Politics

Gunning The Tax Cut Machine

By CBSNews.com staff CBSNews.com staff

January 30, 2001 / 1:31 PM EST / CBS

Though some top Democrats argue against the the president's tax cut plan, claiming it gives too much to the rich, Mr. Bush is emphasizing its benefits for the less well-off, reports CBS News White House Correspondent Mark Knoller.

"Our tax cut will give the biggest percentage reductions to people who struggled to get into the middle class and American families who struggled to stay there," the president said.

At a swearing-in ceremony for his treasury secretary, Paul O'Neill, Mr. Bush said he knows that many American families feel the squeeze of high energy prices and credit card debt — and the government should give them their own money back.

O'Neill said Tuesday he believes the Bush administration has close to "uniform agreement" with Congress on the need for an across-the-board tax cut. The size of the reduction is the major unresolved issue, he said.

O'Neill said the administration is intensively trying to work out the mechanics of how to make President Bush's proposed 10-year $1.6 trillion tax package retroactive to the first of the year.

Meanwhile, at the White House, President Bush met with Republican leaders of Congress on Tuesday and said the issue of how to get his tax package through Congress was a main topic of conversation.

"We did discuss the timing of the tax package, how best to move it through the House," Mr. Bush told reporters. "We are interested in success."

As far as timing for debate on the centerpiece of his economic program, the president said he would like to see the measure dealt with "as soon as possible."

Also at issue was whether lawmakers should consider Bush's proposal in one fell swoop, or in pieces.

Mr. Bush was giving lawmakers "procedural flexibility" on how they approach his proposals, spokesman Ari Fleischer said. "The president's focus will be the bottom line," Fleischer told reporters. "He wants taxes cut (and) he'll work with the Congress on whatever procedure best gets that done."

After the meeting, Senate Majority Leader Trent Lott told reporters he believes Congress could have a major tax bill approved by July 4.

"We believe we can get to the major tax package in the Senate in May. We fully expect to have significant tax relief for Americans before the Fourth of July recess," Lott said.

"As soon as consumers across America see that Congress is committed to and working on a tax cut and producing it you can see a turnaround in consumer confidence," said House Majority Leader Dick Armey of Texas, following a report by the Conference Board that consumer confidence has fallen to its lowest level in four years.

A decision on whether to make the tax cut retroactive has not been made, O'Neill said in a separate meeting with reporters.

"The president hasn't decided to accelerate yet. There is only one decision-maker down here and he is over there," O'Neill aid, pointing from his Treasury office to the White House next door.

One issue to resolve is how to change individual tax withholding rates to cover the full year, O'Neill said. That would make the withholding reductions larger since they would not take effect until several months had passed. However, that could result in what would appear to be a tax increase next year when withholding rates would be readjusted to be spread over a full 12 months.

"It is a complex, technical issue and it involves millions of employers and more millions of individuals and it is something that you have to attend to really carefully," O'Neill told a small group of reporters during a breakfast interview.

O'Neill, who won widespread praise for his successful turnaround of aluminum giant Alcoa, expressed a businessman's frustration about the length of time it takes in the political process to decide such issues as a tax cut.

"We now have what looks like pretty uniform agreement that we should have a tax cut and that we should have marginal rate reductions and the question about how much, which is a legitimate question. But once we have agreed to all of that, how long should it take to pass legislation, a week, two weeks, be generous, say six weeks," O'Neill said.

The administration is expected to send its tax proposal to Congress next month along with the broad outlines of its budget proposal for 2002, the fiscal year that begins next Oct. 1.