The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight: Our summary of today's news; then, a NewsMaker interview with interim Iraqi Prime Minister Allawi; a look at the tax cuts issue, in Congress and in the presidential campaign; and two views of what, if anything, should be done about television indecency.

NEWS SUMMARY

JIM LEHRER: Iraqi Prime Minister Allawi declared today his country is moving forward, and he thanked America for its support. Allawi addressed the U.S. Congress. He said most Iraqis are grateful the U.S. for going to war and ousting Saddam Hussein. He said Iraq is making major progress, and he insisted the surge in violence will not derail plans for national voting early next year.

AYAD ALLAWI: Some have speculated, even doubted, whether the stakes can be met. So let me be absolutely clear. Elections will occur in Iraq, on time in January, because Iraqis want elections on time. There would be no greater success for the terrorists if we delay and no greater blow when the elections take place, as they will, on schedule. (Applause)

JIM LEHRER: Allawi said 15 of Iraq's 18 provinces are safe enough to have elections today. We'll have an interview with the prime minister right after this News Summary. President Bush reaffirmed the U.S. commitment to Iraq today as a front in the war on terror. He met with Prime Minister Allawi, and spoke later at a Rose Garden news conference.

PRESIDENT GEORGE W. BUSH: A path to our safety and Iraq's future as a democratic nation lies in the resolute defense of freedom. If we stop fighting the terrorists in Iraq, they would be free to plot and plan attacks elsewhere in America, and other free nations. To retreat now would betray our mission, our word and our friends.

JIM LEHRER: But Democratic presidential nominee John Kerry said the president and the prime minister painted too rosy a picture. The senator spoke outside a firehouse in Columbus, Ohio.

SEN. JOHN KERRY: I think the prime minister is obviously contradicting his own statement of a few days ago where he said the terrorists are pouring into the country. The prime minister and the president are here obviously to put their best face on the policy. But the fact is that CIA estimates, the reporting, the ground operations, and the troops all tell a different story.

JIM LEHRER: Kerry said there are no-go zones in Iraq where insurgents hold sway. And he said, "you can't hold an election in a no-go zone." The top Shiite religious leader in Iraq warned today that violence must not be an excuse to delay elections. Grand Ayatollah al-Sistani said through an aide that the voting must be "credible and transparent." He asked for international supervision to make sure that happens. The family of a British hostage in Iraq appealed again today for his release. Kenneth Bigley was kidnapped a week ago along with two Americans. All three were civilian contractors. The Americans were beheaded earlier this week. The kidnappers have demanded the release of Muslim women in U.S.- run prisons. There was more fighting in Baghdad today. U.S. warplanes hit insurgent strongholds in the Sadr City neighborhood. Hospital officials said at least one person was killed.

Also today, the U.S. military announced another U.S. Marine was killed in action yesterday, in the west. The U.S. Army National Guard confirmed today it will miss its recruiting goal for this year by 5,000 troops. That's the first time that's happened in ten years. The guard's top general said fewer active-duty soldiers are switching to the Guard. That's partly because they know many guard units are going to war zones. Later, the chairman of the Joint Chiefs told senators it's not a serious problem yet.

GEN. RICHARD MYERS: The army national guard is the one where the recruiting is the tightest right now, they probably won't make their goal this is year. What we got to do is look beyond what we know and try to predict, predict what our retention is going to be. This will be a serious matter if we wind up in a year or two without the kind of force we need, particularly the reserve component, because they're not built overnight and they're so essential I think to the way we do our military business in this country.

JIM LEHRER: Despite the problems recruiting new troops, the Guard said it is meeting goals for retaining existing members. It said re-enlistment is actually higher in units that have deployed to Iraq or Afghanistan. The death toll in Haiti rose to more than 1,100 today from Tropical Storm Jeanne. More than 1,200 others were still missing. The storm devastated the Caribbean nation last weekend. Health workers said today they face a possible outbreak of waterborne disease. And survivors in one city fought each other for food and water. Jeanne is now a hurricane that could hit the southeastern United States by Sunday. And part of Hurricane Ivan has become a tropical storm again, and looped back into the Gulf of Mexico. It could strike Texas or Louisiana late tonight. The U.S. House of Representatives neared a vote today to keep several middle class tax cuts. They included the child tax credit, relief for married couples, and an expanded 10 percent tax bracket. Without an extension, those measures would have expired at the end of this year. The tax package will cost nearly $150 billion. It now goes to the Senate. We'll have more on this story later in the program. A key predictor of future U.S. economic activity fell in August, for the third month in a row. The Conference Board, a business research group, reported today its index of leading economic indicators was down 0.3 percent. On Wall Street, the Dow Jones Industrial Average lost 70 points to close below 10,039. The NASDAQ rose a fraction of a point to close at 1,886. And that's it for the News Summary tonight. Now it's on to Iraqi Prime Minister Allawi, the tax cuts issue, and broadcast indecency argument.

NEWSMAKER

JIM LEHRER: Now to our Newsmaker interview with Iraq s interim prime minister, Iyad Allawi. I spoke to him earlier this evening from his Washington hotel.

JIM LEHRER: Mr. Prime Minister, welcome.

PRIME MINISTER IYAD ALLAWI: Thank you.

JIM LEHRER: First, the hostage situation in Iraq; the terrorists have already beheaded two Americans and are still threatening tonight to kill a British man if some women prisoners are not released. Are those demands going to be met?

PRIME MINISTER IYAD ALLAWI: We don t discuss; we don t negotiate with terrorists. This is the attitude which we have adopted since the beginning. Of course, we are very sad to what has happened and this is really a very barbaric and unbelievable act of murder. Our heart goes for the families of the people who were killed. It is very unfortunate. The Iraqi government is doing its best to cooperate and to find a way out but definitely there are no negotiations with terrorists.

JIM LEHRER: Are the reports true that your government as well as the U.S. military authorities were preparing to release these women anyhow, is that correct?

PRIME MINISTER IYAD ALLAWI: No. We had been we had a joint committee formed a while back between the Iraqi and the multinational forces to look at the detainees. There are some names that three names, I think as I can remember including one of the ladies. But this is premature; there is no release as yet. There are lots of other criteria that need to be met, and then finally I have to make the decision, but this is still we are way way there is a long way in front of us.

JIM LEHRER: All right. You have not made that decision yet?

PRIME MINISTER IYAD ALLAWI: No.

JIM LEHRER: All right. Why can t the people who are doing these kidnappings and beheadings, why can t they be found?

PRIME MINISTER IYAD ALLAWI: Well, we are finding some of them, some of them we are not, unfortunately, there are the lawless ordinary criminals who are doing a lot of these kidnappings. They are doing it for money on behalf of terrorists and insurgents. We have apprehended some of them about a week ago in an area called the Haifa Street area, but unfortunately in this case we were not successful. As we build our forces, our police, and our intelligence, and our police, specialized police capabilities, we definitely will be able to do so, but for the time being it s still a bit difficult, although we are trying our best to do what is possible.

JIM LEHRER: Do you know who is behind these kidnappings and beheadings?

PRIME MINISTER IYAD ALLAWI: It s the radical organizations, which is known as al-Qaida, as Ansar Islam -- Islam this group including of course al-Zarqawi

JIM LEHRER: But you can t you haven t been able to penetrate them; you haven t been able to find them and stop them?

PRIME MINISTER IYAD ALLAWI: Well, we have been successful in certain areas; in other areas we haven t been successful yet. As you know, bin Laden, himself, and Valla Hari and others are still free; nobody knows where they are, so this is the case really we ll keep on trying until I m certain that ultimately we ll get them and bring them to justice.

JIM LEHRER: Did your appearance before Congress today in your meeting with President Bush meet your expectations?

PRIME MINISTER IYAD ALLAWI: Very much so, yes. We are very appreciative of what the United States has done for Iraq during liberation and after liberation, and we are very appreciative for the support we are getting from the United States and other partners in the world.

JIM LEHRER: Both you and President Bush were criticized today by John Kerry, Sen. John Kerry, the Democratic presidential nominee, for painting an inaccurate picture of what s going on in Iraq that was too rosy, that didn t gel with the reality on the ground. How do you respond to that?

PRIME MINISTER IYAD ALLAWI: Well, I don t know what is rosy and what is not rosy. I am painting a picture that I know; I am the prime minister of Iraq, and I am talking about Iraq I know what is happening there. I know the details; I am involved in I have only been out of Iraq for five days so I don t think that in the last five days things have changed dramatically. I know, as I have been saying all along in the last two, three days, that out of the eighteen provinces in Iraq fourteen to fifteen of them are safe and good, as good as they can be. There are areas which are still turbulent pockets really, so I don t know what people are talking, in the media, I don t know what they are talking about. You know, I haven t had any positive talking about Najaf, about Basra, about Uani, about Sumawa, about Samarra. I only hear the story of Fallujah, and Fallujah does not represent the whole of Iraq. It s a tiny villa -- city, and the province of Umbara -- the rest of Umbara is very good, is very quiet and very positive. So really I don t know what and I really don t want to be dragged into the problems of the internal politics; we are interested in the support of the United States for us, the Congress for us, and the American government for us, to Iraq. This we feel is very vital.

JIM LEHRER: Well, the words that Sen. Kerry has used to describe the situation is chaos and a mess. He said the situation is a mess in Iraq and it s chaos there and it s getting worse every day. Do you disagree with that?

PRIME MINISTER IYAD ALLAWI: Well, you know, I don t know from where he derives his information but we welcome any friend who would support us to transfer this chaos into something more logical and more structured. It is really not a place to criticize we are fighting a very vicious war in Iraq. The terrorists are adamant to kill us; they have been inflicting a lot of damage on life in Iraq, both Iraqis and partners in the coalition, and the multinational force; they have been hitting the infrastructure, and really anybody who could help in shifting things and helping are welcome to do so. I don t think it is time really to pick on Iraq and the plight of the Iraqi people. We are moving in the in the right speed toward democracy, towards the rule of law, towards respect of human rights, and this I think should have the support of all people who believe in the same values. We all have done nothing wrong in Iraq; we are trying to fight terrorism; we are trying to fight terrorism in behalf of the world, of the civilizations, a course of law. We are suffering a lot of losses, so are our friends, including the United States; this is all being done for a very good cause, for the cause of humanity all over.

JIM LEHRER: What would you say to somebody in the United States who questions whether or not getting rid of Saddam Hussein was worth the cost of more than a thousand lives now and billions and billions of U.S. dollars?

PRIME MINISTER IYAD ALLAWI: Well, I assure you if Saddam was still there, terrorists will be hitting there again at Washington and New York, as they did in the murderous attack in September; they ll be hitting also on other places in Europe and the Middle East. I have been outside Iraq; I have been listening to a lot of atrocities that have been committed by Saddam s regime and his liaison with terrorist organizations when I went to Iraq and saw what atrocities had been committed was really nothing compared to what we had so far we have found 262 mass graves; and we are still finding new mass graves. Saddam had used chemical warfare to kill his people; they have used weapons against, chemical weapons and weapons of mass destruction against Iran, against his neighbors, Saddam had alienated himself with the terrorist organizations and he brought them to Iraq even prior to the war of liberation to kill. The war against Saddam was very just; it was a courageous decision. I salute the government of the United States and the Congress of the United States who have taken these courageous and brave decisions, so I do salute the rest of the civilized countries who helped us in getting results from them.

JIM LEHRER: How many Iraqis have died since the U.S. military operation began?

PRIME MINISTER IYAD ALLAWI: The figures we have so far, this is the ministry of health figures: in the last five months, this is taking into account the most recent ones, deaths, three thousand, six hundred and something, I can t remember the fractions over six hundred civilians have been killed by terrorist attacks in the last five months by terrorists, and more than twelve thousand injured now; of course some of those who have been injured probably have lost their lives, so it is a deadly war; they are trying to stop the life in Iraq; they are trying to stop the progress in Iraq; and in order to not only hurt Iraq but to undermine the whole region of the Middle East and to go beyond and to help out civilization and civilizations in the world

JIM LEHRER: You ve said several times since you ve been in the United States, a couple of times today, you told the Congress that these elections that are planned for January are going to come off no matter what. Can they come off if this level of violence continues up till then?

PRIME MINISTER IYAD ALLAWI: Well, this level of violence really is where the media are focusing on and there are a lot of areas in Iraq, the majority of areas are free of such violence. We just in August concluded a national conference, they elected --1400 people assembled from all over the country and they elected a 100-member council. This is a preparation for the forthcoming election in January; people also then doubted that this conference was going to be held, but yet we were able to hold it and in fact it lasted for four days, and it came up with very positive results. I am sure that we will be able to conduct the elections in January next.

JIM LEHRER: You just did it now about the press, the media and the United States; you said that the media is giving oxygen to the terrorists. What do you mean by that?

PRIME MINISTER IYAD ALLAWI: Well, I mean by that focusing on the negative aspects and talking about the negative aspects only and the media is really in a way an encouragement to the terrorists; it s very simple. We know that I know I come from Iraq; I am the prime minister of Iraq; I know there are problems in Iraq. I know security is not safe 100 percent; I know there are enormous problems in various parts of the country. But I know as well that a lot of good things are happening. I know a lot of successes have been achieved. And Najaf and Talafa and Samarra and Basra and Diwaniya, and Karbala, a lot of successes; I can t read on these successes in the press; these are successes not only for Iraq but successes against terror, against terrorism -- who have been trying to undermine not only Iraq but rather the whole world.

JIM LEHRER: So you re not

PRIME MINISTER IYAD ALLAWI: And that s why I say it is unfortunately some media when they focus only on the bad events, they give oxygen to terrorists -- this is unfortunate; we should all close ranks; we should all work together; we should all send the same message that things will be steadfast against terrorists until they all go to justice and until the world is a much safer place.

JIM LEHRER: Just for the record, Mr. Prime Minister, you re not suggesting that the media not report the bad things, are you?

PRIME MINISTER IYAD ALLAWI: No. No. I am suggesting that there are focuses on the negative aspects. I haven t said what kind of a conference has been held in Baghdad in August and how the various Iraqis who came from different backgrounds, religious, ethnic and so on women and men from all over Iraq came to participate in a democratic practice to prepare for the next phase, which is the forthcoming elections in January. This is something positive; this is something that the Iraqis and the friends of Iraq have lost lives to achieve a level of unacceptable democracy moving forward towards a full election in Iraq; this is something very positive. I haven t read a lot in the press about this. You know, when I read and people read that, you know, there are suicidal bombers and there are problems in Fallujah and Fallujah and Fallujah, this is fine; this is happening. But this is don t forget this is a war; this is a big war. People are coming to Iraq from as far as China, Morocco, Syria, Lebanon, Yemen, Pakistan, Afghanistan; terrorists, they are trying to kill; they are trying to commit murders; and they are doing so. So what is happening in Iraq really is a global phenomenon; it s not only to Iraq. That's why I would like to see in the media a fair assessment of what's happening and a realistic assessment of what's happening.

JIM LEHRER: All right, sir. Mr. Prime Minister, thank you very much.

FOCUS TAXING ISSUE

JIM LEHRER: Still to come on the NewsHour tonight: Tax cuts, and indecency on television.

Kwame Holman begins our tax cuts coverage with what's happening in Congress.

KWAME HOLMAN: Concern in Congress last spring about the mounting federal deficit prompted a move by Democrats and some moderate Republicans to prevent any more tax cuts unless Congress found a way to pay for them first. At the time, Wisconsin Sen. Russ Feingold tried to resurrect an old budget rule known as pay-go,

SEN. RUSS FEINGOLD: Reinstating the pay-go rule makes it harder for this body to make the deficit worse. It doesn t prohibit these tax cuts; it doesn t make it impossible to have a tax cut; it just makes it a little harder. Mr. President, that s as it should be.

KWAME HOLMAN: Feingold s effort failed, the mission abandoned, and today in the House of Representatives, a series of middle class tax cuts scheduled to expire at the end of the year appeared certain to be extended, at a cost of nearly $150 billion. A few Democrats stood to protest.

REP. CHARLES RANGEL: Who pays for these tax cuts?

SPOKESMAN: Where does this end?

KWAME HOLMAN: But a substantial package of tax cuts for the middle class just a few weeks before Election Day was not difficult for most members to get behind. New York Republican Tom Reynolds:

REP. THOMAS REYNOLDS: Mr. Speaker, a yes vote today seizes on the momentum we have created towards a strong economy, and job creation, and sends a clear message that this Congress supports putting real dollars back where they belong, into the hands of hard working men and women.

KWAME HOLMAN: In detail, the middle class tax cut legislation on the floor today would extendfor six years the expansion of the 10 percent income tax bracket, extend for five years the $1,000-per-child tax credit, extend for four years the standard deduction for married couples at two times the deduction for single taxpayers, and extend for one-year current relief from the alternative minimum tax. The bill also would extend for a year some two dozen business tax breaks, for a total cost of more than $146 billion. Pennsylvania Republican Melissa Hart:

REP. MELISSA HART: If we allow these taxes, those tax cuts to be removed, meaning increased taxes, we do not help our economy. We certainly will do the opposite. In fact we'll put a number of families in a difficult situation as well as a number of businesses.

KWAME HOLMAN: But the bill does not preserve a child tax refund for poor families who no longer meet an income threshold that's been adjusted upward for inflation. Tennessee Democrat Harold Ford said some four million poor families would lose benefits.

REP. HAROLD FORD: What it means is we're raising taxes on people who earn $11,000,000. So if you're watching, if can you afford a TV or know somebody who earns 11,000 a year, they're raising taxes on you this afternoon.

KWAME HOLMAN: And New York's Tom Reynolds had this exchange with Texas Democrat Charles Stenholm.

REP. CHARLES STENHOLM: To my friend from New York, let me remind you it took our country 204 years to borrow the first one trillion dollars. 204 years, we're borrowing one trillion every year and a half under the policies, you've got the guts to stand up here and say we ought to keep following it. Then vote for increasing the debt spending and tell the American people before Nov. 2 this is the result of the policies, we're borrowing the money to have the policies that we're giving to you. Vote for us.

REP. THOMAS REYNOLDS: There they go again. Have a plan where we're going to sell a loaf of bread that says we're going to cut middle class taxes, but then again I don't really have a plan how to do it. But you know, I've been in the minority before getting here, and serving in the majority from the day I got here, but that majority of the previous 40 years has nicely gotten trenched in the minority because they have a lot of rhetoric but they haven't put much action plan as to how to get the job done. They want to come up and say I'm for cutting the middle class tax, but I don't see this, I don't see that, but there's never a solution.

SPOKESMAN: The House will be in order.

KWAME HOLMAN: Still, an overwhelming House vote in favor of the middle class tax cuts is expected later tonight. The Senate is likely to do the same before the week is out.

JIM LEHRER: Now: Taxes in the presidential campaign, and to Ray Suarez.

RAY SUAREZ: The congressional proposal over whether to extend middle class tax cuts ties into a larger debate between the two presidential candidates over tax cuts. President Bush believes that all of the tax cuts passed in his first term, including those for the wealthiest Americans, should be made permanent. Most are set to expire in coming years. The president also says that if he is reelected, he will appoint a commission to find ways to make the tax code simpler and fairer. The president recently told supporters in Pennsylvania why further tax relief was so important.

PRESIDENT GEORGE W. BUSH: We unleash the energy and innovative spirit of America with the largest tax relief in a generation. (Applause) The entrepreneurial conspiracy is strong; the small business sector of our economy is strong. And the tax relief helps strengthenit. (Applause) We encourage savings and investment by cutting taxes on dividends and capital gains. (Applause) Tax relief put money in the hands of American workers, so they could save for their retirement or for their home or for the education of their children. My philosophy is government sets priorities, funds its priorities, and lets the people keep as much money as possible. I think you can spend your money better than the federal government can.

RAY SUAREZ: Sen. Kerry's plan has some major differences from the president's. He too endorses tax cuts for low and middle income Americans. But he also wants to cut corporate income taxes while closing so-called tax loopholes that encourage job outsourcing. And to pay for these and other fiscal plans, Kerry would roll back income tax cuts for the wealthiest 2 percent of American taxpayers. He told a crowd in St. Louis recently why those cuts needed to be rescinded.

SEN. JOHN KERRY: John Edwards and I have a plan to put people back to work, a plan to create manufacturing jobs in America, a plan for tax incentives not to the wealthiest people in the country, but to the companies that are trying to create the jobs, help people be able to hire people, help people with job training. These are all choices. George Bush's choice: Tax cuts for the wealthiest people in America, to the exclusion of taking care of our veterans, taking care of children, cutting after school programs. That's a choice. If you want a different value system, folks, that tells you we don't have a broken budget in Washington, we have a broken value system and we need a president who fights for the American people, for the working people, and stands up for justice in this country.

RAY SUAREZ: To learn more about the candidates' positions on taxes, I'm joined by Roger Altman, a senior economic advisor for the Kerry campaign-- he was deputy treasury secretary in the Clinton administration -- and Tim Adams, director of policy for the Bush/Cheney campaign. He's served as chief of staff at the Treasury Department in the Bush administration.

Tim Adams, let me start with you. Could you walk us through the next four years and give us the major points in President Bush's plans for tax policy.

TIM ADAMS: Well, certainly a big portion of it is plans in tax policy is what we saw happen today on Capitol Hill and what we'll see tomorrow and that is passing middle class tax relief -- tax relief that is for the most vulnerable in our society, but those who are facing enormous challenges. The president put these tax cuts into place in 2001, we accelerated them last year, despite John Kerry voting against it, and we think we ought to be helping the most vulnerable and the most economically challenged in our society.

RAY SUAREZ: And Roger Altman, if John Kerry takes the o next year what would his tax policy look like for the next four years?

ROGER ALTMAN: Ray, I don't think the issue is the middle class tax cuts which are going to be extended tonight. There's a consensus in this country favoring those extensions, Sen. Kerry has long favored them, that's really not the question. The request is the condition of our economy, and the effect of the deficits we have on that condition. Right how the economy is not working for most Americans. Over the last three months, and that's a period that has nothing to do with 9/11 or the corporate scandals or the tech. bubble or the conditions this administration inherited, the percentage of Americans who are working in this country has fallen and incomes for most Americans have fallen. The percentage of Americans working has fallen because the job creation rate hasn't kept pace with the population growth rate, and incomes have fallen because inflation is outstripping wage gains. Now, that is not a sign of a healthy economy. One of the underlying problems here, ironically, is a replay of 1993. In 1993 President Clinton came into office, he inherited a very large deficit from then President Bush Sr.; we fought a bloody battle over President Clinton s deficit reduction plan and his economic plan, there was not a single Republican vote for the ultimate bill which passed the House by one vote and passed the Senate on a tie breaking vote from the vice president, and everyone opposed to that at that time said the tiny tax increases in there which affected 1.2 percent of Americans will ruin the economy. And all the prophecies of doom and depressions worse than the 1930s were made. Of course they were all wrong and they're being made again now. And they ll be wrong again.

RAY SUAREZ: And Sen. Kerry's plans for the tax policy --

ROGER ALTMAN: Sen. Kerry has said we need to get these deficits under control, they're undermining confidence and they re threatening the country, especially with the aging of America, so he has said let's roll back the tax cuts for the top 2 percent of Americans, that's those earning $200,000 a year or more, and only those, and dedicate the proceeds to health care, education, and deficit reduction. That's the clear choice in this election, because the Bush side of course as I'm sure Mr. Adams will say, believes that first of all any tax rollbacks will be ruinous to the economy, they said that in '93, they were wrong and they're saying it again now and they'll be wrong again and also will say that they'll get the deficit under control through some mysterious plan they haven't unveiled. And the choice is whether we want to roll those taxes back as we did in '93 to the levels that prevailed when President Clinton left office and I with would remind everybody that at the time President Clinton presided over those tax rates, '99, '98 and '97, so forth, we have the best economy of anybody's lifetime, so returning to those rates is not going to ruin anything, it didn't then and won't again -- or whether we want to stick with the enormous deficits we're facing and the weak economy that we're currently experiencing, that's the choice.

RAY SUAREZ: Well, Mr. Adams, what about the deficit that Mr. Altman put so much emphasis on?

TIM ADAMS: Well, certainly the president has a four-volume, thousand page budget that lays out in excruciating detail how we're going to cut the budget, the deficit in half in four years. John Kerry has a single page which doesn't even include tax cuts; it doesn't include deal with the AMT; it doesn t include Social Security, and it doesn't even include the 1.5 trillion dollar government takeover of our health care system. And let me just quibble with Mr. Altman's characterization of the current economic conditions. At 5.4 percent unemployment, the unemployment right now is exactly where it was when Bill Clinton was running for re-election in '96 and he was running on a good economy. Interest rates are low, inflation is low, we've seen 1.7 million new jobs created over the past year. And our economy is growing faster and has lower unemployment than most of our industrialized partners. The president believes that we should keep taxes low for all

Americans.

RAY SUAREZ: Well, the federal government this year had to borrow $422 billion to pay its bills. In deciding today, and for President Bush to support the decision to forego more than $100 billion of collecting revenues over the next several years, are you staying on track toward cutting that deficit in half as you say?

TIM ADAMS: Absolutely. Let me remind you, back in 2000 when the president was running for office, he said there are two reasons we should run a deficit, we have a war and we have a recession, and we had both, we had much more. And so while we are not happy with the deficit, we think it's too large, we do think it is manageable from historical norms and when compared to other industrialized economies. But we are determined to get that deficit down, we have a plan in place, John Kerry does not.

ROGER ALTMAN: Can I address that?

RAY SUAREZ: Please, and then a quick question. Go ahead. Respond.

ROGER ALTMAN: I want to say something very clearly about the two candidates' positions on deficits. Sen. Kerry has said let's reinstate the two central budget laws, I want to emphasize laws, of the 1990 to 2000 period first signed into law by President Bush Sr. -- extended again in 1993, extended again in 1997, probably the only thing that Speaker Gingrich and President Clinton agreed on, those two laws very simply were the pay as you go system, and the system of inflation based caps on non-defense discretionary spending. Those two laws over that ten-year period were a primary reason why we achieved over those years the first balanced budget in 40 years, ultimately the surpluses we saw unprecedented, then the truly unique pay down of the national debt. Now during the early days of this current Bush administration those laws expired and this administration made no effort to extend them, and currently opposes them fiercely. So one candidate is saying let's reinstate those budget laws of the 1990s, I will live under them regardless of the effects, including the effects on my own initiatives. That's Sen. Kerry's position. The other candidate is saying I don't want anything to do with them, I'm against them. Now that's one reason why President Bush inherited a budget surplus, Goldman Sachs estimated 5 and a half trillion over ten years, and we now face Goldman Sachs estimates -- a more than 5 trillion estimated ten-year cumulative deficit, that s the biggest budget reversal in American history in constant dollars since George Washington raised his hand and took the oath of office; they'll tell you it's about war, but if you take out defense and homeland security we still have a giant deficit and they're spending x defense, x homeland security, is still twice the annual rate that we saw during the Clinton years. Why? Because they have abandoned the budget discipline embodied in those two laws that we had during the 1990s and ask Mr. Adams if you would why President Bush opposes reinstating those and why he fought so hard to be sure the bill which did pass the Senate a month ago on pay-go at least would die in the House.

RAY SUAREZ: Well, you just asked him.

Tim Adams, go ahead. Respond.

TIM ADAMS: I'm so glad that Mr. Altman brought up the pay-go rules because I just saw a press release from John Kerry who said that he now supports these middle class tax cuts that are going to be voted on in the Senate tonight or tomorrow morning and he says he supports them despite the fact that he opposed them last year. Now, he opposed them last year because he said there were no offsets, and there are no offsets today, so what we've seen is yet another flip flop by this candidate, but it also violates his own pay-go rules. So why is it he says he's for pay-go, but this legislation we see today violates those rules --

ROGER ALTMAN: Mr. Adams.

TIM ADAMS: Please, please. Please allow me to finish. Let's go back to the 1990s. The reason we had a surplus in the 1990s is because the previous administration practically gutted the Defense Department and our military capacity which we're trying to rebuild at this point, they gutted our intelligence capacity which we're trying to rebuild at this point, and the surplus was principally the result of a bubble in the stock market which produced a historically anomalous set of numbers with respect to the realizations of capital gains. When the market burst in early 2000 and 1.8 trillion dollars of wealth was lost in 2000, the great year that Mr. Altman was talking about, that surplus went with it. It took us right into a recession which we've been trying to manage our way out of for the last three and a half years.

RAY SUAREZ: I want to return to 2005 when the next presidential term, there's a great debate to be had over the 1990s, but Roger Altman, very quickly, how does John Kerry reduce the deficit given the Bush, in the Bush critique, the number of proposals he's made about how he'd like to spend government funds starting with his term?

ROGER ALTMAN: Well, Ray, I'm going to answer that, but I just want to say for one moment, it's difficult to respond to the types of things Mr. Adams just said because they're so nonsensical. The idea that the budget was balanced in the 90s because of the tech. bubble or the idea that the budget laws I referred to had nothing to do with it, with all due respect, that's absolute nonsense. Now back to your question --

TIM ADAMS: Then you should read Alan Blinder's book and Janet Yellen s book; they were your colleagues, or Joe Sitglitz, another one of your colleagues from the 1990 s, it's all in their books, they've written bit, they're Democrats, they're advisors to John Kerry, they're your former colleagues and that's what they said. I didn't make this up, it's from their books.

RAY SUAREZ: Quickly Mr. Altman on deficit reduction --

ROGER ALTMAN: That's also nonsensical. In answer to your question, Ray, I answered it a moment ago. Sen. Kerry has said let's put back into effect those two laws, which produced the first balanced budget in 40 years, the surpluses and the pay down of the national debt, and I as president, President Kerry, will live with the consequences of those laws, regardless of the effects including on my own initiatives. In addition, every initiative Sen. Kerry has put forward in this campaign, and it's right on his website, is accompanied by a pay for, every single one. The two central initiatives that account for about 80 percent of his proposed spending are health care and education, those two initiatives add up to less than the proceeds from rolling back the tax cuts for the wealthiest Americans, that's how they're paid for. It's clear, it's there on the website. Every initiative has a pay for, and that's how Sen. Kerry would govern as president and Mr. Bush in his own words would not.

RAY SUAREZ: Let me get a quick response from Mr. Adams.

TIM ADAMS: I'm glad Mr. Altman brought up the Kerry budget and their website. I urge people to look at his budget on his website. The single page in which he derives enormous amount of savings from forcing federal bureaucrats to wear sweaters in the wintertime because he's going to turn down the temperature -- the fact is that for every dollar he raises in raising taxes on small businesses and entrepreneurs, he is going to spend $3 in new spending: 1.5 trillion for a health care proposal. That's the same size as the economy of France. This country cannot afford the government takeover of our health care system.

ROGER ALTMAN: There are no tax cuts on small businesses -- no tax increases on small businesses in Sen. Kerry's program. In fact, there are tax cuts for small businesses --

RAY SUAREZ: This conversation is to be continued but I want to thank you both for being with us.

TIM ADAMS: Thank you very much.

ROGER ALTMAN: Thanks for having me.

FOCUS TV INDECENCY

JIM LEHRER: Finally tonight: An update on the move against indecent TV over-the-air programming, and to media correspondent Terence Smith.

TERENCE SMITH: The CBS Network, already dealing with the controversy over disputed documents used by its news division, got more bad news yesterday. The Federal Communications Commission fined the broadcaster a record $550,000 for its Super Bowl halftime show, site of Janet Jackson's now infamous "wardrobe malfunction," which exposed her right breast. The FCC decided the performance was "in apparent violation of the broadcast indecency standard." It was a moment of rare unanimity for a commission deeply divided along partisan lines. The fine, which the network has 30 days to pay or appeal, was levied against CBS' 20 owned and operated stations-- $27,500 each, totaling $550,000. CBS is owned by the media conglomerate Viacom, and that factored into the FCC decision. The commission cited Viacom's ownership of Infinity Broadcasting, and its "history of indecency violations" levied against Infinity's syndicated Howard Stern Show. The popular radio personality has had a decades-long battle with the FCC over the content of his program.

Meanwhile, a pattern of apparently self-censorship has taken hold among broadcasters. Five-second and longer delays are now the norm for awards programs and some sporting events. Entertainment television producers have also cited far more stringent attention to sexual content by over-the-air broadcasters as they devise their fall TV lineups. A new study out today from the Kaiser Family Foundation says two-thirds of parents want government to restrict violent and sexual content on television. Congress has not addressed that constitutionally sensitive issue, but there are measures pending in both Houses to increase tenfold the fines for programming labeled indecent.

Joining me now are Congressman Fred Upton, Republican from Michigan, who is chairman of the Telecommunications Subcommittee at the House Energy and Commerce Committee; and Jonathan Rintels, the executive director of the Center for Creative Voices in Media, a nonprofit organization that represents writers, directors, and others who produce programming. CBS was invited to join this discussion, but said it was studying the FCC decision and declined to participate. Gentlemen, welcome to you both.

Fred Upton, let me ask you first what you think of these fines, whether you consider them justified and appropriate.

REP. FRED UPTON: Well, you've got to remember that this didn't even cover the amount of money that CBS collected for a 30-second ad. And it's under the old standard. These rules have been under the books for a long time. The fines were established decades ago. The Supreme Court actually ruled on this very issue as to whether or not the FCC had the ability to fine for indecent material. The answer was yes. And we have now passed legislation... we actually started working on this issue last year, way before the Super Bowl. On a bipartisan basis we actually raised the fines by 20-fold over what they can do today. Remember, this is... these current fines were under the old standards. We didn't touch the standard. The standard stays exactly the same. Every one of the commissioners of the FCC, Republican or Democrat, begged us to increase the fines. That's what we did. We passed it out of our committee 49-1, obviously clear bipartisan support. We passed it on the House floor 391-22, obviously wide bipartisan support. And in a vote that even John Kerry and John Edwards made, they passed virtually the same bill, a little bit different, 99-1 in the Senate back in July. So right now we're in a conference between the House and the Senate. There are differences between the two.

I am very hopeful and optimistic that we can grapple with those differences and come back with a bill and get to it the president's desk before too long.

TERENCE SMITH: All right, we'll talk about... a little further about the legislation in a moment. But Jonathan Rintels, what's your view of the fines imposed by the FCC?

JONATHAN RINTELS: Well, we think they're not an appropriate response to the issue of indecent material on television. And I'm not here to defend indecent material. In fact, in my other full-time job as a parent of two young children, watching the Super Bowl halftime show, we turned it off about ten minutes before Janet Jackson ever took the stage. So I share the outrage and the feeling that the Super Bowl halftime show was inappropriate with the congressmen and with the FCC commissioners. The question is how best to deal with indecent or offensive material. We think that the government regulation of the content of the speech that goes out over the air is constitutionally dangerous, and in fact is censorship, and in fact censors a great deal of wholly appropriate and decent speech that unfortunately the American public will not be able to see because of these actions.

TERENCE SMITH: Fred Upton, what about that? Is it... "a," is it censorship? And "b," is there a risk that it's too broad?

REP. FRED UPTON: No, it's not. I'm not going to buy into that argument at all. The standards are pretty clear. You can't use the "f" word. You can't talk about sex or conduct real live sex acts, as we've seen as you look actually at the transcripts, that the FCC has fined over-the-air broadcasters... remember, this does not apply to cable, does not apply to satellite, because that's not the taxpayers' airspace; over-the-air broadcast, radio and TV, is. And that's why the restrictions are in place. They've been affirmed by the highest court of the land, so in fact they are constitutional, and they say, "look, during the hours of between 6:00 in the morning and 10:00 at night when kids are likely to watch, whether it be a Super Bowl or anything else, you cannot do this."

TERENCE SMITH: Jonathan Rintels, do you agree that that line is clear, that producers and creators understand what's permissible and what's not?

JONATHAN RINTELS: No, I don't. And in fact, the FCC doesn't agree that the line is clear. I attended a session where FCC representatives were on a panel at the National Association of Broadcasters' Convention a few months ago, in which the first ten minutes of the groundbreaking miniseries "Roots," which was broadcast in 1977, were shown on the screen, and the FCC representative was asked point-blank: Would the FCC today consider this obscene or would it not consider it-- indecent, excuse me-- or would it not consider it indecent? And he would not answer the question; he could not answer the question. Now, the first ten minutes of"Roots," as many of your viewers may recall, since it was so widely viewed, is a historically accurate representation of life in an African village, and therefore it does include nudity and other potential violations of these new indecency standards. So how, as a creative artist, are we... as creative artists are we supposed to react when not even the FCC can tell us when a historical television show is indecent?

TERENCE SMITH: Well, what's the answer to that, Congressman?

REP. FRED UPTON: Let's look at the real facts here, and that is when you read what the FCC has fined the broadcasters for, most of it radio-- a few TV, as we saw with the halftime show this week with the fine coming out-- you read the transcripts, you see what's been aired, you look at the panel, the Republicans and Democrats on that five-member panel, virtually... in this case again, a unanimous decision. They all lamented that they couldn't raise the fines even higher, which is only what our legislation does that we passed in the House. But you read some of those transcripts and you say, "no way should this stuff be on the air." I'm a dad, too. I've got two teenagers, and it should not be on over-the-air broadcast. And the pattern is pretty clear. The broadcasters know. In fact, some of them now have put out a warning. "If in doubt, leave it out" were the words that some of them used. It's pretty apparent what's going to be fined and what's not. I don't think there's a person out there that didn't think that CBS would be fined for the Janet Jackson expose. They apologized to the country for it, we had hearings about, and it no way should it have been aired, and they're paying a price. But you know what? That price under today's standards isn't even the cost of a 30-second commercial.

TERENCE SMITH: All right. Jonathan Rintels, the FCC cays it got 500,000 complaints about this from viewers. And we have the Kaiser Family Foundation study today saying two-thirds would like to see some regulation. Doesn't that suggest that there's a problem here?

JONATHAN RINTELS: I think there is a problem. The question, as I said earlier, is how best to address it. Now, we think there are many more constitutionally appropriate ways of addressing it that actually empower the audience, empower the consumer to avoid indecent content. For example, the ability to take cable channels on an "a la carte" basis so they're not forced to take, say, an MTV that they may find indecent or offensive. We also think that policymakers at the FCC and in Congress ought to really take a much more careful look at the root cause of indecent programming, and we believe one of those root causes, as the FCC alluded to in discussing Viacom, is media concentration. After all, the Super Bowl halftime show is really the poster child for the dangers and the evils and the... of the synergies that come from media concentration.

TERENCE SMITH: Jonathan Rintels, and Congressman Fred Upton, thank you both very much.

REP. FRED UPTON: Thank you.

JONATHAN RINTELS: Thank you very much.

RECAP

JIM LEHRER: Again, the major development of the day: Iraqi Prime Minister Allawi addressed the U.S. Congress and insisted violence will not prevent elections in January. Democratic presidential nominee John Kerry said Allawi and President Bush were painting too rosy a picture, but on the NewsHour Allawi rejected that criticism. He said he knows what's happening in his own country. We'll see you online, and again here tomorrow evening with Mark Shields and David Brooks, among others. I'm Jim Lehrer. Thank you and goodnight.