Sen. Charles Grassley, R-Iowa

This is a partial transcript from Your World with Neil Cavuto, November 19, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: There's not much the president of the United States can do about local and state taxes, but he's doing his best to help on the federal front. And here now, the point man in the Senate who some say could decide what we get and when we get it. Joining us now from Washington, the soon-to-be chairman of the Senate Finance Committee, Charles Grassley.

Senator, welcome.

SEN. CHARLES GRASSLEY, R-IOWA: Glad to be with you.

CAVUTO: Your take, first off, sir, on what you see happening across the country in these towns and municipalities and states dramatically hiking their taxes in the middle of still dicey economic times. What do you make of that?

GRASSLEY: We would not do that at the federal level because we're interested in creating jobs. And one of the things that would be very bad for us to do would be to increase taxes. That would put a damper on the economy. Considering what the Fed has done, wanting to reduce interest rates to enhance the economy, obviously it'd be counterproductive for us to think about raising taxes. In order to create jobs, the more money we put in the pockets of the taxpayers and they spend it, it is going to turn over many more times in the economy than if I spend it. So we ought to think about reducing taxes or for sure making the tax cuts that were enacted a year ago, the second largest tax cut this 50 years, making that permanent.

CAVUTO: Now, when it comes to making the 10-year tax plan of the president's permanent, that obviously is tops on your list, Senator, and we understand the president's list, but some of the other things that investors, for example, were looking forward to out of the new Congress they might not see. Now these are some of the things that we've heard. I think we have a full screen of these, some of the things that are looking maybe a little dicier. If you can confirm that they look dicier. Increasing your investment loss right off, cutting the capital gains tax, maybe stopping the double taxation of dividends, that sort of thing, maybe more generous provisions for 401(k)s, that sort thing, are those still goals but not near-term goals?

GRASSLEY: I would say as I know the economy right now, those would be goals but not near-term goals, compared to making parts or all of the tax law of last year permanent legislation. On the other hand I might answer that question differently when we come back in January. We're going to adjourn today, not to reconvene until January 7. We're going to have a better view of the economy at that point. And maybe at that time I would give you a different answer on those particular instances because we might want to stimulate the economy even more than what making the tax bill permanent would do.

CAVUTO: We have heard other talk, Senator, that the administration is eager to front load some of the tax cuts that would benefit lower to middle income folks, still hold off on the tax cuts for upper income folks until years they're allotted, I believe 2004, 2006, but front load some of the lower end ones. Are you for that?

GRASSLEY: The answer is yes, but I would say it more like this, that I would be for speeding up the child tax credit, making it sooner, and the marriage penalty sooner than we otherwise do. That's going to put money in the pockets of middle income taxpayers and very much help the consumer economy.

CAVUTO: Are you concerned, Senator, the economy is slowing down, maybe markedly? There's a split camp on this, where are you?

GRASSLEY: Well, first of all, don't forget, we had three-quarters of economic decline last year. We've had four quarters of increase in the economy now and we expect to continue to have increases in the economy.

CAVUTO: So you don't expect us stepping back down into minus growth, this quarter we're in now?

GRASSLEY: No, I don't, I don't expect it. But this quarter we're in, I expect to be 1 percent or under compared to 3 percent where we were last quarter.

CAVUTO: OK. Finally, sir, your sense of this local and state taxes that are moving up in so many areas across the country. Do you shake your head and say this wipes out whatever Uncle Sam can do at the federal level?

GRASSLEY: No, all the states combined do not have the economic impact that the federal government has in a $10 trillion economy. But obviously the extent to which they raise taxes, at least in a localized area, that's going to have some impact, negative impact on the economy. But I think what we set as a goal at the federal level is the really dominant and - well, the dominant factor in the economy.

CAVUTO: All right. Senator Grassley, thank you very much. We wish you well as the new Congress begins next year.

GRASSLEY: Thank you.

CAVUTO: Senator Grassley from Washington.

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