How is Bush governing in his second term?

July 12, 2005

Unedited transcript prepared from a tape recording.

11:45 a.m.	Registration and Lunch
Noon	Panelists:	Norman J. Ornstein, AEI
		David Gergen, U.S. News and World Report
		Dan Balz, Washington Post
		David Sanger, New York Times
	Moderator:	John C. Fortier, AEI
2:00 p.m.	Adjournment

Proceedings:
MR.  FORTIER:  Good afternoon.

I'm John Fortier, a research fellow here at the American Enterprise Institute.  I want to welcome you to AEI.

This is a session today on how George Bush is governing in his second term.  It is part of a series of events that we've done over the years.  The most recent series starting during the election is a project AEI has done in conjunction with Brookings, Norm Ornstein, myself, Tom Mann, who is not here with us today and funded by the Knight (ph) Foundation.

And the real goal was, especially during the campaign, to get people thinking about the real--after the campaign work--the governing.  It's well covered in the campaign what each candidate's issue positions are.  The day-to-day ups and downs of the campaign, the polls, who's up, who's down, the gaffs people make are also well covered.  But with some notable exceptions, some of them whom are here on our panel, we think there's not enough coverage of what the candidates will do when they're in office, how they will govern.

So we had a series of these events.  We actually did a series back in 2000 with a similar set of events and, of course, covered George W. Bush as well as several of the other Republican and Democratic candidates.  And then we looked at Bush and Kerry several times at the conventions, at the debates and here in Washington.

This is sort of our look back.  Now we're into a second term.  We're at a moment where we can make some assessment.  We're about six months in to a second term, and second terms tend to have issues that are very particular to them.

And so we wanted to take the best of what we could find of journalism, political science, people with practical experience in Washington and in administrations to take a look and sort of take the temperature on how Bush is governing July, 2005.

Just a few general themes that we'll touch on and then we'll open it up to the panel and hopefully have some back and forth and also some time for questions at the end.

Has Bush succumbed to second-termitis?  Are his problems larger than him?  Are they things that every second term president would face?  What's happened to his domestic policy agenda since the election?

Foreign policy, David Sanger, who is not yet with us, we hope--he is here--we hope really can fill us in on the goings-on in Iraq, the relations with other allies, what the effects of the London bombings will be.

There's also the--second terms tend to have scandals in them.  We can think of Watergate.  We can think of Iran-Contra, Monica Lewinsky.

We could give a name to one potential scandal emerging.  It could be called turd blossom-gate.  For those of you who don't know, the strange name the strange name that the President likes to give to Karl Rove is turd blossom.

So maybe we have that one that will be on our lips for the next few months.

Supreme Court politics, and finally relations with Congress, both with his own party and with the Democratic Party.

Let me do a few quick introductions, and then I want to, as I say, open it up with some general questions, pose some other, more specific questions and then get to your questions.

I will start with Dan Balz, who is the national political correspondent at the Washington Post.  He joined the paper in 1978.  Actually spent some time early on in Texas, but is known mostly for his Washington coverage, both of Congress, of the President.  He's the author of a book with Ron Brownstein, "Storming the Gates:  Protest Politics and the Republican Revival."  And he is someone who is a frequent contributor to our panels before.  And we promised him that we will not read back his earlier predictions and hold him to it.  But somebody who knows something about Bush's governing in Texas, certainly the Washington scene and what his first and the early part of his second term have looked like.

David Gergen--I'll go in order of the bios, which you have in front of you, more extensive bios--is a public service professor and director of the Center for Public Leadership at the JFK School at Harvard University. He has been an editor at U.S. News and World Report.  He used to be a frequent guest on the McNeil-Lehrer News Hour.  He is an author of a book which comes out of his experience in four different administrations, "The Eye Witness to Power:  The Essence of Leadership, Nixon to Clinton."  This is a book which has both general observations on the presidency and governing, but also really has an insider's guide to each of those presidencies, and is one that is very consistent with the themes we are looking at today.

David Sanger covers the White House for the New York Times.  He's been at the paper for more than two decades.  Has reported from New York, Tokyo and Washington.  He's also covered significantly the crisis in Iraq and Korea.  And we hope that he might talk a little bit about foreign policy today, what the President's foreign policy we might have expected it to look like back in the campaign, and what's happened and why.

Finally, Norman Ornstein is a resident scholar here at AEI, is one of our directors of the project that is putting this panel on today.  He's a regular columnist at Roll Call and USA Today, has directed earlier projects on the transition to governing project, on campaign finance reform and is also finishing up a book on Congress, which I will spur Norm on to get it out, which it's almost there.

And Norm, of course, has been a frequent participant and organizer of these events as well.

I'm going to start by posing a question to David Gergen.

David was with us at the convention in New York, looking at the Bush presidency.  We did one on Kerry in Boston.  And we tried to think about what a second term would look like.  What are the elements that all presidents face in second terms?  And how much is Bush's situation now governed by that aspect of the presidency?

MR. GERGEN:  Thank you.

Good afternoon.  It's good to be back at AEI, especially with old friends, Ben Lautenberg (ph) and Carlin Keene (ph).  And I was especially pleased and surprised to see Mark Shields here.

Hi, Mark.

I hope he will chime in.  He can bring both light and laughter to this conversation.

But second terms have been lousy.  The question I think that one is faced with is, why would anybody ever want to run for a second term?

[Laughter.]

MR. GERGEN:  Because they've uniformly, going all of the way back to the days of George Washington, been less successful than first terms.

Thomas Jefferson, our second president, as you will recall, had a pretty lousy second term.  And if you look at the 20th century, the people elected to the first term and who won and are elected to a second, Woodrow Wilson had a great first term domestically and promised to keep us out of war in his campaign for re-election, and of course wound up in war and with the Versailles Treaty and the debacle that followed.

Franklin Roosevelt had such a bad second term that had it not been for the Nazis marching across Europe, never would have had a third term.  But he overreached with the Supreme Court with the stacking of the Supreme Court, his efforts to do that.  And then trying to purge the Democratic Party in the '38 elections of the conservative wing of the party.  And he got his head handed to him on that.

It was really a very--it was the weakest of all of his years in the presidency.  And many thought he lost his touch in the second term, that he somehow had--Dick Newstat (ph) used to talk about the problem hubris for presidents in the second term and used FDR as a prime example.

Eisenhower had a rather quiet second term. Not much happened.  It allowed the Democrats to come back, let's get the country moving again kind of charge.

Ronald Reagan was the next president who had a second term, but took a lot time between.  And he did have one notable achievement in his second term, well, a couple of notable achievements.  One was his tax reform of '86, which was very bipartisan in nature, and I think has lessons for how a second term should be conducted.  More on that later.

He also had some achievements in foreign policy, but of course Iran-Contra came along about half way through and it, as Dick Wirthlin argued at the time, it really snapped this magical cord that existed between Reagan and the people.  This cord of trust that goes, that was so important to his leadership and governance.

And finally, Bill Clinton, I think would just as soon never hear again of aspects of his second term, especially Ken Starr and Monica Lewinsky.

So, it is not totally surprising that this Bush second terms raises the question not of his governance, but whether he is governing.

It seems to me right now he's in a very reactive mode, and whether he in fact can come out of that--and I think he does have some opportunities that are now present for reversing his fortunes somewhat.  But of course, I think the almost uniform feeling is that his second term is now joining the pantheon of other unmemorable second terms.

MR. FORTIER:  Let me pose a question to our two reporters here.  I'll frame it this way.

If you look at Bush's first term, Bush really controlled the agenda for much of the term.  It was whether it was events beyond his control, 9/11 and the reactions to it, the war in Afghanistan, other domestic issues that came out of 9/11, pushing his agenda when he'd win in the mid-term elections or when his popularity was up by going to go back and get more tax cuts or the Department of Homeland Security on the domestic side.  Very few presidents, I think, have had that control of the agenda, which is something more like a prime minister's control of the agenda, which often slips away from a president.

The second term seems to be different.  Whether he can turn this around, he certainly is somewhat adrift in terms of his big major legislative priorities, Social Security, tax reform.  Not hearing too much about that any more.  And on foreign policy, it's a more of a day-to-day management crisis, not large events that we saw in the first term.

Asking David to look at foreign policy and Dan to look at domestic policy, where is the President now?  Is that an accurate assessment?  Is he adrift?  Are things slipping away?  Does he have the command that he did in the first term?

MR. SANGER:  Well, you know the irony of it is that he entered the first term with very little plan for foreign policy.  And you'll remember the first nine months until September 11th were basically all about tax cuts, the no-child-left-behind program.  And then 9/11 happened, and foreign policy over night became the dominant theme of his first term.  And counter-terrorism became that.  And then built into it, was the invasion of Iraq, which whether you think was a good idea or a bad idea, then moved him from the offensive to, over time, the defensive as he had to explain the rationale for why he really went in and also the question of whether they had prepared themselves for what was ahead.

So when he came into the second term, he actually had a plan for the foreign policy agenda. The plan was basically to continue pursuing the terrorists abroad and continue to pursue Iraq and try to find a way gracefully for us to ease our way out, but also to try to repair the damage that was done in the first term on the major alliances.

He's done four trips to Europe already.  By putting Condoleezza Rice at the State Department, he was clearly signally that he was putting in somebody who would speak for him when she went abroad.  And that has certainly been the case and was not always the case when Secretary Powell was traveling.

The irony is that because he does not have these huge events, he is left with a world that is a bit untidy.  He has repaired some of the relationships with Europe.  But he is in increasingly on a foreign policy scale by three big problems.  And it's the axis of evil that won't go away.

It's the questions on Iraq that he cannot answer or will not answer, which is what are the metrics by which we know when to get out.  And that is a question that I think has begun to erode some of his base in the middle of the country, places where many of the troops in Iraq have come from.

Iran and North Korea, he faces the question of countries that either in North Korea's case, have boasted about weapons of mass destruction programs or in Iran's case, that have denied they have one, but in any case, provide a much more potent WMD challenge than Iraq ever did.  And yet at the same time, he does not have available to him the tool that he  had in Iraq.  You can't invade North Korea.  You can't invade Iran for the obvious reasons.  And we're stretched way too thin even if it was possible.

And so, he is in the odd position now of trying to manage and not raise the alarm about WMD programs that are clearly more worrisome than anything that Saddam Hussein had ever possessed.

And he is not in control of the schedule in both of those cases, and not necessarily fully in control of the agenda.  And as we learned  at the G-8 Summit, though it was overshadowed, obviously, by the horrific bombings in London, he still remains fundamentally divided with many of his allies on key issues outside of terrorism, mostly the global warming issues, where there was very little effort to try to patch up the differences.

I'll leave it at that.  We can come back to any of those.

MR. FORTIER:  Dan, on domestic policy.

MR. BALZ:  I went back and looked at where Bush's approval ratings were at this point four years ago and they were about seven to ten points higher around the middle 50s rather than the mid-to-high 40s where he seems to be stuck today.

At that point he had gotten a tax reform bill through.  He has no similar big achievements so far in his second term.  The education reform bill was well under way.  It ultimately didn't get signed until earlier January of '02, but it was clear that it seemed to be heading in the right direction.

This has obviously been, as David suggested, more in the pattern of other second terms, a difficult second term.

I think there are a lot of factors that have caused that, some relating to Bush's operating style and some just relating to the political climate that we're in.

One is that this is a president who got no honeymoon out of what looked like a pretty good re-election victory.  He got a majority of the vote, which he didn't get the first time around.  He got a bigger electoral vote than he did the first time.  And there was no question that he had won that election through kind of the force of personality that he brought to the campaign trail.

And I think that he and his advisors had hoped that that would begin to bring the country, if not together, to be a little less divided.

That has not happened.  The same partisan divisions that were so evident throughout 2003 and 2004 are clearly there today.

And so to try to govern in that kind of environment is obviously much more difficult.

I think these second thing which has happened to him, which has complicated his governing strategy and style is that the Democrats made a decision early on that they were going to be united in opposition to his main second term priorities, particularly Social Security.

The Democrats came out of the election in a different frame of mind than they came out of the 2000 election.  After 2000, I think because that court fight had been so contentious and divisive, I think Democrats felt that it was probably useful to try to at least show some sign of trying to cooperate with Bush.

And I think they were probably a little more intimidated by Bush's potential political skills and his rhetoric about a uniter and not a divider and wanting to reach out to Congress.

That all evaporated during the first term. There was no pretense or no sense among Democrats that when Bush said he wanted to work with Congress that he would do it in a way that they felt comfortable with.

So they decided early on that they would be in strong opposition particularly on Social Security. I think the administration again hoped that there were, you know, three, four, five, six, seven Democrats that they might be able to do business with even if most of the Democratic caucus was in opposition.

That has not worked out.

The third reason, I think, that he's had problems is that he has a more contentious agenda this time than he did last time.

One thing that happens to presidencies and administrations in the second term is that they do begin to think about legacy even if they don't always talk about it in the way the Clinton administration so obviously talked about it.

People around this president believe he is and will be seen historically as a consequential leader, consequential being somebody who is doing big things.  They take it for granted as a fact.  As a result of that, that a consequential leader will sometimes be divisive, but they feel he is working on big bold agenda items.

That forces them to think about what are the big bold agenda items that they want to do.  And one of those is obviously Social Security.

They did not lay the necessary groundwork for the debate on Social Security that was required. And they're paying a price for it at this point.  And we don't know what the end of that story will be, but the beginning of the story I don't think has been anything like what they had hoped and expected.

And I think the other point I would make is in contrast to four years ago, we are seeing much more open splintering within the Republican Party and the Republican coalition than we did in the first term.

Bush was able through a skillful campaign in 2000 and through force of personality and a very good political operation run out of the White House, to keep the various wings of the Republican Party happy and contented during the first term.  A second term, by necessity, you have people beginning to look toward a next presidential election and beginning to stake out turf.  But you also have Republicans who are very, very nervous about some of the things that the president has proposed, namely Social Security.

So I think for those reasons, many of them external, but some certainly at the doorstep of the White House.  The opening phase of this second term has been much more difficult than the first.

MR. FORTIER:  Norm, maybe we could continue on with the theme of Congress here.  Bush, in his first term, did have some success in Congress, mostly using a strategy of keeping his majority together in the House, doing a little bargaining in the Senate, occasionally reaching across the aisle for education or prescription drugs, but mostly keeping the Republicans together.

What's different today?  Are people waiting him out?  What about the splintering of both parties?  And why not, why couldn't Bush coming off of a solid election win, do what he did after the mid-terms or other times when you've got a popularity bump, use that popularity as he says her wants to do to put some of his agenda through Congress?

MR. ORNSTEIN:  All good questions, John.

And I think we can build on what my three very insightful colleagues have said.  But also, in some of the earlier sessions that we had, going back to the beginning of the 2000 campaign, when we had very searching examination of how George W. Bush would govern based on what he had done in Texas and on his previous existence in politics, such as it was.

We were wrong on that score, and I'll come back to that, which is the core of your question.  But also on David's very, very good presentation, laying out at the Republican Convention in late August of what second terms are like.

Today, he did it in historical terms.  Back in August, he did it in thematic terms.  And let me just give you a quick check list, some of which has been covered here.  And I've added and embellished it a little bit myself, of what we normally see with second terms.

Second term presidents, which of course by definition means presidents who were successful in their first term, successful enough that they could navigate through their political process, get renominated usually by acclamation and then re-elected.

They are characterized one by hubris, two usually by a loss of energy after having come through--it's like running a marathon and then you win and then you're told to start the second marathon immediately--a lack of new ideas which leads second term presidents usually to fall into a caretaker status, trying mostly to preserve and extend incrementally what they've accomplished, scandal as we have mentioned, divisions within their own party, particularly in Congress, but also among national leaders, trouble with their own ideological base, a united opposition, and what usually becomes a turn away for many of the reasons mentioned above, from a focus on domestic policy, to a look at the world, which is easier to deal with than a Congress in the second term.

Now, if you look at George W. Bush, almost all of those items on the checklist would qualify.  One exception, the loss of energy.  And there I keep waiting for Bush to use one of Reagan's favorite lines, now if Iraq and the scandal and all of the other problems he's getting, suffering a lot of sleepless afternoons.

[Laughter.]

MR. ORNSTEIN:  This is a president who husbands his energy and delegates a lot.  But otherwise, fundamentally, the hubris issue, I think, is what is most significant here.

If you think about what the president said and did immediately after the election and leading up to the inauguration, all of those interviews he granted, the press conferences he held, to me it reflected two things.  One was a very sharp infusion of self-confidence.  To watch the re-elected Bush in front of the press, compared to the previous president in front of the press, was just night and day.  He didn't stumble over words or flip phrase or look nervous.  He had a very, very high level of confidence, and that included his sense of how he would have command over the world, or at least our role in the world.

But along with that was the hubris that basically said, I've earned a lot of political capital and now I intend to spend it.  The American people have given me a thumbs-up on Iraq.  And if mistakes were made, they've basically said put them behind us.  We don't need to look back, hold anybody accountable, we're just going to move forward.

There was a sense that I had in talking in the White House and in the administration that with this re-election victory, the strategy which had been to aim, not at the middle, but to energizing the base, had worked and they'd suspended the normal rules of politics and didn't have to worry about those things that had plagued previous second terms.

And now they've discovered that almost all of them are there.

We have had only one, so far as I can, major or sweeping domestic initiative enacted in a second term in modern times.  As  David referred to it, it was tax reform in 1984, which came up in 1984 and was enacted in 1986.  Look back, and Reagan not only had the Treasury Department working long before the election, to come up with specific plans to take right off of the shelf, but framed the issue during the campaign so it was a springboard coming out.

Social Security and tax reform, the two issues that Bush laid out there as his big sweeping items in the second term were barely discussed.  Social Security was discussed only in terms of the broad idea of private accounts, now personal accounts.  And tax reform, so far as I can tell, was raised once during the campaign, which was when somebody asked him about a national sales tax, and he said, well, that's an interesting idea that deserves further discussion.

So, no attempt to lay out the issues.  And I think it's simply a belief that once he put it out there, his party would go along.

It hasn't worked that way.  And obviously, the perfect unity in the House--the House of Representatives as a house of commons, that he relied on as the linchpin of his legislative successes in his first term, hasn't been there.

Of course, a part of that, is if you look back through the history as David expressed it, and think about the 1938 mid-term elections, the six year, the 1958, six year elections, the 1986 six year elections, they were disasters for the president's party.

And that is the typical pattern.  And while we're not likely to see disasters of that proportion, given the nature of our politics and of seats right now in the House, there's an understandable nervousness.  And then of course, the fact that we existed in the post-22nd Amendment environment with a lame duck president, and every president in that category, no matter how strong he may be or thinks he is, is a lame duck, reinforced even more now by having a vice president who is explicitly taken himself out of the mix.

All of that and ideological base that went a long way with the president, but now is calling in the chits, has created a series of headaches.

I think in a lot of ways though, the largest headache was the deliberate approach that the president took to governing in his first term.  I think he felt his way a little bit in the first several months, and then changed with 9/11.  And he is now reaping what he sowed in that first term.

When he started, and going back to what we saw as governor in Texas, with tax cuts on the one hand, done in a strongly partisan way, jamming it through the House in a pure party vote early on.  And then pushing the Senate, intimidating it in a way, to go along early, balanced off against with what we saw with education, which was cut to the chase immediately and negotiate with Ted Kennedy in the Senate and George Miller in the House.

And bring up a Democrat, Sandy Kress (ph), from Texas, to not use the education secretary, or any of his strong partisan figures, to be the chief negotiator through that.  And it was easy to imagine that what we were going to see in a governing style was one part tax cuts, one part education.

The fact is, we never saw another education.  Prescription drugs did not fit that particular template.  It did in the Senate.  And when the president went to Ted Kennedy and said, let's do it again, Kennedy said, sure.  And they cut a deal.  And that deal went through the Senate with 76 or 78 votes.

Then when it got to the House, there was no George Miller and no Henry Waxman.  It was jammed through at 6:00 o'clock in the morning on a partisan vote.  And then in the conference committee, the Democrats were excluded from any particular involvement, and it was brought back to the Senate where it passed with just over 50 votes, with an enormous amount of resentment on the part of the Democrats.  And that became a pattern, which we saw on other bills as well.

There was a sense after 9/11, I believe, on the part of the president, now I've got an 80 or 90 percent approval rating, and I don't need to tick off my base or adulterate the programs that I'd like to get through by moving to the middle; I can play this political game where I can have a perfect unity in the House even if I've got a five or a 10 or 11 seat margin there, get bills through that fit what I want and then find ways to work them through the Senate and end up with 80 to 90 percent of what I want.

And it worked to a considerable degree, but of course he was going to pay a price for it moving to a second term.

By the end of his first time, it was astonishing, given especially his personal charm and style, affability and strong political skills, to see the level of animosity among Democrats towards him, which was every bit as great as Republicans felt towards Clinton at the height of the impeachment process.

That carried on through a campaign, which they saw as handled in the same way.  The animosity built with the first mid-term elections, where Bush did go against the tide of history, and his party gained seats in both houses. But from the perspective of Democrats, it was by a cynical manipulation of the homeland security issue.  And that added to their feeling of unease.

They didn't much like the 2004 campaign. They were loaded for bear this time.  He can't afford to operate the way he did in the first four years because he doesn't have his own party's unity.

So now the interesting question is, as he faces a time of immense challenge with low approval ratings, divisions within his own party, parity in the country, and a political process this divided, does he change?  If he attempts to change, will any Democrats go along at this point?  And if he doesn't change and continues to follow a pattern of basically trying to energize his base, as use that as leverage, can it work in a second term?

So far, we see signs of small successes as we had early on with a pent-up demand in both parties to get a few things done--bankruptcy and class action reform.

I think we're going to see an effort in the next month or six weeks, a delay in picking the Supreme Court nominees, to try to get a few things of that dimension, including energy, through the Senate, before it all blows up.

But now, actually, these Supreme Court choices really will reflect whether we see a tempered approach to the political process in his second term, or what has been characteristic of Bush when he's faced adversity from the beginning, which is to forge ahead with what's worked for him in the past.

What we saw, it seemed to me, as he became president was that the style and approach that he used in Texas was not one he picked out of a deep-seated choice to be a moderate in the middle, but out of what he saw as the political necessity in Texas.

He saw a different political pollical dynamic in Washington.

Now it's yet another political dynamic and which path will he chose?  That's the most interest question, I think, of this presidency.

MR. FORTIER:  I want to get into some of the specific issues in the court vacancy or maybe vacancies.  None of our reporters' cell phones have being going off so I assume we still only have one.

But before I do that, I guess I want to play devil's advocate a little.  I've set up the question to say Bush had a more successful first term; things aren't going so well in the second term.  And I think that's been echoed by all of the panelists.  And I guess I would agree with that as well.  But to play devil's advocate, how badly is it going for Bush?

I guess I would say I don't think it's going so badly.  His numbers are down.  But his numbers are down, not taking Dan's marker from the first four years ago, but if you look at it just from the election or even a low point that he had in the summer of last year in the campaign, they're down a few points.

He still holds his party together, at least out in the country very well.  He's never dropped in to the 30s and 20s as Presidents Carter and his father, Bush, and even Bill Clinton had dropped at times.

So he's got a high floor, if maybe not also a low ceiling for the future.

The accomplishments Norm mentioned, there are some accomplishments, not his signature ones, but certainly things are going through Congress that are on his agenda.  And again, the Republicans have more or less not split.

And as I said, I think the base is still relatively solid.  In fact, probably the greatest rumblings we've heard about the base of the Republican Party splitting are from the President's  potential nomination of Al Gonzales, which he may very well make that nomination.

So to play devil's advocate, Bush maybe down, but how do you place him in relation to other president's?  Is on the precipice here, or is he sort of floating down, floating adrift with the possibility of going in one direction or the other.

Anybody can take that one.

MR. BALZ (?):  I'll relate a story that happened some weeks ago.  Our White House team did a piece about the beginning of Bush's second term, which talked about lack of momentum, loss of momentum, problems, et cetera, et cetera, you know, that he was no longer a commanding figure on the Hill and the way he had been, and a lot of things that we've talked about here.

And not long after that I got a call from somebody from the White House who started reading to me an article, which sounded almost eerily similar to this analysis that our team had done.

He said, do you know when that as written.  And knowing that it was a trick question, I said, I would guess it was 1985 during Ronald Reagan's, beginning of Ronald Reagan's second term.

He said, you're absolutely right.  It was a Washington Post article, which literally made many of the same points about Reagan. And this person's argument was, it's way too early to write the obits about success or lack of it in a second term for President Bush.  We have a long way to go in this fight.  We have a long plan to try to get these things through.

And to some extent, they're right. I don't think you can make any definitive judgements in July of 2005 about the way this presidency is going to turn out.  But we do know, as we've talked about already, the factors that make the opening stage of this more difficult and that are going to continue to make it more difficult.

The question, I think, as Norm puts it so well, is what lessons are Bush and his advisors taking from what they are now seeing?  And are they adaptable?  Are they prepared to change?  Do they think they need to change?  And we don't know the answers to that other than Bush has often stuck with the same pattern, and believed that eventually he can overcome the opposition.

But we don't know.

MR. GERGEN (?):  Well, John, it seems to me it seems the question is, the way to look at this is not whether his numbers are up or down.  The question is whether he is going to have significant achievements in his second term.  That's certainly the standard why which historians have judged presidents over a long period of time.  And in this case, it's the standard by which I think that President Bush and is own conservative base is judging his second term.  Because this is a team that's very interested in change.

They're fundamentally committed to changing the direction of Washington through legislation and the direction of the world through their foreign policy.

And I think that so far  you'd have to say, that look, you have about--in terms of Congress, you have an 18 month window, normally in a second term to get significant legislation through.

That window may have shut very prematurely on him.

You know, Harry McPherson (ph) will remember how Lyndon Johnson, after his 64 landslide election called and said, gentlemen, we've got 12 months, and we've got to get--because our power if just going to slip away from us over that time.  So you have to move quickly.

And I think that it's now fairly clear in his first year-and-a-half that his legislative achievements are not likely to be strong.  Does that say he's going to ride out the end of the term with very little to be achieved?  I don't think so.

I think there are now possibly three opportunities.  One is on the court, or the court nominations that he has.  If he has one nomination, it seems--my hunch is it's going to go a lot more smoothly than people think.  And he's going to succeed in his court nomination, and that will be seen as a substantial achievement.  If he has two, that will become a lot more problematic.  And we can talk about that.

The second area--and David Sanger could obviously talk about this--he clearly has the opportunity for achievements in foreign policy. And we'll have to see where that goes.  But thirdly, and this goes back, as Norm was suggesting, he may well be remembered as much as anything for his political legacy.

He's a formidable politician.  You know, Bill Clinton has been telling friends that in retrospect that he ran against papa, not the son.  The papa may be a better diplomat, but the son is a darn good politician.

And so far, George W. Bush has done something really important in politics.  He's the first president since FDR whose party has gained seats steadily while he's been running for office.

That didn't happen under President Reagan.  The Republican lost seats, House, Senate, state houses, governorships.  That did not happen under Bill Clinton.  The Democratic Party lost seats while he was president.

But George W. Bush has increased the number of seats, and even though his numbers aren't high now, I would have to say the prospects for the Republican Party continuing to grow in this country are pretty encouraging to Republicans.  Because they should be pretty encouraging to Republicans.

There are a lot of signs right now that the Republican Party right now is healthier as a party than the president is.

MR. FORTIER:  I do want to turn to the court and I keep saying I will, but I'm going to pick up on what David said, and pose the question to the other David about places for accomplishments in foreign policy, what those might be.

But I have a second part of the question also, and that is, early on in the administration when Bush was fresh off of his victory, one of the themes that we saw in Washington was that Bush was replacing his cabinet, taking his close, trusted advisors and sending them out to the departments, from Al Gonzales to Condoleezza Rice. How is that working?  Condoleezza Rice has obviously gotten very favorable attention around the world.  But how is that changing the dynamic within the administration of how policy is made.  And then, secondarily, the question that David asked about potential accomplishments in foreign policy?

MR. SANGER (?):  Let me take the liberty of answering the potential accomplishments first, because it backs us in to how he's accomplishing it.

I think the big question for the second term is can the President emerge from it with a sense that he has made a lasting change in the world and actually has a Bush grand strategy, and that the grand strategy has a chance of working?  And he's made it pretty clear what that grand strategy is.

He's made the argument that if the first term was about fighting terrorism, and ousting Saddam Hussein, the second term is about the spread of democracy, something he talked almost nothing about in the first term.

In fact, I went down with a colleague of mine to interview him the week before the first inauguration.  And he did an absolutely brilliant dissection of why it is not the role of the United States military to bring societies along, create democracies, walk school children to kindergarten, basically nation building.  And you will remember that the nation building phrase came up a lot during the first term.

By the second term, he has made some of the most cogent arguments in favor of nation building, and whenever he gets a moment to make the comparison, talks about Iraq in terms of the Marshall Plan or the rebuilding of Japan in 1945.

Nation building and democracy building have become the big theme of the second term.  The great news about that is, it's sellable, it appeals to the American sense of optimism. It's easy to understand, it's hard to object to.

The bad news about it is you have very little control over it.

So within Iraq, as you've seen, we are gradually loosing control over the political process because we are no longer the formal occupier.  In the rest of the Mid East you either get lucky as he did in Lebanon or you help promote along the various color revolutions we have seen in orange and purple.

But with the countries that matter most to him, Saudi Arabia, Pakistan and so forth, there's only so much he can push, because the democratization push runs up against his need to keep very stable regimes that can help him in the fight on terrorism.

And that's the tension.  So how do you resolve that?

Well, he now has a State Department that is working in full concert with his policies.  In the first term, there was this constant sense that there was a White House foreign policy and then a back channel foreign policy that the State Department was trying to execute.

That hasn't happened.  Now with Dr. Rice sitting in as Secretary of State, it's become clear to the staff at the State Department that they either get with the President's program or they seek other employment.  And if you go out and take a look in some of the departments,  you discover a fairly high number who have decided to seek other employment or go out to some remote embassy and sit it out.

I don't detect, though, much of a change in the centralization of control.  In fact, with Dr. Rice there, basically the State Department and the NSC have become one merged entity.  It's very difficult to tell where they start and stop. And that's a big change because the NSC has traditionally been a place that has sort of adjudicated between State, Defense, the Vice President's Office and others.

That really isn't the case as much any more.  Steve Hadley has talked quite openly, the new National Security Advisor, about knitting up State and NSC and having selected the staff according to their ability to go work together seamlessly.

Well, that's wonderful because in some ways it reflects a White House desire to end this internal war that provided us with some vivid copy.

But on the other hand, it does take away that one element of counter-think, of challenging an accepted wisdom.  And you can run off the rails in that regard.

It is a foreign policy team that is working together much more harmoniously.  That's a different thing than saying they have accomplished more. And on that, I think, it really is only six months after the inaugural.  Too early to tell whether his democratization approach will actually yield much fruit.

MR. FORTIER:  Norm?

MR. ORNSTEIN:  Just to add to that, the most interesting Republican administration issue or dynamic in this Republican (ph), it goes beyond the foreign policy. It really is the attempt by President Bush to bring more central control of the cabinet agencies into the White House.

It was the move of his close advisor, Condi Rice to State, and then as David said so eloquently, bringing, meshing State and NSC.  It's bringing his close advisor, Alberto Gonzales, to the Justice Department and his close advisor Spellings to the Education Department.

And then it's having the cabinet members required to spend time in the White House itself.

This is no accident.  I remember actually in the fall of 1990, having a conversation with then Texas Rangers' managing director George W. Bush, about the nature of administration in his father's White House.  And this man, who of course, had thought, had actually thought a lot about management from his time at Harvard Business School, gave what could have been a doctoral thesis on the nature of management in the White House.

He'd thought about these things from a very different perspective and now is putting something else into place.

I actually have not problem at all and think it's a commendable thing to bring cabinet people into the White House where maybe  you can get everybody in sync and on the team.  It doesn't necessarily mean  you're going to send every cabinet member out as an automaton to do what the White House has suggested.  It does mean that maybe they can get input that they wouldn't have otherwise.

But it remains a question of whether somebody who is physically located miles from the White House, who doesn't have that minute to minute or day to day proximity over the long run, can sustain this sort of thing if  you don't have the kinds of bureaucratic wiles (ph) that Henry Kissinger had when he was spending half of his time trying to make sure that the White House, the State Department, the Defense Department and everybody were in sync and under his control in any of these departments and whether it can work especially if your larger political environment isn't working as well as you would like.

MR. FORTIER:  I would remind you that proximity isn't everything.  Paul O'Neill's office looked out on the East Wing.
   [Laughter.]

MR. BALZ:  Can I respond to that?

MR. FORTIER:  I'm going to pick up on a point that Dave Gergen made, because I think it's a very important point, and I think it's sometimes underestimated in thinking about this president and the way he both governs and operates.  And that is David's point about him being a very smart politician and very shrewd politician.

And if you think about the Bush presidency and Bush campaigns in domestic terms, it's never been clear that they have had a kind of overarching ambition in domestic policy.  They've had things they wanted to do.  He clearly wanted to bring the Texas model on education to the nation.

There was a political purpose in that, which was to take the Republican Party away from where it had been under Newt Gingrich, which was opposition to the Department of Education and recast the Republicans in a more education friendly manner.
  And so there was both a policy and a political purpose to that.

Tax cuts obviously are part of the Republican mantra, and Bush adopted those.  But if  you recall when he first mentioned (ph) his tax cut during the 2000 campaign, it wasn't simply tax cuts for...

[End of Side A, begin Side B of Tape 1]

... approach to cutting taxes.  All of that, by the way, has gone mostly by the boards.

But what has been very clear so that they haven't had sort of an overarching ambition on domestic policy, they have had one on political policy.  I mean, there is a Bush-Rove political project, which David described very clearly, which is to through governing and through elections, grow the Republican Party inch by inch, yard by yard, to leave being a Republican Party that is more dominate than any that we've seen in the last century.

And that, I think, is what continues to animate their operation.  And again, the strange paradox of the Bush presidency is you have somebody who has turned out to be a divider, not uniter, who at the same time seems to be able to continue to enlarge the Republican coalition.

MR. FORTIER:  Just one last follow up on foreign policy before we switch back to domestic.

The London bombings, what sort of affect is this going to have on the Bush presidency?  It comes at a time where--not that terrorism had faded away, but was at the summit,the very summit that was going on at the time of the bombings, was being put on the back burner.  We were talking about the environment and differences between Tony Blair and George Bush.

Does this unite the allies?  Does it make the case that Bush is in a long-term war on terror and help him, or is it just short-term phenomenon, or don't we know?

MR. SANGER:  You know, I think, that at least over the short term, it's got to help him unite him some.

The splits with Tony Blair were becoming more and more evident, and the leakage of the Downing Street memos and more interesting, the memos leading up the Downing Street one, which described the British doubts about the war strategy.  Told you that even within his tightest alliance, there were significant breaches.

This was an opportunity for the president to say in more polite terms than I now put it, see, I told you so.  And yesterday, he gave a speech at Quantico, Virginia, that was basically a restatement of his counter-terrorism approach, but tried to build on the London bombings to make the argument that this problem hasn't gone away.  It's just when you turn down CNN, you are learning about other issues, because it seemed to fade.

And heard the president say in the first term, a number of times, to the American people, you may forget about this or move on to other subjects; I won't.

And this was his way of saying, this is why I did not.

At the same time, this is very difficult to sustain over a long period of time.  And part of the breach with Europe is whether or not the outreach program that Europeans argue for, to further integrate the Muslim world with our own, is one that the president is taking as seriously as of late.  And there have been what now, three false starts with the Department of Diplomacy within the State Department, the Bureau of Public Diplomacy?  And Karen Hughes is coming in to head that, won't even be here to start this up until the fall.

That's where they've got the most work cut out for them.  And that's what the allies will be watching most carefully.

MR. GERGEN (?):  Just briefly to add on to that, David Sanger's point.  The other issue for presidents so frequently, as many practitioners here in this room know, is that if you're mired overseas in something which is--it's very sticky, what you really want as president is time.  You want to buy as much time as you can to see if you can work things out before you hand gets forced at home.

Lyndon Johnson had to do that in Vietnam.  Richard Nixon was certainly doing it in Vietnam.  Ronald Reagan had to do it in Lebanon.

And it does seem to me that, in addition to what David said, that the London bombings are likely to give President Bush more time in Iraq.  And that's a precious moment for him, because it strengthens his hand to give this thing more time to work out, to see if he can then extricate himself on his terms, not forced by political pressures at home.

MR. FORTIER:  We'll turn the courts.  Why don't we turn to the court nomination.  There have been several references to it earlier, and I want to follow up on some of them.

First of all, we don't know whether we're going to have one vacancy right now or two at the same time.

David Gergen made an interesting hint that he thought that it was easier for Bush to get one through, and two would be tougher.  I've heard both sides of that argument, that with two you could balance a more conservative nominee with a Al Gonzales as well.  What's the politics of vacancy fight, and what does it do for Bush overall?  Is it just a sort of interruption of where we are in the Bush presidency that we're going to focus on this nominee or nominees for a month-and-a-half and then we'll go back to the times before?

So what's the politics of it, and what's the lasting impact of a court nomination?

MR. ORNSTEIN (?):  Well, look, first of all the policy impact is immense.  We've had a court that has basically been split five-four with a coalition tenuous in the middle that's been sort of center right, maybe even center center.  A shift of two or three seats could make an immense difference.  And we know that it makes an immense difference because the court is making more policy decisions across a whole range of areas.

The business community is now engaged in this court fight because decisions of immense consequence to the business community are being made by the courts, far more than we would have said 30 or 40 or 50 years ago.

It's social policy, it's domestic policy, it's environmental policy.  It's just a whole lot.

So that's there.

Politically, it's significant in a variety of ways.  One I alluded to earlier.  If the President wants to move more things incrementally in a domestic agenda within that 18 month window or 12 month window or wherever it may be, without the Senate moving to a meltdown status, and we did comer very close to that with the nuclear option issue, having a few more things move, at least get them through the Senate to conference committees, before you become completely preoccupied with the court or get into a kind of battle that will draw the lines even more sharply, it's very much in his interest to do so.

And I suspect he may delay making his court nominees for a while to see if he can move a few things along.

I think there's also some virtue, if there is going to be another vacancy soon, and you know, we don't know when, but Chief Justice Rehnquist does have a very bad form of thyroid cancer so it's not likely to be two years from now.  It's going to be a much shorter timeframe than that.  I think it's actually easier to keep your base with you and build a broader coalition if you can package some things together.  If you can pick somebody who's not necessarily going to make your base jump and down, but package that with somebody who will, a little bit more, you might have an easier time of it rather than have them come serially.

But beyond that, I would make two points.  The first is that this has the possibility of really creating a greater schism and partisan ideological and tribal in terms of politics that reverberate across everything, including Iraq and foreign policy.

So it's dangerous territory we're in.

The second, which gets to a point that David made, there are people out there on the short list or not, who could garner 85 votes in the Senate.  There are people who could get 75 or 65.  And then there are those who could 49, or 51, or 52.  And...

MR.     :  [Inaudible] the 49 or 51?

MR. ORNSTEIN:  I think Edith Jones, Michael Luttig would be in the --Janice Rogers Brown, would be in the 51, 52 range.

I think Harvie Wilkinson would be in the 65 or 70 range.

I think John Roberts would probably be in that same category.

And I think Alberto Gonzales as either a justice or as chief justice would end up in the 75 range.

So he's got some choices here in terms of how much of a fight he wants to pick.

MR. FORTIER: Does he relish the fight, or politically thinking about it, does he relish the fight over a more conservative nominee thinking he'll win or he'll show the division between the parties?

I guess that are several things that he might gain politically from this.  One, first certainly changing the court policy-wise, but this fight over a conservative nominee, the possibility of appointing the first Hispanic to the court. And not to be underestimated, the possibility of appointing a close colleague, one that he knows well and likes, to the court.

If all three things could be packaged in one nominee, that would be the slam dunk nominee.  But how do you think he weighs these things?

And David, you seem to think one was easier.  Why is that?

MR. GERGEN:  I think he would relish a fight because he's likely to win in it.  And it would not only put someone he wants on the court, but it would strengthen his presidency.  It would revive his fortunes if he had a tough fight and won with one nominee.

My hunch is if he has one, that there's going to be a squawk but that he can come along with someone off of the court of appeals. Michael Leydig would be among them, in my judgement, who could win, with a fight.  And I think that the president's base would be pleased.

If he has two, he's got to make a very significant choice, and I think it become a little more complex.

Okay, one is clearly going to be a conservative in that case.  The question becomes, does he go to a moderate as the second one, like a Gonzales, and that would be popular in many circles, obviously, especially in the Latino community. And it would help him with his long term political legacy.

But it will not please the base.  The base is going to say, look, we came here to change the court, not to go one to conservative and one moderate, for one conservative and one moderate; we want two conservatives.

And you're likely to dampen the enthusiasm of the base and if you then get into a fight over the conservative, they might not be there for you.

So that becomes a problematic question. But let's say he goes the other way.  Then he goes for two conservatives, as I think he's more likely to do, because that really brings change.  I mean, that's what he's about, I think that's fundamentally what he's about.

If that's the same, then the Democrats do go to war. If you come up with two conservatives, two Luttigs and the media will go nuts.  That's just predictable and we're going to have a real whoop-de-do here.  So I think it's an interesting question.

It seems to me from his point of view it will be cleaner and easier to have one this year and then have one next year.  I think that would help his politics, and confirmation is always the name of the game.  What's really interesting to me is that there is this deal that they cut among the 14, from all indications, and you folks know better than I do, that's not going to hold if he goes with a conservative.  That's why I think he's going to win.

MR. ORNSTEIN:  Let me just add there are different kinds of conservatives.  We're not talking about just moderates and conservatives.  John Roberts by every standard is a conservative.  Harvie Wilkinson by every standard is a conservative.  Michael McConnell by every standard is a conservative.

They also have a quiet, careful judicial temperament.  They're not in your face in a way that Michael Luttig is, and that's the kind of choice I think he's making here.  He's going to pick somebody who's a conservative.  In a lot of ways it's hard to think of Alberto Gonzalez given the people he's built around him, the policies that he's taken as a moderate by any conventional standard, you've got a lot of people in the President's base who are seizing on one decision he made in the Texas Supreme Court which by every standard was a conservative decision.  It was adhering to what the legislature had very clearly written, and they've taken it to a different level because they make assumptions about abortion.

You can pick conservatives who don't create a firestorm among Democrats or you can deliberately pick somebody with an in-your-face kind of move.  That I think is the choice he's going to make.

MR. BALZ:  I think that one of the things that we're seeing unfold here is an administration which was not prepared for the O'Connor retirement.  Every indication they had given out prior to the announcement by Justice O'Connor of her intention to retire was that they were prepared to move quickly, they were not going to be caught flat-footed, they had done the work, they knew where they were heading.

My guess is that they had done a lot of work on replacing the Chief Justice of the United States and not Justice O'Connor, and so I don't know what the reason for the lengthening of the time table is.  David has a good point on that.  They may be trying to smoke out whether or how quickly there may be a second vacancy, there are a lot of reasons.

But I think they're in a situation now where it becomes more difficult if they only have this one, and to some extent a moment of truth for Bush.  We know how assiduously he has courted and paid attention to the social and religious conservatives in the Republican Party.  But what we don't know is what is really in George W. Bush's heart on a lot of these very contentious social issues.

A decision on how to replace O'Connor will give us some clues as to whether he really wants to in one form or another cement a very conservative social policy agenda with the help of the Court or whether perhaps he wants to play on the political project by naming somebody like Gonzalez, a Hispanic, and gaining the credit that the first President who does that will do so.  So I think that for them, this is a much tricker moment than it might have been had it been just the Rehnquist resignation.

MR. SANGER:  It's also tricky on a gender basis because with Rehnquist and with two women already on the court it was fairly clear.  I haven't seen the transcript yet, but I'm told that Mrs. Bush opined a little bit today about the need for women justices.

MR.          :  Catching the President by surprise.

MR. SANGER:  My observation about this White House is that in most policy arguments she tends to win more than her fair share.

[Laughter.]

MR. FORTIER:  What else does she want?

MR. SANGER:  There are moments where she had pulled back his language.  Remember dead or alive, and remember what happened after she publicly said that she could think of a more felicitous way to explain the hunt for Osama bin Laden?

There have been indications that she has played some role in some of the social policy debates.  It's always a little bit murky.  You never get this at briefings.  You always have to sort of here later on where was she on the stem cell issue, and sometimes it's 6 months or 8 months or a year later before you learn that she actually had a position.

MR. FORTIER:  In the transcript today when she talked about that, did she say bring them on?

[Laughter.]

MR. SANGER:  She was going to, but she knew that that would be the Dan Balz Full Employment Act.

[Laughter.]

MR. FORTIER:  Let's turn to the other story that's been in the news very recently.  Nobody liked my coining it Turd Blossomgate, so that is the last time that word will come from my mouth.

[Laughter.]

MR. FORTIER:  What about Karl Rove?  What do we know?  And although it's very early, is this likely to be a problem for the President, do we just not know, and how might we compare it to other second term scandals of note in the past?

MR. ORNSTEIN:  One note to make here is that this shows one of the differences that Bush faces in his second term from Clinton, no independent counsel statute.  Just imagine where they might be if we had three or four independent counsels running around investigating Jack Abramoff and all kinds of other problems?  This is the closest they've come feeling under some political pressure to pick not an independent counsel as we had under the statute, but an existing U.S. Attorney who has been a very tough and aggressive prosecutor, and it's bringing headaches where otherwise none would exist.

If you didn't have this prosecutor pushing the envelope here in a way to get to the bottom of this, pushing these journalists in a way that we hadn't seen before and now pushing it to this point, it wouldn't be the headache that it has become, it would probably have been a submerged news story.

Who has a clue as to where this head?  First of all, we don't know whether Mr. Fitzgerald is really digging into a violation itself of the law involving the outing of Valerie Plame or a perjury issue, whether it may involve somebody having told Mr. Rove information that he then passed on with or without mentioning the name.  So we don't know where that one is going.

I would say this, that getting back to the issue of centralizing policy control in the White House, moving Karl Rove to be the Deputy Chief of Staff for Policy was a reflection of something that Rove watchers have seen for a long time.  He is a genuine policy wonk who has quite an amazing command of policy.

I remember sitting with him at one point fairly early in the first term and somebody came by to ask about the Education Bill.  This was post-9/11 and had kind of taken on for a time the domestic portfolio while the President was off focusing on foreign policy.  The command that he had of every comma and line of that bill was quite astonishing.

So he is playing a different role now in this White House than I think anybody I've ever seen, and the expectation was that he would be a very central player in the policy world, that is, you move these close allies of the President out into the Cabinet, Rove was going to play that coordinating role along with the political role, and they're a seamless web as Dan has suggested in terms of what he sees as his legacy.

If Rove is distracted or crippled temporarily or permanently by this, it's an immense problem for the President in his second term given what he has planned including on the domestic agenda.

MR. GERGEN:  Certainly the Post said it well today in the news reporting on the Rove story in that they distinguished between the credibility problem the White House has versus the criminal culpability problem that might be here, that this is much more a political problem than a legal problem based on what we know now.

Legally it's a very complex case, and I can just tell you outside Washington a lot of people don't understand this.  They're mystified why Judith Miller is in jail.  They don't understand what Time magazine was doing.  They don't understand why Robert Novak has never been hauled into this net.  And people don't understand the law.

This issue is very complex.  When things tend to be this complex, they don't have the kind of sharp political impact that some other sex scandals that occur which are easily understood can have.  So I just don't it in the same category.  It's nowhere close to Iran-Contra or the Monica issue or anything like that.  It may be a little closer to the Burt Lance kind of question that Jimmy Carter faced in the summer of 1977.

But on the law, based on what we know now, there is no evidence.  I'm not somehow who is in love with Karl Rove's politics, but I have to tell you, based on what we know now, there is no evidence here that this fellow broke the law.  If he just simply said as the Matt Cooper notes say that when Joe Wilson went overseas he was just simply called by the CIA, his wife was involved with it.  It's true his wife was involved, and just by saying his wife was involved with the CIA, that is not a violation of the law.

If he named her and if he knew she was a covert operative and if he thought the United States government was carefully protecting her identity, those would be grounds for finding him in violation of the law.  But there's no evidence of any of that being true, and I can tell you people at the White House by and large have clue when they hear about somebody at the CIA whether they're covert or not.  It just isn't part of the vocabulary that people are going around, I wonder if that person is hidden or not.  It's just not the way this city works.

My own sense of it is based on what we know now that he does not have a legal problem unless he lied to the grand jury.  That's a legal problem, and that's what usually people get caught on, but he's too smart to do that, so I don't see that.

But as a political problem, they've been ham-handed in the way they handled it.  They could have gotten this thing cleared up a long time ago, to get way out in front and say nobody was involved, he wasn't involved.  The press secretary says I went and talked to him and he wasn't involved.  They were wrong about that, and that's their political problem.  And their press secretary has got a problem, and he's got a problem about trying to clear this thing up, but I don't think it will cripple the second term, and I don't think based on what we know now this is going to explode into something that would force his resignation.

MR. BALZ:  I will leave aside the question of whether there's criminal culpability, liability or not here.  I'll leave that to the special prosecutor.

I think what's important is what has changed in the last week or 10 days.  For many weeks if not months, the focus of this case has been on the issue of confidential sources, the First Amendment, the role of the press.  If has not been where it suddenly is now which is back on the question of was there a violation of the law in the leaking of Valerie Plame's name.

That subject has not been the focus of anybody's attention for a very long time, but because of what happened last week with the jailing of Judith Miller and Matt Cooper's decision to testify, is that we now know things that we did not know before and we now know that there are questions that come out of that that aren't being answered.  So the first important thing that's changed is that the focus is not on the press, it's back on the White House and senior White House aides.

I think the second thing that's important is exactly what Norm was talking about which is that we're not talking about any White House adviser here.  We are talking about one of the most important advisers and long-term advisers and closest advisers to this President.  Karl Rove occupies as Norm said a unique position in this administration, and if it were almost anybody else, this story would not have the kind of attention that it's now getting.

When Joe Bolton went to OMB from Deputy White House Chief of Staff, a vacuum was created in the White House on the domestic policy side.  Karl Rove filled some of that, but not all of it.  This new role, as Norm suggests, is something that fuses the two roles that Karl and Josh Bolton had played together through the campaign in the early part of the first term which was the fusing of the political project and the domestic substance in the domestic agenda.  Karl Rove now plays both of this roles, unique I think to any White House.  So the consequence of any problem involving him is greater than it is for almost anybody else.

Finally, the other problem that they have, as David said, is the political problem they have from past White House statements that Scott McClellan and others have made which now cry out for some reinterpretation as a result of what we now know.  There may not have been anything illegal that was done, but there is an involvement that existed that nobody had revealed before, and the idea that the press is pressing for answers on that is not surprising.  I think the question now that will arise is how much pressure the White House will get from Republicans for some further explanation, description, whatever.

The one thing that's happened today is that while the White House is not prepared to answer questions on this, the Republican National Committee in the form of Ken Mehlman has jumped into it in a political way which is to push back against the idea that Democrats are promoting that Karl Rove did something illegal.  So now a political fight has been joined between Democrats on the Hill and the Republican National Committee which further guarantees that this is going to stay at least somewhat in the forefront until we get a court nomination.

[Laughter.]

MR. SANGER:  First of all, I should say at the outset this is a hard subject to be objective about while Judy Miller sits in jail for a story that she didn't write.  Last week at least we had the benefit that we were discussing a real large principle here as anybody who has tried to do reporting, and I do a lot of reporting in the intel world, knows which is that the system comes to a halt if your sources believe that at some point they are going to get revealed, and I think that the deeper issues that are here are going to be very lasting and very damaging.  Those are separate and apart from question on Karl.

To pick up for a moment on Dan's point, I think what's interesting in watching this White House is that this whole incident and what started all of this which was the President's 16 words about uranium in Africa, was the first time that we saw the unity of the Bush administration crack, really fracture, in 2003 in the summer when this all happened.  The reason this whole issue came up, the reason that people were talking to reporters about this was an enormous breach that had opened up between the CIA and the White House first over the revelation of Valerie Plame's identity, and, secondly, over a sense that the agency were taking the hit for the fact that the President said something in his State of the Union speech that was either insupportable as the White House argues or patently untrue as now seems more likely.

That set in a panic that I hadn't seen in covering this White House before, and it created the panic because suddenly the inner workings of the system, how these words made it into the speech, became the subject of conversation.  I remember talking to a very senior administration official early on in this and saying to this person, sooner or later you guys are going to have to reveal to us what the underlying intel was that led you to put this in the speech.  You can try to resist it for a while, but we and the Post and others have this annoying habit of coming out every day.

[Laughter.]

MR. SANGER:  It's not like the subject is going to fall off of page one, and it didn't.  You'll remember that in the end they did reveal the intelligence and Steve Hadly ended up taking the fall for this going into the paper.

That problem only dissipated when they got out and explained what had taken place.  My instinct is, and I couldn't prove this, that this problem will only dissipate if they do the same thing.  This is more complicated because in that case it was just a political embarrassment, there was no grand jury investigation.  In this case, there is one.  I don't think they're going to be able to resist that pressure forever.

MR. GERGEN:  A quick question, did Time magazine make a mistake turning over that material?

MR. SANGER:  My personal opinion is that they did and that they made the mistake because at that point, they forced the hand of their reporter who had been trying to protect his sources, and at what is utility of trying to protect your sources if your notes have already been turned over?

They make a perfectly legitimate argument that at some point you lose in the courts and you have to take that.  It's not the choice I would have made, but I can understand why as a corporate decision it made sense to them.

MR. GERGEN:  But did it hurt journalism?

MR. SANGER:  I think it hurt journalism deeply.

MR. FORTIER:  We're going to turn to audience questions, if the microphone could get ready.  I am going to ask one last question, and while the microphone is getting ready, when you do get up to ask a question, please identify yourself.

The last question is, the 2006 elections, they're not so far away.  We've talked about various windows in the second term, maybe it's 18 months.  At some point those start to come into play.

The history of presidents in midterm elections is not very good.  The last two midterms have actually broken that pattern, but before 1998, I think we went back all the way to the Civil War for a President to gain seats of his party in Congress.

What are the prospects for Bush, and what are the likely results of the 2000 election both in affecting what's happening in the next or so, but also the aftermath of those elections?  I want to ask particularly Norm, but if anybody else wants to jump in.

MR. ORNSTEIN:  Of course you're right about the last two midterms.  Part of it is that Bill Clinton had his sixth year election in his second year.  With the Democrats in charge of everything and the Republicans united against, we saw an immense backlash in 1994, and then a very modest correction the next time, but that immense backlash gave Republicans majorities in the House for the first time in 40 years, and despite losing seats in '96-'98 and 2000, they've kept that majority.

Now it's really a question of whether there could be another 1994 type election in a midterm looking ahead.  The answer is you could see a tidal wave of unease and you can start to see small signs, not of what we had in 1994 which had been building since the late-1980s, a populist reaction against insensitive powerful people in Washington that really got triggered by the pay raise in 1988-'89.  That's what really created Rush Limbaugh and talk radio was the pay raise, the House Bank, all kinds of other scandals and problems, the departure of Jim Wright, all leading up to the health care debacle and so on, and a 52 seat loss for Democrats in the House.

Going into that election, I think almost every major observer who looked at the larger political climate and seat by seat, race by race, said the Democrats would probably lose somewhere around 25 or 30 seats.  The increment from 25 or 30 to 52 is what happens when you get a large national tide.

This time around, there just aren't the seats that are even remotely contestable to bring you into the range of 30, 40 or 50.  What you could see happening this time, where Republicans have a 15 seat margin but there are really no more than 30 or 35 significantly contestable seats out there out of 435, astonishing as that may be, and they're evenly divided between the two parties, is you could maybe add to that 10 seats that don't look to be contestable but in the midst of a tidal wave could shift.  That's what happened in 1994.

So at the out side, you could imagine Democrats picking up 20 seats, maybe, enough that they could take a majority, but that would require a set of circumstances that would be the perfect storm, and it's just not likely to happen.

In the Senate, just because of the nature of the seats that are up with Democrats having more up and more vulnerability, even a tidal wave of that proportion would be unlikely to result in a shift of six seats that could give them a majority.

I'm not sure, frankly, if I were George W. Bush looking to the final 2 years of my presidency that if we got something in between where Democrats picked up eight or nine seats in the House and two or three in the Senate, and I faced 2 years where it was still the Republicans in charge, but there had been a large public expression of unhappiness and I had even narrower majorities with what's likely to be a vicious contest to succeed me already well underway, that I'd be very pleased with that.

I might actually be a little bit happier if Democrat's had a three seat margin of majority in the House which would mean they would be unable to govern but they would forced to work with me and I'd at least have some ability to point the finger somewhere else.  They'll never take that position, but that may be the single most likely outcome looking at it this far in advance, that Democrats pick up some seats but not enough to give them majorities in either house and Republicans have the enormous challenge of a divided majority party, nervousness looking ahead to the next presidential contest, a wide open and divisive contest but no real ability to have the troops to make things happen.

MR. FORTIER:  We're going to turn it to the audience here.  If you could please identify yourself, we'll start right here.

MR. THOMPSON:  I'm Gordon Thompson of the--Group.  A question for Mr. Sanger.  What change if any, please, do you see in evolving nature of the NSC on the impact of Don Rumsfeld on national policy and practice?

MR. SANGER:  Is the question how the NSC affects Rumsfeld or how Rumsfeld affects the NSC?

[Laughter.]

MR. THOMPSON:  I had in mind the first, but if you'd care to comment on the second, that would be fine, too.

MR. SANGER:  It seems to me that Secretary Rumsfeld having started the Iraq war at the center of all of the decision making on that issue has now to some degree pulled back a little bit, and this was the case as soon as Abu Gharib happened, that you saw Condoleezza Rice when she was still National Security Adviser create an Iraq Strategy Group after the invasion was over inside the White House that was essentially intended to pull a lot of the major decisions of the occupation away from Secretary Rumsfeld who at that point really didn't want to go deal with them.  In any case, this wasn't what he had gotten into this war for it seemed.

He is now focusing very much on military transformation, the issue that he championed when he first came into office.  While he participates in the Iraq discussions each day and of course is dealing with the deployments and all of that, to some degree it strikes me that he has been happy over the past year to see others begin to pick up part of that portfolio.

What also is interesting to me is that Secretary Rumsfeld by his own account offered to resign twice and the President couldn't take it, and that tells you that he has retained a quite powerful position and that his main nemesis in all of this, Secretary Powell, is now tinkering with his cars and doing other projects, and Steve Hadly who is the National Security Adviser comes up very much out of the Rumsfeld school.  So it is my sense that he remains quite powerful, not as influential as Secretary Rice, not as influential as Dick Cheney, but probably right after them.

MR. FORTIER:  Why don't we go right here in the middle?

MR. CAMARELLA:  I'm Maury Camarella (ph), a Senior Fellow at the National Academy of Public Administration.

The New York Times reporter was ordered by a court to testify.  She refused.  There was an appeal.  The Court of Appeals upheld the court.  It went to the Supreme Court.  The Supreme Court refused to hear the case.  The question I would put to the panel is whether one has the right in our society to trump a court order out of a sense of professional ethics.

MR. SANGER:  This is the most difficult question raised by this case and it's one that everybody is deeply uncomfortable with, and as you can see, Time and the New York Times came out in very different places on it, so I don't think there is reserved truth out here.

The choice that was facing Judy was not to testify or whether or not she could defy the courts.  It was fairly clear the courts certainly had the right to order her to go do this.  The question facing Judy as I understand it was, was she going to comply with that or was she going to pay the penalty for not complying with that, and she has chosen to pay the penalty on the theory as has happened with many people over the years from Rosa Parks on and many years before that, to make a declaration that an established law is not necessarily in the best interests of the society and to pay the price for taking that position, and she's paying that price.  She is in jail as a coercive effort by the court to get her to testify an if she is not coerced by that, she'll remain in jail until such time as they release her.

MR. ORNSTEIN:  Let me add a thing or two, and I have great sympathy for Judy, and she is up front about this and is paying the price.

It is certainly the case, however, that if Richard Nixon in the face of an 8 to 0 Supreme Court decision had refused to turn something over and said it was civil disobedience, all of us including the New York Times would have reacted rather differently.

I think this gets to a larger question which I believe is the misuse of unnamed sources that has grown over recent years.  Of course, journalists are going to get information from people that is given for their own reasons just as the IRS gets information from wronged spouses and partners with vengeance and uses it to nail people on tax evasion charges, just as prosecutors bring in people, give them immunity and then often send them back out to do things because the information they find is useful.  There are limits to this, or should be, to when you take information and use it, and there needs to be some self-discipline here.

I was appalled, frankly, when I saw leaks clearly coming from independent counsels during the latter part of the Clinton administration designed to manipulate the political process, and it was just sort of out there and taken, as there were leaks from the White House.  There ought to be some limit to when you use information, and there are limits, and the law sets limits.

Frankly, I think Judy Miller is paying a price for the sins of others who didn't have the sense or self-discipline to say just because I get a leak from somebody doesn't mean I use it when it is illegal.  And particularly if the leak itself happened to be illegal, journalists shouldn't be trafficking in this.  And this I hope will bring some semblance of self-examination on the part of the profession about how far you go in using anonymous sources.  They are an absolutely essential part of currency now, but just as with anything, there are limits.

MR. SANGER:  Norm, I would agree completely with what you said, but I just want to add in that she didn't use it.

MR. ORNSTEIN:  Yes.

MR. SANGER:  She didn't publish anything.

MR. ORNSTEIN:  Yes.  She's paying the sins for others.

MR. SANGER:  I would otherwise completely endorse everything you said.

MR. GERGEN:  Let me add that it's an outrage that Judith Miller is in jail.  She never wrote a story.  This is a prosecutor who is far too zealous and should have wrapped up this case long ago.  He's been at a simple case for 2 years and throws this poor woman in jail because he can't wrap his damn case.  As a reporter who never did anything wrong, never wrote a story, standing on principle, it's an outrage that she's there.

MR. BALZ:  Let me just add one thing.  I don't think there's any journalist that I know who took heart from what Time magazine did in turning over notes for the obvious reasons of the chilling of sources and all of that that it implies.

On the other hand, I don't think there are many journalists who see this as the kind of case that we really want to break our pick on.  The use of anonymous sources is justifiable in many cases.  It is necessary in many cases.  But generally what we're talking about when we go to the wall on something like that is a whistle-blower, someone who has exposed wrongdoing and has taken a great risk to his or her own career to do it to tell it anonymously to a reporter, and protecting a source like that is obviously paramount in everybody's minds.

Here is a case which is quite different than that, and for all of those reasons I think people are uncomfortable coming firmly down on the side of either Judith Miller or what Time magazine did.  I think most of the journalists I talk to feel ambivalent about both sides of this and see consequences not helpful in both tracks.

MR. FORTIER:  Harry McPherson?

MR. McPHERSON:  I'm Harry McPherson, a Washington lawyer, with some experience with administrations in not a second term, but in the latter part of a term that bit the dust in large part because of the public's rejection of the administration's management of the war.

You all haven't talked much about this.  To me it's the biggest issue by a landslide that Bush faces.  The country in the polls is going progressively south in its opinion of this war.  In fact, the country is going south in its opinion of the administration.  It is not going south in its opinion of George Bush.  When you look at that single poll number, how do you feel about George Bush, he's still okay.  But if you talk about how the administration is managing either domestic issues or foreign policy issues, they're all going down as happens frequently in second terms.

But here we've got a war that Rumsfeld and Cheney bear an enormous responsibility for that in my view Condi Rice as the National Security Adviser who was supposed to be able to tell the President what was credible and what was not credible in terms of evidence coming up to him, they're all still in office, the country is negative about the war, and the one thing the President certainly has going for him is the sense in the country that he and his administration have been very firm in fighting terrorism.

If we get attacked as the British were the other day, then I assume that the administration will have an uptick because they are the terrorist fighters.

But the wars in Iraq and Afghanistan are not good news right now, and as somebody who has been part of a failing administration in such a time, it seems to me to get closer and closer to the late-1960s.

MR. BALZ:  Harry, I agree with you on part of that and I think I see things a little bit differently on the second part.

I think this is an enormously consequential issue for this administration and there is no question that public opinion has gone south on them on the reasons that we went to war.  Where public opinion is more ambivalent is, now what do we do?  And that's the real test for George W. Bush, which is to manage his way through this question in terms of decisions about troop levels while he tries to manage public opinion.

MR. McPHERSON:  That was true in the late-1960s, Dan, the same issue, what do we do.

MR. BALZ:  Right.

MR. McPHERSON:  And the guy who won the election in 1968 said I have a plan which he didn't reveal to the country.

MR. BALZ:  That's right, but at this point--

[End of tape 1B, begin tape 2A.]

MR. BALZ:  [In progress] --did not have many leading Democrats standing up and saying we have to get out or we have to have a exit strategy.  They're setting up far short of that at this point.

The question will be, next year at this time will there be candidates running for office around the country, will there be members of the United States Senate or the House, senior members, taking a different tack than they are now, and then what happens with public opinion.

MR. SANGER:  The Vietnam comparisons are all fascinating here, and what doesn't compare is also I think equally fascinating.

First of all, the White House would say, and I'm not endorsing this, I'm just reporting it, we litigated this issue in November and the President was reelected.  You can argue and I think accurately so that public opinion has gone sough since then, but we only have our elections every 4 years and that's when the cycle was, and whose to know how it would have come out if the election were next November instead of last November.

The second difference is that while public opinion is very much against the reasons that we got into the war and I think even polls I've looked at have said if you knew then what you know now, would you have gone into this, I think the answer is no.  At the same time, the President has been able to hold up on the polls that say, do you think we ought to just cut and run?

The way I read the polls, and this is more Norm's territory than mine, is, no, we shouldn't cut and run, we should cut and walk slowly but briskly to the exit.  The Democrats are in this awful spot where they keep trying to get the President to set the metrics by which we will know when it is that the Iraqis have trained themselves well enough that we can begin to get out.  The President doesn't plan to fall into this trap.  He's basically saying we'll know it when we see it.

MR. ORNSTEIN:  Let me add a couple of things.  The first is, the real problem for Lyndon Johnson politically was when the Democrats fractured deeply from Fulbright on, and then, of course, losing Walter Cronkite which had a larger impact on the public opinion more generally.

So far, Democrats aside, George Bush has been able to keep his Republicans behind him with a few notable and what would have to be for the White House worrisome exceptions developing in the last few weeks.  If you start to get an increasing level of nervousness among Congressional Republicans as they approach 2006 that it will be a referendum on a failed war and they'll take the hits and more of them go off the reservation and say we got to get out of there, then President Bush who I think is resolute in this one and will hold firm as long as he possibly can will have a much, much bigger headache on his hands.

I think there's another headache that he has to consider, and it gets to the domestic agenda and the Supreme Court.  You do have a substantial number of Democrats who have been with him on this.  Even those who were critical of some of the earlier points say we can't afford to lose this now.  But if we get an increasing tribal warfare on other political issues, it will beyond question bleed into the situation on foreign policy and the war.

We've had this before.  Remember we had Tom DeLay undercut Bill Clinton when we were at war in the Balkans, so that leading political figures on the other side will move right ahead and cut the pins out from under a President can happen, even those who otherwise might be supportive of a posture.  That's where I think he has to be very careful as well.  All of these things become interrelated and we can't afford to lose at least that larger elite consensus that whatever the problems, we got to find a reasonable way out.

MR. GERGEN:  There's so much that's deeply objectionable about this war that I think a lot of feel, the way we got talked into it, the lack of planning, now the rhetoric that we had to go in because of 9/11, just so much is deeply objectionable.  But now that we're there, it strikes me that the smart Democrats are not going to try to push him out, that the stakes are higher here now that we're there.  The stakes are higher than they were in Vietnam for our long-term security and that the smart Democrats are ones like Joe Biden who are saying basically let's step up the number of troops and let's see this through, and I think Hillary Clinton is likely to come down on that position.  I will be very surprised if she is not one of the last hawks on how we deal with it.

MR. FORTIER:  I wanted to leave time for another question, but we are at the end of our time.  Thank you very much to the panel, thank you to the Knight Foundation for funding this project, and we will see you again closer to the next election.

[Applause.]