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CNN INSIDE POLITICS

Rangel Proposes Reinstating Draft; FBI Searching For Five Men Who Entered U.S. Illegally and May Have Terrorist Ties

Aired December 30, 2002 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CANDY CROWLEY, CNN ANCHOR: INSIDE POLITICS begins right now.
(BEGIN VIDEOTAPE)

ANNOUNCER: Is al Qaeda on the move? An attack on Americans and a new wanted list add to the end of the year anxiety.

REP. CHARLES RANGEL (D), NEW YORK: Let everyone have an opportunity to defend the free world against the threats that are coming to us from the Middle East.

UNIDENTIFIED MALE: Forward, march!

ANNOUNCER: Should the draft make a comeback? Faced with the prospect of a new war, is the Pentagon taking the idea seriously?

Jane Swift's stint as Massachusetts governor ends as it began, with controversy. We will ask her about the state's massive budget deficit, and her latest musing about politics and motherhood.

Counting down to the New Year: the unfinished business for President Bush, and the silver lining for Democrats.

(END VIDEOTAPE)

ANNOUNCER: Live, from Washington, this is INSIDE POLITICS with Judy Woodruff.

CROWLEY: Thanks for joining us. Judy is off this week. I'm Candy Crowley. We begin with the war on terror. New fronts and new fears as another holiday approaches.

In this "News Cycle," the FBI is searching for five men who entered the U.S. apparently illegally sometime last week. They are wanted for questioning in the bureau's investigation of the al Qaeda terrorist network.

In Yemen, a suspected Islamic extremist reportedly has confessed to killing three humanitarian workers and wounding a fourth. A local journalist tells CNN the suspect said he opened fire on the workers at a U.S.-funded missionary hospital to -- quote -- "get closer to God." Authorities say they are not sure whether the gunman acted alone.

And French police say they are questioning an airport baggage handler who was found with automatic weapons and explosives. He was arrested this weekend in a parking lot of Charles de Gaulle airport outside of Paris.

We have more now on the FBI's manhunt and its appeal to the public for help.

Here is our Justice Department correspondent, Kelli Arena -- Kelli, why does the FBI want to talk to these guys and where are they looking for them?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, it is a nationwide manhunt. The FBI has alerted its 18,000 state and local law enforcement partners in this effort, as well as alerting the public on its Web site with pictures of the men saying if you have any information at all about these men, please call your local FBI office.

The men are believed to have entered the United States illegally through Canada. There is no evidence suggesting any terror tie, but the FBI says this is part of a terror investigation, and they say that these are people are interest, in that they have a specific need to question in the broader realm of a terror investigation, but they're not saying that there's any specific or credible information that these men are involved in any attack or in any actual project that is underway.

CROWLEY: Well if they don't have any specific information about them, how did they come to their attention, and how did they -- how do they know or why do they believe they came across the border?

ARENA: Well, they were involved -- the U.S. and Canadians were working on a joint investigation into fraudulent visas and passports, and apparently these five men had procured a fraudulent passport. It was part of that larger investigation that intelligence came in suggesting that these men did enter the United States illegally. They started running these names through the databases, and apparently got some more information out of law enforcement authorities in Pakistan.

Beyond that, though, not much more is known. They are not -- their names did not come up in connection to any known terrorist or in connection to any previous terror attack. It is -- there's no concrete evidence either, Candy, suggesting that they actually did come in to the United States. It was intelligence that was gathered suggesting that that is what the men said, that it was their intent to enter the United States on or before December 24.

CROWLEY: Kelli, you've talked to people all day long. Do you get the sense in talking to them there is more than the normal sense of urgency about finding these men?

ARENA: Well, people have said that there is a great deal of concern and that they are taking this situation very seriously. As one source said, whenever this -- whenever these men are referred to by intelligence sources they are referred to as a group. They are connected, which led one person to speculate, Well, we could be talking about a possible terror cell. It is the grouping of the men as well as just the current climate and continued attacks overseas that has led to a heightened concern overall, but they are taking this very seriously, Candy.

CROWLEY: Kelli Arena, Justice Department correspondent. Thanks, Kelli.

Now to nuclear tensions with North Korea. As two U.N. weapons inspectors banished by Pyongyang prepared to leave the country today, South Korea said it may negotiate with the North, something the Bush administration has said it will not do.

CNN's Rebecca MacKinnon is in Seoul.

(BEGIN VIDEOTAPE)

REBECCA MACKINNON, CNN CORRESPONDENT (on camera): South Korea is now indicating it's not likely to fall neatly in line with the Bush administration's new policy of containing North Korea. South Korea's new president-elect, Roh Moo-hyun indicating today that the situation can only be solved peacefully and through dialogue.

ROH MOO-HYUN, SOUTH KOREAN PRESIDENT-ELECT (through translator): It is dangerous to have a war, even if there are complete preparations, so we have to do our best to avoid this violent dimension. The president is trying his best to resolve the diverse conflicts between North Korea and the U.S. by peaceful means, and I as the president-elect will do my best to allow people to go about their lives without any worries.

MACKINNON: To further emphasize the point, the outgoing president, Kim Dae-Jung, said in a statement to the cabinet today -- quote -- "pressure and isolation have never been successful with communist countries. Cuba is one example."

He went on to say that South Korea cannot go to war with North Korea, and he said, We can't go back to the cold war system and extreme confrontation.

Meanwhile, the latest statement out of North Korea monitored here in Seoul, the North Korean foreign ministry spokesman there hinting that North Korea may consider withdrawing from the nuclear nonproliferation treaty. If North Korea were in fact, to do so, that would mean that North Korea would no longer be bound by its obligations to let in international nuclear inspectors.

Rebecca MacKinnon, CNN, Seoul.

(END VIDEOTAPE)

CROWLEY: We'll have word from how the White House is reacting to all of this in just a moment, but first from another trouble spot, Iraq is accusing Washington of double standards, questioning why the U.S. is taking a diplomatic approach to North Korea while preparing for a possible war against Baghdad.

CNN's Rym Brahimi reports on Iraq's P.R. campaign and the United Nations' hunt for weapons of mass destruction.

(BEGIN VIDEOTAPE)

RYM BRAHIMI, CNN CORRESPONDENT (on camera): Well, inspectors here on the ground have stepped up their pace since yesterday when they had sort of slowed down with only three inspections yesterday.

Today, at least seven sites visited. A couple of biological teams went out today. One to a laboratory in Baghdad, another one to a facility that screens agriculture products, food, imported or exported from Iraq.

Another team, a team of missile experts went to visit a facility that they'd already checked on before to count a certain number of missile engine, and then another team went to check a water treatment plant and to check the chlorine that is distributed to water treatment plants outside of Baghdad. So a lot of activity there.

And all this time, the media campaign here in Iraq continues denouncing today in the main newspaper run by the Baath ruling party, announcing double standards on the part of the United States with regard to Korea, to North Korea and Iraq, saying that while North Korea has declared it has a weapons program, while the United States is prepared to negotiate with it, while Iraq, it says, has no weapons of mass destruction, but the U.S. still is trying to bomb it.

Rym Brahimi, CNN, Baghdad.

(END VIDEOTAPE)

CROWLEY: Secretary of State Colin Powell insists the situation in North Korea is not a crisis, but the president continues to keep close tabs on what is happening there through daily briefings at his ranch in Crawford, Texas.

CNN White House Correspondent Suzanne Malveaux is there with us now -- Suzanne, seems to me that South Korea has somewhat undercut where the Bush administration is on that.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Very interesting point, Candy, because actually, one of the White House spokesperson responded to that earlier today saying that, Yes, it is actually North Korea that is the one that is isolating itself from the rest of the world. It is not blaming the administration for isolating North Korea.

President Bush at his, what's called the Western White House, his Crawford Ranch, is monitoring the developments both in North Korea and Iraq. As you had mentioned before, Secretary of State Colin Powell explaining the administration's point of view on at least five talk shows yesterday saying that the White House does not intend to invade North Korea, but rather, wants to isolate North Korea using economic and diplomatic means, but senior administration officials do acknowledge, however, the success of this policy is going to depend largely on North Korea's neighbors, that being China, South Korea, Japan and Russia. (BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: The Japanese were ready to do more for North Korea. The South Koreans were, and the North Koreans have put that all at risk, playing with the fool's gold of nuclear weapons, which will not make them stronger, will not make the society better, and will not intimidate either the United States or its allies.

(END VIDEO CLIP)

MALVEAUX: Now, those key neighbors, one being China, is North Korea's largest trading partner. It supplies 70 percent of the crude oil. It is also a major provider of food as well as other goods. South Korea has a policy of engaging North Korea, its sunshine policy supported by both the current and new regime.

They also have new initiatives to build railroads linking the two countries as well as developing economic free trade zones.

Now Japan has been -- was set to contribute some $10 billion in economic aid if relations had been normalized. That has been scrapped, because North Korea's nuclear brinkmanship as well as the controversy over kidnapping of Japanese citizens has really soured their relationship, and finally, Russia. Russia and North Korea signed a trade and economic pact in 2001. They trade about $100 million of goods each year.

Now, Candy, we should know as well there's going to be a flurry of diplomatic activity. The administration really hoping to push diplomatically and economically to get North Korea to change its course. The administration is going to be sending a high-level (UNINTELLIGIBLE) Seoul in the weeks to come. Also, South Korea will send its own representatives to Russia and China. All of this in the hopes that North Korea will go ahead and abandon its nuclear weapons ambition, but, again, the administration also emphasizing it is willing to take as much time as necessary to make this work -- Candy.

CROWLEY: Suzanne, before you go I wanted to ask you about another part of the world. The American missionaries killed in a hospital in Yemen. Any reaction from the White House?

MALVEAUX: A White House spokesman earlier today saying they condemned this act, they're working with investigators to get to the bottom of this, but also saying it was much too early to make a connection to al Qaeda or other terrorist groups. But they will allow the investigators to do their jobs. And again saying this only under scores just how dangerous the situation is not only in Yemen but also the rest of the world.

CROWLEY: Thanks very much. Suzanne Malveaux with the president in Crawford, Texas. Thanks.

There is much more ahead on INSIDE POLITICS.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: I'm Bill Schneider in Los Angeles. Americans are not exactly popping their corks as they review their end of the year finances. I'll look at message behind the latest economic poll results.

CROWLEY: Also ahead; any heavy lifting expected on Capitol Hill? Our Bob Novak has some weighty inside buzz.

And what did Jane Swift mean when she said her public role as mother sometimes tainted her judgment as the politician. I'll ask the soon to be former Massachusetts governor.

And drafting a plan to reinstate the draft. Will a lawmaker's proposal fly at the Pentagon?

(COMMERCIAL BREAK)

CROWLEY: It's time to check your "I.P." I.Q. Jane Swift became the governor of Massachusetts when this man left office. Was it, A., William Weld? B., Paul Cellucci or, C., Michael Dukakis ask stay with INSIDE POLITICS we'll tell you the answer later on in the show.

(COMMERCIAL BREAK)

CROWLEY: New York Democrat Charlie Rangel surprised a lot of people yesterday when the Congressman announced here on CNN he plans to introduce legislation reinstating the military draft. Rangel opposes a war against Iraq. He says a draft would require sacrifice from both the rich and the poor and could make U.S. leaders more cautious before heading into battle.

(BEGIN VIDEO CLIP)

RANGEL: When you talk about a war, you talk about ground troops. You're talking about enlisted people, and they don't come from the kids and members of Congress. You know that and I know it.

(END VIDEO CLIP)

CROWLEY: With me now to talk more about Congressman Rangel's comments, senior Pentagon correspondent Jamie McIntyre. Jamie, this certainly is not a new idea, we've heard it before. Basically, does the Pentagon need more people? Have they ever thought reinstating the draft?

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: The issue has come up since September 11. Every time Defense Secretary Rumsfeld is asked about if, not a chance, those were his words, that the U.S. Would return to conscription. Secretary Rumsfeld makes the argument that while you could argue there might be some social good in a draft, from a military standpoint, it's simply not needed. The U.S. is able to attract and retain the number of people it needs in the military through its voluntary recruiting.

The U.S. only has, 288 million people, only has 1.4 million active duty troops and another 1.3 million in reserves. That's not a huge military, compared to the size of the country. If everybody served at some time in the military, far more people than the U.S. really needs. Here's how Rumsfeld but it when asked about a draft earlier on "LARRY KING LIVE".

(BEGIN VIDEO CLIP)

LARRY KING, HOST "LARRY KING LIVE": Think we'll need a draft?

DONALD RUMSFELD, DEFENSE SECRETARY: Absolutely not. Absolutely not. No. I mean, I was one of the sponsors of the volunteer army back in the 1960s and I was a Congressman. And what we were doing in those days was using force, compulsion, conscription, to bring people into the military so we could pay them 50 60 percent of the civilian man power market wage, whatever was fair. And we used compulsion to underpay people.

KING: But we clothed and fed them.

RUMSFELD: We clothed them and fed them. We brought them in, spewed them out after 18 or 24 months, that's the least efficient thing you can do.

(END VIDEO CLIP)

MCINTYRE: The bottom line is from the Pentagon's perspective, this issue is a non-starter, even if it's argued it would be good for some young people it would be very expensive and not necessary, according to the Pentagon.

CROWLEY: Jamie, one of the things that Congressman Rangel said or implied was, look, if people that were the sons and daughters of Congressmen policymakers that sort of thing that is sort of richer people, were in the army, that we would think twice before going to war. Has that question ever come up, and what's the response there?

MCINTYRE: I don't have statistics on whether or not a portion of people who came from affluent backgrounds, as opposed to moderate or lower incomes are in the military. One thing, many of the military leaders here, commanders here, have sons and daughters in the military. Have a family of military tradition.

And I think that Secretary Rumsfeld and all of the military commanders on down would say that they take very seriously the question of sending young men and women into battle, and they argue -- say at every opportunity, when it comes to this war with Iraq, war should be the last resort, and they still haven't ruled out diplomacy or some sort of coerced diplomacy in resolving the situation in Iraq today.

CROWLEY: CNN senior Pentagon correspondent Jamie McIntyre.

Thanks, Jamie.

We'll turn our attention to the markets momentarily. First a year-end look at how Americans view the economy. A new CNN/"USA TODAY"/Gallup poll has a snapshot of public attitude.

Our Bill Schneider is in Los Angeles and with me now.

So, Bill, what's in the poll?

SCHNEIDER: Well, Americans feel worse off. They've noticed a deterioration in their financial situations over the course of this year. For instance, at the end of last year, 37 percent said they felt better off. And the same number felt worse off. At the end of this year, 33 percent feel better off while 44 percent say they're worse off.

The economy is faltering, Candy, and people are feeling it in their pocketbooks.

CROWLEY: Do they feel that 2003 will bring a little relief? Or are they looking forward to more of the same?

SCHNEIDER: A few of optimistic, about their own financial prospects. Sixty-one percent expect to be better off a year from now. You know what? Americans are always optimistic about their own prospects. A year ago, 69 percent said they thought they'd be better off by now. What really matters is how they think the country's going to do. On that, the outlook is not so rosy.

A year ago, 44 percent of Americans said they thought economic conditions of the country were getting better. 48 percent said worse. Now the numbers say thing, getting better, it's down nine points to 35 percent. 50 percent say the economy's getting worse. People don't see a lot of good news out there.

CROWLEY: You know, Bill, during the midterms, one of the things we saw that even though people were concerned about the economy, they didn't seem to blame George Bush.

Do you see any change in that attitude?

SCHNEIDER: Well, we're seeing some evidence of repercussions for the president. The president's current job approval rating stands at 61 percent. Not bad, but it is the lowest rating he's gotten since the terrorist attacks of September 2001.

Now the president's not in trouble yet, but he's slipping. The economy, you'll remember, brought down his father in 1992. Are Americans in as much trouble now as they were then?

Let's take a look. At the beginning of 1992, 48 percent of Americans said they were worried about being able to maintain their standard of living. Now, 36 percent say they're worried.

Health care was a big issue in 1992. Forty-eight percent said they were worried about the cost of health care. Now, 33 percent say they're worried.

And what about unemployment? At the beginning of 1992, the nation's unemployment rate was over 7 percent. Now it's exactly 6 percent. Then, 36 percent of Americans said they were worried about losing their jobs. Now, 24 percent are.

Americans are not in as much trouble now as they were then. Then they were angry. Now, I'd say they're worried -- Candy.

CROWLEY: Bill Schneider, out in what I hope is sunny California for you.

SCHNEIDER: It is.

CROWLEY: Thanks very much, Bill.

SCHNEIDER: Thanks.

CROWLEY: My interview with acting Massachusetts Governor Jane Swift is still ahead.

But up next, we'll talk about Swift's parting words in our "Daily Debate."

Plus , views from the right and left on what's behind Congressman's Rangel call to reinstate the draft.

(MARKET UPDATE)

(COMMERCIAL BREAK)

CROWLEY: It's time again to check your "I.P." I.Q. Jane swift became the governor of Massachusetts when this man left office. Was it, A, William Weld? B, Paul Cellucci, or C, Michael Dukakis?

The correct answer is B, Paul Cellucci. Swift took over the governorship when President Bush appointed Cellucci to become the ambassador to Canada. Cellucci himself became governor when William Weld resigned in 1997.

(COMMERCIAL BREAK)

CROWLEY: With us now Maria Echaveste, former Clinton White House deputy chief of staff; Betsy Hart with Scripps Howard News Service.

Let's talk about the draft here. So Charlie Rangel brings it up and we've now spent the day sort of talking to a lot of people about it. Good idea?

MARIA ECHAVESTE, FORMER CLINTON WHITE HOUSE DEPUTY CHIEF OF STAFF: Well, I think -- let's start with the defense of democracy -- we need to distribute that democratically. And the fact is that the all-volunteer Army is populated by a lot of poor people, brown and black, and when you go to war, those are the lives that are going to be lost.

And I think what Charlie Rangel is saying is, let's make sure that the risk and the burden of defending our democracy is spread across -- across the line.

BETSY HART, SCRIPPS HOWARD NEWS SERVICE: But the point is, it is a volunteer army. Nobody is forcing anybody into it, which is the marvelous work of the marketplace here. In fact, for many of these people, as you know, who might not have other opportunities in the marketplace, it's a tremendous opportunity for them.

If you go to a draft situation, of course, you create all kinds of not only political and personal and personnel problems. And, as we heard earlier on CNN, we simply do not need to do that. We have what we need to fight the war with the volunteer army.

Charlie Rangel is trying to put an ugly face on it, because that's what liberals do. They like to scare people.

(CROSSTALK)

CROWLEY: OK, let me ask you this.

The implication -- is the implication that the white men at the Pentagon and the white men up on Capitol Hill more easily send people of color to war?

ECHAVESTE: No, the implication is that we, as a country, may be less willing to ask the tough questions about whether we need to go to this war, the risks that are there, when it's not all of our children, and the lesson that we must have learned from Vietnam was the fact that once those loopholes, college deferments and all of the loopholes that were closed and suddenly you had white, middle-class sons being killed, the outcry from the people stopped that war.

HART: Maria, this is outrageous. This is what happens when you have a draft. You have people who found ways to get out of it. When you have a volunteer force, and we have a plentiful one for America's needs, is when everybody is there, has signed up, of their own free will to be there, so you don't create those resentments, and what you're looking for is to create a class warfare situation. That's not what we have now in the military.

CROWLEY: Let me move us on just because I want to get to Jane Swift, who is the outgoing Massachusetts governor. The first woman to give birth in office -- not actually in her office....

HART: Thankfully. Thankfully, yes.

CROWLEY: ...but while being governor, and also got into some trouble because it turned out that as lieutenant governor, she used some of her aides to babysit her children, a helicopter to get home.

I want to read you what her sort of political epitaph was for herself and something she wrote when she said, Who wouldn't want to recast history in a more attractive mold? Of course I would relish leaving office with accolades, high poll numbers and flattering tributes to my service. I expect that will not be the case.

I expect she's right. Look, did -- was Jane Swift done a disservice? Was she treated more harshly because she was a mother, or did she just blow it?

ECHAVESTE: Well, I've talked, actually, to some folks in Massachusetts who are familiar with her governorship. And they say that unfortunately, she was -- her competence, her capability, were really overshadowed by a few mistakes that she made where her instincts as a mother made her make a wrong decision, but that she did a good job, but balancing work and family is a hard thing, and she was under a lot of scrutiny as a working mom.

HART: Yes, actually, not a particularly good governor. She was a Republican. Normally I would appreciate that in the state of Massachusetts, but no visionary by any means and she did get into trouble because she tried to make this case that you can have it all. You can be a great mom to a bunch of little kids, you can have a very high-profile, high-pressure job and most working moms know that that is just not true.

And it's not scandalous to admit that it's not true. That you can have it all, but maybe not all at the same time.

CROWLEY: We don't have a lot of time left in a minute, but I wanted to know -- did she hurt women who want to be politicians? Did she hurt mothers who want to go out into the workplace? Where -- did she do harm in a general sense?

ECHAVESTE: I think she just raised the issues that all of us are facing as working moms. And I think that there will be moms who decide they want to run for office and they're going to make those decisions anyway.

HART: I think most moms want to take time away to be with their young kids. Why can't we just say that?

CROWLEY: Betsy Hart, thank you very much.

HART: I just did.

CROWLEY: Maria Echaveste, thank you very much.

See you in the new year.

ECHAVESTE: Absolutely.

HART: You bet. Happy new year.

CROWLEY: Well, now, we've talked about her. Up next, we'll talk with her. Jane Swift joins me to talk about her time in public office, her state's budget crunch, and the challenge as serving as active governor and full-time mom.

(COMMERCIAL BREAK)

CROWLEY: Are the high-flying Republicans headed for a fall? Jeff Greenfield reads the signs just ahead.

(NEWS BREAK)

CROWLEY: Jubilation today in Kenya where, after a quarter- century under strongman President Daniel arap Moi, Kenyans finally elected a new president.

Catherine Bond attended the inauguration. And it truly was a political party.

(BEGIN VIDEOTAPE)

CATHERINE BOND, CNN CORRESPONDENT (voice-over): The crowds were huge, the mood ecstatic. Tens of thousands of people packed Nairobi's central parade grounds to witness the swearing-in of Kenya's new president, Mwai Kibaki, who had to remain seated to take his oath of office because of a leg injury from a road accident during campaigning.

Earlier, it had been almost impossible for vehicles to snake their way into the grounds, the area in front of the grandstand a crush of politicians and television cameras, this only the third time in almost 40 years that Kenya's had a new president.

A reluctant outgoing President Daniel arap Moi, statesmanlike for this, a peaceful handover of power after an election described by members in the international community as remarkable. Africa, Mwai said, can change its destiny on its own.

Just to get a glimpse of the inauguration, people climbed trees and lampposts, packed the balconies of nearby high-rises, and perched on rooftops, mounted police driving people back when they pressed forward. Kibaki, in his inauguration speech, saying he won't Kenyans people down. his pledge: a journey to a promising future.

(on camera): And Mwai Kibaki will have his work cut out, appointing a new government to debate a new constitution, reinstalling the commitment (INAUDIBLE) and passing laws to help punish politicians after the prevalence of corruption.

Catherine Bond, CNN, Nairobi.

(END VIDEOTAPE)

CROWLEY: Up next: an interview with outgoing Massachusetts Governor Jane Swift. And Bob Novak forecasts some turbulence for treasury secretary nominee John Snow.

And a "Snapshot" from Hawaii in today's "Campaign News Daily."

Stick with us.

(COMMERCIAL BREAK)

CROWLEY: Massachusetts acting Governor Jane Swift leaves office this week after a groundbreaking, but sometimes turbulent 20 months. Governor Swift is with me now me from Watertown, Massachusetts.

Governor, thanks so much for joining me.

ACTING GOV. JANE SWIFT (R), MASSACHUSETTS: Thank you, Candy. I'm glad to be with you this afternoon.

CROWLEY: I was talking with two other women right before this last break, talking about how tough it really is to be both a mom and any kind of professional, from switchboard operator to governor of the state.

Do you think that you were -- that being a mother made you a less good politician or being a politician made you a less good mother?

SWIFT: I don't think either.

I think, like anybody else, I was somewhat unaccustomed to the limelight and made some mistakes early in my tenure. But I happen to believe that mothers and women and fathers and men, we all have different life experiences. And they provide very valuable insights into the role of governing. And we should all working toward a time -- and I guess I'm a little biased on this. I saw some of the clips you were using, so your viewers will know I'm the mother of three girls.

I think we should all be working toward a time when people's individual decisions and their opportunities aren't determined by their gender.

CROWLEY: Do you fear that the uproar over the baby-sitter and some other things did hurt women politicians who want to get into office? I think this probably applies most to child-bearing-age women.

SWIFT: Well, I hope that people will look at my experience in its totality. I have only been governor 20 months, but there have been some historic events that have affected Massachusetts, as well as the rest of the country. I prefer to focus on those facets.

We have made some of the greatest improvements in public education. I think, arguably, we have some of the best public schools in the country today. Since September 11, when we had to accept the responsibility that two planes took off from Logan Airport, I was one of the first governors to call to federalize airport security. And today, Logan Airport is a national pilot site for safety and security.

And while Massachusetts, like many other states in the country, has its challenges on the fiscal front, I have consistently closed those gaps, unilaterally reducing spending by $850 million over the past 15 months. So, I think, certainly, the things that are somewhat exotic and different about me will always attract some attention. And I believe, if looked at in the totality of all of my experiences governing, it should make it and I hope it will make it easier for women who follow.

CROWLEY: Governor, let me sort of switch topics here and ask you about the budget. As early as a week ago, you were saying it was going to be balanced. Now you're going to hand the incoming governor, Mitt Romney, $100 million deficit.

How does that happen? And I notice that you also said that you were surprised that people thought there was animosity between the two of you. And yet this is sort of being determined as part of that, kind of, like, leaving him with this $100 million deficit.

SWIFT: Nothing could be further from the truth. We, in fact, have been providing the Romney team with all of the data and all the revenue collection data on a daily basis. This gap, whatever it ends up to be by tomorrow afternoon at 5:00, shouldn't startle anyone who is following finances throughout the country. I think California currently has an 18-month projected deficit of $25 billion, bigger than our entire budget deficit.

I know my good friend John Rowland in Connecticut is trying to get his legislature to deal with a $500 million deficit. We have and I have closed deficits by hundreds of millions of dollars by unilateral action.

CROWLEY: If I could interrupt you, Governor, just because our time is sort of short, I guess the question is how it could go from last week you thought it was going to be balanced to being minus $100 million this week.

SWIFT: Well, by the time we close the books tomorrow, that number is still volatile. Our withholding collections -- which is probably too technical than you want to be -- and we think a lot Christmas bonuses didn't materialize, even worse than they did last year.

But volatility in the tax collections, whether this is a blip or a trend, is one of the reasons I believe that, with a little more data, the new administration and the new legislature should continue to work together, as we have with the legislative leadership over the last year and a half, and as many states have been faced with, to close gaps.

Unfortunately, I don't think it's going to be news to anyone in the country that our economy, particularly in the Northeast, seems not to be getting better.

CROWLEY: And a last question for you, Governor. And it is about your successor, Mitt Romney. If someone had been a male governor in your place, would they have had such a strong challenge as Mitt Romney gave? You literally had to give it up before you even had a primary.

SWIFT: Well, I think that there are -- I made a choice. And I wanted to deal in an honest, up-front way with the budget situation. I knew that wouldn't make me popular. I faced what many other individuals around the country are facing, a well-financed, personally wealthy opponent.

I think there are trends that are similar in Massachusetts that folks haven't focused on as much as my gender, but I accept that as part of the -- what happens when you go first.

CROWLEY: Governor Jane Swift of Massachusetts, we wish you, your three little ones and your husband well. Thanks very much for joining us.

SWIFT: Thanks, Candy.

CROWLEY: We're going to switch now from Massachusetts and go down south to our Bob Novak, who's in Atlanta.

So, Bob, I've got to guess there's a football game going on, but let's get on to what Congress is doing.

You're looking at sort of a light schedule for them?

ROBERT NOVAK, CNN POLITICAL ANALYST: Candy, there was a lot of talk that Congress wouldn't fritter away January, as it usually does.

And get a load of this schedule for the House of Representatives. They come in on the 7th, at noon on the 7th, stay on the 8th. And then no votes past 5:00 p.m. on Thursday the 9th. Then, for the next two weeks, there are not votes at all. In effect, they're out of business. They return on Monday the 27th at 6:30 p.m., all day Tuesday the 28th. And then, on Wednesday, no votes past 2:00 p.m.

And that's all for the month of January. That's a total of six days, only two days, only two full days. That makes banking hours look like the labors of Hercules, not heavy-lifting, Candy.

CROWLEY: Well, Bob, I think a lot of people, we could have a real debate on whether the country is better or worse off when they're in office.

But let me move on to Bob Graham, senator from Florida, thinking about a presidential bid. What are you hearing?

NOVAK: When he said that last week, it was a big surprise.

I checked around with some savvy Democrats. And there's a lot of interest in him, because they look at him as somebody who could beat George W. Bush. He's a mature politician, an adult. He has a moderate image, although a pretty liberal voting record. He voted against the Iraq resolution, but he has a reputation as a good man on national defense. He's outgoing chairman of the Senate Intelligence Committee.

So, the question is not so much whether Bob Graham can get elected. Can he get nominated? Some people think he would have to stay out of the Iowa primary, hope to survive in New Hampshire, and wait for the Southern primaries, especially South Carolina.

CROWLEY: Well, there you go. He's got a blueprint from you on how to make it through the primaries.

Let me move on to more immediate business. The president brought in a new economic team. He has a new treasury secretary-designate, Snow. Pretty easygoing for him, or no?

NOVAK: Not at all.

There's nothing better than the White House would have liked than to have John Snow quickly confirmed as secretary of the treasury. But I am told that the labor unions, who didn't like him when he was the president of CSX, the railroad company, is going to give him a hard time. And beyond that, what really is a little worrisome, no evidence of wrongdoing, but whether he gets questioned on whether his sale of the company's stock just before it went down, why he sold it at that time. The point is that, even though it's a Republican-controlled Senate Finance Committee, it's not going to be one of those routine Senate confirmations, one day and you're out, that the White House had been hoping for.

CROWLEY: Let me squeeze one more question into you, Bob. I understand the Democrats are sort of looking a little glum having lost a primary fund-raiser?

NOVAK: That's Richard Gephardt. He just stepped down as House minority leader, one of the great fund-raisers of all time. Now, they have still got some very good fund-raisers in the new minority leader, Nancy Pelosi, and the House minority whip, Steny Hoyer.

But Gephardt was the king of fund-raisers. And he is going to be fund-raising for himself for his presidential run. And they need a hot fund-raising, because, with no soft money and a lot of bills to pay, there's a lot of money worries by the House Democrats that they're not talking about publicly.

CROWLEY: Bob Novak, looking very dapper in your Christmas outfit, thanks. See you later.

NOVAK: Thanks.

CROWLEY: Checking the headlines in "Campaign News Daily": Hawaii Democrat Ed Case has picked up the endorsement of his state's largest newspaper in this weekend's special election for Congress. "The Honolulu Advertiser" endorsed Case yesterday. He won a special election last month to complete the final five weeks of the late Patsy Mink's term from Hawaii's 2nd District. This Saturday, Case will be one of 44 names on the ballot as he tries to win the seat outright.

And, in California, Governor Gray Davis has decided to tone down his second inaugural celebrations in a nod to his state's economic trouble. "The L.A. Times" quotes Davis aides who say they expect to spend less than $1 million on four inaugural events. The money will come from private donors. Four years ago, Davis held 13 official events and spent more than $3 million.

It is out with the old and in with the new. Coming up: Republicans have plenty to celebrate at the close of 2002, but our Jeff Greenfield says Democrats may also have some reason to party.

(COMMERCIAL BREAK)

CROWLEY: As 2002 draws to a close, many political observers would agree that one party fared a lot better this year than the other.

But our senior analyst, Jeff Greenfield, says the year-end picture is not quite that clear-cut.

(BEGIN VIDEOTAPE)

JEFF GREENFIELD, CNN SR. ANALYST: The year ends with Republicans in full control of the government, with the president at 800-pound- gorilla status, and with Democrats asking what went wrong and pointing fingers. But look at the numbers behind this picture and that picture gets just a bit more muddled.

(voice-over): First, was November a triumph for Republicans? Democrats like to argue that a shift of just about 70,000 votes in Missouri and Minnesota would have kept the Senate in Democratic hands. Well, that's true.

But, if you add up all the votes for Republican and Democratic candidates for governor and senator and Congress all over the country, the Republican win becomes apparent. They got 35 million total votes to 31 million or so for the Democrats.

Another way to measure the Republican triumph is at the grassroots, votes for state legislatures. Now, in a typical midterm election, the party in power loses 350 seats on average nationwide. This year, Republicans gained 200 seats in state legislatures, most but not all in the South. That is, of course, very good news for Republicans.

But now look at numbers from the latest CNN/"USA Today"/Gallup poll and you'll find other numbers that might give Republicans a bit of pause. For instance, Bush's job approval rating is now in the low 60s. That is very good by historical standards, but still a distinct drop from his 86 percent approval rating one year ago in the wake of 9/11.

Moreover, there are apparently, lingering doubts about the president. In a recent CNN/"TIME" poll, when asked if Bush's achievements are his or his advisers, Americans say, by a 55-35 margin, they are more due to the president's advisers. And when asked, "Do you trust Bush as a leader or do you have doubts and reservations?" the country seems split, 50-48. Those doubts, by the way, are a lot bigger about Bush's vice president. By 51-42, the public says it has doubts and reservations about Vice President Cheney.

(on camera): Finally: Bush's reelect number, the benchmark for any first-term president, now stands at 49 percent. Now, that still puts him in good shape. And he runs well ahead of any potential challenger. But it does mean that voters are willing to think about the possibility of a different president.

Now, that is surely not surprising nearly two years out. But it means that, for all those hurting Democrats, they can at least entertain the possibility of a real fight in 2004.

Jeff Greenfield, CNN, New York.

(END VIDEOTAPE)

CROWLEY: More on the president's year when we return: how his world view and global threats are likely to echo in the months ahead.

(COMMERCIAL BREAK)

CROWLEY: Looking ahead to what's in the works for tomorrow's show: Bill Schneider wraps up the good and the bad of 2002. You don't want to miss Bill's "Political Plays" of the year and his political bloopers of the year, right here this year on tomorrow's INSIDE POLITICS.

Nuclear tensions with North Korea and possible war with Iraq provide bookends of sorts for President Bush's second year as commander in chief.

Our senior White House correspondent, John King, looks at the global challenges Mr. Bush has faced and will continue to face in the new year.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): The State of the Union speech a month from now will contain echoes of the one 11 months ago.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: States like these and their terrorist allies constitute an axis of evil arming to threaten the peace of the world.

KING: It raised eyebrows at the time, condemnation of Iran, Iraq and North Korea just a few months into the war against al Qaeda.

BUSH: The United States of America will not permit the world's most dangerous regimens to threaten us with the world's most destructive weapons.

KING: Eleven months later, many view war with Iraq as inevitable, North Korea is reviving its nuclear weapons program, and though hardly over, the war against al Qaeda at times seems an afterthought.

LAWRENCE EAGLEBURGER, FORMER SECRETARY OF STATE: There are an awful lot of terrorist targets out there that I wish we were spending more time looking at.

KING: Grading the president as 2002 draws to a close is difficult business because so many of this year's challenges will carry over to the next. Al Qaeda no longer has sanctuary in Afghanistan, but Osama bin Laden is thought to be alive and attacks in Bali, Kenya and elsewhere were reminders of terror's reach.

MICHAEL O'HANLON, SENIOR FELLOW, BROOKINGS INSTITUTION: I would say that the glass is half full/half empty. I think we've about cut al Qaeda's effectiveness in half.

KING: There would be no weapons inspectors in Iraq were it not for the president's September demand that the United Nations get tough with Saddam Hussein. BUSH: Will the United Nations serve the purpose of its founding or will it be irrelevant?

KING: Yet coalition building for a possible war is complicated by resentment.

EAGLEBURGER: If I were to criticize the administration for anything, it is the general reputation they have in too many places around the world for believing or for at least apparently believing that the United States is so powerful now and the only superpower that we can do almost anything we want.

KING: Nuclear brinkmanship with North Korea is suddenly as big a challenge as Iraq.

O'HANLON: The idea you can simply let that situation fester and demand that the North Koreans make good on their nuclear program and eliminate it prior to any negotiations is not a sustainable policy.

KING: But the president believes firmness and isolation is the right policy.

RICHARD BUSH, THE BROOKINGS INSTITUTION: North Korea does not have potential economic resources that Iraq has in terms of its oil fields. And so that gives us more leverage to work out a peaceful solution.

KING (on camera): North Korea is the latest example of a hard- line approach that sometimes leaves allies uneasy, but has become the trademark of a Bush White House that believes ruffling feathers and stark rhetoric like the axis of evil line are sometimes necessary to achieve results.

John King, CNN, the White House.

(END VIDEOTAPE)

CROWLEY: And that's it for INSIDE POLITICS. I'm Candy Crowley.

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