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Inside Politics

Administration Under Pressure to Front-Load Tax Cut; Al Gore Gets Good Grades From His Students

Aired March 21, 2001 - 5:00 p.m. ET


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

President Bush cozies up to seniors, while delivering a new slap to Senator John McCain.

And then, there's his relationship with his EPA chief.


JUDY WOODRUFF, CNN ANCHOR: Some analysts are saying you've had your legs cut out from under you because of the CO2 decision. How do you see it?


ANNOUNCER: Christie Whitman answers that question, and more, about the president's environmental policy.

As the Oscars approach, we'll feature the film "Traffic" in a debate about America's drug war.

And Professor Gore gets some high-profile help in the classroom. Some students tell us if Gore is making the grade.

Now, Judy Woodruff takes you INSIDE POLITICS.

WOODRUFF: Thank you for joining us.

We begin with the economy, and the Bush administration's efforts to rev it up. Even before the Dow Jones industrial average fell another 233 points today, the president was under pressure to make his tax cut plan more front-loaded, so the money would be in people's pockets sooner.

Now, new numbers and options apparently are on the table, as our senior White House correspondent John King reports.


JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): The administration is studying ways to change the president's plan in order to make room for a much bigger immediate tax cut. The version of the Bush plan already passed by the House provides only $5.6 billion in tax relief this year.

But senior officials tell CNN the administration is studying ways to provide an immediate tax cut of more than 10 times that, roughly $60 billion, and still stay within the president's limit of $1.6 trillion in total tax cuts over the next decade.

The study was ordered by Treasury Secretary Paul O'Neill, who will present options to the president in a week or so, just before the Senate finance committee drafts a budget resolution and sets its target for tax cuts.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This debate in Washington has moved beyond whether we should have tax relief to how much it should be and who should get it.

KING: The $60 billion figure represents roughly half of this year's projected budget surplus, and was suggested to Secretary O'Neill during a recent round of meetings with Senate Republicans. The review reflects the impact of the slowing economy on the tax debate. Lawmakers in both parties say the Bush plan does too little to provide immediate stimulus.

And Democrats have proposed an immediate reduction in just the lowest tax bracket from 15 percent to 10 percent.

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: Given their own assertions for the last six months that we really ought to be concerned about finding a way to deal with the economy.

KING: Speaking to cardiologists in Florida, Mr. Bush made clear he opposes the Democratic approach.

BUSH: You also pay a lot of taxes, and I think everybody, everyone who pays taxes, from the school teacher to the truck driver to the doctor, should get tax relief.

KING: Paying for a bigger tax cut up front would require some adjustments to the overall Bush plan. Ideas being discussed in Congress include cutting the top rate from 39.6 percent to 35 or 36 percent instead of the 33 percent proposed by Mr. Bush; dropping the president's $270 bill plan to eliminate estate taxes and instead embracing a much less expensive alternative.

Senior administration officials say the treasury review is designed, at least for now, just to study various ideas and these officials stress that the president has yet to embrace any major changes to his tax plan.


KING: But with the momentum clearly growing for a bigger immediate tax cut, the administration now scrambling to put its stamp on the developing Senate blueprint. And even before the Senate gets to tax cuts, already talk with some influential voices of using the House-Senate conference committee down the road to bid up the price of that immediate tax cut even higher. Some already using a figure of perhaps $100 billion -- Judy.

WOODRUFF: John, how far are the people at the White House saying they think they could go toward some of these compromises being discussed on the Hill without giving up on their basic principles of tax cutting?

KING: Well, they won't discuss in any detail right now, Judy, any specifics; say, OK, the president will accept 35 percent instead of 33 percent. They don't want to do that right now because their position is if you start to negotiate one provision, you're open to negotiating all the provisions, and there are dozens, if not hundreds, of competing ideas in the Congress right now.

But they certainly know they're going to have to compromise down the road. They certainly know especially they will have to compromise if they cede to this momentum, and they know they can't stop it, to front load this tax cut plan because of the slowing economy and stay within the $1.6 trillion price tag down the road. There's just no way to do it unless you compromise.

So, that's what Secretary O'Neill is doing now, presenting a blueprint of options to the president so they can start to make some choices as the Senate debate goes on. But they're trying to do this all at once, at least if they can, most of it at once.

So, all fingers now pointing to that House-Senate conference committee, which is still a few months down the road. Many think the tax cut could be significantly rewritten there. And again, some people, including administration officials, privately involved in discussions now about if the economy is still slowing, perhaps giving almost all of this year's surplus back in an immediate tax cut. That would be about $100 billion.

WOODRUFF: All right, John King at the White House.

Meanwhile, on Capitol Hill, the House Ways and Means Committee is already pushing through the next piece of the Bush tax cut plan. At a hearing today, the panel outlined what's ahead. And as our congressional correspondent Kate Snow reports, some sparks flew, too.


KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT (voice-over): At a House committee hearing on taxes, Democrats lash out at Senator Kay Bailey Hutchison, there to make the Republican case for tax cuts.

REP. PETE STARK (D), CALIFORNIA: Do you know what you're talking about when you talk about a budget?

SEN. KAY BAILEY HUTCHISON (R), TEXAS: I assure you that I do.

STARK: You do? Well, what is your budget, then? How much is budgeted...


HUTCHISON: I do know what the estimates are on our surplus and what we are going to have in the way of...

STARK: How much is your tax bill going to be, senator?

HUTCHISON: Our tax bill is going to be $1.6 trillion.

SNOW: The second installment of that $1.6 trillion due on the House floor next week. The bill would fix what's known as the marriage penalty, when a couple pays more taxes together than they would if they were single.

Chairman Thomas' bill is actually larger than the fix President Bush proposed. It would change the standard deduction for couples to equal twice that of single filers and it adjusts the 15 percent tax bracket for couples so they're not penalized when they marry. Bottom line, the Republican bill benefits every married couple, whether rich or poor and whether or not they now face a marriage penalty.

REP. SAM JOHNSON (R), TEXAS: We're arguing about peanuts here. What we've got is tax relief for married couples, and it applies across the board.

SNOW: And relief for parents. Like the president, Republicans would double the child tax credit, but they would phase in the change more quickly and make part of it retroactive so that taxpayers would get an immediate break.


SNOW: Republicans hoping that all of this will attract a lot of Democratic support. They say how you can say no to these two provisions, marriage penalty relief and the child tax credit. Last year, over 50 Democrats voted along with the Republican version of marriage penalty relief. They're hoping to repeat or even do better than that this year.

Joining me is the chairman of the House Ways and Means Committee, Chairman Bill Thomas. I appreciate your being here.

REP. BILL THOMAS (R), CALIFORNIA: My pleasure, Kate.

SNOW: It is your bill that we're talking about. Let's talk about the child tax credit. You've made it retroactive, which is something the president didn't include. Are you doing that because you want to spur the economy? Is that at all part of the decision here?

THOMAS: Well, if you can, you'd like to make sure people get the savings rather than in the future, today. We did that with the marginal rate reductions that have already moved out of the House, and we'll try to do that with every package that we have. If you can bring it into the current environment where people will see that they're getting something today, I think that's a good thing to do.

SNOW: You heard John King's package about Treasury Secretary O'Neill calling for a study to look at how to move some of this ahead even quicker, provide an economic stimulus to the economy. Do you think that's going anywhere? Do you think that that's a good idea?

THOMAS: Well, first of all, I think it's a good idea to study alternatives. I felt the criticism earlier was that they were locked in a two-year-old tax plan. Now, that they're saying even Chairman Greenspan agrees with most recent half a percent cut, notwithstanding the market didn't react the way we would like, the circumstances maybe are different.

This administration is responding to reality. They're looking at where we are today and changes that might be suggested. But we still have on our plate the president's plan, and that marriage penalty and the estate death tax plan which we passed last year, modified to fit within the president's program and we're going to move those forward.

SNOW: And let me ask you about that. At this point, you are -- two weeks ago, you passed a $950 billion rate cut reduction. You're talking about $400 -- little less than $400 billion in marriage penalty relief and the child tax credit. That doesn't leave you with a lot of wiggle room. You're talking about $1.3 trillion just with your first two bills, and you've got a space of $1.6 trillion. How do you fit the rest of it in?

THOMAS: Well, actually, the marriage penalty-child credit is two parts of the president's program. The death tax that he asked is another part, and we'll be looking at other areas. We have been able to fit it in. I described it as putting a pound and a half of sugar in a one-pound bag.

We are able to do it and make sure that everyone who is told they're receiving a tax cut gets it because we're also taking care of the alternative minimum tax problem. We're going to move forward. Under the Constitution, the House has to act first on revenue bills.

We're going to pile the product on the steps of the Senate, and we hope that the Senate takes up some portion, hopefully the marginal rate, across-the-board reduction or some other package fairly soon. The idea the Senate is going to wait for process, some rule that they have to follow, when the leadership of the Democrats in the Senate is saying we need to act immediately, why don't they go ahead and move it to the floor and vote on something so we could get the conference and actually produce a real product?

SNOW: Move your bill to the floor.

THOMAS: Move any bill to the floor.

SNOW: OK, thanks so much...

THOMAS: All I need is the Senate to act instead of talking.

SNOW: Understood. Thank you, Chairman Bill Thomas, Republican from California; the chairman of the House Ways and Means Committee. They held their hearing today. They are planning to mark up the bill in their committee tomorrow and move it to the House floor, the second piece of President Bush's tax cut by next week -- Judy, back to you. WOODRUFF: Kate, thanks, and please tell Chairman Thomas we look forward to seeing that one-pound bag with a pound and a half of sugar in it.

While much attention has been focused on the president's economic proposals, he has been moving on the environmental front as well, and getting heat for it. Today, the administration suspended a regulation to toughen environmental standards for some mining on public lands. And, the last couple days, the Environmental Protection Agency withdrew a new standard for arsenic levels in drinking water. And, Mr. Bush pulled back on a campaign promise to limit certain carbon dioxide emissions.

Today, I spoke with EPA Administrator Christie Whitman, in one of her first interviews since the president's about-face.


WOODRUFF: Some analysts are saying you have had your legs cut out from under you, because of this CO2 decision. How do you see it?

CHRISTIE TODD WHITMAN, DIRECTOR, EPA: Not at all. This was a decision that the president made after reviewing the new facts he was getting from the task force of which I am a part on the energy policy, that the vice president chairs, and he was looking at signals that were going to be sent that could impact the generation of new power -- investment in new power plants.

Clearly, we need -- we have a big energy problem in this country. What we are seeing in California -- first of all, California will have a much harder time over the summer. There's very little we can do short-term for them; long-term we can do some things, we need to make sure we continue to have a mix of energy sources, we depend quite heavily on coal now, although that dependence is going down, but as you move to natural gas there are some problems there.

So, he was looking at sending a signal now that was going to discourage people from investing in things like new coal technology, which is a lot cleaner than some others.

WOODRUFF: But he said flat-out in the campaign -- this is the end of September last year, just a month before the election. He said, "with the help of Congress, environmental groups in industry, we will require all power plants." And he went on to say, "and we will move to reduce emissions of carbon dioxide." Do circumstances change that dramatically?

WHITMAN: Well, first of all, in some ways, yes, as far as what we know about the energy crisis that we were left with. And secondly, we can still get a multi-emission bill through Congress that focuses on three of the major emissions, not putting mandates on carbon and move much further than any previous administration has done.

But if you try to put carbon in a mandated way, the reaction as we saw from the Hill when I started talking about it. was such that told us, that was never going to happen. The president is committed to two things: he's committed to providing an energy policy for this country and he is committed to cleaning the environment.

WOODRUFF: But you were talking about the administration's intention to live up to this commitment through the month of February and on into March, when it now turns out the White House was thinking otherwise. How did that happen?

WHITMAN: I don't believe that they'd really focused fully on that part of it until I started talking about it and became a bigger issue and a lot of concentration, a lot of reaction, a lot of warning signals that this in fact could cause ultimately energy price spikes in already tight energy market. It could affect decisions down the line for plants -- for investment for plants coming on-line that could hurt our ability to get energy, to have a good mix of fuel and energy for the future.

WOODRUFF: But you didn't have access to that information at the time you were talking about it?

WHITMAN: Well, one of the things I was talking about is a future discussion. I perhaps underestimated the impact that even a discussion of future caps could have on decisions being made today. And the president has the look of the whole landscape in the way none of the rest of us have.

But I still believe, as he believes, that there is something called global climate change and that we need to look at that. We all know that carbon is an emission, it's a Greenhouse emission, which you can talk about. There are a lot of voluntary programs going on now and we are going to encourage those.

WOODRUFF: Assuming it was done, accepting your explanations for the reasons it was done, still, has your credibility been hurt with the Europeans you deal with; with the environmental community, who was taking you at your word?

WHITMAN: My word hasn't gone back, in the sense, we are going to continue to work for a multi-emission bill up in Congress; we are going to continue to promote things that help will reduce carbon in an involuntary basis. I don't know. I think the Europeans are going to be fine with this ultimately. I mean, they kind of expected a different position from the United States.

The fact that we are reviewing all our policies on global climate change is something they recognize; it's a new administration, it has a right to do that. I was very clear in Trieste that they should take, because we were reengaging in some these talks didn't mean we were accepting the positions in the past and we are going to continue to engage in those talks.

WOODRUFF: It's the CO2 decision, but it's also some other decisions the administration has recently announced. Just yesterday, talking about reconsidering tough arsenic limits in drinking water...


WOODRUFF: ...something you're involved in. And separately from your department, decisions having to do with mining, with logging. The impression is coming across to some in the environmental community that this administration is not going to be sensitive to the environment?

WHITMAN: See, I think that's a very wrong impression. First of all, let's remember the diesel rule that the environmentalists liked. The same day -- yesterday, as we announced the arsenic decision, we also announced a decision that, when I first came into office, I was told that was the litmus test of whether or not we were good environmentalists on a suit and a consent decree that the previous administration decided on pesticides, we kept that going. Nobody talks about that because that's the way the environmentalists want to see it.

The important thing about arsenic to know, is we are not pulling back any arsenic standards; the arsenic standards are going to be exactly the same today as they were yesterday and will be tomorrow and were going to be under the new rule. The rule really wasn't going to start to impact most of the water companies until 2006. I think we will have new standards, I know we will have new standards well before that.

But this was a rush decision where we didn't have either a good enough scientific base to say, everybody agrees it should be less than 50 parts per billion. Nobody knows, why 10? And we hadn't considered what the impact would be on particularly rural communities and people who depend or living right on the edge and where their water bills could skyrocket.

WOODRUFF: But why hadn't that been considered? Why is all of this seem to be coming in fairly short order?

WHITMAN: Well, because a lot of decisions made at the very end of the last administration that were time sensitive. This was a rule that was done faster than I think any rule has come out of the agency, probably because they hadn't worked on it before. And Congress had said we need to come up with the new standards by June of this year. So they were reacting to a June deadline but they didn't start on it until about a month and a half or two months before the end of the administration, so they really rushed this thing through.

And I had the staff in, I listened to the professionals at the Environmental Protection Agency and I was really troubled by the fact that I didn't feel that we had no scientists can tell you, why 10? They all say 50 isn't right; it's been there too long. We need to reexamine it.

This is a naturally reoccurring substance, unfortunately it occurs naturally in the land, we all have some arsenic in us. We all know it needs to be changed. We don't know whether 10 is the magic and the right number; some say 5, some say 25. And we haven't done the kind of economic analysis that we are also required to do by law that would look at what the impact is going to be on people.

WOODRUFF: Christie Whitman, finally; to those people who look at this episode, not just the CO2 -- perhaps arsenic, some other things going on, and say does she really have the clout that she needs to do her job as the administrator of the Environmental Protection Agency? What do you say to them?

WHITMAN: I certainly believe I do. The president and I have a very good working relationship. And we are going to look at every one of these issue, and that's why I can point to two decisions yesterday. One -- if you are looking for sides -- one that went one way, and one that went the other, that really reedifies what we are doing. We are looking at each issue on its merits, and we're going to decide them on the merits of those individual issues.

Some are going to be happy with some of the decisions, others are going to be happy with other decisions. But we're going to do what this president has asked us to do at the agency which is to ensure we include all points of view and to move forward to protect the environment.

WOODRUFF: Christie Whitman, Environmental Protection Agency administrator, thank you so much. We appreciate it you being with us.

WHITMAN: It's a pleasure.


WOODRUFF: There is a lot more to come on INSIDE POLITICS. Later in the program, a rare live interview with investor Warren Buffett. Why is he speaking out in favor of campaign finance reform? But first:


SEN. TED KENNEDY (D), MASSACHUSETTS: We've waited too long, and Americans are suffering. The time for action is now.



GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Just as doctors no longer treat heart disease with bed rest, we should not approach this year's patients' bill of rights stuck in last year's rut.


WOODRUFF: An early exchange of fire in the political battle over a patients' bill of rights. This is INSIDE POLITICS.


WOODRUFF: The political divide between President Bush and Senator John McCain goes beyond the high-profile debate over campaign finance reform. The two men also disagree over terms of a proposed patients' bill of rights, an issue the president addressed earlier today in Florida.

CNN White House correspondent Major Garrett has the story. (BEGIN VIDEOTAPE)

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT (voice-over): With Congress stalemated on HMO reform, the president tried to break the logjam.

BUSH: I want to sign a patients' bill of rights this year, but I will not sign a bad one and I cannot sign any one that is now before the Congress.

GARRETT: That was yet another White House slap at Senator John McCain, who has teamed up on a patients' bill of rights bill with Democratic Senator Edward Kennedy. Both have been frozen out of White House negotiations on new legislation.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: It has been five long weeks that we've waited in the Congress and in the Senate for the president to work with us so that we can fashion a bill that'll be in the interest of the patients, and not in the interest of the HMO industry.

GARRETT: Although McCain supported his one-time rival in the general election, the two are at odds over tax cuts and campaign finance reform. The HMO fight adds new fuel to the McCain-Bush feud.

PETER FENN, DEMOCRATIC STRATEGIST: When he gets together with Ted Kennedy with a reasonable health care, people listen. When he objects to certain portions of the tax bill, people listen, and this is going to be tough for George W. Bush because people are going to be listening to the next four years.

GARRETT: Most HMO issues have already been settled: Access to emergency room care and specialists, and review boards to resolve disputes between HMOs and doctors. The sticking point is lawsuits.

BUSH: I will insist any federal bill have reasonable caps on damage awards and the caps in proposed legislation before Congress are too high and will drive up the cost of health care in America.

GARRETT: Mr. Bush wants to limit lawsuits to federal courts and cap damages. In Texas, the cap is $750,000. The Kennedy-McCain bill allows for state and federal lawsuits, and limits damages in federal court only to $5 million. Critics say that the review boards Mr. Bush favors will only work if HMOs fear expensive lawsuits.

RON POLLACK, FAMILIES USA: There's going to have to be some real potential of damages that plans are going to have to pay as a deterrent for plans failing to do the right thing.

GARRETT (on camera): HMO reform eluded the Clinton White House and Mr. Bush would love nothing more than to win it in his first year. But his fight with McCain means he will need more Democratic support, and as even White House aides concede, more than one policy speech.

Major Garret, CNN, Orlando.


WOODRUFF: And joining now us from the Capitol, Massachusetts Senator Edward Kennedy. Senator Kennedy, thank you for being with us. And is Major Garrett right that you've been frozen out of negotiations with the White House?

KENNEDY: Well, the president's statement as a veto was disappointing because this legislation has been before the Congress for five years. We received the president's objections five weeks ago. We were looking for an opportunity to negotiate with the president over the period, the last five weeks. It hasn't taken place, and today was really more of an ultimatum rather than a willingness to negotiate.

I would hope that we would put the legislation before the United States Senate and begin the debate and then try to work things out. It seems to me the overwhelming majority of American people, Republicans as well as Democrats, support this legislation. Every medical society in our country supports our legislation, and I think if we have the American people and the medical representatives and associations, I would expect that the president would sign that bill.

WOODRUFF: But, senator, the president said today he wants to sign a bill, but he won't sign what he called a bad one, and he said he won't sign anything now before the Congress. That sounds like your proposal is dead in the water.

KENNEDY: Well, his principle objections dealt with the whole questions of lawsuits. Of course, we have 26 million state and county employees today that have HMO protections that include lawsuits, and we don't see the kind of proliferation of lawsuits that the president feels would be the case should we pass a patients' bill of rights that have a liability provision.

And secondly, Texas has a liability provision, and we've only had a half a dozen lawsuits there. The real question -- the real value of having the liability provisions to ensure that you're going to have a quality kinds of concerns and controls by the HMOs. It's basically a red herring.

What this debate is about is the power of the HMOs. They are very, very powerful, and we've seen the power of these special interests in the last couple of week very strong in Washington. Once again, it's the HMOs against the patients.

We have a strong bipartisan bill with Congressman Ganske and John Dingell in the House of Representatives. Congressman Norwood provided leadership and we have a bipartisan bill. We have senators, not only McCain, Senator Specter and Senator Chafee. So, we have a bipartisan in both. We want to move ahead.

WOODRUFF: I hear what you're saying, senator, and yet the president characterizes this very differently. Six times today, I think, he used the term, "frivolous, unnecessary lawsuits." He talked about lawsuits, trial lawyers. He is portraying this as a very different battle from what you've just described. KENNEDY: Well, we ought to get sort of beyond the rhetoric and look at what has been accepted in the Texas, in which he took pride in, as a matter of fact, during the presidential debates. Effectively, the provisions that are included in the bipartisan bill are very similar are to the ones that are in Texas, and the one other provision about the suit of lawyers -- employers. We are quite prepared to accept language that provision.

WOODRUFF: But are you prepared to bend on the $5 million cap that is now in the in the McCain-Kennedy legislation?

KENNEDY: Well, the interesting point is that the president said that he wanted to these decisions made by the states. That's been his positions. We let the states make the judgments and decisions. In many of the states where these tort cases are going to be decided, have caps much, much below $5 million.

All -- we are prepared to say those decisions will be made by the states in the states. That's the historic location for these, and those will be the cases dealing with medical challenges. The contract cases, which are very small amounts, will be in the federal courts. The best is to do it, leave in the states. That's what president initially. We agree with him. Let's do that.

WOODRUFF: Senator, finally, your tone today very different from, I think, during the first week of the president's time in office, when you talked about how you were able to do business with him. You found him engaged and involved, interested and so forth, intelligent. Now it sounds like you're describing a different George W. Bush.

KENNEDY: No, I still agree with those earlier observations. I want to see a successful negotiation. I am the one that wants to get something done.

We are working very effectively in the areas of education, which is a prime area of the president's interest and the interests of families, and we are working out. We had virtually a unanimous vote in the Senate Human Resources Committee, Republicans and Democrats, on the elementary secondary education. That's because we had engagement. That's because we had negotiation, and...

WOODRUFF: But you're saying that's not happening here?

KENNEDY: We haven't had it here, and so we're going to press to bring this up. The American people have waited long enough. Let's get it on the floor. That's the way to get real negotiations going. That's what we are committed to doing. I'm hopeful we can do it prior to the May recess.

WOODRUFF: All right, well, Senator Edward Kennedy. We appreciate you're joining us on the Capitol. Thanks very much.

KENNEDY: Thank you.

WOODRUFF: Just ahead, understanding the drug war, from Hollywood's "Traffic" to the current U.S. policy. Is the U.S. losing the war on drugs? We'll ask a former drug policy chief, and we'll talk to a governor who supports the legalization of marijuana.


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

Federal agents are expected to seize a second flock of sheep in Vermont for fear that some are infected with an illness related to Mad Cow Disease. This morning, more than 200 sheep were loaded onto trucks for Iowa, where they'll undergo further testing before they're destroyed. The sheep were imported from Europe, where the human form of Mad Cow has killed dozens of people over the last five years, and has virtually destroyed the British beef industry.

The U.S. Supreme Court today ruled that hospital officials may not give police the results of drug tests done without the patient's consent. Senior Washington correspondent Charles Bierbauer reports the case involved pregnant women.


CHARLES BIERBAUER, CNN CORRESPONDENT (voice-over): In 1988, when the government-run medical University of South Carolina noticed an increased number of babies born with cocaine addiction, it began testing some pregnant patients and handing the positive results to police without the patients' knowledge. The Supreme Court ruled that violates the Fourth Amendment ban of "unreasonable search." Justice John Paul Stevens:

"The reasonable expectation of privacy is that the results of those tests will not be shared with non medical personnel without her consent."

PRISCILLA SMITH, PETITIONER'S COUNSEL: What this decision really means is that there are not exceptions to the Fourth Amendment for people who either have drug problems or for pregnant women.

BIERBAUER: Justice Stevens, writing for the majority, noted the ultimate goal may have been drug rehabilitation, but:

"the immediate objective of the searches was to generate evidence for law enforcement purposes."

BIERBAUER: Hundreds of women were tested: 30 arrested, 10 sued the city. Paula Hale was one.

PAULA HALE, ARRESTED FOR COCAINE USE: After birth, I was arrested. After birth, I went through trauma because of the statute that was implemented at the time.

BIERBAUER: South Carolina officials argued there was a "special need" for the testing.

CHARLES CONDON, S.C. ATTORNEY GENERAL: The object of this policy has never been and is not now maternal prosecution. The object is fetal protection. BIERBAUER: Justice Anthony Kennedy agreed with the court's 6-3 majority throwing out the test, but said, under different circumstances:

"South Carolina can impose punishment upon an expectant mother who has so little regard for her own unborn, that she risks causing him or her life-long damage and suffering."

BIERBAUER: The court ruling sends the case back to court in South Carolina to reexamine the general hospital consent form the patients signed.

SMITH: A consent to a medical test is not a consent to a search for criminal justice purposes.

BIERBAUER: If the women succeed in the next court round, they would be entitled to seek damages from the Charleston Hospital.

Charles Bierbauer, CNN, the Supreme Court.


WOODRUFF: In Denver this afternoon, the man armed with an AK-47 rifle robbed a Wells Fargo bank of an undisclosed amount of money. He is surprised an off duty police officer and took his semiautomatic handgun. The police are searching for a suspect described as about 35 years old. The police consider the suspect to be extremely dangerous.

Coming up next, the movie "Traffic" spurs again the debate over the war on drugs.


WOODRUFF: Three out of four Americans say they believe the country is losing the war on drugs. A new survey by the Pew research group shows the same number, 74 percent, believe we will never be able to solve the problem of drugs coming into the country because the demand is so high.

Almost as many people, 68 percent, say Latin American countries will never be able to control drug trafficking on their end.

The war on drugs spread to the big screen this with the Oscar nominated movie "Traffic." The film deals with all sides of the drug battle, from a White House drug policy director, to drug users, to members of a drug cartel.

To talk more about U.S. policy on illegal drugs, we turn to former Clinton administration drug policy director Barry McCaffrey, and the governor of New Mexico, Gary Johnson. Although having some audio difficulties with Governor Johnson, we hope to get to him in just a moment.

Let me start with you, General McCaffrey, what right now, in a nutshell, how do you describe the state of the American war on drugs? BARRY MCCAFFREY, FORMER CLINTON DRUG POLICY DIRECTOR: Well, first of all, Judy, many of us have tried to shift the metaphor to a cancer affecting American communities. Drug use in America is down dramatically, by more than half since 1979. Adolescent drug use in the last two years is down 21 percent.

A lot of the numbers are moving in the right direction because we have put huge new resources into prevention, education and treatment with bipartisan support out of Congress. People like Senator Pete Domenici and a brilliant young Congressman Heather Wilson out in New Mexico have been part of the solution.

So, we do believe if we stay on focus for the next decade, drug use, which today is down to around 6 percent from around 14 percent, will drop even further. This is a problem of shaping youth attitudes, and then providing effective drug treatment to the five million chronic addicts in America.

WOODRUFF: Well, how does that square, then, with the fact, as I understand it, that two-thirds of federal drug dollars right now, go to law enforcement and not treatment and prevention?

MCCAFFREY: Well, you know, there's a lot of mischief in these numbers, and we shouldn't argue about facts. The facts of the matter are in the last -- since FY 96, we've increased the prevention education budget by 55 percent; drug treatments up by 35 percent. The research budget for Doctor Alan Leshner over in the National Institute of Drug Abuse is now over 600,000 million bucks. Drug courts have gone from a dozen to almost 800.

So, we think we're moving in the right direction and we're dismayed by the kind of, to be blunt, irresponsible thinking that I am hearing coming out of Governor Johnson.

WOODRUFF: Well, Governor Johnson, I know you're able to hear now. We may have a delay in having you respond to this. How do you respond to what I know -- I believe you just heard Barry McCaffrey say.

GOV. GARY JOHNSON (R), NEW MEXICO: You know what, I actually -- I actually got cut out of what most of what he did say. But kind of the gist of it is that we really do have a disagreement here.

I don't think that you can continue to arrest 1.6 million people a year in this country on drug-related crime, and I didn't hear the statistics on how many users they figure that they have, but if you do the math, I think that they're saying there are 10 million, 14 million users. I reject the notion that they're arrested one out of 10 users in this country a year, meaning there a lot more people that are using drugs than what they say.

And fundamentally, I'm under the belief that it is not criminal to smoke marijuana in the confines of your own home, doing no harm to anybody, arguably, other than yourself. The line I think that we need to draw here is the line that we've drawn with responsible alcohol use. And that is, you have a drink, that's OK. But you have a drink, you get in the car and you drive the car, now you have crossed over the line to criminal behavior.

I think that we need to apply those same rules when it comes to marijuana use. We need to adopt harm reduction strategies regarding these other drugs and by no...


WOODRUFF: Let me...

JOHNSON: ... no figment of the imagination is this something that we're winning. This is a war against ourselves. There are 80 million Americans who have done illegal drugs. I happen to be one of them and but for the grace of God, I'm not behind bars and give the federal government enough time and essentially, they're going to arrest and incarcerate everybody in this country.

WOODRUFF: General McCaffrey...

MCCAFFREY: How's that?

WOODRUFF: .. why is that not a reasonable proposition, the notion that drug should be made, marijuana, at least should be made legal?

MCCAFFREY: Well, you know, look, in the end of the day, I think some of the suppositions are sort of silly. We've got two million people behind bars in America. It Is ridiculous to assume that there is any significant number there for simple possession of marijuana.

If you're in the federal prison system right now, you got arrested for more than 200 kilograms on average. You know, Governor Johnson has been trying to legalize the simple possession of heroin. The problem with these drugs is not that they're illegal, but that they change the neurochemistry of brain function. You end with dependence and tolerance and then you end up unemployed and HIV and hepatitis C.

So, I think a lot of us say, look, let's focus one children. Let's reduce exposure, adolescent gateway behavior, and then we certainly need to take those chronic addicts and get them into effective drug treatment that's linked into the criminal justice system. There has to be a reward and the punishment to get these suffering people into effective treatment.

WOODRUFF: Governor Johnson, you hear Barry McCaffrey saying the focus needs to be on prevention, on treatment, on continuing in what he says is the direction being pursued now.

JOHNSON: Actually, Judy, I heard all of that. So, you know, I had a visit from the Zurich chief of police here in Albuquerque about three months ago. And interestingly, what they do in Zurich is they give away free heroin.

Now, this is the chief of police from Zurich, and he says hey, I've been in law enforcement all of my life. All of my friends are law enforcement. When they came out with free heroin in Zurich and the idea was that, again, heroin -- the heroin addict would have to get a prescription. They would go to a clinic. There wouldn't be anymore hepatitis C, no more HIV, no more overdose, less violent crime, less property crime.

That was the whole idea behind this. Fewer people behind bars, nonviolent criminals. He said we could have not been more opposed to this strategy because this was opposite of what we have been doing, been led to believe would be effective. He said I am here to tell you, and am I chief of police of Zurich, I am here to tell you that this program has exceeded anybody's wildest expectations.

It has made Zurich a better place to live. So, my point is is that we need to manage this problem in a different way. We have heroin addicts, and the problem that the drug czar has and that everyone -- that the policy national policy has is that they assume, for example, that the tens of millions of Americans, every single one of them that smoke marijuana, for example, belong in rehabilitation and that's simply not true.

What they fail to recognize is that most people, 90 percent of the people that smoke marijuana, smoke marijuana like other people have cocktails in the evening. It's something that they do. They don't belong in rehabilitation. They don't have a problem.

They certainly have a problem today because it's criminal. If they are arrested, they are going to go to jail and I just -- I have to take exception out of the 1.6 million arrests, 800,000 of those arrests are for marijuana. Half of those arrests are Hispanic. So, this is terribly discriminatory on top of everything else.

WOODRUFF: Gentlemen, I wish we had more time. Barry McCaffrey, a very brief response...

MCCAFFREY: Well, I just wanted to say he needs to listen to his own district attorneys, his own law enforcement officers, not the Swiss. I mean, I think some of the Swiss policies are disgusting. New Mexico now has the highest heroin overdose rate of any state in the country. There are terrible problems of compulsive drug use.


MCCAFFREY: Lots of us believe that effective drug treatment is really what most of us are trying to do -- trying to achieve.

JOHNSON: ... that we currently have that they're using products and needles that are dirty, and that's put on us by prohibition.

WOODRUFF: We are going to have to leave it there, but I do want to thank you both very much for being with us, and I hope that we can return to the subject again very soon.

MCCAFFREY: Indeed, thanks, Judy.

WOODRUFF: Governor Johnson, we thank you for joining us and we apologize about the sound difficulty there. We'll try to get that

JOHNSON: You know, I'm sorry, too. I wish I could have heard more of what Mr. McCaffrey was saying. Thank you for having me on.

WOODRUFF: We were able to hear most your argument. Barry McCaffrey, thank you as well. Gentlemen, thank you both.

When INSIDE POLITICS returns, a cease-fire in Macedonia. The latest on the conflict and the U.S. involvement.


WOODRUFF: The Bush administration international policy team are keeping a close eye on the situation in the Balkans. After escalating violence in recent days, ethnic Albanian rebels have called a cease- fire today, just hours before a government deadline to end the fighting. CNN's Andrea Koppel has more from the State Department.


ANDREA KOPPEL, CNN correspondent (voice-over): Facing another ethnic conflict in the Balkans, the U.S. is once again expressing concern but is reluctant to beef up the number of U.S. troops already stationed in Kosovo, next door to Macedonia.

DONALD RUMSFELD, DEFENSE SECRETARY: We have no plans to send troops to Macedonia. There are, as you know, a series of things that the United States and General Ralston, through NATO, and that NATO had and are doing with respect to the difficult situation along the border.

KOPPEL: In recent days, the U.S. doubled its presence along the Kosovo-Macedonia border to 300 troops to stop more armed ethnic Albanian rebels from crossing into Macedonia from Kosovo. And the U.S. says that it's continuing to provide Macedonia with military intelligence on rebel movements and may expand existing aid programs. But the Macedonian government wants the U.S. and NATO to do more to crack down on the rebels.

GOCE GEORGIEVSKI, MACEDONIAN EMBASSY IN U.S.: If this is not going to stop as soon as possible, that the whole concept of multiethnic society, that the whole concept of stability and peace in the region is going to fail.

KOPPEL: But ethnic Albanians in the U.S. say that the West is not welcome.

GJEK GJONLEKAJ, AMERICAN NLA REPRESENTATIVE: If a U.S. and NATO continues to help the Macedonian government, to hurt -- to kill Albanians is going to be more bloodshed, more refugees, more genocide.

KOPPEL: To some observers, what is happening in Macedonia today has elements of deja vu, hearkening back to the Bosnian war of the early 1990s when that multiethnic society literally ripped itself apart.

In Macedonia, however, there is no ethnic cleansing, one of the horrid hallmarks of the Bosnian war and more recently, in the war in Kosovo. Another thing missing in Macedonia: the presence of former Yugoslav president Slobodan Milosevic.

JIM O'BRIEN, FORMER U.S. ADVISER ON BALKANS: What's very different here is that the international community is on the other side now. Milosevic was the greatest threat to the growth of democracy in Europe. And he's gone.

KOPPEL (on camera): Long before Macedonia heated up, the Bush administration made no secret of its desire to withdraw, not add U.S. troops to the Balkans as soon as possible. The first test of the administration's resolve could be just around the corner.

Andrea Koppel, CNN, the State Department.


WOODRUFF: Ahead on INSIDE POLITICS, Warren Buffett joins me to talk about campaign finance reform and what he thinks about it. But first, class resumes with an economic's lesson. Alan Greenspan attends Al Gore's journalism class. We will hear from some students who were there when we return.


WOODRUFF: Al Gore brought a special guest to his journalism class today at Columbia University: Federal Reserve Chairman Alan Greenspan. Given yesterday's Fed decision to cut interests rates at half a point, the visit was especially timely. But to hear Gore tell it, the class discussion focused more on academic theory than our real world policy.


AL GORE, FORMER VICE PRESIDENT OF THE UNITED STATES: One of the things we talked about, albeit in theoretical framework, was the relationship between monetary policy and fiscal policy. And the way in which monetary policy can become less precise in its intended consequential effects on the economy.


WOODRUFF: No reporters are allowed to attend Gore's classes at Columbia, so we asked two students to join us from New York from Columbia School of Journalism: Lenora Chu and Michael Arnone. And we thank you both for being with us.

Ms. Chu, to you first: did the Fed chairman announce that when the next rate cut is?

LENORA CHU, STUDENT: No, he didn't. He made it very clear that there's a blackout period this week and also next week. So, he made it very clear from the beginning as did Gore -- Mr. Gore, that we couldn't talk about that.

WOODRUFF: And Michael Arnone, did the Fed chairman say anything about the economy? MICHAEL ARNONE, STUDENT: No, he didn't. Mr. Gore made it quite clear to us that even tangential questions related to the economy were not fair game today. So -- even though many of us tried to ask questions about the economy in Japan and George Bush's tax cut, all of them were deflected.

WOODRUFF: So, you didn't obey his instruction, in other words.

ARNONE: Well, no, a...

WOODRUFF: I'm teasing. I'm teasing.


WOODRUFF: Lenora Chu, back to you: how is the vice president turned out to be as a teacher?

CHU: You know, I think he's actually quite wonderful. The first day he came in the class, he said, look, I have no teaching experience whatsoever, and he sort of made it a question-answer, sort of movement type of thing, so that we could ask him whatever he wanted.

He usually starts out by talking about an issue, and then he'll open it up to questions almost immediately after. I think he's done really pretty well.

WOODRUFF: And Michael Arnone, were you surprised at anything about how he comes across in class?

ARNONE: No, not at all. I realize that he has a very broad wealth of experience, and that makes him very -- a very vital teacher. Even though he doesn't have professional teaching experience, he's a professional communicator from all his years in politics. So he can get ideas across and he can engage us in a conversation. So, that makes the class very enjoyable.

WOODRUFF: He was accused during the campaign, Ms. Chu, as you know, of being somewhat stiff, you know, not someone who takes himself with a, with a sense -- or has a sense of humor. How does that aspect come across in class?

CHU: You know, I didn't see any of that. I'm now sure whether it was that he was a little nervous throughout the campaign or the press didn't really get his personality across, but in class he's very funny, he's very witty. He's usually right on top of things, very loose. He makes a lot of jokes, some of them are self-deprecating.

It's really quite enjoyable. He's very different from how you see him on TV, especially during the campaign.

WOODRUFF: So, Michael Arnone, we can also assume he hasn't commented on President Clinton's pardons?

ARNONE: No, he has not commented on President Clinton's pardons, but he has made numerous references to George Bush. He has made numerous references to things that the president is doing in the news. WOODRUFF: Can you mention -- can you tell us what some of those are?

ARNONE: Oh, sure. Well, one thing that was actually the funniest thing that happened in class today was that they were -- Mr. Greenspan and Mr. Gore were discussing the possibility of an economic recovery and they were discussing something, the shape of an economic recovery on a graph. And they were saying -- Mr. Gore was saying, "It could look like a hockey stick, it could look like a 'U,' it could look like a 'V,' or if things get really bad, it could look like a 'W.'"

WOODRUFF: Good line. OK, I'm glad we got that. We'll ask you to remember everything else he says for the next time we have you on this show.

Michael Arnone and Lenora Chu, we want to thank you both. We appreciate you joining us today.

CHU: Thank you very much.

ARNONE: Thank you.

WOODRUFF: Thank you.

Well, there's even more INSIDE POLITICS ahead in the next half hour. The talk on Capitol Hill from the money that ends up in campaign coffers to the energy problems on the West Coast.

Those issues and much more when INSIDE POLITICS continues.


WOODRUFF: Why are these senators hugging before a divisive vote on campaign finance reform?

We'll talk about cash and political clout in a rare interview with billionaire Warren Buffett.

Also ahead...


CANDY CROWLEY, CNN CORRESPONDENT: Power problems in California have led, inevitably, to power play in Washington.


WOODRUFF: Candy Crowley on one of the latest political lightning rods.

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

WOODRUFF: Welcome back to INSIDE POLITICS. On this third day of Senate debate over campaign finance reform, a vote is now under way on a particularly controversial amendment that, if it passes, would hit labor unions hard.

Let's go to our congressional correspondent, Jonathan Karl -- Jonathan.

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, that's right, Judy, and when the votes are finally counted, as we expect they will be within the next few minutes, this measure is expected to fail. It is the most contentious issue yet to hit the Senate floor during the campaign finance reform debate. And that is whether or not to require labor unions to get the permission of their members before spending money on political activity, also known as paycheck protection. It's an idea most Republicans support, including the president.


KARL (voice-over): President Bush has long said that any campaign finance reform measure should include, what he calls, "paycheck protection."

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: So that a union member will be able to opt out of a union spending money if he or she doesn't like the purpose for which it's being spent. I think that's only fair.

KARL: When Republicans tried to act on the president's wishes, the campaign finance reform debate got heated.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: Virtually 10 to 12 to 1, corporations are involved in outspending the unions of this country, and nonetheless, we are faced at this particular time with an attempt to try and emasculate that kind of opportunity for their voices to be heard.

SEN. ORRIN HATCH (R), UTAH: We all know what's going on here. There are people on that side who will fight to the death, because although 40 percent of all union members are Republicans, virtually 100 percent of all union political money is used to elect Democrats.

KARL: As the debate went back-and-forth, it got personal.

HATCH: We all know that when the distinguished senator from Massachusetts speaks, he speaks for every liberal special interest group in this country, and you better pay attention if you're on the Democrats' side of the aisle, because if you don't you're going to have a primary in the next election. You know, I respect that kind of power.

KARL: And then, Senator Hatch, a close friend of Kennedy's, tried to take the sting out of his attack, but did so with a compliment that was decidedly back-handed.

HATCH: And I love my colleague as very few in this body do.


KARL: A few moments later, a rare across-the-aisle hug on the Senate floor.

HATCH: That brought tears to my eyes, honest to goodness.

KARL: Hugs aside, Kennedy and his fellow Democrats so oppose paycheck protection, they call it a "poison pill" that would cause them vote against the McCain-Feingold bill. Hatch's proposal would require unions to get permission from their members before spending money on political activity. Union members who object would be entitled to a partial refund of their dues.

It would also apply to corporations, which would be required to get permission from their shareholders before spending money on political activity. And both unions and corporations would be required to disclose all political expenditures to their members and shareholders.


KARL: In another vote earlier today, the Senate voted to allow candidates the cheapest possible airtime, to force broadcasters to sell candidates their airtime at the cheapest possible price during campaigns. This was a measure that was supported by saying that candidates are being gouged by television stations and cable companies. Critics of the amendment said that this was a million dollar give-away to political candidates, but it passed by a comfortable margin -- Judy.

WOODRUFF: All right, Jon Karl. And we're told the voting, as we said a moment ago, voting under way right now on that so-called "paycheck protection" amendment.

As of right now, the vote to table, which would send this back to committee, the paycheck protection amendment: 47 to table it, which would, in effect, kill that amendment, which President Bush has said he would like to see part of campaign finance reform.

Well, one of the wealthiest men in this country is expressing some strong views on the issue of campaign finance reform.

Warren Buffett, chairman of Berkshire Hathaway, joins us now on INSIDE POLITICS.

Mr. Buffett, thank you for being with us.


WOODRUFF: Well, your op-ed piece today in "The Washington Post" caught the attention of just about everyone I know, Mr. Buffett. You start out by talking about a senator who some years back offered -- said, if you give me $10 million, I'll do what?

BUFFETT: He said -- it was in jest. But fund raising, a senator, a friend of mine, said, if you give -- give $10 million, you can get the colors of the American flag changed. Lately, just a few weeks ago, when I pointed out the increasing costs of political contributions as sort of a market economy takes effect, the same senator called me up and he said: "Warren, you're right. It is getting more expensive." He says," It'll now cost you 20 million and you only get one color changed."

WOODRUFF: It's a great story, Mr. Buffett. Can you tell us who it is?

BUFFETT: Well, you know, I'm from Nebraska, but you'll have to -- you'll have to explore a little bit on that one.


WOODRUFF: All right. You've just given us a clue. Will you at least tell us what party he's in?

BUFFETT: No, he's a -- he's a very good friend of mine who's no longer in the Senate.

WOODRUFF: OK, all right. Well, that helps a lot.

You also mentioned in this piece -- before I ask you about -- you mentioned personal knowledge of several $1 million requests for contributions to be independent committees that would have ended up, clearly, with a candidate.

BUFFETT: That's -- that's true. And in certain cases, the candidate himself or herself -- I won't give anything away -- but requested that sort of money with the promise that the -- it would be handled in such a way that the donor's identity never had to be revealed. And you know, that just goes 180 degrees against what Congress believes in, what the American people believe in, the kind of laws we've actually had enacted in the past. But the independent committee makes that possible.

So if anybody out there wants to give a million dollars to some candidate in a senatorial election, their local chairman will tell them how to do it and make sure that nobody knows about it.

WOODRUFF: Why is it so important to get -- to change the law so that this kind of thing can't happen again?

BUFFETT: Well, the interesting thing is we have the law so that it shouldn't happen in the first place. I mean, the 1907 Congress said that corporations should not give to federal campaigns. In 1947, they said the same thing to labor unions. In 1974, they put what they thought were strict limits on what individuals could give. And then there was a decision of the Federal Elections Commission -- I believe in 1978 -- that opened the door to soft money and later independent committees.

So what Congress in a democratic manner said should be illegal people have figured out clever ways to do -- to do quite legally, but clearly subverting the intention of Congress in passing those earlier laws.

WOODRUFF: Now, you said to me before the interview you wanted to help John McCain here in any way that you could. You are supporting stopping corporate and labor soft money, but you still would go along with individual contributions of soft money?

BUFFETT: No. No, I would not go along with individual contributions of soft money. I would favor raising the limit a bit, because it's been -- whatever -- more than 25 years and inflation has happened and so on. But I think soft money should be totally out of the picture. It subverts the democratic process, because, you know, next to votes, politicians like campaign money second.

And of course, campaign money is a vehicle to increase their vote. I mean, it isn't the money itself. It's what it does for them in getting elected.

WOODRUFF: What do you say, Warren Buffett, to those who argue on the other side that money is really a healthy part of the process, that it's the way people who care about issues can express themselves in our modern-day political world? It pays for voter registration, voter mobilization. It pays for the candidate to talk about their positions.

BUFFETT: Well, I have no objection to money being in politics. I just don't think that people ought to vote according to how much money they have, and I don't think they ought to be able to influence votes according to how much money they have. So I -- there will be plenty of money in the political system if the -- if the individual contribution limit is raised somewhat. And frankly, I also favor some amount of free TV time for candidates. I mean, I do think that TV advertising is -- it's an enormous cost. Broadcasters get their licenses from the federal government. It was a huge, huge windfall to the people who received those licenses.

And to give back a few minutes of time to help our democratic process work better I think -- I think would make sense.

WOODRUFF: Warren Buffett, you said before agreeing to do this interview no questions on the economy and the markets. But I've got to try. Are you worried at all about the state of the economy in this country?

BUFFETT: Well, I admire you for trying, Judy, but -- you're not old enough to remember, but Hubert Humphrey many years ago said he never talked about father on Mother's Day.


So let's make campaign finance reform Mother's Day.

WOODRUFF: Well, let me -- let me go back to a question then finally. The argument that it's unconstitutional to put these kinds of limits on contributions to politics, that the Constitution says -- the amendment that protects free speech protects this kind of giving.

BUFFETT: Well, free speech isn't so free anymore. I mean, you know, the idea that you have a megaphone and a soap box, and you're achieving free speech is sort of ridiculous. It's a little bit like Dolly Parton said some time back. She said, "It costs a lot of money to look this cheap." And it costs...


... a lot of money to get listened to in this -- in this country.

You know, we have 280 million people and you -- you need money to be listened to, or you need free TV, one of the -- one of the two.

But I would not only like to see people have the ability to speak freely, but also the ability, frankly, to get their message listened to. And -- and money makes that field very uneven. Nothing I'm for in any way curbs free speech.

WOODRUFF: All right. Well, Warren Buffett, we appreciate your joining us to talk about campaign finance reform. And anytime you want to talk about the economy, we'll be glad to have you back to talk about that as well.

BUFFETT: OK. Well, when Greenspan talks to that class at Columbia, I'll be back.


WOODRUFF: OK, great. Thank you very much.

BUFFETT: Thank you.

WOODRUFF: We do appreciate it. And I just want to let our audience know that the Senate has voted to table the Hatch amendment, the so-called "paycheck protection amendment." That has gone down to defeat.

The debate over U.S. energy policy is heating up as well here in Washington. When we return, as darkness falls on California, some ask if the power crisis is real or if the problem is being exploited to sell a political solution.


WOODRUFF: Today marked the first time in three days that California managed to avoid rolling blackouts. But in this case, it was cooler weather, not new political policy, that made the difference.

The power troubles in California have become a major issue here in Washington, and senior political correspondent Candy Crowley reports the blackouts and shortages are now major elements in a classic political power play.


CROWLEY (voice-over): Power problems in California have led, inevitably, to power play in Washington.

SEN. LARRY CRAIG (R), IDAHO: Everybody is focused on California at this moment. California is dragging the whole Pacific Northwest down with it.

CROWLEY: From congressional committee rooms to the Oval Office, energy -- the stuff that fuels the American way of life -- is a top agenda item. Everything about the energy question is grist for the political mill, including whether the crisis the administration predicts has been ginned up to help sell the controversial parts of the Bush energy program.

SEN. JOHN KERRY (D), MASSACHUSETTS: I think you're hearing so much of this to try to drive drilling in the United States, particularly in Alaska, in the wildlife refuge.

CROWLEY: John Kerry thinks there'll only be an energy crisis if the Bush administration fails to act responsibly.

George Bush's energy secretary thinks there's an energy crisis because the Clinton administration failed to act responsibly.

SPENCER ABRAHAM, ENERGY SECRETARY: My predecessor, as you'll recall, even said that the previous administration, it had been caught napping by these challenges. So I think that we went through too long a period of not addressing them effectively.

CROWLEY: California's darkened businesses and eye-popping winter heating bills have clearly gotten the nation's attention as the Bush administration prepares its energy package. But Democrats argue Bush is trying to sell a long-term plan as a short-term cure.

KERRY: They've used the most desperate argument of all, which is the California crisis, when only 1 percent of California electricity is produced by oil, and no oil will come out of Alaska for 10 years. So I think that shows the bankruptcy really of the current set of proposals.

CROWLEY: While on the subject of politics, it's relevant to note that any number of people believe John Kerry wants to run for president in 2004.

In the end, the energy debate is shaping up as the age-old political conflict: environmental concerns versus consumer demand -- what gives when something has got to give.

CRAIG: What would you suggest we do right now to get relief?

GUY CARUSO, CENTER FOR STRATEGIC INTERNATIONAL STUDIES: I think we need to do something to stimulate the production of electricity, and to remove obstacles and bottlenecks to...

CRAIG: That may mean cutting temporarily some environmental oversights.

CARUSO: It may, yeah.

CRAIG: Are people ready to support that? Or do they have to go in the dark for a while in order to accept it?


CROWLEY (on camera): The White House says there's a lot more to the Bush energy plan than a call for exploration in the Alaskan wilderness. A comprehensive package is expected in the next month or two. Democrats, eager to get their markers on the table, will offer the broad outlines of their plan Thursday.

Candy Crowley, CNN, Washington.


WOODRUFF: The president plays it for laughs. But was the joke on Vice President Cheney? That story next on INSIDE POLITICS.



WOODRUFF: ... at 8:00 p.m. Eastern.

I'm Judy Woodruff. "MONEYLINE" is next.



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