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Kenya's President to Meet With Bush Next Week

Aired November 29, 2002 - 16:00   ET


ANNOUNCER: Back to the bloodbath in Kenya. Investigators search for possible links to al Qaeda.

Democrats look for direction. Can they improve their chances in the next election by moving left or right?

Ringing in the holiday shopping season. If retailers cash in, the president could profit politically.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: I'm Bill Schneider. Money can't buy happiness. It sure can buy the "Political Play of the Week."

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

WOODRUFF: Thank you for joining us.

Police in Kenya questioned a dozen people today about the terror attack at the Israeli-owned Paradise Hotel. In this news cycle, investigators searched the rubble from yesterday's suicide attack that killed 16 people, including the three bombers. Kenyan and Israeli officials have blamed al Qaeda for the bloodbath and for a failed missile attack on an Israeli charter jet. The United States says the link is premature, but a senior administration source tells CNN that al Qaeda and a Somali-based Islamist group are at the top of a list of suspects.

CNN's Ben Wedeman is in Mombasa, Kenya.

We'll try to have that report from Ben Wedeman a little bit later.


BEN WEDEMAN, CNN CORRESPONDENT (on camera): ... Paradise Hotel on Thursday morning is in its initial phases. At this point, Kenyan investigators are saying that they've brought in 12 people for questioning. People they hope will help them in their investigation.

Now, among those 12 there are Pakistanis and Somalis who apparently entered the country illegally. There is one American and her Spanish husband who, we are told, were brought into police custody when they decided very soon after that bomb went off that they wanted to check out of their hotel and just leave. That aroused suspicions of some of the hotel staff. However, we are hearing that U.S. diplomats say that they expect those two to be let out shortly.

Meanwhile, in the morning of Friday, Israeli and U.S. and Kenyan investigators combed through the ruins of the hotel, the hotel where 10 Kenyans and three Israelis lost their lives. Those investigators do not seem to have come up yet with any hard and fast clues which might lead them to those who were behind the bombing.

Also on Friday, around 250 Israelis, including some who were injured in the blast, left Mombasa, going back to Israel. Also, the investigation continues into those two shoulder-launched missiles fired at an Israeli charter 757. That investigation, however, is also very much in its opening phases.

I'm Ben Wedeman, CNN, reporting from Mombasa.


WOODRUFF: Well, even before all this, Kenya's president, Daniel Arap Moi, was scheduled to meet with President Bush at the White House next week. And they are expected to talk about the terror attack.

But as Mr. Bush spends this holiday weekend at his ranch in Texas, he may also be thinking about his domestic agenda, and its prospects in the new Congress. Our senior White House correspondent John King is with the president in Texas.


JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): This week, signing ceremonies are proof the midterm elections gave the president more clout with Congress.

KEN DUBERSTEIN, FRM WHITE HOUSE CHIEF OF STAFF: There we are going to have an opportunity to at least get votes on the Bush agenda, on America's agenda.

KING: But as Mr. Bush shapes an agenda for next year, the White House is worried some constituencies might be expecting too much.

NICK CALIO, WHITE HOUSE CONGRESSIONAL LIAISON: There has been a lot of talk. I call it hyperventilation about what we will now be able to do and what Republicans can do now that they control the presidency and the House and the Senate.

UNIDENTIFIED FEMALE: And that's why we at CWA have been fighting hate crimes...

KING: Christian conservative groups, for example, are urging members and listeners to push an ambitious wish list. A ban on late- term abortions. Federal penalties for transporting a minor across state lines to avoid abortion restrictions. Sexual abstinence teaching for welfare recipients, and allowing religious groups to discriminate against homosexuals in hiring.

Mr. Bush supports many of those goals, but the White House is preaching patience and reminding friends the Republican majorities are quite slim.

CALIO: The notions that somebody can run some big agenda through I think are fallacious. It won't happen in reality. You're still going to have to reach out, work with the other side and make accommodations to pass legislation.

KING: The White House also is making clear the president's priorities should come first, like an economic stimulus package that includes perhaps $150 billion in new tax cuts and a Republican Medicare plan that includes a prescription drug benefit.

New House Democratic leader Nancy Pelosi promises feisty opposition, and the early stages of the 2004 campaign will play out across the Capitol.

CALIO: There probably will be some interesting theatrics in the Senate, given the number of senators thinking about running for president. So we'll just have to see.


KING: Now, White House aides are under strict orders not to claim that the elections gave the president any broad new mandate. But Mr. Bush clearly has more leverage and senior aides say one early challenge will be convincing eager conservatives not to overreach -- Judy.

WOODRUFF: John, you said that the president apparently agrees with much that is on this conservative wish list. Do we know what the president does agree with?

KING: Well, of those items I just mentioned, Judy, we know that the president does favor a ban on those late-term -- conservatives call them partial-birth -- abortions. We know the president has favored abstinence teaching, and he is a fan of that. We also know that in pushing his faith-based initiative, it included the administration proposal included allowing religious groups to discriminate against homosexuals in hiring.

It is not so much the substance. Mr. Bush does support most of the cultural, social conservative agenda. It is a question, the White House says, of tone and timing. They want to begin on the economy next year. Then they want to move on to health care, an issue not only critical to the American people, but an issue on which the Democrats traditionally have had an advantage. White House officials remember all too well President Clinton's early experience coming right out of the box with gays in the military, controversial social issues. They say that is not how this president wants to begin the first legislative session in his own run-up to reelection in 2004 -- Judy.

WOODRUFF: But John, how do they expect to make the case to these conservatives who care very deeply about these issues and do want them pushed early in the next couple of years? How do they explain to them, yes, we're with you, but, your agenda has to take a back seat here? KING: What they will say is it will still take 60 votes to get most things through the Senate. Yes, it's nice that the president's party now has 50-plus, but that you cannot get much of this through the Senate, and that the best way to get some of these items through, is to build momentum, build bipartisan relationships, and if those items get to the president's desk, the conservatives, especially the social items on which he agrees, he will happily sign them. He just does not want to be seen as captive, if you will, to the social right. He would prefer that those things make their way slowly and quietly through the Congress and then get to his desk. We know, of course, most of those debates hardly ever quiet -- Judy.

WOODRUFF: That's right. It will be interesting to see how these groups react. All right, John, thanks. John, of course, is in Crawford, Texas, with the president.

Well, no matter what comes out of the new Congress, American shoppers have an opportunity today to stimulate the economy on this first official day of the holiday shopping season. New York City Mayor Michael Bloomberg went to a Target store to promote the buying spirit. We're keeping tabs on the action at the malls with a little help from CNN's Jeff Flock. He is in Skokie, Illinois. Hello, Jeff.

JEFF FLOCK, CNN CORRESPONDENT: Judy, hello to you. We have spent the day walking the miles of aisles today, trying to get a beat on this and see what kind of a holiday season it will be. I'm with Deb Flattery, who is with the company that owns this, and I guess, what, about 60 other shopping centers across the country?

DEBORAH FLATTERY, REGIONAL MARKETING DIRECTOR, WESTFIELD CORP.: Sixty-one across the country. Westfield Shoppingtown.

FLOCK: And how has the day been? Is it a good day? I mean, it's a big shopping day. Looks like a lot of people, certainly.

FLATTERY: Well, today, here at Westfield Shoppingtown Old Orchard, we're delighted because it's not raining.

FLOCK: That's right. This is an outdoor affair.

FLATTERY: In Chicago. In Chicago.

FLOCK: That coat may not stand up too well in the rain.

FLATTERY: Well, you know, it was 11 degrees yesterday. So we're doing just fine. But in terms of traffic, we hit our mark, we're over last year, but it did rain last year. So that's kind of hard to go to.

But you know, throughout the Midwest, the shopping towns have been experiencing very high traffic, and they are more traditional center, indoor center. So we're happy about that. We also see a little more buying than browsing today. Because today is traditionally not the biggest spending day, which is usually the Saturday, which, I guess, is the 21st this year.

FLOCK: Right.

FLATTERY: This is a buying/browsing day. But these people are coming out to do some serious stuff. And I wonder if it because there is a three weeks only.

FLOCK: I was going to say, we've got a shortened season this time. So it's really on you to get people in and out and be efficient about it.

FLATTERY: And also, you know, when you look at Westfield Shoppingtown Old Orchard, after a day in the house with the family yesterday, people want to get out. They might not necessarily want to go to a traditional shopping venue, so this gives them a little fresh air. You can see the decorations. The kids are happy. But I'm telling you, they're shopping today.

FLOCK: But you're telling me traffic-wise, if we're just looking traffic, it's across the Midwest at least.

FLATTERY: Yes, it is. It is up. And again, you know, it's -- you see the confidence in people. They are ready to shop. And what I found interesting is that they're not spending less, but they do want a lot more for their dollars that they are spending. So, you know, there's a lot of great values in all the stores. I mean, retail across the country is looking at, you know, some serious values and some serious promotions.

FLOCK: So this despite Iraq looming out there, this despite economy not the best, stock portfolios may be down. Despite all of that, you think you're...

FLATTERY: Well, I have to tell you, if there is one thing that brings comfort to a lot of serious shoppers, it's shopping -- you know, it's shopping centers.

FLOCK: Oh, boy. There's a line. I'll tell you, Judy, I may have to turn back to you here. Getting a little deep out here.

FLATTERY: See, you're not a serious shopper. If you were a woman -- all the women are at home. They know.

FLOCK: Point taken. Judy, back to you, before we get swamped here.

WOODRUFF: Yes, Jeff. I hear the line about comfort in shopping centers. Jeff, the question I have is just because people are out there and walking around doesn't mean they're spending.

FLOCK: Exactly. And I think this is even a point you would make now. At this point of the day particularly, the spenders came in the morning. The serious people came in the morning. Now we're in phase two which is more "let's take a look."

FLATTERY: Let's get some fresh air, let's get out there and get in the holiday spirit and stretch our legs, get some fresh air. And I guarantee that they're going to shop, though. FLOCK: The last word from the shopping center. Back to you, Judy.

WOODRUFF: All right, Jeff, thanks very much. We appreciate that.

And a final word, if you're looking for the perfect holiday present, you can check out the interactive gift finder at, AOL users, the keyword is CNN.

Now we go to Wall Street where a short workday gave traders time to hit the stores themselves. Fred Katayama at our business newsdesk in New York. Hello, Fred.

FRED KATAYAMA, CNN FINANCIAL CORRESPONDENT: Hi there, Judy. Just guessing optimistic but the holiday shopping season may not exactly ring in lots of holiday cheer for retailers. The national retail federation expects holiday sales to rise by just 3 percent to 4 percent from last year. That's below the robust levels retailers have seen in recent years.

In 1999, for example, holiday sales soared by more than 8 percent. Of course, that was during an expanding economy and a stable jobs market. Now the situation is much different. Many consumers are carrying far higher personal debt. That and concerns about job security are making many consumers cautious.

And this could be an especially important season for one giant retailer, Kmart. Holiday sales at the bankrupt discount chain could mean the difference between getting out of bankruptcy and extinction.

While shoppers were out in force at the stores today there wasn't much action on Wall Street. The Dow Jones Industrial Average lost 35 points in an abbreviated session. But it still stretched its weekly winning streak to eight straight weeks. The Nasdaq fell nine points today.

That's a quick check of the markets. Judy, back to you.

WOODRUFF: All right, Fred. Thank you very much. Enjoy the rest of your day.

KATAYAMA: Thank you.

WOODRUFF: There's much more ahead on INSIDE POLITICS. Question: are Democrats having an identity crisis? Up next, we'll talk to the authors of a new book that predicts the emergence of a Democratic majority.

If you think Hawaiians lead a good life, wait until you hear about the cushy political jobs that a lot of people seem to want.

And later, is Rush Limbaugh upset he doesn't have Bill Clinton to kick around anymore?

(COMMERCIAL BREAK) WOODRUFF: Checking the headlines, in our "Campaign News Daily," more than three dozen candidates are on the ballot in tomorrow's special election in Hawaii, all hoping to serve a five-week term as a member of Congress.

The winner will finish out the term of the late Patsy Mink who died in September but was reelected posthumously. It only cost $75 to get on the ballot and it is possible the winner may never even be sworn in. Forty-four candidates will be on the ballot though in January when another election is held to determine who will complete Mink's full two-year term.

The flamboyant former mayor of Providence, Rhode Island is preparing to head to prison. Buddy Cianci wrapped up his final radio talk show today. He heads to prison next Friday to begin serving a five-year sentence for racketeering conspiracy.

A new "Washington Post" poll finds Al Gore leads the field among Democrats who are considering a run for the White House. Gore was the choice of 49 percent of the Democrats who were surveyed. Senator Joe Lieberman got 10 percent followed by Senators Tom Daschle and John Kerry, each with 6 percent. Civil rights activist Al Sharpton finished ahead of senator John Edwards and Vermont Governor Howard Dean.

A reminder, I will have an extended interview with Al Gore here on INSIDE POLITICS, a week from Monday, December the 9th.

Ever since their election day disappointment, Democrats have engaged in some high-profile soul searching about the direction of their party. The authors of a new book written before election day argue that the Democrats have demographics on their side. They predict what the book calls an emerging Democratic majority. I caught up with them a few hours ago outside the White House.


WOODRUFF: John Judis, Ruy Teixeira, thank you for talking with us.

Just 3 1/2 weeks ago the Democrats went down to flaming defeat, for the most part, in the mid-term elections. But the two of you have just in the last few months come out with a book saying the Democrats are the emerging majority in this country. What's to stop people, John Judis, from thinking that you two have just lost all touch with reality?

JOHN JUDIS, AUTHOR, "THE EMERGING DEMOCRATIC MAJORITY": We're talking about something that we think is going to happen towards the end of the decade and that began in the early 1990s.

The Democrats were doing well throughout the '90s. They would have done very well in this last election had it not been for one singular event on September 11, 2001, which transformed politics. And which really gave Republicans and George W. Bush a big edge in the election. WOODRUFF: What do you see as the ingredients of this emerging Democratic majority?

RUY TEIXEIRA, AUTHOR, "THE EMERGING DEMOCRATIC MAJORITY": Well, the ingredients are the things we wrote about in the book in terms of emerging constituencies. Looking at minorities, looking at women, looking at professionals. Used the most occupational groups now tend vote Democratic.

WOODRUFF: How do you know there are enough these people together to make a majority for the Democrats?

JUDIS: Let me put it another way. If you look at the election, at the domestic issues over which is was fought: Social Security, prescription drugs, education. Those were all issues that were defined by Democrats.

The Republicans found themselves being the me too party. They were saying, We're not for privatization, which they had been. They were saying, We are for prescription drugs just like the Democrats are.

What that means is, that once the election, once the electorate move on, back to these domestic issues. These education, environment, social issues, then the kind of advantage that the Democrats were beginning to have in the 1990s will re-emerge.

WOODRUFF: But what's to stop the Republicans, Ruy Teixera, from peeling off some of these people who you count on as reliably voting Democratic?

TEIXEIRA: They're certainly going try to do that and they blunted the edges of somethings. I think what's interesting to see in this election is just how unsuccessful that's been in some ways.

Even after 9/11, with the advantage Republicans had going in to the summer, they were actually not looking that good. The Democrats were gaining much ground. Then the Iraq debate came to the floor. That shifted attention away from the issues John was talking about. The Republican advantage re-emerged to some extents and then even prior to the election after the Iraq debate stopped, again things were moving back to the Democrats. So it's kind of like you take the national security stuff off the burner for a second, and the election almost like snaps back.

And Bush managed to turn the needle in the final analysis in the Republicans direction by the barnstorming tour he had in the last week.

WOODRUFF: You've got the Democratic Leadership Council now arguing the Democrats to win -- have any hope of winning have got to move aggressively in the Senate. They've got to go after the broad middle class. They've got to talk about fiscal restraint. They've got to even move to the center on moral values, like gun rights.

You know, their argument is that just relying on some of the traditional Democratic goods is not going to get the Democrats to win.

JUDIS: Well, some of the groups, for instance, women are not traditional Democratic groups. They were -- women were just disproportionate disproportionately Republican. Now they've shifted. I think if the Democratic party were to abandon some of those issues like abortion, they would find themselves in big trouble -- in a lot bigger trouble than now.

The basic advantage that the Democrats have is that they're seen as the party of the people. The party that cares about the average person. If they lose that, then they're gone.

TEIXEIRA: And if they lose their identification with a lot of these social issues, like leaning toward gun control -- responsible gun control, defending women's rights and abortion rights I think they would lose more than they'd gain by doing so.

WOODRUFF; So again, the timing on this emerging Democratic majority? End of the decade? Democrats --

JUDIS: 2006. 2008. I think those would be telling elections. Unless the world is transformed. I mean, we can -- we're on the eve, maybe, of a war. We don't know what the world's going look like. So Ruy are not telling you that something's going to happen for sure. Nothing's for sure in politics.

WOODRUFF: Ruy Teixeira, John Judis, thank you both.

TEIXIERA: Thank you.


WOODRUFF: And up next, we'll have more on that internal memo with different ideas advising Democrats to chart a new course. We'll have reaction from both political parties to the confidential DLC criticism next in our "Taking Issue" segment.


WOODRUFF: With us now, Jim Dyke, press secretary for the Republican National Committee, and Jennifer Palmieri, press secretary for the Democratic National Committee.

I think you all heard a little of this conversation I had a few minutes ago with the authors of this book who argue the Democrats are going to emerge naturally on their own.

However, there is this memo from the leaders of the Democratic Leadership Council saying the Democrats cannot just count on the traditional base. They've got to expand. They've got to reach out to the middle class. They've got to think about what they're values are, even consider gun rights.

Jennifer Palmieri, is this -- which is it? I mean, we're talking about two different roads for the Democrats here. JENNIFER PALMIERI, DNC PRESS SECRETARY: Well, I think it's going to have be a little bit of both. And I don't think that they're -- two camps are really too far apart. I mean, yes, we need to reach out to and energize the base and there are some demographic trends that are in our favor.

But we can't -- sort of an obvious point, we can't just rely on that. And I think what the DLC memo -- and it made some important points of saying that the most important thing Democrats need to do is have a strong alternative vision on the issues that Americans care about the most, which right now is the economy and national security, and don't get tripped up in the issues that our friends on the Republican side like to watch the Democrats' side of that.

WOODRUFF: Jim Dyke, I mean, is that -- is it as simple as that?

DYKE: I would have to agree that we do like to see Democrats fight. That's part of the problem going forward, as you see all the different Democrat candidates come forward. You saw before the election the politics of economic destruction didn't pay off. I think this is a response to that, knowing that they need to have a positive message.

But look at what happens. John Kerry goes out, gives a speech talking about Iraq. And Al Sharpton goes to Iraq. Tom Daschle says that all sort of talk radio people are bad. And Al Gore comes out and says that the RNC is sort of controlling the media. So I think you're going to see -- you have a balance of coming up with a positive agenda based on these candidates who are out sort of leapfrogging each other trying to go more and more ahead.

PALMIERI: I think we can only, you know, do better as the candidate evolve in their positions. Because we have alternative visions. They may be -- you know, they'll be within a spectrum and they will be different from Bush's and they won't all be the same. But we need to be -- we didn't give anybody anything before.

DYKE: But the Democrat party at its core is a very liberal organization with liberal...

PALMIERI: And the Republican party, of course...


DYKE: Well, with liberal activists. So, as you come up with positive policies they have to be mainstream policies. And, as you have these presidential contenders, can they come up with policies that are mainstreamed at the same time winning the liberal base that gets them elected?

WOODRUFF: I don't hear either one of you disagreeing with the premise -- premises in this DLC memo. Quote -- "The harsh reality is that the Democratic base just isn't big enough to win."

PALMIERI: Not big enough to win the White House, and neither is -- nor is the Republican base big enough to win the White House. And we do have to capture the center. And it can be done with energizing the base. A guy named Bill Clinton did it quite effectively.

WOODRUFF: And what about this other point that they make -- the Democratic path to victory. They say, you've got to put security first, they agree with the Democrats, meaning -- at one point they make -- is you got agree that Iraq, Saddam Hussein, the United States has got to go -- stand up for the quote-unquote forgotten middle class and finally close the culture gap. I mentioned gun rights. They said Democrats have got to make it clear that they're not adverse to gun rights.

PALMIERI: Right, I think that what we have to do is we have to articulate on the issues that American people care about the most, which is the economy and national security. You can't run away from national security. And I don't think Democrats would agree that we need to be tougher on Iraq, but you have to be able to articulate what your visions is and Democrats shouldn't be scared of that.

And on the culture, you know, there's a lot of Democrats that aren't going to like what they read in that. But what I think the overall point is -- as a strategist what I would say -- you can't get tripped up in that. These guys don't want to get tripped up in abortion either.

DYKE: You have to have a leader that puts forward a positive policy, gets the job done and the problem is going to be going forward. The Democrats, as they compete with each other in primaries across the country, Howard Dean is not going to put forward mainstream ideas. Al Sharpton, who polled well in your latest poll -- "The Washington Post" poll -- I don't know what sort of -- so you have a real competition of ideas. You're right. But the question is, are they the right ideas for Americans?


PALMIERI: Howard Dean is going to come up with a mainstream economic plan. You know, Al Sharpton may not. But there's going to be someone who emerge that's going to hit -- that's going to hit the center but does enough -- you know, our base -- the reason why our base wasn't energized was because we didn't articulate a view on the economy, you know? That -- doing that alone is going to make the base happy and be able to bring in moderates.

WOODRUFF: We love to debate these things, even if it's two years out. All right. Jennifer Palmieri, Jim Dyke, good to see you both.

DYKE: Thanks, Judy.

PALMIERI: Thanks very much. No problem.

WOODRUFF: And coming up next: war, peace and politics, the result of a party power struggle in Israel, even as the nation suffers more bloodshed.


WOODRUFF: The world according to Rush Limbaugh. (BEGIN VIDEO CLIP, "RELIABLE SOURCES")

RUSH LIMBAUGH, RADIO TALK SHOW: Liberals are more fun when they're out of power, because that's when they get wackier and nuttier.


WOODRUFF: The conservative king of talk radio talks to our Howie Kurtz.

INSIDE POLITICS back in a minute.


WOODRUFF: Ross Perot can afford to run for office, but what about the average American? A new rule may help the little guy or girl throw their hat in the ring. Details in our "Play of the Week."


WOODRUFF: New violence against Israelis could cast a cloud over what should have been an upbeat moment for Prime Minister Ariel Sharon. Final results today showed Sharon winning reelection as Likud Party leader with almost 56 percent of the vote, compared with 40 percent for Foreign Minister Benjamin Netanyahu.

CNN's Jerrold Kessel is in Tel Aviv.


JERROLD KESSEL, CNN JERUSALEM BUREAU CHIEF (voice-over): It was perhaps the shortest ever political victory campaign meeting, less than a quarter hour, enveloped in a minute's silence for the people killed in the trio of attacks abroad and at home.

And Ariel Sharon, reinstalled Likud leader, vowing to track down those responsible, seeking to position himself as national leader in adversity.

(on camera): Amid the traditional ups and downs of politics, it seems to be only one-way traffic for Ariel Sharon. Despite the prevailing sense of down among Israelis, the Likud leader appears to be headed again for the top, likely still to remain Israel's prime minister after the January 28 general election.

(voice-over): From a cross section of Israelis, a potpourri of what people here seem to want from their prime minister.

UNIDENTIFIED MALE: The ability to deal with Arab terrorism, to protect the people of Israel.

UNIDENTIFIED FEMALE: He manifests power. And people, like, identify with it.

UNIDENTIFIED MALE: I want unification. UNIDENTIFIED FEMALE: The only aim in our life is peace, but not to give everything to Arabs.

UNIDENTIFIED MALE: All my life, I've been in the left. But I think, today, things have changed. So, I'd like to see somebody who's strong on one hand, because we have no choice. And, on the other hand, maybe because of his strength, he will lead us to peace.

KESSEL: But Ariel Sharon has already been in power for two years. And not only his critics say he's been distinctly unsuccessful in bringing Israelis what he promised them: security, peace and unity.

Yet, for all the failure to stop the Palestinian bombers, despite the state of the Israeli economy, despite the lack of hope many Israelis feel, Sharon continues to ride high in the polls. Most Israelis seem to believe that, though he is the man in the hot seat, he can't be held responsible, not even indirectly responsible, for Israel's plight.

UNIDENTIFIED MALE: I don't know if anyone can do any better, because it's doesn't only depend on the prime minister. It also depends on other things, like the Palestinians, the Americans, the rest of the world.

KESSEL: Perhaps this is the ingredient that assures Israelis most about having Sharon at helm: the perception that he is lined up right alongside U.S. President George Bush and that the U.S. leader is right there alongside him, especially critical at a time, Israelis feel, they could face an even more serious threat from Iraq, should the U.S. go to war with Saddam Hussein, and now, following the double- barreled attack in Kenya, that Israel could be involved in the global war on terror.

Jerrold Kessel, CNN, Tel Aviv.


WOODRUFF: Back now to U.S. politics.

And here now with some "Inside Buzz": our Bob Novak.

All right, Bob, you are aware of this memo. In fact, you wrote about it yesterday in your column. This Democratic Leadership Council, a set of ideas, memo, about what direction the Democratic Party needs to take.

ROBERT NOVAK, CNN POLITICAL ANALYST: What's interesting, Judy, is that they say in the memo, Al From and Bruce Reed, both Clinton -- architects of the Clinton victory, that, unless the Democratic Party moves to the center, they're going to suffer a terrible defeat in 2004 that may have very long-lasting consequences.

What's significant is, this is part of a behind-the-scenes debate going on in the Democratic Party that their losses on November 5 were not trivial and not secondary. And, of course, this nonsense about the Democratic emerging majority will take care of itself by ethnic changes, I don't know any political who believes that.

WOODRUFF: Some very tough language in that memo.

NOVAK: It is.

WOODRUFF: Still on the Democrats, Bob: Nancy Pelosi elected to be the head of the Democrats in the House of Representatives. She has a choice to make about who runs the Democratic Congressional Campaign Committee.

NOVAK: That's an appointed position right now.

She could send a signal if she names Martin Frost, who opposed her briefly for the leadership. He's a moderate from Texas. He had been the DCCC chairman at one time. She's given no indication she's going to do that. The Black Congressional Caucus is pushing William Jefferson of Louisiana. I think that the DLC memo we talked about was really aimed at Nancy Pelosi moving to the left. And the DCCC chairman she names will be a sign of which way she's really going.

WOODRUFF: All right, let's quickly move to the Republicans.

In Pennsylvania, the incumbent, Senator Arlen Specter, is up in a couple of years. He now may face some Republican primary opposition?

NOVAK: Pat Toomey, a very conservative Republican, runs very well in a Democratic district. He's term-limited. He's not running for reelection in 2004. And he is indicating he might run against Specter.

Specter's problem might be that his suburban Philadelphia voters, many of them re-registered as Democrats to vote for Ed Rendell in the Democratic primary. He may have to get them back re-registered as Republicans.

WOODRUFF: And, finally, the new head of the Republican Senatorial Committee made some comments that have gotten him -- that he's had to backtrack on.

NOVAK: Senator George Allen of Virginia was interviewed in "The National Journal." He indicated that it was too tough to go after Barbara Boxer of California. That really enraged some of the people in California, because they really want to go after her. They'd like to go after her with Condoleezza Rice, the national security director.

I interviewed -- taped the interview today with Senator Allen on "THE NOVAK ZONE." It's going to on tomorrow morning. And he backed away from that. He said: "We have not made any decisions on any of these races," because I can tell you that the Republicans in California say there's no reason for having a party if they don't try to beat Barbara Boxer, who is very liberal, partisan Democrat.

WOODRUFF: OK. We'd know they'd like to go after her in California.

NOVAK: They sure would. WOODRUFF: No question about it.

Bob Novak, great. Thanks very much. And have a great weekend.

NOVAK: Thank you.

WOODRUFF: Radio talk show host Rush Limbaugh has been on the receiving end of political attacks recently as the target of criticism by Al Gore and Tom Daschle. Of course, Limbaugh made a name for himself targeting Democrats, perhaps, most notably, Bill Clinton.

But on CNN's "RELIABLE SOURCES," Limbaugh told Howard Kurtz that his success doesn't depend on who wins elections.


KURTZ: As a radio talk show host, wasn't it more fun for you to beat up on Bill Clinton day after day than to defend President Bush?

LIMBAUGH: No, because I don't defend Bush.

If you go back and -- not routinely -- I was one of Bush's biggest critics in the first two years, because he was siding with the Democrats on every important domestic issue. Campaign finance reform, I flipped a wig.

The real answer to the question is, actually, liberals are more fun when they're out of power, because that's when they get wackier and nuttier. When they're in power, they're more dangerous. They can actually implement what they're talking about. I was never happier to see Clinton go. And I wish he'd stay away.


WOODRUFF: Always colorful comments. You can see all of the interview with Limbaugh on CNN's "RELIABLE SOURCES" at 6:30 p.m. Eastern tomorrow and again Sunday morning at 11:30 a.m. Eastern.

The nation's governors face a money crunch -- when we return. Some recent governors rose from the statehouse to the White House, but the financial forecast could make the jump much harder in the future .


WOODRUFF: The nation's governors will have their work cut out for them in the year ahead. State budgets nationwide are in the worst shape since World War II, according to a new survey by the National Governors Association.

Here now: our senior analyst, Jeff Greenfield.


JEFF GREENFIELD, CNN SR. ANALYST: That report out of the National Governors Association points to some very rough times ahead for the nation's governors, as they grapple with some $40 billion in cumulative deficits expected over the next couple of years.

But these numbers also have profound political implications as well. Why? Because there's a 100-year record of big political shifts in this country that begin in the states. A progressive movement was launched in California with Hiram Johnson and in Wisconsin with Bob LaFollette. They were going after corruption in big-money politics years before Washington did.

In New York, in the '20s, the governorships of Al Smith and Franklin D. Roosevelt essentially foreshadowed the New Deal. In the 1960s, Governor Ronald Reagan in California rode a tax revolt in resistance to big-government sentiment right into the White House. Bill Clinton in the '80s on education, Wisconsin's Tommy Thompson on welfare reform in the '90s are more recent examples.

But if governors are going to spending their time now slashing services and raising taxes, that is a very different climate. And it may affect the national political climate as well, because, well, look at where our recent presidents have come from. It always baffles observers from other countries, with their parliamentary systems, but we tend to get our presidents from outside the national capital.

Four of the last five presidents have come from statehouses. In fact, it has been 30 years since we've had a presidential campaign without a governor or ex-governor as one of the presidential nominees. But you have to wonder whether governors are going to be all that popular a group if their work in the days ahead is overhung by delivering nothing but bad news.

Now, is there a silver lining politically in these clouds? The answer: a definite maybe. If one of these incoming governors can demonstrate some fresh thinking about taxes or about delivering services in a time of fiscal restraint, he or she could begin to gather national attention pretty quickly.

Think back to 1980, when Ronald Reagan's campaign aides realized that people knew him as an ex-actor and a speechmaker, but they didn't think of him as an executive. The ads that year featured Governor Reagan's role as governor of the biggest state in the Union facing tough fiscal times. And it may well have helped to make him a more comfortable fit as the nation's chief executive.

So, it's just possible that governing in rough times could make one of these new governors more presidential.

Jeff Greenfield, CNN, New York.


WOODRUFF: In other words: a challenge that could help them.

Well, candidates can soon give up their day job and still run for office. Up next: a new way to earn a salary while working the campaign trail full-time.

(COMMERCIAL BREAK) WOODRUFF: From Ross Perot to Michael Bloomberg, the list of wealthy candidates seems to grow with each election season. A federal rule change, however, could open the door to a new class of political candidate.

Here's our senior political analyst, Bill Schneider.


SCHNEIDER: It seems like you have to be rich to run for Congress these days. Can anything be done to make it easier for working people to run? The answer is yes. And it was the "Political Play of the Week."

(voice-over): You have to be willing to give up a lot to run for Congress these days. Ask Dr. Michael Burgess from Texas.

MICHAEL BURGESS (R), TEXAS CONGRESSMAN-ELECT: I'm an ob-gyn doctor. I am going, though, to be your congressman. Doctoring is something that I have stopped doing as of August 31. This is my new full-time job. And I do not look to come back to the practice of medicine to earn gainful employment in the future.

SCHNEIDER: Most ordinary working people can't afford to give up their jobs. That gives incumbents two advantages, as a formal general counsel to the Federal Election Commission explains.

LARRY NOBLE, FORMER GENERAL COUNSEL, FEC: An incumbent has the ability to raise a lot of campaign funds and doesn't have to use any of them to pay themselves a salary since they're getting paid their salary.

SCHNEIDER: This week, the Federal Election Commission voted to allow candidates for federal office to pay themselves salaries out of their campaign funds. Wait a minute.

NOVAK: What an opportunity for an operator. Get a nomination for the minority party in a congressional district. Raise $150,000, not much today, and pocket it all without even campaigning.

SCHNEIDER: Well, you do have to raise the money.

NOBLE: Presumably, it will require a certain amount of public support to get enough money to pay yourself.

SCHNEIDER: And the FEC did impose certain restrictions. You can't pay yourself any more money than you made the year before or any more money than you would earn as a member of Congress, whichever is less. For years, the FEC was deadlocked on this issue.

NOBLE: The traditional split had been, the Democrats were opposed to allowing members and candidates to pay their salaries out of campaign funds and the Republicans were in favor of it.

SCHNEIDER: Why? Because, until 1995, most incumbent House members were Democrats. And they didn't want to make it easier for challengers to run. Now Democrats are the minority. It was two Democrats on the FEC who broke the logjam. What will it mean? Not clear yet.

NOBLE: It will take a while to see, actually, how this shakes out, whether or not we have a lot of candidates who are fringe candidates who are running just to collect salaries or really whether it does bring a whole new class of people into the political process.

SCHNEIDER: Any move that could bring a whole new class of people into politics sounds pretty good. In fact, it sounds like the "Political Play of the Week."

(on camera): The big beneficiary may be organized labor, which has a program to increase the number of union members running for office. Now they can run with labor support and not lose their income.

Bill Schneider, CNN, Washington.


WOODRUFF: And up next: the first night of Hanukkah. The celebration begins and at least one New York politician is saying a prayer.


WOODRUFF: Former White House Press Secretary and Texas political consultant George Christian has died of cancer. He was 75 years old.

George Christian took over as Lyndon Johnson's press secretary in 1966, at the height of the Vietnam War. He was also involved in LBJ's decision not to seek reelection in 1968. In more recent years, Christian ran a lobbying and consulting business, advising candidates in both parties.

INSIDE POLITICS will be back in a moment.


WOODRUFF: In the works for next week: Bill Clinton speaks out. We'll keep a close eye on a major political speech by the former president. And we will go live to Louisiana, where it is still election season. We'll have the latest on a hot and spicy race for the United States Senate.

Well, the leftover turkey is still in the refrigerator, but some Americans already are beginning another holiday. In New York, Senator Chuck Schumer marked the first evening of Hanukkah by lighting a giant menorah near the Plaza Hotel. The eight-day Jewish Festival of Lights starts unusually early this year.

And we wish you all a happy Hanukkah.

That's it for INSIDE POLITICS. I'm Judy Woodruff.


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