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 Home > News & Policies > April 2003

Excerpts from the Press Briefing by Ari Fleischer, April 30, 2003 (Full Transcript)

12:32 P.M. EDT

You're saying now the President was trying to build up support for his tax cut with the Republican leadership. Alan Greenspan was on the Hill again expressing opposition to it, saying --

MR. FLEISCHER: That's not what he said.

QUESTION: He said his position hasn't changed --

MR. FLEISCHER: That's correct.

QUESTION: -- since he testified the last time. The last time he was not encouraging it when it passed. Does the President --

MR. FLEISCHER: That's not a fair characterization of what the Chairman has said about the question of providing tax cuts. He has had a very nuanced statement about it, but certainly he never said he was opposed to it.

QUESTION: He's expressed that this is probably not a good time to pass a tax cut of that magnitude, is my understanding of what he said.

MR. FLEISCHER: You have to take a look at what he said in its entirety, because he has expressed his concerns about spending and he has said that tax cuts have a stimulative effect on the economy, and he has expressed support for stimulus of a nature of the tax cut, without defining specifically what should be in it. So, again, I think you have to take a look at what he said in its entirety, but that's not a fair characterization.

QUESTION: Does the President feel that his case is somewhat undercut by the Fed Chairman's position, especially since the Fed Chairman, as the President suggested he will reappoint him --

MR. FLEISCHER: No, because that's not the Fed Chairman's position, as you've expressed it. So, no.

QUESTION: And to follow up on Tom's question on Greenspan's comments. He wasn't only focusing on the problem of spending. He was saying long-term deficits will impact long-term interest rates, and he said that while he has favored a dividend tax cut, he believes it's very important that there's a pay-as-you-go or discretionary spending restraint in order not to increase the deficit. And the Congressional Budget Office is saying this tax cut and the spending together will cause deficits long, far into the future. Doesn't that undermine the case of a tax cut?

MR. FLEISCHER: Well, the President believes very strongly that we need to reduce the deficit. His budget focuses on doing that. But the President also is very concerned about the state of the economy here and now, today, for the unemployed, for people who are looking for work and can't find it. And certainly, as unemployment still is at about a 5.8 percent level, what we've seen increasingly is people who are leaving the labor force and not even looking for work, which doesn't show up in the unemployment statistics.

The President has a lot of concern about those families, those people who want a job. And there are different issues to be approached, they're both important, about how to make sure there is no deficit. But his first focus is helping people to find a job. And he knows we can reduce the deficit over time. He also knows that the best way to reduce the deficit is to hold the line on spending. And he's very pleased that the budget resolution that was just passed does have a good, tight control over domestic discretionary spending. And the meeting the President had with congressional leaders today, they did talk about adhering to the spending discipline of the budget resolution.

QUESTION: So you disagree in the emphasis that Chairman Greenspan has put on get control of the deficit before you do anything on spending or taxes?

MR. FLEISCHER: The President wants to focus on growth, on creation of jobs for the American people, and on deficit reduction.

QUESTION: Republicans on the Hill are talking about a variety of mechanisms or gimmicks, some might call them, to keep the size of the tax cut down to a level that can pass the Senate. Among them is making some aspects of this temporary. Would the President be prepared to accept a tax cut package that made, for example, the dividend exclusion temporary or less than 100 percent?

MR. FLEISCHER: Well, there are a number of ideas that are now starting to publicly float off of Capitol Hill. I anticipate that there will be a markup in both the Ways and Means Committee and the Finance Committee next week, and so, obviously, this will come to some form of a concrete proposal prior to that. And that's one of the reason the President met today with the leadership. He'll have continued conversations. He's spoken with the leaders; many meetings take place.

And I'm not going to be able to negotiate the President's position publicly, but there are a variety of different ways when it comes to tax policy to achieve the President's goals and the President is going to work productively with the Congress to find those ways.

QUESTION: So he's open to these kinds of ideas?

MR. FLEISCHER: I'm not going to negotiate in public, but there are a good variety of ways to accomplish all of the objectives of the President's proposal -- including a 100-percent dividend exclusion.

QUESTION: You talked a moment ago about the problem of unemployment being an immediate problem and suggested that the deficit is something that would have to be dealt with a little bit further down the road. At what point does the deficit become an immediate problem? It's reaching levels that some economists say over the next year or two could even be 5 percent of GDP, which is typically a level at which other countries would be told they have a huge, major, immediate problem.

MR. FLEISCHER: Well, first of all, the trend line in the deficit is that it is going down. Second of all, you have to examine what caused the deficit. And it still remains numerically and empirically the fact that the deficit has been caused by the recession that took place beginning in January of 2001 as a result of the slowdown in the economy that began in the summer of 2000, or the stock market decline, which began in March of 2000. That, combined with the September 11th attacks and the war and the subsequent spending required to fight the war and to react to September 11th, is what caused the deficit.

That is empirically the case. Even if there had been no tax cut, for example, we would still have a deficit today, without the tax cut. So first things first is what caused the deficit. And clearly, the international situation, as it increasingly improves, helps to reduce the deficit.

But the greatest factor is the economy is emerging from a recession. Nothing hurts revenue growth more than a recession. And what's particularly interesting to note is that the greatest source of revenues from the dramatic upswing in revenues in the late '90s was something that people started to refer to as the market factor. The dramatic surge in the stock market led to a dramatic surge in revenues. And so much of this was the result of factors that are now increasingly fading from the economy. We hope the deficit will react to this.

QUESTION: But this, again, is $400 billion, $500 billion an acceptable level for this economy?

MR. FLEISCHER: Well, clearly, when it comes to fighting the war, whatever it took to fight the war was necessary to protect our force, to protect our troops and to achieve our objectives. The war is now -- as the President has said, the major combat operations -- the President has been told major combat operations have ended. So all these factors, the recession and the war and 9/11, have helped to drive the deficit to where it is.