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Northeast Power Outage Calls For Change, But Who Will Step Up?; Lieutenant-Governor Cruz Bustamonte Has Slight Lead In New Poll; Liberian President Charles Taylor Resigns

Aired August 16, 2003 - 19:00   ET


ANNOUNCER: Live from Washington, THE CAPITAL GANG.

I'm Mark Shields, with Margaret Carlson, Robert Novak, and Kate O'Beirne.

Our guest is former Democratic congressman Vic Fazio of California.

Thanks for coming in, Vic.


SHIELDS: Good to have you.

The eight-state power blackout brought general agreement that something has to be done, but with differing emphasis.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I view it as a wakeup call. You know, I've been concerned that our infrastructure, the delivery system, is old and antiquated. And I think this is an indication of the fact that we need to modernize the electricity grid.

GOV. BILL RICHARDSON (D-NM), FORMER ENERGY SECRETARY: We've been warning for years -- I went around the country saying these blackouts are going to happen. The utilities have bucked us. They enjoy the monopoly power. And they've got to change.


SHIELDS: Before the blackout, President Bush was asked by a reporter what he would say if a Democrat presided over a huge budget deficit.


BUSH: Let me tell you something. The deficit was caused by a recession, which we inherited and did something about. The deficit was caused because we spent more money on fighting a war.

(END VIDEO CLIP) SHIELDS: "The Washington Post" published a front-page report that the public opinion on the president had stabilized, with 59 percent of those polled now approving of how Mr. Bush is handling his job.

Margaret Carlson, what is the political fallout from the power blackout?

MARGARET CARLSON, CAPITAL GANG: Well, we can blame Ohio, poor Cleveland. Mike Bloomberg did well. Unfortunately, no one saw it in New York, because there was a blackout. But he certainly handled it well.

And we'll get an energy bill passed, although there'll still be the regional conflicts, with nobody wanting to pay for the heavy consumers in the East.

And it showed that, you know, New Yorkers, perhaps, have learned something from 9/11, which is how to face adversity with really good spirit. What great citizenship that we all saw, as they, you know, slept on the ground, and even hotel owners provided free sheets. Now, people who (UNINTELLIGIBLE) don't provide free anything, not even a phone call.

SHIELDS: No mints on the pillow, Bob. Way -- Bob, the president said a wakeup call. That doesn't make George W. Bush sound like the Paul Revere of the energy crisis.

ROBERT NOVAK, CAPITAL GANG: (UNINTELLIGIBLE) he said, I told, he said I told them about this, I told them this was going to happen.

SHIELDS: He did? I missed it. I missed it.

NOVAK: And, and Bill Richardson, who was secretary of energy, when this thing was (UNINTELLIGIBLE), said, I warned them.

So all these -- all these politicians, Vic, they say, you know, I -- if you only listened to me -- I don't think the public takes that seriously, and I don't think there is any political fallout from this. It's a nonpolitical event, and the only thing we can be thankful for is Congress wasn't in session, so we don't -- we got much less baloney than we would if they were in session.


FAZIO: But Mark, you know, this gives an opportunity to do something on electricity in this energy bill, which everybody's been debating as ANWR versus CAFE. There really needs to be regional approaches to repairing and upgrading this grid.

You know, we have the potential of having a smart, self-healing grid that can deal with both terrorism as well as natural phenomena. But it's going to take investment. And the private sector has not been able to make the kinds of investments in the energy grid, largely because regulators keep rates low. So you're going to need national leadership. This is going to be the interstate highway system of this century. It's going to take maybe a national surcharge on electricity rates, or something to get the $100 billion it's going to take...

SHIELDS: Hundred billion dollars.

FAZIO: A hundred billion over a decade.

CARLSON: Let the record show Bob Novak...


CARLSON: ... is frowning.

SHIELDS: ... nobody mentioned, nobody mentioned that price tag, and I'd heard $58 billion earlier, Kate O'Beirne, and I -- I'm just curious...

FAZIO: That's a (UNINTELLIGIBLE) number.

SHIELDS: ... the argument that was made by -- for deregulation was, it would keep the rates lower. Now...

KATE O'BEIRNE, CAPITAL GANG: Well, the cost of energy to consumers has been kept much lower by deregulation. That's not been true of the infrastructure and the grid...

FAZIO: That's right.

O'BEIRNE: ... because that remains regulated and...


NOVAK: ... regulate it.

O'BEIRNE: And it discourages the kind of the private investment it needs.


O'BEIRNE: So further deregulation happens to be the answer. I agree with...

CARLSON: It discourages people like Enron...

O'BEIRNE: That was a question, I assume.

CARLSON: ... from coming in...

O'BEIRNE: That's what I...



CARLSON: ... and, you know.


O'BEIRNE: We do need private investors to help with this, with -- Look, Vic agrees with me. Look, the blackout did energize the president's Democratic critics. I thought in a rare misjudgment, Hillary Clinton, much too quickly, before anybody knew anything about what had happened, was pointing fingers at the president.

But I agree with Bob, I think that line of attack is going to fizzle.

First of all, the energy task force report from two years ago, the Democrats tried to politicize that, owing to secrecy of who Dick Cheney's group met with. Clearly, in that report, the administration sounded the alarm about the outdated and outmoded grid system.

SHIELDS: And Kate, I've listened to this president's eloquent speeches on that subject time and again. We're still waiting for the first one, Bob.


CARLSON: ... how come I've never seen... heard the word "grid" come out of his mouth?

SHIELDS: Oh, no, he talks about the precious Texas (UNINTELLIGIBLE).

NOVAK: Just, just, just (UNINTELLIGIBLE), we all know that the only issue the Democrats have is pounding on George Bush to, to, to cultivate this sick hatred of Bush by the, by the, by the Democrats, and the biggest thing is that he isn't in a free fall. He's about as popular as he was before. And I think it's going to be a close election, but he's -- but it's not -- the wishful thinking of the Democrats, boy, with people dying in Iraq and people getting unemployed, he was (UNINTELLIGIBLE)...

FAZIO: But this is an opportunity...

CARLSON: But Bob...


FAZIO: ... and if he doesn't take it, a year from now, and he hasn't led the country in the direction of really investing, then he will be vulnerable to criticism.

CARLSON: Bob, did you read Bush's lips this week, though? He said, Read my lips, no new tax cuts. Doesn't that really...


CARLSON: ... alarm you?

NOVAK: ... he's had a lot of tax cuts. CARLSON: Oh, finally, finally.

NOVAK: Wait, wait till...


NOVAK: ... wait till -- no, wait, no wait...


NOVAK: ... wait till, wait till the second term, and then...


NOVAK: ... you're going to get, you know, you're going to get tax reform.

SHIELDS: Well...


SHIELDS: ... I say one thing, they didn't have electricity in Brooklyn or in Baghdad this week, but they did have it in San Bernadino, and they did have it because California's already been through this.

Vic Fazio and THE GANG will be back with a new top gun in the California political showdown.


SHIELDS: Welcome back.

The just-released California Field poll showed the only major Democrat on the ballot in the October 7 recall election, the new leader. After trailing badly in earlier polls, Lieutenant Governor Cruz Bustamante is now 3 points ahead of Arnold Schwarzenegger. The actor's Republican opponents have been tougher on him than Bustamante has been.


BILL SIMON (R), CALIFORNIA GUBERNATORIAL CANDIDATE: We don't know where Arnold stands on the issues. Some of his comments, you know, make me nervous.

TOM MCCLINTOCK (R), CALIFORNIA GUBERNATORIAL CANDIDATE: I know there's a great deal that Arnold Schwarzenegger could teach me about making movies. And there's a great deal I could teach him about the fiscal reforms that are needed.

LT. GOV. CRUZ BUSTAMANTE (D-CA), CALIFORNIA GUBERNATORIAL CANDIDATE: I'm the only Democrat in the race. And if you look at the top folks on the other side of the aisle, the other candidates, I'm probably the only nonmillionaire in the race.


SHIELDS: The Field poll shows support for recalling Gray Davis rising to 58 percent. The governor's own approval rating is down to a record low 22 percent, but Davis said he would not resign.


GOV. GRAY DAVIS (D), CALIFORNIA: I have an obligation to the 8 million people, Conan, who went to the polls last November.


SHIELDS: Bob Novak, what has happened to the earlier inevitability of the Terminator?

NOVAK: Well, I think Mr. Schwarzenegger, with this all-star political cast handling him, had a very bad week. With all the attention on him, he says nothing. People say, Gee you don't have a program, and he just goes underground.

At the same time, he's getting hit by Simon and by McClintock, from, from, from the right, and people realize, they're a Democratic state, that Bustamante -- who is Bustamante? Well, he's a Democrat. So he is moving up.

I think the dumbest thing that Schwarzenegger did, however, was to put out front his old buddy Howard Buffett, the second-richest...

SHIELDS: Warren Buffett.

NOVAK: Warren Buffett, the second-richest man in the world. He doesn't know anything about economics. He's a stock picker. And he says the dumbest political thing you can say. He says, We're going to get rid of Proposition 13 and raise property taxes. They said, Oh, no, Arnold isn't for that.

But let's have Arnold talk, and if he's not for it, why is his man Buffett saying stupid things which are -- is, is not going to help him in the election?

SHIELDS: Vic Fazio, a Californian, are the Democrats facing crunch time very soon when they've got to decide whether they're going to devote their energy, resources, and time to electing a Democrat, Cruz Bustamante, and then instead of trying to save Gray Davis?

FAZIO: Well, I think you're going to see a two-track strategy. Obviously the Democratic Party and labor and all the environmental groups that are allied with the party are dead set against this recall. But they're also, I think, going to be increasingly spending time and energy on the Bustamante effort, so that if recall is enacted, and it looks today as if it will be, Bustamante will be in a position to be competitive.

I'm amazed that he's ahead now. I thought that might not happen until just the cusp of the election in October. But what is seen is Schwarzenegger's rejection, really, by the party line Republicans, who were largely the source of support for the recall petition. Unless Schwarzenegger can adopt the Jessie Ventura style, bring a lot of new people to the polls who have not been heretofore involved, younger voters who are caught up in the celebrity, I don't think he stands a chance to ultimately win this, even though a week ago he looked like he was a shoo-in.

SHIELDS: Kate O'Beirne, you are our archeologist of the loony right. Tell us, what's going on in California? I mean...



O'BEIRNE: I think the elect, Bob handled the loony, right? I think, I think Vic has made the Democrats' challenge sound a little easier than it is. They, of course, have a problem, because they have two candidates, Davis and Bustamante, and they're looking for this appeal and money from the same people.

And I think there's a little less of it this week on the part of Democrats for Davis than there was last week. He might be forced out yet.

On the Republican side, that same Field poll showed, you know, a 44 percent Republican vote, but they're splitting it among four candidates, and conservatives who were initially hopeful about Schwarzenegger, but Buffett sent exactly the wrong signal...

NOVAK: Terrible.

O'BEIRNE: ... and I think if he cannot rally conservative, fiscal conservatives to his cause, he's going to have a problem.

SHIELDS: Let me make the case for Arnold Schwarzenegger. I mean, Dana Rohrbacher, than whom there is nobody more conservative, certainly, at this table, congressman, is supporting him. David Dreier, a card-carrying conservative and a supply-sider, is supporting him. It isn't -- you got George Schulz, I mean, a solid Republican.

NOVAK: But, but, but there was a...

SHIELDS: I think, you know, (UNINTELLIGIBLE) Warren Buffett, is that what it is?

NOVAK: It's a dumb thing. (UNINTELLIGIBLE), you know, Proposition 13, and you know well enough, the -- is a sacred, is a sacred (UNINTELLIGIBLE), it's like saying I'm against the first -- a commandment or something like that.

O'BEIRNE: Bob, even more important, it's even more important than that, because...

SHIELDS: More important than the First Commandment. O'BEIRNE: No, no, no, no. The Prop 13, because he had such a little profile, Arnold Schwarzenegger, the one thing he had a profile on was Prop 13. He spoke at a...

FAZIO: That's right.

O'BEIRNE: ... 25th anniversary dinner in favor of a 20 this past June. So to have the first thing Warren Buffett does out of the box is call for higher property taxes does two things, it raises questions about Schwarzenegger's commitment to lower taxes, and it also makes him look as though there might have been a flip, which is fatal.

CARLSON: I don't think Schwarzenegger had a commitment to lower taxes. Remember, I mean...

NOVAK: Oh, yes, he did.

CARLSON: ... he's in favor of these squishy social programs. And he hinted -- no, that he would have to raise taxes. No, he did, before he got into the race, he was saying that, to support that...

NOVAK: I don't think he did.

CARLSON: ... afterschool education program...

NOVAK: I don't think that's true.

CARLSON: Now, Warren Buffett...


CARLSON: Warren Buffett, not a stock picker, a venture capitalist, who's been more successful than any one other than Bill Gates...

NOVAK: A Democrat.

CARLSON: ... in this country. And, you know, he pointed out something so important that in Omaha, his property taxes went up $3,000 this year on a $500,000 house, and $23 on a $5 million house in California. And that it is so cockeyed, no wonder California is starving.

And then we had Arianna Huffington showing that she paid $717 in federal taxes on what must be a substantial income, and it makes you people wonder about the fairness of that happening.

Of course, Bob wants to know how she did it. The rest of us wonder if it's fair.

NOVAK: I won too. California Republicans are really -- nobody's ever accused them of being intelligent. But when...

FAZIO: And they're not pro-gun...

NOVAK: ... and when, when, when... FAZIO: ... or gun control.

NOVAK: No, but...

FAZIO: Or pro-choice or...

NOVAK: Well, that isn't the point I'm going to make, (UNINTELLIGIBLE)...

FAZIO: Or any of those other things.

NOVAK: ... (UNINTELLIGIBLE) McClintock's, when McClintock set, spokesman, is asked, where is, where is Schwarzenegger being? And he said, I don't know, maybe they're giving him English lessons, that is just stupid. That's the kind, that's the kind of really dumb kind of stuff that they deserve.

And just to be honest, Cruz Bustamante, and you all agree with me, is a lightweight. I mean, nobody ever thought he'd be governor of California...

CARLSON: He could never win, except in chaos.

SHIELDS: Let's make one point. I mean, Bob said Warren Buffett is a Democrat, and recoiled, and I thought he was going to, you know, somehow (UNINTELLIGIBLE) bring a voodoo hex upon him.

In order for a Republican to win in California, if I'm not mistaken, in a Democratic state, he has to have Democratic...

NOVAK: Not those, not those kind of Democrats.

SHIELDS: ... Democratic votes.


NOVAK: Not those kind of Democrats.


CARLSON: ... Democrats have a huge advantage in California, but if Cruz Bustamante, who would be a very weak candidate under any other circumstances, goes into a debate, and people see him perform, I think it's going to be erase...


CARLSON: ... this lead that he has.

NOVAK: ... (UNINTELLIGIBLE) Schwarzenegger has to come out of the closet...


NOVAK: Oh, I'm sorry.

SHIELDS: ... we have a guest here.

FAZIO: You know, at this point, you wonder who would want this job. When you think about a two-thirds vote requirement to pass any meaningful bill...

SHIELDS: I know.

FAZIO: ... a term-limited legislature, tied in knots by initiatives like Prop 13 and like Schwarzenegger's afterschool program, you know...

NOVAK: I like it.

FAZIO: ... we had, we had a...


CARLSON: You like the afterschool program?

FAZIO: ... we had a prison construction program, because we had three strikes and you're out. We've been forcing them to spend money on education while not taxing over here. The micromanagement of the California state government has gotten so bad that this is the ultimate expression...


FAZIO: ... of, of, of...

SHIELDS: Vic Fazio...

FAZIO: ... of a populist...

SHIELDS: ... Vic Fazio, you not only had the...


SHIELDS: ... the last word...

FAZIO: ... democracy.

SHIELDS: ... it was the right word. And I'll tell you this, the curse of the devil is those damn term limits. They are awful. To get there...


SHIELDS: ... you get there...


SHIELDS: ... you get there, and immediately...


SHIELDS: ... they're looking... (CROSSTALK)

SHIELDS: ... what's my next job?



SHIELDS: (UNINTELLIGIBLE) I just wanted to echo.

Vic, it's a pleasure to have you here. Novak, wait in the car.

Next on CAPITAL GANG, why are U.S. Marines in Liberia?


SHIELDS: Welcome back.

The long-postponed introduction of U.S. troops into Liberia was made possible when Charles Taylor resigned as president.


CHARLES TAYLOR, FORMER PRESIDENT OF LIBERIA: I want to be the sacrificial lamb. I am the whipping boy. I will be back.

Please, President Bush, come and save Liberia.


SHIELDS: Two hundred Marines entered Liberia as U.S. jets roared overhead, and Liberians celebrated.


COLIN POWELL, SECRETARY OF STATE: The ceasefire remains in place. I would not expect any large commitment of U.S. forces.


SHIELDS: Kate O'Beirne, is there danger here of U.S. mission creep, and a deeper American commitment?

O'BEIRNE: Mark, first, I think it has to be said that the administration's approach was successful to the extent it got Taylor out, and they have been, the administration, extremely reluctant to commit troops, for good reason, I think. Of course, we can't, despite the wishes of Taylor's successor, you know, bring peace to Liberia. The civil wars have been going on for 14 years. It's unclear if he's going to be himself much of an improvement over Taylor.

Two hundred Marines on the ground, I think the Marines, are, if (UNINTELLIGIBLE) is worth multiples of other soldiers. But that still smacks of a symbolic commitment on the ground, and I don't think American troops ought to be used symbolically. SHIELDS: Margaret Carlson, is it not, though, refreshing to see American power being exercised where there's not a strategic or economic overriding national interest, and perhaps a humanitarian one?

CARLSON: And (UNINTELLIGIBLE), yes, a force for good.


CARLSON: Which does not take much. We go into Iraq, it's taken, you know, billions of dollars a month. We go here, it doesn't cost much. It brings relief to a wartorn land. It gets the dictator that Richard Holbrooke referred to as Milosevic with diamonds out of the country into Nigeria, but to be tried as an international war criminal.

That is what the (UNINTELLIGIBLE), what to whom much is given much is expected, and that is where the -- what the United States should be doing.

SHIELDS: Bob Novak, Fritz HOllings, I remember, when the United States had a contingent in Beirut before the bomb, the barracks were blown up, the Reagan administration said there are two few to fight and too many to die. And Kate's point about 200 being symbolic rather than a real commitment.

NOVAK: Well, I thought I was, I thought I had dropped in to the liberals' hour when they're talking about, We can't have troops there that are in American national interest, we just want them as...


NOVAK: Can I finish? As do-gooders around the world. What nonsense. In the first place, they have no business being there. And the idea that these 2,000 Marines off on the ship are going to rush in if the Nigerian troops are attacked, is nonsense. I -- and I thought, maybe (UNINTELLIGIBLE) Kate can correct me, that President Bush in the debate with Al Gore said he wasn't going to do this kind of thing. I thought that, didn't you?

CARLSON: Well, now he has to be consistent, because...

SHIELDS: Let me -- before I go to...

CARLSON: ... doing it in Iraq.

SHIELDS: OK. Before I go to Vic, if we discovered oil in Liberia...


SHIELDS: ... then it would be a matter of...

NOVAK: ... (UNINTELLIGIBLE), absolutely...

SHIELDS: ... overriding national interest.

NOVAK: ... absolutely.


FAZIO: You know, this is an historic commitment. We created this country in the 1830s. These are freed slaves who were sent back to Africa, with the support of a lot of white Americans. We have exploited the diamonds and the gold. This isn't just a one-time mistake on our part in the 1830s. This has been a place that's been in the American orbit ever since.

The French and the British have been far quicker to go back to Africa when they...


FAZIO: ... needed to...

O'BEIRNE: They're colonial powers.

FAZIO: ... when their former colonies needed their help. Now, I'm not critical of trying to get the West Africans involved. But I think our involvement thus far has been pretty tepid. And pretty much lacking in a sense of responsibility...


FAZIO: ... which I think we have historically...


FAZIO: ... in this area.

NOVAK: ... didn't think that since 1830s they have had time to get their act in order? (UNINTELLIGIBLE) in that amount of time?

O'BEIRNE: You're suggesting (UNINTELLIGIBLE) real power?


FAZIO: I'm suggesting that in this one instance, it's almost the same thing.

SHIELDS: Do you think there's been more exploitation than investment?

NOVAK: In Liberia? What are they exploiting in Liberia?

SHIELDS: Well, we exploited...



FAZIO: Look, we are loved in this country...

O'BEIRNE: Look, we only have... FAZIO: ... this is not Mogadishu...


FAZIO: ... 10 years ago.

CARLSON: They would be flying kites upon our arrival there.

O'BEIRNE: We have no business committing young American lives unless it's in the direct national security interests of the United States, which it was with respect to Iraq, certainly Afghanistan.

Your rule of getting involved in Liberia certainly doesn't (UNINTELLIGIBLE) natural end. What other country wouldn't we go in order to just spread goodwill and help the beleaguered people?

CARLSON: And success. We do have a historical interest in Liberia, and for a small commitment, we can bring an end to a horrible civil war. And the (UNINTELLIGIBLE), I mean, Charles Taylor is...


CARLSON: ... worse -- Charles Taylor is worse...



CARLSON: ... than Saddam Hussein.

O'BEIRNE: There's an echo.


SHIELDS: It ill behooves those who talked about, you know, the cakewalk in Iraq...

NOVAK: I didn't talk about (UNINTELLIGIBLE).

SHIELDS: Oh, ho, ho, ho, ho, but, I mean, there are those at the table who spoke about strewing palms in the path of advancing American troops.


NOVAK: Let me ask you a question, what...

CARLSON: ... flying kites.

NOVAK: ... Secretary Powell, who I like, says that we won't send in more troops if the ceasefire holds. Well, I don't quite understand. What if the ceasefire doesn't hold?

O'BEIRNE: Right now.

NOVAK: What happens then? FAZIO: To pacify this country is going to take 15,000 troops. We've got, together with the Nigerians, perhaps several thousand. It's a long way from being a peaceful, resolved situation.

SHIELDS: Last word, Vic Fazio.

Vic Fazio, thank you very much for joining us.

Coming up in the second half of THE CAPITAL GANG, our Newsmaker of the Week is California State Treasurer Phil Angelides. Beyond the Beltway looks at a surge in Middle East violence with CNN's Sheila MacVicar directly from Jerusalem. That and our Outrages of the Week all after the latest news headlines.


ANNOUNCER: Live from Washington, THE CAPITAL GANG.

SHIELDS: Welcome back to the second half of CAPITAL GANG.

I'm Mark Shields, with Margaret Carlson, Robert Novak, and Kate O'Beirne.

Our Newsmaker of the Week is California State Treasurer Phil Angelides.

Phil Angelides, age 50, residence Sacramento, California, religion Greek Orthodox. Graduate of Harvard University, Sacramento- based developer and chairman of the California Democratic Party, 1991 to 1993.

Elected California state treasurer in 1998, reelected in 2002.

Margaret Carlson interviewed Phil Angelides from Sacramento earlier this week.


CARLSON: A comedian once said that if you tip the map of California, everything loose would fall into that state, and we here think it has. I know the Republicans look a little flaky, but the Democrats don't look all that good either. What do you make of it?

PHIL ANGELIDES (D), CALIFORNIA STATE TREASURER: Well, look, I mean, this is a cataclysmic event for our state. You know, we get a lot of national attention from being somewhat eccentric. What Democrats need to do is stand up and articulate to Californians where we want to go.

CARLSON: It looks like the Democratic Party discipline totally broke down, with two Democrats getting into the race, then Garamendi being talked into getting out, Cruz Bustamante staying in. He couldn't win at any other time. It looks opportunistic. How do you explain this to Democrats?

ANGELIDES: Well, I think... CARLSON: And Democratic voters?

ANGELIDES: Look, here's the best chance we have in this special election, and that is to make the case that what this election is about is about a bunch of folks who did not win last year. Just as one example, Margaret, our budget, where the Republican minority in the e legislature resisted any reasonable revenue measures. Our budgets can delay the start of the U.C.-Merced campus, University of California-Merced campus. It's going to cut classroom spending by $9,000 a classroom.

You know, I just looked at some numbers the other day, Margaret, where, under the Bush tax cuts, the wealthiest Californians, those making $250,000 or more a year, get a net tax break of $14 billion at the same time that we're struggling to fund schools.

CARLSON: When you have a very sensible financial expert like Warren Buffett joining Arnold Schwarzenegger's team, doesn't that augment his reputation and augment him as a serious person who can solve the problem? Because Warren Buffett is a genius.

ANGELIDES: Look, I have a lot of respect for Warren Buffett and what he's achieved in the marketplace. But make no mistake about it, you know, we have a budget that got adopted this year with $20 billion of borrowing, with substantial cuts to education, driven by a Republican minority, because we need two-thirds to adopt a budget.

And so notwithstanding Warren Buffett's engagement with Schwarzenegger, I think the real issue for Californians is whether they want to go back, and whether they want to endorse that kind of agenda.

I don't think they do, Margaret...

CARLSON: Well, you were the next in line to be governor of California. What does this do to you?

ANGELIDES: Well, I mean, it's hard to say anyone is next in line to be governor of California.

CARLSON: But let's just say you were.

ANGELIDES: Well, I don't know. You know, Margaret, the fact is that I'm a public official statewide. I'm going to do my job as treasurer. You know, we have very significant challenges. And the next two months, ironically, during the recall, I'm going to have to arrange for several billion dollars of borrowing...

CARLSON: Are you about to go into junk bond status?

ANGELIDES: No, look, we're not. As I said, the irony here is we have one of the most vibrant economies in the U.S. We're, in fact, holding up the U.S. economy that you know is in very tough times.

The credit rating problems we have are a reflection of this deep partisan fighting. And frankly, until that stops, and the recall's just a manifestation of it, my state's going to struggle.

So frankly, I think everyone ought to start laying down their arms...

CARLSON: Jay Leno said for 39 cents more at McDonald's, you too can run for governor of the state. Now, how does that make you feel as a Californian?

ANGELIDES: This is not our best moment. I don't personally resent the recall process as an expression of democratic fervor. But I would prefer that we engage in a vibrant debate about our state's future, and that's still missing from this recall.

CARLSON: You see Governor Davis all the time. Honestly, isn't he dispirited, discouraged, a little bit depressed by all this?


CARLSON: If he's human, he must be.

ANGELIDES: Well, look, I think this is tough for anyone in the public arena. And I say that for a whole range of people beyond Governor Davis. I think the real challenge for Californians is whether we can get through this thundercloud and then, once again, begin building a society of broad opportunity...


SHIELDS: Margaret, Phil Angelides, a leading California Democrat and a former state party chairman, certainly did not make a compelling case against recalling Gray Davis, did he?

CARLSON: He didn't give him a great big hug. I thought under my tough questioning, however, that he might crack and say that Cruz Bustamante had no reason to get -- no, no call to get into the race, and really derail Phil Angelides for the foreseeable future from his own rising career.

NOVAK: You know, politicians are entitled to be ridiculous. But he went a little too far saying California was holding up the American economy. And then all this thing about the University of California at Merced would -- it's just going to be the end of the state if we don't get another campus for this huge, sprawling university. It's really the bankruptcy of the Democratic ideas.

O'BEIRNE: This -- there's a very uncomfortable fact for California Democrats (UNINTELLIGIBLE) nationwide Democrats. After 16 years of Republican governors, finally California became a Democratic state, of the top 10 states, largest states, it's the only one thoroughly Democratic.

Guess what happened, not coincidentally? Spending doubled in less than 10 years. They're losing 10,000 jobs a month. That's Democratic governance for you. It's not just Gray Davis.

SHIELDS: And the American United States record is almost, of course, I forget, if George Bush...


SHIELDS: ... if George Bush creates 300,000 jobs a month for every month for the rest of his presidency, he will meet the average of the past 60 years.

CARLSON: Good point.

SHIELDS: Coming up, CAPITAL GANG Classic, with U.S. troops went into Somalia 11 years ago.


SHIELDS: Welcome back.

Nearly 11 years ago, an earlier President Bush dispatched a division of American troops, 30,000 strong, to Somalia on a humanitarian mission.

THE CAPITAL GANG discussed this on November 28, 1992. Our guest was Senator Trent Lott of Mississippi, just elected to the Republican leadership as minority whip.

(BEGIN VIDEO CLIP, November 28, 1992)

NOVAK: I just wonder how many American mothers and dads are willing to see their son die just to deliver food in Somalia. And I just wonder where we end. Are we going -- this is really the policeman for the world.

AL HUNT, CAPITAL GANG: Trent, I don't want to send troops everywhere, or even to very many places. But it seems to me it's the price of leadership.

SEN. TRENT LOTT (R), MISSISSIPPI: Well, it is a terrible situation, and something should be done and can be done. I think 30,000 troops is overreaching, though.

SHIELDS: I think Brother Novak does touch on something that's important, it can't be overlooked, and that is, what is our military objective? What is our temporal commitment? How long?

UNIDENTIFIED FEMALE: Well, the precedent setting here is that if the U.N.'s going to do anything militarily, it's going to be U.S. led, U.S. run, U.S. staffed.


SHIELDS: Bob Novak, with 11 years' hindsight, do you now think it was time still, still was a mistake to go into Somalia?

NOVAK: A huge mistake. I was perfectly right. Eighteen troops died in the streets of Mogadishu. Of course, that was under President Clinton's watch, but he went into nation-building, he didn't back it up with arms. And then besides that, we have now set a precedent that we go all over the world.

CARLSON: We don't go all over the world. We go some places where (UNINTELLIGIBLE) where the situation is just so extreme that we should get in. The Bush administration goes into Iraq on what now looks like a humanitarian mission because there are no weapons of mass destruction.

NOVAK: You were for that...


NOVAK: ... you were for going in there.

CARLSON: And I'm for humanitarian missions. But let's just say what it is.


O'BEIRNE: President Clinton's professed surprise that the military mission had changed in Somalia that led to the debacle and loss of the troops. But his own State Department was sponsoring the U.N. calling for a disarming of the factions and a rebuilding and reconstructing. It quickly became nation building under Bill Clinton.

SHIELDS: And what about President Bush and 30,000 troops? I thought that's what we were discussing.

O'BEIRNE: For a (UNINTELLIGIBLE), it shows how difficult it is. It was a strictly defined humanitarian mission. Under Bill Clinton, it became nation building, and that's the problem with these missions.

CARLSON: Where's the line between humanitarian and nation building?

O'BEIRNE: (UNINTELLIGIBLE), it is tough line.


SHIELDS: It is a tough line before (UNINTELLIGIBLE)...

O'BEIRNE: It was crossed by Bill Clinton.

SHIELDS: ... we certainly -- Iraq certainly borne out very, very well.

Next on CAPITAL GANG, Beyond the Beltway looks at unraveling Middle East peace plan with CNN's Sheila MacVicar in Jerusalem.


SHIELDS: Welcome back.

The uneasy, six-week-old Middle East ceasefire was broken by two Palestinian suicide bombers.

(BEGIN VIDEO CLIPS) SHAUL MOFAZ, ISRAELI DEFENSE MINISTER (through translator): The Palestinians must fight the terror infrastructures. They must disassemble them in order for there to be a continuation to this process.

MOHAMMED DAHLAN, PALESTINIAN SECURITY MINISTER (through translator): The Palestinian Authority is now expected to achieve what Israel failed to do (UNINTELLIGIBLE) the course of the last three years, without anything in return. This is unrealistic, and the Palestinian Authority will not operate according to Israeli demands.


SHIELDS: With the road map to peace in danger, Israel Friday night broke a negotiating deadlock by agreeing to hand over control of Jericho and Kalkea (ph) on the West Bank.

Joining us now from Jerusalem is CNN senior international correspondent, Sheila MacVicar.

Sheila, are both the Israelis and the Palestinians now truly committed, in your judgment, to the U.S. road map to peace?

SHEILA MACVICAR, CNN SENIOR INTERNATIONAL CORRESPONDENT: Listen, that road map is looking pretty frayed around the edges. We're six weeks into it. The ceasefire, this -- which is a unilateral ceasefire between the Palestinian militant factions and something which has been really important in terms of bringing about a more calm atmosphere is due to expire on September 29.

There are hopes that that ceasefire will be extended, but in terms of progress on the ground, in terms of real movement along that U.S. administration road map, we're not seeing very much of it here.

SHIELDS: Bob Novak.

NOVAK: Sheila, when you come to the Israelis saying to the Palestinian Authority, You must suppress the terrorists, is that viewed by the Authority as a way to get out of the, out of the, out of the road map, (UNINTELLIGIBLE) Palestinian state by imposing an impossible condition on the Authority?

MACVICAR: That, in fact, is that the road map calls for. The road map says that the Palestinian Authority must act to dismantle the -- what's called the terrorist infrastructure. The Palestinian Authority has argued that if it can accomplish the same thing, i.e., peace and quiet and security for everyone, without going to what they fear would be an internal civil war between the Palestinian factions on one side and the Palestinian Authority on the other side, they say, Why can we not proceed this way?

There is some evidence that the Bush administration has bought at least part of this argument. But, of course, these two bombings this week, Israel's continued discovery in areas which are still under Israel's security control of evidence that there are more plans in the works, more bombs being built, put more pressure on the Palestinian Authority.

And we know that following those bombings this week, there was some very strong language used by U.S. interlocutors with the Palestinian Authority, telling them they had to do more, and they had to be seen to be doing more.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Sheila, for their part, the Bush administration is talking about committing new money to help the Palestinian Authority. If they haven't been successful with respect to dismantling terrorist operations, the new leadership, are they -- have they been more successful in getting control of the resources available to the Palestinian Authority?

MACVICAR: Well, if you remember, President Bush's vision, which he laid out in that speech more than a year ago, talked about the need for reform of the Authority. And part of that reform was to bring in now-Prime Minister Mahmoud Abbas.

In addition to that, they have brought in other people, including people who have internationally established reputations, being people who worked with international institutions, who are well known.

And there is a view that the Palestinian finances are better in order, that there is a better sense for where the money is going.

This three-year-long intifada has been devastating to the Palestinian economy and to the Palestinian people. It's also greatly hurt the Israeli economy.

What we are seeing now are some signs of recovery, and there is a view that if you can make life better for people, if you can make people hope more for the future, then their inclination to support those who would turn again to violence will be greatly diminished.

That's one of the reasons why money now, an injection of cash now, may greatly help.

SHIELDS: Margaret Carlson.

CARLSON: Sheila, I was listening to a report on the radio. I didn't see this with my own eyes. But there were sounds of new housing going up on the West Bank, new settlements. Now, Israel agreed to withdraw from four more West Bank towns. But is there anybody who monitors the building, who's saying, Well, listen, (UNINTELLIGIBLE), let's shut down the infrastructure. They were hooking up to sewer lines and other things. I mean, it was temporary housing.

Nonetheless, it was building new settlements. What do you make of that? Is there anybody looking at that?

MACVICAR: Well, you're absolutely right. I've been on the West Bank. There is a lot of building going on. Under the terms of phase one of the road map, which is the part of the road map that we're in, Israel has committed to dismantling what are called unauthorized outposts, not those big settlement communities you see, but perhaps a collection of a couple of tents and a couple of ramshackle sheds put together.

Those are places which were put up on West Bank hilltops after Prime Minister Sharon came to power in March 2001. He is supposed to agree to take all of those down. Now, he has told President Bush that he has taken down 22, that there are another 12 which will come down.

But U.S. officials have told me, and I have seen myself, that, in fact, as fast as some of those come down, others go up in other places. And some of those which have come down and have been dismantled by the Israeli defense forces have been reconstructed.

In addition to that, just two weeks ago, Israel's government announced 22 new housing permits for a settlement in Gaza, where there are hundreds, literally hundreds of vacant Israeli homes.

The question is, of course, what's the purpose? In the past, Israel -- various Israeli governments have argued that this creates facts on the ground. To the Palestinians, what they see is a decay or disintegration of any hope of a contiguous land that they could ever call their own.

This is a big issue, and it's going to get bigger the closer we get to the end of phase one, when, in fact, this government is supposed to agree to freeze all settlement activity. Nobody can agree yet, it seems, neither the Israelis, the Palestinians, or the Americans, precisely what freeze means.

SHIELDS: Sheila, on that subject, something else we have difficulty understanding is what this unilateral ceasefire means when Mohammad Sir (ph), the leader of the Islamic Jihad group in Hebron, was killed by an Israeli raid this week, and then you get retaliation. It seems as though each side sort of reserves unto itself acts of retaliation or taliation, I guess, against the other side.

MACVICAR: Well, when the ceasefire was declared by these Palestinian militant factions in June, they made clear that if, in fact, Israel broke the ceasefire, though Israel's not a party to the ceasefire, if Israel broke the ceasefire by engaging in military activities, which results (UNINTELLIGIBLE) death, then they would reserve the right to retaliate.

We saw these bombings this week that came about after Israel went into a refugee camp near Nablus and killed two Hamas militants. Now, Israel had always said, and Israel promised the U.S. administration, that it would stop its policy of what has been called here targeted assassinations, that they would engage only in hot pursuit operations, or in going after what they called ticking bombs, where they had specific intelligence that someone was planning or about to carry out a terrorist attack.

In the event, two Hamas militants dead in Nablus. We then saw the two bombs, which -- one of which was linked to Hamas. Hamas said it was in direct response, direct retaliation to that Israeli action. We then had this action in Hebron, which resulted in the death of a senior Islamic Jihad leader. Islamic Jihad has promised retaliation. And given the example of Hamas, we expect or anticipate that there will indeed be at least another attack.

It's a very difficult situation. All the groups have said again that they are adhering to the ceasefire, that as far as they're concerned, the ceasefire still stands. It doesn't look a lot like a ceasefire, but the level of violence is a lot lower.

And the question is whether or not it can be contained at this lower level, whether it can be further suppressed, or whether or not there will be something that will be just simply so dreadful on one side or the other that it just sort of sets the whole thing off again.

SHIELDS: Sheila MacVicar, thank you very much for being with us.

THE GANG will be back with the Outrages of the Week.


SHIELDS: And now for the Outrages of the Week.

Last October 25, Senator Paul Wellstone, his wife, their daughter, three campaign workers, and two pilots died in a Minnesota plane crash just days before the November election.

Recently, bumper stickers in Wellstone's trademark green and white have showed up in Minnesota bearing this truly hateful and hurtful message, quote, "He's dead. Get over it," end quote. And, quote, "It's time to park the bus," end quote, the latter a reference to the green bus the maverick Wellstone drove all the way to Washington.

Two questions. Whatever happened to Minnesota nice? And what happened to that pledge about changing the tone of our politics?

Bob Novak.

NOVAK: "The Washington Post" has just reported that Freddy Mac CEO Gregory Jay Parsejian (ph) made $17 million by selling all his company stock he could in 2001. He did that after devising a strategy to circumvent new accounting rules.

Whether that amounts to insider trading is up to the authorities. The outrage is that Freddy Mac's mortgage lending is sponsored by the U.S. government, which gives it special privileges.

Freddy Mac's arrogance is insufferable. Liberals want increased regulation. The conservative answer is better. Just sever the government connection.

SHIELDS: Kate O'Beirne.

O'BEIRNE: The suspense is over. The stash of illegal weapons has been found and will be removed from the United Nations headquarters in New York. Although Hans Blix never noted their presence under his very nose, the U.N. security force had a collection of submachine guns that traveled about the city with Secretary General Kofi Annan, despite the prohibition on their possession, except by law enforcement agencies.

Obviously, Kofi Annan only objects to self-defense when it's exercised by the United States, and so much for the rule of law.

SHIELDS: Margaret Carlson.

CARLSON: Mark, it was shocking to see Halliburton without any competition walk off with a lucrative contract to rebuild Iraq. An emergency, the administration said, that only Dick Cheney's former company could handle.

Furious industry execs at other corporations thought they'd get a crack at the next nonemergency contract. But they would be wrong. Seems that being there is everything. Only Halliburton has the, quote, "experience" to pull off the next contract.

So has a sweetheart deal that could last forever. Bechtel and Schlumberger have dropped out of the bidding in disgust. If only they'd had a vice president on the payroll.

SHIELDS: This is Mark Shields saying good night for THE CAPITAL GANG.

Coming up next, "CNN PRESENTS: Going for the Gold." At 9:00 p.m., "LARRY KING WEEKEND," conservative author Ann Coulter and "American Idol" host Ryan Seacrest (ph). And at 10:00 p.m., the latest news headlines.

All that and much more right here next on CNN.


Up?; Lieutenant-Governor Cruz Bustamonte Has Slight Lead In New Poll; Liberian President Charles Taylor Resigns>

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