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CNN LATE EDITION WITH WOLF BLITZER

Daniels Discusses Budget Surplus; Durbin and Allen Debate the Bush Administration; David and Thornburgh Talk About Gary Condit

Aired August 19, 2001 - 12:00   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.
WOLF BLITZER, HOST: This is LATE EDITION, the last word in Sunday talk.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: If they try to bust the budget, you will have a president who will veto those budget- busting bills.

(END VIDEO CLIP)

BLITZER: President Bush promises not to touch Social Security funds, even as the budget surplus shrinks. But can he keep his promise? We'll ask White House Budget Director Mitch Daniels.

Then.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: There's hostilities in dozens of places all across this globe, and that's dangerous.

(END VIDEO CLIP)

BLITZER: But is the Bush administration withdrawing from the rest of the world? We'll discuss international affairs, defense, the budget and much more with two key senators: Illinois Democrat Dick Durbin and Virginia Republican George Allen.

And how is President Bush's message playing outside the Washington Beltway? We'll get perspective from two governors, Oklahoma Republican Frank Keating and Vermont Democrat Howard Dean.

And Congressman Gary Condit plans to run for reelection. Will he be the next comeback kid? We'll ask former Clinton White House special counsel Lanny Davis and former Bush Attorney General Dick Thornburgh.

Plus, our LATE EDITION roundtable: Steve Roberts, Susan Page and Christopher Caldwell.

And Bruce Morton has the last word on echoes of old wars.

ANNOUNCER: Live from CNN in Washington, this is LATE EDITION WITH WOLF BLITZER.

BLITZER: It's noon in Washington, 9 a.m. in Los Angeles, 7 p.m. in Jerusalem and 8 p.m. in Moscow. Wherever you're watching from around the world, thanks for joining us for this two-hour LATE EDITION.

We'll get to our interview with White House Budget Director Mitch Daniels in just a moment but, first, the hour's top story.

We begin in Crawford, Texas, where President Bush, even while on his working vacation, is gearing up for a bitter battle with congressional Democrats over the shrinking budget surplus. Will the president be forced to do what he earlier pledged he wouldn't do under any circumstances, dip into the Social Security surplus? CNN White House correspondent Major Garret joins us now live from Crawford with the latest -- Major.

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Good afternoon, Wolf. No politician likes to eat his words, least of all a president of the United States, and specially not in his first year in office. During the campaign and while he was pushing for that tax cut as president, George W. Bush promised the country that that tax cut could be done, and that no damage would be done to the Social Security trust fund or Medicare.

Well, he is going to release a revised budget this week that shows country has $160 billion surplus, but that he is coming dangerously close into tapping in to that Social Security surplus, and some Democrats already allege he is touching Medicare trust fund moneys. The Democratic National Committee is going pay for television ads to drive home that exact point, and when the president travels from Crawford tomorrow and Tuesday to Wisconsin and Missouri, there will be Democratic-generated crowds to greet him protesting on this very point.

The president's top economic adviser today on "Meet the Press" said the president's budget will protect Social Security, but Democrats have to do their part.

(BEGIN VIDEO CLIP)

LAWRENCE LINDSEY, WHITE HOUSE ECONOMIC ADVISER: Remember, the president is not in complete control of things here. We have to keep a lid on spending. President Bush will propose a budget which will not touch Social Security.

(END VIDEO CLIP)

GARRETT: Now, Democrats will say in the coming battle over 13 spending bills that must be approved by Congress and signed by the president in September, the president can't pay for all the priorities he wants -- education, defense and other things -- because the economy has slowed down, the tax cut was too large, and other things should have been done to protect the budget.

Here is what Dick Gephardt had to day on "Meet the Press." (BEGIN VIDEO CLIP)

REP. DICK GEPHARDT (D-MO), MINORITY LEADER: We said we ought to have a trigger. If we had taken some of these common sense measures while we were doing the tax cut, we wouldn't be dipping into Social Security, which is what we are doing right now.

(END VIDEO CLIP)

GARRETT: Now, Wolf, this debate is largely symbolic. No benefits are going to change for Social Security or Medicare, and as the Bush administration points out, when there have been six quarters of declining economic growth to have a budget surplus of $160 billion, that should be celebrated.

These are about political promises, though, and high symbolism. Democrats believe they have a juicy issue here, they intend to drive it home -- Wolf.

BLITZER: It will be a hot issue indeed. Major Garrett in Crawford, thanks so much for joining us.

And earlier today, I spoke with the White House Budget Director Mitch Daniels about that shrinking surplus, its impact on Social Security and the president's budget priorities.

(BEGIN VIDEOTAPE)

BLITZER: Mitch Daniels, thank you very much for joining us, and let's talk about the numbers. That's your business, the numbers game, right now.

Earlier this year, we were told there would be a budget surplus of about $275 billion. What do you now expect it will be, given the economic slowdown?

MITCH DANIELS, THE WHITE HOUSE BUDGET DIRECTOR: It'll be in neighborhood of $160 billion, Wolf, but, of that difference, most of it was intentional. About $40-odd billion, about 2 percent less revenue came in than was expected, and that's attributable to the slowdown. The rest of it is the tax relief which the president pushed through Congress so that we can get the economy going again.

DANIELS: And also, there was some supplemental spending to start the repair of our national defense.

So, the real miss was about 2 percent, which I would point out is a lot closer than most of the 50 states and many businesses are coming this year.

BLITZER: Of the $160 billion budget surplus that you are now projecting, how much of that will come from the Social Security payroll tax surplus?

DANIELS: Essentially all of it.

BLITZER: Will you have to dip into the Social Security money in order to make sure there is no so-called deficit spending?

DANIELS: No, although that's never what happens anyway. The idea of dips and raids and drains and so forth is really sort of a fictional Washington convention.

But respecting or observing that convention for a moment the answer is no. The overall surplus will be just slightly larger than that attributable to Social Security.

BLITZER: As you know, when President Bush addressed the joint session of Congress earlier this year, he made a specific point of insisting that he wouldn't touch that Social Security money. I want you to listen to what the president said way back in February.

(BEGIN VIDEO CLIP)

U.S. PRESIDENT GEORGE W. BUSH: My budget protects all $2.6 trillion of the Social Security surplus for Social Security and for Social Security alone.

(END VIDEO CLIP)

BLITZER: Why is it so important, as the president seems to insist given his remarks, that that money not be touched, for example, by other budget practices?

DANIELS: Well, it will enable the nation to pay down -- continue paying down debt. We're reducing the national debt now, and that's a great thing. And the Social Security surpluses over the years happen to be more than enough to repay all the debt we can repay and to leave money over for the reform of that system, which is really imperative if we're going to protect it over time.

Let me also point out, Wolf, that the president's budget that he referred to there is the budget for the coming year, for 2002. So the numbers we just talked about are for 2001, and they reflect the spending decisions of the last Congress and the last administration.

Incidentally, in just last December, that last Congress and administration broke their own budget by $35 billion. And if all that spending had not occurred, these numbers would look even better than they do.

BLITZER: And that was, obviously, the result not only Democrats but Republicans, as well, breaking of that budget.

DANIELS: It was bipartisan in nature.

BLITZER: All right, let's talk a little bit about some criticism that the Bush administration received this week.

As you point out, almost all of that $160 billion budget surplus will come from the Social Security payroll tax surplus. Some people note that this past week you came up with a new budgetary procedure that allows you to have an extra $4 or $5 billion, changing a procedure that had been in effect for 65 years, in order to get you an extra $4 or $5 billion so you wouldn't supposedly raid the Social Security money.

Tell our viewers what precisely you did without getting into too much bookkeeping complexity.

DANIELS: I noticed that, of this year's revenues, several billion had not come in this year. It came in in 2000 and '99 and '98. I now know, and we now all know, that it takes that long for the accountants to reconcile which revenues were attributable to payroll taxes, which to income taxes or other sources.

And so, in the interest of accuracy, since everyone is so fixated on this one year snapshot, I put those revenues in the year they actually came in. It's a far more accurate way to do it.

And incidentally, going forward, I think we should always do it this way, because the trust funds have been short-changed. If you had made a deposit in your savings account and it took the bank a year or two to post it, I think you would want them to post it for the year you sent it in so you could accrue interest on it. That did not happen in the case of these adjustments, and the trust fund is $200 million smaller than it really ought to be.

So, maybe the one good thing that has come from all this consternation about the relative size of the surpluses is that we looked a little more closely and we now have a way to view it that it is more accurate and in the end will be more fair.

BLITZER: And as you know, your critics are saying this is highly suspicious, that it wasn't simply a coincidence that this was a more accurate bookkeeping form, but that you were desperately searching for a few extra billion dollars so that you wouldn't have to go into Social Security trust money.

DANIELS: Listen, the accountability for this is mine and mine alone. And I will be glad to defend the virtues of accuracy and not short-changing the trust fund with anybody. And they're right, it's not a coincidence. We were looking very, very hard at these numbers because of the intense interest that now surrounds them.

And it was when I noticed that when the total surplus was clicking down by a couple percent but the Social Security surplus, as reported, was going up that I knew something was amiss, and we looked behind to it see why.

BLITZER: As you know, the Democrats, when they returned to Washington, in fact, even as early as this week, they're going to go on political war path and blame the huge tax cut that the president pushed through the Congress for these reduced budget surplus numbers.

And Tom Daschle, the Democratic leader in the Senate, sort of previewed part of their attack campaign earlier this week. Listen to what Senator Daschle said.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: Because the tax cut was so large, we virtually have no room to do all of the other things that we need to do to run the government. We are going to be dipping into Medicare and, most likely, Social Security trust funds for the first time in years. The Bush economy is souring. And we've got to find a way to resolve these issues, prior to the time they get any worse.

(END VIDEO CLIP)

BLITZER: You say you are not going to dip into Social Security, but will you be dipping into Medicare, as the majority leader in the Senate says?

DANIELS: No. Every penny of Medicare receipts go to Medicare. And by the way, it takes about $50 billion more from the general taxpaying taxpayer to cover the rest of Medicare's bills. The Medicare trust fund and Social Security trust fund will be identically as large, completely unaffected, as though there had been no tax cut passed this year.

You know, Senator Daschle and his party, when they were in charge of government, spent every penny of these receipts on general operations, and it's really only in the last year or two that we have done a little better.

But listen, this is recess. The boys are out to play, and a little horseplay is only natural. I would say that if anybody out there has nothing better to do in this nice summer than go to town hall meeting and hear a senator talk about how your taxes should be higher so the government can have even more excess money, then come out here to Indiana and we'll give you a better option.

BLITZER: Well, I guess the point they're trying to make, though, is that, had you not pushed through that big tax cut, there would be more money available for a cushion for the surplus, and that would avoid the potential at least of having to go into Medicare and Social Security trust funds.

DANIELS: Wolf, I think the nonsense-stopping question here is the one I asked a minute ago: If there had been no tax cut, how much bigger would these trust funds be? And the answer is zero. They are absolutely unaffected.

That leads one to the suspicion that the real angst Senator Daschle and others are feeling is that they want more tax dollars, more surplus dollars, since we're running the second biggest surplus in history right now. They want even more so they can spend it. That's an honest debate and one we look forward to joining when we get back to town.

BLITZER: So, what you are saying is that, had there been no tax cut, that $40 billion, let's say, that was going to be spent this year, that would have just been spent for various government programs instead of using it to increase the budget surplus. Is that is what you're saying?

DANIELS: I think that's highly likely. And the president always said that one reason to offer tax relief to the American people was to get that money off the table so that it wasn't spent, which has been the historical pattern.

You know, I think that the central point that all these attacks miss is that our common concern should be the state of the economy. It is not growing fast enough. The budget of the government is in great shape; it's the economy that is not.

The president had a plan which he has enacted now that we hope will, along with lower interest rates, pick the economy up again. But that is what we ought to be engaged on, because paying the bills of Medicare and Social Security and growing those trust funds over time depends entirely on economic growth. And that really ought to be what is our common first concern.

BLITZER: I want to talk about economic growth in just a second, but just to tie up one loose end, given the weakening economy right now, the less-than-expected projections for budget surpluses, are additional tax cuts anytime soon off the table?

DANIELS: I don't think anything can be ruled off the table. The president hasn't given his direction on this. But clearly, we ought to be looking for ways to jump-start growth. And as we monitor the situation, moving toward the end of the year and into next year, I'm sure the president will want us looking at all options.

BLITZER: The treasury secretary, Paul O'Neill, was on Evans, Novak, Hunt and Shields over this weekend. I'll just read to you briefly what he said about additional taxes. He said, "There's not room for more tax reductions at the moment." Is he right?

DANIELS: Depends on your definition, but, yes, in sense that we do want to maintain a surplus as large as the Social Security surplus, use that money for debt reduction, which is what the secretary of the treasury is doing with it. And so, for the moment, that's the correct answer. But you know, these are dynamic times.

BLITZER: The other points that Democrats are making and criticizing your administration and the budget numbers, the projections, is that you have an overly rosy scenario for the economic growth of next year. About 3.2 percent you're projecting it grow at. Many of the private Blue Chip forecasters are saying it might be 2.8 percent.

But people are looking at the last quarter, the second quarter of this year and they saw a very, very anemic .7 percent growth. Why do you think it's going to go all the way up to 3.2 percent?

DANIELS: Well, our number is sort of in the middle of those -- of all the forecasts that are out there. It happens to be the same number that the Conference Board, which has been the most accurate forecaster in recent years, has picked for next year. It's lower than Merrill Lynch and Prudential and some other respected forecasters.

But typically, a slowdown like the one we're in is followed by a snap back. We've tried to be carefully in picking a number that seems to be in the mainstream. And, you know, what we have to be about is looking for policies that make it more certain that that occurs.

BLITZER: So you're not looking at any recession anytime soon?

DANIELS: We're certainly not, and I don't find any forecasters out there who seem to think that's the case. But we've all been wrong before, and we have to be prepared to be flexible.

BLITZER: We only have a few second left, but when you take a look at the 13 spending bills that Congress will have to consider once it returns from its recess, where, from your perspective, will be the biggest problem, the biggest fight?

DANIELS: I'm hoping that we'll finish this spending season without big fights, and I'm very optimistic about that. I would commend Senator Byrd and Congressman Young and the other leaders of appropriations for a very good process so far.

I think the big issues the president has said are high priorities: national defense and its repair, education in particular. And we would like to try to come to agreement on those priorities early in the process and then bring the rest, knit the rest together within the limits that the budget resolution has contemplated.

BLITZER: Mitch Daniels, we learned this week that the president has a nickname for you. He calls you "The Blade." Tell us why.

DANIELS: I don't second guess the president's decisions and particularly not those related to nicknames. I suppose it has a little something to do with trying to save the taxpayer a dollar here or there. I believe that's the assignment he's given me, and we'll do our best.

BLITZER: And you have that Samurai sword in your office.

DANIELS: Courtesy of some old buddies out here in Indiana.

BLITZER: All right, Mitch Daniels, the budget director in the White House, thanks so much for joining us.

DANIELS: Thank you.

(END VIDEOTAPE)

BLITZER: And just ahead, the Bush budget blueprint in a battle on Capital Hill. Who will win that fight? We'll talk about that and much more with two members of the U.S. Senate, Democrat Dick Durbin of Illinois and Republican George Allen of Virginia.

LATE EDITION will continue right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: We can do a lot of good for the American people, and at the same time, by the way, make sure we've got a good budget. Most Americans expect that, when you set a budget, expect people to meet the budget.

(END VIDEO CLIP)

BLITZER: President Bush making the case earlier in the week for his budget plan.

Welcome back to LATE EDITION. Joining us now to talk about that and much more are two members of the U.S. Senate: In Chicago, Illinois Democratic Senator Dick Durbin, and in Richmond, Virginia Republican Senator George Allen.

Senators, good to have you both back on LATE EDITION. Thank you very much for joining us.

And, Dick Durbin, let me give you the first chance to respond to what we just heard Mitch Daniels say, that this $160 billion budget surplus for the current year, the second-largest in U.S. history, what's wrong with that?

SEN. RICHARD DURBIN (D), ILLINOIS: Seven months ago the president and his administration told us we were going to have not only big surpluses this year but for many years to come. And a lot of members of the Senate, myself not included, voted then for the president's budget and his tax plan.

Well, look what's happened in just seven months. That surplus is all but evaporated, and now we are knocking on the door of raiding the Medicare and Social Security trust funds just to maintain the expenses of government.

Now, both parties had made a solemn pledge never to do this. Over 400 votes in the House of Representatives, the members of the president's Cabinet, they said we'll never reach this point, and here we are. The economy is not doing well. We are at least on the doorstep again of looking at deficits. This not a good situation.

BLITZER: What about that, Senator Allen? How uncomfortable are you with these new numbers in part attributed to the slowdown in the U.S. economy?

SEN. GEORGE ALLEN, (R), VIRGINIA: Well, clearly the economy's not doing very well. Some sectors are, as far as the technology sector is concerned, I think in a recession. Others are doing better. The housing's still doing well.

However, the knocking on the door, as far as Social Security and Medicare dollars or taxes that are collected, that door shouldn't be opened; it ought to be locked. What we need is fiscal discipline.

I think it's great to have Mitch Daniels talking about doing town meetings. I love asking people, well, have you received your tax rebate? And then those who have received it, I ask them what they're doing with it. Some are saving it, some are repairing their homes, some are paying down debt, others are spending it. All of that is good for the economy. And it's also their money, and I think that they know better how to spend it than have it in Washington, which is really what this debate is. You protect Social Security and you protect the Medicare tax dollars that are sent in, but then what do you do with the surplus? The question is, should Washington spend it, or should the taxpayers make a decision on it?

Now, clearly we'll have to have some discipline, fiscal discipline, in spending, taking care of priorities of education, national defense, scientific research, but also make sure a dividend of these surpluses -- again, this is the second-largest surplus. Some of that should be a dividend to the taxpayers.

BLITZER: Well, you heard, Senator Durbin, you heard Mitch Daniels say that that $40 billion in the current year that is being returned to American taxpayers in the form of these tax reduction checks -- had that money still been on the table here in Washington, it probably wouldn't have gone for debt relief, it would have been spent by Congress.

DURBIN: Well, I think you have to look at the fact that an economic stimulus in time of recession is a good idea. And if we are going to give tax breaks, I support that. Democrats support that. We're for tax cuts.

But to look at this tax cut package that the president has proposed, we have to look at the reality. They've gone too far and too fast.

And I listened to my colleague, Senator Allen, go through a litany of things we need to work on. I agree with him. We need to put more money in our national defense, but we're not going to have that money because of the president's budget policies that brought us to this point. We're not going to have the money to put into education that we're going to need, and the president's been calling for it. Where's the money for a real prescription drug benefit under Medicare? And how are we going to come up with the funds to really invest for our nation's energy policy needs?

These things are basic. This is not runaway pork-barrel spending. And the fact is, because we've gone along with the Bush tax cut that has gone too far with rosy scenarios they couldn't back up, we're not going to have the resources to meet these very high priorities in the weeks ahead.

BLITZER: Senator Allen, where is that money coming from?

ALLEN: Well, the money's coming from the taxpayers is where it's coming from.

All this tax cut, over 10 years, is being phased in over a long period of time. There are a lot of people who bring up to me, well, when are we going to really see some of this tax relief other than these rebate checks? And I think it's good economic policy for our country. The priorities -- and I agree with Senator Durbin on the prescription drug coverage. And in these budget blueprints there is an amount of money set aside for prescription drug coverage under Medicare.

And clearly there's going to be an increase in spending. The question is, where should it be? And if we agree on education, national defense, scientific research, prescription drug plans and so forth, that's good.

But, you know, just before we left in July, Senator McCain had an amendment to take some of the funds out of some of these various programs around the state and use it for the VA so that we can get veterans' claims paid more efficiently and more quickly.

And one of those things that gets $5 million was to cut some of these programs or projects by 50 percent.

One of them was to pay for funding a greenhouse to grow orchids in Pittsburgh. Well, you know, to me that's very nice to grow orchids in Pittsburgh. I'm sure the Steeler fans would be embarrassed by it. But nevertheless, it seems to me that our veterans are more important than growing orchids in greenhouses in Pittsburgh. But there was a decision and there was only about 30-some of us who said our veterans were more important that greenhouses.

BLITZER: All right, well we're not going to get into a debate over orchids in Pittsburgh right now. We'll leave that for another occasion, but Senator Durbin...

ALLEN: But that's an example of some of the decisions that are being made.

BLITZER: It obviously is.

Senator Durbin, this whole issue is also coming at a time -- this issue of these budget surpluses and allegedly raiding the Social Security trust fund, just at a time as the president's Social Security Reform Commission, lead by your former colleague Daniel Patrick Moynihan, is about to come up with some additional recommendations.

They want to give Social Security recipients an opportunity to invest at least a small portion of those Social Security funds in the private markets, perhaps get a better return than they do from the modest interest rates that the government provides. What's wrong with that concept right now?

DURBIN: It's worth exploring, but ask most investors about their experience over the last year. If they had made that investment choice, what would have happened to their nest egg, their plan for retirement? They would have seen a tremendous decline in value, and that has just been a fact in the stock market for all of us who have any kind of investments for our future.

But listen, the bottom line is this: This commission and others have to give us the total package. Don't just tell us you're for privatization. Tell us how you reach it. And that's when things get dicey, because we know -- we've already heard it from some of our colleagues, Kolbe, Stenholm in the House -- that what it takes to reach privatization is to increase payroll taxes for Social Security, increase the retirement age and also decrease the benefits for people who are presently receiving it.

Now that's unacceptable. It's never going to fly. This is a noble concept, but when you put it on paper and say make it work, it's pretty tough to put together.

BLITZER: Senator Allen, given the performance of the markets over the past year, as Senator Durbin points out, are you still comfortable with allowing some of that Social Security money to be thrown into the stock markets, given what's gone on as we've seen these declines over the past year?

ALLEN: I think that what we need to do is see what their whole plan is, and they're developing that. But in the meanwhile, to give some confidence to the people that the government will keep its promises, it's back to the first issue you brought up. And that is, do not raid Social Security taxes. And I think the plans that we have over the next 10 years of not raiding Social Security, paying down the national debt, are all very good in providing some people some comfort and confidence that the federal government will keep its word on Social Security.

Moreover, I think that what byproduct may come from this is, let's give people additional, individualized, personalized options to get a better and more secure rate of return on their investments so they have more retirement income when they do retire.

I think this is way too early for anybody to have anything but a lot of questions on this commission. And so, in many respects, the questions that were raised by Senator Durbin and others are the same questions I have, and I've yet to be convinced that we should be in favor of one or the other. I think it's something to be explored, to be looked at. And then let's determine the cost, especially though, determine the safety and security for our retirees.

BLITZER: All right, Senator Allen and Senator Durbin, we have to take a quick a break, but we still have a lot more ground to cover.

We'll be coming right back with Dick Durbin and George Allen. They'll also be talking your phone calls. LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Beautiful shot of the White House on this sunny Sunday afternoon. Welcome back to LATE EDITION.

We're continuing our discussion with Democratic Senator Dick Durbin of Illinois and Republican Senator George Allen of Virginia.

Senator Durbin, there has been some criticism of President Bush for supposedly withdrawing U.S. involvement in the peace process between the Israelis and the Palestinians. A Palestinian spokeswoman, Hanan Ashrawi, this morning complained about that. I want you to listen to what she had to say earlier today on Fox News Sunday.

(BEGIN VIDEO CLIP)

HANAN ASHRAWI, PALESTINIAN SPOKESWOMAN: I don't know whether when President Bush goes on vacation that the whole world is supposed to go on vacation, but certainly the situation is drastic. It is serious. It is rapidly spinning out of control, violence on the rampage. And at same time the U.S. says there hasn't been enough blood shed, let's wait and see until both sides are exhausted.

(END VIDEO CLIP)

RUSSERT: Senator Durbin, is she right?

DURBIN: During the course of the presidential campaign, I think then Governor Bush made it clear that he thought that Bill Clinton had gone too far in the peace process in the Middle East and had made it too personal. I think that this administration, the Bush administration, now realizes that if the United States doesn't step up and accept the responsibility of leadership in the Middle East, there is no one else to turn to. And we have seen the situation there steadily deteriorate on both sides. I think we really have to become a part and parcel of this peace process, and quickly.

Unfortunately, this is just a symptom of a lot of things that are happening in Washington. The Bush administration seems to be withdrawing from the world community at a time when we're involved in a more global economy, when we're still leaders in the world and have to show our leadership.

So, I hope that they will have a change of heart in the Middle East and also in their view about our role in the world.

BLITZER: Senator Allen, President Bush earlier in the week, on a few occasions, insisted that both sides -- the Israelis and the Palestinians --have to do much more to end this violence. Listen to what Mr. Bush had to say.

(BEGIN VIDEO CLIP)

BUSH: Mr. Arafat must do everything in his power to discourage the suicide bombers. And the Israelis must be restrained in their response. There is too much violence in the Middle East, but I'm confident that we can avoid war.

(END VIDEO CLIP)

BLITZER: Do you agree with the president's assessment on both of those fronts, what the Palestinians have to do and what the Israelis have to do?

ALLEN: Generally speaking, I do very much agree with it.

Let me make a few points on the previous comments about this Palestinian councilwoman. I take great exception to blaming the United States for what is going on in Israel and with the Palestinians. The Palestinians, whether it's the military wing of the Hamas or the Islamic Jihad where their terrorists attacks, whether it is on discotheque dance halls or Sbarro pizzerias or various other innocent women and children being hit with these terrorist attacks in Israel, in their right of self-defense are obviously being provoked to try to get after the leadership.

I think what she ought to be doing rather than worrying about President Bush taking a vacation, she ought to be worrying about keeping those thugs and terrorists and suicide bombers from provoking this situation.

Now, the United States has been involved. Secretary Powell's first visit as secretary of state was to visit with outgoing Prime Minister Barak and also incoming Prime Minister Sharon. He met with President Mubarak of Egypt. We've had many relations with the new king in Jordan. And so he was involved. The United States is involved.

But it's incumbent upon the Palestinian leaders, to the extent you want to call them the leaders of these different groups, to enforce the promises of Oslo, the promises that have made time after time.

And so, I don't think we ought to be blaming the United States for these attack. And for that matter, I don't think you should have equal blame to the Israelis when they're naturally provoked. You might recollect after the discotheque bombing, there wasn't a response, thinking the world might get all upset with the Palestinians for killing 21 or so individuals. What was response? Nothing, there was another attack on a pizzeria recently.

So we do need to be involved. We need to be constructively involved. But it is something that I don't think that we should be just thinking everything is neutral and equally culpable.

BLITZER: Senator Durbin, are you open to this notion, which has been discussed in the Middle East now for several days, of the possibility of the United States dispatching what are they calling monitors, or peacekeepers, or U.S. troops to the West Bank and Gaza to try to end the violence?

DURBIN: I'm very, very leery of that.

Let me first say that I agree with Senator Allen. These acts of terrorism really are unacceptable. I think that if there's going to be genuine peace in the Middle East, you have to first see a stop in this sort of terrorist activity. And I really have to point my finger at the Palestinian side. I don't think Mr. Arafat and others on that side have shown appropriate leadership.

The idea of involving American troops at this point is something that I am not going to support. I frankly want to see efforts made toward bringing both sides to a peace table before we even consider sending the first American serviceman overseas. BLITZER: All right. And very briefly, Senator Allen, do you agree with Senator Durbin on the introduction of U.S. troops or monitors on the West Bank?

ALLEN: There is no purpose in having our troops and men at risk and servicemen. I agree with him completely.

BLITZER: All right, Senators, we're going to take another quick break.

When we return, your phone calls for Senators George Allen and Dick Durbin. LATE EDITION will continue right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're continuing our conversation with Senator George Allen of Virginia and Senator Dick Durbin of Illinois.

And let me get right to this issue, Senator Allen, of what the Senate majority leader, Tom Daschle, complains about the alleged withdrawal by the Bush administration from so many traditional U.S. responsibilities around the world. Listen to what Senator Daschle said earlier this month.

(BEGIN VIDEO CLIP)

DASCHLE: The administration seems to have forgotten an essential fact of today's global age. With the Cold War over, fear of a common enemy no longer keeps our allies by our side. Our allies will follow us only if we use our unparalleled strength and prosperity to advance common interest.

(END VIDEO CLIP)

BLITZER: Senator Allen, as you know, there's a lot of criticism coming from the Europeans and elsewhere about the Bush administration's policy, whether on Kyoto or national missile defense or on a whole host of issues.

Is this administration withdrawing within the U.S. borders?

ALLEN: Absolutely not. This administration's very much for engagement in the world.

And indeed, if the Democrats were so much in favor of getting the president involved, as far as the economic competitiveness, they would be giving him trade promotion authority. And indeed, what they're doing is holding that up. So we can expand trade and our influence and our ties with other places in the world, especially in the Western Hemisphere.

As far as Kyoto, the Democrat leader, majority leader, knows full well that that bill, before I was a member of the Senate, was rejected 98 to 0. What the president is doing, and I think what we all need to do, is try come up with a good science-based approach to reduce greenhouse gases around the world. Insofar as a missile-defense system, we have a right to defend ourselves. And one of the ways that we're upgrading our military is not just in better pay for those who serve, but also make sure that we have the most technologically advanced armaments for their safety and the safety of our citizens. A missile-defense system is part of it.

And indeed there is a reality, at least seemingly understood by the Russians, that the old relationship between the Soviet Union and the United States no longer exists. And it's simply a system to protect us, and also possibly our allies, from missiles, not just from enemies that we do know, but also from rogue nations who unfortunately are getting some of these missiles from China and elsewhere.

BLITZER: Senator Durbin, let me pick up on one point that Senator Allen made, the issue of trade. Will you support President Bush as he seeks to increase international trade by supporting that new authority he is seeking in order to expand the North American Free Trade Agreement and other international trade agreements?

DURBIN: Well, Senator Allen has said that Congress is holding this up, but frankly I haven't seen the administration's proposal. What are they going to do in terms of environmental protection, workers' rights, banning slave labor, things that are really critically part of this decision? I'm still waiting for the administration to come forward.

But let me go back to the original point, Wolf. When this president came to the White House, he said, "I will be a uniter, not a divider." It's true. He has united Russia and China in a friendship pact, the first time since 1950 that these two countries have come together, primarily because of their dissatisfaction with this administration.

One hundred and eighty nations around the world have united to try to do something about our global environmental problems, and the United States is not at the table.

That vote of 98 to zero on the Kyoto treaty was not to reject it. That wasn't even the vote. The vote said that every nation, large and small, developed and undeveloped, had to accept some responsibility. And I voted for that, I think that should be part of the package.

Now when we sit down at the table and try to resolve these problems, the United States isn't there.

BLITZER: All right.

ALLEN: Well, Dick, how many...

BLITZER: Senator, Senator,...

ALLEN: How many of these countries -- I would ask Senator Durbin how many of these countries have done things, whether it is the People's Republic of China or Russia or any of these others, have we done something wrong, as far as our taking the side of the People's Republic of China getting upset with us, what, over our airmen? Or them jailing and incarcerating scholars? Obviously I know you don't think that.

DURBIN: Of course not.

(CROSSTALK)

ALLEN: And these countries act holier than thou. How many of them passed the Kyoto protocols? Not many.

DURBIN: Let me say to Senator Allen -- and of course that's not the case. But the United States has an important role to play in the world, a role of leadership.

ALLEN: Agreed.

DURBIN: And I think that leadership involves getting on the stage in these important discussions, and we have left the stage. Whether we're talking about issues involving nuclear testing, whether we're talking about environmental issues, instead of being involved in the world stage, the administration, Bush administration, pulls back.

I think the United States can and should be a leader. We shouldn't compromise our principles, but to leave the stage and not be part of this debate is to unite the rest of the world in opposition to our country. That isn't good for us or the world.

BLITZER: All right. Senators...

ALLEN: But we do have to respect our own sovereignty.

BLITZER: Senators, unfortunately we have to leave it right there. Two great cities, Richmond and Chicago, two important senators in Washington joining us from today outside the Washington Beltway.

Thanks to both of you very much for joining us. We'll have to continue this discussion on another occasion.

ALLEN: Thanks, Wolf.

BLITZER: Thank you very much.

And President Bush is using part of his vacation to push his own legislative agenda in the nation's heartland. How is his message being received? We'll ask two governors, Democrat Howard Dean of Vermont and Republican Frank Keating of Oklahoma, when LATE EDITION returns.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We're continuing our conversation.

We're now joined by two governors -- two governors joining us from outside the Washington Beltway. We want to ask them how the president is faring outside of Washington. Joining us now in Burlington, Vermont, the governor, Howard Dean, and in Oklahoma City, Republican Governor Frank Keating. Governors, welcome back to LATE EDITION. Good to have both of you on our program.

I want to begin with you, first of all, Governor Keating, and pick up where we just left off with our two senators on the whole issue of how President Bush is being perceived around the world, especially among America's closest allies in Europe.

Look at these numbers that were published by the Pew Research poll earlier in the week. Do you approve or disapprove of President Bush's international policies? Here in the United States, among Americans 45 to 32 approve. But look at this: In Britain 17 percent approve, 49 percent disapprove. In Italy, 29 percent approved, 46 percent disapprove, Germany similar numbers -- 23 to 65. France, 16 percent approve, 59 percent disapprove.

And if you compare what they said about Bill Clinton's international policies, take a look at these numbers -- almost diametrically opposite. In Britain, people approved of Bill Clinton's international policy, 66 to 15; Italy, 71 to 16; Germany, 86 to 9; France, 68 to 15.

Why is President Bush, Governor Keating, getting such a bad play on the other side of the Atlantic?

GOV. FRANK KEATING (R), OKLAHOMA: Well, I think what's important is that he has a very good play -- 59 percent approval rating -- on this side of the Atlantic.

Obviously, it's important that our allies know what we're doing and what we believe and that they're in a position to partner with us and follow where we're leading.

But I think the reasons for this, truthfully, Wolf, is missile defense in Kyoto and I think the ultra-left the glitteratti, the chattering classes of Europe have embraced Kyoto, but haven't voted for it, and they're very much against missile defense, even though we're the ones that ended the Cold War. So I think it's a question of a lot of jealousy, a lot of suspicion, a lot of ignorance.

But what matters is that George Bush is respected here, and he's doing a great job as president.

BLITZER: You agree with that, Governor Dean?

GOV. HOWARD DEAN, (D), VERMONT: No. I don't agree that he's doing a great job or that he's respected abroad. I think his foreign policy, what there is of it, has been a disaster, starting with the meeting with the president of South Korea, which he publicly embarrassed him without any advanced notice, saying that he was going to withdraw his support from the discussions between North and South Korea. That is not the way you win friends and influence people abroad.

I think, as Frank knows, one of things that you have to do when you're in politics, is give people advanced notice quietly and tell them where you stand, but don't publicly embarrass them. And George Bush has publicly embarrassed most of his allies. Some of them are competitors. It just doesn't pay to conduct a foreign policy like that.

At home, I do agree with one thing, he does have good numbers at home, but I think those are going to change. I am terribly worried about the financial situation of this country. We're now down to a, supposedly, $160 billion surplus, but all that's spoken for Social Security. If they start spending that, whether it's on defense or on Medicare, prescription benefit, we are going to be raiding the Social Security trust fund. We have gone from a huge deficit retirement to a huge deficit increase, and I am shocked to see that happen under a Republican president.

BLITZER: What do you say about that, Governor Keating?

KEATING: Well, the manufacturing sector of the economy began to slide last May and June. Late in the fall, things did begin to look pretty grim.

But I think a combination of the tax cut, the combination of attempting to do everything to encourage the manufacturing sector, which I think you see some glimmer, some significant glimmer on the manufacturing side, the home building side, I think things are going to turn around.

But economies are cyclical. We're not in a recession. Hopefully, we will not go into a recession.

But I think the president's handled it well. And the Congress, when they speak in bipartisan terms, to very well. The reality is, more money in the pockets of individuals creates wealth, creates savings and investment in new jobs. More money in the hands of government produces nothing. I consume wealth; I don't produce it.

DEAN: Frank, I can't disagree with you more. In order to get the $300 to $600 check, which I'm about to get, the government had to go out and borrow $51 billion. Now, if you or I ran for re-election, borrowed money, so when you give people a check around just after the election, I think people would see through that pretty fast. I think what the president has done is outrageous -- borrowing $51 billion...

KEATING: Fortunately, Congress doesn't...

DEAN: ... in order to send out checks.

KEATING: ... agree with you, Howard. No, I got my $600 and I spent it. And I spent it on the kids and did the things that I wanted to do, in order to try to create a better...

DEAN: Well, why should we borrow...

KEATING: ... a better economy in my state.

DEAN: Why should we create a federal debt, in order to...

KEATING: But the reality is this is...

DEAN: ... to do that?

KEATING: ... coming out of the surplus. The only way you encourage surpluses is not by government spending but by a private sector investment, savings and spending, and that's exactly what's happening. Unfortunately...

DEAN: That sounds good, but we increased...

KEATING: ... economies are cyclical.

DEAN: ... the deficit to do it. But we increased the debt...

KEATING: But we're not in a recession.

DEAN: ... to do it.

KEATING: We're not in a recession, and the figure is better than the 3 percent growth rate for next year. This is going to be a tough next several months, but I think the president's on the right track.

BLITZER: Well, Governor Dean, let me...

DEAN: Well, I wish I could agree.

BLITZER: Let me interrupt, Governor Dean, and ask you, don't you think the people in Vermont are happy they are getting those $300, $500, $600 checks? And won't it, as the Bush administration insists, help recover or spur the U.S. economy to get back on track?

DEAN: Well, the irony of all this is he is pursuing Keynesian economics, which hasn't been in fashion since Franklin Roosevelt was president. He borrowed $51 billion in order to send me a check for $600.

The truth is, I'm going to do something like what Bob Byrd did, I'm going to send mine, instead of back to the federal government, I'm going to send it to the church because I don't think we needed that tax cut desperately.

I think it will be a help to some people, but I think if people knew that they were borrowing that money from their children in order to give them the $600, they would never have accepted the tax cut in the first place.

BLITZER: All right. Governor Keating, a lot of people are suggesting that the Bush administration -- we pressed Mitch Daniels on this earlier in this program -- is coming up with some overly rosy scenarios to try deal with next year's budget, projecting a 3.2 economic growth rate next year, when in the second quarter of this year, it was at a really poor .7 percent.

Are you as confident as the Bush administration appears to be? How is it looking like in Oklahoma, where there are some serious economic problems, as you know? KEATING: Well, here we're doing reasonably well. And in part, it's the result of a diversified economy, keeping government spending down, not hiring more government employees, and trying to encourage the private sector that creates the job and the wealth and the income and the savings to flourish.

But obviously, all of us are concerned about that. The reality is I think we have too much partisanship. And in my state, I worked and I'm sure Howard does as well in his state, but my state I worked for the Democrat legislature to cut taxes to send right-to-work (ph) to a vote of the people.

We are considering abolishing the income tax entirely. The reality is we know the way you create wealth is let the private sector loose. And the fact of the matter is that, obviously, the view of many different economists in Washington is quite varied. But I'm hoping that we will have better than the 3 percent growth rate. And if that is the case, all the naysayers will be quiet.

But the reality is I think the president is on a sound course. Thank goodness we got some of our money back. I'm happy that my people have some of their money back that they sent to Washington for the purpose of buying new refrigerators and cars and TV sets and things like that that do create wealth.

BLITZER: Governor Dean, are you as optimistic, as upbeat as Governor Keating appears to be?

DEAN: I don't think we're going to be in for as bad a recession as we were when I first took over here at the end of the 1980s.

I do think there are growing to be some problems. What I'm very concerned about is going back to deficits, and that's what I see. We already have no money to upgrade national defense, which we ought to do. We have no money to upgrade prescription benefits for seniors, which we ought to do. Because that money has been irresponsibly spent by giving enormous tax cuts mostly to people who don't need them.

We get the $600 now, that's great, but we aren't going to see much more of that. That is all that most working people are going to see is that $300 or $600. They're not going to see any more. But for those making more than $350,000 a year, they're going to see more and more and more as this progresses. And we've traded that for the prescription benefit for Medicare. I don't think that's the right thing to do.

BLITZER: All right.

KEATING: Wolf...

BLITZER: Go ahead, governor.

KEATING: Howard knows that that isn't the case.

DEAN: It is the case. KEATING: The reality is, even with the tax cut, the top 5 percent of taxpayers pay 50 percent of the taxes; the bottom 50 percent of taxpayers pay 5 percent of the taxes. The fact of the matter is that everybody benefits. And certainly, married couples, particularly middle-income married couples, benefit. And this was done by both Democrats and Republicans in the Congress.

I think it was absolutely right. The government was collecting more taxes than any time since World War II. It was right to give it back so that they can create, the private sector can create the jobs that will get us out of any pending recession.

We aren't going into recession. We're certainly having difficult times, and they are bumpy times. But the fact of the matter is that the government can't get us out, the private sector will. And that's exactly why we cut taxes.

BLITZER: Governors, stand by. This conversation is only just beginning. We have to take a quick break.

For our international viewers, "WORLD NEWS" is next.

For our North American audience, stay tuned for the next hour of LATE EDITION. We'll be taking your phone calls for Governors Keating and Dean. Then we'll get some perspective on Congressman Gary Condit's political and legal future. Can he come back? Plus, our LATE EDITION roundtable and Bruce Morton's last word. It's all ahead in the second hour of LATE EDITION.

(COMMERCIAL BREAK)

BLITZER: This is the second hour of LATE EDITION, the last word in Sunday talk.

(BEGIN VIDEO CLIP)

BUSH: One of the things I'm doing is heralding the values of the heartland. And, you know, it's important for folks to get outside of Washington, D.C.

(END VIDEO CLIP)

BLITZER: But is the president's message reaching out beyond the Washington Beltway? We'll get perspective from two governors: Oklahoma Republican Frank Keating and Vermont Democrat Howard Dean.

And Congressman Gary Condit plans to run for reelection. Will he be the next comeback kid? We'll ask former Clinton White House special counsel Lanny Davis and former Bush Attorney General Dick Thornburgh.

Plus, our LATE EDITION roundtable: Steve Roberts, Susan Page and Christopher Caldwell. And Bruce Morton has the last word on echoes of old wars and walls.

Welcome back. We'll get to your phone calls for Governors Howard Dean and Frank Keating in just a moment.

(COMMERCIAL BREAK)

BLITZER: Now back to our conversation with Democratic Governor Howard Dean of Vermont and Republican Governor Frank Keating of Oklahoma.

Now I want to begin with you, Governor Keating. I want to go through several issues that are going to be on the front burner once Congress returns to Washington right after Labor Day, beginning with the minimum wage.

Do you think it's time to increase the nation's minimum wage?

KEATING: Well, the minimum wage doesn't affect that many workers, but obviously it's a psychological lift. I have never been an opponent of raising the minimum wage. I know conservative theology frequently is not particularly embracive of that. But if there is reason to raise the minimum wage to encourage more people to work and work successfully, I'm for it.

On the other hand, if the nature of the raise is such as to discourage, particularly minority employees, youngsters, people going through college to work in what are traditionally minimum wage jobs, I would be opposed. But it depends upon the amount of the increase.

BLITZER: Governor Dean, as you know, there are many conservatives here in Washington, like Dick Armey for example, the House majority leader, who says this is going to have precisely the opposite effect. It's going to hurt those minority kids who want those minimum wage jobs but they won't be available because the minimum wage will be increased.

DEAN: One of the problems we've had in the last 10 years is that we've had unprecedented prosperity, but it hasn't touched the lower 20 percent of the population. If those people can't feed their families by working 40 hours or more a week, sometimes 80 hours a week, there is something wrong. And a minimum wage is a good way to deal with that problem.

So we've always supported an increase in the minimum wage in Vermont. Our minimum wage is actually significantly higher than the federal minimum wage, and that's the reason for it.

BLITZER: Governor Dean, now you're also among other things, in addition to being a politician and a governor, you're a medical doctor.

Patients' bill of rights is going to be on the agenda once the Congress comes back. There was a version that President Bush likes that he got through the House of Representatives. But this conference committee between the Senate and the House has some major differences, especially the rights of patients to sue their HMOs, their insurance companies. How is it playing in Vermont?

DEAN: The biggest problem with the patients' bill of rights is one that's not being debated in the newspapers, and that is, like some of the other legislation in Congress and frankly that the White House has sent down, it takes away what the states have already done.

We have the most comprehensive legislation in place to control HMO abuse, but instead of doing it through the courts, we do prospectively. That is, we have a mechanism in place where if you think your HMO is not giving you the care you deserve, they can appeal ultimately to the bank and insurance commissioner or the bank and insurance commissioner can force the care to be given. That's a win for the patient. That's an early win for the patient rather than having them be damaged and sue.

So that would be abolished by some of the versions of the patients' bill of rights, and weaker federal protections would be substituted. So I think the biggest problem with the patients' bill of rights is that it takes away the states' ability to protect their citizens against HMOs and weakens, in some cases, those protections significantly.

Right now, I would prefer no patients' bill of rights passed, because in Vermont, our people are better protected than they would be under the federal patients' bill of rights in either the House or the Senate.

BLITZER: Governor Keating, what about in Oklahoma?

KEATING: Well, in Oklahoma, in a bipartisan legislature, and my legislature is overwhelmingly Democratic -- most of the time the little bit of hair I have left I pull out. But we passed torte reform, limited punitive damages and civil lawsuits to double actual damages.

We also passed a patients' bill of right measure that does limit damages, very similar to the compromise that President Bush is working to accomplish in the Congress, to limit pain and suffering, for example, to $1.5 million, to limit punitive damages to $1.5 million, to let economic losses be fully compensated, to encourage conciliation, arbitration, if you will.

I think that's all sound public policy. I agree with Howard Dean on one point, and that is that, if there is a preemption feature in this bill that comes out -- and both the Democrat and the Republican versions have preemption features -- I would hope that the Congress would have the floor -- they would set the floor and not the ceiling, and let us do the things at the state level that we're doing together in a bipartisan way, attempting to address this problem 50 states at a time.

BLITZER: You like, Governor Dean, you like the fact that Congress and the president seem to be on the education front, in the education legislation, increasing the role of the federal government, in terms of testing and scores, as far as education is concerned, taking away perhaps some of the authority of the states. How do you feel about that?

DEAN: That's an interesting question, because there was a lot of consternation about that among both Republican and Democratic governors at the NGA meeting which we recently concluded in Rhode Island.

I think we are all concerned on a bipartisan basis about the excessive control in both the House and the Senate versions of the education bill.

The problem is -- well, there's a lot of problems. First of all, we're mandated to do some testing, and the feds aren't paying for it, which means, when that bill passes, if it passes, signed by the president, our property taxpayers are going to have to kick more in, because there's mandates that are not paid for. And all the governors, Republican and Democrat alike, have taken positions against that.

Secondly, there's a problem with this testing mechanism. I just got back a big assessment, report from the National Association for Educational Progress, and it's gobbledygook. And this is -- these are the tests, the NAVE (ph) tests that are going to be used to assess how states are doing. It's very imperfect.

There's a lot of work that's being done. A lot of the governors on both sides have worked hard to improve their responsiveness, and that's worked. But there's a long way to go. We are really, frankly, not ready for this bill to be signed. And I would like to see it, frankly, put off for another year so the states can have more input into it.

BLITZER: Governor Keating, as you know, President Bush has been working with Ted Kennedy, other Democrats, on this education bill. Are you enthusiastically welcoming what the president says is his top priority in getting this education legislation through the Congress?

KEATING: Wolf, I must say I'm darkly suspicious of anything that Senator Kennedy embraces and that we adopt.

(LAUGHTER)

But the fact of the matter is that what we ought to do is what George Bush did in Texas. To say that you're going to read at grade- level by grade 3, that we're not going to socially promote, that we're going to test and we're going to get results, and we're going to change the schools, the superintendents, the teachers...

BLITZER: But let me interrupt -- let me interrupt you, Governor Keating. Let me interrupt you, and I apologize, but do you want the federal government to be doing that, or do you want the states to be doing that?

KEATING: Well, I think Howard Dean would agree with me. All of us as governors, Republicans and Democrats, want the federal government to give us our money to take care of special education costs.

DEAN: Right.

KEATING: They pay about 15 percent and require to us pay the other 85 percent. It's enormously expensive.

We are testing in Oklahoma. We test five times. I think to have the federal government set bars and say, look, you need to test. You can have a carrot, here's the carrot. If you test and you take action, then there will be certain positive results.

I must say, as a conservative, I'm disappointed that all the vouchers and the choice, all the competition that would really improve public education fell out of the bill. But to the extent we can get some kind of bipartisan commitment to address special education funding, and some bipartisan commitment to raise the bar and make sure that our kids don't continue to slide in math and science, particularly vis-a-vis the rest of the world, I think that's good. But unfortunately, it's a difficult process in Washington, because do you have a much more liberal bent in the Senate, particularly, than you do in most legislatures.

BLITZER: All right.

DEAN: Well, actually, the House has actually got more mandates in it right now than the Senate does. The Senate has a little more money, which you should like. But the House really does have some testing mandates, and they're not paid for, and they ought to be.

BLITZER: Governor Dean, Governor Keating, unfortunately we have to leave it right there, but a good discussion. Thanks to both of you for joining us.

DEAN: Thank you.

BLITZER: Two of the best governors out there in the country, thanks for joining us.

KEATING: Thanks, Howard.

Thanks, Wolf.

DEAN: Thanks, Frank.

BLITZER: Thank you very much.

And just ahead, despite his involvement with missing intern Chandra Levy, Congressman Gary Condit is banking that his House district is still Condit Country. Can he salvage his political career? We'll ask former Clinton White House special counsel Lanny Davis and former Bush Attorney General Dick Thornburgh when LATE EDITION returns.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MIKE LYNCH, CONDIT'S CHIEF OF STAFF: Long before this issue, he had decided to seek reelection.

(END VIDEO CLIP) BLITZER: Congressman Gary Condit's chief of staff, Mike Lynch, talking with me earlier this week on "WOLF BLITZER REPORTS." Welcome back to LATE EDITION.

Joining us now to offer some political and legal insight into what the congressman is facing are two guests who have been following this Chandra Levy investigation: Lanny Davis was a White House special counsel to former President Bill Clinton, and Dick Thornburgh, who was attorney general under the first President Bush.

Good to have both of you, of course, back on LATE EDITION.

Let me begin with you, Dick Thornburgh. You know politics, as well as the law. You were a former governor or Pennsylvania. Can Gary Condit come back right now? We heard Mike Lynch say that he's certainly planning on seeking reelection.

DICK THORNBURGH, FORMER ATTORNEY GENERAL: He's got himself in a pretty deep hole, Wolf, I think. There's no question but what the American public appears to be considerably more tolerant in their view about extracurricular sexual activities of high public officials, like President Clinton and Gary Condit. But there's more to it here, and I think that point was made by his hometown newspaper, The Modesto Bee, which, after supporting him for 30 years, told him he ought to step down now.

And I think it's useful to look at what they said, and I'm quoting: "For 15 weeks, Condit has put his own interests ahead of the effort to find Levy. His self-absorption has been a lapse not only of judgment but of human decency."

And I think when you factor in the real question at issue here is where is this young woman, what happened to her, is she still alive, then you realize that his insensitivity is very hard to accept and is going to pose some real hurdles for the voters.

BLITZER: Lanny Davis, you helped Bill Clinton come back on several occasions, including after the Monica Lewinsky affair was exposed. Same question to you: Can Gary Condit, seeking reelection, come back?

LANNY DAVIS, FORMER WHITE HOUSE SPECIAL COUNSEL: I don't think so, nor do I think he should come back. The issue here is not whether he is involved in her disappearance. I've assumed from the beginning that he's an innocent man. So the presumption of innocence still is important to me.

The issue for me is his refusal, for over two months, to come forward and tell the police the truth and to tell the American people the truth about what he knew about his relationship with her that could have led to her, at least, help the police locate her.

BLITZER: But as you know, he's planning to give a major interview, a sit-down interview with major network, give a speech, explain to his constituents out in California what's been going on. Is there anything he can say during that speech, during that interview, that could help bring him back politically?

DAVIS: I don't believe so, because he can't answer the question that his highest political consultant today on national television was unable to answer: Why did you wait two months to tell the police the truth about your relationship with this young woman? Why are you not on the doorsteps of her parents working with them in every way you can? He cannot erase that, whether he's innocent or not -- and I assume he is. He cannot erase the fact that he put his privacy rights ahead of the need to find that young woman, which makes it different from President Clinton and every other instance where there are privacy issues involved.

BLITZER: Do you assume he's innocent of any criminal wrongdoing, as far as the disappearance of Chandra Levy is concerned?

THORNBURGH: Probably premature to pass judgment on that, but I agree with Lanny.

The big question that's always stumped me here is that the congressman apparently admits to having an affair with this young woman. That implies to me that he had some feelings for her, that he was sensitive to her life and knowledgeable about her life. And yet, he stiffed the police for a couple of months and, even to this day, has not spoken out publicly. I can't understand what the thought processes might be in trying to ignore a legitimate inquiry simply for a selfish desire to keep himself out of the news, which obviously didn't work very well.

BLITZER: Dick Thornburgh quoted an excerpt from the Modesto Bee, that editorial which not only condemned Gary Condit but urged him to resign.

Let me put up on the screen another excerpt from that very same editorial: "Resignation is the proper course because Condit has irrevocably violated the public trust. He had abused his office, deceived his constituents and given Congress another black eye."

The next question to you, Lanny Davis, is this: Should he resign?

DAVIS: I think for the benefit of the Democratic Party and the House of Representatives, which I hope will someday be Democratic and majority, that he is a stain on our party, and I hope that he does choose to step aside.

But as my friend Paul Begala said today, we Democrats have an obligation to be outraged by this man's conduct, to ask him why are you not telling the truth even as we speak today, and holding fund- raisers and political rallies, rather than going to the home of Chandra Levy's parents and saying to them, "Whatever I can do, I want to help find your daughter," is really what has caused people like myself to be so angry and so puzzled by the absence of other Democrats, who are not saying what I'm saying.

BLITZER: But Lanny Davis' friend, Abbe Lowell, who's the attorney representing Gary Condit, Dick Thornburgh, insists that all of this is totally unfair to his client. Abbe Lowell was on CNN earlier this week. Let's run this excerpt.

(BEGIN VIDEO CLIP)

ABBE LOWELL, CONDIT'S ATTORNEY: Congressman Condit has been a congressman for 12 years, and has served his district, as they will tell you, extraordinarily well. He has been a public servant for an additional, almost 20 years. I think people in his district are smarter and wiser and more considerate, and they are going to judge him over the course of his entire career, not the last three months when he was fodder for the lack of news in the national media.

(END VIDEO CLIP)

BLITZER: Go ahead.

THORNBURGH: I'm puzzled, as my colleague Lanny Davis is, by the thundering silence among Democrats in the House over what has been condemned by his hometown newspaper and by other high ranking Democrats out of the Congress.

And we have referred before to some of the partisan political subtleties here. If Gary Condit resigns now and that seat is filled by a special election, the consensus view is it would go Republican. If however, he waits, runs through this election, takes a chance on being reelected and the reapportionment takes place under a Democratic governor and legislature, then maybe that seat can be preserved.

And they're looking, the Democrat leadership in the House, is looking at a very narrow window of opportunity, and they don't want to squander a seat. So I think that's why there's been reluctance to call for him to resign from the House leadership.

BLITZER: One of the points that Abbe Lowell made, Lanny Davis, not only Abbe Lowell but Mike Lynch, the chief of staff to Congressman Condit in an interview he did with me earlier in week, is that the news media fueling this problem for Congressman Condit. And it's really attack-the-press, which is emerging as a strategy on behalf of the Condit camp.

DAVIS: My friend, Abbe Lowell, who is a great lawyer, really knows better -- that what fueled the press was, to this day, Gary Condit has never publicly denied his involvement in this young woman's disappearance. He has never faced anybody who is an objective questioner publicly. And that is what fuels the press.

And what Abbe also knows is that for two months he didn't even tell the police the truth that he had had a private relationship. And there is no disputing that that hindered an investigation. That's the only issue for me.

I don't think we ought to convict this man in the headlines. I still presume he is innocent. What convinces me is he has acted as if he has something to hide. That has been his biggest problem, and it will continue to be so.

BLITZER: All right, gentlemen, stand by. We're going to take a quick break.

We have a lot more to talk about including your phone calls for Lanny Davis and Dick Thornburgh. LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're continuing our conversation about Congressman Gary Condit's political future and the Chandra Levy case with former Clinton special counsel Lanny Davis and former Bush Attorney General Dick Thornburgh.

Billy Martin, who is the attorney representing the Levy family, was on Face the Nation earlier today. And he spoke about Congressman Condit and his suspicions of the congressman in terms of the disappearance of Chandra Levy. Listen to what he had to say earlier today.

(BEGIN VIDEO CLIP)

BILLY MARTIN, ATTORNEY FOR LEVY FAMILY: I don't know what the police mean say that he is not a suspect. In my eyes, as an experienced investigator and former prosecutor, anybody is a potential suspect until they can be eliminated. And I don't think it's yet possible to eliminate Gary Condit.

(END VIDEO CLIP)

BLITZER: Dick Thornburgh, the police say he is not a suspect, Condit is not a suspect. They even insist that he's not even central to the investigation. How do you explain this discrepancy?

THORNBURGH: Well, Billy Martin makes a good point. It's kind of a semantical battle. The term "suspect" really has no legal meaning. To all of us ordinary folks it means somebody has put themselves in a position where you suspect they may have had something to do with it.

But the operative terms in the legal sense are whether a person is a target of an investigation or the subject of an investigation, because that kicks in certain requirements that the investigators have to follow.

BLITZER: But on both of those points, the police say he is neither a target nor a subject of the investigation.

THORNBURGH: That's true, that's right. But that's not saying that he's not a suspect. And I think we get bogged down in terminology here.

But he has made himself a suspect by his actions, by his statements, by his walling himself off behind lawyers and public relations advisers. All of that raises the question of what he's trying to hide. And when you get into that, you figure there must be something ominous out there that he's concerned about, and that makes him a suspect.

BLITZER: But, Lanny Davis, one of the points that Billy Martin has made, others who support the Levy family have made, is that if he's not a suspect, he's certainly behaving in a very suspicious manner, refusing to come forward, as you yourself pointed out earlier, with all of the information he had right from the start once she disappeared.

Why are you so convinced that he apparently had absolutely nothing to do with the disappearance of Chandra Levy?

DAVIS: Well, I'm not convinced, but I'm presuming he's innocent.

BLITZER: Why?

DAVIS: I think that it's our system, as Congressman Gephardt pointed out today, it's our system of justice that somebody should be presumed innocent. We can't convict in headlines, and we shouldn't...

BLITZER: Well, how do you explain the strange behavior that he's undertaken these past three and a half months?

DAVIS: I can't explain it except somebody who is hiding something and puts his privacy rights ahead of the job of finding that young woman. And at the end of the day, that is the issue for every one of us who have been outraged by his conduct. Privacy rights have a place, unless you look at those two parents on television and you say to yourself, he's got to come forward and do everything possible, even if it means sacrificing his privacy rights.

That's what Abbe Lowell and all of the other defendants of Gary Condit have never addressed. He has no privacy rights in this situation.

BLITZER: And the parents were on Larry King Live earlier this week. You probably saw the program. But I want to play an excerpt from their comments, suggesting they think that Congressman Condit had something to do with the disappearance of their daughter. Listen to the Levys.

(BEGIN VIDEO CLIP)

LARRY KING, HOST, "LARRY KING LIVE": The other night you said if Gary Condit were not in your daughter's life, she would be here today.

SUSAN LEVY: I feel that and...

KING: What do you mean?

S. LEVY: I feel like for some reason internally that, as a mother, that it's possible that my daughter would have graduated and she would be here with us spending her summer.

(END VIDEO CLIP)

BLITZER: All of our hearts, of course, go out to the Levy family, who are of course distraught having their daughter still missing right now.

But you can understand why they are as angry as they are.

THORNBURGH: Absolutely. That's a logical conclusion for them to come to. I think if it were my child, I probably would come to a similar conclusion.

But I think what Lanny and I are both saying is that when you're talking about criminal charges, someone being a target or subject of an investigation, you have to deal in the realm of evidence. And there simply here is no evidence whatsoever that points toward incriminating Congressman Condit. It may turn up, and if it does, that will change the status of the case.

But we all have to be very cautious in this country to be talking loosely about criminal liability. Our whole premise and our Bill of Rights and our whole legal system is that people are innocent or presumed innocent until proven guilty. And here we don't have any evidence that would implicate Congressman Condit.

BLITZER: And Billy Martin himself, the lawyer for the Levy family, when he was interviewed by Roger Cossack on Burden of Proof on Friday, made a similar point, that legally versus politically or morally, there are different obligations for Congressman Condit.

Lanny, listen to Billy Martin on CNN on Friday.

(BEGIN VIDEO CLIP)

MARTIN: As a criminal suspect, he is under no responsibility. As a congressman, a relationship with a woman who is now missing, he does have a responsibility.

(END VIDEO CLIP)

DAVIS: Well, I think there is some truth in that, but what about as a human being? How could he not see those parents and not call them on the telephone and say, "I'm coming over and I'm sitting with you; I'm telling you everything. I will do anything you want. I will call a press conference. I will do anything you want to help find that young woman."

How can he not look at those two parents and say my political career is more important, my privacy rights are more important, my anything is more important? That is why I'm going doing these shows, Wolf. This issue comes down to the human dimension, and he is not dealing with that.

BLITZER: All right. Let's take a caller. We have a caller from Toronto, Ontario. Please go ahead with your question.

CALLER: Good afternoon, Wolf.

Gentlemen, how important is guilt or innocence when his life is laid out on the line and opened to be picked at the way it is?

THORNBURGH: Well, I think we've both made the point that any discomfort that the congressman is suffering now is due entirely to his own reluctance to come forward and cooperate in the investigation of a missing woman with whom he had intimate relationships. Any focus of the media or focus of law enforcement has been prompted by his unwillingness to come forward and cooperate and to help in the investigation to find this young woman.

BLITZER: So both of you are getting ready for the next step. Unless they have some break in the investigation, the next step will be Gary Condit coming forward and delivering his long-awaited speech or interview or whatever it is going to be. You're getting ready for that.

DAVIS: As I said it, for me, no matter what he does at this point, it's too little, it's too late. He owes an apology to the parents, and I think he owes an apology to everybody for what he has done here and not helping to find this young woman.

And let's say it again: He has not helped find this young woman. And until that happens, he'll never be forgiven as far as I'm concerned.

BLITZER: On that note, we're going to leave it right there. Lanny Davis, Dick Thornburgh, two familiar faces on LATE EDITION. Thank you very much for joining us.

DAVIS: You bet, Wolf.

BLITZER: And just ahead, President Bush's home in the heartland. Is it working, his new strategy? We'll go 'round the table on that and much more with Steve Roberts, Susan Page and Christopher Caldwell. LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Time now for our LATE EDITION roundtable. Joining me, Susan Page, Washington bureau chief for USA Today; Steve Roberts, contributing editor for U.S. News and World Report; and Christopher Caldwell, senior writer for the Weekly Standard and a panelist on CNN's "TAKE FIVE," which airs Saturday nights, 8:30 p.m. Eastern.

Steve, the whole strategy that President Bush has been undertaking in the past few weeks, based in Crawford, Texas, but going out and speaking, whether in New Mexico or Colorado, elsewhere, he's going to be doing that week, his Heartland tour, if you will. Is that working?

STEVE ROBERTS, U.S. NEWS AND WORLD REPORT: Well, I understand what he's doing. This is the red state strategy, the red states for Bush, blue states for Gore. He's going around telling everybody that lives in a red state, you're virtuous, all good things reside out in the mountains and on the farms. I'm getting a little sick of it, frankly. I want to say a word for city-dwellers. There's virtue in cities.

But this is an old Republican approach, you bash Washington, you bash the cities. And I think that he's going a little too far in that, because, among other things, there he is talking about how great the independent virtues of the farmers. At the same time, he signs a farm bail-out bill for $5.5 billion. If they are so determined to be rugged individualists, why are taking so much federal money?

BLITZER: You're going to get a lot of heat from the farmers on that one.

(LAUGHTER)

You know, Chris, the president met with some students in Albuquerque, back to school, promotion of his education, and he had this little exchange. I want you to listen to what he -- what happened in that exchange.

(BEGIN VIDEO CLIP)

BUSH: You know where are I'm from?

UNIDENTIFIED MALE: Washington.

UNIDENTIFIED MALE: Washington, D.C.

BUSH: No, that's where I live right now, but guess where I was raised?

UNIDENTIFIED MALE: Washington, D.C.

BUSH: I was in one state going east. What's the state that's right next door to you?

UNIDENTIFIED MALE: Um -- Washington, D.C.

(LAUGHTER)

BUSH: Well, not really. Texas is where I was raised.

(END VIDEO CLIP)

(LAUGHTER)

BLITZER: Well, he's having some trouble convincing those kids he's from Texas as opposed to Washington, D.C.

CHRISTOPHER CALDWELL, "WEEKLY STANDARD": Yes, it's not as high- achieving a school, perhaps, as he had indicated.

(LAUGHTER)

You know, the smartest reading of this tour that I've seen has been by Matt Miller, the former Clinton budget official who's now a syndicated columnist. He said that what Bush is trying to do through events like these is exactly what Michael Deaver tried do with Ronald Reagan in the summer of 1983, when he was behind on a lot of issues, which is to create a persona for him so that he goes back to Washington as the most trusted American politician on other issues, like Social Security, Medicare, the minimum wage, that kind of thing. So it's an indirect strategy.

BLITZER: Trying to get some benefit from his summer vacation. Bill Clinton used to try to do that all the time too, whether he was in Martha's Vineyard or Jackson Hole.

SUSAN PAGE, "USA TODAY": Yes, he might want to try some kind of geography testing program when he comes back to Washington to help kids in schools like that.

BLITZER: Minimum standards.

PAGE: Yes, that's right.

You know, I think this didn't start as a grand strategy. I think the White House was defensive that Bush was going to be on vacation for so long, so they added some events, you know, day trips that he could take from ranch in Crawford. And the states that are nearby happen to be red states. And I do think it's worked pretty well. And I think it's made this vacation kind of a non-issue.

You know, last week we talked about his speech on stem-cell research. I believe that is the first time a president has given a nationally televised address to the nation from someplace other than the White House. I'm not sure about that, but I can't remember another president who's done that. And it totally went without any comment, because I don't think people really care.

ROBERTS: Look, he is trying to duplicate a Reagan strategy. You know, Ronald Reagan managed to run for reelection for president as an outsider to Washington.

(LAUGHTER)

Now, that is a incredible political feat to be able to do it.

But I think, in the end, Reagan's relentless campaign against Washington, Newt Gingrich's campaign against Washington when the Republicans took over the Congress -- and then they wonder why there's no faith in government, why there's no confidence in public policy. And they're the ones who are running the government, and I find it inappropriate for people who are running the government to make political profit at bashing the government. And I think that Bush is doing that, and I think it's cheap, and I think it's cynical.

BLITZER: You know, Christopher, this week, while the president's been on vacation, he had the first serious resignation of his White House, John DiIulio, the University of Pennsylvania scholar who was in charge of the faith-based initiative. Just as Congress is coming back, getting ready to vote on this important legislative initiative of the president -- we've got a picture of John DiIulio up on our screen right now -- he quits.

Give us the background. Tell us what's going on over here.

CALDWELL: I don't think we quite know the background. He is -- you know, he writes for the Weekly Standard, he's a great scholar. I don't think we know the full reason behind this. He's mentioned a few. He said that his work is done, which it isn't really. He served out seven months. He only planned to be here for six, but he thought that the faith-based stuff would be finished by then. He also mentioned his health.

Either way, it's a big setback, the first setback from the left for this plan. The other, bigger earlier setback for it was when the religious right turned out to be distrustful of it. So it keeps looking worse and worse for faith-based.

PAGE: You know, I think we know a lot about this. In fact, John DiIulio got incredible cross purposes with Karl Rove and other political figures in the White House. He had really been frozen out. The White House decided to pursue a very partisan strategy in terms of the vote they got in the House on faith-based. That was almost a party-line vote.

Now, John DiIulio, who is a Democrat, did not have very good relations with Republicans in Congress, but he did have a lot of credibility with Democrats in Congress, including with Joe Lieberman. The White House is counting to carry their water on this issue in the Senate. So, I think this is a real setback in the hopes of actually getting something through Congress and signed into law.

BLITZER: And for those of our viewers, Steve, who don't know, this faith-based initiative would allow federal money to go to charitable organizations to provide social services whether for unwed teenaged mothers or for other purposes, drug addicts or whatever.

ROBERTS: And one of the reasons why DiIulio was picked, because, as you say, he is a Democrat, he does have credibility on this issue, they were hoping that he would be the bridge to the Democratic critics from the left.

As Chris says, in some ways the criticisms have been harder from the right, because they're uneasy, a lot of conservative Christians, about taking federal money, accepting federal restrictions such as anti-discrimination rules on hiring.

What is the definition of a religion anyway? Everybody can agree the Presbyterians are, but what about the Nation of Islam? What about Scientology?

So, I think it is a reflection of the fact, as you say, Karl Rove, whose job is to keep up the ties to the Republican base. DiIulio was uncomfortable with the strategy that went too far to the right on this issue.

BLITZER: We're going to take a break. But very, very briefly, Susan, do you agree with Christopher this perhaps signals the death of the faith-based initiative?

PAGE: I don't think there's any possibility this gets through the Senate this year. And I think you are looking at next year competing bills in the Senate and the House. And I think you're more likely to have an issue for the next election than a bill that gets passed.

BLITZER: I don't blame John DiIulio. If this was going to go on for another year. Who wants to commute between Philadelphia and Washington on that early morning train? That sounds like not a pleasant experience.

We're going to take a quick break. We have a lot more to talk about with our roundtable when LATE EDITION continues. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back to our LATE EDITION roundtable. We're continuing our conversation with our roundtable.

Christopher, let's talk a little bit about the Senate. Next year, a third of the Senate is going to be up for election. Several Republicans perhaps won't be seeking reelection. Let's talk, first of all, North Carolina Republican Jesse Helms. What are you hearing he's going to do, because there could be an announcement as early, perhaps, as this week?

CALDWELL: Yes, it sounds like he's not going to run. Helms is a notoriously late starter with fund-raising, and fund-raising of course is what you look at to see whether a guy is going to run. Last cycle, he didn't start fund-raising until about 18 or 20 months before. Now we're about 15 months before the 2002 elections. It just doesn't look like he's going to do it, and we're starting to hear noise.

BLITZER: He's had some serious heart problems. He's almost 80 years old.

Does that set the stage for a daughter of North Carolina, Elizabeth Dole, a Republican, to go back to North Carolina from here in Washington and seek that Senate seat?

PAGE: It certainly does. You see Elizabeth Dole talking about running. You see the White House trying to kind of clear the field for her in North Carolina. She doesn't want to face a big primary. Democrats do not have a strong candidate for that race.

Elizabeth Dole looks like she would have an easy ride. You know, she'd be sort of the Hillary Clinton of the GOP when she got elected to the Senate. She would be a senator who immediately has a kind of a national base. And if Dick Cheney chose not to run again for vice president, she'd have to be on the short list of possible replacements.

BLITZER: You know, just to take a different point of view, she did run for president last time around, did not do very well.

PAGE: She ran for president. She was considered a credible candidate, even though she had never run for political office before. That's pretty remarkable. And she didn't embarrass herself in that presidential run, even though she didn't manage to knock off George W. Bush.

BLITZER: Anybody remember who her press secretary was in the...

PAGE: Ari Fleischer.

BLITZER: That's correct.

(LAUGHTER)

ROBERTS: You know, one of the things we're seeing, though -- you mentioned that Jesse Helms is sick, it's true. He will be 81 actually on election day, that's true. Another factor, he's no longer chairman of the Foreign Relations Committee.

And one of the subtle but important implications of the Democrats' control of the Senate is that there is more of an incentive for some of these Republican senators who might be contemplating re- election or getting on in years. If they're not going to be chairmen of committees, it's a far less enticing thing.

This worked against the Democrats for years, that they lost good people who gave it up because they weren't going to be chairmen. This is a flip side. And it also helps in recruiting Democratic candidates because you go and say, "Hey, if you run, you'll be a member of the majority." So there are two subtle effects of that.

BLITZER: And, Christopher, you know that The Washington Post had a piece this week speculating on some other Republican senators who are perhaps thinking about not seeking reelection -- Phil Gramm of Texas, Fred Thompson of Tennessee, Strom Thurmond, who has already announced of course he's not going to be seeking reelection from South Carolina. And it mentioned Pete Domenici from New Mexico.

These are all Republicans, but that could throw a major monkey wrench in the Republican's efforts to regain the majority in the Senate.

CALDWELL: Republicans desperately want it back. And in the best of circumstances, of the senators who are up, I believe only 14 of those are Democratic seats.

BLITZER: So what you're saying is the Republicans have a disadvantage to begin with?

CALDWELL: That's right.

I believe Domenici squelched that speculation.

But Fred Thompson in Tennessee, he's definitely not running. He's really not doing anything. And you even begin to hear talk of Lamar Alexander as a possible stand-in for him.

ROBERTS: You know one of the things you're also seeing, Chris, is that in these states you mentioned, these are states where Democrats have done better in recent year in statewide elections than they had for a while. It's a large part because of the energized black vote. Democrats have the governorship in South Carolina, North Carolina, Alabama, Mississippi. And that's one of the reasons why you see such a Republican emphasis on Hispanics.

Why was George Bush in New Mexico this week? Because they have basically given up on the black vote, and they know in a lot of states, for that reason, they've got to win a significantly higher share of Hispanic votes than they've gotten in the past, particularly on these statewide races.

BLITZER: Susan, we did get some news on the Al-Gore-comeback front this week, I thought some significant news, but maybe I'm not right. The word is he's going to be in Iowa at the end of September for a major Democratic fund-raising event. What does that mean?

PAGE: Well, you know, as wonderful as Iowa is, I think people go there when they're presidential contenders for one reason, and that's because they are running for president. And I don't think there's any question but that Al Gore has now indicated clearly the last couple of weeks that he does plan to run again. And certainly emerges as the frontrunner, no question about that.

Dick Gephardt wants to be president. Tom Daschle wants to be president. John Edwards wants to be president, but they're going to have to get past Al Gore.

BLITZER: Well, will the other Democrats simply move out of the way and allow the bearded one to come through...

(LAUGHTER)

... and to get that Democratic nomination?

CALDWELL: No, and in fact John Kerrey was in Martha's Vineyard last week making jokes about how he was happy to be able to blow in from his summer house in Iowa. I mean, Kerrey is already, himself, has already tried to contact Gore personnel in New Hampshire. And a big determination of whether Gore will be able to sweep the field will be whether his old personnel from the old primary races go to other candidates or start getting picked off by him.

ROBERTS: And also, the other thing Gore is doing is following the oldest game plan in the book. Richard Nixon did it. Ronald Reagan did it after losing the nomination in 1976. How do you rehabilitate yourself? You go out and you raise money. You go around the country. You make friends with the local people. You get a stack of IOUs.

If he were running, this is how he would do it. And I think you're going to see him a lot more active, particularly raising money around the country.

BLITZER: So far, Susan, as you know, Bill Clinton has made a bunch of commitment dates to raise money for the DNC, the other Democratic fund raising, dinners coming up for the balance of this year. But we're hearing that Al Gore so far with Terry McAuliffe, the chairman of the DNC, he's being a little coy.

PAGE: Well, he hasn't made the kind of commitments Bill Clinton has, but I think the DNC does expect him to go forward and do some fund-raisers with them.

But you know, the trouble for Al Gore is that Bill Clinton is probably a much better fund-raiser than he is and always has been and is a more compelling figure in those kinds of circles than Gore has been. And that's' a hurdle for Gore. One of the hurdles Gore needs to get back is to hold on to the donors who supported him last time around, and also to the interest groups, like organized labor, that are now, more or less, up for grabs.

One other thing he needs to do -- shave his beard.

BLITZER: Well, we're going to -- next week, we're going to continue this discussion, and we're going to ask our viewers to e-mail us and predict, when will Al Gore shave his beard?

(CROSSTALK)

(LAUGHTER)

If he will. Let's find out.

Susan Page, Christopher Caldwell, Steve Roberts, thanks for joining us on our roundtable.

And up next, Bruce Morton's Last Word.

(BEGIN VIDEO CLIP)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): World War II left scars, and relations between the two Koreas seemed to have cooled. And, of course, the United States still has troops in South Korea too -- like the ones in Europe, a reminder of the Cold War.

(END VIDEO CLIP)

BLITZER: Can U.S. peacekeeping efforts ever heal rifts from past conflicts?

(COMMERCIAL BREAK)

BLITZER: Welcome back. Time now for Bruce Morton's last word on lingering wounds from old conflicts.

(BEGIN VIDEOTAPE)

MORTON (voice-over): All kinds of old echoes this past week -- reminders, more than one, of how long things last.

Forty years ago in 1961, the Berlin Wall went up. It was, we in the West thought, a confession of communism's failure. They had to put up a wall to keep their people from fleeing Marxism, pouring into West Berlin, the only hole in the iron curtain, a hole 3 million East Germans had already used by the time the wall went up.

John Kennedy said the wall was a hell of a lot better than war and let it stand. It was very ugly and it seemed eternal, but it came down in 1989.

And now, well, The Washington Post quoted one East Berliner as saying, "I wouldn't say it was better in East Berlin, but it was safer and more secure." And, in fact, the old Communist Party, now renamed the Party of Democratic Socialism, is reportedly the most popular party in what was East Berlin and will be a serious player in city- wide elections.

And though the Cold War ended and the wall came down, the U.S. still has troops in Europe. They've been there more than half a century.

So, World War II left scars, and relations between the two Koreas seemed to have cooled. And, of course, the United States still has troops in South Korea, too -- like the ones in Europe, a reminder of the Cold War, which has not ended in Korea as clearly as it did in Germany.

Troops in Europe, troops in Asia, for roughly half a century. Troops in Bosnia for a much shorter time; troops in Kosovo; the deployment of NATO troops in Macedonia. Nothing wrong with being peacekeepers, but you have to wonder, for how long?

I'm Bruce Morton.

(END VIDEOTAPE)

BLITZER: Thanks, Bruce.

Now it's time for you to have the last word. Melinda from Springfield, Ohio, writes this: "Bravo to President Bush for his decision on stem cell research. The problem with this country is that we are into the me-and-now generations, disregarding others. We need to go slowly on this research and take small steps into this new age of medicine."

But Teron (ph) from Plano, Texas, says: "Being disabled with multiple sclerosis, to those who are against stem cell research and believe the president's decision will only open the door, I say, I hope so."

And about former Vice President Al Gore's future political plans, Connie from Port Richey, Florida, writes this: "What is all this about, wondering if Gore will run again? Gore could, may, might, will and should run again in 2004. And maybe he might just get it this time without any judge taking it away from him or having to do the recounts."

Whew!

As always, we welcome your comments. You can e-mail us at lateedition@cnn.com. And don't forget to sign up for my free weekly e-mail at cnn.com/email.

Just ahead, we'll show you what's on the cover of this week's major news magazines. Stay with us. (COMMERCIAL BREAK)

BLITZER: Welcome back. Now a look at what's on the cover of this week's major news magazines.

"TIME" magazine asks, "Is home-schooling good for America," with home-schooled kids, along with their teacher and their mom -- same person -- on the cover.

And on the cover of Newsweek: "Are you maxed out? American consumers are drowning in debt." With some advice -- "How to swim to financial safety."

There is no "U.S. News and World Report" this week. They had a double issue last week.

And that's your LATE EDITION for Sunday, August 19. Please join us again next Sunday and every Sunday at noon Eastern for the last word in Sunday talk.

And if you missed any of today's program, you can tune in tonight, 7 p.m. Eastern, for a one-hour replay of LATE EDITION.

I'll see you tomorrow tonight at 8 p.m. Eastern on "WOLF BLITZER REPORTS." Until then, thanks very much for watching. Enjoy the rest of your weekend. I'm Wolf Blitzer in Washington.

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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