Sens. Bill Nelson, D-Fla. and Charles Grassley, R-Iowa

This is a partial transcript from Your World with Neil Cavuto, January 6, 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: The class warfare debate, it has begun. Democrats calling President Bush's plan to stimulate the economy a suck-up to the rich. They unveiled their own plan just about an hour ago. The president unveils his biggie tomorrow. Now joining us now two senators from both sides of the aisle. Fair and balanced. Republican Senator Charles Grassley of Iowa, he's the chairman of the Finance Committee. And Democratic Senator Bill Nelson of Florida. He sits on the Budget Committee.

Senators, welcome to both of you.

Senator Nelson, to you first, you think the president's program is skewed.

SEN. BILL NELSON, D-FLA.: Well, I think it's skewed to the wealthy. You know, in ideal world I would love to eliminate the double taxation on dividends. But we are a big time deficit financing right now.  And we've got to make choices, number one, what do in the short term to stimulate the economy and get out of this sick economy that we are in; and number two, get the money to where it will do the most guide, into people's pockets that they will start spending. And if that is a choice between the wealthy and the average citizen, I think we ought to choose the average citizen.

CAVUTO: Senator Grassley?

SEN. CHARLES GRASSLEY, R-IOWA, CHAIRMAN, FINANCE COMMITTEE: Well, I think first of all, the big picture is that we've got to have a strong economy in order to meet our military obligations in the war on terrorism.  The second thing is I'm willing to consider the deficit when I hear people complain about tax cuts hurting the deficit, but if they want to increase expenditures, that does not hurt the deficit. I think we need to have a consistency there in order to have those arguments carry water. Now the - I think the real test of this is that if we speed up the 10 percent bracket, helping low income people, we help families through doing away with the marriage penalty immediately and making it permanent, make the thousand dollar tax credit phased in right now instead of the year 2009, and make it permanent, we are going to be helping middle-class families, particularly families with children. And then in addition, when you talk about the stock dividend, don't forget that more than 50 percent of the Americans today have money invested in the stock market.

CAVUTO: All right, gentlemen.

GRASSLEY: Maybe not directly, but indirectly, through their retirement plan.

CAVUTO: Let me step back. Senator Nelson, this is a question I guess for you and for Democrats in general who argue against the rich, I guess getting any sort of a tax break even though they pay the vast majority of taxes in this country, the progressivity of the tax code hasn't been changed with the president's plan, they still pay higher percentage and still pay a lot more. So what's wrong with them, as a percentage, getting some back?

NELSON: Well, it's a question of what you want to do. If we all recognize there is a sick economy, and you want to get dollars into the economy to stimulate growth, you want to get dollars, circulating in the economy, then you need do things like some kind of tax credit that puts more dollars in people's pockets that they will spend, accelerated depreciation for business that will get them to invest in plant and equipment in the short term, not the long term, so that it will stimulate the economy. Help the states, the states have got all kinds of financial problems. And they've got a huge new burden with homeland defense. And the unemployed, get dollars into their pockets, with an extension of unemployment benefits. Now if you do those four things, you are going to stimulate the economy, and that is a good, balanced tax package.

CAVUTO: Senator Grassley, let me ask you about these good debating points. You are a pretty shrewd negotiator an Capitol Hill, widely known for that. If it looks like the president trying to speed up these tax breaks for the upper income folks, I guess those over $300,000, is the Holy Grail, in other words, the Democrats, or those certainly who are on the fence, won't balk or move until there is a concession on the administration, let's say, toward the upper income tax cuts, and speeding them up. Would you be for that? Would you be for delaying those tax cuts just to get this package through?

GRASSLEY: Well, first of all, I think as much as the we can do on the tax bill is going to have to be bipartisan, even if we do it under reconciliation where you figure if 51 Republicans stick together, well 51 Republicans are going to stick together. So I'm chairman of the committee, I'm going to have to have the flexibility to work something out with the Democrats to get it done. But on the other hand, don't forget that we have seen Democrats, based on the vote in the last tax bill, at least 12 Democrats, two years ago, were voting to reduce marginal tax rates. So I don't think that - I think you can have a bipartisan bill, reduce marginal tax rates. And the real reason you can do it is because Democrats see like Republicans do, that small business, small entrepreneurs, benefit most by the reduction of marginal tax rates, and quite frankly it - that is where most of the jobs are created in small business, not big business, and individuals, small entrepreneurs, self-employed people ought to not have a higher marginal tax rate than corporations have. And corporations highest marginal tax rate is 35 percent.

CAVUTO: Senator Nelson, there is a feeling among more well-to-do folks that Democrats have it out for them, that they don't like them, that they either consider they're ungodly rich and not deserving of any sort of break or just the Democratic Party just hates rich people. Do you?

NELSON: Well, the flip side of that, if you want to live like a Republican, vote Democratic, and get the economy stimulated. We have come through a decade of very robust economic years, because we were balancing a budget and we were moving into a surplus instead of deficit financing. And now the thing has been turned upside down, and we are facing on top of deficit financing all of the additional expenses of the war. So what you need is some common sense, how do you balance your budget, how do you best spend your dollars?

CAVUTO: But do you get more bang for the buck, Senator, this again to you, Senator Nelson, if you can live with deficits during tough times just to give the economy a goose?

NELSON: In the short term, which is what you would have to do here, you are basically doing more government spending by what our I outlined, and mine is only a suggestion as a starting point, but you do. You spend more. But you've got a reasonable chance because of money getting into the economy quickly, accelerated depreciation within a year, not over three years, where you get the economy stoked up and moving again.

CAVUTO: All right, Senator Nelson, the final word on the subject. I wish we had more time, Senator Grassley, but thank you very much. We would love to get you both back again, I appreciate it, gentlemen.

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