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Inside Politics

Partisanship Comes to the Fore as House Prepares to Vote on Tax Cuts

Aired March 7, 2001 - 5:00 p.m. ET

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

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. We just watched, a moment ago, the continuance in the arraignment of the young California boy, 15-year-old Andrew Williams, accused of murdering two schoolmates and wounding 13 others. We are told any moment now attorneys in that case will be coming out to talk to reporters. When that happens, we'll bring it to you live.

Back here in Washington, as the House of Representatives prepares to vote tomorrow on President Bush's tax cut plan, the issue is not really whether Republicans will prevail, but how: How many Democrats will support the Bush plan and how might that affect its uncertain chances in the Senate?

Our John King has more on tax cut politics and the president.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CORRESPONDENT (voice-over): It is a vote the young administration can't afford to lose, so the president walked over to the Treasury Department to make one more pitch for tax cuts.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The message is slowly but surely getting out that we've got enough money coming into the treasury to meet important obligations. But we've also got enough money to remember who paid the bills in the first place, and those are working folks, the people who paid the taxes.

KING: Bipartisanship is this president's constant refrain, but the first big vote on tax cuts is shaping up as a highly partisan showdown. Treasury Secretary Paul O'Neill made a morning call at the Capitol to urge House Republicans who want a bigger tax cut not to stray from the president's plan.

REP. RICHARD ARMEY (R-TX), MAJORITY LEADER: Last time I checked, Mr. Secretary, president trumps the majority leader.

(LAUGHTER)

KING: And by mid afternoon, Vice President Dick Cheney, just back from heart surgery, was dispatched to the Capitol, too, to remind Republicans the president is banking on their loyalty.

QUESTION: Have you got the votes tomorrow? DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: I think so, but in this business, you never know.

KING: Administration officials project only six to 10 House Democrats will back the president's approach Thursday.

By comparison, 63 House Democrats supported the first Reagan administration budget resolution, and 48 House Democrats voted in favor of the 1981 Reagan tax cuts. Republicans predict Democratic support will grow as Mr. Bush targets individual lawmakers and travels to make his case for tax cuts.

RON KAUFMAN, GOP STRATEGIST: This president's done a really good job of going around the established leadership, directly to the members, and to the members' voters. And in the end, that's what counts.

KING: South Dakota is one of the president's stops this week. Senator Tim Johnson, one of the skeptical Democrats, on the White House target list.

SEN. TIM JOHNSON (D), SOUTH DAKOTA: It also involves some give and take on the part of the president. Up until now, the president's view has been "My way or the highway, " frankly.

KING: But administration officials say the first round of the tax debate is not the time for concessions.

(END VIDEOTAPE)

With the Congress so evenly divided, and even a fair number of Republicans wary of the Bush approach, the White House view is that a hard line now will result in a better deal for the president a few months down the road.

But there are some Republicans who privately grumble there could be a price to pay for getting off to such a partisan beginning.

WOODRUFF: John, separately today, Vice President Cheney was up on the Hill, his first full day back on the job, and he was asked about his health.

KING: He sure was. The first question was about his health. He was asked how he was doing. He wanted to talk about tax cuts, back to work, right back into that debate.

Instead, reporters asked him about all the speculation in Washington that because of his health, perhaps he wouldn't even make it through the first Bush term. The vice president joked that there were probably plenty of people who would like his job, but that for now, he's staying.

(BEGIN VIDEO CLIP)

CHENEY: I've got a job to do. The president asked me to do it. I'll do it as long as he's comfortable having me do it and I feel like I can make a contribution. And I've signed on for a four-year term, whether or not he wants me to serve with him on a second term, that's a decision he'll make at the appropriate time.

(END VIDEO CLIP)

KING: At the appropriate time, Cheney aides say, is at least two years down the road, before they would think about that. He did acknowledge, though, that it was scar tissue blocking that artery. The doctors say there's a fairly good chance it could happen again. And that if it happens again, next time, instead of just having angioplasty, they will probably use some sort of radiation treatment to treat it, if it happens again.

WOODRUFF: All right. We're showing his trademark low-key sense of humor there -- about the second Bush term.

KING: Yes, and aides said he was very antsy to come back to work to show the American people that he feels just fine.

WOODRUFF: Evidently so. John King, thanks very much.

Well, heading into tomorrow's vote on tax cuts, some House Democrats have been complaining loudly about Republican tactics. And now, as CNN's Kate Snow reports, a battle over workplace safety has further damaged efforts to build a new bipartisanship.

(BEGIN VIDEOTAPE)

KATE SNOW, CNN CORRESPONDENT (voice-over): The Senate's two leaders, Republican and Democrat, hammering home the message that two rivals can work together to help low-income families. But behind the smiles on Capitol Hill, Democrats say the mood has grown sour.

REP. RICHARD GEPHARDT (D-SD), MINORITY LEADER: I think what we're seeing this week is the end of what we thought was bipartisanship.

SNOW: Angering Democrats: the Republicans effort to rescind workplace safety standards issued in the last days of the Clinton administration.

GEPHARDT: This is the biggest heist of a special interest in the history of the Congress. I mean, this is breathtaking. This takes your breath away, that they would come in here in one week and two days and rip this thing out that took 10 years to do -- the scientific work to find out what ought to be done.

SNOW: Republicans say the standards are intrusive and expensive. That's why they're pushing for an overhaul.

REP. DENNIS HASTERT (R-IL), HOUSE SPEAKER: We have to move this quickly in order to get it in to change the situation. The Senate moved quickly on it and we had to move quickly, as well.

SNOW: It's the latest item on a fast-paced agenda, one that Democrats say is moving far too fast. Thursday the House will vote on the first piece of Mr. Bush's tax-cut plan. Democrats know they can't win.

Overall, Democratic aides say about a dozen Democrats are expected to vote for the tax bill, including a handful of conservative Blue Dogs. But behind the public anger, an understanding that the Republicans' pace may help the Democrats later.

REP. BOB MATSUI (D), CALIFORNIA: There's no question that we can make the case now that the Republicans are being very partisan and very single-minded in a way that -- in a way, it works against the American public.

SNOW: If that argument sells, it could bolster Democrats in the Senate, where compromise seems more likely.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: I think it is important that we do everything we can to ensure that we have the bipartisan spirit. We've been able to demonstrate it in a lot of ways. If we can do it in other things, we ought to be able to do it in taxes.

I'm still optimistic that that's possible.

(END VIDEOTAPE)

SNOW: One sign of compromise on the House side of things tonight, there is -- there has been a lot of talk today back and forth about whether Democrats would be able to offer their Democratic tax cut alternative on the floor of the House tomorrow. CNN has learned that, yes, indeed, the Democrats will be given that opportunity.

One Republican aide saying that the White House made it clear that they ought to give Democrats that room -- that they ought to give them the opportunity to have a vote, up or down, on their alternative -- even though Republicans don't think that they're going to be likely to swing that many Republican votes to the Democratic side of things.

Judy, back to you.

WOODRUFF: Kate, you've also been talking to so-called blue dog moderate Democrats -- what are they up to?

SNOW: They're very unhappy about what's happening up here, Judy. The Blue Dogs, of course, are more conservative. But on taxes they really talk a lot about debt reduction. That's their key priority, and they feel that the president's plan doesn't do enough to help debt reduction.

So we understand that tomorrow some of the Blue Dogs may try to wage a sort of protest. They may try to do some stalling on the House floor tomorrow. It's just a tactic to show that they're not happy with the way this tax cut plan and this tax cut bill is going through -- Judy.

WOODRUFF: All right. Kate Snow at the Capitol. Thanks very much. Well, there may be a bit more bipartisanship as members of Congress try to fix problems in the election system, in the wake of the Florida standoff.

During the first Congressional hearing on the matter today, Republicans and Democrats agreed on the need for reform. But figuring out how to accomplish that may not be easy, as CNN's Jonathan Karl explains.

JONATHAN KARL, CNN CORRESPONDENT: In the wake of the mess created by dimpled, pimpled, pregnant, and hanging chads in Florida, virtually everyone in Congress seems to want to do away with the 1960s-era technology of Votomatic machines and punch-card ballots.

But there's a problem: the new technology may actually be worse.

CATHY COX, GEORGIA SECRETARY OF STATE: In Georgia, we now believe that replacing punch cards with Opti-Scan would be the electoral equivalent of jumping from the frying pan into the fire.

KARL: Various Congressional proposals would spend as much as $2 billion to help states replace the old punch cards with newer optical- scan ballots. One of the primary reasons for the change is the effect that the old punch cards have on African-American voters.

REP. CARRIE MEEKS (D), FLORIDA: We were far more likely to have their votes invalidated -- black voters were, and other voters -- because of a greater percentage of African-American voters lived in counties that used defective, outmoded punch cards.

KARL: But Georgia Secretary of State Cathy Cox says that in her state, the problem of disproportionately discarded African-American ballots was actually worse in precincts with the newer technology.

COX: We had a number, more than a dozen black precincts, where the error rate or undervote rate was well in excess of 10 percent. We had one full county where the entire county average was 15 percent undervote. Those are spoiled ballots.

KARL: Cox said she didn't know why the newer ballots performed worse, but her revelations shocked Max Cleland, one of several senators with proposals to help states upgrade to newer technology.

SEN. MAX CLELAND (D), GEORGIA: Mr. Chairman, I might say that a lot of my preconceived notions about technology solving our problems has just been exploded today. It crashed and burned. And not only is Thomas Edison's basic lever system of voting, invented in 1900, looking better and better, but the paper ballot is looking better and better.

KARL: But after the hearing, Cleland forged ahead with his proposal to make the punch-card ballot and its hanging chads history.

CLELAND: But it's painfully obvious in testimony before our commerce committee today that the punch-card system has built-in errors in it, as does the optical-scan equipment. KARL: One option would be touch-screen technology, which is considered the most accurate. Although it's also the most expensive, and may not work at all in rural areas that don't have up-to-date digital phone lines.

(END VIDEOTAPE)

KARL: The secretary of state for Kansas urged the Senate to avoid forcing states to adopt any kind of new technology. He said that for rural areas of his state and others, that the best technology remains, simply, a piece of paper and a pencil -- Judy.

WOODRUFF: Jon, how much of all this is actually decided by the federal government, and how much of it is decided by the states?

KARL: Well, virtually all of it is left to the states. What they're talking about doing, these various proposals that are kicking around the Congress, is providing national standards that would simply be voluntary on how votes should be counted and how voting should be conducted. That's one idea.

The other idea is helping states pay for updating their technology. It would simply be federal matching grants would go to states should they elect to adopt some of these newer, quite expensive proposals. I mean, some of these new machines cost upwards of $5,000 apiece. It's a cost that most local jurisdictions, local precincts simply could not afford. So, the federal government here with some of these proposals, the idea is simply to offer matching grants to give them some money to help them do that.

WOODRUFF: Jonathan Karl at the Capitol. Thanks a lot.

And still ahead on INSIDE POLITICS: The Capitol Hill battle over ergonomics and its effect on the new secretary of labor. My conversation with Elaine Chao is next.

(COMMERCIAL BREAK)

WOODRUFF: Right now, we are waiting for the House vote on the repeal of the workplace safety regulations. That vote is due sometime in the next few hours. With that in mind, today I sat down with the new labor secretary, Elaine Chao. I asked with all that she's had to contend with in her first few weeks on the job, would she have preferred that some of these issues came up a little later?

(BEGIN VIDEOTAPE)

ELAINE CHAO, LABOR SECRETARY: I don't think any of the Cabinet secretaries have had easy issues. That's what our job is, that's what our responsibilities are, to take on some of these tough issues. I'm delighted to be here at labor.

This is an area that I care deeply about. I'm very passionate about improving the quality of life and improving access to opportunities for working men and women, and that's going to be one of my main themes is that I want to prepare this department to help working men and women to prepare for the 21st century.

There are so many challenges and we need to find grounds of commonality in which we agree. We need to talk about the skills gap. We need to talk about the shortage of workers coming up, and we need organized labor to help us talk about some of these issue, discuss some of these issues and find some solutions.

WOODRUFF: You've been here just a matter of weeks and already organized labor is up in arms and saying that they're very upset about an initiative that's being pushed in the Congress today, these last few days, pushed by the administration, by your administration, to roll back worker safety rules. Did this come about too quickly in your mind?

CHAO: Well, I have very good relations with the labor unions, stemming from my days as president and CEO of United Way of America, and also when I was director of the Peace Corps. I have worked with many, many NGOs, nongovernmental organizations in the international arena, many of whom have very strong labor agenda.

I've also worked with labor leaders on charitable activities when I was, again, with United Way. So, I have a working relationship with organized labor and when I first took office, I emphasized that I want to keep an open door. I want to keep the communications open, the channels of communication open, and that I will always be available to listen to their concerns.

But I also did say that we're going to have our differences and, in fact, let me just add that one of my first trips, one of my first acts since taking office was, in fact, a visit with the AFL-CIO at their executive council meeting in Los Angeles.

I met with the executive council members of the AFL-CIO. I listened to their concerns, and again, I emphasized that I want to work with organized labor, that I'm always going to be open and available to their concerns, but that we are going to have differences.

WOODRUFF: But they look at these specific changes that are working their way through the Senate and the House today and yesterday, and saying this administration is rolling back the very things that we think are vital to worker safety?

CHAO: I would disagree with labor's characterization of the current ergonomic standards in this sense. Let me make two points. One is that I inherited this from the previous administration. The rule on -- the final rule was finalized on January 16th, 2001. And secondly, everyone I have talked to has got some problems with this rule, and I have said that I am very concerned about ensuring the safety of the workplace and the safety of the work force.

I am very concerned about ensuring workplace safety, work force safety. And that's one of my goals. Now, we are in litigation at this point. So, I am a bit constrained in terms of what I can say, but we will be -- we are looking at this issue very carefully, and we're going to look at it from a comprehensive point of view to ensure that the overall goal of protecting the working men and women at their workplace will be maintained.

WOODRUFF: You talk about -- you personally have a good relationship with organized labor. John Sweeney, the president of the AFL-CIO said what's happening is dishonest and disgraceful. He used some very strong language. Obviously, Democrats on the Hill talk about it being a political payoff. Is this just a tempest in a teapot? Do you not take their criticism seriously?

CHAO: No, I think the rhetoric has been very harsh and I think it's unnecessary. I think President Bush has said that we can disagree without being disagreeable, and that we can have a civil dialogue or discussion about important issues, and I hope that we're able to do that.

This is a different administration. So, I think organized labor in expecting that their agenda is going to be carried out by this administration, I think is very unrealistic. On the other hand, I have said repeatedly that we want to work with them, and that we will always be there to listen to their concerns and we will do so.

WOODRUFF: I noticed when the budget numbers were put out by the White House -- by the president last week, Labor Department is getting, if I understood it correctly a 5 percent decrease as the administration overall gets a 4 percent increase. Is that accurate, first of all? And second of all, is that enough?

CHAO: First of all, the president's numbers are not coming out until April. But overall, we have had -- about three-quarters of our budget is fixed, and then we have a quarter that's basically in training and we have some realignments of some funding. We've had some excess funding that has been unused in the previous. And so that five -- that percentage or whatever the number is will have to be taken into account that we some surplus from the previous year.

So the cut is not as bad as we said. Now I've let it out.

WOODRUFF: I think they were extrapolations from whatever the administration had put out. Let me just finally ask you, Secretary Chao, as an immigrant yourself. You were born in Taiwan, you came to the United States at the age of eight. You come from a working class family. Your father worked his way up and became a successful business person. Do you feel any special responsibility, obligation to people who are immigrants in this country because of your own background?

CHAO: I hope that, because of my own experience, I will have a greater understanding as to what immigrants go through, and I can better help them adjust in whatever policies we are involved with, and also that I'm able to enunciate and also project their voice so that others can understand the tremendous tales of courage that immigrants face to come to this country to seek opportunity.

WOODRUFF: Secretary Chao, we thank you very much for joining us. We appreciate it.

CHAO: Thank you. (END VIDEO CLIP)

WOODRUFF: And when Secretary Chao made the point that this administration has a different philosophy, organized labor shouldn't expect it to be any different; she said that's what elections are all about: change.

There is much more ahead on INSIDE POLITICS. Still to come, another new initiative announced by Attorney General John Ashcroft.

(BEGIN VIDEO CLIP)

KELLI ARENA, CNN CORRESPONDENT (voice-over): Over the past month, Ashcroft has made a concerted effort to win over groups opposed to his nomination; most notably, African-Americans.

(END VIDEO CLIP)

WOODRUFF: Kelli Arena on what might be called a "charm offensive" underway at the Justice Department. Also:

(BEGIN VIDEO CLIP)

CANDY CROWLEY, CNN CORRESPONDENT (voice-over): The Republican Party problem with the black vote is widespread, longstanding, and increasingly politically critical.

(END VIDEO CLIP)

WOODRUFF: Candy Crowley with an in depth look at why the GOP lacks appeal for many African-American voters.

(COMMERCIAL BREAK)

WOODRUFF: Attorney General John Ashcroft says protecting the rights of voters is a key priority at the Justice Department. Ashcroft announced a new initiative today, in part a response to complaints that minority voters were disenfranchised in Florida during the recent presidential election. As Kelli Arena reports, the move may also be a response to criticism that marked Ashcroft's nomination hearing.

(BEGIN VIDEOTAPE)

ARENA (voice-over): Responding to complaints from African- Americans about voting problems in Florida, Attorney General John Ashcroft says the Justice Department will keep closer watch on state and local elections, and hire more lawyers to investigate complaints.

JOHN ASHCROFT, U.S. ATTORNEY GENERAL: We will take action if we find evidence that any American is being excluded from polling places. We will take action if we find evidence of voting or election fraud.

ARENA: Ashcroft laid out the plan, just after praising Ralph Boyd, a Boston lawyer nominated to head the Civil Rights Division, the third African-American nominated for a top post at Justice. If confirmed, Boyd's first challenge: to combat racial profiling, what Ashcroft has described as a top priority.

ASHCROFT: If we come to the conclusion that anyone has violated the Civil Rights Law with credible evidence, we'll take action to correct that violation and to prosecute it. Yes.

ARENA (on camera): Over the past month, Ashcroft has made a concerted effort to win over groups opposed to his nomination: most notably, African-Americans.

Last week, he met with the Congressional Black Caucus.

REP. ELIJAH CUMMINGS (D-MD), CONG. BLACK CAUCUS: He said the right things. The question is not what you say, but what you do.

ARENA: And during a Black History Month event, Ashcroft relayed this conversation with his late father.

ASHCROFT: What would you think if I were, instead of to be dating a white girl, what would you think if I were to be dating a black girl, and he said, I care more about you being associated with people who are people of faith and people of value and people of good will than what color they are.

ARENA: Ashcroft has also reached out to gays, meeting with Log Cabin Republicans. He has been roundly criticized for opposing the nomination of James Hormel, who's openly gay, to be ambassador to Luxembourg. The one group Ashcroft hasn't yet courted: women.

QUESTION: Where are the women?

ASHCROFT: We will, I hope and I expect, be announcing a group of individuals.

ARENA: A woman has yet to be appointed to a top post at Justice. Women's groups actively opposed Ashcroft's nomination based on his staunch anti-abortion record.

Kelli Arena, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: With their showing in the November election fresh in their mind, Republicans are keenly aware of the need to reach out to the African-American voters. Tomorrow, House Majority Leader Dick Armey will meet with the president of the NAACP to talk about race relations in America.

Candy Crowley takes a closer look at the issues and the impact of the disconnect between African-Americans and GOP.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): The problem is there for the asking.

UNIDENTIFIED MALE: No, I never voted for a Republican.

UNIDENTIFIED FEMALE: Never.

UNIDENTIFIED MALE: No, no, not for a Republican.

CROWLEY: The problem is there in the stats. George Bush won 9 percent of the African-American vote last year. Al Gore won 90 percent.

UNIDENTIFIED FEMALE: I'm kind of stuck on Democratic.

UNIDENTIFIED MALE: I feel more comfortable with the Democrats.

UNIDENTIFIED FEMALE: I was born Democratic,

CROWLEY: Al Gore won electoral-rich states like Pennsylvania and Michigan, and made it a cliffhanger in Florida, largely because of the African-American vote. The Republican Party problem with the black vote is widespread, longstanding, and increasingly politically critical. The Republican National Committee has beefed up its coalition-building division, and plans to pour more money into outreach efforts.

GOV. JAMES GILMORE (R-VA), RNC CHAIRMAN: I think we have failed for over 100 years as Republicans to do this, and I don't think we can turn it around in a week.

CROWLEY: For the GOP, the only thing worse than its poor standing with black voters is the reason.

UNIDENTIFIED FEMALE: When had you hear the word Republican, what is the first thought that comes to your mind?

UNIDENTIFIED MALE: Money. Just money.

UNIDENTIFIED MALE: White, the white party.

UNIDENTIFIED MALE: They pay their way, basically. They pay their way for everything in life. They do, they pay. They get the tax cuts -- they get everything; they get the hookup.

GILMORE: My father was a meat cutter for 40 years for Safeway stores. I grew up in a working-class neighborhood, in a working-class family. My mother was a church secretary. So I am not a man of wealth. Yet, here I am, the chairman of the Republican Party. So there is a lot of unfamiliarity here.

CROWLEY: Though Governor James Gilmore envisions a nationwide effort, a Republican source says the GOP will initially target places like Detroit and St. Louis, cities in battleground states. The idea is to identify community leaders more involved in community than politics, and meet them where they live.

GILMORE: Let's get to know these people. We don't know them as Republicans. The first thing to do is sit down, have a cup of coffee and talk about issues, talk about our families, talk about our hopes and dreams not only for members of our community, but for the whole nation. CROWLEY: "At the macro-level," said one party source, "George Bush will provide tools: his education plan or his faith-based initiative. At the micro-level, we want to find people willing to help us provide the information to the community."

UNIDENTIFIED FEMALE: So what would it take for a Republican presidential candidate to get your vote?

UNIDENTIFIED FEMALE: Doing what he's doing now, pretty much. I like his religious platforms and the faith-based initiatives that he is beginning to put into place.

CROWLEY: At the presidential level, the outreach is already apparent. Washington, D.C.'s mayor and the Congressional Black Caucus were among the first to be invited to a Bush White House. Impressive and welcome, says the D.C. Delegate, but not enough.

DEL. ELEANOR HOLMES NORTON (D), WASHINGTON, D.C.: And black people are really oriented toward policy, what's in it for me. That may be real specific. That's why the Democrats get them every time, because they know that affirmative action matters. They know that the earned income credit matters.

CROWLEY: In his first speech to Congress, the president did announce that he had directed the Justice Department to come up with a plan to end racial profiling. It is, it appears, one of those tools the GOP might be able to use.

NORTON: And the only way you overcome larger-than-life barriers like that, which stick in people's minds, is by very dramatic policy overtures. Racial profiling is one. Let's see what it turns out to be. That could help.

CROWLEY (on camera): Party leaders say they understand their task is difficult and they realize that in the end they may ultimately not be able to woo large numbers of black Americans into the Republican Party. "Still," said one source, "we have to try, and at least they may learn we don't have horns."

Candy Crowley, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: And joining us now with his "Reporter's Notebook," Bob Novak of "The Chicago Sun-Times."

Bob, you've been talking to a lot of people. What's the reaction in the administration, among Republicans to Vice President Cheney being hospitalized, the angioplasty this week?

ROBERT NOVAK, "CHICAGO SUN-TIMES": Nothing, Judy, since the inauguration has so disturbed Republicans as this seemingly trivial medical event. They are really concerned and worried for Dick Cheney.

He is not just your normal vice president. He is the prime minister. He is important to a president just learning his way in Washington. Cheney is the old hand who knows all of the tricks. He's got his fingers on policy all over.

And the question is, will he be able to serve out his term? That would be a disaster if he had to resign the vice president. No sign of that now. But you know, the Republicans are getting the street- corner opinions from their doctors, which have no authenticity whatsoever, and it makes them nervous when they say, gee, he might not be able to serve out his term. They're very nervous.

WOODRUFF: Bob, let me ask you about something on the Hill. Republicans, moving very quickly to roll back the so-called "ergonomics regulations," worker safety rules. What's the Democrat -- Democratic reaction?

NOVAK: They are furious. They were taken by surprise. This thing was just put in place. It started to leak out last Thursday. The Democrats really didn't know about it. Sources say that Senator Ted Kennedy is really mad, that he is going to -- talking that this is the end of bipartisanship. He's going to put on the minimum wage legislation as an amendment to a Republican bill. Many Republicans would have a hard time voting against a minimum wage increase.

But you know, on the ergonomics, Judy, all 50 Republicans, including liberals like Jim Jeffords and Arlen Specter, voted for it. So labor has very little clout with Republicans, and of course they lost the six Democrats or so that they needed to pass the bill.

WOODRUFF: And you saw on that interview earlier in the program with the Labor Secretary Chao, this is a different administration.

NOVAK: Absolutely.

WOODRUFF: Different philosophy.

Reaction to the treasury secretary, who used to be the head of ALCOA, keeping his stock options there?

NOVAK: $10 million worth. Now this proved -- this passed the smell test of the ethics office at the White House. So it's perfectly kosher. We're not talking about ethics transgressions. We're talking about politics here. And Republicans I talked to think this is a terrific mistake for Mr. O'Neill. It's one thing to say, well, give up the 10 million. But every decision he's going to make -- and he's very deep into these environmental programs -- is now being questioned: What is in it for ALCOA?

I'm not saying that Paul O'Neill operates that way, but by keeping the stock he raises those questions. And some Republicans think he made a big mistake.

Of course, it's easy for us to say, "Give up the 10 million, Paul."

(LAUGHTER)

WOODRUFF: All right. And finally, another job for the former chairman of the Republican Party, Jim Nicholson. NOVAK: Jim Nicholson is going to be, as soon as he clears the FBI clearance, ambassador to the Vatican. Now, that may not be the most important diplomatic post, but it's one of the most sought after. Many Catholic laymen were after that job, Judy, and people with closer connections to the church than Jim Nicholson, although he is a devout Catholic.

But Chairman Nicholson was a very faithful supporter of George W. Bush, and he, the president, owed him one.

Now, there was some talk earlier that let's -- let's do something really novel, let's name a Protestant as ambassador to the Vatican. That did not go over.

WOODRUFF: Didn't fly.

NOVAK: That didn't fly. I knew it was going to be a Catholic, but it's a little surprise in some Catholic circles that it was Jim Nicholson. But as I say, the president owed him a lot.

WOODRUFF: Bob Novak, thanks very much. Drop by any time.

And when we come back, an update on the California school shooting. We'll bring you up-to-date on the aftermath of that.

(COMMERCIAL BREAK)

WOODRUFF: A short while ago, a California judge granted the 15- year-old suspect in Monday's school shooting an extension in his arraignment. It was rescheduled for March the 26th.

Prosecutors said Charles Andrew Williams will be charged with two counts of murder with special circumstances and 13 counts of attempted murder.

Meanwhile, counselors stood by at Santana High School classrooms, as students and teachers returned for the first time today.

CNN's national correspondent Frank Buckley joins us now with the latest from Santee, California -- Frank.

FRANK BUCKLEY, CNN CORRESPONDENT: Judy, very tight security in the courtroom as Andy Williams made his first court appearance today. There were at least a dozen sheriff's departments as we went into the courtroom. We were magged to make sure that there was no metal or any objects that could be a threat inside of the courtroom. Then the proceedings got under way.

He, Williams, facing a 28-count criminal complaint, including charges of murder, attempted murder and assault with a firearm.

Williams was wearing an orange jump suit as he came into the courtroom. He showed no emotion and looked down at the desk in front of him, and also looking up at the judge, Herbert Exarhos from time to time. His arraignment, as you say, was continued to March 26th at the request of the public defenders who are representing him. They may challenge the new California law, Proposition 21, which requires that prosecutors try Williams as an adult because of the nature of these crimes.

(BEGIN VIDEO CLIP)

STEVE CARROLL, PUBLIC DEFENDER: We asked the court for time to review the law, to have a look at -- at the status of proposition 21 in the nondiscretionary area, where this case was filed, to see whether or not it's appropriate for us to file a demur and challenge the constitutionality. We have not made that decision. We have simply asked for time to review it, to see whether or not we should make that decision.

(END VIDEO CLIP)

BUCKLEY: Now, Williams' mother lives in the Southeast of the United States and was not present. Williams' father lives here in the San Diego area, and he was not present in the courtroom, either. Now, he has said that the .22-caliber revolver that prosecutors allege was used in this crime was in fact his and was kept in a locked gun cabinet.

Still, he could theoretically face charges of negligence with that gun and where it was placed within that house. But so far, prosecutors say they do not plan to press ahead with charges similar to those.

(BEGIN VIDEO CLIP)

KRISTIN ANTON, CHIEF DEPUTY D.A., SAN DIEGO COUNTY: In this situation, it appears to us based the evidence that we know today, that the father kept his guns in a locked cabinet inside the home. Therefore, the sections governing the negligence of the storage of firearms would not apply.

(END VIDEO CLIP)

BUCKLEY: Meanwhile, today, at Santana High School, some 1,900 students returned to the school. The principal and the superintendent saying that they plan to have trained counselors in each one of the classrooms along with the teacher to help the students as they begin the process of returning back to school -- Judy.

WOODRUFF: All right, Frank Buckley reporting from Santee, California. Thank you.

Meanwhile, two more schools have become the scenes of criminal police investigations today, even as classes were resuming in Santee, California for the first time since that shooting incident Monday. Authorities say that a 13-year-old girl was wounded today in a shooting at Bishop Neumann High School in Williamsport, Pennsylvania. A suspect, another teenaged girl, is in custody in that shooting. The victim is reported in stable condition with a wound in the shoulder. And in California, authorities are holding two 17-year-old male students charged with conspiracy to commit murder. Authorities in Twentynine Palms, California say that a girls's tip lead them to an alleged hit list containing 16 names of students at Monument High School. The search also turned up a .22-caliber rifle in one of the suspect's homes.

Still ahead, the Bush policy machine is up and running, but how well is it working? We'll ask Margaret Carlson and Tucker Carlson when we come back.

(COMMERCIAL BREAK)

WOODRUFF: Joining us now, two of our favorite political analysts: Margaret Carlson of "Time" magazine and Tucker Carlson of "The Weekly Standard" and of CNN's "Spin Room."

TUCKER CARLSON, CO-HOST, CNN'S "SPIN ROOM": Yes.

WOODRUFF: All right, to the both of you. We just heard Bob Novak say that a number of Republicans that he is talking to very concerned still the vice president's health despite the fact that he is back on the job. What are the two of you hearing about this, Tucker?

T. CARLSON: I've heard exactly the same thing, and it makes sense. I mean, it's amazing that he's back at 7:30 this morning meeting with officials from South Korea and going over to Congress, and et cetera.

It's striking to me that they're admitting, that the Republicans are being so completely up-front about it. I mean, Trent Lott and Haley Barbour, who's a sort of mouthpiece for the administration. George W. Bush himself saying, you know, we really need this guy.

Maybe -- there is some strategy behind it, but it seems to play right into the stereotypes that the Democrats are pushing that Cheney's really in charge. He's the prime minister and the president's a figurehead. It's not clear why they'd want to bolster that line of argument against them.

WOODRUFF: Margaret.

MARGARET CARLSON, "TIME" MAGAZINE: Even more stressful, he was said to be unpacking, moving boxes yesterday, which I thought they had people for, where you showed up and all your socks were in the sock drawer. But when we went home, the word from the White House was -- let me quote it: That he'd had a non-emergency precautionary procedure.

But the doctors said that what he had was both urgent and significant. So, there's this effort to downplay that's just visible to your eyes and the reason that so many Republicans are saying this is that it defies our common sense, which is somebody who's had four heart attacks and has two incidents recently and angioplasty is not just fine. So, the concern is out there and everybody knows that Dick Cheney has proved himself to be a great vice president and to be shouldering quite a bit of the load.

WOODRUFF: And he's...

T. CARLSON: I mean, you'd think -- I mean, I keep hearing that there this concern within the White House that somehow Cheney's, you know, how active he is going to overshadow Bush and make Bush look weak and et cetera, which makes complete sense and so why, at the same time, would the Bush people be saying directly America needs Dick Cheney.

M. CARLSON: Well, right. No, that is a good point and say -- they could say, well, listen, stay home a few days. We don't need you.

T. CARLSON: That is right.

M. CARLSON: And do what most people would do after they had been sedated in hospital and had such a procedure, which is to knock off for a day or two.

WOODRUFF: Evidently, he very much wanted...

M. CARLSON: When I have a cold I knock off for a day or two.

WOODRUFF: So do most of us. The tax cut, the president out there selling it, traveling all over the country. Is this tour helping him, Tucker?

T. CARLSON: I think it's got to help. I mean, this is clearly something he learned from Clinton. That's not a criticism, you know, from the campaign mode. It works in selling things like this. There were these reports that it was actually irritating Democrats, but you know, who's the...

WOODRUFF: He's hitting the states of some of the people he wants to vote.

T. CARLSON: That's right, and making this very aggressive -- you know, he goes to Chicago, meets with Mayor Daley, heaps praise upon him. I don't know. It's hard to -- how is that alienating Democrats? I bet it works, and we'll, of course, find out on Thursday.

M. CARLSON: Well, he's invading some people's turf. he did take new Senator Ben Nelson to Nebraska where Bush won big and Ben Nelson won narrowly and he's on Air Force One and he's in a state and six years from now probably would like to reelected. And so Bush is taunting, don't you want to be with me? I won big here.

So, there's, you know, there's that aspect. Senator Tom Daschle today, where Bush won South Dakota and he said I'm popular there, too. So don't, you know, try to get me over on your side on the basis that my state is Republican.

WOODRUFF: How important is this vote for the president tomorrow, Tucker?

T. CARLSON: Well, pretty darn important. I mean, you saw that all 50 Republicans in the Senate went with the ergonomics -- you know, went for Bush on the ergonomics matter. So, it seems like there's obviously discipline in Congress. I mean, there's coordination that seems to be working between the White House and the Hill and, you know, you'd imagine they'd be trying really hard to keep everyone in line tomorrow and I bet they succeed.

M. CARLSON: I mean, this is the heart of the Bush presidency. This is the most important thing...

WOODRUFF: But it's also very early in the administration.

M. CARLSON: And what's annoying Democrats, I think, more than Bush going out on his little tour is that he is ramming it through. There were no hearings in the House. It's just going to the floor, and they feel like they are being pressured without the earmarks of democracy, which is let's have a little discussion here.

WOODRUFF: Speaking of moving quickly, this ergonomics, this worker's safety business has just been rushed through, apparently, in a matter of days. Tucker, the Democrats are saying this is the end of bipartisanship. I mean, is that what's going on?

T. CARLSON: Well, Senator Kennedy was going on that this was a slap in the face to all of the injured workers out there: all of the widdled (ph) widows and orphans of Carpal Tunnel Syndrome victims or whatever. I mean, the rhetoric was really overheated over what, essentially, is an argument about comfortable chairs -- not to minimize it.

WOODRUFF: Is that what is it is all about, Margaret?

M. CARLSON: Well, it's a little bit more than that. But I have to agree with Tucker a little bit, in that it diminishes coal miner injuries and farm workers and other people to raise this up to this level this soon. But of course, Bush picked something, I think, that allows Democrats to look slightly overheated and Republicans to look sensible.

Maybe we don't need government there. Maybe you can get your boss to buy you a chair that makes it so that you are, you know, your neck and back are not hurting. I mean, ergonomics sounds like one of those Earth-shoe Democrat things that you can make fun of. I think that it's more serious than that, but it was not the best one for Democrats to go head-to-head with Bush on.

WOODRUFF: We are glad that there is nothing overheated about the two of you.

M. CARLSON: I want a new chair, Judy.

T. CARLSON: I was just thinking, we need to get a little ergonomics at CNN.

WOODRUFF: OK. Tucker Carlson and Margaret Carlson, thank you both. Great to see you.

Coming up on INSIDE POLITICS: the vice president's health, in his own words. Please stay with us.

(COMMERCIAL BREAK)

WOODRUFF: President Bush gives South Korea's president an earful about North Korea and whether it remains a threat. We'll look at the political implications for Latinos, as census figures confirm their numbers are soaring. And later:

(BEGIN VIDEO CLIP)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): California Governor Gray Davis may be breathing a little easier today, wouldn't you if you learned you didn't have to do battle with the terminator?

(END VIDEO CLIP)

WOODRUFF: Bill Schneider on Arnold Schwarzenegger bowing out before he's in?

Welcome back to INSIDE POLITICS.

Even before the House votes on tax cuts tomorrow, the White House is praising what it calls a "do something Congress." President Bush sounded equally confident about his plan's prospects during a visit to the Treasury Department today.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I feel like we're going to have a pretty good day in the House of Representatives tomorrow. The message is slowly but surely getting out, that we got enough money coming into the Treasury to meet important obligations, but we also got enough money to remember who paid the bills in the first place.

(END VIDEO CLIP)

WOODRUFF: The Bush tax cut plan is expected to clear the House without much support from Democrats. Its prospects in the divided Senate are dicier. Vice President Dick Cheney visited Capitol Hill today, resuming his hectic scheduled just a day after being released from the hospital. Cheney was asked about his heart condition and the stresses of his job.

(BEGIN VIDEO CLIP)

CHENEY: I'm 60 years old, I have a history of coronary artery disease, but I very much enjoy my job, and having a very good time, and don't consider it stressful. But I'm willing to live with those circumstances; I have for a very long time. I started down this road when I was 37 years old. And as I say as long as I'm comfortable and the doctors are comfortable having me do it, I'll continue to do it. (END VIDEO CLIP)

WOODRUFF: Cheney underwent an angioplasty Monday to reopen a blocked artery. Turning to the international front, President Bush said today that he views North Korea as a threat and will not immediately resume negotiations with the communist regime. He shared his views with the South Korean president during a meeting at the White House. That story from CNN's Major Garrett.

(BEGIN VIDEOTAPE)

MAJOR GARRETT, CNN CORRESPONDENT (voice-over): Kim Dae Jung came to find out what approach the new U.S. president will take toward North Korea. By all accounts, he got an earful.

KIM DAE JUNG, SOUTH KOREAN PRESIDENT (through translator): President Bush was very frank and honest in sharing with me his perceptions about the nature of North Korea and the North Korean leader; and this is a very important for me to take back home and to consider.

GARRETT: But the administration's Korea policy has been a bit muddled. At first, Secretary of State Colin Powell on Tuesday said the U.S. was prepared to restart Clinton-era talks with the North on ending its nuclear programs and arms sales.

COLIN POWELL, SECRETARY OF STATE: We do plan to engage with North Korea, to pick up where President Clinton and his administration left off.

GARRETT: But Wednesday, Mr. Bush was more cautious.

BUSH: We look forward to, at some point in the future, having a dialogue with the North Koreans.

GARRETT: Powell then echoed the go-slow approach.

POWELL: In due course, when our review is finished, we'll determine at what pace and when we'll engage with the North Koreans.

GARRETT: Though the Clinton administration was close to striking an arms deal with the North, the Bush team wants to be sure it can verify any deal.

BUSH: We want to make sure that their ability to develop and spread weapons of mass destruction was in fact stopped, they were willing to stop it and that we could verify that in fact they had stopped it.

GARRETT: Analysts say the Bush team appears to fear that the South's efforts to improve relations, highlighted by last June's first-ever North-South summit is simply moving too fast.

BOB MANNING, COUNCIL ON FOREIGN RELATIONS: Everybody is creating this image of a new North Korea, peaceful and so on. Their military activity in the last two years has accelerated, they've put ten percent more artillery near the DMZ, their pace for military exercises has increased to new levels.

GARRETT (on camera): The speed of Mr. Bush's engagement with the North is crucial to South Korea's own efforts to drastically improve relations with Pyongyang. While the U.S. won't discourage continued North-South diplomacy, Mr. Bush made clear it will not jump into any new agreements with the North until the isolated, communist country changes its ways.

Major Garrett, CNN, the White House.

(END VIDEOTAPE)

WOODRUFF: The White House announced today that President Bush will meet with Israeli Prime Minister Ariel Sharon at the White House on March 20th. Sharon was sworn in today after the Israeli Knesset voted to approve his coalition government.

Here is CNN's Fionnuala Sweeney.

(BEGIN VIDEOTAPE)

FIONNUALA SWEENEY, CNN CORRESPONDENT (voice-over): One month and a day after winning a sweeping victory in Israel's prime ministerial elections, Ariel Sharon presented his coalition government of national unity to parliament. Stressing first the need for unity among politicians and the Israeli public alike, Mr. Sharon then called on Palestinians to halt the violence, which began more than five months ago.

ARIEL SHARON, ISRAELI PRIME MINISTER (through translator): Our hand is extended in peace. We know that peace involves painful compromises on both sides. We shall conduct negotiations with the Palestinians in order to achieve political settlement, but not under the pressure of terrorism and violence.

SWEENEY: The new government, comprising the left-of-center Labor Party through to the far-right of Israel's political spectrum, will be the largest in the country's history, combining 26 ministers and controlling 78 seats in the 120-member Knesset. Palestinian reaction to the new government and Mr. Sharon's speech was muted.

SAEB EREKAT, CHIEF PALESTINIAN NEGOTIATOR: There are ministers in this government who advocate the transfer of us Palestinians. There are ministers who advocate the continuation of occupation. There are ministers who want peace. I'm afraid that the major, the huge contradictions of the composition of this government will lead to paralysis. But the shortest way to security to Israelis and Palestinians is to end the Israeli occupation.

SWEENEY: Included in the new cabinet is former Labor Prime Minister Shimon Peres, who becomes foreign minister. He has faced criticism from some within his own party that by joining a Sharon government, he and his colleagues have put political ambition above serious political differences.

SHIMON PERES, ISRAELI FOREIGN MINISTER: We didn't come in as a fig leaf. We came in as a wind of peace and we're determines to do so. We didn't come in for power, and we didn't come in for cover. We came in for a new initiative.

SWEENEY: Mr. Sharon's inauguration came on the day a Palestinian man was buried in the West Bank town of Nablus. He had set off a bomb in the northern coastal town on Netanya Sunday, killing himself, three Israelis and wounding dozens more. Hamas claimed responsibility, and said it was prepared to send 10 suicide bombers to Israel once Ariel Sharon assumed power.

Israel is on edge, and it is looking to Mr. Sharon to provide security first before tackling the issues of peace, a peace Mr. Sharon says he wants, calling for agreements with longtime enemies Syria and Lebanon.

(on camera): So, Mr. Sharon assumes power already having delivered his first promise to form a broad-based government of national unity. But with security uppermost in Israeli minds, there won't be any honeymoon period for the new 73-year-old prime minister.

Fionnuala Sweeney, CNN, Jerusalem.

(END VIDEOTAPE)

WOODRUFF: Here in the United States, the latest census numbers hold important keys to the future of U.S. politics. We'll take a look at one U.S. minority's increasing clout and get some insight from an expert when INSIDE POLITICS continues.

(COMMERCIAL BREAK)

WOODRUFF: A preliminary look at the nation's new census figures indicates the Hispanic population will soon rank as the number one minority, if it doesn't already. That means more political clout.

Analysts say about 35 million Hispanics completed the year 2000 survey, a jump of 58 percent from the 1990 census. The count is less official on the black population, but it is estimated between 34 and 36 million. The new census will determine how voting districts are redrawn, among other things.

To find out more about what these latest numbers mean for the Hispanic community, we are joined now by Gregory Rodriguez in Los Angeles. He is a senior fellow at the New America Foundation and a leading expert on Latino-American policy.

Mr. Rodriguez, thank you for joining us and...

GREGORY RODRIGUEZ, NEW AMERICA FOUNDATION: Thanks for having me.

WOODRUFF: ... and how do you explain this 60 percent jump?

RODRIGUEZ: Well, to some extent, this was expected. I couldn't get into the methodological reasons for this jump, but I think there's plenty of immigration fertility to account for much of it. This was something we expected to happen within three or four years anyways. WOODRUFF: And what effect do you think it will have on the political landscape, if it hasn't already?

RODRIGUEZ: Well, this will be a continuation of what we've seen in the last several years. Really, I think what this Gore and Bush race was unprecedented in the attention that both candidates gave to the Hispanic electorate and we're seeing that level of outreach and symbolism reach new highs in the next four years.

WOODRUFF: And what about the participation of Hispanics themselves? How many of them are voting? How many of them are politically active?

RODRIGUEZ: Well, we have to understand that about 40 percent of this 33 million group is really foreign born. So, a lot of this will happen over time. Obviously, the U.S.-born children and grandchildren of immigrants tend to have higher rates of voting. So, really, a lot of this will be a delayed reaction as Latino immigrants become more and more Americanized and more at home and more at home in the political system of the U.S.

WOODRUFF: Are politicians right now paying enough attention to the Hispanic community in this country?

RODRIGUEZ: Well, you know, this year, both candidates really did up the ante. I think, yes, there has been -- begun to get more attention. As enough, it depends. It's really going to be a highly regionalized phenomenon.

Really, there's not going to be a lot of Latinos in North Dakota or South Dakota or Iowa. But this really highly regionalized. In California and Texas, yes, Hispanics are a very big, major part of everyday politics.

WOODRUFF: And Gregory Rodriguez, is either major political party, the Democrats or the Republicans, at this point better equipped to reach out or are they about on par with one another?

RODRIGUEZ: You know what, the Democrats did very well in the past election. It was about 61 to 38. However, the Republicans -- or President Bush did quite well. Thirty-eight percent of the Latino vote nationwide is very good.

If you look at it even closer, in households under $40,000 a year, Mr. Gore did very, very well, about more than 75 percent. However, if you look at households over $40,000 they're starting to compete for the middle class Latino vote, which is more likely to be U.S.- born, more likely to be suburban.

So yes, in the short-term, the Democrats have a very decided advantage. In the long-term, they may be fighting over middle class Hispanics in the future.

WOODRUFF: Since they're numbers are approaching, if not now equal to the numbers of African-Americans in this country, what are the implications there for the African-American community as a political body do you think?

RODRIGUEZ: Well, as a political body, I don't think we should think -- part of the problem, we've look at post-1965 immigration as if it belonged in the civil rights prism.

Hispanic immigrants really do not vie or should not vie or should not be considered to vie to the claim of moral conscience that blacks have in this country. This is a very different situation.

Black and white relations are still the Achilles Heel of the American racial landscape. Hispanics belong more in the immigrant framework in which they will work themselves up in a way not unsimilar to the Italians.

So, in a very real way, blacks should be considered -- the black and white relationship should be considered the primary racial scheme in this country. I know that's unpopular to say, but I think that's the only honest way to look at it.

WOODRUFF: If one is watching the political climate in this country right now, what should one keep an eye on with regard to the Hispanic community? I mean, you point out it's Texas. It's Florida. It's California and a number of other state. But what are we to watch for?

RODRIGUEZ: Well, you know, I think the most fascinating rumor at the moment is really the potential for the current White House legal counsel to become the first Mexican-American Supreme Court judge. I don't know where the rumors are coming from. If not, they're from the White House itself.

But Alberto Gonzales, the long-time counsel to the president, is considered a front-runner for that post. That is when Hispanic- American, particularly Mexican-Americans, who make up 66 percent of all Latinos in the United States, will become a serious political factor if one is considered for the Supreme Court or actually appointed for the Supreme Court. I think that's what we should be being looking for.

WOODRUFF: All right. Well, you're right. If that happens, we'll all be covering that one.

RODRIGUEZ: And you know what? I think there may be a potential realignment in American politics if that happens.

WOODRUFF: Well, Gregory Rodriguez, we thank you so much for joining us. We appreciate it. Thank you.

Still ahead on INSIDE POLITICS, Arnold Schwarzenegger stars in a political cliffhanger.

(COMMERCIAL BREAK)

(JOINED IN PROGRESS)

(BEGIN VIDEOTAPE) ALLAN HOFFENBLUM, GOP POLITICAL CONSULTANT: We're pretty much in the same situation in California today.

SCHNEIDER (voice-over): A month ago, columnist George Skeleton wrote in "The Los Angeles Times" that what California needed to deal with the state's energy crisis was another Patton.

"The Terminator" rose to the call. Arnold Schwarzenegger telephoned the columnist and said, quote, "If Gray Davis doesn't keep his promises on all those issues, energy, environment, schools, health care, then you've got to say, 'OK, there's room for someone else.'"

Like Schwarzenegger? Hmmm, vast name recognition, his own money. A tough-guy persona, and "The Terminator" has been known to hang out with "The Body."

But could Schwarzenegger sell to Republicans? He's been a loyal G.O.P. activist for Bush the first.

ARNOLD SCHWARZENEGGER, ACTOR: I want you to vote. At the same time send a message to Congress, at the same time send a message to Pat Buchanan,"Hasta La Vista, Baby." Thank you.

SCHNEIDER: And Bush the second.

SCHWARZENEGGER: And in this convention. It was like a whole breath of fresh air that came in there, you know, so I think George W. Bush, who led the way, the way of inclusion.

SCHNEIDER: But would Republicans go for a guy like Schwarzenegger?

GARRY SOUTH, GRAY DAVIS CAMPAIGN ADVISER: ... is someone who described himself just recently as a social liberal. Someone who said he was pro-choice. Someone who said he was for gun control. Someone married to a member of the Kennedys.

SCHNEIDER: Could be perfect for California.

HOFFENBLUM: The ideal candidate on the Republican side is one that does not necessarily have to worry about the Republican label, which, I've got to be very candid, is not a positive label in California.

SCHNEIDER: Governor Davis's man acted fast, alerting the political press to controversial tabloid allegations about Schwarzenegger.

SOUTH: These outsiders who toy with the idea of getting involved in political campaigns really don't know what they're getting into.

SCHNEIDER: Schwarzenegger thought more about the idea, decided "the timing's not right," according to a spokeswoman, and announced yesterday he was ruling out running for office next year. Davis's man gloated. SOUTH: The infatuation with Republicans in California with Schwarzenegger as a potential candidate really says more about the Republican party in California than it says about him. It shows you how low this party has sunk.

SCHNEIDER: But what about Governor Davis's vulnerability on the energy issue? The man who terminated "The Terminator" offered some brave talk.

SOUTH: We have earthquakes in California. We have floods. We have fires. We have droughts. We have everything that you can imagine, and people just learn to deal with it.

(END VIDEOTAPE)

SCHNEIDER: This just in, we spoke to Schwarzenegger's publicist a few minutes ago and she said, "This movie isn't over yet. He still hasn't made up his mind."

So, is it "Hasta La Vista, Arnold" or "I'll be back"? -- Judy.

I mean -- Judy.

WOODRUFF: So, Bill, is it the publicist or the spokeswoman who knows what's going on?

SCHNEIDER: Well, the publicist is the spokeswoman. She says she was correctly quoted by "The Los Angeles Times" but that the conclusion that he is pulling out of the race was a little premature. He hasn't made up his mind yet. Of course, he never got into the race, but hasn't made up his mind whether or not he's going to run for office next year. So, stay tuned.

WOODRUFF: And indeed we will. Fascinating. Bill Schneider, thanks very much. See you soon.

SCHNEIDER: All right.

WOODRUFF: And that's it for this edition of INSIDE POLITICS, but of course, you can go on-line all the time at CNN's allpolitics.com.

I'm Judy Woodruff. MONEYLINE's next.

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