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Inside Politics

President-elect Bush Applauds Fed's Interest Rate Cut; 107th Congress Convenes with Democrats in Control

Aired January 3, 2001 - 5:00 p.m. ET



GEORGE W. BUSH, PRESIDENT-ELECT OF THE UNITED STATES: It was a strong statement that measures must be taken to make sure that our economy does not go into a tailspin.


BERNARD SHAW, CNN ANCHOR: President-elect Bush applauds a surprise interest-rate cut. Will it help him get his proposed tax cut? Also ahead:


AL GORE, VICE PRESIDENT OF THE UNITED STATES: The majority leader, Senator Daschle, is recognized.



JUDY WOODRUFF, CNN ANCHOR: In the Senate, Democrats savor a brief period of power, as the divided 107th Congress convenes.

SHAW: Plus, we'll follow the most famous freshman on the Hill and her even more famous congressional spouse.

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

WOODRUFF: Thank you for joining us.

The timing could not have been better for George W. Bush. Even as he held a meeting showcasing his concerns about the economy, the Federal Reserve helped him make his case by unexpectedly cutting a key interest rate by one-half of a point. The news also helped Bush send a message to the newly seated Congress that he believes his tax-cut plan is more needed than ever.

We begin with CNN's John King, covering the Bush transition in Texas.

(BEGIN VIDEOTAPE) JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): The president-elect called the Fed's surprise move a bold step.

BUSH: I think the cut is needed. It was a strong statement that measures must be taken to make sure our economy does not go into a tailspin.

KING: But Mr. Bush made clear he considered cutting interest rates just a first step.

BUSH: And when I get sworn in as president, I intend to take another bold step. And that is to ask the Congress to work with us to enact tax reform and tax reductions.

KING: Mr. Bush favors a $1.3 trillion, 10-year, across-the-board tax cut, and is reworking his campaign plan to front-load more of the relief, with an eye on priming the economy. As the new Congress convened, Democrats offered some hope of bipartisan compromise: $500 billion over 10 years was the leadership bottom line on tax cuts last year. But Democrats are open to a bigger tax cut now. Leadership sources say perhaps $750 billion or so.

But there will still be a fight over who benefits the most. Democrats say the Bush approach is lopsided in favor of the rich and threatens efforts to pay down the long-term debt.

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: We're going to fight not only for tax cuts going to the right people, but being the right size, that make economic good sense.

KING: The president-elect was surrounded by top business leaders, called to Austin to offer their thoughts on the recent economic slowdown. The numbers explain the nervousness. Manufacturing activity in December fell to its lowest level since April, 1991. Last year was the weakest in nearly two decades for the Dow Jones industrials. Energy costs are already up. And the OPEC cartel is considering a production cut that could crimp supplies.

Then-president-elect Clinton had a similar event eight years ago. But the comparisons end there. Back in 1992, the economy had already bottomed out. It was in the early stages of a rebound. It went on to roar for most of the Clinton presidency. Mr. Bush, on the other hand, will inherit an economy that is clearly slowing.


KING: And the question now is just how the Fed decision affects that coming debate over tax cuts: whether it helps the new president makes the case for his approach, or whether, as some believe, it will harden positions in favor of a more modest targeted tax cut, and leave most of the major economic decisions in the Fed's hand -- Judy.

WOODRUFF: John, the president-elect seemed almost eager today to talk about the economy. Is that a departure for him?

KING: Well, talking about the economy not so much of a surprise, but talking so specifically about what the Federal Reserve did is a major departure from the Clinton administration. President Clinton's position all along has been to say the Fed has been an independent agency, to not comment specifically on any moves, whether you like them -- as president-elect Bush did today -- or whether you dislike them -- as President Clinton has on the several occasions the Fed has raised interest rates.

That is a major departure. And it's one many Clinton administration officials privately think might get the new president in trouble down the line, especially if the Fed does some things that his administration doesn't like. They think the Bush team doesn't quite understand that when the president or leadership people in the administration speak, it could have a very dramatic effect on the markets.

WOODRUFF: All right, John King, reporting from Austin, thanks -- Bernie.

SHAW: Now let's take a closer look at Bush's push for tax cuts and whether they will fly in this 107th Congress.

Here is CNN's Major Garrett.


MAJOR GARRETT, CNN CORRESPONDENT (voice-over): The president- elect swiftly rejected any suggestion that lower rates would undercut political support for his big tax cut.

BUSH: Not in the least, because I think that -- I think, if you were to talk to the business leaders here, they'll tell you that a rate reduction of 0.5 percent is not enough to serve as a stimulus to encourage capital formation, economic growth, job creation.

GARRETT: Despite repeated warnings from Democrats, the president-elect made clear he will push ahead with an across-the-board cut in income-tax rates.

BUSH: I think it's going to be important for us, Carl (ph), to cut the rates. And I think we are going to need to move quickly to do so.

GARRETT: Democratic leaders are willing to support larger tax cuts than they did during the Clinton years. But in pursuit of compromise, they are not prepared to swallow an across-the-board rate cut, which they say largely benefits the rich.

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: Now, they can't hold out their hard position if we are willing to come halfway. I am hoping that we both can come halfway. And that is what this is all about.

GARRETT: Some analysts argue that the Democrats' targeted tax cuts cannot stimulate economic growth.

WILLIAM BEECH, HERITAGE FOUNDATION: What I think most economists would want, rather than that, is for their to be a reduction in rates, so everybody is affected in a kind of an equal way.

GARRETT: But other analysts counter that: The way Washington works, a tax cut can't make any economic difference until sometime next year.

RUDY PENNER, URBAN INSTITUTE: Probably most of it won't go into effect until January 1, won't have an economic effect for six months or a year after that. If a recession starts tomorrow, it may well be over by the time a tax cut has a real effect.

GARRETT (on camera): Mr. Bush remains on a collision course with Congress. He will argue that the Fed's moves vindicated his concerns about an economic downturn, and that Congress should heed his warnings that the Fed can't revive the economy on its own, and that a big tax cut is needed, too.

Major Garrett, CNN, Austin, Texas


WOODRUFF: And now let's go to Capitol Hill, where tax cuts were not the only source of friction, as the new Congress was sworn in today.

CNN's Jonathan Karl reports on the divisions under the dome, as well as the stars of this opening day.


GORE: The majority leader, Senator Daschle, is recognized.

JONATHAN KARL, CNN CORRESPONDENT (voice-over): Welcome to the era of political parity: a Senate so evenly divided that, until outgoing Vice President Gore is replaced by incoming V.P. Cheney, Democrats are in charge.

DASCHLE: I assure you, I intend to savor every one of the next 17 days.


KARL: Publicly, the talk was bipartisanship as the antidote to political division, but behind the scenes: a battle over power-sharing in a 50-50 Senate. The negotiations are over sources of power, committee assignments and chairmanships, but also over on more mundane matters, like office space and patronage jobs on Capitol Hill. Democrats want everything divvied up 50-50.

SEN. TRENT LOTT (R-MS), MINORITY LEADER: It's quite often not easy to find consensus, as is forced upon us quite often in the Senate. But we must strive for it.

KARL: Much of the attention was on Democrats: First lady Hillary Rodham Clinton took the oath -- so did another first lady, Jean Carnahan, serving for her deceased husband and former Missouri Governor Mel Carnahan, who died in mid-October, but won election to the Senate anyway. And there was Joe Lieberman, sworn in for another term because he decided to simultaneously run for vice president and for reelection to the Senate.

Over in the House, Republicans used their narrow majority to reelect Dennis Hastert as speaker, but also talking bipartisanship was one of the most conservative voices in the House.

REP. TOM DELAY (R), TEXAS: Oh, there will be plenty. We will be able to work very well together.

GORE: Thank you. Thank you very much.

KARL: In a benediction of sorts, Vice President Gore started the day off with a speech to the Congressional Black Caucus, reminding some of his strongest supporters that there are limits to reaching across party lines.

GORE: When you are the conscience of the Congress, you of course have to do your best to reach across the party lines, but you also have to know when to draw the line.


KARL: Democrats used their temporary hold on power to install Democratic senators as chairman of all of the committees, including those that will hold confirmation hearings on George W. Bush's nominees for his Cabinet. The first such confirmation hearing starts tomorrow: of Don Evans, nominee to be commerce secretary. But the impact of this may be minimal, because the more controversial nominees, such as John Ashcroft, the nominee to be attorney general, that hearing not expected to start until after the new president and vice president are sworn in, and the Senate is back in Republican hands -- Judy.

WOODRUFF: John, aside from the confirmations, what real business would the Democrats like to get done in the next couple of weeks, when they are in the majority?

KARL: Well, basically, Judy, they are very realistic about this. They don't expect to get any real business done between now and when the new administration is sworn in, for one main reason, is that over on the House side, the House, which is in Republican hands, will be adjourned. They don't expect to come back together and reconvene until January 22, when we have a new president and vice president.

So, basically, the orders of business over on the Senate side will be those confirmation hearings. And there may not be many of them until the new administration is sworn in.

WOODRUFF: All right, Jon Karl, on this opening day at the capital, thanks.

And now we are joined now by CNN senior analyst Jeff Greenfield.

Jeff, all this talk at the capital about bipartisanship: how real? JEFF GREENFIELD, CNN SR. ANALYST: Well, if you know your Shakespeare, this is, as Hamlet would have said, more honored in the breach than in the observance -- at least if history is any guide. We always think of times of crisis, for instance, as producing bipartisanship.

During World War II and Korea, the Republicans were very critical of the way the Democratic presidents conducted the war. The same is true of Democrats when Richard Nixon was in power during Vietnam. And when you put war aside and just look at basic economic policy, eight years ago, not a single Republican in either the House or the Senate voted for Bill Clinton's key economic plan. So I think, as a general rule, you have to discount steeply, even in this divided situation, talk of bipartisanship as a governing principle.

WOODRUFF: So are you telling us that means we are facing gridlock?

GREENFIELD: Well, I don't think that is exactly the case, because some of what president-elect Bush wants to do, the Congress has already passed. You know, the repeal of the estate tax was passed last year, with almost a third of the Democrats in the House and Senate supporting it. The marriage penalty was repealed, but Clinton vetoed both of those things. Even an issue like partial-birth abortion, more than a third of Democrats in the House, and almost that percentage in the Senate voted for it.

Sine president-elect Bush has indicated he would sign all those measures, we can at least take a look at those issues and say: Well, that's going to get done for -- almost for sure. And I think in an area like prescription drugs, it's not that complicated, even in this situation, to see both parties splitting the difference, because they both have an interest in getting that done.

WOODRUFF: Well, if they're going to work together on those things, Jeff, where do you see them not working together? Where do you see the bipartisanship?

GREENFIELD: I think that you are already seeing that in the reaction to, for instance, the nomination of Senator Ashcroft as attorney general. When you talk about what we can now consider core party principles -- like, for instance, race, where the Democrats won more than almost 90 percent, I think it was, of the black vote -- and for all of George W. Bush's efforts, he got less than 10 percent of the black vote.

I think when people define an issue in terms of race -- and if the Democrats succeed in defining the Ashcroft nomination along that line, that is an area. Certainly abortion is an area where partisanship is going to be very, very strong, because fundamentally these days, despite some differences, Democrats are mostly pro-choice, Republicans pro-life. So on, for instance, the appointment of a key federal judge -- especially a Supreme Court nominee, where we have see that politicized for the last 15 years -- clearly those are areas where the fur will fly. And even in an area like the environment, this is much more a development-friendly administration. The Democrats tended to be more environmentally conscience. I think issues like that -- maybe the appointment of the secretary of the interior, a pro-development woman, you will see the bipartisanship flair up -- I mean, the partisanship flair up. I'm sorry.

WOODRUFF: All right. All right, Jeff Greenfield in New York. And I should have started off by saying Happy New Year.

GREENFIELD: And the same to you.

WOODRUFF: All right, and we'll see you again soon. Thanks -- Bernie.

SHAW: And still ahead here on INSIDE POLITICS: We are going to ask two freshman senators about their jobs and the challenges ahead. Senators Maria Cantwell and John Ensign join us when we come back.


SHAW: Eleven -- count them -- 11 new senators were sworn in on the Hill today -- among them: Republican John Ensign of Nevada, who joins us now. And very shortly, Democrat Maria Cantwell of Washington state will be along.

Senator Ensign, let's start with you first. Welcome to INSIDE POLITICS, we hope the first of many appearances.

SEN. JOHN ENSIGN (R), NEVADA: Well, thank you very much, Bernie. It's good to be with you.

SHAW: Good to have you.

First question: Which two issues are you most passionate about?

ENSIGN: Well, during the campaign, a big part of my campaign was about the prescription drug issue. And, actually, I had looked at what the Congress was doing, both Republicans and the Democrats back then, and I really didn't like either one of the proposals.

So we sat down with a lot of people in the health care field, both providers and people -- seniors and patient advocacy groups and everybody, and tried to draft a proposal I think that could gain a lot of bipartisan support. So we're going to work hard on trying to get, at least, something like that, because I think that it's the right thing to do for our seniors, it's desperately needed in this country.

And then, another big issue, I think that everybody ran on was education. Republicans and Democrats both care about improving education. Sometimes we have a little different way of going about it, and we're going to have to compromise and come together. But I think that making education the best in America, around the world, it is -- absolutely has to be a priority for this administration and the new Congress. And I think that everybody's willing to do that. SHAW: Mr. Bush has indicated that one priority for his administration is a more than $1 trillion across-the-board tax cut. How would you vote?

ENSIGN: Well, I don't know that we're going to get to the -- you know, the total $1.3 trillion tax cut. I do think the tax cuts are necessary right now.

You know, I would love to see us hold the line on federal spending on most of the things that -- especially a lot of pork-barrel spending that we do up here -- use a lot of the money through efficiency for tax cuts, but then take a lot of the surplus and just pay down the debts. Because I still feel strongly that our number one priority has to be paying down the national debt.

SHAW: With the parties evenly split in the Senate, in your judgment how will members have to comport themselves?

ENSIGN: I was talking about this morning. And I think a big thing is going to have to happen. I remember when I was elected in 1994 in the House, when we came in on this Republican wave, and we were just coming in with guns a'blazing, and we did everything as Republicans and then brought it to the floor.

I think the difference this time, especially in the Senate, is going to have to be that before anything ever gets to the Senate floor it's going to have to be worked together, both Republicans and Democrats. Because if you just bring something as Republicans to the floor, it's really not going to have a lot of chance, and so it's going to be a waste of time.

So I think that you're going to see a lot of working together, three or four Republicans and Democrats working with three or four others before something ever happens. And when you do that, I think, actually we can have some very good comity and spirit and bipartisanship and really putting the country before our parties.

SHAW: And, lastly, what are the must committees, briefly -- what are the must committees you want to sit on?

ENSIGN: Well, I'm very interested right now in Commerce and Banking. I've looked as the B committee, as the Budget Committee. I think that's an exciting committee to be on as well. There are several others that are -- that would be wonderful to sit on.

Just being a senator, let me tell you, is an incredible thing. So committees -- we'd like to get our committees so we can hire our staffs. But just being a senator, right now, is a pretty overwhelming feeling. I can tell you that.

SHAW: Well, Senator John Ensign of Nevada, thanks very much for joining us on INSIDE POLITICS.

And we should tell our viewers that, very shortly here, we are going to have Democrat Maria Cantwell of Washington state.

Thanks for joining us.

ENSIGN: Thank you, Bernie and Judy.

SHAW: Quite welcome -- Judy.

WOODRUFF: And there is much more ahead on this edition of INSIDE POLITICS. Still to come: more on the newest members of the Senate.


CHRIS BLACK, CNN CORRESPONDENT: Throughout her life, Hillary Rodham Clinton has been making waves. Now she's making history.


WOODRUFF: Chris Black on the first lady and her unprecedented move to Capitol Hill. Plus:


SEN. JEAN CARNAHAN (D), MISSOURI: It just shows how life leads us in directions sometimes we don't plan.


WOODRUFF: Jean Carnahan begins the job that was once her husband's dream. And later, presidential transitions and media predictions: Howard Kurtz checks the record.


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

Wall Street gets a major boost from the Fed after unexpectedly lowering a key interest rate a half-point. The cut was larger and came a lot sooner than anticipated. It was the first rate-drop in two years. And it pushed both the Dow and the Nasdaq up more than 300 points -- more on Wall Street's surprise surge tonight on "MONEYLINE" at 7:00 Eastern, with Willow Bay and Stuart Varney.

SHAW: The door to peace in the Middle East may have cracked open just a wee bit more, at least in the eyes of the White House. Our correspondent there, Kelly Wallace, is on that story.


KELLY WALLACE, CNN CORRESPONDENT (voice-over): With just 17 days left to craft a deal, President Clinton gets a hopeful sign from his Middle East partners.

JAKE SIEWERT, WHITE HOUSE PRESS SECRETARY: Both sides have now accepted the president's ideas, with some reservations. That represents a step forward.

WALLACE: Palestinian leader Yasser Arafat leaves Washington to brief his Arab counterparts in Cairo sounding an optimistic note.

YASSER ARAFAT, PALESTINIAN AUTHORITY CHAIRMAN: What has been done is very important to push the peace process forward.

WALLACE: And Israeli Prime Minister Ehud Barak tells Mr. Clinton an Israeli negotiator will travel to Washington Thursday to meet with U.S. officials. The White House says the key is whether both sides' reservations can be reconciled to pave the wave for another round of talks.

SIEWERT: I would not presume that we will get this done. But the president is committed to trying.

WALLACE: The Palestinian reservations cover the thorniest issues: sovereignty -- who controls the holy site in Jerusalem Muslims called Haram al-Sharif, Jews consider the Temple Mount. Territory: Palestinians want to see maps of exactly what they will control in the West Bank. And refugees: Palestinians want priority given to those refugees living in Lebanon who want to return.

But the American plan calls for the Palestinians giving up the right for refugees to return in exchange for sovereignty over parts of Jerusalem.

UNIDENTIFIED MALE: Oh, I think that the gaps have narrowed. But let's not be Pollyannish in thinking that is this is all over.

WALLACE: Other hurdles: The president leaves office January 20. As for Mr. Barak, he faces reelection in February and declining support in Israel for himself and for the American outline.

UNIDENTIFIED MALE: Highly difficult and irregular to do this under the gun of the end of an administration in Washington and a defined Israeli election date.


WALLACE: Senior U.S. officials concede they are not sure it will be possible to get an agreement, and say there may be a point at which the president determines he's done all that can do, leaving the matter for his successor, president-elect Bush. When will that be? One senior administration official said: "We will know it when we see it" -- Bernie.

SHAW: Thank you, Kelly Wallace at the White House.

In Manhattan, jury selection begins in the trial of four men charged in the 1998 bombings of two U.S. embassies in East Africa. The four are believed associates of suspected terrorist Osama bin Laden. Family members of some of the American victims showed up outside the courtroom. They lashed out at the government for ignoring warnings issued before the attacks.

WOODRUFF: In Southern California, a wildfire started this morning on an interstate median and quickly spread to more than a thousand acres. The fire has torched at least a half-dozen homes and has triggered evacuations of several hundred people. There are no serious injuries reported so far. The fire is being fanned by warm, dry winds gusting up to 65-miles-an-hour.

Seven current and former employees accuse Microsoft of racial bias. A lawsuit filed in federal court is asking for $5 billion. It is the most ever sought in a class-action suit. An attorney for the plaintiffs says -- quote -- "What is $5 billion to Microsoft? You have to hit them in their pockets."

SHAW: There is still much to come here on INSIDE POLITICS. When we come back: the first-lady-turned-senator now on the Hill. And later, Howard Kurtz with gives his take on those who speculate the president-elect may already be a lame duck.


WOODRUFF: That's a look at all of the women in the Senate. Let's focus on one of them now. After years of being a political cheerleader for her husband, first lady Hillary Rodham Clinton began her new job today as the United States Senator from New York.

But as Chris Black reports, despite an impressive resume, Senator Clinton still faces a tough job ahead.


UNIDENTIFIED MALE: Mrs. Clinton of New York.

CHRIS BLACK, CNN CORRESPONDENT (voice-over): Throughout her life, Hillary Rodham Clinton has been making waves. Now, she's making history.

The first baby boomer to be first lady is now the first first lady to serve in the United States Senate.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: So, here I am and I never could have predicted it.

BLACK: The Republican leader says she's just one of 100.

LOTT: She certainly is going to get extra attention because she is, after all, the first lady and the first one ever to be in the Senate, and you all are going to give her extra attention because of that. But, you know, under the rules of the Senate, we are all co- equals.

SEN. PETE DOMENICI (R), NEW MEXICO: That does not come with notoriety around here nor does it come with public relations. It comes with work and being part of this process, part of what's called the Senate.


CLINTON: Hello, Mr. Vice President.

BLACK: Senator Clinton ranks 97th in seniority, but she went to the head of the line for the traditional re-enactment ceremony to accommodate the security concerns created by the presence of the president.

The outgoing president told Senator Chuck Schumer of New York he wanted to help the new New York team.

WILLIAM J. CLINTON, PRESIDENT OF THE UNITED STATES: I told Hillary, I'll be part of the Schumer-Clinton errand running team.

BLACK: Thirty-five years ago, another politician with a famous name, Robert F. Kennedy, the former attorney general, became the junior senator from New York. His younger brother remembers.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: I enjoyed working very closely with my brother, Bob, but he cast a big shadow and I expect Mrs. Clinton to cast a big shadow as well.

BLACK: Hillary Clinton considers Ted Kennedy a role model. He has some advice:

KENNEDY: To work very hard; to fight for what you believe in; to respect the opposition; and to watch out after your state.

BLACK: The moderate Democrat who sits next to her in the last row of the Senate chamber said she should take time to learn the waves of the Senate.

SEN. JOHN BREAUX (D), LOUISIANA: I think that my advice will be to take it slow and easy and not try to do everything the first couple of months in the Senate, and I think that's what she's going to do and I think that she recognizes that there is a, I think, a moderate mandate.


BLACK: Now, the work begins for the junior senator from New York. She's expected to become the newest member of the Senate Labor Committee, where she can focus on education, health care and other issues of long-time concern -- Judy.

WOODRUFF: Chris, we caught a quick glimpse there of Vice President Al Gore performing his duties as the presiding officer of the Senate. What was it like having him around for a few minutes today?

BLACK: Well, it was a bittersweet day for Al Gore, Judy. I mean, he has been up here for a long time as a House member, then senator and as the presiding officer of the Senate for the last eight years and this was really his last official day. But there was one very nice moment. He took the card that contains the Oath of Office, which he used to administer the oath to all 34 senators who were sworn in today, signed it and presented it to Hillary Rodham Clinton for a little souvenir for her first day.

WOODRUFF: All right, Chris Black at the Capitol. Thanks -- Bernie. SHAW: Months ago, Jean Carnahan had hoped to attend this day's swearing in as the spouse of a newly-elected senator. But that changed two weeks before the election when her husband Governor Mel Carnahan died in a plane crash.

CNN's Kate Snow caught up with Mrs. Carnahan on her first day as Missouri's junior senator.


UNIDENTIFIED MALE: Here is your new office.

SEN. JEAN CARNAHAN (D), MISSOURI: Well, thank you. Which way do we go in?

KATE SNOW, CNN CORRESPONDENT (voice-over): Jean Carnahan has a new office and a new live, taking over the Senate seat won by her late husband Mel Carnahan.

CARNAHAN: It's a bittersweet moment. I would have preferred being in the gallery as a spectator today, but I'll be the participant and it just shows how life leads us in directions sometimes we don't plan.

SNOW: Senator Carnahan spent her first hour on Capitol Hill checking out her surroundings.

CARNAHAN: Oh, this is my desk?


CARNAHAN: OK, I'll try this out.

SNOW: It's a small space. Carnahan is ranked 99th out of 100 senators in terms of seniority. But the senator says it'll do just fine.

CARNAHAN: Well, most of my life I have officed in a dining room or a basement, so this looks pretty good.

SNOW: Most of her life she's been Mrs. Carnahan, wife of a career politician. Two of her children made the trip to Washington to watch her be sworn in. Robin says her mother is her role model.

ROBIN CARNAHAN, DAUGHTER OF SEN. JEAN CARNAHAN: Unlike most people who come here, this wasn't a goal of her life. This wasn't something that she personally thought she wanted to do. And so she came here because she thought there were some important causes that she and daddy worked for that she wanted to keep going.

SNOW: Carnahan was never a politician, but she has the personality, stopping to talk with workers who spent all night preparing her office.

CARNAHAN: What's your name?


CARNAHAN: Tim, I'm Jean Carnahan, and I live down the hall.

SNOW: Carnahan has received more than 10,000 letters offering condolences and congratulations. Many say they admire her strength.

UNIDENTIFIED MALE: We're so proud of your mom, and I was one of the biggest fans your dad had here.

SNOW: Carnahan shares many of her husband's goals on education, Social Security, targeted tax cuts. She says she's not here just to warm a seat; she wants to get something done.

CARNAHAN: You look at the challenges before you and you take them as they come, one step at a time. And sometimes you can't see the future; it's not always clear. But you go one step at a time, and that's what I've been doing the last few months, and that's what I intend to do now.

SNOW: Kate Snow, CNN, Capitol Hill.


SHAW: And this footnote: Russ Carnahan, another son of Jean and Mel Carnahan, missed his mother's being sworn in as the member of the Senate. He was sworn in this day as a member of the Missouri House of Representatives after winning election in November.

Now, as promised, we're joined by freshman Democratic Senator Maria Cantwell of Washington State.

Senator, welcome to INSIDE POLITICS.

SEN. MARIA CANTWELL (D), WASHINGTON: Thank you. Good evening. It's a pleasure to be here.

SHAW: It's a pleasure to have you. First of all, which two issues are you most passionate about?

CANTWELL: Well, I'd have to start with campaign finance reform and getting at least the McCain-Feingold bill passed. Because I think if you pass that kind of change in the way campaigns are run, you'll ultimately impact the way decisions are made in Washington, which I think would help us have a much faster process on other issues.

The second issue probably for me, having been part of the new economy for the next five years, is thinking through those issues that will help other Americans and people in Washington state, since, you know, our state is diversifying, how we focus on access and flexibility to education and job training that people need as their jobs continue to change.

SHAW: How would you vote on Mr. Bush's more than $1 trillion across-the-board tax cut?

CANTWELL: Well, I didn't support President-elect Bush's tax cut proposal during the campaign that I ran. I look forward to what proposal and what shape that might come in as a member of the United States Senate and will look at those proposals.

But his proposal in total during the campaign, it was not something I thought, in the long-term focus of reducing the debt, was good for the economy.

SHAW: In the Senate, as we all know, the parties are virtually evenly divided. How, in your judgment, should members comport themselves on the issues?

CANTWELL: Well, you're -- we, obviously, are in this historic position of a 50-50 split in the United States Senate. And I think it's very important that members learn to work, as they've done in the past, but probably in a much more fashion of outreaching across the aisle, work together on these important issues so that we aren't stalemated in the United States Senate.

The public -- you run for office as Democrats and Republicans, but you govern as Americans. And we need to show the public that these tough issues that have maybe stalemated past Congress' can be achieved in this -- in this dynamic of a 50-50 Senate.

SHAW: Historically, you're taking the seat once held by Henry "Scoop" Jackson.

CANTWELL: That's right. Obviously, the Northwest has been known for two prominent senators who served here for a long time, Warren Magnuson and "Scoop" Jackson. And this is "Scoop" Jackson's seat. And today on the floor of the United States Senate, Senator Cleland from Georgia, who's now sitting in Senator Jackson's desk actually is turning that desk over to me. And it's a great honor to carry on the Northwest tradition.

SHAW: Last question. Thirteen, 13 women in the United States Senate; good solid crack in the old boys club?

CANTWELL: Well, it's a start. But you're talking to someone who comes from a state where we probably have the highest percentage of women in our state legislature. And so, that has created a dynamic in which lots of issues that women care about, women's health research and others, have bubbled up to the top. And so, it's a start, but we need to do more.

SHAW: Freshman Democratic Senator Maria Cantwell, Washington state, thanks very much.

CANTWELL: Thank you.

SHAW: Quite welcome. And up next, the politics of this new Congress and much more with Margaret Carlson and Tucker Carlson.


SHAW: Before continuing with INSIDE POLITICS, we have some new information concerning the USS Cole. Let's go live now to our Pentagon correspondent, Jamie McIntyre.

Jaime, what's the latest.

JAIME MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Bernie, Pentagon sources say almost half of the 62 security measures that were intended to protect the USS Cole from terrorist attack were not carried out the day the warship was bombed in Yemen, October 12th. While many were not required because the Cole was refueling at a harbor, not at a pier, others were judged to be significant lapses, according to sources.

Perhaps the most significant lapse was the failure to brief the ship's crew on the threat condition in effect and to warn them to be alert for possible terrorist attack according to sources. When the USS Cole entered the port of Aden, it was operating under Threat Condition Bravo; an alert level that warns of an increased and more predictable threat of terrorist activity.

The ship protection plan filed by the Cole's commanding officer, Commander Kurt Lippold, specifically called for the crew to be briefed on the threat of terrorism and warned to be suspicious and inquisitive of strangers. Another provision specifically warned that small boats require special concern because they could serve as an ideal platform for terrorist.

Those briefings were not given, according to Pentagon sources. The crew was also supposed to identify and inspect all work boats, keep unauthorized craft away from the ship and prepare fire hoses to repel borders. Those provisions were not implemented either, say sources. Senior Navy officials are still debating the fate of Commander Lippold, along with several subordinate officers who could be subject to career-ending discipline if it's found that the security lapses left the billion dollar destroyer more vulnerable to attack.

The Navy is scheduled to release its report next week, along with the decision about discipline for the skipper -- Bernie.

SHAW: And so, Jamie, in sum, just to be emphatically clear, essentially what you're reporting is that the crew aboard the USS Cole was never told it was in danger.

MCINTYRE: Well, they weren't briefed about specifically about the level of the ship. In other words, it appears from these findings, that they didn't take the threat as seriously as they should have. They were operating under a Threat Condition Bravo but they weren't -- didn't seem to be all that concerned, and the members of the crew were not specifically briefed and told to be on the lookout, to be suspicious, to have their guard up.

They didn't have their guard up as much as they should have, and the question now is, would it have made any difference and is this enough of a dereliction, if I may say, to warrant some punishment or does it fall within the acceptable bounds of what would be expected of a ship's skipper under these conditions, and senior Navy leaders still haven't made that decision.

SHAW: Jamie McIntyre at the Pentagon -- Judy.

WOODRUFF: Joining us now with their take on today's political developments and related issues: "Time" magazine's Margaret Carlson and Tucker Carlson of "The Weekly Standard."

Tucker, to you first. Federal Reserve surprise, lowers key interest rate today. Is this in any way going to help or is it going to hurt George W. Bush's thoughts that he wants to raise or rather lower tax cuts -- have a tax cut?

TUCKER CARLSON, CNN POLITICAL ANALYST: Well, I mean, I think that he -- he's made both arguments essentially. First, you know, when the economy's doing well that we can afford to a have tax cut, and then Republicans were working for George W. Bush say, well, you know, if the economy is in fact in a downturn then people are going to be clamoring for the tax cut because they want the money.

So, I'm not sure it's going to have a direct effect either way. I think that the going idea among Bush people is, you know, what's the use of being president if you can't sort of set forward your agenda and work out your plans, and a tax cut is really in the plans so I think they're going to go forward no matter what.

MARGARET CARLSON, "TIME" MAGAZINE: Or, as Bob Novak says, what good are Republicans if not to lower taxes. You know, the market is not the total bellwether of the economy, although it seems to be. That's how we measure things but if the market is doing better because interest rates are down, Alan Greenspan gets to argue that we don't need the tax cut, which he doesn't want and which he said any number of times, and I'm not sure that George Bush wants to be pushing against Alan Greenspan who still cautious on inflation.

WOODRUFF: What are the prospects for the tax cut right now?

M. CARLSON: Little pieces, I think. What was up before, which is marriage penalty and estate, what we used the call estate taxes but are now called death taxes.

T. CARLSON: I prefer death taxes.

M. CARLSON: You prefer death?

WOODRUFF: He's saying no matter what, he's going ahead with this $1.3 trillion dollar cut.

T. CARLSON: Yes, well that seems to be the idea. I mean, look, you know, he campaigned on it and he hasn't even been inaugurated yet. So, I mean, it would odd for the Bush people at this point to say, gee, we sort of give up on that already


T. CARLSON: ... polls well and it did poll well for a lot of the election. So, I mean, it's not as if -- like, you know, he may be fighting in certain editorial pages and in the opinions of some, but, you know, the public isn't going to rise up in arms or something if he proposes the tax cut.

WOODRUFF: Significance of this meeting, today, Margaret with all the CEOs; is there something we should be looking for here?

M. CARLSON: Well, it was an excellent picture of Bush being a CEO. and it's a CEO kind of Cabinet, a Harvard business school, chief executive's kind of Cabinet and he's chairman of the board and he's let it be known that the decisions that are made are all going to be his and nobody's going to know about them because he's got this very tight-knit group. Very disciplined, not like the children in the Clinton Cabinet. These are grown-ups.

T. CARLSON: I don't know. I think it's a fairly fair description. I mean, I guess, you know, it's one of those...

M. CARLSON: There are no young fogies.

T. CARLSON: Yes, well, I mean it's one of those steady hand photo-ops. I mean, people are saying, though, you know, why did Alan Greenspan do this? I mean, he's not the sort of, you know, who takes radical steps. Does he know something that we don't that he felt like he had to, you know, make this reduction today? I don't know.

WOODRUFF: What about the Cabinet, Tucker? What's your -- how do you size it up?

T. CARLSON: Well it seems like a very moderate Cabinet to me. I mean, I'm just struck in all of the descriptions of it you keep hearing, well it's this conservative Cabinet. It's conservative. Very conservative. Hard-line conservative. I mean, I get the sense watching Democrats that they're where Republicans were eight years ago.

Republicans eight years ago were fixated on this idea that Clinton was a wild-eyed lefty, which turned out not to be true. There were other problems with Clinton, but he wasn't a left-wing ideologue. But that had been the line during the election and it took years for them to snap out of that and I think that Democrats haven't really come to terms with the reality which is George W. Bush, whatever faults he may have, is not a right-wing ideologue.

M. CARLSON: Part of the reason it may be called conservative is that in the traditional sense, it looks like a bridge to the past as opposed to the bridge to the 21st century in that it's a 1970s, there's an older look to this.

And in that sense, it look more conservatives because there's no chances; there's no risk. The vision thing is not necessarily there. These are tried and true people and there are a few people who are very much on the right like John Ashcroft and the Interior secretary has never met a property right she didn't like, and, you know, maybe she'll grow in the job. Yes.

T. CARLSON: I think she's already grown. And let me clarify.

M. CARLSON: Drill in your backyard, Tucker. Your back 40. T. CARLSON: And that's totally fine as long as she finds something. But I, I mean, I'd like to see, you know, 14 John Ashcrofts. I mean, I said that more in sorrow than anything else.

WOODRUFF: All right, we are going to have to leave it there, unfortunately. Tucker Carlson, Margaret Carlson. Thank you both.

M. CARLSON: Thank you, Judy.

T. CARLSON: Thanks.

WOODRUFF: We appreciate it. And coming up next on INSIDE POLITICS, Howard Kurtz takes on those pundits predicting big problems ahead for George W. Bush.



W. CLINTON: The economy is why we started down this road. The economy is why the American people gave me a chance, along with Vice President-Elect Gore and all of the others who will be a part of this administration to turn this country around. And the economy, is why we are here today.


WOODRUFF: Like a man getting ready to move into the White House now, the economy was on the mind of President-Elect Bill Clinton eight years ago. And like George W. Bush today, Mr. Clinton was being written off by some reporters as he prepared for his inauguration.

Howard Kurtz looks at the media pitfalls of rushing to judgment.


HOWARD KURTZ, CNN'S "RELIABLE SOURCES": No sooner had George W. Bush emerged with a less-than-landslide victory in Florida than the pundits started dumping on the new president's prospects.

CHARLES COOK, CNN POLITICAL ANALYST: There are going to be a lot of people who say, he's be a lame duck from day one.

KURTZ: But history shows that media commentators are often wrong about an incoming president, especially during his transition and first months in office. Early stumbles or successes may turn out to be a mere blip in the long run.

When Bill Clinton took the reins from Bush's father, the press criticized the baby-boomer president for presiding over chaos. "The New York Times" called it the worst transition in modern memory, with all the dignity and order of a mudslide.

On his first day in office, Clinton touched off a flap about gays in the military. On his second day, he withdrew his nomination of Zoe Baird as attorney general over her problems with an illegal nanny. (BEGIN VIDEO CLIP)

W. CLINTON: I feel very bad about it, but I'm responsible for it.


KURTZ: As other nominees fell by the wayside, much of the press and the pundits gave the new president failing grades.


MARK SHIELDS, CNN'S "CAPITAL GANG": Bill Clinton has been getting the stuffing kicked out of him during the transition for seeming to change from the campaign.


KURTZ: Clinton was also stiffing the White House press corps, preferring such venues as "LARRY KING LIVE," and he paid a price.

Things got so bad that George Stephanopoulos had to step down as communications director, and the young staff resented the hiring of David Gergen, a Republican, to deal with the media. But despite these early problems, Clinton regained his political footing and was easily reelected four years later.

George Bush Senior assumed power in 1988 after a rough, racially charged campaign in which "Newsweek" famously derided him as a wimp. But suddenly, said Barbara Walters, it's as if Clark Kent became Superman.

Brit Hume spoke of a new George Bush. He was the regular guy going to the White House, said "The New York Times." He went fishing and jogging with reporters. But Bush hit a major pothole soon after taking office.


GEORGE BUSH, PRESIDENT OF THE UNITED STATES: I'm going to strongly continue to back Senator Tower and I do not believe he is going down the drain.


KURTZ: When the Senate rejected John Tower as his Defense Secretary. The press quickly turned on Bush, commentator Gergen saying there is a deepening sense that something is badly amiss.


ROBERT NOVAK, CNN'S "CAPITAL GANG": The whole trouble is that George Bush is starting this week off with too much symbolism and no agenda.

(END VIDEO CLIP) KURTZ: That was the complaint four years later when, despite Bush's victory in the Gulf War, he was evicted by the voters.

Ronald Reagan, by all press accounts, had a terrible transition. His profile so low it was practically invisible. "The Washington Post" said that he seems to be remote from the process of shaping his own administration. Reagan held only one news conference in the two months after his election.

When his choices for Secretary of State and Labor were announced, Reagan was off getting a haircut. He spent much of the time at his Pacific Palisades home or clearing brush at his ranch. One day soon after the election, Reagan told reporters there would be no personnel decisions that day. But James Baker and Ed Meese were announced as top White House aides hours later.

When his first eight Cabinet nominees made a joint appearance, Reagan didn't even watch the whole event on television. The great communicator was, well, not communicating. But Reagan got off to a fast start when the American hostages in Iran were released the day he was sworn in. And with his actor's flair, Reagan became a successful two-term president, despite media carping that he was out of touch.

(on camera): Journalists have a seemingly insatiable desire to forecast the future; to presume, for example, that a president elected by 537 votes won't be able to get much done. No one knows whether George Bush will make them eat those words a year from now, but remember, it's happened before.

This is Howard Kurtz of CNN's "RELIABLE SOURCES."


WOODRUFF: Good historical reminder there.

SHAW: Indeed.

WOODRUFF: Well, stay with us as INSIDE POLITICS continues at the top of the hour.

SHAW: We'll go to live to Austin, Texas for more on George W. Bush's tax -- or take on tax cuts and the economy. Plus:


UNIDENTIFIED MALE: I think Larry Lindsey is the original supply sider.


SHAW: Experts weighing in on the man who will be President Bush's top economic adviser.


SHAW: And welcome back to INSIDE POLITICS. The state of the economy: topic number one this day, from the president-elect's home base in Texas to his future home here in Washington -- and on Wall Street. Stock prices soared today, with the Nasdaq scoring its biggest daily gain ever: this after the Federal Reserve unexpectedly cut a key interest rate by one-half of a point, a move designed to boost the economy.

In Texas, George W. Bush praised the Fed's move, as he held a meeting with top business leaders. And he took the opportunity to urge the new Congress to pass his $1.3 trillion, across-the-board tax- cut plan.


BUSH: In order to make sure Americans can find work that we've got to be mindful of the warning signs. And today Alan Greenspan was mindful of the warning signs by taking a bold step. And when I get sworn in as president, I intend to take another bold step. And that is to ask the Congress to work with us to enact tax reform and tax reductions.


SHAW: Many Democrats oppose Bush's tax-cut plan. But House Minority Leader Dick Gephardt of Missouri said today that Congress may need to pass a larger tax cut than many in his party had favored because of the slowing economy.

WOODRUFF: Well, let's talk more about tax cuts, the economy and the Bush transition with CNN senior White House correspondent John King. He is in Austin.

John, this timing -- the Fed timing today, announcing this rate cut on the very same day that the president-elect is meeting with these business leaders: We don't know if it was coincidence or not, but it was certainly good news.

KING: It is quite a coincidence, Judy, and certainly good news for the Bush team, at least in the short term, in the sense that it reinforces what they have been saying: that there are problems in the economy and that the government -- whether it's the new president pushing for tax cuts or the Federal Reserve cutting rates -- needs to do something to deal with the slowing economy.

Whether it is good news in the long run for George W. Bush politically remains to be seen. Some now would prefer to let Alan Greenspan handle things, let the Fed try to engineer a little more growth, a soft landing, however the economy is turning out, and maybe argue perhaps that politicians should stay out of it. That will be the big question now: Can he get agreement on a big across-the-board tax cut? Even most Republicans would tell you no.

Will he push for one? Of course he will, because you don't want to compromise even before the debate begins. That debate will begin a little less than three weeks now. WOODRUFF: John, what does the president-elect accomplish with a meeting like this one today? We -- it's being compared with the one that President -- then-president-elect Clinton had back in Little Rock eight years ago. But this one was in private, behind closed doors.

KING: Judy, I'm sorry. We're having a technical problem on this end. I can't hear your questions at all. Maybe we can fix it up and come right back.

WOODRUFF: Yes, I was just pointing out, John, that today's meeting with the CEOs -- are you able to hear me now, John? All right, we're going to wrap up and we'll try to get back to John a little bit later. Thanks. And sorry about that audio problem.

During his meeting with those business leaders today, the president-elect announced that Larry Lindsey, his top economic adviser during the presidential campaign, would serve in that same capacity in the White House.

CNN's Brooks Jackson has a profile of Larry Lindsey and his economic credentials.


BROOKS JACKSON, CNN CORRESPONDENT (voice-over): Lawrence Lindsey is used to being close to economic power: five years on the Federal Reserve Board with Alan Greenspan. Lindsey was only 36 when President Bush appointed him in 1991. Back then, key Democrats held up his confirmation more than 10 months. The young Harvard economics professor had already worked in the Reagan White House and the Bush White House, and was known as one of the strongest academic defenders of supply-side tax cuts -- still is.

BOB LITAN, BROOKINGS INSTITUTION: I think Larry Lindsey is the original supply-sider from the original school, in the sense that he really does believe that lower tax rates will stimulate more saving and more investment.

JACKSON: So it came as a surprise to many that, as a member of the Federal Reserve, Lindsey visited struggling neighborhoods, pushing for affordable housing, prodding banks to lend more mortgage money to low-income families. Democrat Alan Blinder, a former colleague at the Fed, describes him this way:

ALAN BLINDER, PRINCETON UNIVERSITY: Conservative, to be sure, but I think you could say -- if the phrase has meaning -- a compassionate conservative. Larry does care some about the poor and unfortunate, which is a good thing.

JACKSON: Lynn Reilly worked with Lindsey at Social Compact, a business-backed group promoting private investment in poor neighborhoods.

LYNN REILLY, SOCIAL COMPACT: He was just a fabulous champion. He's also incredibly idealistic. But he's got this pragmatism that helps you get to the end goal. And he's got incredible energy. JACKSON: Not surprising, then, that George W. Bush turned to Lindsey to be chief economic adviser to his campaign, and give practical meaning to that compassionate-conservative slogan. Lindsey was chief architect of Bush's tax-cut and Social Security proposals. He was also a chief explainer. Bush himself told "Business Week" magazine last year, Lindsey "can explain complex issues in terms that I can understand."

Observers expect Lindsey to play a particularly strong role in the administration, too.

LITAN: He'll be one of the economic advisers closest to Bush. And I think he'll be a liaison also between the administration and the Federal Reserve because of his experience, having been at the Fed.

JACKSON: Conservatives will like Lindsey's belief in lower tax rates and fewer deductions. But liberals may applaud his opposition to further cuts in capital-gains taxes. Lindsey told "Business Week" last year: "Maybe it's just the populist in me, but I believe capital should be taxed. The government spends a lot of money protecting it" -- a hard supply-sider to pigeonhole.

Brooks Jackson, CNN, Washington.


WOODRUFF: All right, let's go back to Austin now and try to bring back our chief White House correspondent, John King.

John, it was interesting today that, when the president-elect announced Larry Lindsey, he said: He's going to be my economic adviser. But he didn't give him a formal title: head of the Council of Economic Advisers, for example. Why not?

KING: Still a debate within the Bush White House over how to handle things, and also still a lot of Republicans looking for jobs. So they're not sure which titles to assign to which aides right now. No question Larry Lindsey is the president's most trusted, closest adviser on economic issues. But remember back to the early days of the Clinton White House, they created, for Bob Rubin -- who went on to become the treasury secretary -- the National Economic Council.

Gene Sperling, another trusted adviser, took that over later. And the National Economic Council became the power base in the Clinton White House for economic policy. The Bush team is debating whether to go back to the traditional approach: have the Council of Economic advisers be the president's main economic arm. But there are other economic advisers who still want jobs in the White House -- a debate over where exactly the power base will be on economic policy -- so no firm title yet for Larry Lindsey.

But throughout the campaign, he was the most trusted aide. Look for him to be a trusted aide in the White House as well. And this is not just confined to economic matters. When he named his national security adviser, Condoleezza Rice, he said she would not have Cabinet status. The trade representative, we're told, might not have Cabinet status -- so Bush reassessing the power structure. But make no mistakes: Proximity is what matters to George W. Bush. Larry Lindsey sitting next to him today at the conference tells you a lot about his influence.

WOODRUFF: And, John, what about his relationship -- his working relationship with the treasury-secretary-designate Paul O'Neill?

KING: Well, Mr. O'Neill of course not involved in the campaign per se. And some conservatives -- not Larry Lindsey, we should make clear -- but some conservatives were troubled by the O'Neill appointment, because he had, eight years ago at the economic conference held by then-president-elect Clinton -- a very similar event, very different times -- Mr. O'Neill back then had spoken out in favor of gas taxes -- Mr. O'Neill brought in because of Dick Cheney: he, of course, the most influential person in this transition.

But we're told there are good relations between the teams, but that some members obviously don't know each other terribly well -- those relationships just beginning. Mr. O'Neill and Don Evans -- who we're told will take a lead on trade issues from the Commerce Department -- O'Neill and Evans were not here today because they were making courtesy calls as the new Congress convened -- their confirmation priority number one right now.

WOODRUFF: All right, John King in Austin -- fascinating, that internal decision-making. Thanks a lot. We'll see you later -- Bernie.

SHAW: Back here in Washington on the Hill, this was the official day on the job for the new members of the 107th Congress. Since Al Gore still is vice president, and, in turn, president of this body -- the Senate -- he presided over the swearing-in of 11 new senators and others reelected in November. Publicly, this chamber was oozing with talk of bipartisanship.

But behind the scenes, members still are battling over how to share power in this Senate that is divided 50-50, Democrats and Republicans. As the most famous freshman in the Senate, Hillary Rodham Clinton stole the show -- at least to some degree. That was especially true when she posed for pictures with her husband during this traditional reenactment of her swearing-in ceremony.

A bit earlier, I spoke with two veteran observers of Congress: Stu Rothenberg of the "Rothenberg Political Report" and Charlie Cook of the "National Journal." I asked them who we should keep an eye on in this new Congress, and who might George W. Bush turn to for help.


STUART ROTHENBERG, CNN POLITICAL ANALYST: Well, Bernie, I'd say, certainly on the Democratic side, the first name that comes to mind is John Breaux in the U.S. Senate, a moderate Democrat from Louisiana. We already know that George W. Bush talked to him initially, possibly about a Cabinet slot. Breaux was the ultimate deal-maker. He is the bridge to the moderate Democrats in the Senate that Bush and the Republicans will need. I think he certainly plays a central role. COOK: I think in terms of the House Democrats, I would look at Cal Dooley from California, Tim Roemer from Indiana, Sanford Bishop from Georgia, maybe David Price, North Carolina. These are the moderate Democrats that George Bush has to get on board if his legislative package is going to go through. These are the people he has to go after.

SHAW: What about Gephardt?

COOK: Well, obviously, leadership on both sides is terribly important, not just the elected overall leadership, but people like David Dreier, who is going to be the chairman of the Rules Committee on the Republican side. In the House: people like Nancy Johnson, Fred Upton, the moderates that George Bush is going to have to keep in his camp as well.

ROTHENBERG: And, obviously, it's important to co-opt, as Charlie suggests, both the left and the right, even in the Republican ranks. So if you want to talk about a Republican moderate, you talk about somebody like Mike Castle of Delaware, a veteran legislator -- speaks not for all moderates, but is a point person for many Republican moderates. And on the other side, you have to consider the conservatives.

You have got to consider Tom DeLay, who is not really the kind of person who plays ball with anybody else. He keeps the ball to himself. But he's a significant factor. And George W. Bush is going to have to consider Tom DeLay and conservatives.

COOK: I think what you are going to see George Bush do in the first couple months is meet with more members of the House and Senate one-on-one and in small groups than we've ever seen before: get to know them, get to create direct relationships with them, so that he can go around the leadership and kind of hold onto people, pick them off, kind of soothe their feelings, know what makes them tick and pick them off. That's what he did in the legislature in Austin. I think that's what he's going to do here.

SHAW: But what about back in the Senate and men with possible presidential ambitions? You have Lieberman. You have Daschle in the Senate?

ROTHENBERG: Well, Bernie, everybody in the Senate has presidential ambitions. That's why they are in the Senate. Yes, there's a huge list. And Joe Biden made it clear at the Democratic Convention out in L.A. that he was interested in a presidential run. He ran before, you remember, in the '88 race, where he dropped out well before the contest for the nomination. Certainly, John Kerry of Massachusetts has been mentioned -- Joe Lieberman.


ROTHENBERG: Tom Daschle's name has came up recently because he is the leader. Well, I'm not sure whether Harkin is a serious contender for the nomination. But he is a serious factor for whoever wants to be the Democratic nominee, coming from Iowa. SHAW: Evan Bayh?

COOK: Oh, Evan Bayh, absolutely. I think the other thing is, you know the old joke about every senator under 70 that looks in a mirror, that gee -- when they're shaving or putting on their make-up, you know, sees a future president. And they are all like that. They are all on the list. But, no, absolutely. But I think, for the first two years, you won't see quite so much presidential politics, as much as just sort of general maneuvering to keep your options open, that sort of thing. We have got a long way to go until 2004.

ROTHENBERG: And, of course, Bernie, the one Republican you can't forget in the U.S. Senate is John McCain. Who knows if he is ever going to run for president again, but he is going to have a lot to say on how well George W. Bush does as president and how the Democrats are going to react to Bush. So he's a person to keep an eye on.

COOK: Oh, it's clear that McCain is just not a team player. I mean, the Navy did not put him in a single-seat fighter for nothing.


COOK: And this guy, it's clear he's going to make trouble for Bush every week, 52 weeks, for four years.

SHAW: What about the women, including Hillary Clinton?

ROTHENBERG: Well, I think it's just -- I think 2004 is probably too soon for her to think about a presidential run, or to even, over the next year, to think about being a major player in the Senate. I think she understands that people have been in the Senate for years. You know, Robert Byrd has been there forever. And you don't just go into the U.S. Senate and throw your weight around.

But I think she will take some time to learn the Senate, to learn who the people who, to forge some personal relationships. And then I think later on, later in the term, she will be a significant factor. But unquestionably, we have to keep our eye on women for national ticket down the road. I don't know exactly who it's going to be. I don't know if it's to be Maria Cantwell in four years for vice president or whatever. But this is an important constituency.

SHAW: Charlie, Al Gore, outside the mix, but is he out in the cold?

COOK: Well, I think there's a chance he may do it. I think he wants to keep his options open. And he needs to reflect on things. I mean, I wouldn't put him out of the mix completely. But I would be very surprised to see him win the nomination. What would be a more interesting move to see is, you know, as he moves back to Tennessee, does he do something in the interim? Does he run for governor of Tennessee, where there is an open governorship? There could be an open Senate seat in Tennessee -- something like that.

That's what Nixon did after he lost the 1960 governorship, his -- or the 1960 presidential race. He went back and ran -- although he lost -- for governor in 1962, but managed to come back and got elected president in 1968.

ROTHENBERG: Bernie, I would say, right now, Gore is in the mix. The problem is: out of sight, out of mind. If he does drop out of sight, in another two or three years, he will be a footnote rather than a candidate.

COOK: But the fact that he lost his home state, he's got to undo that. I think that's very important. If he wants to have a future, I think he has to undo that. And, in fact, that's actually -- although Hubert Humphrey didn't lose his home state in 1968 -- when he lost, he came back and got elected to the U.S. Senate.

ROTHENBERG: And a lot of us thought that Dan Quayle possibly should have gone back to run for governor of Indiana. I think he would have won that. I think he could have rehabilitated his reputation. Instead, he chose not to do that. And we see what has ultimately happened to him politically.

SHAW: And we shall see what happens in the next few years.

Stu Rothenberg, Charlie Cook, thank you.


SHAW: And just ahead on INSIDE POLITICS: Remember those Florida ballots? Well, they're still under scrutiny. The latest on the efforts to make sure the next Florida election runs much more smoothly.


WOODRUFF: As a new Congress is sworn in and Washington moves toward the presidential inauguration, the news-media inspections of Florida's November 7th presidential ballots have resumed. A blue- ribbon panel is also slated to examine the problems at issue in that state's election process, as our Susan Candiotti reports.


SUSAN CANDIOTTI, CNN CORRESPONDENT (voice-over): As Governor Jeb Bush attends the swearing-in of Cabinet members, his newly formed election reform task force gets ready for its first formal meeting next Monday.

MARK PRITCHETT, COLLINS CTR. FOR PUBLIC POLICY: We're looking at it systematically: everything from voter registration to actual certification of an election.


CANDIOTTI: The panel is charged with recommending sure-fire changes to prevent a repeat of Florida's chaotic presidential election.

JIM KANE, POLLSTER: Right now, I think we're mostly -- Florida is considered mostly a nice joke.

CANDIOTTI: Florida pollster Jim Kane says it will take a bipartisan effort by the state's Republican-dominated legislature to pass needed reforms, then get them accepted by the public.

KANE: You can pass all the laws in the world, but if you don't install confidence back in the system, then you haven't really solved the problem. And right now, there's not a lot of confidence in the Florida system.

CANDIOTTI: Adding to the scrutiny: media-sponsored ballot reviews resuming this week in about 10 Florida counties, inspecting those now infamous punch-card ballots. They're likely to bite the dust in favor of other methods, such as touch-screen machines, or optically-scanned ballots, where voters mark their choice with a pen, a system favored by newly retired Broward County supervisor of elections Jane Carroll, a GOP appointee to the governor's task force.

JANE CARROLL, FMR. ELECTIONS SUPERVISOR: In a mark-sense system, you're marking with ink. And ink doesn't fall off the page. Chads may come and chads may go, but an ink-mark is forever.

CANDIOTTI: Another panelist, Democratic state Senator Daryl Jones, is concerned about talk the task force might not tackle allegations that thousands of minority voters were disenfranchised.

STATE SEN. DARYL JONES (D), FLORIDA: And I think that would be a tragedy for this state, because this election was a complete embarrassment for all of us in the state of Florida.

CANDIOTTI (on camera): Whether those allegations are considered by the task force during public testimony, they will be addressed by the U.S. Civil Rights Commission, also meeting in Florida's capital next week.

Susan Candiotti, CNN, Miami.


WOODRUFF: When INSIDE POLITICS continues, the man who lost: Al Gore, bowing out with grace and a sense of humor.

(COMMERCIAL BREAK) SHAW: As with so many times in the past, Al Gore was on the Hill today taking care of business. But, as Bruce Morton reports, the duties carried out and the memories they recalled -- well, they must have been bittersweet.


GORE: To be here with all of you is a great way to start the new year.


BRUCE MORTON, CNN CORRESPONDENT (voice-over): He was never funnier, more at ease, more graceful, than when saying goodbye.

GORE: Come on. Come on.

MORTON: This was the Congressional Black Caucus.

GORE: America is about to see some bold, new leadership from the state of Texas. Of course, I'm talking about Eddie Bernice Johnson, the new chair of the Congressional Black Caucus.


MORTON: You know he must have been thinking: It could have been so different. We came so close. But he didn't show any of that.

GORE: I believe very deeply that we all must respect, and, whenever possible, help president-elect Bush.

MORTON: He must have remembered and wondered: How could you miss by so little? But he called the Senate to order, its presiding officer.

GORE: The majority leader, Senator Daschle, is recognized.


MORTON: They're laughing because the Senate is tied 50-50, and the Democrats and Daschle are the majority only until inauguration, when Republican Vice President Dick Cheney will preside with the vote to break a tie. Trent Lott will be majority leader then.

LOTT: And I want to extend also the appreciation of the Senate and a grateful nation to the presiding officer, the vice president of the United States, for the service he has given our country.


GORE: The chair will remind the Senate that boisterous demonstrations are against the rules of the Senate.


MORTON: He must have been remembering and wondering: Couldn't it all have been different?, as he swore in the new senators.

GORE: And you will bear true faith and allegiance to the same.

MORTON: A kiss for the most famous new senator, and a hug for Senator, no-longer-running-mate Joseph Lieberman.


MORTON: He must have remembered and ached at least a little. But he was all grace and laughter as he said goodbye.

Bruce Morton, CNN, Washington.


SHAW: And that's all for this edition of INSIDE POLITICS. But, of course, you can go online all the time at CNN's -- AOL keyword: CNN.

WOODRUFF: And this programming note: Senators Dick Durbin and Kay Bailey Hutchison will be talking about the new Congress tonight on "CROSSFIRE." That's at 7:30 p.m. Eastern. I'm Judy Woodruff.

SHAW: And I'm Bernard Shaw. The "MONEYLINE NEWS HOUR" is next.



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