Inside Politics

Lindsey Graham Announces He Will Run for Senate; Allegation That an FBI Agent Spied for the Russians Rocks the Intelligence Community

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

BERNARD SHAW, CNN ANCHOR: The FBI spy case as a flashback to another era. We'll have the latest on the intrigue now and how it relates to the past. Also ahead...

(BEGIN VIDEO CLIP)

REP. LINDSEY GRAHAM (R), SOUTH CAROLINA: I intend to seek the Republican nomination for the United States Senate.

(APPLAUSE)

(END VIDEO CLIP)

SHAW: ... an announcement that signals the changing political times in South Carolina.

Plus...

(BEGIN VIDEO CLIP)

EMINEM, RAPPER: You think I give a damn about a Grammy. Half of you critics can't even stomach me, let alone stand me.

(END VIDEO CLIP)

SHAW: ... the outrage over this man, Eminem: in the political world and at tonight's Grammy awards.

ANNOUNCER: From Washington, this is INSIDE POLITICS, with Judy Woodruff and Bernard Shaw.

SHAW: Thanks for joining us. Judy is off today.

Some strong words from the chairman of the Senate Intelligence Committee today in response to the FBI spy case. Republican Richard Shelby of Alabama calling the case a "national security debacle." And he says his committee will hold hearings designed to prevent such an incident from happening again.

Also, the FBI is trying to piece together the puzzle of Robert Philip Hanssen's life and the allegations that he spied for Moscow for more than 15 years. CNN's Kelli Arena is following the investigation.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN CORRESPONDENT (voice-over): How could Robert Hanssen have gotten away with what he's been charged with for so long? One former FBI agent suggests the answer could lie in the FBI's culture.

RICHARD ALU, FORMER FBI CO-WORKER OF ROBERT HANSSEN: There's an esprit-de-corps within the FBI. Everybody trusts everybody else. We have had, over the course of years, very few bad apples in the FBI.

ARENA: In fact, there have only been two FBI agents convicted of espionage: Earl Pitts in 1997 and Richard Miller in 1984.

Even so, the threat of having a trusted insider betray that trust is very real. And the security measures in place are, by the FBI director's own admission, inadequate.

LOUIS FREEH, FBI DIRECTOR: None of the internal information or personnel security measures in place alerted those charged with internal security as to his activities.

ARENA: FBI agents routinely go through background checks every five years. Finances are looked into and neighbors interviewed. But FBI personnel are not routinely polygraphed, and the FBI won't say whether Hanssen had ever been.

LARRY TORRENCE, FORMER FBI DEPUTY ASSISTANT DIRECTOR: I think we do need to consider expanding the use of the polygraph. I think that's an effective technique. It's not an end-all, however. There are other personnel policies: reinvestigation, how they're conducted. I think we can do better at that as well.

Certainly the way that we protect our database information, we need to be very careful with that, so that there are avenues that can prevent someone from having such broad access to information.

ARENA: The Hanssen case is bringing new attention to a directive signed by President Clinton just before he left office. Dubbed counterintelligence 21, it's a plan to create a sort of spy-czar's office to identify, prioritize and protect classified information.

The Bush administration would not say whether it supported the directive.

In the meantime, former CIA and FBI Director William Webster is conducting a review of FBI security procedures, which he says will be finished in a few months. And the Senate Intelligence Committee will hold hearings next week.

But even the man who prosecuted convicted spy Aldrich Ames is skeptical anything can be done to prevent security breaches in the future. MARK HULKOWER, FORMER FEDERAL PROSECUTOR: You can't stop them. You can have checks, you can have precautions, you can have polygraphs, but at the end of the day, if somebody's determined to do it, they're going to do it.

(END VIDEOTAPE)

ARENA: While most in law enforcement would agree with that assessment, it won't stop the search for answers. And it's expected the FBI will come under increasing scrutiny in the coming months -- Bernie.

SHAW: On the Hill, Kelli, further word on congressional investigations?

ARENA: Yes, they'll start, the Senate Intelligence Committee will have hearings on Wednesday. So far, they have heard from CIA Director George Tenet, who will be there. They haven't heard from FBI Director Louis Freeh, but it's expected that he will show.

The hearings will be closed, and we're told that they are going to happen in two phases: One, the first stage, just what happened with this case? What security measures were taken immediately to protect American interests? The second phase will look at security vulnerabilities and what needs to be done to prevent this from happening in the future.

SHAW: And our INSIDE POLITICS producer Shirley Hung (ph) has just sent word, as you were answering that question, that the FBI Director Louis Freeh will -- will testify.

ARENA: Not surprising.

SHAW: No. Thank you, Kelli Arena.

Investigators also are exploring Hanssen's possible motivation, and to do that, they are zeroing in on his background.

CNN's Kathleen Koch has the latest on the man behind the intrigue.

(BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): His FBI colleagues described him as very intelligent, wearing black so often they called him Dr. Death. But they say there were no clues that he might betray the nation he swore to serve.

TORRENCE: He was a relatively quiet person. He was reserved, somewhat introverted, I think. He was known around the division as being very bright.

KOCH: Hanssen was born in Chicago and attended college in Illinois. He worked for the Chicago Police Department before beginning his long FBI career in 1976. Hanssen, his wife, Bonnie, and their six children moved to this quiet Vienna, Virginia neighborhood in 1987, two years after the FBI alleges he began selling U.S. secrets to the Soviets.

(on camera): The FBI affidavit does not implicate Hanssen's wife or any of his children in the alleged espionage. Neighbors say four of the children are grown. Two, a teenaged son and daughter, still live at home.

(voice-over): All three of Hanssen's sons attended the Heights, a private boy's school in Maryland. One, an 11th grader, is still enrolled. The headmaster has known Hanssen and his family for 12 years.

REVEREND FRANKLIN MCAFE, ST. CATHERINE OF SIENA: Other than he talked about the FBI a lot, and Russia. He talked about Russian conversation and the FBI a lot. I mean, but that was his job, so...

KOCH: Friends say the Hanssens are devout Catholics, the mother teaching at the Catholic girl school her youngest daughter attends.

UNIDENTIFIED MALE: They came generally to the same mass. It was 10:30 on Sunday, and they would sit in the same place most of the time.

KOCH: Neighbor Ryan Bennett grew up with the Hanssen children and speaks of an unusual room in their home.

RYAN BENNET, NEIGHBOR TO THE HANSSENS: ... an odd room in their house that had two computers, and it was very dark. And we usually weren't allowed to go in it as kids...

KOCH: Other neighbors remain stunned at Hanssen's arrest.

JENNIFER JONES, NEIGHBOR TO THE HANSSENS: Strange to wake up this morning and still see the crime-scene tape, and the FBI still down there, that actually it wasn't a dream. I guess still just a real sense of shock, though, that -- that this could happen on a street in a community like this.

KOCH: As the FBI continues removing evidence from the Hanssen home, no one knows when the family will return.

Kathleen Koch for CNN, Vienna, Virginia.

(END VIDEOTAPE)

SHAW: In a letter, allegedly written by Hanssen to the Russians, he says he was inspired as a teenager by the memoirs of British Soviet double agent Kim Philby, who spied during the Cold War era.

Now, our Bruce Morton has been thinking back to times past and how espionage has changed.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): Once, spies mattered. So did secrets. The United States broke the Japanese naval code in World War II, a huge advantage for the Americans. The allies worked hard at building fake embarkation points along the English coast, part of an effort to confuse the Nazis about where the D-day invasion would be. Thousands of lives at stake.

The atomic bomb was so secret, Vice President Harry Truman learned of it only after Franklin Roosevelt's death. As president, Truman used the bomb to force Japan's surrender.

And then the Cold War. U-2 spy planes over the Soviet Union, taking pictures of missiles, airfields and so on. The Soviets shot one down, and Premier Nikita Khrushchev angrily canceled a summit meeting with President Dwight Eisenhower, who defended spying.

(BEGIN VIDEO CLIP)

DWIGHT EISENHOWER, PRESIDENT OF THE UNITED STATES: No one wants another Pearl Harbor. This means that we must have knowledge of military forces and preparations around the world, especially those capable of massive surprise attack. Secrecy in the Soviet Union makes this essential.

(END VIDEO CLIP)

MORTON: And the Soviets spied back. Red-baiters like Senator Joseph McCarthy were more hot air than sense, but Julius and Ethel Rosenberg were convicted of spying, and whatever their exact roles, spying helped the Soviets to match the West in nuclear arms. Spy planes and spies tipped the United States to the Soviets' installation of missiles in Cuba.

(BEGIN VIDEO CLIP)

JOHN F. KENNEDY, PRESIDENT OF THE UNITED STATES: This government, as promised, has maintained the closest surveillance of the Soviet military buildup on the island of Cuba.

(END VIDEO CLIP)

MORTON: And then the world changed. The Berlin wall came down in 1989. And on Christmas day 1991, the Soviet Union ended. The Cold War ended. Russia, with shortages and a troubled economy, was left.

Spy satellites in space took over surveillance, but the spies kept spying. It was what they did. They had big budgets for it. Military secrets? The Russians had trouble building their share of the Space station.

Missile defense? No one yet has a system that's been proven to work.

Now, the spies spy on each other. Aldrich Ames of the CIA spied for nine years, but mostly passed secrets about spying. Robert Hanssen, the FBI alleges, passed things like a compendium of intelligence requirements, a CIA study of KGB recruitment.

He allegedly named some double agents who were executed, but it's all in-house: two teams playing the only game they know in a world with different worries.

And one other change: Spies used to believe. American Nathan Hale, against the British during the Revolution, about to be executed: "I only regret that I have but one life to lose for my country." Western Cold Warriors believed in freedom. Communist spies, the Rosenbergs, the rest may have believed in some Marxist brotherhood of man.

Not now. Aldrich Ames was a good capitalist who believed in wealth. He flaunted it. Robert Hanssen, it's alleged, got $1.4 million for his trouble, lived modestly, but supposedly asked for diamonds he could leave his kids.

(on camera): Why did they do it? Good old money, apparently. And maybe love of the game, love of having one more secret than anybody else.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

SHAW: And still ahead on INSIDE POLITICS: Looking ahead to 2002 -- Congressman Lindsey Graham planning to follow in the footsteps of Senator Strom Thurmond. Can he fill those shoes?

Jonathan Karl, Charlie Cook and Stu Rothenberg will look at the politics in the palmetto state.

(COMMERCIAL BREAK)

SHAW: Republican Congressman Lindsey Graham made his plans official today, announcing he will run for Strom Thurmond's Senate seat in 2002.

In a kickoff tour of South Carolina, Graham promised, if elected, to uphold the legacy and conservative values of the retiring Thurmond. Our Jonathan Karl takes a closer look at Graham, Thurmond, and the political landscape of South Carolina.

(BEGIN VIDEOTAPE)

LINDSEY GRAHAM, REPUBLICAN SENATORIAL HOPEFUL, SOUTH CAROLINA: Ladies and gentlemen, I intend to seek the Republican nomination for the United States Senate.

(APPLAUSE)

JONATHAN KARL, CNN CORRESPONDENT (voice-over): Lindsey Graham wasn't even born yet when the man he wants to replace was first elected to the U.S. Senate.

GRAHAM: For the rest of my life, I will honor Senator Thurmond's legacy and continue to fight for his cause of conservative government.

KARL: The four-term congressman has been plotting his run since the impeachment of President Clinton catapulted him into conservative stardom. With the support of virtually all his state's GOP powerbrokers, Graham is jumping on an opportunity South Carolina pols haven't seen for nearly two generations: the chance to run for an open U.S. Senate seat.

GRAHAM: Just to be alive and hopefully well when the seat comes open in 2002, as I am very fortunate.

KARL: Strom Thurmond, the dominant political figure in South Carolina for more than a half-century, plans to call it quits after celebrating his 100th birthday and completing his eighth term in the U.S. Senate next year.

HENRY MCMASTER, GOP CHAIRMAN, SOUTH CAROLINA: There are plenty of people around this state pushing up daisies right that have based their political careers on Strom Thurmond leaving that office.

KARL: With Thurmond finally retiring, there's a crowded field of Democrats also weighing a run, including Congressman Jim Clyburn, multimillionaire businesswoman Darla Moore, and former U.S. ambassador to Britain, Phil Lader.

And with the 98-year-old Thurmond beginning to show his age, there has also been frenzied speculation about what would happen if he were forced to leave office early, giving Democratic Governor Jim Hodges the opportunity to appoint a successor.

(on camera) The assumption in Washington is that Hodges would appoint a Democrat, suddenly giving his part majority control of the U.S. Senate.

But here in South Carolina, Democrats say, not so fast. It could be in the governor's political interests to appoint a Republican.

KEVIN GEDDINGS, DEMOCRATIC STRATEGIST, SOUTH CAROLINA: There are Republican state senators here who would have to be considered as well as Democrats and others. We have an almost-tied state Senate in South Carolina. It would make some sense for Governor Hodges to try to make our Senate Democratic.

KARL (voice-over): If Democrat Hodges appointed a Republican state senator, he could erase the one-seat Republican majority in the South Carolina Senate, helping party leaders here at the expense of party leaders in Washington.

DICK HARPOOTLIAN, DEMOCRATIC CHAIRMAN, SOUTH CAROLINA: If I were Tom Daschle and that crowd in D.C., I wouldn't assume anything.

Jim Hodges is going to what's best for South Carolina, not what's best for Tom Daschle.

KARL: And South Carolina's conservative Democrats don't feel much allegiance to their national party.

HARPOOTLIAN: The National Democratic Party has paid us little or no attention whatsoever, and, you know, that's why if I were Jim Hodges, I'd do what's best for us. Why the hell would we care what's best for them?

KARL: Governor Hodges won't take part in the speculation because, like most politicians here, he expects Thurmond, after 46 years in the Senate, to complete his remaining 22 months.

GIV. JIM HODGES (D), SOUTH CAROLINA: I really have not begun to compile a list. I think that that would be inappropriate for me to do because I fully expect the senator to fill his term out.

KARL: With the support of all 70 Republicans in the State House, Graham is off to a quick start, but he's one of the few Republicans here who never worked for Strom Thurmond.

South Carolina politics is dotted with Thurmond proteges who got their start working for him. Henry McMasters went to work for Thurmond right out of law school, and with Thurmond's help, was appointed U.S. attorney 20 years ago.

HENRY MCMASTER, REPUBLICAN CHAIRMAN, SOUTH CAROLINA: It'll be a funny feeling to wake up in the morning and know that if you need something, you don't have Strom Thurmond to call. And that -- that goes for big people and little people all across South Carolina.

KARL: And everyone in this state, Democrat and Republican, seems to have a Strom Thurmond story.

HODGES: He came into my office one time when he was visiting Columbia and looked around and said, "This doesn't look like it did when I was governor."

And I said, "Senator, that's because you were governor in the 1940s."

(LAUGHTER)

KARL: Jonathan Karl, CNN, Columbia, South Carolina.

(END VIDEOTAPE)

SHAW: For more on the politics in the palmetto state and the rest of the nation, we're joined by two INSIDE POLITICS regulars: Charlie Cook of the "National Journal," and Stu Rothenberg of the "Rothenberg Political Report."

The impeachment of William Jefferson Clinton -- a catapult for Lindsey Graham?

CHARLES COOK, "NATIONAL JOURNAL": He certainly -- that's what gave him -- made him a household name, at least in terms of political aficionados nationwide, but also got him a lot of name recognition across the state of South Carolina.

It really sort of catapulted him to the front, but this is a state with a very, very strong and rich Republican Party. I think there are going to be a lot of other Republicans jumping in. I think it's going to be a big primary and I think Democrats are going to have to fight real dirty to have any chance at all of holding onto this seat.

STUART ROTHENBERG, "ROTHENBERG POLITICAL REPORT": Well, Bernie, I'm not entirely clear that there is going to be a Republican bloodbath here. I think it's very possible that Lindsey Graham has scared everybody else out of the race.

He is an interesting combination of a conservative who's also an iconoclast. He can be independent enough that people say, "Yeah, he's not just in lockstep with the party. He's quirky, he's independent, I like that."

But he's certainly conservative, and looks to me as though the other big Republican names -- Lieutenant Governor Bob Peeler, Secretary of State Jim Miles, Charlie Condon, the attorney general -- are all now looking at the governor's race.

So -- so I think that Lindsey Graham is in pretty good shape. I think he's going to be the nominee, I think he's probably going to be the senator. The Democrats are going to need some breaks to get -- to really, I think, challenge him.

COOK: I think that the key here, though, is that whoever -- if a Republican wins this seat, they will probably have this seat forever. And so, you know, a lot of Republicans have waited a long time for this seat to come open, and I have got to think that at least one or two more are going to jump in and not give Graham a free ride.

ROTHENBERG: The Democrats, of course, are trying to create a buzz on this. Darla Moore, this wealthy Democratic woman, gave $25 million, I believe, to the state university. She's attractive, she's well-funded. The governor appears to be behind her, but we don't know what kind of a candidate she'll be, and this is a very Republican state, as Charlie said.

SHAW: And one of the things underscored in Jon Karl's piece, don't bet on Strom not finishing out his term?

COOK: That line about pushing out daisies -- there are a lot of people who have waited a long time. And yeah, this is -- there's a very, very, very good chance that -- that this will be -- just simply be an open seat in November of next year.

ROTHENBERG: Right. I think Charlie and I are both looking at this, evaluating this as a 2002 race.

SHAW: But you suspect that the Senate Democratic leader here in Washington, Tom Daschle, is licking his chops?

COOK: Well, I mean, but as Jonathan pointed out, if the governor thinks it's in his own interest to break the tie in the Senate and to give Democrats a breakdown there, that's a problem. I mean, at the end of the day, I don't think he does that. But obviously, it's something that they're entertaining or Kevin Geddings wouldn't be saying that.

SHAW: Let's focus on the dome in the Hill in this great capital city. Were already talking about 2002. What do you see in the House and Senate?

ROTHENBERG: Well, I think the House, it's a -- it's really too early to tell, because 2002 in the House depends on redistricting and that means open seats, and candidate recruitment is quite slow. I've only seen one candidate so far.

SHAW: Why is that?

ROTHENBERG: Well, because people are waiting for the new congressional lines to be drawn. Legislatures are starting to deal with that, but will take some time. There are a number of possibilities in most states. In Pennsylvania, for example, even though it's controlled by the Republicans, they're trying to figure out exactly which lines to put where and which Democrats to try to make vulnerable or in fact defeat. And it's going to take a while.

So we're starting to see, I think, some early attention to the Senate. And my own view is even though the Democrats only need five seats in the House, maybe more of the attention is going to be on the Senate this cycle, because there they'll need just a single seat, and I think they're, given the number of Republicans up, they have a reasonable chance.

SHAW: Republicans have a lot on the line, don't they, Charlie?

COOK: They sure do. I agree with Stu that I think there will be more press attention on the Senate, just because it's a smaller, more -- it's an easier place to cover than the House of Representatives. But I think both bodies are just going to be teetering right on the edge, awfully, awfully, awfully close. But in the House, I think you're going to see at least 100 competitive races, which is...

(CROSSTALK)

... twice as many as you saw in the last cycle, and it's going to be just hand-to-hand combat. And as Stu said, redistricting does slow things down, people kind of keeping their powder dry, waiting to see where the lines are going to shake out before they -- before they go too far in terms of looking -- looking to run.

But -- and redistricting, at the end of the day, I think it'll probably be a slight Republican advantage. I don't think it's a 10- or 12- seat advantage. But they'll get a couple of breaks off of it at the end of the day.

SHAW: Let's go back to the Senate, vulnerabilities. Where do you see some?

ROTHENBERG: Well, I think in terms of Republicans, the obvious cases are North Carolina with Senator Helms. He has not yet decided whether he will seek re-election or not. I'm not going to second- guess it. I've been assuming that he wasn't going to run for another term. Obviously, his health hasn't been great. But he's proven me wrong before. And Bob Smith of New Hampshire is an interesting case. There's talk about a potential Republican primary. John Sununu's been mentioned, but other Republicans have been mentioned as well, because the governor, Jeanne Shaheen, is considering running.

We're also focused on Tennessee and Fred Thompson. He's taken himself out of the governor's race. We're waiting to see if he announces for the Senate.

Colorado, Wayne Allard. There are a number of possible Democratic opportunities, in Oregon and Maine as well, and certainly in Arkansas.

COOK: On the Democratic side, we'll be watching Mary Landrieu in Louisiana, for example. That's going to be a good race. Tom Harkin, Greg Ganske in Iowa, that's going to a terrific race, a very, very, very competitive race. Republicans think they can do something in Montana against Max Baucus, but the governor's not running. We'll see how they're going to be able to do there.

Basically, you have five or six potentially vulnerable seats on each side. There's no obvious real -- there's no imbalance at this point in terms of one party looking more in danger than the other. For every one really endangered seat on one side there's one on the other side as well.

ROTHENBERG: And again, open seats will be -- is a question. We really don't know what's going to happen. The Republicans had hoped to be able to recruit candidates in open Democratic seats in Minnesota and Michigan, but now Paul Wellstone and Carl Levin have indicated no, they're going to seek another term. That has to deflate Republicans and lessen their chances in those two states.

COOK: Although of those two, I would say Wellstone is probably the one more likely to draw significant opposition.

SHAW: We have 60 seconds, and you weren't expecting this question, but you're good reporters and you hear a lot. Al Gore, what are you hearing about Al Gore?

COOK: You know, the people that watch -- I mean, the conventional wisdom around Washington is that Al Gore is dead, that he can't come back. But the people that watch this thing most closely, including people that don't necessarily like him, they say it's going to be very, very hard, if he wants it, to keep him from getting the nomination, that he is still a martyr, still very, very strong within the base of the party.

ROTHENBERG: I think we're in a normal period of decompression, where he has decided to take some time, focus on himself and his other things, and that's why we're hearing these other Democratic names, whether it's Evan Bayh or John Edwards or Kerry or Biden.

But if the vice -- former vice president is interested again, I think he's a player. I think as time goes on his sway in the party probably fades, but he's -- he's a factor.

SHAW: And I was struck by something I read the other day in "The Political Hotline," Senator Joe Lieberman making a speech in Florida indicating in 2004 -- quote -- "We may be back." COOK: And was that the royal we or the singular we?

(LAUGHTER)

SHAW: Well, that's the question.

ROTHENBERG: I'm ready. Where can I get my tickets for Iowa, Bernie?

(LAUGHTER)

SHAW: Stu Rothenberg, Charlie Cook, thanks so much.

And there is much more to come here on INSIDE POLITICS. Straight ahead...

(BEGIN VIDEO CLIP)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: You won't find many elected Democrats standing up for Clinton on this one. Why? Because they don't have to anymore.

(END VIDEO CLIP)

SHAW: Where have all the defenders gone? Our Bill Schneider on the deafening silence from elected Democrats.

And later: a divided Supreme Court places new limits on the Americans With Disabilities Act.

(COMMERCIAL BREAK)

SHAW: We will have more of this day's political news coming up, but now a look at some other top stories.

Officials in Florida say a stretch of interstate might be closed through the weekend because of a major wildfire. The fire, burning west of Orlando, is getting closer to being contained, but authorities say it still could burn for weeks.

Smoke and downed trees have forced the closure of a 10-mile slab of Interstate 4, which runs between Orlando and Tampa.

Also in Florida, federal prosecutors move to drop charges against a couple accused of lying in connection with their baby's disappearance. Five-month-year-old Sabrina Aisenberg disappeared from her home in 1997 and she has never been found. Last week, a judge ruled that secretly taped conversations used to charge the parents were largely unintelligible and probably inadmissible.

(BEGIN VIDEO CLIP)

STEVEN AISENBERG, BABY'S FATHER: I think the judges were very fair in looking over everything that was presented to them, and they saw that there was nothing there, that the police came in with a preconceived notion of what had happened and immediately followed that path without looking at everything else.

(END VIDEO CLIP)

SHAW: The Aisenbergs have been facing charges of making false statements and conspiracy.

In Connecticut, Kennedy relative Michael Skakel was arraigned in adult criminal court on murder charges. The nephew of Mrs. Robert F. Kennedy is accused of the 1975 beating death of his neighbor Martha Moxley. The case had been in juvenile court because both the victim and the accused were 15 at the time of the murder. If convicted, Skakel could be sentenced to life in prison.

Several products for children and babies are being recalled by the manufacturer. The Graco Company is recalling some 860,000 high chairs because they could collapse. Consumers can call Graco at 1- 800-617-7447 to get a free repair kit.

Simmons Company is recalling more than 68,00 cribs that have faulty mattress hooks. The Consumer Products Safety Commission is urging owners to stop using these cribs. You can call the company at 1-800-421-2951.

We now have some breaking news and CNN Capitol Hill correspondent Bob Franken has joined us now here in the studio -- Bob.

BOB FRANKEN, CNN CORRESPONDENT: CNN has learned that former President Clinton is about to put out a statement in which he will acknowledge that his brother-in-law, Hugh Rodham, received a sum of money to represent two clients who were given pardons by the president. They two are Almon Glenn Braswell and Carlos Vignali, both of them controversial.

The statement will go on to say that the president and first lady asked him to return the money, the brother-in-law, Hugh Rodham. who is an attorney. Rodham in fact did return the money. He will say that he regrets this. That it was bad judgment. but that there was nothing illegal about it and at no time, will say Rodham, was there any communication between the president and first lady.

Now a little background about the two cases. One of them involves Almon Glenn Braswell. He was pardoned for a 1983 conviction on a mail fraud claim, a false claims about a baldness product. In fact, he's still investigation by the Justice Department in connection with his vitamin and supplement business.

The other case involves Carlos Vignali, who was freed after serving six years of a 15-year term for a role in a cocaine trafficking ring. This is something that has gotten quite controversial in California.

President Clinton did pardon both of those, and Hugh Rodham is the person who represented them. He said that there was no direct communication with the president but that he has returned the money.

And we have a statement now from President Clinton saying that yesterday, I became aware of press inquiries that Hugh Rodham received a contingency fee in connection with a pardon application by Glenn Braswell and fee for work on the Carlos Vignali commutation application.

Neither Hillary nor I had any knowledge of such payments. We were deeply disturbed by these reports and have insisted that Hugh return any monies involved. And as i said, we are hearing from a source close to the situation that the money has been returned -- Bernie.

SHAW: Bob Franken, do we know whether Mrs. Clinton's brother-in- law Hugh Rodham informed the Clintons that he had received a contingency fee and funds for working on the case of Carlos Vignali?

FRANKEN: At this particular point we don't know that. He did say that he had no communication with the president while he still was still president about this matter. Now, it first came to light, I should point out, in a "National Enquirer" case which talks strictly about the Braswell case.

The "National Enquirer" says that it's talking about a $200,000 payment. There is no specification in the Vignali case, but we have no discussion about whether or not Rodham actually talked to the president and the first lady about the return of the money.

SHAW: OK, I misspoke. Hugh Rodham, of course, Mrs. Clinton's brother. Our senior political analyst Bill Schneider is here. Obvious why the Clintons want to get a statement out in reaction to this.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, certainly, because this is -- it may not be illegal, but it certainly is a questionable judgment and may be challenged on ethical grounds. This is a fairly serious matter continues the controversy over the Clinton pardons way beyond what they ever expected.

SHAW: Bob Franken.

FRANKEN: Well, one other thing I would point out is that we've already spoke with sources on the House Government and Reform Committee, that is the one that's Dan Burton's committee conducting an investigation and the first reaction was that there did not seem to be, said a spokesperson for that committee, that there was anything illegal about this transaction. Rodham is, after all, a lawyer but, of course, the Clintons are saying that this was something that had such bad appearances that they asked him to return the money.

SHAW: OK, thank you, Bob Franken and, of course, Bill Schneider. Thanks very much. We're going to pause here at INSIDE POLITICS. And return in just a moment.

(COMMERCIAL BREAK)

SHAW: Revisiting our breaking story, the case of New York Senator Hillary Rodham Clinton's brother, Hugh Rodham, a lawyer, getting legal fees from two men who were pardoned by former President Clinton. Once again, Bob Franken.

FRANKEN: And, of course, that means he is the brother-in-law of former President Clinton. He is an attorney who practices in Florida. President Clinton has just put out a statement saying: "Yesterday I became aware of press inquiries that Hugh Rodham received a contingency fee in connection with a pardon application for Glenn Braswell and a fee for work on Carlos Vignali's commutation application. Neither Hillary nor I had any knowledge of such payments. We are deeply disturbed by these reports and have insisted Hugh return any monies involved."

Very quickly, Almon Glenn Braswell was pardoned for a 1983 conviction on mail fraud and perjury, false claims was the charge, about a male baldness treatment. He was also and continues to be under investigation for his vitamin supplement business, under investigation by the Justice Department. The Justice Department is now saying that the pardon does not affect that investigation.

As for Carlos Vignali, he is a California man who was freed after serving six years of a 15-year term for his involvement in a cocaine trafficking ring. It's been quite the controversy in California.

Now, according to a source close to the situation, the statement from the president and the first lady was met by a response from Hugh Rodham in which he said he would return the money. He says that he regrets this, says it was bad judgment, but he says that there was nothing illegal here. Rodham goes on to say at no time did he have a direct conversation with then-President Clinton.

He did say that he went through the normal White House procedures for a pardon, which is to be differentiated from the normal Justice Department procedures for a pardon. But in any case, some sources from the House Government Reform and Oversight Committee, that's the committee headed by Dan Burton, say that it looks like there was nothing illegal. He was, after all, a lawyer and the money has been returned.

Now, the "National Enquirer" is the one that first broke this story, at least in the Braswell matter, and the "National Enquirer" says that the amount of money involved in the Braswell case was $200,000. No specification in the Vignali case. But again, Rodham says he returned the money, and the Clintons have put out a statement saying that they just found out about this -- Bernie.

SHAW: Bob, might this become the subject of Congressional hearings?

FRANKEN: Well, just about everything is these days. Of course, much of the focus has been on the Marc Rich matter, but this is obviously going to ratchet up pardon controversy into these other areas.

SHAW: Bob Franken, thank you. Super reporting. For more on the Clinton pardons and the continued fallout within the Democratic Party, let's go to our CNN senior political analyst, Bill Schneider, once again -- Bill. SCHNEIDER: Well, you know, Bernie, this just makes it a lot harder for Democrats to defend President Clinton. You remember back in January 1998 when the Monica Lewinsky story first broke? Very few elected Democrats came forward to defend President Clinton. They felt betrayed.

It wasn't until the polls came out showing the public strongly behind the president that Democrats found the courage to defend him. Now, once again, Democratic leaders feel exasperated and sometimes betrayed by Clinton's behavior.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Are there any Democrats out there defending former president Clinton? Yes, but a funny thing: they all used to work for him. You won't find many elected Democrats standing up for Clinton on this one. Why? Because they don't have to any more, and really and truly, how much do Democrats have to thank Bill Clinton for? Oh sure, he got elected and reelected, but how much did he help the party?

The truth is, the Democratic Party did not thrive under Clinton. Let's compare the Democrats B.C., Before Clinton, in 1992, and A.C., After Clinton, in 2001.

Before Clinton, Democrats had a 100-seat majority in the House of Representatives. In 1994, Republicans gained control of the House for the first time in 40 years. While the Republican margin has diminished since '94, the G.O.P. is still the majority. In the Senate, Democrats went from a decisive 12-seat edge to a 50-50 split.

It's the same story in the states. In 1992, Democrats had a strong lead in governors. After 1994, the number of Democratic governors dropped below 20 for the first time since 1970 and has remained below 20. Eight of the 10 largest states -- all but California and Georgia -- now have Republican governors.

Before Clinton, Democrats were the dominant power in the state legislatures. After Clinton, the parties are nearly tied, 16 Republican legislatures, 17 Democratic and the rest split. That's important because those legislatures, in most states, will be redrawing Congressional district lines this year.

Do Democrats have anything to be grateful to Clinton for, besides fund-raising, of course? Well, yes. President Clinton gave the party an image of fiscal responsibility. That has made the Democrats competitive in the suburbs, where most voters now live, but it's happened at a cost.

Clinton's personal values and behavior have alienated culturally conservative voters and turned them over to the G.O.P. Just look at the map of last year's election. The challenge to Democrats is to distance themselves from Clinton personally while embracing his economic record. That's no easier now than it's been for the last eight years.

(END VIDEOTAPE)

SCHNEIDER: If Democrats turn away from Clintonism, where will they go? Well, there are voices out there who denounce Clintonism as a sell-out. Bill Bradley and Ralph Nader -- they want to take the Democratic Party back, to the left. That could be a catastrophic mistake, but it could happen if Clinton falls into disgrace.

SHAW: On a note you made in your piece, Bill, clearly, New York Senator Hillary Rodham Clinton cannot distance herself from Bill Clinton. What possible fallout, political, for her?

SCHNEIDER: Yes, well, of course this is her brother that is the latest news involves. The question is: will voters want more of the Clintons? New York voters, she is not up again for another, just about six years. If she has presidential aspirations, this could tarnish them, because the image of the Clintons right now, are people who are compromised and who are a constant media feeding frenzy, and a lot of voters are saying, we have had enough of that. They may not want to hear the name Clinton for some time.

SHAW: And simply in terms of doing the business of the New York state, does this hamper her efforts?

SCHNEIDER: Of course it does, because, it indicates that she is surrounded by people who will have questionable ethics. Her husband, of course, had a lot of ethical problems. There have been six -- I count six -- controversies since the last week of the Clinton presidency. Plea bargains, pardons, plunder, the allegations of pranks, office space, speaking fees, and now of course, her own brother is involved in taking a questionable fee, which may have not been illegal, but certainly was a questionable, ethical judgment in this case.

So, I think that it creates a bad odor around Hillary Clinton as well as her husband.

SHAW: OK, thank you, Bill Schneider.

Add former president Jimmy Carter to the list of prominent Democrats going public with criticism of the Marc Rich pardon. Mr Carter made it clear, during a lecture at Georgia Southwestern State University, that he believes former president Clinton made the pardon decision based on several key factors.

(BEGIN VIDEO CLIP)

JAMES EARL CARTER, 39TH PRESIDENT OF THE UNITED STATES: I don't think that there was any doubt that some of the factors in his pardon was attributable to his large gifts, some of which he gave to Israel, some of which he gave to other benefactors. And the influence of his former wife, who made major contributions to the Democratic Party at the present lobbying and I think that was, in my opinion, disgraceful.

(END VIDEO CLIP)

SHAW: Carter said he pardoned about 500 people while he was president, most, he said, during his first three years in office, and, he said, all of his pardons came only after investigations by the Justice Department. INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

SHAW: More now on the pardon story. We go to Eileen O'Connor -- Eileen.

EILEEN O'CONNOR, CNN CORRESPONDENT: Well, one of the reasons, Bernie, that these two pardons were so controversial is that Almon Braswell was still under investigation by authorities for even more charges and they were concerned that the pardon granted by President Clinton would preclude them from pressing charges.

The Justice Department, though, after the pardon was granted, looked at it, and decided that it would not preclude them from pressing further charges on money laundering and tax evasion involving Mr. Braswell's mail order vitamin and health supplements businesses.

Now, also as we know, Carlo Vignali Jr. was, his sentence was commuted. Now, he had been prosecuted in Minneapolis for delivering more than 800 pounds of cocaine. It was a very controversial pardon as well immediately, because several of the people who had sent letters on his behalf actually took back their letters.

One, Cardinal Mahoney from California, who said that he regretted sending the letter on behalf of Carlo Vignali Jr. Joras Vignali (ph), his father, was a political contributor to both parties in California but predominantly to Democratic candidates.

And, as we know now from the statement by Mr. and Mrs. Clinton, Hugh Rodham was involved in both of those pardons. But Bernie, I spoke to people last week in Mrs. Clinton's office and, in fact, because I had sources and I couldn't pin this down whether or not Mr. Rodham had received money for particularly the pardon of Carlo Vignali and Mr. Braswell, and asked her through her spokesman last week, whether or not she knew of any involvement of her brother in these pardons and she said, she new nothing.

Now, this, despite the fact that the statement says, that they only just learned of the press inquiries and that is why they talked to Hugh Rodham and have now given this statement. As the statement says, they have asked that the money he received for working on behalf of these pardons, and the commutation of Carlo Vignali sentence that that money be returned. We are expecting, Bernie, according to sources, a statement from Hugh Rodham shortly.

SHAW: Eileen O'Connor, I want to go back to something that raises my curiosity in your report you just completed. Was Almon Glenn Braswell under active investigation by the Justice Department, and yet, received a presidential pardon?

O'CONNOR: Yes he was. He was under active investigation, and this is, again, one of the criticisms of the way that the pardon process occurred at the White House. Had it gone through the normal channels through the Justice Department, these kinds of investigations would have meant that the Justice Department would have told the president and the White House that it was not advisable and that this pardon should be denied.

SHAW: What about the interest on the part of Congressional committees? Specifically, the Burton committee and the House?

O'CONNOR: Well, I spoke to people on the Burton committee, and they told me that, you know, Hugh Rodham is an attorney. He can be hired to work on behalf of a client that while this is obviously controversial and very disappointing from an ethical standpoint, it is not illegal. And they say that this is not something that they could really pursue, because it is not technically illegal for him to do this.

But again, it is certainly very controversial from an ethical point of view.

SHAW: Eileen O'Connor, thanks very much.

And in our continued tradition of measured reporting and balance, here again now I will quote in its entirety the Clinton statement on Hugh Rodham. Quote: "Yesterday, I became aware of press inquiries that Hugh Rodham received a contingency fee in connection with a pardon application by Glenn Braswell and a fee for work on the Carlos Vignali commutation application. Neither Hillary nor I had any knowledge of such payments. We are deeply disturbed by these reports and insisted that Hugh return any moneys involved." Unquote.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

SHAW: Still reporting on our breaking story. Former President Bill Clinton Wednesday acknowledged that his brother-in-law and attorney was paid money to represent two people: one who received a pardon; the other, a commutation. But sources said the payments had been returned.

And as we indicated, the statement from the president, Mr. Clinton issued the statements saying "Yesterday, I became aware of press inquiries that Hugh Rodham received a contingency in connection with a pardon application by Glenn Braswell and a fee for work on the Carlos Vignali commutation application." Mr. Clinton said in the statement: "Neither Hillary nor I had any knowledge of such payments. We are deeply disturbed by these reports and insisted that Hugh return any moneys received."

Braswell was pardoned for his 1983 convictions involving fraud, perjury and tax evasion. Vignali was serving a prison term on a cocaine charged. Mr. Clinton issued 140 pardons hours before he left office January 20th.

We have on the telephone CNN legal analyst Roger Cossack.

Roger, as you digest these details, your first thoughts. ROGER COSSACK, CNN LEGAL ANALYST; Well, Bernie, you know, my first thought are -- I'm probably pretty sure of the same thoughts that most Americans have, which is a certain sense of uncomfortableness, to say the least. However, let me say that like what all of the pardons that we have been discussing so far, there is nothing criminally wrong here unless you can show that there was some quid pro quo that changed hands -- bribery, if you will -- for the -- for -- in exchange for the commutation or the pardon.

And I'm not sure -- and in fact, I am sure that there are no allegations, at least so far, that that is what happened.

Now, let's talk about whether or not this is a very smart thing for the president's brother-in-law to be doing. It's clearly not a very smart thing to do to take money. It smacks of influence- peddling. It smacks of being able to get close to the president because you're a relative. It's clearly something that the president didn't need.

What's interesting about the story so far is the denial by the president that he didn't know that Rodham had received any money for it. But so far, at least, I haven't heard a denial by the president that he didn't know that Rodham was involved in some way.

SHAW: Well, specifically, what Mr. Clinton says in his statement at one point. Quote: "Neither Hillary nor I had any knowledge of such payments. We were deeply disturbed..."

COSSACK: Well, that's right. There's a denial that he knew that his brother-in-law received funds for acting as an attorney in this case. And again, and I suppose that is to the degree that he acted as an attorney. And clearly, he did nothing wrong in acting as an attorney there. I mean, there is certainly nothing criminally wrong, an attorney representing a client, to try and get some action done by the president.

When you're the president's brother-in-law, it's something that gets very close to the line in terms of is it -- well, it's not even close to the line. It's not a smart thing to do, and clearly, all parties should be disclosed.

But what the president has disclosed is -- has said is not that he didn't know that his brother-in-law was involved in the process, but he didn't know that his brother-in-law had received money for being in the process.

SHAW: And CNN's Eileen O'Connor just a few moments ago here on INSIDE POLITICS, quoting sources on the Burton committee in the House, joined the conclusion that Mrs. Clinton's brother, Mr. Clinton's brother-in-law, Hugh Rodham, didn't do anything illegal.

COSSACK: No, and I want to make sure that I'm saying the same thing. There is nothing illegal in representing a client and trying to get something done for your client. There's nothing wrong with that. It only becomes uncomfortable, if you will, when you are dealing with your brother-in-law, the president of the United States. I think that's when all disclosures have to be made and second thoughts have to be given about whether or not you want to be in that position.

But certainly I want to conclude and I want to add my voice to saying that as of now, there is absolutely no evidence that there is any criminal wrongdoing.

SHAW: And the big question, of course, arises over appearances.

COSSACK: Appearances is another question, Bernie. This is certainly something that doesn't look good, but you know, we're talking about criminal activity, and looking good and looking bad is not part of what criminal activity is, thank goodness.

SHAW: CNN legal analyst Roger Cossack.

INSIDE POLITICS will be right back with Margaret Carlson and Tucker Carlson.

(COMMERCIAL BREAK)

SHAW: Once again we go to our breaking story involving former President Clinton and his brother-in-law. Here again, Bob Franken.

FRANKEN: And the story involves Hugh Rodham, brother of the Senator Hillary Rodham Clinton. And what I want to do is just start with the statement that was put out by former President Clinton just a very short time ago.

"Yesterday," he says, "I became aware of press inquiries that Hugh Rodham received a contingency fee in connection with a pardon application for Glenn Braswell and a fee for work on the Carlos Vignali commutation application. Neither Hillary nor I had any knowledge of such payments. We were deeply disturbed by these reports and insisted that Hugh return any monies involved."

Now, a source close to the situation tells CNN that in fact Rodham says he's already returned the money, that in fact, he regrets his bad judgment. This is quoting the source. But he said that he did nothing illegal and I would point out that that is a point of view that is reflected by members of the congressional committee that have been investigating the pardons matter.

Rodham goes on to say, according to the source, that at no time did he have any direct communication with then-President Clinton over the matter, but he went through the normal White House procedure, as he described it. Not the normal, the proper, appropriate procedure that goes through the Justice Department, the normal legal procedure, but instead he went through a White House procedure.

Now, the two people involved. One of them, Almon Glenn Braswell, was pardoned for a 1983 conviction on mail fraud and perjury. It had to do with false claims that were made about a baldness treatment. He is still being investigated by the Justice Department for money laundering and tax evasion in connection with his mail order vitamin and health supplement business. The Justice Department has determined that that investigation is not thwarted by President Clinton's pardon.

The other case involves Carlos Vignali. There was a commutation after he served six years of 15-year term for his role in a cocaine trafficking ring. That was quite controversial out in California. It even involved a letter from Cardinal Roger Mahony who has subsequently said that he regrets sending that letter to President Clinton.

But the Clintons have said that they had no knowledge of Rodham's contingency fees in connection with these two cases. They insisted he return the money, and CNN has been told that the money already has been returned -- Bernie.

SHAW: Hugh Rodham returned the money, money that he was paid for services rendered?

FRANKEN: Yes, that is right. He was paid as a lawyer. He is an attorney who operates in Florida. And as I said, everybody is saying that that is a normal legal transaction. Of course, the normal legal transaction not just for any attorney, but an attorney who is the brother-in-law of the former president.

SHAW: And backing up to go back to something you reported, the normal Justice Department procedure was bypassed...

FRANKEN: In these cases.

SHAW: ... in these cases even though Almon Glenn Braswell is still under active investigation by the U.S. Justice Department?

FRANKEN: That is the claim that is made by Hugh Rodham, who says that he actually went through what amounts to a White House procedure. Of course, that White House procedure is not the official procedure, but, yes, everybody acknowledges that the Justice Department procedure was bypassed.

SHAW: And this is one avenue of approach that has people in the Justice Department and the U.S. attorney in New York very upset?

FRANKEN: Well, we're talking, of course, about the Marc Rich case, too. The Marc Rich matter was not -- did not go through the normal Justice Department procedure. In that particular case, a former White House counsel, Jack Quinn, appealed directly to the president.

That, of course, is the subject of not only of congressional investigations, but a federal criminal investigation to see if there was any quid pro quo, any exchange of a pardon for political contributions and the like. That investigation is going.

Most of the controversy has centered around the Marc Rich matter. Now, of course, this gets into the whole realm of questions about the pardons by President Clinton as he was leaving office.

SHAW: And from Bob Franken, whom we thank, we turn to Margaret Carlson of "Time" magazine and Tucker Carlson of CNN's "SPIN ROOM." You have been watching this story break, unfold in the reporting by both Bob Franken and Eileen O'Connor. Your thoughts?

MARGARET CARLSON, "TIME" MAGAZINE: Well, the Clintons say the money has been returned and you wonder can the pardons be revoked on the basis of what they know now? It's curious to me that Hugh Rodham went to the White House but not to the Clintons, as if there's a distinction between the two.

Hugh Rodham stayed at the White House three days a week for a long time. He practically lived at the White House. He's well-known to people there so his involvement would be, you know, clear to -- I mean, he was just simply well-known there, and I wonder about a brother and a brother-in-law who wouldn't tell his sister and brother- in-law, look, I'm involved in this and leave them open to this kind of trouble.

TUCKER CARLSON, CNN'S "SPIN ROOM": Especially, these are two of the most controversial and foul-smelling pardons, and I guess I'm struck by the fact this was a contingency fee, apparently, or so the former president says rather than simply a bill for hour deal. So, it implies obviously that, you know, Hugh Rodham is on -- there was a jackpot at the end of this.

You know, why would you go to Hugh Rodham, some random lawyer in Florida except because he's the president's brother-in-law. Mrs. Clinton has problems with the men in her life, her husband and her brother and, I think it will affect her plans to run for president.

SHAW: I want to go back to the statement by Bill Clinton, a statement which deals not with knowledge of what the president's brother-in-law and his wife's brother was doing, but it dealt with the question of payment.

Let me repeat the statement. It's on our screen for our viewers to see: "Yesterday, I became aware of press inquiries that Hugh Rodham received a contingency fee in connection with a pardon application for Glenn Braswell and a fee for work on Carlos Vignali's commutation application. Neither Hillary nor I had any knowledge of such payments. We are deeply disturbed by these reports and have insisted that Hugh return any monies receives."

That says receives, I think, but the statement says any monies involved, unquote. So there's no reference to knowledge of what this lawyer acting legally was doing.

M. CARLSON: Right, it begs the question, like, was he doing it as a volunteer? Did they think that these were just -- this was pro bono work on his part because they are just emphasizing the payments as if they might have known. It's a very curious wording of the statement and it sounds a little like depends on what the definition of "is" is.

T. CARLSON: But it's also relevant, I mean, whether or not the Clintons knew or had knowledge of the money that Hugh Rodham received doesn't make any difference really. Clearly his lawyering, his conversations with the president had an affect on these two guys getting pardons, which again have been among the most controversial of the 140-odd pardons and commutations.

M. CARLSON: You know, we had one where the guy was a fugitive, Marc Rich. And then we had Braswell, who was under active investigation and maybe the last shoe to drop will be somebody who was actually in the course of committing a crime and was pardoned. I mean these just get smellier and smellier.

SHAW: Another angle to this story. This freshman senator from New York state is having some rough sledding in her first few weeks in the United States Senate, and the buffeting is not coming from activities on the Senate floor in behalf of the people of New York?

T. CARLSON: Against those -- it's those darn men, and at some point, her husband and her brother, and at some point she's going to have to answer questions about this. This is one of the great things about congressional investigations is some of the time they're a waste of time and waste of money. Other times they actually bring to light tons of interesting facts.

M. CARLSON: Also, she's managed not to have the pardon of the Hasidic Jews, you know, burst onto the front pages, when she's already said she was in the room when the pardons were discussed and yet she had no influence over them, yet that whole district of New Square, New York voted for her in the election.

T. CARLSON: The only Hasidic community in New York to vote for Mrs. Clinton.

M. CARLSON: To do that, yes.

SHAW: Let me abruptly change subjects. Tonight, the Grammy awards. One of those up for best album, Eminem, a 28-year-old white rapper from Detroit. People abhor, some people, his lyrics. Your thoughts.

M. CARLSON: They're coarse. They're vulgar. They're hateful and they're popular. As a parent, I wouldn't let my child purchase such a CD. Seems like parents could exercise some control. I'm not sure it's a place for Bill Bennett and Joe Lieberman.

SHAW: What if your child listens to Eminem, though?

M. CARLSON: Well, you can't listen to it that easily unless you have the CD yourself.

T. CARLSON: I mean, I guess the most striking thing about the story to me is how big a fan of Elton John Lynne Cheney is. She did this interview yesterday going on about how I can't believe Elton John, who I love, would appear with Eminem. I mean, it is sort of hard on the obnoxiousness scale to separate which is more annoying, Eminem or the moral posturing you hear about him. Read the lyrics, and it's upsetting.

SHAW: Elton John, Eminem will perform a solo tonight? M. CARLSON: Who's laundering who?

SHAW: Well, the other thing is, is there a question of free speech involved in this controversy?

M. CARLSON: Well, there always is, and when you ask government to get involved in these things, I always say what can parents do? Is this something only government can do? And it's not. It's clearly something parents can do. And, if Eminem weren't popular and kids weren't buying it, he wouldn't be out there. You can, as Nancy Reagan said, just say no.

T. CARLSON: Well, nobody's proposing hauling them off to jail. I mean, he may go to jail on the gun charges, perhaps at some point. But, for his music, sadly, he's not going to be imprisoned for it. So, there is no free speech issue for it.

M. CARLSON: Well, there have been efforts to have government somehow get in there, and remember Joe Lieberman was criticized for not being in favor of this.

SHAW: A lot of publicity. Margaret Carlson, Tucker Carlson, thanks very much. And we'll be right back with more of INSIDE POLITICS.

(COMMERCIAL BREAK)

SHAW: Now, we're going to turn to the story of the United States nuclear sub that slammed into a Japanese fishing boat in Hawaii. Today, a clear picture is emerging on what may have gone wrong in the waters off Hawaii, as CNN's Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN CORRESPONDENT (voice-over): Slowly the pieces of the puzzle are beginning to come together, as investigators learn more about what the USS Greeneville's sonar detected, whether the civilians on board were a distraction, what the skipper might have viewed through the periscope, and how the fishing ship's position and color might have made it easy to miss.

The National Transportation Safety Board now says the submarine heard the engine noise from the Ehime Maru an hour and 11 minutes before the collision.

JOHN HAMMERSCHMIDT, NTSB: The Greeneville reportedly gained passive sonar contact with a surface vessel at 12:32 local time.

MCINTYRE: But a member of the submarine's crew, who's job it is to keep track of contacts with surface ships, has told safety board investigators he briefly stopped doing that job, because of the 16 civilian guests crammed into the control room. So, there's a question about whether Commander Scott Waddle knew to look for the training vessel when he conducted multiple periscope sweeps.

The Navy also says a device called a sonar repeater that displays recent sonar contacts at the periscope position, was broken, and so did not serve as a backstop to the skipper. Radar records show the Japanese fishing boat was traveling directly out to sea from the Honolulu harbor on a course heading directly toward the submarine.

Officials say one theory is that, if the Ehime Maru was approaching head-on, the white ship could have had a reduced profile, making it hard to spot through the periscope in the overcast and ocean spray. That ship position might also have deadened the sound of its engines. Navy officials believe the captain either didn't see it or thought it was much farther away.

(END VIDEOTAPE)

MCINTYRE: Navy officials say it's becoming clear that there had to be multiple breakdowns in procedures for the accident to happen. The commanding officer and two other top officers face possible criminal charges, but Navy officials expect their military attorneys to mount a vigorous defense, arguing all three did everything by the book -- Bernie.

SHAW: Jamie, let me switch subjects. It occurs to me that last Friday this time, CNN was reporting -- and you broke the story -- that north of the 33rd Parallel in Iraq, British and American warplanes attacked Iraqi targets on the ground. Do you have an update?

MCINTYRE: Well, the interesting thing is, the Navy is a little disappointed in one of its new smart weapons. It turned out to be a little directionally challenged in Friday's attack on Iraq. Of the more than two dozen J-sal (ph) standoff weapons that were dropped from F-18s from high altitude from as far away as 40 to 50 miles. Roughly half missed their aim points, not by much, Navy officials insist.

More than half of the 20 radars targeted were undamaged, although two other standoff weapons used by the Navy and Air Force, proved deadly accurate, hitting critical communications nodes. The Navy says because the satellite-guided bombs all seemed to miss by the same small amount, they suspect that the GPS coordinates might have been entered incorrectly. Garbage in, garbage out, as one Pentagon official put it. As for restriking those missed targets, one senior Pentagon official said, we've already sent our message -- Bernie.

SHAW: Jamie McIntyre with the latest from the Pentagon; thank you very much. INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

SHAW: President Bush pressed ahead today with a tour designed to highlight his education plan. Along the way, he tossed out something of a bargaining chip to Democrats, as well as a new verbal gaffe. CNN's Major Garrett has been traveling with the president.

(BEGIN VIDEOTAPE)

MAJOR GARRETT, CNN CORRESPONDENT (voice-over): Children hugged President Bush as he arrived in Knoxville, Tennessee at the end of a two-day campaign-style push for education reform. A child's essay about the future; a president's plea for a new approach.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There is no more important subject than public education. We must get it right.

GARRETT: But when he described the benefits of learning to read, the president did not get it right -- not grammatically, at least.

BUSH: You teach a child to read and he or her will be able to pass a literacy test.

GARRETT: Malaprops aside, Mr. Bush merges big spending increases with a carrot-and-stick system that rewards schools that improve and punishes those that fail.

The president will seek an extra $1.6 billion for federal elementary and secondary education aid. And he will raise spending at the Department of Education -- which Republicans once sought to abolish -- by $4.6 billion, the biggest increase given to any Cabinet department.

But the head of a powerful teachers union says money alone is not enough.

ROBERT CHASE, NATIONAL EDUCATION ASSOCIATION: I hope that those dollars are not spent just on developing tests, but rather those dollars are spent on improving programs and helping students learn more and being exposed to a broad curriculum within their schools.

GARRETT: Republicans have warned the White House that they will not support more spending unless the president cuts red tape and holds schools accountable. Suggesting he's gotten the message, Mr. Bush mentioned local control eight times in a nine-minute speech.

BUSH: The best way to chart the path to excellence for every child in America is to insist that authority and responsibility be aligned at the local level.

GARRETT (on camera): The president's walking a tightrope as he pushes education reform. More money should mollify most Democrats. But now the president will have to win testing and accountability reforms from those Democrats to keep conservative Republicans on board.

Major Garrett, CNN, Townsend, Tennessee.

(END VIDEOTAPE)

SHAW: Former President Bill Clinton, his brother-in-law. A pardon, a commutation. CNN is reporting on this breaking story.

Once again, Bob Franken.

FRANKEN: And the story of the hour is that President and Senator Hillary Rodham Clinton, the former first lady, have put out a statement saying -- and I'm quoting now President Clinton, former President Clinton's statement: "Yesterday I became aware of press inquiries that Hugh Rodham received a contingency fee in connection with a pardon application for Glenn Braswell, and a fee for work on Carlos Vignali's commutation application. Neither Hillary nor I had any knowledge of such payments. We are deeply disturbed by these reports and have insisted that Hugh return any moneys received."

Hugh Rodham, of course, the brother of Senator Clinton, the brother-in-law of the president, of course. And a source close to the situation says that in fact Rodham has returned the money.

We do not have a total figure for the money, but Rodham is described by the source as very embarrassed by this. He regrets it. Said it was bad judgment, but insists that there was nothing illegal, which is a judgment, by the way, that is pretty universally now followed.

In fact, somebody who is a source on the House Government Reform Committee, Dan Burton's committee that has been quite adversarial in the pardons matter, says that there does not seem be anything illegal. Rodham is an attorney operating in Florida, and it would be appropriate legally if, in fact, he would receive money to represent a client.

Of course, there is strong appearance problems, and as a result the president and first lady have put out their statement.

Now the two principals involved, two of those who were pardoned by the departing president, Bill Clinton, Almon Glenn Braswell was pardoned for 1983 conviction on mail fraud. He was making false claims about a baldness treatment. Also had been convicted for perjury.

He's still being investigated by the Justice Department for money laundering and tax evasion, in connection with his mail-order vitamin and health supplement business.

The Justice Department says that there's been a determination that former President Clinton's pardon of Braswell does not affect that investigation.

The other person, Carlos Vignali, who was commuted -- had his sentence commuted. He was freed after serving six years of a 15-year term for his alleged involvement -- for his involvement in a cocaine trafficking ring that operated all the way from California to Minnesota.

That has been quite controversial in California. There were a variety of letters that were sent to the president, including one from Cardinal Roger Mahoney, who now says that he regrets sending the letter to President Clinton.

In any case, there was that commutation and the president and former first lady have said that after they became aware of all this they insisted that Hugh Rodham return the money. Rodham, according to sources, has already returned the money -- Bernie.

SHAW: And Bob Franken, based on your reporting, the Justice Department is saying, notwithstanding Braswell being pardoned by former President Clinton, it, the Justice Department, is going to continue with its investigation of Glen Braswell.

FRANKEN: There were some legal questions whether this pardon would in effect clean the slate for Braswell and make him impervious, so to speak, to this investigation. But the determination is being made that they continue. There is no -- this is a separate investigation and that the two are not intertwined, and that they can continue to see if there are reasons to charge Braswell in this new matter.

SHAW: Thank you, Bob Franken and Eileen O'Connor, who earlier reported very superbly on this breaking story.

Bill Schneider, President Clinton issued 140 pardons and 36 sentence commutations hours before he left office January 20th. Reverberations continue.

SCHNEIDER: Absolutely, pardons are supposed to be based on the merits of the case. They're supposed to be based on a judgment that an injustice was done. What this looks like is influence peddling, pure and simple. Nothing illegal about influence peddling. There's an entire industry in Washington that peddles influence for money, but it certainly smells bad, and in this case there's the notion that it was highly improper for one of the president's relatives, his wife's brother, to be involved in it, to the point where they've obviously acknowledged that something was wrong, because they asked him to give back the money, which apparently he has done.

SHAW: Do you think this statement, this paper statement put out by the former president in his behalf and his wife's behalf will do it, will scotch it, will end it?

SCHNEIDER: No, are you kidding? With the Clintons it never ends.

I think what this could lead to is the Democrats will finally just throw up their hands in exasperation and say: "We have to turn the page on the Clintons. We cannot continue any longer being defined as Bill Clinton's party."

That could be a problem for Clinton's legacy. It could be a problem for Hillary Rodham Clinton's future, both as a senator and a potential presidential candidate. It could even be a problem for Al Gore, because if he were to run again four years from now, three years from now, it could remind people: Do we really want to bring the Clinton era back?

SHAW: Well, you know, that was the point Terry McAuliffe, the head of the Democratic National Committee, vociferously made in his interview right here yesterday with Judy Woodruff.

SCHNEIDER: That's right. Democrats may want to turn the page and decide they want to look at a different view. They want to create a different image of the party, but as I said earlier in my piece, "Clintonism" is something that's benefited the Democratic Party as a philosophy, as a policy. The Clintons themselves have big problems.

SHAW: Bill Schneider, thanks very much, on this breaking story.

And of course, CNN will continue reporting and watching it as the night goes on and becomes tomorrow.

Well, that's all for this edition of INSIDE POLITICS. But of course, you can go online all the time at CNN's allpolitics.com: AOL keyword, CNN.

And please, this programming note: Minnesota Governor Jesse Ventura will be the guest tonight on WOLF BLITZER REPORTS. That's at 8:00 p.m. Eastern.

I'm Bernard Shaw in Washington. "MONEYLINE" is next.

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