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The Lead with Jake Tapper

Bush Nominates Chertoff as Secretary of Homeland Security; Republicans, Democrats Gear Up for Fight Over Social Security

Aired January 15, 2005 - 19:00   ET

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

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


ANNOUNCER: Live from Washington, THE CAPITAL GANG.
MARK SHIELDS, HOST: Welcome to THE CAPITAL GANG. I'm Mark Shields, with the full GANG: Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

President Bush announced his second nomination for secretary of homeland security. It was a surprise, Michael Chertoff, who became a U.S. appeals court judge two years ago, after heading the Justice Department's criminal division for the first two years of the Bush administration.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: When Mike is confirmed by the Senate, the Department of Homeland Security will be led by a practical organizer, a skilled manager and a brilliant thinker.

(END VIDEO CLIP)

SHIELDS: In interviews to begin his second term, the president for the first time admitted mistakes in challenging Iraqi insurgents to "bring it on" and in promising to get Osama bin Laden "dead or alive."

(BEGIN VIDEO CLIP)

BUSH: I guess it's not the most diplomatic of language. Laura, as a matter of fact, chewed me out right after that. So I -- I do have to be cautious about, you know, conveying thoughts, as -- in a way maybe that doesn't send wrong impressions about our country.

(END VIDEO CLIP)

SHIELDS: Margaret Carlson, what message is President Bush sending, first in his nomination of Michael Chertoff and then in his admission of past mistakes?

MARGARET CARLSON, CAPITAL GANG: Well, I guess it's a good idea to say that those were what they were, which were, you know, childish statements. But the real mistake he admitted this week was that someone like Bernie Kerik, who could be an extra in "The Sopranos," was not the right kind of nominee for Homeland Security. Michael Chertoff is much closer to what's needed. And he's right to call Chertoff a brilliant thinker. I think most lawyers think he's got a great mind. But what's needed at Homeland Security really is the best police chief in America should come and do that job, or someone similarly skilled. To bring in somebody who's not a career prosecutor but a political prosecutor -- he tormented Hillary Clinton during Whitewater -- I think sends the wrong message. You really -- this is a department -- you might bring your buddy into Commerce because it doesn't matter, but you want to hire somebody at Treasury who really knew finance. It's the same thing with Homeland Security. It would be a good idea to get somebody who knows something about it.

SHIELDS: Kate O'Beirne, you had the feeling with Bernie Kerik that this was an infatuation on the part of George W. Bush. He really -- he just was excited about that one. This is a more sensible, practical choice on the part of Bush. I mean, it wasn't one made out of the emotion, it seemed, that the...

KATE O'BEIRNE, CAPITAL GANG: Yes. No, I think...

SHIELDS: ... Bernie Kerik was.

O'BEIRNE: I think that's absolutely true. I think the president was sort of wowed by Bernie Kerik's biography. The message I got, regardless of whatever message they're sending, is that this administration is extremely fortunate. I think Bernie Kerik was a bad choice. They were lucky enough to have his nomination crash and burn for obvious reasons. There's no evidence that he -- that he had the kind of managerial experience you'd need. He knows nothing about the federal system. So I think he would have been a really poor choice. They were lucky.

Michael Chertoff, they're extremely lucky again. He's willing to leave a lifetime appointment on a federal bench, what so many brilliant lawyers aspire to, and he's willing to give it up, take over a very challenging department at a really challenging time. Being brilliant's not enough, Margaret, I agree. But it's certainly not a bad beginning. He does understand the federal government. He is a talented prosecutor. He has managed a U.S. attorney's office. People who've worked with him at the Justice Department rave about his skills.

SHIELDS: Bob Novak, in spite of the controversy about his involvement in the Patriot Act, he's already been endorsed by liberals like David Cole (ph), the Georgetown law professor and great civil libertarian, by Jon Corzine and Frank Lautenberg, Democratic senators from New Jersey, and Chuck Schumer. I mean, will he sail through? And should he?

BOB NOVAK, CAPITAL GANG: He will sail through. Whether he should without getting a deep inquiry, I have some doubts. You know, by the way, he was so popular on his appeals court judge nomination, the only person who voted against him was Hillary Clinton, for obvious reasons.

I think it's a very significant shift because in -- in Bernie Kerik, they tried to get somebody who was an outsider, who brought something to the table that wasn't the inside gang. And it was such a catastrophe that he's back now to a cabinet which is very much concerned -- dominated by Bush insiders.

Let me say a couple of words about Chertoff. Chertoff, when he was at the Justice Department, was Mr. No. He was the person who refused to give any information to Congress on the outrageous performance of the -- of the FBI in Boston years ago, where murders were committed. He was the guy who said -- he was the guy who led the executive privilege thing, which I think was very dubious, very -- very disinclined to ever go beyond the company solution.

So I think he's going to get a good -- he's going to have an easy confirmation, but I don't think he should have.

SHIELDS: Al Hunt.

AL HUNT, CAPITAL GANG: Well, first of all, on George Bush's mea culpas, the problem with Iraq is not one of rhetoric, it was the tragic miscalculation in failing to adequately prepare for the post- invasion occupation.

But on Bernie -- on Bernie Kerik's successor as the nominee, Michael Chertoff, I agree with most of what was said here. First, he's obviously a lot better than Bernie Kerik. You know, Michael Chertoff (UNINTELLIGIBLE) doesn't even have a mistress, much less cheat on her. I mean, Bernie Kerik was a disastrous appointment, and this guy is every bit as smart as Margaret said, and I think he will -- he'll be easily confirmed, as Bob suggested.

I hope -- I agree with you, I hope there's more scrutiny. I think he's been insensitive to civil liberties. I think there's some things he tried to stonewall. But I'll tell you the biggest challenge, Mark, I think he faces. I think -- Margaret, I disagree with you. I think he's perfectly adequate as a cop in this. I think managing that department -- very few government reorganizations work. None have worked in the last 50 years, other than EPA, and the jury's still out on Homeland Security.

NOVAK: I think it's very interesting, though, to see whether they go back into his role in the out -- most outrageous example -- one of the most outrageous examples of executive privilege I have seen, on the Boston FBI case.

HUNT: You're right about that.

SHIELDS: Last word, Bob Novak. THE GANG of five will be back with the great Social Security debate. Stay tuned.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. The president and vice president stepped up their campaign for a major revision of the Social Security system.

(BEGIN VIDEO CLIP)

BUSH: If you're 20 years old, in your mid-20s, and you're beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now.

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: Personal accounts would not merely help the nation resolve the long-term challenges to Social Security, they would continue a great American tradition of upward mobility and individual independence.

(END VIDEO CLIP)

SHIELDS: Democrats signal that there is no room for compromise.

(BEGIN VIDEO CLIP)

SEN. EDWARD M. KENNEDY (D), MASSACHUSETTS: We must oppose it, and we will defeat it. We will not let any president turn the American dream into a nightmare for senior citizens and a bonanza for Wall Street.

(END VIDEO CLIP)

SHIELDS: Kate O'Beirne, before we have a specific plan before us, is anybody winning this debate?

O'BEIRNE: No, Mark. I don't think the shape of the debate is yet set. We're getting there. The administration, I think, has to make a decision. You see them doing both at the moment. Is there a form based on the case that there's a looming crisis in Social Security, or is it based on the affirmative appeal of a new deal for younger workers, the ability to take some of their Social Security taxes and privately invest in an account they own.

The problem with the looming crisis, it seems to me, which is what President Bush was emphasizing this week, is the talk about the trust fund going bankrupt in the year 2042. Well, I am the mother of one of those younger workers, a 25-year-old, who's going to be 62 when that happens. I don't think it strikes him and his contemporaries as a particularly -- particularly concrete problem they ought to be worrying about. And of course, it permits the Democrats to just say, There's no crisis, there's no crisis. We don't have to do anything, even though Bill Clinton spent all of 1998 talking about the Social Security crisis.

SHIELDS: But Margaret Carlson, this is a program that's never bounced a check in 20 years, never -- 70 years, never missed a payday. And there's something...

CARLSON: Yes...

SHIELDS: No, it's something that people have come to rely upon...

CARLSON: And by the way...

SHIELDS: ... and depend upon.

CARLSON: ... has the lowest -- the lowest cost of any -- you know, when you say "government waste" -- it costs far less than 1 percent to get these checks out the door, and we don't even know what it's going to cost when Wall Street gets in on it.

You know, the Democrats were criticized for scaring old people. Well, Republicans are trying to scare young people. And actually, it's a lot harder because, as you say, they just don't see this crisis really affecting them.

Why is that funny, Bob? You're an old person, and we can't scare you, either. And it's really too bad.

(LAUGHTER)

SHIELDS: He scares people!

CARLSON: Because I would love to be able to scare you!

But here's the thing. The problem they're describing doesn't fit with the solution. You could, say, raise the payroll tax by 1 percent. You could raise the age. You could lower benefits. There's a whole bunch of things you could do instead of treating this like the domestic mushroom cloud. And I don't think it's going to work domestically the way it worked on Iraq. You get one of those crying wolf per administration.

SHIELDS: Hey, Bob, even if you do accept the president's premise that the -- it's in trouble, insolvency, it's at risk, diverting money to private accounts doesn't do anything to help the solvency.

NOVAK: Yes, it does. The interesting -- the reason I was laughing, this is one of the great somersaults I've ever seen in my years in Washington because the -- Bill Clinton was out there saying what a -- We got to save this system. It's in -- it's in great jeopardy. And suddenly -- I don't know whether you people all get together in somebody's basement at night. You all got the same line. It's crying wolf, like Iraq. I've seen that analogy a hundred times. There's nothing wrong with the system.

Of course, the question is, as years go by, you're going to get -- starting in 2018, you're going to start getting into the red. It's going to get deeper and deeper in debt. And the other factor is, of course, this is a terrific system, to let people buy their own -- their own stock and investment. But the point is, they're doing a lousy job on it. And one of the things is that the lobbyist community, Mark, in town, the Republican lobbyists, don't like this -- don't like this issue because there's nothing in it for them.

SHIELDS: And their clients.

NOVAK: And their clients. The whole joke that this is a -- that this is a Wall Street concoction is ridiculous! But what they like is tort reform because their clients are for it.

SHIELDS: I don't think Wall Street's offered to do this pro bono, Bob.

CARLSON: Yes!

SHIELDS: Al Hunt?

HUNT: Well, there is no looming crisis. There's not even a crisis in 2018 or anywhere else. Among other things, that makes terribly pessimistic assumptions, which I'm sure Robert Novak, as an optimistic person, wouldn't want to make. But this will be the biggest political-economic fight at least since Medicare 40 years ago and perhaps since Social Security was enacted 70 years ago, Mark.

SHIELDS: Fight now, this year.

HUNT: Right. There are three -- and we're not even at the bottom at the first inning, Kate's right. There are three overarching political realities. First of all, Republicans have got to come away with some private accounts or it's just a stinging defeat for them. Democrats -- you cannot get sufficient Democratic support if you're going to borrow $2 trillion in transition costs. So to get sufficient Democratic support, there have to be tax increases. And thirdly, for all the machinations about senators getting together and talking, the pivotal figure in whether this is done or not done successfully will be Bill Thomas, the House Ways and Means Committee chairman.

CARLSON: Hey, Mark, wait...

O'BEIRNE: Actually, the system is in -- the system is in trouble. Of course, Al, look at the demographics of it, too few workers in the future for too many retirees!

HUNT: Over the long term, it's a problem.

O'BEIRNE: So they clearly have to do something about it. And I think the business lobbying community might get more enthusiastic about the president's kind of plan when they realize what kind of taxes they're all going to have to pay if the Democrats are the ones who...

(CROSSTALK)

SHIELDS: I want to go to Margaret. Just one point. The entire shortfall projected over the next 75 years, that is more going out than coming in in Social Security, does not equal the amount of the president's tax cuts...

NOVAK: That's not true!

SHIELDS: ... for the top 1 percent.

CARLSON: But wait. I'm...

SHIELDS: The top 1 percent...

NOVAK: Not true!

CARLSON: Here's the thing. I want to -- Bob mischaracterized me. I'm not saying it's not a problem, I'm saying you don't need to invade Social Security, just the way you didn't need to invade Iraq when you did. You can say it was a problem, but you don't have to make it into a crisis, so right away, you can rush through and do what you want.

And by the way, you know that "lockbox" that we made fun of Al Gore talking about? You could lock away these funds...

NOVAK: Oh, boy!

CARLSON: ... it'd be a lot better.

NOVAK: You know -- you know, let's -- let's be honest with each other for once.

SHIELDS: It's a good idea.

NOVAK: It's a good idea, Al.

(CROSSTALK)

NOVAK: The reason the Democrats oppose these personal accounts is that they don't want all these stockholders. When you're a stockholder, when you're getting dividend checks, you're much less apt to be the people who want Andrew Jackson's populist party to win elections.

CARLSON: Yes, if you have retired...

O'BEIRNE: They want people to...

(CROSSTALK)

O'BEIRNE: They want people dependent upon government, and they want to be...

CARLSON: No!

(CROSSTALK)

CARLSON: Mark, if you had retired between 2002 and 2003, you would really be hurting if you had invested...

HUNT: The political evidence...

CARLSON: ... this money in the stock market.

HUNT: ... for what Bob charges is very, very flimsy. But let me just tell you something. I -- there is no looming crisis. There may be a long-term problem. But I'll tell you, you know, we get distracted. The long-term financial problem for Medicare is twice...

SHIELDS: Twice as -- twice as serious!

HUNT: ... what it is for Social Security. That qualitatively and quantitatively...

(CROSSTALK)

SHIELDS: I just -- unlike Bob, I don't ascribe sinister or venal motives to you or to Kate or to conservative friends.

NOVAK: Well, I...

(CROSSTALK)

SHIELDS: I think Social Security was created so that people would face their twilight years with some sense of dignity and security, and it's worked.

NOVAK: And -- and...

SHIELDS: And my God almighty, they just see that as this great, big pot of money...

NOVAK: And the...

SHIELDS: ... and they want to get a little piece of it!

NOVAK: And the people...

O'BEIRNE: The government...

(CROSSTALK)

O'BEIRNE: It was a noble promise the government can't any longer keep...

NOVAK: Because you know why?

(CROSSTALK)

NOVAK: Because those people thought they were going to die at the age of 60. And they don't. They live on, like I am!

(LAUGHTER)

CARLSON: If you took the 20 percent of the revenues lost to tax cuts, you could solve Social Security overnight.

SHIELDS: Overnight.

CARLSON: Yes. Done.

SHIELDS: Why don't you do it, Margaret?

CARLSON: Done. Yes. Give it back.

SHIELDS: Next on THE CAPITAL GANG, who will lead the Democrats?

(COMMERCIAL BREAK)

SHIELDS: Welcome back. A survey of Democratic National Committee members conducted by the "National Journal's" "Hotline" with 42 percent of the members responding shows the race for Democratic National Committee chairman to be a two-man contest between former Vermont governor Howard Dean and former Texas congressman Martin Frost.

(BEGIN VIDEO CLIP)

HOWARD DEAN (D), FORMER VERMONT GOVERNOR: You want to know my Southern and Western strategy? Show up. People will respect you, and they won't respect you if you don't show up. You want to know why we have a tough time as Democrats? Because we don't show up.

MARTIN FROST (D), FORMER TEXAS CONGRESSMAN: I think national security is an issue that this party should never concede. We're the party that stands for a strong America. We're the party that wanted to create the Homeland Security department.

(END VIDEO CLIP)

SHIELDS: Meanwhile, Senator Edward Kennedy indicated the kind of chairman that he wants with this indictment of Republicans.

(BEGIN VIDEO CLIP)

KENNEDY: They exploit the politics of fear and division, while ours is a politics of hope and unity. In the fact of their tactics, we cannot move our party or our nation forward under the pale colors and timid voices.

(END VIDEO CLIP)

SHIELDS: Al Hunt, who has the upper hand in this contest to head the Democratic National Committee?

HUNT: Well, "The Hotline" is right. As of today, Howard Dean clearly has the most votes. The issue is whether the anti or stop- Dean forces can coalesce behind one candidate and stay -- and stay together.

Mark, I don't know if Howard Dean would be a good or a bad chairman, but I think the ideological factors in this race are vastly overrated. One congressman, who -- Democratic congressman who's not supporting Dean points out there are several things you want from a party chair. You want a Democratic Party chair who's going to relentlessly criticize the president, because that's what the opposition party chairs do. Dean will certainly do that. You want a party chair who can raise a lot of money. Howard Dean's proven he can do that. And this guy says the bonus is that Dean's promised if he wins, he won't run for president in 2008.

SHIELDS: Kate, what's your assessment of the race?

O'BEIRNE: Well, if the -- I'll say this. "National Review" this time is not going to endorse Howard Dean...

NOVAK: I thought they did already?

O'BEIRNE: ... for DNC chair.

NOVAK: In fact, there's a little squib... O'BEIRNE: We endorsed him for the presidency, and I'm afraid it backfired because cooler heads then prevailed. I wonder whether or not his ranking in the poll for chairman, roughly 30 percent, will -- is like his ranking when he was leading the polls in the primary voters. It wound up being his ceiling. Cooler heads prevailed. And of course, they went someplace else.

Look, if the Democrats think that an anti-war Northeast liberal is just the ticket, who blew $50 million on his presidential race, more power to them. They've got a candidate in Howard Dean.

SHIELDS: Hey, Howard Dean, whatever else he did, Bob, brought an awful lot of new people in and...

NOVAK: I've heard you say that a hundred million times.

SHIELDS: No, he really did.

O'BEIRNE: Where were they in November?

SHIELDS: He really did.

NOVAK: You keep -- you keep saying it...

SHIELDS: No, he did.

(CROSSTALK)

SHIELDS: Small contributions. Have you ever seen anybody match it in small contributions?

NOVAK: Well, he...

O'BEIRNE: (UNINTELLIGIBLE) disaster.

NOVAK: Let me -- I'll tell you, very interesting -- my litmus test of whether a Democrat has passed the sanity test is whether they think Howard Dean's a good thing for the party. If you think he is really a good thing for the party, as -- as -- as unstable as he seems to be, you got some serious problems. Now, Martin Frost is really dull, and a chairman out of power shouldn't be dull. But he's the best -- apparently, the best alternative to -- to Dean that there is right now. And I would -- everybody I talk to -- of course, the Democrats I talk to are fairly reasonable people. They -- they seem to think...

(LAUGHTER)

NOVAK: They seem to think...

SHIELDS: If they talk to you, they must be, Bob, right?

NOVAK: They seem to think that Frost should get it.

SHIELDS: Margaret Carlson?

CARLSON: Well, if you want a really dull guy who can't talk on TV, then Frost would be your person.

Listen, this only matters for a year to 18 months before the candidates start emerging, but one of things you need is somebody who can actually, you know, put three sentences together on TV and explain what your party's about. Howard Dean is actually good at that.

What I find curious -- what I find curious is that there hasn't been a stop-Dean movement of any force.

NOVAK: Oh, no?

CARLSON: Of any force, yes.

NOVAK: Oh, no? Are you kidding?

CARLSON: Well, it's not working. It's -- it's...

NOVAK: Well, what do you mean it's not working?

CARLSON: It's certainly not...

NOVAK: He's only...

CARLSON: It's certainly not working. There's one thing we've forgotten about Howard Dean, is that before he ran for president, he was elected chair of the National Governors Association by Republicans, by the way, because he wasn't considered such a liberal. He was actually considered a moderate governor. Part of what he did during the campaign was to position himself to the left because he saw that.

O'BEIRNE: I think in the minds of most people, though, Margaret, he sort of redefined himself as a liberal.

CARLSON: I think he -- I -- I think he...

O'BEIRNE: I think he has.

CARLSON: ... did, but...

O'BEIRNE: Let me just say one thing...

CARLSON: ... when you listen to him...

O'BEIRNE: ... that surprised me...

CARLSON: ... he makes sense.

O'BEIRNE: Listening to Senator Teddy Kennedy this week was just unbelievable. He apparently is representing, pretty angry guy himself, a minority view in the minority party. All of the ideas he had -- national health insurance, free college for everyone, let's pull out of Iraq...

NOVAK: (UNINTELLIGIBLE) O'BEIRNE: ... not a single one of them was endorsed by Senator John Kerry, his own candidate, which I think should tell the senator that he is representing a very small...

HUNT: Kate, the one thing that...

(CROSSTALK)

HUNT: The one thing that would not describe Ted Kennedy is angry. I mean, he is a...

SHIELDS: No.

HUNT: He is a full, active player...

O'BEIRNE: He certainly sounds angry!

HUNT: ... and will be...

(CROSSTALK)

NOVAK: Let me -- let me...

CARLSON: The last stop-Dean movement...

NOVAK: Let me say that Bill...

CARLSON: ... yielded Kerry, by the way.

NOVAK: Bill Richardson, the governor of New Mexico, chairman of the Democratic Governors Association, says that what the party needs as a chairman is a moderate from a red state, and that...

O'BEIRNE: Zell Miller was right!

NOVAK: And that is -- that certainly is not Howard Dean.

SHIELDS: Well, I think if the Democrats want to listen to the advice of Kate O'Beirne and Bob Novak...

O'BEIRNE: We're trying to help!

SHIELDS: ... you know, I mean...

(CROSSTALK)

SHIELDS: It's been so good so often in the past -- I mean, think of Bob's nominees in the past, which have been so helpful to the party's future. So I think we heed them with all the respect they deserve.

NOVAK: I appreciate those kind words.

SHIELDS: Coming up next in the second half of THE CAPITAL GANG: Is Newt Gingrich running for president? That's our "Sidebar" story of the week. We'll go "Beyond the Beltway" to Sacramento, where Arnold Schwarzenegger begins his second year as governor of California. And our "Outrages of the Week." That's all after these latest news headlines.

(COMMERCIAL BREAK)

(NEWSBREAK)

SHIELDS: Welcome back to the second half of THE CAPITAL GANG.

Former Speaker of the U.S. House Newt Gingrich was asked this week if he was planning to run in 2008 for president. He replied, "Anything seems possible. I don't think it's very likely. On the other hand, if I have an impact on public policy and do it in a way that is exciting and positive, why wouldn't I want to do that?"

In his new book "Winning the Future, a 21st Century Contract With America," Gingrich criticizes President Bush's handling of the war in Iraq.

Bob Novak, is Newt Gingrich really thinking about running or is he just out there trying to sell books?

NOVAK: Would you believe it if I said both? I think he wants to sell books. He's never really had a runaway best seller. Nobody here has at this table but he would really like to sell a lot of those books. I've got a copy of the book. I think it's (UNINTELLIGIBLE).

SHIELDS: Did you buy it?

NOVAK: No. He gave it to me and I think it's going to be hard to make that a best seller. The second thing is he's always wanted to run for president. He wanted to run for president, believe it or not, in '96.

SHIELDS: That was his time.

NOVAK: '96.

SHIELDS: That really was.

NOVAK: And he still is very vigorous and there's no -- there's no frontrunner. There's no -- the field is wide open for 2008 and he just might do it. I think he would really enjoy it. Whether the country would enjoy it that much we can discuss later.

SHIELDS: Margaret, in 1995, I made the first trip Newt Gingrich made out of Washington to New Hampshire.

CARLSON: right.

SHIELDS: And I have never seen such press attention and popular excitement for any candidate.

CARLSON: Right.

SHIELDS: And I mean that. I mean it was just remarkable. He was walking on water then and '96 was the year.

CARLSON: Well, remember when he went to meet with Clinton, ostensibly that handshake with Clinton and he had a book on every chair.

SHIELDS: Yes.

CARLSON: Merging the will he or won't he run with the book. He had two books. Actually the novel, the more interesting one, called "1945" with the pouting sex kitten and other things which wouldn't quite fit in with the family values that the -- that the Republicans like.

Listen, he's a highly amusing and interesting speaker and thinker and even writer and, like Hillary, he energizes the other side. There's that, almost like Howard Dean.

He's a great, you know, he's one of the -- Mario Cuomo, Newt Gingrich, Bill Clinton, Howard Dean can give a speech that's a speech and for that reason I hope he does run. But I do agree it was that year when we were in New Hampshire. That was his moment.

SHIELDS: Kate, your sense of it, I mean does it make sense for Newt Gingrich to think about 2008 as a presidential candidate?

O'BEIRNE: I don't think it does.

SHIELDS: Why?

O'BEIRNE: Politicians' policy books are rarely worth reading but Newt Gingrich is an exception. His ideas are always worth listening to. He's really good at this. He's extremely talented. Out of every ten of his ideas, because he does have a lot, half of them are really worth considering and that's a much higher percentage than most.

SHIELDS: And the other half gets you in trouble?

O'BEIRNE: The other half are the kind of things that finally exhausted his colleagues, ultimately exhausted his colleagues. There was a certain lack of discipline and whatnot but he's a real talent in the party.

I think he's a real idea guy. He had the vision when nobody did that the Republicans could actually become a majority party. It's the Newt Gingrich legacy we're seeing in the House but I don't think that spells a presidential run.

SHIELDS: Al, you've covered Newt Gingrich and I know that Denny Hastert is no Newt Gingrich in your eyes.

HUNT: The first lunch I had with Newt Gingrich was 30 years ago but I'm sure he'd love to run but he can't take a political frisk. He will not run. But he is a fascinating idea man. I'll say this as someone who has not been an altogether Newt Gingrich admirer but I think that he is -- that book, I'm going to read it, Bob, because I think, you know, I think he will really become, I think he'll have some interesting things to say.

NOVAK: Well, let me say about the interesting thing he says about the criticism of the president. I find that a lot of the people who are really out in front in getting into this war, and Newt was one of them, Newt was pounding the drums to get into Iraq and something that I was very skeptical about and Bill Kristol, Kenny Adelman, all these people are now saying it wasn't done right.

In other words, it wasn't the idea of going into Iraq was the bad idea, it's that the president screwed it up. Now it's very interesting that Newt says this when he is a member of the Defense Policy Board.

HUNT: And he has absolutely no -- wait a minute. He has no, I think you're absolutely right he has no credibility on Iraq at all. I think what might be interesting is I'm told by people in the health care field that Newt Gingrich really has some interesting original ideas on health care. On Iraq, he's just playing the game.

NOVAK: He's a member, he was appointed by Secretary Rumsfeld to the Defense Policy Board. He's attacking Rumsfeld.

HUNT: Right.

SHIELDS: Al, just explain to our viewers what do you mean by he couldn't take a frisk?

HUNT: I think that there's so much controversy in Newt Gingrich's background, you know professional and personal that I think it would be very hard for him to run for president.

NOVAK: You mean he's not as clean as Bill Clinton was.

HUNT: Bob that was a different time.

SHIELDS: And he's not running for the nomination of the party that seems...

O'BEIRNE: That doesn't care.

SHIELDS: No, that esteems clean living as exemplified by the exultation of Rush Limbaugh and Bill O'Reilly.

Coming up on THE CAPITAL GANG, classic Newt Gingrich admits violating House ethics rules eight years ago.

(BEGIN VIDEO CLIP)

ANNOUNCER: Here's your CAPITAL GANG trivia question of the week. Newt Gingrich is a recipient of which of the following honors? Is it a) Time's person of the year; b) the Pulitzer prize; or, c) a Rhodes Scholarship? We'll have the answer right after the break.

(END VIDEO CLIP)

(COMMERCIAL BREAK) (BEGIN VIDEO CLIP)

ANNOUNCER: Before the break we asked, "Newt Gingrich is a recipient of which of the following honors?" The answer is A, Time's person of the year in 1995.

(END VIDEO CLIP)

SHIELDS: Welcome back.

Eight years ago then House Speaker Newt Gingrich admitted to violating House ethics rules. THE CAPITAL GANG discussed Newt Gingrich's future on December 21, 1996. Our guest then was Republican Congressman Henry Hyde of Illinois.

(BEGIN VIDEOTAPE)

CARLSON: He's wounded because to have the wounded Speaker who had to admit that he lied to the committee as the leader of the Republican Party makes it easier for Democrats to make him look bad and roll over him.

REP. HENRY HYDE (R), ILLINOIS: I think that's kind of a loose use of the word lied. I think a lie is something you intend and he has denied intentionally misleading.

NOVAK: The Speaker is an arrogant man and he acted arrogantly. He made mistakes which he has admitted but he is going to be reelected Speaker. He's going to be Speaker for a long time.

HUNT: Gingrich knows the ethics process better than any member of the House. It's not like applying for a refund for a vacuum cleaner when you go before the Ethics Committee. You better be careful. I think the term lie probably will apply to this.

SHIELDS: Newt Gingrich obviously believed in public financing of elections. I mean he used the tax code to use tax-free dollars to organize and to underwrite his attempt to take over the Congress. There's no question about it. The penny (UNINTELLIGIBLE) personal enrichment of Jim Wright by comparison is nothing compared to what this has done.

(END VIDEOTAPE)

SHIELDS: Bob Novak, did we fail to see on the ethics violation to mark the beginning Newt Gingrich's fall from power? He was going to be Speaker for a long, long time.

NOVAK: Yes, I said he was going to be a Speaker a long, long time. I was wrong. Everybody -- I didn't see one of us who predicted his very imminent demise and he was gone in a very short time.

CARLSON: Father Hyde, the Jesuit, was defining lying for us not to include anything that Newt did but I'm still wondering about the refund for the vacuum cleaner. O'BEIRNE: Margaret, I would say I loved your vest but I'd be lying. It was the beginning of the end. It was the last election he was going to win as Speaker. The members, his members were beginning to be weary of him and beginning not to trust his judgment as they once had.

SHIELDS: And then, Al, in 1998 when Bill Clinton sixth year and he's under siege and the Republicans lost House seats was that what sealed Newt's fate primarily?

HUNT: Yes, sure it was and people just got tired of it. By the way, I wanted to swap Margaret's vest for the vacuum cleaner. That's what I was (UNINTELLIGIBLE). Newt was a brilliant guerrilla war fighter and insurgent. He always was going to wear thin (UNINTELLIGIBLE).

NOVAK: Then one of his friends once said he should never have had a job higher than chairman of the Republican Campaign Committee. He did a brilliant job at that but he was not a good Speaker.

SHIELDS: Al, do you want to give us a quick (UNINTELLIGIBLE) on warranties for vacuum cleaners?

HUNT: As I say, I think the vest and the vacuum cleaner (UNINTELLIGIBLE).

CARLSON: Yes, it's a wash, yes, right.

O'BEIRNE: She was trying to appeal to the gender gap.

SHIELDS: Kate was just lucky because she wasn't on that show.

O'BEIRNE: Exactly.

SHIELDS: Next on THE CAPITAL GANG, "Beyond the Beltway" is Arnold Schwarzenegger still golden in the Golden State?

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

In his second State of the State address, California Arnold -- Governor Arnold Schwarzenegger proposed a budget with these elements, the elimination of a $9 billion budget gap, no new taxes, cutting more than $2.6 billion from schools and $1.6 billion from transportation and providing an overall spending increase of 4.2 percent.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: ...continue on the way we have been going and bankrupting the state and making people insecure and going through this budget battles every summer through July and August.

(END VIDEO CLIP)

SHIELDS: Democrats were cautious in reacting.

(BEGIN VIDEO CLIP)

CALIF. SEN. DON PERATA (D), PRESIDENT PRO TEM: Democrats embrace and join the governor. We accept and welcome his leadership, his ability to make people feel proud about this state. He is providing the one thing California needs right now and that is bold leadership.

(END VIDEO CLIP)

SHIELDS: Earlier in the week, Governor Schwarzenegger took time to survey the damage left by landslides in La Conchita along the California coast.

Joining us now from Sacramento is "Los Angeles Times" political columnist George Skelton. Thanks for coming in, George.

GEORGE SKELTON, "LOS ANGELES TIMES": Sure.

SHIELDS: George, the governor has said his budget changes "will demand political sacrifice from all of us." Just what sacrifice is he asking and from what Californians is he asking them?

SKELTON: Well, he's not asking enough sacrifices from enough people to really honestly balance this budget, which is going to be in debt now for the last -- for three or four years in a row but who he's asking to sacrifice mostly are poor people, welfare mothers who would have their grants cut, disabled people who must live at home and have people come in and help them. The people that help them will be paid a lot less money.

Old people on SSI would not get (UNINTELLIGIBLE) and in addition to that anybody that drives a car in California is going to have to sacrifice because the governor again for the second year in a row is raiding the highway fund and virtually bringing to a halt all the local highway projects and many of the state projects. And then students going to the universities will have to pay higher tuitions.

People who are not sacrificing are people who really should be paying higher taxes, people that want services but they're not willing to pay for them out here because a lot of politicians have (UNINTELLIGIBLE) and said you don't have to pay higher taxes.

SHIELDS: Bob Novak.

NOVAK: George, the Democrats don't sound much like you. They're not nearly as tough on him as you are. Are they afraid, number one, of crossing Arnold Schwarzenegger and, two, coming out for higher taxes?

SKELTON: You bet. They're very much afraid of Arnold Schwarzenegger. Arnold Schwarzenegger has got an approval rating now of around 65 to 70 percent. He's maintained that. They don't want to cross him and they know the voters are with him, so they don't want to cross the voters either.

CARLSON: George.

SHIELDS: Margaret Carlson.

CARLSON: It sounds like the novelty of Arnold Schwarzenegger's act is not wearing off. Does that mean that he'll run for his first full term in '06 and that he'll easily win?

SKELTON: Well, nobody knows whether he'll run but the guessing is that he will because actors are not immune from the disease that people get when they get into politics and it gets in their blood. He loves the job. Everybody says he likes the power. And he still wants to do something and he hasn't come anywhere near doing anything yet.

If he runs as of now, I mean he would win easily. I mean long ago I quit saying somebody was a slam dunk but this guy is about as close to being a slam dunk as you can imagine.

SHIELDS: Kate O'Beirne.

O'BEIRNE: George, one thing the governor has -- wants to try to reform is the apportionment of seats, legislative seats in the State of California where Republicans and Democrats get the non-holy alliance and divvy the state up to make sure none of them can every be defeated. Is he being awfully naive asking politicians to cooperate in changing that system?

SKELTON: Well, like we just discussed, he's very popular with the people. There's two or three ballot initiatives floating out there right now that would do that if the legislators won't put it on the ballot and with Schwarzenegger's backing it would probably pass.

What's likely to happen here is a deal where they extend term limits. They've got very Draconian term limits in this legislature, six years in the Assembly and eight in the Senate.

A lot of people want to make it a combination of 12 years, which is fewer than now but make it all in one House if the legislators want or even go up to 16 years, which I think makes more sense.

But if the Democrats can get a deal like that and the Republicans also privately want that deal, although they're afraid to speak out against term limits, they could probably get a redistricting measure on the ballot that was bipartisan.

SHIELDS: Al Hunt.

HUNT: George, has the governor totally co-opted the conservative or right wing Republicans and then if you're so inclined give him a grade after 15 months.

SKELTON: Well, look, conservatives, Republicans are in power and they like it. I mean they can get their bills signed. They can get judges appointed. So, the real conservatives, the Tom McClintocks, they are not going to speak out against Arnold Schwarzenegger. They may vote against him once or twice but they're not going to make a habit of it. My grade on him, well I would say it depends how you grade, what you grade him on. If you grade him on politics, he's an A. If you grade him on policy, I'd put him down around a C, generous C because things really haven't changed that much since Gray Davis was governor.

SHIELDS: George, we're down to 30 seconds but, you know, Arnold Schwarzenegger's charisma manifested to the country at the Republican Convention and is obvious but what struck me when he was at La Conchita comforting the victims of the mudslide, he read everything he said. I mean is this part of his shtick? I mean Ronald Reagan could just do it off the cuff. Is Arnold Schwarzenegger just not comfortable enough to speak impromptu?

SKELTON: That surprises me because he does speak impromptu a lot. He's very good at press conferences. Of course his speeches are rehearsed but he's a good impromptu speaker but I have no idea what happened down there except that he probably had a message he wanted to get across and it was written for him.

SHIELDS: OK.

SKELTON: But, you're right. You're right. Reagan could -- that was a slam dunk for him. He was the greatest impromptu speaker of all time.

SHIELDS: I couldn't agree with you more, certainly in the Golden State that's for sure. George Skelton thank you so much for joining us.

And THE CAPITAL GANG will be back with our "Outrages of the Week."

(COMMERCIAL BREAK)

SHIELDS: And now for the "Outrage of the Week."

For President Bush's second inauguration, the administration wants to stick Washington, D.C., the city, with a bill of constructing the reviewing stands, the police overtime and all other security costs associated with inaugural events, more than $17 million. The feds are telling the city to spend money from the homeland security account.

Virginia Republican Congressman Tom Davis disagrees.

"It's simply not acceptable for the federal government to tell the District of Columbia to reallocate funds earmarked for other security needs. It's the textbook unfunded mandate asking the District to rob Peter to pay Paul." Good for you Tom Davis -- Bob Novak.

NOVAK: While liberals whine about spending for President Bush's inauguration, Bush haters plan counter inauguration celebrations, about a dozen of them, competing with each other. One of them charging $100 a head advertising the appearance of the hottest Democratic personality, Senator Barack Obama of Illinois. However, Obama never agreed to come. One group hands out stickers saying "Kerry won." The hard truth is he lost.

Next Thursday is a day of celebration for all Americans, Democrats and Republicans and bad mannered losers ought to stay home.

SHIELDS: Margaret Carlson.

CARLSON: Mark, President Bush was "pleased" CBS fired four people, although Bush himself does the opposite. No architect of the Iraqi mess, for instance, is gone.

Meanwhile, the White House let go the inspector general of Homeland Security for reporting that known felons manned airport security. Little cargo was being inspected. There was no terrorist list and that Tom Ridge spent a half a million dollars to throw a party to celebrate the mess.

After Dr. David Graham testified that Vioxx killed 55,000 people he now feels like a (UNINTELLIGIBLE) at the Food and Drug Administration.

Tell the truth in Bush land, you're dead. Screw up you get the Medal of Freedom.

SHIELDS: Kate O'Beirne.

O'BEIRNE: California's most annoying atheist lost his bid for an emergency injunction to prevent prayers at the inauguration. Every president since George Washington, who added the words "so help me God" to the oath he took with his hand on a Bible, has invoked God at his swearing in.

Our founders' view is crystal clear but federal courts have grown increasingly hostile to religious expression in the public square and some decisions do lend support to banning God from inaugurations. We can only pray that the wrong judge won't hear the next challenge.

SHIELDS: Al Hunt.

HUNT: Let's knock off all this talk from armchair sports pundits about how early entries to the NBA have diminished college basketball. It doesn't get any better than this afternoon's Wake Forest/North Carolina game, won decisively by they way by the Deacons, my alma mater.

The purpose of college sports is fierce competition between student athletes forging fierce loyalty from their followers. After half a season, this may be one of the most competitive and one of the best college hoop seasons ever.

SHIELDS: That's of course because Wake Forest, Al's alma mater, won this afternoon.

This is Mark Shields saying good night for THE CAPITAL GANG.

Coming up next, "ROAD TO THE GOLD," the winner, there's a preview of the Golden Globe Awards.

Thank you for joining us.

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


Aired January 15, 2005 - 19:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: Live from Washington, THE CAPITAL GANG.
MARK SHIELDS, HOST: Welcome to THE CAPITAL GANG. I'm Mark Shields, with the full GANG: Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

President Bush announced his second nomination for secretary of homeland security. It was a surprise, Michael Chertoff, who became a U.S. appeals court judge two years ago, after heading the Justice Department's criminal division for the first two years of the Bush administration.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: When Mike is confirmed by the Senate, the Department of Homeland Security will be led by a practical organizer, a skilled manager and a brilliant thinker.

(END VIDEO CLIP)

SHIELDS: In interviews to begin his second term, the president for the first time admitted mistakes in challenging Iraqi insurgents to "bring it on" and in promising to get Osama bin Laden "dead or alive."

(BEGIN VIDEO CLIP)

BUSH: I guess it's not the most diplomatic of language. Laura, as a matter of fact, chewed me out right after that. So I -- I do have to be cautious about, you know, conveying thoughts, as -- in a way maybe that doesn't send wrong impressions about our country.

(END VIDEO CLIP)

SHIELDS: Margaret Carlson, what message is President Bush sending, first in his nomination of Michael Chertoff and then in his admission of past mistakes?

MARGARET CARLSON, CAPITAL GANG: Well, I guess it's a good idea to say that those were what they were, which were, you know, childish statements. But the real mistake he admitted this week was that someone like Bernie Kerik, who could be an extra in "The Sopranos," was not the right kind of nominee for Homeland Security. Michael Chertoff is much closer to what's needed. And he's right to call Chertoff a brilliant thinker. I think most lawyers think he's got a great mind. But what's needed at Homeland Security really is the best police chief in America should come and do that job, or someone similarly skilled. To bring in somebody who's not a career prosecutor but a political prosecutor -- he tormented Hillary Clinton during Whitewater -- I think sends the wrong message. You really -- this is a department -- you might bring your buddy into Commerce because it doesn't matter, but you want to hire somebody at Treasury who really knew finance. It's the same thing with Homeland Security. It would be a good idea to get somebody who knows something about it.

SHIELDS: Kate O'Beirne, you had the feeling with Bernie Kerik that this was an infatuation on the part of George W. Bush. He really -- he just was excited about that one. This is a more sensible, practical choice on the part of Bush. I mean, it wasn't one made out of the emotion, it seemed, that the...

KATE O'BEIRNE, CAPITAL GANG: Yes. No, I think...

SHIELDS: ... Bernie Kerik was.

O'BEIRNE: I think that's absolutely true. I think the president was sort of wowed by Bernie Kerik's biography. The message I got, regardless of whatever message they're sending, is that this administration is extremely fortunate. I think Bernie Kerik was a bad choice. They were lucky enough to have his nomination crash and burn for obvious reasons. There's no evidence that he -- that he had the kind of managerial experience you'd need. He knows nothing about the federal system. So I think he would have been a really poor choice. They were lucky.

Michael Chertoff, they're extremely lucky again. He's willing to leave a lifetime appointment on a federal bench, what so many brilliant lawyers aspire to, and he's willing to give it up, take over a very challenging department at a really challenging time. Being brilliant's not enough, Margaret, I agree. But it's certainly not a bad beginning. He does understand the federal government. He is a talented prosecutor. He has managed a U.S. attorney's office. People who've worked with him at the Justice Department rave about his skills.

SHIELDS: Bob Novak, in spite of the controversy about his involvement in the Patriot Act, he's already been endorsed by liberals like David Cole (ph), the Georgetown law professor and great civil libertarian, by Jon Corzine and Frank Lautenberg, Democratic senators from New Jersey, and Chuck Schumer. I mean, will he sail through? And should he?

BOB NOVAK, CAPITAL GANG: He will sail through. Whether he should without getting a deep inquiry, I have some doubts. You know, by the way, he was so popular on his appeals court judge nomination, the only person who voted against him was Hillary Clinton, for obvious reasons.

I think it's a very significant shift because in -- in Bernie Kerik, they tried to get somebody who was an outsider, who brought something to the table that wasn't the inside gang. And it was such a catastrophe that he's back now to a cabinet which is very much concerned -- dominated by Bush insiders.

Let me say a couple of words about Chertoff. Chertoff, when he was at the Justice Department, was Mr. No. He was the person who refused to give any information to Congress on the outrageous performance of the -- of the FBI in Boston years ago, where murders were committed. He was the guy who said -- he was the guy who led the executive privilege thing, which I think was very dubious, very -- very disinclined to ever go beyond the company solution.

So I think he's going to get a good -- he's going to have an easy confirmation, but I don't think he should have.

SHIELDS: Al Hunt.

AL HUNT, CAPITAL GANG: Well, first of all, on George Bush's mea culpas, the problem with Iraq is not one of rhetoric, it was the tragic miscalculation in failing to adequately prepare for the post- invasion occupation.

But on Bernie -- on Bernie Kerik's successor as the nominee, Michael Chertoff, I agree with most of what was said here. First, he's obviously a lot better than Bernie Kerik. You know, Michael Chertoff (UNINTELLIGIBLE) doesn't even have a mistress, much less cheat on her. I mean, Bernie Kerik was a disastrous appointment, and this guy is every bit as smart as Margaret said, and I think he will -- he'll be easily confirmed, as Bob suggested.

I hope -- I agree with you, I hope there's more scrutiny. I think he's been insensitive to civil liberties. I think there's some things he tried to stonewall. But I'll tell you the biggest challenge, Mark, I think he faces. I think -- Margaret, I disagree with you. I think he's perfectly adequate as a cop in this. I think managing that department -- very few government reorganizations work. None have worked in the last 50 years, other than EPA, and the jury's still out on Homeland Security.

NOVAK: I think it's very interesting, though, to see whether they go back into his role in the out -- most outrageous example -- one of the most outrageous examples of executive privilege I have seen, on the Boston FBI case.

HUNT: You're right about that.

SHIELDS: Last word, Bob Novak. THE GANG of five will be back with the great Social Security debate. Stay tuned.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. The president and vice president stepped up their campaign for a major revision of the Social Security system.

(BEGIN VIDEO CLIP)

BUSH: If you're 20 years old, in your mid-20s, and you're beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now.

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: Personal accounts would not merely help the nation resolve the long-term challenges to Social Security, they would continue a great American tradition of upward mobility and individual independence.

(END VIDEO CLIP)

SHIELDS: Democrats signal that there is no room for compromise.

(BEGIN VIDEO CLIP)

SEN. EDWARD M. KENNEDY (D), MASSACHUSETTS: We must oppose it, and we will defeat it. We will not let any president turn the American dream into a nightmare for senior citizens and a bonanza for Wall Street.

(END VIDEO CLIP)

SHIELDS: Kate O'Beirne, before we have a specific plan before us, is anybody winning this debate?

O'BEIRNE: No, Mark. I don't think the shape of the debate is yet set. We're getting there. The administration, I think, has to make a decision. You see them doing both at the moment. Is there a form based on the case that there's a looming crisis in Social Security, or is it based on the affirmative appeal of a new deal for younger workers, the ability to take some of their Social Security taxes and privately invest in an account they own.

The problem with the looming crisis, it seems to me, which is what President Bush was emphasizing this week, is the talk about the trust fund going bankrupt in the year 2042. Well, I am the mother of one of those younger workers, a 25-year-old, who's going to be 62 when that happens. I don't think it strikes him and his contemporaries as a particularly -- particularly concrete problem they ought to be worrying about. And of course, it permits the Democrats to just say, There's no crisis, there's no crisis. We don't have to do anything, even though Bill Clinton spent all of 1998 talking about the Social Security crisis.

SHIELDS: But Margaret Carlson, this is a program that's never bounced a check in 20 years, never -- 70 years, never missed a payday. And there's something...

CARLSON: Yes...

SHIELDS: No, it's something that people have come to rely upon...

CARLSON: And by the way...

SHIELDS: ... and depend upon.

CARLSON: ... has the lowest -- the lowest cost of any -- you know, when you say "government waste" -- it costs far less than 1 percent to get these checks out the door, and we don't even know what it's going to cost when Wall Street gets in on it.

You know, the Democrats were criticized for scaring old people. Well, Republicans are trying to scare young people. And actually, it's a lot harder because, as you say, they just don't see this crisis really affecting them.

Why is that funny, Bob? You're an old person, and we can't scare you, either. And it's really too bad.

(LAUGHTER)

SHIELDS: He scares people!

CARLSON: Because I would love to be able to scare you!

But here's the thing. The problem they're describing doesn't fit with the solution. You could, say, raise the payroll tax by 1 percent. You could raise the age. You could lower benefits. There's a whole bunch of things you could do instead of treating this like the domestic mushroom cloud. And I don't think it's going to work domestically the way it worked on Iraq. You get one of those crying wolf per administration.

SHIELDS: Hey, Bob, even if you do accept the president's premise that the -- it's in trouble, insolvency, it's at risk, diverting money to private accounts doesn't do anything to help the solvency.

NOVAK: Yes, it does. The interesting -- the reason I was laughing, this is one of the great somersaults I've ever seen in my years in Washington because the -- Bill Clinton was out there saying what a -- We got to save this system. It's in -- it's in great jeopardy. And suddenly -- I don't know whether you people all get together in somebody's basement at night. You all got the same line. It's crying wolf, like Iraq. I've seen that analogy a hundred times. There's nothing wrong with the system.

Of course, the question is, as years go by, you're going to get -- starting in 2018, you're going to start getting into the red. It's going to get deeper and deeper in debt. And the other factor is, of course, this is a terrific system, to let people buy their own -- their own stock and investment. But the point is, they're doing a lousy job on it. And one of the things is that the lobbyist community, Mark, in town, the Republican lobbyists, don't like this -- don't like this issue because there's nothing in it for them.

SHIELDS: And their clients.

NOVAK: And their clients. The whole joke that this is a -- that this is a Wall Street concoction is ridiculous! But what they like is tort reform because their clients are for it.

SHIELDS: I don't think Wall Street's offered to do this pro bono, Bob.

CARLSON: Yes!

SHIELDS: Al Hunt?

HUNT: Well, there is no looming crisis. There's not even a crisis in 2018 or anywhere else. Among other things, that makes terribly pessimistic assumptions, which I'm sure Robert Novak, as an optimistic person, wouldn't want to make. But this will be the biggest political-economic fight at least since Medicare 40 years ago and perhaps since Social Security was enacted 70 years ago, Mark.

SHIELDS: Fight now, this year.

HUNT: Right. There are three -- and we're not even at the bottom at the first inning, Kate's right. There are three overarching political realities. First of all, Republicans have got to come away with some private accounts or it's just a stinging defeat for them. Democrats -- you cannot get sufficient Democratic support if you're going to borrow $2 trillion in transition costs. So to get sufficient Democratic support, there have to be tax increases. And thirdly, for all the machinations about senators getting together and talking, the pivotal figure in whether this is done or not done successfully will be Bill Thomas, the House Ways and Means Committee chairman.

CARLSON: Hey, Mark, wait...

O'BEIRNE: Actually, the system is in -- the system is in trouble. Of course, Al, look at the demographics of it, too few workers in the future for too many retirees!

HUNT: Over the long term, it's a problem.

O'BEIRNE: So they clearly have to do something about it. And I think the business lobbying community might get more enthusiastic about the president's kind of plan when they realize what kind of taxes they're all going to have to pay if the Democrats are the ones who...

(CROSSTALK)

SHIELDS: I want to go to Margaret. Just one point. The entire shortfall projected over the next 75 years, that is more going out than coming in in Social Security, does not equal the amount of the president's tax cuts...

NOVAK: That's not true!

SHIELDS: ... for the top 1 percent.

CARLSON: But wait. I'm...

SHIELDS: The top 1 percent...

NOVAK: Not true!

CARLSON: Here's the thing. I want to -- Bob mischaracterized me. I'm not saying it's not a problem, I'm saying you don't need to invade Social Security, just the way you didn't need to invade Iraq when you did. You can say it was a problem, but you don't have to make it into a crisis, so right away, you can rush through and do what you want.

And by the way, you know that "lockbox" that we made fun of Al Gore talking about? You could lock away these funds...

NOVAK: Oh, boy!

CARLSON: ... it'd be a lot better.

NOVAK: You know -- you know, let's -- let's be honest with each other for once.

SHIELDS: It's a good idea.

NOVAK: It's a good idea, Al.

(CROSSTALK)

NOVAK: The reason the Democrats oppose these personal accounts is that they don't want all these stockholders. When you're a stockholder, when you're getting dividend checks, you're much less apt to be the people who want Andrew Jackson's populist party to win elections.

CARLSON: Yes, if you have retired...

O'BEIRNE: They want people to...

(CROSSTALK)

O'BEIRNE: They want people dependent upon government, and they want to be...

CARLSON: No!

(CROSSTALK)

CARLSON: Mark, if you had retired between 2002 and 2003, you would really be hurting if you had invested...

HUNT: The political evidence...

CARLSON: ... this money in the stock market.

HUNT: ... for what Bob charges is very, very flimsy. But let me just tell you something. I -- there is no looming crisis. There may be a long-term problem. But I'll tell you, you know, we get distracted. The long-term financial problem for Medicare is twice...

SHIELDS: Twice as -- twice as serious!

HUNT: ... what it is for Social Security. That qualitatively and quantitatively...

(CROSSTALK)

SHIELDS: I just -- unlike Bob, I don't ascribe sinister or venal motives to you or to Kate or to conservative friends.

NOVAK: Well, I...

(CROSSTALK)

SHIELDS: I think Social Security was created so that people would face their twilight years with some sense of dignity and security, and it's worked.

NOVAK: And -- and...

SHIELDS: And my God almighty, they just see that as this great, big pot of money...

NOVAK: And the...

SHIELDS: ... and they want to get a little piece of it!

NOVAK: And the people...

O'BEIRNE: The government...

(CROSSTALK)

O'BEIRNE: It was a noble promise the government can't any longer keep...

NOVAK: Because you know why?

(CROSSTALK)

NOVAK: Because those people thought they were going to die at the age of 60. And they don't. They live on, like I am!

(LAUGHTER)

CARLSON: If you took the 20 percent of the revenues lost to tax cuts, you could solve Social Security overnight.

SHIELDS: Overnight.

CARLSON: Yes. Done.

SHIELDS: Why don't you do it, Margaret?

CARLSON: Done. Yes. Give it back.

SHIELDS: Next on THE CAPITAL GANG, who will lead the Democrats?

(COMMERCIAL BREAK)

SHIELDS: Welcome back. A survey of Democratic National Committee members conducted by the "National Journal's" "Hotline" with 42 percent of the members responding shows the race for Democratic National Committee chairman to be a two-man contest between former Vermont governor Howard Dean and former Texas congressman Martin Frost.

(BEGIN VIDEO CLIP)

HOWARD DEAN (D), FORMER VERMONT GOVERNOR: You want to know my Southern and Western strategy? Show up. People will respect you, and they won't respect you if you don't show up. You want to know why we have a tough time as Democrats? Because we don't show up.

MARTIN FROST (D), FORMER TEXAS CONGRESSMAN: I think national security is an issue that this party should never concede. We're the party that stands for a strong America. We're the party that wanted to create the Homeland Security department.

(END VIDEO CLIP)

SHIELDS: Meanwhile, Senator Edward Kennedy indicated the kind of chairman that he wants with this indictment of Republicans.

(BEGIN VIDEO CLIP)

KENNEDY: They exploit the politics of fear and division, while ours is a politics of hope and unity. In the fact of their tactics, we cannot move our party or our nation forward under the pale colors and timid voices.

(END VIDEO CLIP)

SHIELDS: Al Hunt, who has the upper hand in this contest to head the Democratic National Committee?

HUNT: Well, "The Hotline" is right. As of today, Howard Dean clearly has the most votes. The issue is whether the anti or stop- Dean forces can coalesce behind one candidate and stay -- and stay together.

Mark, I don't know if Howard Dean would be a good or a bad chairman, but I think the ideological factors in this race are vastly overrated. One congressman, who -- Democratic congressman who's not supporting Dean points out there are several things you want from a party chair. You want a Democratic Party chair who's going to relentlessly criticize the president, because that's what the opposition party chairs do. Dean will certainly do that. You want a party chair who can raise a lot of money. Howard Dean's proven he can do that. And this guy says the bonus is that Dean's promised if he wins, he won't run for president in 2008.

SHIELDS: Kate, what's your assessment of the race?

O'BEIRNE: Well, if the -- I'll say this. "National Review" this time is not going to endorse Howard Dean...

NOVAK: I thought they did already?

O'BEIRNE: ... for DNC chair.

NOVAK: In fact, there's a little squib... O'BEIRNE: We endorsed him for the presidency, and I'm afraid it backfired because cooler heads then prevailed. I wonder whether or not his ranking in the poll for chairman, roughly 30 percent, will -- is like his ranking when he was leading the polls in the primary voters. It wound up being his ceiling. Cooler heads prevailed. And of course, they went someplace else.

Look, if the Democrats think that an anti-war Northeast liberal is just the ticket, who blew $50 million on his presidential race, more power to them. They've got a candidate in Howard Dean.

SHIELDS: Hey, Howard Dean, whatever else he did, Bob, brought an awful lot of new people in and...

NOVAK: I've heard you say that a hundred million times.

SHIELDS: No, he really did.

O'BEIRNE: Where were they in November?

SHIELDS: He really did.

NOVAK: You keep -- you keep saying it...

SHIELDS: No, he did.

(CROSSTALK)

SHIELDS: Small contributions. Have you ever seen anybody match it in small contributions?

NOVAK: Well, he...

O'BEIRNE: (UNINTELLIGIBLE) disaster.

NOVAK: Let me -- I'll tell you, very interesting -- my litmus test of whether a Democrat has passed the sanity test is whether they think Howard Dean's a good thing for the party. If you think he is really a good thing for the party, as -- as -- as unstable as he seems to be, you got some serious problems. Now, Martin Frost is really dull, and a chairman out of power shouldn't be dull. But he's the best -- apparently, the best alternative to -- to Dean that there is right now. And I would -- everybody I talk to -- of course, the Democrats I talk to are fairly reasonable people. They -- they seem to think...

(LAUGHTER)

NOVAK: They seem to think...

SHIELDS: If they talk to you, they must be, Bob, right?

NOVAK: They seem to think that Frost should get it.

SHIELDS: Margaret Carlson?

CARLSON: Well, if you want a really dull guy who can't talk on TV, then Frost would be your person.

Listen, this only matters for a year to 18 months before the candidates start emerging, but one of things you need is somebody who can actually, you know, put three sentences together on TV and explain what your party's about. Howard Dean is actually good at that.

What I find curious -- what I find curious is that there hasn't been a stop-Dean movement of any force.

NOVAK: Oh, no?

CARLSON: Of any force, yes.

NOVAK: Oh, no? Are you kidding?

CARLSON: Well, it's not working. It's -- it's...

NOVAK: Well, what do you mean it's not working?

CARLSON: It's certainly not...

NOVAK: He's only...

CARLSON: It's certainly not working. There's one thing we've forgotten about Howard Dean, is that before he ran for president, he was elected chair of the National Governors Association by Republicans, by the way, because he wasn't considered such a liberal. He was actually considered a moderate governor. Part of what he did during the campaign was to position himself to the left because he saw that.

O'BEIRNE: I think in the minds of most people, though, Margaret, he sort of redefined himself as a liberal.

CARLSON: I think he -- I -- I think he...

O'BEIRNE: I think he has.

CARLSON: ... did, but...

O'BEIRNE: Let me just say one thing...

CARLSON: ... when you listen to him...

O'BEIRNE: ... that surprised me...

CARLSON: ... he makes sense.

O'BEIRNE: Listening to Senator Teddy Kennedy this week was just unbelievable. He apparently is representing, pretty angry guy himself, a minority view in the minority party. All of the ideas he had -- national health insurance, free college for everyone, let's pull out of Iraq...

NOVAK: (UNINTELLIGIBLE) O'BEIRNE: ... not a single one of them was endorsed by Senator John Kerry, his own candidate, which I think should tell the senator that he is representing a very small...

HUNT: Kate, the one thing that...

(CROSSTALK)

HUNT: The one thing that would not describe Ted Kennedy is angry. I mean, he is a...

SHIELDS: No.

HUNT: He is a full, active player...

O'BEIRNE: He certainly sounds angry!

HUNT: ... and will be...

(CROSSTALK)

NOVAK: Let me -- let me...

CARLSON: The last stop-Dean movement...

NOVAK: Let me say that Bill...

CARLSON: ... yielded Kerry, by the way.

NOVAK: Bill Richardson, the governor of New Mexico, chairman of the Democratic Governors Association, says that what the party needs as a chairman is a moderate from a red state, and that...

O'BEIRNE: Zell Miller was right!

NOVAK: And that is -- that certainly is not Howard Dean.

SHIELDS: Well, I think if the Democrats want to listen to the advice of Kate O'Beirne and Bob Novak...

O'BEIRNE: We're trying to help!

SHIELDS: ... you know, I mean...

(CROSSTALK)

SHIELDS: It's been so good so often in the past -- I mean, think of Bob's nominees in the past, which have been so helpful to the party's future. So I think we heed them with all the respect they deserve.

NOVAK: I appreciate those kind words.

SHIELDS: Coming up next in the second half of THE CAPITAL GANG: Is Newt Gingrich running for president? That's our "Sidebar" story of the week. We'll go "Beyond the Beltway" to Sacramento, where Arnold Schwarzenegger begins his second year as governor of California. And our "Outrages of the Week." That's all after these latest news headlines.

(COMMERCIAL BREAK)

(NEWSBREAK)

SHIELDS: Welcome back to the second half of THE CAPITAL GANG.

Former Speaker of the U.S. House Newt Gingrich was asked this week if he was planning to run in 2008 for president. He replied, "Anything seems possible. I don't think it's very likely. On the other hand, if I have an impact on public policy and do it in a way that is exciting and positive, why wouldn't I want to do that?"

In his new book "Winning the Future, a 21st Century Contract With America," Gingrich criticizes President Bush's handling of the war in Iraq.

Bob Novak, is Newt Gingrich really thinking about running or is he just out there trying to sell books?

NOVAK: Would you believe it if I said both? I think he wants to sell books. He's never really had a runaway best seller. Nobody here has at this table but he would really like to sell a lot of those books. I've got a copy of the book. I think it's (UNINTELLIGIBLE).

SHIELDS: Did you buy it?

NOVAK: No. He gave it to me and I think it's going to be hard to make that a best seller. The second thing is he's always wanted to run for president. He wanted to run for president, believe it or not, in '96.

SHIELDS: That was his time.

NOVAK: '96.

SHIELDS: That really was.

NOVAK: And he still is very vigorous and there's no -- there's no frontrunner. There's no -- the field is wide open for 2008 and he just might do it. I think he would really enjoy it. Whether the country would enjoy it that much we can discuss later.

SHIELDS: Margaret, in 1995, I made the first trip Newt Gingrich made out of Washington to New Hampshire.

CARLSON: right.

SHIELDS: And I have never seen such press attention and popular excitement for any candidate.

CARLSON: Right.

SHIELDS: And I mean that. I mean it was just remarkable. He was walking on water then and '96 was the year.

CARLSON: Well, remember when he went to meet with Clinton, ostensibly that handshake with Clinton and he had a book on every chair.

SHIELDS: Yes.

CARLSON: Merging the will he or won't he run with the book. He had two books. Actually the novel, the more interesting one, called "1945" with the pouting sex kitten and other things which wouldn't quite fit in with the family values that the -- that the Republicans like.

Listen, he's a highly amusing and interesting speaker and thinker and even writer and, like Hillary, he energizes the other side. There's that, almost like Howard Dean.

He's a great, you know, he's one of the -- Mario Cuomo, Newt Gingrich, Bill Clinton, Howard Dean can give a speech that's a speech and for that reason I hope he does run. But I do agree it was that year when we were in New Hampshire. That was his moment.

SHIELDS: Kate, your sense of it, I mean does it make sense for Newt Gingrich to think about 2008 as a presidential candidate?

O'BEIRNE: I don't think it does.

SHIELDS: Why?

O'BEIRNE: Politicians' policy books are rarely worth reading but Newt Gingrich is an exception. His ideas are always worth listening to. He's really good at this. He's extremely talented. Out of every ten of his ideas, because he does have a lot, half of them are really worth considering and that's a much higher percentage than most.

SHIELDS: And the other half gets you in trouble?

O'BEIRNE: The other half are the kind of things that finally exhausted his colleagues, ultimately exhausted his colleagues. There was a certain lack of discipline and whatnot but he's a real talent in the party.

I think he's a real idea guy. He had the vision when nobody did that the Republicans could actually become a majority party. It's the Newt Gingrich legacy we're seeing in the House but I don't think that spells a presidential run.

SHIELDS: Al, you've covered Newt Gingrich and I know that Denny Hastert is no Newt Gingrich in your eyes.

HUNT: The first lunch I had with Newt Gingrich was 30 years ago but I'm sure he'd love to run but he can't take a political frisk. He will not run. But he is a fascinating idea man. I'll say this as someone who has not been an altogether Newt Gingrich admirer but I think that he is -- that book, I'm going to read it, Bob, because I think, you know, I think he will really become, I think he'll have some interesting things to say.

NOVAK: Well, let me say about the interesting thing he says about the criticism of the president. I find that a lot of the people who are really out in front in getting into this war, and Newt was one of them, Newt was pounding the drums to get into Iraq and something that I was very skeptical about and Bill Kristol, Kenny Adelman, all these people are now saying it wasn't done right.

In other words, it wasn't the idea of going into Iraq was the bad idea, it's that the president screwed it up. Now it's very interesting that Newt says this when he is a member of the Defense Policy Board.

HUNT: And he has absolutely no -- wait a minute. He has no, I think you're absolutely right he has no credibility on Iraq at all. I think what might be interesting is I'm told by people in the health care field that Newt Gingrich really has some interesting original ideas on health care. On Iraq, he's just playing the game.

NOVAK: He's a member, he was appointed by Secretary Rumsfeld to the Defense Policy Board. He's attacking Rumsfeld.

HUNT: Right.

SHIELDS: Al, just explain to our viewers what do you mean by he couldn't take a frisk?

HUNT: I think that there's so much controversy in Newt Gingrich's background, you know professional and personal that I think it would be very hard for him to run for president.

NOVAK: You mean he's not as clean as Bill Clinton was.

HUNT: Bob that was a different time.

SHIELDS: And he's not running for the nomination of the party that seems...

O'BEIRNE: That doesn't care.

SHIELDS: No, that esteems clean living as exemplified by the exultation of Rush Limbaugh and Bill O'Reilly.

Coming up on THE CAPITAL GANG, classic Newt Gingrich admits violating House ethics rules eight years ago.

(BEGIN VIDEO CLIP)

ANNOUNCER: Here's your CAPITAL GANG trivia question of the week. Newt Gingrich is a recipient of which of the following honors? Is it a) Time's person of the year; b) the Pulitzer prize; or, c) a Rhodes Scholarship? We'll have the answer right after the break.

(END VIDEO CLIP)

(COMMERCIAL BREAK) (BEGIN VIDEO CLIP)

ANNOUNCER: Before the break we asked, "Newt Gingrich is a recipient of which of the following honors?" The answer is A, Time's person of the year in 1995.

(END VIDEO CLIP)

SHIELDS: Welcome back.

Eight years ago then House Speaker Newt Gingrich admitted to violating House ethics rules. THE CAPITAL GANG discussed Newt Gingrich's future on December 21, 1996. Our guest then was Republican Congressman Henry Hyde of Illinois.

(BEGIN VIDEOTAPE)

CARLSON: He's wounded because to have the wounded Speaker who had to admit that he lied to the committee as the leader of the Republican Party makes it easier for Democrats to make him look bad and roll over him.

REP. HENRY HYDE (R), ILLINOIS: I think that's kind of a loose use of the word lied. I think a lie is something you intend and he has denied intentionally misleading.

NOVAK: The Speaker is an arrogant man and he acted arrogantly. He made mistakes which he has admitted but he is going to be reelected Speaker. He's going to be Speaker for a long time.

HUNT: Gingrich knows the ethics process better than any member of the House. It's not like applying for a refund for a vacuum cleaner when you go before the Ethics Committee. You better be careful. I think the term lie probably will apply to this.

SHIELDS: Newt Gingrich obviously believed in public financing of elections. I mean he used the tax code to use tax-free dollars to organize and to underwrite his attempt to take over the Congress. There's no question about it. The penny (UNINTELLIGIBLE) personal enrichment of Jim Wright by comparison is nothing compared to what this has done.

(END VIDEOTAPE)

SHIELDS: Bob Novak, did we fail to see on the ethics violation to mark the beginning Newt Gingrich's fall from power? He was going to be Speaker for a long, long time.

NOVAK: Yes, I said he was going to be a Speaker a long, long time. I was wrong. Everybody -- I didn't see one of us who predicted his very imminent demise and he was gone in a very short time.

CARLSON: Father Hyde, the Jesuit, was defining lying for us not to include anything that Newt did but I'm still wondering about the refund for the vacuum cleaner. O'BEIRNE: Margaret, I would say I loved your vest but I'd be lying. It was the beginning of the end. It was the last election he was going to win as Speaker. The members, his members were beginning to be weary of him and beginning not to trust his judgment as they once had.

SHIELDS: And then, Al, in 1998 when Bill Clinton sixth year and he's under siege and the Republicans lost House seats was that what sealed Newt's fate primarily?

HUNT: Yes, sure it was and people just got tired of it. By the way, I wanted to swap Margaret's vest for the vacuum cleaner. That's what I was (UNINTELLIGIBLE). Newt was a brilliant guerrilla war fighter and insurgent. He always was going to wear thin (UNINTELLIGIBLE).

NOVAK: Then one of his friends once said he should never have had a job higher than chairman of the Republican Campaign Committee. He did a brilliant job at that but he was not a good Speaker.

SHIELDS: Al, do you want to give us a quick (UNINTELLIGIBLE) on warranties for vacuum cleaners?

HUNT: As I say, I think the vest and the vacuum cleaner (UNINTELLIGIBLE).

CARLSON: Yes, it's a wash, yes, right.

O'BEIRNE: She was trying to appeal to the gender gap.

SHIELDS: Kate was just lucky because she wasn't on that show.

O'BEIRNE: Exactly.

SHIELDS: Next on THE CAPITAL GANG, "Beyond the Beltway" is Arnold Schwarzenegger still golden in the Golden State?

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

In his second State of the State address, California Arnold -- Governor Arnold Schwarzenegger proposed a budget with these elements, the elimination of a $9 billion budget gap, no new taxes, cutting more than $2.6 billion from schools and $1.6 billion from transportation and providing an overall spending increase of 4.2 percent.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: ...continue on the way we have been going and bankrupting the state and making people insecure and going through this budget battles every summer through July and August.

(END VIDEO CLIP)

SHIELDS: Democrats were cautious in reacting.

(BEGIN VIDEO CLIP)

CALIF. SEN. DON PERATA (D), PRESIDENT PRO TEM: Democrats embrace and join the governor. We accept and welcome his leadership, his ability to make people feel proud about this state. He is providing the one thing California needs right now and that is bold leadership.

(END VIDEO CLIP)

SHIELDS: Earlier in the week, Governor Schwarzenegger took time to survey the damage left by landslides in La Conchita along the California coast.

Joining us now from Sacramento is "Los Angeles Times" political columnist George Skelton. Thanks for coming in, George.

GEORGE SKELTON, "LOS ANGELES TIMES": Sure.

SHIELDS: George, the governor has said his budget changes "will demand political sacrifice from all of us." Just what sacrifice is he asking and from what Californians is he asking them?

SKELTON: Well, he's not asking enough sacrifices from enough people to really honestly balance this budget, which is going to be in debt now for the last -- for three or four years in a row but who he's asking to sacrifice mostly are poor people, welfare mothers who would have their grants cut, disabled people who must live at home and have people come in and help them. The people that help them will be paid a lot less money.

Old people on SSI would not get (UNINTELLIGIBLE) and in addition to that anybody that drives a car in California is going to have to sacrifice because the governor again for the second year in a row is raiding the highway fund and virtually bringing to a halt all the local highway projects and many of the state projects. And then students going to the universities will have to pay higher tuitions.

People who are not sacrificing are people who really should be paying higher taxes, people that want services but they're not willing to pay for them out here because a lot of politicians have (UNINTELLIGIBLE) and said you don't have to pay higher taxes.

SHIELDS: Bob Novak.

NOVAK: George, the Democrats don't sound much like you. They're not nearly as tough on him as you are. Are they afraid, number one, of crossing Arnold Schwarzenegger and, two, coming out for higher taxes?

SKELTON: You bet. They're very much afraid of Arnold Schwarzenegger. Arnold Schwarzenegger has got an approval rating now of around 65 to 70 percent. He's maintained that. They don't want to cross him and they know the voters are with him, so they don't want to cross the voters either.

CARLSON: George.

SHIELDS: Margaret Carlson.

CARLSON: It sounds like the novelty of Arnold Schwarzenegger's act is not wearing off. Does that mean that he'll run for his first full term in '06 and that he'll easily win?

SKELTON: Well, nobody knows whether he'll run but the guessing is that he will because actors are not immune from the disease that people get when they get into politics and it gets in their blood. He loves the job. Everybody says he likes the power. And he still wants to do something and he hasn't come anywhere near doing anything yet.

If he runs as of now, I mean he would win easily. I mean long ago I quit saying somebody was a slam dunk but this guy is about as close to being a slam dunk as you can imagine.

SHIELDS: Kate O'Beirne.

O'BEIRNE: George, one thing the governor has -- wants to try to reform is the apportionment of seats, legislative seats in the State of California where Republicans and Democrats get the non-holy alliance and divvy the state up to make sure none of them can every be defeated. Is he being awfully naive asking politicians to cooperate in changing that system?

SKELTON: Well, like we just discussed, he's very popular with the people. There's two or three ballot initiatives floating out there right now that would do that if the legislators won't put it on the ballot and with Schwarzenegger's backing it would probably pass.

What's likely to happen here is a deal where they extend term limits. They've got very Draconian term limits in this legislature, six years in the Assembly and eight in the Senate.

A lot of people want to make it a combination of 12 years, which is fewer than now but make it all in one House if the legislators want or even go up to 16 years, which I think makes more sense.

But if the Democrats can get a deal like that and the Republicans also privately want that deal, although they're afraid to speak out against term limits, they could probably get a redistricting measure on the ballot that was bipartisan.

SHIELDS: Al Hunt.

HUNT: George, has the governor totally co-opted the conservative or right wing Republicans and then if you're so inclined give him a grade after 15 months.

SKELTON: Well, look, conservatives, Republicans are in power and they like it. I mean they can get their bills signed. They can get judges appointed. So, the real conservatives, the Tom McClintocks, they are not going to speak out against Arnold Schwarzenegger. They may vote against him once or twice but they're not going to make a habit of it. My grade on him, well I would say it depends how you grade, what you grade him on. If you grade him on politics, he's an A. If you grade him on policy, I'd put him down around a C, generous C because things really haven't changed that much since Gray Davis was governor.

SHIELDS: George, we're down to 30 seconds but, you know, Arnold Schwarzenegger's charisma manifested to the country at the Republican Convention and is obvious but what struck me when he was at La Conchita comforting the victims of the mudslide, he read everything he said. I mean is this part of his shtick? I mean Ronald Reagan could just do it off the cuff. Is Arnold Schwarzenegger just not comfortable enough to speak impromptu?

SKELTON: That surprises me because he does speak impromptu a lot. He's very good at press conferences. Of course his speeches are rehearsed but he's a good impromptu speaker but I have no idea what happened down there except that he probably had a message he wanted to get across and it was written for him.

SHIELDS: OK.

SKELTON: But, you're right. You're right. Reagan could -- that was a slam dunk for him. He was the greatest impromptu speaker of all time.

SHIELDS: I couldn't agree with you more, certainly in the Golden State that's for sure. George Skelton thank you so much for joining us.

And THE CAPITAL GANG will be back with our "Outrages of the Week."

(COMMERCIAL BREAK)

SHIELDS: And now for the "Outrage of the Week."

For President Bush's second inauguration, the administration wants to stick Washington, D.C., the city, with a bill of constructing the reviewing stands, the police overtime and all other security costs associated with inaugural events, more than $17 million. The feds are telling the city to spend money from the homeland security account.

Virginia Republican Congressman Tom Davis disagrees.

"It's simply not acceptable for the federal government to tell the District of Columbia to reallocate funds earmarked for other security needs. It's the textbook unfunded mandate asking the District to rob Peter to pay Paul." Good for you Tom Davis -- Bob Novak.

NOVAK: While liberals whine about spending for President Bush's inauguration, Bush haters plan counter inauguration celebrations, about a dozen of them, competing with each other. One of them charging $100 a head advertising the appearance of the hottest Democratic personality, Senator Barack Obama of Illinois. However, Obama never agreed to come. One group hands out stickers saying "Kerry won." The hard truth is he lost.

Next Thursday is a day of celebration for all Americans, Democrats and Republicans and bad mannered losers ought to stay home.

SHIELDS: Margaret Carlson.

CARLSON: Mark, President Bush was "pleased" CBS fired four people, although Bush himself does the opposite. No architect of the Iraqi mess, for instance, is gone.

Meanwhile, the White House let go the inspector general of Homeland Security for reporting that known felons manned airport security. Little cargo was being inspected. There was no terrorist list and that Tom Ridge spent a half a million dollars to throw a party to celebrate the mess.

After Dr. David Graham testified that Vioxx killed 55,000 people he now feels like a (UNINTELLIGIBLE) at the Food and Drug Administration.

Tell the truth in Bush land, you're dead. Screw up you get the Medal of Freedom.

SHIELDS: Kate O'Beirne.

O'BEIRNE: California's most annoying atheist lost his bid for an emergency injunction to prevent prayers at the inauguration. Every president since George Washington, who added the words "so help me God" to the oath he took with his hand on a Bible, has invoked God at his swearing in.

Our founders' view is crystal clear but federal courts have grown increasingly hostile to religious expression in the public square and some decisions do lend support to banning God from inaugurations. We can only pray that the wrong judge won't hear the next challenge.

SHIELDS: Al Hunt.

HUNT: Let's knock off all this talk from armchair sports pundits about how early entries to the NBA have diminished college basketball. It doesn't get any better than this afternoon's Wake Forest/North Carolina game, won decisively by they way by the Deacons, my alma mater.

The purpose of college sports is fierce competition between student athletes forging fierce loyalty from their followers. After half a season, this may be one of the most competitive and one of the best college hoop seasons ever.

SHIELDS: That's of course because Wake Forest, Al's alma mater, won this afternoon.

This is Mark Shields saying good night for THE CAPITAL GANG.

Coming up next, "ROAD TO THE GOLD," the winner, there's a preview of the Golden Globe Awards.

Thank you for joining us.

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