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CNN Late Edition

Jack Kemp and Robert Rubin Discuss the American Economy in the 21st Century

Aired January 2, 2000 - 12:00 p.m. ET


WOLF BLITZER, HOST: It's noon in Washington and here in Atlanta, 9:00 a.m. in Los Angeles, 5:00 p.m. in London, and 8:00 p.m. in Moscow. Wherever you're watching from around the world, thanks for joining us for this LATE EDITION millennium special.

We'll get to Robert Rubin and Jack Kemp shortly, but first a check of the hour's top headlines from around the world.

Global Y2K problems have so far been few and minor and the United States government has cut back by half its monitoring staff. Among the reports to the national Y2K Center in Washington, glitches at seven nuclear plants. But those problems were quickly fixed and did not affect operations or jeopardize public safety.

Still, experts warn problems are possible, especially as more businesses get back to work tomorrow, and that applies to the international financial markets, but the industry has been preparing for many months and most insiders do not anticipate any significant glitches.

A top Kremlin official says Russia's acting president, Vladimir Putin, will likely win the March elections outright. Boris Yeltsin resigned Friday and named the former prime minister interim leader. Commenting on the transfer of power, U.S. Secretary of State Madeleine Albright said today, the United States will keep a close eye on the Putin administration.


MADELEINE ALBRIGHT, U.S. SECRETARY OF STATE: He is a tough person, he is -- I have met him with the president. He is somebody that is very determined, action oriented, I think we're going to have to watch his actions very carefully.


BLITZER: Observers say Mr. Putin's decisive handling of the Chechnyan war has boosted him to front-runner in Russia's upcoming vote.

Retired Admiral Elmo Zumwalt has died. Zumwalt was the head of the U.S. Naval forces during the Vietnam War and then became chief of all U.S. Naval operations. Zumwalt was just 44 when he became rear admiral; the youngest officer to reach that rank. He died today at the Duke University Medical Center in North Carolina, where he recently underwent colon surgery. Zumwalt was 79.

And George Harrison is back home. The 56-year-old former Beatle was stabbed in the chest by an intruder early on Thursday. Doctors say he has recovered enough to recuperate at home. Harrison's 33- year-old attacker is undergoing psychiatric evaluation.

We now turn to something that affects everyone around the world as this new century begins: the economy and your jobs. Over the last 1,000 years, jobs have evolved from mainly agricultural to industrial, and now in increasing parts of the world, there's the information age, thanks to computers and the Internet. The advances of the 20th century, from the automobile to the airplane to the computer, made many jobs extinct. As we begin a new millennium, there is both optimism and some nervousness about how the work force will change.

CNN's Gary Tuchman looks at the transformation of work in the 21st Century.


GARY TUCHMAN, CNN CORRESPONDENT (voice-over): Industries evolve. Think of how construction has changed since that Great Pyramid project in Egypt. Or how shipping changed since an explorer named Columbus sailed the ocean blue. But the knowledge that change Is constant doesn't decrease work place anxiety.


EWAN MCGREGOR, ACTOR: You think you can replace me with a robot.


TUCHMAN: This custodian losing his job to a machine in a movie, "A Life Less Ordinary," did and still does reflect a fear among many workers. As it is, technology is both friend and foe, creating new jobs while making others obsolete.

GREGG EDWARDS, ACADMY ADVANCED STRATEGIC STUDY: The history of jobs in America has been a history of job creation and job loss and of major changes in the way that the kinds of skills that people have to have.

TUCHMAN: Since the beginning of time, humankind, through invention and ingenuity, has found ways to make work easier. But as that has happened, many types of jobs have started disappearing.

Coal mining is a classic case in point. About 91,000 American miners are left; 32,000 of them will be out jobs by the end of the next decade. The natural gas industry will lose more than half of its jobs. And 55,000 people currently employed in the steel and blast furnace industries will have to find new work within the next decade.

EDWARDS: We went from almost 60 percent down now to 12 percent, and soon it will be four percent of people that are actively involved in productive manufacturing.

TUCHMAN: Charlie Chaplin realized early in the 20th century that assembly line work is challenging to say the least. But that type of work used to be plentiful. It no longer is.

WILLIAM BRIDGES, AUTHOR, "JOBSHIFT": When companies did everything themselves, there was room for all kinds of factory workers. Ford, back in the early part of the 20th century, had such a complex system that it even raised the sheep for the wool that went into the seats of the cars. Now, those jobs went away. Those are not Ford jobs anymore. They're jobs that belong to this sheep ranch and that sheep ranch now.

TUCHMAN: An electronic wave has shaken the workplace. The advent of the microchip has spawned a whole new world of computer technologies that enable work places to do more with less.

Take the recording industry.

CONRAD ROTENDELLA, MUSICIAN: Five or six years ago, in order to make a record you had to pretty much sell your soul to a record company.

TUCHMAN: But now things are changing.

ROTENDELLA: That's a good starting point.

TUCHMAN: Marcus Farney and Conrad Rotendella (ph), both drummers, use a computer to record, mix and distribute their music. Here Markus plays while Conrad records the sounds. They manipulate and edit the sounds using computer software.

The recording studio is actually a hard drive.

MARCUS FARNEY, MUSICIAN: We can actually do without the engineer, we can do without studio managers, we can save a lot of money in musicians. If you are selling it via the Internet, you don't even need CD-ROM manufacturing anymore; you just download the files.

TUCHMAN: This past spring, Ricky Martin's "Livin' la Vita Loca" became "Billboard"'s first No. 1 single to have been entirely recorded and mixed using a computer.


HEATHER DONAHUE, ACTRESS: I am so, so sorry for everything that has happened.


TUCHMAN: And with digital cameras in vogue, Hollywood feeling a jolt. Some movies, such as the recent hit, "The Blair Witch Project," are being shot on relatively inexpensive digital cameras which reduce the number of employees needed.

But the technology also creates opportunities for people who couldn't have afforded to make a movie. Scott Coffey and Nadia Conners make digital movies for the Internet.

NADIA CONNERS, "TREE MEDIA": We couldn't have done this 10 years ago.

TUCHMAN: Their latest feature is called "Traffic," a film about life in L.A.

SCOTT COFFEY, "TREE MEDIA": We shot this in a supermarket with a camera this big, and we ran in, shot it, used a real tomato, squish it in our hand, we ran out of the supermarket.

CONNERS: People had no idea we were making a movie.

COFFEY: We were there and did it and ran out.

CONNERS: They were like, what are they doing?

TUCHMAN: Another industry that is changing dramatically is sales.




TUCHMAN: In the movies, Avon is still calling, but in real life, it has become rare. Twenty-first century Avon entrepreneurs are more likely to attract their clients on the Internet.


TUCHMAN: And receive their orders on e-mail before delivering the merchandise.

DEBBY SHINE, AVON REPRESENTATIVE: It has saved me a lot of time, a lot of energy. And for me personally, it has been wonderful addition to running the business.

TUCHMAN: Running business in a more streamlined fashion is the way of the future. Whether it's the mom and pop shop or a giant like Xerox...

SHARON VARELLI, XEROX FIELD MANAGER: I put the unclean version up.

TUCHMAN: ... Where Sharon Varelli (ph) is a field manager.

VARELLI: The companies that stay with the old wave way of doing business won't be here five years from now.

TUCHMAN: The most valuable employees of the 21st century, experts say, will be the ones with the most skills.

BRIDGES: Unless you're actually adding some kind of demonstrable, measurable value to what the organization does for its clients, for its customers, it's going to be very hard to justify keeping you on the payroll.

TUCHMAN (on camera): That certainly sounds intimidating. But experts say if you're the type of employee who adds that kind of value to an organization, you'll be even more important than you were in the past.

(voice-over): To help workers through all these changes, experts still see a place for trade unions.

ELAINE BERNARD, HARVARD TRADE UNION PROGRAM: Unions will probably play a fairly important role in the next century, because people forget that one of the functions of unions is to help employees deal with change.

DR. SAM BUB, FAMILY PRACTITIONER: Look how much inflammation she's had.

TUCHMAN: Even doctors, in their own practices, feel the need to offer more.

BUB: We're capable of doing various therapeutic modalities in this room.

TUCHMAN: This Pennsylvania family practitioner is adding alternative care services, such as massage therapy and acupuncture.

BUB: Managed care has created many more jobs within my office, and I've got a larger payroll, and the compensation we get per patient is less because of managed care. So we have to come up with ways to make our practice succeed.

TUCHMAN: Remember the Fuller Brush man?


UNIDENTIFIED MALE: Would you be interested in a hair brush? Would you be interested in a hair brush? Would you be interested in a hair brush? Would you...


TUCHMAN: This movie portrayal of the classic sales job will have to serve as the enduring memory because it's one of the many jobs that have disappeared or will disappear as times change.

But if you're looking for a 21st-century career path with lots of opportunities, consider computer and data-processing services jobs. Currently there are about 1.6 million such positions in the U.S. By the end of the next decade, though, that number is expected to jump to 3.4 million.

Other promising fields for future growth include the health services industry, where jobs are expected to increase by more than 50 percent. And the business of residential care, where a similar jump is anticipated. BRIDGES: If you've built your life around yesterday's opportunities, you may find it very, very hard to seize tomorrow's opportunities.

TUCHMAN: Flexibility, creativity and versatility, all keys to success in the job market of this new millennium.

Gary Tuchman, CNN, New York.


BLITZER: And just ahead: the 21st century economy. We'll talk about what's ahead with the man who has had his hand on the pulse of the U.S. economy, former Treasury Secretary Robert Rubin, when this special millennium LATE EDITION continues.



WILLIAM J. CLINTON, PRESIDENT OF THE UNITED STATES: He brought it all together. He got us to work as a team. Everyone believed as long as he was secretary of the Treasury, nothing bad could happen.


BLITZER: President Clinton, praising his former Treasury secretary, Robert Rubin last May.

Welcome back to this LATE EDITION millennium special.

Joining us now from New York with his perspective on where the economy is headed in the 21st century is Robert Rubin.

Mr. Secretary, happy New Year and welcome to LATE EDITION. Good to have you with us.

ROBERT RUBIN, FORMER TREASURY SECRETARY: Happy new year to you, Wolf. And it's nice to be back with you.

BLITZER: Thank you so much.

Before we get to the whole question of jobs, the new economy, I have to ask you about Boris Yeltsin's decision to step down. Vladimir Putin, the acting president, so much is at stake. The international markets are looking at Russia, of course. What's your assessment at this transition?

RUBIN: My view, Wolf, is that there has been remarkable change in Russia over the past 10 years. If you look back, it was about 10 years ago that you had the Soviet Union. If you think of all that has happened in this period, it has been both remarkable in its magnitude and extraordinary, extreme importance to the rest of the world.

Having said that, there are obviously enormous issues with respect to Russia: geo-political issues, issues of corruption and all the rest. But I think the administration has had it rate in terms of policy. All choices are difficult, but I think the key is to continue to support reform in Russia, and the key is to try to minimize the alienation of the Russian people towards the West.

So I think amongst all these difficult decisions, we have to find a path that enables to us stay involved with Russia and to continue on the long-term -- toward the long-term objective of having a successful, prosperous and politically reformed Russia, because that's enormously in our interest. And I think we simply have to be willing to make choices among very difficult decisions.

BLITZER: But this departure of Boris Yeltsin, who was a source of stability of sorts, in the entire Russian connection with the outside world, is that going to reassure the markets, those who are dealing with Russia, or cause concern?

RUBIN: I think, Wolf, that, in terms of global markets, I think it will be relatively irrelevant. In terms of focus on Russia, I think it depends on what happens next. If there's a support for reform, if there is a sensible coming to grips with very, very difficult issues that Russia faces, I think that can be reassuring. But I do think a lot will depend on what this new government does.

Whatever this new government does, I think it's very important that we continue to remain in a constructive stance toward a country that has enormously difficult problems.

BLITZER: You just heard Gary Tuchman's report about some of the jobs that were lost in the 20th century, careers, there's a sense that stock brokers -- a source -- a job close to your heart, stock brokers may no longer be needed as we move into this new millennium. Life insurance salesmen, car dealers, people will just go to the Internet and do that kind of business. Where do you see this trend moving as we begin this new century?

RUBIN: Well, I don't know that I necessarily agree with the projections or extrapolations that you just set forth. I think it is so that we live in a era of enormous change with new technologies, as you correctly say, globalization, move toward market-based economics. And that's been enormously beneficial to our country. Our country is open to change. It has relatively open trading markets. And I think all that has positioned us extremely well to benefit from these new and important developments.

But I also think, Wolf, that there are real risks and real challenges and I think it is exceedingly important that, as we continue to live with what I think will continue to be a period of great change and change that is enormously -- can be enormously beneficial to us, that we also continue to have sound and sensible public policy. That's the framework for this new era, that was the basic view the president had when he started in this administration. I think it was aptly right: strong fiscal position, open trading markets, open markets abroad, invest in our people so they're equipped for this new economy.

If we do the right things, it is a period of enormous promise for us, although I have no doubt there will continue to be ups and downs as well.

BLITZER: But if you're looking at the short-term, and you're looking at jobs, and you're speaking to people out there who are watching not only here in the United States but around the world, which jobs right now are most on the line?

RUBIN: I think that it depends on the country that you're talking about, Wolf. I think in the United States, we will continue to move toward the higher value-added jobs. I think that that's why it is so critically important that we have sound education systems. And I think it's why the president has been so much focused on having effective education in this country so that our people are equipped for these higher value jobs. And if we have those policies, and if we have a good education system, and if we had the people of the inner cities become part of the economic main stream, then we can benefit as our country continues to shift toward the higher value-added jobs.

I think the answer to the question difference from country to country. But the key is change is opportunity, but change also creates issues and those have to be dealt with.

BLITZER: Are you overly concerned that manufacturing types of traditional jobs are increasingly moving away from the United States towards other countries?

RUBIN: I think what will happen in this country with respect to manufacturing is that we will continue to increase productivity, so that we will continue to manufacture with less input, less cost per unit, which increases standards of living in this country, and I think that manufacturing will shift from sector to sector. But I think we can continue to have a robust manufacturing component of our economy as long as we continue to provide the work force and as long as we have cost of capital, enables business to invest.

And that's why, as I said a moment ago, Wolf, it's important to focus on the factors that you did, but it's also very important to focus on having an appropriate public policy framework, particularly fiscal discipline, low interest rates, education and open markets and opening markets abroad. And that, of course, has been exactly what the president has done over the last now roughly seven years.

BLITZER: Look what the markets have done in the '90s. We have some graphics that we want to show you and our audience. The Dow Jones, for example: In 1990, it was at 2633. It went up most recently over 11400. That is a jump, if you just take a look in the '90s, of 317 percent over these past 10 years. Now take a look at the Nasdaq, which has been, of course, even more spectacular. In 1990, it was only at 373, closing 1999 at over 4000. A spectacular jump of 786 percent over these past 10 years.

How much longer, Mr. Secretary, can this go on?

RUBIN: Well, I'm not going to get in the business of being a market prognosticator, Wolf, but I will say a couple of things. I think in part what you have is a reflection of a very strong economic conditions and of the dramatic change in policy that took place with the president's '93 deficit reduction program, that really changed the fiscal position of this country and brought interest rates down, that increased confidence.

On the other hand, Wolf, I don't believe with all of the important things that have happened, that cycles have been abolished or that we will in the future not continue to have ups and downs, including downs. And I think that it's very important that people maintain their discipline as they face markets, that they be disciplined in the way they think about the future of companies and economies, and very importantly, that they be disciplined with respect to valuation. And I think there is a tendency to lose those disciplines in good times.

I'm not commenting on the market, I'm not saying what it's high, low or indifferent, I'm just saying that that seems to be the framework that you need in thinking about the market.

BLITZER: All right, Mr. Secretary, we have a caller from Virginia Beach, Virginia. Let's go ahead with the question, please. Go ahead, caller.

CALLER: Hi, Mr. Rubin. I was just wondering whether you felt that the sort of semi-government regulated economy that has been successful over the past few years should be continued, or should we try more leaving things up to the market, and the market-based system, a few things, or is that dangerous?

RUBIN: Well, I think you're raising a very good question, although I wouldn't frame it your way. I think what we have is a market-based economy in this country, and an economy that's driven by the private sector. But what we also have -- around that is government performing the function that's markets, by their nature, don't or aren't likely to perform optimally. Education, law enforcement, programs to help people in the inner cities and distressed rural areas join the economic main stream. Fighting to open markets abroad, keeping our own markets open. These -- obviously maintaining fiscal discipline, I think, the most important thing that's happened during this whole period has been the dramatic change and direction in that respect that started in '93 with the president's deficit reduction program.

So I think you need both. I think that we benefit in this country from having a market-based economy, an openness to change, and open markets, but I also think we need effective government policy to provide the framework for that to succeed.

BLITZER: Mr. Secretary, we have a caller from overseas, in Prague. Please go ahead with your question.

CALLER: Hi, this is Larry Travers (ph) calling for Mr. Rubin. I just want to ask when do you think the economies of Central Europe will enter the European Union, and whether that will have an impact on jobs in the United States?

RUBIN: Well, I don't know when the countries of Central Europe will enter the European union, but I will say this: It does seem to me that to bring together of the economies of Europe is very much in the interest of Europe and what is good for Europe, is good for the United States because economic strength abroad helps our exports.

So, and the answer to the second part of your question, I think that the more Europe comes together, the more it knits together, the stronger its economic conditions are, the better for job creation in this country.

BLITZER: When Wall Street goes back to business on Monday, Mr. Secretary, so far so good as far as Y2K-computer-bug glitches. What are you hearing? What do you anticipate, if anything, could develop in the course of the next 24 hours as far as the markets are concerned and the computer?

RUBIN: Wolf, both in the private sector and the public sector, there have been command centers, if you will, monitoring the Y2K developments, and there really has been remarkably little that's happened. My guess would be -- although my guess is no better than anybody else's -- but my guess, having talked to people in these command centers, is that the evidence suggests that probably will be very little disruption.

And I think that's actually a very interesting lesson to be learned from this. The private sector focused well in advance to provided the leadership necessary that was necessary to get ready, and the public sector, under the vice president's leadership -- a very strong apparatus was put in place, led by a man named John Koskinen, of the Office of Management and Budget, so that the government was ready for this event. And I think we can learn from how the public and private sectors prepared for this with respect to dealing with other kinds of large issues of a similar kind.

BLITZER: OK, Mr. Secretary, always good to have you, especially as we begin this new millennium. Thanks so much for spending a little bit of this New Year's weekend us with. And good luck and happy new year to you as well.

RUBIN: Same to you, Wolf, thank you.

BLITZER: Thank you.

And when we return: a different prescription for the economy. We'll talk with former vice presidential candidate Jack Kemp about the government's role in maintaining prosperity.

Our LATE EDITION millennium special will continue right after this.



STEVE FORBES (R), PRESIDENTIAL CANDIDATE: We are not living in the sixth year of the Clinton expansion, we are living in the 16th year of the Reagan expansion.


BLITZER: Republican presidential candidate Steve Forbes offering his assessment of who's responsible for America's economic prosperity.

Welcome back to this special LATE EDITION millennium program.

We now get another perspective on the 21st century economy.

Joining us, from his home in Vail, Colorado, is former Republican vice presidential candidate Jack Kemp.

Happy New Year, and welcome back to LATE EDITION, Mr. Secretary. Always good to have you on our program.

JACK KEMP, FORMER VICE PRESIDENTIAL CANDIDATE: Thanks, Wolf. Happy New Year and happy new millennium to you and all your CNN followers.

BLITZER: Thank you, and to your family as well.

KEMP: Thank you.

BLITZER: Steve Forbes make the case that this robust economy that the United States is enjoying right now, that Bill Clinton really doesn't deserve a whole lot of credit. It's been going on for some time. If the numbers were different, if inflation were high, if unemployment were high, if interest rates were high, you would be blaming Bill Clinton for this economy, wouldn't you?

KEMP: Well, look, this is a new year. We have a new beginning. It's going to be an Internet century, in my opinion, and with all due respect to Bob Rubin, for whom I have very high regard, Steve is right.

When you mentioned in that graph -- or showed in that graph that the stock market has had -- what? -- the Dow Jones up 370 percent since 1991 or 1992, Bill Clinton and Bob Rubin and Alan Greenspan and a lot of other people can take some credit. But I would remind you and other people that when Ronald Reagan was sworn in as president in 1981, the Dow Jones was 790, the top tax rate was 70, the capital gains rate was 49. And our country was mired in what the Keynesian economists said could never happen: the simultaneity of inflation and high unemployment.

And with all due respect, I think Bill Clinton enjoys the benefit of many of the policies that began under Reagan. NAFTA was continued, he reappointed Greenspan, Bob Rubin was a good choice for secretary of Treasury, and President Clinton, wisely, I think, signed the Republican congressional effort to reform welfare and also cut the capital gain tax from 28 to 20.

So I think both parties can take the credit, not withstanding the fact that I think history will look back on this as the beginning, in my opinion, of a possible golden age for not only the United States, but for hopefully the whole world. BLITZER: All right. Listen to what President Clinton -- he, of course, would like to take some credit for this, he is a politician of course.

KEMP: I don't blame him.

BLITZER: Listen to what he said in the Rose Garden in October.


CLINTON: In America, we have 19.5 million new jobs, the longest peacetime economic expansion in history, the highest home ownership in history, the lowest unemployment rate in 29 years.


BLITZER: Well, that obviously was not the Rose Garden. But the point that he makes is obviously that this economy -- this economy is booming right now. How much longer, you heard what Bob Rubin said, how much longer can this go on?

KEMP: Well, I agree with Secretary Rubin, Wolf, that it depends on policies. In effect, if you have good policies, you get good results. I think that is the message of the last 18 or 19 years, that good policies, good economic policies, good social policy, hopefully good educational policies on the edge of this new millennium, you'll get good results.

And I think that's the hopeful message from the United States, which is at the epicenter of this information age revolution, to the rest of the world. That if they follow good policies in central Europe, eastern Europe and the third world, and Latin America, Africa and Asia, you get good results. My hope is that the United States can lead not by force of arms, but by our good example.

BLITZER: You know, a lot of people say that the single source of credit for this great economy that the United States and a lot of the rest of the world is enjoying, but especially here in the United States, is the development of the computer chip and that will be the source of so many jobs down the road. But people watching this program, if they're not very computer oriented, how nervous should they be at looking at the potential job force out there over the next decade?

KEMP: Well, every problem also presents an opportunity. And again, I would reiterate my hope and prayer on this occasion, that the rest of the world will embrace this computer-led technological information age revolution, and join in the tremendous benefits that can accrue to our families, to the work force, to the efficiency of capital and trade, and the well-being.

KEMP: And I would add one other thing. In my opinion, this Internet century into which we are entering is going to be a century of empowering people, disempowering government bureaucracies, and is going to lead to, in my opinion, if countries embrace it, with all of the vigor that I think the United States has, from Silicon Valley in California to the Dulles corridor of the Washington and Northern Virginia area, I think they're going to see the benefits that will allow greater choice, greater opportunity for our children and our families. And if we do the right thing, we're going to get, I think, a more democratic -- small "d" -- century ahead.

BLITZER: All right, let's take a caller from Camillus, New York. Please go ahead with your question for Jack Kemp.

CALLER: Yes, this is Willie Lies (ph) from New York, and I will be graduating in June from college, and I was wondering what the opportunity would be like in the job market for the next three to four years.

KEMP: Well, I heard the question, or at least the question posed by the earlier segment on this show, and I would say to the caller from New York, when you stop and think about it, if you buy a book from in Seattle, Washington, you are still going to need United Parcel Service or FedEx or someone to deliver it to your store.

I was saying earlier to my own family that when I was growing up in Los Angeles, California in the 1940s, Carnation Milk Company delivered fresh milk every morning to my family's home there in Los Angeles. So we're still going to need service, we're still going to need retail.

But I believe the change that is going to take place is that instead of just brick-and-mortar retail stores, we're going to see brick-and-click, or what they're now calling, "click and mortar." It's going to be a combination of traditional economics with the enhancement of cyberspace, the microchip, the computer, the Internet, and the expansion of bandwidth, which is going to bring people not only in America closer together but around the world.

I think it's an exciting time to be alive.

BLITZER: All right. Well, which Republican presidential candidate, Mr. Secretary, in your opinion, best embodies that same vision that you have who would best be able to implement that kind of economic vision?

KEMP: Thank you, Wolf. I'm not ready to announce my choice for the ticket in the year 2000. But I will -- Steve Forbes, a very dear friend of mine. I've great regard for John McCain, and I'll tell you, George W. Bush has been a terrific governor. He's doing something in the Republican primaries that I have felt for a long time -- particularly when I was secretary of Housing and Urban Development -- that the Republican Party will always remain a minority party until it embraces minority voters.

So I like the fact that George W. Bush is reaching out to Latino, Hispanic, African-American, Asian-American and is pro-immigration, which I think the Republican Party must embrace if it is to be an all- inclusive party, circa 2000 and 2001.

BLITZER: All right. Mr. Secretary, as you, though, look ahead to the eventual campaign, irrespective of who the Republican nominee is and who the Democratic nominee is, probably tax cuts will be a huge issue, just as it was when you ran in 1996; the Republicans calling for big tax cuts, the Democrats saying, hold on, save Social Security first, make sure Medicare is alive. Those were popular. Those were good productive issues for the Democrats last time around.

At this time, when the economy is strong, the Democrats will also argue that tax cuts could be inflationary. How are the Republicans going to respond?

KEMP: Well, with all due respect, Wolf, back when Reagan and a guy by the name of Kemp and Roth cut tax rates in the early '80s, it was also considered inflationary, and with all due respect to the critics, inflation came down, didn't go up, and unemployment came down. So we really had non-inflationary economic growth, which the world had lost sight of and which now continues under President Clinton, in my opinion because he's followed some of the wise policies begun by Reagan-Volker-Greenspan.

I don't talk about tax cuts today as much as I talk about tax reform. I think we should look at a 21st-century tax code where we tax income but once, not twice, three, four, five, and if you die -- which is a likely possibility in most of our lives -- the government can confiscate 55 percent of your estate.

Tax reform for the 21st century would open up capitalism to lower-income people.

BLITZER: All right.

KEMP: I don't see how we can go into the 21st century and leave so many people out of our democracy, out of our capitalistic structure, who don't own property, have a job, have a good education, and have access to the ownership of property that is so important to empowering people.

KEMP: So I think we need a 21st-century tax code, and a 21st- century education system to go along with the exciting millennium ahead.

BLITZER: Sounds like a potential Republican platform in the works.

Jack Kemp, always great to have you on LATE EDITION. Go back to those ski slopes in Vail and enjoy the rest of your little holiday. Thanks again.

KEMP: Thank you.

BLITZER: And up next, what ever happened to the Y2K disaster so many people were predicting?

And Russia gets a new leader for a new millennium.

We'll sort it all out when we go round the table with E.J. Dionne, Susan Page and Tucker Carlson.

Our LATE EDITION millennium special will be right back.


BLITZER: Welcome back to LATE EDITION.

Time now for our roundtable.

Joining me from Washington, E.J. Dionne, columnist for "The Washington Post"; Susan Page, White House bureau chief for "USA Today"; and Tucker Carlson, political writer for "The Weekly Standard."

E.J., thanks for filling in, by the way, for Steve Roberts, who will be back next week.

You wrote a year ago exactly something that I want to read to you and to our audience and get your sense of what you knew that we perhaps did not know. This is what you wrote in January 1999:

"Many of us suspect it's an invention of computer analysts who know we'll spend a lot of money to fix a problem especially if we don't really understand it. Maybe this is the high-tech version of planned obsolescence, a cyber scam. This will be the big scandal of Y1999K."

What did you know that the rest of the world apparently did not know?

E.J. DIONNE, "WASHINGTON POST": Well, the simple answer is probably nothing. But my guess at the time -- I guess I had more confidence in the technologists than the technologists did. And it just struck me, it was very hard to believe that this problem would be as severe as the wolf-criers would have us believe. I respect the people in the papers this morning in the technology world who say, we should go back and look at this, maybe we were wrong about the severity. On the other hand, even having written that, I am still glad that the folks who deal with nuclear weapons, hospitals and airplanes took this seriously, despite my nasty comment of a year ago.

BLITZER: Tucker Carlson, all that water you bought that's being stored in your basement, are you going to be able to get a refund for that?

TUCKER CARLSON, CNN COMMENTATOR: Wolf, I would never, under any circumstances, admit buying bottled water here or any other venue. No, clearly this was a conspiracy cooked up by Evian and the Poland Spring.

Look, actually I think it may have been a failure of the press. I mean, if it turns out that Y2K threats were greatly exaggerated, I guess my question is, where were reporters in this? Where was the media? Isn't it our job to get to the bottom of rumors and find out if they're true?

BLITZER: Fair enough, Susan Page, did we over-hype this Y2K computer bug story? SUSAN PAGE, CNN COMMENTATOR: Well, I guess in retrospect we clearly did, but we weren't really smart enough to know about it at the time. I mean, maybe this is the triumph of technology that we dealt with Y2K so effectively that it turned out to go on without a glitch. Although I understand there were some slot machines in Delaware that went down, missed the Y2K patch, I guess.

BLITZER: The Y2K story, just to caution all of our viewers here in the United States and around the world, not yet over, let's wait and see once business gets back to normal tomorrow, what, if anything, might happen.

The other big story, of course, this weekend involves the change in leadership in Russia from Boris Yeltsin to Vladimir Putin. President Clinton, writing in the new issue of "Time" magazine, writes this. He says:

"No one deserves a larger share of the credit for Russia's transformation to democracy than Yeltsin himself. For all his difficulties, he has been brave, visionary and forthright, and he has earned the right to be called the father of Russian democracy."

E.J., is President Clinton right?

DIONNE: Well, I think we won't know what Yeltsin's real legacy is until about five or 10 years from now. I think clearly he deserve a lot of credit for courage. He saved Russian democracy from an effort to reimpose a, kind of, communist or authoritarian system when he climbed up on that tank, and I don't think the world will ever forget that. But things went downhill. There was a spread of corruption and a lot will depend on what kind of guy Mr. Putin is. Is he going to be a democrat or is he going to slowly move Russia back toward authoritarianism? And that's how we're going to judge Yeltsin.

BLITZER: Susan, what are you hearing about Vladimir Putin?

PAGE: Well, the meeting that he had with President Clinton in Oslo about two months ago did not go so well. There were some real tensions over the issue of Chechnya -- that's one of the big issues the United States' is going to be looking for. He's made it clear he's going to pursue the war in Chechnya, the violence and brutality against civilians there is creating some real dilemmas for U.S. policy towards Russia.

Just one other comment, though, to make about Yeltsin is, whatever else, he's certainly shown himself to be a master politician. He has managed to install his chosen successor in office, moved up the date of the election, shortened the time of the campaign, has Vladimir Putin as the acting president, and greatly increased the chances that his candidate will remain in office. And that part of his legacy, at least, is pretty much assured.

BLITZER: Tucker, is there going to be any prospect that this whole Russia involvement in Chechnya -- that possibly that could be a campaign issue here in the United States as these following weeks get going? CARLSON: It could be. I mean, I'd be surprised if any of the candidates, apart from Alan Keyes who has addressed this directly, as I remember at one of the debates, takes it on directly. Apparently Putin is very anti-corruption, and I think, you know, when corruption is out of control it becomes a kind of totalitarianism; it curtails people's freedom, so to the extent he could get that under control, you know, it's hard to think of an issue more important for Russia now.

BLITZER: All right, stand by, we have to take a quick break.

A lot more to talk about with our roundtable. We'll ask the roundtable what politics will be like in the 21st century.

Our LATE EDITION millennium special will continue right after this.


BLITZER: Welcome back to our LATE EDITION special, millennium 2000. Still with us in Washington is our LATE EDITION roundtable.

Tucker Carlson, how will politics be different in the 21st century, if at all, than they were in the 20th century?

CARLSON: Well, politics will probably be the same until there's a crisis. I mean, politics doesn't tend to change very dramatically until there's war or a depression or something momentous like that. It sort of goes along. It seems to me that there aren't too many issues that people care about deeply. I mean, it was easy 10 years ago to say: Well, you know, these are the people who are, you know, one side of the Soviet issue, and these are on the other, and, you know, this is a matter of life and death. It's hard to get too exercised about capital gains, however, or any of the other issues that are present now. So it probably won't change until something happens.

BLITZER: E.J. Dionne, you've been a student of politics for a long time. Do you see changes as we move to this new century?

DIONNE: Well, I should thank you for starting the show with a prediction that panned out because I'm probably about to wreck my record. But my sense is that this period very much resembles a period at the turn of the last century. We were coming out of a gilded age where there was an enormous economic transformation. A lot of people made a lot of money, but there was anxiety about what was happening to the country. And we ended up with the progressive era; we ended up with Teddy Roosevelt and Woodrow Wilson.

I'm struck with how much candidates, especially John McCain and Bill Bradley, but really all of them, are talking about Teddy Roosevelt's legacy. We're back to antitrust 100 years later, with Microsoft and other cases, and so I think we may be heading into a kind of period of reform. It won't be like the period of 100 years ago, but I don't think it will be all that different from it either.

BLITZER: Susan, are we entering towards a period of reform, including campaign finance reform?

PAGE: I don't know. I think a different thing has happened to American politics in this country, and that is that there are fewer and fewer differences between the candidates. I think, if you look at the four candidates who actually have a chance to become president, their stand on issues like world trade, or the importance of education, or the need to have discipline about the deficit are all very similar. And I think that may be one effect of the globalization of the economy, that you were talking about earlier in the show, they are not the great ideological divides we saw in years like 1980, for instances, or 1960. The edges -- there are still issues on which there are some differences, but they're not very big and they're not on the biggest issues that we face.

BLITZER: You know, Susan and company, every year "The Washington Post," on January 1st, publishes their list of what's in and what's out. This year, for example, in and out: Out: Tom Hanks, In: Kevin Spacey; Out: Mars landers; In: Ann Landers -- that's cute -- Out: merlot; In: red Zinfandel. And listen to this. Out: Christopher Hitchens, the writer for "Vanity Fair"; but In: Tucker Carlson -- I guess we had some graphics that were not necessarily in line with that.

Tucker Carlson, how does it feel to be "in" this year?

CARLSON: Well, you know, it's just, it's one step on the way to being out, you know, to be this year's Chia Pet. So it's troubling, Wolf.

BLITZER: You only have one place to go, which is out. I can tell you a couple of years ago, Tiger Woods was "in" -- "Wolf" Blitzer, "Tiger" Woods -- Wolf Blitzer was "out." So I have one place to go, which is in.

Thanks for joining us, our roundtable. Always great to have you on LATE EDITION.

When we return, we'll reveal what's on the cover of this week's major news magazines in the United States.

Also, Bruce Morton's last word on the products and promises of the new year.


BRUCE MORTON, CNN CORRESPONDENT (voice-over): Budweiser has millennial beer. The bottle looks like a bottle of champagne, sort of. Still tastes like Bud, I'll bet.


BLITZER: Bruce reviews millennium madness.


BLITZER: Time now for Bruce Morton's "Last Word" on the commercial side of the Y2K phenomenon.


MORTON (voice-over): Got all your millennial stuff? These special Spaghetti-O's, for instance? They've added 2s to the Os, you see, so that you can have a millennial spoonful. And also, according to the can, win $2,000. The Cheerios people have done pretty much the same thing. Millenios, these are called.

The New York Stock Exchange has been having famous people, millennial people, ring the opening and closing bell, Elie Wiesel and an old boss of mine, Walter Cronkite, for instance.

Budweiser has millennial beer. The bottle looks like a bottle of champagne, sort of. It still tastes like Bud, I'll bet.

"Cosmopolitan" magazine is advertising a millennium supermodel photo shoot. But don't know, don't all the women in "Cosmo" look like some teenage boy's dreamscape? Are these really any different?

There's a millennium Barbie, Mattel Toys assures us, popular they say, hard to find.

All kinds of companies have been putting out little millennial clocks which count down -- or counted down -- to the magic moment.


UNIDENTIFIED ACTOR: It's our job, as official spokescandies of the new millennium, to choose a host for the big New Year's bash in Times Square.

UNIDENTIFIED ACTOR: And we want you.


MORTON: M&M's claims to be the official candy of the millennium -- I have no idea why and haven't asked. Korbel says it's the official champagne -- don't know why that is either.

Finally, I'll bet you'll be glad to hear this -- finally there's the Millennium Force roller coaster in Sandusky, Ohio. Allegedly the tallest, fastest, et cetera, roller coaster in the world. The problem is, it's not ready. Won't open till May. This is just computer animation.

(on camera): But not to worry, it'll be open by next New Year's, which all those arithmetically correct people keep telling us, is when the millennium really is.

Save that cereal.

I'm Bruce Morton.


BLITZER: Thanks, Bruce.

Time now for a look at what's on the cover of this week's major news magazines in the United States.

Times Square is on the cover as the new century is celebrated at "Time" magazine.

Fireworks light up the Eiffel Tower in Paris on the cover of "Newsweek."

And "U.S. News" has a double issue on "Outlook 2000: A New Age of Innovation" on the cover.

That's your LATE EDITION for Sunday, January 2nd, 2000.

For now, thanks very much for watching. Enjoy the rest of your weekend and have a very happy new year.

I'm Wolf Blitzer at the CNN Center in Atlanta.


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