FTN - 1/27/02

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BOB SCHIEFFER, Chief Washington Correspondent: Today on Face the Nation, Senate leaders Daschle and Lott on the Enron scandal and the congressional agenda.

How will the Enron situation affect Congress? Will the budget deficit define the agenda?

And should the White House reveal all its dealings with Enron?

All of these are the questions for the Democratic leader of the Senate, Tom Daschle, and Republican Minority Leader Trent Lott.

Gloria Borger will be here, and I'll have a final word on partisanship.

But first, Daschle and Lott on Face the Nation.

ANNOUNCER: Face the Nation, with CBS News Chief Washington correspondent Bob Schieffer.

And now from CBS News in Washington, Bob Schieffer.

SCHIEFFER: And good morning again.

We welcome first the Democratic leader is in the Senate, the Majority Leader Tom Daschle. Senator Daschle's in Florida today.

Senator, I want to start--I want to go directly to something that you said last week.

You compared the administration's handling of Social Security and the economy to the Enron scandal. You said specifically, "We are slowly Enroning the economy, Enronizing the budget. We are all taking the same approach that Enron took," referring to the administration.

That's a little strong, isn't it?

SEN. TOM DASCHLE, Majority Leader, D-SD: Well, Bob, keep in mind what happened.

You had thousands of employees who were victimized by a very small group of people in the Enron Corporation, taking their life savings, taking their livelihood and using it for purposes that we all know now were just wrong.

We've got to be very concerned. We're going into a very difficult period. Baby boomers are about to retire. We're going to be using $1 trillion of Social Security and Medicare trust funds over the course of the next 10 years for purposes other than retirement.

And so I think we've got to be very concerned about that. I don't want to see happen to all of the country; to our retirees what happened to employees of the Enron Corporation.

SCHIEFFER: But you're saying that the administration's handling of Social Security is akin to what Enron executives did? I mean, people are talking about there may be a criminal enterprise within Enron. That has not been shown at this point, but that's what people are saying may well happen. And you're saying that the administration's handling of the economy and Social Security is somewhat akin to that?

DASCHLE: I'm saying, Bob, that we have a real problem with regard to Social Security and Medicare. We're using those funds, a trillion dollars of those funds for purposes for which they were not intended. That's what happened with the Enron scandal, and I think we've got to be very concerned about that.

Obviously I'm not making any charges of criminal intent here. But we ought to be concerned. We ought to be very, very careful about the wa we manage our retirement funds, especially given the fact that our baby boomers are about to retire.

I don't want to see them left and dry just exactly like the Enron employees where left high and dry without any pension funds, without any retirement security.

GLORIA BORGER, U.S. News & World Report: So you think the administration is risking people's Social Security because of the way they're managing the economy?

DASCHLE: Oh, no question, Gloria. I think we've got to be very concerned.

As I say, we're going to see a trillion dollars of the trust funds used for purposes other than Social Security and retirement over the course of the next 10 years. That's, of course, in the addition to the fact that we've seen $4 trillion of the surplus evaporate entirely in the last eight or nine months.

So, we've seen a dramatic change in the course of our economy, and that is going to have a profound effect on the retirement security of all Americans, especially those baby boomers who are about to retire over the course of the next decade.

BORGER: Let's talk about the economic stimulus package for a moment because last week Alan Greenspan, the chairman of the Fed, said that perhaps the economy might be recovering, there might not be a need for an economic stimulus package.

So, why don't you just sort of hold off or give it up for now?

DASCHLE: Well, I think what the chairman was saying is that we've got to be very concerned about doing long-term harm.

And basically, I think, what he was saying is that some of the proposals made by Republican colleagues would do just that. Those huge deficits created by some of the proposals made by Republicans are just wrong.

What I think we have to do is short-term good and avoid doing long-term harm. There is a lot of short-term good that can be done. There are certain sectors of our economy that still are in deep trouble and, not to mention, of course, the millions of employees, the millions of workers who are left without jobs right now. He did say, of course, that we've got to be concerned about those unemployed workers and provide some help to them, especially in the short-term.

SCHIEFFER: Senator Daschle, let me go back to Enron and another aspect of it for just a minute.

Congress, the General Accounting Office has been demanding that the vice president, Vice President Cheney, turn over records of meetings that he had with various people as he formulated the energy policy.

It's my understanding that the vice president has just said that, no, he is not going to turn over those records, because it's a matter of principle. He says that the president and the vice president ought to have the right to meet with people, that it is not always in the public's interest for those meetings to be made public.

So he says, the bottom line, he is not going to release the records. What's your response to that?

DASCHLE: Well, I think hat's unfortunate, Bob. It may be a matter of principle, but it's also a matter of law. If this has to be resolved in the courts, I think that that may be the only recourse.

The General Accounting Office is on solid ground in demanding that these records be turned over. The American people have a right to know what the facts are. I think the administration needs to open up, to be willing to be forthcoming, with all the information regarding these circumstances.

Short of doing that, I think there is a lot of doubt, a lot of skepticism, questions asked about what really happened. I don't think they want to go there, but clearly, that appears to be the approach the administration is now taking.

SCHIEFFER: So, will you take any other action, besides what the General Accounting Office has done here on this, or will you just let the battle be fought there?

DASCHLE: Well, I think we have to see how this plays itself out. I think the General Accounting Office, as I said, is on solid ground, Bob, and if they have to go to court to get the job done, I think that that's an appropriate measure to be taken.

We will analyze just what our options are, what prospects there would be for Congress asserting itself. But clearly, the General Accounting Office ought to do what it needs to do, and I think they're on solid ground in pursuing this matter as aggressively as they have.

SCHIEFFER: Let me shift quickly to another matter, and that is also related to the budget. The president, we're told, is going to ask for the largest increase in defense spending since Ronald Reagan's first term.

Is he going to get that?

DASCHLE: Well, Bob, we want to see the details. Clearly, we recognize the importance of providing the support, both in terms of the budget as well as just the moral support we want to provide.

But we need to see the details. What is it going to be used for? Just what are the needs?

We want to be supportive. We recognize that we're fighting a war that is critical to the security of this country. So we'll look at the details and make some decisions at a later date.

BORGER: Senator Daschle, Senators McCain and Feingold sent the president a letter this week, asking him to announce in his State of the Union address coming up this Tuesday night, that he intends to sign a campaign finance reform bill.

Do you want him to do that?

DASCHLE: Absolutely, Gloria. This is something that should have been done a year ago. And now, with the Enron scandal, there's no question that there is real momentum behind campaign finance reform.

Let's not quibble over whether one or more of the smaller details are in complete agreement with the White House or the Congress. Let's get this job done. Time is wasting. We've got to see this legislation implemented sometime during this session of Congress, and it ought to be signed into law.

BORGER: Can I just ask to you follow up on he Enron scandal and campaign finance? I mean, aren't Democrats trying to have it both ways? Democrats and Republicans received an awful lot of money from Enron. Democrats and Republicans received an awful lot of money from the accounting industry.

Isn't it difficult for you to lay the blame all on one party and not on both?

DASCHLE: Well, we're not laying any blame. We're simply trying to get the facts.

We're trying to understand what happened.

And we've got to remember that one of the lessons out of this is that we've got to do something with the incredible mismanagement of employee pension funds. We cannot allow that to go unaddressed this year.

So in addition to campaign finance reform, Gloria, we've got an array of other corrective reform measures that must be taken.

There's a lot that can be learned, but I don't think either party ought to try to lay blame. Let's just let the facts speak for themselves.

SCHIEFFER: How do you respond, Senator, to the vice president's assertion that you have become an obstructionist to passing legislation?

DASCHLE: Well, I don't think the politics of personal destruction Bob, have any place in the public debate. So much for changing the tone in Washington. But I think that we've got to stick to the debate and try not to personalize these debates. It's unfortunate. It isn't necessary, and I don't think it does them a lot of good.

BORGER: Very quickly, Senator Daschle, should the detainees be treated as prisoners of war under the Geneva Convention?

DASCHLE: Well, Gloria, I haven't seen any indication of mistreatment here.

Obviously, we have to be concerned about whatever international ramifications and requirements there are.

But I was just in Central Asia, I was in Afghanistan, and there are a lot of troops there that don't appear to be getting the kind of treatment that I see in Guantanamo at this point.

But we'll look at the facts and try to make our best decision with regard to how they ought to be treated. But I don't see any evidence of mistreatment so far.

SCHIEFFER: And one quick question on the Middle East. The administration is now talking about perhaps breaking relations with Yasser Arafat. And today we have yet another terrible incident in Jerusalem, another suicide bombing.

Should the United States sever its ties with Yasser Arafat?

DASCHLE: Well, Bob, you're right, we've seen another example of the incredible violence perpetrated in large measure by terrorists in the Middle East, especially in Israel.

I don't think that anybody has any patience left for the way the PLO has conducted itself. I believe all options ought to be on the table, and I look forward to working with the administration to decide what course of action we ought to take.

SCHIEFFER: So you have not yet decided whether we ought to break relations with Arafat, but that's one of the options you're ready tconsider?

DASCHLE: I think that is an option we ought to consider. As I say, I want to work in very close consultation with the administration in this matter. I don't know that anybody in Congress has made the decision yet. But we've got to be very concerned about the extraordinary increase in the level of violence.

And we know now, because of the arms shipment, that there is a close association between all of that violence and what is happening within the ranks of the PLO and the leadership of the PLO. That has to be disconcerting, and we have to take into account those facts as we make our decision about our relationship with the PLO.

SCHIEFFER: All right, Senator Daschle, we'll leave it there. Thank you so much for joining us this morning.

When we come back, we'll talk to Trent Lott, the leader of the Republicans, in a minute.

(Commercial Break)

SCHIEFFER: And now, as we say, the rest of the story. We're talking now to the Republican leader in the Senate, Trent Lott.

Senator Lott, thank you for coming.

I want to pick up right where Tom Daschle left off. He said it is quite clear to him now that we have to considerate least the option of cutting off relations with Yasser Arafat.

What's your view of that?

SEN. TRENT LOTT, Minority Leader, R-MS: I agree with that, and I think the administration is looking seriously at that question. I think they've decided not to make the decision right now. But the arms shipment clearly pointed out that Arafat is not living up to his agreements.

They may actually decide they've got to move on beyond him. He has become irrelevant, not to mention irresponsible in his conduct.

The question is, if not Arafat, who? And, you know, how can we get the Middle East situation back in a posture where the terrorism, the killing can stop and we can find a way to get back to peace? But it seems that Arafat has taken himself out of that equation.

SCHIEFFER: Well, if the administration does in fact decide that let's just cut it off with Yasser Arafat, are you prepared to support that?

LOTT: I am. I think that they'll be very careful in that decision. I've watched the way they work in foreign policy issues. They do have internal discussions, in fact even debate. The president will be very careful. He will reach out and consult with others in the region. I believe that there would be widespread, broad and bipartisan support of a presidential decision in that area.

SCHIEFFER: Let's turn now to the vice president. He said today that, in fact, he is not going to release the records of the meetings he's had with various people as the administration formed its energy policy. He said it's a matter of principle; that ought to be kept confidential.

You just heard Senator Daschle say that's very unfortunate. What's your response?

LOTT: I think it's a matter of fact, everybody knows what happened there. This wa an internal administration task force that talked to a lot of different people. You want to encourage an administration to reach out and get a lot of different advice, and they have done that. I do think there's an important principle here.

Well, I also think that the proof is in the pudding, and that is they came up with a bill that is a broad bill that does address production needs, that does talk about conservation, electricity transmission, alternative fuels. The product was an excellent product that passed the House of Representatives with a broad bipartisan vote.

And, by the way, once again, as in so many other areas, the Senate has not acted. We need a national energy policy.

So, I understand what the vice president is saying. The administration wants to be forthcoming. GAO has certain, you know, responsibilities in this area, but in the 32 other instances they appear to have worked to resolve it.

I think that David Walker's, the comptroller of GAO, communicating and talking to the press before this thing comes to a conclusion was very unfortunate.

SCHIEFFER: Well, let me, let me just--Fred Thompson, Republican, member of your party, says that, you know, it's one thing to say whether or not it ought to be released. But he said from a political standpoint, this is hurting the administration.

And I bring that up because the new CBS News-New York Times poll says that 58 percent of the American people now believe the administration is hiding something.

LOTT: Well, I can assure you they're not hiding anything. I looked very closely at what Fred Thompson had to say. He was very careful. He said within the law of the Constitution, they're absolute right. It's a perception problem.

But I think that vice president going on TV this morning, answering questions about it.

The American people trust this man, have faith in him. They know he'll do the right thing, and he will find a way to make sure that everything that needs to be in the public arena will be.

BORGER: If your Republicans in your caucus had a vote, would they support the releasing of this information?

LOTT: Oh, I think they would want to make sure that they know what they're doing.

I've been around, you know, 34 years in this city, and I've seen presidents let their power be eroded. I've seen Congress try to take more and more and more.

It would be very easy from a political standpoint to say, what is this, you know. But they're wanting things that clearly they're not entitled to, wouldn't be helpful and, as a matter of fact, would chill discussion and a president and administration trying to get information they need.

But the easy thing would be to tell them, you know, give them whatever it is.

SCHIEFFER: You know, I asked Senator Daschle today about his characterization of your and the administration's handling of the economy as "Enroning" the economy. I know that stirred up Republican when he said that last week, but he stuck by his guns this morning.

LOTT: Well, that's very inappropriate.

You know, next week the president of the United States, that's been doing an outstanding job, that has the support of the American people, is going to be talking about what we have been through together over the last year; the experience we endured, how we did come together in this country.

There's a sense of unity, patriotism and a renewed spirit about this country. And the Congress reflected that in a bipartisan way. The American people liked that.

As we moved on into the end of the year, once again, you know, in the case of Senator Daschle and the Democrats in the Senate, they started to block legislation, energy legislation. We didn't get a stimulus bill when we should have. Trade legislation, agriculture bill, 150 nominations were left on the table.

We should be listening to this president, coming together to address the security needs of the American people--national security, personal security here at home. We're fighting a war against terrorism, and we're also dealing with terrorism here at home in a way that we've not had to deal with before--and also economic security. We need the creation of jobs and economic growth. This president's going to talk about that.

This president has changed the tone in Washington. He's already met with a bipartisan leadership. He wants to work together.

When Senator Daschle uses a term like that, I don't think that's a good way to start off the year. And we don't want to Daschlize the budget, which to me means raise taxes, increase spending and obstruct.

We need to be coming together and not using adjectives or verbs to describe each other's motives. Lets do this together.

SCHIEFFER: So he says "Enron the economy" and that's partisan, and you say "Daschlize the budget" and what is that?

LOTT: Well, that's what I said, what that is, when he talks about, oh well, we don't, you know, need the tax relief for working Americans and then Senator Kennedy comes out and says what we need is tax increases.

And then, when you look at what he's now talking about as a stimulus package, it's stimulus light at the very least, light on stimulus and heavy on spending.

And then also, we ended the year without doing what we needed to be doing together. I would hope that we would begin the year--and I thought that Senator Daschle had been indicating early on--look, we are going to try to find a way to do a stimulus bill, an energy bill and a trade bill. That's what we should be doing.

BORGER: What about campaign finance reform? Given the Enron scandal, there's now a lot of congressional support for campaign finance reform. Do you think it's inevitable right now?

LOTT: I don't know that it's inevitable. I think the chances have been, you know, increased that there will be a bill. We'll have to see what the House does.

I've said ll along, there are some things we need to do in campaign finance reform. I have not supported all of the components of the--what is it, Shays-Meehan bill in the House of Representatives. I hope we could go through a process that gets into conference, that produces a bill that is positive and the president can sign.

But let me comment on this Enron thing. I don't want to give any kind of misimpression here. This is a tragedy of the worst kind for the industry but, more importantly, for the employees and the investors.

Something's wrong here. I don't think we should be affixing blame or pointing fingers, but I think, if Congress does what we quite often do and we have a bunch of hearings and try to blame somebody or each other and don't take some action, then we will have failed.

Clearly something was not right here. We have got to look at how accounting firms do their job. We have got to look at how employees can protect their investments. And I think that, as Republicans, as Democrats, and as Americans, we have got to take this as a wakeup call and do something about it.

I hope the House and the Senate committees and the Justice Department and the administration and the SEC will look at this, learn from this, and do something to stop this kind of thing from happening and happening again.

You know, you don't know whether to get angry or cry when you look at what happened here. A lot of mistakes were made. And I don't think we ought to just say, OK, he did it or they did it. Fix it. That should be what we do here. And I think that's what the American people would want.

SCHIEFFER: And that's where we have to stop, I'm sorry.

LOTT: OK.

SCHIEFFER: Thank you very much, Senator Lott.

LOTT: Thank you.

SCHIEFFER: Very forthcoming this morning.

We'll be back with a final word in just a minute.

(Commercial Break)

SCHIEFFER: Finally today, as a rule, even the mention of public opinion polls makes my eyes glaze over.

But with Congress back in town and the partisan barking at full throttle from the White House to the Capitol, the latest CBS News-New York Times poll caught my attention, maybe because it just confirmed what I have always thought: that people just don't like the partisan stuff.

Washington gets itself all wound up trying to score partisan points, but the poll says the rest of us are not amused. It says an overwhelming majority of us, 74 percent, believe the two parties should just work together and get things done.

So, why is there so much partisanship, so many lines drawn in the sand, the old headlines-over-headway approach, when the object is not progress but finding a way to blame the other side?

There's only one reason that I know of: It's easier to raise campaign contributions when you stir people up. Politicians believe compromise, moderation is a fund-raising loser.

Yet, poll after poll shows that's exactly what eople want.

The president is wildly popular these days. One reason? The poll says the way he has led the war effort has made people see him as more moderate. Have any of these multitudes of political geniuses advising candidates and presidents picked up on that? I doubt it.

We keep hearing that politicians spend too much time reading the polls. I wish they would spend more time reading this one. But they won't.

Well, that's it for us. We'll see you next week, right here on Face the Nation.



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