Political Wrap with Mark Shields and Paul Gigot
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JIM LEHRER: Now, some analysis of the tax struggle, among other Washington matters, from Shields and Gigot; syndicated columnist Mark Shields, “Wall Street Journal” columnist Paul Gigot. So, what does what Paul Solman just told us, how does that translate into the politics of the struggle that is now under way up on the Hill, with the president, et cetera, sir?
MARK SHIELDS: First of all, I mean, it was a jewel of a piece, because it really did explain why we’ve gone from five-year projections to ten-year projections, and that is legislatures, politicians, human beings like to provide pleasure and like to postpone pain. That’s why those sixth-year projections.
Jim, when I think about the projections, I’m reminded of just the last time we had a new president — 1993. Bill Clinton came in, he introduced his package, his longest deficits as far as the eye could see. Phil Graham, still a major player, Senator from Texas, said this is a one-way ticket to recession. Dick Armey, the House Majority Leader, an economist, said that’s it, this is going to send unemployment and the deficit through the ceiling. Newt Gingrich said it’s going to double and swell the welfare rolls. Well, that didn’t happen. And it ought to be an exercise in humility, just as Paul pointed out, for all of us. And I think when you’re making ten-year projections, you’re basically saying, you know, this is what I want it to be to some degree. The CBO does a great job, don’t get me wrong.
JIM LEHRER: But the question is politically, so the numbers don’t mean anything, it’s basically a political argument about philosophy?
MARK SHIELDS: I think they’re serious; I think they’re conscientious, but intervening a single percent in change of spending can change it. A single change in the economy can change it. Now we’re hearing that the economy is cooling, it’s slowing, it’s sputtering, it’s stuttering.
JIM LEHRER: Okay. Paul, how would you answer the question about how these numbers, what do they mean then in terms of this struggle?
PAUL GIGOT: They don’t mean very much– except… well, I think they’re essentially speculative and even sort of phony basically, not that anybody’s dishonest about it, but — unfortunately they have very real consequences, because both sides use them as weapons in the political fight. And for years, the lack of surpluses were used to block tax cuts.
Now that we have big surpluses, they turn the tables and they’re assisting the cause of tax cuts, because it looks like there’s more room for it. So it makes some of the skittish Republicans more likely to vote for them. So there’s no question in my mind, though, right now the surplus estimates have really changed the politics of tax cutting and they’ve changed them in the direction of the Bush tax cut and the Republicans.
JIM LEHRER: So the numbers really do mean something?
PAUL GIGOT: They have real, real consequences, even though they’re probably not real numbers, they have real political consequences. Absolutely — and that’s, in part, because the Congress wants protection. So they set up – they rig these numbers so they can point to them and say see, we’ve got this, or they do the long projection not just to postpone the pain, but sometimes to stop us before we spend again.
JIM LEHRER: So we’ve had one vote that was in the House Ways and Means Committee yesterday, and it was on a party line vote on the president’s plan, or most of the– it’s not all there, but most of it – $900 billion of it is — what does that mean about the future of this whole exercise?
MARK SHIELDS: Well, it means a couple of things, Jim. First of all, it means the new chairman of the Committee, Bill Thomas of California, it was an intramural statement, a political statement on his part. What he was basically saying to the Republicans in the Senate is, stiffen your spines. Look, we’re going to pass this over here, we just took the tougher part, that’s the rate reduction without the sweeteners of marriage penalty being removed or the child credit being increased or even the estate tax.
We just– we’ve been attacked by the Democrats on tilting to the rich and rewarding the well off, we just passed this, we just stood up and did it. I think that’s the message he wanted, we want to move it quickly, we want to strike while the president is in his honeymoon period. I think that was the political message that was sent. There will never be a vote in the United States Senate on what came out of the Ways and Means Committee tomorrow.
JIM LEHRER: We’ll get to that in a minute. How do you read what was happening?
PAUL GIGOT: Take advantage of the momentum of the president’s speech, no question about it, that’s the big message, and also try to do it early because you put maximum pressure on the Democrats if you’re making this argument that you need a tax cut to stimulate the economy, you do it now when the economy looks a little soft — and hope that that sells. Unfortunately, the bill that they passed only has a lot of the tax cuts– only one of the tax rates retroactive to January 1 of this year, so I think they undercut their own argument.
JIM LEHRER: About helping stimulate the economy.
PAUL GIGOT: Right, but that’s the political message they want to send. I think a better tax cut would have been a better way to back that message up, but anyway, that’s why they did it right now.
JIM LEHRER: Does it mean anything? Is it going to have any effect?
PAUL GIGOT: Sure, it’s going to have, I think — they’re going to vote on it in the House next week, at least they plan to. It will probably pass the House. Remember, tax bills have to start in the Ways and Means Committee in the House before the Senate can do anything under the Constitution. So this is trying to build some momentum so some of those weak-kneed Republicans and moderate Democrats in the Senate will see that you can pass tax cuts and get the momentum.
JIM LEHRER: Does it also set a pattern that this is definitely not a bipartisan issue?
MARK SHIELDS: I think that was fairly visible yesterday. I think what he has done, what Bill Thomas has done, and he’s an effective legislator, I do not underestimate him, but he has united the Democrats. I will be willing to bet right now there will be fewer than a dozen Democrats voting for a popular president’s popular tax cut next week. That’s a big turnaround from 20 years ago when the last Republican president came in with a big tax cut, Ronald Reagan. Who were the ones who were the initial defectors? They were all the southern conservative Democrats. They are the most staunch and stalwart in opposition to this.
PAUL GIGOT: Most of those are Republicans, now, Jim.
MARK SHIELDS: You’re talking about the blue dog Democrats, the blue dog Democrats — the Gene Taylors, the Charlie Stenholms.
PAUL GIGOT: There are a lot fewer of those guys was my point.
MARK SHIELDS: Alan Boyd — I agree there are. In 1991 they turned out to be turncoats, Phil Graham and Shelby among them.
JIM LEHRER: A lot of people are not as informed as you two, as we go through this debate over… we’ve heard the numbers, we’ve heard what Greenspan said today, we just heard what Paul said from the CBO, et cetera. The politics of this, lay out what you think is truly at the heart of the argument between the Democrats and the Republicans for us to watch as this thing unfolds.
PAUL GIGOT: Well, it’s a philosophical argument about the size of government. What you want to do with the surpluses, do you want to spend it or do you want to return it to the people, that’s I think the core part of the argument more than anything else. I really do.
JIM LEHRER: And the rest of it is just around that.
PAUL GIGOT: Yeah, I think ultimately…
JIM LEHRER: Would that mean then that the moderates in the middle who don’t feel that strongly philosophically either way are going to resolve it?
PAUL GIGOT: They’re going to move with the politics. I think the politics are heavily on the side of a new president in this case. Chairman Greenspan made that a lot easier with his statements supporting tax cuts in general, and also taking, I think… going a long way to taking the debt reduction argument off the table.
Bill Clinton did a great job of turning into Bob Dole as the old accountant Republican, root canal Republican and saying look we have to pay down the debt first. What Greenspan said is look, we’re paying it down so fast already that within a few years we’re going to be piling up, we’re not going to be able to reduce any debt in any one year, because there’s not going to be enough to reduce that matures in any one year. The surpluses will be larger. So the government will then accumulate assets, and he’s saying we don’t want to do that, so better now get on a glide path of lower revenues. And that’s been a big help to tax cutters in the last couple of weeks.
JIM LEHRER: Do you agree first of all – we’ll come back to my question – do you agree that Greenspan is really helping the president?
MARK SHIELDS: Greenspan has helped the last two presidents. Greenspan really gave support to Bill Clinton for his tax increase in 1993 as part of deficit reduction, and he’s helped George W. Bush, there’s no question about that.
JIM LEHRER: Draw a simple line where you see the argument here.
MARK SHIELDS: I think the argument is made, first of all, Jim, we’re doing this in the dark. I mean, it is… the Congress has lost, its own rule. You have a budget. What George Bush did the other night in his presidential speech was to lay out a lot of pleasure, a tax cut and spending increases. We know there’s going to be spending cuts. There’s absolutely no indication of where those spending cuts will going to be.
And what Democrats and some Republicans are saying we have to have a budget first before we can do that. The president agreed with that before he appeared before the House Democratic caucus meeting. He said yes, we should have a budget before we have a tax cut. That’s one. The second is over the next ten years, the $555 billion of the tax cut – and the numbers are already there — will go to the top 1 percent, which is more than the president talks about in spending increases for all prescription drugs, all education, all health care — research, all national defense increases. So that’s what we’re really talking.
PAUL GIGOT: The difference, there aren’t going to be budget cuts of the kind Mark talks about. The cuts… this is the thing that surplus has allowed Bush to do. He’s allowed to increase spending by 4 percent. You don’t give the Democrats the opening and say cuts in school lunches. He proposed a reduction in transportation because they’ve already spent three or four years building a lot of bridges and roads. You don’t need to have the big increase. But this is the big difference in the debate, the surpluses mean you don’t have to do that tight of budgeting and everybody can get something.
JIM LEHRER: So it’s not as much about priorities as it used to be, it’s just how to– no?
MARK SHIELDS: I don’t think there’s any question that the spending caps worked to a considerable degree in the past because of the deficits. I think once the deficits are removed, I think spending will increase dramatically. But the third factor, you know, they talk about cold showers and root canal work. But, I mean, people want the debt paid down, Jim. Last year in debt payment, interest on the national debt last year, we paid more than we paid for all our veterans, all our FBI, all our national parks, all our senior citizens.
JIM LEHRER: And how do the Republicans respond to this?
PAUL GIGOT: We’re already paying it down so fast, they’re going to pay off $2 trillion. It’s going away. You don’t really have to worry about it. The other thing about the class warfare argument, he talks about the rich, look, it really doesn’t matter, because, you know, a lot of the tax cut is going proportionately to lower and middle class people — not in dollar terms, but proportional terms. They don’t pay as much– they’re getting a bigger tax cut proportionately than the rich are.
JIM LEHRER: Well, I just want to thank you both for clearing this up. Thank you both.