SYNOPSIS:

ROBERTS: Well, we'll try to answer that question, 'Can he come back?', on our ROUNDTABLE. George Will is with us, as always. Hi, George.

GEORGE WILL reporting: Good morning.

ROBERTS: And joining us today is Paul Krugman, a columnist for The New York Times and author of "Fuzzy Math." Thanks for joining us, Paul. So, George, after being out there, what do you think?

STEPHANOPOULOS: Probably not. But I--I--I--with two caveats. Number one, if the police come out and say, 'Listen, he had absolutely nothing to do with this and we found out who did,' there could be something of a Richard Jewell effect, where Condit can play on the backlash. And secondly, Ross also said in the interview--we couldn't show it--but in 1996, they ran a poll in the district where they just said to the people, 'What do you call your congressman?' Over 50 percent said, 'Gary.' You know, in most districts 90 percent of the people don't know who their congressman is.

ROBERTS: That's unbelievable.

STEPHANOPOULOS: So he does have an unusual personal relationship with his district. He might be able to fight back, but I think it's tough.

WILL: Yes. Thirty years of constituent service might pay off in this. And--and there has been, obviously, an element of piling on, and there has been the planted axiom that somehow he's responsible probably for her death. If she's not dead, or if he had nothing to do with her and she is dead, then there will be a reaction.

ROBERTS: But what about the conversations with the police? I mean, you're--you're bringing up that he didn't tell them the whole truth until--until the third interview, the other stories that have come out about him. I mean, does--does all of this mean that he's just--just runs and ignores all of that?

Mr. PAUL KRUGMAN (The New York Times): I have a special 'no Condit' clause in my contract with The New York Times. But let me say, there is an issue behind all this. He's--supposed he's cleared of all this, he's also a hypocrite. I mean, this is the guy who wanted to put the Ten Commandments in every school. So, there--there's an issue. You know, even, you know, it appears--we have to presume that he's innocent, that he had nothing to do with it, but, you know, this is a--this is some guy who's pretending to be something he isn't.

ROBERTS: Well, we'll see if all that makes a difference. Of course, the thing that seems to make a huge difference is the wives. And his wife is writing notes asking people to support him. I don't know what's with these women. More thoughts from the ROUNDTABLE after this.

(Commercial break)

Announcer: THIS WEEK, with Sam Donaldson and Cokie Roberts, will continue in a moment after this from our ABC stations.

(Commercial break)

ROBERTS: We're back with our ROUNDTABLE. Looking forward to a week when there's going to be a lot of to-ing and fro-ing between the Democrats in Congress and the Republican White House on the subject of the federal budget. Is the surplus shrinking? Will we dip into the Social Security Trust Fund? Did the tax cut cause it? These are all of the questions you're going to be hearing debated in the weeks to come. And Paul Krugman, this is your subject. Go to it.

Mr. KRUGMAN: OK. The important thing to realize is that a billion here or a billion there doesn't matter. What's really at stake here is credibility.

ROBERTS: He's Everett Dirkson.

Mr. KRUGMAN: That's right. Well, but that isn't even real money these days. It--it's really a credibility issue. I mean, we were told this tax cut is going to, you know, fit easily within the budget. There's plenty of room to do all kinds of other things. And it actually--those of us who looked at the numbers--that was--I wrote a little book called "Fuzzy Math," but I knew that that wasn't true. And I think the administration knew that that wasn't true. But they didn't expect the truth to hit quite so soon. They expected to have a couple of years to build their political base before it began to become clear that they were actually going to raid the trust funds to pay for it. Now, what's happened, for a variety of reasons, the rebate, the--the slump in the economy--I think we can--almost ready to call it a recession, the--some other things that the--the--end of the bull market in stocks, etc., etc., it--now is the time. And so, they're doing crazy stuff.

ROBERTS: Well, is this crazy stuff, or is this anything anybody cares about?

WILL: Well, it--it's a highly complicated bookkeeping argument about the government. What Democrats call 'raiding the Social Security surplus' should be understood to be standard operating procedure for more than a generation. First of all, running a surplus of any sort is morally dubious because it's the government taking more money than it needs. That's why it's called a surplus. Second, running a surplus during a slowdown is peculiar. Running a surplus and trying to preserve a surplus, as some Democrats suggest, by raising taxes during a slowdown indicates that...

ROBERTS: You're sounding like a Cainsian (ph).

WILL: ...but indicates the Democrats have a certain versatility of conviction.

STEPHANOPOULOS: George, you may have been around for a generation before, but the fact is, for the last couple of years it's been against the law. You've had over 400 members of Congress vote--not just Democrats, but Republicans as well--to protect the Social Security Trust Fund and to protect the Medicare Trust Fund. And now there's no question it's going to get dipped into. But I wanted to ask--ask Paul, one of the big debates is going to be whether or not the administration is really using gimmicks, and whether or not their estimate of economic growth--which is about 3.2 percent--is in line with standard economics now?

Mr. KRUGMAN: It--it's--it's much higher than the typical private sector forecast. And all the private sector guys are marking their forecasts down, because this is looking worse than we thought. It's also treating--they suddenly changed a 65-year-old accounting rule, just, you know, a couple of days before their budget announcement, to move the numbers up $4 billion so they could be on the right side of a particular line. You know, you can argue--it's too technical, the rule is very technical--but the question is, why now?

ROBERTS: But, George, I've been here before and so have you. This is the argument over the Office of Management and Budget estimates vs. the Congressional Budget Office estimates. This is not something Americans are sitting home and saying, 'Oh, CBO says one thing, OMB says another,' are they?

WILL: And the chances are excellent most Americans know that both are wrong. It wasn't too long ago that we've had deficits--$200 billion deficits--as far as the eye could see. What we've learned is that eye can't see that far over the horizon.

Mr. KRUGMAN: Ah, but...

STEPHANOPOULOS: Well, but if the CBO has been generally much more accurate over time--and listen, we don't have to go far to see how wrong the Bush administration estimates have been so far this year. In April, when they were trying to pass their tax cut they predicted 2.4 percent growth this year. This week they revised it to 1.7 percent. That's about a $90 billion difference in the budget.

Mr. KRUGMAN: It's really important to...

ROBERTS: I'm ask--but--but what I'm asking here, though, is a political question. I mean, is anybody really going to sit around, concerned about this? And--and we have coming this week--the Social Security Commission is coming to town. Is--is--are people going to put together the Democrats' mantra that this is raiding the Social Security Trust Fund, with the Social Security Commission coming to town, and have a political reaction to it?

STEPHANOPOULOS: It becomes a political question, I think, only in this respect: is that if you can pin the issue of incredibility on one side or the other, and--and you have to look at whose numbers are standing up over time.

Mr. KRUGMAN: Yeah, and let me just say, this is going to keep on happening. It's going to happen year after year. This is not a one-time event that'll all look fine next year. It's going to keep happening. So, what the Democrats are trying to do is build a case. They don't really think they're going to roll back the tax cut this fall. What they think is that they're going to build a case so that by about 2003--when it becomes obvious that this thing has, in fact, wiped out the surplus, that we're, in fact, not going to be accumulating enough reserves to pay into Social Security benefits--then they'll be in a position to roll back the tax cut. They may not succeed, but that's the plan.

WILL: Paul, I envy your certitude about what's going to happen year after year after year, but did you predict, for example, the kind of surpluses--10 years ago, did you predict the kind of surpluses we've recently had?

Mr. KRUGMAN: No, I didn't, but did you have to ask which way are the risks lying? And the fact is CBO and--and OMB are both wrong. It's much worse than that. Everyone who's looked at the numbers knows that they're both wildly over-optimistic.

ROBERTS: Well, Paul talks about building the case for 2003, but we've got, coming up next month, or in a few weeks, the whole question of...

STEPHANOPOULOS: The battles' being joined.

ROBERTS: ...of appropriations bills. Well, we just heard Governor Kitzhaber say, 'We need more money for healthy forests.' You know, there's--everybody needs more money for something. And the president wants more money for both defense spending and education spending. How do they do this?

STEPHANOPOULOS: And so what the Democrats are doing is holding out the education and defense bills until the very end. So that if they--if they--if the increases aren't there they're going to be able to say it's Bush's fault because the tax cut ate it all up. The real important question, I think, is going to be, in all those bills, as you point, before there, will President Bush actually stick to the pledge that Vice President Cheney made on this program several months ago where if any appropriations bill was over 4 percent growth would he veto it? And I think they say now that he's willing to do it. It's unclear whether that will happen.

WILL: But if he does it, it will be harder for his critics to say, 'Look he's raiding this or that trust fund.' He'll say, 'No I'm not raiding it, I'm protecting it by using the presidential veto.'

STEPHANOPOULOS: If he does that...

ROBERTS: But--but what about--but what about the political question there? Because, of course, each one of these boardrooms has its supporters and they tend to be quite popular. So is he vetoing poor farmers, or is he vetoing, you know, little children and after school programs, or one of those?

WILL: Well, first of all, federal sub--farm fund subsidies do not go to poor farmers, they go to very rich farmers...

ROBERTS: But you know what I'm saying.

WILL: ...which is why they're rich. Yes. I--the question is, and we're going to find out, is there a larger general constituency for frugality than there is particular contituencies for spending.

ROBERTS: And we've never seen that before?

WILL: No.

ROBERTS: So, do you see--what do you see happening here, and is this--as they battle this out?

Mr. KRUGMAN: There's no way he's going to get out of it without the feeling that he's broken promises. I mean, the--the tax cut wasn't the only promise. There were promises to the military, there are promises of prescription drugs. How it plays, I don't know, because I have to say I've been impressed by the spinelessness of the Democrats and the Republican moderates. So it may be that--that, you know, that--they fudge and they finagle, and--and the--the Bush administration just slides through all of this. You know, there are some Democrats who are determined that that won't happen. But they've been determined about a lot of things that haven't happened.

ROBERTS: Now, the other issue that he--that President Bush talks about this weekend, and it has come--it will be on the agenda come the fall, is faith-based initiative. House of Representatives have passed a version of this plan, the Senate has not. And this week his--the head of his office, of faith-based initiative, John DiIulio resigned. George?

WILL: Well, DiIulio is an--an amiable bull in a very nice and a very nice china shop. And he--he did alienate some people with his, shall we say, forthrightness. The question...

ROBERTS: Not the way they operate in Washington, DC.

WILL: No. The--the question is, is there now a constituency--you've lost people on the left who suspect government being involved with religion because religion will tank government, and on the right they think government will tank religion. The question is, is there a viable middle here? And the question really that comes down to is whether a Joe Lieberman will step forward?

STEPHANOPOULOS: And right now he says he won't, because unless you can work out this issue of whether or not these faith-based groups can discriminate in hiring--which is still a little bit unclear, Lieberman says that they--that under the current bill they can--and if--as long as that provision is there--is in there, he's not going to support it. So, the bill's not going anywhere. I was surprised though, because, actually, George, I do agree with your assessment of John DiIulio; a really--a really strong man, a committed man. And I'm surprised at how ungracious several of the conservatives were as he were leaving. They kind of kicked him as he was going out the door.

ROBERTS: Well, and some liberals. There was also a black minister who said, 'This means now that this is an all white administration.'

STEPHANOPOULOS: Oh--well, yeah. He was complaining about the administration, not about DiIulio, but you're right.

Mr. KRUGMAN: You know, graciousness has not been one of the characteristics of this administration. That's how they lost Jeffords. I mean, this is not--these are people who really believe, in some sense that the truth and maybe God is on their side. And they have a really hard time being polite to people who aren't part of the cause.

ROBERTS: I would assume you would like to come back, here?

WILL: Well, I--I think we lost Jeffords over milk. And given the fact that Strom Thurmond looked so feeble that if Jeffords came over too late he wouldn't be the lionized person that he has become. I don't think this has to do with manners.

Mr. KRUGMAN: Oh, I think it's--it's--it's an issue. I mean, there--there--these are--these are--these are hard core. And you've got to remember, this is a hardline administration, much more so than--than anyone expected. And it does have its impact on this and other things.

ROBERTS: But the president keeps talking about bringing back civility to Washington, and I think that he--he actually is trying to do that in his conversations to people. So maybe there's a little bit of disruption inside the administration itself.

STEPHANOPOULOS: I think that's probably right. And I--another person who got a lesson--I don't know if in civility, but in infighting--this week was Secretary of Defense Donald Rumsfeld. We heard for months about his big reform plans and by the end of this week on Friday he was saying, 'never mind.'

ROBERTS: Well, we'll talk about that another week. But when we come back, it's not the writing on the wall, but the writing on the road that has George really up in arms this week. He explains after this.

(Commercial break)

STEPHANOPOULOS: This week George Will got hung up at the intersection of the First Amendment and a South Dakota freeway.

Originally broadcast, 8.19.01