House, Senate Advance Separate Tax Proposals
ANNOUNCER: From Washington,</s>THE CAPITAL GANG. MARK SHIELDS, HOST: Welcome to CAPITAL GANG. I'm Mark Shields, with Al Hunt, Margaret Carlson, and in Greenville, Mississippi, Robert D. Novak. Our guest is Republican Senator Trent Lott of Mississippi. Thank you for coming in, Trent.</s>SEN. TRENT LOTT (R), MISSISSIPPI: Glad to be back, Mark, and I tell you, I wish I could be with Bob Novak in Greenville, Mississippi and Julia Reed. What an event. She's getting married.</s>SHIELDS: OK. The House and Senate advanced separate Republican tax cuts, both different from President Bush's. The House in a party line vote passed $550 billion cut, reducing rates on capital gains and dividends.</s>REP. TOM DELAY (R-TX), MAJORITY LEADER: So embarrassing is the minority's lack of leadership on the economy that they didn't even propose a remedy to the economy until just yesterday.</s>REP. NANCY PELOSI (D-CA), MINORITY LEADER: The Democratic plan stands in stark contrast to the Republican recklessness. The Democratic plan, again, is fair.</s>SHIELDS: Senate Finance Committee approved a $350 billion cut with a partial exclusion of dividend taxes after agreeing to provide states with $20 billion. Meanwhile, the CNN-"USA Today" Gallup poll showed support for the Bush tax cut rising to 52 percent from 42 percent a month earlier. Al Hunt, is George W. Bush now winning the tax cut fight?</s>AL HUNT, CAPITAL GANG: I'm afraid in Congress, he is, Mark, though in the court of public opinion, some other polls would dispute that CNN poll. But the Senate bill, the Senate Finance Committee bill, is less bad than the House bill or the Bush plan, because two Republicans, George Voinovich, and Olympia Snowe, under tremendous pressure, held their ground. I'm told Olympia Snowe is more popular than ever in the state of Maine. But none of these bills are going to provide much economic stimulus, and they're going to create budget deficits that are even bigger, for the next decade. That's going to affect interest rates. It's going to exacerbate the income disparity in America. And I know someone here, not you or Trent or Margaret, might suggest that's Marxian, but that's the view of Warren Buffett, the greatest investor of our lifetime and</s>HUNT: ... Nobel Prize winning economist.</s>SHIELDS: A capitalist with a conscience, Bob Novak. Is that</s>ROBERT NOVAK, CAPITAL GANG: Just because a guy is a good stock picker, which Mr. Buffett is, does not mean he knows anything about economics, and Warren Buffett, read my lips, is a liberal Democrat. So don't pay any attention to that. The American people are going to like this tax cut. The House bill, as I said last week, is a good bill, and maybe better than the president's. The Senate bill isn't much, but they had to get it out of committee. If you think the people of Maine are happy with Olympia Snowe, the members of the Senate are not, because they had to bribe her with this ridiculous payment to the state. It has no part in the tax bill. But the bad news for you, Mark, and the bad news for you, Al, is there is going to be a big tax cut and it's going to help the economy and help George Bush.</s>SHIELDS: Bob Novak, not to correct you or anything, but I think Trent Lott might even point this out, members of the Senate don't vote for your reelection, but residents of your own state do, so Olympia Snowe is worried about being more popular in Maine, isn't she?</s>LOTT: Well, I'm sure she is. And there is no use focusing on how we got to where we were in the committee. This is certainly not a very good bill. One senator said, nobody's particularly happy with it, so it must be just about right. But we've got a long way to go. There are six steps along the way to getting a tax relief growth package. This is only the fourth step. I think we'll get something through the Senate. I think we will have a tax bill. This is not about tax reform, and this is not about trying to, in my opinion, to help states with some of the problems they have, which are legitimate, and some of which we caused (ph). This is about trying to find a way to give a little boost in the economy through encouragement to save, invest, sell and turn over things in the economy. This is not about tax reform, for instance, and it certainly should not be about tax increases. So I wasn't very happy with the bill we had, but we moved the process along.</s>SHIELDS: Margaret Carlson.</s>MARGARET CARLSON, CAPITAL GANG: Too bad it's not about tax reform. By the way, if it were to stimulate the economy, many of Bush's economists don't think so, from (ph) his administration. So for that reason, that's enough to be against it. There is a little -- there is a teeny, tiny pony in the manure that offshore companies that move offshore to avoid taxes will be taxed, that's a good thing.</s>CARLSON: .. and that the states, who, by the way, have to live under a budget, because they can't have deficit spending, are going to get some help, thank goodness.</s>LOTT: Not much.</s>CARLSON: Not much, not enough. First responders, though, in the war on terror should get some help. Olympia Snowe, a real champion, and Tom DeLay says Democrats should be embarrassed. I wonder if Republicans should not be about the crossfire they're having where the House is going after your institution, the U.S. Senate.</s>LOTT: Well, listen, I think the Senate is entitled to a lot of criticism. We haven't handled this very well, in my opinion...</s>LOTT: And not so much -- well, it doesn't help, and I went over to the House and said, you know, we need to find a way to get around that, but we've got to make sure they understand what we're doing and why we're doing it. And when you look at the substance of the bill in the Finance Committee, it was, you know, susceptible to some legitimate criticism. I want to talk about the aid to the states just briefly, though. If it's coupled with some reform, some flexibility and some offsets, maybe some of that should be done, but the states have continued to increase spending every year over the previous year significantly, while saying, oh, gee whiz, we're developing deficits. By the way, federal government, bail us out.</s>SHIELDS: Well, Bob Novak, Margaret does make an interesting point, though. At the time when the Republicans should be riding high, the president is 71 percent in the polls, and you've got Republican sweep last November, and boy, there is really some really bad (ph) fighting and the House Republicans are saying some ugly things I don't even hope that Trent Lott hasn't heard them about his colleagues in the Senate.</s>NOVAK: I think the senators, the Senate deserves that. You had a rookie majority leader to made a bad mistake. He made a commitment on a limit on what's going to come out of conference. I won't ask Trent to second-guess him on that, but a majority leader should never do that. That's what the back-fighting (ph) is about. Maybe he didn't tell the speaker of the House</s>HUNT: Let me quickly -- and also, I'll pay when you try to explain economics to Warren Buffett. That will really be fascinating to watch. This is supposed to be a stimulus. We have a bad economy. One of the best ways to do it is to prevent states from having to raise their own taxes, which is going to offset anything we do on a federal level. There are other things you can do. A payroll tax holiday you could do. You could extend unemployment assistance. We need to get this economy going. Take an even a bigger short term deficit. This won't do it, and it will exacerbate income inequality.</s>SHIELDS: Last word, Al Hunt. Trent Lott and THE GANG will be back with whether President Bush's carrier landing was nothing but pure politics.