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JUDY WOODRUFF'S INSIDE POLITICS

More Aid From United States; Desperate Times; Political Awards

Aired December 31, 2004 - 15:30   ET

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


(BEGIN VIDEOTAPE)
ANNOUNCER: A new year dawns in the tsunami disaster zone with a spark of hope amid so much death and destruction.

UNIDENTIFIED MALE: This is a world class, a world-size disaster. We were very humbled by that.

ANNOUNCER: Ten times more aid. After days of criticism, the United States dramatically increases its assistance to southeast Asia.

A powerful pair to see the devastation firsthand. We'll set the stage for the Colin Powell-Jeb Bush trip. Does the president have a political motive for sending his brother?

It's been a scream. The most memorable snapshots from a rough and tumble election year. Our annual countdown. What would December 31 be without the "Political Plays of the Year?"

(END VIDEOTAPE)

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

KELLY WALLACE, CNN ANCHOR: Thanks so much for joining us. I'm Kelly Wallace, in Washington, filling in for Judy this week.

Another very busy hour ahead bringing you the latest on the tsunami disaster. So, once again, let's get right to it.

It is now New Year's Day in southeast Asia. Not a happy one to be sure. But amid this somber passage marked by candlelight vigils like this one in Sri Lanka, some uplifting news for tsunami-ravaged nations. This news coming from the United States.

The Bush administration announced it is increasing its donation to relief efforts to $350 million. This comes as the death toll from this disaster keeps climbing. It is now at about 135,000 lives lost. We will have a report from the region just ahead.

First, though, let's get more on the dramatic increase in U.S. aid and the reasons behind it. CNN's Elaine Quijano is in Crawford, Texas, where President Bush is taking a holiday break at his ranch.

And Elaine, do White House officials believe this dramatic increase will silence those critics who say the U.S. has not moved quickly enough to help? ELAINE QUIJANO, CNN CORRESPONDENT: Well, certainly they are not coming out publicly, Kelly, and saying just that. But, of course, from the White House's perspective that would not be a bad thing.

As you mentioned, the White House announcement comes after days of criticism that the Bush administration did not do enough, did not move quickly enough to help the tsunami victims. The president making the announcement in a written statement today here in Texas where the president is spending his holiday vacation. Upping, multiplying tenfold from $35 million the initial U.S. financial pledge, to $350 million.

In that statement, the president also noting that already a substantial U.S. effort is under way, saying that U.S. cargo planes are helping to delivery leaf supplies. And the White House noting that in Thailand a support center has been set up and is staffed and operational.

One other note we should tell you. We know clean drinking water continues to be a concern in the region. Specifically, the president noting in his statement that soon U.S. military ships and personnel will be in place to help teams generate clean water.

Now, while the president is vacationing here in Crawford, but issuing a statement on paper, the administration certainly not leaving its presence unfelt. Colin Powell, the secretary of state, just a short time ago coming out before the cameras explaining some of the reasons for the increase in aid.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: So this tenfold increase is indicative of American generosity but it also is indicative of the need. The need is great, and not just for immediate relief but for long-term reconstruction, rehabilitation, family support, economic support that's going to be need for these countries to get back up on their feet.

(END VIDEO CLIP)

QUIJANO: Now, where will this money come from? Secretary Powell a short time ago saying that the money that the administration and the Office of Management and Budget will be looking specifically at, some of the accounts within the USAID to see where there is some ready access to cash. Understanding, though, also, that working with Congress will be necessary to replenish those accounts.

The White House saying today that, of course, it is going to work closely with Congress to do just that. But, again, making that dramatic increase, $350 million in financial aid -- Kelly.

WALLACE: All right, Elaine. We have to leave it there. Elaine Quijano reporting from Crawford, Texas. Thanks so much.

Secretary of State Powell, meantime, will talk about his upcoming trip to southeast Asia. He leaves Sunday, along with Florida Governor Jeb Bush. He'll also be talking about relief efforts there. He will be doing an interview with CNN's "LATE EDITION WITH WOLF BLITZER." And you can see that Sunday beginning at noon Eastern right here on CNN.

Well, the first aid workers finally arrived today in some remote and devastated parts of Indonesia. But in Banda Aceh, help remains scarce and the need incredibly great. We have a report now from correspondent Dan Rivers, and we want to warn you, the report contains pictures you may find disturbing.

(BEGIN VIDEOTAPE)

DAN RIVERS, REPORTER, ITV NEWS (voice-over): New Year's Eve, Banda Aceh, its famous mosque shrouded in smoke. The clock frozen at 8:30. The time, the date, the year, Indonesia will never forget.

The army has started to clear this central square, determined they will reclaim this city. But 100 feet away there is still untouched horror.

(on camera): We've seen so many bodies here, but this is the only one we have seen having any sort of funeral rites performed on it. Hundreds and hundreds of other people, thousands, tens of thousands have just been simply scooped up by diggers and dumped in mass graves.

(voice-over): Out-of-town refugees are flooding into makeshift camps. Chaotic, but for the survivors this is the only option.

This is how they wash up here. Water is too precious to throw away. There are fears of a measles outbreak among the children. Barely any are inoculated.

They are surviving on rice donated by locals. Everyone here has a story to tell. Yusarin (ph) escaped the tsunami by climbing a three. His three children are dead, so is his wife and his two brothers.

UNIDENTIFIED MALE (through translator): I ran to find my family. I looked for 12 hours but couldn't see anyone. But there were a lot of dead bodies.

RIVERS (on camera): There must be several thousand refugees now at this camp outside the city of Banda Aceh. But despite the fact that it's now six days since this earthquake, there's not a single international aid agency or NGO anywhere to be seen here.

(voice-over): The missing stare out from posters scanned by the desperate trying to find their loved ones.

We took one man from the camp back to his village. Iwan (ph) is a fireman. He was called out on Boxing Day to put out a house fire. It meant he lived, but his wife, his son, his daughters, his two brothers and his two sisters all died.

UNIDENTIFIED MALE (through translator): I just can't say anything. I lost everything I have. I don't know how I feel.

RIVERS: In the same village we ran into the U.N.'s most senior official in Indonesia.

(on camera): Everywhere we have been there has been no aid at all. It's six days after this disaster. Why is it taking such a long time?

UNIDENTIFIED MALE: I think if you make an international comparison it isn't that long. If you go out to the airport things are moving fairly rapidly.

RIVERS: Yes, but out here there are people starving to death. We've talked to people who have had no food for five days.

UNIDENTIFIED MALE: That is obviously something that we're very unhappy about. And that's why -- why we're here, why I'm here personally.

RIVERS (voice-over): People like Iwan (ph) need help fast. They have nothing but profound horror.

Dan Rivers, ITV News, Aceh.

(END VIDEOTAPE)

WALLACE: And of all the countries suffering after the tsunamis, Indonesia has lost the most. More than half of all those killed in this disaster died in that country.

We are joined now by the Indonesian ambassador to the United States, Soemadi Brotodiningrat.

Mr. Ambassador, thanks for being here today.

SOEMADI BROTODININGRAT, INDONESIAN AMBASSADOR TO U.S.: It's a pleasure to be here.

WALLACE: We appreciate it. You probably heard, of course, U.S. Secretary of State Colin Powell a short time ago announcing the U.S. increasing its aid from 35 million to $350 million. What's your reaction to that?

BROTODININGRAT: Well, I think it's very heartening, because the scale of disaster is (UNINTELLIGIBLE) suffered by the country. To give you an illustration, for us we have estimated only for the emergency measures only, it will cost us $150 million.

WALLACE: You know that the United States administration was criticized a little bit. The president criticized for not coming out right away to express his condolences. The initial U.S. response criticized as not being generous enough. Do you think that criticism is fair?

BROTODININGRAT: Well, in a situation like this, unfortunately there are always some criticism. We are also being criticized for rather slow in dealing with the -- the disaster. But then many people doesn't known how complicated it is to -- to do that. And, of course, I don't know how in the U.S., but certainly I don't see how any lack of goodwill in the part of the U.S. government.

WALLACE: The numbers are incomprehensible, Mr. Ambassador.

BROTODININGRAT: Yes.

WALLACE: Some 80,000 lives lost in your country.

BROTODININGRAT: Yes.

WALLACE: What is the biggest concern for you right now about what's going on in your country?

BROTODININGRAT: Well, now people -- people's public attention is focused primarily on the dead. But then we should also take care of the living victims, which is -- many of them are there. Perhaps the number of them are -- their number is twice as much as the dead, and we have to take care of them. And the (UNINTELLIGIBLE), the one who got ill because of the disaster, all those things, you know, it's really a complex operation.

WALLACE: We have heard from a UNICEF spokesman who said that the infrastructure in particular in Banda Aceh is making distribution of aid difficult. Some concerns about coordinating the response. What are the biggest obstacles in terms of getting aid to the people in need in Indonesia?

BROTODININGRAT: Well, in the first day, of course, it's the lack of means of transportation. We have 40 C-130 (UNINTELLIGIBLE), there were only which were in flying conditions because unfortunately we are restrained in buying spare parts from the U.S.

So this is already one example of -- of the constraint. And also, a lot of roads, networks in Aceh is damaged by the disaster.

So now, what is very much needed is the most versatile means of communication with this helicopter. But I would like to tell you that the good news is that beginning around five hours ago, the road from Banda Aceh to Molabo, which is -- which is so far isolated, now is already -- could be used by trucks.

WALLACE: And what have you found, do you know, now that that road is clear? Anything more that -- that people on the ground have found?

BROTODININGRAT: I think they will found many more dead, but also they can -- they will be able to help those that are still living. This is more important, I think.

WALLACE: All right, Mr. Ambassador. The Indonesian ambassador to the United States, , Soemadi Brotodiningrat, we appreciate your time. And our condolences.

BROTODININGRAT: Thank you very much. I hope to be here under better circumstances.

WALLACE: We certainly hope so.

BROTODININGRAT: Thank you.

WALLACE: Thank you for your time.

BROTODININGRAT: Thank you.

WALLACE: And on this New Year's Eve, our coverage of the tsunami tragedy continues in prime time. Another two-hour special. Anderson Cooper with the latest on the disaster at the close of a year filled with moving and memorable moments. That's tonight beginning at 7:00 Eastern.

And we have much more on the tsunami ahead here on INSIDE POLITICS. Retired general and former presidential candidate Wesley Clark shares his insights into the military's role in relief operations.

Plus, with so much destruction, so much grief, this New Year's Eve is even more of a time for reflection.

And later, that countdown in Times Square. How tight will security be tonight? We'll have the answers. We'll be right back.

(COMMERCIAL BREAK)

WALLACE: And welcome back.

U.S. advance -- military advance teams are on the ground in south Asia, and dozens of ships and planes are mobilized. The mission this time is humanitarian.

The first American military C-130 cargo plane landed in Sri Lanka today to distribute clean water. This is all part of one of the U.S. military's largest operations in the region since Vietnam.

Joining us from Little Rock, Arkansas, is retired general, former NATO supreme allied commander and former Democratic presidential candidate, Wesley Clark.

General Clark, thanks for being with us today.

GEN. WESLEY CLARK (RET.), FMR. PRESIDENTIAL CANDIDATE: Good to be with you, Kelly.

WALLACE: First, your reaction. The U.S. increasing its initial assistance tenfold from $35 million to $350 million.

CLARK: Well, I'm delighted to see it, but I'm even more delighted with the news that our military is in there on the ground and starting to make a difference.

WALLACE: What role can the U.S. military play? You obviously were overseeing humanitarian relief in Kosovo, after the earthquake in Turkey in 1999. What can the U.S. military be doing on the ground now?

CLARK: Well, first of all, we've got reconnaissance. And there's still -- presumably, there are hundreds of thousands of people that are living in the jungles and trying to scratch out a survival day by day and hour by hour. We can find those people.

Secondly, we've got the logistics, the long haul capability, plus the close-in capability if we put the right assets in the region to help distribute. And we need cooperation from the local governments. They really have to take the lead in it. And we need the cooperation from the nongovernmental organizations.

WALLACE: You also know, though, we are talking about traveling a lengthy distance, and also problems of getting to the people in need. A lieutenant colonel with the U.S. Pacific Command said that the ships are facing "a tyranny of distance" in terms of getting ships, getting water purification systems to the people in need. Talk to us about the obstacles the American military must be facing.

CLARK: Well, first of all, it is a very long way. These ships were coming from the western Pacific. So they've had to go either through the Straits of Malaka or around. They have gone thousands of miles to try to get there.

When they get there, then they've got the -- most of the equipment is onboard the ships. So you have to get the process, whether it's water or the food or whatever, you've got to get it off the ships and on to the shore, and distribute it onshore. So it really takes a combined operation.

You can't just have the ships. You've got to have some people who can go onshore. And you've got to have the ability to work with the local government.

I think the biggest thing the United States military can do is the logistics piece of it once the operation gets under way. We can help the coordination, help the flow, help manage that flow of supplies, relief, the water, and taking care of the NGOs who are there.

The other things we can do, of course, is the reconnaissance. Because we do have the best reconnaissance assets of anybody. We can fly over the jungles, we can take pictures, we can really see what is going on and help the governments in the region get a grip on it.

WALLACE: And when you talk about NGOs, of course, for our viewers, those nongovernmental organizations, private organizations the military is working with. In light, General Clark, of what the American military is doing, do you think the criticism of this administration has been unfair? And also, in light of this increase in aid from $35 million to $50 million, do you think some of the critics were off base here?

CLARK: Well, first of all, I didn't like to see any criticism at all. But I understand where it was coming from. Because it really wasn't about the military assistance or even the amount of money.

What they were looking for was the emotional commitment on the part of the president and his administration to want to do something. Americans are a very generous people, and when something like this happens, even if it's half a world away -- and as it now turnses out, maybe several thousand Americans were there -- but even if it's half a world away, we expect our leader who is the leader of the most powerful country in the world to show compassion and to help shape the world's response.

And I think the criticism was misplaced in terms of what America has done in the past. I think there was concern that we weren't going to be as forthcoming as we are now showing that we are. So I am very pleased with the way the relief effort is developing. I think we're going to play a major role, the leading role in this.

WALLACE: All right. Retired General Wesley Clark. We have to leave it there. Thanks so much for joining us today.

CLARK: Thank you, Kelly.

WALLACE: And we have news about former President Bill Clinton and his wife, Senator Hillary Rodham Clinton. They have joined the outpouring of private support for the enormous relief effort in south Asia.

A Clinton spokesman isn't saying how much, but he says the family is making a private contribution to the tsunami relief effort. The Clintons also paid a visit today to a Buddhist temple in the New York borough of Queens which has a sizeable southeast Asian population. Temple volunteers have collected hundreds of boxes of relief supplies to be shipped to a sister temple in Sri Lanka.

When we return, a time of grief at what is normally a time of celebration. As 2004 comes to a close, our Bruce Morton considers how the suffering overseas affects all of us no matter where we live.

We'll be right back.

(COMMERCIAL BREAK)

WALLACE: In many places around the globe, New Year's celebrations have been dampened by the misery caused by last weekend's tsunami. Our Bruce Morton has a very special story, a look at the suffering and grief so many people are experiencing at a time when most of us are used to celebrating.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): This year the tsunami, like a tsunami, has somehow swept everything else away. It is all we can look at, sometimes more than we can look at, all we can think about. Sometimes more than we can bear to think about.

Humankind is to blame for most of the bad things that happen to us, for wars, say. Humankind invented bombs that can destroy the planet. For the first time America's Roman Catholic bishops noted some years ago man can destroy god's created order.

But we didn't do this. It just happened to us. It happened to so many of us in Indonesia, Sri Lanka, India, Thailand, people miles from there in Kenya, Somalia. And in a real sense it happened to all of us. The tsunami in that sense is a test of our humanity, of the truth that we all do belong to one human family. As one American said outside the Indonesian embassy the other day...

UNIDENTIFIED MALE: We're not as divided as we think we are. Life is life and death is death. And it made me realize just how close we all are no matter what our skin color or nationality or where we live.

MORTON: So, a test of our humanity. We fail, though, sometimes as when the world stood by and watched people kill one another in Rwanda a few years ago. We pass them sometimes, too, as when the allies pitched in to help their defeated enemies, Germany and Japan, rebuild after World War II.

And this time governments are sending help, but so are people. Contributions to the Red Cross, to church groups and the like. People are sending money, people of faith are sending prayers. This was the service at the Sri Lankan embassy here in Washington.

The tsunami was terrifying, really did shock and awe. But out of terror and tragedy perhaps we can find the humanity that binds us all together. It's a hard test. Let's hope we pass it.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WALLACE: Bruce Morton with reflections for all of us on the tsunami disaster.

Up next, the Bush administration ups its ante. The president says he is sending 10 times the amount of humanitarian aid he originally announced. We'll talk about his response to the tsunami disaster.

Plus, it is already the new year across nearly half the globe. When we come back, live pictures as Moscow rings in 2005.

We'll be right back.

(COMMERCIAL BREAK)

WALLACE: And welcome back.

Joining us now from New York, Kitty Pilgrim with "The Dobbs Report."

And Kitty, what's the word on this final day of trading for 2004?

KITTY PILGRIM, GUEST HOST, "LOU DOBBS TONIGHT": That's right, Kelly. Well, there are really no big moves for the market today. It's the last day of the year. But we're still a few minutes away from the closing bell.

The Dow Jones industrials down about 10 points. The Nasdaq slightly lower. Of course, trading volume very, very light today.

But let's look at the numbers for the full year. And they are interesting.

The Dow up more than 3 percent in 2004. The Nasdaq has gained 9 percent. But even after two years of gains, the major averages are still well off of the highs they set before the tech bubble when it burst in 2000.

Now, there was some notable losers this year. And drugmakers Merck and Pfizer, they saw their share prices tumble.

Merck pulled its arthritis drug Vioxx off the market. And Pfizer's Celebrex is under fire. Question of safety about those drugs. Also, flu-maker Chyron lost ground after British regulators shut down its vaccine plant.

Now, in terms of sectors, no surprise. Airline companies big losers because of higher fuel costs and labor disputes. But on the flip side, energy stocks were big winners.

Coming up at CNN at 6:00 p.m. Eastern on "LOU DOBBS TONIGHT," we'll have coverage of the tsunami disaster. That will continue. Author Ellen Prager will join us to talk about how the -- how to reduce the devastation that's caused by natural disasters.

And we'll also take a look at the most intriguing news and entertainment stories of the whole year. Also, global import quotas are set to expire on January 1st and that could mean another loss for American workers, but a major boost for retailers and also China.

So that's the very latest, Kelly. Back to you.

WALLACE: Thanks, Kitty. We'll see you in two hours.

The second-half of INSIDE POLITICS continues right now. We'll have the latest on the tsunami disaster, but first, new year celebrations from around the world. It is now midnight in places such as Baghdad and Moscow. You're look at live pictures from Baghdad, coming from the Green Zone, which is where the Iraqi interim government and U.S. and British embassies are located.

And there you see Red Square in Moscow, some fireworks, celebrations underway. A message also coming, as midnight strikes in Moscow, from Russian president Vladimir Putin. He basically is urging Russians to remember what he called a traumatic year, which included a series of terror attacks. Those included that deadly hostage seizure at a school in Beslan.

So fireworks underway there in Russia. And, again, also, it is now 2005 in Baghdad. It will be a pivotal month, indeed, inside that country. Iraqi elections are set for January 30th.

A look now at a CNN security watch, security here in the United States, as we continue our countdown to the new year. Law enforcement officials are using chemical sensors to test air quality in Times Square before the traditional celebration there.

Overhead, the New York Police Department's entire fleet of seven helicopters will be on patrol tonight and authorities have welded manhole covers and have locked or removed mailboxes in preparation for the big event.

Officials say they are not aware of any specific threats related to New Year's Eve, but they say they are not taking any chances. Of course, stay tuned to CNN day and night for the most reliable news about your security.

Even with all the serious things going on, there will be time for some celebration in Times Square tonight. And you can see the festivities right here on CNN. Anderson Cooper, hosting our New Year's Eve special, which includes a live musical performance by Celine Dion. That gets underway at 11:00 p.m. Eastern, right here on CNN.

Back now to our coverage of the tsunami disaster. The international community has now donated more than $1 billion to relief efforts, a figure boosted considerably by today's increase in aid from the United States.

The Bush administration is pledging to spend $350 million to help devastated areas of Southeast Asia. That's up from $35 million. The announcement was made as the death toll in the region climbed above 135,000 lives lost.

Secretary of State Colin Powell says the increase in aid reflects the great need in countries walloped by the tsunamis. He discussed relief efforts and other matters today with U.N. Secretary-General Kofi Annan.

Secretary Powell will lead a U.S. delegation to the disaster area on Sunday. And he will be joined by the president's brother, Jeb, who has had considerable experience dealing with disasters as governor of the state of Florida.

Well, joining us now to talk more about the ongoing U.S. response to the tsunami disaster and other issues, two of our favorite reporters. Ron Brownstein of the "Los Angeles Times," Susan Milligan of the "Boston Globe."

Thanks to you both for being here.

RON BROWNSTEIN, LOS ANGELES TIMES: Thanks, Kelly.

WALLACE: Ron, let me begin with you. This increase, tenfold, $35 million to $350 million. Take us behind the scenes. Was this a move to try to silence some critics of the administration?

BROWNSTEIN: Well, I think they got off to a slow start. Even people inside the White House believe it took too long for the president to come in front of the cameras. They said they were trying to assess what the real needs were.

But what the administration has made clear from the outset, I think, and I think fairly, was that that $35 million they put out was not going to be the end of the story. This $350 million, Kelly, is not going to be the end of the story. It is a substantial increase in our aid, and we will probably be following it with yet more.

It is important, I think, with critics around the world wondering if we are as committed to this kind of enterprise as we have been to the war in Iraq, it is important for the administration to stay at the forefront of the effort here. And I think they recognize that.

WALLACE: Susan, do you pick up from White House congressional sources they felt sort of angry, that they felt the U.S. was unfairly being criticized here?

SUSAN MILLIGAN, BOSTON GLOBE: I do think there was a sense that the United States was unfairly criticized. On the other hand, it did seem to take a while for the president to come before the cameras and just express some compassion for all the people who had been killed.

I mean, this is something you do the way you go to a funeral. It's not that you can make it better, necessarily, but showing up and saying you're sorry goes a long way, particularly when you're dealing with so many deaths in the biggest Muslim country in the world. It would be a good diplomatic move for the White House to have people have a vision of U.S. military helicopters that's, you know, more positive than the one that maybe that they've exposed to.

So I think it's also fair to say that the first day, I don't think anybody really understood how horrible this was and how much destruction and how much death there was. So they did need a day or so to assess that.

WALLACE: And, of course, the news came out yesterday that Florida Governor Jeb Bush, the president's brother, will be joining this delegation. Ron, what are they saying behind the scenes? Publicly they say Governor Bush is going. He has tremendous experience after four hurricanes in Florida. Any other message privately?

BROWNSTEIN: Yes. I think that is obviously true. He is one of the public officials in the U.S. that, unfortunately, has had the most experience cleaning up after natural disasters. But really, is there any better way for the president to try to send a message of his personal concern about this than to send his own brother, much as John F. Kennedy used Bobby Kennedy sometimes to send a message. It's very rare for Jeb Bush to play that role for this president. But in the end, I think this is an appropriate way for him to signal his concern, especially after the questions that were raised following the first 72 hours.

WALLACE: And there are always cynics in the town of Washington. And there are some who are saying this is a way for the president to prop up Jeb Bush for 2008, even though the governor has said he doesn't want to run for president.

MILLIGAN: To be honest, it was the first thing I thought of when I heard the news that the governor was going. I do think Ron's right, that it's more personal for the president to send his own brother to Southeast Asia, but it certainly is a high-profile trip. And it kind of makes one wonder why that's being done. BROWNSTEIN: On balance, I think most will say this is the right thing to do, though. Because, I mean, first of all, Jeb Bush is not -- has said he doesn't want to run. He's never seemed like somebody who would be easy, comfortable in that role in 2008. And, again, there really is no better way for the president to signal his concern, which is something that's important for him to do after the questions that were raised earlier this week.

WALLACE: And also, switching gears a little bit, Congress coming back to town next week, a subject you both are following closely. A moved by some House Republicans, Susan, to change some rules, to make it more difficult, it appears, for lawmakers to go ahead and discipline one of their own. It seems like a movement by some Republicans, angry by the House Ethics Committee admonishing House Majority leader Tom DeLay. What are you picking up from sources about this movement?

MILLIGAN: Well, I think that you've got it exactly right. They were angry at this pursuit of Tom DeLay, which was being spurred by a member, Chris Bell, who had lost his own primary. And they felt that it was unfair, and they were unfairly tainting the majority leader.

That being said, it's a little hypocritical, the Democrats think, for the Republicans to change these rules when they were the ones who were talking about ethics and so forth when they took control back in the 1990s.

But what's going on there is really a consolidation of power by the majority party in protecting the majority leader in case he is indicted by a Texas grand jury and, you know, protecting some of the other members, as well.

BROWNSTEIN: History is not a strong suit of many people in Washington, but even so, it is still astonishing to watch this happen when, as Susan pointed out, the House Republicans in the minority in the late '80s and early '90s used ethics systematically, one issue after another. Jim Wright, the House Bank, the House Post Office, to try to weaken that Democratic majority.

And here they are, taking a series of steps to reduce, dilute the ethics rules, possibly remove the Ethics Committee chairman, make it tougher to bring cases, allow people to stay in their jobs even if they've been indicted in the leadership. They are opening themselves potentially to the same sort of arguments that they used so effectively a decade ago.

WALLACE: And also, Susan, some of these rules have been in place for decades, three decades or more. I know Congress back again next week. What is the likelihood that House Republicans, the House, will go ahead and approve some of these major changes?

MILLIGAN: Oh, I think, if the majority leader wants it, that he'll get it. The other thing here, though, Kelly, is that it's not as though the Ethics Committee has ever been a particularly powerful committee. I mean, there aren't that many occasions when someone is forced out of Congress because of something the Ethics Committee has done. I mean, Mr. Traficant left, but he was, you know, sentenced to prison. So it was going to be a little hard for him to show up for work anyway. I think he was...

(CROSSTALK)

BROWNSTEIN: Can you imagine the impact if the chairman of the Ethics Committee is removed on the willingness of future committee members to move against a powerful member of the House? I mean, that would be as clear a signal as can you send.

WALLACE: What an interesting way to start the 109th Congress.

Ron Brownstein of the "Los Angeles Times," Susan Milligan of the "Boston Globe," thanks and happy New Year...

BROWNSTEIN: Happy New Year to you.

(CROSSTALK)

WALLACE: Coming up next here on INSIDE POLITICS, what's your pick for political play of the year? Our very own Bill Schneider counts down his top five when we return. And later...

(BEGIN VIDEO CLIP)

AUDIENCE: Four more years.

U.S. SENATOR JOHN KERRY (D), MASSACHUSETTS: And I'm reporting for duty.

(END VIDEO CLIP)

WALLACE: You can say 2004 was one wild ride out on the campaign trail. We'll take a look back at the race for the White House from Iowa to Election Day.

And be sure to stick with CNN for the most complete coverage of the tsunami disaster. We will have reports from across South Asia at the top of the hour on "WOLF BLITZER REPORTS." And Anderson Cooper will have more on the tragedy in another two-hour special report beginning at 7:00 p.m. Eastern tonight. We are back with more INSIDE POLITICS in just a moment.

(COMMERCIAL BREAK)

WALLACE: And we lead off the last "Political Bites" of 2004 with, what else, a Washington governor's race update.

New Governor-elect Christine Gregoire says she is looking forward to her inauguration in less than two weeks, following her 129-vote victory and two ballot recounts. Republican Dino Rossi hasn't given up, however. He can still challenge the results in court. And the state GOP is waiting to see if the official voter list in heavily Democratic King County can be reconciled with the actual number of ballots that were cast. Meantime in Ohio, the Libertarian and Green Party presidential candidates who paid for a statewide recount there have gone to court to have the ballots recounted a second time. President Bush lost a few hundred votes to John Kerry in unofficial results from the first recount, but he still defeated Senator Kerry in Ohio by more than 118,000 votes. The Green and Libertarian nominees claim state officials did not follow proper procedures during that first recount.

And, finally, overseas in Ukraine, Prime Minister Viktor Yanukovych announced today that he has resigned. But he refused to concede defeat in last Sunday's presidential election. Results show opposition candidate Viktor Yushchenko defeated Yanukovych in the revote which was ordered by Ukraine Supreme Court. The court ruled that the first election, which was won by Yanukovych, was marred by fraud.

From start to finish, it had been a political year filled with award-winning moments. And who better to hand out the awards than our senior political analyst, Bill Schneider?

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Play no. 5, the Senate class of '04 produces two rising stars. One GOP victory was especially sweet, South Dakota, where Congressman John Thune knocked off Democratic leader Tom Daschle.

U.S. SENATOR-ELECT JOHN THUNE (R), SOUTH DAKOTA: We prayed a lot about it, as did a lot of other people, and finally concluded that this was something that we needed to do.

SCHNEIDER: Did the Democrats produce a star? They sure did.

U.S. SENATOR-ELECT BARACK OBAMA (D), ILLINOIS: The hope of a skinny kid with a funny name who believes that America has a place for him, too.

SCHNEIDER: Barack Obama won a stunning 43-point victory after wowing Democrats with his spellbinding oratory at the Boston convention.

Play no. 4, two filmmakers turned the nation's red-blue division into box office gold. Many moviegoers in red America were deeply moved by Mel Gibson's "The Passion of the Christ."

UNIDENTIFIED FEMALE: Stunning. Stunning.

UNIDENTIFIED FEMALE: It's the most awesome thing I've ever seen.

SCHNEIDER: In blue America, Gibson's film was denounced as prejudiced and inflammatory.

UNIDENTIFIED MALE: Millions of people will see this "Passion" play, and believe that it is the truth, when, in fact, it is Mr. Gibson's version.

SCHNEIDER: A few months later, Michael Moore's "Fahrenheit 9/11" rallied anti-Bush voters.

MICHAEL MOORE, FILMMAKER: You're fighting for the majority, the majority that never elected this man to office.

SCHNEIDER: Moore's film drew an angry response from the right. "Fahrenheit" did very well at the box office, especially for a documentary. But the box office revenues for "Passion" were three times as big, very impressive for a movie where the dialogue is in Aramaic.

Play no. 3, a non-partisan commission shows political clout. The 9/11 Commission included a lot of former politicians. They knew how to be politically effective. Public hearings with dramatic testimony from insiders, like former weapons inspector David Kay, and former White House counterterrorism chief Richard Clarke.

A best-selling report written in such a compelling, readable style, that it was nominated for a National Book Award. The 9/11 Commission turned its report into a cause. They demanded action.

UNIDENTIFIED MALE: Look, we want a bill on the desk of the president as soon as possible.

SCHNEIDER: They got it. Most commissions have expertise, and the 9/11 Commission had the political skill needed to break through the logjam of interests that resisted reform.

Play no. 2, John Kerry rewrites the playbook for winning the nomination. Last December, Kerry was sinking in New Hampshire. The playbook says New Hampshire voters don't care what happens in Iowa. Nonsense, Kerry said.

He pulled up stakes and went to Iowa. It was an all-or-nothing gamble that the way to win New Hampshire was to first win Iowa. It worked. Kerry won Iowa on January 19th.

KERRY: Thank you, Iowa, for making me the comeback Kerry.

SCHNEIDER: Eight days later, New Hampshire fell into place, and Kerry was on his way.

KERRY: Bring it on.

(APPLAUSE)

SCHNEIDER: Play no. 1, President Bush runs a campaign with relentless purpose. The key to Bush's reelection was the president's image of firmness and resolve, in contrast to his opponent's image of vacillation and inconsistency.

President Bush lost no time drawing a contrast. One day after Super Tuesday, when John Kerry clinched the Democratic nomination, Bush made his move.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Senator Kerry's been in Washington long enough to take both sides on just about every issue.

SCHNEIDER: Kerry provided Bush with ammunition two weeks later at a West Virginia town hall, which instantly made its way into a Bush campaign ad.

KERRY: I actually did vote for the $87 million, before I voted against it.

SCHNEIDER: The flip-flop charge reverberated through the Republican campaign for the next eight months, right through Bush's final campaign rally in Texas.

BUSH: And then he entered the flip-flop hall of fame.

SCHNEIDER: President Bush showcased his strength and his opponent's weakness by sticking to one message relentlessly.

2004 was a year when a lot of conventional wisdom got turned on its head. Like, Iowa doesn't matter, and high turnout helps Democrats. Let's hope 2005 is just as interesting.

Happy New Year. Bill Schneider, CNN, Los Angeles.

(END VIDEOTAPE)

WALLACE: And I bet you're wondering where he got that fabulous hat? We'll have to check with him and let you know.

Well, those are the award winners, the five political plays of the year. What about the highlights?

(BEGIN VIDEO CLIP)

HOWARD DEAN (D), FORMER VERMONT GOVERNOR: ... take back the White House. Yes.

(END VIDEO CLIP)

WALLACE: Up next, an inside look at the race for the White House from the snows and screens of Iowa to the last returns on Election Day. You won't want to miss it. We'll be right back.

(COMMERCIAL BREAK)

WALLACE: From Washington, D.C., to Washington State, 2004 has been a year flush with memorable political moments. The centerpiece, of course, the presidential election pitting President Bush against Democratic challenger Senator John Kerry. The race really began with the primaries and maintained its breakneck pace until November 2nd. Time now to take a look back.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I'd like to find out who on this stage agrees that they will pledge to vigorously support the Democratic nominee.

U.S. REPRESENTATIVE DICK GEPHARDT (D), MISSOURI: I'm nostalgic for Ronald Reagan.

KERRY: This president has run the most inept, arrogant, reckless and ideological foreign policy in modern history.

BUSH: It's great to be back in the great state of Florida. We carried it once, and we're going to carry it again.

U.S. SENATOR JOHN EDWARDS (D), NORTH CAROLINA: The truth is, we live in a country where there are really two different Americas, one for the families that get whatever they want whenever they need it and then one for everybody else.

BUSH: Human beings are headed into the cosmos.

DEAN: The president wants to go to Mars. I think Mars is a great idea. I think he should be the first one to go.

U.S. SENATOR JOSEPH LIEBERMAN (D), CONNECTICUT: A statewide outbreak of Joe-mentum!

JIM RASSMANN, VIETNAM WAR VETERAN: I figure I owe this man my life.

KERRY: Thank you, Iowa, for making me the comeback Kerry.

WESLEY CLARK, FORMER NATO SUPREME ALLIED COMMANDER: Looks like it will be $3.81, ma'am.

UNIDENTIFIED FEMALE: Thank you.

CLARK: Okay, now, what are you doing tonight?

DEAN: Then we're going to Washington, D.C., to take back the White House. Yes.

BUSH: For all who love freedom and peace, the world without Saddam Hussein's regime is a better and safer place.

KERRY: Like father, like son, one term and you're done.

BUSH: So far all we hear is a lot of old bitterness and partisan anger.

UNIDENTIFIED MALE: We're going to keep going and going and going and going and going...

EDWARDS: Objects in your mirror may be closer than they appear.

DEAN: Yes.

BUSH: Gentlemen, start your engines.

KERRY: Let's go. Rock and roll here.

The gas prices keep rising at the rate they're going now, Dick Cheney and George Bush are going to have to carpool to work. UNIDENTIFIED MALE: Some people have wacky ideas, like taxes gasoline more so people drive less. That's John Kerry.

KERRY: I actually did vote for the $87 billion, before I voted against it.

BUSH: Senator Kerry's been in Washington long enough to take both sides on just about every issue.

UNIDENTIFIED MALE: John Kerry not been honest about what happened in Vietnam.

UNIDENTIFIED MALE: He is lying about his record.

UNIDENTIFIED FEMALE: George Bush used his father to get into the National Guard, was grounded and then went missing.

EDWARDS: He shares the values and the vision that I believe in.

(APPLAUSE)

AUDIENCE: Four more years, four more years.

TERESA HEINZ KERRY, WIFE OF SEN. JOHN KERRY: You said something I didn't say. Now, you shove it.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: You believe it is good policy to pay for my taxes and the Social Security checks of working men and women, and borrowing money from China and Japan, you should vote for them.

OBAMA: We are one people, all of us pledging allegiance to the stars and stripes, all of us defending the United States of America.

KERRY: I'm John Kerry, and I'm reporting for duty.

(APPLAUSE)

We're here tonight united in one purpose: To make America stronger at home and respected in the world.

GOVERNOR ARNOLD SCHWARZENEGGER (R), CALIFORNIA: How do you know if you are Republican? Well, I tell you how. If you believe that government should be accountable to the people, not the people to the government, then you are a Republican.

U.S. SENATOR ZELL MILLER (D), GEORGIA: This is the man who wants to be the commander in chief of the U.S. Armed Forces? U.S. forces armed with what, spitballs?

BUSH: If America shows uncertainty or weakness in this decade, the world will drift toward tragedy. This will not happen on my watch.

(APPLAUSE)

I don't see how you can lead this country in a time of war, in a time of uncertainty, if you change your mind because of politics.

KERRY: The world is more dangerous today because the president didn't make the right judgments.

BUSH: Now, he's just going to break all of these wonderful promises he's told you about or he's going to raise taxes.

KERRY: The president has presided over an economy where we have lost 1.6 million jobs, the first president in 72 years to lose jobs.

I'm sorry that we got here a little bit late and a little bit short. It is now clear that, even when all the provisional ballots are counted, which they will be, there won't be enough outstanding votes for us to be able to win Ohio. And, therefore, we cannot win this election.

BUSH: America has spoken. And I'm humbled by the trust and the confidence of my fellow citizens.

KERRY: America is in need of unity.

BUSH: To make this nation stronger and better, I will need your support, and I will work to earn it. I will do all I can do to deserve your trust.

(END VIDEOTAPE)

WALLACE: And that was the year in politics. What's ahead for 2005? Well, we hope you'll watch INSIDE POLITICS with Judy Woodruff throughout the year to find out. Judy is back on Monday.

I'm Kelly Wallace in Washington. Until then, have a safe and happy New Year. We appreciate you joining us. "CROSSFIRE" starts right now.

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


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