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Opposition Emerges on Iraq Strike; Israelis and Palestinians Attempt to End Impasse; Dingell Smashes Michigan Competition

Aired August 10, 2002 - 19:00   ET



I'm Mark Shields with Robert Novak, Kate O'Beirne, and in New York, Margaret Carlson.

Our guest is Democratic Congressman Barney Frank of Massachusetts. Barney, thanks for coming back.


SHIELDS: After months of lying low, Vice President Dick Cheney emerged in San Francisco addressing the Commonwealth Club and was asked about his desire for a second term.


DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: Well, I suppose two people are going to figure very prominently in that decision. One is obviously the president, and the other's my wife. If the president's willing and if my wife approves, and if the doctors say it's OK, then I'd be happy to serve a second term.


SHIELDS: The vice president was also asked about the Securities and Exchange Commission's investigation of accounting practices at the Halliburton Energy firm that he formerly headed.


CHENEY: I am of necessity restrained in terms of what I can say about that matter, because there are editorial writers all over America poised to put pen to paper and condemn me for exercising undue improper influence if I say too much about it.


SHIELDS: Bob Novak, is another Bush-Cheney term good news for President George W. Bush?

ROBERT NOVAK, CAPITAL GANG: The best kind of news, because he's been a terrific vice president. He's the most influential, powerful vice president I have seen in 45 years here. Unlike Al Gore and some people, it's not just publicity, he really does the job. Certainly doesn't hurt on the ticket for the next time if he's able to run.

The only thing that the Democrats in this wall-to-wall campaign of trying to tie corporate sleaze to the Republican Party have attacked the Halliburton firm because he is the CEO. They're not attacking him because he was -- because of Halliburton, they're attacking Halliburton because of him.

But I think that's a political nonstarter.

SHIELDS: Margaret Carlson in New York, it's hard to make the case, I think, as Bob does, that Dick Cheney is a great political asset, certainly in 2000. If Tom Ridge had been the vice presidential choice, George Bush would have won the presidency without all the Florida brouhaha.

MARGARET CARLSON, CAPITAL GANG: Indeed he would have, but he won, and he's there, and Dick Cheney happens to be a reassuring presence, given that we have this -- the international problems that we do, because George Bush has virtually no experience in that area.

But in fact, you know, the vice president, he was running the country, remember? His first life, he was running the country. And then he disappeared, a suitcase on two wheels and going from undisclosed location to undisclosed location. And George Bush looked fine handling 9/11 and the aftermath.

Now he's back. Halliburton is not a good reason to stay off stage in particular, because now he has -- he's able to say, hey, it's in the hands of the lawyers.

And next to Rumsfeld, he is the most authoritative person in the administration, and remember, everyone thought this is just what George Bush needed, a real grownup at his side.

SHIELDS: OK, Barney Frank, your own take on the vice president and his reemergence out there.

FRANK: Well, first of all, I think the most important thing for Bush about Cheney running again is that it avoids the very difficult decision about who else it would be. Tom Ridge would have some attractions, but his having not (UNINTELLIGIBLE) outlawing abortion would have caused great friction.

And I think the advantage of Cheney is, it allows Bush not to have this reopening of this tremendous thing. There would be a big issue about whether or not it would be Colin Powell, who is on many issues too far to the left for many Republicans.

As to the Halliburton thing, I have to say, I think people ought to resist saying things in public that almost no one will believe. I mean, I know it's hard when you're a politician to always be totally credible.

When Dick Cheney says he can't talk about this because people will think he's trying to influence the SEC, I find that totally noncredible. In the first place, to the extent that there's influence on the SEC, it's the fact that he's the vice president. Harvey Pitt knows that without Dick Cheney opening his mouth.

The fact is that he obviously finds some aspect of this either embarrassing or he'd rather change the subject. I must say here, I agreed with the piece I saw that Kate had written in which she said, "No politician in trouble ever was wise to say, Oh, my lawyers told me not to say anything."

That's not good political advice, and I must say about Halliburton, I am puzzled as to why Dick Cheney will not defend himself.

SHIELDS: High praise indeed for you, Kate O'Beirne, it...

KATE O'BEIRNE, CAPITAL GANG: Mark, he would clearly -- I disagree. He would clear -- If he were to say, if he were to talk about the merits of the Halliburton case, and I must say, anybody I've spoken to at the White House is convincingly unconcerned about the fact of the Halliburton case and what I know of it and it's explained in detail on their Web site, which Dick Cheney has now referred people to, there is nothing there.

And he himself, of course, is not even a target of this. But I disagree, if he were to make the case on the merits, there of course would be editorial writers saying, See? He's trying to make his case to the SEC. They of course know he's vice president. He's trying to lean on the SEC.

I think the safest thing is to say, I'm not talking about it until it's over, and then he'll be...

FRANK: Well, (UNINTELLIGIBLE) wrote something...

O'BEIRNE: ... he'll be...

FRANK: ... (UNINTELLIGIBLE) directly...

O'BEIRNE: ... he'll be totally...

FRANK: ... contrary to that...

O'BEIRNE: No, no. I recommended...

FRANK: ... when you said he ought to be speaking out. But I also say it's not simply -- why -- the notion that editorial writers will criticize you, well, then don't go into politics...

O'BEIRNE: I said...

FRANK: ... if you're that fear of editorial writers, you ought to be institutionalized...

O'BEIRNE: I said I thought we missed him...

FRANK: ... not a politician.

O'BEIRNE: ... speaking out, and on the corporate governance, on the administration's economic agenda. He's a very important voice on all that.

FRANK: Yes, but he can't speak out on corporate governance without...

O'BEIRNE: Well, he just did.

FRANK: ... talking about Halliburton.

O'BEIRNE: And he just did, and it was, I think, well received and reassuring.

NOVAK: Let me respond to something that Margaret said, saying that he suddenly disappeared. You hadn't seen him, and so he's not an important figure. That's a kind of a media outlook, if you don't see the guy on the Sunday shows and on the -- and giving press conferences...


NOVAK: ... and CAPITAL GANG, he's not there. He -- by my reporting, he is into everything. Some people don't like the things he's into, but he...


NOVAK: ... he does, he is absolutely the hardest-working. Well, I wouldn't say he's the hardest working, he is the most influential vice president that I have come across.

SHIELDS: Margaret?

CARLSON: Bob, but as far as a presence on the stage, Bush occupied it totally after 9/11. And, you know, there's a point about Halliburton I didn't make, which is, those people who really want to use it against him have not found the smoking gun. Maybe it's there, I don't know, I'm not a business reporter.

But it hasn't caught fire. So I wonder if he is as vulnerable. Is he vulnerable enough that he'd want to stay backstage? And, you know, by the way, the guy picked himself the first time. It's good to see he's picking himself the second time.

SHIELDS: Barney, Barney Frank, one thing, one argument I always hear from Republicans is, if Dick Cheney is -- does run again, it saves the whole problem of a successor if George W. Bush were to win a second term, because whomever he chose in his place would be considered, you know, I don't think people considered Dick Cheney a plausible candidate for 2008.

FRANK: Cheney himself says that. But can I just say on Halliburton, it is not simply whether or not there's corruption. Dick Cheney's great success as a brilliant CEO with no help from the government, he told Joe Lieberman, was part of his argument. Now it turns out that Halliburton, not through Cheney directly, was making a lot of money with government contracts. So the notion that the government was irrelevant to Halliburton's success is wrong. But also, it's legitimate when he ran for office as this great successful CEO to look at the Halliburton performance not from the corruption standpoint but from the competence standpoint.

O'BEIRNE: You know (UNINTELLIGIBLE) media line that all of a sudden this corporate experience that somebody in the Bush administration is a negative. A CNN poll this week found -- this week -- 72 percent of the public think it is a good thing that both George Bush and Dick Cheney have corporate experience.

So it's a media fiction that this is bothering anybody but them.

FRANK: (UNINTELLIGIBLE) whether or not he did a good or bad job ought to be discussed, and it turns out that the brilliance that he was running on in 2000 looks a lot less brilliant a couple years later.

SHIELDS: Last word, Barney Frank.

THE GANG OF FIVE will be back with an old bull's survival in Michigan.


SHIELDS: Welcome back.

Democratic Congressman John Dingell of Michigan, the senior member of the U.S. House of Representatives, survived the most serious challenge of his entire 23-term career. In a Democratic primary contest between two incumbents, he defeated Congresswoman Lynn Rivers by 59 percent to 41 percent.


REP. JOHN DINGELL (D), MICHIGAN: She did make us work. This was the doggondest election that I've ever seen. Our people here are, in the words that my dad used to use, as loyal as dogs.

REP. LYNN RIVERS (D), MICHIGAN: The issues that I have advocated, gun safety, a woman's right to choose, and protecting the environment have resonated across this district.

And I am not going away.


SHIELDS: Margaret Carlson, was John Dingell's victory a defeat for gun safety, the right to choose, and the environment?

CARLSON: Not exactly. John Dingell isn't bad on all but the guns issues. On the environment, he was a sponsor of the Clean Air Act. On abortion, he's against partial birth abortion, and what sane person is not against it?

On guns, he's in a -- he duck hunts, and he's in a gun state. And across the country the pro-gun safety doesn't work as an issue if you are for it to the extent where the NRA comes out against you. It's a single voting issue for them, it's not a single voting issue for most voters.

So I think Dingell is where most people are. She ran on being a woman, Emily's List supported her primarily, you know, she was a teenaged mother who had a lot of problems, and she threw that out there, and that's what she ran on, and it doesn't work.

Women are too sophisticated for that now.

SHIELDS: John Dingell, it turns out, did get almost half, I think, about half the women's vote in that race, and it seemed that performance and effectiveness trumped biography.

NOVAK: Well, (UNINTELLIGIBLE) I happen to like John Dingell. I think I disagree with the man, but I like him. And he's -- one of the reasons is, he's the only member of the House of Representatives who, when I came to Washington, was a member and is still there. And the other thing is, is that...


NOVAK: ... any Democratic who was anti-(UNINTELLIGIBLE), pro- gun, and anti-partial birth abortion and (UNINTELLIGIBLE) that there are a lot of Democrats who do not oppose partial birth abortion is OK.



NOVAK: I think, I think, I think he's a Neanderthal, though. I think he's like a dinosaur, he's disappearing. I think Lynn Rivers is, for better or for worse, the future voice and face of the Democratic Party. That's the kind of people they're going to get. I don't think that's too good for the Democrats, but I think that's what's going to happen.

SHIELDS: Barney, 3 to 2 victory, though, for the Dingell.

FRANK: Yes, I -- look, the first thing that's -- we should be clear about, this is the biggest defeat at all (ph) on something that used to be a hot issue. Remember term limits? John Dingell has been in Congress longer than most of the term limit advocates have been alive. And a few years...

NOVAK: And here's Bob Novak, loving both (UNINTELLIGIBLE), John Dingell and term limits.

FRANK: And loving him -- by the way, one of John's, one of John Dingell's great assets was the fact that he's been in Congress for so long and has done well. And I literally think we should note this is a total repudiation by those people of the term limits idea.

Beyond that, I think Margaret is right about the gun issue. The gun issue has always been a stronger issue for the people against any regulation of guns than it is who are for it. Majorities will say they're for it, but very few of those people vote on that basis.

Beyond that, the issue differences between John Dingell and Lynn Rivers, frankly, weren't that great. I mean, in a primary, you tend to magnify them. But my guess is that they have voted together 90- plus percent of the time, and on most of the big issues, the economic issues, which really are the dominant ones in most elections, they're pretty similar.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Well, I think we saw most recently in Michigan that Emily's List, devoted singly to electing pro-choice women, has a whole lot of money but not very many troops. It's not peculiar to Michigan. They've lost more of the races they've gone into this season, election season, than they've won.

And I think it's because the NRA has more troops, as Barney pointed out, unions can put grassroots people out, and pro-life forces can too. So it's a real setback for the Emily's List formula of backing any woman, regardless of how good male candidates may have been on the abortion issue.

SHIELDS: Let me just toss in...

O'BEIRNE: By their lights.

SHIELDS: ... this little bit of reporting from Michigan, and that is, I think if Lynn Rivers had won this race, it would have been what the politicians call an upside-down victory. She would have won on the environment, on choice, and on gun control, which are not at the foremost of most voters' primary concerns in 2002.

John Dingell won, I mean, how the Democrats have to win in November, which is being tough on corporate malefactors, being big on Social Security, big on Medicare, big on health care.

NOVAK: And lots of labor support...


FRANK: ... I should also point out that...

CARLSON: Mark...

FRANK: ... a pro-choice woman, Jennifer Granholm, won a very big victory for governor...

SHIELDS: She did.

FRANK: ... in the Democratic primary over one of the outstanding public officials in my lifetime, Dave Bonior, who's a very tough guy, who happens to be...


FRANK: ... conscientiously opposed to abortion. So the -- what it shows is...


FRANK: ... that those are not the central issues for people.


CARLSON: Mark...

SHIELDS: OK, go ahead, Margaret.

CARLSON: I just wanted to ask a question of Bob, did I understand that he's against dinosaurs?

NOVAK: Well, no, I said (UNINTELLIGIBLE)...

CARLSON: You've been here as long as John Dingell.

NOVAK: I like, I like dinosaurs, and that's why, even though I'm a great advocate of term limits, I am (UNINTELLIGIBLE). But I just don't, what I don't think, Barney, you're not going to see many people with the profile of John Dingell. And don't forget, John Dingell was a strong anti-Kyoto, pro-auto industry congressman...

FRANK: (UNINTELLIGIBLE) big issues. But let me just clarify, Margaret, Bob is anti-Brontosaurus, but he's very pro-Tyrannosaurus Rex.

SHIELDS: He is. Tyrannosaurus Robert.


SHIELDS: OK, next on CAPITAL GANG, Saudi Arabia, ally or enemy?


SHIELDS: Welcome back.

"Washington Post" reporter Thomas Ricks reported a briefing in the Pentagon's defense policy board by a Rand Corporation analyst calling on Saudi Arabia to stop backing terrorism or to face U.S. seizure of its oil fields and of its U.S. financial assets.

The briefer said, quote, "The Saudis are active of every level of the terror chain. From planners to financiers, from cadre to foot soldier, from ideologist to cheerleader, Saudi Arabia supports our enemy and attacks our allies," end quote.


DONALD RUMSFELD, SECRETARY OF DEFENSE: ... not represent the Defense Policy Board's views, it does not represent the Department of Defense's views, and no senior member of the Department of Defense was there to hear it.

CHENEY: We've had a very good relationship with the Saudis now for about 60 years. It's been a very productive relationship in terms of the values that we gain from it and that the Saudis gain from it as well.


SHIELDS: Saudi government reaffirmed that it would not permit use of its bases for a expected attack on Iraq.

Kate O'Beirne, is Saudi Arabia ally or enemy?

O'BEIRNE: Mark, the Saudi-American friendship is a fairy tale, complete with a kingdom and princes. This briefing at the Pentagon happens to be true. Now, it's not the administration's policy, but sometimes fictions are important in the world of diplomacy. And it's certainly true that in the past during the cold war we had more common interests with the -- with Saudi Arabia. Oil has always been a very important export of theirs.

But now that they're also exporting this strain of radical Islam that killed 3,000 Americans, the American public increasingly sees them as not a friendly regime. And I think the man spoke the truth.

SHIELDS: Margaret Carlson in New York, is Kate O'Beirne right?

CARLSON: She is, in a way. We need Saudi Arabia, so we don't want these things said publicly about them because it, it, it hurts, it hurts our relationship with them. They have a lot of pride.

But the first half of that report, every word is true, and it's been written everywhere, you know, that the regime is corrupt, and they play to the street, and they have fund raisers and telethons for terrorists and suicide bombers.

So these things are true. But we need them so much, it can't be said in polite society.

And the second part of that report was Dr. Strangelovian. Are we going to bomb the, you know, take over the oil fields? Are we going to invade Saudi Arabia. I mean, this is crazy stuff. We're not going to do that. It'd be nice if they were more cooperative and they pulled back on some of what they've done.

But they are not the country it was during the Gulf War. A lot has happened there, and they are a lot -- the, the, the ruling family is more precarious and has to throw more red meat, or goat, to the street.

SHIELDS: Bob Novak, when Don Rumsfeld, secretary of defense, says it does not represent the views of the Defense Policy Board, that was, that was not true.

NOVAK: Well, it represents the views of the chairman of the Defense Policy Board, Richard Perl. From the moment we had the 9/11 attack, Richard Perl, my old friend, (UNINTELLIGIBLE) fellow cold warrior, has had a strategy, and that is, to pit the United States against the rest of the -- all of the Arab world. Our only friend then becomes Israel.

We attack Iraq, we, and we isolate Saudi Arabia. So you have had, you had immediately, I went on a, right after 9/11, I went on a "National Review" cruise, and I couldn't believe my fellow conservatives were attacking. They said Saudi Arabia is the enemy.

That stuff is blather than why, than Richard Perl put up, put out there, and it was, it is not true, they are not a terrorist state, and I'll tell you this, you get rid of the royal family there, and remember what we did when we got rid of the shah of Iran and the crowd that came in there.

SHIELDS: Barney, Barney Frank, I don't know if you RSVP'd on your invitation to that "National Review" cruise that Bob...

FRANK: (UNINTELLIGIBLE) struck by their tolerance and the fact that Novak made it back to shore.

SHIELDS: That's right, (UNINTELLIGIBLE). But -- and seriously, Barney, why would so many countries that strongly backed the U.S. in 1991 with first President Bush in its -- our military invasion of Iraq? I mean, we seem isolated at this point, and this...

FRANK: It's a matter of self-interest. I think with regard to the Saudis, clearly they are a society that's very hostile to most of our values. But that does not mean that there are no common points of interest. We have some points of agreement.

They have a need to sell oil as we have a need to buy it. And that's a two-sided relationship. I believe they need to sell it economically as much as we need to buy it.

So I agreed with Margaret's denigration of this proposal that we bomb the oil fields and seize them. I mean, this Lawrence of Arabia fantasy is unbecoming.

On the other hand, I do think we fail to use leverage that we've got. Yes, there are points of cooperation with regard to the Saudis, but they need us at least as much, if not more, than we need them.

And the way we kowtow to them with regard to banning the religion for an American soldier or woman who's serving her...

O'BEIRNE: Right.

FRANK: ... country, to have to wear one of those outfits...

O'BEIRNE: And the...

FRANK: ... that's an outrageous...

O'BEIRNE: And the...

FRANK: ... thing, and they need us, and we're not...

O'BEIRNE: Right. FRANK: ... they're not doing us a favor.

NOVAK: But that, but that is, that is the kind of stuff that people pick on and...


FRANK: ... values, pick on it.

NOVAK: ... the same kind of, the same kind of stuff we did with Iran and the catastrophe that occurred there. I will say this, that this is a conscious conspiracy so we end up in the Middle East, I, Middle East...


NOVAK: ... us...


NOVAK: ... let me finish my sentence, let me finish my sentence. Us and Israel, that's all they want...


O'BEIRNE: ... the Saudis are certainly -- certainly helping this conspiracy, are they, by being so unfriendly to us. The difference between now and the Gulf War was, in the Gulf War, they were perfectly willing to sacrifice American lives to save their corrupt regime. Now that we need some help to defend and protect American lives, they're not there for us.

FRANK: And Bob, you're entitled to your grievance against Israel. But to say that that means we should not protect American service women from being abused in Saudi Arabia...


FRANK: ... but that's what we talked about. You said, Oh, that's part of a plot.

NOVAK: It is part of a plot.

FRANK: So I think it's possible, I think it is possible to defend American values. When we were over there to try and defend people, and say that no, that doesn't become part of...


NOVAK: ... you'd be the last person in the world who would say that we have to impose our values on every country in the world.

FRANK: When we send an American soldier over there to defend them, to say that she's not going to be abused...

SHIELDS: It's in our interest, but... FRANK: ... she's not going to be abused, that's not imposing our values on them.

SHIELDS: Margaret Carlson, one, one piece of news, just late this week, was majority leader Dick Armey of the -- Republican from Texas coming out against a U.S. invasion of Iraq. So it's not all limited to our allies, the opposition.

CARLSON: Well, he'll be leaving soon. No, it's probably not such a unified front. But I want to say to Barney, you know, we need that base there. That's one thing where we need them more than they need us.

FRANK: No, Margaret...

CARLSON: We've got...

FRANK: ... they need us as much as we need them. If it wasn't for that base, Saddam Hussein would now be in Riyadh.

O'BEIRNE: Right.

CARLSON: Well, I don't think they see it that way, and...

FRANK: Well, of course they see it that way.

CARLSON: ... for us right now...

FRANK: They know that, that's why they let us be there...

CARLSON: ... for us right now...

FRANK: ... in Saudi Arabia.

CARLSON: ... if they were to push us out of there, they say, No, you can't fly with bombs, but if they were to move the United States out of that base, where would we be...

FRANK: And they would (ph) do that...

CARLSON: ... in that region?

FRANK: ... because they're afraid of Saddam.

CARLSON: It would be a terrible thing.

SHIELDS: Last word, Margaret Carlson. We'll be back with a CAPITAL GANG classic, the first time we talked about Osama bin Laden.


SHIELDS: Welcome back.

Four years ago in the wake of the U.S. embassy bombings in Africa, former Secretary of State Lawrence Eagleburger suggested the U.S. should go after Osama bin Laden in Afghanistan. THE CAPITAL GANG talked about the Saudi billionaire terrorist leader for the very first time on August 15, 1998. Our guest was former Democratic congressswoman Pat Schroeder of Colorado.


SHIELDS: Bob Novak, is it now time to get tough on terrorism?

NOVAK: Well, if getting tough means sending a hit team to Afghanistan to kill somebody, I really can't believe my good friend Larry Eagleburger really would do that if he were secretary of state. We have a foreign policy, particularly in regard to Israel, which makes us hated by many people over the world. And since we are hated, we should really not have these exposed positions in these backwater countries with just these huge embassies...

O'BEIRNE: I'm not going to join the blame-America chorus, like we should maybe apologize for provoking the attack on us. The way to deal with it is effective retaliation. And I think this administration has to show a lot of -- a lot more strength in dealing with these attacks in order to try to deter them.

PAT SCHROEDER (D), FORMER CONGRESSWOMAN: Yes, I'd love to retaliate, I just don't know who we retaliate against. I think at this point we have to do a little more research till we know who did it.

AL HUNT, CAPITAL GANG: I want to dissociate myself from everything Robert Novak said, you know, for starters. I do, I do share Larry Eagleburger and Kate's desire to strike back, but I think that's right, it's very hard...


SHIELDS: Bob, in retrospect, was Larry Eagleburger right and Kate O'Beirne right, and were you wrong about going after Osama bin Laden?

NOVAK: Well, I'm afraid so, as history has proved. I really don't like sending out assassination teams. I don't think it's civilized and I don't think it's American. But it would have been nice to have eliminated him at that -- at that time.

But it was a different world then.

SHIELDS: Barney.

FRANK: Well, I am struck by Bob (UNINTELLIGIBLE) blame Israel here as he did with regard to the Saudi Arabian dress code. Yes, it was right to try to get Osama bin Laden. It's harder. I mean, people say, Well, how come we didn't? And the answer is, it's not easy to do that. But I think Bill Clinton's attack and effort to get Osama bin Laden now is -- was quite justified.

SHIELDS: Margaret Carlson. CARLSON: Mark, it gives me great pleasure to align myself with everyone but Bob Novak on that particular CAPITAL GANG. What we see, however, is that even when the whole U.S. military is trying to get Osama bin Laden, they cannot. So retaliation, yes, but how?

Still our problem.

SHIELDS: Kate, are you going to be humble in victory?

O'BEIRNE: Nineteen Americans have been killed three years earlier in Saudi Arabia, the embassy bombings, 87 people. Nobody said it was going to be easy, it wouldn't be hard to Osama bin Laden. But it sure was a lot harder to suffer the murder of 3,000 Americans.

SHIELDS: OK, last word, Kate O'Beirne.

Barney Frank, thank you for being with us.

We'll be back with the second half of THE CAPITAL GANG, our Newsmaker of the Week is Colorado's Republican Governor Bill Owens. Beyond the Beltway looks at the Israeli-Palestinian standoff with CNN's senior international correspondent, Walter Rodgers.

That and our Outrage of the Week, all after the latest news following these urgently important messages.



SHIELDS: Welcome back to the second half of THE CAPITAL GANG. I'm Mark Shields with Robert Novak, Kate O'Beirne, and in New York, Margaret Carlson.

Our Newsmaker of the Week is Colorado's Republican governor, Bill Owens.

Bill Owens, age 51, residence Denver, Colorado, religion Roman Catholic. Bachelor's degree, Austin, Texas, State University. Master's degree, University of Texas. Twelve years served Colorado's state legislature, elected Colorado state treasurer in 1994, elected governor in 1998.

Earlier this week, Kate O'Beirne interviewed Governor Owens from Denver.


O'BEIRNE: Governor, the states face a combined $50 billion deficit next year. Colorado's budget, on the other hand, is in better shape than most. Why?

GOV. BILL OWENS (R), COLORADO: Yes, we've really been lucky here in Colorado that the voters in 1992 have put in place a constitutional amendment which limited government growth to the same rate of growth as the nongovernmental sector. That means we didn't overbuild government in the good years, and it means when these tough years come along, we're not going to be as impacted as some of our fellow governors in other states.

O'BEIRNE: But tax receipts in Colorado are down.

OWENS: Sure they are.

O'BEIRNE: How do you hope to handle the shortfall? Any tax increases in the offing?

OWENS: No, not at all. What I've done as governor is, we've put in place line item vetoes. I've ordered all my departments to cut spending by 4 percent. And we've seen the same decline in revenues. But what we've decided to do is shrink the size of government a little bit rather than try and increase taxes at precisely the worst time...

O'BEIRNE: Unlike most governors, you oppose taxes on sales made over the Internet. Why shouldn't Internet sales be taxed like purchases made at the mall?

OWENS: Well, there's a number of differences. First of all, when I go to the mall and purchase an item, I'm receiving benefit from the local government, from the state government. I'm being protected by the police and the fire professionals. When I buy something online, and it's delivered to my house by UPS, the only impact on government is that UPS truck, which more than pays its own way in terms of gas taxes.

So there's no benefit received by me from that transaction from government, so why on earth should I pay government for what is essentially a private transaction?

None of us are suffering because of the Internet, and we shouldn't certainly tax it at a time when it's still a growing industry.

O'BEIRNE: You recently vetoed legislative spending you called irresponsible that had been approved by some of you fellow Republicans. Some of us are advising President Bush to do the same thing. Any advice for him about controlling spending?

OWENS: Well, I certainly wouldn't want to give advice to the president. He knows better than I do in terms of -- especially after his years as a governor, how to control spending.

But I will suggest that an executive acts often as a brake upon the legislative branch. That's why in Colorado we've cut about a quarter of a billion dollars in spending from the budget that the legislature gave me.

O'BEIRNE: Why is Secretary of Education Rod Paige calling Colorado's education reforms the envy of the nation?

OWENS: We're pushing hard for accountability. We're pushing hard for standards. We're not accepting excuses. We're demanding more from our educators. And we're also putting resources into the mix. The teachers' union doesn't like much of what I'm doing.

But I think the results in terms of improved education for the children are proving that what we're up to here in Colorado and elsewhere in the country really can work if o give it the time and really push for reform.

O'BEIRNE: Governor, many people thought that the shooting at Columbine would hurt the gun rights agenda. Has it in Colorado?

OWENS: You know, it hasn't, with one exception. We were about to pass a concealed carry bill. We were just in the last week of the legislative session when that Columbine tragedy occurred. All gun bills were pulled by their sponsors, including that bill.

Had Columbine not occurred, we'd have a right-to-carry bill, you know, in Colorado, because I would have signed it. Because of Columbine, we still haven't been able to pass that legislation. We still respect the rights of gun owners, and hunting is on the rise i Colorado.

O'BEIRNE: Bob Novak cited you as one of the country's 10 up-and- coming leaders. Isn't that likely to cost you some votes?

OWENS: Well, you know, I've had to deal with drought, I've had to deal with fire, but that's been an incredible challenge for me to try to overcome.


SHIELDS: Kate, did I understand Governor Bill Owens to be saying that there's less political risk in cutting public services than in raising taxes?

O'BEIRNE: How did you like my tough interview, Mark?

SHIELDS: I was going to say, boy, oh, boy, that poor guy, he must have been squirming.

O'BEIRNE: I confess that I'm smitten, but so are a whole lot of other people. The governor's conservative agenda has been extremely successful in Colorado. In the latest polls, he's up, public polls, he's up by 30 points in his reelection bid.

Yes, his agenda of cutting spending and cutting taxes has allowed Colorado to be spared the fiscal trouble other states are in, and it looks like he's going to be really rewarded for that in November.

SHIELDS: Margaret Carlson.

CARLSON: You know, it makes me sad to say this, because I owe a lot to the nuns, but it seems like you always have to make the teachers' union mad to show progress in education reform, which Governor Owens clearly has done. He's a beacon of hope.

And, you know, Mayor Mike Bloomberg has just named Joel Klein the chancellor of the schools there. He's put his whole administration on the line. And I think they're going to make to make the teachers' union mad.

SHIELDS: Bob Novak.

NOVAK: You know, it's really right to hear an attractive, intelligent person who sounds like a Republican. You don't hear much of that i Washington these days. I think he's terrific, pro-gun, small government. Boy, he's somebody I think you're going to want to look out for on the national scene.

At least, I said so several years ago right in "The National Review."

O'BEIRNE: (UNINTELLIGIBLE) you were there early, Bob.


CARLSON: You're always right, Bob.

SHIELDS: Bob, I'm telling you, you are, you are amazing.

And I did think there was a thinly veiled criticism of George W. Bush when he talked about vetoes. That was just my reading of it, Kate.

Next on CAPITAL GANG, Beyond the Beltway looks at Israelis and Palestinians with CNN's veteran reporter Walter Rodgers.


SHIELDS: Welcome back.

Following a series of terrorist attacks on Israel, Israel pushed its military offensives on the West Bank and in Gaza.


ARIEL SHARON, ISRAELI PRIME MINISTER (voice of translator): Israel's aim is to achieve peace. And, of course, before that, a diplomatic solution. And therefore we must have a stop to terror, a ceasefire. If the terror continues there will not be peace.


SHIELDS: Israel offered to withdraw its forces from some occupied areas in return for a Palestinian crackdown on militants.


NABIL SHA'ATH, PALESTINIAN CABINET MINISTER: We look at any withdrawal from any part of the Palestinian territories in the West Bank and Gaza.

SHIMON PERES, ISRAELI FOREIGN MINISTER: I do believe that the idea to start gradually to pacify areas has a chance to succeed.

(END VIDEO CLIP) SHIELDS: But talks to pin down the details ended in failure.

Joining us now from Jerusalem is CNN senior international correspondent, Walter Rodgers, who served for five and a half years as CNN's Jerusalem bureau chief.

Thank you for coming in, Walt.

Walt, who gets...


SHIELDS: Thank you. Walt, who gets the biggest blame for this most recent breakdown in negotiations?

RODGERS: Well, blame is what the Israelis and Palestinians usually assign to each other. This is the Middle East, blame assignment is not productive for a journalist.

What you should point out, however, is that this has been a very, very rough week for negotiations here. First the Palestinians and the Israelis met on Monday, things were fantastic, everything was going swimmingly. They met again Wednesday. By the time they finished Wednesday, they were shouting at each other.

Now, the problem is with Middle East peace negotiations is that it's like an old jalopy going down a road. Bob Novak and I covered Camp David together. We saw it with Jimmy Carter years ago. It happened with the -- it happened with Bebe Netanyahu in his negotiations in the Middle East.

It always happens. This old jalopy goes along, it goes bump, bump, bump, it hits a pothole, it breaks down, it has to be fixed again.

That's what we're seeing, the Israelis and the Palestinians will probably start talking again this coming week, but it's never, never easy. Middle East peace negotiations are about as much fun as a, as a, as a root canal.

And one of the other things you have to remember this time, which is very, very different, is Israelis and Palestinians have extraordinarily different agendas. The Palestinians are shooting for a state, and they're trying to remaneuver Yasser Arafat back to center stage here, may be impossible.

The Israelis' agenda in this part of the world at this point is, is even more interesting. They are trying to practice crisis maintenance. They want to keep the region quiet while George Bush prepares for war with Saddam Hussein.

That involves isolating, politically neutering, Yasser Arafat at this point. The (UNINTELLIGIBLE) -- the Israelis believe by doing that, they're going to be pleasing George Bush and the United States. The Israelis are willing to talk with the Palestinians, but only in the context of keeping things quiet in this part of the world until the central issue comes into focus. That's President Bush's upcoming war with Iraq.


SHIELDS: Bob Novak.

NOVAK: Well, the difference between the jalopy going down the road now and then is the presence of the prime minister, General Sharon, who, I understand on Friday went on the air and said that the Palestinian leaders were terrorists, at the same time the Palestinian leadership is meeting with the people at the highest level in Washington.

The impression you get is that Sharon is -- does not want a settlement because he doesn't want a Palestinian state and he doesn't want to give up the settlements. Is that unfair?

RODGERS: Well, I don't think that's unfair, but it may be a little strong. Here's the position, and I talked with someone in Sharon's office this week. The Israelis say they're -- what they want is reforms within the Palestinian movement. They want Arafat in a museum or a mausoleum. They want him out of the way. They say he's not a reliable partner.

They're willing to talk to other Palestinians. Sharon's problem, however, is that no Palestinian can talk either in Washington or to the Israelis without Arafat's blessings. He's still there behind the scenes as a manipulator of events.

Now, in a perfect world, the Israelis would like to see reform in the Palestinian territories. What Sharon's ultimate goal is, is subject to conjecture, and it may be exactly as you described it, no Palestinian state, and indeed Palestinians under the subjection of the Israelis.

Of course, Palestinians suspect that's his goal and motive and has been for some time.


SHIELDS: Margaret Carlson, Margaret Carlson.

CARLSON: Well, when the Israelis step over the line and bomb an apartment house and kill women and children, the Bush administration says, you know, You've gone too far. But it sounds like a passive observer in many ways.

What are the conversations like after that happens with Colin Powell or Condoleezza Rice or -- and Sharon? What, what does -- what does the United States actually say? And, and, and, and, you know, beyond, Don't do it again?

RODGERS: Well, the read here is that Condoleezza Rice, the president's national security adviser, read the riot act to the Israelis. But remember, the Israeli rationale in all of this, and I'm just quoting a source in the prime minister's office with whom I had an extended conversation this week, the Israelis say, Look, we had to hit Salah Shahaydah (ph), the reason being he was a senior Hamas military commander, and he was planning at least half a dozen mega-terrorist attacks, not little bus bombs that take out 10 or 20 people. They're talking about taking out 200 to 300 Israelis.

And the Israelis claim that they hit Shahaydah even -- that with -- including the 14 women and children, the civilians, they said that was the price they had to pay because this guy was going for mega- terrorist attacks that would maybe, you know, crash an airplane into a building in Tel Aviv, blow up a fuel farm.

The Israelis are really scared to death now of a mega-terrorist attack where the various Islamist militant groups in this part of the world vie with each other to see who can most replicate September 11 in the United States last year.

SHIELDS: OK, Walt, (UNINTELLIGIBLE), we have less than a minute. Kate O'Beirne.

O'BEIRNE: Walt, last week, a bomb at Hebrew University in Jerusalem killed five Americans, who are on that campus of Arabs and Jews, who are among professors and students who typically counsel negotiations and restraint. Has that unprecedented attack in that kind of a community had any effect on the peace activists in Israel?

RODGERS: Well, the peace activists have been muzzled for more than some time here. Before, you would see demonstrations in the streets. I can't remember the last demonstration in the street here.

One interesting thing I did read in an Israeli paper is that despite the attack which killed five American citizens at the Hebrew University, American kids, and particularly American Jewish kids, are volunteering to come back here to work with the ambulance squads, to work in crisis centers, to help Israelis in times of suicide bombings.


SHIELDS: Walt Rodgers, I thank you so much for being with us.

THE GANG will be back with our Outrages of the Week.


SHIELDS: Now for the Outrage of the Week.

Dennis Kozlowski, CEO of Tyco International, until indicted for evading more than $1 million in sales taxes, turns out to be one of the greediest human beings on the planet. According to "The Wall Street Journal," not only did Mr. Kozlowski get from Tyco more than $135 million in personal expenses, including $11 million in antiques for his New York penthouse, he also got his company to pay for a $6,000 gold and burgundy floral patterned shower curtain.

A shower curtain! This is corporate corruption. Where the hell was the Tyco's board of directors?

Bob Novak.

NOVAK: Jack Grubman is the epitome of the fabulously rich Wall Street wiseguy of the 1990s, continuing to recommend WorldCom stock long after investors had sold it down. He also happens to be a big Democrat. On the very day he was subpoenaed by Congress, Grubman wrote a $100,000 soft money check to the Democratic Senatorial Campaign Committee.

Since 1998, Grubman had contributed $160,000 to the Democrats.

Can we stipulate that Wall Street sleaze is bipartisan?

Oh, by the way, the Democrats are keeping Grubman's money. No stipulation about it.

SHIELDS: Margaret Carlson.

CARLSON: Mark, Representative Bob Barr, an ardent gun-lover, shot one off Tuesday inside a supporter's house, claiming one victim, a sliding glass door.

But the shot should prove fatal to him. Always a loose cannon, Barr called for Clinton's impeachment the minute he was inaugurated.

He's now in a primary fight with a relatively reasonable congressman, John Lindner.

Lindner says to vote for him because, quote, "I won't embarrass you." He suggested Barr take gun safety lessons when the NRA comes to campaign for him. Barr snapped, "It's not a joking matter."

But Barr is.

SHIELDS: Kate O'Beirne.

O'BEIRNE: When President Bush visited Mississippi this week, he highlighted the health care crisis caused by frivolous lawsuits and out-of-control jury awards that cost the federal government $30 billion a year. This year, Mississippi will lose 10 percent of its doctors, and 17 insurance companies no longer offer medical malpractice coverage, leaving pregnant women without doctors.

When will Democrats stop tending to wealthy trial lawyers and back the liability reform that will cure this expensive abuse?

SHIELDS: This is Mark Shields saying good night for THE CAPITAL GANG.

If you missed any part of our show, get down off the bridge. You can catch the replay at 11:00 p.m. Eastern and again at 4:00 a.m. Eastern.

Coming up next, "CNN PRESENTS: Captured -- Inside the Army's Secret School."


Palestinians Attempt to End Impasse; Dingell Smashes Michigan Competition>



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