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Inside Politics

Debate Over Spending Choices Intensifying as the Economy Slows and the Surplus Shrinks

Aired August 17, 2001 - 17:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN KING, GUEST HOST: This is INSIDE POLITICS. I'm John King in Washington. This intensifying debate between the president and Congress over the shrinking surplus and tough spending choices is all too familiar to the nation's governors.

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: I'm Major Garrett in Texas, where the president is bracing for a Democratic blitz over his budget numbers.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: I'm Bill Schneider in Washington with a great escape that merits the political play of the week.

KING: Also ahead, how the U.S. Treasury is turning the tables on deadbeat dads.

ANNOUNCER: Now, Judy Woodruff takes you INSIDE POLITICS.

KING: Thanks for joining us. Judy is off this week. We begin with new red flags from Wall Street and the corporate world that are likely to add fuel to the political debate over the economy and the federal budget priorities. An hour ago, the Dow Jones industrial average closed down 151 points. Some investors say they are growing less optimistic that an economic recovery is around the corner. Adding to the anxiety, Ford Motor Company announced today it plans to slash as many as 5,000 white-collar jobs in North America by the end of the year.

In the tech industry, fall profits for Dell Computers and Hewlett-Packard are contributing to the jitters in the markets, but the Bush administration insists the worst is over. Treasury secretary Paul O'Neill, for example, says the economy is beginning to rebound.

(BEGIN VIDEO CLIP)

PAUL O'NEILL, U.S. TREASURY SECRETARY: What we've been seeing now since, let's say, a year ago is a natural correction in the economy where the excesses of the previous three years were running out of the economy. And we're going through that process, and we're going to start moving forward. And I think the fiscal policy, changes in the tax cuts that have been put in place are very pro return to growth.

(END VIDEO CLIP)

KING: Now evidence of a rebounding economy would certainly help the Bush administration in the looming budget battle and the debate over the shrinking federal surplus. For the latest on that, let's go to our White House correspondent, Major Garrett, covering the president's stay in Crawford, Texas.

Major, you heard there a bit of the numbers from Wall Street in the corporate world because of the political debate here as well, isn't there?

GARRETT: Absolutely, John. And it is within this atmosphere the Democrats are going to take to the streets and the airwaves starting on Sunday and for the next four days to accuse the Bush White House of being two things: bad stewards of the economy and bad stewards of the surpluses of the Clinton years and the good economic years generated in Washington. It's going to start on Sunday where four key Democrats will be on the Sunday talk shows making that argument.

Then Monday, Tuesday and Wednesday, you're going to see street theater across the country. Democratic activists will greet the president in Milwaukee, Wisconsin on Monday, in Independence, Missouri on Tuesday, and in Washington on Wednesday, where the president's Social Security Commission will meet. Every step of the way, the message will be the same: The budget surplus is shrinking, the economy is weakening, and this White House is playing with the budget numbers.

Now you might ask yourself: OK, so what? A few hardened Democratic activists are in the street. Big deal, who cares? Well, the Democrats say this is a long, running argument they're going to have with the White House. They want to start it now and continue on into September, putting pictures and words out there so the American public gets the sense that they've got a strong argument against the Bush White House and intend to carry it out.

Now the White House says, "Well, we're not really that worried." White House press secretary Ari Fleischer told me just a moment ago he liked to watch street theater. That's all we're going to say." John.

KING: Well, Major, looks pretty peaceful down there in Crawford, Texas, but we understand the president won't be staying there as long as we initially thought?

GARRETT: No, he won't. The White House had said he could stay there -- stay here, rather, as long as September 4th, Labor Day weekend. But the president's coming back to Washington August 31st for a round of events in Washington. White House denies he's leaving because he's either bored or he feels public pressure that he's been on vacation too long -- John.

KING: All right. And the budget debate will be here in Washington to greet him and you as well. Thank you, Major Garrett, in Crawford, Texas.

Now amidst this great budget debate here in Washington, similar battles are playing out on the state level. I spoke today with two governors in the trenches: Republican George Pataki of New York and Democrat Ronnie Musgrove of Mississippi. I began by asking Governor Pataki about his budget showdown with the legislature and both governors about the choices they face because of the slowing economy.

(BEGIN VIDEOTAPE)

GOV. GEORGE PATAKI (R), NEW YORK: New York is doing well. We're in good shape fiscally, but what we can't do is ignore the realities of the national economic slowdown. It does mean declining revenues. Our revenues are below what we projected, but fortunately, over the last few years when we had the good years, we salted away a few billion dollars in reserves. So what the battle with the legislature has been over spending. We cannot spend billions more than I proposed. We're going to be able to continue to increase funding for education, increase funding for environmental program, increase funding for highway and transit programs, but within limitations caused by this national slowdown. So we're OK, but one bad budget in the face of this national economic slowdown and the fiscal progress we've made could be lost.

KING: Let's move on to Mississippi. Now, Governor Musgrove, you have had to dip into your rainy day fund as well. What is the impact in terms of trying to provide services to people who need them, and is there anything Washington can do to help?

GOV. RONNIE MUSGROVE (D), MISSISSIPPI: Well, John, what we have had to do is we have had to make sure we rein in spending, that we are prudent, fiscally wise and responsible in what we invest in. We need to make education a priority, make job opportunities a priority, solid health care not only in urban areas but in the rural areas across Mississippi, and make sure we focus and target the money where it needs to go. That is being fiscally responsible.

I believe what in light of the slowdown in the economy we have to realize is that we're in a transitional economy. That is we're changing over to a new knowledge-based economy that is seamless, that is borderless, that is global. I believe what Washington can do can refocus and redirect where our incentives are to make sure that investing in some of today's up-to-date technology in industries will carry us into the next 10 years and 20 years. That's what will help our states, but that's also what will help our economy nationwide.

KING: I want to read to both of you a figure I find pretty stunning. New tax cuts in the year ahead, all 50 states combined. New tax cuts in the year ahead projected to be about $677 million. In 1999, $7 billion in tax cuts. Obviously, the slowing economy forcing governors to make tough choices about spending but also what you can propose to consumers, the voters. Any chances of tax cuts in your states in the years ahead because of this slowing economy? And as you answer the question, I'd like both of you to weigh in on the question being debated here in Washington: Was the Bush tax cut too big?

Governor Pataki, you first, sir?

PATAKI: Well, sure, John. We're going to continue to cut taxes in New York state. We've led the nation over the course of the past six years, and we have in place an intelligent tax cut program that phases in tax cuts on businesses and homeowners as we go forward. We're in good enough financial condition that those tax cuts that are going to be taking effect will take effect. So of the $600-plus million, I bet a good chunk of that comes from New York. And, in fact, I would like to see us do more in the way of cutting taxes, because I believe it helps the economy, it helps create jobs, and it will help turn around the slowdown that we're seeing across the nation right now.

I don't think the Washington tax cut was too big at all. In fact, I think the fact that now those rebate checks are hitting homeowners, consumers across America is exactly the right thing at exactly the right time. Consumer spending obviously is an important part of the national economic picture, and tax cuts give the money back to the taxpayer, back to the consumer so they can either use it to save or pay down debt or to go out there and keep the economy going through consumer spending. So I'm a supporter of tax cuts. I think they mean economic growth and more jobs, and we're going to continue to try to do as much as we can to cut taxes. We're not going to raise them in New York state.

KING: Governor Musgrove?

MUSGROVE: John, we have had substantial tax cuts. In fact, some of the ones they're talking about in Washington are ones that we've already put in place like the elimination of the marriage penalty tax, also, the capital gains tax cut. We have had a number of major tax cuts that are flowing into the economy so that the economy sees those additional dollars. Now I believe that the tax cut was appropriate in Washington; the amount might be debatable. But I think what we're seeing is the Federal Reserve continues to cut rates, tax cuts are going across the nation, and nonetheless, we're still seeing a sluggish economy. I believe not all of the economy is based on the tax cuts. It is a combination of wise investment into the places where you need the money to flow from the federal government and from business and industry -- not only across the United States but around the world. So it's a combination of things that's going to make our economy strong, but we must invest those tax dollars we have wisely and invest them in the places that will make a difference. I, like George, will tell you we're not raising taxes in Mississippi, we're cutting taxes, but we're also trying to take the tax money that we have and invest them in the right places.

KING: Now one thing that would help any governor would be more revenue. And one of the great debates that Washington will have on the Congress returns in September is whether to lift the moratorium on Internet taxation. Many governors want that. They want the sales tax that would come from lifting that moratorium. I'd like to ask each of you your view on that issue starting with you, Governor Musgrove?

MUSGROVE: Well, John, the moratorium issue has to be understood in its context. I don't believe any state necessarily wants to tax the Internet, but what they believe is important that this is a state's rights issue. Each state must deal with it as it deems necessary and appropriate. So I believe it's important to let the states decide, let local governments decide, and not have this issue swallowed up in Washington. That's a generally ongoing debate that I believe the states feel strongly that it's their prerogative and their decision that they need to make in what's in the best interest of their citizens.

KING: Governor Pataki?

PATAKI: Well, I'm in favor of a continuation of the moratorium in Washington. I don't believe governments should be taxing Internet sales. A year ago, everybody was talking about how the dot-com companies were going to be taking over the world, and a lot of them don't even exist today. The changes are so rapid in technology, whether it's the Internet or e-commerce, and for government to try to get in front of that with a tax policy I think is just not sound policy. So what I would do is continue the moratorium. We have no intention of imposing taxes on Internet sales in New York State. And let the market evolve, let the technology evolve, see where the Internet is going before we put in place any tax structures.

KING: You have about a minute left, gentlemen. I'd like to ask each of you in about 30 seconds a piece. You're out there where the rubber does meet the road. One job of governor is recruiting new business into his state. We're in a time of mixed signals, new layoffs from the Ford Motor Company today, yet consumer confidence seems to be up a little bit. In your view, has the economy hit the bottom, and is it on the way back up, or are there more tough days ahead?

PATAKI: Well, John, I'm not an economist and I wouldn't want to predict the economic future. And, in fact, the economists are generally wrong when they try to. But I do think that there are two thing to take away from the slowdown. One is this is a time for fiscal conservatism and fiscal prudence. You cannot count on the growth and expansion of the economy at the level that we've seen over the last few years. So to go on a spending binge at this point jeopardizes state's finances and it's not going to happen in New York state.

And the second is we have to do everything we can at the state level as well as at the federal level to try stimulate the economy, whether it's tax cuts or reducing the regulatory burden or just trying to create a more favorable economic climate through the attitude of the government. I think it's important because job growth is not just critical to the revenues of the state. It's most important for the children of the 21st century to be able to have their dreams and opportunities come true right in New York. So we're going to continue to be fiscally conservative on the spending side, and pro-active in our efforts to attract more jobs and development.

KING: Governor Musgrove?

MUSGROVE: I believe the economy remains sluggish, it will continue to be sluggish for a time. I believe what the business world, what the marketplace is looking for is making sure that we can respond to the changing needs of business and industry, and more importantly, the consumer. Businesses having to change to meet the needs of the consumer. I believe those of us in state government and in Washington need to make sure that we change and we're able to fit the needs of business and industry with the proper mix of incentives and the right investment. So I believe it's going to continue to be a transitional economy until we get the right mixture in place where we meet the needs of business, industry and the consumer.

KING: All right, Governor Ronnie Musgrove, joining us from Jackson, Mississippi, thank you very much for your time today, sir.

Governor George Pataki of New York, thank you very much. Stay with us, sir. We want to bring you back into our discussion on another issue in just a minute.

Now as you heard there, Governor Pataki is a big fan of the Bush tax cut, but he is also working aggressively to make sure that some taxpayers are denied their rebate checks.

(BEGIN VIDEOTAPE)

KING (voice-over): The Treasury is at the halfway point in mailing checks to taxpayers, 41 million checks so far totaling more than $17 billion. But 373,000 taxpayers so far have received letters instead of checks because of a five-year-old federal database of parents who owe a combined $66 billion in delinquent child support.

MICHELLE DAVIS, ASSISTANT TREASURY SECRETARY FOR PUBLIC AFFAIRS: The thing that makes this year so different is the sheer volume of checks we're sending out. We've never sent 90 million checks out to taxpayers ever, so we check each and every one before it goes out. If that person owes back child support, instead of getting a check, they get a letter saying, "Your money is going to the child you owe money to."

KING (on camera): And how so far -- how many checks -- how much money have you actually stopped?

DAVIS: So far, about $128 million that we've collected in back- owed child support. And we're about halfway through the program. So we think at the end of the rebate checks going out, we will have collected almost a quarter of a billion dollars in back-owed child support.

KING (voice-over): New York expects to seize $16 million as the checks are mailed out this month and next; Wisconsin, as much as $10 million; Connecticut, perhaps $5 million.

(END VIDEOTAPE)

KING: Joining us now to discuss this issue of denying tax rebate checks to those who are delinquent in their child support, the governor of New York, George Pataki.

Thank you again, governor, for being with us. You have spent quite a deal of time during your time as governor focusing on this issue and doing the research. I see you quote here in one article that saying, "We've suspended driver's license and seized everything from a tank to a jaguar to an auto repair shop." How have advances in technology helped this effort by the states?

PATAKI: John, they've changed things completely. And to my mind, this should be a top priority of government, because it's not just a legal obligation for that deadbeat parent, generally a deadbeat a dad, to support their children, it's a moral obligation. And if we allow people with great jobs and good resources to ignore their obligation to the kids, that doesn't say much for us as a society.

We've used technology. We've threatened over 300,000 New York state drivers with revocation of their licenses if they didn't start making their payments to the children. And we've seen our payments almost double over the last five years, record levels. And as a result, more than 225,000 families that were on welfare, on Social Services, now have been able to get off welfare because the parent is supporting that family and those children.

And we certainly have the technology now with those rebate checks, and New York has sent the federal government our records of those who are in arrears, and we're going to intercept every one of those rebate checks and make sure they go to the kids and not to that deadbeat parent.

KING: Now this federal database has been in place for five years. Now the Treasury Department says, obviously, these rebate checks the biggest example, the biggest opportunity to seize this money. But Republican governors have made a conscious effort to focus on this. Obviously, a strong policy in your view, but is there a little bit of politics in play here as well: Republicans deciding to focus so much attention on something that I believe would have happened anyway, would it have not?

PATAKI: John, I think it's quite simply the right thing to do. And you certainly need to have a partnership. And what we've done are things like with our tax department and our labor department. When we get a record of every person who is hired by a company so we can use that computer technology to compare it to our lists of those who are in arrears in child support, and we are sending updates regularly to the federal government of those that we find in arrears so that they will have that database and they will be able working with the state to intercept those checks. I think it's a partnership that's an important partnership, and I'm pleased that the Bush administration is supportive of these efforts. And we're certainly going to be aggressive, whether it's state rebate check, lottery winnings or those federal rebate checks to make sure parents -- deadbeat parents meet their obligation to their children.

KING: All right, we need to leave it there because of time constraints. Governor George Pataki in New York, thank you for joining us today on INSIDE POLITICS.

PATAKI: Thank you, John.

KING: Please stay with us. This is INSIDE POLITICS.

ANNOUNCER: Postcards from the edge. This week, the top political play is definitely not picture perfect. Also ahead, should the U.S. government legalize the status of some illegal immigrants? We'll have a debate on an issue that's expected to heat up this fall. And, they got an earful from Al Gore. Now we'll talk to some of the young people who attended Gore's political workshop. Live from Washington, there's more of INSIDE POLITICS with Judy Woodruff straight ahead.

(COMMERCIAL BREAK)

KING: The president is considering a form of amnesty for millions of illegal immigrants, and the reaction spotlights changing attitudes toward immigration. Unions that once saw new immigrants as a threat now embrace them. And many lawmakers in both parties view immigration as a chance for economic and perhaps political gain.

For more, I'm joined now by Republican congressman Tom Tancredo of Colorado. He chairs the House Immigration Reform caucus; and Andrew Stern, president of the Service Employees International Union.

To you first, Mr. Stern. This is one issue on which you are working closely with the Republican administration. The president considering -- there are a number of proposals on the table, but one would be to give the millions already in this country illegally after a period of time status as citizens. You say yes to that proposal, is that right?

ANDREW STERN, SERVICE EMPLOYEES INTERNATIONAL UNION: Absolutely. I think the president recognizes that for nearly two centuries, this has been a country that's welcomed immigrants, and that hardworking, taxpaying immigrants deserve an opportunity to have legal status and become legal citizens of this country. And I applaud President Bush and the Democratic leadership for putting this issue on the front of the American agenda.

KING: But Congressman Tancredo, you say that's wrong? And as you answer the question, any chance that such a proposal -- amnesty or something close -- could get through the Congress?

REP. TOM TANCREDO (R), COLORADO: Well, I suppose there's always a chance for it, because as you've described, as some people see massive immigration as a political advantage, I think that it is not a good idea. Certainly I believe amnesty is a terrible idea. The fact is that if we, you know -- we are not denying our heritage by saying that people who come in here illegally should not be rewarded. But that's exactly what amnesty does. It rewards people for illegal behavior. There are literally hundreds of millions of people across the world hoping to come to the United States, desirous of coming to the United States. The fact is they have to do it legally or else they come in here under a different kind of status. And we should not reward that.

KING: Two men with very different view. Let's get a sense if we can find a compromise right on INSIDE POLITICS today. One proposal would be some sort of a guest worker program where if you're in the United States illegally, you could come forward, declare yourself. You would then have a chance to work in the United States for a year, some say two, maybe three, but then you would have to return to your country of origin. Is that (a) a fair proposal; and (b) do you think it would work?

Let's start with you, congressman?

TANCREDO: I'm all for a good guest worker program being developed. But amnesty should not be connected to it in any way, shape or form. The two are completely separate issues. Guest worker program, identifying where there is a need in any particular industry, bringing those people into the country to work in that particular industry, making sure that their rights are protected in that case. I've nothing against that. But we should not connect it to amnesty. Amnesty is a slap in the face to every single person who is out there waiting to come into this country legally.

KING: Andy Stern?

STERN: Well, first of all, we're not talking about amnesty; we're talking about a limited version of legalization for people who are in this country who are paying taxes, who are working hard, and who are doing what generations and generations of immigrants have done: built the American dream, an incredible global and wonderful economy for all American citizens.

TANCREDO: Andrew, you can call it anything you want. You can try to dress it up with any kind of language you want. You're talking about giving amnesty to people who are here illegally. That's the bottom line, and it's the wrong thing to do. It's terrible policy.

STERN: Congressman, what we're talking about is that we built walls, we've hired guards, we've sanctioned employers, and yet, we have millions of people who are in this country, like my grandparents and people before us, who are working hard and paying taxes. We have to deal with the reality of the situation. They take care of our children in our homes, they take care of our parents in nursing homes. They clean our offices. They serve our food, congressman. Let's deal with reality now and find a limited, controlled and orderly way to legalize people in this country.

TANCREDO: If there is a single person out there, if there is anybody out there watching this who believes that we have a problem in the United States with illegal immigration, with three to four 4 million people a year coming across our borders illegally, if there's people out there who believe that's a problem, think to yourself: How does amnesty solve that problem? You can talk about dealing with things directly. And I'll tell you how we should deal with it. We should, in fact, put in place employer sanctions that work. We should make sure that there are guest worker programs that also work. And that is the way to deal with it. But just to say to people, "Yes, you came here illegally. You've been able to avoid detection for a certain amount of time, and therefore, we're going to give you legal status."

We did it before, Andrew. Remember, we did this before in 1986. It solved no problem whatsoever. It only exacerbated the problem.

KING: Gentlemen, let me jump in for a minute try to earn my paycheck.

Congressman Tancredo, fair to say that this is an issue that divides the Republican Party; correct?

TANCREDO: Oh, absolutely. And I think it divides several factions of the Democratic Party.

KING: Does that factor into the debate at all? Are you troubled you have a Republican president in first year of office bringing this to the fore?

TANCREDO: Well, you know, that's an issue that is not clear in my mind right now that the president has, in fact, proposed this as a formal policy. I know that a working group in the White House has come forward with it. To this date, I have not seen anything from the president of the United States that actually sanctions this kind of activity. In fact, I heard him say the other day that he is opposed to blanket amnesty. I hope that that still holds. And to the best of my knowledge, that's the president's proposal.

KING: And as we wait for the specifics, Andy Stern, this is one issue on which we see organized labor -- big supporters of Al Gore in campaign 2000 -- trying to work closely with the Republican administration. As you discuss your efforts to do so, first, I want you to listen to something you said about this administration before it took office but late in last year's campaign.

(BEGIN VIDEO CLIP)

STERN: From what I saw firsthand at that convention in Philadelphia, the Republican ticket could not be more wrong when it comes to the issue of health security for American families. Their answer to working people who need secure, affordable health care coverage is: Take two aspirin and don't call us in the morning.

(END VIDEO CLIP)

KING: But on this issue, sir, you work closely with them. How's it been?

STERN: Well, I believe that President Bush is right on the issue of immigration. He's now joined by Democratic leadership. There's a growing consensus. In fact, next week, we'll release a bipartisan poll with the Catholic Health care West that showed America is ready for a basic change in our immigration laws. We have an incredible 21st century opportunity. And what the congressman is talking about is going back to the 20th century. I intend to work with President Bush on the issues. And when he's right, he's right. And on this issue, he has taken an issue from the back burner to the front burner of the American political scene. And I think Democrats have come forward and there's a growing consensus for change.

TANCREDO: Well, no one should be surprised.

KING: Gentlemen, excuse me, sir...

TANCREDO: No one should be surprised by the fact that the labor unions want to see massive illegal immigration, massive numbers of people coming in here because they believe that they'll be able to unionize them. But in fact, they're going to hurt their own people, because massive numbers of illegal immigrants in this country depresses the wage rates for people in low scale job, does it for everybody: people who are here in the United States and for the immigrants themselves. It's bad for the unions, too.

KING: All right, gentlemen, thank you. A spirited debate, obviously. We will revisit it in the weeks and months ahead as the specific proposals come forward from the administration. For today, thank you very much Congressman Tom Tancredo joining us from Denver, chairman of the House Immigration Reform Caucus.

TANCREDO: Thank you.

KING: And here in Washington, Andy Stern, president of the Service Employees International Union, thank you both very much.

STERN: You're welcome. Thank you for having us.

KING: Now the reverend Al Sharpton is a free man. He left a federal prison this morning after serving a 90-day sentence for trespassing, charges related to protests at the U.S. bombing range on the Puerto Rican island of Vieques. At a New York rally, Sharpton told supporters he's prepared to go back to Vieques and to keep fighting for the causes he believes in.

(BEGIN VIDEO CLIP)

REV. AL SHARPTON, NATIONAL ACTION NETWORK: We went in this jail struggling, and we're going to come out continuing to struggle. They didn't do anything but give me a recharge of my batteries. I just took a 90-day catch of breath for the next time.

(END VIDEO CLIP)

KING: Sharpton also criticized President Bush for deciding to allow the Vieques bombing to continue until 2003. Mr. Sharpton recently said he's considering his own run for president as a Democrat in the year 2004.

President Bush led those paying tribute to longtime South Carolina congressman Floyd Spence today. The 73-year-old Spence died last night at a hospital in Jackson, Mississippi, one week after surgery to remove a blood clot from his brain. Mr. Bush said of Spence, quote, "He was a great leader, a man of great courage and determination. He will be remembered as a true friend of the men and women in our armed services." Spence, a Republican, served 30 years in Congress and was a former chairman of the House Armed Services Committee. His body was being flown to South Carolina today, and he will lie in state at the state House before a service with full military honors.

(COMMERCIAL BREAK)

KING: Well, a week-long workshop for young Democrats, complete with firsthand advice from a well-known instructor. Straight ahead: Al Gore's advice for party activists just starting their careers in politics.

(COMMERCIAL BREAK)

KING: More than two dozen young Democratic Party activists spent this week in a political training academy at Vanderbilt University. Former Vice President Al Gore was among the instructors, his first step back into politics since last fall's election.

We are lucky to be joined now by two of the graduates, if you will: Elyse Sudow of Colorado, and Felipe Perez, initially of Los Angeles, now of the great state of Massachusetts. Let me ask you both, and Felipe, please, you go first. So, Al Gore's your teacher this week. Has he taught you about how to run a campaign? Did he give any hints about whether he might be looking for your help a little ways down the road?

FELIPE PEREZ, GORE WORKSHOP STUDENT: Well, he's been talking to us a lot. He and the program have really been working on the get-out- the-vote portions of campaigns. The basic message is, a good campaign is going to fail if you don't get the people to the polls.

Regarding him running in 2004, we didn't really talk about it.

KING: Did he talk at all about the painful lessons of campaign 2000, Elyse?

ELYSE SUDOW, GORE WORKSHOP STUDENT: No, he didn't. It was -- what he talked about really was, you know, his values, what drove him to have the courage to commit to to be a political figure, and how his values and our values come together to create a Democratic Party that we all want to work hard and fight to elect the Democratic officials up and down the ticket in whatever state we are from.

KING: No examples at all looking back as he tries to teach you how to get out the vote? Obviously, he lost a very close, a contested election, in which had he been able to turn out a few more votes, say, in Florida, maybe you'd be here today as workers in the Gore administration, not graduates of a Gore political academy -- Felipe.

PEREZ: Well, I mean, of course, what the 2000 campaign teaches us is that every vote really does matter, and you can run the best campaign in the world, but if you don't get those people to the polls, you're not going to succeed. I mean, that has been the big lesson that, you know, you can't help but take away.

KING: Well, you are young political consultants at this moment. One of the great skills of a political consultant is to have a good gut. What does each of you think when just by spending this week around Al Gore and people close to him, does he want to run for president again?

SUDOW: Yeah, like we said before, it really was not discussed. The focus of this week...

KING: I'm not asking if it was discussed, I am asking you what you think. SUDOW: You know what? If Al Gore chooses to run, it would make me happy, but I don't -- I really don't know. Like I said, we were focused on how to get out the vote for this year's Democratic candidates around the country, and you know, that was our target this week, so.

KING: And what next for each of you? Felipe, you first. You were talking about campaigns in 2001, 2002, where are you going to go to work?

PEREZ: Well, actually, I'm going to be working, just starting next week, for the state Democratic Party in New York state. Just working on the coordinating campaign, trying to get Democrats elected in mostly local races.

KING: Elyse?

SUDOW: I am actually headed to Essex County to work for the Essex County Democratic Party in New Jersey, working to elect Democrats up and down their ticket.

KING: Any discussion at all at this seminar of President Bush and how Democrats should respond to the Bush agenda, or were you working mostly on the mechanics of the campaigns to come?

PEREZ: We've been working very focused on tactics.

KING: OK. We'd like to end it there, then. Elyse Sudow of Colorado, Felipe Perez of Massachusetts, thank you both for joining us, and should the vice president perhaps down the road a bit give you a phone call to try to sign you up, drop us a line here at INSIDE POLITICS.

SUDOW: Well, thank you very much.

PEREZ: Thanks for having us.

KING: Thank you.

Al Gore's political future and how President Bush is responding to the shrinking government surplus. Two of the issues on the agenda next, in our weekly political roundtable.

(COMMERCIAL BREAK)

KING: Joining me here in the newsroom for our weekly political roundtable -- maybe we should call it stand-around -- Ron Brownstein of the "Los Angeles Times" and John Gizzi, the political editor of "Human Events."

Let's start first with the debate intensifying yet again today about the shrinking surplus and how that impacts the budget debate here in Washington. Ron Brownstein, to you first. The Democrats sense an opening here to replay the tax debate.

RON BROWNSTEIN, "LOS ANGELES TIMES": Yeah, a political opening for them, and maybe a substantive setback. I mean, the reality is that when the OMB forecast comes out next week and later this month when the Congressional Budget Office comes out with its numbers, the projected surplus for 2001 is going to be a great deal smaller than originally expected.

And as a result, you're going to have less money there for both sides' priorities. You have less money for Bush on defense, you have less money for Democrats on education. What you also got, though, is a potential of a political debate over whether the Bush administration is going to have to go back into Social Security to fund the ongoing operations of the budget. That's something they don't want to do, and it's something that Republicans on the Hill don't want to do even more. They don't want to do it, because they will have to run on it in 2002.

KING: Well, John Gizzi, few in this town track the conservatives as closely as you do. On the one hand, conservatives seem to be quite happy. This forces discipline when it comes to spending. Any concerns, though, that there won't be enough, say, for conservative priorities, like defense?

JOHN GIZZI, POLITICAL EDITOR, "HUMAN EVENTS": No, I don't think there is a lot of concern about it, John, and I think it's amazing listening to Ron say that after of so many years of hearing Bill Clinton say that a tax cut will blow a hole in the deficit, that now people are worried about blowing a hole in the surplus.

Look, you are going to have 13 spending bills that come up on October 1, many of which are bloated -- the education bill, which started out bigger than anything the previous administration offered, has now nearly doubled to an estimated $40 billion, if you believe the stories out of conference. And when areas like this are attacked and potential pork barrel is assaulted, then there will be enough for a missile defense, a tax cut, and yes, enough to have a balanced budget.

BROWNSTEIN: I mean, look -- I mean, the reality is that since Bill Clinton said, "save Social Security first," it's become basically a norm in both parties that you have to balance the budget without reaching into Social Security. For a long time, you know, we looked at a unified budget, looking at both, but beginning in 1999, 2000, at the end of the Clinton administration, they were able to go into surplus without tapping into Social Security.

Republicans on the Hill, I think, by and large, almost without exception, think that if they have to go back into Social Security in 2002, that would be an extremely damaging thing to have to carry back to the voters. It took 40 years between 1960 and the late 1990s to get back into surplus, and to say that you lost it within two years I think would be an extremely heavy burden to carry into the election.

GIZZI: Once again, I find it entertaining. Ron knows that you can't carry a surplus from year to year, that something has to be done with the money.

BROWNSTEIN: Yeah, it's used to pay down the debt, and that's what it has been used for, and that, by and large, has been a very popular idea with the public. I mean, the economic impact of this may be slight, whether you are a few billion dollars in the red or a few billion dollars in the black, but there's no question that there could be a large political impact.

Both parties I think have accepted the idea that you have to keep the budget in balance without reaching into Social Security. Medicare -- the Medicare trust fund is a more open-ended question, one we're probably going to be debating later this year.

KING: Let's call a time-out on this one. We're not going to settle it here.

Also this week, past week, reemergence of former Vice President Al Gore -- the beginning, John Gizzi, of a Gore comeback?

GIZZI: No, I think the beginning of a Gore exodus. I always say that Democrats propose on the first date, Republicans like long courtships. Only twice in this century has a losing Democratic candidate has been renominated again -- William Jennings Bryan and Adlai Stevenson.

Al Gore is neither of them, and neither faced the kind of field that Al Gore would have to face, fresh faces from John Edwards to potentially Dick Gephardt and others. I have a funny feeling that Mr. Gore will go off, teach school, spend time with his family and grow his beard.

KING: You think he may have an issue, though, on...

BROWNSTEIN: Well, sure. I mean, the best way for Gore to run would be an "I-told-you-so" campaign, without a doubt. He needs a rationale, and that would be it. If the budget goes back into deficit, if some of the environmental things that he warned about take place, then he has a rationale.

But he does have a very difficult situation, it's sort of an odd situation. When CNN-"USA Today"-Gallup Poll Democratic voters, 65 percent said they thought he should run again. By and large, Democratic voters feel, you know, that he ran a reasonable campaign, he got more votes, et cetera, et cetera.

But I suspected if we polled the insiders, the fund raisers, the party chairmen, the activists, you'd probably get 65 percent the other way. They feel that he had as good as he will ever get in 2000, and if he didn't win, he's never going to get over the top against George W. Bush.

So, if Gore runs, it will be a very different kind of campaign, because he would not have the overwhelming institutional support, from party institutions like the AFL-CIO and the money machine that he had in 2000. He would be a much different candidate. Much less intimidating than he was, as was able in 2000 to basically scare off everyone except Bill Bradley.

GIZZI: Look, as the sitting vice president with the support of the president who appeared to be popular in good economic times, he still lost. As a defeated vice president and someone who now is a very poor loser, I don't think he is going to recover much anyway. Americans don't like sore losers.

BROWNSTEIN: You sound like a party chairman in any one in 50 states.

KING: Democratic Party chairmen I don't suspect they want the job?

(CROSSTALK)

KING: Someone else, we are told, will leave the stage in the next week or so, is Jesse Helms, a longtime senator from North Carolina, quite a polarizing figure in Washington politics, sometimes across the country in recent years. His legacy, John Gizzi?

GIZZI: His legacy is simply showing that if you stand on principle and don't change from what you were when you came to Washington to the day you retire, you can win some friends, even among those who disagree with you. Jesse Helms is essentially the same person who was a commentator on the Tobacco Network in the '60s and early '70s. He stood he ground. He was Dr. No, and proved to be an effective chairman of the Foreign Relations Committee, one who supported strong reforms within the State Department, so much that he had a fan in Secretary Madeleine Albright.

I have a feeling that one day soon, perhaps in our lifetimes, we will see a Jesse Helms statue, if not an office building, although I don't think he would like a new government building built here.

KING: Ron Brownstein.

BROWNSTEIN: Probably more than anyone except Ronald Reagan, Helms defined both the ideology and the operational nuts and bolts of the modern conservative movement.

I mean, his building of his national mailing lists in the 1970s really was a precursor to what happened with the grassroots conservative groups that had so much influence in the '80s and still do in the '90s, and obviously he was there very early on in shaping the conservative agenda that both Reagan and then later, in his own way, Newt Gingrich adopted, so really a seminal figure in modern conservative history.

KING: And for the time, we need to end it there. If you two want to continue the surplus debate, you take it over to the other side of the room, maybe. Ron Brownstein of the "Los Angeles Times," John Gizzi of "Human Events," thank you both for joining us today on INSIDE POLITICS.

GIZZI: Thank you for having us, John.

KING: My pleasure, thank you very much.

And now, pack your bags. Next: Bill Schneider will be our travel guide to the "Political Play of the Week." (COMMERCIAL BREAK)

KING: We all know the saying, "when the going gets tough, the tough get going." But what do politicians do? Our Bill Schneider braved the elements to tell us -- Bill.

SCHNEIDER: John, it is now official. Washington is a disaster. No, the news is, it's not a political disaster; it's a natural disaster. For the first time in history, the president has declared the District of Columbia a major disaster area. Now, smart politicians know how to turn a disaster into the "Political Play of the Week."

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Four days of searing heat followed by two days of torrential rainfall. The result: A foul mix of flood water, mud and raw sewage surged through the nation's capital last weekend. Homes were flooded, businesses shut down, trees collapsed, and cars were swept away. Washington's 130-year-old sewer system couldn't take it. A ruptured sewer line opened up a 25-foot-deep sink hole that ultimately swallowed up an Oldsmobile.

And that's not all. How's this for a new urban horror? Exploding manholes. Nearly 50 of them have blown their lids in Washington so far this year. This is a city where you can walk down the street and get whacked by a flying manhole cover.

Georgetown restaurant owner Carol Ross Joynt describes the experience.

CAROL ROSS JOYNT, RESTAURANT OWNER: They don't just flicker; they shoot up in the air. It's sort of like -- it's a violent flame, and smoke comes billowing out, and you can hear it. It's like a roar.

SCHNEIDER: Headline: "Washington goes to hell! Only the brave dare venture out."

JOYNT: Here's a manhole cover. Stand on it, Bill. Maybe we'll make some news.

SCHNEIDER: Last week's heat wave drove up the city's power consumption, which overheated the electrical cables, which got soaked in the downpours, which then short-circuited, which caused more manhole explosions, which knocked out the power just a few blocks from the White House. Where was the president?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm on my vacation.

SCHNEIDER: He tried to dissociate himself from the capital, without success.

BUSH: You know where I'm from?

UNIDENTIFIED MALE: Washington, D.C. BUSH: That's right. Right now. But guess where I was raised?

UNIDENTIFIED MALE: Washington, D.C.

BUSH: That's one state going east. What's the state that's right next door to you?

SCHNEIDER: What do politicians do when faced with disaster? Get out of town.

(on camera): All of the Congress, the president...

JOYNT: They're all gone, all the lobbyists, you know. When Congress goes, so goes the lobbying field. And when the White House leaves, the press corps leaves, so there's nobody here.

SCHNEIDER (voice-over): Except the poor, bewildered tourists wandering around the empty Capitol building and the deserted Mall. The mayor's still around, of course, but that's his job.

MAYOR ANTHONY WILLIAMS (D), WASHINGTON: Well, we haven't had the locusts yet, but we pretty much have had a lot of different plagues hitting the city, and we're trying to manage them and get on top of them. It's part of what a mayor does.

SCHNEIDER: If you were smart this week, you got out of Washington. If you stayed in town, there were a few consolations.

JOYNT: Bill, your very own exploding manhole cover.

SCHNEIDER (on camera): And you invented this?

JOYNT: I did. Cheers.

SCHNEIDER: Cheers.

SCHNEIDER (voice-over): To those who have fled, cheers, and the "Political Play of the Week."

(END VIDEOTAPE)

SCHNEIDER: And that includes certain CNN anchors who have made themselves scarce during Washington's week of woe. Not you, John, you are at your station, steering this ship. But watch out for the manholes.

KING: Watch out for the manholes and watch here for the return of Judy Woodruff on Monday. INSIDE POLITICS will be right back.

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KING: That's all for this edition of INSIDE POLITICS. But\ of course, you can go online all the time at CNN's Allpolitics.com. AOL keyword: CNN. Our e-mail address is insidepolitics@cnn.com.

I'm John King. Thanks for watching. In a special footnote: thanks to the INSIDE POLITICS staff for putting up with their rookie anchor this week. "FIRST EVENING NEWS" is next.

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