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CNN CAPITAL GANG

Kennedy Criticizes White House; Clark Announces Run for Presidency; Recall Election Postponed

Aired September 20, 2003 - 19:00   ET

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

ANNOUNCER: Live from Washington, THE CAPITAL GANG.
MARK SHIELDS, HOST: Welcome to CAPITAL GANG. I'm Mark Shields, with the full GANG -- that's Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

Senator Edward M. Kennedy of Massachusetts, the second most senior Democrat in the U.S. Senate in an interview with the Associated Press attacked President Bush's Iraq policy as political, quote, "this was made up in Texas, announced in January to the Republican leadership that the war was going to take place and was going to be good politically. This whole thing was a fraud," end quote.

On camera, Senator Kennedy did not back down.

(BEGIN VIDEO CLIP)

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: This is a failed, flawed, bankrupt policy. There is no question in my mind that the White House has hyped the political aspects of the war in Iraq.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It is vital that we succeed in Iraq, that a free Iraq will make America more secure. A free Iraq will change the dynamics of the Middle East, which will be important for peace.

(END VIDEO CLIP)

SHIELDS: Bob Novak, will Iraq be the cutting edge issue for the 2004 presidential campaign?

ROBERT NOVAK, CAPITAL GANG: Mark, if Senator Kennedy and a lot of other Democrats have their way, it will be. But it may be something that they'll regret doing. I really believe the senator's rhetoric, which goes over very well in Boston and the Senate, using the word "fraud," "politics," which is border implication that the president has wasted American lives for political purposes, I think that is really going over the edge and may well backfire against the Democrats if that kind of language is used.

SHIELDS: Margaret, it wasn't a particularly good week for the administration. They were doing a lot of backtracking after Vice President Cheney had said that Iraq had been the geographical base for September 11, for terrorism, and including September 11, and then had to backpedal. NOVAK: He didn't say September 11.

MARGARET CARLSON, CAPITAL GANG: He said "I'm not sure" at one point.

NOVAK: He said, I'm not sure.

CARLSON: And that's kind of muddled it when the president has admitted, finally, no, there was no al Qaeda connection in Iraq. If people don't feel safer as a result of going into Iraq, in the war on terrorism, by the time the election comes around, it's not going to take the Democrats, it's going to take -- people are just going to conclude, look, we got into a voluntary war, it didn't do any good, and we don't like it. They don't need the word "Fraud," they don't need politicians doing it.

George Bush's great triumph is that he was dealing with the war on terrorism. He got a huge, wide berth to do it, and so far I don't feel any safer as a result of our going to war in Iraq.

SHIELDS: Kate O'Beirne, the wonderful letter to the editor of "The Washington Post" a week ago by a man named Lowry (ph), in Woodbridge, Virginia, said 70 percent of Arabs believe that Jews were behind September 11; 70 percent of Americans believe Saddam Hussein was behind September 11.

KATE O'BEIRNE, CAPITAL GANG: You know what's interesting about the American public view of Saddam Hussein's connection to the attacks of 9/11? That was evident within days of 9/11. The White House did not do that. George Bush did not do that. But the public themselves decided, this is a really bad guy over there, we bet he has something to do with it, and that has been a persistent belief on the part of the public. George Bush didn't say there was no connection between Iraq and al Qaeda, he said that there is no evidence that there is a connection between Saddam Hussein and 9/11, and they've never said otherwise, but the public, as I said, has made the connection themselves.

I agree with Bob with respect to the Democrats I think in over- the-top language, it's not just Teddy Kennedy, it's Bob Graham, it's John Kerry, criticizing the president as a liar and a fraud. George Bush is not a shoe-in for reelection. He might have a problem getting reelected in November next year, but it won't be because the public has decided that he's a liar and a fraud. The public still thinks by a big majority, he is doing a good job on the war on terrorism, and the public likes him and trusts him. I think they are missing an opportunity to actually criticize in cogent terms the president's foreign policy with the over-the-top attacks.

SHIELDS: Al, the latest CBS poll showed support for the president on Iraq had gone down to unfavorable, 47/46 unfavorable, a precipitous drop in just four months.

AL HUNT, CAPITAL GANG: Mark, if Dick Cheney and Don Rumsfeld are right and Iraq is getting better every day, then I think it will be a plus for George Bush a year from now. If they are wrong, and the next five months are as been the last five months then I think it will cut against George Bush.

There are warning signs for the GOP. The president's speech 13 days ago bombed. He paid a price for not leveling early with the American people about the cost, and I think the National Guard corps are a political time bomb around America.

Let me say a word about the Kennedy flap. The criticism was spearheaded by Tom DeLay, who in 1999, as Bill Clinton was preparing to go to war in Kosovo, not only questioned the integrity of the president, but said it was a policy that could have been, quote, "formulated by the Unabomber," end quote.

Now, I don't agree with Ted Kennedy's critique, but Ted Kennedy, unlike Tom DeLay, never, never made an analogy between the president, the commander in chief, and a psychotic killer.

NOVAK: If I can just back up a little bit. I'm kind of losing track of what's going on here, because I thought we were discussing whether this was going to be an issue, and I had made a suggesting that Senator Kennedy's rhetoric was counter-productive for the Democratic cause. I'm not talking about Tom DeLay's rhetoric, I'm not talking about the question of the last presidential election, I'm talking about this presidential election, and I think if I heard Margaret, kind of embedded in her screed against Bush was an objection that people shouldn't use the word "fraud." I think you really, when you say that he president perpetrated a fraud in sending American troops into combat, that is really a big casino.

SHIELDS: Let me just say, Bob, I think it's obviously to anybody who is at all, at all objective about this, the regime change was a lot more important to the Bush administration than the weapons of mass destruction.

NOVAK: You're not addressing what I'm saying.

SHIELDS: Yes, I am, because the argument for going to war was the weapons of mass destruction.

NOVAK: (UNINTELLIGIBLE) a fraud?

SHIELDS: I'd say there was a bait and switch. Weapons of mass destruction -- Richard Kay (ph) is going to come back with 1,200 inspectors, he's going to report that they don't have any evidence of weapons of mass destruction.

CARLSON: Mark, let me just say this, Democrats don't have to find that Bush was fraudulent to find that he was wrong...

(CROSSTALK)

CARLSON: And if Iraq is...

NOVAK: That's a different case.

CARLSON: Well, you know, he used that word once. I think Democrats -- it will be obvious if Iraq is where it is, you know, at election time where it is today, with no progress being shown, then of course it will be an issue, and of course it will be an issue that will favor those who are running against Bush.

SHIELDS: Last word, Margaret Carlson. THE GANG OF FIVE will be back to debate whether the Democrats are looking for a general election. Get it? General?

ANNOUNCER: Here is your CAPITAL GANG trivia question of the week: How much did U.S. taxpayers contribute to the total cost of the 1991 Gulf War? Is it, A, about 8 percent; B, about 14 percent; or C, about 22 percent? We'll have the answer right after the break.

(COMMERCIAL BREAK)

ANNOUNCER: Earlier, we asked how much did U.S. taxpayers contribute to the total cost of the 1991 Gulf War? The answer is A, about 8 percent.

SHIELDS: Welcome back. In Little Rock, Arkansas, retired General Wesley Clark became the 10th Democrat to announce for the presidential nomination.

(BEGIN VIDEO CLIP)

WESLEY CLARK (D), PRESIDENTIAL CANDIDATE: Why has our country lost our sense of security, and feels the shadow of fear? Why has America lost the respect of so many people around the world? Why are so many here in America hesitant to speak out and ask questions? Well, we're going to ask those hard questions, my friends, and we're going to demand the answers.

(END VIDEO CLIP)

SHIELDS: In Robbins, North Carolina, Senator John Edwards officially launched his own candidacy.

(BEGIN VIDEO CLIP)

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: We deserve a president who is close to our people, not close to the lobbyists, who listens to our people because he knows them, because he works for them.

(END VIDEO CLIP)

SHIELDS: Al Hunt, is Wes Clark a serious presidential possibility?

HUNT: Mark, he's generating great excitement. In part, that reflects him; in part that reflects the rest of the field. This is a guy who's, I think, his pluses are just incredibly impressive. He graduated first in his class from West Point, he's a Rhodes scholar, he's a brilliant military strategist. As the NATO supreme allied commander during the war in Kosovo, he managed to keep together 19 disparate nations, a very effective coalition, as they -- as he and the Americans won that war, ended up toppling Milosevic. He has lots of enemies. Most successful people do. A lot of those enemies think that he's arrogant, ambitious and duplicitous. But he's the perfect antidote to George W. Bush.

He's also, however, has never ran for political office before. That was evident this week in the announcement speech, in his inability to deal with some major domestic issues, and most surprisingly, on a flip-flap on whether he would have voted for the Iraqi war resolution, which is his area of expertise. My guess is, if Wes Clark is on the national ticket in 2004, it will be as number two.

SHIELDS: Margaret Carlson, your take?

CARLSON: Well, he's Clinton with a war record. You know, from the South, he looks good, he talks good, he's been on CNN, he's our colleague. But Al points out, somehow he went out there not ready, and no general does that. It's kind of mystifying that he didn't have at least the answer on the war. He might be forgiven for muffing a few on domestic policies. He did on the death penalty.

But his second response on the war I think was the right one, which is if you vote for the war, you're voting to have leverage, it's to up the ante on the bluff. But you don't actually go to war.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Well, it's certainly true that I love a guy in uniform.

SHIELDS: You married one.

O'BEIRNE: Exactly, and I've got two younger ones in uniform.

But I don't disagree with Margaret and Al about what a rocky debut General Clark had this week. I thought this whole time he was "should I, shouldn't I, should I, shouldn't I," he was going through some sort of a tutorial, but apparently no, he was just dithering all these weeks. The one issue he is supposed to have such credibility on, the war with Iraq, he wasn't even sure how he would have voted on it. He is now saying (UNINTELLIGIBLE) universal health care. How do we pay for it, General Clark? We'll cut the defense budget.

And he's going to have to explain how he distinguishes Kosovo, our national interest in going into Kosovo, the war he of course was so engaged in, with Iraq. There was no U.N. resolution for Kosovo, because Russia would have blocked it. He now says that we had no business going into Iraq without an imminent threat from Saddam Hussein. Milosevic never posed an imminent threat for us. He's really got a lot more answers to sort out.

SHIELDS: Bob Novak, the knock on Clark is that, yes, he's intelligent, but he's ambitious and he has a big ego. Very few presidential candidates (UNINTELLIGIBLE).

(CROSSTALK) NOVAK: You know, I think he was off to a rocky start, but nonetheless, he has a lot of support from liberals. And the reason he has support form liberals, they think he inoculates the Democrats on this war issue. And they say they have -- they think a general as the presidential nominee looks good, and they have never seen a general that liberal. So they're very fond of him for that. He has a very sketchy record in the military. He had -- pulls a lot of strings. He was never on the promotion list to four-star general. He was pushed out as NATO commander by Secretary Cohen ahead of time. He didn't get along with the NATO allies with Kosovo. He wanted -- somehow he wanted to make that a ground war, when he was running an air war.

I think his whole military record is questionable. There are a lot of things that can be brought up. But I take him seriously. I think -- very seriously for second on the ticket, and maybe even first.

HUNT: Can I say a word about John Edwards?

SHIELDS: Sure, go ahead.

HUNT: Because I think this is an exceptionally talented politician, who has future written all over him. The bunk about him being a trial lawyer, the RNC talking points. I want the people who say that to take the other side of every case he argued, you know, defend makers of defective products that maim and kill children.

But timing is of the essence in politics, Mark, and I think 9/11 changed the commander in chief threshold, and I think John Edwards' campaign is one that shows no signs of getting off the ground.

SHIELDS: I think that despite Mr. Novak's indictment of General Clark's military record, I think it certainly stacks up to Mr. Cheney's, and maybe even Mr. Bush's. But I also want to say this about John Edwards. I think John Edwards makes the best critique of George Bush's economic record of any of the Democratic field, but I think that September 11 commander in chief obstacle is still there for him.

O'BEIRNE: I think he was a casualty of 9/11, John Edwards. He just looks very young these days. And I agree with you, that Wes Clark is certainly running as a liberal. I mean, abortion on demand, he wants to re-look at gays in the military, but he wasn't always so liberal. He's allowing (ph) that he voted for Richard Nixon and he voted for Ronald Reagan twice.

SHIELDS: He voted for first President Bush, he said.

O'BEIRNE: So he's a liberal of late.

(CROSSTALK)

NOVAK: How can you say that -- how can Edwards come out and say he's running against lobbyists when he's totally...

O'BEIRNE: Trial lawyers. NOVAK: ... trial lawyers. I mean, how can you make that stretch, unless you think that trial lawyers are really good guys. But wait a minute, there are probably some people at this table who think that.

HUNT: Will you defend the other side of his cases?

NOVAK: Sure.

HUNT: Oh, good.

(CROSSTALK)

CARLSON: ... Clinton who's, you know, the Clintons love Wes Clark, he's from Arkansas and whatever, but Clinton is dropping little Hillary hints to get that stirred up again. What a mischief maker.

SHIELDS: Yes, he is, that's right, but we've known that for quite a while, Margaret. Next on CAPITAL GANG, when will California vote on the recall of their governor?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ARNOLD SCHWARZENEGGER (R ), CALIFORNIA GUBERNATORIAL CANDIDATE: I cannot believe that the court can interfere of the people's decision. I mean, the people made the decision. We want the recall. Was very clear, was (UNINTELLIGIBLE).

GOV. GRAY DAVIS (D), CALIFORNIA: In this wild hatter's ride, the conventional wisdom has turned out to be in error almost every time, so nobody knows for sure in who's interest a delay in this election would be.

(END VIDEO CLIP)

SHIELDS: A three-judge panel of the 9th U.S. Circuit Court of Appeals began this week by postponing indefinitely California's election on the recall of the governor. But at the week's end, an 11- judge panel was picked by lottery to hear arguments on that decision.

Kate O'Beirne, are the federal judges saving Gray Davis?

O'BEIRNE: I think, Mark, if this decision stands and the recall won't be on the ballot until next March, I think that does benefit Gray Davis. Mind you, next March, there is every change that the new optical ballots, where you fill, as we all did on standardized tests, the little circles, is going to have just as high an error rate as the punchcards, but so be it.

I think Gray Davis will keep up his contrition tour, and Lord knows how many other constituencies he will buy off out of Sacramento.

I think the public just gets tired of the whole spectacle of it, and aside from Tom McClintock, who remains popular, the other top candidates' negatives keep rising the longer this campaign goes on, and who knows how high these negatives will be on Schwarzenegger and Bustamante by next March.

SHIELDS: Bob Novak, what about the postponement? Does it help Gray Davis?

NOVAK: I think it has to help him. I think this is just a terrible decision. Judge (UNINTELLIGIBLE), one of the judges, is one of the most reversed appellate court judges in America. Doesn't even take Supreme Court decisions as a precedent. If you read the opinion, it looks like an op-ed page piece, with the people in the third world are not going to be happy if we have the recall, but as far as McClintock goes, Kate, my reporting indicates he's fading...

O'BEIRNE: No, I just said his negatives aren't very high. The other candidates have very high negatives.

NOVAK: Well, I think the (UNINTELLIGIBLE) people who want to get him elected is fading, and I believe that this -- this is really a plus for Gray Davis.

SHIELDS: My reporting tells me exactly what Kate's is, and that's one of the absolutely bizarre qualities of 135 candidates, is it doesn't make a difference how high your negatives are; you've got 72 percent negative, you've got 28 percent positive. I mean, in a two-way race, they'll kill you -- Margaret.

CARLSON: (UNINTELLIGIBLE). You know, the Supreme Court said in its decision in the Florida recount, don't try this at home, this is a one-time only. If they follow it, of course, than the election would be postponed. I doubt that it will be, by the whole panel.

You know, Arnold Schwarzenegger, celebrity helped him jump out of the box. But the longer you look at him and the longer you have a guy who can't debate without getting the questions first, like a take-home exam; you think he's just not ready to be governor of the state.

NOVAK: Just in fairness, he asked for that to be dropped from that provision. Isn't that a fact?

CARLSON: No, oh, so he's not going to get the questions?

NOVAK: They refused to go along with it. I mean, might as well get the facts straight here.

(CROSSTALK)

HUNT: Look, I agree with Justice Novak on the court, for the wrong reasons. I think this court should have stayed out of this recall, as lousy an idea as this recall is, just as the Supreme Court should not have stopped the vote recounting in Florida in 2000, but I think the full -- politicians I speak to from both parties in California the last couple of days think the full court is going to overturn this decision, and there will be an election probably on October the 7th. If it should be delayed, I'm not sure the conventional wisdom is right. I am not sure it's good for Gray Davis. I'm not sure if, you know, one Democrat out there said, when Gray campaigns, he looks like a stalker on the playground. I'm not sure more exposure to Gray isn't bad news. But whatever it is, there will be unintended consequences, because there have been unintended consequences this whole circus.

SHIELDS: I think it's fair to say, though, if it is postponed, it won't be the media frenzy it's been because...

(CROSSTALK)

SHIELDS: ... we've got New Hampshire, we've got Iowa...

(CROSSTALK)

O'BEIRNE: Yeah. And I was merely saying that more and more exposure to Schwarzenegger and Bustamante doesn't seem to benefit them any more than Davis does.

NOVAK: The interesting thing is that the person in Los Angeles County running the voting procedures said these -- they will not have new ballots by next March. They won't have them by then.

O'BEIRNE: And come next March, there will be two ballots, the presidential primary plus this one. This one being, what, how many pages long, probably an opportunity for even more mistakes come next March, given how complicated it would be.

NOVAK: One thing I've never understood is how this is a civil rights issue? Does that mean that the minority groups are not as able to use these ballots as the Caucasians? Is that what the implication is?

CARLSON: The equipment in those places is far worse than any other place, just as it was in Florida.

NOVAK: I think the punchcards are all over the Los Angeles County.

(CROSSTALK)

HUNT: Don't stop voting and don't stop recounts, that should be the lesson here, Mark.

SHIELDS: Good lesson. Al Hunt, you make sense to the American people, once again.

Coming up in the second half of CAPITAL GANG, our "Newsmaker of the Week" is Washington super-lobbyist Tom Korologos, helping out in the reconstruction of Iraq. "Beyond the Beltway" looks at the fall of Dick Grasso at the New York Stock Exchange, with CNN's Allan Chernoff, and our "Outrages of the Week." That's all after the latest news headlines.

(COMMERCIAL BREAK) (NEWSBREAK)

ANNOUNCER: Live from Washington, THE CAPITAL GANG.

SHIELDS: Welcome back to the second half of CAPITAL GANG. I'm Mark Shields, with the full GANG, of Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

Our "Newsmaker of the Week" is Tom Korologos, senior counsel to Paul Bremer in Iraq.

Tom C. Korologos. Age, 70. Residence, Washington, D.C. Religion, Greek Orthodox. B.A., University of Utah, M.S., Columbia Graduate School of Journalism. Aide to Senator Wallace Bennett of Utah for nine years, deputy assistant to presidents Nixon and Ford. Chairman and co-founder of Timmons Lobbying Company.

Earlier this week, Margaret Carlson sat down with Tom Korologos.

(BEGIN VIDEOTAPE)

CARLSON: At 70 years old, you could be having three-martini lunches every day at the pond, but you decided to go to Iraq, which sounds like a very dangerous place. There is a recent report by American intelligence suggesting that the biggest foe in Iraq are the ordinary people who are just getting more and more resentful.

THOMAS C. KOROLOGOS, SR. COUNSELOR TO PAUL BREMER: Well, that's partially true, except for one thing. The biggest problem with Iraq right now is the leftover Fedayeen and Baathists who didn't get wiped out in Baghdad, who took their AK-47s and went home, and melded into society. The other problem is the 100,000 thugs and murderers and rapists that Saddam let out of jail, and the third new element is the fact that outsiders are coming in, they are finding Iranians and others coming in to raise all kinds of chaos (ph).

CARLSON: The United States disbanded the Iraqi army, trying to bring some of them back now, the former police force. But Lieutenant Colonel David Hape (ph) said: "Right now, the Iraqi police are just bad. Months ago, they were absolutely horrible." Is that the kind of progress we're going to see, from really horrible to bad?

KOROLOGOS: Well, if you go back one step further, they were nonexistent before that. So if you want to say that, we're making progress. We've got 47,000, 50,000 police going along, getting training. There is a new Iraqi army being formed. There is a new security force being formed.

CARLSON: Some members of the congressional delegation that you've shown around, I take it in three-cars convoy only, to avoid being shot at, say that if you don't get the police operation under control over the next six months, the place is lost, it is just -- the chaos will be too much.

KOROLOGOS: The chaos, it does exist, except don't forget, the chaos exists in what we call the Sunni triangle. The rest of the country, 99 percent of the people love us and want us there. The economy is flourishing a little bit. They're selling satellite dishes, air conditioners, shoes and refrigerators on the streets.

CARLSON: We here at CNN love the sale of satellite dishes.

KOROLOGOS: Selling them every day. Saddam did not allow satellites before, because he didn't want any international broadcasting coming in.

CARLSON: Do you feel personally threatened when you're there? You could have been in that U.N. building.

KOROLOGOS: Once in a while, we get a little nervous when we go downtown and the convoys aren't around, but we wear flack jackets and we're very careful.

CARLSON: And you always have the boots on.

KOROLOGOS: Well, it's the Bremer boots.

CARLSON: The Bremer boots are on even in the palace. Does he ever take them off?

KOROLOGOS: (UNINTELLIGIBLE).

CARLSON: He doesn't sleep in his boots?

KOROLOGOS: No, he doesn't.

CARLSON: We're glad to hear it. There is an embarrassing lack of enthusiasm on the part of allies to actually put money on the table.

KOROLOGOS: When they saw that the United States ponied up that huge amount of money for Iraq, the world noticed, holy cow, these guys are serious, and they're going to probably see some money coming in from allies.

CARLSON: These incidents have happened recently. Eight Iraqi police officers shot, a family of five, a Reuters journalist killed when somebody mistook his camera for a grenade, and on and on. There are carjackings and there is crime.

KOROLOGOS: There are 130,000 American soldiers there, they're attacked every day, and when a car comes out at you with its headlights off, going to go through a checkpoint and there are guns outside of it, you're going to shoot back.

CARLSON: You shoot first.

KOROLOGOS: You're going to shoot first.

CARLSON: Now, American intelligence before, relying on people like Ahmed Chalabi, seems not to have predicted this level of chaos, you know, America as liberators... KOROLOGOS: America as liberators -- we were welcomed, everywhere, except in this, as I say, the Sunni triangle. You go up to Mosul and Tikrit and Kirkuk and other areas where we have taken congressional delegations down the streets and people waved at us. But in the city and in this bad area of Baghdad, where, as I say, 100,000 criminals are out there, killers, want to do us in, that's a problem.

CARLSON: How long before they want to wave at us?

KOROLOGOS: They'll start waving as soon as -- I'll tell you, they'll start waving when Bremer succeeds and the Army leaves.

(END VIDEOTAPE)

SHIELDS: Margaret Carlson, Tom Korologos is a legendary lobbyist in this town. Are you more optimistic yourself about Iraq after listening to Tom?

CARLSON: Well, he's such an optimist, and generous to go and do this at this stage in his life. I am not necessarily more optimistic, but I can understand he's there working, he has to be optimistic.

He said it's like -- it's a little like California over there. There is not enough -- there is an energy problem, there is a water problem, and there is no government.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Some of us are a little more sympathetic this week about the challenges and getting lights on in Baghdad, given that we don't have them, haven't had them for days.

I understand the frustration of people like Tom Korologos, who to his enormous credit, is over there trying to help, because things are going so well in other parts of the country.

But that's just the fact of life. The American public clearly is going to be far more concerned about the loss of American lives in the Sunni triangle than they are with self-government operating, yes, nicely in other places of Iraq.

So it's no answer to say that things are better elsewhere in Iraq. They clearly have to fix the security problem around Baghdad.

HUNT: Mark, Tom didn't persuade me that things were rally going swimmingly over there, but thank God for patriots like Tom Korologos, who not only is leaving a cushy existence to serve his country in Baghdad, but is leaving a brilliant and gorgeous wife, Ann McLaughlin (ph). This is a real guy.

SHIELDS: Bob, before the U.S. invasion and occupation in Iraq, there were no Muslim fundamentalist terrorists there to speak of. Now they are there by the numbers, because it's a great place to take shots at Americans. NOVAK: I'll tell you, look ahead, Mark, you didn't have those Muslim fundamentalists. What you had was Baathist terrorists, and they terrorized the people of Iraq. Let me ask, before we run out of time, let me second my admiration of Tom Korologos, but I do think that the people -- as you know, I was against this intervention -- but I do believe that they are -- the people of Iraq are a lot better of now than they were under Saddam Hussein, and (UNINTELLIGIBLE).

SHIELDS: Last word. Coming up on CAPITAL GANG Classic, another candidate from Arkansas announces 12 years ago.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Nearly 12 years before General Wes Clark became a candidate, another Arkansan, Governor Bill Clinton, announced for president. The same week, Senator Bob Kerrey of Nebraska also announced. Your CAPITAL GANG discussed their prospects, mainly Governor Clinton's, on October 5, 1991.

(BEGIN VIDEOTAPE)

SHIELDS: I think that Bill Clinton, there is not a governor anywhere probably that's ran for governor in the last generation, anybody who's ran for president, who has talked as extensively and as imaginatively about the problems of education and welfare as Bill Clinton has.

NOVAK: Governor Bill Clinton says that he's a moderate because he was for the Gulf War. I don't remember when he came out for the Gulf War. I've been looking and trying to find a quote on it. It think they are both part of the same (UNINTELLIGIBLE). I'll tell you something very interesting. They're going to have a chance to be nominated and elected if George Bush doesn't get on his horse of economic growth.

PAT BUCHANAN: You get in President Bush's face and the economy is down, Democrats can give him a run for the money. But you sit and listen to this and try to draw something out of it instead of having really something with a really sharp edge to it.

HUNT: Look, these are the two guys who have a shot at beating George Bush. They are probably the only two in the field right now. They are both smart, they are both telegenic, and they are both tougher than Michael Dukakis. What I think is a problem, though, is that they're playing the big leagues of presidential politics for the first time.

(END VIDEOTAPE)

SHIELDS: Margaret Carlson, you weren't on that program.

(CROSSTALK)

SHIELDS: But would you say that the guys were about right in assessing the Clinton candidacy? CARLSON: It's sure better not to be on than to be on in real time, you know. I am glad to comment when -- listen, if Wes Clark is anything like Clinton, and the economy is anything like the Bush economy, you know, he'll have a great tournament. We were mostly right about Clinton, except for Bob, who said that only if the economy is down, is Clinton any good.

O'BEIRNE: I have to reconsider my opinion about John Edwards looking too young. I have forgotten how young Bill Clinton and Bob Kerrey looked running for the president.

Bill Clinton did run as a convincing moderate. As it turns out, Bob, it didn't matter what he said about the Gulf War, because foreign policy has receded in importance, although it won't be the case next year.

SHIELDS: Al.

HUNT: Of course, what Bill Clinton said about the Gulf War was that he would have voted for it, but he agreed with the opposition. Look, we will never in our lifetime see a better first-time candidate. But we ought to remember, even with that, Bill Clinton had struggles. In June of 1992, he was running third behind George Herbert Walker Bush...

(CROSSTALK)

SHIELDS: ... Ross Perot. Ross Perot (UNINTELLIGIBLE). Bob Novak.

NOVAK: You know, a lot of these golden oldies we have where we really look bad; I thought we looked particularly good for a change on this. Saw that there was an economic disaster, political disasters awaiting President Bush, and that Bill Clinton could win. And I think if we look back at what we said about General Clark, we might if he gets to be president, we -- I think we would say the same thing. I think we took him as a serious candidate tonight, didn't we?

O'BEIRNE: You looked good, Bob, but you looked lonesome without Margaret and me.

SHIELDS: And one thing, one thing, don't forget, that CNN, which tries to have a presidential candidate every cycle, we had Pat Buchanan, waiting in the wings ready to go that time.

Next on CAPITAL GANG, "Beyond the Beltway" looks at Dick Grasso's forced resignation with CNN's Allan Chernoff.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Dick Grasso was forced out as president of the New York Stock Exchange, amid criticism of his newly revealed $140 million compensation package. The stock exchange interim chief promised change.

(BEGIN VIDEO CLIP) CARL MCCALL, INTERIM CHAIRMAN, NYSE: From today on, the New York Stock Exchange will operate differently. The board of the New York Stock Exchange is fully committed to moving forward with a corporate governance plan that will commit us to transparency, that will commit us to being a model for all other corporations in this country.

(END VIDEO CLIP)

SHIELDS: Joining us now is Allan Chernoff, the senior correspondent for CNN and CNNfn. Thanks for coming in, Allan.

ALLAN CHERNOFF, CNN CORRESPONDENT: Good to see you, Mark.

SHIELDS: Allan, is Dick Grasso the only casualty, or is there somebody's stock about to fall at the Exchange?

CHERNOFF: Mark, there is no question that we're going to see more heads rolling. Dick Grasso may have taken the money, but there were 25 other people on the board of directors who gave him all of that money, that $140 million in deferred pay and retirement package. So we're certainly going to see members of the board moving out. In fact, there is a committee within the board, a governance committee, that is going to come out with recommendations very shortly, calling for reduction in the number of people from the Wall Street community who actually sit on the board. There are 27 slots on the board right now; 12 of them are comprised of securities firms, and you are certainly going to see a reduction over there.

SHIELDS: Bob Novak.

NOVAK: Allan, I think the consensus was that Mr. Grasso was doing a very good job at the stock exchange. I had never heard any criticism of him. Is there any feeling up there among the people connected with the stock exchange that he was treated shabbily, that he took something that was offered to him and then when they got a little criticism from the media, they said you have to go?

CHERNOFF: Dick Grasso was unique at the stock exchange. The only person ever to rise from the bottom all the way to the very top, 36 years there. For a long time, people said nobody knows the ins and outs of the stock markets like Dick Grasso.

But in terms of the pay, it was simply shocking, because that money was publicized, all of a sudden it was kept very quiet and then all of a sudden it came out, and this happened at a time when members of the stock exchange had to pay more for improvements in technology, and they've also been seeing their profit margins squeezed because of changes at the exchange. So it really hit a sore spot when all of a sudden, people saw how much Dick Grasso was getting. People had no idea.

SHIELDS: Margaret Carlson.

CARLSON: Allan, isn't it partly the public's outraged that it's corporate back-scratching, that it was, you know, people on the board that were friends of him, they were interlocking, sitting on the boards, and there was no greater cheerleader for Grasso that that first week than Carl McCall. And now Carl McCall is running -- he's the head of the governance committee. Why isn't his head going to roll?

CHERNOFF: Yes, I mean, people are looking at this and saying, what is going on here? The board picked this fellow, not only is he head of the governance committee, he's actually head of the compensation committee, so it's totally shocking that they would point to Carl McCall as the guy to on the interim basis be the lead director. I mean, it's almost laughable. People are really smirking about this, and it says something about maybe how there has been a total disconnect from reality in the board of directors. And I don't know what the threshold is, whether you have to earn $5 million a year or $10 million a year, but trust me, there are plenty of people on that board who have earned that type of money, and frankly they didn't think Grasso was being overpaid.

Mel Karmazin said just the other day, he thought Dick Grasso was worth it. I mean, Grasso certainly did do a great job, but not many people think it was worth maybe $140 million.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Allan, William Donaldson was of course Grasso's predecessor and is now SEC chairman. Was he that well compensated in that same job, and what role is he playing in this controversy?

CHERNOFF: Great point. In fact, he had earned about $1.5 million per year, so a fraction of what Grasso had earned, although we should point out that Mr. Donaldson is a very wealthy man himself, having been the founder of Donaldson, Lufkin, Jenrette. So it's a very interesting interplay. There has been lots of tension, because Grasso had been hoped to be named chairman when Donaldson got the job. But the two worked it out, and Grasso really was the hands-on person, while Donaldson was sort of overseeing things as the chairman.

Now, we understand that Mr. Donaldson has instructed the board of directors that he does not want to see any of the people sitting on the board to take over as the new chairman.

HUNT: Allan, you mentioned earlier that they might reduce the number of securities representatives on the board, and I think we all agree that the culprit really here, the worst culprit here is the board. The head of Goldman Sachs apparently has suggested barring executives of any industry regulated by the exchange. It would appear to be a conflict of interest. Why not do that? Why not get rid of all those securities executives on the board?

CHERNOFF: I think there is a chance that will actually happen. Henry Paulson, the head of Goldman Sachs, apparently has made that recommendation. It's certainly one thing that's being considered at the stock exchange. I think what we're about to see is a dramatic change in the way the stock exchange operates. Fro years and years, it has been an incredibly opaque organization, an old boys club, no question about it. It has worked fairly well, but it really -- there has not been much sunshine through the windows of 11 Wall Street. SHIELDS: Allan Chernoff, thank you for providing some sunshine to us on this subject. THE GANG will be back with "The Outrages of the Week."

(COMMERCIAL BREAK)

SHIELDS: Now for "The Outrage of the Week."

Before he would give his total backing for a limited pilot project for school vouchers in Washington, D.C., Cardinal Theodore McCarrick demanded that not a nickel can be cut from the budget for D.C.'s public schools. Good for you, Cardinal McCarrick.

The African-American mayor supports the school vouchers project, as does the African-American chairman of the city school board. Democrats, who have overwhelmingly opposed the D.C. voucher project, will have to admit that it's not just a sinister, right-wing plot to kill public education. Bob Novak.

NOVAK: I agree.

Hurricane Isabel hurt Washington area residents, who lost power and water, but the federal city itself went unscathed. Yet the Metro shut down and all commuter service ended. That caused closing down of the entire federal government, costing up to $67 million a day. Friday was a fine weather day here, but even the White House was closed. The Metro closing was triggered by a weatherman, who told his wife, "honey, I think I just shut down Washington." Should he and the nervous bureaucrats who closed Metro exercise this kind of power?

SHIELDS: Margaret Carlson.

CARLSON: Mark, that was good, the way you almost cut Bob off.

The National Organization for Women and the National Women's Political Caucus has just endorsed Carol Moseley Braun, in her vanity bid to be president. What a waste. Braun lost her Senate seat in part because she visited a murderous African dictator, flimflammed Medicare and airbrushed charges that a male member of her staff she was keeping company with and who she lavished with gifts was a sexual harasser.

Other candidates are just as strong on women's issues, but they don't wear skirts. And feminists wonder why young women aren't joining up.

SHIELDS: Kate O'Beirne.

O'BEIRNE: How's this for an outrage? Soldiers wounded in action are billed for their meals while hospitalized. They must reimburse the government $8.10 a day, to be exact, or so the law said until publicity got members of Congress scrambling to change the law. Have the public remained in the dark, would the military and Congress still have wounded soldiers receiving bills for their food, along with their new artificial limbs?

SHIELDS: Al Hunt.

HUNT: Oh, boy.

Mark, 17 American soldiers held as POWs by Saddam Hussein during the Gulf War were subjected to psychological and physical torture, including mock executions and electric shocks. They sued, and a district court judge ruled their awards should be paid from frozen Iraqi assets, but the Justice Department and Paul Bremer, our man in Baghdad, said this would impede the ability to rebuild Iraq. The judge labels this argument, quote, "meritless," end quote, and in violation of congressional intent. But the government says the funds are being depleted. What an example for the rule of law.

SHIELDS: This is Mark Shields saying good night for THE CAPITAL GANG. Coming up next, CNN PRESENTS: "Part II of America Remembers, the 9/11 Attacks." At 9:00 p.m., "LARRY KING WEEKEND," a look back at the life and career of actor John Ritter; and at 10:00 p.m., the latest news headlines. All that and much more right here on CNN. Thank you for joining us.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



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