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JUDY WOODRUFF'S INSIDE POLITICS

Bush Chooses Margaret Spellings as Education Secretary; Democratic Senator Suggested for Agriculture Secretary; Specter Fights for Judiciary Chair; Kerry Back at Work in Senate; Washington Governor's Race Too Close to Call; New Senator Minority Leader Looking for Consensus

Aired November 17, 2004 - 15:30   ET

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


(BEGIN VIDEOTAPE)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The issue of education is close to my heart. And on this vital issue, there is no one I trust more than Margaret Spellings.

ANNOUNCER: Another friend of George gets a call to the Bush cabinet.

Back in the Senate, John Kerry braces for battles ahead.

SEN. JOHN KERRY (D), MASSACHUSETTS: If the president is going to drive a hard ideological agenda, then we're going to have some tough fights over the course of these next months.

ANNOUNCER: A cliffhanger in Washington state. Is there any chance the governor's race will be resolved today?

A senator's swan song. When you're leaving, does anything go?

SEN. FRITZ HOLLINGS (D), SOUTH CAROLINA: We had, senator five drunks or six drunks.

ANNOUNCER: Now, live from Washington, JUDY WOODRUFF's INSIDE POLITICS.

JUDY WOODRUFF, HOST: Thank you for joining us.

On Capitol Hill today House Republicans vowed to protect their majority leader, and Democrats are accusing them of turning a blind eye to ethics.

The House Republican Conference approved a change in party rules that would permit Tom DeLay to stay on in his leadership post if he is indicted by a Texas grand jury on state political corruption charges.

There is no indication that charges against DeLay are in the works. But if he were indicted, his future as majority leader now would rest in the hands of several dozen House Republicans.

We're going to have a full report on this story a little later on INSIDE POLITICS. Now to the president's second term cabinet. Today Mr. Bush filled one of several vacancies, another White House insider who has a long history of working with him.

Our senior White House correspondent John King has more on Mr. Bush's choice for education secretary.

Hi, John.

JOHN KING, CNN CORRESPONDENT: Hello to you, Judy.

I think it's safe to say we have met the definition of a trend here at the Bush White House, as they prepare the transition to the second term.

You mentioned education secretary, the job the president filled today. He did it again in the Roosevelt Room, and he did it again by turning to one of his most trusted advisers.

Margaret Spellings is among the Texans who came here to Washington with then governor and president-elect Bush four years ago. She was a key education advisor back in Texas. She was a key education advise as the domestic policy advisor here in the White House, among the architects of what the president considers his signature domestic initiative besides tax cuts in the first term. That would be the No Child Left Behind Act.

She will now go to the Education Department, replacing Rod Paige, who is returning to Texas. And the president, in making this appointment today, said he was yet again picking someone he trusts, someone he knows very closely and someone he said he hopes will work with him to expand the scope of that signature education act, No Child Left Behind.

(BEGIN VIDEO CLIP)

BUSH: Margaret Spellings and I are determined to extend the high standards and accountability measures of the No Child Left Behind Act to all of America's public high schools.

We must ensure that a high school diploma is a sign of real achievement so that our young people have the tools to go to college and to fill the jobs of the 21st Century.

(END VIDEO CLIP)

KING: Now, Democrats have raised some questions about some of the other Bush confidantes who are on their way to cabinet jobs. Judge Alberto Gonzales, for example, he wants to make him attorney general, the president does. Democrats say they will have some tough questions there, although they expect him to be confirmed.

Tough questions, as well, to Condoleezza Rice, the national security adviser, who Mr. Bush wants to be the next secretary of state. Interesting, though, Democratic praise for Margaret Spellings today. Again, she worked behind the scenes with Senator Kennedy and others on the No Child Left Behind Act. Democrats say she has worked very well with them and look forward to her confirmation hearings.

And one more, Judy, in again, what is a clear trend. Harriett Myers, the White House announced today, will be elevated if and when Judge Gonzales is confirmed as the attorney general. Harriet Myers, you see her there with the president at the ranch in Crawford, Texas.

She, too, was one of his close advisers when he was Governor Bush. She has been the staff secretary, now the deputy chief of staff here at the Bush White House. She will become White House counsel when Alberto Gonzales -- if Alberto Gonzales, but all assume it is a "when," not an "if" -- becomes attorney general -- Judy.

WOODRUFF: All right, John. We want you to stand by, but for a moment we want to bring in the congressional correspondent, Ed Henry, with the latest on another cabinet post in need of filling, and that is agriculture secretary.

Ed, tell us what you've learned.

ED HENRY, CNN CORRESPONDENT: That's right. CNN has learned that a few days ago senior White House advisor Karl Rove called up Democratic Senator Ben Nelson of Nebraska and broached the idea of whether or not Senator Nelson would like to become agriculture secretary.

There's an opening now. Ann Veneman announced this week that she's stepping down. This makes some sense, because Senator Nelson is from a farm state, Nebraska. And he also -- we know obviously that President Bush has suggested he might like another Democrat in his cabinet to join Norm Mineta over at transportation.

But Democrats are very concerned that what Karl Rove really wants to do is get Ben Nelson out of the Senate. His successor would be appointed by a Republican governor in Nebraska. That would mean 56 Republican Senate seats up here on Capitol Hill. That's something obviously Democrats are very worried about.

Also, Ben Nelson facing a very tough reelection in that red state of Nebraska in 2006. And some Democrats are wondering whether this is a signal from the White House that maybe Ben Nelson can get out of the Senate and get a prominent job in the cabinet rather than face the prospect of potentially losing in 2006.

I can tell you I spoke for ten minutes last night with Senator Nelson. He would not confirm or deny this conversation with Karl Rove. He just said he's very happy in his current job.

But I pressed the senator and said, "What if the president calls you or you go to the White House and the president offers it?"

And senator Nelson said point blank, "If the president wants to talk to me, you have to listen." So right now it's something that Democrats up here are very concerned about -- Judy.

WOODRUFF: All right. So if that's the story from the Hill, John King, back at the White House, what are they saying there about this agriculture secretary story?

KING: Well, they're saying very little about this conversation between Karl Rove and Senator Nelson, Judy. They are simply not happy at Ed Henry's fine reporting, that we know of this conversation.

I tried to reach Karl Rove through his office. They said Karl Rove does not talk about private conversations with any members of Congress. They would not even confirm the conversation with Senator Nelson.

Other administration officials do confirm that a conversation took place.

What they are saying here at the White House is that Karl Rove and other senior officials reach out to Democrats and Republicans in Congress quite frequently. Senator Nelson is someone this administration has worked with the administration before, one of the more conservative to moderate Democrats on Capitol Hill.

Officials telling us they are aware and one official saying it adamantly would be wrong to say any cabinet position was offered to Senator Nelson. But I can tell you they did not like the fact that we knew of this conversation, again. And Karl Rove's office says he will have nothing to say, because any conversations he has with any members of the Senate -- and again, they will not even confirm this one conversation -- are confidential -- Judy.

WOODRUFF: All right. Well, John King, we're going to leave it at that for now. But we want to come back to you, Ed Henry, because we know there was still more going on, on the Hill today -- Ed.

HENRY: That's right. Senator Arlen Specter from Pennsylvania obviously has spent the last two days in closed-door meetings with fellow Republicans, trying to convince them that he should be the next chairman of the Senate Judiciary Committee.

A lot of concerned conservative activists outside the Senate still upset that right after the election Senator Specter, who's a moderate, as you know, suggested that President Bush will have a very hard time getting opponents of abortion rights confirmed to federal courts across the country, including the Supreme Court.

And with the potential for Supreme Court vacancies, that has gotten a lot of conservatives upset.

But I can report that it looks like a little momentum is starting to go Senator Specter's way. Late last night Senator Orrin Hatch, the current judiciary chairman who's leaving that post, came out and actually endorsed Arlen Specter. I've talked to another conservative on the judiciary committee today who said that he thinks now Arlen Specter is going to get this chairmanship.

Leaders like Bill Frist are saying they're going to stay out of it. They're going to let Arlen Specter continue to make his case. But what Republican senators privately are saying is it obviously will be decided by Republicans on the judiciary committee.

And so far, a lot of those Republicans feel that Specter privately in the last two days has gone a long way to convincing them that he will treat judicial nominees fairly, even if he does not agree with them on issues like abortion.

Now, there was another bit of housekeeping today in the Senate Republican conference as well. They chose a new chairperson for their campaign committee in 2006. Elizabeth Dole of North Carolina beat Norm Coleman of Minnesota by just one vote.

And insiders up here are saying the bottom line is that Elizabeth Dole's name I.D. rode her to victory. They feel that is going to help them recruit more Republican candidates for some of these tough Senate races over the next two years.

But also obviously that fund-raising is a big deal and probably the biggest part of it. Elizabeth Dole's name I.D. will bring in more to Senate Republicans. She won that leadership battle, again, by just one vote.

Finally, there is suddenly a little bit of optimism from some of the negotiators involved in the 9/11 intelligence reform bill. As you know, there's a lame duck session of Congress going on. This 9/11 bill has been stalled.

Now, they've been meeting in marathon meetings over the last couple of days. They're meeting right now, in fact. One negotiator told us that it's moving at a glacially slow pace.

But Speaker Dennis Hastert came out of a White House meeting this morning and told CNN that he's optimistic. He thinks this can get done in the lame duck session -- Judy.

WOODRUFF: All right. Ed Henry with a whole lot of news to report from the Hill. Thanks very much, Ed, for all that digging. We appreciate it. Thank you to you and to John King.

Well, separately in the Senate, John Kerry is readjusting, apparently, to life as one of 100 members after losing his presidential bid.

In a round of local television interviews, Kerry says he's moving on. But as CNN's Bruce Morton reports, Kerry also says he's not shutting any doors on a future run for the White House.

(BEGIN VIDEOTAPE) BRUCE MORTON, CNN CORRESPONDENT (voice-over): John Kerry is back at his day job in the U.S. Senate. He didn't win the White House, of course. Why not?

KERRY: I think war fear. It's very hard to unseat a president -- nobody has ever done it in history -- during a war. But it's up to other people to sort of figure all that stuff out.

MORTON: Does he resent the swift boat veterans ads, all the negatives?

KERRY: What's important to me is that -- that people came to understand that those were lies. They were damnable lies. They were part of a Republican smear campaign of fear. And I fought a campaign that was positive, that had a vision for the country and for the future. I'm proud of that campaign, and I'll never look backwards.

MORTON: Would he do it again? Put himself through all this again in 2008? Too soon to know, he says, but he will be involved in leading the party and fighting for his issues.

KERRY: I'm going to continue the fight. I mean, that's why I'm here, is to try to get healthcare for people who can't afford it, to try to get better jobs for people who are struggling in our economy, get an energy policy that makes America safer and make America safer in the world.

These are big challenges. They don't go away, those challenges. And I intend to keep very much active, very focused and fight passionately on those issues.

MORTON: And if the president goes hard right, the fights could start quickly.

KERRY: If the president's going to drive a hard ideological agenda, then we're going to have some tough fights over the course of these next months.

MORTON: John Kerry back at work.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Two weeks and a day after the election, the last votes still are being counted in the state of Washington.

The results must be certified by the end of the day but the cliffhanger governor's race seems headed for a recount.

CNN's Katherine Barrett has the latest from Olympia, Washington.

Hello, Katherine.

KATHERINE BARRETT, CNN CORRESPONDENT: Hello to you, Judy. That's right. Just to give you an idea of how close this race remains, nearly more than two weeks after election day, the very latest tally of votes counted shows state Republican senator Dino Rossi ahead of his opponent, Washington state attorney general, Christine Gregoire, by a margin of just 133 votes.

That's 133 votes out of nearly 2.8 million votes that are being counted. Two point eight million have already been counted around this state.

(BEGIN VIDEOTAPE)

BENNETT (voice-over): Ballot by ballot, first Democrats squeak ahead, then Republicans edge past, then Democrats again. In this excruciating slow motion photo finish to Washington's governor's race, the lead has shifted repeatedly since election night.

DEAN LOGAN, KING COUNTY ELECTIONS DIRECTOR: It's been a phenomenal effort. I mean, everything about this election has been record setting. Record numbers of new registrations, new records in terms of absentee ballots issued.

BENNETT: As late as Tuesday political party machines were moving to ensure their votes were counted.

UNIDENTIFIED MALE: I've got your forms here. Try and get your vote counted.

BENNETT: Democrats visited voters' homes to help correct provisional and absentee ballots with signature problems. Republicans called those with botched ballots to go to the county election office to fix them.

JAYSON FRANK BEATTY, VOTER: So often you feel like -- you feel silly for voting because you don't think your vote is going to affect the outcome, one way or the next. And it's exciting to know that every citizen has a chance to effect the process. And when it's this close, your efforts do make a difference.

BENNETT: Tuesday Republicans lost a court challenge to the Democrats' aggressive ballot rehab effort in King County, turning in forms for voters. And one county is recounting all its votes after finding a glitch that they say favored Republicans.

The two candidates, state attorney general Gregoire, a Democrat and Republican state senator Rossi, are trying to stay calm while waiting. Both are planning transition teams. Washington state must certify the vote count later today, but that may not end it.

SAM REED, WASHINGTON SECRETARY OF STATE: If the race is within 2,000 votes, which it apparently is going to be, then I will be calling for a recount.

(END VIDEOTAPE)

BARRETT: We could hear the call for that recount as early as later this evening or possibly tomorrow morning. And that recount could start as soon as Saturday.

But if the declared margin of victory today is less than 150 votes, that recount will have to be done by hand -- Judy.

WOODRUFF: Oh, that will be fun to watch! All right, Katherine, thank you very much.

BARRETT: And it's going to be live (ph).

WOODRUFF: Katherine Barrett joining us from Olympia, Washington.

We're checking the headlines now in our "Campaign News Daily."

A new poll from New Jersey confirms Democratic Senator Jon Corzine is the clear front-runner in the governor's race next year. The Quinnipiac survey shows that at this point, Corzine would defeat all possible GOP competitors by at least 20 percentage points.

And he would score a landslide Democratic primary win against New Jersey acting governor, Richard Codey, who took over after -- over this week after Jim McGreevey's resignation. We know that Corzine has expressed interest in the position.

Looking ahead to 2008, Arnold Schwarzenegger says he's not thinking about running for president, but the California governor is praising efforts to change the Constitution to allow foreign-born citizens such as himself to run for the White House.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I think it's good that America is talking about that. You know, in Washington, they're talking about it. But I think it's important to leave me out of that discussion. Because otherwise, it becomes a political discussion. Because I'm not thinking about running for president.

(END VIDEO CLIP)

WOODRUFF: Governor Schwarzenegger appeared on CNN's Larry King last night.

Tom DeLay says fellow Republicans are protecting him from the politics of personal destruction. Still ahead, more of what the House majority leader is saying about that controversial move.

Up next, the Democrats' new Senate leader. Does Harry Reid really think Republicans are ready to compromise?

And later, it's like a Clinton reunion in Little Rock before the grand opening of the former president's library.

This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

WOODRUFF: The man elected to lead the dwindling number of Senate Democrats in January certainly has his work cut out for him.

Senator Harry Reid of Nevada will take the reins from outgoing Senate Minority Leader Tom Daschle. Just a short while ago, I talked with Senator Reid and started by asking him if he agreed with his colleague, Senator Joe Biden, who said he had a hard time picturing Reid on the Sunday talk shows, that Reid's real strength was behind the scenes.

(BEGIN VIDEOTAPE)

SEN. HARRY REID (D-NV), HOUSE MINORITY LEADER: Well, I have great respect for Joe's opinion. He may not watch the Sunday shows, but I've been on them already quite a bit.

So I will -- I'm not somebody that seeks publicity, seeks being on TV shows. As you know, it wasn't easy to get me on yours. But I am not going to run from them. I've been on all the major national TV shows and will continue to be on them when I feel it's necessary.

WOODRUFF: So I raise that because, you know, there's some talk among Democrats, well, maybe Harry Reid isn't the man we want out there being one of the lead spokespersons for the party. But sounds like you're comfortable with that.

REID: Well, I think, Judy, that my colleagues who voted yesterday unanimously to put me in this position understand who I am. I'm certainly something -- somebody that's not untested. I've been on the floor virtually every day for six years.

People know my strengths and my weaknesses. And I know my strengths and my weaknesses. And I feel capable of doing the job that I think needs to be done for the millions of people who are depending on us, the Democrats in the United States Senate, to represent their interests.

WOODRUFF: Senator, you have said that you want to find consensus or compromise whenever possible with Republicans. They won a big victory on November 2. Where do you think they're going to want to compromise?

REID: Well, remember, the Republicans control the White House, the House and the Senate. We have this unique body called the United States Senate that our Founding Fathers set up to make sure that the minority had representation.

The president, they can't get anything done unless we work with them. So if they want to have another four years just like the last four where they accomplished nothing, well, that's one thing. If they want to accomplish something, then we have to work on consensus building.

And that's my whole point. I'm not going to look for fights. I'm going to look for ways to build consensus. But it's their problem. It's their president. It's their Congress. They're the ones that must report to the American people that they've been able to accomplish something. WOODRUFF: All right. Let's talk very quickly about two of the president's main initiatives, we're told. Are you prepared to accept partial privatization of Social Security?

REID: You know, this is a target that has never been fixed. They've talked about this. It's all been in campaign jargon. Let them put something in writing, and we will take a look at it.

At first glance I'm not for privatizing Social Security, but I am certainly not saying I won't look at what the president proposes.

WOODRUFF: What about tax reform. Are you open to moving to either a value added tax or a national sales tax to replace part or all of the income tax?

REID: Well, one of the things they've talked about is coming up with a value added tax. If we come up with a system like they have in Europe, I think it would not help the very complicated system we have now.

I think they have the worst of all worlds there. They have an income tax and then when you finish that, they have a sales tax on everything.

If the president is really interested in simplification, there are a lot of plans out there, and I'm happy, happy, to talk about simplification. The American people need tax simplification. We're willing to work with the president on that.

Let's start talking specifics rather than these hypotheticals.

WOODRUFF: If the president names either Clarence Thomas or Antonin Scalia to be the next chief justice if there's an opening, would you support them?

REID: I voted for Scalia. I voted against Clarence Thomas. I would be happy to take a look at both of these men.

Scalia, you know, he's not somebody that -- well, what I'm trying to say about Scalia, he is really a very brilliant man. I may not agree with some of his opinions, but his sheer brilliance is something that is certainly there.

We have to look into, though, with him, as a judicial committee will do, at some of the things he's done. You know, he's received some criticism for the traveling he's done and other things. And we'll take a look at that.

Clarence Thomas, I think it would not be a good day for this country if he were made the chief justice.

WOODRUFF: And finally, what lessons for Democrats, Senator, going into 2008 from this election? What do Democrats need to do differently?

REID: We have to make sure that we do a better job making sure that the people in rural America understand we're the ones that protected the family farmers when the Republicans were more worried about the banks.

We have to make sure that people understand that we have represented the interests of rural America when it seems Republicans are looking mostly at the big house on top of the hill.

So we just have to make sure that people in rural America understand what we stand for and not be afraid.

(END VIDEOTAPE)

WOODRUFF: Senator Harry Reid of Nevada, the newly chosen minority leader of the United States Senate.

One of the U.S. Senate's last remaining lions steps down. And he has a final friendly growl for his colleagues in the Senate. A colorful goodbye from retiring Democrat Fritz Hollings when INSIDE POLITICS returns.

(COMMERCIAL BREAK)

WOODRUFF: Outgoing Senator Fritz Hollings gave his final speech on the Senate floor yesterday, wrapping up his 38 years in the Senate with colorful and irreverent remarks, some of them.

The South Carolina Democrat, who did not seek reelection this year, jabbed his colleagues for their spending and free trade policies. But Hollings also had praise for his fellow senators, reminding them of the changes he's seen.

(BEGIN VIDEO CLIP)

HOLLINGS: We've got a way better group of senators. We had a senator -- five drunks or six drunks when I came here. There's nobody drunk in the United States Senate. We don't have time to be drunk.

And we got -- more than that, we've got the women. We had one woman. She was outstanding. But she was outstandingly quiet. It was Margaret Chase Smith from Maine. Wonderful lady. Now we've got 15 or 17, and you can't shut them up.

(END VIDEO CLIP)

WOODRUFF: Now we want to know who those five or six men are that he was talking about.

But anyway, there are currently 14 women in the United States Senate. Hollings is being succeed by Republican Congressman Jim DeMint.

Stand by their man. That was the theme on Capitol Hill today as House Republicans changed their rules to protect their leader. The latest on the Tom DeLay controversy when INSIDE POLITICS returns.

(COMMERCIAL BREAK) WOODRUFF: Big news in the business world today. A megamerger between two of the best known and the oldest names in retail. For details on this deal and much more I'm joined by Lou Dobbs in New York with "The Dobbs Report." Hi, Lou.

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Hi, Judy. Thank you. K- Mart is buying Sears paying $11 billion. The merger will create the third largest retailer in this country. 3,500 stores, $55 billion in revenue each year. It will trail only Wal-mart and Home depot in sales. Even though K-Mart is the buyer the new company will be called Sears, and it will be based in Sears' hometown of Chicago. Both retailers will continue to operate separately under their own brand names. K-mart's chairman Edward Lampert will be the chairman of Sears Holdings, he helped steer K-Mart out of bankruptcy last week.

And shares of both companies rallying on the news. Sears up 17 percent. K-Mart stock up 8 percent. Martha Stewart Living doing well as well. Its shares up 6 percent. The combination could expand the market for Martha Stewart Living brands. The deal also giving the overall market a boost today. As the final trades are now being counted, the Dow Jones Industrials up over 60 points. The Nasdaq adding 1 percent on the day. But the rally held in check by rising oil prices, crude oil up 73 cents ending just under $47 a barrel.

In economic news today consumer prices rose again. 6/10 of a percent higher in October. That's the largest increase in five months. And the dollar today dropped to another record low against the euro, that has a number of economists concerned. The euro crossing the $1.30 barrier for the second time in a week. The slide in the dollar coming as Treasury Secretary John Snow signaled the Bush administration has no plans whatsoever to halt the dollar's decline. Snow said the dollar's valuation should be left strictly to the markets. He also said Europe should stop blaming the weak dollar and do its part to stimulate growth to correct trade imbalances with the United States.

Coming up on CNN at 6:00 p.m. Eastern on "LOU DOBBS TONIGHT" we'll continue our series "Broken Borders" with a look at the hidden costs of illegal aliens to the economy.

(BEGIN VIDEO CLIP)

STEVE CAMAROTA, CENTER FOR IMMIGRATION STUDIES: They don't pay much in taxes, they tend to use a lot of services, and it tends to drive down wages for the poorest American workers. In effect, what illegal immigration does is make the poor poorer, and sock taxpayers with a big bill.

(END VIDEO CLIP)

DOBBS: We'll also have more on that in our face-off tonight between Dan Griswold of the Cato Institute, Professor Vernon Briggs of Cornell and we'll have a special report on the rising threat of nuclear weapons. Iran may be hiding another nuclear weapons research facility and Russia's President Vladimir Putin today announced the development of the most advanced nuclear missiles. Then we'll look into the Bush administration's counterterrorism policy. My guest former senior CIA officer Michael Scheuer, author of "Imperial Hubris, Why the West is Losing the War on Terror."

All of that 6:00 p.m. Eastern, tonight on CNN. Now back to Judy Woodruff in Washington -- Judy.

WOODRUFF: Lou, the nuclear threat you spoke of just now in Iran and in Russia, do you think these are real concerns to America's national security?

DOBBS: They're very real concerns, Judy. And in point of fact, the appointment of Condoleezza Rice as secretary of state with her background in Russian relations and international policy couldn't be more timely. The issue in Iran continues. And we're going to have to have the most reliant intelligence possible in the months ahead because these are very serious issues.

WOODRUFF: All right, Lou Dobbs, and we'll be hearing much more at 6:00 Eastern. See you then.

DOBBS: Thank you, Judy.

WOODRUFF: INSIDE POLITICS continues right now.

(BEGIN VIDEOTAPE)

ANNOUNCER: Republicans in the House stand by their man.

UNIDENTIFIED MALE: I did not instigate this. This is something the members wanted to do.

ANNOUNCER: We'll tell you about a new move to protect Tom DeLay.

BILL CLINTON, FMR. PRESIDENT OF THE UNITED STATES: Most people have said it's a beautiful building.

ANNOUNCER: But it's also big. 148,000 square feet of presidential history. We'll take a sneak peek at a large library honoring a larger than life politician.

While her husband gets honored for his years in the White House, Hillary Clinton plans for her political future. We'll tell what you she's up to.

Now live from Washington, JUDY WOODRUFF'S INSIDE POLITICS.

(END VIDEOTAPE)

WOODRUFF: Welcome back. As some House Republicans tell it their vote today to change party rules was not just about protecting Tom DeLay. They say it was about taking power away from a Democratic prosecutor who they believe may be eager to indict their majority leader. We have a full report now on that vote and the fallout. Here now our congressional correspondent, Joe Johns.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Fearing House Majority Leader Tom DeLay could be indicted in a grand jury investigation in Texas rank-and-file Republicans in the House move to protect him from losing power, if it happens. They see the Texas case led by a prosecutor who is a Democrat as politically motivated.

REP. HENRY BONILLA (R), TEXAS: We are trying to protect members of our leadership from any crackpot district attorney in any state in the nation from taking on a political agenda and indicting any member for any frivolous cause that they think is important.

JOHNS: House Republicans voted to change a rule that requires members of the leadership to step down at least temporarily if under indictment. The new rule says they only have to step down if convicted. In the case of an indictment, a steering committee of Republicans first decides whether the charges are serious enough to require stepping aside. DeLay steadfastly defended the decision.

REP. TOM DELAY (R), MAJORITY LEADER: Democrats have decided that they're going to use politics of personal destruction to gain power, and what we are doing is protecting ourselves from those assaults. I'm not going to let the Democrats dictate who the chairman or subcommittee chairman or leadership are in the Republican majority.

JOHNS: Three associates of DeLay have been indicted in the Texas case investigating alleged violations in 2002 of a state law against corporate contributions to political campaigns. DeLay denies wrongdoing and says he hasn't even been questioned in the case. The investigation is led by Democratic prosecutor Ronnie Earl who indicted Republican Senator Kay Bailey Hutchison in an unrelated matter but dropped the case before trial. Still some House Republicans like Chris Shays of Connecticut oppose changing the rule because it rolls back a reform they put in place ten years ago to distinguish themselves from ethical lapses by some top Democrats.

REP. CHRISTOPHER SHAYS (R), CONNECTICUT: I just think it's a slippery slope that we are building momentum in and we're losing our uniqueness and our difference.

JOHNS: Democrats went on the attack.

REP. NANCY PELOSI (D), MINORITY LEADER: That the first order of business following the election on the part of the Republican majority is to lower their ethical standards for their leaders in the Congress by saying that if indicted, you can serve.

(END VIDEOTAPE)

JOHNS: Now for the record, the rule for House Democrats says Democratic chairmen have to step down of committees. But it doesn't say anything at all about elected party leaders. Congresswoman Nancy Pelosi hearing about that today said she wants to change the rules so that it applies to everyone -- Judy.

WOODRUFF: All right, Joe Johns, I guess watching that prosecutor in Texas to see if he makes a move.

JOHNS: That's for sure.

WOODRUFF: Joe, thank you very much.

President Bush plans to attend the dedication tomorrow of the Clinton Presidential Library in Arkansas. Dignitaries and reporters already are gathering for the big event in Little Rock, including our own senior political correspondent Candy Crowley. She's been looking around and talking with the Clinton faithful.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): A $165 million, 148,000-square-foot glass and steel presidential library, museum, grad school research center, archives and outdoor park. It is just perfect. An outsized complex for a larger than life politician. How the Democrats miss him?

UNIDENTIFIED FEMALE: He could be president forever as far as I'm concerned. He's my president.

CROWLEY: There are 79,000 objects, almost 2 million pictures and, yes, mention of Monica Lewinsky, Ken Starr and impeachment, all part of a timeline framed as political assaults. They still miss him.

UNIDENTIFIED FEMALE: I think he was a good president but he was kind of shady sometimes with all the -- I don't know. He had a lot of secrets.

CROWLEY: There are an estimated 80 million pages in the Clinton archives roughing out to 27,000 for every day in office. Historians are salivating to get at it. Less enthused are architectural critics who have called the structure the world's largest double wide.

BUSH: Well, that's me, I'm a little red and a little blue.

CROWLEY: Oh, how they miss him.

UNIDENTIFIED MALE: There was just a sense of this was a person to whom we could connect.

CROWLEY: It's only been four years for heaven's sakes but two agonizing elections have made Democrats feel as though they are living dog years. So the party with little reason to party lately is doing it up big this week.

As many as 30,000 people from Hollywood to Armenia are gathering to salute the blue states' favorite politician with red state appeal, vetting the good old days, fretting the days ahead.

UNIDENTIFIED MALE: I think they're going to have to find another Bill Clinton or they're going to be in trouble.

CROWLEY: Fresh off John Kerry's loss, Democrats here fumble when pressed to name the next Bill Clinton. UNIDENTIFIED FEMALE: I'm not sure. I think he really could, but I'm not sure that he would be able to get all the votes. And who else? I'm not sure. Who else could it be?

(END VIDEOTAPE)

CROWLEY: I'm not sure, Judy, whether it's the name Clinton or the place, Arkansas, but do you see an awful lot of "Hillary in '08" bumper stickers as well as T-shirts, but there is some quiet trepidation about Hillary '08. As one Democrat said to me, we had a blue state Senator about two weeks ago and that didn't work out the way we hoped hoped -- Judy.

WOODRUFF: The world's largest double-wide. Is it that bad, Candy?

(LAUGHTER)

CROWLEY: I'm just quoting architectural critics. And as you saw, Clinton had some fun with that. It's interesting. It's beautiful inside, this will not be everybody's cup of tea, but the fact of the matter is that there is a lot of history in there, a lot of fun things to see, and a lot of things to do. It's not just a monument, they want this to be a place where people interested in public policy can come and study. So regardless of what you think of the outside, it's very cool, and it's a neat place to come.

WOODRUFF: Looks very interactive. Probably perfect for the Clinton presidency. OK.

CROWLEY: Exactly.

WOODRUFF: Candy, thank you very much.

Well, some Democrats can't say enough about Hillary Clinton, nor, for that matter, can her toughest critics? Up next, the senator's next big race, not in 2008, but 2006.

And later an annual presidential pardon and a commander in chief who seems ready to joke about the cutthroat campaign.

(COMMERCIAL BREAK)

WOODRUFF: Setting the record straight. Aides to Senator Hillary Rodham Clinton tell "The New York Times" that she is planning to run, for re-election, that is. But the New York Senate race in 2006 could shape up to be a preview of 2008.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): Like many a good New York story, this one begins with Hillary Clinton.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: I love being senator from New York. WOODRUFF: That may be, but many feel this Clinton is moving quickly to lock herself in as the Democratic front-runner for the next White House go-round. But to get to 2008, she'll have to first get through 2006, and her re-election battle could pit her against one of two fierce Republicans, both with 1600 Pennsylvania Avenue on their radar screens as well.

RUDOLPH GIULIANI, FMR. NYC MAYOR: Do I welcome Hillary Clinton to New York as a New Yorker?

WOODRUFF: Rudy Giuliani was raring to go in 2000 until a series of personal setbacks squashed his Senate dream. Now he's being talked up as presidential material. Though his moderate blue state Republican social values put him at odds with the national GOP. Same goes for George Pataki, the New York governor, with his own eye on the presidency and maybe Clinton's Senate seat as well.

CLINTON: I am practically speechless.

WOODRUFF: The thinking, defeating Clinton in 2006 would give either man the GOP credibility necessary to win over the dominant red state Republicans. Still, chances are, both men won't jump into the Senate waters. Nothing like a messy local primary to kill a White House dream. Pataki hasn't ruled out running for a fourth term in 2006, anyway.

WOODRUFF: Senator Chuck Schumer, one New Yorker content with the job he has, won't take on the governor. But another high-profile New York Democrat probably will, hard-charging state attorney general Eliot Spitzer, and guess what, folks in the know in Gotham say Spitzer's got top dog ambitions of his own. All of which confirms one long held New Yorker belief, their state really is the center of the universe. Well, the political universe at least, maybe.

(END VIDEOTAPE)

WOODRUFF: We can talk about that any time. Senator Hillary Clinton, by the way, will talk about her political ambitions in the first live primetime interview since the election, that's tonight on CNN's "LARRY KING LIVE", 9:00 Eastern, 6:00 Pacific.

President Bush and his new cabinet. Just ahead I'll talk with Jack Valenti and Ken Duberstein about what the president's choices mean for his second term in office. And we'll take a look at the Clinton legacy on the eve of the opening of his new presidential library.

(COMMERCIAL BREAK)

WOODRUFF: More reshuffling today in Washington. President Bush moving two of his most trusted confidantes into new positions in the inner circle in the cabinet. What does this say about his second term in office? Joining me here in Washington, Jack Valenti, a former aide to president Lyndon Johnson and from New York Ken Duberstein, former White House chief of staff under president Ronald Reagan. Jack Valenti, to you first. George Bush choosing three people who have been his confidantes in the White House, two of them from Texas, Margaret Spellings and Alberto Gonzales along with Condi Rice, is this -- moving them to the cabinet, is this a recipe for success or is this a blind, possible blind spot...

JACK VALENTI, FMR. AIDE TO PRES. JOHNSON: It's history repeating itself. Every president does this. Nixon had John Mitchell as attorney general, president Kennedy had his brother as attorney general. President Reagan had William French Smith there, and every president wants to bring into his cabinet people that he trusts who have been bloodied in campaigns with him, and who knows when he falls they're going to be there to help catch him. Perfectly normal for a president to do. Nothing unusual about it.

WOODRUFF: But Ken Duberstein, some would say this could lead to insular thinking.

KEN DUBERSTEIN, FMR. W.H. CHIEF OF STAFF: I think this is a friendly transition, certainly not a hostile takeover, it's not regime change, George Bush and Dick Cheney are still on the top of the heap. What this means is that he's going for the comfort of people he's known who have been through battle with him before. There are a lot of people who are saying, well, he should be reaching out and getting Democrats. I even heard somebody say he should make John Kerry ambassador to France. But the answer is George Bush won and he's bringing around him loyalists. People who he's been through the battles with. And so I think, as Jack suggested, this is part of the tradition of American politics. It's a strong, strong cabinet.

WOODRUFF: So it doesn't mean, Jack, that he's not going to be listening to other ideas?

VALENTI: Of course not. That he wants to have a fellow attorney general that he trusts, and I'm sure he's going to bring other members of his cabinet to do this but you will find him behind the scenes as people you don't hear about talking to and trying to get some advice from but I think that second term, I think George Bush is going to be a lot more sure, a lot more confident than he was in the first term. He's got nothing to prove now except a legacy. And every president, I believe without exception, likes to understand how history will regard him, and therefore, I hope that he does reach out, because the word compromise is not an ignoble word, Judy. It's what makes governments function, and I hope President Bush will look for that.

WOODRUFF: Ken Duberstein, very quick point.

DUBERSTEIN: I would only add that I think first terms are about running for re-election. Second terms are about running for the history books. And I think George Bush very much is going to reach out and build alliances not only inside the United States, but also in Europe and throughout the world. That locks in a legacy for him as far as his leadership.

WOODRUFF: Let's talk quickly about his predecessor Bill Clinton. He's dedicating his presidential library tomorrow in Little Rock. What is Bill Clinton's role right now, Jack, in the Democratic party and the country?

VALENTI: I would say that the Democrats are trying to find somebody among these 284 million Americans who has the same kind of charisma of Bill Clinton. Forget about his impeachment or his appetite that went unheeded. He is, without question, the best television performer over the last generation and they're all looking for somebody like Bill Clinton who can say things simply and clearly and charismatically and engagingly and cause people to say, yes, I like that. This is what Bill Clinton means today.

WOODRUFF: What about from a Republican perspective, Ken, what does Clinton represent right now in America?

DUBERSTEIN: I think right now he represents being the best communicator the Democrats have to offer. But he's also a problem for the Democrats, because he is such a good communicator, and there's nobody who stacks up quite like him. But he needs to be a party elder regardless of his age and try to bring people together in the Democratic party so that there is a functioning strong opposition.

WOODRUFF: We're going to have to leave it there unfortunately. Ken Duberstein, Jack Valenti, I hope we see you both very soon.

And as we leave we have some live pictures I'm told coming in from Little Rock. President Clinton -- I'm sorry, I was misunderstood. It is John Kerry. Another Democrat making his first speech on the Senate floor since losing the presidential election 15 days ago. INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), FMR. PRESIDENTIAL CANDIDATE: ...Or to see weaknesses in the American economy, you can have a spiraling impact on our own economy. International currency markets would be shaken and our economy would quickly follow. If those investors began to withdraw our capital, our financial markets would plummet and interest rates...

(END VIDEO CLIP)

WOODRUFF: John Kerry making his first remarks on the floor of the Senate since losing the presidential election 15 days ago, criticizing the Bush economic policy saying those are the reason that the Senate is now confronted with having to raise the debt ceiling of the United States.

Well, turning to a little Thanksgiving related news. There is a turkey named Biscuits who fared pretty well today. Biscuits is the lucky bird who was spared by President Bush today with a traditional Thanksgiving pardon. A vote was held on the White House website to choose the national turkey. Mr. Bush joked about parallels between the neck and neck turkey run and the 2004 presidential race.

(BEGIN VIDEO CLIP) GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Came down to a few battleground states. It's a tough contest and it turned out some 527 organizations got involved including Barnyard Animals for Truth. There was a scurrilous film that came out, "Fahrenheit 375 Degrees at 10 minutes per Pound."

(END VIDEO CLIP)

WOODRUFF: President Bush trying to have a last laugh after a long and often bitter campaign. Those are your two candidates this day and you just heard the winner. That's it for INSIDE POLITICS. I'm Judy Woodruff. "CROSSFIRE" starts now.

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