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President Bush Touts His Education Plan While Congress Worries About the Economy

Aired September 10, 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.

In the presidential election standoff, did the U.S. Supreme Court come close to ruling another way?

JOHN KING, CNN CORRESPONDENT: I'm John King at the White House. The Bush administration is watching the economy, feeling some pressure and weighing its options.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: I'm Bill Schneider in Washington. I'll tell you why politicians are having such a hard time thinking outside the lockbox.

WOODRUFF: Also ahead: a prostitution scandal looms over a mayor's reelection bid.

ANNOUNCER: Now Judy Woodruff takes you INSIDE POLITICS.

WOODRUFF: Thank you for joining us. Well, President Bush is in Florida today, where he has wrapped up a campaign-style event at an elementary school designed to promote his education agenda. But the economy still is the topic of political debate back here in Washington.

Our senior White House correspondent John King has more on the economy and Mr. Bush's options -- John?

KING: Well, Judy, as the president presses for more money for education, more money for defense, just about anything that has anything to do with the budget. Of course, the state of the U.S. economy comes up. The White House press secretary, Ari Fleischer, just a short time ago insisting to reporters Mr. Bush is confident that his -- quote -- "economic recovery plan," meaning his tax cut earlier this year, is enough to get the economy going.

But, many Republicans up for election next year are a little nervous, so the official line at the White House is, the president is open-minded.

(BEGIN VIDEOTAPE)

KING (voice-over): The president's strategy for now is to watch and listen.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Going to Florida today.

KING: Mr. Bush had hoped the economy would get a jolt from his big tax cut and the Federal Reserve's interest rate cuts. But many nervous Republicans in Congress say it is time to do more.

SEN. TRENT LOTT (R-MS), MINORITY LEADER: He'll have to look at these other options and I think it's important that he hear from others, of what we recommend in the process.

KING: One idea gaining steam is a temporary cut in Social Security payroll taxes. That would put more money in workers' pockets immediately, but also mean less money in the Social Security trust fund down the road.

UNIDENTIFIED MALE: It would undermine one of the long-run objectives of policy right now, which is to strengthen the Social Security system so that it can pay benefits to the baby boomers when they retire.

KING: Cutting capital gains taxes is another idea.

LOTT: It will clearly cause a growth in the economy, it always does. And as an aside, it brings in more revenue to the government.

KING: But Democrats say cutting capital gains taxes would, for the most part, benefit businesses and wealthy investors, and would love the chance to argue that the president's first instinct in a tough economy was to help the rich.

SEN. HARRY REID (D-NV), MAJORITY WHIP: We want there to be a formula to get us out of this mess. Any one thing is not going to do it. It's not, you know, we can cut spending, that's not going to do it. We can lower taxes, that's not going to do it.

KING: One urgent Bush priority is keeping a promise not to tap the Social Security trust fund to pay the government's bills.

(END VIDEOTAPE)

But now spending cuts will likely be necessary to keep that from happening in the current fiscal year, which ends on September 30th. The administration already in negotiations with key members of Congress. Also on the table: negotiating the language of a budget rule that would automatically kick in and force spending cuts next year, once again, if necessary to keep that Social Security money off limits -- Judy.

WOODRUFF: All right, John King, we want to you stand by at the White House and we're going to turn now to Jon Karl, who is at the Capitol, and ask him about some of the things you just raised.

Jon Karl, what about this item that we just heard from your colleague at the White House, this budget rule that would, in effect, bring on across-the-board spending cuts?

JONATHAN KARL, CNN CORRESPONDENT: Well, in fact, tomorrow the House Budget Committee will work on just the kind of rule that John King is talking about. It's called the Social Security Preservation Act. It's meant to be drawn up by the House Republicans on the budget committee tomorrow. And the details are still to be worked out. It's not clear if it's going to be a complete across-the-board cut in spending. But the idea is that if Congress -- if it looks like the government will dip into the Social Security surplus this year, it would automatically trigger spending cuts next year to cover that, so to put it right back into the Social Security surplus.

Now, there's also an idea on the Senate side, very similar, for future years, that would be worked out. That's being worked out by George Voinovich, Republican of Ohio, and also by Zell Miller, who, if you remember, of course, was the chief Democratic sponsor of the tax cut. Now, the idea here is to get this passed so Republicans can say that they are not going to allow the Social Security surplus to be tapped, even cutting into popular programs, if that be necessary. Democrats are already prepared to attack any kind of across-the-board cut in spending as something that cuts crucial priorities of the president, like education, like defense. And in fact, it's considered far from likely that something like this would pass in the Senate. It would have a challenge in the House, but seemed almost impossible to pass in the Senate.

Republicans know that and actually don't mind that, because what they can do is they can come out and say hey, we tried not to tap the Social Security surplus. We tried to push for spending cuts, but those Democrats in the Senate wouldn't let us.

WOODRUFF: John King, back to you at the White House. What are the people around the president saying? Do they think it makes sense for him to embrace any one of these spending cut proposals?

KING: Not just yet. They are in negotiations about the short term. The president and key Republicans don't want to touch the Social Security surplus, so the administration open to that idea. Although the public line here is they're still not sure it's necessary to tap in. We know the president's own advisers have told members of Congress they'll probably dip into the Social Security surplus, or at least have to make adjustments to prevent that.

But publicly, the posture here right now is the president in no way wants to seem apathetic when it comes to the economy. He wants to seem interested and engaged in a discussion about possible solutions. But all this will be done in the context of budget negotiations and appropriations negotiations. It could take several weeks, if not longer, so the president does not want to close himself in, block off options by making selections now, endorsing specific proposals now. They'll wait down the road a bit to do that.

WOODRUFF: All right, John King at the White House, Jonathan Karl at the Capitol. Thank you both.

Joining us now, the president's secretary of the Commerce Department. He is Don Evans and he is with us here at the Capitol. And I just want to say as I introduce you, in a moment we'll be hearing from Gene Sperling, who was Former President Clinton's economic adviser.

But to you first, Mr. Secretary. Is the president at all feeling blindsided by all the bad news we're hearing about the economy right now?

DON EVANS, COMMERCE SECRETARY: Judy, not at all. We actually started talking about this issue well over a year ago. As we were going through the campaign, we started talking about the slowdown in the economy, which really started some 12 or 14 months ago. And when the president entered into office, he inherited an economy that was already slowing down, and took immediate action -- showed leadership, first, by pushing a tax cut, second, by putting together a comprehensive national energy plan, talking about fiscal responsibility, making sure we spend within our means.

And of course, on the monetary side, we have seen interest rates come down some 300 basis points or so. So, no, not blindsided. The unemployment numbers, which were disappointing, were really a confirmation of a slowdown that we've been seeing for quite some time.

WOODRUFF: Mr. Secretary, if you have expected all of this, then why the flurry of efforts right now to look for something to stimulate the economy, whether it's with more tax cuts or spending cuts, or spending increases for that matter?

EVANS: Well, listen, Judy, as somebody that was in the private sector for some 26 years and having gone through a number of economic downturns myself, and understanding the pain in the private sector today, you know, you're always wanting to be watching the economy and watching out for signals that may tell you that, listen, we need to look here, are there other options that we want to pursue?

But I wouldn't call it necessarily a flurry of activity. I would call it just a continuing to lead on this issue and talk to the American people about it, how important an economic recovery plan is, telling the American people I have one in place, my tax cuts are beginning to take hold. Interest rates have come down. And we'll continue to watch the numbers and see if there's something else that maybe needs to be done.

WOODRUFF: Well, let me ask about some of these remedies that are being thrown about right now. Across-the-board spending cuts, whether it's a Republican or a Democratic plan, are any of these being looked at seriously at the White House?

EVANS: Judy, you don't take any options off of the table when you go through a period like this. You look at all the options, you continue to watch the numbers. You know, one of the things that I think would be most helpful for this economy right now is for this Congress to pass trade promotion authority, which is fast-track authority. We need to send these financial markets and capital markets and the American business community the signal that America is going to lead on trade. As I talked to business leaders across America, what they say to me is: "I want my market to be opened up." Ninety-five percent of the people have...

WOODRUFF: That's not going to have an immediate stimulus on the economy, is it?

EVANS: I think it will, Judy, for this reason. Because it starts to send the market a level of certainty that we're going to lead on this issue. The markets get confidence that we're going to lead on this issue, and so do CEOs and so do businesses. So they begin to invest to get position for trade opening up around the world.

WOODRUFF: Let me ask you about a couple of other proposals just out there today and over the weekend. A cut in the payroll tax, both Republicans and Democrats talking about that.

EVANS: Well, again, Judy, I don't think you rule it anything out. I don't think -- I think you look at all the options. The president's surrounded by a very strong team of economic advisers. They'll continue to talk to him about the economy. He'll continue to listen to them. We will continue to watch the economic indicators. We have some more important ones coming out this Friday that we'll watch, and so it will be an ongoing consultation and ongoing discussion.

WOODRUFF: What about a capital gains tax rate cut? Senator Lott just said over the weekend it's not a matter of if, but when the president is going to go along with this.

EVANS: Well, I don't know about that. Again, we're focused on the consumer has been driving this economy, and that has been good and people are concerned about capital investment by the business community. And that's why I think opening up trade is so important.

But in terms, will there be a capital gains cut? I am not sure. It's just another one of those options that ought to be considered.

WOODRUFF: Well, when you're ready to tell us what the options are, we'll be glad to have you here to talk about it.

EVANS: Thank you, Judy.

WOODRUFF: Secretary Don Evans, thank you very much. Good to see you.

EVANS: Thank you. Nice to see you, too, Judy.

WOODRUFF: We appreciate it.

EVANS: You bet.

WOODRUFF: And now a little history behind the current budget constraints and that boxed-in feeling that some politicians may be experiencing. Here is our senior political analyst Bill Schneider -- Bill?

SCHNEIDER: One word: lockbox. Now where did it come from? It all started back in January, 1998 when, to everyone's amazement, the deficit turned into a surplus.

(BEGIN VIDEOTAPE)

WILLIAM J. CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I will submit to Congress for 1999 the first...

SCHNEIDER: January 27th, 1998, the whole world was watching to see what President Clinton would say about the Monica Lewinsky story, which had just broken. But the president never mentioned the scandal. Instead, he diverted attention to a much bigger issue.

CLINTON: What should we do with this projected surplus? I have a simple, four-word answer: save Social Security first.

(APPLAUSE)

SCHNEIDER: Fast-forward to September 1999. Republican leaders of Congress were worried about President Clinton's big spending plans. So they took the president's Social Security pledge and went him one better.

REP. RICHARD ARMEY (R-TX), MAJORITY LEADER: And the only way to stop President Clinton from spending the Social Security surplus is to take his credit card and lock it away in our lockbox.

SCHNEIDER: They invented the lockbox. The 2000 campaign, George W. Bush took the pledge.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We're going to set aside all the payroll taxes and dedicate it to only one thing, and that's Social Security.

SCHNEIDER: Al Gore upped the ante by bringing back the lockbox.

AL GORE, FORMER VICE PRESIDENT OF THE UNITED STATES: I'll put Social Security in a lockbox and I'll veto anything that takes the money out of Social Security for anything other than Social Security.

(APPLAUSE)

SCHNEIDER: The image stuck.

(BEGIN VIDEO CLIP, "SATURDAY NIGHT LIVE")

(LAUGHTER)

UNIDENTIFIED ACTOR: Vice President Gore?

UNIDENTIFIED ACTOR, PORTRAYING AL GORE: Lockbox.

(LAUGHTER)

(END VIDEO CLIP)

SCHNEIDER: Now the surplus is gone, except for the money in the lockbox. Both sides need that money. Democrats want more spending to revive the economy. They can't. Lockbox.

Republicans want more tax cuts to revive the economy. They can't, Lockbox. By nearly three to one, the public rejects spending even a small portion of the Social Security surplus to fund programs like education and defense. Recession or no recession, voters say, keep your filthy rotten hands off the lockbox.

(END VIDEOTAPE)

SCHNEIDER: Now there really is no lockbox, not a real one, of course, never was. It's a convenient image that both parties used to advance their agenda. Only now it controls their agenda. Both parties have locked themselves in the lockbox -- Judy?

WOODRUFF: All right. I'm trying to get ahold of that image. Bill Schneider, thanks very much.

(LAUGHTER)

WOODRUFF: Well, for another view of the economy and budget politics, we're now joined by, as I promised, a former economic adviser in the Clinton White House, Gene Sperling. Thanks for being with us.

GENE SPERLING, FORMER WHITE HOUSE ECONOMIC ADVISER: Thanks, Judy.

WOODRUFF: We just heard Commerce Secretary Don Evans say there's nothing surprising really to them about this economy. They knew a year ago that they were heading into a downturn and they expected what's going on.

SPERLING: Well, what's -- what they have to answer, then, is, if they knew that there was going to be a weaker period, why did they have a tax cut that was based on such optimism? And what they've really done, Judy, is they've taken away a lot of the fiscal cushion. They're taken away that large amount of surplus reserved for debt reduction, Medicare and Social Security. And that's not only bad for our long-term fiscal discipline, but it's also making it more difficult to respond in a stimulative way to the weaker economy.

WOODRUFF: But they're arguing that that very tax cut is what's stimulating the economy. That as people get those checks in the mail from the U.S. Treasury, they're going to go out and spend them and that's going to help the economy.

SPERLING: Well, what we need to separate is the short term versus the long term on fiscal policy. In the short term, we actually could have done more on stimulus and still protected Social Security surplus. Remember what this administration did. Because their budget was too big in their first year, they shifted $33 billion out. That was 33 billion that could have been used for stimulating the economy without going into the Social Security surplus. So, really, their focus has been much more on a long-term tax cut.

Had they given a smaller tax cut that was geared more to working people, more to people likely to spend the money, they could have gotten more stimulus without putting our long-term Social Security surplus in such doubt.

WOODRUFF: Gene Sperling, you've got Democrats now on Capitol Hill, like Senator Conrad, chairman of the Senate Budget Committee, saying that we need not only that the president's tax cut -- well, he's basically saying we need more tax cut, that we could use a larger personal income tax rate cut, which seems to me to contradict the argument that you're making.

STERLING: No, I think what Senator Conrad and Senator Daschle said all along, was they said at the beginning of this year, we should have a tax cut that's smaller in the long term so it keeps interest rates low, protects our fiscal discipline. But then let's do one that's more front-loaded, but more targeted to working people.

See, when money goes to people of more moderate incomes, they're more likely to spend it and stimulate the economy. So much of this tax cut goes to upper-income Americans who are not likely, probably, to go stimulate the economy. So the result is, we're close to draining Social Security surplus when we could have done more for working people to stimulate the economy and still had greater fiscal discipline, long-run.

WOODRUFF: Another proposal out there, to cut the payroll tax. Is this a solution the administration should be looking at?

SPERLING: Well, if you'd like my opinion, what I think the administration ought to do, is I think that they should look out at 2005 and 2006, where a lot of their tax cut for the most well-off kicks in. If they were to repeal some of that, just moderate the tax cut for the most well-off, they would save hundreds of billions of dollars.

WOODRUFF: But how did does that affect right now?

SPERLING: Here's how it affects it, because then President Bush could say, I am protecting the Social Security surplus more in the out years by moderating my tax cut for well-off Americans. That would probably allow more Democrats to say, well, if we're going to save an extra $100 billion of the surplus for Social Security in the later years, maybe then we could transfer some of that money to stimulate the economy now, giving it to working families.

Because see, what we really need is, we -- I think that what we really need and what Democrats are trying to say is more long-term fiscal discipline that protects the Social Security lockbox, Social Security trust fund over the long run. And if we did that well enough, then we could have more flexibility to talk about stimulating the economy without raising long-term interest rates or risking our long-term fiscal discipline path.

WOODRUFF: All right. Gene Sperling, economic adviser to President Clinton, now with the Brookings Institution. Good to see you.

SPERLING: Thanks, Judy. It's good to be here.

WOODRUFF: Thank you, we appreciate it.

Stay with us. This is INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: Today's trip to Florida is the fourth time President Bush has visited the Sunshine State since taking office. Mr. Bush appeared at an education event alongside his brother, Governor Jeb Bush. Florida's pivotal role in the presidential election always seems to add an extra dimension to the president's Florida trips.

"Newsweek" magazine reporter David Kaplan has written a new book, "The Accidental President," about the election and the Supreme Court decision that finally brought it to a close. David Kaplan joins us from New York.

And, David Kaplan, what I think is most interesting as a reporting you did on the Supreme Court itself, the justices and the discussions among themselves. Boil it down for us, to what happened in the final day before the five-to-four decision came down.

DAVID KAPLAN, "NEWSWEEK": Well, the court had already figured out the Saturday before, when they stopped the Florida recount, that they were split, five-four. They stopped the recount and the only question was whether anybody was going to change their minds. They didn't. But Justice Souter, meeting with a group of prep school students several weeks after the decision came out, explained to them in this private gathering that he thought that if he just one more day, he might have been able to flip Justice Anthony Kennedy. And the five-to-four ruling for Bush would have become a five-to-four ruling for Gore.

WOODRUFF: Now, why was he so confident? Did your reporting answer that?

KAPLAN: Well, you know, not -- not wholly satisfactorily. I don't have evidence that Justice Kennedy actually was about to flip. I have Justice Souter's state of mind that he thought he could get Justice Kennedy to go. And of course, Justice Kennedy -- it's not an unreasonable proposition on Justice Souter's part. Justice Kennedy, though a member of the court's conservative bloc, for 14 years has been in the middle of the court. He's not really on the hard right of the court with Chief Justice Rehnquist, Anthony Scalia and Clarence Thomas.

And he's kind of known inside the building as Flipper. Law clerks like to call him Flipper, for someone who changes sides, the great equivocator. And in one of the landmark abortion decisions early in the '90s that didn't overturn Roe v. Wade, he changed sides. So not unreasonable for Souter to think that Kennedy was the guy to go to.

WOODRUFF: So, very strong feelings on side of the four-justice minority that lost out. Those who voted in the other direction. David Kaplan, let me ask about the comment. You quote Justice Stephen Breyer, who was in the minority, as at one point telling a group of visiting Russian justices, quoting this decision, saying, "It was the most outrageous, indefensible thing the court had ever done" -- again, these are your words, "the court had ever done." Telling them -- quote -- "We all agree to disagree, but this is different."

Just how upset were he and the other justices in the minority?

KAPLAN: Well, Breyer clearly was. I think Ruth Ginsburg was more baffled than angry. Justice Stevens just expressed being tired. He's the oldest member of the court, at 80. I think it was Breyer whose anger, frustration really came through. And what I guess struck me is the contrast between these comments and a lot of the public statements that they've made at Bar conventions, speeches and whatnot, trying to put this behind them and saying there wasn't all that much division within the court.

Now, these comments don't show, or even allege, that any of the conservatives had partisan agendas, or that they were actively doing the bidding of George Bush. But it does show that within a few weeks after the decision, the divisions inside were bitter, and boiled over when provoked by this rather sarcastic question in private by one of the Russian justices, saying, "So, explain to me, how does it work in your country?"

WOODRUFF: And finally, let me ask about the -- another very interesting quote you have in your book, where you're quoting Justice Kennedy explaining what he did, and saying, I guess feeling the need to explain it and saying, "sometimes you just have to be responsible and step up to the plate." What was he representing there?

KAPLAN: That was vintage -- that was vintage Tony Kennedy. More than all the chatter about equal protection, another doctrine that the court cited in its opinion, this was Justice Kennedy doing as he's done in the past, and saying, you know, this court is important. He was kind of thumping his chest and saying we've got to step in and prevent chaos. And that's what he -- that's what we saw going on with these recounts in his mind on television. And he wasn't content to say, as he might have said, as the dissenters wanted him to say, if you have a problem with what's going on in Florida, the Florida Supreme Court ruling, just go across the street to Congress, which is the branch of government the Constitution set up to resolve disputed presidential elections. Steve -- that isn't Tony Kennedy's style.

WOODRUFF: All right.

(CROSSTALK)

WOODRUFF: David Kaplan, I was just going to -- go ahead, finish your thought.

KAPLAN: I was going to say, it's all -- it's another reason that I was struck, that Souter would go after Kennedy. On the one hand, Kennedy may be an equivocator. On the other hand, he's not one to defer to the other branches. WOODRUFF: All right, David Kaplan, we're going to leave it there. David Kaplan with "Newsweek" magazine, the author of the book, "The Accidental Presidential." Looking at the -- in particular, at the role the Supreme Court justices played. Thanks very much.

KAPLAN: Thank you, Judy.

WOODRUFF: The last-minute ad blitz is under way in several political primaries. We'll check in with the latest in the television ad wars just ahead.

But up next: Another major corporation announces a round of layoffs. That story and some of this day's other top headlines in our news update.

(COMMERCIAL BREAK)

WOODRUFF: And I have a little bit of news. And that is there apparently will be another Dole on the campaign trail next year. Two sources telling CNN's Jonathan Karl that Elizabeth Dole, former presidential candidate, former Secretary of Labor, will file papers tomorrow, Tuesday, on her intention to run for the U.S. Senate seat from the state of North Carolina.

That, of course, the Republicans' seat being vacated by Jesse Helms who just announced a couple of weeks his intention to step down, after decades in the United States Senate. CNN, of course, will be following that story tomorrow very closely.

Odd alliances and the political ad wars. We'll look at the latest commercials and the cash being spent on them. Also ahead.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Is he covering up to protect his buddies in town? I don't know.

(END VIDEO CLIP)

WOODRUFF: In Maryland, a mayor faces re-election and questions about a client list for an alleged prostitution ring.

(COMMERCIAL BREAK)

WOODRUFF: Repeating a story we told you just a few moments ago, CNN's Jonathan Karl learning Elizabeth Dole has decided tomorrow to announce that she's filing the papers to run for the U.S. Senate seat in the state of North Carolina. running for the seat held -- being held now by Jesse Helms, who just a week or so ago, announced his retirement.

We're told the announcement will come from her hometown of Salisbury, North Carolina tomorrow at 1:00. CNN will carry that live. And again, this news coming from CNN's Jonathan Karl, who's coming over right now. We can try to get him on the air right now. If we can put a microphone on you, John, that's a good bit of reporting. You've been talking -- I know that you've been working on this story for some days. What are the people around Mrs. dole saying?

KARL: Well, what hear is that Mrs. Dole has informed the Chairman of the North Carolina Republican Party that is, in fact, going to file her papers tomorrow, officially becoming a candidate for the U.S. Senate. She has promised the chairman that she is going to campaign in all 100 of North Carolina counties. And she is now going to make it official tomorrow, that she's a candidate for the U.S. Senate.

WOODRUFF: Do we have any idea, Jonathan, why she agonized over this for so long? We had reports last week that some senators were going to her and saying, "Make up your mind here?"

KARL: Well, I think from the Elizabeth Dole camp they might say, well, this was actually a pretty quick decision, given that it was a couple of weeks ago that Jesse Helms announced he wasn't going to run again. It was just a couple of weeks ago that we really first saw Elizabeth Dole's name floated as a possible candidate.

So while many were expecting her to jump ahead, you know earlier, she'd probably say this is a pretty quick decision. Now it is a potentially crowded field down there in North Carolina, obviously.

We already heard from Richard Vinroot, who has twice run for governor and is the Republican nominee in North Carolina. He is officially a candidate. We're waiting to hear from Congressman Richard Burr, another possible candidate. So that's why people have been saying Elizabeth Dole get in this quick, because you're going to have a crowded primary if you don't.

WOODRUFF: Former U.S. Senator Lauch Faircloth saying he will not to be a Republican candidate. And there a few names out there on the Democratic side, the state Secretary of State. I think that it's Elaine Marshall.

KARL: Elaine Marshall, yes.

WOODRUFF: Yes, and perhaps Dan Blue, the former speaker of the state house, now a state legislator.

KARL: Yes, Dan Blue has made it -- has also said that he is going to run. So it is on the Democratic side, they think they've got an opportunity here.

Republicans in Washington, of course, as they have been telling you, believe that Elizabeth Dole is their, you know, slam-dunk candidate. But the question is, can they clear the Republican primary field for her? They were most worried about Senator Faircloth. So they saw that as good news that he's not running. But Vinroot's been out there. He announced immediately, I mean just within days of Jesse Helm's announcement, that he would run. WOODRUFF: All right, Jonathan Karl, great reporting. Thanks very much. We appreciate your running over here to get this on the air. Thanks very much.

Well, voters head to the polls tomorrow for primary elections in several states across the country. And with Congress also back at work here in Washington, we're seeing a flurry of new political advertising.

CNN's Jeanne Meserve now with more on the candidates and the issues filling the airwaves.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP, UNITED SENIORS ASSOCIATION AD)

ANNOUNCER: Last year, Congressman Chris Smith voted on keep the promise.

(END VIDEO CLIP)

JEANNE MESERVE, CNN CORRESPONDENT (voice-over): First on the scene is the United Seniors Association. pushing a version of Medicare reforms sponsored by the president.

(BEGIN VIDEO CLIP, UNITED SENIORS ASSOCIATION AD)

ANNOUNCER: ... strengthen and improve Medicare and add affordable prescription drug coverage for seniors.

(END VIDEO CLIP)

MESERVE: The ads target select members of Congress in their home districts.

DAVID PEELER, CNN CONSULTANT: This a pro-prescription drugs benefits group. And the tactic that they've taken is that it's back to work, back to school, and back to issue advocacy ads.

This group has spent half a million dollars in 10 congressional districts over the past week. And what they're trying to do is to influence those Congress people that were either not with them or that were with them, previously and trying to maintain some support.

The group, I'm sure, feels this is important because they're going to go into this next legislative session with a dwindling budget surplus. They're going to be competing against the education issues. They're going to be competing against the military spending issues. And they want to make sure that their issue is forefront in the minds of the Congressmen as they go back.

MESERVE: Primary voters in Massachusetts head to the polls Tuesday. The election is being held to replace the late Democratic Congressman Joe Moakley. State Senator Cheryl Jacques is on the offensive, accusing fellow Senator Stephen Lynch of going soft on the gun issue. (BEGIN VIDEO CLIP, JACQUES CAMPAIGN AD)

ANNOUNCER: ... receiving top ratings from the NRA.

CHERYL JACQUES (D), MASSACHUSETTS STATE SENATOR: The NRA already has too many friends in Washington. I'll put your safety first.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, LYNCH CAMPAIGN AD)

STEPHEN LYNCH (D), MASSACHUSETTS STATE SENATOR: Well, five years ago, my cousin Brian was shot nine times just down the street from my family's home. He died. The idea that I don't support getting guns off the street couldn't be more wrong.

(END VIDEO CLIP)

PEELER: This is an interesting Democratic campaign, and I'll tell you why. Principally, Stephen Lynch has spent the most money in the race so far, but his opponent, Cheryl Jacques, has spent a small amount of money, but she's taken it against an issue that you would not expect to see in the Democratic primary. It's all about gun control.

She has tagged Lynch with almost a pro-NRA slant. And so he has had to come on air and counter that. That's not something that you expect to see in a Democratic primary of this nature.

MESERVE: The New York mayoral primary is also this Tuesday. In one new ad, Democrat Alan Hevesi focuses on his party's favorite target, Rudy Giuliani, though Giuliani isn't even running.

(BEGIN VIDEO CLIP, HEVESI CAMPAIGN AD)

ANNOUNCER: Rudy always attacks people who stand up to him, but Democrat Alan Hevesi has the guts and independence to do what's right.

(END VIDEO CLIP)

MESERVE: Billionaire Republican Michael Bloomberg is still spending big money and bringing in a big name to promote his campaign.

(BEGIN VIDEO CLIP, BLOOMBERG CAMPAIGN AD)

SEN. JOHN MCCAIN (R), ARIZONA: I've known Mike Bloomberg for years. He doesn't know the special interest thing.

(END VIDEO CLIP)

PEELER: In the spending race, it's Michael Bloomberg. He's way out in front. He spent $12 million of his own funds. Second on the Democratic side, you see Alan Hevesi spending $3 million, weighing in against Mark Green and Fernando Ferrer, $1.5 million.

And here are the tactics behind it. Right now on the Democratic side of the equation, this may end up to be a Democratic run off. And it's between Hevesi. Ferrer and Green. This is not a good scenario for the Democrats. If they have to spend more money against each other before they have to face Bloomberg.

In the category of the Republican primary, we've got some interesting twists here. You saw John McCain, whose traditionally been the poster boy for the campaign finance, out there, supporting the poster boy for the self-financed billionaire candidate.

So you know, in the category of politics make strange bedfellows. Go figure.

Jeanne Meserve, CNN, reporting.

(END VIDEOTAPE)

WOODRUFF: So voters going to the polls and those races and many more tomorrow. CNN will be watching those races and of course, bringing you the results tomorrow night and on Wednesday as soon as we have them.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

WOODRUFF: Just north of us here in Washington, outside the Beltway, the small town of Frederick, Maryland is holding a mayoral primary tomorrow. The incumbent is seeking a third term, but he almost decided not run again because of a prostitution scandal that has shaken city government.

CNN's Patty Davis has more on the election, the scandal, and a list of mystery names.

(BEGIN VIDEOTAPE)

PATTY DAVIS, CNN CORRESPONDENT (voice-over): Historic Frederick, Maryland, fast becoming a thriving new bedroom community for Washington, D.C., in political turmoil over the world's oldest profession. Two years ago, police raid an escort service ran by this woman.

ANGELA POTTER, ESCORT SERVICE OWNER: The police came in, storming through this door, grabbed all of our computers.

DAVIS: Computers which held a list of clients, the services so- called "black book."

Steve Miller is a reporter for "The Frederick News Post."

STEVE MILLER, "THE FREDERICK NEWS POST": The allegations were made that elected officials were named as clients of the prostitution ring.

POTTER: Yes, there are guys who are going to be very, very nervous right now. DAVIS: Miller presses police to release the list. Enter Frederick's Republican Mayor Jim Grimes. Instead of making the book public, the mayor orders Potter's book returned to her. By then, Potter had plead guilty to operating a call-girl service. Smelling cover-up, "The Frederick News Post" sues Grimes under the state's Public Information Act."

MILLER: Is he covering up to protect his buddies in town? I don't know.

DAVIS: Grimes, who's running for re-election, says his name is not in the book and flatly denies he is covering up anything.

MAYOR JIM GRIMES (R), FREDERICK, MARYLAND: Absolutely not.

DAVIS: He says he's just trying to protect the city from lawsuits.

GRIMES: I acted on the advice of counsel, who knew more about the liability side of that than I do.

DAVIS: That's not good enough for Democrat Jennifer Dougherty, who's running against Grimes. She says it looks suspicious to her.

JENNIFER DOUGHERTY (D), FREDERICK, MARYLAND MAYORAL CANDIDATE: If he has seen the content, he should be willing to say it's clear. None of the people in my administration are involved in any way.

DAVIS: Grimes says he's never seen the black book list of names.

GRIMES: I never had them. Never for one second of my life have I ever had control of them. I never saw them.

DAVIS: In fact, Grimes says, he's the one who asked police to investigate the escort service in the first place.

The town still doesn't know who's in the black book and who's not, but the alleged madame says one elected official, Frederick alderman Blayne Young, was a client.

BLAYNE YOUNG (R), FREDERICK ALDERMAN: I'm not denying it, but I'm just saying that the services that -- if I have used are of a legal nature, it's my personal business.

DAVIS: With the mayoral election around the corner, opponents are seizing on the scandal.

DOUGHERTY: The city's reputation is being damaged by this. And I find that insulting and so do a lot of other residents.

DAVIS (on camera): The case of the black book is now in the hands of a circuit court judge. The mayor says if the judge orders its release, he'd support it.

(voice-over): Frederick is known as the home of Francis Scott Key and Barbara Fritchie. Whatever the outcome of the election, this quiet city isn't anxious to be known now as the home of Angelica Potter's black book.

Patty Davis, CNN, Frederick, Maryland.

(END VIDEOTAPE)

WOODRUFF: From the politics of today, hearkening back to the Kennedy era. and JFK's call to public service. Up next, a multimillionaire tries to spread that message to today's young people.

(COMMERCIAL BREAK)

WOODRUFF: Beyond the headlines about the economy, the budget, and legislative battles, there is another growing concern here in Washington about a brain drain. A new organization is being launched this week to encourage the best and brightest to consider working for government.

CNN's Brooks Jackson talked to a businessman that has taken the issue to heart.

(BEGIN VIDEOTAPE)

BROOKS JACKSON, CNN CORRESPONDENT (voice-over): How do you get to be a multimillionaire corporate raider? This one started here, 28 years ago, handling civil appeals for the U.S. Justice Department. And now, Sam Heyman is giving $25 million of his own money to attract today's young people to public service.

(on camera): Why are you doing that?

SAM HEYMAN, PUBLIC SERVICE ADVOCATE: Well, Brooks, I feel that the single-most critical national issue in America today relates to the state of our government's service, and the inability of government to attract and retain in sufficient numbers our brightest and best.

More than 50 percent of the entire federal government work force will be eligible for retirement by the year 2004. And more than 70 percent of our senior government officials will qualify for retirement at that time as well.

JACKSON (voice-over): Heyman says the brain drain threatens the quality of government, from collecting taxes to controlling airliners.

HEYMAN: This is a tremendous challenge that in corporate America, you would never let happen in running a corporation. You're always grooming young people to take more senior roles in your company.

JACKSON: But Heyman and others say too few young people seem interested in government careers today. It wasn't always like that.

HEYMAN: When I graduated law school, I remember 30 percent -- this was in 1963 -- I remember 30 percent of my class went to Washington or state and local governments.

JACKSON: Among those, Harvard Law School classmate Janet Reno. It was a different time.

(BEGIN VIDEO CLIP)

JOHN F. KENNEDY, PRESIDENT OF THE UNITED STATES: Ask what you can do for your country.

(APPLAUSE)

(END VIDEO CLIP)

HEYMAN: Of course, those were the days of the Kennedy administration, what we called at the time the new frontier. President Kennedy's election had created a sense of enormous excitement.

JACKSON (on camera): What changed?

HEYMAN: It's a number of things, obviously. It's the Vietnam War, the scandals that we read about in the newspapers, the political scandals.

UNIDENTIFIED FEMALE: Thank you for calling the Partnership for Public Service.

JACKSON (voice-over): Now Heyman's $25 million is funding a new organization, the Partnership for Public Service, officially launching this week, promoting the advantages of working for government.

HEYMAN: When I came here in 1963 as a young lawyer out of law school, I was interested not only in government service, but getting experience in the courtroom. Within a couple of months, I was in a courtroom, arguing cases.

JACKSON: But Heyman knows from the experience of his own four children, government careers today are a tough sell.

HEYMAN: All of my children went to Washington for summers during their college years either as interns in congressional offices, pages and what have you. And although they all had wonderful experiences, not one of them had the -- any interest whatsoever in pursuing a career in government service.

JACKSON (on camera): Forgive me, I've got to ask you, if you can't convince your own children to go into public service, how are you going to convince others?

HEYMAN: Well, I mean, I think that that's the challenge we have today.

JACKSON (voice-over): Brooks Jackson, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: And coming up, someone in government, a senator flying high.

(BEGIN VIDEO CLIP)

SEN. BEN NELSON (D), NEBRASKA: There's only an appropriate statement. That is, go Big Red! Beat Notre Dame.

(END VIDEO CLIP)

WOODRUFF: Nebraska's Ben Nelson cheers on the home team in the air without the airplane. That's next on INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: I'm sure that being a United States senator has its ups and downs. But few, if any, of Ben Nelson's colleagues have had a ride like this one. The Nebraskan Democrat followed through on his plan to skydive over the weekend before the Nebraska/Notre Dame football game.

Nelson was tethered to a jump master with the Army's Golden Knight parachute team. While these pictures may make some of you a little bit queasy, Senator Nelson says he was at ease with the jump.

We're just glad that he made it down safely. We're also glad it was him and not us.

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 that we have time for in this edition of INSIDE POLITICS, but of course you can go online all of the time at CNN's allpolitics.com, AOL keyword CNN. And 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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