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New York Mayor Rudy Giuliani Decides Against Senate Race

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

LOU WATERS, CNN ANCHOR: CNN senior White House correspondent John King has confirmed a rather dramatic political story at this hour, and that is the impending withdrawal of Rudy Giuliani, the mayor of New York, from the U.S. Senate race there.

John, what are you hearing?

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Lou, we hear from senior Republican sources that the mayor called Bill Powers -- he's the powerful chairman of the New York State Republican Party -- a little more than an hour ago to inform him of his decision not to run. This surprising many people who thought the mayor would go against the conventional wisdom because he is a fighter and stay in the race despite his treatment for cancer, despite a swirling controversy in New York about his personal life.

The mayor called Bill Powers, the Republican state chairman, told him he would announce later today he has decided not to seek the United States Senate seat. Mr. Powers now on the phone, we're told, trying to have an orderly transition to a new candidate. One thing New York Republicans worried about now is will more than one candidate try to jump in?

Mrs. Clinton, obviously, was not nominated last week -- this past week by the New York State Democratic Party. Chairman Powers now trying to bring this controversy to a quick end and have the Republicans rally around a single candidate -- Lou.

WATERS: "Orderly transition" is practically and oxymoron in New York politics. How do they plan to go about this? What are you hearing the options are?

KING: Well, Mr. Powers is very close to the governor, George Pataki, and Frank Sesno is with us here on the set. He has some information about Governor Pataki.

Mr. Powers -- remember, Rudy Giuliani not very close to the state party originally. They have warmed to him because they thought he would be the best candidate for this race. Now they're looking around at their other options. Several members of the New York Republican congressional delegation have thought about this race. Obviously most Republicans in the state wish the governor would jump in.

But if it's possible, if I could bring Frank Sesno in here on the set, he has spoken to other senior Republicans in New York in just the past few minutes and he could give us an update on the governor's thinking and some of the other options.

WATERS: Sure, Frank. Bill Schneider, our senior political analyst, said Pataki, who declined before, may decline again. Is that what you're hearing?

FRANK SESNO, CNN WASHINGTON BUREAU CHIEF: Well, I've just spoken just a couple of minutes ago, Lou, with somebody, a senior Republican who's very close to Pataki. He says flatly there is no way. He definitely will not run. Pataki had made his comments known in public prior to this that his interest was up there continuing to be governor.

Senior Republicans in New York say that Rick Lazio, the congressman, is the front-runner for this now, that Pataki and the party establishment owe him a favor. They leaned on him last August to back out of this thing so that Giuliani would be unopposed in this whole thing. He did it. He had about three-plus million dollars raised. That gives him a little bit of a head start. And it's considered that he would be the strongest candidate. Not a great deal of name recognition outside of his own district, but it helps in New York politics that he's got some ethnic background, according to this Republican and others, who are saying that Rick Lazio is the favorite son at this point, sort of the heir apparent, Lou.

Just very quickly, considered to be his weaknesses and strengths: His strengths is that he comes from the suburbs, presents a sort of solid moderate to conservative Republican image. And in the words of one Republican I just spoke to, he's not Hillary. So the thinking being that if Republicans can unite behind one person, they can tap that strong anti-Hillary Clinton sentiment, as they see it, certainly, among Republicans.

Weaknesses, a guy like Rick Lazio: not great name recognition, as I mentioned, and he's relatively unproven. So this still a very dynamic situation, as John King pointed out.

WATERS: Big problem here, Frank, is money: $3 million isn't a whole lot. Giuliani had $16 million. But that money cannot be just handed over to Lazio, can it?

SESNO: No, it certainly cannot. They've got to come up with something creative to do with it or he's got to return it. I think John King, knowing the money trail as much as you do, and you've spoken to some of the people about those options.

KING: Well, Governor Pataki...

WATERS: Are...

KING: Sorry, Lou.

WATERS: Go ahead, John.

KING: Well, Governor Pataki would certainly help whoever the Republican candidate is, the state party would help. You can bet they would lean on their presidential nominee, George W. Bush, and the national party to help.

Let me give you a little bit of perspective from the Hillary Rodham Clinton campaign: One of the things they had tried to do to the mayor was link him to the national Republicans, to criticize him as somebody who, like the Republicans, in Mrs. Clinton's view, wanted to have risky tax cut.

Now, that was more difficult in the case of the mayor because he has won Democratic votes in New York City. He has been outspoken against the party on many issues. He favors abortion rights, for example. They do believe, with the congressman in the race, Rick Lazio, assuming it is him. it will be easier for Mrs. Clinton to do much what President Clinton did in New York State and states like it when he ran for reelection in 1996: looked to hear the name Newt Gingrich, looked to hear the words, Contract With America.

If it is a Republican congressman in the race, Mrs. Clinton will try to make this a national election with Democratic versus Republican themes. New York a relatively moderate state even though it has a Republican governor. Bill Clinton has won there convincingly twice. They believe, thematically, she would have a better case against a Republican congressman.

WATERS: All right, John King, Frank Sesno in Washington.

We expect this story to dominate the afternoon. We'll have many more developments.

Natalie Allen with what's next.

NATALIE ALLEN, CNN ANCHOR: Frank Buckley has been covering the Giuliani campaign. He joins us now from New York.

Frank, are you getting a sense of what people with the campaign are feeling today?

FRANK BUCKLEY, CNN CORRESPONDENT: Well, I can tell you that I just got off the phone with a Republican state official a moment ago and his tone was one of being stunned. I mean -- and this is someone that I had just spoken with a couple of hours ago.

The attitude this morning when I was speaking with this Republican state official was the one we've been hearing, the party line that had been coming from both the Giuliani campaign and from Republicans state officials, which was that it appeared as though Rudy Giuliani was, in fact, going to continue forward. Aides were dispatched this week to Buffalo to continue in the planning process for the upcoming state convention, which is going to be held on May 30. There was a sense that this momentum was going to, in fact, carry forward and that Rudy Giuliani was going to be the nominee of the Republican state party here from New York as the U.S. Senate candidate. So this official sounded stunned.

Just to get into the conversation that you were talking about as for the possible replacements, Rick Lazio is clearly the person that the Republicans have seen as the possible replacement candidate for Rudy Giuliani. There is something that they've talked about, which is the stature gap between a Hillary Clinton and a Rick Lazio, the fact that he is a relative unknown both nationally and even within the state.

Yes, he has raised $3 1/2 million. Yes, he has traveled extensively throughout the state. This was as of a year ago. But he isn't that well-known around the state, and he also just appears young in contrast to a Hillary Clinton, the first lady of the United States.

On the name recognition idea, however, many Republicans here believe that because of the discussions that we are having right now, for example, they thought that the free media, or the so-called "earned media" that would accrue to whoever was talked about as the main placement candidate, would, in fact, propel that person's name recognition throughout the state and throughout the U.S., and that would help.

Also, there is another factor that they've talked about, which is the ABC factor in this state, which is the "anyone but Clinton" factor. It's their belief that, on fund-raising, that around the U.S., Republicans and conservatives so badly want Hillary Clinton to lose this Senate race that whoever they run, whoever the Republicans run will be able to immediately raise a great deal of money. So they're not too concerned about raising money in the months ahead.

Yes, there is a head start that would take place here with Hillary Clinton having raised a significantly amount of -- larger amount of money than whoever will be the replacement candidate, but it's the belief that because contributions will come from throughout the U.S., that at least on the money side and on the name recognition side, those two things are things that the Republicans believe they can counter -- Natalie.

ALLEN: Right. What they lack in stature they -- perhaps they'll make up in money, whoever is the candidate.

What about, Frank, Rudy Giuliani himself? You've been following the mayor. He's had some, you know, major announcement to make lately. As far as -- he such a fighter kind of a guy, what has been his demeanor the past few weeks since he faced such trials in his life?

BUCKLEY: Well, the past few weeks, Rudy Giuliani has sort of transformed. In fact, I talked to a Giuliani aide this morning who said -- used that word, that he's a "transformed" man. His demeanor has changed significantly. Yes, he is still the same person. He is quick to tell reporters that he is not going to answer a question regarding his personal life if he feels that reporters are being too intrusive. But generally, he appears to have become much more introspective.

Last night in a televised town meeting, he seemed much more compassionate about issues related to things like cancer. He was telling very personal stories and being a softer Giuliani, if you will, than the Giuliani we've encountered over the past several months at various occasions.

So, yes, his demeanor has changed. Our sense of it was that -- we've all been on this roller coaster -- yes, he's going to get out; no, he isn't. I mean, most recently, the thinking had gone this week that the longer he waited, the more likely it was that he would stay in the race just because the Republican Party was being put up against the wall.

We talked yesterday to Jim Cavanaugh, the Westchester County Republican chairman, and he said, we have to know and we have to know now. There was a sense from the Republicans -- and Cavanaugh said it; many others wouldn't say it publicly -- but they were feeling very much up against the wall. And many felt that we were already beyond the point of Giuliani being able to pull out because they felt that if he pulled out this close to the state convention -- that is May 30 -- that they were in such a spot that it would really harm Giuliani politically and the party politically now, and Giuliani's political future would be irreparably harmed, or so they thought.

I mean, clearly, Giuliani will do what he is going to do and others will be sympathetic to the factors that are going into this decision; notably, of course, his prostate cancer diagnosis. So, it remains to be seen.

But on the main question of his demeanor, certainly it has changed significantly in the last three weeks.

ALLEN: All right, Frank Buckley, thank you so much for your thoughts -- our correspondent who's followed the Giuliani campaign.

Again, the news is that Rudy Giuliani is stepping down from the Senate race as Republicans scramble to find an opponent for Hillary Rodham to face -- Hillary Rodham Clinton.

We will continue to bring you development on this breaking news story. And, of course, when Rudy Giuliani makes it official, we'll bring that to you live.

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