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| TAX SHOWDOWN | |
 August 31, 2000  |
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President Clinton today vetoed a bill that would repeal the federal estate tax, setting up a battle with the Republican-led Congress. After a background report, congressional leaders from both parties debate the tax cuts and the effort to override the Clinton's veto. Watch the background
report in streaming video.
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PRESIDENT CLINTON: I believe that this latest estate tax bill is another example where Congress comes up with something that sounds good and looks really good coming down the street on a tractor, but if you look at the merits, it would basically take us off the path that has brought us to this point over the last eight years. KWAME HOLMAN: Mr. Clinton kept his long-standing promise to veto the bill Congress passed earlier this session, largely with Republican votes. It would have eliminated the estate tax over 10 years at a cost of $105 billion. The tax currently is levied, at escalating rates of up to 55% on estates valued at more than $650,000. It generates about $30 billion a year in federal revenue.
KWAME HOLMAN: Congress rejected a Democratic alternative that would have eliminated the tax on estates worth up to a million dollars. And even though several dozen Democrats supported the Republican bill, it did not get a sufficient number of votes to override today's veto.
Today, a few moments ago, this bill suffered the inevitable fate of a snowball in August. |
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| The case for and against the estate tax repeal | ||||||||||||||||||||
| JIM LEHRER: Now, reaction
from two leading members of Congress. Dick Armey, Republican of Texas,
the House Majority Leader, and Charles Rangel of New York, the ranking
Democrat on the House Ways and Means Committee.
Congressman Armey, did the President do the wrong thing today?
JIM LEHRER: What about the President's point on fairness, that it only affects and helps a very small percentage of the wealthiest Americans? REP. DICK ARMEY: Well, he's wrong about that. If I got a small shop and I employ 30, 40 people, and I die and my kids have to shut down a shop and sell it to pay Uncle Sam, those thirty or forty people lose their jobs. And the fact of the matter is, it is still wrong. Even Oprah Winfrey points that out. Her point is very simple: She built her estate with after-tax dollars. Now when she dies, the government is going to take 60% of it away from her children or grandchildren or for whomever she might leave it. It is just wrong to take a family's legacy away from a family's children and make them break up a business that the family spent a lifetime trying to either put together or hold together. JIM LEHRER: Congressman Rangel what about that? Why should the government take what a person has made over a lifetime?
Let me make it clear: This is a part of a veto strategy that Republicans have had over the years from the very first time they passed a trillion dollar tax cut that was vetoed. Now they're coming back and every time we're agreeing with them, whether it is marriage penalty or minimum wage, they kick it up a notch. Right now, the hypocrisy is involved. Ask Mr. Armey, when does the repeal take effect? It takes effect ten years from now. And what does it cost after that? $50 billion a year. Do they take in consideration Social Security, Medicare? They are spending money that we don't even have yet. JIM LEHRER: Let's give Mr. Armey an opportunity to respond.
REP. CHARLES RANGEL: We are talking about 98... 98% of estates are not exposed to taxes. JIM LEHRER: All right. Congressman Rangel, let's let Congressman Armey speak to the basic point that you made. |
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| The philosophy behind the repeal | ||||||||||||||||||||
| REP. DICK ARMEY: The
fact of the matter is it is wrong to steal a family's legacy. We wanted
to correct that for all families because it is unjust. Given the affluence,
the creativity of the American people giving us all of these means to
pay down $350 billion in debt, and Charlie Rangel has voted against every
tax reduction we've put on the floor. The fundamental facts are very simple.
The Republicans want to pay down debt, and give a little bit back in tax
reduction and Charlie Rangel and Dick Gephardt and the Democrats want
to hog all of that money to spend on new, big government programs and
other risky government spending schemes.
REP. CHARLES RANGEL: Even if he was right, and he has been consistently wrong, the question would be, could we afford the type of relief that he is suggesting in the repeal. The truth of the matter is that we have a responsibility for Social Security, a responsibility for Medicare, a responsibility to pay down the national debt to provide for affordable drugs. If he's going to spend money that we don't have, it is at the exclusion of doing these other things. And so, we do have targeted relief. We do provide relief for all of the farmers and all of the small businesses, and not those wealthy few that the Republicans are addicted to. JIM LEHRER: But do you dispute his basic premise that it should be across the board? That on... In other words what I just said a moment ago, I mean, you are saying, if we had the money, you wouldn't have a problem with doing what the Republicans...
JIM LEHRER: Let me go back. REP. DICK ARMEY: You know very well, first of all, let me correct this. Charlie knows very well should the heirs of that estate in fact liquidate that, they would be subject to the capital gains. Charlie is upset because we're not trying to find some way to continue taxing the dead person. The fact of the matter is, we give a tax break to somebody that's spent a lifetime building an estate of $7 million, that person in his grave gets no benefit of that, and the benefits of his estate are spread across his entire family. So Charlie's absolutely wrong. His answer to the estate taxes, if you want justice, live forever. REP. CHARLES RANGEL: We have... Can America afford the estate tax repeal?
REP. DICK ARMEY: Well, that's absurd. We have got $250 billion worth of government surplus thanks to the American people and the fiscal restraint of the Republicans. We have spent already 83% of that in buying down the debt. We have locked away all of Social Security, all of Medicare. We're asking for what would have been less than 2 percent of next year's surplus alone, spread over the next five years, and they are saying we can't afford it. You have got to be able to afford to give some appreciation back in the form of some tax relief in the most insidious and inexcusable provision in the tax code to the people that gave you the prosperity in the first place, the American people. And it isn't us spending money, it is us letting people who earned it keep their own money and share with it their families. JIM LEHRER: Congressman Rangel?
JIM LEHRER: Congressman Armey. REP. DICK ARMEY: Well, that's right. And those same baby-boomers will be bearing the load of paying for all of those risky spending schemes that Charlie Rangel has promoted and voted for. Why, Charlie, is it a load on our children, when we give their parents or themselves as little bit of tax relief and it is not a load on our children when you load them up with new, big government, risky spending schemes for programs that we don't even understand are workable and have good evidence to see, have not worked in the lives of their parents and won't work in their lives? |
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| Competing visions | ||||||||||||||||||||
| REP. CHARLES RANGEL:
If you really want to give tax relief, do it fair and equitably, you would
pay down the national debt, reduce interest rates so that kids can get
student loans, young people can buy homes, others can put in their retirement
funds. You seem to say that taxes just belong to the people. Well, the
government has responsibility to take care of people. But that's what
makes Democrats different from you Republicans.
REP. DICK ARMEY: No, no, no. You were in the majority in the House for 40 straight years, never paid down a dime's worth of debt. We have been in the majority for six years and we have paid down over $350 billion worth of debt. Interest rates went down in '95 after we took the majority and the stock market took off in '95 after we took the majority. So you're seeing we Republicans should continue to doing more of what it is that we've been doing that you didn't do for 40 years. REP. CHARLES RANGEL: When President Clinton presented in 1993 a budget bill to the House and Senate, not one Republican in the House or Senate voted for it. And the debt that we had in the Reagan years has been eliminated under the Clinton-Gore years. You know it and I know it and the voters will know it and will let you know in November.
JIM LEHRER: Gentlemen... REP. CHARLES RANGEL: What an imagination. JIM LEHRER: Gentlemen, we have to go. In a word, Congressman Armey, do you concede that you don't have the votes to override the veto? REP. DICK ARMEY: We don't have the votes to override the veto, but I do think the American people understand this is fundamental unfair and the President was wrong to veto that bill, and I think they are going to remember that. JIM LEHRER: So that's an issue in the presidential campaign? REP. DICK ARMEY: Well, he's made it that. If he would have been a man that was willing to give the American people a tax reduction they have earned and they deserve, he would have signed the bill and it wouldn't have been an issue. JIM LEHRER: All right, we have to leave it there. Thank you both very much. |
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KWAME
HOLMAN: Republican congressional leaders rolled out a tractor last week
-- and a Montana farmer to drive it -- to deliver their estate tax repeal
to the White House. Family farmers, they claim, would benefit greatly
from the repeal. But today President Clinton had his own take on the
symbolism. 
PRESIDENT
CLINTON: This particular bill is wrong for our families and wrong for
our future. It fails the test of our future both on grounds on fairness
and fiscal responsibility, and I'd just like to lay out the facts in
a little greater detail. The cost of their bill is $100 billion over
ten years. That sounds in the context of a $2 trillion surplus…
you may say, well, that's not all that much. But to get it down to $100
billion they have to ever so gradually phase it in, and in the second
ten years, when all the baby boomers are retiring and we need as much
money as we can for Social Security and Medicare, and to keep the burden
of the baby boomer retirement off the rest of you, the real cost of
the bill appears it's $750 billion. 
PRESIDENT
CLINTON: Last year the Republicans passed a huge tax bill in one quick
shot, and it was like a cannon ball that was too heavy to fly, and so
it went away. But they're still committed to it; in fact, an even bigger
version of the bill that I vetoed last year. This year they have a strategy
that in a way is more clever. It's like a snowball, and every piece
of it sounds good, but when it keeps rolling, it just gets bigger and
bigger. And unless someone stops it, the snowball will turn into an
avalanche, and you'll have the same impact you had before.
REP.
DICK ARMEY, Majority Leader: Of course he did. This is probably the
most unfair aspect of a tax code. It affects a lot of families, affects
an awful lot of jobs. When you have to sell a business because Daddy
died, it is not just the family and all Dad's sons and daughters and
other relatives, but it is the jobs that go with that. This is a right
thing to do, 65 Democrats in the House agreed with us when we passed
it through the House. The president should have signed it. We should
have had that tax relief, especially when you recognize we've already
paid down $350 billion in debt, never before has that been done. So
this is a very small break for the taxpayers that provided us through
their industry the means to pay down that debt. 
REP.
CHARLES RANGEL: Well, I know that the Republican Party recently is stretching
for diversity. I did not know that Mr. Armey would go to extremes of
having Oprah be the tax expert for the Republican majority in the House.
But, Mr. Armey should know that the Democratic alternative took care
of all small businesses, and all family farmers, and that's only a small
percentage of the 2% of the American people that are eligible for estate
taxes. 
REP.
DICK ARMEY: He says it doesn't affect but a handful of people and they
are mostly rich and not deserving and then he says it costs $50 billion
a year. How could it be so little on one end, Charlie, and so big on
the other? I think you speak out of two sides of the same mouth on.
JIM
LEHRER: Let's stay on the estate tax specifically. Congressman Rangel,
explain from your philosophical point. We heard from Congressman Armey.
He says it just isn't fair; everybody should be treated the same. Whether
you are rich or whether you are poor, the same tax rules should apply
about inheritance. Explain the philosophy the other way. 
REP.
CHARLES RANGEL: I'm not saying that at all. I'm saying that's his argument.
If we did have the money, we have a lot of unrealized capital gains
that have never been exposed to taxes. That the only time it become
as taxable event is when it is an estate. The government is entitled
to receive revenues there so we can take care of the other responsibilities
that we have as a government. 
JIM
LEHRER: Congressman Armey, wait. Let's go back to Congressman Rangel
and the President's second point that even... and they are not conceding
this so I'm not putting words in their mouth. Even if they were conceding
the first point about the fairness issue that we can't afford it right
now? 
REP.
CHARLES RANGEL: Well, I think that we really are going to sustain the
president's veto. The Republicans haven't been looking for this tax
cut. They have been looking for a veto, and they should get it, and
they did get it. The truth of the matter is, that this is a very costly
revenue loser. And we have a responsibility -- when this bill comes
into effect, and they shrewdly have the full repeal to take effect ten
years from now, we don't even know what the economy is going to look
like. And at the same time, we have the baby boomers that will become
eligible for Social Security and eligible for Medicare. It is so unfair
to put a load like that on the Congress ten years from now, when probably
Armey and I won't even be there for the responsibility. 
REP.
DICK ARMEY: You just celebrated the other day, the debt was eliminated
because he signed our welfare reform bill and other reforms.