MARGARET WARNER: We begin with the Majority Leader, Senator Trent Lott from Mississippi. Welcome, Senator.
SEN. TRENT LOTT: Glad to be back, Margaret.
MARGARET WARNER: Is it fair to say that today's passage of this budget resolution is really just the beginning of the fight over tax cuts and spending?
SEN. TRENT LOTT: Really, I think that is accurate. I call it the "kick off." It is a process we had to go through to have an outline from which we would work for the rest of the year. It does provide for entitlement spending, the discretionary accounts like education and for defense and for the tax relief package. Now we go to the Finance Committee and write the details of the tax relief package, the Appropriations Committees begin their process, so it's really just the beginning. It's a shame in a way that we have strained so mightily for three months now to get this budget resolution done so that we could go forward with the actual results that the people want.
MARGARET WARNER: You did get five Democrats today.
SEN. TRENT LOTT: Yes.
MARGARET WARNER: But only five. And just last month you had 15 when you passed - the Senate passed its first version. What happened there?
SEN. TRENT LOTT: Well, first of all, I think it's important to note that that 15 was probably the highest number of Democrats or bipartisan vote in history, the first or second highest number. Sixty-five voted for the budget resolution. We lost some of those Democrats because the spending in that earlier resolution was much higher. It had spending at 8 or 9 percent increase over the previous year. This is down around 4.7 percent, so clearly they wanted more spending than was in the final product. The House and a lot of the Senators, including myself, thought that the 4.7 percent increase in spending over the previous year or this year was enough.
MARGARET WARNER: So do you expect that as we go down the path of the specific tax cuts, the specific spending bills that it's going to continue to be that narrowly partisan, and it's going to be mostly Republican?
SEN. TRENT LOTT: You know, it's hard to tell. I kind of doubt that. I think that when we get our finished product for tax relief, we're going to have a large vote. And I don't - I haven't really started to count it, but I bet you it would be 60 or more final votes with all but one or two Republicans and probably ten or so Democrats, because, you know, when you talk about big numbers, Margaret, you can get lost in that. People say, oh, what is that? Let's talk about what we're talking about. We're talking about cutting individual income tax rates, both the top and the bottom. We're talking about taking the bottom bracket down to 10 percent and taking 6 million more people off the tax roles. We're talking about eliminating the death tax or the estate tax, as some people call it. We're talking about phasing out significantly the marriage penalty tax. Nobody defends that - or people think we should faze that down - and finally we double the tax credit for children. So if you look at the components and you put those together, you're going to find that it is going to be hard to vote against it.
MARGARET WARNER: All right. Let's look at a couple of components here; can't go through them all. But, first of all, this budget plan has $100 billion set aside for a short-term tax cut, an immediate tax cut.
SEN. TRENT LOTT: Right.
MARGARET WARNER: How quickly will Americans see something and in what form?
SEN. TRENT LOTT: Well, that's something we want to do because we do want to give a little lift to the economy right now, as well as economic growth in the future. We do have that $100 billion. But the problem is, you know, this fiscal year is pretty short. I mean, we've got to do something here within the next two or three months, but we can take that $100 billion and use it both in this year and in the next year. It is over a two-year period. I believe that the people could begin feeling some effects on this - direct effect by the end of the summer, maybe early in the fall.
MARGARET WARNER: But you now folks at the Treasury Department, the Bush Treasury Department are talking about a rebate … just giving people a check.
SEN. TRENT LOTT: Well, that's one of the options we have, and because of the way we wound up having to write the budget resolution and depending what the Finance Committee does to get some immediate effect, we may have to do that. I would prefer to change the withholding tables and allow people to start getting the withholding benefit immediately and get the balance of it next year, but we'll have to work through that in Finance Committee. The main thing is to get some tax relief to working Americans as soon as possible that are paying income taxes. Now there are a lot of people that want to use the tax relief bill to give it to people that are not paying taxes, and that defeats the purpose. We should have programs for people at the low end that need help but not through the tax code of the federal contributor.
MARGARET WARNER: All right. Now, let me ask you about the ten or eleven year tax cut - the original one the president came in with. He wanted $1.6 trillion set aside for that - and there's really only $1.25 (trillion). What of that earlier list you gave me will have to be scaled back?
SEN. TRENT LOTT: I think there's enough to do what we need to do there. One of the problems is there are a lot of other good ideas of what might -- should be included - making the research and development tax credit permanent, education savings accounts -changing the alternative minimum tax, which is doing some things that nobody wanted to. It's affecting people in the lower brackets. But I think, you know, we may not get quite much as we had wanted for the marriage penalty -
MARGARET WARNER: Well, let me ask you -
SEN. TRENT LOTT: The rates may not be quite as low as we'd like them to be, or they may be fazed out a little slower. I don't like either one of those. I think the most important thing in terms of job security is helping people, the most people over that long-term, is the tax rate cut.
MARGARET WARNER: And speaking of the tax rate cut, there are a lot of reports out of the Senate Finance Committee. You're a member of that - but even a lot of Republicans on that committee don't want the top tax rate cut as much, from 39 to 33 ….
SEN. TRENT LOTT: All the Republicans want the top bracket down to 33 except two. There are two that would go along with it being a little higher, provided there were some other things done in the package. But I think that the President is absolutely right when he says that no American should pay more than a third of their income for federal taxes - for federal taxes - and then you've got to add all the others on top of it.
MARGARET WARNER: All right.
SEN. TRENT LOTT: We'll have to work through that. I mean, the President understands that this was a legislative process, the Finance Committee will have to do its duty in the Senate and then conference, but he in the end will get the core components he wants, and the rate cuts will be the biggest part of it.
MARGARET WARNER: All right. Let's look on the spending side. Now, the Democrats and some of those were in Kwame's piece right now, said there's really not enough for education spending, even what the President wants, because you have this 4 percent growth cap. There's not enough for the prescription drug benefit that the Senate itself voted for last month. There's no provision for greater defense spending, which Secretary Rumsfeld expected to come in and ask for. What about that?
SEN. TRENT LOTT: There's never enough spending for Democrats. No amount that you could offer would be enough to suit them. You've got to keep it in perspective here. They've been making speeches today -- they've said, oh, my goodness, this budget cuts everything. This budget is 4.7 percent increase over the current year, and the current year is at an inflated rate. The last two years of the Clinton Administration the Congress with the president had a spending binge - really did. I'm ashamed of it - but it is a fact - we ran that base line up, and it's 4.7 percent on top of that. There - there is at least an 11 percent increase of spending in this budget resolution for education and perhaps even more. I mean, how much is enough? Education - we've been spending billions of dollars since 1965, federal education aid. In fact, I think for Title I has been $136 billion over those years. Spending alone is not enough for education. We've got to have reforms, Margaret, and there's also a $500 billion rainy day fund, $500 billion in anticipated surplus that's not earmarked, and if we have emergencies, if we need more money for education, if we need more money for defense, there is that fund set aside. There's plenty of money here.
MARGARET WARNER: And Minority Leader Tom Daschle is going to follow you. So I want to ask you about something he said today. On the floor he called this bill, he said it's a nuclear time bomb for fiscal discipline in this country. Does he have a point? I mean, what if the -- an economic downturn really occurs, surpluses don't appear to materialize? What then? What does Congress do then?
SEN. TRENT LOTT: We can always come back and take another look at any of these things, but when you have an economic downturn, the one thing you don't do is raise taxes. If you go back and look at what the experts say and what we've done when the economy starts suffering is you cut taxes. But, Margaret, this is about fairness. The tax code is not fair. The tax code is too inflated. The people in America are paying too much for taxes. And I still have fundamental faith in the shipyard worker in my hometown and the people out there in the world that earn this money, and they can use it best for their children and their needs. Not the government.
MARGARET WARNER: The final question: New topic before we go. You're talking about tax relief but a lot of Americans may want gas price relief given the cost of gas. Is there anything Congress can do about that?
SEN. TRENT LOTT: In the short term it is going to be very difficult. You know, we could perhaps change some of the regulations that require all these reformulated gas versions in the West Coast, the 15 different versions of gasoline that has to be available out there. And that drives up the cost. But even that wouldn't have an immediate effect. I do think a lot more could be done on conservation. I would urge the president -- and I'm going to do it-to actually go on TV and say to the American people that we can save a lot of gas and a lot of electricity if we just think a little bit more about turning off the light, maybe not driving as much -- conservation can make a difference in the short term. In the long term, look, we've got to have more production, we have got to have more exploration, we have got to have more technology, we have got to have more retrofitting, retooling, technology; that's a big difference. We've got to have more lines, more refineries. We've got to have the whole package. We haven't done it because unfortunately the energy situation has been ignored for eight years -- really since the 1970s we've done very little. It's time we have a national energy policy.
MARGARET WARNER: All right. Senator, thanks so much. Thanks for being with us.
SEN. TRENT LOTT: Okay, Margaret.