MARGARET WARNER: Now, Shields and Gigot with their political analysis of the budget battle and other news of the week; that's syndicated columnist Mark Shields and Wall Street Journal columnist Paul Gigot.
So, Mark, we had the President, the Vice President, the Republican leadership all expressing delight at this vote. Can this be considered a victory for the President?
MARK SHIELDS: Well, the Associated Press, that arbiter of objectivity, called it a stinging setback. Chuck Grassley, the chairman of the Senate Finance Committee acknowledged it was a setback as well. That's the spin. Now, Margaret, I have to say but for the tone deaf White House, up to this vote they could have claimed a great victory. If you think about it, last fall Al Gore was talking about a $250 billion tax cut. The Democrats incrementally have gone to 900 billion -- the congressional Democrats.
All he had to say was - it reminds me of one quick story, and I'll be quick with it Paul. That's the elderly man on the train who encounters the very attractive young woman, over cocktails he says to her, would you sleep with a man for a million dollars, hypothetically, and she muses and said "Yes, I would." He says "Will you sleep with me for 50 dollars?" And she said, "I certainly wouldn't," indignantly. "What kind of person do you think I am?" He said "I thought we both knew what you were; I thought we were haggling over price."
George W. Bush could have claimed victory on the 1.2. But because of -- in my judgment -- the bad politics they've played trying to do in the Senate what they've done in the House, that is, line up your entire army behind you and not let a single troop leave, they end up with the first black eye.
MARGARET WARNER: Why couldn't they push through the 1.6 trillion dollar cut? I mean, the President said this was the crown jewel of this program, it's the thing he most wanted, he went to 22 states to campaign for it. Why couldn't he get it through?
PAUL GIGOT: Because two Republicans, Northeast Republicans, wouldn't give even a new Republican President their vote on his top priority. I think that they felt that they'd get the benefit of the doubt on this first issue of a new presidency.
MARGARET WARNER: The White House thought that.
PAUL GIGOT: The White House thought that, I think the Republican leadership thought it. They knew there was some negotiating to be done, they knew they'd have to make some concessions on spending. But I think in the end they thought, first priority, top priority, new presidency, got to accomplish something, you at least give them the benefit of the doubt on the budget resolution, which remember is only an outline, it is not the final tough votes on particular spending proposals or particular tax cuts.
MARGARET WARNER: But do you agree with Mark that he should have compromised with and negotiated with the Democrats, at least the moderate Democrats, from the outset and then he would have been able to say this is really my package?
PAUL GIGOT: In retrospect looks like he should have, but I don't think that -- he would have run the risk of losing some votes on the right, and with all due respect to these moderates in the middle, they are very hard to pin down, Margaret. The only Senator I've ever seen John Breaux deliver is John Breaux. It is very hard to know where these people are at any particular moment. They thought they had Ben Nelson, for example of Nebraska, a state that George W. Bush carried by 25 points. He had suggested to them yeah, you give me a little agricultural spending, I'll be there, but then he shifted back and forth. So some of these Senators, in a 50-50 Senate every one of these Senators thinks he's President for a vote or a day or a week. And it's hard to work and pin it down.
MARGARET WARNER: What about the Democrats, Mark? I mean it seemed that Daschle was holding them together, they had great cohesion, but in the end you had 15 Democrats going for a much larger tax cut, that -- as you pointed out -- than they had ever endorsed.
MARK SHIELDS: Than they had ever endorsed, but there's obviously, you had economic news today. That I think made the case for a tax cut, not this specific tax cut, but a tax cut, stronger. We had the biggest job loss, to put a partisan edge on it, since the first George Bush was President -- the first -- the biggest in ten years in the last month. So there is a case to be made by traditional Democratic reasoning for economic stimulus. And I don't think there was any question. Margaret, it's a lot easier to vote for a tax cut than it is to vote against a tax cut, I mean, just politically. I mean, just on one point that Paul made about Ben Nelson, Ben Nelson was elected to the United States Senate while George W. Bush was carrying Nebraska by 25 points, he's a little bit insulated. He's been around a long time, and the really inept political pressure they tried to apply to the hometown state press, I think, boomeranged on them.
The second thing is, Margaret -- you talk about northeastern Republicans. This is a week where the administration said how about a little salmonella in the school lunch - about a little more arsenic in the water -- You know, you've got that, and at the same time we want to start drilling in that arctic natural wildlife. When you've got Bob Smith, the most arch conservative probably ever elected from New England, the chairman of this Senate Public Works Committee coming out against arctic drilling this week, they're making it tougher to be with the White House rather than easier.
MARGARET WARNER: All right. So what's going to happen in the House Senate Conference Committee when they go to resolve these two?
PAUL GIGOT: I think they'll probably get something that is at least 1.45, 1.5 trillion. And there are some I talked to Senator Phil Gramm today who said that the thing about this vote when it comes back from a Conference Committee is it's not amendable, so it's going to be an up or down vote. They have some weeks to work on some of these Senators, he's going to try to make it close to 1.6. Whether they can carry that in the Senate I don't know, but I think it will end up being fairly close to what the President proposed.
MARGARET WARNER: Do you want to hazard a prediction?
MARK SHIELDS: The internals will change. This is going to be a different tax cut. I mean, what we're talking about, Margaret, is the bulk of it being the 6th or 7th year. A, there's going to be more stimulus now when the economic clouds are gathering, and second, there will be a pulling down of the top rate. There will be a diminution.
PAUL GIGOT: If there's a mistake the White House made in this, I think it is not adapting to the economic circumstances, Margaret. They kept, they wrote a tax cut in 1999 for a surplus era. They have a situation now where one of the best selling point for the tax cut is the economy, particularly with Democrats. They didn't change. They were too, they are too inflexible and I think that allowed Daschle to come in and say we'll do something this year, and the Democrats take some credit for this - when if they'd adapted a little bit more - and I think they're going to have to when they write the specifics of the tax bill, but I disagree with Mark, there's going to be real fighting over that top rate.
MARGARET WARNER: All right. Let's turn to the other big story this week, China; first major policy test for this new President, Mark. How has he handled it?
MARK SHIELDS: The jury is still out, Margaret, but I don't think there's any question that the longer it goes on, the initial response of the American people is always to rally behind the commander-in-chief, they've done this. Washington Post/ABC poll showed by better than two-thirds Americans say yes the President is doing the right thing. But at the same time what you can see gathering is an antipathy and an enmity toward China. Three out of four Americans in that same poll backed the President saying yes economic sanctions if they don't return our troops and our plane. So I think time is not George W. Bush's ally in this. It's the first unscheduled moment of his presidency. And that's always a great test of any, it's the first look we really get, when it isn't in the Rose Garden or isn't ceremonial. I think this is the test, and people haven't made the final grade yet.
MARGARET WARNER: How do you think he's done? I mean, of course, we don't know what they've done behind the scenes, but in handling it publicly.
PAUL GIGOT: I think it's been a cautious performance, prudent, to use a word his father…. And it's a complicated delicate situation; we have American men and women over there. You want to get them back. And I think that's his first priority, because they don't want to get into a situation where they know. This is the kind of issue with Americans being held hostage, if that becomes, if that sinks in with the American public, --
MARGARET WARNER: Takes hold -
PAUL GIGOT: -- that that could really be a match, a match for dry tinder on this issue and they could lose control over China policy in the long run. And they're not just thinking about this episode, they're thinking about how can we deal with China in the long run. I think what they'd like to do, Bush would like to do is toughen U.S. policy to China from what it was with Clinton on the security side of it, but still maintain open trade because they think in the long run that can undermine the Chinese regime. The danger here is that the Chinese misjudge American public opinion, keep this dragging on, and you'll see the danger next week if this is still going on next week you're going to see the decibel level rise in both parties on Capitol Hill, and I think that's where you can begin to see the administration lose control of this.
MARK SHIELDS: Do you remember how justified conservative critics of Bill Clinton felt when the revelations came out about Marc Rich, soft money -- pardon to this traitor? Okay. They said everything we've been saying about this guy was true, and they felt just absolutely vindicated by events. That's how critics of China feel a little bit right now. These are the people who say, look, let's go in -- economic is really going to change things - these are people -- let's be very blunt about it -- they brutalize their own people, terrorize their neighbors, sell nuclear technology to the worst people on the face of the earth, and somehow because we buy their slave labor products and sell some stuff in there, at about a seven to one ratio against us, that's going to be turning around. They is still a Stalinist state, that is a Stalinist state.
MARGARET WARNER: All right. But, Mark, how long do you think the President has, how long can this drag on before the President has to adopt a tougher line, as you would say?
MARK SHIELDS: I would say, Margaret, by the middle of next week, if our detainees are not home, detainees, they are hostages.
MARGARET WARNER: And how do you think this is going to affect the climate on the Hill in terms of China policy?
PAUL GIGOT: I'll just give you an example. I talked to Craig Thomas, a Senator from Wyoming, a sub committee chairman on the Foreign Relations Committee and an ardent free trader and somebody who has given the benefit of the doubt to China in the past, and he said this week, China is shooting itself in the foot with this. And I was reluctant to support giving Aegis destroyers with missile defense capability to Taiwan.
MARGARET WARNER: To Taiwan.
PAUL GIGOT: I think I'm going to consider that if this drags on. He said, I was in favor of letting them into the World Trade Organization, we're going to have to do some reconsideration if that goes on. And I think if it stops now, I think Bush can get away, President Bush can get away with building a new consensus on a tougher line on security, but still maintain open trade. If it gets too far, then I think we're going to see the Craig Thomas's of the Senate say enough, and it's going to be very hard to withstand public opinion.
MARGARET WARNER: Do you detect the same thing?
MARK SHIELDS: I do, Margaret, and first goes the Olympics probably, 2008 Olympics, which they want. I think that strengthens the case for arms sales to Taiwan. And I think most favored nation or whatever we call it now is coming up again for a vote in the Congress, I'm not saying if it turns it around, but I think it puts the President in a position where he's going to be second-guessed because there wasn't an initial top of the line, either Secretary Powell or the President himself calling the Chinese counter part early on and saying look, let's avoid any kind of a real problem here, let's get this anything we have to do to resolve it, and I think that the delay probably will be viewed in ultimately in retrospect as a mistake.
PAUL GIGOT: I don't know that that would have made all that much of a difference. I mean, he's a new President, you don't have that personal relationship with the Chinese premiere. If you've met him, sat down with him, taken his measure they know each other, that's likely to have a better effect. I think caution in this case probably was wise.
MARK SHIELDS: I just say this, Margaret. Everywhere I went last year talking to people who had doubts about George W. Bush, they said, you know, in a crisis he'll turn to his father because his father was there. This is the time he probably should have turned to his father and listened to him.
MARGARET WARNER: All right. Thank you both.