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President Bush and Governor Davis Discuss Energy

Aired May 29, 2001 - 17:00   ET


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


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Energy debates sometimes throw off some sparks, but this is no time for harsh rhetoric. It's certainly no time for name-calling.


ANNOUNCER: Opening the lines of communication in California. The president and the governor go one-on-one this hour to air their differences over energy policy.


GOV. GRAY DAVIS (D), CALIFORNIA: Right now, the marketplace is not functional, and those are not my words. Those are the words of the federal agency in charge of the market.


ANNOUNCER: Gray Davis says his state needs help and warns the crisis could infect the national economy. Plus, the political impact of blackouts and higher prices at the pump. The president's opponents see opportunity in the battle over the White House energy plan.

Now, Judy Woodruff takes you INSIDE POLITICS.

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. President Bush and California Governor Gray Davis will meet face-to-face this hour to discuss the governor's repeated requests for federal controls on wholesale electricity prices. The governor says price controls are needed to give his state relief from soaring energy costs, but the president argues that price caps are not the answer and will only delay the long-term solutions that he has called for in the recently unveiled White House energy policy.

For the very latest on the meeting upcoming and the political stakes for both men, we turn to CNN senior White House correspondent John King in Los Angeles -- John.

JOHN KING, CNN CORRESPONDENT: Well, Judy, that meeting now just a few minutes away, as you mentioned. Price caps at center stage. This of course the president's first trip to California since taking office. Even many of his strongest supporters here saying that it is long overdue given the political importance of this state, and given the depths of the anger and the emotion and the potential political ramifications of the power crisis.

Now, you may hear some protesters over my shoulder here in Los Angeles: that one sign of the emotion carrying along with the president's visit here. Also as he gave a speech here just a short time ago, three hecklers removed from the audience. They stood up, like Governor Davis, to make the case that the president should impose price caps on wholesale electricity costs here. The president said no. As you mentioned, he believes that will make matters only worse.

Now that debate over price caps and the larger issue of energy supplies at center stage as the president prepares to sit down with the governor and as he spends two days traveling here, making his case directly to the California people.


KING (voice-over): First stop: Camp Pendleton Marine Base, an update on conservation measures mandated by the White House and an effort to turn down the temperature of the political debate over the California power crisis.

BUSH: Energy debates sometimes throw off some sparks, but this is no time for harsh rhetoric. It's certainly no time for name calling. It's time for leadership. It's time for results.

KING: But Democratic Governor Gray Davis says Washington can do more and was using a face-to-face meeting with the president to urge temporary price caps on wholesale electricity costs.

DAVIS: I was simply asking the president with the greatest of respect to see that his appointees enforce the law so that Californians don't have to experience the sticker shock of paying 700 percent more for electricity this year than two years ago.

KING: But Mr. Bush opposes price caps, and the major goal of his first trip to California as president was to rebut the governor's case that Washington is not doing its part to help. Mr. Bush said conservation efforts at federal facilities are exceeding expectations; promised quick federal help in building new electricity transmission lines in California; and announced he would ask Congress to add another $150 million to the federal program that helps low-income Americans pay their energy bills.

BUSH: For some Americans and some Californians, high energy costs are more than a challenge, they're an emergency, and our government must respond.

KING: California Republicans are nervous about the political fallout of the energy debate and want the president to pay more attention to a state that at the moment is dominated by Democrats. DAN SCHNUR, GOP STRATEGIST: The California Republican Party has run into such difficult times over the last few years that it's going to take a president to help put the party back together. So California Republicans -- they're trying to be supportive and trying to be understanding, but believe me, they're very, very grateful to see the president coming out to the state.

KING: Governor Davis and his fellow Democrats warn the president will pay a price if he appears indifferent to the nation's most populous state.

BILL CARRICK, DEMOCRATIC STRATEGIST: California is a huge chunk of the national economy, so if California goes into the -- into the economic tank because of the energy crisis, it could very well affect the national political prospects of the Bush administration. So there are -- there are big stakes here in California in this energy crisis.


KING: Now Governor Davis makes the case that political -- excuse me -- the potential economic impact alone is reason enough for Washington to do more. But with no signs the president is prepared to budge, California officials talking more and more about the prospect of suing the federal government, suing the president, and taking the fight over electricity price caps into the federal courts -- Judy.

WOODRUFF: John, with California Republicans -- and we just heard this expressed in that interview with Dan Schnur -- if they are so worried about the president appearing not to care about what's going on in California, how is a meeting like this one, where the governor and the president are going to be diametrically opposed, going to help their cause?

KING: Well, the Republicans believe that there is at least a mixed opinion in the public, and perhaps even slight majority support for the president's view that price caps are not the answer.

One of the problems has been -- and you know the state fairly well, Judy -- California media don't cover what is said back in Washington all that much. So they believed it was critical for the president to come out here and make his case directly to the California people about the energy crisis.

They also believe, though, that there is a much more -- a larger political question. The president is out of sync with California on the issue of abortion. Environmentalists here are after the president. They say his record isn't up to what this state expects from Washington. So California Republicans say, first and foremost, deal with this crisis, but also come out to the state more, show your other side, talk about education. Come out and help us rebuild the party, challenge Governor Gray Davis next year. So there's both short-term and long-term calculations as Republicans urge the president to travel west a whole lot more.

WOODRUFF: All right, John King, traveling with the president to California. In the meantime, Governor Davis has been outspoken in his criticism of the president and the White House energy policy, at times pointing out that several power companies he says are profiting from the energy crunch are headquartered in the president's home state of Texas. I spoke with Governor Davis late yesterday, and I began by asking him if he stands by his past criticism.


DAVIS: Oh, I don't think so. He was a governor. I knew him from the Governors Association. Governors have to solve problem. We have a big problem out here. I'd like to think we're doing our part in terms of building more plants and conserving electricity, and I want to ask for his help on giving us some price relief. We think we're entitled to it and I'll make my case to him tomorrow.

WOODRUFF: Well, now his office says that he's set aside only 20 minutes for this meeting. Why is it so short?

DAVIS: Well, I can't answer that. All I can tell you is that my job is to fight for the 34 million people of this state who paid $7 billion for power in 1999, and the predictions are 50 billion this year. And that's just a massive transfer of wealth from California to the CEOs of energy companies, some of whom are in Texas. The rest are in the Southwest.

WOODRUFF: Well, governor, is 20 minutes enough time to discuss what the two of you have to discuss?

DAVIS: Well, obviously, I would like more time, but I'm -- I'm pleased that I have a chance to discuss firsthand the impact of a failed electricity deregulation scheme in California: what we're doing in California to help improve the situation and what he can do to improve it even further.

WOODRUFF: Governor, you have criticized the president for among other things about his policies helping those energy companies, especially those in Texas, or including those in Texas, that in effect, in your words, are ripping off Californians. Do you stand by these very strong comments that you've made?

DAVIS: Well, I haven't criticized him because he's done something. What I've said is that federal law says, if the rates are not reasonable and just -- and the federal agency has found they're not in California -- then the federal government must either reduce the rates or return the system to a regulated system. Now that's the law. This is not an ideological debate. That's simply the law, and I'm asking him, with all due respect, to see that it -- his two new appointees to this federal board implement the law.

The board at the moment consists -- consists entirely of Clinton appointees, so I'm asking him to instruct his two new appointees to implement the law.

WOODRUFF: Well, governor, you've also said that by allowing energy companies to do what they are doing, they are in effect getting away with murder because price controls haven't been put on California electricity. Again, do you stand by that comment?

DAVIS: I do. I say, if he does nothing, the net result is that this massive sucking sound occurs and California will ship 43 billion more to Texas than it did two years for electricity.

Now, I hasten to say there's nothing wrong with Texas, but we're talking about plants that are in California, owned by companies that happen to be in Texas charging what the market will bear, even though we're moving at warp speed to build plants. I've got 10 under construction. Four will be online this summer. Eight -- eight peakers will be online. And by 2003, we will have solved this problem.

But between now and then, our people are paying an arm and a leg for power, and Alan Greenspan has said that if California goes into recession, it could well drag down the rest of America. I don't want to see that happen and I don't think the president wants to see that happen.

WOODRUFF: But governor, you're calling for price controls, even if for a limited period of time. That's what you want. The White House is saying, no way, we're not doing that. Do you really expect to make some headway on this tomorrow to change their minds?

DAVIS: Well, I want him to see that 70 percent of Californians believe there should be some control over price caps. The majority of Republicans have that view. The federal agency has already found that the rates are too high.

And I'm not talking about caps as they existed in the Nixon administration. I'm talking about everyone recovering their costs and then getting a 30 or 40 percent profit, which is still a very healthy return given the economy, and only for the period of time it takes us to get new plants online.

By mid-2003, we'll have more plants online than we need, deregulation can work the way it was envisioned. Right now, the marketplace is not functional, and those are not my wards. Those are the words of the federal agency in charge of the market.

WOODRUFF: But when they say -- Vice President Cheney, President Bush and others -- have said that California's experiment with price controls was a disaster and they're not about to let that happen again.

DAVIS: Well, I think that Vice President Cheney is talking about his experience some 30 years ago with -- with President Nixon, and those are price -- those are wage and price controls. We're not talking about that. This is a totally different animal, something that -- that four to five Republican congressmen support in California, that Gordon Smith supports in Oregon, that Rudy Giuliani has called for in New York City. And that is you get all your costs back, and you get a 30 or 40 percent profit while we get our plants online. Then the marketplace can function as it was originally envisioned. Tomorrow, we're releasing a letter from 10 economists -- including economists from MIT, Yale, Northwestern -- all of whom have been involved in the Californian electricity experiment, and they all believe that the federal government has dropped the ball in not making the market reforms it's supposed to after finding the marketplace is not working.

WOODRUFF: But tomorrow, you mean on Tuesday, right, governor?


WOODRUFF: And governor, the vice president has said that you and other California officials knew, knew over a year ago about potential energy problems, but you postponed doing anything because everything was potentially unpleasant.

DAVIS: Well, the vice president is just badly misinformed. Four months into my governorship in April of 1999, a full year before anybody was talking about electricity in California, we started licensing new plants. Everyone will agree from the right to the left the long-term solution is to get more power online. We will have done that by 2003: four new plants this summer, four next summer. But in the meantime, the most important thing that can be done is to make sure that the market flaws in the system, as determined by appropriate federal agencies, are fixed. The problem is they've identified a problem, they just haven't fixed it.

WOODRUFF: Finally, governor, there are new polls out, including one last Friday, showing that your own job approval rating in California has dropped. It's somewhere in the low 40s right now. How do you explain that?

DAVIS: Well, nobody's very happy with anybody out here right now, Judy, particularly when it comes to electricity. Actually, on electricity, President Bush is faring even worse.

My problem, my challenge is to find ways to work across party lines, to bring us together as one state, and to solve a problem that's hurting everyone in the state, regardless of their party affiliation. Californians are among the least ideological people in America, they just want problems fixed. I believe I'm doing my part by building plants at a record rate and improving conservation beyond our already high position in this country in that regard. But I do need some help from the federal government.

WOODRUFF: And finally, governor, you've been criticized for bringing on board on your staff there former Gore presidential campaign aides Chris Lehane and Mark Fabiani, and paying them handsome salaries. Is it something that should be on the state payroll?

DAVIS: Well, you know, this is just politics, Judy. I've tried to assemble the best people I can. I mean, we've Karl Rove and Karen Hughes and Don Evans and Mary Matalin all working for the federal government. These are knowledgeable people who can help us with communications. I brought on David Freeman, who ran the Department of Water and Power in Los Angeles to help us with the public power authority. I brought Ambassador (UNINTELLIGIBLE) on to help us with additional generation. He's actually tracking 199 different forms of generation for us. We have Wall Street experts.

This is a huge problem, bigger than anything California's faced in 50 years, and I'm drawing the best people where I can while I need them to solve the problem.

WOODRUFF: All right. Californian Governor Gray Davis, thank you very much for joining us.

DAVIS: Thank you.


WOODRUFF: And we'll hear the administration's response to Governor Davis just minutes from now, when we are joined by Commerce Secretary Don Evans.

Could the administration's energy policy be a boon for the Democrats?


WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): The Senate gives Democrats a seat at the table. What they need now is a meal ticket, an issue that could bring them back to power.


WOODRUFF: Our Bill Schneider on turning public opinion into political gain. Plus...


CANDY CROWLEY, CNN CORRESPONDENT (voice-over): Are Ward and June and Beaver and Wally losing their seat at the political table?


WOODRUFF: ... Candy Crowley on the evolution of the American family and its impact on the issues. And later, I will talk to golfer Casey Martin about his win before the nation's highest court. All that and much more as INSIDE POLITICS continues.


WOODRUFF: The energy troubles in California have threatened to drive a wedge between the Bush administration and the nation's biggest electoral state. Under former President Clinton, California grew accustomed to being embraced. As CNN's Frank Buckley reports, some Californians believe they are getting the cold shoulder from the new administration.


FRANK BUCKLEY, CNN CORRESPONDENT (voice-over): The president's first visit to California comes four months into his presidency, a sharp contrast to the previous president, who came to California less than a month after being elected, visiting time and again after that.

SHERRY BEBITCH JEFFE, POLITICAL ANALYST: I think he could have registered to vote in the state of California, Clinton was here so many times.

BUCKLEY: But Clinton needed California to win in '92 and '96. Bush didn't. He lost the state to Al Gore by more than a million votes.


BUSH: I, George Walker Bush, do solemnly swear...


BUCKLEY: But Bush won the prize that counts. Still, this...

UNIDENTIFIED MALE: I don't see in the dark.

BUCKLEY: ... California's rolling blackouts, its energy crisis, made visiting California a more urgent matter, say some analysts, especially given Governor Gray Davis' recent criticisms of the president, saying only Bush could ease the energy burden by imposing price caps on wholesale electricity.

DAVIS: Look, I think the president has done some good things for California and I appreciate that. But on the big enchilada, he's been AWOL, and the big enchilada is to give us some temporary price relief while the 14 plants that my administration has approved come online, and give California the supply it needs to allow electricity deregulation to work.

BUCKLEY: Implied in the message, according to some analysts, this president "does not feel your pain."

JEFFE: So he's coming out to defuse some of Governor Davis' arguments, some of Governor Davis' shifting of blame from California and the Democrats to the federal government, and by extension, the Republicans.

BUCKLEY: Polling suggests both Bush and Davis are suffering in California. A new Field Poll of California residents showing only 42 percent of Californians approve of the president's performance. Among 11 individuals and groups associated with the energy crisis, Bush was ranked among the bottom three.

MARK DICAMILLO, CALIFORNIA FIELD POLL: He's right up there with the state's electric utilities and the out-of-state energy providers in terms of the public's negative impression of the job they're doing on this issue.

BUCKLEY: The numbers show Governor Davis with his lowest job approval rating since taking office in 1999: 42 percent approve of his performance, 49 percent disapprove. The rating is a nearly 20 percent drop in job approval numbers since last June, an 18 percent drop since January. And at least one GOP strategist warns that if Davis hopes the president's visit will help to shift the political heat, it could backfire.

ARNOLD STEINBERG, GOP STRATEGIST: People don't understand all the intricacies of the energy crisis, but they do understand politics, and they don't want to see anybody blaming anybody else. And so I think Gray Davis is making a miscalculation if he's simply going to play the blame game.

BUCKLEY (on camera): Davis aides say the governor is not blaming the president, simply asking for relief from the effects of the deregulation that both men inherited, an issue that now threatens to mar both of their terms in office.

Frank Buckley, CNN, Los Angeles.


WOODRUFF: For the administration view now on the California energy crunch and overall U.S. energy policy, we turn to Commerce Secretary Don Evans. He's a longtime friend and adviser to President Bush. He's also the former chairman of a Texas-based energy company.

Secretary Evans, first of all, why the president waiting so long to go to California?

DON EVANS, U.S. SECRETARY OF COMMERCE: Judy, we've been talking about this issue from the day he took office. We knew about an energy crisis not only in California but across the country, really the last year during the campaign. And so it's an issue that's been on the president's mind for a year or two. And of course, immediately when he took office, he instructed Secretary Abraham to call Governor Davis and talk about the crisis they were facing, and a couple of days later he instructed a number of the agencies to take steps to accelerate the permitting process and talk to other people in California, take whatever measures we could to help them with the issues.

So it's not a matter we haven't been thinking about it for the last four months. We've been thinking about it, talking about it, taking action really every day since he took office.

WOODRUFF: So now the president is going to California, he's going to meet with the governor, but he said, I'm only going to give you 20 minutes. Some people interpreted that as sort of giving Governor Davis the back of his hand.

EVANS: He knows what's on Governor Davis' mind. He's -- he's been talking to people in California. Secretary Abraham has been talking with Governor Davis. We've been working with the governor, we've been working with other local agencies out there to help any way we could. So it's not a matter of kind of not knowing what's on the governor's mind.

And part of the mission is to go out there and talk to the people of California, and also visit some of the sites that have been following some of the president's instructions in terms of conserving energy. That's one of the things we can certainly focus on and the president is focusing on while in California, is conservation. Not only is he trying to lead by example in the federal government by instructing his agencies out there to conserve, but that's leading by example.

Hopefully, other Californians will see that and they will begin to conserve.

WOODRUFF: Well, you know, one of the main things Governor Davis and others are asking for are price caps, temporary price caps on wholesale electricity price. His advisers, the governor and his advisers are saying this would help the state of California avoid a recession. If that's the case, why not go along with it?

EVANS: Well, we've got many examples of price caps, price controls in our history, and they just don't work. You can go back to the Nixon price controls, wage and price controls. They didn't work. You can look at the price controls on energy during the 1970s. They didn't work. Those resulted in long gasoline lines. I don't know any American that suffered through the long gasoline lines of the 1970s who wants to return to that.

And the equivalent probably of that would be longer, deeper, more prolonged blackouts. I mean, I think that what the president is just saying is I've seen wage and price controls tried, or I've seen caps tried, or I've seen controls tried, and they just don't work.

WOODRUFF: Well, when I made that point, that very point to Governor Davis, when I interviewed him last night -- and we just showed the interview a few moments ago -- he said that was then, this is now. That was 30 years ago, different circumstances. We need price caps now.

EVANS: Well, I also saw in that interview where he said he's going -- he's going to release a document by some 10 economists from across the country.


EVANS: And for every one economist that he wants to talk about, I imagine I could find a hundred that would say to you that price controls don't work.

Listen, this president (UNINTELLIGIBLE) we will make decisions. I also saw where Governor Davis talked about upholding the law. I can assure you that one thing this president will do is he will uphold the law of the land. And so, you know, I would -- you know, I think the president just feels very strongly that wage and price controls have been tried in the past, and they -- and they won't work.

WOODRUFF: Well, then I do want to ask you about the law, but before I get to that, on the economy, when you have Alan Blinder, who's the former chairman of the Federal Reserve Board, saying Californians buy -- when you don't do anything about the price of energy, the lack of growth in the state's economy would be enough -- he said something like 1 percent of the GDP across the nation. In other words, it is having a huge effect on that state's economy, and therefore, on the nation.

EVANS: Well, short term, I think, Judy. What this president will make decisions on is what is in the best long-term interests of the general well-being of the American people. And that's where he has to stay focused, making sometimes really tough decisions. And these are tough decisions through here.

But he has to stay focused on what's in the best long-term interests of the American people, what's in the best long-term interests for the people of California. And it's his good judgment that wage and price controls is not.

WOODRUFF: Governor Davis is in this interview and earlier citing Federal Energy Regulatory Commission findings back in December that what these electricity companies, these energy companies were charging were, quote, "unjust and unreasonable." In other words, something has to be done about it.

Governor Davis' point is the law says the federal government needs to step in and it's not.

EVANS: Well, as I just said, I mean, the president will uphold the law of the land. There's no question about that. And there have been some steps that FERC has taken. I know that they have asked energy companies to justify 124 million in charges over this last six- month period or so. So those energy companies are going to have to go into FERC and they're going to have to justify those charges. So it's not as if they're not acting and taking some steps. Indeed they are.

WOODRUFF: What about his point, Secretary Evans, that there's been just this massive transfer of wealth, his words, to energy companies, many of which are in Texas? And he's -- he's used very forward language in describing what's going on. I know you're familiar with it.

EVANS: Well, look...

WOODRUFF: But in other words, he said they're ripping off the people of California.

EVANS: You know, that -- look, that disappoints me that the governor would talk in those terms in this difficult period. I mean, this is not a time for name-calling or trying to put the blame on other people. This is a time to really sit down in a very serious way and work through these problems.

You know, I think -- and the first concern that we ought to have is of those lower-income individuals that are suffering through this period, and it's tough on them. And we ought to have local solutions, we ought to have state support, we ought to have federal support, which, of course, President Bush is supporting through LIHEAP. He announced today, I think, an increase in the LIHEAP fund, another $150 million. So, look, this is a time for serious people to sit down in a very serious way to solve a tough problem, and you know, and not be trying to blame somebody or calling names.

WOODRUFF: And just finally, Secretary Evans, do you see anything, any new solutions coming out of this meeting today? I mean, have we heard it all, or is there...

EVANS: Listen, as has been said many times, this is not a -- there aren't any short-term fixes. If somebody had a short-term fix, they would have come up with it a long time. This a long-term problem that's developed over many, many years, and it requires a long-term vision and some long-term solutions. And that's how the president will lead. He will lead in developing, as he already has, a long- term, comprehensive, national energy policy that in the future will provide Californians and people all across America reliable, affordable energy. And that's what -- where he's headed.

WOODRUFF: All right, Secretary of Commerce Don Evans, we thank you very much for joining us.

EVANS: Thank you.

WOODRUFF: Appreciate it. Good to see you again.

EVANS: Good to see you.

WOODRUFF: Thank you.

Murder, conspiracy and a jury's decision: today's verdict in the bombings of two U.S. embassies, and a check of the day's other top stories -- just ahead.


WOODRUFF: We will have more of the day's political news coming up. But now a look at some other top stories.

After twelve days of deliberations, verdicts today in the embassy bombings trial. Four men were convicted of the 1998 attacks against American embassies in East Africa: 224 people were killed, thousands of others injured. Our national correspondent Bob Franken is outside the federal courtroom in New York -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Well, Judy, the jury deliberated for 12 days, as you pointed out, before finding on 576 separate charges, part of a 302-count indictment. All of the verdicts guilty. The first involved the bombing on August 7, 1998 of the U.S. embassy in Nairobi, Kenya. Two hundred and thirteen were killed in that, 12 of them Americans. More than 4,000 injured.

Two of the defendants found quality in connection with that particular crime, Mohammed al-'Ohwali found guilty of charges that included murder. That carries the death penalty. A coconspirator, the jury said, was Mohamed Sadeek Odeh, who was a technical expert associated with Osama Bin Laden, more about that in a moment, found guilty of providing technical advice and helping to build the bomb that resulted in the explosion. He faces life in prison.

Ten minutes after the Nairobi explosion, a second explosion in Dar es Salaam, Tanzania at 10:40 in the morning, 10 minutes later, as I said. Eleven were killed in that bombing. One of participants, according to the jury, was K.K. Mohamed. He was found guilty of direct participation. He too faces the death penalty.

A 4th defendant is Wadih El-Hage. He is, in fact, found guilty of participating in the conspiracy and also about lying before the grand jury about his long-time association with Osama Bin Laden. Bin Laden, the leader of an international organization dedicated, according to the information that came out in this trial, dedicated to the death of Americans.

He is one of those who has been indicted in this case. Of course, he still remains at large. He's expected to be found in Afghanistan. There is a worldwide dragnet still out to get him into custody, a promise that the pursuit of the defendants will continue, a promise made by the U.S. Attorney in case, Mary Jo White.


MARY JO WHITE, U.S. ATTORNEY: The bombing of our embassies on August 7, 1998 will never be forgotten. But our job is not finished. We remain permanently and unrelentingly committed to tracking down, apprehending and bringing to justice every single participant in these crimes. However long it takes.


FRANKEN: Now the members of families of some of the victims in these bombings talked to reporters after the verdict, said it was bittersweet. The next phase is the death penalty phase. The two defendants who face the death penalty will be arguing that it is too severe. They'll be making that argument before a jury that convicted all of the defendants of all of the charges -- Judy.

WOODRUFF: Bob Franken, reporting from the Federal Courthouse in New York, thanks.

A major victory today for professional golfer Casey Martin, but it didn't come on the golf course, it came in the U.S. Supreme Court. Correspondent Elaine Quijano reports.


ELAINE QUIJANO, CNN CORRESPONDENT (voice-over): In the 7-2 ruling, the nation's highest court voted to allow disabled golfer Casey Martin the use of a cart in professional tournaments. Martin, who suffers from a circulatory disorder, sued the PGA in 1997 for the right to use the cart under the Americans With Disabilities Act, or ADA.

CASEY MARTIN, PROFESSIONAL GOLFER: Most people think I don't walk at all, and that's not true. You know, I have to walk around the greens, and get around that area, but basically once I tee off, to my ball I ride.

QUIJANO: Some said using the cart would give Martin an advantage over other players who had to walk the course and had argued it would fundamentally alter the nature of the game.

TIM FINCHEM, PGA TOUR COMMISSIONER: We felt that this argument in the courts was always about the question of whether or not the PGA tour could apply its rules equally to all players.

QUIJANO: But in its majority opinion, the Supreme Court justices said Martin's disorder, which obstructs blood flow to his right leg and heart, caused him more fatigue, even with a cart, than opponents who had to walk.

(on camera): The justices also said under the Americans with Disabilities Act, the pro tour was required to give consideration to disabled golfers.

MARTIN: If I had the opportunity to ride in a cart with my disability or walk with a healthy leg, I mean, I would take the healthy leg every time in every situation possible.

QUIJANO (voice-over): Some people with disabilities are encouraged by the ruling, saying it could open the door for legal challenges in other professional sports.

Elaine Quijano, CNN, Washington.


WOODRUFF: And Casey Martin will be joining us in a little less than a half-hour. Make sure to stay tuned for that. Are politicians focused on a social minority? Up next, a look at American families: A traditional myth and the modern reality.


WOODRUFF: From family values to working families, the traditional American household has become a key political buzzword. But new census data shows the American family is changing. As Candy Crowley reports, those shifts are being felt in local as well as national politics.


CROWLEY (voice-over): Ward, June, Beaver and Wally Cleaver were what anthropologists called a nuclear family, married couple living with children. In 1960, 45 percent of all U.S. households fit that description.

DORIAN SOLOT, EXEC. DIR. ALTERNATIVES TO MARRIAGE PROJECT: We have this picture in our imaginations of what the family looks like, this kind of, cookie-cutter neighborhood. And yet when we go out and we look down the street, we see that that's not really who's living there anymore. CROWLEY: Now, only 23.5 percent of households are nuclear families. There are more people living alone than there are married couples living with children. Some experts believe the public impact of those private decisions is evident.

ISABEL SAWHILL, BROOKINGS INSTITUTION: I think you've got a lot more households that consist of singles and unmarrieds in general, and people who don't have children, and this is eroding the support that used to exist for investing in local school systems, and that is a problem, and that may be one reason why our schools aren't more up to snuff.

CROWLEY: While still a small piece of the whole picture, the fastest growing household in the U.S. is unmarried partners.

KEN CONNOR, PRES. FAMILY RESEARCH COUNCIL: What it says is that the -- marriage as an institution is under assault in the culture, and that we need to do what we can to bolster the institution.

CROWLEY (on camera): The decades-long trend away from married with family presents a fundamental question: What is a family? The answer sets up a political debate between those who believe public policy should reverse the trend, and those who think public policy should address it.

SOLOT: Every place that families comes into contact with the law, the definition of families becomes a problem for unmarried couples. So whether that's insurance, taxes, immigration, employment, housing, there are just an endless list of examples where unmarried couples are really left without any kind of legal protection at all.

CROWLEY (voice-over): To this new-age diversity of living arrangements, politicians have an age-old budget problem. Not every need can be met, and budget choices become value judgments. Just last week, Congress approved doubling the tax credit for a child 17 and under.

ELINOR BURKETT, AUTHOR, "THE BABY BOOM": If you only give a special tax credit to parents, you are saying that it's more expensive to raise a 3-year-old than to take care of an elderly dependent, or my sister, who might be my dependent. Why are some dependents getting more federal consideration than other dependents?

CROWLEY: The self-described, child-free, gays and lesbians, single mom single dads, the unmarried but committed, the single and satisfied. Are Ward and June and Beaver and Wally losing their seat at the political table? Traditionalists note, in terms of sheer numbers, married couples with children remain the single largest voting bloc.

CONNOR: Family are is still in vogue. Al Gore is reportedly at home working on a book about families. The Democrats in the last election sought to co-op the Republicans position on families. I don't think we are going to see politicians abandon the family in the near term. I think they recognize the importance of the family as the cornerstone of our society. CROWLEY: Which, of course, returns us to the central question: What is a family? Candy Crowley, CNN, Washington.


WOODRUFF: Something to ponder.

Under indictment for alleged bribery, representative James Traficant of Ohio released documents today pertaining to what he called widespread corruption within the FBI office that investigated him. Beginning a four day stint as a guest host on a Youngstown radio call-in show, Traficant described his indictment as the work of what he called "unelected bureaucrats."

Several local citizens groups say radio station WKBN is giving Traficant a forum that could taint the jury pool for his trial next year. In addition to bribery, the Democratic congressman faces allegations of racketeering, tax evasion and obstruction of justice.

Massachusetts Governor Jane Swift is to call a special election to fill the Congressional seat of the late Joe Moakley. The veteran Democrat, who served 15 terms, died of leukemia yesterday. Today, his body was returned to his native Boston. Moakley's ninth district, including South Boston, is heavily Democratic. The potential successors are said to include former Boston Mayor Raymond Flynn and Max Kennedy, son of the Late Robert Kennedy. Kennedy recently bought a home in the district.

Moakley's body is to lie in state Thursday at the Massachusetts statehouse with the funeral on Friday.


WOODRUFF: With the Los Angeles mayoral runoff just a week away, a new poll shows the two Democratic contenders in a tight race. "The Los Angeles Times" survey show city attorney James Hahn at 47 percent, former state assembly speaker Antonio Villaraigosa at 40 percent, with 13 percent undecided.

"The L.A. Times" endorsed Villaraigosa on Sunday, citing his legislative experience. That same day, Hahn began running a television ad criticizing Villaraigosa for writing the White House back in 1996 requesting a pardon for a convicted drug dealer. President Clinton later commuted the dealer's sentence.


UNIDENTIFIED MALE: The father of a convicted crack cocaine dealer contributed money to Antonio Villaraigosa. Fact: Villaraigosa wrote the White House pardon office for the drug dealer claiming he was wrongly convicted. Fact: Villaraigosa falsely claimed the crack cocaine dealer had no prior criminal record. Fact: Villaraigosa accepted more money from the drug dealer's father. Fact: Villaraigosa denied he wrote the White House until "The L.A. Times" confronted him with the letter. Los Angeles can't trust Antonio Villaraigosa. (END VIDEO CLIP)

WOODRUFF: An adviser to Villaraigosa says he has already acknowledged that the letter was a mistake and he has apologized.

In New York City, media mogul Michael Bloomberg is acting like a mayoral candidate, switching parties and even launching an exploratory committee, although he remains officially uncommitted. While current Mayor Rudy Giuliani has not given his endorsement, over the weekend he did praise Bloomberg, calling his business background an advantage.

CNN's Brian Palmer takes a closer look at the billionaire who might run for mayor.


BRIAN PALMER, CNN CORRESPONDENT (voice-over): CEO Michael Bloomberg has long been a man about town in New York, attending parties and receptions as head of a financial news empire that bears his name as a high-profile philanthropist, and also as one of the city's most eligible, billionaire bachelors. Now, Bloomberg is also running for mayor of New York City -- sort of.

MICHAEL BLOOMBERG, CEO, BLOOMBERG L.P.: If any of you came expecting to hear a declaration that I was running for public office I would suggest that you'd probably be better off leaving now.

PALMER: He's opened a "Bloomberg for Mayor" office and spoken like a candidate on issues such as education and health care.

BLOOMBERG: Somebody's got to come in and look at all of these things with a fresh face.

BILL CUNNINGHAM, BLOOMBERG SPOKESMAN: Part of the problem with folks who have spent their lifetime inside of the system, is they have been taught what can't be done. What Mike brings to any venture that he enters is a sense of optimism and a sense of teamwork that says, here's the problem, we can solve it.

PALMER: The 59-year-old son of a Massachusetts book-keeper, Bloomberg built and owns most of Bloomberg L.P., a private company that brings in more than $2 billion a year providing financial and news services, syndicating radio shows nationwide, and broadcasting satellite TV in seven languages. Former New York Mayor Ed Koch hosts a show on Bloomberg's radio network. Bloomberg asked Koch if he has a shot.

ED KOCH (D), FORMER NEW YORK MAYOR: I said, "based on the field, the people who are running against you, yes, you can win. You'd be the underdog, but you have a chance.

PALMER: But others are skeptical of the billionaire candidate's suitability.

TOM ROBBINS, COLUMNIST, "VILLAGE VOICE": A business that's privately held like his is a one-person operation where you don't have to deal with courts, you don't have to deal with a legislature. In this case the city council, you don't have to deal with a city controller looking over your shoulder.

PALMER: As a wealthy public figure, Bloomberg could be a formidable candidate, especially since he plans to opt out of the city's campaign finance system and spend his own money. But first, he faces competition for the Republican nomination.

(on camera): From Herman Badillo, also a Democrat-to-Republican convert and the nation's first Puerto Rican Congressman three decades ago. But Badillo has run for mayor five times since 1969 and lost each time.

Brian Palmer, CNN, New York.


WOODRUFF: Next on INSIDE POLITICS: the Supreme Court decision in the case of the PGA Tour versus disabled golfer Casey Martin.


WOODRUFF: As we reported, the Supreme Court has ruled in favor of golfer Casey Martin today in his suit against the PGA Tour. By a vote of seven to two, the court ruled that federal disability bias laws allow Martin the right to ride in a golf court -- cart, I'm sorry -- at PGA-sanctioned tournaments.

It has been a long legal battle for Casey Martin, and as promised, he joins us now from Eugene, Oregon. What's your reaction to this?

CASEY MARTIN, PROFESSIONAL GOLFER: Well, a relief. You know, I'm glad it's over. It's been a long time, and just kind of waiting and wondering about my future. And I'm just grateful to know that the cart's there and can't be taken away.

WOODRUFF: What is your goal in all of this, Casey Martin? Was it just for yourself? Was it for other golfers, other athletes with disabilities?

MARTIN: No, the goal behind it was just, you know, obviously for me. I just wanted to play golf and needed some help to do that. And so that was, you know, that was the motivation behind it. But if a greater good comes out of that, if this can open doors for people in sport, in golf or just in life in general, then I think that's great and would welcome that. And hopefully, that will happen.

WOODRUFF: So when the commissioner of the PGA Tour, Tim Finchem, says that he hopes and plans that the PGA will narrowly interpret this just to apply to you and nobody else, what do you say?

MARTIN: Well, I guess that's fine. I think, though, if they're faced with another situation with a disabled athlete or a disabled golfer they're going to give a little bit different consideration before they just say strictly no, we don't allow it. They might do the same thing to that other player, too, but I think if the situations were very similar they might -- they might make an exception for them, and hopefully, that would be -- that would be the case.

WOODRUFF: Well, to carry it to the other extreme, Casey Martin, today in the opinion released by the Supreme Court, one of the two dissenters, Justice Antonin Scalia, said this judgment distorts the law and common sense. And he went on to envision, as he described it, the parents of a Little League baseball player with attention deficit disorder who he said would be seeking the right to have four strikes in baseball instead of three.

MARTIN: Yeah. Well, I mean, it was 7-2, and he was pretty much the only one that, you know, went the other way, so, I mean, obviously he's not in the norm, or you know, he's a dissenting opinion. But my response to that is I think that's -- I think that's ignorant. And you know, the PGA Tour, when I qualified years ago, they gave me a cart. Baseball never gives four, you know, chances to -- four at- bats, whatever, four strikes for someone with AD, attention deficit. So it's a stupid analogy, and I don't understand why he'd choose to make that because I know he's an intelligent guy.

But so be it, he did, and I just don't think they're equal. Golf is a unique sport and my situation was unique, and so I think you've just got to look at it as that, as a unique situation.

WOODRUFF: Casey Martin, what do you say to those who say that golf is all about stamina and physical exertion, it's just part of the game, and by getting what you have achieved today, you got an unfair advantage?

MARTIN: You know, I just wouldn't agree. I don't think golf's all about physical exertion and stamina. Certainly, it might be part of it. But most people (UNINTELLIGIBLE), you know, watching your show have played a round of golf, and it wasn't like running a marathon, it wasn't like playing football or basketball. It's quite leisurely, and the fatigue that golfers experience, I think the majority of it is mental fatigue from being on the golf course for five hours kind of grinding on your game. I know I experience that.

But I haven't heard of too many players after just walking a golf course that they've just had it. In fact, if you go to these tournaments, these guys practice in the morning. A lot of them work out in the morning before they play, and they'll go play a round of golf. And then afterwards, they're practicing and working out or doing whatever. So if it was so fatiguing I'd find it hard to believe they could do all that. But walking an 18-hole golf course really isn't -- isn't overly strenuous, in my opinion.

WOODRUFF: If that's the case, how do you account for the fact that so many golfers on the tour, including the very prominent Jack Nicklaus, disagree with you on this?

MARTIN: Well, obviously they do disagree. But you know -- and I admit, a lot of golfers are working out to get in better shape. It certainly aids their game to be in better shape. I'm not going to deny that. But to say it's like fundamental to the game I don't agree. And I look back at my qualifying experience: When I had to qualify for the PGA Tour, they gave me a cart. I didn't ask for it. This was years ago. But I had my name on it. I could choose it or not.

And so if it wasn't fundamental then when I was qualifying, I don't understand why it's become so fatiguing now. If walking was so fundamental and if it was so exhausting to play, surely they would have incorporated that into the qualifying experience, which they did not. So I'll leave that up to you.

WOODRUFF: Let me just ask you personally, Casey Martin, how is your condition now affecting your ability to play?

MARTIN: Well, I think I'm doing OK. I haven't played well for a while, but physically I'm doing all right. You know, I have no complaints, and I'm just grateful for this. I can continue to play, and hopefully some good things will happen in my golf game.

WOODRUFF: All right. Golfer Casey Martin, who won a victory in the United States Supreme Court today, thanks very much for joining us. We appreciate it.

And this reminder: we will have more on the Casey Martin story tonight on CNN's "LARRY KING LIVE" at 9:00 p.m. Eastern.

There are developments in the case of Timothy McVeigh -- apparent developments -- and for those, we want to go to CNN's Susan Candiotti, who is in Denver.

Susan, we understand McVeigh attorneys may be filing court papers this week.

SUSAN CANDIOTTI, CNN CORRESPONDENT: It does appear likely, Judy. I've learned that it does appear very likely that attorneys for convicted Oklahoma City bomber Timothy McVeigh will ask for a stay of his June 11 execution at the U.S. penitentiary in Terre Haute, Indiana. Rob Nigh telling me that a filing is likely as early as Thursday.

He would not specify exactly what will be in that filing, although he says he has been talking to his client, and that his client has told him and the other lawyers that their efforts are worthwhile, as they continue to pour over more than 4,000 pages of new material provided to them by the FBI. And Rob Nigh has said consistently that he did not think he would have enough time before June 11 to complete his review of those documents.

Now, this would in fact, if granted by trial Judge Richard Matsch -- would be the second delay. You recall McVeigh was originally to be executed on May 16. That date was pushed back to June 11, and U.S. Attorney General John Ashcroft said just last week he did not intend to issue anymore postponements. Ultimately, however, if there is a filing, it would be up to the trial judge to decide. Back to you, Judy.

WOODRUFF: All right. Susan Candiotti with the latest from Denver. Thank you.

The meeting and its aftermath. President Bush and Gray Davis look for common ground on energy policy, but is there a chance the courts will get involved? The latest on today's meeting and the next step for both men, when we return.


WOODRUFF: The president takes his energy policy on the road, and California's governor makes the case for federal intervention in person.


GOV. GRAY DAVIS (D), CALIFORNIA: And Alan Greenspan has said that if California goes into a recession, it could well drag down the rest of America.



GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It's time to put politics aside and focus on the best interests of the people.


WOODRUFF: The president's position, the governor's response and the political fallout from today's meeting, from California to the nation's capital.

President Bush has spent this day campaigning for his energy policy in California, selling his plan as the right mix of conservation and new energy exploration. At this hour, Mr. Bush is meeting with perhaps his toughest critic on this issue, California's Democratic Governor Gray Davis. We expect the governor to hold a news conference soon, and we will bring you his comments just as soon as they take place.

Earlier today, Mr. Bush made a stop at Camp Pendleton, near San Diego, where he highlighted parts of his plan that promote energy conservation. Later, he explained his opposition to energy price controls to a Los Angeles audience that included Governor Davis.


BUSH: Price caps do nothing to reduce demand and they do nothing to increase supply. This is not only...


This is not only my administration's position. This was the position of the prior administration. At first glance, for those struggling to pay high energy bills, price caps may sound appealing, but their result will ultimately be more serious shortages, and therefore even higher prices. (END VIDEO CLIP)

WOODRUFF: The president took those same arguments into his private meeting with the governor.

And for the latest on that meeting, which is still under way and for the governor's response, let's to CNN senior White House correspondent John King there in Los Angeles.

John, after this meeting is over, what comes next?

KING: Well, as you mentioned, we're waiting for that meeting to break up, and certainly it's running a little late. No indication, though, that the meeting running long means these two men are reaching any common ground.

What next? We were told heading into this meeting by Democratic sources here in California, that Governor Davis is prepared to say that if President Bush holds firm in his opposition to price caps -- and we're told President Bush will do just that -- that California will make another appeal to the Federal Energy Regulatory Commission. But if that's unsuccessful, perhaps go to court, perhaps sue the president and sue the federal government. That, of course, would be a dramatic legal escalation of what has been so far a political and policy battle over energy.

What's next for the president? He's hoping that this trip, A, gives his case directly to the people of California, and B, calms some of the private criticisms from California Republicans that he should have come out here a long time ago.

WOODRUFF: John, the -- I just, a short time ago, interviewed the secretary of Commerce, Don Evans, a long-time friend of the president, who said this president will see that the law is enforced. Clearly, there's a difference of view between the two over what federal -- federal energy regulators believe is taking place in California?

KING: That certainly is true. What the governor wants is based on findings that some energy wholesalers have overcharged California. The governor says that's the case -- that in his view, makes the case for a federal policy of temporary price caps of up to two years on electricity wholesale costs.

What the administration says is that in specific cases, if FERC, or any other federal agency, finds price-gouging or overcharging, that they can remedy that situation through the specific cases. If a company has overcharged, that company can be forced to rebate the money. Not sweeping, broad price caps like the governor now wants.

So, you are right, there's a different interpretation of the law and a different political philosophy, if you will, in how the administration should both interpret and enforce that law.

WOODRUFF: All right. John King, watching that meeting out in Los Angeles. Thanks, John.

Our Bill Schneider has also been looking at the political implications of the energy crunch, and he joins us now -- Bill.

SCHNEIDER: Judy, the Senate gives Democrats a seat at the table. Now, what they need is a meal ticket, an issue that could bring them back to power. How about energy? It's President Bush's greatest vulnerability, and it could be the wedge issue Democrats need to take control of Congress next year.


SCHNEIDER (voice-over): In the Chinese language, the word for crisis is the same as the word for opportunity. The Bush administration sees an opportunity in California's energy crisis, an opportunity to say, "we told you so."

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: They knew a year ago they had problems. They postponed taking action because all of the action was potentially unpleasant.

SCHNEIDER: An opportunity to score points for free markets.

BUSH: The energy plan I lay out for the nation harnesses the power of modern markets.

SCHNEIDER: An opportunity to send a message about the need for new energy production.

BUSH: The problem in California shows that you cannot conserve your way to energy independence.

SCHNEIDER: For the Bush administration, the energy problem is an opportunity to teach the country a lesson about economics. Fair enough. But the issue may give Democrats an even greater opportunity. That's because politics is a short-term business. The crisis is now. People want help now. It's becoming the Democrats' mantra.

REP. ANNA ESHOO (D), CALIFORNIA: We understand long-term in California, and we understand short-term. Whether my constituents are Republicans, Democrats or independents, they need price relief.

SCHNEIDER: Does Bush's plan offer any short-term relief from soaring energy prices? The American people don't see it. Nearly two- thirds say Bush's energy plan will help, but only after several years. Fewer than 10 percent see any immediate relief.

What kind of immediate relief do Democrats want? Price controls. "Oh no," says the Bush administration, "that will just make the problem worse." In the long run, that may be true, but the problem is now.

DAVIS: I am not for price controls over the long haul, but we had them in place for three months last fall. They were working fine.

SCHNEIDER: Even in Texas, nudge nudge, wink wink.

DAVIS: Texas this year adopted price relief until 2003. We're just asking to be treated as well as Texas is being treated, because we are witnessing a massive transfer of wealth from California to Houston.

SCHNEIDER: Does the Bush plan offer any kind of short-term relief for California?

BUSH: My administration is committed to helping California. We're helping right now by expediting permits for new power production and by working as good partners to reduce our electricity at federal facilities.

SCHNEIDER: And Democrats reply: so what?

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: We're told we may be heading into a summer of $3-a-gallon gasoline and rolling blackouts, yet the Bush-Cheney plan offers virtually no immediate relief for energy consumers.


SCHNEIDER: In a crisis, Americans don't want lessons. They want help. Republicans haven't quite grasped that fact. But you know what? Democrats have -- Judy.

WOODRUFF: Bill Schneider, thanks very much.

Democratic Senator Joe Biden announced today he has decided to chair the Senate Foreign Relations Committee. With Democrats soon to take control of the Senate, the Delaware senator had caused concern among some other potential committee chairs, by wavering between Foreign Relations and Judiciary.

Biden's decision clears the way for Vermont's Patrick Leahy to claim the Judiciary chairmanship, leaving the Senate Agriculture Committee to Tom Harkin of Iowa.

We will have more on the subject of energy when INSIDE POLITICS continues.

A city the White House applauds as a model of long-term planning.


WOODRUFF: If the Bush administration believes California has gotten energy policy wrong, it believes it has an example of how to get it right -- New York City.

CNN's Jason Carroll was there today for the visit of the president's energy secretary.


JASON CARROLL, CNN CORRESPONDENT (voice-over): The setting is a Con Edison substation in Yonkers, New York. But make no mistake, this show is orchestrated by the White House. The role of each player here was clear: push the benefits of the president's energy plan.

BILL MUSER, N.Y. INDEP. SYSTEMS OPERATOR: I think the administration is right on in the problems it has identified and the solutions that it has proposed.

GENE MCGRATH, CON EDISON: I, too, want to applaud the secretary and the administration for the national energy policy released less then two weeks ago.

CARROLL: Secretary of Energy Spencer Abraham, with energy policy book in hand, stood before the substation and praised New York for doing in part what the presidents' plan calls for: increasing power supply and improving the way it gets to us.

SPENCER ABRAHAM, ENERGY SECRETARY: This state has done a lot to build supply, and bring supply on-line. And California, I think most of you know, there hasn't been any new electricity generation added to the state in a number of years.

CARROLL: The city's past power problems were not about supply, but the ability to quickly meet demand. The New York Power Authority could see demand increasing, so it planned ahead. 11 new generators are supposed to be on-line June 1st, in time for the summer's peak season.

MAYOR RUDY GIULIANI (R), NEW YORK: Long term, we've got to build more generators in New York City, and we have to overcome the "not in my own backyard" syndrome.

CARROLL: That kind of long-term solution merges well with the Bush administration's energy plan.

UNIDENTIFIED MALE: Their plan really doesn't have a short-term solution.

CARROLL: "Time" magazine political reporter Mitch Frank says, while it's good PR for Abraham to be out selling the president's plan, it's not without risk.

MITCH FRANK, "TIME" MAGAZINE: If the problem persists and Bush doesn't have any short-term solution, he takes a definite risk.

CARROLL: What's at stake here? Angry consumers, who could end up paying higher energy prices in the short term. What the administration is going to have to do is simply wait and see. In other words, wait out the next few months to see if those energy prices go up.

Jason Carroll, CNN, New York.


WOODRUFF: Across the country, high power costs and talk of an energy crisis may have some homeowners looking for ways to conserve. So, CNN's Brooks Jackson went in search of the one place where the average home wastes the most. The answer, and the reason, may surprise you.

(BEGIN VIDEOTAPE) BROOKS JACKSON, CNN CORRESPONDENT (voice-over): Andrew Oser is pumping air through this house in Virginia to check for leaks. The test shows it has lots of little holes that add up to big energy loss. He tracks down the leaks with a smoke puffer.

And up in the attic, where the heating and cooling ducts run, eureka!

ANDREW OSER: This fitting has no tape on it, and if we dig a little further, you can actually look inside the house and see light.

JACKSON: And most homes are much worse than this. Leaky heating and air-conditioning ducts waste 20 percent to 40 percent of the energy in a typical home, according to government research. One reason: duct tape!

Tests at the Lawrence Berkeley National Lab in California show that handy stuff of 1,000 other uses doesn't do its job.

MAX SHERMAN, LAWRENCE BERKELEY NAT'L LAB: Our tests show that the one thing you shouldn't use duct tape for is ducts. After it's been in your attic for a year or two, the adhesive breaks down and no longer sticks.

JACKSON: In fact, the research shows that sealing leaky ducts is one of the most effective conservation measures available.

SHERMAN: Our analysis shows that in the Sun Belt, it's probably the most effective thing. For every $1 you invest in duct sealing in California, you would save $1 worth of new power plant you would have to build.

JACKSON: There's even new technology available to do the job: an aerosol spray that seals most small duct leaks from inside, another product of government-sponsored research. Most jobs cost between $700 and $1,200, but energy savings cover that initial cost rather quickly, according to the inventor.

MARK MODERA, PRESIDENT, AEROSEAL, INC.: The payback was on the order of two or three years. Obviously, it depends on energy prices. If energy prices go up as they are right now, it pays back quicker.

JACKSON: Only 35 contractors are licensed to use this new technology so far, but old-fashioned mastic, a sticky goo that any competent contractor can apply from the outside, also does the job and offers similar savings.

(on camera): Rising energy prices are creating an ever-larger incentive for homeowners to invest in this simple conservation measure. On one level, an example of free markets at work, no government subsidy needed.

On another level, an example of the value of government-sponsored conservation research, which highlighted the problem and created at least one new solution. Brooks Jackson, CNN, Washington.


WOODRUFF: Now we can report to you from Los Angeles that that very closely watched meeting being between President Bush and California Governor Gray Davis has just broken up just a few moments ago. We're now standing by for a press conference. The governor has said that he would hold, and as soon as we're able to bring you that and a read out in the meeting, we will do so.



DAVIS: ...the California market was dysfunctional. The prices were too high, the term they use was, "unjust and unreasonable," and we are entitled as matter of law for some form of price relief. That could come either in the form of very substantial refunds, or some tempering of the price in the future.

I explained to the president that if he were governor, he, like I, would be doing everything within his power to fight for the 34 million people in California that are getting a raw deal. We paid $7 billion for power in 1999, $27 billion for approximately the same amount of power in 2000.

And even though demand has dropped 8 to 10 percent the first five months of this year, we're looking at spending $50 billion for power in the year 2001. Surely, electricity deregulation is not working, if Californians have to spend 700 percent more for electricity in 2001 than they did in 1999.

So I'm going to pursue every recourse available to me. We will file a lawsuit against the Federal Energy Regulatory Commission, for failing to discharge its legal obligations. Since 1935 it has had the obligation to insure that markets are functional and rates are just and reasonable. It has found that both conditions are missing. It hasn't provided us any relief.

Secondly, I'm looking forward to working with the newly constituted United States Senate to make sure that the problems of California and the West and conceivably New York City get a full airing, and people understand precisely what's going on.

Now, there was some good news. The president did agree that it made little sense for California to receive Texas natural gas at roughly $15 per British thermal unit when New York is receiving the same gas at roughly $5.95 for British thermal unit. And he wanted his new commissioner Pat Wood to come out to California to talk about that. To see if there's market manipulation and to review the wisdom of the Federal Energy Regulatory's decision two years ago, when they suspended a tariff that controlled the transportation prices of natural gas when it flows from Texas to other parts of the country. So, that was a positive development. As was the opportunity -- as is the opportunity to meet with Pat Wood who is the president of the Public Utilities Commission in Texas, just a couple of days ago when sworn to the president first appointee to the Federal Energy Regulatory Commission.

I want to conclude by saying, while the president and I have a fundamental disagreement on whether or not California is entitled to price relief, I believe there's no doubt we're entitled to it as a matter of law and the appropriate federal agency has already made the necessary finding to trigger that relief. While we're in disagreement over that fundamental issue, which frankly, all other issues pale in comparison to it, he has been helpful in our efforts to site more power plants.

He's been helpful in seeing that the federal government moves in the same speed the state government is moving, in approving permits. In the 12 years before I was governor, as you know, not a single major power plant was sited in California. During that time, the population grew by 7 million people...

WOODRUFF: California Governor Gray Davis holding a news conference, just moments after he finished a meeting with President Bush. He began by thanking the president for the meeting but went on quickly to say that the two men still have a fundamental disagreement over whether California is entitled to some relief over sky high electricity prices.

He said it's not a matter ideology, it's matter of the law. And he cited federal regulatory body that, months ago, said that the prices Californians are being charged are -- quote -- "unjust and unreasonable" and California needs relief.

You could look for more on this energy story coming up on MONEYLINE.

That's INSIDE POLITICS for now. I'm Judy Woodruff. Thanks for joining us.



4:30pm ET, 4/16

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