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CNN INSIDE POLITICS

Katharine Graham Dead at 84; D.C. Police Continue the Search for Chandra Levy; White House Looking at Raising Fuel Efficiency Standards

Aired July 17, 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.
JUDY WOODRUFF, CNN ANCHOR: This is INSIDE POLITICS. I'm Judy Woodruff in Washington, which is mourning the death of legendary newspaper publisher Katharine Graham.

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: I'm Kate Snow on Capitol Hill with the latest on embryonic stem cell research. Congress hears both sides of the debate.

JONATHAN KARL, CNN CORRESPONDENT: I'm Jonathan Karl also on Capitol Hill where Gary Condit made an appearance with his colleagues.

MAJOR GARRETT, CNN CORRESPONDENT: I'm Major Garrett at the White House, which is studying new fuel efficiency standards that could mean changes for light trucks and SUVs.

ANNOUNCER: Now Judy Woodruff takes you INSIDE POLITICS.

WOODRUFF: Thank you for joining us. A sad day here in Washington as this city mourns the passing of Katharine Graham: for many years, the publisher of "The Washington Post." She died today in Boise, Idaho after suffering a fall over the weekend. She was 84. In an era when so many politicians and media figures seem to have diminished in stature over time, Katharine Graham remained to the end a towering presence. Her years of stewardship of "The Post," particularly during its groundbreaking investigation of the Watergate scandal, catapulted the newspaper to national prominence and made her arguably the most powerful woman in journalism.

Here now, an excerpt from an interview with Katharine Graham done last month by Margaret Carlson of CNN's "Capital Gang." Mrs. Graham is joined by Ben Bradlee, executive editor of "The Washington Post" during the Watergate era.

(BEGIN VIDEOTAPE)

MARGARET CARLSON, CNN'S "CAPITAL GANG": You see that kind of painstaking work that Carl Bernstein and Bob Woodward did going on today and other than say your paper and "The New York Times."

KATHARINE GRAHAM, PUBLISHER, "THE WASHINGTON POST": I think they do a lot of investigative journalism and I think that there's a certain snobism of us on the East Coast that everything is here, "The New York Times" or "The Post." And there's a lot of work going on in smaller community or Western communities.

CARLSON: Kay, do you have another book in you? After a personal history, is there another volume?

GRAHAM: Well, I'm trying to write another book, but it's more or less about Washington over the years, and I don't know -- I never have said this in public, because I don't think I'll -- you know in case it never comes.

(END VIDEOTAPE)

WOODRUFF: We'll have much more on the life and career of Katharine Graham in just a few moments. And we're joined by Ben Bradlee and by Carl Bernstein, who with his partner Bob Woodward, broke the Watergate story in the pages of "The Washington Post."

To another story now that we are following. Should federal money be used to support embryonic stem cell research? That's a question that draws strong and very personal responses, and a House subcommittee heard arguments on both sides today. CNN congressional correspondent Kate Snow joins us now from another part of the Capitol with more on the hearing -- Kate.

SNOW: Judy, today's hearing comes just as expected, that President Bush will soon make a decision about whether to allow federal funding to support embryonic stem cell research. The timing I'm told was coincidental, but those that are against embryonic stem cell research say they are happy with the timing. They want to keep the political pressure on this White House. The chairman of the House subcommittee that held the hearing this afternoon brought in a family to illustrate his point of view.

(BEGIN VIDEOTAPE)

SNOW (voice-over): John and Lucinda Borden adopted their 9- month-old twins, but not at birth. Two years ago, the Bordens went through an agency and adopted frozen embryos. Three were implanted in Lucinda, and Luke and Mark were born. The Bordens are emphatic about their views that using embryos for stem cell research is ethically wrong, a point John Borden made passionately to a House panel.

JOHN BORDEN, ADOPTIVE FATHER: And I would like to ask every member of this committee, especially the members that aren't here. And that question is: Which one of my children would you kill?

SNOW: But proponents of embryonic stem cell research say there are thousands of frozen embryos in fertility clinics around the nation that would never be adopted.

SEN. ORRIN HATCH (R), UTAH: The reality today is that each year, thousands of embryos are routinely destroyed. Why shouldn't these embryos slated for destruction be used for the good of mankind?

SNOW: And their side has a human face as well. Twelve-year-old Mollie and Jackie Singer skipped a vacation to attend a press conference in Washington. Mollie has juvenile diabetes. She says research on stem cells offers promise for a cure.

MOLLIE SINGER, JUVENILE DIABETES PATIENT: So far, I have had 21,000 shots and 28,000 finger pokes. At age 5, I had open heart surgery, which made it harder because of my diabetes. Because of all of the problems I've had, I worry about my future and I don't want Jackie or anyone to go through what I've been through.

(END VIDEOTAPE)

SNOW: The ethics are as complex as the politics on this particular issue. Some of the most adamant anti-abortion forces here on Capitol Hill are actually in favor of embryonic stem cell research. As Senator Orrin Hatch put it, this doesn't break easily, he said, into pro-life versus pro-choice. Senator Hatch tells me he expects the president to make his decision, Judy, sometime after his European trip. And the senator also saying that if the president makes a decision contrary to his position, that federal funding should be allowed for embryonic stem cell research, he said he's willing to pursue legislative options to change whatever the president does -- Judy.

WOODRUFF: Kate Snow.

And now to yet another story that Washington's been following for two months now, despite recent calls for his resignation. Congressman Gary Condit was on the job here on Capitol Hill today. CNN Congressional correspondent Jonathan Karl is here to tell us about it.

Jonathan, is it truly business as usual for this man?

KARL: Well, certainly, that's what Gary Condit is trying to accomplish. And in fact, during this entire controversy, he has shown up at virtually every committee hearing he's had scheduled and he's shown up for every -- almost every vote on the floor of the House of Representatives.

Today, it was a hearing about the farm bill, the 2002 farm bill before the agriculture committee. He's the No. 2 Democrat on that committee. He showed up. There was a huge crush of media attention in anticipation of him showing up. And as you might imagine, that created some attention of the members of that committee. One of the Republicans, Saxby Chambliss, a Republican from Georgia, actually joked about all the attention. We'll play that bite. And as it plays, watch Gary Condit's reaction. The camera is on Gary Condit. You're hearing Saxby Chambliss' voice.

(BEGIN VIDEO CLIP)

REP. SAXBY CHAMBLISS (R), GEORGIA: Mr. Chairman, just once again, I'd like to compliment you and (UNINTELLIGIBLE) for crafting a heck of a farm bill. When we get this kind of national media attention for a farm bill, I think it really says something. I can't imagine why else they're here.

(END VIDEO CLIP) KARL: And Gary Condit for the first time that I've heard since this controversy has been going on, spoke in public. He actually asked some questions while he avoided reporters' questions. He did ask questions at this hearing of the panel of industry representatives, agricultural industry folks. Here's what he had to say.

(BEGIN VIDEO CLIP)

REP. GARY CONDIT (D), CALIFORNIA: I understand that all of you are recommending an increase in the MAP program, the funding of the MAP program. I would like for each of you to tell me if you were granted an increase in MAP, what exactly would you do with the money?

(END VIDEO CLIP)

KARL: As you can see, Gary Condit being tactful. What he's actually talking about is the marketing assistance program. This is that program that gives agriculture industry companies money to advertise to get their products sold overseas. Condit was saying: Shouldn't taxpayers' money be spent possibly on something else? Shouldn't we be opening up markets through trade policy, not by necessarily spending money on this program? So Condit focused on the issues, issues that affect his district, of course, central valley of California, very prominent agriculture district, the place where all those Gallo winery vineyards are located.

WOODRUFF: And as you saw, he was smiling when the comment was made about all the attention he's drawing. Jonathan, he was with his colleagues today. Whom was he talking to? Who was he spending time with?

KARL: Well, you can notice when he went from that hearing over to the House floor, he had several conversations, one-on-one conversations with various members. Among those he spoke to was Alan Boyd, who is the head of the Blue Dog Coalition of conservative Democrats that Condit helped co-found. Also, Anna Eshoo, a California Democrat, who was seen on the floor. You could see the conversation. You also notice she seemed to give Condit a hug of consolation, you know, encouragement on the floor.

And he also interestingly had about a five-minute conversation with Dick Armey, who is, of course, the No. 2 Republican in the House. Armey's spokesperson would not comment on the discussion except to say it was personal in nature.

WOODRUFF: All right, Jon Karl at the Capitol.

Police investigating the disappearance of Chandra Levy continue their search of Washington's Rock Creek Park today. CNN national correspondent Bob Franken is standing by now to bring us up to date on that -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: And Judy, they're searching Rock Creek Park and another park in the southwestern part of the city, the opposite part of the District of Columbia, looking for what could be the tragic outcome of this case: quite frankly, the body of Chandra Levy. And it's just part of an investigation that has really turned into a shoe leather investigation. Here, you're seeing by the way -- that was unintentional, but you're seeing some tennis shoes that they found today, clearly not belonging to Chandra Levy. They also found a knife that is used for opening cardboard cartons, and it's something that they don't believe had anything to do with Chandra Levy. This is in Rock Creek Park. They spent the whole day out there going inch by inch over another section of the 2,800-acre park where Chandra Levy had made a reference on her last use of her computer in the apartment on May 1st. They also were in another park.

And the police say that they're really focusing on a variety of areas now. There are these searches that are going on, there is the element of interviews at the apartment where Chandra Levy lived talking to the other tenants there. There are the following up of tips. There are apparently well over a hundred tips and the police are checking each and every one of them. And they're also waiting for the analysis of the polygraph test that was done by someone hired by Gary Condit last week. That is now in the hands of the FBI. And the police are waiting those results to see if they need to press for their own lie detector test. And the assistant police chief, Terry Gainer, just a very short time ago disclosed that there's another element to the investigation. They're asking the FBI to compile a personality profile of Chandra Levy.

(BEGIN VIDEO CLIP)

ASSISTANT CHIEF TERRANCE GAINER, D.C. METROPOLITAN POLICE: We've been taking a look at the psychological and social profile of Miss Levy since the beginning of this. And frankly, we've been conducting interviews and interrogations since the beginning of this, and we've been doing searches since the beginning.

(END VIDEO CLIP)

FRANKEN: All of this part of the effort to try and determine the state of mind of Chandra Levy in the hope that she is alive, that she disappeared for reason, or a variety of other possibilities. And once again out in Modesto, California, 3,000-plus miles away, the family can only watch and desperately hope.

(BEGIN VIDEOTAPE)

DR. ROBERT LEVY, CHANDRA LEVY'S FATHER: The longer it goes, the more upset we get about, you know, not finding her and not knowing where she is. And it's just taking so long, and don't know when we'll or if we'll find anything out. We're really still hopeful.

QUESTION: Are you still hopefully optimistic?

LEVY: Well, I'd say hopeful. We keep prayers and hopes that, you know, we can find her, bring her back. We've got to do that.

(END VIDEOTAPE)

FRANKEN: And there's a certain feeling of helplessness of the parents, helplessness of the parents while the police just begin a methodical re-beginning actually as they retrace their steps in the hopes that somehow, after 11 weeks, they can come up with something about the disappearance of Chandra Levy -- Judy.

WOODRUFF: All right, Bob Franken.

I'm Judy Woodruff. INSIDE POLITICS will be right back.

ANNOUNCER: The congressman's conduct and a call for action. Why is Bill Bennett looking to the Democratic Party? The answer when he joins us just ahead. Plus...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I believe there is no Democrat or Republican or independent way of protecting our natural resources.

(END VIDEO CLIP)

ANNOUNCER: The environment gets a new voice, and the White House gets a rebuke. But first, a powerful woman with an amazing legacy. Friends and colleagues remember Katharine Graham. Live from Washington. Judy Woodruff brings you more of INSIDE POLITICS straight ahead.

(COMMERCIAL BREAK)

WOODRUFF: There was a protest today outside Congressman Gary Condit's office in Modesto, California. About 50 or 60 demonstrators demanded that Condit resign citing reports that he had an affair with missing intern Chandra Levy. Condit's chief of staff issued a statement, saying, quote, "At an appropriate time when the investigation warrants, Congressman Condit will speak to his constituents who he continues to serve."

The statement goes on to say, quoting again, "Congressman Condit believes the disappearance of Chandra Levy and the ongoing police investigation should not be exploited by partisan special interest groups which have their own political agenda."

Well, is Representative Condit's conduct becoming a partisan issue? Joining us now to talk about the controversy, Democratic consultant Peter Fenn.

Peter Fenn is that what's happening?

PETER FENN, DEMOCRATIC CONSULTANT: I think (AUDIO GAP) it shouldn't be about bipartisan politics. It shouldn't be about the sex police but rather what he told the police. And all the facts are not out yet. We don't know everything about this case, and I think calling for his leaving the Congress right now is really premature. I mean, he may need to do that, and he may make the decision to do that, but you know, no one said to Dan Burton when he fathered a child out of wedlock, "Oh, you should go," or Henry Hyde when he had an affair, "Oh, you should go." So I think we're hearing it from the partisan side mainly right now. WOODRUFF: But what do you say to those, Peter Fenn, who look at what has already known about Gary Condit, that he didn't tell the police the whole story in the first two interviews, and they say that alone is sufficient with some other information?

FENN: I think that there is very possibly information here that would indicate that a resignation may be in order. But I think we ought to wait and see if, in fact, he lied to the police, if he impeded the investigation, if he told other people to lie about the investigation, and delayed efforts to find her. This is a case of someone who very well may be dead. And if that's the case, you know, that's a serious, serious problem. But you know, let it play out a little bit. Let's get all the facts. Let's hear from the police, let's hear from him. You know, I just -- I'm sorry about it, because I'm very critical of his behavior. I think he was very hypocritical when he criticized President Clinton for having the drip, drip, drip problem, and then he himself now is in that same position. I don't think that's healthy but it's not up to us, really.

WOODRUFF: Coming on right after you is Bill Bennett, of course, with Empower America. Among other things, he says that it's up to Democrats to speak up to Gary Condit to tell him what they think. And by not speaking up, they're saying something about the moral standards of the Democratic Party.

FENN: A lot of us have criticized him hardly from the beginning. I happen to think that he is probably toast when it comes to politics. This is a very Republican district. It's a district that was carried by both Bushes. George W. Bush carried the district by nine points. I do not think, to be honest with you, that he's going to be able to get reelected in this district with this kind of situation. Sixty percent of the people right now say they won't vote for the man. So I think that, you know, the politics of this will play out. What I'm arguing here is that we shouldn't be premature. Let the guy come out and make his statement. Let him tell what he knows. Let the police come forward with their investigation.

WOODRUFF: Finally, what standard are we talking about here? Are we talking about a standard of sexual misbehavior? Are we talking about dishonesty? What standard are you using?

FENN: I think that's the key thing. I think that if you are going to call for someone's expulsion from Congress for sexual misbehavior, you have a problem. If it comes out that he lied to the police, that he obstructed this investigation, then, yes, absolutely he should go, then he should not be in Congress. This is not behavior becoming of a member of Congress let alone anybody.

WOODRUFF: All right, Peter Fenn, Democratic consultant, thank you very much.

FENN: Thanks, Judy.

WOODRUFF: Good to see you.

FENN: Nice to see you. WOODRUFF: And joining us now, as I mentioned, Bill Bennett, who was secretary of education under President Reagan and who now is co- director of Empower America.

Bill Bennett, you're hearing what Peter Fenn and others are saying. There may come a time when Gary Condit should resign but that time is not now. What do you say to that?

BILL BENNETT, CO-DIRECTOR, EMPOWER AMERICA: Well, I think he should have resigned. I think that his colleagues in the Congress, Republican and Democrat, should urged him to resign. But I think these folks don't have very good standards, certainly not the same as the American people's standards when it comes to these things. We saw that during the era of Bill Clinton.

WOODRUFF: What do you mean by "these people"?

BENNETT: Members of Congress. You know, I don't understand why there isn't a rule that, you know, no messing with the staff. You know, you can't have relationships with interns, your interns or the Bureau of Prison's interns. I don't know why that is such a high standard or an unreachable standard. But the reason Gary Condit should resign, we don't have to go to the debatable issue whether a congressman who fools around with interns should resign. He should resign because he obstructed the search for two months. He didn't talk to the police. He put his own political viability before the search for this missing girl. Second, he lied to his staff; everyone knows that. They were out there telling everybody there was no affair. And third, you know, there's this question of the false affidavit. We don't have to get to the sex police. All Democrats seems to me can ever say about any of these things is the sex police.

WOODRUFF: But he hasn't been charged with any of these things. I mean, you're right. I mean, much of that information that you're describing does seem to be out there. But the police continue to say he's not a suspect. They haven't charged him with a crime.

BENNETT: Well, this is part of the condition we are in now. Unless you are charged with something or convicted -- there used to be such a thing as moral turpitude, you know, behavior so reprehensible that you forfeit the right to be in certain kinds of company. You know, this contributes to the cynicism of the American people, and I think somebody who behaves like Gary Condit did for two months, not coming clean with the information that he had and lying to his staff, that he let them go out there and tell untruths, has forfeited the right to his office and public respect. But, you know, this is not a view that's shared on Capitol Hill, which is one of the reasons, Judy, in a recent survey, American people were asked who they prefer to have their children come to Washington if they came as interns would they like to have them work for. Eleven percent said Democrats, 12 percent Republicans, and 67 percent said, "No thank you. We don't want to send our children to Washington to work as interns."

The American people think this kind of thing is just ridiculous. We had a very important staff counsel on the Hill the other day saying on television that he didn't think anybody -- any of the American people thought Gary Condit had anything to do with this. Again, they're just tone deaf. Most American people think Gary Condit did have something to do with this.

WOODRUFF: All right, Bill Bennett, we are going to have to leave it there. We appreciate your joining us. Good to see you.

BENNETT: Thanks very much.

WOODRUFF: Thank you. INSIDE POLITICS will be right back with the remembrance of Katharine Graham. Ben Bradlee, former executive director of "The Washington Post joins us. We'll be right back.

(COMMERCIAL BREAK)

WOODRUFF: The busy city of Washington pauses today to remember one of its own. "Washington Post" chairman of the executive committee, Katharine Graham, died today at the age of 84 in Idaho after a fall over the weekend.

Joining us now to remember Katharine Graham, Ben Bradlee, former executive director of "The Washington Post," and former "Post" reporter, Carl Bernstein of Watergate fame. He's now executive vice president and editor of Voter.com.

Ben Bradlee, you were very close to Kay Graham. You must be hurting right now.

BEN BRADLEE, FORMER EXECUTIVE EDITOR, "WASHINGTON POST": I am. I feel bereft for all of us at this paper. She was such a presence and set this paper on a course that -- to excellence that you can't beat.

WOODRUFF: What has Washington lost? What has the country lost with her passing?

BRADLEE: Well, I mean, she was the most famous publisher of her day. And not only the most famous, but the best. She was just a star, one of a kind. And that's what they've lost. I don't know if the paper -- you know, one of her great contributions, I've always thought, was the way that she gave up the power and gave the power to her son, who was ready for it rather than just make him twiddle his thumbs like some Prince Charles. She's -- it was a graceful thing to do and she did it well.

WOODRUFF: Carl Bernstein, you were busy breaking the Watergate story. Ben Bradlee was your editor. How crucial was Katharine Graham's role at that time?

CARL BERNSTEIN, FORMER "WASHINGTON POST" REPORTER: Oh, it was really crucial because, you know, the marbles which were "The Washington Post" and its credibility and its income were really on the table. The Nixon administration had threatened to take away the television licenses of "The Post."

But the real thing about it was the credibility of the paper was on the line and she had the courage to go with two 28-year-old kids that she really didn't know. You know, the other great thing she did -- and Ben maybe can't say this -- is she brought Bradlee to the paper when she took it over. And she brought a lot of great people to the paper. And that's part of her legacy.

WOODRUFF: What was her hand like as a boss? I mean, clearly, she wasn't your immediate superior there, but how did you know -- how did you feel the influence that she had then?

BERNSTEIN: Well, first of all, I think she set a tone for the paper and the paper stood for certain things. And -- and that included this commitment to the best kind of journalism, absolute separation between the editorial side of the paper and the news side of the paper. She did not interfere in any way in our coverage of Watergate. Fairly early on, she had Bob and myself up to the office so she could meet us.

There's that rather famous episode where we wrote a story about John Mitchell controlling the secret funds that paid for the bugging at Watergate, and I called John Mitchell on the phone. And he said, "You print that, Katharine Graham's going to get her tit caught in the big, fat wringer." And Mrs. Graham, who could also be wickedly funny, came in the next morning and said, "Carl, do you have any more messages for me?" Art Buchwald subsequently got her a little pin in the form of a wringer.

She was a remarkable person. She was funny. She could be girlish: Ben can tell you about that.

WOODRUFF: Yeah. We may have unfortunately through the technical glitches that sometimes affect television, we may have lost Ben Bradlee, at least for the moment. But while we're waiting to see if we can bring him back, Carl, you've lived in and outside of Washington since those days. Katharine Graham to many people reflects Washington. Was she someone of this city? Was she -- did she love this city? What's your sense of her and this -- and this capital?

BERNSTEIN: Well, she was tied at the hip to this city. Her father bought "The Washington Post" company in the early -- in the early '40s I guess it was. He had been a governor of the Federal Reserve Board. She was born here. She was educated here. Her mother was a huge figure in -- in -- in the life of the city, particularly in terms of the school systems and bettering education.

But really, it was "The Washington Post" and her leadership of "The Post" which brought her, her prominence, and with good reason, because she took the newspaper that was not the best newspaper in the city at the time -- "The Star" was still probably -- "The Washington Star" was still probably a better paper when she took "The Post" over, and she turned it into this amazing instrument that stands for the best in journalism.

WOODRUFF: And she was friends along the way with presidents, with prime ministers, with Cabinet members.

BERNSTEIN: And the important thing to remember there is it never affected the coverage of the paper. Absolutely not.

WOODRUFF: Which -- that may sound easy to do, but it wasn't. It's not, is it?

BERNSTEIN: No, no, it was not. But she understood that -- she had people running the news side of the paper, and she expected them to run it. And she was not going to interfere with that.

WOODRUFF: Carl, I want to ask you finally, you know, there's so much made of her role as a hostess, entertaining important people here in Washington. How much of the life of Washington is that and how do you see her role in that?

BERNSTEIN: Well, she was obviously the great host -- or hostess of the city. The last person that had any kind of reputation as a hostess comparable in the least -- and it was another aide -- was Pearl Mesta. But Mrs. Graham was much more than Pearl Mesta. This was a woman who ran a kind of salon, who presidents came through her house. You know, pretty much everybody who was important in this city came -- came through her house. And there also was a wonderful informality about it all and the way she presided over -- over of all of this.

WOODRUFF: And finally -- and finally, let me just ask you, Carl -- it does look like we're not going to get Ben Bradlee back unfortunately, not right now. Where do you think she drew her courage from?

BERNSTEIN: That's a really interesting question. I think from deep within herself: She took over the paper upon the suicide of her husband. She never expected to take it over. She had great doubts about her abilities to do it. And I think that -- that, you know, maybe because she had these fears she was that much more able to do such a great job because she rose above them.

WOODRUFF: All right, Carl Bernstein, reporter, as we all know, of Watergate -- won a Pulitzer Price for helping break that story. Carl Bernstein, good to see you. Thanks very much, and we want to thank Ben Bradlee. We were only to hear from him for a moment or so before the technical gremlins came on board, but we hope to catch up with him again soon as well.

And tonight on "LARRY KING LIVE," more on the life and the career of Katharine Graham. Larry will have Barbara Walters, Mike Wallace and Nancy Reagan among his guests. That's at 9:00 Eastern tonight. INSIDE POLITICS will be back in just a moment.

(COMMERCIAL BREAK)

WOODRUFF: Even as Congress considers the Bush energy plan, a draft report of a new study could prompt a change in policy. At issue, the fuel efficiency of the American automobile.

For more, we turn now to Major Garrett at the White House -- Major.

GARRETT: Judy, the Department of Transportation sets fuel efficiency standards, but its hands have been tied for six years. Why? Because Congress has applied a moratorium forbidding it from changing or elevating any fuel efficiency standards. The Bush White House is trying to break that stalemate, and this new draft from the National Academy of Sciences, which many senior administration officials have been waiting for and will put great stock in, could break the log jam.

(BEGIN VIDEOTAPE)

GARRETT (voice-over): Current rules require passenger cars to average 27 miles per gallon, light trucks and SUVs to average 21 miles per gallon. But a draft report from the National Academy of Sciences says fuel efficiency for all vehicles can rise between 7 percent and 58 percent, depending on their size. For example, light trucks and SUVs could reap gains of 8 to 11 miles per gallon.

The report says new engine technology makes all this possible. For new passenger cars, the added costs would range from $400 to $1,300; for light trucks and SUVs, an extra $700 to $1,500. In all cases, lower fuel costs would cover the larger sticker price if the vehicle were kept for 14 years.

The auto industry had no comment, but free-market conservatives said Washington has no business dictating fuel standards.

UNIDENTIFIED FEMALE: The manufacturers are already producing more fuel-efficient automobiles, so you don't need the government out there mandating so many miles per gallon.

(END VIDEOTAPE)

GARRETT: Now the National Academy of Science cautions this report is still in the draft change, and the numbers may in fact change before it's reported fully to the White House. But key officials -- among them, Energy Secretary Spencer Abraham, Transportation Secretary Norm Mineta, and White House chief of staff Andrew Card -- are all looking to this report for guidance as to how to set fuel-efficient standards.

And it's clear, Judy, that Congress will not reinstate that moratorium that expires in September. So as of October, the country could see new fuel-efficient standards which could bring better miles per gallon to many cars, but also bigger sticker prices -- Judy.

WOODRUFF: Major, on different developments, some questions lately about White House political adviser Karl Rove -- and today a Democratic was urging the Justice Department to get involved. What is going on there?

GARRETT: Well, here are the two key players: Karl Rove, senior adviser to the president, a key player in this White House on all matters, politics and policy. And Henry Waxman, a Democrat from California. He's the ranking Democrat on the Government Reform Committee.

Mr. Waxman today sent this document to the White House council. Alberto Gonzales, it's 10 pages long. In it he says that it's quite clear to him at least that Mr. Rove may have in fact broke federal ethics laws; in what dealings? He says, because Mr. Rove owns stock in three companies, General Electric, Enron and Intel -- and had meetings in his capacity as a senior adviser to the president, with those CEOs of those three companies, he violated ethnics laws.

The White House says Mr. Rove did nothing wrong. Sought advice from the White House counsel and as soon as the White House counsel advised him he should sell his stock, he did so immediately. Mr. Rove was asked about this in Manchester, New Hampshire on July 6. Here is what he had to say.

(BEGIN VIDEO CLIP)

KARL ROVE, SENIOR WHITE HOUSE ADVISER: The rules are that I can take part in no decision that would materially and directly affect my holdings and I did not. I lived by the rules.

(END VIDEO CLIP)

GARRETT: Now, the White House says it will respond to Mr. Waxman's latest inquiry. But Anne Womack, who speaks for the White House on this matter, said it appears that Mr. Waxman is heading down the road of politics of personal destruction, a phrase that we heard during the Clinton years. And is not working to create a new tone in Washington to achieve the results for the American people.

The president said that it was wrong when Republicans used these tactics and it's just as wrong now when Democrats are using them -- Judy?

WOODRUFF: Major Garrett at the White House.

More INSIDE POLITICS after this.

(COMMERCIAL BREAK)

In his first news conference as the chair of the Senate Environment Committee, former Republican-now Independent Senator Jim Jeffords took aim at the president's position on a key issue.

(BEGIN VIDEO CLIP)

SEN. JAMES JEFFORDS (I), VERMONT: I am deeply disappointed in the Bush administration's positions in the current round of negotiations on the climate treaty under way in Bonn right now. I urge the Bush administration to commit to the Kyoto Treaty. Then work with Congress to show leadership and start to the implement programs that will achieve its targets. Each year that passes without action to reduce global warming, is an opportunity lost.

(END VIDEO CLIP)

WOODRUFF: It has been nearly six weeks since Jeffords' party switch took effect, giving the Democrats control of the Senate. Jonathan Karl is back with us.

Jonathan, have relations between Senator Jeffords and the GOP warmed up at all?

KARL: And his ex-Republicans, absolutely no signs of that happening. I mean, there's very little forgive and forget.

As a matter of fact, Trent Lott you remember came under fire from some moderates who said that he didn't do enough to keep Jeffords in the Republican Party. Well, Lott has now come out and said that he believes that he did too much to keep Jeffords a Republican. Take a look at this quote from "Roll Call" ,agazine from Trent Lott. He said, quote: "I regret some of the things I did for him over the years. I regret the fact that I encouraged my friend Dan Coats not to run against him for chairman of the Labor Committee, and I regret that I helped save the Northeast Dairy Compact."

So Trent Lott saying that he did too much over the years to try to please Jeffords, keep him in the fold and keep him in the party.

WOODRUFF: All right, another issue that Republicans are a little bit happier to talk about, those tax rebates; the checks are about to roll out pretty soon. What is going to happen here? Are the Republicans ready for this?

KARL: Well, we have learned that there's going to be almost a campaign-style event on Friday with the vice president, Paul O'Neill, the Treasury secretary, several of the Republican leaders -- Trent Lott has been invited, Dennis Hastert has been invited -- in Kansas City at one of those Treasury facilities, that will be writing some of those 11 million checks that will go out in the first installment on Friday.

This event also invited, almost every member of the Missouri congressional delegation, including Democrat Jean Carnahan, who you remember voted for the tax cuts; she has been invited. No word on whether or not she will actually take part in this kind of Republican- dominated, you know, rah-rah session for the tax rebate.

WOODRUFF: All right. Jonathan Karl, thanks again.

Now onto debating the worth of a single cent. Ahead, is it time for the penny to go from the changed purse to the trash bin? Why one lawmaker says it's time for change.

(COMMERCIAL BREAK)

WOODRUFF: Now with a look ahead of what's coming up on "MONEYLINE," Here's Lou Dobbs -- Lou.

LOU DOBBS, CNN ANCHOR: Judy, you look great out there. Thank you. Today, stock prices surge on earnings news, and not all of the earnings particularly good, but surge nonetheless. Intel, after the close, edged out profit targets on Wall Street, but sales are at the low end of forecast. Tonight, we'll be hearing from Intel CEO -- CFO, rather, Andy Bryant, and we'll tell you all about what was a winning day on Wall Street.

That on MONEYLINE, 6:30 Eastern. Please join us. WOODRUFF: All right, Lou, thanks. And you look pretty good yourself.

DOBBS: OK, thanks, Judy.

WOODRUFF: We'll see you later.

Gone are the days of penny candy, and now Congress may consider whether the penny itself will follow suit. Our own Candy, Candy Crowley, takes a look at both sides of the coin.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): What can you do with a penny, anyway?

UNIDENTIFIED FEMALE: I often leave them on the ground, or leave them hanging out in my -- in the bottom of my bag.

CROWLEY: You walk by them when you see them, can't find them when you need them, give them back when you got them. Is it time for them to go?

REP. JIM KOLBE (R), ARIZONA: They don't really have any real value anymore, so we just want to acknowledge that and get rid of them.

CROWLEY: Arizona Congressman Jim Kolbe has introduced legislation which would eliminate pennies in cash transactions by rounding up or down to the nearest nickel. Thus, a $34.41 bill becomes $34.40; $92.99 becomes $93.00. Penny for your thoughts.

UNIDENTIFIED FEMALE: Yes. Yes. I carry around enough garbage in my purse as it is, the less weight the better.

CROWLEY: Kolbe says it's about resources, and the base of the problem is not people trying to get rid of their pennies, but the other people.

UNIDENTIFIED MALE: I usually take them home and put them in a big jar of pennies.

UNIDENTIFIED FEMALE: Put them in my dresser.

CROWLEY: Because so many people hoard pennies, the U.S. government is spending a mint to keep the things in circulation. 14.3 billion pennies were minted last year. Kolbe says the production capacity would be more profitable making other coins.

But you knew there'd be a flip side to the penny story.

UNIDENTIFIED MALE: The only time I paid with pennies was when I was in college and I was broke, and I had to.

CROWLEY: Critics say pennies matter for their symbolism and their economics. They say retailers will find a way to round up more than down.

MARK WELLER, AMERICANS FOR COMMON CENTS: What we are talking about is a $600 million tax on consumers from those cash transactions. Not only is there that overall direct effect, but you are disproportionately hurting the poor and those that can least afford it.

CROWLEY: And pro-penny-ites say polls show most people want to keep the penny in use.

UNIDENTIFIED FEMALE: Here's my two cents worth: pennies have their place.

CROWLEY: And there is more to it than dollars and cents.

UNIDENTIFIED FEMALE: I give them to my son. There is a little box at home, and I just drop them in there. And he puts them together, goes to the bank, and those are his.

CROWLEY: The Kolbe bill would not eliminate the penny. People could still use five for a nickel, 10 for a dime and so on. Pennies would be legal but necessary, and somehow lose their luster. A penny saved is a penny earned, not a nickel. And will the lucky pennies out there lose their charm? And what about all those dreams?

Candy Crowley, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: INSIDE POLITICS will be back with a remembrance of a giant of Washington politics and journalism. And she was a woman.

(COMMERCIAL BREAK)

WOODRUFF: President Bush marked the passing of Katharine Graham today by recalling her hospitality toward him earlier this year. In a statement, Mr. Bush said, quote: "When Laura and I moved to Washington, she was the first to welcome a new president to the nation's capital with a dinner at her home. Mrs. Graham became a legend in her own lifetime, because she was a true leader and a true lady, steely yet shy, powerful yet humble, known for her integrity and always gracious and generous to others," end quote.

Our Bruce Morton now with more on Graham's life and legacy.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): Katharine Graham was born in 1917. Her high school yearbook predicted, "Kay's a big shot in the newspaper racket." But it wasn't that simple. She was a rich girl, but not a spoiled one.

(BEGIN VIDEO CLIP, 1997)

KATHARINE GRAHAM, FORMER "WASHINGTON POST" PUBLISHER: The word money was never mentioned. We had fewer possessions or clothes than other people, and much was expected of us.

(END VIDEO CLIP)

MORTON: She did newspaper work, but when she married, her father gave control of "The Washington Post" to her husband, Philip, because, he said, "no man should be in the position of working for his wife."

She became, she said, a "doormat wife, tail to his kite." But Philip was manic depressive and, in 1963, while undergoing therapy, he killed himself.

(BEGIN VIDEO CLIP, 1997)

GRAHAM: He got them to give him a day off, which there was a lot of argument about, a lot of sensitivity about, but finally he got the day off, and we went down to the country and that's where he killed himself.

(END VIDEO CLIP)

MORTON: The business went to Katharine.

(BEGIN VIDEO CLIP, 1997)

GRAHAM: I didn't want to run it, because I didn't think I could. I really knew that I owned the controlling shares and that, therefore, responsibly, I should try to learn about it.

(END VIDEO CLIP)

MORTON: She learned. "The Washington Post," she said, "should serve its readers, not private interests. The newspaper shall not be an ally of any special interests, but shall be free and fair in its outlook on public affairs and public men."

She hired gifted people, like editor Ben Bradlee, and backed them.

BEN BRADLEE, "WASHINGTON POST": She was set out on such a difficult voyage. I mean, to take command of this newspaper under the circumstances involved in her husband's death, when she'd had no training for it. She learned very well and very fast and, you know, she learned the way the rest of us learned, by making mistakes and not being scared of saying so.

MORTON: She succeeded on the business side, expanding, adding radio and TV interests, succeeded editorially by being tough. Courts stopped "The New York Times" after it published one part of the Pentagon Papers, a classified study of the Vietnam War. "The Post" then published more.

(BEGIN VIDEO CLIP, 1997)

GRAHAM: And the lawyers were telling us not to. The business people were very hesitant, and the editorial people were desperate to publish. (END VIDEO CLIP)

MORTON: She published. The Supreme Court ruled for the newspapers, not the government. And then Watergate, the scandal which eventually forced Richard Nixon to resign the presidency. "The Post" broke a lot of those stories, ensuring its own place in history.

(BEGIN VIDEO CLIP, 1997)

GRAHAM: I used to go down there and say, are we being sure we're being fair, we're being accurate? Are we sure we're not being misled so somebody can cut us off at the knees? And Ben's answers were very good to that.

(END VIDEO CLIP)

MORTON: "The Post" became one of America's most powerful papers, mentioned in the same breath as "The New York Times." Katharine Graham became one of Washington's stars, friend of presidents and celebrities. She turned control of "The Post" company over to her son Donald in 1993. She remained a Washington legend.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: And finally, a personal word about Katharine Graham. In addition to everything else that she did, and it was considerable, she was very supportive of women. I don't know that she started out that way. She came from a very privileged background with two very accomplished parents, and she clearly benefited from her status.

But after 20 years as a wife and a mother, somewhere along the way, she became sensitized. She noticed that women were not just treated equally, they weren't treated fairly. She would reach out to other women journalists at "The Post" and women in journalism. She was always very supportive with me and I will always be grateful to her for that. She leaves a hole in many hearts this evening, not just those of her family.

And now, that's all for this edition of INSIDE POLITICS. I'm Judy Woodruff. "FIRST EVENING NEWS" 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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