One On One With Iowa Senator Charles Grassley
Wednesday, May 17, 2006
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SUSIE GHARIB: President Bush signed a $70 billion tax cut package into law today. The president calls the bill a victory for American taxpayers and says it will give the economy a strong lift. The measure extends for another two years the reduced 15 percent tax rate for capital gains and dividends. Republican lawmakers turned out for the White House signing ceremony, including Iowa Senator Charles Grassley. And Senator Grassley joins us now. Senator, a pleasure to have you on the program.
SEN. CHARLES GRASSLEY (R) IOWA: Thank you very much Susie.
GHARIB: I know it took a lot of very tough negotiations to get this tax bill passed. Do you think that this is now the high water mark for cutting taxes?
GRASSLEY: Except for the continuation of them after the year 2010 and I would only take exception to one word that you used, and that is the word "cut." Because the taxes were actually cut in 2001 and 2003 and this legislation that the president signed today and one other bill in the works yet leaves tax policy right where it`s been. No further tax cuts.
GHARIB: Right, these were all extensions. That`s what I was getting at. Is this a high water mark, especially given how difficult it was even to get these extensions approved?
GRASSLEY: Yeah, it will be the high water mark for the dividend and capital gains tax cuts. And there I use the word myself. But anyway, it`s a high water mark for that until the year 2010. And for the rate reductions, the 2001 expire in 2010. So sometime between now and then, we have to continue the tax policy beyond 2010.
GHARIB: And then what is going to happen beyond this in terms of the alternative minimum tax for many Americans? This is going to put a lot of pressure on them. How are they going to deal with that if there is not going to be any change in tax policy?
GRASSLEY: OK. What I was stating was the general, the main thrust of the tax bills of 2001 and 2003. There are other tax policies that change from year to year. And the alternative minimum tax is one of them. So we made 2006, so 22 million middle income people won`t be hit by the AMT. In 2007, 2008, 2009, we are going to have to extend that on a year to year basis or maybe two years at a time. We`re going to have to continue to do things like that.
GHARIB: Let`s talk a little bit about the immigration bill. Do you think that Congress will pass an immigration bill and if it does, will it include President Bush`s proposal for a guest worker program?
GRASSLEY: The Senate will pass a bill like that. There will be an impasse with the House. I don`t know how you compromise between the House that`s very much opposed to amnesty and a slight majority in the Senate that is for amnesty. It seems like an impossible compromise. I wouldn`t want to say a compromise might not be worked out, but I do not see beyond just going to conference which is like saying the House has passed what they think is best, the Senate likewise. But compromising the difference and getting a bill to the president, I can`t see light at the end of the tunnel at that point.
GHARIB: We have been hearing a lot about border control, but there are some experts who say that one way to control this whole issue of illegal immigrants is to have some kind of penalty for employers who hire illegal immigrants. Do you think that an immigration bill, whatever form it takes, would have some kind of penalty for employers?
GRASSLEY: Without a doubt. Don`t forget, since 1986 we have had a $10,000 fine, but it hasn`t worked very well because we did not anticipate in 1986 the formulation of a whole industry making fraudulent documents. So that you as an employer wouldn`t know whether I`m legally in the country or illegally in the country. So we have got to get fool-proof identification, but right now it`s voluntary for people to check with the Social Security to see if the number is real. My legislation is going to make that mandatory for every employer to do that.
GHARIB: Real quick question, senator. I want to ask you about lifting tariffs on ethanol. The Bush administration wants Congress to lift the tariff. I know there`s considerable opposition, including from you. Why shouldn`t we be able to import ethanol. Won`t that bring gas prices down?
GRASSLEY: It will not. Number one, it won`t go because I`m chairman of the committee that has jurisdiction over it. I`m not going to let it out of the committee. But beyond that, intellectually, it doesn`t carry water because Brazil does not have ethanol to export and they are even talking about importing ethanol. Secondly, there`s already a loophole in the Caribbean basin initiative to bring in 7 percent without the duty and that`s not even being used. So if you can`t import it, why are you talking about taking it off?
GHARIB: All right, senator, we`re going to have to leave it there and get you back to discuss that in more detail. Thank you so much for coming on the program.
GRASSLEY: Thank you.
GHARIB: We`ve been speaking with Iowa Senator Charles Grassley.
