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CNN Crossfire

Interview With Ralph Nader; Interview With Fred Smith

Aired January 18, 2002 - 19:30   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.
TUCKER CARLSON, CO-HOST: Tonight, taking care of business. Is it time for government to step in to prevent another Enron? And...

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I, George Walker Bush, do solemnly swear.

(END VIDEO CLIP)

CARLSON: It's been a year. How is President Bush doing?

ANNOUNCER: Live from Washington, CROSSFIRE. On the left, Bill Press. On the right, Tucker Carlson. In the crossfire, Fred Smith, president of the Competitive Enterprise Institute. And in Minneapolis, Minnesota, former Green Party presidential candidate Ralph Nader. And later, Democratic strategist Kiki McLean. And in New York, Republican strategist Stewart Stevens.

CARLSON: Good evening and welcome to CROSSFIRE. Massive scandal on a colossal scale, that's the growing consensus on the collapse of Enron. And it could turn out to be true. Some people may wind up in prison, but at the moment, this much is certain. The way big business is conducted in America is about to change.

Already there are calls to further regulate the accounting industry. Legislation has been proposed in the Senate that would limit was employers are allowed to contribute to 401(k) plans. There's more to come. All of which raises thorny questions for the current pro-free market president. How much regulation is too much regulation? Should flawed companies like Enron be allowed to fail? Does the market always know best?

George W. Bush may modify his views on those subjects before long. Our guests tonight already have theirs.

Sitting on the left this evening, from "Vanity Fair" magazine, formerly of the Clinton White House, Dee Dee Myers.

But first to Minneapolis. We go to Ralph Nader.

Mr. Nader, thanks for joining us. Here's the criticism as I understand it of the administration's dealing with Enron. First the administration was apparently in bed with Enron. And then, it did not do enough to prevent Enron's collapse. So you -- essentially the criticism is this administration was too involved, and yet not involved enough. Want to pick a side on that?

RALPH NADER, FMR. GREEN PARTY PRES. CANDIDATE: Well, a lot of the top Bush administration officials, including President Bush, came out of Enron's ambit of influence. They received Enron contributions. They socialized with Enron. They were very friendly with Ken Lay.

And when the calls started being made on behalf of Enron that this company was in trouble, and the Bush administration was asked to help, the -- right now, we don't know whether the Bush administration did anything to help them. There's no evidence yet. But what they didn't do was alert the federal cops on the corporate beat. They didn't alert the Justice Department. They didn't alert the Securities Exchange Commission, which itself was asleep at the switch.

So this supermarket of corporate crime, fraud and abuse that is Enron, which defrauded its shareholders and depleted pension funds of its workers, and now has collapsed and unemployed its workers can generate a lot of good reform, Tucker. A lot of...

CARLSON: Wait a second...

NADER: ...pension reform and campaign finance reform.

CARLSON: I know you think that...

NADER: For corporate crime.

CARLSON: But you have not answered my question. You seem to be making the same nonsensical argument that they were, again, in bed with Enron, and yet they didn't blow the whistle and help forestall Enron's collapse. I'm wondering should the government have propped up Enron, when it became clear it was going under?

NADER: You're seeing fantasy contradictions here. There's no contradiction between a administration moving into office on the sea of Enron cash and other corporate cash. And then, being alerted that Enron was in trouble, and not blowing the whistle in terms of law and order against this corporate criminal. There's no contradiction there.

DEE DEE MYERS, CO-HOST: Now Fred Smith, you say there are regulations in place already. There are already regulations in place. And yet, the SEC had no idea how Enron was managing its books. And there was no system in place to manage the auditing companies that should've been doing a better job on this. So in a free market system, don't investors need better information? Don't we need a better regulatory system, so that it can operate efficiently?

FRED SMITH, COMPETITIVE ENTERPRISE INST.: We need a much better system to make sure it operates efficiently. And one of the challenges is, is not to put to sleep the people who should be watching it most closely with the people who lose money when they guess wrong. The due diligence exercisers are the auditors in these cases of the investor relations groups. And the people who were putting in the money in, clearly didn't go very far, because if they did, they basically would have said you know, we don't -- really the auditor in this area. None of them understood how Enron seemed to be making this monies.

MYERS: But how can it be that the auditors didn't understand? Isn't one of the problems that the auditors were also acting as consultants? And in fact, Andersen earned more money as a consultant than they did as an auditor?

SMITH: That's not (UNINTELLIGIBLE). What we saw was why were the investors willing to accept information from groups who had that kind of conflict of interest? The good thing that can come out of Enron...

MYERS: So investors should have stopped it.

SMITH: Investors should have stopped it. What we basically did was, and the '90's had a lot of that. The dot-coms are part of that, too. What we really should recognize is what good could come out of this is a recognition that when something looks too good to be true, it may be.

You don't solve that problem by putting more watchdogs and making them fatter and more sleepy. Because as Ralph just pointed out, the SEC didn't call the whistle. We didn't get the futures group doing it. The regulators didn't do their job. A fatter, sleepier regulator wouldn't do the job as well.

The investor community has to be aware that it cannot rely on information that is this badly made, and then expect to have to be bailed out by government. And it wasn't bailed out by government.

CARLSON: Ralph Nader, you just characterized the Enron bankruptcy as a crime, essentially the biggest disaster in America since the Corvair. But just to put it in some perspective, Spence Abraham, the Energy Secretary, had a fascinating piece in "The Washington Post," in which he pointed out this is the biggest bankruptcy in American history. And yet, what's happened?

You would expect natural gas prices to go out of control. In fact, they've dropped. Electricity prices have gone down. Gasoline prices have gone down. The energy industry seems, from the consumers' point of view, the point of view you care most about, in peachy shape. So why exactly is this massive debacle that we should all be losing sleep over?

NADER: Well, there is ample energy supply, contrary to some pundits. And so the suppliers moved into the breach. But remember, $60 billion or more of shareholder value has been dissipated. A lot of small investors and institutional investors and pension plans are hurt as a result. Several thousand workers unemployed. That has a ripple effect. And the pensions of these people have been depleted.

But most important is the confidence of the investors in the cops on the corporate beat has been severely impaired. You can't rely on the big accounting firms. There, as Fred said, they're in a conflict of interest, selling lucrative consulting services, as well as auditing services to the same corporations. And this has been going on. You have Lucent. You have Waste Management. You have SunBeam. This is a pattern. And that's why we have to have comprehensive reforms.

SMITH: Ralph, we do.

NADER: And also using existing laws to enforce the law.

SMITH: Well, we have to do that, actually. But what do we do? Isn't it clear that what's going on now is the best possible lesson? Those investors who rushed in to these wow, we can make a fortune on these kind of investments, are going to be a little less apt to do it in the future. Those analysts who were telling us don't worry, even though we don't understand it, you can get rich here.

Do we really want to weaken those incentives? Do we want to anesthetize the investment community and say don't worry, in the future, the government cops will protect you. And you don't have to take any more precautions on your own.

NADER: Well, the absence of any bailout movement is very healthy in that respect, to make your point. But more important is this. You can't stop people from gambling with their money and investing, but you can stop corporations and accounting firms from inflating earnings and deceiving people deliberately, while they bailout high stock prices, the way the heads of Enron did last year.

MYERS: Because how were investors supposed to know, Fred, that Enron was cooking its books? If they read the corporate, you know, quarterly reports, they wouldn't have been able to find it unless they were completely, you know, very sophisticated. Even then, they probably wouldn't have been able to find it. The auditors weren't providing the information.

The analysts are rewarded for putting together deals and just making money. So how are investors without the government there to try to provide some framework supposed to get reliable information?

SMITH: Well, the question -- that's a very good question. And the answer to it is, when you see those kind of high flying investments in areas of the economy that that's a frontier, because we were talking derivatives, trading.

You read the literature and people say, nobody could understand how they were making money. You ought to buy it. You should risk, you should beware, if people can't explain to you how they're making money, you maybe shouldn't invest in those areas.

There are some rules, though, that make it harder to inform investors. One of the areas is the liability rules on a company bringing in someone to advise their employees on 401(k) plans. Look, there's a lot of things out there. There are risk premiums. You may want to invest in this. You may want to do that.

Up until now, if a company does that, they can be held liable if the investment advice was wrong. So one of the things we would like to do, I think all of us would agree to, is to try to ensure that we get as much information as possible to the smaller investor community. The big investigators, I think, should take it on the chin. And a lot of them are.

MYERS: So the small ones in this case?

CARLSON: Mr. Nader, I just want to clear something. You said a moment ago that you can't stop people from gambling with their earnings. I thought that sounded sensible. It turns out we're both wrong, because legislation put up by Senators Boxer and Corzine would limit workers' ability to put more than 20 percent of their own company stock in their 401(k).

I'm just interested to know, this limits the choice of workers, obviously their freedom of choice. You can't possibly support something like this, can you?

NADER: Well, I think there again, it's what's called the lockdown, where Enron prevented workers who had Enron stock in their pension plan 401(k)s from selling, while the top executives were selling at a great profit to themselves last year.

You have to get rid of the lockdown. That's like handcuffing the workers. And they can't get rid of the stock as it starts to slide for a long period of time.

This is going to produce some good reforms, I hope, including getting McCain/Feingold to President Bush's desk, getting it through the House. And let's hope that it gets the Securities Exchange Commission under Harvey Pitt, who represented these accounting giants, where he's a private lawyer, to start cracking down.

You know, we really don't total up the shareholder losses. It's in the hundreds and hundreds of billions of dollars in the last 10 years. And it wasn't just because they were gambling. It's because they were relying on truth in investment, relying on the board of directors and the Securities and Exchange Commission.

CARLSON: OK, Fred Smith, you're going to get the quick last word.

SMITH: Ralph, one of the areas that would have caused even greater disaster in the Enron situation would have been if Ken Lay had got his way in the political process and been able to push through the Kyoto Treaty, the global warming thing, raise the price of energy and put hundreds of thousands of people out of work.

CARLSON: Amen.

SMITH: He basically didn't get that because Feingold and campaign reform notwithstanding, it looks like President Bush stood firm and said affordable energy was better than Kyoto with foreign treaty...

CARLSON: Thanks, Fred Smith, Ralph Nader, thanks. (CROSSTALK)

CARLSON: We're going to have to leave it there, unfortunately.

NADER: Ken Lay was right on global warming.

MYERS: He was right.

CARLSON: One of the many ways he was right. Thank you though, Mr. Nader. Mr. Smith, both for joining us.

MYERS: Thank you.

CARLSON: And coming up on CROSSFIRE, grading the president's first year. Did he pass or fail? Our team of resident professors of politics deliver their marks. Some better than others. We'll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: It's fair to say that this first year has been a year of results and progress. And it's also been a year of challenge in defense of our freedoms, as a result of the attack on our country.

(END VIDEO CLIP)

MYERS: Welcome back to CROSSFIRE. Sunday marks the first anniversary of President Bush's inauguration. And what a year it's been. The president's admirers say the country's now seen the real George Bush. And people like what they see, a resolute and determined leader. Democrats are quick to praise the president's conduct of the war, but they say his foreign policy triumphs shouldn't be allowed to obscure his domestic lapses.

Is George W. Bush the next Abraham Lincoln, rallying the nation in its hour of greatest peril? Or is he, well, the next George Bush, winning the war only to lose the peace.

Here to debate the first year of the Bush presidency and the road ahead are Kiki McLean, a Democratic political strategist and Republican strategist Stu Stevens.

Welcome to CROSSFIRE. Stu Stevens, let me start with you. Credit where credit is due. First, I think the president has done a terrific job of prosecuting the war against terrorism. And I think Democrats have rallied to his support because of that.

But Americans, as we know, don't live by foreign policy alone. And the dirty little secret is that George W. Bush's domestic agenda isn't all that popular. Americans like the idea of energy policy, but not one that just pays lip service to conservation. They like a tax cut, but they don't like a tax cut for the rich that threatens Medicare and Social Security. They like a lot of things that he's done, but there's a lot of caveats there. And isn't the truth that when the agenda focuses on domestic policy again, this president's going to have a lot of trouble?

STUART STEVENS, REPUBLICAN STRATEGIST: Dee Dee, you'll be shocked to hear me say this. I think you're absolutely wrong. Look, I don't know. Were you upset the other day when he was standing up there with Ted Kennedy and signing the education bill that was HR-1, that they got through the House?

MYERS: No, I supported that bill. There's a lot of conservatives who don't.

STEVENS: As we've seen, the president is somebody who wants to find the middle ground, who will strike compromise.

I think the most important thing here is for those of us in the campaign, there was always elements of the president that we really were never very good, I think, at getting out to people, letting them know the person that we saw.

And what's gratifying now, even though it comes under tragic circumstances, is the nation is getting to see George W. Bush as the person who he really is, a tremendous leader, a tremendous humanity about the man.

He has qualities of management and leadership that are particularly suited to these times, an ability not to second guess, an ability to pick good people, an ability to plan and then execute a plan.

And all of that done, I think. And an overwhelming sense that they're succeeding slowly to changing the tone in Washington. And that's a huge accomplishment.

MYERS: I mean, that's certainly been one of the things he's tried to say, that he's changed the tone in Washington. And on the way, that's certainly true. But that's not true on the domestic front, with the exception of the education bill. And certainly before September 11, the gulf between Democrats and Republicans was actually getting wider, not narrower.

In think the president, instead of trying to actually reach thoughtful compromise with Democrats, was trying to force his legislative agenda to Congress and succeeded only in driving Jim Jeffords out of the party.

STEVENS: Well, Jim Jeffords mid-life crisis aside here, I think the president...

MYERS: He's an honorable man, who's been an honorable Republican -- was an honorable Republican for a long time. So I don't know if you want to say he had a mid-life crisis.

STEVENS: It used to be you just bought a sports car. But I think the president has succeeded in doing what he said on his domestic front that he was going do in the campaign, which is, he said he was going to cut taxes. And he's cut taxes.

And I got to tell you, it's sort of a sweet little moment for Republicans to have Ted Kennedy back and Ted Kennedy talking about stopping a tax increase, stopping a tax cut, which in fact a tax increase.

And the president said he would focus on education. He's focused on education. It's pretty hard. I mean, if you look at Daschle's speech, for instance, Daschle was reduced to attacking the president for high interest rates when they're at a 40-year low? That's pretty slim pickings.

CARLSON: It sure is, Stu. And I hate to interrupt you, but I'm afraid, speaking of attack, I'm going to have to go on one.

Kiki, welcome.

KIKI MCLEAN, DEMOCRATIC STRATEGIST: OK, Tucker, bring it on.

CARLSON: You know, I hate to bring up poll numbers.

MCLEAN: A cold beer on a Friday night with Tucker. I don't know that it gets any better than that.

CARLSON: Poll numbers, as you know, much as I despise them, they are the currency of Democratic.

MCLEAN: You live by them, Tucker.

CARLSON: You and your party do. Which is why I bring up the following poll number, which are incidentally the highest ever recorded for a president since polls began.

MCLEAN: Sure. We're at war. Are you shocked by that?

CARLSON: Let the numbers tell the story.

MCLEAN: All right.

CARLSON: Eighty-two percent approval rating; 66 percent among Democrats; 57 percent of Americans approve of the way he's handling the economy; 92 percent of Republicans are happy about the next three years, the prospect. And 57 percent of Democrats think he'll do a great job in the next three years. The bottom line here is Bush has won Gore voters. That's the headline and it's remarkable, is it not?

MCLEAN: Well, I think what we have is we have Americans who are patriotic, who want this president to have all the support he can, while he wages this war. I think if you were really doing a report card right now, you'd say that George Bush is what we knew him to be before, an inconsistent student at best.

With his National Security Council, he gets an A plus for executing this war on terrorism. It's important.

CARLSON: So they're lying, the people... MCLEAN: No, I think Americans are giving him that support because they believe he needs it. I think what you're going to find out, though, I thought it was interesting what Stuart said about all of his campaign promises. In fact, I would give him a D on the economy right now.

CARLSON: Wait a second.

MCLEAN: And let me tell you why, Tucker, because this is important. When Stuart talks about the fact that he kept all of his campaign promises, well, let's talk about what he hasn't done. Let's talk about the fact that now, he's taken the greatest surplus that you could see as far as the eye went...

CARLSON: That is absolutely a ludicrous liable. And you're fully, fully aware of it.

MCLEAN: Tucker, Tucker. Let me finish this.

CARLSON: It's the oldest line that has ever...

MCLEAN: And in fact, we are now in...

CARLSON: That's last year's topic.

MCLEAN: Well, the truth of the matter is, we're now in great deficits. And he's been at the helm. When it comes to the domestic agenda, he's scoring a D right now.

CARLSON: May I just throw one idea out for you to react to?

MCLEAN: And as president of the United States...

CARLSON: Fully aware of that.

MCLEAN: ...not just foreign policy and military matters. It's important.

CARLSON: Let me tell you that at this time in American history, there really is nothing else but not foreign policy, but war.

MCLEAN: Can you...

CARLSON: Let me finish. And no...

MCLEAN: But what about all the people who just lost their jobs this year? What about seniors who are going to lose their benefits?

CARLSON: You don't understand.

MCLEAN: What about all the people...

CARLSON: If I may finish...

MCLEAN: ... who he told could fund a prescription drug program for? Does it matter? CARLSON: Nobody remembers Bill Clinton for his school uniform initiative. They will remember him for his negligence on terrorism.

MCLEAN: No, but...

CARLSON: And they'll remember Bush for how he reacted during the war...

MCLEAN: Well, first of all...

CARLSON: Which is what matters.

MCLEAN: They will remember a man who grew one of the strongest economies in peacetime that allows us...

CARLSON: You wish.

MCLEAN: ...to have the resources we need right now. And more importantly, you're looking at someone, who at best scores an incomplete on areas like health care or education. And by the way, while we're ready to criticize Ted Kennedy from the right, they were more than happy to stand up next to him. And it was George Bush...

CARLSON: Ted Kennedy...

(CROSSTALK)

CARLSON: What is this, 1975? What year is this? Ted Kennedy's the leader of your party?

(CROSSTALK)

MYERS: You know, the war has certainly been the source of President Bush's popularity. On September 10, he was at 51 percent in the polls. Tucker wants to refer to polls. His rating before that was consistently in the 50's. And as the war recedes as an issue, his ratings will almost certainly drop back down to those stratospheric levels.

How do you keep the country's attention on the war, without losing sort of that support? And if it focuses back on the economy, his agenda is not that popular. So aren't you worried as you head into the midterm elections?

STEVENS: You know, the amazing thing here is that the president was elected on a classic Democratic political landscape, where the issues weren't the Republican issues we've always known of national defense, and cutting taxes, and welfare reform, or crime. The issues were education. The issues were safety social net, where there's a debate over Social Security. The issues were...

MYERS: But Stu on those issues...

STEVENS: No, let me just finish.

MYERS: ...Al Gore got more votes. STEVENS: So my point -- well, I do believe as they walk into the room, they play hail to the chief when George W. Bush is there.

MYERS: No question about it, but on domestic issues you're laying out Al gore got more votes.

STEVENS: But let me just make this point.

CARLSON: You're going to have to make it real quick.

STEVENS: OK, let me make this point, that the president is very comfortable with domestic issues. It's ultimately one of the key reasons he ran for president. It's one of the key reasons he won. And I think it's one of the key reasons that...

MCLEAN: He better get aggressive about it.

STEVENS: ...he's going to be popular.

CARLSON: Unfortunately, we're going to have to leave it there. Stuart Stevens in New York; Kiki McLean here in Washington. We could go on, and probably will, for the rest of the evening.

MCLEAN: And the rest of the year.

CARLSON: But in the process of CROSSFIRE, we move topics.

And when we come back, fire back, your chance to return fire with e-mails. And Elly, if you're watching, I can't wait to tell you what I think of your e-mail. Not much, frankly, but we'll get to that in a moment. We'll be right back.

(COMMERCIAL BREAK)

CARLSON: Time now for our Friday fire back segment, which is your chance to fire back at us with your e-mails. A lot of electronic salvos this week. Here are a few. Take it away, Dee Dee Myers.

MYERS: This is my favorite, Tucker. "I totally believe Ken Lay is innocent of all wrongdoing. Bush would not be friends with such an evil person. He can look into their eyes and soul and know if they are good or bad."

God bless you, Mr. Nunnes, because that is so true. The president told us when he sat down with Mr. Putin, the Russian leader. He said he looked into the man's eyes and into his soul and knew he was a good fellow.

CARLSON: Well, I think Bush did discern that about Ken Lay, which is why the White House didn't help Enron as it slid down the tubes.

And now one from Elly. "If the Enron debacle had happened under President Clinton's watch, and if he had only been one iota as involved as G.W. has been, he, Clinton would have been drawn and quartered Texas-style." Turns out, Elly, that President Clinton was every bit as involved, perhaps more involved. But the difference is he's in Australia now giving $100,000 speeches. He's split the scene. He's like the friend at the bar who leaves before the bill comes. Oh, I have to go to the men's room. One more drink, please, and never returns. That's Bill Clinton and Enron, not here to be held accountable.

MYERS: That is ludicrous and you know it.

CARLSON: It's probably true.

MYERS: Ken Lay was a good friend of George W. Bush's, even though George Bush denied him three times when the cock crowed or before the cock crowed, as it were.

CARLSON: Pick a story. Come on. Is he helping out or too much or?

MYERS: He -- if Bill Clinton has been as close to Ken Lay as George Bush was to Ken Lay, the public would be screaming foul. And they wouldn't need a coherent argument...

CARLSON: Onward.

MYERS: Now so this one from Horace Dooley. He asks, based on last night's show. "I do not condone the terrible destruction of life and property. I get emotional over it. However, I do not feel that the families should be compensated by the government. Why should taxpayer funds be used when taxpayers were not responsible for what happened?"

Clearly taxpayers were not responsible for what happened. But Mr. Dooley, when Congress passes a bill limiting the liability of the airlines, bailing them out to the tune of $15 billion...

CARLSON: Give me a break.

MYERS: ...they accept responsibility for then compensating the victims.

CARLSON: If I fall off my roof, I don't sue the government. I don't expect payment.

OK, now this is the most suspicious...

MYERS: But if the government is protecting...

CARLSON: Hold on.

MYERS: ...your roof builder...

CARLSON: This is the most suspicious e-mail of the night. "I enjoyed listening to you, Ms. Myers. I appreciate someone who knows their topic, has done their homework and portrays a professional image to the listener. Thanks." And at the bottom, whoa, wait a second, there's a "New York Times" e-mail address. Doesn't your husband at the "New York Times"? That is very...

MYERS: Thank you, Rose Mary.

CARLSON: That's a ringer, if I've ever seen one.

MYERS: Anyway, from the left, I'm Dee Dee Myers, thanking Rose Mary again. Good night from CROSSFIRE.

CARLSON: And from the right, I'm Tucker Carlson. Join us again next week, beginning Monday, for another week of CROSSFIRE. See you then.

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