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JUDY WOODRUFF'S INSIDE POLITICS

New Hampshire Primary Day Arrives

Aired January 27, 2004 - 15:00   ET

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

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us for this special 90-minute edition of INSIDE POLITICS.
You know, on this primary day in New Hampshire, it doesn't get more exciting in American politics. The Democratic presidential candidates still don't have time to catch their breath, after the head-spinning, gut-wrenching turns of the past week. They've been scrambling all this day, phoning voters, visiting polling places, even handing out coffee and hot chocolate, as you just saw.

After all, this contest could go a long way toward deciding if John Kerry cements his place as front-runner, if Howard Dean has a chance of regaining that title, or if someone else is close on their heels. We'll have live reports on all the major Democratic contenders and what they have at stake.

But let's begin with the Kerry campaign and CNN's Kelly Wallace right here in Manchester -- Kelly.

(BEGIN VIDEOTAPE)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: Good to see you today. How are you?

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT (voice-over): The front-runner is not taking anything for granted. He braves the morning cold outside a polling place, trying to win over voters up until the final minute.

KERRY: I hope I get your help today.

UNIDENTIFIED MALE: All right.

WALLACE: Inside Kerry's campaign headquarters, veterans get some help working the phones from the decorated Vietnam veteran himself.

KERRY: Are you going to vote early or are you voting late? OK. We really need your help.

WALLACE: Kerry's challenge is not only to win, but to meet expectations after his big lead in the polls. CNN's Bill Hemmer asked if a victory by a small margin would be a disappointment?

KERRY: My gosh, three weeks ago, you guys were writing me off. This is the comeback trail. If I win here, I think that's enormous.

WALLACE: The Massachusetts senator also shot back at his nearest competitor in the polls, Howard Dean, who has criticized Kerry for opposing the 1991 Gulf War, while backing last year's war resolution for Iraq.

KERRY: The question is when he's going to stop running a negative campaign.

WALLACE: Everywhere he went in New Hampshire, he tried to make the case that he is the only Democratic candidate with the military and political experience who can win.

That message convinced this voter a few weeks ago to go for Kerry.

UNIDENTIFIED FEMALE: At this point, electability is the big thing for me. I think, if you're a Democrat and you want a Democrat as the president, we have to vote Bush out. And I think Kerry will win.

(END VIDEOTAPE)

WALLACE: And this campaign is definitely looking beyond New Hampshire to the February 3 primary states, a senior Kerry campaign adviser telling CNN that, beginning tomorrow, the Kerry campaign will be running advertisements in all seven of those states, sources saying these ads will be some of the ads we've been seeing here in New Hampshire, showcasing Senator Kerry's military experience and featuring comments from some of the veterans he served with in Vietnam -- Judy.

WOODRUFF: Kelly, the senator saying even a small margin wouldn't be disappointing to him. But, in truth, they are looking for something sizable, in double digits or what? What are they saying?

WALLACE: Well, Judy, they don't want to say.

They say, again, this is a campaign that people were writing off just a couple of weeks ago. They know that the polls, you can't always trust the polls. They are hoping, though, for a significant win, something to give the senator significant momentum going into the next round of primaries. But, right now, a lot of caution coming from the Kerry campaign. They said they'll wait to see exactly what the polls do show later today.

WOODRUFF: All right, Kelly Wallace with the Kerry campaign, thanks.

Now we turn to Howard Dean's New Hampshire campaign, his day and his expectations.

Here now, our senior political correspondent, Candy Crowley.

(BEGIN VIDEOTAPE)

HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: So far so good. I'll let you know in 12 hours. CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): After almost two years of campaigning in New Hampshire, Howard Dean put in only cameo appearances primary day, handshakes and coffee at a couple of polls.

DEAN: You guys want some coffee? Are you freezing? Hey, we're all friendly here. Listen, I used to do what you're doing right now when I first started out.

(CROSSTALK)

DEAN: You're very welcome.

CROWLEY: Calm veneer to a campaign struggling to develop plan B. Plan A was power everyone out of the field with early wins and start piling up money for the race against George Bush, then Iowa and the speech and the collapsing polls and the reopening of an acid struggle between Howard Dean and John Kerry.

DEAN: One of the things John's going to have to learn, as the front-runner, he's going to have to stop whining when people say things about him that are different.

Senator Kerry and I have different records. He voted against the first Iraq war. I supported it. He voted in favor of this Iraq war. I opposed it. We're going to have differences of opinion. John's going to have to learn to be tough. I had to take it all summer.

CROWLEY: A few days ago, Dean campaigned as he did in the beginning, door to door, but this time, there were fewer doors and more people watching and the kind of high-stakes pressure he never knew when he was a asterisk.

Three weeks ago, Howard Dean was 20 points ahead in the Granite State. Polls show now, he is behind.

(END VIDEOTAPE)

CROWLEY: The problem for Dean and in fact the other candidates is that a marathon costs a lot more than a sprint. And if the polls begin to fall, the campaign contributions will as well -- Judy.

WOODRUFF: But, having said that, Candy, what plans are they making for the next round on February 3?

CROWLEY: TBD, at this point.

They are looking at the states. At this point, this is about strategic spending. Before, when they thought they could kind of clear the table in Iowa and then in New Hampshire, they figured, at this point, they wouldn't have to be spending so much money. They're going to have to figure out, after they see the results tonight, where their money can best be spent among the seven states that are in play next Tuesday.

And, in fact, while they'll play in all of them, the candidates' time and the ad money will probably come down to maybe four or five of the seven.

WOODRUFF: All right, Candy Crowley, strategic thinking, planning, that's something we're going to be hearing a lot more about. Candy, thank you. And we'll see much more of you tonight.

Well, many political observers are keeping their eyes on a potentially close race for third place, among, Wesley Clark, Joe Lieberman and John Edwards. But Edwards is hoping to defy expectations here in New Hampshire, just as he did in Iowa.

Here now, CNN's Suzanne Malveaux.

(BEGIN VIDEOTAPE)

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: I don't make predictions.

SUZANNE MALVEAUX, CNN CORRESPONDENT (voice-over): Senator John Edwards' camp says the polls don't reflect what's happening on the ground, swelling crowds over the past week that they hope will mean a strong finish.

UNIDENTIFIED FEMALE: To me, George Bush needs to go and Edwards is the guy for the job.

EDWARDS: We can build one health care system in this country, one that works for everybody.

MALVEAUX: Edwards' closing-the-deal strategy has been to use his personal appeal and strong communication skills to deliver vision of hope for America.

UNIDENTIFIED MALE: And I realize, everybody's got to have a plan. And everybody is rolling out plans. And he's got his plan. But when he speaks to you, he speaks from his heart about things that nobody else is talking about.

MALVEAUX: One of those issues is race, a topic that has moved some audiences here in New Hampshire, but is bound to play even better in South Carolina and in Saint Louis, Missouri, where there is a significant African-American community.

EDWARDS: This is not an African-American issue, not a Hispanic- American issue. This is an American issue. It's about who we are, what kind of country we want to live in, what values we have.

MALVEAUX: Edwards has been dogged by criticism that his one term in the Senate makes him relatively inexperienced in military and foreign affairs. Republican strategists have painted him as a slick lawyer whose ambitions exceed his credentials. Some voters wanted to hear more than a stump speech.

UNIDENTIFIED MALE: It's just so well rehearsed. And he's smart enough, I think, to have it down pat. But it just seemed like a performance that you'd go to Broadway and see the same show over and over and it wouldn't vary very much. (END VIDEOTAPE)

MALVEAUX: Now, the Edwards camp is hoping for a strong third- place finish here. They are already looking to the future in South Carolina. That is Edwards' birthplace.

And he is leading in the most recent poll there, at 21 percent, leading the pack, also looking at Missouri, a very critical battleground state. That is where he has received the endorsement of the lieutenant governor -- Judy.

WOODRUFF: All right, Suzanne Malveaux, thank you.

Well, checking now in on the other Democratic hopefuls in our "Campaign News Daily," Wesley Clark, like most of the candidates, spending much of the day here in Manchester. He greeted voters outside polling places earlier. He plans a party with supporters here later tonight before flying to South Carolina.

Joe Lieberman called voters from his Manchester headquarters this morning. Lieberman told a Concord radio show that he expects to do well today, but that he doesn't have to finish in the top three to continue his campaign.

Dennis Kucinich began his day in Maine, where he had breakfast with voters in Portland. Kucinich is now here in Manchester, where he had lunch with voters at the Merrimack restaurant and scheduled a party with supporters later tonight.

Well, Wesley Clark came out on top early this morning when voters in Dixville Notch and Hart's Location cast their ballots. The two tiny precincts have a decades-old tradition of opening their polls right after midnight. Clark finished with 14 votes, followed by John Kerry with 8. Howard Dean and John Edwards both received four votes and Joe Lieberman one.

We'll find out who wins New Hampshire later tonight, of course, but we're already getting a sense of the issues most important to the voters. Up next, our Bill Schneider crunches early exit poll numbers. Plus, I'll talk to the Democratic and Republican national party chairs about today's primary and how it figures into the fall presidential battle.

And they are veterans of the Clinton campaign war room. Now James Carville and Paul Begala will join us from the CNN war room to share their spin on the '04 battle for New Hampshire.

(COMMERCIAL BREAK)

WOODRUFF: Information gathered New Hampshire voters as they went to the polls today indicates that many of them are worried.

Our senior political analyst, Bill Schneider, is here now to tell us what they are worried about -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, they're worried about, No. 1 -- let's look at the top issues that they are concerned about.

The No. 1 issue is health care. Health care is a big concern. Costs are skyrocketing. The number of uninsured Americans has been growing. There you see, 26 percent tell us that's their top issue, followed closely by the war in Iraq. And the third issue is the economy and jobs.

Now, this is an electorate, these Democrats here in New Hampshire, who are not very happy. They're very worried about, among other things, a terrorist attack. Do they think that there will be another terrorist attack in the United States? Seventy-six percent now say, yes, they are worried about another terrorist attack occurring in the United States.

How about the economy? Things are supposed to be pretty good. The stock market is a high for almost three years; 72 percent, almost three-quarter of these voters, say the economy is in not good or poor shape. So they do not rate the economy as very good. The bottom line is, what we have voting in New Hampshire today in this Democratic primary are unhappy campers.

WOODRUFF: Bill, how are these numbers -- and, granted, this picture we're getting is early. This is not the entire day worth of voting.

SCHNEIDER: People are still voting.

WOODRUFF: They are still voting. And they will be voting until 7:00 and even 8:00 in parts of the state.

SCHNEIDER: Yes.

WOODRUFF: How is this different from what we saw in Iowa and what the voters there were concerned about?

SCHNEIDER: These voters are a little more negative, a little bit more pessimistic than the voters in Iowa, even though this state is doing very well economically.

But we're seeing people here who are unhappy with George Bush. This could be driven by partisanship as much as by the economy. But the voters in New Hampshire, they are very liberal; 51 percent of them describe themselves as liberals, very critical of President Bush. And that could be leading them to make very negative assessments of both the international situation, the possibility of another terrorist attack, and about the economy.

Partisanship often distorts or colors, I should say, colors, one's view of reality.

WOODRUFF: And, again, this is based on the interviews with people who went to the polls earlier in the day.

SCHNEIDER: Earlier in the day only.

WOODRUFF: OK. Bill Schneider, thanks. We'll talk to you again on INSIDE POLITICS.

SCHNEIDER: Yes, we will.

WOODRUFF: Appreciate it.

Well, here in New Hampshire, the weather obviously can sometimes play havoc with people's plans to vote. Bob Franken is outdoors keeping track of what is in the air -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Well, Judy, this time of year, when you have weather like this, it's not that bad. People think that there's only a nip in the air. They start thinking thoughts of springtime, meaning that it's not below zero. So the weather is not going to be much of a factor today.

Take a look. Everybody is out. It's like a picnic out here, an election picnic. There are just about every kind of sign, every kind of demonstrator, every kind of TV crew. And the weather, well, it's just as I said, probably not going to be a factor. They're expecting a record turnout.

And I have always wanted to say this on television. Let's go to the forecast. Well, the main thing about the forecast is that there is going to be no snow, at least until the polls close. Then the sky may open up. As a matter of fact, they're thinking there may be heavy snow. But it's not apparently going to be a factor as far as the vote is concerned. Of course, it may be a factor on travel plans.

And that's important, because just about everybody's going to strike the set tomorrow and head for warmer climes in the next set of primaries. But as far as election night is concerned, turnout is expected to be heavy, because the weather is not -- Judy.

WOODRUFF: And it may affect the plans of the candidates to fly from New Hampshire elsewhere, if there's a lot of snow tonight. But we'll worry about that later on. All right, thank you, Bob. Appreciate it.

Well, they ran candidate Bill Clinton's war room back in 1992. This year, James Carville and Paul Begala are in CNN's war room. We'll pay a visit there next for some analysis and where they're helping us.

We'll be right back.

(COMMERCIAL BREAK)

WOODRUFF: There was a memorable documentary done about Bill Clinton's 1992 campaign, the documentary titled "The War Room." Well, that war room was run by two men named James Carville and Paul Begala. CNN has recreated the war room right here on primary night in New Hampshire.

James Carville and Paul Begala are with us. Nobody talks to these campaigns more than the two of you.

James, I want to start with you. What are the campaigns telling you right now? What are they looking for tonight?

(CROSSTALK)

JAMES CARVILLE, CO-HOST, "CROSSFIRE": Well, it depends on who the campaign is.

I think that Senator Kerry's campaign is looking for a good win. I think Governor Dean's campaign is looking for a comeback, a substantial comeback here. I think Senator Edwards and General Clark and Senator Lieberman are all looking for a third-place finish out of this. So they have different things that they're looking for and hoping to accomplish.

WOODRUFF: Is that what it boils down to, Paul?

PAUL BEGALA, CO-HOST, "CROSSFIRE": Yes.

For the third-tier candidates, they want to stay in the second. They don't want to get knocked out. But there's a death match between the two New Englanders here, right? Governor Dean and Senator Kerry, from adjoining states, each of them has led at different times. Dean led at the beginning. Kerry has led at the end. And, yes, those two want -- neither are going to knock the other one out, but they want to win on their home turf.

WOODRUFF: Is it all about numbers at this point, James? Is it that spread between whoever is first and whoever is second and third?

CARVILLE: Yes, of course that matters.

But I think that the important thing for us to focus on is that we have seven -- after tonight -- one thing, Iowa is dead. Then it's New Hampshire. Now we have seven states to go to next Tuesday, which is going to be fascinating. And, at some point -- and I suspect by next Tuesday -- we're just going to have to accumulate who won the most, who's winning primaries, who's winning voters.

And I think what happens tonight is going to have a huge impact on what happens next Tuesday. These things have a way of affecting each other down the line.

WOODRUFF: Paul, can you say who has an advantage going into that climate? That's a very different kind of a campaign than what we've seen in Iowa and New Hampshire.

BEGALA: No. So, all they can do is try to win tonight to try to get the momentum. And so what they're doing right now, my guess is, in the real war rooms in the different campaigns is, they're looking at the maps.

And they're getting anecdotal, probably inaccurate information. But say they're saying, the southern tier of New Hampshire is not voting. Well, that's Kerry country, presumably, because it's close to Massachusetts, where he's from. So they may be moving troops from up here down here, vice versa with Dean. He's likely to be stronger in the north and in the west, which is closer to Vermont. They don't really know, OK, but they got to do something.

WOODRUFF: Right.

BEGALA: And they're running around like chickens with their heads cut off right now.

WOODRUFF: But you're saying, they're still working today to get their voters out today.

CARVILLE: I tell you what. They're going down the line in this thing. The stakes here are enormous.

And for Senator Kerry, if he's able to win by a nice amount, it will have a big impact on, if it goes down. If Governor Dean is able to come back and win or run very close, I think it will reenergize some of his troops out there and give him some momentum going in to next Tuesday.

WOODRUFF: The Dean campaign, in the last few days, we've been hearing him talk about dirty tricks, the other campaigns, they say, calling people in the middle of the night, other things going on. How much of that really does go on in a campaign like this?

BEGALA: Very little, at least here this time, very, very little.

The standard for dirty campaigning is what happened to John McCain in South Carolina. Nothing like that up here. What these guys want, though, what every campaign wants out of here, is, they want to be Seabiscuit. They want to be the one who's coming from behind at the end, so that they can have the momentum and say, I'm the little horse that could. By the way, "Seabiscuit" nominated for an Academy Award today, so it's not a bad model.

WOODRUFF: James, what about the fund-raising? Yes, if you win, people are going to answer your phone calls.

(CROSSTALK)

CARVILLE: And makes it really hard if you run a distant third or you run fourth here. It makes it really hard -- to make it really hard to move on beyond.

So this has enormous impact on fund-raising. The top two guys coming out of here are going to have a big advantage in fund-raising. An important thing I think for the third-place finisher here is to maintain contact with the field. Even Seabiscuit, if he fell too far behind, couldn't -- even as gutty as he was, he couldn't make up the distance. So you don't want to lose contact with the field here.

WOODRUFF: We just heard Bill Schneider look at characteristics of the early voters today, talk about what they are worried about. It was health care, followed by terrorism -- or Iraq, rather -- followed by the economy. The campaign that you all ran so famously in 1992 was, it's the economy, stupid. Is there a motto this year?

BEGALA: They're all different. I think Governor Dean's campaign wants this to be, it's Iraq, stupid, right? I think Senator Kerry is more, it's electability, stupid. I think John Edwards is sort of, I can connect. Maybe it's economy and two Americas. So they each have a different model. There's not one overarching issue.

I think the beginning of the race, it was, Iraq, stupid. But I think that has faded as concerns of electability have really run to the top. And I think electability is actually the biggest issue on the minds of Democrats.

CARVILLE: Yes.

I think it's important to remember, in '92, the actual sign, the first thing was change vs. more of the same. I think what's really motivating these Democrats, they don't want more of the same when it comes to President Bush. They obviously want change. That's their chief motivation.

And also, on that wall, with, it's the economy, stupid, was, and don't forget health care. Health care was a big issue in '92. I think it is a growing issue in American politics and one that needs to be addressed in greater depth and detail.

WOODRUFF: We're going to leave it there. This is the war room, boys. James Carville, Paul Begala, great to see you. We're going to see you throughout the night right here in this corner. We tried to recreate it, but, of course, nothing would really recreate the original war room.

(CROSSTALK)

CARVILLE: You know what? It feels good. It feels good. It's fun.

WOODRUFF: Thank you. Thank you.

We love James' sunglasses.

And, Paul, you've got to get something to counter that.

(LAUGHTER)

WOODRUFF: All right, coming up, we're going to be hearing, as I said, from James and Paul throughout the night.

Coming up next, the presidential campaign prepares to head South and West. Could South Carolina Democrats rearrange the field yet again a week from today? We're also going to look at how the candidates' strategies will be changing as more and more states come into play.

(COMMERCIAL BREAK)

WOODRUFF: Our expanded edition of INSIDE POLITICS continues here in Manchester, New Hampshire. The Democratic hopefuls are making their final stops around the state, many of them greeting voters outside their polling places. Independents are expected to play a key role in the outcome of today's primary. Turnout, of course, expected to be strong. That's what we've been hearing. The candidates will have little time to savor victory or dwell on defeat. Seven more states hold primaries or caucuses one week from today.

South Carolina is among those seven contests on February the 3rd, the first Southern primary and the most diverse of the caucus or primary states so far.

CNN's Frank Buckley is standing by for us in the capital of Columbia with the preview.

Hi there, Frank. It's got to be warmer than it is here.

FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Well, I don't know about that. We're thawing out from an ice storm right now. So when you come down here, Judy, make sure you bring your parka. It's actually pretty cold down here.

You're right. This is the first Southern test of the Democratic candidates coming up on February 3. And it's also the first test among these candidates among a significant group of African-American voters. Up to half of the voters in the Democratic primary on the 3rd could be African-American. Now, so far, John Edwards, the local boy who was born here in Seneca, South Carolina, is in the lead in the polls in the most recent polling. He, as we said, is a local boy.

He has said, this is a must-win state. He will be here tomorrow to begin his drive to February 3, if he carries through from New Hampshire. Now, running second in the most recent polls is Senator John Kerry. He announced his campaign here in South Carolina, but then he promptly left South Carolina. He's only been back once since. But we do expect him to return here to South Carolina at some point, possibly as early as tomorrow as well.

He has signaled that he believes that a Democrat can win the general election without winning any Southern states. Now, that's not gone over too well here among some people in the South. We talked to the former state Democratic chairman about that. And here's what he had to say about that.

(BEGIN VIDEO CLIP)

DICK HARPOOTLIAN, FORMER SOUTH CAROLINA DEMOCRATIC CHAIRMAN: But I think, as we say in the South, that's going around your ass to get to your elbow. You can win Southern states as a Democrat if you talk about the issues that matter.

(END VIDEO CLIP)

FRANKEN: Now, General Wesley Clark also expected to be here tomorrow to begin his campaign for February 3. He's also a Southerner, from Arkansas. He's also hoping to appeal to the many military veterans here in South Carolina. More than 400,000 military veterans are here. He's also reached out to African-Americans by saying that the Confederate battle flag should be removed from these capital grounds here in Columbia.

And then there is Al Sharpton. He has camped out here in South Carolina instead of in New Hampshire. He will be here for the duration until February 3. He has shown up double digits in many polls. But we talked to James Clyburn, who is the most influential African-American leader here in South Carolina, the long-time congressman. And here's what he had to say about Al Sharpton.

(BEGIN VIDEO CLIP)

REP. JAMES CLYBURN (D), SOUTH CAROLINA: He's got a chance of getting 15, 20 percent here. I don't think he has a chance of winning here. I think the winner here is probably going to be either Kerry or Edwards. I don't see anybody else winning here.

(END VIDEO CLIP)

BUCKLEY: Now, Joe Lieberman and Howard Dean have been up and down in the polls here. Howard Dean believed to have the strongest ground organization. But the bottom line here, Judy, is that nobody is calling this race.

The undecideds are up in the 30 percent-plus range. Anything can really happen on February 3 in South Carolina. Many people apparently waiting to see who wins New Hampshire before they decide on who to vote for here -- Judy.

WOODRUFF: And that's probably true of much of the rest of the country coming up next week. Frank, thank you very much.

Well, by the time the sun rises tomorrow, most of the candidates will be back on the campaign trail searching for votes in South Carolina and the six other states holding primaries or caucuses next Tuesday. Checking the itineraries that we know of now, John Kerry heads to Missouri, the state once considered a lock for Dick Gephardt. And Howard Dean plans a quick trip home to Vermont. John Edwards and Wesley Clark heading to South Carolina and to Oklahoma, among other stops. And Joe Lieberman is going to Delaware and then Oklahoma. A large number of states will also require a change in political strategy.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): Get ready for a lot more of this...

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: You give me a shot at George Bush and I will give you the White House.

WOODRUFF: And a lot less of this...

UNIDENTIFIED MALE: How are you? UNIDENTIFIED FEMALE: Good. Welcome.

UNIDENTIFIED MALE: Nice to see you.

WOODRUFF: With Iowa in the distance and New Hampshire in its final hours, the '04 campaign is about to go national. Say good-bye to intimate voter chats and cozy town meetings. The retail season is over. Starting tomorrow, it's all about getting the most bang for the buck, as candidates compete to spread their messages as far and wide as possible to the seven February 3 states and the 10 big contests on March 2.

SEN. JOSEPH LIEBERMAN (D-CT), DEMOCRATIC PRESIDENTIAL CANDIDATE: I thought that maybe they'd think I was Ed McMahon.

WOODRUFF: Door to door won't do it. The '04 Dems need to maximize their air time on local and national newscasts. And they've got to ensure they have the money to play hard in the high-powered media markets of New York and California. A candidate who slips through next Tuesday without scoring a win will find it hard to compete in the crucial race for cash and delegates.

UNIDENTIFIED MALE: It's not just the Democratic National Committee chairman, Terry McAuliffe, saying that if you don't win by February 3 you probably should exit the race. But I think it will be the sense of your supporters, both financial and voters, that you're probably not viable.

WOODRUFF: So New Hampshire's their best girl today. But tomorrow, the candidates start playing the field, going courting cross country while trying not to hurt any feelings.

(END VIDEOTAPE)

WOODRUFF: With me now for more on New Hampshire and beyond are the two national party chairmen. Democrat Terry McAuliffe here with me in Manchester, Republican Ed Gillespie, he's with us from Washington.

Gentlemen, thank you both.

Ed Gillespie, to you first. With the voters here in New Hampshire saying loud and clear that more than anything else apparently they want a Democrat who can beat President Bush -- and this race looking like it's going into February -- how does that affect your strategy?

ED GILLESPIE, RNC CHAIRMAN: Well, let's be clear, Judy. The voters who are saying that today are the Democratic primary voters, they're not the voters across the board. President Bush carried New Hampshire in 2000, and we're going to carry it again in 2004.

But from our perspective, look, I'll tell you, I am watching the whole thing with fascination, not just because I'm RNC chairman, but as someone who has worked in a lot of campaigns. It is interesting to see a race this wide open this late in the game. But whoever emerges from the Democratic Party primary will be a viable candidate come November.

We're anticipating a close contest. But at the end of the day, the president's strong and principled leadership, and the fact that most voters agree with his approach to our national security and how to create jobs, is what's going to make him reelected.

WOODRUFF: Well, Terry McAuliffe, you've been very clear. You've said if one of these candidates, if they don't win a primary or a caucus on February 3, they should get out of the race. Are you going to ask them to do that, number one? And number two, are you worried the longer this goes on, it gives on advantage to the President?

TERRY MCAULIFFE, DNC CHAIRMAN: Well, what I have said is, on the morning of February 4, if you haven't won one of the first nine contests, which I remind you are in all regions of our country, all the different elements of the Democratic Party represented, then maybe you should look at your candidacy. But it's not up to me or anyone else. It's up to the voters to make the decision and whose support they're going to do it.

Ultimately, what happens is candidates run out of money. But it's early. I mean, Ed just said late in the process.

I remind you, we are in the second day of voting. We haven't even finished the second contest. I want everybody to step back, take a deep breath.

We have 38 more contests until March 10, when I think we'll have a nominee of the Democratic Party. We will have 10 voting days between now and March 10. Let the voters decide who it is.

I can tell you, there is tremendous excitement. When you and I were together last week in Iowa, you saw a record voter turnout last week in Iowa. Fifty-five percent of the voters were first-time voters. I think you're going to see another record today.

People are excited about what the Democrats are saying. They're not happy with what they see with George Bush. And that's why you see a "Newsweek" poll showing George Bush is reelected 44 percent today.

WOODRUFF: All right.

Ed Gillespie, I'm sure you want to respond to that, but I want to ask you about Iraq, because we know the chief weapons inspector who has been -- gone in there and looked at the weapons of mass destruction in Iraq is now saying emphatically that he believes there were no weapons of mass destruction in Iraq since the end of the Gulf War. The President, though, still defending that war. Could that become a problem for him?

GILLESPIE: No, Judy, because the fact is, if you listen to what David Kay said, he said Iraq was a very dangerous place. Saddam was a very dangerous man. He did note that they were developing the capacity for biological -- I'm sorry, for chemical weapons.

And the fact is, the Iraq Surveillance Group has not finish finished with their work. David Kay did not stay through the completion of the project. So there's more to -- there's not a finality here.

But the fact is, the American people appreciate the fact that President Bush is willing to act in our national security interest. He's not going to wait for gathering threats to become certain tragedies. Saddam Hussein was a brutal dictator. Those Democrats who say that the Iraqi people are not better off, or the world is not better off with Saddam Hussein out of power are wrong. And I think the American people will see it that way in November.

WOODRUFF: Terry McAuliffe, what about the economy? Good news today in terms of consumer confidence is up. We know the markets are up.

It's good for the Republican Party and for this President, isn't it? Not necessarily good news politically for the Democrats.

MCAULIFFE: Well, first, as it relates to Iraq, President Bush wanted to run this campaign all about Iraq. I think what we found out this week is what we thought all along.

They politicized, they embellished intelligence data to justify him going to war. They've now come out and said there's no weapons of mass destruction. This should be no surprise to anybody.

But as it relates to the economy, which is what President Bush doesn't want to talk about, they haven't created any problems. Yesterday you saw that the Congressional Budget Office came out with a $477 billion deficit. We still have no job creation in this country, only 1,000 jobs last month.

We're going to win this election, Judy, on job creation, education, health care. People are very concerned about those issues. And they don't see the leadership out of the President.

WOODRUFF: Ed Gillespie?

GILLESPIE: Judy, if I could -- yes -- if I could just point something out because, Terry, you may not like the facts, but the facts are this: over 500,000 jobs have been created in this economy since August. Now, we have more to do, and we're not going rest until every American who wants a job can find a job.

But you can't deny the fact that there was an 8.2 percent growth rate in the economy for the last quarter for which data are available. Productivity is at a 20-year high. And it's interesting; Democrats have clearly come to the conclusion that what is best for the American people is what's worst for them politically.

So when we see this kind of -- the numbers you cited, Judy, the jump in consumer confidence, the positive developments in the job market, the positive developments in gross domestic product, Terry looks like his dog just died, because it's not in his political interest. But that doesn't mean you can rewrite the facts. So when he says no jobs have been created, let's be clear. He is factually inaccurate, and that is not an accurate statement whatsoever. And if you look at the data, it doesn't support it.

WOODRUFF: All right.

Terry McAuliffe, last word here.

MCAULIFFE: George Bush, Ed Gillespie see America from 30,000 feet on Air Force One. Three million jobs have been lost, 100,000 people every single month since George Bush has been President have lost their health insurance benefits. Education funding is not what George Bush promised.

You saw just in Virginia the legislature opted out of No Child Left Behind. George Bush has not shown leadership. He's got to create 200,000 jobs every month. He's the first President since Herbert Hoover who has lost jobs as President of the United States of America. Five hundred thousand jobs is not going to get people back to work.

GILLESPIE: Judy, if I could just...

WOODRUFF: All right.

Gentlemen, we're going to have to leave it there.

GILLESPIE: Thank you very much.

WOODRUFF: Terry McAuliffe here in Manchester, Ed Gillespie in Washington.

And now we want to listen to something the President -- President Bush had a meeting with congressional leaders just a little while ago at the White House. Here's videotape of what he had to say.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ... we've got a lot of common interests this year. We're interested in continuing to fight and win the war against terror. We need to protect our homeland. We need to put policies in place that help people find work.

We'll work together to -- on the health needs of our fellow citizens. We've got to be wise with the people's money. I look forward to constructive conversation today and working together constructively throughout the year.

This is an election year. It's the year where people say nothing can get done. We need to prove them wrong. We need to continue to do the people's business in a sound way.

I want to thank the members for coming. I appreciate the chance to visit with you and look forward to a good relationship here in 2004. (END VIDEO CLIP)

WOODRUFF: President Bush meeting at the White House just a short time ago with congressional leaders.

Well, we have much more to come from here in New Hampshire, including word of an endorsement that could have a major financial impact on the Kerry campaign. I'll ask "Hotline" editor Chuck Todd what he's hearing.

This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

WOODRUFF: Senator John Kerry has picked up an endorsement that could be significant. Chuck Todd joins me now. He's the editor and chief of "The Hotline," an insider's political briefing produced daily by "The National Journal."

All right. What is this endorsement, Chuck, that could make some difference?

CHUCK TODD, EDITOR, "THE HOTLINE": Well, it came a couple of days ago. It was the League of Conservation Voters. And on its face, that's great to have an environmental group supporting you. But it's sort of this the financial help that Kerry may be getting from this group for the February 3 states.

The LCV has been doing a lot of work getting ready for the general election. Well, they've done so in a few swing states that also happen to have February primaries: New Mexico and Wisconsin and Washington, in particular. And because Kerry might have some donors that are out of money...

WOODRUFF: When in February?

TODD: Later in February. Wisconsin's February 17, New Mexico's February 3. Because Kerry may -- you know, donors who are excited about Kerry may have already given him everything they can. Now they may potentially have another outlet to give money to.

The LCV could raise and spend money, even though the McCain- Feingold legislation is out there. They're exempt because of a quirk in the law. So it's going to allow them to not only help Kerry on the ground with actual people, which they already have in those states, but possibly with direct mail, advertising. It could become a real extra help to Kerry as he moves on to the February states.

WOODRUFF: And resources hugely important.

(CROSSTALK)

TODD: Gigantic. They're all running on the money right now.

WOODRUFF: All right. Very quickly, Chuck, you picked up some last-minute negative attack stuff. What are you seeing? TODD: You always hear about these fliers that get handed around, and this is one of them. It doesn't look very pretty, but this is -- I have seen this now at two different Kerry rallies in the last two days. It's questioning Kerry's electability. And it's very well researched.

WOODRUFF: Could Kerry beat Bush in November?

TODD: Exactly. It's very well researched. It goes through a number of things. Of particular interest to me was this questioning, noting how Kerry voted against Gulf War One, voted for Gulf War Two.

WOODRUFF: Well, that's what we've heard Howard Dean talking about.

TODD: That's exactly right. And it's interesting to see if that is -- we don't know if this came from the Dean campaign. Some Kerry people thought this came from the Clark campaign.

But either way, it's clear it's a talking point I think we're going to hear more about in the next month because he's been questioning other people's foreign policy credentials. We might now see the spotlight turned on John Kerry.

WOODRUFF: This is anonymous, we should say. There's nothing on here that says what campaign.

TODD: No paid for, absolutely.

WOODRUFF: No fingerprints that we can tell.

TODD: Only mine right now.

WOODRUFF: Only yours. OK. Chuck Todd, thanks very much.

TODD: Great.

WOODRUFF: Well, "The Hotline," of course, is an insider's political briefing. It is produced daily by "The National Journal." And you can go online to nationaljournal.com for subscription information about "The Hotline." We read it every day.

Well, the Democratic candidates aren't getting the entire day to themselves. Coming up, we're going to take you to the White House, where President Bush and congressional leaders have been talking about what, if anything, they can accomplish this election year.

(COMMERCIAL BREAK)

WOODRUFF: These are pictures coming into CNN just a few minutes ago. President Bush meeting this hour at the White House with congressional leaders of both parties, talking about some of the issues facing the country.

Talking in particular about the war in Iraq, saying that this war made the world safer despite the criticism. Saying despite the fact that no weapons of mass destruction have been found, that the war in Iraq was still necessary. President Bush with the congressional leaders just a few moments ago.

Well, today's early exit polls from New Hampshire show that Democratic voters are worried about the economy, about health care, Iraq and the war on terrorism. You know, those are the same issues that President Bush and the lawmakers are discussing.

For a look ahead at how all of this may affect the fall general election campaign, I'm joined by CNN political analyst, Ron Brownstein, of the "Los Angeles Times."

All right, Ron, we've been talking about this, the economy looking very bright right now. Consumer confidence is up, the market. How do the Democrats counter that in a campaign down the road?

RON BROWNSTEIN, "LOS ANGELES TIMES": Well, I actually think they've made more progress in thinking about how they're going to run against George Bush than many of them made in thinking about how they're going to run against John Kerry. On the economy, you can see arguments that are emerging from campaign to campaign that will likely be there in the general election.

First of all, they're going to argue that jobs is the big hole in the Bush economic record. Despite the growth, the overall growth and improvement of the stock market, the job creation record still leaves him at risk, as we discussed, of being the first president since Herbert Hoover to have a net loss of jobs over a full term.

Secondly, they want to make an argument that the economy is not working for everyone. They're trying to argue, as John Kerry I think has been the most explicit, saying this is a Republican recovery, it's benefiting people at the top, but there is a middle class squeeze on daily cost of living problems, especially in health care.

And then third is a subset of this. They're trying to make an argument that Bush has been too beholden to powerful interests, and as a result, the economic concerns of ordinary people are being submerged under the demands of people like health care companies, insurance companies, pharmaceutical companies.

WOODRUFF: That's a lot to talk about.

BROWNSTEIN: It is.

WOODRUFF: Then they've got to figure out a way to do it in just a few words.

BROWNSTEIN: They're trying to make it recovery proof. They're trying to have an argument that can withstand a good economy overall number.

WOODRUFF: Let me ask you about Iraq. A lot of uncertainty in Iraq. How is that going to factor into this campaign? The president is clearly a little bit on the defensive right now with the David Kay statement. BROWNSTEIN: Yes. My sense has been that the polls have shown that Americans care about what happens in Iraq more than what happened in Iraq. That the question of whether there were weapons of mass destruction is going to be an issue about trust of the president, but it's not going to really fundamentally change the degree to which Americans support the mission.

What's going to change that is the mission itself. The extent to which they can show progress towards stabilizing Iraq and removing it as a threat, a destabilizing force in the region, that is really the key. And I think that is where we're going to see. The degree to which the Democrats challenge Bush on it will be dependent to some extent on what happens on the ground.

WOODRUFF: One other quick thing I want to ask you about. The extent to which, Ron, we're seeing voters in New Hampshire and in Iowa say what they really want as a candidate, a Democratic candidate who can beat President Bush.

BROWNSTEIN: Absolutely. Look, the point of this exercise, we lose track of it here in the frenzy in New Hampshire. The point of this exercise is to find the nominee who can take them back to the White House.

One of the things that has happened, I think, is that as part of that exercise of deciding who can beat Bush, they're also deciding who is the most credible as president. They're not just looking for someone -- I think one thing that's probably pretty encouraging amid all the polarization in American politics, they're not just looking for who barks the loudest at President Bush.

They've also shown signs in Iowa and New Hampshire they're looking for someone who can actually serve in that job. Who has the credibility and the experience to do that. And that's a key part of electability as well.

It's, I think, a hopeful sign Democratic voters are pulling away from the extreme anger and demanding really of all the candidates that they show, OK, can you sit in that big chair? Because it is a big chair.

WOODRUFF: And in previously elections that hasn't always been the focus so early in the election year.

BROWNSTEIN: Absolutely.

WOODRUFF: OK. Ron Brownstein, we'll be seeing you tonight as well. Thank you.

BROWNSTEIN: Absolutely. Thank you.

WOODRUFF: Well, we check in on more of the Democratic candidates straight ahead. Wesley Clark plans a party, then he plans to leave the state. We'll have the latest on his final hours of campaigning here in New Hampshire.

Plus, where do the hopefuls go from here? Our Bill Schneider returns with more on the political map and the races that lie ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: The voting ends four hours from now. Will the predictions hold up our will we have a New Hampshire surprise?

Ready for a road trip? We've got our eyes on the next campaign battlegrounds.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Starting tomorrow, the race goes everywhere.

ANNOUNCER: It's been one wild ride here in the Granite State. We'll look at our highlights from primary week.

LIEBERMAN: (UNINTELLIGIBLE) get a chance to do this (UNINTELLIGIBLE).

(END VIDEOTAPE)

ANNOUNCER: Now, live from CNN's New Hampshire quarters in Manchester, JUDY WOODRUFF'S INSIDE POLITICS.

WOODRUFF: Welcome back to New Hampshire.

If you need a reminder of who the top contenders are in this important primary day, just follow the sniping. Front-runner John Kerry is again questioning Howard Dean's credentials to be commander in chief, while blasting Dean for going negative. Dean, in his turn, is calling on Kerry to "stop whining" about his criticism of Kerry's vote to authorize the Iraq war.

Dean and Kerry may have the most to win or lose in the first-in- the-nation presidential primary. But the arrivals are not taking a back seat. Wesley Clark is the only Democratic candidate who can already claim a New Hampshire victory after winning the small early vote in hamlets of Dixville Notch and Hart's Location. But what about his chances in the rest of the state? CNN's Dan Lothian covering the Clark campaign.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: It's now midnight and I declare the polls open.

DAN LOTHIAN, CNN CORRESPONDENT: In the northern New Hampshire hamlet of Dixville Notch, first to vote in the primary, Retired General Wesley Clark began his first political test since running for homeroom representative in the fourth grade. He won here with eight votes.

WESLEY CLARK (D), PRESIDENTIAL CANDIDATE: This is a big step for me.

LOTHIAN: But the bigger picture (UNINTELLIGIBLE) is more on uncertain.

CLARK: I think we'll get votes in New Hampshire but I wouldn't predict on where we'll finish.

LOTHIAN: Clark has been running as the outsider, a message that resonated with some voters.

UNIDENTIFIED FEMALE: I voted for Wesley Clark. He's not an old politician.

LOTHIAN: But he was dogged by missteps, like yesterday, having to back off a statement about being the only one in the race with humble beginnings.

CLARK: I overstated that and I apologize.

LOTHIAN: Clark is banking on undecided voters to buy into his message and inject new life into his campaign.

(END VIDEOTAPE)

LOTHIAN: Later tonight, the Clark campaign will begin what they're calling their true values tour beginning in South Carolina. Over the next few days we'll head to Oklahoma, Arizona and New Mexico. The Clark campaign saying they have good organization in the ground in Oklahoma, and also Missouri, saying in Oklahoma they have over 2,000 volunteers there. What's interesting, they don't appear to be taking a hard fight in South Carolina. One aide saying that John Edwards already has a big advantage there -- Judy.

WOODRUFF: All right. Dan Lothian following the Clark campaign, thank you, Dan.

Wesley Clark, we want to tell you, is a guest next hour on "Wolf Blitzer Reports."

Joe Lieberman says he is, quote, "in the hunt for third place in New Hampshire" but he contends he doesn't need to finish in the top three in order to feel like a winner here. Others might dispute that. Let's check in with CNN's Jeanne Meserve who's covering the Lieberman campaign --Jeanne.

JEANNE MESERVE, CNN CORRESPONDENT: Judy, Joe Lieberman has been relentlessly upbeat throughout this campaign and nothing changed that today. He went by his headquarters in Manchester this morning and placed phone calls to undecided voters. He claimed he had swayed a few of them to his column and he says the doubters will be surprised by the results today.

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN (D-CT), PRESIDENTIAL CANDIDATE: People want, in these tough times, a candidate who can win and then they can trust and do what's right for the country and unite the country and that's my record, and that's why I'm going to surprise today and go on to the White House. (END VIDEO CLIP)

MESERVE: Lieberman, a support of the war in Iraq, claims he is the only centrist Democrat in the pack, the only one who can bring independence and disgruntled Republicans to the Republican ticket in the November election but because he's a little bit to the right of the base in New Hampshire, his campaign admits that the independent vote is more critical to his success than anybody else's.

They say no matter what happens today, he will continue on. He says he could place in third but doesn't have to. Plans right now call for him to travel tonight on to Delaware. Delaware and Oklahoma, the two February 3 states, where he has put in the most effort and will continue to the two states where his campaign believes he has the best chance of turning up a win. Why would he continue if he does poorly in New Hampshire? Well, he did not compete in Iowa and he has said he deserves the chance to take two bites out of the apple. Judy, back to you.

WOODRUFF: You're right, Joe Lieberman being positive, day after day so far in this campaign. Thank you, Jeanne.

John Edwards for his part says that New Hampshire voters are responding to his positive campaign, but while he hopes to do better than expected in the Granite state, Edwards says he has much more riding on the next primary day when voters cast ballots in his birthplace of South Carolina. Bill Schneider reports with the latest polls on the February 3 contests.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Starting tomorrow, the race goes everywhere! February 3, seven contests in all parts of the country, the hottest race. The hottest place, South Carolina. The first southern primary. Anything can happen here, except Dean, one source tells CNN. South Carolina is crucial for the two southerners in the race, John Edwards and Wesley Clark. Al Sharpton's looking for a break-through in South Carolina with its large African-American vote. Has John Kerry got anything going for him in South Carolina? We asked CNN's political editor.

JOHN MERCURIO, CNN POLITICAL EDITOR: The military veteran in South Carolina obviously has a huge population of military veterans.

SCHNEIDER: One poll shows native son Edwards leading in South Carolina with Kerry a close second followed by Sharpton and Clark. Another poll also shows Edwards on top with Kerry second and Sharpton much lower. Note the high number of undecided voters.

Arizona is another hot contest. Four candidates have made a big effort there. Democratic sources say Clark spent the most on ads. Joe Lieberman spent a lot of time in Arizona. Dean's got a big vote by mail effort in a state that allows early voting. Kerry is counting on veterans.

Democrats say Arizona has more than half a million of them. One poll shows Kerry leading in Arizona with Clark right behind, and a high undecided. Another poll shows Kerry leading in Arizona, with Clark right behind, and a high undecided. Missouri is wide open, since Dick Gephardt pulled out last week. No ads or polls yet. Dean's got special problems in Missouri.

MERCURIO: I talked yesterday with a lot of Missouri Democrats, and they're still angry at the way that he campaigned against Dick Gephardt in Iowa.

SCHNEIDER: Missouri then looks like a fight between Kerry and Edwards. Clark's been making a big push in Oklahoma. A poll shows that Clark's the front-runner with Edwards second. The state party chairman tells CNN he's disappointed that Kerry seems to have written his state off, but the polls still shows Kerry running a close third. Momentum can do that for you.

We could see victories for everybody next week. Kerry's best hope for a win, Missouri. Edwards, South Carolina. Clark, Oklahoma. Dean, Arizona, and Lieberman, he's reported to be strong in Delaware.

(END VIDEOTAPE)

SCHNEIDER: All of this could change if one candidate gets a big bounce out of New Hampshire. Bounce is contagious.

WOODRUFF: But if there is no big bounce?

SCHNEIDER: Then it all goes on and on and on.

WOODRUFF: All right, Bill Schneider, thanks very much. We'll talk to you later.

In the late dash to win votes here in New Hampshire, is any candidate claiming the bulk of Dick Gephardt's former supporters? I'll ask Gephardt's ex-campaign manager.

Plus Howard Dean's biggest union endorsement didn't help him as much as he had hoped in Iowa. We'll discuss labor's efforts and influence here in New Hampshire.

And snapshots of our travels through New Hampshire aboard the CNN Election Express. This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

WOODRUFF: This just in to CNN. Three U.S. soldiers were killed today in an ambush near the Iraqi city of Iskandariyah. Earlier today three other soldiers had died in an attack in the Iraqi city of Khaldiyah. In addition to those six soldiers killed, four Iraqi policemen and two of CNN's Iraqi employees all died in separate attacks.

(COMMERCIAL BREAK)

WOODRUFF: A picture of beautiful Manchester and the Merrimack River.

Well Dick Gephardt's withdrawal from the Democratic presidential race puts Missouri's delegates up for grabs and created an opening for candidates seeking support from organized labor.

With me now from Washington is Steve Murphy, Congressman Gephardt's former campaign manager.

Steve Murphy, how do you see this race shaping up now that your man is out of it?

STEVE MURPHY, GEPHARDT'S FORMER CAMPAIGN MANAGER: I think it really depends mostly on what happens today in New Hampshire. If John Kerry wins today in New Hampshire, as many are predicting, he's going to be in a commanding position to win the nomination. If Howard Dean finishes a decent second, as many are also predicting, he's going to be in good shape to, you know, press the fight on for a couple more weeks at least.

(CROSSTALK)

MURPHY: I'm sorry. Go ahead, Judy.

WOODRUFF: How do you define a decent second?

MURPHY: Some separation between Dean and the third and fourth place finishers, if that's Edwards and Clark or Edwards, Clark, Lieberman in some order, but there's quite a few percentage points between them and Howard Dean.

I think the race will shape up as mostly, you know, nationally a two candidate race with Edwards, you know, still able to continue on if he can win in South Carolina and Clark if he can win in a couple of other states on February 3.

WOODRUFF: In other words, you definitely see this going on through at least next week with this many candidates in there?

MURPHY: Absolutely. I don't think you'll see many candidates, if any at all, drop out after tonight. We'll get a little more definition from this race after February 3.

And don't forget February 7 when you have both Washington and Michigan. Those states have more delegates combined significantly than all the states on February 3. That's going to be a big day. And if Dean can bounce back after tonight, he's got strong organizations in both of those states.

So John Kerry won't have the nomination wrapped up after winning tonight, but he'll be the first candidate if he wins today since Jimmy Carter, in either a challenger or an open White House situation, to win in both Iowa and New Hampshire. That will put him in a commanding position.

WOODRUFF: Steve Murphy, what about Dick Gephardt's home state of Missouri? And by the way, we understand the congressman has said he's not going to endorse before Missouri. Is that your understanding as well?

MURPHY: As far as I know, the Congressman has no plans to endorse anybody any time soon. He hasn't ruled out an endorsement at some point down the line but there's nothing eminent.

(CROSSTALK)

MURPHY: I'm sorry, go ahead.

WOODRUFF: Go ahead, please.

MURPHY: Yes, sorry. About Missouri. You know, Missouri is completely wide open. Nobody had anything on the ground there at all except for Dick Gephardt. And Dick Gephardt supporters, some of them are still licking their wounds, some of them have gone to other candidates.

Missouri is going to be a momentum state. So the winner tonight is going to have the upper hand, I mean if it's John Kerry in Missouri. If it's Howard Dean, if Howard Dean can pull out a win somehow in New Hampshire, I think he'd have a tough time in any case in Missouri, given the way he attacked Dick Gephardt in Iowa.

WOODRUFF: So in other words, our political editor John Mercurio's reporting a minute ago apparently correct, that there are some hard feelings toward Howard Dean. But as you said, his strength may lie further on down the line?

MURPHY: Yes. I mean if Howard Dean can get through tonight, you know, he'll be the comeback kid if he finishes a decent second place here.

Now, he's not on the air in any of these February 3 states which I think is a mistake, unless he's somehow or another run out of money which would be an even bigger mistake.

But if he can put a couple of wins together on February 3 and then another win or two on February 7 or in Maine on February the 8th, you'd have a Kerry/Dean race in my view.

WOODRUFF: All right, very quickly, Steve Murphy, organized labor. The industrial unions were very much behind Dick Gephardt. Where do you see them going now?

MURPHY: I they're think absolutely wide open for one of these candidates to reach out to. The Alliance for Economic Justice, the 17 unions that really worked closely together out of the 21 unions that endorsed Dick Gephardt, I think would like to find a candidate that's going to stand up for the manufacturing jobs in this country and stand up against the unfair trade deals. If they find that in one of these candidates I think they'll probably make a move at some point.

WOODRUFF: Steve Murphy, former campaign manager for Congressman Dick Gephardt. Steve, thanks very much. You're not with another campaign yet, is that right?

MURPHY: Absolutely not. Completely neutral.

WOODRUFF: OK. All right, we'll be talking to you in the days to come. Steve, thank you very much.

MURPHY: My pleasure.

WOODRUFF: Weeks ago, Dick Gephardt and Howard Dean waged a fierce battle for union endorsements. You were hearing about it. But how is labor influencing the current contenders in New Hampshire? I'll talk with the head of a big union that's backing Howard Dean. Does he have any regrets?

(COMMERCIAL BREAK)

WOODRUFF: The Merrimack River. The beautiful, cold, icy Merrimack River running through the heart of Manchester, New Hampshire.

When two big labor unions broke from the labor pack and endorsed Howard Dean back in November, they thought they were joining forces with a winning campaign. Are they having any second thoughts now after Dean's embarrassment in Iowa. Or are they confident that Dean's going to bounce back here in New Hampshire?

I'm joined now by the president of the Service Employees International Union, Andy Stern. Andy Stern, which is it? Second thoughts or something else?

ANDY STERN, PRESIDENT, SERVICE EMPLOYEES INTERNATIONAL UNION: Judy, when we endorsed Howard Dean, you may remember, I think we were the first major organization who did so. So obviously we weren't picking the winner. We were picking the person who our members thought best represented their issues and interests. He did then, he does today. And we're pretty proud of him.

WOODRUFF: What were you feeling after Iowa, though?

STERN: We were disappointed. I mean we thought that Howard Dean had a better message. It clearly wasn't heard. He had been knicked and was bleeding in terms of all of the attacks at him. You know, I think he's going to right his campaign in New Hampshire.

And I think the good news is we are learning this campaign, I think, potentially from this point forward is going to be about health care. That's what the voters talking about and that's Howard Dean strength.

WOODRUFF: What makes you confident he is writing his campaign, as you put it?

STERN: I think we're going to see today a different result than a lot of people predicted. It's too early to tell.

I can tell you our members in early polling, 48 percent of them were supporting Howard Dean almost one out of every two. We know they're going to the polls, we're keeping track of them. It's going to be a big turnout I think around this state and I think Howard Dean's going to surprise people.

WOODRUFF: The big rap, or one of the raps on Howard Dean, as you know, Andy Stern, has been on temperament. And given what we saw in Iowa, various outbursts, the famous scream, the speech, what do you say about that? Have you had a heart-to-heart talk with the candidate about that?

STERN: I think Howard Dean is probably his worst critic. And I think he knows that his behavior is incredibly important. I think -- we saw his wife on the campaign. I think we've seen a more relaxed Howard Dean.

And temperament matters. I think he understands that. I think passion matter its as well. And I think he's trying to find the right mix between the two.

WOODRUFF: Have you had a private talk with him about that?

STERN: No, Howard Dean has had a with me and said that he understands he needs to do things differently. That's what he learned in Iowa and I hope that after New Hampshire he goes back to the message that got him to where he started, moving up in the polls, and that was the issue about health care.

He's a doctor. He provided health care. He did it in his state. It's the issue on voters' minds. And it's the issues I think can propel him to the presidency.

WOODRUFF: Resource has become enormously important, as you know. After New Hampshire, seven states next week, more states the week after that. That's going to -- if you don't have the resources, what can labor do for these candidates and how important are those independent expenditures from these separate, independent committees, do you think?

STERN: First of all, I think, you know,what labor does well, at least certainly our union does well, is we go out and talk to our members. And in lots of states coming up, Maine and Washington and Michigan, we have huge numbers of members, and they're on the ground doing the work, ready to go. And that's the good news, too.

Independent expenditures matter. In fact, anybody who had a lot of money for independent expenditures would do pretty well now. Our union made a contribution to a group, they're running ads right now in South Carolina on the issue of health care.

So we think independent expenditures matter, but certainly human people power matter and issues matter.

WOODRUFF: What's your sense, quickly, of the best shot Howard Dean has assuming he can come out of New Hampshire in strong shape? What's his best state next week, do you think?

STERN: I think he should go to the Southwest, I think he should talk about health care. I think he's going to have a great result if he does. WOODRUFF: Andy Stern, the president of the Service Employees International Union, thanks very much.

STERN: Thank you.

WOODRUFF: Wearing trademark purple, the union color.

STERN: Yes, I am.

WOODRUFF: We appreciate it. Thanks a lot. We'll be talking to you in the states coming up.

It has been quite a week and quite ride across the Granite State. When we come back, the New Hampshire campaign as seen from the CNN Election Express.

(COMMERCIAL BREAK)

WOODRUFF: Some prominent non-presidential candidates are also in the news. An aide says that California Governor Arnold Schwarzenegger will use his own money to repay a $4.5 million loan he used to fund his recall campaign. A California judge has ruled that Schwarzenegger broke a state law when he took out the bank loans to help his recall campaign.

In Connecticut, Governor John Rowland is saying he will not mention his own troubles when he delivers his state of the state speech next week. Sate lawmakers have unanimously voted to form a committee to investigate the gifts which the governor admits taking. The probe could lead to Rowland's impeachment.

John Kerry's victory in Iowa set the stage for a frenetic week here in New Hampshire. Here now a look back at some of the highlights of the past seven days.

(BEGIN VIDEOTAPE)

WOODRUFF: Thank you for joining us. Just like the presidential candidates we changed locations. Today, I've left Iowa and I'm inside the New Hampshire state Capitol building in Concord.

Can you win New Hampshire?

EDWARDS: I think that remains to be seen. I think what I have to do is just do in New Hampshire what I did in Iowa.

WOODRUFF: Thanks for joining us here in Manchester, today. Well it's hard to say which is the bigger draw here at the Merrimack Restaurant.

(voice-over): When primary season descends on the Merrimack Restaurant, so do TV personalities and roving cameras, pestering regulars who just want to eat in piece.

UNIDENTIFIED MALE: You already asked me and I told you maybe Kerry. All right? So let's leave it like that. WOODRUFF (on camera): Thank you for joining us. We're on the campus of Phillips Exeter's Academy, the prominent preparatory school here in New Hampshire.

ROBERT NOVAK, CO-HOST, "CROSSFIRE": Let it all out, Howard. And he did and it is one of the colossal political blunders I've ever seen in 40 years -- more than 40 years of doing this duty. And he can blame his staff.

WOODRUFF (voice-over): Dick Bosa (ph) is as a busy man. Running for president will do that to you.

UNIDENTIFIED MALE: New Hampshire knows me. I'm a native son. I am going to win.

WOODRUFF: He bid our producer a gracious farewell. Classy guy.

LIEBERMAN: I usually don't get a chance to do this with Judy Woodruff.

WOODRUFF (on camera): What did you think about that? Well, thank you for joining us here in Portsmouth.

DEAN: We have every intention of winning the New Hampshire primary.

WOODRUFF: Right across from the CNN work space is none other than the work space for the John Kerry for president headquarters.

UNIDENTIFIED MALE: It was pretty intense before Iowa but now it's easily doubled.

UNIDENTIFIED MALE: Trying to catch a few Zs whenever you can.

WOODRUFF: Nothing wrong with that.

UNIDENTIFIED MALE: And Truman, my campaign dog, a Democratic dog.

UNIDENTIFIED FEMALE: I like John Kerry. And I like his stance on environment, I like his foreign policy. But I'm worried about the education.

LIEBERMAN: I have a rising sense of expectation about how this is going to come out tomorrow. I'm optimistic.

(END VIDEOTAPE)

WOODRUFF: It's been a rollercoaster of a week. We are going to miss New Hampshire.

That's it for today's INSIDE POLITICS on voting day. I'm Judy Woodruff. For complete coverage of the New Hampshire primary tonight, stay tuned to CNN. Our special coverage starts at 7:00 p.m. Eastern.

"CROSSFIRE," though, starts right now. 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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