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President Bush Downplays Differences With Allies

Aired June 12, 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.
(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I refuse to let any issue isolate America from Europe, because Europe is too important for America's future.

(END VIDEO CLIP)

ANNOUNCER: President Bush opens his European tour, downplaying his differences with allies. We'll try to pin down his plans on global warming, in an interview with EPA chief Christie Whitman.

And women and Social Security: female senators urge the president to keep moms in mind, too.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: The phrase, "honor your father and your mother" is not only a good commandment to live by, it is a good commandment to govern by.

(END VIDEO CLIP)

ANNOUNCER: Now Judy Woodruff takes you INSIDE POLITICS.

JUDY WOODRUFF, CNN ANCHOR: Thanks for joining us.

President Bush tried to emphasize all that the United States has in common with Europe. But, he spent a good portion of his first day there on the defensive, anyway.

In Spain, Mr. Bush got to experience firsthand the criticism of his administration that has been building overseas. Our senior White House correspondent John King is traveling with the president.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): At stop one, the president was polite but defiant, brushing aside fresh criticism from major European allies on global warming.

BUSH: The Kyoto Treaty was unrealistic. It was not based upon science. The stated mandates in the Kyoto Treaty would affect our economy in a negative way. KING: Spain's prime minister is among those urging Mr. Bush to reconsider. And as the president began his five-day visit, protesters took to the streets of Madrid, and the European Union called the U.S. approach, "soft on action that will contribute to actually reducing greenhouse gas emissions in the short to medium term."

Missile defense is another pressure point. Mr. Bush wants to amend or abandon the 1972 Antiballistic Missile Treaty so the United States can test new intercept technologies.

BUSH: The ABM Treaty is a relic of the past. It prevents freedom-loving people from exploring the future.

KING: Spain was a warm-up for more contentious stops ahead: Wednesday at NATO headquarters in Brussels and a Saturday sit-down with Russian President Vladimir Putin.

BUSH: The days of the Cold War have ended, and so must the Cold War mentality, as far as I am concerned. And I believe we are going to make great progress on this issue. I truly do.

KING: His host offered Mr. Bush a helping hand, warning against a rush to judgment.

JOSE MARIA AZNAR, SPANISH PRIME MINISTER (through translator): What I am surprised by is the fact that there are people who, from the start, disqualify this initiative.

KING: U.S. officials described the talks here as upbeat, and took the prime minister's remarks as a sign of slow progress in the debate over missile defense. But outside the U.S. Embassy in Madrid, a reminder that controversy will shadow Mr. Bush in the days ahead.

(END VIDEOTAPE)

KING: The president resting tonight in Madrid. So far, he shows no signs of giving any ground in the major policy disputes over global warming or missile defense. But over and over again, Mr. Bush is promising to listen. That's an effort on his part to quiet criticism from the European allies that in his early months of office, the president has too often taken the go it alone approach -- Judy.

WOODRUFF: Given that, John, and given the fact that are there very real disagreements between the Bush administration and most of these European governments, what is the main point of this trip for the president?

KING: Well, the main point of the trip is getting to know you, if you will excuse the cliche, the administration saying you will not have a breakthrough on missile defense, you will not have a breakthough on global warming. Until these leaders actually get to know Mr. Bush a little better, come to trust him, learn a little bit about his leadership style.

But the U.S. side would also say look, if the United States wants to go ahead with missile defense, it's the super leading power in NATO. The allies must come along if Mr. Bush consults them properly. The U.S. side would also say the Kyoto Treaty is dead, the United States will not support it, it will not work. And the allies may be upset, but they ultimately will have to reach the political conclusion, that it's time to search for an alternative.

WOODRUFF: So, John, the president -- the people around him, counting on these personal relationships that he may be building to get them through stormier times to come?

KING: They're counting on personal relationships, although on the issue of missile defense, we do see a subtle shift in strategy. Early on, the Bush administration saying that, if it could persuade the European allies to propose and to endorse amendments to the ABM Treaty, Russia would feel it would have no choice but to go along.

Now you sense from the administration that Mr. Bush puts more stock in his Saturday meeting with President Putin. If the Russians would show some openness, perhaps in exchange for something else, in negotiating changes to the to the ABM Treaty, then the skeptical European allies would say, hey, if the Russians are willing to go along, maybe we should too.

But still a very tough sell. The administration insisting, don't look for major breakthroughs here. They will take modest diplomatic progress, and the president is due back here of course in just five weeks for another major European trip.

WOODRUFF: So, John, genuinely, the matters are up in the air when it comes to the president's meeting with Mr. Putin?

KING: Quite a bit is up in the air. And it's not just missile defense. Mr. Bush wants to negotiate deep productions in U.S. nuclear weapons. The Russian economy is struggling, Russia would like to cut the money it spends on its nuclear arsenal. There are other issues to deal with as well.

This administration a much tougher line than the Clinton administration, when it comes to IMF and other international financial assistance to the Russian economy. Mr. Bush, we are told, will be quite blunt in his criticism of what he believes is a crackdown on press freedoms by the Putin government, so a lot of ground to cover.

Still, the administration is saying, very important for this president to look each of these leaders individually in the eye, he has met many of them before, the European leaders -- never met Mr. Putin -- and develop over time that the administration insists down the road a bit, perhaps beginning in the major G-8 Summit, again, five weeks from now in Italy, and then perhaps, some actual policy progress.

Right now they're looking for political relationships.

WOODRUFF: All right, John King, traveling with President Bush, and tonight, in Madrid. Thanks.

Our Bill Schneider is watching the president's European tour, and thinking about political parallels back here in Washington. Bill joins us now -- Bill.

WILLIAM SCHNEIDER, CNN POLITICAL ANALYST: Well, Judy, -- "The common European perception of President Bush," a senior administration officially was recently quoted as saying, "is of a shallow, arrogant, gun-loving, abortion-hating, Christian fundamentalist Texan buffoon." Wow.

Is that the problem President Bush faces this week as he makes his first trip to Europe? Or is it something bigger than that?

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): President Bush is having the same problem in world affairs that he is having in domestic politics. He is assuming a mandate for change where there isn't any.

Americans were overwhelming happy with the way that things were going in the country under President Clinton. Nearly two-thirds of them said so in exit polls on Election Day. What Americans were looking for in Bush was a change of leadership, not a change of direction.

Over the years, Clinton defined a broadly acceptable policy consensus in the U.S. Whenever President Bush has tried to break outside the boundaries of that consensus -- on the environment, on education, on spending, or church-state relations -- he's been forced to backtrack.

Ditto for international policy. President Bush has criticized the Clinton administration for not being tough enough with adversaries like China and North Korea, for being too quick to commit U.S. forces.

BUSH: Many in our military have been overdeployed and underpaid.

SCHNEIDER: But President Clinton's world policy was broadly popular in the U.S. and very popular overseas, especially in Europe.

TONY BLAIR, BRITISH PRIME MINISTER: President Clinton was a great assistance during difficult parts of the Northern Ireland peace process.

SCHNEIDER: Americans repudiated Clinton, not Clintonism. Those things that led Americans to turn against Clinton -- his behavior, his values -- meant little to Europeans.

BLAIR: Bill Clinton is a friend of mine and will remain a friend of mine.

SCHNEIDER: Europeans were dismayed when President Bush set off on a program to change U.S. policy in the world. On global warming, for instance.

GERHARD SCHROEDER, GERMAN CHANCELLOR (through translator): We agree on everything except obviously, for one thing, and that was no surprise to you: the Kyoto protocol.

SCHNEIDER: The president was forced to backtrack.

BUSH: To the contrary, my administration is committed to a leadership role on the issue of climate change.

SCHNEIDER: U.S. allies were dismayed when the Bush administration altered course on North Korea. And in fact, the administration was forced to announce last week that it was reopening negotiations with North Korea. Europeans are especially disconcerted by the Bush administration's determination to scrap the antiballistic missile treaty and replace it with the unproven technology of missile defense. Why is he doing this, they wonder.

BLAIR: I think what is important is that if we take this forward in a constructive way and have the right discussion with allies, then we can find a way through this.

SCHNEIDER: The bottom line is the Europeans don't want change. They certainly didn't ask for it, and they wonder if Americans did.

(END VIDEOTAPE)

SCHNEIDER: Think of this as the second phase of the Bush presidency. Reality sets in. The reality is, there is no big mandate for changes in U.S. policy, either at home or in the world.

WOODRUFF: All right, Bill Schneider, thank you.

While Mr. Bush is being criticized in Europe for his global warming policy, his EPA chief Christie Whitman sat with me today to defend the administration's environmental strategy.

I asked her how she responds to the leaders of the European Union who charged today that Mr. Bush's approach to climate change is short on action.

(BEGIN VIDEO CLIP)

CHRISTIE WHITMAN, EPA ADMINISTRATION: What the president said was this was the interim report. The next part of it, and he's directing the cabinet to continue, should focus on what kind of market-based initiatives we should take, what kind of goals, if we are going to set goals, should we be looking at?

That's really going to be the action part of it. But this was significant yesterday. What he said was, look, there really is a problem, but it has to be solved by the world, it can't be solved by any one nation alone. And we, as the largest emitter of greenhouse gases, have got to be at the table, but we can't do it alone, and so we need to engage with the world. And obviously we have had a lot of conversations that I have had with my counterparts, Secretary of State Colin Powell has with his, and we are trying to keep the conversation going, and I believe we will.

WOODRUFF: Hearing what you are saying, at the same time the European Union leadership is saying abandoning the Kyoto treaty, which was negotiated four years ago in '97 means postponing action that was already delayed at the time that it was taken, and sets the world back in a very significant and damaging way?

WHITMAN: Actually, Judy, they are a little bit disingenuous about this, because none of them have yet ratified that treaty, and they are not going to meet, for the most part. Germany may, but that's because they are -- have taking credit for a lot of East German economy that -- the industrial part that is no longer functioning, probably Russia will meet the targets, but that's because their economy is not doing anything, so they are not emitting anything, but a lot of the rest of the parties to the original treaty are going to have trouble meeting those -- those what they call in those budget meetings, those targets.

What the president is saying is, look, let's focus on what is really going to make a difference over the long term. It's not just emissions, it's concentrations, and we need to know precisely what best actions we can take to have the long-term effect that we all want.

WOODRUFF: Well, let me ask about this, just read this quote to you from global -- or rather, a climate change scientist at the University of Illinois, who said -- quoted in the "New York Times" today -- he says: "There will be deep uncertainty in the climatic future for a long time," but he said: "If you wait until it's diminished to some threshold that you assign, and then you learn the problem is severe, it may be too late to do anything about it."

WHITMAN: Well, that's why the president is calling for some actions now, some short-term actions, and one of the things he challenged the -- Congress was to help implement the energy plan, the parts of the energy plan that to go to renewable resources and conservation, those parts that require some kind of legislative action. We are, certainly in the cabinet, are all directed to start to move this forward, to be aggressive.

And the next part is the cabinet-level review, which is not going to take a long period of time. We know we don't have a long period of time. We have got to reach the next step, sooner rather than later, but we want to do it based on what's really going to address the issue over the long term, what is really going to make a difference.

WOODRUFF: When you say "sooner rather than later," are we talking weeks, months, a year? I mean, can you put any kind of timeframe on it?

WHITMAN: I would -- you know, you always hesitate to do that, because then you fall out, but certainly within a year and sooner than that. There is a major conference, as you know, the next part of the Kyoto discussion is in Bonn at the end of July.

We are looking to see if we can move some things forward by then, to see whether we can have a discussion. There are still some questions as to whether or not that meeting will be held, but that's up to others to decide. We are not asking for it to be canceled.

WOODRUFF: You mentioned Secretary of State Powell. As you know -- well, the administration official, unnamed, was quoted just the other day as saying that you and Secretary Powell tried to urge the president, did urge the president, to move toward mandatory -- at least a move in the direction of mandatory emission controls. And you were rebuffed, in so many words. The president decided to go another way. Is that what happened?

WHITMAN: Well, I think it's a stage thing. And there are those of us at the table who believe in -- because we hear it so much from others -- that you need to have some -- there -- there, and that comes when you have some standards and some targets, and eventually perhaps something mandatory.

But there is a strong conviction that there -- it would be wrong to move to mandatory unless you really know that is going to make the difference, and we need to be careful as we move to mandatory to make sure that's done in a way that allows for the economy to continue to grow, but actually goes after greenhouse gases.

And that's one of the reasons why the president is promoting the multi-emissions bill. That will be mandatory, and that will have an impact.

WOODRUFF: Are still trying to change the president's mind, or have you just accepted this decision?

WHITMAN: Oh, we have another whole phase of the cabinet-level discussion, and I will still to continue to pursue the things that I think are in the best interests of the country and the president.

WOODRUFF: Do you think the president and Vice President Cheney are putting too much emphasis and worry on that energy and energy costs, at the expense of the environment in the long term?

WHITMAN: That's not what -- what's prompting this at all. There are two different things here.

We can use elements of the energy plan to help us meet our greenhouse gas emission goals, or to help us reduce greenhouse gas emissions, but we're not -- we didn't develop an energy plan worrying about what's happening in greenhouse gases, and that is part of the problem, that people think that we didn't take that into consideration, although the energy plan calls for environmental sensitivity as we move forward.

But there is a real crisis here. There is a real problem with energy. We need to address that, and we can still get at greenhouse gases, we can still get at global climate change through other means and mechanisms. It doesn't have to be through the energy plan, but we can combine them.

WOODRUFF: So, when the president's Chief Economic Adviser Larry Lindsey says this is really a choice, he said in so many words between in the short run having the lights on, or having increased carbon dioxide emissions, is that really what we are looking at here?

WHITMAN: Well, we certainly have a problem, and it's hurt the environment not to have had a national energy policy, because as we look at California and try to avoid blackouts there, we are looking at generation -- generators that are having to go to older -- for peak periods, they are having to go to older generating facilities that are not clean as they might be.

Now, we are making an environmental overhaul over time, because we are requiring them to pay more to do that, and to meet higher standards after the crisis has passed, but there is no question that the lack of a national energy policy is hurting the environment. And right now, in order to ensure that we don't have blackouts, which also hurt the environment -- not just the economy, but the environment as well -- that we are taking, allowing some increased emissions, but we are going to recaptured them over time.

So, it's not an either/or. We really can make these two things happen at once, and we believe we can address the energy crisis without trashing the environment.

WOODRUFF: Finally, this week, as the president meets with his counterparts in Europe, how accepting are they going to be of his position?

WHITMAN: Well, you know, a lot of them have invested a number of years in the Kyoto process that led to the protocol. They understand their flaws of the protocol. There was a meeting a year in The Hague, where everybody walked away from it. Things didn't work.

There are two different things here. We don't talk about it that way in this country, but for Europe, there is the treaty or the protocol, that's one thing, and then there is the process that got there, and that's what they want to preserve. They want to -- because they put so much into it, it has parameters, it has the framework, and they are scared of losing that.

And the president, I think, is going to be able to show them that he doesn't want to walk way from these international dialogue. He doesn't want to walk away from that kind of involvement. It's just not the Kyoto protocol.

WOODRUFF: Well, we'll be watching the trip.

WHITMAN: We all will.

WOODRUFF: EPA Administrator Christie Whitman, thank you very much.

WHITMAN: It's a pleasure.

WOODRUFF: Thank you.

(END VIDEOTAPE)

WOODRUFF: The president's education agenda heads toward a vote in the Senate. Straight ahead...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Evidence is that when you have competition, when you have enhanced choice, you have better education for everyone.

(END VIDEO CLIP)

WOODRUFF: Republicans try to keep their school choice hopes alive, but the mathematics are against them in the Senate.

Also ahead: the competing plans for a patients' bill of rights. The party lines are blurred, the lobbying is intense, and a potential veto looms over the debate.

And later: the future of Social Security. Two senators join us to talk about the president's new commission, and the pros and cons of privatization. This is INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: It is week eight of the Senate debate on the education bill, and if Democrats have their way, the bill will be voted on later this week. One of the most controversial provisions was taken up today, a vote on an amendment to provide vouchers for private school tuition.

CNN Congressional correspondent Kate Snow reports.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: This amendment gives my child -- mine a chance!

KATE SNOW, CNN CORRESPONDENT (voice-over): It was part of the president's campaign pitch, giving parents money to choose a private school for their kids. Republican senators tried to put it into law.

SEN. JUDD GREGG (R), NEW HAMPSHIRE: But if you're a single mother, especially a single mother in an urban area trying to raise your children on a low income, you don't have that option. You are stuck in that failing school. Your children are sentenced to that school.

SNOW: Senator Gregg's amendment called for a pilot program in 10 cities and three states. At a cost of $50 million for the first year, low income parents would get part or all of the money needed to pay for private school tuition. But Democrats called the program a phony choice that would leave most children out and take money away from where it's needed.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: Let's take scarce resources, invest them where they should be invested, and that is tried and tested programs that enhance the children's academic achievement in the public schools!

SNOW: It was an intense debate with a foregone conclusion.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: The ayes are 41, the nays are 58. The nays have it. SNOW: President Bush won't get a voucher plan even in pilot form. But analysts say he had little choice. To win Democratic support, the White House had to abandon private school vouchers.

TOM LOVELESS, BROOKINGS INSTITUTE: For the most part, conservatives are going to come along. I mean, they're going to swallow hard and they're going to accept the fact that there's no voucher proposal that's going to pass, and they're still going to support the president on the bill.

SNOW: The education bill does contain a compromise on public school choice. If a school isn't making progress after three years, students could leave and go to another public school in the same district. After four years, a failing school would have to make leadership changes and provide supplemental services, like after school tutoring.

ROD PAIGE, EDUCATION SECRETARY: We would have liked to have seen it go farther, but we want to appreciate what we've got. We're going to take what we've got and we're going to make something nice happen as a result of it.

SNOW: Democrats are pushing to pass the bill this week, but there are still dozens of amendments to consider.

(END VIDEOTAPE)

SNOW: And Senator Tom Daschle, the new majority leader, saying that he's going to keep the senators here rather late tonight, probably until about 9:30, to consider some of those amendments. Also saying today, Senator Daschle, that he wants assurances from the White House before they pass this bill that the money is going to be there to pay for these education proposals included in the bill.

Meantime, Republicans are talking about taking a little more time on some of these amendments. They want to make sure that the amendments that they think are crucial are brought up and considered. They're also sort of flexing their muscle here, Judy. One Republican aide telling me they that they want the Democrats to see what it's like now to be in the majority -- Judy?

WOODRUFF: All right, Kate. Moving away from education to another subject, what is going on now with efforts to get the Senate reorganized after the switch and control to the Democrats?

SNOW: The back-and-forth continues, Judy. Democrats today responding to yesterday's written principles that came over from the Republicans. Senator Chuck Schumer tells me it really comes down to the language now. They're trying to work out the language of what an agreement could be over those judicial nominees. That's been a real sticking point. They're trying to figure out what both sides can agree to, in terms of language, on some sort of a public statement. No material differences, I'm told, and both sides want to try to get that organizing resolution done this week so they can move on with committee business. WOODRUFF: And another subject, which everybody has got to be interested, and that is more rumblings about Senator Lincoln Chafee switching parties?

SNOW: Well, there was an article this morning in one of his hometown newspapers. I talked with Senator Lincoln Chafee today. He's choosing his words very carefully, Judy. And I should point out first of all that he says it is extremely unlikely that he would switch parties. He said that again and again.

But he's disappointed, he says, that the tone hasn't changed. Here's what he said: "I do have some concern that after Senator Jeffords left the party that the reasons that he left are not sinking in."

He went on to say to me that, "if the Republican Party were about the retake the majority," for some reason, for any reason, that he would consider leaving the party in order to tip the balance back toward the Democrats, assuming, he said, that there were still these issues that he's worried about -- that there were still, what he would call, the Republicans sticking in a partisan rut -- Judy, back to you.

WOODRUFF: Whoa, I bet some Republican ears are perking up over that. All right. Kate Snow at the Capitol.

Massachusetts Governor Jane Swift today set October 16th as the date for a special election to replace the late Congressman Joe Moakley. Primaries will be held five weeks earlier on September 11th. Moakley, a 15-term Democrat, died last month of leukemia.

Max Kennedy, son of Robert F. Kennedy, announced yesterday that he had decided not to enter the race. His decision paves the way for other possible candidates, among them former Boston Mayor Raymond Flynn, who has said that he is interested.

A jury decides the punishment for the bombing of a U.S. embassy. The latest on that and some other top stories, ahead on INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: We'll have more of the day's political news coming up, but now a look at some other top stories. One of the four men convicted in the 1998 U.S. embassy bombings in east Africa now faces life in prison without parole. After deliberating for a week, a jury in New York deadlocked on whether Mohamed al-'Owhali should get the death penalty.

The sentencing phase for a second defendant who is eligible for the death penalty begins next week. Two other defendants who were convicted face a maximum sentence of life in prison.

Authorities in the Philippines and the United States are trying to confirm claims by Muslim separatists that they have killed an American hostage. Leaders of the Abu Sayyaf group claim to have beheaded Guillermo Sobero, one of three Americans who were kidnapped late last month from an island resort. In all, the group is holding more than two dozen hostages. Sobero, a native of Peru, lives in Corona, California.

Allison is now the costliest tropical storm in U.S. history. The damage estimates of over a billion dollars are more than twice as much as the previous most-costly tropical storm.

CNN's Brian Cabell is in the hard-hit Texas city of Houston with people who are cleaning up.

(BEGIN VIDEOTAPE)

BRIAN CABELL, CNN CORRESPONDENT (voice-over): Mike and Louis Hallo are waiting for help, from FEMA, insurance agents, the Red Cross -- anybody.

MIKE HALLO, FLOOD VICTIM: I could do -- I mean, if there's something that I could do I'd go ahead and do it, but I can't do nothing right now. Nothing.

CABELL: Nothing, because his and his son's home is a nearly 100 percent loss -- furniture, appliances, the structure itself. They've saved a few clothes, and Mike still has his cigarette coupons that he redeems for gifts, and his cans that he turns in for cash, but not much else. Still, this is home for them.

LOUIS HALLO, FLOOD VICTIM: Been around here 27 years, you know? The property is good, it's just -- just that we know everybody around here.

CABELL: They've gotten to know Green's Bayou as well. It sits about 100 yards away. Last Friday, after four days of rain, it overflowed its banks and sent a 12-foot-high wall of water over the Hallos and their neighbors. The debris still hangs high in the trees.

One house actually burned down during the flood because of an electrical short. An elderly couple lost their home. Now friends from church are helping out.

LEIGH SHERMAN, CHURCH VOLUNTEER: They're in a real trying time now. They've lost everything, and we just want to help.

CABELL: Dawn Emig is spending the day helping out as well.

DAWN EMIG, FLOOD VICTIM DAUGHTER: My dad -- it's all our stuff. It's birth certificates and marriage license -- everything.

CABELL: Her father, Manuel Mendez, is trying to salvage a clock he had bought for his brother's birthday. He also has a set of tools that survived. But his house? Forget it.

(on camera): So you get some money for this and move on?

MANUEL MENDEZ, FLOOD VICTIM: No, I won't get any money for it now, but we're going to start over somewhere else.

CABELL: Do you have insurance?

MENDEZ: No, no insurance.

CABELL (voice-over): No insurance, not much money, but a ton of patience and hope that help from anyone is on the way.

Humor survives here as well. The joke is: One house actually survived the flood -- the birdhouse.

Brian Cabell, CNN, Houston.

(END VIDEOTAPE)

WOODRUFF: A little humor is important in a situation like that.

Ensuring the future of millions of Americans. Ahead, the heated debate over Social Security.

(COMMERCIAL BREAK)

WOODRUFF: Here in Washington today, all nine Democratic female senators urged the president to address the concerns of women in his efforts to reform the Social Security system. The senators called attention to the number of women who rely on Social Security and the dangers privatization may pose to them in the future.

In a moment, we will talk with Senator Barbara Boxer. But earlier today, I spoke today with Senator Jon Kyl, a Republican on the Social Security Subcommittee, and began by asking him about recent comments by members of the president's Social Security Commission who say their reform recommendation could well include some politically difficult steps.

(BEGIN VIDEOTAPE)

SEN. JON KYL (R), ARIZONA: I hope they are wrong. I hope they don't have to do that.

We have studied for a couple years now the different ways in which you can guarantee the benefits that are currently promised under law. Obviously, you can't do it under the existing program, it's going to go bankrupt. But there are ways, and the president's idea of private investment accounts are one the ways, to grow the accounts so that you can pay for all of those benefits. I would hope that the recommendations don't include any reduction in benefits.

WOODRUFF: So, when they and others say there is just no way to do it all simply by changing the way that money is invested, you are saying they just haven't looked hard enough?

KYL: Well, they haven't looked at all. They haven't began their work. I think they had their first meeting either today or yesterday, so I think I will wait for their report before I start being critical of it. They have a lot of work to do, obviously. I have spoken with one of commissioners this past week, and he said they really have barely begun their work. WOODRUFF: Well, if they are starting out by saying this, Senator, are you going to have -- do you expect to have confidence in the results of their work and their findings?

KYL: You know, I really hate to respond to a hypothetical like that, because I just don't know what their conclusion may be. It may be that one little benefit may have to be tweaked a little bit. I would hope not. But I'd really like to see what this report is before I start criticizing it.

I think I know some people are taking partisan pot shots at it, but I think I would rather wait and see what the commission comes out with. It's bipartisan. It's very well represented across the spectrum of American life, and I'd like to see what they come out with before I criticize anything.

WOODRUFF: Senator, as you may know, there were nine -- the nine Democratic women senators held a news conference today to highlight how much more dependent women are than men on the stability of Social Security. Does the fact that there are so many elderly widows depending on Social Security make private investment of Social Security funds that much dicier a prospect?

KYL: No, exactly the opposite. I would agree with my colleagues who stress the importance of Social Security to women, and there is no question -- that's one of the reasons I don't want to see any reduction in benefits, obviously, for anyone.

But the way that you increase the funding so that you can pay for those benefits is either by increasing taxes, or by investing the money which will produce more revenue to pay for them. Clearly, the investment approach is the one that President Bush has been talking about, that he talked about during his campaign and that the commission is going to be looking at.

And again, based upon a study that our group has done over the last couple of years, it appears to us that the increases -- the growth in the funds, through the value of compounding of interest and equity growth, will be enough to pay for the benefits.

My point is this, though, Judy: the status quo is going bankrupt. It will not pay for the benefits. We have to do something, and it's either going to be an increase in taxes, or a growth in revenue through investment.

WOODRUFF: Well, among other things, senator, the women senators were arguing today that investing in the stock market provides far less security for elderly widows, three-quarters of whom rely on Social Security as their major source of income.

KYL: Sure. But the way that all of the ideas work is, that there is a small amount of the Social Security fund invested. It obviously grows far more rapidly than any of the rest of the Social Security funds, and everyone is guaranteed a minimum level of benefits, the level that is guaranteed by law. Some people may do better than that, but nobody will do less than that, and that's accomplished through a variety of complicated mechanisms, some of the ideas involve annuities, there are other approaches to it.

WOODRUFF: But is there a way to do this by supplementing Social Security, rather than substituting for some of Social Security?

KYL: There are many different ways to do it. That is another idea. And the point here that people should remember is, that there are a lot of different ways to get more money into the system. That's what required to pay for these benefits. And the question is: do you get it by increasing taxes, or do you get it by investing. And there is an idea that at least part of this can be obtained by investing, and that's what I hope the commission will look into.

WOODRUFF: All right, Senator Jon Kyl, we thank you so much for joining us.

KYL: Thank you. You bet.

WOODRUFF: Good to see you.

(END VIDEOTAPE)

WOODRUFF: And now, California Senator Barbara Boxer joins us from Capitol Hill.

Senator Boxer, I know you were listening to what Senator Kyl had to say, and when he says the choices in the future are either raising taxes or changing the investment structure of Social Security, are those the only two options here?

SEN. BARBARA BOXER (D), CALIFORNIA: No, I don't think so, and that's what makes my job I have so interesting.

What concerns me, Judy, is when George Bush ran for president, he and Al Gore completely disagreed on the issue of Social Security. And Al Gore said, we shouldn't mess with something that's really worked for so many millions of Americans. What we should do is keep Social Security, keep the guaranteed benefits, keep them inflation-proof and the rest, and then allow people to have accounts on top of their Social Security.

And also, he talked about the possibility of investing some of the trust fund moneys in higher yielding paper, so that it's not just government bonds. I think that's the way to go here. Because frankly, it is very nerve-wracking to me, as a former stock broker, I was many years ago, to think that an elderly man or women of family, would have a situation where, instead of Social Security, they have an individual account like a 401(k) plan that is not insured, and the day they decide to retire, what if that stock market is in a trough?

It's true that the market over time goes up, and I'm a big believer in investing, but if this is what you're relying on for a basic benefit, it's frightening. Just remember the S&Ls when they went sour, what happened to people. So, we have to be very careful.

WOODRUFF: But, again, coming back to one of the comments Senator Kyl made, and I know others have made this point: what they are suggesting is not risking everything in Social Security, there still would be a guaranteed minimum. It's just that some would do better than others.

BOXER: Well, he's mentioned a guaranteed minimum, but trust me, a lot of people don't talk about a guaranteed minimum. I can assure you, if you do the math, if you look at what the economists say, there may be a guaranteed minimum, but it will be a lot lower than what the minimum is today, because it just doesn't add up.

Let's just take the issue of managing these funds, administrative costs. For people who say the government can't do anything right, it's true we mess up some things, but this thing we have done right. The administrative cost of Social Security are 4/100 of 1 percent. To administer private accounts, it's 25 times higher. So, you are just taking money right off the top before you even start.

I think -- I would again say this: you know, if it ain't broke, don't fix it. The reason people are worried about Social Security is that the baby boomer generation is going to be coming up soon and that's a reason to be concerned, but I think there are ways to fix this without messing with the basic premise of Social Security.

WOODRUFF: Despite their belief, those who argue for some sort of private investment, their argument that, through a combination of equity, growth and compounding interest, you are going to grow the pile of money much more so than would you be able to do it by any currently scheme, unless you raise taxes or cut benefits.

BOXER: Let me reiterate. I absolutely do not oppose taking the trust fund monies and taking a proportion of those trust fund monies and investing them in higher yielding certificates, stocks, and so on that are very safe.

But that is completely different than what George Bush talked about in the campaign, which was essentially doing away with Social Security, and everybody has their little portfolio which is uninsured, and it's very problematical.

Because again, if you happen to strike it right -- and we know, we have watched what's happened in the market -- and you retire at the right moment and you turn this into an annuity, you're fine. But if you happened to hit it at the trough, you are in big trouble, and it will increase poverty in this country, and I don't want to go back to those days.

WOODRUFF: Senator, if you don't mind, I've just learned that you were part of a meeting that broke up just a short time ago, members of the California Congressional Delegation and Vice President Cheney discussing California's energy issues. Can you shed any light on what you all talked about? Was there any meeting of the minds here?

BOXER: I would like to shed some electricity on California. Let me just say, we made a heartfelt plea, we Democrats in the delegation, to the vice president that we need some action against this price gouging. You know, we haven't even seen the Bush administration call in these generating companies. Whose profits have gone up Judy, in some cases 1,000 percent, while demand has gone up 5 percent.

We haven't even seen them call these people in and at least do what John Kennedy did during the steel crisis and say, shape up. He still reiterates the fact that he is against any type of the capping of the prices, and...

WOODRUFF: Does he and others in the administration -- do they acknowledge that there has been this so-called price gouging, as you describe it?

BOXER: No. Frankly, I stood up -- I was the first to speak, which was very gracious of Congressman Dryer, who called on me first, and I basically said, Mr. Vice President, if nothing comes of this meeting, thank you for being here because we have to tell you how frustrated we were.

We don't know how these people will sleep at night and getting a good night's sleep, after what they are doing to our people who are trying to conserve. We have letters from business people now flowing in that they will go bankrupt. I told him that California's economy is huge.

If we were a state, we have the 6th largest GDP in the world. So when we get a cold, everyone sneezes, in the Midwest, and the East coast, and we tried to convince him that we need the administration to be compassionate! They said they were and get in there and just say, OK, you have been gouging these people. You can make a reasonable profit, but you can't continue to kill these people because it will go right across the country. We're going to get into a recession.

WOODRUFF: But it sounds like no agreement, no meeting of the minds at this point.

BOXER: No. It was a cordial meeting, and I will give it that.

WOODRUFF: All right, Senator Barbara Boxer, thank you very much. We appreciate you joining us.

We will check in on some important state elections, when INSIDE POLITICS returns, including the New Jersey governor's race, and Democrat Jim McGreevey's effort to get an early jump on his early opponent.

(COMMERCIAL BREAK)

WOODRUFF: Virginia Democrats are at the polls today, selecting their nominees for a variety of elected offices. Businessman Mark Warner is unopposed in the Democratic race for governor. The lack of a contest at the top of the ticket is one reason the turnout could be fewer than 170,000 voters. Warner will face Republican candidate Mark Earley in the governor's race in November.

A democratic candidate for governor of New Jersey is using a pair of new TV ads against his current and future election opponent. Woodbridge Mayor Jim McGreevey faces only token opposition in the Democratic primary, but today, he began a $1.9 million ad campaign in three major markets.

(BEGIN VIDEO CLIP, MCGREEVEY CAMPAIGN AD)

ANNOUNCER: Jim McGreevey. He stood up to the auto insurance companies, demanded role backs. He took the appropriate tax fight to Trenton, and now is pushing for faster, fairer tax rebates. He even forced HMOs to cover mammograms for women.

If McGreevey could win these fights from the outside, imagine what he will do as governor. It's about having a governor that will get in there and fight for middle class New Jersey.

(END VIDEO CLIP)

WOODRUFF: The ads are expected to run until the primary vote on June 26.

Thus far, McGreevey has spent more than the combined total of the two Republican primary candidates, former Congressman Bob Franks and Jersey City Mayor Bret Shundler.

The political races are heating up all around the country, especially given the delicate balance of power here in Washington. For more insight, recently I spoke with CNN political analyst Charles Cook of "The National Journal" and Stuart Rothenberg of the "Rothenburg Political Report."

And I started by asking them if the overall political outlook in the Senate had changed, now that power shifted to the Democrats.

(BEGIN VIDEO CLIP)

STUART ROTHENBERG, ROTHENBERG POLITICAL REPORT: I don't really think the change is the outlook for 2002. You can certainly make the argument that Democrats now as the majority party, will be able to raise money and then there is a question of possible Republican retirements, now that they don't control the body. But I don't think the fundamental dynamic changes until we see how the issue mix changes.

CHARLES COOK, "NATIONAL JOURNAL": I agree that I don't think it changes the dynamics, although in some individual cases. For example, Tom Harkin in Iowa being the chairman of the Senate Agriculture Committee, in a state like Iowa, it doesn't hurt him a bit, that's for sure. But overall, I don't think it changes the dynamics either.

WOODRUFF: All right, let's go down the list -- first of all, some of the Republicans who could be considered vulnerable, and then we'll talk about the Democrats. Stu, let me start with you. Everybody is interested in Jesse Helms and North Carolina. ROTHENBERG: We are still waiting on the decision by Senator Helms. We keep hearing that it's going to be sooner rather than later. Secretary of State Elaine Marshal wants to run, has been making the rounds preparing to raise money. The big question mark on the Democratic side is Bobby Etheridge: Will he run.

Congressman represents overwhelming white Congressional district. As a moderate he would be a formidable candidate. But then again, if Senator Helms don't run it changes the entire mix. There'll be a Republican primary. It's still very much up in the air, Judy.

COOK: You know, 99 times out of 100 a party is always better off having their incumbent run for re-election. But this is one of these cases where it's not entirely sure because Senator Helms is so controversial and he does have the age-health issue there, that that is a bit of a liability.

On the other hand, it is a nominally Republican state and I think, if left to their own devices, people would probably go with a Republican, if it wasn't a Republican too controversial.

WOODRUFF: All right, Charlie, what about another Republican in Arkansas, Tim Hutchinson?

COOK: Well, Arkansas is probably the least or is the least conservative, least Republican state in the country. Senator Hutchinson had a bit of a messy divorce. He's got a very strong challenger in Attorney General Mark Pryor. I would say he is certainly the or one of the top two most vulnerable Republican incumbents in the country, no doubt about it.

WOODRUFF: Stu, moving up to New Hampshire, Bob Smith.

ROTHENBERG: In a region that we have heard recently as a lock solid Democratic, we have a state with two Republican senators, Two Republican House members, and a Republican legislature. But Bob Smith is clearly in trouble. It certainly looks now, Judy, as if there's going to be a primary from Congressman John Sununu.

The Democrats continue to believe that Governor Jeanne Shaheen will run. And there's a big slit here in terms of the general election. Many Republicans believe that Sununu would be a more formidable general election nominee and that Bob Smith would be in trouble against the governor, but there's a long way to go here.

WOODRUFF: All right, Charlie, our last Republican, at least that we are going to talk about this time, Susan Collins in Maine.

COOK: I don't think Senator Collins is terribly vulnerable. I think the state, New England is not a very good place for Republicans these days. She only got 49 percent of the vote last time. There's a female state senator that's in there, a couple of other male Democrats that are looking at running against her, but I think we have a long way to go before Collins an a list of really truly vulnerable incumbents.

WOODRUFF: OK, let's move over to the Democrats, Stu. What about Missouri Senator Jean Carnahan who was appointed.

ROTHENBERG: Appointed, right in a very fluky situation. The Republicans always thought this would be a top target. They looked at a numbers of members of the delegation who have passed. And it now looks as if former Congressman Jim Talent, who narrowly lost the Gubernatorial election last time, is inching toward this race. At least Republican strategists certainly hope so. He's the big name that's left. They say he's going to run. I think it would certainly make this another top tier contest again.

WOODRUFF: All right, let's talk about Tom Harkin. You mentioned him a little while ago.

COOK: Yes, I think this is going to be one of the really good races in the country, Tom Harkin and Greg Gansky is a plastic surgeon by profession. He was elected in the '94 tidal wave. He represents Des Moines. He's going to be running against Harkin, a former wrestler in high school and college, a real tenacious guy. It's going to be a very good race but Republicans have run all kinds all shapes and sizes of challengers to Tom Harkin over the years and he always manages to survive and I would give him the edge but it's going to be one of the best races in the country.

WOODRUFF: Stu, Paul Wellstone in Minnesota, and this is one the president himself has gotten involved in.

ROTHENBERG: Absolutely. Yes, the White House got involved in recruiting Norm Coleman, the mayor of St. Paul, into the race, and you'll recall Coleman ran a very close second to Jessie Ventura last time for governor. There was a potential problem here for the Republicans. If the president's numbers do tank on the basis of energy and the economy, you can certainly bet that Paul Wellstone is going to hang George W. Bush around Norm Coleman's neck. Otherwise Coleman is a formidable candidate, certainly a top tier race.

WOODRUFF: All right, Charlie, New Jersey, Robert Torricelli.

COOK: There are more question marks over this race than anyplace else in the country. First of all, Senator Torricelli has very, very tough legal and ethical problems out there: Rumors of an indictment, whether that happens or not we don't know, but he's in a very, very, very tough shape.

Let's assume that he is on through the campaign -- stays through the campaign -- isn't forced to resign for any reason. Republican are going to come up with a top-tier candidate. They are trying to get, they would like to get form governor Tom Kean. He would be the best of all worlds, but it's up in the air whether they convince Kean to do it. I think Kean in the past has wanted to run again to get back into politics. I think his wife is a little less than enthusiastic about it. But he would be the best case scenario. I think almost any credible Republican would have a very good chance of knocking Torricelli out...

WOODRUFF: Even if nothing else happens? COOK: Even if nothing else happens, I think the cumulative weight of all this is pretty rough. And this is in a state where Republicans have had real problems over the last few years and yet, because of his own unique problems this is a seat that Democrats have to be scared about.

ROTHENBERG: I think problem, Judy, for the senator, is that Torricelli needs a clean bill of health to be able to go to the voters and say re-elect me. He's unlikely to get that. There'll probably still be a cloud hanging over him, in which case the Republicans need a candidate who is formidable enough simply to be an alternative. His major theme or her major theme will be, I'm not Senator Bob Torricelli, elect me. And that'll get a big chunk of the vote right there.

WOODRUFF: All right, any quick last word on potential retirements? Are there any names jumping out?

COOK: Well, there are a couple out there. There's continued talk about whether Phil Gramm retires or not. But to be perfectly honest I don't think Democrats could win the seat anyway. In that sense it doesn't really make a difference in terms of the balance of Senate. Senator Helms, obviously a decent chance he could retire.

WOODRUFF: Fred Thompson.

COOK: Fred Thompson, but again, I think -- well, Democrats might have a shot at that one if he did. The question is, does he want to do this for another six years or not. I mean, he has absolutely no reelection problem if he decides to run, but that's another possibility, surely.

ROTHENBERG: Actually, I think if he retired that race would immediately become a toss-up. Both parties have some bench, but there's no obvious successor. The other name might be considered and is certainly being tossed around in Washington, whether or not it's accurate, we toss around a lot of stuff that's not right, but one of the names being tossed around is Senator Pete Domenici.

He's a very senior Republican, committee chairman, or was a committee chairman. And the logic is, the argument is he's been around a long time, now he's in the minority. Is he really going to run for another six-year term knowing he's in the minority and might be there for another term. So we will have to wait and see. Democrats are certainly making the case that a lot of these senior Republicans are reassessing.

COOK: And if Domenici were to step aside, you have got Bill Richardson there who would be a hands on favorite for the seat. So that would be a big blow for Republicans if Domenici stepped aside.

WOODRUFF: OK. We are going to leave it there for today. Stuart Rothenberg, Charles Cook, thank you both. Great to have you.

Meanwhile some Arizona Republicans are unhappy with positions taken by their senator, John McCain, and they are taking the first steps toward a recall campaign. Two separate recall applications have been filed in Arizona, and organizers say they plan to combine their efforts. To force an election, organizers would have to gather almost 350,000 signatures of registered voters by October 1.

The results of a recall election would be nonbinding, but according to "The Arizona Republic" newspaper, Senator McCain has said he would resign if he lost a recall election.

Did the former president get his birthday wish, or did he miss the catch of the day? How George Bush celebrated turning 77, just ahead.

(COMMERCIAL BREAK)

WOODRUFF: Before departing for Europe, the president phoned his father, the former President Bush, to wish hem a happy birthday. The elder Bush turned 77 today, and he had planned to spend the day golfing and fishing near his home in Kennebunkport, Maine, but the weather spoiled his plan, raining out his two favorite activities.

The spokesman says that instead the former president spent the day inside, taking scores of calls from former heads of state, as well as family and friends. From all of us to President Bush, happy birthday.

From corn to the sun, the many sides of the energy issue, ahead. Plus, saying good-bye to a Chicago institution with bipartisan appeal. This is INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: The Bush administration just says no to California, generating new political friction over energy. Who's fueling the energy crunch? We'll look at a legal loophole that has contributed to the problem. And later: the clouds over President Bush's European trip, and the possible silver lining for him at home.

Welcome back to INSIDE POLITICS. In the political skirmishing over energy, the Bush administration struck a blow against California today. The Environmental Protection Agency said the state must continue to put ethanol or other clean-air additives into gasoline. California had asked for an exemption from a federal law requiring additives, saying that they are not needed and that they increase fuel costs.

EPA Administration Christie Whitman contends those additives, or oxygenates, are actually a good thing for California.

(BEGIN VIDEO CLIP)

WHITMAN: Actually, if were to do away with the 2 percent oxygenate requirement, that would exacerbate -- or could exacerbate their energy crisis, because you would be taking 2 percent out of the fuel mix that they would have to make up somewhere else. So in fact, this shouldn't do anything to dramatically increase gas prices. It should help, because supply -- it will keep supply going. (END VIDEO CLIP)

WOODRUFF: The EPA decision on ethanol isn't likely to help already soured relations between California Democrats and the White House. After Vice President Cheney met with a California delegation on energy issues today, House Democrats, once again, demanded federal action.

(BEGIN VIDEO CLIP)

REP. SAM FARR (D), CALIFORNIA: California keeps entering into almost not only a state of bankruptcy for the state, but we've seen in our district individuals who have restaurants, who have small businesses, who depend on -- who -- and people with disabilities who no longer can afford the energy they need just for survival. This is a crisis, and that's why the California delegation and the Democrats are adamant about taking charge at the federal level and allow the regulatory commission to do its job and regulate.

(END VIDEO CLIP)

WOODRUFF: The new Democratic chairman of the Senate Energy Committee, Jeff Bingaman, is planning a hearing next week to examine the EPA decision on California's use of ethanol more closely. Tomorrow, the Senate Governmental Affairs Committee, now led by Democrat Joe Lieberman, will hold an energy hearing too.

But Senate minority leader Trent Lott to urging the new Democratic leadership to hold a full debate on the issue, and fast.

(BEGIN VIDEO CLIP)

SEN. TRENT LOTT (R-MS), MINORITY LEADER: I think it's important that we soon schedule a full debate on a national energy policy. Some people are saying, well, gasoline prices are falling now, and the electricity bills are not as high as they were. Maybe we don't need to do anything about energy supply and conservation in this country.

I think that's wrong, because this issue is here, now -- and while it may abate occasionally, it was a problem last summer, it is a problem this summer, and it will continue to be one until we come up with a true national energy supply policy.

(END VIDEO CLIP)

WOODRUFF: Meantime, back in the House, GOP Conference Chairman J.C. Watts plans to hold hearings on spiking energy prices. House majority leader Dick Armey had called Watts' investigation "nonsense." Well, today Armey says he apologizes to his fellow Republican Watts, saying that he now understands that the hearings will examine, quote, "what really happens in the real world when people try to impose price controls," end quote. But Watts' spokeswoman said the hearing's primary focus still will be on spiking energy prices.

We will discuss energy tomorrow on INSIDE POLITICS with Senator Joe Lieberman, as his committee launches a hearing on the issue. Amid all of the concern about the supply of gas and its costs, many Americans do not seem inclined to give up their gas-guzzling sports utility vehicles. CNN's Brooks Jackson has been looking into the laws affecting those SUVs and some of the issues they raise.

(BEGIN VIDEOTAPE)

BROOKS JACKSON, CNN CORRESPONDENT (voice-over): If there's an energy crisis, you can put part of the blame here: America's love of big fuel-gulping sport utility vehicles and the special treatment they get under federal law.

DAVID NEMTZOV, ALLIANCE TO SAVE ENERGY: There's a loophole that was put into the law almost 20 years ago that lets SUVs and light trucks have a much lower fuel efficiency.

JACKSON: Much lower. New autos must get 27 1/2 miles per gallon under federal fuel efficiency standards. That's an average for all the autos sold by any one manufacturer, but light trucks only have to average 20.7 miles per gallon, and legally SUVs and mini vans are counted as light trucks, not autos.

Nobody feels the poor mileage more than SUV drivers.

UNIDENTIFIED FEMALE: You want me to be honest? It's horrible.

JACKSON: Fuel efficiency standards haven't been increased in more than a decade for cars or trucks. Meanwhile, SUV sales have boomed. Pick-up trucks and SUVs now account for nearly half of all vehicle sales.

So, average gas mileage of all new vehicles, which improved sharply after the energy crisis of the '70s, lately has been going down. Last year, it fell to just 24 miles per gallon, a 20-year low, according to the Environmental Protection Agency. Manufacturers say they're just giving American consumers what they want.

JOSEPHINE COOPER, ALLIANCE OF AUTOMOBILE MANUFACTURERS: Consumers are in the driver seats, and if you look at the things that people are asking for when they go into an auto showroom to buy a car, fuel economy is way down on the list of things they're asking for.

JACKSON: The industry says buyers want more power for things like towing boats and more room. But energy conservationists say any serious effort to deal with energy shortages ought to start with SUVs.

NEMTZOV: This loophole is leading to the waste of over a million barrels of oil a day, and that's over one-tenth of the imports in this country just being wasted from SUVs.

JACKSON: A bill in Congress would require SUVs and light trucks to get the same mileage as autos by the year 2007. The industry says that's too fast and would mean some big vehicles with particularly poor mileage might disappear.

COOPER: If they don't meet the requirements, there are some of the vehicles that just would not be available for sale.

JACKSON (on camera): And despite higher fuel prices, Americans just keep buying those fuel-hungry SUVs. So a vote on closing the so- called SUV loophole, when it comes, will provide a test, a test of just how seriously Congress takes the so-called crisis in energy.

Brooks Jackson, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: And now some breaking news on the international front, it comes from the Middle East, and joining us now, our national security correspondent David Ensor, to bring us up to date -- David?

DAVID ENSOR, CNN CORRESPONDENT: Well Judy, U.S. officials confirm that CIA Director George Tenet who, as you know, has been in the Middle East for several days now, trying to arrange security cooperation between the Palestinians and Israelis, has succeeded in some kind a breakthrough.

We understand that he has reached the agreement of the Palestinians to a set of proposals that he has laid out to both sides which would be a sort of road map for how they would proceed from here to try to de-escalate the situation between the two.

We know that the Palestinians have objected to one part of the deal. This is according to CNN's Jerrold Kessel in the region, who has been told that they objected to a proposed buffer zone that was part of the agreement. But there is over all agreement on both sides to the proposal which will allow security talks to resume which are of course critical to preventing further terrorism in the region. So it is -- it is an important breakthrough.

We understand that Mr. Tenet is going to stay the night in the region. There will probably be further announcements on this from the Bush administration here in town.

WOODRUFF: And David, we know that George Tenet, the CIA director spent several days in the Middle East to try to make some headway there. Why was it so hard to get the two sides simply to agree to talk to each other?

ENSOR: The anger on both sides cannot be underestimated. The amount of blood that has been spilled recently, the frustration, the feeling on both sides that the other has not kept its side of the agreement, the mere problem that the security chief -- the two Palestinian security chiefs -- both believe that they were attacked by Israeli forces recently. They personally were attacked. So, they were not in a mood to sit down at a table with the Israeli security chiefs at all.

However, it took the prestige of George Tenet, who has a longtime relationship with the security chiefs on both sides and that appears to have achieved some sort of a breakthrough today.

WOODRUFF: Quickly, David, do we know when these talks will begin?

ENSOR: No, we do not.

WOODRUFF: All right, David Ensor, national security correspondent, with that breaking development out in the Middle East. Thanks you very much. Some good news for a change from there.

We head to Spain next on INSIDE POLITICS for the latest on the President Bush's reception in Madrid, and a look ahead at his European itinerary.

(COMMERCIAL BREAK)

WOODRUFF: Sponsors of two separate versions of the patients' bill of rights will meet at the White House on Thursday to try to find a legislative compromise. Without an agreement, Senate Majority Leader Tom Daschle says he has the votes to pass the Kennedy-McCain- Edwards version, and plans to bring it up for a debate as early as next week.

CNN medical correspondent Rea Blakey takes a closer look at the two sides of this debate.

(BEGIN VIDEOTAPE)

REA BLAKEY, CNN CORRESPONDENT (voice-over): 170 million Americans have private health insurance. Both Congress and the White House agree they should have a patients' bill of rights, too, mainly to give patients the right to sue their insurance company.

SEN. JOHN EDWARDS (D), NORTH CAROLINA: The bottom line is, creating more power and putting the law on the side of patients instead of on the side of the big HMOs and giving them a way to enforce that right.

BLAKEY: The Senate is considering two such bills, similar to bills in eight states. Both Senate bills call for the creation of independent panels to review HMO decisions denying care. Beyond that, the similarities end.

The tripartisan Frist-Breaux-Jeffords version requires patients first exhaust that review board process. Only then could patients take their case to federal court. Damages for pain and suffering would be limited to $500,000 -- no punitive damages.

The bipartisan McCain-Edwards-Kennedy bill would allow patients easier access to court, even if they have not exhausted the independent review process. The case could be heard in federal court, or state court, where juries awards tend to be higher. There's no cap on pain and suffering damages, and punitive damages up to $5 million could be awarded.

KAREN IGNAGNI, AMERICAN ASSOCIATION OF HEALTH PLANS: Where we have concerns with McCain-Kennedy is in the area where the subtext says, "if you have a problem, get a lawyer," and in the malpractice arena, the safety arena, everything we know in health care, that is the wrong direction.

BLAKEY: Opponents say McCain-Edwards will inflate health care costs and cause some businesses to stop offering health insurance to their employees. The media campaign is already under way.

SEN. BILL FRIST (R), TENNESSEE: I believe that the Kennedy bill leans toward protecting trial lawyers, not protecting patients.

BLAKEY (on camera): Trial lawyers counter by saying in states which have already enacted the patients' bill of rights legislation, fewer than 20 lawsuits have been filed. That includes President Bush's home state of Texas, which enacted its patients' bill of rights in 1997.

(voice-over): There's already talk of a veto in this showdown between the Senate and the White House.

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: I'm confident that when it reaches his desk, he will at least consider a change of heart and the support it as important as it is.

BLAKEY: President Bush maintains the McCain-Edwards version would increase insurance premiums. According to a report from the Congressional budget office, enacting McCain-Edwards would do just that, by 4.2 percent after 5 years. Frist-Breaux would boost premiums by 2.9 percent after 5 years.

But other advocates say that's not much beyond a typical raise in premiums. This year, they increased an average of 8 percent over last year.

RON POLLACK, FAMILIES USA: When the managed care companies increased their premiums to pad their profits, they're stone silent.

BLAKEY: A new Gallup Poll shows 80 percent of respondents say a patients' bill of rights is very important to them. The question remains: can the Senate deliver a version President Bush will sign?

Rea Blakey, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Overseas today, President Bush used a news conference with the Spanish prime minister to emphasize the history of cooperation between the U.S. and Europe. Mr. Bush faces a public relations challenge on several issues during his five-nation visit, especially as he promotes his views on missile defense and global warming.

In Madrid today, Mr. Bush repeated his opinion that the Kyoto climate treaty was flawed. Mr. Bush also said that he looked forward to tomorrow's meeting with NATO leaders in Brussels, but he plans to defend his call for a missile defense system.

(BEGIN VIDEO CLIP) BUSH: Our intent is to bring stability into the world. And freedom-loving people must recognize the true threats that face democracies in the 21st century. The days of the Cold War have ended and so must Cold War mentality, as far as I am concerned. And I believe we will make great progress on this issue. I truly do. I realize it's going to require a lot of consultation, but I am willing to listen.

(END VIDEO CLIP)

WOODRUFF: For more on the president's first trip to Europe since taking office, I am joined by CNN political analyst Ron Brownstein of the "Los Angeles Times."

Ron, what does the president need to accomplish on this trip?

RON BROWNSTEIN, CNN POLITICAL ANALYST: Well, mostly, I think he has to tamp down the sentiments in Europe that, as one of his aides told me the "Times" this week, that we sort of view him a gun-touting fundamentalist who really has no grasp of the issues.

The White House very much views this as a get acquainted trip. They really downplay the idea that there will be specific policy breakthroughs. Certainly, it would be unrealistic to expect that the big disagreements like Kyoto or the missile defense can be resolved in one trip, or maybe that they can be resolved at all.

But he certainly wants to begin the process of establishing some personal credibility, both with the leaders and I think to a considerable extent with the public in Europe.

WOODRUFF: Let's start from the beginning: yesterday, the day he left the United States to travel was the day Tim McVeigh was executed. Does this in any way affect the tone, the atmosphere as the president?

BROWNSTEIN: Probably in the press. I think probably less so with the leaders in the actual meetings. I mean, certainly there are many things about the political systems and the way government is used in Europe that are sort of out of sync with the American experience, and I think, people in Europe would tend to view this, at least in the leadership level and the political system, as a domestic issue: the death penalty.

And Bush's problem, Judy, is that we are really out of phase at this point between Europe and the U.S. If you think about the Reagan years when Reagan was joined by conservative titans like Margaret Thatcher and Helmut Kohl, who had sort of a broadly similar outlook. By the end of the Clinton presidency, he had sort of his baby boom cohorts, sort of center-left leaders, all across Europe.

Right now, we are out of phase. We have a conservative government in the U.S. By and large, with the exception of Italy, the major countries -- Italy -- have center-left governments who have domestic preserves that encourage them, I think, to disagree with Bush and really don't push them in the same direction as he is on these broad policy questions. WOODRUFF: And not only that, on the eve of his departure yesterday, the president comes out and makes yet another very strong statement against the Kyoto global climate change treaty.

BROWNSTEIN: You start to wonder if he's treating this trip the same way he is treating Congress. I mean, on most issues Bush domestically has looked toward reinforcing his base rather than trying to reassure those who didn't vote for him. And to some extent, he may see -- you know, he did that on taxes, where he was very tough, drew a very hard line, didn't really give in. And to some extent, he may be doing the same thing here on this trip, where he could be -- he could be using the Europeans as a foil to basically reassure his voters here that he is in fact standing up for what he believes in and he is trying to contrast himself with Clinton: these comments about, you know, we don't shift our policy by focus group, we stand up for what we believe in.

And in that way, even disagreement with Europeans might not totally disserve him at home.

WOODRUFF: Well, you mentioned Clinton. I mean, in fact, Bill Clinton is good -- still is good friends with someone like Prime Minister Tony Blair in Great Britain, who, by the way, his party was just...

BROWNSTEIN: Yes.

WOODRUFF: ... put back in power by an impressive margin this week. How does that affect the relationship that Bush can cultivate with someone like Blair?

BROWNSTEIN: At a very sedate party, I might add, that I attended Thursday night they had no -- there was no celebrating going on.

Well, Blair, I think, is the most fascinating figure in all of this, because Blair has not joined the leaders of France and Germany in their very sharp criticisms of Bush. He has been much more circumspect, both for domestic, I think, reasons and also for foreign policy reasons.

He did not want to give the Tories the opportunity in this election to portray him as anti-American, so he has been much less critical of Bush, for example, on missile defense, than the continental leaders and also on the Kyoto agreement. And also, I think that Blair continues to see himself as trying to play a role almost as the bridge between a Europe that tends to be very critical of Bush and the U.S. And maybe a way that he can also try to sell a broader idea of Britain as a bridge between America and Europe as he moves toward more European integration and perhaps a referendum on joining the Euro some time next year. .

WOODRUFF: Do you foresee any significant meeting of the minds this week on whether it's global warming, whether it's missile defense, or any of these issues, the Balkans?

BROWNSTEIN: It's hard to see that. I mean, on the Balkans perhaps, where Bush has moved a little bit, has moved away from his earlier insistence on early withdrawal they seem to be coming closer. But by and large, I think even the people in the White House are not really hoping that they can convert the Europeans overnight on missile defense or Kyoto.

My sense is that they -- these are disagreements that are simply not going to go away. As I said, there are domestic political imperatives that would make it very hard for someone like Schroeder in Germany to really come very far toward Bush on this. And even Blair, I think, would be pressured to avoid a breach with Bush if Bush decides to unilaterally abrogate the Antiballistic Missile Treaty.

So there are some fundamental disagreements here. They probably are not going to go away. The question is how far does Bush let that influence what he ultimately decides.

WOODRUFF: All right. Ron Brownstein, recently back from Great Britain himself. Thanks for being here. See you soon.

BROWNSTEIN: OK.

WOODRUFF: And with apologies to Ron, there won't be anymore clowning around when INSIDE POLITICS returns.

(COMMERCIAL BREAK)

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

Hi, Lou.

LOU DOBBS, CNN ANCHOR: Hey, Judy. Coming up on "MONEYLINE," a dramatic late-day turnaround on Wall Street. Stocks shake off a morning slide and investors look beyond a Nokia profit warning. Also, Kraft prices the second-biggest initial public offering in history. Tonight, the publishing empire of Tina Brown. We'll talking with the maven of "Talk." And also we'll be joined by the scientist who is revolutionizing space flight, creating spacecraft capable of the speed of 180,000 miles per hour.

All of that and a lot more coming up on "MONEYLINE" in just a few moments. Please join us.

(COMMERCIAL BREAK)

(JOINED IN PROGRESS)

WOODRUFF: ... online all the time at CNN's Allpolitics.com, AOL keyword CNN. And our e-mail address is insidepolitics@cnn.com.

These programming notes: President Bush's European trip will be the topic tonight on "CROSSFIRE" with guests John Fund of "The Wall Street Journal" and Christopher Hitchens of "Vanity Fair." That's at 7:30 p.m. Eastern.

And tonight on "LARRY KING LIVE," an exclusive interview with Paul McCartney. That's at 9:00 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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