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CNN INSIDE POLITICS

President Bush, Congress Blaming Each Other for Budget Shortfalls

Aired August 28, 2001 - 17:00   ET

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


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JUDY WOODRUFF, CNN ANCHOR: This is INSIDE POLITICS. I'm Judy Woodruff in Washington. Tempers are flaring and politicians are clashing over the Bush administration's stand on the UN racism conference.

JOHN KING, CNN CORRESPONDENT: I'm John King in Crawford, Texas, where the president is preparing to lay down more markers in the fight over the shrinking surplus.

BROOKS JACKSON, CNN CORRESPONDENT: I'm Brooks Jackson in Washington. I'll put the surplus and its impact on Social Security into perspective by hitting the road.

BOB FRANKEN, CNN CORRESPONDENT: I'm Bob Franken in Modesto, California. The flight attendant who says she's having an affair -- had an affair with Congressman Gary Condit is speaking out again.

ANNOUNCER: Now Judy Woodruff takes you INSIDE POLITICS.

WOODRUFF: Thank you for joining us. Well, as President Bush and members of Congress get closer to their return to Washington, they are stepping up their early skirmishing over the budget. Today, Democrats are trying to make the most of their new ammunition: those projections for Congress that show the federal surplus has shrunk so much that the government may have to tap into Social Security funds.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-MO), MAJORITY LEADER: The real concern I have is: What's going to happen to education? What's going to happen to the Medicare program? What's going to happen to defense and to all of the other high priorities the government has? Today, the money isn't there to pay for those priorities, and the president needs to provide us with the leadership to see that those priorities can be addressed. And I'm willing to work with him to do that.

(END VIDEO CLIP)

WOODRUFF: Republicans are hitting right back, accusing the Democrats of playing the blame game.

(BEGIN VIDEO CLIP) REP. JIM NUSSLE (R-IA), BUDGET CHAIRMAN: All of a sudden, they're in the majority and now they have no -- they're washing their hands of everything, even though they're the governing party in the Senate. We are responsible. We will be responsible. And the Office of Management and Budget should take the lead in finding that money that will be used or lost as part of the bureaucracy of our country.

(END VIDEO CLIP)

WOODRUFF: Tomorrow, President Bush will weigh in once again on budget politics and his spending priorities. Our senior White House correspondent is with the president in Texas, and our congressional correspondent, Kate Snow, is on the Hill.

John, to you first. What is the White House, the people around the president, saying today about the CBO congressional numbers?

KING: Well, Judy, the White House continuing to insist that it believes its projections, which would show a very modest $1 billion non-Social Security surplus, will prove correct. At the same time, they're saying they're not terribly far apart in the context of a $2 trillion federal budget, the CBO and the White House about $10 billion apart.

The White House, though, backsliding a bit in its rhetoric saying it wouldn't be such a bad thing if the government had to tap into Social Security just for a modest amount, making clear that would not affect the program at all over the long run. So they're certainly preparing for the possibility that they might have to dip into Social Security, and they're preparing for this political fight.

You heard Senator Daschle at the top of the program. The White House making clear that if we go back just a few months, many Democrats in the Senate voted for a short-term tax cut that was even bigger than the one that became law. The Bush tax cut, the Democrats now say, is responsible for running the surplus down so low. Among the Democrats who voted for that bigger tax cut, now the majority leader, Tom Daschle, Senator Ted Kennedy, Senator Hillary Rodham Clinton, the Senate Budget Committee chairman, Ken Conrad. So the White House building its evidence list as well, preparing for quite a potentially bitter political battle.

WOODRUFF: Now, John, you're reporting that tomorrow, the president lays out his budget -- rather his priorities for this coming year. How is that going to play into their concern about the surplus?

KING: Well, we're told the president's speech will be relatively polite, and the president will reiterate things we've heard before, that he believes the four major goals in the fall should be funding education, defense, passing a Patients' Bill of Rights acceptable to the White House, and getting the Senate to act on the House version of his so-called faith-based initiative.

Now the president, we're told, not preparing any new initiatives or any confrontational or new language on the issue of the budget, but certainly, everything the president says now about his legislative agenda will be viewed through the prism of this debate over just how big is the federal surplus and will the government, in a matter of weeks if not months, be tapping into Social Security money. So this more a table setting speech, if you will.

The president will be back in Washington Thursday night. Congress is back to work next week. The president trying to get out ahead and present to the American people the issues he wants Congress to deal with first. And again, he will say, "Let's agree, the administration and Congress, on funding levels for education and defense at the beginning of the appropriations process." Those two issues -- education and defense -- so politically high profile, they're often held to the end. They become part of the deal making, part of the trading, part of what some administration officials would call hostage trading at the very end of the process. The president hoping to work that out first, but the history of the appropriations process will tell you that will be very difficult.

WOODRUFF: Kate, at the Capitol, let me come back to you now on those CBO numbers. What are -- how are Democrats responding to what the White House is saying about this?

KATE SNOW, CNN CORRESPONDENT: They've had a very clear message today, Judy, and part of it is that they want to hear from President Bush tomorrow or in the days to come an explanation for these numbers. They also want to hear President Bush and the White House take responsibility for the numbers. Democrats very clear that they feel that this is the administration's fault, that the administration pushed for that overwhelmingly large tax cut. They will tell you -- John King mentioned that some of them supported the up front stimulus, but Democrats will say they didn't support the entire $1.35 trillion tax cut. And so they're looking for answers from the Bush administration. They're placing the blame firmly there, and they're saying the president needs to figure out how to get us out of this mess, he got us into it.

And one thing Senator Conrad today was pressed on was: What could Democrats in the Senate do to try to fix the situation. Of course, they control the Senate. The senator said it really wasn't up to them, it's not up to the Democrats to take the lead, it's up to the White House to take the lead. Republicans read that as the Democrats simply posturing on all of this, taking advantage of the situation to play some politics -- Judy.

WOODRUFF: And Kate, you also have, as you've been reporting today, not just Democrats, but Republicans echoing the White House argument: We've got to hold down spending.

SNOW: Yeah. Republicans downplaying the impact of the CBO numbers. We heard from Chairman Jim Nussle, the Republican chair of the Budget Committee. You saw him at the top of the broadcast. He said today that, look, this isn't about dipping into Social Security. What it's really about is how much can we pay down the debt over the next 10 years? We'll still be able, he said, to pay down the debt at a significant rate.

But one thing we should point out about Republicans here in the House, particularly, Judy, they have a lot riding on all of this. They're up for election again next year. The president is not up for election. So some of them you sense are a little bit concerned about reigning and spending. Jim Nussle talked about the $18 billion that the president has asked for in additional defense spending, and he said, we haven't seen a justification for that just yet. He seemed to indicate that they wanted to know exactly how that money was going to be spent, because maybe they wouldn't support the president on that 18 billion.

Chairman Nussle also talking about other spending that needed to be reexamined in some quite curious comments today.

(BEGIN VIDEO CLIP)

NUSSLE: I mean, all we've got to do is cut up the Pentagon credit cards; you can find $9 billion. Just keep them from going to Hooters or out to strip clubs or whatever they were doing with their credit cards. I mean, I'm very serious. Everybody knows that there's wasteful Washington spending out there. Let's cut up the credit cards, let's stop the use-it-or-lose-it attitude. Let's recoup that money, and let's make sure that we are having the maximum amount of debt repayment.

(END VIDEO CLIP)

SNOW: That comment referring to some press reports earlier this month, Judy, where Senator Charles Grassley did an investigation and found that Pentagon credit cards were being used for improper purposes. That his point there -- Judy.

WOODRUFF: And finally, Kate, Senator John McCain, separate matter. He's checking into a hospital tomorrow?

SNOW: He is. He's going to be checking into the Mayo Clinic hospital in Phoenix, Arizona tomorrow morning. The senator enroute back right now on a plane from Prague and the Czech Republic. He's been on a congressional trip through four Eastern European countries. We understand he's in very good health. We're told he's in great spirits. He feels absolutely fine. But there was something discovered in his last checkup on August 17th when he went in for another routine cancer screening. You'll remember that last summer, Senator McCain had to deal with a melanoma that was found. He has been clear of cancer, we understand, since last summer. In fact, just last week, August 17th, when he went in, it was his fourth clear checkup, clear of cancer.

However, while he was there, his doctors discovered that he did have a problem with his prostate. His prostate was enlarged. They feel they need to go in; it's causing some problems with his bladder, so they're going to go in and take part of the prostate out. We're told it's a routine surgery. Our medical correspondent tells us that this is something that happens to a lot of men at his age. By the way, Senator McCain turning 65 tomorrow. So on his birthday, he'll be having that surgery. He should be out by this weekend recovering in Phoenix and then back here next week when the Senate resumes -- Judy.

WOODRUFF: All right, Kate Snow at the Capitol, John King reporting from Crawford. Thank you, both.

And now, let's talk more about the shrinking surplus and how it may affect one of the president's top priorities: education reform. We're joined now by two members of the House Education Committee: Republican Johnny Isakson of Georgia and Democrat Harold Ford of Tennessee.

Congressman Isakson, to you first, how much money are we talking about here in terms of education? And do you believe it is jeopardized by these new surplus numbers?

REP. JOHNNY ISAKSON (R), GEORGIA: Well, the president's recommendation is not jeopardized; it's included in the mid-session analysis and there's plenty of money to do it. His recommendation was 19 billion. The House bill authorized 22 billion and the Senate bill went to 31 billion, which indicates some of our -- most of our problems are overspending recommendations either House or the Senate, not the president's recommendation. The president's recommendation for education can be fully funded.

WOODRUFF: Representative Ford, is that your view that there shouldn't be any difficulty given these new surplus reports with the president getting that funded?

REP. HAROLD FORD JR. (D), TENNESSEE: Well, the facts are the facts now, Ms. Woodruff. We now know that the forecasts and the predictions made by many of my friends in Congress, including Congressman Isakson, and the White House were completely off base. Not only will we have to dip into the Social Security trust fund this year, but we will not run a surplus next year. And it looks as if in the year 2003, according to CBO, we're some $20 billion short already. You don't have to be a mathematician to know that we're in a little bit of trouble here as it relates to education, defense, health care, transportation, veteran's affairs and agriculture. I appreciate the optimism of my colleague, but the reality is when we return next week, things will be very difficult and very tight whether it's medical research and science research.

WOODRUFF: Well, we just heard congressman -- well, let me just stop you there, because we just heard Congressman Isakson saying the president was asking for, I think, 19 billion, and in his words, that is -- that can be covered. It's the House and the Senate that went over that.

FORD: The president told us several months ago that we would generate a surplus of some $260 billion. He was $120 billion off. I appreciate the president's optimism, but the reality is the numbers don't reflect that, Ms. Woodruff. When we return next week, we may have to revisit a lot of decisions that the Congress has made. I agree with many colleagues in the Congress that we'll wait to hear from the president. He was the one that advocated and aggressively pushed for this legislation. I did not vote for the tax bill. But I believe we ought to wait and hear from him.

But the reality is we do not have the dollars to accommodate all the programs that have been laid out by Democrats and Republicans in the Congress. There will have to be some spending cuts.

WOODRUFF: Representative Isakson, it sounds like you're talking about two different budgets.

ISAKSON: Well, my friend Harold just said the key statement. He said there's not enough money to fund all the programs of members of the House and Senate, both Democrats and Republican. And lord knows he's right. That's the problem where they're comparing huge spending programs that are being introduced. The fact of the matter is the CBO estimate for next year includes four percent growth in the federal budget with its estimates, which is $28 billion in discretionary spending, which more than accommodates the president's $19 billion gross budget for education and the full funding of House Resolution One, no child left behind.

FORD: If I voted for that tax bill, as my friend Mr. Isakson did, I'd be making the same argument, Ms. Woodruff. The problem is not cutting spending, although we will have to do that. And we as a government should be efficient on how we run it. The problem is the president and those who supported that tax cut were completely wrong. We did not generate the kind of revenue the country or the president thought we would due to a slumping economy as well as for this huge tax cut. There were those of us who believed early on that we should have allocated money for the budget first before rushing to enact the tax cut. We probably could have enacted maybe a larger and smarter tax cut had we taken care of our budgetary issues early and perhaps helped invigorate the economy.

WOODRUFF: But Representative Ford, let me stop you there again, though, because...

FORD: Yes, ma'am.

WOODRUFF: ... if education is as important as both you and your Republican colleagues say it is, why isn't it worth spending some of that Social Security trust fund to pay for it?

FORD: We may end up having to do that, Ms. Woodruff. But Mr. Isakson and I both, along with 350 of my other colleagues, all voted earlier in the year to keep all Social Security trust funds in a lock box. It was laughed at throughout the campaign because Al Gore said it so much. But looks now as if we may have to renege on that promise to ensure that defense and education are fully funded.

I think what you're going to find is many of my colleagues on the Democratic side are going to say to this president, "What happened to this enormous surplus that you promised us? We see now it has not materialized and we're going to have to now make some very difficult and tough decisions.

ISAKSON: Judy?

WOODRUFF: Representative Isakson, what would the president say to that?

ISAKSON: I don't know. Well, let me just say what I would say which I think is what the president would say. The tax effect on this year's budget is money going back to taxpayers from a surplus that did exist. Yeah, you had some decline in growth, but what nobody is telling you, including Harold, this year ends September 30th. There is no calculation for the increase in revenues in next year's budget by virtue of the tax decrease. When John Kennedy cut taxes in the '60s and Ronal Reagan cut taxes in the '80s, the net revenues to the federal government from taxes went up not down in each of the succeeding year. So that calculation is not even in there. And I'm not throwing it out there when I tell you the 19 billion the president proposed for education and no child left behind is accommodatable without going into Social Security and without taking the hypothetical increase in revenue that hasn't proven itself.

FORD: The White House disputes your point in that, though, Mr. Isakson. I would remind you, President Reagan, his eight years in office, produced a $3.5 trillion debt. That's what we're trying to avoid here. Again, if I had to make the argument that Mr. Isakson and some of my Republican friends are going to have to make in the coming days, I probably would be hiding behind some of the fiction that they're hiding behind. The reality is we have a $1 billion surplus this year. The other reality is, according to the Congressional Budget Office, which Mr. Isakson and others use so valiantly throughout the debate some several months ago, are now estimating that we will not experience a surplus next year, and we will actually experience a $20 billion deficit the fiscal year following. So we can use all this mumbo jumbo fiscal language we want, but the reality is we have $1 billion surplus this year.

WOODRUFF: All right, gentlemen, we are going to have to leave it there. Clearly, we didn't resolve or come to any sort of agreement, but I want to thank both of you for joining us.

FORD: Ms. Woodruff, we want you to moderate the debate in the House when we get back.

ISAKSON: We'll have a day, Harold.

FORD: Good to see you, congressman.

ISAKSON: Good to see you.

WOODRUFF: Representative Harold Ford, Representative Johnny Isakson, thank you, both. We appreciate it.

Well, even if you have been carefully following the debate over the surplus and the latest estimates, it can still be difficult to visualize the huge sums of money that are at stake. Our Brooks Jackson is here now to draw us a picture, if you will, and to try to put it all in perspective.

Brooks, we've been listening to a debate over just how big a deal it is that the Social Security trust fund is going to be lifted, if you will, to pay for some of these -- for these spending priorities. How big a deal is it?

JACKSON: Well, Judy, let's take a look at that number that's causing all the political commotion.

(BEGIN VIDEOTAPE)

JACKSON (voice-over): Nine billion dollars. That's the amount that CBO now estimates will be spent out of this year's Social Security taxes to fund other federal spending -- dipping, if you will. A lot of zeros but keep it in perspective. This year's federal budget receipts will be more than $2 trillion, CBO's latest estimate. Even more zeros. To make those numbers real, think of that $2 trillion as a summer road trip. Let's say we're going to drive from the U.S. Capitol to, oh, Malibu pier, "Bay Watch" country. That transcontinental drive is 2,681.2 miles, according to mapquest.com. Now if you think of that distance as equaling this year's entire federal budget, then the $9 billion in question equals just 11.3 miles. It barely gets us outside the Washington beltway. And that $9 billion is an even more miniscule fraction of the total amount of money needed to shore up the current Social Security system.

According to the Urban Institute, the Social Security deficit is $10,200,000,000,000. That's the amount of money that would have to be invested today to keep from having to cut the Social Security benefits promised in current law, or raise taxes between now and the year 2075. Now think of that Social Security shortfall as the distance across the continent, and $9 billion gets you only 2.4 miles, about the distance between the Capitol and the White House.

(END VIDEOTAPE)

JACKSON: So, Judy, considering the kind of money the federal government brings in and the kind of money needed to really fix Social Security, nine billion hardly amounts to rounding error -- Judy.

WOODRUFF: Well, Brooks, I wonder if the Democrats are listening. Thanks very much.

Stay with us. This is INSIDE POLITICS.

ANNOUNCER: Now that Colin Powell will definitely be a no-show, the upcoming UN racism conference is generating even more controversy. We'll have a debate on the administration's position. Also ahead, the latest word from some of Gary Condit's leading attackers and defenders.

(BEGIN VIDEO CLIP)

CHAD CONDIT, GARY CONDIT'S SON: He didn't have anything to do with it. I know that.

(END VIDEO CLIP)

ANNOUNCER: And more than 80 years after women gained the right to vote, we'll discuss the gender gap and the ways both major parties are reaching out to women. Live from Washington, there is more of INSIDE POLITICS with Judy Woodruff straight ahead.

(COMMERCIAL BREAK) WOODRUFF: That's the Jefferson Memorial. We're not talking about that now, something very different: Congressman Gary Condit has returned to his self-imposed public silence. But the former flight attendant who says Condit asked her to lie about their relationship, she's speaking out.

CNN national correspondent Bob Franken is in Modesto, California with the latest on what Anne Marie Smith had to say, as well as what Gary Condit's son thinks about the claims against his father -- Bob.

FRANKEN: Well, let's talk about first Congressman Gary Condit and the growing feeling among those who know him that he is spending his time right now thinking about whether he should continue his career in politics. Some are saying it's just a matter of when he announces that he will not. There's a consensus that it's doubtful he would announce that he's resigning from Congress, but there's also a consensus that he very easily will announce that he won't run for reelection. One of his opponents called that something of a plea bargain, but the polls show that that is exactly what his constituents would support. They show that they feel that he's done a good job in Congress, don't want him to resign, don't plan to vote for him the next time around. And all the discussion about this was fueled by an appearance by his son, Chad Condit, last night on "Larry King Live."

(BEGIN VIDEO CLIP)

LARRY KING, "LARRY KING LIVE": Has he made a decision about his political life?

CONDIT: I've been in public life for 30 years. Never an allegation, never a charge. I don't know if he'll run again. My family vote would be that he doesn't. I don't think he deserves this. I don't think my mom deserves this. But that will be decided in the next few weeks.

(END VIDEO CLIP)

FRANKEN: Now we've been told repeatedly by Democratic leaders inside the Congress and friends of Congressman Condit that they have not, not had any conversations with him about his decision -- Judy.

WOODRUFF: All right, Bob Franken reporting from Modesto.

And this programming note. Anne Marie Smith, the flight attendant, will be the guest tonight on "The Point" with Greta Van Susteren. Now that's at 8:30 p.m. Eastern.

A police officer and a suspected bank robber critically wounded. Just ahead, an update on what led to the shootings in Chicago, and a check of some of this day's other top stories. Also, the woman who claims she had an affair with Gary Condit repeats her claim that he asked her to lie.

(COMMERCIAL BREAK)

WOODRUFF: More INSIDE POLITICS after the break, including my conversation with two party officials about the challenges they face as they reach out to women voters.

(COMMERCIAL BREAK)

WOODRUFF: Numbers-crunchers for Congress and the White House came up with different estimates, but both determined that the projected budget surplus has all but vanished. Will there be a political price to pay?

For answers to this and other questions let's turn to Ramesh Ponnuru of "The National Journal" and Mark Shields of CNN's "CAPITAL GANG."

Mark, to you first, a political price for the president?

MARK SHIELDS, CNN'S "CAPITAL GANG": I think so, Judy. The political disadvantage is to the Republicans. There's not, I don't think, a great political advantage to the Democrats. But once the tax cut passed, it was George Bush's economy, and surplus politics worked very good, very well for the Republicans in the year 2000. You'll recall, when you had surpluses, you could be for everything: You could be for tax cuts, defense increases, education, prescription drugs.

Now, we're going to be back in the politics of choices, priorities and scarcity, and I don't think those choices and priorities work as well for Republicans as they do for the Democrats.

WOODRUFF: Ramesh Ponnuru?

RAMESH PONNURU, "NATIONAL JOURNAL": Well, I think that the administration is going to take a modest hit, because -- if it turns out that it has to, as they say, dip into the Social Security surplus, but at the end of the day, when people realize that Social Security is not in danger, people are still getting their checks for the next 10 to 15 years with no problems, and there's still going to be 150 to 160 billion dollars leftover to pay down debt, I think that the -- I don't think the Democrats are going to be able to make too much hay out of it.

WOODRUFF: Mark Shields, one of the president's dearest priorities, as we know, is education: Is he going to be able to fulfill his fondest hopes when it comes to education reform with these new surplus numbers?

SHIELDS: I really question whether the money is going to be there or the will is going to be there. And I think what he may find, Judy, is the restlessness and restiveness in his own party's ranks. The enthusiasm for a much expanded federal role as well as federal paycheck or spending in education has always been lukewarm. And I think you may find that this is the tipping point for some Republicans.

WOODRUFF: Ramesh?

PONNURU: Well, I mean, his budget already includes the money that he's contemplating in his education bill. But you know, the point is there are going to be some tough spending choices here, and I think that the shrinking surplus just increases the likelihood that Bush is going to have to issue a veto of some of the spending bills. If he wants to say, you know, that Congress shouldn't be indulging in wasteful spending, he's going to have to -- he's going to have to wield that veto pen and say, look, if you don't want to dip into Social Security, you can't spend so much.

WOODRUFF: And Mark, what if the president does veto?

SHIELDS: Well, I think, Judy, the politics of scarcity, of fiscal austerity, of who's tougher on the balanced budget, and for more cold showers and root canal work for the American people has not worked for the party that has dominated that debate. Historically -- the Republicans did it for 30 years and consistently lost elections. Ronald Reagan came along and said deficits didn't matter, and carried two -- two landslide victories.

So I'm not sure that it's going to work to the Republicans' advantage or the Democrats' advantage, to be arguing about nickels and dimes. But if you're talking about there isn't money for prescription drugs or there isn't money for Social Security reform, which there isn't because of the president's priority tax cuts, I think it becomes a different political debate.

WOODRUFF: Ramesh, a different subject, the United Nations conference, world conference on racism coming up this weekend. The administration now announcing that Secretary of State Colin Powell will not attend that conference. Is there political fallout for the administration from that move?

PONNURU: I don't think so. I think it's not as bold a step as they could have taken. I do think it somewhat encourages this argument that critics of the administration that they're, you know, a little bit withdrawing from the world. I think the better thing to do would have been to actually go and engage them the way Moynihan, Senator Moynihan, when he was at the United Nations, engaged people who were saying that Zionism was racism and actually take on this argument, and say, look, this is anti-Israeli, anti-American propaganda, and just absolutely fight it.

WOODRUFF: Mark, would that have been a smart thing to do?

SHIELDS: I agree with Ramesh, Judy. I think that the United States has a great story to tell. Colin Powell's is a great American story. It's a triumph over the vestiges of racism in this country. It's a message for the world. I think Condoleezza Rice sends the same message. And for the United States not to engage in such a forum I think is passing up just a marvelous opportunity to really put the lie to what has been, I think, false charges.

WOODRUFF: But Mark, does this -- does this truly make the United States vulnerable to accusations that it's withdrawing from the world, pulling back?

SHIELDS: Well, I think that accusation is already there, and it is circulating, and how much traction it gets is another question. But I think on this issue, we -- the United States, especially in this administration with Colin Powell as secretary of state, has special credentials and special credibility to speak to the subject of racism, and to pass up that opportunity I think is a missed opportunity.

WOODRUFF: A missed opportunity, Ramesh?

PONNURU: I agree, I agree with that. But better than participating in lending legitimacy without challenging it. The worst thing would be to go there and act as though these are reasonable points of view being presented about Israel and America.

WOODRUFF: All right, Ramesh Ponnuru of "The National Review," Mark Shields of our own "CAPITAL GANG," gentlemen, thank you both.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DR. MARTIN LUTHER KING JR., CIVIL RIGHTS ACTIVIST: I have a dream that one day this nation will rise up, and live out true meaning of its creed. We hold these truths to be self-evident, that all men are created equal.

(END VIDEO CLIP)

WOODRUFF: Thirty-eight years after Dr. King's speech, America is still working through issues of race. The U.S. decision not to send Secretary of State Colin Powell to that upcoming U.N. conference on racism has sparked criticism and praise. Some lawmakers and civil rights leaders, including the Reverend Jesse Jackson disagree with the move. Others say Powell should not attend because the gathering will include Arab-backed proposals accusing Israel of racism.

For more on the conference and Colin Powell's conspicuous absence, I am joined by Democratic Congressman Tom Lantos of California, and from Houston, Democratic Representative Sheila Jackson-Lee of Texas.

Congressman Lantos, to you first. Is the administration right not to send Secretary Powell?

REP. TOM LANTOS (D), CALIFORNIA: The administration certainly is right not to send Secretary Powell, and I personally want to congratulate Secretary Powell who desperately wanted to go to stand on principle. This is a conference initially designed to fight against discrimination.

And it has become a conference to denounce and to ridicule the Democratic ally we have in the Middle East, the state of Israel. Both Condoleezza Rice and Colin Powell deserve praise for their principle stand.

WOODRUFF: What is so offensive about this language that is part of the makeup of this conference? LANTOS: Well, Judy, I just came back from Geneva at the preconference and the document, as it now stands, is an absurdity. It does not criticize a single country. It does not criticize Sudan, which currently practices slavery. It does not criticize the Taliban in Afghanistan, which is running a medieval dictatorship. It doesn't criticize China for its treatment of Tibet, but it criticizes one country on the face of this planet, the country of Israel.

And I think it was the only principle thing for us to do, to decide that the secretary should not dignify the conference with his presence.

WOODRUFF: Representative Sheila Jackson-Lee, with that language in there, why shouldn't the administration not send a high-ranking official like Secretary Powell?

REP. SHEILA JACKSON-LEE (D), TEXAS: Well, I'm an eternal optimist and I believe that negotiations are still going on to ensure that the most powerful nation in the world, the nation that has confronted the questions of race over and over again, has the opportunity to be the voice of reason, to likewise be part of a worldwide discussion that is so much in need of correction. Race is an issue, and religion is an issue that permeates foreign policy all over the world.

We should not be absent. So I am certainly willing to wait on the negotiations as they are proceeding, and I have been in touch with the White House. I believe that negotiations and conversations even as we speak are going on.

WOODRUFF: Are you saying, Congresswoman JACKSON-LEE, that the decision could be reversed and Secretary Powell could go after all?

JACKSON-LEE: I think that, far be it for me to speak for the administration, but I think what is key is that this nation understands the importance of these issues. Otherwise my good friend Tom Lantos would not have been at Geneva.

These issues of race, these issues of solving our differences are so very important that before we conclude with finality, if, for example, Kofi Annan is still in negotiations at this point or Mary Robinson is still in negotiations, then should allow the negotiations to proceed because the nation is so diverse, it has so much to offer. It should not be excluded or precluded from an important debate like this.

WOODRUFF: But just to be very clear, Congresswoman Lee, are you saying if the language is as it is, that the U.S. should send Secretary Powell?

JACKSON-LEE: I can't answer. I know that what I have been apprised is that we are still in negotiation, and I hope that is the case. If that is the case, then I think the administration will make an assessment on that.

WOODRUFF: Well, Representative Lantos, do you have some hopes, some reason believe to that the offending language that's offensive to you, with regard to Israel, may be eliminated after all?

LANTOS: Let me first say, Judy, that there is no colleague I have more friendship and affection for than Sheila Jackson-Lee. The American voice will be heard at Durban. Sheila will be there, I will be there, we will have a delegation from the administration. And I think we will present the American point of view crystal clearly.

No, I don't think there is any chance that Colin Powell will go, and I don't think he should. The American government has done its utmost to persuade the recalcitrant Arab and Islamic states who are trying merely to score a propaganda advantage at this conference, to clean up the language. They haven't done so, and Colin Powell made the right decision.

WOODRUFF: Let me quickly show you both what Secretary Powell said earlier this month when I interviewed him about this conference, and I asked him if he was confident that this language would be removed. This is a short segment of what he said.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: Not confident yet. I want to go to that conference. The United States wants to be represented at that conference. It's an important conference. It should be a forward-looking conference. But we should not allow the conference to be sidetracked to deal with a contemporary, political issue that is of concern to some members of the conference, and really isn't directly related to the purpose of the conference.

(END VIDEO CLIP)

WOODRUFF: So, Representative Lee, how do you square what he said with what's happening?

JACKSON-LEE: I hear a glimmer of hope, frankly. And the reason I do so, and again, let me add my appreciation to the leadership that Tom Lantos has shown, and his willingness to hear people, and that's what this conference should be about. The Congressional Black Caucus in particular has been very concerned about issues dealing with racism, about reparations, about slavery.

But it has been open, it is an enormously diverse group to many, many other issues. We seek to be at the roundtable to offer the United States' voice on many diverse issues. I am hoping that my voice can be heard in Durbin, South Africa at this very point. That is Kofi Annan and Mary Robinson and maybe others will realize the importance of making sure everyone is at the table and speak to positiveness of how we can resolve the crucial issues that divide the world. And I believe that we should be there.

WOODRUFF: All right, Representative Sheila Jackson-Lee, my apologies. I have been calling you Congresswoman Lee, and your last name is Jackson-Lee. I want to get that straight.

JACKSON-LEE: Thank you.

WOODRUFF: Thank you very much for joining us, and Representative Tom Lantos.

JACKSON-LEE: Thank you. Hello, Tom.

LANTOS: Hi, Sheila.

WOODRUFF: And we know you are both headed to that conference.

LANTOS: And we will me standing shoulder to shoulder with Sheila.

WOODRUFF: Thank you very much. And INSIDE POLITICS will return in a moment.

(COMMERCIAL BREAK)

WOODRUFF: Eighty-one years ago this week, the United States ratified the 19th Amendment, granting women the right to vote for the first time in the history of the Republic. If the recent activities of the major political parties are any indication, those votes are more valuable than ever. Republicans are working to overcome a large and growing Democratic advantage, particularly among the expanding ranks of women who work outside the home, while Democrats are trying to secure the loyalty of one group that has so far been more resistant: stay-at-home mothers.

Recently, I met with top party officials charged with winning the women's vote to talk with them about their challenges.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): Their names are legendary: Susan B. Anthony, Elizabeth Cady Stanton, crusaders for the cause of women's suffrage. You can see their pictures in the Library of Congress' "American Memory" Web site, a chronicle of the suffragettes' long march to the ballot box.

Today, with the gender gap as wide as it has ever been, both parties have launched major initiatives in pursuit of the woman's vote. The Republican effort, dubbed "winning women, " has a new Web site and a self-described "suburban mom" for a general: Republican National Committee co-chair, Ann Wagner. Her task: change some deep- seated beliefs about the Republican Party.

(on camera): Let me read to you something that a Republican pollster, Bob Teeter, said. He talked about the gender gap being the result of, in his words, "an accumulation of issue stands," he said, "from gun control to the environment," that, in his words, "alienated women and created a perception problem that will take time to reverse."

He said, "You're going to have to work your way back." He said, "I don't think there's one overriding positive issue you can turn it around."

ANN WAGNER, RNC CO-CHAIRWOMAN: We think we have an opportunity with this president, who women like, women trust and he is right on the issues that women care deeply about. And if you're talking about a gender gap, I do have to point out the fact that the real gender gap is with the Democratic Party and men.

You know, Judy, if you look at how George Bush did with men in this last election, he won 43 states, the men's vote in 43 states, including states like California. So they certainly have a big job to do and they have some explaining to do with this hemorrhaging of men from their party.

We recognize where our opportunities are and where our future is. Women make up 52 percent to 54 percent of the electorate, and we are going to aggressively with both human resources and money resources and manpower resource, get out across this nation and talk to women about this president.

WOODRUFF: The exit polls done after last year's election, the surveys that are being done now, show as women go back into the work force, even after they have children, they seem to gravitate away from the Republican Party and towards the Democratic Party. How do you define issue, that problem for your party?

WAGNER: Well, what we have to do is a better job of communicating our issues, the issues that George Bush is right on, the issues that women care about. Issues like education, issues like a strong economy and jobs. Believe it or not, women care about tax relief. They want more money.

Now, women are about the bottom line. We're busy people. We want to hear things in plain terms. We're juggling a lot of different balls and it's important that the Republican Party talk to women and make these things relevant in their lives.

WOODRUFF (voice-over): A block and a half away at the Democratic National Committee, Wagner's counterpart, Ida Castro, scoffs at the notion that a new message will change women's minds. But while the Democrats have a clear advantage among women in general, married women, especially stay-at-home mothers, are far more sympathetic to the Republicans.

IDA CASTRO, DIRECTOR, DNC WOMEN'S VOTE CENTER: Married women -- I think that the party, and that's probably one of the primary reasons why the women's vote center exists, is to focus on those groups that we have not been able to really communicate with. I believe that married women, suburban women, young, old, it doesn't matter. Once they know what we really stand for, once they're a part of that formulation, they, too, will agree with the rest of the women and be part and parcel of our party.

WOODRUFF (on camera): A couple of things the Republicans are saying right now that they think will increase their support among women: No. 1, by stressing President Bush's tax cut, they say that these tax cuts will benefit married couples, their families. They also talk about the president's focus on education. they Say both of those things, they think, will help them attract women voters.

CASTRO: Right. And I will be the first to say that the tax cuts, in fact, there are certain elements of that tax cut that do favor married women and women in general. And that is a good thing. That's why it received Democratic support. The issue is, did it have to be that large? The issue is, how is it, then, that you're going to afford that which you're saying?

Because the president, of course, touches the right buttons. He gives the right message, but if you basically squandered the surplus, then how is it that you can keep your promise to increase your resources for education? How is it that you can expand on after- school child care, for example, or learning programs that will permit children to stay out of trouble and stay safe and keep them in a learning environment? How is it that you're going to deal with Social Security?

WOODRUFF (voice-over): With a country so divided, which side wins the women's vote could easily tip the next election, giving women political clout that would make Ms. Stanton and Ms. Anthony proud.

(END VIDEOTAPE)

WOODRUFF: And INSIDE POLITICS will continue to follow the course of the women's vote. We'll be right back.

(COMMERCIAL BREAK)

WOODRUFF: Former Commerce Secretary and Gore 2000 campaign manager William Daley has made his decision. He will not run for governor of Illinois. Now working as an investment banker, Bill Daley says he needs a break from politics. He says he's opting out of the race for financial and personal reasons.

In today's "Chicago Sun-Times" daily, he's quoted as saying, "I have to do what's right for me and my family."

I'm Judy Woodruff. That's it for INSIDE POLITICS.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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