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CNN CAPITAL GANG

Pakistani Army Engaged With al Qaeda Forces; New Bush Ad Attacks Kerry's Defense Record; Medicare Administrator Accuses Bush Administration of Suppressing Actual Budget Costs; Interview With Howard Dean

Aired March 20, 2004 - 19:00   ET

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

ANNOUNCER: From Washington, THE CAPITAL GANG.
MARK SHIELDS, HOST: Welcome to THE CAPITAL GANG. I'm Mark Shields, with Al Hunt, Robert Novak in Denver and Kate O'Beirne. Our guest is Congressman Barney Frank of Massachusetts, the top Democrat on the House Financial Services Committee.

It's great to have you back, Barney.

REP. BARNEY FRANK (D), MASSACHUSETTS: Thank you.

SHIELDS: President Bush greeted the first anniversary of the U.S. invasion of Iraq with a defense of his administration's war policies.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: No nation or region is exempt from the terrorists' campaign of violence. Each of these attacks on the innocent is a shock and a tragedy and a test of our will.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: Our men and women in uniform fight on almost alone, in reality, with a target squarely on their backs.

(END VIDEOTAPE)

SHIELDS: That followed a coordinated terrorist attack on Madrid commuter trains that left 202 dead and resulted in the election in Spain of a socialist prime minister, who had promised to withdraw Spanish troops from Iraq.

(BEGIN VIDEO CLIP)

JOSE LUIS ZAPATERO, SPANISH PRIME MINISTER-ELECT (through translator): The occupation is a fiasco. Terrorism has to be confronted through the rule of law.

(END VIDEO CLIP)

SHIELDS: Meanwhile, Pakistani military forces were engaged in battle with al Qaeda forces who may be protecting Osama bin Laden's second in command. Bob Novak, one year later, is the Iraq operation more of a success or more of a failure?

BOB NOVAK, CAPITAL GANG: I think it's more of a success. As you know, I was against the military operation, but once it was launched, I believe that it has been -- is being (ph) the long-range benefits of the Iraqi people. I think the -- it's therapeutic to have -- be rid of Saddam Hussein.

But Mark, I think the most important development this week was the ability of al Qaeda or its offshoots to change the government of Spain, to change the result of an election. That is an enormous triumph, and they're going to try it elsewhere. And I think they're going to -- that the real target is George W. Bush. That's the -- that, according to all the al Qaeda propaganda, all the material they put out, that's the government they really wanted changed is the government in Washington.

SHIELDS: Al Hunt, today, one year later, is the United States more trusted or less trusted, more isolated or less isolated than it was a year ago?

AL HUNT, CAPITAL GANG: Well, Mark, never mind the critics, let's judge the administration by its own criteria. They told us that we'd find massive amounts of weapons of mass destruction. We've found none. They told us we would be greeted as liberators. We obviously were not. They told us it would be wrapped up in a year or two with not nearly as many American troops as -- as were required to go in. We now have as many, and we're going to be there for probably the next decade, at least.

Paul Wolfowitz said that it could be financed by Iraqi oil. It's now cost us $150 billion, and it's still climbing. And they said it would stem terrorism, it would stabilize the region, it would spread democracy. None of it's happened. Pretty dismal record.

SHIELDS: Kate O'Beirne...

KATE O'BEIRNE, CAPITAL GANG: Let me just take...

SHIELDS: ... pretty dismal record?

O'BEIRNE: ... those quickly one by one before I -- first I want to point out to Senator Kerry that our men and women in uniform had targets on their back at the Khobar Towers. They had targets on their back at the USS Cole. We have been in the sights of al Qaeda. And then, of course, came 9/11. Who wants to go back to the '90s and pretend, as -- as the Clinton administration did in the '90s, they don't pose a lethal threat to us?

Saddam's own generals thought he had weapons of mass destruction. They did not rely on CIA estimates. Of course, we're going to be there to provide stability -- our troops. We're still in Bosnia, for gosh sakes. The Iraqi people have welcomed us. Polls this week show that not only are they grateful to see the end of Saddam Hussein, but they do think things are better now, and an overwhelming majority believe things are going to be better in the near future.

SHIELDS: Barney Frank, before the war, that Bob Novak talked about that debate, the argument was that Saddam Hussein was the functional equivalent of Adolf Hitler. If you opposed that war, you were Neville Chamberlain. If you supported it, you were really Winston Churchill. Whatever measurement, Saddam did not turn out -- he turned out to be a toothless tiger, didn't he?

FRANK: Well, in fact, yes. This argument -- the analogy between him and Hitler was always wrong, as I argued at the time, because while Hitler had been appeased, Saddam Hussein had been -- had been effectively contained. And in fact, the most interesting testimony, I thought, from David Kay was not simply that there were no weapons of mass destruction, which the administration had said that there were and that was a major reason for the attack, but Kay said the reason was, in part, the sanctions, the over-flights.

There was, in fact, a great difference between the way the world treated Hitler and Saddam Hussein. Hitler was left alone to go into the Rhineland, to go into Czechoslovakia. Saddam Hussein was very effectively contained. And in fact, I( think the way this now works out is Saddam Hussein was a terrible thing for the Iraqi people, and the American invasion now appears to be one of the great kind of examples of beneficence because I think the American people have not benefited from that. It has cost us money. It has cost us life. The Iraqi people are better off. But the broader set of gains they thought -- peace between Arabs and the Palestinians, more democracy in the Middle East -- none of that's come true. So the Iraqi people are somewhat better off, but none of the broader gains that they talked about have been realized.

O'BEIRNE: Our troops are out of Saudi Arabia, which was a huge irritant that Osama bin Laden kept pointing to. Is there any doubt that Libya would -- they would never have come clean on their weapons...

FRANK: Oh, I disagree with that.

O'BEIRNE: Well, by his own words...

(CROSSTALK)

O'BEIRNE: By his own words, he said it's owing to what we did in Iraq.

(CROSSTALK)

O'BEIRNE: The world is demonstrably safer because this guy's gone!

FRANK: Kate, I'm glad you interrupted me because I did get a chance -- I did want to say...

O'BEIRNE: I thought you were finished.

FRANK: ... that your suggestion -- your suggestion that Bill Clinton ignored this threat is, of course, partisan nonsense. Bill Clinton -- in fact, between Bill Clinton's administration and September 11, there was complete continuity. So the notion that the Bush administration came in, things were totally different -- no, not until the mass murders of September 11. They were carrying out, essentially, the policy.

But as far as Libya's concerned, Flynt Leverett, who was the Middle East National Security Council person under Bush, said that this, in fact, had started before that and that he found that the hard-liners in the State Department almost derailed it and that they would have gotten this done anyway. This is the Bush administration's...

O'BEIRNE: No, but...

(CROSSTALK)

HUNT: We can settle this, Kate...

NOVAK: Could I say something, please?

(CROSSTALK)

HUNT: Just very quickly, Bob -- this Barney-Kate dispute can be settled. Richard Clarke, who was in charge of terrorism under both Clinton and under George Bush on 9/11, going in television, "60 Minutes" tomorrow night, has a book coming out. Let's see what he says about how the Bush administration...

NOVAK: How do you know what he's going to say?

HUNT: ... was on terrorism.

SHIELDS: What's he going to say, Bob?

HUNT: He was head of terrorism under both, Bob!

NOVAK: He -- you know what he's going to say. But the interesting thing is...

HUNT: I don't!

FRANK: Well, first you said, How did he know what he was going to say...

NOVAK: Wait a minute!

FRANK: ... then you said you did!

SHIELDS: Go ahead. Go ahead, Bob Novak.

NOVAK: Can I -- can I...

SHIELDS: Yes. Go ahead.

NOVAK: We are in an election year, and what we've been hearing here now is all this stuff on whether we should have gone in, whether it was the right thing. We're going to hear that from Kerry. We're going to hear it from Bush. The American people think, by and large, it was the right thing to do. I think it's a dumb political move by the Democrats to do, now that their primary is over. But I think the thing that worries me is the idea of al Qaeda is alive and well, and I was -- nobody else mentioned the Spanish victory by al Qaeda, and the fact that Spain has taken the route of appeasement. That is, if you do not do the things to go after al Qaeda, they will leave you alone and they won't destroy your people and kill 202 people in a -- in a -- in a sabotage of the railroads. That is what the war of terrorism is (UNINTELLIGIBLE), why the American politicians talk about a guy named Richard Clarke, who wanted a -- who was made at the time that Clinton didn't go after Osama bin Laden.

SHIELDS: Bob, that's one...

HUNT: He was right.

SHIELDS: ... interpretation of the Spanish elections. Another interpretation, and one that's been made by people reporting from Spain, is that the Spanish people, enough Spanish voters felt that they had been misled and lied to by the ruling party on the question of whether, in fact, al Qaeda had been involved and tried to spin it -- pin it and spin the story that it was Basque terrorists, thus strengthening the party in power's hand. And enough voters revolted. It wasn't a matter of appeasement, it was a matter of rejection of the leadership. So that is...

NOVAK: You know, if you -- if that was not -- if that was not -- that was -- that government was very popular. The socialists were in bad shape. If that was not an example of appeasement, I have never seen one in my life!

SHIELDS: Well, Bob, that's -- I'm sorry that that's the case, but you had the last word, so what more could you ask for?

Barney Frank and THE GANG we'll be back with John Kerry under attack.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. President Bush's television ad campaign opened fire on Senator John Kerry.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Mr. Kerry.

UNIDENTIFIED FEMALE: No. Body armor for troops in combat.

UNIDENTIFIED MALE: Mr. Kerry.

UNIDENTIFIED FEMALE: No. Higher combat pay.

UNIDENTIFIED MALE: Mr. Kerry?

UNIDENTIFIED FEMALE: No. And better health care for reservists and their families.

UNIDENTIFIED MALE: Mr. Kerry.

UNIDENTIFIED FEMALE: No. Wrong on defense.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

KERRY: I actually did vote for the $87 billion before I voted against it. I'm not going to worry about them misleading because we're going to just keep pounding away at the truth.

(END VIDEO CLIP)

SHIELDS: Vice President Cheney also weighed in against the presumed Democratic nominee, including his assertions of support from foreign leaders.

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: When a candidate for president claims the political endorsement of foreign leaders, at the very least, we have a right to know what he is saying to foreign leaders that makes them so supportive of his candidacy.

(END VIDEO CLIP)

SHIELDS: Al Hunt -- Al Hunt, are the Republicans drawing blood from John Kerry with these attacks?

HUNT: Yes, they are, Mark. And some of it also was self- inflicted. I think when John Kerry says, I voted for the $87 billion before I voted against it, that doesn't exactly present a portrait of a coherent, in-charge candidate. John Kerry's got to get his act together on what he -- what he thinks and what he did on -- on Iraq. He had problems in the early primary stages, and he's having problems now.

But Mark, this is going to go back and forth. The intensity level eight months out is unprecedented. It's stunning. It's going to just continue. Kerry will soon give an economic speech, and then we'll have a ferocious debate on economics. That's tough terrain for Bush. But I think you're going to see one week where Bush has a good week, and the next week he has a bad week, and the same with Kerry.

SHIELDS: Bob Novak out in Denver, do you have a sense that George Bush is finally getting some traction in the year 2004?

NOVAK: Yes, I think so, because they're attacking Kerry. You know, the -- everybody in the media and in the academy wring their hands, how nasty this is. But the Democrats have been pounding on Bush through these primary elections for months. That's the main reason he fell in the polls. And they had no choice but to retaliate.

I thought it was very interesting that Senator Kerry had his first real blooper of the campaign -- I thought he ran very well in the latter stages of the primaries -- But when he talked about this support by foreign leaders. Who, the communist dictator of North Carolina -- of North Carolina! -- of North Korea, the...

(LAUGHTER)

HUNT: Second time you've said that.

NOVAK: Yes. Second time I said that? The -- the vicious president of Venezuela, the socialist prime minister-elect of Spain? Well, he didn't mean those people, but that's the way it came out. So that was a little mistake. But I agree with you, Al, it's going to go up and down. It's going to be nasty and bitter. But I think the Democrats should stop whining, Don't attack us. They've been attacking Bush for a year.

SHIELDS: One leading Republican this week said, John Kerry's a good and decent man and this kind of rhetoric -- Dick Cheney's he was referring to -- is not helpful in educating and helping the American people...

O'BEIRNE: Let me guess!

SHIELDS: ... make a choice.

O'BEIRNE: Let me guess!

SHIELDS: Who was it?

O'BEIRNE: That wouldn't be Senator John McCain, by any chance, would it?

SHIELDS: It wouldn't be America's hero, John McCain.

HUNT: You got it, Kate.

(CROSSTALK)

O'BEIRNE: I thought it sounded familiar.

HUNT: That wasn't helpful to the Bush campaign.

O'BEIRNE: I thought it sounded familiar. Look, John Kerry has been saying for weeks on end, one of his big applause lines on the campaign has been, "Bring it on." And this week, it was brought on, and I think some weaknesses on the part of John Kerry as a candidate were on display. Of course, (UNINTELLIGIBLE) little ebb and flow over the next weeks. The fact that he thought it was a point in his favor to say, Foreign leaders would rather see me elected, I think shows a really worrisome -- tells the Democrats something worrisome about his instincts. Regardless of who the heck they may have been, we don't much care, the American electorate, what the heck foreign leaders want. They want a change in policy, if anything, we resist it.

Secondly, the -- both -- voting both ways on the $87 billion is just pure John Kerry. And his defense is, Well, I -- wait a minute. I was on both sides of that. The reason, of course, he ultimately voted against funding the troops, which Dick Gephardt called irresponsible, is because it didn't have a tax increase. So now you have John Kerry caring more about raising taxes than supporting the troops.

He just had a bad week, now that the Republicans have brought it on.

SHIELDS: I should point out that Barney Frank was one of the earliest, strongest and longest supporters of John Kerry. Just turn to you, Barney. It just struck me, in watching it, that he had over- learned the lessons the 1988, Michael Dukakis...

FRANK: Well...

SHIELDS: ... just kind of reacting to every charge.

FRANK: That phraseology, I voted for it before I voted against it, was a kind of parliamentary shorthand that he should not have expressed it in that way. But Kate just gave both explanations, and one of them is accurate. And let me give you even more of a disclaimer. I voted the same way. Yes, when the Bush ad says he voted against body armor, he voted against this, he voted against that, those are lies. In the first place, they weren't separate votes. They give a -- just a dishonest impression. There was one vote. The vote was the $87 billion, and everybody who was voting was in favor of that.

The question was -- you're right, Kate -- should we take it out of EPA, should we take it out of housing, should we take it out of transportation, should we take it out of local police in America, or should we say that the Bush tax cuts for people who are going to leave $20 billion to their kids shouldn't stay in place? So that's what John voted for. He voted to say that you shouldn't reduce taxes for incomes of hundreds of thousands of dollars, give the money to Iraq, and then cut back on environmental protection, cut back on housing, cut back on transportation. He didn't say...

O'BEIRNE: Dick Gephardt voted the wrong way! Joe Lieberman voted the wrong way!

FRANK: Yes. Oh, yes. Of course. I disagreed with them.

O'BEIRNE: They supported the war, and they felt, having supported the war, unlike John Kerry, they were obliged to support the troops.

FRANK: Oh, no, Kate, you're simply wrong. And you -- you know, you're going back on what you said yourself. You acknowledged this was not a vote on whether or not you support the troops. And you're just taking that...

O'BEIRNE: It was!

FRANK: Kate, please stop interrupting. You're just contradicting yourself. You acknowledged that the real issue here was the tax cuts. That's what we were talking about. Those of us voted against the $87 billion, as presented, were saying, Give us a chance to undo these tax cuts for millionaires and not take it out of programs domestically, and we'll vote for the $87 billion. Two minutes ago, you acknowledged that. I guess it didn't sound good to you, so now you want to take it back.

SHIELDS: Bob Novak, clear this up, please, in Denver.

NOVAK: Clear it up -- when you vote -- when he cast that vote, he made a choice. It is a vote I think he would rather not have made. I think he'd have been better off voting for the $87 billion. A lot of liberal Democrats voted for the $87 billion. It's a political mistake!

FRANK: He voted for it...

NOVAK: When you can -- wait a minute!

FRANK: ... with a tax...

NOVAK: Wait a minute! Don't you interrupt me, Barney!

FRANK: Why not?

NOVAK: I'm -- I'm...

FRANK: Because you -- you've been filibustering, Bob!

NOVAK: Because I didn't interrupt you, that's why! And because...

FRANK: The point is that you just misstated his position.

NOVAK: Wait -- wait a minute! I -- let me finish what I was going to say! And the fact of the matter is, when you decide that tax cuts are more important than voting for it, you've made a decision!

FRANK: That's right, that tax cuts...

NOVAK: And that -- and that -- and that...

FRANK: ... are not more important than...

NOVAK: You got to live with it.

FRANK: ... supporting the troops! That's the decision he made.

SHIELDS: This dispute to be continued at a later date.

Next on CAPITAL GANG, the muzzling of the Medicare numbers cruncher.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Richard Foster, the government's chief actuary on Medicare, accused the administration of forcing him to withhold from Congress his estimates of the new prescription drug program. A memo was released threatening Foster. Quote, "The consequences for insubordination are extremely severe," end quote.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), MINORITY LEADER: In the executive branch, there are documentations of threats of severe consequences on the job for telling the truth.

(END VIDEO CLIP)

SHIELDS: Kate O'Beirne, was the administration using high- pressure tactics to cover up the real cost of this prescription drug program?

O'BEIRNE: My bet is that no one who voted for this program thought it was going to cost $400 billion over 10 years. These estimates are always shaky. They generally contradict each other. There are so many unknowables.

What is knowable is all of these entitlement expansions cost more than you first think. But I think the -- there's a plausible case that the administration had the alternative, higher estimate and was sitting on it.

I think it's not plausible that Democrats who wanted a bill twice as expensive much care what the pricetag was. But the Democrats aren't going to be arguing about the cost of Medicare. They've made it a credibility of the Bush administration issue. They've made an issue of credibility. And I think the administration left itself open to that.

SHIELDS: Bob Novak in Denver, it's inconceivable, isn't it, that in this, the most important domestic initiative of George Bush's year, that Karl Rove and the White House weren't in this right up to their eyebrows and that, in fact, they were orchestrating the whole program.

NOVAK: Well, I don't -- I don't know who -- who was orchestrating this -- this power play. They -- they put the heat on this fellow. Now, the Democrats are playing this very smart. This Foster, this actuary, is a bureaucrat, but he's a Democrat. He is -- he is very hostile to the administration. And they're setting him up for testimony in Congress and a show trial next week that's going to be very embarrassing.

Having said that, Mark, let me say that this whole program is an embarrassment for conservatives. It's too big. It's a new entitlement. And the -- and I disagree with -- with Kate. I think if the real cost of this had been known, they might not have gotten it through the Congress. They had -- they had to twist arms and threaten on the floor to get conservative Republicans to vote for it. And I think this is really one of this -- this playing in the liberals' court on socialized medicine is one of the really down -- bad mistakes of this administration.

SHIELDS: Barney Frank, I want you to address that. But isn't the real scandal of this whole bill the fact that the bill expressly prohibits Medicare from negotiating with the pharmaceutical and drug companies for a lower price for Medicare recipients to pay for their prescriptions?

FRANK: Well, I agree. And Medicare, which is -- what Bob Novak, people should understand, calls socialized medicine, to make it part of Medicare -- yes, here's part of the problem. It's not just that the estimates went up. The estimates went up -- they didn't go up. The honest estimates came out in a disgraceful effort at manipulation. But the bill is now going to cost one third more than they said, and not one penny of that will go the benefit of the beneficiaries. That's what you're talking about. They have so structured this bill, so instead of $400 billion, they now say it's going to cost $540 billion -- the amount that the recipients have to co-pay, the amount of reimbursement they get -- they don't get a penny out of this. All of it goes to the people on the other side.

SHIELDS: Al Hunt, your own sense of where this stands, as a political story and reality.

HUNT: Well, if Mr. Foster, the actuary, is a Democrat, he's -- I wonder why this Republican administration has -- has kept him and relied on him for three years. I don't think it has anything to do with whether the actuary's a Republican or a Democrat. Of course...

CARLSON: He was a mole. Novak's covered it -- uncovered it. He was a mole.

HUNT: Of course they deceived -- they totally deceived the Congress. Kate, I think you're probably wrong. I think if the cost had come out, that label had been put on, $534 billion, I think some conservatives couldn't have voted for it. But you're absolutely right, the major issue here, the real issue here and the damaging issue is one of credibility. And I think the administration has absolutely no credibility on this issue.

SHIELDS: Bob Novak, your own sense out there? I mean, is this a -- coupled with the weapons of mass destruction, is this the bookend on undermining the credibility of George Bush?

NOVAK: I wrote some weeks ago that credibility was the president's biggest problem, and they're trying to knock down -- and they are doing a good job of knocking down Kerry, but credibility is a problem. I will say this, that the -- that the prescription drug issue was something that they -- that the Republicans went into to get short-term pleasure, even though there may be long-term pain. And now they're even getting short-term pain over it. So it's a political fiasco, in my opinion.

SHIELDS: A number of politicians have had that experience of short-term pleasure, long-term pain.

Barney Frank, thank you for joining us.

Coming up in the second half of THE CAPITAL GANG, our "Newsmaker of the Week" is former Democratic presidential candidate Howard Dean, setting up a new political operation. And "Beyond the Beltway," the Senate race in Illinois with two bright political newcomers. That and our "Outrages of the Week" all after the latest news headlines.

(COMMERCIAL BREAK)

CAROL LIN, CNN ANCHOR: More of the CAP GANG ahead, but first here's what's happening at this hour. Anti-war demonstrators are turning out around the world today. Yesterday marked the first anniversary of the start of the Iraq war. In New York, tens of thousands of people marched through Manhattan, calling for the removal of American troops from Iraq.

Anti-war feelings are also running high today in Egypt's capital, where several thousand protesters are denouncing the U.S.-led invasion of Iraq. Demonstrators burned the American flag and chanted slogans supporting the Iraqi resistance.

More than three years after the bombing of the USS Cole, Yemeni security forces announced the arrest of a suspect in the attack. A second man is behind held, but it's unclear why. Seventeen U.S. sailors were killed in the attack in October of 2000. Thirty-seven others were wounded.

Those are the headlines this hour. Now, back to THE CAPITAL GANG.

ANNOUNCER: From Washington, THE CAPITAL GANG.

SHIELDS: Welcome back to the second half of THE CAPITAL GANG. I'm Mark Shields, with Al Hunt, and Robert Novak in Denver, and Kate O'Beirne right here.

Our "Newsmaker of the Week" is former presidential candidate Howard Dean, who this week introduced his Democracy for America organization. Our Al Hunt spoke with Governor Dean, from New York, earlier this week.

(BEGIN VIDEOTAPE)

HUNT: Governor, why a separate Democracy for America? Aren't you going to compete with the Democratic National Committee and the Kerry campaign for contributors and resources?

HOWARD DEAN, FORMER VERMONT GOVERNOR: No, we won't be doing that. What we're doing, Al, is trying to get a lot of people to run for office at the county level, at the state legislature level and the school boards. We're going to teach people how to raise money from small donors all over the Democratic Party, all over America, because that's the best way to get rid of special interests, and it's also the way -- frankly, it's something like what Ralph Reed did 15 years ago. He was very, very effective in getting members of the right wing Christian Coalition to infiltrate school boards and so forth. And we need to do that. And the Democrats have no mechanism for doing that.

HUNT: You compiled an extraordinary (UNINTELLIGIBLE) Internet contributors. Will you give that list to the Kerry campaign, the DNC? DEAN: We won't give that list to anybody, nor will we rent it, or sell it. Those names were given to us in confidentiality.

HUNT: You said that never again should the Democratic Party lie down and stop fighting. Which Democratic leaders laid down and stopped fighting?

DEAN: Well, in general, the Congress, right after George Bush came into office, with 500,000 fewer votes than Al Gore, gave him what he wanted. No Child Left Behind, enormous tax cuts, which are bankrupting the country, a war in Iraq. That is not the way to beat George Bush. This is the most far right, extreme administration in my lifetime. You do not compromise with the right wing of the Republican Party, you've got to fight back. And that's what we're going to do, and I think that's what the Democratic Party is doing now.

HUNT: Well, your Web site also says that you're going to end the era when politicians equivocate about matters as fundamental as war and peace. Isn't that what John Kerry did, in your view?

DEAN: I don't think we used the word "equivocate." I think we might have used the word "lie."

HUNT: The quote is, "when politicians equivocate about matters as fundamental as war and peace." Didn't John Kerry equivocate?

DEAN: Well, you know, that -- that -- we had lots of accusations flying back and forth when I was running against John Kerry, we're on the same team now, and I plan to focus on what we have in common, which is changing presidents and getting jobs back in this country again, and balancing the budget. George Bush sent this country to war without telling us why he was sending us. He gave us a lot of reasons that turned out not to be true. The administration then concealed the costs of this big Medicare prescription benefit bill, which gives our taxpayers' money to insurance companies, HMOs and drug companies. This is an administration that doesn't tell the truth very often, and that is what we're going to be outlining as we go around the country.

HUNT: Governor, you also say you'll work to persuade those that, quote, "might be tempted," end quote, to support an independent candidate. How seriously do you take the Ralph Nader threat?

DEAN: Pretty seriously. You know, Ralph Nader had a long 40- year career of doing great things, consumer protection, environmental protection. Because of this, I think, Quixotic campaign, he risks his entire legacy. If George Bush were to get a second term, he would undo everything that Ralph Nader has built in his whole career. Unfortunately, a vote for Ralph Nader has the same effect as voting for George Bush.

HUNT: Governor, in addition to school boards and local races, a major purpose of your new organization is to support, quote, "progressive," end quote, Democratic congressional candidates. What are the several most important criteria, and would you for instance support a Democrat who voted for the Iraqi war or any of the Bush tax cuts? DEAN: I don't think there is a particular single vote that would disqualify anybody. I think there are some that would make it more difficult than others. If you're out there supporting the president's tax cuts, I don't think our folks are going to be interested in supporting a candidate like that. But it's going to differ, you know. We're not going to do this nationally, necessarily. For example, in Texas, there is a terrific guy named Chet, I think it's Chet Edwards, he's a congressman who was redistricted out of his seat by DeLay and the Texas legislature.

HUNT: Governor Dean, you still attract controversy. This week, top GOP politicians had blasted you for suggesting that President Bush is partially responsible for the terrorist bombings in Spain.

DEAN: That's a ridiculous print story made by journalists who forgot that they shouldn't take everything that the White House reads and put it in the paper. What I said was that the president dragged our troops into Iraq, and I mean, into Iraq, and one of the reasons the terrorists bombed Spain is because of that. They said so themselves.

HUNT: The person second most identified with the remarkable Dean campaign was your former campaign chairman, Joe Trippi. There are rumors that a rift between you two has continued, and he plans to make separate use of some of the Dean contributor list. Is any of that true, or is that just idle print speculation?

DEAN: I think that's idle speculation. There's not going to be anybody who's going to be able to make use of the Dean contributor list, because I don't plan to allow anybody else to use it. Candidates, DNC, previous employees, or anybody else.

(END VIDEOTAPE)

SHIELDS: Al Hunt, is Howard Dean really on the same team with John Kerry, or is he going off on his own?

HUNT: Mark, actually, both. Because he is going to be a team player, he is going to help John Kerry, and he wants to clearly carve out a role for himself in the Democratic Party. And with that list, which is still an incredibly impressive list, and his performance this year, I think that Howard Dean will play a role in the party, and I think he's actually wearing rather well since his defeat.

SHIELDS: Bob Novak, your own take on Howard Dean.

NOVAK: I think he's an enormous problem for the Democratic Party. Still hasn't endorsed Kerry officially. He has -- he won't give him his list because he wants to use that to obviously, he's very open about it, to build an organization. Now, here's a guy who was on top of the world in the Democratic Party until the people took a look at him. Then the voters turned against him in Democratic primaries. He's -- he's just too harsh and too abrasive for the whole country to go with, but he could be an immense problems for Democrats, because he likes the spotlight and he ain't going away.

NOVAK: Being called abrasive by Bob Novak, Kate.

O'BEIRNE: Look, on behalf of the Kerry campaign, he said George Bush was partially responsible for the Madrid attacks. Al questions him about it, he says, oh, that's a ridiculous story, then he repeats the charge that George Bush is partially responsible. I wouldn't be surprised if John Kerry sent Howard Dean to work with Democrats abroad during the course of this campaign, to rally John Kerry's foreign vote.

SHIELDS: Let me just say what I said earlier on this show, and that is the Democratic primary, absent John Edwards and Howard Dean, would have lacked spine and soul. And thank God both of them ran.

Coming up on THE CAPITAL GANG Classic, our last program a year ago before the war with Iraq began.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. A year ago, a U.S.-British coalition attacked Iraq to remove Saddam Hussein from power, without help from most of the world. The last CAPITAL GANG program before that attack was March 15, 2003. Our guest was the chairman of the Senate Foreign Relations Committee, Republican Senator Richard Lugar of Indiana.

(BEGIN VIDEOTAPE)

HUNT: This administration's ineptitude over the last couple of months has been stunning. Somehow around the world there is a moral equivalency with this murderous thug Saddam Hussein.

SEN. RICHARD LUGAR (R), INDIANA: Perhaps more could have been done in public diplomacy, but it appears to me that France was probably unwinnable from the beginning, so now building the coalition not only for the military action but for the post-war situation is really imperative.

MARGARET CARLSON, CAPITAL GANG: If Britain and the United States haven't -- hadn't put the gun to Saddam Hussein's head, we wouldn't be where we are. Now the United States is painted into a corner and has to proceed no matter what.

SHIELDS: The reconstruction, the pacification, the rehabilitation, the nation-building to which the administration has pledged is going to require a lot of nations that aren't involved in this, aren't they?

NOVAK: Yes, it is, and it's going to take a lot of international relations of people like Colin Powell and Dick Lugar, and George W. Bush, to try to bring these people together, because it's very difficult going to war when most of the world is against you.

(END VIDEOTAPE)

SHIELDS: Kate O'Beirne, was THE GANG correct and the Bush team actually wrong about the difficulty of bringing peace to Iraq? O'BEIRNE: Well, what THE GANG wasn't recognizing is that it really has not been a question of rebuilding Iraq, unfortunately. Iraq was far more degraded than anybody thought in advance. We are actually building Iraq at the moment.

SHIELDS: Bob Novak, do you stick to the analysis you made then?

NOVAK: Yes, I do. You know, everybody who gave some thought to it knew this was going to be very difficult. Colin Powell knew it. Richard Lugar knew it. John McCain knew it. Chuck Hagel knew it. And the administration and Secretary Rumsfeld were feckless on this. They thought -- they didn't do very good on post-war planning, and that's -- that's the truth.

SHIELDS: Al Hunt.

HUNT: Yeah, Bob is right, and you know, we talked a year ago about -- about public opinion around the world. It's just as bad today. There are major American allies, according to the Pew poll that came out this week, who -- where people have a higher regard for Osama bin Laden, a certifiable killer, than for George Bush. That's just outrageous.

SHIELDS: I guess the only thing I'll say is that the human rights activists, rather than the war hawks in the Pentagon, were right, that actually the sanctions had worked. And Kate makes the point, that the people and the nation of Iraq were poor and hungry and really powerless.

Next on CAPITAL GANG, "Beyond the Beltway" looks at the political outlook in Illinois with Scott Fornek of "The Chicago Sun-Times."

(COMMERCIAL BREAK)

SHIELDS: Welcome back. The Illinois primary this week nominated its candidates for the Senate seat left open by the retirement of first-term Republican Senator Peter Fitzgerald. Winning easily in crowded fields were Democratic Senator Barack Obama and Republican investment banker turned school teacher, Jack Ryan.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D), ILLINOIS SENATE CANDIDATE: We can come together and proclaim that in fact we are all Americans and that we all care for one another.

JACK RYAN (R ), ILLINOIS SENATE CANDIDATE: I need all your votes, and if we do that, we can make this vision, we can make this vision a reality.

(END VIDEO CLIP)

SHIELDS: Joining us from CNN Chicago bureau is Scott Fornek, lead political reporter for "The Chicago Sun-Times." Scott, thanks for coming in.

SCOTT FORNEK, CHICAGO SUN-TIMES: Thanks for inviting me.

SHIELDS: Scott, tell us, are Democrats realistic in expecting that they will pick up that Republican Senate seat in Illinois in November?

FORNEK: Mark, I think a better question is, are Republicans realistic in thinking that they can hold on to it? I mean, the state has just been trending Democratic in recent years. Democrats control virtually all of state government, except for one office. Democrats have carried the state in the last three presidential elections. Obama comes out of his primary with a little more bounce than Jack Ryan does. You mentioned that they won easily. Obama won a lot more easily. He won with 53 percent in a very fiercely fought primary, that's a clear majority. Jack Ryan only had a plurality of 35 percent and twice as many Democrats came out, 1.2 million, as came out on the Republican side.

So I think if the election were held today, I think Obama's got it. Obviously, we've got eight more months here, so anything can happen. But the Republicans, I think, have their work cut out for them here.

SHIELDS: Bob Novak in Denver.

NOVAK: You know, the X factor that people I talk to, Scott, in both Democrat and Republican parties, is that Senator Obama is an African-American. And although Illinois has voted -- elected many blacks statewide, including, of course, Senator Carol Moseley Braun, there is a question of whether this is a factor that gives the Republicans a chance. It's very hard to get it in the polls, but what's your intuition? What's your feeling as to whether the Northwest Side of Chicago, Democratic, white Democrats will go out and vote for Ryan?

FORNEK: Well, my sense is they will because they already have. Barack Obama carried, I believe it was nine of the Northwest Side wards very easily. Southwest Side was a little different. Dan Hynes, the state comptroller, did a little better there. But really, when you go throughout the whole area, you know, Barack Obama did not win just with African-American votes. I mean, he carried the entire metro region, all six counties. You know, you don't win with 53 percent of the vote just based on African-American votes. Now, whether or not, how that's going to go in general election, obviously would be a different story.

But the one thing is, I don't think either one of these candidates, frankly, are going to run race-based campaigns. Barack Obama did not in the primary, and Jack Ryan is a guy who quit investment banking to do work in inner city schools and teach African- Americans, so I don't think he's going to play the race card, as they say, either.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Scott, in 1998, another extremely likable black liberal, Carol Moseley Braun, did lose that seat to a Republican conservative. Was that because it was an off year, did that really help the Republican in '98?

FORNEK: Look, Kate, I think the real problem with Carol Moseley Braun's reelection was Carol Moseley Braun herself. I mean, she just had a series of missteps, starting, you know, after her victory with her trip to Nigeria and other various problems. She just seemed to be in more trouble, and she really disappointed a lot of the very soccer mom type women who elected her in the first place. So she was a very damaged and wounded incumbent going into her reelection campaign. Fitzgerald put -- was conservative, you're correct, but he also put in I think it was about $14 million of his own in, and just really pummeled her on those issues, and was successful. He was the only Republican in the past 20 years, I would point out, to win a U.S. Senate seat in Illinois.

SHIELDS: Al Hunt.

HUNT: Scott, Obama, as you have noted, really impressively trounced the other Democrats, including a very rich guy named Blair Hull, who at one point was leading, and then his very controversial divorce proceedings came out, or details of that. There are at least some papers in Illinois who are filing for it to try to get the records released about the Republican candidate Ryan's divorce proceedings. I know Mayor Daley the other day said, you know, it should not be released. But is that a potential fear of Republicans, or is that just trying to re-fight the old Blair Hull wars?

FORNEK: Well, it definitely was a fear during the primary. Now, how much of that was his Republican opponents just fanning it as a potential issue for them obviously is an open question, but the four other Republicans in one statewide televised debate demanded that Ryan make all of his divorce records public.

Should point out, with Blair Hull, there was an issue to begin with, because there was an order or protection, which various media groups were able to use as kind of a wedge to get him to open his divorce records. There is really nothing like that with Jack Ryan. There's just some vague comments that in the divorce proceedings that he might consider some of the stuff in there politically embarrassing. He insists that the only stuff that he's removed from the file, had removed from the file is stuff to protect his son. That's going to be a question on whether or not the Democrats can, you know, press it enough or come up with to show that's really embarrassing, or is it going to be that Jack Ryan is going to be able to successfully argue, as he did during the primary, that he's only trying to protect his child.

SHIELDS: Scott, we only have about 30 seconds left, but tell us from your sense of covering the state as well as you have, who will have the longer coattails in November, John Kerry on the Democratic side or President George Bush on the Republican side?

FORNEK: At this point, no question, John Kerry. Polls here show that either John Kerry, in fact when John Edwards was still in it, either one of them would have easily beaten Bush. Bush lost here four years ago, so at this point Kerry is the guy with the coattails. SHIELDS: OK. Scott Fornek, thanks for being such a terrific guest and thank you for being with us. THE GANG will be back with "The Outrages of the Week."

(COMMERCIAL BREAK)

SHIELDS: And now for "The Outrages of the Week." President Bush's reelection campaign is distributing a letter from retired Colonel William Campenni, who served with Mr. Bush in the Texas Air National Guard. After defending Bush's service, Campenni argues that Bush did more to defend the U.S. than John Kerry did in Vietnam, earning three Purple Hearts, a Silver Star and a Bronze Star.

Quote: "While Mr. Kerry was playing his anti-war games with Hanoi Jane Fonda, we" -- Bush and Campenni -- "were answering 3 a.m. scrambles for who knows what inbound threat over a shark-filled Gulf of Mexico," end quote. Do the Bush folks really believe Americans are that stupid?

Bob Novak in Denver.

NOVAK: When President Bush yesterday delivered his first anniversary speech on Operation Iraqi Freedom, representatives of 83 countries were there, including the ambassadors of France and Russia. Not attending were the envoys from hostile Syria and Syria's satellite, Lebanon. But also absent was America's great friend, Prince Bandar of Saudi Arabia, the dean of the Washington diplomatic corps. He and his deputy were both out of the country. But the Saudis, it might be said, owe their freedom and the fact that they're not under Iraqi occupation to U.S. intervention. Maybe out of gratitude, they should have had the courtesy to send a representative for the president's speech.

SHIELDS: Kate O'Beirne.

O'BEIRNE: It's hard to believe those sweet young girls peddling cookies belong to a thoroughly left-wing outfit. At the national level, the Girl Scouts of America have completely surrendered to the feminist agenda. A local council in Texas recently faced a boycott protesting its affiliation with Planned Parenthood, the country's largest abortion provider. So locals severed the ties, but the Girl Scouts CEO defends the link-up. The Boy Scouts are hounded for sticking to their core values, while Brownies are being recruited by the left. That's how the cookies crumble.

SHIELDS: Al Hunt.

HUNT: Mark, I'll leave it to legal ethicists to say whether Justice Antonin Scalia should recuse himself from the pending case on Dick Cheney's secret energy task force, because the Supreme Court judge recently flew on the vice president's plane and went duck hunting with the vice president in Louisiana. But Justice Scalia's vehement refusal to recuse himself strains credulity, or parts of it do. For example, he dismisses any political implications of the case, insisting, quote, "political consequences are not my concern," end quote. Really? Has he forgotten Bush v. Gore, which decided the 2000 presidential election?

SHIELDS: Before we say goodbye, we would like to correct something from last week's program. During Al Hunt's "Outrage," we showed pictures of Steve Lieberman (ph), of the Congressional Budget Office, instead of former Medicare Administrator Tom Scully. We regret the error.

This is Mark Shields saying good night for THE CAPITAL GANG. Coming up next, "CNN PRESENTS: War Stories From the frontlines." At 9 p.m., "LARRY KING WEEKEND." Rock Hudson's wife, Phyllis Gates. And at 10:00 p.m. Eastern, the latest news headlines. 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



Attacks Kerry's Defense Record; Medicare Administrator Accuses Bush Administration of Suppressing Actual Budget Costs; Interview With Howard Dean>


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