WorldCom Goes Bankrupt; Stocks Plunge Again; Is "Big Brother" Speaking?
Aired July 22, 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: CROSSFIRE. On the left, James Carville and Paul Begala. On the right, Robert Novak and Tucker Carlson.
In the CROSSFIRE tonight: WorldCom goes bankrupt, the markets go crazy, and is your retirement just gone?
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm not a stockbroker or a stock picker.
(END VIDEO CLIP)
ANNOUNCER: So who killed your 401(k)?
The Army as a police force. Secret tips to John Ashcroft. Is Big Brother speaking?
(BEGIN VIDEO CLIP)
BUSH: The world has changed, and so must our government change with it.
(END VIDEO CLIP)
Tonight on CROSSFIRE.
From the George Washington University: Paul Begala and Tucker Carlson.
PAUL BEGALA, CO-HOST: Good evening. Welcome to CROSSFIRE.
Tonight: DO you to trust W. and Dick Cheney to investigate allegations of corporate wrongdoing by W. and Dick Cheney? A major Democrat says no way. Are we going to back -- going back to the days of independent counsel hell?
Also, soldiers on the streets and tipsters on the phone. Is this 2002 or 1984?
But first, the politicians and numbers you thought could not go any lower -- here's our CROSSFIRE "Political Alert." The Dow Jones fell another 234 points today as telecommunications giant WorldCom filed the largest corporate bankruptcy in American history, more than twice the size of previous record-holder Enron, which went belly up late last year.
President Bush sounded strangely upbeat, however.
(BEGIN VIDEO CLIP)
BUSH: I'm not a stockbroker or a stock picker. But I do believe that the fundamentals for economic growth are real.
(END VIDEO CLIP)
BEGALA: Just goes to show you, the Republicans were right: They all said if I voted for Gore, we'd have an idiot in the White House, the deficit would return, the stock market would collapse and the economy would tank. Well, I did vote for Gore and we did -- well, you get it.
TUCKER CARLSON, CO-HOST: I think, as you'll find out later in the show, Paul, the true responsibly lies elsewhere. And we'll devote several minutes to proving that. I hope you change your mind.
The Bush administration has decided that $34 million earmarked for family planning can be better spent than with the U.N. agency that gives the money to China, a country where family planning often means forced abortion, sterilization and infanticide.
The State Department is withholding the money from the U.N. Population Fund, routing it instead to the Child Survival and Health Program run by the U.S. Agency for International Development
A U.N. official says no one denies there are, quote, "problems in China, but the U.N. is working to make Chinese programs conform with international human rights standards, which is great. Give us a call when you succeed, and not until then.
BEGALA: Of course Bush, one of the great suck-ups to the PRC. He even apologized when they knocked our plane out of the sky.
CARLSON: Actually Paul, we are withholding money because their human rights record is so totally appalling, unlike the former administration, which funneled money to it despite that.
BEGALA: Give me a break.
CARLSON: It's true.
BEGALA: The "Washington Post" reported yesterday that as Dick Cheney travels the country raising money for Republican politicians, he's being dogged by reminders of how he cashed out of Halliburton for $36 million before it was widely known that he changed the accounting practices.
The SEC is currently investigating Cheney's old company. But President Bush, for whom the SEC works, has already declared the investigation will clear his veep. Cheney himself was not available for comment. Aides say he's in a secure, undisclosed location sitting on a big pile of money and laughing his ass off.
CARLSON: What do you expect the president to say? No, I think it will find the vice president did something wrong? This is ridiculous.
BEGALA: We will get to that later, too...
BEGALA: ... there's a better way.
CARLSON: Having failed to bring peace or understanding to the world's six other continents, professional former President Jimmy Carter has set his sights on North America.
Carter who, since failing as chief executive, has continued to relentlessly pester the rest of the world, has offered to mediate labor disputes in professional baseball. Quote, "I'd be glad personally to volunteer my services," Carter said in a statement that sent chills down the spines of owners and players alike. Insiders said the offer may deter both sides from taking hasty action, much like the nuclear arms race did.
The threat of spending hours locked in a room with Jimmy Carter, it is hoped, will be enough to bring labor and management together as one.
BEGALA: Well, you know, Bush was an owner of a baseball team. And the true job he should have is commissioner of baseball.
CARLSON: But can you imagine Jimmy Carter (UNINTELLIGIBLE) and says, I'm going bring peace to the situation? You would settle as quick as you can.
BEGALA: Better Jimmy Carter than Bud Light Selig, though. So go get them, Jimmy.
Hank Williams was the greatest country songwriter in history, period. Now his son, Hank Williams Jr., definitely not. He spent most of his life pathetically failing to live up to his legendary father's reputation. But as we all know, politics is more forgiving of the hard-drinking namesake sons of the successful, so Hank is now throwing his cowboy hat into the political ring.
He's endorsing his fellow beer drinker and hell raiser Lamar Alexander for Senate in Tennessee. Of course, it's a natural fit. Lamar is known for being straight-laced and stiff, with a flair for Ragtime piano, and Hank's newest video is entitled "Naked Women and Beer."
"Naked Women and Beer"? Hank, that's the Democratic Party platform. CARLSON: This is called triangulation, Paul. It's borrowing the best of both parties and combining them, and you wind up with Lamar Alexander.
BEGALA: And Hank Williams Jr.
BEGALA: It's been a tough summer for America's national forests, where wildfires have scorched millions of acres of public lands. And it has been a particularly difficult season in California's Eldorado National Forest, which has had to contend with the added menace of American flags.
Recently David Knickerbocker (ph) raised an American flag above the cabin he has rented for more than 20 years in the park. An eagle- eyed forest service office named Debbie Gainer (ph) immediately demanded he take it down, pointing out that flagpoles are not authorized to national forests and, quote, "must be removed."
Knickerbocker, an Army veteran and retired cop, is not facing jail time this time. It was only his first offense.
BEGALA: I've got an idea: If the Bush administration tells a cop he can't fly the flag, blame Clinton. Isn't that what you guys do when anything goes wrong?
CARLSON: No, actually this is a career federal employee of the kind you constantly defend; the kind who, hopefully, is going to get a good, vigorous spanking this evening...
BEGALA: The kind of career employees who saved a lot of lives on September 11.
BEGALA: You should not be banging on career federal employees.
CARLSON: No forest service officials ran into the World Trade Center. Those were cops and firemen, pal. There's a difference. Give me a break.
BEGALA: They're fighting the fires out West Tucker, right now.
Debbie Gainer (ph) is not.
The shrill noise emanating from the political peanut gallery this weekend came from none other than former Vice President Al Gore -- remember him? Stumping for a congressional in Tennessee -- a state he pathetically lost -- Gore accused the Bush administration of lying about future liabilities of the president's tax plan. That's right, Gore accused someone of lying.
Gore then completely lost control of himself, barking at the crowd, quote: "I don't care what anybody says, I think Bill Clinton and I did a damn good job." And then he burst into tears -- just kidding.
In an attempt to set the record at least half-straight, we're joined tonight by Ann Lewis, who served as White House communications director during the Clinton administration; and by Ron Kaufman, who served as political director and adviser to the first President Bush.
BEGALA: This should be fun. Two of the best in the business.
Ron, let's get right to it. The Clinton economic philosophy had three parts: fiscal discipline, free trade and investing in people -- workers and training and education.
So far President Bush has reversed the fiscal discipline -- turned the largest surplus into a deficit -- reversed on free trade, surprisingly, slapping protectionist measures on steel and on lumber, and now reversed on training workers and helping people.
You've reversed the most successful economic strategy in history. Why are you surprised that the economy is tanking?
RON KAUFMAN, FMR. WHITE HOUSE POLITICAL DIRECTOR: First of all, Paul, the economy is not tanking. The stock markets have some problems now. And the market has problems...
KAUFMAN: Some problems right now. Just some -- according to Greenspan, just some.
BEGALA: Elvis had some problems too, man, but he's dead.
KAUFMAN: But he'll be back. He'll be back too.
The problem with the market right now is the same folks that are causing it to fall a little bit are the folks that caused it to be overheated in first place. It's those folks who put together business plans with earning guesses -- they were just that: guesses.
And people are too much money and too over-eager to make too much money, investing too much in those firms. So you have firms that had no income, no profit with more than General Motors. That was going to crash. I've cited Micro Strategies (ph) and Sailor (ph), it's happened.
And that's a bad thing, and it's taken down some good companies with it. And those folks should pay a price for it, Paul. They should absolutely pay a price for it.
BEGALA: Some of this should be -- economic policies do have consequences. In fact, the "New York Times" looked at the stock market performance and had this reflection in a news story, actually, this weekend. Let me put it up on the screen.
"President Bush," they wrote, "who marked his 18th month in office this weekend, is off to the worst start of any president in the last 75 years" -- in the stock market, he said, the writer went on to point out.
The worst start in 75 -- he beat Hoover. Good for him. He even beat his old man, who I thought nobody could crush the economy the way the first Bush did.
KAUFMAN: I mean, the stock market, Paul, is in bad shape relative to the highs they shouldn't have been in the first place.
But, you know, that's not important. What's important is the future. As Greenspan has said, we shouldn't denigrate the market and denigrate the confidence because we both -- all three of us know, a lot of what the market is is perceptions and confidence. It doesn't do anybody any good to have Gephardt say, well if you play the market right, we keep this down, we can gain 30 or 40 seats.
It's not about that, Paul. It's about your mother's 401(k) and my mother's 401(k) and the long-term confidence. So let's not play politics with that. Let's understand people made a mistake and forced the market down. They should pay a price, and a steep price. And if someone is taken out in leg irons, so be it.
But it should be about making the future right. And the president is right: Let's put confidence back in the market, and we'll be fine.
CARLSON: Ann Lewis, thanks for joining us.
I want to sort of boil this down here. I want to read you a list of companies that stand accused of varying levels of corruption: Enron, Global Crossing, Qwest, Xerox, WorldCom, Tyco, Adelphia, Arthur Andersen. That's a pretty short list, but it's way comprehensive.
Every single one of those companies accused of wrongdoing of some kind, the wrongdoing in question took place between 1992 and 2001. You'll notice that the current president was not president then. So the point is that businesses that are beginning to collapse now were essentially unregulated during the Clinton years. That is the lesson of the current problems with the economy right now, is it not?
ANN LEWIS, FORMER WHITE HOUSE DIRECTOR OF COMMUNICATIONS: The lesson -- the current problems with the economy is, and let me say Ron is right about a certain loss of confidence, but, you know, when you send a signal to companies that you're to have a gentler, kinder regulator and they need not worry so much, we shouldn't be surprised. When you send the signal very clearly to investors that they cannot rely on the numbers that start coming out of these companies, let us not be surprised.
But we've now heard, I guess, two versions of the Republican policy. Ron tells us the economy is going to come back because Elvis is going to come back, and you're going to tell us that it is all Bill Clinton's fault. Let's have some positive economic policy, but let's be clear. What was the Clinton record? Putting Arthur Levitt at the Security and Exchange Commission, who was the champion of small investors, who fought for transparency, fought for accountability. Who was trying to prevent Arthur Levitt from putting in those reforms? The Republican congressional leadership.
CARLSON: OK. And I'm glad you pointed that out, the specifics of it. Between 1997 and 2001, Enron is accused of misrepresenting $600 million of earnings. So my question to you is either the Clinton administration knew this was going on and somehow and somehow just didn't bother to tell investors, who subsequently lost millions, or didn't know because the fabled tough oversight of the Clinton administration, in fact, wasn't there. So, which was it? Did they know and not do anything?
LEWIS: Or how about you had corporate executives, some of whom were very close to people you know, who were misstating -- I think the polite term is misstating -- the fact is were lying about their numbers. And it took us a while to catch up with it.
But remember again, in the Clinton administration, you've just heard from Paul, we were trying really hard to expand the economy and with good results. We were trying really hard to build new jobs and with good results. What we were also faced with was a Republican Congress in those last few years, refused to fund the SEC, kept cutting the budget of the Securities and Exchange Commission which, let me point out, President Bush also did, didn't want to give the new SEC, the examiners at the SEC, the funds they needed to do the job.
Do you know that examiners at the SEC and lawyers are paid less than anywhere in the government? And that they're...
CARLSON: I'm fully aware that 40 percent left during the Clinton administration.
BEGALA: Because, as Ann pointed out, they cut the budget for funding. Ron Kauffman, there were several times, I got have a list of five I want to put up on the screen, President Clinton and his administration went to the Congress to try to put reforms in place, greater reforms that we needed that would have, certainly could have, prevented many of these economic tragedies, these rip-offs. And these are a few of them.
He went and asked the Congress, Arthur Levitt, the head of the Securities & Exchange Commission, wanted to have a rule to separate auditing and consulting. The Republican Congress blocked him.
The Clinton administration asked for greater disclosure of derivatives. The Republican Congress blocked it.
Larry Summers, our Secretary of the Treasury, cracked down on tax havens. Bush came in with Paul O'Neill, the new Treasury Secretary, and reversed those policies. Clinton's support of the law that would have limited 401(k) contributions to 10 percent, Republicans in the Senate watered it down. And then he vetoed a Republican bill in 1995 that made it easier for these corporate con-artists to rip people out without being held accountable...
CARLSON: Is there a question in there somewhere?
BEGALA: And the Republicans overwrote him. You know...
CARLSON: You have a little speech here. Get to the question.
BEGALA: Yes, here is the question. Weren't you wrong? Wasn't Clinton right?
KAUFMAN: No. Good try. Listen...
BEGALA: That's the record.
KAUFMAN: That's -- that's your view of the record, Paul, which is different than the record. The bottom line is as Tucker said earlier, a lot of these -- all these problems happened during the Clinton years. Is that Bill Clinton's fault? Honestly, probably not. It kills me to say that, but probably not.
BEGALA: Well, good for you.
KAUFMAN: The bottom line is presidents get more blame than they deserve and probably sometimes more credit than they deserve, particularly when it comes to the economy. And the bottom line is there is a lot of greed in the '90s, that a lot of folks that put businesses together with business plans that just couldn't work and investors so anxious to make such a big killing, invested too much money in analysts, stirred the pot and was too -- too positive about these companies and these firms and these investments. And it all is coming home to roost right now.
Can I blame Bill Clinton for that, even though had it happened during his watch, Paul? In all honesty, no. Does George Bush get all the credit because during his first two years, he discovered all this? No. But the bottom line is it is not important. The bottom line is Republicans and Democrats, House and Senate, administration and Congress, have to work together to make sure that whatever these excesses were, they're solved.
The bill is up before the Congress now, that the president backs, with some changes maybe, should pass, regulators should enforce that. We should give them the tools. But then the rest of us, us four and others, should put confidence back in the system. The market will go up and we're back to where we should be.
BEGALA: And on that hopeful note, let me go ahead and take a quick break and come back for more of this. But still to come, there is breaking news out of the Middle East. Aaron Brown will have details of a major Israeli raid in Gaza. Dozens of people hurt and a top militant may be dead.
Then, it had to happen sooner or later. We'll look at the push by a Democrat to call for an independent counsel to look into the Bush-Cheney way of doing business.
Then, our "Quote of the Day" comes from a U.S. senator who has a very big decision to make. Stay with us.
BEGALA: Welcome back.
On the day that WorldCom went belly up, the stock market hemorrhaged money. Looking back, since the time -- just about the time that is, W. took office, nearly $7 trillion in corporate wealth has evaporated, some of it undoubtedly from your 401(k).
Well, who are the voters going to blame come November? Guess. In the CROSSFIRE, Ron Kaufman, political director and adviser to the former President Bush; and Ann Lewis, who served as the White House communications director during the greatest presidency of my lifetime, Bill Clinton's. Thank you both for joining us.
CARLSON: Ann Lewis, I want to read you a particularly poignant quote. It's poignant, first of all, because it comes from Al Gore. Anything that emerges from his lips is poignant. But this particularly so because it is just so ludicrous.
At a speech the other day, he said -- he was going on, foaming at the mouth about how much he hates this administration, and they're liars, et cetera, et cetera. He finally gets to the point. The administration should, quote, "completely scrap its economic plan and its team on Monday and start over from scratch and start building this economy," presumably at year zero.
My question to you is there is nothing in here about how. There is nothing in here about getting the economy to grow again, about rising stock prices or restoring confidence to investors. It is just tear it down, they're totally wrong. This is a metaphor for the Democratic Party's position on the economic scandals in general, isn't it?
LEWIS: This is a smart, responsible man who says, "whoa, are we going in the wrong direction?" Just to remind you, Tucker, this February, I believe, this administration now said the budget deficit was going to be, what, $105 billion. This -- two weeks ago, they said, whoops, $165 billion. So, we're talking about a $50 billion increase. That's about one-third. We're going in the wrong direction.
And what Al Gore said and what (UNINTELLIGIBLE) are saying and what Bob Rubin said yesterday in the "Washington Post" is we need a better fiscal plan, we need to get back on the path of fiscal responsibility. Yes, we need corporate accountability because that's what's going to restore confidence in the markets.
I'm glad to hear Ron say we're probably going pass a bill. I think we're going to pass the Sarbanes bill this week. I have noticed the Republicans are leaving skid marks all over Washington after a month of trying to delay that bill. They're now trying to rush and get on top.
CARLSON: But aren't you leaving something out?
LEWIS: It is time for us to say, here is what we need to do. Here is what we need to do, get back on the path of fiscal responsibility, get some economic leadership in there that can say this is the direction we need to go. Our responsibility is to grow the economy.
CARLSON: Well, you've been slightly more detailed than your leading presidential candidate -- not Al Sharpton, he's number two, but number one, Al Gore, who said none of the above, and you're also leaving out -- and I think that's rather unfair of you to do this -- the fact that there were terrorist attacks less than a year ago and that we're at war, both of which have an obvious and measurable effect on the economy.
LEWIS: That's why I talked about...
CARLSON: The point is, Gore has no specifics.
LEWIS: ... that's why I talked about this February. 9/11 had happened this February. The fact is -- right -- this was not a surprise. We were at war this February. This administration continues to give inaccurate, misleading numbers. Now, I don't know if these are misstatements or if they are mistaken. I do know that we keep sliding in the wrong direction, and what we do not hear from the White House, from the Treasury Department is how are we going to reverse this, how are we going to turn it around, how are we going to get back to the economic policies that in the last eight years in the previous administration turned that deficit into a surplus.
We saw 22 million new jobs in eight years. A year and a half that George Bush has been in office, we've seen a loss of more than a million jobs. That's the bottom line.
BEGALA: In fact, the reason I love talking about this topic is the way Yogi Berra said about baseball, you know, you can look it up. Let's look it up. We've had test runs now of these different economic theories. Under President Clinton, under Presidents Reagan and Bush. Let's go to the numbers.
First, job growth. Basic, most important indicator of economy's success -- under President Reagan, 15.99 -- basically, 16 million jobs created. That's pretty impressive over eight years. Under President Bush, only 2.5 million, all of them in the public sector, the government sector, not in the private sector. But here is President Clinton -- 22.8 -- 23 million new jobs basically created under President Clinton, more than Reagan and Bush combined in 12 years. Clearly a better job generator. Now look at the other end of the economy, poverty reduction. The other thing that certainly I think -- and I suspect you do -- is part of a decent society. Under President Reagan, 77,000 of us were lifted out of poverty. Wonderful. Under President Bush, 6.5 million of us fell back into poverty. Now, under President Clinton, all of them and more came out. Bill Clinton's economic policies raised 8.1 million people out of poverty, created more jobs, lifted more people. Why aren't we keeping with what works?
KAUFMAN: A couple of things. We should have. And if Bill Clinton followed along President Reagan and President Bush's economic policies, today we wouldn't be having some problems...
BEGALA: We'd have 30 (ph) million people in poverty.
KAUFMAN: No. Paul, we both said this earlier, we both agreed that presidents get more credit than they deserve or more blame than they deserve many times. And the bottom line is that the hard choices that -- I give Ronald Reagan great credit making during his administration to get the government under control, to cut spending, but at the same time, get -- come over the Berlin Wall, get the Berlin Wall down, make world peace. One country -- one world, excuse me, with the fall of communism. It cost some money. It took us some time to get back into doing that. The best single quarter of Bill Clinton's presidency by the numbers, by your known numbers, was his first inherited from President Bush.
BEGALA: But they didn't roll on for eight years, though. I mean, I think maybe you're belittling too much the president's role. I think we shouldn't define the presidency down.
KAUFMAN: (UNINTELLIGIBLE) role.
BEGALA: I think the ideas and the policies that a president puts forth and enacts matter. I give Bush credit. He got his policy enacted in law, but it has measurably failed us, hasn't it?
KAUFMAN: No. Paul, he's been president for about a year now. Give him a chance.
KAUFMAN: It takes a while.
BEGALA: In 18 months, we lost $1.5 trillion.
CARLSON: Really quick, give us your 10-second rebuttal to the brilliant remarks of Mr. Kaufman.
LEWIS: I'm just a little bit puzzled. I'm having a hard time here. But I'm going to go back to the numbers. We're talking about the economy? That's the bottom line. Under Bill Clinton and Al Gore, the economy grew. Now, we're going backwards. Let me say what Ron talks about investors who maybe shouldn't have been investing, we're talking here about those people who are putting money aside for their retirement, we're talking about families who thought they had college tuition in their accounts.
So this loss that the stock market has gone through, this isn't just paper, this isn't just numbers that sort of don't matter except as some kind of game. We're talking about the financial security of every American family. We need to reverse it. This is serious stuff.
CARLSON: Ann Lewis, Ron Kaufman, thank you both very much for joining us. We appreciate it.
Still to come, taking the blame game to a higher level, if it's even possible. Should a special prosecutor give George Bush and Dick Cheney the business? But next, a major story is developing in the Middle East. We'll go live to Jerusalem for the latest on an apparently massive Israeli attack. We'll be right back.
AARON BROWN, CNN ANCHOR: Good evening, I'm Aaron Brown in New York. Israeli warplanes have struck in the heart of Gaza City. An Israeli F-16 has launched a missile that has killed at first report, first report, 10 people. Perhaps as many as 90 people have been injured as well. Among the dead, according to reports coming from Palestinian sources, a top Hamas official, military official with Hamas.
Matthew Chance is in our Jerusalem bureau. Matthew, what more can you tell us now?
MATTHEW CHANCE, CNN CORRESPONDENT: Aaron, the region plunged once again into violence and bloodshed. This time, the Israeli F-16 warplanes carrying out air strikes on a location inside Gaza. As you mentioned there, the apparent target, although there has been no word yet from the Israeli Defense Forces here, the apparent target, the house of a very senior leader of the militant group Hamas. His name: Sheikh Salah Shehada, the leader of the Hamas military wing, the Izzadine al-Qassam brigade, the brigade that is responsible for carrying out Hamas' suicide attacks and shooting attacks against Israeli citizens.
As you can see, though, Aaron, from these scenes of chaos inside Gaza, from inside the hospital and in the streets outside, if this was intended to be a pinpoint strike to take out an individual, it has failed in that respect. All the indications are is that this senior Hamas figure is dead, but also we're hearing from Palestinian hospital sources and officials down there that at least 10 other people have also been killed, as well as now 150 people injured in this attack.
So a significant attack, one which appears to be a continuation of the Israeli policy of carrying out assassinations, targeting killings against wanted individuals, and indeed this individual was one of the most wanted on Israel's list. It's also an indication of just how quickly these events can turn into something much bigger, perhaps, than they were intended. Sort of as a footnote to this, Aaron, we're also being told that at least three of the Hamas leaders children, as well as his wife, have also been killed, according to Palestinian officials, Aaron.
BROWN: Just looking, Matthew, at the pictures, seeing the numbers of children, women who were hit, these are the kinds of pictures that inflame the region, tend to lead to -- you know, you get an attack and then you get a reaction to the attack and then a reaction to that, and it goes on and on. Is the Israeli government saying anything at this hour?
CHANCE: At this stage, they've been very quiet. They are preparing a statement. We're expecting to hear from them in the next few minutes or so.
But you're absolutely right, Aaron. There have already, in fact, been calls for revenge on the streets of Gaza, for Palestinian militants to carry out attacks to try and avenge the deaths of all these Palestinians in Gaza, many of whom, of course, are likely to have been innocent and caught up in this attack, which apparently, as I mentioned, is targeting this -- this Hamas leader.
Just to give you an indication, though, how significant this leader is, how significant Hamas is, when it comes to this and the kind of response the Israeli people might come to expect -- back in 1996, the Israelis carried out a very similar kind of assassination, except not using warplanes that time, against the Hamas military leader, managed to kill him, his nickname was The Engineer. His real name: Yahya Ayash. The repercussions of that back in 1996, 63 Israelis dead in revenge suicide attacks -- Aaron.
BROWN: Matthew, thank you. Again, at least 10 people have been killed, including a top Hamas military official. Upward of 150 people have been injured in an F-16 air strike by the Israeli government in the heart of Gaza. The story continues to develop. We continue to follow it. We'll have the latest on "NEWSNIGHT" at 10:00 Eastern time. We hope you'll join us for that. Now back to CROSSFIRE -- Paul.
BEGALA: Aaron, thank you very much, and thank Matthew Chance for that report from the Middle East.
How much will this latest Israeli attack in Gaza hurt the peace process? In the CROSSFIRE now, James Zogby of the Arab-American Anti- Discrimination Committee who came over just moments ago as this news was breaking, good enough to loan us his time. And Clifford May of the Foundation for the Defense of Democracies. Gentlemen, thank you very much.
Jim, it's the American-Arab Institute. I always get that wrong. Sorry. Get that in the wrong order. This attack, the target apparently from Matthew Chance's report, which is all I have now and wire copy, the target was the founder of the military wing of Hamas. Hamas is a terrorist organization, right?
JAMES ZOGBY, ARAB-AMERICAN INSTITUTE: Hamas has committed terrorist acts at hands. They also have hospitals and other social institutions that they run, but it has committed acts of terrorism. I have had no problems over the years in condemning them. They are wrong in what they've done, and they've exacerbated, I think, the problem. But as well Israel has exacerbated the problem going the other way.
There is no solution to violence by simply accelerating the violence. As Palestinians have had to learn and have to learn that violence isn't the end -- isn't the way to answer the occupation, Israelis have to learn that occupation and more violence isn't the way to stop the violence.
The way to stop it is, in fact, with a peace process. But we have never really gotten there. You know, I mean, the violence has continued through all these years. He made a very important point when he noted that it was the assassination of Yahya Ayash that, in fact, exacerbated and ended a very prolonged period of calm back in the mid-'90s. The fact is that every time Israel takes this kind of position, it ends up simply creating a new round, and that's what we've got now. And it's a terrible tragedy, but America has to act to stop it.
CARLSON: Cliff, I'm interested, I don't think anybody, certainly not on this set, probably not around the world, is going to grieve really for the death of the founder of the military leader of Hamas. On the other hand, does strike me as kind of a blunt instrument that Israel used here, lobbing a missile into a building, killing a number of children, wounding 150 people. They are a very technologically advanced country, Israel, very. A lot of nuclear weapons. And yet there is this theme in its military operations that they tend to be blunt, bulldozing people's houses, strikes me as unnecessary and that it draws sympathy away in the international world from Israel.
CLIFF MAY, FEDERATION FOR THE DEFENSE OF DEMOCRACIES: I think it does. But I think you also have to understand it's difficult to be subtle and use finesse in these circumstances. Hamas, as Jim rightly says, is a terrorist organization. Scores and scores of Israelis, citizens, not soldiers, not settlers, innocent children have been murdered by this terrorist organization, whose stated aim -- and it is candid about this -- is to wipe Israel off the face of the earth. That's what it intends to do, it doesn't kid around about that.
Now, it is important to recognize that Hamas leadership has been based in the -- in Gaza City. And Gaza City is a place the Israelis have not made incursions. They have not gone in there. If they did, it would be like Jenin, fighting door to door, plus there are bobby traps, plus there are roadblocks -- very hard to get in there.
Here is the real unfortunate part of this. Yasser Arafat had an obligation under the Oslo agreement. Under that agreement, he would get authority over the Gaza Strip, over the West Bank, and he was to use that authority to wipe out terrorism in those areas. He never did. And particularly Hamas in the Gaza Strip -- let me just finish, Jim, and then I promise I'll let you get back in -- you have the Hamas leadership living in villas by the sea, visited with their family by journalists as they play pool in their households, they lived perfectly openly, and unfortunately Arafat never went in and made the arrests he could have, and by the way...
ZOGBY: Actually, he did. Let's be clear with the record.
MAY: If he arrested this guy, he wouldn't be in his house with his family...
ZOGBY: Yet Arafat has been under arrest himself now for many, many months. The fact is that Arafat was able to do during the mid- '90s quite a bit to stem the tide of violence. What ended it was the assassination policy. What ended it was the settlement building. What ended it was the fact that the Netanyahu government, despite the appeals of this administration here in the United States, continued to provide obstacles and roadblocks.
You cannot have the authority in control with 60 percent unemployment, with 70 percent of the population in poverty.
MAY: All of this got worse once Arafat came back.
ZOGBY: No, it did not. In fact, in fact, what happened was Israel set up a protectionist -- almost -- have you been to Gaza? I have. It is like a concentration camp. Frankly speaking, it is.
ZOGBY: No, it has been a concentration camp before Oslo, and it got worse after.
MAY: Here is when it got worse. President Clinton took Yasser Arafat and he took Prime Minister Barak to Camp David and he sat them down and he made Barak offer Arafat everything he had ever asked for before...
ZOGBY: That's not true. And don't perpetuate this.
MAY: An independent state...
ZOGBY: It is not true.
MAY: Ninety-seven percent of the West Bank and Gaza Strip, a capital in Jerusalem, the end to the settlement. He said no to that and sent off a wave of terrorism.
ZOGBY: That is (UNINTELLIGIBLE).
MAY: Now, that's the truth and you're trying to revise history. Everybody knows that's the way it was.
ZOGBY: ... end the distortions now. He did not -- he did not...
MAY: Clinton says so, Dennis Ross (ph) says so, who doesn't say so? Other than yourself and a few people who are Arafat sympathizers.
ZOGBY: In fact, Shlomo Ben-Ami and Yossi Beilin who are, in fact, chief negotiators on the Israeli side said that simply wasn't true. Understand -- if you want this, you have to deal with realities. are that Palestinians didn't get a generous offer from Barak.
MAY: Hamas wants to wipe out Israel.
ZOGBY: And Israel, under the current government, does not want to do anything but wipe the Palestinians off the face of the earth.
CARLSON: Let me ask you this question...
ZOGBY: We have a problem here. Both sides have a problem, and America has to play the middle road. We have not played the middle road since this administration was in place.
CARLSON: Nobody is arguing that the character who was assassinated today didn't deserve to be assassinated, but I think Mr. Zogby raises an interesting question, which is: Will Israel's action today reduce the number of suicide bombings, will it make the citizens of Israel any safer or will it make Palestinians any safer? It's hard to believe that it really will. Do you think it will?
MAY: Hamas is an organization dedicated to destruction of Israel through terrorism. I don't see there is anything you can do, anything you can offer, any appeasement or concession....
CARLSON: But as a practical matter?
MAY: As a practical matter, there is only one way to win when you're in a war. And if you have people trying to kill you, you must attack them at some point and remove them. That's what they were trying to do. The fact that this leader lives among civilians all the time, he and -- uses civilians as shields shouldn't stop the Israelis from trying to get him.
ZOGBY: (UNINTELLIGIBLE) civilians, and that's not the way to deal with the problem either. Come on. Let's get real.
ZOGBY: We have got people on both sides...
ZOGBY: We have people on both sides who are committing murder. We have to find a way to stop it.
MAY: No, it's morally (UNINTELLIGIBLE). Stop it. If the Palestinians would stop the terrorism, they would have an independent state in six months.
ZOGBY: ... there is nothing but moral equivalence. Dead on both sides, victims on both sides, and we have to find a way to stop it, not take sides.
MAY: Stop the terrorism, don't ask for concessions for the terrorists.
BEGALA: Don't you see a difference, though, between what they metaphorically call collateral damage, which means innocent people being killed, which clearly happened here, apparently happened here -- clearly happened in Afghanistan when the American military was acting from 50,000 feet up and bombing villages, and the intentional targeting of civilians, which Hamas does? That's a huge difference. That's a difference between right and wrong.
ZOGBY: You know something? Unfortunately, your applause aside, it doesn't make sense. It doesn't cut. And I'll tell you why.
BEGALA: But Bush is not a murderer because we had civilian casualties in Afghanistan, right? He was doing the right thing.
ZOGBY: My friend, my friend, if I wanted to get that lady in the red hat right now and I took a shotgun and fired at the audience, I could say with all the people around her getting wounded, oh, it was just collateral damage, I didn't mean it, guys, really, forgive me.
The fact is is that when you do what they've done, you are responsible for the deaths of the innocent people around, because you did not do anything but put them at risk.
BEGALA: How is that different from our country...
ZOGBY: There is no difference. It is the same.
BEGALA: Our country is not responsible for the civilian deaths.
ZOGBY: Oh, you know something? We are -- we are responsible for civilian deaths in Afghanistan, because we used bad intelligence, we did not use the best of our abilities, and in fact, we victimized a lot of innocent people, and it's a shame.
CARLSON: Unfortunately, we are going to have to break now. Just as I'm getting irritated, we're going to have to switch topics and go to a commercial break. James Zogby, thanks very much for coming over and joining us. Cliff May, thank you.
ZOGBY: And next time, I'll wear a suit.
BEGALA: Jim came on, absolutely no notice. Awfully decent of you for a very tough night and a very important debate.
ZOGBY: Thank you very much. And let's hope that we can end this. BEGALA: Thank you very much.
MAY: I agree with that.
BEGALA: Yes, God willing.
Next in the CROSSFIRE, an idea whose time may have come. Should a special prosecutor be appointed to get to the bottom of the Bush- Cheney business dealings? Stay with us.
BEGALA: Welcome back to CROSSFIRE. We're coming to you live from the George Washington University here in beautiful downtown Washington, D.C.
As a member of the House Judiciary Committee, Michigan Democrat John Conyers is a veteran of those bruising battles over the impeachment of President Clinton, the fruit of overzealous prosecutor, independent counsel Ken Starr. But over the weekend, Conyers called for a Pandora's box to be opened yet again. Mr. Conyers wants a special prosecutor to look into the business dealings of George W. Bush and Dick Cheney.
Now in the CROSSFIRE, former congressman Bill McCollum, a member of that House Judiciary Committee; and Democratic attorney Julian Epstein. Thank you both for joining us.
CARLSON: Now I don't really believe that you really believe that Washington needs another special prosecutor. But before you answer that question, I want to read you a quote which I think kind of sums it up. This is from a particularly vehement critic of former special prosecutor, a pretty articulate character, misguided often.
But here's what he said: "After seven years of an independent counsel effort in this area," that would we Whitewater, "and how many tens of millions of dollars come and not a single Cabinet-level official indicted, convicted of anything, not a senior White House official?" And there was much frothing at the mouth.
Can you guess who that was?
JULIAN EPSTEIN, DEMOCRATIC ATTORNEY: I remember. It was me on CNN.
CARLSON: It was you, in fact! That's exactly right, Julian.
EPSTEIN: Except it was the Clinton administration I was talking about, something you've never acknowledged.
CARLSON: Well, that's the key difference. So, I want you to look at me with a straight face and say, "I repudiate everything I've said for the past nine years, indeed my entire persona before today, and now I want an independent counsel because I don't believe in anything deep down."
EPSTEIN: No. I stand by everything I've said for the last seven years during the Clinton administration. And I don't know if we need another independent counsel in this instance, but I think we do need an investigation. And here is why.
The stock market again tanked. We're at the lowest point in the market now since October of 1998. And the Bush and Cheney -- the biggest problem that I think President Bush and Vice President Cheney have right now is a credibility problem. Every time they open their mouths, the stock market tanks. Why is that? Part of the reason is that they have become the poster children for the corporate malfeasance that's been occurring.
Both of them presided over corporations that used Enron-style accounting. As a result, both of those corporations were driven into the ground. Both of them had information about the fact that the stock...
CARLSON: That's not true.
EPSTEIN: It is true, and we can talk about it. Let me just finish, if I can. Both of them had information that the company's earnings were about to head south, that there were going to be public announcements. Two months, in both cases, they traded on that stock. None of the two, President Bush, Vice President Cheney, have ever been questioned on this. And as a columnist from the "New Republic" said, you know, "we may not have Ivan Boesky in the White House, but if not, we certainly have Mr. Magoo."
BEGALA: Let me -- turnabout is fair play. I remember the days when you were a great defender of my pal, Ollie North, who was the subject of an independent counsel investigation. You thought that independent counsel, a Republican judge named Lawrence Walsh (ph), was terrible and excessive.
Then the Democrats came in. And on every single occasion, you supported independent counsels, many of whom ruined peoples' lives, bankrupted them and as Julian pointed out, the historical record is, 0 for life. The only high-ranking Clinton administration official in the whole government guilty of wrongdoing was the chief of staff to the secretary of agriculture. Now, weren't you wrong to call for all those investigations of all those innocent people.
BILL MCCOLLUM, FORMER U.S. REPRESENTATIVE: Paul, first of all, the independent counsel law has gone away these days. But we have...
BEGALA: Thank God.
MCCOLLUM: There is still a special prosecutor you can have. And if you remember, that preexisted this, and it's always been there for the attorney general. And there are cases where you have real possibilities of crime where you need to have a special counsel, a special prosecutor. And I think in each of the cases we're talking about, that was certainly needed. It certainly was needed with the president, President Clinton.
But, in this case, you're dealing with, first of all, with President Bush, a matter in the Harken Energy case, which was decided a long time ago, 1991, 1992 by the Securities and Exchange Commission, in which he was cleared of any wrongdoing and you're...
BEGALA: I'm sorry to interrupt, but I want to ask you about that. Because the president has the control of those records and he won't release them. He says it is a thorough investigation. Did you know -- because you helped write the crime bill. You are an expert on crime and investigations, our partisan differences aside, you know your stuff.
Did you know that the Securities and Exchange Commission never interviewed Bush, never interviewed the CEO, never interviewed any officer or any director? Does that sound like a thorough investigation to you?
MCCOLLUM: Well, let me tell what they did do. President Bush, the former -- the head of that company or director in that company, I should say, waved his attorney/client privilege and let the SEC interview his lawyers even. The reality is...
BEGALA: The SEC described him as uncooperative.
MCCOLLUM: In addition to that, you can find all those records -- the Center for Public Integrity has them up, the SEC memos, showing how they went step by step to show, A: he was cleared of any of those questions; and B: that the stock in this particular company at the time during the period in question actually fared rather well and went up afterwards.
BEGALA: What is the harm in releasing the records then?
MCCOLLUM: This is largely politics, Julian.
EPSTEIN: The SEC in 1994 cleared the Clinton administration. That didn't stop the Republicans from trying to milk that for seven years after that. That's one.
MCCOLLUM: You guys are (UNINTELLIGIBLE) 10 or 12 years later.
EPSTEIN: Secondly, the SEC at that time was headed by Mr. Breeden, who was a close friend of the Bushes. A general counsel of the SEC was a close friend of the Bushes. And what have we found out since that time? We found out that the CEO of Harken...
CARLSON: Julian, (UNINTELLIGIBLE)...
EPSTEIN: Excuse me, no, no, no, no...
CARLSON: You just made an allegation. Stop.
Let me ask you this. You said they're close friends. Are you saying that because of their friendships with the Bushes, that somehow they threw this?
EPSTEIN: That it lacks credibility. That it lacks credibility, the same way that Bush and Vice President Cheney lack...
CARLSON: You're implying -- hold on...
EPSTEIN: ... credibility right now on trying to fix these corporate problems.
CARLSON: You're alleging a crime. You're alleging a crime.
EPSTEIN: I'm not alleging a crime...
CARLSON: Yes, you are.
EPSTEIN: I'm saying that they were close friends.
CARLSON: You're saying...
EPSTEIN: And I think that it raises the question -- no, Tucker, you really don't know the why. It is not an alleging a crime to say that they're close friends. It doesn't suggest there was something wrong.
CARLSON: What you're doing...
EPSTEIN: What it suggests is that there was a perception that this thing was never investigated. In fact, though after the fact, Tucker...
CARLSON: Julian, you're saying...
EPSTEIN: Tucker, if you'd listen to the answer before you ask the question. What we know...
CARLSON: I can't get past your verbal torrent.
EPSTEIN: Do you deny the fact that the chairman of Harken Energy produced a memo -- remember, Bush was on the audit team at this time -- the chairman of Harken Energy produced a memo about two months before Bush sold his stock saying that the companies earnings -- they were going to have to report a loss, two months before the fact. Is that accurate?
CARLSON: I can't even get past your implication that the head of the SEC committed a crime. EPSTEIN: Who said that, Tucker?
CARLSON: You just said that.
EPSTEIN: Did I say that? I said he was close friends of the Bushes.
CARLSON: You just said it 30 seconds ago.
EPSTEIN: I said that he was close friends with the Bushes.
BEGALA: Tucker is going to get a moist towelette for just a minute...
MCCOLLUM: Of course President Bush knew there was going to be a loss. The question was did he know there was going to be a five times as much loss as he thought it was going to be. And the answer is no, he didn't. And the SEC records show that.
EPSTEIN: Mr. McCollum is saying that he knew there was going to be a loss before he made the trade? And that wasn't public information? Wow, now you're making the case for an investigation.
I hate to tell you.
MCCOLLUM: No, sir. You're talking about a $4.2 million loss that was a rather routine loss in those days in that particular instance. He sold that according to the SEC records that are now available on the Center for Public Integrity. He sold the stock because he was contacted by a stockbroker who wanted to -- a large block trade. The president at that time wanted to have the money for...
Wait a minute, let me finish -- wanted to have the money with his baseball team so he could make that investment and he sold it. I would be happy for him to...
BEGALA: Mr. McCollum, we only have about 30 seconds left. But I want to remind you about Cheney and Halliburton. We should because Dick Cheney watches every night and he gets upset if I don't mention Halliburton. It keeps that heart rate up.
MCCOLLUM: Well, let me tell you a little something about that.
BEGALA: You know what he said? He said Arthur Andersen, which allegedly cooked the books at Halliburton, he bragged about them saying the -- one of the things I like is that they do for us in effect, "I get good advice, if you will, from their people based on how we're doing business and how we're operating over and above just the sort of by the books audit arrangement." Cheney himself is bragging that they don't go by the book.
MCCOLLUM: Paul, today, today...
CARLSON: That is so...
MCCOLLUM: Today, "BusinessWeek" said that he actually, probably Halliburton, in 1998, improved their accounting bookkeeping by the rules change that they made. That's what came out today in "BusinessWeek."
And in addition to that, if you really want to look at this thing, they also said that if there is anything involved here, it is probably only the question of a year before it was disclosed that they made this change, probably be a financial fine against the company, and that's it. Plus at 17 million -- there was 80 -- something like $17 billion in revenue that year. This was an $89 million (UNINTELLIGIBLE), nothing like WorldCom or Enron, not even close. This was all politics.
EPSTEIN: That's reassuring to us now as the stock market is tanking.
BEGALA: That's is going to have to be the last word for both of you. Next -- first of all -- I'm sorry. I want to thank Bill McCollum, who came up here to debate this, and Julian Epstein, both. Thank you all very much. Give them a round of applause. Didn't mean to just cut you off so quickly.
And next, it's your turn to "Fireback" at us. And some of our viewers still aren't finished with Congressman James Traficant. We're not either.
CARLSON: Welcome back to CROSSFIRE. It is time for "Fireback." Let's dig deep into the e-mail bag.
First up, David Griffin from Graylake, Illinois writes: "Dear Tucker, how dare you attack Jim Traficant personally. Do you think you're so great looking, sonny? We think not. Go take a good look in the mirror before you comment on another person's hair or clothing." Well, David Griffin, you may have missed it, I love Congressman Traficant. He's my hero. I would make him godfather of my next child if he weren't going to prison. I didn't mean to criticize him.
CARLSON: Sonny. BEGALA: Sonny. Susanne Melton of Rolling Hills Estates -- what a lovely sounding town: "After listening to Begala's braying about the president's alleged malfeasance -- malfeance (ph), I guess is the way Bush says it -- and shortcomings, I have come to fully understand why the Democratic Party symbol is the donkey, also referred to as an ass." Ooh, Susanne.
CARLSON: All right, Susanne.
And to our audience, our first question. Yes? Hi.
UNIDENTIFIED FEMALE: Hello, my name is Gumar Mahman (ph). I'm from Kazakhstan in central Asia. My question is to Paul. If the Clinton administration has been doing so great economically, why did Americans choose a Republican?
BEGALA: Because Clinton wasn't running. If Clinton was running, if they hadn't had that idiotic 22nd Amendment...
BEGALA: And, by the way, I'm glad to have somebody here from Kazakhstan because our secretary of the treasury is there as our stock market is tanking. He's in Kazakhstan.
CARLSON: So, in other words, it was all about Clinton's personality, not his policies. Yes, sir, a question.
UNIDENTIFIED MALE: Christopher Jones from 44 Pennsylvania. Now with the stock market tanking because of corporate wrongdoing and a major lack of confidence in the past corporate responsibility of our president and vice president, who are American investors supposed to trust?
CARLSON: Well, American investors don't necessarily invest in companies based on the way they feel about politicians. I mean, a lot of companies have tanked because they were, as one of our guests pointed out, wildly overvalued. And so, it was inevitable, and it disconnected completely from politics, I think.
BEGALA: But we need in order to have integrity in our markets, we need integrity in our watchdogs. And the reason Bush is credible in the war on terrorism is he was never in the Taliban. So, why he's not credible in the war against corporate fraud because he was in corporate America playing a lot of funny games.
CARLSON: As opposed to Clinton, who was just a great business leader, we know. I mean, that's...
BEGALA: Yes, but I want to close on a personal note. My friend, Jack DeVore was laid to rest today in Austin, Texas today. He was, for 23 years, press secretary to Senator Lloyd Bentsen, and then Treasury Secretary Bentsen. More importantly, he was my friend and of the old school of honor and integrity. I never knew anybody who could work the press like Jack, smoke a cigar like Jack, find good barbecue like Jack or tell these really corny jokes. My favorite, he called a reporter one time and he said, "roses are red, violets are blue, I'm schizophrenic and so am I." Jack, we'll miss you. From the left, I'm Paul Begala. Good night from CROSSFIRE.
CARLSON: From the right, I'm Tucker Carlson. Join us again tomorrow night for another edition of CROSSFIRE. "CONNIE CHUNG TONIGHT" begins immediately after a CNN "News Alert." See you tomorrow night.
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