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The Lead with Jake Tapper

World War II Memorial Dedicated in D.C.; Spitzer vs. Grasso

Aired May 29, 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: 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, under fire for his Iraq policy, amended and explained it.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: By keeping our promise on June 30, the coalition will demonstrate that we have no interest in occupation.

With the approval of the Iraqi government, we will demolish the Abu Ghraib prison.

I sent American troops to Iraq to make its people free, not to make them American.

As the Iraqi people move closer to governing themselves, the terrorists are likely to become more active and more brutal.

SEN. JOE BIDEN (D), DELAWARE: I didn't hear any fundamental change in strategy. And quite frankly, I -- I don't think there was full leveling with the American people.

(END VIDEO CLIP)

SHIELDS: Lieutenant General Ricardo Sanchez was replaced as U.S. commander in Iraq. Was it because of the prison abuse scandal?

(BEGIN VIDEO CLIP)

BUSH: Rick Sanchez has done a fabulous job. He's been there for a long time.

(END VIDEO CLIP)

SHIELDS: Bob Novak, we've been here for a long time...

(LAUGHTER)

SHIELDS: Did the president help himself politically...

MARGARET CARLSON, CAPITAL GANG: And Bob's been here for an even longer time!

SHIELDS: Did he help himself politically with his speech to the country on Iraq this week?

BOB NOVAK, CAPITAL GANG: I don't think so. I don't think a speech -- you hear all these silly things, mostly on cable television, about this is the most important speech of his -- of his presidency, and then they forget about it the next day. What's going to help him politically is if there's an improvement on the ground there. And there's, hopefully, improvement once they get the handover in power, but I can't predict there will be. But speeches aren't going to do it. When you get -- and also, we're in a full campaign mode, Mark. When you get somebody like Joe Biden, who is as even-handed as any of the prominent Democrats are, and he can't say a good word about it, you're not going to get a single bit of forbearance from the Democrats in a presidential campaign mode.

SHIELDS: But a lot of the griping, Kate, had come from Republicans who had grown restless. Did this speech secure them, comfort them, strengthen them in their resolve?

KATE O'BEIRNE, CAPITAL GANG: I agree with Bob about how -- how a single speech will never be all that important. But I do think the president did a good job this week reassuring his supporters. He was frank. He even used the word "failure." He's being realistic about what's going on in Iraq. The success in training some of the Iraqi troops so far has been disappointing, but we're going to stay it because we must. He reminded a broader audience of the enormous stakes involved here. I think he did do a good job.

And for those who claimed -- which the Democrats, of course, do because they're making these partisan attacks -- that the U.S. policy is adrift, he's -- there's a definite course, and he laid out the course. It's not enough to satisfy Joe Biden. But there will be no fundamental shift in our strategy because the president is resolute about turning over security increasingly to the Iraqis and making sure that the political reforms take place.

SHIELDS: Margaret Carlson, turning over to the -- to the Iraqis -- another problem -- another complication is that now we're finding out that each group is going to have its own militia, not only the clerics but the Sunnis, the Shias, the Kurds. I mean, it's just -- everybody's going to have their own...

CARLSON: Right.

SHIELDS: Isn't that going to make security a little bit tougher.

CARLSON: Yes. And you know, the allies that America needs are the ordinary Iraqi people, but in order to bring security, any kind of security, in the face of Iraqi troops not being trained quick enough, America's turning it over to, you know, Ba'athist generals. And we cut this deal with Sadr this week because Sistani said to do so. And it looks like different insurgents are going to be given credibility, and we're going to pull back and hope for the best.

But Kate, it is not just Democratic partisans. Senators Warner, Lugar, Domenici, Roberts -- Bush allies -- are going wobbly on Iraq.

SHIELDS: Al, is the reality on the ground such, and the prospects so grave, that the best speech in the world, the Emancipation Proclamation, wouldn't have changed things?

AL HUNT, CAPITAL GANG: Yes. And I just totally disagree with Kate. I think his speech was actually quite disingenuous because what he says are our goals -- what the president says are our goals -- a free, democratic Iraq, pro-Western, pro-Israeli, a beacon in the region -- if you want to have that, it will require the presence of American troops for years, probably decades, a lot more casualties, and -- and cost a lot more money, and no certainty of success. That's no longer what the president's goal is. All he's hoping for now is -- all this administration's hoping for is a slightly more secure place, probably some kind of loose confederation, where we can start getting out. Probably a Shia theocracy will run much of the country.

And I think, you know, the president -- I predict by this fall, we're going to start reducing the troop levels over there, not because the place is any -- any safer or more secure, because the American election is only weeks away. And Kate, I think, at some point, we ought to acknowledge that has been a change in policy.

O'BEIRNE: Well...

NOVAK: That is -- that is -- that is such a campaign mode thing of...

HUNT: You don't there's been a change in policy?

NOVAK: Can I...

HUNT: No, but do you think there has been?

NOVAK: ... finish? Can I -- can I finish my statement in my own way, without being interrupted by you?

HUNT: I wasn't interrupting, I was asking.

NOVAK: Yes, I think you did interrupt me. Maybe -- maybe we'll...

(CROSSTALK)

SHIELDS: Go ahead. Go ahead.

NOVAK: I really believe that that is such a -- there's no -- that is -- what you said is based on the Democratic theory there's nothing good he can do right now. If he changes, he's a -- he's a fool. If he doesn't change, he's a fool. There's just no chance of it.

And -- and Margaret, the question of the -- of the deal he made with Sadr -- they're -- his militia was getting murdered. That was -- that was a capitulation on Sadr's part. I mean, that -- that -- you got to look at the glass sometimes like it's half full. CARLSON: Well, I think they're going to regroup, just as, you know, the remnants of Saddam's -- Saddam's army already have done. I mean, we're having a re-Ba'athification and a de-Chalibization in Iraq in hopes that Iraqi people feel secure enough to come around to support...

(CROSSTALK)

SHIELDS: I want to come back to Kate, but just -- just one point on Sadr, Bob. That was -- the stated objective was to -- to capture him as a criminal...

(CROSSTALK)

SHIELDS: ... a war criminal, and to dismantle totally his...

CARLSON: His army, and...

SHIELDS: ... his militia.

CARLSON: ... to hold him for murder!

O'BEIRNE: Look, something else...

SHIELDS: And that changed.

O'BEIRNE: Something else has to be said. This nonsense that General Sanchez is leaving under anything than -- other than a routine rotation is ridiculous! This man has served loyally and well. He's going back to the 5th Corps in Europe. Tommy Franks has been rotated out. General Kimmitt will some day go back to the 18th Airborne Corps. And the only people who are alleging that General Sanchez's routine rotation has anything to do with Abu Ghraib or anything else are people themselves who've been relieved by Don Rumsfeld.

NOVAK: Mark -- Mark, don't -- don't you -- don't you agree -- just trying to be fair...

SHIELDS: Sure. I know you are.

NOVAK: ... that Sadr's people have really taken it on...

SHIELDS: Absolutely.

CARLSON: Oh, no!

NOVAK: ... nose!

CARLSON: I agree, but...

NOVAK: They've been -- well, why don't we say that! I mean, why don't we try to...

(CROSSTALK)

HUNT: But Bob -- Bob... CARLSON: It's more complicated...

HUNT: Bob...

CARLSON: ... that in Sistani went over and said, Listen, leave Sadr alone.

NOVAK: Well, it isn't...

HUNT: Bob -- Bob...

NOVAK: I mean, they were in desperate shape militarily, Sadr!

CARLSON: But they were going to...

HUNT: Bob, I...

CARLSON: They were going to keep at it...

HUNT: Bob -- Bob, I can see why you didn't want to answer that question because, basically, what -- while accusing me of a Democratic campaign speech, what you, of course, want to avoid is the fact that all of those lofty goals of 15 months ago -- that this was going to be come kind of Jeffersonian democracy in the region -- had been abandoned!

NOVAK: Yes, but -- but what...

HUNT: Now, that's -- that's a simple reality...

NOVAK: What I...

HUNT: ... and that's -- that happens to be...

NOVAK: What I -- what I am saying...

HUNT: And -- and maybe that's unavoidable...

NOVAK: They -- they...

HUNT: ... but at some point, you ought to tell the American people that.

NOVAK: Well, the reason -- the reason I avoided it, I was trying to say something when you interrupted me. But as a matter of fact, they should be abandoned because they were unrealistic. And people like you were pushing them!

HUNT: Well -- well, fine, Bob! Then acknowledge they've been abandoned!

O'BEIRNE: The fundamental -- the fundamental...

HUNT: Did the president do that?

O'BEIRNE: The fundamental rationale for the war remains. That hasn't changed.

SHIELDS: Last word, Kate O'Beirne.

THE GANG of five will be back with John Kerry campaigning and the return of Al Gore.

We're still looking for the weapons of mass destruction.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Senator John Kerry refined his criticism of President Bush's Iraq policy.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: They have undermined the legacy of generations of American leadership, and that is what we must restore.

There's a powerful yearning around the world for an America that listens and leads again, an America that is respected, not just feared.

(END VIDEO CLIP)

SHIELDS: Earlier in the same week, the most recent Democratic nominee was on the attack against President Bush.

(BEGIN VIDEO CLIP)

AL GORE (D-TN), FORMER VICE PRESIDENT OF THE UNITED STATES: How dare they subject us to such dishonor and disgrace! How dare they drag the good name of the United States of America through the mud of Saddam Hussein's torture prison!

(END VIDEO CLIP)

SHIELDS: Senator Kerry put an end to the 6-day-old speculation as to whether he would delay accepting the nomination in order to raise more money.

(BEGIN VIDEO CLIP)

KERRY: I believe it's right for us to have a convention to nominate, to speak to the country, to have a finality to the process of nomination.

(END VIDEO CLIP)

SHIELDS: Al Hunt, is Al Gore coming over as a stronger candidate than John Kerry?

HUNT: Oh, no, Mark. No. No. Kerry -- Kerry has a problem on the left, and it's Ralph Nader, and it remains to see how that -- how that plays out. But Al Gore, who -- who was full-bodied as well as full-throated in that speech -- he was shrill, talking to a bunch of lefties -- on the substance, he's getting criticized by a lot of people because he called for -- for sacking all the national security team that got us into this quagmire. I would point out the very same week that General Anthony Zinni, former Marine general, a former Bush Mideast envoy, CINC commander, did the same thing in his book and -- and -- and on "60 Minutes."

I actually think that John Kerry, after two really bad months, has had a couple good weeks. The initial commercials were good. He's a little bit better on the stump, still a little ponderous, but a little bit better. He made the right decision on the convention, and apparently, he's engaged in a serious consideration for a running mate.

O'BEIRNE: Weeks when either Al Gore or Teddy Kennedy are in the news are not good weeks for John Kerry. You now understand -- I understand now why Al Gore's so concerned with global warming. He is in meltdown. That was an unhinged, disgraceful performance. He blamed all of America for what went on in Abu Ghraib, despite all of the evidence. He smeared all of us, warned Americans that we have to resist the temptation, the innate temptation to abuse others. The charge against people like Doug Feith, he calls him -- doesn't even know who he's calling to have resign -- one of the charges against them is they're responsible for the impending loss of intimacy with one's soul!

It was altogether disgraceful in front of that disgraceful left- wing group Moveon.org, his favored audience, Al Gore. Let me remind you, Moveon.org was opposed to Afghanistan, to toppling the Taliban in Afghanistan. So if it was up to Al Gore's favored audience, the Taliban would be running Afghanistan and Usama bin Laden's camps would still be in full operation. And Al Gore's containment policy he's touting brought us 3,000 dead Americans.

SHIELDS: Just so we understand -- I don't think Al and Kate agree on this...

(CROSSTALK)

SHIELDS: Could you give us a sense of...

NOVAK: No, as much as I hate to disagree with my friend, Al, the -- I don't think it was a good two weeks for John Kerry. And the Democrats I talk to don't think it was a good two weeks. They think Bush is going down fast, but they don't think Kerry is going up. And the -- I even find Democrats who say, Well, Gore's a little over the hill, but at least he's got some life to him. That guy Kerry is so ponderous and boring and uninteresting. And to say he made the right decision on accepting the nomination -- I mean, he -- he was the guy who set up the phony choice of whether he was going to accept the nomination! And when several of the anchors said that, We won't go to the convention, they said, Hey, this is -- this is a mistake.

So I think -- I think it was not a good week for John Kerry.

SHIELDS: Not only the anchors, but Tom Menino, the mayor of Boston, who's the host of the convention, on the hook for the whole event, was openly and publicly and repeatedly miffed about the prospect of this being a sham convention.

CARLSON: Yes. It was...

(CROSSTALK)

CARLSON: It was a ridiculous trial balloon to put out there. Now, the law should be changed so that the money starts at the same time, but that's a separate discussion than whether he's going to provisionally accept the nomination.

Kerry is right not to move left and placate the Naderites in his party. That looked like Gore channeling Howard Dean in Iowa. It's not a good performance, and you can't do it about the war in Iraq. It's too serious. And Kerry's -- listen, it's not that -- that Kerry is moving towards Bush's position, as Democrats are accusing him, Bush has moved towards Kerry's on the war. And you know, multi-lateralist, Let's train Iraqi troops, Let's secure the place, Let's get a U.N. umbrella -- so where's Kerry to go and be responsible? He has to stay where he is because it's the right position and let Bush just keep digging his own hole deeper.

SHIELDS: Let me just -- let me just toss out another possibility, that Al Gore does serve a purpose for John Kerry, in the sense that he's not Ralph Nader and that there is a body within the Democratic Party who is still agitated and exercised. He is supporting John Kerry.

O'BEIRNE: I suppose in contrast, Al Gore makes John Kerry look sane. I suppose that's helpful. Look, it's not just the Naderites. Over half of all Democrats want us to pull out of Iraq immediately, which would be a huge disaster. The Republicans ought to be running that Al Gore speech with a warning under it: Warning, this man came too close to becoming president of the United States, be careful in November, be very careful!

NOVAK: Can I -- can I ask you...

CARLSON: And you know what...

(CROSSTALK)

SHIELDS: Sure. Go ahead.

NOVAK: Let me ask -- let me ask you a question. Don't you think that John Kerry looks very uncomfortable on this issue, that he'd really rather be talking about the economy, but the economy is on an upswing, so it's not a good issue at the moment. But don't you think he's very uncomfortable...

O'BEIRNE: Yes.

NOVAK: ... on Iraq because he -- he doesn't want to go all the way over and get into an attack...

SHIELDS: Is that a question?

NOVAK: Yes.

SHIELDS: OK. (UNINTELLIGIBLE) answer that's a little shorter than the question.

(LAUGHTER)

SHIELDS: First of all, I think -- I think John Kerry's made the decision to get up to George Bush's left shoulder. And I agree with Margaret. I never heard Lakhdar Brahimi mentioned until recently, when the war went bad. So there has been a move in that direction. But I don't -- I think -- I think the -- Tom Gallagher (ph), the financial analyst, put this well. He said, In spite of the improving economy, it's Iraq, stupid, in 2004. And that's why Bush's numbers...

NOVAK: My question -- my question...

SHIELDS: ... are still tanking.

NOVAK: ... was, don't you think he's uncomfortable?

SHIELDS: I think -- do I think he'd prefer to be talking...

NOVAK: On Iraq.

SHIELDS: ... about the economy? I think -- I think he -- I think he feels right now -- I think he feels right now -- maybe I'm wrong -- that it's going so badly for Bush that if he is sort of modulated and measured -- and let's be very frank about it, the speech was in the tradition -- he was rhetorical grave-robbing when he talked about Teddy Roosevelt and Dwight Eisenhower, and (UNINTELLIGIBLE) to say it, I'm in the mainstream and Bush is out of the mainstream.

CARLSON: Mark, I have an ad I would like to run next to Kate's Gore ad, which is just Paul -- Paul Wolfowitz getting wrong by 200 the number of dead in Iraq.

SHIELDS: Last word, Margaret Carlson.

Next on CAPITAL GANG, another holiday terrorism alert.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN ASHCROFT, ATTORNEY GENERAL: Credible intelligence from multiple sources indicates that al Qaeda plans to attempt an attack on the United States in the next few months. This disturbing intelligence indicates al Qaeda's specific intention to hit the United States hard.

(END VIDEO CLIP)

SHIELDS: Once again, on a holiday weekend, the government issued another terror warning, but with limits.

(BEGIN VIDEO CLIP) TOM RIDGE, SECRETARY OF HOMELAND SECURITY: There is absolutely nothing specific enough or that rises to the level where we would presently today, as we speak, make a recommendation to the president to raise the threat level.

(END VIDEO CLIP)

SHIELDS: Margaret Carlson, is it not prudent for the government to warn us about threats of terror?

CARLSON: Yes, prudent, I guess. But as long as we stay at mellow yellow, it doesn't really have much meaning. I mean, what we learned from this terror alert, or from John Ashcroft's press conference and Representative Chris Cox's criticism of it, is that one doesn't know what the other's doing and that, unfortunately, Tom Ridge is no -- has been marginalized in this whole process. Homeland Security and Justice and the FBI over here are not consulting with our Homeland Security guy. And our Homeland Security guy, Ridge, was, by the way, the guy who was going to take over defense, at one point, if Rumsfeld did not come back in a second term. And I think that is over.

SHIELDS: Bob Novak, you've talked about seeing everything through the prism of politics. Is this a way, with this sort of vague threat and no change in the color code or alerts or whatever -- is this sort of a way of restoring George Bush's strength as a commander- in-chief in the war against terrorism?

NOVAK: I don't think this came out of the White House...

SHIELDS: You don't?

NOVAK: ... Mark. It may disillusion you and may make you unhappy. And I don't think, Margaret, it hurts Tom Ridge. I think Tom Ridge is still the -- the leading choice to be secretary of defense if Rumsfeld goes.

SHIELDS: And Bush is reelected.

CARLSON: OK.

NOVAK: And -- well, maybe even before he's reelected.

(LAUGHTER)

NOVAK: The -- I think -- I think this is a -- this was -- this is John Ashcroft. There's a lot -- as somebody who was an admirer of John Ashcroft, and I strongly supported him when he was nominated, I think he's been a huge disappointment. I don't think the Justice Department's been well run. The good people have left the Justice Department. And the idea -- I think he just -- every once in a while, he just has to get out there on his own and make these statements. It was -- I think it was a meaningless statement. It doesn't -- am I going to be more careful? Is -- is Kate going to be more careful over the weekend because he said that? We have nothing to do with that. So I -- I think this was John Ashcroft's folly, not Tom Ridge's weakness.

SHIELDS: Meaningless...

CARLSON: Are you going to find those seven people?

SHIELDS: Meaningless statement, Kate O'Beirne?

O'BEIRNE: No, I think Bob's wrong about that. I think the president was very much aware of and supportive of putting out the names and faces of these seven. Look, the infamous August 6 Presidential Daily Brief had no actionable intelligence, and the FBI has been roundly criticized by all the hindsight experts that we had some suspects on a watch list and nobody ever put their picture out there, and they wound up on that plane out of Dulles Airport. So we -- I think these have a real chance to at least make it more difficult for those seven to be operational in the United States, and it might have a disruptive effect. That's exactly the FBI's job, which is different from Tom Ridge's.

SHIELDS: Al Hunt.

HUNT: Mark, Ashcroft at one point said that the profile of these new terrorists will be young, European-looking people who speak English well. So I mean, the good news is that eliminates us. You know, we can at least sleep better that way.

I think there -- I -- I'll let Bob and Kate argue about whether Bush knew or not, but I do think there are Bush political strategists, most of them who think that this terrorism issue is a win-win for them. If al Qaeda is crazy enough to try to pull a Madrid and do something to affect this election, it will backfire. People will rally around the commander-in-chief. I suspect they're right about that. If it doesn't happen, they're going to argue that 36 months and nothing's happened since 9/11, we are safer.

I don't think that'll work because we are not safer. The Institute of International Strategic Studies in London this week said that al Qaeda's membership has -- has -- has mushroomed to 18,000, they're getting stronger, and that the counterterrorism, the global counterterrorism that was so formidable after Afghanistan is getting weaker.

SHIELDS: Last word, Al Hunt.

There's much more ahead in the second half of THE CAPITAL GANG. I visit the new World War II memorial and talk to some veterans. "Beyond the Beltway" will look at the New York attorney general's lawsuit against the former head of the New York Stock Exchange. And our "Outrages of the Week." That's all after these important messages.

(COMMERCIAL BREAK)

CAROL LIN, CNN ANCHOR: I'm Carol Lin at the CNN Center. CAPITAL GANG will continue in just a moment. But first a look at the top stories. Three Palestinians have been killed in an Israeli rocket attack in Gaza City. Palestinian sources say an Israeli Apache helicopter fired two rockets at a motorcycle. Three people, including a senior leader of the military wing of Hamas were killed. Seven others were wounded. The Israeli military said two of those killed were in the midst of planning an attack.

And there is more rough weather ahead for the Midwest. For the latest, here's Jacqui Jeras at the CNN Weather Center -- Jacqui.

JACQUI JERAS, CNN METEOROLOGIST: Carol, so far, 20 tornado reports tonight. Thankfully no reports of damage so far. We have tornado and severe weather watches in effect from Texas extending all the way up to the U.S.-Canadian border, up there in North Dakota and Minnesota.

We have a number of tornado warnings, one just to the west of Sioux Falls, a possible tornado, about five miles away. It is tracking towards the east. You want to take cover now.

A Very serious situation also going in South Dakota, tornado warnings for Edmonds (ph) County with a public (ph) reported tornado two miles northwest of Ipswich; Brown (ph) County in South Dakota where weather spotters reported a tornado three miles south-southeast of Columbia. And a little farther south into Kansas you have an unbelievable supercell right there near Concordia right now. You want to be taking cover there. That is a very dangerous looking thunderstorm.

Huge outlook area for today, high risk has been issued. Basically a one in four chance that a tornado is going to come within 25 miles of your house if you live within this area. Of course, you've got the holiday weekend, unfortunately, it's not just going to be tonight, it's going to continue in here Sunday. Already a moderate look. It's going to be shifting eastwards.

So tomorrow it's going to be Memphis, Nashville, St. Louis, Chicago, Cincinnati. Make sure you plan what you're going to do if you're at that outdoor barbecue and those sirens go off or the skies look threatening.

Remember, Carol, watch means conditions are favorable, a warning means, take cover now.

LIN: You got it. Thanks, Jacqui.

Those are the headlines, more news in about 30 minutes. But right now back to THE CAPITAL GANG.

SHIELDS: Welcome back to the second half of THE CAPITAL GANG. I'm Mark Shields with Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

Here in Washington today, thousands of members of the greatest generation, their families, friends and dignitaries gather to dedicate the World War II Memorial. Washington's newest memorial rests on the National Mall, between the Lincoln Memorial and the Washington Monument.

Veterans of World War II are dying at a rate of more than 1000 a day with fewer than 4 million of the 16 million who served still alive. Last week I visited the memorial and talked with some of the veterans who served our nation in that war.

(BEGIN VIDEOTAPE)

SHIELDS (voice-over): This weekend, 60 years after World War II, the nation finally dedicates a memorial in Washington, D.C.

Much of the world was already at war when on a Sunday morning the United States Pacific fleet was crippled by a surprise Japanese attack.

FRANKLIN D. ROOSEVELT, PRESIDENT OF THE UNITED STATES: With the unbounding determination of our people, we will gain the inevitable triumph, so help us God.

SHIELDS: When President Franklin Roosevelt was first inaugurated, the United States had only the sixteenth-largest army in the world, smaller than the armies of Spain, Poland, Turkey and 12 other countries.

Although they are now in the late autumn of their years, those who answered their nation's call then still remember well.

JACK EVANS, USMC VETERAN: I saw this Marine Corps poster where the guys are in their dress blues and I said, that's just got to be for me, the girls have got to love those dress blues. And at 17 you're interested in girls. So December, 1943 I enlisted.

TED TAUBERT, U.S. ARMY AIR CORPS VETERAN: As a kid I saw all kinds of flying, Air Force, Navy planes flying, and I just wanted to get into flying. So when the war came along, I joined up.

ROBERT COLLINS, U.S. NAVY VETERAN: I wanted to avoid the draft, I guess, that's the reason I went into the Navy before I became old enough for the draft.

SHIELDS: They served here and overseas. They do not romanticize their service, but they do share a pride in that common cause.

TAUBERT: I flew 89 combat missions. We were all over Europe, Germany, France, doing mostly close support work, dive-bombing, strafing, that type of work.

GEORGE MCKINNEY, U.S. ARMY VETERAN: I was in command of a prisoner-of-war camp in Berlin, Germany.

ROD JOHNSON, U.S. ARMY AIR CORPS VETERAN: I went into the Air Force as a radar man. We didn't -- I didn't actually, I wasn't a pilot or anything. What we did was give radar support to the airbases.

SHIELDS: They carry with them not only the painful losses they endured, but they also treasure that era's national spirit of unity.

TAUBERT: It was such a different war. Everybody knew what the mission was. There was an enemy that was known and they were right out there and you knew what had to be done.

MCKINNEY: The United States was all together. Everybody was doing the same thing. And everybody was there.

JOHNSON: I think there was a lot more, what do I call it, patriotism in World War II. People believed in what they were doing. And the home front supported the soldiers. And the people overseas, the soldiers knew that the home front was behind them.

COLLINS: We were united in those days. There was no divisions. Everybody had one target and that was what were after. I think that's the biggest thing that I can remember is it made you proud to be American.

SHIELDS: This memorial is dedicated to all Americans, those who wore the uniform and the millions more who sacrificed here at home.

Because the nation's farm products had to first feed our troops and allies, ordinary civilians in their back yards, corner lots and public places, planted 20 million victory gardens, which by the middle of the war, producing more than one-third of their nation's fresh vegetables.

Everybody's gas was rationed. Most Americans were limited to just three gallons a week.

To pay for the war, which cost more than all the federal budgets of the nation from 1776 to 1940 put together, the taxes Americans at home paid were increased by 300 percent.

On the day he received his draft notice, heavyweight boxing champion Joe Louis successfully defended his title and donated his entire purse to the Navy relief fund. Baseball Hall-of-Famers Ted Williams, Joe DiMaggio and Bob Feller all served. So too did Hollywood stars: Jimmy Stewart, Clark Gable and Henry Fonda. The president's four sons were all in uniform.

John F. Kennedy's multimillionaire father pulled strings and used his influence to get JFK into, not out of, Navy combat service.

Most who served in that war will never see the memorial for their sacrifice. But their comrades who survive were quite pleased.

NATHAN LOUSE, U.S. ARMY VETERAN: I think it is wonderful, very emphatic (ph), fantastic, shows every state, every -- it really shows the feeling.

COLLINS: I think it's beautiful, couldn't be any better done, I don't think. Fact of the matter is, I didn't think I'd still live...

(AUDIO GAP)

COLLINS: ... heart attack about a month ago. But I got to see it.

MCKINNEY: I am awestruck. I am struck by awe. That's beautiful and appropriate. I like it.

EVANS: It's just beautiful, can't describe it.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Twelve years ago a CNN/"TIME" poll showed Ross Perot leading the presidential race with 33 percent and President George Bush second at 28 percent. Arkansas Governor Bill Clinton was third with just 24 percent. Governor Clinton took aim at the Texas billionaire.

(BEGIN VIDEO CLIP FROM 1992)

GOV. BILL CLINTON (D-AR), PRESIDENTIAL CANDIDATE: That's why Mr. Perot does well in the polls. He says, I haven't been part of either one of those parties. Vote for me, I know nothing about it. I just got here.

(LAUGHTER)

(END VIDEO CLIP)

SHIELDS: CAPITAL GANG discussed this on May 16, 1992. Our guest was then Senator Harris Wofford, Democrat from Pennsylvania.

(BEGIN VIDEO CLIP FROM THE CAPITAL GANG, MAY 16, 1992)

HUNT: Bob, can Clinton or Bush attacks stop Perot now?

NOVAK: Well, that kind of stuff sure isn't going to do it, Al. Governor Clinton is saying, this fellow is not a policy wonk like I am. That's why the people like Perot.

UNIDENTIFIED FEMALE: When people get into the polling booth and pull a lever for president of the United States, that's a very serious choice that they make. And they're not going to take a pig in a poke. And that's what Ross Perot is at the moment. Nobody knows what he stands for.

SHIELDS: If there is anybody that ought to know about somebody fading it's the Bush campaign. This is a man who 54 percent of the vote just four years ago, as Harris pointed out, a year ago he was at 90 percent approval in the polls, carried 40 states. He now is down to 28 percent support.

SEN. HARRIS WOFFORD, (D), PENNSYLVANIA: I have one strong bet. In the end more Democrats will be able to come home to Clinton than Republicans who are going to, I think, feel very comfortable going over to a billionaire businessman.

(END VIDEO CLIP) SHIELDS: Kate O'Beirne, what was clearer 12 years ago was how weak incumbent President Bush was. Is his son, this President Bush, in similar shape today?

O'BEIRNE: Well, there are some crucial differences that did weaken his father. Let's not forget that his father had a challenge from within his own party in the person of Pat Buchanan. His son has a unified base, a unified Republican Party. And his father, of course, faced a third party challenge that pulled from his base in the person of Ross Perot, which, this President Bush doesn't. In fact, this time John Kerry faces such a challenge.

SHIELDS: Bob Novak.

NOVAK: I think that we didn't really realize at that time what desperate shape Bush was in. It was really an elimination. People just couldn't buy Perot in the end and Bush was unrecoverable.

CARLSON: You know, we hear an echo of Republicans from that time, however, they never thought this governor from a small state could win, no matter how bad Bush 41 was. And by the way, he wasn't that bad. But as we know, Clinton went on to win. The same thing they say about Kerry, he can't win no matter how bad the situation in Iraq gets and with this president.

HUNT: We also didn't -- we didn't appreciate, Bob, how good Clinton was at that time as a politician. There is, in Yogi's famous phrase, a little bit of deja vu all over again, though. This president is only in marginally better shape than his father was 12 years ago because most people in America today don't think the country is moving in the right direction.

SHIELDS: I'll just point on thing quickly, and that is Ross Perot went from zero in every public opinion poll in February 18 of that year, to leading in four months without spending a nickel on radio or TV advertising. That's an accomplishment I've never seen before or since in American politics.

Next on CAPITAL GANG, "Beyond the Beltway": In New York, Wall Street cop takes on greed, CNN's Allan Chernoff joins us.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Eliot Spitzer, the attorney general of the state of New York, filed suit against Dick Grasso, former chairman of the New York Stock Exchange. Spitzer demanded that Grasso return more than $100 million of the nearly of $140 million paid him by the exchange last year.

(BEGIN VIDEO CLIP)

ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: You can't pay the head of a not-for-profit that much money, close to $200 million, it's simply too much, it's not reasonable, it's not right, it violates the law.

(END VIDEO CLIP)

SHIELDS: Dick Grasso issued a statement saying: "I'm disappointed that New York's attorney general has chosen to intervene in what amounts to a commercial dispute between my former employer and me."

Joining us now from New York is Allan Chernoff, senior correspondent for CNN who covers business and financial news.

Thanks for coming in, Allan.

ALLAN CHERNOFF, CNN FINANCIAL NEWS SR. CORRESPONDENT: A real pleasure and we've got a great story to talk about here.

SHIELDS: Absolutely. But Allan, after all his successes prosecuting corporate criminals and misdeeds, this time has Eliot Spitzer, Wall Street crusader, gone too far?

CHERNOFF: Well, I don't know if he's gone too far, but he certainly is going to have more of a challenge than he's had in the past, because in the past he's been able to squeeze out settlements from the major Wall Street firms. He even got Dick Grasso on board to help craft that settlement over the conflicts on research.

But now Dick Grasso is going to strike back. He is going to go to court, going to fight Spitzer. This is going to be a great court battle. So Spitzer has got a big fight ahead.

SHIELDS: Bob Novak.

NOVAK: Allan, which side of the big deals on Wall Street on Grasso -- he's history, they don't have to think about him. Spitzer may be governor of New York, who are they rooting for in this?

CHERNOFF: Well, a lot of people on Wall Street were very upset with Dick Grasso, particularly the people on the floor of the New York Stock Exchange. When they heard about his compensation they were really outraged.

The bottom line is that it had pretty much been secret. It hadn't been revealed. People didn't know exactly how much he had accumulated, and when the number finally came out, it was simply shocking to Wall Street.

On the other hand, Grasso does have a lot of fans in terms of his actual management. He is widely considered to have been a great CEO. And even Eliot Spitzer said that at the press conference announcing the lawsuit.

SHIELDS: Margaret Carlson.

CARLSON: Allan, isn't one of the problems that it's not what's illegal, it's what is legal on Wall Street, and that as long as you have these compensation committees made up of pals, you're going to get rubber-stamped whatever these CEOs want, whether it's a public company or a private company. And that's not going to end. CHERNOFF: Yes, corporate governance is almost an oxymoron, not only on Wall Street but in corporate America. I mean, we've just seen so many boards asleep at the wheel.

But what Eliot Spitzer is alleging here is that the board members really didn't have all the information. He's saying in this lawsuit that key information was actually withheld from the board, that essentially they didn't even know what they were voting about. So we're going to have some very interesting information come out.

Among the data here in the lawsuit, that a $5 million bonus actually was never revealed to the board members and other details that were simply withheld.

SHIELDS: Kate O'Beirne.

O'BEIRNE: It's of course well-known that Eliot Spitzer has big political ambitions, Allan. One member of the stock exchange board who did know what was going on was the chairman of the compensation committee at one point, former comptroller Carl McCall, a big figure in Democratic politics, Is Spitzer vulnerable to the accusation or the suspicion that he picks his targets based on those kinds of Democratic politics?

CHERNOFF: Yes. Grasso is saying, hey, why didn't you actually go after Carl McCall? After all, he was the head of the compensation committee for the final vote on this package that Grasso.

But what Spitzer says in the lawsuit is that it was really Ken Langone, the prior head of the compensation committee, who was pretty much running the cards here, determining what was going to be given to the rest of the board.

He kind of describes Langone as sort of the Machiavelli here, of making sure that his buddy Grasso would get whatever he wanted. And there's very little about Carl McCall in the actual lawsuit.

But it's certainly a very legitimate question raised by Mr. Grasso. Let's keep in mind that the lawsuit is against not only Mr. Grasso, but also against Ken Langone and the New York Stock Exchange itself. But nowhere do we see Mr. McCall named in the lawsuit.

SHIELDS: Al Hunt.

HUNT: Allan, as you suggested earlier, both sides say they're dug in for a big court fight. Lawyers however tell me that this is going to be a tough one for Spitzer to win. And on the other hand that even if Grasso wins, his -- the picture of him as a poster boy for greed is only going to be embellished. Doesn't that suggest that maybe both sides, as they closer to a court date, may actually want to find a settlement here?

CHERNOFF: Possible, but what Grasso has said he's going to do is if he wins, he's intending to give all of his winnings to charity. And Grasso is in this without question to try to redeem his reputation. Of course he has enough money. That's not a problem for him. But his reputation has just been demolished. And this is absolutely devastating to a guy who spent 35 years at the stock exchange, worked his way all the way up from the bottom rung at the exchange, the only person ever to do that in the history of the New York Stock Exchange.

SHIELDS: Allan Chernoff, thank you for being with us. THE CAPITAL GANG will be back with our "Outrages of the Week."

(COMMERCIAL BREAK)

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

A Memorial Day, (UNINTELLIGIBLE) remind us of the debt the nation owes to the veterans whose sacrifice we honor. Just how much do we honor this nation's veterans? According to the Associated Press, a Bush administration memo on next year's budget, effective October 1, 2005, this nation will honor veterans and their health care at least $1 billion less than we do today. That's all so the administration can preserve its free tax cuts which disproportionately reward the wealthiest and most privileged.

Happy Memorial Day.

Bob Novak.

NOVAK: Last weekend, George W. Bush fell off his bicycle and suffered a few scrapes. John Kerry had a zinger: "Did the training wheels fall off?" asked the Democratic candidate. That style was made popular by Howard Dean, Terry McAuliffe and James Carville. But it offends many people, including the Democratic mayor of Chicago.

Richard M. Daley said: "When someone falls, you should not wish ill upon anyone, you see too much hate." The cliche is that this election is about Bush, not Kerry. The Democrats sure hope so.

SHIELDS: Margaret Carlson.

CARLSON: Mark, "The New York Times" blamed unnamed editors for chasing scoops, for being taken in by the Pentagon's million-dollar man, Ahmed Chalabi. That admission ran on page 10, while "The Times" was snookered on page 1.

Recall Jayson Blair? He didn't contribute to a war in which over 800 Americans have died, yet he got a page 1 mea culpa and the resignation of two editors. Intel agencies actually cited "The Times"'s dubious reporting to justify the war.

Such a failure on the part of "The Times" demands more than a Nixonian "mistakes were made" non-apology.

SHIELDS: Kate O'Beirne.

O'BEIRNE: There are five investigations of alleged fraud and corruption in the U.N.'s Oil-for-Food Program intended to provide humanitarian aid during Saddam's regime. An apparent cover-up can now be added to the charges.

Kofi Annan refuses to provide Congress with internal audits. Colin Powell and Jerry Bremer are also accused of stonewalling. We provide 22 percent of the U.N.'s budget and of course 100 percent of the State Department. If Kofi's friends who opposed the war weren't on Saddam's payroll, what's the problem?

SHIELDS: Al Hunt.

HUNT: The White House is making plans for a second Bush term, and it's not good news for education or medical research, or as Mark suggested, veterans' benefits. "The Washington Post" reveal a private Bush budget document that outlines sweeping budget cuts for the fiscal 2006.

The Infant and Children's Nutritional Program, medical research, Head Start, environmental protection, all cut. Of course, none of this is designed to become public until after the election. This document would be a good starting point for a debate with John Kerry and George Bush before the election.

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

Coming up next, "CNN PRESENTS: President Kennedy Has Been Shot." At 9 p.m. "LARRY KING LIVE," an encore interview with Dr. Phil. And at 10 p.m., the latest news.

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 May 29, 2004 - 19:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: 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, under fire for his Iraq policy, amended and explained it.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: By keeping our promise on June 30, the coalition will demonstrate that we have no interest in occupation.

With the approval of the Iraqi government, we will demolish the Abu Ghraib prison.

I sent American troops to Iraq to make its people free, not to make them American.

As the Iraqi people move closer to governing themselves, the terrorists are likely to become more active and more brutal.

SEN. JOE BIDEN (D), DELAWARE: I didn't hear any fundamental change in strategy. And quite frankly, I -- I don't think there was full leveling with the American people.

(END VIDEO CLIP)

SHIELDS: Lieutenant General Ricardo Sanchez was replaced as U.S. commander in Iraq. Was it because of the prison abuse scandal?

(BEGIN VIDEO CLIP)

BUSH: Rick Sanchez has done a fabulous job. He's been there for a long time.

(END VIDEO CLIP)

SHIELDS: Bob Novak, we've been here for a long time...

(LAUGHTER)

SHIELDS: Did the president help himself politically...

MARGARET CARLSON, CAPITAL GANG: And Bob's been here for an even longer time!

SHIELDS: Did he help himself politically with his speech to the country on Iraq this week?

BOB NOVAK, CAPITAL GANG: I don't think so. I don't think a speech -- you hear all these silly things, mostly on cable television, about this is the most important speech of his -- of his presidency, and then they forget about it the next day. What's going to help him politically is if there's an improvement on the ground there. And there's, hopefully, improvement once they get the handover in power, but I can't predict there will be. But speeches aren't going to do it. When you get -- and also, we're in a full campaign mode, Mark. When you get somebody like Joe Biden, who is as even-handed as any of the prominent Democrats are, and he can't say a good word about it, you're not going to get a single bit of forbearance from the Democrats in a presidential campaign mode.

SHIELDS: But a lot of the griping, Kate, had come from Republicans who had grown restless. Did this speech secure them, comfort them, strengthen them in their resolve?

KATE O'BEIRNE, CAPITAL GANG: I agree with Bob about how -- how a single speech will never be all that important. But I do think the president did a good job this week reassuring his supporters. He was frank. He even used the word "failure." He's being realistic about what's going on in Iraq. The success in training some of the Iraqi troops so far has been disappointing, but we're going to stay it because we must. He reminded a broader audience of the enormous stakes involved here. I think he did do a good job.

And for those who claimed -- which the Democrats, of course, do because they're making these partisan attacks -- that the U.S. policy is adrift, he's -- there's a definite course, and he laid out the course. It's not enough to satisfy Joe Biden. But there will be no fundamental shift in our strategy because the president is resolute about turning over security increasingly to the Iraqis and making sure that the political reforms take place.

SHIELDS: Margaret Carlson, turning over to the -- to the Iraqis -- another problem -- another complication is that now we're finding out that each group is going to have its own militia, not only the clerics but the Sunnis, the Shias, the Kurds. I mean, it's just -- everybody's going to have their own...

CARLSON: Right.

SHIELDS: Isn't that going to make security a little bit tougher.

CARLSON: Yes. And you know, the allies that America needs are the ordinary Iraqi people, but in order to bring security, any kind of security, in the face of Iraqi troops not being trained quick enough, America's turning it over to, you know, Ba'athist generals. And we cut this deal with Sadr this week because Sistani said to do so. And it looks like different insurgents are going to be given credibility, and we're going to pull back and hope for the best.

But Kate, it is not just Democratic partisans. Senators Warner, Lugar, Domenici, Roberts -- Bush allies -- are going wobbly on Iraq.

SHIELDS: Al, is the reality on the ground such, and the prospects so grave, that the best speech in the world, the Emancipation Proclamation, wouldn't have changed things?

AL HUNT, CAPITAL GANG: Yes. And I just totally disagree with Kate. I think his speech was actually quite disingenuous because what he says are our goals -- what the president says are our goals -- a free, democratic Iraq, pro-Western, pro-Israeli, a beacon in the region -- if you want to have that, it will require the presence of American troops for years, probably decades, a lot more casualties, and -- and cost a lot more money, and no certainty of success. That's no longer what the president's goal is. All he's hoping for now is -- all this administration's hoping for is a slightly more secure place, probably some kind of loose confederation, where we can start getting out. Probably a Shia theocracy will run much of the country.

And I think, you know, the president -- I predict by this fall, we're going to start reducing the troop levels over there, not because the place is any -- any safer or more secure, because the American election is only weeks away. And Kate, I think, at some point, we ought to acknowledge that has been a change in policy.

O'BEIRNE: Well...

NOVAK: That is -- that is -- that is such a campaign mode thing of...

HUNT: You don't there's been a change in policy?

NOVAK: Can I...

HUNT: No, but do you think there has been?

NOVAK: ... finish? Can I -- can I finish my statement in my own way, without being interrupted by you?

HUNT: I wasn't interrupting, I was asking.

NOVAK: Yes, I think you did interrupt me. Maybe -- maybe we'll...

(CROSSTALK)

SHIELDS: Go ahead. Go ahead.

NOVAK: I really believe that that is such a -- there's no -- that is -- what you said is based on the Democratic theory there's nothing good he can do right now. If he changes, he's a -- he's a fool. If he doesn't change, he's a fool. There's just no chance of it.

And -- and Margaret, the question of the -- of the deal he made with Sadr -- they're -- his militia was getting murdered. That was -- that was a capitulation on Sadr's part. I mean, that -- that -- you got to look at the glass sometimes like it's half full. CARLSON: Well, I think they're going to regroup, just as, you know, the remnants of Saddam's -- Saddam's army already have done. I mean, we're having a re-Ba'athification and a de-Chalibization in Iraq in hopes that Iraqi people feel secure enough to come around to support...

(CROSSTALK)

SHIELDS: I want to come back to Kate, but just -- just one point on Sadr, Bob. That was -- the stated objective was to -- to capture him as a criminal...

(CROSSTALK)

SHIELDS: ... a war criminal, and to dismantle totally his...

CARLSON: His army, and...

SHIELDS: ... his militia.

CARLSON: ... to hold him for murder!

O'BEIRNE: Look, something else...

SHIELDS: And that changed.

O'BEIRNE: Something else has to be said. This nonsense that General Sanchez is leaving under anything than -- other than a routine rotation is ridiculous! This man has served loyally and well. He's going back to the 5th Corps in Europe. Tommy Franks has been rotated out. General Kimmitt will some day go back to the 18th Airborne Corps. And the only people who are alleging that General Sanchez's routine rotation has anything to do with Abu Ghraib or anything else are people themselves who've been relieved by Don Rumsfeld.

NOVAK: Mark -- Mark, don't -- don't you -- don't you agree -- just trying to be fair...

SHIELDS: Sure. I know you are.

NOVAK: ... that Sadr's people have really taken it on...

SHIELDS: Absolutely.

CARLSON: Oh, no!

NOVAK: ... nose!

CARLSON: I agree, but...

NOVAK: They've been -- well, why don't we say that! I mean, why don't we try to...

(CROSSTALK)

HUNT: But Bob -- Bob... CARLSON: It's more complicated...

HUNT: Bob...

CARLSON: ... that in Sistani went over and said, Listen, leave Sadr alone.

NOVAK: Well, it isn't...

HUNT: Bob -- Bob...

NOVAK: I mean, they were in desperate shape militarily, Sadr!

CARLSON: But they were going to...

HUNT: Bob, I...

CARLSON: They were going to keep at it...

HUNT: Bob -- Bob, I can see why you didn't want to answer that question because, basically, what -- while accusing me of a Democratic campaign speech, what you, of course, want to avoid is the fact that all of those lofty goals of 15 months ago -- that this was going to be come kind of Jeffersonian democracy in the region -- had been abandoned!

NOVAK: Yes, but -- but what...

HUNT: Now, that's -- that's a simple reality...

NOVAK: What I...

HUNT: ... and that's -- that happens to be...

NOVAK: What I -- what I am saying...

HUNT: And -- and maybe that's unavoidable...

NOVAK: They -- they...

HUNT: ... but at some point, you ought to tell the American people that.

NOVAK: Well, the reason -- the reason I avoided it, I was trying to say something when you interrupted me. But as a matter of fact, they should be abandoned because they were unrealistic. And people like you were pushing them!

HUNT: Well -- well, fine, Bob! Then acknowledge they've been abandoned!

O'BEIRNE: The fundamental -- the fundamental...

HUNT: Did the president do that?

O'BEIRNE: The fundamental rationale for the war remains. That hasn't changed.

SHIELDS: Last word, Kate O'Beirne.

THE GANG of five will be back with John Kerry campaigning and the return of Al Gore.

We're still looking for the weapons of mass destruction.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Senator John Kerry refined his criticism of President Bush's Iraq policy.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: They have undermined the legacy of generations of American leadership, and that is what we must restore.

There's a powerful yearning around the world for an America that listens and leads again, an America that is respected, not just feared.

(END VIDEO CLIP)

SHIELDS: Earlier in the same week, the most recent Democratic nominee was on the attack against President Bush.

(BEGIN VIDEO CLIP)

AL GORE (D-TN), FORMER VICE PRESIDENT OF THE UNITED STATES: How dare they subject us to such dishonor and disgrace! How dare they drag the good name of the United States of America through the mud of Saddam Hussein's torture prison!

(END VIDEO CLIP)

SHIELDS: Senator Kerry put an end to the 6-day-old speculation as to whether he would delay accepting the nomination in order to raise more money.

(BEGIN VIDEO CLIP)

KERRY: I believe it's right for us to have a convention to nominate, to speak to the country, to have a finality to the process of nomination.

(END VIDEO CLIP)

SHIELDS: Al Hunt, is Al Gore coming over as a stronger candidate than John Kerry?

HUNT: Oh, no, Mark. No. No. Kerry -- Kerry has a problem on the left, and it's Ralph Nader, and it remains to see how that -- how that plays out. But Al Gore, who -- who was full-bodied as well as full-throated in that speech -- he was shrill, talking to a bunch of lefties -- on the substance, he's getting criticized by a lot of people because he called for -- for sacking all the national security team that got us into this quagmire. I would point out the very same week that General Anthony Zinni, former Marine general, a former Bush Mideast envoy, CINC commander, did the same thing in his book and -- and -- and on "60 Minutes."

I actually think that John Kerry, after two really bad months, has had a couple good weeks. The initial commercials were good. He's a little bit better on the stump, still a little ponderous, but a little bit better. He made the right decision on the convention, and apparently, he's engaged in a serious consideration for a running mate.

O'BEIRNE: Weeks when either Al Gore or Teddy Kennedy are in the news are not good weeks for John Kerry. You now understand -- I understand now why Al Gore's so concerned with global warming. He is in meltdown. That was an unhinged, disgraceful performance. He blamed all of America for what went on in Abu Ghraib, despite all of the evidence. He smeared all of us, warned Americans that we have to resist the temptation, the innate temptation to abuse others. The charge against people like Doug Feith, he calls him -- doesn't even know who he's calling to have resign -- one of the charges against them is they're responsible for the impending loss of intimacy with one's soul!

It was altogether disgraceful in front of that disgraceful left- wing group Moveon.org, his favored audience, Al Gore. Let me remind you, Moveon.org was opposed to Afghanistan, to toppling the Taliban in Afghanistan. So if it was up to Al Gore's favored audience, the Taliban would be running Afghanistan and Usama bin Laden's camps would still be in full operation. And Al Gore's containment policy he's touting brought us 3,000 dead Americans.

SHIELDS: Just so we understand -- I don't think Al and Kate agree on this...

(CROSSTALK)

SHIELDS: Could you give us a sense of...

NOVAK: No, as much as I hate to disagree with my friend, Al, the -- I don't think it was a good two weeks for John Kerry. And the Democrats I talk to don't think it was a good two weeks. They think Bush is going down fast, but they don't think Kerry is going up. And the -- I even find Democrats who say, Well, Gore's a little over the hill, but at least he's got some life to him. That guy Kerry is so ponderous and boring and uninteresting. And to say he made the right decision on accepting the nomination -- I mean, he -- he was the guy who set up the phony choice of whether he was going to accept the nomination! And when several of the anchors said that, We won't go to the convention, they said, Hey, this is -- this is a mistake.

So I think -- I think it was not a good week for John Kerry.

SHIELDS: Not only the anchors, but Tom Menino, the mayor of Boston, who's the host of the convention, on the hook for the whole event, was openly and publicly and repeatedly miffed about the prospect of this being a sham convention.

CARLSON: Yes. It was...

(CROSSTALK)

CARLSON: It was a ridiculous trial balloon to put out there. Now, the law should be changed so that the money starts at the same time, but that's a separate discussion than whether he's going to provisionally accept the nomination.

Kerry is right not to move left and placate the Naderites in his party. That looked like Gore channeling Howard Dean in Iowa. It's not a good performance, and you can't do it about the war in Iraq. It's too serious. And Kerry's -- listen, it's not that -- that Kerry is moving towards Bush's position, as Democrats are accusing him, Bush has moved towards Kerry's on the war. And you know, multi-lateralist, Let's train Iraqi troops, Let's secure the place, Let's get a U.N. umbrella -- so where's Kerry to go and be responsible? He has to stay where he is because it's the right position and let Bush just keep digging his own hole deeper.

SHIELDS: Let me just -- let me just toss out another possibility, that Al Gore does serve a purpose for John Kerry, in the sense that he's not Ralph Nader and that there is a body within the Democratic Party who is still agitated and exercised. He is supporting John Kerry.

O'BEIRNE: I suppose in contrast, Al Gore makes John Kerry look sane. I suppose that's helpful. Look, it's not just the Naderites. Over half of all Democrats want us to pull out of Iraq immediately, which would be a huge disaster. The Republicans ought to be running that Al Gore speech with a warning under it: Warning, this man came too close to becoming president of the United States, be careful in November, be very careful!

NOVAK: Can I -- can I ask you...

CARLSON: And you know what...

(CROSSTALK)

SHIELDS: Sure. Go ahead.

NOVAK: Let me ask -- let me ask you a question. Don't you think that John Kerry looks very uncomfortable on this issue, that he'd really rather be talking about the economy, but the economy is on an upswing, so it's not a good issue at the moment. But don't you think he's very uncomfortable...

O'BEIRNE: Yes.

NOVAK: ... on Iraq because he -- he doesn't want to go all the way over and get into an attack...

SHIELDS: Is that a question?

NOVAK: Yes.

SHIELDS: OK. (UNINTELLIGIBLE) answer that's a little shorter than the question.

(LAUGHTER)

SHIELDS: First of all, I think -- I think John Kerry's made the decision to get up to George Bush's left shoulder. And I agree with Margaret. I never heard Lakhdar Brahimi mentioned until recently, when the war went bad. So there has been a move in that direction. But I don't -- I think -- I think the -- Tom Gallagher (ph), the financial analyst, put this well. He said, In spite of the improving economy, it's Iraq, stupid, in 2004. And that's why Bush's numbers...

NOVAK: My question -- my question...

SHIELDS: ... are still tanking.

NOVAK: ... was, don't you think he's uncomfortable?

SHIELDS: I think -- do I think he'd prefer to be talking...

NOVAK: On Iraq.

SHIELDS: ... about the economy? I think -- I think he -- I think he feels right now -- I think he feels right now -- maybe I'm wrong -- that it's going so badly for Bush that if he is sort of modulated and measured -- and let's be very frank about it, the speech was in the tradition -- he was rhetorical grave-robbing when he talked about Teddy Roosevelt and Dwight Eisenhower, and (UNINTELLIGIBLE) to say it, I'm in the mainstream and Bush is out of the mainstream.

CARLSON: Mark, I have an ad I would like to run next to Kate's Gore ad, which is just Paul -- Paul Wolfowitz getting wrong by 200 the number of dead in Iraq.

SHIELDS: Last word, Margaret Carlson.

Next on CAPITAL GANG, another holiday terrorism alert.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN ASHCROFT, ATTORNEY GENERAL: Credible intelligence from multiple sources indicates that al Qaeda plans to attempt an attack on the United States in the next few months. This disturbing intelligence indicates al Qaeda's specific intention to hit the United States hard.

(END VIDEO CLIP)

SHIELDS: Once again, on a holiday weekend, the government issued another terror warning, but with limits.

(BEGIN VIDEO CLIP) TOM RIDGE, SECRETARY OF HOMELAND SECURITY: There is absolutely nothing specific enough or that rises to the level where we would presently today, as we speak, make a recommendation to the president to raise the threat level.

(END VIDEO CLIP)

SHIELDS: Margaret Carlson, is it not prudent for the government to warn us about threats of terror?

CARLSON: Yes, prudent, I guess. But as long as we stay at mellow yellow, it doesn't really have much meaning. I mean, what we learned from this terror alert, or from John Ashcroft's press conference and Representative Chris Cox's criticism of it, is that one doesn't know what the other's doing and that, unfortunately, Tom Ridge is no -- has been marginalized in this whole process. Homeland Security and Justice and the FBI over here are not consulting with our Homeland Security guy. And our Homeland Security guy, Ridge, was, by the way, the guy who was going to take over defense, at one point, if Rumsfeld did not come back in a second term. And I think that is over.

SHIELDS: Bob Novak, you've talked about seeing everything through the prism of politics. Is this a way, with this sort of vague threat and no change in the color code or alerts or whatever -- is this sort of a way of restoring George Bush's strength as a commander- in-chief in the war against terrorism?

NOVAK: I don't think this came out of the White House...

SHIELDS: You don't?

NOVAK: ... Mark. It may disillusion you and may make you unhappy. And I don't think, Margaret, it hurts Tom Ridge. I think Tom Ridge is still the -- the leading choice to be secretary of defense if Rumsfeld goes.

SHIELDS: And Bush is reelected.

CARLSON: OK.

NOVAK: And -- well, maybe even before he's reelected.

(LAUGHTER)

NOVAK: The -- I think -- I think this is a -- this was -- this is John Ashcroft. There's a lot -- as somebody who was an admirer of John Ashcroft, and I strongly supported him when he was nominated, I think he's been a huge disappointment. I don't think the Justice Department's been well run. The good people have left the Justice Department. And the idea -- I think he just -- every once in a while, he just has to get out there on his own and make these statements. It was -- I think it was a meaningless statement. It doesn't -- am I going to be more careful? Is -- is Kate going to be more careful over the weekend because he said that? We have nothing to do with that. So I -- I think this was John Ashcroft's folly, not Tom Ridge's weakness.

SHIELDS: Meaningless...

CARLSON: Are you going to find those seven people?

SHIELDS: Meaningless statement, Kate O'Beirne?

O'BEIRNE: No, I think Bob's wrong about that. I think the president was very much aware of and supportive of putting out the names and faces of these seven. Look, the infamous August 6 Presidential Daily Brief had no actionable intelligence, and the FBI has been roundly criticized by all the hindsight experts that we had some suspects on a watch list and nobody ever put their picture out there, and they wound up on that plane out of Dulles Airport. So we -- I think these have a real chance to at least make it more difficult for those seven to be operational in the United States, and it might have a disruptive effect. That's exactly the FBI's job, which is different from Tom Ridge's.

SHIELDS: Al Hunt.

HUNT: Mark, Ashcroft at one point said that the profile of these new terrorists will be young, European-looking people who speak English well. So I mean, the good news is that eliminates us. You know, we can at least sleep better that way.

I think there -- I -- I'll let Bob and Kate argue about whether Bush knew or not, but I do think there are Bush political strategists, most of them who think that this terrorism issue is a win-win for them. If al Qaeda is crazy enough to try to pull a Madrid and do something to affect this election, it will backfire. People will rally around the commander-in-chief. I suspect they're right about that. If it doesn't happen, they're going to argue that 36 months and nothing's happened since 9/11, we are safer.

I don't think that'll work because we are not safer. The Institute of International Strategic Studies in London this week said that al Qaeda's membership has -- has -- has mushroomed to 18,000, they're getting stronger, and that the counterterrorism, the global counterterrorism that was so formidable after Afghanistan is getting weaker.

SHIELDS: Last word, Al Hunt.

There's much more ahead in the second half of THE CAPITAL GANG. I visit the new World War II memorial and talk to some veterans. "Beyond the Beltway" will look at the New York attorney general's lawsuit against the former head of the New York Stock Exchange. And our "Outrages of the Week." That's all after these important messages.

(COMMERCIAL BREAK)

CAROL LIN, CNN ANCHOR: I'm Carol Lin at the CNN Center. CAPITAL GANG will continue in just a moment. But first a look at the top stories. Three Palestinians have been killed in an Israeli rocket attack in Gaza City. Palestinian sources say an Israeli Apache helicopter fired two rockets at a motorcycle. Three people, including a senior leader of the military wing of Hamas were killed. Seven others were wounded. The Israeli military said two of those killed were in the midst of planning an attack.

And there is more rough weather ahead for the Midwest. For the latest, here's Jacqui Jeras at the CNN Weather Center -- Jacqui.

JACQUI JERAS, CNN METEOROLOGIST: Carol, so far, 20 tornado reports tonight. Thankfully no reports of damage so far. We have tornado and severe weather watches in effect from Texas extending all the way up to the U.S.-Canadian border, up there in North Dakota and Minnesota.

We have a number of tornado warnings, one just to the west of Sioux Falls, a possible tornado, about five miles away. It is tracking towards the east. You want to take cover now.

A Very serious situation also going in South Dakota, tornado warnings for Edmonds (ph) County with a public (ph) reported tornado two miles northwest of Ipswich; Brown (ph) County in South Dakota where weather spotters reported a tornado three miles south-southeast of Columbia. And a little farther south into Kansas you have an unbelievable supercell right there near Concordia right now. You want to be taking cover there. That is a very dangerous looking thunderstorm.

Huge outlook area for today, high risk has been issued. Basically a one in four chance that a tornado is going to come within 25 miles of your house if you live within this area. Of course, you've got the holiday weekend, unfortunately, it's not just going to be tonight, it's going to continue in here Sunday. Already a moderate look. It's going to be shifting eastwards.

So tomorrow it's going to be Memphis, Nashville, St. Louis, Chicago, Cincinnati. Make sure you plan what you're going to do if you're at that outdoor barbecue and those sirens go off or the skies look threatening.

Remember, Carol, watch means conditions are favorable, a warning means, take cover now.

LIN: You got it. Thanks, Jacqui.

Those are the headlines, more news in about 30 minutes. But right now back to THE CAPITAL GANG.

SHIELDS: Welcome back to the second half of THE CAPITAL GANG. I'm Mark Shields with Al Hunt, Robert Novak, Kate O'Beirne and Margaret Carlson.

Here in Washington today, thousands of members of the greatest generation, their families, friends and dignitaries gather to dedicate the World War II Memorial. Washington's newest memorial rests on the National Mall, between the Lincoln Memorial and the Washington Monument.

Veterans of World War II are dying at a rate of more than 1000 a day with fewer than 4 million of the 16 million who served still alive. Last week I visited the memorial and talked with some of the veterans who served our nation in that war.

(BEGIN VIDEOTAPE)

SHIELDS (voice-over): This weekend, 60 years after World War II, the nation finally dedicates a memorial in Washington, D.C.

Much of the world was already at war when on a Sunday morning the United States Pacific fleet was crippled by a surprise Japanese attack.

FRANKLIN D. ROOSEVELT, PRESIDENT OF THE UNITED STATES: With the unbounding determination of our people, we will gain the inevitable triumph, so help us God.

SHIELDS: When President Franklin Roosevelt was first inaugurated, the United States had only the sixteenth-largest army in the world, smaller than the armies of Spain, Poland, Turkey and 12 other countries.

Although they are now in the late autumn of their years, those who answered their nation's call then still remember well.

JACK EVANS, USMC VETERAN: I saw this Marine Corps poster where the guys are in their dress blues and I said, that's just got to be for me, the girls have got to love those dress blues. And at 17 you're interested in girls. So December, 1943 I enlisted.

TED TAUBERT, U.S. ARMY AIR CORPS VETERAN: As a kid I saw all kinds of flying, Air Force, Navy planes flying, and I just wanted to get into flying. So when the war came along, I joined up.

ROBERT COLLINS, U.S. NAVY VETERAN: I wanted to avoid the draft, I guess, that's the reason I went into the Navy before I became old enough for the draft.

SHIELDS: They served here and overseas. They do not romanticize their service, but they do share a pride in that common cause.

TAUBERT: I flew 89 combat missions. We were all over Europe, Germany, France, doing mostly close support work, dive-bombing, strafing, that type of work.

GEORGE MCKINNEY, U.S. ARMY VETERAN: I was in command of a prisoner-of-war camp in Berlin, Germany.

ROD JOHNSON, U.S. ARMY AIR CORPS VETERAN: I went into the Air Force as a radar man. We didn't -- I didn't actually, I wasn't a pilot or anything. What we did was give radar support to the airbases.

SHIELDS: They carry with them not only the painful losses they endured, but they also treasure that era's national spirit of unity.

TAUBERT: It was such a different war. Everybody knew what the mission was. There was an enemy that was known and they were right out there and you knew what had to be done.

MCKINNEY: The United States was all together. Everybody was doing the same thing. And everybody was there.

JOHNSON: I think there was a lot more, what do I call it, patriotism in World War II. People believed in what they were doing. And the home front supported the soldiers. And the people overseas, the soldiers knew that the home front was behind them.

COLLINS: We were united in those days. There was no divisions. Everybody had one target and that was what were after. I think that's the biggest thing that I can remember is it made you proud to be American.

SHIELDS: This memorial is dedicated to all Americans, those who wore the uniform and the millions more who sacrificed here at home.

Because the nation's farm products had to first feed our troops and allies, ordinary civilians in their back yards, corner lots and public places, planted 20 million victory gardens, which by the middle of the war, producing more than one-third of their nation's fresh vegetables.

Everybody's gas was rationed. Most Americans were limited to just three gallons a week.

To pay for the war, which cost more than all the federal budgets of the nation from 1776 to 1940 put together, the taxes Americans at home paid were increased by 300 percent.

On the day he received his draft notice, heavyweight boxing champion Joe Louis successfully defended his title and donated his entire purse to the Navy relief fund. Baseball Hall-of-Famers Ted Williams, Joe DiMaggio and Bob Feller all served. So too did Hollywood stars: Jimmy Stewart, Clark Gable and Henry Fonda. The president's four sons were all in uniform.

John F. Kennedy's multimillionaire father pulled strings and used his influence to get JFK into, not out of, Navy combat service.

Most who served in that war will never see the memorial for their sacrifice. But their comrades who survive were quite pleased.

NATHAN LOUSE, U.S. ARMY VETERAN: I think it is wonderful, very emphatic (ph), fantastic, shows every state, every -- it really shows the feeling.

COLLINS: I think it's beautiful, couldn't be any better done, I don't think. Fact of the matter is, I didn't think I'd still live...

(AUDIO GAP)

COLLINS: ... heart attack about a month ago. But I got to see it.

MCKINNEY: I am awestruck. I am struck by awe. That's beautiful and appropriate. I like it.

EVANS: It's just beautiful, can't describe it.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Twelve years ago a CNN/"TIME" poll showed Ross Perot leading the presidential race with 33 percent and President George Bush second at 28 percent. Arkansas Governor Bill Clinton was third with just 24 percent. Governor Clinton took aim at the Texas billionaire.

(BEGIN VIDEO CLIP FROM 1992)

GOV. BILL CLINTON (D-AR), PRESIDENTIAL CANDIDATE: That's why Mr. Perot does well in the polls. He says, I haven't been part of either one of those parties. Vote for me, I know nothing about it. I just got here.

(LAUGHTER)

(END VIDEO CLIP)

SHIELDS: CAPITAL GANG discussed this on May 16, 1992. Our guest was then Senator Harris Wofford, Democrat from Pennsylvania.

(BEGIN VIDEO CLIP FROM THE CAPITAL GANG, MAY 16, 1992)

HUNT: Bob, can Clinton or Bush attacks stop Perot now?

NOVAK: Well, that kind of stuff sure isn't going to do it, Al. Governor Clinton is saying, this fellow is not a policy wonk like I am. That's why the people like Perot.

UNIDENTIFIED FEMALE: When people get into the polling booth and pull a lever for president of the United States, that's a very serious choice that they make. And they're not going to take a pig in a poke. And that's what Ross Perot is at the moment. Nobody knows what he stands for.

SHIELDS: If there is anybody that ought to know about somebody fading it's the Bush campaign. This is a man who 54 percent of the vote just four years ago, as Harris pointed out, a year ago he was at 90 percent approval in the polls, carried 40 states. He now is down to 28 percent support.

SEN. HARRIS WOFFORD, (D), PENNSYLVANIA: I have one strong bet. In the end more Democrats will be able to come home to Clinton than Republicans who are going to, I think, feel very comfortable going over to a billionaire businessman.

(END VIDEO CLIP) SHIELDS: Kate O'Beirne, what was clearer 12 years ago was how weak incumbent President Bush was. Is his son, this President Bush, in similar shape today?

O'BEIRNE: Well, there are some crucial differences that did weaken his father. Let's not forget that his father had a challenge from within his own party in the person of Pat Buchanan. His son has a unified base, a unified Republican Party. And his father, of course, faced a third party challenge that pulled from his base in the person of Ross Perot, which, this President Bush doesn't. In fact, this time John Kerry faces such a challenge.

SHIELDS: Bob Novak.

NOVAK: I think that we didn't really realize at that time what desperate shape Bush was in. It was really an elimination. People just couldn't buy Perot in the end and Bush was unrecoverable.

CARLSON: You know, we hear an echo of Republicans from that time, however, they never thought this governor from a small state could win, no matter how bad Bush 41 was. And by the way, he wasn't that bad. But as we know, Clinton went on to win. The same thing they say about Kerry, he can't win no matter how bad the situation in Iraq gets and with this president.

HUNT: We also didn't -- we didn't appreciate, Bob, how good Clinton was at that time as a politician. There is, in Yogi's famous phrase, a little bit of deja vu all over again, though. This president is only in marginally better shape than his father was 12 years ago because most people in America today don't think the country is moving in the right direction.

SHIELDS: I'll just point on thing quickly, and that is Ross Perot went from zero in every public opinion poll in February 18 of that year, to leading in four months without spending a nickel on radio or TV advertising. That's an accomplishment I've never seen before or since in American politics.

Next on CAPITAL GANG, "Beyond the Beltway": In New York, Wall Street cop takes on greed, CNN's Allan Chernoff joins us.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Eliot Spitzer, the attorney general of the state of New York, filed suit against Dick Grasso, former chairman of the New York Stock Exchange. Spitzer demanded that Grasso return more than $100 million of the nearly of $140 million paid him by the exchange last year.

(BEGIN VIDEO CLIP)

ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: You can't pay the head of a not-for-profit that much money, close to $200 million, it's simply too much, it's not reasonable, it's not right, it violates the law.

(END VIDEO CLIP)

SHIELDS: Dick Grasso issued a statement saying: "I'm disappointed that New York's attorney general has chosen to intervene in what amounts to a commercial dispute between my former employer and me."

Joining us now from New York is Allan Chernoff, senior correspondent for CNN who covers business and financial news.

Thanks for coming in, Allan.

ALLAN CHERNOFF, CNN FINANCIAL NEWS SR. CORRESPONDENT: A real pleasure and we've got a great story to talk about here.

SHIELDS: Absolutely. But Allan, after all his successes prosecuting corporate criminals and misdeeds, this time has Eliot Spitzer, Wall Street crusader, gone too far?

CHERNOFF: Well, I don't know if he's gone too far, but he certainly is going to have more of a challenge than he's had in the past, because in the past he's been able to squeeze out settlements from the major Wall Street firms. He even got Dick Grasso on board to help craft that settlement over the conflicts on research.

But now Dick Grasso is going to strike back. He is going to go to court, going to fight Spitzer. This is going to be a great court battle. So Spitzer has got a big fight ahead.

SHIELDS: Bob Novak.

NOVAK: Allan, which side of the big deals on Wall Street on Grasso -- he's history, they don't have to think about him. Spitzer may be governor of New York, who are they rooting for in this?

CHERNOFF: Well, a lot of people on Wall Street were very upset with Dick Grasso, particularly the people on the floor of the New York Stock Exchange. When they heard about his compensation they were really outraged.

The bottom line is that it had pretty much been secret. It hadn't been revealed. People didn't know exactly how much he had accumulated, and when the number finally came out, it was simply shocking to Wall Street.

On the other hand, Grasso does have a lot of fans in terms of his actual management. He is widely considered to have been a great CEO. And even Eliot Spitzer said that at the press conference announcing the lawsuit.

SHIELDS: Margaret Carlson.

CARLSON: Allan, isn't one of the problems that it's not what's illegal, it's what is legal on Wall Street, and that as long as you have these compensation committees made up of pals, you're going to get rubber-stamped whatever these CEOs want, whether it's a public company or a private company. And that's not going to end. CHERNOFF: Yes, corporate governance is almost an oxymoron, not only on Wall Street but in corporate America. I mean, we've just seen so many boards asleep at the wheel.

But what Eliot Spitzer is alleging here is that the board members really didn't have all the information. He's saying in this lawsuit that key information was actually withheld from the board, that essentially they didn't even know what they were voting about. So we're going to have some very interesting information come out.

Among the data here in the lawsuit, that a $5 million bonus actually was never revealed to the board members and other details that were simply withheld.

SHIELDS: Kate O'Beirne.

O'BEIRNE: It's of course well-known that Eliot Spitzer has big political ambitions, Allan. One member of the stock exchange board who did know what was going on was the chairman of the compensation committee at one point, former comptroller Carl McCall, a big figure in Democratic politics, Is Spitzer vulnerable to the accusation or the suspicion that he picks his targets based on those kinds of Democratic politics?

CHERNOFF: Yes. Grasso is saying, hey, why didn't you actually go after Carl McCall? After all, he was the head of the compensation committee for the final vote on this package that Grasso.

But what Spitzer says in the lawsuit is that it was really Ken Langone, the prior head of the compensation committee, who was pretty much running the cards here, determining what was going to be given to the rest of the board.

He kind of describes Langone as sort of the Machiavelli here, of making sure that his buddy Grasso would get whatever he wanted. And there's very little about Carl McCall in the actual lawsuit.

But it's certainly a very legitimate question raised by Mr. Grasso. Let's keep in mind that the lawsuit is against not only Mr. Grasso, but also against Ken Langone and the New York Stock Exchange itself. But nowhere do we see Mr. McCall named in the lawsuit.

SHIELDS: Al Hunt.

HUNT: Allan, as you suggested earlier, both sides say they're dug in for a big court fight. Lawyers however tell me that this is going to be a tough one for Spitzer to win. And on the other hand that even if Grasso wins, his -- the picture of him as a poster boy for greed is only going to be embellished. Doesn't that suggest that maybe both sides, as they closer to a court date, may actually want to find a settlement here?

CHERNOFF: Possible, but what Grasso has said he's going to do is if he wins, he's intending to give all of his winnings to charity. And Grasso is in this without question to try to redeem his reputation. Of course he has enough money. That's not a problem for him. But his reputation has just been demolished. And this is absolutely devastating to a guy who spent 35 years at the stock exchange, worked his way all the way up from the bottom rung at the exchange, the only person ever to do that in the history of the New York Stock Exchange.

SHIELDS: Allan Chernoff, thank you for being with us. THE CAPITAL GANG will be back with our "Outrages of the Week."

(COMMERCIAL BREAK)

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

A Memorial Day, (UNINTELLIGIBLE) remind us of the debt the nation owes to the veterans whose sacrifice we honor. Just how much do we honor this nation's veterans? According to the Associated Press, a Bush administration memo on next year's budget, effective October 1, 2005, this nation will honor veterans and their health care at least $1 billion less than we do today. That's all so the administration can preserve its free tax cuts which disproportionately reward the wealthiest and most privileged.

Happy Memorial Day.

Bob Novak.

NOVAK: Last weekend, George W. Bush fell off his bicycle and suffered a few scrapes. John Kerry had a zinger: "Did the training wheels fall off?" asked the Democratic candidate. That style was made popular by Howard Dean, Terry McAuliffe and James Carville. But it offends many people, including the Democratic mayor of Chicago.

Richard M. Daley said: "When someone falls, you should not wish ill upon anyone, you see too much hate." The cliche is that this election is about Bush, not Kerry. The Democrats sure hope so.

SHIELDS: Margaret Carlson.

CARLSON: Mark, "The New York Times" blamed unnamed editors for chasing scoops, for being taken in by the Pentagon's million-dollar man, Ahmed Chalabi. That admission ran on page 10, while "The Times" was snookered on page 1.

Recall Jayson Blair? He didn't contribute to a war in which over 800 Americans have died, yet he got a page 1 mea culpa and the resignation of two editors. Intel agencies actually cited "The Times"'s dubious reporting to justify the war.

Such a failure on the part of "The Times" demands more than a Nixonian "mistakes were made" non-apology.

SHIELDS: Kate O'Beirne.

O'BEIRNE: There are five investigations of alleged fraud and corruption in the U.N.'s Oil-for-Food Program intended to provide humanitarian aid during Saddam's regime. An apparent cover-up can now be added to the charges.

Kofi Annan refuses to provide Congress with internal audits. Colin Powell and Jerry Bremer are also accused of stonewalling. We provide 22 percent of the U.N.'s budget and of course 100 percent of the State Department. If Kofi's friends who opposed the war weren't on Saddam's payroll, what's the problem?

SHIELDS: Al Hunt.

HUNT: The White House is making plans for a second Bush term, and it's not good news for education or medical research, or as Mark suggested, veterans' benefits. "The Washington Post" reveal a private Bush budget document that outlines sweeping budget cuts for the fiscal 2006.

The Infant and Children's Nutritional Program, medical research, Head Start, environmental protection, all cut. Of course, none of this is designed to become public until after the election. This document would be a good starting point for a debate with John Kerry and George Bush before the election.

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

Coming up next, "CNN PRESENTS: President Kennedy Has Been Shot." At 9 p.m. "LARRY KING LIVE," an encore interview with Dr. Phil. And at 10 p.m., the latest news.

Thank you for joining us.

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