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CNN CAPITAL GANG

Intelligence Bill Killed By Dissenting Republicans; 2005 Spending Bill Would Allow Appropriations Committee Chairman To Question Any Tax Return; Tom Vilsack Bows Out Of DNC Chairman Election

Aired November 27, 2004 - 19:00   ET

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


ANNOUNCER: Live from Washington, THE CAPITAL GANG.
AL HUNT, GUEST, HOST: Welcome to THE CAPITAL GANG. I'm Al Hunt, with Kate O'Beirne, Robert Novak and Margaret Carlson. Our guest is John Podesta, former Clinton White House chief of staff.

It's good to have you back, John.

JOHN PODESTA, FORMER CLINTON CHIEF OF STAFF: It's nice to be back with you.

HUNT: And a happy belated Thanksgiving to you.

The intelligence reform bill was stalled by objections from two House committee chairmen.

(BEGIN VIDEO CLIP)

REP. DUNCAN HUNTER (R-CA), ARMED SERVICES COMMITTEE CHAIR: You don't want to hurt the troops that are in the field, and I have a real concern, a continuing concern. And I think all the 9/11 families would agree with that.

REP. JAMES SENSENBRENNER (R), WISCONSIN: We need tough national standards to make sure that people don't game the system, and that includes denying driver's licenses to illegal aliens who cannot prove their lawful presence in the United States.

(END VIDEO CLIP)

HUNT: At the request of Chairman Hunter, General Richard Myers wrote a letter insisting on a Pentagon role.

(BEGIN VIDEO CLIP)

GEN. RICHARD MYERS, JOINT CHIEFS CHAIRMAN: Senior officers go before the Senate Armed Services Committee to be confirmed. One of the things they ask you, Would you be willing to provide your personal opinion, if it differs from that of the administration on whatever matter.

DONALD RUMSFELD, DEFENSE SECRETARY: The congressmen who are saying that I had blatant opposition to the bill is incorrect because the bill didn't exist in the form that it currently is, and the president didn't have a position on the bill at the times that I was briefing him.

(END VIDEO CLIP)

HUNT: The chief Senate conferee, Republican Susan Collins, said they've compromised as much as they could.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: I was disappointed that the bill didn't pass. I thought it was going to pass up until the last minute. And so I look forward to going back to Washington to work with the interested parties to get it passed.

(END VIDEO CLIP)

HUNT: Kate, is President Bush willing to spend all that political capital he's amassed to get this bill passed?

KATE O'BEIRNE, CAPITAL GANG: Al, I doubt he'd be willing to spend more than maybe a little pocket change on behalf of this bill. To help push through the Senate version would put him at odds with the majority of the House Republicans. And I increasingly think that there would be no political price to pay if this bill just died, as it is out of the Senate.

Look, the 9/11 commission has intimidated most of Washington. Either you accept our recommendations, or you're going to be blamed if there's another attack. And what many politicians are worried about is being attacked by the 9/11 commission, not another terrorist attack.

Who knows whether or not the merits of what they're doing makes sense? A new national intelligence director to sort of consolidate intelligence agencies -- the argument could be made that it ought to be decentralized. There ought to be more voices dissenting and arguing and whatnot.

But putting aside the merits of it, what the public does understand is the chairman of the Joint Chiefs has reservations about that -- this, as does every service chief. It could endanger, they argue, our troops in the field. That the public does understand, and the public also understands that 19 hijackers should not have had 63 valid driver's licenses among them.

I think the House Republicans are on the side of public opinion on this one.

HUNT: No political price to pay for deep-sixing this, Margaret?

MARGARET CARLSON, CAPITAL GANG: Well, the politics that killed it are ugly, but it doesn't mean that the bill shouldn't wait until next year, in part because there's an intelligence report yet to come which points fingers at who's to blame for the intelligence failures so far, which was held off until after the election.

I do think that Senator Pat Roberts is right when he blows the whistle on the White House and says, Hey, they're lobbying against it, despite what they say. I think General Myers is right in saying that some of the intel that the Pentagon is doing needs to be kept, which is especially the satellites, which show where the troops should go. But there's also, like, a private rogue shop at the Pentagon that should be killed.

HUNT: OK. Bob, the fine hand of Don Rumsfeld, no matter what he protests...

BOB NOVAK, CAPITAL GANG: Didn't you love -- didn't you love that thing...

CARLSON: He's a Jesuit!

NOVAK: I -- there was no bill at the time...

HUNT: Right. Right.

CARLSON: Yes.

NOVAK: ... and so how could you have a position? Let me -- let me give you a couple of reality checks. In the first place, it is very hard to pass legislation in this country, extremely hard. Thank God for the Founding Fathers. They made it so hard, and it's even harder with the rules of the Senate and a divided -- it's hard to get anything done, particularly a complicated thing.

Secondly, there is a law which you may not have read, Al, called the Goldwater-Nickles act, which makes...

HUNT: In 1986.

NOVAK: That's right. It makes the Joint Chiefs independent, and that -- and that -- for -- the Joint Chiefs -- General Myers is exactly right.

The third thing is that I take issue with you, they're not afraid of the 9/11 commission. They're afraid of the families of the -- of the dead. I have great sympathy for them in their sorrow, but they don't...

O'BEIRNE: Some of the families.

NOVAK: But...

O'BEIRNE: Are on board for the 9/11 commission recommendations.

NOVAK: That's right. The noisy ones.

O'BEIRNE: Exactly.

NOVAK: And they -- and they -- they don't know anything about what's in this bill. And so the idea of the -- the whole point that we all knew was once the election was over, the cards, the value of the cards of the people pushing for quick passage was markedly reduced. HUNT: John, you -- you've been there. You've presided over the White House staff. You've seen some of the intelligence difficulties we've had. Talk about the merits. Should the Congress pass this bill, or does it have flaws?

PODESTA: Well, I think this bill is an important bill. I think it would improve the security and safety of the country. I think the most important provision, obviously, is creating this national intelligence director that had real clout under the legislation that passed the Senate. And I think that it looked as though the administration was in support of that theory of the case, if you will, but watching the administration play here is like -- a little bit like watching a game of three-card monte. You really just -- you can't tell where they are. You see those three statements, and they're just all over the place. And you know, I think the president didn't want the commission created in the first place. They didn't want legislation to move forward quickly when the commission reported this summer. And you know, evidently, I think you really can't take him at his word when he says he wants to get this bill done. I think he wants to put it off until next Congress, at which point, I agree with Bob, I think he's afraid to say no to the 9/11 families, but I think he wants this to kind of quietly disappear.

(CROSSTALK)

HUNT: ... all the objections that you -- that you just articulated, it's also clear that the system didn't work before. Now, we know that.

O'BEIRNE: Right. Right.

HUNT: So something has to be changed, doesn't it?

O'BEIRNE: Well, what I was going to say is it's clear that what the White House and the president does want is a functioning intelligence system, where the agencies do a far better job of collecting and analyzing intelligence. That's what the president wants. He may be unpersuaded that this is the way to get there.

I think there's every chance -- every reason to believe the changes Porter Goss, the new director of the CIA, is making, shaking up the place, getting rid of some people who should have gotten -- be gotten rid of, has -- will have every bit as much effect as this bureaucratic reshuffling...

PODESTA: But if he's unpersuaded...

CARLSON: But you know what?

(CROSSTALK)

PODESTA: ... why did he say he supports the bill, Kate?

CARLSON: Right.

PODESTA: That's what -- that's the $64,000 question. CARLSON: Also what...

HUNT: "He" being the president.

(CROSSTALK)

NOVAK: And in fact, there are -- there are supporters of the president's -- I talked to one of them today who thinks it's very important for the president to get out and show that he is tougher than Duncan Hunter and Speaker Hastert, which is, I think, a fairly ridiculous concept. This is -- this is not his agenda, to pass this bill. And to say that this -- this is a -- this is something that he's required to do, I think, is unrealistic.

HUNT: Margaret, I'm going to give you the last word. But in saying that last word, would you also tell us if we're ever going to have a national intelligence czar?

CARLSON: I think there will be something like that next year when the report comes out and shows that the most significant intelligence failures were the ones coerced and pressured out of analysts at the CIA.

NOVAK: Is that President Kerry's position?

CARLSON: That put us...

NOVAK: Is that President Kerry's position?

CARLSON: That put us into war in Iraq...

NOVAK: Is that President...

CARLSON: ... based on faulty info.

NOVAK: Is that President Kerry's position?

O'BEIRNE: They told them that they never felt pressure!

CARLSON: It is a position shared by any number of people...

HUNT: You know, I don't -- I don't...

(CROSSTALK)

O'BEIRNE: ... never felt pressure by anybody!

HUNT: ... know if it's President Kerry's position or not, but it was certainly a prescient position. Margaret, thank you very much. And it is the last word.

O'BEIRNE: Hey!

HUNT: John Podesta and THE GANG will be back with plenty of pork on Capitol Hill.

(COMMERCIAL BREAK)

HUNT: Welcome back. The $338 billion, 3,500-page omnibus appropriations bill was about to pass last weekend when Democratic senator Kent Conrad found a provision allowing the chairman of the appropriation committees and their agents to review tax returns of any American.

(BEGIN VIDEO CLIP)

SEN. KENT CONRAD (D-ND), BUDGET COMMITTEE: We only discovered it on Saturday. Thank goodness we did because if it hadn't been discovered, it would be the law of the land upon the signature of the president.

(END VIDEO CLIP)

HUNT: House Democrats were not willing to repeal this provision without a roll call, postponing debate until December 6. House minority leader Nancy Pelosi argued, quote, "The assault on taxpayer privacy was not a simple mistake, and Democrats will not let Republicans sweep it under the rug," end quote.

(BEGIN VIDEO CLIP)

BUSH: Obviously, there's going to be things in these big bills that I don't particularly care for, and that's why I've asked Congress to -- to give me a line-item veto.

(END VIDEO CLIP)

HUNT: The bill includes over $200,000 for blueberry research, nearly $500,000 to develop baby food containing salmon, and $1 million to the B.B. King Museum.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: I'm not the one that caused this bill to not appear before us when we've been here for the entire year without acting on nine of the appropriations bills! The system is broken! And sooner or later, we better fix it.

(END VIDEO CLIP)

HUNT: Bob, is the system broken, as Senator McCain says, or are our lawmakers just irresponsible?

O'BEIRNE: Both!

HUNT: Both.

NOVAK: The system is broken, but they are very irresponsible because they have these -- these safe districts, and all they're interested -- many of them are only interested in these ridiculous pork barrel projects. So what they do is, they delay action until the very end. They wrap it up in this great, big bill at the end. They didn't use to do that when I first came to Washington many years ago. And then they -- they cut programs that have gone through the legislative process, through appropriations and authorization process, and they put in all these -- these pork barrel projects and these crazy things like this business of the Appropriations Committee looking -- looking at tax returns.

Now, I'm with Senator McCain 100 percent that the system has to be fixed, but it's not going to be fixed unless you get the administration interested. And the president said, Hey, it balances out. There's stuff in it I don't like, but it balances out on the numbers. And that's -- that's the attitude by the administration. And of course, the line-item veto, which was declared unconstitutional -- they'd have to have different wording -- that, I think, is a non- starter.

HUNT: Yes, because your boss wanted that, too, John, a line-item veto, and it was tossed out...

PODESTA: We got the line-item veto...

HUNT: Yes.

PODESTA: ... for a little bit, and then the Supreme Court ruled it unconstitutional.

HUNT: Yes.

PODESTA: So I don't actually know what the president's...

HUNT: Is this -- do you think the system's broken, or you think this is just a bunch of...

PODESTA: Oh, well, you have 18,000 projects. The estimates range from $16 billion to $22 billion of these pork barrel projects. I think...

HUNT: And nobody...

(CROSSTALK)

PODESTA: I kind of like the B.B. King Museum, but I think the rest, you know, you could -- I suppose that that's the problem, which is that every -- every member likes one of those little projects in there. But the whole system really is out of control. The rules have been shredded. This 3,300-page bill was put -- was filed at 1:00 AM in the morning, and they had to vote on it the next day.

HUNT: Nobody read it.

PODESTA: Nobody read it. The usual rules to have these bills sit out for three days so people can read them are gone. So I think the House is in serious trouble. I think the Congress is in serious trouble, when it comes to managing the fiscal matters of the United States.

HUNT: Kate, liberals and conservative alike really should be horrified by that really Orwellian provision saying that staff members can go up there and look at anybody's tax provision, shouldn't they?

O'BEIRNE: Yes. I was so horrified when I first...

HUNT: Good for you.

O'BEIRNE: Sure! Who wouldn't be? Now, that -- it actually isn't what it's intent was -- I've since read -- it's been reported the IRS actually drafted the provision. It was to permit the Appropriations staff to be able to go in someplace in their oversight role, an IRS processing center, and see how they're processing returns, even though somebody's return might be visible on a table, not to go rifling through IRS returns but to do oversight of processing centers. That was its innocent explanation. But -- and it was so.

I certainly can understand why Nancy Pelosi politically exploited this awkward provision, even though she has a long history of abusing taxpayers much worse than snooping at their tax returns, it seems to me. So it wound up being a very embarrassing episode for the -- for the Republicans in the House.

HUNT: I don't think there's much -- there's much worse than snooping into your tax returns. But Margaret, look, I think -- I agree with -- with Bob Novak, and I particularly agree with John McCain that the system is just atrocious. It's awful. People don't read these bills. They have no idea what's in it. It's filled with pork. But almost 90 percent of these guys just got elected. They don't care.

(CROSSTALK)

HUNT: Right. They don't care, do they.

CARLSON: Right. I mean, I think Senator Conrad's...

HUNT: There's no price to pay.

CARLSON: ... aide should get a promotion for finding it. Even though Kate thinks it's innocent, it looked not innocent at all, and it could have been used for mischief. They don't care -- each person gets their own thing in the bill, and there's no -- there's no reason for anybody to stop anybody else, except for Senator John McCain, who has his list of pork each time around. There used to be a three-day rule...

(CROSSTALK)

CARLSON: It was the Republican rule, which was that you should be given three days to look at a bill, and that's -- that was when the Democrats were in charge. Now they've decided to ignore it, and a whole bunch of other things like seniority. You know, I think the Republicans' majority -- of the majority rule -- Senator Frist saying seniority is out the door -- I think Republicans are going to be in the same position as Democrats were...

O'BEIRNE: You know what, though? CARLSON: ... which is abusing their power.

O'BEIRNE: The Ways and Means Committee staff actually does have that same power. Appropriations Committee staffers want it. But I'm not so sure there's not a price for Republicans, Al. I mean, their supporters actually believed what they said when they took power in 1994.

HUNT: Cutting spending and (UNINTELLIGIBLE)

O'BEIRNE: Yes, about wanting to cut spending and not do business as usual. And when you look at the proliferation of these pork-barrel projects, spending now in the billions under Republican leadership, I think they face a lot of supports who are really disillusioned.

NOVAK: (UNINTELLIGIBLE) they don't care. And I'm going to tell you -- you know, I've written about this pork many times, and I talk to people in high places in the administration and people in the Republican leadership -- they don't care! They really don't care. And they say, Well, that's a trifling bagatelle.

PODESTA: That's why we're...

(CROSSTALK)

PODESTA: That's why we're back to a $413 billion deficit...

(CROSSTALK)

PODESTA: ... and deficits as far as the eye can see.

HUNT: This is a president who's never vetoed a bill.

PODESTA: Never vetoed a bill, right.

CARLSON: And they don't have to worry about not getting reelected because their districts are all gerry-rigged.

NOVAK: Just to -- just to repeat that they balance off the -- it's like -- like you say -- I spent a lot of promiscuous things, but I -- but my checking account balances out, see?

HUNT: Well, I'm glad...

PODESTA: As long as you keep raising the debt limit.

CARLSON: Yes.

HUNT: I'm glad that Bob told us when he first came here, they didn't do that because Speaker Henry Clay said, There's no way I'm going to allow that to take place.

(LAUGHTER)

HUNT: Next on CAPITAL GANG: Who will lead the Democrats?

(COMMERCIAL BREAK)

HUNT: Welcome back.

This week, Tom Vilsack bowed out of contention for chairman of the Democratic National Committee, saying he wanted to concentrate on being governor of Iowa. Howard Dean, former governor of Vermont and presidential candidate, has been actively canvassing for votes on Capitol Hill. Others mentioned as national chairman include former Clinton aide Harold Ickes, former New Hampshire governor Jeanne Shaheen and former Denver mayor Wellington Webb.

Margaret, what message will the Democrats send if they tap Howard Dean to be their new party chair?

CARLSON: I don't think they're going to do it because it would send a message of self-loathing...

(LAUGHTER)

CARLSON: ... because Howard Dean is not -- he ran as an outsider against the Democratic Party. But I think he may miss the limelight. And also, the Democratic Party wants a pledge that you're not going to run for president, and I think that's one reason Vilsack dropped out. Another reason is I don't think if you have Senator Kerry's support, it really helps you, as Vilsack did, because the Democrats are so angry at Kerry for hoarding that $15 million, which could have gone...

HUNT: Are they ever.

CARLSON: ... to beat, say, Senator Jim Bunning in Kentucky. That was a very close race. Another million dollars would have made a difference.

HUNT: John, pick up on what Margaret said, your view of Dean, but -- and give us a profile of who you'd like to see as the next DNC chair, what type person.

PODESTA: Well, you know, I think that we might borrow a little bit, in this case, from our Republican friends. I think that putting in Ken Mehlman, somebody who really can make the party work again at the grass roots level -- this year, we saw almost all of that go out to the so-called 527 groups. Of course, one of the candidates, Harold Ickes, was in charge of putting one of those...

HUNT: So would he be your candidate?

PODESTA: Well, I don't know that he'd be my candidate. You know, I don't have a -- I don't have a vote and I don't have a horse in it. But I think someone who really knows the mechanics of putting a strong grass roots operation back together with the grass roots fund-raising that I think is why I think Dean says that he's the right guy for the job, is really the important aspects of this job.

I think we can make a lot out of the DNC chair being the spokesperson themselves. I think that still is going to fall to national leaders, governors and members of the Congress. HUNT: I think John is absolutely right, Bob.

NOVAK: I really disagree with him completely.

HUNT: Do you really?

NOVAK: Yes. I'll tell you why. I think Ken Mehlman, who's a very good mechanic, is a terrific national chairman for the party in power. I think the party out of power needs somebody who's a spokesman. I've heard a lot of people say, What we need is a young Bob Strauss, who was a terrific spokesman after the party had virtually committed suicide, losing all but one state and the District of Columbia in the McGovern race in '72 and going far to the left. And you need somebody like -- I don't -- and that's why I thought that maybe Governor Vilsack might do the -- do the job. And everybody was -- was coming up before -- Harry Reid and Nancy Pelosi and John Kerry were all for Vilsack, and I think it kind of leaves and opening when they drop out.

But I would really think that Howard -- that Howard Dean would be a disaster. And I think Terry McAuliffe, for the party out of power -- he raised a lot of money, but he was a very bad image for the party.

HUNT: Oh, I want to say I think Terry McAuliffe did a splendid job. He changed the nature of the Democratic fund-raising, no longer relying on the big fat cats. He, you know, has got hundreds of thousands of names. I think you got to give him a lot of credit.

Kate...

NOVAK: I don't!

HUNT: ... you'd love to have Howard Dean, I'm sure, as DNC chair, but do you think it matters?

O'BEIRNE: If he's canvassing -- oh, yes, I think it does matter. If he's canvassing for votes, at least Democrats can be grateful he's not a great vote getter, so...

(LAUGHTER)

O'BEIRNE: He probably will have lined up chairmen. Bob -- you're -- it's interesting, the point you make about Ken Mehlman. If Karl Rove is the architect of the president's victory, Ken Mehlman was the general contractor, who put all the nuts and bolts in place to make it happen. And I think it shows a level of aggression on the part of the Republicans to put Ken Mehlman at the RNC. It shows an attitude towards 2006 on their part, and Karl Rove remaining at the White House, and that's now, of course, what the DNC's up against.

I think your model might be, John, Haley Barbour in '92, an extremely talented -- he's sort of a two-fer -- knew the party inside and out, good with the grass roots stuff, but also, I thought, an attractive personality on television. And that was...

NOVAK: Now, who is that? That was -- name somebody.

O'BEIRNE: Haley Barbour. That was a key role he played. I agree with Bob about Terry McAuliffe. He's a very likable, nice guy in person, so I was always taken aback when, I thought, on television, he came across as very thuggish. I thought he was exactly the wrong image for the party.

HUNT: Bob, can you think of -- or excuse me -- John, can you think of anybody that might fit these descriptions?

PODESTA: Oh, you know...

HUNT: Give us a name.

NOVAK: John Podesta!

(CROSSTALK)

PODESTA: ... outside pick, Henry Cisneros, who -- you know, the former secretary of HUD, somebody who's really...

O'BEIRNE: Good.

PODESTA: ... attractive on television and who's also a great organizer, you know, a proven vote getter. But you know...

HUNT: That's a good idea.

PODESTA: ... I think -- I thought Alexis Herman made sense. She had run the party before and is very, very strong on -- as a spokesperson, but she's pulled herself...

CARLSON: Who would -- who would...

PODESTA: More people are...

CARLSON: ... the Clintons like?

PODESTA: More people are pulling out than are getting in.

HUNT: Yes.

CARLSON: Yes.

(CROSSTALK)

PODESTA: That may say that this is a...

CARLSON: John, who would the Clintons like?

PODESTA: Well, you'd have to ask them.

O'BEIRNE: John, why doesn't John Edwards do this for the party? The party's done a lot for John Edwards.

(CROSSTALK) PODESTA: I think that that's the point that was made earlier, that anybody who wants to run for president in 2008...

NOVAK: I got good news for you, Al!

PODESTA: ... is not going to...

(CROSSTALK)

NOVAK: Terry McAuliffe says he might want to run again.

HUNT: Well, I want to tell you, John Podesta, you were an enlightened guest tonight. Thank you very much for your contributions on this and everything else. And thanks for joining us.

Still ahead, after the latest news headlines, in the second half of CAPITAL GANG, we'll go "Beyond the Beltway" to Kiev and a contested election in the Ukraine with CNN's Jill Dougherty. And Robert Novak is "On the Beat," an American in Paris takes a look at post-election politics.

(COMMERCIAL BREAK)

(COMMERCIAL BREAK)

(NEWSBREAK)

HUNT: Welcome back to the second half of THE CAPITAL GANG. Robert Novak spent the week on the beat in Paris looking for how the French have reacted to a second Bush term.

(BEGIN VIDEOTAPE)

BOB NOVAK, CNN CORRESPONDENT (voice-over): Paris is still the city of lights, one of the most beautiful in the world. Fewer Americans go there than in the past thanks to the weak dollar and fear of anti-American attitudes. Actually, everybody was nice to me, including the man who sold me a newspaper and told me he loves Americans but hates George W. Bush.

The French are quick to give you their negative views on our president and the Iraq War, mourning the defeat of John Kerry that would have brought back the good old days between the two countries but would a President Kerry have made any difference?

Thoughtful people I talked to did not think so. American irritation with France is fairly new but anti-Americanism in France goes way back and is getting worse. French writers and thinkers I contacted worry about it.

President Jacques Chirac, unpopular though he is, is thinking of a third term engaging in heavy duty Bush bashing and America bashing to boost his popularity. France has plenty of problems, Muslim immigration, labor unrest, a sick economy hampered by too much government, a government where civil servants are in control and the elected National Assembly is powerless. The politicians react by playing the anti-American card. The exception is finance minister and potential presidential candidate Nicolas Sarkozy who says America is good.

(END VIDEOTAPE)

NOVAK: Americans should not interfere in French politics anymore than the whole French establishment should have backed John Kerry but for France's own sake it needs a leader who is not preoccupied with George W. Bush.

HUNT: Margaret do you agree with our very own French connection that poor relations with France is mostly a problem for the French?

CARLSON: No, I don't and, you know, they much prefer John (UNINTELLIGIBLE) to the person they call the cowboy and you said everybody was nice to you. Have they heard -- they didn't know you long enough but did they hear you talk about the old Europe and the French on this program? Did they recognize you?

NOVAK: I assume they're well informed.

CARLSON: Or did they think you were just some old guy buying a newspaper?

HUNT: We have a huge audience in Marseilles. Kate, are you still boycotting everything French?

O'BEIRNE: I would have made an exception.

CARLSON: Freedom fries.

O'BEIRNE: I would have made an exception of behalf of the gang had I been sent to Paris to do an R&B piece just like that on your behalf. I have not been so charmed since Gene Kelly went to Paris, Bob. You know what you bought into the myth though by talking about the special friendship between the French and the Americans.

NOVAK: I don't think I did. I said the French have been nasty to us for a long time.

O'BEIRNE: Over 200 years.

NOVAK: Yes.

O'BEIRNE: My colleague has just written a terrific -- John Miller at "The National Review," this terrific new book about France and about the fact that they've been antagonists for over 200 years to bust this myth about a special friendship called "America's Oldest Enemy," which is actually the more accurate title for France.

NOVAK: You know with the end of conscription in France, the young people have a one-day indoctrination course and the four hours of their indoctrination is just all this blather about America, capitalism and this is the army, the French army attacking the United States for selfish interests in Iraq, trying to help the capitalist class. They're anti-capitalist, anti-American and they got problems they should worry about solving.

HUNT: What's their relationship with the rest, most of the rest of the E.U., Bob? I mean does it matter more to them what the E.U. thinks or what...

NOVAK: I think they got a lot of problems there too. They've gone beyond their budget deficit limit in the E.U. and there's a huge problem there.

O'BEIRNE: They're trying to organize. France is playing a role and trying to organize E.U. around a single ideology, which is anti- Americanism. They want it to be a counterweight to American power and prestige. Happily, an awful lot of the member countries aren't onboard the French agenda.

CARLSON: It still does no good to insult the French by calling them Old Europe and refusing to listen to anything that Jacques Chirac says about American foreign policy.

NOVAK: Well, Jacques Chirac, my dear, talks about (UNINTELLIGIBLE). (UNINTELLIGIBLE) polarity is the kind of system that led us to World War I, World War II. Is that what you want to return to where the United States is just one up against all these selfish nation states, you can have it?

HUNT: No, but I'll tell you what I'd like to return to. I'd like to return to pictures of you on the left bank, if you'll pardon that expression Robert Novak. That was a terrific report.

NOVAK: Thank you.

HUNT: And coming up, THE CAPITAL GANG classic, Democrats debate the future after a midterm election defeat two years ago.

(BEGIN VIDEO CLIP)

ANNOUNCER: Here's your CAPITAL GANG trivia question of the week. French President Jacques Chirac was reelected in 1995 with what percentage of the vote, 62 percent, 72 percent or 82 percent? We'll have the answer right after the break.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ANNOUNCER: Before the break we asked, "French President Jacques Chirac was reelected in 1995 with what percentage of the vote," the answer, C, 82 percent.

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HUNT: Welcome back.

Following midterm election defeats, the Democrats regrouped and planned strategy for 2004. THE CAPITAL GANG discussed this November 30, 2002. Our guest was House Democratic Whip Steny Hoyer.

(BEGIN VIDEOTAPE)

MARK SHIELDS, CNN CORRESPONDENT: Two leaders of the centrist Democratic leadership council, Al From and Bruce Reed issued a draft memorandum warning the party against moving to the left. Bob Novak, which way is the Democratic Party going?

NOVAK: Well, in the House of Representatives and Congress they're moving to the left. Ms. Pelosi decided that all the issues that haven't worked for the last four elections that since they hadn't worked before we'll try them again and just attack right wing Republicans.

HUNT: They can ill afford to be perceived as soft on terrorism and defense. They ought to take the initiative and say we need more cops, more firefighters, more first responders. Those are the issues that they, I think they forfeited during this election.

REP. STENY HOYER, DEMOCRATIC WHIP: I've pressed this for a long time. People need to know that we care about patriotism that we care about faith that we care about personal responsibility that we care about the things that are important to them in their daily lives as well.

O'BEIRNE: When the public is reminded that there's a dangerous world, they trust Republicans and have for 30 years two-to-one on the national security issue.

(END VIDEOTAPE)

HUNT: Bob Novak, did Democrats change strategy after that?

NOVAK: No. They didn't take any of that advice that we gave them or Steny Hoyer, who is very prominent and very intelligent Democrat gave them. If they had done that, I don't know if they would have done any better in the election. I think they would have. They might have had a Democratic president being elected January 20th.

But all the things they said they ignored and there's a lot of that being said now but there's such a suicidal leftward bias in the Democratic Party for high taxes, big government, no interest in moral issues that I think it's in grave trouble.

HUNT: I've heard that before -- Kate.

O'BEIRNE: Al, you are right. They could ill afford to look as though they're weak on national security, although your prescription was not the right one. They thought the prescription was to nominate a Vietnam veteran because veterans rejected John Kerry. And, I agree the party would be in much better shape overall had they listened to Steny Hoyer.

HUNT: Margaret.

CARLSON: Listen, Republicans were good at marrying the war on terror with the war in Iraq and Democrats could not pry it apart, didn't want to change a president in wartime. When you look at some of those exit polls now, it doesn't look as if the Democrats are the party of immoral values.

HUNT: Democrats are always well advised to listen to my Congressman from Culver County, Maryland, Steny Hoyer. He really, really was in the game then.

CARLSON: And he wins by, what, 60-something percent?

O'BEIRNE: Yes, he got it. He got it.

HUNT: Next on CAPITAL GANG, Beyond the Beltway looks at crisis in the Ukraine.

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HUNT: Welcome back.

The Ukrainian Parliament today passed a non-binding resolution declaring the country's disputed presidential election invalid. Face- to-face talks began between the disputed candidates, Viktor Yushchenko and Prime Minister Viktor Yanukovich, who had been firing at each other from long distance.

(BEGIN VIDEO CLIP)

VIKTOR YUSHCHENKO, UKRAINIAN OPPOSITION LEADER (through translator): Once the polls closed voter turnout increased by half a million. How can that be? It was a massive injection of the ballots in favor of the other candidate.

VIKTOR YANUKOVICH, UKRAINIAN PRIME MINISTER (through translator): I see no way to resolve this conflict with ultimatums or pressure on the government.

(END VIDEO CLIP)

HUNT: The dispute reopened tension between Washington and Moscow.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: We cannot accept this result as legitimate because it does not meet international standards and because there has not been an investigation of the numerous and credible reports of fraud and abuse.

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): During counting, final counting of the votes, the representatives of the oppositional headquarters, representatives of the headquarters of Mr. Yushchenko to the best of my knowledge signed all the documents which allowed the Central Election Commission of Ukraine to conclude that Mr. Yanukovich was the winner.

(END VIDEO CLIP) HUNT: Joining us via videophone from Kiev is CNN's Moscow Bureau Chief Jill Dougherty. Jill, is Ukraine headed for a new election?

JILL DOUGHERTY, CNN MOSCOW BUREAU CHIEF: It could be, Al. That's certainly on the table. Here is the deal. They've already made some progress. That is what the opposition certainly wants. Viktor Yushchenko wants these elections replayed and he wants them replayed without the problems that they had during the first and the second rounds.

So, they've made the progress you mentioned, the vote in the parliament today, which is really symbolically very, very important. It doesn't have any legal force but symbolically it's a victory for the opposition. And then Monday you're going to be seeing the Supreme Court, which will be hearing some of those allegations by the opposition that there was indeed massive voter fraud.

HUNT: Bob Novak.

NOVAK: Jill, the way Secretary of State Powell puts it and other people here is that there is no doubt that there was just immense voter fraud, that there was these absentee ballots, millions of them came in. Quite apart from who's the good guys and who's the bad guys, is there much doubt that this election was stolen?

DOUGHERTY: If you look at what the international observers said, no, there really are major, major problems according to them and there's interestingly you know a kind of Watergate type of case has surfaced that the opposition has, which they believe is credible and others, in fact, do believe are credible.

These are tapes that were made of people who were actually rigging the vote allegedly and on that tape you can hear them say, for example, "We have to get into the computers because our vote count is low and we have to get it up."

And the vote right from the beginning there were rumors that he was going to win, Mr. Yanukovich was going to win by three percent. That was back several weeks and, lo and behold, he won by about three points.

HUNT: Margaret.

CARLSON: Jill, staying with Secretary of State Powell, his words were much stronger about fraud in the election and needing new elections than President Bush. Do you see -- what accounts for that difference? Is it our president's affection for the soul of President Putin?

DOUGHERTY: Well, I think what they're doing is they're keeping this very strong message on that level. It's not the top person, President Bush, but it's very strong nonetheless.

Remember, there was a round table that took place between the two candidates just yesterday, the very first time that they sat down together, and the Russians were at the table, of course Ukrainians, Europeans were there but no Americans.

So, the Americans aren't trying to put in, you know, a big show of force but it's very, very obvious that they're sending the message loud and clear and behind the scenes as well.

HUNT: Kate.

O'BEIRNE: Jill, there have been massive peaceful demonstrations on the part of the opposition forces, people taking to the streets. At some point the allegiance of the Ukrainian Army and Special Forces might become key. Is it clear whose side those forces would come down on?

DOUGHERTY: Well, the police, the riot police are definitely out there. I saw them tonight and they're firmly on the side of the government at this point but it hasn't turned into a type of confrontation where you have fighting or anything like that.

So, at this stage, it's a pleasant standoff where they just kind of look at each other over the barricades and there actually aren't that many barricades in just one place. But you have seen some police.

We saw pictures of police cadets who came over onto the side of the opposition and, slowly but surely, there is I think a movement in that direction going toward the opposition. The political winds, the opposition would say, are changing and that vote again, getting back to that vote in parliament, was very significant in that sense -- Kate.

HUNT: Jill, let me talk about Washington-Moscow relations in general, about Bush-Putin relations. We've overlooked a lot of what some might call the Putin sins of the last year or so because it said we need the Russians in Iran. We need the Russians in North Korea. Does this affect either our leverage here or does it affect other issues?

DOUGHERTY: Well, I think you have to look at this relationship now between Bush and Putin and if you evaluated not only what's going on here in Ukraine but with other things as well, it's getting into some difficult times.

You have, number one, Ukraine, big country, major election, the problems that are going on. You have Yukos Oil Company and the crackdown by the Russian government on Yukos Oil Company. You have the head of Yukos, former head, Mr. Khodorkosky, sitting in a jail cell. That's going to be coming to some decision probably in December. It could be January. You have Chechnya. You have a number of different issues that are really souring the relationship at this point.

NOVAK: Jill, we only have about 30 seconds left, do you hear anything about a division of Ukraine coming out of this controversy between the Ukrainian-speaking majority and the Russian-speaking minority? DOUGHERTY: There's a split that is developing right now between east and west. In fact, tonight we were watching pictures of demonstrations in Donetsk (ph). That's in the eastern part of the Ukraine, the miner area out there and they are saying that they, number one, don't want to replay this election and that they will not accept if the opposition candidate gets in. And finally, if that happens that they would be willing to secede from Ukraine.

HUNT: Jill Dougherty thanks so much for joining us and thanks for your splendid reporting.

The gang will be back with the Outrages of the Week.

THE CAPITAL GANG FACT: The United States has provided Ukraine with more than $3 billion in and since its independence from the U.S.S.R.

(COMMERCIAL BREAK)

HUNT: And now for the Outrages of the Week.

Conservatives, even if they often attack the wrong targets, are right about too much violence in our culture, too much of what the late Daniel Patrick Moynihan once called defining deviancy downward.

The latest horror is a new video game that offers players up to $100,000 in prize money for reenacting the assassination of President Kennedy put out by a sick company called Traffic. A good rejoinder is for a boycott of any products made or distributed by this company -- Robert.

NOVAK: The European Union plans to close its members' embassies in Havana to Cuban dissidents seeking refuge from Fidel Castro's tyranny. Leading dissidents warn that will increase repression. Martin Palous, once an anti-communist dissident who is now Czech ambassador in Washington, writes in "The Wall Street Journal":

"Closing E.U. embassies to dissidents will send a message of appeasement and tolerance to Castro that will badly harm the dissidents." The E.U. demands democracy for a membership but sells it out in Cuba to please one of the world's worst tyrants.

HUNT: Margaret.

CARLSON: Al, Halliburton, according to the inspector general, has lost two electric generators worth $1 million, 18 trucks, 111 vehicles and 42 percent of CBA head Paul Bremer's equipment.

Last month, "Time" magazine's Adam Zagorin reported that the Army contracting specialists who objected fiercely to Halliburton's no-bid five-year contract but was forced to sign off on it was pushed aside to make things easy for Halliburton in the $61 million price gouging case.

Threatened with a demotion, not allowed to speak with reporters, she should forget a lawyer and call in her brother, NBA great Elvin Hayes to bully those bullying her.

HUNT: Kate.

O'BEIRNE: Target stores has decided to ban the Salvation Army's dedicated bell ringers from soliciting donations in their red kettles in front of its more than 1,300 stores nationwide.

Target had previously made an exception to its non-solicitation policy for the Salvation Army's Christmas season tradition. Target's ban is expected to cost the Christian charity $9 million in donations to the poor.

While denying the poor, Target remains willing to enjoy the profits from its customers' Christmas generosity and thankfully the Salvation Army remains welcome at Wal-Mart.

HUNT: This is Al Hunt saying goodnight for THE CAPITAL GANG.

Coming up next, "CNN PRESENTS: COMPANY TOWN" hard economic times for small towns.

At 9:00 p.m., "LARRY KING LIVE," Prince Albert of Monaco.

And at 10:00 p.m., tonight's hot topic is that JFK assassination video game.

Thanks for joining us.

(NEWSBREAK)

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