Excerpts from the Press Briefing by Ari Fleischer, May 19, 2003 (Full Transcript)

1:20 P.M. EDT

QUESTION: I have a question on taxes, Ari. The first time around, the first tax cuts the President sought, he and the White House was saying that one of the reasons it was needed was to cut the surplus, keep revenues out of the hands of government to spend it. And now you're saying that over time the tax cut would lead to an increase in revenue. So which is the impact of the tax cut?

MR. FLEISCHER: Randy, you forgot to mention the other two reasons that the President always cited for the tax cut in 2001.

QUESTION: Well, I see discrepancy in those two, Ari.

MR. FLEISCHER: The President always said that there were three reasons for the tax cut in 2001, and this is his approach to economic thinking. And one was just as you indicate, at a time of surplus, which 2001 represented, to make certain that the money didn't get spent on bigger federal programs, that we all know that people here in Washington will do.

The second reason was as an insurance policy, as the President said, against economic slowdown. And thirdly, because, as the President enjoys saying, you've heard it before, it's the people's money, not the government's money, and they deserve to keep it. So in the current environment, the reason the President gave as an insurance policy against a downturn has turned out to be absolutely valid. The timing of the tax cut in 2001 helped bring the economy out of the recession of early 2001, and the economy has been growing slowly since then. In the President's judgment, it still needs an additional boost.

QUESTION: And does he still believe it will lead to an increase in revenues?

MR. FLEISCHER: Unquestionably. What it will lead to is increased growth. And as a result of growth, it brings in revenues to the federal government, and the deficit, which was created by the war and the attack and the recession, the deficit is indeed on a downward trend now. And that's what important. The deficit was on an upward trend; that is now coming back down. And that's what the President is focused on.

QUESTION: And secondly, does he support the sunsetting provisions in the -- on the dividend tax cut as a way for the Senate to meet its self- imposed limit on the size of the tax cut?

MR. FLEISCHER: We'll still -- we'll work with the Congress to see what the final shape of the tax cut will be.

QUESTION: Ari, there are reports that the Senate language on the tax bill on dividends was actually offered by the White House, basically. Is that correct?

MR. FLEISCHER: I haven't seen those reports, so I wouldn't want to comment on them. We're still working --

QUESTION: But was it offered by -- I mean, is that the White House proposal, to temporarily eliminate dividends?

MR. FLEISCHER: Well, the White House position was to eliminate dividends. That is our preference, and working within whatever the aggregate amount of the tax cut will be to help accomplish that goal for whatever period of time that is accomplishable. But I am -- I'm just not aware of that report, so I don't have anything to give you more specific on it.

QUESTION: Maybe this is a follow-up to April's question about when is there too much spin, but what did you mean that the deficit is on a downward trend? (Laughter.)

MR. FLEISCHER: If you look over time over the next several years --

good one, Keith, very, very well done. The out-years, the projection for the deficit in the out-years, that is indeed coming down, not going up.

QUESTION: But in the short run it's going up still.

MR. FLEISCHER: No, over the next several years. It's expected to peak and is now coming down in the out years.

QUESTION: Peak when?

MR. FLEISCHER: I think it's this very year.