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JUDY WOODRUFF'S INSIDE POLITICS

Unemployment Falls as Job Growth Jumps; Interview With Commerce Secretary Don Evans

Aired November 7, 2003 - 15:30   ET

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

(BEGIN VIDEOTAPE)
ANNOUNCER: A jump in jobs for a third straight month. Are the president's tax cuts behind the drop in unemployment?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This administration has laid the foundation for greater prosperity and more jobs across America.

ANNOUNCER: Allegations and investigations surround California's governor-elect.

BILL LOCKYER (D), CALIFORNIA ATTORNEY GENERAL: I think it's a stain on his reputation and administration to have these lingering doubts. And I think that they should deal with them forthrightly.

ANNOUNCER: So Arnold Schwarzenegger says he'll hire a private investigator to look into claims he groped women.

Call them a political odd couple. Why are Ted Kennedy and former President Bush teaming up today?

(END VIDEOTAPE)

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

JUDY WOODRUFF, HOST: Thank you for joining us.

Well, on the surface, today's word that unemployment is down and job growth is up is about as good as it gets for President Bush and Republicans. Businesses added 126,000 new workers last month, and the unemployment rate fell from a tenth of a point to 6 percent. The numbers help to bolster Mr. Bush's political arguments for his tax cut policies, but many Democrats remain unconvinced. More on their reaction a little later.

First, let's turn to our White House correspondent, Dana Bash. Dana, what are they saying at the White House.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Judy, as you can imagine, they are quite happy here at the White House. As one Republican strategist put it, if you listen carefully, you can hear the sigh of relief. The president, of course, has been trying to make the case that the economy has been getting better for months, but those job numbers have gotten in the way, those stagnant job numbers.

So today, the October numbers were good. They revised the September numbers to show improvement. That meant that the president, who is in North Carolina today, had good news to tell, certainly on the job front. But he was, as they say, very cautious in his optimism.

(BEGIN VIDEO CLIP)

BUSH: So long as any of our citizens who want to work can't find a job, it says to me we've got a problem. I will continue to try to create an environment of job creation and job growth by enhancing the entrepreneurial spirit of America. We've had some good news recently about our economy. But we won't rest until everybody who wants to work can find a job.

(END VIDEO CLIP)

BASH: The word from the White House to all officials was essentially a policy of no gloating, as one put it. You're not going to see any spikes or butter turning in the end zone from anybody at the White House or in the administration. But they are trying to talk up the optimism in the economy.

Officials from across the board are going out on TV, on radio, local and national newspapers to make the case that the economy is getting better and these job numbers are proof of that. The reason, Judy, is because of the date. This is a key time economically. They're hoping that if they show consumers that they should go out and start spendinging now, it will mean great spending during the Christmas buying season and that will lead into they hope better economic numbers coming into the election year -- Judy.

WOODRUFF: And, in fact, in just a moment, we're going to be speaking with Commerce Secretary Don Evans. But Dana, overall the number is clearly good. But in the manufacturing sector, there continues to be a loss of jobs. What are they saying about that?

BASH: Well, certainly they're concerned about that. There's no doubt. The president was in North Carolina today, where he not only was raising some money, but he also made sure to go to a place where they are retraining workers.

North Carolina is a state that has hemorrhaged jobs since Mr. Bush has been in office; 150,000 jobs in the manufacturing sector, textiles furniture makers. Those jobs are not coming back. And the president made clear when he was taking questions there that he understands that this is a problem. He understands that they need to be retrained.

North Carolina, though, Judy, is a Republican state. They probably don't have to worry down there, but the fact that manufacturing jobs did see a loss this month, as well, is certainly a problem in key industrial states where they are essentially a swing state, bellwether states. That is something that the White House is definitely looking at. WOODRUFF: All right. Dana Bash at the White House, thanks very much.

And as I just said, with me now to talk more about this job report, as well as the overall economy, the secretary of commerce, Don Evans.

Good to see you. Thank you for being with us.

DON EVANS, COMMERCE SECRETARY: Thank you, Judy. Great to be with you.

WOODRUFF: Clearly, overall a great picture in terms of jobs. Are you able to predict how many jobs are going to be picked up in the economy over the next year?

EVANS: No, we really can't do that, Judy. My crystal ball is not any clearer than anybody else's. But the numbers today were encouraging, and it shows we are beginning to create jobs in this economy. More Americans are taking home a paycheck instead of an unemployment check. Though we always must be mindful of those that do not have a job.

If there is one person in this question that wants a job that does not have a job, we still have a lot of work do. And I say to them, help is on the way. We've had a lot of encouraging economic news over the last number of months. But the best news is when you can start talking about jobs and creating more jobs and seeing unemployment drop.

WOODRUFF: Let me -- as we just mentioned -- and this is no surprise to you -- the Democrats, the House Democratic whip, Steny Hoyer, put out a statement today and said, "Barring an economic miracle, this president will finish his term with a negative job creation record." He said the first since the great depression. And in his words that's "a sorry standard for this nation."

What do you say?

EVANS: Well, what I say to him, that we've been working since January of 2001 to overcome a lot of challenges that this country has had. We were handed a recession in 2001. We had 9/11 that everybody knows about.

We had corporate scandals we had to deal with. And this president from day one has led on creating the conditions in this economy where we can create more jobs. The tax cuts are beginning to work their way into the economy, and we are starting to see the results, the performance.

The president likes to be judged on his performance and we're starting to see the results of tax cuts over the last three years. So, you know, what I say to them is it we'll continue -- we're going to continue to work very, very hard, as the president said, in making sure we're improving the conditions in this economy. WOODRUFF: What about in the manufacturing sector? Clearly, there are some states where there are changes and you aren't going to see some of these jobs.

EVANS: Well, Judy, that's probably right. And you have to look at it historically. First of all, what you have to say is we have the strongest manufacturing sector of any country in the world. If you took the manufacturing sector by itself, it would be the fourth or fifth largest economy in the world. It has been growing for the last 40 years.

What has been declining for the last 40 years has been employment in the sector because of productivity, because of technology, because we are being innovative in this country and finding more innovative ways to produce the products and sell them not only domestically, but internationally.

WOODRUFF: Well, speaking of internationally, you've just come back with China. You met with officials there. You talked about trade, you talked about their currency issues. But at a time when Congress is pushing hard to deal with the trade deficit, to do something about getting China to revalue their currency, in effect, there are those who looked at what you said and what you did and said you were pretty soft on them. You didn't get commitments, you didn't push for commitments, you didn't push for a timetable.

How do you explain that?

EVANS: Well, Judy, I wouldn't say I was soft on them. I was pretty tough on them.

When I was over there I talked about their lack of enforcement of intellectual property rights. And what I said to them was, you know, 90 percent of the CDs and DVDs and other software that's being sold in your country is counterfeit or it's stolen and made a very public pronouncement of that and told them they've got to get tougher when it comes to enforcement. You've got to quit using just civil penalties and charging somebody some little civil penalty that they can write off as a business expense and begin to put people in jail.

Use the criminal penalties. You have to enforce your laws and you have to honor and comply with your trade agreements.

WOODRUFF: And on the currency matter, it's still in progress here?

EVANS: Still in progress. Still in progress.

WOODRUFF: OK. All right. The secretary of commerce, Don Evans. It's good to see.

EVANS: Thank you, Judy. Always good to see you.

WOODRUFF: Thank you very much for coming by. We appreciate it. Thanks.

EVANS: You bet. Good to see you.

WOODRUFF: Well, checking the headlines now in our "Campaign News Daily," President Bush and Vice President Cheney are adding to their campaign war chest today. Before his speech on the economy in North Carolina, Mr. Bush attended a million-dollar fundraiser luncheon. Meanwhile, Vice President Cheney is in Texas raising money at events in Austin and Houston.

As we've already reported, Howard Dean plans to announce tomorrow if he will abandon federal financing for his campaign. Dean has said that accepting matching funds and the spending limits that go with them could make it harder to compete with President Bush. He was not accepting public money.

A new Quinnipiac University survey finds New Yorkers favor the leading Democrats in hypothetical match-ups with President Bush. Registered voters in New York give John Kerry an eight-point lead over Bush, while Joe Lieberman and Dick Gephardt have six-point leads. Howard Dean and Wesley Clark lead the president by four points in that poll.

Governor-Elect Arnold Schwarzenegger not happy with a top California Democrat. Up next, what the state attorney general said to reporters about the harassment claims against Schwarzenegger and what the actor turned governor is doing in response.

Senator Edward Kennedy heads to Texas. We'll tell you why former President Bush is honoring one of his son's toughest critics.

And later, Katherine Harris has already made it to Congress. Could her next stop be the world's most exclusive club?

This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

WOODRUFF: The California recall may be over, but allegations that Governor-Elect Arnold Schwarzenegger groped women apparently will not go away. Adding fuel to the controversy, remarks by the state's attorney general.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): It's a story that hasn't gone away. The allegations of sexual misconduct that dogged Arnold Schwarzenegger during the campaign are back in the headlines again. And now the governor-elect is hiring a private investigator look into them.

GOVERNOR-ELECT ARNOLD SCHWARZENEGGER (R), CALIFORNIA: If I've done anything wrong, where I thought that I'm playful and just you know, have fun, maybe I have offended someone. So again, I feel bad about that.

WOODRUFF: When the groping stories emerged in the end game of the recall, Schwarzenegger vowed to fully explore them after the election. But victory apparently brought a change of heart, with the new governor-elect dismissing the matter as...

SCHWARZENEGGER: Old news.

WOODRUFF: Now, with his inauguration just days away, the stories are back.

LOCKYER: I think it's a stain on his reputation and administration to have these lingering doubts. And I think that they should deal with them forthrightly.

WOODRUFF: California's Democratic attorney general, Bill Lockyer, triggered the latest round by telling reporters that he had advised the governor-elect to launch an independent probe into the groping incidents. Schwarzenegger's aides say that advice was given in a private sit-down, a conversation they insist was protected by lawyer-client privilege since the attorney general represents the state in lawsuits.

A spokesman for the governor-elect says, "Attorney General Lockyer's breach of confidentiality is serious, and the governor-elect is very concerned about this development." But Lockyer's staffers insist no privilege exists since Schwarzenegger is not governor yet.

Regardless, the episode has caused a rift between the two Sacramento power players just as their relationship was beginning to blossom. After all, Democrat Lockyer says he voted for Republican Schwarzenegger just one month ago.

(END VIDEOTAPE)

WOODRUFF: Joining us now for more on the "San Francisco Chronicle" -- on this from the "San Francisco Chronicle," I should say, reporter Carla Marinucci.

CARLA MARINUCCI, "SAN FRANCISCO CHRONICLE": Hi Judy.

WOODRUFF: Carla, what has happened here? Bill Lockyer did say that he voted for Arnold Schwarzenegger. Now it looks like he's turning around trying to cause problems. What's happened?

MARINUCCI: Well, this incident has caused head scratching, Judy, on both sides of the aisle, I think. You know, Lockyer has made these comments before. This morning on radio in San Francisco, he appeared to suggest that there were other even more recent incidents that needed to be looked into from "Terminator 3" filming. So yes, absolutely, he fanned the flames, but the head scratch is about the Republican, the Schwarzenegger reaction to it.

In the past, they have said they're going to look into it. A lot of people in the GOP said feel they should have just said, yes, we're going to look into it, thank you very much. We'll take it under advisement. But with the aggressive response that they had, saying they're going to do their own investigation, accusing Lockyer of breach of attorney-client privilege, that gives the news hook to us in the media to go back at this.

It appeared to be dying down. It's definitely not, just a couple of days from the inauguration.

WOODRUFF: Carla, what would the difference be whether it were a private investigation or an independent investigation, as Lockyer says should be the case?

MARINUCCI: You know, this is interesting, too. But with a private investigation, some of the women who have made these allegations have said they don't know if they would feel comfortable talking to somebody who has been hired by Schwarzenegger privately. Whoever does the investigation, now that Schwarzenegger says it's going to go forward, certainly there's going to be a report.

The news media is going to want access to that report. And if Schwarzenegger doesn't come forward with it, it's going to look like a cover-up. So in a sense, there's been a problem created here where there wasn't before. It's going to be interesting to see how this all pans out in the weeks to come.

WOODRUFF: Carla, what about the district attorney's office, local prosecutors, have they been brought into this in any way?

MARINUCCI: You know, it's too early for that yet, Judy. I think many legal experts suggest that at least the allegations that have been published in some of the "LA Times" stories were too far back to be covered by the statute of limitations. But as I mentioned, Lockyer now brings up this -- what he says is the possibility of a more recent allegation in the last year.

That just opens a whole can of worms. So I think right now, both sides are looking at this and trying to determine where to go from here. And certainly now the media is on this full bore.

WOODRUFF: All right. Carla Marinucci with the "San Francisco Chronicle." Carla, we appreciate it. Thanks very much.

MARINUCCI: Thank you.

WOODRUFF: Well, the timing perhaps could have been better, but tonight in Texas, former President Bush is presenting the George Bush Award for excellence in public service to Senator Edward Kennedy, one of his son's harshest critics. This comes just a few weeks after Kennedy's blistering attack on President Bush's Iraq policy, saying the American people were told "lie after lie after lie," before the war. The decision to honor Kennedy was made before the war, and his spokesman says the senator is looking forward to the event.

Well, Bob Novak is just back from California. He's going to join us with "Inside Buzz" on Arnold Schwarzenegger and other hot topics.

Also coming up, just who are these guys? Veteran journalist Walter Shapiro offers a unique take on the Democratic presidential candidates in his new book.

Stay with us.

(COMMERCIAL BREAK) WOODRUFF: Bob Novak joins us now from the CROSSFIRE set at George Washington University with a little "Inside Buzz."

All right, Bob. You're literally just back from California, midnight last night you just told me. What about Arnold Schwarzenegger and this Democratic legislature he's going to face.

BOB NOVAK, HOST, "CROSSFIRE": He may start off with two big wins, the repeal of the increase in the car tax and the authorization of driver licenses for illegal immigrants, two things that really got Gray Davis in trouble. Looks like the assembly is going to pass the repeal. The Senate is a little more (UNINTELLIGIBLE) and will probably go along. And then the primary next spring, it looks like Governor Schwarzenegger will put out a spending limitation and a bond issue, probably get that. The interesting thing is that there is really no Democratic voice who is in opposition to what the governor- elect is doing.

WOODRUFF: Bob, another California story. A lot of speculation about the Barbara Boxer Senate seat. What do you hear about that?

NOVAK: It looks like she was going to have a pretty free ride. Rosary Marine (ph), the former U.S. treasurer, who was a political neophyte, was the only candidate. But there are two big names lining up now. One is Bill Jones, former secretary of state of California, a very good vote getter. He is going to run unless Congressman David Dreier runs.

Congressman Dreier is looking at it. A lot of people don't think he will run.

WOODRUFF: All right. Completely different subject, the energy bill that's been tying this city in knots for weeks. A surprising element to that.

NOVAK: I love this story. The House Republicans say that what has held up the final passage is Republican Senator Chuck Grassley's insistence that the House go along with $135 million for a science museum in Des Moines. The speaker's people, Speaker Hastert's people, say that's pork barrel. Senator Grassley's people say, what pork? Pork is in the eye of the beholder.

WOODRUFF: We need to write that one down. Last but not least, Democrats are having something to say, you hear, about the president's strategy with his judicial nominees.

NOVAK: They had a closed-door secret caucus yesterday, the Senate Democrats, in response to the plans for Republicans to go around the clock on debating these judicial nominations. And the Democrats said OK, you do that, we're going to stop any action in the Senate, cut off action on any kind of legislation or confirmation.

Whatever happened to the kinder, gentler Senate under Dr. Bill Frist? It looks as mean as ever, maybe meaner.

WOODRUFF: Well, we'd be surprised if there were a trend in the other direction. Bob Novak, thanks very much. And we're going to be watching you and all your colleagues on CROSSFIRE 4:30 Eastern. We'll see you then.

NOVAK: Thank you.

WOODRUFF: Thank you, Bob.

Question: do baseball and politics mix? Well, some fans of Manchester, New Hampshire's new Double A baseball team apparently do not think so. They are not happy, they say, with the nickname chosen by the club's owners: the New Hampshire Primaries. We like the name.

The team president says that that is what New Hampshire is known for. But one 14-year-old boy put it this way: "I can't imagine sitting in the stands and saying, 'Go primaries.'" We could do that.

Well, it wouldn't be Friday without the "Political Play of the Week." Our Bill Schneider reveals the winner coming up on INSIDE POLITICS.

Plus, he's the top Democrat on Capitol Hill, but he's no shoe-in for reelection. We'll take a look at the latest polls on Tom Daschle's bid to stay in the Senate.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

BUSH: We've had some good news recently about our economy.

(END VIDEO CLIP)

ANNOUNCER: Another drop in unemployment. Are the president's tax cuts finally paying off?

WESLEY CLARK (D), PRESIDENTIAL CANDIDATE: What we've had is 3.3 million jobs lost, and we don't know what the real unemployment rate is.

ANNOUNCER: She was at the heart of the Florida recount. Now she's a congresswoman from the Sunshine State. But does Katherine Harris have her sights set on a higher office?

He's been out of the White House for nearly 15 years. But thanks to a controversial made-for-TV mini series, Ronald Reagan is back in our spotlight.

(END VIDEOTAPE)

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

WOODRUFF: The president and his party obviously are delighted by today's positive job growth numbers. But some of the Democratic presidential hopefuls are eager to temper Republican enthusiasm.

Senator John Edwards, for example, is pointing out that President Bush will likely oversee a net job loss during his term. In Edwards' words, "While I'm glad to see that the economy is finally creating jobs, it is still falling far short of repeated White House predictions."

On the trail in Georgia, retired General Wesley Clark called the positive news "long overdue." And he said a lot of people are still looking for work.

(BEGIN VIDEO CLIP)

CLARK: I think we ought to be remembering all those people out there in this country who don't have jobs or are worried about their jobs, worried about the health care and whose wage increases don't keep up with the increasing cost of health care. The mission is not accomplished on the economy.

(END VIDEO CLIP)

WOODRUFF: For more now on the political impact of the economy and the new job numbers, I'm joined by political analyst Ron Brownstein of the "Los Angeles Times."

Ron, the White House very excited; Democrats throwing cold water. Which side is more on top here?

RON BROWNSTEIN, "L.A. TIMES": Not really a contest, Judy. A rising tide may not lift all votes, but it certainly lifts the ones that anchor at 1600 Pennsylvania Avenue. This is unequivocally good news for the president. As John Edwards pointed out, job growth will probably have to accelerate from where it is now for Bush to avoid becoming the first president since Hoover to oversee a net loss of jobs during his term.

But the key politically, historically has been the trend. And if the economy is growing, if unemployment is declining and jobs are increasing that will serve him very well next year.

WOODRUFF: But as I discussed a few minutes ago with Commerce Secretary Don Evans, still in the manufacturing sector you have a steady, continuing loss of jobs. That's not going to hurt the president?

BROWNSTEIN: No. I mean obviously, he'd prefer to avoid getting -- he'd prefer to get through this term and have a net increase in jobs. And as I say to do that, you'll have to have a faster job growth than we saw this month.

But there is, I think, pretty persuasive evidence that voters react to the trend of in the economy. And there's lag, but if there's a sense that month after month we're gaining jobs, he'll be strengthened. I think clearly, you see it in the poll numbers already, people are a little more optimistic about the economy, and they're a little more optimistic or positive on his performance in handling the economy.

WOODRUFF: Well if that's the case, Ron, what do the Democrats have to hang their hat on in terms of the economy? Or does it just go away as an issue?

BROWNSTEIN: Well, first of all, we don't know that the job growth will sustain itself through next year. That's the first variable.

Secondly, Democrats will certainly argue, as you saw from John Edwards, that the overall performance will still be, by any standard, anemic by historical comparison. No president in 70 years will have had a weaker job growth performance unless things significantly accelerate.

And third, they'll look at other concerns. Poverty, the growth in the number of people without health care, the growth of number of Americans in poverty. And for that matter the war in Iraq.

WOODRUFF: But you're saying if the trend is up, that's all that counts?

BROWNSTEIN: The trend is the critical variable, historically. When you look at this, political scientist examine this, clearly that is the variable. And voters stake a snapshot. If things are good in the spring, that helps the president enormously.

WOODRUFF: OK, Ron Brownstein, thanks very much. Good to see you, Ron.

Staying with the subject of money and its impact on presidential politics, Democratic presidential hopeful Howard Dean will announce tomorrow if he's dropping plans to accept federal matching funds and spending limits. He's asked supporters to advise him on the decision via e-mail. He's said that the spending limits could handicap his chances of competing with President Bush.

Senator John Kerry says Howard Dean would be going back on his word if he does opt out of public financing. Kerry criticized Dean's potential decision and he accused the former Vermont governor of changing his views in order to get elected.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: This is not straight talk when you stand up and try to translate your appeal to the NRA in into some glorious effort to have a discussion of race relations in America.

And it's time for us to tell it straight to the American people. It's time to back off the flim-flam artistry of politics as usual.

HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: I would call on Senator Kerry to try to lift his campaign a little bit higher.

Again, I don't believe that making a variety of charges about (UNINTELLIGIBLE) kitchen sink approach to politics, whatever I did in the past was flim-flam and so forth and so on.

I think we really do have to concentrate on the notion That we want to replace George Bush as president. That's what we're trying to do as Democrats.

(END VIDEO CLIP)

WOODRUFF: Senator Kerry, by the way, indicated that if Dean drops public financing, then he, Kerry, will have no choice but to take the same action.

Checking the state headlines in our "Campaign News Daily," extra -- Florida Republican Congresswoman Katherine Harris says she's seriously considering a run for the U.S. Senate. "The Orlando Sentinel" reports that Harris plans to discuss her potential candidacy with her family. Harris, of course, first made headlines in her post as Florida secretary of state in the 2000 election.

Indiana Governor Joe Kernan says he'll run for a full four-year term. Kernan, who was then lieutenant governor, said last December that he'd not run. He says he started reconsidering his decision after he took over for the late governor, Frank O'Bannon, in September.

Two South Dakota Democrats fair well in hypothetical match-ups of the House and Senate races. Democratic Senator and Minority Leader Tom Daschle is leading former GOP Congressman John Thune by six percentage points in a Mason Dixon Poll.

In a potential rematch from 2002, Democrat Stephanie Herseth leads incumbent Republican Bill Janklow 57 percent to 29 percent. Janklow faces currently felony manslaughter charges of a after a traffic accident that left a motorist dead.

Travels along the trail. Coming up next, a behind the scenes look at a race for the White House from a reporter who's been with the candidates for a long time.

Plus, polling the pollsters. I'll get the numbers from the left and the right on the nine Democrats and one Republican in the presidential campaign.

(COMMERCIAL BREAK)

WOODRUFF: To find out just who are the Democrats running for president before they are taken over by media managers and campaign consultants, "USA Today" political columnist Walter Shapiro traveled with them on their initial forays, you could say, into Iowa and New Hampshire.

He's written a book about the travels, "One-Car Caravan: Running for President Before America Tunes In." Walter Shapiro joins me now.

All right, Walter, let's talk about this. For people who don't follow the politics the way we do, they're thinking the primaries don't start for another three months. What is there to cover at this point? What were you covering?

WALTER SHAPIRO, "USA TODAY" POLITICAL COLUMNIST: Well what I was covering, No. 1, the candidates as people. Because there is a way of seeing Howard Dean in the back of a van, the back of a car with one aide a year ago, reviewing the text of his first brochure.

And what was so wonderful about this is here is Howard Dean, the man who is about to drop out of federal matching funds, the greatest fund raiser in the history of the Democratic Party. And these days, he's the church mouse candidate. He's sitting there asking his aide, Kate O'Connor, have you gotten a price on this?

I mean, here's a guy who wants to be approving the Pentagon budget, worrying that the printing will cost $4,000, not $5,000.

WOODRUFF: Can you learn something about these people, Walter, that early, or are they on guard because you're a reporter after all?

SHAPIRO: There's a level to which they've all been in politics a long time. And this is not totally let's hang out, it's all here. Let me tell you about -- but there is a level of ease and comfort that all of the candidates have early on.

It's because time is slow, they're still trying to get their act down. When I was out with Howard Dean, he didn't know how to be on message, because at that point in the campaign, he didn't know what the message was.

And the fact is, the -- if a Democrat wins in November 2004, the exact same guy will be going into the White House, as is visible in 2002 and early 2003, then will be the person who doesn't say a spontaneous word all through 2004. They're the same people?

WOODRUFF: Did you see, at that point, at that stage of the campaign, Walter, the things in these people that the American people are going to see next year, assuming they make it that far.

SHAPIRO: I don't want to beat the world's most prescient (ph) person, but I did see the incredible inner self-confidence in Howard Dean that his carried him so far.

I saw in John Kerry, who is by far the most complicated candidate, to my mind, running, his problem of being able to answer a simple question. I was with him in South Carolina in February, and I remember he got this complicated question. -- What about Iraq? His answer took six minutes and 47 seconds. And that problem with Kerry still -- that lack of focus is still there.

WOODRUFF: Dick Gephardt?

SHAPIRO: Dick Gephardt is running, to my view, the best -- as the best version of Dick Gephardt that's imaginable, given that this is Dick Gephardt who has been on Capitol Hill for 25 years.

WOODRUFF: The best that he can be?

SHAPIRO: Exactly. It's a very disciplined, very well thought- out campaign. It may not work. Some of these union endorsements for Howard Dean make it a little harder for him. But at the same point, if Gephardt fails, this is not -- should not be a campaign where he should be filled with self-recrimination. WOODRUFF: Very quickly, John Edwards and Joe Lieberman.

SHAPIRO: John Edwards, still has this inner self-confidence that I find amazing, given the fact that he wears the outward bound pin of a dead son in his lapel.

And as for Joe Lieberman, the only candidate to ever offer me matzo in the back seat of a campaign van. Matzo packed by his mother, Marcia (ph). He hasn't made his mark, but he's still -- there is a good human -- humor and an even-keeled temperament about him that I think shines through in my book and I just find him -- you know, probably the best sense of humor outside of Al Sharpton.

WOODRUFF: And that's going a ways.

SHAPIRO: That is a high compliment.

WOODRUFF: Some remarkable reading in here. If you want to know who these people are, the book is "One-Car Caravan: On the Road With 2004 Democrats Before America Tunes In."

Walter Shapiro, thank you very much...

SHAPIRO: Thank you so much, Judy.

WOODRUFF: ... for talking to us about it. We appreciate it. It's a real gift to all of us. Thanks.

Well, the economy, good news or bad news for President Bush? I'll ask pollster Stan Greenberg and Bill McInturff.

And later, how the power of loyal friends figures in Bill Schneider's "Political Play of the Week."

(COMMERCIAL BREAK)

WOODRUFF: Joining us now from New York, Democratic pollster Stan Greenberg.

And here with -- in Washington, his Republican counterpart, Bill McInturff.

Bill, let me start with you. You know, we know there are good economic numbers out today for the president. At the same time, the poll that came out late last month, the CNN/"USA Today" poll shows, here we are almost two years after the 2000 election, Americans are very divided -- 46 percent say they would vote for George Bush, but 43 percent say they'd vote for a Democrat facing the president.

How do you account for this still pretty close division out in the country?

BILL MCINTURFF, REPUBLICAN POLLSTER: Well, I think that there's a lot of unease about Iraq. People are concerned.

But look, it's a great week to be a Republican. Record victories in Mississippi and Kentucky. The fastest growth in 20 years. Unemployment rates are down. Jobs are being created.

And I think -- here's the important thing to remember. Twenty years ago, when we had this kind of growth, it led eight months later to morning again in America and President Reagan's massive re- election. And I think we could be seeing the same kind of economic building block coming into play to help George Bush win a very comfortable election.

WOODRUFF: Stan, is that how you see it?

STAN GREENBERG, DEMOCRATIC POLLSTER: Well, it's hard for me to believe that Bill looks back on this week as a great week for Republicans.

I mean, this is a week in which we've had a very tough time in Iraq. A lot of Americans have guy died. We have a war going on without a real plan.

I mean, we do have -- we do have a strong quarter in which a lot of spending, a lot deficits, a lot military spending, you know, produced a burst of growth. But we really don't know over the longer term what that's going to mean on the economy. We got rising healthcare costs.

And so we still have a president where a majority disapprove both on the economy and Iraq. That's where we are this week. And I think we have a real election -- or a polarized electorate and a real election.

MCINTURFF: Here's what we've already seen, though.

This week alone, a majority of Americans for the first time in two-and-a-half years, said they think the economy is getting better.

Clearly, all the news about the better economy is beginning to affect consumers. We know it takes four to six months between economic reality and consumer opinion to catch up. The point is we've got four to six months. We've got a year before this election. And we have enough time for this good news to begin to affect public opinion and stabilize and change the president's ratings.

WOODRUFF: And let's talk about that, Stan Greenberg. I mean, the numbers show fewer people are as concerned about the president's handling of the economy as there were a month ago. Could this turn out to be a non-issue for the Democratic presidential candidate?

GREENBERG: No. I mean, there's no -- look, there's no history of instantaneous translation between macroeconomic growth and people on a broad basis feeling like they are better off. While Bill says six months, the history of this is a couple years before people really see this, particularly for the 60 percent of the population who are at the median or below the median in income. This is a very unequal economy, unequal in its effects.

And they -- I mean, look, they need to spin this as to how good it is for over the longterm. But this needs to -- you know, this needs to filter down to people's lives. This normally takes a quite long period to break through and we're going to have to see what happens.

WOODRUFF: Bill, I want to ask you also about some numbers we're seeing among Democratic voters. And that is, "Washington Post"/ABC poll showing that within the Democratic Party, some significant divisions. A number of -- 53 percent of the Democrats say they want somebody who reflects their views, but you've still got 42 percent of Democrats who say they want somebody who can beat George Bush.

As a Republican, what do you think that says about the Democratic field?

MCINTURFF: Well, I've run in a lot of primaries.

I think Democrat primary voters are just like Republican primary voters. They're going to vote for the candidate they think is the most like them, the candidate they think has the strongest message. And people believe that's a candidate who has the best chance of winning.

And I think, by the way, we're seeing something else very significant. Howard Dean is very, very close to blowing this race open. He's going to get the endorsement of two major unions who, I think, are signing on board because they see the train leaving the station. Between his money, his chance to sweep Iowa and New Hampshire, he is very close to breaking through and becoming the Democrat nominee. And I believe that having a Vermont governor, with his current cultural position, makes him essentially unelectable and I think, again, contributes to the possibility of a substantial Bush victory in 2004.

WOODRUFF: Stan?

GREENBERG: I love Bill and we work together. We do polling together for National Public Radio. But just as he selectively looks at the week's news, and, you know, he selectively looks at the news about the Democratic primary electoral, he does look at New Hampshire, where Dean's ahead. But when you look at Iowa, you've got an even race with Gephardt having made gains and being a quite plausible candidate for the future.

And your poll, but many other polls show a, you know, Democratic primary electorate that has complicated positions on Iraq. They're very strongly anti-Bush and there are many of them who want to vote for a candidate that can win in November.

MCINTURFF: Judy, you know, I worked for McCain, Senator McCain. And after he won New Hampshire, Senator McCain went up 17 points overnight in South Carolina. What I'm suggesting is that if Howard Dean can beat Dick Gephardt in Iowa and he does win New Hampshire, then the primary calendar and the surge he would get makes it incredibly difficult to stop him, given the beginning of the organizational support we're seeing amongst Democrat unions and other key power brokers in the Democratic primary. WOODRUFF: Very quickly, Stan Greenberg. I want to ask you about this Pew poll that came out not long ago. Looking at voters and whether they identify themselves as Democrats or Republicans, the trend in states like Iowa, Michigan, Minnesota, Wisconsin, New Mexico -- these are all states that were close the last time, states that are important to Democrats. Again, in every one of these states, more people identifying themselves as Republicans. Is this a problem?

GREENBERG: Well, those are the -- look, those are the battleground states and frankly, the states in the center part of the country, states with larger rural populations, constitute a, you know, battleground.

But what we've seen, actually, over the last three months is a fairly significant shift back from the two-year period of even parity between the parties with the Democrats beginning to edge ahead. By the way, there were gains for the Republicans in the South, but there were gains for the Democrats in New Jersey and Pennsylvania this past week.

WOODRUFF: All right. We're going to have to leave it there, gentlemen. Lots of numbers to look at.

Next time, we'll go over more. Stan, Bill, great to see you both. Thanks very much.

Circling their wagons. Conservatives protecting one of their own. It's all in Bill Schneider's "Political Play of the Week."

(COMMERCIAL BREAK)

WOODRUFF: Well, more fireworks today in the feud between Democrats and Republicans over the pre-war intelligence on Iraq. The bad blood began two days ago with the leaking of a Democratic staff memo. That report vowed to expose what it called the Bush administration's misleading methods and motives in making the case for war in Iraq. Republicans say the Democrats are playing politics and have their priorities all wrong.

(BEGIN VIDEO CLIP)

SEN. BILL FRIST (R-TN), MAJORITY LEADER: Those responsible for this memo appear to be more focused on winning the White House for their party than on winning the war against terror. And those priorities are wrong. They are dead wrong.

(END VIDEO CLIP)

WOODRUFF: Democrats say the memo was not official policy, but that it does reflect frustration that the investigation into the pre- war intelligence was not tackling the tough issues.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), NEVADA: Because each of us recognize that we need a strong, independent, intelligent community to win the war on terrorism. In order to answer these questions, we need to understand both what the intelligence told the administration about these issues and what the administration did to use this information.

(END VIDEO CLIP)

WOODRUFF: Everyone's confident this is not the last we're going to hear from Capitol Hill on this story.

INSIDE POLITICS back in a moment.

(COMMERCIAL BREAK)

WOODRUFF: It's Friday. Bill Schneider has his "Political Play of the Week" -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, Judy, some political figures create a cause. The cause endures and influences events long after the politician has left the political scene.

And that's what happened in this week's "Political Play of the Week."

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): On October 21, "The New York Times" reported details of the script of a CBS miniseries about the Reagans, scheduled for broadcast in November. The portrayal was unflattering.

UNIDENTIFIED MALE: We can't sell weapons to Iran. They're a terrorist country. And we support Iraq.

UNIDENTIFIED MALE: Believe me, sir, all we're doing is opening up communications.

UNIDENTIFIED MALE: Open 'em up.

SCHNEIDER: Conservatives' antenna immediately went up. No one from the Reagan family or the Reagan administration was involved in the project. There is no record that the president or the first lady said some of the things in the original script.

UNIDENTIFIED FEMALE: From now on, you don't just call the president to tell him what's happening. You call me.

MICHAEL PARANZINO, POLICY CONSULTANT: We had plenty to go on to know that this was a biased hit piece, a smear, if you will, from the left.

SCHNIEDER: Michael Paranzino started a Web site.

PARANZINO: I launched it on a Sunday. By Monday night, I was getting 10, 12 e-mails a minute. And that is just -- I've never seen anything like that.

SCHNEIDER: The Republican Party started a petition drive demanding that CBS appoint a team of experts to vet the film for accuracy or else constantly remind viewers that the story was fictionalized, something CBS acknowledged from the start.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: It smells of intimidation to me.

SCHNEIDER: It worked. CBS pulled the broadcast after suddenly discovering that the final product -- quote -- "does not present a balanced portrayal of the Reagans."

But fictionalized stories about the Kennedys, for example, have never elicited the same level of protest. Why did it happen with Reagan?

ROBERT DALLEK, AUTHOR, "AN UNFINISHED LIFE: JOHN KENNEDY 1917- 1963": He's so important to that conservative movement. Kennedy isn't -- he's not important to the movement -- any movement in particular. He's important to the country.

SCHNEIDER: When a cause believes its leader has come under unfair attack by its enemies -- Hollywood, liberals, the media -- it rises to his defense.

And in this case, it achieves "The Political Play of the Week."

(END VIDEOTAPE)

SCHNEIDER: Reagan was played by James Brolin, husband of well- known liberal activist Barbra Streisand. In fact, the creators of the project were liberals. Now, liberals and artists are angry at Cbs for caving in to conservative pressure and they're asking, Could this have had something to do with the fact that CBS parent company, Viacom, has important business interests that it's pursuing now in Washington?

WOODRUFF: Hmmm. Some interesting questions...

SCHNEIDER: Exactly.

WOODRUFF: ...still out there. OK. Bill Schneider, thanks very much.

Well, that's it for INSIDE POLITICS this Friday. I'm Judy Woodruff. Have a great weekend.

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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