White House Ally Backs Bush Tax Cuts; Stimulus In Disguise?
WOLF BLITZER, HOST: Thanks very much, Rick. Happening now, it's a major break from President Obama. Just weeks after leaving his post, the former White House budget director now arguing for a temporary extension of the controversial Bush era tax cuts for the wealthy. Plus, as Ohio goes so goes the nation? The phrase rings true, as Democrats struggling right now to hold onto critical seats in time for November's mid-term election. The best political team on television is in Ohio right now live with the CNN Election Express. I'll speak also with the chairman of the Democratic Party. And heightened warnings from top U.S. military officials in Afghanistan as a Florida pastor pushes ahead with plans to burn Qurans on the September 11 anniversary this Saturday. I'm Wolf Blitzer. And you're in THE SITUATION ROOM. The economy is spelling new trouble for President Obama and Democrats on the national stage. Nowhere is that more evident than in Ohio, a state that helped decide the fate of all but two presidential races in the last 100 years. Now with only 56 days left before what's expected to be a highly contentious mid-term election, Ohio's staggering 10.3 unemployment rate is toughening the battle for Democrats already clinging to stay in power. This hour, we're on the ground in Ohio with the best political team on television. They'll be live from the CNN Election Express. But first, let's go live to the White House, where President Obama's efforts to jump-start the ailing economy are hitting new roadblocks. A CNN/Opinion Research Corporation poll now shows that more Americans -- 46 percent -- think Republicans can do a better job handling what voters consider to be issue number one, while 43 percent say Democrats. This comes amid new concerns about the administration's proposed plans to end Bush tax cuts for the wealthy from someone who just recently was one of the president's closest economic advisers. The former White House Budget Director, Peter Orszag, writing in "The New York Times" today -- and let me quote -- "No one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned." We're breaking it all down with our White House correspondent, Dan Lothian, and our chief business correspondent, Ali Velshi. He's at the CNN Center. Let's go to the White House first to get reaction. What are officials saying about Peter Orszag's proposals -- Dan?</s>DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, White House Spokesman Robert Gibbs today saying that he thinks that Peter Orszag was wearing his Congressional relations hat. In other words, he was laying out a compromise whereby lawmakers might have to do something to help the wealthiest of Americans in order to get a deal done up on Capitol Hill. Orszag writing, quote, "Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt." Though the bottom line here at the White House is that despite what he has written in that "New York Times" opinion piece, it does not change the president's thinking about tax cuts for the rich.</s>ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Our viewpoint on this is that -- that we should and must pass legislation that extends the tax cuts for the middle class families. But we cannot afford, in this environment, to -- in our budgetary and fiscal environment -- to extend the tax cuts for those that make more than $250,000 a year.</s>LOTHIAN: What's clear here at the White House, though, according to top aides is that they won't say whether they're concerned that this message from Orszag today will give ammunition to Republicans, especially during this critical mid-term election season. What we do know, though, is that they were apparently caught off guard by that opinion piece, Robert Gibbs saying that as far as he's aware, no one here at the White House got an early read before it was released -- Wolf.</s>BLITZER: I know the president tomorrow, around this time, is going to be in Cleveland, Ohio, speaking about the economy, about jobs. He's got more initiatives, more proposals he's about to -- to lay out. Give us a little preview.</s>LOTHIAN: That's right. This is just yet another prong of this big push by the White House to try and turn the ailing economy around. The president will be rolling out $200 billion in tax cuts for businesses to buy new equipment. All told, between that, some other proposals, including infrastructure -- $50 billion in infrastructure -- we talked about that yesterday -- will total about $350 billion that the president is proposing. The White House says it's much less than that because there will be offsets and they'll be closing some loopholes. But what they are trying to show here is that the president is very much engaged in trying to get the economy back on track. You can call it a lot of things, but do not call it a secul -- second stimulus. While some may argue that's exactly what it looks like, the White House is staying away from that. The big challenge, though, is will they be able to get all these proposals through up on Capitol Hill. Right now, it's uncertain they'll be able to do that -- Wolf.</s>BLITZER: Uncertain, you say. A lot of experts are saying between now and November 2nd and the mid-term elections, it's impossible to get this $350 billion package through.</s>LOTHIAN: That's right. And that's why, you know, today at the press briefing, someone asked Robert Gibbs if it pretty much seems uncertain or impossible to get this done, then why is the White House moving forward with this? Of course, cynics would argue that at least there's a public relations side to this -- the White House can show Americans that this is what they're doing to turn the economy around and Republicans are putting up roadblocks.</s>BLITZER: Dan Lothian is over at the White House. Let's dig deeper right now on these proposed tax cuts with our chief business correspondent, Ali Velshi -- all right, Ali, assuming that the president's plans do get off the ground, explain what we're talking about right now.</s>ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: All right. Well, part of the reason why they want to do this even if it doesn't get off the ground is because of that $350 billion that Dan was just talking about, $300 billion of those are essentially tax credits. So for an administration that has been called unfriendly to business, $200 billion of that is going to be announced tomorrow. And that is for expansions of plant or to buy equipment for businesses. The idea is that businesses are not spending their money and not expanding. If they start expanding plant building, that creates jobs. If they buy equipment, that will create jobs. That's the -- the $200 billion. I want to switch this over and -- and show you what else that the White House is talking about. There's the $100 billion -- well, let's start here. There's the $50 billion that the president announced when he was in Milwaukee. This is for rapid transit -- high-speed rail, new runways at airports and air traffic control upgrades and new roads. That's traditional stimulus, Wolf. Then you've got the $100 billion. Those are for extensions of a credit -- a tax credit that already exists for companies who develop and -- and create new inventions -- one of the things that a lot of people say will be the -- the heart of economic growth in America. And, finally, the $20 billion that Dan was just talking about, which is designed to get companies to build, plant and buy equipment. So the -- it is a stimulus. The idea is it's supposed to stimulate the economy. The problem, Wolf, is that we -- we've made stimulus into a bad word in this country. And that's why the White House doesn't want us using that expression for this kind of stuff. But, ultimately, it is designed to stimulate and it is designed to go through businesses to do that. Many of those businesses will be small business. You and I have discussed many times, Wolf, that small business is typically the engine of job creation in this country, not big businesses. Right now, that's not happening.</s>BLITZER: Let's talk about it. If, in fact, Congress were to approve all of this $350 billion package, it would take a while, Ali, for any new jobs --</s>VELSHI: Yes.</s>BLITZER: -- really to emerge as a result of this. These aren't going to be creating new jobs within a week or month or -- or very quickly.</s>VELSHI: Completely right. But we are at a point in this recession, Wolf, where we shouldn't have to depend on increased government expenditure into the economy to be creating jobs. We should be looking at the private sector to do so. So what I think we're trying to deal with right now is confidence. As we've discussed, consumers are keeping their money in their pocket because the unemployment rate continues to be high. Jobs continue to be lost, so they're worried about losing homes. You don't want to spend money if you think you won't be able to pay for -- pay for that a year from now. Businesses are not stepping up and hiring people because they're waiting to see consumers step in. So this is more meant to -- to provide confidence that this is not an anti-business administration and that things are going to get good, so we're going to give you an incentive to start spending now. The recovery has to come from consumers and businesses. It can't continue to rely on government inputs. So, you're right, it's not going to create any jobs immediately. It is meant to get businesses to step in and say, look, there's some incentive for us to get back in the game and put some of the money we've been stashing on the side into the economy.</s>BLITZER: Ali Velshi, thanks very much. Good analysis. Shifting political opinions -- a new poll shows many Americans are losing confidence in Democrats' ability to handle the economy. Will that translate into real problems come election day? And Chicago Mayor Richard Daley announcing he will not seek reelection. Will the White House chief of staff, Rahm Emanuel, try to take his spot? Stay with us. You're in THE SITUATION ROOM.