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CNN CAPITAL GANG

George Allen Discusses Tax Policy; Kati Marton on Laura Bush's Increased Political Role; Joel Siegel Addresses Giuliani's Recent Actions

Aired October 6, 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.
MARK SHIELDS, HOST: Welcome to CAPITAL GANG.

I'm Mark Shields with Al Hunt, Robert Novak and Margaret Carlson. Our guest is Republican Senator George Allen of Virginia, a member of the Senate Foreign Relations Committee.

It's good to have you back again, George.

SEN. GEORGE ALLEN (R), VIRGINIA: Good evening; good to be with you.

SHIELDS: Thank you.

Tommy Thompson, secretary of health and human services, tried to reassure Americans about a possible biological attack by terrorists.

(BEGIN VIDEOTAPE)

TOMMY THOMPSON, HHS SECRETARY: We've got to make sure that people understand that they're safe, and that we're prepared to take care of any contingency, any consequence that develops for any kind of bioterrorism attack.

SEN. ROBERT BYRD (D-WV), APPROPRIATIONS CHAIRMAN: Well, I just don't believe that. I hope that we'll both be very careful what we say.

SEN. ARLEN SPECTER (R-PA), APPROPRIATIONS COMMITTEE: Those categorical statements, I think, will not really help.

(END VIDEOTAPE)

SHIELDS: An unnamed senior intelligence official was reported as telling Congress there is a 100 percent chance of another terrorist attack.

Meanwhile, Washington's Reagan National Airport reopened for limited traffic.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There really is no greater symbol that America's back in business than the reopening of this airport.

(END VIDEO CLIP)

SHIELDS: Al Hunt, should Americans be frightened, or secure about their personal safety?

AL HUNT, "THE WALL STREET JOURNAL": Mark, there's considerable anxiety in America, and it is understandable. I'm a fan of Tommy Thompson's, but that performance was positively dreadful. The White House is very, very upset about it.

Look, we may be fortunate; maybe the September 11 group of terrorists were isolated and, you know, alone, there's no one else. But I think that's very unlikely.

And there are two threats; they may come from the same source. probably do. One is what that intelligence official told the people on the Hill of a retaliatory strike if we do something against Afghanistan. That would be more conventional -- a car bomb, a shopping center, whatever. But the other is something that's been in the pipelines for a while. This September 11 incident took two or three years. And the fear is, what else was approved earlier over there several years ago. And these guys, as someone has said, are entrepreneurial; they then come over here and they do their own thing. But fears, biological or chemical -- but I think it's very real.

I was at a bar mitzvah this morning, and there were some people there from Israel who were nervous about coming to the United States.

SHIELDS: George Allen, do you share that anxiety? Or should Americans?

ALLEN: I think people cannot relax. Whether there's a 100 percent chance that we'll be hit with some sort of attack remains to be seen.

I think that whatever that risk is does not matter whether or not we hit the terrorists and their supporters or not. Those attacks will come one way or the other. Secretary Thompson, I think, is trying to assure people and trying to get people calmer so we can get back to some -- whatever the new state of normalcy is to recognize that they do have the antidotes ready in case there's a smallpox infestation, so to speak. The chemical approaches and getting some of these chemicals would be much easier than a biological attacks, since many of these chemicals are available -- readily available.

So I think we're all on heightened alert, understandably; we ought to be. But none of that should, in any way, have us cower from acting and bringing justice to these who perpetrated these acts.

SHIELDS: Bob Novak, there seems to be a mixed message out of the administration. We say, get back to normal, start flying, go on vacation, you know, return to the traditional American way. And at the same time, we're told there's a 100 percent chance of a retaliatory attack. ROBERT NOVAK, "CHICAGO SUN-TIMES": That's not the administration's position; it's one intelligence officer saying that. And Porter Goss, chairman of the House Intelligence Committee, says it's nonsense.

Al, the White House was upset with Tommy Thompson starting about January 20 because he doesn't follow the script. He's a former governor who takes his own position. I saw nothing wrong with what he said, and I think it's outrageous that Senators Byrd and Specter are saying, don't reassure the American people, we want to have fear. And a lot of liberal journalists want everybody to be just wringing their hands.

I think the problem with this country is the word "fear," which you use, and it's a fear of guns. If you can't give airline pilots the guns to protect themselves in their planes, which they want and their union wants, it's because of this irrational fear of firearms.

And by the way, the chances -- talk about percentages -- chances of a biological or chemical attack on this country, by the experts I talk to are very, very low.

SHIELDS: Margaret Carlson?

MARGARET CARLSON, "TIME" MAGAZINE: I wish I could talk to those experts.

Part of Tommy Thompson's problem is that he did follow the script on stem cells. Magically there were 60, and then we found out later there were 25. And so when he comes out and says there, there, don't worry, I think we wonder about him now.

You know, the possibility of bioterrorism is not zero. And that's basically what Tommy Thompson said in his testimony. The second part of his testimony was, but by the way, citizens should report any mysterious symptoms. I don't think that gives reassurance to people about the threat of bioterrorism.

He then goes on to say that we have 10,000 gas masks and we have X amount of vaccine, which is not nearly enough for the population. So why do we have those things? That's because there's a threat.

And Senator Richard Shelby and others than Peter Goss came out and said, there s a threat, nearly 100 percent that they have something ready and that they will use it. It won't be a plane this time, but it will be a car boom or a truck bomb.

NOVAK: That's isn't what Mr. Goss said. He said there wasn't.

CARLSON: He said there wasn't. I'm saying Senator Richard Shelby, who heard the same information, said there was.

ALLEN: Actually, if you look at what the president is getting, you take Reagan National Airport as a case example, you have those who are paid to be paranoid, that if it were up to them Reagan National Airport still would still be shut, not even with a 25 percent opening -- or capacity right now.

There are others who say, let's get back to business; let's make sure our country is open for business, get people's livelihoods going forward again. While we have the loss of over 6,000 lives, let's not have them take away the livelihoods of so many people. And so, granted, you want to have people cautious and concerned.

In the issue of bioterrorism, the key is bioinformatics, to make sure if there is any outbreak of any malady -- anthrax, smallpox, whatever it may be -- get that information using information technology so there can be a proper response. That's the logic of saying, if somebody has some symptoms, let people know about it, because the sooner you know the better you can alleviate it.

HUNT: I Agree with that. The one thing that this is not, however...

(CROSSTALK)

ALLEN: ... well, needs to be improved. Everything needs to be improved.

HUNT: The one thing this is not is ideological. This has nothing to do with conservative of liberal; it has nothing to do with ideology whatsoever. People like Chris Shays, a Republican who conducted hearings over this, 20 hearings, says the threat is real.

NOVAK: He's a liberal, too.

HUNT: There was a piece on ABC's "Nightline" last night that was positively riveting. Almost every expert says the threat is very real.

And George, I agree with you, but anthrax -- there are not even enough vaccines to take care of the military.

ALLEN: Well, that's right. And if you really study anthrax, there are so many different strains of it, it would just be prohibitive.

The mother likely problem would be a chemical attack, which is more readily available. Or if you're going to have bombings, say in a rented vehicle or a suitcase bomb, again all these fertilizers that are readily available are more likely to be utilized.

NOVAK: The one thing that Mark can agree with me on is that everything is political. Politics never stops. And there's just a lot of people who somehow or other don't like the idea of this government saying to the people, please go about your business and don't get into a panic. They want the people to go into a panic.

(CROSSTALK)

CARLSON: I think we can go about our business, but one reason Tommy Thompson has to say there is no threat is because the government is unprepared, despite all the studies and all the hearings. ALLEN: Maybe the proper word is under-prepared; but I wouldn't say unprepared in the case of Secretary Thompson.

SHIELDS: Last word, George Allen.

George Allen and the GANG will be back with bombs and food for Afghanistan.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

As the Bush administration prepared for military action against Afghanistan, the president pledged humanitarian aid.

(BEGIN VIDEO CLIP)

BUSH: We will fight evil; but in order to overcome evil, the great goodness of America must come forth and shine forth. And one way to do so is to help the poor souls in Afghanistan, and we are going to do so.

(END VIDEO CLIP)

SHIELDS: Defense Secretary Donald Rumsfeld enlisted allies in the Muslim world.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, U.S. DEFENSE SECRETARY: The effort against terrorism, as the president said, is not against any country; it's not against any religion. It is purely and simply an effort to find the terrorists and see that they stop imposing the kind of damage that was imposed on the United States of America on September 11.

(END VIDEO CLIP)

SHIELDS: But the prime minister of Israel lashed out against President Bush's policy.

(BEGIN VIDEO CLIP)

ARIEL SHARON, ISRAELI PRIME MINISTER: I call on the Western democracies, and primarily the leader of the free world: Do not try to appease the Arabs on our expense.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The president believes that these remarks are unacceptable. Israel could have no better or stronger friend than the United States, and better friend than President Bush.

(END VIDEO CLIP) SHIELDS: Margaret Carlson, is the United States strategy clear?

CARLSON: In the short-run, it's clear: It's to win the hearts and minds of the Afghan people. The United States is making love, not war. We're dropping food pallets all over the country that say, you know, courtesy of the USA. So butter is coming before guns.

The coalition seems to be nailed down. Rumsfeld travelled all around this week. We have about 12 staging areas in Asia, allies on four continents. The coalition is coming together. And I don't know if the guns will come in the same news cycle as the food, but I think the guns will come soon.

SHIELDS: Bob Novak, your take on Ariel Sharon, the prime minister of Israel, after $91 billion in foreign aid from the United States to Israel, and the most steadfast ally Israel has ever had -- the United States?

NOVAK: It's outrageous. And I suspected that that would come from General Sharon. In the speech we saw just a little bit of, he compared the United States to the appeasers of Munich in 1938, selling Israel down the river as Czechoslovakia was. Just -- now, of course, knowing -- the Israelis know which side their bread is buttered on, they've been saying, he didn't mean that. Of course he meant it.

And here's -- I'll tell you what's going on: The president has wisely decided that it is necessary to build a global coalition to fight this war. That's why he sent Rumsfeld around. And a lot of conservatives and neo-conservatives take the position that we should have the same enemies as Israel. We should have a peremptory strike on Iraq, whether it's connected with the events of September 11 or not.

And that's what this is all about: whether this should be Israel and the United States against the world or a global coalition against terrorism. And I think General Sharon put it in very clear terms.

SHIELDS: Bob Novak right, George Allen?

ALLEN: Unfortunately not exactly. I think that all the statements that were made by Ari Fleischer as well as General Sharon both are accurate. The United States is not going to appease these tyrannical governments. We are not going to give up Israel.

It is very important, though, that we do talk to the moderate Arab states because they can be very helpful to us on our key focus here, which is getting after these terrorists and those who harbor them, specifically, as a terrorist organization, Osama bin Laden and this al Qaeda network. That's No. 1.

Now, as you go after them and hopefully rid them of -- the world of this batch, they're not the only terrorist. There's Hamas, there's the Hezbollah and so forth. And I think one thing out of all of this, the United States will not be telling Israel, just sit back and take it. We're not going to sit back and take it any more than Israel should just sit there and take it when a pizzeria or a discotheque or something else is hit by these suicide bombers.

So I think that you might have to put in General Sharon's statement in view of the unfortunate leaking of the view of the Bush administration, which is the view of the Clinton administration, that there should be, eventually, a Palestinian state.

SHIELDS: Don't you agree there should be?

ALLEN: It would be nice if they would actually have Israel safe enough as a country. But I think we're so far from that, I'd be happy to see that occur in my lifetime. But the key is the security of Israel, who is our friend and ally. And you don't abandon your friends and allies in the midst of this effort. And, indeed, I think they can be helpful, but we need more than Israel to win this war.

SHIELDS: Al.

HUNT: Mark, this is the precursor to a big battle that's going to be waged months down the road. But I think first -- I think the administration's strategy is pretty clear. I agree with my friend General Carlson here; I think we're going to topple the Taliban and the United States is going to get Osama bin Laden. I think that's a very clear strategy; I think the guns are going to come soon. I think they're well positioned to do it.

The Clinton administration may have even come close to getting bin Laden. And this time we have the PACs and we have the other front-line states as allies. We have intelligence from those places. The military targets are really rather meager over there. The 200 tanks, airfields, they're going to be easy to take out. And I think that probably it will be a successful operation. It may take a little while, but it will be successful.

But what Bob is talking about, what George is talking about, then will be next. What do we do? Do we go after Iraq, do we go after some other places, and I think that will be...

NOVAK: See, that's what gets the whole question. I was -- I spent a part of last week with a lot of conservatives. And conservatives are very -- are divided on this question. But there's a lot of them, very prominent ones, who really feel that we should wage a jihad. Do you know what a jihad is, Al? It's a holy war. And -- but usually people from our side of the fence call it a crusade; and it's a crusade against Islam.

Islam is a -- I've heard this said to me by very prominent people, Islam is a vile religion, and it's a religion of terror; and what we have to do -- we can't follow this Colin Powell position.

Now I think -- I just don't believe that we can align ourselves, the United States can align itself against 1 billion Muslims because we don't like their religion.

(CROSSTALK)

ALLEN: You can quote whomever these people are; that is not the policy of the United States, though.

NOVAK: It isn't.

ALLEN: So just because a few...

(CROSSTALK)

SHIELDS: Let's be very frank right here, 80 percent...

(CROSSTALK)

ALLEN: Well, they're wrong.

SHIELDS: Eighty percent of the casualties in the intifada are on the Palestinian side. I mean, this is just a fact. That's a reality.

NOVAK: Two more Palestinians killed today, but you don't see a story about it.

SHIELDS: And the reality is -- I'm not in any way rationalizing, condoning terrorist acts of any sort -- but the real fundamental truth is that the United States policy has to be for a Palestinian state and a secure Israel. I mean, it can't be one or the other. It can't be mutually exclusive. You're never going to have...

(CROSSTALK)

SHIELDS: ... until you have a Palestinian state.

ALLEN: Maybe, but you cannot have these constant attacks on civilians and Israel.

SHIELDS: Absolutely. And you can't have American planes with Israeli pilots going in and destroying villages and houses.

NOVAK: The question that Al raised is a question that the president has to make up his mind about, I'm told he hasn't. That is: Does the United States attack Iraq in the absence of clear evidence that Saddam Hussein was complicit in the terrorist attacks of September 11? That's a tremendous question. I doesn't think he should. There's a lot of people, a lot of senators who think he should.

(CROSSTALK)

ALLEN: Bob is right. Remember, again, the focus here is the attacks of September 11; that's the case that's being built. It's clear evidence to virtually everyone that Osama bin Laden is involved.

Now, to the extent that other terrorist attacks, fine. But so far, the case hasn't been made about Iraq in this instances.

CARLSON: You know, this -- I think it's an evolving, sequential war against terrorism. And when we're done with Osama bin Laden, it's unlikely that we're done with terrorism. And within the White House, I think there's a strong call to do more once that's done. But for the moment it's Osama bin Laden. But they have not said that -- I doesn't think there's even a chorus in the White House that's saying absolutely not, we're not going to Iraq.

NOVAK: I know, I didn't say that. I said a decision has to be made.

SHIELDS: I will point this out: George W. Bush came to office condemning Bill Clinton's policy in Korea; he's endorsed Bill Clinton's policy in Korea. He condemned Bill Clinton's policy in the Middle East, of engagement, now he's doing that. He condemned Bill Clinton's policy on Kosovo, now he's picked that up. And finally he's into nation building in Afghanistan. We've got the Clinton foreign policy, and a Republican in the White House.

Next on CAPITAL GANG: what kind of stimulus for the economy?

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

After the administration and Congress agreed on a $60 billion spending package, debate began on further economic stimulus.

(BEGIN VIDEO CLIP)

BUSH: In order to stimulate the economy, Congress doesn't need to spend any more money; what they need to do is cut taxes.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: If we're going to talk about getting the economy revived, the very best way to do that is helping these workers get through this tough time.

(END VIDEO CLIP)

SHIELDS: Bob Novak, is a bipartisan approach now in danger?

NOVAK: I certainly hope so.

I agree with Dick Gephardt, who has said that bipartisanship and bipartisan policy is an unnatural act, and it really is. This is what we send people like George Allen to Congress for: to disagree with the people on the other side.

Now, having said that, there is a policy at the White House that they have to this have this stimulus package to encourage and give confidence to the economy. Mark and I today interviewed R. Glenn Hubbard, the chairman of the president's Council of Economic Advisors who has kept -- who used the word "confidence" about 36 times -- building confidence.

So the president is going to, in my opinion, for the sake of bipartisan, agree to things he shouldn't, like extending unemployment benefits, which just means that people out of work have longer to sit around without looking for a job. It also means putting 30,000 additional labor union members on the payroll to help Democratic supporters for policing the airports.

But the president wants to get a package out, and he's going to make a lot of concessions.

SHIELDS: Al Hunt, after disassociating myself from brother Novak -- you know, people who are laid off, 30,000 workers at Boeing, you know, are laid off and they've got mortgages to meet and groceries to provide, they are not sitting on their duffs, Mr. Novak, unlike some of your conservative friends you spent the week with.

Go ahead, Al.

HUNT: A $75 billion stimulus package, of which you give $3 billion to workers? I'm sorry, that doesn't quite cut it.

Look, this should not be used as an excuse for anyone's agenda. If we want to enact the stimulus package, it ought to be in order to stimulate the economy -- I think that's quite simple -- and to protect us from any threat of terrorism. It should not be used for extraneous things like capital gains taxes or patients' bill of rights or anything like that.

And that means there ought to be tax cuts, but the tax cuts ought to be A, temporary, because it's a stimulus package; B, they ought to be directed at the people who will spend it in order to stimulate the economy. Not because of social justice, because that's good economic sense. That means that schoolteachers and firemen and policemen ought to get tax cuts, and for anyone to get it on this panel, it's sheer greed. You know what that is Mark? It's G-R-E-E-D if you want to get it on this panel.

SHIELDS: Al, I don't want it.

NOVAK: I'll take yours.

SHIELDS: I know you would -- I don't what you'd do with it.

Margaret.

CARLSON: Al is so right. And the idea that the airlines got their bailout and the CEOs didn't take one cent less in pay -- remember the Chrysler bailout? Lee Iacocca had the decency to take a one...

NOVAK: Said that last week.

CARLSON: I most certainly did not.

(CROSSTALK)

CARLSON: We could just press a tape button and get you.

The whole idea of not giving it to the people both who will spend it and to the people who have been thrown out of work without severance and without health insurance, it is just criminal. It is absolutely criminal.

And Bush was on board for this. It wasn't until Thursday night, Mark, when Republicans came down and read him the riot act and said, you know, you're at 90 percent, let's get you to 120 percent popularity rating with Republicans and go for tax cuts for the wealthy and not help the people thrown out of work.

SHIELDS: One of the things that really fascinates me...

CARLSON: Were you there George?

ALLEN: No.

SHIELDS: All the proposed tax cuts for corporations, accelerated appreciation and so forth, are permanent. Lower the rate...

NOVAK: Well they should be. That's good policy.

(CROSSTALK)

SHIELDS: ... are permanent, whereas for the people you're talking about, Al, turning back Social Security payments and such matters, unemployment, those are all very, very temporary, George.

ALLEN: Let me give you -- first on the airlines.

The reason the airlines got the $5 billion is because the federal government shut down the skies. It was the right thing to do; it probably saved lives, because there would have been other terrorist attacks being planned on other airlines to be hijacked.

Now, as far as workers out of work, I think the folks who are out of work are good, hard-working folks and they want to get back to work as soon as possible. And it's fine to have some of these minor things.

But the big deal is the economy, and have jobs. Now where's our economy driven? It's by consumers. Cutting corporate tax rates in the long run might be fine. But short term, cutting corporate taxes means nothing because most corporations are laying off people.

What you need do is make sure that you spur consumer spending. The one part of the economy that is most hurt is the technology sector; they've lost 400,000 jobs. Four times the number in aviation.

My general view is we ought to empower parents, give them a tax credit for purchasing computers, educational software, Internet access for their children. It'll be good for education; it's good for technology, and it's good for the technology sector.

SHIELDS: And it would be good for Virginia.

(CROSSTALK)

ALLEN: That's right, and all of America.

NOVAK: As much as I am admire the junior senator from Virginia...

ALLEN: And make it for a year or two. Now listen; hold it. When South Carolina and Pennsylvania gave a sales tax holiday on computers and so forth, they had a six times, ten times...

NOVAK: As much as I admire George Allen, I think he's got it all wrong. What we need to do is to rationalize the tax system, and particularly lower the capital gains rate.

Now Al, I hate to say this to you, but you're guilty of hypocrisy when you say that nobody should use this emergency to further their own agenda, when you just sat their and furthered your own left-wing agenda up and down. You said, we've got to have tax cuts for the poor people and not for the rich people. That's your agenda!

So be honest, you're trying to further yours just as much as conservatives are trying to further theirs.

HUNT: I don't need a lecture on honesty from Bob Novak any day of the week.

NOVAK: I think you do.

HUNT: I want to tell you, you never do, Bob. And because I think your position is untenable here and it is really shameful. Alan Greenspan actually favors eliminating the capital gains tax, but he has integrity and goes up there and says it will do nothing for stimulus, nothing at all. The reason to give tax rebates is you are going to give it to people who will spend it, Mark. And George may be absolutely right. Maybe you give it for high-tech stuff, I don't know, but you give it to people to spend, you don't give it in order to do something you have been trying to do for years.

That, Mark, is lacking integrity.

NOVAK: That's the kind of a tax policy that didn't work with Jimmy Carter, and it's not going to work today.

SHIELDS: That's the kind of a tax policy, building a stronger middle class that made America the great country it is and allowed you to go...

(CROSSTALK)

SHIELDS: Thanks for being with us, Senator George Allen. We'll be back with the second half of CAPITAL GANG. Author Kati Marton is our "Newsmaker of the Week," talking about Laura Bush. "Beyond the Beltway" looks at New York City's Mayor Rudy Giuliani, with Joel Siegel of the "New York Daily News," and our "Outrages of the Week," that's all after the latest news following these messages. Thank you, George.

(COMMERCIAL BREAK) SHIELDS: Welcome back. I'm Mark Shields with Al Hunt, Robert Novak and Margaret Carlson. Our "Newsmaker of the Week" is Kati Marton. She is the author of the newly published "Hidden Power: Presidential Marriages That Shaped Our Recent History."

Kati Marton. Age: 52. Residence: New York City. Masters degree in international relations. Journalist ABC News, "Sunday Times of London," National Public Radio. Winner of the George Foster Peabody journalism award. Author of five books.

Al Hunt sat down with Kati Marton earlier this week.

(BEGIN VIDEOTAPE)

HUNT: Kati, you include an epilogue on George and Laura Bush, in which you say if there's a crisis Laura Bush will rise to the occasion. Has that occurred?

KATI MARTON, AUTHOR: I'm rather proud of that forecast, because that indeed is the case. She's really stepped up to it, after starting off as probably the quietest first lady in recent memory until September 11. And since then, she has been very much out-front, both beside her husband and in front of him, on her own and steadying him, and basically playing the role that she is very suited for, which is sort of a national comforter.

HUNT: Other first ladies have also played an tremendously important role, and yet as you say in "Hidden Power," the standard really was set by Eleanor and Franklin Roosevelt. That was a powerful partnership, but really a terrible marriage, wasn't it?

MARTON: Yes, that's the supreme irony is that they managed to lead these very rich, very productive lives, and yet as a couple they didn't work at all. They were really along the most dysfunctional couples ever to live in the White House. But they had separate Eleanor and Franklin courts in the White House, and came together largely for public things.

But in fact, during World War II, she became the moral force of the Roosevelt administration.

HUNT: She was a role model for Hillary Rodham Clinton, but Hillary Rodham Clinton became much more visible as a first lady, and that to some extent backfired, didn't it?

MARTON: It did. She was too overt about this co-presidency business, and taking on her husband's largest domestic program, health care reform was a mistake. The most useful role that a first lady can play in the White House is internal rather than external.

And Hillary is a quick study. She learned and she repositioned herself after the failure of health care, and she became a much more traditional and much more successful first lady.

HUNT: Was Jackie Kennedy more than just an ornament, more than just an attractive first lady? MARTON: Absolutely. Jackie was a serious historian, only 31 -- astonishing fact -- when she became first lady, and yet she had a very specific idea of how she wanted to proceed as the first lady. She was going to turn the White House not into just this great social place, but into a repository of all that was best in American culture and art.

HUNT: If Eleanor Roosevelt set the standard for a policy-driven first lady, Nancy Reagan really set the standard for a personally protective first lady, didn't she?

MARTON: Nancy was essential for Ronald Reagan's well being. Mike Deaver told me that if it hadn't been for Nancy, Ronald Reagan would still be driving a red convertible up and down the California coast, speaking to rotary clubs.

She's the one who when glasnost first loomed on the horizon, she decided it was time for President Reagan to jettison the evil empire thing and become the peacemaker that he ultimately became.

HUNT: The only president who may have adored his wife as much as Ronald Reagan was Harry Truman, who just adored Bess.

MARTON: I called the chapter on the Trumans "The Good Husband," because he's singular in the presidential pantheon for his devotion to his wife, and only his wife. He hated it when she kept leaving for Independence, Missouri for her card games and her mother. The eve of his first meeting with Joseph Stalin in Potsdam, he's running around Berlin looking for Chanel No. 5, and is distressed that he can't find it.

HUNT: My colleague Robert Novak says the first ladies have too much power, whether it's Hillary Clinton or Nancy Reagan. No one elected them. Does he have a point?

MARTON: He has a point. No one did elect them. But I think it's time to get real. These presidents need their spouses. Some day, we're going to have a woman in there who's going to need a first gentleman.

These are people who are locked up in what Harry Truman called "the great white prison," and their aides don't like to break bad news to them. Their spouses can do that. I think that whether Bob Novak approves or not, they do the rest of us an enormous service.

(END VIDEOTAPE)

SHIELDS: Al Hunt, is Kati Marton suggesting that Laura Bush can become a truly effective first lady?

HUNT: Mark, Kati told me separately that normalcy returns when Laura Bush is at the ranch in Texas reading, because that's what she really, really likes to do, and I don't think it's going to happen any time soon.

But I think the most important, influential presidents -- Roosevelt, Reagan -- have important and influential first ladies. It's just a matter of fact. And I think this is an easy call, the Marton/Novak feud here, if you will. Kati is right, and Bob is wrong. That I think that they need -- a strong president needs a strong and a supportive first lady, and I think that's true of almost everybody in society. I can't imagine Geraldine Novak taking on one of her important tasks without real support from the little man.

SHIELDS: Bob Novak.

NOVAK: Well, since I was mentioned, I invoke personal privilege on this. Al is like a (UNINTELLIGIBLE), he's a stir-up of strife, and he's misrepresented me.

What I have always said is not that I am very grateful for having Geraldine as my wife -- as Al, I'm sure, is very grateful for having Judy as a wife. What I am saying is something much less limited -- much more limited than that and saying that first ladies, who were not elected, should not be making policy. And the greatest violators of that -- many first ladies violated it -- but the worst were Eleanor Roosevelt and Hillary Clinton, who got involved in government policy, and the worst of all was Hillary Clinton who actually was running a government commission. And she was not elected, she had no business doing it.

So I don't have any disagreement with you or Kati.

SHIELDS: And now she is elected and she does have business doing it, but...

NOVAK: Yes, exactly. Exactly.

SHIELDS: ... two things that jumped out, two things that jumped out at me. One, Jackie Kennedy was 31 years old, she was 33 when her husband was murdered, held the country together. But the first lady who had the greatest impact on this nation in my judgment is Betty Ford. I mean, Betty Ford has left a lasting legacy in her clinic and probably touched more lives possibly than any first lady I know.

CARLSON: I read a lot about first ladies, but Kati Marton brought out some things about these complex marriages that are very interesting. Jackie was not frivolous, and at 33 she did do this. Barbara Bush was not a sweet grandmother, and Hillary Clinton had a more traditional marriage, as she points out, than you might think.

Geraldine is a saint for keeping you as her husband.

SHIELDS: That's the last word, Margaret.

Next on CAPITAL GANG, "Beyond the Beltway" looks at Rudy Giuliani, one month after the attacks with Joel Siegel of the "New York Daily News."

(COMMERCIAL BREAK)

SHIELDS: Seeing a live photo -- live picture of ground zero in New York right now. Welcome back. "Beyond the Beltway" looks at Mayor Rudolph Giuliani of New York. This week he again offered to briefly extend his tenure as mayor, but not to seek a third term.

(BEGIN VIDEO CLIP)

MAYOR RUDOLPH GIULIANI, NEW YORK CITY: The offer is to make that a much smoother transition. And I think that would also satisfy the large group of people in this city who have to also be considered, who are begging me to stay and to run for another term, which I'm not going to do.

(END VIDEO CLIP)

SHIELDS: Giuliani became the first mayor of New York in 50 years to address the General Assembly of the United Nations.

(BEGIN VIDEO CLIP)

GIULIANI: On this issue, terrorism, the United Nations must draw a line. The era of moral relativism between those who practice or condone terrorism and those nations who stand up against it must end.

(END VIDEO CLIP)

SHIELDS: For the curious, the last mayor to address the U.N. of New York was Bill O'Dwyer.

But joining us now from New York is Joel Siegel, senior political correspondent for the "New York Daily News." Thank you for coming in, Joel.

JOEL SIEGEL, "NEW YORK DAILY NEWS": Thanks for having me.

SHIELDS: Joel, did Rudy Giuliani spoil an otherwise splendid public performance by trying to hang on to power?

SIEGEL: Well, I think the analogy here is Willy Mays. Willy Mays had a great career, and then if you remember he had that last season with the New York Mets where he batted about .228, couldn't run the bases, couldn't feel the ball as well, and I think that's Rudy Giuliani here.

He had a great run in the way he handled this crisis. New Yorkers gave him an astounding 90 percent approval rating, but when it comes to extending your term, I don't think you can be seen as encouraging it. It has to sort of happen independently. I think there was a small window where that might have happened. Rudy didn't give any private signals, and the moment passed. And then he tried to go for it, and I think it was too late.

SHIELDS: And it is too late, and he will go early now?

SIEGEL: Yes. This thing is the dead. There's not enough support in the legislature, specifically the assembly up in Albany, which is controlled by Democrats, and there's enough Democrats that just don't want to see his term extended.

SHIELDS: Bob Novak.

NOVAK: Joel, all of us insiders can make these judgments, gee, he didn't handle this right and I agree with you and Mark that he didn't, but for the people of New York, particularly when they look at the alternatives who are going to succeed him, and particularly the people of the United States as they watched him give really a tremendous address to the United Nations, which I thought was just excellent, he still has come out of this as a national figure that he wasn't before. Wouldn't you think so?

SIEGEL: No question. This is Rudy Giuliani's finest hour. With Rudy Giuliani, there are highs and there are lows. He deserves the credit he's receiving, and I bring back the Willy Mays analogy. We look back on Willy Mays' career as a great, splendid career. We'll look back on this moment here in New York that Rudy Giuliani rose to the occasion, no question about it.

SHIELDS: Margaret Carlson.

CARLSON: Yeah. I think despite this politics as usual, I think Rudy will leave with a halo around him and we will forgive him for thinking he should be mayor for life for the way that, you know, he could go to five funerals a day and the Yankees games at night.

Of the candidates, it seems to me that if Freddy Ferrer wins that primary -- and his voters seem more enthused at the moment -- that the one closest to Rudy, if there's still a groundswell for Rudy, would be Mike Bloomberg, who should be able to run the city closer to the Rudy way than either Freddy Ferrer or Mark Green.

SIEGEL: Well, Mike Bloomberg is running as a Republican, and Rudy Giuliani will support him, will do commercials for him. They will be closely identified. It still is going to be a difficult campaign for Mr. Bloomberg, because New York City Democrats outnumber Republicans approximately five to one.

I think the problem for Freddy Ferrer -- he was the candidate who rejected Rudy's request to serve an extra 90 days. So, if Freddy Ferrer is elected, he's going to have to meet a very high standard. And the first slip-up, if there is a slip-up, everybody is going say, well, gee, if we only had Rudy around for 90 days, this wouldn't have happened.

SHIELDS: And just one question, Joel, does that energize Rudy if Freddy Ferrer is the Democratic nominee? Does that energize him more on behalf of Bloomberg, because Ferrer was the obstacle that stayed opposition?

SIEGEL: Perhaps. There's no love lost between Rudy Giuliani and the two Democrats who are battling in this runoff we have on Thursday, Mark Green and Freddy Ferrer. At the end of the day, Rudy will work for Mike Bloomberg, he'll work enthusiastically. It's still going to be a difficult campaign for Mike Bloomberg.

SHIELDS: Al Hunt.

HUNT: Joel, I'm sure you're right about that, but I would just think it's tailor-made for Michael Bloomberg right now, at least the scenario is, you know, where we've come out, but let me go back to Rudy for a second, because to keep with your Willy Mays analogy, Willy Mays of course retired, and we looked finally back upon his playing days. My suspicion is that Rudy Giuliani, no matter who is elected in November, does not want to retire. And how do you think Rudy will be out of office, and what do you envision him doing?

SIEGEL: Well, look, he's leaving on a high note, he's got a book deal, he's going to be so in demand as a public speaker now, he can make a lot of money.

But there's no question that he loves this job. Everybody who is mayor loves the job. It's a big headache job, but you're the center of attention. It's a very strong office, and he loves this job, and there's no question in my mind that he will be on the scene in New York, and if the circumstances are right he will run again, I believe that, if his health permits.

SHIELDS: Joel, tell us, who wins the Democratic nomination? Will it be Mark Green or Freddy Ferrer?

SIEGEL: Well, a week ago I would have said Mark Green. A few days ago or yesterday I would have said Freddy Ferrer. It's 45-45 in the latest poll. I think Mark Green is making some moves in his campaign now that his supporters wanted to see, where he's going after Freddy Ferrer.

Freddy Ferrer, though, has today -- he had Al Sharpton and Ed Koch walking together on his behalf. That's a rare sight to see in New York. I can't be honest and tell you how it's going to turn out.

NOVAK: Just quickly, Joel, do you think that the people of New York City, your fellow residents, have a sinking feeling when they look at the alternatives facing them in city hall?

SIEGEL: Well, that's a good question. I think a lot of people are going to be sad to see the mayor go. As far as the way he's handled this crisis, he's been a reassuring figure. I think they are willing to give the next person a chance, but the first slip-up -- it's going to be bad news for the new mayor.

SHIELDS: OK, Joel Siegel. Joel, thank you very much for being with us. THE GANG will be back with the "Outrage of the Week."

(COMMERCIAL BREAK)

SHIELDS: And now for the "Outrage of the Week." Thanks to the "Los Angeles Times'" Judy Pasternak, we know how lobbying from the airline industry slowed or weakened safety improvements urged by a presidential commission. The airlines opposed a proposal to match every checked bag with a boarding passenger in order to minimize the chances of a bomb being planted on board. The airlines fought fiercely against the fingerprinting and background checks of all personnel doing security screening and those with access to secure areas.

Is it any wonder that Americans now by a margin of nine to one want uniformed federal personnel and standards to make air travel safer? Bob Novak.

NOVAK: While the world's attention focused on Central Asia, terrorists in Colombia kidnapped and murdered Consuelo Araju, a former culture minister and a beloved figure in her country. She was killed by FARC, the Marxist guerrilla army financed by drug dealers.

So much for the dubious efforts by Colombian President Andres Pastrana to bring peace by granting the terrorists an enclave the size of Switzerland and trying to make a deal with them. Will he resume the war in earnest now?

SHIELDS: Margaret Carlson.

CARLSON: Mark, one evil act spawned a million acts of kindness, except for here, where it's spawned 100 acts of greed. The worst is flag-draped lobbyists trying to revive the full deduction for the three-martini, or the crab salad and Pellegrino lunch.

The greatest generation was asked to dig victory gardens and give up driving. The richest generation is asked to go to Disney World and dine lavishly. We're not shunning marbled steaks at the Palm for want of a tax break, but because it feels wrong. The country is ready to sacrifice. So far, we've only been asked to splurge.

SHIELDS: Al Hunt.

HUNT: Mark, conservative Republicans on Capitol Hill are charging that an opposition to Otto Reich, nominated to be assistant secretary of state for Latin-American affairs, is unpatriotic during a war on terrorism. What nonsense! Reich's earlier term as ambassador to Venezuela was marked by ineptitude, bothersome ethical issues have been raised about him, and once he went to bat for Orlando Bausch, a convicted right-wing Cuban exiled terrorist.

So to help the war on terrorism, the Senate should confirm a man with a blemished record who once tried to help a terrorist? No way.

SHIELDS: This is Mark Shields saying good night for the CAPITAL GANG. CNN's coverage of "America's New War, Target: Terrorism" begins right now.

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