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CNN CAPITAL GANG

Dorgan Discusses Federal Budget Crunch; Specter Talks About Stem Cell Policies; Tomasky Weighs in on New York City's Mayoral Race

Aired September 8, 2001 - 19:00   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.
ANNOUNCER: From Washington: The CAPITAL GANG.

AL HUNT, HOST: Welcome to CAPITAL GANG. I'm Al Hunt, with Robert Novak, Kate O'Beirne, and in Boston, Margaret Carlson. Our guest is Senator Byron Dorgan of North Dakota, chairman of the Senate Democratic Policy Committee.

It's great to have you back, Byron.

SEN. BYRON DORGAN (D), NORTH DAKOTA: Thank you. Glad to be here.

HUNT: Glad to have you.

President Bush and Congress returned to Washington from their August vacations with the president facing fiscal demands not only from Democrats, but from his own Republicans. They wanted a reduced capital gains tax rate.

(BEGIN VIDEO CLIP)

SEN. TRENT LOTT (R-MS), MINORITY LEADER: I have been suggesting all year that I thought that a capital gains tax rate cut was the right thing to do, that it would be helpful to the economy.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

REP. DENNIS HASTERT (R-IL), HOUSE SPEAKER: It does stimulate the economy. It does. It's proven. Most economists will tell you that's the best way to go.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: What I'd like us to do is take a look-see to make sure that the stimulus package that we've (sic) now are implementing works. But I'm open minded.

(END VIDEO CLIP)

HUNT: At the same time, Democrats demanded that the president submit a new budget.

(BEGIN VIDEO CLIP)

SEN. KENT CONRAD (D-ND), BUDGET CHAIRMAN: We are, because of the president's budget plan, on the brink of using Social Security and Medicare trust fund money to finance the other operations of government.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

BUSH: We can work together to avoid dipping into Social Security.

(END VIDEO CLIP)

HUNT: Bob, the president is going to have to sequester funds to avoid dipping into Social Security. I want to ask you if he's going to submit to either the Republicans on capital gains or the Democrats demand to produce a new budget.

ROBERT NOVAK, "CHICAGO SUN-TIMES": Well, he's not going to give them a new budget. And this whole sequester thing is a lot of nonsense, too. The whole idea of dipping into Social Security, as Mitch Daniels, the budget director has said -- the money is all green. You don't have yellow money, red money. It all is in the same pot. We have right new a huge surplus.

The real question is not these accounting problems that bother -- seem to bother the senators from North Dakota so much. The problem is the economy. The economy is in terrible shape, and it's getting worse. The stock market is tanking. And so when the Republicans -- and Senator Lott has been saying this all year, what we need is a cut in the capital gains rate, there's something that might help the economy, and the president is so passive on it.

He says, I'm open minded. Open-minded? He ought to just jump at the opportunity. And he's not showing good leadership when he says, well, if you want to do it, go ahead, I'm not going to say yea or nay.

HUNT: Byron, are you North Dakota twins in the Senate...

DORGAN: That's what Bob Novak says.

HUNT: ... just green-eyeshade warriors?

DORGAN: Well, it's interesting: Apparently only in Washington the word "trust" doesn't mean anything when it comes to a trust fund. The economy is in tough shape -- Bob's right about that -- and it's getting worse. But it's not going to get better by raiding the Social Security trust funds.

That money comes out of workers' paychecks. They're told it's going to go to Washington to be put in a trust fund for one purpose: That's Social Security. And it's not just some accounting issue if you take that money and use it to build Star Wars or some other function.

We need a new budget plan. The fact is, we have a plan that doesn't add up. Everybody knows that; that's why they don't have confidence in the future, in the president. And the Democrats, Republicans ought to get together and develop a new plan.

HUNT: Kate, I want you to jump in here, but also address whether Bob Novak is right: Is George Bush too wishy washy on capital gains tax cuts?

KATE O'BEIRNE, "NATIONAL REVIEW": Let me jump away, Al.

It's important for the Republicans to recognize -- and many of them do -- they are exactly where they wanted to be. They wanted to get the surplus off the table through tax cuts so it wouldn't be spent. If there were an extra $40 billion there now -- not in Social Security surplus -- Republicans would be trying to figure out what kind of a tax cut can we quickly implement to get it off the table. They're bumping up against the Social Security trust fund, phony though it may be. And that's just where they wanted to be.

Next year, though -- and they will not go into it, they're determined not to. They do not want to be battered -- I think it's ridiculous. Some things are more important than this phony trust fund, like the state of the economy. They're nervous -- members running in 2002 -- about demagogic 30-second Social Security ads being run against them next year, so they will not go up against it.

They do feel they have to have something for the economy, because they agree with Bob Novak, the economy is more important, and a capital gains tax cut is the single most important thing they can do. The White House has given them a green light to go ahead with that kind of economic recovery measure.

But I agree with Bob: The president ought to be doing more than just giving a green light, he ought to be leading the parade.

HUNT: Margaret Carlson up in Boston, who's in the briar patch, Democrats or Republicans?

MARGARET CARLSON, "TIME MAGAZINE": Well let me jump in where Kate didn't want to go: Bush being lukewarm on a capital gains tax cut shows that a man can grow in a presidency. He's already taking from granny, possibly, to give a tax cut to the wealthy. He would be in such a bad position if he were then to be in favor of a capital gains tax cut, which sends further breaks to the wealthy, while all the headlines are about dipping into the Social Security surplus.

I mean, that being said, both parties are in a lockbox on this issue. Democrats want to say Republicans are going to do it. Republicans want to say Democrats are going to do it for spending. What's going to happen is, I think, that Democrats are going to win this fight, saying that the tax cut made it necessary to dip into the surplus. It looks like it's just going to have to happen because, as Bob says, the economy is terrible...

(CROSSTALK)

CARLSON: ... they define as a recession or not, there's a recession coming, and the money is going to have to come from somewhere.

HUNT: Byron, you all have done an effected job of criticizing the White House; you haven't done a very effective job in saying what you'd do about it though, have you?

DORGAN: Well, at this point it is not our plan. We lost. We offered a plan and we have a vote, and the president won. That was at a very different time. It was when he expected we would always have economic growth, always have surpluses. And that has not worked out, as this economy begins to soften and grow weaker and weaker, it's time for a new plan.

Now, we can go back to some of the things we talked about; we talked about a tax cut that had much less impact in the outer years. And, incidentally, the American people and the markets understand the consequences of that tax cut that the president passed.

That's why we say at this point, let's have the president and Republicans and Democrats in Congress sit down and recognize there's a new reality, and let's develop a new plan.

(CROSSTALK)

NOVAK: It's ridiculous, because the question is, do you want to raise taxes? You don't want to raise taxes in this kind of economy. Do you want to cut spending? Democrats love to spend. They don't want to cut spending. So it's just -- it's a game. Submit a new budget, they say.

Now, of course, what I would like to talk about is what it takes to fix the economy. It takes -- I hope it would help -- a capital gains tax cut would help. I think it's going to take a different kind of policy by the Central Bank. And I think that Byron and I might even agree on that. But one thing I've never understood by the North Dakota twins: how it is that if you take the money that's coming in in the surplus, in Social Security and you give it to bond holders -- to bond holders to retire their debt, that's good for the economy, while it's not good to give it in tax cuts. I've never understood.

O'BEIRNE: And Al, Margaret thinks the Democrats can get away with blaming the tax cut for possibly raiding the fund which, of course, Democrats did for years on Capitol Hill -- raid the Social Security trust fund -- I don't see how they can do that for a couple of reasons.

First of all, they voted for a larger tax rebate this year, Margaret, than did the Republicans. They miscalculated far more than the White House did about how big the surplus would be. They wanted a bigger rebate. And secondly, ambitious, nervous Democratic senators running for reelection all enthusiastically supported this tax cut. It's going to make it a little hard for them, I think, to abandon those. DORGAN: There's so much misinformation here I don't...

CARLSON: The economy...

(CROSSTALK)

HUNT: Wait a minute, Margaret, Byron's under attack.

DORGAN: There's so much misinformation I don't know where to start. I mean, the fact is our proposed tax cut, the rebate was larger, yes, only for this year. But our proposed tax cut was much smaller than that which the president proposed for the next decade.

But let me go back to this: One of the great frauds of political discussion is to tell people whose money you take out of their paycheck that there's no trust fund, there's to lockbox, there's really no trust in this issue. That is an enormous fraud to be doing that. You can't take money from people under false pretenses.

HUNT: We're going to revise that lots. I'll just say on the capital gains tax cut, Bob Rubin, best Treasury secretary ever says it doesn't increase savings and it doesn't do anything for economic growth...

NOVAK: And he's wrong.

HUNT: ... but it gives a lot to rich people. Byron Dorgan and the GANG will be back with a Mexican surprise.

(COMMERCIAL BREAK)

HUNT: Welcome back.

The first official state visit of the Bush administration was paid by President Vicente Fox of Mexico, who in his opening statement surprised his hosts.

(BEGIN VIDEO CLIP)

VICENTE FOX, PRESIDENT OF MEXICO (through translator): We must, and we can, reach agreement on migration before the end of this very year, which will allow us before the end of our respective terms to make sure that there are no Mexicans who have not entered this country illegally in the United States, and those Mexicans who have come to this country do so with the proper documents.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

BUSH: I hope to come forward with a program that will pass the Congress that deals with guest workers with some sense of normalization, and I'd like to do that as soon as possible.

(END VIDEO CLIP)

HUNT: Margaret, are presidents Bush and Fox really going to work out the immigrant problem?

CARLSON: Not in the short run. This week was a great buddy movie with -- George Bush was so happy to be with a foreign leader he understands. His foreign policy is basically a Mexico policy. First state dinner, fireworks that were unscheduled so that people in Washington thought they were being bombed.

But this is going to split the Republican Party. Bush did not lay the groundwork for amnesty for illegal immigrants. The one wing of the Republican Party wants cheap labor, the other is jingoistic and doesn't want immigration at all -- remember Pat Buchanan's fence.

So there's a long way to go here, and especially the fact that if you grant amnesty to Mexicans, what about Hondurans and Nicaraguans and all the other groups that are here?

HUNT: Split the Republican Party, Kate?

O'BEIRNE: Well, I just wanted to point out to Margaret if we a had a missile defense system people wouldn't have been afraid of those fireworks. It might have been an...

(LAUGHTER)

O'BEIRNE: ... of the White House, trying to remind people how vulnerable we are.

CARLSON: Right; there's danger at home.

O'BEIRNE: Exactly.

Condoleezza Rice this week explained that this is a very complicated set of issues, and boy she is not kidding.

I don't understand what the president hopes to be able to do here, yet he certainly has promised President Fox to do something really significant. Because they recognize every poll shows the public's overwhelmingly opposed to amnesty, they won't use the "A" word; they're trying to figure out what to call this. There's probably support on Capitol Hill for a very narrow guest worker program.

But beyond that, I think support starts dropping off. And it seems to me that Democrats would have every reason in the world to hijack a very narrow guest worker program in order to deny George Bush this issue.

So the politics couldn't be more complicated. And I'm not at all convinced the politics help Republicans.

HUNT: Can't get anything through Capitol Hill; you agree with that Byron?

DORGAN: I was just sitting here thinking that almost every problem relates to a national missile defense or a capital gains tax cut in these two corners of the table. This is a complicated issue. The president made some discussion, or some announcements, rather, and then seemed to pull back just a bit because of the split in his party. This country has 3 million people here from Mexico that are working. But more than that -- people from Nicaragua, Honduras, El Salvador and other places.

And, you know, we have to think our way through this. I mean, these are people with jobs, raising families in the country. Many of them have been here a long, long while and contribute to the labor force. It's a complicated issue, and I think the president was right in raising it, and I think there will be something that is agreed to with Congress.

HUNT: Bob, I was disappointed you weren't invited to the state dinner; I hope Karl Rove will get you invited to the next one.

But your impressions of the Fox-Bush meetings this week?

NOVAK: I thought it was fine. I think they were a little surprised that President Fox came over so strong on that. But he does want open borders. that's very, very important to him.

I was amused at Margaret saying it's a choice between the Republicans being either jingoists or -- jingoists or people who want to exploit cheap Mexican labor. There are some Republicans, there's many Democrats who believe in immigration. I think most of us are the descendants of immigrants. Nobody invited my grandparents to come in. They weren't documented by any means.

So I think that the president was right in the first place, regrettably, by coming out for this and then backing away again. He has this kind of end-of-the-year slump where he doesn't seem to have a strong hand. But I really do believe that with a big Hispanic- American group, the rising voter block in America, the Republicans would be well-off to try to find a solution to this problem and not just take the Pat Buchanan...

HUNT: I'm in the unusual posture of agreeing with everything that Robert Novak just said.

I also had breakfast this week with a number of other people with President Fox. He is one extraordinarily charming, captivating politician, as I'm sure you found on Capitol Hill, Byron.

But I'll tell you one problem that he has: It's going to take three or four Vicente Fox's. Reform is not easy after 71 years. And one of the biggest problems they have in that political system in Mexico is something called term limits for both the members of Congress and for the president. It's really a terrible system down there, and they ought to change it.

Next on CAPITAL GANG: Phil Gramm bows out.

(COMMERCIAL BREAK)

HUNT: Welcome back. Republican Senator Phil Gramm of Texas announced that he will not seek a fourth term in the Senate next year.

(BEGIN VIDEO CLIP)

SEN. PHIL GRAMM (R), TEXAS: The budget is balanced. First, working with President Reagan and now with President Bush, we've cut taxes twice. We did reform welfare. Remarkably, the things I came to Washington to do are done.

(END VIDEO CLIP)

HUNT: Kate, did Phil Gramm, over the last quarter of a century, really accomplish everything he set out to do?

O'BEIRNE: Al, Senator Phil Gramm certainly accomplished more of his policy goals than most politicians do, although he had more policy goals than most politicians. I mean, look at the issues that motivated him to come to Washington: energy price controls, the huge deficit; he was a good Cold War warrior; runaway welfare. I mean, enormous progress, in no small part due to Phil Gramm, have been made on those issues. He was really crucial to President Reagan's success in the early '80s.

Now, if he were to stay, he would certainly keep busy, because much remains to be done, but it's a remarkable policy legacy I think, and also a political legacy. When he headed the Senatorial Campaign Committee for the Republicans during those years, the Republicans went from 43 Republican Senators to 53. He's been a very successful senator.

HUNT: Margaret Carlson, not a very warm and cuddly guy, but I agree with Kate: very effective senator. I would say he's Jesse Helms without the racism.

CARLSON: Very effective; and not that many leave with legislation named after them -- the Gramm-Rudman Act.

You're right, he wasn't warm and cuddly; he was an inside player. It didn't translate to a bigger stage, despite the fact that he gave camera hogging a name -- it was called Gramm-standing. But his run for the presidency was one of the weakest ever. He contributed the reason for campaign finance, which he said that money is presidential candidate's best friend. It proved not to be true in his case.

But he was a resilient, energetic guy. I think he leaves a great legacy. I kind of liked him because he didn't have that blown-dried way about him and because he didn't play to the wider audience.

HUNT: Byron, are you going to miss Phil?

DORGAN: Well, actually, I sat next to Phil years ago in the U.S. House Veterans Affairs Committee when he was a Democrat -- 20 years ago. I like Phil. I think of the phrase, "not always right but never in doubt" when I think of Phil. But he's smart, very capable, and he planted himself on the far right. He was an abiding conservative on the far right of his caucus, and you always knew where he was. And he made, you know, he made an assertive case for the things that he cared about, and yeah, I mean, I think the Senate -- it wasn't wild applause and feasting and rejoicing, there isn't one when anyone announces retirement from the Senate. But I liked Phil personally.

HUNT: How about you, Bob?

NOVAK: I first met Phil Gramm over breakfast as a professor at Texas A&M. He was running in the Democratic primary against Lloyd Benson, and I had two things that struck me -- one was how conservative he was, and how smart he was. And that's what he is. He's very smart guy. I think he's one of the smartest guys -- I've been covering the Senate since 1957, and he is one of the smartest guys I have ever met there. And he works very, very hard.

I think -- one thing I also remember is when he changed parties, Byron, he ran -- he resigned from Congress and ran again. Very few can do that.

(CROSSTALK)

HUNT: I'll just tell you one other retirement in the offing is California Congressman Gary Condit. Kate, if that occurs, I think there will be a collective sigh of relief among all of Democrats.

O'BEIRNE: Yeah, couldn't happen soon enough for a lot of his House colleagues.

NOVAK: Gary, Gary, we hardly knew you.

O'BEIRNE: Yeah, right.

(CROSSTALK)

DORGAN: We talked about Phil Gramm being smart. Also relentless. That was another characteristic. He is a smart guys, relentless for the things he cared about.

NOVAK: Almost like a couple of guys from North Dakota I know.

HUNT: We'll be back with a CAPITAL GANG classic, the economy going south, and Bill Clinton's first year as president.

(COMMERCIAL BREAK)

HUNT: Welcome back. At this point in Bill Clinton's first year as president, the government calculated economic growth at 2 percent, down from 3.1 percent in an earlier forecast. This is what your CAPITAL GANG said on September 4, 1993. The guest was Democratic Congressman Lee Hamilton of Indiana.

(BEGIN VIDEOTAPE)

HUNT: Mark, is the economy moving in the right or the wrong way for Bill Clinton?

MARK SHIELDS, HOST: Al, it is not moving as robustly and energetically as some Clinton folks had hoped it would. The recovery has been disappointing in the real sense of American major companies -- GE, Procter & Gamble, companies of that nature laying off 400,000 people. So, there's an anxiety in the country.

HUNT: Bob?

NOVAK: The economy isn't going anywhere. So the economy is in a ditch, and that's political trouble for the president.

REP. LEE HAMILTON (D), INDIANA: Well, the number one question on the minds of the working people today is the job -- is the economy producing good-paying jobs?

HUNT: I mean, I agree with Mark, this is a disappointing recovery. But I mean, if you look at Germany, they are moving in the wrong direction. We're at least moving in the right direction.

SHIELDS: I think Lee Hamilton's point has to be underscored here, and that is there is an ominous lesson from the Bush years, and that is people's perception of the economy is in jobs, and whether the jobs are there. And just anecdotally, I don't know...

HUNT: Good jobs.

SHIELDS: Good jobs. And I don't know anybody who either doesn't have or doesn't know a recent college graduate who has moved back home.

NOVAK: There is a lot of whining going on. There was whining going on in the -- in the Bush administration, there's whining now -- we got -- we're not in a Great Depression. When I grew up, people were really in bad shape, but there is so much hand-wringing and people saying -- worrying about people not having the right kind of jobs. I think Americans are very well-off.

(END VIDEOTAPE)

HUNT: Kate, was your GANG excessively gloomy eight years ago?

O'BEIRNE: Well, I think Bill Clinton and Al Gore during that campaign in '92, it sort of set you all up. They kept carrying on in this outrageous way about the worst economy since the depression, which of course wasn't true. A weak recovery had begun in 1992, during that election year, although not soon enough to help former President Bush.

And you of course didn't realize there was a light at the end of the tunnel. The Republicans would take over Congress in 1994, and the recovery would begin with that.

HUNT: I think, Margaret Carlson, what we really missed back then was we forgot what a tremendous boom that 1993 budget act, including that tax increase, was going to be for the economy to produce the greatest eight years this economy has ever seen. Don't you think that was our miscalculation, Margaret?

CARLSON: I think it was. I loved that tape because Bob was so completely and utterly wrong. We have the evidence. And I love it because he was whining about the whining, and then at the beginning of this show I heard him whining about the economy and the stock market.

HUNT: How much whining, Lord? How much whining?

NOVAK: Well, in the first place, I think I was completely right. I didn't think the economy was in that bad of shape in the Clinton years.

What was interesting is all these people who loved the tax increase, they didn't -- not one mentioned it, did they, Kate? Not one of them mentioned, gee, this tax increase is going to bring us -- because it had nothing do with the record recovery, but the big -- one of the big differences is that you didn't have a stock market crash going on in 1993. So I think we're in a lot worse shape now than we were in '93.

HUNT: We got about 10 seconds, Byron Dorgan, but people bike Phil Gramm and Bob Novak had told us that the tax increase was going to kill the economy. Didn't, did it?

DORGAN: No, it didn't. They predicted it would wreck the economy -- in fact, we had unprecedented economic growth.

HUNT: Byron Dorgan is absolutely right, and on that note I want to thank you for being with us. The GANG will be back with the second half of our show. The "Newsmaker of the Week" is Republican Senator Arlen Specter of Pennsylvania on stem cell research. "Beyond the Beltway" previews next week's primary election for mayor of New York City, and our "Outrages of the Week," all after a check of the hour's top news.

(COMMERCIAL BREAK)

HUNT: Welcome back to the second half of CAPITAL GANG. I'm Al Hunt, with Robert Novak, Kate O'Beirne and up in Boston, Margaret Carlson. Our "Newsmaker of the Week" is Republican Senator Arlen Specter of Pennsylvania who was the lead witness this week at stem cell research hearings in the Senate.

Arlen Specter. Age: 71. Residence: Philadelphia. Religion: Jewish. Yale law school graduate, assistant counsel Warren Commission, Philadelphia district attorney from 1965 to '73, elected to the United States Senate in 1980.

Margaret Carlson sat down with Senator Specter earlier this week.

(BEGIN VIDEOTAPE)

CARLSON: Earlier this summer, President Bush addressed us from the ranch, and it seemed as if he had gotten out of a tight spot by coming up with 64 stem cells lines that most of us didn't know existed. Since then, I think you and some others have found out that that may not be so. What does that mean?

SEN. ARLEN SPECTER (R), PENNSYLVANIA: Margaret, I think the president got bad advice. For example, when they represented, they had 19 stem cell lines out at Gutenberg University in Sweden. It turned out they only had three which were appropriate for research. But even more important than that, they did not make a disclosure about these stem cell lines having mouse feeder cells for nutrients, which is kind of complicated.

CARLSON: It sounds like fuzzy math that was going to defuse Congress getting involved, but I take it that you're not going to stand aside and let that happen.

SPECTER: Well, not at all. My subcommittee had nine hearings. We got into the field immediately after the story broke in November of '98, because it was apparent from the outset that this had miraculous potential for Parkinson's and Alzheimer's and cancer and heart disease, and further that these embryos, where the controversy existed, were going to be thrown away.

Now, Gordon Smith, Senator Smith has really put it very well: There's a big difference between the embryo in the womb of a woman where life may eventually, contrasted with being in a test tube in a laboratory where it's going to be thrown away. So in the Senate, we had I think more than 75 senators who were in favor of stem cell research. Now, with the president's August 9 speech, a lot of people are stopping and looking.

CARLSON: Some of your colleagues are calling it quits. They're dropping like flies up there. What do you make of the exodus from the Senate, of people like Senator Phil Gramm? He's not old. He's in the prime of his life and he's giving it all up.

SPECTER: Well, I think Senator Gramm's departure is a real loss. I think he has a grasp of economics which is second to none, but it's customary -- Phil has served three terms in the United States Senate, and there are a lot of people -- Hank Brown left after one term, people like Adlai Stevenson and Dick Schweiker after two. Some have made it more of a career, like Senator Byrd, certainly Senator Helms.

CARLSON: Certainly Senator Specter.

SPECTER: Well...

CARLSON: You're not going anywhere, are you?

SPECTER: I feel vigorous and got a lot of things, I'm certainly not going anywhere until I work through the stem cell issue and some of the important judiciary committee issues.

CARLSON: The Bush administration says, well, don't worry about these stem cell lines. We are not that far along on Parkinson's. We are not that far long on Alzheimer's research, just hold on. And yet, you know, if we are not that far along, shouldn't we be going even quicker? SPECTER: Well, I reject the theory of we're not that far along. The research ought to be pushed, and I think that the therapy ought to go on a separate track. And when Secretary Thompson testified that when they worked through some of these property questions about patents, that there was an exclusion on therapy -- it's a big, big red flag to me.

I had a whole series of town meetings last month, and this is an issue which has reached the people. I've never seen in my tenure in public service an issue so suddenly, so highly publicized.

(END VIDEOTAPE)

HUNT: Margaret, do you think Senator Specter represents a Republican rebellion in stem cell research?

CARLSON: He could be the Senator Jeffords here. Bush bought himself some time coming up with these 64 stem cell lines. Now, Secretary Tommy Thompson of HHS had to come clean this week, there aren't 64.

So, there's going to be going to be a battle again. There is going to be some congressional action. That has not been forestalled now, probably not until the first of the year, but indeed it's going to come back up and it's going to pit those people who think life starts in a Petri dish against those who think that those embryos to be discarded should be used for this research.

HUNT: Kate, I must say that politics don't look as good for George Bush as they did a month ago.

O'BEIRNE: I think that's probably true. I think there is a majority in both houses, Al, that want to go much further than George Bush is willing to go in embryonic stem cell research, but the principle that he annunciated I thought so well is not dependent upon the number of stem cell lines.

And there's no evidence of bad faith. It's a very complicated issue. They did a survey. It appeared that there was this many, and now appears that there are far fewer. But George Bush's principle will remain the same, and I think he's going to have to make it clear that he's closing the door on going any further, even though there's sentiment on Capitol Hill that wants to.

HUNT: Bob, let me ask you about that principle, because it seems to me if you really want to take a principled position, you should oppose any.

NOVAK: That's right. Which I would have preferred.

HUNT: No, I know you would have, but I mean, isn't George Bush sort of, you know, a quarter pregnant, if you will, on this?

NOVAK: I don't think his position is any different than it was a month ago. I think if you really thought you were going to shut up Arlen Specter or Hillary Clinton or Ted Kennedy, and they were going to say, OK, we will go with these 64 -- no.

The numbers aren't important. The question is there going to be more later on, it's a moving target, but, I mean, out of the 64 that are eligible to be used for research -- but that isn't the point. They were always going say we have to do more.

Now the question is, how much time has he bought? I think he's bought a year. I think it's going to be a year before -- but what after the year is up? What does he do, does he say, OK, we are going to go into more embryos? So I believe that all of this was just a temporary solution by the president, and he might have in the long run be better off to have said no.

O'BEIRNE: Bob, what's often overlooked is we are just talking about federal funding. Embryonic stem cell research can go on, unfortunately in my view. We are just talking about federal funding, and just as the federal government has never funded abortion -- many members don't believe and George Bush agrees that there shouldn't be funding for the destruction of embryos in the name of research.

HUNT: Of course, Tommy Thompson and everybody else says that, basically, without those federal research moneys those laboratories aren't going to do the kind of fundamental research that has to be done.

(CROSSTALK)

CARLSON: Those breakthroughs never come without federal funding.

HUNT: The last word goes to Margaret Carlson in Boston. Next on CAPITAL GANG, "Beyond the Beltway," narrowing the field for mayor of New York.

(COMMERCIAL BREAK)

HUNT: Welcome back. "Beyond the Beltway": After eight years in office as mayor of New York, Rudy Giuliani is ineligible for a third term. The Democratic and Republican nominees will be picked in Tuesday's primary elections. City public advocate Mark Green had been considered far in front for the Democratic nomination until a new poll this week showed him slipping behind Bronx borough president Fernando Ferrer, 28 percent to 26 percent.

In the Republican primary, billionaire publishing mogul Michael Bloomberg has a huge lead. Joining us now from New York City is "New York" magazine columnist Michael Tomasky. Thanks for coming in, Mike. Mike, is the battle to be Giuliani's successor between two liberals?

MICHAEL TOMASKY, "NEW YORK" MAGAZINE: Well, so far, it's certainly true that the two candidates you mentioned, Green and Ferrer, who are likely to finish one and two in the Democratic primary and probably have a runoff thereafter. Under New York law, if no candidate gets 40 percent in the primary, there's a runoff between the top two finishers two weeks after the primary.

Those are likely to be the two candidates, and they're certainly the more liberal candidates of the four major Democratic aspirants, so yeah, that's the case.

HUNT: Mike, if you're Michael Bloomberg, who's about to win the Republican primary, your dream is first that there will be a runoff, but secondly -- who would you rather run against in November, Green or Ferrer?

TOMASKY: I don't think there's much question, they would rather run against Freddy Ferrer. In all the -- excuse me -- in all the public polls and in some private ones I've been told about, Ferrer is the weakest candidate of the four major Democrats against Mike Bloomberg in November.

Ferrer hasn't had very much white support in this primary and isn't expected to get very much. He's running against three white candidates, in fairness to him. On the other hand, I think his campaign has been focused mostly on black and Latino New Yorkers, and the expectation is that he's going to finish Tuesday in single digits among white voters, and that's good news for Bloomberg, because though in a Democratic primary white voters make up about half, or 55 percent of the vote, in a general election in New York, the white vote is going to be two-thirds, or 70 percent.

NOVAK: Mike, a lot of people felt that Rudy Giuliani, though a very controversial figure, was a good mayor, a popular mayor, a lot of people liked what he did for New York. Certainly, the outlook in New York was much more upbeat after his eight years. Is there anyone of these candidates who really could be counted on or even could imply that he would follow the Giuliani course, or is Giuliani a very successful politician without a legacy?

TOMASKY: Oh, I think he has a legacy, and I think you see it in some of the things these candidates say -- Freddy Ferrer excepted. Freddy Ferrer is running very much as the anti-Giuliani candidate.

But even Green, who has a long history as a liberal, and it's a label he wouldn't shy away from by any means, even Green is trying to shore up his moderate credentials, and he has the endorsement of Giuliani's first police commissioner, Bill Bratton. All of the candidates, to different extents, are saying that they would continue the things that Giuliani did particularly well, that is crime fighting first and foremost, and some of these other quality of life things.

Beyond that, there is going to be a break from Giuliani, and you know, I think people are looking for somebody -- I think voters are looking for a candidate who is going to be -- strike that right balance between being enough like Giuliani in the ways that people liked and then being unlike him in the ways that to be a little bit more -- a little bit -- have softer edges and to do a little bit more about some things that Giuliani left undone, like education and housing and so forth.

HUNT: Sounds a little bit like succeeding Bill Clinton -- Kate.

O'BEIRNE: Mike, you've called this Tuesday a fiercely contested primary that no one really cares about. Mike, is that because Giuliani has been so successful in the second toughest job in America that New York voters now think it's safe to have a liberal Democrat, any liberal Democrat run the city?

TOMASKY: Maybe not any liberal Democrat, but I think that -- yeah, I would agree with that to some extent. I think that people, even though they understand that Giuliani is leaving the stage, I think people are pretty sanguine about the condition the city is in and don't fear, by and large, any retro-gression to the dark days of the '70s and the '80s and the crime epidemic and the crack epidemic and so forth.

I think people feel pretty good about the shape the city is in and the city's future. And you know, you can liken this election in some ways to Britain at the end of the second world war. Britain needed Churchill to fight the second world war, but once the war ended, they went with Clement Atley, and I think that New Yorkers feel in some respects kind of the same way about Rudy Giuliani. They feel they needed him to fight the war on crime, and now it's time for somebody else to do a different job.

HUNT: Margaret Carlson.

CARLSON: Is it possible, though, Michael, that by the time of the, say, general election, that New Yorkers might not feel quite so sanguine, given the looming resection? And if the city is not running quite as well, that they think they need somebody more -- who is able to run the city with a steadier hand, not, you know, a liberal, but somebody more in the Giuliani mold?

TOMASKY: Well, that's what Mike Bloomberg hopes, and that's how he's trying to position himself.

You know, people know that Mike Bloomberg is a lifelong Democrat and only became a Republican for convenience's sake, and he won't tell people how he voted in last year's presidential election, last year's Senate election here in New York. He considers that private and won't tell people.

However, he is -- just because he's a self-made billionaire and a successful businessman, he automatically comes with some kind of credential of efficiency and order and take-chargeness, if you will, that lifelong politicians who are Democrats just somehow don't have about them, so Bloomberg, I guess, is hoping for some anxiety, while the Democrats and whoever the Democrat nominee is is hoping for some constancy and normalcy to prevail between now and November.

HUNT: Mike, if the polls are right and we have a Green-Ferrer runoff, tell us what are the dynamics and who would be the favorite?

TOMASKY: Green would be the favorite. By the way, a lot of people who are following this race closely aren't so sure these public polls are right. The campaigns are doing internal polls, and in those Green is ahead of Ferrer. Ferrer has certainly picked up in the last couple of weeks, but Green is in the 35 neighborhood, Ferrer in the 25 neighborhood, so the real number somewhere between the public polls and those numbers.

But Green would be the favorite, because I think that, for one thing, you'll see that in a runoff turnout is traditionally pretty low. Jewish voters are traditionally the highest voting block in a runoff, so Green has a more natural base there among Jewish voters. But it too will be a question of turnout and who gets their people to the polls.

Ferrer has a little bit more union support. It will be interesting to watch where the other candidates go, where the unions and other institutional players that have backed the other candidates go after the primary, and you know, we will just have to see how that shakes out.

Green is not very popular, for example, with the head of the Teachers Union, whose endorsement is very important. She's with Alan Hevesy now. Her name is Randy Weingarten. So it will be particularly interesting to see which direction she goes, if it boils down to Green and Ferrer.

NOVAK: Mike, I understand that Mr. Bloomberg now has spent $60 million of his own money on this undertaking, which even for him is a modest change, and he's going to spend a lot more. Is there any -- you're out there -- is there any feeling of a presence of a Bloomberg candidacy? I mean, is it strictly a high house operation, or has he got some impact from the money he's spent?

TOMASKY: People know his name now. How can you not? I mean, his commercials are on TV, you know, it's virtually every other commercial on some channels. He's spending as much as $250,000 a day against his poor opponent, Herman Badillo, who's spending about $250,000 all told during this primary season.

But there is no sense of -- I don't get anyway -- any sense of excitement about Mike Bloomberg's candidacy right now. I think that he's made a lot of mistakes, he's proved that having experience as a politician might not necessarily be a bad thing, because...

(CROSSTALK)

HUNT: Michael Tomasky, we will see how it all comes out next Tuesday. I want to thank you for coming in and being with us.

TOMASKY: My pleasure.

HUNT: And THE GANG will be back with the "Outrage of the Week."

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HUNT: And now the "Outrage of the Week." Two of the finest Republicans members of Congress are Congressman Tom Davis and Senator Bill Frist, but they are sponsoring wretched legislation that would sabotage the FDA's authority to set standards for tobacco products, gutting Frist's own 1998 proposals.

What makes this sob to Philip Morris and the other merchants of death even more obscene is that Davis and Frist are chairmen of the House and Senate campaign committees. In the last election, big tobacco gave $7 million to the GOP. Smells like a payoff. NOVAK: The U.S. attorney general still denies congressional Republican investigators documents relating to the investigation of the 1996 Clinton-Gore campaign scandals. Wait a minute! Isn't Janet Reno gone and replaced by steadfast conservative John Ashcroft? That's the outrage. Senator Ashcroft is following Janet Reno's footsteps. You can't tell whether he's controlled by Justice Department's bureaucrats or was so intimidated by his brutal confirmation hearings that he is not the same Ashcroft.

He won't say, because he's under deep cover. Janet Reno never answered questions, John Ashcroft never even takes them.

HUNT: Margaret.

CARLSON: Al, the National Organization for Women is coming to the defense of Andrea Yates, who is in prison awaiting trial for murdering her five children. NOW blames her, quote, "ordeal" on prosecutors' callous refusal to recognize that post-partum blues is to blame.

How about blaming her for her ordeal? NOW says Yates needs treatment, not punishment. How about giving her both? NOW used to worry about equal pay, child care. Aren't there better things for NOW to spend its members' dues on than defending Andrea Yates?

HUNT: Good point. Kate.

O'BEIRNE: The U.N. World Conference Against Racism has been so anti-Semitic and anti-American that the U.S. delegation, representing the most tolerant multi-racial and multi-ethnic society in the world, walked out. Our delegation should have stayed a bit longer, long enough to tell the conferees that our racial track record is far better than the countries who outrageously lecture us, and until those countries join together to abolish modern-day slavery in Africa, we don't much care what they think.

HUNT: This is Al Hunt, saying good night for the CAPITAL GANG and wishing all the happiness to today's new bride Amy Shields. "CNN TONIGHT" is next.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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