Press Briefing by Ari Fleischer

James S. Brady Press Briefing Room

12:35 P.M. EDT

MR. FLEISCHER: Good afternoon. My apologies for running behind today. The scheduled half-hour meeting with the Prime Minister of Norway turned into an hour of meetings, they were enjoying each other's company so much. So let us begin.

The President began his day with a phone call with President Putin of Russia. The Presidents underscored their commitment to building a strong U.S.-Russia partnership. They stressed the importance of cooperating on post-conflict Iraq. And they expressed condolences over the terrorist attacks in Chechnya and Saudi Arabia, and noted the United States and Russia face a common threat from terrorism and proliferation of weapons of mass destruction. They look forward to seeing one another in St. Petersburg at the end of the month.

The President also had his intelligence briefing, FBI briefing. He has the meeting with the Prime Minister of Norway, where they talked about reconstruction in Iraq. They talked about bringing peace to the Middle East, and they discussed other areas around the world.

The President is scheduled to have lunch with the Vice President, and then he will also have the presentation of the Commander-in-Chief's Trophy this afternoon.

Two items I want to inform you of -- one is, in addition to the week-ahead that I provided to you earlier this morning, I do want to let you know I'm pleased to announce that the 2003 White House tee-ball season will begin on June 22nd. The first tee-ball game will honor the men and women of our Armed Forces and their families, who have made so many sacrifices to defend our nation.

The game will feature tee-ball teams from military bases, and the teams will largely be comprised of children from military families. The teams are both from Virginia for this June 22nd game -- the Fort Belvoir Little League Braves, and the Naval Base Norfolk Little League -- very proud to say -- Yankees. The game will be the tee-ball version of the famous Army-Navy game, and members of all branches of the Armed Forces will be included in the audience and in other aspects of the event. We'll have further details as we get closer to the date.

Finally, before I take your questions, the President would just like to note what a week of accomplishment it's been in the United States Congress. The Senate last night was able to pass the jobs and growth plan that the President has proposed, and the President also noted the passage of the emergency funding bill to fight AIDS in Africa and the Caribbean. The President is very pleased that the Senate has now taken action on both measures; the House has acted on both measures. It is just a short time before both arrive on the President's desk so he can sign them in whatever final shape they are in.

And the President is very pleased with the strong work the Senate did last night. He commends the leadership of the Senate and all members of the Senate for their good work. It's been a real week of accomplishment in Washington.

With that, I'm happy to take your questions.

Q: Ari, about an hour ago, the President filed papers with the FEC to kind of formally launch his reelection effort. Will this change anything in terms of his status as he goes around the country? And will he accept federal funds before the general election?

MR. FLEISCHER: Okay. Today, as you accurately point out, the legal structure for a reelection campaign was put in place as a result of the filing of what's called FEC Form One, and FEC Form Two. These are the legal forms necessary so that the structure around which a campaign will eventually be built can begin to take place. We've also announced today that Ken Mehlman will be the campaign manager of the presidential campaign, as well as announcing Mercer Reynolds as the Finance Chairman, and Jack Oliver as a Deputy Finance Chairman.

On the question of funds, it is not anticipated, no, there will not be matching funds received for the primary campaign.

Q: Will the President actually make an announcement that he's running for reelection? Or does this serve as that?

MR. FLEISCHER: No, this does not serve as that. This is the legal structure that is required so that grassroots activities can begin, and fundraising can begin. This is the required legal step that must be taken for other events to follow on. Now, in terms of any statement by the President, that's a follow-on event that would happen some time substantially down the road -- no time soon.

Q: You said no matching funds for the primary?

MR. FLEISCHER: Correct.

Q: Will the billing practices for his trips, Air Force One time, will that change in any way now since he's --

MR. FLEISCHER: No, that will follow the longstanding procedures that are in place, and that is guided not by the creation of this entity, but based on what type of events the President participates in. So if the President participates in anything political, of course, it would be paid for by non-taxpayer funds.

Q: The rules of engagement for U.S. forces have changed in Iraq with new orders allowing the use of deadly force against looters. Has the President signed off on this? Is this something the White House encouraged, given what many citizens of Baghdad and elsewhere in Iraq thought was chaos on the streets?

MR. FLEISCHER: Terry, the President's focus is on bringing security to the people of Iraq. And that's an area of marked progress in much of Iraq. There are still pockets inside Iraq, inside Baghdad, for example, where there is more room for more progress. And the President leaves it up to the, still, commanders in the field to determine the exact tactics to employ to preserve security. And that way the Iraqi people know they can go about living their lives with as great a resumption of freedom as is possible. And this continues to increase on a day- by-day basis.

Q: So, as far as he's concerned, this new policy of use of deadly force against looters is a good thing?

MR. FLEISCHER: Well, the President believes that it's best to leave these matters up to the people on the ground who are in the life-and-death situations where they know what level of force must be used to protect the security of people there. And I remind you that as we are working with the Iraqis on a new Iraqi police department, police offices throughout Baghdad and elsewhere, much of the patrolling, wherever possible, is done with Americans and Iraqis shoulder-to-shoulder.

Q: We went over this a little bit yesterday with Scott, but I wanted to ask you about it, as well. The use -- or abuse, I suppose -- of the Air and Marine Interdiction Coordination Center, now under the Department of Homeland Security, for partisan political purposes -- does the President support an investigation as to how, at a time of war, the Department of Homeland Security's resources could be abused like this by Republicans in Texas?

MR. FLEISCHER: Without accepting the premise on which you laid this out -- because I think the facts and the circumstances are all what need to be looked into -- I think you will find that the Department of Homeland Security does intend to look into the facts and circumstances of the request that they received.

Q: Is the President troubled at all that members of his own political party, at a time of war, days after Americans were killed in a terrorist attack in Saudi Arabia, would have the gall to use federal resources designed to protect the country against terrorists in order to pursue partisan political objectives?

MR. FLEISCHER: Well, again, I think that the facts and the circumstances involving any contacts that took place will be explored by the appropriate agency, in which this case is the Department of Homeland Security. They are doing that.

Q: He has no reaction to this?

MR. FLEISCHER: His reaction is, learn the facts and circumstances. And that's what the Department of Homeland Security is doing.

Q: Ari, if the President is as enthusiastic about signing an extension of the assault weapons ban as you've been up here at the podium saying he is, why don't we see him traveling the country, as he did promoting his tax cut, urging members of Congress not to let the bill die in the House?

MR. FLEISCHER: You remember in the State of the Union, the President stated that he had two top priorities, and they are economic security and national security. And in the principal actions the President takes that's exactly what you're seeing. As you know, the President's position on this goes back to the 2000 campaign where the President was on the record then -- his position remains identical to it now. And we'll continue to work with Congress and see what the will of Congress is.

Q: But why -- can you tell the American people why he is not actively promoting extension of the assault weapons ban and why he's not using his bully pulpit to encourage Congress to pass this, as well?

MR. FLEISCHER: I don't share your characterization of this. I think when the President speaks out and says what he is for, that sends a rather powerful signal to the Congress. Sometimes the Congress listens, sometimes they don't.

Q: But in other moments, though, he feels like he has to travel the country to keep hammering Congress over the head with certain issues.

MR. FLEISCHER: There's no question the two top priorities the President --

Q: Here's a bill that's going to die in the House. Is the President not concerned about that?

MR. FLEISCHER: As I was saying, the two top priorities the President has are economic security and national security, and will continue to travel the country, making his case on those issues.

Q: So this isn't a top priority for him?

MR. FLEISCHER: I think the President has made his position very clear, consistently, from 2000 forward.

Q: Prime Minister Sharon has so far ruled out curbing settlements. There's daily violence. Is Sharon doing enough to comply with the road map?

MR. FLEISCHER: Well, the President looks forward to his meeting with Prime Minister Sharon next week. There will be much to discuss. This is an important moment in the Middle East and it's a moment that the President is going to urge the Prime Minister, as well as the Palestinians and the Arab neighbors, to seize. The history in this region is one of statements that are typically made at the beginning of a difficult process that outwardly do seem to make it appear that there's a lot of room to go in reaching agreements, and in the Middle East there's always a lot of room to go on reaching agreements. But the President is determined to work very closely with the Israelis as a friend, as an ally, and as a nation that cares deeply and is prepared to act to protect the security of Israel, to help Israel so Israel can help itself.

Similarly, with the Palestinians, it's important the Palestinians continue their efforts at reform so that Israel knows that it has faithful interlocutors with whom to discuss peace and security, and real changes on the ground that allow Israelis to go to bed at night knowing that they will be able to wake up in the morning safe and protected. And then, the Arab neighbors, as well, have a role to play. And they have, indeed, been playing a productive role, particularly Egypt, Jordan, and Saudi Arabia.

And so this is a hopeful moment in the Middle East. Hopeful moments in the Middle East are often beset by question marks. It will be a good meeting next week. The President looks forward to it.

Q: Has Sharon done enough leading up to this meeting? Have you seen any positive signs from Sharon at this point?

MR. FLEISCHER: Well, I think, certainly, you've seen the Israelis have, per their obligations -- and they honor them -- released money to the Palestinian Authority that was money that properly belonged to the Palestinian Authority. This was tax money that came through Israel to be given to the Palestinians. They have taken those steps. We have urged Israel to continue to act in a way that says that people who come across need to be treated humanely; to remember the economic conditions of the Palestinian people. Israel, certainly, when Secretary Powell was there, released prisoners.

So this is a moment that the President wants to step back from, urge each party to focus on what it is that they need to do to advance the cause of peace, and not to worry so much about what the other party may not be doing, but to focus on what they, individually, need to do to advance peace.

Q: Do you see Sharon's initial comments on settlement as sort of an opening gambit, he wasn't serious?

MR. FLEISCHER: No, I just -- I think the President is not going to get drawn in to the minute-by-minute, play-by-play description of the latest words that anybody on any side of any issue utters here. That is a way to not achieve success in the Middle East. The way to achieve success in the Middle East, history has shown, is for the United States President to work diligently with the parties to continue to push them to help themselves. And that's what this President will do.

Q: If I could go back to the campaign for a moment. Can you give us an idea of how soon the President and the Vice President will begin to go out raising money for the campaign? And secondly, on the same topic, if there's an emerging Democratic theme as far as attacking the President, it's that he's presided over the loss of two million jobs, an explosion of budget and trade deficits, and a very bad economy in general, as well as having failed to adequately fund homeland security. How would he respond to those attacks in the context of the campaign?

MR. FLEISCHER: Well, one, it certainly seems from here that the emerging Democratic theme is to snipe at each other. There are nine Democratic presidential candidates running, and they seem to spend to be spending a lot of time dealing with each other, while this President is focusing on economic security and national security. And he will continue to govern. That is what he was elected to do. The Democrats have a lot of time and a lot of internal party politics that they have to sort out first before this even becomes a race with the President. That will happen, of course. But until then, this President does not have to deal with the politic side of the business.

There will be fundraising. And that is one of the reasons why this FEC Form One and Form Two was filed now. Historically, this is about the time that incumbent Presidents file these forms. I think if you look back, you'll see that this was done after President Clinton filed his forms, just shortly before President Reagan filed his forms, in their corresponding years in their presidencies. So this is about the time that this is begun by a historical basis.

So I think you can anticipate very shortly that a fundraising letter would go out to begin the effort to raise money required for a reelection, and there may be a presidential event to raise money not this month, but next month.

Q: If I can turn to a foreign policy question for a moment. You mentioned the phone conversation with President Putin this morning. Did President Bush bring up the question of Iran and its nuclear program, and Russian sales of technology to Iran for that purpose?

MR. FLEISCHER: That's a topic that the President has brought up often with President Putin, and is frequently brought up with aides to President Putin. It did not come up in today's conversation.

Q: Ari, first of all, the President proposed $726 billion in tax cuts. He only got half of it, less than half of it from the Senate. The Senate is putting a sunset provision on the dividend tax cut. How can you be pleased with this?

MR. FLEISCHER: Well, changes were made to the President's proposal. But all the elements of the President's proposal are still included in the Senate proposal -- in the Senate plan that passed last night. And the President is pleased by that, because progress is being made. The House version and the Senate version are now coming together and will be decided in a conference committee. And the President believes that what will come out of that conference committee is going to be good for the economy, good for workers, and good for the unemployed.

And so, therefore, the President looks at what is happening and he does see discernable progress on every element of what he proposed. And I can go right down the line and talk about how the marriage penalty is now going to be reduced, retroactive to January 1st of 2003; marginal income tax rate reductions, including taking the rate of the lowest tax payers from 15 percent down to 10 percent, retroactive to January 1st, 2003. For parents who have children, the child credit will be increased from $600 to $1,000 retroactive to January 1st, 2003.

On the dividend exclusion, there is a difference between how the House did it and how the Senate did it. Nevertheless, progress has been made. We still have issues we need to work out in the conference on that. And, of course, one way to help small business, which is one of the largest employers in our society, the expensing limits -- which are currently capped at $25,000, which means if a small business expends more than that they can't deduct it -- will be increased to different levels, depending on the House version or the Senate version, but between $75,000 and $100,000. So all of that is what the President proposed. Much of that is what is in both versions.

Q: On filing today, isn't there a danger in filing too early? The President makes himself vulnerable to attacks from all sides.

MR. FLEISCHER: Well, considering the fact that the Democrats loved to attack him even before he filed, I don't know that there makes any difference in when he filed. They attacked before, they attack during and they'll attack after. So I don't really see any connection there.

Q: Ari, when did the President make this decision, if such a decision ever had to be made? And how was that decision conveyed down the line, leading to the filing?

MR. FLEISCHER: The decision to work for the jobs and growth plan?

Q: To run for reelection.

MR. FLEISCHER: Oh, I'm sorry.

Q: Nice try. (Laughter.)

MR. FLEISCHER: Well, again, you have to keep in mind -- and FEC forms are available -- but this is the legal paperwork required in order to form the candidacy. And again, putting it in historical perspective, this is about the time that incumbents do file their papers. And the raising of money is a part and parcel of American democratic elections. And this President will raise money to take his case to the people.

But that's where we are now. The follow-on events, additional staffing, this is down the road. There will be additional announcements at some point, but it's not today. And in terms of the President actually declaring candidacy, making a speech, that's significantly down the road.

Q: Did he have some conversations with certain staff, you know, let's go do this next week?

MR. FLEISCHER: Sure, sure. You can imagine the President has talked to staff about this. And there are ideas, there are plans, and this, of course, led to the filing today.

Q: How far back do these discussions go?

MR. FLEISCHER: Well, I think the discussion specifically about filing these papers took place last week.

Q: Ari, I'd like to turn to the warnings that Steven Hadley delivered to the Crown Prince. Because about an hour ago AdI'll al-Jubeir, the advisor to the Crown Prince, said that Mr. Hadley specifically warned of an attack against the Jedawal compound, and the Saudis did not do anything about it, which he acknowledged. Was that a warning that Mr. Hadley did deliver?

MR. FLEISCHER: Let me say that I'm not going to discuss any individual's specific communications with Saudi authorities. But I will say that in this matter, as we continue to see Saudi cooperation, broadly speaking, in the war on terror, this attack does serve as a reminder to the Saudi authorities and to the Saudi government of the importance of taking on terrorism within their own country, because this terrorism presents a threat not only to the United States and to Westerners living in Saudi Arabia, but to the Saudi government.

And the reaction of the Saudi government has been good. I think they understand this. They understand the very real threat that this type of terrorism poses. And the Saudi government has been working well with the United States. They have an interest in rounding up these terrorists; we have an interest in rounding up these terrorists. And we will work our mutual interest together in a spirit of cooperation. We will continue to work with the Saudis to encourage them to do more, to find ways to be effective against terrorism, just as we do with all our allies around the globe.

Q: Just out of curiosity, why do you feel restrained from discussing a specific warning? Is there a reason that you could give us?

MR. FLEISCHER: Well, typically, as a matter of diplomacy, whether it's with Saudi Arabia or any nation around the world, we do have communications that I don't often get into when it comes to specific individual communications. And you can be assured that messages are given to multiple governments around the world, not just Saudis.

Q: Back to the conversation with the Russian President Putin. Did the topic come up about the plan to control the oil production of Iraq by Britain and the United States? And if so, has the President convinced President Putin to withdraw his opposition? And has any progress been made on the same subject with France and Germany?

MR. FLEISCHER: I think, if I recall, they spoke generally about the resolution that is still being discussed at the United Nations. That will come up for a vote sometime very shortly. And the United States continues to be optimistic about its ultimate outcome. We do see a different environment at the United Nations, particularly involving some of the nations that you mention, a will of the Security Council to work together this time. And that will be manifest in this resolution. We'll work together with our friends on it.

Q: Just a follow-up. Any hint from Russia or the other two countries of a possible veto on this resolution?

MR. FLEISCHER: You'd have to talk to them about it. It's not my place to say if that -- if even that were the case.

Q: Coming back to the tax cut issue, the President went on record saying that we need at least $550 billion to try to stimulate the economy. We've got a range now of $350 billion, $550 billion. One, how much pressure is the White House going to bring to bear on this process next week? And two, can we expect to see any more tax cut legislation this year, not in 2004?

MR. FLEISCHER: Well, here's what's guiding the President on this. His view is that the economy needs a boost, the economy needs a stimulus because we're not creating enough jobs. We are in a period of low growth in our economy. We're coming out of a recession, but we're coming out of a recession in an uneven fashion.

You can find quarters not too far ago where growth actually did grow above 5 percentage points. But there are too many quarters where growth grew only at about 1 percentage point, or just above 1 percentage point. That type of uneven growth does not lead to businesses, to manufacturers, to factories hiring workers.

The purpose of the tax plan is to create a permanent boost to the economy so the economy grows at a more sustainable rate. From the President's school of thinking, the higher the number, the bigger the boost. The smaller the number, the less the boost. The higher the number, the more jobs. The lower the number, fewer jobs.

So, yes, the President will push for the greatest amount of boost to the economy, therefore, the most jobs get created. We will work with the House and the Senate. There are certain constraints that each of those institutions is working under. And now they face the difficult work of working together to get the agreement. And we will be there to help them with that.

Q: But assuming that figure comes in closer to $350 billion than to $550 billion, what other actions could we see the President propose this year?

MR. FLEISCHER: Okay, and, one, I also need to point out, it gets a little bit into the technicalities of how tax legislation works, but you've got a net number and a gross number. So, of course, you can have a higher tax cut than $350 billion, depending on the offsets that are including. So you can have a gross number that's a higher tax cut number that has a stimulative effect, and assuming that the offsets are benign, then you can deal with that difference as a result of having proper offsets.

I'm not prepared to make any guesses about any other tax legislation down the road. Congress has some ideas that it wants to work on. Of course, there is an issue that's not necessarily -- depending on how you want to review it -- it's tax legislation that deals with our obligations to the World Treaty Organization involving foreign sales corporations, the FSCs legislation. That's tax legislation that does -- that the Congress is taking a look at working on this year. That's an important matter.

Q: Is the President's reelection committee, or campaign committee have a target, fundraising target, for the total amount of money that it wants to raise?

MR. FLEISCHER: Well, we'll see what the targets need to be. And I've seen media reports of $200 million. I have no earthly clue where those guesses or numbers came from. I can only assume that somebody outside of the White House, or the RNC, or anybody who might know what we're thinking, just took a look at how much the Bush campaign raised in the primary phase in 2000. And because campaign limits have been doubled, they doubled what we got in 2000 and said, therefore, it's $200 million. That's faulty. I would not go with that. It will be lower than that --

Q: But you don't -- lower than --

MR. FLEISCHER: Lower than $200 million.

Q: But more than it was last --

MR. FLEISCHER: Yes, I think that's a fair statement.

Q: So somewhere between $100 million and $200 million?

MR. FLEISCHER: I think that's a fair statement.

Q: Do you have a name --

MR. FLEISCHER: I think it goes under the very fancy name of Bush/Cheney 2004. Let me see what the papers actually said. Let me amend that. It is Bush/Cheney '04, Inc. And that's Inc. It's actually not spelled out, incorporated.

Q: How soon can we expect to see political spots on behalf of the President's reelection --

MR. FLEISCHER: I won't even begin to speculate. Right now, this is the building block phase, the legal phase, the fundraising phase.

Q: And at some point, will Karl Rove leave the White House payroll and go on to the Bush/Cheney '04 campaign?

MR. FLEISCHER: No, I would not anticipate that.

Q: Does that mean he won't be playing a role in the reelection campaign?

MR. FLEISCHER: No, I think that, as is traditional, there's areas in which people who, in performance of their White House duties, are able to play roles in campaigns, per the rules, per the laws as set out by the Congress.

Q: -- is on time and is not working for the government?

MR. FLEISCHER: Per the rules and per the laws established by the Congress.

Q: Is that you're understanding of the rules?

MR. FLEISCHER: I'm not the lawyer, so I couldn't tell you specifically.

Q: Ari, yes, I have two questions, Ari. The President, you said, is satisfied with his tax cut or job creation program. Is he totally satisfied with what Congress has given him as far as the AIDS initiative, help, you know, $15 billion? How is the campaign to get Priscilla Owen and Miguel Estrada, to get their vote? How is that going?

MR. FLEISCHER: That, clearly is a priority for the President. He will continue to push it, as you've seen in numerous events that the President has held, to make the case for the importance of confirming these judges. He thinks that they are well-qualified; the American Bar Association thinks that they are well-qualified; and the President will continue, continue, continue to make the case.

Q: Ari, there's word that the President, once again, -- a situation that looks like the University of Michigan case. There's some that are saying that the President does not approve of a provision in the energy policy act of 2003 that allows for under-served persons, particularly at historically black colleges or universities, tribal colleges, and Hispanically-served universities, to be able to work with the Department of Energy to learn science and technology. And there's an understanding that President Bush is against that.

How is President Bush meshing that with the fact that before he came into office, he said civil rights would be a cornerstone of his administration? And also, how is he meshing that with saying that everyone -- that he wants everyone to have a fair chance in life and at schools and different things, when affirmative action was meant to level the playing field to correct a wrong?

MR. FLEISCHER: If I'm not mistaken what you're referring to in this energy legislation is a statement of administrative principle -- administrative policy, or the SAP, that was issued in regard to this energy bill. And this deals specifically in this energy bill, unlike the President's position on higher -- funding for higher -- historically

black colleges and universities. And the energy bill, it deals specifically with set-asides and racial preferences.

And on this question, the President's views are very, very well-known. He supports aggressive efforts to reach out to minorities, to be inclusive of people of all races, provide equal opportunity. But he does not support quotas, preferences, or set-asides. He strongly supports increase the funding for historically black universities. And that is the difference. The SAP addresses technical issues in the energy bill that deal with set-asides.

Q: But isn't that a contradiction?

MR. FLEISCHER: No, it's a distinction, and an important one.

Q: Okay, but isn't it a contradiction that he would push forward to promote hundreds of millions of dollars for black universities, and also Hispanically-served universities, as well as some tribal colleges, and then not allow kids to go to the University of Michigan because of their admissions policy, as well as the SAP in the energy act?

MR. FLEISCHER: No, I think if you take a look at the statement that the President made in the Roosevelt Room when he announced his position on the University of Michigan case you'll find this is perfectly consistent with what he said, where he supports aggressive affirmative action outreach, affirmative access outreach, as he calls it, where he wants to make certain that universities are doing all they can to attract a diverse student body without engaging in quotas or preferences.

Q: -- last statement -- or the last question. Does the President feel that his arms of compassion, his conservative compassion has reached out to the nation's 36 million African Americans and other minorities? Does he feel satisfied with his work that he's done thus far, after saying that civil rights will be the cornerstone of his administration?

MR. FLEISCHER: You know, I think that those are determinations that others will make. Clearly, I think, from the President's point of view, he has run an inclusive administration, in terms of its policies and the message to the American people. He will continue to do that.

I think you will see that represented in the actions that have been taken through the Department of Justice in dealing with racial matters, in dealing with some of the most sensitive civil rights issues that have come up, in dealing with some of the issues in our cities that have come up involving police departments, the riots in Cincinnati, for example, and the successful way that was handled by the federal government. So the answer from this administration is emphatically, yes, and I think you will see that.

Q: I have two questions on taxes. The first is, a few minutes ago you said -- you declined to speculate on future tax cuts. But earlier today, you suggested that future budget submissions from this administration would contain tax cuts. Given the fact that only about -- of the President's budget this year, over a trillion dollars still hasn't even been considered by the Congress, will future budgets contain new starters of tax cuts, of will they just be --

MR. FLEISCHER: Thanks for raising that again. I want you to go back to exactly what I said this morning. When I talked about the budgets, I said the last three that the President proposed all contained tax cuts. And I said the President continues to talk about making certain that the tax cuts are permanent. I did not describe whether there would be or would not be additional future tax cuts. So to be precise, that's what I said this morning. And I can't speculate about tax cuts down the road other than making tax cuts permanent.

Q: And my second question has to do specifically with the bill that was just passed last night in the Senate. On Wednesday -- Tuesday, rather -- the President in Indiana reiterated his insistence that corporate profits -- that it's fair to tax corporate profits at least once. The dividend proposal that the Senate passed last night will create a scenario where a company that's not paying taxes to the government, but issuing dividends, would still be able to issue those dividends tax-free to shareholders. Is the President committed to the idea that corporate profits should be at least taxed one time before their dividends are passed on to shareholders?

MR. FLEISCHER: Well, in terms of the specific way that the tax legislation and the tax code interacts with dividends, in terms of the corporate profitability, this is a technical question that the Department of Treasury can better address when it applies to the dividend provision. Generally, of course, that's what the President believes. He continues to believe that. But there is a specific interactability among different provisions in the tax code that deal with profits and dividend exclusions. And you would need to talk to Treasury, because they're more expert than I am on that.

Q: But, more generally speaking, since the President has argued against this dividend -- double-taxation of dividends as a matter of principle for the last several months, if he gets a bill that doesn't -- that may actually eliminate the single taxation of dividends, that's something he can accept.

MR. FLEISCHER: You just rephrased your same question, but my answer remains the same.

Q: Just double-check, Ari. The Senate tax cut bill that was passed last night, the President called it a "little bitty tax cut" very recently. Does he still think that?

MR. FLEISCHER: Well, we'll see what actually comes out of the House conference. And this is why I indicated there's a difference between the net number and the gross number, and you have to see how that comes out, as well. We're not done yet.

Q: But the level that passed last night is still "little bitty," right?

MR. FLEISCHER: Well, the level that was passed last night looks like it's in the mid 400s as a gross matter.

Q: If you factor in the tax hikes that --

MR. FLEISCHER: That's why I said, as a gross matter. And so we're not done yet. We still have some issues to work out both on the offset side and on the actual tax cut side.

Q: Ari, the President is the most famous person on the globe today. And of course, no doubt about it --

MR. FLEISCHER: Well, I think some people would say Bono is more recognized globally.

Q: -- when I was in India.

MR. FLEISCHER: What's your question, Goyle.

Q: My question is that, of course, the credit goes to him for winning the war in Iraq and also standing against terrorism around the globe. Even though he has some idea of where Osama bin Laden and Saddam Hussein, but we still don't have them. And he is like a maharajah of this world today. So how does he feel?

MR. FLEISCHER: Well, I think the President thinks that we are in the thick of a battle against terrorism. It's a battle that we're winning. But like all wars, there are days that we win battles, and there are other days when our enemy is able to strike back. And our enemy obviously struck in Saudi Arabia. And we still are at risk in the United States; we still are at risk overseas. And that's why the President looks at this as an ongoing fight against terror to which he is committed personally, presidentially, and as Commander-in-Chief to achieving victory every day. It is not over, and we do have many risks that remain.

Q: Also on terror -- does the President or do you see an increased risk of terror this week, especially with the Sharon visit and Memorial Day? Do you expect the terrorism threat to be elevated?

MR. FLEISCHER: Well, I would never speculate about the color code. That is evaluated every day by the professionals on the basis of the information that they receive every day. And they're the analysts. But just as I said, risks remain.

Q: Ari, to this point the President has blamed the sluggish economy on an inherited recession and the war. Since it's apparent now that he's going to get at least some tax cuts, and as you've said, it contains his proposals, if the sluggish economy continues and it doesn't improve, will the President then take responsibility for that and stop blaming it on other factors?

MR. FLEISCHER: I saw a story last week that said that with this tax cut this means the President has responsibility for the economy. This President accepted a responsibility for the country on January 20, 2001. He accepted responsibility for it in all forms, whatever form it was in. And that is what happens when you're the President. And so I think it's a nonissue. The American people know who the President is. They'll make their judgments about factors at the appropriate time.

But when you take a look at what happened in the economy, talk to private sector economists, and they'll tell you that for a rare time the tax cut in 2001 was actually perfectly timed. It did help us emerge that fall from the recession that we were in. It did give a boost to the economy. And clearly, the first quarter of 2002, right after the tax cuts were received, was one of those quarters where the economy in greater than 5 percentage points for that first quarter. Now, the economy has been uneven since then, meaning that this, too, could be a perfectly timed tax cut to give that boost to the economy to help it to get going in a sustainable period of higher growth.

Q: So he anticipates that whatever comes out of Congress is going to be a boost to the economy. Now, if it fails to do that, what other thing can he attribute it to other than his policies aren't working?

MR. FLEISCHER: You're asking a hypothetical. I'm sure that if the economy is not strong a year from now you'll be asking questions about it.

Q: Ari, there are analysts -- back on the campaign -- there are analysts who say that before this President came to office, that the presidency has become a sort of permanent campaign, and that at least so far as the public events that the President undertakes, there is always at least a political element to that. How does the President think about that?

MR. FLEISCHER: Again, I think that you've got an abundance of historians and analysts who can share their perspective with you on this. But as any number of scholars -- as de Tocqueville has pointed out -- I mean, America is a very open democracy, and part of that open democracy is a government that does its business in front of the people, and the people make judgments. That's how it should work. What's the alternative? The alternative is not democratic.

So, yes, this President is going to do everything he can as the elected President of the country to implement good policy. And the American people will form judgments about what he does -- both in the war on terror, in the conduct of foreign policy, and in matters domestically, including the economy.

Q: And on a second subject, there were reports in the British press this weekend alleging that the Jessica Lynch affair was used by this administration, was manipulated in some ways, and that even, perhaps, the conduct of the rescue of Jessica Lynch was manipulated in some way for public consumption.

MR. FLEISCHER: I haven't seen those reports. And I don't comment on things I haven't seen, especially -- there's all kinds of different tabloids.

Q: In a couple of weeks, the President will be at the G8 summit with some of the stauncher opponents of the Iraq war. How important is it to the President to get the issues at the U.N., the current resolution out of the way with a minimum amount of argument or fight before he goes off to that summit?

MR. FLEISCHER: Well, again, the timing, of course, is to help the Iraqi people. That's what this is about. This is not about the timing of the G8. This is about how to help the Iraqi people as quickly as possible so they can assume control over their own future and their own lives. And there is no reason to impose sanctions on the Iraqi people anymore. Sanctions should only have been imposed against the Iraqi regime, which is no longer with us. And that's the President's approach to this.

So the President looks at this as -- the oil-for-food program expires at the United States on June 3rd, so that the United Nations knows it is up against a June 3rd deadline to get their business done. And the faster it is done, the quicker, the better, the more relief for the Iraqi people.

Q: What was the process that resulted in breaking Germany away from the axis of opposition to get them to support lifting sanctions against Iraq?

MR. FLEISCHER: I did see a story on the wire this morning that said, quoted the German leader as saying that they would oppose sanctions -- or they would support the lifting of sanctions in Iraq. And I do not speak and I do not try to guess the motives of other countries. But as the President said, we are operating now in a different environment at the United Nations Security Council, and he's appreciative of that.

Q: Until recently the President called for a tax cut package of at least $550 billion. Lately you're just calling for a package as robust as possible without giving a price tag. I'm wondering why the administration is no longer setting a figure, and whether the $450 billion that you mentioned a moment ago would be adequate, whether or not it's a gross number, or a net number?

MR. FLEISCHER: I think I said mid-400s. And the President sets a standard that he hopes that the Congress will live up to. The President sets that standard because he thinks it is the best policy for the country. In our constitutional system, the Senate and the House are also qualified to discuss what they think is the best for the country. And at the end of the day, the President wants to get something done for the country.

Now, you can say a President -- after how he takes a stand, should never change from that stand, should only adhere to that stand, and, therefore, not get compromises reached in order to make progress. If the President came to the conclusion that there was insufficient progress, he would say so. He see progress being made on the tax legislation on Capitol Hill and he's grateful for it. He thinks it's good for the country and good for the economy.

Q: Does the President foresee the Iraqi oil fields and industry being controlled by the new Iraqi government or by private entities?

MR. FLEISCHER: These will be decisions that the Iraqis will make for themselves as they work toward their future. And obviously, different countries have different experiences with private ownership of means of production. And these will be matters that the Iraqi people eventually take final decision-making for.

Q: Is the President considering inviting Abu Mazen, the Palestinian Prime Minister, to Washington?

MR. FLEISCHER: Yes, the President said publicly, oh, a couple weeks ago, that he would be inviting Abu Mazen to Washington to meet with him at the appropriate time.

Q: When is that?

MR. FLEISCHER: I think, as with many visits with foreign leaders, these are things that get thought through and worked out in concert with the foreign leaders.

Q: Thank you.

MR. FLEISCHER: Thank you.

END 1:19 P.M. EDT