This is a partial transcript from Your World with Neil Cavuto, May 2, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The double taxation of dividends is not fair. It is not fair to seniors who oftentimes rely upon dividend income. It is not fair to the workers, whose pension plans rely upon dividend income. It is not fair for the federal government to tax something twice, and we need to get rid of the double taxation of dividends in America.

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NEIL CAVUTO, HOST: Well, my next guest kind of agrees with all of the above. He wants to put money back in your pocket. He’s the man who may have just come up with the details and the ways and the compromises to get the president’s $550 billion jobs plan to his desk. Joining me now with the details is the chairman of the powerful House Ways and Means Committee, Congressman Bill Thomas (search) of California. Mr. Chairman, good to have you.

REP. BILL THOMAS, R-CALIF., CHAIRMAN, WAYS AND MEANS COMMITTEE: Hi, Neil, how are you.

CAVUTO: I’m fine, sir. So much I want to get into here. First off, on this $550 billion (search) figure, how confident are you that it stands in the Senate where they want a figure at least $200 billion lower?

THOMAS: Not as confident as I would like to be. I want everyone to remember that the House of Representatives passed the president’s plan that went to zero taxation of dividends, and it cost $726 billion. The Senate rejected that. When we sat down to try to negotiate under the so-called budget reconciliation package, we were not able to arrive at an agreed upon amount. So the Senate decided they would use $350; the House decided we would reconcile the $550 billion amount. The House is in the process of creating a plan that we are going to be talking about that utilizes the $550 billion as a stimulus and a growth package for jobs and continued consumer demand.

The Senate hasn’t figured yet out what it is going to do with the $350, although most of the discussions I’ve had with senators recently is how can we find offsets to make the $350, $450 or five.

CAVUTO: Well, that’s the problem, right? I mean, making those offsets believable. You know, The Washington Post and The New York Times have jumped on not you specifically, but Republicans’ efforts in the House to try to create what I believed The Washington Post called "phantom offsets," in other words not real spending cuts to make those tax cuts bigger. What do you say?

THOMAS: We don’t have any offsets. We created a number under which we can build a really good plan, and in some respects better than the original, if you really want to talk about the number of jobs that are going to be created between now and the end of 2004. Given the way we mix the business incentives far more than in the president’s plan and the reduction, as you indicated, on the capital gains and dividends that we believe between 600,000 and 700,000 jobs will be produced before the end of ‘04.

CAVUTO: All right. What’s interesting is you want to say the president’s dividend tax cut slowly phase out taxing on dividends over a number of years, and that Wall Street would probably welcome. What I imagine Wall Street or at least corporate America might not do is start offering dividends themselves. That is companies for fear that it’s going to be a slow boat to China plan, dragged out. So do you with the best of intentions, Mr. Chairman, make this sort of a non-issue?

THOMAS: You do the best you can to make it a non-issue, Neil, but anytime you operate under the so-called reconciliation rules, nothing can be permanent. Our plan moves immediately from the top rate, for example, on dividends, from 38.6 to 15. That’s good day one, and it’s good for the entire 10 years. As a matter of fact, it is brought back to January 1, ‘03 for example, for dividends.

CAVUTO: In other words, dividends are no longer taxed like income?

THOMAS: No, they are taxed at a 15 percent rate. The president’s plan was to go to zero immediately for 10 years. As I said, the House passed that. The Senate didn’t agree to it.

All of the proposals that are currently being looked at at the Senate involve some kind of a phase-in and then end shorter than the 10-year period. You well know, Neil, that if it’s 50 percent phase-in, and of course 15 percent is more than a 50 percent cut, if you have a phase-in from 50 to 75, to 75 to 100, the behavior you’re looking for at the first year or the front end won’t necessarily occur, because next year you’re going to get a higher deduction, and so on.

And then when it goes to zero only for that brief time and goes away, you’ve created an extender. You have got to have Congress renew it. We don’t need it. One vote, and it is for the entire 10 years. So when you look at the real impact, our policy is better than anything that the Senate can now conceive, especially at their lower dollar amount, for a shorter period of time.

CAVUTO: But are you exasperated by this whole process that you have to be doing this wheeling and dealing, yet you’ve got a Republican Senate, you’ve got some on the other side that Denny Hastert has been arguing seem to be Republican in name on. I am just wondering, do you find it ironic that this president, who was riding very high in the polls post-Iraq is now desperately trying to cobble together a tax deal essentially with his own party?

THOMAS: No, tax situations are always difficult. And the president’s desired goal was an admirable one, getting rid of the double taxation of dividends. He’s provided an umbrella with his thrust in that direction, which has allowed us, although not achieving something that no other country in the world has achieved, by the way, allows us, I think, to move significantly, going down from 38.6 to 15 is a really big improvement, and for many of our members who don’t focus only on the stock market, and I believe the market is reacting at least to something favorable that’s happened recently, cap gains is something they are interested in as well.

CAVUTO: Indeed, indeed.

THOMAS: But more importantly, the way in which we’re stimulating business, small business -- I heard your previous guest talk about small business help -- it seems to me that if you were in favor of a malpractice reform, that would be at least as much a help as his scheme on health insurance.

CAVUTO: Mr. Chairman, thank you very much.

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