News Chief Washington Correspondent: Today on Face The Nation, campaign finance reform, labor, and the stock market.
This week, the big battle over reforming campaign finance laws begins in the Senate. Can the McCain-Feingold plan pass?
We'll ask one of its creators, Senator Russ Feingold of Wisconsin, and talk with Senator Chuck Hagel of Nebraska, who's got a plan of his own.
The support of labor is key to this bill. We'll ask John Sweeney, head of the AFL-CIO, what he wants.
Then we'll turn to the sinking stock market and talk with Abby Joseph Cohen of Goldman Sachs.
Gloria Borger will be here, and I'll have a final word on corrections.
But first, Senators Feingold and Hagel, on Face The Nation.
Announcer: Face The Nation, with Chief Washington Correspondent Bob Schieffer. And now, from CBS News in Washington, Bob Schieffer.
Schieffer: And good morning again.
Senator Hagel and Senator Feingold are here in the studio with us. Let's get right to it, gentlemen.
Senator Feingold, your plan is the toughest one. Basically, it would ban what we call "soft money." And that's those large unregulated donations that could go to the political parties.
At this point, do you believe you have the votes to pass your bill?
Sen. Russell Feingold, (D-WI): I do. I think we have the votes, a majority of the votes, as we've had for some time.
I also think, when we get down do it, we'll have enough votes, just in case somebody gets the bright idea to do a filibuster again.
But the important thing is, we will finally have an open amending process where every senator, who, by the way, every one of us is an expert on this subject, gets to offer amendments and I hope improve the bill. That would be fine. We want to make sure, though, of course, that amendments aren't brought on the bill that would have the effect of losing our majority. That's the key.
Schieffer: Well, you know, the reality of this is that all the Democrats have been just four-square for this as long as it looked like it didn't have a chance to pass, as long as the Republican leadership in the Senate was blocking a final vote.
Now it seems that some of the Democrats are wavering a little bit. John Breaux, for example, said he's not sure he can vote for McCain-Feingold. He was for it. Have you lost anybody else?
Feingold: Well, I give my colleagues in the caucus higher marks for sincerity.
I think they hate the system. They have been unified against it.
Look, when you're going to take $500 million out of the system in one cycle, it is going to cause some anxiety. But I think in the end, with the leadership of Senator Daschle, that has been very strong on this, that almost every Democrat will be in there.
And I teased John Breaux. I said, "John, when you look up campaign finance refrm in the dictionary, you don't see John Breaux's picture."
So I'm not as concerned about that. I think we're going to have a lot of Democratic votes, and more Republican votes than you might think.
Gloria Borger, U.S. News & World Report: Senator Hagel, you're a former John McCain supporter for president. Suddenly you have become the White House's new best friend, because have you your own reform plan which limits soft money, doesn't eliminate it, as Senator Feingold said of McCain's, limits it to $60,000 a year. What's going to happen to your plan?
Sen. Chuck Hagel, (R-NE): Well, first of all, when I introduced my plan in October of 1999, I was co-chairman of John McCain's presidential campaign. So the Shakespearean drama and intrigue of me somehow being the point of the spear being used by George Bush to get to John McCain is just a complete fabrication.
I introduced my bill back in 1999 because I thought I had a way to attract enough bipartisan support to a bill that, in fact, would improve the system, protect the constitutional rights of individuals and organizations to express themselves, and could pass and hopefully get signed into law.
Where all this is going to go, as Russ said, nobody knows. What Russ Feingold and John McCain deserve great credit and acclaim for, initially, is pushing this to the point where we are, in fact, going to get two weeks of transparent debate, and hopefully we're going to get a bill out of the Senate that the president could sign.
Schieffer: But, you know, the critics, senator, say that your bill is just a way to kill McCain-Feingold, and they say that your bill really has such loopholes in it that it makes campaign finance reform meaningless, because these unregulated donations could go to the state parties instead of the national parties. And everybody says, well, look, once people figure that out, that's what they'll do, and it'll be the same old deal. How do you respond to that?
Hagel: Well, a couple of things.
One, I always find it interesting, if you disagree with somebody, you refer to it as a loophole. I don't see the fact that...
Schieffer: But that is true. I have defined it correctly, have I not?
Hagel: No, it's not true. The fact is, I start from a different philosophical point than where Russ or John or others start.
I think, in fact, it is not the place of the federal government to federalize state election laws. Each state should have that ability, certainly, to do that on their own. Right now the Federal Election Commission regulates so-called soft money, non-federal money. As a matter of fact, there's seven pages of regulations. The state laws do that. And what I don't want to see come out of this is that we so weaken our parties at this state level, especially because of the get out the vote, all the things that parties do that nobody else would do, ealthy individuals and third parties will not do that.
So I don't see this as a loophole. I see it as a real reform to give some regulation at the federal level. Let the state laws continue to apply to these things. We already have Federal Election Commission laws that, in fact, regulate laws.
Schieffer: Let's let Senator Feingold weigh in.
Feingold: I really like Chuck Hagel and we are friends, but I gotta tell you, this bill that he's proposing is worse than no reform at all.
There are so many loopholes in it that it really will cause us to put the stamp of approval on soft money forever. Sixty- thousand dollars from every corporation, every union, every year - that repeals the Tillman Act that Teddy Roosevelt signed and the Taft Hartly (ph) Act. And then it's true, Bob, what you said.
Every single dime, you can check with Fred Wertheimer on this. Every single dime of soft money that is currently allowed is still allowed through the Hagel Bill because it can be transferred to the state party and they can spend it on federal elections.
And finally, if I could add, because those two things are enough to make it a bill that would be worse than the current system.
But under Chuck's increases and the individual hard money limits, and other hard money limits, as well as the soft money limits, every couple in America, but there aren't many who could do it, could give $540,000 in campaign contributions every two years. So, all I can say is I prefer it when he is with McCain. In fact, if you were ready to have him be president, why can't you trust his judgment on this one.
Borger: Will you answer Senator Hagel's complaint which is that your bill would effectively kill political parties, which would be a bad thing and would give more power to independent expenditures.
Feingold: That's pretty interesting because we didn't even have this expenditure five years ago. When I was elected in 1992, this system had hardly gotten off the ground. The parties were doing just fine without soft money. The fact is, this is a new corrupting influence on our system that the members of the Congress have become addicted to. They were just fine without it five years ago and the parties were just fine without it five years ago, and they will be again without soft money.
Hagel: I might respond. First of all, since the golden age of Pericles, we have had influence, a bit before Schieffer was in this business.
Schieffer: But not Thurmond.
Hagel: He was with the Visigoth, I think. But, the fact is that if we want to try to screw down representative government so tightly that we disallow representative government to hear the voices of individuals and organizations, then I think we better reassess what kind of a country we have.
Now, the charge that my bill would be worse than the current situation is most puzzling. The fact is I put new dsclosure requirements in my bill, which codifies it into Federal Communications Commission law. I limit $60,000 across-the-board where there are no limits now.
And I might draw your attention, by the way, to a Wall Street Journal piece on Friday, I don't know if you saw this. But it makes the point here that I've been trying to make when you limit. What that piece said, these are FEC numbers, that two-thirds of the soft money that came in, in the last election cycle, came in from those who played in the cycle paying in more that $120,000. That means essentially, technically, if my bill would have been law, two-thirds of the soft money that flowed in wouldn't have flowed in because of the limits.
Feingold: All they'd have to do under your bill is give the $60,000 to the federal campaign and put the rest of the $140,000 or whatever the remaining amount would be through the state and the exact same thing would happen because they can spend every dime on the federal election.
It would do, frankly, absolutely nothing but say soft money is fine forever. We have to defeat it.
Schieffer: Senator Hagel, let me ask you one thing about what the White House seems to want, and this is this the so-called paycheck protection, where union members - unions could not give campaign contributions unless each individual allowed his portion of it to be used. Would you - could you ever support something like that, because I know Trent Lott wants it, I know President Bush wants it.
Hagel: Well, first of all let me make one other point about the state law piece. Again, I don't think - I don't want to and I don't think any governor or any legislature would want the federal government to tell the states how they can run campaigns, get out the vote, all the activity, and have state candidates captive to federal elections.
Feingold: Our bill has no impact on state candidates. It only relates to the relationship of those dollars to federal campaigns.
Borger: Well, what about unions?
Hagel: We already have that now.
Schieffer: Quickly on the paycheck protection.
Hagel: But on paycheck protection, I think we may well see an amendment on that. That would be a very difficult amendment to pass in the United States Senate.
Schieffer: Would you yourself...
Hagel: I would want to see all of it. There are different variations of it. But if we, in fact, want to get a reform bill out of the Senate - and that's my goal and it's the goal I think of most of us, with the president, then I think we could lay that aside for now. But we're going to have to deal with it.
Feingold: Let me compliment Chuck Hagel on this for a minute because I have been harsh on his bill. But he is part of the solution here, to the extent that he has talked about voting for cloture and making sure that the end of this process, whoever wins wins. If Chuck Hgel's bill wins by a majority, so be it. If McCain-Feingold wins, so be it, but we're not going to have the filibuster this time. And that's a major contribution, I think, to the process.
Schieffer: All right. That's a good point to stop. Thank both of you so much.
Feingold: Thank you.
Hagel: Thank you.
Schieffer: When we come back, we're going to talk to John Sweeney, the president of the AFL-CIO, in just a minute.
Schieffer: And we're joined now by the president of the AFL-CIO John Sweeney. How are you sir?
John Sweeney, President, AFL-CIO: Good, thanks.
Schieffer: You heard Chuck Hagel just say that he did not think that paycheck protection, the so-called paycheck protection provision would be something that would be mandatory in his view. He said he thought it could be set.
Does that mean, do you think, that that idea is dead on arrival?
Sweeney: We hope so, and we strongly believe that this would be an attack on workers and their ability to participate in the political process.
Schieffer: Now you supported McCain-Feingold in the abstract over the years, but can you wholeheartedly support this bill as it is now structured? Is there anything in there that could you not support at this time, Mr. Sweeney, and organized labor I should say?
Sweeney: We have been strong supporters of campaign finance reform for a long time and we're not opposed to McCain-Feingold. We're not out to kill it, but we are interested in fixing it.
Schieffer: What needs to be fixed?
Sweeney: Well, there are several areas that have to be fixed, and we just feel that those - we're waiting to see how it all flushes out in terms of amendments and how they might make some changes.
Schieffer: Well, at this point, what things do you think need to be changed?
Sweeney: Well, one of the areas is the coordination between federal and state and how it limits organizations from participating fully in the political process. Also the exemption for 501-C for special interest groups really gives them benefits and the ability to participate more in the process than it would allow labor unions or corporations with electioneering broadcast as an example.
Schieffer: In other words, as I understand this bill, groups like labor, money could not be funneled to them directly and you could not coordinate that with the parties or the candidates in running these issue ads as they're called, close to the election, and that's one of the things you want changed?
Sweeney: Organizations that would fall into the category that's exempt could campaign on an issue against
Schieffer: With these issue ads.
Sweeney: Minimum wage, as an example.
Schieffer: But you couldn't.
Sweeney: Sixty days before we would have to stop.
Schiefer: Now, if that stayed in the bill as it is, would that mean you'd urge people not to vote for it?
Sweeney: We'd really would have to see what the full bill is.
Borger: Let's talk a little bit about this administration and its relationship with labor. To say that it's been bad is almost an understatement. A lot of people would say from right off the start the president signed four executive orders you don't like. He's threatening to intervene in an mechanics strike with airlines. He pushed to pass or repeal worker safety rules in the Congress.
How would you describe this relationship right now as you see it?
Sweeney: Well, it's clear that the president is listening to the wealthy people who supported him and the corporate interests, and there are several areas in the short time that the president has been in office that have really been basic attacks on working families and their agenda.
Borger: So would you say that the administration is at war with labor?
Sweeney: It - I would hope that we may be in battles, but I would hope as in other administrations in the past, that they would be reaching out to the largest organization that represents working families and it's really - there's a mean spirit behind some of these initiatives that are going on, and ergonomics is a classic example. This has never been done before with occupational safety and health. There was no hearing, and this is something that Elizabeth Dole initiated 10 years ago.
Borger: What's the motive for the mean spirit that you call a mean spirit?
Sweeney: I think it's because of the business employer power here and it's their agenda and their issues that the president and the leadership in the Congress are following.
Schieffer: Do you think it would be a good idea to meet with the president, or do you have any interest in that? Has anybody invited you over to the White House?
Sweeney: Nobody's invited me. I called and congratulated the president and talked about having a dialogue, and he agreed, and he was very cordial in that conversation. But nothing's happened since then.
Schieffer: Well, I noticed you said in a conference call last week, I guess with state labor leaders, that it is time to get on a war footing. Now you just said you didn't think that you're at war, but what did you mean by that?
Sweeney: We're in battle.
Schieffer: You're in battle.
Sweeney: I mean, we're trying to protect the interests of working families and these attacks in several different areas have been directed at workers.
Ergonomics is really as good an example as one could use.
This is not about organized labor. This is about workers. There are hundreds of thousands of poultry workers, as an example, who benefited from the ergonomic standards.
Borger: Mr. Sweeney, as long as we'e been talking about money this morning, let me talk about money a little bit. Labor groups gave almost $90 million during this last election to candidates. Ninety-four percent of that money went to Democrats. Are you surprised that you're not good friends with this administration?
Sweeney: Well, I didn't talk about being friends. I talked about whether they're going to address working family issues and whether they're going to speak to the organization that speaks out in behalf of working families.
I mean, we have every right to take political positions and to support candidates for public office. But this president is the president of all the United States, every citizen of the United States. And it's about time that they addressed the issues of working families.
Schieffer: Mr. Sweeney, thank you so much for coming by.
We'll be back in a minute. We're going to talk about the stock market with Abby Joseph Cohen.
Schieffer: And with us now from New York City, Abby Joseph Cohen of Goldman Sachs, truly one of the great stock pickers of our time.
Ms. Cohen, thank you very much. Well, let's get to the obvious question; is this the end of it? Are we at the bottom?
Abby Joseph Cohen, Goldman Sachs: We think that most of the correction of the stock market is indeed over. Let's recognize that, a year ago, everyone was enthusiastic as could be, and clearly sentiment has swung dramatically. We think the economy is going to be growing, and we think stock prices will follow.
Schieffer: What happened here?
Cohen: I think a year ago we had extraordinary enthusiasm, not just in the stock market, but also an economy that was growing at two to three times a sustainable trend pace. We've gone through an adjustment in inventory and capital stock. And I think investors had been unnerved, but let's keep in mind that much of the damage in the stock market has been concentrated in small areas, primarily technology and telecom. While they're not small, they represent, however, just one portion of the market, there are other areas where stock prices have risen. And of course cash and bonds, which represent 60 percent of the typical household portfolio, have risen in value over the past year.
Schieffer: Let me ask you: do I hear you saying here that maybe we got too excited a year ago and we're too down on this today?
Cohen: Bob, I think that's right.
A year ago, we suggested to our clients that they take some money out of the stock market. And we expressed particular concern about the price-levels of technology and telecom stocks. Just last week, we indicated to our clients that we'd be putting some of that money back into the stock market and looking much more favorably, again, at some of the technology-related issues.
Technology is real. There have been enormous improvements in our economy associated with thnew computer systems, the enormous boost in productivity. It's quite likely many of these stocks were just priced too high, but that doesn't mean that technology was itself a mirage, not at all.
Borger: Ms. Cohen, but, for the last few months, the new president has actually been talking down the economy, talking about a sputtering economy. Is that helpful?
Cohen: Clearly sentiment has been a factor. A year ago, sentiment was only on the upside. And it is now increasingly on the downside.
But, if consumers are nervous and if businesses are concerned, I think we will see economic growth slow even more perhaps than it would have done.
Borger: So do you think that the administration should stop talking down this economy?
Cohen: I think everyone should speak the truth as they see it. Mr. Greenspan, I think, has done a great job in doing that, indicating that, from a structural standpoint, this economy is in great shape. The world's most productive workers, the best managed corporations on the planet. And what we're dealing with right now, I think, is a cyclical phenomenon.
Borger: Everybody is sort of looking to next week and the Fed and interest rates.
Can you look into your crystal ball and tell us what you think's going to happen?
Cohen: Most investors are expecting that the Federal Reserve will lower interest rates 50 basis points. Some people think a bit more.
The real key is this. We think the Federal Reserve will make a statement similar to the ones they've made over the last three to four months that they stand ready to do whatever this economy requires. With low inflation, they can continue to lower interest rates until they feel the economy has, in fact, stabilized.
Schieffer: Do you think, if in fact the Congress takes the advice of the president and passes his tax cut, that it's going to have an impact on the economy?
Cohen: The original tax cut, which was put together at the beginning of the presidential election campaign, was never really intended to be a short-term fiscal stimulus to the economy. And so I suspect that there will be notable revisions over the next several weeks as it relates to the tax cut.
Also keep in mind that a lot of the action in the original tax proposal comes in years five through ten, and budget forecasts that far out tend to be notoriously inaccurate.
Borger: So are you saying that what the Fed does is more important than what Congress does, in terms of the overall the economic picture?
Cohen: Over the last several decades, that has always been the case.
Adjustments in interest-rates have a much more immediate impact on sentiment, and of course on economic activity, because it affects the cost of borrowing money to buy a home, to buy a car, and of course to fund business growth.
Schieffer: If you were the president at this particular time, what would you bsaying about this economy right now?
Cohen: I would be reminding everyone that this is indeed the strongest economy on the planet. Our workers are much more productive than they are in any other economy. We are blessed to have a large budget surplus, and we're also lucky to have low and controlled inflation. That gives us enormous flexibility to get out of what I think is a short-term and frictional problem.
Granted, the problems have been severe in some sectors where there was perhaps too much enthusiasm a year or two ago.
Schieffer: Abby Joseph Cohen, it's always good to hear you. Thanks so much.
Cohen: Thank you, Bob.
Schieffer: Finally today, well, maybe it says more about me than it does about The New York Times, but I have become addicted to The New York Times' corrections column.
For example, Dr. Sherwin D. Strauss is not dead, as The Times reported last week, just retired in Maryland. Most any newspaper would have corrected that mistake as The Times did.
But who but The Times would be so conscientious it would feel compelled to tell us that John Herzfeld's 1996 movie was Two Days in the Valley, not Three Days in the Valley, as The Times mistakenly reported?
And who but The Times would point out that an article on Monday misstated the site of the glass flowers that Martha Stewart is planning to visit.
Got a pencil? Those flowers are in the Harvard museum of natural history, not the Fogg Museum. Now who do you suppose caught that one? Was it a jealous reporter trying to show up whoever wrote the item, or did Harvard call or was it Martha, surely not as busy as she is, whittling cocktail tooth picks or some such, she wouldn't have had the time.
And yes it is a relief to know for sure that what makes trees grow straight up on hill sides is a combination of phototropism and geotropism and not just phototropism alone asThe Times had erroneously reported and then corrected.
I just love The New York Times.
That's it for us. We'll see you next week right here on Face The Nation.
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