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Aired February 24, 2003 - 11:00   ET


LEON HARRIS, CNN ANCHOR: We think we have the audio problem straigtened out now from the White House. Let's go back there.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It's the principle which the Congress listened to and passed meaningful tax relief because we were in a recession at the time.

I worked with -- we worked with Congress in '01, and they phased in this tax reduction plan over a period of years. My attitude is, since the economy's not as good as we'd like it to be, we ought to accelerate the tax relief which they've already planned.

It will put about $70 billion immediately into our economy, since I intend to ask for this plan to be made retroactive to January 1st of this year.

It's got a lot of positive effects in it. First of all, you know, I'm always startled to talk about the marriage penalty in the tax code. I don't know why we penalize marriage in the tax code. It doesn't make sense. It seems like we ought to encourage marriage. And so we ought to accelerate that aspect of the tax relief.

We increase the child credit to $1,000. It ought to be done this year and not in the out-years.

And as importantly, when you reduce the tax rates at the individual level, you also provide capital for small-business growth.

BUSH: See, most companies are sole -- most small businesses are sole proprietorships or limited partnerships or Subchapter S's, and therefore that entity pays tax at the individual tax rate. And so the reduction of all rates, not just a selected few, but the reduction of all rates provides needed capital in the small-business sector of our economy.

Secondly, I'm asking Congress to allow for the deduction of up to $75,000 worth of capital expenditure for small businesses, which will have a stimulative effect on our economy.

And thirdly, I believe we ought to get rid of the double taxation of dividends. It's bad for -- when you tax something twice, it's unfair tax policy. It's fair to tax the corporate profits. It's unfair to tax the senior who receives the dividend from the corporation you've already taxed. I think getting rid of the double taxation of dividends will not only help our seniors -- I know it'll help our seniors -- it'll be stimulative in the sense that it gets $20 billion into our economy this year.

But more importantly, it helps capital formation. In a society -- if jobs equal capital, we ought to working on policy to encourage more capital formation.

It's a positive -- it also will have the positive effect of corporate reform. After all, we went through a period of time when people said, "Invest in my company because the sky is the limit, see. We may not have any cash flow, but our story's a good one. You know, we may not be able to show tangible assets, but we've got a wonderful story, so buy in us."

When you have a dividend-oriented policy, the only thing you can distribute is cash, not false promises. And so the elimination of the double taxation of dividends will in itself serve as a corporate- reform measure, which is important.

So this is the plan that I'm asking Congress to pass. And I believe we're going to get a lot of it passed. And I believe it's going to encourage growth. As a matter of fact, you know, these economists predicted in the Blue Chip forecast that the economy would grow at 3.3 percent if Congress responded to a stimulative package -- if it responded.

And so you just need to know that jobs are on my mind, and I'm going to work hard to get Congress to pass the package, and I'm optimistic about it. In this town you hear a lot of early noise which sometimes fades when a chief executive starts taking the message to the people, and that's what I intend to do, and I know you do the same things when you sell your packages at home. It's got a good effect, and I'm just beginning to make the case.

Secondly, I understand, you know, we've got an issue with our own budget. You've got issues with your budgets. We can talk about that. Our budget is in deficit. It's because we went through a recession and we're at war.

And so I'm going to do everything I can to mitigate the deficit by encouraging, on the one hand, more revenues coming into our treasury through economic growth, but also limiting the spending to reasonable amounts.

BUSH: And I thought a 4 percent discretionary spending increase was the right amount.

And I look forward to working with Congress. As you know, appropriators are appropriators. They live up to their name. Whether they be Republicans or Democrats, they like to appropriate. And our jobs as chief executives is to make sure they appropriate within reasonable levels. And I intend to work hard to encourage them to spend within reasonable levels and set priorities. One of the interesting things about the '04 budget I've submitted is that there's $400 billion worth of grants to states. That's a 9 percent increase. And as a matter of fact, the grants to states have been growing by 9 percent since I've been the president of the United States. We can discuss whether that, in your mind, is enough or not. I suspect I may know the answer.

But nevertheless, it put things in perspective. Of the 4 percent increase in discretionary spending, $400 billion, or a 9 percent increase, goes directly to the states. That's a bigger increase than 4 percent I guess is the point I'm trying to make to you.

I look forward to working with you on health care matters, on Medicare. Medicare is an issue that is a vital issue for our country. It is a -- Medicare is an old system. It's (INAUDIBLE) down with rules, and it really doesn't address the needs of many seniors because of its age. I like to put it this way: Medicine's changed, Medicare hasn't. And we got to deal with, and we will deal with it.

And Medicaid is also an issue that we will discuss with you and work with you.

Tommy -- I don't know if you had the Tommy briefing yet or not. Well, he's got a good vision, a good idea.

I -- we'll work with Congress. We got the bill out of the House already. The welfare reform bill is out of the House. I hope we can get it out of the Senate this time.

BUSH: This is a matter of making sure that there are proper incentives, particularly for people to find work. We believe, in this administration, work and dignity go hand-in-hand. And we want to encourage work and training for work.

And at the same time, I want you to know that I feel just as strongly about the faith-based initiative today as when I first came into office, because I understand a modern welfare system must understand the power of our faith-based institutions and their ability to change lives and help people who need.

I don't talk about a particular faith, I talk about all faiths. Some of you have done some great things. I know Virginia and I think Jersey (ph) (INAUDIBLE) Florida, I hope, have done good things with the faith-based offices.

I encourage you to take advantage of this initiative. I encourage you go into your inner cities and find some of these neighborhood helpers and healers and empower them. Tell me that if they decide to help a neighbor in need, government is not going to make them take the cross off the wall or the Star of David off their wall. Encourage their faith-based initiative to go forward. It is an integral part of saving lives in America.

I had to go to Congress. They balked a little bit on the faith- based initiative, so I put out an executive order that said there would be a level playing field for any faith-based program with federal agencies. If you got a housing initiative based upon a faith- based initiative, HUD will treat you fairly. They're not going to fund you if it's a lousy deal, but you'll be treated fairly coming in.

And I just urge you to do this. I'm absolutely confident. Well, I know one of the great strengths of the country is the heart and soul of the American people. And there are thousands of our fellow citizens who will answer a call to love a neighbor in need.

I want to work with you on education. It's a subject I, you know, spent a lot of time on as the governor of Texas. It's the most important thing a state does, as far as I'm concerned.

Today I look forward -- if you've got any questions on the No Child Left Behind bill, I'll be glad to answer your questions.

BUSH: But you're going to hear a guy who is not going to relent when it comes to making sure we measure whether every child can read and write and add and subtract. Because you can't cure unless you measure. And there are too many of our children who cannot read and write and add and subtract, and we better figure out how to not only figure out who can't read and write, but how to cure it now, before it's too late.


Margaret (ph) tells me we've talked about the Head Start initiative to help you better coordinate the early childhood development programs. I firmly believe that those children can be taught the basics for reading now, and should be, and people ought to be held to account as to whether or not they are being taught the basics of reading now.

I look forward to work with you on this -- our homeland security initiative. I was disappointed that the Congress did not respond to the $3.5 billion we asked for. They not only reduced the budget that we asked for, they earmarked a lot of the money. That's a disappointment; a disappointment when the executive branch gets micro- managed by the legislative branch. You may have had that experience yourself.


But we will do everything we can to not only get that money out quickly, but figure out ways to get as much of the money to you in ways that'll help you respond to the threats this country faces.

I want to thank you very much for working on these joint terrorism task forces. They're effective tools to help prevent attack. The culture of the FBI has changed from one that said we're going to find criminals and arrest them to one we're going to do everything we can to -- let me start over. That's still an important function of the FBI, but it's now -- it's primary function is now to prevent attack.

I say that because America's still a battlefield. You know, after September the 11th our perspective had to change about the world. I remind your constituents when I travel around the country that prior to September the 11th oceans would protect us. That's what we thought at least, that we were safe. September the 11th we learned that we're vulnerable to attack. It's just the nature of the world we live in. As leaders, our job is to remind the American people that -- of the reality of the dangers we face and do everything we can to prevent attack.

So we're doing everything here at home. I hope you feel the level of coordination is good. If it's not, we need to hear about it so we can continue to button up the homeland to the best of our ability.

The best way to protect America is find the killers before they kill us, and that's what we're going to do.

BUSH: That's why this budget I asked for Congress had a lot of defense spending in it, because we're on the hunt and we're going to stay on the hunt until we bring terrorist networks to justice. That's what we owe the American people.

As we speak today, we are not only providing help to the people of Afghanistan, we're hunting down the remnants of Al Qaida. And they're on the run. And it doesn't matter how long it takes, they will be brought to justice.

The war on terror is more than just chasing down shadowy terrorist networks. The war on terror is recognizing that weapons of mass destruction in the hands of brutal dictators also threatens the American people.

I've come to the conclusion that the risk of doing nothing far exceeds the risk of working with the world to disarm Saddam Hussein. I came to that conclusion because of the new realities we all face as American citizens who love freedom and who aren't going to change.

Today we're going to submit a resolution to the U.N. Security Council that spells out what the world has witnessed the last months. The Iraqi regime is not disarming. The Iraqi regime is not disarming as required by last fall's unanimous vote of the Security Council.

Saddam Hussein's refusal to comply with the demands of the civilized world is a threat to peace, and it's a threat to stability. It's a threat to the security of our country. It's a threat to the security of peace-loving people everywhere.

We're going to work with the members of the Security Council in the days ahead to make it clear to Saddam that the demands of the world and the United Nations will be enforced.

It's an interesting moment for the Security Council and the United Nations. It's a moment to determine for this body that we hope succeeds to determine whether or not it is going to be relevant as the world confronts the threats to the 21st century. Is it going to be a body that means what it says? We certainly hope it does.

But one way or the other, Saddam Hussein, for the sake of peace and for the security of the American people, will be disarmed.


We face common challenges. I look forward to working with you all to meet those challenges. The country expects leaders to lead, and that's exactly what we all are going to do for the good of mankind, for the good of the American people.

Thank you very much.


HARRIS: President Bush there now being warmly greeted there and applauded by his former colleagues, amongst the governors, the nations' governors there are meeting in Washington. We heard President Bush this morning come out with some words, maybe the words governors wanted to hear. Many of them are saying they need more money coming from the government to deal with certain mandates that have been passed on to them, namely homeland security issues.

President Bush this mornign said he has done everything he can to get the money to the governors, he says, to handle the homeland security initiatives, but micromanagement by the Congress has interfered with that process, according ot President Bush this morning. President Bush also with strong words about the U.N. situation. He says that U.N. needs to back up its words, and needs to stand for -- needs to follow up with what it says it stands for. He said this is a serious moment for the U.N. and for the Securit Council, and he's going to be working with the U.N. -- and he emphasized this, in the "days" to come, emphasis on days.

Well, there is lots of activity at the U.N. today. We expect that sometime today, there's going to be the introduction of this new resolution that's being written by Britain and the U.S., and it's going to be talked about in the U.N. session with the Security Council, behind closed doors, we understand.

And our Richard Roth is standing by.

He's covering this, and many other events as they unfold at the U.N. today.

Hello, Richard.


Yes, another busy day at the U.N., countdown possibly to war. Meanwhile, the diplomacy continues here. In a few hours, the United Nations Security Council, behind closed doors, expected to receive a new Iraq resolution from the U.S. and Britain, probably Spain as a co- sponsor, one of the few members the Council the U.S. can count on at this moment, looking toward a possible vote.

The diplomats telling us that this resolution expected to say Iraq is again in material breach and thus would face serious consequences. Last chance opportunity for Iraq, in other words, code word there for possibly military authorization for war.

Here's Hans Blix approaching today's first day of the two-day meeting with his so-called college of weapons commissioners and advisory panel from countries around the world. Blix is telling Iraq that it has to destroy the Al Samoud missiles starting March 1st. He said technical talks may allow some discussion on the pace and order of that destruction. Blix uses this panel for sounding off before he submits his latest report on Iraq, rating Iraq's level of cooperation.

The chief inspector discussed Iraq's needing to destroy those Al Samoud II missiles.


HANS BLIX, CHIEF WEAPONS INSPECTOR: I think it's good that they are considering, and Mr. Perricos (ph) is going down to Baghdad very soon, and we would expect them to accept what we have said and to destroy the missiles as we have stated. They have done so in the past, always, when UNSCOM and when we have requested so.

So for today, we are having a meeting, as you know, with the advisory board, the College of Commissioners of UNMOVIC, and we have two top subjects on our agenda. The first is the normal quarterly report of our work, covering the last three months, about which you have heard quite a lot already, and then the second is a list of unresolved disarmament items as we see them.


ROTH: And Iraq has been made aware of these items, called clusters of concerns that Iraq has. Blix seen here this morning meeting with the advisory panel. They're going to discuss it. Iraq is going to have to show members of the Security Council it's willing to comply. Nations such as China, France, Russia do not favor a second resolution. They think the inspectors are working well, and that Iraq is cooperating further with them.

So the destruction of the Al-Samoud missiles, Leon, will be an early litmus test on where Iraq might want to go in the area of disarmament. While it's under a strict deadline, the new resolution is not expected to have any deadline for cooperation. It's kind of going to have to be understood by Bagdhad, that, as the president has said, time is running out.

HARRIS: Good point. Thank you much, Richard. Richard Roth at the U.N today. Thank you -- Daryn.

DARYN KAGAN, CNN ANCHOR: Well, France and Germany stood firm today in their opposition to a war-authorizing resolution.

Our Christiane Amanpour is covering that angle of the story. She is in London today.

Christiane, hello.

CHRISTIANE AMANPOUR, CNN CORRESPODNENT: Well, Daryn, Prime Minister Blair is obviously shaping up to be President Bush's key ally in trying to get a coalition together to endorse this second resolution.

You may have caught President Bush in his speech just a few minutes ago actually confirming that diplomats would be presenting and would be tabling the draft of a second resolution at the Security Council today.

The U.K. people and the prime minister's office at 10 Downing Street have told us they expect there to be several days between the tabling of this resolution, and the discussion and debate and vote on that. They believe they told us that will head into at least the first week of March, by which time they said there should be a vote. Then they said that time between now and then, when there's a vote, this is the -- quote -- final final push for peace, diplomatically, the final, final opportunity, as they tell us for saddam hussein to resolve this issue peacefully.

In the meantime, as we've mentioned, diplomats of the U.N. are basically saying the Security Council now faces a potentially unwelcome choice between friends, if you like, going with Washington on the one hand or going with the Paris-led group of people who oppose the war on the other hand.

And right now, a French high-level source has told CNN that if a resolution was to be put to a vote today France, which does not see the need for it, nor does it think is wise, this official tells me France would vote against it, as many other countries would, too.

President Chirac of France meantime is meeting with Schroeder, the chancellor of Germany. They form the backbone of those countries that are opposed in Europe and on the Security Council to a second resolution and to war at this time. Germany, of course, is opposed to war at any time.

In the meantime, Prime Minister Blair faces several days of intense diplomacy, not only within his own country. He faces the House of Commons tomorrow, then there will be a debate on Iraq policy on Wednesday, at which point they are expecting dozens of Britain parliament Labour Party, the prime minister's own members, to vote against it.

Prime Minister Blair has been having many, many telephone conversations. He had a four-way conference call with President Bush and the Spanish and Italian prime ministers over the weekend. They are the four that form the nucleus of the pro-war countries. Prime Minister Blair has also been talking to Putin, the president of Russia, and also with other members of the Security Council who are on the fence, presidents and leaders of Mexico, of Chile and of Spain again. Spain goes with the U.S. and the U.K.

In any event, they're telling us these next two to three weeks will be crucial arm-twisting weeks, whereby they hope to get some kind of resolution on a second resolution and some kind of clarity when it comes to a final push towards war.

Back to you, Daryn.

KAGAN: Christiane Amanpour in London. Christiane, thank you.


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