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Margaret Warner joins Shields & Gigot in discussing disaster relief, the Republican leadership, and the new tax bill.

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JIM LEHRER: Now, to Shields & Gigot and to Margaret Warner.

MARGARET WARNER: And we get our regular end-of-the-week political analysis from syndicated columnist Mark Shields and "Wall Street Journal" columnist Paul Gigot. Paul, last Friday we were talking about the fact that the Republicans had passed this disaster relief bill with these riders the President said he was sure to veto. You said you thought the Republicans could win this thing. But yesterday they backed down. What happened?

PAUL GIGOT, Wall Street Journal: Well, I said the Republicans could win if they were willing to fight and make their case, and, instead, they folded faster than the Italian Africa Corps, which may be unfair to the Italians. I mean, if you're going to get into a fight with the President of the United States, who they knew was going to use the bully pulpit against them--he advertised that--they knew the media was not going to be at least initially playing their way--if you're going to get into that kind of a fight, you have to play to the end. You have to make your case, set it up for a week in advance, and then make it for a week or two or three so that people understand the choice that really was at stake here, which was they didn't want to shut down the government. By cutting and running so fast what's happened is they've got the worst of all possible worlds. They look to be mean-spirited, and they look to be incompetent. So this thing has fiasco written all over it.

MARGARET WARNER: Was that the problem Mark, they didn't tough it out, or was it a bad strategy?

MARK SHIELDS: It was a bad strategy. They had no fallback position. Once the President took his position, vetoed it, it was an institutional clash. The President stands at the highest point of his presidency and popularity. The Congress is divided. The Republican side is divided. The great fault lies within the party. Bob Livingston, the chairman of the House Appropriations Committee, and Dick Armey, the Majority Leader, are not really on speaking terms. They're blaming each other, faulting each other.

MARGARET WARNER: Well, Livingston thought it was a bad idea.

MARK SHIELDS: Thought it was a bad idea, and Newt Gingrich thought it was a bad idea. John Boehner, the third--fourth in Republican leadership, is letting people know that it was Armey's idea and not Gingrich's idea. So, I mean, you've got all of these divisions at work, but beyond that, I think, Margaret, beyond the external, internally it's devastating. It's devastating because what Paul talked about, the ineptitude, sends a vote of non-confidence within the Republican Caucus. It's one thing to say you're ideologically out of step. But when people start to doubt your leadership, your strategic thinking, your ability to make and to hold a decision that's in the interest of the party, then disunity is the result. I talked to one very, very prominent Republican today who said it had all the smell to him, this past week, for the Republicans on the Hill of the Democrats in the summer of 1994 and their failure on the crime bill, when you could feel the Democratic cohesiveness as it had existed in the first two years of the Clinton presidency just coming unglued. And I think that's what's really a threat here.

MARGARET WARNER: Do you see that, Paul, that it's much deeper, it's really an internally, very corrosive event to have occurred among the Republicans?

PAUL GIGOT: Well, I've talked in the past about the lack of confidence, intellectual and ideological confidence that exists in the Republican Congress since the election before, but this goes beyond that. This does go to the question of whether or not you have a leadership that is trusted by the members and a leadership across Senate and House that trusts each other. I talked to people in the Senate this week about what was happening, and they were claiming the House. Then I talked to people in the House and they were blaming Trent Lott, and Trent Lott is--different Senate members who bailed out on each other--there's no coherence--there's no leadership. And I don't--and the problem is--and I think that Mark is right about this--I don't see anybody stepping forward to demonstrate that right now, and so I think the President has taken their measure, and I think that he is going to look to drive this kind of wedge against the Republicans on all of the spending bills, to get his priorities, and I think he's setting up a tax bill for a veto that's going to create more problems for the Republicans.

MARGARET WARNER: But you said there's nobody stepping forward to take the leadership, so you're saying Newt Gingrich, the Speaker, is not able to do that, or not willing to do that?

PAUL GIGOT: Well, Mark said that this was--that Newt Gingrich was for this. That's true about two weeks ago but then last--when it came out of the recess, he surveyed all the members of the leadership--is my information--and they said, what do you think we should do? And to a man in the House side, except for Livingston, who's the chairman of the Appropriations Committee, they said, we'll do it, we'll do it, we'll do it. Well, so they all--so Gingrich said, okay, let's go ahead and do it. I mean, if you're Speaker of the House, you have to be able to say wait a minute, if you think this is a bad idea, let's not do it. You don't fall in line behind Dick Armey and Boehner and the rest of them when--if you think it's suicidal. And I think the weakness that Gingrich has politically suffered since his ethics problems was really showing in this case because he was not in a position to be able to look at the other people and say, this is a bad idea, or if we're going to do it, we have to do it this way. So there is a lot of tension within the leadership, itself, about which direction to go, and it's like any political group run by a committee, they're all running around shooting each other.

MARGARET WARNER: Well, Mark, then this week the Republicans also came out with the first part of the overall budget plan, which is the tax bill. Now, first, explain what happened among the Republicans when the chairman, Bill Archer, of the Ways & Means, who came out with this tax bill within two days had to roll back some of the provisions because some of his own members didn't agree. What's going on there?

MARK SHIELDS: Well, Bill Archer understands what has happened. Not only the Republicans were weakened by what happened this week, the President was strengthened. The President, who's had his own troubles and been besieged by bad headlines and campaign finance stories. It looked like Gary Cooper at High Noon, standing up, and the other side capitulated and surrendered. It was supposed to be York Town. It turned out, instead--it was supposed to be Saratoga. It turned out to be York Town. And I think what happened in the Ways & Means Committee is you've got Bill Archer, who's the chairman, who has been in the minority his entire career. This is his one chance to write a tax bill in all likelihood, in all reality, and he wants to--he's a man who believes firmly in taxcutting. And one of the things he wanted to cut was the minimum alternative tax, which corporations and individuals that have great wealth or income and because of writeoffs don't have any tax liability in a particular year. There's a minimum liability that's been assessed in the past. I mean, this was just--kind of put a lid on public outrage that Exxon's and GE's pay no taxes. So immediately, John Boehner and some other Republicans said wait a minute, this is just going to be killed. Democrats are going to hit us over the head with this, and the Democrats were, and so he had to pull that back, and I think what you saw this afternoon was a message from the President's press secretary that there were provisions in the bill the President didn't like, and although he didn't say veto, walked right up to the edge of that, and the President can do that now because of what happened earlier in the week. He's very much in the leadership, in the dominant position, in the relationship with the Congress.

MARGARET WARNER: Do you agree, Paul, that there's a real connection between what happened on the disaster relief bill and what's now unfolding on the tax bill?

PAUL GIGOT: Well, sure, I mean the President has strengthened. But I disagree with Mark on a couple of things regarding the tax bill. One thing, John Boehner, who didn't like the--

MARGARET WARNER: A member of the Republican--just explain who he is.

PAUL GIGOT: He's the I think number four man in the Republican leadership. He said that what Archer proposed was good policy, but we just couldn't do it because it was bad politics. And I think Archer understands that corporations by and large don't pay taxes; they pass it along. They collect them and pass them along to customers and shareholders and employees and lower wages and so on, but what Archer was doing politically was making the first offer. I think he understands that he is not going to get everything in this tax bill, and ultimately, he's going to have to go into negotiation with the President. And what he wants is something he can give away to get what he wants. And I think the alternative minimum tax--because of its political--it's difficult to defend politically--they--even if it is good policy--what they do is--I think that's something that Archer in the end is going to be able to say we gave--be able to give it to the President, so that when they work out a negotiation they can come to some kind of a deal.

MARGARET WARNER: All right. Well, thank you both very much.

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