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JUDY WOODRUFF'S INSIDE POLITICS

Recall Election Continues to Grip California; Bush Meets With Economic Advisers

Aired August 13, 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: Dynamic duos in the California recall. How much help will Arnold get from Maria? How much help will Gray get from Bill?

UNIDENTIFIED MALE: This was both the public and the media driving this.

ANNOUNCER: There's a switch. California TV stations are covering politics. Are voters tuning in?

UNIDENTIFIED MALE: People who normally don't vote, who normally aren't interested in politics and suddenly are interested in politics because they want to vote for the movie star because he's in the race.

ANNOUNCER: At the ranch and on the money, the president and his economic team focus on the bottom line for the nation and for his re- election bid.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We feel like the plans we have in place are robust enough to create jobs.

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

(END VIDEOTAPE)

JOHN KING, CNN ANCHOR: Thanks for joining us. Judy is off this week.

Arnold Schwarzenegger is adding new muscle to his campaign for California governor. As you heard live here on CNN less than an hour ago, billionaire investor Warren Buffett has signed on as Schwarzenegger's senior economic adviser.

And Schwarzenegger is hiring three aides to former California Governor Pete Wilson whose influence on the campaign appears to be growing. A Schwarzenegger spokesman says this does not signal a demotion for George Gorton, another former Wilson adviser who still is the actors campaign manger.

Media adviser Don Sipple tells me also that the campaign is welcoming input of Schwarzenegger's wife Maria Shiver. "The Los Angeles Times" says she is assuming a central campaign strategy role. Still to be answered, will this famous member of the Kennedy family actively stump for her Republican husband?

Many Schwarzenegger fans and foes are still wondering when and if he'll talk issues. Some are suggesting perhaps the actor might be better off sticking with a Hollywood-style promotional tour brief recall campaign. But Schwarzenegger media adviser tells me issues will be addressed.

(BEGIN VIDEO CLIP)

DON SIPPLE, SCHWARZENEGGER MEDIA ADVISER: I think you'll see over the course of the next eight weeks a lot of substance and policy that he would apply as governor of the state of California.

KING: So you will come out with detailed policy. I assume you think politically, why now? You're riding a pretty good wave. Why come out with policy now? Is that the thinking?

SIPPLE: No, it's a long campaign. We have from today forward eight full weeks. And he's been in it for just one week. And so there's plenty of time to deal with each issue one by one and give the people of California a clear sense direction that he's going to take the state.

(END VIDEO CLIP)

KING: Sipple also told us in that interview that Schwarzenegger will initially finance his campaign from his own bank account.

Now as the Schwarzenegger campaign strategy begins to take shape, it's till a little fuzzy, we're beginning to get a much clearer picture of how Governor Gray Davis will try to keep his job. Davis is exchanging one old campaign playbook for another.

(BEGIN VIDEOTAPE)

AD ANNOUNCER: An unforgivable act of foolishness, reckless and below any standard of decency in campaigning.

KING (voice-over): The scored earth campaign, a Gray Davis trademark.

AD ANNOUNCER: How did Riordan return the favor? He gouged the rest of the stare.

KING: But this year the governor is all warm and fuzzy. The governor's fellow Democrats have put him on notice that a bare knuckles recall campaign will backfire. So now Davis is using his official platform to highlight voter-friendly issues and to woo key constituency.

GOV. GRAY DAVIS (D), CALIFORNIA: ... so I'm going to work every day on matters that people care about.

KING: It is a page out of the Clinton playbook. Tips the governor is getting from the man himself.

DAVIS: The highest award Hollywood can give for extraordinary performance, an Oscar for being (UNINTELLIGIBLE)...

KING: The two long-time allies talked strategy during a recent meeting in Chicago. And sources familiar with the talks say the governor and former president have talked several times since that meeting.

So will Davis forego attacks in this campaign?

AD ANNOUNCER: Helmsley blames her servants for the felony. Feinstein staff for the lawsuit.

KING: The governor is keeping mum on strategy, but he did made one thing clear, he's not about to quit.

DAVIS: They asked me to do a job in California, I'm going to do it every day they allow me to do it. I'm not going to give up on those 8 million people who went to the polls.

(END VIDEOTAPE)

KING: Now the California recall ballot is still taking shape. This much is clear: it will be long and have a roster of both celebrities and unknowns. The final list of qualified candidates is expected later this evening.

Let's check in now with CNN's Miguel Marquez following all this from Los Angeles -- Miguel.

MIGUEL MARQUEZ, CNN CORRESPONDENT: We hope it's final there, John. We know that the paperwork for 131 candidates has been completed at this point. There's about 40 more to go. The Secretary of State's office here says that they believe they can get that done by 5:00 p.m. tonight. Then all those candidates can be certified.

It's kind of a point in this election where we all kind of take a deep breath and wait for this thing to take shape. One thing we know for certain, that there will be lots and lots of candidates. The No. 2 guy in the polls right now is a guy by the name of Cruz Bustamante. We thought it would be an appropriate time to look at who he is and where he comes from.

(BEGIN VIDEOTAPE)

LT. GOV. CRUZ BUSTAMANTE (D), CALIFORNIA: I've made my own personal decision and my own personal decision is not to put my name on the ballot.

MARQUEZ (voice-over): That was Cruz Bustamante in July, and just like everything else in the California recall, that changed, too.

BUSTAMANTE: I feel very, very good even though we're coming to this particular race a little reluctantly.

MARQUEZ: The reluctant candidate is the most prominent Democrat running. In the '90s he served in California's assembly and in three short years rose to become speaker of the house. BUSTAMANTE: Of all the candidates that are major candidates who are running, none of them have led in the legislature.

MARQUEZ: He is the son of Mexican immigrants who was born and raised in California's Central Valley. When he was elected lieutenant governor 1998, he became the first Latino to ascend to statewide office in over 100 years. When he speaks publicly he knows who's listening.

BUSTAMANTE: And now for a few words in Spanish. (speaking in Spanish)

TONY QUINN, POLITICAL CONSULTANT: I would expect that he could get 60, 70 percent of the Latino vote and the Latino turnout will be pretty high.

MARQUEZ: Tony Quinn has worked in Sacramento politics for 30 years. Bustamante's biggest challenge, he says, defining who he is.

QUINN: The problem with Cruz Bustamante for having held public office for having held major public office for ten years, we know very little about him.

MARQUEZ: Dan Walters, a political reporter for "The Sacramento Bee" says Bustamante's a guy who has benefited from being at the right place at the right time.

DAN WALTERS, "SACRAMENTO BEE": Cruz Bustamante's a nice guy with some definite limitations. He has a reputation, I think well- deserved, for indecisiveness, having a difficult time making up his mind on things, of being torn between one thing and another and not wanting to go against anybody.

MARQUEZ: Bustamante's response to such criticism, show me somebody else who has done so much so far in a very competitive election.

BUSTAMANTE: I think I've consolidated the Democratic Party, I've coalesced them around a new strategy, as well as offered solution to the car tax. Let me see, has anyone else done anything like that yet? I guess not.

(END VIDEOTAPE)

MARQUEZ: Now, the car tax is a huge issue out here. Governor Gray Davis almost single-handedly tripled it and now even he's talking about getting rid of it.

The one question still out there, John, is whether or not this election will ever get to the issues where Governor Davis and Mr. Bustamante might feel more comfortable or will celebrity and personality trump all that? And we could see a different person in a different party in the governor's office -- John.

KING: Miguel Marquez keeping track, and a difficult task, keeping count of the candidates for us in Sacramento. Not as I said earlier in Los Angeles. Thank you very much, Miguel.

Now Democrats have portrayed this California recall as an assault on the Democratic process. But wait, a our Bill Schneider says, tell that to voters who are suddenly paying attention to politics.

(BEGIN VIDEO CLIP)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): Porn stars, movie actors, smut peddlers running for governor. Even comedians are dismayed.

BILL MAHER, "HBO'S REAL TIME WITH BILL MAHER": This is not what the founding fathers had in mind when they founded this republic. One of their greatest fears was putting too much power in the hands of the howling masses.

SCHNEIDER: For years the masses in California have been howling -- with boredom. Involvement in politics have been dwindling. In 1966 when Ronald Reagan got elected governor, 79 percent of those registered voted. When Jerry Brown won in 1974, 64 percent. Pete Wilson's election brought out 59 percent. Last year just over 50 percent turned out for Gray Davis' re-election.

The media responded by not paying much attention. The joke? TV news wouldn't cover a political debate unless the candidates got in a freeway chase.

UNIDENTIFIED MALE: He starts moving from lane to lane and is mainly staying over there in the left lane.

SCHNEIDER: But now suddenly all that apathy and cynicism seem to be turning around.

JILL STEWART, SYND. POLITICAL COLUMNIST: I know the East Coast media has been using the term chaos, chaos and confusion, chaos and confusion, chaos and confusion, but California voters aren't finding that much chaos. They are enjoying the stories.

SCHNEIDER: Apparently now the recall is getting equal billing with crime.

UNIDENTIFIED FEMALE: A judge in San Francisco ruled that a convicted child molester must go free this week.

UNIDENTIFIED MALE: And Governor Davis lays out his plan for the days leading to the recall election.

SCHNEIDER: There's an explosion of public interest in politics. Last year, two months before the election for governor, 24 percent of California voters said they were very interested in the campaign. Right now, 71 per percent say they're very or extremely interested.

UNIDENTIFIED MALE: People in California who usually just don't care and too blase about the whole thing become suddenly become involved, excited, talking about which candidate, laughing, crying, you know, jumping on band wagons, jumping off band wagons. SCHNEIDER: You can see it the breathless local coverage. Sure, it's the prospect of electing a movie star, but it's something else, too. Angry voters taking power into their own hands. It's called democracy.

UNIDENTIFIED MALE: We have a democracy, and democracy only works when people get involved. And right now California is a boiling cauldron of democracy.

(END VIDEOTAPE)

SCHNEIDER: Cauldron of democracy, that's democracy on the people's own terms. And it may be what it takes to get Americans engaged in politics again -- John.

KING: Bill Schneider in Los Angeles keeping track of this race and not the freeway chases, for us. Thank you, Bill.

Yes, the recall is a huge political story. But as George W. Bush asked just today, Isn't there a presidential race coming up? Still ahead, Mr. Bush tries to send another "I care" message about the economy. I'll ask White House Budget Director Josh Bolten to read between the financial and political lines.

Plus, we have a tasty morsel in today's "Campaign News Daily."

And later, was Schwarzenegger's political future foretold in a movie script?

This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

KING: President Bush has one huge advantage over embattled California Governor Gray Davis: the president's overall job approval rating is still pretty solid. But there are also similarities worrisome for a White House gearing up for a re-election run. Like Governor Davis, Mr. Bush is dealing with a struggling economy, high unemployment and red ink.

(BEGIN VIDEOTAPE)

KING (voice-over): The president says the national economy is bouncing back, no reason for a voter backlash, like the one getting so much attention in California these days.

BUSH: We believe it is more likely in the upcoming year that people are going to be able to find a job and that's exactly what -- where we focused our policy. But I also know there is more that can be done.

KING: That upbeat talk is no accident. The Bush team knows psychology matters when it comes to the politics of the economy, especially when not all of the numbers paint an optimistic picture.

Put the president, for example, side by side with embattled California Governor Gray Davis. California's unemployment rate was 5.6 percent when Davis first took office, 6.6% now. The national jobless rate was 4.2 percent when Mr. Bush was sworn in, up to 6.2% now.

California is required to balance its budget. One major source of anger at Governor Davis now is the borrowing and other tough choices necessary to erase a $38 billion state budget shortfall. And Mr. Bush? He inherited a $236 billion budget surplus, but his administration now projects red ink, a record deficit of $455 billion this year.

(END VIDEOTAPE)

KING: All of this economic news on the agenda when President Bush met earlier today with his economic advisers at his ranch in Crawford, Texas. And he sounded after the meeting pretty close to ruling out another round of tax cuts in the campaign year next year.

I spoke earlier with the White House budget director, Josh Bolten. Here's how he sees it.

(END VIDEOTAPE)

JOSH BOLTEN, WHITE HOUSE BUDGET DIR.: What he said today was that it's the belief of his economic team and of the president that the tax cuts that we put in place are well designed to deal with there situation we're in. They -- it looks like they're having a good effect. There's some positive signs about the economy and the president wants to wait and see before he makes a decision about what, if anything, further might be needed to help this economy grow and create jobs.

KING: As you know, the Democrats have a very different view. They say the Bush tax cuts were a disaster for the economy, that they have not created jobs, as the president promised, and that they have blown up the federal budget deficit. Former White House Press Secretary Ari Fleischer said on May 28 that the new -- the latest installment of the Bush tax cut would create 1 million new jobs. Just coming into place, as you note, but the economy is still losing jobs. Do you stand by that pledge, 1 million new jobs?

BOLTEN: I don't know exactly what the number is, but there is absolutely no doubt that the tax cuts that the president has put in place have been very important job creators.

Remember the situation that the president faced coming into office. He faced an economy that was saddled with a tech and stock market bubble that burst about a year before he came into office. The economy was entering recession when he came into office. There were undiscovered corporate scandals that came to light during his first couple of years in office. And then, of course, there was September 11 and the global war on terror. So all of those things combined created a very challenging situation for the budget of the United States and for the economy and the president has taken exactly the right actions to put us back on the right path. So the -- I think the tax cuts have had a great deal to do with making sure that our economy is doing as well as it is.

KING: I want to change the subject, just for a second here. When you were up on Capitol Hill recently, not just the Democrat, but also some Republicans pressing for answers. I want you to listen, there were many Democrats criticizing you, but also a Republican, Senator George Voinovich of Ohio. He says the administration is being less than forthcoming, in his view, when it comes to answering key questions about Iraq. Let's listen for a second.

(BEGIN VIDEO CLIP)

SEN. GEORGE VOINOVICH (R), OHIO: I think you, Mr. Bolten, should be more forthright in terms of what the costs are going to be so that we have some idea and the American people how long, how much.

(END VIDEO CLIP)

KING: Josh Bolten, how long, how much?

BOLTEN: Well, I know -- I can appreciate the frustration that Senator Voinovich might have been feeling at that time. But the important thing is that we not make estimate about the cost of these things before we actually know what's going on. There are way too many variables that have been in place about the security situation, about what our international partners will be prepared to do, about how quickly the Iraqis are able to take over their own economy before we make definitive judgment about how much we're going to need to spend to meet our obligations in Iraq.

I think you'll see in the next couple of months -- you'll see more information coming out of Iraq that will enable us to give more solid estimates to the Congress, which they legitimately are looking for. But the one thing you can be sure of is that the president will make sure that we spend what's needed to secure the peace in Iraq because that is now the front line in the global war on terror and Ambassador Bremer is doing a terrific job to helping to bring that country around. The president will do what's necessary to make sure that our participation there is a success.

(END VIDEOTAPE)

KING: Coming up, is it over for Gray Davis even before Californians go to the polls? Bob Novak joins us with the "Inside Buzz" on that and much more, just ahead.

(COMMERCIAL BREAK)

KING: Checking the headlines now in "Campaign News Daily," next stop Iowa for the '04 Democrats in a busy week of presidential forums. Six of the nine contenders were in Oklahoma last night. They aggressively took aim at President Bush, and at times one another. Senator Joe Lieberman was booed by the audience when he criticized his rivals who opposed the war in Iraq.

White House hopeful John Kerry made something of a cheesy move earlier this week in Philadelphia. He ordered a local culinary treat, a Philly cheesesteak, with -- horrors of horrors -- Swiss cheese, instead of the traditional Cheese Whiz. A food critic moonlighting as a political pundit contends the faux pas will doom Kerry's candidacy in Philadelphia.

From that tasty morsel, I guess, to a veritable entree of what's going on elsewhere, Bob Novak joins us with his notebook full of buzz.

Let's start with this recall campaign. Your sources are telling you Gray Davis is...

ROBERT NOVAK, CNN CO-HOST, "CROSSFIRE": Done. I've been on the phone with Democrats in California and they think there is no chance since Schwarzenegger got in that Davis will make it. They think it's a two-way race between Schwarzenegger and Bustamante. And the Democrats I talked to are counting on the right wing Republicans, Bill Simon and Senator Tom McClintock to damage Schwarzenegger enough so that Bustamante will squeeze in.

KING: Now the president was almost goading reporters today in Crawford to remember that there is a presidential race going on. He had a whole bunch of his best fundraisers down to the ranch over the weekend. Do you think they have a sense yet, at least a gut, of who they're going to get as an opponent?

NOVAK: After they heard the president's speech, they all sat around eating barbecue and they have consensus, not who they want, but who they think -- they think Dick Gephardt will be the nominee because he has labor backing, because he has the at-large delegates -- remember they're only Republicans. They don't know much about the Democrats. And of course, Gephardt has to win the Iowa caucuses.

KING: Now, there are other races all but forgotten now, of course, because of California and the presidential race. But other important races in '04, including Congressional and Senate races. You're picking up some buzz on Alaska.

NOVAK: On Alaska. Lisa Murkowski, who was picked to -- selected to the seat for her father, was considered the weakest incumbent Republican. But now the polls now indicate that she is running, as far as approval going, about even with Tony Knowles, the very popular ex-governor, a Democrat. So this is now an even race and with Bush on the ballot in Alaska, he could pull Murkowski in. The weakest Republican seat now is Illinois, which is a open seat, a Republican incumbency.

KING: No secret, of course, that Bill Frist of Tennessee got off to a bit of a rough start as the Senate majority leader. Most of his allies had thought he had stabilized things. But as Congress is home on recess this August, you're hearing otherwise.

NOVAK: Yes, this is -- nothing's happening in Washington, as you know, John,. But the staffers are still up on the Hill, and on the House side, some of the House leadership staffers are really complaining around town to outsiders that Frist messed up the last session. They had to bring the House back, you remember, because the Senate wouldn't confirm. And they say, He better get with it. Now I don't know what they're going to do if he doesn't get with it, but it's very unusual to hear Republicans talk about each other from House to Senate as openly as they are in the House side.

KING: Slow in August in Washington, but it doesn't stop Bob Novak, picking up some buzz.

NOVAK: Thank you, Bob.

KING: Thank you, Bob.

Now the movies made Arnold Schwarzenegger famous, but did they also make him president? Details you don't want to miss just ahead.

(COMMERCIAL BREAK)

KING: More INSIDE POLITICS and a market story in just a moment. First, though, a developing story we want to bring you up to date on. A letter purportedly written by the deposed Iraqi leader Saddam Hussein calling on Iraq's powerful Shiite Muslim clergy to call for a jihad against the U.S. occupation. That according to a report on the Al Jazeera Arab satellite network.

This letter, again, purportedly written by Saddam Hussein, says quote -- "If the Shiite seminary calls for a jihad, this would unify the whole Iraqi people against the occupation."

The Arabic satellite channel says this letter was written by Saddam Hussein in answer to questions it sent to him. The authenticity of this, of course, cannot be immediately established. Al Jazeera showed this footage of the letter without telling us at all any details of how it was obtained. CIA analysts,of course, will look into this, as many other things.

More on this story as it develops. More INSIDE POLITICS in just a moment.

(MARKET UPDATE)

(COMMERCIAL BREAK)

KING: Arnold Schwarzenegger's ambitious nature has been well documented, but did the movie industry know he'd a future in politics before he did? We dug up this clip from the 1993 movie "Demolition Man." A 1990's cop is cryogenically frozen and then thawed in the year 2032 to chase a super villain.

Listen closely to the dialogue as the cop, played by Sylvester Stallone, is briefed on what he missed during the 30 or so past years.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I have, in fact, perused some news reels from the Schwarzenegger Library, and that time that you took that car...

SYLVESTER STALLONE, ACTOR: Hold it. The Schwarzenegger Library?

UNIDENTIFIED FEMALE: Yes, the Schwarzenegger Presidential Library. Wasn't he an actor when you...

STALLONE: Stop. He was president?

UNIDENTIFIED FEMALE: Yes. Even though he was not born in this country, his popularity at the time caused the 61st Amendment, which states that any...

STALLONE: I don't want to know. President!

(END VIDEOTAPE)

KING: The 61st Amendment. Yes.

More on that tomorrow on INSIDE POLITICS. Also, we're getting final word here from our John McCurrio (ph), the Schwarzenegger campaign may go on TV in California with its first ads as early as Tuesday, we are told. More on that tomorrow as well.

That's it today, though, for INSIDE POLITICS. I'm John King. Thanks for watching.

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