TOPICS > Politics

Taxing Matters

February 16, 1999 at 12:00 AM EDT


JIM LEHRER: Kwame Holman begins our tax- cut report.

KWAME HOLMAN: Republican leaders took to the road yesterday to tout a new agenda, in the wake of public opinion polls that showed the impeachment trial dented their party’s image. In the Detroit suburb of Warren, they held a town meeting titled “Listening to America: Tax Cuts for Everyone.”

SEN. TRENT LOTT: Thank you very much, ladies and gentlemen. It’s a great pleasure to be back in Michigan.

KWAME HOLMAN: The tax-cutting message was delivered by Senate Majority Leader Trent Lott, Michigan Governor John Engler, and other Republican members of congress. It was welcomed warmly by most in the largely partisan audience of 500.

SEN. TRENT LOTT: I believe, as Ronald Reagan believed, that America never has to be satisfied with the way it was or the way it is. We can make it better. That’s what the Republican Party is all about.

KWAME HOLMAN: This working class enclave was the first of a 150-stop nationwide tour aimed at selling the belief of many Republicans that the times are right for an across-the-board cut of 10% in income tax rates.

SEN. TRENT LOTT: We have a new opportunity in Washington this year. We have a phenomenon that we have not had since 1969. We have a balanced budget and we have a surplus. You know, in Washington, they had to pull out Webster’s Dictionary, surplus, surplus, what is this? We haven’t had it in so long. Well, we do have it. So we have these surpluses now. There are a lot of people in the Washington bureaucracy that say “this is our money.” When they say, “our,” they don’t mean you and me, they mean theirs in Washington. They want to spend it. Well, this is my motto: “It is your money.”

KWAME HOLMAN: Both Republicans and Democrats propose dedicating some of the projected $2.5 trillion in budget surpluses over the next ten years to tax cuts. They also agree the bulk of the surpluses should go to shoring up Social Security. The two parties differ, however, on the kind and size of any tax cuts. President Clinton’s latest budget calls for smaller, targeted tax cuts, totaling about $36 billion over five years, aimed primarily at helping families pay for child care and long-term health care. GOP leaders say they’ll continue to press for the 10% reduction in tax rates, which some analysts say will cost $775 billion over ten years. And they will take that message next to town meetings in Virginia and Pennsylvania.

JIM LEHRER: Differing views of the Republican plan now from a supporter, Governor John Engler of Michigan, and a critic, Congressman Charles Rangel of New York, the top Democrat on the House Ways and Means Committee. Congressman, what’s wrong with a 10% across-the-board tax cut?

REP. CHARLES RANGEL: You would think that the Republicans, after getting the hit on the impeachment, their conduct on impeachment, that this was behind us, that they would come together and see how they could work with the President of the United States in putting forward a legislative agenda that both Democrats and Republicans could agree to. To go on some town hall meeting and just to say that they’re going to ignore the president’s suggestion that we fix Social Security first, that we fix Medicare first and then we look to a tax cut — I don’t want to spend a lot of time with this unfair tax cut, because, as Trent Lott said, this is taxpayer’s money. But Republicans being as they are don’t want to redistribute it to those poor working people that are down there, but rather have the wealthier people receive the benefits. But the most important thing is that if they earmark this large part of the surplus to a tax cut, then what they’re saying is to the President of the United States is that we’re ignoring the needs of Social Security, we’re ignoring the needs of Medicare, and I don’t think with a six-vote margin that the Republicans in the House of Representatives can afford to do that.

JIM LEHRER: Governor, is that what you Republicans are saying?

GOV. JOHN ENGLER: Well, this sounds like a flashback, Congressman Rangel to when we were talking about welfare reform in ’95 and ’96, and we had to pass it twice, had it vetoed, and finally on the third time the president signed it. I think this tax cut is fair. The last time I checked, the auto workers that live in Warren, Michigan, where we were meeting yesterday, they pay a lot of taxes, and they ought to get some of it back and across-the-board it is modeled after a former president you thought a lot of, John Kennedy, in the 1960’s. And it’s modeled after a president I thought a lot of, Ronald Reagan in the 1980’s. And I hope every 20 years or so we can get this right. Across the board, a tax cut for all Americans is the way to go. And this micro targeting, trying to divide the American people into little groups and little camps, here’s a tidbit for you and a tidbit for you, is the wrong way to go. That’s the old class warfare politics. We ought to get beyond that. In the 21st century, let’s have all Americans and let’s encourage all Americans to earn more and let’s deal with this bracket creep, which today punishes people when they earn more by rewarding them with higher taxes. We’re for lower taxes.

JIM LEHRER: Congressman Rangel, one of your basic charges is that this favors the wealthy. How does it favor the wealthy?

REP. CHARLES RANGEL: Because there’s so many poor people that have to pay excise taxes and they pay taxes each and every day, and they don’t have this federal liability. But if you just were to go across the board and find the higher income people and see how this is going to be distributed, a tax cut isn’t just supposed to give back money, it’s supposed to redistribute it with some degree of fairness. And the president has said that before you even talk about the allocation of returning the surplus, there are federal responsibilities. I would have hoped that instead of just trying to find a Republican solution to a problem, that perhaps the governor would recognize there is no Democratic or Republican solution. The American people have an obligation to take care of those large number of retirees, that’s going to be a bumper crop, that’s going to come up in the next couple of decades and the next century, that if we don’t do something about it now, instead of talking about 10% tax cuts, it means that working people — each working person will be responsible for taking care of one retiree. If we don’t take care of the Medicare system, it means that our aged will not have health care for there for them. The president didn’t just say no tax cut, he said take care of this national responsibility. Now, why in God’s name, with all of the bad polling that the Republicans are getting, why would they not come to Washington and say let’s sit down with the president, let’s sit down with the Democrats, and let’s work out something that we all can agree on?

JIM LEHRER: Governor, why not do that first, follow the president’s way first?

GOV. JOHN ENGLER: Well, the president is getting a large part of what he asked for. Some 62% of this surplus right off the top is solving all those problems that the congressman is talking about. We’re talking about what really is in Washington something surprising, a surplus, found money even above the estimates that some of the congressional estimators had put out there. Let me tell you that in Michigan, by cutting taxes across the board, and we’re doing that again, it will be a billion dollar annual reduction in taxes across the board on Michigan taxpayers, we’re seeing jobs created. And the way to lift people out of poverty is to give them better opportunities to go to work. And in America, when way I look at taxes, people earning $50,000 and more are paying 91% of all the income taxes in America. And we want to see more jobs created; we want to see these auto workers and middle income families get some relief so they can help pay for child care, pay for college, pay for other expenses in life. And at the same time, we want to see the economy stronger so everybody can move up.

JIM LEHRER: What about the –

REP. CHARLES RANGEL: Maybe I’ve misread something that came out of Michigan. But if the Republicans are saying that before they even go to the 10% tax cut, that they’re going to fulfill a commitment to the Social Security system and take care of that first and then say they’re going to take care of Medicare and take care of that second, then of course I think we can debate tax cuts. But I don’t think that’s what Republicans are saying. You’re saying you’re going to use the surplus to give a tax cut, and if there’s anything left, then you’ll deal with Social Security.

JIM LEHRER: Is that what you’re saying, Governor?

GOV. JOHN ENGLER: I don’t think that’s what Senator Lott said yesterday. I don’t think he said that in the clip that we just broadcast before we started talking.

REP. CHARLES RANGEL: Why can’t we get a commitment now? If Republicans are saying this, that the first thing we’re going to do for America is to make certain that Social Security trust fund is sound, the second thing we’re going to do is to make certain that no older person that is entitled to Medicare is going to go wanting, and then after that let Democrats and Republicans debate what the tax cut is going to be. But you started off with your Republican retreat with tax cuts and not the needs of America’s future.

GOV. JOHN ENGLER: Well, I disagree with that, congressman. You’ve got that Social Security issue, you trot it out every two and four years, the Democratic dogma to scare old folks in America, to say to the senior citizens in our country, who worked hard, paid all those taxes, you’re at risk. And they’re at risk when the economy is in trouble. The way to keep the economy strong is to cut taxes. That makes it easier to take care of all kinds of problems. So I think the strategy that Senator Lott is talking about, that Senator Abraham of Michigan, who is a co-sponsor of this tax cut for all Americans is real straightforward. Let’s use a part of this surplus to help with Social Security and some of those long-term problems. Let’s also, Congressman, while we’re at it, get a proposal from the president, a specific proposal. He could do that, that would help this debate as well. And then let’s use part of that surplus and give that back to all Americans right across the board. And that’s a win-win situation for all Americans.

REP. CHARLES RANGEL: Governor, if you really don’t believe it’s a serious Social Security problem, if you don’t believe it’s even a more serious Medicare problem, then –

GOV. JOHN ENGLER: Oh, I believe it’s a serious problem.

REP. CHARLES RANGEL: — all you have to do is say this. Let Democrats and Republicans and the president fix that and then we’ll debate your issue. But I don’t think you’re saying that. If you’re saying it’s not as much as a problem as Democrats say it is, then good, let’s make certain we use the surplus, fix those two important problems that we face in the future, and then you and I can discuss whether the targeted tax credits are good or whether your across the board thing is good. But we can’t get a commitment out of Republicans that they’re going to fix the Social Security /Medicare system. That’s where we ought to start.

GOV. JOHN ENGLER: Congressman, all I’m saying is for seven years your president has had an opportunity to put a specific Social Security reform plan in front of the American public and have that debated. He’s neglected to do that. He doesn’t see maybe some of the same urgency. I agree there’s a problem, that’s why I’m willing to see some of this surplus put towards Social Security. But I’m also just as committed to having a substantial part of that surplus put toward growth in America, opportunities for people who live in poverty in our society to be able to move up, more opportunities for job creation.

REP. CHARLES RANGEL: We agree on that. But the president did put out a proposal, and the Republicans have not put out anything.

JIM LEHRER: All right. Let me ask the governor a question. This has become, it is being touted as the centerpiece of the Republican party at this point. New governors, members of the House, and Republican senators, Senator Lott as he said in Michigan yesterday, this is the centerpiece of your party and your agenda, is that correct, is that a correct reading?

GOV. JOHN ENGLER: It’s part of it. I think there are several other parts of that centerpiece. I do think that the general theme of taking power and authority out of Washington, and, you know, I would remind everyone that Congressman Rangel and I debated welfare reform, and fortunately, we prevailed on that. And we’ve seen millions of Americans get off welfare, be able to go to work. So we were right on that one. I think we’re just as right on tax cuts — education, again, freeing up states and local communities to solve the problems, loosening Washington’s grip. The same is true when it comes to retraining our workers and getting them 21st century skills. So all of that is part of a domestic agenda which trusts families and people to make decisions and doesn’t suggest that by growing government bigger or taking the money to Washington and having Washington set our priorities somehow leads to a stronger America.

JIM LEHRER: And do you feel that that’s the right side of politics right now?

GOV. JOHN ENGLER: Well, I think that in America people are looking for solutions. I think that’s why we’ve got more than 30 Republican governors in virtually every key state in America today, including the congressman’s own home state of New York, where Governor Pataki is seeking to cut taxes in order to create jobs. So, I think that’s absolutely the right agenda. I think the national campaign, as we look ahead to the rest of this year and 2000, with this congress, we have an opportunity to do business with the president who is, I think, really got an eye on his legacy. I think unfortunately if some other members of congress in the president’s own party are merely looking at the next election, they may not be as eager. But I think the Republican congress and the president finishing out his second term in office have some room to do business, just like we did on welfare reform.

JIM LEHRER: Congressman, finally, let me ask you, do you see this as a defining issue between Republicans and Democrats right now?

REP. CHARLES RANGEL: I hope not. This is just a partisan meeting that they had. I hope that when we do come back to the Congress, that Republican and Democrat leaders will get together and meet with the president and to see what we can compromise and what we can come up with that saves the Social Security system and the Medicare system and then start talking about education and tax cuts. But to go away and to try to fashion an agenda — Republicans is just not going to fly.

JIM LEHRER: All right. Gentlemen, thank you both very much.