Senator Grassley Discusses Tax Cuts on Inside Politics

WOODRUFF: As we've been reporting, the president's tax cut package faces several stumbling blocks on Capitol Hill, even among Republicans. Earlier, I spoke with GOP Senator Charles Grassley of Iowa. He's the chairman of the Senate Finance Committee. And I started by asking him about the tax cut debate, and if he thinks he can get fellow Republicans to approve cuts that are only about half as large as what the president requested.

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GRASSLEY: I think that we have a very basic problem between Republicans, particularly in the house, who wanted $750 billion to begin with, and Republicans in the Senate, who didn't want one penny over $350 billion or maybe, preferably, no tax cut at all. I think eventually, Judy, both groups have to make a decision whether or not they want Republicans to govern or they don't. And if we come to the conclusion that Republicans were elected a majority to produce a product, it means we have to get together or else we aren't governing.

WOODRUFF: But you're saying you're not there yet?

GRASSLEY: No, no, I'm not there yet. You know, there's still a lot of things that need to be worked out between the House and Senate. First of all, I would expect the House to pass something all the way up to $550 billion, and, obviously, if we pass something at $350 billion-plus, something offset, you know, it's still a wide difference between.

WOODRUFF: Senator, in the numbers you're looking at, whether it's 350 or something above that, how much of that is the president's proposal to completely eliminate the tax on dividends?

GRASSLEY: Well to completely eliminate it would take $350 to $400 billion more. So, that's where the $726 billion comes in.

WOODRUFF: But how much of that would be included a smaller number?

GRASSLEY: First of all, let me establish a principle as far as I'm concerned. Now, this may not govern, but I think unless you get at least 50 percent exclusion, it's pretty difficult to do anything worthwhile on dividends. That would be about $200 billion. Now, I'm going to look at anything less than that, if it will do good economic good, I'm glad to go down the road of dividends, because I think eliminating the taxation on dividends is good policy. But you ought to do it upright, if we're going to do it.

WOODRUFF: Senator, there have been a lot of recriminations we've been hearing between Republicans in the House, Republicans in the Senate, talking about one another, even from the White House. What is it going to take to work through all this in this atmosphere where there are a lot of recriminations flying around?

GRASSLEY: Well, first of all, I don't think the recriminations, except for words, are going to last very long. We will get together, we will produce a product. And what it's going to take is what I've already referred to as a lot of team work and a lot of compromise on the part of Republicans. And in the Senate it's going to require some bipartisanship. And on the part of the House, it's going to be some understanding that in a 51/49, almost equally divided Senate, albeit Republicans controlling, that Republicans don't get everything they want. And if Republicans push too hard, you have what happens to us two years ago, with Senator Jeffords leaving the party.

WOODRUFF: So that sounds like a serious threat. If the party doesn't get together on all this, you could lose another Republican? Is that what you're saying?

GRASSLEY: Well, no, I suppose I spoke a little bit too strong, that somebody in our moderate group is ready to leave. I don't know anything about that. And I don't expect that to happen. But you know, at least that's the reality of what happened two years ago. And I think that we should learn from history.

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