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President Bush Outlines His Fall Agenda; GDP Grows Only 2/10 of a Percent in Second Quartery

Aired August 29, 2001 - 17:00   ET

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


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JUDY WOODRUFF, CNN ANCHOR: This is INSIDE POLITICS. I'm Judy Woodruff in Washington, where political jitters may be growing because of a new report of anemic economic growth.

JOHN KING, CNN CORRESPONDENT: I'm John King in San Antonio, Texas, where the president offered hope for a rebound, and outlined his priorities for the fall congressional session.

WILLIAM SCHNEIDER, CNN SENIOR POLITCAL ANALYST: I'm Bill Schneider in Washington, with a look at how today's economic numbers may be playing with the public.

WOODRUFF: Also ahead: a staple in seven administrations flies off into retirement.

ANNOUNCER: Now, Judy Woodruff takes you INSIDE POLITICS.

WOODRUFF: Thank you for joining us.

Many economic analysts had feared that the numbers would be worse. Still, you would be hard pressed to find many champagne corks popping here in Washington, or, for that matter, on Wall Street. The Commerce Department reports that the Gross Domestic Product grew at an annual rate of 2/10 of a percent from April through June. That is the weakest growth in eight years. But economists say it does not appear to signal the start of a recession.

Many investors seemed to see the glass as half empty. An hour ago, the Dow Jones Industrial Average closed down 131 points. Even President Bush acknowledged the troubling side of the GDP report.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Our economy began slowing down last year, and that's bad news, and I'm deeply worried about the working families all across the country. According to today's GDP figures, the recovery is very slow in coming.

(END VIDEO CLIP)

WOODRUFF: Mr. Bush spoke today in San Antonio, Texas. Our senior White House correspondent John King is there. And CNN financial news correspondent Peter Viles is here in Washington. Peter, first to you. Put these numbers in context. Clearly, Wall Street was not thrilled with what they saw, but some did see the glass is half full?

PETER VILES, CNN CORRESPONDENT: Well, Wall Street was bracing for worse. Let's put this in perspective. Just 16 months ago this economy was growing at a 5.7 percent annual rate. Now down to 0.2 percent. That is an incredible slowdown, 5 1/2 points of growth gone in 16 months.

So Wall Street still a little shocked at the degree to which the economy has slowed down. Yes, it's a slight positive and it didn't slip into negative territory. But the commerce department is going to crunch these numbers again in a month. It could be that the quarter was negative. This is a very short-term positive, and not enough of a positive to give the market any lift today. There was a pretty decent sell-off on Wall Street on these numbers, so generally half empty, I think, would be the consensus on these numbers.

WOODRUFF: Peter, I want you to listen to a comment today from the commerce secretary, Don Evans.

(BEGIN VIDEO CLIP)

DON EVANS, COMMERCE SECRETARY: There are some good signs out there, retail sales continue to be OK, housing starts continue to be good and solid. The downward revision today, you know, a positive spin on it is actually it was revised downward because we brought the inventory numbers down some, which means that the companies are being set up to begin to, again, start their manufacturing processes and building inventories.

(END VIDEO CLIP)

WOODRUFF: Now, are they just putting a positive spin on all this, do you think?

VILES: That's not really political spin. We've heard that from economists today and you'll hear it on "MONEYLINE" tonight. Economists do see dropping inventory as a potentially good sign, because you can't drop them forever. At some point, you've got to fill the warehouses up again and start the production lines again. So that is not out of step with economic thinking.

There is some health in this economy. The consumer, particularly, really hanging in there. Consumer spending was really decent in the second quarter, considering all the blows that this American consumer has taken from corporate America. I don't think that's really political spin. You've heard a lot of economists pretty much saying the same thing, that there is strength in the economy. The question is how much more weakness is there going to be before it bottoms out?

WOODRUFF: Peter, what about President Bush's tax cut? Is that having any effect that is showing up in these current growth numbers?

VILES: The rebates came after the second quarter GDP numbers that we saw today. You wouldn't look for it in those numbers. There is mixed readings so far from the retail sector about the degree to which it's helping in fall retail, back-to-school retail.

We don't have a whole lot of numbers on that yet. But there's no real way it can hurt. It might, and we still have a bad fall because the economy is so weak underneath the tax cuts. So the question, I don't think, is so much how much are the tax cuts going to help, but how weak is the economy that those tax cuts are going into?

WOODRUFF: Peter Viles here in Washington. Now we want to go to John King, who's in San Antonio, Texas. John, while we're talking about the president's tax cut, he's putting a lot of stock in that, hoping it is going to help turn the economy around. Are they prepared if it doesn't?

KING: Well, Judy, they certainly will not make the case just yet that it isn't. Although they are a bit concerned with these latest numbers. At the White House, the No. 1 marker for them is that the economy did not dip into negative territory. No president wants that. As we learned through the Clinton years, a president's popularity closely tied to the strength of the economy. But the president knows the shrinking surplus, the strength of the economy, and his tax cut will be major debating points as he heads now back to Washington tomorrow and into a fall budget battle with the Congress.

The president conceded the economy is more sluggish than he had anticipated, but voiced confidence a rebound is just ahead.

(BEGIN VIDEO CLIP)

BUSH: With the tax reduction already in place, Americans will have more of their own money to spend, to save and invest, the very things that make our economy grow.

(END VIDEO CLIP)

KING: Mr. Bush used a speech to the American Legion convention in San Antonio to outline his top priorities for the fall legislative session: education, defense, his so-called faith-based initiative, and a Patient's Bill of Rights acceptable to the White House. A shrinking budget surplus means less to spend, and Mr. Bush needs help in Congress.

(BEGIN VIDEO CLIP)

REP. JIM NUSSLE (R-IA), CHAIRMAN, BUDGET COMMITTEE: It has been a lot easier during years of surplus to say, well, here, we've got a little bit extra, spend it on this. Get-out-of-town money, some people called it. But this year we are going to have to be a lot more responsible.

(END VIDEO CLIP)

KING: But Democrats say the Bush tax cut has left Washington without enough money to pay for the president's priorities.

(BEGIN VIDEO CLIP)

REP. CHARLES RANGEL (D), NEW YORK: Of course there's not enough money for everything that President Bush has campaigned for. People forget, the president said get the money out of Washington.

(END VIDEO CLIP)

KING: Mr. Bush disagrees.

(BEGIN VIDEO CLIP)

BUSH: I presume those who now oppose tax relief are for raising your taxes. That would tie an anchor on our economy, and I can assure you, I won't allow it.

(END VIDEO CLIP)

KING: It is a critical stretch for the first-year president. He kept his promise of a big tax cut, but is on the verge of breaking a pledge not to tap into the Social Security surplus. The economy is the wild card of the budget fight. The White House predicts growth at the rate of 3.2 percent next year, but the economy was almost flat, growing at an anemic 0.2 percent rate in the second quarter of this year, and consumer confidence fell for the second month in a row. It is consumer spending that has kept the economy from dipping into negative territory.

So slipping consumer confidence now is especially worrisome to the White House, and evidence to the administration's critics that the president's tax cut is not providing the economic stimulus Mr. Bush promised -- Judy.

WOODRUFF: John, how are they bracing themselves for what promises to be a really tough fight with this Congress to get the president's priorities funded?

KING: Well, No. 1, they're trying to work very hard on Republicans. They realize here they need Republican loyalty on spending. They cannot have Republicans going off, either saying on the one hand that there's not enough money to pay for the president's priorities, or on the other hand, proposing spending in areas that the president does not want to spend on. No. 1, they're working behind the scenes now, even during the recess, to have loyalty among the Republicans. No. 2, they'd like to spring a surprise.

They would like more than nothing else to reach an agreement with key Democrats in the Senate -- Senator Edward Kennedy would be No. 1 -- on the patients' bill of rights. Believing that if the president can get some early victories on education and on a patients' bill of rights, they can at least in the short term, distract attention from this big debate about the shrinking surplus and hope, hope, a rebound kicks in. Judy?

WOODRUFF: All right. John King, who traveled with the president today to San Antonio. A number of top Democrats in Congress have voiced their concerns, as we know about, the dwindling surplus, and how it's likely to limit their spending choices. But today, they are trying to make sure that the president is getting their point. Let's bring in our Congressional correspondent Kate Snow. Kate, what are the Democrats saying?

KATE SNOW, CNN CORRESPONDENT: Well, they actually sent a letter, Judy, from the top four -- two Democratic leaders, the Democratic Minority Leader in the House, Dick Gephardt, the Majority Leader in the Senate, Tom Daschle; and the two top Democrats on the budget committee.

They sent this letter over to the White House. They said it's our third letter in as many weeks and we want you to know how we feel. It is about their concern, as you mentioned, over the economic forecast, over these projections that have come out this week that say that the budget may allow them to have to dip into Social Security and Medicare surpluses.

Let me read you part of the letter. They say, "As Congress and the administration resume their work on the budget, it is imperative that you provide specific guidance on how you intend to pay for the additional spending initiatives that you are calling for." So pointing the finger, there, the Democrats, right back at White House -- saying, "You want this spending on many of these programs. You need to tell us how you're going to do it."

Twice in the letter, Judy, they talk about leadership, closing with this sentence: "Presidential leadership is critical to resolving complex budget problems. That is the kind of leadership needed now."

Now, the Democratic leaders also talk about wanting a meeting with the White House, a meeting with the president. I'm told there is no such meeting in the cards -- right now, anyway. But I did learn that next week Senate Majority Leader Tom Daschle plans to sit down in a prescheduled meeting with House Speaker Dennis Hastert. That should be interesting. Judy.

WOODRUFF: Kate, you mentioned pointing fingers and the president, for his part, is pointing a finger at the Democrats, saying they have a plan to hold up the Congress even taking up education spending, because it's part of their plan to deny him what he wants to do there.

SNOW: Yeah, he has suggested -- the president has suggested, and did so today, in his speech that the Democrats would perhaps wait -- particularly in the Senate, where they have control -- that they would wait on key things like defense and education until the last minute, when there wouldn't be a lot of money left and they would have to fight over which things got funded and which didn't.

Democrats say that's really a false choice, they're going to do defense and education as quickly as they can in the Senate. They're not trying to hold up those issues for any reason. They certainly say that they value defense and education as much as the president does. In fact, they point that out in their letter as well. Judy?

WOODRUFF: All right. Kate Snow at the Capitol. Stay with us, this is INSIDE POLITICS.

ANNOUNCER: Some of Gary Condit's fellow Democrats in California may wish he would disappear. But are they prepared to wipe him off the map? Also ahead: recessions plus midterm elections usually equal trouble for one party. We'll figure up the fallout. And later:

(BEGIN VIDEO CLIP)

KING: It is a plane with a lot of miles, and a lot of history.

(END VIDEO CLIP)

ANNOUNCER: John King will be back, to say so long to a last-of- an-era version of Air Force One. Live from Washington, there's more of INSIDE POLITICS WITH JUDY WOODRUFF straight ahead.

(COMMERCIAL BREAK)

WOODRUFF: Today's feeble economic growth report adds more fuel to the debate over consumer confidence and a possible recession. For more on the impact of economic slowdowns, we turn to our senior political analyst, Bill Schneider.

Bill, what kinds of concerns do these numbers that came out today bring?

SCHNEIDER: They bring a concern about consumer confidence, because that's what holds the economy up. Business confidence right now is very shaky. But as John King reported, consumer confidence has dropped a bit in the last couple of months. Consumer expectations for the future have remained high. They think things will be better six months from now. In fact, they're far above recessionary levels.

The concern is that this economic bad news will depress consumer confidence. Already, we're seeing that in January two-thirds of Americans said they thought the economy was in good shape. Now it's a little more than one-third. And, in fact, a majority of American workers say either that they are fearful about losing their own job or they know someone who's lost their job.

That kind of news could depress consumer spending, which, as Peter Viles reported, has been pretty robust this year. When consumers stop spending because they are fearful about the future, that's what could drive the economy into a recession.

WOODRUFF: Bill, we're not in a recession now, but if we were to be in a recession, how that could affect the president?

SCHNEIDER: Well, you know, Judy, in the last half-century, this country has experienced eight recessions. And only one of them occurred under a Democratic president. Give up? It was under President Carter in 1980. And that helped end Carter's political career. All the other recessions happened with a Republican in the White House. They, too, paid a price, especially in midterm elections.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): In the 1950s, the Eisenhower years saw two midterm elections, two recessions and two double-digit losses for house Republicans. And the Nixon-Ford years? Two midterm elections, two recessions, two double-digit losses for house Republicans. The really striking parallels are between George W. Bush and Ronald Reagan. The centerpiece of Reagan's economic program was a tax cut. No sooner did it pass than the deficit nearly doubled.

(BEGIN VIDEO CLIP)

RONALD REAGAN, PRESIDENT OF THE UNITED STATES: Not that a deficit is all right, and not that we shouldn't continue a program to eventually get us back, as I've said, within our means. But the important thing is whether you are following a program, a consistent program, that will get us there.

(END VIDEO CLIP)

SCHNEIDER: 1982 saw the worst recession since the 1930s. Nearly 10 percent unemployed. President Reagan's answer?

(BEGIN VIDEO CLIP)

REAGAN: We can do it, my fellow Americans, by staying the course.

(END VIDEO CLIP)

SCHNEIDER: But Reagan could make one argument that George W. Bush can't make.

(BEGIN VIDEO CLIP)

REAGAN: We inherited the highest interest rates since the Civil War, the first back-to-back years of double-digit inflation since World War I, rising budget deficits and a national debt ready to break through the trillion-dollar barrier.

(END VIDEO CLIP)

SCHNEIDER: Even so, the Republicans lost 26 house seats in 1982. President Bush's father came in in 1989, and sure enough, a recession started in 1990. G.O.P. losses were held down in the midterm, however, because the president was standing tall against Saddam Hussein. But as savvy political analysts predicted at the time, the recession would ultimately do him in.

(BEGIN VIDEO CLIP)

SCHNEIDER: If the economy slips into recession, he's in deep trouble.

(END VIDEO CLIP)

(END VIDEOTAPE) SCHNEIDER: If the economy slips into recession now, his son is in deep trouble, because while a midterm election is always bad for a president's party, a recession makes it much, much worse -- Judy.

WOODRUFF: Bill, who what was that savvy political analyst we just saw?

SCHNEIDER: Looks familiar.

WOODRUFF: He did look familiar. Bill, we talked about what the president has to worry, but what does the president -- what do the Republicans have going for them, if anything, next year?

SCHNEIDER: Two things, Judy. One is redistricting. Republicans have more influence over the redistricting process than usual, and most of the population gains have been in the Bush states. Another thing Republicans have going for them is that Bush did not have any coattails in 2000. My goodness, he didn't even have a coat. So Republicans do not have big gains to protect in Congress next year the way they did, say, in president Reagan's first midterm election.

WOODRUFF: All right. Savvy political analyst Bill Schneider. Thanks.

SCHNEIDER: Sure.

WOODRUFF: Actor and comedian Bob Hope has been hospitalized in California. We will update his condition, and we'll check some of the day's other top stories in our news update.

Plus, John McCain also receiving medical treatment. Why the senator had to spend part of his birthday in surgery, just ahead. Judy?

(COMMERCIAL BREAK)

WOODRUFF: All right, Bill. Thanks.

Arizona Senator John McCain is expected to make a full recovery following prostate surgery. McCain turned 65 today, and as he entered the hospital this morning, he joked that he had found, "a great way to have a birthday party." Doctors at the Mayo Clinic Hospital in Phoenix removed part of McCain's prostate, which was enlarged. The procedure was not related to McCain's history of skin cancer.

Will the stroke of a pen determine Gary Condit's political future? That story is next on "INSIDE POLITICS." And a big decision by Condit's children. Margaret Carlson and Tucker Carlson will offer their takes on the Condit family political saga and more.

(COMMERCIAL BREAK)

WOODRUFF: The children of Congressman Gary Condit have quit their jobs in the California governor's office in a show of support for their father. Governor Gray Davis said Monday that he was disheartened that Gary Condit had not spoken out "more quickly or more fully" in the Chandra Levy case.

In a letter to Governor Davis, Chad and Cadee Condit wrote: "You may remember our father's strong public support, endorsement and organizational efforts for you during the bleakest moments of your 1998 primary campaign. It is that kind of loyalty to friends that has been the hallmark of his career and is a standard we strive to live up to. Continued employment with the governor's office after your public statement regarding our father would undercut that standard."

Before he resigned, Chad Condit noted his disappointment with the governor on Monday's "LARRY KING LIVE."

(BEGIN VIDEO CLIP)

CHAD CONDIT, GARY CONDIT'S SON: The fact of the matter is, Gary Condit's been forthcoming with law enforcement folks from the very beginning. And there's no honor in kicking somebody when they are down. I just -- I just disagree with the governor's comments, and they kind of missed -- missed the mark.

KING: But you don't hold the governor in less regard?

CONDIT: I probably do.

KING: But you are still working for him.

CONDIT: Right. This second.

KING: As of this minute.

CONDIT: Yeah.

(END VIDEO CLIP)

WOODRUFF: Chad Condit was the governor's liaison to the state's Central Valley region. Cadee Condit was a special assistant in the governor's office. The controversy following Gary Condit has emerged as a major factor in how California legislative leaders redraw their state's congressional districts. Democrats control the process, but that may not be enough to help Condit when the new maps are revealed, that is expected later this week. Joining me now, Carla Marinucci, she is a political writer for the "San Francisco Chronicle."

Carla, first of all, when do you expect the legislature to put out those new Congressional maps?

CARLA MARINUCCI, "SAN FRANCISCO CHRONICLE": Judy, they're working on them as we speak. We are expecting them any time now. Some of the assembly district maps have already been posted. And these are things that people are going to be watching very closely as you know, in the central valley.

Gary Condit's district has been a conservative district increasingly so, went for Bush. Condit has been a very good fit for that district since 1989, when he was first elected there. And the problem is now, his political troubles are causing troubles for California Democrats. They need to change that change the district lines to figure out how to survive, how to keep a Democratic seat at post-Condit era.

WOODRUFF: Is that possible to do, and do you think that they are going to do that?

MARINUCCI: Yeah, I mean, this is the problem right now. Gary Condit, in his district, as you know, polls showing two-thirds of the voters would not vote to reelect. Now Condit has been series mayor, city councilman, a hometown boy, so he has held onto that district but now the Democrats need to reshift the lines and what they are going to do, at least talking about is, stretching the lines north to Stockton, where there is a very large Democratic stronghold Latino voters.

But these are voters that don't know Gary Condit and wouldn't be likely to vote for him. A lot of folks are saying this is the way, in fact, that Democrats are going to make it easy for Gary Condit not run again. There is some talk, and wonder, will Gary Condit basically say, well, look, I don't care what the Democrats will do. I am going to run as an independent.

If he does that, will be a big problem because then the seat will go Republican.

WOODRUFF: Carla, why aren't the Democrats and the legislature sticking with him?

MARINUCCI: At the point, the Democrats and the legislature, and most of the people in Sacramento feel Condit will not run again for reelection. So many of them are publicly holding their fire on this situation, but privately, they're saying, they're going to wait before they essentially throw him over the side of the ship. That's what one top Democratic consultant said to me.

They are very disappointed with him. As you heard Gray Davis say this week that was very significant. The governor, who has been a friend of Condit and who Condit has supported all along finally said that he was disheartened by the whole performance.

WOODRUFF: If the legislature, controlled by Democrats, isn't doing Gary Condit, another Democrat, any favors, are they doing -- are other Democrats in the state, part of the congressional delegation, facing the same thing? Or is he unique in this respect?

MARINUCCI: There is one other Blue Dog Democrat, Ellen Tauscher, in the 10th congressional district who is facing some problems also. They are trying to make her district a stronger Democratic seat as well. Condit's seat, as we said, tended to be conservative. Tauscher has the seat that's 41-41, Democratic-Republican. They want to make her stronger.

What they are looking at, instead of an incumbent protection act, which is what a redistricting has generally been, they need to make these safe Democratic seats. That's the goal right here. In Condit's case, they want to make it stronger. The fact -- make it easier for a Democrat to be elected in the 18th district and in the tenth district as well.

That is going to cause a little bit of problems for both of those folks and for Condit particularly, the feeling is, this is the way that the Democrats are kind of solving their Condit problem.

WOODRUFF: In other words, help the party, but not necessarily help these two individuals?

MARINUCCI: Absolutely. And in Condit's case by stretching the district, it puts him out of touch with the base of his voters. Those conservative people, and it's going to make him harder to run. Democrats here in California are already buzzing about possible people who could fill in in that district, who could be run in that district should Gary Condit make a decision.

WOODRUFF: Carla, one other question here: Gary Condit, the problems he's been having, is that in any way hurting, so far as you can see now, other Democrats running for reelection in California?

MARINUCCI: Democrats as a whole are worried that this is going to hurt the party top to bottom. For instance, the labor groups, the big donors who have supported Condit in the past, are they going to be turned off? Is this going to be something that filters from the party from top to bottom? That's a bad situation. And the situation is with the issues.

The governor on down cannot talk about other issues in California or at least it is difficult to because they're being asked so much about Gary Condit and his situation. So, yes, there is a concern. And they're getting very tired and fatigued with it and angered with the situation, I think increasingly. So as I said, people feel it's very likely Condit will not run for reelection. I think that he is getting a lot of pressure from all sides.

WOODRUFF: All right, Carla Marinucci with the "San Francisco Chronicle." Thanks, good to see you.

MARINUCCI: Thanks, Judy.

WOODRUFF: We'll have more on Condit's district, and an interesting description of the congressman, as we talk about the contents of a new political almanac. That's next, on INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: "The ultimate guide for political junkies," says the blurb on the front of the book and it's no hype. "The Almanac Of American Politics 2002" was certainly among the most anticipated political books of the year. Complete with detailed descriptions of every governor, senator and House member in the nation.

Now that it's out, CNN's Kate Snow sat down with Richard Cohen of the "National Journal," who co-authored the book with Michael Barone, to talk about Cohen's specialty: the House districts. They started with one district that has been very much in the news.

(BEGIN VIDEOTAPE)

SNOW, (on camera): You literally wrote the book.

RICHARD COHEN, "ALMANAC OF AMERICAN POLITICS": I wrote the House profiles of the book.

SNOW: Right. The new 2002 almanac just came out and yet there is already something that I can see that might be a revision in the making and that's California 18, Gary Condit's district. Knowing what you know now, how would you rewrite?

COHEN: When we rewrote the book after the last six months of this year and went to press in June and July, the Condit story was just evolving. So we decided, basically, not to deal with Gary Condit's Chandra Levy problem, because we didn't know where that story was going.

Now, in answer to your question, now we would say Gary Condit's in big trouble and the 18th congressional district in California is likely to change a lot.

SNOW: Let me read you a line from your description of Condit's district. You wrote, "Condit's friendliness and apparent lack of guile has enabled him to make friends across all lines." Interesting choice of words, "his lack of guile."

COHEN: It was accurate when we wrote it. Gary Condit was one of the it's -- an anonymous members of Congress in the first 12 years that he served here, across the street. And he didn't get much attention from us in the press. But he was well-regarded, he was a player within the House of Representatives.

He was a moderate Democrat. Republicans liked to work with him.

SNOW: You thought at the time of writing, that Democrats might try to redistrict the California 18th, Gary Condit's district. Do you still think that that might happen?

COHEN: The district has become more republican in the last few years and Democrats have been worrying, mindful about the need to kind of reinforce the Democratic base of Condit's district, the 18th district of California, near around Modesto.

Now, they're going to have to protect the district for Democrats, but they're not going to protect it for Gary Condit. They don't -- they are going to let him go. They are going to sacrifice him in all likelihood.

SNOW: In Southern California, the issues are different. Lets talk about the 35th district. That's where Maxine Waters is. She is very popular, very well-known. This was California's, in fact, as I understand, first black majority district is. Is that changing? Is the population changing there?

COHEN: There's been a huge population change in this district, which is the South Central part of Los Angeles. It's been over the, in the last several decade, it's been a heavily African-American district. But like, much of downtown Los Angeles, the black population has held only steady or even decline, but there has been a huge increase in the Hispanic/Latino population.

The question, not so much that Maxine Waters faced, but that African-American Democrats generally face in Los Angeles and in some other urban centers, is that the Hispanic community is feeling it's muscle. It has more numbers, and as more and more Latinos are registered to vote, become interested in the political process, they're going to want their own people to represent them in Congress.

SNOW: Another trend that I know that you have identified, I have read about it in the almanac, is suburban sprawls, suburban growth. One area where that seems to be really evident is outside the metropolitan Dallas-Ft. Worth area. You call it the fastest growing area in America right now. Is that a good microcosm of what you see happening? And what does that mean politically?

COHEN: Politically, these Southern, rapidly growing areas tend to be represented by Republicans in Congress. They tend -- because they are solid enclaves of Republican voters. And we've seen the leaders in Congress across the street here, tend to become -- to come from these Republican enclaves.

Dick Armey, for example, represents the Dallas suburbs and he was first elected in 1984 by defeating a Democratic incumbent. So it had been a swing district. He's made it a solidly Republican district.

SNOW: There's a star candidate in Florida.

COHEN: Sure.

SNOW: Everybody knows her name, outside of Florida, Katharine Harris, the secretary of state in Florida. Famous for her role in the election last fall. Tell me about that district. We think she is going to run in the 13th district.

COHEN: The 13th district, which includes Sarasota and some of the rapidly growing suburbs around Sarasota along the Gulf Coast has been represented by Republican, Dan Miller. He is retiring and the Republicans in Florida really want and hope and expect that Katharine Harris will be the candidate to run in the district which could be redrawn a little bit.

It is also the case that the adjacent district has a retiring Republican member, Porter Goss, so with all these retirements and all these Republicans in Florida eager to move up, there are several, kind of, stars. Katherine Harris is probably the prime star, not only in Florida but from -- for those of us in Washington who watch Florida -- and she's making clear she's planning to run, and well, she's probably going to be elected. SNOW: It would seem to be a cakewalk for her.

COHEN: Yes.

SNOW: Yes, easy answer. She's popular enough.

COHEN: She is very well known. She is going to have the money, she is already raising money, and the Republicans in Florida have to figure out where Katherine Harris fits in, in the new geography in Florida because there are other Republican members, both incumbents in Florida and Republicans in Tallahassee who want to come to Congress.

They all have to kind of fit into this puzzle, this jigsaw puzzle that's being created. But Katherine Harris is almost certain that she will be taken care of.

(END VIDEOTAPE)

WOODRUFF: Meantime on Capitol Hill, House Government Reform Committee Chairman Dan Burton, is known for his attacks on Democrats. But now he's apparently taking aim at a fellow Republican. Burton sent a letter today to Attorney General John Ashcroft demanding access to specific internal memos relating to three cases during the Clinton administration.

Dan Burton expressed great concern that his committee has been allowed more access to Justice Department information. Some Democrats on Burton's committee saying they are surprised that the chairman is leveling some of the same obstructionist charges at Ashcroft as he did at former Attorney General Janet Reno.

The economy and the Bush budget: Is there any reason for optimism? Tucker Carlson and Margaret Carlson will take stock when we return.

(COMMERCIAL BREAK)

WOODRUFF: You saw their pictures, they are joining us now: Margaret Carlson of "TIME" magazine, Tucker Carlson, co-host of CNN's "CROSSFIRE."

Margaret, to you first. New economic growth numbers out today suggesting the economy heading down, and yet the Bush Administration Commerce Secretary Don Evans saying he's encouraged. He thinks that things are going to turn around. What's going on here?

MARGARET CARLSON, "TIME" MAGAZINE: And the president said a couple of days ago, he was extremely pleased that -- at the economic news. He didn't have the point to GDP at the time. But we are this far from a recession and it's hard to believe they are as cheery about it as they say they are.

But the interesting thing is that when they came in, they were saying there was a Clinton recession on the horizon, in order to get their way on the tax cut. And now they are saying, because they are held to blame for it, no, the recession we were saying isn't really going to happen after all and this is just great news and you know, things are looking bright.

WOODRUFF: Tucker, are they just putting a positive spin or is there really something here that they can be hopeful about? TUCKER CARLSON, CNN'S "CROSSFIRE": Well I think that they are -- I think that they are concerned about it. Look, I think that the White House wants to make two points in response to Democratic attacks. They can't make either one. First is, 7 out of the last eight budgets took from Social Security. And the second is, the Social Security surplus? Nobody ever heard of this two years ago. Who cares if we spend part of it. They can't make either argument, and they also can't make the third argument, which is good one to the Democrats, if you don't like the tax cut, repeal it.

So instead I think that they are stuck with, Democrats, cut your own spending. And, B, it's not really our fault because the economy was on its way down when we got here.

WOODRUFF: What is going to happen this fall when push comes to shove on the hill? The president's pushing his agenda, Margaret, the Democrats want to score political points but they also want to fund some programs that are important to them.

M. CARLSON: It is Republican doctrine not to go into the Social Security surplus. So even if they are going to call it a gimmick, it's a gimmick that they believe in, and so it's hard to say to the people out there, we don't like it. So there will be a fight over priorities in the budget and Bush is going to try to make defense go first, so he can get what he wants and squabble over the rest later.

WOODRUFF: Tucker, I mean, is this -- it's a foregone conclusion that that is not going to be a meeting of the minds on these things?

T. CARLSON: I think that there will be on defense. There are a lot of Democrats, Norm Dicks of Washington, among many who have defense contractors in their districts and who have real reason to want to see defense spending increased. So I think that they are probably safe on that. Education obviously is an issue Democrats have been campaigning on for a long time.

Faith-based, one of the priorities Bush laid out this morning, probably going to be difficult to get a lot of money for that I would imagine.

WOODRUFF: Quick question, turning the corner, Gary Condit, Margaret Carlson, a week almost after the interview of last week on ABC. What hope does he have to salvage his political career?

M. CARLSON: I don't think much. The interview hurt him more than helped him. His children are the only people to come out before him since that interview. I am surprised it took Gephardt and other Democrats so long. It was just a craven desire to keep the seat.

WOODRUFF: And Governor Davis.

T. CARLSON: Well, Davis, he is I think the leading indicator of backlash. If Governor Davis comes out for something, that means that the consensus has reached saturation. Everyone believes that. He focused groups, hello, in the morning. If there is anybody who could make you want to feel sorry for Gary Condit, it's Gray Davis joining the pile-on along with Patrick Kennedy. I mean, come on! That does make me feel sympathy for Gary Condit.

WOODRUFF: He may want equal time.

M. CARLSON: Well, you are with the kids then and you know, the kids should support him and they should never leave him and you know, it's too bad that they had to quit their jobs. But unlike, Tucker, I think that these people are finally facing up to the reality, and not playing partisan politics because they're Democrats.

T. CARLSON: They should have done it three months ago. They had the leverage over him and could have said, you know, answer the questions the D.C. police put to you.

WOODRUFF: You are saying to waited until this interview.

M. CARLSON: It's useless and that the trail is cold, whatever it might be.

T. CARLSON: It does mean that it's over for him, I think.

M. CARLSON: Yes.

WOODRUFF: Let me ask you finally about this United Nations Conference on Racism, scheduled for this week in Durban, South Africa. The Administration was planning to send secretary of state Colin Powell. Now though, because of the disagreement over he language in the document that they are going to be debating in South Africa having to do with Israel and Zionism, Secretary Powell is not going.

Let me just, before I ask the two of you, here is something Jesse Jackson said about the administration's decision.

(BEGIN VIDEO CLIP)

REV. JESSE JACKSON, RAINBOW/PUSH COALITION: It is a slap in the face. It must embarrass human rights people who, in the Republican Administration, it must embarrass people like Colin Powell and I suppose Condoleezza Rice. I mean, these people are products of the civil rights anti-racist movement.

(END VIDEO CLIP)

WOODRUFF: Margaret, is Jesse Jackson right? Do you think that Colin Powell and Condoleezza Rice are embarrassed by this?

M. CARLSON: Well, it would be interesting if they said it. It is not very interesting for Jesse Jackson to say it. You know, he tends to intrude on other people's events. I imagine Colin Powell would have liked to have gone. This is a perfect excuse not to go. The problem with not going is you only get one hit. You get the not going as your as your protest but not being there to try have an impact day to day.

So, in some ways it's too bad because Colin Powell would bring more attention to it than anybody else.

WOODRUFF: Tucker, does it matter that the administration is not sending someone high profile to this?

CARLSON: I think the appropriate response to Jesse Jackson and I hope we hear this in the administration is: blah, blah, blah, yada- yada-yada.

Look, the answer they have is, we are not going to support the (UNINTELLIGIBLE) as racism. I think that that's perfectly acceptable as an excuse for not going. And I also think you could raise the point, the U.N. defeats racism? It is such an unlikely prospect. It is ludicrous. Where was the U.N. in Rwanda when close to 1,000,000 people died because of racism? Nowhere. So, the very premise is dumb, I'm sure they will take a lot of heat for it, but a lot of Democrats, Tom Lantos among them, are pretty much on the side of the administration. They are very offended by this anti-Israel statement.

WOODRUFF: All right, Margaret Carlson and Tucker Carlson. Thank you both, good to see you way up high.

And we'll sore with presidents next on INSIDE POLITICS. The No. 1 flier aboard Air Force One joins us in a tribute to a plane that has flown a number of his predecessors.

(COMMERCIAL BREAK)

WOODRUFF: President Bush's trip to San Antonio today marked a milestone. Not for him, for the plane that he flew on. It was the last time that an aging Boeing 707 will serve as Air Force One. As our John King explains, the aircraft has quite a political past.

(BEGIN VIDEOTAPE)

KING (voice-over): It is a plane with a lot of miles, a lot of history. It is known as tail No. 27000 in the logbooks, as Air Force One to seven U.S. presidents, dating back nearly 30 years.

STEVE LOMINAC, CHIEF FLIGHT ATTENDANT: Got our money's worth out of it. Here it is, nearly 30 years later and we are finally retiring it. It's a piece of history. That's all you can say. In August, 1974, after this memorable moment, the Boeing 707 left Washington as Air Force One, but lost that designation somewhere over Missouri as Nixon headed home in disgrace and Gerald Ford was sworn in as president.

Jimmy Carter, just out of office, few 27000 to Germany to greet 52 American hostages just released from Iran. Resident Reagan let Carter borrow the plane for that trip, and would fly it himself to Germany a few years later for another memorable moment, this one in Berlin.

(BEGIN VIDEO CLIP)

RONALD REAGAN, PRESIDENT OF THE UNITED STATES: Mr. Gorbachev, tear down this wall. (END VIDEO CLIP)

KING: It has carried vice presidents and secretaries of state, too, swooping down around the world as a symbol of power and democracy. Its twin 707, tail No. 26000, took Nixon to China, and was the airborne stage for this sad chapter in the history books, an inauguration forced by assassination.

26000 was retired in 1998. So 27000 is the last of an era. This, its final mission with the designation Air Force One. Presidents have a 747 at their disposal now, making the old 707's antiques. This one flew more than 440 missions and a million miles as Air Force One. Its first carrying the nation's 37th president, its last carrying the 43rd.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Today this plane carried a president for the last time, and soon it will be taking its last flight. It will carry no more presidents, but it will carry forever the spirit of American democracy.

KING: John King, CNN, Waco, Texas.

(END VIDEOTAPE)

WOODRUFF: A piece of American history.

Every Friday, our Bill Schneider awards a political play of the week, and we want your nominations. You can e-mail your ideas to: insidepolitics@cnn.com, and tune in on Fridays to see if you picked the play of the week.

That's all for this edition of INSIDE POLITICS. But, of course, you can go online all the time at CNN's allpolitics.com, AOL keyword: CNN. Our e-mail address is: insidepolitics@CNN.com. I'm Judy Woodruff.

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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