<i>FTN</i> Transcript - March 11

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Bob Schieffer, CBS News Chief Washington Correspondent: Today on Face The Nation, can President Bush's big tax cut pass the Senate?

The Bush White House has been sending signals the past couple of days that the president may be willing to compromise on his big tax cut plan. Will he agree to the trigger provision which would tie the size of the cut to the surplus? Should the rate cuts be different?

We'll talk to the top two senators on the budget committee, Republican Senator Pete Domenici of New Mexico and Democrat Kent Conrad of North Dakota. And we'll talk with Republican Senator Olympia Snowe of Maine, who's heading the trigger effort.

Then we'll turn to the school shootings last week and talk with Education Secretary Roderick Page. Gloria Borger will be here, and I'll have a final word on guns. But first the tax cut on Face The Nation.

Announcer: Face The Nation, with Chief Washington Correspondent Bob Schieffer. And now from Washington, Bob Schieffer.

Schieffer: And good morning again. Joining us this morning from Sarasota, Florida, where I understand she's helping her mother-in-law move, Senator Olympia Snowe. Here in our studio this morning, Senator Pete Domenici and Senator Kent Conrad. Senator Domenici, of course, is the chairman of the Budget Committee. And I will start with you, Mr. Chairman.

As we all know, the House passed on a mostly party-line vote last week a big chunk of the president's tax cut plan, but the conventional wisdom is that the president's plan as written cannot pass the Senate, at least as it's now written. Do you agree with that?

Sen. Pete Domenici, R-NM: Well, let me make sure that we understand. A budget resolution does not have specific tax cuts in it, it's a number, and then the tax writing committee has to write the tax law. I predict that a budget resolution up to $1.6 trillion will pass the Senate.

It will be extremely close, it'll be a tough fight, and there may be some give and take elsewhere. But I think that will go to the Finance Committee in the United States Senate for them to write the law. I don't know their vote, but I believe that we'll get something very close to it even out of that committee.

Schieffer: Well, you said up to $1.6 trillion which is the president's number. But I take it from what you're saying here that as it is now written, the bill that passed the House, which was this across-the-board rate reduction in income tax rates - that bill, as it is now written, would not pass the Senate.

Am I not correct in assuming that?

Domenici: No, I don't know the answer to that.

I think there will be a great deal of give and take after we get the budget resolution that authorizes them to do the president's number. That "up to" is the way budget resolution is written. And the compromise is if they're going to occur on the tax bill, will occur in the Financ Committee with the president. I'm not aware of any. I think we'll get something very close to it in the end product.

Schieffer: Senator Snowe, you are also a Republican. Do you believe that the bill that is now written can pass the Senate?

Sen. Olympia Snowe, R-ME: Well, I think they're obviously going to have to be some changes. And I think the president's proposed $1.6 trillion is possible, but obviously there are going to be some additional changes.

I, for one, have been working with Senator Bayh to include a trigger mechanism that was proposed by Chairman Greenspan in the event that our projected surpluses over the next 10 years do not materialize. Obviously, it's risky when you project out that far.

So we would like to target the tax cuts over the next 10 years and new spending initiatives to a debt reduction target that we would establish each and every year. I think that would bridge the gap towards the president's $1.6 trillion. Obviously, there will be other changes, but the president has certainly indicated his flexibility to work with members of the Senate to bring about this important initiative.

Schieffer: All right, Senator Conrad, you're the Democrat here this morning. You heard these signals coming out of the White House over the weekend that perhaps the president is ready to make some changes.

First, let me just ask you quickly, do you think the bill, as it is now written, could pass the Senate? 50 Republican senators in the Senate, 50 Democratic senators in the Senate. Could he get 51 votes?

Sen. Kent Conrad, D-ND: No, I don't think as it's written today it could. And it should not because, frankly, it threatens putting us back into deficit.

Schieffer: Let me just ask you, then, the follow-up.

What do you think has to be done to get some kind of a tax cut passed in the Senate?

Conrad: I think what the president has to do is moderate his proposal to really fit the priorities of the American people. They would rather see less of a tax cut, still a significant one, but one that would provide resources for additional pay-down of debt, to strengthen Social Security for the future, improve education, provide a prescription drug benefit. And most importantly, I think the people of the United States really want to see us get this long-term debt situation under hand, and the president's proposal doesn't do that.

Schieffer: Gloria?

Gloria Borger,U.S. News & World Report: I'd like to start talking about some specifics, because over the weekend President Bush started to indicate a little bit that he might be willing to compromise.

Senator Domenici, let me start with you. It seems that the White House now may be talking not about reducing the top rate from 39 to 33, but reducing it from 39 to 35 percent. Is that a good start as far as you're concerned? Is that something you would support?

Domenici: Well, lookI support what he currently has in terms of the marginal rate reductions. I'm not sure the rest of this package will pass as he plans it, but we're talking now, I assume, about the marginal tax rate bill that passed the House.

Borger: The top rates, yes.

Domenici: Top rates and lower rates going down. I believe that's a good bill. And I think, ultimately, what we're going to find out is that after you reduce these taxes, the top percent is going to be paying more taxes than they are now, if not less a percentage of the total.

Borger: So 33 percent is fine with you?

Domenici: 33 percent is fine with me.

Borger: Senator Snowe, would you like to see it at 35 percent or 33?

Snowe: Well, I think that's going to be one of the areas that will probably be addressed. And I know, in talking with other senators, they see that as a possible area for negotiation and perhaps even the estate tax.

But I think it all, again, underscores the fact that I think the president is going to be willing to work with members of the Senate to bring about the changes that are going to be so important to reflect, I think, a reduced tax burden in America.

Borger: Well, Senator Snowe, just let me follow up on your trigger proposal, if I might.

You've spoken with President Bush directly about this. Has he indicated any willingness to you to do a trigger mechanism?

Snowe: Well, he obviously didn't embrace it and didn't discourage me from it. And I've had multiple conversations with administration officials, with the Secretary of the Treasury, with Pete Domenici, the leader, Senator Lott, Chuck Grassley, the Senate Finance Committee chairman. Because I do think this is the way which we can build support for the president's $1.6 trillion tax cut, but without jeopardizing these surpluses that we anticipate over the next 10 years.

If six or seven years out we find that surpluses do not materialize the way we expected, what is the alternative? We don't want to return to an era of deficits and debt. I don't think anybody wants to repeat that period in American history.

Borger: Would you vote for this bill if it did not include your trigger mechanism?

Snowe: Well, I haven't reached that conclusion yet, Gloria. I am trying to work on this issue first and foremost, because I do think it is a way in which we can make sure that Congress adheres to certain specific targets, because we've never seen Congress exercise self-discipline.

In fact, I've heard people say, well, the trigger is Congress. Well, in a perfect world, that's true, but we know that Congress isn't a perfect world.

Schieffer: Senator Domenici, let me ask you this question. You said just a minute ago you thought that the rate reductions, as the president proposed, you favor that, but you said there may have to be changes in other parts of the president's program.

What changes, what othr parts of the program?

Domenici: Well, let me first say that I think the president is on the right track. And I believe the people of this country are beginning to understand that this is not a huge tax cut. The tax take of the United States is $25 trillion over that same period, and we're saying, just don't collect 1.6 of it.

Now the issue, then, is: What is the 1.6 made of? The president's cornerstone is marginal rate reductions. Beyond that, there are three or four very important items. Any of those can be adjusted if people want to adjust them.

The point is you've got to get the marginal rate one, because over time, that's what will keep the economy going. And if you don't give back that much taxes, what's going to happen? We're back to a tax-and-spend and we're going to spend it.

Schieffer: Well, what about, for example, what the Republicans call the death tax, the repeal or the elimination of inheritance taxes? There seems to be now some suggestion or at least some signal from the White House that maybe they would be willing to not go for just totally eliminating it, but perhaps reducing it somewhat. Would that make sense to you?

Domenici: Let me just say, when I said keep the marginal rate ones, that's a reduction in everybody's rates. People will be paying less.

The estate tax, there are three or four versions. In fact, the United States Senate passed a version that is named after Senator Kyl which is a very good change, and it is nothing like the president's in cost. It is about one-third the cost. It does it differently, and it makes the beneficiaries pay capital gains whenever they sell the property.

Schieffer: And you think that might be a good idea?

Domenici: That might be a substitute, and that would permit them to use money for some other things that Senator Conrad has spoken about.

Schieffer: Senator Conrad, what do you think about that?

Conrad: You know, what's missing in this whole debate is the dirty little secret that the debt of the United States is not going to be reduced under this plan.

The debt of the United States is going up, and going up by about the amount of the president's proposed tax reduction. Right now, the gross debt of the United States is $5.6 trillion. At the end of this period, it's going to be $7.1 trillion. You know, what's really happening is the Social Security money is what is being used to reduce the debt of the United States. I don't think most people, perhaps, appreciate that.

And in the president's plan, he takes every penny of the Medicare trust fund and uses it for a so-called contingency fund to be used for other purposes. That's double counting.
That's exactly how we'll get this country in deep financial trouble. And this time there's no opportunity to recover.

You know, back in the '80s, you had time to recover. This time, there is no time to recover because the baby boomers start tretire in 11 years. If we get it wrong this time, we'll be back into deep deficit and deep debt.

Borger: Now, you want to lock that money away. Have you talked to the White House about this, the Social Security, Medicare money, locking it away?

Conrad: I have proposed what I proposed last year, which is to protect the Social Security trust fund, the Medicare trust fund. We got 60 votes on a bipartisan basis last year. We're going to vote on this on Tuesday, and hopefully it'll pass.


Domenici: Well, I have an amendment - we'll vote on Tuesday.

Schieffer: Let me ask you this, Senator Conrad. The president has been talking about the bipartisan approach. But, last week, Congressman Gephardt said, after this bill was rammed through the House the way it was, that he saw that as the end of bipartisanship.

Do you think we're going to get back to where we were where nobody can get anything done because both sides refuse to budge? Is bipartisanship over before it's really begun?

Conrad: Well, first of all, I hope not. But when the president and his allies say it's got to be their way or no way, that's not principled compromise. That's not bipartisanship. That's an insistence on everybody else just agreeing with them. Look, we're not going to do that. We can't go back to deficits.

Some of us have spent a lot of our political capital and energy trying to lift us out of the deficit ditch that's taken us 17 years to recover from what happened in the '80s. We have no intention of going back because of the implications for the economic strength of the country.

Borger: Senator Domenici, I just want to switch to the budget for a moment, if I can. You have said that the 4 percent increase in spending that President Bush has talked about is not adequate. This morning, Senator Trent Lott says that it's more than adequate, that you'll be able to work with that.

What's your response to that?

Domenici: Well first, my response is that I'm going to talk about for a minute about something Kent Conrad said and then I'll tell you the 4 percent. But frankly, we've heard this rhetoric about spending the Social Security fund, spending Medicare.

You know, every time we get close to a tax cut, the Democrats come up with something like that. It's just a lot of rhetoric, you know. It's kind of all sizzle and no steak, which I borrowed from somebody because I'm not good at those kinds of words. So the truth of the matter is, the president looked everybody in the eye and said, "We will spend every penny of Medicare's money on Medicare."

So I don't think those issues are the real issues. If they are what we adopt, then it means we're back to the tax-and-spend era, the era of bigger government rather than littler, because the surplus is going to be spent on government. A little teeny piece of it should go back to the people.

Schieffer:Snowe, let me ask you, because I think you and some of the Republican moderates will be the key here as to what finally happens. Do you think at the end of the year the American people are going to get a tax cut or not?

Snowe: I do. I think that it's not a question of if, it's a question of when, because there is bipartisan support for significant tax relief. And Senator Bayh and I are working with Republicans and Democrats on this trigger mechanism as one step in that direction.

Obviously, they're going to be differences about composition and, for some, for size. But I think, at the end of the day, you will see strong support for tax relief, because we're in an economic downturn; not to mention that the American people are facing a historic high when it comes to tax burden.

I might also add one other issue on debt reduction. The president's budget accounts for as much debt reduction over the next 10 years as the previous administration. In fact, Clinton's economic outlook issued a report in January that underscored the same amount of $1.2 trillion as the minimum debt level at the end of 10-year period. So it's on the same track, and obviously Medicare is going to be protected. He has a contingency fund, and of course the Democratic are proposing something else, but in the final analysis, it becomes the same.

Schieffer: All right, I want to thank all of you for coming this morning. Obviously, we'll be talking some more about this as the year goes on. When we come back, we'll talk to Education Secretary Roderick Paige in a minute.

(Commercial Break)

Schieffer: With us now, the new education secretary, Mr. Roderick Paige. Welcome to Face the Nation, sir.

Roderick Paige, Education Secretary: Thank you.

Schieffer: And let me just get right to the issue of the day.

We have had another of these terrible shooting incidents in America's schools. Do you see anything that the administration, that Washington can do about this?

Paige: Well, as you know, the president feels that in order to have effective schools, you have to have a safe and secure environment. That's why under his plan, "No Child Left Behind," he addresses these issues so vigorously.

Schieffer: Well, what does he suggest to be done about what happened in this school?

Paige: Well, in this particular incident, the particular incident in California now, we were in touch with the superintendent out there, I think, within hours of the incident. We offered some assistance, and he later called back and took advantage of that. We have counselors on the ground out there now assisting with the situation.

Schieffer: Do you think there's any connection between the easy access to guns and this violence we see increasingly in the schools, Mr. Secretary?

Paige: Well, I think more that probably the biggest problem we have is the amount of aienation and rage in our young people. I think guns turn out to be the instrument that is used, but that's probably not the cause. We need to look to the cause of the situation.

Schieffer: But the instrument is kind of a big part of it, isn't it? Because I'm sitting here thinking if this young fellow has been armed with a baseball bat, those kids probably would not be dead.

Paige: No, but in San Jose, California, just recently, a photo clerk gave a tip to a policeman about some kids making bombs. The same thing in Fort Collins, Colorado. So these bombs could have caused a good deal of damage, too. They're not guns. So we need to address the situation where the cause really exists.

Schieffer: But I'm not sure I understand what you're getting at. You say we need to address the cause. There is a lot of talk about it, but what are we doing to address the cause? What ought we be doing?

Paige: Well, I think there are a lot of things we can do, and I think under the president's plans, some of the more spectacular opportunities would be including faith-based organizations to help give them eligibility to work in after-school programs.

These after-school programs, I think, are very important. And faith-based organizations are very good at this. And so, the fact that they will be eligible now under the president's plan I think is going to make a big difference.

Schieffer: To bring faith-based organizations into the public schools? Do I understand what you're saying here?

Paige: After-school programs, faith-based organizations there. And this period of time is very important to give young people things to do that are positive.

Also under the president's plan, there is going to be an increase in character education in our schools. In fact, it is going to triple the funding there. That is going to make a big difference.

Schieffer: In what way, how does that work?

Paige: Well, character education offers an opportunity to teach kids things like empathy, compassion, tolerance - all values that we all know are wonderful.

Schieffer: Let me ask you this question.

When I went to school, you were grouped in - the 7th and 8th and 9th was called junior high school. And then high school was the 10th, 11th and 12th. Now, we have the middle schools, and most high schools begin in the 9th grade.

Do you think we're putting little kids into high school too soon and that might have something to do with it?

Paige: Well, you know, that thought has been discussed around. I have some personal feelings about it, too, yes. The middle school concept still needs a little bit more fine-tuning. And there are a lot of people who may be right who think that the middle school concept may bring elementary kids, who are used to a more nurturing environment, into a more adult environment too early. I don't know. That's still to be debated.

Do you think this child that was arrested in connection with this incident should be tried as an adult?

Paige: I don't know. I have to withhold judgment on that right now. I don't know enough about the circumstances to have a strong opinion on that. I do know that some children should be tried as adults when they conduct themselves in certain ways. This particular situation, I don't know if I could make a judgment about that now.

Schieffer: Do you think parents should be held liable?

Paige: Absolutely, absolutely. I think parents have a very important role to play, and that when parents fall down, I think they have a good deal of liability and accountability there.

Schieffer: How do you get kids to take these kinds of things seriously and to understand how serious this kind of a situation is?

Paige: Well, I think that relationships are important. We got to figure out ways to make sure that a quality adult is in the life of every child. And we hope that quality adult would be a parent, but if it's not going to be a parent, then the school has to step in and fill that void. And so, teachers and principals and counselors and other people like that have to chip in there.

Schieffer: Let me ask you about the president's education plan, because I've got something here called a "fact sheet" that's put out by the Democrats on the Budget Committee. And I know Senator Conrad, who was just here a while ago, kind of took you to task when you were before that committee, saying that, really, the president's plans on education are not nearly as extensive as he has laid them out to be.

In fact, he said that while he talks about increasing funding 11.5 percent, that in reality that that's just some juggling with the books. It's only about 4.2 percent when you figure in inflation. And he says, over the last five years, funding in education has gone up on an average of 12.9 percent.

What is your response to that?

Paige: Well, my response would be this: My predecessor, Terrence Bell, started the new generation of school reform about 20 years ago. And since then, we've been trying to spin our way into the solutions. We've not found those solutions there. So solutions obviously are not tied directly to spending, although spending is important. And the president's plan increases spending, but he understands that there are other factors at work here. And we're not going to spend our way into solving these problems.

Schieffer: All right. Well, Mr. Secretary, thank you and good luck. You've got a big job.

Paige: Thank you.

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

(Commercial Break)

Schieffer: Finally today, Sherlock Holmes solved a mystery when he was the only one to notice what did not happen. When the watchdog did not bark, he realized the killer was not an intruder but someone the og knew, and that's how he solved the crime.

Well, all of us missed a big story last week when we failed to notice what did not happen in Washington after that latest school shooting.

Remember the outcry after that earlier shooting at Columbine High School? Members of Congress lined up to express shock. Senators were so outraged they passed new gun laws. We should also add that the gun lobby went to work, too, and the Senate's effort was quickly undone.

But compare that to what happened last week. There was no outcry.

This time, Congress did not bark. There was hardly a peep out of Washington. And that's the story we missed.

The fight over guns is over, and the gun lobby has won.

You could see it coming during the last campaign when the lobby turned up the heat from the presidential race right down to races for the state legislatures. Guns became the subject no one, no candidate wanted to talk about.

Washington has concluded this is a problem to be solved somewhere else, and last week's silence just made it official.

Well, that's our report. We'll see you here next week on Face The Nation.

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