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Political Wrap with Paul Gigot and Tom Oliphant

September 7, 2001 at 12:00 AM EDT


JIM LEHRER: Still to come on the NewsHour tonight, Gigot and Oliphant, and Kaiser of the Kennedy Center. Terence Smith runs the political discussion.

TERENCE SMITH: Tonight that discussion is with Paul Gigot and Tom Oliphant. That’s The Wall Street Journal columnist Paul Gigot and The Boston Globe’s Tom Oliphant. Mark Shields is off tonight.

Paul, this extraordinary visit this week and this interview that we’ve just listened to from President Fox and President Bush, it was a bit of a love fest and they’ve reached at least an agreement in principle on immigration. What’s the political consequence of this?

PAUL GIGOT: The political consequence is I think that they made enormous progress on what could be an historic migration or immigration deal. No question about that. It looked like it was stalled for a while there because of opposition from the Republican Party, opposition in Congress, the White House.

There had been a trial balloon floated a couple months ago. Since they backed down a bit, but this week President Bush came out at a joint press appearance and committed to giving some legal status to Mexicans here. And Fox’s presentation to the Congress, I think, if you talk to people afterwards on the Hill, made a lot of progress because he’s an enormously credible witness, as you can see, for Mexican cooperation. So I think this has reenergized the ability for a significant immigration bill.

TERENCE SMITH: But the opposition is still there, Tom?

TOM OLIPHANT: Is it ever! I agree completely with what Paul just said but I do think there is a need for a “however,” and that involves the timing, scope and nature for any proposal that President Bush would be willing to make.

I don’t think there’s any question that President Fox tapped into — in ways President Bush hasn’t — the changed American political climate with regard to immigration.

These numbers are so huge now; they were what, 800,000 thirty years ago in the case of Mexico? Ten times that today. Everybody knows somebody. We have American businesses that depend on this, this work force.

President Bush is confronting Republican opposition in Congress, much as President Clinton confronted Democratic opposition to NAFTA itself. It’s still not clear to me that he’s willing to take it on.

PAUL GIGOT: Oh, I don’t know.

TERENCE SMITH: Do you think he can deliver the Republicans on a regularization, to use President Fox’s words?

PAUL GIGOT: I do. I mean think about this. Six years ago the consensus in the Republican Party was Prop. 187 in California, which was essentially we don’t want a lot of immigration.

Now, I think President Bush almost on his own has changed the Republican Party. There have been other voices, no question about it.

But his campaign, he went around the country and I remember seeing him, South Carolina, all over the country to get a question, a tough question in the primaries in immigration. He would say, look, family values don’t stop at the Rio Grande. If the wages are different, if people want to help their families, they’re going to come.

And unless we build a wall, which would dishonor — over that 2,000-mile border — which would dishonor our traditions and wouldn’t be workable probably anyway, they’re going to come. Let’s do something to make it work, to… And what’s happened is, as Tom pointed out, business is supportive because they need the jobs. Labor has come around because they now see an opportunity to organize these people.

TERENCE SMITH: And politically, the Hispanic vote, how important for President Bush?

TOM OLIPHANT: Well, expectations have been raised. And I would just add that President Fox, I think, plugged into this community inside America in a way that American politicians haven’t in recent months. I just still would cite that President Bush himself, for all he said particularly yesterday, did continue to dwell on the obstacles he sees in Congress.

TERENCE SMITH: Okay. The other big story, of course, the unemployment numbers. Those numbers are up. The market is down. The economy is in a slump, Paul. Is this starting to look like political trouble?

PAUL GIGOT: Yes, it is. I mean, this is the number-one worry on the minds of Republicans going into the elections of next year. And well it should be. I mean, unemployment is typically been a lagging indicator — or up to 4.9% now but it tends to trail GDP, so even if you get a recovery early next year, you could have unemployment rising into the upper 5s or worse, you know, come dangerously close to re-election time.

That’s why you see the Republican members of the Hill going to the President with just a touch or a hint of panic saying, look, we need to talk about this. We need to show our concern. So you had the President walk out with the two Republican leaders and say, basically….

TERENCE SMITH: This afternoon.

PAUL GIGOT: This afternoon and say growth, growth, growth, that’s the concern.

The problem for both parties has been they’re locked into this accounting mentality with the Social Security Trust Fund. Nobody wants to touch that money even though the Democrats, by their historic policy lights would like to spend it to grow and Republicans would like to cut taxes to grow.

But instead they’re saying, oh, no, we can’t touch Social Security. So we have this impasse. And Pete Domenici this week, Republican from New Mexico, finally said, broke the code on it – and said let’s break out of this and deal with the economy but so far he’s the only one who’s talking about it.

TERENCE SMITH: Right. Tom, late today there was even talk, anonymously sourced, out of the White House about an across-the-board cut in spending.

TOM OLIPHANT: Yes. I’m sure it caused Paul to have something of a heart flutter – that the Republicans now would be talking about putting on the green eyeshade accounting Herbert Hoover or whatever that we were supposed to be wearing earlier this week.Paul is absolutely right on the economics of unemployment as a lagging indicator.

But I think politically that it’s a co-incident indicator because of what hits people in the guts. The Dow Jones Industrial Average doesn’t matter much on a daily basis to working families. But you hear about lay-offs, you see unemployment go up, and the danger is that it not only affects your political mood; it affects your propensity to consume. And retail sales, of course, are so important to this economy.

I also think it’s what we didn’t see today that’s very important. Mitch Daniels, the Budget Director, has told Republicans on the Hill that this moment of dipping into that Social Security surplus is coming very soon, probably after the end of this month. That triggered a daylong series of meetings at the White House. Some of us were even warned this afternoon to be on the alert for an announcement.

TERENCE SMITH: But it didn’t quite gel.

TOM OLIPHANT: But it didn’t quite gel. So what the President is still saying is that the proposals and programs I have in place now are going to do the trick. That stands at variance with the views– not just of Democrats– but I think even some people in his own administration who think a real growth proposal is necessary and the question is whether it is Republican only, tax cuts, spending cuts, or whether there’s an attempt in about a month to get together about the Democrats.

TERENCE SMITH: How do you do that in the face of a disappearing surplus?

PAUL GIGOT: Well, you do it by saying… First of all, there is a surplus. It’s just the Social Security surplus. You do it the way Ronald Reagan did it. He didn’t worry about surplus. For 30 years Congress didn’t worry about it either, to spend it or to cut taxes.

I mean this is a construct of President Clinton’s in the surplus era understanding that Social Security could be a useful political club to prevent tax cuts and then Republicans turned around and used it to prevent spending. So they’ve got themselves in this self-made trap that prevents a real fiscal policy from emerging.

TERENCE SMITH: Another Republican Senator told us this week that he’s not going to run again, Phil Gramm of Texas, the man whose name has been associated with taxes for a long time. What’s the political significance of that, Tom?

TOM OLIPHANT: Well, not only with taxes, you know, Terry, but with spending cuts. This is one half of Gramm-Rudman’s one and two and whatever. This is a figure who is truly himself book ends on the political and economic history of the country for the last 20 years. After Jesse Helms — Strom Thurmond, of course, is a unique situation, there may be one or two others. It does strike me that I think we’re in one of these cyclical situations where it’s… There’s a changing of the leadership generations on the Hill for Republicans in particular and conservatives in general. And it will be interesting to see who the new faces will be.


PAUL GIGOT: It really is a passing of the generations. Phil Gramm is arguably the most important economic conservative over the last 30 years in political life other than Ronald Reagan and maybe Jack Kemp — significant legislator, hard to find a more significant career. Passed the Reagan tax cuts, helped pass the Reagan tax cuts as a Democrat and then changed parties. The arc of his career in many ways has paralleled the arc of the ascendance of free market economics, not just in the Republican Party but Bill Clinton came around, too.

TERENCE SMITH: Paul, Tom, thank you both very much.