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Budget Experts on Capitol Hill are Seeing Red Ink

Aired April 29, 2003 - 16:00   ET


ANNOUNCER: The doctor is in. Senate majority leader Bill Frist has an appointment at the White House. Will he get some political relationship therapy?

Budget experts on Capitol Hill are seeing red ink. The new deficit discovery is complicating the battle over tax cuts.

Women and war. The pairing may work in the military, but it's reviving a gap in politics.

You've got to have friends. We'll tell you which presidential hopeful is cashing in on a sitcom connection.

Now, live from Washington, Judy Woodruff's INSIDE POLITICS.


JUDY WOODRUFF, HOST: Thank you for joining us.

The Senate is back in session today and majority leader Bill Frist -- has his work cut out for him on the sticky subject of tax cuts. Frist heads to the White House in just a couple of hours to continue what he has been doing all day, plotting strategy and mending fences with fellow Republicans who felt - those who felt he sold them out on the tax cut issue.

Our senior White House correspondent John King and our congressional correspondent Jonathan Karl are both with us. Jon Karl, to you first. What are you hearing? You are talking to Republicans on the Hill. What are they saying about where everything stands with regard to this tax cut?

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, Judy, even before getting down to that very difficult task of working on actually crafting the tax cut, Senator Bill Frist, the Republican leader in the Senate, has had to work very hard to repair those relations with House Republicans who felt that he betrayed them in that budget debate before they went out on their two-week Easter recess. Frist has contacted the Republican leaders over in the House by telephone and has apologized to them in person that way. And today he also did so publicly.


SEN. BILL FRIST (R-TN) MAJORITY LEADER: I have apologized. I have said I made a mistake. The big mistake, lesson learned is no surprises, and at this point, I'm ready to move on. Basically, we've got a domestic agenda out there that's very important. An international agenda that is very important. And we've got right now a jobs and growth package that's very important. And I've made mistakes. I'm smart enough as a heart surgeon to say, if you make a mistake somewhere along the line you make it, you make it one time.


KARL: Now, in about 10 minutes, Treasury Secretary John Snow and Senior Economic Adviser for the president Steven Friedman are scheduled to be here on Capitol Hill, over in Senator Frist's to meet with Senator Frist and Finance Chairman Grassley for a strategy session on how to get this tax cut passed in the next few weeks. Their biggest challenge here, Judy, is trying to figure a way to get the president's call for elimination of the double taxation of dividends into a much smaller tax package here in the Senate. One idea under very serious consideration up here is a temporary elimination of the dividend tax.

The way this would work is the dividend tax would be eliminated over the next three years, but it would be only a temporary elimination and would go right back to where it is in the fourth year, which would be 2007. One person actually working on this proposal acknowledged it may sound like a screwy tax policy, but it has an advantage. This plan would only cost $80 billion, significantly less than the $396 billion that the full elimination, the permanent elimination of the dividend tax would cost under the president's original plan.

But, Judy, in all of this, there is another very serious complicating factor. And that is that since April 15, tax revenues have been significantly less than anticipated. Take a look at this. Since April 15, tax receipts are $20 billion lower. Tax refunds are $20 billion higher, meaning a $40 billion higher than expected deficit. That's a very serious problem as they go to vote on a tax cut. Also, Judy, it means that they will have to vote on raising the so-called debt ceiling that allows the government to borrow money, a vote that would probably happen almost exactly at the same time as a final vote on the tax cut. Not something that makes it any easier for the Republicans up here.

WOODRUFF: Right. All right, Jon Karl at the Capitol. It will be very interesting to see how corporations react to making that dividend tax cut a temporary rather than a permanent thing. All right, Jon Karl.

And now let's turn to John King who is at the White House. John, the president inviting speaker Dennis Hastert and Bill Frist, the Senate majority leader to the White House. What's the strategy now behind this meeting?

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Judy, the number one strategy of this meeting is peacemaking. Here at the White House, they understand the frustration on the House side with Senator Frist's earlier maneuvering. You just heard him apologizing there in Jon Karl's report. Here at the White House they say the president wants to bring the two leaders together and say it's time to move on. Let's not have any grudges. Let's not have any leftover anger or frustration. Let's improve communication between the White House, the House and the Senate. And let's feel out both speaker Hastert and leader Frist about what they think is the biggest tax cut they can get out of their respective bodies, and how they think it is best for the White House to proceed.

That is the president's main goal here, simply to get them to together to say let bygones be bygones, and let's look forward. As the president lobbies the support of those two key leaders, his cabinet, as Jon Karl noted, also involved in the effort. Secretary Snow arriving on Capitol Hill just a few moments ago, said he thought things were going pretty well in a brief question-and-answer session with reporters. And he's up there for meetings. He's also lobbying members directly, as is the Commerce Secretary Don Evans. Secretary Evans is in the western part of the United States today.

But we are told among his conversations yesterday was a telephone call to Senator Olympia Snowe of Maine. One of the moderate Republicans, like George Voinovich of Ohio, who have said no more than $350 billion in taxes, unless you come up with spending cuts to pay for the rest. One of the items to be discussed the president, with the speaker and the Senate majority leader tonight will be what kind of spending offsets could you sell, because while on the surface those sound quite popular, every time you try to cut a program, some constituency raises its hand, of course, and cries foul.

WOODRUFF: John, given all these competing interests, the fact, as Jon said, the deficit now may be worse than originally thought, is there a sense of what the White House would consider an acceptable compromise here?

KING: Well, Judy, they still insist here the president wants more than $550 billion if they can get it. They also understand that they are unlikely to get any more than $550 billion, and in the end they may have to settle for something closer to $450 billion. They are not ready to say that publicly just yet.

They want to fight this out a little bit longer, but they do say this year at the White House that if the president accepts a package, even if it is just $550 billion, just being the White House description of it or $450 billion, what the president will do is say, OK, that's the best I could get in this round. And then he would very quickly come back with another round of tax cuts, putting the pressure yet again on the Congress as we get closer, and closer to the presidential and Congressional election year. So, if the president has to compromise more in this round look for him to immediately come back and present to the Congress yet another tax package.

WOODRUFF: That should be interesting. All right, John King reporting from the White House, Jon Karl from the Capitol.

Well, a separate story now. Majority leader Frist said today that Senator Rick Santorum's leadership post in the Republican Party is not in jeopardy, despite his controversial comments about homosexuality. In light of those comments, Santorum's appearance at the White House today was notable. He was in the audience when President Bush promoted his global AIDS initiative. And some fellow Republicans today came to the defense of Santorum, who likened homosexuality to incest, polygamy and adultery.

House majority leader Tom Delay said that Santorum took, quote, "a very courageous and moral position." And Senator Trent Lott whose, quote, "loose lips" sank his leadership post says that he offered his support to Santorum. And he advised him to say what he had to say and then stop repeating it.

Well, the war in Iraq has sparked a mini-war between two Democratic presidential camps. Up next, John Kerry and Howard Dean battle over who is fit to be commander in chief. What does the skirmish say about the state of the campaign?

Plus, the political winners and Losers of the war. Bob Novak will be along to name names.

And a lesson in how to get by politically with a little help from America's favorite "Friends."

This is INSIDE POLITICS, the place for campaign news.


WOODRUFF: The summer release of Senator Hillary Rodham Clinton's book is generating political buzz. Senator Clinton acknowledges that there will be more than one way to view her book, which is entitled "Living History." In a statement she said, quote, "It is about those White House years, not about me being a senator. There will be 100 million different ways to see it, because obviously it was a challenging time for our country." End quote.

Well, for starters, one million copies of the book on sale June 9. Senator Clinton's book is the topic we want to tell in today's "CROSSFIRE." That's coming up at half past the hour.

Did the war in Iraq help or hurt President Bush when it comes to capturing women voters? Our Bill Schneider will read between the poll numbers.

INSIDE POLITICS back in 60 seconds.


WOODRUFF: The war of words continues today between two Democratic presidential camps. As we told you yesterday, John Kerry's communications chief took aim at Howard Dean saying, quote, "His stated belief that the United States won't always have the strongest military raises serious questions about his capacity to serve as commander in chief." Well, today Dean's campaign manager Joe Trippi shot back. "The statement by Senator John Kerry's campaign is absurd. John Kerry's approach to foreign policy was also short-sighted when he voted to give President Bush a blank check to wage a preemptive war." Well, let's bring in our senior political correspondent Candy Crowley to read between the lines of all this early campaign battle, Candy, I guess you call it. Candy, it's a little vicious to be hearing this kind of language between the camps so early. What's going on here? What's the strategy?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: I think first of all, everything is early. This election cycle and the Iowa caucus comes a month early. I think by early March more than half of the states will have had primaries or caucuses. So, everything is pushed up, including the rhetoric. Beyond that, there will be nine of them by the time Bob Graham enters the race next week. So, they're fighting for attention. They're fighting for money. They're fighting for supporters.

And if you take for the moment that the presumed front-runner is John Kerry, and there is some thought that he is at this point, what do you want to be if you are one of the other eight? You want to be the person who John Kerry is in a fight with. And there you are with Howard Dean. You want to be the race between John Kerry and Howard Dean. So, that's kind of where it's coming from at this particular point, I think.

WOODRUFF: And why the fight in particular between Dean and Kerry? What's the special relationship there?

CROWLEY: Well, you know, first of all, let's take a look at the polls in New Hampshire, where you can see the main challenger, at least at this point, and again it's very early on to John Kerry at this point, is Howard Dean. Now, it's interesting that John Kerry took on Howard Dean at this point, because if you are sort of the presumed front-runner what you'd like to do is remain sort of above the fray. But he chose to take him on, which may hint that Dean is, in fact, cutting into some of Kerry's support.

And they do draw from the same sort of voter poll, described to me by one Democratic strategist as sort of the Volvo-driving MPR Democratic voter, sort of the liberal wing of the Democratic Party. So, they are drawing from the same pool. And it's very hard to figure how either Howard Dean or John Kerry could come out of New Hampshire having lost and be anything but limping. So, the stakes are really high for both of them in New Hampshire. I think you saw John Kerry take a hit this early, because there were some signs that maybe Dean was making some inroads.

WOODRUFF: Well, having said all that, Candy, where does all that leave the other seven candidates?

CROWLEY: Well, shoot, you know, if you are one of the other seven you are looking at this and saying, if Howard Dean can bring Kerry down a couple of notches, why isn't that good for everybody in the race? I think what is going to be interesting is you've got a debate coming up this weekend. And you may see more of this aimed at John Kerry, if the others see him as well as the front runner.

WOODRUFF: OK, Candy Crowley, we're all going to be watching. Candy is going to be there covering that debate for us.

More headlines on the Democratic hopefuls in our "Campaign News Daily."

Howard Dean is taking his White House campaign to San Francisco. The former Vermont governor continues his series of events commemorating the signing of the Vermont's civil unions law. He is holding a fundraiser tonight at he city's ferry building.

After some delay, Al Sharpton has released his campaign fundraising totals. Sharpton, at first, declined to file the report, arguing he was not yet an official candidate. Last week he agreed to file after a warning from a federal official. Sharpton reports raising $82,000 in the first quarter of this year. Now, that ranks him eighth out of the nine candidates just ahead of Carol Moseley- Braun.

Among his contributors, radio host Tom Joyner, Newark New Jersey Mayor Sharpe James and Abner Louima. He was the man who was tortured by New York police officers who later won an $8 million verdict against New York City.

Well, our senior political analyst Bill Schneider is with me to talk about an old standby in political polling that has made a comeback in recent months. I'm talking about the political divide between men and women. Bill, so what's happened to the gender gap?

WILLIAM SCHNEIDER, CNN CHIEF POLITICAL ANALYST: Well, you know, Judy, it disappeared for a long time and now it's back. For nearly a year and a half, from September 11, 2001 to January of this year, the gender gap simply vanished. Women supported President Bush just as strongly as men. Why? I call it the fear factor. Women were more worried about terrorism than men. In 15 polls taken since 9/11, more women than men have said they are worried that they or someone in their family could become a victim of terrorism.

Here is the latest evidence. Thirty-nine percent of women compared with 29 percent of men are worried now about terrorism. And women worried about terrorism have been more likely to support President Bush. He is, to use the stereotype, the strong, protective man.

WOODRUFF: So what has brought this gender gap back?

SCHNEIDER: What I call the war factor. Women are more skeptical than men that war is the best way to protect Americans from terrorism. And here's the latest evidence. Men are convinced that the war in Iraq has made the U.S. safer from terrorism, 64 percent. Women are not so sure, 52 percent. And, in fact, women who were worried about terrorism are even less likely to say that the war has made the country safer, just 44 percent. Sure enough, since the war started, the gender gap has made a comeback.

WOODRUFF: And so what effect is it truly having, politically, Bill? SCHNEIDER: Well, look at President Bush's re-elect figures before and after the war. In mid-March, just before the war, there was very little difference between men and women -- 47 percent of men, 44 percent of women said they would vote to re-elect Bush. But look at what's happened since the war. Support for Bush has surged among men, to 55 percent, but it hasn't changed at all among women.

Now those post-war figures are almost exactly the same as the vote for Bush among men and women in 2000. A lot of people have been comparing 2004 with 1992. But it's looking more and more like a replay of 2000. Oh, boy - Judy.

WOODRUFF: You're right. Oh, boy. OK, Bill Schneider, thanks very much.

Just ahead, winners and losers on the political home front. Bob Novak joins us.

Next, to talk about who gains stature and who lost ground in the wake of the war in Iraq.


WOODRUFF: In his first appearance on INSIDE POLITICS, essentially since the war ended, Bob Novak joining me now with his political winners and losers from the war in Iraq. Bob, first of all, you've been thinking about this a good deal. Who are the winners?

ROBERT NOVAK, CO-HOST "CROSSFIRE": Who else but George W. Bush. He was a successful war president and he looked very good doing it, too, very much in control. Don Rumsfeld, the most powerful secretary of defense I've ever seen. He controlled the war. He controlled Iraq. He even looks like he's controlling foreign policy, very popular with the people, 71 percent approval rating.

WOODRUFF: All right. That's two of them. You have a couple of members of Congress?

NOVAK: Joe Lieberman, Democratic Senator Joe Lieberman running for president. He took a gamble on supporting the war. He is ahead in the polls. In a multi-candidate field, Joe Lieberman would probably win the primaries. He helped himself. And the other winner Dick Gephardt, bland Dick Gephardt took a chance. He came out with a very risky plan of raising taxes, national health care. He had something the Democrats haven't had in a long time, a new idea. He was a winner out of the war.

WOODRUFF: All right, now that we've heard who four of the winners are, what about on the negative side of the ledger?

NOVAK: A man I admire very much, Secretary of State Colin Powell. Successful war. He looked like a reluctant warrior. History may prove him correct, but he was really pretty much of a loser. Senate Majority leader William Frist showed he's an inexperienced politician. He made one of the worst mistakes. He did not tell his own colleagues in the Senate, in the House and in the White House, a deal he had made on the taxes. He apologized for it today, but apologies, Judy, don't count in politics. He was a loser.

On the Democratic side ...

WOODRUFF: And you tie that to the war.

NOVAK: Absolutely. While this was going on, the tax bell was the big domestic issue during the war. Now the loser on the Democratic side, John Kerry, a few weeks before the war looked like the front-runner, moving toward the Democratic national nomination, presidential nomination. Made a mistake in which he compared a regime change in Washington with a regime change in Baghdad. The Democratic people who were looking at him closely said, has this guy got a tin ear? His status was hurt.

And, of course, the biggest loser of the war, politically, Governor Howard Dean, former governor of Vermont, who was rising as a dark horse candidate. Looked like he was going with Jimmy Carter for a nomination, but he had one issue, and that was opposition to the war. He needed, Judy, a three-month, off this 12-month war where we were bogged down in a quagmire, not a three-week war where we were sped to success. Howard Dean is in bad political trouble. And even John Kerry is attacking him for suggesting we might always have a strong military.

WOODRUFF: Bob, how long lasting are these labels, are these impressions that are now attached to these people?

NOVAK: Not very, I don't think. I think this is a very volatile situation, and the state of the economy may change everything else. But people do have memories. They have memories on people who went in the wrong direction, people who went in the right direction, people who look like they are courageous, people who look like they are faltering. And it all gets put into the mix. It isn't definitive, but it does have a long-lasting effect.

WOODRUFF: OK, Bob Novak, it's great to have you back on the program.

NOVAK: Nice to be here.

WOODRUFF: We're getting back to normal, so to speak, after the war.

NOVAK: All right, take care. Thanks very much. Good to see you.

Still ahead, the cast of the hit sitcom "Friends," knows a thing or two about raking in the money. Will that do a presidential candidate any good? Details when we return.



WOODRUFF: How much money would you fork over to hobnob with friends of TV's best known "Friends." Well, the creator of this hit situation comedy is hosting a fundraiser in Los Angeles tonight for Democratic presidential candidate Dick Gephardt. We are told that some celebrity types are expected to show up at the event, but we don't know if any of the actors who play Monica, Rachel, Phoebe, Joey, Chandler or Ross are going to be there. We'll try to let you know that tomorrow.

That's it for INSIDE POLITICS. I'm Judy Woodruff. Thank you for joining us.

"CROSSFIRE" starts right now.


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