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The Lead with Jake Tapper

President Bush Immigration Plan To Give "Illegals" Guest Worker Status; Howard Dean Endorsed By Iowa Senator Tom Harkin; Has the Bush administration turned the corner in Iraq?

Aired January 10, 2004 - 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 Al Hunt, Robert Novak and Margaret Carlson. Our guest is Republican senator Chuck Hagel of Nebraska.

It's good to have you back, Chuck.

SEN. CHUCK HAGEL (R), NEBRASKA: Thank you.

SHIELDS: Good to have you here.

President Bush proposed legal status for millions of immigrant workers who are in the United States illegally.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: Out of common sense and fairness, our laws should allow willing workers to enter our country and fill jobs that Americans are not filling.

(END VIDEO CLIP)

SHIELDS: The plan came under fire from both the left and the right.

(BEGIN VIDEO CLIP - "WOLF BLITZER REPORTS")

GOV. BILL RICHARDSON (D), NEW MEXICO: Well, we're a little disappointed. Now, it's a mild step forward, but at the same time, it is not a legalized status that I think many of these individuals deserve.

REP. TOM TANCREDO (R), COLORADO: Employers would start publishing jobs, publicizing jobs availability for about $2 or $3 less an hour than they're presently paying, right? They won't get any takers. Then they'll go, of course, to this pool of workers.

(END VIDEO CLIP)

SHIELDS: Margaret Carlson, is this immigration initiative a political loser or a winner for George W. Bush in this, an election year?

MARGARET CARLSON, CAPITAL GANG: Well, in the short run, which the election is, it's a winner. It's amnesty for employers. They get the upper hand with all these workers because you have to have a single employer this whole time. And like the drug bill, the prescription drug bill, before Hispanics know that it's not good for them, they'll think that the president has -- has improved their status.

So for now, with the base it's good because of employers, and Hispanics may think he's -- that the president is a compassionate conservative on this issue.

SHIELDS: Bob Novak, Hispanics are the largest -- fastest-growing voting bloc in the country. That has nothing to do with the initiative?

BOB NOVAK, CAPITAL GANG: No. It's good politics, but it's also the right thing to do. You've got to be a very partisan Democrat, Margaret, to think this is bad for Hispanics. But I'll tell you, it brings out the worst in a lot of people. It brings out the worst in a certain kind of conservative Republican who really don't like these foreigners coming into the country.

I hear this -- I hear people talking about, Well, these aren't real Americans. They won't -- they won't learn English. They'll take good jobs away. And you've been hearing this thing for 100 years from the grandparents or parents of -- grandparents of some of the people who are sitting at this table, including me. So I -- I have no sympathy with (UNINTELLIGIBLE) It's a good move. This is a country of immigrants.

SHIELDS: Al Hunt, George Bush's proposal did tiptoe right up to the edge of amnesty and then backed off, though.

AL HUNT, CAPITAL GANG: Yes, but first, on the politics -- this is about politics, and it's a great political move for George Bush. Other -- you know, along with increasing the turnout among evangelicals, Karl Rove's biggest priority is to get a bigger share of the Hispanic vote for George Bush this time. This is clearly going to help.

I think he deserves some substantive credit, too. I agree with Bob on that. There are some flaws in this. He didn't go far enough. Most of these immigrants are not going to be able to get Green Cards, you know, as he proposed it. As Margaret said, they are too beholden to their employers. We got to do something about that. And there'll be some added costs.

But I'll tell you something. Politically, it is a terrific winner, and George Bush is in such great shape with his base that he can have a simple message for the Tom Tancredos of the world: Drop dead.

(LAUGHTER)

SHIELDS: Chuck Hagel, the -- I think the arguments are good ones. President Bush probably wasn't thrilled with the cartwheels and the -- being done by those in the restaurant business and the hotel business, that, This is great for us because we need this pool of workers, right?

HAGEL: Well, first, this is a base of principles, not legislation, not a bill. And I think the president deserves great credit for initiating this debate. This is a serious national issue. It deserves serious national debate. It's going to deserve serious national legislation. So this is not the first time, either, that he's come at this. Let's not forget, when he was elected, in the first few months of his administration, prior to September 11...

SHIELDS: That's right.

HAGEL: ... first national leader he met with -- international leader he met with was Vicente Fox. He initiated an effort at that time. September 11 came. Everything was paralyzed. This is also a president who understands the issue fairly well. Obviously, governing a border state, Texas, he knows the depth and the width of the issue.

Politically, I don't know. What I think's going to be critical here is the president stay focused on -- on the momentum, carrying through something. I don't know how likely it is that we can accomplish a bill this year because of politics. Senator Daschle and I will introduce legislation in the end of this month that will be a little more comprehensive than what the principles were that the president set down.

But nonetheless, I think it's important. I give the president credit for the leadership and the courage to go forward with it.

SHIELDS: The president's own pollster, Matthew Dowd (ph), said that if the president got the same percentage of the Latino vote, Hispanic vote, that he got in 2000, 35 percent, that he would lose the popular vote, if everything else remained the same, because the Latino vote was growing so fast, and that it would be a smaller percentage. Will this make a difference in the Latino vote?

NOVAK: I don't know if it will or not. I don't like -- those kind of calculations are ridiculous. You don't know what the turnout's going to be. You don't know how it's going to come out. But I -- I really do believe, quite apart from the politics, this is a really interesting debate in America of people resenting these people coming in to be chambermaids and to be waitresses and busboys and do a lot of jobs that Americans don't like to do.

HUNT: Well, I think you're absolutely right about that, and I resent the people who resent them. But I also resent the -- I remember the former -- Phil Gramm -- Phil Gramm used to be a senator, one of Chuck's colleagues...

NOVAK: I know him well.

HUNT: Chuck, by the way, is terrific on this issue and will be indispensable to the president. But Phil Gramm basically had a view that, Let's bring them in to clean toilets and serve food but not give them any rights. Now, that I object to as much as those who are anti- immigrants. NOVAK: Well, I think (UNINTELLIGIBLE) You know, a lot of people say that nobody asked these people to come in. Well, nobody asked their ancestors to come into this country, either.

SHIELDS: Well, it's interesting, Bob...

(CROSSTALK)

NOVAK: Oh, weren't you born here originally?

(LAUGHTER)

SHIELDS: Bob, a lot of people asked my people to come here.

(LAUGHTER)

SHIELDS: Not your people.

Chuck Hagel and THE GANG will be back with a roller-coaster week for Howard Dean.

ANNOUNCER: Your CAPITAL GANG "Trivia Question of the Week." What was Senator Chuck Hagel's occupation after he returned from military service during the Vietnam war? Was it, A, talk show host; B, car salesman; or C, school teacher? We'll have the answer right after the break.

(COMMERCIAL BREAK)

ANNOUNCER: Before the break, we asked: What was Senator Chuck Hagel's occupation after he returned from military service during the Vietnam war? The answer is A, talk show host.

SHIELDS: Welcome back. Ten days before the Iowa Democratic caucuses, former Vermont governor Howard Dean was endorsed by that state's most popular Democrat, Senator Tom Harkin.

(BEGIN VIDEO CLIP)

SEN. TOM HARKIN (D), IOWA: There is a powerful authenticity to Howard Dean. With that authentic demeanor, his toughness, his progressive beliefs and his plain speaking, he is the Harry Truman of our time.

(END VIDEO CLIP)

SHIELDS: That followed disclosure of 4-year-old comments about the Iowa caucuses made by Governor Dean.

(BEGIN VIDEO CLIP)

DEAN: And if you look at in the caucuses system, they are dominated by the special interests on both sides, on both parties.

I was talking four years ago. If I had known then what I knew now about the Iowa caucuses -- you know, Iowa's been very good to me, and I'm -- I couldn't run for president if I weren't -- if I didn't have Iowa.

(END VIDEO CLIP)

SHIELDS: The latest Iowa poll by Research 2000 shows Dean only 4 points ahead of Congressman Richard Gephardt of Missouri, with Senator John Kerry of Massachusetts in third place.

Bob Novak, you were in Iowa this weekend. Is Howard Dean actually slipping there?

NOVAK: Well, let me first say that I think that -- that Governor Dean has got a remarkable style because he says that, I didn't realize how good the caucuses were until I ran in them, and they are important to my campaign. Now I...

(CROSSTALK)

NOVAK: Now I love them. And that's the kind of stuff that has hurt him and maybe caused him to slip a little bit nationally, a little bit in New Hampshire, a little bit -- a little bit in Iowa. But as we all know, Iowa is a caucus state. People have to get out on a cold Monday night, spend a couple hours. It's an organization thing. They've got hundreds and hundreds of college students coming in for Dean from all over to work for him, labor union people coming in for Gephardt. It's very hard to poll on that thing.

But I just got a feeling that -- that Dean in Iowa was now still probable but not inevitable.

SHIELDS: Chuck Hagel, in 1988, Al Gore skipped the Iowa caucuses and said it's dominated by liberal activists. That didn't stop him from coming back in 2000 and winning 2-to-1 there. So I wonder if those remarks are going to come back and plague Dean.

HAGEL: I don't know. This is a very professional business, and you have a very small group of activists that control that process in Iowa, the caucus process. Dean's done an exceptionally good job at organization. Whether he can sustain that and hold that, I don't know.

But the bigger problem, I think, for Dean is he has been tagged as the candidate of rage. And I don't think Americans respond well to rage. I don't think they trust rage. I noted that Dean has been moving, as any candidate would, closer to the middle here lately, talking about God and Jesus Christ and values and standards and principles. He's going to have to, seems to me, to get the nomination, to sustain it within his own party, move in a more hopeful direction, talk in a more hopeful way about this country, what kind of leader he would be. The caucuses are a little different, and I think we all understand that, than what's ahead in the primaries, where more people can play.

SHIELDS: Margaret Carlson?

CARLSON: Dean sometimes reads his stage directions, a little like the first President Bush. Dean message, I care about God. He announces he's going to speak. And he committed a gaffe in Iowa, which, as Michael Kinsley says, is inadvertently telling the truth, which is that in Iowa, special interests really count. And it's going to be Dean's teenagers against Gephardt's Teamsters. That's part of it.

But you know, Gephardt and Dean have traded places there for a long time. And I think what's going to happen is that the stage has been left to Clark in New Hampshire to gain a little momentum there, and it could come down to the general versus the doctor and WalMart versus L.L. Bean.

NOVAK: That's moving ahead a week, though. I mean...

CARLSON: Well, don't -- don't let me spin forward here, but I do think that Clark is a bit of the story this week.

(CROSSTALK)

CARLSON: Yes. I'm going to stay dead still.

SHIELDS: I think you made a good point, Margaret.

CARLSON: Thank you, Mark.

SHIELDS: Al?

HUNT: I don't think that Howard Dean is the first person to change his view on the Iowa caucuses once he gets in them. I think most politicians have. I don't think it matters much. I don't think Tom Harkin's endorsement, actually, at this stage, matters much. They're kind of a wash. And we -- we're where we've been for a while. If Howard Dean wins Iowa, which he's a favorite to do now, and he wins New Hampshire, he probably has this thing all sewed up. Dick Gephardt has to win in Iowa to survive. John Kerry either has to win or finish a very strong second to stop his slippage in New Hampshire.

And I'll tell you the scenario that the Dean people most fear, and that is that Dean wins in Iowa, that Gephardt is through then, John Kerry finishes third, and then -- to jump ahead, Bob -- they go mano a mano against Clark in New Hampshire. If that happens, Clark will beat Dean in New Hampshire, and we really have a race.

SHIELDS: Clark will beat Dean in New Hampshire?

(CROSSTALK)

HUNT: Under that scenario, he will.

NOVAK: I don't know -- I don't know...

CARLSON: Bob, you allowed Al to spin ahead!

NOVAK: I don't know how you get that...

SHIELDS: What happens in South Carolina, then, Bob?

NOVAK: Who the hell knows?

(LAUGHTER)

NOVAK: Let me tell you something I picked up. Some of the people who are with Kerry feel he has made some ground, and everybody seems to think that. And he's picked up some of the upscale Iowans who were -- who were with -- with Clark -- I'm sorry, with Dean -- who were with Dean, picked those up. And they think that it is possible that little surge by Kerry could put Gephardt over the top -- possible. It'd still be a long shot. But I think Gephardt is in the picture now.

SHIELDS: John Kerry -- it's an interesting thing. John Kerry was stuck behind Howard Dean in New Hampshire, and he's moved -- he's rolled the dice in Iowa. I mean, he's basically gone to a one-state strategy, which is, I've got to -- I've got to change my position in New Hampshire by doing well in Iowa.

(CROSSTALK)

NOVAK: ... ironic if it benefits Gephardt.

(CROSSTALK)

HUNT: ... but everybody I've talked to who has seen him says John Kerry's a much better candidate...

NOVAK: He is. He is.

HUNT: ... than he was a month ago.

SHIELDS: He is a much better candidate. And remember this about Wes Clark. He has soared in New Hampshire. He's done well. He hasn't had anybody on his case. I mean, whatever you say about Howard Dean, he's had a pack of wolves after him...

HUNT: But you know, Mark...

(CROSSTALK)

HUNT: There's only eight days between Iowa and New Hampshire...

SHIELDS: You're right.

HUNT: ... and boy, it happens so fast.

SHIELDS: It does, Al. The tsunami of Gary Hart, '84.

HUNT: Exactly.

SHIELDS: I remember it well.

Next on CAPITAL GANG: Is there progress in Iraq?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP - ABC NEWS "NIGHTLINE")

COLIN POWELL, SECRETARY OF STATE: There was a sufficient body of intelligence information that suggested that there were weapons programs -- chemical, biological, nuclear. I don't think we overstated that.

(END VIDEO CLIP)

SHIELDS: That was Secretary of State Colin Powell's response to a report by the Carnegie Endowment for International Peace that the, quote, "intelligence community overestimated the chemical and biological weapons in Iraq," end quote.

In Iraq, 9 U.S. soldiers were killed when a Black Hawk medical helicopter crashed, probably hit by a missile. One U.S. civilian and 33 U.S. troops were wounded, 1 fatally, in a single attack. And U.S. authorities announced the intention to release -- the release of some 500 detained Iraqis.

Al Hunt, Has The Bush Administration Turned The Corner In Iraq?

HUNT: Yes, Mark, and the proverbial light at the end of the tunnel is there. No, I'm afraid that, to paraphrase the defense secretary, we're in for a long slog. In the four weeks since Saddam has been captured, the pace of violence and killings has actually increased. Internal strife, according to reports over there, is worse than it's ever been. We're still waiting for that -- that third multi-national division that the president talked about four months ago.

And it just seems to me that -- there's even some talk in the Pentagon of giving $10,000, $20,000 bonuses to troops to stay. They're not going to have very many takers. I think that the American forces are going to be in Iraq, tens of thousands if not hundreds of thousands, for many, many years to come. Let's just hope we can get others to help us.

SHIELDS: Chuck Hagel, you have been one of those voices warning about the consequences of a rush to action and all the rest. Is Al right?

HAGEL: Well, I think we have to, once again, understand and put this in perspective. This is complicated. It is long-term. It is dangerous. It's uncontrollable. And what's happening now in -- in one sense, all at the same time, trying to provide the security and the stability so that we can start to make the kind of progress necessary in order to move the Iraqi people into position to govern themselves and defend themselves. Al's right. This is going to take a long time. No guarantee.

I think it's going to take far more allied involvement than we have seen. I was in New York and spent some time with the secretary general this week alone, talking about the United Nations' involvement. I have been one who's been saying for a long time they must be in this. Their role must be defined. They must have a partnership kind of status here. We can't get them in, or any other major institution, unless we're willing to share not just some of the burden, the decision-making power and the authority. And it's critical that we get them in. I think the administration has come to that realization. I think Secretary Powell has believed that for a long time, but others have not. A long way to go.

And what's critical is, I think, when we get down to that July 1 deadline, turning over to the Iraqis some kind of a transitional government, what then do we have?

SHIELDS: Bob Novak, I mean, whatever we say, pulled out 400 linguists and inspectors this week quietly, no -- no evidence of weapons of mass destruction, no chemical weapons, no biological weapons. And that was, in large part, the argument for going to war.

NOVAK: Well, I really think, unless you're a -- you want to play Democratic politics, that going over these arguments of weapons of mass destruction and al Qaeda connection -- it's irrelevant. We're there. We're going to be there for a long time. And the interesting thing to me is that a lot of the neo-cons and people in the Pentagon said this was going to be an easy thing. We'd go in there and it wouldn't be hard. It is very hard. The British could tell you, going back 60 years -- not 60 years, 80 years, it was -- it was a hard thing. And the imperial burden is a very tough thing, and that's why a lot of these people will get a lot of applause for great national purpose, running around the world instilling democracy. I think we got to be very careful. And maybe this is just a very good object lesson for us, but we got to stay there.

SHIELDS: Margaret, just a point. I could not disagree with you more strenuously, Bob, on the subject of whether it's a matter of interest or curiosity. We relied upon intelligence that was given. We relied upon -- either -- somebody out to be outraged. Either the intelligence was wrong or what they did with the intelligence was wrong. Eighty years after Pearl Harbor -- - sixty years after Pearl Harbor, we spend seminars arguing about what the administration knew and didn't know. I mean, we...

NOVAK: You want to discuss Pearl Harbor?

SHIELDS: We've got a lot -- I'm talking about...

NOVAK: I'd be happy to, if you'd like to.

SHIELDS: ... whether, in fact -- whether, in fact...

(CROSSTALK)

NOVAK: -what Roosevelt did.

SHIELDS: ... whether, in fact, we're going into -- whether, in fact, we're going into a war again. And I mean, what it comes down to is we've had 3,000 Americans crippled and killed just to remove Saddam Hussein. If that had been the object at the beginning, that wouldn't have been an argument.

NOVAK: Well, in all -- with all due respect, that is the Democratic line!

SHIELDS: It is not a Democratic line!

(CROSSTALK)

NOVAK: I listen to you the way you listen to me.

SHIELDS: And I didn't characterize your line.

NOVAK: I said that is the Democratic line because you came back very hard at me on this, and that's the Democratic line. And I said that we are there and let's talk about the best job we can do, as Chuck Hagel did. And I agree with him we've got to have internationalization.

CARLSON: There are some Democrats and there are some Republicans. It's not a line. It could be right. Just because the Democrats say it doesn't make it wrong, Bob, that the intelligence was markedly wrong or it was hyped so that, you know, Colin Powell could say, Well, it was prudent to follow it.

What I think now is, boy, we are there, and boy, we do have to stay. But just as Colin Powell moved to follow the administration in his testimony before the Security Council -- and we all kind of -- so many people followed Colin Powell's pivot on the subject -- now the administration has to go with Secretary Powell and do everything they can to get the U.N. involved because that way, when this moment comes, which the -- you know, we're getting out, so the administration says, we'll have a U.N. force to take over.

SHIELDS: Chuck Hagel, how long are we going to be there?

HAGEL: Oh, we'll be there years. I don't know how many years, but we'll have over 100,000 troops in there all this year, probably next year. I don't know. This is unpredictable, uncontrollable. But some...

CARLSON: But the administration has said, Well, we're pulling out. We're turning it over this summer.

HAGEL: Well -- well, that's not exactly what they've said. We're still going to be there. We'll have to be there. What they've said, and they should say, is that more authority given to the Iraqi people to govern Iraq is in the best interests of all of us. That's what we're talking about, is the authority of governing.

SHIELDS: Chuck Hagel...

HUNT: I'm all for that, Chuck. I just think they're not ready for it.

SHIELDS: Chuck Hagel, thank you very much for being with us.

HAGEL: Thank you.

SHIELDS: Coming up in the second half of CAPITAL GANG, "Beyond the Beltway" looks at the challenge to Senator Tom Daschle in South Dakota -- we'll talk with political reporter David Kranz -- the CAPITAL GANG "Classic" and "Outrage of the Week." And straight ahead, Robert Novak is "On the Beat" in Iowa with presidential hopeful Dick Gephardt.

(COMMERCIAL BREAK)

(NEWSBREAK)

ANNOUNCER: Live from Washington, THE CAPITAL GANG.

SHIELDS: Welcome back. Twelve years ago, Bill Clinton. Welcome back to the second half of CAPITAL GANG. I'm Mark Shields, with Al Hunt, Robert Novak and Margaret Carlson.

Robert Novak was on the beat this week in Iowa, following the presidential campaigns of Congressman Richard Gephardt of Missouri. Bob.

NOVAK: Dick Gephardt, at age 62, could be entering his last week as a major political player (UNINTELLIGIBLE) in the Iowa Democratic caucuses a week from tomorrow night.

(BEGIN VIDEOTAPE)

NOVAK (voice-over): But addressing small groups in rural Iowa this week, he hardly raised his voice. There was none of the anger Democrats are supposed to feel as he expounded the old time liberal Midwest religion of Hubert Humphrey and Walter Mondale.

At Sam's Soda and Sandwiches in Carroll, Iowa, he defended rolling back the Bush tax cuts for everybody.

REP. RICHARD GEPHARDT (D-MO), PRESIDENTIAL CANDIDATE: Now, I am sure Bush will argue when we get to the debates, well, Gephardt wants to take away that big tax cut I gave you. Well, you better look closer. This plan does better than the Bush tax cuts just in terms of sheer monetary input into families.

NOVAK: The long-time House Democratic leader ignored the issue of the war in Iraq, which Howard Dean has ridden to the head of the presidential pack. He did chastise the former governor of Vermont for being too fiscally conservative.

GEPHARDT: Governor Dean opposed our position on Medicare in the mid-'90s, when the Republicans were trying to cut it by $270 billion. In fact, Bill Clinton and I had to sustain going through a government shutdown. Howard Dean agreed with the Republican position. He also said at a similar time period that he felt that Medicare was the worst federal program ever. I just disagree with him.

(END VIDEOTAPE)

NOVAK: Dick Gephardt is betting that Iowa Democrats care more about health care than Iraq. We'll find out a week from Monday night. Mark. SHIELDS: Al Hunt, can the old, reliable politics save Dick Gephardt in Iowa?

HUNT: You know, I suspect not, Mark, but Dick Gephardt is the most experienced, the most knowledgeable and perhaps the most decent candidate in this race, and he's right, health -- I think not only Iowa Democrats, but Americans care more about health care than about Iraq or about tax cuts.

But somehow, Dick Gephardt is depicted, is seen as yesterday, and that's why even such fair-weather old allies as Al Gore and Tom Harkin deserted him.

SHIELDS: Margaret, I don't know any even critics of Gephardt who don't argue that he would be more competitive in states like Ohio and Michigan and Missouri than Howard Dean would be.

CARLSON: The smokestack states, and old people like yesterday, so among older voters I think it's a question of is Howard Dean really bringing all these new people into the caucuses in Iowa? It's hard to know. People predict that instead of 60,000 people at the caucuses, there might be 130,000 to 150,000. At least that's what they're preparing for. So there is a wild card element that we don't know. Who are the new people? If they're Deanie babies, that's bad for Gephardt.

SHIELDS: Bob, one of the things that strikes you as -- this is a great test, the people that do all the work for the party, year in and year out, who go to the dinners, who stuff the envelopes, all of a sudden they show up on election night, and they're joined by people they've never seen before.

NOVAK: Who are these people?

SHIELDS: Yeah, yeah.

NOVAK: Well, also, of course, they are bringing in 900 labor union people from out of the state, out of the state of Iowa to work for him to counter the (UNINTELLIGIBLE) crusade going on, going on...

HUNT: The Gephardt people are bringing 900...

NOVAK: Gephardt, 900. I was interested when I was following him at a few stops that he never mentioned the war, and he was never asked about the war. And I asked Congressman Gephardt about that, and he said, you know, he said, the people I talk to are more interested in jobs, they're worried about the closing down of factories in Iowa, decline of the family farm, which Hubert Humphrey told me it was imminent in 1960, but it is still going on. And he is saying those are the things people really care about, that the war is, you know, people -- it's probably more popular than unpopular with the Democrats of Iowa.

SHIELDS: I may take question with that, based upon one theory that the Iowa National Guard being on active duty right now, I think there is a certain (UNINTELLIGIBLE). But one thing is interesting is Dick Gephardt may be winning the argument but not carrying the day. I mean, as the number of Democratic candidates have moved closer to his position, touting NAFTA and its, you know, genius ability to resolve the immigration crisis, which the president's initiative indicates hasn't been resolved.

CARLSON: Yeah. Well, everyone is questioning NAFTA, so he's not alone there.

NOVAK: I'm not questioning NAFTA.

CARLSON: No, I don't...

(CROSSTALK)

CARLSON: You're like an alien creature.

NOVAK: Do you question NAFTA?

HUNT: I think we are better off having NAFTA.

NOVAK: Yeah.

SHIELDS: Go ahead, Margaret.

CARLSON: Gephardt is really the Democratic wing of the Democratic Party. He is labor, he's for jobs, he's for health care. So we'll see if Dean is what he says he is, the Democratic wing, or whether Gephardt is. We'll find that out in Iowa.

NOVAK: He never yells, he never raises his voice, unlike...

(CROSSTALK)

SHIELDS: In spite of Mr. Novak...

HUNT: Thoroughly good human being.

SHIELDS: Yes, I agree. In spite of Mr. Novak and Mr. Hunt, the majority of Americans, plurality of Americans have doubts and skepticism about NAFTA.

HUNT: You're right.

SHIELDS: Coming up in the second CAPITAL GANG Classic, second thoughts about another troubled Democratic frontrunner, and that was 12 years ago.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Twelve years ago, Bill Clinton, then the frontrunner for the Democratic presidential nomination, came under fire from a variety of sources. A taped telephone conversation was disclosed with him saying that New York Governor Mario Cuomo acted like a Mafioso. THE CAPITAL GANG discussed this on February 2, 1992. Our guest was then House Democratic Whip David Bonior of Michigan.

(BEGIN VIDEOTAPE)

SHIELDS: It's like a ghost train right now. The campaign is headed at good speed, but it's not going in any particular direction. There is a grave, grave doubt among other Democratic politicians who are starting to say, geez, you know, I like Bill Clinton, but is there going to be a problem, do I want to have somebody (UNINTELLIGIBLE).

NOVAK: The Democrats are certain it will look pretty good, because George Bush and the economy are looking so bad, and they're back in trouble again because there's no question that Cuomo was the frontrunner. I think he was heading for the nomination. The guys in the media think he's still alive, but the guys in the party think he's dead, and they don't know where they're going next.

REP. DAVID BONIOR (D), MICHIGAN: I think Bush is in trouble. You ought to watch his primary situation. I think Pat Buchanan can get 25, maybe 30 percent of the vote.

HUNT: I have a prediction that a big beneficiary in New Hampshire may prove to be Paul Tsongas, the sounds of Tsongas, as the Capital Steps said.

(END VIDEOTAPE)

SHIELDS: Well, Al Hunt looked pretty good, and David Bonior looked terrific, but what lesson can we draw, Bob, for this year from the premature burial of Bill Clinton's hopes in 1992?

NOVAK: I was going to say, Bonior is pretty savvy. Bonior, a politician, looked so much better than the reporters.

HUNT: Sure did.

NOVAK: I think I was listening to people in the party who thought that Clinton was dead, and these premature burials happen in these primaries all the time. You better watch it with Mr. Dean, because he kind of messes up a little bit, doesn't mean he's dying or dead.

SHIELDS: Margaret.

CARLSON: I think Dean recovers from his gaffes pretty well, even the one this week about the Iowa caucuses. For Clinton, though, we can all take a lesson in resilience. Whatever didn't kill him made him strong. It was just remarkable.

SHIELDS: Al.

HUNT: You know, Paul Tsongas did win that New Hampshire primary.

SHIELDS: He sure did.

(CROSSTALK)

HUNT: ... after the show, and that's what was so remarkable about Bill Clinton, as Margaret said, his resilience. He was incredible. He was one of the great politicians any of us will ever see. I don't see his counterpart out there today.

SHIELDS: I didn't say it on that broadcast, but I did say that Bill Clinton was carrying more baggage than United van lines, and there was no way he could win. So that just tells you what a prophet I was as well.

CARLSON: And I wasn't on the show.

SHIELDS: That's right. You...

HUNT: Mark, he's the only person ever to come back from losing the New Hampshire primary like that, before George Bush did in 2000.

SHIELDS: Yes, George W. Bush did, of course he didn't win the presidency.

Next on CAPITAL GANG, "Beyond the Beltway" looks at the challenge to Senate Democratic leader Tom Daschle in South Dakota, with David Kranz of "The Sioux Falls Argus Leader."

(COMMERCIAL BREAK)

SHIELDS: Welcome back. In South Dakota, former Congressman John Thune announced as a Republican candidate against Senate Democratic leader Tom Daschle. Immediately began debating whether the state should elect a senator to support President Bush, or to retain the leader of the opposition party.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: I've also been able to develop a very close and good relationship with the people of my state, and I'm proud of that. So I'm not sure that -- whether it's President Bush or any other celebrity is going to make that much difference.

JOHN THUNE, REPUBLICAN SENATORIAL CANDIDATE, SOUTH DAKOTA: The person with the clout in the United States Senate is going to be the one who can work in a constructive way with the majority party, with the White House, with the House.

(END VIDEO CLIP)

SHIELDS: Joining us now from Sioux Falls, South Dakota is David Kranz, political writer for "The Sioux Falls Argus Leader." Thank you for coming in, David.

DAVID KRANZ, SIOUX FALLS ARGUS LEADER: Hi, how are you.

SHIELDS: David, if John Thune could not defeat Tim Johnson two years ago for the Senate, why we consider he should have a chance against Tom Daschle in 2004?

KRANZ: That's a question he began weighing about a couple of weeks after that 2002 election. Some Republicans were telling him, you run this race and lose again, your political future is done. So as time went on, he was sorting out his decision, he started to contrast Senator Daschle's record with Senator Johnson, and he said, Daschle is far more liberal, and I think a race of John Thune versus Daschle would be easier to define for voters; Thune the conservative, Daschle the liberal. And that was one of the thins that really pushed him to the point of getting into the race.

SHIELDS: Bob Novak.

NOVAK: David, let me take a minute to say that I created quite an uproar in South Dakota with some remarks I made on this program and on "CROSSFIRE" about Native American voting, I want to say I did not intend any bias against Native Americans. I don't have any bias against Native Americans or anybody else, but I do feel, based on my reporting, that there were very serious voting irregularities in 2002 in South Dakota, which the -- I also believe that -- which the Republican Party, for political purposes, did not want to protest.

My question is, are the Republicans looking at the voting on Indian reservations in this upcoming election and worrying about taking any corrective measures on it?

KRANZ: Governor Rounds in particular is paying close attention to improving relations with the Native Americans. He's appointed a Native American to the state senate, and they are actively interested in playing this election a lot harder. They feel that they can make a case on the reservation for their side. You have some very key Native Americans, including Russell Means (ph), who tells Democrats, don't take this for granted anymore. You just can't. Tim Daego (ph), a gentlemen who announced his candidacy against Tom Daschle in the primary said the same thing. He says, hey, Democrats, don't take, you know, the Native Americans for granted.

So they've sounded out the warning shot, that on the other hand the Daschle campaign is saying, if you thought that our 2002 effort was big for Johnson, you ain't seen nothing yet. So it's going to be interesting to watch.

SHIELDS: Margaret Carlson.

CARLSON: David, in the special election in June, to replace former Congressman Janklow, Stephanie Herseth is greatly favored, and if she wins, the Democrat, is that going to effect Tom Daschle's race? In that you would have a completely Democratic congressional delegation in what's a Republican state?

KRANZ: You hear Republicans saying that, they're saying, hey, we need, you know, to make sure that we preserve one of those seats and hopefully pick up the Senate seat. And so that's become an issue out here. And so John Thune when they said, Congressman Thune, we need you to bypass the Senate race, get in this race so we can, quote, "save the Republican Party." He says, the party doesn't see -- need saving, many good Republicans in this race that can do it. And so he went to the Senate race instead.

But there are some people who believe that these Republicans, these 20 percent Republicans who oftentimes vote Democrat may choose between one of the two, and let either Daschle or Herseth fall by the wayside, and so that's part of the discussion.

SHIELDS: Al Hunt.

HUNT: Dave, as you know, in 1992, Tom Daschle ran 25 points ahead of Bill Clinton in South Dakota, but that was against a very weak Republican opponent. This time, he's got a formidable opponent. Is there any concern among the Daschle people about the top of the ticket, particularly Howard Dean being the nominee and hurting Tom Daschle in South Dakota?

KRANZ: I think their side is concerned about that, but one of the things about South Dakota when you look at it, we're pretty inconsistent with the rest of the country. We have voted for many -- we have only voted for three Democrats for president, only four governors have been Democrat. Yet we continue to have an equal opportunity seat in the United States Senate, and Democrats are comfortable that that's not going to be an issue. In fact, when you talk about the previous question of the Republican advantage of maybe trying to win all three seats, Democrats are saying, well, you've got George Bush to vote for; we'll take the other three, and they're making that case and that particular argument.

SHIELDS: David, in 2002, there wasn't a state of all the Senate races where the president devoted more attention, energy and time than he did in South Dakota, trying to help John Thune against Tim Johnson. With all due respect to the state of Mount Rushmore, it's highly unlikely that the president will be visiting South Dakota much in 2004. How will that effect the Daschle-Thune race?

KRANZ: I don't want to speak for John Thune, but I got to believe he's thinking that's OK with him, because virtually every visit by President Bush in 2002 ended up in some sort of a mess. On August 15, he went to Mount Rushmore, didn't bring aid, disaster aid to the farmers and ranchers out there, and had a little bit of a backlash. He went to Aberdeen on October 29, and a ticketing snafu left 2,000 people holding tickets standing in the cold. On November 3, he came back for a final hurrah, filled the arena, tore down the entire Republican operation for getting out the vote so they could fill the arena, and Bush's visits weren't exactly a big plus for him at that point in time.

SHIELDS: Short time, Bob.

NOVAK: Dave, do you think the fact that Tom Daschle is no longer majority leader undermines the necessity for South Dakota to keep their high position in the U.S. Senate?

KRANZ: I'll tell you this, the majority leader, minority issue is a big deal in South Dakota. I've talked to a lot of Republicans who are sympathetic to Daschle, some of that 20 percent, and I asked them, what happens if Daschle runs for reelection but does not run for minority leader? The (UNINTELLIGIBLE) over the top of the table or over the phone, I hear saying, listen, South Dakota is so often 50th in everything. We finally got somebody in the United States Senate in the position of power and influence that can get things done for the state, and oh by the way, get things done for us. So why would we throw that out?

And that becomes a real tough point for that 20 percent of the Republicans who still support or will support Democrats. It's going to be awfully tough for John Thune to go get that vote, even though that has to be one of his top priorities in this election.

SHIELDS: David Kranz, thank you again very much for being with us. You've been terrific.

KRANZ: Thank you.

SHIELDS: THE GANG will be back with "The Outrages of the Week."

(COMMERCIAL BREAK)

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

I am angry at my colleagues in the press who antiseptically discuss the nation's economy like it was a collection of statistics. They are arguing about earned run averages, or RBIs, the Dow Jones is up 25 percent, corporate profit is up 22 percent, manufacturing growth highest in 20 years, even for the 41st straight month Americans in manufacturing lost their jobs.

The economy in December produced only 1,000 jobs, not the 340,000 promised by the administration. Let's understand a fundamental truth -- the economy must serve the people, people do not serve the economy. It is about people, and it is about jobs. Bob Novak.

NOVAK: George W. Bush named as his first treasury secretary Paul O'Neill, a non-Republican, non-conservative industrialist, former bureaucrat. He was a disaster. He was not fired for two years. The pain persists.

A new book by a passionately anti-Bush journalist features nasty O'Neill quotes to be featured by CBS on "60 Minutes," with the former treasury secretary calling the president "a blind man in a room full of deaf people." The lesson for presidents, don't appoint people you don't know, who never supported you and who don't share your agenda.

SHIELDS: Margaret Carlson.

CARLSON: Mark, the president so wants to cut wages for workers that tucked away in fine print in proposed Labor Department rolls are tricks for getting around those rolls. One, give a small rise, to $22,100 so that mandatory overtime won't apply. It will be cheaper in the long run. Or cut salaries immediately, so even though eligible for overtime, the poor sap will work 50 hours but only bring in what he used to make for 40.

This and three upper-income tax cuts confirm that to the Bush administration, bosses are winners and workers are chumps.

SHIELDS: Al Hunt.

HUNT: Mark, Pete Rose, desperate to get in the Hall of Fame, admits now he bet on baseball, including his own team, when he was a manager and player. He lied about it for 14 years and now pretends he doesn't have a gambling addiction. Betting is much more serious than other obnoxious behaviors. It goes to the integrity of the game. Hypocrisy aside, "Slot Machine" Bill Bennett is right, Pete Rose is not ready for the Hall of Fame.

NOVAK: Mark, I want to raise a point that the "Washingtonian" magazine selected as one of its Washingtonians of the year our colleague, Mark Shields, for the year 2003, for his charity work. There is a picture of him there in the (UNINTELLIGIBLE) helping aged nuns. They call him a good guy, with good sense and good works, and we're proud of the (UNINTELLIGIBLE) to you, Mark Shields.

SHIELDS: Well, thank you, Bob. Thank you all.

HUNT: It should be given every year.

SHIELDS: OK. This is Mark Shields saying good night for THE CAPITAL GANG. Coming up next, "CNN PRESENTS: "Blowback, Afghanistan on the Brink." At 9:00 p.m., "LARRY KING LIVE," Tom Cruise. And at 10 p.m., a hot topic, should the Ku Klux Klan should be able to sponsor a piece of adopt a highway in St. Louis, Missouri? Plus much more.

Thank you for joining us.

END

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Worker Status; Howard Dean Endorsed By Iowa Senator Tom Harkin; Has the Bush administration turned the corner in Iraq?>


Aired January 10, 2004 - 19:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: Live from Washington, THE CAPITAL GANG.
MARK SHIELDS, HOST: Welcome to THE CAPITAL GANG. I'm Mark Shields, with Al Hunt, Robert Novak and Margaret Carlson. Our guest is Republican senator Chuck Hagel of Nebraska.

It's good to have you back, Chuck.

SEN. CHUCK HAGEL (R), NEBRASKA: Thank you.

SHIELDS: Good to have you here.

President Bush proposed legal status for millions of immigrant workers who are in the United States illegally.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: Out of common sense and fairness, our laws should allow willing workers to enter our country and fill jobs that Americans are not filling.

(END VIDEO CLIP)

SHIELDS: The plan came under fire from both the left and the right.

(BEGIN VIDEO CLIP - "WOLF BLITZER REPORTS")

GOV. BILL RICHARDSON (D), NEW MEXICO: Well, we're a little disappointed. Now, it's a mild step forward, but at the same time, it is not a legalized status that I think many of these individuals deserve.

REP. TOM TANCREDO (R), COLORADO: Employers would start publishing jobs, publicizing jobs availability for about $2 or $3 less an hour than they're presently paying, right? They won't get any takers. Then they'll go, of course, to this pool of workers.

(END VIDEO CLIP)

SHIELDS: Margaret Carlson, is this immigration initiative a political loser or a winner for George W. Bush in this, an election year?

MARGARET CARLSON, CAPITAL GANG: Well, in the short run, which the election is, it's a winner. It's amnesty for employers. They get the upper hand with all these workers because you have to have a single employer this whole time. And like the drug bill, the prescription drug bill, before Hispanics know that it's not good for them, they'll think that the president has -- has improved their status.

So for now, with the base it's good because of employers, and Hispanics may think he's -- that the president is a compassionate conservative on this issue.

SHIELDS: Bob Novak, Hispanics are the largest -- fastest-growing voting bloc in the country. That has nothing to do with the initiative?

BOB NOVAK, CAPITAL GANG: No. It's good politics, but it's also the right thing to do. You've got to be a very partisan Democrat, Margaret, to think this is bad for Hispanics. But I'll tell you, it brings out the worst in a lot of people. It brings out the worst in a certain kind of conservative Republican who really don't like these foreigners coming into the country.

I hear this -- I hear people talking about, Well, these aren't real Americans. They won't -- they won't learn English. They'll take good jobs away. And you've been hearing this thing for 100 years from the grandparents or parents of -- grandparents of some of the people who are sitting at this table, including me. So I -- I have no sympathy with (UNINTELLIGIBLE) It's a good move. This is a country of immigrants.

SHIELDS: Al Hunt, George Bush's proposal did tiptoe right up to the edge of amnesty and then backed off, though.

AL HUNT, CAPITAL GANG: Yes, but first, on the politics -- this is about politics, and it's a great political move for George Bush. Other -- you know, along with increasing the turnout among evangelicals, Karl Rove's biggest priority is to get a bigger share of the Hispanic vote for George Bush this time. This is clearly going to help.

I think he deserves some substantive credit, too. I agree with Bob on that. There are some flaws in this. He didn't go far enough. Most of these immigrants are not going to be able to get Green Cards, you know, as he proposed it. As Margaret said, they are too beholden to their employers. We got to do something about that. And there'll be some added costs.

But I'll tell you something. Politically, it is a terrific winner, and George Bush is in such great shape with his base that he can have a simple message for the Tom Tancredos of the world: Drop dead.

(LAUGHTER)

SHIELDS: Chuck Hagel, the -- I think the arguments are good ones. President Bush probably wasn't thrilled with the cartwheels and the -- being done by those in the restaurant business and the hotel business, that, This is great for us because we need this pool of workers, right?

HAGEL: Well, first, this is a base of principles, not legislation, not a bill. And I think the president deserves great credit for initiating this debate. This is a serious national issue. It deserves serious national debate. It's going to deserve serious national legislation. So this is not the first time, either, that he's come at this. Let's not forget, when he was elected, in the first few months of his administration, prior to September 11...

SHIELDS: That's right.

HAGEL: ... first national leader he met with -- international leader he met with was Vicente Fox. He initiated an effort at that time. September 11 came. Everything was paralyzed. This is also a president who understands the issue fairly well. Obviously, governing a border state, Texas, he knows the depth and the width of the issue.

Politically, I don't know. What I think's going to be critical here is the president stay focused on -- on the momentum, carrying through something. I don't know how likely it is that we can accomplish a bill this year because of politics. Senator Daschle and I will introduce legislation in the end of this month that will be a little more comprehensive than what the principles were that the president set down.

But nonetheless, I think it's important. I give the president credit for the leadership and the courage to go forward with it.

SHIELDS: The president's own pollster, Matthew Dowd (ph), said that if the president got the same percentage of the Latino vote, Hispanic vote, that he got in 2000, 35 percent, that he would lose the popular vote, if everything else remained the same, because the Latino vote was growing so fast, and that it would be a smaller percentage. Will this make a difference in the Latino vote?

NOVAK: I don't know if it will or not. I don't like -- those kind of calculations are ridiculous. You don't know what the turnout's going to be. You don't know how it's going to come out. But I -- I really do believe, quite apart from the politics, this is a really interesting debate in America of people resenting these people coming in to be chambermaids and to be waitresses and busboys and do a lot of jobs that Americans don't like to do.

HUNT: Well, I think you're absolutely right about that, and I resent the people who resent them. But I also resent the -- I remember the former -- Phil Gramm -- Phil Gramm used to be a senator, one of Chuck's colleagues...

NOVAK: I know him well.

HUNT: Chuck, by the way, is terrific on this issue and will be indispensable to the president. But Phil Gramm basically had a view that, Let's bring them in to clean toilets and serve food but not give them any rights. Now, that I object to as much as those who are anti- immigrants. NOVAK: Well, I think (UNINTELLIGIBLE) You know, a lot of people say that nobody asked these people to come in. Well, nobody asked their ancestors to come into this country, either.

SHIELDS: Well, it's interesting, Bob...

(CROSSTALK)

NOVAK: Oh, weren't you born here originally?

(LAUGHTER)

SHIELDS: Bob, a lot of people asked my people to come here.

(LAUGHTER)

SHIELDS: Not your people.

Chuck Hagel and THE GANG will be back with a roller-coaster week for Howard Dean.

ANNOUNCER: Your CAPITAL GANG "Trivia Question of the Week." What was Senator Chuck Hagel's occupation after he returned from military service during the Vietnam war? Was it, A, talk show host; B, car salesman; or C, school teacher? We'll have the answer right after the break.

(COMMERCIAL BREAK)

ANNOUNCER: Before the break, we asked: What was Senator Chuck Hagel's occupation after he returned from military service during the Vietnam war? The answer is A, talk show host.

SHIELDS: Welcome back. Ten days before the Iowa Democratic caucuses, former Vermont governor Howard Dean was endorsed by that state's most popular Democrat, Senator Tom Harkin.

(BEGIN VIDEO CLIP)

SEN. TOM HARKIN (D), IOWA: There is a powerful authenticity to Howard Dean. With that authentic demeanor, his toughness, his progressive beliefs and his plain speaking, he is the Harry Truman of our time.

(END VIDEO CLIP)

SHIELDS: That followed disclosure of 4-year-old comments about the Iowa caucuses made by Governor Dean.

(BEGIN VIDEO CLIP)

DEAN: And if you look at in the caucuses system, they are dominated by the special interests on both sides, on both parties.

I was talking four years ago. If I had known then what I knew now about the Iowa caucuses -- you know, Iowa's been very good to me, and I'm -- I couldn't run for president if I weren't -- if I didn't have Iowa.

(END VIDEO CLIP)

SHIELDS: The latest Iowa poll by Research 2000 shows Dean only 4 points ahead of Congressman Richard Gephardt of Missouri, with Senator John Kerry of Massachusetts in third place.

Bob Novak, you were in Iowa this weekend. Is Howard Dean actually slipping there?

NOVAK: Well, let me first say that I think that -- that Governor Dean has got a remarkable style because he says that, I didn't realize how good the caucuses were until I ran in them, and they are important to my campaign. Now I...

(CROSSTALK)

NOVAK: Now I love them. And that's the kind of stuff that has hurt him and maybe caused him to slip a little bit nationally, a little bit in New Hampshire, a little bit -- a little bit in Iowa. But as we all know, Iowa is a caucus state. People have to get out on a cold Monday night, spend a couple hours. It's an organization thing. They've got hundreds and hundreds of college students coming in for Dean from all over to work for him, labor union people coming in for Gephardt. It's very hard to poll on that thing.

But I just got a feeling that -- that Dean in Iowa was now still probable but not inevitable.

SHIELDS: Chuck Hagel, in 1988, Al Gore skipped the Iowa caucuses and said it's dominated by liberal activists. That didn't stop him from coming back in 2000 and winning 2-to-1 there. So I wonder if those remarks are going to come back and plague Dean.

HAGEL: I don't know. This is a very professional business, and you have a very small group of activists that control that process in Iowa, the caucus process. Dean's done an exceptionally good job at organization. Whether he can sustain that and hold that, I don't know.

But the bigger problem, I think, for Dean is he has been tagged as the candidate of rage. And I don't think Americans respond well to rage. I don't think they trust rage. I noted that Dean has been moving, as any candidate would, closer to the middle here lately, talking about God and Jesus Christ and values and standards and principles. He's going to have to, seems to me, to get the nomination, to sustain it within his own party, move in a more hopeful direction, talk in a more hopeful way about this country, what kind of leader he would be. The caucuses are a little different, and I think we all understand that, than what's ahead in the primaries, where more people can play.

SHIELDS: Margaret Carlson?

CARLSON: Dean sometimes reads his stage directions, a little like the first President Bush. Dean message, I care about God. He announces he's going to speak. And he committed a gaffe in Iowa, which, as Michael Kinsley says, is inadvertently telling the truth, which is that in Iowa, special interests really count. And it's going to be Dean's teenagers against Gephardt's Teamsters. That's part of it.

But you know, Gephardt and Dean have traded places there for a long time. And I think what's going to happen is that the stage has been left to Clark in New Hampshire to gain a little momentum there, and it could come down to the general versus the doctor and WalMart versus L.L. Bean.

NOVAK: That's moving ahead a week, though. I mean...

CARLSON: Well, don't -- don't let me spin forward here, but I do think that Clark is a bit of the story this week.

(CROSSTALK)

CARLSON: Yes. I'm going to stay dead still.

SHIELDS: I think you made a good point, Margaret.

CARLSON: Thank you, Mark.

SHIELDS: Al?

HUNT: I don't think that Howard Dean is the first person to change his view on the Iowa caucuses once he gets in them. I think most politicians have. I don't think it matters much. I don't think Tom Harkin's endorsement, actually, at this stage, matters much. They're kind of a wash. And we -- we're where we've been for a while. If Howard Dean wins Iowa, which he's a favorite to do now, and he wins New Hampshire, he probably has this thing all sewed up. Dick Gephardt has to win in Iowa to survive. John Kerry either has to win or finish a very strong second to stop his slippage in New Hampshire.

And I'll tell you the scenario that the Dean people most fear, and that is that Dean wins in Iowa, that Gephardt is through then, John Kerry finishes third, and then -- to jump ahead, Bob -- they go mano a mano against Clark in New Hampshire. If that happens, Clark will beat Dean in New Hampshire, and we really have a race.

SHIELDS: Clark will beat Dean in New Hampshire?

(CROSSTALK)

HUNT: Under that scenario, he will.

NOVAK: I don't know -- I don't know...

CARLSON: Bob, you allowed Al to spin ahead!

NOVAK: I don't know how you get that...

SHIELDS: What happens in South Carolina, then, Bob?

NOVAK: Who the hell knows?

(LAUGHTER)

NOVAK: Let me tell you something I picked up. Some of the people who are with Kerry feel he has made some ground, and everybody seems to think that. And he's picked up some of the upscale Iowans who were -- who were with -- with Clark -- I'm sorry, with Dean -- who were with Dean, picked those up. And they think that it is possible that little surge by Kerry could put Gephardt over the top -- possible. It'd still be a long shot. But I think Gephardt is in the picture now.

SHIELDS: John Kerry -- it's an interesting thing. John Kerry was stuck behind Howard Dean in New Hampshire, and he's moved -- he's rolled the dice in Iowa. I mean, he's basically gone to a one-state strategy, which is, I've got to -- I've got to change my position in New Hampshire by doing well in Iowa.

(CROSSTALK)

NOVAK: ... ironic if it benefits Gephardt.

(CROSSTALK)

HUNT: ... but everybody I've talked to who has seen him says John Kerry's a much better candidate...

NOVAK: He is. He is.

HUNT: ... than he was a month ago.

SHIELDS: He is a much better candidate. And remember this about Wes Clark. He has soared in New Hampshire. He's done well. He hasn't had anybody on his case. I mean, whatever you say about Howard Dean, he's had a pack of wolves after him...

HUNT: But you know, Mark...

(CROSSTALK)

HUNT: There's only eight days between Iowa and New Hampshire...

SHIELDS: You're right.

HUNT: ... and boy, it happens so fast.

SHIELDS: It does, Al. The tsunami of Gary Hart, '84.

HUNT: Exactly.

SHIELDS: I remember it well.

Next on CAPITAL GANG: Is there progress in Iraq?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP - ABC NEWS "NIGHTLINE")

COLIN POWELL, SECRETARY OF STATE: There was a sufficient body of intelligence information that suggested that there were weapons programs -- chemical, biological, nuclear. I don't think we overstated that.

(END VIDEO CLIP)

SHIELDS: That was Secretary of State Colin Powell's response to a report by the Carnegie Endowment for International Peace that the, quote, "intelligence community overestimated the chemical and biological weapons in Iraq," end quote.

In Iraq, 9 U.S. soldiers were killed when a Black Hawk medical helicopter crashed, probably hit by a missile. One U.S. civilian and 33 U.S. troops were wounded, 1 fatally, in a single attack. And U.S. authorities announced the intention to release -- the release of some 500 detained Iraqis.

Al Hunt, Has The Bush Administration Turned The Corner In Iraq?

HUNT: Yes, Mark, and the proverbial light at the end of the tunnel is there. No, I'm afraid that, to paraphrase the defense secretary, we're in for a long slog. In the four weeks since Saddam has been captured, the pace of violence and killings has actually increased. Internal strife, according to reports over there, is worse than it's ever been. We're still waiting for that -- that third multi-national division that the president talked about four months ago.

And it just seems to me that -- there's even some talk in the Pentagon of giving $10,000, $20,000 bonuses to troops to stay. They're not going to have very many takers. I think that the American forces are going to be in Iraq, tens of thousands if not hundreds of thousands, for many, many years to come. Let's just hope we can get others to help us.

SHIELDS: Chuck Hagel, you have been one of those voices warning about the consequences of a rush to action and all the rest. Is Al right?

HAGEL: Well, I think we have to, once again, understand and put this in perspective. This is complicated. It is long-term. It is dangerous. It's uncontrollable. And what's happening now in -- in one sense, all at the same time, trying to provide the security and the stability so that we can start to make the kind of progress necessary in order to move the Iraqi people into position to govern themselves and defend themselves. Al's right. This is going to take a long time. No guarantee.

I think it's going to take far more allied involvement than we have seen. I was in New York and spent some time with the secretary general this week alone, talking about the United Nations' involvement. I have been one who's been saying for a long time they must be in this. Their role must be defined. They must have a partnership kind of status here. We can't get them in, or any other major institution, unless we're willing to share not just some of the burden, the decision-making power and the authority. And it's critical that we get them in. I think the administration has come to that realization. I think Secretary Powell has believed that for a long time, but others have not. A long way to go.

And what's critical is, I think, when we get down to that July 1 deadline, turning over to the Iraqis some kind of a transitional government, what then do we have?

SHIELDS: Bob Novak, I mean, whatever we say, pulled out 400 linguists and inspectors this week quietly, no -- no evidence of weapons of mass destruction, no chemical weapons, no biological weapons. And that was, in large part, the argument for going to war.

NOVAK: Well, I really think, unless you're a -- you want to play Democratic politics, that going over these arguments of weapons of mass destruction and al Qaeda connection -- it's irrelevant. We're there. We're going to be there for a long time. And the interesting thing to me is that a lot of the neo-cons and people in the Pentagon said this was going to be an easy thing. We'd go in there and it wouldn't be hard. It is very hard. The British could tell you, going back 60 years -- not 60 years, 80 years, it was -- it was a hard thing. And the imperial burden is a very tough thing, and that's why a lot of these people will get a lot of applause for great national purpose, running around the world instilling democracy. I think we got to be very careful. And maybe this is just a very good object lesson for us, but we got to stay there.

SHIELDS: Margaret, just a point. I could not disagree with you more strenuously, Bob, on the subject of whether it's a matter of interest or curiosity. We relied upon intelligence that was given. We relied upon -- either -- somebody out to be outraged. Either the intelligence was wrong or what they did with the intelligence was wrong. Eighty years after Pearl Harbor -- - sixty years after Pearl Harbor, we spend seminars arguing about what the administration knew and didn't know. I mean, we...

NOVAK: You want to discuss Pearl Harbor?

SHIELDS: We've got a lot -- I'm talking about...

NOVAK: I'd be happy to, if you'd like to.

SHIELDS: ... whether, in fact -- whether, in fact...

(CROSSTALK)

NOVAK: -what Roosevelt did.

SHIELDS: ... whether, in fact, we're going into -- whether, in fact, we're going into a war again. And I mean, what it comes down to is we've had 3,000 Americans crippled and killed just to remove Saddam Hussein. If that had been the object at the beginning, that wouldn't have been an argument.

NOVAK: Well, in all -- with all due respect, that is the Democratic line!

SHIELDS: It is not a Democratic line!

(CROSSTALK)

NOVAK: I listen to you the way you listen to me.

SHIELDS: And I didn't characterize your line.

NOVAK: I said that is the Democratic line because you came back very hard at me on this, and that's the Democratic line. And I said that we are there and let's talk about the best job we can do, as Chuck Hagel did. And I agree with him we've got to have internationalization.

CARLSON: There are some Democrats and there are some Republicans. It's not a line. It could be right. Just because the Democrats say it doesn't make it wrong, Bob, that the intelligence was markedly wrong or it was hyped so that, you know, Colin Powell could say, Well, it was prudent to follow it.

What I think now is, boy, we are there, and boy, we do have to stay. But just as Colin Powell moved to follow the administration in his testimony before the Security Council -- and we all kind of -- so many people followed Colin Powell's pivot on the subject -- now the administration has to go with Secretary Powell and do everything they can to get the U.N. involved because that way, when this moment comes, which the -- you know, we're getting out, so the administration says, we'll have a U.N. force to take over.

SHIELDS: Chuck Hagel, how long are we going to be there?

HAGEL: Oh, we'll be there years. I don't know how many years, but we'll have over 100,000 troops in there all this year, probably next year. I don't know. This is unpredictable, uncontrollable. But some...

CARLSON: But the administration has said, Well, we're pulling out. We're turning it over this summer.

HAGEL: Well -- well, that's not exactly what they've said. We're still going to be there. We'll have to be there. What they've said, and they should say, is that more authority given to the Iraqi people to govern Iraq is in the best interests of all of us. That's what we're talking about, is the authority of governing.

SHIELDS: Chuck Hagel...

HUNT: I'm all for that, Chuck. I just think they're not ready for it.

SHIELDS: Chuck Hagel, thank you very much for being with us.

HAGEL: Thank you.

SHIELDS: Coming up in the second half of CAPITAL GANG, "Beyond the Beltway" looks at the challenge to Senator Tom Daschle in South Dakota -- we'll talk with political reporter David Kranz -- the CAPITAL GANG "Classic" and "Outrage of the Week." And straight ahead, Robert Novak is "On the Beat" in Iowa with presidential hopeful Dick Gephardt.

(COMMERCIAL BREAK)

(NEWSBREAK)

ANNOUNCER: Live from Washington, THE CAPITAL GANG.

SHIELDS: Welcome back. Twelve years ago, Bill Clinton. Welcome back to the second half of CAPITAL GANG. I'm Mark Shields, with Al Hunt, Robert Novak and Margaret Carlson.

Robert Novak was on the beat this week in Iowa, following the presidential campaigns of Congressman Richard Gephardt of Missouri. Bob.

NOVAK: Dick Gephardt, at age 62, could be entering his last week as a major political player (UNINTELLIGIBLE) in the Iowa Democratic caucuses a week from tomorrow night.

(BEGIN VIDEOTAPE)

NOVAK (voice-over): But addressing small groups in rural Iowa this week, he hardly raised his voice. There was none of the anger Democrats are supposed to feel as he expounded the old time liberal Midwest religion of Hubert Humphrey and Walter Mondale.

At Sam's Soda and Sandwiches in Carroll, Iowa, he defended rolling back the Bush tax cuts for everybody.

REP. RICHARD GEPHARDT (D-MO), PRESIDENTIAL CANDIDATE: Now, I am sure Bush will argue when we get to the debates, well, Gephardt wants to take away that big tax cut I gave you. Well, you better look closer. This plan does better than the Bush tax cuts just in terms of sheer monetary input into families.

NOVAK: The long-time House Democratic leader ignored the issue of the war in Iraq, which Howard Dean has ridden to the head of the presidential pack. He did chastise the former governor of Vermont for being too fiscally conservative.

GEPHARDT: Governor Dean opposed our position on Medicare in the mid-'90s, when the Republicans were trying to cut it by $270 billion. In fact, Bill Clinton and I had to sustain going through a government shutdown. Howard Dean agreed with the Republican position. He also said at a similar time period that he felt that Medicare was the worst federal program ever. I just disagree with him.

(END VIDEOTAPE)

NOVAK: Dick Gephardt is betting that Iowa Democrats care more about health care than Iraq. We'll find out a week from Monday night. Mark. SHIELDS: Al Hunt, can the old, reliable politics save Dick Gephardt in Iowa?

HUNT: You know, I suspect not, Mark, but Dick Gephardt is the most experienced, the most knowledgeable and perhaps the most decent candidate in this race, and he's right, health -- I think not only Iowa Democrats, but Americans care more about health care than about Iraq or about tax cuts.

But somehow, Dick Gephardt is depicted, is seen as yesterday, and that's why even such fair-weather old allies as Al Gore and Tom Harkin deserted him.

SHIELDS: Margaret, I don't know any even critics of Gephardt who don't argue that he would be more competitive in states like Ohio and Michigan and Missouri than Howard Dean would be.

CARLSON: The smokestack states, and old people like yesterday, so among older voters I think it's a question of is Howard Dean really bringing all these new people into the caucuses in Iowa? It's hard to know. People predict that instead of 60,000 people at the caucuses, there might be 130,000 to 150,000. At least that's what they're preparing for. So there is a wild card element that we don't know. Who are the new people? If they're Deanie babies, that's bad for Gephardt.

SHIELDS: Bob, one of the things that strikes you as -- this is a great test, the people that do all the work for the party, year in and year out, who go to the dinners, who stuff the envelopes, all of a sudden they show up on election night, and they're joined by people they've never seen before.

NOVAK: Who are these people?

SHIELDS: Yeah, yeah.

NOVAK: Well, also, of course, they are bringing in 900 labor union people from out of the state, out of the state of Iowa to work for him to counter the (UNINTELLIGIBLE) crusade going on, going on...

HUNT: The Gephardt people are bringing 900...

NOVAK: Gephardt, 900. I was interested when I was following him at a few stops that he never mentioned the war, and he was never asked about the war. And I asked Congressman Gephardt about that, and he said, you know, he said, the people I talk to are more interested in jobs, they're worried about the closing down of factories in Iowa, decline of the family farm, which Hubert Humphrey told me it was imminent in 1960, but it is still going on. And he is saying those are the things people really care about, that the war is, you know, people -- it's probably more popular than unpopular with the Democrats of Iowa.

SHIELDS: I may take question with that, based upon one theory that the Iowa National Guard being on active duty right now, I think there is a certain (UNINTELLIGIBLE). But one thing is interesting is Dick Gephardt may be winning the argument but not carrying the day. I mean, as the number of Democratic candidates have moved closer to his position, touting NAFTA and its, you know, genius ability to resolve the immigration crisis, which the president's initiative indicates hasn't been resolved.

CARLSON: Yeah. Well, everyone is questioning NAFTA, so he's not alone there.

NOVAK: I'm not questioning NAFTA.

CARLSON: No, I don't...

(CROSSTALK)

CARLSON: You're like an alien creature.

NOVAK: Do you question NAFTA?

HUNT: I think we are better off having NAFTA.

NOVAK: Yeah.

SHIELDS: Go ahead, Margaret.

CARLSON: Gephardt is really the Democratic wing of the Democratic Party. He is labor, he's for jobs, he's for health care. So we'll see if Dean is what he says he is, the Democratic wing, or whether Gephardt is. We'll find that out in Iowa.

NOVAK: He never yells, he never raises his voice, unlike...

(CROSSTALK)

SHIELDS: In spite of Mr. Novak...

HUNT: Thoroughly good human being.

SHIELDS: Yes, I agree. In spite of Mr. Novak and Mr. Hunt, the majority of Americans, plurality of Americans have doubts and skepticism about NAFTA.

HUNT: You're right.

SHIELDS: Coming up in the second CAPITAL GANG Classic, second thoughts about another troubled Democratic frontrunner, and that was 12 years ago.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Twelve years ago, Bill Clinton, then the frontrunner for the Democratic presidential nomination, came under fire from a variety of sources. A taped telephone conversation was disclosed with him saying that New York Governor Mario Cuomo acted like a Mafioso. THE CAPITAL GANG discussed this on February 2, 1992. Our guest was then House Democratic Whip David Bonior of Michigan.

(BEGIN VIDEOTAPE)

SHIELDS: It's like a ghost train right now. The campaign is headed at good speed, but it's not going in any particular direction. There is a grave, grave doubt among other Democratic politicians who are starting to say, geez, you know, I like Bill Clinton, but is there going to be a problem, do I want to have somebody (UNINTELLIGIBLE).

NOVAK: The Democrats are certain it will look pretty good, because George Bush and the economy are looking so bad, and they're back in trouble again because there's no question that Cuomo was the frontrunner. I think he was heading for the nomination. The guys in the media think he's still alive, but the guys in the party think he's dead, and they don't know where they're going next.

REP. DAVID BONIOR (D), MICHIGAN: I think Bush is in trouble. You ought to watch his primary situation. I think Pat Buchanan can get 25, maybe 30 percent of the vote.

HUNT: I have a prediction that a big beneficiary in New Hampshire may prove to be Paul Tsongas, the sounds of Tsongas, as the Capital Steps said.

(END VIDEOTAPE)

SHIELDS: Well, Al Hunt looked pretty good, and David Bonior looked terrific, but what lesson can we draw, Bob, for this year from the premature burial of Bill Clinton's hopes in 1992?

NOVAK: I was going to say, Bonior is pretty savvy. Bonior, a politician, looked so much better than the reporters.

HUNT: Sure did.

NOVAK: I think I was listening to people in the party who thought that Clinton was dead, and these premature burials happen in these primaries all the time. You better watch it with Mr. Dean, because he kind of messes up a little bit, doesn't mean he's dying or dead.

SHIELDS: Margaret.

CARLSON: I think Dean recovers from his gaffes pretty well, even the one this week about the Iowa caucuses. For Clinton, though, we can all take a lesson in resilience. Whatever didn't kill him made him strong. It was just remarkable.

SHIELDS: Al.

HUNT: You know, Paul Tsongas did win that New Hampshire primary.

SHIELDS: He sure did.

(CROSSTALK)

HUNT: ... after the show, and that's what was so remarkable about Bill Clinton, as Margaret said, his resilience. He was incredible. He was one of the great politicians any of us will ever see. I don't see his counterpart out there today.

SHIELDS: I didn't say it on that broadcast, but I did say that Bill Clinton was carrying more baggage than United van lines, and there was no way he could win. So that just tells you what a prophet I was as well.

CARLSON: And I wasn't on the show.

SHIELDS: That's right. You...

HUNT: Mark, he's the only person ever to come back from losing the New Hampshire primary like that, before George Bush did in 2000.

SHIELDS: Yes, George W. Bush did, of course he didn't win the presidency.

Next on CAPITAL GANG, "Beyond the Beltway" looks at the challenge to Senate Democratic leader Tom Daschle in South Dakota, with David Kranz of "The Sioux Falls Argus Leader."

(COMMERCIAL BREAK)

SHIELDS: Welcome back. In South Dakota, former Congressman John Thune announced as a Republican candidate against Senate Democratic leader Tom Daschle. Immediately began debating whether the state should elect a senator to support President Bush, or to retain the leader of the opposition party.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: I've also been able to develop a very close and good relationship with the people of my state, and I'm proud of that. So I'm not sure that -- whether it's President Bush or any other celebrity is going to make that much difference.

JOHN THUNE, REPUBLICAN SENATORIAL CANDIDATE, SOUTH DAKOTA: The person with the clout in the United States Senate is going to be the one who can work in a constructive way with the majority party, with the White House, with the House.

(END VIDEO CLIP)

SHIELDS: Joining us now from Sioux Falls, South Dakota is David Kranz, political writer for "The Sioux Falls Argus Leader." Thank you for coming in, David.

DAVID KRANZ, SIOUX FALLS ARGUS LEADER: Hi, how are you.

SHIELDS: David, if John Thune could not defeat Tim Johnson two years ago for the Senate, why we consider he should have a chance against Tom Daschle in 2004?

KRANZ: That's a question he began weighing about a couple of weeks after that 2002 election. Some Republicans were telling him, you run this race and lose again, your political future is done. So as time went on, he was sorting out his decision, he started to contrast Senator Daschle's record with Senator Johnson, and he said, Daschle is far more liberal, and I think a race of John Thune versus Daschle would be easier to define for voters; Thune the conservative, Daschle the liberal. And that was one of the thins that really pushed him to the point of getting into the race.

SHIELDS: Bob Novak.

NOVAK: David, let me take a minute to say that I created quite an uproar in South Dakota with some remarks I made on this program and on "CROSSFIRE" about Native American voting, I want to say I did not intend any bias against Native Americans. I don't have any bias against Native Americans or anybody else, but I do feel, based on my reporting, that there were very serious voting irregularities in 2002 in South Dakota, which the -- I also believe that -- which the Republican Party, for political purposes, did not want to protest.

My question is, are the Republicans looking at the voting on Indian reservations in this upcoming election and worrying about taking any corrective measures on it?

KRANZ: Governor Rounds in particular is paying close attention to improving relations with the Native Americans. He's appointed a Native American to the state senate, and they are actively interested in playing this election a lot harder. They feel that they can make a case on the reservation for their side. You have some very key Native Americans, including Russell Means (ph), who tells Democrats, don't take this for granted anymore. You just can't. Tim Daego (ph), a gentlemen who announced his candidacy against Tom Daschle in the primary said the same thing. He says, hey, Democrats, don't take, you know, the Native Americans for granted.

So they've sounded out the warning shot, that on the other hand the Daschle campaign is saying, if you thought that our 2002 effort was big for Johnson, you ain't seen nothing yet. So it's going to be interesting to watch.

SHIELDS: Margaret Carlson.

CARLSON: David, in the special election in June, to replace former Congressman Janklow, Stephanie Herseth is greatly favored, and if she wins, the Democrat, is that going to effect Tom Daschle's race? In that you would have a completely Democratic congressional delegation in what's a Republican state?

KRANZ: You hear Republicans saying that, they're saying, hey, we need, you know, to make sure that we preserve one of those seats and hopefully pick up the Senate seat. And so that's become an issue out here. And so John Thune when they said, Congressman Thune, we need you to bypass the Senate race, get in this race so we can, quote, "save the Republican Party." He says, the party doesn't see -- need saving, many good Republicans in this race that can do it. And so he went to the Senate race instead.

But there are some people who believe that these Republicans, these 20 percent Republicans who oftentimes vote Democrat may choose between one of the two, and let either Daschle or Herseth fall by the wayside, and so that's part of the discussion.

SHIELDS: Al Hunt.

HUNT: Dave, as you know, in 1992, Tom Daschle ran 25 points ahead of Bill Clinton in South Dakota, but that was against a very weak Republican opponent. This time, he's got a formidable opponent. Is there any concern among the Daschle people about the top of the ticket, particularly Howard Dean being the nominee and hurting Tom Daschle in South Dakota?

KRANZ: I think their side is concerned about that, but one of the things about South Dakota when you look at it, we're pretty inconsistent with the rest of the country. We have voted for many -- we have only voted for three Democrats for president, only four governors have been Democrat. Yet we continue to have an equal opportunity seat in the United States Senate, and Democrats are comfortable that that's not going to be an issue. In fact, when you talk about the previous question of the Republican advantage of maybe trying to win all three seats, Democrats are saying, well, you've got George Bush to vote for; we'll take the other three, and they're making that case and that particular argument.

SHIELDS: David, in 2002, there wasn't a state of all the Senate races where the president devoted more attention, energy and time than he did in South Dakota, trying to help John Thune against Tim Johnson. With all due respect to the state of Mount Rushmore, it's highly unlikely that the president will be visiting South Dakota much in 2004. How will that effect the Daschle-Thune race?

KRANZ: I don't want to speak for John Thune, but I got to believe he's thinking that's OK with him, because virtually every visit by President Bush in 2002 ended up in some sort of a mess. On August 15, he went to Mount Rushmore, didn't bring aid, disaster aid to the farmers and ranchers out there, and had a little bit of a backlash. He went to Aberdeen on October 29, and a ticketing snafu left 2,000 people holding tickets standing in the cold. On November 3, he came back for a final hurrah, filled the arena, tore down the entire Republican operation for getting out the vote so they could fill the arena, and Bush's visits weren't exactly a big plus for him at that point in time.

SHIELDS: Short time, Bob.

NOVAK: Dave, do you think the fact that Tom Daschle is no longer majority leader undermines the necessity for South Dakota to keep their high position in the U.S. Senate?

KRANZ: I'll tell you this, the majority leader, minority issue is a big deal in South Dakota. I've talked to a lot of Republicans who are sympathetic to Daschle, some of that 20 percent, and I asked them, what happens if Daschle runs for reelection but does not run for minority leader? The (UNINTELLIGIBLE) over the top of the table or over the phone, I hear saying, listen, South Dakota is so often 50th in everything. We finally got somebody in the United States Senate in the position of power and influence that can get things done for the state, and oh by the way, get things done for us. So why would we throw that out?

And that becomes a real tough point for that 20 percent of the Republicans who still support or will support Democrats. It's going to be awfully tough for John Thune to go get that vote, even though that has to be one of his top priorities in this election.

SHIELDS: David Kranz, thank you again very much for being with us. You've been terrific.

KRANZ: Thank you.

SHIELDS: THE GANG will be back with "The Outrages of the Week."

(COMMERCIAL BREAK)

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

I am angry at my colleagues in the press who antiseptically discuss the nation's economy like it was a collection of statistics. They are arguing about earned run averages, or RBIs, the Dow Jones is up 25 percent, corporate profit is up 22 percent, manufacturing growth highest in 20 years, even for the 41st straight month Americans in manufacturing lost their jobs.

The economy in December produced only 1,000 jobs, not the 340,000 promised by the administration. Let's understand a fundamental truth -- the economy must serve the people, people do not serve the economy. It is about people, and it is about jobs. Bob Novak.

NOVAK: George W. Bush named as his first treasury secretary Paul O'Neill, a non-Republican, non-conservative industrialist, former bureaucrat. He was a disaster. He was not fired for two years. The pain persists.

A new book by a passionately anti-Bush journalist features nasty O'Neill quotes to be featured by CBS on "60 Minutes," with the former treasury secretary calling the president "a blind man in a room full of deaf people." The lesson for presidents, don't appoint people you don't know, who never supported you and who don't share your agenda.

SHIELDS: Margaret Carlson.

CARLSON: Mark, the president so wants to cut wages for workers that tucked away in fine print in proposed Labor Department rolls are tricks for getting around those rolls. One, give a small rise, to $22,100 so that mandatory overtime won't apply. It will be cheaper in the long run. Or cut salaries immediately, so even though eligible for overtime, the poor sap will work 50 hours but only bring in what he used to make for 40.

This and three upper-income tax cuts confirm that to the Bush administration, bosses are winners and workers are chumps.

SHIELDS: Al Hunt.

HUNT: Mark, Pete Rose, desperate to get in the Hall of Fame, admits now he bet on baseball, including his own team, when he was a manager and player. He lied about it for 14 years and now pretends he doesn't have a gambling addiction. Betting is much more serious than other obnoxious behaviors. It goes to the integrity of the game. Hypocrisy aside, "Slot Machine" Bill Bennett is right, Pete Rose is not ready for the Hall of Fame.

NOVAK: Mark, I want to raise a point that the "Washingtonian" magazine selected as one of its Washingtonians of the year our colleague, Mark Shields, for the year 2003, for his charity work. There is a picture of him there in the (UNINTELLIGIBLE) helping aged nuns. They call him a good guy, with good sense and good works, and we're proud of the (UNINTELLIGIBLE) to you, Mark Shields.

SHIELDS: Well, thank you, Bob. Thank you all.

HUNT: It should be given every year.

SHIELDS: OK. This is Mark Shields saying good night for THE CAPITAL GANG. Coming up next, "CNN PRESENTS: "Blowback, Afghanistan on the Brink." At 9:00 p.m., "LARRY KING LIVE," Tom Cruise. And at 10 p.m., a hot topic, should the Ku Klux Klan should be able to sponsor a piece of adopt a highway in St. Louis, Missouri? Plus much more.

Thank you for joining us.

END

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