This is a partial transcript from "The Beltway Boys", April 17, 2004, that has been edited for clarity.

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MORT KONDRACKE, CO-HOST: It's time for this week's ups and downs.

DOWN: Democratic 9/11 Commission Member Jamie Gorelick

Critics say she should resign from the commission because of a conflict of interest. While serving in the Clinton Justice Department, Gorelick authored a memo which built up the so-called wall, further restricting communication between intelligence agents and criminal investigators.

Here's Chairman Kean's incredible response.

(BEGIN VIDEO CLIP)

CHAIRMAN TOM KEAN: She is, in my mind, one of the finest members of the commission, one of the hardest-working members of the commission. And, by the way, one of the most nonpartisan and bipartisan members of the commission. So people ought to stay out of our business.

(END VIDEO CLIP)

KONDRACKE: This is the guy who we just quoted...

FRED BARNES, CO-HOST: Yes.

KONDRACKE: ... as saying that this was the public's business ... and what we were ... trying to is inform the public.

Butt out, is what, what he's saying.

BARNES: Yes.

KONDRACKE: I mean, look, he's acting like, you know, that the commission is a chummy little club unanswerable to even the Congress that created it.

BARNES: Yes.

KONDRACKE: Now, Jamie Gorelick may be smart, she's certainly and may be hard working, and she's certainly a nice person and all that stuff. But, you know, she should have informed this commission on her own that she was, was the author of a memo back, back in the mid-'90s, that increased the separation wall. She should not have waited for John Ashcroft (search) to expose her the way he did.

BARNES: No, she shouldn't have. Look, Tom Kean is not dealing with the issue. The issue is not that she is a bad person or lazy or has been very partisan in these hearings.

I mean, she hasn't been accused of that by everybody, so far as I know. The problem is that she has a specific, palpable, significant conflict of interest, not an apparent conflict of interest, but a conflict of interest on the issue that is one of the most important in front of the commission.

Now, if, if she stays, and it looks like she is going to stay on the commission, it will taint all their work, their findings, which will be taken by the public and by me and I think a lot of other people too as less serious than they would like those findings to be regarded.

UP: President Bush

In a dramatic shift in U.S. policy, President Bush (search) is backing Israel's plan for a withdrawal from the Gaza Strip (search) and parts of the West Bank to allow for a viable Palestinian state. But the plan also allows Israel to keep parts of the West Bank it's occupied since 1967 and dismisses the right of Palestinian refugees to return.

Here's Bush Friday.

(BEGIN VIDEO CLIP)

PRESIDENT BUSH: It's going to require a commitment by the Palestinian people to find leadership that is committed to peace and hope. And it's going to require a commitment by people in the neighborhood to support the emergence of a state. This is historic moment, and I appreciate the prime minister of Israel coming here to announce it. And we intend to seize the moment.

(END VIDEO CLIP)

KONDRACKE: Well, as usual, the Arabs can only focus on what they're not getting out of this, out of this offer instead of what they are getting. What they're getting is the Gaza Strip, which is, which is a hellhole now, but could be a grand resort area on the Mediterranean and make a lot of people a lot of money ... were invested in.

They're also getting from Bush a tacit acceptance of the 97 percent of the West Bank offer that Bill Clinton made at the end of his administration. This is all provided, the Palestinians will agree to negotiate in good faith and without using violence as a weapon.

You know, the problem is that I begin to fear that it is simply not in the nature of those people to be able to do that.

BARNES: Well, you may be right about that.

You know, I think this was quite bold by President Bush, knowing that by endorsing this proposal, that he would be criticized by all those people around the world, particularly in Europe, and a lot in the United States who are always calling on him to get more involved in the Palestinian-Israeli dispute, and calling on him to be even-handed, when we know what they mean, they're calling on him really to lean on Israel, not agree with Sharon on anything, but lean on Israel and, and try to squeeze more concessions out of them, then, you know, the president said he would recognize as Israel's some population centers in areas that Israel didn't control, I guess, prior to 1967.

You know what these population centers are? They're suburbs of Jerusalem. They were never going to be given to the Palestinians.

KONDRACKE: Right.

UP: California Governor Arnold Schwarzenegger

Whether it's his Hollywood charm or raw political muscle, Schwarzenegger's governing style is working. This week, he engineered a deal with state Democrats on worker's compensation reform, fixing the most expensive system in the nation.

BARNES: You know, Schwarzenegger really has Democrats on the run. I mean, he says, Look, agree with me, mostly on my terms on legislation that in this case would reform workman's compensation and maybe attract some more businesses back into the state, or if you don't agree with me, if you don't compromise, I'm going to take it to a referendum. And he was ready to do that. And I'll crush you there.

Now, Democrats claim that, that he's really muscling them, that he's strongarming them. Of course he's strongarming them. And Californians love it.

KONDRACKE: Yes, you know, it does help Arnold a good deal to be the successor to Gray Davis (search), the, a total failure.

BARNES: Right.

KONDRACKE: It's sort of like Winston Churchill (search) succeeding Neville Chamberlain (search) or ... or Ronald Reagan (search) succeeding Jimmy Carter (search) as president of the United States.

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