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Bartlett Discusses White House Agenda; Buchanan, Ramos Debate Immigration Issues; Carnahan Talks About Trip to War Zone

Aired January 12, 2002 - 12:00   ET



DONALD RUMSFELD, DEFENSE SECRETARY: This is going to be a long process. There are terrorist networks well beyond al Qaeda.


JONATHAN KARL, HOST: What next, where next in America's new war? From Capitol Hill, just back from Afghanistan, Senator Jean Carnahan, Democrat of Missouri.

How does the war hit home on the national economy and the pocketbook? And what's the fallout from the collapse of energy giant Enron? Dan Bartlett, White House communications director, speaks for the administration. And two economic experts are back to answer your questions.

All just ahead in our special edition of America's New War.

I'm Jonathan Karl in Washington. Coming up in this hour, perspectives on America's new war. Plus a debate between two authors world's apart on what immigration means for the United States: conservative commentator Pat Buchanan and author and broadcaster Jorge Ramos.

And we want to hear from you, as we talk to our guests about the war front, the home front, immigration and an economy in trouble. E- mail us at

Our interview with Dan Bartlett, White House communications director, in just a moment, but first, the latest developments in America's new war.


KARL: President Bush has been dividing his attention between the war on terrorism in Afghanistan and the economy here in the United States.

CNN's White House Correspondent Kelly Wallace joins us with the latest on the economy.

(NEWSBREAK) KARL: And coming up next, he helps shape the Bush administration's message on topics ranging from the war to the economy. A conversation with White House Communications Director Dan Bartlett, when America's New War continues.



GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: They thought, because of our richness, that we were soft, that we didn't believe in anything, that we weren't willing to stand up for what we think is right. And they're paying a dear price for messing with America.



KARL: President Bush beating the drum for America this week, committed to winning the war on terrorism. The commander in chief continues to enjoy enormous public support for how he and his team have waged the war.

Yesterday I caught up with a key member of the president's team, White House Communications Director Dan Bartlett. We talked about the brewing Washington story over the collapse of energy giant Enron, about Ted Kennedy's call to roll back the Bush tax cut, and about how to maintain public support and public vigilance in the war on terrorism.


DAN BARTLETT, WHITE HOUSE COMMUNICATIONS DIRECTOR: The current campaign going on in Afghanistan is one that is going to take time. Secretary Rumsfeld, President Bush, everybody has talked about the complexity of this conflict in Afghanistan. And there has been a remarkable progress made to date, but there is much work to be done.

There is a lot of progress made on the other efforts of the war. There is the financial progress, the diplomatic progress, the law enforcement progress.

And President Bush and the administration will continue to publicly discuss these different aspects of the war, to continue to update the American people, and the world for that matter, about these different movements in corralling and breaking down the al Qaeda terrorist network.

But it's a long-term challenge. It's one that this president and this administration is keenly focused on.

KARL: Now, we have had some mixed messages over the last several months coming from the administration in terms of alerts, high alert, warnings of possible terrorist attacks. But of late we have not heard a lot from homeland czar, if you will, defense czar Tom Ridge. What do you expect we're going to see from Tom Ridge? Are we going to see him emerge now more aggressively as he gets his operation together?

BARTLETT: Well, Governor Ridge has been spending a lot of time working on a comprehensive plan to protect the homeland. He was just in Salt Lake City this past week talking about the extraordinary amount of measures that are taken to protect the Olympics that are to take place here shortly.

He is spending a lot of time on working on the budget and working on a comprehensive strategy with all of the relevant federal, state and local agencies to make sure that we have a coherent plan going forward, to make sure that we do everything we can to protect the homeland.

And it's very important, this new land, that we take different measures and remain vigilant, remain on alert. And at time to time it will be important for the federal government, it will be important for Governor Ridge or Attorney General Ashcroft to inform law enforcement and at times inform the American people about concrete steps that can be taken to help protect the homeland.

So this is a new way of life after September 11. And Governor Ridge is spending a lot of time in making sure that we take the necessary steps going forward.

KARL: And of course this all happens in a political context, and Governor Ridge will be bringing a request up to Capital Hill for money for homeland defense. This all happening at a time when the deficit has reemerged as an issue.

How is the president going to approach this? Virtually all of the money that we thought was there, in terms of surplus, is not there. What priorities are going to have to give way as the White House needs to think about money to spend on homeland defense?

BARTLETT: Well, Jon, I think you will see that the president's budget will reflect the priorities of this nation. This is a nation at war, this is nation fighting a war abroad and also doing unprecedented -- taking unprecedented measures to protecting the homeland.

This is also a nation in recession, and this will be a budget that reflects that. This is a budget that will focus on making sure that our military forces have all of the necessary resources to prosecute the war. And it will make sure that we make dramatic increases on our homeland protections to make sure that we have every step, every measure taken, to make sure that we protect against bioterrorist attacks, that we protect our borders, that we protect our ports, that we take the necessary steps to make sure, to do everything we can to make sure an act like 9-11 doesn't happen again.

On top of that, there will be key investments in other areas of the government that reflects the president's priorities. The president is committed to protecting Social Security. He's committed to protecting Medicare. He's committed to making sure that we continue to push and implement education reforms. And this will be a budget that reflects that.

But when we have a clear priority in this nation, such as the war and such as protecting the homeland, it's important that the federal government focus its attention on those priorities and does not use this an opportunity to spend money unnecessarily and put us into a fiscal position that we can't overcome.

The president has always said that the important thing to do is create jobs. And the way we create jobs is make sure we put more money in taxpayers' pockets. That's why we passed tax relief last year. That's why the president is working with Congress right now to pass it now.

KARL: Well, on that very issue, we have learned that Senator Ted Kennedy is expected to come out and do something that Tom Daschle did not do, which is call for the postponement of that tax cut that was passed last year.

What do you make of Senator Kennedy's plan?

BARTLETT: Well, we obviously disagree with that policy. Anytime that we have a nation in recession, we have American workers hurting, the last thing we should do is think about a tax increase. And that's exactly what it sounds like, if you are reporting correctly that Senator Kennedy is proposing.

It seems like there is really a debate within the Democratic Party right now. Senator Daschle did not come out for a repeal of the tax cut, although he made every suggestion to do so.

BARTLETT: He is saying that he does not like the tax relief policy that we passed last year. I think that maybe this is something that he is advancing through Senator Kennedy.

But there were 12 other Senate Democrats -- Senator Feinstein, Senator Miller, Senator Breaux, his own finance chairman Senator Baucus -- all voted for the tax relief package last year.

And Senator Torricelli said this would be the wrong time to raise taxes on the American people, so that's something that the president just simply won't support.

KARL: Well, as all that's going on, we're going to have a very busy season on Capitol Hill when it comes to the Enron Corporation. As you know, by my count there are now eight committees and subcommittees that will be investigating Enron.

I want to ask you, the White House, will the White House release details of all contacts between White House officials and executives and those associated with Enron? Will you tell us about all those contacts?

BARTLETT: Well, not only are there the multiple investigations under way through the congressional committees, this administration has a multi-front investigation. The attorney general's office is conducting a criminal investigation. The Labor Department is conducting investigation on the pensions of Enron employees. The Treasury Department is looking into rules.

We're now seeing that President Bush came out this week saying he wants the treasury secretary, the commerce secretary and the labor secretary to look at pension reform and look at issues of fiscal management and look at issues of corporate governance. This administration is committed to making sure we make -- that workers, such as those that were hurt in the Enron situation, doesn't happen again.

And this administration also is very much committed to a full investigation to get to the facts and hold those accountable who may have been accountable for the fall of Enron and the unfair treatment to Enron's workers.

KARL: But, Dan, specifically on my question, will the administration turn over all of the contacts, let congressional investigators and the public know all the contacts between senior executives at Enron and administration officials?

BARTLETT: Well, I think you've heard the president say this week that he has no conversations with regards to the financial condition of Enron. You've heard the conversations that Secretary O'Neill and Secretary Evans have said about their communications with Enron, as is responsible as the treasury secretary, as is responsible as the secretary of commerce.

This administration is fully complying with not only fulfilling all the information requirements but also getting to the bottom of the facts of this case to make sure that we have a full investigation. We're going to lead this investigation, and we're going to get to the facts.

KARL: OK, well, in light of what's happening, and in light of the administration's desire to get to the bottom of this, will the administration reconsider the decision not to cooperate with the GAO, the Government Accounting Office, when it comes to that energy task force of vice president's. As you know, the GAO is considering suing the administration to get details of exactly who was advising the vice president on energy policy.

Will you now turn over that information?

BARTLETT: Well, throughout the course of the last year, we made very clear that many different people, representing all different organizations whether it be industry, environmental organizations and state and local governments, all had an opportunity to provide input to the national energy policy.

If anybody is interested in what considerations were taken or exactly what represents the policy or the impact of that policy, all they have to do is read the report. The report has been made public. It represents everything President Bush supports. And unfortunately, we believe that the GAO -- we do have a disagreement over their jurisdiction over portions of the types of information they are requesting. But I think it's been very clear that the President Bush has put into his energy plan exactly what the types of policies he's going to advance.

KARL: And, Dan, just a last question on Enron. Will the administration consider appointing a special prosecutor to look into this?

BARTLETT: Well, I think, as I've told you, that there are multiple investigations going on. A criminal investigation run by career prosecutors that most people on both sides of the aisle have high respect and regard for. We think that those investigations at this time are going to get to bottom of this.


KARL: My thanks to Dan Bartlett, White House communications director.

And up next, a clash of ideas over whether the U.S. should still accept "your tired, your poor, your huddled masses yearning to breathe free." We'll talk to Pat Buchanan and Jorge Ramos about immigration and terrorism.


KARL: The scar of September 11, the terror attacks and the realization terrorists had worked from inside the United States set off alarms about immigration.

Our guests are two men with very firm, very different ideas about that. Here in Washington, former presidential candidate and conservative commentator Pat Buchanan. His new book gives something of a hint of where he stands. It's titled "The Death of the West: How Mass Immigration, Depopulation and a Dying Faith are Killing our Culture and Our Country."

And in Miami, we are joined by Jorge Ramos, Emmy-award-winning anchor for Univision, author and columnist. His latest book is "The Other Face of America: Chronicles of the Immigrants Shaping Our Future."

Pat Buchanan, you've never been one to mince words, and now you say that the West is dying, especially the United States. But you've also said that September 11 is the kind of moment that can change our destiny. How so?

PAT BUCHANAN, CONSERVATIVE COMMENTATOR: Well, it's what Walter Litman (ph) called, "a plastic moment," when the American people suddenly awaken and are aware of a tremendous danger they were unaware of.

Jon, we've got something like 10 to 12 million illegal aliens in this country in the United States of America. 300,000 had been ordered deported and disappeared into our society. And as the Office of Homeland Security says, we've got porous borders, and they are wide open to a terrorist threat.

So I think the American people have been alerted to the fact that America's borders are wide open, while there are terrorists coming inside to kill us.

KARL: Mr. Ramos?

JORGE RAMOS, ANCHOR, UNIVISION NETWORK: Well, Jonathan, let me tell you something, to be anti- immigrant is to be anti-American. To be anti-immigrant is very un-American.

And we have to say that the 30 million foreigners and the 30 million immigrants who live in this country are not terrorists. The fact is that this country was founded by immigrants. The fact is that every single person in this country, with the exception of Native Americans, is either an immigrant or a descendant of immigrants.

So the solution is not to deport 8 million or 10 million immigrants from this country. The solution to give them an amnesty, and that would change the whole thing.

KARL: But, Mr. Ramos, isn't Pat Buchanan right in saying that, at least many Americans agree that in light of September 11, something needs to be done to tighten the controls on immigration?

RAMOS: Absolutely, something has to be done. But the problem is that immigrants should not be scapegoats for the failures in intelligence work.

What has to be done is three things: First of all, we have to give an amnesty to 8 million or 10 million undocumented immigrants who live in this country.

The second thing is to negotiate an agreement with Mexico and with other countries, so we could have a more orderly way in which we could accept immigrants.

And third, we have to accept the fact that the United States needs immigrants in order to maintain the high standards of living that we are used to.

BUCHANAN: I think the position is really absurd.

Look, we do have 30 million immigrants in this country, 30 million foreign-born, and most of those are hardworking folks, and many of those are on the way to become an American.

But we're talking about 10 million illegal aliens who broke in line, broke the law, broke into our country and are remaining here against the laws of the United States of America.

Because they are very poor, they drive down wages. Their crime rate is twice as high as the native population. A third of them come in here without being educated in high school. They consume more taxes than they pay.

RAMOS: That's not true.

BUCHANAN: In 1953...

RAMOS: That's not true.

BUCHANAN: Listen, 1953 General Eisenhower came into office with 1 million illegal aliens in the United States and he said, look, I understand why you've come here; Mexico is a failed state, a failed country. But you can't stay here if you broke in.

The name of his program was Operation Wetback, and he sent the Mexicans here illegally back to Mexico. That's all we ask, is that people who broke in our country, broke the law and are here illegally go back where they came from.

KARL: Mr. Ramos?

RAMOS: What you are saying, Mr. Buchanan, it's not true. You perfectly know that immigrants contribute much more to the economy of this country than what they take.

The Academy of Sciences says very clearly that immigrants, both legal and undocumented, contribute $10 billion a year to the economy of this country.

But on the other hand, it is a double standard and, to say the least, hypocritical to say that we should deport all these 8 million undocumented immigrants and, at the same time, benefit from their work.

The salads and the food that you eat every day were harvested by immigrants. The house where you live, most probably, was built by immigrants. The restaurants and hotels where you were most probably are serviced by immigrants. And because of these immigrants, you don't have to pay $5 for a tomato or $20 for a hamburger or $50 for a steak.

BUCHANAN: Well, look, look, look...

RAMOS: So the fact is that the United States needs immigrants so we could maintain the high standards of life and to keep on providing social services.

BUCHANAN: Well, look, I am talking about right now, illegal immigration. And you are dead wrong. George Borjas of Harvard says the kind of immigration we're getting now costs us far more than they pay in taxes. At Rice University, they estimate $100 billion a year for -- generally, for immigrants.

RAMOS: My research says exactly opposite, Mr. Buchanan. My research says exactly the other thing.

BUCHANAN: Hold it. Well, it's -- hold it. It's my turn. Look, you're supposed to be an American citizen, and I'm astounded to think that you don't mind 10 million people breaking into your home. You don't even know who they are. They have a very high crime rate, which you must concede. American citizens are being damaged by it.

KARL: OK, but, Pat, how about -- why not do an amnesty then? Do an amnesty...

BUCHANAN: Do an amnesty and you'll have -- you'll have 10 million more illegals in this country. You don't reward law breakers, and if you do, you get more law breakers.

RAMOS: No, the fact is that we...

BUCHANAN: When you subsidize something, you get more of it.

RAMOS: The fact is that we need to give these undocumented immigrants an amnesty.

And you know why they are here. Because American companies are giving them work, because Americans are hiring them. We do need immigrants so we could maintain the really high standards of living that we want to.

BUCHANAN: My friend, the reason they are here...

RAMOS: Not only that -- now, you talked and I didn't interrupt you. Now you listen to me.


RAMOS: The fact is that the Academy of Sciences clearly establishes that immigrants do contribute more to this country than what they take from this country.

And not only that, immigrants are assimilating at a very fast pace, according to a study from the University of Southern California. Immigrants are getting...

BUCHANAN: Well, that's -- I think that's nonsense.

RAMOS: ... higher wages, better education. And not only that, they're escaping poverty and learning English at a very fast pace.

BUCHANAN: All right, let me tell you why they're here. They have come here because they have had a number of corrupt and thieving governments in Mexico that have robbed them of their wages and robbed them of their savings. And they are impoverished, and they are poor. And they are unemployed, and they want to work. And they are fundamentally good people, and I don't deny that.

But the government of Mexico has no right to dump its poor and its unemployed into the United States to solve social problems of its own making. And the United States, to defend its own borders, if necessary take the troops off the border of Kuwait, Korea and Kosovo where we don't need them, and put them on the border of the United States of America to defend our country.

Secondly, Mexican statesmen themselves or leaders, presidents, say "La reconquista is what we're practicing," the reconquest of the American Southwest. If we want to stop that, I think every American citizen ought to support closing the American border.

KARL: All right, Pat Buchanan, Jorge Ramos, we have to take a quick break. We'll be back with more on this, more about the immigration debate and how to defend our country.

And that debate continues after this break. And we are looking forward to your phone calls and e-mails at


KARL: An important source of information about the news of the day, the terrorism investigation, and progress of the war can be found online at or AOL Keyword CNN.

Welcome back to our special coverage of America's new war. We're talking to Jorge Ramos and Pat Buchanan.

Now, Pat, in your book, "The Death of the West," you talk about how the birth rate's down, the population is aging in Western countries, the United States and other Western countries.


KARL: Well, how are you going to pay for all those benefits, the Social Security benefits for elderly Americans, if you don't have a workforce of younger immigrants coming into this country?

BUCHANAN: That's an excellent question, Jonathan. And, clearly, in Europe the birth rate is going down much, much faster, and they face a hellish problem. They're going to have to import hundreds of millions of workers in order to maintain the present level of benefits.

I think that you point to a problem that the Americans really are going to have to solve.

Now, if we do decide that the way to solve it is through immigration, my argument is, we do it legally. They come in the way your ancestors did and mine did. First legally, and secondly, determined to assimilate into American society. Now, in California right now, the Mexican-Americans out there have voted for two languages, bilingualism in the schools. You get two languages, two cultures, you're going to have two countries.

KARL: Well, Jorge, what's wrong with that? Immigration, but legal immigration. RAMOS: I'm completely in favor of legal immigration. The fact is that there are already in this country more than 8 million undocumented immigrants, and they deserve an amnesty.

Now, Mr. Buchanan is giving out a false impression that these Latinos and the immigrants are not assimilating fast enough to this country. That's a lie. Not only, again, are they getting higher wages and getting a better education but they are rapidly assimilating and learning English in this country.

Of course we are retaining Spanish. There are 30 million people who speak Spanish in this country, and there's nothing wrong with that. In Europe, children learn two and three languages. What's wrong with speaking two languages?

And also, this is an option. I mean, what's wrong between being able to read Hemingway in English and (UNINTELLIGIBLE) Marcus (ph) in Spanish? What's wrong between listening to Britney Spears and Madonna and at the same time Jennifer Lopez and Shakira? Or what about rooting for Mark McGwire and Sammy Sosa?

Let me tell you something, there's absolutely nothing wrong with being able to speak two languages. And I would love to debate Mr. Buchanan not only in English but also in Spanish whenever he wants.

BUCHANAN: Well, listen, I've studied about four or five languages myself, including Greek and Latin.

But here's what wrong with the Hispanic -- not Hispanic, but Mexican immigration of the Southwest. First, it's coming in in huge, huge numbers, 20 million to 25 million. Secondly, it's illegal. Third, it is the Anglos and the African-Americans are leaving California.

Fourth, you have on the part of the Mexican presidents and folks like Mario Obledo -- he says, "California is going to be Mexican. We're going to take over all the institutions. If the Anglos don't like it, they can leave." Mr. Clinton gave him a medal of freedom.

Americans better wake up and realize that what happened in Kosovo to the Serbs is happening in California to the Americans.

KARL: OK, we've got an e-mail question for you.

BUCHANAN: All right.

KARL: This one says, Mr. Buchanan is himself an offspring of immigrants. I assume he is not 100 percent Native American. Why are things different now than they were then? Is it because many of today's immigrants are people of a different color and religion than Pat?

BUCHANAN: Well, they're the same religion from Mexico, they're Catholic.

KARL: You in fact are Irish. And, of course, the Irish had a terrible time when they came to this country. The signs, "No Irish welcome here."

Isn't what you're saying now about Mexican immigrants exactly what was said about Irish immigrants?

BUCHANAN: It may have been said, but first, Irish immigrants came legally. Secondly, when they came here they said goodbye to the old country and they became Americans. They assimilated into the language, the culture, the history. Pat Buchanan reads Shakespeare. Pat Buchanan and Jonathan are talking in the English language.

KARL: You celebrate St. Patrick's day too, though.

BUCHANAN: Yes, but when we do we carry American flags, not Mexican flags.

And what I'm saying is -- and also the immigration from Ireland from 1845 to 1853 halted. And then we assimilated all these folks.

What we need is a time-out on immigration so we can assimilate and Americanize all those folks, including some of those in Southern California.

KARL: OK, Mr. Ramos...

RAMOS: Let me tell you something, Jonathan and Mr. Buchanan. Jorge Ramos also reads Shakespeare.

And how could you question, Mr. Buchanan, the loyalty of Latinos after all the signs of unity and support after September the 11? You know, the same Latinos and immigrants and African-Americans and Asians that you despise so much are the same ones who are fighting right now in Afghanistan. I went to Afghanistan a few weeks ago, and I was witnessing the dangers that they are facing.

So it is completely untrue and uncalled for to question the loyalty of the Latinos who right now are fighting for this country.

KARL: Before we get into that, I do want to get another e-mail question here, this one directed toward you, Mr. Ramos.

Why does Mr. Ramos have such a difficult time referring to "illegal" immigrants and instead insists on "undocumented"? What is the technical difference?

RAMOS: Well, the technical difference is that I do prefer to call them undocumented, because even though they did break the law to cross the border, the fact is that they are helping the economy of this country.

And not only that, the fact is that because of immigrants we have the last economic boom in this country. And because of the immigrants, this country is going to get out of the recession.

BUCHANAN: Well, I find a little racist note in this gentleman here, that everything that is good about America is simply because we've had this massive illegal immigration in the American Southwest. Excuse me, sir, but I grew up in this country in the '50s, and it was a very good country, America was. It was a unified country. It was a strong country.


BUCHANAN: It was an economically healthy country, and it's a great country. And I think it's a slur on native Americans to say that only because we got folks breaking the law and breaking in, therefore the economy is working.

KARL: One last question...


BUCHANAN: Hold it, sir. We're getting the last question. We're getting the last question.

KARL: We're running out of time. Just quickly...


KARL: Some of what you have said about American materialism, American hedonism, about American pop culture, harshly critical, sounds a lot like what you hear from the Islamic extremists.

BUCHANAN: Well, you know...

KARL: Does Pat Buchanan have something in common with Muslims?

BUCHANAN: Well, look, do I think that the filth on American television is lousy and poisonous and toxic and in Hollywood and the media? Yes, I do. If that Taliban agrees with that, that's one point on which they're correct.


KARL: OK, Pat Buchanan and the Taliban on the same page at least on that.

Jorge Ramos, thank you so much for joining us. We appreciate it.

Pat Buchanan, thank you as well.

BUCHANAN: Thank you.

KARL: We'll look at another side of the immigration story in the next hour, but straight ahead now, is the news media providing aid and comfort to the enemy by disclosing information valuable to terrorists? We'll ask our reporters' roundtable.


KARL: Welcome back.

Can an open society be too open for its own good? That's the question raised in a provocative article in the "National Journal," entitled "Educating the Enemy."

It says, quote, "Both the suicide bombers of the September 11 and the anthrax attacker turned the symbols and infrastructure of U.S. society into weapons. And they could not have accomplished that without a wealth of information, all of which is available through the news media, books, academic institutions, scientific journals and businesses."

Joining us now is the author of that article, Alexis Simendinger of "National Journal." We're also talking to Jake Tapper of and Jonathan Last of "The Weekly Standard."

Alexis, I get this all the time. People say, after CNN's done something on where the U.S. is vulnerable, why are you giving terrorists ideas? Why are you telling them how to attack us next?

Is that's what's happening here? I mean, are journalists, especially, giving a road map to terrorists that want to do harm to the U.S.?

ALEXIS SIMENDINGER, "NATIONAL JOURNAL": Well, one of the things that made us interested in doing this story is because there was a lot of public outcry about the difference between patriotism and maybe trying to withhold information.

And the public was writing to a lot of media organizations and newspapers and saying, you're giving away the secrets that the enemy is going to use against us; why are you doing this?

And a lot of journalists and newspapers were responding and saying, hey, the government is helping us to inform you of all of the dangers that are out there, as we all do this sort of re-looking at what happened to security for bridges and airports and all of that.

And so, what we ended up finding out, I think, is that there was this big disagreement about, can you squelch the First Amendment in the interest of patriotism, or is that information already out there in a free and open society, not only to inform, you know, the public.

KARL: But the information is out there, Jonathan, right? You can get it, if you're smart enough to look it up and dig it out of a government sources, but putting it on 60 Minutes is another matter.


KARL: I mean, what about when 60 Minutes does something about just how exactly to, you know, attack a nuclear facility?

LAST: Right. And again, and in fact, you don't even have to be that smart. I mean, anybody who wants to log on to the Internet, go to a search engine and type something in, can find these things out with a relative amount of ease.

But it cuts both ways here. I think, in terms of telling terrorists ways to attack or different things to attack, these guys are professional terrorists. They've been spending their entire lives trying to think this up. And then a lot of them -- I don't know that you're going to give them any new ideas, any things that they haven't thought of before.

But certainly matters of public health with anthrax, and particularly with smallpox, when people worried about smallpox, it's good to have information out there because that could help stop the spread of smallpox if it came out.

KARL: And, Jake, you've written about the concerns about open trials of terrorists being venues for information to come out. What's your...

JAKE TAPPER, SALON.COM: Yes. When the military tribunal argument first came out, I was really interested in the argument that there should be secret trials, because so much information had come out in previous cases, in the Ramzi Yousef bombing trial or the trial of the U.S. embassy bombers.

Well, I looked into it and it turned out a lot of the charges that were made about the information that had come out, it wasn't the case. There was the argument that in the Ramzi Yousef trial -- who was the 1993 World Trade Center bomber -- that the terrorists from September 11 might have learned that you need a bigger airplane than a 707 to fly in, because the...

KARL: So could that be why they didn't use 707s this time?

TOPPER: Well, exactly. But it's a silly argument because, as Alexis points out in her story, first of all, you can go to the Boeing web site and find out almost anything you want to know about these planes. But also, the information was in Popular Mechanics, the information is available to anyone who wants it, whether -- they can go to a library or you can just watch an episode of MacGyver. I know that's one of your favorite shows, Jon...


... where they give certain secrets on how to make a bomb out of peanut butter and a paper plate.

KARL: But it may also have been that the 707 isn't even made anymore.

TAPPER: The 707 is not even made anymore, as I point out in my story.

KARL: Maybe that's why they didn't choose the 707.

TAPPER: Well, exactly. Which belies the point of how inaccurate the argument was. You can't say -- I mean, they also said that Osama bin Laden learned in the spring 2001 trial of the embassy bombers, that he learned that his calls were being monitored. Well, he had learned that years before, as CNN's own Peter Bergen told me, that when he went to interview bin Laden in 1997, he already -- bin Laden already knew that the U.S. government was monitoring his calls. So these arguments are a ruse. And there is a push for more secrecy by the Bush administration, and I think this is trying to feed into that.

KARL: So, Alexis, is that push for more secrecy, which clearly is there in the Bush administration, about really just controlling information, or is there legitimate concern here?

SIMENDINGER: It's both. This is an administration that already had a tendency to lean toward secrecy and wanting to maintain control of the information. And the other is that they use it as an excuse, because they really did believe that information was being disclosed that they would have preferred to keep secret.

KARL: OK. Speaking of the Bush administration, I want to switch gears. We've got another e-mail question. I don't know if we can show this here. This one comes from Mike in Iowa. He says, is it the strategy of the Bush administration to keep the U.S. involved and focused on the war on terrorism that it is involved with and, you know, conceal or distract from the Enron investigation?

This is kind of the wag-the-dog theory, Jonathan Last.

LAST: I don't think there's much wagging going on here.

The Enron story, who knows what this is going to turn out to be? As it looks right now, it seems that we have a large corporation which gave money to everybody in Washington, probably, except the four of us. I don't know that you could find, you know, a room without two people in it that has money from Enron.


LAST: Right. I mean, from Sheila Jackson Lee to Dick Armey to Chuck Schumer -- everyone gets money from Enron.

And it goes down, and it seems like, a month before the bankruptcy happens, they come to the president's men and they say we'd like some help and they say, hey, sorry.

Now, if that's the full extent of the story, then it doesn't look like there's much of a scandal. I think to suggests that the war on terrorism is a ruse to distract people from Enron is probably...

KARL: OK. But Enron, we've got -- I mean, I counted up yesterday, eight committees and subcommittees already starting to hold -- prepare for hearings on Enron.

LAST: Yes. Well, the politics of this are very interesting. I was talking to a Bush administration official yesterday, and he said he understood it because, look, the one big weakness that the Bush administration has always had is that, three to one, the American people even today, even with Bush having huge, huge approval ratings, the American people believe that this administration favors corporate interests over the little guy. This feeds into that. Now, I agree with Jonathan, I don't see any connection yet. Obviously there are going to be investigations, but the administration has...

KARL: But if it ties to the Bush administration, Enron will be talked about over and over again in the countless hearings.

LAST: Right. So there's a lot of politics here.

But what's interesting is that the administration is handling this, except for today when I saw Dan Bartlett earlier today on CNN, who seemed to have the right tone for this, talking about concern for the stockholders and the employees, the administration has been acting very funny about this.

Mary Matalin, former CNN employee, talking about dredging up the Clinton rumors, going on Imus and talking about the blue dress. Bush saying that...

TAPPER: Acting perhaps a little defensive here...

LAST: ... Enron wasn't supportive of him.

KARL: We'll get more on Enron. We do need to take a quick break.

We'll be right back. Our panel of reporters will take your e- mails and phone calls when America's New War continues.


KARL: Welcome back to our reporters' roundtable with Alexis Simendinger of the "National Journal," Jake Tapper of and Jonathan Last of "The Weekly Standard."

Alexis, we've seen the return of the scandal industrial complex. I mean, even Lanny Davis has become a regular fixture on TV again.

Is the Bush administration showing signs of starting to act like the Clinton administration with the kind of war-room approach?

SIMENDINGER: Oh, the thought.


They're very interested in not looking like the Clinton administration, so much that they're a little bit unwilling I think to adopt some very practical solutions to their problem in terms of just crisis management.

And that would be, if you have got some information that makes you look like you didn't do anything wrong, make sure that reporters get it and get it all at the same time.

And for some reason, they have been very interested in executive prerogative as opposed to just informing the public about things that they say are -- make them innocent.

KARL: Why doesn't Dick Cheney turn over information about that task force? I mean, this is like Hillary's health care task force.

LAST: Well, he's got all of the information, but nobody knows where he is.


And the next week is very important for the Bush administration, for them to get everything that they have on the table, face up, and show people what did and didn't happen, and take -- if there is going to be a small hit in the media, take it now instead of stretching it out and getting sucked into a long running investigation.

I think also, it's an important week for the Democrats because they do not want to get sucked into overplaying their hand here.

Now, people are saying, you know, is Enron the Bush Whitewater? Well, he could say, I only hope so. Whitewater turned the Republicans into the party of scandal-mongering for half a decade. It managed to get a moderately popular president reelected. And Democrats really, especially if Tom Daschle decides he wants to push this, could wind up in a whole lot of trouble if they overplay their hand.

TAPPER: But, Jon, you have to agree that the Bush administration so far has been acting squirrely on this and unnecessarily so if they have nothing to hide. I mean, I am willing to believe they have nothing to hide.

But, you know, Bush comes out and says -- starts distancing himself from Enron, starts distancing himself from Ken Lay, the CEO; says that Ken Lay was actually a supporter of Ann Richards in the 1994, 1998 -- I'm sorry, in the 1994 gubernatorial race.

Now, it's true Ken Lay did give Ann Richards money, but he also gave three times more money to George W. Bush.

And it's -- I just don't understand if there is nothing to hide, why would you say something that bald-facedly ridiculous?

LAST: The Bush administration being defensive, my gosh, I'm shocked.


This has been their MO since the guy ran for governor in Texas.

KARL: Alexis?

SIMENDINGER: Well, I think you're right, that in the next week, if they don't get their act together, pull all of the information together, make it one of those question-and-answer sessions that goes from dawn to dusk, until everyone is exhausted.

And then they can do what the White House wants to do, which is they say they want the president to focus on his agenda, and let's zero in on state of the union and the budget, and you know, his economic package and let that be that. They're not going to be able to that if they don't actually try to react to this in a proactive way.

KARL: Bush has managed to maintain this approval rating, I mean, for longer than any other president since modern poling. He's still over 80 percent.

Will this continue, or is Enron, you know, first shake in the armor, or are the press still kind of giving him a pass?

I mean, look he had his first fund-raiser, post-September 11 fund-raiser, hardly any note of that.

TAPPER: Yes, you know, it's unusual. I was reading a poll by the Republican pollster, Bill McIntyre, an end-of-the year poll.

And terrorism -- I hate to be glib about it, but terrorism has been good in terms of policy for this president.

First of all, most Americans blame terrorism for the fact that there is no longer a surplus and that we're in debt. Now, that may or may not be the case, but I mean that most Americans just immediately blame it on Osama bin Laden is good news for Bush.

KARL: Jonathan?

LAST: Well, politically it has been a mixed blessing for the president. You know, on one hand, you have to deal with having a war on terrorism, and Americans being their constant threat.

But in another way, it has allowed him to find his voice, to get his feet underneath him and emerge as a real, genuine leader. No longer do you see people, you know, saying on the streets, saying "This wasn't our president; the Supreme Court elected him."

KARL: OK. Well, we're out of time. Jake, Alexis, Jonathan, thank you very much for joining us. We appreciate it.

LAST: Thank you, Jonathan.

TAPPER: Thank you.

KARL: Coming up in our next hour, we'll talk with a lawmaker just back from Afghanistan, Senator Jean Carnahan, Democrat of Missouri.

And two economic experts weigh in again on proposals to review the economy and the impact on your wallet.

And a debate on reforming the Immigration Service in the war on terrorism. Will changes hit certain groups unfairly?

And give us your phone and e-mail questions. The address is All next, on America's New War.


KARL: Welcome back to America's New War. I'm Jonathan Karl in Washington.

We'll talk with Missouri Senator Jean Carnahan about her trip to Afghanistan in just a few minutes, but first, Catherine Callaway is in Atlanta with the hour's latest developments.


KARL: President Bush is running the war, but he needs Congress to pay for it. A group of nine senators went to the war zone to see it for themselves. Among them, Missouri Democrat Jean Carnahan, who serves on the Senate Armed Services Committee.

Senator Carnahan, you just returned from a seven-day trip over there....


KARL: ... including stopover in Afghanistan, a meeting with Hamid Karzai.


KARL: What's the headline from your trip?

CARNAHAN: Oh, it was a wonderful trip, to be able to see the commitment of our troops there. They are committed to getting the job done. I had them tell me, we know why we're here and we're committed to staying until we get the job done.

And it was wonderful to talk to someone like the new president of Afghanistan and to see his degree of commitment in fighting terrorists.

And so, we had to assure him, and he wanted to know, that we were there for the long haul. He said, Afghans are not asking why are Americans here; they're asking, will they stay long enough to make a difference? And this is the assurance that we need to give them.

KARL: Now, what's your sense from in Congress, though, about how much support there is for a lengthy stay or a big financial commitment to rebuilding Afghanistan?

CARNAHAN: Well, you know, this was a bipartisan group that went to Afghanistan. We had Senator John McCain; we had Senator Joe Lieberman. And we all came away with the same feeling -- that we had to get over there and do something about this.

This isn't just their problem now. Terrorism is our problem as well. And when you see so much poverty and unemployment and illiteracy there, you know that something has to be done, because this provides a seed bed for terrorism. And this is...

KARL: Well, we're at the height for public support in involvement over there right now, right? I mean, because we just...

CARNAHAN: Exactly.

KARL: ... really started to really win the military campaign, essentially concluded. Osama bin Laden is still loose but, you know, now you're talking about a lengthy engagement, possibly troops on the ground for six months or more. A lot of money to rebuild Afghanistan, and you also have huge budget deficits emerging again here in the United States.

I mean, is it going to be a tough sell? You nine may have agreed, but is it going to be a taught sell to your colleagues?

CARNAHAN: Well, what's the cost if we don't do it? Think of that. Think of that, if we have another generation of people who want -- see terrorism as an option. And we've got to take that out of the equation. We have to give them hope, and we can only do that if we get in there and be a part of helping them restructure their country.

KARL: You also, while you were over there, had a brief conversation with a person in the Afghan government, the woman who's in charge of women's issues in Afghanistan. I mean, wow, what a task. What's your sense?

CARNAHAN: Well, we spoke with here, Sima Samar. She was a delightful woman. I asked her how things were coming along with the -- getting women back into the government, and she said they had 140 women now in the Bureau of Information, and they had just gotten a new office.

So things were moving slowly, but they were moving in the right direction. And we wee encouraging and wanted to know how we could help on down the road. And so they're getting things on the road, but it's slow.

KARL: So a lot of the persecution of woman was cultural in Afghanistan, not only the Taliban. The Taliban was ruthless, obviously.

CARNAHAN: Well, you see, some of those countries over there, although they are Islamic, there is a -- you take Turkey, for instance, it's a moderate and a very modern country, and it's a democratic country.

It's totally different than what you see in Afghanistan. So I think it was the Taliban that really came in there and caused women to suffer so much oppression.

So those Islamic countries are different in their take, and Turkey certainly is an example of that. They have been a good friend over the years and democratic.

KARL: And I want to switch gears to Osama bin Laden. I have a piece of tape I want to play for you, Henry Kissinger talking about bin Laden.



HENRY KISSINGER, FORMER SECRETARY OF STATE: Six months ago he was running a network. He had training camps. Now he's a fugitive, he's in hiding. He can't have much of a network. He can't have any training camps. And he's spending all of his time surviving. We have achieved fundamentally what we have set out to do, which is to break up his network. And I think it's too dramatic to focus on him.


KARL: So is Secretary Kissinger right? Has there been too much personalization in this war, so much focus on Osama bin Laden?

CARNAHAN: Well, I think that's what brought our attention to the whole process of needing to get the terrorists. We have a focus. We know that there is one person there that we need to get, and symbolically, it will be good for us to do that.

But we don't stop there. We know that there are conditions that will breed other terrorism. We know that there are still members of al Qaeda around the world.

So our job is not ended. It's going to be a long-term effort. It's going to take some commitment, but I believe the American people are committed to doing that. They realize that this is something that affects them now in their lives. And I think we are committed to taking out terrorism wherever we can find it in the world.

KARL: And certainly wherever we find it in the world, this is going to go beyond Afghanistan.

How is the congressional support going to be when the administration starts talking about going in places possibly like the Philippines or Somalia, Sudan, maybe even another major effort in Iraq? Is the same level of support going to be there for that, or does the president have to make the case again in each and every place?

CARNAHAN: I think he has to make the case each time. He had to do this in Afghanistan. He was very careful to get in and build some allies to do what had to be done, and that was very important. If we do anything in Iran, again, that will have to be the case.

Any time we move, it's going to have to be something that is not unilateral, but multilateral. That's very important for the success of anything we do on terrorism.

KARL: And did you get a sense -- obviously Afghanistan was just one place you went -- did you get a sense of what the support is going to be like, how that coalition will be in some of the other countries you visited? CARNAHAN: In every case, they were anxious to know if were there for the long haul, whether we were going to pull out next months, when things looked a little more favorable perhaps. So we tried to give them the assurances that we would be there.

But, you know, we need reforms from them as well. We need political reforms, we need economic reforms. We need reforms on the human rights level, especially in Uzbekistan where we visited. There are some human rights violations going on over there.

KARL: Is it hard to press on those, though, when we have to rely on these countries to help us fight terrorism...

CARNAHAN: Exactly, it is. Exactly. They were one of the first on board to help us when we needed them. But as time goes on, we're going to have to look into those. We can't let those go.

We were talking with a group of human rights people there in the country. And they told us that the bureau's censorship is located in the same building with the newspaper office.


KARL: That's going to be an interesting...

CARNAHAN: It's very convenient. But no, those are things that eventually are going to have to be corrected.

And it's part of what we want to achieve there in Central Asia. Our goal is the democratization of those countries. And that's going to be the best thing for them in the long haul. It's going to be the best thing for us, but it's going to be a very long and time-consuming and costly task.

KARL: A very difficult goal.

We have a phone call from Oklahoma. Oklahoma, caller, your question?

CALLER: I was just curious, what is the projected cost of this war on terrorism for the U.S. taxpayer and for the coalition as a whole? Is there any projections on that?

KARL: Senator?

CARNAHAN: I have not seen any projections on that. This is something that we're going to certainly have to analyze on down the road. I do not have those figures, but I am sure there will be others coming up.

It depends on the extent of our involvement and which country we're in and how much help we have from other people in the world. And so I think that's something yet to be determined.

But what will it cost us not to do it? That's the question we have to ask. KARL: Of course, it may force some tough choices on the domestic front...

CARNAHAN: Exactly.

KARL: ... because if you take this money away, the deficit, the economy is already, you know, contributed to the kind of disappearance of the surplus, you have this. There will be some tough choices to me made.

CARNAHAN: Exactly.

KARL: OK, well, Senator Carnahan, we need to take a quick break. We will be right back. We'll talk more about the domestic front when we get back with you.

More of our conversation about the war, the wartime economy and your phone calls and e-mails about the war effort when we return.


KARL: A somber but moving scene at the funeral in Washington state Friday for Sergeant Major Nathan Chapman, the first soldier killed in combat in Afghanistan.

We're talking with Missouri Senator Jean Carnahan, who just returned from the region.

And you talked about the soldiers over there and how committed they are to this cause. This is really the most committed that we've seen since World War II, right. It's the clearest case of America getting involved in what nobody can deny is a just cause, no American can deny.

CARNAHAN: Certainly that's the case. And when I talked to these young men, I sat onboard the Theodore Roosevelt, the aircraft carrier out in the Arabian Sea. And I sat down with about nine or 10 of them from Missouri. And one of them showed me some cards, Christmas cards, he had gotten from children. And some of them had their names and pictures there. And he said, "You see this card," he said, "When he look at these cards, I know why we're here." And I found that very touching.

And it was that kind of feeling we got with all the troops that we met. We met with one young man who had just received a wound and had been brought into what was a MASH unit. And so we got to visit with him just before he had his operation.

So there are a lot of very lonely young people over there, but I got a sense that they know why they are there.

KARL: Whereas with some of the other military involvements over the years, there's been questions. This one not so much.

I wanted to also ask you, when you returned to the United States from your trip to the war region, you were greeted by screaming headlines about Enron and the Enron investigations.

I counted up eight congressional investigations into Enron. And as a matter of fact, three committees and subcommittees that you sit on will be holding Enron hearings.

What are we in for?

CARNAHAN: Well, certainly, people have been hurt. Stockholders have been hurt. People who lost their life savings. And so, I think we have a duty to question what went wrong. What happened? We don't want this to have to happen again. And so, I think there is reason to look into this, and I hope that we will.

KARL: Is this going to turn into a Republican Whitewater? I mean, did the Democrats risk kind of...

CARNAHAN: I don't want that.

KARL: ... overplaying their hand?

CARNAHAN: I don't want a political shouting match. I don't think that's good for the nation. I want us to keep focused on the things -- I want us to keep focused on the economy. I want us to keep focused on winning this war on terrorism. And to have something to degenerate into a political shouting match, I don't want that.

And yet, we need to find out how these people were hurt and why and prevent it from happening again.

KARL: Also, while you were gone, you probably heard about Tom Daschle's major economic speech, where he said that the tax cut, the tax cut you voted for, not only didn't prevent the recession, but actually made the recession worse.

I'm wondering, do you agree with Democratic leader Tom Daschle, that the tax cut you voted for actually made the recession worse?

CARNAHAN: I think some people will say that one thing caused the recession, some will say another thing caused the recession. It's sort of a matter of opinion.

But what we need to do now is to get in and do something that will actually cause economic recovery -- something that is, in fact, stimulative, something that would be immediate, something that is temporary, that wouldn't cause some sort of inflationary effect. And that's what we need to dwell on when we go back. What can give that result?

And something that will do that will be to have unemployment benefits for those who have been laid off that will happen.

KARL: But this is your party's leader saying that tax cut made the recession worse -- very strong words. That didn't help people like you that, are up reelection this time around.

CARNAHAN: Well, certainly, he has -- that's his opinion. And some of the rest of us have a different opinion. I don't try to -- I'm not always on the side of my leader. Sometimes I go on the other side. But he has certainly a right to say that. But I feel very confident about the vote that I took, and I have no regrets about that.

KARL: Ted Kennedy is going to call for a repealing or at least postponing the tax cut next week. What do you think that -- how will you view that idea?

CARNAHAN: Well, I'd like for us not revisit that. I want is to get in and do something that is stimulative and something that is immediate and something that is temporary, that will actually get the economy moving. And I think that's the direction we need to go.

KARL: OK, we have another e-mail. This brings us back to Afghanistan -- e-mail from Jeff. He says, "President Bush has said many times that the U.S. is not in the business of nation-building. Recently, he reiterated this in terms of Afghanistan. How then, can the U.S. be in it for the long haul, in terms of establishing stability in Afghanistan?"

Is this the president revisiting his criticism of nation- building? That was obviously before September 11.

CARNAHAN: Of course all of us have looked at the world since then in a different way. Things have changed. They've changed the way we view other nations. We know now that the war on terrorism has got to take place. We can't sit comfortably back on our shores any longer and hope that things will all go well.

The poverty, the unemployment, the insecurity of those nations over there are a threat to us. And we know now that their stability is very important, and we need to get in there and make them be stable nations, do those things that will cause them to be stable nations, and part of the -- get involved in free trade and get markets open to them.

This is the thing that's going to help them impact terrorism more than anything else.

KARL: OK, we have another phone call, this one from Texas.

Caller, your question, please.

CARNAHAN: Yes, I was wondering what type of trials are these men going to be having and what type of repercussions are we going to look for afterwards, after these men are tried for whatever war crimes or whatever? And, you know...

KARL: Thank you very much for that question, a very good question.

We have all these detainees -- we're not calling them prisoners yet -- detainees going to Guantanamo Bay. Will they even be tried? Do we know what the U.S. is going to do? CARNAHAN: I don't know. I don't know the answer to that. I think that is yet to be decided. Certainly we're going to have to do something we've never done before, and it's certainly in this scope.

So it will be interesting to see just what we will be doing with those detainees, what courts they will be tried in, and just when and where that will occur. Those are things that will have to be decided on down the line.

KARL: And you have only a relative handful, 20, that are in Cuba right now. We have in U.S. custody over 300 detainees at last count in Afghanistan.

CARNAHAN: That's right.

KARL: Any word on your trip there, what's going to happen with this people?

CARNAHAN: No, we did not have any contact with them.

Our main focus on this trip was to see our troops, to see what their morale was, and then to visit with the heads of state, which we had the opportunity to do and to kind of encourage them in the war on terrorism and the fight that they have before them and let them know that we were there backing them up in this effort and that we were going to be there for as long as it took to do that. So that was our main focus.

KARL: Now, Senator, back on the home front, you are up for reelection. You need to run for election in November...

CARNAHAN: That's right.

KARL: ... if you are going to stay a United States Senate. That's not far away from now. Are you going to run?

CARNAHAN: Well, you know, I'm not going to announce that today. I'm not going to tell you that today, Jon, but I am going to do it very shortly.

I have not wanted to think about that right now in the wake of 9- 11. People didn't want us to think about our political lives. They wanted us to think about the life of our nation, and that's what we're doing here in Washington and in the Senate. That's what I was focused on. I didn't want to think about it then, and I don't think the American people wanted me to.

But very shortly I am going to make an announcement, and we will be ready to think about the next year.

KARL: At this point, the people of Missouri should expect that announcement that you are going to run?

CARNAHAN: I think the people of Missouri will shortly know the answer to that.

KARL: You're not going to tell us today, on Saturday?

CARNAHAN: Not today.

KARL: Senator Carnahan, thank you so much for joining us. I know you still have some jet lag. We appreciate you coming right onto the set after your trip to Afghanistan. Thank you.

CARNAHAN: Glad to do it. Thanks.

KARL: When we return, the war's toll on the economy. We'll talk with two financial journalists about the impact on your pocketbook and competing plans to end the recession.



ELAINE CHAO, SECRETARY OF LABOR: We are waging a war against the recession that really is a part of our war against terrorism. And I know that we will win both wars. After all, we've already shown our ability to pull together, fight together and work together.


KARL: There's Labor Secretary Elaine Chao commenting on the challenges of a reviving the economy.

Joining us from Boston, Gerri Willis, senior financial correspondent for "SmartMoney" magazine...


KARL: And in New York, Jim Frederick, senior editor for "Money" magazine.

Gerri, I want to start with you. I'm wondering if you can help us decipher Alan Greenspan's most recent comments on the economy. He said that the indicators are no longer unremittingly negative, but then he added this: "I would emphasize that we continue to face significant risks in the near term."

It sounds like bad news coming from Alan Greenspan.

WILLIS: Well, you know what this reminds me a lot of is that speech he made a couple of years ago about irrational exuberance.

I think what's going on here is that the markets have picked up dramatically since their lows of September. The Dow Jones Industrial Average is up about 200 points. And what the Federal Reserve chairman is saying is, look, don't get ahead of yourselves, you know. The bad times may not be over yet. You know, take a chill pill.

KARL: Well, are the markets going to believe him?

WILLIS: Well, they already have. You know, they're already selling off on these comments. That happened as quickly at Friday, right after he made them.

KARL: Well, it's good to know that Alan Greenspan can still move the markets with a few comments.

Jim, where do you think we're headed? I mean, there have been indications of a recovery. Alan Greenspan seemed to be recovering -- suggesting that that may be overstated. Are we recovering yet?

JIM FREDERICK, "MONEY" MAGAZINE: I think that, pretty clearly, recovery has begun. Leading economic indicators have been up for the past two months. Most recent data is in November. The Conference Board actually came out and said that that might point toward a recovery in the first half of the year.

But I think I agree with Gerri. I think the important thing to understand, and what Alan Greenspan was talking about yesterday, is that a recovery doesn't necessarily mean that, starting tomorrow or starting early next year, that we'll -- or starting later this year -- that we'll, you know, we'll be back to where we were in 1999. It could be a long, hard slog upward. But it does seem like we've hit the bottom, at least.

KARL: Well, at least the Enron Corporation has hit the bottom, but probably doesn't see signs of a recovery yet. We have a question on Enron from a caller from Georgia.

Caller, can we have your question?

CALLER: Yes. Thank you, Jonathan. CNN does a great job.

My question is, what will be the impact of Enron's scandal on the stock market and the economy, please?

KARL: Well, we've already seen that, right, Gerri? What's your take?

WILLIS: Yes. I think we've already seen an impact. I think what's interesting about the response on Wall Street has been that everyone's looking for the next Enron, but it's really difficult to tell.

I think that the next steps out of this should be a rethinking about how we regulate these companies. Where were all those regulators? Where were all those congressional committees, you know, back when Enron was trading at $90 a share and the chief executive still couldn't explain to investors those off-balance sheet activities?

I think there's some serious thinking that's going to have to be done about this company and its legacy.

KARL: Well, it's certainly no shortage for congressional investigations now -- eight committees looking into it.

Jim, what's your sense, as we watch the Enron hearings unfold here in Washington? Does this matter much to people that weren't directly involved, the people that lost all that money in their 401(k)s with Enron stock? Does this have a larger implication beyond Enron?

FREDERICK: Yes, and I think it has a number of different implications.

First and foremost, again to agree with Gerri, I think that a lot of questions have been raised about corporate oversight and especially accounting practices and the way that companies report their earnings and the transparency of financial documents.

I think it points to a lot of issues about regulations on 401(k) plans. Something like 60 percent of all assets in Enron's 401(k) system were in Enron's stock, which is an unbelievably high number. And nationwide, 30 percent of all people's 401(k)s are in their company's stocks. So it touches on a lot of different issues.

But to follow up the caller's question, so far, I've been really surprised at how little impact the whole Enron debacle has seemed to have on society, the economy, the stock market. And I think a lot of that is because, you know, we've been overshadowed by the war on Afghanistan. If the war in Afghanistan hadn't been happening, this would just be just the biggest story of the decade.

KARL: Well, and the other thing Washington will be obsessed with, over the next months, in addition to Enron, was the question of who lost the surplus. The record surpluses now about to turn into deficits.

Gerri, does the disappearance of the surplus really matter, have an implication to the average worker on the street? What is that implication?

WILLIS: Well, in the short term, you know, I don't think it's surprising. I don't think it has an impact on the individual investor. I think it makes sense to be running a deficit at a time that the economy is in recession.

And I heard in the previous segment, you were talking about Tom Daschle's remarks. Those were pretty amazing this week, Daschle blaming the tax cuts for the deficit.

And, in fact, what's so shocking about that is it's typically been, you know, Keynesian economists, liberal economists, who advocate deficit spending during a recession. So just an interesting switching of sides here going on. It's sort of surprising.

KARL: Well, in fact -- and, in fact, the only part of the tax cut that's going into effect yet are those rebate checks, which was exactly the tax cut or -- I mean, actually payment, it's -- depend on how you define it, that was exactly what the Democrats wanted.

WILLIS: Right, exactly. Exactly.

You know, it's hard for people to remember typically what the government does during a recession because we haven't seen one in 10 years, and people forget how the economy reacts, how the government reacts and what to expect. So I think we're having a little memory loss problem here.

KARL: Well, one of Daschle's big arguments is that you cannot have -- the danger of a deficit is that it spikes up long-term interest rates. And that, of course, affects anybody that's got a home mortgage.

But is there really that much of a direct correlation between the size of the deficit and the surplus and interest rates, long-term interest rates?

WILLIS: I think the big impact on interest rates is what the Fed is doing.

And the other irony here is typically when you have really low short-term interest rates and higher long-term interest rates, as we do right now, that's generally predicting an economic rebound. But nobody seems to be paying attention to those tea leaves right now. They're only seeing it as a negative.

At any rate, the mortgage rates, I've got to tell you, at about 7 percent last week, about a little higher than that. You know, they're still at lows. Anything below 8 percent is a really good number for people out there looking to buy a house.

KARL: So, Jim, is that over-simplistic, what so many politicians are saying now is that a high deficit means high long-term interest rates?

I mean, after all, 1999, that's when you had the record surpluses and record projections for surpluses. Interest rates actually went up in 1999.

FREDERICK: Yes, I think that it is overly simplistic. And I think that a lot -- I think that there has now been a lot of political wrangling that is going on with discussions about what to do with the economy going forward.

And, you know, I have been on your show a couple of times, and I think it is pretty clear that I'm a stimulus package skeptic.

I am not really certain that the stimulus packages that are going to be -- that are being bandied about right now, broadly I doubt fiscal and budgetary controls as a way to manage recessions, primarily just in terms of timing, because recessions are typically short. And this one has now been pegged to last to March. It's been five months since September 11, and still we don't have any stimulus package. Yet again, two leading economic indicators have already said that we're pulling out. So I'm frankly skeptical.

WILLIS: Well, what about the fact that even the Federal Reserve's actions here, haven't, which are dramatic, haven't really had an impact either? That's what's really amazing.

FREDERICK: Yes. WILLIS: We've got both fiscal and government action here on taxes, and nothing seems to be working.

FREDERICK: Yes, that is the problem, is that the monetary policy, which is the lever that is usually most responsive -- you know, you cut interest rates and a rebound occurs -- you know, we've had 11 rate cuts in just over a year. And that's the lever that's really not working.

So I do think that Greenspan's comments yesterday indicated that, you know, there's reason to be doubtful about going forward.

KARL: And most people interpreted Greenspan's remarks as an indication that he may go back to the rate cut once again for yet another rate cut, getting closer and closer to zero.

FREDERICK: Yes, it looks like one more is coming.

KARL: All right, we've got to take a quick break. Gerry and Jim, please stay with us.

They will both take your phone calls and e-mails when America's New War continues.



BUSH: In light of the most recent bankruptcy, Enron, there needs to be a full review of disclosure rules to make sure that the American stockholder or any stockholder is protected.


KARL: President Bush reacting this week to the uproar over the collapse of Enron, and particularly the impact on workers who saw their pensions wiped out.

We're talking with Gerri Willis of "SmartMoney" magazine and Jim Frederick of "Money" magazine.

Gerri, the rule one of investing 101 is diversify. How common was this notion of people that had all their retirement savings in a single stock, the stock Enron?

WILLIS: Well, it was pretty common. And it just wasn't something that employees did voluntarily. The company required that the company employees under 50 not sell out when they started having problems. So there was no way for people to even get out of these shares when they were aware there were difficulties.

You see this kind of practice though all over the country with a lot of different kinds of companies. Proctor and Gamble comes to mind. Microsoft employees typically hold high levels of company stock. And it's like doubling up on your risk. Not only do you work for the company, but all of your life savings is in their stock. KARL: So you lose your job and you lose your portfolio in one fell swoop.

WILLIS: That's right.

KARL: (inaudible) big scandal here, I mean, it was exactly what Jerry mentioned, the fact that this company was requiring people to hold on to their Enron stock at the same time the top executives were unloading millions of shares of Enron.

WILLIS: Yes, it was just unconscionable what was going on there. And I think we need to revisit this whole area and come up with some rules, some laws, something to make sure that this doesn't happen again.

KARL: So, Jim, you mentioned that the question of whether or not there is another Enron out there. And that's what people on Wall Street are looking for. Was their echoes of Enron in the earlier collapse of MicroStrategies?

WILLIS: Oh, that's...

FREDERICK: Sorry, go ahead.

WILLIS: No, I was going to say that's an interesting question. I am less familiar with the collapse of MicroStrategiies, I have to say.

But what I can tell you is that, you know, this kind of thing happens over and over again, where, you know, when corporate officials, you know, essentially don't tell the truth about their results, it's very difficult for outsiders to pick up. And that's why the accountants' role is so important and so critical here.

KARL: And in both cases, Jim, the accountants signed off on the accounting procedures.

FREDERICK: Yes, that's right.

I think really among the most important issues that needs to be revisited is accounting regulations and auditing regulations. Because, I mean, it's two different issues: what the companies are required to disclose in their financial statements and the role of the auditor in whether or not that the techniques or if they're actually vetting the information in the documents.

WILLIS: Well, there is a real problem with accounting firms not only doing the books of the company, but also giving them advice as consultants and trying to get business that way.

So it makes it very difficult for the accountants to view the company, you know, without any ax to grind, so to speak. You don't want to go in and ask really hard questions of a company if in fact you're really hoping you get that big consulting contract.

KARL: Is the collapse of Enron going to be followed by the collapse of Arthur Anderson? I mean, one of the most well-respected names in this field, but they were the ones that destroyed the documents related to the Enron issue. They're going to be called to testify in Congress. They're going to be the subject of investigations.


FREDERICK: Yes, I mean, I think this is going to be a very big case, very long, ongoing case. I think nobody really knows what happened with Enron yet, and I'm not sure we will know the full details. But senior executives, the auditors, you know -- you mentioned earlier in the program how many congressional committees were meeting on this. And I know the Justice Department has initiated a criminal investigation. And I think all of that is warranted.

There has been a comparison for a long time between the biggest meltdown in recent memory has been Long-Term Capital Management, the hedge fund. I don't really think that those comparisons are valid because Long-Term Capital Management, they made a lot of really bad investments, and the fiscal and the financial ripples that went out from that collapse were huge. But it appears like they were bad investments. At Enron, it really is beginning to look more and more like people were doing really bad things there.

KARL: Well, Jim, to bring it back to the individual investor, what kind of advice would be have here? I mean, obviously, the first advice is don't put all of your money in Enron stock. But beyond that, we have had some changes in the tax law that affect people's IRAs and 401(k)s.

What are some of the changes that went into effect this year that should affect the average investor?

FREDERICK: Well, a couple of the big changes that went into effect was some of the tax brackets are going into effect now, which sort of leads back to the economic stimulus discussion that we were having earlier about how necessary is it because a lot of the brackets are going down.

Also, for IRAs, for traditional IRA, you can now contribute $3,000 as opposed to $2,000 previously, and keep, I believe it's over 50 -- there's the catch-up provision they're calling it, where they can invest $3,500.

And the other big change, I believe, is the education IRA, where it used to be limited to $500, and now I think it's $2,000.

KARL: So in light of all those changes, Gerri, what are you telling your readers of "SmartMoney" magazine to do?

WILLIS: Well, I think it's obvious that with a company, say, like Enron, if you would apply just a simple smell test, I think it would have been clear that there was a problem there. The stock was rising dramatically at a time that profitability was falling. If you just looked at the fundamentals from a very basic level, I think there should have been warning signs for investors.

So it's just a message to investors to, you know, do your basic homework, and it'll help you spot some of these companies, like Enron.

KARL: All right. Well, Gerri Willis, Jim Frederick, thank you two again for joining us...

WILLIS: Thank you.

FREDERICK: Thank you.

KARL: ... here on CNN Saturday. Appreciate it.

And just ahead, have the September 11 attacks resulted in the government's unfair treatment of Arabs living in the United States? We'll get two perspectives, when America's New War returns.


KARL: Is the immigration system off the rails? Hundreds of thousands of people from other countries have stayed in the United States, even after being ordered out by federal authorities. The Justice Department is focusing on some 6,000 Middle Eastern men with expired visas as part of its antiterrorism effort.

Joining us is Paul Virtue, former general counsel for the Immigration and Naturalization Service, and James Zogby, president of the Arab-American Institute.

Mr. Zogby, I want to start with you. There are some 300,000, as we heard, foreign nationals who've ignored deportation orders. The INS wants to do something about that.

Doesn't it make sense to start with the 6,000 that are from countries that al Qaeda is known to operate?

JAMES ZOGBY, ARAB-AMERICAN INSTITUTE: Actually, it doesn't, because there's no connection at all between the two issues. And I think that's the problem I have with this.

It simply is yet another stunt that the Justice Department has initiated, like the questioning of 5,000 individuals, that diverts law enforcement from the real task of following leads and helping to capture people in this country who may be intending to do us harm.

Look, there's no tolerance -- there's no question there's no tolerance for people who overstay and violate these deportation orders. And it's clear that there's a hypersensitivity to Arabs.

But the question is, do we need right now to pretend that by finding these 6,000 and deporting them, that the country will somehow be more secure? The answer is no. There's simply no question between the two realities, and the Justice Department ought not to be confusing people in the way that they're doing it.

KARL: Paul Virtue, you -- former official with the INS, what do you think?

PAUL VIRTUE, FORMER U.S. GENERAL COUNSEL: Well, I have to agree with Jim, that we have to identify where we prioritize law enforcement resources. And the question is, is the Justice Department investigating al Qaeda and people who are involved or engaged in terrorist activity, or are they focusing their attention on overstays or people who have stayed beyond deportation orders?

Should the Justice Department spend some resources and spend some time on the issue of the 300,000? Of course they should. But what's the most profitable way to do that? I think maybe one of the most profitable ways is chase the warmest trails, perhaps, the people who are the most recent overstays from deportation orders, where you have some good addresses, where you can identify the people more closely, perhaps even look at people with criminal records among that population, focus some attention on...

KARL: So you think the focus on people from countries where al Qaeda operates, Middle Eastern countries, you think that that is just a publicity stunt, like Mr. Zogby said?

VIRTUE: No, I don't go that far. I just think the resources -- and again, we're dealing with fairly limited resources -- are misguided in terms of this particular focus.

ZOGBY: Let me tell you why I think it is a stunt because, you know, initially, we had the situation of a very wide net cast, and 1,200 people was the last number they gave us -- 1,200 people were detained.

Of them, one indictment on terrorism, the rest were mostly visa overstays, and some were minor criminal violations, nothing to do with terrorism.

After that, we had the questioning of 5,000. Again, no one in that 5,000 that was questioned gave any lead to do with terrorism. And frankly, I talked to FBI agents who were furious at having to do this, because they said we want to be following leads, we want to be tracking terrorists. Instead, we're being diverted. Now we have the third diversion.

The fact is, is that I think the American people want law enforcement right now focused on identifying terrorists, terrorist suspects, tracking them down, making the country secure.

What the Justice Department is doing is creating the illusion that they initially tried to undo -- in the very beginning, they were very strong on saying let's not -- Arabs aren't the target, Muslims aren't the target. Now they've initiated a bunch of stunts that have focused exclusively on Arabs and Muslims that aren't making the country more secure but, in fact, are playing the negative stereotypes up.

KARL: But do you agree that there's a real chance, a real fear, that there are active al Qaeda cells operating in the United States, people that we don't know, that are not on the radar screen...

VIRTUE: And you know what...

KARL: ... and not any of the lists.

VIRTUE: ... they're not here illegally and I'll tell you why, because if you look at the Justice Department's own web site, where they published the al Qaeda handbook, they teach that these guys are very careful. Of the 19 who committed these evil acts, 16 of them were here legally. Three had only recently been subject to overstay, and none of them under deportation order.

I'll tell you, if there are al Qaeda people in this country right now, they are not people who will come up on this 6,000 watch list. And in fact, as the Justice Department indicates, they are people who are so quiet, so careful, so non-involved in the local Arab-Muslim community that they've blended into the woodwork of America, because that's where they -- that's how they learn to operate. The mosquito that buzzes, in this case, doesn't bite. It's the one that doesn't buzz that you've got to be wary of.

KARL: Well, in terms of the 6,000 that are -- they're focusing on, or the 300,000 if you go beyond the total people that have gotten these deportation orders and ignored them, 6,000 have disappeared.

I mean, you spent time at the INS as a senior official. How is it that we're in this situation? This is not a new problem. I mean, these lists have been around for a long time.

VIRTUE: Well, they certainly have. I mean, I think the Justice Department is boiling them down and focusing their priorities.

I'm not suggesting that we throw away the 300,000 list or perhaps even the 6,000 list, but there is some information to be gained from the files of people that are among people who have overstayed their deportation orders. I think if the FBI wants to mine some data from that information, I think that's a very good resource to do it. Look at the reasons...

KARL: But the question is...

VIRTUE: ... why people were deported. Have they committed crimes -- have they committed crimes since they overstayed? I mean, those are some of the things I think law enforcement should certainly be focused on.

KARL: But my question is how we got in this situation. I mean, the deportation letter is now called a "run" letter because it simply seems to indicate, "Ah, watch out, get out of the way." It's not an invitation to leave the country. It's an indication to be a little more careful.

I mean, why has the INS been so lax on this issue?

ZOGBY: Underfunded.

VIRTUE: Well, I think you have a funding issue. You have 2,000 law enforcement officers who are responsible for interior enforcement within the INS. They have never been sufficiently funded to address the overstay issue. Also, and it's a difficult issue to bite off on, the fact of the matter is, unless someone is actually detained once they're ordered deported, there -- the INS is simply not successful in removing them.

ZOGBY: Look at the magnitude of the problem. You have 300 who were under orders to be deported, but you have probably 7 million illegal immigrants in the country. The INS is woefully underfunded.

My concern, and I think that Mr. Virtue's concern is the same, and that is, do you want to divert the very limited manpower resources we have, about 10,000 FBI field agents to this job right now, when in fact what they ought to be doing is tracking down leads and identifying terrorists, not being diverted to what amounts to, I think, a useful job to help get absconders dealt with but not the job we need to prioritize right now.

KARL: All right, we'll address that. We have to take a quick break first.

ZOGBY: Sure.

KARL: Our guests will take your phone calls and e-mails when America's New War continues.


KARL: We're talking about the effort to deport thousands of Middle Eastern men from the United States, with former INS general counsel Paul Virtue and Arab-American Institute President James Zogby.

Before we get back to you, I want to share an e-mail that just came on the transmit (ph) here. It's from Ahmed. He says, "If I come from a country where al Qaeda operates, it doesn't mean that I'm a terrorist."

I don't imagine that either of you would disagree with that sentiment.


KARL: But let me ask you, how is local law enforcement going to be dealing with this new order from the Justice Department?

ZOGBY: Well, we've already seen a little of it because when the initial watch list went out, there were names on it -- people who had names similar to that which, unfortunately or fortunately, whatever, is a reality in Middle Eastern countries, were being stopped, were being called in. And some people were treated quite unfairly.

Similarly, when the letter went out to the 5,000 to come in for questioning, many of people who got the letters weren't in that group at all. There were citizens who got letters, green card holders who got letters. They simply had a similar name and they went to the wrong address.

If you put 6,000 Middle Eastern names into a watch list and send it out to local law enforcement and say, you pick him up with a speeding ticket, you are going to end up catching a whole lot of people who have nothing to do with that 6,000 list.

But some sheriff down in some state some place is going to pick up and Abdel Rahman, somebody with a speeding ticket, and he's going to say, oh, I got me one, because it's a close name and a match, and we're going to be creating a nightmare for a whole lot of people don't deserve it, frankly.

KARL: How many nightmares have we already been seeing out there, in terms of...

ZOGBY: Well, look, we've got -- we have calls from people who have been treated in ways that are just I think really unbelievable. And I know of a dozen or so cases myself. I certainly haven't heard all of them.

But it is not an easy time to be a person with an Arabic name from a country that is from the Middle East right now. It's not easy.

KARL: We have a phone call from Texas. Caller, your question, please.

CALLER: Yes. I'm really unclear on how our government can target one individual group legally. If you were to substitute African-American, Hispanic or people of Jewish descent for Arab- Americans, this country would absolutely not tolerate it. So with the democracy and the freedom of this country, how are we saying that it's OK to target any one group?

KARL: Well, Paul, that's a good question. I mean, racial profiling would be the term to be used. I mean, is the INS, Justice Department, actually breaking the law here, in terms of focusing just on people from certain countries?

VIRTUE: Well, the Supreme Court has not addressed this issue directly. And so, I don't know that we know the final answer to that.

The Arab-American Anti-Discrimination Committee case that the court did hear leaves some question about whether courts would have jurisdiction to entertain such a challenge, because there's no question that the people on the list have final orders of deportation. The question is how you prioritize enforcing those orders. And there may not be jurisdiction for a court to hear a challenge to that, under the current law.

ZOGBY: Well, I think that one of the things that's been so heartening -- and I'm going to take a little bit of diversionary tact here -- has been the support we've gotten from African-American leaders, from civil rights and civil libertarians around the country, from the right and the left, who have been very upset with this kind of profiling that has been taking place.

Look, there's no question that you can establish a profile, and it may be good law enforcement technique to do it. The question is, to what degree does ethnicity play a role in the profile? Should it be the determining factor or should it be a part?

What we've been having are practices in which ethnicity is almost the only factor. That's wrong, and there simply are no federal guidelines that is permit it. And we ought to be dealing with that. We ought to be addressing that issue straight out.

KARL: Well, Paul, you know, the INS is talking about some high- tech renovations to how they do their work, you know, possible fingerprint identification on immigration papers and the like.

What do you think all this is going to amount to? Or is there going to be more, you know, highlighting specific ethnic groups, people from specific countries?

VIRTUE: Well, I think the INS is expanding its capability to positively identify people. And that has always been a problem, not just for the INS, but other law enforcement agencies and the State Department as well.

So I think that the use of technology, for example, retinal scanners or hand scans, and ways to positively identify people will assist the visa process, it will get us back into a situation where it is not so difficult to come to the -- visit the United States, even as a tourist.

KARL: Right.

VIRTUE: And I think those capabilities will be brought to bear, so that we get back to a regular situation.

Right now it's very difficult...

KARL: But the INS is so underfunded. I mean, what you guys said before the break was that the INS is so underfunded that essentially the immigration laws don't mean much.

ZOGBY: Not a whole lot at all, and frankly, people come here with the intention of visiting and know that they're going to stay. They declared an intention to visit, but they know they're going to stay. And there is almost nothing that can be done about it because the INS is so underfunded.

And I think that one of the reasons why we are so concerned about this is that it simply does not address the reality of what we need to do to get the INS up to par.

KARL: We have only about 20 seconds left. I wanted to ask you, "How do you rate this president, this White House, on how they are dealing with the issue of Arab-American discrimination?

ZOGBY: Well, the president has been great on the statements that he has made, and he's been very helpful in tamping down hate crimes. But conversely, some of the programs instituted by the Justice Department have been nightmares and have undercut the very words that the president has uttered.

KARL: Is it important for the president to keep the message out there?

ZOGBY: I think it is very important. It has a domestic and foreign policy objective. We need to continue to build a coalition and have friends in the region. If they see Arabs and Muslims treated unfairly, it's going to undercut our ability to work overseas.

But the president has been on message from the very beginning, and I have him high marks. The Justice Department I don't give as high a grade to.

KARL: Quickly, Paul, you have the last word.

VIRTUE: Very good. I think we have to remember that we have about 500 million people visiting the United States or entering the United States on an annual basis. That is the part of the task of the immigration service. I think they need some help.


KARL: Paul Virtue, James Zogby, great to have you here.

ZOGBY: Thank you.

KARL: Thank you, so much for joining us.

VIRTUE: Thank you .

KARL: Appreciate it. And thank you for watching our special coverage of America's new war.

I'm Jonathan Karl in Washington.




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