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CNN CAPITAL GANG

Is Enron a Political Scandal?; What Is Bush's State of the Union Speech About?; Are the Philippines Next Target of War on Terror?

Aired January 26, 2002 - 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.
ANNOUNCER: Live from Washington, THE CAPITAL GANG.

MARK SHIELDS: Welcome to CAPITAL GANG. I'm Mark Shields with the full CAPITAL GANG. That's Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

Congress reconvened this week. And the first of many Enron investigations was launched. The Arthur Andersen accounting executive in charge of Enron was asked why he ordered the company documents shredded.

(BEGIN VIDEO CLIP)

DAVID DUNCAN, FMR. ANDERSEN AUDITOR: Mr. Chairman, I would like to answer the committee's questions, but on the advice of my counsel, I respectfully decline to answer the question based on the protection afforded me under the Constitution of the United States.

(END VIDEO CLIP)

SHIELDS: Arthur Andersen executives were pointing fingers at the silent Duncan.

(BEGIN VIDEO CLIP)

REP. JIM GREENWOOD (R), PENNSYLVANIA: Why didn't the top brass at Andersen immediately send out word to everyone in the company, and particularly those involved in the Enron case, obviously, to not touch the document, not shred a document?

C.E. ANDREWS, ANDERSEN MANAGING PARTNER: Mr. Duncan has been advised of our policies in the memo on October 12. He directed the action. We find that action totally unacceptable.

(END VIDEO CLIP)

SHIELDS: On the first day Congress was back, enough House members, 218, had signed a discharge petition to bring the campaign finance bill to the floor. A co-sponsor rejoiced.

(BEGIN VIDEO CLIP) REP MARTIN MEEHAN (D), MASSACHUSETTS: As the Enron storm clouds come in, the public's tolerance for this soft money system is growing thin.

(END VIDEO CLIP)

SHIELDS: Margaret Carlson, has Enron, which has been called by many a business story, now becoming more of a political story?

MARGARET CARLSON, "TIME" MAGAZINE: Well, this week, we saw politicians trying to get on the right side of this story and trying to counteract this statistic that "The New York Times" published this week, which is that of the 11 committees and the 248 members investigating Enron, 212 of them received contributions from Enron. And while they're patting themselves on the back that Enron didn't get bailed out in the end, everything Enron wanted up to that point, Enron got. At least the Congress was an enabling body.

And when Arthur Levitt came to testify, it was clear that the accountants and all the accounting rules that Arthur Levitt was screaming to high heaven, "we've got to fix this," that Congress denied him that at every turn. So much so that the high point of the hearing in the Senate was when Senator Robert Torricelli, one of 13 senators who had blocked this rule, got up and said to Arthur Levitt, "We were wrong and you were right." And that's how that auditing consulting thing got going.

George Bush got on the right side by conveniently and luckily finding a mother-in-law, who'd lost $8,000, the best $8,000 the Bush ever lost. And you could see that maybe members of Congress who couldn't get the money back fast enough were looking for a cousin who might've lost money.

Bob, did you lose any money in Enron?

ROBERT NOVAK, "CHICAGO SUN-TIMES": I didn't own any stocks, so I didn't lose any money, dear.

CARLSON: That should make you happy, Bob. Smile.

SHIELDS: Bob, in a strange way, though, I mean, the president's public mood did go from concern to outrage. And it did reflect, I think, the public.

NOVAK: Sure.

SHIELDS: But second, in a strange way, Enron may be hurt politically by the fact that they did contribute to 211 of those 248 members who now have to prove their bona fides and their independence, don't they?

NOVAK: In the first place, I don't like soft money. I've never liked soft money. I've always been against it. I just don't like the McCain/Feingold bill. I think it's a bad bill, but that's another story. But I think it's going to pass, the bill. I don't think there's any question about that. And it's going to be signed by the president.

But you're quite wrong, Margaret. They didn't get everything they want. The thing that made them the most money was limitations on carbon dioxide emissions. They didn't get that. They didn't get a lot of things that they wanted. Or they certainly didn't get a better credit rating push by the Treasury when they made those frantic phone calls at the end.

So you really -- what you do get is access. And I think that is a problem. By the way, you know, I think it's very interesting that we have accountants taking the Fifth Amendment. Now when I first got here, it used to be communist labor leaders. So the Fifth Amendment bout has gone upscale socially, hasn't it?

KATE O'BEIRNE, "NATIONAL REVIEW": Accountants wind up being a lot more interesting than we gave them credit for.

(CROSSTALK)

O'BEIRNE: ... the accounting profession. Who knew?

SHIELDS: Kate, is it a political story?

O'BEIRNE: I think it's now a political scandal in the sense that -- now that there's any evidence politicians necessarily did anything wrong. But in the sense that it's a very useful politically, to an awful lot of people. So I think it's taken hold in Washington and it is not going away.

Look at how easy this is. You can, and they will, Democrats, smear George Bush because his rich friends bankrupt a corporation and sent thousands into the streets. They're going to use it to kill the energy bill. Tom Daschle's having a very hard time holding up that bill that had majority support in the Senate.

Now they'll say it was formed in secret behind closed doors by the Cheney task force. Bought and paid for. So let's kill the energy bill. Government will move into securities and the accounting profession and regulate, which government always wants to do, and of course, finally campaign finance reform. They now have their final signature and they'll be a house vote. So it's so useful to so many politicians, it will be a big political story.

SHIELDS: But hasn't -- I mean, hasn't the failure and the debacle demanded that somebody move in this vacuum, this ethical and moral vacuum, whether it's -- call it regulation of accountants and conflicts and all the rest of it, Al?

AL HUNT, "WALL STREET JOURNAL": Mark, this story has more legs than a centipede. I mean, this is not going to stop. It's just going to mushroom. It's going to be big. I don't know where it's going to end up.

But we felt the hearings would be the big story this week. And they were what we thought they would be. And they really were eclipsed by a number of other stories. There was the tragedy of a vice chairman of Enron who committed suicide. He's somebody who knew a lot. At least according to reliable reports. We remember -- we can't help but remember the Vince Foster suicide and the way that mushroomed into a bigger story nine years ago.

And then we had "The New York Times" revelation that former Christian Coalition honcho, Ralph Reed, apparently at the behest of Karl Rove, the Bush strategist, was for four years secretly put on the Enron payroll. Not for his expertise, that's for sure.

How many others were put on that payroll? And Mark, I think the important point to make here is so much of this is going to come out, no matter how much has been shredded, because you have competing interests here. You have the auditors against the company. You have Fasto (ph) versus Lay versus Skilling. You have customers who are furious. You have hostile competitors. It's going to come out.

NOVAK: See, the interesting thing is that -- as Pete says, there's people who want to make political hay out of it. And the Ralph Reed story is a great example of that. As I understand the story, he got on there himself. And he got a recommendation from Karl Rove, but he got on the himself, was $10,000 to $20,000.

HUNT: A month.

NOVAK: A month. But at the same time, his company was getting about $2 million from the Bush campaign. I mean, so the idea this was some cover from the Bush campaign, as incorrectly reported in "The New York Times," is ridiculous.

But I'll tell you one thing, these result -- these documents from the Cheney task force on energy, which the Vice President Cheney stubbornly refuses to put out -- he says that's an invasion or presidential privilege -- this is still a huge mistake.

CARLSON: But you know, Bob, I want to point out. A quarter million here, a quarter million there. It adds up. I mean, Ralph Reed did get an extra...

SHIELDS: Ten, 20,000 a month.

CARLSON: A month.

NOVAK: But he got it himself.

CARLSON: And let me just make this one other point.

HUNT: For doing what?

CARLSON: Which is that...

NOVAK: You don't know what he did.

HUNT: No, I don't think he had any expertise though.

NOVAK: He was a public relations man.

HUNT: He was hired by an energy company. I think it was...

NOVAK: Well, they have public relations.

(CROSSTALK)

HUNT: We don't know the answer to that question.

NOVAK: There were certain people, and they may be at this table, who are looking for something to make conservatives and Republicans look bad.

HUNT: No.

CARLSON: The accounting trick...

NOVAK: I think you are.

HUNT: No the issue is...

CARLSON: The accounting tricks that allowed Enron to get away with what they did and for the officers to get out the money and partly led to their bankruptcy, were accounting rules that Congress let stand when they were warned about them by Arthur Levitt. And if it hadn't been for that, if they hadn't gotten, you know, some of them, $50, $100,000 to Hillary Clinton, $100,000 to Chuck Schumer by the accounting industry, I don't think that they would've been allowed to get away with what they got away with.

NOVAK: Look, I...

SHIELDS: In closing that, that is that first of all, I think the focus in the coming industry's understandable, but the accountants in this case, were lied to by the company. I mean, you know, I'm not making any grief to the accountants, but if they're getting phony numbers and perhaps they should've detected them, I don't think that's the real scandal, nearly as much as it is Enron.

Second, and I just say this, if "The New York Times" story is right about Karl Rove and Ralph Reed, it was at a time when John Ashcroft was making the move to be the candidate of the religious right that he joined. And he was not getting $2 million from the Bush campaign in 1997...

NOVAK: That's...

SHIELDS: ...and 1998.

NOVAK: That's a conspiracy theory. And I think the story's a distortion.

HUNT: Well let me just say, I don't think it is a distortion. And it may well be you'll find there are Democrats who were involved in this, too. What we have to find is who else did Enron put in their payroll? What favors? Did they give stock to anyone? (CROSSTALK)

NOVAK: ... of "The New York Times."

HUNT: Was anybody else -- no, he wasn't from "The New York Times."

NOVAK: $50,000.

HUNT: He was not with "The New York Times."

NOVAK: Well, he...

HUNT: He later went with "The New York Times." It's quite different. You know, but anybody. Did they -- do Democratic consultants. Was there anybody who was given stock or partnerships in that? What other deal? Did Ken Lay have any role in the transition? These are very important questions. Answer them.

SHIELDS: And I think none of us on here has been on the Enron payroll, right?

CARLSON: Darn.

SHIELDS: Gang of five will be back with combat in Afghanistan.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. U.S.-led forces conducted a raid against Taliban leaders holding out in the mountains north of Kandahar.

(BEGIN VIDEO CLIP)

RICHARD MYERS, JOINTS CHIEFS CHAIRMAN: Our forces attacked two compounds and attained 27 individuals. There were enemy forces killed in this action. And one U.S. special forces soldier was slightly injured.

DONALD RUMSFELD, DEFENSE SECRETARY: There are a lot more of these pockets. We pursue them alone. We pursue them with coalition forces. We pursue them with Afghan forces. And we're going to keep at them until we get them.

(END VIDEO CLIP)

MYERS: The American Taliban, John Walker Lindh, returned to America and was arraigned on criminal charges.

(BEGIN VIDEO CLIP)

JAMES BROSNAHAN, LINDH FAMILY ATTORNEY: The United States government has kept John Lindh away from a lawyer. He began requesting a lawyer almost immediately, which would have been December 2 or 3. For 54 days, he was held incommunicado.

JOHN ASHCROFT, U.S. ATTORNEY GENERAL: John Walker chose to join terrorists who wanted to kill Americans. And he chose to waive his right to an attorney, both orally and in writing before his statement to the FBI.

(END VIDEO CLIP)

SHIELDS: Kate O'Beirne, what does this renewed military action near Kandahar indicate?

O'BEIRNE: Well, Mark, it seems to me al Qaeda's clearly no longer able to operate freely in Afghanistan. The Taliban's been toppled, but they are still present and able to cause trouble. U.S. is helping the new government find and destroy their assets and them, when possible.

But it seems to me that not too far in the distant future, we ought to be prepared to say mission accomplished, even though Afghanistan is not totally Taliban-free, because I don't believe it will be. And then we can turn over a military operation to assist the new government to other troops who aren't the huge targets American troops are.

SHIELDS: Al Hunt, your own sense of where we are militarily and John Walker Lindh?

HUNT: Well, on the first, I pretty much agree with Kate though. I think we're losing sight of one thing. I still think it's absolutely essential that we capture or kill Osama bin Laden. I don't think it is sufficient to say, "Well, he's paralyzed. He can't." If he becomes a symbol of defiance, I think that hurts the effort against terrorism, not only in Afghanistan.

O'BEIRNE: (UNINTELLIGIBLE) Afghanistan.

HUNT: Right. I am, too.

O'BEIRNE: Right.

HUNT: And I don't think we should lose sight of that. John Walker Lindh, I really don't think very much about it, Mark, one way or the other.

SHIELDS: Has he become, in some ways though, Bob, the surrogate for Osama bin Laden? I mean, that fury that he...

NOVAK: I don't believe so. I think most American people who don't belong with the American Civil Liberties Union -- anybody here belong to the American Civil Liberties Union?

HUNT: No, but I would.

NOVAK: Yes.

HUNT: I think they did great work.

NOVAK: Oh, I think they're a disgrace. But anybody who doesn't want to belong or want to belong to them now would understand that this fellow took up arms against his country. And the idea that he didn't get a lawyer for all that period is just a disgusting statement by his lawyer.

Now I want to say one thing, Mark. A lot of this -- if you read the papers carefully, watch the television, you'd think the war in Afghanistan is over. And all of a sudden, we're mopping up things. Rumsfeld is saying that...

CARLSON: We can't hear him?

NOVAK: We can't hear me?

CARLSON: Oh, good, OK.

SHIELDS: Margaret, you can jump in.

CARLSON: Do you want my mike? Let me just say Afghanistan -- we need to have Afghanistan al Qaeda-free. We may never get it Taliban- free.

O'BEIRNE: Right.

CARLSON: And al Qaeda-free contains capturing Osama bin Laden. And I think that's a good part of that.

On John Walker, whom we now call John Walker Lindh, he's the American Taliban who now, for the first time this week, looks American as well as Taliban, because we saw him cleaned up and we saw his parents and we saw his lawyer.

(CROSSTALK)

CARLSON: He's really porked up. He's like Elian Gonzalez in a way. I think we're pouring into him, whether we think he's Mullah Omar or Osama or just this spoiled kid from...

O'BEIRNE: I think we know who he is.

CARLSON: ...permissive Marin County. And you know, on talk radio they want to execute the parents. It's not him. But I think this lawyer business is a problem. It could be that he was sick or he was being medicated and didn't waive his rights completely, as is being said.

NOVAK: Well, ask me what I worry about. What I did worry about, before my microphone disappeared into my gut.

CARLSON: God was punishing you for what you were about to say.

NOVAK: Everybody had thought that war was over by reading the papers. And all of a sudden, we have this mop-up operation at Kandahar. Don Rumsfeld said there's lots of pockets. And do you know what the truth is? Because they have kept the press out. And look, only people in our business care about it. That because they have kept the press out, we have no idea what's going on. You know, we get these nice little stories about a correspondent on the aircraft carrier John Stennis, but we don't -- there's not the kind of war reporting there was in past reports. So we have no idea what the truth is.

CARLSON: You were over there, Bob.

SHIELDS: Last word, Bob Novak. Next on CAPITAL GANG, the stimulus package revived or is it?

(COMMERCIAL BREAK)

SHIELDS: Welcome back. On the second day that Congress is back in session, Majority Leader Tom Daschle went to the Senate floor with a plan to revive economic stimulus legislation, which died in the Senate last year.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: If we're serious about finding compromise, what could possibly be wrong with taking the proposals that both sides had in their initial proposal as a way with which to at least get to conference? This is a ticket to Congress.

(END VIDEO CLIP)

SHIELDS: That very day, Federal Reserve Chairman Alan Greenspan splashed cold water on the need for economic stimulus.

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: I do not think it is a critically important issue to do. I think the economy will recover in any event.

(END VIDEO CLIP)

SHIELDS: House Democratic leader Richard Gephardt separated himself from Senator Kennedy's proposal a week earlier for rollbacks on tax cuts passed last year.

(BEGIN VIDEO CLIP)

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: It's my view that we shouldn't be reconsidering tax cuts in the middle of a recession.

(END VIDEO CLIP)

SHIELDS: Bob Novak, will an economic stimulus bill pass now?

NOVAK: Yes, I think it will. And the reason it will is because if you watched carefully Thursday and Friday, there was a mass pilgrimage or should I say a stampede of lobbyists from K Street up to Capitol Hill, because they suddenly saw a vehicle for all the goodies they want to put in, the so-called tax extenders, extending tax benefits, new tax provisions, special tax provisions. And that's what they're interested in there, Bill. This is not a stimulus bill.

And you know, what it is, is mostly a spending bill for people who are unemployed. It has not stimulation in the economy. And that's what -- that's probably is going to get through to the -- enacted. And it won't hurt the country, but it's certainly not going to help the economy.

I just hope that Dr. Greenspan is right that we will have a recovery, because things are going pretty slow.

SHIELDS: Al Hunt, the argument for the tax cut was, first of all, there was too much money in Washington, too much, you know, this surplus. We had to get it back. The surplus is gone. Then it was the economy was bad. We had to had to have a tax cut. Now the economy is good. I mean, what's the argument for the tax cut?

NOVAK: The economy is good?

SHIELDS: That's what Alan Greenspan said.

HUNT: I don't think he quite said it's good. He gave...

(CROSSTALK)

SHIELDS: Yes.

HUNT: That it will get better. I happen to agree with Bob there probably will be a stimulus package.

SHIELDS: You do?

HUNT: It won't matter. On that narrow a point, I agree with Bob. I want to say this. I found Dick Gephardt's speech incredibly disappointing. Here's a guy who was a good public servant. It's not that what he said that was so bad, it was just pedestrian. He was supposed to sound Clintonian, and it wasn't interesting. There was nothing in there that was very memorable. The one exception what he said about -- he said we shouldn't repeal a tax cut during -- shouldn't talk about doing a tax cut during a recession. And that was a blatant misrepresentation.

He knows that no one's proposed that. Ted Kennedy's not proposed that. I don't think we'll be in a recession in 2004. If we are, we're in really -- real big trouble.

O'BEIRNE: Mark...

SHIELDS: Kate?

O'BEIRNE: Let the record show that one of the things Alan Greenspan told Congress this week was that the tax cut last spring helped to cushion the economy and was a good idea. So Democrats were unhappy to be hearing that.

I agree with Bob that any stimulus package will likely be -- do nothing to stimulate the economy, and instead, just spend a whole lot of money. But I disagree with him about whether or not it's going to happen. I think Alan Greenspan sort of hurt that cause by saying, you know, the economy's -- simply needed -- especially the kind of package we're talking about.

And the more critical problem. The stimulus package the president's talking about and others puts the -- this year's budget into a deficit. In the absence of the stimulus package, they can balance the budget.

Now an awful lot of members are not going to want to go to the floor and vote to create deficits, which also, of course, then lets the appropriators run up Washington's tab. So I think that's another reason why they might not want a stimulus package. They'd prefer to keep no deficit.

SHIELDS: All right. Margaret, I think Kate makes a lot of sense on the political urgency of a stimulus package right now. And I just point out, I've always been a fan of Alan Greenspan's. But his argument last year on why we needed the tax cut, endorse the president's tax cut, was that this surplus was so large, we're going to pay it off in no time, pay off the national debt. And we'd end up buying public -- have to buy public stocks, private stocks. And I think that argument may have outlived its usefulness -- Margaret.

CARLSON: Well, Alan Greenspan is closer to Ted Kennedy than to anyone else in saying that, you know, if we're in deficit territory, let us think about that trigger again by which those tax cuts do not go into effect. That's the fiscally responsible thing to do.

Democrats are so cowardly in they cannot explain the tax cut in the later years as doing nothing to help the economy and only doing something to help the wealthy. There's no job stimulus in there. This is a state tax. This is for the top 1 percent of people...

(CROSSTALK)

CARLSON: No, no, in an election year, they're not brave enough to say we want to postpone tax cuts in the out years that do nothing to stimulate the economy.

NOVAK: The interesting thing is that Margaret now criticized the Democrats for not -- for being against tax cuts. And they probably can cite some phony polls to buttress it. But it is a matter...

(CROSSTALK)

NOVAK: They could, though. But as a matter, they sometimes do in the newspaper. But what the fact of the matter is, is that Dick Gephardt, who's a good politician, knows that being against tax cuts is bad politics. That's why he's doing -- Al, can you understand that?

(CROSSTALK)

HUNT: Let me explain something to you. He said that we should not think about repealing tax cuts in a recession. No one has suggested...

NOVAK: This is a recession now.

HUNT: Bob...

CARLSON: Postponing.

HUNT: Bob, let me think for a second. Just listen carefully to what you're saying.

(CROSSTALK)

HUNT: 2004 is not...

NOVAK: I mean, that's ridiculous.

HUNT: And we're talking about tax cuts that affect the very wealthy.

NOVAK: No.

HUNT: Some people that you know.

NOVAK: That's a metaphysical argument.

HUNT: And that is -- no, it's not. It's a real argument.

(CROSSTALK)

SHIELDS: No more. The gang will be back. (UNINTELLIGIBLE). With the return of THE CAPITAL GANG classic.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. In response to your calls, cards, letters, and a few gifts, CAPITAL GANG classic returns.

We go back to January 19, 1991, the week U.S. and British forces launched the air war against Iraq. Our moderator then, Pat Buchanan, asked our guest, former Secretary of State Alexander Haig, whether U.S. ground forces would be needed.

(BEGIN VIDEO CLIP)

ALEX HAIG, FMR. SECRETARY OF STATE: Well, classically, yes, they will have to go in and finish the job. But that job can be largely done with this kind of air power.

NOVAK: How long?

HAIG: I think weeks, not days, weeks, and not months.

NOVAK: I know that we are -- this is not Iran that Saddam Hussein is facing, but the whole style that they had during that eight year war was to lie back and to lie back and to lie back, and then to hit. And I just think it is going to take, I think, Al Haig is right. It's going to take weeks, but it may not be the most pleasant thing in the world.

PAT BUCHANAN, MODERATOR: I hope they're going to lie back. But the Iranians did not have 2,000 airplanes to put on top of, including B-52s.

HUNT: Those B-52s are going to do incredible damage to those soldiers along that Kuwait line, like nothing that the Iranians ever did. And if we can cut off and wipe out most of that Republican guard in southern Iraq, I then think that mopping up operation may be much simpler than otherwise would be the case. Panic may well set in after 10 days of B-52 bombs.

SHIELDS: So you're reading in history shows that air power's been decisive in two places, Nagasaki and Hiroshima. And eventually does come down to people going after other people on foot. It's firepower versus manpower. And this is the first time, you know, I've seen it really tried this way. And I'm not sure it's going to work.

HAIG: Well, this is not Vietnam, Pat. This is a billiard table in which it's very difficult. There are no triple canopy jungles or hidden trails or sanctuaries. And there's no superpower supporting Iraq as there was in Vietnam.

(END VIDEO CLIP)

SHIELDS: Al, for once didn't CAPITAL GANG seem to be mostly on target in predicting a short, successful war?

HUNT: Mark, great credit has to go to the staff, Brad Watson, Tiffany Curless (ph) for finding one of those few times that history is kind to us.

SHIELDS: Bob Novak?

(CROSSTALK)

NOVAK: Well, I happen to be, in all candor, rather pessimistic about it, the air war could work. And I said it might be nasty, but Al Haig and Al Hunt were exactly right that air power is -- has made the United States politically starting with that in the world, much more dominant superpower than it was before that.

SHIELDS: You're -- you weren't there?

CARLSON: I'm grateful for air power. And I am grateful that the Taliban era of THE CAPITAL GANG is over.

SHIELDS: Kate O'Beirne? Taliban era, she means all male?

O'BEIRNE: Yes. What were you thinking? What were you thinking?

I remember the time so many others predicting thousands of U.S. casualties. So I give you credit for, General Al Hunt, for recognizing that was not going to be the case.

SHIELDS: Generals Al Hunt and Al Haig, thank you. We'll be back for the second half of CAPITAL GANG with our "Newsmaker of the Week," former Clinton press secretary Mike McCurry. "Beyond the Beltway" looks at the Philippines with former U.S. Ambassador Frank Wisner. And our "Outrage of the Week." That's all after the latest news following these critically important messages.

(COMMERCIAL BREAK)

SHIELDS: Welcome back to the second half of CAPITAL GANG. I'm Mark Shields with the full gang. That's Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

President Bush's State of the Union scheduled for Tuesday. Our "Newsmaker of the Week" is former White House press secretary Mike McCurry.

Mike McCurry, age 47. Residence, suburban Maryland. Religion, Methodist. Bachelor's degree from Princeton. Master's degree from Georgetown. Worked in Democratic presidential campaigns of John Glenn, of Bruce Babbitt and of Bob Kerrey. And Clinton administration State Department spokesman before becoming White House press secretary. Currently chairman and CEO of Grassroots Enterprise, Incorporated.

Al Hunt sat down with Mike McCurry earlier this week to talk about state of the union speeches.

(BEGIN VIDEOTAPE)

HUNT: What's the importance of a State of the Union speech?

MIKE MCCURRY, FMR. WHITE HOUSE PRESS SECRETARY: You know, Al, the State of the Union is sort of the strategic plan for the United States government. The government doesn't do what most organizations do really -- do a roadmap of what they're going to be doing looking ahead. But the State of the Union is that for a president. It deserves a little more attention than it gets sometimes, precisely because of that.

HUNT: Well then, ideally, should a State of the Union speech be a laundry list of accomplishments and objectives? Or should it project a thematic vision?

MCCURRY: Well, very interestingly, they probably ought to be both. But one thing that pollsters tell presidents, and it's hard to -- sometimes for pundits to believe, is that long laundry list. American people like. They want to hear their issue identified. They want to hear what the president has to say about something that is particularly important to them.

So that's why they go on long. Of course, my old boss, they went on famously long. I suspect that President Bush will probably be a little more concise. You know, the most important part of the State of the Union is taking place in the days before the speech is actually given. And when the fights occur between various government officials about what line will get in the speech, what line won't.

And it really is important stuff, because it does give really marching orders to the entire federal government.

HUNT: George Bush would appear to have an easy task next Tuesday. His popularity is sky high. Patriotism flourishes. Support for the war on terrorism continues. Does he simply have to ride this tiger?

MCCURRY: Well, he's got to do more than that, I think. There are still, you know, warning signals here at home that the economy is soft. People care about the fact that folks are out of jobs. They're losing health insurance. There are a lot of things that still aren't quite right with the union, even though the state of the union is quite strong.

HUNT: Are there any real downsides?

MCCURRY: I don't think there's much of any downside when a president walks into that hall, is announced, and gets that thunderous ovation that he surely will get. He deserves it because he's been, you know, superb in conducting the war on behalf of all Americans.

He's going to be measured in some respects against the last time he was in that hall. George Bush became the president of all Americans when he went in the aftermath of September 11 and addressed the nation there. That was a brilliant speech. Rising up to that level a second time might be a little more difficult.

HUNT: Mike, your last year as White House press secretary, 1998.

MCCURRY: Don't remind me.

HUNT: The State of the Union was given six days after the Monica Lewinsky scandal broke.

MCCURRY: Yes.

HUNT: How tense were those six days, as you prepared for the State of the Union?

MCCURRY: Well, not so much tense as just utterly bizarre, because in the midst of this story that had just broken, consuming all the press, consuming the very few of us who actually had to deal with that subject day in and day out, simultaneously, the president very occupied on saying exactly what he wanted to say in front of Congress and focusing, as I said, on really developing that roadmap. It was parallel universes.

HUNT: Props. American heroes or some unifying foreign dignitary sitting in the chamber, usually next to the first lady, are a staple of every State of the Union speech now. Are they effective?

MCCURRY: I think ever since Ronald Reagan really invented that devices, more or less, it would be great to see a president give a speech and not point to some American hero up in the sky box, because it would be refreshing. It would be different.

HUNT: Give us a prediction of a surprise prop next Tuesday? MCCURRY: A surprise prop? Well, boy, it would be hard to say. I'm sure there will be someone or some reference or something there that is symbolic of the first responders, who did such a heroic job in the aftermath of September 11. Those who are now bravely serving overseas to defend our interests. I wouldn't be surprised if there's some call in a national service program or something, which I hope he will credit President Clinton for having putting some of those ideas in front of the country in the first place.

(END VIDEOTAPE)

MCCURRY: Al, the wonderful Morris Kayute Alverizoni (ph) used to call it touching all the erogenous zones of the body politic. Does Mike McCurry really mean it when he says the American people like their presidents to give this long laundry list, so that everybody has an issue?

HUNT: Mark, in stark contrast to our "Capital Classics" success, I used to come on this show after the interminably long Clinton State of the Unions and say it was really a bad performance. It went too long, too much of a laundry list. And then four days later, we find out the public loved it. So I think he probably is right about the public.

NOVAK: That's why I distrust polls. I can't believe American people were so stupid to have to hear 100 new items in the Clinton speech, which most of them were never heard from again. I think it's just insane to do that, give that kind of speech, when they should give a coherent message of hope for the country and tell them what the government -- say what the government is all about and what he wants the government to do.

(CROSSTALK)

NOVAK: And I agree with Mike McCurry. I would hope there's a no-prop speech would have a little confidence in it.

CARLSON: Bob's hope is tax cuts. But you know, it wouldn't be authentic for George Bush to give a laundry list. It was authentic when Clinton did it, because he's a policy wonk. I think George Bush will be more like what Bob wants, which is a thematic, simple speech.

SHIELDS: But Kate, do you think Mike McCurry made the point to Al that he's going to be measured against the last time he was in the hall. And that was truly a dramatic historic moment right within a week after September 11.

O'BEIRNE: Yes, absolutely. And he did a fabulous job. But his audience, we were also even then in a different frame of mind. So I think it'll be judged on its own terms this time.

I think what's increasingly annoying during the speech is the jumping up and down by the members of Congress. And I'm hoping he'll have a few lines there that keep the Democrats firmly in their seats. Thank you.

SHIELDS: Last word, Kate O'Beirne. Next on CAPITAL GANG, "Beyond the Beltway" looks at American troops in the Philippines.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. "Beyond the Beltway" looks at the Philippines. The U.S. anti-terrorist campaign has sent troops to the Philippines, where the government has waged a long war against Muslim insurgents.

(BEGIN VIDEO CLIP)

JOHN STUFFLEBEEM, REAR ADM., PENTAGON SPOKESMAN: We have a joint combined exercise training team that was previously scheduled to be in the Philippines for para training. And they're there. We have been asked or invited by the Philippines government to also come and provide training to their forces. And we are also doing that.

FRANK GUDANI, COL., PHILIPPINES MILITARY: As regards to the entry of American forces, I believe that they are most welcome by our troops. We don't want any of our American friends to have any casualties in this -- during this exercise. And we were told not to be overprotective, but you know, it's part of Philippines hospitality.

(END VIDEO CLIP)

SHIELDS: Joining us now from New York is Frank Wisner, who is a career Foreign Service officer, was the United States to four countries including the Philippines.

Thanks for coming in, Frank.

FRANK WISNER, FMR. U.S. AMB. TO PHILIPPINES: Mark, a pleasure to be with you.

SHIELDS: Frank, does this look at the beginning of a long U.S. commitment in the Philippines?

WISNER: Mark, I don't think the operation as presently defined should be a long commitment. We're looking at about six months. The objectives are quite clear. It's a training exercise designed to improve the intelligence, logistics, mobility capabilities of the Philippines armed forces.

But let's also remember that it's in a context, in a context of a long relationship with the Philippines, a defense treaty. We have been in military exercises and training missions for over 50 years to the Philippines armed forces. They're up against some hard targets in the southern Philippines, in the southwestern Philippines. And we'll be there to give them a hand, to get them through this period.

So I don't think it's a long engagement, but it's a long relationship, one that's important to the United States. The Philippines have been our side in the war against terror. And we have a chance to lend them some help, to get on top of a problem they face.

SHIELDS: There is, as you point out, a long history between the United States and the Philippines. And they were a colony. And the reality is that in 1991, after Marcos was toppled, the Philippines government and people said we want the United States and its military bases out of here. And their own assertion of independence.

Do you see any domestic, political implications within the Philippines, for our military presence there?

WISNER: Well, there's been some concern expressed over the past 10 days in the Philippines about American forces in such a visible manner returning. But let's remember this isn't the old days. There are no American bases. This is not a combat presence. There are no American aircraft involved. You have no combat capabilities being demonstrated in the part of the United States.

We're there as a training mission inside a long-standing treaty commitment. And at the invitation of the Philippines government.

SHIELDS: OK, Bob Novak.

NOVAK: Frank, about 10 years ago, I was in the Philippines reporting. I was on the island of Mindanau. And I asked the CIA guy where I could go interview some Muslim insurgents.

And he gave me a very good answer. And he said get a cab driver and give them about $25. And say you want to see some Muslim insurgents and he'll take you there. And sure enough, he did. So this has been going on a long time without much success. Isn't this just sort of an artificial thing that we had to find something else we were doing, besides -- the United States had to find something it was doing besides Afghanistan?

And here was this long-standing problem with a variety of insurgences? And so it gets Colin Powell and Don Rumsfeld at all talking about it?

WISNER: Well, let me make two points. First of all, this is different than the long-standing quarrel between Muslims in Mindanau and the Philippines government, a quarrel that started in 1972. There's been a cease-fire. Many political accommodations in the late '90s. And the Philippines looked like it was heading towards a basic accommodation.

But now we have a group in one of the areas, in one of the islands in the southeastern, southwestern Philippines, that has connections to al Qaeda, that is involved in the kidnapping of Americans. It's holding two American hostages right now. It beheaded another American citizen.

These are people who are part of a global terrorist network. And we're helping the Filipinos try to crack this nut is very important.

Where I think I agree with you is it's very important for the administration, the president, even in the state of the union address, to set a context. Where does the Philippines fit in our overall approach to terrorism? We're using different means than we're using in Afghanistan. What are our priorities? How does this all fit together? SHIELDS: Margaret Carlson?

CARLSON: Mr. Ambassador, it's not as if -- where these insurgents are hiding is like Afghanistan. It's not like looking for Osama bin Laden in one cave somewhere in a huge country. Why can't -- you know, Bob alluded to this, what's so hard about this? You know, we have 600 troops there. We have, you know, all of our expertise? Why can't we zero in on them?

WISNER: Well, Margaret, let me go back to the basic point. The American 650 combat American military that will be in the southern Philippines are not fighting a war. They are improving the capabilities of the Philippine armed forces to fight their own war. We're not out looking for an Osama bin Laden. We're out making it possible for the Filipinos to do that job and go on and maintain anti- terror order in the future.

Obviously, all of us want the American citizens to be released. And that's an important objective. But our basic objective is to support the Filipinos, not to conduct a war.

SHIELDS: OK, Kate O'Beirne?

O'BEIRNE: Mr. Ambassador, recently uncovered terrorist plots aimed at Western targets in like Malaysia and Singapore remind us that problems with terrorism in that part of the world obviously are beyond Philippines. The president of the Philippines recommended, and is this, do you think possible, that regional anti-terrorism task force or effort? Do you anticipate that kind of cooperation, which would need less direct U.S. involvement?

WISNER: Well, I see some capability of communications between the armed forces police and intelligence services of the southeast Asian nations. But the Alcion (ph) regional grouping is not a military organization. It doesn't have a military capability. It's not a defense alliance. It's come together on ad hoc missions, like peacekeeping in east Timor.

But the real connections are with outsiders, notably ourselves. We have defense relations with the Thai. We have defense relationships with the Filipinos. We have long-standing interests in the region. And I think many of them look to the United States to help them strengthen their military capabilities and stay on top of the problems that they face, particularly when they get violent and nasty, like the Abu Sayyaf incidents in southern Philippines.

SHIELDS: Al Hunt?

HUNT: Frank, you talk about 600 Americans going in there just as advisers. That does have a familiar ring to it. Do you think that once we're there, that this is going to be a reasonably manageable problem that we can solve in a fairly short order, the Filipinos rather, the Filipinos can solve in a relatively short order?

Or is there any danger of this imploding and having what was known before as mission creep in the United States rule there? WISNER: Well, it's obviously extremely important that the American command its synchpac (ph) in Hawaii, keep a close eye on the mission, the commanders on the ground, the coordination of the Philippine forces, our embassy and new investor in Manila, all keep a very close eye.

But again, the task is not a short-term one. It is to retrain, to strengthen the capabilities of Philippine armed forces. That doesn't have -- it's not like defeating the Taliban. It's a totally different order of business.

I suspect the insurgences in Mindanau are going to go on well beyond the presence of American forces during this period of training and improvement of Philippine capabilities. But the United States won't be as visibly present as it is right now.

SHIELDS: Frank Wisner, thank you very much for being with us. The gang will be back with the outrage of the week.

(COMMERCIAL BREAK)

SHIELDS: Now for the "Outrage of the Week." On January 7, President Bush issued an executive order, mostly unreported by the press. The president banned 500 Justice Department workers and four agencies and the U.S. attorneys offices from belonging to public employees' unions. Then, many of these workers had belonged to these unions for up to 20 years.

The Bush White House raises a claim union contracts potentially prevent Justice Department workers from defending national security. Well, Mr. President, what about the bravest heroes of September 11, who defended our national security and our national honor? The firefighters and the rescue workers and the police who gave their lives? Of course, sir, they were dues-paying union members.

Bob Novak.

NOVAK: The Virginia Military Institute, VMI, whose former cadets include George Marshall and George Patton, survived an attack on its warrior culture when the courts ordered women admitted. This week, Federal District Judge Norman K. Moon ruled that saying grace before dinner at VMI is unconstitutional. Another absurd misinterpretation of constitutional protection against an established state religion.

Not surprisingly, Judge Moon was put on the bench by Bill Clinton. That's why Democratic senators are blocking President Bush's judicial nominations, stalling until a Democratic president can appoint more Norman Moons.

SHIELDS: Margaret.

CARLSON: Three hundred thousand Americans die from fat-related diseases annually. So now, tobacco plaintiff's lawyers are looking at suing the fast food industry for negligently selling fries and shakes. Already, obesity can be considered a disability by the EEOC. Where is personal responsibility? A society in which the strong do not prey on the weak and the thin do not live longer than the fat is a worthy goal, but not every wrong has a remedy.

What's next? The right to sue for not being born blond and beautiful?

SHIELDS: Plaintiff Novak. OK, Kate O'Beirne.

O'BEIRNE: According to new census data, there may be as many as 115,000 illegal aliens from the Middle East in the United States, among the some nine million total illegals. At least three of the September 11 terrorists were here illegally, as were terrorists involve in previous attacks.

The fact that so many lawbreakers can settle here so easily makes it possible for terrorists to plot amongst us. Illegal immigration is a national security problem that Washington must tackle.

SHIELDS: Al Hunt.

HUNT: Mark, Army Secretary Thomas White, former Enron vice chairman, complained that with the collapse of Enron stock, he, quote, "suffered significant personal losses, but he'd persevere." Government ethics rules force Mr. White to divest holdings, but he got a 90-day delay, costing him $10 million. He still pocketed $12 million.

Compare his plight with that of Charles Presswood (ph), a retired pipeline supervisor whose life savings plummeted from $1.2 million to $9,000. Or Janice Farmer (ph), an Enron employee and single mother whose $700,000 company retirement virtually disappeared because of the Enron scam perpetrated by company executives.

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

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