BEGALA:   Welcome back to CROSSFIRE. We're coming to you live from the George Washington University, which is right here in Washington, D.C. where politicians are tripping all over themselves to take the courageous position that the Pledge of Allegiance is OK. No word yet on when Congress will declare a special session to defend apple pie, but first, Politics Inc. The nation's number two long-distance carrier, WorldCom, has revealed that it used accounting tricks to cover up nearly $4 billion in losses. In Canada for the G8 Summit, President Bush called the scandal "outrageous." The Democrats say the way Bush and the Republicans cozy up to big business is the real outrage. So is this a political issue? Of course it is. If it were really a business scandal, we wouldn't be talking about it on CROSSFIRE. We'd have left it to Lou Dobbs on "MONEYLLINE." Today's "Washington Post" says that my former boss, Dick Gephardt, is the architect of a strategy to remind voters that the Republican revolution of 1995 unleashed a wave of corporate greed and rule breaking.  In the CROSSFIRE tonight, New York Democratic Congresswoman Nita Lowey, the chairwoman of the Democratic Congressional Campaign Committee and the Virginia Republican Tom Davis, chairman of the National Republican Congressional Committee. Thank you both. 
CARLSON:   How are you? 
BEGALA:   Thank you. Congressman Davis, before we get to WorldCom, we need to do a piece of business with you about this issue of the Pledge of Allegiance. "One nation under God." Your committee, the committee that you chair and for which you are responsible, has put out a memo today - in fact, I want to show you - put it up on the screen -- in which your committee takes the outrageous position of trying to blame Tom Daschle. This is your committee's release today. "Liberal Democrat Tom Daschle and Senate Democrats are holding up 45 of President Bush's judicial nominees who would serve as a counter- weight to this type of nonsense. This ruling demonstrates why it is so important that Daschle move on President Bush's nominees." First, if every single Bush nominee had been confirmed, this judge, Republican, would still be on the bench and still have written this. This is - this is completely false and outrageous. I'm asking you now... 
DAVIS:   Actually... 
BEGALA:   ... as a man of good conscience to dismiss it and say you're sorry. 
DAVIS:   As a man of good conscience... 
BEGALA:   Yes, sir. 
DAVIS:   ... I am proud of the staff, and if we - actually, if we had some of the 9th Circuit nominees in maybe they would have gotten the draw instead of the judge who did it and we might have had a different... 
BEGALA:   So it's Daschle's fault. I love this. 
CARLSON:   Wait, if there's something wrong with the decision, why is it outrageous that Daschle is being... 
BEGALA:   Well, I think it's a stupid decision, but I don't want to blame Daschle. Blame the Republicans who put him on the bench, Congressman. It's your party that appointed this judge. 
DAVIS:   Actually, it was a Democratic Senate that confirmed it. So I think there's equal culpability there. 
CARLSON:   Now, Congresswoman, I don't understand why Democrats are running away from this decision. Most clearly support it. 
LOWEY:   In fact, Democrats took a very strong position in the Senate today saying it was outrageous and making it clear that they thought, saying the pledge of Allegiance is constitutional. And as my good friend knows, it was a Richard Nixon appointee. 
CARLSON:   But wait a second... 
LOWEY:   I think he was a Republican. 
CARLSON:   It was a very liberal Republican. This is part of a long, liberal... 
LOWEY:   Liberal? Richard Nixon was... 
CARLSON:   He was very liberal. He was a supporter of affirmative action. So that's another show, but this is -- part of a long, liberal tradition of being afraid of the word God. And it's part of the right-wing conspiracy. 
LOWEY:   Look... 
CARLSON:   Why are Democrats... 
LOWEY:   ... Look.... 
CARLSON:   ... all of a sudden afraid of him? 
LOWEY:   ... let's just finish this and make it clear for the record. While this committee was debating what they should do, Tom Daschle took action today and passed legislation that said -- saying the Pledge of Allegiance is constitutional... 
DAVIS:   OK. 
LOWEY:   ... and the action of the court, the Republican judge was outrageous. 
DAVIS:   Let me make one comment here. Under Richard Nixon -- if you remember a number of Nixon appointees - Haynesworth, Carswell and a string of nominees were... 
LOWEY:   He's saying this with a straight face. 
DAVIS:   ... rejected by the Democratic Senate at that time and to get nominees confirmed, he put people that otherwise he may not have. 
BEGALA:   Because they were stupid, Congressman. 
CARLSON:   Now, let me just... 
DAVIS:   Well, Haynesworth was anything but stupid. 
CARLSON:   ... to sort of shift here back to corporate greed, there's, of course, this new plan - this is how Democrats are going to take back the House we learned today in the "Washington Post" by focusing on Republican ties to corporate greed. It's not going to work, as you know. And I just want to show you why. It's summed up in one picture here. There is noted centerpiece arranger, Martha Stewart...    There is Senator John Kerry, presidential aspirin, and that's Sam Waksal of Imclone. 
LOWEY:   Do you have Bernie Ebbers there too? 
CARLSON:   They're all together. 
LOWEY:   Now, wait a minute. Wait a minute. Is Bernie Ebbers there of WorldCom to contribute... 
CARLSON:   But that's the point. 
LOWEY:   ... some support... 
CARLSON:   Now, Martha Stewart was on her way... 
LOWEY:   ... and why we're going to win in Mississippi first? 
CARLSON:   She was on her to, as you know - you probably arranged it - to a Democratic fund-raiser when she was accused of insider trading. I mean Democrats are deeper in this than Republicans. There's no way you can convince America this is the Republican's fault. 
LOWEY:   Let me just say very clearly, I don't care whether it's Democrats and Republicans who took money. The bottom line here is what kind of leadership have the Republicans shown in doing something about corporate greed. 
CARLSON:   Well, I have an answer. 
LOWEY:   Let me finish this.    Every time -- every time my constituents talk to me on the Merrimack Avenue in White Plains and I'm sure it happens in Virginia, they go to the newsstand and they see another case of corporate greed. 
CARLSON:   Then maybe you can answer this...  
LOWEY:   WorldCom, Tyco... 
CARLSON:   ... question, Mrs. Lowey. 
LOWEY:   What kind of leadership have they seen... 
CARLSON:   I'll tell you how. 
LOWEY:   ... in the House? They voted against getting rid... 
CARLSON:   In the president's union address, he said we're going to -- after Enron; we were going to do something about accounting. 
LOWEY:   Where or when? 
CARLSON:   He put forward a 10-point plan... 
LOWEY:   When? 
CARLSON:   ... which was passed in the House and passed in... 
DAVIS:   You passed it, Nita. You... 
CARLSON:   That's exactly right. 
LOWEY:   Oh, wait a second. Wait a second. 
CARLSON:   And it started in the Senate, Democratic control. Why? 
LOWEY:   Wait a second. 
CARLSON:   It's true. 
LOWEY:   We had a lot of hearings. There was a lot of bravado from the Republicans -- we're going to do something about it. So they passed a bill that doesn't deal with corporate accountability. It doesn't deal with tough accounting standards. It doesn't include... 
CARLSON:   Did you vote for it? 
LOWEY:   ... offshore tax payments... 
CARLSON:   Did you vote for it? 
LOWEY:   It doesn't deal with criminal penalties. 
CARLSON:   You voted for it. 
LOWEY:   I did not vote for it because I didn't think it was tough enough. We need some leadership because this is the basis of our democracy now.    The United States system -- people are losing confidence. This is serious stuff. And Tom voted against all of this. 
BEGALA:   Congressman Davis, in talking about the political problem that you and your party have. I'm going to show you a poll. Before the WorldCom collapse, where they asked American voters this question - "the Bush administration's philosophy is to let corporations police themselves. But as we've seen now on the environment and Enron, the companies take advantage, hurt customers or employees and high executives are not held accountable." Seventy-six percent of our countrymen and women agree with that. That's the tide you're swimming against and WorldCom doesn't help. 
DAVIS:   Well, he did in Greensboro and let's look at it. Number one, look at the wording of this. That's not the Bush administration policy. 
BEGALA:   Now, you all don't believe - do you believe in more government regulation in corporations? They just take, ladies and gentlemen. 
DAVIS:   We had voted for it twice. 
BEGALA:   Tell me that we need more regulation in corporations and I might vote for you. 
DAVIS:   If we need to continue to be transparent in what they're doing. We just passed a bill in the House, the kind of off the books, off balance sheet things that Enron had would be illegal under the act... 
BEGALA:   Your party, in 1996 and '97, the Clinton administration for who... 
DAVIS:   ... is hard to man...    Trust me, they were pardoning these guys and giving them a pass on this. Your - the Democratic National Committee chairman, Terry McAuliffe, has really cashed in on this thing, $18 million. 
LOWEY:   What about the bill that was passed? Does it deal with the fact that WorldCom filed a phony report and then after they make all the money, a couple of months later, they file an amended report? Oh, we forgot about a $3.9 billion debt. This is going to be an issue in Mississippi. 
CARLSON:   I agree with that. 
LOWEY:   Seventeen thousand people lost... 
CARLSON:   And you were trying to make political hay out of it. 
LOWEY:   ... their jobs. 
CARLSON:   Isn't that outrageous that you would -- these people lost their jobs. The Democrats said, oh, a political opportunity here. 
LOWEY:   You know what I'm trying to do? 
DAVIS:   We're prosecuting these people. We're prosecuting Enron. 
LOWEY:   Wait a minute. 
DAVIS:   We're prosecuting Arthur Andersen. 
LOWEY:   Pitt. You put them all in charge of the chicken coop. 
BEGALA:   Today, Congressman, in fact, President Bush, our president, said that we should have an investigation immediately on this case of WorldCom. I'm curious to ask you about a similar case, which the president hasn't spoken out about. A company that, in one year, changed its accounting rules to count $100 million of cost overence (ph) as revenue without telling their investors for more than a year. This was on the advice of Arthur Andersen. The company's Halliburton. The man who made that decision as CEO was Dick Cheney. Shouldn't Dick Cheney and Halliburton be investigated for the same kind of corporate shenanigans that are alleged at least... 
DAVIS:   Well, in the marketplace - and I gather the marketplace will...    ... have been no allegations for criminal wrongdoing in that case. 
BEGALA:   The marketplace... 
DAVIS:   ... in that case - in this particular case. There's been no allegation of criminal wrongdoing and... 
BEGALA:   It's a 20-year-old land deal in some trailer park; you all investigate it for eight years and $50 million. We've got Cheney with a $100 million accounting gimmick and we're not even going to - we have to go to the marketplace to take care of this. 
DAVIS:   Halliburton is still a viable company. And you can't get... 
CARLSON:   Yeah, I guess. 
BEGALA:   You beat I'm mad about - I saw a lot of people get dragged through the mud. And here is Dick Cheney who made a promotional video for Arthur Andersen. Let me put it up on the screen and tell you what Dick Cheney said about Arthur Andersen, who are the getaway car drivers for Halliburton, for Enron and the rest of them. This is what Cheney said. He made a commercial for them. "I get good advice, if you will, from their people, based on how we're doing business and how we're operating, over and above just the sort of normal by-the-books auditing arrangement."    That's Dick Cheney on Andersen. 
CARLSON:   That was 1997... 
BEGALA:   When they were cooking the books for him. 
DAVIS:   And also - no, well - let me just - as a -- Arthur Andersen was also the auditors of the Democratic National Committee. So I guess it goes both ways. 
LOWEY:   Well... 
BEGALA:   So that's your defense of Dick Cheney, saying they don't give us just the normal auditing? 
DAVIS:   Arthur Andersen - and now, we're down to the final four. It was one of the top five accounting firms in the country. They had a... 
LOWEY:   You know, I...    Yes. 
DAVIS:   At that time, they messed up and they're going... 
LOWEY:   Can I just make one point... 
CARLSON:   Yes, ma'am. 
LOWEY:   ... because we're going back and forth and seeing who this is going to benefit. 
CARLSON:   Yes. 
LOWEY:   But when you talk to average constituents -- and more and more average people have their money in the market -- and I just talked to somebody I met at a local store this weekend. They lost $200,000 because of these shenanigans. He -- this is his life savings. He's going to have to work another five, 10 years. So what happened in the past is one thing. What has the Republican leadership done... 
CARLSON:   Well, let me ask you this then... 
DAVIS:   Let her answer. 
LOWEY:   ... to remedy it? And they have done a weak bill that does not correct the problem with accounting standards, putting people in jail and dealing with... 
DAVIS:   Part of the bill... 
LOWEY:   What about... 
DAVIS:   Carter did two different things in terms of what the accounting standards did. First of all, all of these off-balance sheet things that Enron had, they are illegal under what we did there. Also, we would not have allowed the auditors and the consultants to be the same company. Something at Arthur Andersen and other companies would do it. We illegalize that. Enron could not have occurred if this bill had been in effect at the time. You voted against it, Nita, but we sent it over. And now, this week, Tom Daschle says he's going to bring it up in the Senate this week. 
LOWEY:   How about offshore tax havens? 
DAVIS:   A couple months too late, but we've already passed it in the House. 
BEGALA:   When in 1997... 
DAVIS:   That's what we've done. 
BEGALA:   ... and 1998, President Clinton and his Securities Exchange Commission Chairman Arthur Levitt asked for many of those same reforms, was it not your party that helped him block those reforms, Congressman? Do you ever regret that? 
DAVIS:   I don't know that the party blocked the reforms. The administrative process on this allows the SEC to move ahead. Congress can't stop those. 
BEGALA:   Now, really quickly... 
DAVIS:   We have proposed to the executive branch for eight years...    The executive branch has the ability to issue regulations without the legislative interference. 
BEGALA:   Arthur Levitt tried to. They dragged them up to the House. The Banking Committee took Brooksley (ph)... 
DAVIS:   We don't issue regulations. That's the executive branch - that is an executive branch perog and at the same time, Clinton's out there fund-raising it on these very same... 
CARLSON:   No, hold on. Wait, can you...    One last question. 
DAVIS:   ... and it - are guilty now. 
CARLSON:   We're almost out of time. Pay attention to the civics lesson here. When Republicans - there was talk among consultants that they would leverage, in the some way, the war against terrorism for political gain. Democrats went completely fruitcake. This is outrageous that they would use a tragedy like this for political gain. But I want you to address this question that I asked you a moment ago. Again, aren't you a little bit embarrassed - and in the "Washington Post" this morning, the leader of House Democrats said, "Well, all of these people are out of work. This is good for the Democrats." That's revolting, isn't it? 
LOWEY:   Just a second. The United States war on terrorism is a bipartisan effort. There's no space between Democrats and Republicans. But when people are out of work -- when 17,000 people are out of work because of WorldCom and every day you go to the newsstands and see the Tyco, WorldCom, Enron, every day... 
CARLSON:   Global Crossing. 
LOWEY:   ... we have - Global Crossing. We have a responsibility... 
CARLSON:   To use something... 
LOWEY:   ... to pass some laws. And when the Republicans and the House have not shown leadership and pass tough laws to do something about it, I think these are issues we have to talk about and legitimate issues. 
BEGALA:   Thank you for joining us, Congresswoman. Congressman, we thank you as well. And still ahead, we'll let you "Fireback" at us or at least at the U.S. Court of Appeals because next, Tucker and I take the gloves off and go one-on-one. Stay tuned for that.
