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Is Passage of Shays-Meehan Going to Clean Up Campaign Finance?; Foley Talks About Bush's Asian Trip; A Look at Milosevic's Trial

Aired February 16, 2002 - 19:00   ET


MARK SHIELDS, HOST: Welcome to CAPITAL GANG. I'm Mark Shields with Al Hunt, Robert Novak and Margaret Carlson. Our guest is former Republican Congressman Vin Weber of Minnesota. It's good to have you back, Vin.

VIN WEBER, FMR. U.S. CONGRESSMAN: Nice to be here.

SHIELDS: Thank you. The House passed a campaign finance reform bill, closely resembling the same version passed earlier and approved by the United States Senate. Republican leaders failed in repeated attempts to amend the bill.


REP. TOM DELAY (R), MAJORITY WHIP: This bill doesn't contain real reform. Instead, this bill strips citizens of their political right and unconstitutionally attempts to regulate political speech.

REP. MARTY MEEHAN (D), MASSACHUSETTS: This bill does not prevent any individual, any individual or any or any groups of individuals from speaking out 60 days before election. They simply have to use hard money. And the public has a right to know where that money comes from.


SHIELDS: While only 12 Democratic House members voted against the bill, 41 House Republicans vote party ranks to support it.


REP. LINDSEY GRAHAM (R), SOUTH CAROLINA: I think America needs to change the way we conduct our campaigns. And I'm willing to pay a price by making my friends mad at me.


SHIELDS: Will President Bush sign this bill?


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I want to sign a bill that improves the system. And it seems like to me that if they get a bill out of the House of Representatives, that improves the system, it ought to be in effect immediately.


SHIELDS: Margaret Carlson, are we really on our way to cleaning up the way we finance our campaigns?

MARGARET CARLSON, "TIME" MAGAZINE: Well, lots of people will say, it doesn't really do that much. They'll find other loopholes soon. It's just how the system works. It's not a whole loaf, but it's a good half loaf. It's not a crust of bread. And it will make a difference. After all, soft money is most of what Ken Lay gave to help out his lovely corporation.

Cheers for Lindsey Graham for standing up that way. Tom DeLay doesn't turn out to be as powerful as we thought he was. The hammer is not quite so powerful. And I think it was a great moment. Republicans were lucky. Those ones who said they were helping the bill, but they were trying to kill it, that we were glued to the Olympics and not watching their debate on C-Span.

SHIELDS: Bob Novak, you were glued to both the Olympics and campaign finance?

ROBERT NOVAK, "CHICAGO SUN-TIMES": No, I don't like figure skating and I don't like sham debates.

CARLSON: How about French judges?

NOVAK: That was a sham debate. And I hate to tell you, disillusioned American people aren't interested in this subject. It's just people like you and (UNINTELLIGIBLE) who are fascinated by it.

This bill was a poor bill. Any bill that doesn't crack down on organized labor's activities -- it have left them untouched. But the thing had just got in the way. And it was impossible to -- for the Republicans to control it.

The speaker said that this was Armageddon. Armageddon is the last battle between good and evil. That, this wasn't. I guarantee you. It was nothing like that. It was -- and they just went through the motions on it. And what it is going to do, as our colleague Dave Broder said in "The Washington Post" the day after, it's going to really hurt state political parties." But the Beltway boys in their safe seats in Congress don't care about that anyway.

SHIELDS: Al, it seemed that people did care a little bit about it. And John McCain's campaign of 2000 certainly sparked the first debate, pushed action. Bill Clinton's pardon of Marc Rich and all disclosed about that and Ken and Enron now. I mean, that was a trifecta.

AL HUNT, "WALL STREET JOURNAL": Well, I would add to the people that Margaret gives credit to. I agree with you on Lindsey Graham. I would say young reformers like Zach Wamp, I think, deserve a lot of credit and Mike Castle. But the sponsors. Deadset over the sponsors. McCain and Feingold and Meehan and Shays deserve great credit. And I'll tell you who performed an incredible leadership job was Dick Gephardt. It really was. It was not easy. He had a lot of resentment from the black caucus, the members of the black caucus. And he did a great job.

I think this marginally reduces the influence of big money. And it marginally reduces the amount of time that a number of politicians are going to have to spend raising money. That's a considerable plus. It denies corporations the right to give soft money to federal candidates. It denies labor unions one in the same. It denies corporations the right to take out ads 60 days beforehand, that directly help a candidate. It denies labor directly the same. There is no distinction at all. That is one of the great canards. And I just, you know, I think it was a good week for the House.

SHIELDS: A good week for your old House, Vin Weber?

WEBER: Well, I think it was sort of inevitable week. I don't think there was any issue that I can think of where so much time, effort and rhetoric has been spent for a piece of legislation, about which the outcome really is so uncertain.

We're all speculating about what it might do. It might be Armageddon for the Republican party. It might get big money out of politics. And it might do none of those things. It might just open up a whole new set of loopholes, a whole new industry in time, trying to raise money in different ways and spend it in different ways.

Campaign finance reform, I have a lot of respect for the people that believe in it and did it. And might've voted it if I'd been there. But it's become a process. It's like the disarmament process or the Middle East peace process. It's not going to end. As soon as this law is signed into law, which I guess it probably will be, it'll be a short period of time before we start finding out that there still are evil people and big, nasty corporations, and people still don't like the money that's currently being spent, and will start the next round of campaign finance reform.

SHIELDS: Let me say, I lived through changes before. 1976, 1980, 1984, we had the three cleanest presidential campaigns of my lifetime, in terms of campaign spending. And in all three, we had an incumbent defeated in '76. We had an incumbent defeated in 1980. It made the system more competitive. The advent of soft money came in the '88 campaign. No question that Democrats played as prominent role as Republicans. And it has grown exponentially. From '86...

WEBER: Mark, you aren't going to tell us that those elections were decided because of the campaign finance system?

SHIELDS: I'm saying...

WEBER: Reagan beat Carter because of the ...


SHIELDS: What I'm saying is that the big money that you say is so inevitable, Vin, and that you so -- this other cynicism that you bring to the table is it's going to begin. It wasn't in, in '76, '80 and '84 because it was a political liability. It was politically toxic to be seen fooling around that way.

NOVAK: We've had this debate here many times with about labor. And Al, you can shake your fists and say it's a canard, but the fact is that money is taken out of the paychecks and dues, and it used for political activity by unions. Is it used by direct contributions to candidates? Of course not, but it's used -- and this is -- one of the biggest special interests. And it went untouched in this bill.

HUNT: Can I tell you something? Basically there's Supreme Court law that says you can't do it against your will. And what we heard for years from Mr. Novak and the like is the Labor Department won't enforce that. You have Mitch McConnell's wife as the Labor Secretary now. So you have no excuses anymore.

Let me tell you one more thing. We used to talk about Clinton having it both ways. You know, midnight basketball and curfews. George W. Bush this week had a Clintonian moment that outdid anything Clinton did. He went and within five hours, he came out for the bill. And then he seemed to come out against the bill. He unleashed the RNC to lobby against it and then sent Ari Fleischer out to say if it passes, that George W. Bush deserves the credit.

SHIELDS: And let me just say, it was one of the things, Bob Novak, while you're wrong on labor, Dick Gephardt, who did lead this fight and who did, and did something that politicians really do. He didn't speak on the floor. He really built the bipartisanship. And (UNINTELLIGIBLE).

NOVAK: What is this?

SHIELDS: Let me just get one point.

NOVAK: Gone through this on a couple of people.

SHIELDS: Dick Gephardt deserves credit.

NOVAK: Oh, he's gotten more than enough credit than I can possibly stand.

SHIELDS: Well, if Bob's going to (UNINTELLIGIBLE), I got to make one point. He was threatened with the loss of Labor support for his leadership in this.

NOVAK: I'll bet. That is -- now you talk about canards. That is the biggest canard I have ever heard. John Sweeney -- just a minute, I can't let that pass. John Sweeney is sitting in the front row. When he gives a speech in the Democratic Leadership Council, this is a golden moment for labor.

HUNT: Labor hated that bill.

SHIELDS: Labor hated the bill.

NOVAK: Yes, sure they did.

WEBER: I think this is just all groovy like Lindsey Graham.

CARLSON: Dick Gephardt...

HUNT: Mike Castle -- don't you think Mike Castle was good, Bob?

SHIELDS: Margaret?


SHIELDS: That's it.

CARLSON: Bob used up my time.

SHIELDS: Bob, you can't use Margaret's time.

CARLSON: You'll yield your time to me.

SHIELDS: Vin Weber and the gang will be back with a villain and a heroine from Enron.


SHIELDS: Welcome back. Former Enron CEO Kenneth Lay appeared before a House subcommittee, took the Fifth Amendment.


KENNETH LAY, FMR. ENRON CEO: I do. I am deeply troubled by asserting these rights, because it may be perceived by some that I have something to hide. But after agonizing consideration, I cannot disregard my counsel's instruction.

SEN PETER FITZGERALD (R), ILLINOIS: I'd say you were a carnival barker, except that wouldn't be fair to carnival barkers.

SHERRON WATKINS, VICE PRESIDENT, ENRON: I continue to ask questions and seek answers, primarily from former co-workers.


SHIELDS: Enron executive Sherron Watkins told the subcommittee how she sent Lay an anonymous letter warning of trouble, but did not confront Jeffrey Skilling, who was then Enron's president.


WATKINS: I did not want to do that without the safety net of a job in hand. I felt like it would be an immediate job-terminating move.

UNIDENTIFIED MALE: What you've done really is very courageous. You're a hero. If actions that you feel are unwarranted are being taken against you, because of what you're doing here, that you should let us know. (END VIDEO CLIP)

SHIELDS: Democrat leaders suggested Enron exerted undue influence on the Bush administration.


REP NANCY PELOSI (D), MINORITY WHIP: We know that they help participated in writing the energy policy for our country, that they had a tremendous access to stave off disclosure and regulation of the businesses that they were doing, that they participated in naming members to the FERC, the Federal Energy Regulatory Commission, which oversees Enron.


SHIELDS: Bob Novak, what has the nation learned about this scandal from the hearings on Capitol Hill?

NOVAK: Absolutely nothing. These are a waste of time. I've told my friend, congressman Billy Tauzin, the chairman, Republican chairman, they were getting nothing. If you read any of the good newspaper accounts, you'll learn nothing from these kabuki theater things, bringing up the guy to take the Fifth Amendment, than they have. She's not a whistle-blower. She didn't even tell the SEC. She didn't -- she was afraid to tell the CEO.

And Ed Markey courageously said he'd give her the protection of Congress if they bothered her or not. You know, they turned this woman, who was probably -- not probably, she was correct, but hardly heroic into Joan of Arc. All this is a financial scandal, not a political scandal. And -- but I can tell you, Mark, because you're friends with the Democratic party, just counting on this to hurt the Republicans...

SHIELDS: Bob, you're friends with the Republican Party. What did they have to say? Margaret Carlson?

CARLSON: Bob and I agree on something. You're so right about Sherron Watkins. She didn't blow that whistle loud enough for anyone who wasn't on the take to hear it. So I don't know, there's going to be no movie made about her. And she kept a paper trail. She showed some moral indignation to her colleagues, but did nothing to help the people who were going to lose money.

And then, we have Ken Lay raising his right hand, taking the Fifth, and saying how he agonized over it.

WEBER: Big difference.

CARLSON: And we're supposed to feel sympathy for him, after we learn that he made $100 million in stock sales last year, sent out his wife and kids to say, "We have nothing. We're down to our last Aspen condo."

SHIELDS: Vin Weber, I'll say this about it. (CROSSTALK)

SHIELDS: I'll say this about Sherron Watkins. In the land of the blindmen, the one-eyed man is king. She looks like Joan of Arc compared to these ethical eunuchs that she's dealing with at Enron.

CARLSON: And well, Cliff Baxter delayed...

WEBER: They may not make a movie about her, but I still think in that corporate environment, to do what she did, took a little bit of guts. And I acceded her some credit for that. I think the story goes on and on, though, because it's such a wonderful story, you know. You got everything to keep it on the front pages. Suicides and careers ruined and semi whistle-blowers. And now, it's like talking about bringing strippers into Enron headquarters. We've even sex in this story.

And so, I don't think they ever find any kind of smoking gun that links this to the Bush administration. I think the linkage to the Bush energy policy is bogus, because Bush did what any good Republican would do in terms of energy policy.

I do think the whole Enron scandal is risky for the Republican party, though. Anytime you highlight the abuses of big business, it reminds people of what they're suspicious of Republicans about. If you highlight the problems of big government. It's bad for the Democrats, when you've got a big corporation and its abuses front and center, Republicans have to worry about that.

SHIELDS: Al, we learned of a rather personal correspondence this weekend between Ken Lay and George W. Bush. So I mean, it was more than Kenny boy.

HUNT: Yes, a month or so ago, it was Ken who? And now we find out he's sending him, Governor Bush is sending Mr. Lay very nice Christmas gifts. Even that to someone you hardly know, that seems rather intimate.

Look, I remember four, five years ago, that the Republicans were hoping to take advantage of the Clinton fund-raising breakfast and the scams and scandals. And they were hoping that would parlay into their advantage. And you know, the politics -- they may have been right, but the fact of the matter is they were also right in substance, because it was a scam.

This is a political, as well as business scandal. We don't know exactly where it leads. There are people who stonewall. I don't know if Vin's right or not. I do know this. I do know the former chairman of FERC said that Ken Lay went to seeing him. And he thought at the behest of the Bush administration, who say, "Change your position, you can stay." He didn't change his position. He didn't stay.

I do know that Ken Lay went to meet with Clay Johns, the personnel director, gave a list of people who were going to go on the Federal Energy Regulatory Commission. Two of them went on. Was there a correlation? We ought to find out. NOVAK: We've been all through this before.

HUNT: Yes. We still don't know the answer.

NOVAK: We've been all through this before. And if you do some reporting, Al, you find out that the decision to replace the FERC chairman, which was a bad decision. They should've kept the guy in, had been made long before that conversation with Ken Lay and the previous chairman, saying...

HUNT: That's not with Mr. Hebert thinks. That's what the Bush White House says.

NOVAK: That (UNINTELLIGIBLE) what Mr. Hebert meant.

HUNT: We ought to put people under oath.

CARLSON: He's on the record...

HUNT: Yes, he's...


HUNT: No, he said it and he did it. And he just said it publicly. As a matter of fact on public television, we ought to put him under oath. And we find out under oath, then.

CARLSON: Yes, it's an incumbency scandal. It's not a Democrat -- it's not a Republican scandal, even though in the aura is that...

WEBER: And the Democrats hope it's a Republican scandal.

CARLSON: Well, they surely do. They surely do.

SHIELDS: Margaret Carlson, last word. Next on CAPITAL GANG, targeting the axis of evil.


SHIELDS: Welcome back. Top U.S. officials explained strategy in confronting what President Bush has called "the axis of evil."


COLIN POWELL, SECRETARY OF STATE: Hopefully, we can work with all of our friends in the international community, but the president doesn't rule out the option of having to act alone if it becomes necessary.


SHIELDS: Exactly what action is planned against the new targets?


RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: Some of it will be visible and public, as when we went into Afghanistan to take out the Taliban. Other aspects of it may never see the light of day, probably shouldn't.


SHIELDS: Iraq was designated as a primary target.


CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: We are pursuing a range of policy options, including, for instance, trying to change the nature of the sanctions with Iraq.


SHIELDS: In Alaska today, on his way to Asia, President Bush repeated his threats against the axis of evil.


BUSH: We expect them, and so do other freedom-loving countries, to change their behavior. But if they do not, the United States will do what it takes to defend our freedom. Make no mistake about it.


SHIELDS: Al Hunt, has President Bush decided where to strike next?

HUNT: I don't know about next, Mark, but I think he's decided that we're going to get Saddam. We're going to try the U.N. sanctions and inspectors route. We know that won't work and that will then become the predicate for going after Saddam. And I hope people like Richard Perle and Ken Adelman are right, and that this will be a piece of cake. It'll be easy. It'll be like Afghanistan. You help the Kurds. You help the Shi'ites. And there's internal insurrection. We provide some air cover, and he collapses, just like the Taliban did.

But I hope we debate some very tough questions, starting with if that's not the case, if it's not a cake walk, what are we willing to do? How many troops are we willing to send over there? Where are we going to put them?

And secondly, and maybe even more importantly, I think we will topple Saddam, but what comes next? What is a post-Saddam Iraq going to look like? And what role are we going to play? It would be wonderful to think that you could then get rid of this awful person and have the Shi'as and the Sunnis and the Kurds all together in a Jeffersonian democracy. History suggests that won't be the case. What effect will it have on the region and what effect will it have on Iran, who we're not going to try to topple?

SHIELDS: Bob Novak?

NOVAK: The problem with this war, and it's a strange kind of war when you don't know where the enemy is and the battlefield is, is that Dick Cheney says some of the battles, we don't know where they're going to take place. We don't know where -- and we'll never know about him.

The president's popularity is based on his leadership in this war. And he has really backed down, I think from the axis of evil speech because there was such universal disapproval by our allies. Now he's saying that -- now he's changed the wording. He said if you don't, if they don't come along, then we'll have to hit them.

And I see that maybe the threats help because the Iranians are kicking out some al Qaeda. And the Iraqis are saying, "Let's have some weapons inspections."


WEBER: The president of the United States has put down a marker. He said we're not going to permit nations to develop weapons of mass destruction, if there's any chance that they're going to supply those weapons to a network of terrorism that could attack the United States.

Doesn't have to have proof that they were involved in the attack in the World Trade Center. There just to be substantial reason to believe that we should be fearful of this happening in the future. And we can have that fear with regard to these nations.

The axis of evil, nobody argues about these nations. Nobody says, gee, I take my vacations in North Korea, which led Iraq into NATO. Everybody agrees on the nature of these nations. It's this question of axis that causes people problems. Is there some reason to link them all together?

That's a lot like the criticism that was put at President Reagan, when he called the Soviet Union "the evil empire." People said it was unnecessary, it was inaccurate, but it was actually tremendously important principle. And people rallied to it. And I think people will ultimately rally to this description of this threat to us.

SHIELDS: Margaret?

CARLSON: Well, it makes it sounds as if one, two, three. We're going to get them in some sort of order.

WEBER: You're reading that into it.

CARLSON: Although...

WEBER: The president didn't say that.

CARLSON: No, he didn't say that, but axis and the three, and it follows necessarily from that. Nobody's better at saying we're going to come and get you than George Bush and Vin Weber, it turns out. But you can only talk loudly for so long before you show the stick and you know, step up to the plate.

It's like high alert. We were on high alert this week. We knew the date, time certain. And it was going to be here or Yemen. And I didn't see anybody behaving any differently. No one listens to that anymore.

You know, there's a point at which the United States is going to have to stop, you know, stop saying we're going to it, and do it if we want to, and say what the cost is going to be. It's going to be higher than Afghanistan. There's no Northern Alliance up and running and waiting for us to direct them as to what to do.

SHIELDS: Let me just jump in here. And that is that once again, we hear the brave music of the distant drum here in Washington. Let's go to war, says the people. Is it going to be another war like Vietnam, in the sense that we ask very few Americans to do everything, and we ask nothing of the rest of us, nothing at all. It's going to just be business as usual and business on the Ways and Means Committee and the Finance Committee.

We're going to say who's going to fight, who's going to die, who's going to pay for it. Is that ever going to be debated? I mean, I think the Democrats have dropped the ball. I think the Republicans have dropped the ball. We need a free, full debate. And the president has to come before the American people and explain exactly what he's asking, what's it going to be, what are the objectives?

NOVAK: But isn't a real, real war -- we have had, I don't want anymore casualties. We've had one CIA person and one Army trooper killed in Afghanistan. You know, that...

SHIELDS: Several more killed...

HUNT: Let me ask the number one question, because Vin, I know you think we ought to take Saddam out and we are going to -- but if we do, and I think we will, the Kurds are going to be terribly important as allies over there. Are we going to give the Kurds a state over there? Are we going to say, "Fine, you get a state after we get rid of Saddam?"

WEBER: I think that's one of the most difficult parts of this because of the problems with Turkey, and probably Iran, too.

HUNT: I mean, that's -- don't you think we should debate that?

WEBER: I'm certainly not to going to make bets. I don't think anybody's going to say the answer to that question in advance. Probably not, probably not.

HUNT: We'll sell them out the way we were then?

WEBER: We probably will come up -- well, did we sell out everybody in Afghanistan that isn't actually in charge of the country?


WEBER: But the fact is, the Kurds need a government that will tolerate them and treat them decently in that country first and foremost.

SHIELDS: OK, last word, Vin Weber. The gang will be back with a CAPITAL GANG classic, a 1997 debate over campaign finance reform.


SHIELDS: Welcome back. THE CAPITAL GANG classic goes back to September 27, 1997, when the U.S. Senate was debating campaign finance reform. Our guest was a leading opponent of that bill, Republican Senator Mitch McConnell of Kentucky.


SEN. MITCH MCCONNELL (R), KENTUCKY: What's at stake here is, of course, the First Amendment, which applies to more people than just the press. The Supreme Court has said it's spinning its speech. They're absolutely right.

NOVAK: What you have to have is protection from union members, who may vote Republican and are having money taken out of their paychecks, to finance Democratic campaigns. Now if you had that in there, with an elimination of soft money, now you're talking.

But the fact is, the Republicans wouldn't even buy that, would they?

MCCONNELL: No, we wouldn't buy that.

SHIELDS: Let me just get this straight on labor. So -- because I think you misspoke yourself. It is illegal to make a campaign contribution from -- out of union funds, unless it is voluntary on the part of members? You're talking about...

NOVAK: Can you say that with a straight face?

SHIELDS: I say it with absolute straight face.

NOVAK: It doesn't have to be a political contribution. They are taking money involuntarily out of workers' paychecks, to use for political purposes. You know that.

SHIELDS: Just as those auto workers have checked by whether Ford Motor Company, when they make their soft money contributions to Republican National Committee, what are they -- are they polled whether they want to make that contribution?

NOVAK: I said get rid of all of that.

SHIELDS: Soft money? Get rid of soft money, Al Hunt?

HUNT: Oh, absolutely.

CARLSON: Absolutely.

NOVAK: If you have what has to be done on labor.

SHIELDS: Soft money?

CARLSON: Mark... SHIELDS: OK, if we do, it'd have to be...

MCCONNELL: Maybe it's time somebody defined what soft money is. Soft money is non-federal money. You might be able to constitutionally tell the national parties they can no longer engage in state and local races. I don't know. That's never been litigated.


SHIELDS: Bob Novak, did Mitch McConnell lose on his questions or (UNINTELLIGIBLE)?

NOVAK: It's amazing. Nothing's changed in five years. Mitch McConnell was very honest. He didn't want any kind of reform. And Republicans now pay the price for that.

SHIELDS: Pay the price, Margaret?

CARLSON: Only hair changes, nothing Bob says.

SHIELDS: Vin Weber?

WEBER: I think Mitch Mcconnell's been so central to this debate. I think they should invite him to the signing ceremony, even though he's not going to be -- it wouldn't be right not to have him there.

CARLSON: He'll be east to Bill, yes.


HUNT: I thought Margaret and I were brilliant.

SHIELDS: That's it. Thanks for being with us, Vin Weber. We'll be back with the second half of CAPITAL GANG. Our "Newsmaker" is Tom Foley, former U.S. ambassador to Japan, talking about President Bush's Asian visit. "Beyond the Beltway" looks at Slobodan Milosevic's war crimes trial with former Secretary of State Lawrence Eagleburger. And the "Outrage of the Week." That's all after the latest news following these crucial messages.


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 Thomas Foley, former United States Ambassador to Japan. Thomas S. Foley, age 72. Residence, Washington, D.C. Religion, Roman Catholic. Undergraduate and law degrees from the University of Washington. Served as a local prosecutor in Spokane before election took Congress as a Democrat in 1964, where he served 15 terms. The last six years as Speaker of the U.S. House. Ambassador to Japan for the second term of the Clinton administration.

Our Al Hunt sat down with Tom Foley earlier this week.

(BEGIN VIDEOTAPE) HUNT: Tom, Japan has been in a virtual, perpetual state of economic recession for more than a decade. Serious deflation now. Beneath the diplomatic rhetoric, what real message do you expect President Bush to deliver in Tokyo next week?

THOMAS FOLEY, AMBASSADOR TO JAPAN: Well, I think he's going to go to Tokyo with the immediate background of Prime Minister Koizumi's collapse in his public support raids.

In late January, he for a lot of reasons, dismissed Mikiko Tanaka, the foreign minister. And his polls went down. In order to pull out of this economic slump they're in, has to take some really tough decisions. And the prime minister's popularity is an important part of that.

So the president will convey to him very privately concern about the Japanese economy, but no public scolding.

HUNT: You mentioned that Japan needs to take very tough action. Experts think that some of it really has to be pretty radical. Let more failing institutions go under. Massively writing down assets. Letting property prices drop further. Are the economic and political and cultural systems of Japan really so paralyzed that that's not going to be possible?

FOLEY: I think you have to look at the situation from the standpoint of the Japanese. Nothing that they have been able to do in recent years has had much effect on the economy. And the advice is always you have to have a radical increase in unemployment, as a consequence of letting companies fail. Very bad medicine.

And it's not unusual that democratic societies, and Japan's a democratic society, shy away from really, really tough decisions, unless your back is to the wall.

HUNT: Well, it is said about Koizumi that, as you said, last summer we thought he was a new type of reformer, but with the firing of Tanaka, which you mentioned, and other actions, there is a sense he is increasingly capitulating to the old guard. Is he really any different?

FOLEY: I think he is different. It's dangerous to write him off because there isn't anybody -- there's no alternative at the moment. I think the problem with Prime Minister or foreign minister Tanaka was that she, herself, was very popular with the Japanese people, but she was also very confrontational.

HUNT: Let me ask a final question of the Japanese economy. As well as being a huge debtor, it's also the world's largest creditor in our nation. Holds over $300 billion of U.S. Treasury Securities, over $300 billion of U.S. bank loans. What are the ramifications for America if the world's second largest economy, Japan, goes into a further economic tail spin?

FOLEY: It could have wide ranging effects in Asia. Japan is the world's second largest economy. It's our largest overseas trading partner, after Canada and Mexico. It would be very bad for the United States, for many reasons, if Japan should really go into a serious economic collapse.

HUNT: In the State of the Union, President Bush described North Korea as one of the axis of evil. The Korean peninsula, of course, is Japan's closest neighbor. What will the Japanese tell the president about how to treat North Korea?

FOLEY: I think they'll probably not say much, except that they hope he will continue to look for opportunities for a dialogue with North Korea.

HUNT: Does it make them nervous when...

FOLEY: Well, it made them very nervous when he used the phrase "axis of evil." Senior people in Japan didn't think there was a connection between these three countries. More importantly, the president's going to go to South Korea, where the statement has further weakened President Kim Dae-Jung.

HUNT: I can't let the former Speaker of the House get away without one political question. George W. Bush, in the aftermath of 9/11, is dominating the American political agenda. Many Democrats seem quite despondent. Is this going to be a bad political year for your party?

FOLEY: Well, that remains to be seen. You know, a lot of issues will not be clear until we get to the fall. Traditionally, in the midterm elections, an administration has problems. Roosevelt had problems in 1942 in the congressional elections.


SHIELDS: Al Hunt, did you get the sense that Tom Foley is really unhappy with President Bush's designation of North Korea as a terrorist enemy?

HUNT: Yes, and that's why I think a good friend of Vin Weber is wrong in saying the axis of evil was an apt description, because I don't think it'll applies to North Korea, which is an insane, miserable place. But I think if you're in South Korea or if you're in Japan, you're saying, "What is Bush is talking about?" We're going to attack North Korea? Of course, we're not.

SHIELDS: Bob Novak?

NOVAK: Apart from the axis of evil question, I thought that Tom Foley thinks of the president going to Japan to lecture the Japanese on economics, that was true of the previous administration. I think it's consciously, the Bush people don't want to lecture the Japanese. I don't think they think that the decline of Japan is that damaging to us. I think he wants to go there to talk about terrorism.

And I noticed, I really believe that when Al and Tom Foley talk about the thing for Japan to do is for more businesses to fail, I don't think that's the medicine that -- I don't think it's good medicine. And I don't think it's the medicine that this administration would prescribe. I don't think they're going to prescribe any medicine. I think they think that's Japan's business.

HUNT: Quickly, we didn't advocate that, either one of us.

CARLSON: Well, in fact, you're right that the president likes to keep the subject on terrorism and not on the economy, no matter where he is. On North Korea, Bush may have added North Korea as a way of not just having Muslims in this axis of evil and not looking as if we're anti-Muslim. When he goes to South Korea, I think the wages of doing that are going to come to him, because they're engaged in engagement reconciliation with North Korea. And this did not help.

SHIELDS: OK, all right. Next on CAPITAL GANG, "Beyond the Beltway" looks at the trial of Slobodan Milosevic with Former Secretary of State Lawrence Eagleburger.


SHIELDS: Welcome back. "Beyond the Beltway" looks at the trial and the Hague of Slobodan Milosevic, charged with genocide as Serbian head of state.


GEOFFREY NICE, PROSECUTING ATTORNEY: Not a racist in the sense of someone determined only to live with fellow Serbs. Not an idealist, someone concerned more, if not exclusively, with the maintenance of personal (UNINTELLIGIBLE).


SHIELDS: Milosevic delivered a four-hour argument, accusing the United States and NATO of terrorism in Kosovo and demanding that President Bill Clinton be called to The Hague as a witness.


SLOBODAN MILOSEVIC, FORMER LEADER OF SERBIA (through translator): President Clinton proclaimed that genocide is a state policy. He proclaimed the destruction of an independent and sovereign state, 776 times weaker, 10,000 kilometers away from America, as a target for a war without casualties.


SHIELDS: Joining us now from Charlottesville, Virginia is former Secretary of State Lawrence Eagleburger. Thanks for coming in, Larry.


SHIELDS: Larry, you knew Slobodan Milosevic when you were United States ambassador to Yugoslavia.


SHIELDS: Has anything in his performance in the Hague, in anyway surprised you?

EAGLEBURGER: No, it hasn't surprised me. I've seen him now for too long being the stuffy, arrogant man that he's proved to be all along. I must tell you, however, that at an earlier stage when I knew him in Belgrade, and he was head of a bank, he was quite a different fellow.

And there have been massive changes in the way he behaves from that time, which is now 20 years ago, but he's now so completely dominated by his own view of himself and Serbia, that nothing's going to make any difference.

SHIELDS: Bob Novak?

NOVAK: You know, Senator John F. Kennedy, in his Pulitzer Prize winning "Profiles of Courage," talked about Senator Robert H. Half's criticism of the Nuremberg trials, where you put the losers in a war in the doc, not a very popular position.

I suppose it isn't a popular position to wonder about this either, Larry, but do you, as a diplomat, have some compunction about this international court and this former head of state, who was carried away to the Hague under rather suspicious legal arrangements?

EAGLEBURGER: Bob, I think you're absolutely correct. I'm really ambivalent on this one. In one sense, there is no question he's a criminal. There's no question that he was responsible for the murder of thousands of people. On the other hand, I worry about this kind of a trial, this kind of a system that's now being set up, not because of the Milosevics it may deal with, but at a later stage, whether they don't expand that, to begin dealing with people that we all know ought not be under trial in this sort of a circumstance, including, if you want to really stretch it all the way, charges against President Clinton or against President Bush.

I worry about the long term implications of this thing, at the same time that I can't argue too much about Milosevic's such being tried.

SHIELDS: Margaret Carlson?

CARLSON: Well, we need to be grateful that somehow, he's going to be brought to account for his deeds. And there may be no other way. You know, this tribunal, I'm told, can't enforce subpoenas and can't compel testimony, but the judge can allow him to call witnesses. And there might be some moral pressure for them to appear.

So he's got this long list. A head of state cannot be called, but Dole, Albright, and Clinton. And if he -- if Milosevic needs a stunt to draw attention to his trial, what would be better than -- it worked for Paula Jones to have Clinton called. I mean, it might work for him to turn this into a show trial.

Do you think there's any possibility that this list of witnesses could -- any of them could be called? EAGLEBURGER: No, I don't. I mean, they might be called, but I don't think any of them can be forced to attend. And I think they would be foolish to do so. So I don't think this can be turned into that kind of a show trial.

As it is now, it seems to me, it's almost dull because he's so dull. And it goes on and on for hours. So I'm not at all sure you can get much enthusiasm for watching it anyway.


HUNT: Larry, this thug, as you I think so aptly suggested he is, is almost certainly trying to play to the hometown audience, to the Serbs. How do you think it's going over back there? And what effect will it have on that country?

EAGLEBURGER: I have to be careful how I say this, but I must tell you, I have believed all along that Milosevic's popularity within Serbia is fairly substantial. It was very substantial at one stage. I think with the losing of the Kosovo war and so forth, and the pain and anguish that went with that, his popularity is substantially decreased.

But if I know my Serbs, I'm telling you now that this trial will play on them in a way that will supportive of Milosevic and will not do a great deal of good for the present government in Belgrade.

HUNT: I was going to say what's the upshot then, you know, on that troubled country?

EAGLEBURGER: Well, in the end, I think what happens now is that -- well, I don't think there's much of anywhere they can go, Al. The point is that at this stage, they've all been beat up enough. They will now try to create some sort of democracy out of this mess, but they will be unhappy about the Milosevic thing, but there's not much they can do about it.

SHIELDS: Larry, you and Bob Novak, I think, speak to many people when you talk about the reservations of the trial itself and the way it's been conducted. And tell me this, your knowledge, and I think it's universally accepted that this man is responsible for the murder of thousands of people. What is the legal remedy absent the trial we have now?

EAGLEBURGER: You're asking me to solve a question that civilized human race has not been able to establish in years, but I'm not saying -- here's my point, I'm not saying that I think Milosevic should not be tried. And even that the methods of the trial don't bother me particularly. It is the concept itself, but at the same time I'm prepared to concede to you that in this case, if there's anybody that deserves this sort of treatment, it is a Milosevic.

But I will also remind you that this is the kind of treatment that could be done to losers in small countries. I cannot -- I can't imagine that we could ever impose something like this on some leader in Russia, for example. So this is something that's going to -- it will make a difference as far as leaders in small countries are concerned. I do not think it applies to anything much beyond that.

SHIELDS: OK. Bob Novak...

NOVAK: Larry, there was one faintly interesting thing in this (UNINTELLIGIBLE) by Milosevic. And that was that the Muslims that lost the war in -- that won in the war in Kosovo, I beg your pardon, that won the war in Kosovo against the Serbs had some connections with the international Muslim terrorists who perpetrated the September 11 attacks. Do you think he's got any point there? Not judging Milosevic, but whether there's any factual basis for that?

EAGLEBURGER: I wouldn't be -- well, it depends on how hard you want to stretch it. I have, myself, would not be surprised if there weren't fairly substantial connections between some of the Kosovar Muslims and some of the terrorist groups. Whether they are directly connected to Osama bin Laden or any of that sort of thing, I don't know. But I would not be surprised if there isn't some influence from outside terrorist groups.

SHIELDS: OK. Lawrence Eagleburger, we thank you for being with us. The gang will be back with the outrage of the week.


SHIELDS: And now for the "Outrage of the Week." Look up bombastic in the dictionary, and chances are good you'll see a picture there of Arizona Republican Congressman J.D. Hayworth, whom conservative colleague Matt Salmon called Foghorn/Leghorn after the cartoon character.

This week in the House floor, J.D. Hayworth backed an amendment to bar all campaign contributions from resident non-citizens. When critics of the amendment called it a legislative poison pill, J.D. erupted. "I guess it's poisonous to disallow enemies of the state access to our political system." Not exactly welcoming words to naturalized immigrants, whose votes his Republican Party are seeking -- Bob Novak.

NOVAK: Secretary of State Colin Powell has been superb in building a global coalition against terrorism. Not so, domestically. Mistake number one, appearing on MTV. Mistake number two, neglecting abstinence, while boosting condoms for young people. Mistake number three.


POWELL: It is important that the whole international community come together, speak candidly about it, forget about taboos, forget about conservative ideas with respect to what you should tell young people.


NOVAK: Mr. Secretary, I thought President Bush wanted to tell young people about conservative ideas?

SHIELDS: Margaret Carlson?

CARLSON: Bob Novak, you can't tell the difference between a matter of life and death and a matter of lifestyle. I'm all for abstinence. I'd put my daughter in a burkah when she went off to college. But even if abstinence is the best policy, a condom is the second best policy. A government that can stop the dying is morally obligated to do so. The right wing should realize AIDS could mushroom here, as it has in Africa.

Luckily, Colin Powell didn't leave his principles at the cabinet room door. Bush should follow his example.


HUNT: Mark, since this show began, another 500 Americans have lost their unemployment benefits, 11,000 each week. The Senate, with President Bush's support, voted to extend these benefits for 13 weeks, as has been done in every recession for 40 years.

But the House Republican leadership says, "No way," unless it includes huge tax breaks for the wealthy. After all, GOP Majority Leader Dick Armey charges unemployment benefits "are not commensurate with the American spirit." Imagine the nerve of those millions of Americans to lose their jobs since September the 11th.

SHIELDS: This is Mark Shields saying good night for THE CAPITAL GANG. If you missed any part of this program, I am personally sorry, but you can catch the replay at 11:00 p.m. Eastern, and again at 4:00 a.m. Eastern, when Margaret Carlson will be watching.




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