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Bill Richardson Interview; Bush Speaks at Counter Terrorism Center; Bush Poll Numbers Down; Fighting Terror; Tobacco Deal Up in Smoke?; California Special Election

Aired June 10, 2005 - 15:30   ET


ANNOUNCER: It's the nation's nerve center in the war against terror. Now the president takes a tour and we get our first look inside the top secret Counter Terrorism Center.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It is all aimed -- all the work here is aimed at keeping America safe.

ANNOUNCER: How low can they go? We've got new poll numbers out on Congress. Do you think lawmakers are doing a good job?

Why is the Justice Department slashing the penalties it is demanding of cigarette manufacturers?

UNIDENTIFIED MALE: It reeks. And it reeks of political interference.

ANNOUNCER: Democrats charge the Bush administration is protecting a political ally: big tobacco.

Will the campaigning never end? Probably not. The ad wars just keep going and going and going.


JOHN KING, CNN ANCHOR: Thanks for joining us. I'm John King.

President Bush today toured the nation's high tech Counter Terror Command Center which was created to help assess threats to the United States from around the globe, and to better coordinate responses if necessary. Mr. Bush used the occasion to make his second pitch in as many days for the renewal of the Patriot Act.

Several key provisions of that law are set to expire at the end of the year. And the president once again disputed critics who say the Patriot Act does more harm than go. It is a policy debate that plays to what long has been considered the president's greatest political strength. And for more on that, we turn to our White House correspondent Dana Bash -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, John, you know Democrats and even some Republicans strongly object to a lot of what President Bush wants to extend in terms of the provisions of the Patriot Act, but allowing law enforcement and intelligence agencies to better coordinate is probably the least controversial and that as you mentioned is what Mr. Bush talked about today when he visited the National Counter Terrorism Center.

That, of course, was established after September 11, or at least the commission recommended that it was very necessary to better coordinate those issues, law enforcement and intelligence.

While there, Mr. Bush did praise their work. But he also made a point of saying how critical it is not to forget that terrorism is still very much a threat.


BUSH: It's a different kind of war. It's a war that seems like there's maybe no action taking place, that maybe the enemy is not active. You know, I was concerned after September the 11 that the tendency would be to forget the nature of the people with whom you deal on a daily basis. But I understand, that there is an enemy that still lurks. And you know it as well.


BASH: Now there's a very good reason for the president to be saying that, polls recently show that the priority for Americans in terms of terrorism really has lowered, but also confidence in the president's ability personally, his No. 1 asset, also has taken a tumble.

Look at those numbers. Now Mr. Bush's approval in terms of dealing with terrorism is 50 percent. That's 11 points lower than it was just six months ago at 61 percent.

Now some here attribute that eroding not simply to the fact that Americans are not confident in his leadership on terrorism, but simply that the president hasn't been talking about it recently. He's been talking more about things like Social Security, where Americans really are not thrilled with the ideas. So far polls show that he has plans.

So, today was a way for the president to get back to the message where the Americans historically, at least since 9/11, have been most comfortable with his leadership, John.

KING: And Dana, we'll have more on the dispute over the Patriot Act in just a minute. But before I let you go, a key guest for the president in the Oval Office today. And differences on another key security issue.

BASH: That's right. That, of course, is North Korea. You'll remember back during the campaign, the biggest foreign policy difference perhaps between President Bush and John Kerry was North Korea. John Kerry favored one on one direct talks. President Bush said that simply doesn't work. He wants these six-party talks.

Well, they have been stalled now for about a year. So today Mr. Bush had South Korea's president here in the Oval Office. And South Korea is a bit frustrated with the U.S. stance saying perhaps privately they are too inflexible in what the U.S. is or isn't offering. But today it was all smiles.

South Korea's president did hint at the fact there are differences, but the key goal in today's meeting you are seeing in the Oval Office was to try to get North Korea back to the table. Earlier this week they said they would, but there still is no date set. And that is exactly what these two men were trying to do today.

KING: Dana Bash at the White House. Thank you very much.

Now, congress passed the Patriot Act immediately after the 9/11 terror attacks. And on the surface, at least, it still enjoys the support of most Americans. A new Washington Post/ABC News survey finds 59 percent of those polled favor making the law permanent, 39 percent are opposed.

But when asked if they agree with the president's call to expand it further by allowing the FBI to demand records without a judge's prior approval, only 31 percent are in favor, 68 percent say they are opposed to that.

While touring the Counter Terrorism Command Center, Mr. Bush argued the Patriot Act is essential to winning the war on terror.


BUSH: The Patriot Act has helped save American lives. And has protected American liberty. For the sake of our national security, the United States Congress needs to renew all the provisions of the Patriot Act, and this time Congress needs to make those provisions permanent.


KING: On Capitol Hill, however, many Democrats are among those who remain unconvinced. They forced, those Democrats did, an extra hearing on the law this morning for the House Judiciary Committee. A hearing that ended abruptly when the Republican committee chairman decided to adjourn it.


REP. JAMES SENSENBRENNER, (R) JUDICIARY CHAIRMAN: Thank you all for coming today. I thank the members.

UNIDENTIFIED MALE: Gentleman yield, gentleman.

UNIDENTIFIED MALE: Mr. Chairman, Mr. Chairman.

UNIDENTIFIED MALE: Gentleman yield.

UNIDENTIFIED MALE: Mr. Chairman, Mr. Chairman.

Point of order, Mr. Chairman...

(END VIDEO CLIP) KING: And with me now to talk more about the Patriot Act and the political debate and the many critics is Richard Falkenrath. He's a senior fellow at the Brookings Institution, and a former deputy Homeland Security adviser to President Bush.

A taste there of the spirited political debate about this. But that debate is not just politics, it's about some key policy ideas. Many Democrats, but even some Republicans, objecting to expanding this law. Help our viewers understand one of the key provisions is the idea that the FBI could get an administrative subpoena to collect evidence in terrorism cases without going to a judge first.

RICHARD FALKENRATH, CNN SECURITY ANALYST: That idea is actually not in the Patriot Act. It's been passed by the Senate Intelligence Committee. And this is an idea that literally expands some of the powers in the Patriot Act. The Patriot Act has a related provision, which allows the FBI to get access to business records, including library records, by going to a judge. In this case a very special judge called the FISA judge and getting permission. That provision will expire at the end of the year.

The very similar sorts of authorities for the FBI. One will expire at the end of the year unless Congress extends it. One is the effort by one committee in the Senate to enlarge the authority.

KING: And another debate, and you have an odd alliance here, many liberals like Dick Durbin in the senate, conservatives like Senator Craig, about the sneak and peek provision. Explain that.

FALKENRATH: A sneak and peek is the ability to go to a judge and ask for permission to enter a suspect's residence or place of work and conduct a search and then leave without leaving a trace, never telling the suspect that they're there. Routinely used for counter drug investigations. Was not allowed for counter terrorism investigations until the Patriot Act made it allowed.

People don't like that for whatever reason the term sneak and peek has been some sort of radioactive. However, that provision is not expiring, that one stays unless Congress decides to change it or eliminate it.

KING: Now, you were there at the beginning of this debate and the crafting of this law. It has been some time. Things have been tested. Everything in life needs to be fine tuned. From your perspective, what has proven maybe to be excessive. And where does the government need more powers?

FALKENRATH: I'm not sure anything in the Patriot Act has proved excessive. There's been no evidence of any abuses related to the Patriot Act that anyone can identify. Senator Feinstein said that publicly. Even the ACLU concedes that they haven't found any evidence of abuses.

And we know that these authorities have been pretty important, particularly for promoting information sharing between law enforcement and intelligence. And that has proceeded for the last three and-a- half years. And everyone agrees that needs to continue.

KING: Now, critics say when the president is out campaigning for the reauthorization, and in some cases the expansion, he always highlights things on which everybody agrees and doesn't mention the more controversial items. Is that a fair critique?

FALKENRATH: Yes. It probably is fair. When you work on a presidential speech, you try to get really clear examples that are easily made and easily understood by everyone.

But I will say this, John, there's only 16 provisions here that are going to expire. The Patriot Act was hundreds of pages of long. A vast majority of it stays in place and is not going to expire.

KING: And can you cite right here one or two things quickly for the American people to say, you want to expand the law because it has done this?

FALKENRATH: Well, the two things that are most important, first, it permitted the FBI to share information with the intelligence community. And second, it is permitted the FBI to conduct domestic intelligence operations against terror threats against the modern means of communication. And the old days were just about wiretaps or phone lines. Today it's the Internet, it's multiple different cell phones, it's pagers, it's lots of different things. And the Patriot Act modernized electronic surveillance law in a way that has been very useful in the 21st Century.

KING: Mr. Falkenrath, thank you for your insight into both the policy and a pretty feisty political debate.


KING: Thank you much.

And stay tuned to CNN day and night for the most reliable news about your security.

Coming up, the public's view of the president and the Congress. New polls find a decline in how people view the occupants at both ends of Pennsylvania Avenue. I'll talk to two pollsters about what the numbers mean for the Bush agenda.

It's a lot of time before the next big election, but the ad wars are already heating up. We'll assess the airwaves with CNN"s political ad consultant.

And the last minute shift in legal strategy in a trial against big tobacco. Why anti-smoking advocates are so angry about a multibillion dollar decision.


KING: There are several new polls just out with numbers that aren't likely to bring smiles to President Bush or members of Congress. Joining us now with their take, Democratic pollster Anna Greenberg and Republican pollster David Winston.

Let's start with the president's approval numbers. A new Gallup poll out showing the president's taken from June 6th to 8th -- shows the president's at 47 percent. If you look over the back as far as April, essentially looks like Groundhog Day. He goes somewhere from 50 to 48, somewhere in that range that right there.

Let me start with the Republican in the group. He's a president under 50. He's not running for reelection, so it's not a huge number right now. But it's not great.

DAVID WINSTON, REPUBLICAN POLLSTER: No, I mean -- and he's dealing with a pretty difficult political environment. I mean, there's a question that's also asked called right direction, wrong track, in terms of mood about the country. And you've seen over recent months that that mood has gotten somewhat more negative. So the fact that his numbers have stayed pretty stable within a sort of slightly worsening political environment I think has been a good sign for him. Nonetheless, long-term, you want a president over 50 percent, clearly.

KING: He says a good sign for him. I assume you think not so good?

ANNA GREENBERG, DEMOCRATIC POLLSTER: I think it's not a great sign. I mean, he has a lot of things he wants to accomplish in Congress and it's becoming increasingly difficult. You also have to look at his other approval numbers, and if you look at things like Social Security, he's down at 35 percent. He's even seen five and six point drops on foreign policy and war on terrorism. So when you look at the components of what he's doing, it's down even farther.

KING: I want to move on to the Congress number. But let me ask you, David -- the idea that Bush was so defined by terrorism in the first term, many say just because he has to deal with all these domestic issue, that it's just tougher sledding for him. He's in an unfamiliar environment. Maybe the public perceives him in a different environment.

WINSTON: I think there are two things. One, because things have gotten slightly better there -- the elections were certainly a positive and the electorates' focus has been moved toward the economy because of gas prices. He's being more affected by the right track, wrong track, that sort of optimism, pessimism question, in terms of how people are perceiving what he -- how he's doing in Iraq.

I know that sounds like an odd combination, but there's the overall impact of the direction of the country, impacting a variety of numbers, whether it's Social Security handling or Iraq handling. I mean, it's a number that defines a presidency to some degree.

KING: You're shaking your head. I'll give you a second.

GREENBERG: Well, I mean, he has an agenda that is clearly out of step with what America wants to do. He interpreted his win in this election in 2004 as a mandate to do a series of things he never had a mandate to do. So we shouldn't be surprised when see these low numbers, because if you take Social Security, stem cell, Schiavo, et cetera, et cetera, he's doing things that are fundamentally out of touch with what people want.

KING: Well, you say he's out of touch with what people want. Let's look at how people rate the Congress right now. How Congress is handling its job. This again, a Gallup poll, I believe. Approve 34 percent, disapprove 59 percent. So six in ten Americans, essentially, don't like what the Congress is doing right now.

I'll start with you. The Republicans run the Congress. I assume you somehow think that benefits the Democrats or is it a pox on all your houses?

GREENBERG: I think if the election were held today, we would see a pretty serious change in control of Congress. These are really bad numbers. And I think it reflects mainly that this is a Congress that's been focused on things that's out of step what people want. I mean, the most serious economic concern people have is the cost of healthcare. There's no been discussion of the cost of healthcare. This discussion of stem cell and Terri Schiavo -- people just don't understand what they're doing in Congress.

KING: You're shaking your head. It's your turn to shake your head while the Democrats speak. I assume you would make the argument that a lot of this is simply because they're in the middle of a lot of things and they're not finishing things right now.

WINSTON: They're in the middle of a lot of things. A lot of issues are about to come -- the big one being energy. Everybody is very concerned about it and there's a chance we'll see a bill here pass through the Senate and get to the president's desk. That will be a significant change. But also, there's a differentiation here. And that is, if you ask the question, are you satisfied with your personal member of Congress, you see a very different picture.

People are very happy with their individual members. There may be this broader perception. And so if you're looking at some sort of -- is there a sort of ground swell to sort of throw the guys out, at this point that's clearly not there. And you see the satisfaction with their individual members, that's real important.

KING: Let's move on to that broader environment you talked about. This is a number from the A.P./Ipsos poll, I think, just out. Where is the country headed? Right direction? 35 percent. Wrong track? 59 percent. So, again, six in ten Americans say the country is on the wrong track.

Let's try to take this debate outside of Washington, starting with you, Anna. If we grab six people on the street in Grand Rapids, Michigan or Des Moines, Iowa, right now, and said what's going on, what's good, what's bad, what would they say?

GREENBERG: They're worried about Iraq. They can't understand what's going on there, how we're going to get out. They're worried about the economy, gas prices, you know, good paying jobs. They're worried about the cost of healthcare. There's a whole set of things they're worried about and they hear nothing that comes out of Washington that addresses those concerns.

KING: Do you agree with that? The concerns, anyway?

GREENBERG: No, I -- the concerns, yes. But the way they're set up, I would disagree with. I think people have -- there are all these jobs being created every month, but yet a real problem with gas prices. So they don't know how to resolve the economy. In Iraq, we had these really good elections, but people are continuing to die. So they don't know how to resolve that.

And I think what you're seeing is that the electorate is not quite sure what to make to the situation. That tends to make them a little more negative. The positive sign to that is that they're soft. They are trying to make a decision. So they have not yet framed their prism for the 2006 elections, in terms of how they're going to look at these issues. That's an opportunity for the president and it's also a threat, as well.

KING: Well, you bring me to the question I want to close with, is that they haven't framed their opinion for the 2006 elections. We're here in June, the beginning of the summer in 2005. If we're having this conversation a year from now and the wrong track is that way, you're going to have a harder time making your case to keep the Republican majority.

WINSTON: I would absolutely agree. I mean, if this were three or four months out, then actually, what you'd be looking at is an electorate that was really beginning to frame its viewpoint of the election. I think at this point they're not there at all. And I see some -- like I said, you know, example in terms of jobs being created. There are enormous amount, versus the gas price. They haven't resolved that yet. By next summer they will resolve that.

GREENBERG: I mean, I -- obviously, who knows what's going to happen in a year? But I see no evidence that idea that the administration is taking positive steps to deal with it. They are going to continue to go out and talk about Social Security reform, when it's clearly dead. You don't see evidence of a Congress that is doing -- you know, they were very smart in 2002. They took on prescription drugs, they passed a bill in the house, didn't pass the Senate, but then Pharma (ph) spent $20 million in swing districts advertising about the prescription drug bill the Republicans passed.

You don't see them doing those kinds of things that would start addressing the real concerns people have. They're distracted by lots of other issues and if they don't sort of turn around what they're doing, I don't see how 2006 looks any different than it does now.

WINSTON: But having said that, just as you said, we're in the middle of things and there are a lot of things that are about to happen this summer. And I think you will see American concerns get addressed this summer. KING: We're going to keep the tape, keep the transcript, bring you back on Friday afternoon one year from now. Thank you both. David Winston, Anna Greenberg, thank you very much.

And as we've just been discussing, the never ending campaign. It's supposed to stop, or at least slow down after a presidential election. But ads are flooding the air waves. A look at what is going on when INSIDE POLITICS continues. Stay with us.


KING: The fierce election battles of last year are history. But surprise, surprise, campaigning goes on. Numerous groups on both sides of the ideological spectrum are on the air with commercials. Evan Tracey, who analyzes ad spending for CNN, takes a look.


ANNOUNCER: Stop defending Tom DeLay's corruption.

ANNOUNCER: If you had a problem with the kitchen sink, you wouldn't tear down the entire house.

ANNOUNCER: Accused of accepting a gift worth thousands from a foreign agent.

ANNOUNCER: Democrats have no solutions for Social Security.

EVAN TRACEY, TNS MEDIA INTELLIGENCE/CMAG: We're in the permanent campaign right now. I think it's going to be part of where we're in this culture of advocacy, where the elections end but the advertising doesn't. We've already seen over $40 million spent in less than six months in 2005.

There's really two things going on. One is there are some big ticket items, obviously, moving in Congress that are going to bring a lot of groups out to engage on, like Social Security, like tort reform, like the filibusters.

JIMMY STEWART, ACTOR: In other words I have got a piece to speak. And (INAUDIBLE), I'm going to speak.

TRACEY: The second is, we've got groups out there that really formed to take part in the elections, most recently the 2004 elections, that are really engaging in a way to keep the political activism alive and advertising is obviously the way they can do that and be the most visible.

Well, MoveOn engaged very early against President Bush in the 2004 election. When the Democratic primaries were going on, this is a group that spent $10 million in some of the key battleground states. It ended up spending, obviously tens of millions of dollars throughout the election. So far, they have engaged on a number of the issues such as the filibuster, Social Security and some of the president's cabinet appointees. The most active conservative groups right now have been Progress for America, Club for Growth, mostly engaging on issues like the filibuster and Social Security. Progress for America, for example, very successful in the last election sort of running ads that complimented the Bush campaign message. They're doing the same here.

ANNOUNCER: The president who fights to defeat terrorists before they can attack again.

TRACEY: They are really picking up the White House party line and carrying that forward, in some cases using clips of the president's State of the Union Address.

BUSH: And so we must join together to strengthen and save Social Security.

TRACEY: In many ways, these groups are trying to present a track record I think, so that they will be the groups that fund-raisers will go to to donate the money for them to engage in the next election. In other words, it's about staying relevant and showing that you can use the money you are raising to advance an agenda or a political party.


KING: That report from Evan Tracey with TNS Media Intelligence.

Tough words from one of the president's supporters. Coming up, we'll tell you what Republican senator Mel Martinez had to say about Iraq and Latin America.

And is New Mexico's governor Bill Richardson eying a White House run in 2008? I'll ask him that when he joins us live.


KING: With the markets about to close on this Friday afternoon, I'm joined by Christine Romans in New York with the Dobbs Report -- Christine.


About 30 seconds to go in the day, and stocks are mixed. Right now, the Dow Jones Industrial Average actually up 8 points, 10,511. The NASDAQ is falling about two thirds of one percent.

GM gained 8 percent after signs that United Auto Workers might help that struggling car maker cut healthcare costs. So a big mover there.

The nation's trade deficit widened by 6 percent in April to nearly $57 billion dollars, that's partly because of the higher cost of imported oil. Both imports and exports rose to new records. The politically-sensitive trade gap with China, in particular, grew 14 percent for the year. The deficit with China is running at an annual rate of $170 billion, which would be the highest ever recorded with any country. Citigroup will pay $2 billion to settle a class-action suit over its role in the Enron debacle. The suit had accused Citigroup, along with a number of other investment banks, of taking part in a scheme that cost investors billions. Citigroup will make payments to investors who bought Enron stock and bonds before that company's collapse. This is the second big hit in the past year Citigroup has taken for its involvement in a financial scandal; it paid $2.6 billion last year to settle a suit arising from the WorldCom bankruptcy.

Day five of jury deliberations in another high profile case of corporate fraud. It's the second trial of former Tyco CEO Dennis Kozlowski and ex-finance chief Mark Swartz. They're accused of cheating the company and its investors out of nearly $600 million. The first trial ended with a hung jury.

Coming up on CNN at 6:00 p.m. Eastern on LOU DOBBS TONIGHT, our special report, "Living Dangerously." More people are making their homes in areas that are highly vulnerable to natural disaster. We'll map out the most dangerous places to call home.

I promise, we'll map it out.

Also tonight: President Bush says Congress must immediately renew parts of the Patriot Act that are set to expire. Former CIA Director James Woolsey will be our guest on that topic.

And "Red Star Rising" -- we'll go Shanghai for a report on China's latest efforts to lure U.S. companies to its factories.

Plus, our special report, "Heroes," looks at a lance corporal injured during the fighting last fall in Fallujah and how he's starting over, relearning what it takes to be a Marine.

All that and more -- join us -- 6:00 Eastern right here on CNN. Now back to John in Washington.

KING: Thanks, Christine, and you have a great weekend.

ROMANS: You, too.

KING: And now for us, back to INSIDE POLITICS.

The president's trip today to the National Counterterrorism Center offered a first look at the government's highly-classified operations aimed at preventing future terror attacks.

Our National Security Correspondent David Ensor is with me now with more on the president's trip and the work that goes on at this highly secretive center -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Well, John, this is a highly secretive center. And it's the first peek that the president or we have had at the National Counterterrorism Center, which is in the shopping area in rural -- in suburban Virginia, just close to town here. It's a state-of-the-art intelligence fusion center where the idea is to get rid of the mistake that was made before 9/11, where intelligence wasn't being exchanged between the FBI, the CIA and other agencies, to fuse it all in one place. And this is it, where they can see what they've got, put it together and catch more terrorists. That at least is the goal.

KING: Now, you're making a joke about where it is. I mean, this is a top-secret, highly-classified place. You see some of the most amazing gizmos the U.S. government has here.

ENSOR: Right.

KING: Do we know exactly where it is?

ENSOR: We know, but we're asked not to be too specific about it. Frankly, it's going to be out. It's there. It's very obvious. It's a large building.

Here is how the president himself described what he saw there.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Here at the NCTC, men and women from different agencies, of different backgrounds, work side by side to share information, to analyze information, to integrate information. See, prior to the attack, it was kind of we all went about our own merry way. There was some interagency dialogue, but not a lot. And we learned a lesson about having walls between our agencies, and we're tearing those walls down.


ENSOR: They're tearing the walls down, but there still are some problems with the FBI computer system that are going to need fixing because there's really an integrated system of intelligence, domestic and foreign, that can work.

KING: The president not just there for show and tell. He's trying to advance a policy agenda renewing the Patriot Act, expanding the Patriot Act. As you ask your sources in the counterterrorism community, how important is this to them?

ENSOR: This is critical to them. And what was interesting was the president did something he doesn't often do and high officials don't often do. He got into specifics. He named names about which FBI agents have cracked which cases and how they used the Patriot Act to do it, all part of trying to convince the Congress this matters, this has already made a difference.

Here's what he said.


BUSH: Prior to the Patriot Act, parts of the same FBI office couldn't discuss a case with each other. And as a result of information-sharing, the agents discovered that the suspects had attended an al Qaeda training camp in Afghanistan. Prosecutors used the information to build a convincing case, and today, all six of the -- all six of the Lackawanna folks are in federal prison.


ENSOR: That's the president at the National Counterterrorism Center today -- John.

KING: And hopefully we'll see more of it in the days and weeks ahead, maybe.

ENSOR: Maybe.

KING: David Ensor, thank you very much.

Lawyers for the tobacco industry say they were as surprised as anti-smoking activists when the government took a dramatic turn in its racketeering trial against cigarette makers. Critics are yelling foul in a case that dates back to the Clinton administration.


KING (voice-over): Democrats and anti-smoking crusaders charged politics is behind the Justice Department's decision to drastically slash the dollar amount it's seeking from big tobacco.

SEN. FRANK LAUTENBERG (D), NEW JERSEY: It reeks and it reeks of political interference. It reeks of an administration whose heart isn't really in this case.

KING: Sparking the outrage, a stunning twist in the government's landmark racketeering case against the tobacco industry. The prosecution's charge? For 50 years, cigarette makers conspired to get Americans hooked on nicotine, jeopardizing countless lives by deliberately withholding information about the dangers of smoking.

The suit was filed during the Clinton administration, with Justice Department lawyers demanding a $280 billion payout, punishment, they said, for profits obtained through the alleged fraud. But in February, an appeals court ruled the government couldn't penalize the tobacco industry for past profits. So the focus shifted to getting the companies to fund future anti-smoking initiatives.

A government expert witness estimated those programs would carry a $130 billion price tag. And that's what the Justice Department was seeking until Tuesday, when without warning, it scaled back its request to just $10 billion.

Tobacco industry lawyers voiced confusion. Anti-smoking advocates disbelief and skepticism, accusing the Bush Justice Department of going easy on the tobacco industry.

BILL CORR, ANTI-SMOKING ADVOCATE: The Bush administration and the Bush Justice Department is way to close to the tobacco industry. I don't have any proof that they've made these decisions because of campaign contributions, but they have a long history of opposing this lawsuit, and it is inexplicable that they would undermine their own expert witness at the last minute.

KING: Justice Department officials argue the diminished reward request reflects the appellate court ruling that sanctions apply only to future cases of fraud by big tobacco. The $10 billion figure, they say, is just a jumping off point, an initial requirement based on the compelling evidence that the defendants will continue to commit fraudulent acts in the future.

They add that all department lawyers involved with previous tobacco cases were recused from this case. But that doesn't appease critics who strongly denounce the about-face. Their hope now lies with the judge in the case, who can award any amount she sees fit if she finds the tobacco industry liable at all.


KING: And we shift now to Bush administration foreign policy. Republican Senator Mel Martinez of Florida today criticized Mr. Bush for not paying enough attention to Latin America. Senator Martinez also expressed concern about the progress or the lack of progress in the war in Iraq.

Martinez, a member of the Foreign Relations Committee, said the situation in Latin America demands urgent action by the United States. As he put it, "The administration has been very remiss for the last four years in its direction toward Latin America to their great consternation now."

Martinez singled out Bolivia, calling the situation there a crisis, and said things aren't much better in Ecuador and Venezuela. Martinez, who strongly supported Mr. Bush on the Iraq war during last year's campaign, also said he's "discouraged" by the fact the administration has yet to reduce the number of U.S. troops in Iraq. And he also said the president should consider Democratic Senator Joe Biden's suggestion this week that the prison camp at Guantanamo Bay, Cuba, be shut down.

Checking our Friday "Political Bytes," CNN has confirmed that Democratic Governor Mark Warner of Virginia has decided to create a federal leadership PAC this summer, a move that will allow him to raise money for a possible run for president. Warner has also hired Monica Dixon, Al Gore's former deputy chief of staff, as a consultant.

A follow-up to a story we reported earlier this week. Former Democratic Congressman Tom Roemer says he will make a decision soon about a challenge to incumbent GOP Senator Richard Lugar of Indiana. Roemer has four children, and he tells the "South Bend Tribune" that a key factor in his decision will be the impact the Senate race could have on his family.

On the road this weekend, Indiana's other Democratic -- other senator, excuse me, Democrat Evan Bayh, is keynoting the Wisconsin Democratic Party's annual convention later tonight. Another would-be presidential candidate for the Democrats, Senator Joseph Biden of Delaware, is speaking to the Florida Democratic party members tomorrow in Fort Lauderdale.

And in Massachusetts, Republican Lieutenant Governor Kerry Healey has apparently locked up the endorsement of Govenror Mitt Romney should Governor Romney decide to run for president instead of reelection. "The Boston Globe" reports that Healey won the governor's support after a series of private meetings earlier this year. Aides to Romney have said he will decide on a potential White House run sometime this fall.

He's got a resume some politicians would call a pot of gold, but is the governor of New Mexico ready now to cash all that in for a run at the White House? I'll ask Bill Richardson just ahead.

Also, a human cry from the right over a museum at the site of the World Trade Center. We'll check in with our Internet reporters. What's all that about?

And in our "Strategy Session," Margaret Carlson and Bob Novak weigh in on the latest figures on the nation's economy.


KING: New Mexico Governor Bill Richardson is no stranger to the spotlight or international hotspots. And he's got a resume to prove it, one that just about anybody would love to have if they were setting their sights on higher office.

Former ambassador to the United Nations, former energy secretary and former congressman, he has a current title as well. It's Governor.

Governor Richardson joins us now from Santa Fe.

Governor, thank you for joining us on INSIDE POLITICS. Did you get a little bit lost earlier in the week? You were in New England, in New Hampshire, not New Mexico. How did you end up there, sir?

Governor Richardson, obviously -- can you hear us now, Governor? Let's try this again.


KING: OK. John King, Governor. Glad you can hear me.

I was trying to start with a joke. Maybe you didn't like the joke. Maybe that's why you couldn't hear me.

RICHARDSON: No, I didn't hear it.

KING: So earlier in the week -- that you are the governor of New Mexico and you got lost in New England earlier this week, up in the state of New Hampshire. Some would suggest maybe looking ahead a little bit. Tell us about your visit.

RICHARDSON: Well, John, the purpose of my visit was, as chairman of the Democratic Governors, we've got a new Democratic governor, John Lynch, who's doing a great job. We were there to signal our strong support for him.

I had gotten a lot of invitations from Democratic Party groups in Keene, in Portsmouth, in Manchester, and so I decided to accept them. And that was the reason for my visit.

KING: You know, Governor, I was born at night, as Haley Barbour used to say, but it wasn't last night. I've been in New Hampshire a few times. And guys going up to say hi to the Democratic governor don't do the politics and eggs, breakfast, don't go to some of the other places you went. You're at least thinking about 2008, are you not?

RICHARDSON: Well, yes. I -- my main objective is to be a good governor of New Mexico. I've got reelection in '06, but I also chair, as I said, the Democratic Governors.

Beyond '06, should I be reelected, I'm going to keep my options open. And it was a good opportunity, John, to combine all of those Democratic governor events with Democratic Party events and learn about the state.

You know, they liked my message of cutting taxes and early childhood education and access to health care. Some of the moderate positive things we've done here in New Mexico played very well there.

KING: Let me ask you a question. Earlier in the program we were talking about some of the polling numbers. The president's numbers pretty stagnant right now. The Congress's numbers pretty bad right now.

I assume as you have conversations with people about what might be down the road, one of the things you might say to them is that, "I know Washington pretty well, but guess what, I'm not from there now."

RICHARDSON: Well, my main message, John, is that the main policy that works is being done at the state level by governors, cutting taxes, helping the National Guard, finding educational excellence, promoting and creating job creation initiatives. They're happening at the state level, renewable energy.

It's not happening in the Congress. Look what they're talking about, judicial nominations, filibusters, Tom DeLay issues.

What happens to people every day, the best initiatives policy- wise, are being done by governors. We have 13 Democratic governors in red states. And that is working extremely well.

Elected in the South and the West, throughout the country. And we think that the party should look more towards governors instead of just looking towards the Congress and the Senate.

KING: Another thing they're talking about here in Washington, Governor -- and you in the past have held several leadership positions within the Democratic Party -- is the current chairman of the Democratic National Committee, Howard Dean. He called the Republicans a largely white Christian party. He said most Republicans have never held a job or worked hard for a living. I'm paraphrasing a bit there.

Does Governor Dean need to readjust his message in your view?

RICHARDSON: Yes, that was a mistake. He shouldn't have said that.

On the whole, though, Governor Dean's doing a good job. He's reaching out to state parties, to the grassroots. He's traveling through the West and the South.

He's rebuilding state Democratic Party organizations. He's fund- raising well. On the mechanics, he's doing the right thing, but he's not the party's spokesman.

That's the governors, that's the senators, the House members. On the whole, he's doing a good job. But like anybody else, he made a mistake. We all make mistakes.

It's over with. Now we need to move on.

KING: Let me ask you to put your foreign policy hat on finally. President Roh of South Korea in the Oval Office today. Some differences between the Bush Administration and the South Koreans over the tactics, the strategy.

The key goal, of course, is to get the north back to the six- party talks and the bargaing table. It's been a year now almost since the last negotiations. The president said he has a proposal on the table, it's the north's turn, the ball's in the north's court. China and South Korea have said maybe the United States needs to spice it up a little bit, offer more inducements.

What do you think, sir?

RICHARDSON: Well, I believe the administration's policy is moving in the right direction. What was a key breakthrough was the fact that the administration said that they are ready to have bilateral talks with the North Koreans within the six-party discussions. That's a step forward. Now it's up to the North Koreans to look at a potential dialogue, which I think makes a lot of sense.

What's on the table, John, that the administration has put toward is a good basis for negotiations, the dismantlement of North Korea's nuclear weapons in exchange for a security guarantee that they not get attacked, plus food, fuel assistance, other economic development. We have to get through these atmospherics of distrust, of calling each other names. Both sides need to tone down the rhetoric.

But I think we're pretty close to establishing a framework for these six-party talks to resume. And within those six-party talks, have the U.S. and North Korea step into a corner and start looking at ways that we can get this process of dismantling their nuclear weapons going. So I do commend the administration for some good positive steps forward in the last two weeks.

KING: Governor Bill Richardson of New Mexico joining us today from Santa Fe. Thank you, sir, for your time and your thoughts, your insights on your trip to New Hampshire. And if you just happen to go see the Democratic governor of Iowa, give us a shout. Maybe we can tag along.

Take care, Governor.

RICHARDSON: Thanks, John. Thank you.

KING: And coming up next, we go "Inside the Blogs." A new idea for the World Trade Center is creating a stir. How about a museum dedicated to the history and freedom -- freedom and oppression? Some bloggers like it and, you guessed it, some don't. We'll tell you why when we come back.


KING: So what could be controversial about a museum dedicated to the history of freedom and oppression? Well, plenty, if it's built at the World Trade Center site.

With that story and some other big online topics, we turn to CNN Political Producer Abbi Tatton and Jacki Schechner, our blog reporter -- Jacki.


We wanted to take the opportunity this Friday to give you some ongoing stories that have been resonating throughout the blogs. The first one had to do with a "Wall Street Journal" opinion piece that was written by the sister of one of the pilots whose plane was hijacked on September 11.

She's very upset with plans for the World Trade Center memorial and says it appears to be a memorial dedicated to the history of freedom as opposed to exclusively to the victims of September 11 themselves. This has resonated throughout the blogs, many on the right. But one of the ones that has resonated with bloggers specifically has been Jeff Jarviz over at

And his quote was, "Why build something like this here?" "On my grave," he says. "Please do not build a memorial to the mistakes of my neighbors and ancestors. Just let me lie there in peace, please."

ABBI TATTON, CNN POLITICAL PRODUCER: This issue has been taken up her at, where they're saying, "Take back the memorial. They're starting to hear you, but please speak louder."

It's a rallying cry. They really don't want this to happen, asking, "What is Ground Zero to you?" and "What should visitors see there?"

A link of lots of pictures. And also, at the bottom of this site here, a link of lots of the sites, the blogs that have been talking about this throughout this week.

Some of the biggest conservative blogs are out there, Power Line's there, Arthur Chrenkoff, Roger L. Simon, Little Green Football, some of the big conservative sites that we mention here. Also, Michele Malkin, who is a conservative columnist and blogger who's been writing extensively about this.

Yesterday, she was writing in response to another "Wall Street Journal" article actually written by the president of the International Freedom Center, who wrote there defending what it was he was doing with this museum. She says that response didn't cut it with her and also with the other bloggers.

Charles Johnson at Little Green football read it too, and said, "After reading it, I'm more convinced than ever that this memorial will be a complete travesty and a disgrace to the memories of 3,000 murdered people."

SCHECHNER: Yes, a lot of them calling the response nonresponsive. Someone taking action is over at This is Robert, and he has created

This is a site where they are trying to take action to dedicate this memorial entirely to the victims of September 11. And now what he's asking for on his site is volunteers, people that can help him organize an online petition, and also what he calls a one-click god in everybody e-mailer to try to get the word out there.

We've got another scandal we want to tell you about. That one in Ohio. And we're going to do that in the next section, John. It has to do with some mismanaged funds and some missing coins.

KING: All right.

Coming up next in our "Strategy Session," the U.S. economy. Is it on firm ground or are rocky times ahead? We'll take a look.

And Big Bird could be on the endangered species list before too long. A possible victim of budget cuts. We'll have that story when INSIDE POLITICS returns.


KING: We have just into CNN some pictures in from astronauts on the International Space Station of Tropical Storm Arlene, which is churning through the Gulf of Mexico toward Florida.

CNN Meteorologist Jill Brown is at the CNN Weather Center in Atlanta with the latest -- Jill.


KING: And it's time now, back on INSIDE POLITICS, for our "Strategy Session" on the day's hottest political topics.

With us today, two members of the "CAPITAL GANG," Bob Novak and Margaret Carlson. Today's topics: it's the economy, new numbers and predictions from the head of the Federal Reserve; funding Big Bird: major cuts could be in the works for public broadcasting; and Arnold's special election: The California governor wants voters to weigh in on his plans to change the way the Golden State does business; and as always, our political play or in this case maybe, plays of the week.

The Federal Reserve Chairman, Alan Greenspan, has reassuring words about the nation's economy. He says he doesn't see a significant downturn ahead or a burst in the housing bubble.


ALAN GREENSPAN, CHAIRMAN, U.S. FEDERAL RESERVE: The U.S. economy seems to be on a reasonably firm footing and underlying inflation remains contained.


KING: But new government figures out today show the second highest trade deficit ever. The deficit rose 12 percent in April to almost $57 billion. Reflecting mostly a surge in oil imports.

So what about the state of the economy and its impact on our politics.

Let's start with you, Bob.

BOB NOVAK, CNN'S CAPITAL GANG: I think the economy is pretty good. I go talk to a lot of businessmen, I go around the country. They're not wildly enthusiastic but they're doing well.

I think there's not much unemployment. You go out to the malls, they're filled. People eating out at the restaurants. So why are people so nervous about the economy? Well, I think this administration has done a lousy job of selling it. They don't do a very good job of selling anything. If they're lucky enough to run against John Kerry, they can sell George Bush. But they aren't very good salesmen. So, I would say, Chris, they're not very self- introspective -- look at themselves. But that's what they ought to do, because I think the economy's pretty good.

MARGARET CARLSON, CNN'S CAPITAL GANG: Well, I think the people Bob talks to are in the top one percent of income earners, whose income has doubled. And the top one-tenth of one percent, which Bob could be in, it's tripled. So of course, they're going to think it's OK.

But those people at the mall who are probably shopping for their kids' clothes for school, are one health crisis away from, you know, not making a house payment, or as we heard, during the bankruptcy bill, you miss a couple of credit card payments, and what you owe the credit card company can swamp you.

So, I think people feel insecure, and it's exacerbated by going to the gas pump and paying $100 to fill up. So, Bush's disapproval on the economy which, I think is up around 58 to 60 percent, I think partly comes from this immediate sense.

If we'd been there back when Kerry was running, it might have made some difference.

KING: Let's listen a bit to what Alan Greenspan had to say about housing, because as we've seen in the Social Security debate, there's a talk about how so many Americans have money invested in the stock market.

But for a great deal of Americans, their biggest nest-egg is their house, and there's been all this concern around the country of their value going up so up, so high, so fast, that it's going to fall.

Let's listen to Alan Greenspan.


GREENSPAN: Although a bubble in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels.



CARLSON: Now he's going to be known for fraud instead of irrational exuberance.

KING: What is froth?

NOVAK: I wonder if that was one of those speech writers that are with the fed. That is...

CARLSON: It's what you get when you go to Starbucks and order a latte.

NOVAK: I tell you what, the people who are trying to make a buck by speculation in real estate may be making a mistake. I still say they're better off buying common stock than -- but people who have good location and are just sitting on their homes, they're not trying to speculate, it's a tremendous investment. This is the best economy in the world.

Margaret, the rest of the liberals -- one health crisis away and all the wringing of hands. This is the greatest economy in the world, and that's why the real estate is going up so well.

CARLSON: It would be...

KING: But not for everyone.

CARLSON: I wouldn't be wringing my hands if some of the mortgages that had come into this market hadn't encouraged the speculation: zero money down, adjustable rate. So that if anything happens, those people who got into the market aren't going to be able to stay in. And then what happens?

By the way, you can't move in this economy. If you have to say move from one market to another, you could really be out of luck because you move to New York, even if you lived in Washington and owned a house, you can't buy a house in New York.

NOVAK: That's a lot of whining going on there. But I tell you this, this is a risk economy whether you buy stock, whether you buy housing, whether you buy property. People take risks and that's what makes America great. It's -- the government isn't going to guarantee any of it, and sometimes you win and sometimes you lose.

CARLSON: Your house didn't used to be a risk.

KING: A fair point perhaps. Let's move on from Alan Greenspan to another colorful figure, Big Bird. Loved by kids for generations but not feeling love from lawmakers in Washington. Yesterday a House subcommittee approved dramatic cuts for public TV and radio. Cuts that would eliminate all taxpayer funds for programs such as "Sesame Street," "Author," and "Dragon Tales."

Your favorite, right, Bob?

Is this a needed budget cut? Is this necessary, or is there politics behind it?

NOVAK: Well, I don't think there's enough of a cut because I don't think we need this kind of programming. There's a lot of private channels that are excellent. The "History Channel" is much better than public broadcasting, much fairer. And you know, it's a left-wing channel. Now my friend Ken Tomlinson, the head of the Corporation for Public Broadcasting, is trying to have a little balance.

You know, he had a little program for Tucker Carlson, which is off the air. And all the lefties, they were just -- your old friend Tucker -- their going to have that conservative on. But I don't think we need public broadcasting. You've got so many channels. You know, I stay home every night and go all through the channels and listen to all of them. It's hard to get through all of them.

CARLSON: I was such a loyal viewer of Tucker's program on PBS. Listen, to put "Sesame Street" -- to put, you know, on the endangered species list is ridiculous. If you care about family values, you would want to keep that show. It's at your level, Bob, I'd tune in and learn a thing or two. There's not enough of that on TV, and this is one of the reasons people turn to public television, which is to get that kind of programming.

NOVAK: My 7 grandchildren don't even like it. They like the...

CARLSON: I want those seven grandchildren in here and question them.

KING: Now, let me -- is there a market -- you say it's not necessary. You say it's good for children. Would the market step in your view? If you take "Sesame Street," and all those other programs for children -- I mean there's -- my kids watch stuff that I like and other stuff I think is nuts, on television. NOVAK: You know what, let the kids watch the junk stuff. It's perfectly OK, and I hate this business that you're going to make the kids watch the boring -- "Sesame Street" is really boring.

CARLSON: It's not boring. Bob's moving from: let the market decide, to let the children decide what junk they're going to watch. This is not...

NOVAK: That's right, my kids decided and they're fine. They're both conservatives and they're good.

CARLSON: Commercial television produces good conservatives. Is that your view?

KING: There's a bumper sticker, I see that one coming up.

Governor Arnold Schwarzenegger is again taking his brand of populous-brand of politics directly to the people of California, and wants them to weigh-in on what he considers key issues before the state. That story coming up, more of our "Strategy Session" just ahead.


KING: You wish you were here during the break.

The "Strategy Session" continues now on INSIDE POLITICS. Still here, two members of the "CAPITAL GANG" Bob Novak and Margaret Carlson.

We move on now to California where Governor Arnold Schwarzenegger not known as a shrinking violet. Now he's about to take one of the biggest gambles of his short political career. He's been stymied by powerful unions and a Democratic-controlled state legislature. So, he plans to call a special election. What the governor wants is to put what he calls special interests in their place. But with his approval rating plunging, has Governor Schwarzenegger finally met his match?

Bob Novak, he will call this special election. He wants to reign in teachers' unions, he wants to stop legislators from drawing their own districts, he wants the power to cut spending in California. Has he overreached?

NOVAK: He may have, but I think -- but I was in California recently, and the politicians I talk to think he's going to win. And despite that, because he's going to go out there and sell it.

It's not a gamble, John, because he doesn't care, you know. He's got all the money in the world. If he doesn't serve another term so what? It's just a wonderful position for a guy in office to be. And the thing I like the most is that the saying that these corrupt legislators can't drawn their own districts.

I think even Margaret will agree with me that it's absolutely a disgrace that they drew these districts so no outsiders can do it. They did it with a computer so that these districts meander and gerrymander all around and they're absolutely unbeatable.

CARLSON: I so totally agree with you, Bob. I'm completely with you on that. And you know, nothing to lose mentality, however, is a bad one. He started out with can't we all get along. And he's now maneuvered to really being the Terminator again, which is if you don't agree with me, I just want to kill you.

And taking on the nurses, you know, it's kind of the teachers have been softened up by other politicians but nurses? And they've gone around the state picketing different locations where he's been. I think it's had quite an effect.

NOVAK: I'll tell you where you're wrong...

CARLSON: When I'm in the hospital, I want a nurse.

NOVAK: I will tell you where you're wrong. And that is, it's not dangerous because all they've got to do is vote against it -- vote against the referendum, vote against him for another term. See, we're in a democracy. So, all this worry -- and boy, we can't have this. It's fine.

I think it's great to have -- he's the only guy in the country, the only governor in the country who doesn't give a damn. And he's going to stay what he believes and what he wants and if the people don't want it, they can get rid of him.

CARLSON: It's a waste of $80 million, however, on a special election because he doesn't want it during the primary because people might actually come out and vote. He wants a low turnout. Wasting $80 million. Bob, you must be against wasting that money.

KING: Way back in the tax reform debate, years ago California set the stage for this, the voter initiation. Do you see that happening again, or is this isolated in California?

NOVAK: I think this thing is going to carry. My gut feeling is it's going to carry. Of course, they started off on that tax thing. And everybody was against it. And I knew when Jerry Brown was governor, he said he wasn't against it anymore because he saw the people wanted it.

CARLSON: And because it's a special election, those people who want it are more likely to turn out and vote than not. Schwarzenegger knows about that.

NOVAK: That's fine.

CARLSON: I wouldn't waste the $80 million to bring out the people you want to do what you want against people that other people are in favor of like teachers and nurses.

NOVAK: Well, the people sitting around smoking marijuana and don't want to go vote, you know, that's their problem, isn't it.

CARLSON: If someday you're in pain, I'm not bringing you a toke. KING: OK then. Be sure and catch "The Novak Zone" tomorrow 2:30 pm Eastern. Bob's guest -- and I've seen a bit of this interview -- Washington Nationals manager and baseball Hall of Famer, Frank Robinson.

And don't go away. Because still ahead in the "Strategy Session" our political plays of the week.

We're scouring Washington and beyond for those stories that rose about the din to capture out attention and your attention. This week, too many for just one. Stay with us.


SUZANNE MALVEAUX, CNN CORRESPONDENT: I'm Suzanne Malveaux reporting from Washington.

Coming up at the top of the hour, has Syria gone back on its promise to leave Lebanon. What the U.S. State Department has to say.

Tropical Storm Arlene heads towards the U.S. Gulf coast. We'll have the latest update.

And jurors keep on deliberating in the Michael Jackson case. Will there be a verdict today.

All those stories and much more are just minutes away on "WOLF BLITZER REPORTS." Now back to INSIDE POLITICS.

KING: Thank you, Suzanne. And our "Strategy Session" now continues on INSIDE POLITICS.

Still here -- I think I owe them a meal by now -- "THE CAPITAL GANG'S" Bob Novak and Margaret Carlson.

And time for our plays of the week. CNN senior political analyst Bill Schneider is on some secret assignment, so we thought we would ask our guests which stories grabbed their attention the most.

And Bob, you're up first.

NOVAK: Tony Blair, the prime minister of Britain was here. He's in a lot of trouble for supporting President Bush on the Iraq war. So he's still supporting, defending the so called memo that comes out.

But what he does is he goes out there, standing next to President Bush and he takes two positions opposite to the president. On aid to Africa, much more aid than the president wants. But that's not a big deal. But the big deal is the protocol, the Kyoto Protocol for global warming. Totally opposite position.

They got the G-8 conference coming up. He says that's going to be my big issue. And poor Bush is standing there. What's he going to stay say? I don't agree with you?

So that was the play of the week where he really -- he kind of entrapped our president that way, because you can't go against a guy who sticks with him on Iraq.

CARLSON: Right. I mean, congratulations to him for getting something out of it finally, because Blair paid the price for the Iraq war that Bush never paid. I mean, it's like that old story about two guys going through the car wash with the top down, only Blair got wet. So he should get whatever he wants from Blair (sic). And that was such good stage craft.

NOVAK: They've got a problem at (INAUDIBLE) Eagle's in Scotland, because all the other guys including Tony are for this ridiculous global warming business and poor Bush is by himself.

KING: We'll deal with that one month from now. Margaret, your play of the week.

CARLSON: The Bush administration, John, has just taken a dive for the tobacco industry. So Philip Morris won big-time this week. The government had $130 million (sic) settlement right in their hands. And then decided to argue against themselves.

NOVAK: Billions.

CARLSON: And ask for only $10 billion instead of 130. I get my Ms and Bs mixed up, because it's such a huge amount of money. So they argued against themselves saying, oh, well this is how it needs to be. Got a government witness to go soft on what needed to happen so that after all these years, $100 million spent on the litigation, they've decided to kind of throw up their hands, back off, accept this only future smokers will get any remedial help out of the settlement.

Now Bob, I know you quit on your own, but there are a lot of smokers out there who are hoodwinked bye the tobacco industry saying, listen, it's a great thing to smoke, it's very sexy, it's very cool and by the way, it's good for your health.

NOVAK: You know what I'd like to see in the first thing John. I'd like to see the guy who smoked and they had somebody from the tobacco industry came in with his bedroom with a gun and said you start smoking or I'll kill you, or I'll threaten you, I'll wreck your family. All these people did it on their own. Isn't there any personal responsibility? If you want to smoke and you want to hurt yourself, go ahead and smoke.

CARLSON: Bob's answer to regulation is to go one by one and pull out your own gun.

NOVAK: No, I mean, it's ridiculous to say that the tobacco company made these people smoke. Did you ever smoke, John?

CARLSON: The tobacco industry systematically hid, hid the information that they had about how damaging smoking was.

NOVAK: We used to call them -- what did they call them -- coffin nails? Everybody knew they were bad for you, but we did it anyway. You did yourself, didn't you?

KING: Once, behind Mrs. Golden's garage.

CARLSON: Right. And then the nuns came and just whacked it right out of my hands. And as a consequence, my lungs are just clean as a whistle.

KING: We're going to end it there, although, I might buy the meal. We could keep going.

CARLSON: Yeah. Let's go out.

KING: Maybe add a drink.

And here's a programming note. Join Bob tomorrow at 7:00 p.m. Eastern on CNN's "CAPITAL GANG." Former Democratic House leader Dick Gephardt and former Speaker of the House Tom Foley will be the guests.

A decidedly unique investment by state officials in Ohio is causing a stir among bloggers. When we come back, we'll check out what the bloggers are saying about government investments in the Buckeye State. Stay with us.


KING: It's being called Coingate, a political controversy in Ohio that involves state officials, rare coins and lost money, a story that's getting a lot of attention from bloggers. So we check in again with CNN political producer Abbi Tatton and Jacki Schechner, our blog reporter -- Jackie.


Actually Coingate one of two financial scandals now in Ohio. And these are stories that a lot of the liberal bloggers are saying it's going to have national implications come the next election cycle.

There's a lot of detail -- complicated details in the story, but we'll try to break it down to the basics for you.

The first involved Coingate. And that has to with a guy named Tom Noe who is a rare coin dealer and a Republican fundraiser in Ohio. Now, he invested a worker's compensation fund and invested it in rare coins, $10 million of that money went missing. A lot of people alleging that that money went into campaign contributions. And a lot of Republicans, including President Bush himself, are giving some of that money back.

One person who's been following this all along,, the liberal blog has been linking to it for quite some time now. Now what they have today is the latest financial scandal in Ohio. And this one says the state lost $225 billion in a hedge fund investment that the governor's office knew about that loss back in October, but it's not being reported now. So, a lot of people wondering why the stall till after the election.

TATTON: Now, these issues in Ohio being reported a great deal locally, especially by the newspaper "The Toledo Blade." Not so much on a national level. And some of the liberal bloggers really trying to elevate it to a national level there. This Coingate scandal, as they call it.

But not all liberal bloggers following it as closely. Joshua Mica Marshall admitting yesterday that he's way behind on the story, but he'd like to know more. And what he's got is a sister site where he set up a discussion board about this issue.

Readers are weighing in, they are adding links to articles, to blog posts about it, also their own research and opinion on the topic, kind of a one-top shopping there for readers and for Josh Marshall himself on the issue.

SCHECHNER: Now, if you have got some free time over the weekend and you want to do some reading about this issue, another site that's got a roundup is What they've done is collected the articles from the local Ohio newspapers, "The Toledo Blade" being one of them, "The Plain Dealer" the other. The Blade following this daily, really, at this point. And that has a roundup at that site. You can go back and read it all the way from the beginning.

And then finally another site that we found we thought was kind of funny was Toledotastic. This is a guy in Toledo. And he's commenting on President Bush giving the money back, wondering where that money is going to go.

So just another issue that is making the rounds on the blogs this Friday -- John.

KING: All right, ladies. Thank you both. Have a great weekend. And that's it for INSIDE POLITICS. I'm John King. Thanks for watching. We hope you have a safe and a great weekend. "WOLF BLITZER REPORTS" starts right now.



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