Press Briefing by Ari Fleischer

The James S. Brady Briefing Room

12:36 P.M. EST

MR. FLEISCHER: One update for you sports fans. The President last night spoke with the head coach of the Baltimore Ravens, Brian Billick, to congratulate the Ravens on winning the Super Bowl, and I'll offer that to you.

I'm prepared to take any questions you have.

Q:The Lockerbie verdicted is expected in tomorrow morning at 5:00 a.m. East Coast Time. If the verdict says not guilty, will the administration consider that an end to the affair?

MR. FLEISCHER: I'm not going to speculate about a verdict that is not yet announced. After the verdict is reached, we will take all deliberate time to study the verdict, and if we have anything to say at that point, we will share it then.

Q:The President, in the leadership meeting, seemed to be sending a signal on taxes, that he could live with whatever the leadership and Congress decided to do, which -- the suggestion was that that would include breaking it up into smaller pieces and perhaps other things. Was that the signal that the President was trying to send?

MR. FLEISCHER: On the procedural question about how Congress should best move forward with tax cuts, there is obviously the well-stated desire of the House to break the tax cut to individual components, all of which would add up, to the President's proposal. And the Senate, on the other hand, the Senate is still working itsa way through and it looks like they're interested in doing it as one comprehensive tax plan.

What the President indicated this morning is he's going to work with the Congress to do it. The plan that we submit will be one tax plan, but then the path it takes after we submit it to the Congress will be largely decided by congressional leaders.

Q:Would we be wrong to interpret this as flexibility?

MR. FLEISCHER: It's procedural flexibility. I think what's important is the substance of the tax cut. And what the President believes is, we need to reduce marginal income tax rates, we need to eliminate the death tax, we need to reduce the marriage penalty, we need to have a charity tax deduction. A series of changes need to be made in the tax code to make it more fair and to provide tax relief to the American people.

Whether the Congress is best able to do that in incremental fashion that adds up to the President's plan or in one fell swoop is a matter that the President is happy to work with the Congress on. And in the past, frankly, the House has passed incremental pieces and then it's all gotten bundled together in the Senate and then sent to the President in one package. So I think Congress is still trying to figure out the exact procedures that they will use.

Q:Ari, related to all of this, your old boss, Pete Domenici, said today that it's monetary policy, it's a rate cut that is actually the best short-term fixer, his word, for the recession in the economy, also his word today. Which seems to suggest that even though there's a belief that a tax cut could be a more permanent fix, what do we do in the short term for an economy that continues to slow down, consumer confidence is again down, and as the President outlined today, energy costs are starting to put the squeeze on people?

MR. FLEISCHER: Well, I think there are three essential things you can do to help strengthen the economy, not all of which are immediate or short term. But cutting taxes is one of them, enacting a national energy security policy is the second, and also important, but long term, is improving education, because that too becomes an important part of America's economy.

Q:Right, but we're talking about short term. We're talking about the here and the now.

MR. FLEISCHER: Short term, the most important step you can take is to cut taxes to move forward on the President's tax plan. It is important, and it also sends a signal -- it will be a boost of confidence, we believe, for both markets and consumers, when they see that Congress is working with the President in a bipartisan fashion on the President's agenda, that the era of gridlock in Washington is coming to an end.

Q:That doesn't put money on the table, though, does it?

MR. FLEISCHER: That's why we're looking at retroactivity in the tax cut, we're looking at the phase in dates.

Q:But even that wouldn't get through; you could be in a recession before any of that happens, right?

MR. FLEISCHER: Those are the best tools available to the government.

Q:What about rates? What about his question about rates?

MR. FLEISCHER: I don't think you heard the President say he is going to respect the independence of the Federal Reserve. Clearly, that is one of the options they were looking at.

Q:No, no, the tax rate.

MR. FLEISCHER: Oh, the tax rate, I'm sorry, I thought you were talking about interest rates. And what's the question on it?

Q:Cutting the tax rate put more money in people's pockets sooner.

MR. FLEISCHER: I just indicated that's one of the issues we're looking at in terms of retroactivity or changing the phase-in dates on tax cuts. The President does believe that can be an effective tool to help create confidence in the economy.

Q:Ari, in regard to Congress, you're saying that he will not insist on a single tax increase, and that he would defer to members -- leadership, the leaders in Congress to decide whether or not to break it up or to keep it as a whole?

MR. FLEISCHER: I think he indicated flexibility. He's aware of -- as far as the procedure is concerned -- he is aware of the different prerogatives of each institution. In the House, because you have a closed rule on all tax bills that proceed on to the floor, they have one option available -- or they have a different set of options available than in the Senate. And so this is a traditional issue that the Congress has faced in recent years where the House and the Senate weigh in on how they think it's best to proceed.

The President's focus will be the bottom line. He wants taxes cut. He wants the marriage penalty reduced. He wants the death taxes eliminated. And he'll work with the Congress on whatever procedure best gets that job done.

Q:So he's going to let them tell him what the best way to do it is?

MR. FLEISCHER: He'll work with them. And again, the President proposes, and it's up to Congress to dispose. Tax bills originate, of course, in the House Ways and Means Committee, and then it moves through the House first before it can get to the Senate.

Q:On the inheritance tax, was it not the campaign program to eliminate over 10 years? Was that the right years?

MR. FLEISCHER: That's about correct.

Q:Was there any thought to moving that up as well?

MR. FLEISCHER: Well, again, all the phase-in dates that I previously discussed that applied to the marginal income tax rates, we can look at any phase-in date. When we submit the plan up to the Hill, obviously you'll know what decisions were made by that time.

Q:And do you expect to do that next week, or does that come with the budget -- when you make these decisions?

MR. FLEISCHER: I think some of the details will still remain, some of the more fine-print details.

Q:Does the CBO estimate on the surplus at $5.7 trillion say to this President there is no reason that he should back down on the ultimate size of the tax reduction package?

MR. FLEISCHER: Absolutely. We are seeing a government that is awash in surplus money, even with an economy that is softening from where it used to be. And that's a short-term softening. But especially in the out-years, we're seeing just an explosion in the size of the surplus.

It is believed that the CBO projection will be $5.7 trillion of surplus. In other words, the taxpayers will send the government $5.7 trillion more than the government needs to spend over the next 10 years. Approximately $2.5 trillion of that is Social Security money, which leaves approximately $3.2 trillion in surplus for other governmental needs beyond Social Security. The tax cut people have indicated they believe will be about $1.6 trillion, is a figure that I've read in the press, over 10 years -- $1.6 trillion out of a $5.7 trillion surplus. There's plenty of room.

Q:Why don't Democrats seem willing to give you more than $800 million?

MR. FLEISCHER: Well, I think we're going to have a lot of progress with the Democrats.

Q:Ari, in Europe children are dying of the mad cow disease, the human version of the disease. If government officials are asked about it, if that can be a problem in the U.S., they say it might, but it won't spread. Is this a sensitive issue, among other reasons because it would hurt -- badly hurt Texas cattle farmers?

MR. FLEISCHER: Food safety is always an important issue. And as you are aware, there has been some developments on that front, and I would refer you to the Department of Agriculture and the FDA for more of the details on how the government is proceeding. But it's always an important issue and is always something that government needs to concern itself with.

Q:Ari, may I follow up just on -- permits, also? Are you a beef eater, Ari?

MR. FLEISCHER: Am I?

Q:Yes.

MR. FLEISCHER: My personal eating habits will not be discussed from this podium, but than you for your concern. (Laughter.)

Q:Ari, is President Bush convinced he has all the Republican votes on the Ashcroft nomination, and does he expect to get some Democratic votes, or is he worried that the Democrats are consolidated in their opposition?

MR. FLEISCHER: No, the President remains confident that Senator Ashcroft will indeed be confirmed, and that it will be with the votes of both parties. Obviously, I don't think it will be an overwhelming number of Democrat votes, but there will be a number of them.

But the President does have concerns about delays in the process. The President does want to make certain that our nation's Cabinet is in place. There are important civil rights laws that need to be enforced, there are important anticrime initiatives that need to be enforced, and all of that depends on having an attorney general in place, or it can be strengthened, of course, by having an attorney general in place and by allowing the attorney general to appoint the number twos and the number threes at a department. That is a need of leadership, and so that's the source of the President's concern about any delays.

I would also note that the previous Attorney General, General Reno, when her nomination was up on the Hill, she was asked to respond to some 30 or 40 questions as part of her questionnaire. Senator Ashcroft has been asked to respond to some 300 or 400 questions as part of his questionnaire.

The President certainly hopes that in the cause of bipartisanship, there will not be any further delays. The vote appears to be scheduled for Thursday of this week, and we think it's important to get on with the people's business.

Q:Ari, in the past you have indicated that the tax plan that he's proposed will be essentially what is sent to the Hill. I'm wondering if, at this point, there's any consideration of adding other tax cuts to the plan, particularly the alternative minimum tax, which there is a lot of talk on the Hill that that needs to be changed.

MR. FLEISCHER: The President's tax proposal does address aspects of the alternative minimum tax problem. The alternative minimum tax is a tax that pinches an increasing number of middle income voters, depending on whether or not they take tax credits. For example, if you live in a high tax state, or if you have a lot of children, you would be more subject to the alternative minimum tax than other families and other states or with fewer children. And the President's tax cut, because we doubled the child credit from $500 to $1,000, addresses the alternative minimum tax problem for those families. But there remains in the tax code a structural AMT problem that was created essentially in 1993 when taxes were raised at that time. It is a concern. Many members of Congress have addressed, but the package the President sends to the Hill will be the one on which he ran.

Q:Does he have a preference on the withholding of taxes? I mean, there's some concern that if retroactivity could create the appearance to taxpayers of a sort of tax increase, depending on how it's done in the following year. You understand what I'm saying, in terms of --

MR. FLEISCHER: No. (Laughter.)

Q:Well, if it's retroactive -- by the time it takes effect, if it's retroactive in a condensed period in this calendar year, then you have to -- you make up -- you're trying to spread it across the year, and then by the time it's phased in over a 12 month period, it gives the appearance of being -- of more being withheld.

MR. FLEISCHER: No, no, I've never heard -- a tax cut is a tax cut, and that means people have less money to send to the government, more money in their pockets. Any issues addressing withholdings and phase-ins of course, that's a natural issue that people worked out with their employers, to make sure that withholdings are at the adequate level, the level that they are comfortable with.

Q:Ari, in all this flexibility on the tax plan, is he willing to negotiate the across the board nature of the tax rate reductions, or is it his way or the highway when it comes to the treatment of upper income --

MR. FLEISCHER: The President believes very strongly that taxes are too high and that the 15 percent bracket is too onerous on low-income Americans and needs to be reduced to 10 percent. He believes very strongly that no American should pay more than one-third of their income tax -- of their income to the government in the form of taxation.

Q:So he will insist that everybody gets tax relief.

MR. FLEISCHER: Ron, that is what he believes in, that is what he ran on, that's what he's submitting to Congress, and that's what he's going to fight for.

Q:Ari, does the administration agree with what Senator Domenici said outside, that a recession is already under way?

MR. FLEISCHER: I did not hear the Senator say that, so I'm not going to comment.

Q:Thursday, what world leaders are coming to this prayer breakfast, and if you could talk about if Kabila will be meeting with Bush or he will be meeting with Colin Powell?

MR. FLEISCHER: Right. The President is going there for the purpose of attending the prayer breakfast, and there are no plans to meet with foreign leaders at that meeting.

Q:Ari, you took Social Security out of the surplus for what's in play as far as the budget and taxes. Are you also doing the same with the Medicare surplus, or is that in play as far as the tax cut goes?

MR. FLEISCHER: As far as Medicare is concerned, the President believes that every dollar of Medicare should be used for Medicare. In other words, if we can use the Medicare surplus to help get prescription drugs to seniors, we ought to do that, as opposed to use Medicare money to pay off bonds or to pay money to bond holders. So the President believes that every dollar that comes in for Medicare should be used for Medicare.

Q:Is that the famous lockbox that he brought on to this?

MR. FLEISCHER: That's a lockbox of sorts, absolutely. It means Medicare money for Medicare. It's a Medicare lockbox.

Q:But it's not the same lockbox the Democrats were talking about. Weren't they essentially saying it will be used to pay down the debt and not for new spending, the surplus of the Medicare account?

MR. FLEISCHER: And that's why the President believes that people have money taken out of their paychecks for FICA taxes and other taxes under the promise that that money will go for their Medicare needs. And he thinks that that promise should be kept, that the money should go to Medicare.

Q:So he thinks it should go to new spending which is on prescription drugs rather than paying down the debt, is that --

MR. FLEISCHER: The President believes that every penny that comes in -- every dollar or penny that comes in to Medicare should go to Medicare.

Q:In the case of both the President's education reform proposals and the tax cut proposal it sounds like he is delegating a lot of the nuts and bolts work, the detail work to Congress. Is that going to be a style of government that we see in the future, or is that just because you're working under a tight time frame here in the first couple of weeks?

MR. FLEISCHER: Well, you're saying -- because what would lead you to make that conclusion?

Q:Well, when he submitted his education reform proposals, it was more of a blueprint, it wasn't a detailed legislative work --

MR. FLEISCHER: I see. That's --

Q:-- and in his tax cuts, he's also saying that Congress, you try to work out how to get this through.

MR. FLEISCHER: That's nothing new from the Executive Branch. That's actually more often the pattern than not. Congress puts out the specific bill language; Presidents typically send up specific proposals, which is what President Bush has done here. Legislative language is up to the Congress. There may be times when we decide to send up legislative language, but more often than not, that is the practice of the Executive. And he's setting the agenda; he's defined the issues and proposed the solutions. And we're going to work with Congress to get them done.

Q:On the marriage penalty tax, you said the President wants reduction. I thought he had talked about elimination.

MR. FLEISCHER: No, he has always talked about reduction.

Q:Ari, is the President contemplating holding a formal press conference in the near future?

MR. FLEISCHER: I have not really discussed it with him at any length. We're aware that there have been some requests for it. But obviously, he's been very accessible on a daily basis, taken questions at a variety of formats, but we just haven't gotten to that yet. It's day nine.

Q:Ari, is there anything new on the timetable for the President to address the joint session of Congress?

MR. FLEISCHER: No. Nothing new on that. I think the address will be, as I indicated previously, the most likely time sometime in February. I think it's more likely to be late February than early February. And I think you can also anticipate it will closely timed with the submission of the economic blueprint. But no dates yet.

Q:But you are committed to giving one, though?

MR. FLEISCHER: The President is. (Laughter.)

Q:Ari, the Baucus-Rangel meeting today, what's the purpose of that? Is the President trying to figure out what the traffic will bear in terms of tax cuts?

MR. FLEISCHER: That's part of his ongoing outreach to members of Congress. Yesterday he met with the two chairmen of the Finance and Ways and Means Committees; today he wants to meet with the ranking Democrats on the Finance and Ways and Means Committees.

They have important ideas. They have good ideas to contribute to the President's formulation of issues and to the ongoing development of policies once they're sent up to the Hill. So he wants to make the case for his policies; he's also going to be a good listener to their ideas.

Q:The tax cust is a topic --

MR. FLEISCHER: I think anything under the jurisdiction of those two committees could be the topic. I think certainly tax cuts will be one of those things. And I'll have to point out, those committees have very broad jurisdiction.

Q:Does the President feel that the capital gains tax rate is too high, and would that be a part of the tax cut?

MR. FLEISCHER: The President understands the important of capital formation. He understands the importance a capital gains cut can lend to the formation of capital to help keep the economy growing. However, when he put his tax cut together, he wanted to focus on the top tax priorities, as he saw them, and that is reflected in the tax plan that he plans to send up to the Hill. And he obviously is aware of different ideas that members of Congress have, but I'll leave you with that.

Q:Is he likely to oppose an effort to broaden the tax bill to include corporate --

MR. FLEISCHER: I just think it's much too early to start speculating about what's going to happen. Maybe we're going to have 100 percent of what he asked for sent back to him from the Hill. So let's wait and see what happens.

Q:Ari, have you thought about when the President might be doing a press conference?

MR. FLEISCHER: You mean since the last question? (Laughter.) I just answered that question.

Q:On the faith-based programs, one, do you have some sort of estimate of what the cost would be in terms of the tax deduction, and how much money would be available for community groups and faith-based institutions to compete for? Are we talking about new money and new programs or are we talking about something limited to the portion of charitable choice that you -- MR. FLEISCHER: There will be a briefing at 3:00 p.m. today, as I indicated earlier, and I think that would be an opportunity to ask that question. I do not know the dollar amounts yet.

Q:Ari, has the President looked at all at the reopening of Pennsylvania Avenue?

MR. FLEISCHER: He's had a couple discussions with various people about it from both sides of the issue, and he's made no decisions, no determination.

Q:Is it true that his mother was given a tape showing the possible damage if it were opened?

MR. FLEISCHER: No, no. I saw that report. It said that his mother gave him the tape to watch, and it just never happened.

Q:When is he going to make a decision?

MR. FLEISCHER: I don't think he's had a timetable.

Q:A question on the energy sector. You mentioned yesterday during the briefing that President Bush is planning to talk to President Fox about it. What exactly is in the mind of the United States? To increase the oil import from Mexico, or what's the idea?

MR. FLEISCHER: Again, on the agenda for the meeting with Mexico, I'm going to wait until the agenda is set before I weigh in on that.

Q:May I ask a question on the church issue?

MR. FLEISCHER: Yes.

Q:The President attended a church Sunday that is predominantly black and inner-city church. Is it very common that presidents go to churches that are great, no doubt about it, but by appearing there, they also can improve their political standing and push for their political agenda?

MR. FLEISCHER: No, I think that anybody who knows President Bush knows the importance of faith in his life. When he goes to church, he goes to church for reasons that have to do with faith, and nothing else.

Q:Is the President joining that congregation, **

MR. FLEISCHER: No, I think he is going to follow a tradition that has been done in Washington, that he's going to go to a couple different churches. He may ultimately settle on one church, I'm not sure, but that's going to be a private matter and a private decision. At the point if he makes it, when he makes it, we'll share it, but I would not be surprised to see him go to a couple different churches. The church was in my neighborhood, I want to point out.

Q:Did he like the gospel music there.

Q:Ari, any new calls to foreign leaders?

MR. FLEISCHER: The President mentioned this morning that he called the Indian Prime Minister.

Q:Are you going to have a press conference any time soon, Ari? (Laughter.)

Q:What will you eat before the news conference.

MR. FLEISCHER: Hold on.

THE PRESS: Thank you.

MR. FLEISCHER: Thank you everybody.

END 12:56 P.M. EST