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JUDY WOODRUFF'S INSIDE POLITICS

President Bush Signs Tax Cut Bill; Mideast Summit Trip Set For Next Week

Aired May 28, 2003 - 16:00   ET

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

(BEGIN VIDEOTAPE)
ANNOUNCER: The final act in the tax cut political drama. Now what does President Bush do for an encore?

It looks as if the road map will lead Mr. Bush to the Middle East. We'll explore his summit plans and what the administration hopes to accomplish.

COLIN POWELL, SECRETARY OF STATE: Such a meeting would certainly demonstrate the U.S. commitment to moving forward with the peace process.

ANNOUNCER: Clinton meets Kennedy. The 42nd president rekindles his connection to Camelot, for better or for worse.

(END VIDEOTAPE)

ANNOUNCER: Now, live from Washington: JUDY WOODRUFF'S INSIDE POLITICS.

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us.

Well, the ink still is fresh and soon the first refund checks will be in the mail. President Bush today signed the third biggest tax cut in U.S. history. But he can't afford to spend too much time celebrating, with his reelection bid under way and with world events moving quickly.

On the international front, the White House says Mr. Bush will meet with the Israeli and Palestinian prime ministers in Jordan next week, conditions permitting. This hour, National Security Adviser Condoleezza Rice is due to brief reporters on the president's trip to the Middle East and the G8 Summit. We'll be monitoring her remarks.

As you might expect, former President Bill Clinton doesn't have much good to say about the latest Bush tax cut. Mr. Clinton spoke a short while ago at the John F. Kennedy Library in Boston. He charged that Republicans are driven by an anti-tax ideology that doesn't hold up under scrutiny.

(BEGIN VIDEO CLIP)

WILLIAM J. CLINTON, FORMER PRESIDENT OF THE UNITED STATES: These tax cuts are too small in the short run to do any good and way too big in the long run to avoid serious harm. We get the worst of both worlds. All we get out of this tax cut is a continued maldistribution of wealth, which satisfies a theological argument about the evil of taxes as a burden on the poor, overtaxed Americans.

(END VIDEO CLIP)

WOODRUFF: Mr. Clinton also reflected on his now famous boyhood meeting with President John Kennedy almost 40 years ago and how JFK inspired a generation of young Americans and future politicians, including himself, to explore new frontiers.

Well, right now, let's talk more about the new tax cut and the president's next big battle with Congress.

Our congressional correspondent Jonathan Karl is on the Hill.

Jonathan, what are the Democrats up there saying about this tax cut the president signed today?

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, not surprisingly, Judy, Democrats are on the attack. This will be one of the central avenues for attack against the president, his handling of the economy, this tax cut being exhibit A.

Terry McAuliffe, the Democratic chairman, said that it was notable that the president yesterday signed a bill that would allow the government to spend or borrow nearly another trillion dollars to be added directly on to the national debt, but that that signing was not a ceremony at all. It was done behind closed doors, unlike today's fanfare for the signing of the tax cut.

And also, Joe Lieberman, one of those Democratic presidential candidates, was out in California today giving a speech on economics, where he took on the president's tax cut with this.

(BEGIN VIDEO CLIP)

SEN. JOSEPH LIEBERMAN (D-CT), PRESIDENTIAL CANDIDATE: The Bush administration has sapped our schools of the funding they need to produce the next generation of innovation leaders. I suppose that may help him finance those tax plans that haven't worked, but, believe me, we're going to pay a large price for it in the future.

(END VIDEO CLIP)

KARL: But Democrats are in a bind here. What the tax cut does is, it forces them to talk about rolling back the Bush tax cut, something Republicans will surely pounce on as a tax increase -- also, Judy, more tax cuts to come. Republicans have already signaled that they will come back later this year for more tax cuts, probably making some of the tax cuts just passed permanent, those very popular tax cuts, like the increase in the child tax credit.

So these will be very popular tax cuts that will be very hard for Democrats to vote against making permanent -- Judy.

WOODRUFF: All right, well, with tax cuts, at least for now, out of the way, what's the next big battle up there, Jon?

KARL: Well, there's a very big one coming up. And that's on the question of prescription drug coverage for those in Medicare. This is something that the Republicans think is their last chance for one more domestic victory before the presidential campaign season is in full swing.

It's a $400 billion-or-more proposal. And there are very different views from Democrats and Republicans on what to do about it. Now, Judy, one thing that's key about this is that this is not like the tax bill, where the Republicans only needed 50 votes in the Senate. If you remember, Vice President Cheney cast that tiebreaking vote. He won't be able to do that the way the debate is structured. Republicans will need 60 votes.

That means they'll need significant Democratic support on this. So, right now, what Republicans are trying to work on is a deal with moderate Democrats to come out with a proposal that will be the opening salvo in a debate that will probably dominate much of the next month. They want to get this done by July 4.

WOODRUFF: All right, Jonathan Karl with the latest on taxes and health care from Capitol Hill -- thank you, Jon.

Still ahead -- next, I should say -- the latest news from the campaign trail; plus, the president's most aggressive personal pitch for Middle East peace since taking office.

We're going to go to the briefing by National Security Adviser Condoleezza Rice when we return.

(COMMERCIAL BREAK)

WOODRUFF: Checking the headlines in our "Campaign News Daily": Hall of Fame football coach Don Shula is pitching in to help Florida Senator Bob Graham take his game to the next level. The longtime Miami Dolphins coach and his wife are hosting a Graham fund-raiser at their Miami home this week. The two couples have been friends for years. And Shula and Graham also have business relations as well.

Senator John Kerry is asking potential donors to help counter what he calls the Bush money machine in a new e-mail fund-raising request. Kerry also mentions potential donors that he claims will be giving to the Bush-Cheney team by writing -- quote -- "The Bush campaign will be armed with every dime they can scrounge from special interests, like Halliburton, Enron and WorldCom."

Senator Joe Lieberman expects to pick up a high-level endorsement later this week in California. Lieutenant Governor Cruz Bustamante has scheduled a news conference with Lieberman for Thursday. The campaign promises what it calls a very -- a special announcement.

Also in California, supporters of Governor Gray Davis are forming a committee to fight the anti-Davis recall effort. The "L.A. Times" reports that a top Davis adviser, Steve Smith, is expected to leave the group called Taxpayers Against the Recall. The governor was reelected in November, but polls show the state budget crisis has taken a toll on his popularity.

INSIDE POLITICS returns in a moment.

(COMMERCIAL BREAK)

WOODRUFF: While we wait for a briefing from the president's national security adviser, Dr. Condoleezza Rice, we want to look at more now on the president's upcoming trip to the Middle East and bring in two of our correspondents. CNN's Kelly Wallace is in Jerusalem. Kate Snow is on Capitol Hill.

Kate, to you first.

There are some Republicans, members of the president's own party, conservatives, who are not very happy about not only the trip, but the way he is pushing Israel here. What are they saying?

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Well, actually, what they are saying, Judy, is that they trust President Bush implicitly, but what they don't trust is the Palestinians and they don't trust everyone who surrounds President Bush, several Republican aides and members saying to me today that they are not quite as confident about the people around President Bush, notably the State Department.

One member says that there's a general reticence about promoting peace and proceeding down any path with the Palestinians. Remember that Majority Leader Tom DeLay has had some awfully strong words about this road map for peace, Judy. Remember, in March, he said -- quote -- "This is no road map for peace. It's a road map for destruction."

Today, I tried to reach out to Tom DeLay, wasn't able to get him on the phone. But through his spokesman, I'm told that he says, the president is showing tremendous leadership, but he cautions that nations and international organizations need to be very careful about propping up and communicating, in his words, with Yasser Arafat as if he were a legitimate leader, Republicans also saying, Judy, that they want to be very sure that Israel isn't prompted or pushed into making any kind of concessions -- Judy.

WOODRUFF: And having heard that from Kate, Kelly, I turn to you now in Jerusalem.

Is there a sense among some Israelis that they may be getting more pressure than they want from the United States and from the president himself?

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Well, Judy, they feel they already have had some pressure, certainly some heavy convincing, coming from the American administration to urge Ariel Sharon, the prime minister, to take the road map for Middle East peace before his Cabinet.

Mr. Sharon did that only after he was assured that the Americans would take into account some 14 reservations that the Israelis have with this road map. There is a concern privately that some have that they could be facing some pressure, especially with this upcoming summit next week. But they also feel very strongly that they think the American president is fully behind them when it comes to cracking down on terrorism first.

The Israelis continue to say they first need to see specific steps that the Palestinian prime minister, Mahmoud Abbas, is taking to dismantle and disarm these radical Palestinian groups responsible for attacks against Israelis. But, Judy, this is a problem that the American president is going to have to face next week, because the Palestinians are saying steps should be taken at the same time. And they're calling on the Israelis to take steps right now, easing travel restrictions, pulling troops out of Palestinian towns, to ease the plight of the Palestinian people.

This will be a big issue for Mr. Bush next week, Judy.

WOODRUFF: Kate, and back to some of the Republicans you were discussing just a moment ago on the Hill. Just in the last few days, we've heard from the Israeli prime minister, Mr. Sharon, a different formula. He's talking about Israel occupying land where the Palestinians live. How are they taking this new tone by the Israeli leader?

SNOW: Right. And what I'm hearing, Judy, is that that makes all the difference in the world. I'm told by one influential Republican here on Capitol Hill, Sharon's actions in accepting most of the road map and taking it to the Knesset, he says, makes all the difference. He says, there's less risk for this president politically now that Sharon has at least given some lip service to this. Those are his words.

He said, expect conservatives to keep their criticism of the administration rather quiet, behind the scenes. As long as Sharon is out there in front, they feel like they have got some cover -- Judy.

WOODRUFF: And, at the same time, Kelly, since Mr. Sharon made these remarks earlier this week, his administration has been asked almost hourly to clarify what he meant.

WALLACE: And they have been doing that clarifying, Judy.

What they're saying is that, when Mr. Sharon used the word "occupation" Monday night -- and, remember, it was the first time he ever used that word in public -- they say he was referring to military control of the 3.5 million Palestinians, not control of the land itself, that the Israeli position continues to be that the West Bank and the Gaza Strip are -- quote -- "disputed territories" that must be resolved in any final-status agreement with the Palestinians.

Political analysts have been having a field day with this. Many believe Mr. Sharon is a master politician, that he knew what he was saying. Some believe he was trying to send a message to the White House that he is committed to the road map. Others say he perhaps was just trying to send some vague signals to keep people guessing about what next steps he might take -- Judy.

WOODRUFF: Well, we won't stop asking questions here. All right, Kate Snow on the Hill, Kelly Wallace in Jerusalem, thank you both.

And, as we've mentioned, the president's national security adviser, Condoleezza Rice, has been talking to reporters about the president's trip. Her briefing got under way just a moment ago.

We're going to join it in progress.

(JOINED IN PROGRESS)

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: ... not actually contributing to the potential problem of a military nuclear program in Iran.

We believe that we've had pretty fruitful discussions with Russia in recent months on this matter, particularly Minister Rumansev (ph) and Secretary Abraham (ph) have had very important discussions. And the discussions, as I said, have been fruitful and far-ranging, and I think the presidents will want to build on those.

QUESTION: (OFF-MIKE) next meeting of the G-8, will it be in Texas next year?

RICE: We don't have an announcement yet to make on where the U.S. will host the G-8.

Yes?

QUESTION: What is the president supposed to come away with in the summit in Jordan? Does he want immediate implementation of the road map, a cease-fire, what exactly?

RICE: The president has always said that when he thought he could give a little impetus to what is going to be a very long and difficult process that he would do so. The president believes that this is new opportunity for peace at the end of the war in Iraq, and particularly with changes in the Palestinian leadership, that there is a new opportunity.

With the Israeli government's acceptance of the steps in the road map and some of the statements that Prime Minister Sharon has made about the future that he sees with the Palestinian people, the president just believes that this is a good time to sit down face to face, eye to eye, with the leaders who have responsibilities for trying to bring about that peace.

I want to be very clear. This is going to be a long process. And it is going to have ups and downs as it has always had. But on this entire Middle East portion, what the president will do is to talk to the assembled leaders about their responsibilities and about our responsibilities, to try and push forward the peace.

QUESTION: (UNINTELLIGIBLE). Are you going to be asking the Arab leaders to make a formal statement endorsing (UNINTELLIGIBLE) effort to centralize all armed force police force under the recognized Palestinian authorities and the militias? Are you looking for something that concrete?

RICE: Well, we're examining the best way to signal the commitment of all who want peace. To the extremely efforts that are underway in the Palestinian authority for reform -- reform of transparency in the finances of the Palestinian authority, and, perhaps most importantly, reform of the security services into security services that are unified and accountable.

And there are a number of Arab states who have already talked about the importance of that effort, who are indeed supporting that effort in various ways, and I'm sure the president will want to have a full discussion of that.

There is no secret that we very much think that this is one of the most important steps that Prime Minister Abbas will need to take, that he will need to be devoted to creating security services that can be accountable and that can truly fight terror.

But the form in which we express that support, I think, is up to the leaders.

RICE: The most important thing is that when we sit down we all have to recognize that the responsibilities for everyone who says that they want a peaceful outcome of this, that those responsibilities are quite heavy.

And those responsibilities include fighting terror. Those responsibilities include ending incitement. Those responsibilities include saying that anyone who is engaged in terror cannot possible do anything but harm the process toward peace.

And so those are some of the principles that the president put forward in his June 24 speech, and I think he looks forward to an opportunity to sit down face to face in the group with Arab leaders and talk about those responsibilities.

QUESTION: Dr. Rice, can you please tell us how Iraq fits into this schedule? Because a heavy emphasis on the Israeli-Palestinian issue and the G-8 agenda in place. Where does Iraq fit in? How much time will the president spend talking about getting together peacekeepers and reconstruction, financial aid, that sort of thing?

RICE: Well, these discussions since the passage of Resolution 1483 in the U.N., have been quite intensive, with a number of countries that -- even before 1483, but particularly since the passage of the resolution have been quite intensive on matters of who might be willing over a period of time to contribute to stabilization forces, who might be willing to contribute to the well-being of the Iraqi people through development assistance or reconstruction assistance.

I would remind everybody that this was a broad coalition from the very beginning. There are a lot of countries that are already contributing fundamentally to what is going on in Iraq. So there's no need to suddenly launch an agenda on issues of support for the Iraqi people, because that's already an agenda that is well launched. I'm sure that the president will, with his G-8 colleagues, talk about the reconstruction effort, talk about what can be done to support the Iraqi people. But those discussions are well under way.

With the Arab leaders, the president will want to talk also about Iraq. Again, he's had many discussions with them, by phone, by letter, in some cases in person, and they will talk about that agenda.

The one thing the president will have an opportunity to do that I think he's particularly looking forward to is at CENTCOM to sit down with Ambassador Bremer, who has now been in the region for a couple of weeks, with General Franks, and to talk about how the reconstruction effort is going and how we're going to discharge our responsibilities to the Iraqi people.

QUESTION: Can you get together the peacekeeping forces that you need if you don't have the bigger, wealthier traditional allies in the game here?

RICE: Well, I wouldn't jump to any conclusions about who will or will not engage in the production of stabilization forces. We're not at that stage just yet of having a massive peacekeeping operation.

I remind everybody the war is only recently over. It is also the case that American forces, the coalition forces have the bulk of the responsibility right now for security. As Secretary Rumsfeld has said a number of times, we have focused particularly on trying to deliver security to Baghdad. And so it is a conversation that is under way.

I'm quite certain that because everybody is committed in 1483 to making things work for the Iraqi people, that there are a lot of countries out there, and the president has had expressions of interest from a wide range of countries.

And by the way, countries, whatever their stand was at the time of the war, countries that understand the importance of doing well in Iraq and have said that they want to talk about what kind of contribution they can make.

WOODRUFF: President Bush's national security adviser, Dr. Condoleezza Rice, not only talking about Iraq, but primarily about President Bush's trip next week to the Middle East, saying he'll be meeting face to face with leaders of the Palestinians and the Israelis, talking to them about what their responsibilities are and what the responsibility of the United States is.

We'll talk a little more about what Dr. Rice had to say when we come back. After a break, we'll talk with our White House correspondent Chris Burns.

(COMMERCIAL BREAK)

WOODRUFF: We've just been hearing from Dr. Condoleezza Rice, President Bush's national security adviser, talking to reporters about the president's trip to the Middle East next week, where he will sit down with the leaders of the Palestinians, with Israeli Prime Minister Ariel Sharon.

Let's talk a little bit more right now with our White House correspondent Chris Burns about what Dr. Rice was saying.

Chris, it very much sounded to me as if the White House is going to be looking to the Arab leaders in the region to work in any way they can on improving the security for the state of Israel.

CHRIS BURNS, CNN WHITE HOUSE CORRESPONDENT: Well, it does appear to be that way, Judy.

It does appear that President Bush -- this is a critical moment for the president to try to get some support from those key Arab countries when he meets with them in Egypt, before going on to that three-way summit with the Israeli and Palestinian prime ministers in Jordan, so very, very key, as Condoleezza Rice, the national security adviser, laid out.

In fact, what in part was remarkable about this briefing is that it happened at all. Usually, she does not give briefings like this ahead of a trip by the president, so, obviously, underlining the importance of tapping the Arab world for support in this effort to get both sides to start taking initial steps on a road map to peace, hopefully establishing an independent Palestinian state by 2005, Condoleezza Rice saying that the president believes that there is a new opportunity for peace, in that now Iraq is defeated, there's a new Palestinian leader, and now that the Israelis have accepted the road map, of course, with reservations, though.

But she underlined, this is a long process. And she says that it is important during this trip that they know and we know our responsibilities in this process -- Judy.

WOODRUFF: All right, Chris Burns, as we look ahead at what the president is going to be saying and doing over in the region next week -- Chris, thank you very much.

BURNS: Thank you.

WOODRUFF: And now back to politics. From Super Bowls to Stanley Cups, the only problem with political bets is, eventually, someone has to pay up. Just ahead: The Mayor of Saint Paul has to make good when the hometown hockey team falls short in the playoffs.

(COMMERCIAL BREAK)

WOODRUFF: With good reason, many politicians have learned to avoid wearing funny hats at all costs -- well, no so, Saint Paul, Minnesota, Mayor Randy Kelly. He wore Mickey Mouse ears to work yesterday because his home state team lost its National Hockey League playoff series.

Yes, he made one of those all-too-common political sports bets with the mayor of Anaheim, California, whose Mighty Ducks have now advanced to the Stanley Cup finals. Mayor Kelly says he knows that he looked ridiculous and that people were laughing at him all day, but, he notes, he's a man of his word. And in politics, as in life, that counts.

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

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