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Inside Politics

President Bush Releases Outline for Campaign Finance Reform; Reform Battle Pits Senate Allies McCain and Hagel Against Each Other

Aired March 15, 2001 - 5:00 p.m. ET

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

ANNOUNCER: Live from Washington, this is INSIDE POLITICS with Judy Woodruff.

Is President Bush in step with campaign finance reform, just days before the start of Senate debate? We'll talk about the battle to limit soft money with its commander: Senator John McCain.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: I'm fully aware that a system that keeps incumbents in office -- which is the present system -- is very hard to get incumbents to change.

(END VIDEO CLIP)

ANNOUNCER: We'll take stock of the president's economic strategy, given new pressures from the markets, and from Democrats.

Plus: today's charge on the Hill for bankruptcy reform.

Now, Judy Woodruff takes you INSIDE POLITICS.

JUDY WOODRUFF, CNN ANCHOR: Thanks for joining us. We begin with the political maneuvering before the Senate opens debate on campaign finance reform next week. A short while ago, President Bush sent Senate leaders a sort of a road map for crafting legislation that he would be willing to sign if it clears Congress.

CNN's Major Garrett has more on the president's position, and whether he may find any common ground with Mr. Campaign Finance Reform, his former rival, John McCain.

(BEGIN VIDEOTAPE)

MAJOR GARRETT, CNN CORRESPONDENT (voice-over): The president's bracing for a tough and possibly distracting fight with John McCain over money and politics. The president's first move: sending to the Senate his reform principles. The White House believes it does not have the votes to defeat McCain, at least right now. Aides say the main goal is for the president to persuade voters he supports reform.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The president wants to get an agreement reached this year. GARRETT: At the top of the president's list: banning soft money from labor unions and corporations.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I think we ought to get rid of labor union and corporate soft money.

GARRETT: This falls well short of McCain's across-the-board soft money ban. Another priority is to give union members and corporate shareholders the right to block the use of their funds for political purposes.

BUSH: We need to make sure we have -- to make sure that shareholders and labor union members have got a say-so on how their money is spent.

GARRETT: McCain opposes this, too, as do the unions, who see it as retribution.

LARRY GOLD, AFL-CIO: All it is, is an attempt to retaliate against the labor movement for its effectiveness in political and legislative advocacy.

GARRETT: The White House has not threatened a veto if it cannot win these kinds of protections. Instead, it sent the Senate a broad list of principles. Among them: ban corporate and union soft money; pass pay check protection; raise individual contributions; require swift disclosure of campaign donations; and protect issue advocacy commercials.

These are similar to provisions in a bill from Nebraska Republican Chuck Hagel. The big question at the White House is, can it defeat the McCain bill and make Hagel's the alternative? Campaign finance experts say it's too early to tell.

TONY RAYMOND, CAMPAIGN FINANCE EXPERT: Everyone is expecting something to happen and once the debate starts and they get into it, all bets are off.

(END VIDEOTAPE)

GARRETT: The White House says it cannot afford to look like an obstructionist. Said one senior aide, "right now, we don't want to talk about what we're against. We only want to talk about what we're for." Judy.

WOODRUFF: Major, you said right now the White House doesn't believe it has the votes to defeat McCain, but it evidently does believe it at least has the votes to derail him, to start searching for an alternative?

GARRETT: Well, the White House believes that as this debate begins in the Senate next week and as the amendments come to the floor, there might be some peeling off of the support of the McCain bill. Some Democrats have raised some concerns about his absolute soft money ban; that would of course ban union contributions, a huge source of funding for the Democratic Party. They are also wondering if some other amendments might come to the floor that would further erode support from McCain. The central message from the White House is going to be: look, if you support McCain, you will not support a signable campaign reform bill. But if you move over to the direction of Chuck Hagel or the president's proposals, you can vote for something that not only will pass, but can be signed -- Judy.

WOODRUFF: All right. Major Garrett at the White House. And, rush in because we know that it's raining. Thanks, Major.

Some may see the fight over banning so-called soft money as McCain versus Bush. But, others may view it as McCain versus Hagel. Our Jonathan Karl has more, now, on how the Nebraska senator figures into the dynamic, politically and personally.

(BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CORRESPONDENT (voice-over): On one level, the battle to limit the influence of big money in politics comes down to a battle between two close friends and political allies: Senators John McCain and Chuck Hagel.

MCCAIN: It is always difficult when you disagree with a close friend, but we were friends before it, and we will be friends afterwards.

KARL: Whether they'll be friends during the debate may be another question. Senator Hagel's campaign finance proposal is considered the number one threat to McCain's.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: The Hagel bill is a Trojan Horse to defeat the McCain-Feingold bill.

KARL: In contrast to McCain's call for a ban on all unregulated, unlimited soft money, Hagel's approach is one the White House likes. He proposes: more frequent disclosure for candidates; requires broadcasters to disclose the identities of any groups buying ads; limits soft money to $60,000 per year for unions, corporations, and individuals; and he raises the hard money limit from $1,000 to $3.000.

SEN. CHUCK HAGEL (R),NEBRASKA: To say that George Bush is using me to get at John McCain is ludicrous. It's just not true.

KARL: But privately, McCain's allies say that is exactly what is happening, which is especially interesting because in a Senate where McCain is often at odds both personally and politically with his colleagues, he has been close to Hagel, who was one of just four senators to endorse McCain for president.

HAGEL: I put my "McCain For President" button on last week when I addressed our conference on explaining my bill.

KARL: But Hagel, who says he has always opposed the McCain- Feingold bill, says he has a fundamental disagreement on unregulated soft money, which McCain says is destroying the public's confidence. HAGEL: My biggest difference with John and Russ's is that they weaken political parties by banning soft money to parties. I don't think there is anything wrong with soft money, in that the intent of soft money always was to be used for party building, get out the vote, education -- that expands the political base. That's good, I think.

SEN. FRED THOMPSON (R), TENNESSEE: A couple of friends have different views on part of a bill. Big deal. It happens all the time.

KARL: Senator Fred Thompson supports McCain-Feingold. But he sees room for compromise.

THOMPSON: We advocate the doing away with soft money, and Senator Hagel advocates putting a cap on it. That's the difference. He allows more soft money than we would, but he does not allow unlimited soft money, which is the current state.

KARL: McCain, however, remains vehement in his opposition to Hagel's bill.

MCCAIN: Hagel is an affirmation of soft money.

(END VIDEOTAPE)

KARL: Now, in one very important way, the Hagel bill actually does not go so far as the White House would go in limiting soft money. The White House, in the principle set forth by the president, would ban all soft money from corporations and from unions, leaving only soft money from individuals. Hagel would allow all types of soft money; just limit it to $60,000 a year.

Now, as far as the statement of principles put out by the White House, McCain, together with Russ Feingold, have put out a statement that just came out a couple of minutes ago -- I have a copy of it. This is what they say about the White House principles on campaign finance reform:

"We applaud the president for beginning to engage the Congress on this vital issue of campaign finance reform. We especially praise the president for reiterating his support for a total ban on corporate and union soft money. While we believe more needs to be done in this area and the individual loophole must always be closed, completely banning corporate and union soft money is a key component of any acceptable regulation."

The statement goes on to show some willingness to compromise. It says:

"Although the McCain-Feingold-Cochran bill is silent on the subject of raising the hard money limits and banning involuntarily contributions from both unions and corporations, we have always been willing to discuss these subjects and look forward to a healthy debate that produces truly fair and balanced legislation."

Judy, what is not said in this statement, however, is that on a couple of the principles outlined by the White House, McCain has been absolutely adamant in his opposition. Most importantly on those is this whole notion of paycheck protection. McCain sees that as something that would kill this bill -- Judy.

WOODRUFF: So, Jon, based on your reporting, are you seeing the beginnings of compromise there or are you seeing simply people hardening position.

KARL: I think that it's way to early to say you're seeing the beginnings of compromise here. There has been a real hardening of position. That said, this will be a free for all in the floor of the Senate that is going to start on Monday at noon, and nobody knows exactly how this will proceed because there are very little ground rules set, except for a general notion that this is going to be two weeks of debate on the McCain-Feingold bill.

Nobody really knows how it will go forward. McCain has been very firm in his position. But both sides also want to leave some wiggle room out there. Some possibilities for a compromise down the road, but right now the two sides do remain very, far apart.

WOODRUFF: All right, Jon Karl at the Capitol. Thanks very much.

And in fact, just a few hours ago, I sat down with John McCain at his office at the Senate. I started by asking him about the opposition to the reform bill that seems to be coming out of the woodwork -- the opposition, that is -- before the debate even gets under way.

(BEGIN VIDEOTAPE)

SEN. JOHN MCCAIN (R), ARIZONA: Well, it's -- it's in a way, it's a good sign, in a perverse sort of way, because in the past, they could just sit back and not have to engage, because they were pretty confident that we would not see passage of any campaign finance reform.

Now that it seems at least possible, if not likely, they are coming out of the woodwork. You got to understand two fundamentals here: one, we are asking incumbents to vote to change the system that keeps incumbents in office. The present system is an incumbent protection system, because most of the money goes to incumbents. That's why you only had about 20 contested House seats in the last election and seven or eight contested Senate seats.

And the second point is that any organization that gains access and influence through the use of money is going to see this legislation as a diminution of their power. It's interesting that those that buy their access and influence with money are opposed. Organizations like the AARP, which depends on their membership and grassroots activity, are in favor.

WOODRUFF (on camera): Before I ask you the specifics, let me just ask you one broad comment. I noticed that conservative columnist Paul Gigot in the "Wall Street Journal" last week said: "Stopping money in the campaign is like trying to prevent water from going downhill. You dam it up in one place, and it's going to find another way to get there."

MCCAIN: Sure, he's exactly right. That is why 20 or 30 years from now, we will have to fix the system again. Just like we fixed the tax code in 1986, and we certainly need to fix it again. In 1907, we outlawed corporate contributions, because the robber barons were controlling politics. In 1947, we outlawed union contributions. In 1974, because of the terrible Watergate system, we fixed the system again.

The system was pretty clean all during the '70s, all during the '80s and into the '90s. And then, smart guys found loopholes, and that water flowed downhill again. But that does not mean that we should be satisfied with the present system, where at least the appearance of purchasing of pardons is a practice in America.

WOODRUFF: Has the bill proposed by your good friend, Nebraska Senator Chuck Hagel, in effect pulled the rug out from under what you are trying to do by attracting Republicans you need to get your bill passed?

MCCAIN: It has attracted no Republican that was in support of my bill, number one. Number two, as everybody knows, that it legalized soft money, which is unacceptable and would put incredible amounts of money into play into the political system.

So, I see no Democrat support nor support from those of us Republicans who were in favor of McCain-Feingold.

WOODRUFF: But the Hagel-Landrieu bill would put a severe cap on soft money. It would not eliminate it, but it would put a severe cap...

MCCAIN: Let me just stop you right there. Not a severe cap. If you are talking about $540,000 in a cycle of soft money, certainly not a severe cap at all.

WOODRUFF: I thought that it was 120 in soft money? One hundred and twenty over a two-year cycle.

MCCAIN: Excuse me -- 120 per person. A couple could be $240,000, and then with other loopholes that he has created, it's even more than that.

WOODRUFF: So, you are saying it doesn't make any difference?

MCCAIN: No, of course not. Of course not.

WOODRUFF: Is there any aspect of that legislation, Hagel- Landrieu that you would like to see as a part of what you are doing?

MCCAIN: Absolutely, and I have had discussions with Chuck about it. I would love to see some of the provision on disclosure adopted. There are other provisions of his bill which are very good. We would love to work it out, but if you are going to legitimize and legalize soft money, which has been outlawed, then you are obviously not serious about campaign finance reform. WOODRUFF: What about Senator Hagel's proposal -- idea that you put limits on soft money and you raise the amount of hard money that can be contributed? Your own -- another good friend of yours, Senator Fred Thompson has talked to you about raising the amount of hard money contributions to make up for that loss of soft money?

MCCAIN: Sure. We always said that we would be open to amendments that would make 1974 $1,000 $1,000 today in the context of the overall reform, but it's meaningless -- you could put it at $100,000 if you wanted to, as long as soft money is legal, because the soft money avoids any campaign contribution limit of hard money.

WOODRUFF: Do you understand at least why Democrats -- and we're talking about the Democrats right now -- would be reluctant to give up what they see as at least something that gives them parity with Republicans, and that is raising soft money. They can't compete with Republicans when it comes to hard money, regulated money. But when it comes to unregulated, they're at least in the ballpark?

MCCAIN: Sure, and I hear the arguments on both sides -- that -- to those who want the status quo. Because Republicans who want the status quo will say, look, we've got to have this hard money advantage, because they've got the unions, and they get out all of their people and they organize them, and we never know what those union guys are doing.

Look, it goes back and forth this. This legislation, in the view of the objective observers, the objective observers -- and there are many experts -- view this as fair and balanced. And if we tried to do something which balanced -- unbalances one side -- party -- or the other, then everybody will know about that.

But I understand why Republicans think that it's unfair, because the unions are still able to organize and get out their votes. They are worried about that. Democrats are worried about the fact that Republicans raised more hard money. The fundamental fact is, the system has gone out of control, which has made young Americans cynical and even alienated from the political process.

WOODRUFF: People in both parties, organized labor -- I just talked to John Sweeney, the head of the AFL-CIO -- they say their very real concern is that what you're doing could drive -- OK, you're saying, don't give money to the political parties, but money would still flow to these unregulated -- or largely hard to regulate -- independent entities, independent groups, and you're giving them power that you are taking away from the political parties?

MCCAIN: Well, first of all, we wouldn't -- and are not harming the political parties. The political parties were stronger in 1982 when I ran for the House of Representatives when there was no such thing as soft money. They were more powerful, ask any observer -- all through the '80s and the '90s.

Now, the political parties have become conduits for big money to run in ad campaigning attacking candidates. That is really what parties are all about today, and that's why you see the most registered voters are not registering as Republicans and Democrats, but as independents.

The second thing, in all due respect to Mr. Sweeney, Mr. Sweeney has a great deal of political influence, including my objection to paycheck protection, which still allows him to take a union member's dues and use it for political purposes. I -- I am sympathetic to his concerns about the unknown, but I do not accept the premise that the unions in America would have their influence diminished.

WOODRUFF: What are you learning about your colleagues in this process of trying to get this passed that you didn't already know, anything?

MCCAIN: No. No. Look, I was fully aware, and am fully aware. I read about the struggle that Theodore Roosevelt had in 1907 when the robber barons were controlling the American elections, that the enormous hurdles that he had to overcome to outlaw corporate contributions to American political campaigns. I am fully aware that the system that keeps incumbents in office, which is the present system, is very hard to get incumbents to change.

WOODRUFF: And finally, what will you consider success? Does it have to be McCain-Feingold bill intact? Or how will you define success?

MCCAIN: We'll definite success by banning the soft money and addressing the so-called independent campaign issue in a variety of ways. There is many other provision that may be helpful. Something to handle the millionaires' issues, something on more full and complete disclosure. There is a number of other areas that we, I think, we need to address.

But we have fought for the ability to debate and amend this bill. We welcome amendments. We've been blocked in the past from being able to do this. So I think the bill can certainly be improved.

WOODRUFF: Prediction?

MCCAIN: Oh, I think we have a very good chance. I think we have a very good chance. If we fail, we'll be back at it. Because there will be more scandals. There'll be more scandals in American politics because of this money, which makes good people do bad things.

(END VIDEOTAPE)

WOODRUFF: Senator John McCain on Capitol Hill earlier today.

And as I mentioned, I did interview AFL-CIO President John Sweeney today about campaign finance reform and other matters, including what he thinks of the Bush administration. That interview, coming up at the top of the hour.

As John McCain champions the cause of campaign finance reform, he appears to have a potent ally: the public. Here is our senior political correspondent Bill Schneider.

(BEGIN VIDEOTAPE) WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (on camera): As the debate begins, how does the public feel about campaign finance reform? They're for it. Three-quarters of Americans favor new federal laws limiting the amount of money individuals and groups can contribute to political parties. In fact, over half the public strongly favors such limits.

In the past, votes in Congress on campaign finance reform have been highly partisan. Democrats have solidly supported the McCain- Feingold bill, while most Republicans have voted no. But if this is a partisan issue, nobody's told the people. Republicans, Democrats and independents all strongly support campaign finance reform. After all, senator McCain's a Republican, senator Feingold's a Democrat, and President Bush says he's not opposed in principle to campaign finance reform.

How much popular pressure is there for Congress to act? Just over half of Americans say it's important for Congress and the president to pass new campaign finance reform laws. Only 30 percent feel strongly about it; 41 percentage say there are more pressing problems to deal with. Support for campaign finance reform is broad, but it's not a matter of great urgency.

Senator McCain has made the issue his personal mission. He is regarded just as positively as President Bush: 61 percent of Americans have a favorable opinion of McCain, very close to Bush's 63 percentage. But there is one big difference: opinion of President Bush is highly partisan. Opinion of McCain is not. McCain draws equally favorable ratings from Democrats and Republicans. He's trusted by members of both parties.

On most issues facing the country, Americans trust President Bush more than Senator McCain. But on campaign finance reform, more Americans trust McCain. McCain has a unique standing on this issue. Why? Because voters do not see him as a typical politician. That puts him in a perfect position to lead the fight to change politics as usual.

Bill Schneider, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: And Bill, is of course, our senior political analyst, not our senior political correspondent. That honor goes to Candy Crowley.

From campaign cash to personal finance: when INSIDE POLITICS returns, we will update the closing numbers from Wall Street.

Plus: a look at how Americans view the stock market slide. And, how President Bush hopes to manage the market's affect on the overall economy.

(COMMERCIAL BREAK)

WOODRUFF: The stock markets were mixed but relatively stable today, following the roller-coaster rides that marked the first three days of the trading week. The Dow Industrials closed up more than 50 points, at just above the 10,000 mark. The Nasdaq spent the day in a slow and steady decline. The Index finished down a little more than 30 points, and remained below 2,000.

As investors try to make sense of the uncertainty, a new CNN-"USA Today"-Gallup Poll finds many Americans see no reason for alarm: 51 percent say the recent drops cause them to worry about the economy; 46 percent see no reason for worry. When it comes to personal finances, 29 percentage say they are worried; 69 percent say they are not.

Looking ahead to the next six months, 29 percent say they expect the stock market to improve; 50 percent say they believe it will stabilize. Only 16 percent say it will get worse.

CNN White House correspondent Kelly Wallace reports that the sudden market swings present a new challenge for President Bush and his economic plan.

(BEGIN VIDEOTAPE)

KELLY WALLACE, CNN CORRESPONDENT (voice-over): Senior Bush aides say there has been no shift in the president's economic strategy, that despite the market gyrations, Mr. Bush will continue to talk about the economy just the say he sees it.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The president believes what's important is to be accurate, not political. His statements have been accurate.

WALLACE: But Democrats, armed with charts and quotes, stepped up their charges that Mr. Bush and the vice president's comments since December about the slowing economy have fueled the economic downturn.

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: What we're seeing is a talking down of the economy, the suggestion of a recession, the suggestion of a slowdown in order to justify what looks like it's going to be a $3 trillion tax cut.

WALLACE: The White House fired back, saying the economic slowdown started long before the president started talking. In fact, consumer confidence began falling back in October, declining every month since then, and now sits at the lowest level since June 1996. Still, political observers say what Mr. Bush is doing is unique and possibly economically damaging.

JAMES THURBER, AMERICAN UNIVERSITY: I can't remember a president who has talked down the economy, even though the economy was getting worse. They usually try to talk up the economy, give the psychological boost to those who invest in the market.

WALLACE: But Bush advisers say the president will keep expressing his concern about the short-term outlook, but also his optimism about the future. Economists say Mr. Bush must strike a balance between being alarmist and being proactive. HENRY AARON, BROOKINGS INSTITUTION: They have to try to push through policies that they think will be good for overall economic performance, and I am sure that is what President Bush now sees his remarks as trying to do.

WALLACE: And, aides say, the president's recipe for a healthy economy in the future continues to be threefold: tax cuts that are immediate and retroactive; new sources of energy to deal with the crisis out west; and free and robust trade to boost exports.

(END VIDEOTAPE)

WALLACE: Still, the president faces a delicate balancing act, trying to send a reassuring signal to the American people that he is taking action, but at the same time, possibly facing a political price if his tax cut, which he says would jump-start the economy and increase consumer confidence, doesn't do the trick -- Judy.

WOODRUFF: So, Kelly; given that and given these worrying signs about the economy, is the White House starting to think about tinkering of the shape and the structure of that tax cut?

WALLACE: At this time, no. At this time, it says that it's sticking with that $1.6 trillion plan as you know. Many Republicans in the Congress would like to accelerate that and increase that tax cut. Many Democrats would like to decrease it. Right now the White House saying it's sticking with that number and it says that it based that tax cut on conservative estimates so it still believes, despite of what we saw in the market this week, that the economy will grow over the next 10 years and there will be money to support that tax cut -- Judy.

WOODRUFF: All right, Kelly Wallace at the White House and just like we told Major Garrett a moment ago, we know that it's raining and so, get inside quickly.

WALLACE: Will do.

WOODRUFF: Thanks very much.

There is much more to come on INSIDE POLITICS. Straight ahead: making it harder to wipe away debt. Credit card companies near a victory as Congress gets closer to sweeping new bankruptcy legislation.

Also ahead:

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The good news about choice is that it served as a wake-up call.

(END VIDEO CLIP)

WOODRUFF: A progress report in Milwaukee, 10 years after city schools became a testing ground for school vouchers. And later:

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We think that parental choice is a necessary condition for really authentic, effective school reform. But it's only one part of it.

(END VIDEO CLIP)

WOODRUFF: The education secretary talks about why school choice is important. And why it should not overshadow other key reforms.

(COMMERCIAL BREAK)

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

A hijacking ordeal is reportedly over for nearly all the passengers of a commandeered Russian airliner in Saudi Arabia. At least two men, allegedly wielding knives, they are said to be Chechen rebels, seized control of the Moscow-bound flight shortly after takeoff from Istanbul this morning.

Journalist on the scene says that nearly all the passengers on the plane have now been released without incident. But the plane's crew members are apparently still on board, barricaded in the cockpit.

Under pressure from Congress, airline officials agreed today to examine new ways of reducing flight delays. Measures being considered include the routing -- re-routing connecting flights away from the busiest airports, and juggling flights to secondary airports in areas served by more than one facility. At a hearing today in Washington, members of Congress asked for less finger-pointing and more action.

(BEGIN VIDEO CLIP)

REP. HAROLD ROGERS (R), KENTUCKY: There tends to be a lot of finger-pointing. The airlines blame the FAA. FAA blame pilots. Pilots blame air control systems. Somebody blames the weather. I don't think God is a problem in airline delays.

(END VIDEO CLIP)

WOODRUFF: Several officials suggested today that the government's prepared to take action to reduce flight delays if the airlines do not do so themselves.

One action that could hurt the airlines and the U.S. economy would be a cutback by OPEC. The organization of petroleum exporting countries is considering a production cut of up to a million barrels a day. Worldwide oil prices have dropped in the last few weeks. The vote on whether or not to cut production is scheduled for tomorrow in Vienna.

The American Hospital Association warned that medical centers around the country are becoming overcrowded. In a report released today, the group said hospital visits are up, just as hundreds of hospitals have had to close. Officials warn the problem could worsen.

(BEGIN VIDEO CLIP)

ARTHUR KELLERMAN, GRADY MEMORIAL HOSPITAL: When the hospital has no vacant inpatient or intensive care unit beds, and we have evaluated and saved lives to patient who needs admission, they have got nowhere to go. We have to hold that patient in the emergency department until a bed becomes available. Sometimes that wait is measured in hours, increasingly that wait may be measured in days.

(END VIDEO CLIP)

WOODRUFF: The report released today says that emergency room visits rose by 15 percent during the 1990s, and during those years, nearly 500 hospitals closed.

There's still no verdict after two days of deliberations in the Sean "Puffy" Combs trial. The rap star and media mogul faces weapons and bribery charges from a shooting in a New York nightclub. Three people were wounded in the shooting. Combs faces up to 15 years in prison if convicted on all charges.

When INSIDE POLITICS returns, a process that affects more than a million Americans each year is on the verge of getting a complete overhaul. The latest on the Senate and bankruptcy reform, just ahead.

(COMMERCIAL BREAK)

WOODRUFF: At this hour, the Senate is nearing a vote on a measure to change the bankruptcy process. The bill, backed by the credit card and banking industry was vetoed during the Clinton administration. But with a Republican in the White House, the chance of passage today is considerably improved.

Kate Snow reports.

(BEGIN VIDEOTAPE)

SEN. CHUCK GRASSLEY (R), IOWA: There are a lot of credit associations that are very interested in getting this bill passed, I am not oblivious to that. But I think that you ought to take into consideration how Senator Grassley got to the point of considering legislation like this.

KATE SNOW, CNN CORRESPONDENT (voice-over): For four years, Senator Chuck Grassley has been pressing for bankruptcy reform. Now, an opportunity: a Republican Congress with enough Democratic support to pass the bill in the Senate, and a president who's already promised to sign the bill. Supporters of the reform say current law makes it too easy to get out of debt.

SEN. JEFF SESSIONS (R), ALABAMA: There are these advertisements: "Wipe out your debts, don't pay anybody you owe, call Old Joe, your friendly lawyer, he'll tell you how to do the deal."

SNOW: The reform would make it harder for Americans to simply wipe out their debts by filing for Chapter 7 bankruptcy. It creates a means test. Anyone making above a certain income would be forced to pay back some or all of what they owe.

Senators spent Thursday debating the details. An amendment by Senator Herb Kohl passed, further tightening a loophole that's allowed millionaires like actor Burt Reynolds and Wall Street financier Paul Bilzerian to keep their homes even after filing bankruptcy.

SEN. HERB KOHL (D), WISCONSIN: All too often, millionaire debtors take advantage of this loophole by buying mansions in states with unlimited exemptions like Florida and Texas, and then declare bankruptcy, while continuing to live like kings.

SNOW: Other Democrats repeated concerns that the reform would hurt debt-ridden consumers who need bankruptcy protection the most.

SEN. PAUL WELLSTONE (D), MINNESOTA: This means test is unfair. It doesn't really look at the debtors' current income in determining ability to repay debt. It's abusive to workers who file shortly after losing good-paying jobs.

SNOW: Senator Wellstone failed in his effort to add additional consumer protections, but another Democrat succeeded. Senator Patrick Leahy added two amendments to the bill, one to protect battered women, another to prevent children's names from being listed on bankruptcy documents.

(END VIDEOTAPE)

SNOW: And Democrats are still trying to add additional amendments to this bill. Right now, they are voting on an amendment from Senator Russ Feingold. And that has to do with a small piece of this legislation, a piece that deals with Lloyd's of London. And that piece would actually exempt about 200 Americans who owe money to Lloyd's of London.

Right now, Senator Feingold trying to get an amendment through that would take that language out, because he feels that the only people who would benefit from that language are very wealthy Americans, millionaires.

Senator Trent Lott has said, just recently, that he thinks Democrats are stalling. He said, "Let's get on with this." There is a lot of support for it. Senate Majority Leader Lott saying that he believes about 80 Senators may vote to approve this bankruptcy reform -- Judy.

WOODRUFF: Now, Kate, we understand that meanwhile there's been a change with regard to the big three automakers.

SNOW: Right. There are so many provisions to this bill. It's very detailed, and one of the amendments they dealt with this afternoon was from Senator Patrick Leahy. It will change the way people who file bankruptcy have to pay off their car loans.

The big three automakers had lobbied that they thought that people should have to pay off the full loan even if your car isn't worth that much anymore. Say you file for bankruptcy and your car has devalued. It's not worth much. Right now, the way the law is you only have to pay what the value of the car is. The change in this law and the amendment that passed would make it that if you have owned your car for less than three years, you'd have to pay off the full value of the car, the full value of the loan, not just what the car is worth today -- Judy.

WOODRUFF: All right. Kate Snow reporting from the Capitol, thanks. Kate's going to be there until they, the debate is finished and they have the vote. We'll report it to you just as soon as it happens.

When INSIDE POLITICS returns: Milwaukee's school voucher program. How a decade of school choice has changed the city's public and private schools.

(COMMERCIAL BREAK)

WOODRUFF: As President Bush finalizes his education reform agenda, one of his most controversial proposals already has been in use for a decade in the state of Wisconsin. The city of Milwaukee allows its students to take government vouchers to private schools.

And as CNN's Kathy Slobogin reports, the program has had some surprising effects on how the public school system operates.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP)

DR. SPENCE KORTE, SUPERINTENDENT, MILWAUKEE PUBLIC SCHOOLS: Hi. I'm Spence Korte, superintendent for Milwaukee Public Schools.

(END VIDEO CLIP)

KATHY SLOBOGIN, CNN CORRESPONDENT (voice-over): Milwaukee's superintendent is trying to sell his schools to the public.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It's your choice, make it.

(END VIDEO CLIP)

SLOBOGIN: Dr. Spence Korte is competing with private schools for students, producing television ads out of this middle school studio. In Milwaukee, 9,600 children go to private schools paid for by government vouchers, worth more than $5,000 apiece. But Korte says he welcomes the competition.

KORTE: Frankly, the good news about choice is that it served as a wake-up call. SLOBOGIN: Korte is at ground zero in the voucher wars. His experience defies the cherished notions of both sides in the debate.

KORTE: We really have to put a face on public schools.

SLOBOGIN: Korte may embrace competition, but on the other hand, he challenges a basic premise of voucher reform: that private schools are better.

KORTE: I can actually show you some great voucher schools, some sort of so-so voucher schools, and some really terrible voucher schools.

SLOBOGIN (on camera): As far as academic progress, the jury is still out. Voucher schools don't have to subject their students to state tests. But studies that have compared the performance of voucher students to those in public schools have been inconclusive.

What do you think of President Bush's proposal to have vouchers kick in after a failing school has failed to improve for three years?

KORTE: I understand his intent, but I think it's a little bit simplistic, again, to assume that there may not be a mediocre voucher school waiting right around the corner from the mediocre public school.

UNIDENTIFIED FEMALE: What letter comes first?

UNIDENTIFIED MALE: C.

SLOBOGIN (voice-over): Milwaukee is a microcosm of the contradictions of school reform.

STUDENTS: One, two, three, four...

SLOBOGIN: Take the state legislature's program to give elementary schools an extra $2,000 per low-income student...

STUDENTS: 50, 60...

SLOBOGIN: ... to reduce the student-teacher ratio.

LAURA YALE, ELEMENTARY SCHOOL TEACHER: Raise your hand if you can think of an animal that would live in a cave.

SLOBOGIN: For teachers like Laura Yale and Wendy Novak, the money means fewer children fall through the cracks.

YALE: What it's offered us the opportunity to do is definitely increase direct instruction time for the students.

UNIDENTIFIED FEMALE: That's the aim. That's the bottom line.

SLOBOGIN: But to Spence Korte, it's all part of a mixed message from politicians: pumping extra money into the schools at the same time the voucher law moves money out. KORTE: It's a little bit schizophrenic in terms of, are we punishing the public schools or are we assisting them? And I think that really reflects the whole debate about schools.

SLOBOGIN: Korte presides over a system where 74 percent of the children qualify for free or reduced-price lunches. Half the children who enter 9th grade don't graduate. To him, much of the debate over vouchers misses the point.

KORTE: Every urban district in the country is, in general, outperformed by its well-to-do suburban neighbors which tend to ring it. You either have to assume that all 200 urban school districts are run by inept people, which some people are happy to assume, or you have to assume that there's something else going on. And I think that something else going on is the phenomenal impact of poverty.

SLOBOGIN: Despite the poverty, Korte has less money to spend than middle-class districts: $3,000 less per student, in fact, than the nearest middle-class suburb.

KORTE: I, frankly, think urban school districts in this country have been short-changed for a long time.

YALE: I live in a cottage with eight curious cats.

SLOBOGIN: That's the message Korte hopes Washington will hear from the front lines of school reform.

Kathy Slobogin, CNN, Milwaukee.

(END VIDEOTAPE)

WOODRUFF: And up next on INSIDE POLITICS, more on the future of American schools. Education Secretary Rod Paige talks about the administration's visions for the classroom.

(COMMERCIAL BREAK)

WOODRUFF: For more on the Bush administration education agenda, I sat down with the secretary of education, Rod Paige, and I asked him about the president's proposals of standards, accountability and testing, and whether he would add anything to that description of the Bush plan.

ROD PAIGE, SECRETARY OF EDUCATION: It is an accurate summary in a sense, but I think what I would add to it is -- I think what is not being communicated quite as well, or people are not getting quite as well, is the compassion involved in that. We want to have standards because we want young people to reach those standards. We want to have high expectations of them because we think they're capable of these high expectations. And we think to have low expectations for them is sinister, in a sense.

We don't want to just pat kids on the head and say: You look nice, and be smiley and things like that. We want them actually to achieve because we know they can, and so these standards are strong standards, but they're because we care about children, and we want them to actually benefit from the education experience.

WOODRUFF: And to what extent are the public school systems around the country at the heart of education reform -- or are they not?

PAIGE: No, the public school system is right at the center of the education reform. In fact, the president is a passionate supporter of public education, and that's why he wants it to work. We think the worst thing that could happen to public education is that we continue to do what we're doing now. We're leaving too many children behind. And we have to test our children, and we have to have high expectations of them, and we have to trust the people on the scene do the job. Because if education is reformed it'll be reformed by the people in the school building. It won't be reformed by us in Washington, D.C.

WOODRUFF: I ask about that, because as you know, so much of the president's plan has been characterized and boiled down by some people --the vouchers. The president wants to give the vouchers to the families of students who want to leave the public schools and go into the private schools. Does that make your blood boil when you hear that?

PAIGE: It really does make my blood boil, because it's a mischaracterization of what is really being communicated here. We think that parental choice is a necessary condition for really authentic, effective school reform. But it's only one part of it. It's only one part of it.

WOODRUFF: So how much of a commitment do you have and does the president have to seeing some sort of voucher program passed as a part of overall education reform?

PAIGE: Well, we use the term parental choice because that communicates what we mean. We want to empower parents by giving them more information about schools and about the progress schools are making, and the progress the students are making, so that they can use this information to choose a site for their child -- choose a site that's making the best for them.

WOODRUFF: Let me ask you about some of the criticism that has come from -- beginning to bubble up from inside the education establishment, if you will.

As you know, part of the president's education proposal would involve consolidating a number of different programs into just -- I believe it's just five categories. There's already beginning to be heard some unhappiness from those groups, whose programs may -- they're worried they not only may be identifiable, they may disappear altogether.

How much opposition do you expect from inside the so-called education establishment to what you all are trying to do?

PAIGE: Well, we know the inner change is going to bring about opposition. And in any change there's going to be some difference in the way of people living their lives, so those who have to change most will probably object most.

But we have to change in order to make progress. And so the change that we are putting in place would be change that would provide more flexibility for those at the scene to customize the education situation to meet their own personal needs. The alternative to that would be, for us in Washington, or even at the state level, in many cases, to say, "We know best, but it's for you," so we can prescribe exactly what we want you to do. Well, we don't think that's a good practice. Nor do we think you can hold people accountable when you dictate the recipe.

WOODRUFF: So you're prepared for that, is what you're saying...

PAIGE: Well, anytime you institute change, you are prepared for some opposition.

WOODRUFF: Let me ask you about the recent school shootings, particularly the one in southern California. I know you've been asked about this a great deal. When you first heard about the situation at Santee, California, at the Santana High School, what was your reaction?

PAIGE: My reaction was one of deep sadness, as was the reaction of every American who cares. And it's such a complex problem, one of frustration. One of wondering what is it we have to do to change this?

WOODRUFF: Why do you think this is happening? I'm told there were something like 220, 230 incidents -- shooting incidents in schools across the country in the last seven or eight years.

PAIGE: Yes, and that's a very difficult situation that we must really give some real thought to. And I think that that thought is going to have to be expanded past the instruments of the violence, and past police operations, and guard dogs and metal detectors, and those kinds of things. There are not enough metal detectors in the world to stop this kind of thing.

We've got to go back to the source of the situation and find out what's motivating this and what is causing so much rage in our young people that they would decide to solve their problems in this manner.

WOODRUFF: And is that something that the federal government should be involved in doing?

PAIGE: Well, we should be involved, yes. But the responsibility belongs to all of us, including you in the media. The responsibility belongs to all of the citizens who care. We should provide some resources and assistance, and we are doing -- and research, but it's going to be a very broad problem that's going to involve all of us.

WOODRUFF: I also asked Secretary Paige about reports that the White House is driving the process when it comes to drawing up education reform plans, with minimal involvement on his part and the part of his department. He denied that. He said that his policy office is very much involved in drawing up education reform plans.

Well, there's even more ahead on INSIDE POLITICS. In the next 30 minutes: the pending vote on Capitol Hill. The latest on the debate over Republican bankruptcy reform. That story and much more ahead on INSIDE POLITICS.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN SWEENEY, AFL-CIO PRESIDENT: We've had our differences with Republican administrations in the past, but there never has been a transition such as this one.

(END VIDEO CLIP)

WOODRUFF: Organized labor at odds with the Bush administration. We'll talk with AFL-CIO chief John Sweeney.

Also ahead:

(BEGIN VIDEO CLIP)

CHRISTOPHER REEVE, ACTOR: It's a miracle. It's something that has unlimited potential for curing people.

(END VIDEO CLIP)

WOODRUFF: Famous champions of stem cell research and the political opposition they face.

And later: reflections on Bill Clinton and the price that he has paid.

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

WOODRUFF: Welcome back to INSIDE POLITICS.

Well, minute by minute and speech by speech, the Senate is moving closer to a vote on what would be the most sweeping overhaul of bankruptcy laws in 20 years.

Let's get an update now from our congressional correspondent Kate Snow.

Kate, tell us, what was the impetus for this legislation?

SNOW: The -- I'm sorry, I didn't hear your question. The issue of -- that's under discussion now?

WOODRUFF: The -- what caused this to come up right now, as it has?

SNOW: Right; well basically, Judy, this has been out there for about four years now. Senator Chuck Grassley, a Republican from Iowa, brought up the bill in 1997; and the idea behind it is to -- according to Republicans -- to fix the system. They will tell you that the bankruptcy system right now is broken because too many people are able to take advantage of loopholes and of the law itself. Too many people, they'll say, are able to file for bankruptcy and then have the slate wiped clean -- they don't have to pay back any of their debts. They think that that's unfair and they're trying to use this bill to fix that.

And I should say it's not just Republicans; there are a number of Democrats who support this legislation as well. President Clinton vetoed the legislation last year after it was passed by a fairly good majority. Now, he vetoed it because he had some concerns -- the same kind of concerns that some Democrats have -- which is that basically it will take away protection for those who do need it, for those who are lower income Americans who may need the bankruptcy law to protect them -- Judy.

WOODRUFF: Kate, we know that they are moving closer to a vote. Can you tell us what is going on on the floor right now?

SNOW: Yes, they're voting right now -- excuse me -- they're voting right now on an amendment from Senator Russ Feingold from Wisconsin. And this amendment has to do with a very small piece of this legislation; there are a lot of parts to this bill. You mentioned it's a very big, complex overhaul of the system. One little piece of it, Judy, deals with several hundred Americans who, right now, owe Lloyd's of London a good deal of money. Now, Republicans had put in this provision into the bill last fall because they feel that these people simply were mislead by Lloyd's of London and they shouldn't have to pay these exorbitant bills -- these were investors in Lloyd's of London who ended up losing quite a bit -- or being charged quite a bit of money.

Democrats have said that they want the -- they want the bill not to include this language to protect those folks, and I understand the bill -- the amendment, rather, did just pass. This is an amendment my Russ Feingold which removed the language that I just talked about. So, in other words, the protection that the bill would have given to those several hundred investors in Lloyd's of London has been removed from the bill; so that no longer an issue to contemplate -- Judy.

WOODRUFF: All right. And Kate, we know, as you said, they are getting closer to a final vote on this; and when that happens we'll come back to you. Thanks very much.

Senate leaders now have an outline from President Bush of his vision for any campaign finance reform legislation. Mr. Bush, who attended a luncheon on Capitol Hill earlier today, released that outline this evening. Among his main goals: a ban on so-called soft money from labor unions and corporations. The legislation, which is cosponsored by Mr. Bush's former rival, Senator John McCain, calls for an across-the-board soft money ban.

In a statement, Senator McCain and his cosponsor, Democrat Russ Feingold, applauded the president for beginning, as they said, to engage the Congress on this issue. Earlier, in an interview with INSIDE POLITICS, McCain talked about the prospects of finally winning his fight for campaign finance reform.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: Oh, I think we have a very good chance; i think we have a very good chance. If we fail, we'll be back at it because there will be more scandals; there will be more scandals in American politics because of this money, which makes good people do bad things.

(END VIDEO CLIP)

WOODRUFF: Senate debate on campaign finance reform will begin on Monday.

Organized labor has a stake in whether campaign finance reform legislation is passed. I spoke today with the AFL-CIO President John Sweeney, and I began by asking if, contrary to earlier impressions, his union now opposes the McCain-Feingold bill.

(BEGIN VIDEOTAPE)

SWEENEY: No, we're not against it. We've been strong advocates of campaign finance reform for many years and we want campaign finance reform that opens up the process. We support a ban on soft money. There are weaknesses in the McCain-Feingold bill that we have talked to both senators about and we're looking to see what the final product is.

WOODRUFF: But when you say, among other things, when you talk about weaknesses I assume you're talking about the issue ads provision that would ban the use of so-called issue ads in the last 60 days before an election. If labor were to be disadvantaged by this, wouldn't also conservative groups, corporations, wealthy individuals -- everybody would be disadvantaged, so why isn't it fair?

SWEENEY: That's not true. There are many organizations that are 501c4s that have exemptions. And these are organizations that are very active on the issues -- advocacy as well as the labor movement. And why should the labor movement be discriminated against and allow others who are our opponents to be able to do whatever they please for -- right up to Election Day?

WOODRUFF: You say you favor campaign finance reform and yet, by coming out now, this week, on the eve of what -- the Senate taking up McCain-Feingold aren't you, in effect, with everyone else who has a problem with a part of this legislation, piling on and, in effect, contributing to its defeat?

SWEENEY: No, we're -- as I have said before, we have supported campaign finance reform for several years. And we want campaign finance reform that is going to open up the political process, that's going to allow our members to be as involved as those who are opposed to them. And we think that state organizations in both parties should have -- should continue to be able to register voters and to have programs that involve some soft money or some way of funding. There's a lot more to be done with McCain-Feingold to make it true, fundamental reform.

WOODRUFF: So you don't think it will be weakened by what you're doing?

SWEENEY: No, I think it will strengthened, and the process -- the democratic process will be strengthened.

WOODRUFF: Mr. Sweeney, let me ask you about the Bush administration. When this president first came in, you said you wanted to listen to him, to be open to him during the first couple of weeks in the administration the labor secretary, Elaine Chao, spoke at an AFL-CIO conference. Your own secretary treasurer, Rich Trumka said in an interview here on CNN that the members of your executive counsel were impressed with what she had to say. They felt she was sincere about wanting to listen to labor.

What's happened since then?

SWEENEY: Well, not too much. When I called back in December to congratulate the president, we talked about having a dialogue on issues that we agreed on, as well as issues that we disagreed on -- that we would have the chance to at least be giving each others' position, and that we would have a respect for each other in addressing the concerns of working families.

None of that has happened, and yet a number of initiatives have been taken by the administration which are basically anti-worker; and this isn't what the president talked about during the campaign. We have had some meetings, some discussions with Secretary Chao and Secretary Mineta, as well as with the new trade ambassador. We -- but most of it is on the new pieces of the administration's policies and programs. It's after the fact.

We had no discussion about ergonomics, about repealing worker safety and health benefits, and that's the classic example. That's a benefit that workers, organized as well as unorganized, need it and want it.

WOODRUFF: When I interviewed the Labor Secretary Chao last week, she said, when I asked her about some of these concerns that you and others at the AFL and organized labor have expressed, she said: "We're going to have differences. This is a different administration, different philosophies." She said: "That's what elections do, they change things."

SWEENEY: That's true, and we recognize that. But just going back to the ergonomics: I mean, Elizabeth Dole started this when she was secretary of Labor 10 years ago; hearings and research and so much has gone into this over the past 10 years.

If there are things that have to be corrected, why can't we talk about it before you repeal it? This is major, major benefit for workers that we're talking about. WOODRUFF: Secretary Chao said when I asked her about the worker safety question, she said: "Everyone she talked to had some problems with the so-called ergonomics rule that the Clinton administration had issued in its last days in office?"

SWEENEY: So why didn't she call a meeting or saw the process to see what had to be addressed if that was so before repealing it? You just don't walk in and wipe out a law or a regulation just because you're opposed to it. If there are some things that have to be changed, let's talk about it. There's no dialogue going on on these issues.

WOODRUFF: Is there anything this administration is engaged right now that organized labor -- the AFL-CIO can support?

SWEENEY: They haven't discussed anything with us. Secretary Mineta has met with the transportation unions, and I believe that they're talking about issues that apply to that industry. Elaine Chao has started some discussions with individual unions. But so far, there's nothing that we have had the opportunity to discuss that will benefit workers.

WOODRUFF: Is that discouraging to you?

SWEENEY: It sure is. In -- we've had our differences with Republican administrations in the past, but there never has been a transition such as this one, where such anti-worker initiatives have been taken in the first 45 days of an administration without any discussion with the labor movement.

WOODRUFF: Are you saying this is never -- anything like this has never happened before, to your knowledge?

SWEENEY: That's what I'm saying.

WOODRUFF: And to what extent do you think it has to do with labor's important role in supporting Al Gore this past year in the election and turning out millions of voters to support him?

SWEENEY: Well, that's our right, and we were out there talking about the issues that working families held as priority issues for them. And the election is over now, we have a new president. I would assume that at some point, the administration would start talking to the single representative for so many working families in this country about the issues that are a concern to them.

They're inviting other groups in to have some discussions. It's about time they paid more attention to what they can do for workers rather than what they can do against workers.

WOODRUFF: All right. Well, John Sweeney, the president of the AFL-CIO, we thank you very much for joining us.

SWEENEY: Thanks, Judy, nice to be with you.

(END VIDEOTAPE) WOODRUFF: And still ahead on INSIDE POLITICS: will some potentially groundbreaking medical research be halted for political reasons? The controversy over stem cells, a look at where the Bush administration stands.

(COMMERCIAL BREAK)

WOODRUFF: Today is the deadline for scientists to apply for funding from the National Institutes of Health for medical research involving fetal stem cells. Whether or not the federal government provides that funding is a controversial political issue tied closely to the abortion debate.

CNN medical correspondent Elizabeth Cohen takes a closer look at stem cells, their medical significance and the political issues.

(BEGIN VIDEOTAPE)

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT (voice-over): Christopher Reeve says his best hope for walking again is something called stem cells.

CHRISTOPHER REEVE, ACTOR: It's a miracle. It's something that has unlimited potential for curing people.

COHEN: You'll be hearing a lot more about stem cells in the future. They're essentially unprogrammed, or blank cells. Take a stem cell, manipulate it in the lab, and it can become a heart cell, a liver cell, a bone marrow cell or practically anything.

So let's say, as in Reeve's case, where the spinal cord was damaged, doctors could take stem cells, convert them into nerve cells, and give him an injection to repair the damage. The same principle applies to the heart. After a heart attack, some of the cardiac muscle dies. Stem cells could be made into cardiac cells, and then injected, healing the heart tissue.

(on camera): So, if stem cells are so great, why is there a controversy? Well, it's all about where the cells come from. One source is aborted embryos. Another source: embryos infertile couples have set aside in a bank, but don't end up using to start a pregnancy.

Anti-abortion groups are against the use of both, and so far, not a cent of federal money has been spent on embryonic stem cell research.

JUDIE BROWN, AMERICAN LIFE LEAGUE: As deeply concerned as we are about the treatment and cure of disease, we don't believe that the average American wants to see tiny embryonic boys and girls, little children, used as experimental material.

COHEN (voice-over): And she says the embryos that are not used for in vitro fertilization are no better.

BROWN: A frozen embryo who is destined to be discarded is a tiny human being, an embryonic child, whose parents have decided that he is garbage.

COHEN: On the other side are stem cell researchers and celebrity patients who have lobbied Congress for federal funding.

MICHAEL J. FOX, ACTOR: I'm one of the million involuntary experts on Parkinson's disease in the United States, battling its destructive nature as we wait for a cure. We need a rescue, and the country should know it.

COHEN: If there's a lab that could someday give Fox his rescue, this is it. Ron McKay at the National Institutes of Health has given mice an animal form of Parkinson's, then treated them with stem cells, and it worked.

DR. RON MCKAY, NATIONAL INSTITUTES OF HEALTH: We can restore a lot of the missing functions in these animal models of disease.

COHEN: But scientists say moving stem cell research from animals to humans will take the kind of huge infusions of cash that only the federal government can provide.

Last year, President Clinton authorized federal dollars to be spent on embryonic stem cell research. A deadline for applications is tonight at midnight. Now scientists worry President Bush will stop federal funding before it even begins. One observer says they have good reason to worry.

ALTA CHARO, UNIVERSITY OF WISCONSIN: For 25 years we've had a political compromise in the United States. Private funding supports controversial research in this area; public funding is withheld, so the taxpayers who oppose it don't need to feel complicit in research they find immoral.

COHEN: A compromise is in the works. Stem cells can be obtained from alternative sources, such as adult bone marrow. But it's unclear whether they're as medically useful as embryonic stem cells. Everyone hopes they will be. Because right now there appears to be no middle ground between the people who say stem cells are their hope for walking again, their hope for being healthy again, and those who say it's never right to do research on an embryo, no matter what.

(END VIDEOTAPE)

COHEN: Scientists who want federal funding for embryonic stem cell research think they may have found a friend in Tommy Thompson, the secretary of Health and Human Services. Thompson was a big supporter of Biotech while governor of Wisconsin. In fact, he was governor when a researcher at the University of Wisconsin was one of the first scientists to successfully use embryos to make stem cells in the lab -- Judy

WOODRUFF: All right, Elizabeth Cohen, thank you very much. Fascinating story. Thank you.

Ahead on INSIDE POLITICS: reports that Jesse Ventura may have to go back to his day job. Plus: our Bruce Morton, with some thoughts on the former president and his legal bills. +

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

BILL CLINTON, 42ND PRESIDENT OF THE UNITED STATES: You know, I read in the history books how other presidents say the White House is like a penitentiary, and every motive they have is suspect. Even George Washington complained he was treated like a common thief, and they all say they can't wait to get away. I don't know what the heck they're talking about.

BRUCE MORTON, CNN CORRESPONDENT (voice-over): So he loved it, in spite of all the investigations, all the embarrassments, all those moments in the spotlight he didn't enjoy.

CLINTON: It depends on what the meaning of the word "is," meant.

MORTON: And impeachment, and trial in the Senate, and endless Monica -- how many times have you seen the hugs -- and all that. Comes with the territory? Maybe. But the legal bills? Who's ever heard of anything like that?

As president, Clinton made $200,000 a year. George W. Bush got a raise to $400,000, but even that wouldn't help much. The Clintons' legal bills -- according to the fund that's been raising money to try to pay them, the Clintons' legal bills come to $11.3 million, lawyers fees that go back to Whitewater in 1993 and cover Travelgate and Paula Jones and all the other investigations. The fund, and a previous fund, have raised $7.4 million, so the Clintons still owe $3.9 million.

Clinton once said he wanted to pay his aides' legal bills, too. That may be hard. Paying his own may be hard. He can make speeches, of course. He can write a book. She got a big advance for hers. But still, a $4 million debt is something most people can't imagine. And whatever you think of Clinton, you have to wonder, why would anybody go into politics knowing they can face partisan investigations and run up legal bills that would stun small countries?

CLINTON: I feel, as John Podesta did, we walked out of the Oval Office for the last time today, about 10:30 -- no, no about 10:00 -- and he was tearing up a little bit. He just looked, he said, "we did a lot of good, we did a lot of good, we did a lot of good."

(APPLAUSE)

MORTON: But at what price? Is this a system -- however you feel about the man -- is this a system that needs fixing?

Bruce Morton, CNN, Washington.

(END VIDEOTAPE) WOODRUFF: Minnesota Governor Jesse Ventura may soon have more free time on the weekends. The founder of the XFL football league tells the "L.A. Times" that Ventura's job as a television commentator for the league is, "on thin ice."

Vince McMahon says his league needs more football announcers. And Ventura, you may recall, made his name as a pro wrestling announcer. The governor's attorney today called McMahon's comments "interesting." A spokesman for NBC Sports says the announcer lineup for this weekend's game has not changed. And Ventura will be the league commentator.

That is all for this edition of INSIDE POLITICS. I'm Judy Woodruff. "MONEYLINE" is next.

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