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CNN CAPITAL GANG

Greenspan Declines to Cut Interest Rates; Politicians Try to Blame Each Other For Recession; Is Global Warming Just Bunk?

Aired August 17, 2002 - 19:00   ET

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


ANNOUNCER: From Washington, THE CAPITAL GANG.
MARK SHIELDS, HOST: Welcome to CAPITAL GANG.

I'm Mark Shields with Al Hunt, Robert Novak, and Kate O'Beirne.

Our guest is Democratic Congressman Marty Meehan of Massachusetts, since July 25, the proud father of Daniel Martin Meehan. Good to have you back, Marty.

REP. MARTIN MEEHAN (D), MASSACHUSETTS: Delighted to be back.

SHIELDS: The Federal Reserve took a cautious view of the economy. Quote, "The softening and the growth of aggregate demand that emerged has been prolonged in large measure by weakness in financial markets and heightened uncertainty related to problems in corporate reporting and governance," end quote.

Nevertheless, the Fed did not lower interest rates, and the Dow Jones industrial average dropped 206 points on Tuesday. Two days later, as reported in its sworn CEO statements to the Securities and Exchange Commission, contained no major disclosures.

The Dow Jones then rose 261 points. Meanwhile, United Airlines announced it may file for bankruptcy.

Bob, given this potpourri, what kind of economic signals does all of this send to the American people?

ROBERT NOVAK, CAPITAL GANG: Pretty scary, in my opinion, because the economy is not nearly as good as the administration makes it out to be. It is -- it's not a double-dip recession yet, but we have our fingers crossed, I believe. It is a credit crunch for small and start-up companies, and that's why it's really insane that the Federal Reserve would not cut interest rates.

Now, the interesting part of it is that the word on the Street was that Chairman Greenspan was going to cut interest rates, the deal was set. They were going to cut it 25 basis points. And then there was difficulty, some kind of a problem in there. They got a lot of new Fed members, maybe Greenspan doesn't have control. And that's the serious part of the whole story.

SHIELDS: Al Hunt, 25 basis points, boy, that really gets your blood boiling. AL HUNT, CAPITAL GANG: Well, there are many reasons I love being on this show, but one of them is the thrill to listen to Bob Novak lecture Alan Greenspan about monetary policy. It really is fun, Mark. It's wrong, but it's exciting.

Look, here's the problem. Interest rates are at the lowest level since John F. Kennedy's administration, and when you have a target rate of 1.75, you only have so many arrows in your quiver, and you better be pretty cautious when you shoot them.

And it may well be that we'll need an interest rate cut, but I frankly trust Alan Greenspan's timing more than I most of his critics, because his critics have been rather consistently wrong.

And Bob, I would just point out to you, there is a model for those who just want to cut all the time, and that was the Japanese. They did it about 10 years ago. They got it down to zero. And it basically helped, you know, keep that country in ruins (UNINTELLIGIBLE).

SHIELDS: Marty Meehan, who's right here, Bob Novak or Al Hunt?

MEEHAN: Well, I would have liked to have seen 25 basis cut in the rate. However, I think we ought to look at what Alan Greenspan's message was. The message was that the economy's in trouble in part because of a lack of corporate responsibility, corporate corruption.

He also made it clear that we're into deficit spending now. We've gone from a record surplus to a $158 billion deficit that the CBO projected last week. That's where we have to address the problems in the economy. People are going to have confidence, and we'll see some stability when we address those two issues.

SHIELDS: Kate O'Beirne.

KATE O'BEIRNE, CAPITAL GANG: Mark, let me say this about something else that happened this week with the corporations restating their earnings. There was a real -- it was good that the market responded favorably to those restatements. There was a real incentive to understate earnings. Nobody's gotten in trouble for lowballing earnings. And that didn't happen, and that was good news.

Now, for those politicians who actually want to help the economy, they -- Robert was just whining about what Alan Greenspan should have done, and I agree with Bob -- there's something they can do. They can do something on behalf of shareholders. Use this teaching moment.

Now that Democrats appreciate corporations, not just a bunch of rich guys around the board room, that there are shareholders in corporations, they ought to end the double taxation of dividends and they ought to index capital gains.

And that would do plenty for the economy and the market.

NOVAK: It sure would. But let me correct a couple of mistakes here. Marty, whatever Alan Greenspan does, he is not a spokesman for Democratic causes, and you can read the Fed statement. He never said anything about the deficit causing this problem. It's not in the statement. It's -- what -- it's -- he did talk about corporate corruption.

But he's not doing the Democratic talking points.

But Al, I know you love to go with the (UNINTELLIGIBLE) figures. If you'd been around the Vietnam War, you'd have probably believed Lyndon Johnson it was going well.

But for once, go with Alan Greenspan. Let me assure you, he wanted to cut rates. What I'm trying to tell you is, I don't think he could. And now you're going to have a split verdict. they had this compromise, flabby statement, economy's not so bad, but we're not going to cut rates. And -- but it was unanimous.

SHIELDS: Al, before I turn back to you and Marty, both of whom were addressed by Mr. Novak, I do want to point out that in his sworn testimony to Congress in July, Alan Greenspan testified that the fiscal discipline brought on in the late 1980s, George Bush and the '90s, Bill Clinton and the declining, the declining deficits leading to circles is (ph) did lead to confidence, lowered interest rates, and economic growth.

HUNT: There is no question, and the new father, Mr. Meehan, Congressman Meehan, is absolutely correct. And Kate, you -- you know, as much as I like you and admire you, what a prescription for disaster. You want to add $50, $60, $80, $100 billion to that deficit over the next four or five years.

O'BEIRNE: I want to help shareholders.

HUNT: And you want to get -- what you do is, you'd have very wealthy shareholders with those tax breaks.

(CROSSTALK)

HUNT: That's who it would all go to...

O'BEIRNE: And reduce -- reduce...

HUNT: ... and we would have a huge -- we'd see red ink as far as the eye could see.

O'BEIRNE: Reduce the (UNINTELLIGIBLE) corporate debt. And Alan Greenspan also said George Bush cut taxes in the nick of time for this economy.

(CROSSTALK)

SHIELDS: Marty, (UNINTELLIGIBLE).

MEEHAN: You have to admit, if you look at Alan Greenspan over the years, he is always preaching fiscal responsibility. That's what we've lost in the last year and a half.

O'BEIRNE: And tax cuts.

HUNT: Alan Greenspan is (UNINTELLIGIBLE) is one of the great politicians I ever met in my life. He's not much of a central banker, but he's a great politician.

SHIELDS: Not (UNINTELLIGIBLE) central banker?

NOVAK: Pardon?

SHIELDS: He's not much of a central banker. Oh, I see.

Last word, Bob Novak. Marty Meehan and the gang will be back with the Bush vision -- vision -- at the economic forum. Or was it all eyewash?

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

Some 200 invited citizens gathered at Baylor University in Waco, Texas, for President Bush's economic forum.

(BEGIN VIDEO CLIPS)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Government can only do so much, and I can assure you we're going to hold people accountable. If they lie, cheat, or steal, they're going to be, they're going to be a -- prosecuted.

This administration is determined to build on the long-term security of the American people.

Here's the way I put it. If somebody wants to work and can't find a job, we have a problem. And we need to do something about it here in America.

(END VIDEO CLIPS)

SHIELDS: The biggest news was the president's promise to effectively veto $5 billion from the emergency appropriations bill.

(BEGIN VIDEO CLIP)

BUSH: But those who wrote the bill designed it so I have to spend all five of the extra billion dollars or spend none of it. I understand their position. And today they're going to learn mine. We'll spend none of it.

(END VIDEO CLIP)

SHIELDS: And what was the reaction by Democratic leaders, none of whom was invited to Waco?

(BEGIN VIDEO CLIPS)

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: One of the things we ought to be able to do, and I think there is broad bipartisan support for doing it, is not make these tax cuts permanent in a way that would exacerbate the debt even more.

We have to restore fiscal responsibility. We ought not be borrowing from the Social Security trust fund, as this president continues to insist on doing.

(END VIDEO CLIPS)

SHIELDS: Al Hunt, did the historic Waco economic forum accomplish anything?

HUNT: Mark, it was remarkable, and it was a start, as you just said. I mean, in only three hours, with this carefully selected group of people, and some of whom reportedly were given their scripts of -- their reaction scripts before it all began, I think George Bush and Dick Cheney took care of all of our economic woes.

I mean, (UNINTELLIGIBLE) have to talk about Iraq and health care and all of the other issues. Mark, it is not -- it should not go without notice that the nickname of Baylor University, where this conference was held, is The Bears. And I think that's...

(CROSSTALK)

MEEHAN: Not the bulls.

HUNT: ... I think that shows you -- that says everything you need to need to know about that.

This was about politics and about public relations. When it comes to policy, this administration is adrift. The president railed against these corporate crooks. It's been nine months since Enron, his close pals at Enron, wrongdoings (UNINTELLIGIBLE). Not a single indictment. Why?

He talks about $5 billion that -- of homeland security measures, money that he's not going to spend, most of which he will spend, ultimately. At the same time, he embraces tax cuts that my friend Kate mentioned earlier that cost over $30 billion a year.

Now, I'll tell you, Mark, I've been away for a couple of weeks in places like Flagstaff, Arizona, and Moran (ph), Wyoming. I don't think this PR game is selling.

SHIELDS: Bob Novak, is it selling with you?

NOVAK: Well, nobody ever thought there was a policy. I hope you weren't that naive, Al, that you thought they were going to go down there and make policy...

HUNT: (UNINTELLIGIBLE)

NOVAK: ... they were going to ask these people, you know, what -- what are we going to do, folks? It was -- you know, it was a gimmick. The difference is that the media said that the Clinton economic forum that he had right after he was elected in '92 was on the level. It wasn't.

And this is just -- this was just PR. The thing that worries me is that I think they need some more tax cuts as, as a, as a, as Kate said before. (UNINTELLIGIBLE) need a capital gains cut. And I do believe that they have to worry about this credit crunch. And none of that came out in this meeting.

I don't think it did any harm. I -- one thing I do believe, and we can talk about that later, is I don't believe Democratic Party, Mark, gets very far talking about fiscal responsibility. That's not their issue. I think that's a artificial issue for the Democrats.

SHIELDS: Well, but it's interesting, Marty, that the interest on the national debt, by the administration's own figures, that we'll have to pay in taxes over the next 10 years, has gone from $700 billion to $1.7 trillion. I guess Bob wants to pay for that with a tax cut.

MEEHAN: Well, it's interesting, I didn't think that worked in the '90s or the '80s, and frankly, I don't think it's working now. So that's part of the president's problem. Number one, he should get Democrats and Republicans, Bob Rubin, some people that actually know how to work on the economy together.

Now, maybe it's true that the -- President Clinton had this, maybe it was a PR event there, but his economic policies, Bob, worked. We had periods of sustained economic growth. We lowered unemployment, balanced the budget. His economic policies worked.

Now what we have to do -- he -- the president has this $5 billion that's apparently bothering him. But the reality is, he calls for permanent estate tax, which over the next decade will cost $5 trillion.

So I think the American people get it, the numbers just don't add up. Maybe we need more tax cuts, maybe there's more spending that we need to put in, that somehow we're going to balance the budget.

It's nonsense. We learned those through our experience in the '90s, we have to get back to good fiscal policy.

And also, not just have Democrats at the conference, let's have Democrat, Republican, independent economists, experts that know what they're talking about.

SHIELDS: Kate, did anything good come out of Waco? I mean, seriously, for the administration politically, did anything good come out?

O'BEIRNE: Well, let me just first note, maybe the president can get together with Bob Rubin when the Senate Democrats finally call him as a witness about Citicorp's role in covering up Enron's ripoff of their shareholders and employees.

I'll tell you what good came out of it. When he announced that he was going to effectively veto $5.1 billion of too much spending, that's an excellent thing. Later in the week, he went to South Dakota, where there is serious track (ph) going on. And what he told them in South Dakota was, the money to address this is going to have to come out of that bloated farm bill. I'm calling it a bloated farm bill. He signed the darn thing.

But he's not going to go along with Tom Daschle and ask -- and spend even billions more than that bloated farm bill.

Now that he is tackling spending, joining Mitch Daniels in his fight, Mitch Daniels is the most valuable economic adviser in this administration, it's good for the economy to controls pending, and it's good politics, I think, because this fall he will be making a partisan argument and bringing back tax-and-spend Democrats and defining the deficit as, in large measure, in addition to the war, a function of too much spending by Democrats and some of their Republican co-conspirators.

SHIELDS: Let me just understand this. He's vetoing $5 billion, and he signed a farm bill that...

NOVAK: Hundred and thirty-eight.

SHIELDS: ... $138 billion.

NOVAK: Mistake.

SHIELDS: I don't understand that arithmetic.

NOVAK: Well, it was a mistake, there was this mistake (UNINTELLIGIBLE)...

O'BEIRNE: But at least he's saying, Not a nickel more over that bloated farm bill, which Tom Daschle wants another $5 billion over that bill.

NOVAK: Let me, let me try -- I -- let me try -- (UNINTELLIGIBLE) Republicans on the Hill, he finally vetoed something, too much spending.

Let me try to put it in perspective with my friend Marty Meehan. (UNINTELLIGIBLE) Marty is a good Democratic boy, or -- and he has got the line from his leader, Dick Gephardt, and that is, we want a history to repeat. We want to have a budget summit where we nag and nag the president to raise taxes, raise taxes, raise taxes, raise taxes.

And who gets the blame for it?

SHIELDS: Nobody.

NOVAK: (audio/video interrupt) Bush got the blame for it, and Bill Clinton was elected president.

MEEHAN: Nobody's talking about raising taxes.

NOVAK: So, so I was, I was, that's what comes out of this conference, that's "fiscal responsibility," quote unquote.

So I, you know, I think that these guys are a little bit smarter than that, Marty, they're not going to fall for that trick twice in one generation.

HUNT: Let me tell you, we raised taxes, and we had the best economy of our lifetime. And some people, I won't mention them, became so wealthy, some people sitting near us, Mark, became so wealthy with that great economy...

SHIELDS: You're not talking about Kate.

HUNT: I'm not going to mention any names. But I'm just going to say that that worked back then. And this $5 billion (UNINTELLIGIBLE) phony, Kate, he's going to end up spending most of that money before it's over. It includes things like $5 million to beef up security in trucks carrying hazardous materials. You think he's not going to spend that money?

Seventy-five million...

O'BEIRNE: (UNINTELLIGIBLE)...

HUNT: ... $75 million dollars to destroy three chemical stockpiles that we have in the United States. The only value they have is to terrorists. Hundred and fifty million for airport security...

NOVAK: Just take or leave it, Al.

HUNT: ... you think they're not going to end up spending...

NOVAK: They will.

HUNT: ... that money? They will.

SHIELDS: Marty, you got 15 (UNINTELLIGIBLE)...

MEEHAN: Hundred million dollars for firefighters. We're trying to put a homeland security effort together. We have firefighters engaged in that. Look, we...

O'BEIRNE: Conference jeopardized all that spending by putting in all that pork and telling the president, You can't spend it on things (UNINTELLIGIBLE) for national...

MEEHAN: He's going to spend it for homeland security.

O'BEIRNE: ... for domestic security unless you spend the pork.

MEEHAN: We're simply going to spend it for homeland security. It's got to get done. It was tokenism at best.

SHIELDS: OK, last word Marty Meehan.

Next on CAPITAL GANG, George W. on vacation. (COMMERCIAL BREAK)

SHIELDS: Welcome back.

The president compared his hot, dry vacation with his predecessor's sojourns off the North Atlantic coast. Quote, "Most Americans don't sit in Martha's Vineyard swilling white wine," end quote.

But the White House line is that President Bush is not taking a real vacation.

(BEGIN VIDEO CLIP)

BUSH: And I did bring Laura her coffee this morning. The only thing that was different from the past is, I brought it to her in Crawford, Texas. I have moved my office to Crawford.

(END VIDEO CLIP)

SHIELDS: Still, the president was criticized in the news media for leaving Washington for a month. "The Newark Star-Ledger" said, quote, "It seems an odd moment for our main man to declare a timeout from Washington. The appearance it gives is far from reassuring, the president taking his leisure at a tense time while asking other Americans to sacrifice," end quote.

Kate O'Beirne, why the irritation with our president being in Texas?

O'BEIRNE: Well, first of all, most Americans in response to the president's comment, most Americans on vacation don't head to central Texas in August, where they get up at 6:00 in the morning to jog three miles, so that's how this president relaxes. This is an August ritual for the press, not fellow politicians. Very few other politicians criticize this sort of thing, given that they disappear for five weeks during the summer.

It's the press. They did it to Reagan with his ranch in California, they did it to Bush. This time I think they're particularly annoyed because while he's on vacation, they're covering him, and they're not, and they're stuck in Crawford, Texas.

SHIELDS: Being stuck in Crawford, Texas. But the line that "Most Americans don't sit in Martha's Vineyard swilling white wine," this is a guy...

O'BEIRNE: It's true.

SHIELDS: ... who grew up in Kennebunkport, Maine, which is not to be confused with East St. Louis or Camden, New Jersey, and who went, if I'm not mistaken, to Andover, where his roommates from Andover joined him at Yale, where he was one of the Bushes, he had dozens of cousins, uncles, father, grandfather who went to Yale.

This does not really sound like Billy Populace, does it, Bob? NOVAK: Well, I think it's a popular situation at that ranch. It's not an easy life down there. And (UNINTELLIGIBLE)...

O'BEIRNE: I think he generally likes it...

(CROSSTALK)

NOVAK: He likes it...

(CROSSTALK)

NOVAK: ... he's working, though...

O'BEIRNE: (UNINTELLIGIBLE).

NOVAK: ... he's working, he's working very hard. And, you know, I tell you something, the Queen Elizabeth II just finished this big tour all over England, and she -- because they're having a -- for her 50th anniversary, and she's taking a nine-week vacation, nine weeks.

SHIELDS: That's the queen.

O'BEIRNE: Bob, she doesn't have a job.

(CROSSTALK)

NOVAK: Isn't she queen, (UNINTELLIGIBLE) queen?

O'BEIRNE: That's one of the great things about being queen, you don't have a job.

SHIELDS: Now we've compared George W. Bush to Queen Elizabeth II. Marty?

MEEHAN: Well, let me just say, I thought that the president's remarks would have more credibility, or he'd have more standing if he vacationed where the Meehans do, at Seabrook Beach, New Hampshire. It's a nice middle-class beach. But I agree with you...

O'BEIRNE: New Hampshire hasn't been nice (UNINTELLIGIBLE)...

SHIELDS: (UNINTELLIGIBLE) vacation there.

MEEHAN: ... I get to -- I -- well, maybe (UNINTELLIGIBLE) politically too.

NOVAK: Are you (UNINTELLIGIBLE) over there?

MEEHAN: But what's interesting -- no, I'm not running for anything up there, I just vacation up there with most of the people from my district who vacation. But your point is correct, every two or three years, I get an opportunity to go to Martha's Vineyard or -- and to Kennebunkport, and frankly, I don't think it's very different. I think to the extent that they're drinking wine up at Kennebunkport, they are (UNINTELLIGIBLE).

NOVAK: Let me say something serious...

(CROSSTALK)

SHIELDS: OK, go ahead.

NOVAK: ... (UNINTELLIGIBLE). The Democrats, (UNINTELLIGIBLE) they're not anybody as nice as you, Marty, but a lot of the Democrats I talk to are just pounding on George W. Bush, they make fun of him, they ridicule him. A lot of the members of the media, Al, question his intelligence and his -- how sharp he is.

I will tell you this, this election 2002 is not going to be won by the Democrats by attacking George W. Bush. He's popular. They have to win it on other basis.

SHIELDS: Al Hunt?

HUNT: No, I think everybody can agree with that. Look, presidents ought to be able to take vacations. We shouldn't get upset about it. I just read -- I'm just about finished a wonderful biography of one of the greatest presidents in the history of our country. Teddy Roosevelt would spend two months at Oyster Bay every summer.

I think the country probably flourished because of that. But he shouldn't have to strain to say it's a working vacation. He's not working real hard down there, Bob, you and I know that, and you shouldn't get, we shouldn't get upset about it.

I had the good fortune to cover two presidents on vacation for weeks and weeks and weeks, Richard Nixon and Ronald Reagan. And I want to tell you, as a reporter, I much prefer Laguna Beach and Santa Barbara...

O'BEIRNE: (UNINTELLIGIBLE), Al.

HUNT: ... to Crawford, Texas, it doesn't have anything to do with the country.

SHIELDS: Well, and I think, I think, in fairness, Ronald Reagan, I disagree with Kate's (UNINTELLIGIBLE) criticize. Ronald Reagan took real vacations. I mean, Ronald Reagan didn't pretend, he didn't do the bleeping books. He didn't have the aides coming in their dark coats (UNINTELLIGIBLE)...

O'BEIRNE: And he was criticized for it.

(CROSSTALK)

SHIELDS: ... I don't know, I don't know, maybe you found some obscure left-wing journal. The fact of the matter was, Ronald Reagan acknowledged that he liked the place, it was real.

George W. Bush is going through this thing, it's a Washington custom, it's the self-important. We can't take a vacation, we're too important, therefore we're going to have all this... HUNT: (UNINTELLIGIBLE) Richard Nixon did (UNINTELLIGIBLE)...

SHIELDS: ... working...

(CROSSTALK)

SHIELDS: ... Nixon did the same thing.

(CROSSTALK)

NOVAK: ... I take, I take, I'm just a poor humble journalist, but I take, I take working vacations. And just, there's some of us, Al, who just can't abandon ourselves to sybaritic pleasures that we have to take...

SHIELDS: Don't you wish you could, though?

NOVAK: I wish I could. But I have to -- I feel if I don't work part of the day, I get a headache.

SHIELDS: We'll be back...

HUNT: Bob, the problem is that Geraldine won't let you stay home without working.

SHIELDS: We'll be back with a CAPITAL GANG classic, Bill Clinton at wine-swilling Martha's Vineyard nine summers ago.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

In his first year as president, Bill Clinton went to Martha's Vineyard, Massachusetts, where celebrities regularly spend the summer.

(BEGIN VIDEO CLIP)

ART BUCHWALD, SYNDICATED COLUMNIST: I (UNINTELLIGIBLE) work from here, and I work (UNINTELLIGIBLE) celebrities, you go sailing with Walter Cronkite, you go with Mike Wallace of "60 Minutes." And people like (UNINTELLIGIBLE) idea. But everybody from (UNINTELLIGIBLE).

(END VIDEO CLIP)

SHIELDS: THE CAPITAL GANG commented on August 21, 1993, starting with Art Buchwald's lineup of celebrities.

(BEGIN VIDEO CLIP)

Those are hardly the only celebrities on the island, whose vacationers have included Carly Simon, Dan Rather, Spike Lee, Tom Brokaw, and Billy Joel.

Margaret, you just came back from Martha's Vineyard. Does Bill Clinton fit in there? MARGARET CARLSON, CAPITAL GANG: Well, he doesn't have to fit in there. He's not going to move there. He just has to vacation there. And it's a glorious place. Why be president if you can't go on vacation to a really lovely spot?

And, you know, you say luxury resort. Isn't every beach a luxury resort?

NOVAK: Well, he does fit in, Margaret, he does, because he really is an elitist. See, this gives him...

SHIELDS: (UNINTELLIGIBLE)

NOVAK: ... (UNINTELLIGIBLE) the notion that this is Bubba, that this is a good old boy from Hope, Arkansas. But what he really is, he loves to be with the beautiful people of Martha's Vineyard. Why didn't he go to Starred Rock (ph), Illinois? Now, wouldn't that have been (UNINTELLIGIBLE), or Rako Kaboji (ph), Iowa, or just some ordinary place where ordinary Americans go?

(END VIDEO CLIP)

SHIELDS: Bob, wasn't it silly to suggest President Clinton go downscale to the Midwest?

NOVAK: No, I think it would have been good for him. I think it would have been good for his presidency. I think being with people at Starred Rock or Rako Kaboji would be very, very good for him. And, and, and you know, the, the, the question, the question of Rako Kaboji, I got a lot of mail from them saying, Don't let that guy come here. They were really mad at me.

SHIELDS: They didn't let you there either. You haven't been to Rako Kaboji since 1957.

Go ahead, Marty.

MEEHAN: We liked having President Clinton in Massachusetts, and frankly...

NOVAK: That's you (UNINTELLIGIBLE).

MEEHAN: ... we had all kinds of Democratic victories, including the president did very well there, as a result of it. Perhaps President Bush should think about coming to Massachusetts and turning things around.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Let me draw another contrast. This President Bush seems perfectly happy to be in solitude with his wife away from crowds and cameras.

SHIELDS: I agree, I agree.

O'BEIRNE: Bill Clinton couldn't stand being on vacation. He's such a political animal, the idea of being alone in private with his happy family, that seemed to be the last place he wanted to be.

SHIELDS: But where does this politics of resentment come from? "Most Americans don't sit in Martha's Vineyard swilling white wine." That's really bizarre, Al.

HUNT: Well, it is, Mark, but I have a proposed new rule. Anyone who criticizes where someone else vacations has to reveal publicly where they vacation.

SHIELDS: OK.

HUNT: And if you do that, Bob, Mark and Kate and I are going to show up at those fancy gates, and we'll lower property values right away.

O'BEIRNE: We might come visit if he (UNINTELLIGIBLE).

SHIELDS: Bob, it's up to you.

NOVAK: It's a real problem, isn't it?

(CROSSTALK)

SHIELDS: Thank you for being with us, Marty Meehan.

MEEHAN: Thank you, Mark.

SHIELDS: We'll be back with the second half of CAPITAL GANG. Our Newsmaker of the Week, climatologist Patrick Michaels debunks global warming. Beyond the Beltway looks at a Georgia primary with political expert Matt Towery, and our Outrages of the Week. That's all after the latest news following these important messages.

(COMMERCIAL AND NEWS BREAK)

ANNOUNCER: From Washington, THE CAPITAL GANG.

SHIELDS: Welcome back to the second half of THE CAPITAL GANG.

I'm Mark Shields with Al Hunt, Robert Novak, and Kate O'Beirne.

Our Newsmaker of the Week is climatologist Patrick Michaels.

Patrick Michaels, age 52, residence Waynesboro, Virginia. Bachelor and master's degree, University of Chicago, Ph.D., University of Wisconsin-Madison. Research professor of environmental sciences, University of Virginia, senior fellow in environmental studies, Cato Institute, state climatologist for Virginia.

Earlier this week, Kate O'Beirne sat down with Patrick Michaels.

(BEGIN VIDEOTAPE)

O'BEIRNE: Professor, global warming is being blamed for causing droughts out West and floods in Europe. That confuses me. Which is it, droughts or floods? PATRICK MICHAELS, SENIOR FELLOW, CATO INSTITUTE: Confuses me too. Our greener friends blame every weather event that they can find on global warming. But when you look at the actual numbers, their claims don't hold up.

O'BEIRNE: Has there been any climate change in the last century?

MICHAELS: Sure. The temperature of the planet's about 1 degree Fahrenheit warmer than it was 100 years ago. In the last 50 years, there have been changes that look like greenhouse effect changes, meaning the coldest air of the winter has warmed up, Siberia's warmed up from minus 40 to minus 38 in January. Don't hear people complaining about that.

You don't see much change in the summer temperatures. Growing seasons have lengthened, crop yields have quintupled, lifespan's doubled.

O'BEIRNE: The federal government spends well over $2 billion a year on climate change research. What are we getting for this money?

MICHAELS: Not much. Our computer models are really not much better than they were 10 years ago before we started to spend all this money. There's another way to look at the issue, which doesn't cost very much money at all, which is to look at how much the planet has warmed as the greenhouse effect has changed.

And when you do that calculation, you realize that it's going to warm up at about -- for about 1.5 degrees Celsius in the next 100 years, which isn't very much. We're going to prosper, we're going to adapt, we're going to live with it...

O'BEIRNE: Private industry funds some of your research. Are they getting what they pay for?

MICHAELS: Well, you know, most of my funding, the vast majority, comes from taxpayer-supported entities. I would make the argument that if funding colors research, I should be certainly biased more towards the taxpayers, of which I am one, than towards industry. But the fact of the matter is, numbers are objective.

And what you look at the global warming numbers, you cannot come to any conclusion other than the fact that we pretty much know how much it's going to warm in the next 100 years. It's not going to be that much. And you can't stop it.

O'BEIRNE: Al Gore saw the disagreement over the extent of global warming as a struggle between good and evil. Why is research on climate change so emotional and political?

MICHAELS: It's -- it is very emotional. But if you think about it, it's like everything here in Washington, D.C. It revolves around money and power. You cannot generate funding for a large issue unless you threaten people children. Look at the competing apocalypses, AIDS, cancer, heart disease, global warming. Their budgets are all about the same. NOw, can you imagine going in front of Congress and saying, Well, this is really an overblown problem, please save your money?

O'BEIRNE: Why does the public, though, professor, seem to be so readily accept doomsday scenarios about the state of the environment?

MICHAELS: We certainly have run through a lot of apocalypses in my professional lifetime. Let's see, there was population explosion, then we were going to run out of resources from the limits to growth, then there was global cooling and the next ice age, then acid rain was going to cause a, quote, "ecological silent spring" and global warming.

You think people would get tired of this? The answer is, I think they are.

O'BEIRNE: Last month you were among the witnesses at a House oversight hearing on global warming. What was Congress concerned about?

MICHAELS: Congress was concerned that a new report that is being used to generate an awful lot of policy, not only in Washington but in the states, was based upon two computer models that did worse than a table of random numbers when applied to U.S. temperatures.

I think it's a tremendous scandal. I think it's the biggest scandal in the history of the environmental sciences that we're using models like this and proceeding with policy.

O'BEIRNE: Professor, if the Kyoto Treaty were fully implemented, there would be economic costs for sure, but wouldn't it help the environment?

MICHAELS: No. The Kyoto Treaty would cost a fortune, between 1 and 3 percent of GDP per year. But the amount of warming that it would save would be 0.07 degree Celsius in the next 50 years. That was the argument that killed Kyoto in front of the Bush administration, that it costs a fortune, and it does nothing.

(END VIDEOTAPE)

SHIELDS: Kate O'Beirne, how would Professor Michaels answer the revelation by the Bush administration's own statement that the warming trend is real and has been due mostly to human activities?

O'BEIRNE: Mark, that's the study out of the EPA, the permanent bureaucracy at the EPA, that criticized in congressional hearings built on models that did no better predicting future climate change than random numbers did, and that's why he's such a big critic of the way Congress funds research. You fund people who are making these dire predictions. They're not interested in throwing a lot of money at somebody who says, A, it's very modest change, B, we can't do much about it anyway.

As I said, money follows the Chicken Littles.

SHIELDS: Al.

HUNT: You know, I've never seen a state climatologist before, and I guess I should be impressed. But boy, the good professor's timing's not very opportune. Washington, D.C., this week, 96, 97 degrees every day.

Arizona, record heat waves. One expert told me in Tokyo in recent decades, the average temperature has increased 7 degrees. Something's going on, Mark.

NOVAK: Let me, let me see, am I supposed to accept the anecdotal, incidental collection of data by you or a brilliant, educated professional? Gee...

HUNT: Like Alan Greenspan.

NOVAK: ... as much as I like you, Al, I'll take the professional. I'll tell you what this is. This is a plot and a conspiracy by people who don't like people who drive Corvettes, who don't -- who drive SUVs, and I'll tell you, you're not going to get away with it easily. You may get away with it in the end, but there's -- but we're not surrendering, Al, we're not surrendering.

HUNT: You just defer to authority figures, Bob, that's your problem.

SHIELDS: You got your choice, Bob Novak, you can either believe your own eyes and your own temperatures, or you can believe abstract theoreticians, Bob.

Next on CAPITAL GANG, two conservative Republicans in a political shoot-out in Georgia.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

Bob Barr and John Linder, two prominent Republican members of the House, thrown into the same district by redistricting, collide Tuesday in Georgia's primary election.

(BEGIN VIDEO CLIP, POLITICAL AD)

UNIDENTIFIED ACTOR: Linder's OK, but Bob Barr, he's just born to lead. He's tough, aggressive, and outspoken. He leads the conservatives in this country, so he's better for us back home.

UNIDENTIFIED ACTOR: Linder's good too, but Barr's just gooder.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, POLITICAL AD)

ANNOUNCER: Strong defense, less government, and more freedom. Just that simple. ANNOUNCER: Since 1993, he's produced real results for us in Congress. That's why the Republicans in Congress have picked John so often to be a leader.

(END VIDEO CLIP)

SHIELDS: A new Mason-Dixon poll shows 45 percent for Bob Barr, 42 percent for John Linder.

In the Democratic primary, Congresswoman Cynthia McKinney, supported by Muslims, has been challenged by former judge Denise Majette, who has Jewish support.

A poll conducted for Insider Advantage shows 41 percent for Denise Majette, 39 percent for Cynthia McKinney.

Joining us now from Atlanta is former Georgia state legislature Matt Towery, chairman of the Atlanta-based news service Insider Advantage.

Thanks for coming in, Matt.

MATT TOWERY, CHAIRMAN, INSIDER ADVANTAGE: Thanks, happy to be with you.

SHIELDS: Matt, tell us, is the issue between Bob Barr and John Linder strictly a matter of personality, or is there really a deep ideological question?

TOWERY: Well, there's no real ideological issue. This is a matter of who the voters in this particular district feel they can identify with. It reminds me of Newt Gingrich's reelection campaign in 1992, when he was redistricted. He thought he was going into sort of a cowboy Republican district. It was more sophisticated than that, and Gingrich almost lost that primary, as you will recall.

SHIELDS: Right.

TOWERY: In this instance, you have the same situation. You have Bob Barr on the air with a character who says "Barr is gooder"? I'm not sure that's going over so well with some of those most likely voters in the district. But the race is clearly tightening. And I might add, Linder did have an advantage, there was no question about a month ago. Virtually every poll, including our own, showed Linder ahead.

But now Linder and Barr have gotten into a tussling match that is just unbelievable. Guns have gone off, antique guns by mistake, they've been reported, they've had tussles with Yosemite Sam character. And they're just becoming really child's play down here, and that's working to Barr's advantage.

SHIELDS: OK, Bob Novak.

NOVAK: Matt, are you saying that Barr has the momentum now, and is that because the Barr people are more committed and more enthusiastic, more fanatic, if you will?

TOWERY: Well, you know, Bob, I always thought from the very beginning that Bob Barr would be a blowaway to win this thing because of the fact that he was well known. But Linder was playing it quiet, and in playing it quiet, he was appealing to a fairly sophisticated district.

What has happened is, Linder is now coming across as sort of being in Bob's same category, and as a result, yes, the more committed Barr voters may make it a very close race.

I still don't think you can call it, and I would still think that Linder may have an advantage. But it's a minimal one.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Matt, on one of the Democratic races, a recent poll found 60 percent of likely Democratic primary voters had thought that Cynthia McKinney had been doing a poor job in Congress. Yet she and her challenger are sort of tied at the 40 percent mark.

Why hasn't this former judge been able to move more of those people who think McKinney's done a bad job into her column?

TOWERY: Well, I think the interesting question there is going to be, how many -- of course, Georgia's unique in the sense that it does allow for crossover. People do not have to register by party. So the real issue there is not as much, will she change African-American voters, for example, who seem to be supporting McKinney, but not at the levels they have in the past.

The question is, will, in fact, you see a crossover of Republican voters into that primary? The polling data which we've seen and some of the other data seems to indicate that that crossover will take place.

Also want to make a quick note here. I write a column for "Creators," which of course some of you guys write for as well. My take is always outside the Beltway. I'm seeing this same degree of unsettled electorate in Florida, where you see Bill McBride suddenly taking on Janet Reno, he was a virtual unknown.

All over the country, the electorate seems to be unsettled right now, and I think that's a great example in this very controversial race between McKinney and Majette.

SHIELDS: Al Hunt.

TOWERY: Yes, sir.

HUNT: Matt, I think there's a tremendous value in diversity in the people's body, in different characters. But I think that Barr and Cynthia McKinney, to my way of thinking, at least, are bookend kooks. I think when Ken Starr endorses Bob Barr, it tells you everything you need to know about Ken Starr. But my question is, it's an August primary, which traditionally means a very low turnout. Would these -- would this sort of fringe persona of these two characters really, really be advantaged by that timing?

TOWERY: Well, you know, it's interesting you ask that, because certainly a lot of people do view them as being the opposite polar ends, and somewhat extreme in the way they come across. Sometimes, as you know, if you have a low voter turnout, being an extremist on one side or another can come to your advantage.

And Al, we may see that in this race. It remains to be seen. What is happening, and as you know, when you start getting a candidate like John Linder, who's viewed as mainstream and who's a little quieter, when he starts getting into that, sort of that mix, with a more controversial character, then suddenly that race starts to heat up, and that's what we're beginning to see not only here in Georgia, but we're seeing it in other states as well.

SHIELDS: That's a good point, Matt. Matt, but on the question of whether in fact Republicans will cross over to vote for Denise Majette against Cynthia McKinney, isn't that less likely, given the fact that there are Republican primaries for both the United States Senate and for governor?

TOWERY: Well, you know, another great question. One of the things we're seeing in polling, not just in Georgia but in other places, is that the president, although he has a high voter approval, these internals are moving like the sands. And until there becomes a clear picture of where Bush is headed on the economy, until there's some issues given by the Republicans, they're really not drawing any interest in these Republican primaries, except when you have someone controversial like Bob Barr.

And this is going on all over the country. There is just this internal question in the minds of the voters, Where is George W. Bush headed? Where is this White House headed? And what do I hang my hat on if I'm a Republican voter?

NOVAK: You know, I feel almost constrained to say something for Bob Barr, because I haven't heard much good said about him, and -- tonight. Bob Barr, it seems to me these are two remarkable candidates, Matt. Bob Barr is a -- has been very courageous on civil liberties, he stood up to the Bush administration, to Ashcroft on the violation of civil liberties in the war against terrorism.

And John Linder is a pioneer on tax reform. He wants to do away with the income tax, God bless him, and have a national sales tax. So I think I would say that Georgia is blessed to have two candidates of this stature against each other. But that doesn't seem to be the image, does it?

TOWERY: Well, you know, I think you're pretty much right on point in the sense that these are two strong Republicans. And had redistricting not been so brutal here in Georgia, they would both be standing. Arguably they might still be standing had Barr decided to run in another district where he might be -- might have been able to win.

But the point you make is correct. I'll tell you another little inside thing, which you would appreciate in the Beltway. Linder comes across in Georgia as being very quiet and calm and nice. The truth of the matter is, we like to joke that he went to the Bill Thomas school of how to behave as a representative, and you guys could appreciate that.

On the other side, Bob Barr, who appears to be bombastic and rather cold, on a one-on-one basis can be very friendly and someone you enjoy talking with. They're both good candidates from the Republican standpoint. Somebody's going to lose, though. And before this race is over, I don't know what other, you know, events could take place.

The same with the McKinney race. That race could go either way, but we have two really interesting races shaping up for Tuesday.

SHIELDS: You sure do, and Matt, I just want to go on record that Novak's statement will be recorded as a paid political announcement for both Bob Barr and John Linder.

Matt Towery, thank you very much for being with us.

THE GANG will be back with the Outrages of the Week.

(COMMERCIAL BREAK)

SHIELDS: Now for the Outrage of the Week.

Conservative and iconoclast Marshall Whitman boldly criticizes his fellow conservatives for turning into chronic whiners when they gripe about liberal media bias, when conservatives at the same time sit in the White House and rule most of Capitol Hill.

"Ask yourself," writes Marshall Whitman, "who is a greater object of ridicule in the press, G.W. Bush or Al Gore? And can anyone argue that Bill Clinton got a free ride from `The New York Times'?" End quote. I don't think so.

Bob Novak.

NOVAK: Marshall's (UNINTELLIGIBLE) Democrats' favorite Republican.

Everybody was glad to see the return to broadcasting of Phil Donahue, a likable, entertaining liberal. But what was Phil smoking those years on the bench? He is focusing on conspiracy behind the September 11 terrorist attacks. This week he said, quote, "All the dots connect to Saudi Arabia, and those dots include George Bush, senior Bush, as well as al Qaeda and the U.S. government itself," end quote.

Who wants such claptrap? Not the big audience who welcomed Phil Donahue back and now have left him.

SHIELDS: Kate O'Beirne.

O'BEIRNE: On this September 11, a new program begins that will require foreign visitors from certain Middle Eastern countries to be fingerprinted and photographed at the border. Given that 15 of the 19 hijackers who murdered 3,000 Americans were from Saudi Arabia, you might think the kingdom's subjects have earned a place on the list of foreigners who warrant a more careful look.

Your government disagrees. Only nationals of Iran, Iraq, Libya, Sudan, and Syria will be automatically screened.

SHIELDS: Al Hunt.

HUNT: Mark, the Bush economic and national security policies may be marked by disarray and disagreement, but on one issue, this president is crystal clear, shaking down political money trees. Remember all those criticisms about Clinton's shameful fund raising? Well, in his first 19 months, Bush has gone to more fund raisers than Clinton and raised over $100 million in political contributions, more than 2.5 times as much as his predecessor.

He truly is, as the "Arizona Republic" headline blares this week, the all-time fund raiser in chief.

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

If you missed any part of our show, do not despair. You can catch the replay at 11:00 p.m. Eastern and again at 4:00 a.m. Eastern.

Coming up next, "CNN PRESENTS: America Remembers, Part One."

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



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