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JUDY WOODRUFF'S INSIDE POLITICS

Schwarzenegger Talks Economics

Aired August 20, 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: Arnold Schwarzenegger showcases his economic brain trust. Does he have a detailed plan to fix California's finances beyond the big picture promises in his new ad?

ARNOLD SCHWARZENEGGER (R), CALIFORNIA GUBERNATORIAL CANDIDATE: I'm running for governor to lead a movement for change and give California back its future.

ANNOUNCER: Gray Davis dance. Are disgruntled Democrats singing a new tune about the governor after hearing his I'm-sorry-I'll-do- better speech last night?

GOV. GRAY DAVIS (D), CALIFORNIA: I got your message and I accept that criticism.

ANNOUNCER: More fallout from the terror in Baghdad. Even some members of the president's party think more U.S. troops may be needed in Iraq.

SEN. JOHN MCCAIN (R), ARIZONA: After an event like this, you have to evaluate whether we have enough people and if we have the right kind of people and whether we are spending enough money.

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

(END VIDEOTAPE)

JOHN KING, GUEST HOST: Thanks for joining us. I'm John King. Judy is off this week.

Arnold Schwarzenegger is promising to start fixing California's struggling economy the day he takes office as governor, but whether the voters trust him with that job may hinge, at least in part, on the ideas and the answers he is laying out to reporters this afternoon after an economic summit with top advisers in Los Angeles.

(INTERRUPTED BY CNN COVERAGE OF LIVE EVENT)

KING: In the recall campaign, while Schwarzenegger was on camera, a federal court released a ruling against the American Civil Liberties Union and its request to delay the October 7 election. So, for now, the urgent campaigning goes on. That election just 49 days away. Arnold Schwarzenegger fielding questions today, trying to answer the questions of California voters, also questions of other critics, including those in the political media. One of our best, Ron Brownstein, of the "Los Angeles Times," joins us now.

Ron, he came out today. He says he needs a 60-day audit. Let's start with the budget crisis, though. Did he give enough to meet the key first test?

RON BROWNSTEIN, "LOS ANGELES TIMES": Well, he gave more, but not that much. He told us some important things today, John.

He told us no new taxes and no cuts in education spending. He did not, however, tell us how he was going to make the budget deficit disappear when you take those two options off the table.

He, as you said, announced he wants to have a review headed by John Kogen (ph), who is a very talented guy at the Hoover Institute. I think Bush at one point looked at him as OMB director. But I think many voters are going to be wanting more specifics.

What it did show was an enormous message discipline. I mean, he constantly turns this argument back into the people versus the politicians. You saw that in the answer just now, the argument being what's lacking is not answers but the will to implement tough solutions.

KING: We talked earlier about one of the great challenges he faces is that he's trying to build a broad base. He is a Republican. If he takes a position on taxes, he will anger either conservatives or liberals. Same on education, any other issue.

Let's listen to just a little bit. He is a Republican, but he also says he's an Independent. And, hey, he says he likes Democrats. Let's listen.

(BEGIN VIDEO CLIP)

SCHWARZENEGGER: People are always concerned and say, you know, there's a lot of Democrats out there. My answer is, I've lived with a Democrat for the last 17 years. I am trained to deal with Democrats, OK?

(END VIDEO CLIP)

KING: Trained to deal with Democrats. Of course, his wife, Maria Shriver of the Kennedy family. What is he trying to do there? He's trying to be funny, number one, but he's also trying to send a message.

BROWNSTEIN: Oh, absolutely. Look, what he said in his answer in what we just saw in the beginning of the show, I am an independent. I go up there without baggage.

He's basically trying to appeal across the spectrum here. He is someone who is trying to say he can work with people in both parties, and therefore people in both parties and Independents should vote for him.

As we said before, it's the opposite of the Gray Davis strategy. Davis wants this to be more partisan. Schwarzenegger is really presenting himself almost as a nonpartisan figure, more as an outsider in the Perot mold, or Jesse Ventura, than he is as a partisan Republican.

On the other hand, the economic blueprint that he offered today, no new taxes, regulatory reform, spending cuts saying the state had overspent is essentially a Republican response to the problem. So it makes him more Republican in that sense and may make it tougher for him to attract Democratic votes.

KING: And does it then, lastly, squeeze those other three major Republicans, Peter Ueberroth, the former baseball commissioner, Bill Simon, the nominee last time, Tom McClintock from the state legislature, all looking for Arnold Schwarzenegger to stumble, all looking to say to Republican voters, he is not one of us? Has Arnold Schwarzenegger pushed them aside, nudged them aside today?

BROWNSTEIN: Not entirely, because his big vulnerability, John, as you know, is really the social issues. That's where they're going to go after him. And for Ueberroth, he can basically argue to Independents that he is more credible, more specific. Schwarzenegger still is going to face that criticism after today, the argument that he did not offer enough of where he really wants to go.

KING: And the more he says, of course, the more the critics will try to hit back with. Ron Brownstein of the "Los Angeles Times," thank you.

More to come, of course. Arnold Schwarzenegger continues to speak. We will keep track of that.

And as Arnold Schwarzenegger's TV ads hit the airwaves in California today, we got new information about just who if funding those spots, which we first showed you, of course, that ad here on CNN yesterday. If you read the fine print, you'll see this ad is paid for by Schwarzenegger's campaign committee and his Total Recall committee.

That second group is designed to support the recall, not Arnold Schwarzenegger. And so it is not subject to limits on campaign contributions. It's OK for the group to help fund the ad since the commercial promotes the recall, as well as the Schwarzenegger campaign.

Now to the target of the recall. Governor Gray Davis should find out tomorrow if the California Teachers' Association will endorse one of the candidates for his job. He, of course, hopes that endorsement would go to him. The union has come out against the recall, but it has a strained history with Governor Davis.

Davis has two campaign appearances later today after his big speech on the recall last night. As expected, the governor was both apologetic for his missteps and defiant toward the Republicans trying to give him the boot. (BEGIN VIDEO CLIP)

DAVIS: Thank you, my friends. Now, this is not going to shock you. I may not be the warmest TV personality in politics, but I am warming to this fight.

I know many of you feel that I was too slow to act during the energy crisis. I got your message and I accept that criticism.

This recall is bigger than California. What's happening here is part of an ongoing national effort to steal elections Republicans cannot win.

Here in California the Republicans lost the governor's race last November. Now they're trying to use this recall to seize control of California just before the next presidential election. This right wing power grab is something we won't get over. It would do lasting damage to our state, our environment and the very fabric of our democracy. This is a fight worth making and I need your help.

(END VIDEO CLIP)

KING: Let's talk now about how Davis did last night and whether he is keeping his support among key Democratic constituencies.

Art Pulaski is the chief California AFL-CIO officer. Sir, one of the challenges for Gray Davis, of course, is to have every bit of money and every foot soldier the Labor movement can give him. There has been some concern because of the overwhelming preference in the polls to vote to recall him that perhaps you in California, national AFL-CIO leaders would say, sorry, governor, you cannot win, we are going to back Cruz Bustamante. Did the governor meet the challenge in your view last night?

ART PULASKI, CALIFORNIA FED. OF LABOR: Oh, he did, yes. He made an important statement to the base, to voters, and to union members; in particular, working families.

He started by saying, listen, I know I made some mistakes, everybody does. And that's true. We acknowledge that.

He also, though, went on to make important statements about what voters feel about him. And he said -- and I thought it was very important -- the energy crisis we had in California actually began because Pete Wilson, president before -- governor before him, voted and approved deregulation of energy prices. It wasn't this governor that caused the energy crisis.

Further, in terms of the economic crisis California is facing, this is a federal national crisis. George W. Bush is playing more of a role than he is in terms of the unemployment figures right now facing Californians. And so he came out to say I'm going to fight back to tell the truth about the issues he is responsible for and those that he is not responsible for. And I think working people are going to get behind him on that question. KING: To fight back he needs money. The national AFL-CIO in Chicago had said maybe $10 million it would give Gray Davis to help. I've talked to several Labor officials, though, who say they need to see a turn in the polls before they would put up all that money.

Have you spoken to other union leaders, national union leaders? Will they put up the money or are they waiting to see if he can turn these numbers around in the next week or so?

PULASKI: When I was in Chicago we never talked about $10 million, but we know that working people here, most important the grassroots, the rank and file, are ready to go knock on doors. They're ready to go to the work sites to talk it up. And that's our greatest value.

Also, money. I think we're going to see a lot of resources coming this way to say no on the recall, too. And it is important, John, to acknowledge that we believe this is not an election about choosing among candidates. We did that some nine months ago.

This is really a question, as the governor said last night, about whether or not we should allow some wealthy, ultra-conservative Republicans put up $2 million, which is all it took to buy enough signatures to put this on the ballot, so that we can re-vote, which voters in California already did nine months ago. What is behind this and what is their motive and why are they really doing this?

And there is no question that the president really wants a Republican governor in California when he comes up for re-election next year. There's no question the White House is behind this.

KING: OK, Art Pulaski. But what the governor wants is all the money spent on the simple issue, vote no. Many Democrats say they need to protect themselves just in case and put money into the, if you do vote yes, vote for Cruz Bustamante. In your literature to working people, union members in California, will you deal with the second question or will you stop and just say, "Vote no?"

PULASKI: Well, John, we are a great Democratic institution. We're going to have a convention of our members next week to tell us exactly what they want to do. Right now, we believe the important message is that it's not about a choice among candidates. It's really about helping voters understand the complex question of who is behind this recall and really why.

And once they understand that, I think they're going to come out and they're going to say, you know what, this is not a good idea for California. This is not a good idea for the majority voters of California. We do not want to re-vote what the majority already did. And that's the message you're going to get from voters.

KING: I'm sorry, Art Pulaski. Thank you very much. I need to end it there.

I'm sorry we're short on time, but we will check back with you next week then, when you've discussed this with your members. Thank you very much, sir.

PULASKI: Very good -- thank you.

KING: Another big name recall candidate is revving up his campaign. Former baseball commissioner Peter Ueberroth conducting his own economic dissertation before the cameras earlier today. The centerpiece of his recovery plan: a one-time tax amnesty Mr. Ueberroth says could raise up to $6 billion. The man who ran the Los Angeles Olympics says he knows how to get a job done.

(BEGIN VIDEO CLIP)

PETER UEBERROTH (R), CALIFORNIA GUBERNATORIAL CANDIDATE: California's in a crisis. The people of California are frightened and I'm frightened. But I'm a problem solver.

(END VIDEO CLIP)

KING: There's much more ahead here on INSIDE POLITICS. The terror attack in Iraq puts new pressure on the Bush administration to send in reinforcements. I'll ask Senator Joe Biden to assess the situation on the ground.

Plus, the dean of New Hampshire. Does the Democratic presidential candidate have (UNINTELLIGIBLE) in the leadoff primary state?

And later, from Cybill Shepherd's own lips. The story of her romantic rendezvous with the young Gray Davis.

(COMMERCIAL BREAK)

KING: Grim work today for investigators in Baghdad searching through the rubble of the United Nations headquarters in search of clues that might indicate who was behind yesterday's deadly bomb attack. Pentagon officials tell CNN the terror group Ansar al-Islam, which has known ties to al Qaeda, is emerging as a leading suspect in the blast.

Yesterday's attack killed at least 17 people and led to renewed criticism by some here in the United States, including Democratic presidential candidate Bob Graham, that the president misled Americans when he announced the end to combat operations in Iraq back on May 1st. Today, the president's spokesman responded to those critics.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: We've been very straightforward about where we are in terms of the theater in Iraq. Again, this is one of the theaters in the war on terrorism in Iraq, and the president was very clear that major combat operations were over. He did not say that the fighting was over by any means. That fighting continues.

(END VIDEO CLIP)

KING: But the questions and the criticism continue.

For more on U.S. policy in Iraq, I'm joined now by Democratic Senator Joseph Biden of Delaware. He is the Democratic -- the ranking minority member on the Foreign Relations Committee.

Senator, you and one of your colleagues, Chuck Hagel, sending the president a letter today. You think he needs to go to the United Nations and say we need a broader mandate, we need more international troops. Why, sir, do you think that is necessary now?

SEN. JOSEPH BIDEN (D), DELAWARE: Everyone knows we need somewhere between 40,000 and 60,000 additional troops, John. And we need about 5,000 police right now on the ground.

You know, you've been reporting it, John, that the Iraqi people don't see any progress. They're worried about their physical security. They don't have lighting, they don't have air conditioning, they don't have clean water. And we have one last opportunity here to demonstrate to them that we are able to secure that country and let a democracy grow there.

But we need more security. We need other forces there. And in order to do that we have to get the United Nations to pass a resolution because, once we do that, the Indians, the Bangladeshis, the Turks, the Germans, the French, they will all send in forces. And we need to do that.

KING: Maybe the need is there, Senator. That will be debated. Let's assume what you say plays out, the administration goes to the United Nations, other countries promise to send in troops. That would take weeks, if not months. Should the Pentagon tomorrow send more troops into Iraq the meantime?

BIDEN: I think, yes. I'm not a military man, but I think yes. My last visit to Baghdad, it was clear to me speaking to our military there they needed more troops on the ground. They need to secure the pipelines. They need to secure the facilities that are there in Iraq and secure the borders.

And there's simply not enough forces. General Shinseki eight months ago was right. It's going to take more like 200,000 forces than what we have now. And people say, well, the administration says we don't it.

Well, if they don't need it, why do they work so hard to try to get the Indians to send in 18,000 forces? Why are they working so hard to get people to send in additional forces but refusing to go to the United Nations to get the mandate?

These countries need the U.N. broadened mandate in order to go to their people and say, we're sending in the troops under and as a consequence of a U.N. decision. But they're going to be led by the Americans.

KING: And, Senator, where are you on this question? Some critics saying the administration has created this nightmare, that Iraq was a gnat, if you will, in terms of a threat of terrorism before the war. Now it is a major terrorist threat because the United States went to war and because, some say, underestimated grossly the post-war security challenge. Is that a fair criticism of this administration in your view?

BIDEN: No, I don't think so, except the last part. They grossly underestimated the post-war requirement. Some of us, from Senator Lugar, myself, Hagel, and others were holding hearings a year ago this month pointing it out. John, you covered them. That we were going to need tens of thousands of forces, spend billions of dollars and internationalize this requirement.

Look, we have an opportunity here. We squandered two opportunities already. The first we squandered was getting the world to go with us when we went in. The second opportunity is, right after Saddam was knocked out to say, OK, we disagreed, now let's all get together and rebuild this place.

Now this god awful event at the U.N. headquarters and Sergio being killed, that presents another opportunity to go back to the world and say this is a world problem, let's all get in on the deal at the same time.

But it seems as though the neo-conservatives led by Mr. Cheney and Mr. Rumsfeld don't want to do that. Powell and others do want to do that. The administration has to settle their internal debate and get on with the policy.

KING: All right. Senator Joe Biden, we are tight on time on this busy day. We will check back with you as this debate continues in the days and weeks and perhaps months to come.

BIDEN: Thank you, John.

KING: Thank you, Senator.

Coming up, are the numbers adding up for Howard Dean in New Hampshire? We'll go inside the race for the White House when INSIDE POLITICS returns.

(COMMERCIAL BREAK)

KING: Even some friends have long said the California governor is aptly named "Gray Davis." But remember earlier in the week we told you about a long-ago romantic encounter with the actress Cybill Shepherd. Well now we have the actress on tape talking about their kissing, when he was young, and she was even younger on a beach in Hawaii.

(BEGIN VIDEO CLIP)

CYBILL SHEPHERD, ACTRESS: I had a mad crush. I had a mad crush. Well, we made out on the sand in Hawaii and he became like my inspiration. He wrote me these wonderful long letters.

He had just won the Moot Court at Columbia Law School and he wrote me -- when he was supposed to be working as an intern in law, he'd write me a legal -- about how important it was to serve in the world and to make something of yourself. And I saved them forever. I still have them in my scrapbook.

(END VIDEO CLIP)

KING: Hard to think the recall campaign will turn on that one.

That's it for today on INSIDE POLITICS. I'm John King.

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