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CNN INSIDE POLITICS

Condit's Fourth Interview

Aired July 27, 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, HOST: I'm Judy Woodruff in Washington. This is INSIDE POLITICS. The United States may skip a world conference on racism if certain issues are added to the agenda.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: I'm Bob Franken in Washington. Congressman Gary Condit meets with police a fourth time. The search continues for Chandra Levy.

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: I'm Major Garrett at the White House. President Bush has a ready response to new signs of a sluggish U.S. economy.

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: I'm Kate Snow on Capitol Hill where supporters of a Patients' Bill of Rights has some new questions for the president.

ANNOUNCER: Now, Judy Woodruff takes you INSIDE POLITICS.

WOODRUFF: Thank you for joining us. Investigators looking into the disappearance of Chandra Levy returned to familiar strategies today in their search for the former Washington intern. Searchers combed wooded areas of this city looking for clues that might lead them to Levy just hours after the FBI and D.C. police interviewed Congressman Gary Condit for a fourth time.

For the very latest on the investigation, let's turn to CNN national correspondent Bob Franken.

FRANKEN: Well, Judy, as Congressman Condit left his apartment building this morning, investigators were beginning to analyze the information he had provided for them last night at a break in the Agriculture Committee hearings last night that had droned on during the day and into the evening. Instead of going to dinner like his fellow members did, he went to the office of his attorney, Abbe Lowell, where he was greeted by Washington, D.C. police investigators and FBI investigators.

We're told by sources that the entire hour-and-a-half that he spent with them was taken up with questions about an FBI profile that is being prepared to try and get some idea of exactly what was on Chandra Levy's mind when she disappeared on May 1st.

Of course, Congressman Condit is somebody who has admitted to police that he had a romantic relationship with Chandra Levy, according to sources, so the profilers believe that he could provide some unique insights into the way that Chandra Levy thinks.

As for details on the meeting, they were scarce, as we found out when reporters today talked to the police chief, Charles Ramsey.

(BEGIN VIDEO CLIP)

CHIEF CHARLES RAMSEY, D.C. METROPOLITAN POLICE: We're not going to talk about the details of what was discussed. All cards are still on the table in terms of interviews and other people that we're talking to. And we're just going to continue to pursue this case.

(END VIDEO CLIP)

FRANKEN: Now the question comes up: Will there be more interviews for Congressman Condit? According to sources knowledgeable about these things, he was not asked yet but as police said, all cards are on the table, and out in Modesto, California, Chandra Levy's parents said they think the emphasis should continue to be on Congressman Condit.

(BEGIN VIDEOTAPE)

SUSAN LEVY, CHANDRA LEVY'S MOTHER: How would you be if you were a parent and if you knew that the last comments of phone calls may have been with an individual you questioned. And, I mean, that's all I can tell you is that as far as I know, her last phone calls seem to be coming from a specific phone number.

DR. ROBERT LEVY, CHANDRA LEVY'S FATHER: It's Condit.

S. LEVY: It's Condit. So -- and a good friend. If he's a good friend, he'd come forward and care, that a good friend and a constituent is missing.

(END VIDEOTAPE)

FRANKEN: But police continue to say their focus is on more than just Congressman Condit. They wrapped up two weeks, Judy, of searches of the wooded areas around Washington. They'll resume on Monday -- Judy.

WOODRUFF: Well, Bob, do the police and the investigators believe they're still making progress in this?

FRANKEN: Well, they're really quite frustrated. Of course, this has gone on for approaching 13 weeks now. They repeatedly say they don't have a clue. They're looking for new ideas. As a matter of fact, they're hoping that something they glean from Congressman Condit might inspire some new approach.

WOODRUFF: All right, Bob Franken.

For more on the Chandra Levy case and the latest on Gary Condit, log on to our Web site. You'll find updates, a timeline of the case, even a message board to post your comments. That's at cnn.com, AOL keyword: CNN. And coming up this weekend on CNN, people in the news chronicles Condit's life, from his childhood to his political career. A half- hour special on Congressman Condit airs Sunday night at 8:30 Eastern.

New government numbers today show that the U.S. economy suffered through its weakest quarter in eight years. News that the smaller- than-expected second quarter growth just 7/10ths of a percent caught the attention of the president. He said the recent tax cut should help reverse the decline.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Economic growth has been slow. It hadn't been up to standard. The economy is puttering along. It's not nearly as strong as it should be. And what the tax cut does by sending money back to the American working people, it provides an incredibly important boost to economic vitality and economic growth.

(END VIDEO CLIP)

WOODRUFF: For more now on the White House response to the day's economic news, we're joined by CNN White House correspondent, Major Garrett.

Major, what was the president trying to accomplish there with those remarks?

GARRETT: Basically say help is on the way. That's a familiar phrase over here at the White House when it comes to the question of the sluggish U.S. economy. The president, his top economic advisers believe that two things are really going to work toward the mid and long-term advantage of the U.S. economy: one, the beginning of the tax cut which shows up this summer in the form of rebate checks and also a slight reduction in tax withholding for millions of American taxpayers; second, the continued drop in interest rates at the Federal Reserve level. Now the administration is in no way predicting another drop in interest rates, although certainly Wall Street has that expectation.

But I also had a chance to catch up with the president's top economic adviser, Lawrence Lindsey, and I asked him what is the direction overall of the U.S. economy.

(BEGIN VIDEOTAPE)

LAWRENCE LINDSEY, WHITE HOUSE ECONOMIC ADVISER: Well, I think what we're seeing is the beginning of a bottoming out of the U.S. economy. Today's numbers show that, in fact, the problem started much sooner than we expected. The GDP for last December was $120 billion lower than what was advertised at the time. We had a major problem with corporate profits and investment and computers and software that started a year and a half ago. And I think that that shows that the economy has been in trouble for quite some time and we just weren't fully aware of it.

GARRETT: In political terms, this is a Clinton slowdown?

LINDSEY: Well, I think this is a slowdown that started early in 2000, yes.

GARRETT: What does it mean and what should Americans expect when it comes to unemployment?

LINDSEY: Well, unemployment is a live indicator, and so we might see some problems ahead. I think the key is that starting July 1, we are beginning to put some money back into the economy and not just taking it out. There was a withholding tax cut on July 1. People will be getting checks in August and September. A family of four making $50,000 is going to get $1,100 back in taxes over the next 12 months. That's going to help them quite a bit. That's going to help the economy quite a bit.

GARRETT: Do you expect them, therefore, to spend that and not save it?

LINDSEY: Well, I think a good portion of it is going to be spent. I think people should do with it what they think is best for them. But in a lot of cases, it's going to be paying off some bills or buying some things that the family's always wanted to buy.

In any event, it's going to give a shot in the arm to the economy, and I think we're going to see that the economy will have bottomed out.

GARRETT: When you say there might be trouble ahead on unemployment, is it your fear or do you have any fear that if people see higher unemployment numbers, they're going to get scared about the direction of the economy?

` LINDSEY: Well, I think that the key is that we have already taken action to address problems that started a year-and-a-half ago. The tax cut was put in place, the Federal Reserve has been cutting interest rates. Those two forces are going to come together in the next few months. They're going to be a very powerful force by the start of next year. And, indeed, I think we have seen the worst of times already.

GARRETT: Higher unemployment comes ahead. What about GDP numbers for the third and fourth quarter?

LINDSEY: Oh, I think that the second quarter is going to be the worst quarter we'll have experienced. And we will have dodged a major bullet. This was a very sharp decline. Today's numbers, again revising back through 2000, showed we've had a very serious problem now for a year and a half. And the fact that we've been able to avoid a real recession I think is positive news.

GARRETT: OPEC announced a swift and sizable production cut. Danger sign on the horizon for the U.S. economy?

LINDSEY: No, I don't think so. Oil prices have come down very substantially. I think they will see some moderation in oil prices, so I do not view it as a major problem.

GARRETT: Robust U.S. economy in 2002?

LINDSEY: Robust U.S. economy in 2002. Monetary policy, fiscal policy, and backing off in energy prices is all going to come together to help us in 2002.

GARRETT: And if it's not, it's the Bush economy, quite clearly?

LINDSEY: In 2002, I guess it'll have to be, yes.

GARRETT: Larry Lindsey, thank you very much.

LINDSEY: Thank you.

(END VIDEOTAPE)

GARRETT: It'll have to be the Bush economy in 2002. And Judy, as you well know, there is no better student of the first Bush presidency than George W. Bush, the 43rd president of the United States. And he knows his father lost in large part because of an economy that fell into recession and the perception he was doing very little about it. So it's no accident that you see Mr. Lindsey and the president saying, "Help is on the way. We're dealing with this bad economy."

And by the time Mr. Bush enters his second full year as president -- and there is that crucial mid-term election -- there's a good deal of confidence here at the White House the economy is going to be good. And they believe that means good things, not only for Mr. Bush, but for Republicans in Congress -- Judy.

WOODRUFF: All right, Major Garrett at the White House. And that is today's story on the economy.

And as the Washington work week draws to a close, negotiations between the White House and Congress on a Patients' Bill of Rights remain deadlocked over a handful of issues.

Joining us now with more on that legislation and other matters, CNN's congressional correspondent, Kate Snow.

Kate, first, bring us up to date on what's going on with Patients' Bill of Rights.

SNOW: Right. Well, Judy, Representative Charlie Norwood, a Republican of Georgia, who has been pivotal in all of this, just wrapped up a meeting with another White House aide here on Capitol Hill. He is engaged in what you might call shuttle diplomacy. Yesterday, President Bush made an offer to him in person, a compromise offer on a Patients' Bill of Rights. Charlie Norwood brought that back here to Capitol Hill. He met last night and again this morning with his allies, but they say that they found some serious flaws -- using their language -- in the White House proposal.

Here are the key sticking points: One, rules governing suits in state court. The White House offer would allow more suits against HMOs to go into state court, but with federal rules applying to those suits. Those on the other side are worried about that. Also, they're concerned about caps on liability. The two sides have very different ideas about how much a person should be able to get in court in a settlement if it's found in their favor against an HMO. Both sides saying now that they are making progress but the White House very definitely changing tact a little bit today: lowering expectations saying they may not get this done before next week.

(BEGIN VIDEO CLIP)

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: As for the question involving Patients' Bill of Rights, the president is less interest in the exact timing of the vote and much more interested in getting the job done and complete. The president believes that this can be the year that Congress gets the job done, and that's why he's working as hard as he is on this issue with Congressman Norwood and others.

(END VIDEO CLIP)

SNOW: Next week important because at the end of next week, Judy, they take a recess for the month of August here on Capitol Hill. We're told Congressman Norwood is on his way back to Georgia to his home district on a flight about an hour from now, so these negotiations probably on hold until Monday -- Judy.

WOODRUFF: Kate, we know part of the White House headache, if you will, behind Patients' Bill of Rights are those Republican moderates sticking together. And now, they're sticking together on another issue.

SNOW: Well, the White House has been having some trouble lately keeping all of their Republicans in the House on board on several different issues. We should point out it's not always the same group of moderate Republicans. It tends to be a bit of a floating group of Republicans that vote against the White House, if you will, or against the Republican leadership position. Today, it was 19 moderate Republicans, most of whom are -- call themselves pro-environment. They have a working group. They meet every Tuesday to have pizza for lunch. They all banded together and voted on an issue with Democrats to restore rules on arsenic in drinking water. These were rules that were put in place by President Clinton.

(BEGIN VIDEO CLIP)

REP. DAVID BONIOR (D-MI), MINORITY WHIP: Nineteen moderates are better than 15 moderates. And 15 moderates are better than 10. And we keep getting more and more each time. And we welcome the coalition of people in the Republican Party who want to join forces with us to make sure our public health issues are addressed as well as our worker safety issues and some of the other things that we care about as a party.

(END VIDEO CLIP)

SNOW: And today's vote in the House would set up stricter standards for arsenic in drinking water, but important to point out that the practical impact of this, Judy, is probably very little because the Senate hasn't taken this up, and clearly, President Bush is probably not going to want to sign into law something that reverses what he wanted to do, which his to have the EPA take another look at arsenic levels in drinking water -- Judy.

WOODRUFF: All right, Kate, different issue. Embryonic stem cell research. A development today. More pressure on the president to come down in favor of federal funding there?

SNOW: That's right. Very much more political pressure. The House jumping in today with a letter from 202 members signing this letter to the president urging him to support federal funding for embryonic stem cell research. I'm told by the authors -- those who gathered those signatures that they think they have another 12 members also who would support this. That all includes 40 Republican members, we should point out.

What does that mean? Well, those numbers are high enough that they could potentially pass legislation through the House in favor of federal funding for embryonic stem cell research. So they're trying to send a signal to the president that, "Look, we can beat you on this. You need to support this federal funding." It joins what happened last week, Judy, you'll remember in the Senate when a group of senators, about 60 of them, also sent a letter to the president to this effect.

WOODRUFF: All right, Kate Snow at the Capitol.

And a quick note today or rather now about Monday's INSIDE POLITICS. I will have an extended interview with First Lady Laura Bush to get her thoughts on her first six months in the White House.

Stay with us. This is INSIDE POLITICS.

(BEGIN VIDEO CLIP)

FLEISCHER: The president thinks it's very important for this conference to be successful.

(END VIDEO CLIP)

ANNOUNCER: A planned global conference on racism meets with U.S. objections. We'll discuss the summit agenda and race relations here at home. Also...

(BEGIN VIDEO CLIP)

BUSH: I oppose blanket amnesty. The American people need to know that.

(END VIDEO CLIP)

ANNOUNCER: The political risk and potential rewards of immigration reform, part of the agenda in our weekly political roundtable. And later... (BEGIN VIDEO CLIP)

COLIN POWELL, U.S. SECRETARY OF STATE: ... my cheek as she kneels by my side.

(END VIDEO CLIP)

ANNOUNCER: Colin Powell in concert. The secretary of state takes the international stage.

Live from Washington, Judy Woodruff brings you more of INSIDE POLITICS straight ahead.

(COMMERCIAL BREAK)

WOODRUFF: White House officials say the administration wants to take part in a United Nations conference on racism. But they say they may have to boycott it if organizers include as part of the agenda any discussion that equates Zionism with racism. Another issue the administration does not want discussed: reparations for slavery.

(BEGIN VIDEO CLIP)

FLEISCHER: For this conference to be successful, it's important that they focus on the current problems of racism and not get lost in the tangle that is presented by trying to address long ago inequity that involved Africans trading Africans, Arabs trading Africans, Europeans trading in enslaving Africans, Americans doing the same. The point is this conference should be successful. Racism is a serious problem in the here and now around the world.

(END VIDEO CLIP)

WOODRUFF: Organizers are scheduled to meet again on Monday on the agenda. The conference is set to begin August 31st. Starting tomorrow here in Washington, the National Urban League will sponsor another conference focusing on race relations in this country: how far we've come, and how far we still need to go.

Earlier today, Congressman J.C. Watts and the Urban League's president, Hugh Price, talked with me about the results of the league's survey on the state of black America. I began by asking Hugh Price what were the most important findings in the survey of 800 black Americans.

(BEGIN VIDEOTAPE)

HUGH PRICE, PRESIDENT, NATIONAL URBAN LEAGUE: Several findings jumped off the page of the survey. The first was that economic opportunity is the primary concern by a wide, wide margin. It's the primary personal concern, and it's the issue that folks said that the African-American organization should focus on. Secondly, we were stunned to find out that 67 percent of the people we surveyed want to own their own businesses. And thirdly, we found that despite the spread of AIDS in our community, only a quarter of the people we surveyed said that they were very afraid of getting the disease. WOODRUFF: Congressman Watts, as a leader in the Republican Party, what does this tell you about the black community in America?

REP. J.C. WATTS (R), OKLAHOMA: Well, I think it speaks very clearly to what the black community is concerned about. I think economic development issues, jobs, capital formation, people starting their own business. I was -- it's quite interesting to hear the health care concerns, that there were so few concerned about the AIDS issues. I think education, those things are very important, but I think we have worked on those things over the last 6 1/2 years, so those numbers do not surprise me.

WOODRUFF: Mr. Price, the president's economic plan, including his tax cut, those rebate checks going out, how much of a difference will that make for black Americans?

PRICE: Well, we have some concerns about the tax plan. We think that too many of the benefits are skewed toward the wealthy, and we're very worried that low-wage workers who didn't pay federal taxes won't be getting any rebate. We wish that more of the resources have been allocated toward working people who are really having trouble making ends meet.

WOODRUFF: Congressman Watts, how do you respond?

WATTS: Well, people that pay taxes got tax relief, they got refunds back. The marriage tax affects about four million African- Americans, reducing tax rates across the board. Affects about 16 million African-American. So I think the tax bill, the black community is going to be very pleased with it, because it enhances their quality of life, gives them more money to buy the kids school clothes, appliances, pay their car payments or whatever their needs are in their household. So the tax bill was very favorable to the African-American community.

WOODRUFF: Mr. Price, what did the survey find with regard to African-Americans and the justice system, racial profiling among other things?

PRICE: Well, it was interesting. Forty-three percent of the people we surveyed said that they had an encounter with the police which they thought was based on race. And that was all across the socioeconomic spectrum. So there continues to be very deep concern about the interaction with the police, and that's an issue that we would hope that the president and Attorney General John Ashcroft will concentrate on.

WOODRUFF: And Congressman Watts, is it your sense that the administration is addressing this problem?

WATTS: Well, Judy, I told the president early in his presidency that racial profiling is real. And I think Hugh's numbers indicated that regardless of which economic background or your status is in life in the black community, everybody has had some bad experience with law enforcement. So racial profiling is on the president's agenda; he said that he would address it. I think the U.S. attorney's office is taking a look at that and rightfully so. They should because racial profiling is real.

But I would also say I hope that we do that the right way and not paint with a broad brush and say that all law enforcement is bad. Let's weed out the bad, deal with the bad, but at the same time, allow law enforcement to do their jobs.

PRICE: Well, our community has benefited enormously from the reduction in crime, so we certainly want to be safe, and we want the police to be effective. We just want folks to honor the law and protect the civil liberties of our citizens.

WOODRUFF: Well, gentlemen, we are going to have to leave it there. Hugh Price, the president of the Urban League and Congressman J.C. Watts, gentlemen, thank you, both. We appreciate your joining us.

WATTS: Thank you, Judy.

WOODRUFF: A former big city mayor eyes a higher office. We'll fill you in. Also, a Florida teenager convicted of killing his teacher learns his fate. And a man accused of killing two Capitol Hill police officers may be forced to stand trial. A look at some of the day's other top stories, when INSIDE POLITICS continues.

(COMMERCIAL BREAK)

WOODRUFF: A potential constitutional showdown between Congress and the White House appears to have been averted. Legal trouble for another lawmaker has surfaced. Joining me now to fill us, our congressional correspondent Jonathan Karl.

Now, Jon, we understand Senator Lieberman, Joe Lieberman has decided to back off on the subpoena threat? What's this all about?

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, as a matter of fact, he has. And Joe Lieberman talked about subpoenaing documents from the White House, documents as to how they made some of those controversial environmental decisions rolling back regulation to put in place in the waning days of the Clinton administration.

Lieberman had complained he wasn't getting documents about how those decisions were made, and he was saying he was going to subpoena today if he didn't get the documents. But now he has said the White House has agreed to share the documents, not to turn them over, but to allow Lieberman's staff and the Governmental Affairs Committee to come in and look at the document. But this is not the end of the battle. Lieberman made it very clear that he is launching an investigation into this matter. He wants to know why the Clinton -- the Bush administration rolled back these environmental regulations. He's hinting that what he thinks is this was all about industry, industry working and nobody else working with the Bush White House. Here's what he had to say.

(BEGIN VIDEO CLIP)

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: And I'll call it just a fear at this point that the administration basically just consulted with one side.

(END VIDEO CLIP)

KARL: So Lieberman says he's been looking into this for four months at the staff level. He raised the possibility that he would have hearings on the subject down the road.

WOODRUFF: All right, different subject. Now we learn that independent senator Jim Jeffords is being sued by two citizens for switching out of the Republican Party?

KARL: That's right. Two citizens of Pennsylvania, by the way, are suing the Vermont senator saying he was elected as a Republican, he should serve as a Republican. But something interesting about this is that Jeffords will not be accumulating legal bills on this question, because in a very little noticed measure that was passed unanimously by the Senate last week, Tom Daschle put forth a resolution that said that in this case, the Senate counsel will represent Lieberman -- I mean, represent Jeffords. Jeffords will have legal representation from the Senate on this.

WOODRUFF: All right, different subject again. There's an issue near and dear to Senator Jeffords' heart that's coming up soon.

KARL: Well, that's right. This is the dairy compact. You know, the dairy compact, which sets a minimum price for milk -- of course, with all those dairy farmers in Vermont, a very critical issue for Jeffords. It's one that narrowly has passed the Senate on two occasions with Trent Lott helping out his fellow Republican, Jim Jeffords, getting this thing passed. Well, now Lott has made it very clear that he is not going to support Jeffords on this. He opposes compacts. He said he only did it in the past to please Jeffords. This is expected to come to a head in the Senate next week and it's going to be a very contentious issue, because, by the way, Jeffords now with the Democrats as an independent senator but caucusing with the Democrats. Tom Daschle has always been against these dairy compacts.

WOODRUFF: You're not saying that Senator Lott is holding -- his leaving the party against Senator Jeffords, are you?

KARL: Well, what Lott says is that he has always opposed compacts and he only did it because he was trying to keep a fellow Republican happy. Now that Jeffords is not a Republican, Lott is anxious to see this thing killed.

WOODRUFF: All right, Jonathan Karl, thanks very much.

Well, not so long ago, Bill Clinton was himself doing battle with Congress. Now it is his wife who's fighting battles on the Hill while he's getting ready to move into a new office on Monday in Harlem.

Our national correspondent Bruce Morton takes a look at what the former president has been up to lately.

(BEGIN VIDEOTAPE) QUESTION: Have you worked out a plan...

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): At first, it was all controversy: Why should being an ex-president be any different? Were you taking White House furniture? What about pardoning Marc Rich?

WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I take full responsibility for it. It was my decision. Nobody else made the decision.

MORTON: But it got better. He traveled -- wow, did he travel.

Since leaving office, he's been to Argentina, Austria, Brazil, Britain, England and Scotland, Canada, China and Hong Kong, of course, Denmark, the Dominican Republic, Germany, India -- hold the map a minute, we know you want to see him on an elephant -- OK, map again: India, Ireland, the Netherlands, Nigeria, Norway, Poland, Sweden, South Africa, Spain.

And if we missed any, we're sorry.

He's seen world leaders, China's Jiang Zemin, South African elder statesman Nelson Mandela. He's been to sports events: the NBA finals, though the 76ers' owner wouldn't put him in his box, asking, where was he when we were losing? The Belmont Stakes, the French Open, Wimbledon.

He's been making speeches for a least $100,000 a pop, or $120,000, depending on which story you read. His agent says he's the hottest lecture circuit draw ever. He's done some political stuff, and some serious speeches, like this one on race and the media.

CLINTON: ... that our children's generation actually believe that racial harmony and respect for diversity is the only way to live and prosper in the 21st century. That's the good news.

MORTON: He's done one thing every parent wants to do: go to his kid's college graduation. He's golfed. He has occasionally spent time at the Chappaqua home he and his senator wife have. He's sampled New York bagels.

He has, in short, made a life which he seems to be enjoying. He'll get a big advance for the book he plans to write, and now he'll have an office he can write in.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: And from former politicians to current ones: Former Los Angeles Mayor Richard Riordan has formed a committee to explore a run for governor of California. Riordan has been accused by some fellow Republicans of being too moderate. But he tells us he is receiving encouragement from all over, including from the White House, even though the Bush administration says it's not taking sides. (BEGIN VIDEO CLIP)

RICHARD RIORDAN (R), FORMER LOS ANGELES MAYOR: I'm going to be Dick Riordan from the beginning to the end. I love this state. As governor, I will be the governor for everybody in the state, whether they're independent, Republican, Democrat. And I think people appreciate that. They want a leader who's going to make their state safer, going to improve their roads, get them more electricity, a better education. They're not going to look at what the etiology of the person is.

(END VIDEO CLIP)

WOODRUFF: Riordan says that he'll make up his mind in a month or two. Democratic Governor Gray Davis has indicated that he does plan to seek reelection next year.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

WOODRUFF: On the table, a plan to grant legal status to thousands of undocumented immigrants, a subject for our Friday roundtable. And a prime minister's popularity: Will it translate into votes this Sunday? Speaking of popular...

(BEGIN VIDEO CLIP)

COLIN POWELL, U.S. SECRETARY OF STATE (singing): My love is strong and it pushes me onward, down off the hill to Felina (ph) I go. Out in the...

(END VIDEO CLIP)

WOODRUFF: The secretary of state showcases his versatility before departing Vietnam. Those stories still ahead.

(COMMERCIAL BREAK)

WOODRUFF: Joining us now for our regular "Friday Roundtable," our senior political correspondent, Candy Crowley, Ed Chen of "The Los Angeles Times," and joining us from New York, Ron Brownstein, also of "The Los Angeles Times."

Ron, to you first, and the case of missing intern Chandra Levy. Has the fact that there is a missing young woman been lost in all of this attention on Congressman Condit?

RON BROWNSTEIN, "LOS ANGELES TIMES": Sure, it doesn't -- in some ways we don't seem to be getting any closer to answering the underlying question, which is of course: What happened to Chandra Levy? And the developments this week, Judy, with the questioning being raised about possible obstruction of justice charges against some of the congressman's aides, really make this a classically tragic Washington story, in a way. You know, so often in Washington, people are accused not of an underlying crime, or the underlying crime, but of trying to cover something up, perjury, obstruction of justice is the usual way that people get in to trouble here, and we might be seeing that again whether or not it gets us any closer to the question that people really ought to care about.

WOODRUFF: Candy, increasing calls for the congressman to step down. At what point does this get to be the kind of pressure he cannot ignore?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, you know, I think that it's interesting that there haven't been more, and part of the problem as our "L.A. Times" correspondents well know, is that the Democrats don't want to let go of that seat early.

Seems to be fairly clear that Congressman Condit, at this point, can't survive through another election. But the Democrats would really love him to have stay until the next one because it would be very tough for a Democrat to win, in that special election, so they would like to keep him here.

WOODRUFF: Ed, quickly, what is your sense as a reporter, how much longer does this story go on? If she's not found, does it just go on and on?

ED CHEN, "THE LOS ANGELES TIMES": I think it does go on. For Gary Condit it will go on forever if she is not found. Now I think what is happening with Condit is he has been a very popular member but he is so increasingly isolated, you know from Democrats and from Democrats from California. Some of whom say they've not talked to him about this.

WOODRUFF: All right. Let's move on to -- to the economy. Today some bad numbers in the Gross Domestic Product, worst or rather -- weakest growth in the second quarter in the past eight years. Ron Brownstein, do we look for this to be about as bad as its going to get or is it going to get worse?

BROWNSTEIN: Well I don't have the crystal ball on that. But the political problem for the president is that you have both a direct and an indirect vulnerability here. The direct vulnerability is obvious -- as president he is the steward of the economy. And if people's optimism about the direction of the country declines the president's approval declines almost always declines with it.

Tom Davis, the ahead of the National Republican Congressional Committee, has said that his biggest concern next year is a slow economy but there is a rebound concern for the White House as well, Judy, which is that with this big tax cut and the economy slowing the growth of federal revenue, there is the prospect that by 2002, they may have to dip into the Social Security trust fund to keep the government operating.

And that, I think, would be something that Democrats would be able to make a lot of hay with. It took 40 years roughly, to have on- budget surpluses and to have it in surplus, and to give that up within two years I think would be very very difficult politically for the Republicans.

WOODRUFF: Candy, the White House immediately as soon as this information came out today, pointed out that the weakening in the economy started last year during President Clinton's time. Can President Bush shift responsibility here?

CROWLEY: No, and they know that. That's just like Gray Davis saying, gee, I had nothing to do with this electricity crisis. It just doesn't wash. But look, I think the next quarter is key. That's when those $40 billion dollar tax cuts get out there. We may see another Fed cut. I guess later this month it's meeting again. We have had six already.

Consumer spending is what has kept this -- remember, there is it still growth -- it's very small growth, it's the smallest we have seen in eight years or something, but there is still growth there. What they really have to make sure of is that the consumer spending keeps them at least afloat and rather than a negative growth, it and stays positive and see if they can kind of get through this.

WOODRUFF: Is there anything they can do, Ed Chen, to keep from being held responsible for what happened?

CHEN: I don't think so. And there is one other lurking issue for the president on this. Throughout the campaign he talked about saving Social Security, providing prescription drug coverage, and also have a billion dollar -- or is it trillion dollar, you get lost in the numbers of a rainy day fund.

Now when this surplus disappears people are going to start asking, where is that rainy day fund? If it ain't there it's not only a political problem, but one of credibility that people will are going to be asking the president about.

WOODRUFF: All right. Let's turn to immigration. The president was asked about immigration and what he wants to do yesterday by our roundtable reporter Ed Chen, and here's what the president had to say.

(BEGIN VIDEO CLIP)

BUSH: I oppose blanket amnesty. The American people need to know that. I do believe though, that when we find willing employer and willing employee, we ought to match the two. We ought to make it easier for people who want to employ somebody or are looking for workers to be able to hire people who want to work. And I know we can do so in a humane way that treats people with respect.

(END VIDEO CLIP)

WOODRUFF: Ed Chen, what does the president want to do here, and is he going to be able to do it?

CHEN: What we are seeing, he wants to allow a lot of immigrants and undocumented workers to become eligible to be permanent residents and perhaps eventually become citizens. His most immediate concern is Mexico, because he has a summit coming up in early September with Vicente Fox. But beyond that I think the tensions we are seeing is from the Republican right and the president's desire to be inclusive is this tension of the campaign slogan of being a compassionate conservative. And what we are seeing is this being played out on a very public stage.

WOODRUFF: Ron.

BROWN stein: Judy, I an going to disagree a little bit with my colleague, Ed. I think what the president clearly wants to do and the administration wants to do is allow a lot of people who are currently here illegally to work here legally, but temporarily.

The big question is going to be: How big a funnel you allow? How many of those people you then allow to become permanent residents and citizens? Some Republicans like Phil Grimm says everybody who is here illegally should be allowed to work legally but then have to go home.

Democrats will want to move as many people as possible toward permanent residency and toward citizenship. The administration hasn't fully tipped its hand about how broad a net it wants to cast, but that is going to be I think, the centerpiece of the debate when it gets to Congress -- how many people -- everybody -- there may be a majority that says people can stay here and work, but can they stay here and become citizens?

That is going to be the big question.

WOODRUFF: Candy, a somewhat related question. It's not the same thing but there is a connection. The president has suffered a couple of setbacks this week on the question of safety standards from Mexican trucks that are traveling here in the United States.

Now a number of Republican senators have parted company with the White House in this. What's going on -- what's the story behind this? Why are they not sticking together here?

CROWLEY: Part of it is that not all of these senators are from states where this is, you know, actually an issue right at this moment, in Texas, Arizona. There is a couple of things about this battle. One is, the influence of John McCain. He's taking the lead on a battle on the side of President Bush.

So the fact that he lost a vote there, you know, it's -- the sting of it has taken a little because John McCain is on his side. Also it is what we in the news business call "TBD" -- this is To Be Determined.

It's not over yet. Score for Tom Daschle. He interrupted a filibuster of the Republicans and it's the first time that he has had to and was able to beat back a filibuster. So this is a win for Daschle and his forces but it's not over. We are still ongoing with this trucking.

WOODRUFF: Mexican trucks, Ed, how important of an issue is this, really, for the administration?

CHEN: They bring a lot of goods to the United States and back the other way of course. And the Mexicans already are threatening to retaliate by limiting American trucks into Mexico. So it's a big issue, bilateral issue that again -- they hope to resolve before September.

WOODRUFF: And Ron Brownstein, one other matter here, the president's nominee to head the Consumer Product Safety Commission has been -- has come under fire from Democrats in the Senate. Where is that headed?

BROWNSTEIN: Well, there is something refreshing about this, actually. You know, so often when there is opposition to a nominee, we find, the opponents find some sort of ethical allegation to shoehorn into the debate. But this is straightforward. The Democrats say that they don't want this woman to become the chairperson of the Consumer Product Safety Committee because she is too sympathetic toward industry,

We have had similar arguments occasionally came up during the Clinton Administration. For instance when the Republicans in the Senate refused to appoint Bill Lann Lee for the secretary for Civil Rights in the Justice Department because they felt that he was too sympathetic toward conventional affirmative action.

It is, I think, entirely appropriate for the Senate in either party to argue that someone has an ideology that they review is inappropriate for the job, rather than, I think it's preferable to the sort of manufacturing of ethical complaints as a shield behind which to raise this real opposition. So in a way I think this is refreshing.

WOODRUFF: All right. We are going to have to leave it there. Ron Brownstein in New York, and Ed Chen and Candy Crowley here in Washington. Thanks to all three of you and have a great weekend.

CHEN: You too.

WOODRUFF: Good to see you. I appreciate it.

Now, some weekend calendar notes: tomorrow, the National Urban League Conference gets under way here in Washington, and Pat Buchanan will give the keynote speech at the National Reform Party convention in Nashville.

On Sunday, President Bush will speak at the Boy Scouts of America National Jamboree, and Japan will hold parliamentary elections.

A man not even on the ballot in Japan's elections has stolen the political spotlight. Will it be enough to help his party?

Up next: our Bill Schneider on the Koizumi phenomenon.

(COMMERCIAL BREAK)

WOODRUFF: Taking a look at politics overseas, Japan's prime minister was on the campaign trail today, even though his name does not appear on ballots in this weekend's election. Our senior political analyst Bill Schneider is in Tokyo with some thoughts to share from his reporter's notebook.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST (on camera): Japan has a new prime minister. He's just been in power for a few months, and the question in this election is: can he transfer his own high personal popularity to his political party? Junichiro Koizumi, the prime minister, is not himself on the ballot. It's an election for half of the membership of the upper house of the Japanese parliament, or the Diet. But it is a test of his electoral strengths.

Koizumi was elected this spring in a desperation move to save his party. You know, Japan has been in an economic slump for the last 10 years, the Japanese call it the lost decade. And the Liberal Democratic Party, the LDP, has been in power almost uninterruptedly since 1955. By choosing Koizumi as their leader, the LDP hopes to capture the public sentiment for change.

All Koizumi has is his own personal popularity. Is that enough? It would be in the United States, where public opinion is a very powerful force. But public opinion has never been that a powerful a force in Japan. Japan is not a plebiscitary democracy like the United States.

There are many classic elements of populism in Koizumi's style and his appear. For one thing, charisma. He is treated as a movie star in Japan. They call it the Koizumi phenomenon. His speeches have warmth and personality, totally unlike the tradition of somber, middle-aged men in dark suits. His hair is a sensation. His wardrobe -- look at his neckties.

Japan is a country that has a history of fads and crazes that are very short-lived. Who can rely on public opinion when you had one prime minister early this year with a 7 percent approval rating, and he was succeeded by another prime minister whose approval rating was close to 90 percent. The conventional wisdom in the political establishment about Prime Minister Koizumi is, "this, too, shall pass."

(END VIDEOTAPE)

WOODRUFF: Bill is on what he calls a working vacation. His "Political Play of the Week" will resume next Friday, and you can e- mail your nominations to insidepolitics@cnn.com. And tune in on Fridays to see if you picked the "Play of the Week."

Vietnam yesterday, South Korea today, China tomorrow. It's a busy time for the U.S. Secretary of State. But if you think it's all diplomacy and debate, think again. We'll show you another side of Colin Powell next.

(COMMERCIAL BREAK)

WOODRUFF: Who says diplomats are staid and aloof? This was last night, at the close of the annual Asian Pacific Nations Summit in Hanoi. Secretary of State Colin Powell taking center stage with his rendition of a song popular when he was a soldier in Vietnam. By all accounts, he brought the house down. You be the judge.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE (singing): Out through the back door with roses I ran, out where the horses (UNINTELLIGIBLE) has found me, kissing my cheek as she kneels by my side.

(END VIDEO CLIP)

WOODRUFF: In case you were wondering, the female star of that cabaret act was none other than Makiko Tanaka, Japan's foreign minister. Other diplomats also entertained, which is a tradition at the close of this meeting.

We cannot top Secretary Powell, and we have just a closing word about our location over the last three weeks. We thought while the weather is nice, it would be a good idea to take INSIDE POLITICS outside, where we can show you a little bit more of this beautiful city where so much of our news is generated and occasionally bring us closer to the news makers. It's a bit more a production for us, but we like the feel and we hope you do too.

And that's all for this edition of INSIDE POLITICS, but of course, you can go online all the time at CNN's Allpolitics.com. AOL keyword "CNN." Our e-mail address is insidepolitics@cnn.com.

I'm Judy Woodruff. Have a great weekend. "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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