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CNN CAPITAL GANG

Bush Administration Changes Threat Level To Orange; Suicide Bomber In Israel Dampens Holiday Spirit; Capital Gang's Predictions For 2004

Aired December 27, 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 THE CAPITAL GANG. I'm Mark Shields, with Kate O'Beirne, Margaret -- I'm sorry -- Robert Novak and Margaret Carlson. Excuse me.

Humorist Mark Russell -- I'm excited -- will join us later to revisit the past and to predict the future.

The Bush administration raised the Christmas season threat level from "elevated" to "high," from yellow to orange.

(BEGIN VIDEO CLIP)

TOM RIDGE, HOMELAND SECURITY SECRETARY: All the strategic indicators suggest -- from the volume, really, the level and the amount of reporting has increased. We've never quite seen it at this level before.

(END VIDEO CLIP)

SHIELDS: France ordered cancellation of all Air France flights to Los Angeles.

(BEGIN VIDEO CLIP)

RIDGE: We collaborated, had great collaboration with the French and decided it was in the interest of the safety of the passengers, given the information that we shared, that we cancel those flights.

(END VIDEO CLIP)

SHIELDS: When Christmas passed without a terrorist attempt in the United States, the seriousness of the alert was questioned.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: It costs money and it -- and it causes stress on -- on military and civilian at all levels of government. Therefore, you do not do it lightly. You asked, Is it serious? Yes, you bet your life.

(END VIDEO CLIP)

SHIELDS: Meanwhile in Iraq, five U.S. soldiers were killed on Christmas Day, as coalition forces attacked guerrillas in Operation Iron Grip. Today guerrillas killed four Bulgarian and two Thai soldiers.

Bob, what do these events say about the success of the war against terrorism?

BOB NOVAK, CAPITAL GANG: Well, I believe that it shows it's a long, hard struggle ahead in Iraq, although it's not Vietnam. It's not an endless tunnel. But I believe that the government is doing a good job on terrorism in the United States these last two years. What I don't understand is the announcement of these orange alerts. Everything else is held very secretly in the war against terrorism. They don't tell you what their intelligence is, but they say -- they put out this orange alert, which gets everybody nervous, with people -- they say, Be alert. I mean, what does that mean? I'm always alert when you're around.

SHIELDS: I've noticed that, Bob.

NOVAK: I mean, what am I supposed to do differently? I just don't see any point in announcing this, when, in fact, the same orders can be given to the security people, as all other orders are given, without a public announcement.

SHIELDS: It is...

MARGARET CARLSON, CAPITAL GANG: But -- but...

SHIELDS: I'm sorry, Margaret. It's frankly unsettling when you do go to the airport and see rifles with bayonets at the ready. And I've seen machine guns, as well.

CARLSON: Yes. But what's interesting is that people -- the good news is, people seem to take it in stride. And the bad news is that people seem to take orange alert in stride. And so I partly agree with Bob that you can -- you can alert all the people who need to be alerted without doing this orange thing, which now is like crying wolf because, you know, I don't think people pay enough attention to it. You know, Republican governor -- former governor James Gilmore, who's heading up the commission to study homeland security, says that he's alarmed because there's no plan. The money's being spent, He first responders aren't getting the money, and that we're not that much better off than we were a year ago.

SHIELDS: Former Republican national chairman, too, Jim Gilmore.

Kate O'Beirne, your sense about the domestic alert, but also, I mean, the continuing guerrilla war in Iraq.

KATE O'BEIRNE, CAPITAL GANG: Mark, it strikes me that an awful lot of people working on our behalf to keep us safe must be doing something right. I don't think there's any doubt that the terrorists who are attacking in Iraq or in Turkey or in Pakistan would rather be in the continental United States. And I think an awful lot of people have prevented that from happening. Now, as has been said, we have to be -- on the defense -- lucky all the time. They only have to be lucky once. These alerts remind us of how extremely vulnerable an open society such as ours is, which is why, ultimately, it seems to me, Don Rumsfeld is the ultimate secretary of homeland defense because we have to take the fight to them.

But I wonder whether or not these alerts -- and this time, those in charge were terribly serious about the kind of chatter and intelligence they had -- whether they might serve a purpose, we'll later learn, in deterring attacks because the terrorists, too, know that local law enforcement and airports are on heightened alert.

NOVAK: Do you...

O'BEIRNE: And if so...

NOVAK: Do you really believe that?

O'BEIRNE: We don't know, Bob. And if so, it would be worth the disruption.

NOVAK: I thought one of the strangest things in this whole week was the Air France cancellations, where there were reports that people had -- first there were reports they had arrested people who were going to be terrorists. Then it was said that this announcement deterred the terrorists from coming to the airport, which doesn't make a bit of sense to me at all. And I really don't understand how -- if you have terrorists you know are going to get on the plane, why you would cancel the plane. It seems very peculiar to me.

SHIELDS: In other words, just grab the terrorists.

NOVAK: Yes.

(CROSSTALK)

CARLSON: Yes, right. And you had the list of names, and it would seem like a good way to go.

O'BEIRNE: It's likely what may have happened there -- somebody may have jumped the gun in France in announcing that there was a problem, a potential problem with those flights. But I mean, we have people responsible for the safety of hundreds of people on any such plane. And somebody whose name is in a computer as a pilot with connections to al Qaeda clearly cannot be permitted to board a plane.

SHIELDS: I'll just say that the reality of five Americans being killed on Christmas is -- is tragic and a reminder that just the capture of Saddam didn't end it all, as had been hoped by many.

THE GANG will be back with a look "Beyond the Beltway," to Christmas in the Holy Land with CNN correspondent Chris Burns directly from Jerusalem.

ANNOUNCER: According to the AAA, how many Americans are traveling for the holidays? Is it, A, 59.6 million; B, 63.8 million; or C, 66.2 million? We'll have the answer right after the break.

(COMMERCIAL BREAK)

ANNOUNCER: ... for the holidays. The answer is, A, 59.6 million.

SHIELDS: Welcome back. As Christians made their annual pilgrimage to the war-torn Holy Land, the first Palestinian suicide bombing since October at a bus stop outside Tel Aviv killed four Israelis. A helicopter strike in the Gaza strip by Israel killed an Islamic Jihad leader and four other Palestinians.

(BEGIN VIDEO CLIP)

SAEB ERAKAT, FORMER CHIEF PALESTINIAN NEGOTIATOR: It is really unfortunate, a very sad Christmas, what we have been witnessing in this deterioration in Gaza strip.

AVI PAZNER, ISRAELI SPOKESMAN: In the last two months, there were 35 attempts to conduct suicide operations inside Israel. They did not succeed because we prevented them. Today a suicide bomber managed to infiltrate Israel, causing death and many casualties.

(END VIDEO CLIP)

SHIELDS: Joining us now from Jerusalem is CNN correspondent Chris Burns.

Chris, just how bleak is the mood in the Holy Land this Christmas season?

CHRIS BURNS, CNN CORRESPONDENT: Well, Mark, bleak in some ways, and somewhat positive in others, actually. If you do go to Bethlehem, it's rather bleak, very sad, not many people showing up there for Christmas Eve. But just today, shopping in the Old City here in Jerusalem, a lot of people, a lot of tourists out there I saw who were shopping, as well as I was. And tonight the cafes and restaurants are full. I saw them there, dined with them. So kind of a mix here.

Also, however, today there was an interview with Moshe Yalon, the army chief of staff of Israel, who said that he could expect and see a possible ceasefire in the coming weeks. So there is positive outlook and bleak outlook at the same time, rather big mix here.

SHIELDS: Bob Novak?

NOVAK: Chris, as I understand the Israeli position, it is that the lack of any suicide bombing has just been because of very tough Israeli prevention, that there has been no attempt by a ceasefire and that the -- there's a constant effort for the suicide bombers to get through. Do you think that's an accurate portrayal of the situation?

BURNS: Well, Bob, there has been that -- that contention by the Israelis. However, at the same time, there have been talks going on. There have been ceasefire talks going on in Egypt, mediated by Egypt, where the Palestinian authority is trying to reach an agreement with the militants to try to get them to at least hold their fire within Israel proper. They have gotten some groups such as Hamas to do so, but there are others, like the PFLP, the Popular Front for the Liberation of Palestine, a Marxist group, that launched that last suicide attack. And that is what is worrying to some people, that perhaps this somewhat quiet period could be disrupted by those who do not agree with pushing ahead with this quiet period.

SHIELDS: Margaret Carlson?

CARLSON: Last week, Chris, Ariel Sharon said that he might unilaterally disengage from the Palestinians and impose his -- his own plan. What does this -- what does this mean for the road map and the talks?

BURNS: Well, Margaret, Mr. Sharon insists -- and when he presented that plan, he insisted that his plan was not in conflict with the road map for peace, that he could build this so-called security barrier that would help to prevent militants from going into the settlements and into Israel proper, but at the same time, he believed that he could go back to the table and talk with the Palestinians and reach some kind of peace agreement later. However, if you talk to the Palestinians, they say that building that barrier could actually slam the door on any peace prospects and actually radicalize those militants and others inside the territories to launch further attacks. So you can -- even -- there are even some military experts here on the Israeli side who say that no matter how high you build that barrier, that the militants could still fire rockets into the settlements and into Israel.

SHIELDS: Kate O'Beirne?

O'BEIRNE: Chris, you noted that there have been no recent attacks on the part of Hamas. Does that provide some evidence that Israel's targeting of terrorist leaders has been a deterrent?

BURNS: Well, the Israelis would contend that to be so. And in fact, the Israelis were hitting extremely hard in, say, around October, when there was that suicide attack in Haifa that killed 21 Israelis. This is a contention by the Israelis. However, at the same time, the Palestinians will say no matter how much you hit at these militant groups, they're still going to be hitting back, that is not going to stop them. The Israelis have been trying to cut off the tunnels that they say are being used to smuggle into weapons into Gaza, for instance, but these -- the militants still have a lot of weapons. You walk in the streets of Gaza, they're still awash with weapons.

SHIELDS: Chris, in the run-up to the Iraq war, one of the arguments used by the administration was that the road to peace in the Middle East, and in particular, in the West Bank, lay through Baghdad, that once Saddam Hussein's regime fell, that peace would follow. Do we have any evidence that that has been the case, nine months after that war?

BURNS: Well, Mark, you can talk to some Israelis who believe that that so-called eastern front that they most feared -- the eastern front being Iraq, especially, that they could actually roll through Jordan and attack Israel some day -- that's gone now. And that supposedly changes the equation on the ground, though the Israelis are still nervous about the Syrians. They're still nervous about what instability there could be in Egypt and even perhaps in Jordan some day. That is why they're maintaining their guard. But this did give the momentum for President Bush to go ahead and push ahead with his road map and say, Look, it is payback time. It is time -- that we have removed this threat against the Israelis. It is time for the Israelis to show a bit more flexibility in trying to reach a peace agreement. And this is what the hope of Washington is.

However, on the ground, what we're seeing is that both the Israelis and the Palestinians have done very little, really, to push ahead with that road map, those confidence-building measures like taking down the militants, taking apart the militant groups and by taking down some of the settlement outposts, pulling back some Israeli forces. We've seen very little of that since that road map was launched back in spring.

SHIELDS: Bob Novak?

NOVAK: Chris, I noticed that Saeb Erakat, the Palestinian statesman -- spokesman, I should say -- said that he would hope that President Bush would become more actively engaged in this negotiation, get the U.S. engaged. Would it be correct to say that there is not a commensurate desire by the Israeli government for President Bush to become an active mediator?

BURNS: Well, that's a very good question. They -- certainly, if they -- they -- if they felt that and believed that, they're certainly not saying it and they wouldn't say it publicly. The Israelis would like to carry on with their project in building this barrier that they're building in the West Bank to prevent any suicide attacks. They would like to go ahead with that. And they haven't gotten any major -- real major pressure from the Bush administration. Bush administration has withheld a small amount of loan guarantees -- of the $9 billion loan guarantees, about $300 million of that, which is really a drop in the bucket. The Israelis do intend on pushing ahead with that, and they seem to be getting the tacit support from Washington, at least the tacit -- the passivity by Washington that the Israelis need to ensure their security by doing that.

SHIELDS: Chris Burns, thank you very, very much for being with us.

THE GANG will be back with a "CAPITAL GANG Classic," our predictions of one year ago.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Later in this program, we will make our fearless predictions for next year, but our forecasts for this year were unveiled by THE CAPITAL GANG on December 28, 2002. Here's just a few of them.

(BEGIN VIDEO CLIP) O'BEIRNE: What will this prescient president's approval ratings be one year from now, December, 2003?

CARLSON: I say up to 92, at least, higher if we're in Iraq and it's successful. If, however, it's a quagmire, low 40s.

SHIELDS: This prescient president cannot defy the laws of gravity perpetually. His -- the president's job rating December of 2003 will be 49 percent favorable.

O'BEIRNE: I give him a precise 61 a year from now.

NOVAK: I'm assuming there'll be a war, and the war will be over and won, and he'll start slipping. He'll be around 53 percent.

O'BEIRNE: Who will lead the Democratic presidential polls one year from now, December, 2003?

CARLSON: I predict that Senator Lieberman will get the Gore vote, without being Gore.

SHIELDS: I'm going to predict an unorthodox selection, and that is Dick Gephardt.

O'BEIRNE: One of the president's sharpest critics on foreign and defense policy's going to be John Kerry, and I think that'll be popular with the base.

NOVAK: I will, too, but for a different reason. I think that he has two people's votes. He has his votes and he has Bob Kerrey's votes.

(END VIDEO CLIP)

SHIELDS: Margaret Carlson, what happened to that frontrunner, Joe Lieberman, and the Gore vote?

CARLSON: Well, I was half right. He hasn't become Gore.

(LAUGHTER)

CARLSON: And on the second part, who could have predicted that by Gore endorsing Dean, Lieberman would have his best week of the campaign, without getting the Gore vote?

O'BEIRNE: Nice save, Margaret.

(LAUGHTER)

O'BEIRNE: Very nice save.

CARLSON: And I was drinking egg nog with that 90 percent for Bush.

SHIELDS: Kate O'Beirne, I think you were the closest on the job rating for the president with your prediction. O'BEIRNE: The president's approval rating, I think I can claim closest. And in my own defense, I knew that one of the sharpest critics on foreign and defense policy of the president would lead the field. I just had the wrong critic. Dean wound up being a sharper critic than Kerry.

SHIELDS: Well, in my defense, I said Dick Gephardt. I thought -- I was in Texas when we were doing that. I thought you asked about Iowa.

(LAUGHTER)

(CROSSTALK)

NOVAK: But why don't we tell the truth? Nobody mentioned Howard Dean. If anybody had mentioned Howard Dean, we'd say, What, are you nuts or something? And that was just a year ago! That's how much things change. And I'm sorry that he's not in the 40s for your sake, but Bush is doing pretty well.

SHIELDS: Is he?

NOVAK: Yes.

SHIELDS: That's it, Bob.

Next on CAPITAL GANG, Margaret Carlson "On the Beat" looks at some important people in this nation's capital whose names you may not know.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Margaret Carlson, who contributes regularly to "Time" magazine and to "GQ" magazine, went "On the Beat" here in Washington to reveal the identities of some of this city's lesser-known power elite.

CARLSON: The man behind Colin Powell, the women behind Vice President Cheney, a confidant of John McCain's and the producer responsible for turning President Bush into Tom Cruise in "Top Gun," to name but a few. These may not be household names outside the White House or the Beltway, but their influence echoes in the corridors of power.

(BEGIN VIDEOTAPE)

(voice-over): In Washington, power's the coin of the realm. So who has the most? In this month's "GQ," I shine a light on the 20 most powerful people you might not know. Secretary of State Colin Powell has said he would trust his deputy, Richard Armitage, with, quote, "his life, his children, his reputation, everything he has," close quote. And last week, sidelined by prostate surgery, he put his No. 2 in charge.

RICHARD ARMITAGE, DEPUTY SECRETARY OF STATE: Regarding Secretary Powell, he is still full of spit and vinegar. I say that very carefully. I announced yesterday that he'd called me twice before 7:00 AM, as a sign of his vitality. This morning, he called at 20 minutes until 6:00 AM.

CARLSON: And Armitage has been given more power than his predecessors, even when his boss isn't under the knife.

The Cheney daughters are a little like dear, old Dad, exercising undisclosed power in undisclosed locations. Until recently, Elizabeth was a deputy assistant secretary of state, responsible for distributing $1 billion in aid annually to Arab countries. Now she's joined her sister, Mary, on their dad's campaign staff. In the category "all politics is personal," Mary, who's openly gay, may well have influenced the veep's position on same-sex marriage. He wants the feds out of your bedroom.

White House deputy director of communications Scott Sforza (ph) landed President Bush in full flyboy regalia on the USS Abraham Lincoln. Mission accomplished, Scott. He also positioned cameras at Mount Rushmore to make it look as though the 43rd president had already been chiseled into the mountain. And how does Bush stay cool while all around him, people are pouring sweat? How's 5,000 BTUs of air-conditioning pumped up from under the platform at Goree Island? All the world's a stage to an image meister.

And the man behind the maverick, Mark Salter (ph), Senator John McCain's chief of staff. Salter, his best friend and confidant, who, according to the senator, quote, "has the unique ability to write like I speak -- unique in that I can't write like I speak," close quote. And unlike Hillary Clinton, McCain gave Salter credit for co-authoring his two best-selling books.

(END VIDEOTAPE)

Only four women out of twenty on that list. Karen Hughes and Mary Matalin left a power vacuum in the White House. Even THE GANG does better than that.

SHIELDS: Kate...

CARLSON: At least this week, we've got 50 percent.

SHIELDS: Absolutely. And you've had about 75 percent of the time.

Kate, is this town really run by people like Scott Sforza, that nobody really outside the Beltway has ever heard of?

O'BEIRNE: Well, those depressing man-in-the-street interviews you see from time to time tell us that an awful lot of people outside the Beltway don't know the secretary -- the speaker of the House or the secretary of state or sometimes even Dick Cheney. So there aren't too many household names, it seems to me, in Washington. But Margaret's done a good job of reminding us that people who never get the headlines also have an awful lot of influence.

SHIELDS: A lot of influence, Bob Novak. NOVAK: I thought it was a very interesting article, but it had two very negative consequences. One is that it -- it makes people out in the country think that these anonymous people are the puppeteers who are pulling the strings, while in fact, it's really the McCains and the Colin Powells and the Bushes who are -- who are making the decisions. And the other thing is, I think it pumps these people up. These people are supposed to be anonymous, not supposed to get in the public. So it's probably a disservice that you wrote it.

SHIELDS: I -- I...

CARLSON: Bob, you hate staff, don't you!

SHIELDS: No, no -- the interesting thing is that those are the two things Bob liked about the piece. I thought it was fascinating, and I thought the point you made about John McCain and his willingness to share the total identity as author of his books with Mark Salter is refreshing and a testimony to McCain's own healthy...

(CROSSTALK)

O'BEIRNE: And my guess would be, Margaret, the people who begged to be left out of the piece are probably more powerful than people eager to be in it.

CARLSON: Well...

NOVAK: And probably smarter, too.

CARLSON: ... it was a mixed thing because people like it that they're the most important, but then when you add it, but that no one's heard of, they sort of backed away.

(LAUGHTER)

SHIELDS: Yes. OK. Good. It was a good piece, Margaret...

CARLSON: Thank you, Mark!

SHIELDS: ... in spite of...

(CROSSTALK)

NOVAK: ... I liked it!

SHIELDS: Oh, go to your room!

CARLSON: And Marry Christmas to you, too, Bob!

SHIELDS: Coming up in the second half of THE CAPITAL GANG, political humorist Mark Russell. That's right. He'll join THE GANG to hand out awards for 2003, to make predictions for next year and our "Outrage of the Year." That's all after the latest news headlines.

(COMMERCIAL BREAK)

ANNOUNCER: Live from Washington, THE CAPITAL GANG.

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

Our guest is a true American treasure, humorist Mark Russell. He'll be up in New Hampshire with the rest of us. He will be performing at the Portsmouth, New Hampshire, Music Hall on Sunday night, January 18, for one night only. Get your tickets soon.

MARK RUSSELL, HUMORIST: Yes, it's in the afternoon, thanks.

SHIELDS: It's in the afternoon.

RUSSELL: Yes, it's at 2:00, thank you.

SHIELDS: It's at 2:00 in the afternoon.

RUSSELL: It's great to be back. I've been waiting all -- six months to do this. I am not now nor have I ever been Robert Novak's source. It's John Dean, right?

SHIELDS: That's right.

RUSSELL: Gordon Liddy.

SHIELDS: It was (UNINTELLIGIBLE). (UNINTELLIGIBLE), Mark joins us to make our awards for 2003. First, who was the most valuable performer of the year, Bob Novak?

NOVAK: Colin Powell. I thought he did a remarkable job in -- with a hostile world on the United States, getting as many people in the coalition as he did, and in making the sale of the President Bush's argument for intervention in Iraq. I think there'd be much less U.S. support if it hadn't been for Colin Powell. I think he's a valuable asset to this administration.

SHIELDS: Mark Russell?

RUSSELL: Most valuable player, the coalition of the willing, 43 countries, three of which have an army. Poland sent 200 troops, Guyana sent a steel drum band, and Czechoslovakia baked a casserole.

But when you're talking about most valuable player, you cannot leave out William Bennett, who, of course, earlier this year, admitted to $8 million in gambling losses, which makes him the most valuable player in Las Vegas.

SHIELDS: That's right. Margaret Carlson.

(CROSSTALK)

CARLSON: ... those three armies, it makes my pick, the American military, all the more important, because they did carry the burden. I'm hoping that President Bush, who found a great way to honor the serve -- the troops serving on Thanksgiving, will find a way to honor the dead troops this year by going to Dover. SHIELDS: Kate O'Beirne.

O'BEIRNE: I pick the strong economy as the most valuable player, with productivity and growth numbers and the stock market is going to be valuable for George Bush and everybody except the Democrats who would be president. I think it's awfully hard to keep crediting the military without giving credit to Don Rumsfeld too, though, as an MVP.

SHIELDS: I will do just exactly that, though. I will give credit, just like Margaret did, to U.S. soldiers and Marines whose superb confidence and discipline won the overthrow of Saddam Hussein in record time, and who have shown courage and resourcefulness and resilience in the face of a terribly botched and absolutely unprepared postwar plan, and in trying to keep, bring peace to that very troubled land.

And I just, I think they owe -- we owe them a debt of gratitude, and they have been the most valuable player.

Now, what was the worst performance of 2003, Mark Russell?

RUSSELL: Well, it's got to be Arianna Huffington. Now, here she is politically astute, she knows her way around the political landscape. And yet she lost the race for governor of California to a man who groped his way to the top and brought to the governor's office the combined expertise of a body builder and a lightweight.

SHIELDS: Margaret Carlson.

CARLSON: Yes, we could put her together with Baghdad Bob, otherwise known as the Iraqi information minister, who, while Iraq is falling around him, went on the air and said, "I triple-guarantee you there are no American soldiers in Baghdad." President Bush used to take time out of his day to catch my man in Baghdad. And by the way, Baghdad Bob called Bush "an insane little dwarf."

SHIELDS: Kate O'Beirne.

O'BEIRNE: I think the worst performance this year was turned in by a majority of the Supreme Court with these bum decisions they made on race preferences, on gay rights, on campaign finance reform. They're substituting elite opinion for interpreting the Constitution, and not even American elite opinion, international and foreign elite opinion for our own Constitution.

SHIELDS: I'm going to pick somebody that nobody could name, and that's Vice President Dick Cheney. In a strange, strange way, he has become an albatross to this administration, not simply because of Halliburton, not simply because of the fact that he overstated, overexaggerated the case for the war and overstated what would be the reaction in Iraq of reliance upon people like Chalabi, that would be like Paris in 1944, but quite frankly, that it's reached the point where he can't even talk to the press, and basically can go to fund raisers.

Bob Novak. NOVAK: He's a hero in Republican ranks, but talk to some Republicans sometime, maybe different idea.

(CROSSTALK)

SHIELDS: ... doesn't do much about carrying the message (UNINTELLIGIBLE).

NOVAK: We just had an interview with Armstrong Williams (UNINTELLIGIBLE).

SHIELDS: Yes, that's right, that was a tough one.

NOVAK: (UNINTELLIGIBLE). Well...

SHIELDS: That was a hard-hitting piece.

NOVAK: All right, anyway, the -- my worst performance, I don't think it's even close, it's Saddam Hussein. He really messed up. I mean, he -- there's a, there's no question that he could have cut a deal, and maybe he didn't even have weapons of mass destruction. If he had played any kind of game, he would, he could have avoided the, the, the invasion.

But what do you do with a paranoid dictator? You know, it is a problem for him to (UNINTELLIGIBLE), (UNINTELLIGIBLE), react rationally. And in the long run, I think it's a good thing for Iraq that he had such a bad performance this year.

RUSSELL: By the way, when the troops tore down that statue of Saddam, it was Baghdad Bob who said it was a statue of Saddam's double, wasn't it?

CARLSON: And triple. And quadruple.

SHIELDS: What was the biggest surprise of the year, Margaret Carlson?

CARLSON: You know, that the energy grid is so weak and outdated that a glitch in a computer in Ohio can shut down the whole East Coast in a blackout, and no ice cream in Georgetown. And an even bigger surprise is that the Congress diddled over a, a, a, a polluters and Hooters bill, I think, as Senator McCain called it, a non-energy reform bill, and so that we ended up with no reforms, no help for and a completely outdated energy system, and we're going to end up with another blackout.

SHIELDS: Kate O'Beirne, the biggest surprise to you.

O'BEIRNE: I think the most consequential surprise is Libya's decision to give up its weapons of mass destruction program. It's a charter member of the club of terrorist states. Gadhafi, presumably, apparently, doesn't want to go the way of Saddam Hussein, and the world will be a far safer place.

SHIELDS: I think the biggest surprise, certainly to me in 2003, was Howard Dean. I mean, all the smart money counted him out, all the Washington wiseguys said he didn't have a chance. And because he dared to stand up to President Bush's preemptive war in Iraq, he won himself a constituency and ardent supporters who are not only willing to knock on doors but to write checks in unmatched numbers. I think Howard Dean was my surprise.

How about you, Bob Novak?

NOVAK: I have to agree with you 100 percent. He's one of the biggest surprises in politics, bigger surprise than George McGovern, bigger surprise than Jimmy Carter. Nobody, nobody knew Howard Dean, who he was, the -- they still don't know very much about him. He's still a kind of a mystery. I understand he's found Jesus. He hadn't before. He was very secular. And he's going to carry him on the bus now. But it's a surprise, and it's going to be very interesting.

SHIELDS: Mark Russell.

RUSSELL: You believe that the M.D. after Howard Dean's name stands for Mondale and Dukakis?

What are we on, surprises?

SHIELDS: Surprises, yes.

RUSSELL: Sorry. The...

SHIELDS: (UNINTELLIGIBLE).

RUSSELL: ... my surprise -- Rush Limbaugh, who came out with that brilliant prescription drug plan, which, to me, was a lot easier to understand than the one Congress came up with.

SHIELDS: And who was the rookie of the year, Kate O'Beirne?

O'BEIRNE: What the premiere of "Return of the King." I have to give it to novice director Peter Jackson, who has done a remarkable thing with the "Lord of the Rings" trilogy. He has satisfied Tolkien enthusiasts and newcomers, and he's made these smash hits, taught Hollywood a lesson about how audiences love stories about virtue and good and evil and truth and courage. Peter Jackson.

SHIELDS: Peter Jackson. I'll go with Kathleen Blanco, who begun last month the first woman ever to be elected a Democrat, pro-life Democrat, governor of Louisiana, and she recaptured the Baton Rouge statehouse from the Republicans.

Bob Novak?

NOVAK: I'm going to pass. You go ahead.

SHIELDS: OK.

RUSSELL: OK, well, if a Ricky can be a general, I nominate Wesley Clark, who becomes the first general in history to become suddenly antiwar at the end of his military career, with the exception of General Custer. About 100 years ago, Gilbert and Sullivan said it best. Would you like to hear this?

(singing): He is the very model of a Democratic general. He's in the Guinness book because the generals are liberal. The stars upon his shoulder indicate a military power, but would he be a mediocre graph instead of Eisenhower?

It's called stretching, Bob.

CARLSON: Yes. Yes. Can I sing mine?

SHIELDS: Yes.

(CROSSTALK)

CARLSON: Well, she has a name that's singable, Seffer Teachout (ph). She is Dean's Internet guru, and she's made, in some ways, you know, a candidate is a, is a commodity that can only be in one place at one time. But the candidate can be every place at all times, because these kids drive 200 miles not to see a candidate, but to see each other. And so it means that Dean can raise money without actually being anyplace. And he can hold a political rally without actually being there.

SHIELDS: Seffer Teachout, Peter Jackson, Kathleen Blanco, Wesley Clark, and...

NOVAK: All right, I, I'll give you mine. I was holding him back.

SHIELDS: Why?

NOVAK: It's -- Well, I was a little embarrassed.

CARLSON: Yes.

NOVAK: Arnold Schwarz...

CARLSON: (UNINTELLIGIBLE) thinking it.

NOVAK: (UNINTELLIGIBLE) Arnold Schwarzenegger is the surprise, is the rookie of the year. I think he's, you know, he's kind of an old rookie, but it was the first time he's run for office. He ran a great campaign. He's off to a flying start as governor. He cannot be president of the United States, because he was born in Austria, but he is clearly the rookie of the year.

SHIELDS: If we can outlaw gay marriage constitutionally, we can inlaw aliens, can't we, as (UNINTELLIGIBLE)

(CROSSTALK)

NOVAK: (UNINTELLIGIBLE) idea.

SHIELDS: Well, that's why we put it together, Bob.

Coming up next on CAPITAL GANG, our fearless predictions for next year, 2004.

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

And now Mark Russell and THE GANG look to the future, to the political events of 2004. First, what will be the biggest crisis of the new year?

The biggest crisis of 2004 will afflict and affect the smug columnists and editorialists who will infect this country and its debate on the issue of free trade, were uncritical, unfettered supporters of free trade, even though it's cost the nation millions of well-paying blue-collar jobs in manufacturing. You know, what's going to cause the crisis? When one $80-a-week Vietnam bureau chief is hired by a major news organization in this country, and those smug columnists feel threatened.

Bob Novak.

CARLSON: (UNINTELLIGIBLE)?

NOVAK: (UNINTELLIGIBLE) have to wait for that one?

OK, it's going to, seriously, it's going to be in North Korea. We still haven't made an arrangement with them. How are we going to deal with that nuclear problem? Nobody really knows what their government is going to do. So I think that is a huge problem waiting to happen. It's potentially much bigger than Iraq or Iran.

SHIELDS: Mark Russell, biggest crisis?

RUSSELL: Well, what if there were no crises in the year? How do we know? It might come from the revelation that Michael Jackson is Strom Thurmond's son. But if you want a crisis...

SHIELDS: And Kobe Bryant's (UNINTELLIGIBLE).

RUSSELL: If you want a crisis, I'll give you three words, mad goat disease.

SHIELDS: Mad goat disease. Margaret Carlson, biggest crisis.

CARLSON: I don't like following you, Mark. It's not easy.

RUSSELL: Sit here, it's...

CARLSON: Yes. Yes. Listen, it's in Pakistan. President Musharraf is not perfect, but he did ally himself with the United States in (UNINTELLIGIBLE) -- against Afghanistan. He did help us defeat the Taliban. There have been two assassination attempts. He's aligned himself with an anti-American group and says he's going to give up power over the army. Who knows what's going to happen there?

SHIELDS: Kate O'Beirne, biggest crisis. O'BEIRNE: Mark, I picked Iran, but as a reminder of what a dangerous world it is, North Korea poses potentially a deadly challenge. Pakistan is a problem. Iran, though, could prove stubborn in its willingness to give up its nuclear program.

SHIELDS: Next, name the Democratic ticket, president and vice president of 2004, Bob Novak.

NOVAK: Well, as we all predicted a year ago, it's probably going to be Howard Dean in the top, in the top spot. I think, I think John Edwards of North Carolina is the most likely running mate. He's from the South, he has an image that's more moderate, though he isn't any moderate. And he gets along very well on everything with Dean, hasn't criticized him very much.

SHIELDS: OK, Mark Russell.

RUSSELL: (UNINTELLIGIBLE) is this Republican psychology, though, using some sort of a...

NOVAK: Just trying to be helpful.

RUSSELL: Yes. Well, the nominee for the Democrats is going to be Wesley Clark for vice president. For president, Hillary Clinton. What's going to happen is that the convention will be deadlocked for the first time since the '50s. Hillary will accept a draft, as opposed to Bill Clinton, who dodged the draft.

SHIELDS: (UNINTELLIGIBLE).

(CROSSTALK)

RUSSELL: Dodged (UNINTELLIGIBLE).

SHIELDS: Margaret Carlson.

CARLSON: Again, following you. I have a...

RUSSELL: (UNINTELLIGIBLE) stock in there, (UNINTELLIGIBLE).

CARLSON: Howard Dean, you could sue me. Howard Dean, and I have a recommendation for him, general, retired general Anthony Zinni.

SHIELDS: Marine general, (UNINTELLIGIBLE)?

CARLSON: (UNINTELLIGIBLE), Marine general, Philadelphia, working class Catholic, and he predicted the trouble, what the aftermath in Iraq and how much that would trouble the administration. And he's got that military might that Wes Clark could bring, but I think Anthony Zinni is a purer form of it.

SHIELDS: Kate O'Beirne.

O'BEIRNE: I predict a general, but I think it could be Dean and Clark. Sure, they've had harsh words, but by next summer, Howard Dean will be reborn as very seriously religious person, and as an act of Christian charity, I think he'll forgive Wesley Clark for the (UNINTELLIGIBLE) the insults they've been exchanging.

SHIELDS: Certainly people who welcomed the religious conversion of George W. Bush will not in any way criticize that of Howard Dean.

But let's get my ticket, which is Wesley Clark and Eliot Spitzer. Howard Dean and Eliot Spitzer, Richard Gephardt and Howard, Eliot Spitzer, or John Edwards and Eliot Spitzer.

NOVAK: (UNINTELLIGIBLE)?

SHIELDS: Eliot Spitzer, well, I mean, I think it, I think it would be part, but I think Spitzer is the key to this.

RUSSELL: Who is he?

SHIELDS: He -- Eliot Spitzer is the attorney general...

CARLSON: (UNINTELLIGIBLE).

SHIELDS: ... the attorney general of New York. He is the sheriff of Wall Street. He's the Eliott Ness of this generation. He's the one guy in the face of the scandal of Americans being fleeced by the giants of Wall Street who has taken them to task, who's brought them to the bar of justice, who's hit them where it hurts, in the press, and (UNINTELLIGIBLE) in their pocketbooks. Eliot, Eliot Spitzer makes more sense than anybody else.

CARLSON: Amen.

SHIELDS: Who will be elected president, and how much will he win by? Mark Russell.

RUSSELL: When Saddam Hussein came out of his hole, he saw his shadow, which means we'll have four more years of Bush. Now, Bush will win by 2.5 pregnant chads.

SHIELDS: Margaret Carlson.

CARLSON: You know, if, if, I don't think things are going to catch up with President Bush by election time. I think we will be out of Iraq one way or another, our presence will be diminished, they will have turned it over to the Iraqis. The economy will not produce jobs, but people in charge will feel buoyant because the market will be up. So I say Bush by 3.

SHIELDS: Kate O'Beirne.

O'BEIRNE: I predict George Bush by at least 5 points. I think the public credits him with the resolve and strength necessary, given the war on terror we face.

SHIELDS: There will be an upset, and we'll have the second Bush one-term president by 4 percent. The Democrats...

NOVAK: (UNINTELLIGIBLE)...

SHIELDS: ... return to (UNINTELLIGIBLE).

NOVAK: (UNINTELLIGIBLE)?

SHIELDS: The Democrats for the, Democrats have won...

CARLSON: (UNINTELLIGIBLE)...

SHIELDS: ... the popular vote three elections in a row. Eliot Spitzer...

NOVAK: (UNINTELLIGIBLE) -- (UNINTELLIGIBLE)...

SHIELDS: ... will take the vow, Eliot's going to take the oath as (UNINTELLIGIBLE), as the...

NOVAK: (UNINTELLIGIBLE)...

SHIELDS: ... as president...

NOVAK: ... (UNINTELLIGIBLE), everybody else is predicting (UNINTELLIGIBLE).

SHIELDS: Wesley Clark.

NOVAK: Wesley Clark, all right. I think, I think it's going to be a lot better year than Margaret thinks. I think the economy is going to be up. This is bad news for the left. I think probably are going to get situation under control in Iraq. And but there's a lot of people who hate Bush, some of them at this table. And he'll only win by 3 points.

SHIELDS: Don't speak that way about your...

CARLSON: Not me, I like Bush.

SHIELDS: ... self.

RUSSELL: (UNINTELLIGIBLE).

SHIELDS: All right, now, quickly, we (UNINTELLIGIBLE), our (UNINTELLIGIBLE) time. Who will be "TIME" magazine's Person of the Year for next year?

CARLSON: No, because we can't invade all the countries that we have trouble with. I think it will be the year of diplomacy, and I hate to agree to Bob, but I think it's going to be Colin Powell.

SHIELDS: Kate O'Beirne.

O'BEIRNE: I think George Bush, finally, on the merits. His foreign policy and defense policy has been extremely consequential for the world, and I think "TIME" magazine ought to stop misunderestimating him and give him credit.

SHIELDS: The man who has the courage to lead the fight to provide legalized marijuana for people who are dying from cancer and other pain, Rush Limbaugh will be Man of the Year.

Bob Novak.

NOVAK: I agree with Kate. I think it's George W. Bush is going to have his best year ever in politics, and "TIME" reluctantly will go along with it.

SHIELDS: Mark Russell?

RUSSELL: This year, of course, it's the American soldier. And next year it better be the American sailors and Marines, for the magnificent job they will do when we invade either Taiwan, Pakistan, or North Korea, take your choice.

SHIELDS: Mark Russell, what else should we know about the upcoming year?

RUSSELL: What else should we know about the...

SHIELDS: Anything.

CARLSON: (UNINTELLIGIBLE).

SHIELDS: Anything.

CARLSON: Sing it.

RUSSELL: Well, you know, I'm amazed about Howard Dean. I really am. He already his credibility problem. He'll say one thing. If he was still practicing medicine, he'd analyze you and then give you a second opinion and then a third opinion, which would contradict the second opinion.

So what I would say to him, relax and just be one of yourselves.

SHIELDS: Last word, Mark Russell.

Next on CAPITAL GANG, the Outrages of the Year.

(COMMERCIAL BREAK)

SHIELDS: And now for the Outrage of the Week. First up, Kate O'Beirne.

O'BEIRNE: The only thing reduced this year was the use of the veto to control Capitol Hill's spending binge. Actual spending increased by an average of over 12 percent in the past three years, with Congress's pet pork projects up by over $160 billion. To buy votes, Congress has federal taxpayers covering the tab for thousands of local projects, like a sidewalk in Maine, a swimming pool in Salinas, California, and a mural in Missouri.

Even Santa Claus was bribed with $75,000 for the North Pole transit system.

SHIELDS: In Philadelphia, the brave men who gave us a nation solemnly stated, quote, "We mutually pledge to each other our lives, our fortunes, our sacred honor," end quote. They understood that war demanded truly shared sacrifice. Later, to pay for the Civil War, President Abraham Lincoln signed the nation's first income tax and the nation's first inheritance tax.

Sadly, in 2003, on the eve of war against Iraq, the cost for which the Bush administration has chosen to pass to the nation's children, the most powerful Republican on Capitol Hill said, quote, "Nothing is more important in the face of war than cutting taxes." Patriotism, huh?

Bob Novak.

NOVAK: For the first time, a Senate minority has prevented a president from naming his own federal judges. The Senate has not confirmed six of President Bush's appellate judges. Actually, the Senate majority supports confirmation of all of them, but so-called filibusters require a vote by 60 out of 100 senators. Democrats take orders from Teddy Kennedy to vote against any pro-life conservative.

Besides barring these judges, that is intended to intimidate President Bush in selecting for the Supreme Court. More than an outrage, it is a perversion of the U.S. Constitution.

SHIELDS: Mark Russell.

RUSSELL: Well, I'm going to have to stand in line and take a number on this, but my outrage is directed toward Congressman Tom DeLay. Because he rigged the redistricting in Texas? No. Because he disguised his political fund raisers as charities, and he probably would have pinned a campaign button on Mother Teresa? No.

But because he proposed housing the Republican delegates to the New York City convention next summer in a cruise ship instead of hotels. That's right, the Tom DeLay Love Boat, an idea which, fortunately, sprang a leak.

SHIELDS: Margaret Carlson.

CARLSON: AARP honcho Bill Novelli, as a co-conspirator of the Bush administration, has hastened the day when Medicare will wither on the vine. The Novelli-Bush reforms pay off two big GOP donors. Drug companies, protected from negotiating prices, can now charge top dollar. And insurance companies, which get subsidies to cover only the healthy and wealthy and leave the sick and poor to Medicare.

What's more, the very wealthiest can underinsure and stash money in tax-exempt IRAs. By the time seniors see how awful the Novelli sell-out is, the election will be over. But they should drop out of AARP now.

SHIELDS: This is Mark Shields saying good night for CAPITAL GANG, and happy New Year.

END

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Suicide Bomber In Israel Dampens Holiday Spirit; Capital Gang's Predictions For 2004>


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