FTN - 8/26/01

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BOB SCHIEFFER: Today on Face the Nation, the future of Congressman Gary Condit and the disappearing federal surplus.

Did the interview Gary Condit did on television last week do him any good, or did it spell his demise as a congressman? We'll ask the head of the Democratic National Committee, Terry McAuliffe, and his Republican counterpart, Governor Jim Gilmore.

Then we'll also talk with them about the disappearing federal surplus and how the Bush administration plans to deal with it.

We'll also talk about the future of Congressman Condit and the state of the investigation into Chandra Levy's disappearance with former prosecutor Joe DiGenova and Michael Doyle, who's covering the story for the Modesto, California, Bee.

Gloria Borger's here, and I'll have a final word on the Condit media blitz. But first, the chairmen of the political parties 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.

Well, Terry McAuliffe and Governor Gilmore are here in the studio with us this morning.

Well, let's start with you, Terry McAuliffe. You're the head of the Democratic National Committee. Should Gary Condit resign?

TERRY MCAULIFFE, Chm., DNC: That decision's up to Gary, and that's up to the voters in Central California. They have to make that decision.

SCHIEFFER: What do you think the fallout from this interview was?

MCAULIFFE: Well, as I said yesterday publicly, I was very disappointed in the performance. I wish that Gary had apologized to the Levy family. I wish he'd been more forthcoming about the relationship. I wish he'd been more forthcoming about why he did not deal more directly with the police early on in this missing person investigation. I was very disappointed in it.

SCHIEFFER: Governor Gilmore, I'll give you your shot on this one.

GOV. JAMES GILMORE, Chm., RNC: Well, I think we've had enough performance. The great thing about the president is, he is what he is and what you see what is you get.

But on the other hand, we've seen too many performances in Washington, D.C. The facts...

SCHIEFFER: I'm sorry, I'm talking about Condit.


GILMORE: Well, I know you are, but the fact...


GILMORE: No, I'm talking about the fact that apparently Gary Condit didn't look very sincere in everything that he was saying.

I'm going to tell you something, Bob. This is a police matter. We need to be very concerned about Chandra Levy, and that's all we need to be concerned about. I think that Gary Condit ought to cooperate totally with the police if he isn't already, and that's what I think.

GLORIA BORGER, U.S. News & World Report: Don't you think the Democrats are throwing him overboard

GILMORE: Absolutely, the Democrats are throwing him overboard. Dick Gephardt said so the other day, and I think that Terry's been somewhat less than flattering in some of the things he's said about Gary Condit. I think they're throwing him overboard.

But this is a police matter, and he should cooperate with the police.

SCHIEFFER: Well, excuse me. Are you here to defend Gary Condit? Is that the line you're taking, Governor?


GILMORE: By no means. By no means. See, I think most people believe he is not cooperating with the police, and he should do that. And it's bad that we are looking at performances on something like this, which is so important to the Levy family. We should be concerned about Chandra Levy and only that.

BORGER: Mr. McAuliffe, there's a redistricting going on in California. What is Gary Condit's fate going to be vis-a-vis that? Could he lose his seat?

MCAULIFFE: Well, the first plan, I believe, is going to be out this Wednesday.

There is talk that they're going to carve up the district. We won't know, Gloria, until actually the map is out on Wednesday. The state legislature is meeting on the map. And there is some talk that they're going to carve up the map, but we won't know till we see it on Wednesday.

BORGER: But Democrats control, so you're saying that they could actually make it more difficult for him to run?

MCAULIFFE: Sure, anything's possible.

And the problem with the situation today is, I want to spend my time talking about the fiscal mismanagement of our economy by George Bush, and I'm having to spend my time talking about Gary Condit. We ought to get back to the issues that matter to working families.

SCHIEFFER: Well, let me, before we get to that, let me just ask Governor Gilmore, do you think Republicans are going to find a candidate to run against Condit, or do you think he's going to have - what do you - how do you see that?

GILMORE: No, I would...

SCHIEFFER: Terry is saying they may be going to carve up the district anyway.

GILMORE: Well, you know, I certainly would expect to see Republicans offered in seats out there in California. California is a very key state for us, and I would expect that the Republicans would offer a candidate in this seat. I certainly would believe that, no matter how they carve up the district.

But I think, at this point, that Gary Condit ought to cooperate with the police, stop doing performances, and let's get on to the business of taking care of this young lady who's missing.

SCHIEFFER: The big story this week, the other big story, seems to be who lost the surplus. The New York Times wrote in an editorial that the surplus seems to have vanished while Washington is on vacation. Democrats are blaming the size of the tax cut.

Was the tax cut now a mistake, Governor Gilmore?

GILMORE: , absolutely not, and particularly in a down economy like this. The president has a plan to help to repair this economy, to fix this economy, and he's implementing that. Putting money back in the pockets of working men and women across the country is exactly the correct thing to do, and he's doing it.

Meanwhile, he is continuing his focus on education, on defense policy, and making sure the working men and women of this country have the money they need to add to their quality of life and, as he said in his press conference, to determine their own lives.

SCHIEFFER: Where did the surplus go?

GILMORE: Well, of course we have a down economy. And that's part of the reason why there has been some shrinkage of what was expected.

But the bottom line is that we're still in the second largest surplus in the history of the United States even to this day. Meanwhile, the president has put together a very sound budget, including education, defense and appropriate types of spending.

BORGER: Mr. McAuliffe, was the tax cut a mistake?

MCAULIFFE: Let me tell you, this has been a horrible week, Gloria, for the Bush White House. The Bush White House has had to admit that they've blown the surplus; that they've raided Medicare, Social Security. They just announced the highest unemployment rates in nine years.

And then they had to admit their Social Security privatization committee just met, and they leaked out that they're going to have to raise the retirement age and cut benefits. I mean, there's no wonder they met in secret.

But this has been a horrible week for the Bush White House. The economy is in terrible shape today.

George Bush has inherited a lot of things in his life, but he did inherit a great economic expansion; an economy that created 22 million new jobs. And he inherited a great surplus. He has blown it. Eight years to create this surplus, hard work by Democrats, tough spending choices by Democrats. He has blown it in eight months. There is no money left for education or for defense.

GILMORE: That's absolutely false. That is absolutely false. The president inherited a down economy from the Clinton White House, from his predecessor, there's no doubt about that. That downturn started long before he took office.

MCAULIFFE: When he started talking it down.

GILMORE: And it is absolutely false and misleading. These DNC ads that have been going on saying that the president is going to invade Social Security is not true. No benefits are being reduced, and those balances have not been reduced in the Social Security trust fund one dollar. So this is false and misleading.

MCAULIFFE: Let me tell you why we did the ads. George Bush made a solemn promise when he was campaigning that he would not touch the Medicare trust fund or the Social Security trust fund. His own White House had admitted that they hit the Medicare trust fund, and i they had not played an accounting gimmick for about $4.5 billion, they would have hit the Social Security trust fund. He broke a solemn promise to the American people he would not touch either account. He has done it.

And the Wall Street Journal - don't take my word for it - the Wall Street Journal editorial the other day, not exactly a left-leaning newspaper - said that he has hit the Social Security trust fund by $10 billion. When the CBO numbers come out this week, you're going to invite me back and I'm going to say I told you so.

BORGER: But as a practical matter, haven't former presidents always invaded the Social Security trust fund, and now people said they weren't going to do it as a political promise because the surplus was sitting out there? So as an economic matter, does it matter?

MCAULIFFE: Bill Clinton is the first president since Eisenhower in the last three years of his presidency where he created great surpluses, and we did not have to hit the Medicare or Social Security trust fund. We left a huge surplus for this administration. They talked the economy down as soon as they were selected, and here's where we are today.

The facts are - don't take my word for it - the Bush White House has admitted, as well as the Wall Street Journal and others, as you read, the New York Times editorial pages.

GILMORE: That's absolutely false, Gloria. In the Clinton years, they invaded and reduced the balances in the Social Security trust fund $673 billion. Only when this president came in did he make a commitment not to invade the Social Security fund, and he's keeping that promise. He's keeping his word.

But, Terry, you know that. You were a big friend and still are of Bill Clinton's. You know that Bill Clinton invaded that Social Security fund his entire eight years and took out $693 billion from that fund.

MCAULIFFE: He did not. In the last three years, we created the surplus.

Here's the problem the Republicans have. When Bill Clinton became president because of Bush 41, the president's father, they left an anemic economy. Our economy was in an absolute ditch. Bill Clinton, working with all the Democrats, worked very hard; made tough spending choices; didn't use faulty economic projections like the Bush's are using now, with 3.2 percent, where the Blue Chips are saying it's going to be 2.8 percent. We created this surplus. When George Bush came into office, he had a huge surplus. That surplus, Bob, is gone.

SCHIEFFER: Let me ask both of you this question: Doesn't this just underline that we shouldn't take seriously all of these projections about what surpluses are going to be? You passed your big tax cut - a 10-year tax cut based on projections 10 years down the road. This shows you can't even tell six months down the road what the surplus is going to be.

Shouldn't we just forget about those long-term things? I mean, how can that be an accurate bass to base anything?

GILMORE: Bob, I think it's always very difficult to project, particularly when you're in a down economy like his one, what's going to happen. And that's why the president has correctly emphasized that you have to control spending. You have to make sure that the Congress doesn't go on a spending spree.

But I'd like to ask Terry what his plan is. If you're so opposed to the tax cut, what is the Democrats' plan for the recovery of this economy?

MCAULIFFE: I'm glad you asked that.


McAULIFFE: Listen, when George Bush gets back from his vacation down in Crawford - and I think it's great. He's been down there for a month. I saw him yesterday with his dog, Barney, walking through the cedar trees. I think it's great.


GILMORE: OK. What's your plan, Terry?


MCAULIFFE: Let me tell you, there's a million people today that are on an unwanted vacation, Jim, that do not have a job, that had one on January 20. What George Bush needs to do when he comes back to Washington is pull his Cabinet together and say, we need to work in a bipartisan way.

Tommy Thompson yesterday admitted that there is no money for children's medical insurance yesterday.

BORGER: What are you going to do, what are the Democrats going to do? Do you want to repeal this tax cut, do you want to repeal parts of this tax cut?

MCAULIFFE: I want George Bush as the president of the United States to come back when he comes back from vacation, pull everybody together and put a plan together. He needs to do a mid-session review of his budget.

BORGER: So you want...

MCAULIFFE: He's the president. He needs to do a mid-session review. The numbers aren't what they said they would be. Not using faulty projections.

And, Bob, you talked about projections. Bill Clinton always used the Blue Chip, and he went under Blue Chip. This administration, the president yesterday said where he had .1 percent growth. Next year we're going to have 3.2 percent. That's unrealistic. Let's get realistic numbers.

And talk about spending. George Bush says, you know, we need more money for education and military. That's great. Where's the money going to come from? But yet they allowed a $34 billion special interest cash giveaway to the oil and gas industry, and you didn't hear them threatening the Congress over that.

GILMORE: Gloria, the answer was they have no plan. If they want to go ahead and increase the death tax again, they want to increase the marriage tax again, if they want to repeal the tax cut, then they ought to just say so and be honest about it instead of this critique and this criticism.

SCHIEFFER: Well, now, President Bush said that one thing here is that this is going to keep the Democrats and keep the Congress from spending money when you have this surplus shrinking. Wel, this week Senator Byrd and Senator Conrad, both Democrats, one chairman of the Appropriations Committee, one chairman of the Budget Committee, announced that they are not going to support the president's request to add $18.4 billion to the original Pentagon budget.

Do you think that's what the president is talking about when he says it's going to keep him from spending money?

GILMORE: Yes, the president in his budget has made it very clear that his focus is education, national defense and making sure that working men and women have enough money to be able to add to the quality of their lives. He made that point over and over again, and it's exactly the right position to take. Therefore, he does believe there should be additional money put into national defense. He thinks it's been deficient for a long period of time. But the direct...

SCHIEFFER: But where do you get the money?

GILMORE: It's in the budget right now. In addition to that, in addition to the budget that includes that increase, you still have the second largest surplus in the history of this country, Bob.

But the fact of the matter is, the absolute fact of the matter is, that the president believes something that's absolutely true: The more money you leave in Washington, the more the politicians will spend it. He wants to see it back in the pockets of working men and women.

SCHIEFFER: Terry McAuliffe, last word.

MCAULIFFE: First of all, the surplus that's left over was left over from the last Democratic administration. There is no non-Social Security surplus left over. That's what they've totally blown to date, and that's the issue that we're fighting for as we go forward there.

There is not the money requested by Don Rumsfeld, for Secretary Page for education, for Tommy Thompson. They all want more money. It's not in the budget. These folks have to got to come to reality.

The reason why - listen, the governor, I know, is sensitive. He's got problems in Virginia. He can't pass a budget in his own state. That's why Mark Warner today is up 14 points. Great fiscal responsibility. We're going to win in New Jersey and Virginia, two Democratic governors.

SCHIEFFER: Governor Gilmore, I'll let you have 10 seconds.

GILMORE: Ten seconds, we're going to win in New Jersey, we're going to win in Virginia. And this president has got this country moving back in the right direction, thank goodness.

SCHIEFFER: All right, thanks to both of you. Very enlightening discussion.

When we come back, we'll have a roundtable discussion on the Gary Condit case in a minute.


SCHIEFFER: And with us now from Fenwick Island, Delaware, former federal prosecutor Joseph DiGenova. Here in our studio, Michael Doyle of the Modesto Bee.
Michael, your paper has a new poll out this morning. How does it look for Gary Condit in his home district?
MICHAEL DOYLE, Modesto Bee: Well, it says two things. It shows that he has a historically strong base of support and it seems to be eroding. The poll over the last two days of 540 residents reported today by Garth Stapley, my colleague, shows that more than half of those surveyed, 54 percent, say they would not vote to reelect the congressman.

It's interesting to see that two-thirds of those asked said they think he has done a good job as a congressman, but that has been undermined by his performance on Thursday night. Two-thirds of those asked said they thought that he did himself harm rather than good by the performance.

SCHIEFFER: Joe DiGenova, obviously you saw Terry McAuliffe just as Richard Gephardt, the leader of the Democrats in the House, had done earlier this week. He is clearly putting some space between the party and Mr. Condit. What do you think is going to happen here? And will he be asked to resign, do you think?

JOSEPH DIGENOVA, Former Prosecutor: Well, Bob, I think at a minimum, his seat on the House Intelligence Committee now has become something very seriously at issue, because the question now becomes, as you know, those members get the most sensitive intelligence information from our intelligence agencies. Well, some of the intelligence agencies may now refuse to testify before that committee is if he is in the room because the congressman now remains eminently blackmailable.

And I think the Democrats realize that, and that's why Dick Gephardt turned around in five days calling him an honorable man to calling him someone who was a disturbing - gave disturbing and wrong interview the other night. And I think Terry is reflecting the fact that the Democratic Party is now trying to minimize the damage.

SCHIEFFER: Well, you know, his lawyer, Abbe Lowell, Mr. Condit's lawyer Abbe Lowell, made a rather unusual argument today. He said now that so much has come out about Gary Condit, he is the most unblackmailable member of Congress. Will that wash?

DIGENOVA: That's absolutely - Bob, that's absolutely false, because the fact is the Congressman still continues to lie and to try and keep things a secret. As long as you are trying to hide things, you are blackmailable, and he is doing both of those. And he is blackmailable, and he should be removed from the House Intelligence Committee.

BORGER: Mike, you have covered Gary Condit for about 12 years. Was the Gary Condit you saw on television the other night the same fellow you've been covering?

DOYLE: Gary has sort of two facets to him. On retail politics, when he's on his game, he can be quite warm, quite folksy and quite direct. He also is a man of very strong will, and he can be quite brittle, he can be quite rigid. And he's a man who sticks to a certain position even if it's against his interests. I think we saw one facet of the congressman that I've seen over the time, but certainly asn't his best side.

SCHIEFFER: Well, was this the real Gary Condit?

DOYLE: My sense of it is that, like everybody else, he's a complicated man of many parts. It certainly was a facet of him, but it was not his entirety.

BORGER: Joe DiGenova, Anne Marie Smith's lawyer - she's the stewardess who said she had a relationship with Gary Condit. Her lawyer, this morning, indicated that tomorrow she may be suing Gary Condit for something like defamation or libel because he denied a relationship in his interview with Connie Chung. What would you do for him in that situation?

DIGENOVA: Well, I tell you, you know, Gloria, the one thing that Gary Condit had done right all along was not give an interview that was recorded on tape. He made a terrible mistake the other night when he gave that interview because he had decided he was not going to tell the truth, and therefore he should not have given the interview.

But he made a legal mistake during that interview, and that was to accuse Anne Marie Smith of lying. That was an overt act. It is an act that can be used by prosecutors in a conspiracy case or even in a non-conspiracy case to show that he was continuing to lie about the relationship. It was an absolutely terrible legal decision by him and his lawyer to accuse her, apparently falsely, of having lied.

And I think that if there were a permanent U.S. attorney in the District of Columbia, there probably would be a grand jury on this right now. There should be one. I hope there is one soon.

SCHIEFFER: Well, as a lawyer, would she have grounds for a lawsuit, a civil suit to sue him for slander or libel or something of that nature?

DIGENOVA: That is theoretically possible, Bob, at this point. But actually, I think from what I heard her lawyer say, Mr. Robinson, he's filing some sort of a paper apparently in California that's going to apparently ask the prosecutors there to investigate the apparently false affidavit that was given to her. That's apparently what he's going to do. I don't think he's going to be suing the congressman civilly.

BORGER: Let's talk about the state Democratic Party in California. You know, the national Democratic leaders like Dick Gephardt are clearly moving away from Gary Condit. What about the state party leaders? Are they still behind him?

DOYLE: Well, you drew out earlier today from Terry McAuliffe his understanding that they may be carving up this congressional district, and there are Democrats who are looking at this, even a possible primary challenge. A couple of names I've heard: Lisa Quigley, chief of staff to a Congressman Cal Dooley; Bill Lyons, the director of food and agriculture department. People have talked to him about this.

And so, personal ambitions are beginning to take paramounts over Gary Condit's future among his fellow Democrats to an extent, to an extent. Wednesday will be key when we see tose new maps.

SCHIEFFER: But the other part of it is Republicans seem not to have come up with a candidate as yet. I mean, you can't beat somebody with nobody, as the old saying goes.


DOYLE: And I think that sort of shows the degree to which Gary Condit has been able to co-opt the Republican and moderate support over the years. There's just never been a field team created of potential Republican candidates. That may change also, depending on what the new district looks like.

SCHIEFFER: If had you to make a guess right now - and your business is being a reporter, not being a guesser - would you guess that Gary Condit will or won't run?

DOYLE: I think he's honestly making that decision right now. He can look at our polls that show two-thirds of the people asked say they think he's done a good job as a congressman. And I think that his job now is to try to convince those people that he can continue doing that. I honestly think that he hasn't made up his mind yet.

SCHIEFFER: And, Joe, just one final question. What do you think the eventual fallout of all this is going to be? Will this have an impact on the elections next year, do you think?

DIGENOVA: Oh, I don't know, Bob. You know, it's really hard to tell. Certainly, I think it's going to be disruptive out in California. And I know from talking to people in the California delegation that they're deeply disturbed by his conduct, and they fear that it will reflect poorly on the entire delegation in the 2002 elections and distract from the Democratic message. So that's why I think the Democrats have decided to jettison him.

SCHIEFFER: All right. Gentlemen, thank you very much. What a week.

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


SCHIEFFER: Finally today, I want to make a flat statement. In more than 40 years of reporting, I've never seen anyone make the kind of mess that Gary Condit made of his attempt last week to rehabilitate himself and gain public sympathy. Or I guess that's what he was trying to do.

And oh, it had all been so carefully planned by his high-priced handlers. No detail was overlooked; timing and control were key. The great media blitz would unfold with a precision of the Normandy invasion.

You can just hear the advisers: "We'll warm up with a couple of print interviews. That will get you ready for the real ball game, the primetime interview with Connie. She'll come on strong, but if you just stick to the script we've given you, you'll look like the victim."

And then, after all the planning and rehearsals, Gary Condit forgot to say he was sorry, which he said later was Connie's fault. She asked the wrong questions, he said.

That seems to be the case most of the time in Condit's version of history. It's always someone else's fault. Chandra's parents didn't understand. Chandra's aunt made ustuff. His flight attendant friend who claimed to be his lover was out for the money. And the police, well, he just can't understand why they are not enamored with his answers.

If Condit's advisers told him this exercise in arrogance was going to help his cause, he needs some new advisers. But my guess is they didn't. My guess is he decided to wing it and we saw the real Condit.

After four months, we still don't know what, if anything, he had to do with Chandra's disappearance, and he didn't help us on that. But in the meantime, he has committed the unpardonable Washington crime: He's shown himself to be a fool.

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

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