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Gephardt Blasts House Republicans on Corporate Scandals; McCain Calls for Tougher Legislation; Amateur Videotaper of Police Video Arrested

Aired July 11, 2002 - 16:00   ET


JUDY WOODRUFF, CNN ANCHOR: If that market update left you feeling a little queasy, it seems safe to assume that the rockiness on Wall Street is hitting President Bush in the political gut as well. I'm Judy Woodruff in Washington. And let's get right to the economic uncertainty here in the nation's capital, and how it is shaping this congressional election year.

With stock prices reeling after a series of business scandals, the Senate is moving closer to cracking down on corporate criminals. A final vote on a bill sponsored by Democrat Paul Sarbanes is expected on Monday.

Meanwhile, Senator John McCain says some of the reforms now before Congress are not tough enough. The Arizona Republican gave a speech today promoting his ideas for making corporations more accountable, and slamming CEOs who have enriched themselves at the expense of their firms and employees.

And, two days after President Bush's big speech condemning corporate abuse, the White House is acknowledging that Mr. Bush received more than $180,000 in loans from Harken Energy, when he served on that company's board more than a decade ago. The president is now calling for an end to these kinds of loans to corporate officers.

Senate Majority Leader Tom Daschle is with us now from Capitol Hill. Senator, you called earlier today for the president to urge the SEC to release all the documents on that loan. Why is that necessary? The White House says the loan happened.

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: Well, Judy, I think there are some questions that haven't been answered. I think there are some confusing issues that could be resolved and clarified if the documents were released. That happens quite frequently and I think, under these circumstances especially, it would clear the air and would allow everybody to feel, I think, that they know the facts and come to their own conclusions.

WOODRUFF: Are you saying you don't believe what the White House is saying? DASCHLE: Well, the White House has said conflicting things, and that's part of the problem. They've described the situation as a certain way, and then they reclarified their position. And I think that for the benefit of everybody, given the fact that these are questions involving accountability, questions involving integrity, that it would do well, I think, for everyone to release the information and to have a better understanding of it, especially now.

WOODRUFF: And if they don't?

DASCHLE: Well, if they don't, obviously that's going to be disappointing to the American people, and to many who are concerned about these circumstances. Clearly, the president, I think, needs to show that we can provide leadership here. And by providing leadership, we're in a stronger position, I think, to affect what happens in the corporate world. To set a standard that the corporate world can live up to as well.

WOODRUFF: Senator, the markets seem to be bouncing back somewhat today but they've been down the last two days. There's a lot of uncertainty in the air. What specifically does Washington need to do now to restore confidence in the markets?

DASCHLE: Judy, I think we first have to realize that we're not going restore confidence overnight. That it is going to take a little time. But I really believe that what we've done in the Senate, by setting a new framework, by clarifying just what accountants can and cannot do, by setting standards that ought to be adhered to, and then by creating real deterrents through the enforcement mechanisms that we put in place with the so-called Leahy amendment. That we really made a major contribution to this effort that could serve us very well in the years ahead.

WOODRUFF: But we're hearing analysts on Wall Street say that these kinds of proposals -- or even actions from the Congress, the president's proposals -- all these things are going to take time to implement. And some of them are saying, what are we going to do right now, in the short-term?

DASCHLE: Well, I think in the short-term, the very actions that we're taking send a clear message to the American people that those days of sleazy governance within the corporate boardrooms is going to end. We're going to be able to change the disposition, the attitude, the environment, that has been going on for too long.

It was triggered, I should say, by these revelations. And I think the actions that we're now taking will trigger a new level of confidence. As I say, not overnight, but over a period of time that I think can go back to the actions that you're seeing the Senate take tonight.

WOODRUFF: Senator, finally, the House Speaker Dennis Hastert is saying that what you and other Democrats are saying is really only politics. And I'm quoting him. He said, "They are desperate for any issue that will give them the momentum. DASCHLE: Well, I guess I would point to the overwhelming votes, Republican and Democratic, as a pretty good indication that this has nothing to do with politics. If it were politics, you'd have Republicans opposing these amendments and this bill. But you're going to see overwhelming support, bipartisan support, for these actions.

So I'm disappointed, really, the speaker would say that because I think, frankly, we're doing exactly what the American people expect. And we're doing it, as I said, on a bipartisan basis.

WOODRUFF: All right, Senator Tom Daschle, the Senate majority leader, thanks very much. Good to see you.

DASCHLE: My pleasure. Good to see you.

WOODRUFF: We appreciate it. And we will get the Republican view from Senate Minority Leader Trent Lott a little later on INSIDE POLITICS.

Now we turn to our senior White House correspondent, John King. John, I know you just did an interview with the president's spokesman, Ari Fleischer.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: I did, Judy. And he says what the Democrats are saying about these loans the president got more than a decade ago is apples and oranges.

Ari Fleischer saying that, yes, the president did receive $180,000 in loans back when he was a director for this company, Harken Energy. He says that was a common practice at the time and it was fully disclosed at the time, reported to the SEC. And that the president, then a private citizen, repaid the loans.

Ari Fleischer saying the Democrats trying to stir up trouble here. But, he says, no comparison to what the president did then to what the president is trying to outlaw now.


ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: More than 10 years ago this was a common practice. And in this case, the president did everything he was supposed to do with your loans: reinvest it in the company so your company can grow, disclose it publicly -- a far cry from what's happened today.

And that's why today, because of these abuses, the president has said, let's not leave room for any abuses. Let's stop this practice of loans. And I think in the end the Congress is going to agree with the president. And they'll accede to his call to stop any loans.


KING: White House certainly not happy the Democrats are questioning the president's business past. But a sense here at the White House, Judy, that this is dust-up, if you will, at the moment. The Democrats, in the view of the White House, seeking political gain. The White House believes all that will dissipate if the pace of action in Congress continues as it is. If there is quick agreement, the Senate passes a bill to have a conference with the House. The full expectation here is that by Labor Day, the president is having a signing ceremony in the Rose Garden -- a bipartisan piece of legislation. At that point, the White House believes it becomes much more difficult for the Democrats to continue these criticisms of the president.

WOODRUFF: John, it's pretty clear now, the president's speech did not calm all the volatility in the financial markets. How concerned are they at the White House, privately, about this?

KING: They are quite concerned, privately and publicly. And they will take some solace in today. Not a great day in the markets, but certainly not the big drops you saw the day the president gave the speech and then again yesterday. A relatively flat day in the markets today, a rally later in the day. So, the White House will take some solace in that.

Ari Fleischer, in that same interview, saying, look, the problems in the market predate the president's speeches. There are other structural problems to the economy that go beyond the accounting scandals right now.

But that is the bottom line at the White House. Yes, the president's past will come under scrutiny. Yes, the Democrats will try to say the Republican Party is too cozy with big business, to pro- deregulation, and that's how some of this mess was started in the first place.

The bottom line in the White House political strategy is, come November, if the economy is in good shape and if the Dow is on the way back up, at that point they believe this is not a political liability for the president and the Republican Party. The president, when he took office, the Dow was about 10,500, I think. They would like to see it back on its way up to that by the time the November elections roll around.

WOODRUFF: All right, John King at the White House.

And, speaking of what John just said, our Bill Schneider has been looking at the economy and the president's political calculations -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: As you said, the president has gotten a vote of no-confidence from Wall Street. His problem now: to keep that from becoming a no-confidence vote in the nation's economy.


(voice-over): It's the president who is regarded as commander in chief of the economy. This President Bush learned that from the first President Bush. So what can this president do?

He tried blaming his predecessor.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Problems long in the making, but now coming to light.

SCHNEIDER: But the problem is now and the ball is in this president's court. He tried making an appeal to character.

BUSH: Lasting wealth and prosperity are built on a foundation of integrity.

SCHNEIDER: But that argument got undermined by news about President Bush's own business record. There's one hope left: keep the bad news about the stock market from spilling over to the economy.

BUSH: Nearly every week brings better economic news and our discovery of fraud and scandal.

SCHNEIDER: After all, it's the economy that matters most to Americans.


Remember people talking about the wealth effect in the 1990s? The stock market boom made people feel wealthy, so they spent more money. Now we could see a reverse wealth effect. Declining stock values make people feel poorer. They spend less. That could doom the economy and the president.

WOODRUFF: All right, Bill Schneider, thanks very much.

Beyond stock prices, several barometers of the economy appear to be sending mixed signals. Wholesale prices edged up 0.1 percent in June. That's the first increase in three months, but still an indication that inflation is under control.

New claims for unemployment insurance shot up last week to a six- week high. But many of the nation's biggest retailers saw their sales rebound in June after a sluggish spring. Rajeev Dhawan is with the economic forecasting center at Georgia State University. He joins us now.

As we watch the market go up and down, what should we be looking at, Mr. Dhawan, in the larger economy, to give us a sense of the health, the broader picture here?

RAJEEV DHAWAN, GEORGIA STATE UNIVERSITY: What we need to look for is, is this crisis of confidence in the stock market, especially the CEOs, is going to affect their capital budgeting and hiring down the road? And that's what we care about because we need to have the job growth come back pretty soon to keep things going nicely and smoothly, the way we were used to seeing it.

WOODRUFF: Well, give us some examples. What exactly should we be looking for?

DHAWAN: We should be looking for job growth numbers, so this rise in the unemployment insurance claims was not good news. That means more people are being laid off and looking for help.

What we need is the CEOs to focus on the basic mission, which is to increase the sales and productivity of the company, which can happen only by opening up new areas, new products, doing investment and doing some hiring.

At this point they're all worried about looking back over their shoulder to see when the axe is going to fall on them. Once you have that kind of a scenario, you have the upper management caught up in the turmoil and not worrying about the growth possibilities.

WOODRUFF: I don't know if you were able to heard Bill Schneider just now, talking about at what point the concern over the market gets much bigger and becomes concerned about the economy. What about on the part of consumers, what should they be looking for here?

DHAWAN: Yes, I think the downturn in the stock market -- for example, I looked at my own personal portfolio and I found that my stocks were down by 8 percent in a month. That's not going to leave a good taste in our mouth. And that's going to show up as lower consumer confidence. And once you have that, you have less spending down the road, which means a weak economy.

So we need to shore up somehow the confidence in the market, among the minds of the people. And that's where all these statements by the presidents, and laws passed by the Congress, they will come in handy. Yes, they won't affect things very quickly right now.

But at least it will be clear that we are doing something to take care of the excesses of the last bubble in the '90s. Actually, what we are doing is we are mopping up the excesses of that bubble. And it takes some time.

WOODRUFF: All right, Rajeev Dhawan is with Georgia State University. We thank you very much.

DHAWAN: Thank you, Judy.

WOODRUFF: Senator John McCain is blasting what he calls crony capitalism. Up next: excerpts from McCain's latest campaign against the system. Is he trying to sound like Teddy Roosevelt?

Another political maverick is back in the spotlight. Did Ross Perot share some blame for California's energy crisis?

And later...


BEN JONES, "COOTER": Cooter's a permanent nickname for me. It's not just a character I once played. It's what people call me.


WOODRUFF: Can Cooter make a comeback in Congress? We'll revisit the "Dukes of Hazzard" star and his Southern strategy. (COMMERCIAL BREAK)

WOODRUFF: First off, we have some breaking news out of Los Angeles. The man who shot the amateur video of an Inglewood police officer -- actually, a group of them -- beating an African-American teenager a few days ago, has been taken into custody this afternoon by officials with the Los Angeles County district attorney's office.

It's not immediately clear why clear why the man was arrested. His name is Mitchell Crooks. He was scheduled to appear at a grand jury proceeding in the case this morning, but he did not appear. It's only a guess as to whether that has some connection with why he was picked up by the DA's office. We will bring you any more information on that story as soon as we have it.

Back in Washington, Senator John McCain laid out his vision today for battling corporate misconduct and restoring investor confidence in America's financial markets. In a moment, political analyst Ron Brownstein of the "Los Angeles Times" will examine McCain's larger agenda, beyond today's remarks. But first, some extended excerpts from the senator's speech.


SEN. JOHN MCCAIN (R), ARIZONA: The first principle of free markets, transparency and trust, have been the first victims of crony capitalism, evidenced most dramatically in the scandals involving Enron, Arthur Andersen, Global Crossing, WorldCom, Tyco and others.

The circle of culprits, witting and unwitting, include not only morally-challenged executives, compromised auditors, negligent institutional investors and securities analysts, and uninformed or indifferent directors, but inattentive government leaders of both parties and business journalists that have grown too comfortable on their beat to look beyond a corporation's annual report, to discern the soundness of management practices.

Those who claim to defend morality in business and politics must not only condemn the malfeasance that has spooked investor confidence, but take all steps necessary to prevent other executives, auditors and boardrooms, from emulating the practices of their selfish peers,

Investors will no longer trust the audits of public companies if they perceive an apparent conflict of interest, when accounting firms provide either simultaneously, or at some future date, consulting services to the same client.

Only a complete and permanent separation of auditing and consulting services will safeguard the integrity of audits. Stock options -- stock options are a legitimate and valuable form of employee compensation. But they must be reported as an operating expense. Otherwise, they obscure the company's real worth, misinform investors and encourage continued false reporting of profitability.

Top executives should be precluded from selling their holdings of company stock while serving in that company. They can be allowed to exercise their option, but their net gain after tax should be held in company stock until 90 days after they leave the company.

Moreover, strengthening public confidence in government oversight requires that those public officials, charged with the greatest responsibility for that oversight, will impress the American people with their unshakable resolve to protect the country from corporate abuses and conflicts of interests.

Obviously, that will also require that those officials not be the object of any reasonable public doubt that they might be influenced by their own conflicts of interest. Regrettably, the chairman of the SEC fails on both counts.

I am sure Harvey Pitt is a fine man, motivated by good intentions. Fine man though he may be, the circumstances today require a new leader of the SEC, whose background and record will leave no question that he or she will proactively assert the independence and authority of the SEC to protect the integrity of our markets. I hope that Mr. Pitt will continue to serve our country in another capacity.


WOODRUFF: That was Senator John McCain speaking at the press club. And in a few minutes we will analyze some of what the senator had to say. But right now we want to go back to that developing story out of the Los Angeles area. And that is the fact that the Los Angeles district attorney's office has taken into custody a man who was shooting amateur video of the African-American teenager beaten by police in Inglewood, California a few days ago.

And for the latest on what's happening there, let's go to Charles Feldman -- Charles.

CHARLES FELDMAN, CNN CORRESPONDENT: Judy, this is a fairly complicated story. We're going to do our best to try to sort this out and make it as simple as we can. And here's the way it appears to have unfolded.

Let's start from the beginning. Mitch Crooks, who is the young man who took that now-famous, or infamous, videotape showing the black youth being beaten, allegedly, by one white, Inglewood police officer. He was apparently at the building that houses CNN, here in Hollywood, earlier this morning, and was planning on doing an interview later in the day with CNN.

Before he got into the building, he was apparently placed under arrest by some plainclothes officers from the Los Angeles County district attorney's office. And we're going to show you some tape soon, so bear with me. But we're going to also try to piece this together chronologically, so you understand what happened.

Now, according to the district attorney's office -- and this is very important and very key to understanding the story -- he was not, and I emphasize that, he was not arrested because of anything to do with the videotape that he took. Nor, according to the district attorney's office, was he arrested because he had been subpoenaed yesterday to appear today before a grand jury looking into that beating, and he failed to show.

Rather, according to the DA's office, he was arrested on outstanding warrants from Placer County, California. Now, for those like myself, who are not thoroughly familiar with all the geography of California, Placer County is north, way north, of Los Angeles. North of San Francisco.

And I'm told by the district attorney's office here in L.A, that he was arrested on at least two different charges. One was an outstanding warrant for petty theft with a prior conviction -- and that would be a no-bailable offense in California.

And also, on a hit-and-run while driving under the influence. Because of those two outstanding charges, there was an arrest warrant apparently out for his arrest by the sheriff of Placer County, California.

Coincidental to that, apparently, was the fact that the young man also failed to show this morning before a grand jury, where he had been subpoenaed yesterday to testify about the videotape that he took in this particular case.

Now, we have a number of videos we're going to show and some eyewitnesses to this event. Let's first go to a piece of tape, or still shots, I should say. These were shot by security cameras outside the building here in Hollywood that CNN is housed in.

And you're looking now at some still frames. We apologize for the jerkiness of the picture. But what you're looking at are the plainclothes officers from the Los Angeles district attorney's office. And you see there the young man, Mitch Crooks, who was at that point being placed under arrest.

Now, we're going to pick up the story with Matt Furman. Matt, nice to meet you. And you are the PR director for CNN. You were down there driving somebody into CNN. What did you see? What did you hear?

MATT FURMAN, CNN EXECUTIVE EYEWITNESS: Walter Isaacson, the chairman of CNN, and I were being dropped off in front of the L.A. bureau. When we got out of the car, we saw the man later identified as Mr. Crooks, shouting and screaming, "help me." He looked to be trying to get away from several other men who were trying to hold him back.

He lunged or was pushed, it's not clear, across the hood of our car, and again, was screaming, "Help me!" At that point, the security officials who were meeting us at the entrance ushered us away. We didn't see anymore, but we continued to hear him scream, "help me," for another 30 or 40 seconds.

FELDMAN: Was there any exchange between you or Mr. Isaacson and the officers arresting this young man?

FURMAN: No, none at all. Again, it was a private security guard who ushered us away, told us that the individual was a crazy person. It turns out he was told that by the district attorney investigators who were there.

FELDMAN: So, a private security guard working for CNN?

FURMAN: That's correct.

FELDMAN: Told you and Mr. Isaacson that he was told by one of the arresting officers from the DA's office that the person being arrested was a crazy man?

FURMAN: Crazy person, that's right. That's the only explanation we were given. We were allowed back in the building as soon as he was driven away.

FELDMAN: OK, now we are going to cut to David Lake, who is a staff camera person here for CNN. David, hi, how are you?


FELDMAN: You were there with your camera. And your camera picked up where the security camera left off. So we're are going to show that tape first and we're going to bring up the audio a bit so you can hear the young man yelling and screaming.




FELDMAN: David, you were there. It was your camera that took those pictures, your audio that recorded that sound. Tell us what you saw.

LAKE: It was that blood-curdling scream that you heard that brought me downstairs. And then when I saw him -- or I saw someone being arrested, I thought, well, I should get my camera. That's when I went and got my camera out of my truck. And I came over to the van that he had already been placed in. And that's when I started to even hear him screaming more.

FELDMAN: And you can hear him here. We're playing the video again. You can hear him shouting, help, help. Did you hear him shout anything else?

LAKE: No, just mainly, "help." I also heard him before that saying, "you guys are going to beat me up like the others did," or to that effect. So -- and then when I went and got my camera, that's when he was placed in the Explorer and then whisked away.

FELDMAN: Matt or David, did either one of you hear the arresting officers read him his rights?

FURMAN: No, not at all.

LAKE: I never heard that, no. FELDMAN: Did either one of you hear why he was being arrested? Did they say, "you are under arrest," for whatever?

LAKE: No, I never heard that.


FELDMAN: OK, what was his demeanor?

LAKE: His demeanor was, you know, he wanted to get away. Actually at one time he tried to get out of one of the doors. And then they came over and shut that door very quickly.

FELDMAN: OK. David Lake and Matt Furman, thank you very much. And we are told, by the way, that the young man was taken from here to the grand jury, downtown L.A., where he has the option to testify or not, about the videotape that he took in the beating episode -- Judy.

WOODRUFF: And just quickly, Charles, is he still in custody?

FELDMAN: As far as we know, he's still in custody. Because once he's done with the grand jury -- and it's illegal for the DA's office to comment on whether anyone did or didn't testify before a grand jury. So we may not have that answer for a while, if at all.

But because he was arrested on these unrelated warrants in northern California, then yes, I would imagine he is still and will still be in custody for some time to come -- Judy.

WOODRUFF: All right, Charles Feldman in Los Angeles, what appears to be a disturbing development in the story. We're going to continue to follow it and bring you anything more that we're able to learn.

When we come back, I'll be talking with Senate Minority Leader Trent Lott about the economy and what the Bush administration is doing about it.

Plus, new information on U.S. cities where suspected al Qaeda operatives are under government watch, next in the "Newscycle."

Also ahead: Four top Cabinet officials travel to Capitol Hill -- the reason for their appearance when we come back.


WOODRUFF: Among the stories in the "Newscycle": As lawmakers continue to work on legislation cracking down on corporate misconduct, investors rode a roller-coaster today, with the markets ending the day mixed. The Dow is now down 6 percent for the week, the Nasdaq down more than 5 percent.

CNN's Kelli Arena reports that the FBI is closely watching suspected al Qaeda operatives in some of the nation's largest cities, including Seattle, Chicago, Detroit and Atlanta. Fewer than 100 suspected operatives are said to be under surveillance. On Capitol Hill, four top Cabinet members testified today at the first hearing of the special House Committee on Homeland Security. Secretaries Powell, Rumsfeld, O'Neill and Ashcroft defended the president's proposal for a new Cabinet department.

Well, the stomach-churning swings on the financial markets have given elected officials plenty of chances to assess blame for the decline in investor confidence.

CNN's Jonathan Karl has more on all the political finger- pointing.


JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT (voice-over): The House's top Democrat placed the blame for the current corporate scandals squarely on Republicans for easing regulations on corporate America after taking control of the Congress in 1995.

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: What I argue is that the actions or inactions that they took following these statements in 1995 are the reasons that we now have come on the threshold of crippling a lot of business, crippling the stock market, crippling the businesses that were doing things the right way.

KARL: As evidence, Gephardt presented a report detailing the key votes he said caused the current problem, especially a 1995 vote that put restrictions on shareholder lawsuits. It's a vote Gephardt has been harping on all week.

GEPHARDT: One of the biggest things they took away was the right of people to sue corporations for stockholder fraud.

KARL: Gephardt's report tells the story this way: Over President Clinton's veto, Republicans were able to muscle through a bill that shielded CEOs from liability from making dubious financial projections and reduced the potential liability of defendants, such as accountants, in securities fraud suits.

But what the report doesn't say is that 99 Democrats in the House and 20 in the Senate also voted for the bill, including Chris Dodd, Ted Kennedy, John Kerry, Joe Lieberman and Harry Reid. Kerry and Lieberman, both potential rivals to Gephardt for the 2004 Democratic presidential nomination, said they stand by their vote. Kerry's spokesman said it was an effort to curb frivolous lawsuits.

So, what does Gephardt say about his fellow Democrats who voted with the GOP?

GEPHARDT: I think you'll find that the great majority of Republicans supported these wrongheaded efforts and only a minority, in most cases, of Democrats supported these efforts.


KARL: The Republican National Committee accuses Gephardt of putting his own presidential ambitions ahead of his party's interests. The RNC is preparing its own report, a report looking at all the Democrats that voted for the bills that Gephardt is criticizing and blaming the Republicans for -- Judy.

WOODRUFF: All right, Jonathan Karl reporting from the Capitol.

And with us now also from Capitol Hill: the Senate minority leader, Trent Lott.

Senator, what about these charges by Congressman Gephardt and other Democrats that what the Republicans did back in the mid-1990s set the stage for the kind of abuses that we're seeing today?

SEN. TRENT LOTT (R-MS), MINORITY LEADER: Well, Judy, that is just a part of the blame game. This is the political season, unfortunately.

What we need to be doing is trying to figure out what we can do now to restore confidence and what actions maybe are necessary to add to existing law. A lot of what happened here is violation of laws. And we can add more laws on the books, but if you've got men or women in corporate structures that acted in bad faith or illegally, they're still going to do that.

Back in the '90s, though, if you want to look back to that period, we didn't pass anything that President Clinton didn't have to sign. In the one case of the securities-litigation reform, it was to curb frivolous lawsuits. It did have, in the Senate, a totally bipartisan vote. In fact, 20 out of 45 Democrats did vote for it, as was just noted in that previous piece.

But, rather than trying to impugn his motives, I'd rather just say, in the Senate, we're acting on some accounting-reform legislation. I added an amendment to it yesterday that added a number of the proposals that the president asked for to strengthen penalties for things like shredding documents. I mean, who doesn't know that, if you're fixing to be subpoenaed or there's an investigation, you shouldn't shred documents? But we clarified that, when that illegality would actually come into play.

We also provided some increased penalties in a number of these areas. And I believe we'll report -- vote on this bill early next week. And then it will go to conference.

WOODRUFF: Let me also ask you about a portion of the Sarbanes bill, the accounting-reform bill. You have the administration's treasury secretary, Paul O'Neill, saying that he has a problem with this, because he says it gives power to enforce securities law to an unaccountable body. Do you have the same concern that he does?

LOTT: I have a concern, if that in fact would be what happened. But that's not our intent. I mean, we still have the SEC, which is an accountable body. To have an independent board that looks at accounting principles, to me, makes some sense in view of what all has happened here. I introduced a bill with Senator Kay Bailey Hutchison back in early February, February the 8th, that had some of these reforms, including saying that you shouldn't be auditing and consulting for the same firm at the same time. Just the appearance is bad, if in fact the actuality is not bad.

WOODRUFF: Senator...

LOTT: So in my -- I guess I would have to say, in short, Judy, that I don't think I agree with Secretary O'Neill and I do support that part of the Sarbanes bill.

WOODRUFF: Senator, just quickly, two other things: First of all, should the president, should the White House urge the SEC to release those -- the documents having to do with the loans the president received when he was on the board of directors of Harken Energy?

LOTT: I don't know what the rules or the laws are on that. That issue I know has been visited and revisited. That did happen, what, 10, 15 years ago. And that decision will have to be made by the White House, in consultation with the right people. I just don't know enough about what was involved there to give an educated assessment.

WOODRUFF: But the question is, should these documents be made public?

LOTT: I don't know, Judy, because I don't know what's involved or what the laws or regulations allow for in that particular instance.

WOODRUFF: But why shouldn't -- why wouldn't they be?

LOTT: I don't know. That's what I'm just telling you. I don't know what is allowed there or what the history is. But I have no doubt that that was investigated; there is no problem; and that's just a way to try to pick up something that might appear to be a problem, whether it is or not.

Again, what we should be talking about is how do we deal with the problem we have right now, and to make sure that we correct these problems for the future. But, on that matter, I just don't know enough to even give you an educated, responsible reaction, Judy. I'm sorry.

WOODRUFF: All right. Well, Senator Trent Lott...


WOODRUFF: ... who is the Senate minority leader, good to see you. We appreciate it.

LOTT: OK. Thanks, Judy.

WOODRUFF: Thank you.

Our Bob Novak says the "Buzz" on the president's corporate crackdown is not pretty. Up next: a political accounting, plus a different kind of fund-raiser. Bob will tell us who is exactly nickel-and-diming the donors.


WOODRUFF: Here now with some "Inside Buzz" from the "CROSSFIRE" set at George Washington University: our Bob Novak.

All right, Bob, I know you have been talking to a lot of Republicans, as well as others, in the last few days. What are the Republicans in particular saying about the president's speech Tuesday?

ROBERT NOVAK, CNN POLITICAL ANALYST: Well, the politicians, Judy -- I thought it was a pretty good speech, but the politicians thought it wasn't strong enough: a lot of talk, no action.

What they would like is for -- and as in the days of Rudy Giuliani -- for the federal cops to come in and put handcuffs on the Enron or other executives and take them to jail. They want -- they don't feel that words are enough at this moment.

WOODRUFF: All right, if that's what the politicians are saying, Bob, what about Wall Street? What are the business people saying?

NOVAK: Just the opposite.

I got an e-mail from a very prominent financial adviser who used the "D" word, depression. He said, if these people on the Hill go wild with regulations and restrictions, we are heading not only for a double-dip recession, but a depression. They're really worried about the food fight -- the fire on -- they're out of control on Capitol Hill.

WOODRUFF: Now a totally different subject: We've heard about campaign-finance lobbying. What about anti-campaign-finance lobbying?

NOVAK: I was at an event last night in Washington, a fund-raiser for the James Madison Center for Free Speech.

Now, I didn't pay, Judy, to get into the fund-raiser. I don't pay for anything.


NOVAK: But this was a big-time event. The keynote speaker was House Speaker Hastert, House Majority Whip Tom DeLay. Senator Mitch McConnell got awards. And they were raising money to fight the McCain-Feingold bill.

Now, the interesting thing about it was: Guess whose name wasn't mentioned during a six-hour evening? The name -- I'm sorry, a four- hour evening -- the name of George W. Bush, like there was not a Republican president. These were Republican speakers, Republican attendees. They never spoke of the president, because he signed the bill they hate.

WOODRUFF: I bet the White House is listening to this.

And, Bob, I hope you do pay for your wife's birthday presents.



WOODRUFF: Bob Novak, thanks a lot.

NOVAK: You're welcome.

WOODRUFF: For whatever it says about the current political landscape, our new poll shows a majority of Democrats, 53 percent, now want Al Gore to run for president in 2004. That's up from 46 percent more than two months ago, but down from 65 percent last August. A little more than one-quarter of the Democrats surveyed actually want Gore to be the party's 2004 presidential nominee.

Checking the headlines in our "Campaign News Daily": Janet Reno has the name recognition, but Bill McBride has the cash in the Democratic primary for Florida governor. New campaign-finance reports show Reno has about $220,000 in the bank, with the primary less than nine weeks away. Her leading opponent, attorney Bill McBride, has $1.2 million. Incumbent Republican Jeb Bush dwarfs both Democrats, with almost $5 million.

California Governor Gray Davis is holding his lead over Republican Bill Simon despite budget problems and a state contracting scandal. Davis leads Simon by seven points in a new Field poll. But 25 percent say they are either undecided or would support a third- party candidate.

Michigan Congressman John Conyers has come up with an unusual plan to help fellow Democrats who are forced to run against each other in party primaries. Using a race in Conyers' home state as an example, the plan would call for longtime incumbent John Dingell to step aside in favor of fellow Democrat Lynn Rivers. And assuming Democrats win control of the House, Minority Leader Dick Gephardt could become speaker, while Dingell returns to private life.

Then, according to the plan, Gephardt might run for president and Dingell would be rewarded by his former colleagues by being elected House speaker. The Constitution, as you know -- you know, of course -- says that the House chooses its speaker, that that person is not required to be a member of Congress. It will be interesting to know what Mr. Dingell has to say about all this.

Well, the heat is on in California. Up next: flashbacks to the days of power outages and the connection to former presidential candidate Ross Perot.


WOODRUFF: While they sweat out a new heat wave this summer, California lawmakers today are investigating price-gouging during the state's power crisis last summer. The star witness: former Reform Party presidential candidate Ross Perot.

CNN's Rusty Dornin reports from Sacramento.


RUSTY DORNIN, CNN CORRESPONDENT (voice-over): Before the very first blackout rolled through California, the blame game was in high gear. State regulators blamed the feds. The feds blamed the market. Then energy companies became the bad guys, accused of gouging consumers and creating artificial shortages. The latest on the energy crisis hot seat? Billionaire H. Ross Perot.

ROSS PEROT, CEO, PEROT SYSTEMS: And Perot Systems believes there is no basis to conclude that it was in any way involved in the California energy crisis and that any suggestion to the contrary is false.

DORNIN: Accusers say Perot's company designed the software that ran California's energy systems. Leading the charge against Perot and other energy companies: state Senator Joseph Dunn. Dunn says Perot Systems told others how the market could be manipulated, because the company knew exactly how the system operated.

JOSEPH DUNN (D), CALIFORNIA STATE SENATOR: At the same time that they were in the process of setting those up, they were marketing the flaws that only they knew that were in those systems to the players that would play in that energy market, the Dukes, the Dynegys, the Enrons of the world.

DORNIN: The allegations focus on details of a so-called gaming seminar given by Perot Systems: gaming theories developed by Nobel Prize recipient John Nash of "A Beautiful Mind" fame.

DUNN: We are talking about gaming as in shutting down your plants to create an artificial shortage, artificially congesting the transmission system so that prices will go skyward. That's not in "A Beautiful Mind."

DORNIN (on camera): But is that illegal?

DUNN: That's the great debate, about whether that activity is illegal. It is not for our community to make that decision.

DORNIN (voice-over): Not only didn't his company do anything illegal, claims Perot, but there were no secrets to be peddled about the California system.

PEROT: The market rules were public knowledge. This is the most important thing I can communicate. Everybody could have access to the market rules.

DORNIN: But questions of legality won't stop here. Perot has also been invited to testify at a congressional hearing on California's energy crisis.

Rusty Dornin, CNN, Sacramento, California. (END VIDEOTAPE)

WOODRUFF: I will be back in a moment, but now let's take a look at what is coming up on "WOLF BLITZER REPORTS" -- hi, Wolf.


We're following a breaking development in the tape that has caused an uproar. We are awaiting word from the Inglewood Police Department near Los Angeles; also, an update on the missing girl Elizabeth Smart. Police say this man stole from the family. But do they think he may have done more than that? And are al Qaeda sleeper cells lying low near your city? Why the government is watching Atlanta, Seattle, Chicago, Detroit and others -- it is all coming up at the top of the hour, right after INSIDE POLITICS.


WOODRUFF: It could very well be one of those "True Hollywood Stories." The star of an old TV series, "The Dukes of Hazzard," goes on to become a congressman, loses his seat, and then tries to make a political comeback.

CNN's Bruce Morton picks up the story.


UNIDENTIFIED MALE: There's old Ace. You the man, Ace. You the man.

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): Ben Jones lives in a log house in Rappahannock County: population 7,000, no malls, no stoplights. He served two terms a decade ago as a congressman from Georgia and is now running in Virginia, where he grew up. But if he looks familiar, it's because he was -- is -- Cooter in "The Dukes of Hazzard."

BEN JONES (D), VIRGINIA CONGRESSIONAL CANDIDATE: Cooter is a permanent nickname for me now. It's not just a character I once played. It's what people call me.

MORTON: About 15 minutes from the house, in Sperryville, is Cooter's Place, which sells, of course, Cooter's stuff. He loves it. Kiss the baby, howdy with the folks, whatever.

JONES: This is what happens. Every time I see a pretty girl like Alley, look what happens to me. My hair starts wiggling like that.


MORTON: Most of the district is not this rural. It is the Richmond area. And it's rock-ribbed Republican. Incumbent Eric Cantor got 67 percent of the vote last time. And redistricting has not changed the lines all that much. But Cooter Jones says he can run as a conservative Democrat and win. JONES: A lot of people now, who used to be yellow-dog Democrats are yellow-dog Republicans. They are not sure why. It's just that they have a bad image of the national Democratic Party and see it as a bunch of leftists and hippies and radicals, which, of course, isn't the case. In the South, though, we can still speak the language.

MORTON: Jones campaigned for Virginia Governor Mark Warner, a Democrat who courted hunters.

AMY WALTER, "COOK POLITICAL REPORT": He took a pretty conservative stance on gun issues and then was able to go and talk to rural Virginians on other issues like the economy and jobs.

MORTON: Cooter on guns?

JONES: My position is basically the same one as the Bush administration's. The Second Amendment means that we individually have the right to own weapons.

MORTON: On a road where a gun store and a church face one another, he says the South believes in both.

At a $35.00-a-head Washington, D.C., fund-raiser, the Lonesome River Band is cooking. The event is sponsored by John Edwards' political action committee, another Southern Democrat who ran and won.

CROWD: We love Cooter! We love Cooter!

HARRISON HICKMAN, POLLSTER: In the South, the local public officials have learned how to talk to their local voters and to define themselves independently of the national Democratic Party. That's been the secret.

MORTON: Ben "Cooter" Jones has done that. He's a longshot still, but...

JONES: Cooter is a West African word for a turtle. I might be slow, but I'm ahead of you.

MORTON: You never know.

Bruce Morton, CNN, Sperryville, Virginia.


WOODRUFF: All right, that's it for INSIDE POLITICS.

"WOLF BLITZER REPORTS" is next. We thank you for joining us. I'm Judy Woodruff.


McCain Calls for Tougher Legislation; Amateur Videotaper of Police Video Arrested>



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