Islamic State threat; Russia-Ukraine crisis; American Companies Flee Taxes, Midterm Election Preview

GWEN IFILL: The Islamic state threat in Syria, fresh confrontations in Ukraine, Burger King has it their way, and a kickoff to the fall election, tonight on “Washington Week.”

PRESIDENT BARACK OBAMA: (From videotape.) We agree, if there was ever any doubt, that Russia is responsible for the violence in eastern Ukraine.

MS. IFILL: New threats in Ukraine. In Syria, some captured Americans are freed, others are killed and more are still being held hostage. While along Israel's border with Gaza, actual peace breaks out. Does the U.S. have a role?

SENATOR JOHN MCCAIN (R-AZ): (From videotape.) Right now there is no one that I have met that can describe what the strategy of this administration is.

MS. IFILL: On the domestic front, why are American companies running away from home?

PRESIDENT OBAMA: (From videotape.) Some people are calling these companies corporate deserters.

MS. IFILL: And as students head back to school, politicians head back to work trying to get elected. 

CHARLIE CRIST, Former Republican Florida Governor: (From videotape.) I am honored to be the nominee of the Florida Democratic Party for governor.

MS. IFILL: Post Labor Day, the rubber hits the road. Covering the week, Alexis Simendinger, White House correspondent for RealClearPolitics, Hannah Allam, national correspondent from McClatchy Newspapers, Greg Ip, economics editor for The Economist, and Dan Balz, chief correspondent for The Washington Post.

(Announcer.)

MS. IFILL: Good evening. It was another week for strong words for problems that never seem to go away. In Ukraine, the word was “invasion” as the government there said its worst fears had been confirmed. Russian troops have once again crossed the border.

In Syria and Iraq, the militant Islamic state group is solidifying its hold over vast swaths of territory. And although the nation's military leaders have suggested the U.S. is prepared to act, the president came into the White House Briefing Room yesterday to say not so fast.

PRESIDENT OBAMA: (From videotape.) I don't want to put the cart before the horse. We don't have a strategy yet. I think what I've seen in some of the news reports suggests that folks are getting a little further ahead of where we're at than we currently are, and I think that's not just my assessment, but the assessment of our military as well. We need to make sure that we've got clear plans so that we're developing them.

REPRESENTATIVE MIKE ROGERS (R-MI): (From videotape.) To have a press conference to say we don't have a strategy was really shocking given the severity of the threat.

MS. IFILL: White House officials immediately began to explain what the president meant, which is never a good thing.

So are we getting mixed messages here, Alexis?

ALEXIS SIMENDINGER: You know, sitting in the room and listening to the president, I was struck also because we have been hearing him a lot more speaking in these short bursts about the situation. And I thought that part of the challenge he was having was describing clearly two strategies that he has in mind and then also the goal. He neglected to talk about what is the goal here. And I think if we understood better the goal then it would have been clearer what the strategy.

So the two strategies he was laying out really, or the range of options, the near term, which is talking about in Iraq, what do we need to do in Iraq, and he was talking about his focus on that part of it.

And then he kept saying there's this longer term, the idea of what should we do with ISIL, the Islamic state group, over the longer term. And he talked about the political aims and building a coalition of regional partners.

MS. IFILL: That's what he means by strategy.

MS. SIMENDINGER: Strategy, exactly. And so what he was saying was I believe that I have the authority now, in terms of using airstrikes in Iraq, under my own power as commander in chief notifying Congress to do that range of things. And he talks about that as rooting out.

He was also trying to explain yesterday, if you listen carefully, that it's unrealistic in his mind to expect that we are going to perpetually defeat ISIL -- one of the acronyms for the group, ISIS or ISIL. So in that range of listening to a president talk out loud almost, you can see why there was a level of confusion because he's really talking, I keep thinking, without saying what's the goal really clearly -- goal to defeat, goal to contain, goal Iraq, goal Syria.

MS. IFILL: So that's the long term.

Let's talk tactically for a minute, Hannah. So assuming that airstrikes are on the table, which has been broadly hinted from the Pentagon, from the State Department, even from the U.N., what's to argue against that?

HANNAH ALLAM: How long do we have? (Chuckles.) You know, you hear a lot from some of the policymakers that they don't know if they can make things better. They know they can make them worse, not least by, you know, this perception that the enemy of my enemy issue with Assad where if we strike against ISIS, the airstrikes against ISIS inside Syria, you know, this is a common enemy with Bashar Assad whose regime we have, you know, the president has called illegitimate now for several years.

MS. IFILL: And did again --

MS. ALLAM: And did again, and not only Assad, but also the al-Qaida affiliate Jabhat al-Nusra that is also on the ground and fighting ISIS. So you've got this, you know, any sort of strike there, you know, the administration, you know, repeatedly has tried to say these are two separate issues, we don't have anything in common with the Assad regime, you know, we might overlap, we might have a mutual enemy in ISIS, but that's it.

But I don't think there is -- you know, it would be really hard to argue that any strike that weakens either Jabhat al-Nusra -- any strike against ISIS wouldn't in some ways help Jabhat al-Nusra gain ground in the rebel movement or Assad to retake some of those territories.

MS. IFILL: For the record, we're using terms ISIS, ISIL and Islamic state group interchangeably. Just go with us on that.

DAN BALZ: I was just going to say, you know, a week ago the Pentagon leaders basically described this group as a terrible, terrible threat, including to the United States security and suggested that dramatic action will be needed. How do we get from that point to where the president was yesterday in at least acknowledging that in the way he was talking about it and understanding that what are actual options to take it into Syria that would do what do what General Dempsey was talking about.

MS. ALLAM: That's where you get some of the deepest divisions because it's really, you know, OK, you strike ISIS inside of Syria, which by the way the Assad regime has said that's unwelcome unless you coordinate with Damascus. And the U.S. has said we don't feel the need to coordinate with Damascus on this and it's territory Assad doesn't control anyway.

But you do that, you -- let's say you degrade ISIS's capabilities inside Syria, that's still ungoverned territory. Who steps in to fill that vacuum? And there are some, you know, there's a really dire assessment of the Free Syrian Army, the so-called moderate rebel forces, of their capability of holding or defending that territory.

And again, you have the problem of the actual al-Qaida affiliate roaming around as well and looking for another foothold now that ISIS has sort of overwhelmed and routed it.

GREG IP: We've had this situation all year where these events in Ukraine and in Iraq and in Syria have exposed the president to withering criticism from Republicans in Congress about his foreign policy. Has anything in the last week changed? I mean, now that there is more action taking place, are we seeing a different role, a more supportive role perhaps from the Republicans in Congress? And would that extend to, for example, the appropriations process where the president has said he needs more money to carry out some of these goals?

MS. SIMENDINGER: You know, it's interesting that you're talking about that because one of the things that I think struck a lot of reporters as Congress was leaving was the relative quiet commentary about the operation in Iraq, the airstrikes that had already begun, and there was not a lot of pushback. There was lots of discussion about what kind of authorization, if it should be expanded and that kind of thing.

But the idea of striking in Syria has energized the political element certainly of the president's opponents or opponents of Democrats on the campaign trail to talk about the president's weak foreign policy or his vacillation. And the press conference yesterday fed right into that line of discussion.

But by the same token, you notice a lot of candidates are not begging -- there aren't a lot of them saying, please, let's cast a vote on this. So they're going to be coming back into town and the president has reassured and said those reassuring things. He hasn't said he'll seek their approval, but candidates are going to continue to weigh in on his weakness, I think.

MS. IFILL: The president heads to a NATO summit this week coming up and one of the issues that's going to be on the table front and center is Ukraine because we saw more aggressive moves being made by Russia.

In fact, what I found interesting is Samantha Power, the U.N. ambassador, was much more strong in denouncing it than even the president was yesterday at his news conference. I wonder if that's another piece as well.

MS. SIMENDINGER: The president has said that the NATO summit which is going to take place in Wales is going to be one of the most important meetings. It was not necessarily supposed to be a meeting talking about these issues; it was supposed to be about the end of the Afghanistan war. It's got a whole new set of subjects.

The president has said on the Ukraine-Russia issue that he does not see this, he was saying yesterday, as anything but an extension of the aggression that Moscow had already been embarked on. But as you point out, his U.N. ambassador was talking about this in much starker and caustic terms in terms of the price.

But both of them are saying that Russia and Putin will pay a price. The president is saying it will not be military, it will be sanctions, it will be --

MS. IFILL: They may have different audiences, too.

MS. SIMENDINGER: Different audiences.

MS. IFILL: The U.N. is speaking to the international community and the president --

MS. SIMENDINGER: Absolutely. To build a coalition, you know, the president is really trying to get the Western alliance to take the next step on tougher sanctions and he's going to be working on that in Wales.

MR. BALZ: But what does that next step actually look like? I mean, they've, you know, they want to up it.

MS. SIMENDINGER: The tiers? The tiers of strangulation? The president believes and keeps arguing that however much Moscow and Vladimir Putin are saying that the sanctions are not harming, he's saying the isolation and the price that they're paying in terms of trade and financial repercussions, banking, et cetera, finding capital, are working and that this will continue, this is a long-term situation.

So the next tier would be perhaps Gazprom. In other words, economic sanctions moving up. But there is an argument that the sanctions should move away from or escalate beyond economic to maybe military contracting, a tougher range of things that Russia depends on and for trade.

MS. IFILL: I also don't want to leave this topic without talking about an interesting new development, or at least not new, but to us it was new, and that's the evidence that there are foreign fighters from the U.S., citizens who have gone to Syria to fight on behalf of ISIS.

We heard the Pentagon spokesman this week talk a little bit about that. Let's listen.

REAR ADMIRAL JOHN KIRBY, Pentagon Press Secretary: (From videotape.) Not just the United States government, but many Western governments are concerned about these foreign fighters leaving their shores, going over there, getting radicalized, trained, and then coming back and executing attacks, which is not out of the realm of the possible.

MS. IFILL: And one of the things we've heard this morning, Hannah, is that Britain in particular has raised its terror alert and perhaps is more worried about this than even we are.

MS. ALLAM: That's right. Certainly, we've known for a while that European jihadists have been streaming into Syria. Now we have this report that an American has been killed, I don't think the first, and there is also reports that a second American has been killed, I think in that same operation, we don't know many details yet on that.

But I mean, this is all of a piece for ISIS in their strategy of releasing these very slick recruitment videos in English and French and, you know, clearly trying to appeal to the West to maybe second-generation immigrants and --

MS. IFILL: Converts.

MS. ALLAM: -- and converts, for example, as we know. I think of this, what is it -- he had a -- McAutur, McCain --

MS. IFILL: Douglas McAuthur McCain.

MS. ALLAM: Douglas McAuthur McCain. Right. You know, a Minnesota kid, went to San Diego and ended up with a group so radical al-Qaida kicked it out. And so now yes, there is some worry about those guys returning in some way to the West.

But I should say that from all the recruiting videos that I've seen, all the propaganda videos from ISIS, it's quite chilling. You see rows of young Westerners, Europeans holding up their EU passports and tearing them on camera and burning them. They have no desire, you know, at least on camera, to return. They want to die there.

MS. IFILL: Talk about tiers or layers upon layers of things which are percolating in the White House now, but we're going to move on to a couple of domestic issues.

It took a couple of fast-food joints to finally help us understand a bit of arcane, but important tax policy this week. Burger King is buying Tim Hortons, a Canadian doughnut chain, and for tax purposes it will become a Canadian corporation. But the home of the Whopper is not alone; other U.S. companies are also eying the exits and almost nobody says they like it.

This is what the president had to say about it last month.

PRESIDENT OBAMA: (From videotape.) They're not actually going anywhere. They're keeping most of their business here, they're keeping usually their headquarters here in the U.S. They don't want to give up the best universities and the best military and all the advantages of operating in the United States, they just don't want to pay for it. So they're technically renouncing their U.S. citizenship.

MS. IFILL: I guess I'd have two questions coming out that. What does he do about it? And what is the strategy that companies are using to justify it?

MR. IP: You need a little bit of history here. And I'm going to have to drag you a little bit into the weeds of tax policy --

MS. IFILL: Oh, joy! (Chuckles.)

MR. IP: I can talk about hamburgers and doughnuts at the same time.

MS. IFILL: OK. (Chuckles.)

MR. IP: Back in the 1980s, the U.S. tax rate of about 39 percent, combined federal and state, was actually one of the lowest in the world. But since then, almost every other rich country has lowered their corporate rate and America's is now the highest. So American companies are looking at that and saying we're paying more taxes than our British competitors, our Dutch competitors, our Canadian competitors.

And not only that, but American companies are the only ones that have to pay taxes on their income no matter where in the world they earn it. So Burger King pays taxes not just on their American stores, but on their foreign stores. No other major country forces their companies to do the same thing.

By essentially changing their corporate citizenship, they buy another company and they adopt that country's citizenship, they still have to pay the 35 percent tax rate at home for anything that goes on in the United States, but they no longer have to pay that high tax rate on everything else in the world.

And so in this globalized era, that's actually a pretty important advantage and why you're going to see more of it in the coming years unless something is changed with the tax system.

MR. BALZ: So what are the ways to stop it?

MR. IP: So there are a couple of proposals out there. From the administration and from the Democrats in Congress you hear a couple of ideas. One is, when these so-called inversions -- I'm really sorry to have to use that term -- (laughter) -- when they were really popular about 15 years ago, these companies would up and move their headquarters to the Cayman Islands or to Bermuda.

MS. IFILL: What kind of companies?

MR. IP: Well, for example, you would have Tyco, for example, which made alarms and fire control systems and so forth. And the government shut that down actually. They said unless -- if 80 percent -- at least 80 percent of the company has to change hands or -- excuse me, either 20 percent of the company has to change hands or it's not valid.

So what some Democrats in Congress have proposed is raising that to 50 percent. In other words, if it's still the same folks in charge of the company, you don't qualify.

Another possibility that the treasury apparently is exploring is saying, hey, some of these companies, after they move their headquarters abroad, they pile all this debt under the U.S. branch and they deduct the interest on that debt from their U.S. profits so that they pay almost no tax in the United States, we're going to try and find a way to prevent them from doing that. It's not clear whether they actually have the legal authority to do that, but they apparently are looking into it.

Now, a bunch of other folks, the Republicans in particular, say enough with all these sort of, like, tweaking things and, like, you know, whack-a-mole hitting them here when they do that and hitting them there when they do that, let's reform the corporate tax system altogether, lower the U.S. rate, broaden the base to capture some of that revenue we're losing and move to the same sort of system other countries have where we don't tax companies based on their income no matter where in the world they earn it.

MS. SIMENDINGER: Greg, I'm dying to ask you. How did Warren Buffett, who I think of as an ally of President Obama's effort to try to talk about equity in taxation, et cetera, how did he get involved in this deal? And is he a little bit of a turncoat kind of here in this?

MR. IP: Oh, yes, Buffett, the one who is Obama's favorite, you know, multimillionaire --

MS. SIMENDINGER: Yeah.

MR. IP: -- calling for higher taxes on the rich, now involved in a very complex tax reduction scheme. Well, he actually came by this for different reasons. He had a preexisting relationship with a private equity company, a Brazilian company that actually controls Burger King and is essentially steering this buyout. The Brazilian company needed financing and so they offered Buffett a chance to buy special shares and pay a very high dividend to finance it.

Now, is Buffett being a hypocrite? Well, I would actually say no for two reasons. First of all, he has always said that he doesn't think he or his company should ever pay more taxes than the law says. He wants the law to change.

And the second reason is that, for very complex reasons that I'm not going to bore you with now, he will actually pay more taxes on this deal as a consequence of the headquarters being moved to Canada. So although it gets a little bit abstruse, when you actually look at it carefully you don't really see that what Buffett is doing is at odds with what he's been saying.

MS. IFILL: I have one final question for you, which is whether there are any incentives, other than changing the entire corporate tax code, which we don't anticipate happening soon, are there any other incentives to be considered to persuade these companies to stay?

MR. IP: Not really. I mean, they've been told over and over again by Wall Street that they have to put shareholders first, which means maximizing profits, minimizing taxes. Buffett sort of said the same thing.

I think, ultimately, one of the ironic things here is that both Obama and his Republican adversaries agree the corporate tax system should be reformed and they even agree on how it should be reformed. They would like to lower the top rate and pay for it by closing some of the loopholes. But there's both the tax conditions to that sort of reform that the other finds intolerable. Obama, for example, would like to raise additional revenue; Republicans aren't going for that.

So instead, they have allowed essentially the perfect to be the enemy of the good and allowed this -- (inaudible) -- to continue.

MS. IFILL: We've never seen that happen before. (Laughter.) Thanks, Greg.

So it's been a pretty sleepy summer when it comes to politics. The Iowa State Fair came and went, most incumbents survived their primaries without a scratch. But now it's Labor Day and you know what that means: campaign ads, money raised hand-over-fist and, most of all, a test for voters who have to be persuaded that any of it matters in Washington or at home.

So we ask Dan, why should we care? (Chuckles.) No. Why are we watching? What are you watching? What are you watching?

MR. BALZ: (Chuckles.) Well, I think everybody is watching the Senate. The House of Representatives is in Republican hands, it will stay in Republican hands.

There are a lot of important governors races this year. We saw the reference to Charlie Crist winning the nomination in Florida for the Democrat Party, though he had been the Democratic governor there before at one point.

MS. IFILL: Well, he had been the Republican governor.

MR. BALZ: I'm sorry, he was the Republican governor --

MS. IFILL: Right.

MR. BALZ: -- switched parties. There are a number of governors races in big, presidentially important states that we will be watching. But the big fight is over the control of the Senate. If the Republicans, who need to win six seats, take control of the Senate, it will have a dramatic effect conceivably on President Obama's final two years in office, it will have a significant effect on putting pressure on Republicans to demonstrate an ability to govern, and will set the table in many ways for the 2016 presidential campaign that we're already anticipating.

MS. IFILL: Take us on a little tour. So say I'm watching Missouri, I mean watching it because Mitch McConnell, the Senate minority leader, is in a tough race against Alison Lundergan Grimes to hold onto his seat, or because it's truly, truly a toss-up.

MR. BALZ: Well, McConnell --

MS. IFILL: Kentucky, I'm sorry. I said --

MR. BALZ: Right. McConnell is very unpopular in his home state. Mitch McConnell has lived his entire life as a senator to become the Senate majority leader. He's the minority leader now. They are within range of having that majority and it is possible, I'm not saying it's likely, but it is possible that he would lose his race. I think at this point people believe that he is a tough enough and wily enough campaigner that he will get through this, but not without a very tough battle. So that's one that people are watching.

There are three states that we give to the Republicans right off the bat: South Dakota, Montana and West Virginia. Then there are about seven states where control of the Senate is going to be decided. There are four red states with Democrats, Alaska, Arkansas, Louisiana, North Carolina, where, you know, you have this situation in which the national move favors the Republicans, the map favors the Republicans, but Democratic incumbents are running pretty good races in these states, and that's where the real fight is. And then there are a few other states, Iowa, Colorado and maybe New Hampshire, that are also competitive.

MS. SIMENDINGER: Dan, the issues that have been talked about on the campaign trail, whether they're national or local, immigration is one that we've been talking a lot about and the president yesterday reaffirmed his desire to move ahead using his own executive authority. He didn't say when and he didn't say what, but he said he still intends to do this if he can and Congress doesn't act.

To what extent on the trail, especially with these Senate races, is immigration kind of a nail-biter for Democrats who may be nervous actually that the president might be doing that? Or is it going to be a wash as an issue?

MR. BALZ: Well, I spoke to somebody recently, a Democratic strategist who is deathly afraid that the president will act before the election on this. This person's feeling is that this would inject a very volatile and controversial issue into these races, particularly for these red-state incumbent Democrats. And his feeling was, why not just wait until after the election?

I know there is some feeling on the Republican side. And two of my colleagues, Karen Tumulty and Bob Costa, wrote about this this week. There's some concern on the Republican side that if the president were to do that, it would generate too much of a backlash among Republicans who would then overreact and draw attention to their, you know, their extreme right wing on some of these issues.

So I think both sides are nervous, but I think Democrats are more nervous that it come before the election.

MS. ALLAM: Are there anymore wild cards or the unknowns that you're keeping on top of?

MR. BALZ: So known unknowns or the unknown unknowns?

MS. ALLAM: Right. (Laughter.)

(Cross talk.)

MR. BALZ: Well, what you all have been talking about is certainly an unknown that, depending on things go, it could have an effect. It was interesting to me that we know that public opinion is certainly opposed to the idea of getting back in any military way, you know, in any place. And I was struck by what the president did yesterday, which seemed to pull us back from the notion that something is imminent in terms of military action. And I took that as a sign that he wanted to slow things down.

MS. IFILL: OK. So we'll be watching to see if he does that.

Thank you. Thank you to all.

We're going to get out of your way now so you can get on with your Labor Day weekend. But if you can't get enough, log on to our “Washington Week” Webcast Extra where the conversation continues online where we left off on-air, including more on Dan Balz's grumpy take on why Americans hate politics.

Say it ain't so, Dan.

MR. BALZ: (Chuckles.)

MS. IFILL: You can find it now at pbs.org/washingtonweek. Keep up with daily developments on the PBS “NewsHour” and we'll see you right here around the table next week on “Washington Week.”

Good night.