Skip to main content /TRANSCRIPTS



What Is Being Done to Turn Economy Around?; Michael Gottlieb Discusses the Spread of AIDS; James Cheek Explains Crisis in Argentina

Aired January 5, 2002 - 19:00   ET


ANNOUNCER: Live from Washington, THE CAPITAL GANG. Welcome to CAPITAL GANG.

MARK SHIELDS, HOST: I'm Mark Shields with Al Hunt, Robert Novak, and Margaret Carlson. Our guest is Senator Pete Domenici of New Mexico, the top Republican on the Senate Budget Committee. It's great to have you back, Pete.

SEN. PETE DOMENICI (R), NEW MEXICO: Thank you. It's great to be back.

SHIELDS: Thank you. Happy New Year.

December unemployment was announced yesterday at 5.8 percent, the highest level in six and a half years, but with a declined pace of job losses. Senator Majority Leader Tom Daschle delivered a major Democratic statement on the economy.


SEN. TOM DASCHLE, (D-SD) MAJORITY LEADER: September 11th and the war aren't the only reasons the surplus is nearly gone. They're not even the biggest reason.

The biggest reason is the tax cut. Not only did the tax cut fail to prevent a recession, as its supporters said it would, it probably made the recession worse.

We should pass a new jobs creation tax credit. I'm proposing that we allow 40 percent bonus depreciation for the first six months, and 20 months -- 20 percent I should say for the next six months.


SHIELDS: President Bush joined the debate in California.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There are some in Washington saying that the tax cut caused the recession. I don't know what economic textbook they're reading. The best way to come out of a recession is to say to the small business person "we'll let you keep your own money."

When we cut taxes on all rates, there's going to be people that say we can't have the tax cut go through anymore. That's a tax raise. Not over my dead body will they raise your taxes.


SHIELDS: Bob Novak, why is the president sticking with a tax cut strategy that so far has not stopped the recession?

BOB NOVAK, "CHICAGO SUN-TIMES": Because the recession started in the Clinton Administration, and I think that it would be worse if it wasn't for the tax cut, although the tax cut in fact wasn't big enough.

But this is all politics, Mark. That may be a shock for you. Senator Daschle is having a little presidential coming-out party. He challenged the president with his economic idea. He got two front- page stories in the "New York Times" out of it.

But I'll tell you something, just as LBJ, Lyndon B. Johnson as majority leader couldn't challenge Eisenhower, I don't think that Daschle comes off very well against George W. Bush, who is really feeling it. I thought Daschle looked a little constrained and defensive. Well, I thought that was a very good performance by the president.

SHIELDS: Margaret.

MARGARET CARLSON, "TIME" MAGAZINE: Last week he was the devil, so, being demonized and, you know, Tom Daschle cannot be demonized.

NOVAK: Who got demonized?

CARLSON: Well, we did so on this -- we talked about him being demonized on this panel. He never mentioned Bush. It was not a stem winder of a speech...

NOVAK: It wasn't?

CARLSON: ... trying to, you know, put down Republicans for favoring the wealthy with tax cuts. What Daschle is trying to say to George Bush is, be as flexible domestically as you've been internationally. You know, he's now a multi-lateralist. He's now into nation building.

Let the president -- let President Bush start nation building at home and worry about the people who are unemployed as a result of the terrorist attack, extending unemployment benefits, and not be so worried about these tax cuts that were only going to the wealthy.


CARLSON: And then hoping for the best.

DOMENICI: I mean, I don't know -- am I supposed to speak? CARLSON: Yes, go ahead.

NOVAK: Yes, go ahead.

SHIELDS: I wanted to ask you particularly -- and then you can say what you want, obviously.


SHIELDS: But Tom Daschle did have the suggestion, it sounded like it may have come out of your play book, and that is reducing the burden of payroll taxes on those businesses that hire new workers --


SHIELDS: ... that take part-time workers and make them full time. Isn't...

DOMENICI: That's a lot different than what I proposed. But let me suggest, it is clear that the Democrat's leader, when it comes to domestic policy, has forgotten about the notion that we can work together. As a matter of fact, the American people were thrilled the first couple of months to see us lock arm-in-arm, working together because of terrorism.

Now this man's running for the presidency. I admire him as a senator, but it's quite obvious he's trying to stake out a position. But let me tell you, the weakest part of his position...

SHIELDS: What's that?

DOMENICI: That tax cuts cause recessions and implicitly, he's saying we should increase taxes. But let me tell you the clue to that one. He doesn't say he's going to. As a matter of fact, he never pledges to do that. He says "Mr. President, George Bush" let George do it, and then he has all the things he wants the president of the United States to do, but those are Daschle's ideas. Why doesn't he do them?

SHIELDS: But I guess, Al, looking at it the whole question of fiscal responsibility has just gone by the boards, right? We're going to have to raise the debt. I mean the secretary of the treasury said...

NOVAK: Sure.

SHIELDS: ... we're going to have to raise the federal debt limit, instead of paying down on the national debt, which we did the last year of the Clinton administration, we're going to have to increase it. I mean this is really a new territory we're in, isn't it?

AL HUNT, "WALL STREET JOURNAL": It is, and there's no one I admire in the Senate literally more than Pete Domenici, and I have for 25 years.

NOVAK: Oh, oh. Now it comes.

HUNT: But, Pete, Bob Taft said in 1942 that during -- that in a democracy, if you can't descend on domestic issues in time of war, a democracy means nothing. Every single leader of the other party has during times of war, and Tom Daschle's no different than Jerry Ford, Bob Taft or anyone else, so I think that's perfectly appropriate. You can disagree with what he did.

DOMENICI: Even disagreeing with the president?

HUNT: Absolutely, on a domestic issue. And let me say this, no one -- I don't know what George Bush is talking about. I don't know a single soul who says the tax cuts caused the recession.

NOVAK: He could have made it worse. He could have made it a lot worse.

HUNT: Bob, let me repeat what I said. I don't know a single soul who says the tax cut caused the recession.

NOVAK: Come on.

CARLSON: Come on.

HUNT: Bob Novak said that it began here in the Clinton administration. It began in March, Bob. Let me tell you, presidents are sworn in January 20. Just get your facts right.

Let me tell you something, Alan Greenspan who some people love to criticize, though he's been right about the economy for the past 10 years, has cut interest rates, short-term interest rates, 11 times over the past year, and long-term rates haven't budged at all.

You know why, Mark? Because investors know that we're headed into a sea of red ink. We're going back to those days that you talked about because of that irresponsible tax cut that's going to take effect in four or five years.

DOMENICI: Well, let me make a point now so we could...

SHIELDS: And you got to say that for a journalist, you're better admired than Al Hunt.

DOMENICI: Look, I mean, I know -- Al came to New Mexico to cover my first campaign and brought his young baby with him, and actually I got to confess, we went to a baseball game together.

SHIELDS: All right.

DOMENICI: I won't tell them what else we did. Suffice it to say, beer was cheap.

NOVAK: Everybody's too chummy.

DOMENICI: Look, I think what we ought to do is get a piece of paper and everybody ought to start with some facts. First fact, this year the surplus went from $330 billion to $1 billion, and guess where all that gobbling up of the surplus came from? I'm going to read you the number. The number is tax cuts amounted to $38 billion, which is 12 percent of that diminution came from tax cuts. The big part came, $220 billion came from changes in economics, that is the recession gobbled up the taxes. Nothing else caused it, $220 billion is from economic -- for instance...

CARLSON: September 11 didn't do it.

DOMENICI: No, it contributed a little bit, but the truth of the matter is, everybody assumed the American economy would grow at 3 percent, outgoing president, incoming president, Congressional Budget Office, everywhere. It did not.

NOVAK: But the tax cuts, it's ridiculous when Tom Daschle suggests the tax cuts are responsible for slowing down the economy. That is Bob Taft economics, which is wrong.

HUNT: Yes, he said it wrong.

CARLSON: He didn't say "caused." He said "exacerbated."

SHIELDS: Let me just ask you this, though, we are going to face a crunch period. We are going to have to make some tough decisions. You've never shied away from tough decisions in the past. We're going to have to say, you're going to have to raise Social Security. The Social Security surplus, forget about it.

NOVAK: They've been doing it for 30 years.

SHIELDS: No, but we had put that up. We were going to build that up, and now we're going to have to go into it big time in 2002.

DOMENICI: The majority leader in one week, in one week proposed three pieces of legislation that gobbled up Social Security surpluses like nobody could imagine. One, Farm Bill, $75 billion. That's his proposal. Get it up, hurry up. Railroad retirement, $15 billion.

NOVAK: That's an outrage.

DOMENICI: And Senator Byrd's proposal for 15. Add it up, that's $100 billion in one week that the majority leader asked for new spending.

CARLSON: Where is the lock box?

HUNT: I think there are some deficiencies, but I'll tell you something. The idea that you would be increasing taxes in a recession, if you want to do away with those huge tax...

NOVAK: That's an increase.

HUNT: Could I please finish?

NOVAK: You cannot increase taxes. HUNT: If you want to increase taxes on the very wealthy, like you want to prevent tax cuts for the very wealthy like Bob Novak who makes more money than any of us could ever dream of, and what Bob Novak is saying is that's going to be a tax increase -- A, it will not. You don't change rates or levels. It's not a tax cut; and, B, it takes effect in 2005 or 2010. So either Bob is absent -- is one of those Cassandras who says "we're going to have an awful economy for eight years" or he just wants to...

SHIELDS: Fifteen seconds.

NOVAK: And your idol, Senator Daschle says those same tax cuts, way out in the future, have made the recession worse. That is just insane.

HUNT: Bob, you don't -- Bob Novak has never understood about long-term interest rates, and one day I will explain it to him, Mark.

SHIELDS: We'll look forward to that, Al. Pete Domenici and the gang will be back with what's next in the war on terrorism.


SHIELDS: Welcome back. With the first reported death of a U.S. soldier from enemy fire in Afghanistan, newspaper accounts quoted unnamed administration sources pointing to Somalia as the next target.


RICHARD BOUCHER, STATE DEPARTMENT SPOKESMAN: Somalia, of course, given the circumstances that exist there now is one of the areas we have to keep our eye on. The secretary has made it clear we want to prevent them as being used as a harbor for terrorism.



GEN. TOMMY FRANKS, COMMANDER, U.S. CENTRAL COMMAND: Certainly Somalia as a failed state is an area where we believe, in the past certainly, there has been some terrorist activity, and I think we'll take a hard look at it to be sure that that's not the case today. And if that becomes the case, then we'll look at it the same way we look at other harbors for terrorists globally.


SHIELDS: Al, is Somalia next? Al Hunt, and if so, why?

HUNT: Mark in our interview show, I asked John Breaux about the prospects of toppling a regime in Somalia. That was a -- there is no regime in Somalia. It's a bunch of rampaging warlords, and I think it probably makes sense to put whatever you can to those warlords to put them on notice that if al Qaeda tries to relocate even more resources there, there may be consequences to that. The problem unfortunately is far more pervasive though. Pete's former colleague, Gary Hart, who spent a lot of time thinking about and studying terrorism, talks about what he calls the terrorist entrepreneurs in their little cells and they're all over the place.

They're not just in Africa and Asia, but they're in Europe and they're in Canada and they're in the United States. And I think that's what we have to worry about, and I think we probably ought to do something, if we can, in Somalia, but that we can take at another time.

SHIELDS: Pete, what's your own sense?

DOMENICI: Well first, I think we ought to say that the president has been a very bold leader when it comes to terrorism. He didn't put this off. He went after them, and the one thing that he said was, not only are we going to take those who bombed America and do them in, but we're going to tell countries that harbor them that they got to -- if they want to be our friends, they got to help us do something about the terrorists in their country.

I think that's -- that policy, the efficacy of that policy is the next issue. Can the president now rely upon some countries who have al Qaeda or similar organization to join us? In Somalia, you may have to do it without anybody because, as Al said, who do you line up to be your friend?

But I think the next big issue will be, can our president line up friends who will let us join them in getting rid of terrorists in their country? A very big issue for the world, terrifically important for this President and for our people.

SHIELDS: Sounds a lot like coalition building, Margaret?

CARLSON: Right, as Al said, there's -- it's become there's no regime to topple in Somalia. It is probably a haven for terrorism.

HUNT: Maybe.

CARLSON: Almost immediately the administration began looking at Somalia, thinking that al Qaeda might flee there and Osama bin Laden has a history there. Who he would link up with there, other countries are more likely to give us allies within. Even in Iraq, the Revolutionary Guard and the Northern -- I forget -- the freedom fighters there, whoever they are, are a more likely way in for us.

There's nobody that looks reliable inside Somalia, and that's going to be a problem. And what we know about Somalia is coming from "Black Hawk Down," and I think it makes us bloodthirsty to go back in there and finish the job.

SHIELDS: Bob Novak, the drum beats. However, in spite of the talk about Somalia, continue about going into Iraq?

NOVAK: Yes, see the problem is that when the president, correctly for political and public relations purposes, called this struggle against terrorism a war, you think of a war as in World War II where you're island hopping in the Pacific to march the map across Europe.

This isn't that kind of war, and so after you've cleaned up Afghanistan in a brilliant operation, just so far one loss of American life, where do you go next? Now there's -- I talked to a very high level person in the White House this week. He's ready to go into Iraq, but the president hadn't made his decision. I don't think Secretary Powell wants to go into Iraq, so I think that's where this Somalia came up.

As far as I can find in my reporting, there's no evidence of an al Qaeda cell in Somalia. It's a mess guaranteed, but that is the problem. We have the terrorists in 62 countries, but where do you send the military next, and I think Somalia is a little bit used to put off talk about Iraq.

SHIELDS: It almost sounds like an exhibition game, not to be casual or cavalier about it, but this is an exhibition game because it's not the real fight in Somalia, right?

NOVAK: That's correct.

HUNT: Maybe not.

DOMENICI: Let me close for my few seconds that I have by saying, it seems to me this is going to be the beginning of a very great year and a very big recovery for the American economy and for our people to have more and better jobs.

I think the most important thing is that we not raise taxes. So today, when the president said "over my dead body," I thought you all would be asking me about that, and I was just going to say he's dead right.

CARLSON: Yes, right.

NOVAK: You really weren't.

SHIELDS: I'm sorry you said that, Pete. That's probably the worst power word in this show. Al Hunt, what does your own reporting tell you about Iraq?

HUNT: Oh, I think Bob's right. I think there's a -- he said there's a huge fight in the administration. I agree that he's right about Colin Powell. There are people, however, at Defense and elsewhere.

NOVAK: The White House.

HUNT: And the White House who clearly want to go in. I think that's going to be a huge fight, and my guess is, it is already a huge fight. The question then is if you want to try to topple Saddam, how do you do it? Do you send ground troops in there and I think probably in the end, the president will not send ground troops in.

DOMENICI: I agree.

SHIELDS: Last word, Al Hunt. You agree, Pete Domenici. Next on CAPITAL GANG, the airline pilot versus the secret service agent.


SHIELDS: Welcome back. Walied Shater, an Arab-American Secret Service Agent assigned to presidential protection is filing suit against American Airlines for not letting him fly as an armed passenger.


JOHN RELMAN, SHATER'S ATTORNEY: The only thing that matters is, is he an agent? If he is, I want him on my flight. He's going to help protect me and everybody else. That could have been resolved with a phone call. It never was.


SHIELDS: The pilot's report said: "I absolutely felt correct in having this individual's identification validated. After three improper form and the behavior of this individual, I needed to be 100 percent sure of his credentials." Was the agent's boss upset by his treatment?


BUSH: Yes, I was. I talked to the man this morning. I told him how proud I was that he was by my side. He's here on the ranch, and he's guarding me. There's an inquiry going on as to specifically what took place, but if he was treated that way because of his ethnicity, that will make me madder than heck.


SHIELDS: Oh, sugar. Margaret, should the president be madder than heck?

CARLSON: Yes siree, Bob. You bet your boot. There's a little problem here in that, yes he should be worried about the Secret Service agent being denied the flight.

However, the pilot and the Secret Service agent have completely different views about what happened, and ordinarily you want the pilot to have authority on a plane to say who gets on and gets off, especially since security is so porous. The pilot has to have authority, like the captain of a ship. He can even marry people perhaps, if he wants to.

So we have this "he-said, he-said" situation, which is that the pilot says he didn't fill out the forms properly, and here is this armed man coming on a plane. The Secret Service agent says he did everything properly, and so he should have gotten on. It was only his ethnicity. There's got to be a way, however, to not be accused of racial profiling but to give more scrutiny to an Arab man carrying a gun more than you give to the little old lady in tennis shoes.

NOVAK: That's called racial profiling, I'm sorry.

CARLSON: ... since 19 Arab men are the ones that drove the airplanes into the buildings.

SHIELDS: Bob Novak.

NOVAK: Generally speaking, I like airline pilots. I don't like Secret Service agents. I think they're arrogant and obtrusive and they've gotten worse over the years.

However in this case, American Airlines made a mistake. That's what everybody loses track of. He should have been permitted on the plane. The whole procedure failed when they kicked him off the plane. It doesn't matter who was acting nicely and who was acting poorly. They made a mistake, and American Airlines has taken an arrogant view.

I just flew with American Airlines a couple of days ago.

DOMENICI: Tell us about it.

NOVAK: I'll tell you, there is an arrogant mood there. They are taking -- people like to push people around, Mark. You may not believe that, when they're in authority, but they're taking this crisis to do it, and there's no question that this fellow would not have been kicked off the plane if he wasn't an Arab-American, and if some airhead flight attendant hadn't looked at his book and thought it was Arabic. It wasn't even Arabic.

HUNT: Did you fly first coach -- first class, Bob?

NOVAK: That's none of your business, Mr. Hunt.

CARLSON: Is he hostile when he's got a gun?

DOMENICI: Let me say tonight, everybody would guess that I'm very -- I look with great favor on our president. I'm a great supporter of his, even more so now. I think he's doing a great job. But I think his statement tonight is a little bit too early.

SHIELDS: Too early.

DOMENICI: Too early. I think he should have waited to get all the facts. It may very well be...

SHIELDS: Well he said he would be mad as heck if they did.

DOMENICI: I know but he left the impression that he was on the guy's side.

SHIELDS: He's been used to this objective. The president is very careful. HUNT: We don't know yet, but my guess is he'll have reason. I agree with Bob. He'll have reason to be mad as heck, and I also think to paraphrase or to quote his father that "American Airlines ought to be in deep doo-doo," Mark, because I think that Bob Novak is absolutely right. American Airlines behaved terribly here.

Look, it doesn't bother me when airlines single out everyone. I took a trip to Denver with my family over the holidays and back, and both times I had to put my boots through the airport screener.

NOVAK: Cowboy boots?

HUNT: Absolutely, and I put them through, and that's fine. That's something we have to -- in this day and age we just have to...

DOMENICI: I've been searched fully three times on different flights.

HUNT: I don't think we can complain about that. That's what has to happen. But when they start singling out people and if this guy's name was...

NOVAK: Hunt.

HUNT: You know, Tom Winthrop, you can bet that he wouldn't have been singled like that.

SHIELDS: I talked to people close to the investigation. I think there was an excess of testosterone on both sides. I think there's no question about that. In defense of American Airlines, they -- you know, they have really felt -- I mean if you're talking about the tragedies so far, American Airlines has borne more than the burden, and brunt of it.

NOVAK: But they made a mistake on this.

SHIELDS: I don't think there's any question. He did what you're not supposed to do, which is to leave behind your baggage when you get off the plane. You're not supposed to do that.

NOVAK: I've done that many times.

SHIELDS: No, but I mean that...

CARLSON: But in this day and age. you are not to do that.


SHIELDS: At the same time, airlines and the Transportation Department want people who are armed and qualified to be armed on planes in case there is something.

NOVAK: I think American Airlines looks really bad.

CARLSON: But you do have to fill out the form to have the gun.

SHIELDS: That's right.

NOVAK: It doesn't really matter whether they lost in the tragedy. A lot of people lost in the tragedy. They acted badly.

SHIELDS: That's one of the reasons they're a little bit more prudent, I think.

CARLSON: If Richard Reid gets on and the Secret Service agent doesn't, there is something wrong.

HUNT: I just hope Bob will tell us next week if he flew first class.

SHIELDS: I like Bob. I like Secret Service agents.

CARLSON: I do, too.

SHIELDS: Pete Domenici. We'll be back for the second half of the CAPITAL GANG. Dr. Michael Gottlieb who discovered AIDS is the "Newsmaker of the Week." "Beyond the Beltway" looks at Argentina's crisis with former U.S. Ambassador James Cheek, and our "Outrage of the Week." That's all after the latest news, following these important if not urgent messages.


ANNOUNCER: Live from Washington, THE CAPITAL GANG.

SHIELDS: Welcome back to the second half of CAPITAL GANG. I'm Mark Shields, with Al Hunt, Robert Novak and Margaret Carlson.

Our "Newsmaker of the Week" is immunologist Michael Gottlieb.

Dr. Michael Gottlieb. Age: 54. Residence: Pasadena, California. Religion: Jewish. M.D. from University of Rochester, fellowship in immunology at Stanford University. First identified the AIDS epidemic as a UCLA professor. One of first to use AZT drug on AIDS patients. Co-founder with Elizabeth Taylor of American Federation for AIDS Research.

Earlier this week, our own Al Hunt interviewed Michael Gottlieb from Los Angeles.


HUNT: Dr. Gottlieb, 2002 is supposed to be the year the world gets serious about AIDS. Twenty-two million already have died. Forty million are living with the virus today. Will this year be any different?

DR. MICHAEL GOTTLIEB, IMMUNOLOGIST: Unfortunately, Al, we haven't gotten serious about AIDS over the first 20 years of the epidemic. So, I'm somewhat pessimistic that we're really going to get serious in 2002.

HUNT: Let's take South Africa. Two hundred babies are born each day who are HIV-positive, because one-quarter of pregnant women are HIV-positive themselves. Yet President Mbeki questions whether HIV causes AIDS. He suggests it all may be a racial plot. Should pressure be brought on Mbeki, and if so how?

GOTTLIEB: Well, I think that someone has to take the president aside and let him know that he may be entitled to his own opinion, but when his opinion is damaging his people and causing the further spread of HIV, it becomes much more serious and actually irresponsible. So, I would think that someone in the U.S. diplomatic corps could possibly speak to him about this and let him know that if he wants certain other things from the United States for his country, the he'd better get serious about his AIDS epidemic there.

HUNT: The situation is tragic in sub-Saharan Africa, where the disease will drop life expectancy to 30 years by the end of this decade, but AIDS is spreading elsewhere. Forty thousand cases in the last six months in the Soviet Union, huge increases in former Soviet republics, and Vietnam, and in China where reported cases have soared 67 percent last year. Are these primarily due to homosexuality or to drug use?

GOTTLIEB: Well, it's absolutely not homosexuality. Actually, in the world, only less than 0.5 percent, less than half of 1 percent of people living with HIV are homosexual or had a homosexual risk factor. So, the epidemics in these developing countries are largely due to heterosexual transmission and the use of needles, that is intravenous drug use.

HUNT: Some experts suggest the conditions that breed AIDS are similar to those that breed terrorism: Poverty, ignorance and disenfranchisement. Yet do you feel all the focus on anti-terrorism may actually deter the effort to fight AIDS?

GOTTLIEB: I think that's quite possible, if we don't address some of these other issues going on around the world. AIDS is one of the contributors to that sense of powerlessness, and in fact that sense of powerlessness actually contributes to the spread of HIV because people feel they have nothing to lose.

So, I think we all have to become more sensitive to how people are feeling about us in other parts of the world and how we can possibly help them with their problems.

HUNT: Doctor, as you know, AIDS cocktails have significantly improved the quantity and the quality of life of some of those afflicted, but they don't eradicate the virus. How close do you believe we might be to a vaccine that may actually cure AIDS?

GOTTLIEB: There are quite a few vaccines in early clinical trials, but I should emphasize that they're early and there's no one vaccine that's been proven to be more effective. I think a vaccine is actually kind of far off.

We all look to high technology, that is a vaccine, as a solution to the epidemic, but in fact there are many low technology devices that might be successful in the short run, and those include much more massive education campaigns from the very top of governments.

HUNT: What do you say to those who say there's a simple answer to stopping the AIDS epidemic: Abstinence?

GOTTLIEB: I think most people realize that's unrealistic, at least for the adult population in most of the world. I think Freud was the first one to point out that sexuality is one of the driving forces of human behavior.

When it comes to teens and preteens, I think that the message of abstinence may be a very realistic message.


SHIELDS: Al Hunt, first of all, let me just say, you learn something every day, but that only 0.5 percent of the AIDS cases are attributable...

HUNT: Around the world.

SHIELDS: Around the world, are attributed to homosexual behavior, I think comes as a surprise to most lay-people.

And secondly, I guess, the fact that Dr. Gottlieb seems to be suggesting here that massive government effort on the part of expenditures and resources rather than the emphasis of stop smoking and, I mean, the usual patient prescription.

HUNT: Mark, I don't think he would quite -- I think he would say that education, public and private, is absolutely critical. It's indispensable. But this is a worldwide epidemic, and if you look at those countries that are successful, and it's a very eclectic group, Thailand, Cambodia, Poland, a few African countries, and the United States, everyone of them commits real public resources. It's not sufficient by itself, but without it, it's hopeless.

SHIELDS: Bob Novak.

NOVAK: You know, this is the only disease that I know of where 100 percent of the -- not 100 percent of the cases, most of the cases are caused by bad behavior, either sexual promiscuity or drug use. You know, a lot of people in a different age might say that this was the wrath of God coming down on people, but I do know that there's more resources in this country on AIDS than on diseases that effect many more people than AIDS, such as cancer.

So, I don't -- I don't think, in this country, at least, the doctor is right about insufficient resources.

SHIELDS: Margaret.

CARLSON: Bob, would you say it's the wrath of God?

NOVAK: I consider that a possibility.

CARLSON: You know, 2002 might have been the year of AIDS had it not been for September 11. Secretary of State Powell had said he was going to make AIDS among his top priorities, and he was working with former U.N. ambassador Richard Holbrooke on a group to get both government and private industry deeply involved. And George Tsoros and Ted Turner and Bill Gates have given a massive amount to the Holbrooke Organization, and yet Powell is not going to be able to devote his attention to it.

SHIELDS: Last word, Margaret Carlson.

Next on CAPITAL GANG, "Beyond The Beltway" looks at Argentina with former U.S. ambassador James Cheek.


SHIELDS: Welcome back. "Beyond The Beltway" looks at the crisis in Argentina. After citizens rioted in the streets to protest a four year recession, a veteran Peronista governor took over as the country's fifth president in two weeks.


PRESIDENT EDUARDO DUHALDE, ARGENTINA (through translator): We want to put an end to decades in Argentina where we've had an alliance that has damaged the country, which is the alliance of the political power with the financial power and not with the productive sector.


SHIELDS: The new president then announced the depreciation of the peso.


BUSH: Obviously, I'm worried about Argentina. We're willing to provide technical assistance to the government through the IMF and hopefully they'll get their house in order here pretty quickly.


SHIELDS: Joining us now from Little Rock is James Cheek, ambassador-in-residence at the University of Arkansas, Little Rock. During a career in the foreign service dating back to 1961, he served as ambassador to Argentina from 1993 to 1996. Thanks for coming in, Jim.


SHIELDS: Mr. Ambassador, is the rest of the world insulated from Argentina's misery and catastrophe?

CHEEK: Well, I think we're insulated from the financial misery associated with it. First of all, the debt isn't all that large. Secondly, it's very widely dispersed and a big portion of it is in the hands of Argentines. My concern is, though, that the world probably isn't very well insulated from the wider consequences of the failure of Argentina, because it's raised questions and is already seriously questioned the credibility of this economic model that has been the center piece of our policy for the developing world, the free market, so-called free market model.

And Argentina was the poster child for that model. They did everything you were supposed to do. They privatized. They deregulated. They opened their borders to free trade, welcomed in the multinationals and private capital, and now look what happened to them. It was supposed to make them rich, and now they're suddenly in a crisis and very poor.

SHIELDS: Well, what went wrong?

CHEEK: I think that's what we're going to have to examine. I think a lot of people, of course, already a lot of explanations being offered. I wouldn't for one minute excuse the responsibility that the Argentines have in this. There were many, many things I think in reforms that they needed to make and do.

But I don't think that fully answers the question. I think there's some responsibility there, if not of this model, of the way that we have been supporting that model as countries such as Argentina have enthusiastically and whole-heartedly adopted it.

SHIELDS: Bob Novak.

NOVAK: Jim, when I see the solution they're putting for themselves, devaluating, devaluing the peso, which only effects the ordinary peso, it doesn't effect the big holders who have their debt in dollar denominations. They talk about the IMF coming in with loans and they always impose austerity. Doesn't that just lead to Peronista demagoguery? I see the new president, President Duhalde, is saying that the problem is the financial interests, not the productive interests. Isn't that a formula for a lot of demagoguery in Argentina?

CHEEK: Well, all politicians engage in a certain amount of demagoguery and President Duhalde has a very serious problem, that suddenly he has to mobilize the support of the people behind this government, and he's got to convince them that this government is for them, is going to protect their interests, is going to at least minimize the incredible pain they're going to have to suffer with this devaluation, and get their support.

So, some populism, I think, is in order and would be in order in probably any situation in any country in the world. I'm not that concerned that he's likely to be implementing it as populism, because it all requires a lot of money or credit, and they don't have either one.

NOVAK: The first time I was in Argentina in 1964, the rest of the world was growing. Argentina was in a deficit GNP. Isn't there something wrong with the Argentineans? They always mange to screw up the economy no matter what they do, don't they?

CHEEK: Well, this is a favored theme, among Argentines included, the famous Argentine roller-coaster: About the time that they're at the top and everything is going well, you're just about on the very edge of hurtling back down, and I'm sure this will be interpreted by many as another example of that roller-coaster still in action.

But I think we have to ask some wider questions here, too, about -- this country, more than any other in Latin America, integrated itself with the world economy, and allied itself wholeheartedly with the United States. And look what happened to it. I think we have to be sensitive to that, because people are going to say, well, bad things happen to you if you follow a free market economy. Bad things happen to you if you're a fully ally of the United States.

And I don't want that -- for anybody to believe that. It's not true, but I'm afraid this situation could lend some credibility to those accusations.

SHIELDS: Margaret Carlson.

CARLSON: That seems to me to be a big problem here, given that Argentina did most of what we instructed them to do in privatizing and deregulating and free market reforms. Don't we owe them more than what President Bush said was some technical help? Maybe not a bail- out, but something, something to get them through this piece of the roller-coaster, the down swing of the roller-coaster.

CHEEK: Well, I think our debt to them goes beyond just their adherence to the free market model. It has been a fact, they're a non-NATO ally of the United States. They have the equivalent status under our law of Britain or France or Germany or Japan. And that's based on fact.

And for the last decade, Argentina has always been there when we needed. And they were the only country in Latin America that went to war in the Gulf. Now, the Organization of American States passed a resolution condemning it, calling on Saddam to withdraw, but when it came time to go out in combat and get shot at, only the Argentine sent forces.

The same thing happened in Haiti. They were in Kosovo. The only place they didn't accompany us was in Somalia because they had really some serious questions about that situations, and they told us, as an ally should. So, they've always been there for us. I never had to ask President Menem for anything. He was always -- we got it before Washington ever asked.

So, what is an alliance with the United States worth? We just two days ago declared Argentina a valuable ally of the United States. Well, the question being asked there: is the United States a valuable ally of Argentina?


HUNT: Jim, if you're going to have to ask sacrifice of people, and there's going to be pain, as there clearly will have to be, you have to have, as you know, the trust of the populace. And yet the issue of corruption is pervasive in Argentina. It goes back to Peron, if not earlier. Is there any reason to think that the Duhalde is going to be different when it comes to this terrible problem of corruption?

CHEEK: Well, certainly, for the next few years it's going to be very difficult to be corrupt because there isn't anything there to take, to steal. That's pretty clear.

But, no, I think one result of this is that the Argentines are looking more than ever very, very closely at their government, and I think they're going to make their government account for every penny of what little money there is in the public coffers. And one of the positive outcomes of this may be that they finally do take seriously and really attend to the problem of corruption, which is one of the problems with Argentina.

SHIELDS: Ambassador James Cheek, thank you so much for being with us. THE GANG will be back with the outrage of the week.

CHEEK: Thanks a lot, Mark. Glad to be here.


SHIELDS: Now for the "Outrage of the Week." Because the Dow Jones stock average tripled in value during the Bill Clinton presidency, candidate George W. Bush in 2000 could talk confidently and even glibly about privatizing Social Security partially. But since the 2001 Bush tax cut, gone is our estimated $1 trillion, which was needed to cover the cost of that privatization. Even worse for nervous Republicans on the ballot next November, up and down has been the roller-coaster of the Dow Jones.

But wait, House Republicans now want to promise everybody 55 years old and over that their Social Security benefits will be guaranteed. That's exactly what the existing system already does, fellows. Bob Novak.

NOVAK: Ridiculous. All right. "Thank God," said Democratic Senator Robert Torricelli of New Jersey. After more than a year of presenting its case against him on page one of "The New York Times," departing U.S. Attorney Mary Jo White announced without apology that no charges will be filed against the senator for alleged illegal fund- raising.

In a typically nasty twist, Ms. White passed the Torricelli file on to the Senate Ethics Committee. What the Senate should really investigate is which federal prosecutors leaked the unsubstantiated charges to "The New York Times."

SHIELDS: Margaret Carlson.

CARLSON: Thanks, Mark. NBC's new motto: "Anything for money." The proud peacock is the first to shame itself by breaking the taboo against advertising hard liquor. Alcohol is among the country's top killers, raking misery on millions of families. Glamorizing it is the last thing we need.

Former Democratic media consultants are producing the ads for Smirnoff, which will be seen by teenagers watching "Frasier" and Leno. Democratic consultants have now represented both alcohol and tobacco. What's next, firearms? Here's not looking at you, kid.


HUNT: Mark, thanks to "The Washington Post," we know that Monsanto for 40 years dumped PCB, a toxic waste, from its Anniston plant into the creeks and landfills in that small Alabama town. This despite the fact the company privately knew that its own test showed alarmingly high rates of toxicity in fish and animals there. Monsanto's attitude: To hell with the citizens.

Almost as outrageous is where's the rest of the media in covering this story?

SHIELDS: This is Mark Shields saying good night for THE CAPITAL GANG. If you missed any part of this program, call Robert Novak, or you can watch the replay at 11:00 p.m. Eastern.

Coming up next on CNN, "CNN SATURDAY."




Back to the top