The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight: Our summary of the news; the details of today's "guilty" verdict against Washington-area sniper John Muhammad; a debate over the republicans' new energy bill; a report from Sacramento on Arnold Swarzenegger's opening day as governor of California; a conversation from Baghdad with a just-returned John Burns of the New York Times; and a Roger Rosenblatt essay on the ins and outs of politics.

NEWS SUMMARY

JIM LEHRER: John Muhammad was convicted today in one of the Washington-area sniper killings. A jury in Virginia Beach, Virginia, found him guilty of gunning down a man in northern Virginia last year. The jury must now decide whether to sentence Muhammad to death or life in prison. A second suspect, Lee Boyd Malvo, is being tried separately. We'll have more on this in a moment. Two more American soldiers were killed north of Baghdad today, in separate attacks. That makes more than 400 U.S. deaths in Iraq since March. The latest came as U.S. forces stepped up pressure on the insurgents. The troops launched a pre-dawn assault in Tikrit, Saddam Hussein's hometown. They killed at least six suspected guerrillas. We have a report narrated by Vera Frankl of Associated Press Television News.

VERA FRANKL: Mortar and tank fire lit up the night sky over Tikrit. The barrage formed phase two of Operation -- Cyclone. U.S. troops were far firing on positions believed to be used to launch attacks on coalition forces.

LT. COL. STEVE RUSSELL: What we are doing tonight is we are firing at a mortar point, we're targeting an area where we've had the rocket launch out of the earlier today.

VERA FRANKL: In the morning, dismayed residents wandered amongst the ruins of their homes. Several buildings were destroyed or badly damaged in the assault. This latest display of U.S. military muscle is intended stabilize the deteriorating security situation.

JIM LEHRER: In Baghdad, Iraqis said a U.S. patrol killed three people at a gun market, including a young boy. Police said the troops thought they were being attacked by people test-firing weapons. Also today, the U.S. Military announced the capture of a high- ranking guerrilla leader. He's allegedly involved in plotting bomb attacks and ambushes. The U.S. Army has ordered its helicopters in Iraq to fly low and fast. The changes are to help avoid ground fire after a series of deadly crashes. The latest came Saturday when two Blackhawk helicopters collided over Mosul, in northern Iraq; 17 Americans were killed. Witnesses said hostile fire was involved, but the incident remains under investigation. The CIA said today it cannot confirm a new audio tape is actually from Saddam Hussein. It said the recording quality was too poor. An Arab television station aired the tape yesterday. The message urged stepped-up resistance to U.S. forces. Today, post-war administrator Paul Bremer dismissed it as "a voice from the wilderness." He told NBC: "This is a man who is followed by a small band of murderers and they have no vision for the future of Iraq." President Bush insisted today U.S. forces will not leave Iraq when a provisional government takes office. On Saturday, U.S. officials and the Iraqi governing council agreed on a political transition by next July. Today, in Washington, Mr. Bush met with a group of Iraqi women. He said he told them America wasn't leaving, even after the transition.

PRESIDENT GEORGE W. BUSH: When they hear me say we're staying, that means we're staying. And it's precisely what the terrorists want us to do is to drive us out of Iraq before these leaders and other leaders are able to put their government together and live in peace. And we will succeed.

JIM LEHRER: France said today the new timetable for transferring power in Iraq was still too slow, but Germany said it was a step in the right direction. And at the U.N., Secretary- General Annan said he was encouraged. The U.N. halted relief operations in southern and eastern Afghanistan today. That followed a series of terror attacks. A French U.N. worker was shot dead yesterday in the South. She was the first foreign U.N. employee to be killed in Afghanistan since the Taliban fell two years ago. The death toll rose to 24 today in the bombings at two synagogues in Turkey. Search crews in Istanbul found the body of an elderly woman in the wreckage. More than 300 people were wounded in the attacks on Saturday. Turkish officials said they were investigating claims that al-Qaida was responsible. Arnold Schwarzenegger was sworn in today as governor of California. The Austrian-born actor and body builder took the oath of office before 7,000 guests in Sacramento. He told them he has big hopes for the state.

GOV. ARNOLD SCHWARZENEGGER: a new partnership for California. One that is respectful of our diverse population, one that challenges each and every one of us to serve our state in a joyful, productive and creative way. Ladies and gentlemen, I have an immigrant's optimism, that what I have learned in citizenship class is true. The system does work, and I believe that with all my heart.

JIM LEHRER: California voters ousted Democratic Governor Gray Davis in October, and elected Schwarzenegger to replace him. The new governor faces a budget deficit estimated at $25 billion. We'll have more on this later in the program tonight. Democrat Kathleen Blanco will become governor of Louisiana in January. She's currently lieutenant governor. On Saturday, she defeated Republican Bobby Jindel, and became the first woman elected to the state's highest office. Her victory snapped a Republican winning streak in governors' races this fall. A republican plan for drug benefits under Medicare attracted key support today, and strong opposition. Starting in 2006, the plan would cover most drug costs, up to $2,200 a year. It would kick in again after seniors pass $3,600 in expenses. And private insurers could offer managed care to Medicare recipients. Today, the American Association of Retired Persons said it would pull out all the stops to pass the bill. But Senator Edward Kennedy of Massachusetts, and most other democrats, vowed to defeat it. American businesses increased inventories in September, for the first time in six months. The Commerce Department reported that today. It could be a sign that companies are feeling more confident about the recovery. But it wasn't enough to help Wall Street. The Dow Jones Industrial Average lost more than 57 points to close below 9711. The NASDAQ fell more than 20 points to close below 1910. That's it for the News Summary tonight. Now it's on to the sniper verdict, the energy deal, the Schwarzenegger beginning, John Burns from Baghdad, and Rosenblatt on politics.

FOCUS SNIPER VERDICT

JIM LEHRER: The sniper story, and to Gwen Ifill.

GWEN IFILL: To hear more about the trial and verdict of John Allen Muhammad, we are joined by James Dao of the New York Times, who has been following the trial in Virginia Beach. Welcome.

JAMES DAO: Thanks for having me, Gwen.

GWEN IFILL: Four counts that Muhammad was found guilty on today. Explain the breadth of the verdict to us.

JAMES DAO: The jury found him guilty on two counts of capital murder. One is a count that deals with multiple murders committed over a three-year period. The second murder count is an anti-terrorism law, a new law in Virginia that makes it a capital crime to commit killing in the act of a terrorism act. He was also found guilty on a conspiracy to commit murder charge and an illegal use of firearms charge.

GWEN IFILL: But you say that multiple, he was found guilty of possibly having had a hand in multiple murders, yet he was only tried on this one murder, is that correct?

JAMES DAO: That's correct. The way the law works is he was, they focused on one killing, that of a man named Dean Meyers who was a civil engineer who was killed in Manassas, Virginia last October. But the prosecution brought in evidence from a total of sixteen shootings, ten of them fatal, that occurred in four different states and the District of Columbia, all to show that in addition to this one primary killing, he had a hand in nine others.

GWEN IFILL: The last time we talked about this case on the program, we talked about how so much of the evidence seemed to than circumstantial that placed him there, but not necessarily the gun in his hand firing at the victim. Did it get more specific in that for the jury?

JAMES DAO: Well, it did in a sense. The first of all, the gun was a powerful piece of evidence in that it was found in Mr. Muhammad's car when he was arrested last October. And then through ballistics tests it was shown to have fired the fatal shot in nine killings, or excuse me, ten killings. In addition, there was a whole array of other types of physical evidence found in the car, and as well also at some of the crime scenes. He has included things like a pen barrel that was found outside a shooting scene that had what is almost certainly Mr. Muhammad's DNA. The car itself was considered an important piece of evidence because of the way it had been modified. The prosecutors described it as a hide, an urban hide they call it, a place where a shooter could lay down in the trunk, hidden, put a gun out the rear, and fire through a hole out the back of the trunk. So there was actually quite a wide array of physical evidence, DNA, as well as witnesses who said they saw Mr. Muhammad, his co-defendant Lee Malvo or the car near shooting scenes.

GWEN IFILL: You were inside the courtroom today. This was not a televised trial, we have only seen still pictures of the people coming and going in the courtroom. Describe what it was like today when that verdict came down.

JAMES DAO: Well, as he has throughout the trial, Mr. Muhammad was absolutely stone-faced. He was asked to stand when the verdict was read, he's a former NCO in the army, he stood bolt straight, as if he were at attention, hands before him, did not show any signs of emotion as the four guilty counts were read off. On the other hand, there was quite a bit of emotion in the audience, where relatives of several victims were sitting. The sister of Hong Ballenger a woman who was killed in Baton Rouge last September, began sobbing quite loudly, and the daughter of Linda Franklin,, an FBI analyst who was killed in Falls Church last year, she also began to cry.

GWEN IFILL: The court went immediately to the penalty phase of this trial, which in this case would be deliberating whether he should be put to death or not. That started right away this afternoon?

JAMES DAO: That's correct. It's almost like a mini trial in and of itself. The prosecution and the defense both gave opening arguments. Mr. , one of Mr. Muhammad's lawyers, Jonathan Shapiro, gave white an impassioned opening speech in which he said this is a man who has value, this is a man who we will tell you was a good father, who was a good employee, who basically led a good and decent life until something clearly snapped. And he outlined what will be a two or three-day defense case in which they will bring people forward who knew Muhammad from childhood on and can talk about him as a person, in an effort to humanize him to the jury. The prosecution, on the other hand, will try to show the viciousness of the crimes and their lasting impact by having family relatives of Dean Meyers speak about what a terrible loss it was for them. They also open today with presenting evidence from another killing in Tacoma, Washington early last year, which Mr. Muhammad hasn't been convicted, hasn't been tried on yet, but the prosecution says that he is responsible for the shooting of a young woman who was related to a friend of his former wife.

GWEN IFILL: You know, not far away from the courtroom where you were today and from Virginia Beach where you are tonight is the other trial of his alleged act place, Lee Boyd Malvo. Does today's verdict affect that trial?

JAMES DAO: It's very hard to say what kind of impact there will be, because theoretically at least the jury in that trial should not be listening to any news accounts so, they should be completely insulated from what's happening here in Virginia Beach. On the other hand, Mr. Malvo's defense lawyers have been making a case that is very similar to the prosecution in Mr. Muhammad's case. They contend that Mr. Muhammad was the mastermind of these shootings, that he effectively controlled and even brain washed Lee Malvo, who was only 17 when the killings took place. So to the degree that the jury here in Virginia Beach believed those arguments, conceivably if the jury in Chesapeake, which is 20 miles away, has the same sentiments, that might be helpful to Mr. Malvo.

GWEN IFILL: Jim Dao, thank you very much.

JAMES DAO: My pleasure.

FOCUS ENERGY DEAL

JIM LEHRER: Now the coming out of an energy bill and to Ray Suarez.

RAY SUAREZ: It took a massive power outage this summer to revive congressional interest in a wide-ranging energy bill President Bush had first called for two years ago. Shortly after the blackout, the Republican-led House and Senate each passed their own energy bills and then spent the last ten weeks negotiating toward a final version. On Friday, Republican leaders announced they had reached agreement

Senate Energy Committee Chairman Pete Domenici:

SEN. PETE DOMENICI: We have succeeded. A most difficult, difficult job, but we have put it together.

RAY SUAREZ: The massive bill, which runs close to 1,200 pages, provides $18 billion in tax incentives to boost development of oil, natural gas, coal, and nuclear power; it imposes reliability standards and penalties on the nation's transmission system, or electricity grid, for the first time; doubles the use of corn- based ethanol as a gasoline additive, a measure favored by farm-state legislators; gives producers of MTBE, an additive blamed for ground water pollution, immunity from lawsuits; and it creates tax subsidies to encourage the construction of a $20 billion natural gas pipeline from Alaska to Chicago. One provision notably absent from the bill is President Bush's proposal to open the Arctic National Wildlife Refuge in Alaska to oil and gas exploration. Also absent, angering Democrats, were more major incentives to encourage the use of renewable fuels. Democrats also complained they were excluded from the negotiations, and that the bill played too heavily to special interests. New Mexico Senator Jeff Bingaman:

SEN. JEFF BINGAMAN: We don't know what other provisions may have been added in, special interests provisions that are easy to add in when you're writing one of these bills in secret, and we just have not been able to look in and see what was happening.

RAY SUAREZ: This afternoon, however, Bingaman and other Democrats were invited to join Republicans as they opened the formal Conference Committee that will vote on the final bill. (Gavel pounds) Outnumbered on the House-Senate Committee, Democrats offered amendments to the energy bill, but by early evening, most had been voted down.

SPOKESMAN: No.

RAY SUAREZ: Later tonight, the committee is expected to pass the energy bill favored by Republicans. The full House and Senate will likely vote later this week.

RAY SUAREZ: Joining me now are two House members who serve on the Energy Conference Committee. Joe Barton is a Republican from Texas, and Edward Markey is a Democrat from Massachusetts.

Representative Barton, if the bill comes out of committee as it's expected to later this evening, what does it accomplish? What are the main points that you wanted to make sure were in there?

REP. JOE BARTON: First I want to thank Congressman Markey for his Patriots beating my Cowboys last night. So we at least start off on a bipartisan fashion of his folks beating my folks. But in terms of the energy bill, what we want to do is look at all energy sources in this country in a comprehensive synergistic fashion, combine the production needs with the conservation needs and the environmental needs to come up with a package that ensures our energy future to be as bright as possible. And I think this bill does that. It's the most comprehensive energy bill we've ever had in the House and the Senate. And I think it's probably the best energy bill that we've ever had before the two bodies.

RAY SUAREZ: Congressman Markey, do you and the Democratic conferees think that it does what Joe Barton just said?

REP. EDWARD MARKEY: No, we believe that this bill is an historic failure. We do have 130,000 patriots over in Iraq right now, fighting for us. And a large reason why, we spend so much of our national resources on the Middle East is because of the oil. And we can't really get around that reality. So this bill, although America puts 70 percent of all of the oil which it consumes into gasoline tanks, this bill does nothing about SUV's, which are now about half all the new vehicles sold in America. We're going to continue to become more and more dependent upon imported oil. Does nothing about air conditioners in the middle of the summer, about 70 percent of peak demand for electricity in the south comes air conditioning demand, we do nothing about that. And I guess if you look a the bill, you can say to yourself, how can they, how can the Republicans have a bill that is conceived in secrecy in the Cheney energy task force and then up here in the House and Senate only Republicans have been allowed in the room, the environmentalists, the consumer groups have not been allowed in and neither have the Democrats, and expect to have a bill which deals with the future rather than just oil, gas, coal and nuclear. So there is no renewable portfolio standard in here to ensure that utilities in our country begin to use more and more of the renewable energy resources over the next fifteen, twenty years, and unfortunately we're going to wind up more dependent on imported oil ten years from now than we are today when another generation of young men and women are going to be asked to go to the Middle East.

RAY SUAREZ: Congressman Barton, how do you respond to your colleague's critique

that there's too much emphasis on production and not enough on conservation?

REP. JOE BARTON: I want to respectfully disagree with my good friend from Massachusetts I. would point out we have the president's hydrogen initiative in the bill. We're funding it to the tune of almost $3 billion over the next five years with the explicit goal of having a hydrogen vehicle available for sale by 2015 and having the infrastructure in place by 2020. That's a very pro environmental, pro conservation measure. We also have a clean coal technology title, and in that a clean air coal title which I personally put in to put a billion and a half dollars I think over the next ten year into retrofitting our older coal plants to bring them into compliance with the best technology for air quality. We look at non-conventional fuel sources, we have tax -- production tax credits for solar and wind. We continue many of the tax credit that we already had in the existing tax code. It's a very good bill. We have a lot of the Markey amendments, not every one he wanted in, on nuclear safety issues. We're trying to revitalize our nuclear industry. So honorable people can disagree honorably about the end result, but I think objective citizens of this country, once they look at the way the bill interacts across fuel sources and across regions, are going to be very pleased with it and our economic future is going to be brighter because our energy future is brighter because of this bill.

RAY SUAREZ: Congressman Markey, what do you think? It's said that one of the things that spurred both chambers into action was the summertime blackouts, the spike in natural gas prices. There are answers to some of these specific energy challenges, according to its supporters, right there in the bill. Doesn't it accomplish some of the things you needed to do?

REP. EDWARD MARKEY: Well, the bill does some things, there's no question about it. It's really what it doesn't do that is troubling, combined with some of the things that it deliberately does. For example, it gives a waiver to all legal liability for the producers of MTBE. We might wind up as a result with rather than the producers of MTBE, than states and local municipalities having to spend tens of billions of dollars to deal with the public health consequences of that. And that's just wrong. These companies should be held liable. Similarly, there is also a waiver provision to the Clean Air Act, which has been built into this bill, which is going to increase the amount of pollutants that go out into the atmosphere, and as you know we have 8 million children in America with asthma today, 24 million Americans altogether. In addition to other respiratory illnesses, this bill actually increases the amount of pollution, which we're going to see over the next generation because it doesn't deal with automobiles, it doesn't deal with air conditioning, it doesn't deal with, in other words with the sources that actually lead to the increase in production. So it's really not a bill for the 21st century. It's a bill looking in a rear view mirror back at the old oil and gas and coal industries, and I understand how Dick Cheney and George Bush feel about those industries. But given the fact that we're over in the Middle East, this should be a bill that is respectful of the sacrifice that those American fighting families are making, and we should be reducing dramatically the amount of oil that we're putting into these vehicles that we drive in America, and instead they actually still have in the law a $100,000 tax subsidy for people who buy Humvees, which is just absolutely, to me, an atrocity given the situation that we're in in Iraq right now.

RAY SUAREZ: Representative Barton let me get your response on some of those points specifically. Congressman Markey mentioned now twice that we're over in the Middle East, that American forces are fighting, in part because of the strategic oil reserves in that region, and yet the bill doesn't do that much to encourage conservation in one of the biggest users, automobiles.

REP. JOE BARTON: Well, I have great respect for Congressman Markey and he knows that. Let me try to quickly respond directly to the main points that he made. On the Humvee issue, that's not in this bill, that's a tax issue that's an accelerated depreciation issue that's not a part of this bill. On the clean air issue, there are no waivers to Clean Air Act on this bill. There's a codification that exists of the prior Clinton administration policy that gives regions that are in non-attainment for ozone a little extra time to comply when part of the pollution comes from outside the control region. That is a Clinton administration policy that the Bush administration policy supports. A court had ruled that the Clean Air Act wasn't explicit on giving flexibility and so we just codified the administration, both administrations' policy on that. On the CAFE standard issue, Congressman Markey is right on that one, we don't have a requirement that we increase automobile fuel efficiency. So I would agree with him on that. I would point out that there is a provision, a Barton amendment in the bill, that requires a comprehensive review of the existing CAFE provisions and a report back to the Congress within a year of enactment if there isn't a better way to do it. Again we have the hydrogen initiative if that works, we're going to be running our cars and trucks with hydrogen powered fuel cells within fifteen or twenty years. So is this a bill that has kind of a wish list of the environmental activist in the country, the answer is no. Is this a bill that looks at the broad needs of our country and says what do we need to maintain our economy, with a sound basic energy policy based on private sector market capitalism, I think the answer to that is yes.

RAY SUAREZ: Congressman Barton, as you scan over the House and look at where the votes might be coming from, is this more complicated than just a Republican-Democrat two sides of the aisle issue? Or are there Republicans from states that are heavily affected by acid rain, Democrats who grow a lot of corn, that might be looking at whether they can go with their party on this one?

REP. JOE BARTON: We've already had a bipartisan vote for the bill in the House, we had I believe 57 Democrats vote for this bill back in April, which I want to point out is before the blackouts in August. The Senate didn't pass their bill until after the blackouts in the Midwest and Northeast. But the House did. It will be a bipartisan bill in the Senate. When this comes to the floor, you'll have almost all the Republicans voting for it, and sizable numbers of Democrats voting for it but not all the Democrats.

RAY SUAREZ: Congressman Markey, is your job now to start peeling some folks away?

REP. EDWARD MARKEY: Ray, this bill is so bad that I can't help but believe that the environmental and consumer movement in the country isn't going to rise up. The only problem is that they gave us the bill on Saturday afternoon, 1700 pages. We're voting on it in the Conference Committee today. And no human being can read 1700 pages of technical material in two days. And the Republican leadership will now want us to vote on this bill tomorrow. So this is absolutely unacceptable. It's done in secret. The ethanol provision actually requires more oil and gas to be spent in producing the ethanol than it will save, and it will wind up with a nickel increase in gasoline prices for people on the East and West Coasts. We have, as Joe said, I had some good nuclear terrorism provisions built into the House bill, but it got watered down in this bill. You would think that it would be strengthened, especially at this time of fear about terrorism. There's a whole long litany that we could go through. Democrats I hope in the Senate will filibuster; this bill deserves a filibuster. The Senate debated last week, all week, on four judges. Well, this bill is the environmental and energy bill for the next generation. And it deserves a long debate in the House and the Senate. The House is planning on giving us one hour tomorrow to debate all of these issues, all 1700 pages.

RAY SUAREZ: Well, let me get a very quick response from Joe Barton on just that question.

REP. JOE BARTON: We had both the House and Senate pass similar bills last year that died in conference, the House bill passed this year back in April, there is nothing in the Conference report that hasn't been known in a general sense for months if not years. The specific language just came out on Saturday. But the issues that revolve around that language has been debated openly and publicly for years and years in some cases. This is not a secret bill. The specific language, the commas and all of that, that's news. But the substance is not new, and it's been fully debated, imbedded. And as Congressman Markey well knows, it will pass both the House and the Senate with broad bipartisan support, because it should. It is good for the country. It is a good basic energy bill for our country.

RAY SUAREZ: I'm going to stop it right there, gentlemen, thank you both for being with us.

REP. EDWARD MARKEY: Thank you.

REP. JOE BARTON: Thank you.

JIM LEHRER: Still to come on the NewsHour tonight: The launch of the Schwarzenegger administration in California; John Burns from Baghdad; and a Roger Rosenblatt essay.

FOCUS TOUGH CHOICES

JIM LEHRER: And Spencer Michels has our report from California.

SPOKESMAN: And to raise your right hand.

SPENCER MICHELS: Immediately on taking office this morning in Sacramento, governor Schwarzenegger pledged to uphold what he called "California's golden dream by the sea." He said the task of fixing the state's huge economic problems was akin to his challenges as a body builder.

GOV. ARNOLD SCHWARZENEGGER, (R) California: I learned something from all these years of lifting and training hard: When I thought I couldn't lift another ounce of weight, what I learned was that we are always stronger than we know-- and California is like that, too. We are stronger than we know. (Applause) There is a massive weight we must lift of our state. Alone I cannot lift it, but together we can. (Applause)

SPENCER MICHELS: Ironically, Schwarzenegger's first official act will add to that weight. He announced he will immediately repeal an unpopular 300 percent increase in automobile registration fees, which would have raised $4 billion. Starting tomorrow, when the legislature convenes in a special session he has called, Gov. Schwarzenegger will begin in earnest attacking the deficit. There is an estimated $15 billion gap between revenue and spending for the budget year ending in 2005, and the governor's own finance director has estimated it will grow to $62 billion by 2007 if not corrected.

GOV. ARNOLD SCHWARZENEGGER: Thank you very much, and may God bless California. Thank you very much. Thank you.

SPENCER MICHELS: Longtime "Sacramento Bee" political columnist Dan Walters says the governor's actions on the budget will be crucial.

DAN WALTERS, Sacramento Bee: If Governor Schwarzenegger can solve the state's budget crisis, which is monumental, his governorship will be a success. And if he can't solve it, it will be a failure. It's as simple as that. It's huge, it's what drove Gray Davis out of office, and it can no longer be ignored because it's eating the state alive.

SPENCER MICHELS: From the moment last august when he jumped into the race, Schwarzenegger has been asked for specifics as to how he would solve the state's financial problems.

GOV. ARNOLD SCHWARZENEGGER: We have in Sacramento a warehouse of specifics now, and look what happened. What you need is leadership. That's what is missing.

SPENCER MICHELS: Once elected, Schwarzenegger quickly appointed Donna Arduin, Florida's finance director, to the same post in California, and told her to audit the state budget.

GOV. ARNOLD SCHWARZENEGGER: Open up the books and let the people look inside, let the sun shine in. That's what we want to do here. And there is a lot of waste that we will find.

SPENCER MICHELS: In Florida, Arduin helped the governor cut taxes, but also cut social services. In California, Schwarzenegger has indicated all along that cuts of some sort are in the cards.

GOV. ARNOLD SCHWARZENEGGER: We must immediately attack the operating deficit head on. Now, does this mean we're going to have to make cuts? Yes. Does this mean education is on the table? No. Does this mean I'm willing to raise taxes? No.

SPENCER MICHELS: But what will be cut is still unclear. Republican Assemblyman Abel Maldonado says small cuts will add up. He was co-chair of Schwarzenegger's campaign, and was designated by the governor's transition team to speak for him.

ABEL MALDONADO, State Representative: There's a lot of things that could be cut, Spencer. Just this past year,there were pieces of legislation that came forward that would cut boards and commissions that were not necessary-- failed. A lot of little things that were in the budget that we need to start looking at.

SPENCER MICHELS: But larger reductions in social services, like child care and health benefits for the poor and elderly, some of which have already been cut during the Davis administration, are the last thing Democrats who control the state legislature want to see.

John Burton, leader of the state senate, says lawmakers would fight such cuts.

JOHN BURTON, State Senator: If the choice is between putting a tax on multimillionaires or taking eye glasses and hearing aids from elderly people, we're going to be on the side of taxing multimillionaires. And if he's on the side of taking away eye glasses, hearing aids and false teeth, there will be a fight and there will be a problem. And I don't think we put that up to the people. We'll see how the bully pulpit works.

SPENCER MICHELS: Surpassingly, a sale of $20 billion to $25 billion in state bonds is under serious consideration by Schwarzenegger. The bonds, sold to investors to raise needed cash, would allow the state to pay its bills and consolidate its debts. They would be paid off with interest, using future tax revenues. Even Republicans who normally oppose bond issues are now saying bonds would allow the state to avoid raising taxes. The fiscally conservative Howard Jarvis Taxpayers Association, which has argued that bonds encumber future generations, has switched positions. Jon Coupal is president of the group.

JOHN COUPAL, Howard Jarvis Taxpayers Association: Like a mortgage, there are appropriate reasons for going in to debt. This is very similar to parents whose child has robbed a convenience store and now they have to make restitution. They don't like doing it, but they have to do it.

SPENCER MICHELS: But while Democrats have traditionally supported bond measures, state controller Steve Westley, and others of his party, now say they don't like the idea of the state incurring debt for twenty or thirty years.

STEVE WESTLEY: I think it's not a good idea for the state. The governor-elect campaigned on a theme that he was going to come in, make the tough choices, and fix California's fiscal house. Now he needs to do just that. And I think by any standard the answer is not to sweep the problem under the rug by doing extended borrowing, it's to make the tough choices.

SPENCER MICHELS: Another device high on Schwarzenegger's announced priority list is a constitutional limit, or cap, on state spending tied to inflation and population growth. Such a cap exists in 29 states. John Coupal's taxpayer group strongly supports that.

JOHN COUPAL: California has a real problem with how it spends its money, and I think one of the things a spending cap will do is it will enforce some degree of fiscal discipline that we have not had in about 15 years. Job number one is stop the bleeding.

SPENCER MICHELS: The spending cap and the bond measure could be presented to the voters in March. But a spending cap does not sit well with some Democratic legislators who would have to agree to put it on the ballot.

JOHN BURTON: Every politician... we're going to have a spending cap, you know, and then something happens. If you have a spending cap, what does it do if school enrollment goes up, or if more and more people get old and they need Medicaid or they need aid to the aged, blind, and disabled. I mean, you need some flexibility or, basically, you put yourself in a straight jacket.

SPENCERMICHELS: The new governor has a few other ways he can try to increase state revenues. He may negotiate with Indian tribes, who mostly supported Governor Davis, to get more money from their casino business. They took in $3.6 billion last year, but paid the state just $130 million. They would want more slot machines in return for more payments. And Schwarzenegger has said he will ask the federal government and his fellow Republican President Bush to help the state, although he hasn't done so yet. Still, in confronting most budget problems Republican Schwarzenegger will have to deal often with the democratic legislature. Whether his celebrity status and his landslide victory will help him there, is a topic of much speculation.

JOHN BURTON: I've been there with Ronald Reagan, with a lot of people that are governors. You know, you take their issues as you think they affect the people of the state, not because, oh, boy, they are a movie star or they are a baseball player or they're a career politician, or what have you.

DAN WALTERS: His celebrity helps him. He's the first, the closest thing we've had to a free agent being elected governor in modern history. And as a celebrity, he commands media attention. Even LA TV will probably give up some freeway chases to cover this new governor. So, he can use that bully pulpit to kind of marshal public support for whatever program he has.

SPENCER MICHELS: The new governor must submit a budget by January 10. The embryonic recovery could help him. The state controller recently announced that because of a pick up in the economy, tax revenues this year will be $1 billion more than estimated.

CONVERSATION BACK IN BAGHDAD

JIM LEHRER: Now, a conversation with New York Times correspondent John Burns. He returned to Baghdad recently after a six month absence. He spoke with us frequently from Iraq during the war, and in the run up to it, I talked with him again from Baghdad earlier this evening. John Burns, welcome.

JOHN BURNS: It's nice to be with you.

JIM LEHRER: First, some items from the news of the day. This latest audio tape supposedly from Saddam Hussein, the CIA said today that it was inconclusive that the voice on the tape was actually Saddam Hussein's. But that aside, how does his being alive still appear to affect things on the ground there?

JOHN BURNS: I think it's, as the United States forces here said last week, it's critical. There's absolutely no doubt that the fact that he's still alive, and presumptively involved in some way in this mounting tempo of attacks on American forces, is having quite an inhibiting effect on Iraqis. People who only a few weeks ago I understand were willing to speak out to people like myself, quite decisively, against Saddam are now beginning to think it wiser to hold their vilification. It may seem impossible to us that anybody that Saddam could come back, but Iraqis live for 25 years under this guy and they are far from convinced.

JIM LEHRER: What about this Operation Hammer that coalition troops are involved in now what effect is it having on the attitude of the Iraqi people toward us and toward the Iraqis who may be in cahoots with Saddam or whatever?

JOHN BURNS: I think it's too early to say. It's only a week old now. There's been enormous firepower deployed, visible firepower. I think the visible is very important. The helicopters over Baghdad, they buzz like night flies through the night, through the day as well. As you know, heavy weapons are being used that haven't been used since the war itself, including satellite-guided missiles. I think there's some apprehension amongst Iraqis who wish the United States well, that this could rebound in terms of a negative reaction amongst the Iraqi population. But it's really too early to tell. I think that if the American forces were able to get the better of these attacks, which after all are killing as many Iraqis as they are Americans, and possibly more, if the Americans were able to get the upper hand, then I think you might see Iraqi opinion beginning to swing.

JIM LEHRER: Are the operations in fact bearing fruit?

JOHN BURNS: Oh, I think they are. We had a news conference tonight with the United States military command here, who gave some impressive figures on the recent arrests and on the operations where they've netted had quite a lot of weapons, principally in the Sunni Triangle which will now be familiar to Americans, the area after few hundred square miles north and west of Baghdad between Baghdad, Fallujah, Ramadi to the west and Tikrit to the north, this is the area where the Sunni people who are Saddam's principal supporters are mostly concentrated -- about 15 percent of the territory of Iraq. Iron Hammer has hit really hard in some of these places -- in Baghdad as well -- sweeps of entire neighborhoods which have been sealed off, the use of helicopter firepower against suspected targets. I think it's been effective. But of course the question is, how effective is it if they don't get Saddam and his top lieutenants? My guess is that so long as Saddam and his top lieutenants are at liberty, or at least some of them, and we heard tonight that the U.S. military command believes that Saddam's number two, Ibrahim al-Douri, they believe is directly involved in these attacks. If they were able to get these men, then I think would it make a real difference. But as long as they don't, I think that you'd have to assume that they would have perhaps not inexhaustible, but very deep well of people they could draw on -- people like myself who were here during the war, and expected Saddam to fight for Baghdad and then found that he really didn't fight, now know where all those fighters that we saw went. All those Fedayeen who were gathered on street corners with their pickup trucks and machine guns in the 21 days of the war who suddenly disappeared as American troops arrived at Baghdad airport, these people, and there were thousands of them, are now either actually fighting or potential recruits for this resistance.

JIM LEHRER: How is the decision by the Bush administration to accelerate the turnover of power to the Iraqis being received over there?

JOHN BURNS: Well, from what I heard from Iraqis in the last 48 hours, there's a very positive response to that. There's no doubt that Iraq with its long history of foreign occupation and colonial rule feels very uncomfortable with American rule here, much as most people are profoundly grateful to the United States for removing Saddam. That rule, as you know, in the last few months, has not been entirely successful in restoring to Iraqis many of the things they had hoped for, their electricity, their water, the end to the crime wave on the streets and so forth. So there's been a great swing of opinion saying "why don't we rule ourselves?" I believe the president with his announcement over the weekend has gone some way to meeting that demand, but there is of course price. And the price may well be democracy. That is to say, if power is handed to a transitional government here, sovereignty, without a permanent constitution which had previously been the primary goal-- get a permanentconstitution agreed among the Iraqi leaders, supported by a referendum and then go to elections-- if you don't have that permanent constitution in place, you hand over power to an unelected group of people, many whom are not popular, almost all of whom are engaged in an intense rivalry with each other, then it seems to me that down the road we may find that the American hopes to implant a democracy of a kind we would recognize here may begin to evaporate.

JIM LEHRER: In a more general way, you were gone for six months, now you have returned. Adding up all the things that you have just been talking about and other things as well, you have come away, you're not leaving now, but, I mean, do you stand there tonight with a feeling of hope or despair? How would you describe your general impression of what you've seen and heard?

JOHN BURNS: Well, I'd have to say that anybody who stood in the square behind me here just in front of the blue-domed mosque that can you see and watched that statue of Saddam being pulled down with the assistance of an American tank on April 9th has to be profoundly dispirited and disappointed by what you find when you come back here. To find that in some respects the hunters have become the hunted, that American forces who did liberate this country, I think the word is in common parlance here, there's no doubt that the Iraqis were in their overwhelming majority absolutely rejoicing over the overthrow of Saddam, to find that the mood has swung so sharply, to find that the United States armed forces are under such heavy attack and taking such heavy casualties, relatively speaking. I understand, something like 80 in the past six weeks, 80 dead, compared with a similar number in the five months prior to that after Baghdad fell, this is all pretty dispiriting. It's also dispiriting to find that Iraqi opinion is so shaky on all of this. Their bottom line is they do not want American forces to leave, because they understand or they say that they believe that would lead to civil war and absolute chaos. But at the same time there are not a lot of Iraqis prepared to come forward and say outright, outside the governing council, the American-appointed interim authority here, to say that they stand behind the United States armed forces in their attempts to eliminate this campaign that can only be described as terror. All of this is dispiriting. But I have to say that I think the American commanders here are correct in saying that they don't believe that more than a small minority of Iraqis would like to go back to Saddam. And that the hope for something that is a representative government, not necessarily a democratic government as we understand it, but a representative government which can tie the Sunnis and the Shias, the Kurds and Arabs, the North, the Center and the South together, that hope is still very much alive. And I would guess, to sum it up, that it's going to take stout hearts on the part of the people of the United States, and the government of the United States, to see this through. The commanders are saying that the casualties are likely to go up before they come down -- that it's likely to be a protracted campaign. So I think a lot of pain is going to have to be taken before the situation gets better.

JIM LEHRER: Did you find it to be scarier and more dangerous than you expected it to be?

JOHN BURNS: Well, of course anybody, I think one of the striking things about the situation here is that I would think it's fair to say that the people of the United States, the people of the world who have access to television and satellite television know more about this country and this war than any war-torn country ever. I found when I was home in England, my native country this summer, that when I spoke about Iraq, and in the United States more recently, that I was talking to the best informed audiences I've ever talked to. Sometimes we've been able to come home from wars and make the safe assumption that we who have been there know, however little we know, that we know more than the people we're talking to. We're talking and writing now for an extremely well-informed audience. I was part of that audience in the months that I was away so I was aware that it was dangerous. But to actually encounter it is, I must confess, a pretty daunting thing. I think my profession is going to have to grit its teeth as well. A lot of journalists have died here, I think the sort of risks that have to be taken to cover this war are going to increase and there's not a whole lot that you can do about it. You cover the war or you don't cover the war. If you cover the war, then you get involved in situations of considerable risk. Although I've missed it for the last seven months, to come back here and see my colleagues, and I don't mean just my colleagues at the New York Times, but hundreds of western journalists here who are, if you will, braving these hazards, I find it to be for our profession a very proud moment.

JIM LEHRER: Okay. John Burns, thank you. Good to talk to you again and we'll do it again soon.

JOHN BURNS: Thank you, Jim, it's a pleasure.

ESSAY INS & OUTS

JIM LEHRER: Finally tonight, essayist Roger Rosenblatt speaks about the ins and outs of politics.

SPOKESMAN: Ladies and gentlemen, the governor of the great state of California, Arnold Schwarzenegger! ( Cheers )

ROGER ROSENBLATT: Arnold Schwarzenegger becomes governor of California, and it is a victory for the outsider. That's what everyone said, including Arnold. He ran on the outside ticket, a breath of fresh air, politics as unusual, a familiar idea in American election and in American everything.

ARNOLD SCHWARZENEGGER: We are here, ladies and gentlemen, to clean house.

ROGER ROSENBLATT: America loves outsiders so much, that no one ever wants to be identified as an insider. The insider is of the shady deals. The outsider is pure, free of established encumbrances. Even incumbent and former senators and congressman who run for president claim the status. They run against Washington. They have never been to Washington. One assumes that during their years in Congress, they drove around the beltway and tossed in their votes from their cars. If this is so, however, if everybody claims the role of the outsider as continually newborn American revolutionary, it suggests, paradoxically, that the outsider is the American insider. This in turn suggests that nobody wants to be where the power is; the power is thought to lie in individual renegades. See monumental Washington or the monumental state houses of America, confirmed in their tired adamancy. But look, here to the rescue comes Jesse Ventura or Clint Eastwood or Sonny Bono or George Murphy or Ross Perot or Ronald Reagan to shake things up from the great outside. There is a basic anti- intellectualism at work in this, which is also all American. The national assumption is that the know-nothing is superior to the know-too-much.

ARNOLD SCHWARZENEGGER: We are going to say hasta la vista, baby to Gray Davis. ( Cheers )

ROGER ROSENBLATT: Fictional heroes such as Holden Caulfield and Huck Finn were opposed to formal education, their creative innocence was judged more virtuous. Washington Irving's headless horseman story showed the pallid teacher Ichabod Crane as deserving of his fate. It is the unschooled boy, the natural man with good instincts, not the schooled, not the learned, who rises to the top.

ARNOLD SCHWARZENEGGER: First, I would just like to get to know you. ( Laughter )

ROGER ROSENBLATT: Come to think of it, Arnold may have got all the training he needed for the governorship when he served a term as kindergarten cop. Of course this raises the whole idea of the qualified. If knowledge and experience disqualify you for office, why not prepare by lifting weights? (Music playing) The nation was founded by outsiders, and it always thinks of them reverently. Our rebel leaders, our inventors and cowboys, all stood outside a reality that required big dreams, and they dreamed their way in. A cyclical process is at work. Outsider wins then governs, then soon becomes an insider requiring another outsider to come in and do things right. The implicit enemy is experience or history. Get too much of either, learn too much about the ordinary requirements of ordinary government, and watch out. There's a new gun at the saloon door or a cyborg crashing into a police station. (Car crashes) So good luck, Arnold. Good luck, California. As nutty as you may seem to the rest of the world, you are part of an old myth that doesn't make much sense, yet sometimes works. A breath of fresh air soon becomes the backroom choking in cigar smoke. But the myth goes on. Only the outsider can fix this mess. Only the one free of training or qualifications can make it right. Odd though it is, he appears irresistible. I'm Roger Rosenblatt.

RECAP

JIM LEHRER: Again, the major developments of the day: John Muhammad was convicted in one of the Washington-area sniper killings. He could get the death penalty. Two more American soldiers were killed north of Baghdad. And U.S. forces launched a heavy assault on insurgents in Tikrit, Saddam Hussein's hometown. And Arnold Schwarzenegger was sworn in as governor of California. We'll see you online, and again here tomorrow evening. I'm Jim Lehrer. Thank you and good night.