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This Week with George Stepanopoulos

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SHOW: THIS WEEK WITH GEORGE STEPHANOPOULOS (10:30 AM ET) - ABC

HEADLINE: DEMOCRATS DEBATE CONVERSATION WITH TERRY MCAULIFFE AND LINDSEY GRAHAM

BODY:
GEORGE STEPHANOPOULOS, ABC NEWS

(Off Camera) Senator Graham?

SENATOR LINDSEY GRAHAM,

REPUBLICAN, SOUTH CAROLINA

Well done. I guess if I was the Democratic Party Chairman I would say that also. To be honest with you, national security is important post-9/11. And you cannot talk about who is going to be the next President without looking at their ability to lead in tough times, at that's gonna be something the President will bring to the table. Two years from now, a year and a half from now he'll have a record of having led the nation during difficult times. He is trying to create jobs. We do have a sluggish economy here and at home and throughout the country. Now the time, Terry, to give money back to the business community and consumers to grow the economy and our Democratic colleagues in the Senate are fighting us at every turn, trying to create an economic stimulus package to grow the economy. In the '90s we cut taxes twice and we controlled our spending. The best way to get this economy going back is to help the President cut taxes so the consumers will have more money and businesses can grow. But the left or right wing of the Democratic party is way left of center of the country. I enjoyed the debate. I think it's healthy for people to have different views of how to get there. But the views of the Democratic party on to how to get there on taxes are out of sync with the American public.

GEORGE STEPHANOPOULOS

(Off Camera) Before we get to taxes, let me stick on national security for one more second, before we're ready to go on the economy. And Senator Graham, another thing that Governor Dean said yesterday was that if a fundamentalist regime took over in Iraq, that could be far more dangerous than Saddam Hussein because as he said you saw Saddam Hussein was never really much of a threat anyway. What do you make of that argument?

SENATOR LINDSEY GRAHAM

Well, he is the odd guy out. Howard Dean is in a bad spot. He was very antiwar, he thought this whole process should have been deferred more to the UN. He is sort of the odd guy out among the major Democratic candidates. I think he's got it totally all wrong that Saddam Hussein was a dictator, deserved to be removed. Joe Lieberman sees it that way. Joe is right. The President has done a good thing by taking a dictator who has a desire to possess weapons of mass destruction to help terrorists out of play. I don't think Iraq is less stable, I think it will be more stable over time. What the Iraqi people do in the next year, year and a half will be up to the Iraqi people and I do believe the forces of democracy will win out. And I know it's better to have the forces of democracy having a voice in Iraq versus being in jail and tortured in Iraq.

HOWARD DEAN

(Off Camera) Okay, let me close this section by asking the same question I asked Mr. McAuliffe. Do you think that every Democrat on the stage last night was a credible commander in chief?

SENATOR LINDSEY GRAHAM

I think every Democrat is a good American exercising their right to pursue the highest office in the land and I think they're all going to lose badly to President Bush.

GEORGE STEPHANOPOULOS

(Off Camera) Okay, now let's go back to another clip.

TERRY MCAULIFFE

George, stay on the military issue for one second. Because I want to be perfectly clear for the Democratic party. We stand very strong on supporting our military to make sure we're strong abroad. The Democratic party, if you go back to Franklin Delano Roosevelt through Harry Truman through Lyndon Johnson, John F. Kennedy, if you look at many of the weapons that were used in Iraq, they were designed under Democratic presidents. If you look at the Stealth bomber, you look at the B-2 bomber, those were all done under President Carter. If you look at President Clinton, if you look at the Longbow Hellfire missile, that was developed, which was very successful in Iraq, under President Clinton. President Clinton added $112 billion, the longest sustained military buildup we had seen since the Cold War. Bill Clinton raised the pay of our military personnel, the first time in a decade. Bush, Quayle, Cheney, as you know, cut defense spending by $55 billion. We are strong on defense. And we will always be strong on defense. But you know what, that the stronger we are here at home, George, the stronger we're gonna be abroad. Our President should be able to do both, overseas and here at home, and George Bush has failed miserably here.

GEORGE STEPHANOPOULOS

(Off Camera) Senator Graham, you're smiling.

SENATOR LINDSEY GRAHAM

Well, that's a great sound bite. But I love this match up. Who do you like best as commander in chief, Bill Clinton or George W. Bush?

TERRY MCAULIFFE

Well, let's wait till November 2nd, 2004. We beat his father. We're gonna beat his son.

SENATOR LINDSEY GRAHAM

I hope, I hope, well, that's, this will be fun. Bill Clinton or Bush or commander in chief.

GEORGE STEPHANOPOULOS

(Off Camera) Let's turn to another big item in the debate last night, health care. Democrats were again divided and Congressman Dick Gephardt who came out with a plan just a couple of weeks ago seemed to take most of the fire. Let's look.

GEORGE STEPHANOPOULOS (CONTINUED)

(Off Camera) Couple of weeks ago, Congressman Gephardt put out a plan that he says is gonna cover 97 percent of the American people. He covers everyone by doubling the tax deduction to employers requiring them to give health insurance and says he's going to pay for it by repealing almost all of the Bush tax cut. Senator Edwards, what do you think?

SENATOR JOHN EDWARDS

I think that's taking money that people desperately need, giving it to people, the very people that we've had trouble with. We've had an enormous problem with the corporate culture in America. To me, to me this is what it feels like. It feels like saying, you're in good hands with Enron. We will trust you. We will trust corporate America to do what's right for its workers to make sure they're taken care of.

GEORGE STEPHANOPOULOS

(Off Camera) Let me stop right there. You have just made a very, very tough charge against Congressman Gephardt. You said taking money from working people. So you think his plan is a tax increase on working people?

SENATOR JOHN EDWARDS

I think it takes money directly out of the pockets of working people.

GEORGE STEPHANOPOULOS

(Off Camera) And gives it to corporations?

SENATOR JOHN EDWARDS

I know, I know it gives it to corporations.

GEORGE STEPHANOPOULOS

(Off Camera) Congressman Gephardt?

REPRESENTATIVE RICHARD GEPHARDT,

DEMOCRAT, MISSOURI

Well, I couldn't disagree with John more. I respect his views, but he's wrong on my plan. First of all, let's talk about what we're trying to do. We've got to get everybody in this country covered with good health insurance. This plan can pass and it will do it.

SENATOR JOE LIEBERMAN

With all respect to Dick Gephardt, if his plan were implemented it would take as much money out of the Social Security and Medicare trust funds as the Bush tax cut.

REPRESENTATIVE RICHARD GEPHARDT

I want to give the American people a choice. If you like George Bush's tax cuts stick with him. Vote for him but if you want to finally solve this problem that's bedeviled our people for a hundred years, let's get it done.

GEORGE STEPHANOPOULOS

(Off Camera) You obviously have differences here over health care, excuse me, and there also seems to be a difference over taxes. Some of you have called for freezing the Bush tax cut where it is. Congressman Gephardt has said he's willing to repeal almost all of it. Congressman Kucinich says raise the payroll tax. You know exactly that President Bush and the Republicans, and the employers. You know what President Bush and the Republicans are going to do. They're going to come out and say, there they go again. Democrats are raising taxes and we just have one, one question. Is there anyone on the stage willing to say, willing to rule out raising taxes as President of any kind?

HOWARD DEAN

All I'm gonna do is, all I'm gonna do is, wait a minute. All I'm going to do is put the tax rate to where it was when Bill Clinton was president. 'Cause we did a lot better under Bill Clinton than we are under George Bush.

GEORGE STEPHANOPOULOS

(Off Camera) That may be more...

REVEREND AL SHARPTON

You've got to really distinguish between raising taxes and canceling the tax breaks that Mr. Bush has given.

GEORGE STEPHANOPOULOS

(Off Camera) Let me ask you that. People say there's no difference. How do you respond when they say that? What are you gonna say to that?

REVEREND AL SHARPTON

First of all, I call George Bush's tax breaks, even the small amounts that he gave working class people, is like Jim Jones giving Kool-aid, it tastes good but it'll kill you. In the long run, in the long, it puts the entire nation in debt. It is mortgaging our grandchildren.

GEORGE STEPHANOPOULOS

(Off Camera) Reverend Sharpton says that. Senator Graham?

SENATOR LINDSEY GRAHAM

We need more Democratic debates. I believe they should debate every week between now and the election. It's a interesting exchange there, very much so. There they go again. Well done, George. I think people are being honest. John Edwards understands that if you take money away from the American consumers in a down turned economy, it's not gonna play well. But he misses the big picture. He's from Seneca, he talks about being from Seneca, South Carolina. And I like John. I live in Seneca. We were both born in the same hospital two years apart. I'm a Republican Senator from South Carolina living in Seneca. His uncle is on my finance committee. John is a nice man. People like him. But George W. Bush is going to beat him like a drum in Seneca, South Carolina.

SENATOR LINDSEY GRAHAM (CONTINUED)

This idea, this idea of taking the tax cut off the table and creating universal health care is a bad idea. I admire Gephardt for having an idea. But his colleagues are right, it will not play well with the American public, to take the money away from them and try to create universal health care. But the Democratic party, class warfare is alive and well. They don't get it, that people do understand to create jobs, you have to have across-the-board tax cuts. Consumer spending's important, but we need investment opportunities in this country to grow our business environment. Double taxation of dividends, if you did away with that, people would buy more stock. People in Seneca get it. Don't treat us all like we're just, we all buy into class warfare. We live on hope in this country. And the hope is that we can do better than our children. And we need a more robust economy and taking away the tax cuts is the wrong way to do it.

GEORGE STEPHANOPOULOS

(Off Camera) But Terry, do you fear the Democrats are gonna be vulnerable on this issue of taxes? All of them are for at least freezing the Bush tax cut. Reverend Sharpton says you have to distinguish between that and a tax increase. But you know what Senator Graham and his colleagues are gonna say, it's a tax increase.

TERRY MCAULIFFE

Well first of all, the Democrats are for tax cuts. We have consistently been out. John Spratt, great member of Congress, from the great state of South Carolina, has a plan on the table today. Kent Conrad in the United States Senate. We're for tax cuts that go to the middle class. We, are for tax cuts, let me finish. Excuse me. I don't know how you do it down here but I would like to finish my statements, thank you.

SENATOR LINDSEY GRAHAM

That was rude of me. I apologize.

TERRY MCAULIFFE

Accepted. We're for targeted tax cuts that go to the middle class. We're for targeted tax cuts that go to the small business, give an incentive for people to create jobs. You know, listen, the first tax cuts that George Bush did, did not create one job in America. The gigantic tax cuts that we had, we've now gone from record surpluses in our nation under your hero Bill Clinton, to now we have record deficits. We've seen a $7 trillion swing. You said yourself in the 2000 campaign that the Bush tax cut plan was a disaster. You were not for it, if you remember. This plan did not work. You were right back then, you are right now. They don't work to create. We can't have the deficits that we have today. You were someone who fought for the contract on America. The deficits that we have now are choking middle class. We don't have jobs in America. This president has not created jobs. 2.8 million jobs have been lost since this man became president. He's the first president to go down that will have has lost jobs on a net basis. Let's do tax cuts for the middle class.

SENATOR LINDSEY GRAHAM

May I respond to my friend over here. Heavily invested in the stock market. Good for you, but let me respond.

TERRY MCAULIFFE

Is there something against making money in this country, Senator? You talk about class warfare, you shouldn't try and create here.

SENATOR LINDSEY GRAHAM

No, I love it, it's a good thing. 12 Democrats voted for the 2001 tax cut. It was a bipartisan tax cut to lower the rates. You wanna go back to the rates under Clinton, they're almost 39 percent. 12 democrats joined in lowering the rates, eliminating the marriage penalty, giving a thousand dollar per child tax credit. And their Democratic nominees for president want to freeze or take that tax cut away. In Seneca, South Carolina, there are many people raising families on 40 and $50,000 as a couple. That thousand dollars per child tax credit they need. But there's companies in Seneca, South Carolina, trying to grow their business, they need more investors. Your idea of growing this economy by hoarding money in Washington and not sharing it with the American economy is not gonna sell. President Bush is at 71 percent for a reason. They like him. They trust him. They know he'll make hard decisions. He'll stand up to the face of evil and not have it both ways. He'll go to the UN and try to get world support but when the UN fails to do its job the way it should, he will not be locked in by the UN. He will defend this country. He's going to grow this economy and Democrats need to help him. This is going to be a wonderful exercise in democracy but at the end of the day your party is out of sync with the American public.

TERRY MCAULIFFE

Well, let me tell you what's happening in Syracuse, New York. Where I grew up, Senator, people out of work today and they want jobs. And this president hasn't been able to create a job. And I remind everybody watching the show today, guess what, you control the House. You control the Senate. Why can't we get a bill passed today? Because, first of all, two of your old members of the United States Senate, two Republicans, Senator Snow, Senator Voinovich, say they're wrong. You control the House and the Senate. Well, let's get it passed if it's so good. And what do you guys do? You go out and attack your senators for...

SENATOR LINDSEY GRAHAM

You're using your minority status in a historically devastating way.

TERRY MCAULIFFE

You could get the tax cut if you could get your senators to do it. But what is your White House do? You go out and attack them. You call them unpatriotic. So you shouldn't...

SENATOR LINDSEY GRAHAM

The Democratic party is standing in a way...

GEORGE STEPHANOPOULOS

(Off Camera) Wait one second, guys. Time out. More fireworks than South Carolina. Must be something in the water here. We only have, a minute left. Big decision came out of the Federal appeals court this week on McCain/Feingold, struck down parts of the law. Are you going to now start raising soft money again?

TERRY MCAULIFFE

Our lawyers are looking at, I believe it's a 1600-page opinion. They've been looking at it all weekend. They will inform me in the next couple of days. If the United States Supreme Court doesn't stay the decision and if the lawyers, I read in the paper today that Tom Davis, Republican congressman, announced that they are going to begin raising money immediately but I'm going to wait at least until my lawyers give me the okay.

GEORGE STEPHANOPOULOS

(Off Camera) You supported McCain/Feingold. What's the impact of this decision?

SENATOR LINDSEY GRAHAM

I'm very proud of the President signing it into law. We need to ban soft money. It hurts the legislative process. The Supreme Court will look at this decision anew. I hope my party will not go into the soft money business. That's not up to me. But I'm proud of my President for trying to clean up the system. I'm proud of John McCain for being a leader. And at the end of the day, George W. Bush signed the bill for all the right reasons. And I hope the courts don't screw it up.

GEORGE STEPHANOPOULOS

Senator Graham, Mr. McAuliffe, thank you very much. We'll be right back.

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