Press Briefing by Ari Fleischer

James S. Brady Press Briefing Room

1:07 P.M. EST

MR. FLEISCHER: Good afternoon. I'll give you a report on the President's day, and I'm happy to take your questions. The President began with an intelligence briefing, followed by an FBI briefing. And the President departed the White House and went and participated in both a roundtable discussion and gave remarks on his growth and job package to employees of the National Capital Flag Company -- talking about the possibility of additional job creation at this company in Northern Virginia, as a result of the increased expensing provisions the President included in his economic plan.

Later today the President will have lunch with the Vice President. That is actually -- as we speak they are dining. And those are the reports on the President's schedule today. I'm happy to take your questions.

Q: What message does the administration want New Mexico Governor Bill Richardson to convey to the North Koreans?

MR. FLEISCHER: I'm not sure that's quite the issue. In this instance, Governor Richardson, who was the former Ambassador to the United Nations, received communication from the North Koreans in New York -- the North Korean Ambassador -- saying that he wanted to visit with Governor Richardson. Governor Richardson called the State Department. Under all our agreements with North Korea, in order for the U.N. Ambassador to the United Nations from North Korea to travel outside of New York, the State Department has to grant permission, per the agreements. So Governor Richardson, knowing that as a former Ambassador, contacted Secretary Powell. Secretary Powell said that he had no objections to North Korea traveling to New Mexico to visit with Governor Richardson. And we don't know what it is that North Korea wants to say to Governor Richardson; the only message that we expect is what America's position is, that we are ready to talk and that we will not negotiate. That's the United States position, and you should not see this as anything beyond that.

Q: Did you ask him to convey that message?

MR. FLEISCHER: Well, that's our message, and Secretary Powell just said to him, this is our message. The same thing in public that you've heard.

Q: But sources close to Richardson have said that the administration initiated some contact with him about a discussion with North Korea.

MR. FLEISCHER: The conversation as it was related to me was exactly as I laid out.

Q: Can we presume that the President is very happy that Mr. Blix says there is no smoking gun in the search for weapons in Iraq?

MR. FLEISCHER: Well, the problem with guns that are hidden is you can't see their smoke. And so we will still await to see what the inspectors find in Iraq and what events in Iraq lead to. The report that we understand was conveyed in the meeting up in New York this morning said that the work of the inspectors is still underway, they continue to gather information. And the report also cited a number of concerns and a number of problems in what Iraq has been doing.

Q: But it wouldn't be disappointing, would it, if there were no weapons there?

MR. FLEISCHER: We know for a fact that there are weapons there. And so -- the inspectors also went on --

Q: What's the search all about if you know it so factually?

MR. FLEISCHER: Let me cite to you what was -- what the inspectors have said at the United Nations. And this if from their reports. "In order to create confidence that it has no more weapons of mass destruction and proscribed activities related to such weapons, Iraq must present credible evidence. It cannot just maintain that it must be deemed to be without proscribed items so long as their is no evidence to the contrary."

Now, continuing in the words of the inspectors, "A person accused of illegal possession of weapons may indeed be acquitted for lack of evidence. But if a state which has used such weapons is to create confidence it no longer has any prohibited weapons, it will need to present solid evidence or present remaining items for elimination under supervision."

And they continue, "If evidence is not presented which gives us a high degree of assurance, there is no way the inspectors can close a file by simply invoking a precept that Iraq cannot prove the negative. In such cases, regrettably, they must conclude, as they have done in the past, that the absence of a particular item is not assured."

So while they've said that there's no smoking gun, they said the absence of it is not assured. And that's the heart of the problem. The heart of the problem is Iraq is very good at hiding things.

Q: The heart of the problem is there is a lack of confidence in anybody speaking the truth there, isn't that --

MR. FLEISCHER: Are you accusing the inspectors of not speaking the truth when they say that it's not assured?

Q: No, I think they're speaking the truth, and the country won't accept it.

MR. FLEISCHER: So when they say the absence of the particular item is not assured, you accept that as the truth. You agree with the President. I'm very proud.

Q: I mean, the point is, wouldn't you be happy if there were no weapons there?

MR. FLEISCHER: There would be nothing that would make the President happier than there being no weapons in Iraq. And the best way to make certain that there are no weapons in Iraq is for Saddam Hussein to disarm himself of the weapons he has.

Q: The inspectors have also said that there's no deadline to their inspections. They need time. Prime Minister Blair has said that they need time and space, that the January 27th report that they'll deliver should not be seen as any kind of deadline. And Secretary Powell said that, as well. Is this an indication that the President is willing to let the inspectors go at this for a good, long while?

MR. FLEISCHER: Terry, I've never heard the President put a time line on it. The President wants the inspectors to continue to do exactly what they are doing, which is to do their level best to carry out the search, given the fact that Iraq has thrown up hurdles and isn't complying in all aspects, continuing with what the inspectors have reported in New York.

They cited a number of issues that are real causes for concern by the United States government. And among the things that the inspectors themselves have said are discrepancies and inconsistencies. These deal with special munitions, illegal imports on a relatively large number of missile engines, contradictions involving the chemical agent VX, inadequate response by Iraq to provide the names of all personnel who have been involved in weapons of mass destruction programs. Indeed, the inspectors found that the list that Iraq provided of who has been involved in the weapons of mass destruction programs left out known names of people who have been involved in the weapons of mass destruction programs.

The inspectors themselves have concluded that Iraq failed to make a serious effort to respond to this information that the world has required. Inspections that the IAEA conducted, which the IAEA, per their rights under the U.N. resolution, asked to be conducted in private without any Iraqi minders were rejected. The inspections could only take place if Iraqi minders were in the room -- hardly a welcoming environment if anybody has information that they want to share. And so there were a number of things that were said that still give cause for concern in this report.

Q: But is the President willing to give the inspectors the time and the space that they say they need, the months that they say they'll need in order to determine the answer to the question?

MR. FLEISCHER: Again, I have not heard the President put a time line on it. The President has said that he wants the inspectors -- the President has said that he wants the inspectors to be able to do their jobs, to continue their efforts, and that's what we support.

Q: The head of the IAEA said today that the suspect aluminum tubes Iraq has obtained were not used for -- or not suitable for enriching uranium. Do you still maintain that Iraq has an active nuclear weapons program?

MR. FLEISCHER: Well, let's be clear on what he said. What Mr. ElBaradei has said is, "While the matter is still under investigation and further verification is foreseen -- so it's not a closed matter -- the IAEA's analysis of data indicates that the specifications of the aluminum tubes sought by Iraq in 2001 and 2002 appear to be consistent with the reverse engineering of rockets. While it would be possible to modify such tubes for the manufacture of centrifuges, they are not directly suitable for it. It should be noted, however, that the attempted acquisition of such tubes is prohibited under the United Nations resolutions in any case."

So it remains a cause for concern that they are pursuing acquisition of elements that are banned to them, that have purposes that still can be used for military purposes. And we do have concerns about their potential of developing nuclear programs. As you know, we have always been explicit on this topic. We have always said that we know that Iraq has weapons of mass destruction of a biological nature. We know they have weapons of mass destruction of a chemical nature. We have not said that conclusively about nuclear. We have concerns that they are seeking to acquire and develop them, of course.

Q: And do the Blix statement, the ElBaradei statement, do they make it harder for you to persuade world opinion that Iraq is a threat?

MR. FLEISCHER: I think when you hear the list of concerns that Hans Blix and Dr. ElBaradei have delineated about the failure of Iraq to comply fully with all their obligations, it gives ongoing cause for concern to the world. They have said that they have not gotten everything they have sought, they have not gotten everything that they need, that the inspections need to continue. And they also walked the United Nations through how they are now getting more material and more resources themselves so they can better do their jobs, which we were very pleased to hear.

Q: Ari, going back to the timetable, you said you've never heard the President lay out a timetable. But he said and you've said that January 27th if a very significant day.

MR. FLEISCHER: That's true.

Q: Is it a deadline?

MR. FLEISCHER: No, the President has not said it's a deadline. The President has said it's --

Q: What do you plan to determine by January 27th?

MR. FLEISCHER: We will hear from the inspectors. So we want to hear what the inspectors are able to find about their abilities in Iraq to find and pursue whether or not Iraq has weapons of mass destruction, and to ascertain what type of compliance Iraq has been providing to the inspectors.

Q: So your expectation is that they will be able to give you that information in just the next couple of weeks?

MR. FLEISCHER: It's an important reporting date. And we will see what the inspectors have to say in this three-week period.

Q: And if they say, we need months more to go do our jobs?

MR. FLEISCHER: I can't speculate. Let's see what they say.

Q: Well, presumably, we're not sending thousands of troops to the region, spending millions of dollars deploying them now if the administration is willing to let them sit there and twiddle their thumbs for six months while the inspectors do their job.

MR. FLEISCHER: I think the fact is that the presence of the military has an effective influence on diplomacy and making sure that Saddam Hussein understands that he needs to comply, because if he doesn't, the United States has the means and the ability to make him comply.

Q: So that's why the troops are there now, to send that message?

MR. FLEISCHER: It certainly does send that message. And the President has said that either Saddam Hussein disarms, or we will disarm him. It's a serious message.

Q: Why did Secretary Powell grant permission for the North Koreans to travel? Is there some expectation that this is a breakthrough or could be a breakthrough in easing the tension?

MR. FLEISCHER: No, no, I wouldn't say that. I think he did it because Governor Richardson, a former U.N. Ambassador, made the request and there was no reason to turn it down.

Q: On the interviews, one of the problems in the past, according to Blix, is what the concerns of the scientists themselves are. And in fact, in the two cases you referenced the scientists themselves asked for Iraqi government minders, perhaps out of necessity. How do they get around that fact? And what is the U.S. doing to help address some of the logistical concerns that Blix expressed about interviews with scientists, either outside the country or in private?

MR. FLEISCHER: Well, you've put your finger on one of the ongoing issues that make matters difficult for the inspectors. In fact, the IAEA in its report up in New York continued to say that, the IAEA's efforts to draw such conclusions will be greatly facilitated by the active cooperation of Iraq -- not only in continuing to secure access to locations, but importantly, in providing documentation, making available Iraqi personnel for interview and encouraging them to accept IAEA modalities for such interviews, and providing IAEA with any physical evidence which would assist in reaching its conclusions.

So IAEA has said to the United Nations Security Council that they require more cooperation from Iraq if they are able to make valid judgments about whether Iraq is pursuing nuclear weapons, and they have the tools available to them, per the United Nations' resolution, to interview Iraqi scientists, scientists who aren't on the list that Iraq provided, and to do so in a place and a time where they think they'd be most productive, not necessarily limit it to Iraq.

Q: Are there things that the U.S. is doing to facilitate these things? There were logistical problems, as Blix put it, sometime before and we have been led to believe that the U.S. was offering to eliminate any obstacles that might present themselves.

MR. FLEISCHER: Specifically, I don't know the answer to that question. And generally, the answer is, yes, of course, we're working with the inspectors as part of the international community to help them to have the tools to do their job. They also, as I indicated, have new equipment arriving in the country that makes it easier for them to do their jobs.

Q: One clarification on the President's stimulus plan, or one question for you on that. Senator Daschle said yesterday that the President's plan is obscene and something for which he should be embarrassed. The partisan lines seem to be pretty well entrenched, at least on part of the President's plan.

MR. FLEISCHER: I suppose you could say that some Democrats have an interesting way of wishing the President a happy new year. The President still is going to work with Democrats on the Hill, despite the fact that there very well may be some Democrats on the Hill who don't want to work with the President, at least on this issue.

Q: If I could ask you one other thing --

MR. FLEISCHER: Jim, we're going to keep moving. We're receiving complaints from the back of the room that we haven't been getting to them.

Q: That's because you slow down on the first row so much.

MR. FLEISCHER: The second row is slowing me down, too.

Q: I'll limit it to two. Is there not a contradiction, on the one hand, for the President to say publicly he will have zero tolerance for Iraqi non-compliance, and for the administration to say the burden is not on the inspectors to find things, the burden is on Iraq to show what happened to its weapons programs -- and then on the other hand, say, as you just said, that even the inspectors say Iraq left out names of scientists known to be working in the weapons program, has not accounted for mustard gas, other chemical agents known to be there in the last violation? Why doesn't the President say, zero tolerance, failed the test?

MR. FLEISCHER: Well, this is why I began this by saying, taking the broad view about what we learned in New York today. What we learned in New York today gives further concern for people who want to keep peace, because Iraq has failed to comply with the United Nations resolutions. The President has said that he will have zero tolerance for this. The President has also said that Saddam Hussein will have to figure out exactly what zero tolerance means and when he means it.

Q: The President -- on another issue, the President resubmitted 30 judges, I think it is, the Democratic Senate either refused to consider or refused to confirm. And people around he describe that as a decision by the President that he believes he was right and he wants his nominees given another chance in the Republican Senate. Why not do the same thing with Otto Reich? Why instead give him a presidential job that does not require Senate confirmation? Why not resubmit his nomination?

MR. FLEISCHER: Well, the President thought that the ideal place for Otto Reich would be here as part of the National Security Council. There are many people who work for the National Security Council who the President has to make a decision about. Does he want to have their expertise right here within the building, or does the President want to have their expertise at a different agency that would require Senate confirmation? So it's a different judgment about different individuals.

Dr. Rice, for example, of course, she works here for the National Security Council. There was no question of Senate process or Senate confirmation. His judgment was, he wants her advice right here close in the White House. Same thing with Mr. Reich.

Q: It's not a calculation to avoid a political appointment?

MR. FLEISCHER: It was principally because of what I just outlined. Obviously, there would have been some other issues that would have been raised, had a nomination gone to the Senate. But the principal reason was because of just what I outlined.

Q: Ari, will the administration be filing a brief in the Supreme Court affirmative action case?

MR. FLEISCHER: That is under review. This is something that the Department of Justice and the White House are reviewing as we speak and no decisions have been made.

Q: There's only a week left, so presumably they have to be writing this now. Can you give us a little more on where you are in the process?

MR. FLEISCHER: Well, the deadline is a week from today. And that's a lot of time.

Q: Why wouldn't you?

MR. FLEISCHER: Well, I'm not indicating whether the administration will or won't, or if we do, what it might say.

Q: But the signal landmark case on affirmative action in 25 years, and the U.S. government isn't going to take a position?

MR. FLEISCHER: I didn't say we would or we wouldn't. I'm just saying it's a matter that's under review, precisely because it is a landmark case and a case that's important and a case that the President, who is very sensitive to issues involving diversity and opportunity for all, wants to make sure that it's approached in a thorough and careful, deliberative manner. And so there is one week remaining on the court given deadline for when an amicus brief would have to be filed. And so it remains an issue under review.

And by the way, very good. The first row got another question in that will come out of the second row. Oh, wait, the second row is done.

Q: The President used the phrase, class warfare, again today, alluding to criticism of his tax plan. Why is it class warfare to point out that the overwhelming majority of the tax cut would go to the wealthiest people in the country?

MR. FLEISCHER: Well, I'll tell you, it's class warfare to say that there are wrong people in America and these wrong people are not deserving of tax relief. The President doesn't look at the American people and say, I'm from the government, I know who the right people are -- I'm from the government, I know who the wrong people are. The President believes that's a divisive approach, and the President seeks an approach that unifies people. And that's why he wants to work closely with members of Congress, just as he did in 2001, to try to arrive at an agreement so taxes can be cut. And he will fight for the plan that he proposed.

Q: Does that mean that anybody who disagrees with him is having a divisive approach?

MR. FLEISCHER: Well, I think that there's a -- there are ways of disagreeing. But to say that there are wrong people is certainly a divisive approach.

Q: Senator Chafee said today he's opposed to the President's stimulus plan. We had John McCain from the Republican side saying he doesn't think the balance is right. As far as I'm aware, there have not been any Democrats who have stepped forward and said, we like it exactly as it stands. Are we seeing warning signs on the Hill?

MR. FLEISCHER: It sounds to me like we're seeing 2001 all over again. When the President proposed his tax package in early 2001, there wasn't any Democrats initially who stepped forward and said they supported it. And as time went along, obviously, 12 Democrats, when the day came to raise their hand, raised their hand and voted for it. And so this is how -- exactly how the process works.

I think the big surprise would be when a Republican President announces a significant package of tax reductions to help get the economy growing, if a large number of Democrats stood up instantly and said they were for it. If they stood up instantly to say they were for it, they would probably be Republicans, not Democrats. So let the process take place, and I think we'll see ultimately what happens and who votes for it.

Q: Can I just ask you a quick question --

MR. FLEISCHER: And, just a point of fact, there have been -- if you take a look, there have been favorable statements made by some Senate Democrats, as well. So allow the process take place.

Q: Can I ask about nomenclature? I haven't heard you guys use the word "stimulus plan." Is that like --

MR. FLEISCHER: Stimulus plan. I've called it both. I've called it stimulus growth. I saw in the paper today that we're not supposed to use the word "stimulus" according to somebody. It's stimulus, it's growth.

Q: To follow on Mark's question, at this point in the process last year -- or in 2001, excuse me -- very early on there had been positive statements from Democrats. We all remember John Breaux and the role he played. He was -- and Zell Miller was out early. We don't have that this time around. I mean, is the President -- does the President realize or has he acknowledged that he's going to have a tougher fight this time than he did?

MR. FLEISCHER: I think really you are seeing something very similar to 2001. And that is, the President makes a proposal, Congress takes its time to review it, and as time goes along, support grows for the package. Let's wait and see. They haven't even had any hearings on it yet. So it's a beginning of the process and events will take place.

Q: A logical follow-up to that, though -- all of this, is that, does the President think the Republicans who have expressed a lot of reservations about this package are engaged in class warfare?

MR. FLEISCHER: Well, it depends on their rhetoric. And I haven't heard Republicans use the same rhetoric that some have used in the Democratic Party about it.

Q: Senator Chafee today --

Q: The National Governors Association, an organization of which the President once was a member, has issued a statement saying that they regret the plan because it doesn't provide states with the kind of help they think they need for their budgets. And the Democratic Governors Association itself is going to come up with its own plan this afternoon, again pushing for grants to the states to help them with their budgets. Why didn't the governor -- the President, who was a governor, not do anything to directly aid the states in this package?

MR. FLEISCHER: For the exact reason I gave yesterday and the day before on that topic. The President wanted the plan to stimulate the economy because he viewed that as the best way to help the states. As a former governor, he's very sympathetic to the needs of the states and understands the budget issues that they face. But his judgment was the best use of scarce federal dollars would be to stimulate and grow the economy and not transfer tax dollars from one taxpayer-funded government entity to another government entity.

Q: But didn't he see -- doesn't he see the governors as potential allies in this fight? I mean, he's used them in other legislative issues to help them out. Does he think he'll lose them here?

MR. FLEISCHER: He's made his judgments on the substance and he's done it for exactly the reason that I said.

Q: I'd like to go back to John's question about Otto Reich. In the case of the judicial nominees, the opposition is coming exclusively from Democrats. In the case of Reich, the opposition was coming from a very senior Republican, Senator Lugar, who is Chairman of the Foreign Relations Committee. Did that difference influence the President's thinking?

MR. FLEISCHER: Yes, I indicated the principal reason was because the President wanted his expertise here. I never ruled out that there could have been other factors, as well. And it's always important to gauge the inclinations of the Senate. And those are the reasons.

Q: So Senator Lugar's weighing did have an influence, did have effect?

MR. FLEISCHER: It's always important to be cognizant of the sentiment of the Senate and to see how widespread it may or may not be.

Q: Ari, as you probably know, the Energy Department put out a report today saying that fuel prices are going to keep going up for the next three months. That approaches the summer driving season when they always go up. What are your concerns about the impact on the overall economy since energy prices drive the economy, so to speak?

MR. FLEISCHER: The volatility of energy prices remains a very important issue that the American people and the American government have got to confront. We, as a country, have gone back and forth, alternating between periods of spiked up costs in energy to very, very low prices in energy. And while very high prices of energy hurt consumers, they spark increased production. Low prices, of course, are very good for consumers, but they ultimately decrease production. The best answer is a stable supply of energy that doesn't lead to giant gyrations of price. And that's why the President thinks is important for Congress to take up this year energy legislation that will make America not only more energy independent, but will make supplies more stable so we don't have to keep going from season to season with alternating highs and lows of prices.

It's important to note earlier this year Secretary of Health and Human Service Tommy Thompson announced grants of $545 million to help low-income seniors with their heating bills. This is going to be a very important issue. The President wants to make certain that the money is there for those who need it and the administration is already moving on that front.

Q: In the short-term, is this just a question of supply and demand, or might the President reconsider the stand that he's taken on the Strategic Reserve?

MR. FLEISCHER: The administration always monitors the Strategic Petroleum Reserve, given supply, demand issues and the purpose of the Reserve, which is to respond to emergencies. You can be assured that every day it's something that is monitored and is under review. There are no changes in the decisions that have been made.

Q: Ari, a couple of Senators, including Tom Daschle, have indorsed the filibuster to block the -- any kind of a vote on Judge Pickering. Would the President drop that nomination if it appeared that it was blocking progress on other aspects of his agenda?

MR. FLEISCHER: It's hypothetical. I think it's important to let the role of the Senate take place. It's unfortunate if people are already, on the second day of the Congress, talking about filibustering. The President would hope that wouldn't be the case. But the process is just beginning. The Judiciary Committee will begin its work on this nomination as well as all nominations.

Q: Specifically, is it considered class warfare to point out that most of the tax cut benefits go to the wealthy, as opposed to the less wealthy? And can you give us what the President considers a working definition of what class warfare is?

MR. FLEISCHER: First of all, it's inaccurate to say that the benefits will go to the wealthy.

Q: Regardless of whether it's accurate or inaccurate, if you think it is, is it class warfare to point that out?

MR. FLEISCHER: Well, I think it's inaccurate. And because it's inaccurate, it is used in the political lexicon as a way to divide and to play class warfare in an effort to portray some Americans as unworthy of tax relief and other Americans as worthy of tax relief based on their class. That is class warfare, in the President's judgment.

Q: So someone who legitimately feels that way, they may be mistaken, but you're saying they're not mistaken, they're using it for their own political purpose?

MR. FLEISCHER: The President defines it as class warfare, yes.

Q: You said that the President is very sensitive to issues regarding diversity. Is it possible that lingering raw feelings over the Lott debacle are a factor in your cautious approach on whether to weigh in

on the affirmative action case?

MR. FLEISCHER: No, I think it's fair to say that the President approaches this issue the way he has a governor of a very ethnically diverse Texas, as somebody who was very sensitive to the importance of issues involving race and diversity and opportunity for all. I think I said diversity and opportunity for all. That's how the President approaches this. He approaches it out of a lifetime of care and concern on these type of important, sensitive issues involving civil rights. And that's how he approaches it.

Q: Setting aside the affirmative action case for a moment, or whether he's going to weigh in on it, does the policy of adding 20 points to minority students, does that comport with his policy of affirmative access, or does it contrast with it?

MR. FLEISCHER: Well, that's what is exactly under review among a number of other factors in the current case pending before the Supreme Court. And I think that's the type of thing that the deadline is next week for weighing in on any type of amicus curai, and we'll wait and see.

Q: It would seem on its face that adding 20 points to the score of blacks and Hispanics and not giving those 20 points to whites would, on its face, not be consistent with the President's policy. You're saying it might be?

MR. FLEISCHER: Bill, it's under review and we'll know when the review is complete.

Q: Does the President embrace the concept of the progressive taxation? Does he feel that a progressive system is somehow inherently unfair?

MR. FLEISCHER: No, he does. And, in fact, one of the things that is notable about the plan the President announced yesterday, or two days ago, is the President's tax proposal makes the tax code even more progressive.

Q: How does it do that? It flattens the rates.

MR. FLEISCHER: Because the share of taxes paid by people at the top actually goes up. Because as you remove people from the bottom of the roles, thanks to the child credit, thanks to the acceleration of the income tax rate reductions and the expansion of the 10 percent tax bracket, you have fewer people actually paying any taxes at all at the bottom. Therefore, the burden that is left is shared increasingly with those who remain at the top.

So the statistics, the facts of the matter are -- and I don't think even the Democrats dispute this -- that the burden of those who pay taxes actually shifts so the upper-income groups pay a higher percentage of the taxes paid.

Q: Isn't it fair to say, though, that when the Democrats criticize this particular tax plan, they're criticizing on the grounds that they find it offensive to their notion of progressive taxation?

MR. FLEISCHER: I'm not -- if the Democrats want to make that the case, they have every right to do so. If they want to say, we oppose your tax cut on grounds of progressivity, I suppose they can do that. But as I just indicated, this plan the President announced makes the tax code even more progressive.

Q: So defending progressivity can be interpreted as class warfare?

MR. FLEISCHER: Well, I think when you say that there are wrong people in America, and I'm from the government and I know who the right people are and I know who the wrong people are -- and the division between America's right people and wrong people is the fact that they may be successful in life, the President judges that to be class warfare.

Q: Ari, can I change the subject to Mexico? Probably you read an article in The Washington Post in regards to Mr. Jorge Castaneda, the Foreign Minister of Mexico. He's resigning to his position in the Mexican government, apparently because he's frustrated for the lack of interest of the U.S. government to resolve issues like immigration and other priorities that seemed to be at the beginning of -- when President Bush came to the White House.

MR. FLEISCHER: Well, number one, the President has always enjoyed his relationship with Foreign Minister Castaneda. And he looks forward to the appointment of a new foreign minister because the relations between the United States and Mexico remain a top priority for the President, a very important matter.

There is no question that September 11th had an impact on some of the progress that was being made between the United States and Mexico on immigration issues. And like many things that happened with the attack on our country on September 11th, the President regrets that that was one of the consequences of it. It clearly has made the ability to change some of the immigration procedures that the President had sought to change harder to do, harder to enact into law. For example, the question of 245I extension -- even something as simple as that, where there should have been and was widespread bipartisan support, failed to take place. So the President wishes him well.

Q: Ari, has the President personally expressed any frustration with the way Prime Minister Sharon has prevented the Palestinians from discussing some of the issues that had been close -- that have been important for the President, the road map and the reform of the Palestinian Authority, which was the object of their going to London?

MR. FLEISCHER: Well, the President does believe when he talks to Prime Minister Sharon about this, that it is very important for reform of Palestinian institutions to continue. Israel has an important stake in making certain that these reforms do develop, and that is part of the overall approach to peace in the Middle East. The President believes that it's in the interest of all parties in the region.

Interestingly, the Arab neighbors continue to be very helpful in trying to achieve reform of the Palestinian institutions. That probably is the single best way, in the President's judgment, to improve the lives of the Palestinian people.

Q: Secondly, Ari, Turkey has indicated that they will not let at this point U.S. bases be established there. You had the red carpet treatment from Mr. Ervogan several weeks ago, and he indicated that Turkey may change its position. Now public opinion is very much against any military action in Iraq and the government has taken consideration for that. Isn't this coalition which was envisioned in the beginning kind of falling apart with the Turkish situation?

MR. FLEISCHER: I would say that the United States and Turkey have a very common interest in making certain that any security threat from the Iraqi regime is neutralized. And we have an interest in working together to foster political and economic stability in the region. The United States and Turkey have long enjoyed a very healthy and good strategic relationship, diplomatic relationship, and economic relationship. We continue to coordinate very closely with Turkey on the best approach to issues in the region and we will continue to do so.

Q: Ari, Prime Minister Blair is facing growing dissent within his own Labor Party over possible military action with us against Iraq if there is no actual smoking gun. Are we concerned that this dissent could bubble over and in some way hamper or restrict our options of dealing with Iraq?

MR. FLEISCHER: No, I think the United States and Great Britain have been working shoulder to shoulder on a common approach to confronting the threat to peace that Iraq presents. The President continues to work very closely with Prime Minister Blair. He remains a very good ally, a very good representative of the people of Britain, all the people of Britain, and we will continue our relationship. It's been a very healthy and productive one for both sides.

Q: -- that the time that is elapsing is really an ally or a foe in dealing with Iraq? It seems as we go along further and further down the road, any --

MR. FLEISCHER: I'm really not sure that, when you talk about the time elapsing, that the President never said that there was a timetable here where on January 9th something had to happen or not happen. That's not how the President has ever approached this. The timetable is actually unfolding very much as the President sought when the President went to New York, I think, on September 12th and went to the United Nations. The inspectors have returned to Iraq; they are in the middle of conducting their business. And the President is appreciative to them for their efforts.

Q: Ari, what is the President's reaction to the Circuit Court of Appeals ruling yesterday that some prisoners can be declared enemy combatants with minimal judicial review?

MR. FLEISCHER: All details of the opinion are still being reviewed, but the President is pleased that once again the courts have recognized that the President has the constitutional authority to direct the military to detain unlawful combatants, to protect the American people during this war on terrorism.

Q: When you say that the President's proposal would make the tax system more progressive -- is that still the case when you factor in the effects of eliminating the tax on deductions and total repeal of the estate, is that still the case then?

MR. FLEISCHER: Correct. Yes, that's an accurate description of the proposal in its entirety. It won't come as a surprise to anybody who follows tax policy, frankly. When you remove people who pay taxes from the bottom, even if you diminish the total amount of taxes that come in from all, the removal of the people at the bottom means there are millions now who will no longer be paying income taxes. The burden of that which remains, even paying a smaller amount of total tax, falls, therefore, more heavily on the top, because it's the top that remain. That's the definition of progressivity.

Q: I understand that, but that remains the case even when the estate tax is totally repealed, even if you eliminate taxes on dividends, that's still the case.

MR. FLEISCHER: That's correct. Let me address one thing about why this issue about who benefits from tax cuts, I think, is such a different issue in Washington than it is in the real world. If you make $30,000 a year, and you pay, for example, $2,000 in taxes, and you receive a $1,000 tax cut, you just received a 50 percent cut in your taxes. A thousand dollars to somebody who makes $30,000 a year means all the world to them. It is a huge difference in their life.

Take somebody toward the top end of the scale, somebody who makes $200,000, and they pay $50,000 in taxes. To begin with, they pay far more in income taxes, a point which opponents of the President never make. They pay far more in income taxes than others who earn less. They receive a tax cut that in dollar amounts may be larger than somebody who receives less. To them, that tax cut won't change their life as much as it does somebody who doesn't earn as much. Their life will change more so, more beneficially, than somebody toward the top.

These are the real-world differences about what amounts of money mean to people at different walks of life. The President's point, though, is it's important to stimulate the economy and to create opportunities for growth and for jobs. And that's why the President has approached it the way he has.

Q: Yesterday, in the driveway, Nancy Pelosi suggested that one of the problems with the dividend tax cut is that in some cases, where companies do not pay taxes themselves in any given year, that instead of having -- eliminating the tax so that you don't have double taxation, you would have actually zero taxation. I gather there is part of the administration's plan that aims to avoid that. Can you explain that?

MR. FLEISCHER: When you start to look at some of the technical language behind the way the individual dividend tax cut would work, corporations in which their income taxes would put them in a position where they would not be paying taxes, would not have this revision applied. This gets deep into the technicalities of exactly how tax transactions work. The Treasury Department has been briefing on it, and I think they have all the information, they'd be happy to share it.

Q: But doesn't that mean that, in fact, some taxpayers who receive dividends would find that they are not free of taxes because they would be taxed if the company was not paying taxes in the first place?

MR. FLEISCHER: As a general rule, the provision of the tax code would be eliminated. As always with the tax code, you still have to see footnotes. It's, unfortunately, the reality of the tax code.

Q: Ari, why did the administration decide not to accelerate the estate tax --

MR. FLEISCHER: Because the purpose of the package that the President announced was, again, to create opportunities for growth and to stimulate the economy. When you provide people with these earlier child tax credits, to modify behavior by getting people to spend more money earlier, the last thing we want to modify is behavior vis-a-vis death. It would not exactly be good tax policy to give people an incentive to die earlier. (Laughter.) So, therefore, estate taxes are typically not the type of changes you want to make in the tax code involving their effective date. If you know what I mean. (Laughter.)

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