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Albright Speaks About Milosevic, Yugoslavia; Abraham Addresses U.S. Energy Policy; How Will McCain-Feingold Reshape Politics?

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

WOLF BLITZER, HOST: It's noon in Washington, 9:00 a.m. in Los Angeles, 5:00 p.m. in London and 6:00 p.m. in Belgrade. Wherever you're watching from around the world, thanks for joining us for this two-hour LATE EDITION.

We'll get to our interviews with former U.S. Secretary of State Madeleine Albright and U.S. Energy Secretary Spencer Abraham in just a few minutes.

But, first, the hour's top stories.

(NEWSBREAK)

BLITZER: Joining us now is someone who has dealt directly with Slobodan Milosevic and is here to offer some perspective on the arrest, the former United States secretary of state, Madeleine Albright.

Madame Secretary, welcome to LATE EDITION. I know you're now also chairman of the National Democratic Institute here in Washington.

Well, give us your sense of what this means, the arrest of Slobodan Milosevic in Belgrade.

MADELEINE ALBRIGHT, FORMER U.S. SECRETARY OF STATE: Well, I think it's a very important day, Wolf, because this is a part of a process of making sure that somebody that has been so involved in internal crimes, as well as international crimes, is brought to justice. And I congratulate the Serb people and the Serbian government for having gone forward with something that was clearly very difficult. But it's an important first step and the people of Serbia should be congratulated.

BLITZER: You heard our Belgrade bureau chief, Alessio Vinci, say there's no discussion, at least in Belgrade, at this point, of handing him over to the international war crimes tribunal. He's going to be charged on domestic issues in Yugoslavia.

ALBRIGHT: Well, clearly it's only the beginning of the story, and I think that there has been some discussion among members of the government that ultimately there has to be movement to the war crimes tribunal.

He is now being tried for crimes against his own people, and as Alessio said, millions of Serbs have been injured by his activities.

But also there are millions in Slovenia and Croatia and Bosnia and Kosovo that also suffered as a result of the activities of Slobodon Milosevic. Those are crimes that the international war crimes tribunal handed down an indictment on, and he has to ultimately be brought before international justice.

BLITZER: Has President Kostunica, the new president of Yugoslavia, done enough now to warrant receiving $50 million in additional U.S. economic assistance?

ALBRIGHT: Well, I don't want to get involved in the decision itself, because that's no longer my job.

But I do think that what is important here is to understand that President Kostunica needs to be assisted in improving the economy of Serbia, and Serbia has to be able to dig itself out of the hole that Milosevic put it in and be able to rejoin Europe as a country that can hold its head high.

I think that there are many aspects of how the West, the United States and Western Europe, can help Kostunica and the Serb regime. I think that those issues all have to be looked at very carefully.

This is only the only the beginning of the story. We haven't always the sense that when something happens there it's the end of the story, this is just turning a page, or closing a chapter. This a whole book, and we have to watch it very carefully and assess very carefully the kind of actions that Kostunica is taking.

BLITZER: Were you surprised by these developments over the past 48 hours? First, the surrounding of the Milosovic villa by the security forces of Yugoslavia, the police, and now the actual arrest?

ALBRIGHT: Well, I think that I was surprised in that it seemed to be taking fairly long time. But, obviously, the difficulties of trying to arrest a former president who did have a minimal number of supporters around him, with the desire by the government not to have more bloodshed, created a longer situation. I would have been very depressed, if it had not ended the way that it has.

But I think it's important now, as was reported, that he is in jail and that the prosecutors are looking at the case and that the case will be taken up in a rigorous way. It's very important that the rule of law be followed and that the investigation continue.

BLITZER: You've met with Milosevic. You've met with a lot of other world leaders over the years as well. How would you rank him -- he's accused of war crimes -- the crimes that he allegedly committed in the big picture of leaders around the world, both good and bad, that you've met?

ALBRIGHT: Well, it's difficult not to personalize these things. I think people always want to know who the enemy is and the face of that person. But I really would put Milosevic right up there as one of the worst, most cynical, brutal leaders that had existed at the end of the 20th century and who really had the ability, as a result of demagogic, dictorial behavior, to undermine what was happening in the rest of Europe -- a movement towards freedom and lack of division, and respect for ethnic differences -- by going the exact opposite of murdering people, or ordering the murder as is alleged, of thousands of people simply by virtue of what ethnic group they came from.

ALBRIGHT: So I think that he is one of the worst leaders that we have seen.

BLITZER: Finally, Madame Secretary, while we have you, the other potential crisis or at least the serious problem developing right now between the United States and the China with the emergency landing of this U.S. Navy surveillance plane. How serious of a potential problem is this between Washington and Beijing?

ALBRIGHT: Well, it's obviously serious whenever a military collision like this takes place. But I think that what is important now -- and we obviously don't have all of the facts -- is that the diplomatic channels be fully used and to try to resolve this as peaceful as possible.

This is why I think it's very important to have continued engagement with China to make sure that all of the channels are open so that this can be dealt with quickly and peacefully.

BLITZER: Madame Secretary, good of you to join us on this Sunday. Madeline Albright, thank you very much.

ALBRIGHT: Thanks a lot, Wolf.

BLITZER: Thank you.

And just ahead, President warns that an energy crisis is just around the corner. What does the Bush administration plan to do about it?

We'll talk to Energy Secretary Spencer Abraham about the White House's strategy to avoid a nationwide power shortage. LATE EDITION will be right back.

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(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We also have an energy crisis. And the idea of placing caps on CO2 does not make economic sense for America. And while I worry about emissions -- and we'll work together to achieve efficiencies through new technologies, and I'm confident we can do that.

(END VIDEO CLIP)

BLITZER: President Bush saying this week that the U.S. is in the midst of a major energy crisis. He's ordered Vice President Dick Cheney to head an interagency task force to come up with a new policy.

In the meantime, Energy Secretary Spencer Abraham in recent days has warned the country faces the worst energy crisis since the days of long gasoline lines and oil embargoes.

Earlier today, I spoke with the secretary.

(BEGIN VIDEOTAPE)

BLITZER: Secretary Abraham, thanks for joining us on LATE EDITION.

When will the vice president complete this review of the administration's energy policy?

SPENCER ABRAHAM, U.S. ENERGY SECRETARY: Well, I think in the next few weeks. We're trying to make sure we do this as comprehensively as possible. And of course, as you know, it's a study that includes a number of the departments and agencies of the government. So everybody's weighing in with their recommendations. The vice president will be taking those, and he and the president ultimately will be reviewing all these suggestions to determine the best policies for the future.

And it's a challenging process, but I'd say in the next few weeks.

BLITZER: Next few weeks, meaning specifically?

ABRAHAM: Well, I can't give you an absolute final date. Either late April or early May would be my guess. But the vice president's going to do this in the most comprehensive, effective way possible.

BLITZER: You have said -- and you caused a major stir by suggesting that the country is right now facing a major energy crisis, perhaps as bad or almost as bad as the long gasoline lines, the oil embargoes.

Yet, at the same time, the administration seems to be backing away from some of the conservation initiatives of the last eight years, including some that were taken in the last few days of the Clinton administration, in terms of energy standards. Why?

ABRAHAM: Well, we actually haven't made any final decisions with regard to some of those rules.

But we do have a serious crisis. Let's start there. Over the next 20 years we project energy demand for electricity, natural gas, oil to go up in significant percentages. And our ability to supply the energy that will be demanded by the American people to drive our economy, to maintain our national security is in some question. That is what the purpose of this Cheney task force really is, to come back with a plan that will make sure we do meet our energy needs.

And we intend to do it not just through more supply, but also by balancing supply with conservation, with traditional energy sources against renewable and new sources. And it will be a balanced approach, because if we allow ourselves to become totally dependent on one or two energy sources instead of diversifying our sources, then I think we'll suffer either higher prices or shortages, because it's just the wrong way to proceed.

BLITZER: Why are you are reviewing the energy-efficiency standards that were imposed in the final days of the Clinton administration on air conditioners, for example, washing and drying machines, other electrical appliances. Why?

ABRAHAM: Well, first of all, this wasn't the only situation where the Clinton administration made 11th-hour decisions that were then going to be imposed on a new administration.

As you know, across the government, from pardons in the White House to rules and regulations in almost every agency, in the last two or three days of the administration the Clinton administration created these new rules.

We feel it's prudent to look at those various rules. You know, these were rules they didn't want to live under or implement in the country, but now they want us to.

And we are looking at all of these things from several perspectives. Will it really work in terms of efficiency? What is the impact on consumers? What's the impact on businesses? And was the process followed, or were these rammed through without fully following the process that's supposed to be imposed?

We're going to make decisions on those in the next few days, and we haven't reached final conclusions yet.

BLITZER: Next few days on those decisions?

ABRAHAM: Yes, because there's a 60-day period that will soon be coming to an end in which we have to make decisions.

BLITZER: On this issue of the administration being more concerned about energy supplies than on conservation, the New Republic in an editorial just coming out this week, let me read an excerpt for you. It says this: "An energy crisis is convenient for an administration looking to justify its about-face on carbon dioxide emissions and its hunger to drill in the Arctic National Wildlife Refuge. Though, if there really is a crisis, shouldn't we be pulling out all the stops?"

ABRAHAM: We should be pulling out all the stops, and we will.

For the last eight years, we haven't had an energy policy, and that's, I think, why we face the crisis we do today. We will be looking at all different ways that we can meet the challenge, whether it's conservation, it's renewables, it's new supplies from traditional sources, it's drilling in Alaska.

I mean, we're going to examine all of those, and we're going to try to do this in an environmentally sensitive fashion. BLITZER: On the issue of drilling in Alaska, President Bush was asked about that at a news conference earlier this week. He seemed to suggest that, given the lack of appetite, if you will, the lack of the support in Congress, he may have to back away from drilling in the Arctic National Wildlife Refuge, ANWR as it's called. I want you to listen to what the president said earlier this week.

(BEGIN VIDEO CLIP)

BUSH: There are other areas in the United States on which we can find natural gas. I think it's important for us to open up ANWR. Whether or not the Congress sees it that way is another matter, but that is not going to deter me.

(END VIDEO CLIP)

BLITZER: Is he backing away from that position to open up ANWR?

ABRAHAM: I don't think so. I think that he was just reflecting the fact that in Congress there will be a big debate.

But I think the facts about Alaska drilling really have been blurred and need to be put in perspective.

The United States geological survey estimates that the amount of oil, that is the mean, the predicted amount there, would be enough to offset about 75 years of imports from Kuwait, about 20 years of imports from Saudi Arabia. I mean, these are significant reserves, and we just can't dismiss the idea of doing so. Especially since I believe that it can be done in an environmentally sensitive fashion.

BLITZER: But most members of Congress apparently don't agree with you. They are concerned that this could spoil a beautiful, pristine area.

ABRAHAM: Well, it can't. I mean, there are 19 million acres that make up this area. That is the size of the state of South Carolina. In order to extract the oil and the natural gas, we only need an area roughly the size of a major city airport. It will not destroy this.

And more importantly, I think a lot of these decisions were formulated before we realized the degree to which we are in an energy crisis. And I think the idea of allowing ourselves to become 60 or 70 percent dependent on foreign oil, which is where we are we headed, justifies our looking at ANWR and looking at other domestic sources so we can diversify our production opportunities.

BLITZER: Including drilling in national parks and monuments, which, of course, was the suggestion by the president earlier this week as well?

ABRAHAM: Well, I think we should look at all federal lands and determine where, in an environmentally sensitive fashion, we can produce more energy and then consider on a case-by-case basis what makes sense. At end of the day, I think that we can balance the environment and our energy needs. But we also have to look at conservation. We have to look at other sources, new sources, renewable sources, as well.

BLITZER: As you know, during the campaign, President Bush made a major issue complaining that the Clinton administration failed in its dealings with OPEC and didn't have the clout, didn't have the resources to make sure that oil supplies would continue. Within the last week or so, OPEC has announced a million barrel a day reduction in oil supplies.

Is the Bush administration failing to deal adequately with OPEC?

ABRAHAM: Well, the thing that is clear of the OPEC's decision is that the OPEC countries are not going to put America's interest first. They are going to put their own interest first, which is why we have to put our own interest first in terms of our domestic policies and with respect to energy.

BLITZER: But isn't there more that the United States, the Bush administration, should be doing to lean on some of those OPEC members?

ABRAHAM: We will look at what options we have.

But I'll tell you this, as I have said before, we are not going to go begging OPEC for more oil. I think what this argues for is more production here at home. But we are considering what future approaches to the OPEC countries we will take.

At end of the day, though, again, I think that they will put their own interests ahead of America's. And we have to recognize that and take our own actions accordingly.

BLITZER: How concerned should other parts of the United States be, outside of California, that the rolling blackouts, the high utility costs that we are now seeing in California could begin to roll across the rest of the United States?

ABRAHAM: Well, for this summer are we have some areas we are watching closely, where the margins between demand and supply are pretty close.

BLITZER: Where?

ABRAHAM: New York City is an area. I think that they are going to bring on some new energy, some new electricity supplies before the summer, so they should be OK. The margins are close there and a few other areas, as well.

BLITZER: You mean to say there could be rolling blackouts in New York City this summer?

ABRAHAM: I don't believe there will be because I think they're going to bring enough new energy on line to offset it. But if you have unique situations, the breakdown of generators or particularly long heat waves, that will put New York City's margins very tight.

But the long-term problems we have are reflected in California. If you don't increase supply as demand keeps going up, then you confront the problems California's got today, which is why we're putting together a national energy policy. It hasn't been in place for a long time. We're trying to pick up the mantle now and bring about some policies that will increase supply over the next 20 years so that Americans don't have to confront these kinds of crises in the future.

BLITZER: And if the situation gets worse in California, is the Bush administration determined to resist engaging any price controls and actively intervening and trying to do something about what's happening in California?

ABRAHAM: Well, let me separate the two. The situation getting worse in terms of blackouts will only be made worse with price controls. Price controls will neither increase supply or decrease demand; it will do the opposite. And if we put them in place, California will have more blackouts, and they'll last longer probably into the future.

What we are doing, however, is to work with Governor Davis. We responded favorably to virtually every request he's made from extending emergency orders for the supply of electricity to granting permits and waivers that relate to bringing new generation on-line.

We're also looking what we can do as a federal government to decrease the use of electricity on federal facilities in California. We've talked to the Mexican government about increasing exports to California.

Unfortunately, California hasn't built a new power plant in 10 years, roughly. Their demand has gone up considerably during that time, and their supply is going down. And you can't solve that overnight, certainly not in terms of supply, because it takes a while to build new generations. So we're trying to help, but it's an uphill fight for the summer.

BLITZER: The European allies and other countries are deeply concerned about the Bush administration's decision to pull away from the 1997 Kyoto treaty that sought to reduce global warming. The decision by the administration on carbon dioxide emissions, for example, to reverse what was said in Saginaw, Michigan, during the campaign by the then-Republican presidential candidate, now the president of the United States.

In Time magazine there's an open letter to the president this week from several world leaders -- Jimmy Carter, Mikhail Gorbachev, Walter Cronkite, among others, John Glenn -- which they say this: "There are many strategies for curbing greenhouse gas emissions without slowing economic growth. The future depends on the resolve that you and other world leaders show."

Is the president determined, committed to reducing global warming? ABRAHAM: Well, we agree with the conclusion that there are a number of strategies, and we're looking at that in the administration. We have a thorough review, a comprehensive review of climate policy going on.

At the same time, let me just make a couple of points. This administration didn't take the first step with respect to rejecting the Kyoto agreements. As you know, the Senate, before President Bush was elected, twice voted by overwhelming bipartisan numbers to basically repudiate the Kyoto approach that was entered into by the Clinton administration.

What we are going to be doing, the president's already, I think, made this clear, is to address several of the various issues from NOX to emissions to mercury to SO2 and others. We are looking at mandatory reductions. He's committed to that policy, and we will review the climate policies and have a plan to address some of these issues.

But a lot of this has got to, you know, reflect the science. And we're trying to do a thorough study of that so that we can have a policy that makes sense and is consistent with economic needs, as well.

BLITZER: We only have a second left, but on the issue of science, is there any doubt that the sciences are accurate as far as global warming is concerned?

ABRAHAM: I think the issue is which technologies and approaches will have in fact the positive benefit, and there's a lot of uncertainty and debate over that that we're trying to study.

BLITZER: OK, Secretary Abraham.

ABRAHAM: Thanks, Wolf.

BLITZER: Unfortunately for you, Michigan State lost. I know that was a major blow for you, but they'll probably be back.

ABRAHAM: Well, I think that they will.

BLITZER: Thanks for joining us.

(END VIDEOTAPE)

And up next, the Senate prepares for a final vote on campaign finance reform. Will the lawmakers who say they're reformers have their way? We'll talk to two key senators who have offered up legislation on the issue: Nebraska Republican Chuck Hagel and Wisconsin Democrat Russ Feingold.

LATE EDITION will continue right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) BUSH: If it improves the system, I'll sign it. I look forward to signing a good piece of legislation.

(END VIDEO CLIP)

BLITZER: President Bush talking about campaign finance reform legislation that the U.S. Senate is scheduled to vote on tomorrow evening.

Welcome back to LATE EDITION.

We're joined now by two members of the Senate: In Washington, Nebraska Republican Chuck Hagel, and in Madison, Wisconsin, Democrat Russ Feingold, the cosponsor of the McCain-Feingold bill.

Senators, always good to have both of you on LATE EDITION. And I want to get to campaign finance reform, tax cuts, a lot of other issues.

But first, quickly, Senator Hagel, your reaction to this latest problem in U.S.-China relations, the forced landing of this Navy surveillance aircraft that was flying over the South China Sea.

SEN. CHUCK HAGEL (R), NEBRASKA: Well, this has to be resolved very quickly. It's a serious matter. And I know our officials have appropriately talked to the Chinese officials about getting this resolved, first, getting our crew back and making certain that everyone understands in the international community that that plane that has a great amount of very sophisticated intelligence equipment on it is the property of the United States.

We are at a very important and delicate point right now in our relationship with the People's Republic of China. And how this is handled will go a long way as to the future of that relationship.

BLITZER: Senator Feingold, there's been concern about the U.S.- China relationship. We heard Madeleine Albright a few minutes ago on this program saying that this is one reason, an issue like this, to be fully engaged with the Chinese in Beijing.

How are worried are you about this incident right now and the potential for damaging that relationship?

SEN. RUSSELL FEINGOLD (D), WISCONSIN: Well, I agree totally with Chuck Hagel. This is a very important test for our relationship. This is the kind of unexpected situation that has to be handled right. Our government is watching, and the American people are watching. We want to have the best possible relationship with China as is possible.

But if there is some kind of violation here in the process of our privacy, of our right to have that information be confidential, it could be a problem.

So I'm hopeful it'll be worked out. But it is a test, and it's the kind of thing that can have an impact on a relationship for many years to come. BLITZER: Senator Hagel, I know you're a member of the Foreign Relations Committee. There's another major international issue this week in the arrest of Slobodan Milosevic in Belgrade by the new Yugoslav government.

You were recently there. Do you think that this arrest on domestic charges, not the international war crimes tribunal issues, is enough to warrant continued U.S. economic assistance to Yugoslavia? Some $50 million is now up in the air.

HAGEL: No, it's a good beginning. And I understand that President Kostunica, the current president of Yugoslavia, has a domestic constituency to deal with.

When I was there a month and a half ago with some of my colleagues in the House and the Senate, we spoke rather plainly to President Kostunica and explained to him that, unless this Milosevic deal was dealt with and this problem at least was initiated in the way that it needs to be initiated in getting that issue on track, moving that toward the international war tribunal, then, in fact, there is no way the Congress of the United States is going to commit any further economic help to Yugoslavia.

BLITZER: Senator Feingold, are you in agreement with Senator Hagel on that?

FEINGOLD: I am, and I really feel that this a step in the right direction. I congratulate the Serbian government and the Serbian people for taking the first step.

But this really has to be only the first step. I'm told that, under the domestic laws there -- he's facing charges of tax evasion, abuse of power, maybe a five-year criminal penalty, maybe some penalties for resisting arrest. But that's not the real story. The real story is that Slobodan Milosevic has been guilty of some of the most heinous crimes against humanity of the last 50 years.

And it isn't just a question here of what happens in terms of Mr. Milosevic. It sends a signal around the world whether somebody like this is going to be held accountable. It sends a signal to somebody like Charles Taylor in Liberia, who is terrorizing the people of his own country, the people of Sierra Leone and the people of Guinea.

HAGEL: If somebody like that thinks they can get away with this and just have their own domestic laws take care of the problem, that is not enough. So I don't think we should give the aid until we are confident that Mr. Milosevic is headed toward the Hague eventually.

BLITZER: Senator Hagel, let's move to campaign finance reform. You introduced an alternative to McCain-Feingold that went down in defeat. The Senate is scheduled tomorrow night to vote on the final passage of this historic legislation. Will it pass? And how will you vote on it?

HAGEL: Well, it will pass, and I would say that after listening to all of the evil and the corruption in our system, over the last two weeks, I am surprised that we have been able to govern in the last few years in this country.

I will vote against it. I think that it's a very bad bill, was at the beginning, and I think that it's a very, very bad bill now. I think it will devastate political parties, and even in The Washington Post this morning, the front-page story, there are a number of quotes from a number of Democrats, one being, Congressman Marty Frost from Texas who is the chairman of the House Democratic Caucus saying, in fact using the words, "this will devastate political parties."

It's a mistake. The consequences of this will be ruinous to the political parties. We will drive influence and money and political dominance outside of the institutions so that wealthy individuals and third-party organizations will dominate the political process forever, unless it's changed. I hope the House will change it. If that doesn't happen. It if eventually does become law, I hope that the courts will overturn it. I think it's blatantly unconstitutional, and I think that they will.

BLITZER: Senator Feingold, I know that you totally disagree with Senator Hagel on that. But tell us why you think this is not going to damage or weaken seriously the political parties in the United States?

FEINGOLD: Good God, Chuck, you make it sound like this is Pearl Harbor. The fact is that this system is only six or seven years old -- these $100,000, $500,000, $1 million campaign contributions. We never had this system since Teddy Roosevelt signed the Tillman Act in 1907. We've had 200 years of great history of this country with strong political parties that I frankly think have only been damaged by these unlimited campaign contributions.

So, it's just the contrary. The parties have been weakened and damaged and destroyed in terms of their credibility by this corrupt system.

And the last two weeks, culminating with our victory tomorrow night, which I expect that will happen, has been a great moment for democracy. It is an inspiring moment. And I can tell that you the people of my state are just delighted -- in the progressive tradition of Wisconsin -- that our nation is going to turn the clock back and get back it is a time only 10 years ago when it was impossible for somebody to be able to give a $1 million check to the political parties.

BLITZER: On that issue, Senator Hagel, if this in fact -- and this is still a huge if -- if it passes the House and goes to a conference between the House and the Senate and the president signs it into law, it does eliminate the unregulated sums that go to the political parties from corporations, labor unions, private individuals, $100,000, $500,000, $1 million gifts.

Isn't that something that, as Senator Feingold and other supporters say, gives the appearance that it could corrupt the political process?

HAGEL: Well, appearance is one thing, but let's look at the reality, of the consequences if this would hold and become law. The fact is you would weaken -- nobody questions on how far this would take the political parties down in shutting off resources of things that I think are very important to the political process: get out the vote, voter registration, vote ID, all the part that expands voter participation in the process.

That, in fact, is going to be weakened and probably will be gone, because it will eliminate that overhead money that can do those kinds of things.

What it will then do, it will drive the resources and money outside of that institution that has served this country very, very well -- the political parties -- which by the way, are important because they are not captive to special interest, Wolf.

Political parties, the great two political parties in this country, represent general philosophies of many interests about governance. Where the monies are now headed are the wealthy individuals and the special interests like for example, Kate Michaelman, her $40 million effort announced last week to elect pro- choice people to Congress. There is where the power is going to be.

BLITZER: We're going to pick that point up, Senator Feingold. Stand by for a second. We have to take a quick break.

We have a lot more to talk about with Senators Hagel and Feingold. We'll also get their view on tax cuts and the budget when LATE EDITION continues.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're continuing our conversation with Nebraska Republican Senator Chuck Hagel and Wisconsin Democratic Senator Russ Feingold.

Senator Feingold, Senator Hagel pointed out and a lot of others are pointing out that there could be some serious constitutional questions about the McCain-Feingold bill if in fact it becomes the law of the land. Senator McConnell earlier this week vowing he's going to move quickly on this front. Listen to what he said.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), KENTUCKY: Wolf, I'm meeting next week with the other likely plaintiffs in the lawsuit. I'm operating now on the assumption that this may become law. It has a lot of constitutional problems. I'm going to be the plaintiff in the lawsuit like Senator Jim Buckley was back in the mid '70s, and we're planning the lawsuit.

(END VIDEO CLIP)

BLITZER: The main argument is that, 30 days or 60 days before a primary or an election, so-called advocacy groups would not be allowed to have their own paid advertising. Wouldn't that logically be a violation of the freedom of speech? FEINGOLD: Well, I don't think so. Let me first say, I like the idea of Mitch McConnell as plaintiff instead of filibusterer. It means we've won this battle and he has to resort to the courts, which is of course is his right.

I just want to respond first, though, to something that Chuck Hagel said before that the political parties would become captives to the special interests. He must have missed the Democratic and Republican conventions. Those were the ultimate examples in American history of a corporate trade show and of the political parties being captives of the special interests. They are now.

But as to the constitutional issue here, yes, they'll be a challenge to the parties soft money ban, but I think it's clear that that will pass constitutional muster.

It will be a closer call on the issue of whether or not we can restrict these phony issue ads; I think we can. I think the justices will have seen these ads that pretend to be issue ads, but everybody in America, including the nine justices, know they're really campaign ads. And we have a letter from 70 constitutional scholars that indicate that it makes perfect sense to at least ban corporate and union treasury money that support ads that are really election ads and not issue ads.

So, they'll be a challenged, it will be brief, it will be argued before the Supreme Court, and there will be a decision. But fortunately, because the bill is severable, because each piece of it stands on its own before the United States Supreme Court, even if that piece is declared unconstitutional, the most important part of the bill will survive which of course is the ban on party soft money.

BLITZER: Senator Hagel, as you know, the bill after it's passed by the Senate goes to the House of Representatives where they make any changes. It then has to be reconciled with the Senate version. There will be a House-Senate conference committee. Some suggestion that the Senate Majority Leader Trent Lott would not name Senator McCain to that conference committee, Senator McCain being a fellow Republican.

Senator Daschle, the Democratic leader, was on Face the Nation earlier today. Listen to what he said if that should in fact be the case. Listen to this.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: I think he has to be part of the conference. I don't recall that that's ever happened before. I think it's important that he be there. I will support and endorse not only John McCain, but Russ Feingold. They both should be in the conference.

(END VIDEO CLIP)

BLITZER: Should Senator Lott name Senator McCain as a Republican conferee?

HAGEL: Well, that'll be Senator Lott's decision along with the other leadership. I suspect (OFF-MIKE) in our conference.

But two observations: Number one, normally we always stay with the committee members of jurisdiction. In this case, it's Rules Committee. Senator McCain is not on the Rules Committee.

Second, if Senator Daschle feels so strongly about this, then I would suggest that he give one of his slots to Senator McCain, because the fact is the overwhelming majority of the Republican conference voted against McCain-Feingold. So John McCain would certainly not be representing the interests of the Republican conference.

BLITZER: Senator Daschle said he would name him as a Democrat in one of his slots.

HAGEL: That's fine, that would be all right with me if that's the way he wants to do it. But I think in fairness here of who's representing whom for what reasons, certainly Senator McCain is not representing the Republican conference in this bill.

BLITZER: Go ahead, Senator Feingold.

FEINGOLD: Well, I'll tell you, he's representing some Republicans that were very courageous this week. When we had the 60 votes to defeat the Hagel amendment, filibuster-proof vote to ban soft money, there were some Republicans who stood very tall, and I want to take my hat off to them.

FEINGOLD: But let me also say, what Tom Daschle said is consistent with his performance this week. He got right up to the plate, and he made sure that our bill got through.

And when he says something courageous, like making sure that John McCain will be on the conference committee even if it means appointing a Republican by a Democratic leader, this just shows the role that Tom Daschle and our caucus played in this thing. So I'm proud of him, and I want to thank him.

BLITZER: The other big issue coming to a head this week in the Senate will be the vote on the Bush budget, the $1.6 trillion tax cuts. The Democrats have proposed $60 billion in immediate tax cuts and tax rebates as a way to help stimulate the economy, get some money into people's hands, $300 per person, $600 per couple. Is that a good idea?

HAGEL: Well, I think, if it is connected to the overall tax cut package. I've always believed, Wolf, that what is fundamental to the discussion on tax cuts, which I support, and I support the president's philosophy, across-the-board tax-rate reductions, is, we need to focus on one question, and that is, what will sustain the economic growth in this country well into the future?

The more capital, the more investment, the more private activity that funds productivity, which in fact is the foundation of economic growth, is the key to that. And I think tax cuts and reducing those rate reductions are key to that. Do we need to front-end load that and get some money out there this year? Yes, but I don't think you can have one without the other. And I would hope enough of us are able to hold strong on that and steady and support the president with that.

BLITZER: Senator Feingold, you've been counting some votes, I'm sure, among your Democratic and Republican colleagues. Are there enough Democrats who will be peeled away by the president to support the president's plan, or are there more Republicans who may vote the other way with you against the president's budget?

FEINGOLD: I'm optimistic. I feel that the Democrats, as well as some Republicans, know that the president's plan, although well- intentioned, is way too heavy-duty in terms of the amount of tax cuts. It's way too high. It's irresponsible. It doesn't give enough force to bringing down the debt, making sure we take care of Medicare and Social Security. And, you know, I'm looking forward to voting for a responsible tax cut. It's time for it, and I think that it's exciting.

But if we are irresponsible, it will do more harm to the economy, more harm to people's ability to get rid of their consumer debt than if we do something that is responsible.

BLITZER: All right, Senator Feingold and Senator Hagel, unfortunately we have to leave it right there. I want to thank both of you for joining us.

Just ahead, if the McCain-Feingold bill passes the Senate, it will then turn it to the House, where it will be considered. The battle there will be intense, we are told by the House majority whip Tom DeLay.

We will discuss all of that, including taxes, with two influential members of the Congress: Republican David Dreier of California and Democrat Charles Rangel of New York.

LATE EDITION will continue right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Our economy needs more than a pick-me- up, more than a one-time boost. Our economic health depends on people feeling comfort and confidence about long-term decisions.

(END VIDEO CLIP)

BLITZER: President Bush talking about his tax cut in Kalamazoo, Michigan. Welcome back to LATE EDITION.

Joining us now to talk about the budget, campaign finance reform and other issues, are two veteran members of the U.S. Congress. Here in Washington, California Republican Congressman David Dreier; he chairs the House Rules Committee. And in New York, Democratic Congressman Charlie Rangel; he's the top Democrat of the House Ways and Means Committee.

Congressmen, welcome to LATE EDITION. Good to have both of you on the program.

REP. DAVID DREIER (R), CALIFORNIA: It's good to be here.

REP. CHARLES RANGEL (D), NEW YORK: Good to be back.

BLITZER: Let me begin with you first of all, Congressman Dreier. Is it is a done deal, do you think, knowing the history of the House passing campaign finance reform legislation in '99, 2000? Is it is a done deal that McCain-Feingold will pass the house?

DREIER: I don't think that it's a done deal.

But let me just say at the outset, Wolf, that, you know, for literally decades, Charlie and I have been debating public policy questions, and frankly, I've done a lot of soul searching, and I thought today would be an appropriate day for me to say that Charlie, who has argued for increased taxes on working Americans, he's argued to extend the welfare state -- the cradle-to-grave give-away concept, and he wants regulation imposed on virtually every American -- you are right, Charlie. I have decided that now you are right on those issues.

BLITZER: He is making an April Fools' joke.

RANGEL: Is that it?

BLITZER: I think that is what he is doing.

DREIER: But seriously, I think that we are really in the position where campaign finance reform is not necessarily dead. But I do think that there are questions.

BLITZER: Dead?

DREIER: No, no. I think that are there some people who clearly want to block it. I think it needs to be improved. I am a proponent of campaign finance reform. I have introduced legislation called the Voter Empowerment Act. I want to use the Internet to empower voters with more information on campaigns. But I don't believe we should jeopardize First Amendment rights.

BLITZER: What about that, Congressman Rangel? Is it going to pass the House of Representatives?

RANGEL: David Dreier is my friend, but that has to be best non- answer he has ever given on your show.

DREIER: Thank you, Charlie.

RANGEL: The truth of the matter is that the Republicans and the House and the Senate want to kill campaign reform so badly, but politically, they don't want their fingerprints on it. It is going to pass the House, and it is going to pass by a very small margin. And it won't be much help from our Republican friends. But you bet your life on it, in conference, they are going to put a poison pill in it, and it will never reach the president's desk.

BLITZER: But, Congressman Rangel, you know that are there are some out there who say that the Democrats in the House are deeply worried about this campaign finance reform, including Congressman Martin Frost of Texas, that it would hurt the Democrat's chances of becoming the majority in 2002, this ban on soft money?

DREIER: Now, you've argued that I should be in favor of it.

RANGEL: Why don't you watch the votes? The same debate that you see going on in the Senate, it's not the Republicans that are providing the leadership, it's Daschle and the Democrats.

As a matter of fact, they won't even let McCain get on the conference committee in order to protect his bill there. And if I was McCain and in that Senate, I would get a food-taster. Those Republicans don't want reform.

DREIER: Yes, we do.

BLITZER: But, Congressman Dreier, and we are going to take a quick break, but I want your response. You have no doubt that if it passes the House and the Senate, the president will sign it as he indicated?

DREIER: Well, if it goes through the conference, the president will sign it. He has indicated that. But I do believe...

RANGEL: If it goes through the conference.

DREIER: ... we should pursue campaign finance reform -- I am a strong proponent of it -- but just not anything that jeopardizes First Amendment rights, which this clearly does.

Charlie calls that a non-answer, but I think it's the right answer.

BLITZER: We are going to get on to the budget and tax cuts in just a second. We are going to take a quick break. Stand by, Congressmen.

For our international viewers, World News is next. For our North American audience, stay with us for the second hour of LATE EDITION. We will check the hour's top stories and take your phone calls, as well, for Congressman David Dreier and Charlie Rangel.

Then, a debate on affirmative action: Is its time over? Plus, our LATE EDITION roundtable and Bruce Morton's last word. It's all ahead in the next hour of LATE EDITION.

(COMMERCIAL BREAK)

BLITZER: This is the second hour of LATE EDITION, the last word in Sunday talk.

(BEGIN VIDEO CLIP)

BUSH: The American economy is like a great athlete at the end of the first leg of a long, long race -- somewhat winded but fundamentally strong.

(END VIDEO CLIP)

BLITZER: But will a faltering economy leave the Bush budget behind? Democrat Charles Rangel of New York and Republican David Dreier of California talk spending, tax cuts and more.

And a federal judge declares a university's affirmative action policy unconstitutional. Will the U.S. Supreme Court follow suit? We'll get two very different views from DC delegate Eleanor Holmes Norton and American Civil Rights Institute chairman Ward Connerly.

Plus our LATE EDITION roundtable: Susan Page, David Brooks and E.J. Dionne. And Bruce Morton has the last word on selling a dream: commercializing an American icon.

Welcome back to LATE EDITION. We'll get to your phone calls for Congressman David Drier and Charlie Rangel in just a moment, but first let's go to Donna Kelly in Atlanta for the hour's top stories.

(NEWSBREAK)

BLITZER: Now back to our conversation with the Republican Congressman David Dreier of California and Democratic Congressman Charlie Rangel of New York.

Let's take a phone call from Wisconsin. Please go ahead with your question.

QUESTION: Hi, this is Jonathan from Milwaukee. By passing the tax cut before passing a budget, are you essentially putting the cart before the horse?

BLITZER: What about that, Congressman Dreier?

DREIER: Not at all. In fact, there is clearly a very strong need to reduce the tax burden on working Americans. And, you know, this is all inside baseball stuff.

We need to stimulate this economy. We need to front-load this tax cut so that we can get things going again, and that's why we're strong proponents of that. And frankly the proposal was put forward by a number of senator to have this $300 rebate. Sounds terrific, but it won't focus on investment in job creation, which is what we need to do right now.

BLITZER: What about that, Congressman Rangel? The Republicans say the Democrats used to do it all the time when Bill Clinton was in the White House, send up a budget after they passed certain tax increase legislation. RANGEL: Dave Dreier is continuing his April fools' joke with that answer, because what he is saying is that the $1.6 trillion tax cut is supposed to help working families and stimulate the economy.

April Fools' joke No. 1: 43 percent of the entire tax cut goes to the top 1 percent of the highest-income people; 60 percent of it goes to the highest...

DREIER: They pay 65 percent -- Charlie, you know they pay 65 percent of taxes.

RANGEL: Let me finish, please, David.

DREIER: I will.

RANGEL: Sixty percent goes to the highest 10 percent, so this is not really directed at the working taxpayers.

And then, when he talks about a stimulus to the economy, it locks into place five years from now. And they expect -- that's when the so-called surplus, $5.6 trillion -- this is Alice in Wonderland. It's like trying to get a size-12 foot into a size-six shoe. And it has nothing to do with stimulating the economy.

DREIER: Charlie, you know we need to cut the top rate on capital gains, which is something that you and I have agreed on in the past.

RANGEL: That's not even in the bill. It's not in the bill.

DREIER: I know, but I want -- listen, I want a capital gains tax rate reduction.

RANGEL: There's no room for it in the bill.

(CROSSTALK)

DREIER: What do you mean, "room for it"?

RANGEL: There is $1.6 trillion...

DREIER: Charlie, you've acknowledged in the past that capital gains reduction will in fact stimulate the flow of revenues to the Treasury. You've argued that you wanted it, with me, for those programs that you've got in the inner city. You know it's a revenue enhancer and will create jobs.

RANGEL: David, if you're saying "Take the cap off the 1.6, and make it the 2.9 trillion that it is," then we can talk. But with the 1.6, you already spent a $1 trillion for high-income tax cuts. $400 billion has already been spent for the so-called marriage penalty, which really is not that, it's the marriage bonus.

DREIER: We're going to do the death tax repeal this week, you know, which is a very important thing.

RANGEL: You're going to do the -- and let me tell you... DREIER: The Democrats support, Democrats support...

RANGEL: And let me tell you, David, when would you think the repeal locks in? Is it something that people should look for it next year, like in the Democratic alternative? No.

DREIER: Let me...

RANGEL: In the year 2010 is when the so-called death tax is repealed. So it's all...

DREIER: Completely repealed.

RANGEL: It's out...

Yes, and that's 2010. And the Joint Tax Committee said it costs $662 billion.

DREIER: Wolf wants to ask you a question, Charlie.

RANGEL: And you've only got $200 billion left. That's before capital gains.

(LAUGHTER)

BLITZER: Congressman Dreier, I really want to ask you a question. The Democrats say Tom Daschle and Dick Gephardt, the leaders of the Democratic Party in the Senate and House, they say, "Why can't the Republicans take yes for an answer?"

You said you wanted $60 billion in immediate stimulus tax cuts, tax rebates to get the money retroactively to the American people. They've come up with a plan.

And they say do it right now. They also say, immediately start reducing the lowest bracket from 15 percent to 10 percent, which is what the president himself has proposed.

They say that if you support this right now they could get a consensus, and they could enact this by May.

DREIER: I don't believe that. The fact is, we need to focus again on job creation. Charlie went through the litany of those cuts that impact the job creators, those who are investors, those who are savers. Wolf, 50 percent, nearly 50 percent of the American people are today part of the investor class. They need to have the relief so that we can deal with this downturn that we've had.

We need to do something else. We need to open up markets around the world. We need to have expanded trade. I look forward to working with Charlie on that.

The fact is, there are a number of growth-oriented items that need to be put into place, and the proposal that they have won't do it.

BLITZER: You know, Congressman Rangel...

RANGEL: But don't say it's a stimulus to the economy. Say that you're looking after Republican backers, and you're trying to pay them back for the monies they invested in your victory.

DREIER: Some of them happen to be job creators, Charlie. Some of them happen to be job creators, and that will stimulate the economy.

RANGEL: OK, but don't talk...

It doesn't stimulate...

Oh, I see, when? In the year 2010.

DREIER: We want to do it now. We want to front-load it now.

BLITZER: Let's take a caller. We have a caller from California. Go ahead please with your question.

CALLER: Yes, good morning, gentlemen.

DREIER: Good morning.

CALLER: Isn't, on the campaign finance, the real issue the large individual contributions and not necessarily the soft money?

BLITZER: Well, what about that, Congressman Rangel? Let me ask you.

RANGEL: The big issue is the soft money, and the big issue is the ability of businesses to get and to defame candidates by saying it's a free-speech issue and putting millions of dollars there.

The patient bill of rights is a clear example where we thought we had a bill, and then they made certain that they put millions of dollars out there and poisoned the whole well and made it very difficult for us to get a bill past the House.

DREIER: The big issue here is, shouldn't we do everything that we can to empower voters with as much information as possible and not regulate the First Amendment, not undermine the rights of individuals to express themselves? That's the question that we've got here. And so, I think that we need to encourage greater participation rather than less, which is exactly what this measure is designed to do.

BLITZER: Let's get back to tax cuts of the budget, Congressman Rangel, a subject that I know is very close to your heart, the ranking Democrat on the Ways and Means Committee.

Listen to what the House Majority Whip Tom DeLay said earlier this week about the entire concept of tax cuts. Listen to this.

(BEGIN VIDEO CLIP)

REP. TOM DELAY (R-TX), MAJORITY WHIP: This budget respects the taxpayer. The reasoning behind it begins with the supposition that tax dollars actually belong to the people who earn them. The president wants to let America keep more of what it earns, and we ought to help him do it.

(END VIDEO CLIP)

BLITZER: What's wrong that concept? If there's going to be across-the-board tax cuts, if there's going to be major tax cuts, why not give the people who actually pay the most federal income tax, namely the wealthiest Americans, give them the biggest breaks?

RANGEL: Tom DeLay is probably one of the most honest people we have in the House, because he shows his disdain for the Social Security system...

DREIER: Come on, Charlie.

RANGEL: ... the Medicare system, the educational system, the patients' bill of rights.

DREIER: No.

RANGEL: Please, David.

He says, "Give the taxpayers back their dollars." What he doesn't say is that the $3.4 trillion debt that we have, that belongs to the taxpayer. To make certain that the tens of millions of people that will be eligible for Social Security and Medicare in the 10 years, we have a responsibility to protect that. That belongs to the American people.

DREIER: Charlie, you know than we lock up...

RANGEL: They don't believe that those paying payroll taxes...

DREIER: Charlie, you know...

RANGEL: David, they don't call it income taxes. But should 70 percent of the people pay more for Social Security and Medicare? We call it taxes, we want to give them relief. They're not even on the radar screen by the Republicans.

DREIER: Charlie, we're the ones who pay down the debt with that...

BLITZER: But what about that, David Dreier?

DREIER: ... $2.6 trillion we lock up for Social Security -- $2 trillion of debt we're relieving, all of it...

BLITZER: But on the payroll tax, that's a point that Congressman Rangel, many Democrats make. You want to help poor people. They pay taxes, maybe they don't pay federal income tax, but they pay a lot of withholding tax, Social Security...

DREIER: Seventy-five percent of the American people obviously pay more in payroll taxes than they do in federal income taxes. But if we advocated any kind of cut in the payroll tax, Charlie would be the first to say that we're all trying to undermine Social Security and Medicare.

RANGEL: You don't have to cut it. You can give the earned income tax credit and make certain that you give back to the people enough in the check to cover their expenses. You don't have to cut the contribution to Social Security.

DREIER: Charlie, you do know that at that lower end the president does bring about a cut of from 15 to 10. We want to reduce that burden for people who are working Americans at the lower end of the spectrum, and that's why we take literally millions of people off the tax roles completely. That's something we need to do.

RANGEL: Some of those people don't pay income taxes. They're paying payroll taxes, and you give them absolutely zip in terms of relief.

DREIER: Well, we want to make sure that we provide relief to everyone who's paying taxes. Those are the ones we need to.

RANGEL: You want to do it?

DREIER: And that's what we're going to do.

RANGEL: You're the nice guy in this, David. You've been a fair referee as to chairman of the Rules Committee. But those Republicans got a lead pipe in their glove you, and you know it.

DREIER: Come on, Charlie. We want to save Social Security and Medicare...

RANGEL: Sure you do.

DREIER: We're focused on education. We're doing the right thing.

RANGEL: You want to save it from Wall Street. You want to privatize that.

DREIER: I want to save it for you and your constituents up there in New York, Charlie.

RANGEL: Yes, you want to privatize it, too, don't you, David?

BLITZER: All right, unfortunately...

DREIER: The president has got a good plan here.

BLITZER: Congressman, we have to leave it right there.

Congressman David Dreier, Congressman Charlie Rangel, always good to have bot of you on our program.

DREIER: Always good to be here, Wolf. BLITZER: We could continue this for a long time...

DREIER: I'm glad we're not, though.

(LAUGHTER)

BLITZER: ... but unfortunately, we are out of time.

Just ahead, a federal ruling against affirmative action at the University of Michigan sparks protest on that campus. Should race continue to be a factor in college admissions? We'll get two very different views on the issue from the DC Congressional Delegate Eleanor Holmes Norton and American Civil Rights Institute Chairman Ward Connerly.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: I will constantly speak for the values that unite our country: personal responsibility, equal justice, equal opportunity for everybody. These are important common values.

(END VIDEO CLIP)

BLITZER: President Bush speaking at a White House meeting this past week with African-American leaders. Welcome back to LATE EDITION.

That meeting came just two days after a federal judge in Detroit ruled that the University of Michigan Law School's affirmative action policies were unconstitutional. It was the latest in a recent string of defeats for affirmative action.

Joining us now on talk about that are two guests: here in Washington, the D.C. democratic congressional delegate, Eleanor Holmes Norton, a supporter of affirmative action; and in Sacramento, California, Ward Connerly. He is Chairman of the American Civil Rights Institute and has been a leading opponent of affirmative action.

Welcome to both of you to LATE EDITION.

And I want to begin you with you, Congressman Norton. The decision by the federal judge in Detroit against the University of Michigan's policy, which did include race as a factor in admissions -- among other things, the judge said this: "All racial distinctions are inherently suspect and presumptively invalid. Whatever solution the law school elects to pursue, it must be race neutral."

Why was that a bad decision in your opinion?

DEL. ELEANOR HOLMES NORTON (D.C.): Wolf, I wouldn't attach a lot of importance to that decision. It's a district court decision that is at odds with the district court even in its circuit.

It was a bad decision also because it is in violation of a Supreme Court decision that rules otherwise. The Supreme Court has held that race may indeed be a factor, so long as it is used for the admission of otherwise qualified students.

And it must be a factor today unless we want to go back to the time when I graduated from the segregated schools of the District of Columbia. Schools were just being integrated. I went off for the first time to white colleges. And then in the late '50s, there were only token blacks. That's where we would be pushed back today.

BLITZER: What about that, Mr. Connerly? What is wrong with allowing university admissions committees to use race as a factor to try achieve a diverse student body?

WARD CONNERLY, AMERICAN CIVIL RIGHTS INSTITUTE CHAIRMAN: I don't think that that is a compelling factor, as the court said. You know, going back to even the Bakke decision, the courts have consistently held in Bakke and Aderan and Crowson and the University of California, the Supreme Court here in California -- they have all said that racial classifications are odious, that they should not be used unless there are strict scrutiny reasons for doing so.

So, I think it's an excellent decision, and I think that it portends the end of preferences, not all affirmative action, but preferences based on race in America.

BLITZER: And presumably, Congressman Norton, this decision will go up to the U.S. Supreme Court in one form or another. You teach at Georgetown University Law School. You have studied this issue. I your opinion, why should it be overruled?

NORTON: Well, for 25 years the Supreme Court has left in place the Bakke decision. The Bakke decision essentially finds that race is a compelling factor in higher education.

One of the reasons that we want diversity in the make-up of the people that go to college and law school is to promote the very robust discussion that is part and parcel of education, especially higher education. About the only place that many students will ever come in contact with people of the other race, because we live in segregated neighborhoods, jobs are often still segregated, is in institutions of higher education.

I don't think that the Supreme Court has left Bakke standing for 25 years, have seen its effect in turing out fully qualified minorities in order to overturn it now a quarter of a century later.

BLITZER: Mr. Connerly, on this issue of factors that schools should consider, you say race should not be a factor. But many universities, especially the prestigious ones, do include so-called legacies. If your father or mother or grandfather, grandmother went to Harvard or Yale or the University of Michigan, you have an added advantage, you have an opportunity to go to that school. Or they use geographical distribution. They want a student body that represents all of the country, not just one geographic area. Why not use race as a similar kind of factor?

CONNERLY: Race is different in America. It's not the same as geography or legacy. I oppose legacy admits, by the way. I think that they have nothing to do with the individual merit of the student.

Race is something that we have decided in this nation that we don't want to use unless there's some very compelling reason for doing so. And the courts are saying over and over again that using race to achieve this artificial diversity is not compelling. I don't see anyone rushing around to get diversity based on religion or diversity based on political views. You don't see a lot of Republicans or conservatives on many of these campuses.

So I think that it's a specious argument to be saying that race has to be used as a proxy for intellectual diversity.

HOLMES: The fact is that diversity has always been used in our society for everything except race. And we pay the price for the fact that race was not included as a diversity factor until recent years in the North or the South, in state institutions or private institutions, until it became clear that higher education itself had suffered, American society had suffered. And we've taken steps to rectify that. We're not going to go back.

BLITZER: Congresswoman Norton, in this case in Michigan, as you know, the facts of the case: A white women in her 40s applied for admission. She had the grades; she had the academic test scores. She was not accepted.

And the university has not conceded that others, African- Americans, other minorities were accepted with lower test scores. And the argument is, she was denied her place at the University of Michigan Law School simply because she was white. If she had been black, she would have been accepted.

NORTON: Wolf, we should clear up one thing. In this country, even in the most selective institutions, we do not admit people on based on their scores. Harvard and Yale and many selective institutions could fill their universities with people who had all A's in high school and perfect or near perfect SATs. In fact, what we want in institutions of higher education, is a mix of the society, and we want it not just for cosmetic reasons. We want it because it is valuable to the education enterprise.

Now this woman, would she have complained if in fact she were excluded because she didn't play the violin? Because many people are excluded because others bring that kind of diversity. You don't have a right to say "Because my score is X, I must be admitted," since that's never been the rule in any institution of higher learning in this country.

CONNERLY: You know, this is like living in a twilight zone. For decades we have been fighting to defend the principle of equality for everybody, saying that people should not be treated differently because of their skin color. And now all a sudden we're saying, yes, people are entitled to get in on the basis of where their granddaddy was born or the color their skin. Equality has to be equality, not special treatment for some based on race, whether they're white or they're black or they're purple or whatever.

BLITZER: Is this an issue that is economic, or is it racial?

Let me give you the hypothetical example: The son or daughter of a very wealthy black family, who had all the finest education, private schools, should that person -- and doesn't have necessarily the test scores to get into Harvard or Yale, or whatever, some of the best schools. Should that person have an advantage simply because that person's skin color is black?

NORTON: Wolf, there has never been an economic test for being admitted. And in fact, lower-income students, white and black, have been admitted to institutions for a long time. Who have not been admitted to institutions were people who were black or brown, people from minority groups. What we're trying to do with this kind of diversity, is add it to the other kinds of diversity that have always been there, including economic diversity.

CONNERLY: The answer to that question is no. No, we're right now admitting at most of our public universities middle-income, upper- income students who happen to be under-represented minorities, as we call them, who happen to be coming from professional families, over low-income Vietnamese kids or low-income white kids from rural areas. That makes no sense.

NORTON: Well, wait a minute. Would you be for admitting lower- income black students and Hispanic students with lower scores than white students?

CONNERLY: I don't take race into account, Congresswoman. I think that the student has to be judged on the basis of his or her merit. Merit does not necessarily mean academic indicia, but it certainly does not include race.

NORTON: Well, let's be clear about merit. These students are very highly qualified students. I teach at Georgetown Law Center, and I can see no difference between the black students and the white students. And the reason is there's every disincentive to take in a student who is not fully competitive with these white students.

Race is one factor and only one factor. These students have very high scores, have very high grades, and that's why they're in these law schools.

CONNERLY: But they're not as competitive as others.

BLITZER: Let's take a caller from South Carolina. Please go ahead with your question.

CALLER: Yes. My question is, with the current racial attitude in this country, isn't affirmative action almost a hypocritical viewpoint with wanting racial equality?

BLITZER: Congresswoman?

NORTON: Well, affirmative action is the only way to get racial equality. The former presidents of Princeton and Harvard have done a survey that shows that we'd back down to 3 to 4 percent blacks in institutions of higher education if it were not for affirmative action.

As we go forward, we will find that these remedies are no longer necessary, because education is going to improve for minorities of every class, just as we in the Congress are now focusing on improving education for the entire country.

BLITZER: Mr. Connerly, President Bush speaks about affirmative access, as opposed to affirmative action. Do you understand the difference that he's putting forward?

CONNERLY: I think I do. I think he is saying, let's engage in aggressive outreach to benefit students, regardless of their race, who happen to be in need of government assistance. There's nothing wrong with affirmative action practiced the right way.

But race as one of those factors is not the way to do it, and I think that this decision, the Friedman decision, is powerful in that regard. It talks about a variety of things that can be done in a race-neutral way to achieve the kind of diversity that the congresswoman and all of us happen to want.

BLITZER: Unfortunately, Congresswoman Norton and Mr. Connerly, we have to leave it there. We are all out of time. Thank you so much.

Just ahead, is John McCain on the verge of trumping President Bush with campaign finance reform? We'll go 'round the table on that and much more with Susan Page, David Brooks and E.J. Dionne when LATE EDITION returns.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Time now for our LATE EDITION roundtable. Joining me: Susan Page, Washington bureau chief for USA Today; and sitting in for Steve Roberts, E.J. Dionne, columnist for The Washington Post; and David Brooks, senior editor for the Weekly Standard.

E.J., you're filling in for Steve, so I'll start off with you. It's going to pass in the Senate tomorrow night, campaign finance reform. Big victory, of course, something he's been dreaming about for a long time, John McCain. Still got to go through the House, conference committee presumably and be signed into the law by the president. Is it all going to happen?

E.J. DIONNE, CNN COMMENTATOR: Well, I think it was interesting in the earlier part of the show when Charlie Rangel said that somehow a poison pill will get put in the conference committee. The old cliche about campaign reform is "Predicting it will pass is like predicting that Lucy would hold down the football for Charlie Brown."

But it's got power this year that it never had before, and I think it has that because elections matter, campaigns matter. I think McCain, obviously, has a position in the country that he didn't have before he ran for president.

And Mitch McConnell always said, "Well, no one ever lost an election over campaign reform." Well, it turned out in the last election several Republicans lost their seats to Democrats who made a big issue of campaign finance reform. It wasn't the only thing that elected them, but it was part of the package.

So that's why things are different in the Senate this year, and that's why the pressure is much greater this year to pass it than it's ever been.

BLITZER: Do you agree with that?

DAVID BROOKS, CNN COMMENTATOR: Yes, a McCain staffer sent me an e-mail last week: "Indiana Jones has survived the Temple of Doom."

(LAUGHTER)

And he meant that campaign finance reform had survived, and it really did. There was obstacles on left and right, and there was this majority coalition that held through.

And what I thought was interesting Senator McConnell at the very end of the debate said, we are really entering a new world. And I think a lot of people voted for this without really knowing what that world looks like. Parties will be a lot weaker. We'll be a lot more powerful because 60 days before an election, the media are the only ones who can mention a candidates name on television. So, there really is a dramatic change.

BLITZER: A lot of Democrats secretly, quietly are nervous, very nervous. They're going to vote for it, but they're very nervous about this, because they're afraid it will undermine their ability to take over the House of Representatives specifically in 2002.

SUSAN PAGE, CNN COMMENTATOR: You know, a huge victory for two people: for John McCain, who managed to play the end game very skillfully, something that some people said he couldn't do. Couldn't actually deliver on a piece of legislation, but he did.

Big victory, too, for Tom Daschle, who managed to hold together Democrats by and large, even though there is nervousness on the part of Democrats.

And, you know, that will be important for how campaign finance works. It may also be important in the tax debate that's going to follow, because it showed that Democrats can hold together even when they're not completely united on a policy. It means that they can stand up possibly with the Democratic alternative to President Bush.

If you're looking for a loser in this, George Bush might be among them, because he's going to end up probably signing a bill with John McCain, his arch rival from the primaries last year, standing beside him, taking a lot of the credit.

DIONNE: There is one angle on that, if Bush signed this bill -- and it was sort of a surprise how he signaled he would -- basically he takes John McCain's best angle away from him. So without this attack on Bush, McCain is left with a bunch of liberal Republican positions. He becomes more like John Anderson than a real threat.

BLITZER: You know, E.J., the president was asked about his relationship with John McCain at a sort of impromptu news conference he had in the White House briefing room earlier this week. Listen to what President Bush said about John McCain.

(BEGIN VIDEO CLIP)

BUSH: I respect John McCain. I like him a lot. That does not mean we're going to agree 100 percent of the time. Obviously, we're got some differences. That's what the primary was all about, airing our differences. But I respect John, and I realize it's a game in Washington to try to create tension between John McCain and me. And I'm not going to let it happen.

(END VIDEO CLIP)

BLITZER: Are you familiar with that game?

(LAUGHTER)

DIONNE: It's a game, it's an interesting game, almost as interesting as baseball, which I suspect we'll get around to.

Yes, I think there's a problem between Bush and McCain. He didn't forget the primaries; neither has John McCain. There was a very tough primary, especially in South Carolina. And their aides, I think, feel even more strongly about it, keep the thing going. And so, yes, it's real.

I'd like to go back to a good point Susan made, which is the importance of Daschle and Democrats staying together on this so far. One of the reasons I think it's possible to pass this year is people are completely confused about the political impact of this bill if it actually passes.

BROOKS: Michael Berman, a Democratic consultant, told The Washington Post, you know, "Don't listen to us when we predict it's going to help one party, because we are always wrong in the predictions."

And precisely because it's unclear, I think it's a little easier to pass.

And in terms of hurting the parties, McCain made a good point earlier today on Meet the Press, when he said, really, the parties are not the parties we used to love, that had grassroots organizations and clubs where people would play cards. They are basically conduits for soft money.

So yes, if you're worried about hurting the party as a conduit for soft money, maybe you need to worry about this, but not as an old- fashioned political party.

BLITZER: You know, David, you probably heard Tom Daschle say something interesting earlier today on Face the Nation, when he said that if Senate Majority Leader Trent Lott does not name Senator McCain to the House-Senate conference committee, he'll name him to that conference committee, representing one of those Democratic seats. That's pretty unusual, isn't it?

BROOKS: Yes, well, maybe McCain'll just switch parties. No, I don't know.

He clearly is the leader in this, and he has gotten under Bush's skin. You know, Bush just said, "I like McCain a lot." Give me a break. I mean, if you look at the Bush administration staff, there are no McCain veterans, no campaign veterans from the McCain campaign. One of the McCainiacs said, you know, if you had Al Gore on your resume, you would have a better chance of getting a job in the Bush White House.

So, really, that tension really exists, regardless of what they say in front of the cameras.

BLITZER: There's no doubt also, Susan, that if that were to happen, if Trent Lott would not name McCain as one of the conferees -- and we heard Senator Hagel on this program say, well, you know, he's not a member of the Rules Committee, and there's a reason, perhaps, why he wouldn't be a member of that conference committee. I think that there are some Democrats who would say, you know, "Come on in" to John McCain. "We'd welcome you aboard, not only this conference committee, but in the Democratic Party."

PAGE: But, you know, John McCain's a Republican. He says he's a Republican. He said it again today, as he did last week, he's not going to mount an independent campaign against George Bush. I mean, I think he is a conservative Republican, although there are some issues on which he agrees with the...

BLITZER: Some issues. The budget is not just some issues.

PAGE: But there are also some issues in which he does not agree with Democrats. And, you know, surely, if the Republican Party intends to hold the White House and both houses of Congress, they're going to need a tent big enough to include John McCain.

What McCain gets out of this, he may lose an issue that's been good for him, but he gains just enormous credibility as a spokesman for people, as a credible, principled guy.

And there was an interesting Zogby poll out this week that showed Americans as a whole were more likely to believe John McCain was going to represent their interests than George Bush. That's not good for Bush. BROOKS: But so interestingly, Democrats and independents trusted McCain, and Republicans trusted Bush.

BLITZER: All right. We're going to take a quick break.

We're going to get to some of those other issues where John McCain and George Bush may or may not agree. We're going to take a quick commercial break. More of our roundtable when LATE EDITION continues.

(COMMERCIAL BREAK)

BLITZER: Welcome back to our LATE EDITION roundtable.

David, there is a big vote in the Senate coming up on the president's budget expected this week. Some Democrats are suggesting they can peel off one or two, maybe even three Republicans and defeat that. Do you think that is likely?

BROOKS: I wouldn't bet on it; it's possible.

But there's no question that on the larger issue of the tax reform that Bush has lost a bit of the agenda. You know, his mistake, which he sticks to, is this long-term idea of cutting taxes where most of the tax cuts take place five, six, seven years out. And that left a vacuum the next couple of years which Republicans -- well, first, Democrats wanted to fill with a rebate. Now there are a lot of Republicans that want to fill in with an immediate rebate.

So he has sort of lost control of the short-term agenda on that, and that's the larger problem that he faces on that issue.

BLITZER: What about that vote? Is it going to be 50-50 with Dick Cheney having to break the tie?

PAGE: Well, that would be fun. I don't know what the vote will be. I assume it will probably pass very narrowly.

But I do think that several things have worked against Bush getting the tax cut that he wants. I think there will probably be a tax cut, but it maybe not the one he wants. One is the jitteriness of the stock market, which has just shaken people's confidence a little bit. It's made people a little less confident the surplus will be there. And it makes them less confident about going ahead with that Social Security plan that Bush talked a lot about during the campaign but hasn't been talking about it lately.

BLITZER: To privatize.

PAGE: To allow people to invest some part of their Social Security taxes in an individual account. That may not look as quite a good a deal when the stock market does not seem quite as secure.

DIONNE: Right. And the poll suggests that, there's been some decline in support of Social Security privitization, no doubt caused by the stock market. I think the president's problem is that he has never had a consistent argument in favor of this tax cut. When we were prosperous, it was "We have all this money, let's give it back." And then, when the economy went down, the same tax cut was good to stimulate.

But, of course, as David points out, most of this tax cut takes place -- it might be great to stimulate the economy in 2006, but not today.

And so, the Democrats grabbed this and said, "Right, we do need a stimulus. Let's have a small kind of equal tax cut for everybody." $60 billion is still a lot of money in some circles. And it's taken the initiative away from Bush and he has to get it back.

And I think some of these moderate Republicans, Lincoln Chafee of Rhode Island is the interesting one to watch. He really seems to have cold feet on this. He may vote with the Republicans on procedural issues. It will be interesting to see where he ends up.

BLITZER: You know, the New York Times, in an editorial today, David, writes this as far as what the Congress is doing, what the president is doing: "The events of the last few days suggest that on a variety of issues, including the environment and campaign finance, Congress may be less out of touch than the president and that Mr. Bush is beginning to get it."

BROOKS: Well, we are certainly seeing the juggernaut of the first couple weeks is over and that the agenda has shifted.

Who would have thought after McCain lost South Carolina that the first big agenda item that would pass the House is campaign finance? And there is no question that Bush is now in the dog days of what could be the normal period of his presidency as opposed to the macho first few weeks, the steroid-pumped Bush unleashed.

(LAUGHTER)

BLITZER: There is some concern also that the president's administration has been hurt by some of the environmental decisions that they took. And specifically, you know, Christie Todd Whitman, the Administrator of the Environmental Protection Agency, on this whole issue of the carbon dioxide emissions -- she wrote in a letter to the president on March 6, she wrote: "I would strongly recommend that you continue to recognize that global warming is a real and serious issue. Mr. President, this is a credibility issue for the United States and the international community."

Well, this past week, the president announced the U.S. is not going to comply with the 1997 Kyoto Treaty, which called for that kind of emission standards to deal with global warming.

PAGE: Putting Christine Todd Whitman in a difficult spot once again when she met with some of her international counterparts.

You know, I wonder if on the environment, might be an example of something like taxes. Perhaps Bush has over read his mandate from the election.

You know one interesting figure from exit polls is that of people who think the environment is more important than the economy, 36 percent voted for Bush. These are people who probably believed him when he said he was going to restrict CO2 emissions from power plants and people who are alarmed by the idea that he has rolled back the lower levels of allowed arsenic in drinking water.

PAGE: You know, Bush does not come into this job with the most commanding electoral position, and we're seeing maybe some of the difficulties that can create for him.

BLITZER: We did see, though, some humor from the president this week, pretty effective, at the Radio and TV Correspondents Association dinner here in Washington. He had some self-deprecating comments. I want you to listen to this little excerpt.

(BEGIN VIDEO CLIP)

PRESIDENT GEORGE W. BUSH: Then there's my most famous statement. Rarely is the question asked, is our children learning?

(LAUGHTER)

Let us analyze that sentence for a moment. If you're a stickler, you probably think the singular verb "is" should have been the plural "are." But if you read it closely, you'll see I'm using the intransitive plural subjunctive tense.

(LAUGHTER)

So the word "is" are correct.

(END VIDEO CLIP)

BLITZER: Susan, let's go around very quickly. Is that kind of self-deprecating humor effective?

PAGE: Terrific, we should all learn from it.

BROOKS: Yes, but he can't do it forever. If he keeps saying, "Don't laugh at me, because I can't talk," well, then we just get reminded he can't talk.

BLITZER: Isn't there a point, though, when David is right, that the president -- he is the president of the United States -- cut it out, stop with the self-deprecating humor?

DIONNE: Well, I think it depends on what the meaning of "is" is.

Yes, I think at some point -- if the economy starts going down and people are really angry at him, then no self-deprecating humor will help. But I think, on balance, we like leaders who laugh at themselves. It makes us feel better about them and more like we live in a democracy. Dictators tend not to laugh at each other, at themselves. BLITZER: E.J. Dionne, doing an excellent job filling in for Steve Roberts. Thanks for joining us.

David, Susan, of course, you'll be back next week.

Just ahead, Bruce Morton's last word.

(BEGIN VIDEO CLIP)

BRUCE MORTON: What he would make of being used as a pitch man, a company sales rep, we can't know. Though, in life he was about ideas, philosophy, causes, not much concerned with money.

(END VIDEO CLIP)

BLITZER: Should some people and ideas be above commercialization?

(COMMERCIAL BREAK)

BLITZER: Time now for Bruce Morton's last word on the commercialization of a political and social icon. Is it in poor taste?

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP)

MARTIN LUTHER KING, JR: I have a dream...

(END VIDEO CLIP)

MORTON: If you happened on it channel-surfing, you might think you were watching a documentary, a news report on the civil rights movement of the 1960s. Wrong. You were watching an ad.

(BEGIN VIDEO CLIP)

ANNOUNCER: Before you can inspire...

KING: We hold these truths to be self-evident...

ANNOUNCER: ... before you can touch...

KING: ... that all men are created equal...

ANNOUNCER: ... you must first connect. And the company that connects more of the world is Alcatel.

(END VIDEO CLIP)

MORTON: Alcatel specializes, a spokesman says, in optical networking, broadband access, high-tech stuff. They run TV and print versions of that ad. The negotiated a fee for the use of King's image with the King family through the Martin Luther King Center, though neither party will say how much Alcatel paid. Many are indignant. Julian Bond, like King, a veteran of the civil rights movement, said it shows the most sacred icons of the movement are not immune to exploitation and commercialization.

A company spokesman told The Washington Post, "It's not like we're selling a product. This isn't Fred Astaire with a vacuum cleaner."

Well, sir, you got that exactly right. Mr. Astaire was a fine man and a dancer of grace and power, but he was not a man whose words helped pass a law, the Civil Rights Act of 1964, which changed America.

Dr. King himself copyrighted the speech. The King family takes a firm line in seeking payment for the use of his words, even in historical contexts. One King biographer says he was told, "If you quote the speech in your book, you'll have to pay."

I'd like to think that Dr. King, had he lived, would let historians and news reporters quote him freely as we did in the 60s.

What he would make of being used as a pitch man, a company sales rep, we can't know, though in life he was about idea, philosophy and causes, not much concerned with money.

Still, it makes you think. Mr. Lincoln, could your speech be an ad? "The world will little note nor long remember what we say or" -- no, no, sorry, not assertive enough for commercial copy probably. But you have to admit, the Gettysburg Address without networking has lasted pretty well.

Maybe you, Mr. Jefferson. "We hold these truths to be self- evident, that all ad men are created equal, endowed by their creator with certain inalienable rights -- life, liberty and the pursuit of profit." Now that has a certain ring, don't you think?

I'm Bruce Morton.

(END VIDEOTAPE)

BLITZER: Thank you, Bruce.

Now it's time for to you have the last word.

David writes this: "The best campaign finance reform would be to allow individuals to contribute only to politicians they can vote for. Apart from the presidential ticket, we have no national politicians. This reform would force the candidates to truly represent their constituencies."

And Howard from Miami says: "Regarding the declining economy, President Bush is the messenger, Gephardt and Daschle are the generals who want to shoot the messenger, and Greenspan is Nero, who is fiddling while Rome burns."

As always, I invite your comments. You can e-mail me at lateedition@cnn.com. And don't forget to sign up for my free weekly e-mail at cnn.com/email.

When we return, we'll reveal what's the cover of this week's major news magazines. Stay with us.

(COMMERCIAL BREAK)

BLITZER: And now a look at what's on the cover of this week's major news magazines.

Time magazine examines global warming: "Climbing temperatures, melting glaciers, rising seas -- All over the earth, we're feeling the heat. Why isn't Washington?" with a fried egg on the cover.

Newsweek takes a look at pain killers: "Vicodin and OxyContin -- Hot drugs that offer relief and danger," on the cover.

And on the cover of U.S. News and World Report: "America's best graduate schools -- Exclusive rankings and tailoring a degree to fit your goals."

And that's your LATE EDITION for Sunday, April 1. Please join us again next Sunday and every Sunday at noon Eastern for the last word in Sunday talk.

And if you missed any of our program today, you can tune in tonight at 7:00 p.m. Eastern for a one hour replay of LATE EDITION.

I'll see you tomorrow night on Wolf Blitzer Reports at 8:00 p.m. Eastern. Until then, thanks very much for watching. Enjoy the rest of your weekend. I'm Wolf Blitzer in Washington.

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