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Inside Politics

Field of Democratic Presidential Hopefuls Continues to Crowd

Aired January 03, 2003 - 16:00   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.


CANDY CROWLEY, CNN ANCHOR: INSIDE POLITICS begins right now.
(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The Iraqi regime is a threat to any American.

ANNOUNCER: The president rallies military troops, and Democrats rally their political forces.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: I think what you see is the administration, perhaps, using the term "stimulus" as a Trojan horse to wheel in some favorite tax breaks to the high end that they're so fond of.

ANNOUNCER: The Hillary factor: an insider's view of the first lady turned senator and how she may figure into presidential politics.

Is there a doctor in the house? We'll follow up on Bill Frist's highway heroics, and applaud a separate rescue operation in the "Political Play of the Week."

(END VIDEOTAPE)

ANNOUNCER: Live from Washington, this is INSIDE POLITICS with Judy Woodruff.

CROWLEY: Thanks for joining us. Judy is off this week. I'm Candy Crowley.

President Bush is promising U.S. troops who may see action in Iraq, but if there is a war, America is prepared to win. In this "Newscycle," Mr. Bush visited with thousands of soldiers at the nation's largest Army post, Fort Hood in Killeen, Texas. He told them some crucial hours may lie ahead if Saddam Hussein refuses to disarm.

Democrats are preparing to do battle with the president over the economy. House Democratic leaders plan to unveil their own economic stimulus package Monday. They contend it will be fairer and do less harm to the federal budget than the package Mr. Bush is due to unveil Tuesday.

We'll talk more about economic politics ahead, but for more on the president rallying the troops, we want to go ahead and bring in White House Correspondent Dana Bash in Crawford. Dana, got off the ranch finally, I guess?

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: He sure did. He has been here for about a week, and this is the first time he has left Crawford. He went to Fort Hood, which is in Killeen, Texas, about 80 miles from here in Crawford. He certainly did rally the troops. He talked to them as their commander in chief, and said on behalf of America, he is grateful to them for their service and grateful to their families for the service.

He also said that he is very confident in their ability to serve wherever they're sent, and he said if it comes down to it, the U.S. military is ready for an attack against Saddam Hussein.

(BEGIN VIDEO CLIP)

BUSH: If force becomes necessary to secure our country and to keep the peace, America will act deliberately. America will act decisively. And America will prevail, because we've got the finest military in the world.

(END VIDEO CLIP)

BASH: And, Candy, he also made clear that the troops will not go there to conquer Iraq, but rather to liberate Iraq if they do end up going to -- to that region. He also made clear, like he has in the past couple of days, the difference between his strategy towards Iraq and North Korea, saying with North Korea, there still is a diplomatic solution, and that is something that he intends to employ, working with that country's neighbors in the region, and that's very different from Iraq, where he says that there have been 11 years of broken promises and broken commitments to the world community -- Candy.

CROWLEY: OK, Dana. We want you to stand by for a second, because we want to talk about the economic challenges for the president, but I want to first bring in our Congressional correspondent, John Karl, off Capitol Hill.

A new year, and new leadership for the Democrats on the House side. What is their new plan to go on the offensive about the economy, Jonathan?

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, the first thing is a little bit of preemption. The president, of course, will have his economic stimulus plan on Tuesday. That means the House Democrats now led by Nancy Pelosi will have their plan on Monday. In coming out with their plan, they have talked very little about the details of it, but we have learned a little bit. One, is that it will cost less than the amount than the amount that is being talked about at the White House.

It will probably be in the neighborhood of between 100 and $175 billion, and much of that money will be used for what they are calling a refundable tax credit, something like that tax rebate check that was given out in 2001, except it would go to all employees, not just those that pay income taxes. So even if you don't pay any income taxes at all, under the Democratic plan, you would get some of this tax rebate. They are saying although it will cost less than the White House plan, it could actually cost more in the short run. It could cost more in the first year, because Democrats are saying that's when it's needed. It is needed this year; it's needed right now.

Now, Nancy Pelosi in her first press conference dugout as the incoming leader, said that she took very strong issue with what has been talked about or what she has read about, the White House economic stimulus plan. She had this to say.

(BEGIN VIDEO CLIP)

PELOSI: The speculation that I see doesn't indicate that there's much stimulus in the package. I think what you see is the administration, perhaps, using the term "stimulus" as a Trojan horse to wheel in some favorite tax breaks to the high end that they're so fond of. But it remains to be seen what the president will do.

(END VIDEO CLIP)

KARL: And in a coordinated attack, Senator Tom Daschle, in a radio address to be delivered tomorrow, will also attack the president's plan, saying -- quote -- "the tax break the president is said to be proposing is the wrong idea at the wrong time to help the wrong people." So we're off to a quick start here when it comes to economic stimulus here. Congress doesn't even return until next week, and the leadership for the Democrats in both the House and the Senate also already very much on the attack, attacking what they know of the president's plan, or at least what they've read about it in the newspapers -- Candy.

CROWLEY: All right, Jonathan. Sounds like the season of joy is over -- hang on Jonathan, and I want to bring Dana back now. Dana, obviously, we know where the Democrats are going on this, and that is, this is -- the president's plan is for the wealthy. How is he going to counter that?

BASH: Well, the president's, sources say, will have some proposals in his plan that they say will help people who don't have jobs. They also say that there are plans in place to help people -- to help create jobs. Some of those plans, they say, are tax cuts for businesses, Republicans here at the White House say that that is the way to create jobs for Americans who don't have them.

But they also know full well that the Democrats were going to make these criticisms, that they are just out for the wealthy, and they plan a blitz next week following the president's speech.

Some of his deputies including, I'm told, Vice President Cheney and other cabinet members like Elaine Chao, the labor secretary, and Don Evans, the commerce secretary, will be going out and making speeches and making the pitch, trying to convince, rhetorically, and they say by using the information, the numbers, government studies that they're going to employ, to back it up, that this stimulus package that they will propose next week will help to create jobs and will help to help the people who don't have jobs. And they also, I'm told, send Stephen Friedman, who is the president's new economic adviser, up to Wall Street to convince that sector of the country that this is good for the economy -- Candy.

CROWLEY: Jonathan, it sounds like they're going to dazzle them with their footwork here next week. The Democrats have already complained that they don't have a platform. Is there anything you know of that they are going to use -- is that why they did this Monday, really, is because they know they have got a platform then?

KARL: Candy, I'm sorry. I didn't -- but Democratic platform -- clearly, what the Democrats are saying in terms of the timing of this is that actually, they had planned to do this on Monday, that Nancy Pelosi began work on this plan back in December and she kind of turned it around, and said that perhaps the White House had decided to do it Tuesday, moving their plan up to compete with the Democrats.

But, clearly, there is an effort to get out in front on this, because the Democrats faced a lot of criticism last December when Nancy Pelosi had a little summit on the economy and did not come out with a plan. They've heard over and over again from Republicans, Republicans have a plan; where is the Democratic plan?

So this is an effort not only to get a platform for the Democrats, but also to get out there and to say, We've got a plan, we have got an alternative, and it's a better alternative.

CROWLEY: OK. Quickly, Jonathan, before I say good-bye to the two of you, Trent Lott has found a place to hang his hat?

KARL: It looks like he has. It's not a completely done deal, but Senator Rick Santorum, who was one of his strongest defenders has agreed to step down as the chairman of the Rules Committee in the Senate leaving the position open for Senator Lott to come in and to be a committee chairman, a relatively powerful committee chairman. But the decision must be ratified by the Republican Conference. They have a meeting on Monday, the 51 Republican senators. They'll be voting on a number of issues. That issue, I am told, will be one of them. Trent Lott has said he will accept the position, and by the way, he said in an interview with the Associated Press today that he still will have enough power in Washington to be a player.

CROWLEY: Jonathan Karl on Capitol Hill, Dana Bash in Crawford, Texas. You guys make a great team. Talk to you later.

KARL: Thanks.

CROWLEY: Joining us now, Bob Hormats, who is vice chairman of Goldman Sachs International. Thanks, Mr. Hormats, for joining us.

BOB HORMATS, VICE CHAIRMAN, GOLDMAN SACHS INTERNATIONAL: Nice to be with you.

CROWLEY: Now, from what you know of the president's plan, who is this directed at, do you think, primarily?

HORMATS: Well, really, there are two audiences. One is the investor, or the corporate sector, by cutting the tax on corporate dividends. That can actually be very helpful for certain kinds of investors who are investing in stock, and it also provides an incentive for corporations to issue stock as opposed to issuing debt. But it really doesn't provide much stimulus in the near-term for the average person.

The thing that could help to a degree is to accelerate the 2004 tax cut to fiscal 2003, or to 2003, and that would be very helpful to a lot of people, both upper and lower income people, because it would put more money in their pocket, and they'd start seeing the benefits in lower withholding, which could be done relatively quickly.

CROWLEY: Well, let me ask you about how this is viewed in your end of the swamp, and that is, what does Wall Street get out of this? Is it likely to see it as a good plan, a mediocre plan, it doesn't care?

HORMATS: I think Wall Street will regard it as a marginal plus. Basically, we have a $10 trillion economy. The kind of stimulus they're talking about in this plan over the next couple of years, about $150 billion. So, really, people are not expecting too much in terms of additional growth coming from this.

The exclusion of the tax, or tax on part of dividends, will be helpful to a certain number of people and helpful to a degree to the stock market. But in terms of a big boost for the economy and a big boost for investors, they're not going to see this, I think, in either the Republican or the Democratic plan.

What they can hope for, I think, is that there is some stimulus for the consumer to get the consumer over this difficult period of time. Then, maybe, down the road, investment. Corporate investment will begin to kick in and help to sustain the recovery. But this in itself is not going to be decisive, one way or the other.

CROWLEY: I want to ask you sort of a very bottom-line question that occurs to a number of us that are not economists by trade, and that is -- we keep hearing from the president, and indeed from a lot of analysts that the economy's on track and it's doing fine. And yet there's this big rush to do a stimulus package by both sides, and there's, you know, a figure comes out, more signs that the economy's in bad shape. Which is it?

HORMATS: Well, I would say the economy is not doing fine. The economy has been struggling over the last couple of years. One indication of that is that this year -- actually, last year, there was a huge amount of fiscal stimulus, big tax cut and big increase in government spending, about 2 percent, 2.5 percent of GDP. We only got growth of about the same amount. That is to say, 2.5 percent of GDP stimulus, 2.5 percent GDP growth. That's quite disappointing. It meant that the government stimulus was what accounted for the growth in the economy. You've got to begin to get some pickup in consumer demand, or if consumer demand doesn't pick up, then you have to have a pickup in corporate investment. And corporate investment has been the thing that has been lagging. That's really the disappointing part of the economy.

You can't keep government stimulus up forever. At some point, corporate investment has to kick in. And without that, we're going to be condemned to a very weak economy for quite some time, and exports aren't doing well because of weakness abroad. So we've got a struggling economy, it's swimming upstream. It's not doing badly, given the terrorist attacks and other problems that we face, and the corporate scandals, but it certainly isn't doing well. And all you have to do is ask the 6 percent of the population that's unemployed, and they'll tell you it's not doing well.

CROWLEY: Bob Hormats of Goldman Sachs, thanks for helping us clear that up.

HORMATS: Thank you.

CROWLEY: Outgoing House Democratic leader Dick Gephardt is playing it low-key as he moves towards a presidential campaign. A source close to Gephardt says the Missouri congressman will file papers Monday to create a presidential exploratory committee. But the Gephardt camp says there are no plans to mount a media blitz just yet, because Gephardt doesn't see it as a major event in the campaign process. And aides say Gephardt plans a more formal and public announcement later this winter. Gephardt also plans trips this month to Iowa, New Hampshire and South Carolina, which host the first three contests of the 2004 primary season.

We have a follow-up now on the family that received emergency treatment by senator and Dr. Bill Frist when he stopped at the scene of a highway accident in Florida. A second crash victim has died, 14- year-old Felix Kelly (ph). His younger sister died at the scene on Wednesday. And now the family must decide whether to remove a 20- year-old victim from life support after she was declared brain dead. Senator Frist has been credited with helping to save the lives of others in the wreck. A Florida radio station spoke to him briefly.

(BEGIN VIDEO CLIP)

SEN. BILL FRIST (R), TENNESSEE: Well, I'm really not going to do anything (UNINTELLIGIBLE) out of deference to the family. I did go by the hospital today and I did see the family. That's pretty much it.

(END VIDEO CLIP)

CROWLEY: Frist was heading to a family vacation home in Florida when the sport utility vehicle going in the same direction blew out a rear tire and rolled over. At least three of the six passengers were thrown from the vehicle.

There is much more ahead on INSIDE POLITICS. Up next -- she has had a front seat view of presidential politics. We'll talk about Senator Hillary Clinton's campaign future and past, with a reporter who watched her in action.

And how do you stand out in the presidential field? Try working the sidelines at a big bowl game.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: I'm Bill Schneider in Los Angeles. You know, it's quite a coup to score "The Political Play of the Week." All the more so, you haven't even taken office yet.

CROWLEY: It's time to test your "I.P. I.Q." Richard Gephardt won the Iowa caucus when he ran for the president in 1988. How many state primaries did he win? Was it A, two, B, four, C, six. We'll have the answer later on INSIDE POLITICS.

(COMMERCIAL BREAK)

CROWLEY: That most recent CNN/"TIME" poll found Senator Hillary Rodham Clinton the leading choice for president among registered Democrats. With me now to talk about Senator Clinton, her role in the party and her political future is reporter Beth Harpaz. Beth chronicled the Clinton's Senate campaign in her book, "The Girls in the Van." Beth, thanks very much.

BETH HARPAZ, AUTHOR, "THE GIRLS IN THE VAN": Thank you for having me.

CROWLEY: Listen, we know that Hillary Rodham Clinton says she's not going to run for president this time around. But let's, you know, indulge us here. Was she in the campaign that you saw a candidate of the caliber that can get out on the presidential campaign trail and get that kind of laser national attention?

HARPAZ: Oh, absolutely. I mean, she is a celebrity, even more than being a politician. She is an incredibly famous woman. But one thing that we saw in New York was that she was aware of how much she's hated. I mean, she is a very polarizing person. Many people love her, but many people don't like her, and she gave herself plenty of time in New York to dispel some of the bad feelings that people had about her.

I just don't see any evidence that, you know, she's getting ready for something in 2004, because I think she knows better than anybody that she needs a very long time to get out there and talk to people and change some of their minds.

CROWLEY: You know, Beth, I went to North Africa with Mrs. Clinton before she decided to run for the Senate. I found her inscrutable in a lot of ways, very hard to press through. Did you ever feel like you really knew what she was about?

HARPAZ: Oh, absolutely. One of the games that you play when you cover Hillary is, you know, who is the real Hillary? What is she really thinking? Isn't that what everyone in America is doing now? It's become a favorite political game. Is Hillary going to run for president or isn't she?

She is a person, who -- the real Hillary is somewhere behind a curtain, and I never really knew whether that was -- is that her upbringing? Is that because of what happened in the White House? That she was under this intense scrutiny all the time and, therefore, had to pull that curtain down tighter? Or is that just who she is? Is she just a private person? And has been that way all her life?

CROWLEY: Does she have the kind of formidable presence that you really need on a national scale? Can she play hardball? Did you see it in New York?

HARPAZ: I believe she can. Remember, she was up against Rudy Giuliani, who's not exactly a shrinking violet. Eventually he dropped out of the race and was replaced by Rick Lazio. But I think part of his figuring in dropping out was that he saw how tough an opponent she was. This was not going to be a cakewalk for him.

And she certainly can hold her own with the biggest and baddest of the big, bad boys. There's no question about that. The question really is, you know, can she be an acceptable candidate to people who don't like her?

The polls show that among Democrats, she's the top choice. But the polls also show that when you poll all registered voters, most of them, the majority of them, the majority of them, something like almost 70 percent do not think she should run for president. This has come up over and over again in Marist Polls and other polls taken in 2002.

CROWLEY: What about her side ever the equation? Did you ever get any sense that she had ambitions beyond the Senate? I remember thinking, oh, Hillary Clinton will never run for the Senate. Why would she want to do that? Did you ever see anything that you sense, OK, she wants to step beyond this eventually?

HARPAZ: You know, this is a woman who when she was a little girl wrote to NASA and said she wanted to be the first female astronaut. Her mother told her she thought should be the first woman on the Supreme Court. From the time she was a child she was sort of groomed to be a barrier breaker, a pioneer.

And even in becoming senator of New York. We've never had a woman elected to state-wide office in New York before. She was the first, and the only first lady to ever be elected to anything.

So does she want to be president? Absolutely. I think she wants it so badly.

Is the time right? Right now? I don't think it is. So there are sort of two separate issue. Is it doable? She's also very pragmatic and I don't think she would take the kind risk that running at this point represents.

CROWLEY: Go out on a limb. Will she do it in '08?

HARPAZ: Good question. It's a risk for her either way, really because if the Democrats were to win this time around, then she really can't run in 2008.

But if the Democrats lose this time, then who is there besides Hillary? In a way, the risk is -- it's better if she doesn't run now, because the Democrats could very well lose against a very popular incumbent president. And then in 2008, all of these other guys who've been kicking around fro a while, Gephardt and Edwards and Kerry, they'll be has-beens. And it'll be like Hillary. The great anointed Hillary. There's nobody else left. So in a way, if she holds out until '08 and Democrats don't do it this time, she's in a much stronger position.

CROWLEY: Reporter Beth Harpaz, obviously a student of politics as well as author of that Clinton Senate campaign book "Girls in the Van." Thanks, Beth.

HARPAZ: Thank you.

CROWLEY: We check in with other high-profile Democrats in our Friday edition of "Campaign News Daily."

Civil rights activist Al Sharpton firming up his timetable for an all but certain campaign for president. Sharpton plans to file the paperwork for his exploratory committee January 21. That's a day after the Martin Luther King Holiday which Sharpton plans to spend in the early primary state of South Carolina as well as in his home state of New York.

It's now standard procedure for presidential candidates to publish a book. But the new effort by Senator Joe Lieberman and his wife, Hadassah, is off to a rocky start with one reviewer. The Liebermans' story of their experiences during campaign 2000 is called "An Amazing Adventure." "Publisher's Weekly" is less than amazed, however. The reviewer describes the book as a, quote, "frustrating effort." It goes on to say, "Readers expecting political insights, in-depth policy analysis, or entertaining and gossipy insider information about the 200 presidential election will have to look elsewhere."

Ouch. We stay focused on the Democratic hopefuls after a quick break. The advantages and unique challenges facing two of the party's best known potential candidates.

But first, let's get the latest on gas prices and find out how the markets ended the week. Fred Katayama is at the New York Stock Exchange.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CROWLEY: SO how's your "I.P. I.Q."? We asked you how many state primaries did Richard Gephardt win in 1988? Was it A -- two, B -- four or C -- six? The answer is two. Gephardt won his home state of Missouri and South Dakota.

(END VIDEO CLIP)

CROWLEY: With us now, Jim Dyke, who is press secretary for the Republican National Committee. Jim, thanks. And Jen Palmieri who is press secretary for the Democratic National Committee.

OK, Dick Gephardt, since he's our exploratory committee du jour...

JENNIFER PALMIERI, PRESS SECRETARY, DNC: Of the day.

CROWLEY: Yes. I want to kind of begin game out his pros and cons from a Democratic and Republican perspective. Let's begin with the pros. What does he bring to the table?

PALMIERI: Well, I guess I'll go first with that.

(CROSSTALK)

PALMIERI: Well, first of all, a tremendously experienced leader. Has a lot of poise, a lot of credibility and is good on the issues. He has spent, unlike the other leader we're going to talk about Daschle, he has had the luxury, it's been the last couple of years building a good field team, a good farm team.

He's got a great organization. He has like incredibly talented staff. And considered to be probably more liberal than most of the other candidates. That serves you pretty well in a Democratic field.

CROWLEY: Could be a tough opponent?

JIM DYKE, PRESS SECRETARY, RNC: I think that -- well it depends on if he is the opponent, I guess.

But I think labor bosses were probably applauding across Washington when they found out that he was going to get in the race and it probably helps them. He's got to play to a constituency.

But look, there's also a sort of common sense can he win question. And if you look at what's happened the last four elections and he's been sort of a leader of Democrats in the House, they haven't had much success.

So I think it's a problem, and the policies go with the failures of the return to leadership or to increase even your minority.

CROWLEY: In fact, Jen, we were showing our viewers, while you all were talking, the picture of Gephardt handing out -- painfully handing over that gavel to Newt Gingrich and he hasn't been able to get it back. Does that hurt him?

PALMIERI: No one would have preferred to have the won the House back in one of the past four elections more than Dick Gephardt.

But I think both Gephardt and Daschle have distinguished themselves as good leaders for the party and in the Congress in a very difficult time. I mean I think that -- you know we had a tough November. No question.

But I think that when we look back on this year, we will be amazed at how, at the steady leadership of both Gephardt and Daschle, and it was some really difficult, dark days.

And I think he did himself well. He did well by the party. And now he has an opportunity to go out and be his own candidate. And I think he's really relishing that. DYKE: And I think it's important to understand, though, that the failure was a focus on political rhetoric and sort of attacks, as opposed to a positive policy. And I don't know whether you can change going into a primary season, going into a Congress, where you have so many Democrats running for president.

CROWLEY: I need a one-word answer from each of you about one question, because I want to move on to another subject.

When Dick Gephardt stood behind the president, joining in the House resolution against Iraq, it hurts him in the primaries or no?

Come on, Jen.

PALMIERI: No, I don't think so, because he makes up for it -- one word. Sorry. No.

DYKE: I don't know if it hurts, but it was nice to see him do the right thing.

CROWLEY: These were supposed to be only one word.

(LAUGHTER)

CROWLEY: Look, we've got all these Democrats that we expect to run. And they're all in the Senate. How does this sort of bollix up the work of the Senate? If Senator Daschle gets in and he's the leader, how does he then sort of move his caucus around and not -- how does everything not look political?

DYKE: Well, I guess the good news is, to start with, the American people made clear in November that they want someone else leading the Senate. Senator Daschle had real trouble passing a budget. He had trouble passing a prescription drug plan.

So, going forward with those competing interests, I think it's very difficult, including his own ambition to be president himself.

PALMIERI: One interesting byproduct of this, I think, that will happen immediately is that Democratic proposals are going to be treated with more weight.

All of the sudden, it's not that Democrats didn't have good ideas out there the last couple of years, but they didn't get a lot of attention. Now, when Gephardt proposes something, when Daschle proposes something, when Edwards proposes a department about homeland security, all of the sudden, it gets a lot of attention. And I think it is going to be a productive debate.

Obviously, it's always difficult in a presidential cycle to get things done.

DYKE: You have to pull people together, though,. You have to bring people together. You have to unite them. And you have to start with your own caucus. And if you five different proposals on the same subject, as people are sort of leapfrogging at each other, you can't be successful.

PALMIERI: The presidential primary is not going to play out in the United States Senate. That's not good for any of the Democratic candidates to do that. So, they're not going to do that.

(CROSSTALK)

PALMIERI: But it is your -- it is your Senate and your House and your White House now to lead. So, it's going to up to Bush to do that. But I think our guys will play fair.

CROWLEY: Come back, Jennifer Palmieri, DNC, Jim Dyke, RNC. Come and see us again.

DYKE: Love to.

CROWLEY: Thanks very much.

PALMIERI: Thank you.

CROWLEY: Our "News Alert" is coming up next. We'll get an update on tensions along the world's most heavily militarized border and the diplomatic struggle over North Korea's nuclear program.

(COMMERCIAL BREAK)

CROWLEY: Just ahead: The oil strike in Venezuela turns violent. Will Americans pay a price at the pump?

(NEWS ALERT)

CROWLEY: In Venezuela today, violent clashes erupted between supporters and foes of President Hugo Chavez. Thousands of opposition demonstrators called on the army to support a strike that has crippled Venezuela's oil output.

CNN producer Ingrid Arnesen joins now by phone video from Venezuela -- Ingrid.

INGRID ARNESEN, CNN CORRESPONDENT: Candy, what we're seeing now is basically a standoff after this day of rioting here in Caracas.

The opposition is basically up the street from me right now, having retreated. And behind me, at the end of the block, is Chavez opposition -- the Chavez forces. This battle has been continuing on and off all afternoon. It was much widespread earlier. But after both camps exchanged fire (UNINTELLIGIBLE), the national guard and the army and the police who were here spread the place with tear gas, causing everyone to flee to various corners.

Right now, it is very tense. Both camps are looking at each other from a distance, I would say, of about 200 feet, waiting at any moment to come at each other. Earlier today, the chief of police -- the chief of the fire department told us that there had been 25 people wounded from tear gas. Another five have been injured from rocks and bottle throwing. And three, at least three, have been injured from gunfire, one including a civilian police who was part of a medical -- part of the security forces here, who was shot in the knee.

At this stage, people have retreated from the area. But, clearly, they are waiting for a signal to come back in, because the national guard has moved away. So, there's no telling what will happen next. This is a symbol of where the negotiations stand.

The secretary-general, Cesar Gaviria, from the Organization of American States, arrived yesterday at about 5:30 to try to jump-start the very fragile negotiations here between the opposition and the government, the opposition wanting Chavez to resign and to call for new elections, and the government saying that is absolutely unconstitutional.

Right now, we are hearing again more groups rounding up at the end of several blocks, clearly getting ready to come in this direction. So, Candy, right now on the streets, it looks like more violence. As for the negotiations, no telling if there was any outcome today from the meeting between President Chavez and Gaviria -- Candy.

CROWLEY: Ingrid Arnesen in Venezuela, covering a very unsettled and unsettling situation, thank you.

The Bush administration today again rejected calls for a dialogue about North Korea's nuclear program. The impasse prompted Pyongyang's ambassador to China to accuse Washington of Cold War tactics.

CNN's Rebecca MacKinnon is following the story from the armed border between north and South Korea.

(BEGIN VIDEOTAPE)

REBECCA MACKINNON, CNN CORRESPONDENT (voice-over): The demilitarized zone, where United States and South Korean joint forces come face to face with North Korean soldiers every day. They're still technically at war. Despite the international concern about North Korea's nuclear weapons program, routines of these soldiers have not changed.

MAJ. REICH ANDERSEN, U.S. ARMY: Twenty-four hours a day, seven days a week, 365 days a year, we are at the same readiness condition.

MACKINNON: The commander's main concern in these tense times is preventing even the smallest incident from spinning out of control.

LT. COL. MATT MARGOTTA, COMMANDER: Not creating any type of incident by ourselves or based upon a provocation by the North Koreans that would allow the situation to escalate.

MACKINNON: While the soldiers keep watch as usual, diplomats are going into overdrive around the region. A South Korean envoy just visited China, North Korea's closest ally, asking it to do more to halt North Korea's nuclear ambitions. Another envoy is on his way to Russia, hoping Moscow will also put more pressure on Pyongyang.

U.S. Assistant Secretary of State James Kelly will hold a meeting with South Korean and Japanese diplomats next week in Washington to coordinate policy. Then he will fly on to Seoul. He will confer with South Korea's new president-elect, Roh Moon-hyun, who has been critical of Washington's strategy to isolate the north.

South Korea's outgoing president, Kim Dae-jung, is sticking to his sunshine policy of engaging North Korea. Members of his administration will hold talks with North Korean officials this month. In Beijing on Friday, a North Korean diplomat repeated Pyongyang's desire for negotiations and a nonaggression treaty with Washington.

CHOE JIN SU, NORTH KOREAN AMBASSADOR TO CHINA (through translator): It is clear as daylight that the outbreak of nuclear crisis on the Korean Peninsula is due to the U.S. hostile stance towards the DPRK. And this issue must be solved between the DPRK and the U.S.

MACKINNON (on camera): For now, it's the diplomats, not the soldiers, who are mobilizing to stop North Korea from developing nuclear weapons, which means that, for the soldiers stationed here, the demilitarized zone is no more and no less dangerous than usual.

Rebecca MacKinnon, CNN, on the South Korean side of the demilitarized zone.

(END VIDEOTAPE)

CROWLEY: Straight ahead: a U.S. senator working on the chain gang. A potential presidential candidate makes the most of his audience, which just happens to include a lot of people from Iowa.

(COMMERCIAL BREAK)

CROWLEY: Our Jeff Greenfield has been keeping a close eye on all the maneuvering by potential Democratic candidates, the talk about causes and primaries. He says there's one factor most people may have overlooked.

(BEGIN VIDEOTAPE)

JEFF GREENFIELD, CNN SR. ANALYST (voice-over): Well, it may be midwinter, but presidential campaigns were flowering this week.

There was North Carolina Senator John Edwards walking with his children and appearing on every TV program, except "Survivor." Edwards talked so much about regular Americans, it sounded a bit like an ad for Metamucil.

SEN. JOHN EDWARDS (D), NORTH CAROLINA: Because I want to be a champion for regular people.

Championing the cause of regular people.

GREENFIELD: And there was Florida Senator Bob Graham, who just happened to schedule his regular work-like-an-ordinary-person-day as a sideline official at the nationally televised Orange Bowl, where one of the teams was from Iowa, site of the first caucus, and where he got to talk about his own presidential possibilities.

QUESTION: Are you nearer to a decision on the Democratic nomination?

SEN. BOB GRAHAM (D), FLORIDA: I'm nearer to a decision, but I haven't made it yet.

GREENFIELD: And yesterday, thanks to a premature fax release, the news media were alerted to the story that former House Democratic Leader Dick Gephardt was going to launch an exploratory bid for the White House. Has anyone ever launched such an exploratory bid and then announced: Hey, guess what, they don't want me to run?

(on camera): Well, all well and good, but the real question about all this maneuvering, of course, is, how will this affect me and the hundreds, maybe thousands of people like me, who make their living covering this stuff? For me, the real question is, how cold or warm am I going to be next year?

(voice-over): For nearly 30 years now, presidential campaigns have begun in the freezing cold winters of Iowa and New Hampshire. We journalists get to watch potential leaders of the free world admire farm animals and search for voters in subzero conditions. That's why many of us have a warm spot in our hearts for Iowa Senator Tom Harkin.

When he ran for president in 1992, all the other candidates skipped Iowa and so could we. No such luck in 2004. If Missouri's Gephardt runs along with South Dakota Senator Tom Daschle, it means a competitive fight out there. And we journalists will have to be there. Same with New Hampshire. With New Englanders' Joe Lieberman, John Kerry, Howard Dean and maybe Chris Todd contending, break out the long johns.

But good news. Democrats have now moved up the South Carolina primary into early February. The key here is that North Carolina's Edwards has to face competition to justify a lengthy stay in the Palmetto State. You go, Reverend Sharpton. And if we all get to stay in the Palmetto State long enough, we might find out what a palmetto is.

Of course, my argument to CNN will be that all of these early primaries will cancel each other out, making the one, crucial, all- important, bigger-than-life-itself test California, a state so important, it will be absolutely necessary for journalists, or at least for me, to move out there in December and stay there right through to March.

(on camera): Will I miss all those visits to factory gates in ice storms, those fun six-hour waits while the planes get deiced, the frostbite that lingers until April? Of course I will. But, in this business, you learn to sacrifice.

Jeff Greenfield, CNN, New York.

(END VIDEOTAPE)

CROWLEY: Well, stand in line, Jeff.

Senator Bob Graham chose the most prestigious of the Florida bowl games for his stint as a sideline referee. But the biggest bowl game of them all is tonight's Fiesta Bowl in Tempe, Arizona.

CNN's Josie Karp is standing by with a preview -- Josie.

JOSIE KARP, CNN CORRESPONDENT: Candy, there's at least one person with some strong Washington ties who will be in attendance and keeping close tabs on the Fiesta Bowl that pits Miami against Ohio State for the BCS national championship.

And that is the former U.S. secretary for health and human services, Donna Shalala. And that's because she's the president, currently, of the University of Miami. She won't have a whole lot of support in terms of fellow Miami fans here in Arizona rooting the Hurricanes on. That's because, if you looked outside the stadium today and really anywhere around Arizona the past couple of days, all you saw was scarlet and gray. And those are the colors of Ohio State.

There are many more Ohio State fans here in Arizona than there are Miami fans. Estimates have it that about 50,000 Buckeyes fans came to Arizona. And that's compared to only about 12,000 Miami fans. On the field, though, it appears that Miami has a big edge, at least from those people who are in the business of predicting who's going to win this game. Miami is nearly a two-touchdown favorite.

A lot of people are basing that on the fact that, last year, Miami won the title. The Hurricanes currently have a 34-game win streak. And they have a much more explosive offense than Ohio State. One thing we don't anticipate having tonight is any controversy. And that's rare in this BCS format that's been established for the past five years.

Normally, there's at least one team that has a legitimate claim that it should be involved. That's not the case this year. There are only two teams left in Division 1A that are undefeated, Candy. And that's Miami and Ohio State. And they're going to play tonight and determine the champion -- back to you.

CROWLEY: CNN's Josie Karp in Tempe, Arizona. And there's a spot that ought to have the first-in-the nation primary.

Voters expect their elected officials to stay cool under pressure. But just ahead: how one new governor helped avoid a crisis before he even took office.

(COMMERCIAL BREAK)

CROWLEY: Solving problems is just part of the job for elected leaders. But some people just can't wait to get started.

With me now here is Bill Schneider, who's been in California so long, I think you can vote there now, Bill.

SCHNEIDER: Yes, I might be able to. (LAUGHTER)

SCHNEIDER: We've seen governors deal with crises before, Candy, even newly elected governors. But a governor who hasn't taken office yet? That's rare. It's also the "Political Play of the Week."

(BEGIN VIDEOTAPE)

(voice-over): Doctors in Pennsylvania threatened to stop work or cut back on services this week to protest the soaring costs of malpractice insurance.

DR. CHARLES BANNON, CHIEF OF SURGERY, MERCY HOSPITAL: There are some physicians whose malpractice premiums this year will be $275,000. There's been a general increase as much as 300 percent across the board.

SCHNEIDER: The protests would have shut down hospitals and trauma centers and forced patients to postpone operations or seek treatment elsewhere.

WHITNEY CASEY, CNN CORRESPONDENT: So, there would have been sort of an emergency in the emergency room?

UNIDENTIFIED MALE: Yes, exactly.

SCHNEIDER: Doctors blame trial lawyers who win outrageous malpractice awards. Lawyers blame insurance companies that raise premiums to make up for investment losses. Both blame doctors who practice bad medicine.

DR. ANDREW STAK, SURGEON: The people who suffer in this are the patients, because the patients aren't going to go someplace else. And as doctors leave this area and as some of the high-tech and very high- quality specialists leave the area, who's going to be here to take care of them?

SCHNEIDER: Enter Pennsylvania governor-elect Ed Rendell.

ED RENDELL (D), PENNSYLVANIA GOVERNOR-ELECT: We hear you. Help is on the way.

SCHNEIDER: Rendell put together a $220 million plan that will dramatically cut physicians' payments to a state-run insurance fund this year.

RENDELL: So, we took action to solve a short-run problem. I agree with the physicians who say it's a band-aid, not a cure.

SCHNEIDER: Physicians say the only real answer is to cap malpractice awards. But the governor-elect is cautious.

RENDELL: It is a balancing test. We don't want to take away people's right to sue.

SCHNEIDER: He's playing for time. RENDELL: Hang in there. And we promise that, by July 1, we'll have some long-term changes in place.

SCHNEIDER: The doctors said, OK, we'll give you time.

DR. MICHAEL DRATCH, SURGEON: We'll see if this is enough. I have to sift through this. I have it read it. And I can tell you, it's a start.

SCHNEIDER: On Thursday, the doctors were back at work, crisis averted by a governor-elect who won't even take office until January 21, but who has already earned the "Political Play of the Week."

(END VIDEOTAPE)

SCHNEIDER: The insurance companies are angry over Rendell's proposal. But, you know, it just might just go through, because, Candy, in this controversy, public sympathy is clearly with the doctors.

CROWLEY: CNN senior analyst Bill Schneider -- thanks, Bill.

SCHNEIDER: OK.

CROWLEY: We have news just in.

An illegal immigrant who allegedly used a false identity and fake documents to work on the White House grounds for two years has been indicted in Texas. Salvador Martinez Gonzalez (ph) rubbed elbows with then President Clinton and with current Vice President Dick Cheney, while working to set up outdoor social functions at the White House.

He now is in federal custody in Texas. His indictment is expected to be formally announced later today. Secret Service officials say there is no evidence Martinez Gonzalez ever posed a threat to the White House or officials there.

INSIDE POLITICS will be right back with a farewell to one of our own.

(COMMERCIAL BREAK)

CROWLEY: Finally, this New Year's week, INSIDE POLITICS wants to say goodbye and thank you to one of our regulars.

CNN correspondent Brooks Jackson is leaving us. And, boy, are we going to miss him.

(BEGIN VIDEOTAPE)

BROOKS JACKSON, CNN CORRESPONDENT: And it shows thousands and thousands of Americans who wanted to vote and got themselves to the polls.

CROWLEY (voice-over): The truth of it is, when there was a complicated story you needed figured out and told straight, Brooks was a go-to guy.

JACKSON: These old cars were terrific in their day, but they pollute like crazy. And when it comes to Medicare, the gas gauge is almost empty.

CROWLEY: Brooks helped us and you through the convoluted arguments over Medicare, Whitewater, campaign finance, Enron, and:

JACKSON: Well, hold on. Who's telling the truth here?

CROWLEY: You think you had to watch too many political ads? Brooks should get frequent-viewer miles. As one of our colleagues put it in the every-growing computer goodbye note, Brooks Jackson made us all look smarter.

JACKSON: We counted 1,244 would-be voters for Bush or Gore who spoiled their double-bubble ballots in just this way.

CROWLEY: Brooks is a journalist's journalist. But that's what he does. How he did it tells you who Brooks is. He is a class act and a gentleman.

So, goodbye, sir. We'll see you again somewhere along the road.

(END VIDEOTAPE)

CROWLEY: But, in the meantime, Brooks, we at INSIDE POLITICS salute you. Thanks. Bye.

And that's it for INSIDE POLITICS. I'm Candy Crowley.

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





Crowd>


Aired January 3, 2003 - 16:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CANDY CROWLEY, CNN ANCHOR: INSIDE POLITICS begins right now.
(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The Iraqi regime is a threat to any American.

ANNOUNCER: The president rallies military troops, and Democrats rally their political forces.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: I think what you see is the administration, perhaps, using the term "stimulus" as a Trojan horse to wheel in some favorite tax breaks to the high end that they're so fond of.

ANNOUNCER: The Hillary factor: an insider's view of the first lady turned senator and how she may figure into presidential politics.

Is there a doctor in the house? We'll follow up on Bill Frist's highway heroics, and applaud a separate rescue operation in the "Political Play of the Week."

(END VIDEOTAPE)

ANNOUNCER: Live from Washington, this is INSIDE POLITICS with Judy Woodruff.

CROWLEY: Thanks for joining us. Judy is off this week. I'm Candy Crowley.

President Bush is promising U.S. troops who may see action in Iraq, but if there is a war, America is prepared to win. In this "Newscycle," Mr. Bush visited with thousands of soldiers at the nation's largest Army post, Fort Hood in Killeen, Texas. He told them some crucial hours may lie ahead if Saddam Hussein refuses to disarm.

Democrats are preparing to do battle with the president over the economy. House Democratic leaders plan to unveil their own economic stimulus package Monday. They contend it will be fairer and do less harm to the federal budget than the package Mr. Bush is due to unveil Tuesday.

We'll talk more about economic politics ahead, but for more on the president rallying the troops, we want to go ahead and bring in White House Correspondent Dana Bash in Crawford. Dana, got off the ranch finally, I guess?

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: He sure did. He has been here for about a week, and this is the first time he has left Crawford. He went to Fort Hood, which is in Killeen, Texas, about 80 miles from here in Crawford. He certainly did rally the troops. He talked to them as their commander in chief, and said on behalf of America, he is grateful to them for their service and grateful to their families for the service.

He also said that he is very confident in their ability to serve wherever they're sent, and he said if it comes down to it, the U.S. military is ready for an attack against Saddam Hussein.

(BEGIN VIDEO CLIP)

BUSH: If force becomes necessary to secure our country and to keep the peace, America will act deliberately. America will act decisively. And America will prevail, because we've got the finest military in the world.

(END VIDEO CLIP)

BASH: And, Candy, he also made clear that the troops will not go there to conquer Iraq, but rather to liberate Iraq if they do end up going to -- to that region. He also made clear, like he has in the past couple of days, the difference between his strategy towards Iraq and North Korea, saying with North Korea, there still is a diplomatic solution, and that is something that he intends to employ, working with that country's neighbors in the region, and that's very different from Iraq, where he says that there have been 11 years of broken promises and broken commitments to the world community -- Candy.

CROWLEY: OK, Dana. We want you to stand by for a second, because we want to talk about the economic challenges for the president, but I want to first bring in our Congressional correspondent, John Karl, off Capitol Hill.

A new year, and new leadership for the Democrats on the House side. What is their new plan to go on the offensive about the economy, Jonathan?

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, the first thing is a little bit of preemption. The president, of course, will have his economic stimulus plan on Tuesday. That means the House Democrats now led by Nancy Pelosi will have their plan on Monday. In coming out with their plan, they have talked very little about the details of it, but we have learned a little bit. One, is that it will cost less than the amount than the amount that is being talked about at the White House.

It will probably be in the neighborhood of between 100 and $175 billion, and much of that money will be used for what they are calling a refundable tax credit, something like that tax rebate check that was given out in 2001, except it would go to all employees, not just those that pay income taxes. So even if you don't pay any income taxes at all, under the Democratic plan, you would get some of this tax rebate. They are saying although it will cost less than the White House plan, it could actually cost more in the short run. It could cost more in the first year, because Democrats are saying that's when it's needed. It is needed this year; it's needed right now.

Now, Nancy Pelosi in her first press conference dugout as the incoming leader, said that she took very strong issue with what has been talked about or what she has read about, the White House economic stimulus plan. She had this to say.

(BEGIN VIDEO CLIP)

PELOSI: The speculation that I see doesn't indicate that there's much stimulus in the package. I think what you see is the administration, perhaps, using the term "stimulus" as a Trojan horse to wheel in some favorite tax breaks to the high end that they're so fond of. But it remains to be seen what the president will do.

(END VIDEO CLIP)

KARL: And in a coordinated attack, Senator Tom Daschle, in a radio address to be delivered tomorrow, will also attack the president's plan, saying -- quote -- "the tax break the president is said to be proposing is the wrong idea at the wrong time to help the wrong people." So we're off to a quick start here when it comes to economic stimulus here. Congress doesn't even return until next week, and the leadership for the Democrats in both the House and the Senate also already very much on the attack, attacking what they know of the president's plan, or at least what they've read about it in the newspapers -- Candy.

CROWLEY: All right, Jonathan. Sounds like the season of joy is over -- hang on Jonathan, and I want to bring Dana back now. Dana, obviously, we know where the Democrats are going on this, and that is, this is -- the president's plan is for the wealthy. How is he going to counter that?

BASH: Well, the president's, sources say, will have some proposals in his plan that they say will help people who don't have jobs. They also say that there are plans in place to help people -- to help create jobs. Some of those plans, they say, are tax cuts for businesses, Republicans here at the White House say that that is the way to create jobs for Americans who don't have them.

But they also know full well that the Democrats were going to make these criticisms, that they are just out for the wealthy, and they plan a blitz next week following the president's speech.

Some of his deputies including, I'm told, Vice President Cheney and other cabinet members like Elaine Chao, the labor secretary, and Don Evans, the commerce secretary, will be going out and making speeches and making the pitch, trying to convince, rhetorically, and they say by using the information, the numbers, government studies that they're going to employ, to back it up, that this stimulus package that they will propose next week will help to create jobs and will help to help the people who don't have jobs. And they also, I'm told, send Stephen Friedman, who is the president's new economic adviser, up to Wall Street to convince that sector of the country that this is good for the economy -- Candy.

CROWLEY: Jonathan, it sounds like they're going to dazzle them with their footwork here next week. The Democrats have already complained that they don't have a platform. Is there anything you know of that they are going to use -- is that why they did this Monday, really, is because they know they have got a platform then?

KARL: Candy, I'm sorry. I didn't -- but Democratic platform -- clearly, what the Democrats are saying in terms of the timing of this is that actually, they had planned to do this on Monday, that Nancy Pelosi began work on this plan back in December and she kind of turned it around, and said that perhaps the White House had decided to do it Tuesday, moving their plan up to compete with the Democrats.

But, clearly, there is an effort to get out in front on this, because the Democrats faced a lot of criticism last December when Nancy Pelosi had a little summit on the economy and did not come out with a plan. They've heard over and over again from Republicans, Republicans have a plan; where is the Democratic plan?

So this is an effort not only to get a platform for the Democrats, but also to get out there and to say, We've got a plan, we have got an alternative, and it's a better alternative.

CROWLEY: OK. Quickly, Jonathan, before I say good-bye to the two of you, Trent Lott has found a place to hang his hat?

KARL: It looks like he has. It's not a completely done deal, but Senator Rick Santorum, who was one of his strongest defenders has agreed to step down as the chairman of the Rules Committee in the Senate leaving the position open for Senator Lott to come in and to be a committee chairman, a relatively powerful committee chairman. But the decision must be ratified by the Republican Conference. They have a meeting on Monday, the 51 Republican senators. They'll be voting on a number of issues. That issue, I am told, will be one of them. Trent Lott has said he will accept the position, and by the way, he said in an interview with the Associated Press today that he still will have enough power in Washington to be a player.

CROWLEY: Jonathan Karl on Capitol Hill, Dana Bash in Crawford, Texas. You guys make a great team. Talk to you later.

KARL: Thanks.

CROWLEY: Joining us now, Bob Hormats, who is vice chairman of Goldman Sachs International. Thanks, Mr. Hormats, for joining us.

BOB HORMATS, VICE CHAIRMAN, GOLDMAN SACHS INTERNATIONAL: Nice to be with you.

CROWLEY: Now, from what you know of the president's plan, who is this directed at, do you think, primarily?

HORMATS: Well, really, there are two audiences. One is the investor, or the corporate sector, by cutting the tax on corporate dividends. That can actually be very helpful for certain kinds of investors who are investing in stock, and it also provides an incentive for corporations to issue stock as opposed to issuing debt. But it really doesn't provide much stimulus in the near-term for the average person.

The thing that could help to a degree is to accelerate the 2004 tax cut to fiscal 2003, or to 2003, and that would be very helpful to a lot of people, both upper and lower income people, because it would put more money in their pocket, and they'd start seeing the benefits in lower withholding, which could be done relatively quickly.

CROWLEY: Well, let me ask you about how this is viewed in your end of the swamp, and that is, what does Wall Street get out of this? Is it likely to see it as a good plan, a mediocre plan, it doesn't care?

HORMATS: I think Wall Street will regard it as a marginal plus. Basically, we have a $10 trillion economy. The kind of stimulus they're talking about in this plan over the next couple of years, about $150 billion. So, really, people are not expecting too much in terms of additional growth coming from this.

The exclusion of the tax, or tax on part of dividends, will be helpful to a certain number of people and helpful to a degree to the stock market. But in terms of a big boost for the economy and a big boost for investors, they're not going to see this, I think, in either the Republican or the Democratic plan.

What they can hope for, I think, is that there is some stimulus for the consumer to get the consumer over this difficult period of time. Then, maybe, down the road, investment. Corporate investment will begin to kick in and help to sustain the recovery. But this in itself is not going to be decisive, one way or the other.

CROWLEY: I want to ask you sort of a very bottom-line question that occurs to a number of us that are not economists by trade, and that is -- we keep hearing from the president, and indeed from a lot of analysts that the economy's on track and it's doing fine. And yet there's this big rush to do a stimulus package by both sides, and there's, you know, a figure comes out, more signs that the economy's in bad shape. Which is it?

HORMATS: Well, I would say the economy is not doing fine. The economy has been struggling over the last couple of years. One indication of that is that this year -- actually, last year, there was a huge amount of fiscal stimulus, big tax cut and big increase in government spending, about 2 percent, 2.5 percent of GDP. We only got growth of about the same amount. That is to say, 2.5 percent of GDP stimulus, 2.5 percent GDP growth. That's quite disappointing. It meant that the government stimulus was what accounted for the growth in the economy. You've got to begin to get some pickup in consumer demand, or if consumer demand doesn't pick up, then you have to have a pickup in corporate investment. And corporate investment has been the thing that has been lagging. That's really the disappointing part of the economy.

You can't keep government stimulus up forever. At some point, corporate investment has to kick in. And without that, we're going to be condemned to a very weak economy for quite some time, and exports aren't doing well because of weakness abroad. So we've got a struggling economy, it's swimming upstream. It's not doing badly, given the terrorist attacks and other problems that we face, and the corporate scandals, but it certainly isn't doing well. And all you have to do is ask the 6 percent of the population that's unemployed, and they'll tell you it's not doing well.

CROWLEY: Bob Hormats of Goldman Sachs, thanks for helping us clear that up.

HORMATS: Thank you.

CROWLEY: Outgoing House Democratic leader Dick Gephardt is playing it low-key as he moves towards a presidential campaign. A source close to Gephardt says the Missouri congressman will file papers Monday to create a presidential exploratory committee. But the Gephardt camp says there are no plans to mount a media blitz just yet, because Gephardt doesn't see it as a major event in the campaign process. And aides say Gephardt plans a more formal and public announcement later this winter. Gephardt also plans trips this month to Iowa, New Hampshire and South Carolina, which host the first three contests of the 2004 primary season.

We have a follow-up now on the family that received emergency treatment by senator and Dr. Bill Frist when he stopped at the scene of a highway accident in Florida. A second crash victim has died, 14- year-old Felix Kelly (ph). His younger sister died at the scene on Wednesday. And now the family must decide whether to remove a 20- year-old victim from life support after she was declared brain dead. Senator Frist has been credited with helping to save the lives of others in the wreck. A Florida radio station spoke to him briefly.

(BEGIN VIDEO CLIP)

SEN. BILL FRIST (R), TENNESSEE: Well, I'm really not going to do anything (UNINTELLIGIBLE) out of deference to the family. I did go by the hospital today and I did see the family. That's pretty much it.

(END VIDEO CLIP)

CROWLEY: Frist was heading to a family vacation home in Florida when the sport utility vehicle going in the same direction blew out a rear tire and rolled over. At least three of the six passengers were thrown from the vehicle.

There is much more ahead on INSIDE POLITICS. Up next -- she has had a front seat view of presidential politics. We'll talk about Senator Hillary Clinton's campaign future and past, with a reporter who watched her in action.

And how do you stand out in the presidential field? Try working the sidelines at a big bowl game.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: I'm Bill Schneider in Los Angeles. You know, it's quite a coup to score "The Political Play of the Week." All the more so, you haven't even taken office yet.

CROWLEY: It's time to test your "I.P. I.Q." Richard Gephardt won the Iowa caucus when he ran for the president in 1988. How many state primaries did he win? Was it A, two, B, four, C, six. We'll have the answer later on INSIDE POLITICS.

(COMMERCIAL BREAK)

CROWLEY: That most recent CNN/"TIME" poll found Senator Hillary Rodham Clinton the leading choice for president among registered Democrats. With me now to talk about Senator Clinton, her role in the party and her political future is reporter Beth Harpaz. Beth chronicled the Clinton's Senate campaign in her book, "The Girls in the Van." Beth, thanks very much.

BETH HARPAZ, AUTHOR, "THE GIRLS IN THE VAN": Thank you for having me.

CROWLEY: Listen, we know that Hillary Rodham Clinton says she's not going to run for president this time around. But let's, you know, indulge us here. Was she in the campaign that you saw a candidate of the caliber that can get out on the presidential campaign trail and get that kind of laser national attention?

HARPAZ: Oh, absolutely. I mean, she is a celebrity, even more than being a politician. She is an incredibly famous woman. But one thing that we saw in New York was that she was aware of how much she's hated. I mean, she is a very polarizing person. Many people love her, but many people don't like her, and she gave herself plenty of time in New York to dispel some of the bad feelings that people had about her.

I just don't see any evidence that, you know, she's getting ready for something in 2004, because I think she knows better than anybody that she needs a very long time to get out there and talk to people and change some of their minds.

CROWLEY: You know, Beth, I went to North Africa with Mrs. Clinton before she decided to run for the Senate. I found her inscrutable in a lot of ways, very hard to press through. Did you ever feel like you really knew what she was about?

HARPAZ: Oh, absolutely. One of the games that you play when you cover Hillary is, you know, who is the real Hillary? What is she really thinking? Isn't that what everyone in America is doing now? It's become a favorite political game. Is Hillary going to run for president or isn't she?

She is a person, who -- the real Hillary is somewhere behind a curtain, and I never really knew whether that was -- is that her upbringing? Is that because of what happened in the White House? That she was under this intense scrutiny all the time and, therefore, had to pull that curtain down tighter? Or is that just who she is? Is she just a private person? And has been that way all her life?

CROWLEY: Does she have the kind of formidable presence that you really need on a national scale? Can she play hardball? Did you see it in New York?

HARPAZ: I believe she can. Remember, she was up against Rudy Giuliani, who's not exactly a shrinking violet. Eventually he dropped out of the race and was replaced by Rick Lazio. But I think part of his figuring in dropping out was that he saw how tough an opponent she was. This was not going to be a cakewalk for him.

And she certainly can hold her own with the biggest and baddest of the big, bad boys. There's no question about that. The question really is, you know, can she be an acceptable candidate to people who don't like her?

The polls show that among Democrats, she's the top choice. But the polls also show that when you poll all registered voters, most of them, the majority of them, the majority of them, something like almost 70 percent do not think she should run for president. This has come up over and over again in Marist Polls and other polls taken in 2002.

CROWLEY: What about her side ever the equation? Did you ever get any sense that she had ambitions beyond the Senate? I remember thinking, oh, Hillary Clinton will never run for the Senate. Why would she want to do that? Did you ever see anything that you sense, OK, she wants to step beyond this eventually?

HARPAZ: You know, this is a woman who when she was a little girl wrote to NASA and said she wanted to be the first female astronaut. Her mother told her she thought should be the first woman on the Supreme Court. From the time she was a child she was sort of groomed to be a barrier breaker, a pioneer.

And even in becoming senator of New York. We've never had a woman elected to state-wide office in New York before. She was the first, and the only first lady to ever be elected to anything.

So does she want to be president? Absolutely. I think she wants it so badly.

Is the time right? Right now? I don't think it is. So there are sort of two separate issue. Is it doable? She's also very pragmatic and I don't think she would take the kind risk that running at this point represents.

CROWLEY: Go out on a limb. Will she do it in '08?

HARPAZ: Good question. It's a risk for her either way, really because if the Democrats were to win this time around, then she really can't run in 2008.

But if the Democrats lose this time, then who is there besides Hillary? In a way, the risk is -- it's better if she doesn't run now, because the Democrats could very well lose against a very popular incumbent president. And then in 2008, all of these other guys who've been kicking around fro a while, Gephardt and Edwards and Kerry, they'll be has-beens. And it'll be like Hillary. The great anointed Hillary. There's nobody else left. So in a way, if she holds out until '08 and Democrats don't do it this time, she's in a much stronger position.

CROWLEY: Reporter Beth Harpaz, obviously a student of politics as well as author of that Clinton Senate campaign book "Girls in the Van." Thanks, Beth.

HARPAZ: Thank you.

CROWLEY: We check in with other high-profile Democrats in our Friday edition of "Campaign News Daily."

Civil rights activist Al Sharpton firming up his timetable for an all but certain campaign for president. Sharpton plans to file the paperwork for his exploratory committee January 21. That's a day after the Martin Luther King Holiday which Sharpton plans to spend in the early primary state of South Carolina as well as in his home state of New York.

It's now standard procedure for presidential candidates to publish a book. But the new effort by Senator Joe Lieberman and his wife, Hadassah, is off to a rocky start with one reviewer. The Liebermans' story of their experiences during campaign 2000 is called "An Amazing Adventure." "Publisher's Weekly" is less than amazed, however. The reviewer describes the book as a, quote, "frustrating effort." It goes on to say, "Readers expecting political insights, in-depth policy analysis, or entertaining and gossipy insider information about the 200 presidential election will have to look elsewhere."

Ouch. We stay focused on the Democratic hopefuls after a quick break. The advantages and unique challenges facing two of the party's best known potential candidates.

But first, let's get the latest on gas prices and find out how the markets ended the week. Fred Katayama is at the New York Stock Exchange.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CROWLEY: SO how's your "I.P. I.Q."? We asked you how many state primaries did Richard Gephardt win in 1988? Was it A -- two, B -- four or C -- six? The answer is two. Gephardt won his home state of Missouri and South Dakota.

(END VIDEO CLIP)

CROWLEY: With us now, Jim Dyke, who is press secretary for the Republican National Committee. Jim, thanks. And Jen Palmieri who is press secretary for the Democratic National Committee.

OK, Dick Gephardt, since he's our exploratory committee du jour...

JENNIFER PALMIERI, PRESS SECRETARY, DNC: Of the day.

CROWLEY: Yes. I want to kind of begin game out his pros and cons from a Democratic and Republican perspective. Let's begin with the pros. What does he bring to the table?

PALMIERI: Well, I guess I'll go first with that.

(CROSSTALK)

PALMIERI: Well, first of all, a tremendously experienced leader. Has a lot of poise, a lot of credibility and is good on the issues. He has spent, unlike the other leader we're going to talk about Daschle, he has had the luxury, it's been the last couple of years building a good field team, a good farm team.

He's got a great organization. He has like incredibly talented staff. And considered to be probably more liberal than most of the other candidates. That serves you pretty well in a Democratic field.

CROWLEY: Could be a tough opponent?

JIM DYKE, PRESS SECRETARY, RNC: I think that -- well it depends on if he is the opponent, I guess.

But I think labor bosses were probably applauding across Washington when they found out that he was going to get in the race and it probably helps them. He's got to play to a constituency.

But look, there's also a sort of common sense can he win question. And if you look at what's happened the last four elections and he's been sort of a leader of Democrats in the House, they haven't had much success.

So I think it's a problem, and the policies go with the failures of the return to leadership or to increase even your minority.

CROWLEY: In fact, Jen, we were showing our viewers, while you all were talking, the picture of Gephardt handing out -- painfully handing over that gavel to Newt Gingrich and he hasn't been able to get it back. Does that hurt him?

PALMIERI: No one would have preferred to have the won the House back in one of the past four elections more than Dick Gephardt.

But I think both Gephardt and Daschle have distinguished themselves as good leaders for the party and in the Congress in a very difficult time. I mean I think that -- you know we had a tough November. No question.

But I think that when we look back on this year, we will be amazed at how, at the steady leadership of both Gephardt and Daschle, and it was some really difficult, dark days.

And I think he did himself well. He did well by the party. And now he has an opportunity to go out and be his own candidate. And I think he's really relishing that. DYKE: And I think it's important to understand, though, that the failure was a focus on political rhetoric and sort of attacks, as opposed to a positive policy. And I don't know whether you can change going into a primary season, going into a Congress, where you have so many Democrats running for president.

CROWLEY: I need a one-word answer from each of you about one question, because I want to move on to another subject.

When Dick Gephardt stood behind the president, joining in the House resolution against Iraq, it hurts him in the primaries or no?

Come on, Jen.

PALMIERI: No, I don't think so, because he makes up for it -- one word. Sorry. No.

DYKE: I don't know if it hurts, but it was nice to see him do the right thing.

CROWLEY: These were supposed to be only one word.

(LAUGHTER)

CROWLEY: Look, we've got all these Democrats that we expect to run. And they're all in the Senate. How does this sort of bollix up the work of the Senate? If Senator Daschle gets in and he's the leader, how does he then sort of move his caucus around and not -- how does everything not look political?

DYKE: Well, I guess the good news is, to start with, the American people made clear in November that they want someone else leading the Senate. Senator Daschle had real trouble passing a budget. He had trouble passing a prescription drug plan.

So, going forward with those competing interests, I think it's very difficult, including his own ambition to be president himself.

PALMIERI: One interesting byproduct of this, I think, that will happen immediately is that Democratic proposals are going to be treated with more weight.

All of the sudden, it's not that Democrats didn't have good ideas out there the last couple of years, but they didn't get a lot of attention. Now, when Gephardt proposes something, when Daschle proposes something, when Edwards proposes a department about homeland security, all of the sudden, it gets a lot of attention. And I think it is going to be a productive debate.

Obviously, it's always difficult in a presidential cycle to get things done.

DYKE: You have to pull people together, though,. You have to bring people together. You have to unite them. And you have to start with your own caucus. And if you five different proposals on the same subject, as people are sort of leapfrogging at each other, you can't be successful.

PALMIERI: The presidential primary is not going to play out in the United States Senate. That's not good for any of the Democratic candidates to do that. So, they're not going to do that.

(CROSSTALK)

PALMIERI: But it is your -- it is your Senate and your House and your White House now to lead. So, it's going to up to Bush to do that. But I think our guys will play fair.

CROWLEY: Come back, Jennifer Palmieri, DNC, Jim Dyke, RNC. Come and see us again.

DYKE: Love to.

CROWLEY: Thanks very much.

PALMIERI: Thank you.

CROWLEY: Our "News Alert" is coming up next. We'll get an update on tensions along the world's most heavily militarized border and the diplomatic struggle over North Korea's nuclear program.

(COMMERCIAL BREAK)

CROWLEY: Just ahead: The oil strike in Venezuela turns violent. Will Americans pay a price at the pump?

(NEWS ALERT)

CROWLEY: In Venezuela today, violent clashes erupted between supporters and foes of President Hugo Chavez. Thousands of opposition demonstrators called on the army to support a strike that has crippled Venezuela's oil output.

CNN producer Ingrid Arnesen joins now by phone video from Venezuela -- Ingrid.

INGRID ARNESEN, CNN CORRESPONDENT: Candy, what we're seeing now is basically a standoff after this day of rioting here in Caracas.

The opposition is basically up the street from me right now, having retreated. And behind me, at the end of the block, is Chavez opposition -- the Chavez forces. This battle has been continuing on and off all afternoon. It was much widespread earlier. But after both camps exchanged fire (UNINTELLIGIBLE), the national guard and the army and the police who were here spread the place with tear gas, causing everyone to flee to various corners.

Right now, it is very tense. Both camps are looking at each other from a distance, I would say, of about 200 feet, waiting at any moment to come at each other. Earlier today, the chief of police -- the chief of the fire department told us that there had been 25 people wounded from tear gas. Another five have been injured from rocks and bottle throwing. And three, at least three, have been injured from gunfire, one including a civilian police who was part of a medical -- part of the security forces here, who was shot in the knee.

At this stage, people have retreated from the area. But, clearly, they are waiting for a signal to come back in, because the national guard has moved away. So, there's no telling what will happen next. This is a symbol of where the negotiations stand.

The secretary-general, Cesar Gaviria, from the Organization of American States, arrived yesterday at about 5:30 to try to jump-start the very fragile negotiations here between the opposition and the government, the opposition wanting Chavez to resign and to call for new elections, and the government saying that is absolutely unconstitutional.

Right now, we are hearing again more groups rounding up at the end of several blocks, clearly getting ready to come in this direction. So, Candy, right now on the streets, it looks like more violence. As for the negotiations, no telling if there was any outcome today from the meeting between President Chavez and Gaviria -- Candy.

CROWLEY: Ingrid Arnesen in Venezuela, covering a very unsettled and unsettling situation, thank you.

The Bush administration today again rejected calls for a dialogue about North Korea's nuclear program. The impasse prompted Pyongyang's ambassador to China to accuse Washington of Cold War tactics.

CNN's Rebecca MacKinnon is following the story from the armed border between north and South Korea.

(BEGIN VIDEOTAPE)

REBECCA MACKINNON, CNN CORRESPONDENT (voice-over): The demilitarized zone, where United States and South Korean joint forces come face to face with North Korean soldiers every day. They're still technically at war. Despite the international concern about North Korea's nuclear weapons program, routines of these soldiers have not changed.

MAJ. REICH ANDERSEN, U.S. ARMY: Twenty-four hours a day, seven days a week, 365 days a year, we are at the same readiness condition.

MACKINNON: The commander's main concern in these tense times is preventing even the smallest incident from spinning out of control.

LT. COL. MATT MARGOTTA, COMMANDER: Not creating any type of incident by ourselves or based upon a provocation by the North Koreans that would allow the situation to escalate.

MACKINNON: While the soldiers keep watch as usual, diplomats are going into overdrive around the region. A South Korean envoy just visited China, North Korea's closest ally, asking it to do more to halt North Korea's nuclear ambitions. Another envoy is on his way to Russia, hoping Moscow will also put more pressure on Pyongyang.

U.S. Assistant Secretary of State James Kelly will hold a meeting with South Korean and Japanese diplomats next week in Washington to coordinate policy. Then he will fly on to Seoul. He will confer with South Korea's new president-elect, Roh Moon-hyun, who has been critical of Washington's strategy to isolate the north.

South Korea's outgoing president, Kim Dae-jung, is sticking to his sunshine policy of engaging North Korea. Members of his administration will hold talks with North Korean officials this month. In Beijing on Friday, a North Korean diplomat repeated Pyongyang's desire for negotiations and a nonaggression treaty with Washington.

CHOE JIN SU, NORTH KOREAN AMBASSADOR TO CHINA (through translator): It is clear as daylight that the outbreak of nuclear crisis on the Korean Peninsula is due to the U.S. hostile stance towards the DPRK. And this issue must be solved between the DPRK and the U.S.

MACKINNON (on camera): For now, it's the diplomats, not the soldiers, who are mobilizing to stop North Korea from developing nuclear weapons, which means that, for the soldiers stationed here, the demilitarized zone is no more and no less dangerous than usual.

Rebecca MacKinnon, CNN, on the South Korean side of the demilitarized zone.

(END VIDEOTAPE)

CROWLEY: Straight ahead: a U.S. senator working on the chain gang. A potential presidential candidate makes the most of his audience, which just happens to include a lot of people from Iowa.

(COMMERCIAL BREAK)

CROWLEY: Our Jeff Greenfield has been keeping a close eye on all the maneuvering by potential Democratic candidates, the talk about causes and primaries. He says there's one factor most people may have overlooked.

(BEGIN VIDEOTAPE)

JEFF GREENFIELD, CNN SR. ANALYST (voice-over): Well, it may be midwinter, but presidential campaigns were flowering this week.

There was North Carolina Senator John Edwards walking with his children and appearing on every TV program, except "Survivor." Edwards talked so much about regular Americans, it sounded a bit like an ad for Metamucil.

SEN. JOHN EDWARDS (D), NORTH CAROLINA: Because I want to be a champion for regular people.

Championing the cause of regular people.

GREENFIELD: And there was Florida Senator Bob Graham, who just happened to schedule his regular work-like-an-ordinary-person-day as a sideline official at the nationally televised Orange Bowl, where one of the teams was from Iowa, site of the first caucus, and where he got to talk about his own presidential possibilities.

QUESTION: Are you nearer to a decision on the Democratic nomination?

SEN. BOB GRAHAM (D), FLORIDA: I'm nearer to a decision, but I haven't made it yet.

GREENFIELD: And yesterday, thanks to a premature fax release, the news media were alerted to the story that former House Democratic Leader Dick Gephardt was going to launch an exploratory bid for the White House. Has anyone ever launched such an exploratory bid and then announced: Hey, guess what, they don't want me to run?

(on camera): Well, all well and good, but the real question about all this maneuvering, of course, is, how will this affect me and the hundreds, maybe thousands of people like me, who make their living covering this stuff? For me, the real question is, how cold or warm am I going to be next year?

(voice-over): For nearly 30 years now, presidential campaigns have begun in the freezing cold winters of Iowa and New Hampshire. We journalists get to watch potential leaders of the free world admire farm animals and search for voters in subzero conditions. That's why many of us have a warm spot in our hearts for Iowa Senator Tom Harkin.

When he ran for president in 1992, all the other candidates skipped Iowa and so could we. No such luck in 2004. If Missouri's Gephardt runs along with South Dakota Senator Tom Daschle, it means a competitive fight out there. And we journalists will have to be there. Same with New Hampshire. With New Englanders' Joe Lieberman, John Kerry, Howard Dean and maybe Chris Todd contending, break out the long johns.

But good news. Democrats have now moved up the South Carolina primary into early February. The key here is that North Carolina's Edwards has to face competition to justify a lengthy stay in the Palmetto State. You go, Reverend Sharpton. And if we all get to stay in the Palmetto State long enough, we might find out what a palmetto is.

Of course, my argument to CNN will be that all of these early primaries will cancel each other out, making the one, crucial, all- important, bigger-than-life-itself test California, a state so important, it will be absolutely necessary for journalists, or at least for me, to move out there in December and stay there right through to March.

(on camera): Will I miss all those visits to factory gates in ice storms, those fun six-hour waits while the planes get deiced, the frostbite that lingers until April? Of course I will. But, in this business, you learn to sacrifice.

Jeff Greenfield, CNN, New York.

(END VIDEOTAPE)

CROWLEY: Well, stand in line, Jeff.

Senator Bob Graham chose the most prestigious of the Florida bowl games for his stint as a sideline referee. But the biggest bowl game of them all is tonight's Fiesta Bowl in Tempe, Arizona.

CNN's Josie Karp is standing by with a preview -- Josie.

JOSIE KARP, CNN CORRESPONDENT: Candy, there's at least one person with some strong Washington ties who will be in attendance and keeping close tabs on the Fiesta Bowl that pits Miami against Ohio State for the BCS national championship.

And that is the former U.S. secretary for health and human services, Donna Shalala. And that's because she's the president, currently, of the University of Miami. She won't have a whole lot of support in terms of fellow Miami fans here in Arizona rooting the Hurricanes on. That's because, if you looked outside the stadium today and really anywhere around Arizona the past couple of days, all you saw was scarlet and gray. And those are the colors of Ohio State.

There are many more Ohio State fans here in Arizona than there are Miami fans. Estimates have it that about 50,000 Buckeyes fans came to Arizona. And that's compared to only about 12,000 Miami fans. On the field, though, it appears that Miami has a big edge, at least from those people who are in the business of predicting who's going to win this game. Miami is nearly a two-touchdown favorite.

A lot of people are basing that on the fact that, last year, Miami won the title. The Hurricanes currently have a 34-game win streak. And they have a much more explosive offense than Ohio State. One thing we don't anticipate having tonight is any controversy. And that's rare in this BCS format that's been established for the past five years.

Normally, there's at least one team that has a legitimate claim that it should be involved. That's not the case this year. There are only two teams left in Division 1A that are undefeated, Candy. And that's Miami and Ohio State. And they're going to play tonight and determine the champion -- back to you.

CROWLEY: CNN's Josie Karp in Tempe, Arizona. And there's a spot that ought to have the first-in-the nation primary.

Voters expect their elected officials to stay cool under pressure. But just ahead: how one new governor helped avoid a crisis before he even took office.

(COMMERCIAL BREAK)

CROWLEY: Solving problems is just part of the job for elected leaders. But some people just can't wait to get started.

With me now here is Bill Schneider, who's been in California so long, I think you can vote there now, Bill.

SCHNEIDER: Yes, I might be able to. (LAUGHTER)

SCHNEIDER: We've seen governors deal with crises before, Candy, even newly elected governors. But a governor who hasn't taken office yet? That's rare. It's also the "Political Play of the Week."

(BEGIN VIDEOTAPE)

(voice-over): Doctors in Pennsylvania threatened to stop work or cut back on services this week to protest the soaring costs of malpractice insurance.

DR. CHARLES BANNON, CHIEF OF SURGERY, MERCY HOSPITAL: There are some physicians whose malpractice premiums this year will be $275,000. There's been a general increase as much as 300 percent across the board.

SCHNEIDER: The protests would have shut down hospitals and trauma centers and forced patients to postpone operations or seek treatment elsewhere.

WHITNEY CASEY, CNN CORRESPONDENT: So, there would have been sort of an emergency in the emergency room?

UNIDENTIFIED MALE: Yes, exactly.

SCHNEIDER: Doctors blame trial lawyers who win outrageous malpractice awards. Lawyers blame insurance companies that raise premiums to make up for investment losses. Both blame doctors who practice bad medicine.

DR. ANDREW STAK, SURGEON: The people who suffer in this are the patients, because the patients aren't going to go someplace else. And as doctors leave this area and as some of the high-tech and very high- quality specialists leave the area, who's going to be here to take care of them?

SCHNEIDER: Enter Pennsylvania governor-elect Ed Rendell.

ED RENDELL (D), PENNSYLVANIA GOVERNOR-ELECT: We hear you. Help is on the way.

SCHNEIDER: Rendell put together a $220 million plan that will dramatically cut physicians' payments to a state-run insurance fund this year.

RENDELL: So, we took action to solve a short-run problem. I agree with the physicians who say it's a band-aid, not a cure.

SCHNEIDER: Physicians say the only real answer is to cap malpractice awards. But the governor-elect is cautious.

RENDELL: It is a balancing test. We don't want to take away people's right to sue.

SCHNEIDER: He's playing for time. RENDELL: Hang in there. And we promise that, by July 1, we'll have some long-term changes in place.

SCHNEIDER: The doctors said, OK, we'll give you time.

DR. MICHAEL DRATCH, SURGEON: We'll see if this is enough. I have to sift through this. I have it read it. And I can tell you, it's a start.

SCHNEIDER: On Thursday, the doctors were back at work, crisis averted by a governor-elect who won't even take office until January 21, but who has already earned the "Political Play of the Week."

(END VIDEOTAPE)

SCHNEIDER: The insurance companies are angry over Rendell's proposal. But, you know, it just might just go through, because, Candy, in this controversy, public sympathy is clearly with the doctors.

CROWLEY: CNN senior analyst Bill Schneider -- thanks, Bill.

SCHNEIDER: OK.

CROWLEY: We have news just in.

An illegal immigrant who allegedly used a false identity and fake documents to work on the White House grounds for two years has been indicted in Texas. Salvador Martinez Gonzalez (ph) rubbed elbows with then President Clinton and with current Vice President Dick Cheney, while working to set up outdoor social functions at the White House.

He now is in federal custody in Texas. His indictment is expected to be formally announced later today. Secret Service officials say there is no evidence Martinez Gonzalez ever posed a threat to the White House or officials there.

INSIDE POLITICS will be right back with a farewell to one of our own.

(COMMERCIAL BREAK)

CROWLEY: Finally, this New Year's week, INSIDE POLITICS wants to say goodbye and thank you to one of our regulars.

CNN correspondent Brooks Jackson is leaving us. And, boy, are we going to miss him.

(BEGIN VIDEOTAPE)

BROOKS JACKSON, CNN CORRESPONDENT: And it shows thousands and thousands of Americans who wanted to vote and got themselves to the polls.

CROWLEY (voice-over): The truth of it is, when there was a complicated story you needed figured out and told straight, Brooks was a go-to guy.

JACKSON: These old cars were terrific in their day, but they pollute like crazy. And when it comes to Medicare, the gas gauge is almost empty.

CROWLEY: Brooks helped us and you through the convoluted arguments over Medicare, Whitewater, campaign finance, Enron, and:

JACKSON: Well, hold on. Who's telling the truth here?

CROWLEY: You think you had to watch too many political ads? Brooks should get frequent-viewer miles. As one of our colleagues put it in the every-growing computer goodbye note, Brooks Jackson made us all look smarter.

JACKSON: We counted 1,244 would-be voters for Bush or Gore who spoiled their double-bubble ballots in just this way.

CROWLEY: Brooks is a journalist's journalist. But that's what he does. How he did it tells you who Brooks is. He is a class act and a gentleman.

So, goodbye, sir. We'll see you again somewhere along the road.

(END VIDEOTAPE)

CROWLEY: But, in the meantime, Brooks, we at INSIDE POLITICS salute you. Thanks. Bye.

And that's it for INSIDE POLITICS. I'm Candy Crowley.

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