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The Lead with Jake Tapper

Republican Senators Join Criticism of Defense Secretary Rumsfeld; Discussion of Past and Present Economic Summits

Aired December 18, 2004 - 19:00   ET

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

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


ANNOUNCER: Live from Washington, THE CAPITAL GANG.
MARK SHIELDS, HOST: Welcome to THE CAPITAL GANG. I'm Mark Shields, with the full GANG, Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

Republican senators joined the criticism of defense secretary Donald Rumsfeld which was set off by his recent remarks to U.S. troops in the field.

(BEGIN VIDEO CLIP)

SEN. CHUCK HAGEL (R), NEBRASKA: That might work in a newsroom, when you can be cute with the television audience, but not when you're putting these men and women in harm's way who will be wounded some. Some will be killed.

(END VIDEO CLIP)

SHIELDS: Senator John McCain said he has "no confidence" in Secretary Rumsfeld, but added this:

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: The president has expressed his confidence in him, and the president should have the people working for him that he trusts.

(END VIDEO CLIP)

SHIELDS: Senator Susan Collins criticized the secretary's handling of armor in the war zone.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: Well, I'm not calling for his resignation, but I am calling for -- to pay attention to this issue and to personally ensure that it's solved once and for all.

(END VIDEO CLIP)

SHIELDS: Senator Trent Lott said Secretary Rumsfeld should leave in the next year. But Rumsfeld did receive expressions of confidence from the White House and the Senate Republican leaders.

Meanwhile, President Bush awarded the Presidential Medal of Freedom to three architects of Iraq policy: former CIA director George Tenet, General Tommy Franks and former Iraq administrator Paul Bremer.

Kate O'Beirne, will Don Rumsfeld be force out of the Pentagon?

KATE O'BEIRNE, CAPITAL GANG: Mark, I don't think so. He clearly has the confidence of the president and vice president. He has the confidence of the troops, who, people rarely point out, gave him a standing ovation after meeting with him in Kuwait, when that question was asked. So they sure didn't feel as though he blew them off. He has the confidence of his senior military commanders, the chairman of the Joint Chiefs and the vice chairman of the Joint Chiefs, and his field commanders.

These aren't party regulars that are criticizing George Bush. The combination of John McCain, Chuck Hagel, Trent Lott and Susan Collins are unlikely to get the administration to change its mind about the important job and good job they think Rumsfeld's doing. The only question they raise is where's Lincoln Chafee? And these are all supporters of the war. I didn't hear a single one of them say, Wait to invade Iraq until you're ready to fight a sustained urban insurgency. None of them said that. And I don't know if any one of them has up-armoring vehicles been their top priority for the past year? I don't think so.

SHIELDS: Bob Novak, add Norm Coleman of Minnesota to that group, as well. But all we're talking about is 29,000 vehicles with armor and our troops in Iraq. And that's been the central focus of the criticism about Don Rumsfeld. What's going on here?

BOB NOVAK, CAPITAL GANG: I don't think it has much to do with armored vehicles.

SHIELDS: You don't?

NOVAK: No. I think it has to do with Don Rumsfeld's personality. I used to say that Coach Vince Lombardi treated all his players the same, like dogs, and Rumsfeld treats everybody the same. He treats -- he's been doing that for years. He's a...

SHIELDS: Catching up with him?

NOVAK: Yes, it's catching up with him. He's treated -- he's treated senators very badly. When you get John Warner, the establishment-establishment chairman of the Senate Armed Services Committee, who hates Rumsfeld -- when you get him mad at you, you're really lost.

Now, I'll tell you this, the answer to your question to Kate. They're not going to fire him because of these people that asked him. But there's one other advantage he has. There is nobody inside the Pentagon who can take his place. They are not going to name Wolfowitz, his deputy, as secretary, and there's nobody else. And so that gives you a certain security. But I don't think he's going to stay there for the -- forever. I would say he'll probably be gone with -- sometime within this year.

SHIELDS: This year? Margaret Carlson... (CROSSTALK)

NOVAK: This year -- I mean, '05.

SHIELDS: You mean '05. OK. Yes.

MARGARET CARLSON, CAPITAL GANG: And a happy one we'll have in the new year. Bob, you and Rumsfeld have one thing in common. You treat everyone the same way. And I won't characterize how it is.

Listen, as -- you know, Rumsfeld got in more trouble for the way he handled the soldier's question. The situation in Iraq didn't change. What changed was that everyone got to see Rumsfeld, as he is with the press corps and other people, doing that to a soldier. And as he flippantly might say, he's been up-armored by the president. He's not going anywhere. And Trent Lott does not have the moral authority -- I think there's not going to be a stampede after Tent Lott gets on a bandwagon. The bandwagon might even empty -- empty out.

On the Medal of Freedom winners, you know, what a political move by the president, armoring these three men who were the architects of the insurgency, really. Tommy Franks, too few troops. Paul Bremer, not asking for more troops, disbanding the Iraqi army, getting rid of the Ba'athists. And George Tenet starting it all without listening to, you know, his people about Osama bin Laden, and then saying there were these imaginary weapons of mass destruction.

SHIELDS: Al, I want you to address the Rumsfeld thing, but...

AL HUNT, CAPITAL GANG: I do -- I do want to...

(CROSSTALK)

HUNT: Rumsfeld first. Let me just say...

SHIELDS: OK.

HUNT: ... I am in the untenable position of agreeing with everything Bob Novak said about Don Rumsfeld. One of us better examine our positions. But I think Bob's right. I think Rumsfeld's going to survive, but only in the short term, and he is going to -- and that's assuming he doesn't embarrass the president again, as he clearly did with those remarks to the troops. And that's because there is no really good replacement scenario right now.

But Kate, the negativity about Don Rumsfeld goes well beyond those mavericks, as you might -- as you might consider them. It really is -- privately, at least, it's very pervasive. And indeed, if Bill Frist, the Senate GOP leader, had not -- who actually, I think, privately is negative on Rumsfeld himself, too, after they clashed on the intelligence bill, when Rummy tried to scuttle it -- I think if he hadn't issued that obligatory statement of support, I think there would have been an avalanche of calls for Rumsfeld's head.

NOVAK: Let me say one thing, that one of the -- one of the things that started this firestorm was an op-ed piece in "The Washington Post" by Bill Kristol, the editor and publisher of "The Weekly Standard," a neo -- voice of the neocons, and who'd been urging this war and -- for the neocons now to turn on Rumsfeld -- I don't think Rumsfeld is a neocon. I don't think he was a great war hawk, as a matter of fact. But to turn on him, I think it just kind of showed me what -- what life is really like in Washington.

SHIELDS: Well, let me tell you where I think Bill Kristol -- Bill Kristol, whom I happen to like and disagree with thoroughly -- what -- they had a vision, argue with it as I would, and I think many -- some on the panel did before the war began -- of this democratizing of the entire Arab world. And they see this just absolutely, because of too few troops, because of the failure to armor our own troops, because of two few troops going in, all the way along, wanted to be the light army and everything else, that it's failed, that Iraq is in chaos -- we're in a state of denial about...

(CROSSTALK)

CARLSON: Look, here's the thing...

O'BEIRNE: Excuse me! As the only person who's defending the secretary, might I point out to the critics, to the armchair generals, you have to make one of two arguments. You have to argue either General Casey, General Abizaid and before him, General Franks, are either incompetent or cowardly because they haven't asked for more troops. They've all been asked. In fact, they're tired of being asked, they tell people -- constantly being asked, Do you have everything you want and need, including number of troops, and they constantly say yes.

Look, extra troops is not a panacea fighting an insurgency -- more targets, a long tail that makes the troops even more vulnerable, less likely for the Iraqis to step up to it, which is ultimately what's going to get us out of Iraq, and it puts the occupation, which is already a problem, with a capital "O" if there are more troops.

HUNT: So Kate, you...

O'BEIRNE: It's not a panacea, and they haven't asked for them!

HUNT: Do you think the post-invasion strategy has worked?

O'BEIRNE: I am saying they are following the advice...

HUNT: No, do you think it's worked?

O'BEIRNE: They say, I am following -- they're following the advice of their field commanders, not a bunch of armchair generals...

NOVAK: Mark...

(CROSSTALK)

NOVAK: Mark, have you heard my friend, Bill Kristol, in the -- and -- did you hear them, the -- Bill Kristol and the neocons say way back, We should have more armor, we should have more troops?

O'BEIRNE: Right.

NOVAK: I didn't hear that.

O'BEIRNE: Nobody did.

SHIELDS: Yes. No. No, in fairness to them, they did argue -- I did hear that argument made that we did need more troops...

NOVAK: I didn't hear it.

SHIELDS: ... and it was made -- it was made at the outset, and it wasn't simply made by armchair generals. It was made by the generals -- the Army chief of staff, for one.

CARLSON: Right.

O'BEIRNE: He never told the president that! He signed off on the plan, Mark!

SHIELDS: He said it -- he said...

HUNT: Don Rumsfeld never talked to him before...

(CROSSTALK)

O'BEIRNE: He signed off on the plan!

HUNT: Kate's factually wrong. Don Rumsfeld never, never talked to him before...

O'BEIRNE: General Shinseki met with the president...

HUNT: Absolutely...

O'BEIRNE: ... before the invasion...

HUNT: Rumsfeld -- Rumsfeld...

O'BEIRNE: ... and signed off on it!

HUNT: I've talked to General Shinseki. He never met with Rumsfeld...

O'BEIRNE: Did he meet with the president?

HUNT: ... beforehand. Absolutely -- no.

O'BEIRNE: Did he sign off?

HUNT: No.

SHIELDS: He publicly...

O'BEIRNE: He didn't? HUNT: No.

(CROSSTALK)

SHIELDS: He publicly endorsed...

HUNT: ... went to Capitol Hill...

SHIELDS: ... hundreds of thousands of troops...

HUNT: Publicly, in March.

O'BEIRNE: He told the president he had what he needed in a meeting with the president!

HUNT: Oh!

SHIELDS: Well, that...

(CROSSTALK)

SHIELDS: Remember what he said in public.

THE GANG of five will be back with George W. Bush's economic vision.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. President Bush wound up the White House economic conference by pledging to push his own agenda.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: I like to work with people so that we can say we left behind a better America after it's all said and done. And I don't have that much time here in Washington, so I'm ready to work. And I want to thank you all for helping us highlight the issues that we have to work on.

(END VIDEO CLIP)

SHIELDS: The conference consisted of most administration officials and private citizens endorsing the Bush program of tort reform and overhaul of Social Security and the tax code.

(BEGIN VIDEO CLIP)

BOB NARDELLI, HOME DEPOT CEO: Lawsuit abuse is not a talking point anymore. I think it's -- it's a sore point for all of us and one that has to be addressed.

DICK PARSONS, AOL TIME WARNER CEO: We can't continue a system that puts a huge burden on future generations that they're not going to be able to meet. We're going to have to start saving and funding our -- you know, our responsibility to ourselves on a current basis. BRIAN WESBURY, ECONOMIST: Our tax code, as it is existing -- as it exists today, reduces the incentives to save while not necessarily increasing the incentives to consume.

(END VIDEO CLIP)

SHIELDS: Al Hunt, was this a persuasive presentation on behalf of the Bush economic plan?

HUNT: Mark, former Bush treasury secretary Paul O'Neil, after he was sacked, candidly acknowledged that these forums, Democrat as well as Republican, are shams. They are totally scripted. They are rewards for supporters and contributors, and policy makers really serve as props. I couldn't have said it better myself.

The really interesting dialogue going on on economic issues is among Republicans right now over how -- how aggressively and how forcefully to push the overhaul of Social Security and whether it can be done on a bipartisan basis or not. And this forum was irrelevant to that debate.

SHIELDS: Irrelevant, Kate O'Beirne?

O'BEIRNE: We're going to be talking about Social Security reform -- it is a very big problem, and the president has a dramatic solution -- all year, and this is just one of the early forums to do so. I think the president deserves enormous credit. He could easily just kick the can down the road. Social Security is unsustainable. Younger workers can't plan on it. This president's willing to do something real about it by creating private accounts. He deserves credit for the attempt.

SHIELDS: Margaret, has the case been made with the CBO, Congressional Budget Office, says it's fully funded until 2052 with just nothing being done? I mean, so is George Bush really trying to create a crisis atmosphere...

CARLSON: Right.

SHIELDS: ... when there isn't a crisis there yet?

CARLSON: Right. Let me say that I do not want to call our boss, Dick Parsons (ph), a prop. I call him an economic...

(CROSSTALK)

CARLSON: ... an economic genius...

HUNT: Let me quickly point out...

(CROSSTALK)

(LAUGHTER)

CARLSON: Listen, yes, the trust fund -- if you leave the trust fund alone -- lasts until 2052. And then after that, Social Security payments cover 81 percent of the cost. So you need to come up with the other.

O'BEIRNE: There is no trust fund!

CARLSON: Now, do you -- well, there should be a trust fund...

(CROSSTALK)

CARLSON: By the way, that's the lockbox. Let's keep it there. But this is like weapons of mass destruction. Let us say that Social Security is in complete crisis, so that we can put in our solution, which is to reward Wall Street by giving them private accounts, take money, put it into the stock market, and ultimately, cut benefits. And they say, Listen, it's going to pay for itself over 40 years. Now, what Congress 40 years from now do we know is going to be cutting benefits or raising the age or doing whatever? You simply don't know.

NOVAK: Let me make two -- two remarks. Paul -- anybody who -- Paul O'Neil is cited by lefties...

(LAUGHTER)

NOVAK: ... because he's their favorite Republican, if he is a Republican. And he was the sham. He was the sham secretary of the treasury. A disgrace.

(LAUGHTER)

NOVAK: Secondly, if you really think -- if you really think there is -- there is a Social Security fund, go with the North Dakota twins, Dorgan and -- what's -- what's...

SHIELDS: Conrad. Conrad.

NOVAK: ... Conrad and -- because they think there is, too. There is no such fund. Now, let me tell you what's going on, is it's -- is that there's a lot of interesting things going on. Last week, Paul -- Al had a very interesting argument -- interview with Chairman Thomas, who said he might do tax reform and Social Security reform together. That was news to the White House, but it wasn't news to other members of the -- of the Ways and Means Committee. There's going to be some very interesting proposals. And -- and Margaret, get out of that AFL-CIO left-wing garbage you're...

(CROSSTALK)

SHIELDS: Let me bring home a couple of points to you, Robert Novak. First of all, Paul O'Neil was the unanimous choice to be secretary of the treasury...

NOVAK: Not mine!

SHIELDS: ... of George Bush and Dick Cheney both, right? First point. Second -- so he just didn't arrive miraculously on the scene. Second point, for 50 percent of Americans on retirement age, without Social Security, they'll be living in poverty. For 1 out of 5 Americans, Social Security is the only income they have. Now, when you start tampering with...

O'BEIRNE: And they'll still get it!

SHIELDS: When you start tampering with...

(CROSSTALK)

SHIELDS: ... private accounts and all of...

O'BEIRNE: There's no change for current retirees!

SHIELDS: You want to do it...

O'BEIRNE: None!

SHIELDS: Yes. And how about the 13 million people who aren't retired who get Social Security, widows and orphans and people like that?

O'BEIRNE: Social Security...

(CROSSTALK)

SHIELDS: No provision!

O'BEIRNE: No, no. You do!

NOVAK: I am the...

(CROSSTALK)

HUNT: Bob Novak, do I take it from your answer you disagree with me that that was a sham? You think this was...

NOVAK: Well, it was...

(CROSSTALK)

NOVAK: ... those things are useful.

CARLSON: Mark? Mark?

NOVAK: They're not -- they're not debates, they're presentations. But as the only Social Security recipient on this panel...

HUNT: You are.

NOVAK: ... my payment that I get and my wife gets every month is not touched by any of these proposals. Not touched by them.

CARLSON: Mark, Bush is going to destroy Social Security under the guise of saving it.

NOVAK: Oh!

SHIELDS: Last word, Margaret Carlson.

Next on CAPITAL GANG: Kofi Annan comes to Washington.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. United Nations secretary Kofi Annan came to Washington to confer with secretary of state Colin Powell but not with President Bush. Charges of corruption in the U.N.'s oil-for-food program were discussed.

(BEGIN VIDEO CLIP)

KOFI ANNAN, U.N. SECRETARY GENERAL: And I am anxious to see the investigations concluded as quickly as possible so that we can get -- put it behind us and focus on the essential work of the United Nations.

COLIN POWELL, SECRETARY OF STATE: We have confidence in the secretary general. We want to get to the bottom of these matters as quickly as we can.

(END VIDEO CLIP)

SHIELDS: But the lead investigator in the Senate did not express confidence in the secretary general.

(BEGIN VIDEO CLIP)

SEN. NORM COLEMAN (R-MN), INVESTIGATIONS SUBCOMMITTEE: And Kofi Annan's legacy is the oil-for-food program that allowed Saddam Hussein to fund terrorism, to bribe folks who were (UNINTELLIGIBLE) member states and to rebuild his military capacity and to get around sanctions.

Kofi Annan's a fine man, but he oversaw this incredible disaster of incredible magnitude, and he really should step down if we care about the U.N. making reform and regaining credibility.

(END VIDEO CLIP)

SHIELDS: Bob, is this really a smokescreen for witch hunt against the U.N.?

NOVAK: No. Senator Coleman is not anti-U.N. He's not a Neanderthal. And Senator Levin, the -- his liberal Democratic ranking member, has joined him in- in this investigation. I think that the administration supports the U.N. and supports Kofi Annan like a rope supports a hangman. They -- they just don't want to be -- they don't want to say no to him, but they certainly don't want to get too close to him because there is a scandal there. And Paul Volcker does not have subpoena power. Senator Coleman is convinced that Volcker is being used to stifle the investigation. And I believe that Kofi Annan is in serious trouble, and the whole institution is in -- is in serious trouble

SHIELDS: Margaret, there's no -- there seems to be little question that U.N. mismanagement of the oil-for-food is just really a serious, serious matter. But two other matters. One is you've got -- it strikes me, anyway, you've got Kojo Annan, his son, involved in the middle of this, sort of like Neil Bush, the brother of one president, the father of another -- son of another -- using family connections illicitly. But secondly, doesn't -- isn't it really payback time for the U.N. for not supporting the United States invasion and occupation of Iraq?

CARLSON: Right. The U.N. has many enemies, and they'll use the oil-for-food to get back at the U.N., but it doesn't mean that the oil-for-food program wasn't full of corruption. And you know, sons of -- it's such a tragic thing when they, you know, sort of betray the family name by using it in these instances.

Secretary Powell voicing support for Kofi Annan I think is emphatic proof that Bush doesn't feel that way and that will give, you know, only, you know, the back of his hand to Kofi Annan at some point, if asked to do so.

But Paul Volcker is no one's fool. I am going to wait for Paul Volcker's report because he's a -- he's a tough guy.

SHIELDS: Kate O'Beirne.

O'BEIRNE: He's a good, tough guy, but he doesn't have any -- any tools. The U.N. refused to give him what he needs to get to the bottom of this. Look, Bob, you can be anti-U.N. without being a Neanderthal. Plenty of people I keep company with are. The U.N. has long been morally bankrupt. This we know. Look at how they're completely ineffectual in Sudan. The human rights commission at the U.N. has member states like Cuba, Syria, Libya. Now we're finding out, of course, also financially corrupt. It goes right into the secretariat, Kofi Annan's office. His right-hand person running the program -- there's some evidence he was on the take.

It probably helps Kofi Annan that it's some Americans calling for him to step aside because the whole body is so anti-American, they'll now rally to him. If Israel were to join us in calling on him to step aside, he'd probably be ensured another five-year term.

SHIELDS: Al, at the Republican convention in New York, other than "girlie boys," the automatic applause line was anybody who stood up and criticized the U.N.. It brought the -- it brought cheers to the rafters in that place.

HUNT: Yes. Well, Mark, this is both a terrible scandal -- a real scandal, a big, big scandal and a terrible scandal -- and it's also a witch hunt. The real goal of some of the witch hunters is twofold. No. 1, to distract attention from -- from the U.S.'s own Iraq-related scandals, the disastrous post-war planning, and to stick it to the U.N.

I would say Paul Volcker is a man of impeccable integrity, standards and judgment. And there's no way in the world Paul Volcker is going to whitewash something. He's either going to come up with a very good report or he's going to say, I couldn't get the information. I have total, complete confidence in Paul Volcker.

NOVAK: You've always been soft on Paul Volcker.

HUNT: I have been.

NOVAK: He made a tremendous amount of mistakes and blunders when he was chairman of the Federal Reserve and...

HUNT: Oh!

(CROSSTALK)

HUNT: Saved the American economy.

NOVAK: And I certainly -- certainly don't think -- have much confidence in him. I do -- I do know this. It is a funny thing, there are a lot of people in our business and in Washington who'd have no difficulty in attacking the United States government, U.S. policy, but they can't -- you say a bad thing about the U.N., Oh, dear! You can't say anything critical about the U.N. or you're...

CARLSON: I just attacked the U.N.

NOVAK: ... having a witch hunt!

SHIELDS: I think everybody on this panel has criticized the U.N., but the point...

HUNT: I said it was a terrible...

(CROSSTALK)

SHIELDS: The point is, are there other ulterior motives, and there's no question there's ulterior motives.

NOVAK: Oh!

SHIELDS: You don't want to see them, you just want to be blind!

CARLSON: You know, and it's such a loss to the U.N. that former senator John Danforth resigned, saying, This place has to be more than a building. He was envoy to the Sudan. He was there...

NOVAK: Why did he resign? You know why he resigned?

CARLSON: There's a genocide -- there was a genocide -- there is a genocide going on in Sudan, and he couldn't get the kind of action from the U.N....

O'BEIRNE: Right, because they're morally corrupt!

CARLSON: ... and they should...

(CROSSTALK)

NOVAK: They are corrupt. HUNT: They weren't morally corrupt in Cambodia.

SHIELDS: And they weren't morally corrupt in Cambodia and they weren't morally corrupt in 1991 when they backed George Bush in Iraq. Yet somehow, because they didn't back this war...

(CROSSTALK)

CARLSON: Well, without Danforth there, I don't think there's going to be the impetus to save the Sudan.

SHIELDS: Thank you very much, Margaret. Thank you, Bob, for being with us.

Coming up next in the second half of THE CAPITAL GANG: Who should be "Time" magazine's Person of the Year? I have no idea. We'll give your our picks. We'll go "Beyond the Beltway" for a report on the trial of Saddam Hussein, and Osama bin Laden's new message. And our "Outrages of the Week." That's all after the latest messages -- these latest messages and a check of the hour's top stories.

(COMMERCIAL BREAK)

(NEWSBREAK)

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

"Time" magazine has been naming its person of the year for 77 years. Bob Novak knows them all, starting with Charles Lindbergh in 1927. Last year the award went to the American soldier. The selection of the 2004 will be announced tomorrow morning at 8:00 a.m. here on CNN.

We'll make our choices right now -- Bob Novak.

NOVAK: I think Karl Rove, the special adviser, political adviser to President Bush. He has -- he planned that campaign, kept a low profile. I think his strategy and his tactics were good. He worked on the base. He cut into some of the minority votes and I believe that it was one of the best run presidential campaigns that I have seen and certainly he had a lot of impact on the biggest event of the year.

SHIELDS: That's it.

CARLSON: I bet he'll return your calls now, Bob.

SHIELDS: Margaret Carlson.

CARLSON: Yes. I am coming up for the first time ever a "Time" magazine couple of the year.

SHIELDS: Couple.

CARLSON: Bill and Melinda Gates, who so far at the end of 2003 had given away over $4 billion and they give it away very smartly. Just last week they made a grant of over $40 million for a malaria vaccine that will cost $1 a patient.

SHIELDS: Wow. Kate O'Beirne.

O'BEIRNE: Mark, I think Mel Gibson with his "Passion of the Christ" has earned him Man of the Year. For 77 years, "Time" magazine has slighted cultural figures. The list has always been dominated by political leaders or business leaders, every now and again a general, and our culture is so crucially important.

Hollywood takes credit, gives itself credit for being so creative. It, of course, is the most conformist city in the country and Mel Gibson is the most interesting person in that city. And, even by Hollywood standards, we're told they worship God, they worship money as their god. Mel Gibson was hugely successful, $600 million in worldwide sales, maybe another $400 million in DVD.

SHIELDS: Al Hunt.

HUNT: Mark, I'm going to offer an autographed copy of Bob Novak's autobiography to anyone who can rattle off the last five "Time" persons of the year without looking it up. It doesn't have quite the saliency say of the Heisman Trophy. I suspect they'll pick George Bush but I would give it to the 9/11 Commission. In an age of great partisan rancor all ten members came together with a unanimous recommendation. It was extraordinary.

SHIELDS: I'll give a twist on that. I'll give it to Lee Hamilton and Tom Kean, the leaders of that commission, Tom Kean the Republican governor New Jersey, former, Lee Hamilton the former Democratic Congressman from Indiana. They understood brilliantly that for them to be effective as a commission their recommendations had to be unanimous. And, in this toxic political partisanship of Washington, they overcame that through maturity, through statesmanship. They talked together. They ate together. They proved that bipartisanship can be in the best of American interests.

CARLSON: Right.

SHIELDS: I just wish the rest of the town (UNINTELLIGIBLE).

CARLSON: And they're (UNINTELLIGIBLE).

NOVAK: How do you know that what they proposed is going to be any good that it will work?

O'BEIRNE: They'll be forgotten. They'll be forgotten years and years and years before the "Passion of the Christ" will ever be forgotten.

SHIELDS: They may be forgotten but the good work they've done will not and they made an enormous difference.

NOVAK: How do you know that it's any good?

SHIELDS: They've made an enormous -- I know that -- I know for one thing that we will not have a repetition of the intelligence disaster that afflicted this country on September 11th.

O'BEIRNE: Being premature Mark.

NOVAK: Don't be too sure.

CARLSON: They'll be nobody -- they'll be nobody...

SHIELDS: Not as good as a tax cut, Bob, not as good as a mean spirited campaign.

CARLSON: There will be no deliberately tailored intelligence.

NOVAK: The intelligence -- the intelligence people can screw it up.

SHIELDS: Not as good as a campaign that accuses your opponent of being a traitor but that's all right.

Coming up on THE CAPITAL GANG, classic Bill Clinton hosting an economic conference 12 years ago.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

Twelve years ago this week, President-elect Bill Clinton held a two-day economic conference. Your CAPITAL GANG discussed that on December 19, 1992. Our guest was Republican Congressman Henry Hyde of Illinois.

(BEGIN VIDEOTAPE)

HUNT: Bob, what did this fascinating seminar, economic conference accomplish?

NOVAK: As far as anything, as serious in economic going it got nowhere. The point of the matter is that he had a lot of people there who were putting out their pet projects, all of which had a remarkable similarity to what Bill Clinton said during the campaign.

MARGARET WARNER, "NEWSWEEK": What he did was start to create, seriously Bob, a political constituency for two propositions. One is that the problems are really deep and structural, no quick fix will work. And, secondly, that we do have to pursue deficit reduction at the same time that we pursue pro growth.

REP. HENRY HYDE (R), ILLINOIS: It was largely show biz, successful show biz. It certain fooled CNN and C-Span.

SHIELDS: The problems, as Margaret pointed out, are systemic. They are underlying. They're not going to go away. It comes up with the conclusion that it isn't going to be quick. It isn't going to be painless. But, Al, he has yet to prescribe any pain.

(END VIDEOTAPE)

SHIELDS: Margaret Carlson, did the 1992 Clinton economic conference accomplish more than this week's Bush conference did?

CARLSON: You know, I'm wondering is there a third Margaret waiting in the wings here somewhere.

SHIELDS: Probably.

CARLSON: Only Margarets. Listen, you know, they do have their similarities but nobody talks about any pain. There was certainly no pain at the Bush economic summit. It was -- nobody talked about how we've max'd out the Visa card.

Nobody talked about any spending cuts and they had your man in the street or your woman in the street giving a human interest story on Social Security and she happens to be paid by the people who want to privatize Social Security. So, it was totally fake.

SHIELDS: Totally fake.

O'BEIRNE: Nothing -- there was a lot of talk about spending cuts. They have to restrain discretionary spending.

CARLSON: Not one single spending cut.

O'BEIRNE: Ninety-two and '93 didn't do anything for the economy or the federal budget but delivery was at hand because once the Republicans took the House in '94 it meant that Bill Clinton couldn't raise spending and he couldn't raise taxes and surplus followed.

SHIELDS: You know, we had a Republican Congress. We still do. We had Alan Greenspan. We still do. The only thing that's missing was the Clinton economic plan -- Al Hunt.

HUNT: Yes, I'm going to ask my dear friend Kate O'Beirne to take a look at the economy a year after that tax increase in '93 was passed versus the day it was passed. Look, that economic forum of 1992 was just as much of a sham as the one that was just completed. Weeks afterwards Bill Clinton proposed a stimulus package and a BTU tax, both of which went down the drain.

NOVAK: The big difference of those two conferences, at that conference there was a miracle and the miracle was that the president- elect said -- he'd been saying how terrible the economy was the whole campaign, got to get rid of it and he sat down there and he said, "You know, I've just been elected and it's already getting better." It was a miracle.

HUNT: And it was.

NOVAK: This is some miracle.

SHIELDS: Do you want to know how much was spent out of the Social Security fund during the Bush years during the locked box, $635 billion.

CARLSON: I do want to know.

HUNT: Mark, out of the trust fund?

SHIELDS: Out of the trust fund. That is -- that's what they've used. They've used the...

CARLSON: You honor the trust fund. It's trust.

O'BEIRNE: It has a $11 trillion unfunded liability.

SHIELDS: The workers pay in their benefits hoping it will be preserved for them. It's being spent by George W. Bush.

NOVAK: Total fraud.

SHIELDS: Next on THE CAPITAL GANG, we go "Beyond the Beltway" for a look at Saddam's trial and Osama bin Laden's new message. CNN's Nic Robertson joins us.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

The interim Iraqi government announced war crimes trials of Saddam Hussein's regime will begin next week. Saddam Hussein for the first time conferred with a lawyer.

(BEGIN VIDEO CLIP)

ISSAM GHAZZAWI, SADDAM HUSSEIN'S LAWYER: He sent his best regards to all the members of the Saddam Hussein defense lawyers committee and their families and he was in very good health status and mental status and high spirits. He was enjoying very high spirits.

(END VIDEO CLIP)

SHIELDS: Meanwhile, a new audio tape attributed to Osama bin Laden praised the December 6th attack on a U.S. Consulate in Saudi Arabia.

(BEGIN VIDEO CLIP)

OSAMA BIN LADEN (through translator): The clear truth is that the regime is responsible for the mayhem inside Saudi Arabia because it failed to maintain security and stop the bloodshed by dealing with infidels and bringing God's punishment on the country.

COLIN POWELL, SECRETARY OF STATE: He is a criminal. He's a terrorist. He's a murderer and we're going to continue to hunt for him until he is captured and brought to justice.

(END VIDEO CLIP)

SHIELDS: Joining us from London is CNN's Senior International Correspondent Nic Robertson. Thanks for coming in Nic. Nic, what will the public reaction in Iraq be among rank and file Iraqis to these war crime trials? NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: I think Iraqis at the moment look at everything that happens in Iraq through the prism of what is the involvement of the United States? Is this legitimate? Is it an Iraqi operation, if you will, and are the trials being held by Iraqis for Iraqis? So, I think they're going to look at it through that prism.

Certainly, the movement towards putting on trial Chemical Ali, Ali Hassan al-Majid who is responsible for murdering Shias following the 1991 Gulf War and for murdering Kurds in 1988 is going to go a long way to getting those two communities into believing that what's happening in Iraq, the democracy that's coming, is a good thing and will perhaps help get them out to the polls. That's important.

But perhaps for the Sunni community from whom all Saddam Hussein's or pretty much all of Saddam Hussein's leadership came from are going to take a different view but mostly people are going to look at it and say is this an Iraqi event or are the Americans running it?

SHIELDS: Bob Novak.

NOVAK: In that connection, Nic, the statements that were made this week by Saddam's lawyers indicate that this is just a puppet operation for the Americans that this is not Iraqi that Saddam Hussein is still the legal president of Iraq. Do you think that the Ba'athists can use these trials as a propaganda instrument despite the atrocities that were committed by Chemical Ali and the other defendants?

ROBERTSON: I think the Ba'athists are going to have a hard time trying to do that. They may through the insurgency try to ramp up the insurgency. They don't really have a political voice in Iraq and they're not really going to find it in the trial other than the likes of what we've heard from Saddam Hussein's lawyer.

They're going to find trying to do that very difficult. And, I think as the trials go on and the Iraqi people hear more and more laid out exactly what the regime did they're going to find very, very little support.

But, as far as the coalition is concerned at the moment, the Ba'athists, the remnants that are still in Iraq do pose the biggest threat. They are organized and they do see them as becoming more and better organized.

So, if there's anything that they can do, those former Ba'athists to use these trials to their own perhaps more military than political advantage, then very likely that will happen.

SHIELDS: Margaret Carlson.

CARLSON: Nic, if Prime Minister Allawi can't somehow find a way to get the Sunnis voting in substantial numbers isn't it going to look at if the United States toppled Saddam Hussein, a Sunni, in favor of putting in a Shiite government? And how are Sunnis going to be gotten out to vote in an election that they're probably going to lose? ROBERTSON: This is a big problem. These elections are a proportional representation, perhaps about 12 million voters, 275 seats. Only the people who will get in the seats, those 275 seats, will be a direct representation of who comes out to vote.

The Shias look set to come out in numbers. The Kurds are behind their two principal political parties. They are set to come out in numbers. It's only the Sunnis who are holding back and, if they do, they'll be the big losers.

The legitimacy of the elections therefore in the eyes of the Sunnis is a big issue, the concern for many will it then precipitate greater civil strife and turn what is an insurgency against the government and the United States and the coalition into a civil war and that is a real concern.

The hope is that those Sunni parties who have so far said that they'll boycott the elections they'll change their mind because they'll see that this is the only opportunity they have to get into the political arena, if you will.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Nic, Iraq's defense minister has accused Iran and Syria of aiding the terrorists killing so many in Iraq. There's plenty of evidence that he's right. Any of these candidates running for office in January have a plan? Do they also talk about the destructive role being played by their neighbors?

ROBERTSON: Everyone in Iraq is concerned about the influence of outside countries, particularly Syria, particularly Iran. When you talk to the average Iraqi they see their problems that they have manifested by the involvement of countries from the outside, particularly Syria, particularly Iran.

So, there is a great deal of concern. It's not clear what sort of strategy is going to be used and if some of those political players, who may take a more prominent role in the country now, will actually be people who are benefiting from support from outside the country.

And, certainly there's a lot of skepticism amongst Iraqis on who are these political figures? They don't know who they are. They haven't seen them play a political role before. They don't know if they're good people or bad people, so the concern on the street is about who's coming to power and who's behind the people coming to power is very, very alive, very much alive at the moment.

HUNT: Nic, we only have 30 seconds left but just let me ask you, to turn Kate's question around, what are the prospects of the next government in Iraq being a Shia majority that is more sympathetic or supportive of Iran than the United States and what are the ramifications?

ROBERTSON: There's certainly an indication that the leading figures in some of the political parties have had ties with Iran in the past and that's likely to -- that's likely to be something that's going to shape their judgment of what's happening -- what's happening in Iraq once they get elected. So, this is not an issue that's going to be changed by the elections themselves. That's what -- that's the thing that concerns a lot of Iraqis.

SHIELDS: Nic Robertson, thank you so very much for joining us.

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

(COMMERCIAL BREAK)

SHIELDS: And now for the "Outrage of the Week."

Actor Laurence Fishburne was performing on a Broadway stage when a cell phone rang in the audience. Fishburne responded, turned to the audience and said: "Are you going to turn that (EXPLETIVE DELETED) thing off?" The audience cheered.

Now our Federal Communications Commission may lift the ban on cell phone use on airplanes. Imagine you're on an L.A. to New York flight, trapped at 40,000 feet between two obnoxious self important jerks making deals on the phone. If you think air rage is a problem now, pity the poor flight attendants trying to break up the fights among passengers over cell phones -- Robert Novak.

NOVAK: The Securities and Exchange Commission confirmed that Fanny Mae cooked the books not recording $9 billion in losses. That built multimillion dollar salaries for top executives. Why no Enron- sized outcry from Democrats? Because Fanny Mae is a quasi- governmental institution which makes former politicians rich.

The current CEO Franklin D. Raines was Bill Clinton's budget director and was supposed to be John Kerry's treasury secretary. He took home over $50 million the last three years. Why no calls for Raines' resignation or demands that Fanny Mae be privatized?

SHIELDS: Margaret Carlson.

CARLSON: The Capitol Visitor Center was a ridiculous project when it only cost $265 million. Now we'll pay twice that for this three-story underground maze of tunnels, hideaway offices and Washington's biggest cafeteria.

Representative Jack Kingston, a Republican, who oversees the project is also letting the Capitol Police Chief Terrance Gainer build a private army around the capital, complete with assault rifles, bunkers and a mounted horse patrol that costs $50,000 just to clean up after.

When voters get wind of the world's first half billion dollar visitor center Congressmen will need those hideaway offices to hide away from their constituents.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Parents in Plano, Texas want a temporary restraining order that allows their children to utter the forbidden "C" word and use their (UNINTELLIGIBLE) red and green colors during class parties. This has been forbidden in a typical example of the annual campaign to keep Christ out of Christmas.

Even Congress refuses to call its big decorated Evergreen a Christmas tree. Have you noticed it's the forces of diversity and tolerance that want to sensor the reason for the season?

SHIELDS: Al Hunt.

HUNT: The FOX TV network is taking reality programming to a new low when it premieres "Who's Your Daddy?" This features an adopted woman trying for cash to guess which of eight men is her biological father.

As the Edmund B. Donaldson Adoption Institute notes, if this were based on race or religion we never would tolerate it. Adoption is pro-life and it's pro-choice. It's a precious opportunity for all of us in the adoption community. And, anyone who cares about family values should let FOX know how the concept of "Who's Your Daddy" is despicable.

SHIELDS: Amen.

O'BEIRNE: Amen.

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

Coming up next, "CNN PRESENTS: The Two Marys" the Madonna and the Magdalene.

At 9:00 p.m. on "LARRY KING LIVE" the Scott Peterson penalty phase.

And at 10:00 p.m. on "CNN SATURDAY NIGHT," go inside the factory making the armor kits for military vehicles in Iraq.

Thank you for joining us.

(NEWSBREAK)

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


Aired December 18, 2004 - 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 THE CAPITAL GANG. I'm Mark Shields, with the full GANG, Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

Republican senators joined the criticism of defense secretary Donald Rumsfeld which was set off by his recent remarks to U.S. troops in the field.

(BEGIN VIDEO CLIP)

SEN. CHUCK HAGEL (R), NEBRASKA: That might work in a newsroom, when you can be cute with the television audience, but not when you're putting these men and women in harm's way who will be wounded some. Some will be killed.

(END VIDEO CLIP)

SHIELDS: Senator John McCain said he has "no confidence" in Secretary Rumsfeld, but added this:

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: The president has expressed his confidence in him, and the president should have the people working for him that he trusts.

(END VIDEO CLIP)

SHIELDS: Senator Susan Collins criticized the secretary's handling of armor in the war zone.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: Well, I'm not calling for his resignation, but I am calling for -- to pay attention to this issue and to personally ensure that it's solved once and for all.

(END VIDEO CLIP)

SHIELDS: Senator Trent Lott said Secretary Rumsfeld should leave in the next year. But Rumsfeld did receive expressions of confidence from the White House and the Senate Republican leaders.

Meanwhile, President Bush awarded the Presidential Medal of Freedom to three architects of Iraq policy: former CIA director George Tenet, General Tommy Franks and former Iraq administrator Paul Bremer.

Kate O'Beirne, will Don Rumsfeld be force out of the Pentagon?

KATE O'BEIRNE, CAPITAL GANG: Mark, I don't think so. He clearly has the confidence of the president and vice president. He has the confidence of the troops, who, people rarely point out, gave him a standing ovation after meeting with him in Kuwait, when that question was asked. So they sure didn't feel as though he blew them off. He has the confidence of his senior military commanders, the chairman of the Joint Chiefs and the vice chairman of the Joint Chiefs, and his field commanders.

These aren't party regulars that are criticizing George Bush. The combination of John McCain, Chuck Hagel, Trent Lott and Susan Collins are unlikely to get the administration to change its mind about the important job and good job they think Rumsfeld's doing. The only question they raise is where's Lincoln Chafee? And these are all supporters of the war. I didn't hear a single one of them say, Wait to invade Iraq until you're ready to fight a sustained urban insurgency. None of them said that. And I don't know if any one of them has up-armoring vehicles been their top priority for the past year? I don't think so.

SHIELDS: Bob Novak, add Norm Coleman of Minnesota to that group, as well. But all we're talking about is 29,000 vehicles with armor and our troops in Iraq. And that's been the central focus of the criticism about Don Rumsfeld. What's going on here?

BOB NOVAK, CAPITAL GANG: I don't think it has much to do with armored vehicles.

SHIELDS: You don't?

NOVAK: No. I think it has to do with Don Rumsfeld's personality. I used to say that Coach Vince Lombardi treated all his players the same, like dogs, and Rumsfeld treats everybody the same. He treats -- he's been doing that for years. He's a...

SHIELDS: Catching up with him?

NOVAK: Yes, it's catching up with him. He's treated -- he's treated senators very badly. When you get John Warner, the establishment-establishment chairman of the Senate Armed Services Committee, who hates Rumsfeld -- when you get him mad at you, you're really lost.

Now, I'll tell you this, the answer to your question to Kate. They're not going to fire him because of these people that asked him. But there's one other advantage he has. There is nobody inside the Pentagon who can take his place. They are not going to name Wolfowitz, his deputy, as secretary, and there's nobody else. And so that gives you a certain security. But I don't think he's going to stay there for the -- forever. I would say he'll probably be gone with -- sometime within this year.

SHIELDS: This year? Margaret Carlson... (CROSSTALK)

NOVAK: This year -- I mean, '05.

SHIELDS: You mean '05. OK. Yes.

MARGARET CARLSON, CAPITAL GANG: And a happy one we'll have in the new year. Bob, you and Rumsfeld have one thing in common. You treat everyone the same way. And I won't characterize how it is.

Listen, as -- you know, Rumsfeld got in more trouble for the way he handled the soldier's question. The situation in Iraq didn't change. What changed was that everyone got to see Rumsfeld, as he is with the press corps and other people, doing that to a soldier. And as he flippantly might say, he's been up-armored by the president. He's not going anywhere. And Trent Lott does not have the moral authority -- I think there's not going to be a stampede after Tent Lott gets on a bandwagon. The bandwagon might even empty -- empty out.

On the Medal of Freedom winners, you know, what a political move by the president, armoring these three men who were the architects of the insurgency, really. Tommy Franks, too few troops. Paul Bremer, not asking for more troops, disbanding the Iraqi army, getting rid of the Ba'athists. And George Tenet starting it all without listening to, you know, his people about Osama bin Laden, and then saying there were these imaginary weapons of mass destruction.

SHIELDS: Al, I want you to address the Rumsfeld thing, but...

AL HUNT, CAPITAL GANG: I do -- I do want to...

(CROSSTALK)

HUNT: Rumsfeld first. Let me just say...

SHIELDS: OK.

HUNT: ... I am in the untenable position of agreeing with everything Bob Novak said about Don Rumsfeld. One of us better examine our positions. But I think Bob's right. I think Rumsfeld's going to survive, but only in the short term, and he is going to -- and that's assuming he doesn't embarrass the president again, as he clearly did with those remarks to the troops. And that's because there is no really good replacement scenario right now.

But Kate, the negativity about Don Rumsfeld goes well beyond those mavericks, as you might -- as you might consider them. It really is -- privately, at least, it's very pervasive. And indeed, if Bill Frist, the Senate GOP leader, had not -- who actually, I think, privately is negative on Rumsfeld himself, too, after they clashed on the intelligence bill, when Rummy tried to scuttle it -- I think if he hadn't issued that obligatory statement of support, I think there would have been an avalanche of calls for Rumsfeld's head.

NOVAK: Let me say one thing, that one of the -- one of the things that started this firestorm was an op-ed piece in "The Washington Post" by Bill Kristol, the editor and publisher of "The Weekly Standard," a neo -- voice of the neocons, and who'd been urging this war and -- for the neocons now to turn on Rumsfeld -- I don't think Rumsfeld is a neocon. I don't think he was a great war hawk, as a matter of fact. But to turn on him, I think it just kind of showed me what -- what life is really like in Washington.

SHIELDS: Well, let me tell you where I think Bill Kristol -- Bill Kristol, whom I happen to like and disagree with thoroughly -- what -- they had a vision, argue with it as I would, and I think many -- some on the panel did before the war began -- of this democratizing of the entire Arab world. And they see this just absolutely, because of too few troops, because of the failure to armor our own troops, because of two few troops going in, all the way along, wanted to be the light army and everything else, that it's failed, that Iraq is in chaos -- we're in a state of denial about...

(CROSSTALK)

CARLSON: Look, here's the thing...

O'BEIRNE: Excuse me! As the only person who's defending the secretary, might I point out to the critics, to the armchair generals, you have to make one of two arguments. You have to argue either General Casey, General Abizaid and before him, General Franks, are either incompetent or cowardly because they haven't asked for more troops. They've all been asked. In fact, they're tired of being asked, they tell people -- constantly being asked, Do you have everything you want and need, including number of troops, and they constantly say yes.

Look, extra troops is not a panacea fighting an insurgency -- more targets, a long tail that makes the troops even more vulnerable, less likely for the Iraqis to step up to it, which is ultimately what's going to get us out of Iraq, and it puts the occupation, which is already a problem, with a capital "O" if there are more troops.

HUNT: So Kate, you...

O'BEIRNE: It's not a panacea, and they haven't asked for them!

HUNT: Do you think the post-invasion strategy has worked?

O'BEIRNE: I am saying they are following the advice...

HUNT: No, do you think it's worked?

O'BEIRNE: They say, I am following -- they're following the advice of their field commanders, not a bunch of armchair generals...

NOVAK: Mark...

(CROSSTALK)

NOVAK: Mark, have you heard my friend, Bill Kristol, in the -- and -- did you hear them, the -- Bill Kristol and the neocons say way back, We should have more armor, we should have more troops?

O'BEIRNE: Right.

NOVAK: I didn't hear that.

O'BEIRNE: Nobody did.

SHIELDS: Yes. No. No, in fairness to them, they did argue -- I did hear that argument made that we did need more troops...

NOVAK: I didn't hear it.

SHIELDS: ... and it was made -- it was made at the outset, and it wasn't simply made by armchair generals. It was made by the generals -- the Army chief of staff, for one.

CARLSON: Right.

O'BEIRNE: He never told the president that! He signed off on the plan, Mark!

SHIELDS: He said it -- he said...

HUNT: Don Rumsfeld never talked to him before...

(CROSSTALK)

O'BEIRNE: He signed off on the plan!

HUNT: Kate's factually wrong. Don Rumsfeld never, never talked to him before...

O'BEIRNE: General Shinseki met with the president...

HUNT: Absolutely...

O'BEIRNE: ... before the invasion...

HUNT: Rumsfeld -- Rumsfeld...

O'BEIRNE: ... and signed off on it!

HUNT: I've talked to General Shinseki. He never met with Rumsfeld...

O'BEIRNE: Did he meet with the president?

HUNT: ... beforehand. Absolutely -- no.

O'BEIRNE: Did he sign off?

HUNT: No.

SHIELDS: He publicly...

O'BEIRNE: He didn't? HUNT: No.

(CROSSTALK)

SHIELDS: He publicly endorsed...

HUNT: ... went to Capitol Hill...

SHIELDS: ... hundreds of thousands of troops...

HUNT: Publicly, in March.

O'BEIRNE: He told the president he had what he needed in a meeting with the president!

HUNT: Oh!

SHIELDS: Well, that...

(CROSSTALK)

SHIELDS: Remember what he said in public.

THE GANG of five will be back with George W. Bush's economic vision.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. President Bush wound up the White House economic conference by pledging to push his own agenda.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: I like to work with people so that we can say we left behind a better America after it's all said and done. And I don't have that much time here in Washington, so I'm ready to work. And I want to thank you all for helping us highlight the issues that we have to work on.

(END VIDEO CLIP)

SHIELDS: The conference consisted of most administration officials and private citizens endorsing the Bush program of tort reform and overhaul of Social Security and the tax code.

(BEGIN VIDEO CLIP)

BOB NARDELLI, HOME DEPOT CEO: Lawsuit abuse is not a talking point anymore. I think it's -- it's a sore point for all of us and one that has to be addressed.

DICK PARSONS, AOL TIME WARNER CEO: We can't continue a system that puts a huge burden on future generations that they're not going to be able to meet. We're going to have to start saving and funding our -- you know, our responsibility to ourselves on a current basis. BRIAN WESBURY, ECONOMIST: Our tax code, as it is existing -- as it exists today, reduces the incentives to save while not necessarily increasing the incentives to consume.

(END VIDEO CLIP)

SHIELDS: Al Hunt, was this a persuasive presentation on behalf of the Bush economic plan?

HUNT: Mark, former Bush treasury secretary Paul O'Neil, after he was sacked, candidly acknowledged that these forums, Democrat as well as Republican, are shams. They are totally scripted. They are rewards for supporters and contributors, and policy makers really serve as props. I couldn't have said it better myself.

The really interesting dialogue going on on economic issues is among Republicans right now over how -- how aggressively and how forcefully to push the overhaul of Social Security and whether it can be done on a bipartisan basis or not. And this forum was irrelevant to that debate.

SHIELDS: Irrelevant, Kate O'Beirne?

O'BEIRNE: We're going to be talking about Social Security reform -- it is a very big problem, and the president has a dramatic solution -- all year, and this is just one of the early forums to do so. I think the president deserves enormous credit. He could easily just kick the can down the road. Social Security is unsustainable. Younger workers can't plan on it. This president's willing to do something real about it by creating private accounts. He deserves credit for the attempt.

SHIELDS: Margaret, has the case been made with the CBO, Congressional Budget Office, says it's fully funded until 2052 with just nothing being done? I mean, so is George Bush really trying to create a crisis atmosphere...

CARLSON: Right.

SHIELDS: ... when there isn't a crisis there yet?

CARLSON: Right. Let me say that I do not want to call our boss, Dick Parsons (ph), a prop. I call him an economic...

(CROSSTALK)

CARLSON: ... an economic genius...

HUNT: Let me quickly point out...

(CROSSTALK)

(LAUGHTER)

CARLSON: Listen, yes, the trust fund -- if you leave the trust fund alone -- lasts until 2052. And then after that, Social Security payments cover 81 percent of the cost. So you need to come up with the other.

O'BEIRNE: There is no trust fund!

CARLSON: Now, do you -- well, there should be a trust fund...

(CROSSTALK)

CARLSON: By the way, that's the lockbox. Let's keep it there. But this is like weapons of mass destruction. Let us say that Social Security is in complete crisis, so that we can put in our solution, which is to reward Wall Street by giving them private accounts, take money, put it into the stock market, and ultimately, cut benefits. And they say, Listen, it's going to pay for itself over 40 years. Now, what Congress 40 years from now do we know is going to be cutting benefits or raising the age or doing whatever? You simply don't know.

NOVAK: Let me make two -- two remarks. Paul -- anybody who -- Paul O'Neil is cited by lefties...

(LAUGHTER)

NOVAK: ... because he's their favorite Republican, if he is a Republican. And he was the sham. He was the sham secretary of the treasury. A disgrace.

(LAUGHTER)

NOVAK: Secondly, if you really think -- if you really think there is -- there is a Social Security fund, go with the North Dakota twins, Dorgan and -- what's -- what's...

SHIELDS: Conrad. Conrad.

NOVAK: ... Conrad and -- because they think there is, too. There is no such fund. Now, let me tell you what's going on, is it's -- is that there's a lot of interesting things going on. Last week, Paul -- Al had a very interesting argument -- interview with Chairman Thomas, who said he might do tax reform and Social Security reform together. That was news to the White House, but it wasn't news to other members of the -- of the Ways and Means Committee. There's going to be some very interesting proposals. And -- and Margaret, get out of that AFL-CIO left-wing garbage you're...

(CROSSTALK)

SHIELDS: Let me bring home a couple of points to you, Robert Novak. First of all, Paul O'Neil was the unanimous choice to be secretary of the treasury...

NOVAK: Not mine!

SHIELDS: ... of George Bush and Dick Cheney both, right? First point. Second -- so he just didn't arrive miraculously on the scene. Second point, for 50 percent of Americans on retirement age, without Social Security, they'll be living in poverty. For 1 out of 5 Americans, Social Security is the only income they have. Now, when you start tampering with...

O'BEIRNE: And they'll still get it!

SHIELDS: When you start tampering with...

(CROSSTALK)

SHIELDS: ... private accounts and all of...

O'BEIRNE: There's no change for current retirees!

SHIELDS: You want to do it...

O'BEIRNE: None!

SHIELDS: Yes. And how about the 13 million people who aren't retired who get Social Security, widows and orphans and people like that?

O'BEIRNE: Social Security...

(CROSSTALK)

SHIELDS: No provision!

O'BEIRNE: No, no. You do!

NOVAK: I am the...

(CROSSTALK)

HUNT: Bob Novak, do I take it from your answer you disagree with me that that was a sham? You think this was...

NOVAK: Well, it was...

(CROSSTALK)

NOVAK: ... those things are useful.

CARLSON: Mark? Mark?

NOVAK: They're not -- they're not debates, they're presentations. But as the only Social Security recipient on this panel...

HUNT: You are.

NOVAK: ... my payment that I get and my wife gets every month is not touched by any of these proposals. Not touched by them.

CARLSON: Mark, Bush is going to destroy Social Security under the guise of saving it.

NOVAK: Oh!

SHIELDS: Last word, Margaret Carlson.

Next on CAPITAL GANG: Kofi Annan comes to Washington.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. United Nations secretary Kofi Annan came to Washington to confer with secretary of state Colin Powell but not with President Bush. Charges of corruption in the U.N.'s oil-for-food program were discussed.

(BEGIN VIDEO CLIP)

KOFI ANNAN, U.N. SECRETARY GENERAL: And I am anxious to see the investigations concluded as quickly as possible so that we can get -- put it behind us and focus on the essential work of the United Nations.

COLIN POWELL, SECRETARY OF STATE: We have confidence in the secretary general. We want to get to the bottom of these matters as quickly as we can.

(END VIDEO CLIP)

SHIELDS: But the lead investigator in the Senate did not express confidence in the secretary general.

(BEGIN VIDEO CLIP)

SEN. NORM COLEMAN (R-MN), INVESTIGATIONS SUBCOMMITTEE: And Kofi Annan's legacy is the oil-for-food program that allowed Saddam Hussein to fund terrorism, to bribe folks who were (UNINTELLIGIBLE) member states and to rebuild his military capacity and to get around sanctions.

Kofi Annan's a fine man, but he oversaw this incredible disaster of incredible magnitude, and he really should step down if we care about the U.N. making reform and regaining credibility.

(END VIDEO CLIP)

SHIELDS: Bob, is this really a smokescreen for witch hunt against the U.N.?

NOVAK: No. Senator Coleman is not anti-U.N. He's not a Neanderthal. And Senator Levin, the -- his liberal Democratic ranking member, has joined him in- in this investigation. I think that the administration supports the U.N. and supports Kofi Annan like a rope supports a hangman. They -- they just don't want to be -- they don't want to say no to him, but they certainly don't want to get too close to him because there is a scandal there. And Paul Volcker does not have subpoena power. Senator Coleman is convinced that Volcker is being used to stifle the investigation. And I believe that Kofi Annan is in serious trouble, and the whole institution is in -- is in serious trouble

SHIELDS: Margaret, there's no -- there seems to be little question that U.N. mismanagement of the oil-for-food is just really a serious, serious matter. But two other matters. One is you've got -- it strikes me, anyway, you've got Kojo Annan, his son, involved in the middle of this, sort of like Neil Bush, the brother of one president, the father of another -- son of another -- using family connections illicitly. But secondly, doesn't -- isn't it really payback time for the U.N. for not supporting the United States invasion and occupation of Iraq?

CARLSON: Right. The U.N. has many enemies, and they'll use the oil-for-food to get back at the U.N., but it doesn't mean that the oil-for-food program wasn't full of corruption. And you know, sons of -- it's such a tragic thing when they, you know, sort of betray the family name by using it in these instances.

Secretary Powell voicing support for Kofi Annan I think is emphatic proof that Bush doesn't feel that way and that will give, you know, only, you know, the back of his hand to Kofi Annan at some point, if asked to do so.

But Paul Volcker is no one's fool. I am going to wait for Paul Volcker's report because he's a -- he's a tough guy.

SHIELDS: Kate O'Beirne.

O'BEIRNE: He's a good, tough guy, but he doesn't have any -- any tools. The U.N. refused to give him what he needs to get to the bottom of this. Look, Bob, you can be anti-U.N. without being a Neanderthal. Plenty of people I keep company with are. The U.N. has long been morally bankrupt. This we know. Look at how they're completely ineffectual in Sudan. The human rights commission at the U.N. has member states like Cuba, Syria, Libya. Now we're finding out, of course, also financially corrupt. It goes right into the secretariat, Kofi Annan's office. His right-hand person running the program -- there's some evidence he was on the take.

It probably helps Kofi Annan that it's some Americans calling for him to step aside because the whole body is so anti-American, they'll now rally to him. If Israel were to join us in calling on him to step aside, he'd probably be ensured another five-year term.

SHIELDS: Al, at the Republican convention in New York, other than "girlie boys," the automatic applause line was anybody who stood up and criticized the U.N.. It brought the -- it brought cheers to the rafters in that place.

HUNT: Yes. Well, Mark, this is both a terrible scandal -- a real scandal, a big, big scandal and a terrible scandal -- and it's also a witch hunt. The real goal of some of the witch hunters is twofold. No. 1, to distract attention from -- from the U.S.'s own Iraq-related scandals, the disastrous post-war planning, and to stick it to the U.N.

I would say Paul Volcker is a man of impeccable integrity, standards and judgment. And there's no way in the world Paul Volcker is going to whitewash something. He's either going to come up with a very good report or he's going to say, I couldn't get the information. I have total, complete confidence in Paul Volcker.

NOVAK: You've always been soft on Paul Volcker.

HUNT: I have been.

NOVAK: He made a tremendous amount of mistakes and blunders when he was chairman of the Federal Reserve and...

HUNT: Oh!

(CROSSTALK)

HUNT: Saved the American economy.

NOVAK: And I certainly -- certainly don't think -- have much confidence in him. I do -- I do know this. It is a funny thing, there are a lot of people in our business and in Washington who'd have no difficulty in attacking the United States government, U.S. policy, but they can't -- you say a bad thing about the U.N., Oh, dear! You can't say anything critical about the U.N. or you're...

CARLSON: I just attacked the U.N.

NOVAK: ... having a witch hunt!

SHIELDS: I think everybody on this panel has criticized the U.N., but the point...

HUNT: I said it was a terrible...

(CROSSTALK)

SHIELDS: The point is, are there other ulterior motives, and there's no question there's ulterior motives.

NOVAK: Oh!

SHIELDS: You don't want to see them, you just want to be blind!

CARLSON: You know, and it's such a loss to the U.N. that former senator John Danforth resigned, saying, This place has to be more than a building. He was envoy to the Sudan. He was there...

NOVAK: Why did he resign? You know why he resigned?

CARLSON: There's a genocide -- there was a genocide -- there is a genocide going on in Sudan, and he couldn't get the kind of action from the U.N....

O'BEIRNE: Right, because they're morally corrupt!

CARLSON: ... and they should...

(CROSSTALK)

NOVAK: They are corrupt. HUNT: They weren't morally corrupt in Cambodia.

SHIELDS: And they weren't morally corrupt in Cambodia and they weren't morally corrupt in 1991 when they backed George Bush in Iraq. Yet somehow, because they didn't back this war...

(CROSSTALK)

CARLSON: Well, without Danforth there, I don't think there's going to be the impetus to save the Sudan.

SHIELDS: Thank you very much, Margaret. Thank you, Bob, for being with us.

Coming up next in the second half of THE CAPITAL GANG: Who should be "Time" magazine's Person of the Year? I have no idea. We'll give your our picks. We'll go "Beyond the Beltway" for a report on the trial of Saddam Hussein, and Osama bin Laden's new message. And our "Outrages of the Week." That's all after the latest messages -- these latest messages and a check of the hour's top stories.

(COMMERCIAL BREAK)

(NEWSBREAK)

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

"Time" magazine has been naming its person of the year for 77 years. Bob Novak knows them all, starting with Charles Lindbergh in 1927. Last year the award went to the American soldier. The selection of the 2004 will be announced tomorrow morning at 8:00 a.m. here on CNN.

We'll make our choices right now -- Bob Novak.

NOVAK: I think Karl Rove, the special adviser, political adviser to President Bush. He has -- he planned that campaign, kept a low profile. I think his strategy and his tactics were good. He worked on the base. He cut into some of the minority votes and I believe that it was one of the best run presidential campaigns that I have seen and certainly he had a lot of impact on the biggest event of the year.

SHIELDS: That's it.

CARLSON: I bet he'll return your calls now, Bob.

SHIELDS: Margaret Carlson.

CARLSON: Yes. I am coming up for the first time ever a "Time" magazine couple of the year.

SHIELDS: Couple.

CARLSON: Bill and Melinda Gates, who so far at the end of 2003 had given away over $4 billion and they give it away very smartly. Just last week they made a grant of over $40 million for a malaria vaccine that will cost $1 a patient.

SHIELDS: Wow. Kate O'Beirne.

O'BEIRNE: Mark, I think Mel Gibson with his "Passion of the Christ" has earned him Man of the Year. For 77 years, "Time" magazine has slighted cultural figures. The list has always been dominated by political leaders or business leaders, every now and again a general, and our culture is so crucially important.

Hollywood takes credit, gives itself credit for being so creative. It, of course, is the most conformist city in the country and Mel Gibson is the most interesting person in that city. And, even by Hollywood standards, we're told they worship God, they worship money as their god. Mel Gibson was hugely successful, $600 million in worldwide sales, maybe another $400 million in DVD.

SHIELDS: Al Hunt.

HUNT: Mark, I'm going to offer an autographed copy of Bob Novak's autobiography to anyone who can rattle off the last five "Time" persons of the year without looking it up. It doesn't have quite the saliency say of the Heisman Trophy. I suspect they'll pick George Bush but I would give it to the 9/11 Commission. In an age of great partisan rancor all ten members came together with a unanimous recommendation. It was extraordinary.

SHIELDS: I'll give a twist on that. I'll give it to Lee Hamilton and Tom Kean, the leaders of that commission, Tom Kean the Republican governor New Jersey, former, Lee Hamilton the former Democratic Congressman from Indiana. They understood brilliantly that for them to be effective as a commission their recommendations had to be unanimous. And, in this toxic political partisanship of Washington, they overcame that through maturity, through statesmanship. They talked together. They ate together. They proved that bipartisanship can be in the best of American interests.

CARLSON: Right.

SHIELDS: I just wish the rest of the town (UNINTELLIGIBLE).

CARLSON: And they're (UNINTELLIGIBLE).

NOVAK: How do you know that what they proposed is going to be any good that it will work?

O'BEIRNE: They'll be forgotten. They'll be forgotten years and years and years before the "Passion of the Christ" will ever be forgotten.

SHIELDS: They may be forgotten but the good work they've done will not and they made an enormous difference.

NOVAK: How do you know that it's any good?

SHIELDS: They've made an enormous -- I know that -- I know for one thing that we will not have a repetition of the intelligence disaster that afflicted this country on September 11th.

O'BEIRNE: Being premature Mark.

NOVAK: Don't be too sure.

CARLSON: They'll be nobody -- they'll be nobody...

SHIELDS: Not as good as a tax cut, Bob, not as good as a mean spirited campaign.

CARLSON: There will be no deliberately tailored intelligence.

NOVAK: The intelligence -- the intelligence people can screw it up.

SHIELDS: Not as good as a campaign that accuses your opponent of being a traitor but that's all right.

Coming up on THE CAPITAL GANG, classic Bill Clinton hosting an economic conference 12 years ago.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

Twelve years ago this week, President-elect Bill Clinton held a two-day economic conference. Your CAPITAL GANG discussed that on December 19, 1992. Our guest was Republican Congressman Henry Hyde of Illinois.

(BEGIN VIDEOTAPE)

HUNT: Bob, what did this fascinating seminar, economic conference accomplish?

NOVAK: As far as anything, as serious in economic going it got nowhere. The point of the matter is that he had a lot of people there who were putting out their pet projects, all of which had a remarkable similarity to what Bill Clinton said during the campaign.

MARGARET WARNER, "NEWSWEEK": What he did was start to create, seriously Bob, a political constituency for two propositions. One is that the problems are really deep and structural, no quick fix will work. And, secondly, that we do have to pursue deficit reduction at the same time that we pursue pro growth.

REP. HENRY HYDE (R), ILLINOIS: It was largely show biz, successful show biz. It certain fooled CNN and C-Span.

SHIELDS: The problems, as Margaret pointed out, are systemic. They are underlying. They're not going to go away. It comes up with the conclusion that it isn't going to be quick. It isn't going to be painless. But, Al, he has yet to prescribe any pain.

(END VIDEOTAPE)

SHIELDS: Margaret Carlson, did the 1992 Clinton economic conference accomplish more than this week's Bush conference did?

CARLSON: You know, I'm wondering is there a third Margaret waiting in the wings here somewhere.

SHIELDS: Probably.

CARLSON: Only Margarets. Listen, you know, they do have their similarities but nobody talks about any pain. There was certainly no pain at the Bush economic summit. It was -- nobody talked about how we've max'd out the Visa card.

Nobody talked about any spending cuts and they had your man in the street or your woman in the street giving a human interest story on Social Security and she happens to be paid by the people who want to privatize Social Security. So, it was totally fake.

SHIELDS: Totally fake.

O'BEIRNE: Nothing -- there was a lot of talk about spending cuts. They have to restrain discretionary spending.

CARLSON: Not one single spending cut.

O'BEIRNE: Ninety-two and '93 didn't do anything for the economy or the federal budget but delivery was at hand because once the Republicans took the House in '94 it meant that Bill Clinton couldn't raise spending and he couldn't raise taxes and surplus followed.

SHIELDS: You know, we had a Republican Congress. We still do. We had Alan Greenspan. We still do. The only thing that's missing was the Clinton economic plan -- Al Hunt.

HUNT: Yes, I'm going to ask my dear friend Kate O'Beirne to take a look at the economy a year after that tax increase in '93 was passed versus the day it was passed. Look, that economic forum of 1992 was just as much of a sham as the one that was just completed. Weeks afterwards Bill Clinton proposed a stimulus package and a BTU tax, both of which went down the drain.

NOVAK: The big difference of those two conferences, at that conference there was a miracle and the miracle was that the president- elect said -- he'd been saying how terrible the economy was the whole campaign, got to get rid of it and he sat down there and he said, "You know, I've just been elected and it's already getting better." It was a miracle.

HUNT: And it was.

NOVAK: This is some miracle.

SHIELDS: Do you want to know how much was spent out of the Social Security fund during the Bush years during the locked box, $635 billion.

CARLSON: I do want to know.

HUNT: Mark, out of the trust fund?

SHIELDS: Out of the trust fund. That is -- that's what they've used. They've used the...

CARLSON: You honor the trust fund. It's trust.

O'BEIRNE: It has a $11 trillion unfunded liability.

SHIELDS: The workers pay in their benefits hoping it will be preserved for them. It's being spent by George W. Bush.

NOVAK: Total fraud.

SHIELDS: Next on THE CAPITAL GANG, we go "Beyond the Beltway" for a look at Saddam's trial and Osama bin Laden's new message. CNN's Nic Robertson joins us.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

The interim Iraqi government announced war crimes trials of Saddam Hussein's regime will begin next week. Saddam Hussein for the first time conferred with a lawyer.

(BEGIN VIDEO CLIP)

ISSAM GHAZZAWI, SADDAM HUSSEIN'S LAWYER: He sent his best regards to all the members of the Saddam Hussein defense lawyers committee and their families and he was in very good health status and mental status and high spirits. He was enjoying very high spirits.

(END VIDEO CLIP)

SHIELDS: Meanwhile, a new audio tape attributed to Osama bin Laden praised the December 6th attack on a U.S. Consulate in Saudi Arabia.

(BEGIN VIDEO CLIP)

OSAMA BIN LADEN (through translator): The clear truth is that the regime is responsible for the mayhem inside Saudi Arabia because it failed to maintain security and stop the bloodshed by dealing with infidels and bringing God's punishment on the country.

COLIN POWELL, SECRETARY OF STATE: He is a criminal. He's a terrorist. He's a murderer and we're going to continue to hunt for him until he is captured and brought to justice.

(END VIDEO CLIP)

SHIELDS: Joining us from London is CNN's Senior International Correspondent Nic Robertson. Thanks for coming in Nic. Nic, what will the public reaction in Iraq be among rank and file Iraqis to these war crime trials? NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: I think Iraqis at the moment look at everything that happens in Iraq through the prism of what is the involvement of the United States? Is this legitimate? Is it an Iraqi operation, if you will, and are the trials being held by Iraqis for Iraqis? So, I think they're going to look at it through that prism.

Certainly, the movement towards putting on trial Chemical Ali, Ali Hassan al-Majid who is responsible for murdering Shias following the 1991 Gulf War and for murdering Kurds in 1988 is going to go a long way to getting those two communities into believing that what's happening in Iraq, the democracy that's coming, is a good thing and will perhaps help get them out to the polls. That's important.

But perhaps for the Sunni community from whom all Saddam Hussein's or pretty much all of Saddam Hussein's leadership came from are going to take a different view but mostly people are going to look at it and say is this an Iraqi event or are the Americans running it?

SHIELDS: Bob Novak.

NOVAK: In that connection, Nic, the statements that were made this week by Saddam's lawyers indicate that this is just a puppet operation for the Americans that this is not Iraqi that Saddam Hussein is still the legal president of Iraq. Do you think that the Ba'athists can use these trials as a propaganda instrument despite the atrocities that were committed by Chemical Ali and the other defendants?

ROBERTSON: I think the Ba'athists are going to have a hard time trying to do that. They may through the insurgency try to ramp up the insurgency. They don't really have a political voice in Iraq and they're not really going to find it in the trial other than the likes of what we've heard from Saddam Hussein's lawyer.

They're going to find trying to do that very difficult. And, I think as the trials go on and the Iraqi people hear more and more laid out exactly what the regime did they're going to find very, very little support.

But, as far as the coalition is concerned at the moment, the Ba'athists, the remnants that are still in Iraq do pose the biggest threat. They are organized and they do see them as becoming more and better organized.

So, if there's anything that they can do, those former Ba'athists to use these trials to their own perhaps more military than political advantage, then very likely that will happen.

SHIELDS: Margaret Carlson.

CARLSON: Nic, if Prime Minister Allawi can't somehow find a way to get the Sunnis voting in substantial numbers isn't it going to look at if the United States toppled Saddam Hussein, a Sunni, in favor of putting in a Shiite government? And how are Sunnis going to be gotten out to vote in an election that they're probably going to lose? ROBERTSON: This is a big problem. These elections are a proportional representation, perhaps about 12 million voters, 275 seats. Only the people who will get in the seats, those 275 seats, will be a direct representation of who comes out to vote.

The Shias look set to come out in numbers. The Kurds are behind their two principal political parties. They are set to come out in numbers. It's only the Sunnis who are holding back and, if they do, they'll be the big losers.

The legitimacy of the elections therefore in the eyes of the Sunnis is a big issue, the concern for many will it then precipitate greater civil strife and turn what is an insurgency against the government and the United States and the coalition into a civil war and that is a real concern.

The hope is that those Sunni parties who have so far said that they'll boycott the elections they'll change their mind because they'll see that this is the only opportunity they have to get into the political arena, if you will.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Nic, Iraq's defense minister has accused Iran and Syria of aiding the terrorists killing so many in Iraq. There's plenty of evidence that he's right. Any of these candidates running for office in January have a plan? Do they also talk about the destructive role being played by their neighbors?

ROBERTSON: Everyone in Iraq is concerned about the influence of outside countries, particularly Syria, particularly Iran. When you talk to the average Iraqi they see their problems that they have manifested by the involvement of countries from the outside, particularly Syria, particularly Iran.

So, there is a great deal of concern. It's not clear what sort of strategy is going to be used and if some of those political players, who may take a more prominent role in the country now, will actually be people who are benefiting from support from outside the country.

And, certainly there's a lot of skepticism amongst Iraqis on who are these political figures? They don't know who they are. They haven't seen them play a political role before. They don't know if they're good people or bad people, so the concern on the street is about who's coming to power and who's behind the people coming to power is very, very alive, very much alive at the moment.

HUNT: Nic, we only have 30 seconds left but just let me ask you, to turn Kate's question around, what are the prospects of the next government in Iraq being a Shia majority that is more sympathetic or supportive of Iran than the United States and what are the ramifications?

ROBERTSON: There's certainly an indication that the leading figures in some of the political parties have had ties with Iran in the past and that's likely to -- that's likely to be something that's going to shape their judgment of what's happening -- what's happening in Iraq once they get elected. So, this is not an issue that's going to be changed by the elections themselves. That's what -- that's the thing that concerns a lot of Iraqis.

SHIELDS: Nic Robertson, thank you so very much for joining us.

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

(COMMERCIAL BREAK)

SHIELDS: And now for the "Outrage of the Week."

Actor Laurence Fishburne was performing on a Broadway stage when a cell phone rang in the audience. Fishburne responded, turned to the audience and said: "Are you going to turn that (EXPLETIVE DELETED) thing off?" The audience cheered.

Now our Federal Communications Commission may lift the ban on cell phone use on airplanes. Imagine you're on an L.A. to New York flight, trapped at 40,000 feet between two obnoxious self important jerks making deals on the phone. If you think air rage is a problem now, pity the poor flight attendants trying to break up the fights among passengers over cell phones -- Robert Novak.

NOVAK: The Securities and Exchange Commission confirmed that Fanny Mae cooked the books not recording $9 billion in losses. That built multimillion dollar salaries for top executives. Why no Enron- sized outcry from Democrats? Because Fanny Mae is a quasi- governmental institution which makes former politicians rich.

The current CEO Franklin D. Raines was Bill Clinton's budget director and was supposed to be John Kerry's treasury secretary. He took home over $50 million the last three years. Why no calls for Raines' resignation or demands that Fanny Mae be privatized?

SHIELDS: Margaret Carlson.

CARLSON: The Capitol Visitor Center was a ridiculous project when it only cost $265 million. Now we'll pay twice that for this three-story underground maze of tunnels, hideaway offices and Washington's biggest cafeteria.

Representative Jack Kingston, a Republican, who oversees the project is also letting the Capitol Police Chief Terrance Gainer build a private army around the capital, complete with assault rifles, bunkers and a mounted horse patrol that costs $50,000 just to clean up after.

When voters get wind of the world's first half billion dollar visitor center Congressmen will need those hideaway offices to hide away from their constituents.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Parents in Plano, Texas want a temporary restraining order that allows their children to utter the forbidden "C" word and use their (UNINTELLIGIBLE) red and green colors during class parties. This has been forbidden in a typical example of the annual campaign to keep Christ out of Christmas.

Even Congress refuses to call its big decorated Evergreen a Christmas tree. Have you noticed it's the forces of diversity and tolerance that want to sensor the reason for the season?

SHIELDS: Al Hunt.

HUNT: The FOX TV network is taking reality programming to a new low when it premieres "Who's Your Daddy?" This features an adopted woman trying for cash to guess which of eight men is her biological father.

As the Edmund B. Donaldson Adoption Institute notes, if this were based on race or religion we never would tolerate it. Adoption is pro-life and it's pro-choice. It's a precious opportunity for all of us in the adoption community. And, anyone who cares about family values should let FOX know how the concept of "Who's Your Daddy" is despicable.

SHIELDS: Amen.

O'BEIRNE: Amen.

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

Coming up next, "CNN PRESENTS: The Two Marys" the Madonna and the Magdalene.

At 9:00 p.m. on "LARRY KING LIVE" the Scott Peterson penalty phase.

And at 10:00 p.m. on "CNN SATURDAY NIGHT," go inside the factory making the armor kits for military vehicles in Iraq.

Thank you for joining us.

(NEWSBREAK)

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