Sen. Jon Corzine, D-N.J. andSen. Charles Grassley, R-Iowa

This is a partial transcript from Your World with Neil Cavuto, February 25, 2003, 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: One of the issues the president got into today is that we can go ahead and cut taxes even as we're increasing military spending, not because we would want to, but because ultimately in this kind of an environment, we have to. The president indicating to economic journalists that it is very important to keep in mind the unique issues he deals with: terrorism, the ongoing war and the weak economy. He says taken that together, I'm the first president that's had to deal with so much so fast since Abraham Lincoln. Is it a good enough issue to justify this big tax cut? On hand now, Republican Senator Charles Grassley of Iowa, and that bearded fellow right next to him is Jon Corzine of New Jersey.

Thank you, guys, both for coming, appreciate it.

Senator Grassley, to you first. The president again saying in the face of critics who say this increased defense spending will bust the deficit, that it's actually the right time to be offering a tax cut. Do you agree?

SEN. CHARLES GRASSLEY, R-IOWA: Well, I hear so often from people that are concerned about the tax cut affecting the budget. And yet a lot of times those same people will vote for $500 billion increases in expenditures almost the size of the tax cuts. So I think it is kind of a philosophy of government that is on either side. And I think the president believes that money left in the taxpayer's pocket is going to do more to stimulate the economy and create jobs. And after all, what the whole discussion is about is growing the economy more than the 2 1/2 percent it is growing now, to about 3 percent, because that is where you really create a lot of jobs.

CAVUTO: Senator Corzine, let me ask you about that. We already know the tax cuts are built into the code anyway. What the president is essentially saying is speed `em up. What do you say?

SEN. JON CORZINE, D-N.J.: Well, he is saying that with part of the tax cuts. He is talking about acceleration. He is also talking about a dividend exclusion, which I don't know which group Chairman Greenspan is, but I think he was arguing for a revenue neutral tax cut as it relates to the - all of the proposals that the president has put down. I think there are a lot of us who believe that at a time of war, both here at home, domestic terror as well as foreign enemies, that there ought to be shared sacrifice around the parts of the various participants of the country. And that is not what is being put down. We have a tax cut that is going really to those that are doing very well in our society.

CAVUTO: Well, I'll get to the class issue that you've addressed, sir. But I think for now I want to focus on an issue that the president raised again and again, that he does not seem to want to over negotiate on this. That, Senator Grassley, maybe you can help me with this. I did not get the feeling, this is my own feeling, from the discussion with the president, that he will not give much ground on this wiping out the taxes on dividends. He will not give much ground on speeding up these income tax rate reductions. Am I right?

GRASSLEY: Well, I hope the president is right. And I wish it would work out that way. But the practical thing is in the United States Senate, unlike the House, we will not get any tax bill passed that is not bipartisan. And as I told the president at the White House, about a week ago, that means that everything is on the table. He will have some major victories. There will be some things in the package he doesn't want. There are some things he will want that might not be in the package. But that is the art of compromise. And I think the president started out and ended up with the pretty good package two years ago. He didn't get what he wanted, but I think it was good for the economy. And I think he could declare victory and we could be in the same situation this time. But no, the president doesn't get everything he wants. So.

CAVUTO: Senator Corzine, let me follow that with you. If he doesn't get everything he wants, is one of the things he doesn't get is that dividend tax cut? I mean, I heard one Democrat describe it as a dead issue.

CORZINE: I think that is going to be the hardest sell because I think there is the least of intellectual support among economists. I don't see an overwhelming charge for that coming from business. And there is real arguments among both sides of the aisle about whether it is actually stimulative and whether it is going to actually promote growth any time soon. And in a period of when we require shared sacrifice in a time of war, both here at home and abroad, it's a very questionable policy. And I think a lot of people are going to have to scratch their heads long and hard whether we want to impact our long-term structural deficit so dramatically as to finances that particular tax cut.

CAVUTO: All right. Senator Corzine, final word on the subject. Senator Grassley, thank you very, very much.

GRASSLEY: Thank you.

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