THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NATALIE ALLEN, CNN ANCHOR: All right. Big day on Capitol Hill. Senators have just voted on their version of a tax cut after battling back and forth all week over the president's $1.6 trillion proposal. He's been working to try to get that figure passed, it's been in doubt. Let's get the outcome now with CNN Congressional correspondent, Jonathan Karl, who has been following the story.
JONATHAN KARL, CNN CORRESPONDENT: Very rapidly developing story here just in the last hour or so. What's happened here is the Senate has voted on a renewed-Republican budget outline -- a budget outline that does not include the president's $1.6 trillion tax cut.
Instead, Republicans came down to what they believed was the highest possible tax cut they could get, and still get the needed 51 votes in the U.S. Senate. That figure, $1.27 trillion, and it looks like it has passed. We're still waiting for a final tally, but so far, I've counted at least seven Democrats that have voted for this Republican tax cut, but a scaled-back Republican tax cut. One that is, as I said, $1.27 trillion.
What's interesting about this is this is almost exactly the number that had been proposed by Senator John Breaux, the Democrat of Louisiana, as a compromise proposal between the Democratic and Republican positions. Republicans had called this number far too low just over the last two days, but they came to a realization that there simply aren't the votes in the United States Senate to pass the full tax cut that the president wants.
That said, the $1.27 trillion tax cut that will be included in this budget outline is almost exactly the 1.3 trillion that George W. Bush campaigned on when he was for president last year. So we can certainly expect Republicans will declare victory here, even as they didn't get the full tax cut they were looking for.
Once this vote is finally made official, we're expecting to see Vice President Cheney and the top Republican leader, Trent Lott, come before the cameras and give us their recap, talk about it and expect them to declare victory. Again, victory not quite all of what the Republicans wanted, but a good chunk of it -- Natalie.
ALLEN: And will we, along those same lines, get some victory talk from some Democrats as well, because the president didn't get the 1.6 trillion?
KARL: Well, certainly, after Dick Cheney and Trent Lott come to the cameras, you can expect the very next person to the cameras will be the top Democrat in the Senate, Tom Daschle. Now, Daschle and most of the Democratic caucus voted against this compromise budget. They cannot declare a full victory, but they will certainly declare victory in terms of scaling back the tax cut.
But this tax cut, at almost $1.3 trillion, will have passed largely because those moderate Democrats that have been working with John Breaux. At least seven of them have signed on and supported a tax cut of nearly $1.3 trillion.
ALLEN: There were also just a -- one or two defiant Republicans as well, correct?
KARL: That's exactly right.
ALLEN: And how closely did President Bush work to try to get them on his team?
KARL: Well, they worked very hard. As a matter of fact, at the beginning of this week, they really thought they had at least 49 Republicans on board, supporting the whole full tax cut. But that did not turn out to be the case. They worked very hard on those renegade Republicans, Jim Jeffords of Vermont, and Lincoln Chafee of Rhode Island. They now seem to have both come on board this compromised budget.
ALLEN: Jonathan Karl, thank you. Announcing a budget 1.27 trillion tax cut, included in that budget passed in the Senate just now.
Now here's Lou.
LOU WATERS, CNN ANCHOR: And Major Garrett is over at the White House. "Scaled back" is not the words, probably, the White House would like to hear, Major. But Ari Fleischer said earlier today that the American people would get a very substantial tax relief, much like what the president promised during the course of his campaign. And as Jon Karl pointed out, 1.3 was the promise during the campaign, so they must be talking victory over there already.
MAJOR GARRETT, CNN CORRESPONDENT: Well, Lou, they're trying to put a victorious face on this, at least outwardly. But internally, White House officials admit this is a setback for this administration.
Only yesterday, the president of the United States exhorted the Senate again to approve the $1.6 trillion, 10-year across-the-board tax cut that he had presented to Congress. His aides were working furiously yesterday, last night, even this morning, to try to turn some votes, a couple of Democratic votes. Try again, for the umpteenth time this week to persuade those recalcitrant Republican senators, Jeffords and Chafee, to reconsider. It did not work.
And this is why this vote is so important. This is not the final vote on the tax cut. That will come several months hence. But for a tax cut that the president wants to be $1.6 trillion, the House and the Senate must agree on this budget blueprint. They must allow that number, 1.6, to come back, and if they don't, then the 1.6 is dead forever.
Right now, the Senate is at 1.27, the House is at 1.6. Typically, what Washington does when you have two numbers like that, is you split the difference. Well, any mathematician can tell you the difference is going to be less than 1.6 trillion, which means the president is not going to get the tax cut he asked for.
What you do, and what the White House is clearly doing at a time like this, is say, well, look how much progress has been made, look how far we have come. And it's true. During the campaign, the largest Democratic tax cut being proffered by anyone -- in that case, Al Gore, the vice president and the nominee of the Democratic Party -- was $500 billion. 1.2 or anything larger than that would certainly be more. That is what the White House is banking on now. But this is a defeat for the Bush tax cut proposal, at least of that $1.6 trillion. They will deny it publicly, but privately, they concede it.
WATERS: 1.6 trillion, or splitting the difference? Aren't we splitting hairs here? Is the number that important?
GARRETT: Well, many Republicans on Capitol Hill would say no, the number is not important. And I can tell you, Lou, there have been several conversations between senior Republicans in the House and the Senate with this White House, asking them not obsess over a number. Don't get tied down to a number. Speak the policy. Tell the American people what kind of tax cuts you are going to give them to change their lives. Build support for the policy, and don't get hung up on a number.
But that advice has not been heeded by this White House. The president, his press secretary Ari Fleischer, refer continuously to 1.6 as the president's goal. It has become the defining element of this tax cut debate, not the underlying tax cuts the president proposed. Many Republicans on Capitol Hill believe that was a tactical mistake, and one that may have contributed to at least this temporary defeat.
WATERS: All right. Major Garrett at the White House -- Natalie.
ALLEN: We have Republicans in the Senate gallery talking about this vote right now. Let's go to Larry Craig of Idaho who's speaking to the reporters.
SEN. DON NICKLES (R), OKLAHOMA: No...
ALLEN: He is just finished, and let's see -- it's Don Nickels is now at the microphone.
NICKLES: Some people called it tax cut. That's in the year 2001. And frankly, the way the rules are, it will be in 2001 or 2002. We only have four months left in fiscal year 2001. It will be very, very difficult to make that all apply, actually, to be accounted for in this fiscal year, so it will probably be a bridge between 2001 and 2002.
Actually, we beefed up the numbers both for 2001 and 2002. I think there is bipartisan agreement that we needed to accelerate as much as possible, as early as possible, a lot of the tax cut. And so, we will work on that. The tax cut as a whole, you know, we are talking about several years, but we are talking about significant changes.
QUESTION: Senator, do you have any details on how the rebate, or whatever you want to call it...
QUESTION: That's still to be worked out?
NICKLES: That's still to be worked out. The budget resolutions -- and this is the part that's reconciliation -- the budget resolution, by and large, sets the parameters in what you are going to do. And it sets the parameters on what we're going to do with tax policy. And the Finance Committee and the Ways and Means Committee now will be working more to find the compromise between the House and the Senate.
And so we will do that. We are at about 1.3, they are at about 1.6, and so we are going to compromise. And so, we will work that out. And then, it sets parameters on what you can do per year. We want to make sure that we don't touch Social Security and Medicare. So we will do that. And then we will try to enact tax policy to do it.
And we had no definitive decisions been made on how do we accelerate it. And there are different ways you can do it. Some people suggested that we print $300 checks and drop them from airplanes. Others people have said, well, maybe we can accelerate the tax cut and make the tax cut effective January 1 of this year, and so people would be getting refunds for next year. And so, that is -- that is what some of us would prefer to do. And so, how we implement it is going to be between the two tax committees.
QUESTION: But you think people can expect something this year?
NICKLES: People will have significant tax reduction, frankly, from at least the time the president signs the bill. And I say that -- it takes a little while to change withholding periods, and no decisions has been made -- some people, again, have said that we'll have a -- we will write a check for every person that has filed a tax return, and so on. Those decisions have not been made yet.
QUESTION: When would you expect to have a tax cut on the president's desk?
NICKLES: I hope by Memorial Day. Certainly, we'll have one passed by -- through the Senate by Memorial Day, and it would very much be our hope that we have good bipartisan work.
We did pass reconciliations instructions today. There was a major move against that, but we did. That enables us to move the tax bill expeditiously through the Senate. Not real expeditiously, so if we have bipartisan support, it may be that we can get it on the president's desk by Memorial Day. That's really our goal.
ALLEN: All right. Don Nickles talking about to win, there may be a tax cut to be signed by President Bush, and he predicts by Memorial Day. Let's go back now to CNN's Jonathan Karl, who has been following the debate all week on Capitol Hill, who has more for us now -- Jonathan.
KARL: Well, Natalie, the first thing to remember is they have not actually announced the final vote, but obviously it looks like the Republicans have clearly won on this, as the last couple of votes start to trickle in.
But what was interesting here is the numbers of Democrats who came on to support this compromised tax cut of $1.27 trillion. A tax cut much larger than that of what the Democratic leadership, represented by Tom Daschle, has been supporting.
You had Democrats, including John Breaux, who obviously had been pushing for this all along. Ben Nelson, who had been targeted more strongly than any other Democratic for a vote on the president's tax cut, voted yes. Also, Mary Landrieu, Bob Torricelli, Jean Carnahan, Blanche Lincoln, Tim Johnson of South Dakota, who is up for re- election next year in a state where Bush won decisively in November.
Also, two possible presidential contenders on the Democratic side for the year 2004, John Edwards and Evan Bayh both voted yes on this $1.27 trillion tax cut. We're still waiting for a few remaining votes, but it clearly looks like a victory for a compromise, a compromise that scaled back the president's tax cut, scaled it back from 1.6 trillion to 1.27 trillion, but also a compromise that was quite a bit bigger than the $800 billion that the Democrats have been hoping to see. So, it looks like really a true compromise.
Now, it looks like we do have a final vote, I am hearing. Here is Dick Cheney about to announce it.
RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: The nays are 35, and House concurrent resolution number 83, as amended, is agreed to.
KARL: 65 to 35. You have heard the official word from Vice President Cheney, there in his role. Here is Trent Lott. Let's hear what he has to say.
SEN. TRENT LOTT (R-MS), SENATE MAJORITY LEADER: Mr. President, I asked that at 2:00 p.m. on Monday, April 23rd, the Senate resume H. Con res 83, and the majority leader be recognized to make a motion for the Senate to insist on this amendment, request a conference for the House on disagreeing votes, their own, and the chair be authorized to point...
KARL: There you have Trent Lott announcing some housekeeping. The Senate will, after this is over, go into a period of two weeks of recess, but you've heard the official vote count announced by Vice President Cheney, Vice President Cheney there sitting in the presiding officer's chair, acting in his role as the president of the Senate, announcing the final vote of 65 to 35 in favor of the President Bush's budget outline.
The budget outline that includes a scaled-back tax cut of $1.27 trillion. Slightly less, again, than that 1.6 trillion that the president worked so hard to get, but something that Republicans clearly will declare somewhat of a victory, very close to the figure that President Bush had campaigned on all of last year. Back then, he was talking about the $1.3 trillion tax cut.
So, there you have it, but the budget battle really not over. This is simply a budget outline. Now the Senate will have to get to work on the actual tax cut itself, passing tax cut, the details of that tax cut, and a final vote on that would not be expected until probably some time in May -- Natalie.
ALLEN: All right. Thanks so much, Jonathan Karl on Capitol Hill, Jonathan reporting that compromise bill has been passed, something that the Republicans will be able to say that they succeeded at. However, the word from the White House is that there will be some disappointment that it's not the 1.6 trillion figure that President Bush had wanted.
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