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Congress Returns from Holiday to Face Campaign Finance Reform, Budget Problems

Aired July 7, 2001 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MARK SHIELDS, HOST: Welcome to CAPITAL GANG. I'm Mark Shields with the full Capital Gang: Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

With Congress returning from its Fourth of July recess, the House will take up campaign finance reform. Republican leaders declared war against the Senate-passed McCain-Feingold bill. Supporters of the GOP substitute insist it would limit soft money.

(BEGIN VIDEO CLIP)

REP. RICHARD ARMEY (R-TX), HOUSE MAJORITY LEADER: We're going to impose real restrictions on that, but we're not going to intrude against the First Amendment rights of people in the campaign session.

(END VIDEO CLIP)

SHIELDS: Some 25 House Republicans, whose re-election campaigns last year were aided by Senator John McCain, received a letter from the senator saying, quote, "We both promised to lead the fight to make meaningful campaign reform law. I urge you to keep up that commitment to reform in the coming weeks," end quote.

Senator McCain's assurance that he intended no intimidation did not satisfy the Republican speaker of the House.

(BEGIN VIDEO CLIP)

REP. J. DENNIS HASTERT (R-IL), HOUSE SPEAKER: I think that's a threat, and I don't think he ought to threaten, call it a threat or a bully or whatever.

(END VIDEO CLIP)

SHIELDS: Margaret Carlson, is John McCain losing his coalition on this key issue?

MARGARET CARLSON, "TIME" MAGAZINE: Well, the closer campaign finance gets to being a reality, the more afraid the coalition will look, but John McCain has a few things going for him. It's not a shakedown to ask the 55 Republicans he campaigned for -- to call in those chits on campaign finance. A good number of them promised that they'd be with him on that and not back some weak compromise bill. Gephardt wants to deliver the way Tom Daschle delivered in the Senate. Now he's got a harder task. Tom Daschle doesn't have a Black Caucus, because we know what the Senate is made up of. And Gephardt will be able to get half of them, but there's a -- you know, there's a problem. The blacks just got on this gravy train and they don't want to get off of it now, and they feel more vulnerable, but I think at least half of them.

It would be a terrible blot on the Democratic Party not to support this when it's coming due. And maybe McCain will get lucky and Tom DeLay will get his wish, which is a threat of a veto from George Bush.

SHIELDS: Bob Novak, what's the story?

ROBERT NOVAK, "THE CHICAGO SUN-TIMES": I think that John McCain is very heavy-handed in these dealings with all the Republicans.

There was nothing sealed in blood, Margaret, in that campaign.

CARLSON: Just a promise.

NOVAK: No, it was no promises made. It was just -- it was a concept.

And just -- this does come away as very heavy-handed, and it's the hand of John Weaver who (UNINTELLIGIBLE). And I don't think the senator is that bumptious.

But I would say this, that the coalition is breaking down. Martin Frost, the chairman of the House Democratic Caucus, is against it. The Black Caucus is against it. I think it's going to be a very close vote because the bill itself has got a lot of complications, a lot of problems; doesn't do what a lot of people, including myself, hoped it might do.

SHIELDS: Kate O'Beirne, the Republican leadership is all gathered around this Ney substitute -- Mr. Ney not long identified with this issue of campaign finance reform, but he's rushed into the breach now.

KATE O'BEIRNE, "THE NATIONAL REVIEW": Late to the cause, Mark.

SHIELDS: Late to the cause, as we say.

O'BEIRNE: It's not as bad a bill, but it's still a bad bill. I think, it, too, shares some of the constitutional problems, but they clearly thought they had to be able to rally around something. The House Republican freshmen sure don't think John McCain's threat is particularly harmful to them. Only two House Republican freshmen are supporting the McCain-Feingold version in the House.

And when you look back at the news reports of John McCain campaigning for Republicans last fall, invariably McCain people were quoted as saying campaign people were saying, "There's no quid pro quo. We're not looking for anything in return." So this late in the day, my way or the highway, does show up an unattractive side that we've sometimes seen in John McCain's personality, which is the bully boy.

SHIELDS: Al, the bully boy?

AL HUNT, "THE WALL STREET JOURNAL": Well, first of all let me say that this so-called Republican alternative, the Ney bill, is a total fraud. It codifies corruption. Let me say what it will do.

Carl Lindner, who is a big wheeler-dealer, political fixer, used to love to give to both parties. Under that Republican bill, he could give in any election cycle $900,000 in soft money, another $360,000 of hard money. And if his wife gave too, they could give $2.5 million. That is real reform. All the Clinton outrages -- Roger Tamarez (ph), Denise Rich, the breakfasts and all that -- none of it would be affected by that bill -- not one single bit would be affected by it.

As for John McCain, I would love to hear what the right would say if, for instance, Jack Kemp had campaigned for a bunch of vulnerable Republicans and they campaigned on the tax cut and then they came back and they voted for a phony tax cut instead. I think you would have a thunder on the right.

I was out in Michigan with Mike Rogers, and I interviewed him three or four times, and he made quite clear that he thought McCain- Feingold was the sort of reform we needed, and then Florida's Clay Shaw in the Palm Beach paper when John McCain campaigned with him, said "I've seen the light," basically, on this. Now, they don't want to be held down by it.

NOVAK: Can I explain the difference between the campaign -- I'd like to explain it to you, Al, the difference between this and the campaign? Tax cuts are a basic part of the Republican Party -- something they really stand for. This campaign reform, which is just the first step toward goodness knows what is going to be a restriction of freedom of speech -- is not a part of the ideology of either party. That's why they're having trouble passing it. What it is is a lot of elitists who feel that somehow or other there's something obscene about these contributions...

HUNT: Bob, I'm going to yield to Margaret, but you misunderstood my point. I'm not talking about what's essential to the Republican Party. I talked about being accountable for your word -- what you said in November and then doing something different next July.

NOVAK: That is the difference.

HUNT: No, they are breaking their word, and that is the point -- accountability.

Go ahead, Margaret.

O'BEIRNE: You're saying a promise is a concept. That's what this was, a concept from these people that he came to campaign for, and they had an agreement. And he's calling them on it. Now, that's good politics. Most of the time you would say that's -- you know, you have to keep your word. It's a hand shake. You have to do it.

O'BEIRNE: Except you have to be -- John McCain ought to be a little careful. He lives in a fairly large glass house here. During the primary season, he was signing letters, along with Sam Brownback, opposing embryonic stem cell research -- absolutely opposed. This happens to be a matter of life and death. He's now flipped on that issue. A lot of people think that's a lot more important than campaign finance reform.

NOVAK: He keeps moving off to the left every day a little bit.

SHIELDS: Let me just saying something about John McCain. One hundred and fifty House candidates -- Republicans -- demanded, importuned. He was the 911 call. He was the savior. He was the rescue squad. Time and again -- Tom Davis -- his numbers are better than anybody's on or off the ticket, the most popular politician in the country. They all want him. Why? Because he can bring independents and Democrats and reformers and people who believed in changing it.

And that's when they really did want him desperately, and Denny Hastert today I think has his job in large part because John McCain preserved the Republican House majority. And I just think that, you know, when John McCain spends the last four days in 24 districts in 15 states...

O'BEIRNE: Fifty-five Republicans...

SHIELDS: Yes, I mean, it's just so -- and the idea of John Weaver, who is a very able political guy, manipulating John McCain -- it may be the most ludicrous thing you've said...

(CROSSTALK)

NOVAK: I know you just love John McCain. You just idolize him and bow to him. But John McCain said that John Weaver had gone overboard sometimes on these things.

SHIELDS: I admire John McCain. You idealize anybody who'll cut your taxes.

(LAUGHTER)

The gang of five will be back with what to do about the shrinking budget surplus.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

National economic director Lawrence Lindsey's speculation that the estimated budget surplus for this year has shrunk by $56 billion triggered this reaction by the newly installed Democratic chairman of the Senate Budget Committee.

(BEGIN VIDEO CLIP)

SEN. KENT CONRAD (D), NORTH DAKOTA: I will be calling a hearing next week asking Mr. Lindsey and asking the head of the Office of Management and Budget to appear to give us their ideas on what they would recommend we do. I believe they have an affirmative obligation to come up with spending cuts or new revenue to prevent us from raiding the Medicare and Social Security trust fund.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

LAWRENCE LINDSEY, WHITE HOUSE ECONOMIC ADVISER: We're paying off debt to the tune of $150 billion to $250 billion a year for this decade. That is the biggest surplus that we have ever had in history. And by any measure that is very, very tight fiscal management.

(END VIDEO CLIP)

SHIELDS: Kate O'Beirne, is the amazing disappearing budget surplus a big embarrassment for President Bush?

O'BEIRNE: Well, we finally do have a president at least capable of being embarrassed, but this is not something that George Bush ought to be held accountable for.

If my memory serves me correctly, he was not around during the past five years when Congress has been on a huge, bipartisan spending spree, most recently in December when Bill Clinton signed his last bloated budget. And now it's Capitol Hill talking about a 7 percent increase in overall government spending, when George Bush is one of the few voices in Washington calling for spending restraint and proposing only a 4 percent increase.

But a slow economy, of course, will reduce the surplus and revenues, meaning that's all the more reason for pro-growth tax cuts.

SHIELDS: Al, is that the case?

HUNT: You know, this huge explosion -- the federal spending as a percentage of GDP is down a little over 18 percent now from 22 percent 10 years ago. That's one heck of an explosion.

There's one reason -- there's two reasons, rather, that you have this surplus that's vanishing: a souring economic and a tax cut that we couldn't afford and that is misdirected, Mark.

And at least -- I'll say this. I think that Bob Novak and Kate O'Beirne are both honest. They say we shouldn't spend extra money on Medicare and on Social Security and on education, prescription drugs. They say basically, "Tax cut ought to be passed." What George Bush says is, "We can do it all." And we can with smoke and mirrors.

SHIELDS: Bob, Al's point: unemployment rate the highest in two years, announced on Friday. Manufacturing really on the verge of recession, it seems.

NOVAK: I've been saying there's a manufacturing recession for many months thanks to the mismanaged monetary policy by Alan Greenspan at the Federal Reserve. But this whole business about the vanishing, disappearing budget surplus is ridiculous.

The surplus is now $200 billion for this year -- $200 billion. What has vanished? Yet Senator Conrad is giving his impression of Herbert Hoover, saying that because we have a drop in the economy, we should increase taxes. Have they learned nothing in the last 70 years?

There is going to be a show trial this week in the Senate Budget Committee where they're going to bring Mitch Daniels, the budget director, up, and say, "What are you going to do? Are you going to raise taxes or cut spending? What are you going to do?"

And he ought to really stick it in their eye and tell them that they're a bunch of phonies and fakes when they talk about a disappearing budget surplus when it's $200 billion.

SHIELDS: Margaret?

CARLSON: The White House itself says it's shrinking. And, remember, Dick Cheney predicted the Clinton recession. Remember that. He wanted to name it early and it was coming. And so, we all said on this program, except for Bob, listen, are we going to have this surplus, given what Cheney's predicting is going to happen?

NOVAK: $200 billion.

CARLSON: But it is not enough for this tax cut and to do anything else.

This is what Republicans want. They don't want government. So how do you do it? You spend the money on a tax cut.

But the numbers don't add up. They haven't. The rosy predictions aren't going to play out. If you don't go into Medicare and Social Security -- mind you, they will be calling those accounting tricks, that Social Security trust fund an accounting trick when they dip into it eventually.

There's not enough money to Xerox the blueprint of the missile defense system plans at the Pentagon. Forget it. It's not there.

O'BEIRNE: I have a constructive idea. If congressional Democrats are so worried about the size of the surplus, Americans who are getting their rebate checks, why don't they take their case to the American public in saying, "Please endorse your checks -- your rebate checks back over to the federal government, because we're coming up a little short on our projected surplus and we have other plans for the money"? Let's see how many Americans...

NOVAK: That's ridiculous.

O'BEIRNE: ... give the money back to politicians.

CARLSON: It takes no political courage to give a tax cut to people, a tax cut, by the way, they didn't want. They didn't want.

NOVAK: They didn't?

O'BEIRNE: Let's see if they give it back, if they don't want it.

NOVAK: I think that's a good -- that's a good...

SHIELDS: Would you send yours back?

NOVAK: Of course not. I know I wanted you to pay my taxes for a long time, because you love paying them so much.

The serious thing is, they talk about this is going to cut into the Medicare fund. They have never been able to finance Medicare out of the payroll taxes. They always dip into the income taxes. This is smoke and mirrors. And I just hope that Mitch Daniels, when he gets up before "Herbert Hoover" Conrad of North Dakota, tells the truth and says exactly what I'm saying...

(CROSSTALK)

SHIELDS: Now is that Mitch "Harry Truman" Daniels against Kent "Herbert Hoover"?

NOVAK: Calvin Coolidge.

HUNT: Conrad has not called for increasing taxes. What Kent Conrad has suggested is that later on, that five years out, because we aren't going to have any surpluses, Bob, it is this administration that you praise so often that said, "Social Security and Medicare are off the table." That's what they said. That's not me saying that.

NOVAK: They've been on the table all the time.

HUNT: Bob, I think you've had a lot of time in this, allow me to finish. What Kent Conrad is saying is down the road, five, six years from now, that huge tax cut that you get, the people of your income, that maybe we ought to spend it instead on education, prescription drugs and defense. That is the issue.

NOVAK: Didn't Senator Conrad, in the soundbite we saw, said we either have to come up with more spending cuts -- they say there's not enough spending now -- or new revenue? Didn't he say "new revenue"? That's an increase in taxes, my friend.

HUNT: That's -- your tax cuts won't take effect, Bob. That's not an increase, that's your...

SHIELDS: That's yours. Next on CAPITAL GANG: a new FBI director.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

President Bush named a new FBI director, Robert S. Mueller, a 56- year-old career government prosecutor who was U.S. attorney in San Francisco the past two years.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The FBI has a great tradition that Mr. Mueller must now affirm and some important challenges he must confront.

ROBERT S. MUELLER, FBI DIRECTOR NOMINEE: And if confirmed, I look forward to working with the thousands of dedicated men and women who are agents and employees of the FBI to enforce our nation's laws fairly and with respect to the rights of all Americans.

(END VIDEO CLIP)

SHIELDS: Al Hunt, does this nomination promise a genuine housekeeping at the Federal Bureau of Investigation?

HUNT: Well, it's certainly needed, Mark. After the fiascoes over Robert Hanssen, Wen Ho Lee, the dissembling on the McVeigh case, the FBI needs a shake-up. Louis Freeh was very good at getting more money for the bureau, but he was lousy at reforming the culture.

I think the first thing to say is that this appointment had to be a nonpolitical appointment, and it is that. And George Bush and John Ashcroft deserve credit for that, I think.

I don't know Mr. Mueller, but people who do say he's very able, he's very honest, and he's very devoted to public service. The New York Times reported the other day, he also has a terrific record for appointing women to high posts. That in itself is good, and it also suggests that he may not be as wedded to the old-boy network at the FBI.

SHIELDS: Bob Novak, you've seen a few FBI directors. There have only been six in history. You have been here for all six of them.

(CROSSTALK)

NOVAK: I thought he was a great man, even when he tried to tap my phone.

I think, out of the crimes of the FBI agency, you never mentioned Ruby Ridge and Waco, of course, but liberals never -- whether it was done by the FBI, liberals never mention those blood baths as anything very bad.

I think, I don't envy Mr. Mueller his job. I think he's got a really tough job. Some of the statements coming out of the FBI officials were not very pleasant, you know. They're acting like he was the guy who was being tested.

The whole villain in this is Theodore Roosevelt who, among his other sins, started a national police force. We don't need a national police force. We've never needed an FBI. It's been a lot of aggrandizement and propaganda, but it probably has done a lot more harm then good.

SHIELDS: Abolish the FBI, Margaret?

CARLSON: Mueller is so good a lot of people didn't think he'd get the nomination, including George Bush who asked for more names after Mueller came in to see him. He wasn't glittery enough and a big enough star.

But he is a good guy. Everyone thinks so. I haven't heard a negative word about him. He cleaned up the San Francisco office. He's a career guy, loves public service -- all of the things that Bob thinks are terrible in a human being: Why isn't he in a private practice making money?

Louis Freeh was independent of the Justice Department, but not independent of Congress. I mean, he was a great boot-licker. And his low point was that note to Ken Starr in which he said, "Thank you for being a great American."

So he's out of there. There's time to depoliticize it, and the other test will be to fix the management. And I think Mueller is really good at that.

SHIELDS: Kate?

O'BEIRNE: I get the same kind of reviews talking to people about Mueller. He certainly has strong bipartisan credentials, although he was the personal pick of John Ashcroft who worked with him during the transition period when Mueller was deputy attorney general. So John Ashcroft badly wanted him. He was his candidate.

And I think, news out of the White House that there was some dissatisfaction with the list, I don't think was about Mueller per se. I think it was sort of a little pushback saying, "Don't forget, it's the White House choice," but I think they're perfectly happy with Mueller.

And I have more recent culprits about the FBI. What Congress keeps doing is federalizing more and more crimes while they keep giving resources to local law enforcement because that gets good reviews in local newspapers. They better stop federalizing crimes if they're going to complain that the FBI is doing too much.

SHIELDS: A matter of historical record: The FBI began under President Calvin Coolidge, not Teddy Roosevelt.

NOVAK: That's not true.

(CROSSTALK)

NOVAK: In fact, he did it over -- he pushed it through over congressional objections. And I'll send you the material on that.

SHIELDS: Thanks very much, Bob.

And everybody who supports that move to abolish the FBI, write to Bob Novak at 1-800-BOB.

(LAUGHTER)

SHIELDS: We'll be back with the CAPITAL GANG classic part and the handover of Hong Kong from the British to China four years ago this Fourth of July week.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

And now for our CAPITAL GANG classic. On the Fourth of July weekend four years ago, the British handed over their longtime colony of Hong Kong to China. These were the comments by your Capital Gang on July 5, 1997.

(BEGIN VIDEO CLIP)

SHIELDS: Bob Novak, can the United States really protect democracy in Hong Kong?

NOVAK: I doubt it. But I think we'll probably be a little more protective than we were during 156 years of British colonial rule when the Chinese were treated like dogs most of the time, at best fourth- class citizens.

I don't think we can control the way other people act. We certainly can't control democracy in Egypt and Saudi Arabia. And perhaps we ought to have more limited means of keeping Hong Kong as a free market for capital, and that's what's going to happen under the Chinese government, I'll guarantee it.

SHIELDS: Is that all we're interested in is capital, rather than human freedom and liberty and democracy?

O'BEIRNE: I was taken aback by the coverage, acting like there was a big celebration, when it was a very sad day, it seems to me. Six million people in Hong Kong have now been brought under the control of totalitarian government. All the fireworks in the world can't cover that reality.

SHIELDS: I want to agree and associate totally with Kate's remarks. I think when half the people of Hong Kong -- half of them -- have fled the terror, the tyranny and the despotism of China to get there, these are people that must be really waking up with a different feeling each morning.

HUNT: I don't think we can guarantee democracy in Hong Kong, but I do think we can apply pressure and I think we ought to apply pressure. You have to keep pressure, but you have to engage.

NOVAK: Shall we continue to have a confrontation with the Chinese on everything or should we try to have some kind of a constructive engagement?

(END VIDEO CLIP)

SHIELDS: Bob Novak, in view of what has transpired since then, were you overly optimistic about how Hong Kong could maintain a measure of freedom as part of China?

NOVAK: No, I think it's been -- as part of China, it's had its distinctive culture, which I said it was going to do. So for once I was right. And the notion that you were going to have democracy there never was going to happen, I said that then, because the only time we got interested in democracy and the British did was just when they were getting kicked out by the Chinese after all those years of colonial rule.

But what it is is we still have a capitalistic system, it's still a money center, and Hong Kong is pretty much today like it was before the Chinese came in; there hasn't been that much difference.

SHIELDS: Kate O'Beirne, you took the other perspective then.

O'BEIRNE: Yes, and I do now, Bob. There are gradual changes that are really ominous. Most recently, the chief executive, who seems more inclined to appease Beijing than defend the independence of Hong Kong, has now adopted Beijing's language -- the Falun Gong is an evil cult, a dangerous cult. You've got the bishop -- Catholic bishop of Hong Kong saying that definition could apply to the Catholic Church. Things are changing there, unfortunately, Bob, which I think was predictable.

SHIELDS: Margaret?

CARLSON: I'm in favor of democracy over colonial rule, but when it goes to thugs, you know, you do it with some reservations. I know that Bob admires that kind of behavior in China itself, and so the spread of it is fine. But I think we have to keep a close eye on what's happening there.

SHIELDS: Al?

HUNT: Mark, I hate to do this, but I don't think it's been as good as Bob's hoped for, it's not another Singapore, and, Kate, it hasn't been quite as bad as you feared. It's not as bad as mainland China. But, you know, for the Chinese four years is a very, very short time; the verdict is still out on Hong Kong.

SHIELDS: OK. The verdict is still out on everybody except Al Hunt.

We'll be back in our second half-hour with our Newsmaker of the Week, AFL-CIO President John Sweeney. Beyond the Beltway looks at the trial of Slobodan Milosevic with former Secretary of State Lawrence Eagleburger. And our Outrages of the Week. That's all after a check of the hour's top news.

(COMMERCIAL BREAK) SHIELDS: Welcome back to the second half of CAPITAL GANG. I'm Mark Shields with Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

Our newsmaker of the week is AFL-CIO President John Sweeney. John J. Sweeney, age 67; residence: Washington, D.C.; religion: Roman Catholic; economics degree from Iona College; headed the Service Employees International Union for 15 years; elected AFL-CIO president in 1995.

Earlier this week, Al Hunt sat down with John Sweeney at AFL-CIO headquarters here in Washington.

(BEGIN VIDEOTAPE)

HUNT: President Sweeney, you called this White House the most anti-labor administration in years. That was several months ago. Now there are reports of conversations, even some accommodations in recent weeks. How would you characterize the current relations between the Bush White House and the house of labor?

JOHN SWEENEY, PRESIDENT, AFL-CIO: Well, just judging by the actions of just a few months in terms of what's going on, there continues to be this anti-worker, pro-big business, pro-employer attitude over there in the administration. And it just remains to be seen how this is going to play out. But we had better relationships with George W. Bush Sr.

HUNT: Have you personally met with this president since he's been in office?

SWEENEY: I haven't met with him since he's been in office. I've talked to him on the phone.

HUNT: The business interests that are so pleased with this administration basically supported Republicans in 2000. You and your organization were vehemently for Al Gore. Isn't this simply a case of to the victors go the spoils?

SWEENEY: No, this is not. The election is over. We have a president. This is about how working families are treated and how their issues are handled by the administration. And if you look at ergonomics or you look at the budget, the tax proposals -- all of this has favored big business, has favored employers. And they're ignoring the interests of working families.

HUNT: Labor for decades has been considered part of the Democratic Party. Ninety-five percent of your contributions last year went to Democrats. Does it worry you that you may be too closely aligned with one political party?

SWEENEY: We've had good relationships with both political parties through the years. We have relationships with the Republican members of Congress who really are interested in trying to find solutions for the concerns of working families and who are interested in improving the lives of workers. HUNT: Some (inaudible) building trades, especially the carpenters and the Teamsters, say that the Republican, the Bush energy plan does a lot more as far as creating new jobs than anything the Democrats are offering today. Is that fair?

SWEENEY: Well, as in the past, the administration is discussing some of these issues with individual unions from industries that are affected. And the building trades are really taking a very close look at the president's proposals on energy.

HUNT: Let me ask you about one labor issue -- the question of Mexican trucks in the U.S. The proponents say that the safety record of Mexican trucks has improved tremendously in the last couple years. Is the issue one of safety or is the issue one of American jobs?

SWEENEY: It's really a very broad issue, but safety is one of the main pieces of it. And those in our country representing truckers, who have been taking a hard stand on this, their primary concern has been really the safety of workers and the regulation.

HUNT: Mr. Sweeney, a final question: The AFL-CIO today has 13 million members. That's down 2 million from 1980. Thirteen and a half percent of workers in America today are unionized -- less than half of what were unionized 25 years ago. Can you reverse this trend?

SWEENEY: Well, I believe that we can. And I think over the past six years since I was elected president, we're seeing significant changes in terms of aggressive organizing and building for the long term, reaching out to young people, minorities, women workers as well.

(END VIDEOTAPE)

SHIELDS: Al Hunt, is President John Sweeney in a difficult, if not impossible, situation politically with the Republicans in the White House?

HUNT: Well, Mark, one measure of success in this town is how much heat you generate from your opponents. And the temperature is a lot higher today than it was certainly under Lane Kirkland or George Meany, so he must be doing something right.

I disagree with labor on some of their parochial issues, and I disagree with them on trade. But I think you have to say they remain one of the truly important voices for progressive politics, for the weak and dispossessed in this country, including sometimes when it's not in their narrow interest.

Finally, I'd say, Mark, I think it's remarkable that George Bush has not even met once with the head of labor. Imagine if Bill Clinton, after six months, hadn't met with the most prominent business leader in America.

And Elaine Chao, the Labor secretary, told John Sweeney a few months ago that, "Bush is upset because you're opposed to his tax and budget policies. Those aren't labor issues." As long as he feels that, there's not going to be much communication between them. SHIELDS: Bob Novak, John Sweeney and the...

NOVAK: Well, the difference between the U.S. Chamber of Commerce official and the head of the AFL-CIO is that the Chamber of Commerce hedged its bet. Give the Democrats a little, give to the Republicans. The old labor leaders, right up through George Meany, used to do it.

The biggest joke in your interview was when he said, "Well, we give to some Republicans." Even pro-labor Republicans like Congressman Chris Smith of New Jersey, he went all out to beat him. He is the most totally Democratic labor leader they've had.

His problem is -- he kind of glossed it over -- is the building trade unions, who aren't getting anything from the AFL-CIO, which is geared to government workers and service employees. The building trade union is very interested in the energy plan of President Bush because it means jobs. That's his problem, Al.

SHIELDS: I will say this, Margaret, that there wouldn't have been a civil rights movement passed in this country without the AFL- CIO and organized labor. There wouldn't have been any of the worker safety, Medicare, Medicaid. They created the modern welfare state with their political support in large part.

CARLSON: None of it. And, well, labor picked bad issues to put a lot on the table with the MFN status. There wouldn't be a minimum wage bill now. The bill coming up wouldn't get passed without them. The only people talking for the working class is labor.

And I'm surprised at the White House. To hold a grudge against labor this great and to have it show up in the polls, people saying it's such a pro-business administration and not to have Sweeney into the White House even once and have business people just crowding in, piling in, day after day...

NOVAK: Other labor leaders are going to the White House, though.

O'BEIRNE: The fact remains that John Sweeney represents a very small number of working families he hides behind all the time and a shrinking number of working families.

The number working for private sector who belong to unions is down 250,000 on his watch. They are increasingly public sector, and even at that, a declining share of the labor market. These workers do not feel they need the unions.

And he's gone so culturally left, he's very out of touch by radicalizing the AFL-CIO with the cultural views of union members.

HUNT: He's going to have dinner next week with two dozen House Republicans, Mark.

SHIELDS: Thank you, Al. Next on CAPITAL GANG, "Beyond the Beltway" looks at the first chief of state ever arraigned as a war criminal.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. "Beyond the Beltway" looks at the war crimes prosecution of Slobodan Milosevic. The former Yugoslav president was arraigned in The Hague.

(BEGIN VIDEO CLIP)

RICHARD MAY, WAR CRIMES TRIBUNAL PRESIDING JUDGE: Now, do you want to have the indictment read out or not.

SLOBODAN MILOSEVIC, FRM. YUGOSLAV PRESIDENT: That's your problem. I consider this tribunal a forced tribunal, and the indictments false indictments. It is illegal, being not appointed by U.N. General Assembly, so I have no need to appoint counsel to illegal order.

(END VIDEO CLIP)

SHIELDS: Joining us now is former Secretary of State Lawrence Eagleburger, who served as U.S. ambassador to Yugoslavia in the late 1970s. Thanks for coming in, Mr. Secretary.

LAWRENCE EAGLEBURGER, FRM. SECRETARY OF STATE: My pleasure.

SHIELDS: Lawrence, do you have any misgivings about the way Milosevic was brought to justice in The Hague?

EAGLEBURGER: No, he needed to be brought to justice. We need to remember, however, that the Yugoslavs let him go because we told him we weren't going to give them any war -- any money. We in the West told him we weren't going to give them any money, so let's remember the Yugoslavs did not necessarily do this willingly. But no, I think he had to be tried, but there are real questions as to how much more we ought to be doing with that court.

SHIELDS: I guess it comes to $500 million and they wouldn't have turned him and a billion and he was turned over. Is that the way to conduct foreign policy?

EAGLEBURGER: Of course it's not the way to conduct foreign policy. It may well, however, be the only way you're going to get some of these war criminals turned over. It's not usual in the practice of the legal profession to do this sort of thing.

SHIELDS: Bob Novak.

NOVAK: I really do have great misgivings about this blood money of giving them -- of over the heads and against the wishes of the elected president of Yugoslavia replacing the man who he defeated, Milosevic. That really bothers me, and where does this end? Do they start snatching General Sharon out of Israel and say, boy, he's got war crimes? I think you can make that case. I think this is a really a scary precedent because there doesn't seem to be any rules. Do you see rules there?

EAGLEBURGER: No, no, no, see, Bob I think fundamentally you're correct. Milosevic is enough of an obvious war criminal that I don't have too much trouble with getting him up to The Hague where they can go at him and send him to the pokey at some point. But you're absolutely correct about the precedent, and about the problem of a court created to deal with war crimes when they're not defined, when the jurisdictions aren't defined, when you get into things like some French magistrate wants to subpoena Henry Kissinger in Paris.

I mean it gets very dangerous on the question of due process and the rights guaranteed to defendants if we are not careful. The Milosevic thing, I don't too much trouble with, but I think you have to be very careful of the precedent. I agree with that.

SHIELDS: Margaret Carlson.

CARLSON: I think it's a wonderful thing, despite the cost, to get somebody who is out of power and bring him to justice. What I wonder, though, is if Milosevic clearly wants to be the star of a show trial and play to folks back home. The judge that we just saw is no Judge Ito. I don't think he's going to let much happen, but nonetheless, is this going to have any domestic fallout?

EAGLEBURGER: In the Yugoslav case? You mean in Yugoslavia

CARLSON: In Yugoslavia.

EAGLEBURGER: I think it already has had some, and if you analyze it, I don't see how Milosevic can do anything than what he's doing. He's got to deny the legitimacy of the court. We all know the evidence is there in multiple cases. He's got to deny the court, he's got to deny its jurisdiction.

I think this is a game he will play all the way through. I don't think it's going to get him much. We all know he's going to be convicted, and maybe -- and clearly I think he should be, but he's going play it this way from the beginning to the end, I think, and it will have some impact in Yugoslavia, yes.

SHIELDS: Kate.

O'BEIRNE: Well, it seems to me, Mr. Secretary, we all agree that Milosevic should be brought to justice. But, and I share your concerns about any international criminal court which is bound to be anti-American and what a terrible precedent this could set.

EAGLEBURGER: Quite right.

O'BEIRNE: I do disagree, though, even in the case of Milosevic, it strikes me that this is a dangerous idea. First of all, isn't there an obligation on the part of others in Serbia, the Serbian nation, to confront what Serbia did. He had some willing helpers in Serbia.

EAGLEBURGER: Good for you.

O'BEIRNE: And won't he now be a martyr to a kangaroo court and feed the delusions of Serbia, those who want to promote the notion that Serbia is surrounded by these hostile Westerners?

EAGLEBURGER: One of the most important points to be made is the one you've just made. It wasn't too many years ago that Milosevic was the hero of Belgrade and the hero of Yugoslavia, and the cheers for what was going on, as long as he was winning, were there amongst a great many Serbs, and I think we need to remember that Milosevic, while he headed this gang of thieves, was by no means the only one responsible, and I think you can go well down into the populous of Serbia, if you go back far enough in terms of years, to find that he was very well-respected, supported. You've got cottages sitting somewhere avoiding capture so far. There are a whole holes of people and yes, one of the problems may well be that Milosevic stands in for all of them, and that would be a mistake.

SHIELDS: Al Hunt.

HUNT: Larry, like Margaret, I don't know how far down we should go, but I'm awfully glad that we're getting the chief thug and the chief war criminal. Do you suspect, though, as we deal with public opinion, including public opinion in Serbia, do you agree -- do you think some of this intelligence information, some of this intelligence material that we have will even more clearly and graphically establish a chain of command that shows how complicit Milosevic was?

EAGLEBURGER: Yes, Al, my sense of it that there must be documents there, there must be a good many things that if they are unearthed will demonstrate that he was not just an unknowing leader, that he was, in fact, not only condoning, but I suspect ordering a great deal of this stuff. I think clearly there will be more evidence that will come out.

SHIELDS: Larry. based upon your own extensive knowledge of the area and the people, what does the top link of a democratically- elected president by this process, what does it mean for the future of democracy and democratic institutions in Serbia?

EAGLEBURGER: There's no way I can answer that question. Yes, he was democratically elected at one point. I think his last election probably was stolen however, so you have to be a little bit careful there. What does it mean?

I'll tell you what I think all this means is that the Milosevic case will go forward and it means very little in terms of any other war criminals or any other prosecutions. If you're a little country and you lose, you may get prosecuted. If you are a big country and you win, you ain't going to see the court at all, believe me. This is a very narrow precedent and nothing more.

NOVAK: And of course, the greatest war criminals of our time, Joseph Stalin and Ho Chi Min, because they won the wars, go to no war crimes tribunal.

EAGLEBURGER: Of course, of course. They never would go.

SHIELDS: Bob, you forgot Hitler.

O'BEIRNE: Or Fidel Castro.

SHIELDS: Larry Eagleburger, thank you for being with us.

EAGLEBURGER: My pleasure.

SHIELDS: THE GANG will be back with the "Outrage of the Week."

(COMMERCIAL BREAK)

SHIELDS: Now for the "Outrage of the Week." Robert Hanssen began working for the FBI in 1976. By 1979, Hanssen had become a traitor, spying for the Soviets. For 22 years, until he was arrested this year, Hanssen earned $1.4 million for betraying his country and for allegedly disclosing the identities of Russian agents working for the United States who were subsequently executed. For this Hanssen Friday, under a plea bargain, was spared execution and given life. In addition, Hanssen's family will receive his FBI pension. Did the families of Benedict Arnold or Julius and Ethel Rosenberg get pensions? This is truly an outrage -- Bob Novak.

NOVAK: So slow is confirmation in the newly-Democratic Senate that President Bush will not have his team in place before next March at the earliest. The worst-stalled nominees include John Negroponte for U.N. ambassador and Otto Reich for assistant secretary of state, both superbly qualified. The Senate confirmed Negroponte as ambassador to three countries; Reich as ambassador to one. But liberals have vowed vengeance because in the Reagan administration, each supported the Contras to bring freedom to Nicaragua and that's an redeemable sin in the eyes of the left.

CARLSON: Remember Henry Cisneros, one of the brightest Democratic stars before he got ensnared in independent counsel land? The former Cabinet member admitted to an affair, but fudged how much he gave his mistress. Since then, Cisneros has paid a $10,000 fine and been pardoned, but independent counsel David Barrett goes on, finding lifetime employment in the case. Last week, he got permission from a Republican panel to keep going, using the same flimsy justification he's used for the past six years. Cost to the taxpayer of all this: $15 million; cost to Cisneros and the country, incalculable.

SHIELDS: Kate O'Beirne.

O'BEIRNE: The International Olympic Committee will meet within the week to select the host city for the 2008 Summer Games, and Beijing appears to be the front runner. The Bush administration is officially neutral on this outrage, despite the American citizens in Chinese custody on trumped up charges. So far, they, at least, have been spared the fate of executed whose organs are sold to fund the Chinese military. Rewarding this abusive regime makes a mockery of alleged Olympic ideals.

SHIELDS: Al Hunt.

HUNT: Mark, Chandra Levy, a 24-year-old intern, has been missing since April 30. She had some relationship with Congressman Gary Condit. We have no idea what happened to her, but Gary Condit continues to largely stonewall, offering minimal help to this aggrieved family, and the cops still treat him with kid gloves. The only priority in this case is to find out what happened to Chandra Levy; protecting the powerful is no way to do that.

SHIELDS: This is Mark Shields saying good night for THE CAPITAL GANG.

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