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CNN LIVE EVENT/SPECIAL

White House Press Conference

Aired May 6, 2003 - 11:51   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DARYN KAGAN, CNN ANCHOR: Here is Ari Fleischer.
ARI FLEISCHER, WHITE HOUSE PRESS SECY.: Good afternoon.

The president began today with an intelligence briefing, followed by his FBI briefing. He had a meeting earlier today with the secretary of state, then he made remarks to the Tax Relief Coalition about the importance of Congress moving this week to pass his jobs and growth plan. He will later this afternoon meet with the secretary of defense in the Oval Office and have a personnel announcement immediately following the meeting. And then later this afternoon the president will meet with the prime minister of Singapore in the Oval Office and then will sign the U.S.-Singapore Free Trade Agreement in the East Room.

And with that, I'm happy to take your questions.

QUESTION: Does the appointment of Bremer, does that mean that Secretary Powell has prevailed over Secretary Rumsfeld?

FLEISCHER: There will be, as I indicated, a personnel announcement, so I'm not at liberty...

(CROSSTALK)

FLEISCHER: If you're inviting me on the record, on camera, to speculate in front of a presidential event, before the president has made a personnel announcement, I regrettably must decline the honor.

QUESTION: Will he rationalize it? I mean, will he explain it?

FLEISCHER: Let me just recommend, it is a pool event, as you know. The press corps has been invited, will be there, I anticipate. People have already RSVPed. And I think the president will have something to say, and he'll share it at that time, and I'll be available after that to answer whatever follow-up questions emerge.

QUESTION: How does the resignation of Mitch Daniels, the pending resignation, affect the president's ability to get his tax cut plans through Congress? This now means the total economic team has been totally revamped within the last six months. Does this affect the president's position on the Hill?

FLEISCHER: Well, of course, Director Daniels did inform the president today that he was going to resign, effective 30 days from today.

And so, he remains on the post, on the job for 30 days.

I want to make two statements. Number one, the president tremendously appreciates Mitch's service to our country. The president views Mitch as a very strong manager, a very able leader and a wise steward of tax dollars.

During these next 30 days, Mitch will continue to do his work to help the president make progress on his economic plan. As I indicated, the House and the Senate are both moving this week on the economic plan. And I anticipate it very well may be done, thanks to the help of Mitch Daniels. We'll see exactly what the timing is as Congress acts.

But Mitch as always been very effective and a team player for this president. He'll continue to do that during these 30 days. So I don't think there's anything here connected with the economic plan.

QUESTION: Are you suggesting the whole thing will be done within 30 days?

FLEISCHER: I think the Congress is working on a schedule to make that happen, yes. We'll see ultimately if they can do that. The plan as the Ways and Means Committee is marking it up this afternoon. The Senate Finance Committee has said that they anticipate marking it up on Thursday. So the process is moving actually very well and very early.

QUESTION: When can we expect a successor?

FLEISCHER: The announcement was just made this morning. I think it's too soon to speculate about any successors to Director Daniels.

QUESTION: Senator Grassley has laid out a proposal on this package which would include the notion of a cut on dividend income, taxes on dividend income. But that would be phased in and then sunsetted. Is that a good idea?

FLEISCHER: Well, phase-ins, sunsets, are a typical part of tax policy. Obviously, given the fact that the president's original proposal was for $726 billion and the two proposals in the House deal with $350 and $550 billion, it's important that the central elements of the president's plan be included. And the president's very pleased by what he's hearing about the inclusion of the central elements of this plan. Even beyond the dividend, there's so much more that the president sought that is in the plan.

So there's a lot of progress being made. Obviously, it's not everything that the president sought, but it's an awful lot of what the president sought.

QUESTION: But isn't cutting taxes and then sunsetting the tax cut a kind of gimmick by saying -- it's sort of defying a future Congress to reinstate the taxes on dividends where it's pretty obvious that that would be a real politically difficult thing to do. So essentially it's trying to pass a bigger tax cut that they're willing to admit. FLEISCHER: Well, of course, the 2001 bill was done in a similar matter. That's why I said this is a common way that tax legislation is considered on the Hill. You're all very familiar with the alternative minimum tax which every year has to be treated as what they call an extender because the provisions sunset on an annual basis.

FLEISCHER: Sunsets, these are regular parts of the tax code. The president would have preferred for it to be dealt with in its entirety through the $726 billion proposal that he made. Congress did not agree to all of that, but they've agreed to much of that. And so, we're working now on the specific details of it.

But no matter how you cut it, substantial progress along the lines of what the president proposed is being made, and the president's appreciative of that. More importantly, people looking for work in America can be appreciative of the fact that Congress is taking action to help them to find jobs by stimulating the economy through these presidential plans.

QUESTION: And on that, the president reiterates again and again, 1 million new jobs from this package; that comes from the Council of Economic Advisers. But most economists say that most of those jobs, the vast majority of those jobs would come about given the current projections for economic growth in the economy. So the president is trying to take credit for potential job growth that most economists think will happen as the economy comes out of this (inaudible).

FLEISCHER: There is a school of thought among economists that the economy is going to recover later. That doesn't do a whole lot of good for people who are unemployed now.

For somebody who's unemployed now it is small comfort to know that some economist somewhere says, "You may get a job in six months, you may get a job in a year. But by the way, until then do you mind collecting unemployment benefits because we're not here to help you." That's not the president's approach.

QUESTION: So the president is promising, guaranteeing that this package would create these jobs in the next six months.

FLEISCHER: Well, let me walk you through some of the studies that have been done on this. And one of the best ways to understand the job creation that the administration economists believe will take place in this 2003 proposal is to look at history.

The 2001 tax bill that was passed at a time when the country was actually in recession, which helped propel the economy out of recession, without the stimulative effects of that proposal 1 million fewer people would be working today. This is according to the Council for Economic Advisers.

The Job Creation and Worker Assistance Act of 2002, which was passed earlier in 2002 with bipartisan support, also helped mitigate the effects of the economic downturn. That act created an additional 220,000 jobs and raised current GDP by another 0.4 percent. Many of the economists that you are accurately citing have also based into their projections for recovery the fact that Congress will indeed pass a stimulative tax bill this year. They will still differ about the exact elements of it or the size of it, but baked into their cake is a presumption that Congress will pass a stimulus which will help create jobs.

What the CEA has estimated for 2003 is that the president's proposal that he originally made would have created 1.4 million jobs in 2003 and 2004. And the proposal that the president is pushing for, which is at least $550 billion, will create more than 1 million jobs. That's a lot of comfort to a lot of people, and that's why the president is doing it.

QUESTION: And due entirely to this proposal, not to economic growth that would be occurring otherwise?

FLEISCHER: This is the CEA has estimated the president's jobs and growth tax reduction would create.

QUESTION: Ari, has the president given up on a bipartisan tax plan this year? Democrats seem to be digging in their heels, and they're also saying that no one from the administration has contacted them; people like Mark Pryor have said that. Are you still hoping for a bipartisan bill?

FLEISCHER: Well, one, there have been numerous contacts with Senate Democrats about this.

FLEISCHER: And obviously the president is interested in as bipartisan a result as is possible. But he's interested in results. And he hopes that many Democrats be willing to provide support for a jobs plan, a growth plan based on stimulating the economy. We'll see if the Democrats decide to do that or not.

But in the meanwhile, the president is looking to assemble a majority, and we'll see exactly how many Democrats sign up for that majority. We'll see exactly how many Republicans as well. That's in the end how you get things done for the country, you assemble majorities.

QUESTION: And you were citing figures from the CEA, and now comes news that they are being moved off of the White House grounds. Is the National Economic Council now being given the lead? Are they the lead agency in the White House now?

FLEISCHER: I think you're very familiar with the security situation on 17th Street that has necessitated the move of many offices from the OEOB to other facilities as work is being done on the Eisenhower Executive Office Building. No less an office than White House personnel, one of the most crucial ongoing functions, has also been moved.

So I think that it's rather farcical to attach any significance to a move related to the security situation on 17th Street to any one office around here or any people's influence around here. QUESTION: Is that why they're being moved?

FLEISCHER: Yes. We announced that when we said all these offices were moving some time -- oh, boy, this was probably about six, eight months ago, maybe even longer than that.

QUESTION: If I could go back to the jobs question for a moment. The president said very specifically this morning that he expected this to create 1 million jobs by the end of 2004. Since he became president the economy has lost about 2 million jobs. Does that mean that the president is willing to go to the voters in 2004 and say, "My record of presiding over the loss of 1 million jobs in this economy is good enough to warrant reelection"?

FLEISCHER: I think the president is going to, no matter what the year, make the case to the American people that the economy that we inherited in 2001 was an economy that had already begun its downturn. The downturn began, as you know, in the summer of 2000. And what's important now is that the economy recover and that people in both parties work together to help the economy to recover.

The American people will decide who should get the credit, if they want to give the credit to anybody. The president is interested in sharing that credit, and therefore he wants Democrats, Republicans to work with him to get an economic plan passed so that we can grow from the recession that began in January of 2001.

QUESTION: But as to the question is, is losing 1 million jobs over the course of a presidency a good economic record?

FLEISCHER: Well, the American people will decide who they want to credit for the growth and for the recovery that takes place. We'll see what the actual numbers are as the recovery continues. And I can't make any predictions about that, other than the president's approach to it is to share the credit, to work with Democrats and Republicans alike, because what's important to him is that people have an opportunity to work if they're looking for work.

QUESTION: Ari, Congressman Bill Thomas is calling for a $550 billion tax cut plan, including the accelerated cut for income tax, as well as -- not in full, but at least reducing the corporate dividend tax to 15 percent. It's a figure, the $550 billion, that's the closest to what the president is seeking. Is that an acceptable package, the 15 percent?

FLEISCHER: Well, just as I indicated earlier, both the House and the Senate are making important progress on the president's proposals. I think you'd be hard pressed to find an example on tax policy where any president has made a proposal and Congress passed it precisely, exactly as is. That's just not how our system based on checks and balances works.

But when you look at the substance of what the Congress is working on, it's remarkably, remarkably similar to what the president proposed in structure and substance, not in every detail. The House of Representatives is working on a proposal that would reduce the individual dividend tax rate down to 15 percent and 5 percent. It's currently at 38.6 percent. The president's proposal was to take it from 38.6 percent, reduce it to zero percent. Instead they're reducing to from 15 percent and 5 percent, depending on your income level.

FLEISCHER: That's progress.

When you look at the rest of the tax plan that the Ways and Means Committee is working on, you'll see it is virtually identical to what the president proposed because it accelerates the income tax rate reductions to January 1 of this year, it accelerates the child credit from $600 to $1,000 immediately, effective this year, as well as accelerating marriage penalty relief, all of which the president proposed, all of which are significant in terms of getting dollars into people's hands this year so those individuals can spend that money to buy a good or a service, which in turn creates economic growth and helps to employ people.

QUESTION: And Senator Daschle just announced, as you know, his own plan, $152 billion, but he also criticized the president's plan, saying a robust jobs and growth package is just a bust and talked about the reason why he felt that it would not necessarily create jobs. Is there any response from the administration?

FLEISCHER: Well, obviously there are going to be some people who have previously voted to raise taxes, who have said previously they would think about reversing the president's tax cuts, which is tantamount to another tax increase.

And the president thinks that that's the exact wrong thing to do, raising taxes is the wrong thing to do, particularly in an economy that needs a stimulus to create jobs. He respects the opinions of others, but, no, he will not support plans that raise taxes and a plan that provides, in this case, not enough stimulus to the economy.

QUESTION: Ari, two quick questions about numbers. The president this morning said his package, as sent to Congress, would create 1 million jobs. There's almost no one left in this town who believes that that package will survive intact. So is the president really acknowledging that the lesser tax cut will -- is he prepared to acknowledge that it would create far fewer than 1 million jobs?

FLEISCHER: Well, I think that remains to be seen when you have to examine the exact details of what the Congress passes and the exact level at which a final conference agreement is reached, whether it's, as the president has asked for, is at least $550 billion. The Council for Economic Advisers has also come to the conclusion that if a proposal were scaled back to about $350 billion it would create some 300,000 to 400,000 fewer jobs -- actually 425,000 fewer jobs than a package passed at $550 billion.

So the president is concerned that any plan that was passed that would be smaller would create fewer jobs. And that's why this is an ongoing progress, and we'll continue to work with both the House and the Senate to create as many jobs as possible.

So we'll see what the exact formula the Congress uses and see what the exact substance is.

KAGAN: We've been listening to the daily media briefing by White House spokesman Ari Fleischer. A lot of questions and answers about tax cuts, about the economy. This on a day when the president addressed the U.S. Chamber of Commerce. And we also heard Senate minority leader Tom Daschle come out and give a Democrat proposal of what the Democrats would offer for tax cuts.

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