CNN Late Edition

Condoleezza Rice Discusses Importance of Missile Defense System; What Will Become of Bush's $1.6 Trillion Tax Cut in Congress?

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

WOLF BLITZER, HOST: It is noon in Washington, 9:00 a.m. in Los Angeles, 5:00 p.m. in London, and 7:00 p.m. in Tel Aviv. Wherever you are watching from around the world, thanks for joining us for this two-hour LATE EDITION.

We'll get to our interview with President Bush's National Security Adviser Condoleezza Rice shortly. But, first, let's check in with CNN reporters covering the hour's top stories.

(NEWSBREAK)

BLITZER: On the international front meanwhile, there's no shortage of hot spots awaiting the new Bush administration. On Tuesday, for example, Israelis go to the polls for what's shaping up as a bitter election. A bit later in the program we'll go live to Israel and talk with CNN's Christiane Amanpour for a preview of that country's election.

But earlier today I spoke with the U.S. National Security Adivsor Condoleezza Rice about some of President Bush's key global concerns.

(BEGIN VIDEOTAPE)

BLITZER: Condoleezza Rice, thanks for joining us on LATE EDITION. Congratulations on your new post. This is your first interview since you became the National Security Adivsor.

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISOR: That's correct. It's nice to be with you, Wolf.

BLITZER: Thanks for doing it on this program.

The national missile defense system that you've proposed, it's causing major, major concerns among the European allies, Russia, China, a lot of other countries around the world. Are you having, perhaps, now that you are in office, some second thoughts about going forward with something that so many of the allies of the United States think could escalate dangerously the arms race?

RICE: Well, there's absolutely no second thought about the importance of missile defense within the context of a restructured nuclear relationship. The world has changed. When the ABM Treaty came into being it was 1972. Poland was a part of the Wassau Pact. Poland is now a part of NATO. It's a very different environment. Russia is no longer our hostile adversary.

So the president is committed to restructuring the nuclear relationship and making defenses against limited threats from rogue states or accident launch a part of that new restructured relationship.

RICE: We understand that there is a lot of work to do with the allies, a lot of work to do with the Russians, but we believe that, with the proper context, and with the chance to do the diplomacy, that we can make this work.

BLITZER: Now, President Bush has spoken by telephone with the president of Russia, Vladimir Putin. Is there any indication you are getting at all, from the Russian government, so far, that they might be open to working out some sort of arrangement whereby the U.S. could go forward with this new missile defense shield, without undermining -- or a abrogating the ABM, the antiballistic missile treaty?

RICE: Well, I don't want to characterize the Russian government's position. I think it's only fair to have discussions with the Russian government and to have them characterize their own position.

But clearly, some months ago, President Putin recognized the threat from places like North Korea, perhaps from Iran or Iraq. Clearly, he is searching, I think, for a way to deal with that threat. And so we look forward to conversations and discussions at all levels with the Russian government about how we move forward to a new restructured relationship that is more evident and more capable of dealing with the threats that we face today, rather that on the ones that we faced 25, 30 years ago.

BLITZER: When do you expect President Bush to meet with President Putin?

RICE: Well, there is no certain date, at this point. They have talked by phone. I have talked with my counterpart, Sergei Ivanov. Of course, Secretary Powell has talked with the Russian foreign minister.

I think there will be many conversations, but they look forward to an opportunity to get together, when it can advance the cause.

BLITZER: No penciled-in target dates, or anything like that?

RICE: No, no penciled-in target dates.

BLITZER: Because the Russians are clearly key in getting this missile defense shield off the ground.

RICE: Well, I think there are really two aspects of this.

Yes, it is important to have discussions with the Russians, but it's also important to have discussions with our allies.

One of the commitments that then-Governor Bush made, and now President Bush has made is that, whatever we do, we'll take into context what our allies need. We are not going to decouple from our allies.

And he's also said that he will have broad consultations with our closest friends.

So, yes, what we do with the Russians is important, but it's also very important what we do with the allies.

BLITZER: Now, the allies in Europe seem to be uniformly opposed to the national missile defense shield. They're also pretty much upset about what then-Governor, now-President Bush said during the campaign about withdrawing U.S. forces from the Balkans, the peacekeepers, from Kosovo, from Bosnia. Is there any target date, right now, when the U.S. will start withdrawing troops from that NATO peacekeeping force?

RICE: President Bush is in fact opposed to any kind of target date or deadline.

He was, after all, during the campaign, one of the people who spoke out against trying to have a July 1 withdrawal date for American forces in Kosovo when there was such a move in Capitol Hill to do so.

He understands and believes strongly that we have commitments that we have to fulfill to our allies, that anything that we do in restructuring a presence in the Balkans has to be done in the context of allied consultations.

I think that the allies will find that this is going to be a very consultative administration, that they're not going to be subject to surprises, and that's probably the most important thing, and that is true whether you are talking about troops in the Balkans, or missile defense.

BLITZER: The Europeans seem to see a contradiction, though, in U.S. policy under a Bush administration. On the one hand, the administration has said it wants to withdraw U.S. troops from that Balkan peacekeeping force. On the other hand, the U.S. is concerned about the European Union's creation of a rapid deployment force, about 60,000 troops, as a potential threat to NATO. How do you reconcile that apparent contradiction? If you want the Europeans to do more, why not let them create their own force?

RICE: Well, the president's point of view is that, first of all, when we think about what we do in the Balkans, we will do it with our allies. Similarly, we would expect that any move toward a European security and defense policy or force would be done in consultation with us.

After all, NATO is still the premier security institution in Europe.

RICE: It is a living, breathing, changing institution. And all that we've said is that we are certain that our allies understand that any European defense force would need to be within the context complementary to, not opposed to, NATO. And I think that that is the position of the Europeans at this point. We are -- we have a lot to work with, going all the way back to the Helsinki statement of almost a year ago. I think we have a lot to work with to make sure that the European plans are not counter to NATO. And in fact, anything that helps the Europeans to pay closer attention to what are in some situations, really, under-investment in defense, that we're going to be in favor of.

BLITZER: As you know, the NATO alliance was expanded under the Clinton administration to include Poland, Hungary and the Czech Republic. What does the Bush administration want to do next to expand NATO? Are you planning on bringing in some of the other central and European nations?

RICE: Well, the president has said that expansion needs to continue, that for NATO to continue to be a living and breathing and changing institution, it needs to continue to bring in new members.

Now, the exact terms of that, the exact players, the countries that will be brought in in what order, we've not made any decisions. And indeed, consultations with the allies will be very critical, because this is not a unilateral American decision to admit members to NATO. There are 19 other members of NATO that have to have a say.

BLITZER: U.S.-China relations are, of course, critical as well. There's a meeting of the U.N. Human Rights Commission coming up next month. Will the Bush administration vote to condemn China's human rights policies, as previous administrations have routinely done at that annual meeting?

RICE: I think you will not see any diminution of American support for human rights in China. Indeed, in his first talks with the Chinese ambassador, Secretary Powell made very clear that human rights was high on the agenda of this president with China.

And so, what we do at that meeting will be consistent with our views of the importance of human rights. And it's important not just for U.S. policy, but as China tries to join the world community, tries to become a member of the World Trade Organization, tries to improve its economic position, has to treat its own people well. That's the definition of a modern state. It's a state that respects the human rights of its people.

So I think you will not see any diminution of support for human rights in China. In fact, I think you'll see a renewed emphasis on it.

BLITZER: And as far as the Middle East is concerned, their elections Tuesday in Israel: Polls shows Ariel Sharon the favorite right now. What do you anticipate a Bush administration would do if Ariel Sharon becomes the next prime minister of Israel?

RICE: Well, the first thing is to say that Israel is a democracy, and the Israeli people are going to make an important choice on Tuesday. But it is their choice. And this administration, as well as the rest of the world, has to be prepared to work with the Israeli prime minister, whether it is Mr. Barak or Mr. Sharon. The most important step in the first -- first order step, is going to be for all to act with a sense of calm, a sense of statesmanship. Violence will achieve nothing. And if all the parties are committed to the creation of a calm environment in which we can move forward, I think that will be very good. And that will be our message to all of the responsible parties in the region on Tuesday and on Wednesday.

BLITZER: I know you have a limited amount of time, but I want you to listen to what then-Governor Bush said a year ago on this program about the prospect of moving the U.S. embassy from Tel Aviv to Jerusalem, which is obviously a very sensitive issue in that part of the world. Listen to what then-Governor Bush said.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I would start the process is what I said. Upon swearing in, I would start the process.

BLITZER: What if the parties come back as they do, the Arabs, and say, well, that would totally disrupt the peace process by the U.S. taking this unilateral gesture?

BUSH: No, I understand, but I think part of the president's job is to make it clear that that's my intention. That's exactly what campaigns are meant to be. I've sent the clear signal, and this is what I intend to do.

(END VIDEO CLIP)

BLITZER: Has he started the process?

RICE: The president has made clear his intention to begin this process, and in fact, part of the process will be to talk to friends in the region to assess the possibilities of doing this.

But the commitment remains. The question of exactly when and how, I think, has to be judged within the context in which we find ourselves.

BLITZER: So there's no date yet, no specific timeframe when the U.S. embassy would be moved, only that that's your goal to move it?

RICE: Well, the president as governor did not make the commitment to a specific timetable or to specific steps. He said only that it was his intention to do so and that remains the case.

BLITZER: You enjoying your new job at the White House?

RICE: I'm having a great time. It's really terrific working with this president. He's off to a fast start. He spent a lot of time talking to leaders assuring them, by the way, that the American economy, which they're all very concerned about, for instance, that he's going to work hard through the tax cut and in other ways to strengthen the American economy. He spent a lot of time on the fundamentals of getting to know people and of the alliance. He's off to a great start, and I'm really honored to have a chance to serve him.

BLITZER: Condoleezza Rice, thank you so much for joining us on our program.

RICE: Thank you, it's great to be with you.

BLITZER: Good luck to you.

RICE: Thank you.

BLITZER: And up next, the campaign for Israeli prime minister is in its final days as the country prepares to decide who will be its next leader. We'll go live to Tel Aviv for some perspective on Tuesday's critical elections from our own Christiane Amanpour.

And later, President Bush's charm offensive. Will his bipartisan gestures be enough to win Democrats over on his controversial tax plan? We'll ask two key members of the U.S. Senate.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: The past few days have seen yet more Israeli- Palestinian unrest as voters prepare in Israel to decide who will be that country's next prime minister. The incumbent, Ehud Barak, is facing a stiff challenge from the former Israeli defense minister, Ariel Sharon.

Welcome back to LATE EDITION.

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BLITZER: Be sure to tune into CNN's special coverage of the Israeli elections, "Israeli Decides," with Christiane Amanpour this Tuesday, 3 p.m. Eastern, noon Pacific, 20:00 GMT.

And up next, President Bush's tax cut proposals. Will Congress give him what he wants? We'll talk tax cuts, politics and more with Texas Republican Senator Phil Gramm and Connecticut Democratic Senator Christopher Dodd.

Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: It's important for us not to let the tax relief debate fall into a class warfare debate.

(END VIDEO CLIP)

BLITZER: President Bush making the case this past week for his $1.6 trillion tax cut plan. Welcome back to LATE EDITION.

Joining us now to talk about the president's proposals are two members of the U.S. Senate: here in Washington, Republican Phil Gramm of Texas, and in his home state of Connecticut, Democrat Christopher Dodd.

Senators, always good to have both of you on our program.

Let me begin with you, Senator Dodd, on the tax cut initiative that the president is pushing, $1.6 trillion. He got a big boast from Zell Miller, the Democratic senator from Georgia. He got a big boost from Alan Greenspan this week. Are the Democrats now -- I'll rephrase it. Are you ready now to go ahead with this large tax cut, across- the-board tax cut that the president is pushing?

SEN. CHRIS DODD (D), CONNECTICUT: No, I think what we feel -- and that isn't just Democrats -- I think people who have looked at this issue seriously, we're for as large a tax cut as we can afford. And I emphasize the last part of that statement here. This is not about whether or not we ought to have a tax cut, but in the context of a good economy, one that's slowing down a bit, are we about to engage in an economic program that may undo a lot of which has occurred over the last few years, which has produced the strongest economy in the history of the United States?

If you take the $1.6 trillion tax cut that the president is proposing and add to that interest costs as well as alternative minimum tax reforms that would be necessary, that equals about $2.2 trillion. If you exclude Social Security, Medicare and other trust funds, you take the $5.6 trillion estimated surplus over 10 years -- that shrinks to, ironically, $2.2 trillion. And so you would eat up as much as 100 percent of the real surplus in the next 10 years with the president's tax cut proposals.

Our concern is that that excludes, of course, any expenditures for defense, for education, which the president has talked about, health care, prescription drug reforms, not to mention a rainy-day fund or paying down on the debt.

So the issue is, we ought to have a tax cut, but let's be prudent, let's be responsible about this, not go overboard and drive this country back into a red ink, forcing interest rates up. That adds a tax increase on home mortgages, car payments, other costs that consumers have in this country. That could really set this economy back on its heels.

BLITZER: All right, Senator Gramm, $2.2 trillion all of a sudden. It was $1.3 during the campaign, became $1.6 trillion. Now Senator Dodd says it's really $2.2 trillion, the country can't afford it.

SEN. PHIL GRAMM (R), TEXAS: Well, first of all, I think it's important to look -- the president's bill over 10 years, his tax bill is $1.6 trillion. To compare that to the level of revenues we expect over the next 10 years, that's about half the size of the tax cut that President Kennedy proposed in 1961. That's about one third the size of the Reagan tax cut in 1981. We believe the economy is getting weaker, the surplus is getting bigger. Alan Greenspan has said the economy needs a tax cut, it needs an across-the-board rate cut to remain strong.

And finally, the most important thing that has happened since the election is, last Thursday, the report from the Congressional Budget Office came out. The media focused on the fact that the surplus was up. But the important thing was that that report showed that in six months Congress added $561 billion to spending over the next decade. At that rate, if we don't give some of this money back to working people, Congress will spend the whole tax cut over the next 12 months.

So, I think this argument, don't spend it, don't give it back in tax cuts, let Congress pay down the debt rings hollow when you look at what they're doing.

BLITZER: Senator Dodd, we have a chart -- I want to show our viewers -- which shows what those latest numbers on the surplus, the projections are. $5.6 trillion over the next 10 years. If you take a look at the Social Security surplus, which is going to be protected -- both parties agree $2.5 trillion is not going to be used. It's going to be lockboxed, if you will, for Social Security. There's a $3.1 trillion budget surplus that's left over.

Listen to how President Bush responded when he saw those new numbers earlier this week. Listen to this.

(BEGIN VIDEO CLIP)

BUSH: I was pleased to see the CBO numbers. I think it helps further the case that there is enough money to pay down debt, to meet priorities, and to give some of the money back to the people who pay the bills -- that's the taxpayers.

(END VIDEO CLIP)

DODD: Again, Wolf, I've said I'm for as large a tax cut as we can afford. You forget to mention Medicare, which is also a trust fund. There are other trust fund dollars there, so that number comes down from the $3.1. And you've got to add in interest costs, because interest costs are a tax in a sense. And there's $400 billion in interest costs under this proposal of a tax cut of $1.6 trillion, and you are going to have to modify the alternative minimum tax.

Now Phil knows that, and that's additional amount. If you add those numbers together, it comes out to roughly $2.2 trillion.

And let me quickly add: Respected economists, people like Bob Rubin, tell us the other day that he believes that in fact those numbers, $2.2 trillion, may be high, may be talking more than the $1.6, $1.8 in terms of real surplus.

And let me add this fact to you: If you took the Congressional Budget Office estimates on where the economy will be over the next five years, it shows anything from $1 trillion surplus to a $50 billion deficit over next five years. This is guesswork. We are at a bit of a fantasy world here, rather than fact world, and we ought to be very careful and very cautious here or we could really cause some major problems for the country.

BLITZER: You know, Senator Gramm, Senator Dodd is not alone in his raising these concerns. Even some Republicans -- I interviewed John McCain earlier in the week, and I asked him about what he used to talk about during the presidential primaries. He used to say that Donald Trump doesn't need a tax cut. He still believes that the middle class is where the bulk of those tax savings should go.

Your tax cut proposal, the president's tax cut proposal, would give Donald Trump and billionaires huge tax cuts.

GRAMM: Well, look, we believe everybody deserves a tax cut. We have a tax surplus in the federal budget. We cut rates for the lowest bracket twice as much as we do for the highest bracket. Repealing the marriage penalty is aimed right at the middle class. Doubling the child exemption from $500 to $1,000 affects moderate income people.

But we are not going to apologize for the fact that everybody deserves a tax cut.

I would say about all this concern that Chris is talking about, about uncertainty about projections, on deficits: Where was that in the last six months when we spent $561 billion? We spent a third of the president's tax cut on new government programs in the last six months.

BLITZER: Well, let's ask Senator Dodd about that. Where was that concern when you increased spending in all those programs over the past six months?

DODD: Well, with a lot of Republican support I might add let me. But let me also...

GRAMM: I agree. I'm not denying it.

DODD: Let me quickly point out to you that today, federal spending as a percentage of gross domestic product is lower than it has been at any time since 1966. So we are being able to manage this increased spending.

You may not like where they are going to go, but I'd quickly point out to you: It's one thing to say that about what happened the last six months. But here we are talking about where we are today. We are heading in the right direction, we're looking at annual deficits, we're now talking about surpluses.

But if you take what the president has proposed in terms of tax cuts, the size of it, and add it into the other elements I have mentioned to you, there is no money, if you buy the CBO numbers of a $5.6 trillion surplus, a real surplus of around $2.2.

What about the defense increases this president wants? He says he wants prescription drug benefit, he wants to work on one. He says leave no child behind and he wants to do better on education.

You're going to be in red ink very quickly. And that is going to cause the Federal Reserve Board to raise rates, and that is a real tax on people.

All I'm saying to you here, Wolf, and to Phil is, let's be reasonable, let's be smart about this. This ought not be about ideology. It ought to be about what's smart for country. Let's really know what we are doing before bind ourselves to a huge tax increase that we cannot afford, any ore than I would support a huge spending increase -- that would be as mistaken.

BLITZER: Senator Gramm, go ahead.

GRAMM: Let me just respond by saying we're going to come out with a budget, we're going to pay off the debt over the next 12 years, we're going to preserve Social Security and Medicare, and we're going to cut taxes for every worker in America. To fail to do so is unfair, it's dangerous economically, and it guarantees the most massive expansion in government spending in American history, and we're not going to let it happen.

BLITZER: All right, we're going to take a quick break. We have a lot more to talk about. When we return: the president's most controversial Cabinet nominee survives a bruising Senate confirmation. Are similar battles ahead?

Plus your phone calls for Senators Phil and Chris Dodd when LATE EDITION continues.

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(BEGIN VIDEO CLIP)

SEN. ORRIN HATCH (R), UTAH: I resent the calumny that they've heaped on John Ashcroft. I resent the unfair tactics. I resent the distortions of his record.

SEN. CHARLES SCHUMER (D), NEW YORK: It is a shot across the bow in terms of the push and pull within the Bush administration -- to be moderate and bipartisan, or to play to the hard right.

(END VIDEO CLIP)

BLITZER: The sentiment of two senators following Thursday's confirmation of John Ashcroft as attorney general. Only eight Democrats voted to confirm him.

Welcome back. We are talking with Texas Republican Senator Phil Gramm and Democratic Senator Chris Dodd of Connecticut.

Senator Dodd, you were one of those eight Democrats who voted to confirm John Ashcroft. Some have suggested that that means you are not interested in running for president in 2004, because you have irritated a lot of the Democratic base out there. Is that true?

(LAUGHTER)

DODD: Well, I'm not running for president, but that is not the calculation here. I just am tired of sort of payback politics in Washington, and I didn't feel -- John Ashcroft wouldn't have been my choice. I voted for him. I believe President Bush could have made a better choice. But I don't believe that he is a racist. I don't believe, when he says he will uphold the law, that he won't. He swore on the Bible during those hearings that he would do that. And I have no reason to believe otherwise that he won't.

And thirdly, while I hate what he did to other people, including Ronnie White, to James Hormel, to Bill Lann Lee, I don't like what John Ashcroft did to those people, but I don't like anyone doing that including even to John Ashcroft, in my view. So on a narrow consideration on my part, he got my vote.

I was fully aware that I was going to disappoint some good friends, and I have heard from them about it and tried to explain my views on it. I'm more interested in debating policy questions. People in cabinet-level positions I hold to a lesser standard than I do to a district court or the Supreme Court.

So I would never support John Ashcroft, with all due respect, to be a Supreme Court justice. But I can accept the president needs his political family. This is his choice. If John Ashcroft proves to be a huge disappointment, this is going to be President Bush's problem, not my problem.

BLITZER: Senator Gramm, you heard many Democratic senators, including Chuck Schumer just now, make the point that this was a shot across the bow, this was a warning, to the Bush administration: make sure the next time some important judicial nominations, especially to the Supreme Court, come up, it was a 58 to 42 vote, enough to sustain a filibuster if the Democrats decide they want to go in that direction.

"The New York Times" in an editorial on Friday said this, it said: "The message to Mr. Bush is that he should think twice before sending up any more right-wing nominees, especially for the Supreme Court."

GRAMM: Well, first of all, let me say that I -- the president asked Republicans to put this behind them. If you're looking for a reason in this business to get your feelings hurt, you can constantly find it. One could have found reason to have their feelings hurt in the Ashcroft debate. It is over. He won. It is done.

But let me say this: elections have consequences. And when George Bush was elected president, we decided, in that election -- and people, if they follow politics, knew they were deciding -- that on judicial appointments that people are going to be appointed who believe in the rule of law, who believe that they should follow the Constitution and the laws, and not make it up as they go along.

And I can't imagine that the president is in any way going to change basically what he said he would do, in terms of judicial nominees, based on what Democrat politicians say or do.

BLITZER: Senator Dodd, there's an editorial in the Chicago Tribune suggesting that the president could make a gesture which would be powerful, one I assume you would support. Let me read to you what the Chicago Tribune says.

"If Bush wants to defuse the anger, he needs more than feel-good sessions with black leaders. He can start by acknowledging that Ashcroft was wrong about Ronnie White and repair the damage by appointing him to the federal bench himself."

Ronnie White, the Missouri Supreme Court justice who was not confirmed. Is there any indication at all, do you think, that President Bush might have some second thoughts about Ronnie White and let him go to the federal bench?

DODD: None that I'm aware of, but I probably -- I'm not likely to be consulted by him on that point. But it's a point you're making here and that's, I think, a worthwhile one.

We've seen a lot of news this week about the president reaching out and meeting -- in fact, the first time ever coming to an issues forum by Democratic senators and the House Democrats who gathered, and I commend him for that. He's had a lot of Democrats down to the White House over the past week, met with the Black Caucus. I happen to subscribe to the notion that good manners is good politics. I believe that, and I believe this president is making a good first impression.

But good manners is not necessarily good policy, and we shouldn't confuse the two. And while we're getting along with each other at the -- it's like a new neighbor who arrives in the -- new family arrives in the neighborhood, everyone sort of reaching out to one another. But we're going to find out whether or not he's really going to be a good neighbor when it comes to issues like choice and like the environment and dealing with education policy and defense policy.

And let me say to Phil, I accept the fact that this is the president. I was there, obviously, on Inauguration Day. I've said so publicly many times. But don't underestimate the hard feelings that exist in this country about this election. This was a very bitter election. There are a lot of issues that have yet to be resolved in many people's minds, and it is very important that this president understand that. I believe he does, candidly.

And so, just saying that elections have consequences and I'm going to disregard what a majority of people who went to the polls said -- people, not the Electoral College -- and when it comes to judicial appointments, Cabinet appointments and the like, sub-Cabinet appointments, I think it would be a huge mistake. He's got to really demonstrate that he understands this country is not just of one political ideology and persuasion. It's of many, and he needs to embrace that as an American president.

GRAMM: Well, first of all, I think -- and let me say to you, Chris, that I think if you look at the president's Cabinet, that it is a fairly broad-based Cabinet. I think it's hard to look at it and say that represents one little narrow corner of American political philosophy.

The point I was making, however, is that there's always a temptation for people to try to say that they're going to override in Congress what they did not win on Election Day. And it's one of the things, when Bill Clinton was president, that I often said to my colleagues and that is that elections have consequences. Bill Clinton did not appoint a single judge that I would have chosen. And yet I voted for the overwhelming, overwhelming majority of them, to confirm them, because...

BLITZER: Not for Ronnie White, though.

GRAMM: No, I think that Ashcroft was right on Ronnie White. I'm not going vote to confirm a federal district judge who is almost uniformly opposed by law enforcement as being soft on criminals.

DODD: Well, that was an unfair accusation, but...

GRAMM: Well, it may be unfair, but all the sheriffs came out against him, all the law enforcement agencies came out against him.

DODD: Well, I know. But, Phil, almost every Republican senator on the Judiciary Committee, when Ronnie White appeared before them during the Ashcroft hearings, apologized to Ronnie White for how he was treated. We've never allowed that to happen before. They voted, what is it, 18 to 2 or something like that, 16 to 2 in the Judiciary Committee and then brought him to the floor and ambushed him there.

Now I don't want to revisit that debate, but it was cruel, unfair thing to do to that man. And we ought to apologize to him. I'd have a great deal of respect if John Ashcroft and the president would do it. I don't think they're going to appoint him to the federal district court bench, I understand the motivation there, but a good apology to him might be appropriate.

GRAMM: Well, look, Chris, I respect people that I might not put on the Supreme Court or the circuit court. I voted against White for basically one simple reason, and that is, when you have been a judge in a state and every sheriff, Democrat and Republican, in the state opposes you, when the law enforcement officials of the state believe that you're not fair to the cop on the beat and to those who are concerned about putting criminals in jail, then I think that's an issue that has to be looked at.

And I don't -- I haven't said anything -- I don't know -- I've even made a statement on Judge White, but that's why I voted against him. That's why I would do it again in my state. BLITZER: All right. Senator Dodd, you have the last word on this point. Go ahead.

DODD: Well, just to say this, I won't dwell on that one case, but there was a case involving some sheriffs in that state, and I understand the motivations behind the community. But to suggest somehow that Ronnie White was opposed by all law enforcement, that's just not accurate and that's not fair to him.

I understand the hostility felt over one particular case, but it certainly didn't apply to a distinguished judicial career as a member of the supreme court of that state, highly regarded by people across the board, including the other senator from the state who spoke eloquently on his behalf during the Judiciary Committee hearings and then changed a vote on the floor. That's not a proper accusation of this man.

But, look, let's -- it is done, as Phil has said. I'm not going to dwell on it, but the point is there are some gestures that could be made here beyond just the good manners. We need to get to the policy issues, and having bipartisan compromises means reaching out, not just everyone crossing back to the president's side on those issues

BLITZER: All right. We're going to take another quick break. We have a lot more to talk about including phone calls for Senators Gramm and Dodd. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're continuing our discussion with Texas Republican Senator Phil Gramm and Democratic Senator Chris Dodd of Connecticut.

We have a caller from New Rochelle, New York.

Please go ahead with your question.

QUESTION: Hello. Senator Gramm, I would like to know why can't you and supply-side economists recognize that the highest-income- bracket people are not clamoring for tax relief? They want strong consumer activity to help the economy going strong, and that the best way to get strong consumer confidence is to lower the lower- and middle-income rates and keep interest rates low at the same time. Can someone please admit that Bush's magic one-third maximum rate is just a number and meaningless at the -- thank you.

GRAMM: First of all, I'm not just a supply-side economics economist. I'm the real thing. So I think that you have to look at the supply side, and you have to look at the demand side.

I think the plain truth is that the tax burden today is at the highest level in American history as a percentage of gross domestic product. Our $400 billion surplus, with an economy that had no growth in the last quarter, has become an anchor. The economy is dragging. The American people need a tax cut. Now is the time to give it to them.

If you look at the Bush tax cut, it cuts the rate of moderate- income Americans twice as much as it does higher-income Americans.

But we are not going to get into this business that some people deserve a tax cut and others don't.

And finally, when you look at the highest bracket, about 80 percent of the income tax is paid in that bracket or paid by small businesses, and so you are talking about economic growth and incentive and fairness. BLITZER: Let's take another caller from --

DODD: Can I respond? Can I respond a bit to that, Wolf?

BLITZER: Well, maybe you will be able to respond, Senator Dodd, from the next question from our caller from Glasford, Illinois.

Go ahead, caller, with your question.

QUESTION: Yes, what I would like to know is, why did Alan Greenspan say that the economy growth is at almost zero but Senator Dodd and other Democrats keep saying there is just a slight slowdown?

DODD: Well, first of all, let me just respond a bit to the last question too in all of this. A family of four in the United States is paying the lowest amount in federal taxes since 1966. And if you add payroll taxes, it is the lowest amount that family of four has been paying since 1975.

What's caused the increase here that Phil talks about -- and Larry Lindsey very candidly addressed this the other day before the budget committee -- is that between 1989 and 1997 the top 1 percent of income earners watched their gross income increase from around $417,000 a year to $518,000 a year, and that's through 1997. '98, '99, and 2000 were very good years as well. And that was primarily due to this tremendous surge in the markets, the stock markets, particularly bonuses that were given out.

The proposal that the president has suggested provides 50 percent of the tax cut to the top 5 percent of income earners. I don't believe in class warfare. God bless these people for doing as well as they have been doing.

But we need to talk about the $12,000 tax deduction that is being proposed to provide relief for people who are sending kids to college, the $3,000 in tax deductions for people who want long-term care insurance for themselves, for their parents and older people, the marriage penalty tax reforms we are talking about. These are the things -- child care -- that people need, so we Democrats are for a tax cut and as large a one as we can afford but not one that was going to send us into deep, deep trouble, as I'm fearful that this proposal -- and read Alan Greenspan's testimony.

And I would urge Alan Greenspan, if he's listening, you need to clarify your testimony before the Budget Committee. I don't believe that what people think up said is what you actually said. You actually said that a tax cut is not a proper stimulus for a slowdown here. The proposed tax cut doesn't go into effect until 4 or 5 years from now. It does nothing to deal with the slowdown we are experiencing right now.

GRAMM: Well, Chris is speaking for Greenspan.

DODD: He needs to do that, in my view.

BLITZER: We'll try get Alan Greenspan on this program, but I'm not holding my breath waiting for him to appear. You probably have a better chance to get him to testify before the Judiciary...

GRAMM: We've got Chris. We don't need that.

BLITZER: All right, let's take another caller from Syracuse, New York.

Go ahead, please, with your question.

QUESTION: Hi. My question is, you know, in the 1980s we cut taxes on the wealthiest Americans in the country. We also increased spending. We saw what the result was: huge budget deficits as far as the eye could see. Seems like we're proposing to do the same thing today, cut taxes on the wealthy, increase spending for certain programs. Why shouldn't we expect to see same results?

BLITZER: Well, let's ask Senator Gramm.

GRAMM: Yes, let me respond. First of all, this cutting taxes for the wealthy is the same old song Democrats sing and liberals sing. You remember the president said, "Well, I'll sign your bill repealing the marriage penalty if you limit it to people who make $21,600 a year or less."

They define as wealthy anybody who gets a tax cut, period. And any time they increase taxes, even on Social Security benefits, it's always for the wealthy even though they make only $30,000 a year. Now, let me respond by...

BLITZER: Very briefly.

GRAMM: The Bush tax cut cuts rates for moderate-income people twice as much as it does for higher-income people. But I'm not going to apologize for the people paying over 50 percent of all income taxes getting 50 percent of the tax cut.

BLITZER: Unfortunately, Senators, we have to leave it right there. Senator Gramm, Senator Dodd, it is always frustrating. I know there is a lot more both would you have like to say. We are simply out of time for this segment. Thanks to both of you for joining us.

DODD: Thank you, Wolf.

BLITZER: And we will take a quick break. For our international viewers, "WORLD NEWS" is next. For our North American audience, there is still another hour of LATE EDITION.

Just ahead, a conversation with the new chairmen of the Republican and the Democratic parties. Plus, our LATE EDITION roundtable and Bruce Morton's last word. It's all ahead in the second hour of LATE EDITION.

(COMMERCIAL BREAK)

BLITZER: This is the second hour of LATE EDITION.

(BEGIN VIDEO CLIP) PRESIDENT GEORGE BUSH: I probably won't agree with everything you say, but I'll listen and I'll respect your opinion.

(END VIDEO CLIP)

BLITZER: Is President Bush closing the divide between the Democrats and the Republicans? We'll ask the new party leadership. Republican Party Chairman and Virginia Governor Jim Gilmore and Democratic Party Chairman Terry McAuliffe talk about politics, fund- raising and the future of the two-party system.

Plus, our LATE EDITION roundtable: Steve Roberts, Susan Page and David Brooks. And Bruce Morton has the last word on how everything old is new again.

BLITZER: Welcome back to LATE EDITION. We'll get to the new Republican and the new Democratic Party chairmen in just a moment.

(NEWSBREAK)

BLITZER: Let's talk now about the new era of politics that we're facing here in Washington potentially. We'll talk with the new party chairman -- Republican -- the Virginia governor, James Gilmore, and the Democratic Party Chairman Terry McAuliffe. He just took over as chief of the party only yesterday.

Gentlemen, congratulations to both of you, and welcome to LATE EDITION. It's good to have you on our program.

Terry McAuliffe, you gave a rousing address yesterday, Saturday, here in Washington. Here's a clip because it has generated quite a stir, as I'm sure you already know. This is Terry McAuliffe only yesterday in his acceptance speech.

(BEGIN VIDEO CLIP)

TERENCE MCAULIFFE, DEMOCRATIC NATIONAL COMMITTEE CHAIRMAN: We will prove there is victory after denial, democracy after Florida, Daschle after Lott, Gephardt after Hastert and justice after the United States Supreme Court.

(END VIDEO CLIP)

BLITZER: Now the criticism, of course, is that you're raising questions about the legitimacy of President Bush's victory.

MCAULIFFE: Well, Wolf, you are always want to come out and start with a bang. I was speaking to our base there, and the point I was trying to make is, after the last election in 2000, there are just still a lot of questions around that. All we want are for all the ballots to be counted as we go forward.

I don't want to send my time talking about the 2000 race. I think news reports will be out in the next several weeks that will show that Al Gore won Florida substantially, but let's wait until that happens. I just want to make sure that, as we go forward, that elections in future, the key governors races in Virginia, in New Jersey, that electoral forum is on the table and that all the votes are counted. And I know Governor Gilmore joins me in that. We just want to make sure that when people go to the polls, they can read the ballots and their ballots will be counted. And I'll stop talking about the 2000 election when I'm in the Rose Garden watching President Bush sign that bill for electoral reform.

BLITZER: Well, you know, the implication obviously, the point, Governor Gilmore, that Terry McAuliffe is making is that you, the Republicans, stole the election.

JIM GILMORE, REPUBLICAN NATIONAL COMMITTEE CHAIRMAN: Yes, and I think that's very bad, Wolf. I think that Terry's comments are not appropriate. I think it's not good to start off by undermining the legitimacy of the republic, and that's what I think that whole strategy has been. And I think it's been culminated in a speech like this.

The fact of the matter is that it doesn't matter at this point about who goes down and pretends to count the votes in lots of different ways and trying to apply all kinds of different standards. The fact of the matter is we have an election on Election Day. We count the votes legitimately, we report those votes. George Bush won the election, he is our president. And I think this constant effort to try to undermine the legitimacy of election is really undermining this republic, and that's not good.

MCAULIFFE: This is where the governor and I disagree. And George Bush is the president; he was sworn in. I think we won the election, but they got the prize.

We do need to move on, but there's a lesson that came out of Florida. We need to make sure, as I spoke about yesterday, that we park the state police cars, that people of color are not asked for multiple forms of identification when they go to vote, that you can read the ballots and the ballots are counted. All I'm saying is, we go forward -- elections do you no good if, at the end of day, all the people who legitimately voted their votes aren't counted.

Lyndon Johnson signed the Voting Rights Act 35 years ago. The right to vote is by no means secure if there are all of these problems with people. There clearly are questions about people who voted.

BLITZER: Governor Gilmore, that's a serious charge that African- American voters in Florida were denied equal access to the ballot.

GILMORE: And if people were denied equal access to the ballot, it ought to be corrected. But I'm telling you, it's unsubstantiated. I think allegations that somehow imply that the voting rights of people have been impinged are irresponsible. I don't think it's the right approach, and it's not the right tone either, Wolf.

The president of the United States has come out and he has said that we should begin to be civil, we should have some civility in this public discourse. To look backwards, backwards, backwards all the time is not going to be the approach that's going to carry this country forward to go ahead, to move ahead with this great president, who is in fact beginning to move this country ahead on education and in tax cuts and areas that are going to really help people across this country. That's the direction we should go.

BLITZER: But is that the message you want to begin your tenure as chairman of the DNC on, that African-American voters and perhaps others were not allowed to vote in the correct way?

MCAULIFFE: We will continue to raise the issue until we have electoral reform in the United States of America. We are the greatest democracy in the world.

There are serious questions, and I've met with many civil rights leaders. I just spent an hour and a half with Wade Henderson, many civil rights leaders I've met with. They have serious questions and concerns about the way the vote was conducted in the 2000 election.

Listen, the governor and I don't want to lead parties in the political process if, at end of the day, people's votes aren't legitimately counted. I just want to make a point: As we go into these key elections going forward, not past, going forward in 2001 and 2002, that we have serious electoral reform so we don't have these questions and issues. People ought to be entitled to vote and the vote ought to be counted. So let's just make sure we have electoral reform. It's a small issue, but let's make sure we don't have any questions as we go forward.

GILMORE: The social contract among Americans is a big issue, and the fact is that you hold your election, you decide on those ballots, you decide on those rules and then you have the election. To then look at results, say you don't like the results, and then to turn around and try to undermine those results is a great threat to this republic.

It's not the right direction to go, we should certainly not continue it. And by the way, coincidentally, the Democrats controlled all those electoral processes and ballot designs in the state of Florida that later became the controversy by their own party.

BLITZER: All right, let's move on. You know that you won the party chairmanship, Terry McAuliffe, but there was opposition. As you know, you had Maynard Jackson, he was running against you for a time being almost until the very end.

Former Senator Bill Bradley, a Democratic presidential candidate, wrote that op-ed piece in The Washington Post, January 22, in which he said this: "In choosing the next DNC chairman, we will be making a statement about what kind of party this is to be. Will we be the party of campaign finance reform or the party of campaign finance? Will we seek to reenergize our party from the grassroots level or from Washington?"

You have a major chore ahead of you if this is the kind of comments attacking you, in effect. Senator Bradley's wing of the party suggesting you try to heal the Democratic Party.

MCAULIFE: Well, listen, Senator Bradley clearly can write whatever he wants. Maybe he wants to run for president again, I don't know.

All I will tell you is my entire platform running for chair of this party was built on the grassroots level. I'm going to go out and energize this base. I'm going to all 50 states, Wolf. We are going to build this from the grassroots up, we are going to rebuild our voter files, we are going to energize our base. We are excited.

What we need to remember at the end of day is that Americans were with us on the issues. Al Gore got 500,000 more votes than George Bush did. Americans were with us on the issues, and they want us to continue that fight on issues as we go forward.

So you are going to see Terry McAuliffe and all of us, all of the party leadership and all of the state party chairs and vice chairs around the country working together to get that Democratic message out on key issues that affect America's working families.

BLITZER: Governor Gilmore, you have a major challenge ahead as leader of the Republican National Committee. Look at these statistics. I want to put them up on the screen, voters' choice for president. Among blacks voters in the United States, President Bush got 9 percent, Gore got 90 percent; among Hispanics, Bush got 35 percent, Gore got 62 percent; among Asian-Americans, Bush got 41 percent, Al Gore got 55 percent.

The president did get a majority of white voters, 54 percent to 42 percent for Al Gore. It seems that you are not doing -- the Republican Party, despite all of the outreach, has not succeeded in generating the kind of support among minority voters that presumably you would like to have.

GILMORE: When the president called me, Wolf, and asked me if I would run and be the chairman of the Republican National Committee, he said the one reason he selected me to do this is because of the outreach efforts I have made in Virginia in order to try broaden the party and broaden the society, generally. That is what I have been working to do that, and that is what he has done in Texas. This has been the most outreach-driven campaign the Republicans have ever run. And yet we did not get the votes that we need to get.

And I think that we do need to reach out stronger and to listen to more people, but we need to do more than that, Wolf. I think we've got to get to know more people.

The first thing I did in my speech when I accepted the election as chairman of the national party was, I asked the members to go out and talk to some new people. We need to find some new leaders to talk to. People who aren't tied into the Democratic Party establishment necessarily, people who just want to do good things for their community, people who to want to lead in their churches, people who want to participate in ways of helping their fellow man and who will rally to the Republican issues of education quality, accountability, tax cuts. These are the issues that we believe we can get strong support on in the minority community.

BLITZER: All right, a major challenge for the Republican Party. We have to take a quick break, Governor Gilmore, Terry McAuliffe.

Stay with us. When we come back, your phone calls for the chairmen of the Democratic and the Republican parties. LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We are talking about the direction of the two major political parties with Republican National Committee Chairman James Gilmore and Democratic National Committee Chairman Terry McAuliffe. He was just elected yesterday to his post.

Let's take a caller from Miami, Florida.

Please go ahead with your question.

QUESTION: Yes, I just would like to ask the Democratic Party chairman, what evidence do you have of voting improprieties in Florida? And what about The Miami Herald's investigation, which showed that there were 2000 illegal votes cast, basically Democratic votes, and that the undervote count in Miami-Dade County turned up a net gain for Bush?

MCAULIFFE: Well, as I'm sure the caller probably knows, the Palm Beach Post this week said that Al Gore picked up 600 votes in Palm Beach.

So, we have a lot of evidence, and one of the first things I'm going to announce next week is that we are going to do hearings, voter-intimidation, voter-suppression hearings in Florida. I have been meeting with the civil rights groups, and they have depositions from thousands of people that they have spoken to that had a problem with the voting, with the ballots, had intimidation issues where people were required to come up with three or four forms of identification.

So it is an issue that we need to raise just going forward so that we can ensure that people's votes are actually counted at the end of day. This is the greatest democracy in the world. We need to make sure that we are an example and symbol to all countries around the world.

BLITZER: Let's take a caller from Albany, New York, in upstate New York near Terry McAuliffe's hometown of Syracuse, New York, not far from my hometown of Buffalo, New York.

Go ahead, Albany.

QUESTION: Hi. This issue of bipartisanship, that's not what the Republicans are asking for. They are pulling the Democratic people so far to the right that they can longer call themselves decent Democrats, especially with the appointment of Ashcroft, who is not going to take care of children who are born to parents who don't want them. Those children are going to be bounced into psych wards and prisons where they're going to be euthanized.

BLITZER: What about that, Governor?

GILMORE: Well, I don't think that's right. I think that John Ashcroft is going to be a great attorney general of the United States. He served as attorney general of Missouri, he served as governor of Missouri, he served as senator from Missouri. And the people of Missouri had plenty of opportunities to vote on this man and to judge his performance, and I think he's going to do a really good job.

But the bigger issue is the direction of the Republican Party, Wolf. And the fact of the matter is that the Republicans are reaching out. They are going to strongly do that. We have to find more people that we can talk to and to find ways to really put our issues out there on the table.

The fact is that working men and women in this country care very much about whether their children have quality in education. African- American parents who have children locked into schools that don't teach properly want accountability in public schools. They want have to an opportunity for their kids to escape from that kind of situation if possible, and working families want to have a tax cut so that they can get on the ladder of success.

BLITZER: Terry McAuliffe, a lot of people say you were handpicked by your good friend Bill Clinton to be the chairman of the Democratic Party, maybe handpicked by Hillary Rodham Clinton as well, the new junior senator from New York.

Is Bill Clinton, in your opinion, the leader of the Democratic Party right now?

MCAULIFFE: Let me first answer your question and say I ran for this job, I received a majority of the vote. At the time I was campaigning, Wolf, I had 85 percent of the DNC membership who endorsed my candidacy. Broad range, I had two thirds of the DNC black caucus, I had the Hispanic caucus, I had the women's caucus, I had the gay- lesbian caucus, I had the Asian-Pacific caucus.

And I want you to know that when I decided to run, the first people I talked to was my friend Dick Gephardt and Tom Daschle and Alexis Herman and Mignon Moore. I went and had breakfast with Reverend Jesse Jackson. I then talked to John Sweeney. So those were the first people that I spoke to about this job.

Let it be perfectly clear: Bill Clinton is a great friend of mine, and he always will be a great friend of mine. He has done such great things for this country. We just came out of eight years of great peace and prosperity, 22 million new jobs created in this country.

So we need to remember what, in the past, Bill Clinton has done for us. He will be an important part of the Democratic Party, just as Al Gore will be, just as Bill Bradley will be. I want everybody who wants to be part of this party -- Mayor Wellington Webb, I've been spending a lot of time with from Denver, as well as Dennis Archer, the mayor of Detroit. We have a whole collection of superstars in this party. They're all going to have a chance to be part of this thing.

I am very inclusive. I want everybody in this party working hard with the state chairs and the vice chairs to move this party forward.

BLITZER: You know, Governor, there is a lot of people out there who say that the Republicans are obsessed with Bill Clinton, that even though he is out of office, he is such a good tool for fund-raising, for whipping up the Republican Party base, that you are never going to let the criticism of Bill Clinton go, no matter what he does.

GILMORE: No, Terry is Bill Clinton's good friend. He has been for a long period of time. I think he's very fast, very quick to disassociate himself from many of the activities that Bill Clinton did in the White House, namely the Lincoln bedroom and those kinds of issues like that. Terry doesn't want any part of that when we start talking about Bill Clinton.

But the fact of the matter is, our big opportunity is to make the case, to make the case on quality in education and on tax cuts, involving faith-based organizations and helping out as a partner to the government so that we can actually extend the benefits of the good works of human beings around this country. It's civility and uplifting.

You know, it's a whole new day in Washington. I just can't tell the listeners how strongly Washington feels so much better and the nation feels so much better. We got to move ahead, not backwards, and I think that maybe the problem that Terry's going to have...

MCAULIFFE: Let's have one fact here. Bill Clinton left office with a 66 percent approval rating, higher than Ronald Reagan and Dwight D. Eisenhower. He and Al Gore presided over the greatest economic expansion this country has ever seen, and we shouldn't forget that.

But we need to use that to go forward. What we have to deal with are issues, and that's what we're going to continue to raise. And as chairman of this party, I'm going to continue to raise issues, and we're all going to work together, let it be the environment, the oil drilling that may go on in Alaska, you know, preserving our pristine wilderness. It's John Ashcroft and his deplorable record on civil rights, equal rights and women's rights. And finally, taxes, which is a very big issue. Should 60 percent of the tax cut go to the wealthiest 10 percent of the country? Those are the issues. This is about issues, this is substance over style. And that's what we need to raise.

BLITZER: The president, the former president Bill Clinton, is in a lot of hot water for that controversial pardon of Marc Rich. A lot of Democrats are saying it was a huge mistake. The president defended his decision this week. Once again, listen to what he said the other day.

(BEGIN VIDEO CLIP)

WILLIAM J. CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I think that if the American people just look at the facts, they may disagree with what I did. But I consulted with the Justice Department about this. It was my decision. Nobody else made the decision, but I handled it in what I thought was the most appropriate way given all the interests that were in play here. And I think if you look at it, it makes sense.

(END VIDEO CLIP)

BLITZER: Marc Rich, the fugitive billionaire living in Switzerland for the past 17 years. His ex-wife Denise Rich, someone you know, a major contributor to the Democratic Party, having given over a million dollars. Can you say categorically, Terry McAuliffe, that her contributions to the Democratic Party, to the first lady's campaign, had nothing to do with the president's decision to pardon her ex-husband?

MCAULIFFE: I would answer that question yes. I have no specifics about how the pardon was done. I believe the president, that he made this decision based on the merits from his former White House legal counsel who brought the case to him. I don't know anything that would go against that. It was a very tough judgment call for the president. He agonized over it and he made the decision.

I think the leaders of both parties have decided that the president's right to pardon is absolute and we need to move on. I agree with Governor Gilmore, let's not spend our time talking about the past. Let's talk about the future. But we need -- one fact has to be stated. Bill Clinton is no longer president. We have got to move on.

BLITZER: You know, President Bush said the other day that the pardon is the pardon. He doesn't want to engage in that because he doesn't want to undermine his ability to pardon or future presidents' ability to pardon.

GILMORE: There's a difference between the exercise of the pardon, which I have as governor of Virginia, for example, and the president of course has and the previous president has, and utilizing that pardon in a correct way.

I don't think anybody thinks this looks good at all to have major money going to the DNC, to have major money available to the Democrats, and then have a pardon issued. I think after a while that there has to be some sense of propriety in the White House, and we have that now.

And you know what, I think a lot of Democrats are ready to move on too. And we're going to reach out to them also and make them a part of our program for the best interests of the people, on the program that the President Bush has put forward.

BLITZER: All right, let's take a caller from Indianapolis.

Go ahead with your question.

QUESTION: Yes, it's for Mr. McAuliffe. My question is, how can you, as a representative of the DNC, state that the nomination of Ashcroft was a divisive thing when all you have done since you've been on the show today is talked about as divisive as I've ever heard anyone talk?

MCAULIFFE: I'm not sure what the question was.

BLITZER: She wants to know, why was Ashcroft was divisive if everything you've been saying today has been divisive?

MCAULIFFE: Well, in his track record of civil rights, equal rights and women's rights, 42 Democratic senators stood up and voted against John Ashcroft's confirmation.

When Ed Meese was put up, he received, I think, 32 Democrats that voted against him. Here was someone who just came out of the Senate chamber, the exact chamber that voted on him, and 42 Democrats came out and voted against John Ashcroft because of his past and what he stood for. It relates to Ronnie White, and most importantly it relates to a women's right to choose. These are serious issues that need to be raised. This person has gone into a very important, if not the most critical, Cabinet position as attorney general of the United States.

BLITZER: One last question, the two-party system seems to be relatively strong right now. Pat Buchanan did not take a lot of Republican votes away from President Bush this time around, although Ralph Nader, as you know, undermined Al Gore considerably, especially in Florida. How healthy is the two-party system right now?

GILMORE: Well, the Republicans have never been in a better position since 1955. We have the White House, the Congress, the House of Representatives, the Senate, 29 Republican governors, more legislatures than ever before. But the truth is the Republican Party has great challenges ahead of it in order to reach out and make us the broad-based party that I and the president would like us to be.

BLITZER: Terry McAuliffe, you have the last word on Ralph Nader. Is he going to be welcomed back into your party, or is what he did beyond the pale?

MCAULIFFE: What I want to focus on is positive energy and moving this party forward in a positive way. I want everybody involved in the party who wants to work for the agenda out there every day fighting for America's working families, and if Ralph Nader wants to come in the party and join our platform and speak for the things that we believe so much in, let it be environment or taxes, education or health care, everybody's welcome in the Democratic Party.

It's going to be a great two years going forward. In four years we'll get the White House back. But I'm excited about the future of the party. The Democrats came out of this weekend here pumped up, energized, ready to go.

BLITZER: All right, Terry McAuliffe, Governor Jim Gilmore, thanks to both of you for joining us. The two of you are going to be doing this a lot over the next few years... GILMORE: It's going to be a joy.

(LAUGHTER)

BLITZER: ... and we hope you'll be on our program. Thanks for joining us.

We'll take a quick break. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: We'll get to our roundtable shortly, but as we mentioned earlier in the program, Israeli voters go to the polls Tuesday to select their country's next leader. The incumbent, Ehud Barak, appears to be in an uphill battle against the challenger, former Israeli Defense Minister Ariel Sharon.

CNN's senior political analyst Bill Schneider is following the campaign. He joins us now live from Tel Aviv.

(NEWSBREAK)

BLITZER: And just ahead, President Bush has been getting rave reviews about his efforts at bipartisanship. But how long can this honeymoon with the Democrats and the news media last? We'll go around the table with Roberts, Page and Brooks when LATE EDITION returns.

(COMMERCIAL BREAK)

BLITZER: LATE EDITION invites you to sign up for free e-mail. Every Friday or Saturday I'll be letting you know what to expect on our program. You can sign up at cnn.com/email. And you can send your comments and questions to lateedition@cnn.com. That's "lateedition," all one word.

Time now for our LATE EDITION roundtable. Joining me: Susan Page, the Washington bureau chief for USA Today, Steve Roberts, contributing editor for USA News and World Report and David Brooks, senior editor for the Weekly Standard.

All right, Steve, this charm offensive, Bush is getting really pretty high marks for the effectiveness. He's seducing Democrats.

STEVE ROBERTS, CNN COMMENTATOR: Well, up to a point. But look, we've always know that this is George Bush at his best. He's always been at his best in small groups, his personality is very powerful. Not so good in debates, not so good in large groups or on television. But this is Barbara Bush's son and he's always been good at this. He's turning on all the wattage on Democrats.

There are very substantive differences, as we heard from Terry McAuliffe and others on the show, but he's off to a very good start. People like him, and even privately in the Democratic cloakroom on Capitol Hill they're saying nice things about him, not just publicly.

BLITZER: And even little things like being on time and no longer having Clinton time, the former president always running, you know, late, sometimes considerably late. A lot of members of the Senate and the House of Representatives deeply appreciate coming to the White House for a four o'clock meeting and having the meeting start at four o'clock.

DAVID BROOKS, CNN COMMENTATOR: Remember that book, "Everything That's Important, I Learned in Kindergarten," (sic)? Well, Bush is learning the things that are important, and he was this way in Texas, reaching across the aisle. Now he's reaching across to the Black Caucus he had to the White House. Went to the retreat. I thought he went a little too far when he said he would change his name to Franklin Delano Bush.

(LAUGHTER)

But he is presenting an open hand to the Democrats, and the Democrats have to ask themselves, do they want to be seen as the party slapping away that hand, and that's their quandary.

BLITZER: Well, he was pretty tough today, Terry McAuliffe, if you heard what he had to say. He's not letting the Florida recount and the Supreme Court decision, all of that -- although I think he's in the minority, a lot of members of the House and the Senate, the Democratic leadership, seem to be bending over backwards to project niceness to this new president.

SUSAN PAGE, CNN COMMENTATOR: But of course, as David said, it's hard for Democratic leaders in the House and the Senate now to look like they're rejecting or being obstructionist. It's easier for the party chairman to do that, and it's probably an appropriate role for the party chairman.

I thought it was interesting how often, though, Bill Clinton's name continues to come up in our conversations here and in the interviews earlier. And you know, one benefit -- one funny benefit that George Bush has had these past two weeks is Clinton's messy exit. I think it's made people appreciate being on time. And a sense that maybe some of the scandals and the constant turmoil that we saw that really marked the Clinton years is over. I think that's actually helping George Bush with Republicans and Democrats and maybe even the public.

ROBERTS: I think that's true, but I think George Bush has also got to be careful. He's walking a very fine line, because the right wing of his party is going to require that he pay attention to them. The Ashcroft nomination, obviously very controversial.

When Phil Gramm said earlier on the show, elections have consequences, he's right about that. But this election was basically a tie; it was not winner-take-all. And if George Bush does not continue to understand that and continue to play towards the middle in terms of not just the Supreme Court nominations but in other policy ways, then he could cause himself a lot of trouble. So, so far he's off to a good start; got to be careful, though.

BROOKS: Yes, I don't think we should overstate the problem the right is going to be. George Bush has moved to the center quite dramatically on a whole series of issues including abortion, the federal role in education, all sorts of things. And so far the right has been very happy to go along quite happily.

The one thing where I'm beginning to hear rumblings this week was the defense budget. Bush is now leaking out the defense budget may not rise that much. If that indeed is the case, then I think for the first time you'll begin to see real restiveness among conservatives.

BLITZER: But how could the right wing of the Republican Party say that Donald Rumsfeld and Colin Powell and Dick Cheney, the pillars of the national security apparatus, if you will, of this new administration, are going to be soft on defense?

BROOKS: Well, it's soft in a budgetary sense. First of all, the right, I would say, is skeptical of Colin Powell. Here was a guy who did not want to fight Desert Storm. Fought a lot of battles in the Reagan administration against, say, the Reagan speech where he said, "Mr. Gorbachev, tear down that wall." Colin Powell was against that sentence in the speech.

Donald Rumsfeld, of course, has a lot of heft in the conservative base, but it's the budget. You know, conservatives and even George W. Bush have been arguing we need $60 billion extra a year to pump up the defense budget. If they don't deliver that, then there will be some restiveness.

PAGE: But, you know, on the issues that the right really cares most about it seems to me George Bush is really delivering. It's clear he's going to fight for a big tax cut and going to get a big tax cut of some sort.

National missile defense, Rumsfeld was over in Europe this week to a very skeptical audience of European leaders, saying we will build -- we will pursue a national missile defense system.

And Ashcroft too, I mean, that's an area in which the right cares a lot about, the Justice Department, judicial nominations.

So it seems to me he's really courting the right on the issues they care about. The places that he could have problems with the right are on the issues they don't care as much about.

ROBERTS: You know, it's also true that what happens when you become president, as opposed to being a candidate, is you that you have got to actually add up all of the numbers in your proposals. George Bush has not done that yet. During the campaign, "Oh, I'm going to spend more for missiles, I'm going to have a tax cut, I'm going to spend more for education." Now, when he actually has to add up the numbers, that's part of the squeeze that's happening on the defense budget. You can't have everything.

Even though there are big surpluses, if you want this big tax cut, there's not an infinite amount of money. And that is part of the problem he is going to have, because, finally, he's got to sit down and add up the numbers. He's never had to do that before. BLITZER: All right. We're going to take a quick break. We have a lot more to talk about, a lot more politics, a lot more controversy, a lot more pardons? I don't think so.

(LAUGHTER)

Stay with us. The roundtable will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D), SOUTH DAKOTA: Well, the hot news of the day is that the groundhog saw his shadow just moments ago which means six more weeks of bipartisanship.

(LAUGHTER)

(END VIDEO CLIP)

BLITZER: Senate Democratic Leader Tom Daschle in a light moment with reporters this past week.

Welcome back to the roundtable.

You give it six weeks, David?

BROOKS: I think so in Washington, though you're not out in the country. I was out in Michigan this week. There's this weird psychology going on in the Democratic base. You try to tell people that George Bush is not Jesse Helms reincarnated. They don't want to hear it. They are having a good time disliking the guy, they want to keep on disliking the guy. They want to know that he is a very, very conservative guy. So I think there's still, obviously, the anger in the Democratic base, and that's going to begin to show up in Washington, but it has not yet.

BLITZER: You know, the president in the second week, as you well know, Susan, made a big point of the faith-based initiative, providing federal money to religious organizations who in turn will provide various social services. The president made his case on Thursday at a prayer breakfast. Listen to this excerpt.

(BEGIN VIDEO CLIP)

BUSH: Faith teaches humility, the recognition that we are small in God's universe yet precious in his sight. It has sustained me in moments of success and in moments of disappointment. Without it, I would be a different person, and without it, I doubt I would be here today.

(END VIDEO CLIP)

BLITZER: He's pretty open about his own personal journey to where he got today. What do you think of that? PAGE: Well, I think it's appealing, frankly, and I think there is a lot of -- I do not think the issue of financing more social services through faith-based institutions divides on a kind of partisan line. You know, Al Gore supported the idea during the campaign, Joe Lieberman could turn out to be one of George Bush's real allies on the Hill in doing this.

Now, there is concerns and there is oppositions and it may prove to be difficult when it comes to the details, but I think this is an idea that has broad public support.

ROBERTS: And also, it's interesting that he is much more voluble -- George W. is much more voluble than his father ever was in talking about his own religious faith. George Bush's mother -- George W.'s mother always said, you know, we're basically uptight New England Protestants, we don't talk about religion. But he is much more of a Texan in this regard and much more open about his faith.

And I agree with you, Susan. I don't think this breaks down along party lines, and I think the Democrats could make a mistake. Sure, there are constitutional issues that have to be dealt with, but the Democrats do not want to be seen as the anti-religious party. And I think also, this holds promise of finding ways to solve problems that have not been very successful. One of the biggest users of federal money in some of the experimental programs are black churches.

So, I think the Democrats make a big mistake if they hit too much on the constitutional question and don't try to make it work.

BLITZER: And he did win some cover from Joe Lieberman. He was at one of those events together standing right next to him and announcing his support for these faith-based initiatives.

BROOKS: Yes, this really started three or four years ago, with the Indiana senator Dan Coats, who was working with Lieberman and many other congressmen on both sides. I think the Bushies go into this pretty open-minded or pretty skeptical, actually.

John Diulio, Princeton prof who was appointed to head this thing, goes in saying, "Listen, we seem to know that some of these faith- based programs really work, especially on drug treatment. But we also know the government can corrupt religious institutions by getting too heavily involved. We also need to do a lot more research. And we know we can't get into this problem where, suppose, one group fires a gay member because they don't like their ideology."

So they go in, not thinking this is a slam-dunk, but going skeptically, slowly. Reasonably impressive, yes, I'd say.

BLITZER: Susan, President Clinton was engaged in very serious damage control over the past few days on the high office rent for his office in New York, on the gifts that he and the first lady, now the senator from New York, have received, and on the pardon he gave the fugitive billionaire, Mark Rich. Successful?

PAGE: Well, I think more effective in terms of paying for half of those gifts that he took. I think not so successful on the Rich part, and I think the questions remain. We know we're going to see some congressional hearings. Jack Quinn is going to have to answer questions. Eric Holder is probably going to have answer questions, as well. I think that issue has not been put to rest.

ROBERTS: And you wonder what Bill Clinton does all day. I mean, here is a guy for eight years has been the center of the universe, and he's sitting up there. I half believe that one of these phone calls we're going to get one Sunday says "Hi, this is Bill from Chappaqua, you know, I want to weigh in."

I think that he will find ways to be very visible. And yet again, this endless psycho drama with Al Gore, Bill Clinton will be more visible, he's going to be on television more often, he's going to get paid more for speeches, and Al Gore is still going in his shadow.

Now only are we not going to get rid of Clinton, we're not going to get rid of the psychodrama between the two of them.

BLITZER: Well, on that point, David, we, the news media, the national news, are we obsessed right now with Bill Clinton still two weeks after this election?

ROBERTS: Can you imagine what the '90s would have been like without them, without Hillary Clinton and him? They were just the most interesting people in America.

The Bushes are sort of the people who, you know, show up to work on time. The Clintons are "The Days of Our Lives." We wouldn't be human if we were not interested, and I think people are interested in them.

BLITZER: Let's spend a minute -- we only have a minute left -- talking about the 90th birthday this coming Tuesday of Ronald Reagan. A lot of nostalgia for Ronald Reagan right now.

PAGE: More than nostalgia. I think there's really an historical reassessment going on about the importance and significance and the continuing impact of Reagan's presidency.

You know, when he left office, the Soviet Union still existed, there were these huge deficits. Now the deficits have evaporated as an issue.

And Reagan's handling of relations towards the Soviet Union now look quite skilled, despite a lot of skepticism he faced at that time.

BROOKS: It seems to me he'd be getting better with age.

ROBERTS: Well, yes, I covered the last two years of the Reagan administration, we did together. And one of the things that I think we see after Reagan is how important that dimension of the job is that I sometimes think of as the national chaplain -- being able to raise the national spirit, the national confidence. George Bush was not able to do it, George Bush the Elder. Clinton got better at it, still not all that good. It's a priceless element of the presidency, the head-of-state job. Reagan was undervalued at the time, but I think history will see that he was a very good head of state.

BLITZER: I know you want to say something. Unfortunately, we are all out of time. Save that thought on Ronald Reagan, write a great column in the Weekly Standard on it, and we'll all read it and put it online, as well.

David Brooks, Susan Page, Steve Robert -- thanks for joining us.

Just ahead, Bruce Morton's last word.

(COMMERCIAL BREAK)

BLITZER: Time now for Bruce Morton's last word on things coming full circle.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT: Timelines and runs sometimes turns back upon itself. In a Baltimore courthouse this past week, G. Gordon Liddy, chief of the Watergate burglars, was involved in a civil suit based on his belief that the burglary was about call girls, not getting the goods on the Democrats. Half empty courtroom; trial recessed briefly so everyone could watch the parade for the Ravens.

If you're under 50, Watergate is history, the dead past.

(BEGIN VIDEO CLIP)

MORTON (voice over): And yet, and yet the Beatles burst on the scene ten years before Watergate way back in the 1960's, but their album, "One," which is a CD of their greatest hits, is now number one in the U.S. and Britain and Poland and Thailand and Korea and so on, world without end.

Their movie, "A Hard Day's Night," made in 1964 is playing, probably, in a theater near you. A $60 book of Beatle stuff is selling well.

(END VIDEO CLIP)

MORTON: So they are something else. The past, not dead, but very much alive. Time turned in upon itself, perhaps.

My 35-year-old son should have been way too young to be a Beatles fan the first time around, but he was one then and is one now. Time present.

(BEGIN VIDEO CLIP)

MORTON (voice over): And then in Brooklyn something else is happening. The past made present, old made new. In Brooklyn, they are building a ball park. Hasn't been a team in the borough since 1957 when the Brooklyn Eagle, a newspaper which also died, would tell the faithful how the bums were doing.

The new park is in Coney Island, not Flatbush. The team will be the Cyclones, not the Dodgers. And they'll be playing in the Class A New York- Penn League, not the National.

But you know there will be ghosts there opening day, ghosts name Robinson and Reese, Campanella and Furillo. It's being built and you know they'll come. Who said you can't go home again?

So time is a river and sometimes seems to flow in a circle. Watergate's old, the Beatle's are older but new as tomorrow. And in Brooklyn this June, someone will say two wonderful words: play ball.

As those Brits used to sing, let it be.

(END VIDEO CLIP)

MORTON: I'm Bruce Morton.

(END VIDEOTAPE)

BLITZER: Let it be. Thanks Bruce.

When we return, we'll reveal what's on the cover of this week's major news magazines.

(COMMERCIAL BREAK)

BLITZER: Time now for a look at what's on the cover of this week's major news magazines.

Time magazine leads with "Aids In Africa: Look at the Pictures, Read the Words and Then Try Not to Care," on the cover.

Newsweek has a special report on fighting addiction. "New Drugs and Treatments: Dependence in the Brain," with actor Robert Downey, Jr. on the cover.

And on the cover of U.S. News and World Report, "The Risks of Natural Cures: New Findings Show Supplements Can Be Hazardous to Your Health."

And that's your LATE EDITION for Sunday, February 4. Be sure to join us again next Sunday and every Sunday at noon Eastern for the last word in Sunday talk.

And starting tonight and every Sunday at 7 p.m. Eastern, if you missed any part of our program, you can catch a one-hour replay.

This additional programming note: Next Sunday, the day of the NBA All Star Game here in Washington, join me for a special LATE EDITION NBA town meeting. Our guests will include the basketball legend Michael Jordan.

LATE EDITION next Sunday at noon Eastern, followed by our town meeting at 1 p.m. Eastern, 10 a.m. on the West Coast.

I'll see you tomorrow night at 8 p.m. Eastern on "WOLF BLITZER REPORTS." Until then, thanks very much for watching. Enjoy the rest of your weekend. I'm Wolf Blitzer in Washington. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com