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Inside Politics

North Korea Reaches Out to U.S.; Lieberman Gets Ready to Run for President; Interview With Gary Hart

Aired January 10, 2003 - 16:00   ET

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

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


(BEGIN VIDEOTAPE)
ANNOUNCER: North Korea reaches out to the U.S., even as it says it's pulling out of a nuclear arms control treaty.

UNIDENTIFIED MALE: Today's announcement is of serious concern to the North Korean neighbors and to the entire international community.

UNIDENTIFIED MALE: I felt as I was on a magical mystery tour.

ANNOUNCER: After playing second banana in 2000, Joe Lieberman gets ready for a leading role in the early presidential race.

Getting to the Hart of it. Does he want to carry famous baggage into another run for the White House?

Cashing in. After years of offering their two cents, payback time in the "Political Play of the Week."

(END VIDEOTAPE)

ANNOUNCER: Live from Washington, this is INSIDE POLITICS with Judy Woodruff.

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. The diplomatic scramble is on to respond to what South Korea calls a matter of life and death. North Korea's decision to pull out of the nuclear nonproliferation treaty. In this news cycle, two North Korean envoys have been meeting with New Mexico Governor Bill Richardson a former U.N. ambassador and diplomatic troubleshooter. At the same time, North Korean officials are blaming the Bush administration for ratcheting up nuclear tension. And they are warning, any sanctions against their country could make matters worse.

(BEGIN VIDEO CLIP)

PAK GIL YON, NORTH KOREAN AMB. TO U.N.: We will consider, reconsider now, even now, any kind of economic sanctions that could be taken by the Security Council of the United Nations against the PPRK as a declaration of war.

(END VIDEO CLIP)

WOODRUFF: North Korea insists it does not intend to produce nuclear weapons, but officials here in Washington and in other world capitals are clearly worried.

Our Suzanne Malveaux at the White House. What are they saying?

SUZANNE MALVEAUX, WHITE HOUSE CORRESPONDENT: Secretary of State Colin Powell called it a very serious situation but said the administration would not be deterred. He met with the head of the International Atomic Energy Agency, Mohammed El Baradei. El Baradei said if they do not comply, could bring the case before the U.N. Security Council where it could face economic sanctions.

Now, Today the White House reached out to allies to put pressure on North Korea. President Bush earlier today calling China's Jiang Zemin. They had a 15 minute conversation. We're told the two leaders agreed that, yes, this is international concern. Also President Bush making the case that the administration has no intention of invading North Korea.

Now, the White House really on the defensive. Their economic as well as diplomatic pressures saying they believe that is the best strategy that is going to work to make North Korea change its course. And today they pointed to international support.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: While not unexpected, given North Korea's behavior, today's announcement is of serious concern to North Korea's neighbors and to the entire international community. Their actions threaten to undermine decades of nonproliferation efforts and only further isolate the regime. North Korea's relations with the entire international community depend on their taking prompt and verifiable action to completely dismantle their nuclear weapons program.

(END VIDEO CLIP)

MALVEAUX: Now, the administration really taking part in some of the support, some of the statements coming from Japan, Russia as well as France, just to name a few. They say, yes, the administration is willing to talk to North Korea, but not to negotiate. But soon the Assistant Secretary of State for East Asian Affairs, James Kelly, will be going to the region. He is going to be meeting with representing from South Korea, Japan, China and others as well, to push, even more so, for them to put that economic and diplomatic pressure on North Korea to comply -- Judy.

WOODRUFF: All right a great deal under way on the diplomatic front. Thanks, Suzanne.

Well, talks between the North Korean diplomats and Governor Bill Richardson resume in New Mexico just about two hours from now. CNN's Bob Franken is in Santa Fe with more on those meetings.

And on Richardson unexpected role in trying to ease the nuclear standoff -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: What better way to have the administration talk with the North Koreans without negotiating with them than using a former high-profile member of the Clinton administration. Decidedly not a member of the Bush administration, acting all the while on the instructions from the secretary of state.

New Mexico Governor Bill Richardson has been in constant contact, to use the spokesman's word, constant contact with Secretary of State Colin Powell. Meetings that seemed to go on longer than expected. Richardson was contacted by the North Koreans because they knew him both by face-to-face contact with the United Nations and also because he has taken earlier in his political career several very sensitive trips to North Korea for negotiations. They know Richardson. They like him.

So the administration, this is a chance for the policies of this government to be presented to the North Koreans without an official stamp on them. Now, we are told that in the meetings today there was a discussion, very substantive discussion and extended one, about the Korean withdrawal, North Korean withdrawal from the nuclear proliferation treaty. As far as the meetings themselves, they're going to extend into this evening, longer than many people expected. Maybe even through tomorrow. We talked to the spokesman for Governor Richardson to find out if that had any great significance.

(BEGIN VIDEO CLIP)

BILLY SPARKS, RICHARDSON SPOKESMAN: I think that both the governor and the North Koreans are interested in substantive talks. As I said they're positive in atmosphere but very frank. We decided to continue the talks at 4:00 this afternoon and I don't know how long they'll last into the night.

(END VIDEO CLIP)

FRANKEN: You'll recognize, Judy, terms like positive, frank, candid, diplomatic terms that mean they'll really dealing with substance. It's being characterized as an effort to come up with preliminary discussions about more official discussions later on -- Judy.

WOODRUFF: All right, Bob. Reporting from Santa Fe. Thanks very much.

And we did hear Secretary of State Colin Powell say earlier he expects to talk with Governor Richardson after these meetings conclude. Thanks very much.

And coming up, we'll discuss the nuclear standoff with former U.S. ambassador to South Korea, James Lily.

The standoff with North Korea may have temporarily overshadowed the showdown with Iraq. But moves toward a possible war with Baghdad go on. Three U.S. Navy ships began to deploy today from their home base in Virginia. The ship and some 7,000 Marines from Camp Lejeune, North Carolina are expected to be sent to the Persian Gulf region.

Meantime, Turkey announced today it has agreed to allow the U.S. to survey some of its military bases and ports for possible use if there's a war with Iraq.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: We are positioning ourselves for whatever eventuality might occur. As the president also said, he hopes for a peaceful solution, but we will be ready to act otherwise if that is what is required to make sure that Iraq is disarmed of its weapons of mass destruction.

(END VIDEO CLIP)

WOODRUFF: Secretary Powell spoke after meeting with the head of the United Nations nuclear watchdog agency. Muhammad El Baradei says they need more intelligence from Washington and more cooperation from Baghdad.

On the economic front, a mixed report today on unemployment. The nation's overall jobless rate held steady at 6 percent in December. But the economy suffered a loss of more than 100,000 jobs. Underscoring the dismal holiday shopping season for retailers, and the political stakes for President Bush.

(BEGIN VIDEO CLIP)

ARI FLEISCHER, WHITE HOUSE PRESS SECY.: The president used the latest report on unemployment as another reason why it's so important for Congress to pass the president's job creating economic plan. The president views this morning's announcement as the reason by Democrats and Republicans need to join together so we can serve the country and pass a program that helps create jobs.

(END VIDEO CLIP)

WOODRUFF: Still, some Democrats pressed their criticism of the president's $674 billion stimulus package, charges it will "grow the size of a financial disaster that lies ahead of this country."

Much more ahead on INSIDE POLITICS.

BILL SCHNEIDER, CNN CORRESPONDENT: I'm Bill Schneider In Miami. Flashback to the days of dynasty disco and big hair -- I used to have big hair -- and the "Political Play Of the Week" will trickle down, too.

(BEGIN VIDEO CLIP)

SEN. RICK SANTORUM (R), PENNSYLVANIA: Someone told me the other day I might lose my office as senator because I had conduct unbecoming a senator.

(END VIDEO CLIP)

WOODRUFF: Well, what did Senator Rick Santorum do? He'll talk about it in our subway series.

And later, an interview with Gary Hart. Why does the man at center of a famous political scandal think now may be the time to run for president again?

This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

WOODRUFF (voice-over): It's time to check your "I.P. I.Q." As we mentioned earlier, North Korea announced today it was withdrawing from the Nuclear Nonproliferation Treaty. When was the treaty ratified? Was it, A -- 1970, B -- 1975 or C -- 1985? Stay with us. We'll tell you the answer later on INSIDE POLITICS.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

WOODRUFF (voice-over): When was the treaty ratified? Was it A -- 1970, B -- 1975 or C -- 1985? The correct answer is "A." The treaty was ratified in 1970. It's objective, to stop the spread of nuclear weapons.

(END VIDEO CLIP)

WOODRUFF: More now on the escalating rhetoric and growing tensions between the United States and North Korea. With me here in Washington is James Lilley. He's a former U.S. ambassador to China and to South Korea. Mr. Ambassador, just how worried are you about the situation at hand?

JAMES LILLEY, AMER. ENTERPRISE INSTITUTE: Well, I'm not terribly worried. I know the North Koreans are unpredictable and nasty and use brinkmanship, but we went through this ten years ago. They're using the same language.

This is a poor, broken down, starving Stalinist country. All its got is its weapons of mass destructions. We have given them a clear message, if you ever use those, you're gone. Bill Clinton said it. I'm sure the people this time have said it. If you ever use your weapons of mass destruction, you won't know your country as it exists.

WOODRUFF: Well the North Koreans are now pointing a finger directly at the United States. They're saying what has happened is completely due to the United States withdrawing fuel oil shipments. Very tough rhetoric. President Bush saying North Korea's part of an axis of evil.

LILLEY: If you look at their millions of words of invective about us and Bush every day, it makes his remarks seem like almost nothing. Nothing.

Let me make just one point to you. We gave this awful country $680 million worth of grain in the '90s. We also gave an equivalent amount of heavy oil. We gave it to them. Is this a country we're going destroy? We trying to buy these people off with huge sums of money. And there was no thought of threatening them.

They have murdered our soldiers in the DMZ, blown up half the South Korean cabinet, blown up a plane. We've got to take these guys seriously, but we've got to give very clear message and be tough with them.

WOODRUFF: You're saying the U.S. has done so much for the North Koreans. Why, then, are they doing this?

LILLEY: Because they want more. They want more. They want to keep their weapons, first of all. Weapons as an insurance policy.

WOODRUFF: What do they have? Do we know...

LILLEY: Of course we don't. (UNINTELLIGIBLE) one, two, China says five, we say two, CIA says two, somebody else says something else. Probably somewhere in the dimension of one to five. We've got 7,000. What's the match up?

I think, also, they want more money, and above all else, they want to survive and stay in power, and keep their system as it is. They know it's cracking. They know they need economic reform. The Chinese have told them this in spades. You've got to get rid of this sick agriculture system. Reforestation, irrigation, fertilizer, decollectivization. Do these things. Be brave.

WOODRUFF: Meanwhile, in New Mexico, newly elected Governor Bill Richardson, formerly U.S. ambassador to the U.N., is meeting with North Korean envoys. Can he accomplish some kind of a breakthrough, do you think?

LILLEY: Bill Richardson is one fine guy. He's good at this sort thing. He will not do anything I think the administration doesn't want him to do. He will follow the script, as we give it to him. He will be very good at it. He's a person that can handle people.

The North Koreans have gone to him playing the old game of divide and conquer. Split the Democrats from the Republicans, split the Americans from the South Koreans. But we see through that, that's so transparent. He'll give him the same message that the administration gave them. If you have something to give us back, you'll feed it back to us.

WOODRUFF: Do you think the North Koreans are serious when they say if there are any economic sanctions declared against us, we will consider that a declaration of war?

LILLEY: I think they used that in '93 and it worked. They're trying to use it again. They scared the heck out of people saying that.

This time, you don't need economic sanctions on them. You just work it with the Chinese, the Japanese, the South Koreans, ourselves. And you pinch that little pipeline, that lifeline they have going in to us. They're absolutely hooked on our food and our energy. If you pinch it, they're going to be in terrible shape. WOODRUFF: What's the next thing that you believe will happen here?

LILLEY: I think the United States has to play a very steady role. Don't back off. Jim Kelly's going over there, he's to talk to them.

WOODRUFF: The State Department.

LILLEY: Yes, State Department and Defense Department's going over, too, to talk with China, Japan, South Korea.

Pull us all together on this thing. Figure out what the problem is. We all agree on first of all one thing. The North Korean -- the Korean Peninsula should have no nuclear weapons. We all agree on this.

I think we also agree we have to use -- convince the North Koreans to back off the program. We all agree on this. The only question is how? Coordinate your activities and these big, powerful countries with this miserable little broken down Stalinist state playing this incredible role.

You've got to be steady, you've got to be patient, you've got to be logical, persistent and tough. And I think we'll get what we want.

WOODRUFF: All right, James Lilley, former U.S. ambassador to South Korean and to China. Thanks very much.

LILLEY: Right, thank you.

WOODRUFF: Very nice of you to come by, we appreciate it.

LILLEY: Thank you, Judy, for inviting me.

WOODRUFF: And when INSIDE POLITICS returns, we will turn our attention to 2004. Last time he was a running mate. This time he wants to head the ticket. Can Joe Lieberman make history on his own?

Plus, will it be back to the future for Gary Hart? I'll speak with the former senator from Colorado coming up in a few minutes.

But first, lots of turbulence today for airline workers. Mary Snow joins us live now from Wall Street with all the details. Hi, Mary

MARY SNOW, CNN CORRESPONDENT: Hi, Judy. A federal judge is putting a stop to the long wage battle between bankrupt United Airlines and the machinists union. The bankruptcy court is ordering the union to accept a temporary paycut for its 37,000 members. All of United's other unions have already agreed to accept temporary wage cuts as a struggle to get out of bankruptcy. The wage cuts should save United $70 million a month. United filed for bankruptcy back in December -- Judy.

WOODRUFF: Mary, we've talked here about the weak unemployment report for the month of December. How did the markets react to that today?

SNOW: Well, you know, Judy, early on stocks lost ground early in the day after that report came out with more than 100,000 job losses for the month of December.

However, stocks did recover and they regained momentum finishing higher for the day. The Dow Industrials closed up slightly. The Nasdaq Composite finished half a percent higher and all the major indices finished the week on a positive note. The Dow gained more than 183 points for the week. The Nasdaq surged nearly 4.5 percent for the week. That's the latest from Wall Street.

Having a billionaire as a friend doesn't hurt if you're thinking of running for president. The story when INSIDE POLITICS returns.

(COMMERCIAL BREAK)

WOODRUFF: Checking the headlines now in our Friday edition of our "Campaign News Daily." Democratic presidential hopeful Dick Gephardt is meeting with state party leaders today in South Carolina. Gephardt held a breakfast meeting in Charleston that included Mayor Joe Riley among others. Next hour he joins Congressman John Spratt in Lancaster for a meeting of the South Carolina Democratic Council.

Florida Senator Bob Graham has called on well-healed political ally as he continues to ponder a run for the White House. Graham met with billionaire investor Warren Buffett yesterday here in Washington. Buffett has been a Graham family friend for years, and he has supported the senator's political career since Graham's first run for governor in 1978.

When Senator Joe Lieberman jumps into the Democratic presidential field on Monday, he'll have his experiences from the 2000 election to fall back on. But this time, Lieberman is trying to win a place at the top of the ticket. Here now, our senior political correspondent Candy Crowley.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): Ladies and gentlemen, the latest entry in the '04 presidential contest.

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT (singing): And so I face the final curtain...

I can't believe I'm doing this.

CROWLEY: The talent show may not be his strong suit, but as the next pageant of politics gets under way, the junior senator from Connecticut leads in name recognition.

(BEGIN VIDEO CLIP)

AL GORE, PRESIDENTIAL CANDIDATE: The next vice president of the United States of America, Joe Lieberman! (END VIDEO CLIP)

LIEBERMAN: I think we can say with certainty here in Nashville today that the American dream is alive and it is well.

CROWLEY: Joe Lieberman was the first Jewish politician on a major party presidential ticket. He infused excitement and furor into the Democratic base, and yet was seen as so nice a guy the Bush campaign never took him on.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENTIAL CANDIDATE: As I said, I think Senator Lieberman was a good pick.

(END VIDEO CLIP)

CROWLEY: Far from low-keying his Orthodox Jewish beliefs, Lieberman put them out there.

LIEBERMAN: In Hebrew the expression is betzelama loachim (ph), which means we are all equal in God's eyes.

CROWLEY: It was a tour de force, a rock star in Jewish communities and a hit in African-American churches, the seat of political power among many black voters. Recent CNN-"USA Today" Gallup poll shows Lieberman a top choice of all Democrats, but first choice of black Democrats.

Some colleagues complain Lieberman compromises too early and too often. Others grouse that he wears righteousness on his sleeve earning him the nickname "Saint Joe."

Lieberman piled up with a leading Republican conservative to take on Hollywood. He once eyed school vouchers and privatizing Social Security favorably, while questioning racial quotas and preferences. All leanings Lieberman remolded or rejected as he moved into Gore world. He is hawkish on foreign policy, supporting the first President Bush on Iraq as he now supports the second.

Lieberman's record is to the right of anyone currently in the '04 Democratic pool, a difficult place in Democratic primaries, which are largely populated by left-of-center Democrats. And as attractive as he was as a vice presidential candidate, Lieberman was Al Gore's choice. Now he has to make history on his own.

(END VIDEOTAPE)

CROWLEY: Beyond name recognition and a proven fund-raising ability, Lieberman has also cared for and cultivated the Gore/Lieberman campaign structure. After 2000, said one Democrat, Al Gore went inside his house and shut the door. Joe Lieberman wrote thank-you notes and kept fund-raising -- Judy.

WOODRUFF: Let's see. Does he have a singing career, Candy? That's the real question. CROWLEY: I'm thinking not.

WOODRUFF: OK, Candy Crowley, thanks very much. Candy will be, by the way, in Stamford, Connecticut on Monday when Senator Lieberman makes that big announcement. CNN will carry his remarks live at 10:00 a.m. Eastern.

Later that day, we'll have an interview with the senator right here on INSIDE POLITICS.

Well, while most would-be Democratic candidates are promising to make their presidential decisions this month, former senator and two- time presidential hopeful Gary Hart has said that he will make up his mind by April. Gary Hart joins us now from Denver. Senator Hart -- that's not you. That's the White House. There you are! It's good to see you, and thank you for being with us.

GARY HART (D), FORMER PRESIDENTIAL CANDIDATE: Great pleasure. Thank you.

WOODRUFF: You were quoted yesterday as telling some reporters that you would love to be president of the United States. What are the odds that you're going to run again?

HART: Well, it's much too early to be putting odds on this. Frankly, the people that I've heard from haven't asked what my odds are or how much money I've raised or where I stand in the polls. What they have urged is that I find a way to let the party and the country know my views on national security, particularly in the light of the age of terrorism, foreign policy and new ideas for the economy, and I intend to do that in the next few weeks. And then we'll see.

As you well know and I think your viewers know, I've been away from Washington for a number of years. And so I in a way, have to re- introduce myself. I've never given up on trying to play a role as a public servant. Whether that involves running for office, we'll wait and see.

WOODRUFF: Now, we read in the "New Republic" and elsewhere that you were approached to at least think about this by two Harvard grad students. So you're serious about this. Right?

HART: Well, first of all, there were a good deal more than the two. There is quite a network of people like that. Not only those students, but a lot of other people from -- friends from the 1980s and the previous campaigns that I've been involved in. Former staff members and so forth, and quite a lot of people have offered to help me propose ideas for the country and for the party that no one else is doing. And if I can make that contribution, that will be a substantial contribution, one I intend to continue to try to make.

It turns out, as I've said many times before, in American politics, you're either on the playing field or you're on the sidelines. And when you're on the sidelines, you're not heard very much. And I think because of my work on U.S. Commission on National Security and more recently, the Council on Foreign Relations task force and the warnings of future attacks on this country, it's enabled me to get back into the arena and be able to be heard on those issues and a number of others, and I hope to continue to do that.

WOODRUFF: Well, to be frank, Senator Hart, your last campaign for president back in the late '80s is best remembered for the reason you got out. You had an affair with a very attractive younger woman. What makes you think that people are going to consider you, take you more seriously, than they would all these other Democrats who are saying they want to run who have a more recent public record of service?

HART: Well, first of all, I'm not quite sure what the first part of that question has to do with the second part. I think what we ought to be doing right now is having a primary of ideas, letting the candidates, or potential candidates, let the party know and the country know where we stand in very specific terms, and somehow try to get through the filter of polls and money and the inside Washington, if you'll excuse my reference, inside politics to the issues.

I really don't find people asking me about the inside nature of politics. What people really want in this country is some direction and some guidance, and I think if you have the public service instincts I have, you try to answer those questions, and if other questions from the past come up, I'll be prepared to answer them.

WOODRUFF: And are you saying people like John Kerry and Joe Lieberman, who we just heard about, and Dick Gephardt, and others, are not up to the challenge? Not qualified?

HART: No, no, no. No, no. I think they're all speaking. It's been interesting to me to watch the profiles of them, because they -- there is a great deal of profiling of who they are and so on, and then reference to the fact they've given major public policy speeches. It's very, very difficult to find out what those are. So I would hope that you and others like you would begin to focus on what they are saying, and not just how they comb their hair and how much money they have in their exploratory committees.

WOODRUFF: Well, I hope we're asking those other questions.

HART: I hope so, too.

WOODRUFF: Do you think President Bush can be beat?

HART: Well, of course. I mean, the economy's in terrible shape, and it doesn't seem to be getting any better, and a lot of serious people with no ax to grind for the Democratic Party are saying these tax cuts are not the way to put this economy back on its feet. He isn't taking account of the globalization, he's not taking account of the information revolution, he's not taking account of the costs of the war in Iraq, which are going to more than offset any beneficial economic impact of the tax cuts that he's offering. And he's also not taking account of the costs of the next terrorist attacks that will probably occur as a result of our going to war in Iraq.

WOODRUFF: All right. We're going to have to leave it at that. Former United States Senator Gary Hart, joining us from Denver, and senator, we hope to talk to you certainly by the time you make that decision.

HART: Thank you very much.

WOODRUFF: Thanks very much for talking to us.

Just ahead, if imitation is the sincerest form of flattery, Governor Gray Davis has some kind words for former President Bill Clinton.

(BEGIN VIDEO CLIP)

GOV. GRAY DAVIS (D), CALIFORNIA: These are not ordinary times.

WILLIAM J. CLINTON, FORMER PRESIDENT OF THE UNITED STATES: But this is not an ordinary time.

DAVIS: God bless you. And God bless America.

(END VIDEO CLIP)

WOODRUFF: Words worth repeating from the former president and the California governor.

(COMMERCIAL BREAK)

WOODRUFF: Lining up for a controversial program: It is D-Day for thousands of immigrants here in the United States -- the story coming up.

(NEWS BREAK)

WOODRUFF: And with us now: Mindy Tucker, communications director for the Republican National Committee; and Jennifer Palmieri, who is the press secretary for the Democratic National Committee.

Jen and Mindy, we just heard the vice president making an argument for the president's plan. Today, we have these unemployment number coming out, a lot of people still out of work. The Democrats would say, this is an argument that the president's plan doesn't work.

Republicans, Jen, say this is all the more reason to pass it. Who's right?

JENNIFER PALMIERI, PRESS SECRETARY, DNC: Well, I think the debate shouldn't be over whether having tax-free dividends is a good idea or not. It should be over whether or not it is that having tax- free dividends and accelerating the tax cuts, is that going to help the economy? It didn't two years ago.

This is the same solution we got two years ago. And it didn't help. And we still have problems with the economy. So, why would we do it now? And the second question is, what does this crowd out? Sure, it would be great to have tax-free dividends. But if it's going to cost $300 billion, what priorities does that crowd out. It means we can't have a prescription drug benefit. It probably means we don't meet our homeland security needs, we don't have enough money for education. It's a question of priority.

WOODRUFF: Mindy?

MINDY TUCKER, COMMUNICATIONS DIRECTOR, RNC: Well, there's an important thing to remember here.

Back when the recession started, people said, experts said, because of the Bush tax cuts, it was not as bad as it could have been. These tax cuts do work. They stimulate the economy.

PALMIERI: But that was the rebate. It was the first-year debate, not the long-term

(CROSSTALK)

TUCKER: Money in the government's hands is not going to stimulate the economy. Money in people's hands, so they can go out and spend it, will. We know that.

Secondly, I think it's important also to remember that we have not done anything for the past year. We've been in deadlock. The Senate wouldn't act. We now have a Republican-led Senate, a Republican-led House, but it's still important, bipartisanly, to come together and do something, so that the next time unemployment numbers come out, we're not sitting here having this same argument about who's right and who's wrong.

We need bipartisan action to sit down and figure out what's going to work, create jobs, stimulate the economy and get it done.

WOODRUFF: Very quickly.

PALMIERI: Democrats would say that we would agree that in -- short-term tax cuts and tax rebates, like we did in '01, that does help stimulate the economy. But it's the out-year stuff, it's the stuff in the long term that we don't think we need now.

WOODRUFF: I want to quickly move you both to the civil rights agenda.

In the aftermath of the Trent Lott controversy, you have the Senate Republican leadership, Senator Frist and others, meeting this coming week with conservative African-American leaders. On the other hand, Jen, you have Democratic senators setting up a session on: Where do we go next?

(CROSSTALK)

WOODRUFF: In this period after what happened to Trent Lott and because of his statement, Mindy, are we -- is there going to be anything positive to come out of it?

TUCKER: I think definitely there will be. First and foremost, you're paying attention to it. And I hope that the news media continues to pay as much attention to the things that what we've been doing in the past that we will continue to do in the future.

We've been doing African-American outreach for a long time. And we've made a lot of progress. This year in particular, we ran African-American radio ads. Thousands of parents responded to them. They were about education. They called us, wanted more information on the No Child Left Behind Act. We have hooked those parents up with people in the government that can give them information about how to get a better education for their child. That's the kind of stuff we're doing that hasn't gotten the attention it needs in the past. And hopefully now it will.

PALMIERI: It's true. The Republicans do do African-American outreach programs every election cycle, going back from 1980 on. And they don't make any progress, because they're not sincere in their efforts.

If the White House was really sincere in reaching out to African- Americans, they would have never renominated Charles Pickering, knowing how African-American felt about that.

(CROSSTALK)

PALMIERI: Yes. I think they feel as if they have to do the bare minimum to make it appear as if they're reaching out to African- Americans, but they are not committed to supporting the policies that African-Americans care about, economic policies.

WOODRUFF: A quick rebuttal.

TUCKER: Well, it depends on -- the Democrats are going to define certain things as important African-American policies.

PALMIERI: African-Americans are the ones who define that.

(CROSSTALK)

TUCKER: ... agree about education and the economy and a lot of things and they leave African-Americans behind.

(CROSSTALK)

PALMIERI: You can't afford a prescription drug benefit with your big tax cuts.

TUCKER: Well, that's the other problem, is, they see economic plan of a Republican and all of those programs as a choice. You don't have to choose between...

PALMIERI: It is a choice.

(CROSSTALK)

TUCKER: Bush proved when he was governor of Texas, you don't have to choose between good programs and balancing the budget and offering tax cuts. Good leadership will make it happen.

PALMIERI: We can just have it all.

WOODRUFF: We can leave it there.

(LAUGHTER)

WOODRUFF: Jen and Mindy, thank you. Have a great weekend. We appreciate it.

In California, Governor Gray Davis recently pledged to focus like a laser beam on his state's struggling economy, echoing a phrase that was made famous over a decade ago by then presidential candidate Bill Clinton. Well, on Wednesday, in this state of the state address, Davis appeared to appropriate even more of Mr. Clinton's economic rhetoric.

(BEGIN VIDEO CLIP)

DAVIS: When governors speak from this podium, they ordinarily discuss a whole range of issues.

CLINTON: When presidents speak to Congress and the nation from this podium, typically, they comment on the full range and challenges and opportunities that face the United States.

DAVIS: These are not ordinary times and we do have one overriding task before us.

CLINTON: This is not an ordinary time. And for all the many tasks that require our attention, I believe, tonight, one calls on us to focus tonight and to act. And that is our economy.

DAVIS: We must come together to create new jobs and get our economy back on track.

CLINTON: For, more than anything else, our task tonight as Americans is to make our economy thrive again.

(END VIDEO CLIP)

WOODRUFF: Well, in case you're wondering, in today's "Los Angeles Daily News," the governor's speechwriter, Jason Kinney, acknowledged reading past State of the Unions as he prepared to write, and described any similarities to Mr. Clinton's speech, however, as -- quote -- "accidental homage."

Two Minnesota governors engage in a little trash-talking. Up next: Team Minnesota takes on the Minnesota Old-Timers, as the state's new leader laces up the skates against one of his predecessors.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GOV. TIM PAWLENTY (R), MINNESOTA: There's just been some trash- talking. Governor Anderson has been dissing me. And we are going to go out and just throttle them tonight.

(END VIDEO CLIP)

WOODRUFF: News Minnesota Governor Tim Pawlenty was ready for battle when his Team Minnesota hooky team took on a self-described Old-Timers squad, led by the former Governor Wendell Anderson. The two teams met last night as part of a just-for-fun inaugural event and free skating session for the public. The new governor scored the game's first goal. And his team came out on top 6-2.

Back here in Washington, Pennsylvania Senator Rick Santorum helps to shape the GOP message from his post as chairman of the Republican Conference.

With the kickoff of the 108th Congress just under way, our Jonathan Karl caught up with Senator Santorum on the Capitol Subway.

(BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: We're glad to have you here.

SEN. RICK SANTORUM (R), PENNSYLVANIA: Thank you.

KARL: And one thing that you started off the session with was giving up a Senate chairmanship, which is something that has almost never been done in the United States Senate. But you gave up your chairmanship as the senator...

SANTORUM: Someone told me the other day that I said I might lose my office of senator because I had conduct unbecoming a senator.

(LAUGHTER)

KARL: Now, the chairman of the Rules Committee has been called the mayor of Capitol Hill. Was that a little bit hard to give up, though?

SANTORUM: Look, it's obviously something that I would have enjoyed doing. But, again, Trent, frankly, was better qualified to do the job than me and I think could add a lot more to the position, and, frankly, has probably more time to spend on it than I do.

KARL: Now, clearly, the Trent Lott controversy, many have said, cost the Republican Party in terms of outreach to African-Americans. What are you going to do to repair the damage?

SANTORUM: I see this as an opportunity for us to focus our energy and attention on looking at our ideas through the prism of how it affects this community, which we really didn't do a very good job of in the past.

So, I see this as a -- I really believe all these things work out for good. That's what god has a plan for this. And I believe that this is going to be a good thing for the Senate Republicans and for Republicans in general. And I think its' going to be a great thing for the African-American community in this country.

KARL: Now, you said of Judge Pickering that he was out front -- this is your quote -- "out front leading the charge for racial healing in Mississippi." You make him sound like he was Mississippi's Martin Luther King. Isn't that an overstatement?

SANTORUM: Well, but he was out front. This is a man who testified against the grand wizard or something like that of the Ku Klux Klan.

KARL: But wouldn't anybody testify against the KKK, even in the '60s?

SANTORUM: Well, but this is Mississippi in the '60s, where, as you know, racial division was very acute. And for someone who stand up and do that, you can say, well, anyone else could do it. You're looking at it through the views of someone in the year 2003. Look at it through the views of someone in 1967 in Mississippi and this man took a stance that, yes, all of us would now take, but we weren't there in 1967.

You give the credit for the man at the time he did it. And the fact of the matter is, this is about conservatism. This is not about racism. This is about a conservative jurist. And I think, if you look at the record of all of these civil rights groups, they have opposed virtually every Bush nominee to the appellate court who had a conservative record.

KARL: Now, after Trent Lott announced that he was stepping down, you, for a brief period, considered running against Bill Frist to be the Republican leader, the majority leader. Why?

SANTORUM: Well, what I did is, I thought it was important for me to talk to some of my colleagues who were close to me, folks who were very strong supporters of me, and determine whether the course that seemed to be a fait accompli, which was Bill being the leader, was the right thing to do or whether there should be a contest.

KARL: Your supporters, during those few hours, were portraying you as the conservative candidate in the race and saying that Bill Frist was perhaps too moderate to lead the Republicans.

SANTORUM: Yes, Bill made it very clear to me when I called him that -- he said: I've been sitting here looking at "The National Journal," looking at these voters indexes. I'm more conservative than you are.

(LAUGHTER)

SANTORUM: So, he wanted to make it clear that he was not going to cede conservative credentials to me.

KARL: Senator Santorum, thank you for doing the "Subway Series."

SANTORUM: Thanks. Nice of you to let me off.

(LAUGHTER)

(END VIDEOTAPE)

WOODRUFF: Those "National Journal" ratings really do count.

Well, next on INSIDE POLITICS: Before there was Bushonomics, there was Reaganomics. And that may just add up to the "Political Play of the Week."

(BEGIN VIDEOTAPE)

(voice-over): It's "Capitol Cribs." We show you the office. You guess the occupant.

And if you know what kind of bear that is, you're halfway there. Count this member of Congress in the hunter's caucus. He shot these animals himself. But these trophies, a walrus, part of a whale, were gifts. They are protected. Only the state's native residents can hunt them. And what's that? You probably don't want to know.

We'll tell you anyway a little later on.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WOODRUFF: From Capitol Hill to Wall Street, President Bush's whopping new economic stimulus package is getting mixed reviews. Well, whether it gets passed or not, some people already appear to be profiting.

Our senior political analyst, Bill Schneider, is here with us now from Miami -- hi, Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Hi, Judy.

Victor Hugo once said, nothing is as powerful as an idea whose time has come. And he said it in French. But he didn't say where the idea would come from. Put together a powerful idea and the right time and you just might come up with the "Political Play of the Week."

(BEGIN VIDEOTAPE)

RONALD REAGAN, PRESIDENT OF THE UNITED STATES: We're going to turn the bull loose.

SCHNEIDER (voice-over): Remember the supply-side economists? They're the guys who convinced President Reagan back in the '80s that you could cut taxes and still balance the budget. It didn't quite work out that way, because Congress refused to cut domestic spending, they said. Ah. Well, for years, supply-siders have been kicking around another idea. And look where it ended up this week.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: See, by ending double taxation of dividends, we will increase the return on investing, which will draw more money into the markets. SCHNEIDER: How did it get there? Insiders point to this moment at the White House economic forum in Waco last August.

CHARLES SCHWAB, CEO, CHARLES SCHWAB CORP.: They also ought to reduce the double taxation on dividends, encourage companies to pay more in terms of dividends and reward long-term investors.

SCHNEIDER: Pay dirt.

BUSH: I love your ideas about how to account for loss and/or double taxation dividends. That makes a lot of sense.

SCHNEIDER: Supply-siders just hate the idea that money can be taxed twice. Corporations pay tax on profits. Then shareholders pay a tax on dividends. Outrageous.

Activists, like Club for Growth President Stephen Moore and former Reagan economic adviser Lawrence Kudlow, who has now a TV talk show, have been railing against the dividend tax for years. Why is this suddenly the right time for a dividend tax cut? Because the stock market has been dropping for two years now.

STEPHEN MOORE, PRESIDENT, CLUB FOR GROWTH: I think that 98 million Americans who are investors are going to benefit from this. Anyone who owns stock is going to see an increase in the valuation of their stock.

SCHNEIDER: Supply-siders have won the day. And they have also won the "Political Play of the Week."

BUSH: Thank you all.

(END VIDEOTAPE)

SCHNEIDER: Will the millions of Americans who told stocks in their pension plans get a tax cut? No, because their dividends are not taxed now. They'll still have to pay income taxes when they retire and take the money out. But you know what? That's years from now -- Judy.

WOODRUFF: That's interesting, seeing all those faces from the Reagan era.

SCHNEIDER: Oh, yes.

WOODRUFF: All right, Bill, thanks very much.

And coming up next: civil liberties. Our Jeff Greenfield looks at a frequent casualty of war in the battle against terror and throughout history.

(BEGIN VIDEOTAPE)

(voice-over): More clues to today's "Capitol Crib."

It's not the length of service; it's the quality. So reads the legend on this gavel, fashioned from part of a male walrus anatomy. But, in our congressman's case, it's the length as well. He's been in the House 30 years, making him ninth in seniority.

One last clue: He's the only member who lives above the Arctic Circle. His name just ahead.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): Avid hunter, ex-fur trapper, and the only licensed riverboat captain in Congress. Our congressman has made quite a name for himself fighting environmentalists over oil exploration back home in Alaska.

Who is the subject of today's "Capitol Crib"? Well, since Alaska has only one congressman, he must be none other than Don Young.

(END VIDEOTAPE)

WOODRUFF: A pretty impressive set of trophies.

Well, finally: the struggle between security and civil liberties. Today is the deadline for thousands of men from 13 mostly Arab and Muslim nations to register with U.S. immigration authorities. The post-September 11 crackdown has stirred fear of mass arrests. And it has renewed questions about where to draw the line in the war on terror.

Our senior analyst, Jeff Greenfield, says those questions have been around for generations.

(BEGIN VIDEOTAPE)

JEFF GREENFIELD, CNN SR. ANALYST: History calls Abraham Lincoln the great emancipator. But, during the Civil War, Lincoln cracked down hard on Confederate sympathizers by suspending the writ of habeas corpus, the key mechanism that lets courts judge whether people are being illegally detained.

At one point, the Democratic candidate for governor of Ohio was arrested and detained by the military. The court said they had no power to intervene.

(voice-over): Woodrow Wilson said that the first World War was fought to make the world safe for democracy. But when the U.S. entered that war in 1917, Congress passed the Espionage Act. Some 2,000 were arrested under that law, almost all of them for writing or speaking words of political dissent.

But the more serious assault on liberty took place after the war ended. In 1920, U.S. attorney general A. Mitchell Palmer sent 500 federal agents to round up radicals of various stripes; 240 of them were deported the next year. President Franklin Roosevelt spoke eloquently of the four freedoms during World War II. But, during that war, what is almost surely the most serious breach of liberty ever committed in the United States sent some 120,000 Japanese, two-thirds of them American citizens, into internment camps. The Supreme Court refused to step in, although, years later, the government apologized and offered financial restitution.

Less remembered is what happened to some 600,000 Italians living in America who had not become citizens. When America went to war with Mussolini's Italy, these 600,000 were forced to register as enemy aliens, to carry photo I.D. booklets, and to surrender flashlights, shortwave radios, guns, binoculars, and cameras. More than 50,000 were placed under nightly house arrest. Fishing were boats seized, throwing thousands out of work, including the father of Yankee baseball star Joe DiMaggio.

(on camera): What this history teaches us is what the current controversies since 9/11 teach us; first, when America is attacked, the response will be sweeping, sometimes subjecting incident people to one form or another of restrictions on their liberty; second, that, in time of conflict, courts give great deference to the government. The second thoughts come only later, after the conflict has ended and peace has returned.

Jeff Greenfield, CNN, New York.

(END VIDEOTAPE)

WOODRUFF: And what is it they say about the lessons of history?

Well, that's it for INSIDE POLITICS this Friday. I'm Judy Woodruff. 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





Run for President; Interview With Gary Hart>


Aired January 10, 2003 - 16:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
ANNOUNCER: North Korea reaches out to the U.S., even as it says it's pulling out of a nuclear arms control treaty.

UNIDENTIFIED MALE: Today's announcement is of serious concern to the North Korean neighbors and to the entire international community.

UNIDENTIFIED MALE: I felt as I was on a magical mystery tour.

ANNOUNCER: After playing second banana in 2000, Joe Lieberman gets ready for a leading role in the early presidential race.

Getting to the Hart of it. Does he want to carry famous baggage into another run for the White House?

Cashing in. After years of offering their two cents, payback time in the "Political Play of the Week."

(END VIDEOTAPE)

ANNOUNCER: Live from Washington, this is INSIDE POLITICS with Judy Woodruff.

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. The diplomatic scramble is on to respond to what South Korea calls a matter of life and death. North Korea's decision to pull out of the nuclear nonproliferation treaty. In this news cycle, two North Korean envoys have been meeting with New Mexico Governor Bill Richardson a former U.N. ambassador and diplomatic troubleshooter. At the same time, North Korean officials are blaming the Bush administration for ratcheting up nuclear tension. And they are warning, any sanctions against their country could make matters worse.

(BEGIN VIDEO CLIP)

PAK GIL YON, NORTH KOREAN AMB. TO U.N.: We will consider, reconsider now, even now, any kind of economic sanctions that could be taken by the Security Council of the United Nations against the PPRK as a declaration of war.

(END VIDEO CLIP)

WOODRUFF: North Korea insists it does not intend to produce nuclear weapons, but officials here in Washington and in other world capitals are clearly worried.

Our Suzanne Malveaux at the White House. What are they saying?

SUZANNE MALVEAUX, WHITE HOUSE CORRESPONDENT: Secretary of State Colin Powell called it a very serious situation but said the administration would not be deterred. He met with the head of the International Atomic Energy Agency, Mohammed El Baradei. El Baradei said if they do not comply, could bring the case before the U.N. Security Council where it could face economic sanctions.

Now, Today the White House reached out to allies to put pressure on North Korea. President Bush earlier today calling China's Jiang Zemin. They had a 15 minute conversation. We're told the two leaders agreed that, yes, this is international concern. Also President Bush making the case that the administration has no intention of invading North Korea.

Now, the White House really on the defensive. Their economic as well as diplomatic pressures saying they believe that is the best strategy that is going to work to make North Korea change its course. And today they pointed to international support.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: While not unexpected, given North Korea's behavior, today's announcement is of serious concern to North Korea's neighbors and to the entire international community. Their actions threaten to undermine decades of nonproliferation efforts and only further isolate the regime. North Korea's relations with the entire international community depend on their taking prompt and verifiable action to completely dismantle their nuclear weapons program.

(END VIDEO CLIP)

MALVEAUX: Now, the administration really taking part in some of the support, some of the statements coming from Japan, Russia as well as France, just to name a few. They say, yes, the administration is willing to talk to North Korea, but not to negotiate. But soon the Assistant Secretary of State for East Asian Affairs, James Kelly, will be going to the region. He is going to be meeting with representing from South Korea, Japan, China and others as well, to push, even more so, for them to put that economic and diplomatic pressure on North Korea to comply -- Judy.

WOODRUFF: All right a great deal under way on the diplomatic front. Thanks, Suzanne.

Well, talks between the North Korean diplomats and Governor Bill Richardson resume in New Mexico just about two hours from now. CNN's Bob Franken is in Santa Fe with more on those meetings.

And on Richardson unexpected role in trying to ease the nuclear standoff -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: What better way to have the administration talk with the North Koreans without negotiating with them than using a former high-profile member of the Clinton administration. Decidedly not a member of the Bush administration, acting all the while on the instructions from the secretary of state.

New Mexico Governor Bill Richardson has been in constant contact, to use the spokesman's word, constant contact with Secretary of State Colin Powell. Meetings that seemed to go on longer than expected. Richardson was contacted by the North Koreans because they knew him both by face-to-face contact with the United Nations and also because he has taken earlier in his political career several very sensitive trips to North Korea for negotiations. They know Richardson. They like him.

So the administration, this is a chance for the policies of this government to be presented to the North Koreans without an official stamp on them. Now, we are told that in the meetings today there was a discussion, very substantive discussion and extended one, about the Korean withdrawal, North Korean withdrawal from the nuclear proliferation treaty. As far as the meetings themselves, they're going to extend into this evening, longer than many people expected. Maybe even through tomorrow. We talked to the spokesman for Governor Richardson to find out if that had any great significance.

(BEGIN VIDEO CLIP)

BILLY SPARKS, RICHARDSON SPOKESMAN: I think that both the governor and the North Koreans are interested in substantive talks. As I said they're positive in atmosphere but very frank. We decided to continue the talks at 4:00 this afternoon and I don't know how long they'll last into the night.

(END VIDEO CLIP)

FRANKEN: You'll recognize, Judy, terms like positive, frank, candid, diplomatic terms that mean they'll really dealing with substance. It's being characterized as an effort to come up with preliminary discussions about more official discussions later on -- Judy.

WOODRUFF: All right, Bob. Reporting from Santa Fe. Thanks very much.

And we did hear Secretary of State Colin Powell say earlier he expects to talk with Governor Richardson after these meetings conclude. Thanks very much.

And coming up, we'll discuss the nuclear standoff with former U.S. ambassador to South Korea, James Lily.

The standoff with North Korea may have temporarily overshadowed the showdown with Iraq. But moves toward a possible war with Baghdad go on. Three U.S. Navy ships began to deploy today from their home base in Virginia. The ship and some 7,000 Marines from Camp Lejeune, North Carolina are expected to be sent to the Persian Gulf region.

Meantime, Turkey announced today it has agreed to allow the U.S. to survey some of its military bases and ports for possible use if there's a war with Iraq.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: We are positioning ourselves for whatever eventuality might occur. As the president also said, he hopes for a peaceful solution, but we will be ready to act otherwise if that is what is required to make sure that Iraq is disarmed of its weapons of mass destruction.

(END VIDEO CLIP)

WOODRUFF: Secretary Powell spoke after meeting with the head of the United Nations nuclear watchdog agency. Muhammad El Baradei says they need more intelligence from Washington and more cooperation from Baghdad.

On the economic front, a mixed report today on unemployment. The nation's overall jobless rate held steady at 6 percent in December. But the economy suffered a loss of more than 100,000 jobs. Underscoring the dismal holiday shopping season for retailers, and the political stakes for President Bush.

(BEGIN VIDEO CLIP)

ARI FLEISCHER, WHITE HOUSE PRESS SECY.: The president used the latest report on unemployment as another reason why it's so important for Congress to pass the president's job creating economic plan. The president views this morning's announcement as the reason by Democrats and Republicans need to join together so we can serve the country and pass a program that helps create jobs.

(END VIDEO CLIP)

WOODRUFF: Still, some Democrats pressed their criticism of the president's $674 billion stimulus package, charges it will "grow the size of a financial disaster that lies ahead of this country."

Much more ahead on INSIDE POLITICS.

BILL SCHNEIDER, CNN CORRESPONDENT: I'm Bill Schneider In Miami. Flashback to the days of dynasty disco and big hair -- I used to have big hair -- and the "Political Play Of the Week" will trickle down, too.

(BEGIN VIDEO CLIP)

SEN. RICK SANTORUM (R), PENNSYLVANIA: Someone told me the other day I might lose my office as senator because I had conduct unbecoming a senator.

(END VIDEO CLIP)

WOODRUFF: Well, what did Senator Rick Santorum do? He'll talk about it in our subway series.

And later, an interview with Gary Hart. Why does the man at center of a famous political scandal think now may be the time to run for president again?

This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

WOODRUFF (voice-over): It's time to check your "I.P. I.Q." As we mentioned earlier, North Korea announced today it was withdrawing from the Nuclear Nonproliferation Treaty. When was the treaty ratified? Was it, A -- 1970, B -- 1975 or C -- 1985? Stay with us. We'll tell you the answer later on INSIDE POLITICS.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

WOODRUFF (voice-over): When was the treaty ratified? Was it A -- 1970, B -- 1975 or C -- 1985? The correct answer is "A." The treaty was ratified in 1970. It's objective, to stop the spread of nuclear weapons.

(END VIDEO CLIP)

WOODRUFF: More now on the escalating rhetoric and growing tensions between the United States and North Korea. With me here in Washington is James Lilley. He's a former U.S. ambassador to China and to South Korea. Mr. Ambassador, just how worried are you about the situation at hand?

JAMES LILLEY, AMER. ENTERPRISE INSTITUTE: Well, I'm not terribly worried. I know the North Koreans are unpredictable and nasty and use brinkmanship, but we went through this ten years ago. They're using the same language.

This is a poor, broken down, starving Stalinist country. All its got is its weapons of mass destructions. We have given them a clear message, if you ever use those, you're gone. Bill Clinton said it. I'm sure the people this time have said it. If you ever use your weapons of mass destruction, you won't know your country as it exists.

WOODRUFF: Well the North Koreans are now pointing a finger directly at the United States. They're saying what has happened is completely due to the United States withdrawing fuel oil shipments. Very tough rhetoric. President Bush saying North Korea's part of an axis of evil.

LILLEY: If you look at their millions of words of invective about us and Bush every day, it makes his remarks seem like almost nothing. Nothing.

Let me make just one point to you. We gave this awful country $680 million worth of grain in the '90s. We also gave an equivalent amount of heavy oil. We gave it to them. Is this a country we're going destroy? We trying to buy these people off with huge sums of money. And there was no thought of threatening them.

They have murdered our soldiers in the DMZ, blown up half the South Korean cabinet, blown up a plane. We've got to take these guys seriously, but we've got to give very clear message and be tough with them.

WOODRUFF: You're saying the U.S. has done so much for the North Koreans. Why, then, are they doing this?

LILLEY: Because they want more. They want more. They want to keep their weapons, first of all. Weapons as an insurance policy.

WOODRUFF: What do they have? Do we know...

LILLEY: Of course we don't. (UNINTELLIGIBLE) one, two, China says five, we say two, CIA says two, somebody else says something else. Probably somewhere in the dimension of one to five. We've got 7,000. What's the match up?

I think, also, they want more money, and above all else, they want to survive and stay in power, and keep their system as it is. They know it's cracking. They know they need economic reform. The Chinese have told them this in spades. You've got to get rid of this sick agriculture system. Reforestation, irrigation, fertilizer, decollectivization. Do these things. Be brave.

WOODRUFF: Meanwhile, in New Mexico, newly elected Governor Bill Richardson, formerly U.S. ambassador to the U.N., is meeting with North Korean envoys. Can he accomplish some kind of a breakthrough, do you think?

LILLEY: Bill Richardson is one fine guy. He's good at this sort thing. He will not do anything I think the administration doesn't want him to do. He will follow the script, as we give it to him. He will be very good at it. He's a person that can handle people.

The North Koreans have gone to him playing the old game of divide and conquer. Split the Democrats from the Republicans, split the Americans from the South Koreans. But we see through that, that's so transparent. He'll give him the same message that the administration gave them. If you have something to give us back, you'll feed it back to us.

WOODRUFF: Do you think the North Koreans are serious when they say if there are any economic sanctions declared against us, we will consider that a declaration of war?

LILLEY: I think they used that in '93 and it worked. They're trying to use it again. They scared the heck out of people saying that.

This time, you don't need economic sanctions on them. You just work it with the Chinese, the Japanese, the South Koreans, ourselves. And you pinch that little pipeline, that lifeline they have going in to us. They're absolutely hooked on our food and our energy. If you pinch it, they're going to be in terrible shape. WOODRUFF: What's the next thing that you believe will happen here?

LILLEY: I think the United States has to play a very steady role. Don't back off. Jim Kelly's going over there, he's to talk to them.

WOODRUFF: The State Department.

LILLEY: Yes, State Department and Defense Department's going over, too, to talk with China, Japan, South Korea.

Pull us all together on this thing. Figure out what the problem is. We all agree on first of all one thing. The North Korean -- the Korean Peninsula should have no nuclear weapons. We all agree on this.

I think we also agree we have to use -- convince the North Koreans to back off the program. We all agree on this. The only question is how? Coordinate your activities and these big, powerful countries with this miserable little broken down Stalinist state playing this incredible role.

You've got to be steady, you've got to be patient, you've got to be logical, persistent and tough. And I think we'll get what we want.

WOODRUFF: All right, James Lilley, former U.S. ambassador to South Korean and to China. Thanks very much.

LILLEY: Right, thank you.

WOODRUFF: Very nice of you to come by, we appreciate it.

LILLEY: Thank you, Judy, for inviting me.

WOODRUFF: And when INSIDE POLITICS returns, we will turn our attention to 2004. Last time he was a running mate. This time he wants to head the ticket. Can Joe Lieberman make history on his own?

Plus, will it be back to the future for Gary Hart? I'll speak with the former senator from Colorado coming up in a few minutes.

But first, lots of turbulence today for airline workers. Mary Snow joins us live now from Wall Street with all the details. Hi, Mary

MARY SNOW, CNN CORRESPONDENT: Hi, Judy. A federal judge is putting a stop to the long wage battle between bankrupt United Airlines and the machinists union. The bankruptcy court is ordering the union to accept a temporary paycut for its 37,000 members. All of United's other unions have already agreed to accept temporary wage cuts as a struggle to get out of bankruptcy. The wage cuts should save United $70 million a month. United filed for bankruptcy back in December -- Judy.

WOODRUFF: Mary, we've talked here about the weak unemployment report for the month of December. How did the markets react to that today?

SNOW: Well, you know, Judy, early on stocks lost ground early in the day after that report came out with more than 100,000 job losses for the month of December.

However, stocks did recover and they regained momentum finishing higher for the day. The Dow Industrials closed up slightly. The Nasdaq Composite finished half a percent higher and all the major indices finished the week on a positive note. The Dow gained more than 183 points for the week. The Nasdaq surged nearly 4.5 percent for the week. That's the latest from Wall Street.

Having a billionaire as a friend doesn't hurt if you're thinking of running for president. The story when INSIDE POLITICS returns.

(COMMERCIAL BREAK)

WOODRUFF: Checking the headlines now in our Friday edition of our "Campaign News Daily." Democratic presidential hopeful Dick Gephardt is meeting with state party leaders today in South Carolina. Gephardt held a breakfast meeting in Charleston that included Mayor Joe Riley among others. Next hour he joins Congressman John Spratt in Lancaster for a meeting of the South Carolina Democratic Council.

Florida Senator Bob Graham has called on well-healed political ally as he continues to ponder a run for the White House. Graham met with billionaire investor Warren Buffett yesterday here in Washington. Buffett has been a Graham family friend for years, and he has supported the senator's political career since Graham's first run for governor in 1978.

When Senator Joe Lieberman jumps into the Democratic presidential field on Monday, he'll have his experiences from the 2000 election to fall back on. But this time, Lieberman is trying to win a place at the top of the ticket. Here now, our senior political correspondent Candy Crowley.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): Ladies and gentlemen, the latest entry in the '04 presidential contest.

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT (singing): And so I face the final curtain...

I can't believe I'm doing this.

CROWLEY: The talent show may not be his strong suit, but as the next pageant of politics gets under way, the junior senator from Connecticut leads in name recognition.

(BEGIN VIDEO CLIP)

AL GORE, PRESIDENTIAL CANDIDATE: The next vice president of the United States of America, Joe Lieberman! (END VIDEO CLIP)

LIEBERMAN: I think we can say with certainty here in Nashville today that the American dream is alive and it is well.

CROWLEY: Joe Lieberman was the first Jewish politician on a major party presidential ticket. He infused excitement and furor into the Democratic base, and yet was seen as so nice a guy the Bush campaign never took him on.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENTIAL CANDIDATE: As I said, I think Senator Lieberman was a good pick.

(END VIDEO CLIP)

CROWLEY: Far from low-keying his Orthodox Jewish beliefs, Lieberman put them out there.

LIEBERMAN: In Hebrew the expression is betzelama loachim (ph), which means we are all equal in God's eyes.

CROWLEY: It was a tour de force, a rock star in Jewish communities and a hit in African-American churches, the seat of political power among many black voters. Recent CNN-"USA Today" Gallup poll shows Lieberman a top choice of all Democrats, but first choice of black Democrats.

Some colleagues complain Lieberman compromises too early and too often. Others grouse that he wears righteousness on his sleeve earning him the nickname "Saint Joe."

Lieberman piled up with a leading Republican conservative to take on Hollywood. He once eyed school vouchers and privatizing Social Security favorably, while questioning racial quotas and preferences. All leanings Lieberman remolded or rejected as he moved into Gore world. He is hawkish on foreign policy, supporting the first President Bush on Iraq as he now supports the second.

Lieberman's record is to the right of anyone currently in the '04 Democratic pool, a difficult place in Democratic primaries, which are largely populated by left-of-center Democrats. And as attractive as he was as a vice presidential candidate, Lieberman was Al Gore's choice. Now he has to make history on his own.

(END VIDEOTAPE)

CROWLEY: Beyond name recognition and a proven fund-raising ability, Lieberman has also cared for and cultivated the Gore/Lieberman campaign structure. After 2000, said one Democrat, Al Gore went inside his house and shut the door. Joe Lieberman wrote thank-you notes and kept fund-raising -- Judy.

WOODRUFF: Let's see. Does he have a singing career, Candy? That's the real question. CROWLEY: I'm thinking not.

WOODRUFF: OK, Candy Crowley, thanks very much. Candy will be, by the way, in Stamford, Connecticut on Monday when Senator Lieberman makes that big announcement. CNN will carry his remarks live at 10:00 a.m. Eastern.

Later that day, we'll have an interview with the senator right here on INSIDE POLITICS.

Well, while most would-be Democratic candidates are promising to make their presidential decisions this month, former senator and two- time presidential hopeful Gary Hart has said that he will make up his mind by April. Gary Hart joins us now from Denver. Senator Hart -- that's not you. That's the White House. There you are! It's good to see you, and thank you for being with us.

GARY HART (D), FORMER PRESIDENTIAL CANDIDATE: Great pleasure. Thank you.

WOODRUFF: You were quoted yesterday as telling some reporters that you would love to be president of the United States. What are the odds that you're going to run again?

HART: Well, it's much too early to be putting odds on this. Frankly, the people that I've heard from haven't asked what my odds are or how much money I've raised or where I stand in the polls. What they have urged is that I find a way to let the party and the country know my views on national security, particularly in the light of the age of terrorism, foreign policy and new ideas for the economy, and I intend to do that in the next few weeks. And then we'll see.

As you well know and I think your viewers know, I've been away from Washington for a number of years. And so I in a way, have to re- introduce myself. I've never given up on trying to play a role as a public servant. Whether that involves running for office, we'll wait and see.

WOODRUFF: Now, we read in the "New Republic" and elsewhere that you were approached to at least think about this by two Harvard grad students. So you're serious about this. Right?

HART: Well, first of all, there were a good deal more than the two. There is quite a network of people like that. Not only those students, but a lot of other people from -- friends from the 1980s and the previous campaigns that I've been involved in. Former staff members and so forth, and quite a lot of people have offered to help me propose ideas for the country and for the party that no one else is doing. And if I can make that contribution, that will be a substantial contribution, one I intend to continue to try to make.

It turns out, as I've said many times before, in American politics, you're either on the playing field or you're on the sidelines. And when you're on the sidelines, you're not heard very much. And I think because of my work on U.S. Commission on National Security and more recently, the Council on Foreign Relations task force and the warnings of future attacks on this country, it's enabled me to get back into the arena and be able to be heard on those issues and a number of others, and I hope to continue to do that.

WOODRUFF: Well, to be frank, Senator Hart, your last campaign for president back in the late '80s is best remembered for the reason you got out. You had an affair with a very attractive younger woman. What makes you think that people are going to consider you, take you more seriously, than they would all these other Democrats who are saying they want to run who have a more recent public record of service?

HART: Well, first of all, I'm not quite sure what the first part of that question has to do with the second part. I think what we ought to be doing right now is having a primary of ideas, letting the candidates, or potential candidates, let the party know and the country know where we stand in very specific terms, and somehow try to get through the filter of polls and money and the inside Washington, if you'll excuse my reference, inside politics to the issues.

I really don't find people asking me about the inside nature of politics. What people really want in this country is some direction and some guidance, and I think if you have the public service instincts I have, you try to answer those questions, and if other questions from the past come up, I'll be prepared to answer them.

WOODRUFF: And are you saying people like John Kerry and Joe Lieberman, who we just heard about, and Dick Gephardt, and others, are not up to the challenge? Not qualified?

HART: No, no, no. No, no. I think they're all speaking. It's been interesting to me to watch the profiles of them, because they -- there is a great deal of profiling of who they are and so on, and then reference to the fact they've given major public policy speeches. It's very, very difficult to find out what those are. So I would hope that you and others like you would begin to focus on what they are saying, and not just how they comb their hair and how much money they have in their exploratory committees.

WOODRUFF: Well, I hope we're asking those other questions.

HART: I hope so, too.

WOODRUFF: Do you think President Bush can be beat?

HART: Well, of course. I mean, the economy's in terrible shape, and it doesn't seem to be getting any better, and a lot of serious people with no ax to grind for the Democratic Party are saying these tax cuts are not the way to put this economy back on its feet. He isn't taking account of the globalization, he's not taking account of the information revolution, he's not taking account of the costs of the war in Iraq, which are going to more than offset any beneficial economic impact of the tax cuts that he's offering. And he's also not taking account of the costs of the next terrorist attacks that will probably occur as a result of our going to war in Iraq.

WOODRUFF: All right. We're going to have to leave it at that. Former United States Senator Gary Hart, joining us from Denver, and senator, we hope to talk to you certainly by the time you make that decision.

HART: Thank you very much.

WOODRUFF: Thanks very much for talking to us.

Just ahead, if imitation is the sincerest form of flattery, Governor Gray Davis has some kind words for former President Bill Clinton.

(BEGIN VIDEO CLIP)

GOV. GRAY DAVIS (D), CALIFORNIA: These are not ordinary times.

WILLIAM J. CLINTON, FORMER PRESIDENT OF THE UNITED STATES: But this is not an ordinary time.

DAVIS: God bless you. And God bless America.

(END VIDEO CLIP)

WOODRUFF: Words worth repeating from the former president and the California governor.

(COMMERCIAL BREAK)

WOODRUFF: Lining up for a controversial program: It is D-Day for thousands of immigrants here in the United States -- the story coming up.

(NEWS BREAK)

WOODRUFF: And with us now: Mindy Tucker, communications director for the Republican National Committee; and Jennifer Palmieri, who is the press secretary for the Democratic National Committee.

Jen and Mindy, we just heard the vice president making an argument for the president's plan. Today, we have these unemployment number coming out, a lot of people still out of work. The Democrats would say, this is an argument that the president's plan doesn't work.

Republicans, Jen, say this is all the more reason to pass it. Who's right?

JENNIFER PALMIERI, PRESS SECRETARY, DNC: Well, I think the debate shouldn't be over whether having tax-free dividends is a good idea or not. It should be over whether or not it is that having tax- free dividends and accelerating the tax cuts, is that going to help the economy? It didn't two years ago.

This is the same solution we got two years ago. And it didn't help. And we still have problems with the economy. So, why would we do it now? And the second question is, what does this crowd out? Sure, it would be great to have tax-free dividends. But if it's going to cost $300 billion, what priorities does that crowd out. It means we can't have a prescription drug benefit. It probably means we don't meet our homeland security needs, we don't have enough money for education. It's a question of priority.

WOODRUFF: Mindy?

MINDY TUCKER, COMMUNICATIONS DIRECTOR, RNC: Well, there's an important thing to remember here.

Back when the recession started, people said, experts said, because of the Bush tax cuts, it was not as bad as it could have been. These tax cuts do work. They stimulate the economy.

PALMIERI: But that was the rebate. It was the first-year debate, not the long-term

(CROSSTALK)

TUCKER: Money in the government's hands is not going to stimulate the economy. Money in people's hands, so they can go out and spend it, will. We know that.

Secondly, I think it's important also to remember that we have not done anything for the past year. We've been in deadlock. The Senate wouldn't act. We now have a Republican-led Senate, a Republican-led House, but it's still important, bipartisanly, to come together and do something, so that the next time unemployment numbers come out, we're not sitting here having this same argument about who's right and who's wrong.

We need bipartisan action to sit down and figure out what's going to work, create jobs, stimulate the economy and get it done.

WOODRUFF: Very quickly.

PALMIERI: Democrats would say that we would agree that in -- short-term tax cuts and tax rebates, like we did in '01, that does help stimulate the economy. But it's the out-year stuff, it's the stuff in the long term that we don't think we need now.

WOODRUFF: I want to quickly move you both to the civil rights agenda.

In the aftermath of the Trent Lott controversy, you have the Senate Republican leadership, Senator Frist and others, meeting this coming week with conservative African-American leaders. On the other hand, Jen, you have Democratic senators setting up a session on: Where do we go next?

(CROSSTALK)

WOODRUFF: In this period after what happened to Trent Lott and because of his statement, Mindy, are we -- is there going to be anything positive to come out of it?

TUCKER: I think definitely there will be. First and foremost, you're paying attention to it. And I hope that the news media continues to pay as much attention to the things that what we've been doing in the past that we will continue to do in the future.

We've been doing African-American outreach for a long time. And we've made a lot of progress. This year in particular, we ran African-American radio ads. Thousands of parents responded to them. They were about education. They called us, wanted more information on the No Child Left Behind Act. We have hooked those parents up with people in the government that can give them information about how to get a better education for their child. That's the kind of stuff we're doing that hasn't gotten the attention it needs in the past. And hopefully now it will.

PALMIERI: It's true. The Republicans do do African-American outreach programs every election cycle, going back from 1980 on. And they don't make any progress, because they're not sincere in their efforts.

If the White House was really sincere in reaching out to African- Americans, they would have never renominated Charles Pickering, knowing how African-American felt about that.

(CROSSTALK)

PALMIERI: Yes. I think they feel as if they have to do the bare minimum to make it appear as if they're reaching out to African- Americans, but they are not committed to supporting the policies that African-Americans care about, economic policies.

WOODRUFF: A quick rebuttal.

TUCKER: Well, it depends on -- the Democrats are going to define certain things as important African-American policies.

PALMIERI: African-Americans are the ones who define that.

(CROSSTALK)

TUCKER: ... agree about education and the economy and a lot of things and they leave African-Americans behind.

(CROSSTALK)

PALMIERI: You can't afford a prescription drug benefit with your big tax cuts.

TUCKER: Well, that's the other problem, is, they see economic plan of a Republican and all of those programs as a choice. You don't have to choose between...

PALMIERI: It is a choice.

(CROSSTALK)

TUCKER: Bush proved when he was governor of Texas, you don't have to choose between good programs and balancing the budget and offering tax cuts. Good leadership will make it happen.

PALMIERI: We can just have it all.

WOODRUFF: We can leave it there.

(LAUGHTER)

WOODRUFF: Jen and Mindy, thank you. Have a great weekend. We appreciate it.

In California, Governor Gray Davis recently pledged to focus like a laser beam on his state's struggling economy, echoing a phrase that was made famous over a decade ago by then presidential candidate Bill Clinton. Well, on Wednesday, in this state of the state address, Davis appeared to appropriate even more of Mr. Clinton's economic rhetoric.

(BEGIN VIDEO CLIP)

DAVIS: When governors speak from this podium, they ordinarily discuss a whole range of issues.

CLINTON: When presidents speak to Congress and the nation from this podium, typically, they comment on the full range and challenges and opportunities that face the United States.

DAVIS: These are not ordinary times and we do have one overriding task before us.

CLINTON: This is not an ordinary time. And for all the many tasks that require our attention, I believe, tonight, one calls on us to focus tonight and to act. And that is our economy.

DAVIS: We must come together to create new jobs and get our economy back on track.

CLINTON: For, more than anything else, our task tonight as Americans is to make our economy thrive again.

(END VIDEO CLIP)

WOODRUFF: Well, in case you're wondering, in today's "Los Angeles Daily News," the governor's speechwriter, Jason Kinney, acknowledged reading past State of the Unions as he prepared to write, and described any similarities to Mr. Clinton's speech, however, as -- quote -- "accidental homage."

Two Minnesota governors engage in a little trash-talking. Up next: Team Minnesota takes on the Minnesota Old-Timers, as the state's new leader laces up the skates against one of his predecessors.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GOV. TIM PAWLENTY (R), MINNESOTA: There's just been some trash- talking. Governor Anderson has been dissing me. And we are going to go out and just throttle them tonight.

(END VIDEO CLIP)

WOODRUFF: News Minnesota Governor Tim Pawlenty was ready for battle when his Team Minnesota hooky team took on a self-described Old-Timers squad, led by the former Governor Wendell Anderson. The two teams met last night as part of a just-for-fun inaugural event and free skating session for the public. The new governor scored the game's first goal. And his team came out on top 6-2.

Back here in Washington, Pennsylvania Senator Rick Santorum helps to shape the GOP message from his post as chairman of the Republican Conference.

With the kickoff of the 108th Congress just under way, our Jonathan Karl caught up with Senator Santorum on the Capitol Subway.

(BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: We're glad to have you here.

SEN. RICK SANTORUM (R), PENNSYLVANIA: Thank you.

KARL: And one thing that you started off the session with was giving up a Senate chairmanship, which is something that has almost never been done in the United States Senate. But you gave up your chairmanship as the senator...

SANTORUM: Someone told me the other day that I said I might lose my office of senator because I had conduct unbecoming a senator.

(LAUGHTER)

KARL: Now, the chairman of the Rules Committee has been called the mayor of Capitol Hill. Was that a little bit hard to give up, though?

SANTORUM: Look, it's obviously something that I would have enjoyed doing. But, again, Trent, frankly, was better qualified to do the job than me and I think could add a lot more to the position, and, frankly, has probably more time to spend on it than I do.

KARL: Now, clearly, the Trent Lott controversy, many have said, cost the Republican Party in terms of outreach to African-Americans. What are you going to do to repair the damage?

SANTORUM: I see this as an opportunity for us to focus our energy and attention on looking at our ideas through the prism of how it affects this community, which we really didn't do a very good job of in the past.

So, I see this as a -- I really believe all these things work out for good. That's what god has a plan for this. And I believe that this is going to be a good thing for the Senate Republicans and for Republicans in general. And I think its' going to be a great thing for the African-American community in this country.

KARL: Now, you said of Judge Pickering that he was out front -- this is your quote -- "out front leading the charge for racial healing in Mississippi." You make him sound like he was Mississippi's Martin Luther King. Isn't that an overstatement?

SANTORUM: Well, but he was out front. This is a man who testified against the grand wizard or something like that of the Ku Klux Klan.

KARL: But wouldn't anybody testify against the KKK, even in the '60s?

SANTORUM: Well, but this is Mississippi in the '60s, where, as you know, racial division was very acute. And for someone who stand up and do that, you can say, well, anyone else could do it. You're looking at it through the views of someone in the year 2003. Look at it through the views of someone in 1967 in Mississippi and this man took a stance that, yes, all of us would now take, but we weren't there in 1967.

You give the credit for the man at the time he did it. And the fact of the matter is, this is about conservatism. This is not about racism. This is about a conservative jurist. And I think, if you look at the record of all of these civil rights groups, they have opposed virtually every Bush nominee to the appellate court who had a conservative record.

KARL: Now, after Trent Lott announced that he was stepping down, you, for a brief period, considered running against Bill Frist to be the Republican leader, the majority leader. Why?

SANTORUM: Well, what I did is, I thought it was important for me to talk to some of my colleagues who were close to me, folks who were very strong supporters of me, and determine whether the course that seemed to be a fait accompli, which was Bill being the leader, was the right thing to do or whether there should be a contest.

KARL: Your supporters, during those few hours, were portraying you as the conservative candidate in the race and saying that Bill Frist was perhaps too moderate to lead the Republicans.

SANTORUM: Yes, Bill made it very clear to me when I called him that -- he said: I've been sitting here looking at "The National Journal," looking at these voters indexes. I'm more conservative than you are.

(LAUGHTER)

SANTORUM: So, he wanted to make it clear that he was not going to cede conservative credentials to me.

KARL: Senator Santorum, thank you for doing the "Subway Series."

SANTORUM: Thanks. Nice of you to let me off.

(LAUGHTER)

(END VIDEOTAPE)

WOODRUFF: Those "National Journal" ratings really do count.

Well, next on INSIDE POLITICS: Before there was Bushonomics, there was Reaganomics. And that may just add up to the "Political Play of the Week."

(BEGIN VIDEOTAPE)

(voice-over): It's "Capitol Cribs." We show you the office. You guess the occupant.

And if you know what kind of bear that is, you're halfway there. Count this member of Congress in the hunter's caucus. He shot these animals himself. But these trophies, a walrus, part of a whale, were gifts. They are protected. Only the state's native residents can hunt them. And what's that? You probably don't want to know.

We'll tell you anyway a little later on.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WOODRUFF: From Capitol Hill to Wall Street, President Bush's whopping new economic stimulus package is getting mixed reviews. Well, whether it gets passed or not, some people already appear to be profiting.

Our senior political analyst, Bill Schneider, is here with us now from Miami -- hi, Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Hi, Judy.

Victor Hugo once said, nothing is as powerful as an idea whose time has come. And he said it in French. But he didn't say where the idea would come from. Put together a powerful idea and the right time and you just might come up with the "Political Play of the Week."

(BEGIN VIDEOTAPE)

RONALD REAGAN, PRESIDENT OF THE UNITED STATES: We're going to turn the bull loose.

SCHNEIDER (voice-over): Remember the supply-side economists? They're the guys who convinced President Reagan back in the '80s that you could cut taxes and still balance the budget. It didn't quite work out that way, because Congress refused to cut domestic spending, they said. Ah. Well, for years, supply-siders have been kicking around another idea. And look where it ended up this week.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: See, by ending double taxation of dividends, we will increase the return on investing, which will draw more money into the markets. SCHNEIDER: How did it get there? Insiders point to this moment at the White House economic forum in Waco last August.

CHARLES SCHWAB, CEO, CHARLES SCHWAB CORP.: They also ought to reduce the double taxation on dividends, encourage companies to pay more in terms of dividends and reward long-term investors.

SCHNEIDER: Pay dirt.

BUSH: I love your ideas about how to account for loss and/or double taxation dividends. That makes a lot of sense.

SCHNEIDER: Supply-siders just hate the idea that money can be taxed twice. Corporations pay tax on profits. Then shareholders pay a tax on dividends. Outrageous.

Activists, like Club for Growth President Stephen Moore and former Reagan economic adviser Lawrence Kudlow, who has now a TV talk show, have been railing against the dividend tax for years. Why is this suddenly the right time for a dividend tax cut? Because the stock market has been dropping for two years now.

STEPHEN MOORE, PRESIDENT, CLUB FOR GROWTH: I think that 98 million Americans who are investors are going to benefit from this. Anyone who owns stock is going to see an increase in the valuation of their stock.

SCHNEIDER: Supply-siders have won the day. And they have also won the "Political Play of the Week."

BUSH: Thank you all.

(END VIDEOTAPE)

SCHNEIDER: Will the millions of Americans who told stocks in their pension plans get a tax cut? No, because their dividends are not taxed now. They'll still have to pay income taxes when they retire and take the money out. But you know what? That's years from now -- Judy.

WOODRUFF: That's interesting, seeing all those faces from the Reagan era.

SCHNEIDER: Oh, yes.

WOODRUFF: All right, Bill, thanks very much.

And coming up next: civil liberties. Our Jeff Greenfield looks at a frequent casualty of war in the battle against terror and throughout history.

(BEGIN VIDEOTAPE)

(voice-over): More clues to today's "Capitol Crib."

It's not the length of service; it's the quality. So reads the legend on this gavel, fashioned from part of a male walrus anatomy. But, in our congressman's case, it's the length as well. He's been in the House 30 years, making him ninth in seniority.

One last clue: He's the only member who lives above the Arctic Circle. His name just ahead.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): Avid hunter, ex-fur trapper, and the only licensed riverboat captain in Congress. Our congressman has made quite a name for himself fighting environmentalists over oil exploration back home in Alaska.

Who is the subject of today's "Capitol Crib"? Well, since Alaska has only one congressman, he must be none other than Don Young.

(END VIDEOTAPE)

WOODRUFF: A pretty impressive set of trophies.

Well, finally: the struggle between security and civil liberties. Today is the deadline for thousands of men from 13 mostly Arab and Muslim nations to register with U.S. immigration authorities. The post-September 11 crackdown has stirred fear of mass arrests. And it has renewed questions about where to draw the line in the war on terror.

Our senior analyst, Jeff Greenfield, says those questions have been around for generations.

(BEGIN VIDEOTAPE)

JEFF GREENFIELD, CNN SR. ANALYST: History calls Abraham Lincoln the great emancipator. But, during the Civil War, Lincoln cracked down hard on Confederate sympathizers by suspending the writ of habeas corpus, the key mechanism that lets courts judge whether people are being illegally detained.

At one point, the Democratic candidate for governor of Ohio was arrested and detained by the military. The court said they had no power to intervene.

(voice-over): Woodrow Wilson said that the first World War was fought to make the world safe for democracy. But when the U.S. entered that war in 1917, Congress passed the Espionage Act. Some 2,000 were arrested under that law, almost all of them for writing or speaking words of political dissent.

But the more serious assault on liberty took place after the war ended. In 1920, U.S. attorney general A. Mitchell Palmer sent 500 federal agents to round up radicals of various stripes; 240 of them were deported the next year. President Franklin Roosevelt spoke eloquently of the four freedoms during World War II. But, during that war, what is almost surely the most serious breach of liberty ever committed in the United States sent some 120,000 Japanese, two-thirds of them American citizens, into internment camps. The Supreme Court refused to step in, although, years later, the government apologized and offered financial restitution.

Less remembered is what happened to some 600,000 Italians living in America who had not become citizens. When America went to war with Mussolini's Italy, these 600,000 were forced to register as enemy aliens, to carry photo I.D. booklets, and to surrender flashlights, shortwave radios, guns, binoculars, and cameras. More than 50,000 were placed under nightly house arrest. Fishing were boats seized, throwing thousands out of work, including the father of Yankee baseball star Joe DiMaggio.

(on camera): What this history teaches us is what the current controversies since 9/11 teach us; first, when America is attacked, the response will be sweeping, sometimes subjecting incident people to one form or another of restrictions on their liberty; second, that, in time of conflict, courts give great deference to the government. The second thoughts come only later, after the conflict has ended and peace has returned.

Jeff Greenfield, CNN, New York.

(END VIDEOTAPE)

WOODRUFF: And what is it they say about the lessons of history?

Well, that's it for INSIDE POLITICS this Friday. I'm Judy Woodruff. 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





Run for President; Interview With Gary Hart>