Obama to Hold Press Conference & Answer Questions About Extension of Tax Cuts; Dems Upset with Obama's 'Caving' to Republican Demands; Unemployed: True Life Of A 99er
ALI VELSHI, CNN ANCHOR: Don, you have a fantastic afternoon. Good to see you. I'm Ali Velshi, with you for the next two hours. Here's what's on the rundown: Breaking news, the White House has just announced President Obama holding a news conference in the next hour. We will bring that to you live. He may be the world's most wanted man. WikiLeaks founder Julian Assange in custody now in London, fighting extradition to Sweden. Plus, an exclusive interview with the two women leading the fight against California's ban on same-sex marriage right here on this show. And today's big "</s>I": outsourcing space exploration. Can business do it better than NASA? We're about to find out. Well, that sound you're hearing out of Capitol Hill is arms being twisted, ears being bent on a deal that means money in your pocket. As we speak, Vice President Biden is trying to sell Senate Democrats on a stimulus/safety net worth as much as $900 billion. Remember -- we've had TARP. We've had the stimulus. We are used to talking in the hundreds of billions of dollars, but this is a lot of money. Next hour, President Obama will pitch the plan publicly for the second time in two days. This time, he'll take questions from reporters. We'll bring you his news conference live right here on CNN. Here's the breakdown of the plan: Bush era tax cuts get extended for rich, poor, and in between, but not forever, for two years, not permanently, as Republicans had wanted. Federal unemployment benefits get funded through the end of next year, for 13 months. While people with jobs get a one-year, 2 percentage point break in the payroll tax which funds Social Security, going from 6.2 percent to 4.2 percent. And a big get for the</s>GOP: a break in the so-called death tax or the estate tax. The White House agreed to cap the tax on estates worth more than $5 million at 35 percent. Now, most Americans pay more in Social Security tax than they do in federal income tax. If this compromise passes, the rate for 2011 will drop, as I said, from 6.2 percent to 4.2 percent. That's the portion that you pay on your check for Social Security. Now, for someone earning $40,000 a year, that amounts to a raise of about $800. For someone earning $70,000, $1,400 a year. There are tax breaks for businesses and families I haven't even mentioned, and please remember, none of this is certain. This is a proposal that still has to go through Congress. Democrats in the House in particular say they haven't agreed to anything. Still, I want to talk about the cost of political compromise and economic bang for a borrowed buck. Stephen Moore is the senior economics writer for "The Wall Street journal" and the founder of the free market advocacy group, Club for Growth. Chrystia Freeland is global editor-at-large for "Reuters." Welcome to both of you. Stephen, you and I were talking about this not 24 hours ago. You are pleased. You think this compromise is good.</s>STEPHEN MOORE, THE WALL STREET JOURNAL: Yes. I'm a happy camper, Ali. The reason is I think, you know, we've tried this spending stimulus. That didn't work so well. I think this tax cut stimulus is going to help the economy. I think because of this, Ali, we're going to have a pretty strong expansion in 2011. I would have liked to have seen those tax cuts made permanent because I think permanent tax cuts give you more bang for the buck. But this is a good start and I think it's going to -- it's going to provide some juice for the economy next year.</s>VELSHI: OK. Chrystia, what's the danger here?</s>CHRYSTIA FREELAND, GLOBAL EDITOR-AT-LARGE, THOMSON REUTERS CORP.: Well, first of all, I'm not surprised that Stephen is happy. I think this is a total victory for the Republican. And it shows something that I think a lot of us would have been surprised to assert in 2008, which is Mitch McConnell is a much better politician than Barack Obama. In terms of the actual policy, one thing that I would really like to focus on and maybe get Stephen's response to is the estate tax. I'm shocked, Ali, that you referred to it as the death tax. That's kind of a propagandistic term for it. Warren Buffett, who is a person whose capitalist credential I tend to trust, is really opposed to this and I think he's right. I think the whole concept, the whole American idea is about social mobility and is about people having the rights to pursue happiness, to achieve on their own, not having an aristocracy by birth. And an estate tax is a way to do that. It's a way to achieve social mobility particularly at the time when America has this huge budget deficit, which conservatives should really be worried about. I think it is really outrageous that Republicans have pushed for this.</s>VELSHI: I have to ask you this. This is a good point, Stephen. Conservatives are worried about the deficit and the debts in this country. There is some danger that this doesn't work. And let me just -- let's spell this out for our viewers. You and I have been trying to do this for a long time. Businesses now, and individuals and families earning more than $250,000, will not on the face of it get a cut in their taxes, leaving alone the Social Security and all of that, their income taxes. Until now, everybody hasn't been spending like gangbuster. So, what's to say that they're going to now? What will this investment that we have now made that will add to the deficit do to actually create jobs and juice the economy, as you said?</s>MOORE: Well, I think what it does, Ali, is it puts more -- it keeps more money in the coffers of businesses. And, you know, businesses are the employers in this country. If you want jobs, you have to have healthy employers. So, I think the reduction in the capital gains and dividend tax and the small business tax I think are really important. On this issue of the death tax, you know, it's still a 35 percent rate. So, that means the federal government is still going to help itself to one-third of someone's estate when they die. And the question is: how high should this tax be? You know, I would describe this as the American Dream tax because I think a lot -- people like my father, who is a small businessman, fairly successful, who built up his business over his lifetime, because he wanted to pass something on to his kids and grandkids. How is that contrary to the American ideal?</s>VELSHI: Chrystia?</s>FREELAND: Well, I think, Stephen, the American ideal is about you achieving things in your own right, not about you being a plutocrat because your dad was really successful. And as I mentioned, you know, I think one of the really interesting and admirable things is some of the Americans who have been the most successful, I referred to Warren Buffett, Bill Gates is another one, are really in favor of the estate tax because they say we want our kids to do it on their own. An estate tax even of 50 percent for fortunes over $5 million -- I don't know about your family, but inheriting $2.5 million, that doesn't seem so bad to me.</s>MOORE: Chrystia -- Chrystia --</s>VELSHI: Hold on a second. Hold on, Stephen, I want you to listen to something, today's sound effect. It reminds us that campaign speeches are one thing, closed-door negotiations are clearly something entirely different. What you've seen today has been an unfolding of closed-door negotiations. Long before he was president, Barack Obama said the richest Americans should and would pay more taxes than they have for the past decade. Listen to this.</s>BARACK OBAMA, THEN-PRESIDENTIAL CANDIDATE: I end the Bush tax cuts for the wealthiest Americans. And it means letting Bush tax cuts for the wealthiest Americans expire. And rolling back the Bush tax cuts to the top 1 percent. We have to roll back -- I want to roll back -- we're going to roll back -- I'm going to roll back the Bush tax cuts for the very wealthiest Americans. For the wealthiest Americans. For the wealthiest Americans. For the wealthiest Americans. It is true that I want to roll back the Bush tax cuts on the very wealthiest Americans and go back to the rate that they paid under Bill Clinton.</s>VELSHI: OK. Stephen, I cut you off, but I just pitched you one that you can hit out of the park. Did the president roll back or did he roll over?</s>MOORE: I think he rolled over. But, you know, I think it was a strategic thing to do. You know, the thing, Ali, I say to my Democratic friends, is I think as a result of this compromise, and this is the first time I think in Barack Obama's presidency he's really worked with the Republicans to put forth a bipartisan package, I actually think as a result of this his chances of being re-elected in 2012 are greatly enhanced. But don't forget, Ali, one important point -- we're going to be fighting this same fight on this show two years from now --</s>VELSHI: Absolutely, we are right.</s>MOORE: -- because these are only two-year tax cuts.</s>VELSHI: Absolutely right. Chrystia, let me ask you something. You were with the "Financial Times," you were with "Reuters," you have a particularly global outlook at the world. We have created some sort of impression that we are one of the most heavily taxed people in the world. In fact, there are various fronts, including sales tax and things like that, and income tax where the U.S. is not, quite simply, the most highly taxed jurisdiction in the western world.</s>FREELAND: Well, that's absolutely right, Ali. And actually, Americans are relatively untaxed compared to people living in other western industrialized countries. One point on which I would agree with Stephen and one point on which I think that this package is a good one is lowering some of the corporate taxes, lowering capital gains. I think that's great and a real stimulus to business. But where Americans are undertaxed -- and I know that no one feels that they're undertaxed -- but if you were a person who worries about the budget deficit, which I think all sensible, sane individuals ought to be, is precisely on the areas where the president has caved. And that is on the tax on the wealthiest, particularly on the estate tax. The other issues which it's remarkable that Americans aren't even talking about, is issues like a consumption tax, which you referred to, Ali. And, you know, that is political poison.</s>VELSHI: Sure.</s>FREELAND: But I think it's very hard for any sensible economist to see a way in which the American fiscal situation is sustainable without something like that.</s>VELSHI: OK. We'll continue this conversation. Thanks to both of you. Chrystia Freeland, great to see you. Stephen Moore, come back in an hour. Let's get into it a little bit more. Back to the here and now, don't forget, the president is going to take questions live at 2:20 p.m. Eastern, a little over an hour from now. You will see it start to finish, with analysis, right here on CNN. OK. They're leading the fight to overturn California's ban on same-sex marriage. Kris Perry and Sandy Stier talk to us about their legal battle against Proposition 8, their exclusive live interview -- next.