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Single Senator Turns Washington Politics Upside Down; Senate Passes $1.35 Trillion Tax Cut

Aired May 23, 2001 - 17:00   ET

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


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: Live from Washington, this is INSIDE POLITICS, with Judy Woodruff.

A single senator appears ready to turn Washington politics upside down. We'll set the stage for James Jeffords' expected jump from the GOP tomorrow, the likely shift of control in the Senate, and the ramifications for the president and the parties.

(BEGIN VIDEO CLIP)

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The president is going to continue to work very respectfully and productively with members of Congress from both parties.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: It's obvious that there's no room for moderates in today's inside-the-Beltway Republican Party.

(END VIDEO CLIP)

ANNOUNCER: Might Republicans turn out the tables and convince a Democratic senator to defect? Plus, Jeffords' relationship with Republicans: Why is it set to end on such a sour note?

Now, Judy Woodruff takes you INSIDE POLITICS.

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. Well, after the presidential election standoff, this may be an appropriately dramatic encore. With a few chosen words, Jim Jeffords of Vermont is widely expected to throw control of the Senate to Democrats, and to throw a big wrench in the political plans of Republicans. But despite earlier indications, we won't know for sure if Jeffords is bolting the GOP until tomorrow morning. It is an added bit of suspense for a story that already has Washington reeling.

We begin our coverage on Capitol Hill, with CNN's Jonathan Karl -- Jonathan.

JONATHAN KARL, CNN CORRESPONDENT: Well, Judy, just a few minutes ago our cameras caught up with Senator Jeffords as he was leaving his Senate office building to go over to meet with more fellow Republicans over in the Capitol Building. Here's what Senator Jeffords had to say.

(BEGIN VIDEO CLIP)

QUESTION: (OFF-MIKE) mind at this point?

SEN. JIM JEFFORDS (R), VERMONT: I'm just trying to make sure that my fellow senators and representatives understand what I'm doing.

UNIDENTIFIED MALE: Thank you very much.

QUESTION: Do you think they understand, sir?

UNIDENTIFIED MALE: Thank you very much.

JEFFORDS: That's all I can tell you.

(END VIDEO CLIP)

KARL: Now, Senator Jeffords was on his way over to the Capitol to meet once again with a series -- a group of Republicans who are trying to convince him to change his mind, to stay with the Republican Party. Senator Jeffords right now in that meeting.

Among those in attendance include Senators Chuck Hagel, John Warner, Pete Domenici, and Olympia Snowe. Somebody who has also spoken quite frequently urging Senator Jeffords to stay is Lincoln Chafee, another one of those liberal-to-moderate Republicans here in the Senate. Senator Chafee making the case that the Republican Party needs moderates like Jim Jeffords, trying to get him to stay.

Now, that said, as these efforts are going forward and the Republicans are trying to offer Senator Jeffords something to stay, all expectations from the Republicans are is that they will be unsuccessful. They believe that Senator Jeffords has made up his mind to leave the Republican Party.

(BEGIN VIDEOTAPE)

KARL (voice-over): Senator Jim Jeffords attracted a full contingent of political paparazzi, but as the cameras flashed Vermont's Republican was mum about whether he'd stay a Republican.

After first saying he'd announce his intentions shortly, Jeffords put off his announcement for a day, saying he'd make it in Vermont Thursday, because -- quote -- "I want to go home to my people."

Several Senate sources in both parties say Jeffords has told his staff and many of his Senate colleagues that his decision will be to leave the Republican Party to become an independent who votes with the Democrats, putting the Democratic Party in control of the Senate. But Jeffords' decision to delay came after a long list of Republicans, led by conservatives John Warner and Pete Domenici, and moderates Arlen Specter and Olympia Snowe, personally appealed to him to give them time to change his mind.

Republicans are in the words of one GOP aide willing to do "whatever it takes" to convince Jeffords to stay. But sources close to Jeffords say his mind is made up, a possibility that excites Democrats.

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: This is historic. Secondly, it obviously makes Tom Daschle the majority leader, makes Democrats chairmen of committees, if it happens, and gives us the opportunity to set the agenda. And overall, I hope it brings President Bush and the administration closer to the center to negotiate with us and create a bipartisan government.

KARL: Democrat John Edwards said of the expected change in the Senate's leadership, quote, "The president will have to deal with us. He's had to deal with us a little up until now, but he'll have to deal with us a whole lot more."

SEN. TRENT LOTT (R-MS), MAJORITY LEADER: You decide which questions to ask and we decide which questions we'll answer.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Mr. Jeffords.

(END VIDEO CLIP)

KARL: Republicans were eager to talk about the passage of $1.35 trillion tax cut, which Jeffords voted in favor of. But they were reluctant to talk before the cameras about Jeffords. But off camera, Senator Lott said of Jeffords' decision -- quote -- "It's not final until it's final."

Senator Thad Cochran summed up the Republican view of Jeffords' expected defection, saying, quote: "It seems incomprehensible. There's no way to explain it or justify it. It just doesn't make sense."

(END VIDEOTAPE)

KARL: Now there's been a lot of speculation up here about Senator Zell Miller, the conservative Democrat of Georgia and whether or not he would switch parties, there by balancing out Jeffords' expected move. Well, Senator Zell Miller has put out a statement on that question, and I would like to read that statement.

It reads in part: "While I am certain in the future I will often vote with President Bush and the Republicans on many issues, I will not switch to the Republican Party and have no need to proclaim myself an independent."

He goes on to say: "But a word of warning to my fellow Democrats at this time. What is sorely needed around here is much more getting along and much less getting even. The poisonous partisanship that has pervaded this place on both sides of the aisle must end." So if you're parsing Senator Miller's statement, you saw pretty much an unequivocal ruling out of ever becoming a Republican, but not a ruling out of ever becoming an independent: simply saying that he has no need to proclaim himself an independent, but seeming to leave the door open that he could make a change if his party acts in a way that continues that poisonous partisanship. So the drama continues here on Capitol Hill -- Judy.

WOODRUFF: John, I should point out that Senator Miller actually is going to be a guest tomorrow on INSIDE POLITICS. But to today's story about Senator Jeffords, some people are asking why would he give up the chairmanship of the powerful Education and Labor Committee. Why would he do that in order to switch parties?

KARL: Well, you know, the Democrats have offered him another committee chairman, the Environment and Public Works Committee. But what is little talked about up here is that actually Senator Jeffords was term-limited on that Education Committee. In other words, he only had 18 months left to serve as the chairman of that all-powerful Education and Labor Committee. So he was looking at a situation where he would lose his chairmanship and have to go back to the Republican leadership and ask for another committee to chair, something that would be far from certain would actually happen.

So what Jeffords would be doing here is moving over to the Democratic Party, at least as an independent supporting the Democrats, getting a committee chairmanship from that party, a committee chairmanship that would not expire, because unlike the Republicans in the Senate, the Democrats have no term limits on their committee chairmen.

WOODRUFF: All right, Jon Karl at the Capitol.

In something of an understatement, White House Press Secretary Ari Fleischer said today that President Bush would prefer to have the Senate remain in Republican hands. Fleischer seemed to downplay the effect of James Jeffords' expected defection. But as our John King reports, the president has a lot on the line.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CORRESPONDENT (voice-over): Much of the president's conservative agenda would be in jeopardy in a Senate controlled by Democrats. White House officials and Republican allies predict the greatest short-term impact could be on judicial nominations, health-care issues, like an HMO patients' bill of rights and a Medicare prescription drug benefit, and the president's energy plan.

ED GILLESPIE, GOP STRATEGIST: But it's a pretty big microphone down there at 1600 Pennsylvania Avenue, and the president will still be the one who directs the agenda of the country and focuses the attention of the American people on the issues at hand.

KING: Mr. Bush won his early victory on tax cuts by circumventing the Democratic leadership and courting selected lawmakers, like John Breaux of Louisiana and Zell Miller of Georgia. But that was in a Senate controlled by Republicans. The defection of Vermont's Jim Jeffords would force a strategy shift, and the White House already is preparing to invite Senate Democratic leader Tom Daschle for a meeting with the president.

Senate Republicans privately tell CNN Jeffords has complained of being snubbed by the Bush White House, and they say he came to resent what he considered to be hardball political tactics after he made clear he would not support the president's original tax cut proposal.

Jeffords, for example, was not invited when Mr. Bush honored a Vermont woman as teacher of the year.

PETER FENN, DEMOCRATIC STRATEGIST: That was politically stupid, it was substantively stupid, and it was personally clearly not the kind of kinder, gentler, changing the tone in Washington that the Bush rhetoric puts forth.

But the White House says no slight was intended.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: There are all kinds of events down at the White House that honor people from various states where no members of Congress are invited.

KING: And in a private Oval Office meeting Tuesday, administration sources say the president asked Jeffords point blank if the White House was to blame and was told no.

(END VIDEOTAPE)

KING: Now, administration sources do tell CNN that during a separate meeting with Vice President Cheney, Senator Jeffords did complain that he feels increasingly isolated by fellow Republicans in the Senate. So the White House saying perhaps those senators blaming the White House should think twice. But the bottom line here is the White House officials saying they can't engage in the blame game. In the words of one, "We have an agenda to sell, and it's clear we need a new plan" -- Judy.

WOODRUFF: So, John, is the White House saying that it played no role in Senator Jeffords' decision.

KING: Well, publicly they're saying they played no role. Look, we need to hear directly from Senator Jeffords. It is clear that he did feel that the White House was using some hardball tactics. Some White House officials questioning his loyalty when he demanded a smaller tax cut. He almost single-handedly forced the reduction in the president's tax cut.

Some White House officials quoted privately as saying, hey, this is a Republican who should support a new president. There was some talk on Capitol Hill, the White House insisted came from senators, not from the White House, about cutting dairy programs in some sort of retaliation.

Certainly, no great love between Senator Jeffords and this administration, although administration officials insisting that this is really a reflection of Senator Jeffords philosophically, that he feels out of step with the Republican Party right now. They say the president's not directly to blame. But they also say let's wait and hear what he says. And obviously the White House still hoping against the odds, it appears, that he'll change his mind.

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

Now, the view from inside the Senate. We will talk to Republican Thad Cochran in a moment. A short while ago, I spoke with Democrat Evan Bayh of Indiana. I began by asking him if Democrats are celebrating Jim Jeffords' expected party switch.

(BEGIN VIDEOTAPE)

SEN. EVAN BAYH (D), INDIANA: It's a little premature to celebrate Judy. As Yogi Berra once said, it is not over until it is over. But we are feeling pretty good about the prospect of being able to help chart the agenda for the country.

WOODRUFF: Assuming this happens, tomorrow morning, and Senator Jeffords does announce he is leaving the Republican Party to become an independent, when does all this become effective in terms of the functioning of the Senate?

BAYH: Well, it should start fairly quickly. I don't think it is going to be in time to effect the tax legislation, but as soon as Senator Jeffords votes for Tom Daschle for majority leader, the committee chairman will change, the ratios in the committee will change, and the flow of legislation will begin to be affected. So, I think it will before too very long.

WOODRUFF: Are we talking hours? Days? Weeks?

BAYH: Well, that probably remains to be seen, but I would assume it would be a matter of just a few days.

WOODRUFF: Do the Democrats now have in place, Senator Bayh, a plan for how all this will unfold, in terms of who becomes committee chairman, who serves on which committees, and so forth?

BAYH: Well, as you know, we have ranking members on the different committees, and they will be elevated to be committee chairmen, there are some talk that Senator Jeffords may be the committee chairman of the Public Works and Environment Committee.

But, in general, the people who have been ranking Democrats will now move up and the ratios in the committee will change, because the committees are required to reflect the composition of the Senate. And if there are now more Democrats than Republicans, there will be at least one I would assume more Democrats on each committee than Republicans.

WOODRUFF: Is it clear, Senator, what this is going to mean in terms of legislation? In terms of substance? BAYH: My belief is, it is going to lead to more genuine bipartisanship, and a more centrist agenda for the Congress and the country. No longer will we see a, you know, a agenda tilted to the far right. It will require people to hammer out true consensus and compromise, and I think that will be good for America.

If I could say one other thing, Judy: I think this is really going to be an important test for our party. We need to show that we can govern responsibly, that we can meet the president halfway when we think he's right, and offer a reasonable alternative when we think he is in error.

But I hope that we will not lurch off to the far extreme, that we will learn the lessons of Newt Gingrich, and instead, govern from the center, I think it's an important test for us.

WOODRUFF: What are some examples of areas where you think we'll see a move to the center?

BAYH: Oh, I think you will see that we have already got that under way in education policy. I think you will see that with regard to trade policy, for example. Environmental policy, where I think we'll have a better balance of conservation and production.

And particularly, Judy, I think Democrats will insist upon some aggressive investment in new technology, so that we create a clean, renewable alternative energy source, as a way to break out of this energy stalemate. Those are some of the issues I think you will see a more centrist agenda on.

WOODRUFF: But having said that, President Bush was able just today, to get through his $1.35 trillion tax cut over the next 10, 11 years?

BAYH: Well, that is right. There are a separate set of rules that apply to budget and taxes, though, which make it easier for him to do that. With a new majority leader, a new committee chairman, the president will have to sit down and negotiate a reasonable center ground, and not be quite as able to just ram through proposals without consultation and taking some of the more extreme edges off them.

WOODRUFF: Senator, let me finally ask you about a statement put out today by Georgia Democratic Senator Zell Miller. A lot of speculation has been out there about whether he would switch in the other direction and become a Republican.

He is saying, as of today, he is not changing parties, but he says a word of warning to my fellow Democrats: what we sorely need around here is more getting along, and less getting even. He talks about a poisonous relationship. Is he right about all this?

BAYH: Zell is correct. There is too much political infighting around here. Not enough attention to what's good for the country. And so, again...

WOODRUFF: But he is blaming the Democrats for that. BAYH: Well, there is enough blame to go around. The fact of the matter is that, in our caucus, Judy, we need to be a little more accepting of diversity of opinion. We need to have a big tent, as they say, and have a place for conservative, moderate, and progressive Democrats all of us working together for what's right for America. No one should be drummed out of the party because they happen to have a little bit different point of view, on one or two issues.

And there has been perhaps a little too much of that. And I think perhaps that is what Zell was referring to.

WOODRUFF: So you are saying that he has been a victim of that?

BAYH: Oh, I wouldn't say he is a victim. Zell has been in a small minority view on several important issues. But people can't just write him out of the party because of that. We have to understand that on many issues, we need to work together, and that if a member votes the way we don't like on a tax bill today, we need to work with them in the environment or education tomorrow.

Let's learn the lesson here. Why did Jim Jeffords not feel comfortable with the Republican Party? Why did Richard Shelby or Ben Nighthorse Campbell leave the Democratic Party a few years ago? We need to make people feel comfortable in the Democratic Party.

Occasionally, if they have a difference of opinion, that is one thing, but, moving together when we can to forge a broad consensus for what's good for America. That is what will eventually put us in majority, not just for a few months, but hopefully for many years.

WOODRUFF: All right, Senator Evan Bayh, thank you very much for joining us.

BAYH: Thank you, Judy.

(END VIDEOTAPE)

WOODRUFF: Now, as promised, Senator Thad Cochran, Republican of Mississippi, and he joins us from Capitol Hill.

Senator Cochran, in your mind, this is a final decision on the part of Senator Jeffords?

SEN. THAD COCHRAN (R), MISSISSIPPI: I think he has agreed to postpone an announcement until tomorrow. This gives him an opportunity to think about the implications of his decision, and whether or not he really wants to turn the leadership power in the Senate over to the Democrats.

WOODRUFF: But, wouldn't he have already thought through all that?

COCHRAN: Well, I think he first thought that by becoming an independent, he would have more of an opportunity to vote the way he thinks he should on the merits of each issue and not worry about party loyalty, but the fact of the matter is that he is given a great deal of leeway here in the Senate by our leadership. And he has been an independent-minded senator, and he can continue to be that as a Republican.

But he's decided to become an independent and we have to respect that decision, and try to work with him as a fellow senator, with a feeling of mutual respect.

WOODRUFF: Well, Senator, we just heard our John King reporting from the White House, that what he's hearing there is that Senator Jeffords himself, in a meeting today with Vice President Cheney, said he was feeling increasingly isolated by members of his own Republican Party in the Senate. He talked about support being denied or threatened, being taken away for dairy farmers. Is this the sort of thing that was going on there?

COCHRAN: Well, there is always -- an effort to try persuade people to support one issue or the other. And pressures come from all sides. And I'm sure that within our Republican conference, there has been pressure to support the majority in our conference on some certain issues. And he has done that from time to time.

As a matter of fact, he has been a Republican for over 20 years, he's worked hard for our party's causes in the House and the Senate. I hope that he will rethink his decision, and overnight, decide whether he wants to really make a decision that causes such a shift in power to occur in Washington.

WOODRUFF: But, my question is: was there too much retaliation or something like that going on within the Republicans in the Senate, because of his vote on the tax cut or other measures?

COCHRAN: I don't have any personal knowledge of any kind of payoffs like that, or threats that have been made against him because of any votes that he cast or any decisions he has made. I think that he has been respected as a committee chairman of a very important committee, on education and labor issues. He has been managing on the floor of the Senate a very important bill for the Republican conference, and he has done a very good job of it.

He's got a lot of different ideas on education. It is the president's highest priority, it's the Senate's highest priority, it's my personal highest priority. And I've worked closely with him, and I will continue to do so on these issues.

WOODRUFF: Assuming, Senator, he does go ahead, become an independent, leave the Republican Party, and then vote for Senator Daschle as the Senate leader, what does that mean for the president's agenda and for the Republican agenda overall?

COCHRAN: I think it could be a very serious blow to the efforts of the president to get his legislative agenda before the Senate. There will have to be negotiations with the Democratic leadership if they do assume the responsibility for setting a legislative agenda, and scheduling all of that hearings, and committee meetings. An enormous amount of power flows in the Senate, from the position of majority leader. WOODRUFF: And from a substantive standpoint, what are we talking about? What are -- we heard -- we just heard Senator Bayh saying he believes it would mean much more centrist agenda, an less in his words, "far right."

COCHRAN: The Democrats would have a lot more influence in the process. There is no doubt about that. They decide who the witnesses are going to be, Republicans could request witnesses be called at hearings. But, the Democratic leadership would have an enormous amount of power to decide what happens in committees, what jurisdictional rights are recognized among the committee chairmen. So, a lot of influence flows from the leadership in the Senate.

WOODRUFF: All right, well, Senator Thad Cochran, Republican from Mississippi, we thank you very much.

COCHRAN: Thank you.

WOODRUFF: And we will hear from another senator, Zell Miller, tomorrow on INSIDE POLITICS. The Georgia Democrat will talk to us about his decision now not to switch to the GOP.

As Washington absorbs news of a possible party switch, what about the folks back home? Straight ahead, Green Mountain State voters react to reports that the man they just reelected may be crossing the aisle.

Also ahead: a messy divorce in the media capital. How New Yorkers are handling the mayor's very public marital problems.

And later: Treasury Secretary Paul O'Neill joins me to talk about today's tax cut victory, and his reaction to the chance that Republicans may lose control of the Senate.

This is INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: If he leaves the GOP, Jim Jeffords won't be the only senator to change parties in recent years. But given the current 50- 50 Senate divide, his switch would certainly have the biggest impact.

Joining me now from Atlanta with a look at previous party switchers, CNN senior political analyst Bill Schneider. Hi, Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Hi, Judy. You know, when a politician switches parties, it looks like a very personal decision: "I'll go my own way."

In fact, however, politicians who switch parties are usually going the way their constituents are going.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Four current senators have switched political parties, all of them from Democrat to Republican. Strom Thurmond of South Carolina became a Republican way back in 1964. Phil Gramm of Texas switched to the GOP in 1983, when he was still in the House of Representatives. In the 1990s, Ben Nighthorse Campbell of Colorado and Richard Shelby of Alabama both became Republicans.

(BEGIN VIDEO CLIP)

SEN. RICHARD SHELBY (R), ALABAMA: Officially right now, I am changing parties to a party of hope for America, not a party of dependency, to the Republican Party, effective immediately.

(END VIDEO CLIP)

SCHNEIDER: Notice that accent? Three out of the four Republican converts, all but Campbell, were southerners. Ten House members have switched from the Democrats to the GOP in the last 20 years. Eight of the 10 were southerners, Why? Ask Shelby.

(BEGIN VIDEO CLIP)

SHELBY: I thought there was room in the Democratic Party for a conservative southern Democrat such as myself, representing my people from Alabama and other areas of the South. But I can tell you there is not.

(END VIDEO CLIP)

SCHNEIDER: The Northeast used to be the homeland of liberal Republicans like Jacob Javits and John Lindsey of New York. Lindsey became a Democrat. Javits was defeated in a Republican primary.

Remember Senator Lowell Weicker of Connecticut? He left the GOP and got elected governor as an independent, after saying, memorably, "Liberal Republicans are no longer a wing of the Republican Party. They're a feather."

What party switchers have been doing, is following the voters of their respective regions. Southern white voters have been switching from Democrat to Republican for over 30 years. Southern Democratic office holders have been following them.

In a less widely noticed trend, the Northeast has been moving in the opposite direction: more and more Democratic. Look at 11 states of the South and the 11 states of the Northeast in the last three presidential elections. In 1992, every state in the Northeast voted for Bill Clinton. Seven of the 11 Southern states voted Republican.

In 1996, virtually the same thing: the Northeast, solidly Democratic, the South, all Republican except for four states again. But not the same four states. Clinton picked up Florida and lost Georgia.

Last year, the South went solidly Republican. Even Bill Clinton's Arkansas and Al Gore's Tennessee. The Northeast? All for Gore, except New Hampshire. Liberal Northeastern Republicans like Jim Jeffords have two problems. They have become marginalized in the Republican Party, and they're getting crowded out by Democrats in their own region.

If Jim Jeffords decides to leave the Republican Party, it would not be entirely an act of courage. Vermont voted for Bill Clinton twice. Gore carried the state by 10 points. And Vermont was Ralph Nader's second-best state after Alaska. Vermont's one Congressman? Bernie Sanders, who is an independent and a Socialist -- Judy?

WOODRUFF: Not many of those around.

SCHNEIDER: Very few.

WOODRUFF: ... in the Congress. Bill Schneider, thanks very much.

Well, for a closer look at this developing story, you can visit our Web site at cnn.com, the AOL keyword "cnn." Our in-depth look includes video clips, in-depth analysis and a closer look at the pragmatics and politics involved in party switching.

And later this evening, Senators John Edwards and Jeff Sessions are in the "CROSSFIRE." That's at 7:30 p.m. Eastern.

Cleaning the air with an all-natural product: the latest step forward in the search for new fuel sources when INSIDE POLITICS continues.

(COMMERCIAL BREAK)

WOODRUFF: We'll have more of the day's political news coming up, but now a look at some other top stories. Whichever party controls the Senate, one of the key issues facing Washington politicians this year will continue to be the energy crunch.

As the nation grapples with that, an alternative fuel is hitting the market, and it comes from recycled cooking oils. CNN's Rusty Dornin reports.

(BEGIN VIDEOTAPE)

RUSTY DORNIN, CNN CORRESPONDENT (voice-over): Out of the french fryer and into the fuel tank. Recycling trucks in Berkeley, California, are the latest to fire up their engines with a clean- burning vegetable oil alternative to dirty diesel. It's called biodiesel.

TOM FARRELL, BERKELEY PUBLIC WORKS: We're trying to diversify our fuel sources. We're also trying to reduce pollution, and biodiesel does reduce pollution significantly.

DORNIN: Now diesel drivers in San Francisco will be able to pump soybean oil directly into their tanks. Olympian commercial fueling stations are opening the first ever biodiesel pumps.

RUSTY FIRENZE, OLYMPIAN COMMERCIAL FUELING: It's a renewable resource that can be produced. It takes full advantage of the present fueling infrastructure we have in place. You don't have to add new tanks or new dispensers.

DORNIN: One-hundred-percent soybean oil will run about $2.99 a gallon, but operators here expect commercial fleets to mix the two right in the tank, 20 percent vegetable oil and 80 percent diesel, raising the cost only about 15 percent higher than diesel, but still cleaning up the air.

FIRENZE: Fleets are going to give it far more consideration than they did in the past because it's far more competitively priced to do so.

DORNIN: But can soybean farms grow enough to economically fuel the nation's transportation industry?

DAN SPERLING, UNIVERSITY OF CALIFORNIA DAVIS: Will oil prices ever go up high enough to make biodiesel economically attractive? And the answer is probably no, and the reason for that is because there is still a lot of oil available.

DORNIN: From postal trucks in Florida to garbage trucks in San Jose, California, public truck fleets must, by law, clean up their emissions, and many are dumping vegetable oil into the tank rather than buying new vehicles.

Olympia officials say the target now is commercial use, but consumers `are welcome if they want to pay the price.

FIRENZE: If the individual has a real commitment to his environment, they will make those choices, but for the most part, because of the cost, the individuals just aren't going to do it.

DORNIN: Unless being clean and green drives them to it.

Rusty Dornin, CNN, San Francisco.

(END VIDEOTAPE)

WOODRUFF: Several consumer groups are asking the government to ban baby bath seats and declare them unsafe. They say the seats give parents a false sense of security, encouraging them to leave their children unattended.

Since 1983, at least 77 infants have drowned while using the seats. Manufacturers say the seats are not defected, should not be banned, and that the deaths are a result of parental neglect.

Another break up in the public spotlight: New York City Mayor Rudy Giuliani blames the media. But are reporters the only New Yorkers interested in the Big Apple's biggest divorce?

(COMMERCIAL BREAK)

WOODRUFF: Another prominent Democrat is considering running for Florida governor. Former Congressman Pete Peterson said today he is leaving his post as ambassador to Vietnam on July 15th, and will return to Florida. State Democratic Chairman Bob Poe says he spoke to Peterson by phone yesterday, and he believes the former Vietnam POW has every intention of running.

Former Attorney General Janet Reno said last week she may enter the race. Republican Governor Jeb Bush says he will announce next month whether he will seek reelection.

In New Jersey, two-time Republican presidential candidate Steve Forbes says he hasn't ruled out a Senate race next year. The wealthy magazine publisher said last night he has no plans right now to enter the race for the seat held by Democrat Robert Torricelli, but he hasn't completely closed the door on a Senate bid.

New York Mayor Rudy Giuliani is denouncing media interest in his bitter divorce in wife Donna Hanover. Yesterday, Giuliani accused reporters of using his failed marriage as a way to sell newspapers and gain television viewers.

CNN's Brian Palmer reports on the coverage and the city's interest in the mayor's rather public personal life.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: The media now has an absolute feeding frenzy on this. They are like vultures and buzzards perched there at Gracie Mansion, perched there at City Hall.

BRIAN PALMER, CNN CORRESPONDENT (voice-over): The marital meltdown between New York Mayor Rudy Giuliani and Donna Hanover has taken on a life of its own in the media, yet some New Yorkers say they don't care.

UNIDENTIFIED MALE: It doesn't affect me at all. It's not my marriage.

UNIDENTIFIED FEMALE: It's sort of in my face, so I have to look at it, but I don't like the idea. It's his personal, private business.

PALMER: But plenty are still buying the newspapers, watching the TV news broadcasts, and listening to the radio shows that cover it incessantly.

UNIDENTIFIED MALE: I think it's shameful, but I still pick up the newspapers and read it.

PALMER: The mayor blames the media for driving the story.

MAYOR RUDY GIULIANI (R), NEW YORK: Mostly, it's all of you that are driving it, not the people involved in it, because you want to exaggerate it and you want to take it out of context and you want to do the best you can to keep it going, so you can sell newspapers and get more time on television.

PALMER: But the mayor's own lawyer has spilled some very private details of the couples' married life to reporters.

RAOUL FELDER, GIULIANI'S DIVORCE ATTORNEY: Her agenda is to embarrass the mayor and embarrass his friends, to make life difficult, to denigrate the mayor of the city of New York, and to help her career.

PALMER: Columnists Jack Newfield and Andrea Peyser share office space at "The New York Post," but they don't share the same opinion about who's to blame. Newfield raps the mayor; Peyser sides with Rudy. But both say the media is just doing their job.

ANDREA PEYSER, "NEW YORK POST" COLUMNIST: I wish I had a nickel for all the stories that people on the street tell you they're not interested in that they really in fact are. They say, I don't care, I'm not interested, but this is what I think about it. Everybody has an opinion in this, whether you're for Rudy, Donna, Judy or the dog.

JACK NEWFIELD, "NEW YORK POST" COLUMNIST: Nobody that I know in the media really knows what the line is. I think we're groping, to use a bad expression, and exploring it, you know, story by story, day by day.

PALMER: As the divorce saga continues, so will the daily exploration for that fine line between public and private -- and perhaps, the daily crossing of that line.

Brian Palmer, CNN, New York.

(END VIDEOTAPE)

WOODRUFF: Winning some and losing some, the president finds mixed results on Capitol Hill today. We will talk to Treasury Secretary Paul O'Neill about the tax cut vote, and the potential loss of G.O.P. control in the Senate.

(COMMERCIAL BREAK)

WOODRUFF: As we mentioned earlier, the Senate today approved an 11-year, $1.3 trillion tax cut that reflects President Bush's priorities. Among the 62 senators who voted yes, expected GOP defector Jim Jeffords. Let's talk now about the tax cut, the budget and the political dynamic in Washington with Treasury Secretary Paul O'Neill.

Mr. Secretary, thank you for being with us.

PAUL O'NEILL, TREASURY SECRETARY: Glad to be here.

WOODRUFF: So you now have this tax cut through the Senate, it goes to a conference committee. Is the president going to get everything he wants?

O'NEILL: I think he will be able to get all the principles, I think, what you said, is exactly right: what goes to conference reflects the president's principles that he's been talking for two- and-a-half years. So it is a great day and hopefully tomorrow is going to be the day when they do it all.

WOODRUFF: You think it will happen tomorrow? O'NEILL: Well, I've very -- I'm an optimistic person, and, you know, I said earlier in the week, I thought by Friday and tomorrow is Thursday. And -- so it would be great if we got this done on Thursday.

WOODRUFF: Know you have said that this the first tax cut bill, not the last one. What you mean by that?

O'NEILL: Well what I mean by that is this, I have thought all along that the estimate which was agreed to by most everyone, that we're going to generate $5.6 trillion worth of surpluses over next 10 years, underestimates what our economy is really capable of. And I give you as an evidence of what -- why my view is what it is: This year, with the economy running at fairly low rates, we've already collected a $165 billion surplus from the American people, which is 40 billion more than we collected at this time last year, and we are on our way to something close to $300 billion worth of surplus.

And when I look at future years, I think of our economy running at 3.5 or 4 percent real growth. We're going to generate a whole lot more money that belongs to the American people, that they should have a first call on.

WOODRUFF: Well, if that is the case, what are the kinds of tax cuts you'd like to see coming down next after this bill?

O'NEILL: Well, I don't know. I tell you, the president -- the reason we are where we are on this tax bill is the president's been focused. And he's given all of us encouragement to stay focused, don't wander off the path.

And after we get this tax bill in hand and signed, the next priority is Social Security. We need to deliver on what the president has promised, that we will finally, after 30 years worth of recognition but no action on the need to fix Social Security, we're going to get that done. And I'm going to be spending most of my time working on it and talking about what are the principles to ensure that Social Security is secure for the American people for the next generation.

WOODRUFF: What -- you're not talking about that in the form of a tax cut or are you?

O'NEILL: No, no, no -- I'm talking about what are the priorities, and I think, indeed, there can be additional things done on the tax side. But in terms of what should we focus on: Up to now we have been focused on the domestic side, in getting this tax cut done, and we're going to get it done in record time. You know, most people said it couldn't be done until November. Here it is still May. And next comes Social Security.

WOODRUFF: All right, having said all this, you've got a Republican majority just barely -- you got a 50-50 Senate, but you got a Senate Republican and Vice President Cheney whose the tiebreaker. With Senator Jeffords' expected defection, things are going to change dramatically. What effect is that going to have on the president's agenda?

O'NEILL: Well, first of all, I put emphasis on the word you use as a modifier: expected. It's not done, we'll see. But more importantly, I think, you go back to the 62 votes out of the Senate on the tax bill. The president has been saying, and he said to the captain on a regular basis: I want to unite the American people, and therefore the Congress, around principle.

So I don't want us to talk about partisanship, and these are close votes, and rest of that. We need to work to unite people around principle. And it will help to unify things that we should be doing anyway. So I think whether it's 49, 51 or 50-50, it shouldn't be a material issue.

As long as we put forward ideas that most of the American people believe in, we should be able to get their representatives to understand that they need to reflect what the people believe, not some independent relationship to a party. That's only one of the things they need to care about in their life.

WOODRUFF: Well, you're saying there hasn't been, there shouldn't be so much partisanship. But in fact, what many people are saying today, with what brought Jim Jeffords to this point, was he was feel isolated, even ostrasized by his own party because of disagreeing with the president over the size of the tax cut -- that he felt the White House had belittled him and left him out. Who is responsible, if there is this sort of thing going on?

O'NEILL: I haven't heard or seen that from Senator Jeffords himself. And so I say all of that is conjecture and speculation, but I will go back and say again: Look at the 12 Democrats who voted for this principle bill today. I think that's the telltale about this story. And my own guess is, when this bill is finally conferenced, they're going to be a very, very broad group of Republicans and Democrats who join in saying to the American people: We want to get credit for this. We voted for it and please take notice when we come around to get elected again, that we voted for this bill in spite of all the back and forth.

WOODRUFF: But stepping back, Secretary O'Neill, from this tax cut, there are -- we interviewed Democratic Senator Evan Bayh earlier in the program and he said if Jeffords' defection takes place, you will be looking, in his view, at a legislative agenda -- a program coming out of the Congress, much more centrist than what President Bush is pushing. You, other members of the Bush cabinet, have to be a little worried about that.

O'NEILL: I'm not concerned at all because I really, you know, maybe because I'm not very partisan. I came back to this town for a job I didn't really need because I believe this president can unite people around principle, and I'm going to do everything I can to help him. And, you know, I personally think, as I said, we're going to see maybe 80 votes in the Senate for this bill when it is finally done and 80 percent of the House, or maybe even 90 percent. This is what the people want. I think they resonate to what the president has proposed. I think we're going to see the same thing on education. You know, when I go out and talk to people on the stump, this is the subject I care a lot about, no child left behind really resonates with the people and I think the Congress finally going to come around to getting the things done that will move our country forward.

WOODRUFF: All right, Secretary Paul O'Neill, one member of the Bush Cabinet not worried about a potential defection. Thank you very much, and we appreciate you being with us.

O'NEILL: Nice to be here. Thank you.

WOODRUFF: Thanks a lot -- appreciate it. And we're going to get back with more INSIDE POLITICS in just a moment.

(COMMERCIAL BREAK)

WOODRUFF: For more on the state of the Senate and Republican Jim Jeffords' expected party switch, we are joined by Ron Brownstein of "The Los Angeles Times" and Charlie Cook of "The National Journal."

Charlie, any doubt in your mind that Senator Jeffords is going to go ahead with this?

CHARLIE COOK, "THE NATIONAL JOURNAL": Oh, I guess there's probably a half a percent or something, but it certainly looks like he's going to switch from the Republican side to independent, probably not over -- all the way over to Democratic. But no, I think it's going to happen.

WOODRUFF: Ron, what's your sense?

RON BROWNSTEIN, CNN POLITICAL ANALYST: I think most people feel like he wouldn't be going home and having a big press conference if was going to say: Everything's still the same as it was yesterday.

WOODRUFF: What -- did Republicans drop the ball here? What happened? What has caused him to do this, Charlie?

COOK: I think all senators are prima donnas, but particularly when you have a 50-50 Senate, you have to treat them with kid gloves and you can't treat them like they were a state legislator from Lubbock. And I think the White House got a little too heavy-handed with him, and he sort of bridled at it, got angry, made a decision. And then when he thought about it a little more, he didn't change his mind, but said, you know, this is the kind of thing I need to do from my home state and not announce it from the Senate floor.

WOODRUFF: So you're saying he made the decision hastily?

COOK: I think he probably -- he had not been -- I think it was made in some degree of haste, but I don't he's having second-thoughts. His only second-thoughts were "How should I do this? Where should I do this from?" BROWNSTEIN: You know, what's interesting, Charlie, about your point is that Bush did not treat state legislators from Lubbock that way. I mean, he was not known -- he was not known...

WOODRUFF: That's right. That's right.

BROWNSTEIN: ... he was not known (UNINTELLIGIBLE) taking names and remembering grudges. And he was under a lot of pressure from conservatives in Congress to try to impose party discipline on Jeffords after he voted against the budget plan. But what they forgot, I think, was that, you know, they needed Jeffords more than Jeffords needed them.

Charlie suggested we sort of have fulfilled Huey Long's fantasy 70 years later: The Senate in 2001 is every man a king. I mean, every single person really has tremendous power in this 50-50 divide. And the fact is that for these Northeastern moderates, the balance of power in the Senate had moved toward the South and the West. I'm sorry, the Republican Party has moved South and West. It's gotten more conservative, and it's harder for them to find parts of the agenda they can hold onto while also pleasing their voters back home.

WOODRUFF: Well, won't it be the same way if he goes ahead and becomes an independent, votes for Tom Daschle as majority leader? Won't somebody like Zell Miller, for example, have a whole lot of power?

COOK: Well, the thing is, I mean, that's why you don't see Southern -- you see very few Southern conservative Democrats anymore. They're almost all gone, because the Democratic Party moved away from the South. So it's mirror images of each other.

WOODRUFF: What does this mean substantively, Ron? What changes are we going to see?

BROWNSTEIN: I think the biggest change...

WOODRUFF: I mean, we just heard Secretary O'Neill say it's going to be -- it's all going to be more -- there's going to be less partisanship and everybody is going to work together for a result.

BROWNSTEIN: Maybe. Look, the vote count on the floor doesn't change. You know, the fact is that the votes on each side are still the votes on each side. Jeffords is going to vote with Democrats when he does and against them when he doesn't.

What's really going to change is that up until now the White House has had a free hand in deciding what is the agenda, what are we going to be talking about. They could sketch out literally weeks in advance, we want to do taxes now, we want to do education now.

This is going to give the Democrats the ability that they haven't had in the first six months to showcase their own ideas, not only to respond to Bush's idea, Judy, but to push forward ideas that he may not want to talk about at all: patients' bill of rights, prescription drugs under Medicare, minimum wage hike. All of these things are going to be on the agenda, in the headlines in a way they wouldn't have been if the Democrats didn't, or in fact, don't have the majority.

COOK: Ron's exactly right. Republicans were not in control before. Democrats will not be in control now. I mean, Trent Lott was a Senate plurality leader. Now Tom Daschle will be the Senate plurality leader. But nobody really has control until you've got way up in the 56, 57, 58 seats, something like that. But controlling the agenda, that's important.

BROWNSTEIN: You know, to just add on, Bush never really has had to deal with this. I mean, in Texas he had Pete Laney and Bob Bullock, who were center-right Democrats, who did not really wake up the morning thinking how can I position my party and weaken him for these next two elections. He's never really had to deal with a skilled operator from the other party who was working on a sustained basis to define his presidency in ways he doesn't want.

So it's going to force him to be much more reactive and nimble than they have been. So far they're great at rolling out their own thing, but can they react to this kind of challenge? It'll be interesting to see.

WOODRUFF: Well, the White House says that it's been reaching out to Democrats all along and it'll just continue to do that. Charlie, I mean...

COOK: Well, you know, what I thought was going to happen is you were going to have 10 or so centrist, liberal Republicans, conservative Democrats in the Senate that were going to be the center of gravity and they would sort of collectively move one direction or another on bills. Instead, both parties have maintained party discipline very, very well, and it's like two sides playing the kids' game of Red Rover, Red Rover. You know, just pick off one or two people and that's a victory right there.

But centrists have not been acting as a group. It's just a matter of looking for defectors.

WOODRUFF: And is that going to change?

BROWNSTEIN: I think now. I think two points on that. One is that Bush has in fact been successful at points of pulling a few Democrats over the line on his ideas, but this is a separate challenge, Judy. This is responding to Democratic ideas, where they may have party unity to move forward on things that he will have then be forced to take positions on.

The other thing is that even as they have been reaching out to Democrats they've been facing some flack over it. In the House this week, you have a lot of uneasiness among Republicans, especially conservatives, about the deal-making with Democrats. Now you have pressure from House Republicans to do less deal-making with Democrats, an imperative in the Senate to do more deal-making with Democrats. That's a formula for a headache. WOODRUFF: What -- can we name some specific parts of the Bush agenda that are now more in jeopardy than they were before as a result of this?

COOK: I mean, I think -- I mean, Ron's point was right, is that the same 100 people in the U.S. Senate, but judicial nominations more than anything else. There are a lot of people that are...

WOODRUFF: Ted Olson.

COOK: Yeah, Ted Olson, yeah. I mean, he should be building up his client list again. He's not going to be solicitor-general. And there will be a lot, I think, mainly judicial nominations.

But substantively, you know, I don't know that, except on procedural things, I don't know that Jeffords is going to vote that much differently than he would have anyway.

BROWNSTEIN: Well, the question really will be what gets through committees and do the Democrats, for instance, try to renegotiate the power-sharing agreement to try to get a majority on the committees. The other thing is that even under the existing agreement, a tie in the committees, the majority leader...

WOODRUFF: This was the resolution that just applies when...

(CROSSTALK)

BROWNSTEIN: ... between Lott and Daschle, 50-50.

WOODRUFF: Right.

BROWNSTEIN: So will the Democrats try to seek a majority? Some think they will. But even without that, the agreement says that if there's a tie, the majority leader gets to decide what goes to the floor. So you have something like the Ted Olson nomination, if it's a tie in the Judiciary Committee, you can bet that Tom Daschle is not going to be looking for ways to bring that to the floor.

I think it doesn't totally change the balance of power in the Senate on the big issues, but it gives a slight thumb on the scale toward the Democratic side. Energy, environment, that kind of balance may tilt a little. The bigger thing, though, is Judy Democrats can have more chance to bring forward their ideas.

WOODRUFF: All right, very good. Ron Brownstein, Charlie Cook, thank you both. We appreciate it.

Speaking of balance, the balance of power and the issues at stake: a further look at the impact of Senator Jim Jeffords' pending decision, that and much more in the next 30 minutes.

(COMMERCIAL BREAK)

JUDY WOODRUFF, HOST: An eye popper apparently in the works in Washington. How is Senator Jim Jeffords' expected jump from the G.O.P. likely to play out? We'll discuss the potential fireworks on the Hill if Democrats do indeed nab control thanks to Jeffords.

And later: before there was Monica, there was Elizabeth Ray. She's back in Washington, remembering her role in a political scandal of the past.

Welcome back to INSIDE POLITICS. Some of Jim Jeffords' fellow Republicans may be trying one more time, to convince him to stay in the party. About an hour ago, Jeffords left for a meeting with some other GOP senators. He would not confirm that he has decided to become an Independent. But he did say that he wanted to make sure -- quote -- "my fellow Republicans understand," end quote.

Jeffords' announcement in his home state of Vermont tomorrow morning is expected to shift the balance of power in what is now an evenly divided Senate, and put Democrats in control. But Democrats are trying not to get too excited, at least publicly, just yet.

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN (D), CONNECTICUT: Change of party control in the Senate will decide and change who the majority leader is, who sets the agenda, who controls the committees, who appoints conferees. But it won't change the dynamic on the vote on every particular piece of legislation because that's a separate experience.

(END VIDEO CLIP)

WOODRUFF: Nonetheless, Democratic control of the Senate would likely create big new roadblocks for President Bush's agenda. But, the White House is suggesting Mr. Bush's approach to Congress would not change that much.

(BEGIN VIDEO CLIP)

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: When you have a 50/50 Senate, it's important to work closely with everybody which is what the president has always done. It's also what the president has always done as the governor of Texas.

In Texas of course, he had a Democrat legislature, and he worked very productively and very closely with the Democratic legislature. So, regardless of any decisions that are made, the president will always govern in that style, which is to keep things toned down and to keep things productive and to keep things moving.

(END VIDEO CLIP)

WOODRUFF: If the White House is holding out hope of attracting a Democratic defector to counter Jeffords' expected move, one likely candidate, Zell Miller of Georgia, said today that he's staying put in the Democratic Party, at least for now.

And now let's bring back our congressional correspondent, Jonathan Karl, and our senior White House correspondent, John King. First to you, Jonathan, what's the status of the meeting between Senator Jeffords and his fellow Republicans? KARL: Well, that meeting between Senator Jeffords and his fellow Republicans, including, by the way, Chuck Hagel, Pete Domenici, Olympia Snowe, Senators Bennett and Warner. That meeting is now over. As a matter of fact, Senator Jeffords, we have just learned, has left the Capitol and he is on the way to the airport to fly back to Vermont.

Shortly before he left the Capitol and after that meeting I caught up with Senator Jeffords in the basement in the subway here in the Senate and I asked him how it went. And what he said was that -- what he said to his colleagues -- he said, quote, "I told them I'd thing about things and I will."

He called the meeting very moving, emotional. And I asked him, well, is there any chance you could change your mind, and he just looked at me and said, "I don't think so," and then he got on the subway and went off.

Also after that meeting, Pete Domenici, one of those senators meeting with Jeffords said that that group of senators offered Senator Jeffords four our five, what he said, constructive ideas about how he could stay in the Republican Party. And Senator Domenici said -- quote -- "He made no commitment, but he said he would think about it."

So that meeting is over. Republicans really not holding out any hope that Senator Jeffords would somehow change his mind at this late date. But again, we will not know until Jeffords finally gets up there at 9:30 tomorrow in Vermont and makes that announcement for himself -- Judy.

WOODRUFF: Jonathan, I know you're talking to lot of people up there at the Capitol. How are the Democrats reacting?

KARL: Well, the Democrats, as you referred to earlier, publicly aren't saying a lot, but privately they're already making plans for the transition and you already have some back room maneuvering and dealing about who gets the committee chairmanships once the Democrats get control of the Senate as they would if Jeffords moves out of the Republican Party.

One very interesting thing to watch is there's word up here that Senator Joe Biden would be seeking chairmanship of the Judiciary Committee. He does have seniority on that committee, but right now the ranking member on that committee who would be expected to be chairman is Pat Leahy.

So you could have a little bit of a power struggle here among Democrats positioning for various chairmanships, something very interesting to watch, something Democrats will no doubt enjoy, but Republicans looking up and watching essentially the power or the control of the United States Senate slip out of their hands.

WOODRUFF: All right. Jonathan Karl at the Capitol. And now we go to the White House to our senior correspondent there, John King.

John, what effect are they saying at the White House this may have on the president's agenda?

KING: Well, as you noted, Judy, publicly their line is that this president has, in the past, as both governor and president, worked with Democrats and he will continue to do so. privately behind the scenes, they see a very tough road ahead for many of the president's judicial nominations if the Senate and particularly the Senate Judiciary Committee falls into Democratic hands.

You were discussing earlier the nomination of Ted Olson, a conservative Republican to be solicitor general. Many here believe that would be dead if Tom Daschle were the Senate majority leader. And on issues like the president's energy plan, Frank Murkowski and Ted Stevens, two key Alaskans who are chairmen right now in the Senate would be gone, replaced by Democrats. The White House believes a tougher road there on environmental issues.

And certainly on the health care debate the Democrats have very different ideas than this president. So a recalibration here at the White House. Look for a quick invitation for leader Daschle to visit. But the White House acknowledging a very tough road ahead as this president tries to sell the rest of his first year agenda.

WOODRUFF: Look at ranks unbroken in terms of being upset about Jeffords leaving the party?

KING: Well, certainly the moderates are upset. Remember, this is a president who ran as a -- quote -- "uniter, not a divider." He said he wanted the Republican Party to be a big tent, all voices were welcome. The moderates say the defection of Jeffords could prove devastating to the parties image across the country.

Conservatives have a different view. Many of them believe that it has kept the party away from its conservative roots, because whether it's the president, President Bush in this case, or on Capitol Hill, Republican leaders have tried to court the moderates. Some conservatives believe the president might suffer in the short run, but that the party will gain in the long run.

(BEGIN VIDEO CLIP)

TERRY JEFFREYS, FMR. BUCHANAN CAMPAIGN MGR.: The Republicans have tended to water down both their economic conservatism and their social conservatism in their congressional agenda because of people like Jim Jeffords who won't go with it. So I think we're going to have a lot more clarity in national politics with Jim Jeffords out of the Republican Party. There will be a much clearer debate. There'll be more of a fight over public policy in Washington, and I think that's going to be good for the Republicans.

(END VIDEO CLIP)

KING: But this a very delicate moment for the president as has to reach out now to Tom Daschle and the Democrats in the Senate. Many here question how far he can reach across the aisle without alienating the conservatives in the Republican Party, especially in the House, where many, as we have been reporting, are already upset with this president over education -- Judy.

WOODRUFF: John, switching gears here, at the last we learned today the president going to California. He will sit down with Democratic Governor Gray Davis. Tell us how all his came about.

KING: A great political feud between these two men: The president of the United States and the Democratic governor of the nation's largest state. Governor Davis has been blaming President Bush, saying he needs price caps on electricity to control the power crisis in California. The White House of course has been resisting.

This a president who doesn't expect to win California three years from now. Many Republicans from California though have been critical of the White House, saying he needs to do more to show that he cares. So the president will be traveling to California for to two full days next week and he agreed today after receiving a letter saying, "Why don't we get together and meet?" The president agreed to do that. They will meet early next week in Los Angeles.

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

News that Senator Jim Jeffords may leave the G.O.P. has electrified official Washington. But what about the people who elected Jeffords? Will they accept a senator who runs for office in one party and then switches to another? For more on that, we go to Vermont, and to CNN'S Bill Delaney.

(BEGIN VIDEOTAPE)

BILL DELANEY, CNN CORRESPONDENT (voice-over): In the town of Shrewsbury, Vermont, home to Senator Jim Jeffords, roots run deep, Republican roots, for a long time. Jeff Miller's family traces things back nine generations, continuity in changing times.

UNIDENTIFIED MALE: Well, I'm a Republican and Jim's a Republican. If it comes down to where he does decide to change parties, he's got to do what he feels is the best for everyone.

DELANEY: Republican, Democrat, independent -- what matters in a place like Shrewsbury, down-home issues, like the Northeast dairy compact that supports dairy prices.

UNIDENTIFIED MALE: Take a look around. This was a dairy farm and it's no longer a dairy farm, and you know Jim's working hard to try to keep what farms are left, going. There's only one farm left in this town that's actually producing milk anymore.

DELANEY: Jeff Smith's mother, Donna, a tad more partisan. She ran the Republican party in town for 15 years, and Jeffords is an old friend. She does worry about Democrats in power in Washington.

QUESTION: What would you say to Jim Jeffords, if you could?

DONNA: Right now? Well, I'd say, "Jim, why? What's going on, after all these years?" I mean, why change?

QUESTION: Would you try to talk him out of it?

DONNA: Yeah.

DELANEY: But for the most part, Jeffords seems to have the times on his side.

Right around the corner from the old Vermont, the Smith's farm, here in Shrewsbury, is the new Vermont -- new homes, virtually all of them, the Smith's say lived in by people from somewhere else, people not raised on this town's traditional Republicanism.

Out-of-state plates, like this one from New Jersey, a sign of the times, many arriving with very different political roots or no particular roots at all. Don Parish is a newcomer to Vermont, having lived there only a quarter century or so.

DON PARISH: I think he should have been an independent a long time ago, because I think Vermont is an independent state. I think a lot of the people in Vermont are independent. They can label themselves Republicans or Democrats, but I think most of us are independent.

DELANEY: In a Vermont full of new vistas, unimaginable a generation ago, and new people and new ideas, whatever Jeffords leaves behind of old political ties should be easy enough to untangle.

Bill Delaney, CNN, Shrewsbury, Vermont.

(END VIDEOTAPE)

WOODRUFF: A woman who dominated Washington headlines for a brief time 25 years ago returns to the capital.

Next on INSIDE POLITICS, the changes in Washington, and the changes in politics, since Elizabeth Ray first made headlines.

(COMMERCIAL BREAK)

WOODRUFF: 25 years ago today, a Congressman hired his mistress as his secretary, a move that eventually ended his career. At the time, the news of that affair shocked the capital and the nation. Our Bruce Morton reports on Elizabeth Ray's return to a very different Washington.

(BEGIN VIDEOTAPE)

ELIZABETH RAY: Could you believe it is 25 years today?

BRUCE MORTON, CNN CORRESPONDENT (voice-over): A woman, no longer young, walks with a friend on the Capitol Grounds, points to where her office used to be.

For Elizabeth Ray, it was a visit to old memories. 25 years ago, she went to "The Washington Post" and told them: I'm a secretary who can't type. I can't even answer the phone. What she mainly did was have sex with her Congressman. Headlines. Outrage. The Congressman, Wayne Hays, had to resign. So now she's back.

RAY: It meant something to me that I could go back and walk through the Capitol, go to the House dining room, get a feel of what it's like, 25 years later, when I never thought I'd make it this long, to be honest with you.

MORTON: She made a little history then. Reporters knew about John Kennedy's affairs, and Lyndon Johnson's. But didn't write about them. Liz Ray was a big story.

HUGH SIDEY, "TIME" MAGAZINE: We just intruded more. There was more personal stuff about everybody, Hollywood, wherever you looked, the publications, and it was just probably inevitable.

MORTON: And now things have changed again. Politicians like Bill Clinton, like New York Mayor Rudy Giuliani, confess and don't have to resign.

RAY: People didn't want to be around me. People distanced themselves from me. And now look what happens. Somebody gets caught up in a sex scandal today, they're invited to all the parties. They're all over the place. They're flying all over the country and doing all kinds of things, and the president remains president.

SIDEY: It's part of the coarsening of our society. This stuff just doesn't shock anymore.

RAY: If my notoriety had happened today, I don't think it would have been very much at all.

MORTON: What's she been doing? She wrote a novel. And she sometimes does comedy based on her life. This was New York's Comedy Club last weekend.

RAY: One of my first jobs I had, I was a computer expert. All the senators wanted me to work their laptops.

(LAUGHTER)

MORTON: She doesn't have a lot of friends now, she says. And her thoughts a quarter century later? What happened to her would-be sexual harassment today, she says, and then adds:

RAY: No one really got hurt, you know, really. Maybe they lost their job or something, but physically, and otherwise, no one really got hurt. So I feel good about that, because I wouldn't want to hurt somebody, you know, to really cause a lot of pain and sorrow.

MORTON: Elizabeth Ray, 25 years later.

RAY: Wow, what a beautiful sight.

MORTON: Bruce Morton, CNN, Washington. (END VIDEOTAPE)

WOODRUFF: We will join Lou Dobbs for a preview of the day's business headlines in just a moment.

Plus, we will tally the big gains by Republicans at last night's Washington fund-raiser, a record night for the G.O.P. with the president as the star attraction.

(COMMERCIAL BREAK)

WOODRUFF: For a closer look at the Jim Jeffords story, visit our Web site at cnn.com, the AOL key word, CNN. Our in-depth look includes video clips, in depth analysis, and a closer look at the practical and the politics involved in party switching.

And later this evening, Senators John Edwards and Jeff Sessions are in the "CROSSFIRE." That's at 7:30 p.m. Eastern.

Right now, there are about 75 million Americans, 50 and older. The AARP released a landmark study on what it's like to be in that age group. CNN Rea Blakey reports the survey covers both the good and bad trends of being 50-plus.

(BEGIN VIDEOTAPE)

REA BLAKEY, CNN CORRESPONDENT (voice-over): At age 61, Genevieve Gonzales has high blood pressure, elevated cholesterol, heart problems, and no health insurance. She earns $5.15 an hour.

GENEVIEVE GONZALEZ: If I get sick, I cannot work, I cannot do anything, it would be very devastating for me.

BLAKEY: Mrs. Gonzales typifies a full 25 percent of 50 to 64- year-olds. For many of them, the golden years will be tarnished. A new AARP report on economic security of Americans age 50 and beyond, paints a portrait of joy, and pain, the divide between the have's and have not's is ever widening.

JOHN ROTHER, AARP: People with family incomes under $19,000 are generally in trouble, they do not have savings, do not have a pension, many do not have health insurance, they are not prepared to retire.

BLAKEY: The number of 50 to 64-year-olds without health insurance continues to climb from 11 percent in 1988 to 14 percent in 2000. More than two-thirds who live in poverty do not receive Medicaid protection. Meanwhile, participation in employer-sponsored pension plans continues to stagnate, prompting Congress to call for pension reform.

SEN. CHARLES GRASSLEY (R), IOWA: Getting small business to set up pension systems, because very few small businesses do, and increasing the IRA from a $2,000 to $5,000 limit.

BLAKEY (on camera): Overall, the vast majority of Americans age 50 and older are striking gold in their golden years. In 1998, Americans in the 50-plus age group controlled two-thirds of all the household wealth in the nation.

Rea Blakey, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: There's more INSIDE POLITICS coming up. But first, let's go to Lou Dobbs for a preview of what's happening at the bottom of the hour on "MONEYLINE."

Hi, Lou.

LOU DOBBS, HOST, "MONEYLINE": Hi, Judy. Thank you.

Coming up tonight on "MONEYLINE," the fallout from an impeding power shift in Washington. Tonight, we'll go live to Capitol Hill for the latest on Senator Jim Jeffords' expected decision to split with the Republican Party.

We'll go as well to the White House for how it may affect the president's agenda.

And to Vermont, Senator Jeffords home state, for reaction there.

And we'll go to Wall Street to find out how stocks sold off on the news on Washington. Tonight I'll be talking with Williams Company CEO Keith Bailey about energy and telecommunications.

Former Secretary Treasury Larry Summers on the economic slowdown and the tax cuts the Senate passed today.

The man who translated his hi-tech millions into hoop dreams joins me. Mark Cuban, the owner of the Dallas Mavericks.

All of that and more just ahead on "MONEYLINE." Please join us.

(COMMERCIAL BREAK)

WOODRUFF: The possible loss of a senator, and overall control of the Senate, dominated the day's news for Washington Republicans. But the party can take a little comfort in their growing treasury.

Last night's Republican Party fund-raiser in Washington raised a one night party record of $23.9 million. Tickets ranged from $1,500 per person, to $20,000 for a corporate table. More than 2,000 people listened as the president thanked them for their support.

(BEGIN VIDEO CLIP)

BUSH: We came to your dinner last year and I remember the warm welcome in the middle of a hard fought campaign. A lot of things have changed since then. Last year, I had to fly halfway across the country to get here. Today, it took me five minutes.

(END VIDEO CLIP)

WOODRUFF: The big event followed a Monday reception for party donors at the vice president's home. Some watchdog groups criticized that event, and compared it to President Clinton's use of the White House for fund-raising events in the 1996 campaign.

That's all for this edition of INSIDE POLITICS. But, of course, you can go on-line all the time at CNN's allpolitics.com, AOL keyword cnn.

Our e-mail address is inside politics@cnn.com.

Tonight on "CROSSFIRE," the possible party switch by Republican Senator Jim Jeffords. The guests will be Senators John Edwards and Jeff Sessions. That's at 7:30 p.m. Eastern. And a reminder: we will have an interview with Georgia Senator Zell Miller right here on INSIDE POLITICS tomorrow at 5:00 p.m. Eastern.

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

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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