FTN - 08/05/01

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SCHIEFFER: Today on Face the Nation, Senate Democratic leader Tom Daschle and Republican senator Chuck Hagel talk about President Bush's big week, or was it?

The White House called it a major victory when the House passed a big part of the president's energy plan, including that controversial go-ahead to drill for oil in the Arctic wildlife refuge.

And then the House passed the patients' bill of rights, but only after the president had put pressure on Congressman Charlie Norwood, who had led the fight for legislation the president had threatened to veto.

Now what happens when those bills come to the Senate this fall? That's where we start with Senate Majority Leader Tom Daschle. We'll get the opposing view from Senate energy committee Republican Chuck Hagel of Nebraska.

And for perspective on all of this, we'll talk with the new editorial page editor of the Wall Street Journal, Paul Gigot.

Gloria Borger will be here, and I'll have a final word on stem-cell research.

But first, the Senate majority leader on Face the Nation.

ANNOUNCER: Face the Nation, with Chief Washington Correspondent Bob Schieffer.

And now, from CBS News in Washington, Bob Schieffer.

SCHIEFFER: Good morning again. And joining us from Huron, South Dakota, Senate Majority Leader Tom Daschle. He's at the state fair.

And here in our studio, Senator Chuck Hagel.

We begin with Senator Daschle.

Senator Daschle, it looks like a wonderful day out there.

Majority Leader SEN. TOM DASCHLE, D-SD: Oh, Bob, it's just gorgeous, about 75 degrees, and not a cloud in the sky. It's going to be a great day for a fair.

SCHIEFFER: Well, let's start with news back here in Washington. As you know, the checks went out this week to taxpayers around the country with refunds. The result of the president's tax cut.

But the downturn in the economy seems to be shrinking the surplus now, and now the Treasury Department is saying it may have to borrow $51 billion, some of which must be used to pay for this tax cut.

Will this tax cut have to be revisited come fall?

DASCHLE: Well, Bob, I think that there are some very serious problems. We think that it's very likely now the administration will have to use Medicare and Social Security trust funds to pay for the obligations of the federal government.

We haven't begun to look at what the costs for additional defense spending, education; the other issues we've got to address this fall. We've already used up three quarters of the projected surplus. I have to say, we go back to some of the concerns we expressed earlier this year. We didn't know what the projections would be, and now we know better, and we've made - they've made some very serious mistakes fiscally.

So I think they are concerns we're going to have to address at some point in the future.

SCHIEFFER: Well, now, wait. I wat to go back here. You're saying we may have to use the surpluses from Medicare, from the trust fund. I thought, talking about Social Security, I thought all of those things were things that the Congress had promised to protect no matter what happened. You're saying now you may have to revise and extend your thinking on that?

DASCHLE: Well, we're deeply opposed, of course, to making any effort to reduce the Medicare and Social Security surpluses. We should not be raiding them. They ought to be held and protected.

But clearly, given the budgetary circumstances we're facing right now, the CBO and the Office of Management and Budget are now acknowledging that, given where the tax cut put us, given the fact that the budget resolution is now in place, given the fact that there are some outstanding questions about defense spending and education, not to mention prescription drug benefits and others, that, if we do nothing, that drawing down the Social Security and Medicare trust funds may be an inevitability.

I hope we do all we can to prevent that.

GLORIA BORGER, U.S News & World Report: Well, what specifically would you do, Senator, then to keep this from happening? Because you want an expensive prescription drug benefit, for example. So how do you pay for it?

DASCHLE: Well, what we've said all along, Gloria, is that we believe that these new expenditures ought to be offset, that we ought to find the resources to ensure that we don't dip into Medicare, that we don't threaten the Social Security trust fund. That's what we've said.

Of course, we said all along that we shouldn't have passed a tax cut of the magnitude that has now been put into law. So there are some very serious questions about fiscal discipline that have to be addressed when we get back in September.

BORGER: So, what? I mean, reduce the tax cut for the wealthy, for example? I mean, what are you thinking about here?

DASCHLE: Well, I don't think there's any consensus. The president has said he'd veto anything that would repeal the tax bill as it was passed.

And so we don't need to confront another veto threat from the president.

But yet we're in this box. And the president, I think, needs to give us some guidance on what he thinks we ought to do to avoid drawing down Medicare and Social Security trust funds.

I don't think there's any question. Republicans and Democrats have to do this together.

SCHIEFFER: Well, let's go back to what you were talking about about prescription drugs. There's no question that Democrats want a prescription drug benefit as part of Medicare. You also want a minimum wage increase. How do you plan to finance those programs, Senator?

DASCHLE: Well, Bob, that's a very important question. We do have $300 billion locked in, earmarked in the budget resolution for the prescription drug benefit. So clearly we can start with that. We've got to dea with the constraints that that represents.

The minimum wage itself doesn't have a lot of budgetary exposure.

So there are some things that can be done even under the budget resolution.
But it certainly doesn't allow us the wiggle room, the opportunity, the flexibility that we need to do a number of things that are confronting the American people.

We've got to address public policy with a better understanding of how we're going to get out of the fiscal box this tax cut put us in just a couple of months ago.

SCHIEFFER: The administration's also talking about an increase in defense spending. Is that going to be possible?

DASCHLE: That's correct.

In fact, what we have said is, we're supportive of increases in defense spending, but find us a way to pay for it. Find us - give us the way with which to deal with the $18 billion request that you've now made, and, if we do, if we can find the appropriate offset, if we don't draw into Medicare and Social Security, we'd be happy to support additional increases. We know that some of them are necessary.

SCHIEFFER: But I guess the question I'm asking you now, from what you're saying is, you're saying at this point you don't know where you're going to get the money to pay for an increase in defense spending.

DASCHLE: That's correct. That's correct. And that's one of the dilemmas we're facing about the defense authorization bill when we get back.

Clearly we know we've got to make additional commitments, although I think some of those, especially relating to national missile defense, ought to be pared back.

We recognize a need for an increase in defense, and we've just got to find a way to pay for it without jeopardizing Medicare and Social Security.

BORGER: Senator, let's switch now to the patients' bill of rights. The House passed its version this week. The House and the Senate versions agree on an awful lot of things that voters seem to care about, access to emergency room, pediatricians, ob/gyns.

The big difference is this liability issue.

I guess the question to you is, is it important enough to you to kill the bill over?

DASCHLE: Gloria, we're not going to kill the bill, we've come too far and too long. We've got to find a way to resolve these differences. I think that the bill is still, in many ways, a good bill. We're very concerned about having rights without remedy, which is what has happened now in the House. Not having the remedy, not having the full recourse of options that patients should have to hold their HMO accountable is something we have to address. We need to work that out in conference. We need to keep the core principles that were so much a part, an integral part, of the Democratic and Republican passed bill in the Senate. If we do that, there's no reason at all to kill this legislation. We can salvage it and we ought to.

BORGER: Well, the White House says tha it's flexible on this. For example, there's a cap they have on damages at $1.5 million. Your cap is at $5 million. Can you come to some agreement on that?

DASCHLE: Well, we've got to keep our core principles and clearly if we can do that, there's no reason why we can't find more common ground. The president has already said that the Senate passed bill was 90 percent of what he wanted. We're 90 percent of the way there, we ought to be able to find a way to resolve the remaining 10 percent.

BORGER: Well, Dick Gephardt said if we can't fix the problems, maybe we'll have no bill at all. You disagree with that?

DASCHLE: Well, obviously that's always a possibility. I just hope we do all that we can to avoid that from happening. As I say, we've been waiting 10 years for legislation like this. We've put a lot of effort into compromise all along the way, including the version that passed in the Senate on three separate and very important occasions. So we've come a long way. I hope we can come the rest of the way and get this job done.

SCHIEFFER: Are you as agreeable on the energy bill that the House just passed, Senator Daschle, because you sound to me like you're really looking for a way to go along with what the House did on patients' bill of rights. Let's talk now a little bit about energy.

DASCHLE: Well, if I could, I don't want to mislead you, Bob. I certainly don't want to go along with what the House did. I'm just saying we're not going to give up in trying to find common ground. We're going to stick to our principles, we're going to try to make it a stronger and better bill. We can't avoid the fight to do that, but at the end of the day, I hope we can get a bill.

With regard to energy, there is a lot there that we could support. We're very, very concerned about what they decided to do with the ANWR. You know it provides about six months of energy we can - we can to destroy some very special and fragile treasury of this country for six months of energy just doesn't make a lot of sense to me. So, there's a lot of things in there we disagree with as well. But again, we've got to find common ground.

SCHIEFFER: Well, you know one of the things that interested me in the House vote is that Democratic leaders in the House went along with the Republican leadership in beating back a bill that would have significantly improved the fuel efficiency in SUV's. How can either side have much credibility on this issue if they don't put in strong measures to increase the fuel efficiency of vehicles like the SUV's, Senator?

DASCHLE: Well, Bob, I know that in both parties, the SUV and fuel efficiency question is a divisive one, it's a difficult one, very complex, and there are pros and cons. I happen to believe we ought to be able to get a lot more fuel efficiency from SUV's than we're getting now, and whether it takes mandatory requirements or incentives tdo it, we can work that out.

Clearly, conservation and fuel efficiency have to be an integral part of any comprehensive energy policy, it's essential.

SCHIEFFER: All right and just to make clear on the one point on the energy bill, drilling in the ANWR. Do you think there's any chance that that could pass the Senate as it's now worded?

DASCHLE: Well, as you may have heard this week, a number of our colleagues, senators in my caucus have indicated they would filibuster that provision. I know that the votes are there today to sustain a filibuster, so I would hope we could agree to disagree, take that out so we don't jeopardize the entire energy legislation, the whole possibility of getting comprehensive energy policy passed just because we differ on ANWR. Let's agree to disagree and move on to the things we can agree on.

SCHIEFFER: All right. Senator Daschle, thank you very much. Let's get the other side of the picture now. We turn to Senator Hagel, a member of the Energy Committee, a member of the Foreign Relations Committee.

Why don't we just start where Senator Daschle left off there, Senator? Do you think that the Senate will pass the energy bill now, including the right to drill in the Arctic Refuge?

SEN. CHUCK HAGEL, R-NE: I don't know what specifically we will have in our energy package that we will pass. I am hopeful we will pass an energy package. On the ANWR piece, Bob, I think there are a couple of points that need to be clarified.

Number one, we're talking about a region of Alaska that's almost 20 million acres.

In 1995, the Congress of the United States set aside by law about a million and a half acres as potential exploration acres. Now what the House bill does is that scales it down from a million and a half to about 2,000 acres, so we're talking about 2,000 acres out of almost 20 million.

The new technologies on the tundra, no footprint, horizontal drilling, changes the complexity of this completely. As far as what's up there, nobody knows exactly what's up there, but some pretty sound geological surveys have shown that there may be as much as 16 billion barrels of oil up there.

Now what that means is, that's 30 years of our imports from Saudi Arabia, and I think it's very irresponsible to just unilaterally take that off the table. So what we will finally come up with in the Senate, I don't know. We need to do something. That something should be more productivity, more supply, obviously conservation, obviously better efficiency, more efficiency, obviously renewables, obviously new technology.

SCHIEFFER: Let me just ask you - excuse me Gloria, just to get this one question. Let me ask you the same question I just asked Senator Daschle. How can either party have any real credibility when they beat back an attempt to vastly improve the fuel efficiency of SUVs?

HAGEL: Well, it is a complex issue in the sense that you've got te politics of the labor unions, of the manufacturers, of mainly the consumer, the market, the American consumer wants those SUVs. I'm not sure to put all or a good amount of our priority in the SUV section of that bill is wise anyway.

The fact is, and we have been through hours and days and days in our Energy Committee on taking testimony from everybody in this business. And it all comes back to one thing: more supply, a deeper, wider portfolio of energy supply. So SUVs, we should do better, can do better. But I tend to think that we may be putting too much emphasis on that.

BORGER: Do you think Democrats would be wise to filibuster something that labor supports so strongly as a jobs bill?

HAGEL: They'll have to make that decision. Democrats are pretty good at calculating things politically. So they'll have to make that decision.

But in the end, what we should come up with is a balanced, common sense approach to an energy policy. I might make this point. This is the first president in probably 25 years who has taken this issue on. This is a tough issue. This president, I think, deserves some real credit for focusing his administration on it.

Of course, he is going to have an imperfect proposal. That's why we have a Congress for a number of reasons, but for everyone to have an opportunity to figure this out, work it out, and because it is this president who has started this, then we will have an energy policy before it is all over.

BORGER: Your friend, John McCain, is teaming up with Joe Lieberman on an issue related to global warming. They're proposing a plan that calls for requiring all power plants to reduce their emissions of greenhouse gases. Will you support him on this?

HAGEL: No, I won't. My friend McCain cannot stay out of trouble for more than two days. You know, he was on the right track on this Mexican truck, NAFTA issue and all of a sudden he gets off the edge. He wants to go home and get on a house boat and gets himself off in kind of a new deal here.

BORGER: Why is he wrong?

HAGEL: He's wrong because I don't think and I think most of us don't believe that the way to handle this issue is to put mandatory binding caps on these emissions.

First of all, we're making tremendous pressure on this. The way to handle this, in my opinion, is to incentivize industry, is to incentivize research and development, not through a punitive binding measure.

And the issue about carbon dioxide, I have to remind some of my friends, that, in fact, if we didn't have carbon dioxide, we wouldn't have any plants. We are not sure what carbon dioxide does. And a lot of the nonsense that gets thrown around out there about carbon dioxide being the main greenhouse gas problem just is not true.

So, I appreciate John and Joe Lieberman's leadership on this. They have started something that is important. I introduced a bill this week with Pete Domenic and Frank Murkowski, Pat Roberts, Larry Craig and others, that focuses on many of these same things. But we come at it differently. We come at it through technology development, incentive. There is a good reason for the marketplace to want to get a more efficient use out of its energy. That's what will drive this, not mandatory binding caps.

SCHIEFFER: Let me just before you go, get your thoughts on what Senator Daschle said about the shrinking surplus now. As he seemed to say, there is not going to be much money for anything come the fall. Are you worried about that? Will the tax cut have to be revisited?

HAGEL: A couple things we ought to remind ourselves. When my good friend from the high plains, Senator Daschle - and by the way, I think he is doing a good job as majority leader. And I think Trent Lott, minority leader, is doing a good job. They're both in a tough spot, 50-49-1. I don't' know who leads in a deal like that. But, they both are doing a good job.

On this point, 12 Democratic United States senators voted for that tax cut. A number of Democrats in the House voted for the tax cut. So, let's start there. Second, there is no Medicare trust fund. There is no Medicare Trust Fund because we have a Part A and a Part B. Part A is funded from payroll taxes. Part B, which President Clinton the Democrats over last four years kept moving more and more expense into, very clever, takes now more of the money out of our general treasury to finance it. So, there is no surplus and there is no trust fund in Medicare.

Now, the issue of where do we get the dollars to take care of the spending?

My friend Senator Daschle acts like we don't know what the money is going to be required in education, defense. We know all that. We've passed all that this year for FY-2002 in the budget in the authorizing committees.

We know how much money we're going to need for education, all the rest.

Now, if we run into problems based on projections, then we're going to have to deal with it.

But one last point on this, Bob. The government spending and funding is not unlike a business. It is short-term and long-term. It's operating account. And so, as you pay out and you have resources come in, sometimes there is a spending imbalance.

But overall, you need to look at the bigger picture. I happen to believe, the reason I supported that tax cut and will support more is because the real issue here is: How do you keep the economy growing? I think you keep the economy growing through more money in the private sector, not in the government sector.

SCHIEFFER: All right. I'm sorry. We have to let it go there.

We'll be back in a moment with just a little bit more, in a moment.


SCHIEFFER: And with us now, Paul Gigot the columnist of the Wall Street Journal, and if you read the Journal and other newspapers, you know he was recently named as the editoial page editor of the Wall Street Journal. So, will the Journal change now?

PAUL GIGOT, Wall Street Journal: People who are looking for a revolution, I think will be disappointed, Bob.

SCHIEFFER: Well, let's talk a little bit about what we just heard. Tom Daschle almost seemed to me like, and I asked him, I said, "Do you seem like you're trying to find a way to support what happened on the patients' bill of rights in the House?" He backed off from that a little and said, "not quite," but he seemed very - but he didn't seem all that unfriendly to what happened.

GIGOT: No, he sure didn't. I thought that was very interesting because, I think he understands that the House passing has put the president in a much stronger negotiating position, and now he has to worry about appearing to be obstructionist if something that's been a priority of the Democrats for a long time dies in a conference between the House and the Senate. So I think he's got a decision to make, and he's going to be cross pressured partly because some of his people don't - wouldn't mind a presidential veto and wouldn't mind letting it die, and others who said, "Let's get something done"

SCHIEFFER: What about this whole business of now the surplus is shrinking and where do you get the money to finance the tax cut?

GIGOT: Well, I think it all depends on the economy. If the economy continues throwing off fewer revenues, I think then we're going to be in a big fight over taxing and spending again. But if we can stay out reasonably - some better growth, and we can stay out of the Social Security trust fund, I think they'll get - they'll get passed it. I think what's going to suffer a little bit is the defense spending. I think that's what's going to give, if anything.

BORGER: Let me raise an issue that we didn't raise in the show, which is stem cell research. There's a lot of question now about whether the president's going to allow federal funding for stem cell research. If he does it, do you think the conservatives will view this as the breaking of a campaign pledge?

GIGOT: I think some will, no question about it. I think that will be a difficult decision for him. But I think this is one of those decisions where leadership is going to matter and his ability to use the bully pulpit, explain himself. I think this could be a leadership moment for the president. And if he can explain himself, certainly better than he has on some other issues along the way here, he may find that this can help him.

SCHIEFFER: What about John McCain. We talked about him earlier with Chuck Hagel. He does not seem to think, as he was leaving, he said he does not think at this point that he is thinking about running for president. What did you think?

GIGOT: Well, it's a little early to decide that. But he's putting himself, I think, in a position in the middle between the two parties whre if President Bush is not popular in a couple of years, he could run. So I think that you have to look at where he's positioning himself on issue after issue after issue, and you have to say, well, if he wants to, he's positioning himself to do it.

BORGER: More likely as an independent than as a Republican or a Democrat?

GIGOT: I think so, I mean I didn't see - I think that he's burned off too many bridges with both social conservatives and economic conservatives in the Republican Party. It would have to be as an independent.

SCHIEFFER: Paul, thank you very much for coming by this morning. Again, congratulations on your new job.

GIGOT: Thanks, Bob, thanks for having me.

SCHIEFFER: We'll miss your column, but we'll look for your touch in those editorials.

GIGOT: Thanks.

SCHIEFFER: Thank you very much. We'll be back with a final word in just a second.


SCHIEFFER: Finally today, some thoughts as the president decides whether or not the government should back stem cell research.

History's longest argument has been over what to do about the mountain. One group has always wanted to cross the mountain, to explore and see what is on the other side. The other group, no less sincere, has always been willing to let well enough alone. That group worries there might be things on the other side of the mountain we didn't want to know. They were the ones who refused to look through Galileo's telescope. They already knew all they needed to know about the moon and the sun and the stars.

Some will argue that the debate over stem cell research is more complicated than that, and perhaps, it is. But there is no argument about what history teaches: The store of knowledge increases when one generation is free to explore and build on what the previous generation has learned.

The ancient Chinese invented gunpowder and set it afire to ward off evil spirits. But the next generation harnessed the explosive power of gun powder in a container and created the cannon. Later generations built on that knowledge and produced the internal combustion engine.

Science tells us, the next step in stem cell research may yield cures for crippling diseases and ease the pain and suffering of millions. Are we not obligated to see what is on the other side of this mountain? History argues yes.

The president says it is the hardest decision he will ever make. But if he reads history, he will know that history remembers those who climbed the mountain, not those who stayed home in fear of the unknown.

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

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