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Arnold Schwarzenegger Gets Ready To Take Office; Condoleezza Rice To Head Rebuilding In Iraq; Isreal Attacks Terrorist Camp In Syria, Syrian Government Says It Was A Civilian Refugee Camp

Aired October 11, 2003 - 19:00   ET


ANNOUNCER: Live, from Washington, THE CAPITAL GANG.
MARK SHIELDS, HOST: Welcome to THE CAPITAL GANG. I'm Mark Shields, with Al Hunt, Robert Novak and Kate O'Beirne. Joining us from Los Angeles is Republican congressman and chairman of the House Rules Committee, David Dreier of California, now the newly named chairman of Arnold Schwarzenegger's transition team. Good to have you with us, David.

REP. DAVID DREIER (R), CALIFORNIA: Well, we're making history tonight. I'm told that like the New York Yankees, I guess I'm the first away guest in the 15-year history, as you mark your 15th anniversary of CAPITAL GANG.

SHIELDS: And I'll trust you'll be a good one.

Democrat Gray Davis was removed as governor by an overwhelming vote in California, and Republican Arnold Schwarzenegger was elected to replace him in a landslide.


GOV.-ELECT ARNOLD SCHWARZENEGGER (R), CALIFORNIA: It doesn't matter if they're to the left or to the right or to the center. I extend my hands to them. I want to work with you.

I campaigned that I will not raise taxes, and I say this again, I will not raise taxes.


SHIELDS: His defeated opponents pursued their own agendas.


LT. GOV. CRUZ BUSTAMANTE (D), CALIFORNIA: I know how to balance a budget, and I am ready to roll up my sleeves and get to work. But I also know how to say no, and I know how to make it stick.

STATE SEN. TOM MCCLINTOCK (R ), CALIFORNIA: I believe that the governor-elect has a solid mandate from the people to reduce the taxes and the regulations that are destroying our economy.


SHIELDS: Bob Novak, give us your assessment. Is Arnold Schwarzenegger simply a left coast aberration politically?

ROBERT NOVAK, CAPITAL GANG: I don't think so. I think that the much of the news media, and certainly Democrats, have belittled his campaign and said it was part of a troubled (ph) recall mechanism, but in fact, I think it was a very important development. It has energized the Republican Party in California. The White House had nothing to do with it. They were very skeptical of it. And beyond that, I believe that a governor of California, who is going to use the referendum and the initiative mechanism to get the things over and passed that were blocked by the Democratic legislature can go a long way.

I think his statement, no new taxes, and his proposal, taking David Dreier's advice, to cut the capital gains tax, is part of the boost in the stock market this week.

SHIELDS: Al Hunt. I mean, boy, I mean, it sounds like, you know, nirvana.

AL HUNT, CAPITAL GANG: You know, I love it when Bob's exuberant. I don't want to do anything to change it, but...


HUNT: ... that that election was, you know, responsible for the stock market is really just kind of -- kind of funny. But it was a tremendous personal triumph. There is no question about that, Mark. And I think now we will see which way he decides to govern. Is Governor Schwarzenegger going to govern like his predecessor, Gray Davis, who played political games, failed to reach out, didn't make tough choices, or is going to govern like another predecessor, who also campaigned against raising taxes, and said he can do it all from cutting spending. And he got into office and he right away faced reality, and he cut spending and he raised taxes.

That was Ronald Reagan; $5 billion in today's dollars, and it paved the way, as Lou Cannon (ph), his invaluable biographer tells us, for a very successful Reagan governorship.

I think that Arnold Schwarzenegger is a very smart and a pragmatic man. Probably we'll have bond increases at first, but ultimately he will follow the Reagan model.

SHIELDS: David Dreier, in Los Angeles, tell us the implications of this beyond California.

DREIER: Well, Mark, like Al, I am happy if there is anything that we can do together to make Robert Novak exuberant again in a positive way, which is very unusual.

I do believe that we are in a position right now where this is a Republican Party in California that is new. The front page of the California section of today's "Los Angeles Times" made it very clear -- the tremendous support level in the Hispanic community, the fact that there was no gender gap whatsoever, the fact that the African- American vote was higher than it's been in years indicates that a policy that is focused on fiscal conservatism, reducing taxes to stimulate economic growth and making sure that we bring about responsible cuts, and being socially moderate, more tolerant is I believe the wave of the future for the Republican Party clearly here in California, and I think it was demonstrated by Arnold's candidacy, that he can do just those things, and I think he's going to do them very effectively, Mark.

SHIELDS: OK. Kate O'Beirne, I want your assessment as well, but also, I mean, is this time for Orrin Hatch's constitutional amendment to repeal the ban against foreign-born citizens being eligible to serve as president, which "Newsweek" polls says Americans are against 64 to 29.

KATE O'BEIRNE, CAPITAL GANG: Yes, it's been introduced over the years numerous times, and Senator Hatch has been talking about it for a couple of months. Now, it will only be talked about in the context of Arnold Schwarzenegger, which I doubt will help its prospects.

I thought what was so interesting and predictable was the Democrats' interpretation of what happened in California. Basically, whatever happened, Davis held on, or didn't, if Schwarzenegger won or Cruz Bustamante, it was going to be bad news for George Bush, which is so foolish. I don't think there are big national lessons like that. Beyond it wasn't just Gray Davis, who of course was terrible unpopular and was only elected last year by a plurality.

What we saw in California was liberal, progressive monopoly government. Every -- the Democrats controlled every state office, the Democrats had big, healthy majorities in both the houses of legislature, and Gray Davis. And it's not pretty. They taxed working people in order to pay off all their special interests. That's what the people of California on a bipartisan basis were reacting against, and I thought it was very telling that in the exit polling, Republicans overall had a higher favorability rating than Democrats. Republicans were 54, versus Democrats 43.

SHIELDS: Just one second, David, let me just jump in and say that I thought, first of all, this began, this week began with (UNINTELLIGIBLE) victory in Louisiana, a 32-year-old Republican son of Indian immigrants, who had a record, but not a political record. And it seems that voters may be looking for leadership skills rather than political skills, and that political credentials are being, if anything, discounted. I think you can see the same thing to some degree in the presidential, where, I mean, the long tradition of people with great legislative records seems to mean nothing.

Go ahead, David, what were you going to say?

DREIER: I was just going to say, first of all, I mean, you're absolutely right, Mark, I think you hit the nail on the head. It was a vacuum of leadership that played a big role, and I think that in both Louisiana and in California we are seeing very, very strong leadership being important for the people.

The point I wanted to make is I just talked to Bob Novak's and my friend, Jerry Parsky (ph), a few minutes ago, and later this week, I know that the president and Governor-Elect Schwarzenegger are looking forward to having a meeting here in California.

And it's true, Bob, there were a number of us, and I was among them, not enamored with the process of the recall, and not enthused about it at the outset. But it became inevitable that Gray Davis was going to be recalled, and that's why we got involved, and I think -- and Jerry Parsky (ph) has made it clear, too, Bob, that he believes, as I do, that having a Republican governor in California will be very beneficial for the president's future out here, and obviously for the future of the state.

NOVAK: I just have to quickly respond to Al...


NOVAK: The worst thing you can do right now is to have a tax increase.

HUNT: Right.

NOVAK: There has to be -- I worry about you sometimes, Al, because that is almost an insane comment. Let's raise taxes.

HUNT: Of course, you would have given Ronald Reagan the same advice in 1967...

NOVAK: Different times.


HUNT: He raised taxes by -- Bob, listen to me, by $5 billion in today's dollars, and thank goodness he did not listen to you.

NOVAK: That's a silly comment.

DREIER: One of the first acts is going to be the repeal -- one of the first acts will be the repeal of the tripling of the car tax...

SHIELDS: That's right, and it's a $4 billion hole that's going to be made up somewhere, David. We'll be interested to see how...

DREIER: Economic growth.

SHIELDS: Oh, sure...

DREIER: Economic growth.

SHIELDS: Thank you. That's what's working for George Bush so well. David Dreier and THE GANG will be back with a rummy rice rumble.

ANNOUNCER: Here is your CAPITAL GANG trivia question of the week. Of the following fringe candidates in the California recall election, which one received the most votes? Was it, A, Gary Coleman, B, Larry Flynt, or C, Mary Carey. We'll have the answer right after the break.


ANNOUNCER: Before we break, we asked, of the following fringe candidates in the California recall election, which one received the most votes? The answer is B, Larry Flynt.

SHIELDS: Welcome back. "The New York Times" reported the creation of an Iraq stabilization group, to be run by National Security Adviser Condoleezza Rice. She called it, quote, "a recognition by everyone that we're in a different phase now." End quote.

Defense Secretary Donald Rumsfeld, asked about this in an interview with "The Financial Times" told his interviewers to, quote, "ask Condi that question," end quote. When the reporters persisted, he asserted, quote, "I said I don't know. Isn't that clear? You don't understand English?" End quote.

Meanwhile, Vice President Dick Cheney highlighted the administration's new campaign to sell its Iraq policy by attacking critics.


RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: They're often coached in high-sounding terms of unity and cooperation. It is a prescription for perpetual disunity and obstructionism. So often and so conveniently, it amounts to a policy of doing exactly nothing.


SHIELDS: Kate O'Beirne, who is really speaking for the Bush administration on Iraq? Anybody? Everybody?

O'BEIRNE: Mark, that is a trick question.


O'BEIRNE: You didn't include in your setup the person who's speaking for the Bush administration on Iraq, which is President Bush himself. His critics keep looking for surrogates to attack for the policy on Iraq, like Vice President Cheney or Dick Rumsfeld -- or Don Rumsfeld -- or they're looking for alleged dissidents like Colin Powell to encourage. It's the president, who in speech after speech, lays out his position on Iraq, most recently echoed by Dick Cheney, and the vice president has also recently pointed out the obvious, that the president has staked his presidency on Iraq, the war and our success there, and so it stands to reason, given the enormously high stakes, that the White House is going to take an even more active role watching what's happening there so closely.

SHIELDS: Bob Novak, we have no weapons of mass destruction, we've got no signs of new assistance, money for troops from our major allies. The U.N. effort is now in limbo. I mean, isn't it going to take more than spin control to try and put a good (UNINTELLIGIBLE)...

NOVAK: I thought we were talking about the Rumsfeld... (CROSSTALK)

SHIELDS: ... Dick Cheney was talking about, good news.

NOVAK: I'd rather talk about -- I think it is just fascinating that Rumsfeld didn't -- was not clued in on this operation. I mean, here is a guy, and who has been the toughest, meanest guy on the block...

SHIELDS: In-fighter.

NOVAK: In-fighter. And he's (UNINTELLIGIBLE) going way back to Ford (ph) days, one of the great bureaucratic in-fighters, and his head was cut off on this. Now, people that I talk to in the Pentagon were just laughing themselves silly about it. But the interesting thing is...

HUNT: People wearing uniforms?

NOVAK: Oh, we don't want to get too tight on who my sources are. Please.


NOVAK: But the interesting thing is that he then comes up with this nasty, "Can't you understand English?" He's talking to a German reporter who speaks very good English. And I think it's time for President Bush to get Mr. Rumsfeld and say, that kind of stuff doesn't help. Because he kept this internal fight story going even more, and what they've got to do is they've got to get on the same page, because it is a serious issue.

SHIELDS: David Dreier in Los Angeles, it does sound like the architect of preemption, Don Rumsfeld, was preempted in a bureaucratic strike by a girl, Condi Rice.

DREIER: Mark, Kate is absolutely right. President Bush is the one who speaks on this issue of Iraq. We have, in fact, moved beyond the war. What we're experiencing are terrorist acts taking place in Iraq. There is not a concerted military effort against us. And we have succeeded in keeping the conflict there and away from the United States. And I believe as we look at our next step, we've got to realize that there is very strong bipartisan support for this action.

I'll be back in Washington the first of the week, and we are going to be passing out our supplemental appropriation bill to deal with Iraq, and we will do so in a bipartisan way. If you listen to our Democratic colleagues, Mark, who have just come back from Iraq, people like Norm Dix (ph) and Ike Skelton (ph), they are very supportive and impressed with the kind of development that is taking place, from soccer fields to refineries, as Ike Skelton (ph) said, and that's not being reported. The focus is on the problems in Iraq, and the statements that Don Rumsfeld made, but it's clear -- it's clear right now that Condi Rice is, in fact, taking over for this next step, and I think it's a correct decision. SHIELDS: Al, can I ask you one question? When there are 17 attacks on American troops every day, is that going to take precedence in news coverage over soccer fields?

HUNT: Sure, because that's what's happening. But I guess the message from the administration is the game is going so well, we're going to change the quarterback. I never quite understood that.

I also don't quite understand why Condoleezza Rice escapes any kind of blame. One of the great problems in this administration's national security effort is the tremendous in-fighting, it's sometimes dysfunctional. NSE is supposed to stop that, but George Bush is very fond of her, and she clearly is in the ascension.

Couple of tidbits. Tom DeFrank, bureau chief for "The New York Daily News," who has very good connections with the Bush people, wrote a piece this week saying the president is down on his whole national security team, and thinks that Don Rumsfeld's arrogance is hurting badly in both Afghanistan and Iraq.

And the other thing was I think we've always heard this stuff about the adults are finally in charge -- Don Rumsfeld's tempter tantrum, I agree with Bob Novak, really made him look like an adolescent, and a young one at that. Final point I make...

NOVAK: That's the trouble with being 72 years old.

HUNT: I suppose it is. I know.

Final point about Dick Cheney. Dick Cheney said, basically, the critics of this policy would paralyze us. They would say that we couldn't do anything without unanimous international support. Over the last 15 years, Mark, we have gone into Haiti, we have gone into Panama, Kosovo, Bosnia, Iraq, sometimes with support of others, sometimes without. It is not required unanimity in any of those occasions. It was just a demonstrably false assertion.

O'BEIRNE: No, no, it's not false. When we are looking to assert and defend our own national security interests, that's when our friends in the Security Council seek to block us, when we were operating in our own interests, as opposed to humanitarian...

HUNT: Bosnia, Kosovo, Haiti.

O'BEIRNE: ... intervention. All humanitarian.

HUNT: Humanitarian...

O'BEIRNE: When we finally wanted to take action to protect ourselves directly, that's when they want to throw roadblocks in front of us.


DREIER: It's very clear that this interest is for the region and the rest of the world, and I think that we're having success there that is not being reported. And that's not to in any way dismiss the loss of life that's taking place there, Al.

SHIELDS: All right. Last word, David Dreier.

Next on CAPITAL GANG, the general under fire.



SEN. JOSEPH LIEBERMAN (D-CT), PRESIDENTIAL CANDIDATE: I must say that I've been very disappointed since Wes Clark came into this race, about the various positions he has taken on the war against Saddam Hussein.

WESLEY CLARK (D), PRESIDENTIAL CANDIDATE: I think it's really embarrassing that a group of candidates up here are working on changing the leadership in this country and can't get their own stories straight.


SHIELDS: Retired General Wesley Clark was under fire in this week's CNN Democratic presidential debate, so was Howard Dean. During the debate, Senator John Kerry's staff distributed charges that Dean as governor of Vermont tried to kick seniors off prescription drug aide.


HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: That's silly, of course. What I did try to do was try to get a cigarette tax passed the Republican House.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: Well, that's not silly. It's what he did. I mean, it's sad. But he, in fact, in order to balance his budget, terminated -- called for the full termination for what was called the V-Script (ph) program.


SHIELDS: Al Hunt, who best survived these attacks?

HUNT: Mark, with a nine-person field, you never have a definitive outcome in debates at this stage. I actually thought it was one of the liveliest exchanges. Some differences emerged. Wes Clark was welcomed to the NFL, the big time, (UNINTELLIGIBLE). It's not like being, you know, the NATO commander. Some of the others, Lieberman and Kerry and Gephardt, had some good one-liners, and Howard Dean survived.

Audience questions usually don't work, but I must say that when a woman, who is a stroke victim, asked presidential candidates about the fact that she has to choose between prescription drugs and food, that's the real America.

SHIELDS: Al, I have to say, Joe Lieberman I thought was -- we obviously didn't give enough of a sound bite there, he was very tough in that indictment. And if he had been one-tenth that tough against Dick Cheney, in the debate of 2000, he would be vice president today instead of being namby-pamby Joe.

NOVAK: If you want to believe that, go ahead. I would say that -- I would say that General Clark was diminished by the debate. He's not Wellington. He's not Eisenhower. He looks smaller, he didn't -- he wasn't very effective.

My favorite moment in the debate was when a woman got up and said that she had a small business, African-American woman, and the taxes were killing her. Democrats hate to hear that taxes are killing anybody. And Gephardt got the question, he said, that's OK, he said, I'm going to take care of you with my health care program. I am -- my health care program. I want to pay for the health care that you give those people. And Kerry said, wait a minute, he said, do you give your employees any health care? She said, no.

So, I mean, it is such a phony deal, and when you come up with tax increases and that's all you stand for, you're in trouble.

SHIELDS: What was your second favorite moment?



O'BEIRNE: I think it is -- it was apparent during the debate that Wes Clark does have an incoherent position on the war, but he shares that with Kerry and Gephardt and Senator Edwards. They all have an incoherent position on the war. They all seem to be saying, it's only legitimate to threaten the use of force but never, ever use the use of force, never actually use force in our own defense.


O'BEIRNE: Well, he's certainly backing off that vote last November, much like the others are. And I think it's ineffectual too for Kerry to be attacking Dean from the left. I think it's just implausible that Governor Dean wanted to throw Vermont elderly into the snow. I just don't think that's going to -- that's credible charge against Dean.

SHIELDS: I think that's part of the strategy, quite frankly, to hurt Dean in Iowa, where, as Iowa is the fourth oldest state...

O'BEIRNE: Yeah, I just don't think it's a plausible...

SHIELDS: ... and (UNINTELLIGIBLE) shows softness toward Medicare or whatever. No, I think that's the strategy behind it.

David Dreier out in Los Angeles, did you see the debate?

DREIER: No, I didn't see the debate, of course not. But the fact is, I read the transcript and I saw clips of it. There were a number of things that have really struck me about the presidential campaign so far, Mark, and I believe that if you look at this campaign out here, I'm giving it the California perspective from last Tuesday's election, these negative attacks really fell flat, that we saw come against Arnold Schwarzenegger at the end of the campaign, and frankly, Arnold, by and large, ran a very positive campaign, and all we've seen is negativity from every single one.

In fact, the second point that really struck me most was I did see the clip of Dick Gephardt standing there talking about how George Bush's tax/growth package is an abysmal failure, when as we know we are seeing positive signs of improvement. All you need to do is flip to CNNfn and on virtually every report you see -- obviously, the market has improved, we're seeing improvement in a wide range of areas, but not here in California. So this is going to be a trouble spot, because we've had problems here, but I think the presidential candidates are being way too negative, and I'd love to hear some positive solutions, other than repealing the one item that is actually encouraging economic growth.

SHIELDS: And David, so you didn't see the debate.


SHIELDS: David, we want to thank you for joining us.

DREIER: Always great to be with you. Thanks for letting me be the first away guest.

SHIELDS: All right, absolutely.


SHIELDS: And we know you're the chairman of the House Rules Committee, and you're coming back Monday.

DREIER: I'll be back Monday.

SHIELDS: OK. Coming up in the second half of CAPITAL GANG, our "Sidebar" looks at Hillary Clinton upsetting her party's presidential candidates. "Beyond the Beltway" looks at Israel's air strikes against Syria, with CNN correspondent Chris Burns. And our "Outrage of the Week." That's all after the latest news headlines.



ANNOUNCER: Live, from Washington, THE CAPITAL GANG.

SHIELDS: Welcome back to the second half of THE CAPITAL GANG. I'm Mark Shields, with Al Hunt, Robert Novak, and Kate O'Beirne.

Senator Hillary Rodham Clinton of New York has agreed to serve as master of ceremonies for the Iowa Democratic annual fund-raiser in November. Iowa Democratic chairman -- Party Chairman Gordon Fischer announced, quote, "This is the ultimate statement she's not running. Frankly, we wouldn't have her emcee if there were even a possibility she would become a candidate." End quote.


JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: This has created a furor among the other Democratic candidates, some of whom are very concerned that Hillary Clinton will go to this major event in Iowa, the Jefferson Jackson dinner, it's a major road to the nomination, and steal their thunder. All the attention will go to Hillary Clinton, not to the other 10 Democrats who are actually running for president.


SHIELDS: Kate, is Senator Clinton stealing the oxygen from lesser Democrats in Iowa?

O'BEIRNE: Well, I think the complaining candidates have a point. Clearly, Hillary Clinton is going to overshadow them. I think she relishes doing so. It seems to me it means that she is happy with the shape of the field, has no problem with the frontrunner, so is not particularly interested in giving other people a chance maybe to shine, but in fairness to what Hillary Clinton might be up to, it's not as though in her absence somebody is going to in this field all of a sudden catch on fire.

Cruz Bustamante could show up in Iowa and overshadow this field.

NOVAK: He's not going to run for president?

O'BEIRNE: No, he's not. No.

SHIELDS: Is that a little bit of whistling in the graveyard, Bob, as George Bush in a new "Newsweek" poll falls to 44 percent reelect?

NOVAK: Well, you know that third year of the presidency, for all presidents, including ones who won, like Clinton and Reagan, they fell, so I don't think that means much. I think the president -- I think it's going to be a close presidential race, but I think the Democrats do have a problem, that she overshadows all the rest of them in the minds of the ordinary, rank-and-file voters, and I did check out Jon Karl's story with some of my sources out there, and they are a little feeling being eclipsed by her there, but it's not just an Iowa problem, it is a big basic problem that she is 10,000-pound -- I shouldn't say that about a woman, should I know, but she's a big gorilla...

HUNT: I'm glad you're sensitive.

NOVAK: Yes, thank you, and it's a problem.

HUNT: The politically correct Robert Novak.

SHIELDS: Go ahead, Al.

HUNT: You know, I think some of the irrational right, not on this platform, of course, are sort of reliving their grandfathers' war, remember even the mere mention of Roosevelt would just drive people crazy; didn't matter what he did. The same thing with...


HUNT: I know, same thing with Hillary. You know, people said she'd be a showboat senator. She ends up a pretty effective legislator, she gets no credit. People said just a couple of weeks ago, someone was saying Wes Clark was really a front for Hillary Clinton, a stalking horse. Now, she goes to Iowa and basically says, I'm not going to run, they say, she's just trying to upstage these people.

If these Democratic candidates are worried about being upstaged by Hillary Clinton, they are not ready to take on George W. Bush.

NOVAK: If I could just take - if I could just take issue with you there, I'm sorry...

SHIELDS: I just want to say a word...

NOVAK: I just want to say that I don't think that's the point, that she's upstaging them. Her presence there does upstage them. It isn't intentional on her part, nobody said that, but it's just a very funny situation.

HUNT: You know, I wasn't talking about you, Bob.


O'BEIRNE: It might not be -- it might not be unintentional.

SHIELDS: Bob, Bob -- Roosevelt! No. I want to say a word about Gordon Fischer, the Democratic chairman. He's trying to sell the hall, he's trying to sell tickets.

HUNT: What better way to do it.

SHIELDS: What better way to do it than to get Hillary Clinton there, and so as a consequence you get all the partisans of the candidates to buy tickets, as well, so you have a big night, you get more money.

O'BEIRNE: You can't fill a hall in Iowa with nine nominees?

SHIELDS: It's tough to fill a hall anyplace.

NOVAK: With those nine nominees, yeah.

O'BEIRNE: That's the problem. Those nine nominees.

HUNT: Hey, I'll put this field against the GOP field in 1996 with your friend Steve Forbes, a couple of years (UNINTELLIGIBLE), Pierre DuPont IV, I know those were your salad days.

NOVAK: I like those guys.

HUNT: I know. NOVAK: But anyway, don't you think that there is a problem that she dose overshadow everyone of those people?

HUNT: Before they get the nomination, yes.

NOVAK: Even after.

SHIELDS: No, it's the same thing that Mario Cuomo did, it's the same thing that Ted Kennedy did. As soon as somebody is nominated, that nominee becomes the dominant party.

HUNT: Bill Clinton was going to be overshadowed, remember? By Mario Cuomo.

NOVAK: By whom?

HUNT: By Mario Cuomo.

NOVAK: If he had run, he probably would have been.

SHIELDS: George Herbert Walker Bush was going to be overshadowed by Ronald Reagan.

O'BEIRNE: No, no, no, I don't think we've seen the phenomenon like the Clinton duo. We've just never seen this before in American politics. I think an awful lot of these previous situations just don't apply to these two.

SHIELDS: Like Schwarzenegger and Shriver. Coming up on THE CAPITAL GANG Classic, the Terminator campaigning 15 years ago.


SHIELDS: Welcome back. Vice President George Bush was joined in the last week of his 1988 campaign for president by actor Arnold Schwarzenegger, referred to by Bush then as Conan the Republican.


SCHWARZENEGGER: Let me tell you, when it comes to American future, Michael Dukakis will be the real Terminator!


SHIELDS: CAPITAL GANG discussed this on November 5, 1988. Our guest was Democratic consultant Bob Beckall (ph).


UNIDENTIFIED MALE: Will we be better off with Arnold on the ticket?

NOVAK: I happen to be out that day with Bush, and everybody was paying attention to Schwarzenegger -- the crowds, the media, and that's something to say for the Bush campaign when Schwarzenegger gets the attention. It's the triviality of it. UNIDENTIFIED MALE: It reminds me of Truman Capote standing next to John Wayne. I would not have put that guy up on the stage if I were George Bush if I wanted to keep my tough image intact.

HUNT: I like the idea of that ticket. I mean, let's not forget that Arnold is married to Kennedy in-law Maria Shriver, and I think the idea of Ted Kennedy's nephew-in-law being George Bush's running mate is a terrific idea.

SHIELDS: You know the difference between Arnold Schwarzenegger and Danny Quayle is? That Arnold Schwarzenegger knows a lot more about the Middle East. He does not think that (UNINTELLIGIBLE) is the killer whale at Sea World.


SHIELDS: Al, did THE GANG detect a political superstar in the making 15 years ago, or were we just then kidding around?

HUNT: Mark, we are so prescient. It really is uncanny, isn't it? Of course, we haven't the slightest idea of what we were talking about, but I want to join Kate O'Beirne; I am for that constitutional amendment. I think that people who...

SHIELDS: Now, which one?

HUNT: The Orrin Hatch, Barney Frank, Kate O'Beirne amendment that would allow people who are not American born to become president of the United States, whether it be Arnold or Jenn -- be eligible -- Jennifer Granholm, it ought to be past.

SHIELDS: Bob Novak.

NOVAK: You know, Arnold had a lot more muscles then. Did you notice that?

SHIELDS: Really, he was a lot bulkier then.

NOVAK: And as I said then, I was out on the trail, and he was -- he was really getting a lot more attention than the vice president, Vice President Bush. I thought he was a terrific candidate. I can really spot those candidates 15 years in advance.

SHIELDS: I was going to say, Bob, you really rushed into it, didn't you?

NOVAK: Yeah.

SHIELDS: Kate O'Beirne.

O'BEIRNE: I was impressed, Mark, that you thought Arnold Schwarzenegger was so knowledgeable. Do you still feel that way about Arnold Schwarzenegger's command of policy?

SHIELDS: I thought what was so fascinating was that 51 percent of the California voters said they were voting on issues; two-thirds of the people who voted for Arnold Schwarzenegger said that they didn't know -- that he hadn't told them enough on issues. I think he's smart enough; I think he was told and kept that discipline not to talk about anything in this race, because the choice are tough choices.

NOVAK: People don't pay attention. President Roosevelt was elected on a balanced budget in 1932. Remember that?

SHIELDS: He did mention that in Pittsburgh, but I don't think it was crucial to his election.

HUNT: But then fortunately he was wiser. When we got in office and led America out of the Great Depression.

SHIELDS: And the key, the key was...

NOVAK: And the world war, too.

SHIELDS: The key was, he ran on the incumbent's record, Herbert Hoover, who was the only president to lose jobs during his four years, except...

HUNT: Is it today, Mark?

SHIELDS: Today! That's right. Next on CAPITAL GANG, "Beyond the Beltway" looks at the Israeli attack on Syria, with CNN's Chris Burns.


SHIELDS: Welcome back. Israeli warplanes attacked what Israel said was a Palestinian terrorist camp, deep in Syria, 40 (ph) miles from Damascus. It was in retaliation for the suicide bombing of a Haifa restaurant that killed 20 people.


ARIEL SHARON, ISRAELI PRIME MINISTER (through translator): Israel will not be deterred from protecting its citizens, and will strike its enemies in every place and in every way.

BUTAYNA SHAABAN, SYRIAN CABINET MINISTER: We believe that the United States should take a stand against the Sharonian policy of killing and death and destruction.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I made it very clear to the prime minister, like I have consistently done, that Israel has got a right to defend herself.

However, I said that it's very important that any action Israel takes should avoid escalation, creating higher tensions.


SHIELDS: Joining us now from Jerusalem is CNN correspondent Chris Burns. Thanks for coming in, Chris. Chris, is this a one-shot attack on Syria, or is it the beginning of a change of regime effort and a larger war in the Middle East?

CHRIS BURNS, CNN CORRESPONDENT: Very good question, Mark, is it a one-shot? Well, the Israelis, if the war of words is to be believed today, both the Syrians and the Israelis are withholding -- are holding out their right to defend themselves, so a bit of a war of words today, but it was seen widely as a one-shot deal in the sense that the Israelis had very other -- few other choices than to do that, aside from kicking Yasser Arafat out of the territories, which is what the U.S. was discouraging them from doing.

Is it a change of regime push? Well, at least a change of attitude. The Israelis would like the Syrians to stop fostering or sheltering the militants there; the Syrians say that there always is a media presence by the militants. The Israelis insisting that what they struck at was a camp for training for the Palestinian militants.

There also is pressure here -- over there in Washington, where White House is now backing a move through Congress to push through some sanctions against Syria, to pressure them to try to stop supporting, or sheltering, or harboring any militants.

SHIELDS: Bob Novak.

NOVAK: Chris, U.S. intelligence says that there surely was no terrorist camp they bombed there. The best the U.S. intelligence can come up with is that there are preparations being made for building a terrorist camp, which would then go against Israel; certainly no connection with the (UNINTELLIGIBLE) atrocity, in which 20 people died. Do you find in private sources in Israel that there is some doubt whether this was really a terrorist camp there that was bombed, that was attacked by the warplanes?

BURNS: Well, Bob, the Israelis released a videotape from -- they said it was from Iranian television, showing that there was activity. They are contending that that was the camp. They showed a lot of weapons. But they also said that it was about two years old. So it was very questionable as to whether there was activity there. However, keep in mind also, the Syrians won't let reporters to that site. They're simply saying it is a civilian site, one person injured, that was it. So that is a very good questions, as to whether there really is activity.

But also think about what Richard Boucher said at the State Department earlier this week, saying that, well, you know, we've been pressuring the Syrians to stop harboring the militants, and yes they did try to take some measures to rein them in, but it was basically quite a bit of window dressing, changing of signs, he even said, on the doors of some of these offices, that actually there are militants still there, that they want them expelled, and that increases pressure through this air strike and through what is going through Congress, that sanctions bill, trying to put more pressure on the Syrians.

Now, keep in mind, that could backfire and the U.S. would like some cooperation with the Syrians and trying to seal off that border to prevent the militants from going into Iraq. So there is a wider question there, and that is why the Americans are urging restraint among the Israelis right now.

SHIELDS: Kate O'Beirne.

O'BEIRNE: Given that, Chris, Secretary of Powell -- Secretary of State Powell was visiting Damascus as recently as last May, seeking their cooperation, and now this week our ambassador to the United Nations was flatly stating that Syria is on the wrong side of the war on terrorism, how much has that changed with respect to whether it's possible to work with Syria, attributable to their activity with respect to Iraq?

BURNS: OK, that's a very good question. The U.S. showing increasing impatience with the Syrians, suggesting that they are not really cooperating, that they would like to see cooperation, perhaps applying -- the White House was against the sanctions for quite some time, now they've thrown their support behind it. Apparently, out of frustration that the Syrians are not cooperating. So that is a good question. Is there a change of attitude there? At least in terms of the stated policy of backing those sanctions, it does show that there is a dissatisfaction by the Americans.

Also, the question that -- it does appear that the Americans are, in discouraging the Israelis from attacking the Syrians are at least trying to show they're trying to apply further pressure on the Syrians.


HUNT: Yeah. Chris, I, certainly like most Americans, emphasize very much with the Israelis' efforts to stop these horrific suicide bombings. But there is something that is instructive about this terrible incident in Haifa. The terrorist was from Jenin, which was a city, as you know, that Sharon basically leveled about a year or so ago. It was very symptomatic of a Sharon -- of Sharon approach, he rooted out all the terrorists, and yet she comes back a year later. Is there any thinking in Israel, or at least more thinking than there used to be, that maybe this Sharon policy is counterproductive, it's producing more rather than less terrorists?

BURNS: A lot of questions about that, absolutely. Absolutely. There is a frustration on both sides, and there are questions within -- among Israelis, especially on the left side, suggesting that Sharon's policy, his iron-fisted policy of trying to make the Palestinians hurt even in terms of collective punishment, is not really working, that the suicide bomber saw her brother and her cousin die when the Israelis were taking action against militants. She was a law graduate. She was not some crazy hothead. That she actually was reacting to that kind of situation.

Now, that is a question, is there really continued support among the Israelis? There seems to be a tacit acceptance of what Sharon is doing, and so many people are so frustrated that these attacks are causing so much bloodshed that seems to be the knee-jerk attitude, is just to make the other side hurt. But we are -- even seen today, even, there was a meeting among the Israeli left with the Palestinians out in Jordan to talk about trying to kick-start the peace process. So there is increasing pressure among at least some of the Israelis, that they would like to see a backing off of this iron-fisted approach and try to pursue the road map for peace.

SHIELDS: Chris, on the subject of the peace process, I mean, essential to the success of the road map outlined by the United States administration is the success of the new prime minister in Palestine, and among the Palestinians, and in fact, he's suffered a setback and an embarrassment really, with the failure to agree and have the appointment of an interior chief who is the principal security chief. What is the status of that, and does it threaten his infant administration?

BURNS: Oh, very much. Ahmed Qorei, the new prime minister, even threatened to walk out. He was in a shouting match with Yasser Arafat in the last couple of days. Really, what he wants it to assert power over the security forces to try to at least to begin to end what he's calling a chaos of weapons in the territories. However, he's also asking for the Israelis to show restraint as well, and to try to start to lift this crushing clampdown on the territories that he says is also the reason for a lot of the violence that is going on.

He's very much facing the same frustrations that his predecessor saw previously, who quit just a month ago, that it is the same kind of thing that is happening. Will Mr. Arafat give in on this? That is the big question.

However, also, Palestinians are saying, well, the Israelis should butt out of this; if they tried to kick Arafat out of the territories, it's only going to make things worse.

NOVAK: Just quickly, Chris, we don't have much time, does anybody give credence in Israel to these reports of Chairman Arafat being deathly ill?

BURNS: Well, there are conflicting reports on that. There had been reports that perhaps he has cancer, stomach cancer, reports that he had even heart attacks. We have been hearing from some sources that he is very seriously ill, but as far as anybody will go, they will say it's a very, very serious stomach ailment, gastroenteritis or a gastronomic -- gastro infection.

He has been looking a little better the last couple of days, so again, it's a bit of a guessing game, as with other leaders who are not really giving their details about their medical condition. He did get a visit from an Egyptian doctor in the last couple of days, raising concerns about that. He was on intravenous last week, so he's weak but he seems to be getting better.

SHIELDS: OK. Thanks for joining us, Chris. THE GANG will be back with "The Outrages of the Week."


SHIELDS: Now for "The Outrage of the Week." Thanks to "The Washington Monthly's" Charlie Peters (ph), we're reminded that financial services mogul Charles Schwab had urged President George W. Bush to slash taxes on stock dividends. Because the cut, why, would be a big job creator.

Later, "The Wall Street Journal" reported the Bush dividend tax cut had saved Charles Schwab himself some $5.4 million. After that, Charles Schwab's company laid off 800 employees. Under George W. Bush, the class war is over. The richest have already won.

Bob Novak.

NOVAK: Elia Kazan, the greatest American director of stage and screen, died recently at age 94. The news media dwelled not on his theatrical masterpieces, but on his 1952 congressional testimony admitting his past Communist membership and naming other show business reds. Instead of being painted as a patriot, exposing why the message from Hollywood and Broadway seemed to be written in Moscow, Kazan for half a century has been denounced as an informer. Continuing this disgraceful attack in his obituaries is further proof of left-wing bias in the media.

SHIELDS: Kate O'Beirne.

O'BEIRNE: A Department of Homeland Security official recently told Congress that the Bush administration has no position on whether states should issue driver's licenses to illegal aliens. Well, they're the only ones without an opinion. On Tuesday, polling showed that 70 percent of Californians, including 50 percent of Latino voters, opposed the driver's licenses for lawbreakers that Gray Davis had allowed. There appears to be little political risk in opposing such a security risk. So where is the Bush administration?


HUNT: Mark, this one has got me upset. Prince Johann Friso, the second in line to the throne in the Netherlands, abdicated so he can marry the woman he loves, Mabelle Smith (ph). The choice was necessitated when the government wouldn't sanction the marriage because more than a decade ago Ms. Smith (ph) had an affair with a mobster.

Now, Shields, Novak and I are certainly not royalty, but one experience we share is that we all married above ourselves, something that would not have been possible if the retroactive morality of the Dutch had been foisted against the three of us.

SHIELDS: Good point. This is Mark Shields saying good night for THE CAPITAL GANG. Coming up next, "CNN PRESENTS": "Harsh Continent: A Journey to the South Pole." At 9:00 p.m., "LARRY KING LIVE," an encore presentation of Larry's interview with Siegfried of Siegfried & Roy. And at 10:00 p.m., the latest headlines, plus Comedy Central's Ed Helms blurs the line between celebrity and politics.

Thank you for joining us.



Condoleezza Rice To Head Rebuilding In Iraq; Isreal Attacks Terrorist Camp In Syria, Syrian Government Says It Was A Civilian Refugee Camp>

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