(VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This is going to be a tough battle because we're going to be stepping on some people's toes. I understand that. You see, when you take power away from one person in Washington, it tends to make them nervous.

(END VIDEO CLIP)

NOVAK: In the "Crossfire" to talk about who's nervous and who's feeling safe -- politically, that is -- Democratic political consultant Bob Shrum and former Congresswoman Susan Molinari, Republican of New York.

SUSAN MOLINARI, FMR. U.S. REPRESENTATIVE: How are you?

PAUL BEGALA, HOST: Thank you both for joining us. Susan, if I can start with you.

MOLINARI: Oh, good.

BEGALA: Our friends in the White House did a wonderful public service, not only in recognizing belatedly that we need to reorganize the federal government, but also telling us why. Let me put on the board a quote from a White House aide, the Associated Press, telling us why in fact they announced this when they did.

"Bush's announcement is designed in part to steal some attention from congressional hearings, White House officials say."

That's what they told the Associated Press. I think it's a noble cause to reorganize the government, but isn't doing it to try to preempt bad publicity from hearings a pretty cynical reason?

MOLINARI: Well, and I'd be surprised if that White House person was not named, were they?

BEGALA: You don't think the Associated Press made it up, do you?

MOLINARI: Well, I think they probably talked to some low level person who had no idea of why the president did this. Now ...

BEGALA: I thought you might say that, so let me read you another ...

MOLINARI: Well let me ...

BEGALA: ... quote from "The Wall Street Journal."

(CROSSTALK)

MOLINARI: Let me just say something -- let me just say something. If there is a reason to try and preempt some of these hearings, maybe it is, for a noble reason, that people in America are getting a little nervous and a little shaky. And that if at the same time they can be reassured that there's a president of the United States who's taking decisive action to reassure and calm and change the way government is, as we know it, because the world has now changed, well, that's a good thing too, isn't it?

BEGALA: So let me get this straight. You're saying that it's OK for the White House to -- for eight months to fight against bipartisan efforts ...

MOLINARI: Oh, it's not fighting against.

BEGALA: In fact they did for eight months fight against bipartisan efforts ...

(CROSSTALK)

BEGALA: ... led by senators ...

(CROSSTALK)

MOLINARI: You can write for "Esquire" Magazine with that kind of reporting ...

BEGALA: We'll get to "Esquire" in a minute, believe me. Senator Lieberman, from my party, Senator Specter from your party, for eight months have been asking this president to reorganize the government alone much the same lines as he announced last night in a surprise announcement, and you think it's OK for him to switch gears like that only to forestall bad publicity about his own mismanagement ...

MOLINARI: Clearly he did not ...

BEGALA: ... of the executive branch.

MOLINARI: Clearly he said that he was going to take his time, and be thoughtful and have input from people like you just mentioned on the Hill, and determine that in fact the way he was trying to do things was not the best way. My gosh, we finally have a politician in Washington who says, you know what, maybe the other side was right. Maybe I should give this a second look and change my mind.

NOVAK: Mr. Shrum ...

MOLINARI: You should be applauding him for that flexibility, Bob -- Paul.

NOVAK: Mr. Shrum, you've been ...

MOLINARI: Bob. NOVAK: Bob, you've been explaining to me the strange thought processes of the Democratic Party for a long time so -- but I think you really have a challenge this time, because for months the Democrats are saying you must have a Cabinet-level ...

MOLINARI: Right.

NOVAK: ... department ...

MOLINARI: Exactly.

NOVAK: ... and obviously, he had very careful and lengthy consultations and they're secret - they love secrecy. They have it all in secret. They finally come out with a detailed proposal for a Cabinet level and you say no, it's a bad idea. You're bowing to pressure. Which -- can you explain to me what the thought process is?

BOB SHRUM, DEMOCRATIC STRATEGIST: Bob, you're doing what you've been doing for a long time with me, distorting what Democrats said. Dick Gephardt said he doesn't want this passed by the end of the year. He wants it passed by September 11. There's almost universal support from Democrats who are not nay-sayers on this but yea-sayers on it, for months and months and months, and what I don't understand is why the administration can't do what Susan just did, which is admit that the president changed his mind.

Andy Card of "Esquire" ...

MOLINARI: Oh, I didn't say that.

SHRUM: No, no. Andy Card of "Esquire" ...

(CROSSTALK)

SHRUM: Andy Card of "Esquire" fame was quoted today as saying the president was never against having this department.

MOLINARI: He said he wanted ...

SHRUM: He appointed Tom Ridge to think about the department. Well, Tom Ridge must think kind of slow. I mean this has taken a very, very long time in a real crisis.

MOLINARI: This is an amazing, massive reorganization of government. This is looking at history and saying for the first time after September 11, we've all acknowledged that the world has changed forever.

SHRUM: Joe ...

(CROSSTALK)

SHRUM: ... Lieberman ...

MOLINARI: And you can't change ...

(CROSSTALK)

SHRUM: Joe Lieberman and Arlen Specter ...

MOLINARI: ... government on a dime.

SHRUM: Joe Lieberman and Arlen -- well, they did change it on a dime.

MOLINARI: No, no ...

SHRUM: Joe Lieberman and Arlen -- they got four people in theory in this little room down in the White House. Karl Rove, of course, wasn't there, they tell us, even though he does run foreign policy in this administration.

NOVAK: All right.

SHRUM: And they suddenly come out with this. Now there was no wrong time to do it, because it's the right decision.

(CROSSTALK)

NOVAK: Bob. Bob Shrum, you know, there was -- one of the most remarkable minds of the Democratic Party is Dave Obey, Congressman Dave Obey of Wisconsin. He's the ranking Democrat on the House Appropriation, where he wants to be chairman, and even before the president had released, had given his speech -- there had just been a few comments about it, he had totally analyzed the situation. I'd like to just read you a quote he sent us long before the president's speech, two pages single-spaced.

MOLINARI: Before the president even went on.

NOVAK: Yes, and we'll put it on the screen. Congressman Obey said, quote: "The proposal put out by the White House" -- this is two hours before the speech -- "was developed with little or no input from experts or federal agencies, with the result being a haphazard plan that would load the new department down with a huge bureaucracy and responsibilities that have nothing to do with preventing terrorism."

Now you know partisan politics because you play it. That's sheer partisan politics, isn't it?

SHRUM: No, actually, the first part of that is absolutely factually true, by the White House's own leak to the papers. They had four people in a little room sitting under the White House, in theory doing this in such a way that was -- it was going to prevent leaks.

The real problem here is that they should have just come out and said look, we tried it the other way. It doesn't work the other way. They should have -- Susan should have been there advising them -- said the president changed his mind and we're going to have a department.

(CROSSTALK)

BEGALA: In fact Susan ... (CROSSTALK)

BEGALA: Go ahead.

MOLINARI: Now we are now arguing over did he change his mind or did he move too slow or did he -- I mean, everybody agrees with what the president did so, I mean, in a time of international crisis where we are responding productively and carefully, can't we just all sit back and say ...

(CROSSTALK)

MOLINARI: ... bravo, President Bush.

(CROSSTALK)

SHRUM: I was trying to agree ...

BEGALA: Here's my concern ...

SHRUM: Novak won't take yes for an answer ...

(CROSSTALK)

BEGALA: Here's my concern. We've had an international crisis for many months. It's only when it's become a political crisis for Bush does he act. Let me show you what our press secretary ...

(CROSSTALK)

BEGALA: ... Ari Fleischer, told the country ...

(CROSSTALK)

MOLINARI: If this had come out two weeks after wouldn't you say this has not been well thought out?

BEGALA: No, in fact, in February of 2001, a commissioner appointed by President Clinton, chaired by Gary Hart and Warren Rudman, two respected senators from each Party ...

MOLINARI: Right.

BEGALA: ... recommended this. Bush opposed it. In May of 2001, there were hearings on this. Bush opposed even the hearings. And now here's what his press secretary said about this just a few months ago. Here's Ari Fleischer.

(BEGIN VIDEO CLIP)

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: It's no secret that there are a number of members of Congress, some of whom came down to the White House today, who believe that legislation is necessary to give Governor Ridge more power, the power that they think he may need. And they received a very strong message from the president today that no legislation is necessary, that Governor Ridge has all the power that he needs, that Governor Ridge by virtue of the fact that he is in such proximity to the president, has the ear of the president, has the respect of the president. Governor Ridge has everything he needs to be able to get his job done.

(END VIDEO CLIP)

MOLINARI: Well let me talk about ...

BEGALA: Flip-flop flip.

MOLINARI: No, but let me just talk a little bit about the difference, because what that's talking about is just simply giving him budget authority. What President Bush talked about now, and it reminds me about -- I don't know if y'all saw the ...

(CROSSTALK)

MOLINARI: ... if I'm allowed to talk about ...

(CROSSTALK)

BEGALA: No legislation is necessary to give Ridge more power.

(CROSSTALK)

MOLINARI: OK, but let me just finish ...

(CROSSTALK)

BEGALA: That's what Ari said.

(CROSSTALK)

SHRUM: It's Joe Lieberman's plan.

MOLINARI: There was an HBO special where Bernie Kerik, the police commissioner of New York during September 11 talked about the fact that, you know, the sky was falling and that all this was happening, and he said the first thing he needed to do was figure out how to get the planes down, how to get, you know, military -- security over New York, all these things, and then he looked at the camera and said what number do I call to get that done?

(CROSSTALK)

BEGALA: But Bush has known at that all along.

NOVAK: I want a yes or no answer, Bob.

SHRUM: You probably won't get it.

NOVAK: Since it's Joe Lieberman's plan, I can assume that the Democrats won't be criticizing it?

SHRUM: Oh, I think Democrats in overwhelming numbers are going to support this plan. They have been calling for it for months and months and months.

NOVAK: You tell David Obey and John Conyers ...

(CROSSTALK)

MOLINARI: It's nice that we can get along like this.

(CROSSTALK)

BEGALA: And we will, believe me, we will stir the pot even more. Stay with us. We're going to take a quick break, but in a minute we're going to switch subjects and we're going to ask our guests about an extraordinary, jaw dropping, on the record glimpse of life inside the real George W. Bush inner circle of the White House.

And then later, celebrities descend on Capitol Hill in a Washington version of "Star Wars".

(COMMERCIAL BREAK)

NOVAK: Welcome back to CROSSFIRE. Still ahead, Capitol Hill gets the star treatment, but first, we're going inside the real West Wing. And if you believe a new article in "Esquire" magazine, there seems to be as much wheeling, dealing and back stabbing among president Bush's inner circle as there is on the popular TV drama.

"Esquire" quotes Bush Chief of Staff Andrew Card as saying the president has a mystical bond with terror news. The magazine quotes Card as saying Bush is in denial over Hughes' decision to go back home to Texas.

In the "Crossfire," Democratic Political Consultant Bob Shrum and Republican New York former Congresswoman Susan Molinari.

BEGALA: Let me get right to it, Susan. Here's what Andy Card, the chief of staff to the president, has to say Karen Hughes' departure. Karen, of course being the counselor to the president, clearly the most powerful woman in the executive branch -- what I didn't know is she was the most powerful person.

Andrew Card, the chief of staff, says: "The president is in a state of denial. The whole balance of the place, the balance of what has worked up to now for George Bush is gone, simply gone."

The wheels have fallen off the wagon because one woman leaves. Why?

SHRUM: That's good. It's sort of nice for a change that it happens that way.

(CROSSTALK)

MOLINARI: First of all, we would like all you Democrats to really believe that. But obviously, listen, Karen Hughes was a tremendous force and she will be very much missed in Washington. She's going to Texas to spend some time with her family, you know, reconnect with her Texas roots and also stay engaged very much in presidential politics.

BEGALA: But let me give you specific about what she does. Mark McKinnon, who I should disclose is a dear friend of mine, I went to college with him. He's a great buddy of mine, even though he's Bush's media advisor, he told "Esquire" this:

"President Bush often says the most striking difference between being governor and president is the volume of decision-making. There are 100 decisions he has to make every day, big decisions, with a lot riding on each one. So he'll give 20 of them to Karen to make. He trusts her completely. He trusts her like he trusts no one."

So sayeth Mark McKinnon -- my question is who makes the other four-fifths of the decisions that Karen doesn't make? It's clearly not Bush, right?

MOLINARI: Of course it's Bush. He's -- I mean you know ...

BEGALA: Why is he giving away one-fifth of his decisions to a staffer?

MOLINARI: Well, you don't know what those one fifth decisions are. Maybe...

BEGALA: They are big ones with a lot riding on them.

(CROSSTALK)

That's what the guy says.

MOLINARI: Maybe it has to do with communications. Maybe it has to do with the way we deal with the communications strategy post 9/11. That is a big decision with a lot riding on it, but someone that has the intuitive communication skills of Karen Hughes versus being president of the United States, that seems to be to me a legitimate exercise of division of power.

NOVAK: All Democrats like Begala are just so excited about this story There's something fishy going on here. And let me talk about Mark McKinnon, who's a liberal Democrat from Texas. He was caught giving contributions to Democratic candidates. He was so embarrassed the other day, and now, do you know who vouched for this Suskind, this reporter, to get him in the inner circle of the White House? It was Mark McKinnon. Is there a little plot going on here?

(CROSSTALK)

SHRUM: I'd say, Novak, you got a little witch-hunt going on.

NOVAK: I hope so.

(CROSSTALK)

SHRUM: The fact -- yes, I know, you want to get rid of him. Look, the real question here is what were Andy Card and Mark McKinnon drinking or smoking when they gave these quotes and this interview. (CROSSTALK)

SHRUM: The truth is -- the truth is they did say these things. You can't deny they said them. Andy Card's non-denial is ridiculous. It is obvious that Bush does delegate a lot of big decisions. He delegates a lot to Karen Hughes. He delegates a lot to Karl Rove, who has enormous influence in foreign policy and on a whole series of decisions that he isn't necessarily prepared for, but the president trusts him.

Now in the end, the president's going to be judged by how the administration does. But to go out and do this right now, I think, is very disruptive inside the White House, and I got to say once again, they ought to bring Susan in there because she did a lot better job handling ...

(CROSSTALK)

MOLINARI: This is killing me. You know this is killing me, right?

(CROSSTALK)

NOVAK: It's not good for you. It really isn't.

MOLINARI: That's it for me politically, ladies and gentlemen.

(CROSSTALK)

NOVAK: Mr. Shrum.

(CROSSTALK)

SHRUM: But I mean it -- I mean it.

(CROSSTALK)

NOVAK: Mr. Shrum, you live in -- you live in the real world, and when this guy Suskind, he was on "INSIDE POLITICS" on CNN today and he was elaborating on his - on his ridiculous story even further, and he was saying that Karl Rove is a right-winger and he represented the right wing of the Republican Party and Karen represents the moderates. Now you know very well that Karl Rove is to the left of me and I'm not that conservative.

SHRUM: Bob, you admire Karl Rove so much and you've expressed the admiration so often that I think he may be one degree to the left of you.

(CROSSTALK)

SHRUM: He's very close to you.

NOVAK: He's not a right-winger ...

(CROSSTALK) NOVAK: You know ...

(CROSSTALK)

SHRUM: Look, there are -- look, there are a whole series of decisions here. For example, we don't even know in this new reorganization plan at this point whether or not they're going to use it as an excuse for union busting.

NOVAK: Now ...

SHRUM: Karl Rove would like to do that because he wants to pay back the right wing.

(CROSSTALK)

NOVAK: Do you consider him a right-winger?

SHRUM: Oh sure. Absolutely.

(CROSSTALK)

BEGALA: Andy Card ...

(CROSSTALK)

BEGALA: Andy Card ...

(CROSSTALK)

SHRUM: I consider you an extremist.

BEGALA: Let me read you one last quote.

(CROSSTALK)

BEGALA: Dan Bartlett is the communications director to the White House. This is what he said to "Esquire". Karen Hughes -- she can literally manufacture Bush, the only one who can do it. She knows how he talks, but also how he thinks. It's like they're one person. Over time people have better understood that if you had an idea, a proposal, Karen better like it or it won't have a chance in any event."

I used to work for a president. If anybody said that someone else manufactured him, they would have their ass fired. Why is that not happening in this White House?

MOLINARI: Well first of all -- first of all, let me -- let me just state that I think we know all Andy Card and we all know Dan Bartlett, and these are smart men.

BEGALA: And they've manufactured Bush, right?

(CROSSTALK)

MOLINARI: They have been very political. They are very loyal in a White House that respects and values loyalty.

SHRUM: Hard to tell that today from these quotes.

MOLINARI: It and so one cannot believe, I mean, and if anybody at this table says that they have never read anything about themselves or their candidates that have not been true or that their words taken out of context, then in fact they are stretching the truth a bit. These are intelligent men who are extremely loyal to the president of the United States, and gentlemen, I hate to break it to you, but you can't believe everything that you read.