Kelly Wallace: Campaign finance and other political issues

Kelly Wallace is a CNN White House correspondent.

CNN: Good day, Kelly Wallace. Welcome all to Political Week in Review chat.

KELLY WALLACE: I'm joining you from Baltimore where the president will travel to this afternoon to talk about Medicare reform. Good to be with you.

CNN: Campaign finance reform died in the House yesterday. What happened and why?

WALLACE: Republicans blame Democrats -- and Democrats blame Republicans. Both sides share a bit of the blame. There was a fierce debate over the rules, which would govern the debate over campaign finance reform. In the end, most Democrats -- and even some Republicans -- voted against the rule, charging it was an attempt by the GOP to kill campaign finance reform. Republicans say Democrats voted against the rule because they don't want the legislation and instead want an issue to run on next year.

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As for what happens next, campaign finance reform supporters say they will try to bring up the legislation against this year. But right now, the hopes of a bill getting passed by both houses of Congress and signed into law this year look rather bleak.

CHAT PARTICIPANT: Kelly, what will prevent the drug companies from giving a discount to seniors and raising prices to compensate?

WALLACE: You raise a good point, because some of the criticism of the president's new discount card plan is that the drug companies won't lower their prices, and that the small pharmacies will be the ones who will get squeezed. Supporters of the discount cards say that the group purchasing power of seniors will force drug companies to lower their prices -- the thinking is that the drug companies will want to get the business of a great number of seniors, and therefore will lower their prices to get their business.

But many consumer groups say this won't happen. And some Democrats say seniors can already take advantage of discount cards, and that these cards really only amount to a small amount of savings. So, this plan will be watched closely once it is fully in effect next year to see if it is resulting in savings, and whether the drug companies are lowering their prices at all.

CHAT PARTICIPANT: The U.S. government has criticized Israel for the "targeted assassinations" of terrorists. What does it suggest Israel should do instead, when it finds out about terrorists on their way to an attack and the Palestinians are unwilling to do anything to stop them?

WALLACE: The administration has been trying to keep both sides from making any moves that might provoke the other. Of course, the U.S. says it is against terrorism, and has called on the Palestinian leader Yasser Arafat to speak out more against terrorism and to do more to prevent any terrorist acts. But there is also a question within the administration about how much control Arafat really has over these terrorist groups.

While the administration believes Israel needs to protect itself, it is just trying to keep the situation from escalating out of control. The cease fire does not appear to be holding though, and both sides appear to be getting more and more frustrated. The administration also appears to be in a quandry about what to do next. So, it tries to keep Israel from pursuing any targeted assassinations, but it also knows there are limits to just what the White House can do.

CHAT PARTICIPANT: Has there been any reaction to the plans to build an national missile defense (NMD) test site in Alaska?

WALLACE: Well, Democrats reacted quite strongly Thursday to news the administration was going to go forward with building a test site. Democrats charge this would be a violation of the anti-ballistic missile treaty between the U.S. and Russia, which prevents either country from going forward with any national missile defense system. Clearly though, the administration is going to go forward despite objections from Democrats and European allies. A crucial test of the national missile defense system is scheduled for Saturday evening, and the results of that test could have implications for future research and development.

What the administration has not said is at what point the research and development will break the ABM treaty. The president meets with Russian President Putin in September, and will no doubt hope to secure some agreement from Russia to amend the treaty so that research on NMD can go forward. But getting such agreement from the Russians will be a major challenge.

CHAT PARTICIPANT: Why has the White House changed its story regarding the Salvation Army three times now?

WALLACE: That is another good question. You can say the White House has really been engaged in some damage control over this one. After the Washington Post reported the story Tuesday, senior advisers were quick to say there was no "quid pro quo" -- no deal to get the Salvation Army's support for the president's faith-based agenda in exchange for a possible federal regulation exempting religious charities from having to adhere to state and local anti-gay discrimination laws.

Then, another story in the Washington Post reported that Karl Rove, the president's top political adviser, was involved after White House officials said that no senior official was involved. So this led the administration to do some more damage control, saying the Rove was not the first contact, and that Rove simply was contacted by the Salvation Army, and then passed along the request to the Budget office. Again, the White House said there was no deal, and that the issue is no longer under consideration.

But it is one of those stories where the administration did not put out all the facts right away -- and while it says there was no intention to mislead reporters, the administration probably could have handled this story better from the start. It is also another example of the reach of Karl Rove. White House aides defend his actions, but it shows the president's top political adviser has his hands in a great number of policy issues.

CNN: Do you have any final thoughts today?

WALLACE: White House aides feel they had a good week -- getting the president out talking about patients' bill of rights and Medicare reform. The big question is whether he will be able to score any legislative victories before the August recess. That is looking doubtful. Also, Mr. Bush heads to Europe next week -- his second trip as president. He'll be meeting with British Prime Minister Tony Blair and then attending a summit with the most industrialized nations plus Russia.

Keep an eye on how the allies respond to his positions when it comes to what to do about global warming and missile defense. Also, he still has not made his decision about whether or not to allow federal funding of research on stem cells from human embryos. The president meets with the Pope in Rome. It is not clear if his decision will come before that meeting -- but a big consideration in his decision is not alienating Catholics who are very much opposed to this research. So, a number of issues to keep focused on in the week ahead.

CNN: Thanks for joining us today, Kelly Wallace. Talk to you again next week.

WALLACE: Great to be with you. Hope to join you next week from Italy!

Kelly Wallace joined CNN.com from Baltimore, MD. The above is an edited transcript of the interview on Friday, July 13, 2001.