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CNN Crossfire

Corporations Establishing Off-shore Tax Havens Called Unpatriotic; Will Hillary Run for President in 2004?

Aired August 01, 2002 - 19:00   ET

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

ROBERT NOVAK, CO-HOST: Welcome to CROSSFIRE.
Tonight: Is it time to kick parents out of the bleachers and just let the Little Leaguers play by themselves?

Also, Paul Begala gets to pour gasoline on the Hillary for president boomlet.

But first, as we do every day, let's start with the best political briefing in television, our CROSSFIRE "Political Alert."

Last fall when people were dying of anthrax and the whole country was scared to open its mail, everyone was sure we were under attack by sinister followers of Osama bin Laden. Today, 10 months after the anthrax letters showed up on Capitol Hill, authorities identified a man as a, quote, "potential suspect." As far as we know, he isn't al Qaeda, he isn't even an Arab. He's 48-year-old Steven Hatfill, a former researcher at the Army's biowarfare defense lab in Fort Dietrich, Maryland. Right now he's part of a stand-by U.N. inspection team slated to go to Iraq.

Hatfill, who has not been arrested, is also due to begin teaching a course this fall at Louisiana State University. And get this, it's on how to handle a bioterrorism attack.

After all, LSU is James Carville's alma mater.

PAUL BEGALA, CO-HOST: Let's not convict this guy, though, either, before the evidence and the facts are in.

But I have said on this show that my fear was it was a right-wing white guy. And we don't know anything about who might have done this, and I'm not ready to convict this guy.

NOVAK: Maybe it's a left-wing white guy.

BEGALA: We don't know. We shall find out. Let's be fair and not convict this guy, too, until the evidence is in.

Speaking of convictions, two former WorldCom executives did the perp walk today. They were led away in handcuffs, charged with fraud and conspiracy. The Bush administration moved swiftly against WorldCom, as it did against Adelphia Cable and Arthur Andersen, but not a single charge has been filed against Enron. Now, I wonder why?

Well, Bush was once in an oil-drilling deal with Enron. He was once reportedly a lobbyist for Enron -- a report that Bush disputes. It is undisputable, however, that Enron was the largest donor to Bush's campaign. Of course that has nothing, nothing at all, to do with the fact that the Bush administration hasn't even given Enron even a parking ticket.

Nope, nothing at all.

NOVAK: Let me play my role as one-man truth squad: Bush was never a lobbyist for Enron. Enron gave a lot of contributions to Democrats. And keep tuned, Paul, there's a task force of career lawyers at the Justice Department concentrating on Enron.

BEGALA: That's an Argentine minister who says Bush called him and lobbied him on behalf of Enron when his father was president.

(CROSSTALK)

BEGALA: No, actually I read it in the "Texas Observer" and "The Nation."

NOVAK: Yes, I'm sure. Left-wing rags.

BEGALA: True, accurate.

NOVAK: Among the many roles assumed by Jesse Ventura is village atheist, and perhaps village idiot as well.

So in his last month as governor of Minnesota, what was he doing this week when he proclaimed Christian Heritage Week in Minnesota? Has the former professional wrestler, who has belittled religion, and less than a month ago issued a proclamation sought by an atheist group -- has he finally seen the light?

Unfortunately, no, it was all a mistake. The Christian Heritage Proclamation got in the wrong pile on his desk. This one time Jesse Ventura's inefficiency trumped his bigotry.

BEGALA: I like when he said he believed not in God, but in reincarnation. He was going to come back as a 36-triple-D brassiere, right? And I thought, well, he's already the biggest boob in Minnesota. That serves him well.

Anyway, pity poor Paul O'Neill. The Bush administration's treasury secretary is under fire from all sides. Today's "Washington Post" has, what I recommend to you, as a superb column from my colleague Bob Novak today. He reports that O'Neill is under fire from the right.

Well, allow me to pile on now from the left.

O'Neill is a joke, and a bad one at that. He took the Brazilian currency down 4 -- 5 percent with his foolish comments, and embarrassed himself by being in Central Asia when our stock market was melting down.

Now why would George W. Bush place such faith in a wealthy CEO who says dumb things and who is a joke all around the world? Oh well, never mind.

NOVAK: Paul, if you had read my full column, you would have realized that Paul O'Neill is one of the smartest guys around; he's a charming guy. He's got great passions for things like global warming.

The question is: Is he the right man for secretary of the treasury?

BEGALA: That's right, you called him intelligent but erratic. And I agree on both. He says a lot of dumb things, and they ought to get rid of him.

NOVAK: Democrat Chuck Kalogianis, an attorney and family man in New Port Richey, Florida is running an uphill race against Republican Congressman Mike Bilirakis, and he has a problem. When he was in law school as a student in Boston, Chuck picked up some extra money as a male stripper, an occupation that identifies him to this very day.

In his act back then, the candidate stripped down to a French bikini as women threw money at him.

But it figures, as a Democrat he's campaigning on Social Security and prescription drugs. When you strip away that phony rhetoric, there's just a political bikini.

BEGALA: Bob, I'm getting a report that we have some breaking news, and so we're going to ask Wolf Blitzer to bring us up to date on the latest breaking news -- Wolf.

WOLF BLITZER, CNN ANCHOR: Thank you very much, Paul.

We've been following all day that story in California. Those two girls who were taken by gunpoint from a car late last night, they were with two boys at an area described as Lover's Lane in Los Angeles County. Both of the girls are fine right now. The suspect -- and we're getting the first pictures now of these girls from our affiliate in Bakersfield, California, KBAK.

Here you see the girls, Tamara Brooks, 16 years old; Jackie Marris, 17 years old. They are fine.

The suspect in this particular case, one Roy Ratliff, he was killed by police in a shootout after a brief chase in an area about 100 miles from the scene.

The young woman in the red is Tamara Brooks. She is OK, fine. The father of Tamara Brooks, Sam Brooks, spoke to reporters earlier today. He was delighted, of course, with the news that his daughter was fine.

The suspect, Roy Ratliff had been wanted on earlier rape charges. There was a $3 million warrant out for his arrest. He is now dead. Both girls are fine.

Those are the first pictures from our affiliate in Bakersfield, California. They'll be reunited with their loved ones very soon.

Let's go back to CROSSFIRE now -- Paul Begala and Bob Novak.

NOVAK: Thank you very much, Wolf.

The Democrats have their marching orders: Keep those Republicans on the defensive, talk up corporate abuse, connect it to the president, then make the voters worry about their pensions and Social Security -- scare them.

And the Democrats, typically, are falling right in line. All of a sudden, it's barely short of treason for companies to take advantage of the tax laws, and all of it perfectly legal do part of their business offshore.

In the CROSSFIRE tonight, Democratic Congressman James McDermott of the state of Washington, who joins us from Seattle. And here with us is Stephen Moore of the Cato Institute and the Club for Growth.

(APPLAUSE)

BEGALA: Thank you, sir.

Congressman McDermott, thank you as well for joining us.

Stephen, let me start with you.

And I want to play a piece of videotape of our president talking about this same issue. Apparently Harken Energy, the company on whose board he served, had an offshore subsidiary, perhaps, and I think, for tax purposes, to hide their taxes.

Here's what the president said when he was asked about it.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I think we ought to look at people who are trying to avoid U.S. taxes, is a problem. And I think American companies ought to pay taxes here and be a part of -- good citizens.

(END VIDEO CLIP)

BEGALA: See, I think we should look at people who are trying to avoid U.S. taxes. There's one of them right there. Our president tried to avoid our taxes.

Isn't that unpatriotic?

STEPHEN MOORE, CATO INSTITUTE: Well Paul, American companies are paying U.S. taxes. That's the whole problem.

In fact, this year when you count the payroll taxes, the corporate income taxes and state taxes, corporate America will pay over $1 trillion dollars. That's 1 trillion with a "T."

So the problem in this country is not that American companies are under-taxed.

And the real problem, by the way -- and this is something I'd like to hear Jim McDermott talk about -- is the dysfunctional nature of our tax system. I mean, there's something wrong with our tax system when American companies and American workers and capital is flowing outside of the United States. It used to be that we were the lowest-taxed country in the world, now we're one of the highest.

BEGALA: But isn't there something wrong with our president when he gives us these pious, sanctimonious lectures about patriotism, and then we learn that he, I think, committed an act of deeply unpatriotic economic treason by refusing to pay the money -- or trying to refuse to pay the money -- that supports our troops and our cops and our national defense?

MOORE: This is not illegal...

BEGALA: Right. That's true.

MOORE: ... and it was not unpatriotic. How is it unpatriotic to have a foreign subsidiary?

One of the reasons that companies have these foreign subsidiaries is precisely because the corporate tax burden is too high. If we changed the tax system, made it more rational -- I'd like to get rid of the corporate income tax -- we'd have foreigners coming to the United States, and foreign companies coming here, not American companies going abroad.

NOVAK: Dr. McDermott, as a member of the House, you don't hear much eloquence, but they have that in the other body. I'd like you to listen to one of the more eloquent and devoted free marketeers.

Let's listen to Phil Gramm for a little bit.

(BEGIN VIDEO CLIP)

PHIL GRAMM (R), TEXAS: The bottom line is for most of the 220- odd year history of America, we have been the tax haven. And we have had countries -- companies move their domicile from other countries to America, seeking lower taxes and better opportunity. How much better our time would be spent if we were debating ways to make America more competitive rather than trying to build walls around our country to try to keep capital in.

(END VIDEO CLIP)

NOVAK: I can't say it that well. Why -- what's your answer to what -- not answer, but argument by Phil Gramm?

REP. JIM MCDERMOTT (D), WASHINGTON: You're asking me?

NOVAK: Yes, sir, Dr. McDermott. MCDERMOTT: Well, you know, as I listen to the president of the United States, I keep asking myself, this man is saying we're at war, and yet he doesn't mind giving away tax revenue. If people move off shore, like Stanley Works from Connecticut or any one of these other countries -- Accenture.

There's a whole group of companies that are trying to leave to get away from the tax structure. Why should they have the protection of the United States when they refuse to pay taxes here, and the House just passed an amendment that said if they move offshore, they can't come back in and get a federal contract as a part of homeland security. People like Stanley Tools are going to come back in and take taxpayer money to defend the country, supposedly, when they are not willing to pay themselves. That simply is unpatriotic.

NOVAK: These companies still have to pay taxes on the money they earn in this country, and you know that very well, Congressman. But I want you to -- you didn't answer my question. What's -- wouldn't you rather see the United States as a tax haven where people from Europe flee and say, gee, we can get a better break, and that's what we used to be before it became the fourth highest tax rate in the world.

MCDERMOTT: Well, you know, under Mr. Clinton, when we finally got out of debt after 25 years, this was a pretty good place. But since the president has allowed the economy just to go to pieces, we clearly are now seeing a flight of capital and these companies know we are going to have to raise taxes or do something, or else not be able to fund the war.

So they want to get out of here before the damage is done by the Bush financial -- you mentioned Mr. O'Neill. He really is a joke. And what he has done for the economy is very hard to tell.

NOVAK: Stick to the subject.

BEGALA: Stephen, one of the things I admire about you when we debate this subject is your intellectual honesty.

MOORE: Thank you, Paul.

BEGALA: You say we shouldn't tax corporations. I think we should, but that's an honest debate.

MOORE: No, I say we shouldn't double tax them, and we double and triple tax them right now.

BEGALA: We can have that debate, but when the our president's spokesman was asked about it...

MOORE: Right.

BEGALA: ...he pretended -- well, let me read you what he said. he pretended that Bush didn't try to avoid taxes, which is simply a fib.

MOORE: Yes. BEGALA: I like Ari, so I won't use a harsher word. This is what he said, Ari Fleischer, the White House Press Secretary. "There are other factors beyond the tax consequences. It was a project in the Cayman Islands dealing with those liability issues."

Well, the "Wall Street Journal" checked it out and said tax experts say such arrangements, while having some liability implications, also typically have favorable tax consequences...

MOORE: Right.

BEGALA: ...since they let the companies defer paying their U.S. taxes as long as profits are kept overseas. Why is our president, having done this, falsely trying to deny it?

MOORE: Well, I'm not going to defend what Bush did in his business days, but I will say this. For 20 years that I've been in Washington, and I've debated liberals like you who said, "Taxes don't matter. Businesses don't make decisions on the basis of taxes, and individuals don't make decision on the basis of taxes."

And now what you and Jim McDermott are certainly conceding is that taxes do matter and they matter a lot. And this gets back at the point that Phil Gramm was saying, is that if we had a more rational tax system, Paul -- and right now we have a higher corporate tax than France. Socialist France has higher taxes than we do on our corporations.

We've got to do something. I mean, I'd ask Jim McDermott about this. Can't we fix our tax system so that we are competitive with the European countries?

BEGALA: We're going to have to let you leave that question hanging. Congressman McDermott will be able to ponder it, as we take a quick break, and in a minute I'm going to ask our guests if the Republicans who are protecting these tax-dodging corporate Benedict Arnolds are going to feel some heat about it in November?

And later -- would Hillary Rodham Clinton ever consider moving back to the other end of Pennsylvania Avenue?

And our "Quote of the Day" comes from a White House visitor who is not one of W.'s usual yes men. Stay with us.

(COMMERCIAL BREAK)

BEGALA: Welcome back to CROSSFIRE. We are talking about those corporate traitors who live in America, enjoy our freedom, prosper under the protection of tax-payer provided defense and government services, and set up phony subsidiaries overseas to avoid paying their fair share of taxes.

In the CROSSFIRE tonight, Washington Democratic congressman James McDermott joins us from Seattle. And here in Washington Stephen Moore of the Cato Institute and the Club for Growth.

Gentlemen, thanks for staying with us.

NOVAK: Dr. McDermott, you twice have avoided Steve Moore's questions. Wouldn't you like to really improve this system? You've avoided my question. But one thing I've always admired you, as maybe the most left wing member in the whole House of Representatives, you really don't want to have a system where the corporations benefit. You'd rather increase the corporate tax, wouldn't you?

MCDERMOTT: I don't know that we need to raise the corporate tax. We need to collect them. We've given them more tax breaks than you can imagine.

(CROSSTALK)

What's really fascinating about this program is you couldn't even get a Republican to come on and defend this system. You have to go to the Cato Institute to find somebody who can defend it.

BEGALA: We were lucky to get him.

MCDERMOTT: They know it's wrong. Phil Thomas (ph) wouldn't let people testify. He's refused to do anything with this issue. The Republicans are embarrassed by this, and well they ought to be, when they know people are getting the benefit of the United States and they won't pay taxes here. They do everything to get out of paying taxes.

BEGALA: In fact, Stephen, let me play another piece of videotape from another corporate execute now on the corporate payroll who also apparently tried to avoid taxes. His name is Dick Cheney. This is what he said in a debate with Joe Lieberman in the campaign.

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN (D), CONNECTICUT: I think if you asked most people in America today that famous question that Ronald Reagan asked, are you better off today than you were eight years ago, most people would say yes. And I'm pleased to say -- to see, Dick, from the newspapers, that you are better off than you were eight years ago, too.

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: And I can tell you, Joe, that the government had absolutely nothing to do with that.

(END VIDEO CLIP)

BEGALA: Absolutely nothing to do with it. It turns out the government gave his company, Halliburton, $2.3 billion -- with a "B"-- worth of federal government taxpayers' contracts. In exchange for that, he set up 35 different offshore subsidiaries to avoid his paying taxes. Now that is some kind of lack of patriotism, isn't it?

MOORE: Well, the truth of the matter is, Paul, that if you look over the last 10 years, Halliburton paid tens of millions of dollars of taxes, and that's...

BEGALA: Actually, five out of the last six years they paid nothing.

MOORE: That's a lot of taxes to pay. And so did Dick Cheney. Cheney paid millions of dollars taxes. One tax (UNINTELLIGIBLE). How much do you want out of these people, Paul? How much taxes do you want to cut corporate America?

(CROSSTALK)

BEGALA: ...you paid more in taxes five out of the six years Dick Cheney ran Halliburton, and the whole form of Halliburton did...

MOORE: Not more than Dick Cheney did, and the fact is...

NOVAK: Dick Cheney paid more in taxes this year on his income than you will ever pay in your whole life -- than you'll ever earn in your whole life.

MOORE: Well, he's doing pretty well.

BEGALA: I can't cook the books like Cheney. That's why.

NOVAK: I want -- I want to ask you this, Dr. McDermott. Do you really go along with this claptrap of my partner, Mr. Begala, that these people who are trying to lower their tax liability -- I certainly try my hardest to lower my tax liability -- are Benedict Arnolds because they want to pick -- they're traitors? He used the word "traitors." That's the worst thing you can call an American, because they want to reduce their tax liability. You don't go along with that, do you?

MCDERMOTT: At the very time that the Republicans have run us back into deficits, for companies to move offshore to cut their taxes, in my view, is unpatriotic. I think that Stanley Tools or Accenture or Fruit of the Loom or any of those companies that are trying to go away at the time that we are under attack clearly shows they want the benefits of this country, they just don't want to pay for it.

NOVAK: You used the word unpatriotic, Congressman. That's a tough word to use. Were you unpatriotic when you voted against all those defense appropriations?

MCDERMOTT: No, I think we spent the money in the wrong places. We're putting the money up for -- we can get off on that subject if you want. But the point is you -- as a member of Congress, you try to make the right priorities. We have not set the right priorities.

MOORE: Do you think Thomas Jefferson and Thomas Payne were being unpatriotic when they dumped the tea into Boston Harbor because they didn't want to pay excessive taxes?

MCDERMOTT: They were being...

MOORE: This country was founded on people wanting to pay less taxes.

(CROSSTALK) Well, my taxes are a lot higher now than they were back then.

BEGALA: And we're a lot more prosperous now too. Anyway, that's going to have to be the final word. Stephen Moore from the Cato Institute and the Club for Growth, thank you very much.

NOVAK: Thank you very much.

BEGALA: Congressman McDermott, thank you, sir.

NOVAK: Still ahead, the Democratic party suffers an attack of nostalgia.

Later, big league misbehavior at a little league game. Is it really a national problem?

And our "Quote of the Day" is from a king who came to the White House today.

(COMMERCIAL BREAK)

NOVAK: Jordan's King Abdullah had a really tough job to do today. He's come to the White House bearing a message the hawks in the Bush administration would rather not hear. Don't go to war with Iraq, he said. The king of Jordan, a country that borders Iraq, Syria, Israel and Saudi Arabia, arrived in Washington fresh from talks with the leaders of France and Great Britain, our allies.

His assessment of their opinion and international opinion about a possible Desert Storm II, that amounts to our "Quote of the Day." King Abdullah said, quote, "everybody is saying this is a bad idea."

You see, the problem is, it is OK for -- and this is -- I know you hate to talk about anything being bipartisan, Paul, but this is a bipartisan problem with hawks on both the Democratic and the Republican side saying, "let's go to war. Let's get rid of Saddam Hussein. Let's have a change in regime."

But when you get down to the question, are we going to do it alone, are we going to offend all of Islam, are we going to even do it without our very good friend in Great Britain, I think you have a problem.

BEGALA: I think you have a point. I may never say that again on this show, but you're -- our friend, Al Hunt, had a column on this in the "Wall Street Journal" today, where he focused on Joe Biden, the Democratic chairman of the Senate Foreign Relations Committee, who is holding hearings to try to figure out what we ought to do. We need a national debate on this. And it's scary to me that the king of Jordan, who is our ally, is telling us something. Then, I hope our president is listening. We need to have support in the region the way we did when Bush Sr. attacked Iraq.

NOVAK: Maybe we ought to question whether it is the business of the United States to go around the world changing regimes.

BEGALA: I -- it may well be. I mean, he's got to make the case, Bush does. And I don't know that he's really made it yet.

Well, next on CROSSFIRE, the latest on the California teenagers who were kidnapped last night and rescued this afternoon. Connie Chung will join us with all the details in her CNN "News Alert."

Later, New Yorkers love her, the country loves her. But can they persuade her to run for president? No, we're not talking about Connie Chung.

Also, why loyal parents sometimes make dangerous fans. Stay with us.

(COMMERCIAL BREAK)

BEGALA: On CROSSFIRE there's just no question who stole the show at this week's Democratic Leadership Conference meeting in New York.

My pal Hillary Rodham Clinton, the senator from New York, was not only the person everyone wanted to have their picture taken with, she wowed them with a speech blasting the Republicans on everything from economics to welfare.

Hillary says she's not interested in any political office except the one that she's holding right now, the junior senator from New York, but a lot of folks are dreaming.

Joining us now in the CROSSFIRE, former Clinton administration special assistant Lynn Cutler who, by the way, was just inducted into the Iowa Political Hall of Fame; and Terry Jeffrey, the editor of "Human Events."

(CROSSTALK)

NOVAK: Lynn Cutler, Paul talks about people dreaming of Hillary on the ticket. The Democrats I talked to, they consider it a nightmare. And I want to show you -- take a look at the Fox News poll, and this is favorability -- not whether you want her on the ticket, just are you favorable: 44 yes, 44 no.

Surely...

LYNN CUTLER, FMR. CLINTON ADMIN. SPECIAL ASSISTANT: Now look at the date on that, Bob.

NOVAK: Well, it's November 2001.

BEGALA: That's why she's in the Hall of Fame.

NOVAK: But surely, surely you don't believe that the Democratic Party is suicidal enough to want to put Hillary on the ticket as vice president this year, do you?

CUTLER: I think I know how you feel about this. The fact is that there is no way that the senator is going to be looking at the national ticket in 2004. She's made a commitment to serve a full term... NOVAK: Didn't our president make that same commitment?

CUTLER: This is Hillary, and you may have noticed that she does do her own thing.

She is committed to be a good senator. She's being a good senator. She's getting fabulous press, which I'd be happy to share with you at any point in time, and she's doing a wonderful job for her city and state, the city which, of course, underwent such trauma.

NOVAK: Well, I don't know if you read the New York papers, but about her fabulous press, they had a closed-door Democratic meeting the other day and she just wanted -- she didn't like campaign finance reform, which she had talked about and pushed in public. In private she was very upset.

And Senator Russ Feingold, a co-sponsor of the McCain-Feingold bill, a very principled, gentle man, she screamed at him. She said, Russ, live in the real world.

And isn't that the real Hillary Clinton? She's had this fake facade for these last year-and-a-half?

CUTLER: No. No. No.

NOVAK: Well, how did you explain that?

CUTLER: The last thing that Hillary Rodham Clinton is, is fake about anything.

NOVAK: How do you explain...

CUTLER: I've known a lot of political people, as you know, over many, many years -- more than I want to count at this point, and she is probably one of the most genuine caring, kind...

NOVAK: Please answer my question. Why did she yell at Russ Feingold?

CUTLER: Well, I don't accept that she did because it appeared in where, the "New York Post"?

BEGALA: Well, I like a senator that yells once in a while. I've had a lot of senators yell at me.

TERRY JEFFREY, "HUMAN EVENTS" EDITOR: I bet she yelled at Bill a few times too.

BEGALA: Well, you know, I'm old enough to remember when the Democratic Leadership Council actually was the forum that launched Bill Clinton's presidential candidacy in a meeting in Cleveland in 1991 where he wowed the crowd.

And it really is deja vu all over again. I want to read you just a brief excerpt from Hillary's speech. I can't pull it off like -- I'm not beautiful and brilliant like she is. Let me just read you the rhetoric, and it will strike fear into your heart.

"Some have called the Clinton economic record a binge," she said. "Young people able to afford college, and they call that a binge? Millions climbing out of welfare and into new jobs, and that's some kind of a binge? I'm reminded of what Abraham Lincoln said when his commanders complained about Ulysses S. Grant's binges. `Find out,' he said, `what kind of whiskey Grant drinks because I want to send a barrel to each of my generals.'"

That's the kind of stuff that can win a presidential election. That's why you guys are attacking her, right?

JEFFREY: Well, look Paul, I'll grant you this: In 1992 you guys had a brilliant strategy with Bill Clinton. You portrayed him as a more moderate Democrat, even a conservative Democrat. He saying he was going to cut taxes for the middle class, end welfare reform as we knew it. He said he wanted abortion to be safe, legal and rare. He dissed Jesse Jackson.

We now what we got from Bill Clinton: the biggest tax increase in history. He wouldn't sign welfare reform until he vetoed it twice.

Hillary Clinton is no moderate, but she doesn't have one advantage Bill Clinton had. Bill Clinton came out of the hinterlands of Arkansas, he didn't have a national record.

Hillary's already got a long national record. She's going to serve in the Senate from New York. She'll be one of the most left- wing members of Congress for the next six years until, I predict, she is the Democratic nominee in 2008 and goes down in flames.

BEGALA: Why do you suppose, though -- I have the burden of knowing her personally and professionally for more than a decade. She's actually, certainly, personally a conservative person in many ways. She was a Goldwater gal growing up in suburban Chicago.

And, for example, she has said good things about Bush's welfare bill, which many on the left hate.

How do you reconcile the real Hillary with the rhetoric you...

JEFFREY: Well, the fact of the matter is you still have 66 percent of the people on welfare not working. I'm not sure...

BEGALA: She's supporting Bush's reform, though. This doesn't make her a liberal.

JEFFREY: She didn't vote for George Bush's tax cut, did she.

BEGALA: No, thank God, it would've bankrupted the country.

(CROSSTALK)

BEGALA: Thank God she's got a brain, you know, she's smart.

JEFFREY: You're saying Hillary Clinton is not a liberal. Is she for partial-birth abortion?

(CROSSTALK)

CUTLER: You know what, you are part of the hate Hillary crowd. This has been a cottage industry in the...

NOVAK: How about "dislike Hillary."

CUTLER: No, no, no.

(CROSSTALK)

CUTLER: No, I fought this on the other side for many years.

JEFFREY: I hate what Hillary Clinton stands for.

(CROSSTALK)

JEFFREY: How can you say...

(CROSSTALK)

NOVAK: Hang on, we're going to toss to Wolf Blitzer, who has a breaking story, please.

(INTERRUPTED BY CNN COVERAGE OF A LIVE EVENT)

NOVAK: We're talking -- welcome back -- we're talking about somebody people love to love and love to hate, Hillary Rodham Clinton. We're talking about her with Lynn Cutler, one of the big powers of the Democratic Party for a long time; and Terry Jeffrey, the editor of "Human Events" -- Paul.

BEGALA: Mr. Jeffrey, let me quote to you from a newspaper every bit as conservative as "Human Events," so right-wing it is it carries Novak's column, the "New York Post," in Hillary's hometown of New York City.

TERRY JEFFREY, EDITOR, "HUMAN EVENTS": Great paper. Great paper.

BEGALA: Here's what they wrote about a great senator. They said: "Hillary's work ethic and understanding of her job have earned her praise from many quarters and both sides of the aisle. And it is her efforts in securing aid to rebuild New York that have left a strong and lasting impression among her colleagues." Even the right- wing, ultra right-wing "New York Post" says she's doing a great job.

JEFFREY: Listen, I would not denigrate Hillary's Clinton intellect at her skills as a politician or desire to bring pork barrel home to the state of New York. But I do recognize Hillary Clinton for what she is. She's a hard-core McGovernite liberal in the left wing of the Democratic Party. She's not a moderate. And if Hillary Clinton is as honest as you say she is, Lynn, she'll admit that she's a hard-core liberal and not a moderate.

CUTLER: It's the same old rhetoric. I mean, we're still using McGovern, for God's sake. This is the year 2002...

NOVAK: (UNINTELLIGIBLE).

CUTLER: ... who is now doing incredible work feeding hungry people all over the world.

BEGALA: And who was a heroic bomber pilot in the second World War, a great American patriot, by the way.

JEFFREY: And a hard-core liberal too, too liberal for him to be president of the United States. In a loss, a sweeping landslide to...

(CROSSTALK)

NOVAK: Lynn Cutler, I am not easily shocked. But I was genuinely shocked to learn that the Clintons, Hillary and Bill, want the American taxpayers to pick up some of their legal fees. And just to show you, of course, the Clintons what they say one year is not the same as what they say the next year. Let's listen to what, Bill Clinton, President Bill Clinton, told Larry King on December 23, 1999, about the government and the taxpayer.

(BEGIN VIDEO CLIP)

WILLIAM J. CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I may be entitled to it, but my instinct is not to do it. But I've really never had a discussion about it. My instinct is not to do it. You know, I've been very fortunate. I've had this legal defense fund. People have helped me pay for my legal fees.

(END VIDEO CLIP)

NOVAK: Now why, since they are making millions of dollars, they make more money in one year than is left in their legal fees, which was paid for by somebody else, why do they want the government to pick it up?

CUTLER: Let's be clear what it's for. It's for the Whitewater investigation alone. Now, the federal government spent over $40 million on a witch-hunt that produced absolutely nothing in terms of the Clintons. Nothing. And they got it like a dog with a bone and wouldn't let go, all those months and all those years. Those are the fees that they are requesting reimbursement for and they are entitled to them.

NOVAK: Now, wait a minute. The Clintons this year, between them, made $12 million. Their legal fees remaining are about, of course, the defense fund has paid most of them, are less than $2 million. And I am no lawyer. I can tell you a lawyer who has not gotten a cent from them yet. It is a scam, isn't it?

CUTLER: I don't think so at all, Bob.

NOVAK: Why didn't they pay their lawyer then?

CUTLER: Well, I'm telling you that it's this Whitewater business is all that they are seeking compensation for. They are entitled to it like any other citizen of the United States and so many other people who have far less money who got caught in all of that scandal mongering for 10 years.

BEGALA: Ronald Reagan, by the way, was entitled to his legal expenses reimbursed. He made a lot of money straight out of the Oval Office as well before he became so tragically ill. He made $2 million in one speech in Japan. And he had $500,000 that you and I paid in his legal expenses because Judge Walsh in the Iran/Contra affair investigated Reagan and did not charge him with anything. This is the same statute...

NOVAK: But Clinton was charged. Paul...

(CROSSTALK)

BEGALA: In Ronald Reagan's -- just so you know, in Ronald Reagan's administration, 31 high-ranking officials were found guilty of criminality. In Clinton's whole government, one. He was the chief of staff at the Department of Agriculture.

JEFFREY: First of all, first of all, I remember in the Whitewater investigation, I bet everybody watching this episode of CROSSFIRE remembers that one of the key witnesses refused to answer questions in a grand jury was so adamant about it that she went...

BEGALA: Was he cleared or not? I mean, come on.

JEFFREY: ... to jail instead of answering basic questions about Bill Clinton's behavior under oath in the grand jury.

BEGALA: Was it wrong for Ronald Reagan to claim his rights under that statute?

JEFFREY: Earlier in this program, you said it was treasonist and unpatriotic for corporations to move overseas to avoid paying American taxes.

BEGALA: Yes.

JEFFREY: Now, it is equally equivalent for the Clintons, who are multi-millionaires...

BEGALA: Or the Reagans.

JEFFREY: ... the book (ph) deals they got because of their malfeasance...

BEGALA: Or the Reagans. No...

JEFFREY: ... in office to make average American taxpayers, people pumping gas, school teachers, pay taxes to pay their $500 an hour lawyer fees to K Street lawyers.

BEGALA: It's the law, Mr. Jeffrey.

JEFFREY: That's patriotism, Paul...

BEGALA: Bill Clinton and Ronald...

JEFFREY: Well, that's a bad law. Will you join with me in asking Congress to change the law?

BEGALA: No. They should expand it. Every one of these right- wing crazy prosecutors who ruin somebody's life...

JEFFREY: You think...

BEGALA: ... ought to know that the taxpayers are going to at least protect them. No, Ronald Reagan and Bill Clinton should get the same treatment.

CUTLER: We had this epidemic of going after everybody in our administration. For eight years, all we did was...

(CROSSTALK)

JEFFREY: Why did they not cooperate with the investigation? Why did their best friends and witnesses go to court for contempt of court in refusing...

CUTLER: I think that Susan McDougal, about whom you are speaking...

JEFFREY: She refused to answer questions...

CUTLER: ...was attempting to protect her ex-husband.

NOVAK: We're almost out of time. But I just -- I talk to a lot of Democrats and most of them say, boy, we hope Hillary stays in New York for the future, forever. Isn't that what you hear from Democrats?

CUTLER: No. And, you know, I probably talk to more Democrats than you do, with all due respect.

NOVAK: Maybe you don't talk to the right kind of Democrats.

(LAUGHTER)

CUTLER: Well, that's another whole show to discuss who is the right kind of Democrat. Hillary is a hero in our party, with good reason.

NOVAK: Well, you are a heroine for me. Thank you...

(CROSSTALK)

...Cutler.

CUTLER: Thank you, Bob.

(CROSSTALK) NOVAK: ...Jeffrey.

(CROSSTALK)

Next, with all of the saber rattling over Iraq, we've gotten an e-mail from a worried Canadian viewer who is watching the skies.

(COMMERCIAL BREAK)

NOVAK: Because of all of the breaking news, we won't be able to do our "Baseball Bad Parents" tonight. Hope to do it later, but right now we'll do "Fireback," when the viewers "Fireback" at us. Our first e-mail is from Corey Badeauz of Chalmette, Louisiana, who says, "Dear Bob, you are the only real man on the program."

Boy, I sure hope you are a woman.

BEGALA: It's kind of a gender non-specific name.

NOVAK: Yes.

BEGALA: But he is a real man, I'll give you that.

Craig in Calgary writes, "Can a man who sits on a company's board of directors and is completely unaware of how they invest or hide their money really run the most powerful nation on earth? I sure hope that when it comes to bomb Iraq, Bush doesn't unknowingly hit Canada."

Good point, Craig. Well, we know he won't hit Bermuda, because that's where all his friends' tax money is.

NOVAK: If you really think a board of directors know what's going on in companies, you don't how that system works. Our next one is from Jerry Wright on Inwood, New York, who says, "The Bush Administration went after Arthur Andersen, Aldelphia, and WorldCom, but what happened to Enron? Is it possible that the many former Enron officials who run the government will not let anything happen to Kennyboy and the rest of their friends?"

Well, Jerry, being from New York, you are on the talking points circuit from Paul Begala and his ilk. I'll tell you what I told him when this program started an hour ago. There's a task force on Enron. They haven't even begun to finish dealing with that corrupt company.

BEGALA: And we still haven't even begun to learn the extent of Bush's contacts with that corrupt company, but we will. Carle in Ann Arbor wrote about our debate -- discussion last night, really, of what James Traficant can expect in prison. Carle writes, "I can't believe that's a toupee on top of Traficant's head. You mean somebody made that on purpose? Can I get a group Oy here?"

Well, I don't know. Group?

AUDIENCE: Oy!

BEGALA: All right. You got your Oy, Carle. NOVAK: Question from the audience, please.

TRAVIS: Hi, I'm Travis from Austin, Texas. Now Paul...

BEGALA: Now Travis...

TRAVIS: ...everybody knows powermonger Hillary's presidential run began when she ran -- when she married Bill. Regardless, she won't run for president in 2004 against Bush. She's too clever. She'll run and lose in 2008.

BEGALA: Well, Travis certainly got all the answers. I love Travis. He's a great hero of the Alamo, but he had a little more (UNINTELLIGIBLE) footware than those flip-flops.

NOVAK: Go ahead, (UNINTELLIGIBLE) respond.

BEGALA: She will not run in 2004 because she gave her word, and she gave her word and she kept her word, unlike our current president, who gave his word he would not sell this stock in Harken Energy and then sold it anyway two months later, so...

NOVAK: Oh, please.

BEGALA: ...we can count on Hillary to keep her word.

NOVAK: Next question, please.

ED: Mr. Begala, Ed Shampton (ph), Santa Barbara, California. Why can't the liberals understand that lower taxes mean higher revenue? Isn't it unfair for -- isn't it unpatriotic for lawmakers to have upheld the unfair tax system at the expense of American people?

NOVAK: Yay!

BEGALA: Under Bill Clinton we raised taxes on the rich and revenues went up. We balanced the budget, paid off the debt, and created the greatest economic boom in history. Why can't conservatives understand that that worked and what Bush is trying has crashed us back into a recession?

NOVAK: All right. He gave you the Democratic boilerplate. I'll give you the conservative doctrine is that the lower the taxes the better we are off. When we get rid of the federal income tax system and the internal revenue system, then you'll really see this economy purr.

BEGALA: Ha! Well, I'll believe it when I see it. From the left, I'm Paul Begala. Good night for CROSSFIRE.

NOVAK: And from the right, I'm Robert Novak. Join us again next time from another edition of CROSSFIRE.

"CONNIE CHUNG TONIGHT" begins immediately after a CNN "News Alert."

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