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White House Energy Policy Nears Completion; Vice President Praises Conservation but Insists More Supply Is Needed

Aired May 8, 2001 - 17:15   ET


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


RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: They haven't built any electric power plants in the last 10 years in California, and today they've got rolling blackouts because they don't have enough electricity.


ANNOUNCER: Vice President Cheney says conservation is good, but not good enough. As the new White House energy policy nears completion, we will have an extended interview with the vice president.


UNIDENTIFIED MALE: The thermostats will be at 78. We're going to turn every other light off. And we'll show those Texans that we just don't need as much of their stuff.


ANNOUNCER: As the lights grow dim in California, the golden state's power czar says the administration's energy plans are off base. Plus...


UNIDENTIFIED MALE (singing): Oh, come to the father, through Jesus's son.


ANNOUNCER: A program that gets results -- in life, and in Washington. We take a insider's tour of the Dream Academy.

Now Judy Woodruff takes you INSIDE POLITICS.

FRANK SESNO, CNN ANCHOR: Hello, and welcome to INSIDE POLITICS. I'm Frank Sesno. In a few moments, Judy Woodruff will join us live from California, where she has been on assignment -- ground zero in the growing national debate over energy policy in this country.

As the "Golden State" faces a summer of possible rolling blackouts, and drivers nationwide grapple with soaring gas prices, the pressure grows for Washington to take action. Next week, the White House will unveil the findings of its energy task force, led by Vice President Dick Cheney. For an early preview of the report, we turn to CNN senior White House correspondent, John King, who spoke extensively with the vice president earlier today about this subject -- John.

JOHN KING, CNN CORRESPONDENT: And Frank, from that chat it is clear that the long-term debate, the political debate over the administration's emerging long-term energy strategy, more and more being shaped by the short-term focus on the California power crisis, on rising gas prices across the United States. Let's take California first: The governor out there, Gray Davis, complaining that Washington could do more. The vice president has a very different take. He says California is exhibit A, if you will, as the president prepares to make the case that conservation alone is not enough, and as the report will argue, that this country needs not to only drill for more oil, drill for more natural gas and mine more coal, but also build at least 1,300 more power plants over the next two decades.


DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: But what's happened in California, I would argue, is they've taken the -- the route of saying, well, we can conserve our way out of the problem. All we have to do is conserve. We don't have to produce any more power. So, they haven't built any electric power plants in the last 10 years in California. And today, they've got rolling blackouts, because they don't have enough electricity, they've got rising prices, they've got a whole complex of problems that are caused by relying only on conservation and not doing anything about the supply-side of the equation.


KING: So a little sparring between Washington and Sacramento, some sparring here in Washington, as well. This administration saying there are no quick fixes as gas prices go up at the pumps across the United States. That answer doesn't please many in the Congress. Among them, the Senate Democratic leader Tom Daschle, who says perhaps Congress should investigate why prices are on the rise.


SEN. TOM DASCHLE (D-SD), MINORITY LEADER: I think that we need a bipartisan investigation on the rise in gas prices immediately. Something's awry. Something's going wrong. Something has to be asked here. We have to find out what is behind all of this.

I am not satisfied at all with what the administration is doing with regard to gas prices. I think they've ignored it so far.

(END VIDEO CLIP) KING: The administration answer is that we need to increase supplies, and unlike during the presidential campaign, when both then- Governor Bush and Dick Cheney criticized the Clinton administration, saying the president was not exerting enough influence on the OPEC oil cartel, this time around, now that this new Republican administration is in charge and can be held accountable for the country's energy policy, Mr. Cheney says the problem is not OPEC. The problem is here at home.


CHENEY: We can't blame the problem on OPEC in terms of current gasoline prices. Their production levels and the price of oil through the spring has been fairly label -- stable. In fact, the biggest problem comes back to this refinery capacity. Yeah, by our own choice, we have not built new refineries in this country for over 25 years. And the net result of that is that no matter what happens to the international oil price, it's the lack of refining capacity that drives those gasoline prices higher.


KING: Now, a number of very controversial proposals in that report due out next week: more drilling in federal lands that some say should be off limits because of environmental concerns, more use of coal -- some say that's bad for the environment. More nuclear power, as well. No nuclear plants built in this country since 1973. Mr. Cheney says there should be more.

And as the administration goes about preparing to release this report and to carry on the political debate, they view the short-term focus on California and on gas prices as both a blessing and perhaps a curse. The blessing, to the extent that they think it will help the president make the case this country does have an energy problem -- potentially troubling politically, though, Frank, if consumers keep hearing all this talk and start looking for immediate solutions.

SENSO: All right, John king at the White House, and later on INSIDE POLITICS here, we'll replay John's interview -- his full interview with the vice president. You can hear those exchanges and a lot more.

And tonight, in the "CROSSFIRE," if the government can't do anything about the prices at the pump, who can? That's the question two members of the House Energy Committee debate: conservation versus more refineries. "CROSSFIRE" tonight at 7:30 Eastern Time.

As you heard, California, ground zero, and perhaps no state has a greater interest in the White House energy policy than the "Golden State." So far, at least, state officials are not pleased with what they are hearing from Washington.

Judy Woodruff is in the Golden State right now. She joins us from Los Angeles. Judy, something of a surprise? Not really.

JUDY WOODRUFF, CNN ANCHOR: Well, we do have a call into the governor's office right now, Frank. So far, no call back. We don't know exactly what they are saying. But yes, it's safe to say they're not pleased what they're hearing out of the White House today.

In terms of the energy situation in the state overall, we have no reports right now of blackouts so far. But energy officials here are warning that there could be more this afternoon after yesterday's outages.

And what makes the blackouts so unsettling is that the hottest months of the year are not even here yet.

Now yesterday, I sat down and spoke to Governor Gray Davis' new energy adviser, a man named David Freeman. At age 75, he is one of the most experienced, most outspoken energy administrators in the country. And he is increasingly critical of what he's hearing from the Bush administration.

With Californians bracing for a long, hot summer, I started by asking David Freeman, how bad will it be?


DAVID FREEMAN, CALIFORNIA GOVERNOR'S CHIEF ENERGY ADVISER: Oh, I don't think that Western civilization is going to sweat to death. It'll be uncomfortable and people will be inconvenienced. But we have a marvelous set of programs to reward conservation and to punish people who use too much financially, so that the rates will get very, very high if you use too much.

This is the summer we're going to prove that the people of California have market power. We're just not going to use as much of the stuff. The thermostats will be at 78. We're going to turn every other light off and we'll show those Texans that we just don't need as much of their stuff.

WOODRUFF (voice-over): "Those Texans" include President George W. Bush and Vice President Dick Cheney. There's a widespread belief among Californian Democrats that energy interests in Texas and elsewhere have profited at the expense of this state. Governor Gray Davis touched on it in a quick interview after announcing his latest conservation program.

GOV. GRAY DAVIS (D), CALIFORNIA: The product isn't any better. We're not using any more electrons. It's just Texas and Southwest energy companies charging outrageous prices to our utilities that eventually get passed on to our customers.

WOODRUFF: David Freeman was more direct.

FREEMAN: I've lived in Austin, so I know how folks down there think and talk. They love to drill. I mean, that's what gives them their joys: Drilling in all the most beautiful places seems to be what they like to do because they think that's where the oil is.

You're wimping out unless you're driving an SUV, for godsakes. I mean, their idea is that the more you use, the more we make. I mean money, that is.

WOODRUFF (on camera): But the vice president, the president are talking as if the answer in the long run is going to be -- and even in the short run -- is going to be more production.

FREEMAN: Well, we've tried that for the last 30 years and our finding rate just doesn't keep up with the growth in consumption at all. The only way we really gained on the problem is when we improved the mileage of cars, and we ought to continue to do that. We need to electrify our transportation. There is life after oil, Judy.

And if the president of the United States wanted to be president of all the people and present an energy program with balanced supply and demand, then I'd give him a suggestion free of charge. If he would combine raising the CAFE standards, the fuel efficiency standards, to 40...

WOODRUFF: For automobiles.

FREEMAN: For automobiles and SUVs to 40 miles per gallon, and combine that with drilling in the ANWR, he'd probably get 80 votes in the Senate. But -- but Mr. Card used to represent the automobile industry. They're not going to propose something that Detroit doesn't want, and so if he's going to be just the president of the oil companies, we're going to have an interesting debate over energy policy.

WOODRUFF: But aren't there restrictions on what they can do with regard to fuel efficiency standards because of what Congress has done? Isn't Congress what's standing between here and there?

FREEMAN: I was working for the Senate Commerce Committee when we passed that law. Congress passed the law that got us from eight to 22. No one has suggested, even my good friends Bill Clinton and Al Gore didn't have the courage to suggest improving the CAFE standards. And all I'm saying, if we're going to have a balanced energy policy, let's have a very vigorous conservation measure along with the drilling, and maybe people would then respect the judgment that we need to get off of foreign oil, which we do.

WOODRUFF: As you watch what's going on in Washington and they make preparations to announce this energy policy a week from Thursday on the 17th of May, do you feel that they're in sync with what's going on here in California? Have they consulted with you and others in California, as far as you know?

FREEMAN: The feeling we have out here is that the administration has sort of told us to take a flying leap in a rolling donut. In other words, they -- their attitude seems to be that you're in trouble and you need to figure out how to get out of it yourself.

Well, that's OK, but we have the feeling, those of us out here in the business, and I think most consumers, that we are going through the perfect electrical storm, and the people in Washington are talking about an energy policy: some vague term that has no meaning out here. WOODRUFF (voice-over): Freeman is blunt. That is one of the reasons the governor hired him, even though he once said, "Davis was about as exciting as a blank wall."

DAVIS: He's wily and cagey. He's just what these energy companies need. They respect him. He will not get taken.

WOODRUFF: That and one of the most impressive resumes in the energy business: head of the Tennessee Valley Authority, the New York Power Authority, and until last month, the Los Angeles Department of Water and Power. His performance in L.A. was the eye-opener. While Northern California suffered rolling blackouts, L.A., on a separate power grid, enjoyed a surplus.

FREEMAN: And it has plenty of power. There is an oasis of light in California called Los Angeles.

WOODRUFF (on camera): Why did you take this job at the state level? Weren't you happy doing what you were doing here in Los Angeles?

FREEMAN: You know, I'm a -- it sounds corny. I'm a son of immigrants and a public servant. And this is my life's work. How could I turn it down? Besides I have a secret to my success: I always join an outfit where they're at rock bottom and I just take the bounce up.



WOODRUFF: That's David Freeman, chief energy adviser to Governor Davis, and I should just tell you, Frank, that in the minutes since this report's been on the air, we have now heard back from Governor Gray Davis' office in reaction to what Vice President Cheney had to say in that interview with John King today.

They say, and I'm quoting, they say: "The vice president is just misinformed," and the governor's spokesman pointing out that after 12 years of building no power plants in the state of California, they now have eight under construction and another five approved.

And as for David Freeman and the governor, they say that this month and June will likely be the toughest in California, with increasing supply coming on line by mid-summer. They also say they're anticipating some smaller-scale problems next summer, but they believe in the long-term, Californians will change their habits and the power crunch will recede.

And Frank, if I may, I would just like to add that on a separate subject today, I had an opportunity to meet with former first lady Nancy Reagan, and just thought our viewers would be interested to know that just a matter of a few months after he took a fall and broke his hip, that he is up and walking around. He did have surgery, a pin was put in his hip, but he is up and walking around, and that's a little piece of good news about the former president, even as he continues his courageous battle with Alzheimer's -- Frank.

SESNO: Judy Woodruff, very interesting, from California.

And ahead on INSIDE POLITICS, the looming Senate showdown over judicial nominees. We'll hear from two combatants, Senators Hatch and Leahy.


SESNO: A looming struggle over federal judgeships threatens to poison relations in the United States Senate. Tomorrow, President Bush is expected to announce about a dozen nominees in an effort to start filling the scores of vacant seats on the federal bench. But some Democrats may seek payback for what Republicans did to Bill Clinton's nominees.

CNN's Jonathan Karl join us now with the latest -- Jonathan.

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, Frank, Democrats on the Judiciary Committee have been threatening to blow up this whole process, stop it dead in its tracks unless they got a promise from Judiciary Chairman Orrin Hatch that home-state senators would have veto power over judicial nominations in their home states.

Well, that has been averted. That showdown has been averted because Senator Hatch has written a letter to the Judiciary Committee saying that he still does not agree that home-state senator should have the veto power the Democrats want, but he says, quote, in this letter: "This policy requires substantial deference to the opinions of individual senators from the home states of judicial nominees."

So, when these nominations come up tomorrow, the proceedings will go forward. The White House has tried to avert a showdown over this by sending up primarily only judicial nominees from the states of home-state senators -- from the states where the home-state senators have signed off on these nominations.

So, there will be the beginning of a battle. This is only the first batch, only about 10 to 12 names coming up tomorrow. Frank, as you know, there are nearly 100 vacancies on the federal court.

SESNO: And such issues to be determined by federal judges, ranging from abortion right on through criminal contact. We're going to take a quick break. When come back, how is this dispute over federal judgeships playing in the United States Senate, where nerves have been rubbed very raw. We'll be right back.


SESNO: Let's talk some more about the judicial nominations and the ongoing Senate debate. We're joined now by Senator Orrin Hatch, he's chairman of the Senate Judiciary Committee, and Senator Patrick Leahy, the ranking Democrat on the committee.

Senator Hatch, first to you. We heard from Jonathan Karl a few moments ago about the letter that you have written where you hope to turn the temperature down on this thing. In plain English, so that people who care about what's happening in their judicial branch understand, what have you done and what's happening with all of these disputed nominations?

SEN. ORRIN HATCH (R), UTAH: First of all, I think if Pat Leahy and I, who is the Democrat leader on the committee, if we -- I think if it's just up to us, we'll get this thing resolved. We have always gotten along well. We've always been able to resolve conflicts that have arisen, and I have a lot of respect for him.

But it's gotten into a larger political context, and it's really difficult for either of us or both of us together to control, but we're trying. So, I wrote this letter, trying to say, look, I will treat judges exactly the same as I did during the last six years that I have been chairman.

SESNO: Meaning exactly what?

HATCH: Well, We will abide by the Biden-Kennedy rule, and if there is not consultation, then it will take two blue slips to, you know -- two positive blue slips to bring a judge up.

SESNO: Meaning both senators have to agree from...

HATCH: Both senators would have to agree. They would not have a right to veto, but if both sent in negative blue slips, that would probably be it.

SESNO: Senator Leahy, your reaction?

SEN. PATRICK LEAHY (D), VERMONT: Well, there has been a great deal of rhetoric, and I'd be happy to go just with the way it was when President Clinton was there, and take the exact same position the Republicans took toward President Clinton, which is basically, if the home-state senator -- either or -- either one or two of the home-state senators didn't want the judge, then-President Clinton did not get the judge.

If it was fair for him, of course, it's fair for President bush. But I think what's going to happen -- we can have a lot of rhetoric and it gets almost like arcane, insider baseball. The final thing is this: Democrats are going to have to be consulted.

If a home-state senator does not want a particular person from his or her state, that person, as a practical matter, is not going to -- is not going to be confirmed. That doesn't mean the senators are necessarily going to pick the judge.

The president, after all, is the one who nominates the person. But they can, as a practical matter, especially in a divided Senate, they can stop somebody going forward. In some ways, this helps, because it goes back to the constitution. This way, you never have a strong lurch to the left or a strong lurch to the right in the judiciary. It brings about a balance.

SESNO: Senator Hatch, A: is this all about politics? And B: what will happen when President Bush sends up his several hundred nominations shortly?

HATCH: I think most of it is about politics. Frankly, you know, there are about 18 states with two Democrat senators. It's hardly going to the privilege of the president to put right wingers -- to use Tom Daschle's phrase -- on any district court. There are another 14 states with at least one Democrat.

But we are not going to allow any single senator, Republican or Democrat, to veto a presidential nominee. Pat is right: for all practical purposes, any negative return of a (UNINTELLIGIBLE), saying they don't want that judge from their home state, will be given tremendous weight, no question about it. We always have and we always will.

But we cannot agree to a system whereby any single senator can veto a presidential nomination. There's nothing in the Constitution that permits that. The president has the right to select these judges and we have the right to advise and consent, but that advise and consent comes through voting.

SESNO: From the full Senate.

HATCH: Yes. Let me just say one other thing: Pat knows that we treated Clinton's judges very well. Reagan was the all-time confirming champion with 382 judges in his eight years. Clinton had 377 in his eight years. And Reagan had a Republican Senate and Congress during six of his eight years.

So, to make a long story short, Clinton hasn't been hurt. As a matter of fact, if it hadn't been for Democrat holds -- in other words, stopping their own judges -- Clinton would have had three more total judges than Ronald Reagan...

SESNO: Senator Leahy, you are shaking your head, Senator Leahy, we are almost out of time here. I'll give you about 15 seconds to respond.

LEAHY: There were a lot more vacancies in the federal bunch at the end of President Clinton's term...

HATCH: That's not true: 41 vacancies. 41 versus 53 for Bush.

LEAHY: ...then there were at the end of President Reagan's -- he said President Reagan was the all-time champion. Far less with a Democratic Senate, he had far less vacancies at the end of his term than President Clinton did.

But the point reminds this: there's not going to be a sudden lurch in the federal judiciary. And he said there would be a sudden, huge ideological litmus test, the Democrats are not going to allow that to happen any more than the Republicans will allow it to happen to lurch to the other side.


HATCH: Can I say one thing, Frank? SESNO: I am going to have to cut you off, here.


SESNO: We will come back to this, I promise, such as life in the 50-50 Senate. But Senator Hatch, I want you to stick around; we will shift gears rather dramatically and turn to something we think many of you and your colleagues will agree on, up next on INSIDE POLITICS, as we say thanks to Patrick Leahy.

Helping kids who others might leave behind and bringing together, political opposites. We will look at the achievements of Washington's dream academy.


SESNO: So often, Washington is about the clash of ideas and ideology. The rough-and-tumble of the political arena. We report it every day.

But sometimes the mold is broken and you find rare agreements surrounding a person, place or thing. And that's what this next story is about: a passionate person doing a remarkable thing in a place needing both. And in the process, bringing together some unlikely allies.


(SINGING) Praise the Lord! Praise the Lord! Let the Earth hear His voice.

SESNO (voice-over): When Wintley Phipps leads his church in prayer, it's his voice you notice first, a voice that's taken him far beyond his congregation in suburban Maryland.

He's performed at the White House for Presidents Clinton and Bush.

He's sung for Mother Theresa.

This kind of recognition might be enough for many. Not Wintley Phipps.

He's using the power of his voice to make a difference for a group with hardly any voice at all: the children of prisoners.

It all sprang from a chance encounter with a fellow train passenger and prison minister.

WINTLEY PHIPPS, PRESIDENT, DREAM ACADEMY: It was Chuck Colson of Watergate fame. That started a friendship over 20 years ago, and he began taking me into the prisons with him to sing, and I was amazed at what I saw.

SESNO (voice-over): Most alarming, Phipps says, was the rate at which the children of prisoners would end up in the same place. PHIPPS: We realized we had to do something, because these were the children who were following their parents, and so, this vision was born to build the U.S. Dream Academy.

SESNO (voice-over): A program that provides tutoring and mentoring to a handful of the more than 2 million children in the United States who have a father, a mother or who have a close relative in jail.

(on camera): How does it work? What do you actually do with the kids?

PHIPPS: We figure out where their academic deficiencies are, and then we build a prescriptive curriculum tailored to each individual child. We call our program a combination of high-tech and high-touch, because just the computers themselves are not going to transform the lives of those kids. The most important component of our program really are the caring, loving adults who surround those kids.

SESNO (voice-over): With the help of a $100,000-a-year grant from the Department Of Labor, the Dream Academy currently reaches 200 children in Washington, D.C.

(on camera): Do you ever feel that it's just such a tiny drop in the bucket as to not make the difference that you want to make?

PHIPPS: It is a drop in the bucket, just like the man walking along the seashore throwing starfish back into the ocean. And someone said, "Why are you doing that? It's not going to make a difference -- these thousands of starfish."

And he picks up another starfish and threw it into the ocean and said, "It made a difference to this one."

SESNO (voice-over): Phipps wants to expand his dream academy, and his unique story and personality have led him down the corridors of power.

PHIPPS: I have been knocking on Republican doors and Democrat doors, because, what I found out is, that children in need don't no party, don't no party affiliation.

SESNO (voice-over): On this, conservatives and liberals seem to agree. Orrin Hatch and Hillary Clinton, for example. They've raised over one and a half million dollars.

HATCH: This is a truly bipartisan effort, and Mrs. Clinton and I have joined arms together on this one, and we are going -- before it's all said and done, we will do a lot of good.

SESNO: How would you explain this odd couple?


PHIPPS: Well, I think the first thing is that the music was the entering wedge to both their lives for me. SESNO (voice-over): Phipps' own success story started with a dream.

PHIPPS: I was born to a troubled home, and I would dream that I was flying to far away places in the world, and meeting important people.

SESNO (voice-over): He has done both, and more, and he believes his Academy can do the same for others. And always, there is faith and song. One song in particular, Mr. Phipps says, has power over prisoners and presidents alike:

(SINGING) Amazing Grace, how sweet the sound.


SESNO: And Senator Hatch, Wintley Phipps, you're holding this fund-raiser for him this evening, co-sponsored with Hillary Rodham Clinton and many more.

HATCH: Well, that's right. In the House, we have Charlie Rangel, who is the ranking on the Ways and Means Committee; J.C. Watts, one of the Republican leaders; Sheila Jackson-Lee. Every senator in the United States Senate has co-sponsored and co-hosted this dinner tonight, and many members of the House.

We all love Wintley. He is just one of the greatest people on this Earth, and, you know, he's really making a difference in these kids' lives. I've been to a couple of these sites, and I've got to tell you, those kids would be lost if we don't find some way, like Wintley is doing, to reach their lives.

You know, between 65 and 85 percent of these kids who are children of prisoners, will ultimately wind up in criminal lives themselves unless we do something, and this is one of the programs, a faith-based program, if you will, that will make the difference.

SESNO: Orrin Hatch, we appreciate your time. Thanks very much. Wintley Phipps and that fund-raiser this evening.

Straight ahead, conservation versus exploration and other standoffs in the debate over energy.


CHENEY: So, again, the old stereotypes need to be set aside, and we need to calm down a little bit and get everybody down off the ceiling and sit down and have an informed and intelligent debate over where we ought to go with energy policy.


SESNO: John King's conversation with Vice President Dick Cheney next.

(COMMERCIAL BREAK) SESNO: Earlier today, CNN senior White House correspondent John King had an extended interview with Vice President Dick Cheney. The exclusive interview was held next door to the White House in the Eisenhower Executive Office Building, and covered topics ranging from the economy to the threat of domestic terrorism to Cheney's personal health.

Most of the discussion centered on the White House energy policies and the work of an energy task force led by the vice president.


KING: Your task force is finished its work. The president will unveil the report next week and the administration tries to sell a new long-term energy strategy for this country. Let's focus first on the short term. Consumers pulling their car up to the pump today are paying as much as $2.00 or more, $2.64 I just saw one consumer saying she paid in California over the weekend. Anything the administration can do in the short term to help those people, the American people as they prepare for spring and summer vacation, as they drive to work every day?

CHENEY: Well, you have to ask your self how it is we got to this state, John. Why do we have rapidly rising gasoline prices today? And a lot of that has to do with the fact that we have not had coherent national energy policy for many years. We don't have the refineries, for example. We have not built a new refinery in this country for over 20 years. So the market is very, very tight for gasoline. And we've added a lot of requirements because we want clean air. The combination of those things is what in fact is leading the price spikes this summer for gasoline.

The solution for us is to try to deal with these issues on a long-term basis so that we get more supply. That's the key to having the adequate prices as well.

KING: One way to get more supply obviously is more domestic exploration and production. We'll discuss that in a minute.

During the presidential campaign, yourself and then-Governor Bush were quite critical of the prior administration. I want to read you a quote from then-Governor Bush, January, 2000. "What I think the president ought to do," President Clinton in that case, "what I think the president ought to do, is he ought to get on the phone with the OPEC cartel and say we expect you to open your spigots." OPEC has actually cut production during this administration, citing the downturn in the world economy.


KING: Are you learning, 100-plus days, that it's easier during a campaign to say some things than to actually do them when you're in the government?

CHENEY: Well, no, we've worked with OPEC. I met with the Saudi oil minister just last week, as a matter of fact, he came through town, Mr. Ali Nuaimi. The fact is today we can't blame the problem on OPEC in terms of current gasoline prices. Their production levels and the price of oil through the spring has been fairly stable.

In fact, the biggest problem comes back to this refinery capacity. Yet, by our own choice, we have not built new refineries in this country for over 25 years. And the net result of that is no matter what happens to the international oil price, it's the lack of refining capacity that drives those gasoline prices higher, not what happens in terms of the price fluctuations for crude.

KING: Well, let's talk about that infrastructure. It's a difficult word. You say we need to add 1,300 to 1,900 refineries in this country, power plants -- I'm sorry -- on the electricity side and then a number of refineries, well over a 20-year strategy. How do you get local governments to do that? And there's a term that's used often, NIMBY, an acronym in Washington, not in my backyard.

How you going to convince state and local governments to do this? And will this report call for, essentially, the power of eminent domain? When the state wants to build a highway, it says, "We're taking your house." When the state wants to build a new factory, it says, "We're taking your house." Is the federal government prepared to say, "We will take your house, because we need to build new power transmission lines and new gas pipelines."

CHENEY: Well, the federal government already has the authority, eminent domain authority, with respect to gas pipelines; FERC has that authority. The issue is whether or not we should have the same authority on electrical transmission lines, that's never been granted previously. That's one of the issues we've looked at. We'll have a recommendation when we release the report next week.

KING: You have seem to hint that you think you need that authority to get this done. And you have met with a number of people who have said, "How can we do this back home? We need your help. You need to cover us if we are to do this."

CHENEY: John, what I'm trying to do here is be forthcoming as I can, but save some of the specific recommendations for when we actually release the report.

But let's talk about a couple of those subjects you've touched on there. You know, we're going to get a lot from conservation. We've got a great track record, for example, on conservation and increased efficiency over the years.

If you go back to 1973, our economy has increased five times over, 126 percent. Our energy use increased 26 percent. We've gotten to be much, more efficient consumers of energy than ever before. Our technology's gotten better, and will get even better in the future. We'll get a lot of savings going forward from conservation and increased efficiency.

Bottom line, though, is, we can't close the gap all the way to (UNINTELLIGIBLE) the demand, unless we provide additional supplies. And that means additional supplies of electric power, because we think we will need a minimum of 1,300 new power plants over the next 20 years. We'll need more natural gas. While those plants will be gas- fired, we're going to need more coal. We're going to need, possibly, to go back to nuclear again, that's 20 percent of our electric capacity today. And we're going to find ways to get more gasoline for our transportation industry. So we need that combinations of things.

And what our report does, it focuses on conservation and efficiency and additional supplies that are required, at the same time trying to protect the environment.

KING: You've been in this town quite a bit. You understand this is not just a policy debate, but a political debate as well.

CHENEY: Political debate, that's right.

KING: And you received some criticism after your speech to the Associated Press meeting in Toronto where you said, quote, "Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy."

The governor of California said just last night on CNN he thinks you're missing the boat, that you don't understand the value and the potential of conservation.

As you answer the question, or respond to the governor, if you will, what specifically will this plan do, and does this administration want to do, in terms of conservation? And what kind of new money are we talking about?

CHENEY: Well, you'll find that most of the financial incentives that we recommend in the report go for conservation or renewables, for increased efficiencies. Now, we don't have a lot of new financial incentives in here to go out and produce more oil and gas, for example, so, we believe in conservation, we believe in renewables, we believe in wind and solar and all of those other technologies.

But the bottom line is, the so-called renewables only provide about 2 percent of our electric generating capacity today. If we triple that over the next 20 years, it will only be 6 percent. Conservation's important; we've got a major emphasis on conservation in our report.

But what's happened in California, I would argue is, they've taken the route of saying, "Well, we can conserve our way out of the problem. All we have to do is conserve; we don't have to produce any more power." So they haven't built any electric power plants in the last 10 years in California, and today they've got rolling blackouts, because they don't have enough electricity; they've got rising prices; they've got a whole complex of problems that are caused by relying only on conservation and not doing anything about the supply side of the equation.

KING: One way to conserve is to make cars more efficient. When now-Secretary of Energy Abraham was in the Senate from the state of Michigan, he was known as a friend of the auto industry -- makes sense, they're obviously a major force economically in his state.

The White House Chief of Staff Andy Card was once a lobbyist as well in this field, and one of the big questions is, will this report, or if not this report, will this administration, come July when the National Academy of Sciences makes new recommendations on what's called CAFE standards, fuel economy standards, is this administration prepared to say to Detroit, "You must improve the efficiency of your vehicles?"

And it's that, again, a policy and a political question. Many of the people who go to the polls and vote like their big SUVs.

CHENEY: Sure, well, the important thing to recognize here is all of these are tough political issues -- whether or not to drill in the Alaska National Wildlife Refuge and whether or not we ought to go nuclear on some of our power plants. These are difficult issues -- whether or not we ought to have a comprehensive energy policy.

If it was easy, the Clinton administration would have done it. They ducked it for eight years.

With respect to the CAFE standards, we think they have made a significant contribution over the years, improved the efficiency, if you will, the mileage of our automobiles.

Right now, there is legislative language that prohibits the Department of Transportation from going in and addressing the question of changing the standards for light trucks, SUVs among others.

There is a study underway by the National Academy of Sciences, will be completed this summer. What we'll recommend is taking a look at the results of that study and deciding whether or not we want to go forward with some change in the CAFE standards as well.

KING: So wait for the study, make no decision right now?

CHENEY: That's right. There will be -- As I say, it's a thorough study. It's done by one of the best institutions around, and we think it will give us useful information and lay the groundwork for whatever policy recommendation we want to make after that.

KING: Let me follow on that point something that Ari Fleischer, the White House press secretary, said yesterday that was quite interesting. He said, "One of the goals here is to make this country more efficient, to find new sources of energy, but in no way to put a cramp on the American way of life," that Americans are entitled to their SUVs. Americans are entitled to high computer use, going online. Balance that for you -- there's no sacrifice to be made here?

The country has what you would term an energy crisis or near crisis. There's no sacrifice to be made by the American people?

CHENEY: There are, clearly, places short term. For example, efforts are underway in California to try to reduce power consumption this summer. The president has ordered to the federal agencies out there to cut back at least 10 percent to try to provide some relief for the folks in California.

But long term, what we're talking about is meeting the needs of a growing economy for adequate supplies of energy, providing the kind of continued hope and optimism that the American people have that they'll be able to better themselves and their families and improve the circumstances of their children in the years ahead, that they can start a new business and succeed or take a new job and succeed or build a house they want.

The American lifestyle, basically, we think is very important. With technology, there's no reason why we can't do that or we can't build houses that are more energy efficient than ever before. We're learning how to do that all the time. The automobiles, for example, we drive today with all those silicon chips in them that, in effect, retune the engine between every firing of a spark plug.

There are lots of ways we can use technology to get better, more efficient, conserve more, get more mileage, if you will, out of our energy resources, without saying to the American people, you've got to live in the dark, turn out all the lights, don't enjoy the things that our modern society brings you. That shouldn't be necessary.


SESNO: And more of the interview ahead. Up next, the White House ties to the oil industry: A hindrance or a help? We'll be right back.


SESNO: Vice President Cheney and President Bush are both oil men, a fact opponents are likely to trumpet when Cheney unveils the White House energy plan next week. Here now, more of Cheney's conversation with CNN's John King.


During the break, we were having a little conversation. And you were saying one of the most difficult things that you try to sell a very controversial new energy policy, a number of very controversial items, is that this is an emotional debate, that the parties involved don't trust each other. Explain what you mean by that?

CHENEY: Well, there is a lot of history to some of these issues, of course. But it's almost as though nobody hears the other person on opposite sides of the argument. People hear what they want to hear. People deal with each other on the basis of stereotypes. Oh, you have got a background in the energy industry, that's all you care about. Or you're an environmentalist. Oh, you're a tree hugger. All you care about is preserving the environment and you don't want to meet people's legitimate needs for energy.

Somehow we've got to sort through all of that and get people to sit down and listen, because one of the things that I'm struck by continually as I dig through this is that technology often provides the answer for us, that we can in fact both have adequate supplies of energy and protect the environment, that we've got a great track record over the last several decades as a society in terms of doing a better job, using less energy, preserving the environment.

And in fact, even as our consumption of energy has arisen by some 47 percent over the last few years, the amount of pollution going into the atmosphere is down by 31 percent. So we are doing both. We are protecting the environment and producing more at the same time.

KING: You mentioned the emotions and the politics of this. Forgive me, but to play devil's advocate, in this town, if you wanted to be a political opponent of what you're about to do this is t-ball, excuse the metaphor. You do come from the energy industry yourself.

CHENEY: Right.

KING: The president before he was governor, owner of a baseball team was in the energy industry. A number of people throughout the administration have been involved either in the energy industry directly or relations with the automobile industry. From a political standpoint, pretty easy target, is it not? And how do you address that?

CHENEY: Well, address it first of all, we've got a lot of experienced people in the business. I think it's useful to have somebody who knows something about the energy business involved in the effort. But those aren't the only backgrounds that are represented. Christie Todd Whitman, who has had a major role, as the administrator of the Environmental Protection Agency -- governor, good strong environmental record as a governor. So when we sit down around the table to argue and debate over policy, all views are represented.

And the other thing is that just because somebody comes out of the energy industry doesn't necessarily make them quote, "anti- environment." I think what you'll find, what I found during my experience in the business is that the industry is rather split on nearly every issue. One of the leading environmental firms in the world today is British Petroleum, headed by John Browne, who spends a lot of time in energy on these kinds of concerns. We have a great many good folks in the energy industry who care a lot about the environment.

So again, the old stereotypes kind of need to be set aside and we need to calm down a little bit, get everybody down off the ceiling, and sit down and have an informed and intelligent debate over where we ought to go with energy policy.

KING: OK, we've had a lot of talk about the politics. Let's get in, move quickly through, some of the policy items. Coal, you say it's a great resource, the United States obviously has a great supply of coal; the environmentalists say it's a dirty source of energy, if you will, contributes to global warming.

One of the issues before your commission is will you go back to the prior interpretation of what the Environmental Protection Agency calls New Source Review, a term unknown to most Americans, but essentially a new standard put in place that if a coal plant modernized, it would become subject to new environmental standards.

Many in the industry believe in the latter years of the Clinton administration, they went too far, and that if you would go back simply to the old interpretation, you could fire up some new coal plants as much as 40,000 megawatts. That would be the equivalent of 40 new power plants.

Will you go back to the old interpretation? And then, if you could follow on with that, what specifically are you prepared to do to encourage more use of coal?

CHENEY: Well, on coal, it is very important. It provides 52 percent of our electricity today. You know, we've gotten a lot better at burning it cleanly and taking out the pollutants. We've got $2 billion in the budget for clean coal technology.

The question of New Source Review really flows out of the 1990 amendments to the Clean Air Act. And there, if you have a significant modification or upgrade on an existing plant, then you have to go through New Source Review, and you're required to put on the latest scrubber technology. If, on the other hand, it is sort of routine maintenance and upkeep and not a significant upgrade, then you don't have to go through that process.

The debate has arisen because in the last couple of years at EPA, they have toughened their enforcement standard. They haven't really changed the regulations, but there are a lot more cases pending where it's alleged people need to make the more comprehensive investment. A tough call, we're asking Christie Todd Whitman, the administrator of the EPA, to go review all of that, to draw on some of the other resources within the administration and to take a look at this charge that has been made that somehow it's being enforced now in a way that fundamentally inhibits the capacity of plants to make necessary upgrades and do routine maintenance. We don't have enough facts yet to be able to say it should or shouldn't be changed, but we are asking her to go back and review it.

KING: The critics say this is an administration that wants to burn more coal.

They say it's a follow-up to the administration saying it would not support the Kyoto Treaty on global warming. They, of course, believe coal burning contributes to greenhouse gases and global warming. And they would say this, that the president, then governor in the campaign, promised to limit CO2 emissions from power plants. Then he goes to the state of West Virginia, absent those four electoral votes -- I'm talking to Joe Lieberman today. The president goes to the state of West Virginia and he says he wants to convince many in the country who don't believe we can have a clean air policy and burn coal at the same time. Then shortly thereafter, he says he will not go ahead with that campaign pledge.

Again, politically, that's a pretty easy way to say this is about politics. This is not about policy.

CHENEY: Well, I think the mistake was the campaign pledge. Nobody paid much attention to it at the time. You guys didn't notice it, the press and, frankly, many of us in the campaign didn't either. It was a mistake, because we aren't in a position today to be able to do that in terms of sort of capping emissions, CO2 emissions. We can do a lot of work to clean up coal technologies, so we deal with other kinds of pollutants and he's committed to that: in the same speech made reference to controlling mercury and SO2 and NOX, for example, emissions, and we will go forward with the legislation in those areas.

One of the great ways to deal with greenhouse gases is nuclear power plants. And if we go forward in developing these 1,300 new plants we think we'll need over the next 20 years, some of those probably ought to be nuclear. We get 20 percent of our electricity today for nuclear power. There's no reason why we can't increase that. It is a safe technology and it doesn't emit any carbon dioxide at all. So assuming that we can go forward on that, that helps us with an environmental problem the same time that we meet our energy needs.

KING: Nineteen seventy-three since anyone in the industry has proposed a new nuclear power plant. My understanding is the report will promise to beef up the permitting staff so you can get through the applications faster. Anything else the administration is prepared to do to encourage the nuclear industry? And do you seriously believe that in the current political environment that the industry will step forward and say, let's build more nuclear plants in this country?

CHENEY: Well, I think the environment's changed for a couple of reasons. First of all, I find, as I get out and talking to people and also with members of Congress who are pretty sensitive politically, that there's much greater willingness today than there was a few years ago to look at the question of nuclear power as potential source for us for electricity.

The problems, up to now, have been driven in part by economics. All of the controversy that surrounded nuclear power in the past discouraged many utilities from making that investment. Now, with the gas prices rising as dramatically as they have, nuclear power looks like a pretty good alternative from an economic standpoint, if the permitting process is manageable and if we find a way to deal with the waste question.

KING: I was just going to raise that. The last administration had a very tough time, the state of Nevada and others trying to deal with the waste issue. Can you go forward without upfront saying, "Here's how we will deal with the waste issue?"

CHENEY: Well, it is a tough problem, and it's one of the things that we'll be working on as we go forward from this point. But just making the decision that we think nuclear power deserves another look, that it may offer us significant potential for the future, that does, in fact, then entail us going back and addressing the waste question.

And there have been steps taken. There have been sites studied. There's a lot of work that's been done here. There's more that needs to be done if we're actually going to resolve it. Right now we've got waste piling up at reactors all over the country. Eventually, there ought to be a permanent repository. The French do this very successfully and very safely in an environmentally sound, sane manner. We need to be able to do the same thing.

KING: Another lightning rod in your report will be exploring for oil and natural gas on federal lands -- the Arctic National Wildlife Refuge, the Lewis and Clark Forest and others. And your critics will say, "It's really not that much there if you look at the context of what we need for energy and you're going to put these pristine environments and endangered species at risk."

I know one of your experiences with the Halliburton Company is you believe there's the technology available to do this in an environmentally-friendly way. How so?

CHENEY: Well, if you look at our oil requirements, transportation sector is 100 percent dependent -- nearly 100 percent dependent today on oil. That's not likely to change in the next 20 years. There are interesting possibilities coming along -- hybrids, for example, that I think we're going to encourage and support in our recommendations, eventually, maybe fuel cells. But for the foreseeable future, it's going to be a gasoline- and diesel-powered transportation system. That means oil.

Over the last several years, since the 1970s, when we imported 36 percent of our oil, the amount of oil we get from overseas has steadily crept up until, we estimate in 20 years hence it'll be two- thirds of all our oil will be imported from overseas.

Now we do need to develop resources here at home. We're never going to be totally independent of those foreign sources, probably shouldn't try, but to the extent that we are dependent on those foreign sources, it's easy for a regime, such as Saddam Hussein and Iraq to hold us hostage, because they produce an important part of the world's oil reserves.

We think ANWR can be developed safely. ANWR is an area of 19 million acres in northern Alaska. We only need to disturb an area of about 2,000 acres on the surface in order to be able to develop the oil that we think is there. It's only a portion of the refuge that's of interest.

And today's modern technology, that would let you, for example, drill a well here at the White House -- one well -- and develop oil resources any place under the District of Columbia, offers the prospect of being able to go into a place like ANWR, develop the resource and leave an absolute minimal footprint behind. It does not require us to go to spoil 19 million acres of Alaska wilderness in order to get at that resource.

KING: One more on energy, and then I want to close on a few other issues quickly. The White House has ruled out any temporary cut in gas taxes to ease the burden at the pump right now. But if, as you send these proposal Capitol Hill, if the reaction back is, "Well, we need a compromise here to get some of this through, and we'll give you most of what you want here and most of what you want there, but we're up next year. You're not up until 2004. We have to face the voters in 2002," the members of Congress, if they say, "Let's suspend for a year, say, $.05 of the federal gas tax to help people at the pump," even if it's viewed as largely a symbolic gesture, would the administration be open to something like that if it were part of a larger comprehensive plan that were acceptable?

CHENEY: I haven't talked to the president about that, John. He'll have to make that call and decision if that were to come up, and I wouldn't want to signal one way or the other today.

The gas tax is going to build highways. Those are important considerations as well, too. So you'd have to balance off those competing demands to see whether or not it made sense.


SESNO: Up next, the vice president talks about his heart condition, when INSIDE POLITICS returns.


SESNO: While Vice President Cheney talked at length about energy today, he also discussed a number of other topics. Here again, John King, and Vice President Dick Cheney.


KING: You're wrapping up work on this task force. The administration will announce later today that you are going to take the lead in yet another task force. This one: How should the United States reconfigure, if at all, how the federal government deals with the threat of domestic terrorism?

There have been some recommendations of creating a new agency to do so. For now, the administration is saying, "No, we'll create a new office in FEMA, the emergency management agency," and that you will take a look at this.

What is the goal of that task force, and what do you view as the principal threat?

CHENEY: Well, the concern here is that one of our biggest threats as a nation is no longer, sort of, the conventional military attack against the United States but, rather, that it might come from other quarters. It could be domestic terrorism, but it may also be a terrorist organization overseas or even another state using weapons of mass destruction against the U.S., a hand-carried nuclear weapon or biological or chemical agents.

The threat to the continental United States and our infrastructure is changing and evolving. And we need to look at this whole area, oftentimes referred to as homeland defense.

The president's asked me to take on the responsibility of overseeing all of that, reviewing the plans that are out there today. Joe Allbaugh and the folks at FEMA specifically have the responsibility, and we're working very closely with them to figure out how we'd best respond to that kind of disaster of major proportion that in effect would be manmade or man-caused.

All of this will be pulled together then for the National Security Council chaired by the president to see if there are any changes in policy, recommendations and legislation that we want to make to the Congress to make sure we're teed up, if you will, and organized in a way to effectively deal with this new threat.

KING: Another issue facing the administration, the defense secretary, a position you once held, your friend Don Rumsfeld now conducting a review to decide top to bottom how to change military spending. But among the issues, should the Pentagon abandon the strategy it has had for some time, essentially to be prepared to fight two wars at once.

From your experience now as vice president and the lessons of the Persian Gulf War, during which you were the defense secretary, what is your take there? Should the United States abandon that posture? And what specifically do you see coming out of this review?

CHENEY: We got to the two war scenario, really, at the end of the Cold War. It was something that Colin Powell and I developed as we reconfigured our forces as the Soviet Union collapsed. And it was a way for us to size the force, to decide how many divisions we needed, how many ships and so forth, and I think it's stood in pretty good stead up to now.

It may need to be changed. And Don is charged with the responsibility of looking at all of that. We've really got to decide whether we want a threat-based force, the kind of force, for example, we had during the Cold War, where we really looked at the Soviet Union, said, "That's the threat," and built a force to defend against it, whether you want a capabilities-based force, sit down and decide you need certain kinds of capabilities, that the world out there is pretty unpredictable at this point. It's not possible to specify the kind of threats you'll face in the future, so instead you focus rather on the kinds of forces you build and don't be quite that worried about the scenario.

All of these options are being considered. All of this will come to the president. He'll have to make basic, fundamental decisions. It's a very, very big decision as we sort of lay out our military forces and defense strategy for the 21st century, and the president is heavily involved in that. Don's been reporting in almost on a weekly basis on the progress of those studies, and we'll have some decision shortly, I'm sure.

KING: When the administration took office, there were a lot of signals sent from yourself, the president, and others that perhaps the economy was teetering on the edge of recession. Conflicting evidence in recent days, some first quarter reports show growth OK, some think that would be revised downward. Dell Computer, big layoffs yesterday, other layoffs throughout the economy. Are we still at risk of recession? CHENEY: I think we are. We don't know yet. The basic answer is, we don't know whether we're going to tip over into negative territory or whether we've sort of hit bottom here and we'll level out and begin to climb again. I think the long-term outlook for the economy is very good.

The question of what the second quarter of this year and third quarter are likely to be and how soon we can resume under more normal growth pattern, that's what we don't know yet.

KING: Let's close on a personal note. It was not long ago you were back at George Washington Hospital, having a blockage -- you had had a procedure during the transition, then you had to go back to have an artery blockage unblocked again. How are you feeling and what are you doctors telling you? I know you had at least one follow-up after the procedure. Have you had another and what are the...


KING: ... doctors tell you?

CHENEY: No. I live very close to my docs. They follow me around a lot. One of the things that happened with this job I didn't anticipate, is I've become the best-known heart patient in America. So there's great interest in everything I do. But, no, I'm doing fine. The doctors give me a clean bill of health. We watch it very closely. I might have to go back again at some point for another procedure, but if I have to, the technology's very good.

KING: And you were chief of staff in the Ford administration. You were frequently around here when you're in the Cabinet in the first Bush administration. How is it different, A, the job you're in, being the vice president of the United States, but how -- it's 27 years, I guess, since you were chief of staff....


KING: ... in the Ford administration. How is this job different and this town different, in your view, as your 100-plus days in this administration?

CHENEY: It's changed your business. It's changed a lot and changed the town. During the Ford years, we sort of had the three networks we had to worry about on an evening news broadcast and the deadline for the morning newspapers. That sort of put the boundaries on the day in the news business.

Now with networks like CNN, it's 24 hours a day, and there's greater emphasis than ever before on speed. The news cycle is continuous. The audience out there around the world is dramatically bigger than ever before. I think it was more of a sense of sort of this instant feedback on what you say or do in these jobs that used to be the case. There's not much time to correct something. You'd better get it out right away. That's probably as big a difference.

I think the Congress relationships -- relationships with the Congress are tougher than they used to be back during the Ford days. But again, that was right on the heels of Watergate and the Congress had just impeached the president of the United States when Richard Nixon resigned. And that was a pretty tense period, too.

And then we went through a time in the Ford administration when things quieted down and President Ford restored trust and confidence in the country. And now it's still tense, but I think we're making progress in that regard. There's no reason why we shouldn't be able to work with the Congress. The president's committed to that and I think he's got the right tone and tenor here, and hopefully we'll have a positive impact just on the way the place works and the way people feel about one another.

KING: But what about you personally? You're here by a strange root. When you took the job as the head of the search committee for Governor Bush's running mate, you said you didn't want this job.

CHENEY: Right.

KING: Do you like the job? Are you having any fun?

CHENEY: I am having a ball. This is my fifth time in government. I left after 25 years and went to the private sector and thought that was it. Didn't plan ever to return, but the president prevailed on me to come back. And it's been an absolutely fascinating year.

The campaign was an amazing experience, the 35-day recount. Now to be back functioning as vice president, my third tour, I guess, in the White House. It has been a wondrous experience, really. I wouldn't have missed it for the world. I love working for him.

And family's having a great time and you feel like you're making a significant contribution. And so, I don't regret it at all. I made the right decision.


SESNO: And INSIDE POLITICS will be right back.


SESNO: And that is all for this edition of INSIDE POLITICS. I'm Frank Sesno. "MONEYLINE" is next.



4:30pm ET, 4/16

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