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THE MCLAUGHLIN GROUP

HOST: JOHN MCLAUGHLIN

JOINED BY: PATRICK BUCHANAN, ELEANOR CLIFT,
JAMES WARREN AND MORTIMER ZUCKERMAN

TAPED: FRIDAY, MAY 23, 2003
BROADCAST: WEEKEND OF MAY 24-25, 2003



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THIS IS A RUSH TRANSCRIPT.
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MR. MCLAUGHLIN: Issue one: Unintended consequences.

GENERAL ERIC SHINSEKI (chief of staff, U.S. Army): (From videotape.) (In progress) -- significant ground force presence to maintain a safe and secure environment.

Something on the order of several hundred thousand soldiers are probably, you know, a figure that would be required.

VICE PRESIDENT RICHARD CHENEY: (From videotape.) We will, in fact, be greeted as liberators.

MR. MCLAUGHLIN: The Bush administration's game plan for postwar Iraq was simple. After being greeted as liberators, U.S. forces would restore basic services to the country and swiftly hand off power to an interim Iraqi government composed chiefly of exiles and dissidents.

Now that plan has been shelved, and Paul Bremer, the U.S. civilian administrator, has announced that the anticipated transfer of authority to an Iraq interim government will be delayed indefinitely. The reason?
The unintended consequences of the Iraq war.

One, rampant crime. Baghdad is beset with carjackings, killings, street muggings, kidnapping, gang rape, due to the absence of law enforcement. Looters have sacked everything, from schools and banks to medical
clinics and nuclear research facilities. Basic services -- telephones, emergency rooms, maternity wards, fuel, water, electricity -- are still lacking. It's a tailor-made environment for organized crime.

Two, too few troops. U.S. troop levels in Iraq were kept low -- so low, say critics, that now order cannot be maintained in a country of 24 million people.

By contrast, in Kosovo, in the Balkans, with its population of 2 million, 40,000 troops were committed to restore and maintain order. If the same proportion were applied to Iraq, the U.S. would need 400,000 troops. That's 240,000 more than are currently in Iraq.

Three, Shi'ite theocracy. U.S. planners failed to encompass the strength of Shi'ite unrest and the potential for the long-repressed Iraqi majority to impose on Iraq an Islamic theocracy, with its ayatollahs, like Iran.

Four, weapons of mass dispersal. Experts fear that if Iraq had chemical and biological weapons when the war started, those weapons of mass destruction have now been dispersed and are more, not less, likely to fall into the hands of terrorists.

Five, global arms race. The defense planners from Russia and China and Iran and North Korea and their military strategists took studious note of America's lightning victory in Iraq. The upshot of that notice is
a new global arms race and, for those not yet in the nuclear club, accelerated efforts to build the bomb, to shield against American invasion.

To recap, the unintended consequences: one, rampant crime; two, too few troops; three, Shi'ite theocracy; four, weapons of mass dispersal; and five, global arms race.

Question: Is the Iraq peace in danger of undermining the war?

Pat Buchanan.

MR. BUCHANAN: John, what happened there, in the middle East, in Iraq especially, power comes out of the barrel of a gun. And what we did, we smashed the army, we smashed the police, we smashed the regime, we decapitated the Ba'ath Party, and now, instead of Arab democracy arising, what you've got is chaos and anarchy. It is going to take America far more troops than we have, far more time than we had planned to invest, and far more money if we are going to have any hope of turning this into the kind of country the president hoped to do. I said a long time
ago I think we've hit the tar baby. I the president, though, and I think the administration may be committed to do what they have to do, but it's going to take a lot longer than we thought.

MR. MCLAUGHLIN: You're not talking about mass anarchy, are you?

MR. BUCHANAN: Well, what we had was this looting, was horrible. You have not got things back up -- electricity is not there fully, the water is not there. We're losing -- a lot of people did welcome us as
liberators, who are now angry with us. And it's just going to take a lot more. Already our first effort at it with General Garner, it failed. They had to bring him out.

MR. MCLAUGHLIN: Eleanor?

MS. CLIFT: What is stunning is that the administration had a year to plan for this, and they planned the war beautifully. But the aftermath is like an afterthought in this administration's mind. And I think
it's really been shocking -- the breakdown in civil society. And I think Iraq is on its way to becoming, instead of a symbol of American's intention to spread democracy and do good things, it's becoming a symbol of
American occupation and American incompetence.

And while I doubt al Qaeda is recruiting inside Iraq, I think the rest of the Arab world can look upon this mess and it becomes a recruiting tool for al Qaeda, which is certainly not in a weakened or diminished state, based on the attacks we've seen in the recent weeks.

MR. MCLAUGHLIN: You remember the hearings where the subject of the aftermath was raised, and you remember the total inadequacy of the performance of administration officials on that? So we knew this was coming
on the basis of their lack of foresight, planning.

MS. CLIFT: Well, if you talk to people in the administration they say there were meetings talking about the aftermath, there was planning. But they would inevitably break up with somebody saying, "Let's not get
ahead of ourselves. We've got a war to fight." All the emphasis was on the war.

MR. MCLAUGHLIN: James?

MR. WARREN: Even if you agree with the likes of Donald Rumsfeld, I think there's been a certain rush to judgment among an impatient media. You can definitely conclude that we weren't prepared for the peace. We
weren't prepared for caring and knowing about what makes people feel secure in a postwar environment. We don't seem to have -- and this is more troublesome -- do we seem to care to have a long-term perspective about things like setting up prison systems, setting up judicial systems,
the administration of justice, and particularly in an agricultural society, about the importance of land to people, and many folks, in this case, wanting to get back their land.

MR. MCLAUGHLIN: Do you remember, Mort, who predicted that war with Iraq would spark a global nuclear arms race, with Iran and North Korea accelerating the process?

MR. ZUCKERMAN: John, I have a feeling I'm looking at him. But tell me who it really was! (Laughter.)

MR. MCLAUGHLIN: CIA Director George Tenet in his February 11th, 2003 testimony before the Senate Intelligence Committee. Tenet made the prediction, in the CIA's annual report to the Congress, he said the domino
theory of the 21st century may well be nuclear.

MR. ZUCKERMAN: You know, that's entirely possible. I don't think it was affected by the Iraq war; quite the opposite. I think, for example, a country like Iran is now very concerned about not getting in the
crosshairs of the United States. They really want to find a way to accommodate to the United States. The same thing is true of most of the countries in the region.

So, you look at it at one side, and frankly, I think you exaggerate some of it in that presentation. For example, you talk about the Shi'ite theocracy. Of the three main imams who came over there, the Shi'ite
imams, two of them do not believe that the Shi'ite community should be involved in politics. It's true; that is the case in Iran. But they don't -- that doesn't replicate itself. And the crime that you talk about
took place in certain neighborhoods in Baghdad. It didn't take place in the whole city. I'm not trying to diminish it. I also don't want to exaggerate it.

And of course, you know, in any war -- after World War II, what -- you know, there's that book by Michael Beschloss, "The Conquerors," where we talked about for -- we were -- our planning for what we were going to
do with Germany was ridiculous. It takes time to reorganize. But one thing about the United States, when we saw that Jay Garner wasn't working, we changed. We have a terrific man there now. It will take some time to reestablish order. Of course it's going to be messy. How could it not be?

MR. MCLAUGHLIN: A couple of clauses on what you said. Regarding theocracy, I was talking about southern Iraq. With regard to crime, et cetera, and general upheaval, I recommend to you Knight Ridder coverage of
that particular point.

Okay, Graham cracker.

SEN. ROBERT GRAHAM (D-FL): (From videotape.) We have let al Qaeda off the hook. We had them on the ropes, close to dismantlement, and then as we moved resources out of Afghanistan and Pakistan to fight a war in Iraq, we let them regenerate.

Iraq was a distraction from the war on terror. (Applause.) We are less secure, not more secure. The terrorists have regenerated, and the president is now attempting to cover up the facts.

MR. MCLAUGHLIN: Question: Is Graham declaring war on Bush's reelection strategy by campaigning on Bush's conduct of the war on terrorism?

MR. BUCHANAN: John, you're exactly right. Now, Graham does not really, in my judgment, have a good shot at this nomination. But the only shot he got is to play his long suit. His long suit is intelligence and knowledge of this terrorism thing. He's got inside dope on the 9/11
report. I think what he's doing, quite frankly, it is risky but it is very smart, because he has nowhere else to go. He is getting headlines, he is getting attention he never got before.

MR. MCLAUGHLIN: Ten years, Eleanor, on the Intelligence Committee, including a tour as chairman. In addition to that, there's no other senator who enjoys higher peer respect than this senator from those peers.

MS. CLIFT: Right. And when --

MR. MCLAUGHLIN: True?

MS. CLIFT: True. And when we listen to Senator Graham, we know that he's been privy to the classified information. And what --

MR. MCLAUGHLIN: But we also know he's running for president. Do we have to happen to have -- (laughter) --

MS. CLIFT: Yeah, well -- yeah, but he's also saying things that nobody --

MR. ZUCKERMAN: Minor detail.

MR. MCLAUGHLIN: Well, no --

MS. CLIFT: -- he's also saying things that nobody else dares to say. But I don't think anybody is disputing his facts. The White House is trying to squelch this report on 9/11. Senator Graham says he doesn't
think there's a smoking gun in it, or even any new information. They just don't want a report out that will kick off yet another debate about how inadequately they prepared for 9/11.

MR. ZUCKERMAN: This is one of those --

MR. MCLAUGHLIN: Also, Mort doesn't, perhaps, realize this. This could be one of those rare instances where there is a convergence of principles and politics.

MR. WARREN: Right. Right.

MR. MCLAUGHLIN: I want to ask you a question.

MR. WARREN: You're right.

MR. MCLAUGHLIN: What's the question?

MR. ZUCKERMAN: You're halfway there, John. The politics are there -- (inaudible) --

MR. BUCHANAN: (Laughs.)

MR. WARREN: Well, the question is, should we -- I mean, should we doubt the guy's motive when in fact there is a factual predicate to what he's saying? And why should there be any great surprise?

MR. MCLAUGHLIN: Well, he says that Bush is hiding -- hiding -- data, covering it up.

MR. WARREN: We went into Afghanistan --

MR. MCLAUGHLIN: That's pretty strong stuff. What does that mean?

MR. BUCHANAN: I'll tell you --

MS. CLIFT: He's covering up a report. (Laughs.)

MR. MCLAUGHLIN: What does he mean?

MR. BUCHANAN: He means -- he's claimed that there was a country that knew about it and aided financially the terrorists, and I believe it's Saudi Arabia. He keeps pushing this line. He did on PBS in December.

MR. WARREN: But the --

MR. BUCHANAN: It was dramatic. He said it hasn't come out, but there is a country behind it, and it ought to come out.

MR. WARREN: But John, the underlying predicate here, I think, he's correct on. Why should there be any surprise? We went into Afghanistan to get Osama bin Laden, and we didn't. We went into Iraq, in part, to sever links with al Qaeda, which may not have actually been there.
What's the end result? The bad guys in Afghanistan are dispersed all over the world. They're probably different -- more difficult to infiltrate. And the preemptive invasion of Iraq leaves us with a region that's -- with probably heightened suspicion of us, particularly those young
Muslim fundamentalists.

MR. MCLAUGHLIN: I don't think Mort is convinced yet. So let's hear a little bit more of Senator Graham.

SEN. BOB GRAHAM: (From videotape.) What this administration has done is, they have conducted an ideological war in Iraq, where they have not
found the weapons of mass destruction upon which it was predicated, and at the same time, they have stopped the war against terror.

MR. MCLAUGHLIN: What do you think of that? He says "an ideological war." What does that mean?

MR. ZUCKERMAN: I don't believe that's accurate. We have not stopped the war against terrorism. That -- we have not suffered a terrorist attack in this country since 9/11, and the only attacks that they've been able to carry on are against soft targets. There was an al Qaeda group
in Iran. They were able to launch an attack against Saudi Arabia. We warned the people in Saudi Arabia. They did nothing about it. And they were able to launch an attack in Morocco. These are not exactly countries -- or Bali. These are not countries which have rigorous security
forces. And at least we alerted Saudi Arabia. So our intelligence is still pretty good. We are going -- we have a major covert war going on all over the world, and I think we're making real progress.

MR. MCLAUGHLIN: I've got a question for you, or any of you.

MR. ZUCKERMAN: You cannot expect to eliminate them overnight.

MR. MCLAUGHLIN: What Mort is saying is they were soft targets, and I'm not talking about -- so much about Riyadh, but certainly Morocco was. And one wonders, you know, why they dropped the bomb in an alley between an Italian restaurant and the Belgian embassy.

MR. ZUCKERMAN: Right. Well, because the pizza wasn't cooked well enough.

MR. MCLAUGHLIN: But let me ask you this. What is the thing that is worrying people the most now, the -- what is the bad news, the new bad news that can come out of Iraq?

MR. ZUCKERMAN: Well, what -- the new bad news that could come out of Iraq is, if you have an implosion there, it is really going to take a lot of our resources, and we will not --

MR. MCLAUGHLIN: What are you talking about? Are you talking about a civil war?

MR. ZUCKERMAN: I don't think it has to be a civil war. It's just chaos, chaos --

MR. MCLAUGHLIN: Well, what I hear is what they're really worried about in the neighborhood is a civil war. Now what do they think ought to be done to stabilize, more than anything else, the situation in Iraq?

MS. CLIFT: More troops.

MR. BUCHANAN: John, what you've got to do -- look, she is exactly right.

MS. CLIFT: More troops.

MR. BUCHANAN: You better put in -- Shinseki was right. You will need --

MR. MCLAUGHLIN: All right. Where are the troops supposed to -- should they come from, according to those who are in the region?

MR. BUCHANAN: Well, listen. The United States' are the best ones. We ought to get them from NATO --

MR. MCLAUGHLIN: We ought to get them from the multinational forces and get the U.N. in there now, with their multinational forces. That's what they're saying.

MR. WARREN: Absolutely --

MS. CLIFT: You know what -- but no one --

MR. MCLAUGHLIN: This is not an effort to establish any --

MR. BUCHANAN: They ought to use NATO, John.

MR. WARREN: Absolutely --

MR. BUCHANAN: It would help unite NATO, and you'd get more troops in there. That's what you need --

MR. MCLAUGHLIN: You don't want to send U.S. troops, because you don't want to bear the financial burden. Is that it?

MR. BUCHANAN: No, no. I think you can have U.S. troops, but you can't -- that'll take half your Army in there.

MR. MCLAUGHLIN: Four hundred thousand --

MS. CLIFT: You should internationalize the situation.

But look, what Senator Graham is doing -- instead of looking at everything like this triumphal president, who's won the war, he is pointing out that in less than three years of this administration, we had three
major intelligence failures: 9/11, these recent attacks, and the failure to find those weapons of mass destruction is an intelligence failure, either in what was produced or how it was interpreted.

MR. MCLAUGHLIN: And we don't know where Saddam is, and we don't know where Osama is.

MR. WARREN: And those intelligence failures --

(Cross talk.)

MR. MCLAUGHLIN: Quickly! We've got to get out.

MR. WARREN: Those intelligence failures are unsettling, in that ultimately it's not regime change but good -- old-fashioned good intelligence and police work which will help us in the war on terrorism.

MS. CLIFT: Right. Right.

MR. MCLAUGHLIN: Exit -- go ahead.

MR. ZUCKERMAN: What we need in Iraq is police, and where we can get the police is not from NATO but from Jordan, for example, where they speak Arabic and they know that part of the world. And they needed the U.N. resolution to get that, which they now have. So I think that situation's going to improve.

MR. MCLAUGHLIN: Do you think the king is going to ignite a firestorm in Jordan by sending his policemen over to Iraq?

MR. ZUCKERMAN: In the context of a U.N. resolution, that is a possibility. We have asked them.

MR. MCLAUGHLIN: Exit question: Politically speaking, is Graham's frontal assault on Bush's war credentials foolish or brilliant?

MR. BUCHANAN: It is necessary for him, because he has no other card to play, and it is wise, because he's the only one playing this. It may not work, John, but it's the one card he has. It's gotten him enormous attention on "The McLaughlin Group." (Laughter.)

MS. CLIFT: Somebody's got to say the emperor has no clothes, and he may force us to look at some of the security failures, instead of just bragging about the successes --

MR. MCLAUGHLIN: Well, he's going right to the heart of one of Bush's two campaign presentations for success, one of his two dominant credentials. What do you think of that? And he's merciless on it.

MR. WARREN: The answer to your question is, I think he's largely factually accurate but, as far as the politics and impact, impotent.

MR. MCLAUGHLIN: What do you think?

MR. ZUCKERMAN: I think he's playing into Bush's strength. Bush's weakness is the economy. If the Democrats have any chance at all, it's to make the economy the issue. They're not going to overcome the sense that Bush has been a brilliant political leader and war leader in both Afghanistan and Iraq.

MS. CLIFT: (Inaudible.) (Laughs.)

MR. BUCHANAN: But he can't do that, Mort. The problem is that he can't do that.

MR. ZUCKERMAN: Who can't?

MR. BUCHANAN: I mean, this guy -- he's only got one card to play.

MR. ZUCKERMAN: No, that's what I'm saying. But if you ask me whether it's a brilliant political strength, for him it is, but not for the --

MR. MCLAUGHLIN: The answer to my question is --

MS. CLIFT: Yeah, yeah, but Bush has not been a brilliant war leader, and somebody ought to be able to say that. And maybe some people out in the country will wake up and see that as well -- (inaudible) -- November 2004.

MR. BUCHANAN: We've seen the truth, right, Eleanor? (Laughter.)

MR. MCLAUGHLIN: The answer to my question is, it's a brilliant action, and it's an audacious action, and it's like Teddy Roosevelt going up San Juan Hill.

When we come back: How does Bush expect to win reelection if the nation is caught in a deflationary spiral?

(Announcements.)

MR. MCLAUGHLIN: Issue two: a new tax cut. On Friday Congress passed a $350 billion tax cut, and also it announced new spending. These are the main points:

The tax cut provides for dividends and capital gains taxes cut -- top bracket now 15 percent, the bottom two brackets now 5 percent through 2007, dropping to 0 percent 2008, and -- get this -- sunsetting in 2009.

The child tax-credit is now $1,000 through 2004.

The income-tax brackets are cut -- this will be very pleasing to Mort Zuckerman -- get a load of that, Mort -- (laughter) -- a 3.6 percent drop in your bracket, 38.6 to 35; 35 to 32; 30 percent to 28; 27 percent
to 25 percent beginning in 2003. Many tax cuts will sunset in 2005. There's a lot to be said about that. I don't know if we have time to talk about it.

Aid for states, $20 billion, half for Medicaid. And that's about it.

The question -- this is not the tax cut that Bush wanted. Why couldn't he get what he wanted? Should he be embarrassed by what he got?

I ask you, Pat.

MR. BUCHANAN: Well, let me tell you something. These things aren't going to be sunsetted. This is an $800 billion tax cut over 10 years. None of these provisions are going to be sunsetted. It is very dramatic. It is tilted very much toward the fairly well to do, but $200
billion is front-loaded in the next two years. John, he's got --

MR. MCLAUGHLIN: Is this sunset thing a trick? (Laughter.)

MR. BUCHANAN: Yes, it is a trick! (Laughs.)

MR. MCLAUGHLIN: It is a trick! They did it that way to keep the initial number low.

MR. BUCHANAN: Trick or treat, they got it! (Laughs.)

MR. MCLAUGHLIN: They'll get up to what, 2006 --

MR. BUCHANAN: They're thinking of ending the sunset --

MR. MCLAUGHLIN: -- and they'll say we can't let this -- we can't bring big taxes back.

MR. ZUCKERMAN: It's not a trick or treat, it's a trick and treat. I mean, it's not either/or. Of course it's not going to go --

MR. MCLAUGHLIN: Okay --

MR. ZUCKERMAN: The interesting thing, though, is it going to help the economy? And that is where I have many more doubts about it.

MR. MCLAUGHLIN: Do you think -- Bush has been very rough with the Congress, both parties, in fact. Then he went after Voinovich and he did his number out there. Then he tried to rubber-hose a couple and to bring them back in. Do you think that anything in this vote -- in this
new tax package, and not giving him what he wanted, is owing to the bad -- or questionable legislative liaison between the White House and the
Hill?

MR. WARREN: No, I think by and large a lot of -- most folks, particularly Democrats, are rather spineless. He's going to be able to campaign about this huge cut. And speaking on behalf of the Warren/Clift pauper constituency in this group here -- (laughter) -- not particularly
impacted by this, I might say when even the left- leaning Wall Street Journal suggests that this may not be worth the long-term economic and social consequences in the form of the gap between the rich and poor --

MR. MCLAUGHLIN: Okay --

MS. CLIFT: Close to 70 percent of the public doesn't think it's going to help the economy! (Laughs.)

MR. MCLAUGHLIN: Okay, hold on. We cannot leave this program without playing what the head of the Fed said about the dreaded "D" word.

ALAN GREENSPAN (chairman, Federal Reserve Board of Governors): (From videotape.) We at the Federal Reserve recognize that deflation is a possibility. We do, obviously, have a problem that we never dealt with
this before. The potential consequences are very substantial and could be quite negative. Not as an imminent, dangerous threat to the United States, but a threat that, even though minor, is sufficiently large that
it does require very close scrutiny, and maybe, maybe, action on the part of the Central Bank.

MR. MCLAUGHLIN: Mort, does that worry you?

MR. ZUCKERMAN: Yes, but it's a minor threat. The real threat, I believe, is increasing unemployment. If we have increasing unemployment, we are going to have a major recession as a second dip here, and this economy will really get into trouble. That's much more worrisome. And
that will produce even more deflation and anything else you can see on the horizon.

MR. MCLAUGHLIN: When was the last deflationary spiral?

MR. BUCHANAN: It was in 1929, 1930 --

MR. MCLAUGHLIN: The Great Depression?

MR. BUCHANAN: -- when one-third of the money supply was wiped out --

MR. MCLAUGHLIN: Was there irrational -- was there irrational exuberance in the stock market before that?

MR. BUCHANAN: There was, right up until about the fall of 1929. (Laughs.)

MR. MCLAUGHLIN: Pat, you're right on. We'll be right back with predictions.

(Announcements.)

MR. MCLAUGHLIN: Predictions, Pat.

MR. BUCHANAN: The falling dollar will ignite a trade war with Europe before the end of the year.

MR. MCLAUGHLIN: Eleanor?

MS. CLIFT: More Americans will die in Iraq after the statue of Saddam came down than died in the drive to Baghdad.

MR. MCLAUGHLIN: James Warren?

MR. WARREN: Unable to raise money, not surprisingly, former Senator Carol Moseley Braun will be the first Democratic presidential candidate to drop out.

MR. MCLAUGHLIN: Mort Zuckerman?

MR. ZUCKERMAN: President Bush will appoint a high-level special envoy to try and negotiate the Middle East peace process forward.

MR. MCLAUGHLIN: Who will that be?

MR. ZUCKERMAN: That's going to be an interesting question. It's going to be a very high-level official, though.

MR. MCLAUGHLIN: Not Bill Clinton?

MR. ZUCKERMAN: No way. (Laughter.) No way.

MR. MCLAUGHLIN: What's wrong with Bill Clinton in this regard? (Laughter.)

MR. BUCHANAN: James Baker!

MR. ZUCKERMAN: I bet you that George Bush can think of about 20 reasons. Just a thought. Just a hunch.

MR. MCLAUGHLIN: He gave a speech in 2001 before a Jewish group --

MR. ZUCKERMAN: Right.

MR. MCLAUGHLIN: -- Jewish Americans --

MR. ZUCKERMAN: Right.

MR. MCLAUGHLIN: -- and it's the best thing that's ever been written on this subject, and it's acceptable to both and it synthesizes George -- who am I thinking of?

MR. ZUCKERMAN: It wasn't acceptable to either. The Palestinians rejected it and the Israelis rejected it. So, why do you say it's acceptable to both?

MR. MCLAUGHLIN: I predict that William Rehnquist this summer will retire from his post as chief justice of the United States Supreme Court.

Next week, what can the Democrats do to win the White House in 2004?

Happy Memorial Day. Bye-bye.

PBS SEGMENT

MR. MCLAUGHLIN: Issue three: Nature conspiracy?

The Nature Conservancy is the world's richest environmental organization, with $3.3 billion in assets. Its wealth is collected from donations of land and cash, and the latter is used to purchase land that is resold to developers who pledge to use it in benign ways; that is,
protecting the land from overdevelopment and protecting, thereby, sometimes, endangered species living on the land.

Noble behavior, but there are exceptions, as a Washington Post investigation revealed recently. Natural gas drilling on conservancy land. The conservancy okayed the drilling, then profited from the sales revenue. The drilling, by the way, nearly wiped out a highly endangered
species. Cash loans to conservancy executives, including $1.5 million to its president. Selling conservancy land at cut rates to board members. The land is then turned into home sites for many board members' massive estates. In one example, land in the Hamptons, valued at $2.1 million,
was sold by the conservancy to the member for $500,000. The discrepancy, $1.6 million, is later -- get this -- made up as a charitable contribution to the conservancy, a strategy that allows a conservator, i.e., board member, hundreds of thousands of dollars in tax breaks. These
shady deals gave the conservators the right to build a house of unrestricted size, and garages, a swimming pool, a tennis court, guest cottage, writer's cabin, and authorized tree cutting on the protected land in order to allow the owner -- quote, unquote -- enjoyment of views.

Question: Why are these deals so odious?

Eleanor?

MS. CLIFT: Because they smack of the same sort of insider dealing that went on at Enron and WorldCom, where the board gets all these sweetheart deals.

However, there are some extenuating circumstances here. The board of trustees -- these are not paid people the way they are in the corporate world. They are volunteers around the country who form these advisory
boards, and in some cases -- the footage you showed of that grand home -- they do sell them at reduced prices, and in exchange, though, just the one home gets built, as opposed to intensive development -- that does protect the sensitive areas around. It doesn't look good, and I think they're going to reform their ways --

(Cross talk.)

MR. MCLAUGHLIN: How do you like Eleanor's attempt at white- washing?

MR. WARREN: No, we need -- admittedly, these guys have done ample good for the whole environment. They've done ample good with biodiversity and managing.

MR. MCLAUGHLIN: But? But?

MR. WARREN: They are afflicted with the same ails of growth and corporate smugness and haughtiness and errors of corporate governance that we've seen across the spectrum. By the way, is that South Hampton stuff
near you?

MR. ZUCKERMAN: No. No, that's a much too expensive a neighborhood for me.

MR. BUCHANAN: East Hamptom, he's not South Hampton --

(Laughter.)

MR. ZUCKERMAN: Is there a real problem here.

MR. MCLAUGHLIN: Is there a -- are there criminal charges --

MR. ZUCKERMAN: I don't know if there's a criminal charge, but there is a clear attempt here to get a tax deduction for something you can't get a tax deduction for. When you buy a home, you can't get a tax deduction for the land that you purchased.

MR. BUCHANAN: John --

MR. MCLAUGHLIN: What about mail fraud?

MR. BUCHANAN: It is goo-goo racketeering from beginning to end. And all these tax-exempt charities and foundations and think tanks -- it's the same as Enron; Eleanor's right.

MR. MCLAUGHLIN: Worse than the double -- the Red Cross double cross? Worse than that?

MR. BUCHANAN: The world, the flesh and the devil --

MR. MCLAUGHLIN: Worse than the Red Cross double cross?

MR. BUCHANAN: It's right on that category, John.

MR. MCLAUGHLIN: Worse, because this is hypocrisy, and it may be --
####

END