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Inside Politics

Bush Names Secretaries of Treasury, Agriculture, Commerce and Housing

Aired December 20, 2000 - 5:00 p.m. ET



GEORGE W. BUSH, PRESIDENT-ELECT OF THE UNITED STATES: I'm going to miss this place, I'll always be a Texan, however. I'm packing up my baseballs.


JUDY WOODRUFF, CNN ANCHOR: George W. Bush names a few of the people who will be traveling to Washington for his Cabinet. Plus...


BUSH: Our hope in this administration is that our economy remain robust. But should it not, we have a plan.


WOODRUFF: The economy tops the president-elect's agenda from his choice of treasury secretary to his plan for tax cuts.

Also, a nation politically divided. Can the next administration bring the country together?

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

WOODRUFF: Thank you for joining us. Bernie is off today.

President-elect George W. Bush is filling in a few more blanks on his Cabinet list. He began this afternoon with the secretary of the treasury, perhaps signaling the importance of economic policy in the months to come. Just an hour ago, the president-elect added three more nominees to his growing Cabinet.

CNN White House correspondent Major Garret is in Austin, and he joins us now -- Major.

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Hello, Judy. Well, this was by far the busiest day for the president-elect dealing with filling those important Cabinet positions. And the backdrop was the bad news on Wall Street, appearances that stock prices both on the Nasdaq and the Dow are declining, continuing worries about the fate of the U.S. economy.

And in that context, the president-elect started his day by naming his treasury secretary, Paul O'Neill, Mr. O'Neill is currently the chairman of Alcoa Corporation, the world's largest aluminum manufacturer. He was previously the president and chief executive officer of International Paper. A corporate chieftain with strong ties to the corporate world, but also government experience.

He was a hand at the Office of Management and Budget, rising to the No. 2 slot in the Ford administration, which means he knows the ins and outs of the American budget.

But at his unveiling, Mr. O'Neill made it clear that despite comments earlier in his life that he had sometimes supported higher energy prices -- higher energy taxes, rather, something the president- elect vehemently opposes, he is fully on the Bush economic team.


PAUL O'NEILL, TREASURY SECRETARY NOMINEE: I believe in the president-elect's policy and program as he's articulated it over the last many months, and I'm dedicated to helping him achieve the greatness that I believe he aspires to for America.


GARRETT: An undercurrent of the O'Neill announcement was his longstanding friendship with Federal Reserve Chairman Alan Greenspan. The two have known each other since 1969, and Mr. O'Neill made it clear that at times the Fed chairman has actually called him in to give him advice on both the international economy and the domestic U.S. economy.

Being a part of Mr. Greenspan's kitchen cabinet places Mr. O'Neill in a rather unique position in American economics, something that the president-elect hopes he can rely upon in the days and weeks and months to come as he tries to sell his budget and tax policies to a sometimes skeptical Congress.

Later on in the day, filling out a little bit more on the economic team for the president-elect, he named Don Evans, a lifelong friend and chairman of the Bush campaign, as chairman of commerce: a key part of the Bush administration, one that will focus intensely on developing the U.S. economy and spreading free trade across the globe.

Mr. Evans, a small businessman who took a small business in the oil industry and grew it into a quite large one, said free enterprise is most important to him, and it will be the key goal as he runs the Commerce Department.


DON EVANS, COMMERCE SECRETARY NOMINEE: If I am fortunate enough to be confirmed by the Senate, the road the Department of Commerce will travel is clear: The promotion of free enterprise, first in America and then abroad, will be our first priority. Free flow of capital, free and open competition.

We will strive to be an advocate for U.S. businesses, first in America, and also those wading into the waters of the global marketplace.

In short, we will endeavor to keep the genius of the American free enterprise system strong and dynamic from sea to shining sea and around the world.


GARRETT: Another key Bush appointment today: that of Agriculture Secretary Ann Veneman. Now, you might not ordinarily think of the agriculture secretary being a key part of any president's economic team, but clearly Ann Veneman will be a key part of this president's economic team, because she is a strong and stout free-trader.

The president and she made it clear in their announcement that they believe that U.S. agriculture is a key part, not only of the U.S. economy, but a part of the global economy, and they want to spread free trade around the world and help U.S. farmers sell their goods and services and products overseas.

One last Cabinet appointment announced today: Mel Martinez. He is currently the chairman of Orange County: That is the large county in central Florida, home to Orlando. He is a Cuban refugee, arrived on the shores of Miami in 1962 at the age of 15, spent a few years with foster parents there, and was reunited with his family. He spent a good long time in his announcement here with the press talking about that journey to America, talking about the importance of freedom, and how as the head of the Department of Housing and Urban Development, he wants to spread that dream of freedom to Americans who have yet to obtain it, who have yet to obtain a house.

He wants to use the Department of Housing and Urban Development to create an American dream for other Americans, one he has enjoyed so thoroughly -- Judy.

WOODRUFF: It seems to us that the president-elect, with all of these choices, Major, is sending a message of one sort or another. Are there any messages that he wants, still, to be sent with the rest of his Cabinet choices?

GARRETT: Well, I think with the rest of his Cabinet choices he's going to be trying to deal with some of the internal political dynamics of the Republican Party. I mean, there are still some conservatives who would like to see more conservative Republicans in the Cabinet. There was some conservative criticism, for example, of Mr. O'Neill. There was criticism that at a 1992 economic conference, called together by then President-elect Bill Clinton, he spoke quite outspokenly in favor of higher U.S. energy taxes. They thought that was a bad sign, and they sometimes wonder if Mr. O'Neill will be a full-fledged supporter of the $1.3 trillion tax cut Mr. Bush intends to take to Congress.

So conservatives, I think, will be keeping an eye on future Cabinet appointees, and that will be something the president-elect will have to weigh. There are certainly names being suggested that would suggest perhaps an orientation toward the conservative wing of the party. Governor Tommy Thompson of Wisconsin is frequently mentioned as the possible leader of the Department of Housing and Urban Development. Dan Coats, a conservative Republican from Indiana, a former senator, is often being mentioned as the next defense secretary.

So I think the Bush administration, the president-elect will try to balance those forces within the party, create a Cabinet that is not only skillful and loyal to him, but one that also touches on all sides of the Republican Party -- Judy.

WOODRUFF: All right. Major Garrett, reporting from Austin, thanks very much.

George W. Bush opted not to follow the example of past presidents, who frequently selected their treasury secretaries from Wall Street.

For more, we turn to CNNfn's Lisa Leiter.

Lisa, what is the reaction on Wall Street to the selection of Mr. O'Neill?

LISA LEITER, CNN CORRESPONDENT: Well, I think they feel that he's a highly competent individual, very well-respected. Certainly, he's created a lot of wealth for Alcoa shareholders. The stock has increased more than eightfold since his tenure. He's been chairman for about 13 years.

But there is some concern that he'll have to work a little bit harder than, for example, Bob Rubin had to in developing the kind of intimate relationships and gaining the credibility and the stature that he had already from having come from Wall Street.

WOODRUFF: We heard Major Garrett talking about the friendship that he said. And today, I think he said he's a close friend of Alan Greenspan. Does that count for much?

LEITER: Oh, absolutely, especially at such a critical time in the economy, at a time when people are questioning whether the Fed is on the right track. You know, just yesterday they abandoned their anti-inflation stance and basically telegraphed to Wall Street that perhaps their next move is an interest rate cut. And at the time when the economy is showing so many signs of a slowdown, that's going to be a key relationship for him.

WOODRUFF: All right. Lisa Leiter, thanks very much. We appreciate it.

Well, there may have been a message in Bush's decision to announce his treasury secretary in a separate news conference today. The message: that the president-elect is prepared to focus on the changing economy.


BUSH: Our economy is showing warning signs of a possible slowdown.

WOODRUFF (voice-over): As President-elect Bush announced the appointment of business executive Paul O'Neill as his treasury secretary, the signs of that slowdown were impossible to miss. The reeling stock market took another tumble today: The Dow Jones industrials fell 265 points. The Nasdaq dropped 179 points to finish at its lowest level in more than a year.

Other signs: High energy costs are cutting into profits, corporate earnings are falling short of expectations, consumer confidence is declining. Analysts fear Christmas sales could be the weakest in years.

Faced with the sudden slowdown, the Federal Reserve did a quick about-face Tuesday, saying the risk of recession now outweighs the risk of inflation.

BUSH: The Fed sent the signal, and we are going -- we are going to play the hand we have been dealt.

WOODRUFF: The economy will likely be Bush's first major challenge. On Monday, he met with Fed Chairman Alan Greenspan, and backed him without reservation.

BUSH: I talked with a good man right here, and we had a very strong discussion about -- about my confidence in his abilities. And I mean that in all sincerity.

WOODRUFF: Today Bush repeated his faith in Greenspan, but he also made it clear that he has his own plan to help the economy, his $1.3 trillion tax cut.

BUSH: I believe strongly that tax relief is part of the prescription for any economic ill that our nation may have. I think it is so important for members of the Hill to understand that tax relief is all about economic growth and cash flow and accumulation of capital.


WOODRUFF: And as we've been mentioning in this hour, most analysts expect some relief well before any Bush tax cut will go before Congress, as the Federal Reserve is widely expected to cut interest rates when it meets again at the end of January.

Just ahead, we will take a closer look at the economic challenges that may face the Bush administration. Some experts look into our financial future when INSIDE POLITICS continues.


WOODRUFF: When George W. Bush nominated Paul O'Neill for treasury secretary today, the president-elect mentioned the possibility of an economic slowdown. We've asked three experts to offer their perspectives on the economy. Here in Washington, we have Tom Gallagher of the International Strategy and Investment Group; Alice Rivlin of the Brookings Institution; and in New York, Steven Roach of Morgan Stanley Dean Witter and Company.

And I'm going to begin with you, Mr. Roach, in New York. Let me first pull back and ask you to look at yesterday. The Federal Reserve did not choose to lower interest rates for now, but they did acknowledge that the risk of a recession they said now greater than the risk of inflation. Did they do the right thing yesterday?

STEVE ROACH, MORGAN STANLEY DEAN WITTER: I think they did, Judy. It's very clear to us that the economy is slowing appreciably, but the jury is still out on whether or not we'll actually go into a recession. I think in early 2001, the Fed will move to take rates lower, but they'll do it in a measured and deliberate fashion, and I think that's an appropriate thing for them to do.

WOODRUFF: Alice Rivlin?

ALICE RIVLIN, BROOKINGS INSTITUTION: Oh, I agree with that. I think the Fed had to put themselves in position to lower rates. The Fed is actually in a very good spot right now with respect to acting, because interest rates are high enough so that they could if they needed to take them down quite a lot, and that would be good for the economy if indeed it is slowing down too much. But as Steven said it's not clear yet that that's necessary.

WOODRUFF: And Tom Gallagher, did the Fed do the right thing yesterday?

TOM GALLAGHER, INTERNATIONAL STRATEGY AND INVESTMENT: I think they did, although the economists that I work with in New York probably have one of the more pessimistic forecasts among the professional forecasters, so our view is probably that the Fed is going to need to be a bit more aggressive next year when they come to these interest rate decisions. So, they probably will have to cut rates more aggressively then, but I don't think there's and urgency in doing it yesterday.

WOODRUFF: Well, Steven Roach, let me come back to you. When you say it's not clear, we've heard George W. Bush now on several occasions in the last few days talk about we may be on the verge of an economic slowdown. Just in the last couple of days, Dick Cheney said we may be on the front edge of a recession. Is it premature be saying that or is he correct?

ROACH: No, I don't think it's premature. I think the economy is facing multiple sources of deceleration right now, Judy, whether it's the lagged impacts of the Fed tightening that occurred over the last 18 months, higher energy prices, a weaker stock market or rising corporate financing costs, all these factors are coming together to produce a very sharp slowdown in the economy. But whether we tip into a recession or not is still an open question.

WOODRUFF: Alice Rivlin, how do you read that? RIVLIN: Well, I think it's unlikely we will tip into recession, but it's very dangerous for the new president's team to be talking recession. Recession talk tends to be self-fulfilling, and I'm a little worried about it.

I think they're doing it so that they can make the case for their big tax cut, but unfortunately, that's the wrong reason. If they want the Fed to lower rates and that's the best policy for warding off inflation -- warding off recession, they shouldn't be talking big tax cut because a big tax cut is exactly what would keep the Fed from lowering rates enough to ward off recession.

WOODRUFF: Well, you've raised a couple of points there and Tom Gallagher, turn to you now. Do you share Alice Rivlin's concern that talking about a recession may become a self-fulfilling prophecy?

GALLAGHER: There's a slight risk of that, but I can't imagine many families out there trying to decide whether to buy an SUV or not that they're going to be influences by what Bush and Cheney are saying. I think the Fed statement yesterday, worried about economic weakness, is a lot more important in setting the mood of the country.

Plus, it's really not unusual to have new presidents when you change parties controlling the White House, talk down the economy. President Clinton had a seminar in Little Rock in 1992 to talk about how to fix the economy. President-elect Reagan similarly was talking down the economy in 1980. So, it's really nothing out of the ordinary. You kind of expect new presidents to talk down the economy to make a case for the proposals they campaigned on.

WOODRUFF: Steven Roach, what about you? Do you think that talking about a recession is in and of itself a bad idea, if we're not sure we're going to end up there?

ROACH: Well, I do not underestimate the ability of expectations themselves to be self-fulfilling. So, consumer confidence in early December, prior to the outcome of the election, plunged very sharply. Retail sales look like they're going to be pretty crummy this Christmas. Unemployment is still at very low levels, but the risk is it could go higher, and if you get some talk from the political arena, that could add a little bit of fuel to a very negative expectational climate, and we could have a recession.

WOODRUFF: Alice Rivlin, you said a moment ago, in a way you think that the president-elect may be making the case for his $1.3 trillion tax cut proposal. Why do you believe that's the wrong way to go? Why do you think interest rate cuts and other remedies make more sense than a tax cut, a big tax cut?

RIVLIN: Well, several reasons. Interest rate cuts can be done very quickly by the Fed and it's a very sensitive instrument and it's also reversible. If they go too far, they can go the other direction quite quickly. A tax cut will take a lot of work with the Congress. Not everybody is for it.

It will be a long debate and it'll stretch out probably until next fall, and if quick action is needed, the Fed had better do it. Not fiscal policy but more important, over the long run, we need to reduce the debt. That doesn't mean we can't have some tax cut but a really big tax cut will give away the surpluses that we're going to need when the baby boom generation retires, and I think that's a bad idea. Tax cuts are not reversible. Interest rate cuts are.

WOODRUFF: Tom Gallagher, how do you counter that?

GALLAGHER: Actually, I don't counter it. I agree with what Alice Rivlin just said. I think that whenever you're dealing with a slow down in the economy, monetary policy run by the Fed is the best way to try to deal with that for all the reasons that she described.

I mean, from a political point of view, we probably are going to see a tax cut next year. I think that as the economy weakens, voter tolerance with gridlock and stalemate is probably going to diminish. So they'll expect Washington to do something about it. So, you'll probably get some kind of a tax bill and the Fed will have to incorporate that in their decisions on just how much they're going to cut interest rates.

WOODRUFF: And Steven Roach, this whole notion that again Alice Rivlin raised that talking about tax cuts, pushing tax cuts may make it less likely that the Fed would do something about interest rates?

ROACH: Well, that's possible, but let me just make one, additional point, Judy. Whether the Fed cuts rates tomorrow or there's a tax cut tomorrow, there's a lag in terms of how long it takes these actions to actually impact the economy. So policy is not going to give you a quick fix for a downturn that could occur in the first half of 2001. And I think we have to accept that. The policy moves we will see in the next few months, will probably more of an impact on the next upturn than it will in forestalling any downturn.

WOODRUFF: Alice Rivlin, you agree with that?

RIVLIN: Oh, not quite. I think part of it is a tax cut can't be enacted tomorrow and a rate cut could, but both would take some time, but I do believe that rate cuts act more quickly because they're a signaling mechanism to the markets and the markets could react quite quickly as I believe would consumers and investors.

WOODRUFF: All right, we are going to have to leave it there. Tom Gallagher here in Washington; Alice Rivlin and in New York, Steven Roach. Thank you all three. We appreciate you being with us.

ROACH: Thank you.

WOODRUFF: And there's much more ahead on this edition of INSIDE POLITICS. Still to come...


BROOKS JACKSON, CNN CORRESPONDENT (voice-over): How Democrats howled when the issue was Newt Gingrich's book deal. Now Senator- elect Hillary Rodham Clinton is nailing down a book deal worth $8 million.


WOODRUFF: Brooks Jackson checks the facts and the criticism over the first lady's latest venture.

Plus, the news media reexamining Florida's ballots as Margaret Carlson and Tucker Carlson examine the news of the day.

And later, remembering a political icon in New York. Jeff Greenfield looks back at John Lindsay.


WOODRUFF: We'll have more of the day's political news coming up, but now a look at some other top stories.

Fear of terrorism has security high at U.S. facilities throughout the Middle East and Western Europe. U.S. officials say the last days of the Muslim holy month of Ramadan hold potential for violence.

Meanwhile U.S. and Yemeni investigators say this man, Saeed Awad Al-Khamri (ph) -- we can't show him to you now, but we will in a moment -- is one of two suicide bombers involved in the October attack on the USS Cole. Investigators say there's also evidence linking terrorist leader Osama Bin Laden to the bombing.

It is all over now, but for a while today the London Eye Ferris wheel was held hostage by Turk and Kurd demonstrators threatening to set themselves or the wheel on fire. Chanting crowds had gathered at the base of the giant wheel in support of political prisoners in Turkey. No one was injured, and after several hours the protesters surrendered to police.

As much of the United States continues to shiver, parts of the Northeast are hunkering down for the next in a line of heavy snow storms. An overnight snow led to another risky commute this morning across much of New England. If the Northeast is getting more than its share, it's hardly alone as another blast of cold, rain, and snow is poised to hit the South. Also arriving tomorrow: The official start of winter at 8:37 a.m. Eastern standard time.

Meteorologist Chad Myers joins us now with more on the winter weather -- Chad.


WOODRUFF: Normally, Washington would take very little interest in a new book by an incoming freshman senator. Well, that changes when the senator's name is Hillary Rodham Clinton. Coming up, we'll take a closer look.


WOODRUFF: From scandals to lawsuits to independent counsel investigations, the Clinton years were eventful to say the very least. What was it like to experience all that intrigue first hand? Well, we may soon know, thanks to a book by first lady Hillary Rodham Clinton, at least part of it. But that book deal is raising intrigue of its own.


JACKSON (voice-over): 1995...

UNIDENTIFIED CONGRESSWOMAN: The potential conflict of interest still exists.

JACKSON: How Democrats howled when the issue was Newt Gingrich's book deal.

REP. DAVID BONIOR (D), MICHIGAN: But this latest $4 million book deal wades 10 feet deep into the ethical swamp.

JACKSON: Now, Senator-elect Hillary Rodham Clinton is nailing down a book deal worth $8 million. But this time, the only questions are coming from the Conservative Landmark Legal Foundation, which filed a complaint with the Senate Ethics Committee and from Ralph Nader's Congressional Accountability Project.

GARY RUSKIN, CONGRESSIONAL ACCOUNTABILITY PROJECT: There are real potentials for conflict of interest here.

JACKSON: Nader's group and others questioned Gingrich's deal because his publisher was owned by a giant media conglomerate, Rupert Murdoch's News Corporation, which lobbies Congress. Mrs. Clinton's publisher is owned by another giant media conglomerate, Viacom, which also owns CBS and also lobbies Congress.

RUSKIN: They give a lot of campaign contributions. They have a number of things that they want out of both Congress and the Federal Communication Commission, other parts of the federal government.

JACKSON: But Gingrich backed off his deal, took only a $1 advance, plus future royalties on actual sales, which were disappointing and eventually totaled much, much less than $4 million. The House later changed its rules to forbid big advance payments like the one Gingrich would have received.

But Senate ethics rules still impose no limits on royalties if they are from established publishers and under, quote, "usual and customary contractual terms, " And in publishing, big advances are customary. So, experts say Mrs. Clinton's book deal is probably OK.

BILL CANFIELD, FORMER SENATE ETHICS COMMITTEE LAWYER: Unless someone can determine that Viacom has done something with her through this arrangement that is out of the usual, out of the norm, out of the ordinary, not customary in the publishing business in New York -- if they can show that, she'll have a problem.

JACKSON: Newt Gingrich complains that Mrs. Clinton is being held to a different standard than he was. NEWT GINGRICH (R), FORMER HOUSE SPEAKER: What I did in the end was the right thing, which was sign a deal where I got the royalties for the books we sold. Nobody complained after that, and that's what she should have done.

JACKSON: But even he says her book deal is probably legal. So, the financial future looks bright for Mrs. Clinton and mister. They already own a $1.7 million house in Chappaqua, New York. And now Mrs. Clinton reportedly has been looking at this $4 million mansion in Georgetown and other expensive properties as a possible Washington residence.

(on camera): But they can afford it. Their huge legal fees are mostly paid off, thanks to private donations from political supporters. And Mr. Clinton faces no limits at all on the royalties, speaking fees, corporate directorships or even outright gifts that he can take when he leaves office.

(voice-over): Happy holidays!

Brooks Jackson, CNN, Washington.


WOODRUFF: Well, she's evidently getting a lot of money for writing a book about her years in the White House. Some opinions on the controversy surrounding Hillary Rodham Clinton's publishing deal when we come back.


WOODRUFF: In Florida, they're boxing up and shipping them from Tallahassee down to Palm Beach County in an attempt to put the infamous election behind them, and maybe to do some counting by hand of some of those ballot.

But that may be far easier said than done, putting the election behind them, that is. How long will it take Florida to live down this election? And can first lady Hillary Rodham Clinton live down her multimillion dollar book deal or should she want to?

We're joined now by two people with perhaps some definite opinions on those questions: "Time" magazine's Margaret Carlson and "The Weekly Standard's" Tucker Carlson. Thank you, both.

Tucker, are there ethical questions that we should be considering at least with regard to Mrs. Clinton's book deal?

TUCKER CARLSON, "THE WEEKLY STANDARD": Oh, I think there are questions of seemliness rather than the law. I mean, you know, it's hard to believe that Mrs. Clinton wouldn't have had -- you know, when you're negotiating a $8 million deal you probably would hire a lawyer to make certain that it's not illegal before you embark on it. But I don't think that's the point.

The point is for eight years the question has been, you know, to what degree should we ask Mrs. Clinton questions about her private life when she does interviews? And the consensus has always been, gosh, it's something uncomfortable about asking the first lady of the United States about her marriage, et cetera and here she is making, you know, this profit on her private life, and there's something -- I think whatever the legal question turns out to be -- something unseemly about that.

MARGARET CARLSON, "TIME" MAGAZINE: Well, it takes a senator to get $8 million. I think there's a combination. I mean, she's even more interesting now because she's the first, first lady to become a senator. But as much as seemliness, I object on grounds of impending boredom. She is the most private person, especially everything that's swirled around her, and she's protected it by this zone of privacy and everything that the prurient public is interested in, I think we know for free in the Starr report.


WOODRUFF: She's unlikely to talk about that.

M. CARLSON: So unlikely. So unlikely and I would like to hear the conversation that was had between the publisher and Mrs. Clinton. There was nothing in writing, apparently, and it was an oral proffer of what the book would contain and then decided to fork over $8 million for it. It's just hard to imagine.

T. CARLSON: Well, I mean, it's not hard to imagine. I don't think -- I mean, I understand the fact that she's now a senator-elect makes her book, you know, worth more money. I don't think, however, that being the freshman senator from New York elect entitles you to an $8 million book deal. Clearly, there's an arrangement, an agreement on her part to talk about her marriage. I mean, there's no other way to understand it. In every leak out of the publishing world indicates that she's agreed do that.

M. CARLSON: I think it might have been false advertising. It's hard to picture that happening, but if she does, I think it will be worth $8 million.

WOODRUFF: When is this book supposed to come out?


T. CARLSON: Not to me.

M. CARLSON: In about three years.

WOODRUFF: So, we have to wait to find out. George W. Bush, making some appointments, letting us see at least what part of his Cabinet looks like. What are we learning about him. What are we learning about him and what he'd like to do as president from these choices?

T. CARLSON: We're learning he's much more moderate, at least, if these appointments are anything to judge by and I think they are, then people have said. I mean, I'd like to hear mea culpas from all that people for the last year who have said he's this puppet of Tom DeLay -- not that that's a bad thing -- but that has been the stock criticism, that he's this crazed right-winger. So, all of a sudden, you know, Christie Whitman may run EPA and, you know, Colin Powell and, you know, virtually everyone appointed so far is a moderate. I'm not saying that's a bad thing, but these are not the actions of Jesse Helms character.

M. CARLSON: It's not Tom DeLay's Cabinet, but we'll see how he deals with Tom DeLay once he's dealing with Tom DeLay and it's a Cabinet that looks like America, actually. It's a pretty moderate...


WOODRUFF: Did we hear that?

T. CARLSON: I was going to say, I liked that phrase you just used.

M. CARLSON: I know, and he's delivering. So, I think so far, so good.

WOODRUFF: And do you expect the trend will continue. I mean, based on the names that we're hearing down the road, Dan Coats, defense...

T. CARLSON: And sure. Floyd Flake at education. I mean, again, this is, you know...

M. CARLSON: And we hear Governor Marc Racicot is getting AG, and he really earned it; out there every day in Florida.


WOODRUFF: In Florida.

T. CARLSON: But it's just striking to me the absence of a single conservative ideologue. I mean, arguably Coats.

M. CARLSON: Well, Dan Coats.

T. CARLSON: Well, sure he has a conservative voting record, but I mean, it's not...


M. CARLSON: And he got over Tom Ridge, who keeps losing and each time he loses out on getting something from George Bush they say, well, he removed his name from consideration.

T. CARLSON: So, I think that means that we have at least one thing to be thankful for this Christmas season. No Tom Ridge.

M. CARLSON: Oh, not at all. My governor, Tom Ridge, should be in the Cabinet. It would be a great appointment for any president.

WOODRUFF: All right, Margaret. You're on record. All right, Florida, the recount. Several organizations engaged in trying to figure out how many dimples, one hanging, two hanging, three hanging chads so that we get some sort of recount, hand count, by perhaps more than one standard.

We talked to someone from -- an editor from "The Miami Herald" who told us the other day at least two standards. They'll produce numbers with dimples, without, and the so forth. Is this going to be helpful in terms of getting this election sort of clarified, Margaret?

M. CARLSON: Well, I think for a sense of closure, I think we want to know exactly, you know, what the count was. George Bush is president, but you know, what is the count? The most interesting count came out yesterday. It was in Lake County, where rejected ballots were rejected because there was both a vote for Al Gore and a write-in for Al Gore. So, when those were looked at, Al Gore gained 130 votes. So, we're down -- it's 24 and counting as far as what's separates Gore and Bush.

T. CARLSON: Right, and we're really, as Margaret, said moving towards closure here. I mean, if the Supreme Court can't finally this, maybe the metro desk at "The Miami Herald" can. I mean, this is -- you know, there's -- the closure is not going to be achieved by this.

For one thing, you've got not only news organizations, but you've got Judicial Watch, run by the cable-ready Larry Klain, that's right, and so you're going to have, you know, a number of different final tallies here and I think that's going to help the Bush administration say with some plausibility we don't know any more than we knew before. It's even more muddy and confusing. Let's stop this.

WOODRUFF: We never have closure with you two. We wish we could just go and one, but the clock is ticking and we have to say good-bye. Tucker Carlson, Margaret Carlson.


M. CARLSON: Thanks, Judy.

WOODRUFF: Thank you both. We'll see you back soon. New York City loses one of its most beloved leaders. A look back on the life and times of John Lindsay when INSIDE POLITICS returns.


WOODRUFF: This morning, former New York City Mayor John Lindsay lost a long battle with Parkinson's Disease. Lindsay will be remembered for many things: His battles with then-Governor Nelson Rockefeller; his defection from the Republican Party, but most of all his enduring affection for the city he led.

CNN's Brian Palmer looks back at Lindsay's legacy.


BRIAN PALMER, CNN CORRESPONDENT (voice-over): John Lindsay was a patrician Republican in a Democratic town, but he vowed to take on New York City's ills, and in 1965 the voters believed him.

ROBERT PRICE, FORMER CAMPAIGN MANAGER: People felt that here was a white Anglo-Saxon Protestant who could lead us out of our misery.

PALMER: A four-term Congressman from New York's wealthy upper East Side, the so-called Silk Stocking district, Lindsay was the first Republican mayor elected since Fiorello La Guardia.

PRICE: It's funny that a guy who came out of the blue blood, prep school, Ivy League world would be the one to deliver the message of the poor and disenfranchised.

ESTER FUCHS, POLITICAL ANALYST: He loved the city of New York, and he loved the people of the city of New York, and that certainly comes through in his policies and in his legacy.

PALMER: At a time when the country was racially polarized and the Vietnam War was taking its toll, John Lindsay reached out to heal the city.

FUCHS: He was a man who could bring people together. John Lindsay could walk the streets of Harlem and reassure the black community of New York City that they were being represented by the government.

PALMER: But it was a tough first term for John Lindsay, with transit, sanitation and teacher strikes crippling the city. He lost the Republican nomination for mayor in 1969, so he ran on the independent and liberal party lines, and was reelected.

But John Lindsay had his eye on greater things.

PRICE: There's much literature about that he was running for president from day one. He was actually, in my mind, running for president, not from day one, from about day four.

PALMER: And run he did. Lindsay became a Democrat and made an unsuccessful bid for the 1972 presidential nomination. He went back to practicing law in New York and ran, without success, for the U.S. Senate in 1980. After being stricken with Parkinson's Disease, Lindsay moved to South Carolina with his wife. Many blamed Lindsay policies for New York City's fiscal woes of the '70s, but what lingers in the hearts and minds of those who knew him is his charisma, his style, and his compassion.

PRICE: Walking into those neighborhoods, and somehow everybody being able to relate to him, and him to them. No matter what, angry or not, they wanted to touch John Lindsay.


WOODRUFF: CNN senior analyst Jeff Greenfield knew John Lindsay well. He was Lindsay's chief speechwriter from 1968 to 1970 and Jeff joins us now from New York City with his recollections of the former mayor.

Jeff, what should we know about John Lindsay that we perhaps don't?

JEFF GREENFIELD, CNN SENIOR ANALYST: I think the centrality of race and the racial division in America at the time that John Lindsay became mayor in 1965 was the central, defining issue of his entire administration for a lot of reasons. One, this was a time when the promise of the Civil Rights revolution, the "I Have a Dream" speech, the march on Washington, had already fractured. There were riots beginning in big cities.

There was a feeling that racially, this country was beginning to come apart and so the one charge placed on John Lindsay was try to keep it together, and he did that with great success. But he did it at a price and part of the price was the alienation of other people who felt aggrieved in a place like New York, specifically the white- working class, possibly because he came out of patrician Republican roots, as the piece suggested.

John Lindsay had very little connection with the fiefdoms that had grown up in New York among various other white working class groups, and I think that in attempting to reaching out to the blacks without simultaneously reaching out into that group, he helped define a political problem that would sweep across, really, a lot of American cities in the coming years.

WOODRUFF: Jeff, what about John Lindsay the man? You've known, and covered, worked with at one point, but known many, many political figures. How was he different as a person?

GREENFIELD: Actually, one of John Lindsay's defining characteristics, and it may not have not been a great political characteristic, was he was a really nice fellow. There are people who think without a certain streak of ruthlessness in you, you cannot succeed as a political leader, particularly in a place like New York, and, in fact, if you look at John Lindsay and Rudy Giuliani, another Republican.

Now, there are a lot of different reasons why Giuliani has been successful. The enormous profits thrown off by Wall Street; the end of the crack cocaine epidemic that enabled crime to drop. But one of the reasons that Rudy Giuliani, I think, has been successful in a way John Lindsay wasn't was Rudy Giuliani can be a tough, mean, son of a gun, I almost mean to say, and John Lindsay, I think, lacked that killer instinct.

I think there was a certain sense of restraint on his part; a certain sense of almost demeanor that probably wasn't what New York City ultimately wanted. He came in, remember, as a prince; as a kind of an heir to the -- kind of a Republican Kennedy: 45 years old, incredibly handsome, incredibly dashing and that charisma worked for a while, but in terms of cracking the nut of some of the city's toughest problems, it probably took someone a lot less nice than John Lindsay to do it.

WOODRUFF: So is there a Lindsay legacy, Jeff?

GREENFIELD: I think the Lindsay legacy is one that whatever people want to say about him, for good or ill, his ability to cross that racial divide at a time when with the exception of Robert Kennedy, no other white politician in America could, would be one of the great hallmarks of his time.

And the second one, I think, was that John Lindsay came to power at a time when the liberal coalition that had gotten Roosevelt and Truman and Kennedy so successful was beginning to come unstuck, and it became unstuck first in places like New York City, and John Lindsay actually was called on to ride the tiger of that kind of split and did so, I think, to be about it, with middling success, but the sheer courage that he showed in those days in the '60s walking the streets of Harlem and Bedsty, that's what I think a lot of New Yorkers will remember now.

WOODRUFF: All Right, Jeff Greenfield in New York. Thanks very much. We appreciate that. Very special remembrances.

The current occupant of 1600 Pennsylvania Avenue has one month left on his lease. When INSIDE POLITICS returns, we'll tell you more about the next tenant, and the people he's bringing to Washington.


WOODRUFF: George W. Bush puts four more in the Cabinet, with a focus on the economy and Republican insiders. Plus:


WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): First, we had the election. Then, we had the post-election when Americans seemed torn apart. Now, we have the question: How divided is the country?


WOODRUFF: Bill Schneider on the cultural split of American voters and what it means for the president-elect. Also:


MATTHEW CHANCE, CNN CORRESPONDENT (voice-over): Israel, facing a leadership contest in February without the candidate many feel could have won.


WOODRUFF: CNN's Matthew Chance on politics far beyond the Beltway. The latest on the candidates for Israeli prime minister.

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

WOODRUFF: Aides say George W. Bush will resign as the governor of Texas tomorrow. With one month left until his inauguration as president, Bush has announced four new Cabinet nominations.

CNN White House correspondent Major Garrett reports that most of the attention focused on his nominee for treasury secretary.


MAJOR GARRETT, CNN CORRESPONDENT (voice-over): As stock prices fell and corporate profits sagged, the president-elect warned of tougher economic times.

GEORGE W. BUSH, PRESIDENT-ELECT OF THE UNITED STATES: Our economy is showing warning signs of a possible slowdown, and so it was incredibly important for me to find somebody who had vast experience, who is a steady hand...

GARRETT: Mr. Bush said he wasn't trying to talk the economy down. He described himself as a realist and said his economic team must be ready for the worst.

BUSH: One of my jobs is to think ahead just in case. The Fed sent the signal, and we're going -- we are going to play the hand we have been dealt.

GARRETT: And he wants to play it with a friend of Fed Chairman Alan Greenspan. O'Neill's known Greenspan for 30 years, and that can't hurt.

PAUL O'NEILL, TREASURY SECRETARY NOMINEE: I've made it a business -- my business, at his request, to come by on a fairly regular basis and tell him what I thought he was doing wrong and what I thought he was doing right, which I felt I had the privilege to do...

GARRETT: Three other Cabinet nominees pack skill and political clout. All are Bush insiders.

Don Evans as commerce secretary: Evans raised more than $100 million for the campaign, a good deal of it from corporate America. Ann Veneman, a Californian, as agriculture secretary, the first woman ever appointed to the post. Veneman was No. 2 at the department for Bush's father. And Mel Martinez, a Cuban refugee, to lead the Department of Housing and Urban Development. Martinez has little housing experience, but close ties to Florida's Cuban community and testified before Congress on behalf of the Miami relatives of Elian Gonzalez.


GARRETT: The early read from Wall Street on O'Neill was bleak. High-tech stocks plunged to a 21-month low and the Dow plunged more than 260 points. Economic fundamentals drove the sell-off, but O'Neill's name did nothing to calm the stock market nosedive -- Judy.

WOODRUFF: Major, when we had Margaret Carlson and Tucker Carlson on a few minutes ago, they were saying that most of Governor Bush's choices so far for the Cabinet seemed to be more moderate than people had expected. What are conservatives saying about the Cabinet so far?

GARRETT: Well, conservatives are saying that trend better reverse itself in the not-too-distant future, and there are some signs that indeed it will, Judy. Quite a bit of speculation among Republicans that among the next Cabinet appointees the president-elect will announce will be Dan Coats, a conservative senator from Indiana, former senator, as defense secretary, also governor Tommy Thompson, a staunch opponent of abortion rights, the governor of Wisconsin, to lead the Department of Health and Human Services.

Those appointments could be named sometime this week, possibly as early as tomorrow, and wedged among those two might be another moderate Republican, Christie Todd Whitman, the governor of New Jersey, to head the Department of Environmental Protection. The idea being that if you're going to have another moderate, why don't you sandwich that moderate between a couple of conservatives so the conservatives don't complain more about this moderate tilt to the Cabinet -- Judy.

WOODRUFF: I bet Governor Whitman never thought herself as peanut butter or whatever it is that's in the middle of that sandwich. Major Garrett, thanks very much. Appreciate it.

GARRETT: You got it.

WOODRUFF: George W. Bush's choice for housing secretary is a former Cuban refugee who rose to prominence in Florida. For the past two years, Mel Martinez has been the elected chief executive of Orange County.

CNN's Patty Davis has his story.


BUSH: ... secretary for housing and human development, Mel Martinez.

PATTY DAVIS, CNN CORRESPONDENT (voice-over): President-elect George W. Bush may have gotten the agency's name wrong, but his nominee for Housing and Urban Development knew what he meant.

MEL MARTINEZ, HUD SECRETARY NOMINEE: Mr. President-elect, I am proud to receive your nomination and I accept it.

DAVIS: Martinez, a confidante of Bush's brother, Florida Governor Jeb Bush, served as the co-chair of George W. Bush's campaign in Florida.

BUSH: I love Mel, what Mel stands for, and I'm proud to call him friend.

DAVIS: A friend who as a Republican elector eventually helped deliver the state for Bush.

UNIDENTIFIED MALE: There are 25 votes for George W. Bush for president of the United States.

DAVIS: The 54-year-old Martinez rose from head of Orlando's housing authority in the mid-1980s to his current job as the chief elected official of Orange County, Florida. Martinez has a dramatic personal story. He fled Cuba for the United States at age 15, part of a humanitarian airlift known as Operation Pedro Pan, leaving his family behind.

MARTINEZ: And after living for four years with wonderful people in foster homes, where learned the goodness of America and its people, I was reunited with my family here in freedom. Today that immigrant, that refugee, that young man looking for freedom is standing before you receiving the nomination of the next president to serve in his Cabinet.

DAVIS: Years later, Martinez befriended Cuban shipwreck victim Elian Gonzalez, escorting him through Disney World. Affordable housing advocates say they know little about Martinez.

BOB REID, NATIONAL HOUSING CONFERENCE: Mr. Martinez is not a known quantity in the housing industry. He is going to have tremendous challenges ahead to increase the supply of affordable housing production.

DAVIS: Martinez pledged to work hard to fix the affordable housing problem, a vital element, he said, of Bush's compassionate conservatism.

(on camera): The Cuban-American helped deliver Florida for Bush, and now, if confirmed by the Senate, Martinez will help Bush make good on a promise to deliver a diverse Cabinet.

Patty Davis, CNN, Washington.


WOODRUFF: That's the United States, but elections are coming in Israel. One of that country's best-known politicians will not be running. We'll tell you why when INSIDE POLITICS continues.


WOODRUFF: Turning now to the politics of the Middle East, Israel is preparing for an election early next year, but one of the country's best-known politicians will stay out of the race.

CNN's Matthew Chance has our report.


CHANCE (voice-over): Late into the night, the Israeli parliament debated its course, passing a law giving Benjamin Netanyahu the opportunity to run for the prime ministership. But the man opinion polls say is, at the moment, the most popular figure in Israeli politics is bowing out. Only a prime minister with a majority in parliament, he says, would be a strong enough leader, and he says he wants a general election before he'll run.

But parliament has rejected that, and the people of Israel are facing a leadership contest in February without the candidate many feel could have won.

UNIDENTIFIED FEMALE: I'm very disappointed, because I think that Netanyahu wants all the country will be saved, and if he will not be prime minister, I don't know what's going to happen.

UNIDENTIFIED FEMALE: I'm happy that he's out, first of all, because I think he can't come and decide whenever he'd like to come back and not come back. And I don't think the whole country trusts him.

CHANCE: It now looks likely Ehud Barak will face Likud Party leader Ariel Sharon in the election. And there's speculation veteran former Prime Minister Shimon Peres will also run.

With more confrontation between Israelis and Palestinians, attention is now shifting to Washington, where Israeli and Palestinian negotiators are gathering for talks with U.S. officials that may lead to a peace summit.

There's a Palestinian general strike in force to protest against the meetings, and many Israelis are looking hard at what more negotiations will bring as elections approach.

UNIDENTIFIED MALE: Basically, he has to wait and see, and he cannot do anything before the election.

UNIDENTIFIED MALE: He's trying to have peace. It is better than war, because this time the war is not the same was that was the other time. This will be worse.

CHANCE (on camera): Prime Minister Ehud Barak may have been bolstered by political developments at home, but his re-election chances may still depend on forging a deal with the Palestinians and convincing a skeptical Israeli public that he is the man who can bring peace.

Matthew Chance, CNN, Jerusalem.


WOODRUFF: A little while ago, I talked about the Israeli election with David Makovsky. He's a senior fellow at the Washington Institute for Near East Policy, a contributing editor for "U.S. News & World Report," and a former editor of "The Jerusalem Post."


DAVID MAKOVSKY, SENIOR FELLOW, WASHINGTON INSTITUTE FOR NEAR EAST POLICY: He really felt that he had really little choice. He really had lost his majority in the summer the day he flew off to Camp David. His coalition disintegrated. He only had the support of a third of the Knesset, the Israeli parliament.

He had kind of been limping along. There had been a summer recess, but a certain point you don't have a majority. And so he's hoping, he believes that the public is more supportive of his policies than the parliament, and he thinks, if he can go to elections, he could, you know, reinvigorate his stance.

The problem is even if he wins, he's returning to a dysfunctional situation, because he's got the old parliament.

WOODRUFF: Now, let me ask you about what these other people whose names are -- chances that Shimon Peres will run?

MAKOVSKY: This is what I think could be the Israeli version of Ralph Nader, because ultimately, if Peres runs, he will siphon votes away from Barak.

WOODRUFF: They're both Labor Party.

MAKOVSKY: They're both Labor Party. Peres was considered to be more dovish, but given Barak's concessions at Camp David, that might not be the case. But he would clearly siphon votes away from Barak. And Sharon, who could be the Likud standard-bearer, would seem to benefit from all this.

WOODRUFF: Netanyahu saying he won't run now. How much of a threat to Barak is Ariel Sharon?

MAKOVSKY: Well, in the past, it's always been considered conventional wisdom that he was unelectable, that he had, given the Lebanon war and his image of a bulldozer, he was not exactly a consensus builder. But you have to take into account that key elements of Barak's base have -- have disaffected, have kind of bolted. And therefore, that betting might not be true and he could be the next prime minister of Israel.

Israeli Arabs are angry at Barak, because they feel that he was too heavy-handed with the disturbances in the fall where Israeli Arabs were on the other side of that. Two, the Russian immigrants, who are key -- they're a sixth of the country now -- feel that he, Barak, has made too many concessions to the Arabs and they're angry at him.

WOODRUFF: What about the new administration in Washington, David? You've got George W. Bush and his people coming in. How -- how will that affect the Israeli political situation, if at all?

MAKOVSKY: Well, on one hand, people thought Bush is not going to be as involved, he's not going to be working the phones like Clinton, and he's going to let the thing take its course. I assume, however, Colin Powell, who will kind of come -- be at the center of all this for the U.S. side will not be able to drop the ball. There's just too much riding on this process now.

If Clinton was drawn into this by opportunity of a post-Gulf War, the Bush administration, in my view, is going to be drawn into it by the threat, the threat of a regional war that could -- could proceed if indeed everything deteriorates.

So I think the Bush administration will be involved, but I think the center of it for the administration will move from the White House to the State Department. WOODRUFF: And in terms of the effect, any effect of the new administration on the outcome of the election, do -- what do you see there?

MAKOVSKY: Well, if Yasser Arafat believes that the Bush administration won't be as engaged, then maybe it's better to do a deal now with Barak. Barak thinks a deal will boost his fortune, and indeed, that fear that Bush is not interested could actually help Barak in the short term.

But it could also go the other way. It could mean Arafat saying, I hear his father is very supportive of the Palestinian cause, I'll get a better deal from George W. Bush, and it could be two ships passing in the night: in that he's waiting for George W. Bush, he misses Barak, and he's left with Ariel Sharon.

WOODRUFF: Who are the key figures we should be keeping an eye on now as you get closer to this Israel election?

MAKOVSKY: I think you named all four, really. It's Barak, Sharon, Arafat, and Powell. I think those are the four guys to watch.

WOODRUFF: And if the administration were to show its hand in some way, can you foresee that being -- can you foresee a way where it would be harmful rather than helpful to the process in Israel?

MAKOVSKY: It could be. I mean, he basically has to say, the parties have to work it out themselves, and Yasser Arafat cannot expect that the Bush administration is going to cram something down Israel's throat that it doesn't want.

But ultimately, the U.S. cannot want peace more than the parties. Only they are going to have to live with each other and only they can work this out.


WOODRUFF: That was David Makovsky, journalist and a senior fellow at the Washington Institute for Near East Policy.

He won one of the hardest-fought elections in American history. Now George W. Bush has to win over the American people as well. Is he up to the task? Our Bill Schneider offers some insight, when we come back.


WOODRUFF: Come January, many Americans will be pleased to see George W. Bush move into the White House. However, some others will not. The question is, can he ever earn their confidence?

We turn now to CNN senior political analyst Bill Schneider for his answer -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, you know, first we had the election, in which issue differences were kind of muted and voters could have gone either way. Then we had the post- election, when Americans seemed torn apart. Now we have the question: How divided is the country?


BUSH: I look forward to the chance of healing a nation that has been divided as a result of election...

SCHNEIDER (voice-over): The country sure looks divided. Al Gore won the nationwide popular vote by about half a percent, the closest outcome since 1960. But George W. Bush got elected by carrying the electoral college. Republicans have a razor-thin edge in the House of Representatives. And the Senate? Dead-even. Can't get any closer than that.

The Clinton years have equalized the strength of the two parties. What President Clinton did was blur party differences on economic policy while creating a deep division over values.

Clintonism is a policy of the center. A lot of it was stolen from Republicans. And it worked. It brought the country peace and prosperity, declining crime rates and welfare rolls.

On election day, nearly two-thirds of Americans thought the country was headed in the right direction. Then why didn't Gore get two-thirds of the vote? Because almost 60 percent said the moral condition of the country was seriously off on the wrong track. Clinton created a consensus on policy, not values.

You can see the values split in the 2000 election results. The conservative heartland went for Bush. Gore's support came from the liberal coasts and areas dominated by minorities, like African- Americans in the Mississippi Delta, Hispanics in South Texas and Florida, Asian-Americans in Hawaii, and Native Americans in the West.

Lifestyle differences had a powerful impact on the way people voted. Urban America went heavily for Gore. Rural America went for Bush. Suburban voters were split.

Married voters for Bush. Single voters for Gore. Regular churchgoers for Bush. Less religious voters for Gore. Gun owners came out for Bush. No guns meant Gore.

Why does lifestyle suddenly matter so much? Bill Clinton was the first president to come out of the culture of the '60s. His liberal values, not his centrist policies, made him a hero to African- Americans and Hollywood liberals and feminists, and a hated figure among conservatives.

Impeachment and Florida were the latest skirmishes in the nation's ongoing cultural war.


SCHNEIDER: President Clinton made the Democrats more competitive on economic issues. But at the same time, Mr. Clinton reduced the Democrats' appeal in culturally conservative areas of the country, like Tennessee and West Virginia. Consensus on policy, divided on values. That's America 2000.

WOODRUFF: Bill, has the country ever been this politically divided?

SCHNEIDER: Well, interestingly, yes. You know, for 30 years after the Civil War -- that war created a deep cultural divide. Then it was North versus South instead of left versus right. A president got impeached along straight party lines. Presidential elections then were extremely close, so close that in 1876 and in 1888 the winner of the popular vote lost the electoral vote. Imagine that.

WOODRUFF: Given all these divisions that you just -- you ticked them off one right after the other, Bill -- what does George W. Bush do to try to bring some of those together?

SCHNEIDER: I think he wants to avoid confrontations over values, which I think is his instinct anyway. He has always described himself as a pro-life supporter on the abortion issue. He doesn't want to make it an issue. He said there would be no litmus tests. He'll probably seek to sign a ban on partial-birth abortions, but a lot of Democrats support that. That's not the most divisive version of that issue.

I think they'll try to avoid the cultural issues, the social confrontations, at least initially, so that he can -- so that he can heal the country.

WOODRUFF: As you said, Clinton blurred the economic differences. Maybe bush will blur the cultural?

SCHNEIDER: That's right, and I think by blurring the economic differences, that's why Clinton was so competitive among suburban voters, because they want low taxes, and the Democrats now appear to be fine on economic issues. So what we're finding is suburban voters in many cases, like California and New Jersey, are voting for Democrats because they're culturally liberal, whereas in the South the suburban voters are culturally conservative and they're voting for Republicans.

WOODRUFF: Bill Schneider, thanks very much.


WOODRUFF: We appreciate it.

And that is all for this edition of INSIDE POLITICS. But of course, you can go online all the time at CNN's

This programming note: Representative Maxine Waters of California and the Reverend Jerry Falwell will be in the "CROSSFIRE" over faith- based programs, tonight at 7:30 Eastern.

I'm Judy Woodruff. The "MONEYLINE NEWS HOUR" is next.



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