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CNN CAPITAL GANG

Iraqis Blame U.S. Forces for Explosion in Baghdad; Gingrich Takes Aim at State Department; Bush Pushes Tax Cuts

Aired April 26, 2003 - 19:00   ET

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

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

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

Our guest is former ambassador Ken Adelman, a member of the Defense Department's Policy Board.

Thanks for coming in, Ken.

KEN ADELMAN, DEFENSE POLICY BOARD: You're welcome.

SHIELDS: Good to have you.

Hundreds of Iraqis demonstrated in Baghdad, holding U.S. forces responsible for the explosion of an Iraqi ammunition dump that killed at least six people.

Earlier this week, Shia Muslims celebrated publicly their newfound freedom from Saddam Hussein in religious rituals.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Now the people are beginning to see what freedom means within Iraq. Look at the Shia marches and the Shia (UNINTELLIGIBLE) pilgrimages that are taking...

(END VIDEO CLIP)

SHIELDS: But many marchers professed desire for an Iranian-style theocracy.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: We will not allow the Iraqi people's democratic transition to be hijacked for -- by those who might wish to install another form of dictatorship.

(END VIDEO CLIP)

SHIELDS: Bob Novak, is the U.S. imposing limits to Iraqi freedom in the picking of their own form of government?

ROBERT NOVAK, CAPITAL GANG: They certainly are. And that's the problem, when the president comes out and says, as he did several weeks ago, that the -- we -- our goal as a nation was to establish democracy among people who have no idea what they're doing.

Now, the first time these people get freedom, they run into the streets and did something that Saddam Hussein never let them do, and that's take a big old chain and smash themselves in the head, bleeding all over, smash themselves on the back. That's religious freedom, that's fine.

And that -- what they really love is the ayatollah democracy in Iran.

So this is a really difficult situation for the United States, I believe, of saying, Gee, we want you to be like Iowa Democrats, you know, that we don't want you to be like Shia Muslims.

Real problem.

SHIELDS: As opposed to Idaho Republicans.

Kate O'Beirne.

KATE O'BEIRNE, CAPITAL GANG: I couldn't disagree more. First of all, I would caution, if anybody was watching television about demonstrations here in the United States, you might have, if you saw large anti-war demonstrations, you wouldn't realize that 70 percent of the public actually supported war with Iraq.

So you have no idea, Bob, how representative these people are. They do enjoy majority status, of course, in Iraq, Shia Muslims. But the deal and what America's going to insist on, and they have every right and obligation to Iraq to insist on this, is an Iraqi government for all Iraqis, which means some fundamentals have to be in place, which are going to guarantee minority rights and religious freedom.

And of course that's their obligation, because they want to -- they want democracy to be enjoyed by the entire country, not a dominant minority.

SHIELDS: Ken Adelman, just looking at it politically, if you're organizing a campaign right now in Iraq, popular campaign, the religious figures have a couple of credentials going. One is, they were anti-Saddam. I mean, and they were organizers, they already have a constituency.

And secondly, they're not the puppets of the United States. So, I mean, in that sense, they have certain political electoral credentials, don't they?

ADELMAN: I guess so. But the fact is that we don't know what kind of standing. It just so happened that the liberation took place right before this religious holiday. All these guys had the pent-up emotion of wanting to beat themselves over the head and over their back, which suits me fine. I mean, let them beat themselves.

And the fact is that we don't know how prevalent this is. I think it is a problem today. I don't think it's going to be a problem for long in Iraq.

Two important things to remember. Number one is, we're about 10 minutes after liberation. And number two is, this is a group that is a relatively small group, from the best we understand it, in a relatively large country.

So this is a very passing problem.

SHIELDS: Al Hunt, if they're such a small group, why should be afraid of an open election?

AL HUNT, CAPITAL GANG: Well, look, first, Don Rumsfeld is right. An Islamic theocracy would be a disaster. It would be a disaster at home here politically, and it would be a catastrophe for the region. It would clearly make Sharon more intransigent, and just, I think, inflame tensions tremendously.

But therein lies the problem, and that's why General Garner is so incredibly deceiving when he tells people we're going to turn it over to them quickly. We're not going to turn it over to them quickly, Mark. I mean, I'm sorry.

It is a reminder of how marvelously prepared we were and how right we were for the war, and how ill prepared the Pentagon was for the aftermath.

ADELMAN: Well, I don't think that's (UNINTELLIGIBLE)...

HUNT: This happens time and time again.

ADELMAN: ... (UNINTELLIGIBLE)...

HUNT: Let me tell you, I -- aptly, we're -- I've never seen a more ill prepared -- and the...

ADELMAN: Oh, come on.

HUNT: ... (UNINTELLIGIBLE) what's remarkable is that they knew it was going to be short. So why did they botch it up so badly?

And I'm going to tell you, I don't know what...

ADELMAN: I don't see (UNINTELLIGIBLE)...

HUNT: ... the majority is...

ADELMAN: ... (UNINTELLIGIBLE)...

HUNT: ... I don't have any idea what the majority is over there. There may be a lot of secular Shiites. But these people are committed, they are organized, and if we try to turn it over to the Iraqis quickly, I guarantee you, the bad guys are going to control it.

O'BEIRNE: Well, we don't have a great track record as pundits when we're trying to gauge American public opinion and predict elections, so I for one am not going to try to do this one from a distance of so many miles away.

SHIELDS: But you're ruling out, you're ruling out a Shia religious party becoming...

O'BEIRNE: Well, because, because it would betray large numbers of the Iraqis. The fundamentals -- this is not going to be about one election, one time. The fundamentals have to be in place to make sure that it's a democracy for all Iraqis. And I for one would be very surprised if the women of Iraq, who will have the vote, are going to elect a Taliban-type regime.

NOVAK: Well, don't, don't, don't be surprised about it. You know, the thing I have -- a lot of people have short memories. I can remember very well in 1991 what the people in that administration, in the Defense Department at that time, and the CIA were telling me. And they were saying that the only hope of holding this country together under its present territorial boundaries is a military regime, a military-type regime like Saddam Hussein, if not Saddam Hussein.

That's, that's, that's one of the reasons, Ken...

ADELMAN: That shows the pathetic people you hang around with, Bob, it really does. I mean, why don't you have -- hang around with people who believe in democratic values, and believe in liberty, and believe in the kind of things our country was founded for?

NOVAK: Let, let, let me ask you...

ADELMAN: I don't think we all went to the Gulf War and liberated these people to end up in a either a military dictatorship or a theocracy.

NOVAK: What do, what do we, what do we...

ADELMAN: I think that would be disastrous.

NOVAK: ... what do we do if the Shias decide they want their own state, they don't want those dirty Sunnis around, and that they want a -- they don't want a parliamentary democracy, they don't want Iowa, they want Iran. What do we do when they vote that way?

ADELMAN: Well, you just say no.

NOVAK: Well, then it's not democracy.

ADELMAN: You just say no.

NOVAK: Then they can't have democracy.

(CROSSTALK)

ADELMAN: And you set up a situation so that we have a situation where there's free debate, there's open religion, there's all kinds of the basic freedoms, and then you have, after a while, you have a vote on that basis.

HUNT: Ken, I don't...

ADELMAN: But you just say no.

HUNT: Ken, I don't disagree with you. But I'll tell you, you know, Dick Cheney may have been right about the war, but he was dead wrong when he said they were going to be cheering us in the streets. Those million people...

ADELMAN: They certainly did.

HUNT: ... who marched last week were not cheering us in the streets.

(CROSSTALK)

HUNT: Those people who were...

O'BEIRNE: ... 25 million (UNINTELLIGIBLE)...

ADELMAN: ... (UNINTELLIGIBLE) -- there was -- Al, were you around...

(CROSSTALK)

ADELMAN: ... on the 9th and 10th...

HUNT: There's been, there has been very little...

(CROSSTALK)

ADELMAN: ... and 11th of April?

HUNT: ... cheering in the streets the last two and a half weeks...

ADELMAN: Al, were you around?

HUNT: ... and, you know, as I say, I agree with your bottom line. But Ken...

ADELMAN: (UNINTELLIGIBLE), Al.

HUNT: ... that's not going to be done in a week, it's not -- No, I mean, there's -- he was just dead wrong on that. It's not going to be done in a month. It's going to take five, 10 years, and it's going to be very costly, and it's going to be very dangerous. It beats the alternative, but we ought to be honest with people.

NOVAK: Well, I don't know if we can do it.

ADELMAN: (UNINTELLIGIBLE) I don't believe that at all.

NOVAK: I don't even know if we can do it.

ADELMAN: I don't believe that at all. I think that if you looked at anything in Iraq during the 9th, 10th, 11th, 12th of April, you saw people celebrating like mad, Al...

HUNT: Give me one model...

ADELMAN: ... (UNINTELLIGIBLE)...

HUNT: ... give me one model elsewhere where it's happened quickly. Any model, anywhere?

ADELMAN: (UNINTELLIGIBLE) quickly, I mean, there have been lots of countries that have gone democratic...

SHIELDS: OK...

ADELMAN: ... that everybody thought was...

SHIELDS: Ken...

ADELMAN: ... were hopeless.

SHIELDS: Last word, Ken Adelman.

Is Donald Rumsfeld behind Newt Gingrich's blast at Colin Powell? Ken Adelman and THE GANG will be right back.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

Former House speaker Newt Gingrich, a member of the Defense Department's Policy Board, took aim at the State Department and Secretary of State Colin Powell.

(BEGIN VIDEO CLIPS)

NEWT GINGRICH, DEFENSE POLICY BOARD: The last seven months have involved six months of diplomatic failure, and one month of military success. The first days after military victory indicate the pattern of diplomatic failure is beginning once again. The concept of the American secretary of state going to Damascus to meet with a terrorist-supporting, secret police-wielding dictator is ludicrous.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The process that the State Department followed and Secretary Powell led was the president's process.

(END VIDEO CLIPS)

SHIELDS: Al Hunt, is Newt Gingrich, in this speech, reflecting the sentiments of Secretary of Defense Don Rumsfeld?

HUNT: Yes, I think he is. Look, Gingrich in this fight is merely a useful idiot. Who cares of Tailgunner Newt says there are 150 card-carrying Ba'athists in the State Department?

But I think that that view does -- that view of Powell, that savage attack on Powell, does reflect the views of a number of people who are very close to Rumsfeld, namely, that Powell's view that need -- you're the most important country in the world, but you need allies, you need alliances, you need international institutions, they think that's a sellout of American issues.

I think that's wrong, Mark, as was most of Newt's critique. He said there's been six months of diplomatic catastrophe. U.N. 1441, without that, the Brits and Tony Blair would have been on the sidelines, and we would have a coalition of the willing led by Eritrea, is that how you pronounce it, Kate?

(CROSSTALK)

ADELMAN: Eritrea.

HUNT: It really would have been powerful. And what he says in the final analysis, though, what Gingrich says is either that George Bush is a willing pawn in this flawed Powell doctrine, going to Syria, you don't do it without the president knowing, or he's an (UNINTELLIGIBLE) fool. That's why the White House is so mad at Gingrich.

SHIELDS: That U.N. speech, which Secretary of State Powell pushed over the objections of both Vice President Cheney and Don Rumsfeld, was probably the turning point, where the president turned American public opinion, and may have laid the predicate right then and there for the Republicans winning back the Senate in 2002.

NOVAK: I -- yes, I agree with this. You know, I've been on the phone with the Pentagon, and talking to some of the military there, and they laugh when I ask them, Do you think this reflected Don Rumsfeld? Of course it did. Newt Gingrich would not have said this if he thought that he was going to be knocked down by the secretary of defense. He was not knocked down by him.

They are very -- I don't know when they got so close, but he -- they have become very close. He's over there all the time. And Don Rumsfeld, who I think is a -- did a -- he has a lot of admirable characteristics -- is the most powerful defense secretary I have seen in 46 years in this town.

And he does what he wants to do, and nobody bothers him. He is offensive to the senators, to the military -- to the uniformed military. And he says, Hell, I won the war. So this was the voice of Don Rumsfeld through the mouth of Newt Gingrich.

SHIELDS: Ken Adelman, Al and Bob both think this was Don Rumsfeld's (UNINTELLIGIBLE).

ADELMAN: Yes, but they're both wrong, they're both wrong, Mark. I know Rumsfeld like a brother. I worked for him three times in my life, starting in 1970. I've been to all of his houses. We go on vacation today. I know how Don Rumsfeld thinks and works. He is never vicious, he is never personal, he is always quite direct.

When he disagrees with something, he will tell you he disagrees with it. There is no kind of game playing, there is no kind of indirect.

And I do not believe, I do not believe that...

(CROSSTALK)

ADELMAN: ... that -- No, I do not. I just don't believe that. I have been in Rumsfeld -- with Rumsfeld in all kinds of situations, like I say, in the poverty program in the '70, '71, '72, in the Pentagon, I was with him the whole time he was there...

(CROSSTALK)

ADELMAN: ... I was there in the 1980s with him. I worked for him a lot. And I just saw him a lot over the years, including recently. This is just not true, that he doesn't go after people personally. And I do not think that he would have Newt say anything that he would not be...

O'BEIRNE: Newt, Newt Gingrich didn't go after Colin Powell...

(CROSSTALK)

O'BEIRNE: ... personally either. He...

HUNT: Well, Kate, it seemed that way.

O'BEIRNE: ... made -- he made...

(CROSSTALK)

O'BEIRNE: That wasn't a personal comment about Colin Powell...

(CROSSTALK)

NOVAK: It wasn't a little reference.

O'BEIRNE: Where have you...

HUNT: He fooled all of us.

O'BEIRNE: He reflected the views of every conservative in this city, that they've held for 30 years, about the State Department. Why is that all of a sudden a big personal attack on Colin Powell? These are longstanding conservative criticisms of the State Department, through Democratic and Republican presidents.

Foreign service officers do tend to go native. They do tend to come to believe that their job is to represent foreign governments to us, rather than our interests and point of view overseas. It's a common, longstanding complaint about the State Department.

SHIELDS: Two quick points. At the nub of this, at the center of it, is the -- Powell's pushing President Bush to get reinvolved in the Middle East peace process...

O'BEIRNE: That's not at the center. SHIELDS: ... and is at -- that's at the center of it.

O'BEIRNE: No, no.

(CROSSTALK)

SHIELDS: My own reporting has confirmed that independently.

NOVAK: Absolutely.

SHIELDS: Secondly, why was Tom Daschle, before the bombing or the fighting began, when he criticized the president's foreign policy, considered some sort of a Benedict Arnold, and (UNINTELLIGIBLE)...

O'BEIRNE: I'll tell you why.

SHIELDS: ... denounced -- OK...

O'BEIRNE: That's not rhetorical. I'll tell you why.

SHIELDS: ... now, but Newt Gingrich, I'm waiting, I'm waiting for the first conservative to criticize Newt Gingrich...

O'BEIRNE: I'll tell you why.

SHIELDS: ... during the war.

O'BEIRNE: I'll tell you why.

(CROSSTALK)

SHIELDS: I did hear you (UNINTELLIGIBLE).

O'BEIRNE: OK, what Tom...

SHIELDS: You're the first.

O'BEIRNE: ... what Tom Daschle said was, the war was -- foreign policy was bungled, i.e., we could have eventually gotten Security Council approval there for the president (UNINTELLIGIBLE) into an unnecessary war. That is not what Newt Gingrich is saying. What he is saying is, post-9/11, when reform is all the rage, CIA, FBI, INS, Defense Department, why is reform of the State Department...

NOVAK: Kate...

O'BEIRNE: ... so...

(CROSSTALK)

NOVAK: Kate, I re -- I re -- I re -- I respect you too much to have you say this wasn't directed at Newt. I mean, (UNINTELLIGIBLE) whether it's good -- I mean, at Colin Powell. Whether, whether it's...

O'BEIRNE: Have conservatives been saying this... NOVAK: ... just a minute...

O'BEIRNE: ... for 30 years, Bob?

NOVAK: Just a minute. When he says, him, the secretary of state, going to Damascus, and he doesn't go to Damascus because he says, Gee, I think I'll go to Damascus tomorrow, that's at the orders of the president. When he says that is ludicrous, you, you are -- there are two things there. That is a personal attack on him...

ADELMAN: Oh, stop.

NOVAK: ... because he's -- Deputy Secretary of State Armitage said that Newt needed a little medication...

O'BEIRNE: Not very diplomatic...

NOVAK: ... to take care of himself...

O'BEIRNE: ... for the number two diplomat, I might add...

(CROSSTALK)

NOVAK: Well, I mean, this is very personal. And secondly, it shows that Secretary Rumsfeld is off on his own. The trip to...

ADELMAN: (UNINTELLIGIBLE).

NOVAK: ... to Rumsfeld, to Damascus was not an aberration, it was part of U.S. policy.

HUNT: This is one of those times that Bob is right. Listen, the idea -- I mean, Don Rumsfeld...

O'BEIRNE: Think about that for a minute, Al.

HUNT: ... Don Rumsfeld may be this wonderful, sweet, avuncular man that you describe, Ken...

ADELMAN: That's not how I described him...

HUNT: But let me tell you this...

ADELMAN: ... (UNINTELLIGIBLE) described him as honest and straight...

HUNT: ... let me tell you (UNINTELLIGIBLE)...

ADELMAN: ... and not devious.

HUNT: ... they're are all -- there are lots of people...

ADELMAN: And not vicious.

HUNT: ... like -- there are lots of people like Nelson (UNINTELLIGIBLE) -- Nelson Rockefeller who would disagree with that. But in any event, let me just tell you this. The idea that no one around Rumsfeld knew that Newt Gingrich was doing this is preposterous.

O'BEIRNE: Why?

ADELMAN: OK, I believe that.

O'BEIRNE: Why?

ADELMAN: First of all, I believe that.

O'BEIRNE: Newt Gingrich freelancing is preposterous?

ADELMAN: Secondly -- secondly...

(CROSSTALK)

HUNT: ... he's a member of the Defense Policy Board, he got...

ADELMAN: I'm a member of the Defense Policy Board.

HUNT: ... (UNINTELLIGIBLE) this administration, he's gotten (UNINTELLIGIBLE) -- You were in before him.

ADELMAN: I say all kinds of things...

HUNT: Newt got back (UNINTELLIGIBLE), though.

ADELMAN: I am -- I do not believe that there's anything at all vicious about Don Rumsfeld. I think he's very straight. I think Kate is absolutely right, that there is a Republican line about -- against the State Department. But this was too vicious, and this was too personal for my taste.

SHIELDS: Last word...

NOVAK: (UNINTELLIGIBLE).

SHIELDS: ... Ken Adelman.

Is President Bush bullying an Ohio Republican senator on taxes, while Dick Gephardt dares to call for higher taxes? Next on CAPITAL GANG.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

President Bush went to Canton, Ohio, to pus his tax cut program and to target Ohio's anti-tax cut Republican senator, George Voinovich, even though he did not mention the senator's name.

(BEGIN VIDEO CLIP)

BUSH: Some in Congress say the plan is too big. Well, it seems like to me they might have some explaining to do. If they agree that tax reliefs creates jobs, then why are they for a little bitty tax relief package?

(END VIDEO CLIP)

SHIELDS: Meanwhile, Democratic presidential candidate Richard Gephardt advocated universal health insurance care to be paid for by higher taxes.

(BEGIN VIDEO CLIP)

RICHARD GEPHARDT, DEMOCRATIC PRESIDENTIAL CANDIDATE: This president is shortsighted. How else can you explain his shortsighted support for irresponsible tax cuts?

(END VIDEO CLIP)

SHIELDS: Kate O'Beirne, who has the political high ground on this one, George W. Bush or Dick Gephardt?

O'BEIRNE: Ask Walter Mondale, Mark. Which -- you know, he's the only national politician to have lost statewide in every state of the Union? But he was a big tax increaser.

I think Dick Gephardt -- tax cuts are more popular than tax increases. Dick Gephardt deserves credit, though. This is a big idea, his health insurance idea, and campaigns ought to be about big ideas. This just happens to be a bad big idea.

NOVAK: Can I just...

O'BEIRNE: In order...

NOVAK: Can I just say one thing? You both have used a word that is incorrect. It's not a health insurance plan, it's a health care...

O'BEIRNE: It's mandate on employers.

NOVAK: ... it's a health care...

O'BEIRNE: In order to cover, in order to cover 30 million uninsured, which will cost $210 billion a year, Dick Gephardt proposes raising taxes on workers who already have health insurance. And I think that's going to be a political problem for him. But look, you have to get back in the good graces of the liberals who nominate Democrats, because they're unhappy with his -- and one's unions, what they like this kind of plan. And he's on -- they're unhappy with his support for the war.

And raising taxes and mandating this kind of coverage, I think, will be popular among liberals.

SHIELDS: Ken Adelman, should George Voinovich be quaking in his boots at 69 percent approval in Ohio with the president coming in?

ADELMAN: Well, he's not quaking in his boots. But I think that when you look at this big idea, you realize that it's a big idea, but it's an old idea. I mean, national health care is an old idea. And when you look, we have something that is a very good laboratory right next door, which is called Canada, that has national health service, and, you know, that's very expensive, like Gephardt wants to do.

You know, Canada doesn't look in such great health these days. I mean, you know, Toronto's quarantined off. I don't know the relationship between its health care and that. There may be none. But it is odd that Toronto is really, outside of China, is...

SHIELDS: It's like blaming AIDS on the Mayo Clinic, isn't it? I mean, I don't -- you know, I don't think there's a correlation between them, yes.

ADELMAN: I don't know if there's not a -- it's just odd that right there, it is a tremendous health problem.

Anyway, the health program is Canada doesn't work all that well. It works sufficiently well because Canadians who are real sick come over the border. So I don't think that that's a great model for us, and I don't think Gephardt is going to get any further than Hillary Clinton did in 19 -- when was it, 1991, 1992, on the whole thing.

SHIELDS: Al -- No...

ADELMAN: No, '92, '93.

SHIELDS: Yes, you were (UNINTELLIGIBLE). No health care then. But -- Al Hunt.

HUNT: Well, I think it is a big, bold move, and I think it's a real interesting choice. Do you want to have a tax cut on dividends and lower rates for the wealthiest Americans, or do you want to insure 30 million people who don't have insurance now? That should be a great debate.

My great fear is, of course, is George Bush will run from that debate. He'll pretend like there are no choices. We don't have to make choices in government.

I'm not sure, as far as the health care component, if that's the best model, whether we ought to do the, you know, go through employers, or whether we ought to have the government offer health to people, but that should be a great debate. Dick Gephardt deserves credit.

NOVAK: Al is, Al is too good a reporter and too smart a guy to really pass that off as an accurate description of what's going on. It is, it is, it is not a tax cut for the rich. It is a -- he is going to pull back a tax cut, across the board, for everybody, that's already gone into effect, and raise taxes on all Americans who pay income taxes.

What Dick Gephardt has done -- and I like Dick Gephardt, I think he's a very decent fellow -- he has taken two of the worst ideas, socialized medicine and higher taxes, and wedded them. Now, how in the world can anybody think that's a good idea politically?

O'BEIRNE: Well, socialism and high taxes tend to go hand in hand, (UNINTELLIGIBLE).

ADELMAN: I will say this...

HUNT: (UNINTELLIGIBLE) because we want to have health insurance, Mark, for all the Iraqis, but not for Americans.

SHIELDS: That's right, we want, we want universal health...

NOVAK: I don't want it for them.

SHIELDS: ... universal health insurance for the Iraqis, which is the administration plan, and the request, they've already requested...

ADELMAN: I never saw that.

SHIELDS: ... (UNINTELLIGIBLE). Yes, they've gotten...

ADELMAN: I never (UNINTELLIGIBLE).

SHIELDS: ... (UNINTELLIGIBLE) idea, 25,000 new schools too.

But let's get one thing straight here. Dick Gephardt has come up with an idea, and you get your choice. I think Al's framed it very well. You can have your repeal of dividends taxes, and you can have, you can have somebody who sits there with -- sipping his capuccino and pays no taxes on it, and on millions, or you can have...

O'BEIRNE: Mark...

SHIELDS: ... you can have ordinary workers covered...

NOVAK: Just, just for the...

SHIELDS: ... with health insurance.

NOVAK: ... sake of accuracy, he is rolling back the tax cuts that had nothing to do with dividends, was an across -- Just a minute. Was across the board tax cut for everybody. Let's just be accurate in describing these things.

SHIELDS: (UNINTELLIGIBLE)...

NOVAK: It had nothing to do with dividends, nothing at all.

SHIELDS: But Bob, isn't that what he's advocating right now? I think he is.

(CROSSTALK)

HUNT: ... keeps the child care credit, he keeps the marriage penalty relief, he keeps a number of things.

SHIELDS: That's right.

(CROSSTALK)

O'BEIRNE: He raises rates on the (UNINTELLIGIBLE)...

NOVAK: But he cuts the, he cuts the...

O'BEIRNE: ... (UNINTELLIGIBLE)...

NOVAK: ... across-the-board tax cut. You see, you see...

O'BEIRNE: Right, right.

NOVAK: ... the thing, the thing that kills me about you liberals is, you won't be honest about what he's doing. He's raising taxes on everybody.

HUNT: (UNINTELLIGIBLE), he's raising taxes.

NOVAK: Yes, OK.

HUNT: (UNINTELLIGIBLE)...

NOVAK: On everybody.

SHIELDS: (UNINTELLIGIBLE)...

HUNT: ... (UNINTELLIGIBLE) doesn't want to give health insurance to 30 million Americans.

(CROSSTALK)

NOVAK: I don't either.

HUNT: OK.

SHIELDS: ... Al, Al, $41 million. And that's the way you feel about it.

NOVAK: That's right.

SHIELDS: Tax cuts as opposed to health care.

NOVAK: That's tax cuts for everybody.

SHIELDS: That's it, that's it. Oh-ho, as opposed to health care for everybody.

THE GANG will be back with a "CAPITAL Classic," the first President Bush riding high poll numbers while in Gulf War I.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

In the wake of the U.S.-led coalition's victory over Saddam Hussein in the first Gulf War, your CAPITAL GANG talked politics on March 23, 1991.

(BEGIN VIDEO CLIP, March 23, 1991) PAT BUCHANAN, CAPITAL GANG: The Democratic National Committee is meeting in gloom in this capital city today with news from the pollsters reading like a party obituary. A "Wall Street Journal"-NBC survey shows President Bush destroying the strongest candidate the Democrats have, Governor Mario Cuomo of New York, by 67 percent to 22 percent...

SHIELDS: We're definitely in the age of George Bush. He is stronger than a garlic sandwich.

George Bush has brought together a politics which is inimitable. You cannot, anyway, follow it. There's no ideological pattern to it.

NOVAK: You can go back to before this war started, and even before the ground -- before the shooting war started on January 12 -- January 16. The -- this president was in a lot of trouble, because he didn't seem to stand for anything. He was going down. The Democrats were saying, Hey, maybe we can knock him off.

HUNT: Now, what George Bush has done in the last six months is totally ignore Bob Novak's advice on taxes and on the Persian Gulf, and he's climbed 30 points in the polls since he did that. That tells you a little bit.

That same poll you referred to also (UNINTELLIGIBLE) terrible news for the Democratic Party.

(END VIDEO CLIP)

SHIELDS: Al Hunt, in view of what happened, do you think the first President Bush made a mistake in not calling for a tax cut?

HUNT: No. Two years later, Bill Clinton revived the economy by restoring fiscal sanity and a tax increase on the rich, and you know what he did, Mark? He basically created the greatest economy we have ever seen, and the rich, including some we know, had more wealth than they ever dreamed of.

SHIELDS: Good point, isn't it, Bob?

NOVAK: I'm really crushed that Al can't admit when he was wrong. If George Bush, Senior, had called for a tax cut, this country might, might have been saved the eight years of Clinton.

ADELMAN: I agree with that. I think a tax cut is always better to give the people the money rather than have the government and, you know, these big bureaucracies spend the money. I don't know what's wrong with that.

SHIELDS: You're going to turn wars over to private enterprise...

ADELMAN: No, I would not turn wars...

SHIELDS: ... (UNINTELLIGIBLE)?

ADELMAN: ... I would (UNINTELLIGIBLE) -- the wealth that I make, I'd like to keep as much as possible of that and not have other people...

O'BEIRNE: The first President Bush...

ADELMAN: ... take it.

O'BEIRNE: ... clearly should have followed Bob Novak's advice on taxes, as his son, this President Bush, is. And unlike his father, this President Bush won't face a primary challenge from a member of THE CAPITAL GANG, and that'll be helpful.

SHIELDS: I will...

O'BEIRNE: Unless Bob has plans we don't know about.

SHIELDS: I will say this, that I believe in the GI bill, I believe in the -- I believe in public colleges and universities and public schools...

ADELMAN: I know you do.

SHIELDS: ... and those all come from tax dollars.

George W. Bush does -- George Herbert Walker Bush deserves credit, because Bill Clinton did create that eight years, you're right, Al, but without George Bush's tax increase the first time, it wouldn't have worked.

NOVAK: You never saw a government program you didn't like.

SHIELDS: I sure have, I've seen it, and I'll tell you what it is...

(CROSSTALK)

SHIELDS: ... it's beach erosion at your summer house.

(CROSSTALK)

HUNT: ... during those eight years.

SHIELDS: Ken Adelman, thank you for being with us.

ADELMAN: You're welcome.

SHIELDS: Coming up in the second half of CAPITAL GANG, what's ahead for postwar politics, with analyst Stu Rothenberg. And "Beyond the Beltway," talking to former ambassador to South Korea James Lilly about North Korea's nukes. Plus, our "Outrages of the Week," and the latest news headline, that's next on CNN.

(COMMERCIAL BREAK)

(NEWSBREAK)

ANNOUNCER: Live from Washington, THE CAPITAL GANG.

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

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

Our "Newsmaker of the Week" is political analyst Stuart Rothenberg.

Stuart Rothenberg, age 54, residence Potomac, Maryland, religion Jewish.

B.A. from Colby College, Waterville, Maine, Ph.D. from the University of Connecticut. Taught political science at Bucknell University and the Catholic University of America. Editor and publisher of "The Rothenberg Political Report," columnist for "Roll Call," a Capitol Hill newspaper.

Earlier this week, our Margaret Carlson sat down with Stu Rothenberg.

(BEGIN VIDEOTAPE)

MARGARET CARLSON, CAPITAL GANG: Stuart, let's move forward to '04. If Iraq is like Afghanistan at that point, just a low-level problem, how does it play for Bush in the election? Is he commander in chief, or is he a president with a bad economy?

STUART ROTHENBERG, POLITICAL ANALYST: The president won't let people forget about Iraq. There are, of course, other questions, in terms of rebuilding a country, international terrorism. Most of the Democrats, of course, you're absolutely right, Margaret, will have wanted to move on by then. They're going to want to talk just about the economy, assuming it remains soft.

CARLSON: Karl Rove keeps telling us that '04 is going to be like '00, and not like '84 in a Reagan landslide. Do you think it's going to be another cliffhanger?

ROTHENBERG: Yes, I think it's likely to be close, because although the president has terrific job approval numbers now, in the low 70s, fundamentally, the country is still divided. I just don't think there are a lot of Bush voters who are -- wish they had voted for Al Gore or want a Democrat. And I don't think there are a lot of Democrats who really think that George Bush deserves another term.

CARLSON: George Bush wants to be seen doing something about the economy, as opposed to his dad. So this week he went into Ohio, where the governor, the former governor, now senator, is one of the most popular governors ever of the state. Is that smart politics, to go there?

ROTHENBERG: I think the president is demonstrating to the base that he is taking the fight for tax cuts right to the enemy. And in this case, the enemy happens to be a Republican, George Voinovich.

Look, I don't think the president is really going to get the senator to cave in on this. But Bush has a tendency to do good cop- bad cop sometimes. In this case, he's trying to be tough. CARLSON: Doesn't he look a little like a bully, going in there, Air Force One?

ROTHENBERG: Well, I think he can. I think that's a danger, if he were to keep it up. Democrats don't trust him, don't like him, don't think he should be president, don't think he is really president.

But Republicans kind of like him. I don't think he risks problems with the base, but he does generally have to be careful.

CARLSON: Does the president play too much to his base?

ROTHENBERG: He got elected, obviously, as a compassionate conservative. At the moment, on the tax cut, he's certainly playing to the base. But again, Margaret, I just warn you, I think he has the ability to pull back sometimes, soften up. I think they're pretty savvy at the White House.

They were -- they've been very, very unsavvy in how they've drawn up and presented the tax cut plan, as well as a prescription drug plan, in those details, was disastrous, I think.

CARLSON: Senator Rick Santorum has not apologized for being anti-gay, more or less, however you want to parse it.

ROTHENBERG: I think it reflects his own views, and I think it reflects a significant part of the Republican Party views. The question is whether Republicans want to be in this fight right now. And I can't believe that the president wants that. President's trying to push a big tax cut proposal. His own party is divided. I hear people say, Oh, Santorum wants to energize the base.

Well, maybe you want to energize the base around an election, but this is not the time and place, I would think, to do that.

CARLSON: But in the history of political apologies, wouldn't it be smart for Senator Santorum just do the, If I offended, I'm sorry, construction?

ROTHENBERG: Probably, but he believes what he said. He thinks he said nothing wrong.

CARLSON: Congressman Dick Gephardt, coming out this week with a health care plan, almost bigger than Hillarycare. Is that smart?

ROTHENBERG: I think he feels he's being pinched on the left by Howard Dean, and he's being pinched in a different way by the new faces, particularly John Edwards. He has to show that he thinks big, he has to appeal to the Democratic liberal wing of the party. And he has to show that he has new ideas.

So in that regard, I think it was a good idea. The specifics are going to come under attack.

CARLSON: Yes. Iraq, how does it play on the field? ROTHENBERG: I think it's the reason why Howard Dean has gotten some early traction. He would be nowhere without the issue. But, you know, I think that on the other hand, on the other side, somebody like John Edwards, who's been very smart not to soft-pedal his support for the war. John Edwards and even Dick Gephardt have to show they're tough now, even take it to their own party. In general, it has not helped the Democratic field since they've been invisible for the last two months.

(END VIDEOTAPE)

SHIELDS: Bob, Stu Rothenberg, a respected analyst, saying that President Bush should not appeal too much to his own conservative political base.

NOVAK: That's just wrong. It's the idea that if you appeal to your own base, you're going to offend the people who are in the middle. What you offend are the people who are going to vote for the other side.

I think that one of the president -- President Bush's father's greatest faults was that he lost the base. He -- Ronald Reagan always appealed to the political base, and he was enormously successful presidential politician. So I have a lot of respect for Stu, but I think he's absolutely wrong on that.

SHIELDS: Kate, you think Stu's wrong?

O'BEIRNE: I think, I think there he is too, Mark. The -- George Bush has really solidified his political base. And it seems to me if that remains the case, and I see no reason why it wouldn't heading into 2004, he has a lot of latitude, because the base is so enthused about him. And the base is not out of step with swing voters on taxes, national security, defense.

SHIELDS: Al Hunt, Richard Nixon said no politician is worth his salt unless at every moment he's testing his own base, making them somewhat uncomfortable. George Bush is not doing that.

HUNT: They have to be supportive, but a little bit uncomfortable. And I agree, he has done a terrific job of solidifying that base. It's also true, though, he's an incredibly divisive figure with Democrats. He has -- he gets no support among Democrats, so...

SHIELDS: A lot more so than his father.

HUNT: ... so -- Right. So at some point, he's going to have to try to use that latitude and reach across the middle. It may be harder.

NOVAK: Well, I have to say that I think this is not on Stu's part, but I think on your part, Al, you just don't like his policies, and you want him to betray those policies and be a fuzzy little liberal Republican. Isn't that what you want?

HUNT: I don't like his policies, you're right about that, Bob. NOVAK: Yes, OK.

O'BEIRNE: Democratic voters are not voting for him.

SHIELDS: I will say this, when it comes down to political analysis, I'll take Stu Rothenberg over Bob Novak any day of the week.

Next on CAPITAL GANG, "Beyond the Beltway." Is North Korea guilty of nuclear blackmail?

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

In Beijing, U.S. and North Korean officials sat down to discuss nuclear arms in a meeting arranged and presided over by the Chinese government. President Bush welcomed the Chinese joining the talks.

(BEGIN VIDEO CLIP)

BUSH: Now, this will give us a opportunity to say to the North Koreans, Well, we're not going to be threatened.

(END VIDEO CLIP)

SHIELDS: After the meeting, North Korea acknowledged for the first time that it has nuclear weapons.

(BEGIN VIDEO CLIP)

BUSH: See that? They're back to the old blackmail game.

(END VIDEO CLIP)

SHIELDS: By accusing the North Koreans of blackmail, does President Bush help resolve the crisis?

First of all, through an error on our part for which we apologize, Ambassador James Lilly, the former ambassador to South Korea, will not be with us.

Bob Novak, President Bush, his charge of blackmail, which probably is legitimate, but does it help the process as we just enter negotiations?

NOVAK: I think -- I think -- I don't think it helps the process. Secretary of State Powell has not used the word. It was not in an official state paper, was in an off-the-cuff interview with Tom Brokaw of NBC. And it's -- you know, sometimes you get -- they talk about themselves, Hey, this is blackmail.

But the problem is, we are, number one, we are -- the United States is not going to attack North Korea as they did Iraq because of the fact that we have 37,000 troops and the city of Seoul in South Korea, who are more or less hostage. And secondly, the question of negotiation -- of trying to negotiate a settlement, I don't think, is conducive when you start throwing these names around. And that is what -- whatever we say, that is what the United States is trying to do, negotiate some kind of deal with Pyongyang.

SHIELDS: Kate O'Beirne, one of the earlier developments this week was that we found out that a Rummy-gram from Don Rumsfeld urging that John Bolton, the rather super hawkish undersecretary, replace Jim Kelly...

NOVAK: Undersecretary of state.

SHIELDS: Undersecretary of state, replace assistant secretary of state Jim Kelly as the American negotiator there. I mean, is this -- does this mean that with the talks themselves are in trouble already?

O'BEIRNE: Well, Mark, it seems to me that how exactly to handle this real problem with respect to North Korea is one of the differences inside the administration between the White House view and the State Department. The State Department, in the person of the deputy secretary, Armitage, favored months ago bilateral talks, which is what North Korea was demanding, U.S. and North Korea alone. The White House resisted that.

It now seems that the White House was right. Our refusal to go along with bilateral talks has now moved the Chinese. We're now at least have the Chinese engaged, which they hadn't been prior to Iraq. It was also White House view and Defense Department's that things would change post-Iraq, and it does seem to have changed the Chinese behavior.

U.S. is insisting on engaging all of the neighbors who have a stake here. And that seems to be the approach that's working, Bob.

SHIELDS: Al Hunt.

HUNT: It's kind of hard to call it working this week. But let me just say this, that a couple years ago, during that (UNINTELLIGIBLE) that spy -- that plane incident, when the Chinese shot down our plane, they were wrong, there were some neocons who went and said that Colin Powell had disgraced America -- I'm sure Newt Gingrich would have said that -- because of the way he negotiated a detente on that, if you will.

I think the dividends are now being reaped from that Powell policy. I think the Chinese have gotten far more active. We have a pretty good relationship with China. I think Colin Powell deserves a lot of credit for that.

The Chinese are critical in this. The Chinese are absolutely critical. We're not going to do anything without the Chinese. And they have been playing a helpful role, but it's an incredibly delicate situation. And for -- and, you know, I don't know John Bolton's view, but anybody who wants to be hard-line on this, you're talking about a million casualties in the Korean peninsula. This, this, this ain't any cakewalk.

O'BEIRNE: Al, you don't disagree that the Chinese had been very unhelpful until Iraq, frankly, post-Iraq they've been more helpful. And in 19 -- and given that (UNINTELLIGIBLE), that incident with our plane and the Chinese, Newt Gingrich said no such thing about Colin Powell, and in an article in "National Review," criticizing the State Department, they give Colin Powell full credit for negotiating that...

SHIELDS: (UNINTELLIGIBLE)...

O'BEIRNE: ... situation -- so well.

SHIELDS: ... Bob Novak, Bob Novak, just following up on Al Hunt's point about a million casualties projected, not that that's just made up out of the air. We're talking about a country, North Korea, with 409 surface warships, 509 combat aircraft, 80 armed helicopters. I mean, this is a major military power.

NOVAK: And the city of Seoul sits 30 miles from the border, 30 miles...

SHIELDS: Of the border, (UNINTELLIGIBLE).

NOVAK: ... from the border. It's a big, vulnerable, vulnerable city.

SHIELDS: So the military option is not there.

NOVAK: You know, the -- I just -- No, there's no military option. Everybody knows that. And I don't think, Kate, that the Chinese are afraid of us because we knocked the hell out of Iraq. I think this was an enormous step for American diplomacy, for the Chinese to sit down. Now, they say, We're not mediating, the Chinese say, we're facilitating.

Well, I don't care...

O'BEIRNE: (UNINTELLIGIBLE), right, right...

NOVAK: ... whether they're facilitating...

O'BEIRNE: ... they're engaging.

NOVAK: Yes, I don't care whether they're facilitating or mediating, they are there.

O'BEIRNE: Yes.

NOVAK: First time those three parties have been at the same title since 19 -- table -- since 1952 in the Korean peace talks.

Well, this is a (UNINTELLIGIBLE) more important thing. The interesting thing is, how in the world the United States is going to make a deal without being subject to the criticism that they appeased the North Koreans, as they accused Clinton of doing in the last dustup we had?

That's a -- that's going to be a -- something that's going to take skillful diplomacy and not breast-beating.

HUNT: I agree with that, and I -- you know, I also think, Kate, that, well, this was a compromise. What we had said was, Japanese and South Koreans, everyone has to be there. What they had said was, It's going to be face to face. So the Chinese came in, as Bob said, as mediators. It was a very good compromise.

Chinese coming in, was their own self-interest, had nothing to do with Iraq.

SHIELDS: Let me -- Oh, I'm sorry, go ahead, excuse me.

HUNT: No, go ahead.

SHIELDS: (UNINTELLIGIBLE) the unthinkable, but some neocons, serious, respected figures, have proposed that nuclear arming Japan if North Korea sticks to where it is now, giving nuclear weapons to Japan. Is -- is that a...

O'BEIRNE: Also missile, missile defense is looking better and better, Mark.

SHIELDS: No, but, I mean, are we talking about a nuclearization of that whole region?

NOVAK: I -- well, the problem is that if we pull the troops out of South Korea, there's going to be a great impulse in Japan to go nuclear. And I think you have to think about that into the future.

There is -- it is really -- I think that the unwisdom of putting the axis of evil, including North Korea, and the axis of evil comes up right now, I don't think that helped the problem. Probably didn't hurt it much, but (UNINTELLIGIBLE).

SHIELDS: Last word, Robert D. Novak.

The GANG of five -- the GANG of five? No, just the GANG, the four GANG, will be back with the Outrage of the Week.

(COMMERCIAL BREAK)

SHIELDS: Now for the "Outrage of the Week."

Make no mistake about it, big money in the form of big campaign contribution does buy both access and influence in Washington, D.C. But in comparison to London, Washington looks like a reformers' paradise. "The Christian Science Monitor" reported Friday finding documents in Iraq indicating that British House of Commons member George Galloway, the most consistent admirer of and public advocate for Saddam Hussein in all of England, had received more than $10 million from Baghdad between 1992 and 2003.

If the charges, which Galloway denies, are true, then this Brit will make the Yanks look like pikers.

Bob Novak.

NOVAK: Fidel Castro's latest repression of political dissenters, including summary execution of two airline hijackers. has alienated even some soft-minded U.S. politicians. So the Cuban dictator talked back last night for four hours on state television.

Castro accused Cuban exiles of inciting skyjackings to provoke a U.S. invasion. That's nonsense. But Fidel should not give ideas to George W. Bush. There's at least as much justification for attacking Cuba as Iraq, and Fidel's troops would be no match for U.S. Shock and Awe.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Leading Democrats say Republican Senator Rick Santorum of Pennsylvania is unfit for Senate leadership owing to his comments about a pending Supreme Court case. Santorum echoed a previous case and made a classic slippery slope argument about whether states could regulate any private sexual behavior, like bigamy or incest, if the court strikes down an anti-sodomy law, echoing his church's teaching, the Catholic Santorum believes such behaviors undermine marriage.

His Democratic critics apparently think that holding a Catholic view of sexual mores is bigotry and disqualifies Santorum from his leadership post.

SHIELDS: Al Hunt.

HUNT: Mark, the IRS will crack down on tax avoiders. No, it's not going after the more than $50 billion that corporations evade in taxes with dubious shelters overseas and elsewhere, or the huge amounts that wealthy investors and coupon clippers escape through illicit scams.

After all, these people are powerful, and sometimes they're campaign contributors.

Instead, "The New York Times" reports the IRS will crack down on any abuses in the earned income tax credit, which goes only to the working poor.

This is the most morally bankrupt and politically driven IRS policy in 30 years.

SHIELDS: Boy, it's tough to argue with that.

Do you...

NOVAK: I can argue with it, but we don't have time.

SHIELDS: Yes, got to get out of here, Bob, I'm sorry, but I agree with Al.

This is Mark Shields... NOVAK: (UNINTELLIGIBLE)...

SHIELDS: ... saying goodbye for THE CAPITAL GANG.

Coming up next, "CNN PRESENTS: War Stories -- Embedded Journalists During the Gulf War." At 9:00 p.m. on "LARRY KING WEEKEND," former prosecutor Nancy Grace. And at 10:00 p.m., the latest news on "CNN SATURDAY NIGHT."

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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