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Israel Turns Guns on Arafat Headquarters; Oil Prices Rise as Mideast Violence Escalates

Aired April 2, 2002 - 16:00   ET


JUDY WOODRUFF, CNN ANCHOR: I'm Judy Woodruff in Washington. Israel turns its guns on Yasser Arafat's security headquarters, as U.S. citizens are encouraged to leave the region.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: I'm Bill Schneider in Los Angeles. The Mideast violence is sending oil prices higher. Can President Bush avoid the usual political fallout?

JEFF GREENFIELD, CNN ANALYST: I'm Jeff Greenfield in New York. There's some grumbling on the right with some of the president's policies, but history shows it takes a lot to abandon a president.

WOODRUFF: Also ahead, saving the world from global warming, one pint at a time. My interview with Ben and Jerry of ice cream fame, and the fellow who has his own band, Dave Matthews.


WOODRUFF: Thank you for joining us. The political and economic aftershocks of the ongoing violence in the Middle East are spreading far beyond the region.

The latest operations included a fierce overnight Israeli attack on a Palestinian security headquarters in Ramallah. U.S. officials brokered an agreement to stop the shelling, and about 200 people who were inside came out and surrendered to Israeli forces.

Meantime, Israeli tanks rolled deeper into Bethlehem, where some of the heaviest fighting occurred near the Christian holy site of Manger Square. With Israel's military operations in their fifth day, the uncertainty is rippling through world oil markets, sending prices higher from trading floors to gas stations here in the United States.

Earlier this week, Saddam Hussein called on Arab producers to cut off oil sales to the U.S. because of its support for Israel. Well, today in Malaysia, Iran's foreign minister said if Arab countries decide to use oil as a weapon, -- quote -- "it will certainly be effective."

Oil prices traded at six-month highs throughout this day, raising new concerns about the trickle-down effect on U.S. consumers. CNN's Rusty Dornin reports that the Middle East is just one factor pushing prices higher at the pump.


RUSTY DORNIN, CNN CORRESPONDENT (voice-over): For some, the digits here seem to be spinning faster than the wheels on their car.

UNIDENTIFIED MALE: Right at two weeks ago I'm started feeling it. And this truck definitely tells me.

DORNIN: Gas prices are up 23 cents a gallon over the past four weeks nationwide. The average is $1.37 a gallon for regular. How high does it get? In places like San Francisco, a lot higher.

UNIDENTIFIED MALE: I push my card in, I look at the price, I'm like, wow, regular is 1.74.

DORNIN: Californians can blame higher prices on their summertime fuel blend -- cleaner burning, but more expensive.

(on camera): But why are prices higher everywhere? Well, it starts, as much does lately, with September 11th, and people preferring to drive rather than fly. Also pushing up demand, the U.S. economy is getting back on recovery road.

(voice-over): And then higher demand meant lower supply. OPEC cut production. The Middle East crisis heated up, and worries that there will be conflict in Iraq, a key global producer. That's making everyone nervous.

RED CAVANEY, AMERICAN PETROLEUM INST.: Times of uncertainty, times of volatility, typically result in these rapid price swings. And that's probably something we're going to see until it somewhat temporizes there.

DORNIN: Price swings that people feel they have no control over.

UNIDENTIFIED MALE: We've got to drive. We've got to get to work. We have things to do, so we have to drive. We can't be without gas.

DORNIN: For all the complaining, experts say consumers do have some choice.

ATLE ERLINGSSON, AMERICAN AUTOMOBILE ASSN.: A lot of motorists think that their hands are tied and they have to pay what is asked at the pump. But you, as the motorist, need to be a smart shopper. There are gas stations out there that sell gas anywhere from 10 to 15 cents below the average.

DORNIN: Bill King says current prices won't change his driving patterns, but...

BILL KING, MOTORIST: I think can I handle it a little bit, but I think once we get up over $2 a gallon, which it was here for quite a while, then I'll probably notice it. DORNIN: Even when American drivers take notice of high prices, they're still willing to pay to sustain their love affairs with their cars. Rusty Dornin, CNN, San Francisco.


WOODRUFF: Higher gas prices often mean political trouble for U.S. presidents. Our senior political analyst, Bill Schneider, is in Los Angeles. Hello, Bill.

SCHNEIDER: Hello, Judy. Does the violence in the Middle East get President Bush off the hook on the issue of rising gas prices? Or does it put him on the spot?


(voice-over): We've been here before. In the 1970s, to be precise, when the revolution in Iran created an oil shock. President Carter tried to blame OPEC, the organization of overseas oil producers.

JIMMY CARTER, FMR. PRESIDENT OF THE UNITED STATES: This is the direct cause of the long lines which have made millions of you spend aggravating hours waiting for gasoline.

SCHNEIDER: Did that get Carter off the hook? Not on your life. It will be even harder for President Bush to blame others. When Bush ran for president, he claimed his background in the energy industry gave him special expertise in that subject.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There is no plan, it seems like to me, in Washington, to increase the supply of crude oil or natural gas. There is no national energy plan.

SCHNEIDER: There is now. We don't know much about how it got written, but we do know the philosophy behind it, thanks to Bush's vice president and fellow oil man.

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: Conservation may be a sign of personal virtue, but it is not a sufficient basis, all by itself, for sound comprehensive energy policy.

SCHNEIDER: Cheney's argument is: get real. Americans are not going to change their way of life. The only way the country is going to achieve energy independence is with more production. Dig, we must, even in the Arctic National Wildlife Refuge.

To which Democrats say: get serious. No way can this country produce enough oil to satisfy its needs.

SEN. HARRY REID (D), NEVADA: Our country possesses about 3 percent of the world's oil supply. Three percent. No matter what we do to develop domestic oil supplies -- and we have to do a lot -- we're not going to be able to satisfy the voracious appetite that we have in America for oil. SCHNEIDER: There's only one way out of this argument. Greater dependence on imported oil, which is exactly what's been happening since the 1970s, especially with Americans driving bigger cars -- really bigger cars.


That's why President Bush is on the spot. His skill is managing the Middle East conflict will also be tested at home. First at the pumps, and later at the polls -- Judy.

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

And with me now to talk about the political and economic factors surrounding gas prices, Tyson Slocum, of Public Citizen, and Red Cavaney, who's president of the American Petroleum Institute. We saw him in that report just a moment ago.

Tyson Slocum, to you first. Why are gas prices going up?

TYSON SLOCUM, PUBLIC CITIZEN: Well, for two main reasons. One is we have inadequate competition in our domestic petroleum markets. We've allowed too many supermergers to occur, like Exxon and Mobile and Chevron and Texaco. And these are fully vertically-integrated entities, that have production, refining and marketing capabilities.

And so when you have too few players controlling the market, you're not going to have a lot of responsiveness to increases in demand.

WOODRUFF: Red Cavaney, is that what's happened?

CAVANEY: No, that's not so. If you look at the early part of the year, gas was down near historical lows, at about $1.07 a gallon. Consolidation actually increases efficiency, and that's why it's done, because we're now in a global market.

If you look historically, the price of gasoline is linked to the price of crude oil. Crude oil is up significantly because of three factors, cited earlier. No. 1, the economy is recovering much faster than people thought. No. 2, OPEC has restrained its production, kept it down, to raise prices. And No. 3, people are really nervous about the Mideast.

WOODRUFF: Well, if all that's the case, Tyson Slocum, then what can consumers do?

SLOCUM: Well, I mean, clearly, consumers need to petition the government to talk about how we can open up our markets to more competition. And we also need to address the demand problems. I mean, the United States is the single-largest consumer of oil. And we're also the third-largest oil producing nation in the world. Only Saudi Arabia and Russia produce more oil than the United States. We're never going to be able to produce our way to independence.

What we need to do is to increase the ability of independence -- that's in the refinery and marketing industry -- to get a foothold into the system. We need to start reevaluating some of these mergers. And we need to do things to directly reduce consumption of oil by increasing efficiencies in the transportation sector.

WOODRUFF: Red Cavaney, are you saying there's really nothing significant that the oil companies themselves, the energy companies, can do about this?

CAVANEY: Well, right now they're operating at about their maximums. What we tried to urge, through the national policy debate, is provide more flexibility and less overburdening regulations. Because more flexibility helps us be more efficient. And those price savings get passed along to consumers.

WOODRUFF: Let me ask you, Tyson Slocum. We've got some pretty threatening sounds coming out of the Middle East now. You had the comments from the Iraqi minister today. The Iranian minister spoke the other day about a concerted effort to raise prices to the U.S., or even not sell oil to the U.S. Is this something that Americans should be concerned about?

SLOCUM: Absolutely. And as a result, we need to start changing our habits. It's really foolish to say that we should not be sacrificing certain things. Americans did it, patriotically, back in World War II. We need to start doing it now.

I see SUVs that spend more time at a red light than they do off- road. We need to start looking at our own consumption patterns, and it's patriotic to do so. Because right now, we're importing 620,000 barrels of oil a day from Iraq. If we were to increase fuel economy standards up to 35 miles a gallon by 2010, we're going to be reducing the need to import 1.5 million barrels of oil a day.

WOODRUFF: So, is reducing consumption, Red Cavaney, the answer to this worrisome dependence on foreign oil?

CAVANEY: It's a part of it. We should conserve when it makes good sense, and do things that we need to do. There's certainly room for that. Driving habits, your own personal life, you can take care of in that regard.

But we also ought to look at more security. More security comes about as a result of having more diversified sources of supply, and getting more of it. So it does make some sense to look in other areas of the United States where we have an opportunity, like up in Alaska. It does make sense to look in other parts of Africa and other areas, to try and diversify that supply. Then we don't become beholden to OPEC.

WOODRUFF: Increase production.

CAVANEY: Increase production. You need both.

SLOCUM: Well, we're never going to be able to produce our way out of this. Even if we were Saudi Arabia, which produces 8 million barrels of oil a day, we'd still be importing 40 percent of our oil. The problem here is that we use 15 million barrels of oil a day.

We could turn all of Alaska into a giant oil well. We will never produce enough to get us to energy independence, without addressing problems of demand.

WOODRUFF: Very quickly, immediate prospects for the American consumer. Red Cavaney?

CAVANEY: I think until the Middle East settles down, this is going to be a difficult situation.

WOODRUFF: And, Tyson?

SLOCUM: I think as long as we keep approving these large mergers, where these companies like ExxonMobile, Chevron-Texaco have no incentive to be responsive to consumer needs, we're never going to solve this problem.

WOODRUFF: All right, gentlemen, two very different views. Tyson Slocum of Public Citizen. Red Cavaney, who is with the American Petroleum Institute. Gentlemen, good to see you. We appreciate your dropping by.

SLOCUM: Thank you.

WOODRUFF: Thank you.

Using music and ice cream to save the environment. Up next, rocker Dave Matthews teams up with Ben and Jerry to spread the word about global warming.

The Democrats chances in November -- one of the issues for debate when I'm joined by Tavis Smiley and Laura Ingraham.

Plus, the "Subway Series" heads to New York, with a conversation with Governor George Pataki.


WOODRUFF: Today's "On the Record" has a sweet twist. Some of the profits from Ben & Jerry's newest ice cream flavor, called One Sweet Whirled, will fund the new campaign to fight global warming. Also very much a part of the campaign, the Dave Matthews Band, whose 1993 song, "One Sweet World," provided the inspiration.

Earlier today, Ben Cohen, Jerry Greenfield and Dave Matthews talked to me about what they hope to accomplish. My first question to Matthews, why this cause?


DAVE MATTHEWS, MUSICIAN: Well, it's sort of a -- almost strange to have this as a -- it is a cause, obviously, or an issue. But it seems to have, like -- all of the other things are inside this, as well as us and as well as our families and the trees and everything, are inside this one issue, which sort of covers everything. And that is the world getting warmer and warmer and warmer.

So it's always like this issue should be almost a purpose of the international community today, of the world today. So that's why -- the fact that we're not talking about it every day, the fact that we're not obsessed by this, is almost unforgivable.

That's why I'm involved, because we all need to know about. We all need to act as -- in the little ways we can, that have such a profound effect. We need to act, and we need to act now, to reverse, or at least prevent, further global warming.

WOODRUFF: But how do you know that global warming is a problem? There are still people out there, Jerry Greenfield...

MATTHEWS: Not many. Not many.

WOODRUFF: ... who say, "we're not sure." The Bush administration, the president, the people who work for him, are still putting money into research, because they're not sure.

MATTHEWS: Yes, well, it seems to me that the Bush administration finds a group of scientists and gets them to do the research, and then the research comes back and says, well, it is happening. Oh, well, let's look for some more scientists. Oh, it is happening. You know, that seems to be -- the people that are skeptical of it are desperately trying to find proof that it's not happening.

It's so clearly -- you know, and it's starting to happen in simple ways, like the snow -- you know, snows are starting to go down. It's starting to snow in places that it shouldn't. The freezing and unfreezing of ice blocks. It just seems obvious.

WOODRUFF: And, Jerry Greenfield, what about you? A lot of people, you're right, a lot of people say it's a problem. But there are smart people out there who say, we're not sure yet. We don't have enough information.

JERRY GREENFIELD, ICE CREAM MAKER: I think what's so powerful about this coalition is working with SOE, Save Our Environment, which is a group of 19 environmental groups. The top environmental groups, as I said, the super stars of the environment, the same way we have the super stars of rock, who are telling us this is the most important thing to do. We have Bud right here, who I'm sure could read us reams of evidence.

WOODRUFF: Dave, you mentioned you have a daughter. Is the next generation an issue here?

MATTHEWS: I think that's obviously the biggest issue, is the next generation, and the generations that follow, or seven generation or 10 generations. So of course it's about that. And again, like you said, there are important issues, whether it's hunger or whether it's poverty, that are out there. But all those issues fall under this -- this issue affects all of those things. This issue is so central because it's about the whole planet. We haven't colonized the moon yet. We're not comfortable in the atmosphere of Mars, you know? So this is our one spot. If this turns into a little hot, boiling, bubbling little planet, we don't have anywhere to go. So that's the issue here, I think. Realizing the smallness of this planet.

WOODRUFF: Who are you really trying to reach with this campaign, would you all say? Are you trying to reach young people, old people...

BEN COHEN, ICE CREAM MAKER: We're trying to reach everybody. You know, Ben & Jerry's is eaten by young and old alike. You know, the Save Our Environment and all those environmental groups have young and old people. What we're trying to do is to assemble a critical mass of people that can all make the personal changes that they need to make in their lives, and to pressure Congress.

GREENFIELD: If you talk to the man and woman on the street, they're tremendously concerned about this. So why isn't the government, our elected officials, doing something about it? It's just absurd.

WOODRUFF: What will you consider success? How would you define success in this campaign? Have you already kind of thought that through? Thought that out?

MATTHEWS: I think any amount of spreading the awareness. Because the other thing, the advantage we have, is that I'm sure the government and the major industries that are contributing to the problem, by their indifference, like ice cream. And also, they're made up of people. So that's who we're trying to get to. The more and more people that know about it, the more and more people that can change things. Because it is by the people.

WOODRUFF: All right. Thank you all very much. I really appreciate it.

COHEN: Thank you.


WOODRUFF: Dave Matthews and his band and Ben and Jerry, of Ben & Jerry's ice cream. And in case you're wondering, here's what's in the new Ben & Jerry's "One Sweet Whirled." It's coffee, caramel, coffee fudge chips and marshmallows. Yum! You can find out more about the new global warming campaign at this Web site,

Why did Oprah turn down President Bush? Find out, when Tavis Smiley and Laura Ingraham debate some of the top issues of the day. It's just ahead on INSIDE POLITICS.


WOODRUFF: Checking the stories in our INSIDE POLITICS "Newscycle." Under heavy bombardment from Israeli forces, about 200 Palestinians trapped in a West Bank security compound have surrendered. Among them, office workers, prisoners and children.

Israel says it attacked the compound in Ramallah as part of an effort to dismantle what it calls the Palestinian terrorist infrastructure. Palestinian leaders dispute the Israeli claims. Fighting is reported in other parts of the region, including Bethlehem.

The State Department today unveiled a new state of the art U.S. passport. It is designed to prevent misuse of passports by terrorists. Among its features, digital photos.

In Norwalk, Connecticut, jury selection is under way in the trial of Kennedy cousin Michael Skakel. He's accused of killing Martha Moxley in their wealthy Greenwich neighborhood in 1975. Both were 15 years old at the time. Jury selection is expected to take a month or more.

With us now with their takes on some of this day's top issues, Laura Ingraham, a talk show host on Westwood One Radio and CNN contributor, Tavis Smiley.

Let me ask you both first about this U.S. Supreme Court announcement that it has agreed to take two cases involving the California no strikes -- or rather, the three strikes law. We know that this is the penalty imposing extra strong penalties when someone commits a third offense.

Tavis, are these three strikes and you're out laws, are they inherently unconstitutional?

TAVIS SMILEY, CONTRIBUTOR: I don't know if they're inherently unconstitutional. I suspect that's what the Supreme Court is going to look at. I think that they're certainly punitive, at worst. The truth of the matter is that, too often we find persons who are locked up for life over third offenses that are silly, like stealing a slice of pizza.

Now, I'm not going to condone crime. I don't think any of us are. But I think that we have to have laws in this country that are sensible. I hope that it would be found unconstitutional if, for nothing else, because it absolutely makes no sense, in terms of our best crime fighting efforts.


LAURA INGRAHAM, RADIO TALK SHOW HOST: Now, Judy, about 26 states around the United States have similar provisions, albeit California is probably the most stringent of these three strikes provisions. And it goes like this. You have two felonies on your record, two felonies. You commit a third felony -- and it can be a so-called petty offense felony -- you can be sentenced to 25 years to life. It is within the judge's and the prosecutors' decision, to make that discretion.

Now, the court doesn't usually take cases from the 9th circuit court of appeals, which tends to be a more liberal federal court of appeals, unless it wants to overturn those decisions. It's not a rule, but it's usually the case. If I had to bet right now, I'd bet the Supreme Court would uphold this law, maybe 6-3, maybe 5-4. It would probably be a close case.

WOODRUFF: Tavis, let me turn the subject now to Democrats. A lot of talk about their inability to find a big issue to run against President Bush on and the Republicans this fall. Is there an issue that Democrats can run on at this point?

SMILEY: I think, absolutely. And the issue is the economy. There are a number of domestic issues. I find it incredulous sometimes, that we keep coming back to this conversation as if we have amnesia as a country. George Herbert Walker Bush had popularity ratings in the 90 percentile after the Gulf War. And yet he was soundly beaten, as we all recall, by one William Jefferson Clinton. So I don't think the folks who support President Bush ought to be so caught up in these numbers that they don't think he can be brought down, No. 1.

No. 2, his father lost because he had an international agenda, but he had no domestic agenda. And I suspect on any number of issues, the least of which being the economy, President Bush is vulnerable. And there's a long time between now and the election. And that's -- who knows what the other issues are going to be.

WOODRUFF: Laura Ingraham, the economy?

INGRAHAM: Well, I think the economy has been a real vexing issue for the Democrats. They'd love to be able run on the economy against President Bush in the midterm elections. But poll after poll shows that the American people don't blame this president for the economic downturn. I'm sure the White House is very happy about that.

Everything they've thrown out to the administration so far -- and they shouldn't get cocky -- has not worked. They have not been able to get traction. They've been trying on the war. At various times they've been trying on Social Security. Now it looks like Social Security is going to be solvent for three more years, even though there is an economic downturn. It's a difficult time to be a Democrat. But the Republicans cannot get cocky. They have a long road before November, and anything can happen.

WOODRUFF: Very quickly. The Middle East, is that an issue for the Democrats, Tavis?

SMILEY: I think it's an issue, period. I think that what we're going to find after 9/11 is that Americans, Republican, Democrat, liberal, conservative, want to get away from the partisan petty politicking, and talk more about real issues.

And this is a vexing issue for all of us. President Bush is certainly going to catch some hell, I think, about the way he's mishandled this of late. But it's an issue that all Americans care about and ought not be politicized any more than it already is.

INGRAHAM: Judy, if we had suicide bombers walking into our temples, our shopping malls, our churches and exploding themselves, killing dozens of people at a time, we would not be entertaining the idea of negotiating with the people who blew themselves up. We'd want swift retaliation. We'd want to stamp out the terrorists. This is a loser issue for the Democrats to criticize the administration on.

WOODRUFF: Finally, the White House recently asked Oprah Winfrey to go with a White House delegation over to Afghanistan to look at the schools there. Tavis, any light you can shed on Oprah's decision not to go?

SMILEY: I'd like to tell you that Oprah calls me and consults me on these issues, Judy. She did not call me to consult me on this. I can say this, though. Oprah is a busy woman. She has a right to decline the trip if she can't make it. And furthermore, I think this is history making.

I note that Halle Berry mentioned Oprah in her acceptance speech the other night. And here Oprah is, making history again. I think history must record that this is the first time ever that a trip by the White House has been canceled because a black woman couldn't make the trip.

INGRAHAM: All right, that's progress.

SMILEY: I think it is.

INGRAHAM: I just think -- the Bush administration is trying to soften the approach to the war effort. Women have no problem with the way the war is being handled. (UNINTELLIGIBLE) understand this whole theory about bringing Oprah on the trip in the first place -- don't ask a question that you don't know the answer to. That's an old rule in the courtroom. And the Bush administration should have applied it before they asked the most powerful woman in the United States, a lot of people say, which is Oprah Winfrey.

WOODRUFF: We're going to have to leave it there. We're glad to have two powerful guests, Laura Ingraham and Tavis Smiley. Thank you both.

SMILEY: Thank you, Judy.

INGRAHAM: Thanks, Judy.

WOODRUFF: We appreciate. Good to see you.

And you can give us your opinions on these topics and more at POLITICS. Plus, don't forget to e-mail Bill Schneider with all of your ideas for this week's "Political Play of the Week."

A couple of freshmen congressmen have their work cut out for them in their reelection bids. We will get the "Inside Buzz" from Bob Novak. That's just ahead.


WOODRUFF: Here now with some "Inside Buzz": our Bob Novak. And the reason he's got a big smile on his face is, his team, the University of Maryland, won the national championship last night.

ROBERT NOVAK, CNN POLITICAL ANALYST: Well, that's right. Well, I was there in Atlanta last night.

WOODRUFF: You are a happy man. But we're not going to talk about that. We're going to talk about politics.

Bob, I think there are a couple of freshmen in the House who you think may have some difficulties this year?

NOVAK: Let me tell you what happened.

On "NOVAK, HUNT & SHIELDS" this last week, we thought we would do an unusual show during the Easter recess. We would take two congressmen who defeated incumbents last time, which is very rare. And they are congressmen. And they are being targeted by the opponents today. So they have tough races. We taped an interview, but, unfortunately, because of the Middle East, it got preempted.

So, we asked Congressman Mark Kennedy, Republican of Minnesota, who is facing a tough race for reelection -- he had won in the rural district last time that used to be represented by Ben Webber (ph). And now he has got a new district. We asked him what he thought about the president's proposal -- he's a Republican, don't forget -- to drill in the Arctic National Wildlife Reserve. And this is what he said.


REP. MARK KENNEDY (R), MINNESOTA: ANWR would only add about another year and a half, in my estimates. Right now we ought to work in diversified sources. I don't agree with moving forward immediately in ANWR. I also view that we are becoming much more skilled at extracting things like oil without harming the environment. I don't see the need to move in ANWR now. So, yes, I do disagree with the administration in that regard.


NOVAK: Now, the Democrat we interviewed was Mike Ross, Democrat of Arkansas. He beat Jay Dickey in a district that had been Republican a long time. And he is a big target this time . And he is for drilling in the Arctic National Wildlife Preserve. We asked him, "Why are you for drilling?" And here's what he said.


REP. MIKE ROSS (D), ARKANSAS: I think the people in my district are sick and tired of all the partisan bickering that goes on in our nation's capital. It shouldn't be about what makes the Democrats or Republicans look good or bad. When the president is right, I'll support him. When he is wrong, I'll say he is. I'm going to continue to fight for the traditional conservative small-town values that most of us in my congressional district in Arkansas were raised on and still believe in.


NOVAK: Well, Democrat Mike Ross, Judy, mentioned the word conservative through the whole interview repeatedly, said he was for the Bush tax cuts, never mentioned the word liberal.

Well, there's a lot of environmentalists, particularly in the new district, which is more suburban, than Mark Kennedy, the Republican, has in Minnesota. Al Hunt and I were just struck how different these congressmen are than the people we usually have on interviews, who have the straight party line, the straight ideological line. And the difference is, these people face contested races. There's very few contested House races, so most of them just follow the party line. But these guys follow what they think their constituents want.

WOODRUFF: Well, it doesn't matter what the national party line is when you're facing a tough reelection.

NOVAK: That's right.

WOODRUFF: All right, Bob Novak, thanks. And congratulations to Maryland.

NOVAK: Thank you.

WOODRUFF: All right.

Question: What is the role of the nation's governors in the big political picture? Well, recently, I spoke with CNN political analysts Stu Rothenberg and Charlie Cook.

And I began by asking: How important are this year's governor's races to the 2004 presidential race?


STUART ROTHENBERG, CNN POLITICAL ANALYST: Governors are politically very sexy, because you're talking about the chief executive officer of big states. And, in this case, the Republicans have elected governors in '94 and '98. They're sitting on a lot of big state governorships. And we're talking coast to coast, from New York to Texas to Florida.

And so they have a lot at stake. And these governors are critical, because they really create the political organization, the backbone of the national party. The national party doesn't exist as much as these state parties do. And then, of course, looking toward 2004, in a presidential race, governors usually play a critical role, either as candidates or as supporters of contenders.

WOODRUFF: Charlie, do they play that critical a role leading up to the presidential election?


I don't think that voters are like when you buy a house and the refrigerator and stove convey. I think just because a state has a governor of one party doesn't make it any more likely that state is going to go that way in a presidential election. John Engler in Michigan has the best organization in America. And if he couldn't deliver Michigan for then Governor George Bush in the primary or in the general election, I don't think anybody can deliver anything.

ROTHENBERG: I think Charlie has mentioned the exception that proves the rule.

I think clearly George W. Bush benefited from the fact that he had some big-state governors behind him early on.

COOK: His brother did him a hell of a lot of good.

ROTHENBERG: He clearly benefited from South Carolina, for example, having the political establishment there, even though there wasn't a sitting Republican governor, but there were Republican governors. So, I think governors are important. I don't think they guarantee.

WOODRUFF: All right, let's talk about the biggest governor's races in the country, starting all the way in the West with California.

COOK: The thing is, the polls out there show that Bill Simon Jr. is seven, eight and nine points ahead of Gray Davis. I'm very, very skeptical about whether that is going to happen.

You can argue about whether Gray Davis has been a good governor or not. You can argue about whether he handled the energy crisis out there or not. But I think Gray Davis does two things. No. 1, he can raise a heck of a lot of money. And No. 2, he knows how to win elections.

ROTHENBERG: I don't want to argue on whether or not Gray Davis has done a good job or a bad job. I just want to look at the numbers. And the numbers say he has done a terrible job. His numbers stink. This is a guy with awful reelect numbers, also job approval. And he's losing to a guy who has enough never run for office before on a ballot test.

The problem for Simon -- I think Charlie is correct overall about this -- is that Simon has to make this election about Gray Davis. And Gray Davis is going to want to make it about Simon. And Gray Davis is one of the most tenacious, best-funded politicians you'll ever find, terrific political operative staff. And I think it is going to turn out to be a big problem for the Republicans.

WOODRUFF: Let's talk about Florida.

You mentioned the president's brother, Jeb Bush, facing a challenge. We don't know yet from whom. Janet Reno has been moving, literally moving across the state in her pickup truck.

Charlie, what does it look like for Jeb Bush?

COOK: I think his problem is that Florida -- the whole country took a hit economically this year, last year, and particularly from 9/11. But no state took a bigger hit than Florida, with its dependence on the tourist economy.

He has had to make some tough decisions. He is going to have to make some tough budgetary decisions. I think he is somewhat vulnerable. Now, if Janet Reno wins the Democratic nomination, I think Bush wins. I would watch this guy Bill McBride, a lawyer from Tampa, who labor seems to be pulling behind, most of labor. If McBride gets the nomination, I think he would be a very formidable rival. It would be a real good race.

WOODRUFF: How do you see Florida, Stu?

ROTHENBERG: Much as Charlie does.

Janet Reno is the celebrity factor, the national figure. But there's a lot of questions about her political base. It comes from the southeastern part of the state, which is the Democrats' core, but can she run statewide? Age is a factor and physical condition. So, there are a lot of Democrats that I'm talking to -- that I'm sure Charlie and I are both talking to -- that suggests that, while Janet Reno is certainly a player for the Democratic nomination, she would have a difficult time, maybe an impossible time, in the general election.

WOODRUFF: Let's talk about Texas.

Stu, Tony Sanchez, wealthy businessman, is now the Democrats' choice to go up against Rick Perry, who took the job over when George W. Bush moved to Washington.

ROTHENBERG: Right. And he typifies of Democratic scenario in the state, which is: Put together a combination of minorities, maybe run an African-American for the Senate, an Hispanic for governor, an Anglo for lieutenant governor. Find every Democratic vote out there. Turn out Hispanics in big numbers and win the election that way.

It is an interesting scenario. It's a plausible scenario. I don't think it is a likely scenario.

COOK: Sanchez is going to spend $20 million, $30 million worth of television of his own money. It is going to make it into a race.

But he's a banker. And the attack adds are going to say that $25 million worth of drug money was laundered through his bank, which he may or may not have known anything at all about. But the thing is, it is going to look awfully, awfully ugly. And I would be very, very surprised to see Sanchez win the governorship. But having said that, he does pull out a big Hispanic vote that it could help Democrats in much of the other offices.


WOODRUFF: Political analysts Stu Rothenberg and Charlie Cook.

Well, among the headlines in our "Campaign News Daily": Former D.C. Mayor Marion Barry is rethinking his decision to return to politics. Barry said the recent incident where Park Police reported finding traces of illegal drugs in his car will influence his final decision on a run for city council. Police did not charge Barry. And he says he remains drug-free.

Arkansas Democrat Mark Pryor has released the first campaign ad in his run for the Senate. In the ad, he refers to his father, former Senator David Pryor, and he pledges to work across party lines.


MARK PRYOR (D), ARKANSAS SENATORIAL CANDIDATE: I'm also my father's son. He taught me to speak my mind and to think for myself, to remember that people matter more than political parties.


WOODRUFF: Utah Jazz basketball star Karl Malone says he might run for Arkansas governor once his playing days are over. Malone has raised money for several Republican candidates and he is a member of the NRA. He has spent his entire basketball career in Utah, but he owns a large ranch in Arkansas.

We ride the rails north for the "Subway Series" after a short break. Our Jon Karl leaves the Capitol and interviews New York Governor George Pataki. That's next.


WOODRUFF: Well, with the U.S. Senate in recess, our Jonathan Karl took his "Subway Series," trading the little tiny subway that runs underneath the Capitol for the real thing: the world famous New York subway.

Today's interview: New York Governor George Pataki.


JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Now, we're headed down towards Lower Manhattan.


KARL: Do you think that if you get reelected, you get another four years, will, by the end of your term, we see ground zero rebuilt?

PATAKI: We're moving quickly, but we also have to be very respectful.

This is hallowed ground. We have to have an intelligent plan. And my personal view is that the centerpiece of ground zero has to be a memorial. This is a place where the most horrific attack on American civilians ever took place. Thousands of our friends and loved ones lost their lives there.

KARL: Because it is going to be a long time before the families want to see anything built there beyond a memorial. They're not going to want to see another skyscraper.

PATAKI: And I understand their feelings. And we have to put together an intelligent plan that respects those feelings and also respects the fact that, at ground zero, not just the families and the firefighters and the construction workers and the others who have been working there 24 hours a day since September 11, but, for generations, millions of people from America and millions of people from around the world, when they come to New York, the one place they're going to have to go is ground zero.

KARL: Yes.

Now, you're running for reelection. And the polls show that you're way ahead of both potential candidates. But a lot of Republicans, a lot of conservatives say you're not much of a Republican anymore. You've increased spending more than Mario Cuomo did. You've protested the bombing and the use of Vieques for military exercises. You've got the unions endorsing. Are you still a Republican?

PATAKI: My policies, my philosophy hasn't changed a bit. I've always believed in the Theodore Roosevelt, Republican concept of an activist government. When there's a problem, you don't ignore it.

KARL: One amazing thing politically here was that Dennis Rivera, the head of the hospital union, endorsed you. The hospital union, the biggest union in the state, the most Democratic union until now in the state, endorsed you. But that was after you gave this huge new contract to the hospital union, right?

PATAKI: I didn't give any contract to the hospitals union. They negotiated that with the hospitals. It is a program that has worked extremely well for the people of New York, for the health care system of New York, for the health care workers. But, ultimately, we want to have the best health care system anywhere, and not in America, in the world. And I believe we do.

KARL: But you saw what Andrew Cuomo and Carl McCall said.

PATAKI: Sure. Sure.

KARL: They both implied that you bought that endorsement with a big raise that went to the union.

PATAKI: What we did was make an enormous investment in the health care for the people of New York.

KARL: What do people in this city think of George Bush? Here's somebody who didn't campaign here. He got shellacked by Al Gore in this state.

PATAKI: Jonathan, I'll tell you one story.

The Friday after September 11, the president came to ground zero and spent 2 1/2 hours. And it was very emotional. And then we were riding up the West Side to visit families. And it was Mayor Giuliani, President Bush and I, and the fire commissioner and the police commission and the emergency service director. We were all meshed into the back, because that's the way the president is. We pile in. We're all sitting on each other's laps.

And we're going up West Street. And there were thousands of people -- literally -- this is not an exaggeration -- with American flags and thumbs up and, "God bless you, President Bush," and "God bless our heroes." And we looked out the window. And the president was visibly moved. And I said, "Mr. President, I guarantee you, out of all those crowds, you didn't get three votes in the year 2000." And we all laughed. And Rudy turned to the president, "I don't think I got six."

KARL: So, they've put now the World Trade Center flag over city hall. What's the significance?

PATAKI: It is just so emotional. And it may just seem symbolic. And it is symbolic. But it's just so important to do, and not so much for the politicians, but -- yesterday evening, I was at ground zero. And there were no cameras and no press.

And I was down there. And there were three firefighters retired, who I've gotten to know over the last seven months. And they're there every day. And they're there every day because all three of them had firefighter sons who were killed. And none of them have been recovered. And they're there every day, tremendous courage, tremendous dignity, helping and hoping that their loved ones will be found and be able to be brought home.

KARL: How do you rebuild until you've found everybody? And do you ever find everybody?

PATAKI: You don't. You don't rebuild until this is completed, if it is ever completed. But you do have to move forward. But you have to do it with respect.

KARL: Well, Governor, thank you so much for your time.

PATAKI: Jonathan, thank you.

KARL: Appreciate it.


WOODRUFF: And coming up: Some conservatives are stepping up their criticism of President Bush. We will tell you why.


WOODRUFF: President Bush has been getting increasing criticism from conservatives on a number of issues, including the Middle East.

Joining us now: Ron Brownstein of "The Los Angeles Times"; and in New York, our own CNN senior analyst, Jeff Greenfield.

Ron, there is rising criticism of the president on the Middle East. And, to a surprising degree, it's coming from conservatives.


Since the collapse of the Camp David talks in 2000, the entire American political debate, much like the Israeli political debate, about what to do in the Palestinian crisis has moved right. You don't see any, really, politicians in either party now in America criticizing the Israeli action in the West Bank the way, for example, the European Union did today.

But within that, there are still gradations. And you find a number of conservatives in the last few weeks have raised alarms at any suggestion that the administration was going to ramp up the diplomatic effort to talk to Arafat or to try to restrain Sharon. In effect, it inverts the criticism from much of the Democratic Party and many editorial pages, which say Bush hasn't done enough to promote peace talks.

What many of these conservatives are saying is that, to promote talks now in effect would be to reward terror and to undermine the Bush doctrine, which says that states that support terrorists should be targeted, not tolerated. So, you're seeing a little bit of crossfire there for the White House at this point.

WOODRUFF: And, Ron, one other thing, you have pointed out that the backdrop here is what the president's father did when he was president.

BROWNSTEIN: Yes. In many ways, on a number of issues, Bush I was a throwback or maybe an interruption in a Reaganite movement in the party. Ronald Reagan was the most pro-Israel Republican president to that point.

Bush's father tried to strike a much more neutral or impartial pose, keeping his distance from Israel, a little warmer towards the Arabs. This Bush, his instincts are much more like Reagan, people in the White House say. He is much more inclined to side with Israel, to give them more of a green light to move in a military fashion to respond to this challenge. And the distance between the elder Bush and the son really reflects a change in the Republican Party itself over the past decade, particularly, Judy, as a result of the increased influence of the Christian conservatives, who are very pro-Israel, by and large.

So you see the center of gravity moving in the party, Bush moving with it, but still, within that, a part of the party that worries anytime he seems to be suggesting that he will legitimize Arafat by talking with him.

WOODRUFF: Jeff Greenfield, you've made the broader criticism that there is conservative criticism of the president, and not just on the Middle East.


This is far less emotional, but when the president imposed those steel tariffs, that really strikes at one of the core beliefs of most conservatives, which is free trade. And he got a lot of criticism from that from people, who said: "Wait a second. You were the free trader. You've claimed to be that all your life. This is one of the principles. And it lowers the costs of all goods for consumers. And now to win electoral votes in possibly West Virginia or Pennsylvania or Ohio, you're imposing those tariffs."

There was also a criticism -- and this is true left and right of any president -- that he didn't fight hard enough, particularly on the nomination of Judge Pickering to the court of appeals, a fight that was lost. So, there has been some grumbling across a broader range besides the Middle East that Ron talks about. But we have to remember...


GREENFIELD: I'm sorry. Go ahead, Judy.

WOODRUFF: I was just going to say, to what degree should the president be seriously be worried about this? Is this a passing thing or something he must be concerned about into the future?

GREENFIELD: Even for a president whose political director, Karl Rove, has as his -- "It is the economy, stupid. Don't alienate the base" -- he has got an awful lot of capital stored up with conservative.

They were a little dubious when he first entered the race. But then, as soon as John McCain became the alternative, he was the Republican that saved conservatives from the heretic, John McCain, who didn't agree with them on taxes. They rallied completely and strongly to his side after November, much more so than Democrats rallied to Gore. So, I don't think, at this point -- these are faint tremors and I don't think they're cause for major alarm.

WOODRUFF: Well, gentlemen, we are going to have to leave it there, much to my regret.

Ron Brownstein, Jeff Greenfield, it's great to see both of you. We'll have you both back very soon. Thanks.

And more INSIDE POLITICS in a moment. First, let's join Andrea Koppel for a preview of "WOLF BLITZER REPORTS" coming up at the top of the hour -- hello, Andrea.

ANDREA KOPPEL, "WOLF BLITZER REPORTS": Hi, Judy. Thank you very much.

We are following a developing story: violence at the birthplace of Jesus. Learn what is happening at the Church of the Nativity. A commercial plane violates White House airspace -- and a fist-fight that happened in a most unusual place.


WOODRUFF: Here is what's in the works: As our "Subway Series" in New York continues tomorrow, we will hear from one of Governor George Pataki's Democratic rivals, Carl McCall. And on Thursday, our Jon Karl talks with Karenna Gore Schiff.

CNN's coverage continues now with "WOLF BLITZER REPORTS." Thank you for joining us. I'm Judy Woodruff.


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