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CNN CAPITAL GANG

Special Edition: Live From Madison Square Gardens

Aired August 28, 2004 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ANNOUNCER: Live from Madison Square Garden in New York, THE CAPITAL GANG.
MARK SHIELDS, HOST: Welcome to this special edition of THE CAPITAL GANG from Madison Square Garden. I'm Mark Shields, with the full CAPITAL GANG. That's Robert Novak, Margaret Carlson, Kate O'Beirne and Al Hunt.

President George W. Bush, on the eve of the convention, previewed his Thursday night acceptance speech.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: We've proven to you we can get the job done, and there's more work to be done, and I'll talk about that in the convention. In other words, it's going to be a forward-looking speech.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL NOMINEE: The Republican convention will focus on slogans, excuses and attack politics. They're going to bend over backwards with last-minute proposals and last-minute promises to make up for all that they haven't done.

(END VIDEO CLIP)

SHIELDS: The CNN/"USA Today" Gallup poll of likely voters shows the president leading Senator Kerry by 3 percentage points nationally and by 2 points in the battleground state of Florida. The "Los Angeles Times" of battleground states show a Bush lead of 2 points in Missouri, 5 points in Ohio and 4 points in Wisconsin.

Al Hunt, is it beginning to look like John Kerry is in trouble?

AL HUNT, CAPITAL GANG: Mark, if this election is about George Bush or the Bush record, Kerry wins. The basics are with the Democratic candidate. But I'll tell you, he is in trouble, and it's because they don't realize, apparently, that they are in trouble. Bush during -- I think during what has really been a series of bad news for him in Iraq and on the economy, has gained a few yards in the last couple weeks. The Kerry campaign and the candidate have been slow and sluggish. They let the other side control the agenda. And Mark, if they don't add a couple A-teamers to that campaign team, if they don't sharpen their candidate's message, this'll be an even race today. It'll be -- Bush'll be a little bit ahead after this convention. And if they don't make those changes, I think it could be a long fall for the Democrats.

SHIELDS: A long fall for the Democrats, Kate O'Beirne, and a short fall for -- or a long fall for John Kerry.

KATE O'BEIRNE, CAPITAL GANG: Well, Mark, it's certainly clear that John Kerry has actually lost some ground since his convention. A month ago, for instance, he had cut, following his own convention, the generous lead George Bush had enjoyed on being a strong leader. John Kerry had cut that in half. George Bush is now up again by 20 points. George Bush is up again on who best can handle the war on terror.

I think a fundamental thing we're seeing is this. John Kerry, as most unknown politicians do, has had artificially low unfavorability rating. His favorability -- his unfavorability rating is now ticking above 40. When it was artificially low, he could only tie George Bush. As his unfavorability rating ticks up, I think he's going to drop behind George Bush, and I think that's what we're seeing.

SHIELDS: Margaret Carlson, you look at this, though -- there's a "Wall Street Journal"/NBC News poll, 1 out of 5 voters said they were either soft in their commitment to either candidate or undecided. Among them, they're overwhelmingly negative toward's the president's jobs handling of the economy, of Iraq. They think the country's headed in the wrong direction. If Kerry can't win them, then he can't win the election, can he?

MARGARET CARLSON, CAPITAL GANG: Well, those are the voters that are likely at the last minute to go for Kerry and against the president because the undecideds go that way at the end.

The bad news about Bush is mostly out now. It's a sluggish recovery. It's a jobless recovery. Many people think the country's on the wrong track. These are bad things for Bush. But what we saw the last couple of weeks since the convention is that Kerry, who promised to be unlike Dukakis, he was going to swing back, just didn't swing back. And that gets to Al's point, where -- where's the A-team at the campaign that's telling him, you know, You need to get back out there?

And the problem over these past weeks is unless you were on a swift boat, you can't get on TV. So Kerry has not been able to get his own message out.

SHIELDS: Bob Novak, my own experience, every campaign is ultimately, inevitably a mirror reflection of the candidate. When people start faulting the campaign staff, it's usually the candidate, isn't it?

BOB NOVAK, CAPITAL GANG: Absolutely. You know, all this dancing around by Margaret and Al about -- about (UNINTELLIGIBLE) He's a bad candidate. He's not an attractive candidate. And we were up in Massachusetts last month, and all the Democrats up there said, You know, he's going to win, but he's -- nobody likes him up here. We -- and we've been around with him. Al talks about bringing new people in. The Democrats I talk to think they ought to get some people out of that campaign. They got too many cooks in that kitchen.

I think he has had -- the Democrats -- the Republicans I have talked to here just pinch themselves. They can't believe the kind of month that Kerry had. They thought they would really be under the gun when they came to New York. They can't believe that they're in fairly good shape.

SHIELDS: Two questions, and anybody can answer. First of all, Mark DeCamillo (ph), the Field poll in California, said the president must rebuild some of the trust that's been shaken in him. And you see his -- the trust number in him is down to 45 percent, as somebody who levels. And secondly, the question I wanted to ask is, 50 to 45, voters don't believe George Bush deserves reelection. Now, isn't that ripe for the challenger?

CARLSON: Yes. You know, Bob's point is there's a 2-to-1 voter margin Bush is easygoing and likable. And who knows what Kerry's ratings are there. I don't have them at my fingertips. But I think Bob is right. He's not the most accessible, easygoing and likable candidate. But this time around, I'm not sure that the guy you want to go have a beer with is the key element.

NOVAK: But the thing is, George Bush is a better candidate now than he was four years ago. And I look...

CARLSON: But is he a better as president.

NOVAK: I look...

(LAUGHTER)

NOVAK: Well, what kind of crap is that? I mean...

(LAUGHTER)

CARLSON: Kerry's a bad candidate. He could be a good president.

NOVAK: We're talking politics! I like any candidate cuts taxes, so I think he's a great president. But -- but we -- but when you have John Kerry -- I watch him a lot on television, and he says something and he nods his head. Did you notice that (UNINTELLIGIBLE) he nods his head...

CARLSON: Like Nancy Reagan.

NOVAK: ... like Mussolini!

(CROSSTALK)

SHIELDS: Like Mussolini?

NOVAK: Yes.

SHIELDS: Go to your room!

(LAUGHTER)

HUNT: This is on the eve of the Republican convention. I don't think George Bush is a terrific candidate, by any means.

SHIELDS: No.

HUNT: And most Americans have decided it's been an unsuccessful presidency.

SHIELDS: Right.

HUNT: That's what they think. So if the issue is about George Bush, as I said, he's dead. All -- their only hope -- that's why everything they put on television is negative. Their only hope is to make it about John Kerry.

SHIELDS: Kate, that's true. It's been relentlessly negative this month.

O'BEIRNE: That's not what they think this week is about. Look, a month ago, the Democrats decided that the public, in Al's term, had decided to fire George Bush. Therefore, their guy just had to be barely acceptable. That is the wrong analysis. The public has made no such decision. They still give -- we're in a war on terror. This is post-9/11. They still give George Bush a very wide advantage in keeping us safe. They're giving him much higher grades on handling Iraq and handling the war on terror. Plus, the public does like George Bush, the more they see him. And what the campaign is hoping for this week is that they'll see a lot of George Bush and be reminded about his successes...

SHIELDS: OK...

O'BEIRNE: ... on the war on terror and his likability.

CARLSON: Yes.

SHIELDS: OK. That's -- at a time when only 36 percent of people think the country's headed in the right direction, if a challenger can't win then, then a challenger can't win.

But THE GANG of five will be back with John McCain and the swift boat dispute.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. The Bush and Kerry campaigns clashed over television ads attacking John Kerry's Vietnam war record.

(BEGIN VIDEO CLIP)

BUSH: I asked the Senator Kerry to join me in getting rid of all that kind of soft money, not only on TV but used for other purposes, as well.

SEN. JOHN EDWARDS (D-NC), VICE PRESIDENTIAL NOMINEE: You know who's paying for them. They're being paid for by friends of George W. Bush. They're lies financed by friends of the president.

(END VIDEO CLIP) SHIELDS: Senator John McCain denounced ads on both sides. Quote, "I'm sick and tired of opening the wounds of the Vietnam war, which I've spent the last 30 years trying to heal," end quote.

Meanwhile, retired admiral William Schachte said he was on board the boat with Lieutenant Kerry the night for which John Kerry was awarded his first purple heart.

(BEGIN VIDEO CLIP - "NBC NIGHTLY NEWS")

ADM. WILLIAM SCHACHTE, ABOARD KERRY'S BOAT: I was in command of those missions, and I was in the boat that night. I'm saying that he did not deserve the first Purple Heart, from what I saw.

(END VIDEO CLIP)

SHIELDS: But an enlisted man aboard the boat said then Lieutenant Schachte was not there.

(BEGIN VIDEO CLIP)

BILL ZALADONIS, ABOARD KERRY'S BOAT: I do remember who was on the boat, and I remember it very plainly.

(END VIDEO CLIP)

SHIELDS: Kate O'Beirne, these conflicting stories -- do they cancel each other out?

O'BEIRNE: Well, this latest eyewitness, the retired admiral, is certainly a credible witness. Look, why does it matter? It matters because if a wound was self-inflicted, it didn't qualify for a Purple Heart. Once John Kerry got three Purple Hearts, he left early. That's why it matters. If John Kerry thinks the Navy records support his version of events, he ought to sign the form that would permit the Navy to release all the records, which he refuses to do.

But the bigger contradiction problem for John Kerry goes back to how he behaved when he came home. In 1971, he called Vietnam the biggest nothing in history. It had created a monster in the form of millions of veterans. It was an obscene memory. If he felt that way then, how can he now be so proud of his Vietnam service? And if he's proud now, it's because he knew he was lying then. That's the fundamental problem he has.

SHIELDS: I guess the people who thought it was a noble cause, Bob, didn't go. Someone who did go and fought and came back and said...

O'BEIRNE: Plenty of them went!

SHIELDS: ... he was against it...

O'BEIRNE: Plenty of them went!

SHIELDS: Oh, OK. Well, unfortunately, they're not on the Republican ticket this year.

CARLSON: None in our government.

SHIELDS: But go ahead. Bob Novak?

NOVAK: This -- this swift boat thing is really hurting Senator Kerry very badly. I interviewed...

SHIELDS: Why?

NOVAK: I interviewed -- because the -- just the idea of -- Senator Edwards said calling it a bunch of -- a pack of lies -- it's -- it's not the case. It goes to his character. And I knew it was a lot of trouble when Al, the last two shows, started screaming and yelling at this and interrupting me and not letting me talk.

I interviewed...

SHIELDS: Go ahead.

NOVAK: I interviewed Admiral Schachte this week. He is a former deputy judge advocate general of the Navy, a very distinguished man. He said he was definitely in the boat that night. John Kerry says he wasn't in the boat. I believe Admiral Schachte. I checked with a couple of other officers who were there at that time. They say it is inconceivable that on his maiden mission, Lieutenant Kerry would have been sent off in that boat alone, that this -- using this Boston whaler or skimmer was Lieutenant Schachte's own idea. He was in all the missions on the Boston whaler, and I -- and he is -- and the idea that Kerry said nobody who was ever on a boat on him was ever critical of him is wrong because I believe Schachte was there.

SHIELDS: Yet the enlisted man who was on the boat, and everybody agrees was on the boat, says he wasn't on the boat.

Al Hunt?

HUNT: Well, Mark, let's leave John Kerry and let's leave Schachte aside for a minute. I talked to those two enlisted men today. I talked to Pat Runyon and Bill Zaladonis. They both were on that boat December 2, 1968. They say there is no way that the admiral could have been on that boat. And they describe in vivid detail that night. They say it was a small, 14-foot boat with an outboard motor, that, in fact, with their weapons and other material, that four people would have been a really, really tight fit. They took orders from John Kerry. They remember -- Zaladonis remembers Kerry saying, Shoot over here, rather than over here, when they were in a firefight. And Runyon remembers him telling him to, Start the boat. Let's get the hell out of here. Zaladonis remembers when Kerry was hit, and they just say it's absolutely impossible to -- you wouldn't have had two officers on a little boat like that on that kind of a mission.

Moreover, Schachte has changed his story. A year ago, he talked to Michael Kranish of "The Boston Globe," and he said that there was a firefight. He didn't say he was in the boat. He said Kerry was hit -- quote, "hit" -- though it wasn't very serious. Now he says there wasn't a firefight and it was a self-inflicted wound. Moreover, he went and he said that he -- when he saw Kerry 20 years later in Washington, he was with a top aide with -- of Fritz (UNINTELLIGIBLE) Ashley Thripp (ph). Ashley Thripp I talked to today and said, No way. I wasn't there.

So I think that -- I think the admiral is either mistaken or he's lying.

O'BEIRNE: Should John Kerry release his records?

SHIELDS: Now Margaret. Margaret? Margaret Carlson.

CARLSON: Mark, let me say -- you know, the veterans are entitled to their anger, but they're not entitled to their facts. And every eyewitness account and all the Navy records...

O'BEIRNE: Not true!

CARLSON: ...back up John Kerry. William Rood came out and spoke for the first time. He wrote in "The Chicago Tribune," I believe, he was on that boat 35 years ago when Kerry got the Silver Star.

O'BEIRNE: No, he wasn't!

CARLSON: He...

O'BEIRNE: He didn't say he was!

HUNT: He was in the accompanying boat.

CARLSON: He was in the -- he was in -- there were three boats, and he was on one of them.

SHIELDS: That's right.

(CROSSTALK)

CARLSON: And there was enemy fire, and this idea that there was some teenager in a loincloth -- he said the one thing that they remember, it was a person of a normal age in normal clothing, that there was fire even from the other side of the riverbank.

Also, Thurlow, the other accuser, who got a Bronze Star in that incident, he was pulled out of the water and says there was no enemy fire. But of course there was enemy fire, and his citation says so.

NOVAK: Let me stick to this -- this Schachte thing for just -- just a moment. In the first place, I also interviewed those two guys, Runyon and Zaladoris (SIC), and they both said they both doubted there was any enemy fire. I don't know if you didn't ask them that question. But they told me they didn't believe there was any enemy fire. That -- that's just a factual thing.

No. 2, I really do believe that -- I've talked to other officers, and they say that this Boston whaler, this skimmer, usually had -- almost always had two officers in it. Only has room for three, right. They usually had two officers and an enlisted man in the back. So there was a -- I think these two men are probably good men. I think they're the ones that are confused.

O'BEIRNE: People can be mistaken. Lookit, if John Kerry is so certain that the Navy records back his version, why won't he permit the Navy to release the records? We have not seen all the Navy records. We don't know what all the Navy records say. But the swift boat guys are pretty confident that if John Kerry permitted their release, they would back up their version.

(CROSSTALK)

SHIELDS: Let me say one thing. We're still -- we're still looking for George Bush's records and...

(CROSSTALK)

SHIELDS: We will find them. We will find them.

HUNT: Mark, just one second...

(CROSSTALK)

HUNT: Bob invoked my name and said I -- you know, didn't know if I asked them -- I did ask them the question. They both very clearly say there was a firefight. They describe it in detail. They describe firing at people that night. And Zaladonis -- by the way, you have his name wrong. His name is Zaladonis, Bob. You know, if you called him, you ought to get his name right -- describes when Kerry was hit. They both say that, Mark, and I challenge anyone to call them, and they'll tell him.

NOVAK: They both -- they both told me they didn't believe there was any fire coming from the enemy on that boat.

HUNT: And they also told...

NOVAK: Now, maybe they've changed their story!

HUNT: They also -- you know, I'll tell you, Schachte was...

SHIELDS: Schachte's changed his story.

HUNT: ... Schachte was advised, Why don't you call them to reconcile differences -- they both said, We've never heard from Schachte.

SHIELDS: Let me just make one point. The president, we saw in our set-up piece, was coming out -- now he's against 527s. When he signed the McCain-Feingold bill, he said he was for 527s.

NOVAK: He didn't say that!

SHIELDS: He said he was...

(CROSSTALK) SHIELDS: He said he was for individuals being able to contribute as much as they wanted in unlimited amounts. That's exactly what he did say. And that was his reservation about it.

NOVAK: Are you for 527s?

SHIELDS: Yes. Am I for -- I'll tell you this, what George Bush is doing right now is his position, at this point, is a little bit like the day after the St. Valentine's Day massacre, Al Capone coming out for gun control.

NOVAK: Are you for 527s?

(CROSSTALK)

NOVAK: Are you for 527s?

CARLSON: I talked to Senator...

NOVAK: Wait! I'd like to know what...

SHIELDS: Am I for 527s? I don't like 527s, no.

CARLSON: Mark, I talked to Senator McCain yesterday, and he said that, you know, 35 years ago, you ask some people if they want to remember what they -- they'd say the moon is made of green cheese. Under fire, you don't remember. Thurlow was probably in the water. He doesn't remember. The records are what you go by, and that this is...

O'BEIRNE: And we haven't seen the records!

CARLSON: ... the awful thing that's being done. No, "Newsweek" magazine found Kerry's record on the March incident, and in fact...

(CROSSTALK)

CARLSON: So should George Bush...

HUNT: He has.

O'BEIRNE: He has not!

CARLSON: But the Pentagon...

HUNT: He has.

O'BEIRNE: He has not!

(CROSSTALK)

CARLSON: The Pentagon says it's lost George Bush's National Guard record.

SHIELDS: That's right. George Bush's records are lost. We'll find them. (CROSSTALK)

SHIELDS: Next on CAPITAL GANG, the Republican national platform. Is it too extreme? Is that a rhetorical question?

(COMMERCIAL BREAK)

SHIELDS: Welcome back.

The Republican platform committee beat back conservative amendments on immigration and stem cell research that conflicted with Bush administration policy.

(BEGIN VIDEO CLIP)

SEN. BILL FRIST (R-TN), PLATFORM COMMITTEE CHAIRMAN: We're united by principle. We all accept differences. We're 100 percent behind the president and his forward-looking vision for America.

(END VIDEO CLIP)

SHIELDS: The platform did not even consider any abortion rights provision or opposition to a constitutional amendment against same-sex marriage.

(BEGIN VIDEO CLIP)

GOV. HALEY BARBOUR (R-MS), PLATFORM SUBCOMMITTEE CHAIRMAN: This is the conservative party of the United States. The Democrats are the liberal party.

(END VIDEO CLIP)

SHIELDS: However, Vice President Cheney came out in opposition to the gay marriage amendment.

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: Historically, that's been a relationship that's been handled by the states.

(END VIDEO CLIP)

SHIELDS: Bob Novak, is this even more of a sham platform than the Republicans (UNINTELLIGIBLE) the past and the Democrats adopted in Boston?

NOVAK: Well, the champion sham was the Democrats because they didn't have anything in the platform. They didn't have any proceedings. They didn't have any votes.

But this was a railroad operation. Bill Frist was the chief conductor. Anything they would go to Matt Schlaff (ph), the political aide at the White House, and in the hearing room, they'd say, Is this OK with the White House? I think the committee would have amended the stem cell research thing and the immigration provisions, but they -- the White -- they went against the White House provision. They didn't want any distance between this platform and the White House.

You know, when they even had something saying that the -- that public education was a foundation of society in this country, most of those guys would say, Hey, we don't have to put that in. But the White House said, We want that because of No Child Left Behind. So this is George Bush's platform, and that isn't exactly a surprise.

SHIELDS: Kate O'Beirne, it was tough to object to the platform, though, because we never knew who the platform committee meeting -- members were. They kept it a total secret. What was that all about?

O'BEIRNE: Well, they certainly -- they certainly could have, had there been a desire on their part, but I think Bob's right, there wasn't any such desire. They actually signed off, this conservative party, on a plank in the platform taking credit for the largest increases in federal education spending in history. This is the party that typically wants to -- in the past...

NOVAK: Bigger than Lyndon Johnson.

O'BEIRNE: ... has wanted to eliminated the Education Department. I think the reason why, though, is because -- for Haley Barbour, what Haley Barbour explained. These delegates understand and appreciate that it is a conservative party. They support the -- this Bush administration as a conservative administration. The mood was very different in 1992, when conservatives were unhappy with the first Bush administration, and so were inclined to have a lot of these philosophical fights out in the context of the platform because they felt they'd lost so much in the White House under the first Bush.

SHIELDS: Al Hunt, I have to say one thing. I thought Dick Cheney made a statement this week that was politically adroit, as well as personally moving, when he said -- he basically said to his boss, Hey, look, I don't care. I'm breaking with you. My daughter's more important than policy or politics, when he took an exception to the president's support of a constitutional amendment outlawing gay marriage.

HUNT: Yes, I did, too, because he has a lesbian daughter, which, of course -- but the next question you have to ask is, if you do have a gay or lesbian child and that child does what we hope all of our kids do, falls in love, what's the option then for that child? That's the real difficult part of this debate.

But on the platform, Mark, I don't have the great, finely-tuned sham calibrator that Bob Novak has. I don't think there's a whole lot of difference, when it comes to sham, of platforms. That's always the case. Bob's right, incumbents always get to write the platform for their party. I don't think it matters a great deal. And this is certainly a -- by and large, whatever they might say about education, this is a very conservative document.

SHIELDS: Margaret Carlson, sham calibrators are available for $29.95. (LAUGHTER)

SHIELDS: Tell us about the platform.

CARLSON: And it's going off all the time! I feel the vibrations!

Listen, you know, what Dick Cheney said is what he said in the debate four years ago, which is that the federal government should stay out of the bedroom. And it is a tribute to his daughter that he has this position. And it's probably a welcome political thing for them because they want a bigger tent than they've built so far, which is -- they don't want to alienate gays and lesbians. That's not going to help the Republican Party.

And in so many ways, the Republican Party winks on social issues, trying to say Barbara Bush was a member of Planned Parenthood. It goes back there (UNINTELLIGIBLE) You know, we don't -- we're really not going to do anything about abortion, we're just going to say that we're pro-life. And...

SHIELDS: Last word, Margaret Carlson.

Coming up in the second half of THE CAPITAL GANG -- and you stay tuned, you hear me? -- Bush campaign manager Ken Mehlman is our "Newsmaker of the Week." We'll go beyond the New York convention to look at the Kerry debate challenge. And our "Outrages of the Week." That's all after these urgently important messages and the latest news headlines.

(COMMERCIAL BREAK)

SHIELDS: Welcome back to the second half of the CAPITAL GANG. Kenneth B. Mehlman was the White House political director for the first two and one half years of the Bush administration. Now, just 37 years old, he was named campaign manager of the Bush/Cheney campaign 2004, last year.

Our own Kate O'Beirne sat down with Ken Mehlman here at Madison Square Garden, yesterday.

(BEGIN VIDEOTAPE)

O'BEIRNE: Ken, the locals of this very Democratic city are bracing as though for an alien invasion with your Republicans coming to town. Why New York?

KEN MEHLMAN, MANAGER, BUSH/CHENEY CAMPAIGN 2004: Well, first of all, we appreciate the locals, the hospitality, we appreciate them putting up with too much traffic. And we hope that we'll make up for the challenges they face by spending a little money when we're here.

When you think about it, Kate, New York hasn't had a Democratic mayor or a Democratic governor for more than 10 years. And we're very proud of the fact that George Pataki and Michael Bloomberg and Rudy Giuliani are our hosts here. O'BEIRNE: What do you want voters to know at the end of this convention, about this race?

MEHLMAN: I think that voters know the president. They know the kind of leadership he has shown. They know his conviction. They understand that he is someone that does the right the thing, but they're not necessarily aware of his vision for the next four years.

And so we want to use this convention, unlike the Kerry convention, to talk about how we want to reform government to keep our country safe in the world, and to make sure that there is prosperity that extends across this country.

O'BEIRNE: Ken, the economy is good. Threats in Afghanistan and Iraq have been eliminated. The president has cut our taxes. Why isn't he comfortably ahead?

MEHLMAN: This election will be close because the country is closely divided. But we're about to enter a different period of the campaign where the American people will have a chance to contrast two visions.

President believes that grow the economy by reducing taxes, making taxes lower, simpler and allowing the American people to keep more of their own money. John Kerry has already said he would raise taxes in the first 100 days in office.

He's the first nominee to do that since Walter Mondale was nominated by the Democrats in 1984. President believes we need to just keep taking the battle to the terrorists to win the war against terrorism. John Kerry, a few weeks ago, said going after terrorists actually creates more terrorists. This is someone who is very outside of the mainstream. In fact, he is so far to the left that Ted Kennedy is the conservative senator from Massachusetts, according to objective ratings.

O'BEIRNE: Who is going to decide this election, Ken? Each party's base, or those swing voters in the middle?

MEHLMAN: I think this is one of those elections where both mobilizing your base and also reaching out to swing voters are important. But that is an area we have an advantage. If you talk to most Republicans and most conservatives, their mission, they believe, that the president ought to focus on improving the economy, winning the war on terror. If you talk to most Kerry supporters, they are not motivated by being for Kerry, they are motivated by being anti-Bush.

O'BEIRNE: Over 250 Vietnam veterans have gotten together, openly, not a shadowy group, and formed Swift Boat Veterans for Truth, to tell the American public what they know of John Kerry. Why are you in a lawsuit trying to stop them?

MEHLMAN: Well, our position has always been clear and it has had two basic principles. Number one, we signed a law called the bipartisan Campaign Reform Act. And it said that if you want to elect or defeat a federal candidate, you should operate under a certain set of rules. And we've said that all of these 527 groups, regardless of whether they are for us or against us, ought to operate under those basic rules.

Secondly, the president has said that he believes all of these groups operating outside the rules ought to stop running their ads and operate within the rules. It is a very different position than the Kerry campaign. John Kerry has benefited from more than $63 million of George Soros, and people like that running ads against the president. He doesn't say a word about it until an ad is run against him and he complains.

And he has also said that he thinks there is a double standard for free speech for Vietnam vets. Vietnam vets that are against him, he doesn't believe have a right to speech.

O'BEIRNE: In 2000, Governor Bush enjoyed about a 6 point bounce among registered voters, following Philadelphia. You expect the same out of New York?

MEHLMAN: Well, historically Kate, the bounce of the incumbent, who follows the challenger, is two thirds of the bounce that the challenger received first.

O'BEIRNE: So, for two thirds of ...

MEHLMAN: Of a zero.

O'BEIRNE: ...the zero.

MEHLMAN: But we'll see. Look, the election, I think, will be relatively even around Labor Day. I think it is relatively even now. And I think when people look and they see the Democratic convention, that wouldn't defend an indefensible Kerry record, versus a Republican convention that will talk about the future and how we build on what the president accomplished, I'm confident of what will happen on November 2.

(END VIDEOTAPE)

SHIELDS: Kate O'Beirne, I take issue with one thing, that the economy isn't better for the 4.3 millions of Americans who have slipped into poverty under George Bush, the $1,500 we've lost in the median family income. But having said that, listening to Ken Mehlman, you get the sense that he's trying to make this election a referendum on John Kerry rather a referendum on the incumbent, George Bush.

O'BEIRNE: Mark, I don't think so. You heard Ken explain that they think it was a mistake that the Democratic agenda in Boston was pretty much anti-Bush. And not enough on what John Kerry has done and what he will do.

Now we're going to hear more about Kerry's record that they think he ran away from in Boston. We'll hear about it more here in New York than we did in Boston. But they're not going, I don't think, make the same mistake they accuse the Democrats of making. This convention is about a lot more than being anti-Kerry. They know they have to defend the president's record and put forward an agenda.

SHIELDS: Al Hunt.

HUNT: I think Ken Mehlman is very good. I think what he does he does quite well. There were a number of problems with that very good interview, Kate -- on Ken's part, not yours.

O'BEIRNE: Thank you.

HUNT: Kerry is not more liberal than Ted Kennedy. We know that. Secondly, he says that Kerry wants to increase taxes -- only on the very wealthiest Americans in order to pay for more health insurance. And Mark, as I recall the last time that was done it was done by Bill Clinton and it brought in the greatest economy we have ever seen in our lifetime.

But Ken Mehlman is right in the 527s. They ought to play by the federal rules, that is what the law says. And the Federal Election Commission will not enforce the law, Supreme Court ruling of 30 years ago.

SHIELDS: Good point. Right, Bob Novak?

NOVAK: Let me say this, that John Kerry -- you are not naive, Mark, you used to be in the campaign business yourself.

SHIELDS: You are absolutely right, Bob.

NOVAK: And the idea, this is a very vulnerable candidate, John Kerry, and they are going to pound away at him from now until election day, just like the Democrats are going to -- are going to pound away on George W. Bush. And I'll tell you something that something and that is, anytime you raise taxes on the most productive, investors in the economy, you are going to be in trouble with the electorate.

SHIELDS: Oooh! Margaret, get those violins out.

CARLSON: Is that the sham detector going off?

Listen, you know, the Bush campaign is so good about switching the discussion to 527s whenever the swift boat ads come up. And we can all agree and most of us said 527s shouldn't exist. And we don't want them in our campaigns.

O'BEIRNE: I don't agree.

CARLSON: Uh, Kate wants 527s. But to shift it to that is to get away from the substance. They have benefited greatly from these ads of tearing down Kerry. As well as it is a totally negative campaign. And now, maybe, they'll get to what George Bush is going to do for us. They haven't gotten there yet.

SHIELDS: Margaret, it is good. But it is a sham calibrator, not a sham detector that we're looking for on Bob.

Next on the CAPITAL GANG classic looks at Barbara Bush versus the pro-life Republicans at the Houston convention 12 years ago.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. Twelve years ago, when the first President Bush was seeking reelection, the Republican Convention beat back all attempts to modify an uncompromising anti-abortion plank. No sooner was that platform completed that first lady Barbara Bush declared the platform drafters had made a big mistake by even mentioning the subject of abortion.

The CAPITAL GANG discussed this at the Republican National Convention, in Houston, on August 15, 1992. Our guest then was Republican Congressman Henry Hyde of Illinois.

(BEGIN VIDEOTAPE)

HUNT: Mark, are the Republicans playing a devilishly clever game, here, on abortion?

SHIELDS: I find it, frankly, sort of deceitful politics where you write something up here, this is what we stand for publicly, but a little wink and a nudge down below, and we're going to say this is the message we're sending to our people.

REP. HENRY HYDE (R), ILLINOIS: I think it shows, really, a breakdown in communication. I don't think that Mrs. Bush really thought much about the political consequences of what she was saying. Because it does negate a big struggle we have to leave the platform intact.

NOVAK: This is her last campaign, she has said a lot of things. She knocked the Republican national chairman, Rich Bond, she is speaking her own mind. And I'll tell you something, the pro-life movement is so intricately bound into the Republican Party today that no first lady is going to take it out.

MARGARET WARNER, NEWSWEEK: What is incredible to me is what the platform adopted, the platform committee adopted here, most of the delegates here at this convention don't agree with.

(END VIDEOTAPE)

SHIELDS: Margaret Carlson, did abortion have anything to do with the Republican defeat in November of 1992?

CARLSON: No, it was mostly the economy. Listen, Republicans have staked out a very good position on abortion, which is they're pro-life, but they're not going to do anything about abortions. Current President Bush says we need to change hearts, not the law. So, they have great big wide territory there to operate in.

SHIELDS: Bob Novak.

NOVAK: (UNINTELLIGIBLE) might have been sleeping, but the president signed a partial birth abortion bill.

CARLSON: Right, which does nothing.

NOVAK: He signed the bill, so saying that they don't do anything...

CARLSON: It does nothing.

NOVAK: It does a lot, you just happen to be wrong on that, too.

But I would tell you this, that you can't imagine Laura Bush getting up, whatever she thinks, and saying they made a big mistake on abortion. Abortion ceased to be an issue -- at this convention it wasn't even debated in the platform committee. Not at all.

SHIELDS: Kate.

O'BEIRNE: The Republican Party has been a pro-life party for over 25 years now. Not only has it not hurt them, because the majority of the public is far closer to the Republicans on the pro- life issue, the abortion issue, than the Democrats. I don't think the Republicans could be a majority party if they were not the pro-life party.

SHIELDS: Al Hunt.

HUNT: It wasn't Barbara Bush that hurt them in that Houston convention, it was more Marilyn Quayle ...

O'BEIRNE: She didn't either.

HUNT: ... and the right wing diatribes that came after in that convention. That was the terrible message that was sent.

SHIELDS: Don't forget the easygoing message of our good friend Patrick J. Buchanan.

(CROSSTALK)

NOVAK: I thought it was a good speech.

O'BEIRNE: I liked it, too.

SHIELDS: When George Bush -- when Bill Clinton was up in his dormitory, avoiding the (UNINTELLIGIBLE) conflict ...

NOVAK: Listen, Al...

SHIELDS: ... that George Bush was serving. You can turn that around in this campaign, Bob.

NOVAK: Mark, get the transcript and you'll say we thought it was a good speech at the time, on CAPITAL GANG.

(CROSSTALK)

SHIELDS: Al Hunt.

HUNT: I saw Bob in that clip there without a vest. Gosh, he looks good without a vest.

SHIELDS: That was before he was a vested interest.

HUNT: Exactly.

SHIELDS: Next on CAPITAL GANG, beyond the New York convention, looks at what will happen, the final nine weeks of this presidential campaign.

(COMMERCIAL BREAK)

SHIELDS: Welcome back. John Kerry issued a challenge to George W. Bush.

(BEGIN VIDEO CLIP)

KERRY: Let's meet every week, from now till the election, and talk about the real issues facing Americans, that will strengthen our country and make America great again.

(END VIDEO CLIP)

SHIELDS: The Bush campaign issued this statement, quote, "There will be time for debates after the convention. During the next few weeks, John Kerry should take the time to finish the debates with himself", end quote.

(BEGIN VIDEO CLIP)

KERRY: Yesterday, I challenged President Bush to try to have a debate every week where we talk about one individual subject. I don't know why he hasn't called me.

(END VIDEOTAPE)

SHIELDS: Margaret Carlson, will we have presidential debates this year, as we have every year since (UNINTELLIGIBLE)...

CARLSON: Indeed, we will, Mark.

SHIELDS: And will they be the decisive force of this campaign?

CARLSON: Indeed, we'll have debates. You know, conventions are set pieces, but in the debates something can actually happen. Now, in the last set of debates, what do we remember? Not much. Gore sighed. And he lost. Or he didn't really lose, but he didn't win the election -- enough to actually win the election.

(LAUGHTER)

I know, Florida. But we're not allowed to talk about it.

SHIELDS: Yes.

CARLSON: But listen, I think the debates do hold some promise this time, because last time the economy was fine, we didn't know about terrorism, it didn't come up. They shouted about lock boxes. This time there are real issues, I think they will matter.

SHIELDS: Bob, will George Bush debate?

NOVAK: He will debate, definitely will debate. I'm not -- we don't have time to go over what Margaret -- the ridiculous things that Margaret just said.

CARLSON: Oh, please!

NOVAK: But, but, but the fact that Gore was terrible, and most Democrats will tell you he lost the election in those debates. I don't know if there is going to be three debates, or two debates, but there will be debates. They'll be important.

And John Kerry asking for a debate every week, that is just kind of silliness, nobody takes it seriously. I know you don't, Mark.

(CROSSTALK)

SHIELDS: I don't take it seriously.

CARLSON: Let me just mention, it wasn't the substance of the debates, it was the atmospherics of the debates on which Al Gore lost.

SHIELDS: But President Bush, in 2000, George W. Bush, Governor Bush, benefited from lowered expectations. You know, people were saying things about him. And he did, he did better than expected in those debates.

Will he, those expectations will not be the same this time, because he has already been president for four years.

O'BEIRNE: Well, the expectations benefited him some, but Al Gore sure pitched in by being so unlikable, and so overbearing. So, I think we have to give Al Gore credit there.

And I still think that people are going to think, Democrats certainly believe, that John Kerry is so smart and so adept, and don't forget many of them think that George Bush is an idiot. So the expectations for George Bush on their part are always going to be pretty low. But I suspect he'll surprise them, as he did four years ago.

SHIELDS: Al, you agree that the debates are a given. That there will not be any question about quibbling and just trying to back...

HUNT: Oh, there will be lots of quibbling. There will be lots of quibbling in the next few weeks. But Bob's actually right. There will not be weekly debates.

NOVAK: No.

HUNT: There will be either two or three. You don't want to have one, if you are Karl Rove, because that is rolling the dice too much. But there may be two, there may be three. I think the idea of weekly debates is a splendid idea, it is not going to happen. But it would be terrific to have them debate every week on a different issue.

NOVAK: How about a daily debate?

(LAUGHTER)

NOVAK: If you want to be silly? Why not have one every day?

HUNT: You do it on "CROSSFIRE" everyday, Bob. Why is that any different?

SHIELDS: And, boy, is that ever silly!

(LAUGHTER)

(CROSSTALK)

NOVAK: I rest my case.

(LAUGHTER)

CARLSON: Yes.

O'BEIRNE: The confirmation that John Kerry is slipping in the polls is this silly thing about, I'll challenge him to debate. He'd much rather talk about why George Bush won't debate him weekly than talk about his smearing of Vietnam vets in '71, or swift boat vets.

SHIELDS: One of the smartest Republican governors I know, said last night, in the earshot of Bob Novak and me, "If this election is about John Kerry, George Bush will win. If this election is about George Bush, all bets are off."

NOVAK: That isn't exactly what he said, but close enough.

SHIELDS: Well, we don't want to identify him by telling what state he would get, all right?

NOVAK: All right. All right.

SHIELDS: All right, the GANG will be back with our "Outrages of the Week".

(COMMERCIAL BREAK)

SHIELDS: And now, for the outrage of the week.

That George W. Bush, he's no flip-flopper. Take the Bush doctrine toward North Korea and his "axis of evil." Mr. Bush made it clear, he would not, quote, "tolerate", close quote, nuclear capability in that totalitarian communist regime.

Now, we have substantial intelligence reports indicating that North Korea has enough fuel to produce six nuclear weapons and could be selling nuclear material to other rogue nations.

What does our straight-talking, tough-talking commander in chief now say? Quote, "I don't think you give timelines to dictators," end quote.

Does this Bush rule apply only to dictators who really do have weapons of mass destruction?

Bob Novak.

NOVAK: Ben Barnes was one of my favorite Democrats more than 30 years ago. The boy wonder of Texas politics until he was defeated for governor at the age of 34 in 1972. He reappeared this week, when a Texas Bush basher distributed a 45-second video for the Kerry campaign by Barnes, claiming that he, as lieutenant governor of Texas got Bush into the Air National Guard.

But, Ben was not yet lieutenant governor when Bush joined the Guard. This sleazy politics is not the way for my old friend Ben Barnes to get back on the front page.

SHIELDS: Margaret Carlson.

CARLSON: President Bush, intent upon keeping the evangelical vote has rejected promising stem cell research, embraced guns, rejected gays and now coddles a general who preaches that the Iraq war is a Christian crusade against the infidel Muslims.

General William Boykin declared that Islamic terrorists would only be defeated if, quote, "We came at them in the name of Jesus", unquote. All Defense Secretary Rumsfeld has said is that Boykin has an outstanding record and should have cleared his remarks ahead of time.

Bush must stand up to the Christian right and get rid of this general.

SHIELDS: Kate O'Beirne.

O'BEIRNE: President Bush signed a partial-birth abortion ban supported by 345 members of Congress, but not John Kerry and John Edwards. Under the procedure a child is partially delivered and intentionally killed, by having her skull punctured.

This week, a federal judge found that the, quote, "gruesome, brutal and barbaric and uncivilized," unquote, procedure caused the fetus severe pain, but reluctantly struck down the ban owing to a previous Supreme Court decision.

A gruesome reminder that justices and elections matter.

SHIELDS: Al Hunt.

HUNT: George Bush say America has turned the corner. Really?

The Census Bureau reported this week that 1.3 million Americans were added to the poverty rolls last year. That means there are now almost 36 million people, in this, the wealthiest of countries, living below the poverty line. Also the number of Americans without health insurance rose to 45 million, or one in six in America. And real household income, again, stagnated.

If you are an investment banker, or a rich columnist, the corner looks pretty good. If you are not, for millions of others, it looks pretty bleak.

SHIELDS: This is Mark Shields, saying good night for the CAPITAL GANG. But do not despair, we'll be back tomorrow night at 10 p.m., part of CNN's remarkable, special convention preview. And also, throughout the week, so stay tuned to CNN for complete coverage of the Republican National Convention and inserts with the CAPITAL GANG.

Thank you for joining us.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


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