Kwame Holman reports from Capitol Hill on the progress of President Bush's tax cut plan.
SPOKESMAN: If our guests could find seats, please.
KWAME HOLMAN: This morning, members of the House Ways and Means Committee set into motion President Bush's call to reduce taxes by $1.6 trillion over ten years. The proposed tax cuts, the largest in history, also happen to be the first piece of legislative business for the Committee's new chairman, California Republican Bill Thomas. But after 18 years as a member of the Committee, Thomas was nonchalant.
REP. BILL THOMAS: In H.R.-3, the Committee has an opportunity to help working income taxpayers, both today and tomorrow. I think this is not a debate about whether we have a tax surplus. There may be disagreement over when and how this tax surplus should be returned to income taxpayers, but I think Democrats, as well as Republicans, agree that our hard-working income taxpayers are paying more in these taxes than they should or need to pay.
KWAME HOLMAN: It was the non- partisan Congressional Budget Office that projected ten-year budget surpluses large enough to pay for the President's tax cuts. But opponents-- primarily Democrats-- repeatedly have questioned the soundness of those projections. Today, California Democrat Robert Matsui put the question to Lindy Paull from Congress' Joint Committee on Taxation.
REP. ROBERT MATSUI: In the CBO report, do you believe that they're wrong? It states that CBO has been making... so it's not possible to assess its accuracy. But ten-year projections are likely to be less accurate than five-year projections. Then they go on later on to say essentially that a ten-year... a five-year projection even has a 50% unreliability factor in the sense that, by the fifth year, they could be off by $245 billion dollar in that one year alone. Do you happen to agree with CBO'S forecasting and the ten-year, the five-year, in terms of a 50% unreliability, or do you believe that they're wrong?
LINDY PAULL: Oh, I think they... We operate off of their assumptions and certainly I think most economists would agree that, after you get out after a couple of years, it's very difficult to predict with any sort of precision. CBO has been quite good at it, and the trends are that they've been somewhat conservative.
REP. ROBERT MATSUI: I understand that, but...
SPOKSMAN: Gentleman yield. Not on your time.
KWAME HOLMAN: Florida Republican Clay Shaw joins the discussion.
REP. CLAY SHAW: If you take that argument as the reason not to give a tax... Any type of tax adjustment, tax reduction, you'll never give a tax reduction. So I think what you do is just as any business, corporation or anybody and even the families in trying to project their own budgets, that you have to use your best judgment as to where we're going and then make the plans accordingly.
KWAME HOLMAN: But again, Democrats primarily have complained the Bush tax cuts are unfairly distributed in favor of the wealthy. Michigan Democrat Sander Levin asked how much of a tax break lower-income wage-earners would get.
REP. SANDER LEVIN: The President has talked about a person with two kids, $50,000 I think, gets $1,600 tax relief. How much tax relief is there the first year for that family?
LINDY PAULL: Under this bill? $360.
REP. SANDER LEVIN: Okay. And $300 and what?
LINDY PAULL: $360.
REP. SANDER LEVIN: Not $1,600.
LINDY PAULL: No, sir. That's taking the President's plan all together.
REP. SANDER LEVIN: When would that occur?
LINDY PAULL: And you would need to add the increase in the child credit to get to $1,600. >> Now, when would the $1,600 become available?
REP. SANDER LEVIN: When would that occur? 2006, correct?
LINDY PAULL: Mr. Levin, it's not unusual that tax relief is phased in.
REP. SANDER LEVIN: Okay. But I think when the President stands up and says $1,600 for a family with two kids earning 50,000 bucks, he sawed say, "yes, $1,600 the year 2006 and $350 this year." That's honest salesmanship.
KWAME HOLMAN: But Michigan Republican Dave Camp wanted to make the point that all taxpayers would benefit from the rate reductions.
REP. DAVE CAMP: And how many of those would be defined as small business taxpayers, do you know that?
LINDY PAULL: Roughly about 16 million of the 100 million returns would show some entrepreneurial style income. A combination of farmers, small businessmen or women who have owned their business outright or in partnership or in a subs corporations with others.
REP. DAVE CAMP: Thank you, Mr. Chairman.
SPOKESMAN: Clerk will call the roll.
KWAME HOLMAN: Late this afternoon, by a 23-15 party line vote, the majority Republican committee voted to approve President Bush's tax rate formula. The plan goes before the full House next week.