President in Review -- 12 April 2001

>> Gary Walker: JUST AHEAD ON "NEED TO KNOW," HE TOOK OFFICE 83 DAYS AGO AND GEORGE W. BUSH HAS BEEN A BUSY MAN EVER SINCE, FROM HIS NATIONAL BUDGET PROPOSAL TO HANDLING AN INTERNATIONAL INCIDENT WITH CHINA. WE LOOK AT PRESIDENT BUSH'S FIRST DAYS IN OFFICE WITH POLITICAL ANALYST CURT SMITH AND POLITICAL REPORTER MICHAEL CAPUTO OF "THE DEMOCRAT AND CHRONICLE." THAT'S ALL COMING UP NEXT ON "NEED TO KNOW."

>> IT'S A BUDGET THAT PROTECTS TAXPAYERS, PROTECTS CHILDREN, PROTECTS OUR SURPLUS.

>> THIS IS "NEED TO KNOW," THE ROCHESTER AREA'S ONLY IN-DEPTH NEWS PROGRAM. "NEED TO KNOW" IS A PRODUCTION OF WXXI NEWS AND PUBLIC AFFAIRS, COVERING ISSUES, POLITICS, EDUCATION AND CURRENT EVENTS.

>> "NEED TO KNOW" IS MADE POSSIBLE BY THE DAISY MARQUIS JONES FOUNDATION, BY DORSCHEL LEXUS, AND THROUGH THE SUPPORT OF VIEWERS LIKE YOU.

>> Gary Walker: THANK YOU FOR JOINING US. IT'S A TIME-HONORED TRADITION IN THIS COUNTRY THAT FOLKS LIKE US TAKE A LOOK AT THE NEW PRESIDENT'S FIRST 100 DAYS IN OFFICE. WELL, WE'RE A BIT EARLY, BUT SOMEBODY HAS GOT TO BE FIRST. PRESIDENT BUSH WAS SWORN IN AS THE 43rd PRESIDENT OF THE UNITED STATES ON JANUARY 20th. AS RECENTLY AS THIS WEEK, THE PRESIDENT CONTINUED TO PUSH FORWARD THIS FIRST MAJOR LEGISLATIVE ACT OF HIS PRESIDENCY. Mr. BUSH SENT THE FULL DETAILS OF HIS $1.96 TRILLION BUDGET TO CONGRESS, PROMISING TO RESTRAIN WHAT HE CALLS EXCESSIVE GROWTH IN GOVERNMENT SPENDING. HIS PLANNED BUDGET CUTS MAKE ROOM FOR A $1.7 TRILLION TAX CUT OVER THE NEXT TEN YEARS. THE PRESIDENT HAS ALSO KEPT A KEEN EYE ON THE DEVELOPMENTS INVOLVING CHINA AND THE 24 U.S. SERVICE PEOPLE STILL BEING DETAINED ON HAINAN ISLAND FOLLOWING A MIDAIR COLLISION NEARLY TWO WEEKS AGO. WHILE THE PRESIDENT HAS HAD HIS FOCUS ON THE BUDGET PROPOSAL AND CHINA, HE'S ALSO HAD SOME CONCERNS WITH HIS IMAGE AS WELL. AFTEREFFECTS OF ELECTION 2000 LINGER. ON THE PLUS SIDE, A RECENT "NEW YORK TIMES"/CBS NEWS POLL SHOWED 60% OF THE AMERICAN PUBLIC APPROVING OF THE JOB HE'S DOING. HOWEVER, ONLY HALF OF THE AMERICANS SURVEYED NOW ACCEPT BUSH AS A LEGITIMATE PRESIDENT, AND THREE-QUARTERS OF BLACK AMERICANS DO NOT. FURTHER, AMERICANS QUESTION WHO'S REALLY IN CHARGE. HALF OF THE PUBLIC SURVEYED SAID Mr. BUSH IS NOT REALLY IN CHARGE OF HIS OWN ADMINISTRATION. BUSH HAS RECEIVED A LUKEWARM RESPONSE TO HIS FIRST MAJOR LEGISLATIVE ACT, WITH REPORTS THAT MOST AMERICANS VIEW HIS PROPOSED $1.7 BILLION TAX CUT AS FAVORING THE RICH AND DOING LITTLE TO HELP MIDDLE-INCOME AMERICANS OR TO STIMULATE THE ECONOMY. JOINING ME NOW TO DISCUSS THE FIRST DAYS OF THE BUSH PRESIDENCY ARE CURT SMITH, A SENIOR LECTURER IN ENGLISH AT THE UNIVERSITY OF ROCHESTER. HE'S HOST OF "PERFECTLY CLEAR," A WEEKLY POLITICAL ROUND TABLE, AND CURT WAS A SPEECH WRITER IN THE GEORGE BUSH, Sr. WHITE HOUSE. AND MICHAEL CAPUTO, POLITICAL REPORTER FOR "THE DEMOCRAT AND CHRONICLE." THANK YOU BOTH FOR JOINING ME. AS WE MENTIONED EARLIER, PRESIDENT BUSH SENT HIS PROPOSED BUDGET TO CONGRESS THIS WEEK. AT A RECENT PRESS CONFERENCE, Mr. BUSH SAID HIS PLAN WORKS HARD FOR EVERYONE.

>> IT'S A BUDGET THAT SETS PRIORITIES. IT'S A BUDGET THAT RECOGNIZES THERE ARE SOME GOOD PROGRAMS HERE IN WASHINGTON THAT NEED TO BE FUNDED: CHILD CARE, WE HELP CHILDREN WHOSE PARENTS ARE IN PRISON WITH A $67 MILLION MENTORING PROGRAM. IT ELIMINATES THOUSANDS OF ONETIME EARMARKED PROJECTS.

>> Gary Walker: OKAY. THAT WAS PRESIDENT BUSH TALKING A LITTLE BIT ABOUT HIS PROPOSED BUDGET, AND WE'RE GOING TO TAKE TWO TRACKS HERE, GENTLEMEN, AND ACTUALLY WE ARE GOING TO TALK ABOUT THE POLITICAL RAMIFICATIONS OF EVERYTHING THAT'S COME IN THE FIRST 100 DAYS OR SO OF THE BUSH ADMINISTRATION BUT ALSO THE POLICY EFFECTS THAT ARE GOING TO BE AFFECTING REAL-LIFE AMERICANS. BUT LET'S GET STARTED BY JUST PUTTING IT OUT THERE, AS POLITICAL ANALYSTS WE ALL LIKE TO DO: THE FIRST 100 DAYS OR SO OF THE BUSH ADMINISTRATION, WHAT DO YOU THINK? CURT -- WELL, WE'LL GO TO MIKE INSTEAD OF CURT --

>> ALPHABETICALLY.

>> THERE YOU GO. IT CERTAINLY WASN'T LIKE THE FIRST 100 DAYS OF BILL CLINTON, WHO STRUGGLED WITH WESTGATE IN THE MILITARY, STRUGGLED WITH THE NANNYGATE, GOT OFF -- HE FLOPPED THE FIRST TWO STEPS OR THREE STEPS OF THAT ADMINISTRATION. I THINK GEORGE BUSH HAS SHOWN THAT HE CAN REMAIN FOCUSED EVEN IF THINGS SWIRL ABOUT HIM. HE KEPT ON THE TAX CUT FOR THE FIRST MONTH, AND I THINK HE'S SHOWN A BETTER FOCUS THAN I THINK BILL CLINTON DID IN HIS FIRST 100 DAYS, IF YOU WANT TO CONTRAST.

>> YOU KNOW, IT'S JUST THAT WE HAVE TALKED ABOUT 100 DAYS EVER SINCE FRANKLIN ROOSEVELT WHO, OF COURSE, LIKE A BLITZKRIEG IN EFFECT CASCADED WASHINGTON IN THE NADIR OF THE DEPRESSION IN 1933, SO I GUESS WE'LL BE FORGIVEN IF WE'RE 17 DAYS AHEAD. WE DON'T WANT TO PEEK TOO SOON, BUT WE'LL DO WHAT WE CAN. GEORGE W. BUSH HAS SHOWN WHAT TOO OFTEN DOMESTICALLY HIS DAD DID NOT, AND THAT IS WHAT HIS FATHER CALLED TONGUE-IN-CHEEK "THAT VISION THING."

>> Gary Walker: THE VISION THING.

>> YES. THE PRESIDENT CAMPAIGNED IN ESSENCE ON A TAX CUT AND HE UNDERSTANDS IT'S ONE OF THE VERY FEW ISSUES REMAINING WHICH GALVANIZES AND UNITES THE REPUBLICAN PARTY AND ALSO HAS AN APPEAL TO REAGAN DEMOCRATS. I THINK WHAT'S INTERESTING IS THAT YOU TALK ABOUT THE ELECTION AND, OF COURSE, AS WE ALL KNOW, DEMOCRATS HAVE FINALLY, I WOULD HOPE -- ACCORDING TO THE "USA TODAY"/"MIAMI HERALD" SURVEY OF LAST WEEK, GEORGE W. BUSH, FOR ABOUT THE 18th STRAIGHT TIME NOW, HAS TRULY WON FLORIDA, SO ANYONE WHO SUGGESTS HE'S NOT LEGITIMATE I THINK IS EXTREMELY PARTISAN.

>> Gary Walker: I THOUGHT THAT WAS INTERESTING THAT AT LEAST HALF OF THE PEOPLE --

>> WELL, SOME PEOPLE --

>> I HAVE SEEN POLLS THAT SHOW 6-IN-10, MORE THAN 6-IN-10 ACCEPT BUSH AS LEGITIMATE. BUT WHAT'S FASCINATING IS THE 60% GALLUP POLL APPROVAL RATING. ZOGBY HAS HIM AT 61 AND NBC/"WALL STREET JOURNAL" AT 62. SO THEY'RE VERY MUCH COMMENSURATE. BUT WHAT'S FASCINATING, BUSH GOT LESS THAN 49% OF THE VOTE, AND HERE HE IS AT 60%. SO HE'S DONE SOMETHING RIGHT. HE'S ALSO DONE SOMETHING RIGHT IN TERMS OF FOCUSING LASER LIGHT ON THE TAX CUTS. BUSH UNDERSTOOD EVEN DURING THE CAMPAIGN THAT POLLS SHOWED THAT AMERICANS WERE NOT GUNG-HO ABOUT A TAX CUT, ALTHOUGH I CAN GUARANTEE YOU THAT I AND YOU AND OUR LISTENERS WILL ACCEPT IT WHEN IT COMES. BUT WHAT HE HAS DONE IS TAKEN AN ISSUE THAT WAS VERY LOW IN TERMS OF POLLING DATA REGARDING AMERICA'S COGENCY AND APPROVAL LAST YEAR, AND THAT IS REDUCTION IN TAXES, AND HE'S GOING TO GET 90% OF WHAT HE WANTS. HE WANTED $1.6 TRILLION. THE HOUSE HAS APPROVED EVERY PENNY. THE SENATE HAS APPROVED $1.275 TRILLION. WE'RE GOING TO PROBABLY COME IN AT 1.4, 1.45. THAT'S 90% OF WHAT HE DID. HE HAS TRANSFORMED THE POLITICAL AGENDA. HE'S ALSO PUT DEMOCRATS, THOSE DEMOCRATS PARTICULARLY FROM CONSERVATIVE LEADING STATES THAT VOTED FOR BUSH BUT VOTED AGAINST A TAX CUT, YOU'RE GOING TO HEAR NEXT YEAR, "WHY DID YOU FOLLOW TOM DASCHLE INSTEAD OF THE WISHES OF YOUR CONSTITUENTS?"

>> Gary Walker: AND YOU CAN ALSO SAY THAT ABOUT REPUBLICAN SENATORS AS WELL WHO ACTUALLY --

>> SOME TURNED ON THEIR OWN PRESIDENT AND THEY'RE NOT GOING TO BE OF VALUE --

>> Gary Walker: BUT THAT IS AN INTERESTING WAY TO PUT IT, THOUGH, CURT, AND I WANT TO KNOW, THE POLITICAL RAMIFICATIONS RIGHT OFF THE BAT, I MEAN YOU'RE COMING WITH A 50/50 SENATE AND PARTY -- YOU KNOW, KEEPING THE PARTY DISCIPLINED. THERE'S TWO WAYS TO LOOK AT IT. ON THE ONE HAND, IS IT A POLITICAL EMBARRASSMENT THAT THE REPUBLICANS SO SOON ABANDONED THE PRESIDENT ON HIS FIRST MAJOR LEGITIMATE LEGISLATIVE EFFORT? ON THE OTHER HAND, AS JOE CITIZEN, AS A CITIZEN OF THIS COUNTRY, WOULDN'T YOU WANT TO HAVE THE U.S. SENATE STAND ON ITS OWN AND NOT JUST BE RUBBER-STAMPING THE ADMINISTRATION?

>> WE'VE DEVELOPED POWER BROKERS. I MEAN THESE PEOPLE IN THE CENTER, JOHN BREAUX ON THE DEMOCRATIC SIDE, THEY HAVE CREATED A POWER BROKER IN THE SENATE AND THE SENATE IS ALWAYS GOING TO BE, FOR THE NEXT FEW YEARS, THE PLACE TO WATCH. THIS IS GOING TO BE -- I THINK IT'S A PROBLEM. IT'S NOT SLAM-DUNK, BY THE WAY, THAT IT'S 90%, THAT TAX CUT. I THINK YOU'RE MAKING A PREDICTION HERE, WHICH IS GREAT; WE'RE SUPPOSED TO BE DOING THAT ON A SHOW --

>> EVEN IF HE DIDN'T GET ANOTHER PENNY OF THE 80% --

>> BUT IT'S NOT SAID AND DONE BY A LONG SHOT, AND I THINK ALSO THE DEMOCRATS ARE GOING TO TURN THIS BY SAYING, "HEY, LET'S DO IT UP FRONT. LET'S GET IT TO THEM RIGHT AWAY."

>> AND THAT'S WHERE RESPONSIBILITY COMES --

>> WELL, WHAT THEY WANT AND OF COURSE IT'S TYPICAL OF THE PARTY LAST YEAR. FIRST THE DEMOCRATS DIDN'T WANT ANY TAX CUTS; THEN THEY WANTED TARGETED TAX CUTS; THEN THEY WANTED A TAX CUT BUT ONLY WE GET TO CHOOSE WHO WINS; THEN THEY WANTED $500 BILLION; THEN THEY WANTED $700 BILLION. BUSH DRAGGED THEM ALONG LIKE PUPPY DOGS ON A LEASH. YOU KNOW, WHEN YOU'RE TALKING ABOUT LINCOLN CHAFEE AND JIM JEFFORDS AND ARLEN SPECTER, I WOULD TRADE THEM IN A SECOND IF I COULD GET SOME REAL REPUBLICAN SENATORS FROM STATES LIKE NORTH AND SOUTH DAKOTA AND GEORGIA, ALL OF WHOM -- IN FACT, MAX CLELAND, FOR EXAMPLE, IN GEORGIA, HE'S THE ONLY ONE TO STICK WITH BUSH. ALL THESE PEOPLE CHOSE TOM DASCHLE OVER THEIR OWN CONSTITUENTS. AND THAT'S A MESSAGE I GUARANTEE YOU THAT'S GOING TO RESOUND. YOU CAN TAKE CHAFEE AND YOU CAN TAKE JEFFORDS AND LET THEM BECOME DEMOCRATS. MY POINT IS WE'RE TALKING ABOUT THE NORTHEAST, BY FAR THE MOST ANTI-MIDDLE CLASS, ANTI-POPULIST, ANTI-RELIGION, PATRICIAN AND LEFT-LEANING SECTION OF THE COUNTRY. THAT DOESN'T SURPRISE ME. IT'S APPALLING BUT IT DOESN'T SURPRISE ME.

>> BUT THE TAX CUT HAS NOT TAKEN OFF BECAUSE THE BUDGET WASN'T INTRODUCED. THE BUDGET IS HERE NOW. NOW THE HARD WORK BEGINS IN CALCULATING HOW MUCH WE CAN SPEND ON IT.

>> SO THE FIGHT HASN'T BEEN FOUGHT REALLY YET. >> Gary Walker: YOU WERE MENTIONING, OF COURSE, IN YOUR VERY TEPID OPINION ABOUT THE U.S. SENATORS -- (Laughter)

>> THE REPUBLICANS' FIRST BASIC FAULT, THEY COULD NOT EVEN BRING THEMSELVES TO SUPPORT A VERY RESPONSIBLE TAX CUT PROPOSAL. JIM JEFFORDS, FOR EXAMPLE -- WE'RE TALKING ABOUT REPUBLICAN SENATORS NOW. WE'VE GOT A RATE OF INFLATION OF 4%. THESE PEOPLE CANNOT EVEN BE SATISFIED WITH A RATE OF -- (Talking simultaneously) -- THEY WANT TO RAISE SPENDING 8 TO 10 TO 12%.

>> BRING DOWN THE DEBT.

>> THESE PEOPLE ARE HOPELESS -- WHEN IT COMES TO SPENDING.

>> Gary Walker: BUT MY QUESTION IS, THOUGH, AS A CITIZEN, DON'T YOU TAKE SOME HEART IN THE FACT THAT THE U.S. SENATE DOES HAVE A MIND OF ITS OWN, CAN GOVERN, CAN WORK TOGETHER WITH DEMOCRATS AND REPUBLICANS ALIKE AND NOT NECESSARILY A RUBBER STAMP OF WHOEVER IS IN POWER? ISN'T THAT A GOOD THING?

>> I THINK THAT -- IN FACT EDMUND BURKE ONCE SAID IT BEST WHEN HE SAID, IN ESSENCE, AND I PARAPHRASE, IT BETRAYS HIS CONSTITUENTS IF HE LISTENS ONLY TO THEIR OPINION. HE OWES THEM HIS INDUSTRY BUT ALSO HIS CONSCIENCE AS WELL. AND IT'S FINE, I SUPPOSE, IF YOU COME FROM THE PEOPLE'S REPUBLIC OF VERMONT AND VOTE AS JEFFORDS DID AND IN FACT VOTE FOR A SPENDING INCREASE AND DON'T WISH TO GIVE MONEY BACK TO THE PEOPLE; THAT'S FINE. HE MAY BE IN GREAT SHAPE NEXT TIME HE RUNS. BUT I'LL TELL YOU WHO'S NOT IS MAX CLELAND, AND IT'S THE TWO DEMOCRATIC REPUBLICAN -- DEMOCRATIC SENATORS RIGHT NOW FROM SOUTH DAKOTA AND IT'S BEN NELSON FROM NEBRASKA. BEN NELSON IS FROM A STATE BUSH WON BY 29%. HE'S GOING TO PAY A PRICE.

>> HOW COULD THE BUSH ADMINISTRATION NOT HAVE SEEN WHAT'S COMING? HOW COME THEY WEREN'T WORKING --

>> THEY ARE GOING TO GET TO 85 AND 90% -- THEY WILL GET 90%. THAT'S AN ENORMOUS VICTORY.

>> THE FIRST TEST WAS TO BRING THOSE 50 TOGETHER SO THAT THEY COULD TIEBREAK THE VOTE, AND THEY DID NOT PASS THAT.

>> WELL, WAIT A MINUTE. YOU'RE SAYING -- LET'S SAY BUSH GETS, EVEN BY YOUR ESTIMATE, 85% OF WHAT HE WANTED, 90%. YOU'RE SAYING THAT THE 10% HE DIDN'T GET IS A VICTORY TO DEMOCRATS RATHER THAN THE 90% HE DOES GET IS A VICTORY TO BUSH?

>> I'M SAYING --

>> Gary Walker: WHY DOES EVERYTHING HAVE TO BE A VICTORY FOR DEMOCRATS OR A VICTORY FOR REPUBLICANS? WHAT IF -- JUST LET ME TAKE A WILD SHOT HERE. WHAT IF IT'S A BETTER PLAN FOR THE PEOPLE IF THEY DO WORK TOGETHER AND NEGOTIATE THIS THING? (Talking simultaneously) WHY DOES IT HAVE TO BE -- (Talking simultaneously)

>> -- RONALD REAGAN SECURED FROM THE SENATE AND THE HOUSE OF REPRESENTATIVES IN 1981. THIS IS A VERY MINUTE TAX PLAN. INCIDENTALLY, WE WERE TALKING EARLIER ABOUT THE $300. THAT'S A QUICK GIMMICK; THAT'S SOMETHING THAT THE DEMOCRATS CAN GIVE TO THEIR BASE SO THEY CAN SPEND IT. THERE'S NOTHING IN THAT THAT WOULD EVEN SPUR THE KIND OF INVESTMENT THAT'S THE REAL KEY TO ECONOMIC GROWTH, NOTHING.

>> YOU'RE RIGHT. WE'RE TALKING ABOUT STRATEGY, I SUPPOSE, AND I THINK THE PERSON, THE VOTER, SHOULD LOOK AT THIS PERHAPS AND SAY, "WELL, WE'VE GOT SOME FREE THINKERS." PERHAPS THEY SHOULD LOOK AT IT THAT WAY. MY QUESTION IS, THOUGH, THAT GEORGE W. BUSH -- THERE'S NO DOUBT THAT HE KNEW WHERE HE WAS GOING TO BE WEAK IN THE REPUBLICAN PARTY. WHY WASN'T HE SHORING THAT UP FAR EARLIER --

>> WELL, WHAT SHOULD HE HAVE DONE? I MEAN HE NEGOTIATED WITH JEFFORDS. JEFFORDS WANTED -- BUSH FINALLY SAID, "THIS IS NOT WORTH IT. I WOULD RATHER LOSE THIS THAN BANKROLL THE FEDERAL GOVERNMENT BY AGREEING TO WHAT JEFFORDS WANTED, AND THAT IS SOME DISABLED LEGISLATION THAT WOULD HAVE COST $200 BILLION A YEAR." THAT'S INCALCULABLE. THAT'S THE KIND OF BLACKMAIL THAT NO PRESIDENT CAN --

>> Gary Walker: I SUPPOSE FROM A STRATEGY POINT OF VIEW, THOUGH, YOU WOULD WANT TO KNOW WHERE YOUR VOTES ARE SO YOU DON'T EMBARRASS MEMBERS OF YOUR OWN PARTY IF YOU HAVE A LEGITIMATE DISCUSSION.

>> I DON'T THINK, YOU KNOW -- BASICALLY THIS IS THE WAY BUSH GOVERNED AS GOVERNOR OF TEXAS, AND THAT IS YOU BEGIN BY SAYING, "THIS IS WHAT I EXPECT; THIS IS WHAT I WOULD LIKE TO GET," MAYBE KNOWING IN YOUR OWN MIND YOU'RE NOT GOING TO GET IT; IT'S THE FAR, IN EFFECT, REMOTE EXTREMITY OF WHAT YOU CAN GET, AND THEN YOU NEGOTIATE FROM THERE.

>> Gary Walker: CURT, A POLICY QUESTION FOR YOU ABOUT -- I MEAN THERE'S CONSERVATIVE AND THEN THERE'S CONSERVATIVE -- ABOUT WHAT TO DO WITH THESE PROJECTED SURPLUSES, UNREALIZED AS THEY ARE, BUT THERE'S A LARGE GROUP OF PEOPLE SAYING, YOU KNOW, WE SPEND 13% OF A $1.9 TRILLION BUDGET ON INTEREST PAYMENTS, ON DEBT. WHY NOT, INSTEAD OF GIVING $1.7 TRILLION IN TAX -- WHY DON'T WE PAY DOWN THE DEBT? YOU DO THAT AT HOME.

>> HOW DO YOU DO THAT IF YOU OWE MONEY TO A BANK? YOU CUT SPENDING. ANY AMERICAN FAMILY KNOWS THAT. THIS CONGRESS REFUSES. GEORGE W. BUSH HAS BEEN EXQUISITELY, I THINK, RESPONSIBLE IN SAYING, "OKAY. WE HAVE A RATE OF LESS THAN 4% OF INFLATION. FINE. WE'RE GOING TO CUT GOVERNMENT SPENDING TO 4%." THESE PEOPLE IN BOTH PARTIES, AND I HAVE NO RESPECT FOR REPUBLICANS WHO HAVE NOT THE BACKBONE TO MAKE THIS ARGUMENT TO THEIR CONSTITUENTS.

>> Gary Walker: AND THEY WON'T EITHER.

>> NO REASON, AND I GUARANTEE YOU THAT THEY WON'T.

>> WELL, THEY HAVE DOUBLED IT ALREADY. THEY HAVE DOUBLED TO 8%.

>> THEY WANT 8, 10, 12% ANNUAL INCREASE. WE SPENT 9% INCREASE IN THE RATE OF SPENDING LAST YEAR, AND WE DIDN'T SPEND IT WHERE WE NEEDED IT, AND THAT IS TO MAKE OUR MILITARY ONCE AGAIN RESPECTED AROUND THE WORLD; WE SPENT IT IN ESSENCE WITH SPECIAL INTEREST GROUPS, TRYING TO BUY THEM OFF, AND BOTH PARTIES ARE GUILTY OF THAT.

>> Gary Walker: LET ME JUST EXPLAIN ONE THING HERE BECAUSE BUDGET STUFF CAN BE VERY, VERY CONFUSING, BUT ACTUALLY THE ONLY UNRESTRICTED PART OF THE BUDGET -- THERE'S ONLY ABOUT 16.2% OF THIS BUDGET, NONMILITARY, IS REALLY DISCRETIONARY SPENDING. EVERYTHING ELSE IS FIXED; YOU PRETTY MUCH HAVE TO JUST PAY IT OUT. SO OUT OF THAT 16.2%, THE PRESIDENT WOULD LIKE TO LIMIT IT TO 4% GROWTH A YEAR OVER THE LONG HAUL OF THIS TAX CUT. THE SENATE HAS ALREADY SAID "NO, WE'RE GOING TO DOUBLE THAT TO ABOUT 8%." SO DISCRETIONARY SPENDING, WITHIN THAT WEDGE OF THAT PIE, THEY WANT TO GO UP TO 8. THE PRESIDENT WANTS TO KEEP IT AT 4. AND OBVIOUSLY, I THINK CORRECTLY, IF YOU DO THE MATH, YOU CAN'T DO A $1.7 TRILLION TAX CUT IF YOU'RE GOING TO INCREASE SPENDING IN THE OUT YEARS. BUT AGAIN MY QUESTION IS -- I KNOW YOU CUT -- I'M WITH YOU WHEN YOU SAY YOU'VE GOT TO CUT SPENDING IF YOU WANT TO BE RESPONSIBLE, BUT WHY NOT SAY --

>> NOT CUT SPENDING, REDUCE THE INCREASE IN SPENDING, WHICH IS VERY DIFFERENT FROM CUTTING.

>> Gary Walker: TRUE ENOUGH, TRUE ENOUGH. I MEAN, WE CAN ARGUE THE SEMANTICS OF THAT, BUT I GUESS WHAT THE POINT IS THAT SOME CONSERVATIVES, PEOPLE IN THE CATO INSTITUTE EVEN, ARE SAYING INSTEAD OF A $1.7 TRILLION TAX CUT, DO THE PLAN AND TAKE SOME OF THAT MONEY, TAKE A LARGE PART OF THAT MONEY, AND PAY DOWN OUR DEBT. DON'T DO A TAX CUT; PAY THE DEBT.

>> THAT'S A LOVELY THOUGHT, EXCEPT WHAT HAPPENS IF THE DEBT IS REDUCED? AND I'M NOT SAYING THAT'S A BAD THING. IN FACT, I THINK WE SHOULD. CONGRESS, GIVEN ITS PRESENT TEMPER, WOULD SIMPLY SAY, "FINE, WE'RE PAYING DOWN THE DEBT. WE'VE GOT ALL THIS SURPLUS, WHAT WILL WE DO WITH THE EXTRA MONEY? WE SPEND IT." THIS PARTY, WHAT HAPPENED TO THE REPUBLICAN PARTY -- WE USED TO HAVE A REPUBLICAN PARTY IN ESSENCE THAT, AS GEORGE WALLACE WOULD SAY, THERE WAS A DIME WORTH A DIFFERENCE BETWEEN THEM. IN THE WAKE OF BILL CLINTON'S SKUNKING OF THE REPUBLICANS IN THE SHUTDOWN OF THE GOVERNMENT IN 1995, THE REPUBLICANS HAVE LOST THEIR SPINE WHEN IT COMES TO US VERSUS THEM, DELINEATING STRONG PHILOSOPHICAL DIFFERENCES BETWEEN BOTH PARTIES, AND SAD TO SAY, THE WILLINGNESS TO CUT SPENDING IS ONE OF THOSE ISSUES THAT NO LONGER REALLY SEPARATES PARTY "A" FROM PARTY "B."

>> Gary Walker: WELL, LET'S -- MIKE, I WANT TO BRING YOU IN ON THIS AS WELL. IF THE BUDGET IS A MANIFESTATION OF YOUR PHILOSOPHY OF GOVERNING, WHAT DO YOU THINK THIS BUDGET PROPOSAL FROM PRESIDENT BUSH SAYS ABOUT HIM?

>> I THINK THIS INITIAL BUDGET IS A SAFE BUDGET FOR THE PRESIDENT. I DON'T THINK -- I THINK THAT THE PRESIDENT COULD BE THE PERSON THAT CARRIES THE WATER. YOU SAY THEY HAVE LOST THEIR SPINE. I WOULD AGREE WITH YOU. HE'S THE MAN WHO SHOULD BUILD UP THE BACKBONE AGAIN. HE'S IN THE POSITION NOW. HE'S GOT CONGRESS. THIS SHOULD BE THE TIME FOR HIM. HE HASN'T DONE IT. HE HASN'T DONE IT YET. WITH THIS BUDGET, I THINK HE'S PLAYED IT SAFE HERE, AND I THINK ALSO HE IS SUPPOSED TO BE SOMEBODY WHO COMPROMISES, GEORGE BUSH. HE DID THAT IN TEXAS. I'M NOT SURE THAT'S WHAT THE REPUBLICAN PARTY NEEDS IS SOMEBODY WHO COMPROMISES AT THIS POINT.

>> Gary Walker: MY READING OF THE BUDGET -- I AGREE WITH YOU, AND MY READING OF THE BUDGET WAS THAT IT WAS A REALLY UNREMARKABLE KIND OF BUDGET. I MEAN, THERE ARE SOME PEOPLE WHO WILL BE FACING SOME CUTS OR DECREASES IN THE RATE OF GROWTH. BUT I WAS -- TO ME IT WASN'T A BUDGET ABOUT THE FIRST YEAR; IT WAS A BUDGET ABOUT THE LONG HAUL, AND IF YOU DON'T ADOPT THE PROGRAM IN YEAR ONE, YOU ARE IN DIRE STRAITS IN YEARS FIVE AND SIX AND SEVEN IF YOU DO PARTS OF IT AND NOT ALL.

>> OR YEAR NINE AND TEN, BUT OF COURSE NO PRESIDENT CARES ABOUT YEARS NINE AND TEN BECAUSE THEY'RE NO LONGER IN OFFICE. YOU'RE ABSOLUTELY RIGHT AND MIKE I THINK IS DEAD RIGHT IN TERMS OF IF THIS BUDGET ERRED, IT WAS ON THE SIDE OF TIMIDITY. MY CONCERN ESPECIALLY IS THE CLARION VOICE OF POPULACE CONSERVATIVES, AND THAT IS THE EDITORIAL PAGE OF "THE WALL STREET JOURNAL," SAID, "Mr. PRESIDENT BE BOLD. DON'T ASK FOR 1.6 BECAUSE EVEN IF YOU GET IT, PERHAPS IT'S NOT ENOUGH." A LOT OF REPUBLICANS WERE SAYING, PARTICULARLY IN THE EARLY STAGES WHEN IT WAS REALLY A BIDDING WAR, WERE SAYING TO GO FOR A BUDGET OF A 2.1, $2.2 TRILLION TAX CUT. EVEN IF YOU DON'T GET ALL YOU WANT, YOU WOULD STILL END UP WITH MORE THAN 1.6. SO I TEND TO AGREE. I DON'T THINK IT DOES A GREAT DEAL OF HARM. I'M NOT SURE IT'S GOING TO DO A GREAT DEAL TO GALVANIZE, HOWEVER, THE ECONOMY. I DON'T THINK IT WILL. NOT NOW AT LEAST.

>> Gary Walker: AND THAT'S ANOTHER THING I WANTED TO MENTION. THE PRESIDENT I THINK IN THIS FIRST 100 DAYS, OR 83 DAYS -- LET'S JUST SAY 100 FOR THE SAKE OF ARGUMENT, BUT I WAS STRUCK AGAIN -- I HAVE WATCHED A LOT OF ADMINISTRATIONS TAKE AUTHORITY, AND I HAVE SEEN SOME REPUBLICAN ADMINISTRATIONS FOLLOW DEMOCRATIC ADMINISTRATIONS AT STATE AND LOCAL AND FEDERAL LEVELS. I'VE NOTICED THE ONE THING THAT ALWAYS HAPPENS IS THERE'S IMMEDIATE FOCUS OR A CRISIS OR SOMETHING WE HAVE TO TALK ABOUT. THIS ONE WAS TWOFOLD: CALIFORNIA ENERGY AND THE ECONOMY. NOW, I HAVE TALKED TO A LOT OF ECONOMISTS WHO THINK THERE'S A STRATEGY HERE ON THE PART OF THE WHITE HOUSE WHICH PERHAPS COULD BACKFIRE. IF YOU BADMOUTH THE ECONOMY, IF YOU JUST KEEP BEATING IT DOWN, KEEP TALKING IT DOWN AND PREDICTING DIRE THINGS, YOU KNOW, IT WILL BE A SELF-FULFILLING PROPHESY, THAT EVEN THOUGH THIS IS NOT THE GROWTH ECONOMY THAT WE HAD FOR THE LAST EIGHT YEARS OR SO AND WHATEVER NATURAL PHENOMENA THAT APPEARS TO HAVE HAPPENED, IT'S CERTAINLY NOT A BAD ECONOMY. BUT IF YOU KEEP REFERRING TO IT AS THAT, AREN'T YOU JUST GOING TO FULFILL -- IT'S GOING TO FULFILL ITS OWN PROPHESY.

>> IT WAS A DIFFICULT MANEUVER FOR GEORGE BUSH. I THINK WHAT HE WAS TRYING TO DO WAS PUT A LITTLE BIT OF BLAME FOR THIS ECONOMY ON THE PRIOR -- "I'M INHERITING SOMETHING HERE." AND I THINK THAT IT IS GOING TO BACKFIRE ON HIM A LITTLE BIT. IT HAS TO. YOU'RE RIGHT; IT IS A SELF-FULFILLING PROPHESY. I THINK IT'S A PROBLEM FOR HIM AND I THINK HE IS NOW TURNING THE CORNER ON THIS. HE'S CHANGING HIS TUNE. HE'S NOT QUITE BAD-MOUTHING THE ECONOMY AS HE WAS JUST A FEW WEEKS AGO. I THINK HE'S CHANGED HIS TUNE BECAUSE PEOPLE ARE PROBABLY WHISPERING IN HIS EAR, "EASE OFF, EASE OFF."

>> Gary Walker: WHAT DO YOU THINK ABOUT THAT?

>> I THINK IT WAS DELIBERATE; I THINK IT WAS STRATEGIC. I THINK IT WAS BUSH SAYING, "HOW CAN WE BEST IN EFFECT ACCENTUATE THE URGENT NEED FOR A TAX CUT? WELL, IT'S TO SAY WE NEED THAT. NOW, WHY DO WE NEED IT? BECAUSE THE ECONOMY HAS GONE SOUTH AND WHO HELPED IT GO SOUTH? THE PERSON WHO JUST PARDONED MARC RICH, REMEMBER HIM? HE'S GONE. HE ALSO HELPED THE ECONOMY TANK." AND IT IS TRUE THAT IF YOU LOOK AT THE STOCK MARKET, THE NADIR OF THE STOCK MARKET WAS ACTUALLY LAST SPRING, BUT THAT ROSE AND HAS SOMEWHAT CRATERED AGAIN. AND A LOT OF THE ECONOMY INDICES AS WELL HAD TROUGHED LAST YEAR, SO YOU COULD MAKE A CASE THAT GEORGE W. BUSH WAS CORRECT. HE IN EFFECT, I THINK, SAID, "OKAY. I AM WILLING TO ENDANGER THE ECONOMY PERHAPS LONG TERM IF I CAN GET MY TAX CUT SHORT TERM." AND I DO THINK YOU'RE RIGHT; I THINK THAT THERE WAS SOME BACKLASH TO THIS. IN EFFECT, I THINK THAT'S WHY HE WAS BACKPEDALING A BIT. BUT I FIND THE ULTIMATE IRONY IS THAT DEMOCRATS ARE NOW SAYING THIS PRESIDENT, WHO LAST YEAR THEY WERE SAYING HE COULD BASICALLY STRING TWO SENTENCES TOGETHER, THEY ARE NOW SAYING THIS PRESIDENT IS SO PERSUASIVE IN TERMS OF TALKING THE ECONOMY DOWN THAT IT WAS A SELF-FULFILLING PROPHESY. THAT'S QUITE A TESTAMENT TO HIS RHETORICAL POWER. I'M NOT SURE IT'S DESERVED.

>> Gary Walker: OKAY. AGAIN, TALKING ABOUT THE FIRST 100 DAYS OF THE BUSH PRESIDENCY, YOU KNOW, I HAVE HEARD SOME CRITICISMS OF HIS BUDGET, BARNEY FRANK IN PARTICULAR. YOU CAN SAY WHAT YOU WANT ABOUT BARNEY, BUT HE HAS A WAY WITH WORDS SOMETIMES. HE SAID THIS BUDGET IS COMPASSIONATE BECAUSE IT NAMES PROGRAMS THAT HELP THE NEEDY, AND IT'S CONSERVATIVE BECAUSE IT DOESN'T FUND THOSE PROGRAMS. (Laughing)

>> WELL, COMING FROM THE PEOPLE'S REPUBLIC OF MASSACHUSETTS, I CAN SEE WHY HE WOULD SAY THAT. NO, BARNEY FRANK IS A VERY FACILE LINGUIST. OF COURSE, HE WOULD BE FAR MORE AT HOME IN HAVANA THAN HERE. I'M NOT NECESSARILY UPSET BY THAT, BUT NO, YOU COULD FUND THESE PROGRAMS, AND IF YOU GIVE A 6% INCREASE THAT WOULD NOT BE ENOUGH; BARNEY FRANK WOULD WANT 12. AND IF YOU GIVE HIM 12, HE'D WANT 25. WHAT'S MORE INTERESTING TO ME IS THE DEMOCRATIC LEADERSHIP COUNCIL, WHERE ARE THEY? HOW DO THEY REACT TO THIS PRESIDENT? WHAT ABOUT DEMOCRATS FROM CONSERVATIVE-LEANING STATES? HOW DO THEY REACT? BECAUSE THOSE ARE REALLY THE SWING VOTERS; THOSE ARE THE VOTERS UP FOR GRABS; THOSE ARE THE VOTERS THAT BOTH PARTIES ARE FOCUSING ON BECAUSE ALREADY IN THIS PERPETUAL CAMPAIGN, WE'VE BARELY ENDED THE 2000, AND WE'RE ALREADY ON THE HEELS OF 2002.

>> WELL, THAT'S WHY YOU HAVE TO -- YOU KNOW, I WOULD NOT AGREE ON THE ASSESSMENT ABOUT THE DEMOCRATS. I THINK THEY HAVE BEEN TALKING TARGETED TAX CUTS ALL ALONG, ALL LAST YEAR AS WELL. THE D.L.C. IS A BIG INFLUENCE, ALTHOUGH WE'RE SEEING THE RIFT NOW I THINK IN THE DEMOCRATIC PARTY BETWEEN THE LIBERALS AND THE MODERATES, THE CONSERVATIVE SIDE IF YOU WANT TO CALL IT THAT, ON THE DEMOCRATIC SIDE OF THE AISLE. WE'RE ALSO SEEING A PROBLEM ON THE REPUBLICAN SIDE OF THE AISLE. WHEN WE TALK ABOUT CHINA, WE CAN TALK ABOUT THAT.

>> Gary Walker: WE WILL IN A SECOND, BUT I WANT TO JUST GO OVER A SET OF SPECIAL INTERESTS THAT ARE VERY UPSET AT THE PRESIDENT RIGHT NOW. AND I WANT YOU TO JUST LISTEN TO THE SCOPE OF THE DIFFERENT FOLKS HERE. WE'RE NOT TALKING ALL LIBERAL DEMOCRATS ARE UPSET. WE BEGIN WITH THE AMERICAN SHIPBUILDERS' ASSOCIATION WHO WANT $100 MILLION IN LOAN GUARANTEES FOR PEOPLE WHO BUY SHIPS FROM AMERICAN SHIPYARDS. BUSH WANTS TO END THAT; THEY'RE VERY UPSET BY THAT. THEY HAVE TRENT LOTT AND JOHN BREAUX ON THEIR SIDE. THE NATIONAL ASSOCIATION OF CHILDREN'S HOSPITALS, FOR THE CUT IN DOCTOR TRAINING FOR CHILDREN'S HOSPITALS. THAT WAS A CLINTON PROGRAM, AND YOU'VE GOT KENNEDY, FEINSTEIN AND DODD FIGHTING THAT. THE NATIONAL ASSOCIATION OF HOUSING REDEVELOPMENT, A $700 MILLION CUT FOR PUBLIC HOUSING REPAIR AND CONSTRUCTION. WELL, YOU CAN IMAGINE UNIONS AND CONTRACTORS ARE NOT HAPPY WITH THAT. THE CHAMBERS OF COMMERCES AND A VARIETY OF BUSINESSES FIGHTING A 24% PROPOSED CUT TO THE IMPORT/EXPORT BANK, WHICH HELPS U.S. FINANCE EXPORTS. THE SMALL BUSINESS ADMINISTRATION, AND AGAIN THIS IS SENATOR CHRIS BOND OF MISSOURI, VERY MUCH OPPOSED, THAT SUBSIDIES OF THE LOANS GIVEN BY THE SMALL BUSINESS ADMINISTRATION TO SPUR SMALL BUSINESS GROWTH... WHAT A WIDE VARIETY OF PEOPLE UPSET WITH THIS BUDGET. IN A SENSE, THE MAN IS GOVERNING FROM THE CENTRE HERE, BECAUSE HE'S ENDING WHAT THE DEMOCRATS WOULD CALL CORPORATE WELFARE AND ENDING WHAT THE REPUBLICANS WOULD CALL LIBERAL SPENDING.

>> SOUNDS GOOD TO ME. YOU KNOW, THE REPUBLICANS THAT ARE UPSET WITH THIS ARE THE AMO HOUGHTONS. IF AMO HOUGHTON COULDN'T WIN -- (All talking simultaneously) -- MAYBE TRENT LOTT. MAYBE WITH LUCK, WE CAN RESIST AMO HOUGHTON OUT OF A JOB, WHICH SHOULD HAVE HAPPENED 20 YEARS AGO.

>> AND TRENT LOTT -- (All talking simultaneously)

>> TRENT LOTT HAS BEEN A CATASTROPHE AS SENATE MAJORITY LEADER. >> WE HAVE NOT YET BEGUN TO FIGHT ON THIS BUDGET. THIS BUDGET IS FAR FROM DONE. WE'RE GOING TO SEE WHAT HE'S MADE OF BECAUSE HE'S GOING TO BE BATTERED FROM ALL SIDES.

>> Gary Walker: BOTH SIDES. LISTEN, WE ONLY HAVE A COUPLE OF MINUTES LEFT AND I WANT TO TOUCH ON SOMETHING THAT I THINK IS VERY, VERY IMPORTANT, AND THAT IS WHAT IS HAPPENING IN CHINA. NOW, WE'RE RECORDING THIS ON A TUESDAY FOR AIR ON THURSDAY, BUT AS OF RIGHT NOW WE HAVE A STANDOFF GOING FOR TWO WEEKS, AND I JUST HAVE TO ASK, AT ONE POINT OR ANOTHER -- I'M THINKING BACK TO THE CARTER ADMINISTRATION. AT ONE POINT OR ANOTHER WHEN A NEWS AGENCY GOES ON THE AIR OR GOES IN PRINT AND CALLS THIS A HOSTAGE CRISIS, WHAT HAPPENS TO THE BUSH ADMINISTRATION? IS THIS A HOSTAGE CRISIS?

>> NOT NOW.

>> WHY NOT?

>> WHO CAN SAY A DECADE OR RATHER A WEEK OR TWO FROM NOW --

>> THAT'S A GOOD POINT, AND THE QUESTION YOU RAISE IS QUITE GOOD. I THINK FRANKLY THAT BUSH HAS PERFORMED SURPRISINGLY AND ADEPTLY WELL. YOU WANT TO AVOID BELLICOSITY AND BELLIGERENCE. THE STATEMENTS FROM THE WHITE HOUSE HAVE BEEN VERY CAREFULLY MEASURED. ON THE SAME POINT, HOWEVER, DICK CHENEY AND COLIN POWELL AND CONDOLEEZZA RICE, OTHER MEMBERS OF THE ADMINISTRATION HAVE MADE IT CLEAR, AS HAS THE PRESIDENT, THAT "LOOK, WE'RE NOT GOING TO TOLERATE THIS FOREVER," AND MORE TO THE POINT, "YOU, EVERY DAY THAT GOES BY" -- MEANING THE PEOPLE'S REPUBLIC OF CHINA -- "YOU'RE GOING TO LOSE. YOU'RE GOING TO LOSE ALL THE BUSINESS RELATIONSHIPS YOU HAVE BEGUN OVER THE DECADE WITH COMPANIES LIKE EASTMAN KODAK." EASTMAN KODAK COULD TAKE A HIT LIKE THIS. WHAT THE PRESIDENT HAS NOT DONE, HOWEVER -- (Indecipherable comments) WHAT HE HAS NOT DONE IS WHAT BILL CLINTON DID AD NAUSEAM AROUND THE WORLD, AND THAT IS APOLOGIZE. NO PRESIDENT OF ANY DECENCY APOLOGIZES IF YOU HAVE DONE NOTHING WRONG. WE HAVE NOT IN THIS CASE. I THINK BUSH HAS PERFORMED SURPRISINGLY WELL.

>> BUT BUSH IS ON A TIGHTROPE. THE CONSERVATIVES ARE STARTING TO BATTER CONDOLEEZZA RICE; THEY'RE STARTING TO BATTER COLIN POWELL ON THE STAND AND NOT BEING TOUGH ENOUGH. HE'S WALKING A TIGHTROPE. IT'S NOT A HOSTAGE SITUATION...

>> I DON'T KNOW. IT'S A VERY -- AT WHAT POINT DOES IT CEASE BEING SORT OF AN IMPROVISATIONAL INTERLUDE AND BECOME A FULL-FLEDGED...

>> NOW, THE DIFFERENCE, AGAIN, IS REMEMBER JIMMY CARTER MADE IT THE CENTERPIECE OF HIS RE-ELECTION CAMPAIGN --

>> Gary Walker: WE SHOULD PROBABLY NOT USE THE CARTER ADMINISTRATION AS A BELLWETHER FOR WHAT YOU SHOULD DO, YOU KNOW...

>> BUT HE HAS GONE ABOUT HIS BUSINESS, SIMPLY ONE ASPECT OF THE JOB.

>> Gary Walker: BUT IT SEEMS TO ME IT'S LIKE IF YOU ASK HOW MANY HAIRS CONSTITUTE A MOUSTACHE? HOW MANY DAYS CONSTITUTE A HOSTAGE CRISIS? I THINK THAT SOONER OR LATER SOME ORGANIZATION WILL DECIDE, WHETHER IT'S "THE NEW YORK TIMES" OR CNN OR CBS, THEY'RE GOING TO SAY, "YOU KNOW WHAT? AMERICANS ARE BEING HELD AGAINST THEIR WILL. A COUNTRY WILL NOT ALLOW THEM TO COME HOME. WHAT IS THIS?"

>> WELL, THE BUSH WEST WING IS SAYING THEY'LL COME BACK, THAT CHINA WILL IN ESSENCE SEE THAT, "LOOK, ECONOMICALLY, WE HAVE FAR MORE TO LOSE LETTING THIS PROLONG ITSELF THAN BY SETTLING NOW."

>> Gary Walker: LAST WORD, MICHAEL?

>> I WAS JUST GOING TO SAY WE TALKED ABOUT EASTMAN KODAK, AND I WOULD LOVE TO SEE HOW THE LOBBYING GROUPS ARE WORKING OVER THE BUSH ADMINISTRATION RIGHT NOW. (Laughing)

>> Gary Walker: THERE'S A LOT AT STAKE WITH THIS FOR BUSINESS AND FOR THE FUTURE, AND YOU ALMOST HAVE TO THINK WHAT WOULD CHINA GAIN FROM THIS? I DON'T KNOW. ANYWAY, UNFORTUNATELY, GENTLEMEN, THAT IS THE PROGRAM. IT WENT QUICK. I THANK YOU SO MUCH FOR COMING. AND THANK YOU ALL FOR JOINING US ON "NEED TO KNOW." JOIN US AGAIN IN TWO WEEKS.

BACK