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Justice Indicts Andersen; U.S. Launches New Peace Initiative; Judiciary Committee to Defeat Bush's Judicial Nomination; Arabs Worry About U.S. Attack on Iraq

Aired March 14, 2002 - 16:00   ET


JUDY WOODRUFF, CNN ANCHOR: I'm Judy Woodruff in Washington. As the U.S. launches a new effort to ease Middle East violence, I will talk with former senator and peace plan architect, George Mitchell.

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: I'm Jonathan Karl on Capitol Hill where a deeply divided Senate judiciary committee is on the verge of handing President Bush his first defeat on a judicial nomination.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: I'm Bill Schneider in Washington. I'll map out the reasons why Arab nations are so worried about a possible U.S.-led attack on Iraq.

WOODRUFF: Also ahead, a leading player in a power struggle between Congress and the White House. My conversation with Senator Robert Byrd.


WOODRUFF: Thank you for joining us. We are waiting for a Justice Department news conference in connection with the Enron investigation. As you just heard a moment ago, a criminal indictment against the Arthur Andersen accounting firm has been announced.

But first, the Senate judiciary committee -- we'll go there first -- is getting close to a vote on President Bush's embattled judicial nominee, Charles Pickering. We're going to check in now with our Congressional correspondent, Jonathan Karl. Jonathan, what's the latest from the committee?

KARL: Well, this hearing is taking longer than expected, because many Republicans had a lot to say. And still, as you can see, there's John Kyl of Arizona, Republican -- a lot to say about Charles Pickering, and the way they believe he has been treated, both by outside interest groups deeply opposed to his nomination, but also by the Senate judiciary committee itself.

It's been rather heated. Chuck Grassley of Iowa raised his voice several times when he decried what's happening to Judge Pickering. He believes a distortion of his record. Orrin Hatch, the top Republican on the committee, went through a point-by-point rebuttal of criticisms that have been made about Judge Pickering. Hatch spoke for almost a half-an-hour, going through all the various points that have been raised by the Democrats on the committee.

But then you get to Senator Charles Schumer, a Democrat of New York, who said that this is really kind of a warning shot to the president, a warning shot to the White House, that they should not send to this Senate, this deeply divided Senate, nominees that are as controversial as he believes Charles Pickering is.

So it's been a heated hearing. It will go on for a little while longer, Judy. But everyone expects that the outcome here is going to be that Charles Pickering will be defeated in that judiciary committee by a party line vote.

WOODRUFF: Jonathan, the president was very clear in his news conference yesterday, that he believes it's just a small group of senators who are holding up his nominations, as he put it, for ideological reasons. Given this impasse today, the fact the president's nomination may not go through, what are the implications for future judicial nominees?

KARL: Well, there are certainly serious implications for future judicial nominees, and also for the Senate itself, the operations in the Senate. Because Republicans are vowing somewhat revenge on this. They're saying they're going to fight to get the president's nominees through, even if it means they have to tie up...

WOODRUFF: Jonathan, I'm sorry. I'm going to have to interrupt you. We are going to go to the Department of Justice, where they are announcing the indictments that have just come down against Arthur Andersen.

LARRY THOMPSON, DEPUTY ATTORNEY GENERAL: And to the financial collapse of Enron, which had been considered the nation's seventh- largest corporation. The SEC's inquiry focused attention on the role of Arthur Andersen, LLP, Enron's long time auditor, and one of the nation's big five accounting firms.

The Justice Department established a task force in January to investigate all of the matters that have arisen from that collapse. Today, we are unsealing an indictment obtained last week from a federal grand jury in Houston, Texas, charging the Arthur Andersen partnership with obstruction of justice, for destroying literally tones of paper documents and other electronic information related to the Enron inquiries.

The indictment catalogs allegations of widespread criminal conduct by the Arthur Andersen firm, charging that the firm sought to undermine our justice system by destroying evidence relevant to the investigations. It alleges that, at the firm's direction, Andersen personnel engaged in the wholesale destruction of tons of paperwork, and attempted to purge huge volumes of electronic data or information.

The indictment further explains that at the time, Andersen knew full well that these documents were relevant to the inquiries into Enron's collapse. The indictment alleges that Andersen partners and others personally directed these efforts to destroy evidence.

As the indictment lays out, the destruction initiative began on or about October 10, 2001, as Andersen foresaw imminent government investigations and civil litigation. The destruction continued through the SEC's announcement that an investigation had been launched, and only ended nearly one month later, when the SEC officially served Andersen with a subpoena for Enron documents.

As charged in the indictment, on October 16th, Enron issued a press release announcing a $618 million net loss for the third quarter of 2001. The very next day, the SEC began its Enron investigation. By October 19th, Enron notified Andersen that the SEC was investigating the Enron special purpose entities, that Andersen itself had helped to establish, enabling Enron to camouflage the true financial condition of the company.

The next morning, Andersen's high-level management discussed the SEC inquiry on a conference call. On October 23rd, Andersen partners ordered their employees to destroy Enron documents at Andersen's offices in Houston. The indictment alleges that, at urgent and mandatory meetings, Andersen partners and others told employees to immediately destroy documents related to Enron.

Dozens of large trunks were brought in to haul documents from Andersen's office, in Enron's building, to Andersen's firm office in Houston, in order destroy literally tons of documents, the indictment alleges. Employees were told to work overtime if necessary to finish the job of destroying documents. The shredder at the Andersen office in the Enron building ran virtually constantly.

The indictment charges that destruction of evidence extended far beyond Andersen's Houston-based Enron engagement team. This is the indictment of a firm, of a partnership. As the indictment clearly outlines, the obstruction effort was not just confined to a few isolated individuals or documents.

This was a substantial undertaking over an extended period of time with a very wide scope. The Andersen firm instructed Andersen personnel in Portland, Oregon, Chicago, Illinois and London, England to join in the shredding.

In London, Andersen partners and others orchestrated a parallel, coordinated effort to destroy Enron documents within days of notice of the SEC inquiry. The shredding apparently stopped only after the SEC officially served Andersen on November 8th, with the anticipated subpoena for documents related to the firm's work on Enron.

Obstruction of justice is a grave matter, and one that this department takes very seriously. Arthur Andersen is charged with a crime that attacks the justice system itself by impeding investigators and regulators from getting at the truth. This indictment alleges just such subversion of our justice system, by a firm responsible for upholding the standards of the accounting profession, on which hundreds of millions of investors rely.

Now, in determining whether to charge an entity with criminal conduct, we consider many factors, including the seriousness of the alleged offense, the firm's history of wrongdoing, the pervasiveness of the wrongdoing and the need to deter others from similar activity. Under these standards, we felt compelled to seek the indictment of the Arthur Andersen partnership.

WOODRUFF: Larry Thompson is deputy attorney general. He is at the Justice Department, announcing a sweeping indictment of the Arthur Andersen accounting firm, the fifth-largest accounting firm in the United States for its role in obstructing justice and destroying, as he put it, tons of documents related to Andersen's work with Enron.

Joining us now, our justice correspondents, Susan Candiotti. Susan, what new are we learning from this description of the indictment?

SUSAN CANDIOTTI, CNN CORRESPONDENT: Well, certainly at the very least, the extent of the alleged shredding that went on, according to Larry Thompson. He said a shredder was running virtually nonstop in several Arthur Andersen offices in Portland, Oregon, as well as at the headquarters in Chicago and in London, England. So we're learning more and more about the extent of this.

We know, Judy, that the talks have been going for several days now between Arthur Andersen and the Justice Department. Arthur Andersen trying desperately to avoid an indictment. But in the end, no plea deal was struck. And the deadline was today for that deal to happen. It didn't. That's why you're now seeing obstruction of justice charges.

I can tell you that Arthur Andersen sent a letter to the Justice Department saying that if this went through, they were calling it a -- quote -- "unprecedented exercise of prosecutorial discretion, and a gross abuse of government power," and said that if it happened, that it could mean a death penalty, or send a death knell for Arthur Andersen. We'll see.

WOODRUFF: Susan, I also understand that in that letter from Andersen to the Justice Department, they describe the evidence as flimsy. And they're warning that this could jeopardize their survival. I guess that's an understatement at this point.

CANDIOTTI: Exactly. And the truth is, in the last several days, Arthur Andersen has been losing a number of its very high-profile clients. So, its future is apparently at stake.

WOODRUFF: All right. CNN's Susan Candiotti, who has been following the Enron story and the Justice Department. Thank you, Susan.

We're going to take a break. INSIDE POLITICS, right after this.


ANNOUNCER: Live from Washington, this is INSIDE POLITICS WITH JUDY WOODRUFF. WOODRUFF: And now we turn to Vice President Cheney's mission in the Middle East. He is now in Oman, after a brief trip under tight security to neighboring Yemen. Cheney's talks with the Yemeni president focused on new U.S. military aid to help Yemen track down al Qaeda operatives and other terrorists.

Top U.S. officials say Yemen still is an al Qaeda outpost, despite a recent government crackdown. While Yemen now sees itself as a strategic partner in the war on terrorism, President Ali Abdullah Saleh joins other Arab leaders in opposing military action against Iraq.

Now we're joined by our senior political analyst, Bill Schneider. Bill, why is the vice president having a hard time, as it appears he is, getting Arab leaders on board in this effort to move on Iraq?

SCHNEIDER: Let's look at the map. Three important U.S. allies border Iraq: Saudi Arabia, Jordan and Turkey. Take Jordan. Jordan and Iraq have extensive trade relations. Nearly all of Jordan's oil comes from Iraq. And there are hundreds of thousands of Iraqis in Jordan. If Iraq disintegrates, Jordan could be faced with economic turmoil and a flood of refugees.

Take Saudi Arabia. Saudi Arabia's major competitor for influence in the Muslim world is Iran. Southern Iraq includes a large Shiite population, that may try to ally with Iran. Saudi Arabia wants Saddam ousted, but it does not want to see Iraq disintegrate.

Take Turkey. Northern Iraq includes a large Kurdish population. If Iraq disintegrates, the Kurds may try to claim their independence. Turkey has a large Kurdish population that aspires to become part of a Kurdistan.

Now, my sources tell me that military action is not the hardest part of the puzzle in Iraq. It is weaker, and the U.S. is stronger than they were 11 years ago. The hard part is the day after. Will Iraq remain intact? If Iraq disintegrates, it will have enormous repercussions on its neighbors.

If the U.S. overthrows Saddam we become responsible for everything that happens, politically, in Iraq. That may not be a responsibility we want. But as we're learning in Afghanistan, we can't escape it -- Judy.

WOODRUFF: All right, Bill Schneider, thank you very much.

And "On the Record" this Thursday, the ongoing attempts to achieve Middle East peace. U.S. mediator, Anthony Zinni, has arrived in Israel with plans to meet later today with Prime Minister Ariel Sharon. Zinni's arrival comes during the deadliest period in almost 18 months of violence between the Israelis and the Palestinians. Seven more Palestinians were killed today in two separate incidents. And three more Israeli soldiers died in Gaza when a bomb exploded under their tank.

An adviser to Yasser Arafat said today that no peace talks are possible until the Israeli forces withdraw from Palestinian territories. Late today, Prime Minister Sharon ordered a phased withdrawal from the city of Ramallah.

President Bush said yesterday that one of Anthony Zinni's goals will be to work toward the framework for peace outlined in the proposal by CIA director George Tenet. And that's a plan which builds upon the peace proposal created by former U.S. Senator George Mitchell.

George Mitchell joins me now from New York. Senator Mitchell, is the onus now on Israel to move?

GEORGE MITCHELL, FMR. U.S. SENATOR: Well, the onus is on both sides to immediately stop the violence and resume security cooperation. And then to follow it up with tangible steps that will enable them to get into meaningful negotiation again.

WOODRUFF: At this point, as I understand it, the Israelis are offering a nonspecific pledge for a gradual withdrawal from the Palestinian controlled areas. Is that sufficient? The U.S. is asking for complete withdrawal.

MITCHELL: Well, obviously, that's what General Zinni is going to be doing. The fact that parties disagree at the outset of negotiation is no surprise, otherwise of course, a negotiation wouldn't be necessary. But I think when the general gets into it, he'll be able to work out a process in which there will be reciprocal action by the two sides, to stop the violence.

So what has happened is a shock deterioration. Neither of them can win this thing in a purely military sense, although the Israelis, of course, have overwhelming military superiority. But the fact is, if there is going to a peaceful resolution and security for Israel, and a state for the Palestinians, that will come only through negotiation, not through continued violence.

WOODRUFF: What makes you confident that General Zinni will be successful?

MITCHELL: Well, I think it's mostly the negative reaction to the situation that exists in both societies and around the world. In northern Ireland, where I worked, Judy, a peace agreement ultimately became possible because people got sick of war. After 25 years and thousands killed and tens of thousands injured, a general weariness with war set in.

In the Middle East, life has become unbearable for the people in both societies -- for different reasons, but just as unbearable. And I think ultimately they're going to accept that reality that, as painful as political negotiation is, and the compromises that are required, it's far preferable to the continuation of this current level of violence.

WOODRUFF: But, Senator Mitchell, both sides have put up with violence, they've put up with enormous loss of life. What makes you think that now, or in the near future, is the moment when they're going to turn away from that?

MITCHELL: Well, I can predict, of course, when the moment will occur. But as often in these situations, until it happens you can't predict with certainty. I refer again to northern Ireland. Negotiations lasted nearly two years, or about 700 days. For the first 699 days, the process could be described as not working, and was described that way. Finally we get an agreement.

You have to have patience, perseverance. You must stick to it, and you must constantly remind the parties of the alternative of continued violence -- the heavy toll that it takes on their people, in lives lost, futures stunted, property damage. Just total devastation, and alienation, that's now occurred in both societies.

WOODRUFF: Do you believe that point is coming, though, when both sides have just had it with the violence, with the death?

MITCHELL: Yes, I do. Months ago -- it seems longer than that -- when I was in the region and met with Prime Minister Sharon and Chairman Arafat separately, they both said the same thing to me: Life has become unbearable for our people. The one thing I know about the two of them is they don't coordinate their messages. So they both had the same message separately. And of course, since then it's gotten much worse.

There isn't any way out of this on the current track. They've got to find a way to get back to the negotiating table.

WOODRUFF: The Israeli government presumably can control its own forces. But what about Chairman Arafat? Do you believe that he truly can control all of the militant, the radical Islamic groups?

MITCHELL: Our report called for a 100 percent effort at such control. The language was suggested by Israeli government officials, who told us we know he doesn't have complete control, but he must make a complete, 100 percent effort. That's what's been lacking.

No, he doesn't have complete control. But he has to make a complete effort.

WOODRUFF: And, how will it be possible to know when he's doing that?

MITCHELL: Oh, I think that's like a lot of things in life, Judy. You'll know it when you see it. The Israelis are very well-informed of what's occurring there. The United States is very well-informed. The Palestinians themselves have consistently sought international monitors, people to come in there to watch what happens, and to report on it.

I think we'll know it when it happens. And we do know it hasn't happened.

WOODRUFF: I'm asking partly because I saw today a quote from the founder of Hamas, Sheik Yassin, who said -- quote -- "Our resistance will continue, even with General Zinni here in the region." MITCHELL: There's no doubt about that. They have been opposed to this process. They have been opposed to the Palestinian Authority entering into it. And they've as well as they can to disrupt and destroy the process. That's what makes it very complicated and difficult.

There are divisions in both societies. Political divisions within Israel. As you know, the cabinet is a coalition cabinet. And just today we read in the papers about the threat by the defense minister to quit over the recent activity by the Israeli defense forces. And it's somewhat more open, overt and violent on the Palestinian side. That makes it complicated, but it doesn't make it impossible.

WOODRUFF: Should the U.S. have been more actively engaged than it has been recently?

MITCHELL: Well, I don't think anything is gained by going back over that. The president has recognized, and the secretary of state has recognized, that there has to be an intense effort, and that's under way now. And they should be commended for that.

WOODRUFF: Should it have been sooner, is my question.

MITCHELL: Well, how do you make that kind of judgment? I don't know, Judy. I don't have access to all the current intelligence information. And the best thing to say is, that an intense effort is under way. The timing of it has to be left to the administration under the circumstances which exist.

And the important thing now is to have a full, sustained, persistent effort. That's the key point. Perseverance and patience are essential in these circumstances. You can't take no for an answer and you can't be deterred by failures and setbacks. You just have to keep at it until peace is achieved.

WOODRUFF: Former Senator and peace envoy, George Mitchell. Thank you very much, Senator. Good to see you again.

MITCHELL: Thank you, Judy.

WOODRUFF: A check of the INSIDE POLITICS "Newscycle" just ahead, including courtroom appeals by family and friends, to spare the life of Andrea Yates.


WOODRUFF: Checking the INSIDE POLITICS "Newscycle." Earlier this hour, the Justice Department announced criminal indictments against the Arthur Andersen accounting firm. The charges are in connection with the alleged destruction of documents related to the Enron collapse.

The Senate judiciary committee is expected to vote soon on the nomination of Judge Charles Pickering to a federal appeals court. All 10 Democrats on the committee are expected to vote against Pickering, which could doom his chances for a vote before the full Senate.

A federal grand jury has indicted a Pakistani man in the kidnapping and murder of "Wall Street Journal" reporter Daniel Pearl. Attorney general John Ashcroft announced the indictment of Ahmed Omar Saeed Sheikh.

Russell Yates today asked jurors not to give his wife the death penalty following her murder conviction for the death of their children. The defense and prosecution agree that Andrea Yates was mentally ill. The jury decided that she knew right from wrong. Following the conviction, Texas Governor Rick Perry told me that the Texas law concerning the insanity defense is fair.


GOV. RICK PERRY (R), TEXAS: I don't think that that could stand. I think that clearly the people in the state of Texas feel that those how are going to commit heinous crimes are going to be punished in the state of Texas. But we do have a fair system.


WOODRUFF: The complete interview with Governor Rick Perry is coming up just a few minutes from now.

And now our "Taking Issue" segment.

Today, we are joined by Bay Buchanan of American Cause and Donna Brazile of the DNC Voting Rights Institute.

Good to see both of you.

BAY BUCHANAN, AMERICAN CAUSE: Thank you very much.


WOODRUFF: Donna, let me begin with you.

Vice President Cheney in the Middle East in the Persian Gulf trying to drum up support for the initiative to do something about Iraq, something about Saddam Hussein. Is the administration on the right path here?

BRAZILE: I think the administration is on the right path.

Saddam Hussein is a sworn enemy of the United States of America. We know he has both the biological, chemicals, lethal weapons of destruction. He is looking for an opportunity to strike us. So I think it is important that we exercise all our options. And it is time that the administration begin to really focus seriously on what steps we are willing to take militarily, and get the Congress on board, get our allies on board. And, as famous that American said, "Let's roll."

BUCHANAN: Donna, I will tell you what's the problem there. We say that he has these weapons. He has not indicated that he is threatening Americans at this time at all. So you to have to make a strong case that he is threatening us. Then you have to say -- what did President Mubarak say? He said if we should attack Iraq, all of the Middle East is going to explode. And it's going to explode with anti-American sentiment.

Wouldn't we have greater exposure to a terrorist attack if the Middle East is on fire with anti-American sentiment because we went in an unprovoked attack against Hussein just because is he a thug? I think there's other ways to do this. And if he is going to use them, isn't he more likely going to use if we are attacking him and he knows that we are going after his life and the life of his family? That's when he's most likely to use these weapons.

BRAZILE: Well, Bay, I don't think we should wait and wait for Saddam to give us a timetable of when he intends to strike us.

He has a rap sheet as long as the Mississippi River and as wide of the river in some of its parts. Look, we all know that he has killed his people. He has murdered people. So he is more than a thug. He is a murderer.

And let me just say this, Bay. For three years, the U.N. has tried to go in there and to inspect these weapons. And it is time that -- Mubarak wants to go in back in there. We need unrestricted time to go in there and take look at what is he is doing and what he is up to.

BUCHANAN: If we are to move on this, the president has go back to Congress to get authority.

Secondly, he has got to explain how we are going to do this. We don't have the Arab League with us. We don't have the neighboring countries with us. General Clark, General Wesley Clark has said 200,000, 300,000 ground troops necessary. Where are we going to put those fellows? And then, if we are successful, once we get all these troops into this country, are we going to just occupy this nation for a few years? What are we going to do?

WOODRUFF: Donna, quick word, and then we are going to move on to something else.

BRAZILE: We will not win the war on terrorism unless we deal with Saddam Hussein.

WOODRUFF: Domestic question: The president nominated Charles Pickering of Mississippi to sit on a federal appeals court. His nomination has run into big trouble. It looks as if -- although the Judiciary Committee has not voted yet, Bay, that it will go down. The Democrats are all saying they are going to vote against him.

Is this the kind of nomination the president should be allowed to make, or, as the Democrats say, should the president reach for a higher standard?

BUCHANAN: There is no higher standard

This man has the highest rating from the ABA, not exactly a right-wing conservative crowd. In addition to that, he has the black community in Mississippi. It's praising him. He has the Democrat attorney general from Mississippi flying up here supporting the nomination. This is not about Pickering, Judy. This is about the Democrats, a few handful of fellows who are just very, very mean- spirited human beings who are willing to smear the reputation of a decent and fine man for their own selfish agenda. That's all this is about.

WOODRUFF: Donna, it is true that Democrats in Mississippi are saying that Pickering should be confirmed.

BRAZILE: Look, I think there are a handful of Democrats in Mississippi that are saying that he is a good guy. And, look, he has a lifetime judgeship right now.

The Bush administration and Senator Lott have not made a real compelling case of why Judge Pickering deserves a promotion to the 5th Circuit. What we have seen, in looking at his record is that, in case after case, he has injected his own views, his own personal views and not followed the rule of law. So I think the Democrats and Republicans, if they would join the Democrats, to return this package to the Senate and find a more balanced individual to put on the 5th Circuit.

BUCHANAN: The president is not asked, as president of the United States, to send up balanced individuals. He sends those he believes are qualified. And because this fellow happens to be pro-life, that is where the Democrats have a real problem. He is pro-life. But I'm going to tell you something.


BRAZILE: Roe vs. Wade is the law of the land.

BUCHANAN: As of today.

Both Biden and Senator Leahy in 1997 said a judge has a right to have a full Senate hearing, that it should be a vote on the full Senate. And that's what the Constitution says, the Senate. These fellows will not send it to the Senate, because the Senate will confirm him.

BRAZILE: And I applaud the Democrats for giving him a hearing. Many Clinton nominees did not even get a hearing.

BUCHANAN: No, no. No Republican Judiciary Committee ever killed a judge


BRAZILE: They just smoked them out and said no.

WOODRUFF: We are going to have to leave it there. We will see you guys next week. Thanks very much. Donna, Bay, thanks so much.

BRAZILE: Thank you.

WOODRUFF: And we want you to give us your opinions on these topics and more. Go to POLITICS. Plus, don't forget to e-mail Bill Schneider with your ideas for this week's "Political Play of the Week." It's tomorrow.

When we return, my conversation with Senator Robert Byrd, as more lawmakers gripe about the Bush administration's dealing with Congress.


WOODRUFF: In the House today, lawmakers from both parties slammed the White House for its dealings with Congress, including Homeland Security Chief Tom Ridge's refusal to testify on the Hill. During an Appropriations Subcommittee hearing, Democrat David Obey accused the administration of having a -- quote -- "severe attitude problem." And Republican Ernest Istook said he was dissatisfied with what he called the quantity and quality of information coming from the White House on homeland security.

Over on the Senate side, I spent some time today with a Democrat at the forefront of that battle over Mr. Ridge. And that is Senator Robert Byrd.


(voice-over): Powerful chairman of the Senate Appropriations Committee, staunch defender of the Congress duty to advise and consent, Senator Robert Byrd of West Virginia wants Homeland Security Director Tom Ridge to testify before his committee. The president's response is unequivocal.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He doesn't have to testify. He is a part of my staff. And that's part of the prerogative of the executive branch of the government. And we hold that very dear. First of all, I'm not going to let Congress erode the power of the executive branch. I have a duty to protect the executive branch from legislative encroachment.

SEN. ROBERT BYRD (D), WEST VIRGINIA: I think that President Bush is being poorly advised on this matter. And I'm sorry for that.

The legislative branch does not seek to encroach upon the appropriate powers and functions and responsibilities of the president. I understand the separation-of-powers concept. And I have spent years here fighting to uphold the separation of powers. I say that the president is being poorly advised by someone because there is no justification for the Congress not to be kept fully aware, on behalf of the American people, with respect to the programs, the plans, the priorities of the Office of Homeland Security.

WOODRUFF (on camera): But if the president sticks to his guns and he says "We're not going to" -- he says, "We consult all the time." He said, "We will consult more, if that's what Congress wants, but you're not going to get Tom Ridge." Where is this going to end up?

BYRD: I don't know. And I'm sorry.

And I'm still hoping that the president can be convinced to send Mr. Ridge up here. I'm concerned that the administration seems to have drawn a line in the sand and has fantasized and is saying, "We're not crossing over that line." There is no good reason for that. Common sense dictates that the American people know what Mr. Ridge is doing.

We aren't not going to play gotcha. I have no political axe to grind with Mr. Ridge. I have only the constitutional axe, only the people's axe. And we are interested in protecting the people. We want to work with the administration. We want to help Mr. Ridge. I want to help Mr. Ridge. And I have said that all along. And that is still my intention.

WOODRUFF (voice-over): And what does the senator mean by helping Mr. Ridge? Byrd says he wants more money for the Office of Homeland Security and, according to political columnist Bob Novak, his home state.

(on camera): Today, in "The Chicago Sun-Times," columnist Robert Novak writes that you, in your efforts to work on homeland defense, have worked to get funding for a training institute in West Virginia. And Robert Novak says this is quote "only the most audacious instance of lawmakers turning the war against terrorism into a more lavish pork barrel."

How do you answer that?

BYRD: It is laughable. It is childish on the part of the person who makes that charge, childish. That's built on the old stereotype: Byrd-pork approach. That's an old stereotype. We have heard it over and over and over again. And I don't want to dignify Mr. Novak's childish statement by answering it, other than what I just said.


WOODRUFF: That was senator Robert Byrd this afternoon. Bob Novak will be along next and we will ask him for his response. And Bob will give us the "Inside Buzz" on how the Clinton factor is playing out in election 2002.


WOODRUFF: Now Bob Novak joins us to comment on what Senator Byrd had to say about your column today, Bob, and also for some "Inside Buzz."

First of all, the senator says it is childish and he won't dignify it with an answer, that it is the old stereotype.

ROBERT NOVAK, CNN POLITICAL ANALYST: I will dignify his answer with an answer. The senator doesn't like to give the president the money for the military part of this war that he wants because he wants to put in a lot more money for homeland security. He wants to get Governor Ridge up there to browbeat him. Governor Ridge has offered to have a private meeting, but that isn't good enough.

Now, the fact of the matter is that he wants to put this money for homeland security into West Virginia. He wants to make that the hub of training for anti-terrorism. And if that's not pork barrel, I haven't seen pork barrel in my 45 years in Washington.

WOODRUFF: All right, well, we will go back to the senator again and see if he wants to say anything about this more for tomorrow.

Bob, "Inside Buzz": Tennessee Senate race, the White House involvement, what's going on there?

NOVAK: This is the situation left open by the unexpected retirement of Senator Fred Thompson.

Now, the story has been put out by Congressman Ed Bryant, who wants to run, that the president, that White House is going to be neutral. Congressman Bryant got a call from the White House saying that was wrong. They are not pledged to be neutral. They are going to see how the race between Bryant and former Governor Lamar Alexander for the Republican nomination for the Senate works out.

There is no question that -- and they may support Alexander -- there is no question they prefer Alexander. They are afraid a tough primary battle, with the conservatives supporting Bryant, could result in the loss of a seat that they can ill afford in this tight race for the Senate in 2002.

WOODRUFF: Different subject: The state of Nevada has a Republican governor, but they are looking for lobbyists to help them in a campaign against the White House.

NOVAK: That's right. The White House wants to use Yucca Flat, finally, after all these years, as a national repository for nuclear waste. There is a bipartisan move against that. They are trying to block that in the Senate. They want a Republican lobbyist. They went to eight different prominent Republicans. They all said no, they don't want go against the White House.

They finally hired Ken Duberstein, who was Ronald Reagan's last chief of staff. Let me tell you, Mr. Duberstein is not held in high esteem at the White House right now. The Nevada people also went to Rudy Giuliani to get a little help on this nuclear repository situation. Rudy turned them down.

WOODRUFF: Why do you think so many Republican lobbyists turned them down?

NOVAK: Because they don't want to be on the wrong side of the White House. Mr. Duberstein is either a brave man or a foolish one. I don't know which. WOODRUFF: Last question: the Clinton factor. He has been out there campaigning for some Democrats. What is the evidence? What's the conclusion? Has he helped them or not?

NOVAK: Well, it's all in the eye of the beholder.

Erskine Bowles is running an uphill race for the Senate in North Carolina, Clinton's old chief of staff. He doesn't want to come within miles of Clinton. But, in Oklahoma, Former Governor David Walters, also running an uphill race for the Senate, has agreed to go to a fund-raiser in New York City later this week -- later this month, I'm sorry -- at $1,000 a ticket, where Clinton will be there. And that is a risky move.

Also, it's being held at the home of a man named John Catsimatides, who is a very controversial figure. His associates have been involved in a lot of episodes of white-collar crime involved with his company. So David Walters, who has kind of an interesting and colorful career, running against Senator Jim Inhofe, is saying: "Hey, Bill Clinton is my friend. And maybe he will help me." At he will least bring in those $1,000 ticket holders.

WOODRUFF: So it's not just geography.

NOVAK: That's right.

WOODRUFF: Sometimes it is surprising.

OK, Bob Novak, thanks very much. We'll see you later.

The Texas governor's race is today's "Back Page." My conversation with Governor Rick Perry when INSIDE POLITICS returns.


WOODRUFF: In Texas, the governor's race is already off to a fast start. Businessman Tony Sanchez won the Democratic nomination Tuesday with 60 percent of the vote. He now faces Republican incumbent Rick Perry, who became governor after George W. Bush was elected president.

A little earlier, I went "On the Record" with Governor Rick Perry. And I began by asking him about Tony Sanchez's election-night remark that Perry was -- quote -- "a do-nothing governor" who had rested on the laurels of George W. Bush.


GOV. RICK PERRY (R), TEXAS: Well, certainly we saw one of the most negative campaigns on the Democrat primary side in the history of the state of Texas. And his remarks after the campaign was finished in the primary were a continuation of that negativity. So I expect to see and hear that type of comments through the course of the campaign.

We are going to stay positive. We are going to talk about our children's education, what we have done here in the state of Texas. It's being referred to as the Texas miracle. Our Hispanic fourth- graders are first in the nation in math, as are our African-American math scores. They're second and third in reading. And so we are excited about what is happening here. But we expect him to be very negative.

WOODRUFF: Let me ask you about the economy of the state. Mr. Sanchez had criticized you earlier in the year for, in his words, squandering the state's surplus. He says that that $2 billion tax cut that you supported is a large part of the reason that there is a $5 billion shortfall now. So, in retrospect, now that the recession is over, were too those tax cuts too large?

PERRY: Well, they weren't. I think the vast majority of the people of the state of Texas supported those tax cuts, as did the vast majority of the Democrats in the legislature back in 1999, when those were passed. So he is little bit out of step with Texans.

The bottom line is, our economy is doing well. The recession that hit the rest of the country was substantially softer in Texas. Our economy is doing well. We have got a $114 billion state budget. And we have a constitutional amendment for a balanced budget. We are going to live within our means. I happen to think $114 billion is enough to take care of the needs of the state of Texas right now.

WOODRUFF: Tony Sanchez, obviously, is Hispanic. The Democrats are banking on a large Hispanic turnout this fall. The question is -- the question some are raising is: Are you going to be able to count on as large a Hispanic turnout for you as George Bush had?

PERRY: Well, I think this campaign is going to be decided on the issues, on the vision that each one of us will lay out.

I have been doing that now. This is my fourth statewide election. I think the Hispanic people of the state of Texas are interested in their children's education. They're interested in getting traffic moving, whether it is along the border or in Houston, Texas. They are interested in having health care. I am going to talk about those very positive, far-reaching, visionary issues.

And whether you are Hispanic or African-American, Asian, Anglo, that is what is going to drive this campaign, not one's ethnicity.

WOODRUFF: Well, both you and Mr. Sanchez obviously have connections to President Bush. Mr. Sanchez gave something like $100,000 to various Bush campaigns. He was appointed by Governor Bush to the University of Texas Board of Regents. Are you going to be able to count on all-out support from the president for your reelection?

PERRY: Well, you can bet George Bush, both 41 and 43, are going to be campaigning strongly for the Republican ticket in Texas.

WOODRUFF: Has he given you a commitment that he is going to be there early and often?

PERRY: I full well expect him to be here as needed during the campaign, both raising money, giving support. He is a big supporter of the Republican ticket here, John Cornyn, our Senate candidate, David Dewhurst, the lieutenant governor candidate, all strong supporters -- or, I should say, all strongly supported by the Bushes.


WOODRUFF: Texas Governor Rick Perry, facing Democratic opposition this November.

Well, we will tell you which politician is subway-bound next on INSIDE POLITICS.

But first, Wolf joins us with a look at what is coming up on "WOLF BLITZER REPORTS."

WOLF BLITZER, "WOLF BLITZER REPORTS": We're following several developing stories. Andrea Yates' husband tries to save his wife's life: what he said to try to convince a jury. And why is Rosie O'Donnell coming forward and coming out? One of my guests disagrees with her cause -- those stories plus a CNN exclusive: Witness a daring run for freedom after INSIDE POLITICS.


WOODRUFF: A quick check of what's in the works for Friday's INSIDE POLITICS: Bill Schneider will reveal his "Political Play of the Week." And Senate Orrin Hatch joins Jonathan Karl for the latest installment in our "Subway series." And, by the way, Candy Crowley will be sitting in for me here tomorrow.

That's all the INSIDE POLITICS for now. CNN's coverage continues now with "WOLF BLITZER REPORTS." Thanks for joining us. I'm Judy Woodruff.


Initiative; Judiciary Committee to Defeat Bush's Judicial Nomination; Arabs Worry About U.S. Attack on Iraq>



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