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Inside Politics

Chandra Levy's Aunt Disputes Gary Condit's Account of His Relationship With Levy

Aired July 06, 2001 - 17:00   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, this is INSIDE POLITICS with Judy Woodruff.

Was it a friendship or an affair? Chandra Levy's aunt tells what she knows about her niece's relationship with Gary Condit. We'll tell you what CNN has learned about Condit's political future.

Plus: the deal that spares the life of admitted spy Robert Hanssen.

And how is the White House taking a swing at image of adjustment, even as the president kicks back on his birthday?

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: So you see a rather old guy, kind of moving along slowly, that will be me.

(END VIDEO CLIP)

ANNOUNCER: Now Judy Woodruff takes you INSIDE POLITICS:

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us.

A little over an hour ago, former intern Chandra Levy's aunt detailed what she knows about her niece's relationship with Congressman Gary Condit, and it does not jibe with Condit's claim that he and Levy were just good friends.

CNN's Bob Franken has more on the 15-page statement and the status of the search for Chandra Levy.

(BEGIN VIDEOTAPE)

LINDA ZAMSKY, CHANDRA LEVY'S AUNT: I can't talk with you right now...

BOB FRANKEN, CNN CORRESPONDENT (voice-over): While Linda Zamsky, Chandra Levy's aunt, would say nothing on camera, she released a statement through the public relations firm which represents the Levy family charging that Congressman Gary Condit's "lack of candor is hindering efforts to find Chandra." "From my many conversations with her," said Zamsky, "it was clear without a doubt that they were involved in an intimate relationship. She described in detail some of their bedroom encounters."

Ever since the 24-year-old former Washington intern disappeared about nine weeks ago, Condit has repeatedly tried to deflect reports he had a romantic relationship with Levy. But Zamsky says her 24- year-old niece confided in her about her alleged relationship with Condit. She called Levy "upbeat, and full of life," and continued, "No one in her family believes she committed suicide."

Police make it clear that suicide is the least likely reason that Chandra Levy disappeared. Zamsky is one of about a 100 people police say they've interviewed during their search.

Carolyn Condit, the congressman's wife, was questioned Thursday by Washington police and FBI agents in a Washington, D.C. suburb. A law enforcement source familiar with all aspects of the investigation tells CNN the questioning of Mrs. Condit lasted three to four hours, that it was "entirely about a minute-by-minute description of what happened during the period when she was in town, the times she was with him and the times she was not."

Congressman Condit reportedly told investigators his wife was in Washington between April 28th and May 3rd, the time that Chandra Levy disappeared.

CHIEF CHARLES RAMSEY, D.C. METROPOLITAN POLICE: Mr. Condit is only one of many people that we have talked to about this case.

(END VIDEOTAPE)

FRANKEN: Now police sources tell CNN that many of their interviews have been with those in the Washington exercise club on April 30th, when Levy came in to cancel her membership before returning to California.

And they also spoke to the clerk at a 7-Eleven outside Washington. He had claimed that Levy purchased several items on April 29th, the day before she was reportedly last seen. But after reviewing the surveillance tape again, police sources now say that Levy was not the woman on tape.

The investigation continues, and authorities have interviewed Congressman Condit twice. Will there be a third time? No plans yet, said an investigator, but -- quote -- "I would suspect that as we develop more leads, I'm sure that's a possibility."

Now, referring once again to the Linda Zamsky charges that of course came out about an hour ago, CNN has asked Condit's spokesman for a statement, and we're told, Judy, they are deciding how to respond.

WOODRUFF: Bob, I know you talk to people on Capitol Hill all the time. How much longer do they think Congressman Condit can go without giving a more detailed explanation of what he knows? FRANKEN: Well, there are actually two schools of thought. One, that he probably should do it as quickly as possible. But there's another school of thought that if he responds, particularly on television, it's a no-win situation. No matter what he says, he's going to be (a) compared to Bill Clinton, and (b) whatever he says is going to be somehow ripped apart by the people who analyze these things.

WOODRUFF: All right, Bob Franken, thanks very much. I know you're staying on top of this story.

As the spotlight on Congressman Condit and his personal life grows hotter by the day, the speculation about his political future also is intensifying. Let's now bring in our Congressional correspondent, Jonathan Karl.

Jonathan, what is Condit telling his colleagues?

JONATHAN KARL, CNN CORRESPONDENT: Well, Judy, a Democratic official tells CNN that Gary Condit last week met with the House Democratic leader, Dick Gephardt. The message of that meeting from Condit, according to this official, was that Condit had absolutely no intention to resign, and more importantly, he has no reason to resign. It's a message that Condit repeatedly, last week, we are told, told his fellow members of the House on the floor.

Now, if, in fact, this meeting, as we were told, took place between Gephardt and Condit, apparently his own staff does not know about it. His chief of staff, Mike Lynch, said he had no knowledge of this meeting, and said that -- no knowledge of any special meetings. He said any discussions that Condit has had with fellow members of Congress have happened simply in the normal course of business on the House floor.

That said, since last week, Judy, several Democrats, key Democrats here on the Hill, have expressed frustration, expressed it privately, with how Condit has handled this situation. They say that the statements that he has released through his staff, statements that many up here believe are incomplete, have only fueled the frenzy surrounding the story. They believe that Condit needs to do something more on this, many of them do.

As a matter of fact, one of the harshest assessments came from a former top leader, top Democratic leader in the House, now out of Congress, who told me, and I quote -- "I think he is totally mishandling this. His credibility is falling apart." Judy?

WOODRUFF: I'm sorry, Jonathan. What are the Democrats you're talking to -- of course, Congressman Condit is a Democrat -- what are they saying about his political future and the future of his district in California?

KARL: Well, they're very worried about that district in California because they say, and they know that that district is one that the Democrats have kept simply because of Gary Condit's personal popularity, not because of the makeup of that district. Even as Condit has breezed through reelection in recent years, it's been a tough district for other Democrats. For example, in 1996, Bill Clinton beat Bob Dole by only a single percentage point. And if you remember, Judy, in '96, that was a year that Clinton trounced Dole in the rest of California.

And last fall, last fall in November, Bush actually won that district by a commanding 9-point margin, even as he lost throughout much of the rest of California. So Democrats know that that's a district that Condit has won because he is personally popular. He's a conservative Democrat. They're worried that if things go south on him, this could become a situation where that is a very competitive district and a very tough one for Democrats to hold. That's an assessment, by the way, that Republicans readily agree with.

WOODRUFF: All right, Jonathan Karl at the Capitol.

In the meantime, Chandra Levy's parents have launched a fund- raising campaign in hopes of generating a reward of at least $100,000 to help learn the fate of their daughter. The effort was announced today by the public relations firm that is working for the Levy's, as they deal with huge media interest in this story.

Howard Kurtz of CNN's "RELIABLE SOURCES" has been analyzing the news coverage of the Levy case.

(BEGIN VIDEOTAPE)

HOWARD KURTZ, HOST, CNN'S "RELIABLE SOURCES" (voice-over): In the beginning, two long months ago, the story was about a young woman who mysteriously vanished from the nation's capital. But the spotlight gradually shifted from Chandra Levy's disappearance to her relationship, by many indications a romantic relationship, with Congressman Gary Condit.

Condit, through his spokesman, consistently denied any romantic involvement with Levy. But the media's pursuit of the California Democrat reached a new level of intensity this week when flight attendant Anne Marie Smith told Fox News she'd had an affair with Condit, and that he'd asked her to deny it with a sworn affidavit.

ANNE MARIE SMITH, FLIGHT ATTENDANT: Obviously Mr. Condit knew it was false, and he was asking me to sign it.

KURTZ: Condit denied her account in a two-sentence statement, saying he never suggested that anyone "mislead the authorities." But the very brevity of his denial, part of a strategy of refusing to answer a single question in public, has led some commentators to wonder whether Condit has something to hide.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We haven't heard one word from the Congressman, not a word. And even his constituents, in a district where he wins routinely by 65 to 70 percent, now are saying they'd like to hear something from him. (END VIDEO CLIP)

KURTZ: Soon, the airwaves were filled with talk about Condit and the flight attendant.

UNIDENTIFIED REPORTER: By asking Ms. Smith to sign this affidavit, did the Congressman commit a crime?

UNIDENTIFIED MALE: No, I think he skirted fairly close to the edge.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED REPORTER: Pierre, potentially is there obstruction of justice here?

UNIDENTIFIED MALE: Well, that's one of the things that law enforcement officials are going to want to look at.

(END VIDEO CLIP)

KURTZ: For the press, the Monica Lewinsky parallels have been irresistible. Another California intern, another politician denying an affair.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I did not have sexual relations...

KURTZ: And the proposed affidavit that Smith says Condit's lawyer asked her to sign, reminiscent of Lewinsky's talking points for Linda Tripp, a blueprint for denying her affair with President Clinton.

There is, however, one crucial difference. Lewinsky is very much alive, and went on to a big book deal and celebrity endorsements. Chandra Levy is still missing, a painful reality that's been all but obscured by the journalistic focus on the Congressman's alleged affairs.

Even Levy's parents, whose anguished interviews pushed their daughter's disappearance onto the media radar screen, have faded into the background. In their place: such stories as a "Washington Times" account that the FBI wants to talk to five women besides Smith who have come forward, claiming to have been involved with Condit.

Faced with this media deluge, Condit's attorney, Abbe Lowell, is denouncing the coverage of his client.

ABBE LOWELL, CONDIT'S ATTORNEY: Now, I realize that the media has interest, and they should have interest. But just because the media has interest, it doesn't mean that you have to feed that interest, especially because it doesn't help the investigation. It definitely invades the Condit family's privacy, and all it does is kind of create the next set of questions. KURTZ: The spotlight shifted again Friday, when Levy's aunt gave the "Washington Post" a detailed account of Chandra's description of an affair with Condit and how, she says, the congressman went to great lengths to hide it.

(on camera): The proposed affidavit sent to Anne Marie Smith is clearly a major development that raises the possibility of a cover-up, but now the story is almost exclusively about Gary Condit and his sex life. All but lost in the media frenzy is the haunting question that we seem no closer to answering: where is Chandra Levy?

This is Howard Kurtz of CNN's "RELIABLE SOURCES."

(END VIDEOTAPE)

WOODRUFF: And this note on CNN's coverage of Gary Condit and the Chandra Levy case: the lawyer for the flight attendant who says Condit asked her to lie about their affair will be a guest tonight on "THE POINT WITH GRETA VAN SUSTEREN." That's at 8:30 Eastern.

We will have more on the questions surrounding Congressman Gary Condit later in our weekly political roundtable. Up next on INSIDE POLITICS: an accused spy admits his guilt. Former FBI Agent Robert Hanssen's plea deal, and his agreement to tell all about what he gave away.

Also ahead: the president takes time out for fun with family, as aides plot a strategy to regain the political momentum.

And later...

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We're seeing an explosion because of the predatory practices of trial attorneys.

(END VIDEO CLIP)

WOODRUFF: After a short intermission, the debate over a patients' bill of rights gets set to resume. This is INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: Former FBI Agent Robert Hanssen today admitted that he spied for the Soviet Union and Russia off and on over a 20-year period. Hanssen pleaded guilty to 15 counts of espionage in a deal that will allow him to avoid the death penalty. CNN Justice correspondent Kelli Arena has the story.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): Looking thinner and calmer than before, Robert Hanssen pled guilty to espionage, part of a deal under which he'll spend the rest of his life in prison with no chance of parole. LARRY THOMPSON, DEPUTY ATTORNEY GENERAL: The decision to forego the death penalty in this case was a difficult one. In reaching this decision, we determined that the interest of the United States would be best served by pursuing a course that would enable our government to fully assess the magnitude and scope of Hanssen's espionage activities.

ARENA: Hanssen, one of the most damaging spies in U.S. history, will be debriefed and polygraphed by the government over the next six months. Officials want details to determine the harm he caused to U.S. intelligence and to possibly ferret out other moles. Hanssen has already met with investigators twice.

RANDY BELLOWS, ASSISTANT U.S. ATTORNEY: We would not have entered into this plea agreement unless we and the intelligence community concluded that Mr. Hanssen -- the proffer sessions were complete and truthful and forthright.

ARENA: Also part of the agreement, Hanssen's wife Bonnie will receive the equivalent of survivor benefits from his government pension, as allowed by a congressional statute. Prosecutors say she has fully cooperated since her husband's arrest.

BELLOWS: Based on the evidence the government had acquired, Mrs. Hanssen did not have culpability that would result in her prosecution.

ARENA: The government will also allow Hanssen's family to keep its home and vehicles. But any possessions or accounts directly linked to the $1.4 million Hanssen was paid for selling U.S. secrets will be forfeited.

KEN MELSON, U.S. ATTORNEY: He also forfeits any benefit he might receive in the future from publicity associated with this matter.

ARENA: Hanssen's lawyers say he has expressed remorse for his actions, which include revealing U.S. nuclear response plans and identifying Soviet double agents.

PLATO CACHERIS, HANSSEN ATTORNEY: He very much wanted to make amends, that's a big reason for this disposition today, and he wanted to tell his former agency what he had done and how he had done it.

ARENA (on camera): Hanssen will not be sentenced until January 11, which gives the government some time to make sure that he's cooperating as promised.

Kelli Arena, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: And turning now to the president and his agenda.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm going to throw some horseshoes, probably regain the family championship. (END VIDEO CLIP)

WOODRUFF: While Mr. Bush is at play in Maine, his advisers are planning ways to help him score points with the public. That story coming up next.

And later, Gary Condit: watching two worlds collide. Our Candy Crowley looks at the congressman's predicament.

(COMMERCIAL BREAK)

WOODRUFF: Happy birthday to all three of them, to former first lady Nancy Reagan, to the Republican Party, and to President Bush, who is celebrating his birthday today at his family's vacation home in Kennebunkport, Maine.

Mr. Bush will enjoy four days of R&R before he and his aides step up their efforts to improve his PR. CNN's Kelly Wallace has more from Kennebunkport on the president and his summer strategy.

(BEGIN VIDEOTAPE)

KELLY WALLACE, CNN CORRESPONDENT (voice-over): President Bush on the links in Kennebunkport, Maine. The desired portrait: a family man celebrating his 55th birthday.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm going to get what I want for my birthday: Spend time with my family, a couple of good phone calls from some little girls in Texas.

WALLACE: This trip is really about R&R, but perhaps another attempt to recast the president, faced with sagging poll numbers, as someone who is relaxed and not out of touch with everyday Americans.

That is why this week, Mr. Bush greeted tourists at the Jefferson Memorial and played touch football with kids in Philadelphia. White House aides call this a recalibration of the president's image and their strategy.

Some Republicans say Mr. Bush's handling of the Environment and energy policy has not been a public relation success.

MARSHALL WITTMAN, HUDSON INSTITUTE: The major concern of this administration is that the president is being perceived as a corporate conservative rather than a compassionate one.

WALLACE: To correct that, Bush advisers expect the president to focus on three, quote, "compassionate issues" this summer. His faith- based agenda, his plan for a patient's bill of rights and education.

But his ideas may not have enough support from moderates to insure victory, still analysts say the president needs to mount more of an offensive.

STUART ROTHENBERG, CNN POLITICAL ANALYST: The president I think needs to somehow regain control of the agenda, which he has lost. The Democrats are deciding what issues are coming up and the president is having to react to that, and he's not great reacting.

WALLACE: But some Republican strategists say the administration is going through what every White House experiences at the six-month mark when the honeymoon comes to an end.

KEN DUBERSTEIN, FORMER REAGAN WHITE HOUSE CHIEF OF STAFF: Now you are living together and so you've gotten over, "Oh, isn't everything wonderful" to "how do we make this whole thing work"?

(END VIDEOTAPE)

WALLACE: Still, political observers say momentum is key, and that the challenge for Mr. Bush is to turn around a perception that he is on the defensive and stumbling -- Judy.

WOODRUFF: Kelly, you mentioned that every president goes through a time like this. What have other presidents done in these circumstances?

WALLACE: Well, it's interesting. If you take the case of former President Bill Clinton, who actually had a lower approval rating at the six-month mark of his first year in office as compared to President Bush, an approval rating of 39 percent as compared to President Bush who is in the mid 50s or low 50s. well, then Mr. Clinton was faced with some problem, the way he handled the controversial policy of gays in the military.

He reached out to David Gergen. He was a veteran of Republican administrations. Mr. Clinton bringing him to help build or retool his image and his communications strategy. Apparently this president, President Bush, not likely to bring in anyone new.

We do know though, Judy, that White House officials have been talking to Republican strategists for advice, but Mr. Bush seems very satisfied with his advisers, although some have come under fire in the past few weeks. The main thing this white house is doing, Judy, is what they call recalibrating the president's image. That will be going on this summer and this fall -- Judy.

WOODRUFF: So no sign that any high-profile Democrats are going to be joining the Bush White House, Kelly?

WALLACE: I don't think so, but stay tuned. You just never really know what can happen, right?

WOODRUFF: All right, Kelly Wallace reporting from beautiful downtown Kennebunkport, Maine.

Our weekly political roundtable comes your way in just a few minutes, but up next we'll check some of the day's other top stories, including the sentence given the president's daughter Jenna Bush following her recent attempt to buy alcohol in a Texas restaurant.

(COMMERCIAL BREAK)

(NEWS BREAK) WOODRUFF: The media crunch surrounding Congressman Gary Condit and the impact on his political future. When we return, we'll consider Congressman Condit, the Chandra Levy case and the week's other top stories in our political roundtable.

Plus: out of the Senate and into the House. A look ahead to when the patients' bill of rights moves to the other side of the Capitol.

(COMMERCIAL BREAK)

WOODRUFF: Since the story first broke of a missing intern here in Washington, the focus on Chandra Levy's relationship with Congressman Gary Condit has seemed to grow more intense with each passing day. Condit has worked to keep a low profile, but even some political allies of his now question his political future. With more on the pressures now facing the congressman, here is CNN's senior political correspondent Candy Crowley.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): Gary Condit, a man who knows missing intern Chandra Levy. Gary Condit, husband. Gary Condit, politician. You are looking at a man whose life has collided with itself, exploding into political, personal and legal ramifications.

JIM COLE, CRIMINAL DEFENSE ATTORNEY: From a legal standpoint, the communication is solely between he and his lawyer and the authorities, the police and the FBI, and that's where it should be from a legal standpoint.

CROWLEY: But Condit's public silence, understandable personally, desirable legally, is disastrous politically.

ROBIN COHN, "THE P.R. CRISIS BIBLE": I am sure when has was running for office that he didn't run away from cameras or the press. So he does know better.

CROWLEY: The California congressman is a living, breathing example of a person getting smashed between a rock and a hard place. Talk publicly and increase the risk of legal liability; don't talk, and you look like you've got something to hide.

COLE: A whole another problem that you have when you are a member of Congress and have a situation like this is the public relations end. Sometimes the two don't mix well together.

CROWLEY: Beyond the legal, there is the personal. Condit has a wife and adult children he wants to protect from being sucked into the vortex of this mystery. He has said in written statements there was no romantic relationship, but absent anything else, Condit leaves the public arena to others, the latest from Chandra's aunt who says her niece told her the relationship was intimate. It is in his best interests to stay quiet. It is in the best interests of the Levy family to keep the story alive. BO DIETL, FORMER NEW YORK POLICE DETECTIVE: With her picture being all over the place, maybe someone can remember seeing her that day with somebody to get some more evidence.

CROWLEY (on camera): So tough and precarious is Condit's current position that any number of Democratic PR operatives have turned down requests to join his office staff. Instead, the congressman has now turned to an outside corporate PR firm.

Candy Crowley, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Well, with Congress out of town, the Chandra Levy investigation dominated much of discussion in Washington this week. Joining me now to discuss this week's top stories in our weekly political roundtable are Cynthia Tucker, she is editorial page editor of the "Atlanta Constitution." In Los Angeles, Mark Barabak of the "Los Angeles Times," and here in Washington, John Dickerson of "TIME" magazine and CNN's "TAKE FIVE."

John Dickerson, to you first. Now we only have the statement by the flight attendant that she was asked to lie by Congressman Condit, but we also have the completely contradictory statement by the aunt of Chandra Levy. What are we to make of all of this?

JOHN DICKERSON, "TIME" MAGAZINE: Well, that's right. It's tough what we're to make from all of this, but all we know is that it just keeps getting worse for the congressman, and the statements he has put out have not been very satisfying, there is not much sustenance to them, and they also fall into that category we are pretty familiar with here in Washington.

There are a couple of ways to get out of saying what the truth is. One is to say, well, I've got to get back to the business of the country. The problem is, he's not the president, he can't say that. He's also on recess. And the other thing is to attack your attackers, so they have attacked the media for going after him on this story. It's a legitimate story, though, and he's not coming up with the answers that he called for when President Clinton was in a similar fix.

WOODRUFF: Cynthia Tucker, you are not caught up in this Washington vortex. How does all this look to you from Atlanta?

CYNTHIA TUCKER, "ATLANTA CONSTITUTION": Well, I think the congressman's biggest problem is actually in his home district, Judy. Because you are right, you know, he represents a district in California, nobody would have ever heard of this guy on the national scene had he not been linked with this investigation, the investigation into Chandra Levy's disappearance.

But at home, unfortunately, more and more of his constituents are beginning to question his public silence. A poll this morning said that about 44 percent of his constituents don't think he is being helpful enough in the investigation. And that is the thing that is the biggest problem for the congressman at the moment.

WOODRUFF: Well, in Los Angeles, which is close to the congressman's district, Mark Barabak of the "Los Angeles Times." Mark, what are the people out there saying?

MARK BARABAK, "LOS ANGELES TIMES": Well I think that people have -- have realized that Gary Condit has sunk into that special circle of hell known as the Washington media feeding frenzy, and it's moved -- forgive this sort of obvious cliche -- from a legal venue to sort of the court of public opinion, and I think the consensus here, as elsewhere, is that Congressman Condit has handled it rather poorly, has not been forthcoming.

I think that the case sort of took a turn for the worse from his perspective this week with the allegations that he was -- allegations I should underline that he was suborning perjury on the part of this woman who came forward to claim a relationship with him, and I think that sort of materially changed the case. You know, it's the old Washington cliche about it not being the crime -- again, not necessarily saying there was a crime -- but the cover-up, and I think that Congressman Condit has just not helped himself at all.

WOODRUFF: Well, is it premature, Mark Barabak, to look at what happens to his district?

BARABAK: Well, it's -- it's premature in the sense that it's sort of graceless to talk about something like this at this point, while -- while the ultimate search is to find Ms. Levy, but sure, politics goes on, and political insiders abhor vacuum -- I can tell you from having spoken to them, there is a lot of discussion on the Republican side about Congressman Condit appearing vulnerable, there is a lot of discussion on the Democratic side about what might happen if he were to step down. So -- so the talk is out there, and people are already speculating away.

WOODRUFF: All right. We're going to change the subject now and turn back here to Washington and to President Bush. And a lot of speculation today, a lot of interest today, John Dickerson, with word from the White House that the president is planning to endorse a policy to include, quote, "an unborn child" in the definition of those who would be eligible for medical coverage under the children's health -- federal Children's Health Insurance Program.

Where does this issue stand, John, when it comes to looking at pro-abortion, anti-abortion forces?

DICKERSON: Well, this issue comes up at very bad moment for the White House, because it's a mini bomb of one that's about -- of a much larger explosion that's about to go off in the coming weeks as the president makes a decision on whether there should be federal money to pay for stem cell research. And in the course of that larger discussion, there will be a big debate about when life begins, and the question will determine if you are to protect an embryo at the very beginning stages of life.

Well, here's there's a signal that in the administration there's a chance -- and I must say the White House has backpedaled away from this story, and they say, no, this didn't come out of the White House, it came out of the Health and Human Services, and it's not something we're endorsing. And they have been backpedaling all day.

But the real question is when will the White House decide life begins, and that has a big effect on this stem cell research question, which has to do with research that can go to curing Parkinson's, juvenile diabetes and Alzheimer's: three very politically sensitive diseases.

WOODRUFF: Cynthia Tucker, the -- some in the pro-choice groups are saying this is simply a back-door attempt by the White House, by President Bush to perpetuate the administration's opposition to abortion rights. Do they have a point?

TUCKER: I think they probably do. I mean, we know that this president is on the record, whether he is trying to backpedal from this decision or not, he is on the record as being anti-abortion -- and so for that matter is his secretary of Health and Human Services.

But what is interesting about this to me, Judy, is that without the stem cell controversy -- and I think that it is absolutely right that the stem cell controversy promises big trouble for the president, because most Americans favor stem cell research. And if he makes a decision that angers moderates, he is seen as held hostage to the anti-abortion right. However, he has -- this decision is to make coverage available, more insurance coverage available to poor pregnant women.

No matter what you call it, for 20 years, many activists have been trying to get health coverage for poor pregnant women. So without the stem cell controversy, I think this might have been an issue that was difficult for pro-choice activists to face, because how do you say we don't want more health insurance for poor pregnant women.

WOODRUFF: Very quickly, I want to bring up one final topic, and that by our correspondent Kelly Wallace, that the administration, the White House trying to retool in effect the president's agenda as he runs into the difficulty as where five, six months into this administration.

Mark Barabak, is this a smart thing? Is it is a necessary thing for the president to be doing?

BARABAK: Well, it's both a smart and necessary thing. John and Cynthia, just to touch on what they were talking about, the whole abortion controversy, I mean, if you look at the polls and if you look at what's happened politically for the president, he's done a very good job of solidifying the Republican base. And if you look at polls, his numbers are overwhelming positive.

What he's is he's alienated independent voters, very, very negative reviews from Democrats. It's almost the flipside of the phenomena you had under President Clinton. And President Bush really hasn't done very much to move beyond the base that got him elected president. And he's got to do something to start moving toward the middle. I mean, independents are falling away, Democrats are very, very hostile toward him.

They have to do something to recalibrate, because he's been sinking and the has lowest poll numbers at this of any president in 50 years, aside from Bill Clinton and Jimmy Carter before that.

WOODRUFF: And I want to give John Dickerson and Cynthia a chance to get a word in on this whole retooling question. John, you go first.

DICKERSON: Well, if it's more -- it's going to have to be a little bit more than those kind of fuzzy pictures that we saw on the 4th of July. But the president has an opportunity. In August, Congress is out of town. He has the bully pulpit a little bit more than before. He has a chance to -- to sort of take control of things again in the quiet summer months when people aren't paying as much attention.

WOODRUFF: And Cynthia.

TUCKER: But Judy, he has a fundamental problem, and that his position on issues is at odds with much of the American public, and it's going to be hard for him to recalibrate that, I think.

WOODRUFF: All right. Cynthia Tucker with "The Atlanta Constitution," Mark Barabak with "The Los Angeles Times," John Dickerson of "TIME" magazine, thank you all three and have a great weekend. Good to see you.

Those people keeping an eye on the stock market today got an eyeful, mostly of downward-heading numbers. Our Lou Dobbs is here with us now to talk about what happened.

Lou, what did happen?

LOU DOBBS, CNN ANCHOR: Well, Judy, stocks got hammered is what happened on earnings warnings principally and also a big drop in manufacturing jobs that were reported this morning. The Dow today losing 227 points, losing just about 2 percent. The Nasdaq losing 75 points, losing almost 4 percent. And by the way, Judy, this -- in this third quarter, the Nasdaq has yet to post a gain.

WOODRUFF: Well, aside from the bad market developments, Lou, what else have you got coming up on "MONEYLINE" tonight?

DOBBS: Well, we have lots of good news as well and some interesting guests, including the No. 1 Wall Street economist -- Maria Ramirez. She's an international economist, and she will be talking about her view of what we can expect in this economy. There is no better view of the future than hers right now.

And we'll also be joined by Jeremy Siegel, who is a Wharton professor. He predicted this bear market, and we'll see what his view as to what we should all be doing with our money. And Ashok Kumar, technology analyst with Piper Jaffray, will be talking about exactly what's happening to all -- what were once tremendous darlings on Wall Street that are now causing a lot of us a lot of pain.

WOODRUFF: All right. All the more reason to be watching. "LOU DOBBS MONEYLINE" gets under way at 6:30 Eastern.

Thanks, Lou. We'll see you later.

DOBBS: Thanks, Judy.

WOODRUFF: The House gets set to tackle the patients' bill of rights, and observers say only one thing is certain.

(BEGIN VIDEO CLIP)

ED HOWARD, ALLIANCE FOR HEALTH REFORM: You shouldn't think that this is a temporary phenomenon. For the last 50 years, we've had health care costs going up over inflation about 4 percentage points a year. That's probably going to continue.

(END VIDEO CLIP)

WOODRUFF: Up next, a look at the odds that the bill will become law, and the chance that health care costs will rise no matter what Congress decides.

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WOODRUFF: When health care reform returns to the congressional agenda later this month, the familiar debate over the patients' bill of rights will resume, this time in the House of Representatives. President Bush plans a speech on Monday, which he will use to repeat his support in principle for a patients' bill of rights.

CNN's Boston bureau chief, Bill Delaney, has more on the debate ahead and the potential costs of reform.

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BILL DELANEY, CNN CORRESPONDENT (voice-over): Artist Elizabeth Colburn-Moraites' world won't fall apart as HMO rates rise, as they're expected to next year, at least 8 to 15 percent. She has typical, decent coverage.

ELIZABETH COLBURN-MORAITES, ARTIST: It's through my husband's work. His company covers so much, and then so much is taken out of his paycheck.

DELANEY: What's also typical, though, among the country's 170 million dependent on HMOs, a sense, as costs rise, of vulnerability, uncertainty, especially troubling for someone like Elizabeth, who suffers from a disease she'll need only more and more care for: MS.

Still, she strongly supports a patients' bill of rights allowing HMOs to be sued, even if it further raises her rates, as the health industry predicts it will.

COLBURN-MORAITES: I want to make sure that all of the medications are available to me. I'd feel more comfortable with my insurance and feel that they were -- would be more apt to look out for my best interests if there were some repercussions.

DELANEY (on camera): Even many advocates of HMO reform acknowledge making HMOs more vulnerable to lawsuits will further increase costs, but by very small amounts, they say, compared to what's really driving rising rates: how long we now live and the high- cost care and drugs that help us live that long.

(voice-over): Cost, many from both sides of the debate say, by now simply built in to health care.

From a supporter of the patients' bill of rights...

ED HOWARD, ALLIANCE FOR HEALTH REFORM: You shouldn't think that this is a temporary phenomenon. For the last 50 years, we've had health care costs going up over inflation about four percentage points a year. That's probably going to continue.

DELANEY: ... and this from a bill opponent.

KAREN IGNANI, AMERICAN ASSOCIATION OF HEALTH PLANS: In the current legal environment, before Congress takes any action, we are seeing an explosion of premiums. We're seeing an explosion because of the predatory practices of trial attorneys.

DELANEY: Whatever happens to the patients' bill of rights will likely leave the average person, often contending with very extraordinary challenges, to count on just one thing: paying more.

Bill Delaney, CNN, Boston.

(END VIDEOTAPE)

WOODRUFF: The president's top political adviser, Karl Rove, is in New Hampshire today to attend a fund-raiser for Republican Senator Bob Smith. A senior Republican source tells CNN why Rove made the trip. Smith's camp apparently was livid when former President Bush attended a fund-raiser last month for another New Hampshire politician: GOP Congressman John Sununu. Some Republicans are urging Sununu to challenge Smith in next year's GOP Senate primary.

So, Smith's aides told the White House that they thought it would only be fair if the current President Bush stumped for Senator Smith. The Republican source says Rove was sent to appear with Smith as a compromise.

Looking ahead to the political events this weekend, the NAACP's annual conference begins this weekend in New Orleans and a busload of Minnesota seniors will travel to Canada to buy prescription drugs. The trip is being financed by freshman Senator Mark Dayton to dramatize the high costs of prescription drugs here in the United States.

On Sunday, Senate Democrats will wrap up a fund-raiser for their campaign committee at an event in Nantucket while Maryland Lieutenant Governor Kathleen Kennedy Townsend hosts a fund-raiser to finance her run for governor.

On Monday, CNN's Candy Crowley will profile Kathleen Kennedy Townsend here on INSIDE POLITICS.

A hot political topic produces a noteworthy political play. A surprising voice is added to the death penalty debate when INSIDE POLITICS returns.

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WOODRUFF: It was exactly 20 years ago tomorrow that President Reagan nominated Sandra Day O'Connor to be the first woman justice on the United States Supreme Court. Well, O'Connor is still making headlines to this day, headlines that caught the eye of our Bill Schneider -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, Judy, you know, when a Supreme Court justice speaks out, it's always news, especially about a hot political topic that's on the judicial agenda. Well, a justice did speak out this week and transformed the debate.

This was not just a rare event. It was "The Political Play of the Week."

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): The death penalty has become a hot political topic. President Bush found that out when he went to Europe last month and had to explain his support for a policy a lot of people outside the U.S. find barbaric.

BUSH: Democracies represent the will of the people. The death penalty is the will of the people in the United States.

SCHNEIDER: Yes, it does, but the people are becoming a little uncertain. In 1994, support for the death penalty for persons convicted of murder peaked at 80 percent. Since then, the crime rate has gone down, stories have come out about DNA evidence showing the wrong person was convicted and about incompetent legal representation.

The result? Support for the death penalty has declined to 65 percent. Congress is considering the Innocence Protection Act, which would guarantee access to DNA evidence and set new standards for legal representation in capital cases.

Enter Supreme Court Justice Sandra Day O'Connor, the first woman to serve on the nation's high court, nominated exactly 20 years ago tomorrow.

(BEGIN VIDEO CLIP)

RONALD REAGAN, PRESIDENT OF THE UNITED STATES: She is truly a person for all seasons, possessing those unique qualities of temperament, fairness, intellectual capacity and devotion to the public good.

(END VIDEO CLIP)

SCHNEIDER: Justice O'Connor has supported the death penalty in the past. That's why her remarks on Monday to a meeting of Minnesota women lawyers were striking. According to the Associated Press, she told her audience, quote: "The system may well be allowing some innocent defendants to be executed." The public shares that concern: 80 percent believe an innocent person has been executed during the past five years.

Justice O'Connor also expressed concern about the fairness of the death penalty. She cited statistics from Texas showing that poor defendants with court-appointed attorneys are much more likely to be convicted and sentenced to death.

O'Connor's views are especially important because she is the swing vote on the court.

ROBERT BORK, AMERICAN ENTERPRISE INSTITUTE: She's almost never in dissent. She's almost always lined up on the majority. Often, she makes the majority.

SCHNEIDER: O'Connor also bears another distinction: She's the only member of the Supreme Court who's ever been elected to anything, the Arizona legislature, in her case.

O'Connor has more say over the death penalty than any other individual in the United States. When she expressed her concerns this week, she spoke for the country and changed the debate and claimed "The Political Play of the Week."

(END VIDEOTAPE)

SCHNEIDER: O'Connor's remarks have put death penalty supporters on the defensive. Now, they have to meet her concerns about fairness and about protecting the innocent. She has changed the burden of proof -- Judy.

WOODRUFF: And who would have thought it 20 years ago?

SCHNEIDER: Twenty years she's been on the court.

WOODRUFF: All right, Bill Schneider, thanks very much.

And that's it for this edition of INSIDE POLITICS, but of course, you can go online all the time at CNN's allpolitics.com. AOL keyword, CNN. Our e-mail address is insidepolitics@cnn.com.

I'm Judy Woodruff. Now here's Bill Hemmer.

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