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JUDY WOODRUFF'S INSIDE POLITICS

Bush Jumps on Kerry 'Nuisance' Comment; Kerry Focuses on Energy, Health Care

Aired October 11, 2004 - 15:00   ET

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


(BEGIN VIDEOTAPE)
ANNOUNCER: New fuel for the fire over the war on terror.

UNIDENTIFIED MALE: Terrorism, a nuisance? How can Kerry protect us when he doesn't understand the threat?

UNIDENTIFIED FEMALE: And on the war on terror, Bush said, I don't think you can win it."

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I don't think you can win it.

UNIDENTIFIED FEMALE: Not with his failed leadership.

ANNOUNCER: Win, lose, or draw? Our new poll suggests voters' impressions of the second debate took a while to sink in.

BUSH: I'm kind of working my way west for the final debate.

ANNOUNCER: Bush and Kerry at campaign cross roads in New Mexico.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: Hello, New Mexico. How are you?

ANNOUNCER: Now, live from the CNN Election Express in Santa Fe, New Mexico, Judy Woodruff's INSIDE POLITICS.

(END VIDEOTAPES)

JUDY WOODRUFF, HOST: Thank you for joining us at the Santa Fe plaza, a historic landmark and the commercial, social, cultural, and political hub of this capital city.

We're in New Mexico, because both President Bush and Senator Kerry are campaigning here today en route to their third and final debate in Arizona on Wednesday.

Both candidates aggressively fighting for this state, which Bush lost by just 366 votes four years ago.

In the three days since Bush and Kerry last went head to head, our new polls suggest Kerry has emerged the clear winner of the St. Louis debate. Our just released CNN/"USA Today"/Gallup poll shows 45 percent of those surveyed said Kerry did a better job compared to 30 percent for George Bush. Polls taken on debate night suggested it was more of a draw.

But the strong reviews for Kerry's Friday night performance have not helped him in the horse race in any significant way. The race remains neck and neck, with Kerry one point ahead among likely voters nationwide and a dead heat among registered voters. We'll have much more on the polls ahead.

But now, the campaign flash point of this day: published comments by Senator Kerry about the war on terror. As our White House correspondent Dana Bash reports, the Bush camp is seizing on Kerry's statement, and for now, isn't letting go.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CORRESPONDENT (voice-over): Jumping on John Kerry's suggestion terrorism should be reduced to the level of a nuisance, the president told supporters in New Mexico, the senator doesn't get it.

BUSH: Our goal is not to reduce terror to some acceptable level of nuisance. Our goal is to defeat terror by staying on the offensive, destroying terrorist networks, and spreading freedom and liberty around the world.

BASH: In a state he lost by just 366 votes, Mr. Bush was seizing on a Kerry quote from this weekend's "New York Times," saying, "We have to get back to the place we were, where terrorists are not the focus of our lives, but they're a nuisance. As a law enforcement person, I know we're never going to end prostitution. We're never going to end illegal gambling." Going on to say, "It's something that you continue to fight, but it's not threatening the fabric of your life."

Political manna from heaven for Bush campaign officials, saying for months Senator Kerry's weakness is treating terrorism as a law enforcement problem, not an outright war.

UNIDENTIFIED MALE: How can Kerry protect us when he doesn't understand the threat?

BASH: So an instant Bush ad.

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: This is naive and dangerous.

BASH: And an echo from the vice president campaigning in New Jersey, a solid Kerry state until several polls showed the president gaining ground. And a state that lost some 700 residents on 9/11.

CHENEY: This is all part of a pre-9/11 mindset, and it is a view we cannot go back to.

BASH: Camp Kerry shot back, "The president is playing the politics of fear," saying "even Mr. Bush suggested over the summer the war on terror is unwinnable." (END VIDEOTAPE)

BASH: And honing in on what Bush officials view as a significant Kerry gap on terrorism is a shift from what the campaign had planned on this week, which was to really zero in on domestic issues in advance of Wednesday's debate.

But Judy, as a senior official put it, they're not going to give up any political opportunity that they see, and they certainly saw one with Senator Kerry's remarks to the "New York Times" on Sunday -- Judy.

WOODRUFF: So Dana, do they plan to make a turn to domestic issues, given that's the subject of Wednesday night's debate?

BASH: Absolutely. And you saw it today in the president's stump speech in New Mexico, and you'll likely see it again today as he campaigns in Colorado. Definitely more of a focus on taxes, calling Senator Kerry an out of the mainstream liberal.

More of a focus on health care. You're going to see a lot more of that coming a couple of days, saying that the senator's plan would simply hurt Americans, and it's simply a big government plan.

So you're going to see a lot more of that. It's just that this was an issue that was too good to pass up for them, and they feel like this is an issue that certainly the president has been winning on, on terrorism. And they see an opportunity here to keep it going for them, particularly as that issue, terrorism, seems to be at least narrowing a little bit in the latest polls.

WOODRUFF: All right. Dana Bash, traveling with President Bush. Thanks.

In the war of words over terror, the Kerry camp released a new ad of its own today, blasting the president's past statement, suggesting the fight against terror could never be won. We'll look at that spot ahead.

As for Senator Kerry, he stayed on message today, sidetracking only to talk about the death of actor Christopher Reeve.

CNN's Ed Henry is with Kerry here in New Mexico.

(BEGIN VIDEO CLIP)

KERRY: It is great to be back here in the state of New Mexico while George Bush is in the state of denial.

ED HENRY, CNN CORRESPONDENT (voice-over): John Kerry's in Santa Fe for two days of preparation for Wednesday's final presidential debate.

The Kerry camp is confident the senator held his own on national security in the first two debates. Now he can pivot to his turf, the domestic agenda, the focus of the third debate in Arizona. Kerry zeroed in Monday on energy reform, wrapping it into an overall indictment of President Bush's record here at home.

KERRY: Just like health care, five million people lost their health care. Just like education, millions of children left behind. The president has more excuses than results. And when it comes to developing a real energy policy, George Bush has run out of gas.

HENRY: But Kerry opened his remarks with an indirect reference to another domestic issue, stem cell research, by paying tribute to Christopher Reeve.

KERRY: Chris was a beautiful, hopeful person, full of zest for life, full of caring for other people. He was a great, engaged, creative spirit. I know that, if we put our minds to it, one day we're going to realize Chris' inevitable dream, and that's our mission for all of us.

HENRY: In Friday's debate, Kerry had rapped the president for not pushing harder for stem cell research and invoked the name of Reeve.

KERRY: Chris Reeve is a friend of mine. Chris Reeve exercises every single day to keep those muscles alive for the day that he believes he can walk again, and I want him to walk again.

HENRY: A Kerry aide told CNN that on Saturday the actor called Kerry. The two did not speak, but the Kerry camp says Reeve left the senator a message: "It's important to keep the stem cell issue in the forefront."

Reeve later went to the hospital and died.

(END VIDEOTAPE)

HENRY: John Kerry has now gone behind closed doors to prepare for Wednesday's debate in Arizona. He chose this state in part because he so desperately needs its five electoral votes.

Before the first debate, he headed to the battle ground state of Wisconsin. And Judy, the idea is that if Kerry is here in a battleground state, he'll get more local media attention, maybe rally his base a little bit, and try to win those five electoral votes.

WOODRUFF: In a state that he has a shot in.

Ed, what about this whole flap over what Kerry is quoted as saying in the "New York Times" magazine story yesterday? Saying that we want to get terrorism to a point where it's a nuisance, where it's not part of the fabric of our lives.

HENRY: The Kerry campaign says this is just another example of the Bush campaign taking something deeply out of context. They're saying that Kerry wasn't saying that terrorism is just a nuisance. He understands it's a war on terror. But the bottom line is that he wants to wage a more effective war on terror so that terrorism will eventually just be a nuisance, not such a critical problem plaguing the entire world. And they say that's consistent with what Kerry has repeatedly said, Judy.

WOODRUFF: OK. Ed Henry, here in Santa Fe.

HENRY: That's right.

WOODRUFF: It's a great place to be. Thank you very much, Ed.

Well, as election day gets closer, the polls couldn't get much closer or the candidates much farther apart. Up next, debating the Bush-Kerry race and the sources of friction between them with officials of both campaigns.

Also ahead, a broadcast group orders its stations to air an anti- Kerry documentary. Media analyst Howard Kurtz looks at the implications for the campaign and the idea of fairness.

And later, snap shots from here in New Mexico, a showdown state with past experience at squeaker votes.

With 22 days until the election, this is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

O'BRIEN: Hello. I'm Miles O'Brien at the CNN center in Atlanta. Welcome back to INSIDE POLITICS.

We apologize. We're having some technical difficulties with our signal out of New Mexico this afternoon. Bit of a rainstorm there. So as soon as we get that straightened out, we'll bring you back with Judy Woodruff.

In the meantime, as we reported earlier, the Bush and Kerry camps are engaged in another fierce skirmish over tactics in the war on terror. CNN's Bruce Morton has more on the dispute and whether the two candidates are really saying anything all that different from one another.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): The newest flap started when John Kerry told the "New York Times Magazine" that the war on terror was, quote, "a completely new, different kind of war from any we've fought recently."

He talked about reducing terrorism to a point where it's comparable to gambling or organized crime. Quote, "We have to get back to the place we were, where terrorists are not the focus of our lives, but they're a nuisance. As a former law enforcement person, I know we're never going to end prostitution. We're never going to end illegal gambling, but we're going to reduce it."

The Republicans pounced.

UNIDENTIFIED MALE: Now Kerry says we have to get back to the place where terrorism is a nuisance, like gambling and prostitution. We're never going to end them.

Terrorism, a nuisance? How can Kerry protect us when he doesn't understand the threat?

MORTON: The Kerry campaign counterattacked.

UNIDENTIFIED FEMALE: Two hundred billion for Iraq. But to inspect containers, secure bridges, tunnels and chemical plants, Bush says we can't afford it. And on the war on terror, Bush says, "I don't think you can win it.

BUSH: I don't think you can win it.

UNIDENTIFIED FEMALE: Not with his failed leadership.

MORTON: In fact, Bush did say on NBC's "Today Show" August 30...

BUSH: I don't think you can win it. But I think you can create conditions so that the -- those who use terror as a tool are less acceptable in parts of the world, let's put it that way.

MORTON: The next day Bush corrected himself, saying, "e will win." Still sounds like reducing the danger, not too different from Kerry and like a lot of experts in the field.

UNIDENTIFIED MALE: What you have to do, what you want to do, is get back to a point where it is no worse, no more threatening to your nation than it used to be and therefore on a par with some of these other challenges, like the drug war. Right now, however, it's obvious that that it's worse than that, and that therefore we do need to think of it differently than we did prior to 9/11.

MORTON: So whether it's always going to be a war, as Bush says, or something different, as Kerry suggests, the two candidates don't really seem very far apart on tactics. But each man said something off which the other side thought they it could score points. It's called campaigning.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

O'BRIEN: It's a tradition for newspapers to choose sides in the presidential race. Coming up on the program, some major papers across the country have taken a stand. And we'll tell you who gets their support. Back with more INSIDE POLITICS in a bit of a rain delay, in just a moment.

(COMMERCIAL BREAK)

(STOCK REPORT)

(COMMERCIAL BREAK)

WOODRUFF: Back now in Santa Fe. Sorry about that satellite problem. Those things happen.

But we are joined now by Stephanie Cutter. She is the communications director for John Kerry's campaign. And we're joined in Arlington, Virginia, by Bush campaign advisor Tucker Eskew. Thanks to you both.

Stephanie Cutter, to you first.

John Kerry is getting good reviews out of the debate. He came out 15 points ahead. It's not translating, though, into other aspects of the polls. When people ask, who is a more strong and decisive leader, George Bush 18 points ahead.

Is this something that worries your campaign?

STEPHANIE CUTTER, COMMUNICATIONS DIRECTOR, KERRY CAMPAIGN: Well, Judy, it clearly depends what poll you're looking at, because every poll is saying something a little different. But we know this is a tight race, and we have, you know, progressed tremendously since the first debate.

Let's remember, just 10 days ago, the Bush campaign was saying they were going to put John Kerry away in the first debate. Well, there was one clear leader out of that, John Kerry.

George Bush is clearly improving with each debate performance. He's checking his scowls at the door and trying to defend his record. The debate this week in tem pie is going to be an interesting debate. We're looking forward to it and hope to have a tough debate on the issues.

WOODRUFF: Tucker Eskew, there's some bad news in the polls, as well, for the president. When people are asked who's more honest and trustworthy, John Kerry is doing better.

Again, is this something that the president has to work on?

TUCKER ESKEW, BUSH CAMPAIGN: No, Judy. The president has to continue working on delivering his message to the American people. The debates have been a very good forum for that.

The fact remains that out of those debates we still have some serious unanswered questions.

John Kerry can't really explain this nuisance comment, trying to compare the war on terror to gambling and prostitution. It's got him all tied up, as did previous comments about a global test, previous comments about saying he didn't really want to call it a war and didn't want to focus on the military aspects of the war on terror.

And you know, this is a man who now says he wants to hunt and kill terrorists but used to oppose the death penalty for terrorists, even years after the first attack on the World Trade Center. And he doesn't get a third debate where those topics come up. So those really remain as unanswered questions. The president's direct record, one he is, as even Stephanie permits, proud to defend and promote while the other side sort of dodges theirs, is going to be a topic for the next debate, as well.

WOODRUFF: Stephanie Cutter, what do you say to the Bush campaign? They're saying what John Kerry said in this interview and elsewhere shows that he wouldn't be strong.

CUTTER: Well, I have a couple of things to say to that.

You know, Tucker said that we haven't explained it. I'm not sure what they don't understand. Maybe if they listened, they'd learn a couple of things about how to fight the war on terror.

John Kerry said he not only wants to wage the war on terror; he wants to win the war on terror.

What that article says is that John Kerry understood the threat of al Qaeda long before anybody else did, and he put a strategy in place to fight it. He wants to get back to the time where we're not living in fear each and every day from the threat on terror.

And unfortunately, George Bush doesn't want to get there because the single issue he's running on is fear. Without the politics of fear, he's not going to win this race, and he knows that.

WOODRUFF: Tucker Eskew, in fact, President Bush said in an interview a little more than a month ago, and I'm quoting. He said, "I don't think we can win it," meaning the war on terror, "but I think you can create conditions so that those who use terror as a tool are less acceptable in part of the world, let's put it that way."

How is that different from John Kerry saying he wants to get terror down to a more manageable level?

ESKEW: Stephanie says that we should just listen more closely. We're just not hearing what they say.

Well, you know, the American people have heard George Bush. And notwithstanding one comment, it's clear the president is fighting on offense against terrorists, using military, financial, financial, law enforcement, every tool at his disposal. And that's why he consistently comes out ahead as a fighter in the war on terror.

The Democrats are pushing uphill to try to convince people otherwise, and I think they don't have a third debate in which to do that. We're confident of our position on that.

We'll continue to prosecute the case against John Kerry's weakness and words of weakness, and I think his record is indefensible on defense issues. So we're proud to fight on that ground.

WOODRUFF: How do you come back against, you know, what the Bush camp is saying? CUTTER: Well, you know, it's just not true. But rather than engaging on the politics of distortion, which is what Tucker would like us to do, we're continuing to stick on our message.

Today we're here in Santa Fe talking about the president's failed choices on energy. American people are paying 38 percent more at the pump. We're less secure today in terms of our energy sources, because we're importing more from the Middle East.

John Kerry wants to make sure no that men and women go to war over foreign oil. This president invited the energy companies into the back rooms of the white house to write his bill. That's what we're talking about, and we're going to continue to talk about.

Tucker would like to divert the American people's attention from that, but unfortunately we're living it. He can't do that.

WOODRUFF: What about that, Tucker Eskew, what she just said about the president being close to the -- to energy companies, to the oil industry, and not having a policy that will lead to lower gas prices here in the United States?

ESKEW: If John Kerry and his running mate would show up for votes when the president's plans and those of leaders on both sides of the aisle and both sides of Capitol Hill are proposing them and putting them to a vote, maybe we'd have a better shot at getting the president's plan passed.

The attacks by the Democrats on energy are a diversion, a diversion from their own record of voting to raise taxes, as John Kerry had 10times, voting to raise gas taxes and even proposing at one time his own support for a 50 cent gas tax increase.

Those are serious issues that really, if you want to talk about diversion, I think Democrats are happy to sweep them under the rug. We're happy to have a chance to talk about them again, though.

WOODRUFF: Plenty of daylight between these positions. Tucker Eskew, an adviser too the Bush/Cheney campaign. Stephanie Cutter, communications head for the Kerry/Edwards campaign.

Thank you very much.

ESKEW: Thank you, Judy.

CUTTER: Thank you.

WOODRUFF: Stephanie, for being here in Santa Fe. And Tucker for joining us from Arlington, Ca. Thank you both.

Well, it may be a rainy day here in Santa Fe, New Mexico, but both presidential candidates were on the stump looking for votes in this state. When we come back, I'll talk with a leading Democrat and a Republican about the fight for this crucial showdown state.

Plus, are some television stations taking sides in the race for the White House? INSIDE POLITICS will be right back.

(COMMERCIAL BREAK) seconds.

WOODRUFF: On the road to Arizona and the third presidential debate. President Bush pays a visit to the showdown state of New Mexico. And Senator Kerry's also here in the Land of Enchantment, campaigning and studying up for the last debate.

Welcome back to INSIDE POLITICS. I'm Judy Woodruff, like in Santa Fe on this rainy Monday. This is the city, the capital of New Mexico.

We are in the state known as the Land of Enchantment. And despite its small -- relatively small population, New Mexico's five electoral votes are important to both President Bush and Senator John Kerry. Both campaigns devoting a lot of attention to the state all this week. And just 22 days before Election Day, the race here in New Mexico still up for grabs.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Look at this, mom.

UNIDENTIFIED FEMALE: Wow. How much is this one?

WOODRUFF (voice-over): On a sunny Santa Fe Sunday, picking pumpkins is one thing.

UNIDENTIFIED MALE: The big ones are, of course, decorative. And the little ones way in the background are pumpkin pie pumpkins.

WOODRUFF: Picking presidents, quite another.

UNIDENTIFIED MALE: We're one of those, you know, middle of the road states. That's why the -- Bush and Kerry are here working the turf so much because we are an undecided state, pretty much.

WOODRUFF: The Murphys (ph), Frank, Anna and little Bennett (ph), are a Kerry family. They like his views on the war and his position on issues that hit close to home.

UNIDENTIFIED FEMALE: Education is a big thing in this state because we rank really at the bottom.

WOODRUFF: But on the other side of the pumpkin patch, Scott Vail (ph), who's voting for Bush, sees another side of John Kerry.

UNIDENTIFIED MALE: Most of Kerry's campaign has been reacting to events in the world as opposed to having -- really having a strategic plan or a vision for the country.

WOODRUFF: New Mexicans are divided. The president and his challenger running neck and neck in the polls. Close calls are nothing new here. Although Democrats outnumber Republicans 51 percent to 32 percent, Al Gore beat George Bush by just 366 votes in 2000.

UNIDENTIFIED FEMALE: Are you guys going to be early voting, absentee, or at the polls?

WOODRUFF: Both campaigns are in full "Get Out the Vote" mode.

UNIDENTIFIED MALE: We've already started to vote here in New Mexico. We are going door to door canvassing. We've got our phone banks going on now. We are going to the different communities.

WOODRUFF: The most sought group of voters, Latinos, who make up 42 percent of New Mexico's population. They are being courted on the airwaves and on the ground, where the state's popular Latino governor, Bill Richardson, has been doing a hard sell for Kerry. Both camps have engineered massive voter registration drives in the community.

UNIDENTIFIED MALE: Fifty thousand Republican voters have been registered in this state. Twenty thousand doors have been knocked on by supporters of the president. We have an organization of over 13,000 volunteers that are reaching out to New Mexicans every single day.

WOODRUFF: And so it's game on in the Land of Enchantment, a state of spectacular vistas and abject poverty, where picking pumpkins is one of the year's easier choices.

UNIDENTIFIED MALE: Think we should buy this one?

UNIDENTIFIED FEMALE: That's a good one.

(END VIDEOTAPE)

WOODRUFF: All right. Well, with me now to talk more about the presidential race here in New Mexico, Democratic Congressman Tom Udall, whose uncle, Mo Udall, Morris Udall, was a presidential contender in 1976.

And on the Republican side, Darren White. He is chairman of the Bush-Cheney campaign in Bernalillo County, New Mexico. That's where the state's biggest city, Albuquerque, is located.

And we thank you for coming over.

Congressman, thanks to you as well.

REP. TOM UDALL (D), NEW MEXICO: Thanks, Judy.

WOODRUFF: Let me start with you. Is it Sheriff White?

DARREN WHITE, BUSH CHAIRMAN, BERNAILILLO COUNTY: Yes.

WOODRUFF: Because you are also the sheriff of the county.

WHITE: But Darren's fine.

WOODRUFF: Well, I'm going to call you Sheriff White to be respectful. How do you see the race in this state? The last poll we had showed it close within the margin of error, President Bush a little ahead. WHITE: It is going to be close. And we've been saying that for a year, that New Mexico is going to be a close election. Right up until the very end this -- this race will be decided.

And what we have done because of that, knowing it's close, we have assembled an incredible ground game. Because that's how we -- we know that's how this election is going to be won. The president's campaign in Mew Mexico currently has 13,000 volunteers across the state. We've made 400,000 phone calls, Judy, here in New Mexico. It's unprecedented.

WOODRUFF: Congressman Udall, how does the Kerry campaign stack up against that?

UDALL: I think that this is also going to -- I agree with Darren. This is going to be close.

I don't have any doubt that it's going to come down to turnout. We're doing the same thing on the Democratic side, trying to organize people down to the precinct level. A hundred thousand new voters have been registered in New Mexico, many of them young people. And there have been rallies on the campuses and so forth.

WOODRUFF: How many of them are Democrats, how many Republicans?

UDALL: Well, there are many Independents here. We have a category that's called declined to state, where they won't state a party. And it's about two to one, like the regular mix in New Mexico.

But many of them, 56 percent since the first of the year, have been young people. And so this -- this -- I think I'm seeing young people involved in a way that we've never really seen before. So I...

WOODRUFF: Who's -- if it's going to come down to the so-called ground game, who's got the better organization, Sheriff White?

WHITE: I would argue that the president does, when you look at the fact that we have a precinct captain in every single precinct in New Mexico. We've been organized for over nine months. We've had our headquarters open.

Senator Kerry's campaign has only been open for a few months. And so when it comes down to who has the better -- who is better prepared to win this election on Election Day, I would argue that the president's campaign is.

WOODRUFF: Congressman Udall, can you match that? A precinct chairman in every precinct?

UDALL: Well, we have a strong Democratic party precinct operation that's been here for centuries. So we're just going to rely on getting -- getting people out to vote the way we have. And the Kerry people have been very strong and supportive of that, and using local people.

So I think -- I think it's fair to say that we'll know on Election Day. I mean, we can both predict, but I think the real test is going to be who turns out on Election Day. And some of this early voting makes a difference, too. In New Mexico, absentee and early voting is big.

WOODRUFF: Right. So you've got people making up their mind already.

WHITE: Judy, you bring up a good point about voter registration, though. When you look at the numbers, over 50 percent are registered Democrat in our state, 37 percent Republican.

We shouldn't even be in this game. But I think if you look at the policies of the president, they better represent the people of New Mexico. And I would argue that Senator Kerry is far outside of the mainstream, and that's why we're ahead in these polls. Polls -- when you look at the registration mix, we shouldn't even be in this game.

WOODRUFF: Congressman, how do you explain it? It is the case that Democrats, you know, by the numbers should be ahead.

UDALL: Well, New Mexico has always been a predictor state and a bellwether state. I believe John Kerry is going to win because the issues that he's speaking to, central them issues, education, health care, taxes, the terrorism issue, all of those he's resonating, and I believe he's coming on strong here near the end.

WOODRUFF: Let me ask you both about an important part of the vote in this state, and that is the Latino vote, Hispanic vote. I understand it's a little over 40 percent of the vote in this state.

Sheriff White, the Willie Velasquez Institute, a respected organization, late September, polled likely Latino voters in this state, in Colorado, Nevada and Arizona. Kerry -- John Kerry running 20 points ahead of George W. Bush at that point. Where do you think you stand with Latino voters?

WHITE: Let's look at it right now. In the third congressional district, Senator -- Congressman Udall's district -- Senator Kerry is only winning by about 10 points. That's the reason why Senator Kerry is using valuable time here in Santa Fe.

When you look at the registration, it's about four or five to one, Democrat to Republican. He is not connecting with the Hispanic vote in northern New Mexico. He should be winning by 25 points.

And I would argue it's because, again, going back to the mainstream, those mainstream issues. When you look at abortion, when you look at gay marriage -- and most importantly, taxes. This is a man...

WOODRUFF: Well, I was just going to say -- I want to interrupt because, Congressman Udall, in "The El Paso Times" today, you have a quote, a leading Latino activist named Antonio Gonzalez, he is with the Willie Velasquez Institute. He says, "Kerry hasn't asked for the votes." "You have to appeal," he said, "to people directly and repeatedly." "The Kerry campaign," he says, "has not have enough campaign and ground stuff in those communities in the Southwest battleground states." This is a friend of the campaign saying this.

UDALL: John Kerry has been out here eight times. He's loved in the Hispanic community. He's, I think, connecting in a very, very positive way on the issues like education, health care, prescription drugs. And I think he's going to do it on Election Day.

WOODRUFF: But what about on those value issues that you just heard Sheriff White mention?

UDALL: I think the values that are the important values are the family values, what people talk around over the kitchen table, which are the ones I just discussed. I mean, those are the things that people are talking about in New Mexico: education, health care, and that's where John Kerry is very, very strong.

WOODRUFF: Very quick, one word answer. How close is it going to be? No matter who wins, are we talking just a few hundred votes this time again?

WHITE: Well, it was 366 votes last time, so close.

UDALL: I think it will be close.

WOODRUFF: OK. We're going to leave it there. We're not going to pin you down to a number, unless you want me to. OK.

Sheriff Darren White, thank you very much, from Bernalillo County.

WHITE: Thank you, Judy.

WOODRUFF: Congressman Tom Udall, good to see you.

UDALL: Judy, it's a real pleasure, real pleasure.

WOODRUFF: Thank you, gentlemen. We appreciate your coming in. We appreciate your hospitality here in Santa Fe.

Coming up, a major broadcasting group causes a stir with its plans to air a documentary critical of Senator John Kerry.

And now Democrats are fighting back. The story still to come on INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: We're here live in Santa Fe, New Mexico, checking the headlines now in our "Campaign News Daily."

The vice presidential candidates have been staking out different turf today, while their running mates both stumping here in New Mexico. In Iowa, John Edwards blasted the president's upbeat view of the economy, accusing Bush of trying to "put lipstick on this pig." Edwards stumps in Missouri this evening.

Vice President Cheney rallied supporters in New Jersey, underscoring polls that suggests the state may not be a shoe-in for the Democrats, as many -- as many had expected. Then Cheney headed to Ohio.

As you would expect, Senator Kerry has a big lead in his home state of Massachusetts, but guess what? Voters there are saying they apparently do not think he will win.

The Bay State Poll found 59 percent of those surveyed in Massachusetts think Bush will win on November 2. Only 26 percent said they think Kerry would win.

The anti-Bush group MoveOn.org airs a new ad today in battleground states, the work of Hollywood director Rob Reiner. MoveOn is spending $1 million to run the ad which features quick shots of Bush stumbling on questions about Iraq and whether he has made any mistakes as president.

The curtain falls tonight on a big 11-state anti-Bush rock 'n' roll tour dubbed Vote for Change. Bruce Springsteen, Dave Matthews, Pearl Jam, R.E.M. and Bonnie Raitt are among those appearing at the concert tonight in Washington D.C.

And now to a controversial decision by one of the nation's largest broadcast companies to air an anti-Kerry documentary. Sinclair Broadcasting has ordered its television stations to show the documentary during prime time next week without commercials. Democrats are crying foul. CNN media analyst Howard Kurtz has more.

(BEGIN VIDEOTAPE)

HOWARD KURTZ, CNN MEDIA ANALYST (voice-over): There are two sides to the John Kerry Vietnam story. Supporters highlight the combat heroism that won him a slew of metals. Detractors question the circumstances of some of those declarations and focus on Kerry's rhetoric as an anti-war activist when he returned home.

UNIDENTIFIED FEMALE: Accused all Vietnam veterans of unspeakable horrors.

KURTZ: In the days before the election, Sinclair Broadcasting will be showing only one side. The company has ordered its 62 stations, from Baltimore to Sacramento, to air the anti-Kerry film "Stolen Honor." It's made by former "Washington Times" reporter and decorated Vietnam veteran Carlton Sherwood. And it argues with his anti-war testimony in 1971, Kerry was branding all American soldiers as baby killers, war criminals, and deranged, drug-addicted psychopaths.

Sinclair doesn't hide its conservative bent. Ninety-seven percent of the money the company executives have contributed in this campaign have gone to Republicans. Last spring, Sinclair took on "Nightline," refusing to air a program in which Ted Koppel read the names of all the U.S. soldiers in Iraq. Sinclair accused Koppel of pushing an anti-war agenda. He said he was simply showing the human cost of war.

Kerry spokesman David Wade (ph) calls Sinclair's decision to trumpet "Stolen Honor" a smear and a form of yellow journalism. A Sinclair vice president told "The Washington Post" that the film tells a "powerful story," and that the broadcasters "are acting like Holocaust deniers about Kerry's past."

But even if the movies is newsworthy, airing only a one-sided attack on Kerry would be like the networks deciding that the end of October would be the ideal time to run Michael Moore's anti-Bush film "Fahrenheit 9/11."

(on camera): In the final days of a presidential campaign, media organizations generally try to avoid what in football would be called a late hit. Sinclair Broadcasting, apparently playing a different game, has decided to hit John Kerry hard. Now the Democratic National Committee is hitting back, announcing a complaint with the FEC that accuses Sinclair of making an unkind (ph) contribution to the Bush campaign.

Howard Kurtz, CNN's "RELIABLE SOURCES."

(END VIDEOTAPE)

WOODRUFF: Well, with the polls showing the presidential race is a virtual dead heat, you can bet the candidates are studying up for Wednesday's debate on domestic policy. When we return, we'll take a look at what separates John Kerry -- separates George Bush and John Kerry on two issues which will be very important in the debate.

As we go to the break, we want to show you live scenes here in Santa Fe, New Mexico. Native Americans selling some of the beautiful jewelry they make to tourists and other locals who live in the state of New Mexico. We'll be right back.

(COMMERCIAL BREAK)

WOODRUFF: With the presidential race in its final weeks, both President Bush and Senator John Kerry have just picked up some major newspaper endorsements. Over the weekend, these seven papers backed Kerry: "The Atlanta Journal-Constitution"; the "Maine Sunday Telegram"; the "Portland Oregonian"; the "Philadelphia Inquirer"; the "Press Herald" of Portland, Maine; the "Seattle Post Intelligencer"; and the "St. Louis Post-Dispatch."

Endorsing President Bush, "The Tulsa World" and "The Columbian" in Vancouver, Washington. Also backing Bush, "The Oakland Press" in Oakland County, Michigan, and "The Mason City Globe" in Iowa.

The newspaper industry publication "Editor and Publisher" reports that Kerry does have a slight lead over Bush in the number of endorsements.

Well, domestic issues take center stage Wednesday night. That's when George Bush and John Kerry will meet for their final debate. Bob Franken takes a look at two important issues: education and Social Security.

(BEGIN VIDEOTAPE)

BOB FRANKEN, CNN NATIONAL CORRESPONDENT (voice-over): One would think that the president's No Child Left Behind education reform would make a few waves in this time of no voter left behind. But one would be wrong. It's just an occasional ripple.

After all, John Kerry backed the legislation. However...

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: Two months after the law was signed, this administration started to break its promise by short-changing the law by $27 billion. Millions of children have been left behind.

FRANKEN: Local officials complain they get little financial help with this major accountability exercise as they scramble to avoid the dunce list of schools whose students don't pass their proficiency tests. Kerry says he would provide $200 billion federal over 10 years for education, with $30 billion earmarked for teacher training and incentives. The Bush education secretary contends that No Child Left Behind has put students and teachers ahead.

ROD PAIGE, EDUCATION SECRETARY: We can either build on these achievements or we can return to the days of excuses and indifference. Our opponents voted for No Child Left Behind. Now they try to attack it.

FRANKEN: Other differences. Kerry would expand after-school programs and expand tuition tax credits for college for most households. The president has proposed cuts for after-school programs, while offering a slight increase in grants for low-income college students. Still, in all, educating the youngsters has not really been a burning issue.

Out at the other end of life, there have been a few political sparks, over how to provide for senior citizens, or how not to.

KERRY: Let me make it clear. I will never privatize Social Security, ever.

FRANKEN: The president does support allowing workers to use some of their Social Security payments for private investment. Kerry cites a study which charges that would mean hundreds of millions in new profits for the financial services industry, which happens to be one of the major Bush-Cheney campaign contributors. But the president argues, nowadays, Americans need to have some control over their retirement.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I believe younger workers ought to be able to take some of their own money and set up a personal savings account that earns better interest than the Social Security trust. FRANKEN: The polls indicate that voter confidence in Bush and Kerry is just about evenly divided on most domestic issues, with Bush ahead on education. But it's often difficult to discern their differences.

(on camera): Education, all the candidates are for it. Protecting retirement benefits, ditto. And now it's back to the wars.

Bob Franken, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Bob, thank you very much.

And coming up in our next half-hour of INSIDE POLITICS, with just over three weeks to go until Election Day, what are the latest polls showing? We'll find out from our senior political analyst, Bill Schneider.

And the truth sometimes takes a hit in the TV ad wars. Jeanne Meserve checks out the latest Bush and Kerry ads and shows us who is stretching the truth.

(COMMERCIAL BREAK)

WOODRUFF: Joining me now as the markets close at 4:00 Eastern from New York City for the debut of "The Dobbs Report," none other than Lou Dobbs.

Hello, Lou.

LOU DOBBS, ANCHOR, "LOU DOBBS TONIGHT": Hey, Judy. Good to be with you.

The Senate on a rare holiday session giving the OK to a sweeping corporate tax bill. It's the biggest overhaul of corporate taxes in nearly two decades, and it's what some are calling the biggest corporate giveaway ever.

The $140 billion packet starting out as a bill to bring U.S. exporters into line with World Trade Organization rules and to eliminate $4 billion a year in tax breaks for U.S. exporters. But instead, critics say the bill quickly became what they call a tax grab bag for special interests. Senator John McCain calls it, quote, "the worst example of the influence of special interests" that he's ever seen.

Legislators threw in scores of provisions aimed at helping specific businesses or special interests, $10 billion given to tobacco farmers to end a long-running subsidy program. But supporters claim it won't cost a penny. New benefits balance by closing loopholes they say. Republican leaders, also the tax package will create jobs. The measure now goes to President Bush. He's already promised to sign it.

Oil prices today setting yet another record. Crude oil closing at 33 cents, settling at $53.64 a barrel, the fifth straight session of record-breaking prices. Crude prices are now 65% higher since the beginning of the year.

Today's gains came as Nigerian oil workers began a four-day strike pushing prices high as well. Lingering concerns about winter fuel supplies. And those skyrocketing fuel costs are pushing prices at the gas pump to a four-month high. The price for a gallon of regular unleaded gasoline costing an average of $1.99 over the past two weeks.

Investors warning those high fuel costs will hurt consumer spending and corporate profits. Stocks nonetheless posting modest gains as the final trades are now being counted. The Dow up 27 points. The Nasdaq composite adding nearly half of 1 percent. The trading volume of course light because of today's Columbus Day holiday. Investor action may pick up tomorrow as earning season gains momentum.

Coming up at 6:00 Eastern here on CNN tonight we begin our series "Driven To Run." All week we're taking a look at the Americans who are so frustrated with what is happening in Washington that they have decided to make an individual difference and to run for office. Tonight we'll introduce you to Jack Davis a successful manufacturer from upstate New York. He's on a mission to save American jobs.

(BEGIN VIDEO CLIP)

JACK DAVIS (D), CONGRESSIONAL CANDIDATE: If I paid my employees minimum wage which is $5.50 in New York state, we would still be five times higher than what could be made in China. We can't compete. I got to get that message out.

(END VIDEO CLIP)

DOBBS: Also on "LOU DOBBS TONIGHT" fighting for our troops in Congress. Senator Mary Landrieu of Louisiana working to protect military reservist pay. She's our guest tonight.

And democracy at risk. John Fund, author of "Stealing Elections" joins me to talk about the vulnerability of our national voting system. We'll look at who really won the latest presidential presentation.

Three top political journalists join me to give us their take on the outcome of the most recent so-called debate -- Judy.

WOODRUFF: Lou, a quick question. You talked about record oil prices. You also mentioned gas prices climbing. Today here in New Mexico John Kerry talked about both. Clearly he's trying to make it an issue in this campaign. What's your sense -- what's the prospect do you think of high energy, high oil gas prices being an issue when voters go to the polls November 2?

DOBBS: I think it is already an issue. Senator Kerry today said he would turn to Las Alamos and Sandio Labs (ph) there in New Mexico but frankly it will take years before anyone can move ahead to alternative fuels. The truth is that the previous administration, the Clinton, this administration, the Bush administration, all have wasted valuable time to create alternative fuels. I think the voter and the consumer -- as hard pressed as the consumer in this country is understands that. But we have to have an alternative approach to our energy dependence.

WOODRUFF: All right. Lou Dobbs with the debut of "The Dobbs Report." You'll see it every day here at this hour on INSIDE POLITICS. Lou, thank you very much. The third half-hour of INSIDE POLITICS begins right now.

(BEGIN VIDEOTAPE)

ANNOUNCER: With two debates down and one to go, is there any new movement in the Bush-Kerry contest? We'll take a closer look at our new poll.

AD ANNOUNCER: How can Kerry protect us?

ANNOUNCER: Terror and the ad war.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I don't think you can win it.

ANNOUNCER: Do tough new Bush/Kerry commercials tell it like it is?

Now, live from the CNN Election Express in Santa Fe, New Mexico, JUDY WOODRUFF'S INSIDE POLITICS.

(END VIDEOTAPE)

WOODRUFF: Welcome back to New Mexico and the beautiful Santa Fe Plaza here in the state Capitol. If you needed any reminder that this is a showdown state, John Kerry and George W. Bush provide a vivid reminder by campaigning here today. Bush and Kerry came to the state two days before their third and final debate and 22 days before the election. At this critical juncture where does the race stand? Our senior political analyst Bill Schneider crunches our newest poll numbers.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): The presidential race is just about a dead heat. Is that good news for either candidate? Look at the trend. A month ago George W. Bush was leading John Kerry by 14 points. Just before the first debate, Bush's lead had narrowed to eight points. After the first debate on September 30, the race was tied. Now, after the second debate, it is Kerry 49, Bush 48.

Kerry's support has gone up nine points among likely voters over the last month. Bush has lost six. Here's one reason. Political interest is surging among Democrats to the point with now unlike a month ago more Democrats than Republicans say they have given the election a lot of thought.

The debates are another reason. Voters thought Kerry won the first debate. The second debate was much closer. Viewers overwhelmingly thought Kerry won the first debate. The second debate was seen as much closer. Viewers gave Kerry only a two-point edge. But look what happened in the two days after that debate. Kerry's edge over Bush grew to 15 points. That has raised expectations for Kerry in the next debate. A majority of Americans think Kerry will do a better job in the final debate on Wednesday. The public sees Kerry as more intelligent and Bush as stronger and more decisive but on one quality, there has been a noticeable shift.

In early September just after the Republican convention, Bush had the edge as the more honest and trustworthy candidate. After the first debate, Bush's margin narrowed. Now they are virtually tied. Kerry, 44. Bush, 42. Bush's rating on honesty and trustworthiness has dropped four points just in the past week. Last week's report by the Iraq survey group headed by chief weapons inspector Charles Duelfer may have had an impact especially when the president refused during the debate to acknowledge any mistakes.

BUSH: Did you make a mistake going into Iraq and the answer is absolutely not. It was the right decision. The Duelfer report confirmed that decision today.

(END VIDEOTAPE)

SCHNEIDER: The vice presidential debate may also have helped Kerry. When asked who they would vote for if they could vote separately for vice president, voters preferred John Edwards over Dick Cheney by six points. 52 percent to 46 percent -- Judy.

WOODRUFF: So given the trends that you're seeing, what are the major factors going to be in these last three weeks of the campaign. Clearly one factor will be the debate on Wednesday night. What else do you see on the horizon?

SCHNEIDER: Mobilization of each candidate's core supporters. That's what this race has really come down to. It's a very emotional race. Republicans are enthusiastic about Bush. Democrats are angry over Bush's policies. Each side is trying to rally its base mostly by running against its opponent. The Bush campaign is portraying Kerry as a tax and spend liberal and the Kerry campaign is telling voters that you can't trust President Bush. They're running against the Bush record. It will be a tough, hard, sharp even harsh campaign sometimes very personal to rally each side against the other guy.

WOODRUFF: Bill Schneider, thank you very much. Indeed they are rallying the base. That's exactly what we heard from the two representatives of the Bush and Kerry campaigns in New Mexico just a few minutes ago. Thank you very much, Bill.

Out on the campaign trail today President Bush used his campaign appearance here in New Mexico to jump on Senator Kerry's latest remark on the war on terror. In a "New York Times Magazine" interview, Kerry suggested that he would work to reduce the terror threat to the level of a nuisance where it would not be part of the fabric of our lives he said. Bush said his goal would be to destroy terrorists. Senator Kerry did not respond to Bush during a rally here in Santa Fe preferring to talk about rising gasoline prices. But his campaign is accusing the Bush camp of playing politics. And both sides have unleashed new campaign ads on this subject. CNN's Jean Meserve has a spot check.

(BEGIN VIDEOTAPE)

JEAN MESERVE, CNN CORRESPONDENT (voice-over): In the latest duel of advertisements, context is among the casualties.

AD ANNOUNCER: Now Kerry says we have to get back to the place where terrorists are a nuisance like gambling and prostitution. We're never going to end them.

MESERVE: The Bush ad implies that Kerry is talking about the present when his comments to the "New York Times Magazine" actually refer to the future. He says we have to get back to the place we were where terrorists are not the focus of our lives but they're a nuisance. Kerry says, "as a former law enforcement person I know we're never end prostitution, we're never going to end illegal gambling but we'll reduce it to a level where it isn't on the rise." In the article Kerry's remarks are contrasted with a Bush quote now being used in a Kerry counterattack.

AD ANNOUNCER: And on the war on terror Bush said I don't think you can win it.

MESERVE: Bush did say that in August on NBC's "Today Show." But the president backpedaled the very next day.

BUSH: But make no mistake about it, we're winning and we will win.

MESERVE: The Kerry ad repeats some other distortions of fact.

AD ANNOUNCEMENT: Bush gives Halliburton seven billion in no-bid contracts, $200 billion for Iraq. But to inspect containers, (UNINTELLIGIBLE) bridges, tunnels and chemical plants, Bush says we can't afford it.

MESERVE: In the first debate Bush never actually said we can't afford it. Here is what he did say.

BUSH: I don't think we want to get to how he's going to pay for all these promises. It's a huge tax gap.

MESERVE: As for the other Kerry ad claims, the general accountability office says the Halliburton contract was proper and the price tag for Iraq is actually $120 billion thus far. So the shading and shaving of the truth continues in ads from both sides. Jean Meserve, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Thank you, Jean. And another new entry in the ad war. This one on taxes. A possible scene setter for Wednesday's debate on domestic issues. The Kerry campaign spot presses the Democrats charge that the Bush tax cuts benefited the wealthy. And that John Kerry will cut taxes for the middle class.

In the latest slug fest over terror, which presidential candidate has the upper hand? We'll get some perspective from our Candy Crowley.

Plus, we'll try to get a jump on expectations for the next Bush- Kerry debate.

(COMMERCIAL BREAK)

WOODRUFF: INSIDE POLITICS in Santa Fe, New Mexico, this Monday. Well, national security is back in the spotlight on the presidential campaign trail today. Our senior political correspondent Candy Crowley joins us now. We are lucky to have you here because John Kerry is in town. Candy, we know that John Kerry quoted over the weekend in this "New York Times Sunday Magazine" piece as saying that eventually he would like to reduce terror to the level of a nuisance and went to talk about it. The Bush campaign seizing on this saying John Kerry doesn't understand terror. You're talking to the Kerry people. What do they say?

CROWLEY: Well, they say that's one word in this giant, long article in the "New York Times Magazine." That this is just another example of George Bush exaggerating what's gone on and taking things out of context. They put up the ad as you mention sort of pushing back. Not pushing back right on the nuisance issue but just pushing back saying here is what he hasn't done. He hasn't started inspections of containers and that kind of thing. They put out -- they have people on conference calls saying that this is ridiculous. George Bush said we can't win the war on terrorism, picking on this one word. But as you also mentioned, they didn't want to get off what they were on today which was energy prices so the candidate didn't bring it up.

WOODRUFF: Do the Kerry people think they're making any headway on this issue of terrorism because we know the polls have for the most part shown George Bush ahead when people are asked who will do a better job.

CROWLEY: They concede that he's still ahead on Iraq and on terrorism when the question is asked who would better handle Iraq and the war on terrorism. But they say they are making progress. Obviously we had a poll a couple of weeks ago that showed that there was a double digit gap on terrorism in favor of George Bush and high single digits on Iraq. so it's a pretty steep hill given how little time we have left in this campaign but they say we're working on it and they cite other polls that show that it's closer on those two issues.

WOODRUFF: So they're trying to stay on domestic issues for now, that's what the Wednesday night is about but is John Kerry going to talk more about the war?

CROWLEY: Not in the next couple of days. Because they are setting the table for this domestic debate and they also want to use these last three weeks to focus on the middle class and focus on the swing voters so that's why you hear gas prices are going up and winter is coming and it will cost more to heat your home and so this is a middle class push and they have always believed that their strong suit and polls bear this out are on domestic issues.

So they want to stay on that and gear their last three week message toward the middle class. They will always hit back in an ad. John Edwards was out today talking about it. It won't be the focus of what they do. It will be there. They say the American voters are ambidextrous. They can deal with both these issues at the same time because that is how our lives are. There will be some of it.

WOODRUFF: Time for one last quick question here, Candy. What about this Wednesday night debate? What do they view this as an opportunity for them one way or the other?

CROWLEY: They are a very confident group at the moment in the Kerry campaign. We won the first two debates. We're looking forward to winning the third one. John Kerry came here yesterday and said we're 2-0. We'll make it 3-0. This is a very upbeat group in terms of their confidence in this candidate. Now, has it made any difference? We see the poll numbers and they are virtually the same as they were before the second debate. So whether or not whatever kind of push he was going to get out of the debates came after the first debate and then they'll get nothing else, I don't know. I guess we'll wait until the third debate. But they are very upbeat on how they think he'll do. They think they have a pretty clear record of winning them.

WOODRUFF: We shall see. Candy Crowley, thank you for coming to this beautiful Santa Fe Plaza. Thank you very much. We're glad to be here.

The third and final presidential debate is just two days from now. When we return, how is this faceoff shaping up? What do Bush and Kerry need to do to score points? We'll hear from a couple of political reporters. Ron Brownstein, Dan Balz.

(COMMERCIAL BREAK)

WOODRUFF: We are here in Santa Fe as we have been telling you. Next door to New Mexico in Arizona, preparations under way for Wednesday night's third and final debate between President George W. Bush and Senator John Kerry. With me from Washington to talk more about the final faceoff and about the race ahead, CNN political analyst Ron Brownstein from the "Los Angeles Times" and Dan Balz of the "Washington Post. Dan, to you first. Where does this race stand right now three days after the last debate and looking with three weeks to go?

DAN BALZ, "WASHINGTON POST": I think we're still looking at an even race that is likely to go down to the wire. Depending on what poll you look at, President Bush may have a bit of a lead. It's a smaller lead than he had heading into these debates. Senator Kerry has picked up some ground. The battle grounds may be moving slightly at this point. There has been nothing dramatic in terms of movement since these debates started. But we have to believe that this race is a little closer today than it was.

WOODRUFF: Ron, we see in this new CNN/"USA Today/Gallup poll John Kerry viewed by more people as having won the debate 45 percent to 30 percent. But that's not yet translating in the overall horserace numbers. How do you explain that?

RON BROWNSTEIN, "LOS ANGELES TIMES": I don't know if I full agree. In the Gallup polling a few weeks ago President Bush was significantly ahead overall. The main thing we're seeing since the first debate whether the polls have President Bush ahead or behind, other than Dan's ABC/"Washington Post" poll there hasn't been any poll in the last week of all of the public polls that have come out that have shown President Bush at 50 percent or above. He's almost always now polling below 50 percent. His job approval which I believe is the single most important predicted number out there has fallen below 50 percent down to 47 percent in your poll. And always for an incumbent, if you're looking at a job approval below 50 and a vote total below 50 this late in the election year, you have to get nervous because the history is the most people that disapprove of your performance vote against you and most undecided voters tend to break for the challenger.

WOODRUFF: So Dan, is that reason for the Bush people to be nervous and are they nervous, do you think?

BALZ: They will not suggest that they are. They think that after Friday's debate they think that they are now holding their own again. But going into that debate they were nervous. They knew the president had not done well in the first debate and he had to do better. They came out with a very public display of spin suggesting they had more than accomplished their goals. They have a tough debate coming up on Wednesday night in Arizona. This will be on domestic turf in general that it is turf that should favor Senator Kerry over President Bush. Those are generally issues that are better for Democrats.

There are some people that think President Bush held his own in that portion of the debate on Friday night in St. Louis. The domestic part of the debate. But the Kerry campaign believes that they can score points and what they want to do is reach out to those swing voters who are still making up their minds with a number of domestic arguments on the economy, on jobs, on prescription drugs, on stem cell research in order to put President Bush and his record on the defensive.

WOODRUFF: At the same time, Ron, we heard our Candy Crowley who has been traveling with the Kerry campaign for some time saying that the Kerry people are feeling very confident going into this debate. Is there danger if they are too confident?

BROWNSTEIN: This must be my contrary day because in my contacts with the Kerry people I'm not sure they are as confident as they might have been a week ago about heading into this debate. There are people in the Kerry camp that thought President Bush did surprisingly well on domestic issues and that Senator Kerry didn't have his best performance especially on the social issues like abortion where he gave what many people thought were a very defensive answer in which he never mentioned in that answer that he supported legalized abortion.

President Bush will be on the defensive in terms of many aspects of the record. More people without health insurance, declining number of jobs. Btu he has crystallized a pretty clear and concise argument against the Kerry agenda basically saying it needs a return to big government. Kerry on the domestic side has not been quite as clear and crisp as he has been on the foreign policy side surprisingly for a Democrat. So even though the issue terrain favors the Democrats in this last debate, the performance in the second half of debate No. 2 causes concern among Democrats and I think the Kerry people will tell you privately that he does need to pick up his game and his arguments to take advantage of what could be favorable terrain for him.

WOODRUFF: To Dan now. Today John Kerry is out there talking about the high price of oil. Record price per barrel. Gasoline prices are up. Is this the kind of thing that Kerry can use to his advantage?

BALZ: Up to a point I think that is correct. High oil prices certainly should be a problem for the president. In some ways it is surprising that that is not more of a significant issue. As we know this campaign has been so dominated by national security and Iraq that even many of the domestic issues that we thought might be more significant have not yet become that way. I think that for Senator Kerry, the key Wednesday night is really to be able to put the president on the defensive on these issues and to try to talk about his record as opposed to Senator Kerry's own record.

But what President Bush has been very effective at doing particularly in that second debate is using Kerry's Senate record to keep him on the defensive and to say to people what Senator Kerry is telling you he will do is not what he has done as a senator. I think that is the dilemma for Senator Kerry. The problem for President Bush is a record in which they have a net loss of jobs, more people without health insurance, rising energy prices, a whole host of areas in which the progress has not been close to what they had promised even a couple of years ago. That's the danger for President Bush.

BROWNSTEIN: Can I add something quickly?

WOODRUFF: I hear you saying both candidates have their work cut out for them. We have to leave it there. Hope to talk to both of you after this next debate. Thank you, both. INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

WOODRUFF: As we say goodbye for INSIDE POLITICS we note the passing of Christopher Reeve the actor who died last night. A hero to so many of us. Thank you for joining us. I'm Judy Woodruff in Santa Fe. Tomorrow INSIDE POLITICS is headed to Tempe, Arizona, site of Wednesday night's third and final presidential debate.

Have a good evening. "CROSSFIRE" starts right now.

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