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Government Issues New Terror Alert; John Kerry Gains Modest Bounce From Democratic Convention; Incumbent Missouri Governor Loses Primary Election

Aired August 7, 2004 - 19:00   ET


AL HUNT, GUEST HOST: Welcome to THE CAPITAL GANG. I'm Al Hunt, with Robert Novak, Kate O'Beirne, and in New York, Margaret Carlson. Our guest is former House majority whip Tony Coelho, Democrat of California.

Tony, it's really good to have you back.


HUNT: The government issued a new terror alert that was much more specific than previous warnings.


TOM RIDGE, HOMELAND SECURITY SECRETARY: Reports indicate that al Qaeda is targeting several specific buildings, including the International Monetary Fund and World Bank in the District of Columbia, Prudential Financial in northern New Jersey, and CitiGroup buildings and the New York Stock Exchange in New York.


HUNT: Meanwhile, at special congressional hearings, Democrats and Republicans disagreed on how quickly to adopt recommendations of the independent 9/11 commission.


REP. JANE HARMAN (D-CA), INTELLIGENCE COMMITTEE: So why isn't our committee moving faster? As we all know, our intelligence community was created in 1947 to fight an enemy that no longer exists.

REP. SHERWOOD BOEHLERT (R-NY), INTELLIGENCE COMMITTEE: And people say, We've got all the answers to all the questions now, let's go forward instantly. Reconvene the Congress tomorrow, pass it and our problems are solved.


HUNT: President Bush supported creation of a new intelligence director recommended by the commission, with one caveat.


GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: I don't think that the office ought to be in the White House, however. I think it ought to be a stand-alone group.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL NOMINEE: If the president had a sense of urgency about this director of intelligence and about the need to strengthen America, he would call the Congress back and get the job done now.


HUNT: Margaret, is either or both parties playing politics with terrorism?

MARGARET CARLSON, CAPITAL GANG: Well, because the president is running on his record on terrorism, it falls more to the president how political this becomes during this period of time. He's running on his record on 9/11. He's running on the war in Iraq.

This week was a complete muddle, in that we were told by Tom Ridge that in the, quote, "near term" these financial institutions might be bombed, and then we learned that that information was three years old. Then we said there -- there was new information. Then we were back to, There's old information. And the public didn't know whether to be yellow scared, red scared or scared to death, which I think many people were. New York looks like a combat zone in certain parts of the city.

So for the "We told you so" aspect, maybe if you say all the time, It's a dangerous day and it's slightly more dangerous today, they're protected by saying, We told you everything. But on the other hand, I don't think one person in America feels any safer as a result of what the Bush administration has done about the threat of terrorism.

HUNT: Kate, are you red scared or yellow scared or no scared?

KATE O'BEIRNE, CAPITAL GANG: George Bush still, in all of these polls, even the polls showing a head-to-head tie, enjoys a big advantage in -- with respect to waging the war on terror, keeping America safe. So come the 9/11 commission, John Kerry, who's desperate to get to the right of George Bush on a security issue, within 48 hours embraces all of their recommendations on the offense on the terrorism issue. And for their part, playing politics, the White House defensively decides to embrace everything. The 9/11 commission themselves, I think, is playing politics, announcing afterwards, when they issued their report, Should there be a terror alert and you haven't enacted everything we recommended, you're going to be held responsible.

Look, it might be a really bad idea at the moment to be doing a reorganization of our intelligence agencies, who have plenty on their plate. The 9/11 commission's report did not come down on stone tablets. But when it comes to that commission report, everybody's playing a certain amount of politics. HUNT: Tony, this is a dicey proposition for John Kerry, though, isn't it? When they put out a terror alert, he cannot afford to criticize them, particularly if something should happen later.

COELHO: Well, and he handled it right. He basically stayed away from what Ridge said and sort of let the media and the American public respond. I mean, Ridge made a huge mistake by, in effect, adopting Bush's political agenda in his alert. He politicized that statement.

We're in a situation today, Al, that is -- I find fascinating in that the president is losing the trust of the American people in regards to these public pronouncements. They are not sure if they're playing politics, but they're concerned that they are playing politics. And that's a big, big problem.

HUNT: Bob Novak, I want you to feel free to talk about any of this, which I know you will. But first, I want you to draw on your many years of experience here in Washington. I've been here for a long time, not quite as long as you, and I can't -- I can't remember anyone who's had real power in this town who didn't have either control over a budget or proximity to the president. And yet the president would propose -- would go along with this intelligence jar -- czar, and he would have neither. Or she would have neither.

BOB NOVAK, CAPITAL GANG: Absolutely. That's the way it goes. And he wants him -- he wants him out in the country, not too close to the...


NOVAK: ... to the White House. I thought that was interesting. Of course, everybody's playing politics with this. And see, the -- you alluded to this, Al. You don't realize that the people know it's not on the level. They know it's all political. They're not fooled by it. Both sides are -- are playing politics.

One of the things that's interesting, Kate said that these things didn't come down on stone tablets. I like some of the people very much on that 9/11 commission, but when they say, You've got to do -- you've got to propose -- pass what we say or something else, or the world will come to an end. That's not -- you know that's not the way Washington acts. (UNINTELLIGIBLE) independent commission saying, OK, now we've made our ruling, roll (ph) it through Congress. I think -- I never thought I'd see Sherry Boehlert and I on the same page, but what he is saying, just to rush through the recommendations of the commission is ridiculous.

HUNT: Well, now...

O'BEIRNE: On the...

HUNT: Go ahead, Kate.

O'BEIRNE: On the terror alerts, the Kerry camp can let Howard Dean, as a surrogate, make their lunatic, paranoid, left-wing arguments, claiming that the administration is playing politics with this. Look, within what, 48 hours of the terror alert, 12 suspects were arrested in Great Britain. This is real. Sure, some of it goes three years or four years. They are very patient. They planned 9/11 for years. Some of it's as recent as this year, early this year.

HUNT: Margaret, we have very little time left, but let me just ask you this. I'm going to shock Bob Novak even more by saying that I disagree -- I agree with him. I think you should be very careful when you make major changes like this. But just address for a second the politics of it. The 9/11 commission, the families -- it's still pretty darn hard for a politician to -- just to disagree with them, isn't it?

CARLSON: Very hard, and the credibility of the 9/11 commission is higher than the credibility of the president at the moment. And the president lurched from one end to the other. Remember when the 9/11 report came out, he said, very lackadaisically, Oh, I'm going to study it. And then he lurches to the other end, which is he wants to adopt their recommendations and puts out the terror alert.

And the arrest of the suspected terrorists this week doesn't really have much to do with the old information about financial institutions and putting us on a million-dollar-a-day alert in New York. And by the way, the money is so political. An equal amount of money is going to Missoula, Montana, as New York City, when New York City is the one that's spending the money.

HUNT: Well, we know you won't lurch, Margaret Carlson.

Tony Coelho and THE GANG will be back with the presidential dead heat and a new attack on John Kerry.


HUNT: Welcome back. The week began with polls showing only a small bounce for John Kerry out of the Democratic national convention. The CNN/"USA Today"/Gallup poll showed a 6-point lead for George W. Bush. The ABC News/"Washington Post" poll reflected a 2-point Kerry lead.

Following the convention, a television ad attacked Senator Kerry's war record.


UNIDENTIFIED MALE: And Kerry has not been honest about what happened in Vietnam.

UNIDENTIFIED MALE: His account of what happened and what actually happened are the difference between night and day.

UNIDENTIFIED MALE: John Kerry has not been honest.


(BEGIN VIDEO CLIP) SEN. JOHN KERRY (D-MA), PRESIDENTIAL NOMINEE: I defended this country as a young man, and I will defend it as president.


HUNT: Senator Kerry then went on the offensive on how President Bush reacted to the 9/11 attacks.


KERRY: Had I been reading to children and had my top aide whispered in my ear, "America is under attack," I would have told those kids very politely and nicely that the president of the United States had something that he needed to attended to. And I would have attended to it.


HUNT: Kate, who's winning this back and forth counterattack attack (UNINTELLIGIBLE)

O'BEIRNE: Hard to say during the fog of war, Al. It can't be a good sign, though, when John Kerry's adopting lines of attack from Michael Moore. So I think that's a point against him, feeling as though he has a strong hand. Look, these swift boat veterans, many of whom served in the same command as John Kerry, have not just sprung on the scene. They have been around for months. And the media chooses to ignore them. There are some band of brothers who the media fawns over, takes every word they say as gospel, and there are over 200 members of the band of brothers that the media wants no part of. The fact is, a majority of the naval officer who served with John Kerry in coastal division 11 think he's unfit to command! Now, why they're not being given a fair hearing -- they're not anonymous. They're putting their names and reputations behind their reservations about John Kerry, beginning with him coming home and explaining Vietnam was a filthy, obscene memory and war crimes were widespread and now using that service politically to so promote himself. They ought to be heard.

HUNT: Margaret Carlson, tell me what you think.

CARLSON: Well, the lead person in that commercial has said he made a terrible mistake signing the affidavit accusing John Kerry of not serving his country. And another one of the people said that -- actually praised Senator Kerry in 1996.

Listen, this is supported by a group of partisan Republicans with a lot of money, most of them from Texas, one of whose husband ran for lieutenant governor with George Bush in 1994. It's completely partisan. These people have been gathered together. Much of what they say won't stand the test of time, as we're finding out with Mr. Elliott. And it brought John McCain out against George Bush, saying that he should specifically condemn this dishonest ad.

Of course, the Bush administration has refused to do so.

HUNT: Bob Novak?

NOVAK: First place, there -- of -- of two -- these are 200 colleagues and fellow warriors of John Kerry who signed this letter in May. There's a new book out called "Unfit for Command" about his record. I've read it all. It's coming out -- it'll be published soon. It is a shocking presentation of Senator Kerry's record. I just couldn't believe some of the things in there -- very carefully documented.

Margaret, these are not partisan Republicans. They're not Republicans at all. They're Naval personnel. They're not interested in George Bush. One of the authors of the book told me he would have voted for John Edwards if he were nominated. Not particular Bush fans, but they just are appalled by John Kerry.

Now, I have some question whether 30 years later you should be inspecting the minutiae, the record of John Kerry, which is a very questionable record, how he got his decorations, his very short term of duty, four months of combat, one third of the time. But the fact of the matter is, he brought it on himself by concentrating at the convention and in the campaign on not his Senate record but his war record to try to bring about support from the middle and the center of the road.

HUNT: Tony Coelho?

COELHO: Well, I think it's kind of interesting to watch this. The people who are criticizing Kerry are people who did not serve on the boat with him. The people who served on the boat with him are all banded together, supporting him, including some people who've only voted Republican in their years. They are supporting their commander, who was with them on the boat, who saved somebody's life.

The reason that John Kerry is talking about this is that he expected what is happening today. The Republicans, the way that they can win the White House is they got to tear down the character of the Democratic nominee. And they'll do anything and everything to tear down the children. And so expect it. Kerry's winning this fight. I love it that they're coming after him. And I'll tell you what. The American people are not going to put up with it.

NOVAK: You make an accusation. Can you prove that there is any connection with the Republican Party on this book? Because these are not...

COELHO: I didn't talk about the book. I talked about the film. And I'll tell you what about the film. The film -- the same people who funded this ad are the people who funded the ad against John McCain.

NOVAK: I'm talking...

COELHO: That's why he blew up.

O'BEIRNE: Look, these Naval officers served 20 and 50 yards away from John Kerry. They were all in the exact same command! (CROSSTALK)

COELHO: So they were on the boat...

O'BEIRNE: And it makes people...

COELHO: They were on the boat together with him?

O'BEIRNE: They were 20 yards away. And it makes people uncomfortable, looking at the medals. I recognize that. The public's instincts is in favor of not questioning them. But that was not the media's attitude about Admiral Jerry Borda (ph). Admiral Jerry Borda wore two small veens (ph) on a very heavily decorated chest, and the media thought that was a perfectly legitimate...

HUNT: I think I...

O'BEIRNE: ... issue 30 years later!

HUNT: I'd like to be able to say something here because I think this is some of the sleaziest lies I've ever seen in politics. John O'Neill, one of the principal authors, has been a Republican functionary for over 30 years...

NOVAK: That's not true! That's a lie!

HUNT: Could I please finish?

NOVAK: That is a lie!

HUNT: That's not a lie.

NOVAK: That's not true!

HUNT: He's a liar. He started with -- he started with Chuck Colson. He was a pawn of Chuck Colson.

NOVAK: That's not true!

HUNT: He's been -- if I could finish? I didn't interrupt you.

NOVAK: All right.

HUNT: So I think he's a liar, to begin with. Secondly, if you look at Commander Hoffman (ph) -- ask Bob Kerrey about Mr. Hoffman. He was Bob Kerrey's commanding officer. Ask him about Hoffman's character and veracity. George Elliott, as Margaret said earlier, which is one of the charges against -- that he lied about his Silver Star -- has retracted it. He said, I made a terrible mistake.

Who pressured him to make that mistake? They got a guy named Van O'Dell (ph), who says Kerry lied about his Bronze Star. Got his Bronze Star for saving Jim Rassmann's life. Jim Rassmann says, He saved my life. The people on the boat said he saved -- he saved his life. Now, where was this guy O'Dell? Was he with binoculars somewhere, peering at... (CROSSTALK)

HUNT: And finally -- wait. Wait just a second. Let me finish. John McCain, I think, has more credibility...

NOVAK: He doesn't know anything about it!

HUNT: ... just a second! -- than all of us put together on this issue.

O'BEIRNE: He wasn't there, Al!

HUNT: In fact -- wait a second! These guys weren't there...

O'BEIRNE: They were right there!

HUNT: Where were they when he saved Jim Rassmann? Where were they?

O'BEIRNE: They were right there!

HUNT: Where?

O'BEIRNE: They were 20 yards away! Read the affidavits!


HUNT: So Jim Rassmann's lying about saving his life?

NOVAK: I would...

HUNT: Come on, Kate!

NOVAK: No, wait a minute! You...


HUNT: This is a propaganda...

O'BEIRNE: Do you want an answer?

HUNT: ... effort financed...

O'BEIRNE: Do you want an answer?

HUNT: ... by right-wing Republicans!

O'BEIRNE: Do you want an answer? He was pulled out of the water, and others 20 yards away said there was no enemy fire coming from the shore. Look, John O'Neill is a Naval Academy grad who voted for -- for Hubert Humphrey in 1968, Al. So much for being a Republican Party operative!

HUNT: That's before Chuck Colson got to him.

Next on CAPITAL GANG: What did the Show Me State show America this week?


HUNT: Welcome back. In Missouri, an unusually large primary election turnout voted by more than 2-to-1 for a state constitutional amendment prohibiting same-sex marriages. Democratic voters denied Governor Bob Holden a second term, nominating state auditor Claire McCaskill. Missouri is a traditional presidential battleground state with the candidates frequent visitors.


BUSH: We stand for institutions like marriage and family, which are the foundations of society! We stand for a culture of life in which every person matters and every person counts!

KERRY: We celebrate Missouri's great tradition of giving to our country, of standing up for freedom, of caring about this nation. And I thank you, all of you.


HUNT: The latest Missouri poll in late July showed a 2-point lead by Senator Kerry over President Bush.

Bob, what do these primary election result tells us about Missouri in the fall?

NOVAK: I think they're bad news for the Democrats. I mean, this is obviously a very close state, as the polls indicate. But although Missouri is a -- really more of a Democratic state than a Republican state, it's a barometer state, a battleground state, it's a culturally conservative state. And Holden, first time a sitting governor in Missouri ever lost in his own party's primary, lost because he was a gun control person, he was a very partisan Democrat who was fighting with Republicans. That didn't go over well. And this vote on the gay marriage issue is very, very important. It's very interesting that Bush can come into Missouri and talk about gay marriage but that Kerry can't even mention that subject. So I think it is a -- it is real problems for the Democrats in that state.

HUNT: Bad news, Tony, for the Democrats?

COELHO: I think Kerry wins the state. I think that, basically, they got what they wanted. They wanted change in the primary. They got it. Bad news for the Republican is that Holden was defeated. They needed the governor to be in there in order to carry the state, and they would have carried the state. But they got the change that they wanted. We win the governorship, and Kerry holds onto the lead there. It's a win for us. It is culturally conservative, but John Kerry spoke to them at this convention, and he's going to do well in Missouri.

HUNT: Kate, your take?

O'BEIRNE: Well, John Kerry didn't mention a word about gay marriage in Boston because the Democrats realize it's a loser issue. Look, the pro -- pro-protecting marriage amendment people in Missouri, which won with a huge vote, over 70 percent, including a huge number of Democrats, were outspent 20 to 1. John Kerry couldn't go near Missouri before the vote was -- was about to take place, or he'd have to be asked, What would you do? Because he claims to oppose gay marriage, not willing to amend the Constitution, it's up to the states.

And when states decide to try (ph) the state voters to protect marriage, protect marriage from -- from state court judges imposing it on them, as they did in Massachusetts, the Democrats all oppose that, too. The same kind of amendments to protect marriage, prevent gay marriage, are going to be on lots of other state ballots, and it is a big problem for John Kerry.

HUNT: Margaret, I agree with Kate on the politics of the gay marriage, but what strikes me is two things that I think actually -- well, first of all, I think the vote was wrong. I regret the vote. But it shows that states can handle the problem. We don't need to besmirch the federal Constitution. But secondly, it's over now in Missouri, so therefore, it seems to me Kerry doesn't have to worry about it in the fall. There are other issues people care about, and he's much more comfortable running with McCaskill.

CARLSON: Well, Al, I could just say yes and yield my time back. But you're right, the energy that was poured into this now has dissipated because those voters who are one-issue voters, perhaps, have had their say. And listen, John Kerry's position is consistent with Missouri's position: Leave it up to the states. He is against a constitutional amendment to ban gay marriage, but he's also against gay marriage. So there's a consistency there with the voters of Missouri, who now should be exhausted by having gotten what they wanted.

NOVAK: I'll tell you why that's wrong politically, and that is that it -- the -- if this goes to the U.S. Supreme Court and they overturn the states, such as Missouri, that have banned gay marriage, then it becomes a national issue. And you cannot escape from this issue, Al. It is going to come up in Missouri, and Missouri is going to say it's not over. The Supreme Court can overturn us. And do you want a constitutional amendment or not?


O'BEIRNE: Republican operatives will tell you that they think they're going to keep benefiting from this vote on Tuesday. As Tony said, it's a heavily contested state. What did Tuesday tell Republicans in Missouri? It told them who their voters are. It told them where they live. And it told them the kind of voters they want to be turning out in November. They're going to benefit in that way, too, from the vote on Tuesday.

HUNT: Final word, Tony?

COELHO: Don't forget, it's only up in a few states. It's not up in Missouri. The states that it's up in November are not states that Kerry needs to win.

O'BEIRNE: Michigan...

COELHO: This is -- this is a state...

O'BEIRNE: Michigan he needs to win!

COELHO: This is an issue that doesn't have a lot of life to it.

HUNT: Tony Coelho, that's the final word. I want to thank you for...

COELHO: Thank you, Al.

HUNT: ... joining us tonight.

Coming up in the second half of THE CAPITAL GANG, our "Newsmaker of the Week" is U.S. Olympics committee czar Peter Ueberroth. We'll go "Beyond the Beltway" to New York City, the financial capital of the world, to look at the impact of the terror warnings. That's all after these messages and the latest news headlines.


CAROL LIN, CNN ANCHOR, CNN LIVE SATURDAY: I'm Carol Lin at the CNN Center. More of THE CAPITAL GANG in just a moment, but first a look at what is happening now in the news.

Tragedy in Schenectady, New York, where six people were killed today in a fast-moving house fire. Five children were among the victims, including a seven-month old baby. Two adults managed to escape that fire.

And police are questioning two people whom they believe have some knowledge of the killing of six people in a house in Deltona, Florida. Four men and two women were found dead after one of them failed to show up for work.

Police described the murders as very, very brutal and said the victims suffered violent trauma.

Two people are under arrest after disturbance at the Enola Gay exhibit in suburban Washington. About 20 people protested near the display of the aircraft that dropped the first atomic bomb. And two protestors covered themselves in ash.

And just moments ago, Chicago Cubs pitcher Greg Maddox won the 300th game of his career. The victory came in at an eight to four decision over San Francisco. The four-time Cy Young Award winner is the 22nd Major League player to reach this milestone.

And that's what happening now in the news. I'm Carol Lin. Keeping you informed, CNN, the most trusted name in news. Now back to THE CAPITAL GANG.

ANNOUNCER: From Washington, THE CAPITAL GANG. AL HUNT, "THE WALL STREET JOURNAL": Welcome back to the second half of THE CAPITAL GANG.

With the 2004 Summer Olympics in Athens beginning next Friday our newsmaker of the week is Peter Ueberroth. Twenty years ago he was "TIME's Man of the Year" for organizing the 1984 Olympics in Los Angeles. He is currently chairman of the U.S. Olympic Committee.

I interviewed Peter Ueberroth from California earlier this week and asked him about his expectations for the Olympic Games.


PETER UEBERROTH, CHAIRMAN, U.S. OLYMPIC COMMITTEE: I think they are going to be a great games. I think the 200 countries will show up with athletes. They'll march proudly behind their flags, whatever country.

HUNT: It will certainly be a gripping emotional moment when countries like Afghanistan and Iraq walk in those opening ceremonies.

UEBERROTH: That's right. Whatever country is in the news, for whatever reason, takes its best young people and marches into the field of play.

HUNT: You've read the stories about unfinished venues, shaky power grids and reports that the security systems are not fully functional. Is Athens ready for this Olympics?

UEBERROTH: No city ever is really quite ready. But it transforms a couple of days before and it all comes together. I can remember in '84, they accused of our games of never being ready, and lo and behold, we were ready. The citizens of Athens are going to be ready for these games.

HUNT: The threat of terrorism? Has that cast a pall on these Olympics, even before the opening ceremonies?

UEBERROTH: We had a real threat of terrorism in our games, too. And I think all Olympic Games in the future, because of 1972, will always be focused on terrorism. But I think these games will both start and finish safely.

But this time, because of 9/11 and the rest of the things happening around the world, and Iraq, there is going to be a huge focus on security for these games.

HUNT: I noticed the IOC has taken out $170 million insurance policy if the games are canceled. Isn't that really a sea change from the earlier threats that existed?

UEBERROTH: Well, I think that other thing is that you have to look at it, there are people who are willing to ensure games and they're willing to take the risk, insurance companies.

Normally, it has two things that are involved with terrorism. One is cowardice, and the other is surprise. And in this case I think that the country of Greece and the City of Athens and their authorities will do a good job.

HUNT: And other tournaments over the past year or so, American athletes have been booed apparently, a by-product of unpopular American foreign policies around the world. In Athens, do you think American athletes will become the whipping boys and girls of the crowds?

UEBERROTH: I don't think so. The Olympic Games is a special moment. A special moment when people recognize that the countries can come together for peaceable purposes. And so, I don't think there will be any country booed.

HUNT: Do you worry that this international opinion could have effect on some of the judges?

UEBERROTH: Well, you know, the judging is getting better in the Olympic movement every time. They have ways to throw out judges for life and so that has been helping the judging of sport. They'll be controversies, that I'll guarantee you.

Sometimes it will be fair, sometimes it won't be fair, but it is part of the sport. It happens in all the rest of the sports. So that is part of an athletes demeanor. They know that there may not be perfect officiating. But I don't think anybody is going to pinpoint against a U.S. athlete.

HUNT: The International Olympic Committee has had an unprecedented crackdown on the use of drugs. Do you think we can guarantee, virtually, a drug-free Olympics this year?

UEBERROTH: No, I don't think you can ever guarantee a drug-free Olympics. But I think the improvement has been so substantial, and as far as our team is concerned, all of the NGB's (ph) and the United States Olympic Committee are taking the right steps. Athletes are being eliminated. The clear message is that we're going to do our very best to arrive with a clean team.

HUNT: You were a very successful commissioner of Major League Baseball back in the '80s. Now for 34 years, Major League Baseball has talked about giving a team to Washington, D.C. What does your gut tell you? Will the Montreal Expos be relocated to Washington, or go to Northern Virginia or someplace else.

UEBERROTH: I'm not going to predict, or put Bud Selig in a bad position, but I would expect that I could fly into Washington, D.C. And besides Baltimore, drive within 50 miles and watch Major League Baseball pretty soon.


HUNT: Bob, do you think Peter Ueberroth is too optimistic about the way American athletes are going to treated in Athens?

ROBERT NOVAK, ANCHOR, THE CAPITAL GANG: No, because I don't believe that European sport fans hate Americans as much as liberals hate themselves here in America.

I think that, you know, the U.S. basketball team played Germany in an exhibition game and we're supposed to be so unpopular in Germany and it was very pleasant, very -- cheered them. They beat Germany on a last second shot. So, I'm very optimistic that sport fans are good fans all over the world and they'll give them a good reception.

HUNT: Margaret, are you optimistic. I know you are following these games closely.


HUNT: You and George Bush.

CARLSON: The Olympics transcend so many things, that is why they're so wonderful to watch and to have. However, you know, Bob some -- the U.S. has lost some preliminary games, because of hostility from the crowd. And every survey shows that America's standing in the world has fallen.

I mean you would hope it doesn't matter and you would hope we all pulled together as one small planet. And you know there is a great study which shows that basketball teams win 30 percent more of the time when they're on the home court and have the fans cheering for them.

So, let's hope that there are enough Americans there and enough good will to cheer American on.

HUNT: OK, Kate O'Beirne, your take on Athens?

KATE O'BEIRNE, ANCHOR, THE CAPITAL GANG: I wish I didn't know that Margaret had been a cheerleader. I'm very disappointed, Al. Try to overcome that.


CARLSON: I was young!

O'BEIRNE: Margaret, how could you!


CARLSON: I was young!

O'BEIRNE: That's no excuse, Margaret.

Look, I think the crowds are not going to be particularly friendly to American athletes. I'm not sure they ever were all that friendly to American athletes. We like underdogs, American athletes tend not to be the underdogs. But maybe if the crowd is tough enough on them, they will be the underdogs and it will make them run faster and swim faster and jump higher. And I hope it does.

HUNT: Good point, Kate O'Beirne. Next on CAPITAL GANG: THE CAPITAL GANG "Classic". John Kerry talks about how to deal with Saddam Hussein, 12 years ago.

ANNOUNCER: Here is your CAPITAL GANG trivia question of the week. The United States failed to qualify for the 2004 Olympics in which sport? Is it A, baseball; B, volleyball; or C, water polo?

We'll have the answer right after the break.


ANNOUNCER: Before the break we asked, in which sport did the U.S. fail to qualify for this year's Olympics. The answer is A, baseball.

HUNT: Welcome back.

At the height of the 1992 presidential election, President George H.W. Bush issued new warnings to Saddam Hussein after U.N. inspectors found no nuclear evidence in Iraq. THE CAPITAL GANG discussed this on August 1, 1992. We asked our guest, Democratic Senator John Kerry, of Massachusetts, whether the U.S. should bomb Iraq.


JOHN KERRY (D), MASSACHUSETTS: Well, no, we shouldn't do that yet, obviously. But I couldn't agree more. This is a very dangerous week. And it really underscores another weakness in the Bush front, which is foreign policy.

What has happened is, that since the war, Saddam Hussein has violated every single one, not one, not the agriculture industry, but every single one of the requirements of the U.N. resolution. I think it is a terrible failure.


HUNT: We then asked Senator Kerry about comments by the Democratic presidential and vice presidential candidates.


BILL CLINTON (D), FMR. PRESIDENT OF THE UNITED STATES: ...coddled Saddam Hussein right up until the war. And as soon as the war was over, he wanted him to stay in power.

AL GORE (D), FMR. VICE PRESIDENT OF THE UNITED STATES: President Bush and Vice President Quayle are such whizzes in foreign policy, why is that Saddam Hussein is thumbing his nose at the entire world?

SEN. JOHN KERRY (D), MASSACHUSETTS: I might say that I think Al Gore has a very strong reputation on foreign matters and arms control and on those kinds of issues. And Bill Clinton is no slouch on it either.

The policy is going to have to be measured on its success. George Bush promised America that we would go in and resolve this problem by going to war and that Americans would have jobs as a result. Americans not only don't have jobs but Saddam Hussein, once likened to Hitler, is still in place.


HUNT: Kate, is what John Kerry said about Iraq 12 years ago consistent with what he's saying today?

O'BEIRNE: Al, talk about a weakness in foreign policy, he has no credibility. If it were up to John Kerry back in '92, Saddam Hussein would still have been in Kuwait, he voted against the Gulf War.

Then he supported this war, but in during the primaries described himself as anti-war. Then it would be irresponsible to vote against the $87 billion to fund our troops, then he voted against it. This is his fundamental problem in this race.

HUNT: Margaret, a weak waffler?

CARLSON: Thinking that Saddam Hussein should not be in power is not the same as sending 150,000 to topple the regime. The person who was right in that exchange, was Clinton, saying that President Bush did not want to stay in the war long enough to get rid of Saddam Hussein, for good reason, which is the first President Bush knew that we would have the very situation in Iraq that we now find ourselves in.

HUNT: Bob Novak?

NOVAK: As I listen to John Kerry, from the years gone by, with Al Gore wearing the same suit then that he wore in -- 12 years later.


NOVAK: I heard John Kerry say -- criticize him that he's still in power. Did you hear that?

O'BEIRNE: I heard that, Bob.

NOVAK: I think John Kerry, on Iraq, over the years has said whatever is politically convenient.

HUNT: Well let me tell you, I don't think John Kerry was very articulate back then, but then, of course, we had George W. Bush this week who said that "we'll never stop thinking about ways to harm our country."

It would be a great battle in the articulation fight.

Next on CAPTIAL GANG, "Beyond the Beltway" looks at how terror warnings are affecting New York's financial center. CNN's Allan Chernoff joins us.


HUNT: Welcome back. Heightened security precautions were taken in the nation's financial nerve center in New York.


MICHAEL BLOOMBERG, MAYOR, NEW YORK CITY: New York City is not going to be cowed by the terrorists, make no mistake about that. We're not going to spare any expense in protecting us, but also the people of New York City know giving in to terrorism is exactly the wrong thing to do.

JOHN SNOW, TREASURY SECRETARY: I's awfully important that we not be cowed by the terrorist acts or the terrorists' threats. We have the most resilient and strongest financial markets in the world. The steps that have been taken have made them safer.


HUNT: Joining us now, from New York, is Allan Chernoff, senior correspondent for CNN and CNNfn.

Allan, thanks for being with us.

Both Mayor Bloomberg and Secretary Snow used the word "cowed". Is anybody on Wall Street cowed?

ALLAN CHERNOFF, CNNfn SENIOR CORRESPONDET: Really not. People are maybe a little bit concerned, certainly the headlines caught everyone's attention, but anyone who would really be intimidated had already left town after 9/11. So, Wall Street pretty much took it in stride.

People in New York are getting used to this backdrop, this threat of terrorism and they're living with it.

HUNT: Bob?

NOVAK: What is the feeling in Wall Street as to a long-range negative impact on markets, particularly the stock market as a result of these terror warnings?

CHERNOFF: Again, Bob, this is a background noise for the financial markets. This week, the big concern, really was the rise in oil prices, that has Wall Street very concerned. And also, economic data showing a slowdown in the economy, not much consumer spending and also, of course, Friday's number about jobs, very week jobs growth. That is all combining to really bring out the bears on Wall Street.

HUNT: Kate O'Beirne?

O'BEIRNE: Allan, are the resilient, tough-minded, put upon New Yorkers, are they reconciling themselves to these kinds of precautions being the new normal they have to learn to live with?

CHERNOFF: Yes, unfortunately I think that is pretty much the reality in New York City. I mean everybody who works in a landmark building in New York recognizes it is a potential target. Certainly, everybody who steps into the New York Stock Exchange knows for sure that this is a potential target.

But the New York Stock Exchange, I should also emphasize has had very, very tight security since 9/11. Years ago, you could argue the security had been somewhat lax there, but certainly no longer.

HUNT: Margaret Carlson, a question for your New York colleague?

CARLSON: Allan, the mayor is a diplomatic, even-keeled kind of guy, but isn't he getting a little upset about the amount of money he has to spend every time Tom Ridge puts him on alert, getting the same amount of money as many of the red states, like Cheyenne, Wyoming or Missoula, Montana, where there is almost no threat from the terrorists?

CHERNOFF: There is no question that Mayor Bloomberg saw this as an opportunity to say to Washington, hey, we are a terrorist target. You have to come up with more dollars for New York City.

There were headlines here saying that the mayor was not taking this with salt, et cetera, taking it very seriously. And clearly the point was that the mayor was taking it seriously and that he also he could show Washington, here is a perfect example of why we should be getting more money, in terms of protection.

HUNT: Allan, you talk about tighter security now, in a couple of weeks, they are going to have, in addition to everything else, the Republican Convention in New York. Is security really going to be suffocating?

CHERNOFF: That is going to be a real tough situation. As you know, Madison Square Garden literally sits on top of Penn Station where trains from Long Island, New Jersey, come in, as well as the subway. Many commuters are going to be terribly inconvenienced.

A lot of people are planning to just stay home, work at home that week. Some companies even telling their employees to do that, or just take time off. So, people clearly are trying to make plans regarding the convention. The security, you know, will be super, super tight there.

HUNT: Robert?

NOVAK: Allan, did you get, on this last warning, did you get any kind of buzz from the people in the financial community that boy this is old news, we've been through this before? Ho-hum.

CHERNOFF: Well, people have been through it before. I wouldn't quite say ho-hum, because clearly these were specific targets mentioned in the warning and we haven't had that before. But as you point out, people have experienced worse, much worse before. And it is something that we simply live with.

HUNT: Kate O'Beirne?

O'BEIRNE: Allan, there is so much suspicion that details about these targets may have been provided by insiders, contractors or employees. What affect are those suspicions having on New Yorkers?

CHERNOFF: Yes, well, that is very interesting. And clearly it is on the minds of many New Yorkers. But, again, we don't have any specific details regarding that. I mean, I can't say that we're living in a paranoid society, people staring at their officemates and wondering what is going on. But it certainly is an interesting point.


CARLSON: Allan, I've been in New York many times in August. I never saw New York so deserted as -- Friday, yesterday. Is there any measurement of how many people may have stayed home, or gone on vacation early, or just don't want to be in New York as a result of these latest warnings?

CHERNOFF: Well, I think we have to consider that this is the summer time, this is typical vacation time. Many companies do have early Friday closing dates. And also Friday just happened to be a picture perfect day, after so many days of rain in the metropolitan area. So, a good day for people to take off and enjoy.

HUNT: Allan Chernoff, thank you so much for joining us, in that enlightened insights and you have made us all a wary about coming to New York in a couple of weeks. But we will see you there.

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


HUNT: And now for the "Outrage of the Week".

I'm usually not in the business of counseling political operatives, especially Bush/Cheney ones. But this week, Jenny Wolf, the flack for the Republican Platform Committee, tried to stonewall Robert Novak, whereas he wrote, she was -- quote, "supremely uncommunicative", end quote.

Jenny, let me offer some free advice. Margaret, Kate, Mark and I have all tried that. It doesn't work. He's relentless. Now I suspect you are a young woman with a bright future, don't blow it by trying to stiff the "prince of darkness".

NOVAK: Thanks a lot, Al.

Two weeks ago the Democratic National Committee, not wanting the worlds oldest political party to be the atheist party, named a new adviser for religious outrage.

Count on the DNC to appoint somebody who wants to remove "under God" from the Pledge Of Allegiance, the Reverend Brenda Bartella Peterson, she had signed a friend of the court brief against "under God".

She resigned her new post Wednesday, saying she could not do her job because of Catholic League criticism. Who will Democrats name as their next religious adviser? The Reverend Barry Lynn? HUNT: I wish I could disagree with you, Bob. But I can't.

Margaret Carlson?

CARLSON: Last week Vice President Cheney asked to know the race of the photographer for "The Arizona Daily Star" before he would allow her to snap him at a campaign rally. "The Star" refused, rejecting the lame excuse, quote, "security reasons", when she had already been credentialed.

And now, for voters to attend any Bush/Cheney campaign event you have to sign a blood oath, quote, "I -- and then write your name, do hereby endorse George Bush" and consent to the use of their name in endorsements.

This used to be a free country with a secret ballot.

HUNT: Kate?

O'BEIRNE: In Boston, speaker after speaker, revived the myth that Al Gore won the 2000 election. For the record, George Bush won Florida and thus the presidency.

A "New York Times" headline on November 12, 2001, quote, "Study of Disputed Florida Ballots Find Justices Did Not Cast the Deciding Vote", end quote.

Under the Florida courts recount, Bush kept his margin over Gore, he also won under Gore's original scheme to recount only in heavily Democratic counties. So much for moving on.

HUNT: This is Al Hunt, saying good night for THE CAPITAL GANG.

Coming up next, "CNN Presents: Warsaw Rising". And at 9 p.m., "Larry King Live", followed at 10 p.m. for the latest headlines.

Thank you for joining us.



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