MARGARET WARNER: And that's political analysis from syndicated columnist Mark Shields and "Weekly Standard" editor David Brooks. Paul Gigot is on vacation. Well, gentlemen, week three of the Bush presidency. The theme was tax cuts. David, what are the prospects for the president getting essentially what he wants here?
DAVID BROOKS: For getting a big tax cut, pretty good. There's sort of the fear stalking the streets, the fear of recession, and there's a good chance there will be a tax cut. It is amazing how the mood has changed this week. It looks like there's going to be some big tax cut in five months. The argument is over the redistribution, who gets it, and slightly how big it is-- $800 billion or $2 trillion, somewhere in that small little ballpark there. What has happened is that after eight years of Clintonism, of triangulation, of third way, we have a fundamental argument about principle. The Democrats really believe it is only just to give that money down the income ladder. The Republicans fundamentally believe it's only just to give the people who made the money their money back. So after Clintonism, after the fudge of Dick Morris, we've got a real argument about principle.
MARGARET WARNER: So, what do you think has happened to change the atmosphere, Mark? I mean, just six months ago during the campaign, the Bush tax cut was even laughed at; it was considered completely unrealistic.
MARK SHIELDS: It was considered to be a campaign ploy to head off Steve Forbes, the millionaire publisher of Forbes Magazine who ran rather successfully in 1996 on a flat tax, and to preempt that issue from there. But a couple of things happened. One, George W. Bush won. He is the president, and when a president wins, it carries with it a certain imperative, a certain momentum. Two, Republicans believe in tax cuts. This is a party that can be fractious on many issues, but this is a uniting and unifying issue if ever there were one. Third, the projections for the surplus have grown even larger. And finally, as David points out, the layoffs and sort of the downturn in the economic... The loss of optimism, there was a mixed message. On the front page of USA Today there was a piece today saying personal chefs are just not for the rich. And I look at this specifically. I say, wait a minute, this is supposed to be in a time of economic downturn and decline. I think it is a bold effort by this new president to close the widening and really socially explosive gap between the rich and the superrich. I don't think there is any question about that; that's what this is. David has put his finger on what I hope will be the debate.
MARGARET WARNER: But, David, you gave this range of the tax cut. You've got even Republicans who want to give more than $2 trillion. Can Bush even hold together the Republicans?
DAVID BROOKS: I think so at the end of the day. The Republicans make a reasonable case, if you're designing an anti-recession package, the Bush package is actually pretty lousy at it. It is phased in over a long time, there’s relatively few incentives for saving and investing for capital gains.
MARGARET WARNER: It's personal income tax.
DAVID BROOKS: Personal income tax. But I think at the end of the day, they’re not going to side with the Democrats.
MARGARET WARNER: But business wants all kinds of tax breaks. Are they going to resist that?
DAVID BROOKS: I think they will. There is the myth that in 1981 when Reagan had his tax plan, there was this feeding frenzy. But if you actually look at what Reagan proposed and what came out of it, the lobbyists didn't get all that much. In fact, they got less. So I think they'll be able to hold it relatively simple and straightforward. The main virtue of the Bush plan is that it is relatively simple and it flattens the marginal rates a little.
MARK SHIELDS: I do disagree with David here. I think that, Margaret, what we're really talking about is the top 1%. They're the ones that took the hit on Bill Clinton. Bill Clinton raised taxes on the top 1 percent. That was all; nobody else. Democrats lost the Congress in 1994, probably in part because of that tax increase. I went back and checked the IRS figures, and between 1992 and 1997-- the last year for which the figures are available-- the top 1 percent's income went up from an average of $398,000 a year to $518,000 a year with the onerous burdensome Clinton tax imposed upon them. They went up 30.1 percent, while the other groups are going up 3.6 percent. Now David makes the point this is their money. I don't know how President Bush is going to make the argument to this very admirable 25-year-old single mom with two kids, whom he regularly talks about, why her kids can't go to a safe, clean, superior school because we have to give a tax break to billionaires. And I think that's how the argument has to be made by the Democrats, because we're talking really, quite frankly, 40 percent of the benefits go to the top 1 percent who pay 20 percent of all the taxes.
DAVID BROOKS: Let me just give you my favorite statistic from the entire election year. Time Magazine asked people, are you in the top 1 percent? Nineteen percent of Americans believe they are in the top 1 percent. A further 20 percent expect to be at some point in their lives. This election gave us this referendum on the Bush plan with Al Gore talking about the top 1 percent. Al Gore lost people earning under $75,000 who should feel the most resentful by 13 points. And it only reconfirms an old point, that’s made over and over again, that class warfare doesn't work in America. We don't take money away from the rich whether they deserve it or not.
MARGARET WARNER: So you don't think the Democrats' approach here, which is to emphasize the unfairness, is going to work? I mean, this week, Tom Daschle got up there with a Lexus and said, "this is what the millionaire will get, and the poor guy will get a muffler."
DAVID BROOKS: I thought that Denise Rich had left another present for Hillary Clinton. I saw that Lexus out there at the Capitol.
MARK SHIELDS: That was a cheap shot. I don't think it is a question of class. The class war is over. I mean, the rich have won. Let's be blunt about it when you see the tax cut. It's really to comfort the comfortable. I think it is a question of what are taxes for? Are they just to return to people who are lucky enough to make that kind of money and able to pay them, or is it a question of are we going to build a fairer, more humane, more just society with better schools? How about the 45 million Americans without any health insurance? Are we going to be concerned about the hospitals that are being punished right now because we've had to put a cap on Medicare spending? I mean, I think these are the fundamental questions you have to raise, rather than just a question of are we out to get Michael Jackson or Michael Jordan or some other…
DAVID BROOKS: This is what I'm talking about. Franklin Delano Shields is making the classic argument.
MARGARET WARNER: We have the argument right here.
DAVID BROOKS: Republicans could make another argument -- if you want to have growth, if you want to lift the boats, you have got to give the people who are the most likely to save and invest the money. It is a perfect encapsulation of what we are going to have for five months. This is going to be a long process.
MARGARET WARNER: All right. Let me shift the argument just slightly or the topic just slightly. Yesterday and today a new flap has erupted over the fact that the Bush administration has told the Pentagon, "we are not giving you an immediate infusion of money." How do you read this?
DAVID BROOKS: It’s shocking. George Bush campaigned on the fact that Clinton was under-spending. He promised $20 billion in spending in R&D for. He had Donald Rumsfeld working on a supplemental bill to get money into this year’s defense budget because we are so under-spending, and then we get into the tax issue and suddenly the White House announces we're going to take Clinton's defense levels. It is amazing. And it's raised a flap, and you almost think they have to back down. We don't need a review to know that those divisions that Bush thought were unready should be ready, so it's created a little firestorm.
MARGARET WARNER: Why do you think this has happened? Why did the White House wade into this?
MARK SHIELDS: Well, I'm not clear as to why they waded into it. I think one of the problems is tax cut related.. They're looking seriously, Margaret, at this using up-- David talks about $2 trillion. The business lobbyists are lining up. We're not talking about Gucci Gulch. We’re talking -- this plane is on the active runway, the boat is pulling out, everybody aboard the train, it is time to be boarded. They know this is the biggest tax cut. They have a president who’s going to sign it; they’ve got a Congress who’s going to pass it. So they want to get it in there. This could eat up everything, it really could. As Leon Panetta, the former budget director, former chief of staff, chairman of the House Budget Committee, and long-time budget hawk told me yesterday, he said, "I am terrified that we are going back to deficits that we spent 20 years digging ourselves out of after 1981." And I don't know if that has driven it. But David is right. They ran on the campaign about Bill Clinton, eight years of neglect of the U.S. military. And Dick Cheney's applause line was, "help is on the way." They talked about John McCain, talked about Americans -- servicepeople on food stamps and with no houses to live in and without adequate ammunition, supplies. And I think they're going to back down, which no new president likes to do, back down.
MARGARET WARNER: Do you think it could be related to the tax cut in the sense that the President doesn't want to get a spending thing on the table yet because he's still trying to sell a tax cut?
DAVID BROOKS: They think we can afford it if you just go by the numbers. Alan Greenspan-- we all take our shoes off when he talks-- he says we can afford it. But it's the Reagan legacy. It would be a Democratic talking point that, "look, Reagan raised defense spending and cut taxes; Bush is doing the same thing." So they didn't want to walk into that talking point, I suspect. I'm just guessing.
MARGARET WARNER: Last thing to look at tonight. Yesterday Congress – the House first opened hearings on the pardon controversy, the pardon of Marc Rich, and the Senate is going to do the same next week. How do you read the upshot of these hearings, Mark?
MARK SHIELDS: I have to say, Margaret, to me Chairman Dan Burton of the House Committee has always been a rather ludicrous figure. I mean, after four separate independent investigations of the suicide of Vince Foster, the White House counsel, and Bill Clinton, he refused to accept the fact. He still had a murder conspiracy. He admitted on the House floor he put a melon in his backyard and fired through it to prove his gun theory. Yet this has been his vindication, if anything, these hearings. I mean, yesterday, he asked the question of Marc Rich's lawyers, of Jack Quinn and the others, if in fact Marc Rich... this case against him was so fabricated, so overdrawn and overblown, why didn't he, with the best legal counsel, come home? Why did he renounce his American citizenship? Why has he gone 17 years without paying a nickel of taxes to the American people? I mean, each passing day it becomes less defensible.
MARGARET WARNER: Well, and the "New York Times" editorialized, saying that after the hearings, the pardons look even more sordid. There were a lot of details, were there not, about the well-connected all moving around trying to make this happen.
DAVID BROOKS: This is the essence of Clintonism. The other politicians are shorted. With him the sleaze mongers are left gaping and applauding because it just goes to another level. And I think what the story does is it lasts. It lasts because Denise Rich, who was instrumental, the ex-wife of Marc Rich, is giving moneys to the Clinton Library, and it lasts because of Terry McAuliffe, who is the head of the Democratic Party, who was Bill Clinton’s chief fund-raiser, and he is sort of the personification, not him alone, there are some on the Republican side too, but of the new style of fund-raising, which is more intrusive and more questionable than the old style.
MARGARET WARNER: Do you agree that it lasts as a political issue, because most people on the Hill seem to feel there is nothing they can do to curb the president's pardon power?
MARK SHIELDS: Yesterday, when Tom Daschle, the Democratic leader, and Dick Gephardt, the House Democratic leader, who has regularly used words, as he did in the interview with the NewsHour on Wednesday, "sensible, responsible, moderate, reasonable," on the tax cut as an indication that they think they're trying to stop something that's an 18-wheeler coming at them. But when they held their press conference to make the point about the Lexus going to the top 1 percent, the $46,000 versus pennies for those in the middle, they were preempted on all the cable news networks by the Dan Burton hearings. That's the guarantee. Is there going to be any legislation? No. But if you can guarantee a national TV audience, will you have the full committee in attendance, yes. And will it continue? You bet.
MARGARET WARNER: More to come next week. Thank you very much both very much.