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JUDY WOODRUFF'S INSIDE POLITICS

Bush on the Road; Race for the White House: Spotlight on the Economy; Interview with Matthew Dowd, Tad Devine

Aired June 14, 2004 - 15:30   ET

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


(BEGIN VIDEOTAPE)
ANNOUNCER: After a period of suspended animation, the campaigns are at it again, on the attack, as last weeks political truce fades into memory.

The economy is on the rebound. But are the effects trickling down to the presidential race? The answer may be no.

Get ready New York, the Republicans are coming.

ED KOCH, FMR. NEW YORK CITY MAYOR: And (UNINTELLIGIBLE) side of the street parking.

Hey, you! Move it! It's Tuesday.

ANNOUNCER: We'll tell you how one top Democrat is urging the Big Apple to roll out the welcome mat.

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

(END VIDEOTAPE)

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

Both the Bush and the Kerry campaigns get back to business today. The unexpected week off imposed by the death of former President Ronald Reagan now behind them.

John Kerry will be fundraising tonight at the home of entertainer John Bon Jovi in New Jersey. Tomorrow, he campaigns in Atlantic City, and then in Ohio. Those events will focus, we're told, on the economy.

Later this afternoon, President Bush focuses on senior citizens in the crucial showdown state of Missouri. He'll be doing a little show and tell about Medicare's new discount cards for prescription drugs. Our White House correspondent, Suzanne Malveaux, joins us now with more on the president's return to campaign mode.

Hello, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, hello, Judy. President Bush certainly back in that campaign mode. He is in Liberty, Missouri. That is where he is going to be later today. As you know, a very important state for the president.

He's going to be talking about his health care plan, highlighting the discount card for seniors. This is going to be his 18th trip to that state. This is a state, as you know, that he narrowly won back in 2000.

And the president then, later in the week, is going to be back at the White House, where he'll meet with the president of Afghanistan, Hamid Karzai. He will talk about the two fronts on the war on terror in Afghanistan and Iraq, and of course will carry that very important election theme to a critically important state full of symbolic meaning as well. That being the state of Florida.

That will take place on Wednesday. It will be this 22nd trip to that particular state. As you know, of course, the state that sealed his election victory, that is where he is going to be highlighting his role and his successes as commander in chief.

Then later in the week, Thursday and Friday, it is off to Washington State. That's a state where he lost by just five percent. Nevada, where he won by three percent, all of these, of course, critical to his reelection campaign.

We are told they are going to be rallies, not fundraisers. Certainly an effort to get out the vote, to get out the party faithful, but also to recruit new Republicans as well -- Judy.

WOODRUFF: Suzanne, we're just learning now that when the president was in Europe at the Vatican, just a few days ago, that he reached out to the Vatican secretary of state. Tell us what all that was about.

MALVEAUX: Well, that's right. White House spokesman Scott McClellan confirmed that they did have a meeting. This is after the meeting with the pope, between the president and the pope.

He met with Cardinal Sedano (ph). We are told they discussed about their domestic priorities. And beyond that, McClellan wouldn't get into the details. We have learned new details, however, from a Vatican official who was privy to those discussions.

He said that President Bush essentially was pushing the Vatican to encourage bishops to become more vocal about social issues that the president certainly is trying to highlight in the campaign, that -- his opposition to abortion, as well as his opposition to gay marriage. We are told that the cardinal did not respond about whether or not they would push those bishops to get more involved. But as you know, of course, Judy, the Catholic vote is a critical group here. It could be the difference between a win or lose in this election season.

WOODRUFF: All right. Suzanne Malveaux, thank you very much for all that. We appreciate it. The spotlight in the coming days on the campaign trail will be on the economy. While President Bush promotes an economic recovery, Senator John Kerry says it is not being felt by a lot of people. Our senior political analyst, Bill Schneider, takes a closer look at this issue that always seems to play a big role in the battle for the Oval Office.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): Here's a little secret: the nation's economy is actually doing very well. President Bush has been trying to spread the word.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It shows that our economy is vital and growing. We've added 900,000 jobs over the last three months and 1.4 million jobs since last August.

SCHNEIDER: At that rate, the administration's projection of 2.6 million new jobs this year, a figure that was widely ridiculed a few months ago, now looks too low. Are happy times here again? Not if you ask the people who matter, the voters.

Only 35 percent say the country's economy is in good shape. President Bush's job approval on the economy is still low. It hasn't budged in months.

Don't people believe the good economic statistics? No, they don't. There's always a time lag between statistics and perceptions.

President Bush can ask his father about that. In June, 1992, the economy was more than a year into recovery but job growth was slow. Only 12 percent thought the nation's economy was doing well. The first President Bush had to argue that things were better than they had been 12 years earlier, in 1980, when Jimmy Carter was president.

GEORGE HERBERT WALKER BUSH, FMR. PRESIDENT OF THE UNITED STATES: The Misery Index, the sum of inflation and unemployment, is 10.8 percent, down from 19.6 percent in 1980.

SCHNEIDER: How about when Bill Clinton ran for reelection in 1996? In May, 1996, the public's view of the economy was actually worse than it is now. But things picked up very fast. By the fall, nearly half thought times were good. Good enough for President Clinton to get comfortably reelected.

And look at the figure for May 2000. Wow. Sixty-six percent said times were good. But it didn't quite work out for Al Gore. Critics say he tried too hard to distance himself from Clinton's record.

Right now, when you ask people about the economy, they may not be thinking about growth rates and jobs created. They may be thinking about gas prices and health care costs, the bad news. The Bush campaign is trying to create a sense of economic momentum: we're on a roll here, folks. BUSH: And one reason I need to stay in the office is to make sure that we don't ruin the incentives and don't stop the momentum of economic growth by failed Washington D.C. policies.

(APPLAUSE)

(END VIDEOTAPE)

SCHNEIDER: Here's another reason why the good economic news may not be having much impact. It's not being reported. A study by Media Tenor, an independent media analysis institute, reveals that news coverage of President Bush's economic policy has practically vanished from the major broadcast networks since the beginning of the year. It's all been Iraq. The improving economy is a secret.

WOODRUFF: But we're talking about it here?

SCHNEIDER: Yes, we are.

WOODRUFF: OK. Bill Schneider, thank you very much.

SCHNEIDER: Thank you.

WOODRUFF: Well, coming up INSIDE POLITICS, after a lull, the presidential race is about to heat up again. We'll hear from senior strategists from both campaigns, Matthew Dowd and Tad Devine.

New York is calling on all volunteers to welcome the Republican national convention to town. In our "How it Works" segment, we'll focus on the role volunteers play in political conventions and what it takes to sign them up.

And Bill Clinton returns to the White House for the unveiling of his presidential portrait. Bruce Morton takes a closer look at some of those famous faces that hang in the executive mansion.

(COMMERCIAL BREAK)

WOODRUFF: The presidential race is about to enter its summer stretch, you might say. Both conventions are coming up, and the campaign trail will get even busier. With me now, senior strategists for both the Bush and the Kerry campaigns, Matthew Dowd and Tad Devine.

Gentlemen, great to see you both.

MATTHEW DOWD, SR. STRATEGIST, BUSH-CHENEY CAMPAIGN: Glad to be here.

WOODRUFF: Tad Devine, let me start with you. After a full week of focus on President Ronald Reagan and the Republican Party and its legacy and heritage, are you concerned that George Bush has gotten a lift up by sort of unrelenting focus on the other party?

TAD DEVINE, SR. STRATEGIST, KERRY CAMPAIGN: No. I think this election is going to be about what's happening today in this country and where the nation wants to go in the future. And I think voters are very focused on their economic well-being, particularly middle class voters, working families who are struggling right now to make ends meet.

So, no, I think President Reagan deserved his remembrance. That's why Senator Kerry canceled his campaign activities. He was remembered. But now the focus is going to be on the policies of today and the plans for tomorrow.

WOODRUFF: The other side of that coin, Matthew Dowd, is that some people are saying, well, you might say President Bush would be helped, but then by comparison some would argue he suffers because Ron -- there's only one Ronald Reagan.

DOWD: You know, last week was a celebration and a time of sadness. And I think looking at it from a political perspective is somewhat difficult. But I do think this campaign is about where does the president want to lead the country and where does John Kerry want to take the country.

And that's the choice. It's not going to be about former presidents and what they did or how they were president. It's going to be about each styles of leaderships and what the policies they want to do.

WOODRUFF: Tad Devine, getting back to crass politics here, new doubts are surfacing...

DEVINE: We want to talk about issues, Judy.

WOODRUFF: I know you do. Some doubts surfacing about John Kerry as a candidate. An article today in The Washington Post, among others, Tony Coelho, the former Democratic House leader, saying -- and I'm quoting...

DEVINE: Right.

WOODRUFF: "He has a problem, John Kerry, in that people don't know him and they don't have a great affinity for him." Are you addressing that?

DEVINE: Well, first, I would disagree that he has a problem. I don't think he has a problem.

I think if you look historically, where challengers to incumbent presidents are at this juncture in the race, you'd see that John Kerry, by every objective measure, is doing better than any other challenger to an incumbent president in 30 years. And, you know, I think that progress is reflected in horse race polling.

But more importantly for us in the fact the message is get going through. People are beginning to see John Kerry for who he is, a lifetime of service and strength, which was the biographical ad campaign we ran for issues right now that he's talking about, like health care and jobs. So I think we're making tremendous progress. And I think if he continues to make it with selecting a vice president at the national convention, ultimately debating the president on the same stage, people are going to know who he is and where he wants to lead the nation.

WOODRUFF: By the same token, Matthew Dowd, the -- the -- you see on the Democratic or John Kerry Web site today, and they had a news conference about this today, saying, well, three months ago the Bush- Cheney campaign was saying they were going to destroy John Kerry and he's still -- he's still standing, he's not doing so badly in the polls. How do you answer that?

DOWD: Well, I'm glad to see they have a Web site that talks about what our strategy was and how we were going to win the race. So I wouldn't necessarily trust the Kerry campaign.

I do think this is a long dialogue. And the beginning of March was the start of it. And it wasn't going to -- the race wasn't going to end in 90 days. We thought that was an opportunity to address a lot of issues, differences with Senator Kerry, and where we want to take this country on the two big issues, the economy and terror.

And I think that -- I think we have sometimes too much instant analysis about what we want to do or instant campaigns. This is a long dialogue with millions of Americans that have yet to hear exactly what's going on with the president on the economy, for instance, because of all the news out of Iraq. And I think we're going to see that develop over the coming months.

WOODRUFF: Is that what you think we're going to see, Tad?

DEVINE: I do. Although, I think it is fair to say -- I agree with Matt. You know, if you look at it poll by poll, things go up and down. Any poll can be anywhere on a given day.

But I think it's fair and I think it's objective to say that the spring general election that we just went through, where -- which began with the president with $110 million cash on hand and John Kerry with two, that John Kerry won the spring general election. And I think now we're going to try to win the summer general election.

DOWD: Well, I totally disagree with that. We started off eight or 10 points down when the primaries ended, and now the race is even. So I think if you look at a trend, it's been from us down to basically even, which is where I thought this race would go into the Democratic convention.

WOODRUFF: Matt Dowd, let me also ask you about a group of distinguished former military and diplomatic officials. They've served under both Republican and Democratic presidents. They are calling this week on the American people to defeat George W. Bush. They're issuing a letter later this week. They're saying Bush has damaged America's national security, that he's moved the country to a more isolationist position.

Is this a charge that's tough to respond to?

DOWD: No. I mean, you can look at some of the folks on that list, people that have been Kerry supporters for a while. And there's actually people that were Dean supporters. To a large degree, these are partisans that have decided that they want to support the Democratic nominee instead of the Republican nominee.

But people understand the president's foreign policy and his war on terror and what he wants to do. And it's going to be a judgment not between what some former ambassador, some former general or some former, you know, leader has to say. It's what the differences are between Senator Kerry and George Bush.

DEVINE: Yes, I don't think it's just a former ambassador or a leader. We're talking about two former chiefs of staff, you know, in the military. OK? The chairman of the Joint Chiefs of Staff of the military. A couple of them, we're talking about a number of generals, people who have served in tremendous leadership capacities in this country who are saying that President Bush has taken this nation in the wrong direction.

WOODRUFF: Very quickly, a report that President Bush reached out at the Vatican to top officials, asking them to more aggressively promote his position on conservative social issues, that he's against gay marriage, that he's against abortion. Some people would say, is the president using the church to advance his campaign?

DOWD: Well, what I know about that I learned in the news reports. And I think what I can say about the president and the campaign is we obviously want all Americans to support the president and what he wants to do. And he gets tremendous amount of support from people that got to church, or -- and people that have certain values across this country.

And I think there's no pressure that the campaign wants to bring undue on anybody. And we'll just let the voters ultimately decide this.

WOODRUFF: We're going to have to leave it there. Matthew Dowd, Tad Devine, it's always good to see both of you.

DEVINE: Thank you.

DOWD: Thank you, Judy.

WOODRUFF: June 14 and counting.

DOWD: One hundred and forty days.

WOODRUFF: That's right. Yes -- and I knew you would know the number of days, too. Thank you both.

DOWD: Thank you.

DEVINE: Thank you.

WOODRUFF: I appreciate it. Thank you.

Well, there are new polls out of the veepstakes. Who's in, who's out, and who's the favorite? "Ticket Talk" coming up next when INSIDE POLITICS continues.

(COMMERCIAL BREAK)

WOODRUFF: Well, we think it looks like it won't be John McCain. But in just a few weeks, we should know who John Kerry's running mate will be. CNN political editor John Mercurio is here to talk about the veepstakes.

John, you spend a lot of time asking people questions about this. What's the latest you hear about when we're going to know something?

JOHN MERCURIO, CNN POLITICAL EDITOR: Right. I mean, the semi- official word that we're getting now is that Kerry wants to announce his VP choice sometime in the first two weeks of July. Now, that could be some -- any time after Independence Day and before the Democratic convention, which obviously begins July 26. We're hearing it's almost definitely going to be sometime...

WOODRUFF: We can't pin you down anymore than that?

MERCURIO: We're hearing it's almost definitely going to be sometime before like July 15 or 16. But that's not news. I mean, we've been hearing for weeks that it was going to be sometime in July.

What is news is that we're hearing this week that Kerry is going to have a sit-down meeting with Wes Clark, who is doing a fundraiser for him on Thursday in Washington. He's also trying to meet, I think, with John Edwards. These are going to be private sit-down meetings just man to man as they talk about the race.

WOODRUFF: So they've talked before, but these are serious meetings.

MERCURIO: These are the, you know, if you were one of the finalists, you know, what would you do as VP?

WOODRUFF: What is going on with John McCain? The story broke on Friday on The Associated Press that John Kerry had at least asked McCain to consider it...

MERCURIO: Right.

WOODRUFF: ... McCain said no. Where does all this stand?

MERCURIO: I mean, Democrats reportedly leaked this on Friday. It was pretty much a slow news day. The rest of the country was focused on the -- on Ronald Reagan's funeral.

You know, I mean, there are a lot of theories about this. My guess is that the Kerry campaign realized that they needed to get McCain off the table as a potential candidate, needed to sort of prepare people, the media, the public, for the more realistic list of candidates, VP candidates, all of them Democrats, which doesn't include McCain.

Of course, you know, you talk to the Kerry campaign. Any day when the media is talking about John McCain and John Kerry and their friendship is a good day for the Kerry campaign. So they're not upset about this, really.

WOODRUFF: Because it's bipartisanship.

MERCURIO: Because it's bipartisan, you reach out to swing voters.

WOODRUFF: All right. You've seen -- you've looked at this poll that was done looking at Kerry and running mates and how popular they are.

MERCURIO: Right.

WOODRUFF: What does it show?

MERCURIO: Well, not surprisingly, you know, John Edwards, we've been talking a lot about him. He's in the lead. Almost one-third -- I'm sorry, more than one-third of the people that were polled, 36 percent said that they would choose John Edwards, they want John Edwards as the VP.

Nineteen percent for Dick Gephardt. Eighteen percent for Wes Clark. Four percent for Tom Vilsack, and 23 percent didn't know or talked about other people.

Obviously, a lot of this is, you know, to be taken with a huge grain of salt. John Edwards has high name recognition, Tom Vilsack doesn't. But they're all being considered seriously.

One interesting note. On the Republican side, 28 percent of Republicans polled said that they would urge President Bush to dump Dick Cheney as a VP candidate.

WOODRUFF: Really?

MERCURIO: Yes.

WOODRUFF: That's interesting. But this other part was a poll just of Democrats...

MERCURIO: Yes.

WOODRUFF: ... asking about the running mate?

MERCURIO: Yes.

WOODRUFF: Finally, on John Edwards, he's been out there campaigning, trying to help John Kerry.

MERCURIO: Yes.

WOODRUFF: What do you have on that? MERCURIO: Well, he spent the weekend in battleground Florida campaigning. He raised $150,000. He spoke at the Jefferson-Jackson Democratic Dinner over the weekend.

Today, he's in Philadelphia, another battleground state. Later this week, he goes to Texas and Louisiana to rally Democrats. Next week he's in yet another battleground state, Iowa.

All of this being done at John Kerry's campaign's request. So I think -- you know, if he doesn't get chosen, there is going to be a really interesting story to be written about why, because he's done everything. He's the perfect applicant for the job.

WOODRUFF: Yes.

MERCURIO: And if he doesn't get chosen, you know, the big question will be why. He really is interested, let's just put it that way.

WOODRUFF: Do you think he would be happy if he's not chosen and he was out spending all this time campaigning for John Kerry?

MERCURIO: I don't know what he does after this is over.

WOODRUFF: A lot of interesting -- interesting questions.

MERCURIO: Exactly.

WOODRUFF: OK. John Mercurio, "Ticket Talk," thanks very much.

MERCURIO: Thank you.

WOODRUFF: Appreciate it.

A venerable New York Democrat headlines this week's edition of "How it Works.". Former Mayor Edward Koch stars in a new ad campaign to recruit volunteers for the Republican national convention. Let's take look at the commercial.

(BEGIN VIDEO CLIP)

KOCH: New York City, the greatest city in the world. No wonder the Republicans are coming here for their national convention. While they're here, make nice, volunteer to show them the ropes.

They won't know uptown from downtown. They've never ordered pizza by the slice. And they don't know (UNINTELLIGIBLE) street parking. Hey, you! Move it! It's Tuesday.

(END VIDEO CLIP)

WOODRUFF: The New York host committee says it hopes to sign up 8,000 volunteers. So far, more than 6,000 people have applied for the positions. They will undergo a screening process, including phone and in-person interviews. The lucky chosen ones will undergo a two-week training course, and they will do everything from arranging transportation for visitors to checking in delegates.

In Boston, meanwhile, 10,000 people have already signed up to volunteer during the Democratic national convention. Each state delegation will be assigned a so-called Bean Town buddy to ensure delegates experience the best the city has to offer. That's what they're telling us.

Still ahead on INSIDE POLITICS, it is back to the campaign trail for President Bush and Senator John Kerry. We will fill you in on what's ahead in the presidential race.

Plus, Bill and Hillary Clinton return to the home where they lived for eight years.

Those stories and much more coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: He's ahead in the polls. So why are some Democrats still shaking their heads at John Kerry? Is the Democrat a man with a plan? We'll take a look.

More deadly violence in Iraq as the transfer of power grows ever closer. Has the president mishandled the war? A collection of prominent former military and diplomatic leaders say yes.

He defeated the first President Bush, but today Bill Clinton was praised by the son.

BUSH: He's 41, I'm 43. It's a great honor, it's a great pleasure to honor number 42.

ANNOUNCER: Laughter and smiles in the East Wing, as the Clintons' official portraits are unveiled at the White House.

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

(END VIDEOTAPE)

WOODRUFF: Welcome back.

Political life sort of returns to normal today after last week's truce for Ronald Reagan's funeral services. President Bush is now in Missouri. In less than an hour, he holds an event in suburban Kansas City to promote the new Medicare prescription drug discount cards. Polls show the president in a close race with John Kerry is in the Show Me State. This is the president's fifth trip to Missouri this year.

While the president focuses on the Medicare drug discount card, Senator Kerry is preparing to talk about jobs and the economy. But he did take a week off and the first item is more fund raising. Our senior political correspondent Candy Crowley is keeping track of the Kerry campaign -- Candy.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: About one fund-raiser a day, actually, this week. So they are going to collect some money.

Basically what they're doing this week is what they thought they would do last week, only in different places. Three battleground states, New Jersey, Ohio, Michigan, where the candidate will focus on not just the economy but the effects on the middle class. Obviously, that's the largest group of voters. And particularly in those states that have been, most of them, hard hit by job loss.

This is where they're going to take the message which this middle class squeeze.

WOODRUFF: So -- but you know, there is good economic numbers coming out. We have growth, more jobs are being created and Kerry's still talking about the economy?

CROWLEY: He is. And here's their take on it. That, first of all, these jobs aren't as good as the jobs that were lost.

Second of all, that for the 1.2 million created over the last six months he has lost more than that.

They also believe that when you talk about middle-class problems, that it really isn't just about jobs, it's OK, but you can't afford your health care or you don't have health care, the high cost of gasoline.

So there are economic issues that they say, to answer the famous question, make the middle class worse off today than they were four years ago. So it's not about he lost all these jobs so much anymore, but things like health care, gas taxes, that kind of thing.

WOODRUFF: Do they run the risk though, Candy, of looking like, as the Bush campaign says they are, looking pessimistic, focusing on the negative?

CROWLEY: Well, fine line, sure, because the fact of the matter is it's very hard to come out and just say, boy, the economy grew, you know, 300,000 jobs this month. And the first thing out of your mouth is things are really terrible.

So they're walking this fine line. Any job growth is great, we really like that. But, you know, this many people don't have health care, this many people are, you know, having to get more gas at, you know, a higher price.

So it is something that they're walking a fine line on, particularly on this week coming off all that talk about bipartisanship and the wonderful tone and sunny optimism.

So I don't think you'll hear a lot of Bush bashing so much as just, you know, look, here are the facts of the matter on some other economic issues. WOODRUFF: All right. Candy Crowley on John Kerry, out there, as you say, every day this week raising some more money, talking about the economy. Thank you, Candy.

Well, as we've said, the race for the White House is moving full steam ahead after last week's time-out for Ronald Reagan's funeral ceremonies.

Two hours ago, Republican Party Chairman Ed Gillespie and Democratic Chairman Terry McAuliffe spoke to me about the state of the race. I started by asking if bipartisanship may be breaking out all over with John Kerry talking to Senator John McCain about being his running mate, and President Bush inviting Bill Clinton to the White House today.

(BEGIN VIDEOTAPE)

TERRY MCAULIFFE, DNC CHAIRMAN: We're going put an end to that right now, Judy.

(LAUGHTER)

WOODRUFF: I had to ask you about this because you told me you just came from the Bush White House.

To get to a much more serious subject, Ed Gillespie, today in Iraq, more terrible violence; fourteen people killed. This seems to be a daily occurrence. How can this not be something that is going to hurt President Bush as he goes into this election? Because predictions are this violence is continuing even after the handover.

ED GILLESPIE, RNC CHAIRMAN: Well, Judy, all those who are more knowledgeable about these things than I am certainly say that as we prepare for the handover on June 30 and for a period thereafter, the violence is going to escalate because people don't want it to succeed. They are concerned -- many people over there who mean to do us harm, who do not want to see a free, self-governing Iraq in the heart of the Middle East don't want to see an Iraqi president come here and thank the president for the sacrifice of the American people and coalition for liberating Iraq. They're going to do all they can to derail that.

WOODRUFF: But in terms of whether it hurts the president politically?

GILLESPIE: I believe the fact is the American people understand the perhaps of success there, and they want to see that policy succeed and they understand that there is going to be much violence in pursuit of that policy. But I think they're in support of the broader goal.

WOODRUFF: Terry McAuliffe, let me turn to you and the economy. More numbers out today showing the economy continues to grow, consumer spending way up. Other than the trade deficit, the growth numbers are well beyond what all the economists predicted.

Isn't this a plus for George Bush and something that is going to be a problem for John Kerry, because he was counting on making the economy an issue?

MCAULIFFE: Well, still today, Judy, there are 1.9 million Americans who don't have a job, who had one when George Bush became president. As you know, George Bush promised in February of 2002, that he would create 6 million new jobs. So he's actually 8 million jobs under from where he said he would be than we are today.

So I would say a lot of people out of work. And on the other hand, the jobs that are being created today, they're making $9,000 less than the jobs they're replacing. Meanwhile, your gasoline prices up 50 percent, health care costs are up 40 percent, education costs up 40 percent. Your wages are standard or declining. At the same time, all the costs going up. So the economy is not doing well for millions of Americans today.

GILLESPIE: Judy, the fact is after-tax income has gone up by 11 percent since President Bush took office as a result of his policies. We're seeing astounding job creation going on today: 257,000 jobs per month, per average this year with projections for continued economic growth. We've seen the highest growth rate in this country in 20 years. Senator Kerry's policies would reverse those things, take us back to the recession that President Bush inherited when he came into office.

WOODRUFF: Ed Gillespie, I want to ask you about a Los Angeles Times report that over the objections of an Army official, the office of Vice President Dick Cheney helped to make sure that Cheney's former company, Halliburton, would win a $7 billion no-bid contract to do rebuilding, reconstruction in Iraq. Does President Bush still have full confidence in Vice President Cheney?

GILLESPIE: Oh, I have no doubt, Judy. And the vice president's office has made clear that the fact is that they had nothing to do the awarding of contracts to Halliburton. They've abstained from any interaction at all relative to such transactions. And I have no doubt that that's the case. I don't think that the report is accurate. In fact, the vice president's office said again today they stand by their comment, they were not involved in any way relative to this.

(END VIDEOTAPE)

WOODRUFF: Terry McAuliffe, Ed Gillespie. Bipartisanship ended pretty quickly.

Well, checking the headlines now in our "Campaign News Daily," Connecticut lawmakers have started another week of hearings into the possible impeachment of Republican Governor John Rowland. The governor denies breaking any laws and he's gone to court to fight a subpoena to testify before the legislative committee.

Today, lawmakers questioned the former state ethics official about whether the governor illegally helped a wealthy businessman illegally obtain a lobbying contract.

Arnold Schwarzenegger's role at the Republican National Convention apparently still up in the air. Today's "Los Angeles Times" reports the California governor doesn't even know if he will be making a prime time speech. Some of his advisers warning that Schwarzenegger could hurt himself politically if he gets too close to the president who is much less popular with California voters.

However, Schwarzenegger does not want to be seen as snubbing the president by skipping the convention.

And just in time for Independence Day, one of the hip-hop's biggest moguls is getting political. According to "The New York Daily News," Sean "P. Diddy" Combs intends to start a voter registration effort called "Citizen Change." The goal is to register voters on the Fourth of July.

Still to come on INSIDE POLITICS, the two men who head the Republican and Democratic parties talk about the state of the presidential race. Actually we just talked to them so we're not going to be doing that again. But what we do have coming up, Congressman Henry Waxman wants more information from Vice President Dick Cheney about Halliburton and some Pentagon contracts. Our congressional correspondent Joe Johns will join with us with the details.

And former President Bill Clinton gets a first-hand look at his official portrait that now hangs in the White House.

(BEGIN VIDEO CLIP)

ANNOUNCER: Dan Quayle, he was just trying to help. But by now we all know potato doesn't end with an "e."

AL GORE, FMR. VICE PRESIDENT OF THE UNITED STATES: I will take my own values of faith and family to the presidency, and that is why today, I announce that I am a candidate for president of the United States!

(END VIDEO CLIP)

(COMMERCIAL BREAK)

WOODRUFF: As we mentioned in a couple of interviews, there is new controversy over a Pentagon contract that went to Halliburton, a company once headed by Vice President Dick Cheney. The Bush administration has repeatedly denied any role. But now, a senior House Democrat says the administration is wrong. Congressional correspondent Joe Johns is live on Capitol Hill with the story. Hello, Joe.

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT: Hello, Judy. Democrats are once again trying to attack the administration's credibility by raising questions about the vice president's ties to his old employer. The vice president's office, as you mentioned, has repeatedly said it does not get involved in the awarding of contracts and also says whatever different government agency there is, they ought to do the right thing for the country.

But Democrats now say they have two pieces of information that seem to contradict the vice president's assertions that his office doesn't get involved. The first issue is whether Scooter Libby, the chief of staff to the vice president was, in fact, present at a DOD briefing in which awarding a contract to Halliburton was discussed in October of 2002. Henry Waxman, of course, a congressman from California says there are suggestions that he was, in fact, at that meeting.

The second issue is whether the administration was given a heads up that a lucrative no-bid contract was going to be awarded to Halliburton. There apparently is an e-mail circulating that they're using to make that case. Congressman Waxman is calling on the vice president to clear up any questions.

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REP. HENRY WAXMAN (D), CALIFORNIA: Vice President Cheney has said emphatically his office had nothing to do with the contract given to Halliburton. He didn't have anything to do with it, it was all handled by career officials at the Army Corps of Engineers. Now, we're finding facts that contradict what he had said and contradict what others in this administration have been telling us, that this was decided at the career level. But, in fact, it's been decided at the political level.

(END VIDEO CLIP)

JOHNS: Now, Waxman has already written a letter to the office of the vice president asking for full disclosure. Kevin Kellems, of the vice president's office told CNN just a little while ago it has not yet received the letter from Waxman, accuses Waxman of trying to make political points, reiterates that the vice president has recused himself from any of this. And said if the administration was not, at least, aware of large contracts, and when they're about to be let, then the administration, of course, could be criticized for that -- Judy.

WOODRUFF: Joe, I understand there's going to be a hearing tomorrow. Are these allegations going to be aired at the hearing?

JOHNS: This is a hearing to look into the issue of contractors in Iraq in general. And what we're told by Henry Waxman is he'd like to bring a number of people before that committee that he describes as whistle-blowers. However, as yet, Waxman says the committee chairman, Tom Davis, has decided not to bring along those witnesses. So -- there's a fight behind the scenes on that also -- Judy.

WOODRUFF: So the subject might not come up at all?

JOHNS: There's potential for that.

WOODRUFF: All right. Joe Johns, reporting from the Capitol. Joe, thank you very much.

A potentially awkward situation, as the Bush's host the Clintons for the unveiling of their White House portraits. We'll show you what really did happen when INSIDE POLITICS continues.

(COMMERCIAL BREAK)

WOODRUFF: It was, as far as we could tell, all politeness and no partisanship at the White House today and President and Mrs. Bush hosted their predecessors Bill and Hillary Clinton for the unveiling of their official portraits. Our national correspondent Bruce Morton has the story.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): It's one of those Washington rituals, the last president visits the White House he used to live in to have his and his first lady's portraits unveiled.

This was how it looked last time, the Clintons living in the White House, George and Barbara Bush the visitors who sat for portraits. This is how it looked this time, George and Laura Bush living in the White House, the Clintons now the visitors.

The artist is Simmie Knox, the first African-American painter whose portraits will hang in this house. He painted President Clinton in a business suit with a blue tie, about what he happened to be wearing today. He painted Hillary Clinton in a black pantsuit which is what she almost wore when she was running for the Senate.

Do the people who live in this house look at the paintings of those who used to? The Clintons say yes.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: So I would go and I'd look at that fabulous portrait of Mrs. Roosevelt that just showed her intent and purpose driven life. I'd look at the lovely portrait of Mrs. Johnson, the elegant portraits of both Mrs. Kennedy and Reagan. All of the women who have lived in and tried to make this house a home.

MORTON: Bill Clinton remembered the portrait of worried looking Theodore Roosevelt in the Cabinet Room that he'd look at when he was worried of Bosnia, Kosovo, whatever not going well.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Because if you look at that picture Theodore Roosevelt, who was known as our most macho, bully, self-confident president, you look at that picture and you see, here's a human being who's scared to death and not sure it's going to come out all right. And he does the right thing anyway.

MORTON: The portraits are scattered all over the White House and don't get moved around much. No word yet on where Bill Clinton will go.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Be an interesting question to have the answer to.

We have one programing note. Clinton portrait artist Simmie Knox will be a guest tonight on "PAULA ZAHN NOW." That's at 8 p.m. Eastern, 5 Pacific.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

WOODRUFF: This sad note today before we go. Long-time Republican pollster and strategist Bob Teeter died last night at his home in Ann Arbor, Michigan after a long battle with cancer.

Teeter was President George H.W. Bush's campaign manager in 1992. He had also conducted polling for the campaigns of Gerald Ford, Ronald Reagan, Richard Nixon.

Bob Teeter, a dear friend of mine who loved politics, dead at the age of 65. We'll miss you.

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