FTN - 05/27/01<br><br>

BOB SCHIEFFER: Today on Face the Nation, the president gets his tax cut, but at what a price: Democrats take control of the Senate.

So the tax cut is done, and most Americans will get a refund of several hundred dollars this summer. But is that the end of it now that Democrats are in the Senate driver's seat?

We'll ask White House Chief of Staff Andy Card in an exclusive interview.

And we'll get context from two key Senators, Republican Chuck Hagel of Nebraska and Democrat Joe Lieberman of Connecticut.

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

But first, White House Chief of Staff Andy Card on Face the Nation.

And good morning again. Joining us here in the studio, the White House Chief of Staff Andy Card.

A big victory for the White House this week. You passed the president's tax cut, but you lost the Senate majority. I guess it raises a question, how many victories like this can you stand?

ANDREW CARD, White House Chief of Staff: Well, the tax cut victory was a victory for America, and that wasn't the only victory the president had this week. We also found positive, constructive momentum to an education reform that represented bipartisan support in the House. We expect that education reform will come up in the Senate's agenda as soon as they come back from their recess. And we'll have education reform as a reality as well.

So this has really been a remarkable week, and it was a great week for the American people because they will get tax relief and it's long overdue, and this president delivered on a promise.

SCHIEFFER: Mr. Daschle, who's going to be the leader of the Democrats in the Senate now, calls the tax bill a fraud. John McCain, a member of your own party says the tax cut is so large there won't be room to pay for increases that you're going to need in defense. How do you respond to those?

CARD: Well, they were in the distinct minority, because this tax reform package is the right package for America. It will provide real relief, and it's good for our economy. And it was passed with bipartisan support. In fact, we had tremendous leadership from Senator Max Baucus and Senator John Breaux to help bring that tax package to a reality. And I think this is a great victory for the American people.

SCHIEFFER: But what do you say, because, I mean, people are going to get a couple hundred dollars back this summer, most people will get that.

CARD: More than a couple.

SCHIEFFER: $300 for single people, $500 for couples.

CARD: $600 for couples, $500 for a single parent.

SCHIEFFER: But do you think there's going to be a backlash next year when they realize that's about it for a while, because most of this does not kick in for four or five years. The rate reductions across the board, you don't get that done until, what, 2005. Marriage penalty tax relief doesn't start fr several years down the road.

CARD: Well, rate relief starts July 1 of this year and it starts...

SCHIEFFER: One percent.

CARD: One percent, which adds up to quite a bit of money.

And you'll find that the tax relief is real, it will show up in your paycheck. You'll be able to take home more money, even you, Bob Schieffer, will be able to take home more money. And you'll get a check, and it'll be a real check and you'll be able to spend the money any way you want rather than have the government spend it. So this is significant reform and significant relief.

GLORIA BORGER, U.S. News & World Report: Mr. Card, two Republicans voted against this tax bill, Senator Chafee and Senator McCain. There are reports this morning that Senator McCain has had some conversations with Democratic leaders about switching, perhaps to becoming an independent. Do you know anything about this?

CARD: I've heard those same rumors, but I tell you, I've grown up for a long time in the political world where the Republicans controlled not all three branches of government at the same time. In fact, it's only been about 120 days where the Republicans were in control of the three branches of government - or the House, the Senate and the White House. Not branches, but the House, the Senate and the White House.

Now we'll be able to get the president's agenda put forward because it's an agenda for America.

BORGER: But let's talk about Senator McCain and Chafee. Are you convinced that you can keep Senator McCain in the Republican Party?

CARD: Well, I hope Senator McCain will stay in the Republican Party. It's the party that...

BORGER: Have you talked to him about it?

CARD: I've not talked with him about that. I have talked to Senator McCain over the last course of the last few days, and, no, this did not come up in any way, shape or form.

BORGER: How about Senator Chafee? Word is that the president hasn't even had a conversation with Senator Chafee yet.

CARD: Well, I've had conversations with Senator Chafee, not recently, but I've had conversations with him. And I hope that Senator Chafee will stay in the Republican Party. It's the party that he grew up in; it's the party that his father served so ably in.

And this president will work for an agenda that I'm sure that Senator Chafee and Senator McCain can embrace. They may not agree with everything the president does, but I think their principles are reflective in the same principles that the president has.

SCHIEFFER: Mr. Card, let me ask you a little bit about the White House reaction to Mr. Jeffords leaving, because some of it has been rather personal. I noticed that Karl Rove, your political adviser, suggests that perhaps Senator Jeffords is disingenuous about his reasons for leaving. I noticed your White House Press Secretary Ari Fleischer refers to Senator Jeffords as "quiry." What's going on here? Do you think that sort of thing is helpful?

CARD: Well, first of all, I'm sure that Senator Jeffords made a decision on his own. It wasn't a decision that was based on anyone else's direction. I think he made his own decision, and I respect that decision. I'm saddened by it. I wish he hadn't made it. I think he made a mistake, but I'll respect it and we'll be able to work with Senator Jeffords.

I've had a long relationship with Senator Jeffords and I expect to be able to work with him constructively for America. And I think the president's agenda for America is the right agenda, and I'll work with him. After all, he did vote for this tax plan, and he's help to bring this education reform to reality.

SCHIEFFER: Does Ari Fleischer's description of him as quirky, does that reflect the White House thinking?

CARD: I think it reflected maybe what Ari said, but I'm not sure that it's the White House.

We want to work constructively. You know, it's never good to look back and try to recast battles in different light. I'm focusing on the future. This president wants to work toward future changes for America that are important to him. He campaigned on them, and he's going to deliver them.

SCHIEFFER: Let me just ask you a little bit about that, because I'm reading in The Washington Post this morning - it says that, instead of trying to split the difference with the Democrats, the president intends to stick to his agenda. It says, instead of splitting the difference with Democrats, as I understand it, the strategy will be to put pressure on Democrats in states where Bush is popular.

And then this is a direct quote from a White House adviser: "That's how we got Zell Miller and Ben Nelson." They're both Democrats. You got them by putting pressure on them, is that correct?

CARD: No, we did not. Senator Zell Miller came forward very early and said he was going to support the president's education initiatives and that he was going to support his tax initiatives because they were right for America. And I was there when Senator Miller told that to the president, and I believe that's why he supported him because he recognized they were right for America.

SCHIEFFER: Why would someone there, then, say we got him by putting pressure on him?

CARD: Well, maybe it was someone speaking without knowledge, but I happened be there. I was there when Zell Miller said that he supported the president's initiatives, and I respect that.

BORGER: Well, the White House has made it clear since the Jeffords defection that it intends to proceed with its agenda unchanged. This morning Senator Daschle said that that can't occur, that drilling in the ANWR is dead, that nuclear power is dead, that he may want to revisit parts of the tax bill because of deficit implications; seems as if missile defense may be premature.

Isn't this your agenda goig up in flames?

CARD: No, it sounds to me like he doesn't have an agenda other than an agenda of "no." The president has a positive agenda for America. The tax relief plan is a positive statement to America. The education reform package will be a positive statement to America.

The president is doing the right thing on energy. We need more energy supply in this country. We need more deregulation. We need more conservation. The president is going to put forward a very systematic plan of matching conservation with energy supply so that we can have a sound economy going into the future.

I hope Senator Daschle will work cooperatively in that. This should not be about just saying no to any agenda that the president puts forward. The president's agenda is really the American agenda. And he campaigned on it, the people expect him to put it forward, and he will.

SCHIEFFER: I mean, from your remarks in the beginning here, you seem to suggest that losing control of the Senate may not have been a very significant event. You keep saying, well, we're going on to work for the people. Is this significant or insignificant?

CARD: I think it's significant, but it's not earth shattering. I mean after all, Washington has functioned for many, many years where the White House was one party and the House was of another party and the Senate was of a different party. We'll be able to make things happen.

And the president's agenda is a constructive agenda for America. We'll work across the party lines, across the House and Senate lines, and we'll make things happen. If there is a will to get things done, there is a way to get things done. This president has both the will and the way, and we hope that the Senate and the House leadership will as well.

SCHIEFFER: But aren't you going to have to change something? Do you feel you've done anything wrong here? Are there any lessons to be learned here?

CARD: Well, I think I've got to do a better job of communicating with people on Capitol Hill. But the president has done nothing wrong. He talked about an agenda that's important.

This is not a partisan agenda. The president did not put forward a partisan agenda. He put forward an agenda that will help people in this country. We needed tax relief, and he delivered on it. We needed education reform, and he will deliver on that. We need to have a new energy strategy in this country. We have not had an energy plan for the last 20 years. We finally have one that the president put forward, and I think it's the right plan for America, and we'll work hard to bring it to reality.

BORGER: John McCain has said, and let me quote, "It's well past time for the Republican Party to grow up." And what he was talking about was that this party seems to be, what he calls, intolerant to other points of view. Are you saying here today that you were tolerant to Senator Jeffords' points of view

CARD: Oh, I think we've been very tolerant to many of the points of view that Senator Jeffords has and Senator Snowe and Senator Chafee and others. This president has worked well with all parties, Republicans and Democrats, liberals and conservatives.

He has not put forward an agenda that is a right-wing agenda. He has put forward an agenda that is responsible and it's correct, and it will attract support, and we'll work hard.

But we also know there has to be give and take in the political process. This tax relief is a result of compromise and credible work across party lines. And that's why we enjoyed such bipartisan support in both the House and the Senate for this plan.

SCHIEFFER: Yet, two different publications, Mr. Card, wrote stories back on May 14 saying there was a White House plan to punish Jim Jeffords. The Weekly Standard, a Republican newspaper, said the White House has drawn up a two-year plan to punish him: "It won't draw significant attention, but they are going to get him." Norm Ornstein, a respected consultant and scholar at the American Enterprise Institute wrote a very similar article.

CARD: They're both wrong.

SCHIEFFER: They're both wrong?

CARD: They're both wrong.

SCHIEFFER: Is it false? Was it made up? What happened?

CARD: Well, if it was written in the White House, it wasn't written by anyone who has any responsibility. So I know nothing about it.

This president has an agenda that he will put forward for America. He is not about political retribution or paybacks. He, in fact, is talking about an agenda for America that he wants to put forward.

And we'll work well with Senator Jeffords. I have great respect for Senator Jeffords. I do think he made a mistake in switching parties, and I'm disappointed and saddened by it. But we will work well with all of the members of the Senate. Some will choose to work with us, others may not. But we will work with them.

SCHIEFFER: All right. Andy Card, thank you so much for coming by.

CARD: Thank you.

SCHIEFFER: When we come back, we're going to talk to key members of the Senate: Joe Lieberman, the Democrat, Chuck Hagel, a Republican, in a minute.

(COMMERCIAL BREAK)

SCHIEFFER: And we're back now with Senator Joe Lieberman and Senator Chuck Hagel.

Senator Hagel - one of the key members of the Republican caucus in the Senate - you heard the White House chief of staff say, "I think I better do a better job of listening to the Senate, but nobody else has done anything wrong," as I understood what he was saying. Does the White House have to do a lot of things different, Senator Hagel?

SEN. CHUCK HAGEL, R-NE: Oh, I think we all do. I said recently in an interview that this cannot be - the Jeffords issue - a sign to one individual, one institution. We have become a bit arrogant. You become arrogant, you get sloppy, yu disconnect.

Politics is about people; elections are about governance. And you can't disconnect the two. We must be a relevant party. We must be a party that appeals to America. We must be relevant to the interests of America. Do we connect with what those priorities are that are out there? What do they expect from the majority party?

This is not catastrophic for us, but we should learn here. The president must learn. He is going to engage - must engage - more personally. That means he's going to have to understand issues better, more deeply, get himself immersed in this. I think he has an opportunity to do that.

We need to do it better on the Hill. We can't be a party that just is opposed to things because we don't like the alternatives. That's not what responsible governance is about. And so, therefore, an awful lot of lessons in this that we can all learn, and I think we will.

SCHIEFFER: Well, you know, a member of your caucus, a very conservative Republican senator who is a supporter of the president, told me, when I asked does the White House need to do more to reach out to moderates, said, "They don't reach out to anybody. They won the election, and sometimes I don't think they think they need us." Is that true?

HAGEL: Well, I don't know who said that, but that's not the reality of the business. The fact is, we must govern with a coalition of interests. We, the Republican Party, must decide, are we a narrowly focused party and we have five litmus-test issues and if you don't meet those then you're not in the party? Or are we a broader party representing many interests?

If you are not a party representing many interests, you can't govern. And that is another dynamic of this that we had better learn. That doesn't mean you give away your principles. Certainly there are differences between Democrats and Republicans. But there's tolerance, there's respect, there's dignity, there's differences, there's learning.

And this gives the president, I believe, an opportunity now to play more of a role. And this is going to require leadership from him, and he is going to have to immerse himself in some of these things. It's not just a matter of sending your chief of staff out for you, the chief of staff blaming himself for it. This is about leadership and connecting with America.

BORGER: But Senator Lieberman, you've just heard Andrew Card, White Houe chief of staff, say that they do not intend to change their agenda at all at the White House. Senator Hagel has just said that the White House has been arrogant. Do you agree?

SEN. JOSEPH LIEBERMAN, D-CT: Yes, and I'm surprised at the White House reaction so far.

Look, what happened this week was very significant. And the question is; what lessons do we learn from it?

A lot of us Democrats have been saying for the last three or four months that President Bush campaigned as a centrist, saying he was going to chnge the tone, make it more bipartisan here in Washington.

We feel that he's governed much more to the right of the mainstream and has been very partisan. And that's basically what Jim Jeffords said this week, that on a host of critical issues - education, energy, the environment, the economy, fiscal responsibility - that President Bush and the Republicans in Congress didn't reflect his priorities or Vermont's values.

That's a very powerful statement but from the White House so far all we've gotten is their own restatement that they're going to continue to go ahead with this partisan platform.

And I thought the other night, when Karl Rove went after Jim Jeffords personally, it was really a cheap shot and a low blow and not the change of tone that President Bush said that he was going to bring to Washington if he got elected, and certainly not reflective of what - I think every member of the Senate, no matter how they feel about what Jim Jeffords did this week, will say that he did it as a matter of personal policy and conscience. That's the kind of guy he is.

So I think if - I suppose it's good for us Democrats if the White House doesn't learn from what's happened this week, in very much the way that Chuck Hagel has just talked about, but it's not good for the country. We've got three and a half more years of a Bush administration, and they're going to be more productive if he comes back to the center and he runs this government in a more bipartisan way, as he promised he would.

SCHIEFFER: Is the great risk for Democrats now that they now can look like obstructionists? Don't you have to be very careful now to make sure that, every time the White House proposes something, you don't just automatically come out against it?

LIEBERMAN: We do, indeed. I mean, I think we have an obligation to come out against some of the environmental rollbacks or some of the industry-driven energy policies that the president has proposed. But when there's common ground, I don't think we should hesitate to occupy it just because President Bush is there.

More to the point, or as much to the point, we have an obligation to be affirmative. And I think that's just what Tom Daschle and our caucus wants to do.

We're going to try to finish the education reform bill in a bipartisan fashion. I hope we'll then go on to the patient bill of rights and adopt it in a bipartisan way. I hope we can develop quickly a response to the energy price crisis and energy supply crisis and hopefully blend the two approaches in both parties, and then adopt some election reform to learn the lessons of last year's elections, so next time nobody who goes to vote doesn't have their vote cast anywhere in America.

So I think we've got an obligation, and I know Tom Daschle is ready to do it. We're going to be affirmative, and we know nothing can pass unless there's bipartisan cooperation.

BORGER: Senator Hagel, you are a good friend o John McCain's, and I want to ask you about these rumors that he has in fact met with Democratic leaders, talking about becoming an independent. What can you tell us about that?

HAGEL: Well, before I do that, let me clarify one point. You said I called the White House "arrogant." I was referring to all of us in this business in the Republican Party.

BORGER: Oh, OK.

HAGEL: We've all made mistakes. We all mishandled Jim Jeffords. And it wasn't just the White House or any one person. We all, including this senator of Nebraska, has to take some responsibility for this. So I wanted to make sure that I wasn't picking on the poor White House.

BORGER: OK.

(LAUGHTER)

HAGEL: They've had enough lashes this week, deserved, undeserved.

BORGER: McCain.

HAGEL: So now, my friend Mr. McCain.

First, I don't ever discuss personal conversations with any of my colleagues. I certainly don't do that publicly.

But I suspect there have been some conversations, but John McCain is a man who is driven by deep principle and beliefs. And I would be quite surprised to see John McCain ever change parties or even move to an independent status unless there some cause that propels him deep down to do that.

This is his party, the Republican Party. He's not going to be driven out of his party. He's often said this is the party of Lincoln. He believes that. He'll stay and fight to make it a better, more inclusive, more responsible party.

SCHIEFFER: Republicans seem to think, or seem to be leaving hints and suggestions, that perhaps in some way they might get to Ben Nelson of Nebraska or maybe even Zell Miller of Georgia. Now, Senator Miller said just as late as this weekend that he has no intention of leaving.

But do you think that there would be any chance that either of those two Democrats would go over to the Republicans, Senator Lieberman?

LIEBERMAN: I really don't. I've spoken to Zell Miller and Ben Nelson this week. These are both Democrats committed to the party.

They're independent, but I'll tell you one reason that I'm convinced they're not going to leave the Democratic Party. It's the way Tom Daschle and the Democratic caucus have handled dissent. Neither Ben Nelson nor Zell Miller have ever been excluded from the party. Nobody ever threatened punishment. When we disagreed with them, we told them so, but we always told them, "You're part of the family. Let's work it out internally."

These are good Democrats, and they'll remain that way. Their independence will help us be a better party and better caucus.

SCHIEFFER: I want to ask you, do you see Trent Lott remaining as leader of the Republicans in the Senate?

LIEBERMAN: I do. Our caucus laid out, voted for, supported leadership for the 107th Congress. I think it would be a terrible mistake to go in and blow that up and try to do something different It would be bad for the president, bad for the country.

SCHIEFFER: Gentlemen, thank you very much. Pleasure to have you.

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

(COMMERCIAL BREAK)

SCHIEFFER: Finally today, I went to see the Pearl Harbor movie this weekend. I was four when that attack happened, so I don't remember that, but I was eight going on nine when the war finally ended, so I can remember a lot about it - how we moved around because my dad was part of a team building a bomb factory, and then moving again when he got drafted, and then moving again when they didn't take him because the war was about over and they weren't taking men with children.

I remember going to four different schools in the first grade, and food and gasoline rationing, and neighbors who lost people in the war. All our lives were disrupted, but we all pitched in, even the kids.

We all knew somebody in the army and what they were doing for us. That's part that bothers me now. In this era of peace and the all-volunteer army, fewer and fewer of us have any connection to the military. Many Americans no longer even know someone in the service. We need a move to remind us that young Americans are still out there for us.

After I saw "Pearl Harbor," I had the same thought I had after seeing "Saving Private Ryan": Would Americans still do what Americans did then? I don't know, but I want to believe they would.

After I left the movie, my wife said, "I'm glad we went. It helps me remember that Memorial Day is more than the start of summer." Not a bad way to start the summer every summer.

That's it for this week. We'll see you next week right here on Face the Nation.

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