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Inside Politics

Gore Attacks Bush's Tax Cuts in Texas; Senate Passes Tax Relief for Married Couples; Vice Presidential Speculation Intensifies

Aired July 18, 2000 - 5:00 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(BEGIN VIDEO CLIP)

AL GORE, VICE PRESIDENT OF THE UNITED STATES: It is the same borrow-and-hide approach that is apparently under way with the Texas budget.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: And only a desperate politician could turn a budget surplus into a so-called "shortfall."

(END VIDEO CLIP)

BERNARD SHAW, CNN ANCHOR: The presidential campaigns trade barbs over the Texas budget under George W. Bush as the Bush camp raises questions about Gore's commitment to victims' rights.

Plus...

JUDY WOODRUFF, CNN ANCHOR: The big question: Which names will be in the No. 2 spot on the party ticket? A look at who might be in and who may be out.

(BEGIN VIDEO CLIP)

REP. DICK GEPHARDT (D-MO), MINORITY LEADER: I hope and believe they'll find someone to do that other than me.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

GOV. FRANK KEATING (R), OKLAHOMA: Well, I'd say sure, but I don't expect the phone to ring.

(END VIDEO CLIP)

ANNOUNCER: From Washington, this is INSIDE POLITICS, with Bernard Shaw and Judy Woodruff.

SHAW: Thanks very much for joining us. A quarrel over the Texas state budget got louder today. It echoed all the way to the Middle West, where Governor Bush is campaigning. Together with Texas Democrats, Al Gore is blaming Bush for a looming shortfall in the Texas state Medicaid program, and today a report is suggesting that Bush's budget dilemma may be worse than expected.

CNN's Jonathan Karl is with the Bush campaign, which is trying to stay on message in Chicago.

(BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CORRESPONDENT (voice-over): In an effort to tout a record of bipartisanship as governor of Texas, George W. Bush appeared in Chicago with the speaker of the Texas House, a Democrat.

REP. PETE LANEY (D), TEXAS HOUSE SPEAKER: Governor Bush has certainly been successful in achieving his goals. From the very first day that he was elected, he made it clear that he wanted to work with a partnership, and a partnership with the legislature.

KARL: But as Bush claimed a record of accomplishment, Vice President Gore was in Memphis, criticizing recent reports of a budget shortfall in Texas.

GORE: ... because just this morning, "The Houston Chronicle" reported a -- a memorandum within the Texas state government projecting a $600 million shortfall in the state's health care program. This will -- this apparently will worsen an already grave budget situation, the worst in Texas in a long, long time.

KARL: Gore has blamed Bush's tax cuts in Texas for causing state budget woes, saying Bush's tax proposals would create similar problems for the federal government. The Bush team acknowledged spending in Texas on Medicaid and prisons have exceeded budget projections, but insist the overall budget remains in surplus.

KAREN HUGHES, BUSH CAMPAIGN COMMUNICATIONS DIRECTOR: The state budget is much like your family budget. Some months the light bill is higher than other months, and that's what happened with our Medicaid and prison expenses over the last two years. But as long as you have enough money to pay the bills -- and Texas has more than enough money to pay the bills -- you still have a surplus, and that's exactly the shape that we're in.

KARL: Earlier, Bush visited an inner-city program in Milwaukee called Faith Works that helps troubled fathers overcome drug addictions and reconnect with their families.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Debra (ph).

GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL CANDIDATE: Hi, Debra. Nice to meet you.

UNIDENTIFIED FEMALE: Nice to meet you, too.

(END VIDEO CLIP)

KARL: After his tour of the facilities, Bush proposed $185 billion (ph) in federal grant money over five years for programs that promote responsible fatherhood, including programs run by religious organizations.

BUSH: There is no intent by federal or state government to fund religion. That's not the intent. The intent is to help people by -- in recognizing that a faith program will help people.

In other words, we're funding programs, or the individual, not the church.

KARL (on camera): Bush will spend the rest of the week huddled with his advisers in Austin, working on his speech to the Republican convention, now in its fourth draft, and of course, preparing to make his final decision on a running mate.

Jonathan Karl, CNN, Chicago.

(END VIDEOTAPE)

WOODRUFF: We are going to have a conversation in just a moment with two Texas state officials about that dispute over the Texas state budget. But right now, we are keeping a close eye on a briefing room near Camp David, Maryland, where reporters are waiting any moment now for a briefing from White House spokesman Joe Lockhart.

As we've been reporting, this summit at Camp David -- among President Clinton, the leader of the Palestinians, Yasser Arafat, and Israeli Prime Minister Ehud Barak -- that's a meeting that's been going on since the first part of last week. Now, these leaders, Bernie, are facing a deadline: President Clinton heading off to Asia tomorrow. And he's made it clear that he would like some sort of a resolution of this -- of these talks before that time.

SHAW: We're getting indications that Jerusalem is the stumbling block in these talks going on. And one of the Palestinian leaders, Faisel Husseini, has told CNN there will be no partial agreement. The Israelis said to be insisting on undivided sovereignty over Jerusalem.

WOODRUFF: The dispute -- clearly a number of areas of potential dispute, but what -- what we are being told is that some of the toughest language to work out and the toughest issue is indeed who rules Jerusalem, who has control over that city that both groups, both the Israelis and the Palestinians, consider to be the center of their political and religious life.

Here's Joe Lockhart.

JOE LOCKHART, WHITE HOUSE PRESS SECRETARY: ... that I need to thank for their fine hospitality over the last few days here. So let me go through some people. I wouldn't go any place if I were you. Listen I wanted to -- as this may be the last time I come up here, let me just thank some people here, the mayor of Thurmont, Eileen Washy; the clerk treasurer for Thurmont, Rick May; Chief of Police Neil Bectal; the -- Lieutenant Freshower (ph) from the Police Department; the Frederick County Sheriff's Department; Maryland State Police; the principal of the school, Suzanne O'Toole (ph); the entire staff of the Thurmont Elementary School; the Catoctin cluster maintenance staff; the volunteers here at Thurmont.

And I want to principally thank the very nice teacher out here who made the bold statement that she thought I was better looking than John Roberts.

(LAUGHTER)

Let me go through...

QUESTION: Any bagpipes (ph)?

LOCKHART: No, they're not. I always wait until the last minute.

Let me go through a couple logistical points, because I'm sure that's what you are interested in. As I've been saying all along, the president's schedule remains the same. He is scheduled to leave tomorrow morning for Japan. For your purposes, any adjustment to the president's schedule later tonight or into the morning we'll deal with in the following way.

We will all call it through the White House all-call system, which will get to a number of people and a number of news organizations. We'll keep somebody here overnight in the press office, here in Thurmont, and we will keep the pool on overnight, so that if there's anything that we need to get out, any news or information, or any change, we can let them know.

LOCKHART: The press plane will depart now, instead of at 8:00 tonight, at 8:30 tomorrow morning. Those of you who are traveling to Japan with us on the press plane need to be there by 6:30.

And one scheduling note: If for some reason we do, overnight, announce any kind or alteration in the schedule I'll come down here sometime around 7 to give you guys a sense of any news or developments overnight.

QUESTION: Is that p.m.?

LOCKHART: A.m., a.m.

We will do tonight -- we will also do tonight's wrap-up, like we've been doing each night with P.J., probably around 9, 9:30.

QUESTION: So how would you characterize the point that the negotiations are at today?

LOCKHART: Obviously, as I said earlier today, the pace has picked up over the last few days. There are intense discussions and negotiations going on now between the two parties. I think they understand what they're up against as far as the issues and the timing, and we'll just have to wait and see.

QUESTION: Would it be inaccurate to call the talks in crisis right now?

LOCKHART: No, I wouldn't -- I wouldn't use that phrase. I would say there are obviously very difficult issues in front of them, but the parties are continuing to work at it.

QUESTION: Is Jerusalem the main sticking point?

LOCKHART: They are continuing their discussions on the four core issues that we've identified for you before these -- the talks began.

QUESTION: Are they still working on reaching an agreement tomorrow morning?

LOCKHART: Pardon?

QUESTION: Are they still working on reaching an agreement by tomorrow morning?

LOCKHART: Well, we're working on reaching an agreement. If we could do it in the next hour, we would; we wouldn't wait until tomorrow morning.

QUESTION: Did the prime minister and Chairman Arafat meet again -- have they met again?

LOCKHART: No, there have been -- as I described a few moments ago, intense discussion between negotiators throughout the afternoon. And the leaders have been meeting internally with their own delegations.

QUESTION: Joe, does the White House consider it in any way helpful...

(CROSSTALK)

QUESTION: Does the White House consider it in any way helpful if Chairman Arafat were to be able to consult with other leaders, such as President Mubarak, on some of these issues that remain somewhat intractable in your words?

LOCKHART: Oh, I think if Chairman Arafat wanted to consult with other world leaders, we would -- we would provide him with the facilities to do that. And certainly, if that would help build an atmosphere and a construct for a peace agreement, that would be welcome.

QUESTION: What if a bunch of other people wanted to go there to meet with the other leaders?

LOCKHART: Well, I don't -- there's been no suggestion of any travel, so I don't want to speculate on that. The president met with his -- his team for, I don't know, it was probably about an hour or an hour and a half, since I talked to you last, and there's been periodic reporting back from some of the discussions from people on our side.

LOCKHART: He stands ready to talk to either leader separately, together with the negotiators, whatever we think is useful and constructive.

Yes?

QUESTION: You said that the talks has been intensified, but would you say that there has been any progress before the president's departure?

LOCKHART: I think I've managed to avoid trying to characterize on that particular question for eight days now, and I won't start now.

(CROSSTALK)

QUESTION: If there is an announcement or ceremony, whatever you want to call it, if it takes place in the morning, will it take place back at the White House or here?

LOCKHART: I'm not sure I know the answer to that question, but we'll certainly give everyone ample time to be able to cover it -- ample notice to cover -- whatever happens, one way or the other.

QUESTION: When you say the president stands ready to talk to the leaders, does that mean have you no planned talk between him and either of the leaders or the two of them together for the rest of the day?

LOCKHART: I'd say right now, discussions are ongoing, and I would anticipate further meetings involving the president and the other leaders, but I can't tell you who, when or at what time.

QUESTION: Did they meet in small groups today?

LOCKHART: They're meeting in a variety of settings at different places in Camp David.

Yes?

QUESTION: Joe, can you confirm that Ruven Merhav (ph) has joined the Israeli delegation?

LOCKHART: I cannot. I have no information that he's joined the delegation.

QUESTION: Can I sneak in three quick ones? One, how long was the meeting the president had with Arafat this morning?

LOCKHART: I think it was just over an hour. QUESTION: And second, how much of the president's schedule -- how much of the discussions today have revolved around the president's schedule?

LOCKHART: How much of the discussions? Very little.

QUESTION: And third, how much can these guys get done without meeting face to face, without a face to face with Arafat and Barak in the same room?

LOCKHART: Listen, I think there's many ways to get to an agreement, and I wouldn't try to put a minimum quantitative value on face-to-face discussions or the president with the two leaders together. I think both sides are working in good faith to try to reach an agreement in a short timeframe and they're doing -- they're proceeding now in the way that all sides think is most constructive.

QUESTION: So the fact that they're not meeting doesn't imply a stalemate?

LOCKHART: I wouldn't make a judgment based on that alone.

QUESTION: There were some reports that the president requested a second meeting with Arafat, is that so?

WOODRUFF: White House spokesman Joe Lockhart saying President Clinton is prepared to leave tomorrow morning as scheduled for the industrialized nations' summit in Japan. But as for this Middle East peace summit, Joe Lockhart saying there is really nothing more he can say other than that there are intense negotiations, intense discussions under way. And he said there -- you heard him say -- President Clinton stands ready to meet again with either Prime Minister Barak or President Arafat at any time. But clearly, at this point, no progress that he can report.

We are going to take a break; when we come back: INSIDE POLITICS:

(COMMERCIAL BREAK)

WOODRUFF: Back now to our lead story on INSIDE POLITICS, to the question of the Texas state budget. A Texas Democrat is accusing state Republicans of "cooking the books" to keep the fiscal heat off of George W. Bush as he runs for president. State senator Mario Gallegos made that charge to the "Houston Chronicle" newspaper. In response, State Comptroller Carole Keeton Rylander referred to the claim as "hogwash."

The two join us now: Senator Gallegos from Chicago and State Comptroller Rylander from Austin.

Thank you both for being with us.

Miss Rylander, you reported over the weekend that there was a significant surplus in the Texas budget. And then it is reported now -- we learn -- that there is a shortfall, and overspending, if you will, of some $600 million. Which is it? CAROLE KEETON RYLANDER (R), TEXAS STATE COMPTROLLER: No, that is hogwash. There is no budget deficit in the state of Texas. In fact, there is a surplus. And the vice president has said repeatedly that there is a budget deficit in Texas. That is not only misleading, it is incorrect. We have at least a $1.1 billion surplus. And under the great leadership of Governor George W. Bush -- I'm going to be -- let me give you some facts. Let me give you some facts.

WOODRUFF: Well, let me...

RYLANDER: Sales tax are up this year -- are up $665 million. The motor vehicle tax is up this year $204 million; oil and gas severance tax are up this year $274 million. And unemployment is the lowest rate in over two decades. There is no deficit. There is a budget surplus in the state of Texas. And Thursday, I'm going to be doing an absolute update on that, which, as I said, the conservative estimate today is the $1.1 billion.

WOODRUFF: State Senator Gallegos, given what we're hearing from the state comptroller, how you can challenge that the state has a surplus of the size they are saying they do?

MARIO GALLEGOS (D), TEXAS STATE SENATE: I think, first of all, it wasn't Vice President Al Gore or myself that said there was a shortfall. It was the "Houston Chronicle." I have an article right here that says the "Houston Chronicle" -- we found a secret memo that says there is more of an overrun in the Texas Health Department than was initially reported. Now, that's not us saying it. That's the "Houston Chronicle" saying on the shortfall.

And then we find these secret memos that are saying that overruns are higher than were originally projected. That's not misaccurate. Or that's not misinformation. This is the truth out here. How many of these memos are lying around over at the Legislative Budget Board that are saying that we have higher overruns than is what being reported by the LBB. And now, you know, the comptroller brings out a report five months ahead of time. And she says it's because she wants to tell the Wall Street analysts that we're OK.

I would say that she's bringing it out -- she's more worried about ratings about George Bush than about Wall Street analysts.

WOODRUFF: Ms. Rylander, how can you put -- you say you're going to release details on Thursday.

RYLANDER: Senator...

WOODRUFF: How you can put to rest what are two completely conflicting versions here of what's going on?

RYLANDER: Absolutely. You know. Senator Gallegos is my good friend. But let's tell it like it is. I'm independently elected by the people of Texas. My responsibility is to the people of Texas. It is my constitutional responsibility to do the revenue update. We have personal income this year is up $8 billion over what was projected. Gross state product is up $25 billion. What he is referencing is one agency's appropriations. Every biennium, there are adjustments -- there are adjustments within the budget, but those appropriation adjustments have absolutely -- that is not the deficit. We are talking appropriations and spending. If the legislature came to town today, we would not only cover all of those budgetary adjustments, there would be millions of dollars left over to boot. If Governor George W. Bush does for these United States what he has done for the state of Texas, he is going to go down in history as one of the greatest presidents this country has ever had.

Economy is great in Texas. We are outpacing the U.S.

WOODRUFF: All right, then, State Senator Gallegos, you know what -- you're familiar with the state budget. How, given this information, given the fact that the revenues have been what they've been, given the fact that the surplus is -- has been documented to be over a billion dollars -- how, then, can you question it?

GALLEGOS: I'm saying that these memos that have been found in the LBB are showing overruns higher than what were predicted. This is just one agency. We haven't even looked in the other agencies. If we were to approve the original budget that the governor wanted, with $3 billion, we'd be like the Titanic, at the bottom of the ocean. I'm telling you, these are accurate memos that are being found over in the LBB overruns.

WOODRUFF: But are you saying it's the policy of Governor Bush that has caused this is the question?

GALLEGOS: I think these agencies are run by people that he appoints. You know, if I'm held accountable for my district, he should be accountable for the people he points to. These people that are mismanaging these agencies. Ninety million dollars that we're short on Medicaid. That's not in Miss Rylander's revenue estimate. That's just a projected revenue estimate. These overruns showed by "The Houston Chronicle" are going higher and higher. By the time we get to the session in January, we're not going to have a revenue surplus, the way these memos are coming out.

RYLANDER: Judy, that's absolutely incorrect. Let me say, again, you always have budgetary adjustment. We had a drought in Texas this year, so the Texas Forestry spent a million more on suppressing those fires. You always have appropriation spending adjustments within agencies, but I am telling you that under Governor Bush's leadership, we have a budget surplus that is at least $1.1 billion. It not only -- as I said, I'm wrapping up all those numbers. As we close out books the for this fiscal year, we continually track that, and this -- not only do we have enough dollars to cover any of those budgetary appropriations adjustments, but millions and millions to boot, and that -- I mean, I mentioned that sales tax was up $655 million this year. That's with having the sales tax holiday, which served the good, hard-working Texans. Even on top of that, sales tax revenues are up 655 million.

WOODRUFF: We're going to have to leave it... GALLEGOS: Bob Bullock and John Sharp (ph) would have never come played politics with revenue surplus. They would have never -- there is something wrong for you to release those issues, that revenue surplus early. That's politics. You're playing politics.

WOODRUFF: All right, we're going to have to leave it there. I am sorry.

RYLANDER: Whenever anyone questions financial credibility of the state of Texas, I must set the record straight. That is my constitutional responsibility, and we have a surplus.

GALLEGOS: This is "The Houston Chronicle" doing that, not Mario Gallegos.

WOODRUFF: Ms. Rylander, controller Rylander, and state Senator Gallegos, we thank you both for joining us in INSIDE POLITICS.

GALLEGOS: Thank you.

WOODRUFF: Thanks a lot.

RYLANDER: Thank you.

WOODRUFF: Bernie.

SHAW: One-hundred and twenty-five degrees.

Now Turning now to the Al Gore campaign, House Minority Leader Dick Gephardt of Missouri said today he would rather focus on winning control of the House of Representatives than being Al Gore's running mate. Last week, it was disclosed that Gore and Gephardt had met and discussed the possibility of him joining the ticket. On the campaign trail, Gore began a concerted effort today to try persuade voters that he's tough on crime.

CNN's Bill Delaney has the story from Memphis.

(BEGIN VIDEOTAPE)

BILL DELANEY, CNN CORRESPONDENT (voice-over): A day meant to present Vice President Al Gore as a crime buster. He first appeared with street cops in Memphis, front-line people, then moving on to a gathering with law enforcement officials and victims of crime, Gore proposing what he calls his "crime victims bill of rights" for people like Jody Gaines Johnson, kidnapped, raped, tortured for five days. Her attackers, she said, about to be paroled.

JODY GAINES JOHNSON: I want to know when they're paroled. I have four kids, and I don't want to be in the grocery store and run into him, because I'm not that strong. I think it would devastate me.

DELANEY: Gore proposed, not for the first time, a constitutional amendment protecting victim's rights, including that people be allowed notification of parole, compensation for crime victim's, and leave for victims to attend legal proceedings. AL GORE, VICE PRESIDENT OF THE UNITED STATES: Because there's not an automatic set of procedures and legal protections in place, sometimes in spite of their best intentions, they just don't have their act together. They're good people in a bad system.

DELANEY: Gore himself, though, attacked for being a part of the system.

(on camera): An official from the Bush campaign said Gore's support for victim's rights rang hollow, considering the Clinton administration blocked similar legislation last spring. A Gore spokesman responding that Kyl-Feinstein legislation contained provisions that would have effected prosecutor's ability to address certain kinds of cases.

(voice-over): With Gore planning to speak about crime throughout the week, he's as likely to be asked about the continuing question of who he'll choose for his vice president. A certain Richard Gephardt had this to say Tuesday about his role in that:

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: What I've said is very clear. I've said I don't want to do that, and I said I hope and believe they'll find someone to do that, other than me.

DELANEY: As the Gore campaign continued to move into a fresh theme each week, they may be doing something right. Campaign officials said they were pleased at the new CNN/"USA Today"/Gallup poll, showing their man virtually even with the other side's man.

Bill Delaney, CNN, Memphis.

(END VIDEOTAPE)

WOODRUFF: Here in Washington, Green Party candidate Ralph Nader has made another plea to be included in the fall presidential debates. Addressing the national press club today, Nader said he and Reform Party hopeful Pat Buchanan both should be included. He says it's not just a matter of fairness.

(BEGIN VIDEO CLIP)

RALPH NADER, GREEN PARTY PRESIDENTIAL CANDIDATE: But it's also a matter of keeping the American people awake in front of the television set...

(LAUGHTER)

NADER: ... as they watch the drab debate the dreary.

(LAUGHTER)

NADER: It's also a matter of appealing to 90 million nonvoters. Over 50 percent of the eligible voters in this country didn't even vote in the presidential campaign of '96. That ought to be a badge of shame for the two parties.

(END VIDEO CLIP)

WOODRUFF: The Presidential Debate Commission has established rules that say a candidate needs to be getting least 15 percent of the polls in order to participate. Both Nader and Buchanan have been polling in single digits.

Still ahead on INSIDE POLITICS, making the most of an election- year issue -- a look at the politics behind the Senate's latest tax cut vote.

(COMMERCIAL BREAK)

SHAW: Senate Republicans today pushed through a measure today to eliminate the so-called "marriage penalty" from the tax code. The 61- 38 vote sends the bill to a conference committee, and a final measure could be on the president's desk sometime this week.

As Kate Snow reports, Democratic say the GOP measure is fiscally irresponsible and they accuse Republicans of playing politics.

(BEGIN VIDEOTAPE)

UNIDENTIFIED CONGRESSMAN: The bill is passed.

KATE SNOW, CNN CORRESPONDENT (voice-over): Eight Democrats joined the Republican majority, voting to give married couples a wedding present: $56 billion in tax relief over the next five years.

SEN. KAY BAILEY HUTCHISON (R), TEXAS: We are talking about 21 million married couples in this country having tax equity.

SNOW: Republicans said they were getting rid of the marriage penalty, a fluke in the tax code that makes some married couples pay more tax as a couple than they would if they were single. Democrats said the plan was all politics.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: If you're going to say you're going to fix the marriage penalty, fix the marriage penalty.

SNOW: Democrats agreed with the idea of helping married couples, but charged the Republican bill would benefit too many upper-income Americans. But Republicans said 60 percent of their tax breaks would benefit couples who earn $100,000 or less, and they insisted now is the time to spread the nation's wealth.

New figures from the Congressional Budget Office project a budget surplus of more than $2 trillion over the next decade. That's far higher than earlier projections.

Given those numbers, Senate Majority Leader Trent Lott says the president will have a hard time saying no to married couples.

SEN. TRENT LOTT (R-MS), MAJORITY LEADER: And I predict right now the president will sign this bill, because it's going to be very hard to explain. SNOW: But President Clinton is still threatening a veto. The White House says the Republican bill is fiscally irresponsible and timed to put President Clinton in a tough spot.

LOCKHART: It's very clear that the Republicans in Congress have decided to put aside their responsibilities and to play politics. They've made very clear that they want to get bills done timed to their convention so they'll have something to talk about at their convention.

(END VIDEOTAPE)

SNOW: Now the president has already said in a written statement that he may accept this marriage penalty relief in this form, but only if Republicans were to offer a prescription drug plan for seniors on Medicare. Republican have already rejected that idea of a compromise.

Kate Snow, CNN live, Capitol Hill.

SHAW: Thank you, Kate. And there's still much more ahead here on this edition of INSIDE POLITICS.

WOODRUFF: Still to come...

(BEGIN VIDEO CLIP)

KEATING: I was challenging people, and sometimes, you know, I'll use humor that is -- how do I say it? -- misunderstood.

(END VIDEO CLIP)

WOODRUFF: A look at the sometimes outspoken governor of Oklahoma. Is Republican Frank Keating vice presidential material?

Plus...

SHAW: Religion and a campaign issue collide. The abortion argument and its impact on Catholic politicians.

And later...

WOODRUFF: Kate O'Beirne and Al Hunt on how Ralph Nader factors into the presidential equation and other political matters.

(COMMERCIAL BREAK)

WOODRUFF: There is one less name in the Democratic vice presidential sweepstakes today. New Hampshire Governor Jeanne Shaheen says she likes her current job. Shaheen was asked on a conference call with reporters if she were interested in being considered for vice president. She said she is focused on being elected to a third term as governor.

SHAW: In the Republican veepstakes, Frank Keating remains in the picture, emphatically so. The Oklahoma governor is known for speaking his mind, and he smoke it loud and clear to CNN's Charles Zewe. (BEGIN VIDEOTAPE)

CHARLES ZEWE, CNN CORRESPONDENT (on camera): Do you want to be vice president?

KEATING: Oh, I'd be thrilled and honored.

ZEWE (voice-over): Oklahoma Governor Frank Keating is not bashful about what he'll say if offered the GOP's No. 2 spot.

KEATING: Well, I'd say sure, but I don't expect the phone to ring.

ZEWE: The 56-year-old Keating is a Catholic and Sooner state governor for 5 1/2 years. Millions of Americans got to know him because of a major national disaster...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: A third of the building has been blown away.

(END VIDEO CLIP)

ZEWE: ... the Oklahoma City bombing, where 168 people were killed.

Even his critics agree he was a steady voice in trying times.

(BEGIN VIDEO CLIP)

KEATING: For those who perpetuated this act, we have one message: In America, you can speak and write and vote and complain, but there is no right to maim and bomb and kill.

(APPLAUSE)

(END VIDEO CLIP)

ZEWE: Pat McGuigan, editorial page editor of "The Daily Oklahoman," says Keating and his wife, Cathy, set an example.

PATRICK MCGUIGAN, "THE OKLAHOMAN": And they performed -- I don't know what word to use other than magnificently, brilliantly.

ZEWE: But Keating does have his critics. In 1990, Democrats in the U.S. Senate blocked his nomination to be an Appeals Court judge after the NAACP claimed he had undercut fair housing laws and supposedly made racially insensitive remarks about protecting the private property rights of "good Christian landlords."

KEATING: That was an absurd slander that there was no foundation for it.

ZEWE: On the volatile issue of abortion, Keating, like George W. Bush, would allow it only in cases of rape, incest or danger to the life of the mother. He supports the death penalty, cutting taxes and vouchers for private schools.

An early supporter of the Texas governor, Keating urged Bush to answer questions about possible past drug use. Now he says that's not necessary.

ZEWE (on camera): Did you do drugs?

KEATING: No.

ZEWE: Never try them?

KEATING: No.

ZEWE: Ever wanted to?

KEATING: No.

ZEWE: How about alcohol?

KEATING: Oh, yes. Listen, if you're a Catholic, you love to have a glass of wine now and then.

ZEWE: The major criticism of Keating is that sometimes in an effort to be funny he is too quick with a one-liner that ends up being unintentionally offensive.

(voice-over): Keating, who's been called "Governor Pop-Off," once described bad teachers as slugs. When asked how he'd deal with the state teachers' union, he replied...

(BEGIN VIDEO CLIP)

KEATING: Homicide.

No, I'm...

(LAUGHTER)

(END VIDEO CLIP)

ZEWE: He described methamphetamines as...

KEATING: The whit-man, white-trash drug, which it really is.

ZEWE: And crack cocaine...

KEATING: Just like crack cocaine was a black-trash drug and is a black-trash drug.

DON HOOVER, DEMOCRATIC CAMPAIGN CONSULTANT: He has a well-known tendency to shoot from the lip.

ZEWE: Don Hoover is a Democratic campaign consultant.

HOOVER: At the end of the day, I don't think he'll pass muster.

UNIDENTIFIED MALE: He has a tendency of foot-in-mouth disease.

ZEWE: Radio talk-show host and former GOP consultant Mike McCarville, though, says Keating's candor is beguiling.

MIKE MCCARVILLE, RADIO TALK SHOW HOST: But to a lot of people, that's one of his charms, and to a lot of conservatives, they agree with everything he says no matter how it comes out.

KEATING: I'm always challenging people, and sometimes, you know, I'll use humor that is -- how do I say it? -- misunderstood.

ZEWE: Political observers say despite his verbal miscues Keating would be a good running mate.

MCCARVILLE: He helps George Bush hold the conservative right while during the general election campaign Bush of necessity moves more to the center or even a little bit to the left of center on some issues.

ZEWE: Keating is now waiting to see if the man he calls his brother governor to the South agrees.

Charles Zewe, CNN, Lawton, Oklahoma.

(END VIDEOTAPE)

WOODRUFF: Still ahead, another Republican vice presidential possibility and a closer look at the issue that could stand in his way.

(COMMERCIAL BREAK)

SHAW: Pennsylvania Governor Tom Ridge has stood beside George W. Bush at a number of recent events. But each mention of Ridge and the vice presidential slot is accompanied by questions about his position on abortion.

Bruce Morton, now, with more on an issue that has dogged other politicians in the past, and left them in hot water with the Catholic church.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): The group Priests for Life announced a one-million-dollar campaign to tell voters that abortion is a sin and urge them to vote against candidates who favor it.

REV. FRANK PAVONE, NATIONAL DIRECTOR, PRIESTS FOR LIFE: No public official of any party or of any religion can responsibly take a pro-choice position on abortion. Anyone who identifies himself as pro-choice on abortion first of all contradicts the teachings of the Catholic church. There is not more than one Catholic position on abortion. Furthermore, this is not only a Catholic issue, it is one of basic, fundamental human rights. MORTON: Father Frank Pavone said the campaign would include newspaper ads like this one and TV ads. It will not endorse or attack specific candidates by name.

PAVONE: Now, some in the media have interpreted our effort to be an attack on certain specific candidates for office. This is not the case. Voters are free to elect whom they choose. But to be free, one has to be informed of the implications of one's choice, including the moral and spiritual implications.

MORTON: Pennsylvania's governor, Tom Ridge, who's been mentioned as a possible George W. Bush running mate, is a Catholic who favors limited abortion rights, though he opposes the procedure foes call partial-birth abortions, and supports his state's 24-hour waiting period for an abortion. His bishop has barred him or anyone who shares those views from speaking at Catholic events, though Ridge can attend mass. It's an issue that dogged Roman Catholic Geraldine Ferraro, a vice presidential candidate in 1984.

(BEGIN VIDEO CLIP, 1984)

UNIDENTIFIED MALE: The issue is that the teaching of the Catholic church is monolithic on the subject of abortion. And it is stated in a letter signed by Ms. Ferraro that it is not monolithic. Now, to me, that's pretty basic disagreement.

(END VIDEO CLIP)

MORTON: The late cardinal and former New York governor, Mario Cuomo, also clashed over the issue. In 1980, vice presidential running mate George Bush modified his stand to fit better with Ronald Reagan's hard-line anti-abortion view.

(BEGIN VIDEO CLIP, 1980)

GEORGE BUSH, VICE PRESIDENTIAL CANDIDATE: I oppose abortion. I favor equal rights for women. And I am not going to say that I haven't had differences of some point with Governor Reagan and everybody else, many other people. But what I will be doing is emphasizing the common ground. I will be enthusiastically supporting this Republican platform.

(END VIDEO CLIP)

MORTON: Southern Baptist Al Gore, who favors abortion rights, was denied permission to stage a campaign event at a Catholic hospital because of his stand. Catholic voters, though, are less unanimous than their clergy.

KEATING HOLLAND, CNN POLLING DIRECTOR: Forty-nine percent say that they oppose abortion, but 44 percent say that they support abortion rights. So, while the Catholic clergy may be monolithically against abortion, lay Catholics, the ordinary Catholic Americans, are very split on the issue.

MORTON: No one knows how Governor Bush feels about Governor Ridge for sure, but it's a good guess he wouldn't like spending the fall focused on abortion and on trying to make peace with the Catholic clergy.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: For more now on this issue, we turn to our own Bill Schneider.

Bill, what would happen if Bush were to choose someone like Governor Ridge? What would abortion opponents do?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, Judy, most of them say that they would be upset, but they would probably still vote for Bush if he chose someone like Governor Ridge or New York Governor George Pataki. Now, how many Bush voters would simply refuse vote for him? Well, our calculations show that about one in 10 of his voters would abandon him if he put someone who favors abortion rights on the ticket.

That sounds small. If you consider the closeness of this race, losing that many voters could be fatal. And what happens if he chooses an anti-abortion running mate? Well, then only three percent of his voters would bolt. That looks like a much safer choice.

WOODRUFF: So, which voters would abandon him, Bill, if he were to choose a pro-abortion rights running mate?

SCHNEIDER: Interestingly, not Catholics. Catholics voters are actually, as we just heard, split on the abortion issue. In fact, almost 40 percent of Catholic Bush voters support abortion rights. Bush would lose only nine percent of his Catholic support if he picks an abortion right supporter. The big cost, as you might expect, would be among Religious Right voters, who make up nearly a quarter of Bush's supporters, almost the same as Catholics. Twenty-two percent of Bush's Religious Right's base say they would abandon him if he names a running mate who favors abortion rights.

Now, that is a cost he may not be able to afford.

WOODRUFF: But, Bill, wouldn't Bush gain support for people who are not now supporting him if he were to pick an abortion rights running mate?

SCHNEIDER: Uh huh, he would. but how many? First, we counted the number of Gore voters who say they would be likely to switch if Bush picks a running mate who favors abortion rights. Now, they amount to seven percent of all the voters. Now, compare that with the number of Bush who would abandon him in that case. That's 12 percent: a loss of 12, a gain of seven. That would put Bush five points in the hole if he chose a Ridge or a Pataki. Your call, Governor.

WOODRUFF: All right, Bill Schneider, adding up the numbers for us. And next on INSIDE POLITICS, with polls showing Gore closing the gap, what's the state of the presidential race? That questions and others Bernie will put two member of the "CAPITOL GANG."

(COMMERCIAL BREAK)

SHAW: Joining us now, two members of CNN's "CAPITAL GANG": Kate O'Beirne of "The National Review" and Al Hunt of "The Wall Street Journal."

Do we have a lot to talk about? We have the polls, we have Ralph Nader, we have the conventions, we've got vice presidential possibilities.

Starting with the polls, Gore moving in on Bush. How do you explain this, Kate?

KATE O'BEIRNE, "THE NATIONAL REVIEW": Well, I think all of us expect to see polls seesawing. And when you talk to Republicans today, because there are a couple of polls showing this race narrowing, they immediately explain that they had been predicting that these polls -- George Bush has enjoyed on average a five- to six-point lead. But they've been saying to people to get their own supporters ready for this that they're going to start narrowing. In fact, they anticipate that after both conventions -- come Labor Day, the Bush campaign will tell -- they except to be in a tie in the polls, that Al Gore will get a bigger bounce out of L.A. because at the moment he has fewer Democrats already with him, and that number is bound to go up after L.A., than George Bush does Republicans.

And then they, the Republicans point to the fact that Al Gore has never been above 50 percent, that their guy has been, the high favorables for George Bush in the polls. So they seem prepared to sort of weather the seesawing of polls.

SHAW: Al, is it really surprising? Is this a big deal that lo and behold Gore is catching up?

AL HUNT, "WALL STREET JOURNAL": This is going to be a close election, always was going to be a close election.

I think there's a little bit -- there's a spin of the bounce, if you will, going on right now...

(LAUGHTER)

... as to who's going to get a bigger bounce.

I think, in fact -- and Kate, I suspect, agrees with me -- the Bush people think by Labor Day they'll have a lead, a small lead, but a lead.

But I think the interesting ramifications of this tightening are No. 1 for the convention. The Bush people have said quite fairly and I think quite admirably they want to have a positive convention. They want to have a limited number of attacks on Clinton and Gore. Some Republicans are saying, wait a minute, if this thing is this close now, we may need a healthy dose of more Gore-bashing. That'll be a leading indicator to watch over the next 10 days.

And secondly, it probably has some potential impact on at least the vice presidential considerations.

SHAW: But the Republicans are telling us they're not going to have their traditional bash-the-Democrats night.

O'BEIRNE: No. Every night's going to be nice night, Bernie. You know, this is the nice party.

HUNT: As long as they think they're winning.

O'BEIRNE: But I do think that they think it's helpful. I don't think mind their -- their hard-core supporters, their delegates leaving Philadelphia knowing they've got a really tough race on their heads, that they headed into Philadelphia -- you know, despite the polls during the spring with the things tightening up -- I think they'll be being told in Philadelphia this is going to be a tight race, we're up against a nasty campaigner. I think they might be saying that kind of thing at least.

It's going to hard-fought and they want their troops revved up, ready for it.

SHAW: Do you each suppose it would be very unwise to (UNINTELLIGIBLE) a monkey with George Bush's bounce out of Philadelphia?

HUNT: You mean, whether Gore should go early or not?

SHAW: Try to upstage him.

HUNT: To do it too quickly. But there's only 10 days between the conventions. There really is such a short period anyway, Bernie.

Let me go back, if I may, for a moment to the Republicans: I think there's going to be increasing clamor over the next couple of days for John McCain, because I think Republicans are going to begin to say, wait a minute, this may really be a close race. And even if the Bush people try to prepare them for it, some of them -- some Republicans are surprised. And you'll hear it from House candidates now.

I'm not saying it's going to happen. I suspect it won't happen, but I think that's going to be the buzz in the next couple of days.

SHAW: A feeling of desperation if it's going to be that close.

HUNT: Well, desperation is too strong a word, I think, Bernie, but a sense that John McCain can cinch...

SHAW: Insurance?

HUNT: ... this thing for us. Yes. SHAW: Judy reported earlier on INSIDE POLITICS that Ralph Nader at the National Press Club, let me into these presidential debates. But is he a mortal threat to Al Gore?

O'BEIRNE: Too early to tell. The potential's there, again, based on these early polls in certain states -- there was a Michigan poll a week ago. And when he was thrown into the mix, George Bush had a 12-point lead in Michigan. Some of that was attributable to Nader drawing voters away from Gore, but that's a poll in July.

Some supporters of Ralph Nader who want to be with him try to persuade other Democrats to support Ralph Nader by saying Ralph Nader's only going to campaign in states where Gore is either so far ahead he can't hurt him or so far behind it won't make hey difference. But Ralph Nader himself has made no such pledge. But some Democrats are kidding themselves that they can make the points they want to with Ralph Nader and not have any impact. But I think -- I think that's far from clear.

HUNT: I agree. At 7 or 8 percent, I think Al Gore is really threatened by a Nader candidacy, if Nader gets 7 or 8 percent: 2 or 3, not so much.

And where the threats may end up, where the Nader threat may be most real is not even the bigger states, but places like Wisconsin and Washington that have tended Democratic, but also have this sort of progressive independent tradition.

SHAW: Who are you hearing right now, the hottest names on both parties' vice presidential lists, Al?

HUNT: Well, as I say, I think the McCain -- the McCain bus is going to be big. I think the fallback is probably Chuck Hagel, who is John McCain's closest friend in the Senate.

Democrats tell me they're petrified if Bush should pick McCain, and they say if he does that -- and again, I suspect it's unlikely -- if he does that, they only have two choices: Bill Bradley or Sam Nunn. If he doesn't do that, then their choices are far more diverse.

SHAW: Kate.

O'BEIRNE: I suppose given John McCain's obvious appeal, certainly to independents, there's an outside chance despite his expression of his unwillingness that maybe that could still be pulled off, I suppose. Otherwise, we're hearing, of course, Frank Keating's name a lot.

At the moment, though, I'm sort of lost in the fog of the war over VPs...

(LAUGHTER)

In fact, at some point, we're even be intentionally misled, I think, by people who might know a little something, because they want sort of a surprise. They just assume we not catch on early. HUNT: (UNINTELLIGIBLE) who don't know to start with, too.

O'BEIRNE: That's true. Some of that going on, too.

SHAW: Before we say goodbye, I had never heard Sam Nunn's name mentioned. That really is surprising.

HUNT: This would be, as I say, only if they were to come up with a shocker and pick John McCain, then -- then Al Gore can't do something conventional. And if you can't do something conventional, who else can you pick other than a Bradley or someone like a Nunn?

SHAW: Why not?

HUNT: Because I think that McCain would be seen as such a scintillating choice -- whether you like him or not, this is George Bush, you know, rising about it -- then Al Gore just can't just state politics.

SHAW: Al Hunt, Kate O'Beirne, thanks very, very much.

O'BEIRNE: Thanks, Bernie.

SHAW: Quite welcome.

Well, Judy, that's all for this edition of INSIDE POLITICS. We'll see you again tomorrow when our Pat Neal will have a profile of young George P. Bush, who's playing a prominent role in his uncle's presidential race.

And of course, you can go online all the time at CNN's allpolitics.com.

WOODRUFF: This programming note, Democratic strategist Mark Siegel and Republican strategist Scott Reed will be sizing up the short lists of vice presidential candidates tonight on CROSSFIRE. That's at 7:30 p.m. Eastern.

I'm Judy Woodruff.

SHAW: I'm Bernard Shaw. "WORLDVIEW" is next.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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