# Press Briefing by Press Secretary Ari Fleischer, February 8, 2001

The James S. Brady Press Briefing Room
2:10 P.M. EST
MR. FLEISCHER: I have a few announcements to make, and then be pleased to take your questions. Personnel: The President today is announcing his intention to nominate Michelle Davis as Assistant Secretary of Treasury for Public Affairs. We should have the paper on that out to everybody this afternoon.
In addition, the President today is announcing his intention to nominate Senator Bill Frist of Tennessee to be the Senate representative to the 55th session of the General Assembly of the United Nations. As you know, there are two members of Congress that alternate between the House and the Senate who serve as members who participate in the proceedings at the U.N. General Assembly. They alternate from the House to the Senate. There is currently a vacancy with a seat that was previously held by Senator Rod Grams. And as a result, the President today is nominating Senator Bill Frist to serve on that position.
Finally, the President tomorrow will be visiting a school in Southeast Washington, the J.C. Nalle Elementary School, to mark Black History Month. He will be going there, along with Secretary Paige, and he will also discuss the importance of reading while he is there.
And with that, I'd be pleased to take questions.

## Q Coverage?

    MR. FLEISCHER: The coverage will be a pool, and we'll have all the notification out on that.

## Q Ari, can you tell us more about the President's phone call with Chairman Arafat this morning? Did it happen before or after the bombing, and what did he say?

    MR. FLEISCHER: It happened early this morning; it was prior to the bombing. The President made two calls today, one to Chairman Arafat and the other to Sultan ;Qaboos of Oman.

## Q Do you know, did he use the phrase with Arafat, the United States is committed to a "just and lasting peace"?

    MR. FLEISCHER: He talked about promoting peace and stability in the region and bringing an end to the violence.

## Q Can't say whether he used the phrase, "just and lasting peace"?

    MR. FLEISCHER: I'm not going to get into specifics of a phone call the President made like that, to a foreign leader. It would be a private conversation.

## Q Can we visit the defense budget again just for a moment? The Secretary of Defense reportedly told the Joint Chiefs that there would be no large additions to the defense budget for the next fiscal year. And Mary Ellen is quoted as saying that the budget that is going to go up --

    MS. COUNTRYMAN: Who quoted me as saying that?

## Q -- will be President Clinton's budget of $310 billion, which is, as you know, is $31 billion short of what the President advocated. A two-point question

    One, if Congress adds on those $31 billion, or even more billions, will the President sign the bill? And two, what happens if Congress tacks on weapons systems that the administration does not want, such as the F-22 or the B-22, et cetera?
    MR. FLEISCHER: I'm not going to discuss any hypotheticals, but the President's position is very clear, and this is exactly what he promised to do during the course of the campaign and it's exactly what he and Secretary Rumsfeld are working shoulder to shoulder on right now, which is the President has directed the Secretary to begin a force structure review, which is now underway, and that will help determine what the shape of future spending decisions will be. The President believes we need to rebuild our military and the force structure review is a part of doing that.
    In addition, the President's budget that he will submit will honor the campaign promises he made to increase pay for men and women who wear the uniform, as well as to improve the housing for the men and women who wear the uniform. And that will be an increase above and beyond what was spent previously.

## Q A follow-up. There's a little confusion, I believe. If that force structure review is not completed by the time the budget goes up, what about the possibility of a supplemental?

    MR. FLEISCHER: The President has said he supports no immediate supplementals.

## Q On the President's phone calls with foreign leaders, if the foreign leaders, themselves, quote the President in that phone call, can't we get some help on this end in telling us whether or not that is accurate?

    MR. FLEISCHER: The President's intention, when he has this conversations is he will treat them as private conversations. I would just urge you to be cautious with information you hear from others. We'll be happy to try to help you to the best degree we can, and we may want to discuss that following this.

## Q What is the President's reaction to Prime Minister-elect Sharon's comments yesterday about Jerusalem? Did that come up with the conversation with Mr. Arafat? And does the White House have any reaction to this first episode of violence in the region -- the car bombing this morning?

    MR. FLEISCHER: On the first question, the President is not going to react to every statement made by every foreign leader around the world. Secondly, on the car bombing, it's another reminder of the need to create a just and lasting peace in the Middle East, to bring an end to the cycle of violence.

## Q Did the Sharon comments come up in his conversation with --

    MR. FLEISCHER: I'm not going to get into the topics the two discussed beyond what I've already indicated.

## Q Ari, on the tax cut, the Democrat leaders are up on the Hill today with a car and an automobile part, and they're saying that millionaires under the Bush plan would get a tax cut sufficient to buy a Lexus, and working people would get a tax cut sufficient to buy a muffler. Is their arithmetic wrong, or do you disagree with their emphasis and argument?

    MR. FLEISCHER: I think both their arithmetic and their emphasis is wrong. What the Democrats are proposing is to collect almost $1 trillion in higher taxes than President Bush has proposed; that way, they can spend the money on bigger government. Under the Democrats proposal, the government will get put in the driver's seat, and the taxpayers get stuck in the back.

## Q But their numbers are not wrong, are they, that a millionaire will get a $46,000 tax cut, and that's enough to buy a car?

    MR. FLEISCHER: The numbers are incomplete. The real numbers are that the biggest percentage gainers in this tax plan are people at the middle and the low end of the income scale. They will benefit the most from President Bush's proposed tax cut. But what you have here is an old issue, where there are some Democrats who want to keep taxes high. That way they can spend more money. But I think what you're going to really see is a growing group -- a smaller group, it won't be all the Democrats, but there will be a smaller number of Democrats who want to work with us to cut taxes for all Americans. And that's how we're going to achieve a bipartisan government coalition to get taxes cut.

## Q One more question on this. This example has a kind of visceral appeal, that people would get so much money they could buy this luxury car. Is it a fair argument to make against the President's plan, to make an argument on that basis?

    MR. FLEISCHER: I think the fairer argument is that there are some tax-and-spend Democrats who every time they see a car start thinking about building a toll booth. And that's how they collect all these taxes. So that's our point of view.

## Q Ari, the President a few days ago said categorically that President Clinton or whichever President has the constitutional right to pardon anyone. The Republicans today are holding a hearing on Capitol Hill exactly about one of the pardons of President Clinton. Does the President have any opinion on that?

    MR. FLEISCHER: I think the Constitution is very clear, that the President has the power to pardon. The Constitution is also clear, the Congress has the power to hold hearings.

## Q Ari, on the tax plan, the one that was sent to Congress today does not include the education IRAs that were in the original tax proposal from the campaign. Have those been dropped, or are they going to be sent up in another form?

    MR. FLEISCHER: I'd have to go back and look to see if that was part of the education package that was sent up.

## Q I think that was part of the original December '99 tax package.

    MR. FLEISCHER: Let me go back and take a look at that.

## Q And also, to follow up, there were some other tax breaks proposed for health care or low income housing. Are those going to be sent in other proposals?

    MR. FLEISCHER: As you know, during the course of the campaign, there were a series of provisions that the President announced that are fully built into our budget, such as health care and tax provisions, that allow, for example, people who don't have employer-provided insurance to get a tax credit of up to $2,000 so they can afford health insurance. Those were carried under a separate item in our budget that are not part of the original December, 1999 tax plan.

## Q So the President will propose additional tax cuts in the package that he's sending today?

    MR. FLEISCHER: He'll have additional initiatives that focus on health, that focus on housing, that focus on a series of items, and he'll lay it out just as he did during the course of the campaign.
    For example, let me give you one specific -- the charity tax deduction that the President has talked about. When the President announced his faith-based initiative, the proposal to allow 80 million Americans who are currently denied the right to receive a charitable deduction was carried as part of his faith-based initiative. In terms of the budgeting for it, the cost of the faith-based initiative carries that item.

## Q Ari, why did the President decide it was a bad idea to use the general revenue surplus to deal with the long-term financing problems of Social Security and Medicare, where there's a shortfall in revenues?

    MR. FLEISCHER: He has not said that about Social Security. What he has said is, before we spend more money from general revenues, or spend any money from general revenues, what's important is, we focus on how to save and reform Social Security so it doesn't go broke. So the President expressed an openness to that idea, but in order to proceed, the first step the President believes we need to take is to focus on reforming the system itself.

## Q But the reason for reform is the shortfall in the revenues --

    MR. FLEISCHER: No, the reason for the reform is because the Social Security system, given the demographic changes our nation is going through, or will shortly to through, will not be sustainable. And we need to have a system that will be able to honor the commitments made to our grandparents and to our grandchildren.

## Q Would it be sustainable if you applied the surplus to the problem?

    MR. FLEISCHER: The solution is to reform the system, not just to throw more money into a system that is vital.

## Q Ari, how committed is the President to holding the line on the size of his tax cut? Would he veto anything that went beyond $1.6 trillion?

    MR. FLEISCHER: It's too soon to start talking that type of language. The President has sent his plan up today, and there's no -- we see nothing on the horizon that would indicate to us that we're going to be into that situation. And we'll just withhold and wait judgment. But the plan went up today, and we're very encouraged, frankly, by the reaction that we're getting. I think that you're going to see a sea change in Washington D.C., where tax relief is on its way to the American people.

## Q He also suggested that people could use the money that they get back from their taxes to pay for their higher energy bills. It seems to suggest, because the effects of the tax cut won't be felt for sometime to come, that this higher energy costs will be with us for some time.

    MR. FLEISCHER: And that's another reason the President supports any effort that would make the tax cut retroactive. That would put money in people's hands immediately, because they need it.

## Q Is he saying that these high energy costs will be with us for some time to come?

    MR. FLEISCHER: He's saying that people need to have money in their pockets to spend as they see fit. There will be some families who will use that money to pay for higher energy costs. Other families, like families we've visited this week, have said they'll use it to educate their children. Other families have said they'll use it to take a vacation. The point is, the money doesn't belong to the government, it belongs to those people who made it, and it should be their determination of how to spend it.

## Q Ari, you've said before that the President wants to stick to the $1.6 trillion price tag on the tax plan, and that he also likes the details that he's outlined. Yet today, again, he strongly endorsed this idea of retroactivity. That's going to increase the price tag of his tax cut. Is he going to tell Congress which pieces he would like to have dropped out so that he can afford that retroactivity?

    MR. FLEISCHER: It all depends on how the retroactivity is done, what the phase-ins are, what the effective dates are. But you can still adhere very close to the spending figures the President has said, while tweaking the tax cut on the retroactivity side. It all depends on the final decisions that get made.

## Q Do you have any estimates or cost estimates on retroactivity and how you can fit it in there without increasing the prices?

    MR. FLEISCHER: Jim, again, it all depends on the decisions that are made, about what the effective date would be, what the phase-in rate would be, the acceleration rate of the phase-in. It's a whole series of decisions that have yet to be made. They all do impact the cost of a tax cut, and not to a substantial degree, but they do have a cost impact.

## Q But they do increase --

    MR. FLEISCHER: I've acknowledged they have a cost impact, absolutely.

## Q Is he getting any pressure -- you said he's committed to the size of a tax cut -- but in these meetings with members of Congress, from Republicans, from business leaders like the meeting he had yesterday, to look at things like reducing capital gains or adding some more cuts for business owners?

    MR. FLEISCHER: Yes, that does come up. Frankly, in the meeting with Ways and Means members, the President was talking about the need to create capital in this country, capital formation. And he made the case for his marginal and across-the- board income tax rate cut to create capital. And a member suggested to him that then we ought to cut capital gains taxes. And he said, that's not what I'm going to do.
    At the meeting today with some of the high-tech leaders, they talked about whether or not corporate taxes should be cut. And the President said, I'm not going to push for that, we don't need to do that, and in fact, the reaction was rather strong. People were saying, what we really want is for our customers to have more money in their hands; that way, they can come out and buy our products.
    So we do expect to hear that. We expected to hear it from the Republican side, that we need to do more business provisions, we expect from the Democrat side to say, don't cut taxes as much as you want to cut taxes, leave taxes higher. And the President is going to adhere right to the ground that he has established and fight for the tax cut that he ran on.

## Q In that meeting last night, in the Ways and Means meeting last night, did one of the Democrats tell him if a vote were held today that it would be along party lines?

    MR. FLEISCHER: I'm not going to characterize things that were said by any of the members in that line.

## Q Ari, on racial profiling, you've denied a report that, in fact, the White House is going to set up a panel to look at the racial profiling issue. There is a meeting scheduled next week. Can you describe what the White House can and should do on issues like racial profiling and other issues that go to the trust that Americans have in the police forces around this country?

    MR. FLEISCHER: We'll be working with other people and listening to the law enforcement community, listening to people who were involved in this very important and sensitive issue to hear their ideas and concerns, working with other relevant government agencies and Cabinet departments. It is an important issue that's something the President talked about during the campaign, and we are open to ideas.

## Q What are his ideas?

    MR. FLEISCHER: It's a little preliminary right now. That's one of the reasons we're going to hold meetings with relevant groups, and as soon as we have more to indicate, we will.

## Q Can you remind us what he talked about during the campaign?

    MR. FLEISCHER: He talked during the campaign about the need to make sure that people aren't pulled over because of the color of their skin or because of their ethnic background or their race. And he said we need to be careful and cognizant of that. And that's something the government has been wrestling with for many a year, and we're going to be sensitive to it and work with the law enforcement community and others involved to help address it.

## Q Is there a trust problem, do you think, for the police, a credibility problem for the police around this country?

    MR. FLEISCHER: I think we're going to have some meetings and listen to people from all sides of the issue.

## Q Ari, some black police law enforcement organizations are somewhat upset because they feel that they should be involved in this initial meeting. What is the White House saying to those groups that are saying this?

    MR. FLEISCHER: We're going to continue to have a series of meetings with many different people to discuss issues and so they'll be a part of an ongoing series of meetings.

## Q Ari, House Republicans told The Wall Street Journal today that the White House has privately promised to block states from using sample numbers in redrawing congressional districts. Have they been given this reassurance, and how did the White House reach that decision?

    MR. FLEISCHER: As far as the information that I have, Mike, that is under review right now, about the final determination of what will be happening at the Census Department. The Census Department has more information to be released later on dealing with this issue, and it is under review by Census, and if we have anything to announce, we'll let you know.

## Q What guidance have you given the Commerce Department about how they should proceed, and what's the time frame?

    MR. FLEISCHER: The Commerce Department is proceeding as it sees fit, and we'll work with the Commerce Department.

## Q Are House Republicans wrong, therefore, when they say and are quoted, as they were today in The Wall Street Journal, that they believe there is no way the President will reverse his original intention and allow for sampling?

    MR. FLEISCHER: I'll have to take a look at that story specifically before I comment on that.

## Q Ari, the President's been arguing in his tax cut events that high credit card debt is one reason that people's taxes should be cut. But does he really believe that the government is responsible for bailing out people who run up their credit cards?

    MR. FLEISCHER: It's not a question of bailing anybody out. It's the taxpayers that have been bailing out the government. This money does not belong to the government, it belongs to the taxpayers, and it should be theirs to spend as they see fit. That's the President's view.

## Q Ari, why send up a proposal or a tax plan today as opposed to formal legislation, and what's the strategy behind that?

    MR. FLEISCHER: Well, again, on a host of initiatives traditionally done from the Executive in conveyance of legislation up to the legislature -- it's the exception when you have bill language sent from the Executive to the legislature. Typically, what is sent up are a set of specific proposals, which is what you say today. And today's proposals are, indeed, very, very specific: double the child credit from $500 to $1,000; lower the current five rate brackets to four rate brackets at 10 percent, 15 percent, 25 percent and 33 percent. It's hard to get more specific than that.

## Q In the wake of yesterday's shooting, Ari, is any consideration being given to a review of security measures around the White House or the President's movements on the White House grounds?

    MR. FLEISCHER: I'm not going to discuss any of the security changes, if any, will be made. That's going to be a matter, of course, dealing with White House security. But the President, again, expresses his appreciation to the men and women of law enforcement and the Secret Service who handled the matter the way they did. But he anticipates no changes in his routine or activities. He went right back to work yesterday, as I indicated. So, too, the Vice President. But, no, he's not going to make any changes.

## Q Ari, on the same subject, what is the latest report you have gotten from the investigation?

    MR. FLEISCHER: I'm not going to -- as I indicated yesterday, I speak for the President. I'm not going to get into any of the specific details of what the investigators are working on. I would refer you to the Secret Service or to the Park Police.

## Q Ari, what is the President's position on the use of statistical sampling in a census?

    MR. FLEISCHER: The President supports an actual head count, because he believes it's the best and the most accurate way to conduct the census. And as was indicated by the previous head of the Census Bureau, I think he indicated that the 2000 census was the most accurate count ever. And that's the President's position. What we need to have is the most reliable and accurate numbers, and he believes that the best way to do that is through an actual head count.

## Q So, can we safely assume, then, for the 2002 redistricting, that that's going to be his position there as well?

    MR. FLEISCHER: Well, on the redistricting, there are two different issues here. You have an issue of redistricting, the use of census information for redistricting, and the use of census information for spending decisions. The Supreme Court has already settled the former matter.

## Q At the high-tech meeting today, did the President talk at all about taxation on the Internet? The moratorium ends later this year, and you guys are going to have to make a decision --

    MR. FLEISCHER: Let me refer you to Claire. Claire sat in on that meeting and I've got a read on it, but I'll refer you to Claire after this meeting.

## Q Ari, is the President concerned at all that this fellow who was involved in this incident yesterday outside the White House was able to obtain a handgun, even though he had a history of mental problems, including a hospitalization?

    MR. FLEISCHER: I'll refer you to the law enforcement authorities to determine how that may have taken place. I'm not familiar with all the history of it. That's for the law enforcement people to deal with.

## Q The question is what's the President's view.

    MR. FLEISCHER: Again, I think that's a matter for law enforcement. I haven't discussed it with the President.

## Q In his remarks this morning in the Rose Garden, the President appeared to be trying to create a sense of urgency about action on the tax cut, saying there's this warning light about the U.S. economy. Is that an effort prospectively to insulate the White House from whatever bad economic information may come about in the coming months, and shift that focus on to Congress as it deals with this tax cut? What was the reason for the emphasis on this looming economic problem?

    MR. FLEISCHER: It's a continuation of the emphasis the President began when he announced his tax cut in December of 1999, at which time he said this can be an insurance policy against an economic downturn. The insurance policy is now coming due. We are in the middle of an economic downturn. And so it was the logical extension of the same remarks the President issued more than a year ago when he first announced his tax plan.

## Q On this incident, is there any concern here that there is so much media coverage that it's going to encourage copycats?

    MR. FLEISCHER: There's nothing we can do about media coverage. It's the right of a free press to cover.

## Q Do you think they overdid it?

    MR. FLEISCHER: I'm not going to delve into that. I think you all know how to make those judgments for yourselves.

## Q Ari, can I come back to those comments on the economy that Major was asking about? They really struck me as fairly dire. Don't you think the President is in danger of contributing to the very downturn that he fears, like undermining consumer confidence?

    MR. FLEISCHER: Absolutely not. There is no possibility that a politician can either talk the economy up or talk the economy down, despite the attempts by some to try to talk it up. And I would suggest to you that the only reliable standard should be accuracy. And what the President has said and what the President's advisors have said are accurate portrayals about the strength of the economy. And the evidence is clear when you take a look at GDP growth and it's down to 1.4 percent for the last quarter, the statistics speak for themselves. And it should be the job of a leader, the job of the President to faithfully and accurately describe the country's economic circumstances.

## Q But you don't think when the President goes in the Rose Garden and talks about flashing warning signs on dashboards, that people might say, maybe I shouldn't buy that refrigerator or that Lexus, or whatever it is that they would buy?

    MR. FLEISCHER: No. Again, I think -- that's my point, that politicians don't have the power to talk the economy up any more than they have the power to talk it down. The economy and the statistics speak for themselves.

## Q But if Congress doesn't act, is it going to be the position of this White House that the longer it doesn't act, the more Congress -- not the White House -- is jeopardizing the future of the U.S. economy?

    MR. FLEISCHER: Major, we have full faith that Congress will act, and we have received encouraging signs from people in both parties that Congress will, indeed, act.

## Q Back on the tax cuts, I just want to be clear. Every tax cut proposal President Bush made during the campaign will be sent to the Hill, including education IRAs, even if it wasn't in today's package?

    MR. FLEISCHER: When you asked that question I told you I'd go back and take a look at the education provisions. So allow me to do that.

## Q If the President strongly supports some moving up of the tax cut or retroactivity, why wasn't there some element of that in the proposal that he sent?

    MR. FLEISCHER: Because as the President indicated, he supports efforts on the Hill to make the tax cut retroactive, and he wants to work with members of Congress on that. And that's --

## Q Are you saying he's not going to take a position on that issue in terms of one kind of -- I mean, he'll take any vehicle?

    MR. FLEISCHER: No, but today, again, the whole process begins today. Today is the day the legislation was sent up to the Hill. And of course, now the Ways and Means Committee will begin a series of hearings -- will begin hearings on it, and then let the regular legislative process take its course. And we will, of course, work very closely with Democrats and Republicans as the legislation gets moved along the legislative process.

## Q Does he have an opinion about what kind of retroactivity or moving up should occur?

    MR. FLEISCHER: Too soon to say.

## Q Is the President saying to people who earn between $6,000 and $26,000 a year, you don't need a tax cut?

    MR. FLEISCHER: No. What the President is saying to people is, we need to take down the toll booth to the middle class. Under the current tax code, if somebody makes, for example, $22,000 a year, and has two children --

## Q No, single people between incomes of $6,000 and $26,000 a year, who will remain in the 15-percent tax bracket, is he saying they don't need a tax cut?

    MR. FLEISCHER: Actually, under the President's proposal, the 15-percent bracket is lowered to 10 percent for --

## Q Not for those people.

    MR. FLEISCHER: Yes, it is. Yes. If you look at the back page, the first $6,000 worth of income is lowered to 10 percent. If you make more than $6,000, you get your first $6,000 of income lowered from 15 percent to 10 percent, I remind you, as you know, as a progressive income tax code structure. Your premise is wrong. They would receive the benefits as low as 10 percent.

## Q The bulk of the money will not receive the lower tax rate.

    MR. FLEISCHER: No, the largest percentage gains will go to those people at the low end of the scale. And that's because we lower the rate from 15 percent to 10 percent.

## Q But only for the first $6,000.

    MR. FLEISCHER: That's correct.

## Q So what about the rest of the other $20,000?

    MR. FLEISCHER: They receive that benefit.

## Q For the first $6,000.

    MR. FLEISCHER: That's correct. That's where the rate gets lowered to. That means $6,000 of their income is no longer taxed at 15 percent. For the first time, it's taxed at 10 percent. They get that benefit.

## Q Before I ask my question, is $6,000 for singles and $12,000 for married couples, or $6,000 for couples --

    MR. FLEISCHER: It is the last page that you have in the handout, so I would refer you to that last page.

## Q On the surplus, as you have acknowledged here, it's been consistently revised upward. As it has been increased by more than a trillion dollars, why not increase the tax cuts that you proposed before the surplus was increased?

    MR. FLEISCHER: And I think it's fair to say the President is going to come under pressure from some people, mostly in the Republican Party, who are going to call on him to increase the size of the tax cut. We're already hearing calls on the Hill to increase the size of the tax cut to $2.2 trillion. And the President believes we need to resist those calls. He knows that the Democrats want to collect more money in taxes. The Republicans want to collect less. The President believes that his $1.6 trillion level is the appropriate level, and that's what he intends to fight for.

## Q But when he proposed it, he believed it was the appropriate level with a smaller surplus estimate. Now you have a larger surplus estimate. Why not a larger tax cut?

    MR. FLEISCHER: And interestingly, the same event took place in July of 2000, where we at that time also had new estimates coming and saying the surplus had grown from its previous projections. And he was asked that question in July, and he said he was going to continue to adhere to the plan that he proposed at that time.
    And so, the President has drawn up his plans and he intends, even with these new increases in the surplus, to adhere to them. It allows us to pay down debt. It allows us to be fiscally conservative. It allows for a balanced approach to cutting taxes, in the President's opinion.

## Q Can you tell me, Ari, whether the President believes people that suffer from mental illness should be able to have access to handguns? And if not, what mechanism do you think is appropriate to prevent mentally ill people from getting weapons?

    MR. FLEISCHER: I think there are a series of laws on the books already dealing with that question, and I'm not aware of anything new on the federal level that would address that. If you have anything to bring to my attention, please do and I'll try to review it for you.
    I'll come back to you. Very nicely done, by the way.

## Q There are a couple of other ideas that are gaining considerable attention within the Ways and Means Committee and Finance Committee about adding to this proposal. One deals with accelerating depreciation. There is a rather large and growing coalition on K Street involving some high-tech community members who are very interested in that, believe that would be very beneficial to them and the larger U.S. economy. There is also this issue that Republicans and Democrats have believed in their meetings with the President, have brought up about the alternative minimum tax.

    MR. FLEISCHER: Yes.

## Q Are those two out of bounds, as far as the White House is concerned? Do you have any signals you want to send to the Congress about those two issues and whether or not they should be included in a final package?

    MR. FLEISCHER: On the first point, the signal the President would like to send is exactly why we need to have a permanent extension of the research and development tax credit, which is a part of the President's plan, and we hope the Congress will work with us for the first time to make the research and development tax credit permanent. That way, businesses have the tools they need to innovate and discover new things that can be brought to the market. That provision has, unfortunately, lapsed several times in the past, which has created a lot of uncertainty and made it difficult for corporations to plan, and so that provision directly addresses that question.
    On the issue of the alternative minimum tax, the President's plan addresses the alternative minimum tax to the tune of $70 billion, and that's because he adjusted the child credit so that it does not count against the alternative minimum tax, protecting families with children from paying more taxes as a result of the increase in our child credit.
    So that's already partially addressed. As for the rest of it, the President is very sympathetic about the problems created by the alternative minimum tax. It is a growing problem. However, given the list of priorities that the President has identified, he believes Congress should tackle first those priorities he has set, such as reducing the marriage penalty, abolishing death taxes, reducing marginal rates. He believes those issues, as well as the others in his plan, should come first. After that is done, we'll take a look and see whether tax priorities remain. It is a problem; he's sympathetic to it. But it will have to await other times when those priorities can come to the floor.

## Q I got three calls this morning from real people who said, why is --

    MR. FLEISCHER: They must not work here then. (Laughter.)

## Q -- that's true. Nowhere near here. Why is he cutting the rich people's tax 6.6 percent, and the poor people's tax 5 percent?

    MR. FLEISCHER: I'm not sure where those numbers come from.

## Q From 39.6 to 33 percent, and 15 percent to 10 percent.

    MR. FLEISCHER: And the answer to that is, as I've indicated, the largest gains go to those people who are at the low and moderate end of the scale. The percentage of taxes that they pay will be reduced more than the percentage of taxes paid for somebody at the top end of the scale. And so, those tax cuts --

## Q You need PR, because it's not getting out there.

    MR. FLEISCHER: I think we always need more PR.

## Q The other question is, have you heard the President say anything negative about the Farmington meeting, in light of new reports that there's some feeling he was blindsided by Democrats who were too harsh?

    MR. FLEISCHER: I think the President appreciated the opportunity to go there and have the meeting. And it came as no surprise to him that Democrats asked questions that they wanted to ask. But that's why he went. That's why he went and reached out. And again, let me give you what I believe is going to be an indication of things to come.
    I think as we proceed with our plans on education, our plans on tax cuts up and down the line, you're going to hear from some of the more liberal members of the Democrat party nothing but opposition. What you won't hear is the silence that comes from the rotating coalitions of Democrats who are going to be prepared to vote with and work with President Bush. And that's how we are going to put together the governing, bipartisan coalitions that get this legislation enacted into law. And that's where the President's focus will be.
    We know he is not going to win the votes of 100 percent of the Democrat caucus. But we will work hard to win the votes of enough of the Democrat caucus that we can sign legislation into law. And the President is going to dedicate himself that.

## Q Names? Just throw out a few names.

    MR. FLEISCHER: We'll wait for the votes.

## Q I understand on the marginal rate cut, the rational for that. There's one thing that puzzles me, though. Why would you increase the income cap for the child credit, the child tax credit, from $110,000 to $200,000, and not also make it refundable, meaning that those at the bottom end of the scale would be able to collect that even if they pay no taxes?

    MR. FLEISCHER: Actually, it is partially refundable, in accordance with the current law that treats the child tax credit that was established in the 1997 tax act. The child credit in the 1997 tax act is a partially refundable credit. And the manner in which we've set up the credits, doubling for $500,000, maintains the partially refundable nature. That was a bipartisan agreement reached by President Clinton at the time, along with Democrats in Congress, Republicans in Congress. So what the President is doing is maintaining something that works, something that is bipartisan.

## Q And what percentage is refundable?

    MR. FLEISCHER: It depends on the number of children you have.

## Q It's not a per child percentage?

    MR. FLEISCHER: No, it actually depends on -- it's a very complicated provision of the tax code, actually, and it's determined by the number of children you have.

## Q Ari, a group of senators sent this week a letter to the President, expressing concern about the possible sale of F-16 to Chile. Two questions. What is the answer of the President to these senators, and what is his position about arms sales to South America?

    MR. FLEISCHER: If you don't mind, let me refer that to Mary Ellen and she'll be happy to help you.

## Q I understand your decision not to, as you put it, have the White House respond to every remark of every foreign leader. But in the case of Ariel Sharon, here we have a newly-elected Prime Minister of Israel making some bold statements about the status of Jerusalem. What's the White House view on what impact that kind of statement might have on the Middle East peace process?

    MR. FLEISCHER: I've already addressed that question.

## Q Ariel Sharon is planning to come to Washington next month, as part of the AIPAC policy conference. Will he be meeting with the President at that time? Is the White House interested in meeting with him?

    MR. FLEISCHER: As always, as we have announcements to make with world leaders, we'll keep you informed.

## Q Also, Sharon named three Likud advisors to come to Washington next week to meet and lay out Sharon's agenda. Who will they be meeting with in the White House?

    MR. FLEISCHER: You may want to check with the other agencies and see if there are any meetings set up, or check with us at a later time. And I don't know if there is anything scheduled. If there is, I'll do our best to keep you informed.

## Q Ari, they're starting to catch wind out there in Georgia and Virginia and West Virginia that the President's coming to town. Have you nailed down anything that we can share with them about his plans?

    MR. FLEISCHER: I'll have some more details to announce tomorrow on that. The President will be traveling next week to focus on issues that relate to national defense. And we'll have some details about that tomorrow.

## Q Ari, one thing on the Pennsylvania Avenue thing, which keeps getting kicked up by people. It's never clear to me, is this actually under review by the White House, or is -- just there's no decision has been made to reverse the current status?

    MR. FLEISCHER: There's no decision been made to reverse the current status. The President has met with the Secret Service. He's met with Mayor Williams. He's going to listen to people on all sides of this issue, and then if a decision -- whenever a decision is reached, we'll keep you informed.

## Q Did this Pickett letter reach the White House? Do you know yet?

    MR. FLEISCHER: Not that I have seen. I haven't seen it.

## Q Have you checked with all the relevant --

    MR. FLEISCHER: Haven't checked that thoroughly on that, Major. I just haven't seen it.

## Q So we don't know yet?

    MR. FLEISCHER: That's fair.

## Q Ari, you've had a week to roll out this tax plan. How do you plan to push it in the future? Because it's going to take several months for it to go through Congress.

    MR. FLEISCHER: Well, actually, we've had a very aggressive outreach program all week on the tax plan. In addition, way beyond the Beltway, there have been a series of things done with local media, with talk radio, with the Internet. We've worked very hard to reach the American people in every region of this country on the importance of cutting taxes. And we will continue it.
    It is one of the President's top priorities, along with education, along with rebuilding the military. So you're going to see the President talk about other issues as well. We will always return to that important issue. Just like tomorrow the President is going to focus once more on education. So even at the same time this week, for example, we're talking about taxes substantially, we will find room for other priorities, because they are enduring. So, too, with taxes.

## Q Can you please put together a briefing for those of us who have to write previews for the Mexico trip? Are you thinking about something?

    MR. FLEISCHER: Yes, we're trying to get arms around how to be helpful on that. We'll probably have more on that next week. I'm not sure of the exact manner yet, but let's take that up next week.

## Q Is the President familiar with the National Taxpayers Union study that shows on a year-by-year basis that the President's tax cut, inflation adjusted, is smaller than the tax cut proposed by Tip O'Neill and the Democrats in 1981?

    MR. FLEISCHER: Oh, I've seen a number of studies indicating -- and I may have this backwards, but one study indicates that the President's proposed tax cut is one-third the size of Kennedy's and one-half the size of Reagan's, or vice versa. So we are cognizant of that. Let me give you some perspective.
    Over the next 10 years the federal government will collect just a little over $25 trillion in taxes. And we're proposing a tax cut of $1.6 trillion at a time when we have a surplus of $5.6 trillion. So, again, only in Washington and only among some people in the opposing party can think that $25 trillion in taxes over the next 10 years is not enough, they want to collect more.
    Let me belabor this and give you some statistics that I've seen here. For the President's proposed tax cut, those who make over $200,000 a year currently pay 41.8 percent of taxes. Under the Bush plan they will receive 26.9 percent of the tax cut. Those who make between $30,000 to $40,000 in taxes pay only 3 percent of all taxes. We have a very progressive tax code. People who make that amount of money, that's the amount of taxes they pay, they will get a tax cut that is almost twice the size of the percentage that they pay in.

## Q Ari, if the President doesn't like the analogy that Tom Daschle used about the car and the auto part, which car does he think is appropriate and which auto part is appropriate?

    MR. FLEISCHER: I think I've already driven this metaphor off the road. (Laughter.)

## Q Ari, with regard to the President's outreach to black leaders and the response that he's gotten from black leaders, as well as private responses from the black community in general, is he satisfied that the initiatives have been successful? And have those outreach efforts been enough to compensate in the minds of black leaders for the exploration of the Office on One America?

    MR. FLEISCHER: I think it remains very early in this administration, and that it's only fair to let people watch the President and come to their observations over time. And I think with some communities, that may take longer. And the President is aware of that and is going to be sensitive to that. And he's pleased to let that process begin and he's going to continue to work hard to reach out to the African American community. He's cognizant of the fact that he only got 9 percent of the black vote in the last election and he would like to build on that. He's going to do his best to make that happen.
    I remind you that something similar happened when he ran for governor of Texas. In 1994, he received a percentage a little bit higher than that -- if I recall, it was about 14 percent. And then when he ran for reelection, he doubled that, he received almost 30 percent of the African American vote in the state of Texas. He wished he had done better. But I think it's also fair to say that a lot of Republicans don't start out doing well, but over the course of governing, people have a chance to observe and to come to their own conclusions. And if the past is any guide, he's going to stand in very good shape.
    Thank you.
2:50 P.M. EST
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