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Presidential News Briefing; French Hospital Spokesman Denies Arafat is Dead; Interview With Aaron Miller

Aired November 04, 2004 - 12:00   ET

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

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


WOLF BLITZER, CNN ANCHOR: The president of the United States holding his first news conference since being reelected to a second term. The president spending about 45 minutes in the old Executive Office Building, right next door to the White House, answering reporters' questions on a wide range of issues.
A reporter suggesting to the president that Yasser Arafat -- reports of Yasser Arafat being dead. The president said, "God rest his soul."

Unclear at this point what the exact status of Yasser Arafat is. But we do have this reaction from a French official at the hospital near Paris where Yasser Arafat has been.

Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): Mr. Arafat is not dead. I thank you.

(END VIDEO CLIP)

BLITZER: Let's go to Fionnuala Sweeney, CNN's Fionnuala Sweeney. She's outside that hospital in Paris.

A lot of confusion right now, Fionnuala. One television station in Israel saying he's clinically dead, brain dead, denials. We just heard from a French spokesman, denials from Palestinian leaders. What exactly do we know at this point?

FIONNUALA SWEENEY, CNN CORRESPONDENT: Well, we know that after hours of waiting for a much long-promised news conference here, Wolf, what finally happened was the lone figure of one Christian Estripeau (ph), who is a general here in the French Medical Army Corps, who you just heard briefly from, came in front of the microphone and said the situation regarding Yasser Arafat, was "now more complicated."

It appears that yesterday afternoon he was transferred to a specialized unit within the military hospital behind me. And adding afterwards that, "He is not dead." And then, as you saw, he walked away and did not take any questions from journalists.

There has been rife speculation over the last 24 hours as to what exactly has happened to Yasser Arafat. It did appear from the medical update we received on Tuesday that he was doing better, that he was fit enough to undergo even further medical tests to try and make a firm diagnosis as to what ails him.

It appears that after he underwent further tests yesterday, Wednesday, he did not feel well. And that began a sudden deterioration in his condition. And as you say, media speculation rife. And I'm not sure that what Christian Estripeau (ph) had to say here to journalists a few minutes ago will do very much to calm that speculation.

But what we're hearing from Palestinian officials that is he is slipping in and out of consciousness and he is in a critical condition. But even those aides here accompanying Yasser Arafat to Paris are unsure as to his exact medical condition.

It would seem that only a very few people close to Yasser Arafat, including his wife, Suha, are privy to that information. Indeed, sources in Ramallah saying merely throughout the day that he had been sedated. That was the only reason that he wasn't alert or conscious, and sedated only so that further tests could be carried out.

So the only firm, firm statement we have is that statement from Christian Estripeau (ph), saying Yasser Arafat's situation is more complicated. He is not dead -- Wolf.

BLITZER: Fionnuala, stand by. I'm going to get back to you.

The president of the United States at this news conference we just saw live here on CNN, was asked about the reports that Yasser Arafat was already dead. He said, "My first reaction is god bless his soul." He then went on to say, "My second reaction is that we will continue to work for a free Palestinian state that's at peace with Israel."

Our senior White House correspondent, John King, was at the news conference. He's joining us now live from the old executive office building, the Eisenhower Building, right next door to the White House.

John, when the president said that, was he -- was he reacting, do we know, to specific information that he may have that Yasser Arafat might already be dead? Or simply to the reporter's report to him that there are reports Yasser Arafat is dead?

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: They do not know that here at the White House, Wolf. The president, most of his senior staff, including his national security adviser, Condoleezza Rice, were in this room.

Mr. Bush was asked the question, prefaced by the fact that Mr. Arafat was dead. Obviously that is in question at this hour. So he answered the question, assuming that what he was being asked was true.

I leaned forward during the news conference and had a very brief conversation with Condoleezza Rice. She said they simply do not know. And the senior staff here in the front row, including the president's chief of staff and his national security adviser, began exchanging notes. They say they simply do not know. Now, what their further explanation will be as this day goes on is to them -- and they don't mean this coldly, and it might sound cold -- that it doesn't matter. What Mr. Bush has long said is that for there to be an advancement of the Middle East peace initiative, means -- he believes firmly that the Palestinians need new leadership.

Now, the president did say, "God bless his soul," but they say they simply don't know here at the White House. Now that the news conference is at over, obviously they are more at liberty to try to find out any new available information -- Wolf.

BLITZER: The prime minister of Luxembourg has told reporters that Yasser Arafat has died, but that clearly could be reaction to reports. It's unclear exactly what the status of Yasser Arafat is.

Let me just also get you on this point, John. We heard the president say he agrees with Tony Blair, the British prime minister, who said yesterday the most important issue out there right now is to try to get the Israeli-Palestinian peace process back on track. The president didn't exactly say that in his response. He said it was "a" very important issue.

Is there any indication that in this second term the Bush administration is going to become a little bit more actively involved in trying to get peace talks between the Israelis and the Palestinians back on track?

KING: They would like to get more involved, Wolf. And they have said for months they would like to get involved. But they have also said -- and again, it's a delicate issue to discuss at this moment, Mr. Arafat's life hanging in the balance, apparently -- but they have always said that they believe you can only get back involved once the Palestinians have new leadership.

Mr. Bush and Mr. Arafat do not have a relationship. It's not right even to call it a bad relationship. They do not have a relationship.

This president would not speak to Mr. Arafat. He believes he is corrupt, he believe his refuses to make the right decisions to advance the path toward peace, which would be an independent Palestine.

So Mr. Bush has long said he would like to move the diplomacy forward. And he has said periodically that he's willing to lean on Israel, put diplomatic pressure on Israel, to do some things the Sharon government might not want to do. But that he needs first a partner in the Palestinians.

Again, a very delicate issue to discuss at this moment. But Mr. Bush has said months back, when Mr. Arafat's health was not in question, that the only way he could see advancing the process was for the Palestinians to have a new leadership, one that was willing to engage the Israelis, one that was not corrupt, one that was willing to have democratic reforms within Palestine, or the Palestinian Authority now, and put both parties back on the path to peace. A very difficult dilemma for this president. The Europeans long had said he should deal with Mr. Arafat. Mr. Bush has said simply, no, he will not.

BLITZER: I'm going to get back to Yasser Arafat. And clearly, here at CNN, we're going to be following all of these latest developments. The ramifications for the Middle East are serious with Yasser Arafat's health right now hanging in the balance. But let's get to the news conference for a moment, John.

You spent all of that time listening to the president. What have we learned? What did you come away with hearing the president answer questions for the first time since his reelection?

KING: That you have a conservative president who says he has a very activist agenda. Some might find a conflict in there. But this president says he has a very activist agenda. And he says, "I have the capital," meaning the political capital coming out of this election, with a majority win and advances by the Republicans in Congress. And he says he fully prepares to spend it.

What does that mean? That means in January some difficult issues: tax simplification, Social Security reform, some health care provisions that the president advances that are not welcomed by Democrats right now.

Mr. Bush says he's willing to push these items forward. He says he wants to reach out to Democrats. And that will be, essentially, the big challenge.

We know the specifics of many of his policy proposals, and we know the Democrats don't like them. The question now is, how much is Mr. Bush willing to compromise? How far across the aisle are the Democrats willing to reach?

Those will be questions, though, for January and February. The president clearly in high spirits after his reelection victory, and already at work, he says, on a new budget and the state of the union that will come in January.

BLITZER: And he said "I earned political capital," he said, "And now I intend to spend it." On this issue of privatizing or at least parts of Social Security, this is a very sensitive issue that the president was getting at. What specifically do you think in the next four years he would like to do?

KING: Well, what he would like to do first is bring together a bipartisan group to deal with this. It is a difficult issue.

And what he would like to do is lay the groundwork, as he did in the campaign, to try to convince those Americans who are in their late 50s or 60s that nothing will change in terms of their Social Security. But that he would like for the next generation to go to a program where if you are in your 20s or your 30s or your 40s, and you so choose, you can take some of the money you now give the government for Social Security payroll taxes and put it in private accounts, put it a stock account on Wall Street, for example, put it in certificates of deposit.

He would like to lay the groundwork for that in a way that's not frightening politically, if you will, to the American people. And he will need -- first, he will need Democratic votes to get it through the Congress. And then he will need up front a substantial amount of money, some say as much as $2 trillion to pay for the transition.

Where do you come up with that money at the time the government is running record budget deficits and Mr. Bush is promising to cut those deficits in half? So some very difficult choices.

The president acknowledging himself that he cannot get this done without at least modest Democratic support. Most who would believe in the history of changing Social Security would tell you he needs more than modest Democratic support, he needs significant bipartisan support to get it done. It will not be done in the first year of a new Bush term, but he hopes to lay the groundwork to get it done in the second or third year.

BLITZER: John King, stand by. We're going to be getting to you.

As follow these reports of Yasser Arafat's clearly deteriorating health, reports that he has died are being denied by several sources in Paris, as well as elsewhere.

Let's go to Ramallah. CNN's John Vause is standing by there.

John, what are you hearing from Palestinian Authority officials?

JOHN VAUSE, CNN CORRESPONDENT: Well, Wolf, right now we're being told by at least one source, to add more confusion in all of this, that, yes, Yasser Arafat remains alive, but his health has deteriorated to such a point that now what they are being told is that it is impossible for Yasser Arafat to recover. So, in other words, it's now only a matter of time before his end comes.

We also know that there is a lot of urgent meetings under way right now here on the West Bank, and also in Gaza. The heads of all the security forces, the various Palestinian security organizations are meeting in the Muqada (ph), as well as the West Bank, and also in Gaza.

Meetings, too, amongst various militant groups, like Hamas, Islamic Jihad. We're also being told that meetings amongst the Palestinian officials at the highest level are happening right now at Arafat's compound behind me. Just who is meeting with whom we do not know. But there has been a flurry of activity here for the last few hours.

Also, early today, the Fatah party, Yasser Arafat's political party, held an emergency session of the executive committee. And also, the central committee of the PLO also held an emergency meeting for a few hours.

And this morning, the former prime minister, Mahmoud Abbas, who is effectively the highest-ranking Palestinian official in Arafat's absence, he canceled his visit to Paris. He was told by doctors that Arafat is not able to receive visitors.

And we're also being told that the prime minister, Ahmed Qorei, as well as Mahmoud Abbas, are heading down to Gaza tomorrow. That's significant, Wolf, because if Arafat is, in fact, dead, there's a very good chance that he will be buried in Gaza.

This is speculation. They could be going down there to pave the way for what could be Arafat's funeral. But that is just purely speculation at this point. But we do know that they are heading to Gaza sometime tomorrow -- Wolf.

BLITZER: On that point about a burial for Yasser Arafat in Gaza, why Gaza, as opposed to the West Bank or someplace outside of Jerusalem? I know he would like to be buried in Jerusalem, but the Israeli government apparently has made it pretty clear they're not going to let him be buried in Jerusalem. Why Gaza, as opposed to the West Bank, specifically Ramallah, where he's been living for the past several years?

VAUSE: Well, quite simply, Wolf, Arafat was born in Gaza. His father, his mother and his sister are all buried in Gaza in the (UNINTELLIGIBLE) refugee camp area. So that would be a suitable, fitting place for Arafat to be buried, simple as that.

BLITZER: All right. John Vause in Ramallah. We'll get back to you as well.

Andrea Koppel, our State Department correspondent, is monitoring this situation for us.

Andrea, what are you hearing there?

ANDREA KOPPEL, CNN STATE DEPT. CORRESPONDENT: Well, here at the State Department, Wolf, officials telling us that they are equally in the dark as to what the status of Yasser Arafat's health is right now. This morning, at the senior staff meeting that was headed by Secretary of State Powell, he was told by Bill Burns, who is the senior Middle East hand here at the State Department, "Take your pick," that the U.S. was hearing conflicting reports, as we all are, as to whether or not Yasser Arafat is either brain dead, whether he has been slipping in and out of consciousness, or whether in fact he is just deteriorating and still conscious.

So the U.S. is, as we all are right now, in the dark and unsure as to what his status is. What I can tell you is that the State Department last week, when Yasser Arafat was transferred to the Paris military hospital where he is right now, prepared a statement that would be issued in the eventuality that Yasser Arafat does die at some point in the very near future in which the U.S. government would be expressing its condolences to the Palestinian people and would be expressing sorrow at the loss of Yasser Arafat.

It's a very delicate issue, as we heard John King point out there, because the Bush administration has essentially sidelined Yasser Arafat. Unlike Bill Clinton, who met with Yasser Arafat here in the United States both at the White House and at Camp David five times over the course of eight years, President Bush has never met Yasser Arafat, never shaken his hand, and has refused to deal with him.

So it's a delicate diplomatic issue for the State Department because, on the one hand, they want to express sorrow for the man, the loss of the man, if he should pass from the scene, Wolf, who has led the Palestinian liberation movement for over 50 years and who was clearly the symbol of Palestinian nationalism and aspirations for a Palestinian state. But at the same time, recognizing that he is someone that the U.S. believes, as Israel does, that they cannot do business with, that President Bush has called for new leadership to come forward.

So, in addition, Wolf, I can also tell you that it is highly unlikely -- in fact, we could say that is it very unlikely that Secretary of State Powell or Deputy Secretary of State Armitage or any anyone of that stature would be attending a funeral. What I have heard from at least one State Department source is that former President Jimmy Carter would like to attend a funeral, if that happens in the near future, and that he expressed this interest to the White House.

What would happen right now, as far as burial is concerned, the State Department, the Bush administration does not want to get involved, Wolf, with putting forward what it thinks is the right thing to happen as far as where Yasser Arafat should be buried, saying right now that that's up to the Israelis and the Palestinians to decide whether he should be buried in Jerusalem or whether he should be buried in Gaza, where his parents are right now -- Wolf.

BLITZER: Andrea Koppel, at the State Department. Thanks, Andrea, very much.

A spokesman at that Percy military hospital outside Paris where Yasser Arafat has been staying over these past several days issued that statement we heard at the top. Let me just read the words, precisely what he said.

"The clinical situation following the first days after Arafat's admission has become more complicated. The state of health of the patient requires appropriate treatment which necessitated his transfer during the afternoon of Wednesday, November 3, to a unit suitable for his condition."

Clearly deteriorating, though, Yasser Arafat at that hospital. Let's get some analysis of what all this means.

Joining us, Aaron Miller, a former State Department Middle East peace negotiator, now the president of Seeds of Peace, an organization that tries to promote peace, especially among young people in the Middle East.

Thanks very much, Aaron, for joining us.

First of all, I know you're in close touch with Palestinians. Have you heard anything lately in the last hour or two on what's going on?

AARON DAVID MILLER, PRESIDENT, SEEDS OF PEACE: Not on the health situation, no, Wolf. But I saw Arafat about two week ago. And it was clear that his -- he was a transformed man.

I mean, the weight loss was profound, the absence of focus. He need help standing. So whether this is incapacitation long range or he is on the verge of passing, the impact, frankly, is going to be profound.

BLITZER: When the president was asked at this news conference whether he had any comments on reports that Yasser Arafat has already died or at least was brain dead, clinically dead, he said, "God bless his soul. We will continue to work for a free Palestinian state that's at peace with Israel." It's unclear, though, if the U.S. government has additional information based on what we heard from our John King and our Andrea Koppel.

If you were still in the State Department -- and you spent many years there working on peace, met numerous times with Israelis and Palestinians, trying to jump-start the peace process -- what recommendation would you give the president of the United States on who should represent the U.S. at an Arafat funeral?

MILLER: Well, given the administration's determination to exclude Arafat for maybe reasons that were legitimate, maybe not, it's really not an option. They will probably send a low-ranking official, maybe our consul general in Jerusalem, for example. I doubt, frankly, if they'll send anyone from Washington.

If they were interested in sending an unmistakable signal that they did intend to engage seriously with regard to Palestinians and Israelis in a second Bush administration, they might up the -- up the level of representation a bit. But I doubt, frankly, whether Secretary Powell, Armitage or any White House official will attend.

BLITZER: What about this idea that's been floated that the former president, Jimmy Carter, would represent perhaps the United States at that kind of funeral? Jimmy Carter, the father of the Camp David peace process in the late '70s, certainly would be presumably someone who would want to go.

MILLER: Sure. I mean, that would be a way to signal again American interest in commitment to the Palestinian issue and perhaps the possibility of a reinvigorated role.

BLITZER: But Jimmy Carter would only go if he got a green light from the president, based on -- what -- you know how the U.S. government, all U.S. governments work.

MILLER: Well, I'm not entirely sure that's true. I mean, it may well be that former President Carter's commitment to Arab-Israeli- Palestinian peace is so strong that he might feel, if invited, that he should attend regardless of what the administration believed.

BLITZER: All right. Aaron Miller, stand by for a second. We're going it take a quick break. But we're going to continue coverage.

We're following reports out of Paris Yasser Arafat's situation has deteriorated steadily. There have been reports that he has died. Those reports are being denied by officials at that military hospital in Paris, as well as elsewhere among Palestinian Authority figures. We'll continue to watch this story.

We're also watching the fallout on the reelection of the president of the United States.

Much more coverage coming up.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Lots happening here in Washington, around the world, in fact. I'm Wolf Blitzer, reporting.

The president of the United States had a news conference in the past hour, answering a wide range of questions, including reports that Yasser Arafat had died, reports that are now being widely denied, although his situation has clearly deteriorated, suggestions he's in a deep coma right now. We're watching all of these developments.

Joining us, once again, Aaron Miller, former State Department Middle East peace negotiator, now the president of Seeds of Peace, an international organization designed to try to promote peace in the region.

The whole issue of an Arafat funeral, the fallout from that, passions, he's the father, or the grandfather, if you will, of a Palestinian state. What do you anticipate would happen among Palestinians in Gaza and the West Bank?

MILLER: I mean, I'm -- I'm predicting a fairly stable transition. I think the Palestinians will borrow a phrase from Ben Franklin, who said about the British to his revolutionary colleagues, "Either we're all going to hang together or we're going to hang separately."

I think the formal succession process will actually go quite smoothly. Abu Mazen, Abu Allah (ph), will try to maintain the continuity of the Palestinian Authority.

BLITZER: Those are the code names or the nicknames...

MILLER: For Ahmed Qorei and...

BLITZER: Ahmed Qorei, the current prime minister, and Mahmoud Abbas, the former prime minister.

MILLER: Right. I think the real question -- and I think it's important to focus on -- is who in the months ahead will have the legitimacy and the authority to make the kinds of decisions, critical decisions facing the future of the Palestinian people? Who is going to have the authority to deal with, if not confront, Hamas and Jihad? Who is going to have the authority to negotiate with the Israelis? Assuming there are negotiations. Or who would even have the authority to preside as an Israeli partner over a Gaza first withdrawal initiative?

That's the critical question. And you've got a guy who, for more than five decades, has dominated every aspect of the Palestinian national movement. More money, more guns, political authority, more international weight. You have now taken him out of the situation.

BLITZER: And he has never, never set the stage for an heir apparent.

MILLER: No. And charismatic founding leaders often don't. I mean, I think -- by way of perspective, we have seen three transitions over the last five years, and people predicted the worst in each case.

One, Hussein of Jordan, to the son, Abdullah. A second, Hafez Assad, to the son, Bashar. And a third, King Hassan of Morocco, to the son, Mohammed. In each of those cases, the transitions have not only been bloodless, but very smooth and stable.

BLITZER: But in each of those cases, there were states, there were formal governments, there were military, there were police, there were representatives of political factions. Among the Palestinians, there is no state, and there's a wide split right now between Hamas and Islamic Jihad, all of these factions, extremist groups who don't have much loyalty to the Palestinian Authority.

MILLER: Right, and that's precisely the point. I think you're entering terra incognito. I mean, I'm a historian by training. This is one of those historical moments which -- which are going to have profound implications not only for the future of the Palestinian national movement, obviously for the future of the Israeli-Palestinian peace process.

BLITZER: In those three transitions you talked about, in Jordan, Syria, and Morocco, those were transitions from fathers to sons.

MILLER: Yes.

BLITZER: All three of them. As far as I know, Yasser Arafat does not have a son.

MILLER: He has a daughter. And obviously she's not terribly relevant to the...

BLITZER: She's a child.

MILLER: ... to the transition. That's correct.

But as mentioned, I think you're going to be hearing a lot about Palestinian unity. The real issue is not the formal succession process, but the decision-making process behind the scenes, particularly in the next four or five months. Because you've got two other critical points. Number one, you have a second Bush administration that may or may not decide to adopt a more serious and sustained approach to Israeli- Palestinian peacemaking. And you have this historic, bold initiative by the prime minister of Israel on Gaza first. Assuming that's implemented, or if it were to be implemented with a Palestinian partner, Arafat's passing could indeed open up some opportunities for the first time in four years to break this stalemate.

BLITZER: Best case scenario is that Ahmed Qorei, the current prime minister of the Palestinian Authority, he takes charge. He's someone the Israelis say they can deal with. He's someone the Americans say they can deal with.

The question is, do the Palestinians have confidence in him? Can he emerge as a figure to unify all these various factions within the Palestinian community?

MILLER: The answer is perhaps. But he's going to require an enormous amount of help from the Israelis and the Americans. And this, I think, is the key.

The question about the legitimacy of any of Arafat's successors will come down to this: can he deliver the kinds of political economic and security benefits that the Palestinian public needs in order to get out of the situation that they're in? And to the extent that the government of Israel can facilitate and help that process, and the Americans are prepared to emerge as brokers in this process, I suspect they'll have success.

BLITZER: What was your reaction when you heard Tony Blair yesterday, the British prime minister, say "the" most pressing issue on the international agenda right now was Middle East peace, Israeli- Palestinian peace process? The president, in the news conference just a little while ago, saying it is "a" very important part of the overall agenda, and he said he meant he said it that he was going to try to get peace process -- the peace process going in 2002, when he was in the Rose Garden and delivered that famous declaration, calling for two states, Israel living alongside Palestine?

MILLER: Prime Minister Blair has long been committed to the notion that it's absolutely essential to western interests, British and American interests, that there be a serious pursuit of Israeli- Palestine peace. The Bush administration has adopted a somewhat different approach. But I would argue to you, somewhat counterintuitively, that this second Bush administration may be uniquely positioned to actually do something serious.

Number one, there's no reelection politics to consider. Number two, they have enormous currency in the bank with respect to Israel.

This president has -- has been incredibly sensitive and deferent, frankly, to Israeli security interests. So should this president want to make a withdrawal, figuratively speaking, from the bank, to spend it on Israeli-Palestinian peace, no one would be able to accuse him of being anti-Israel. BLITZER: Sort of just the way Nixon opened the door to China, conservative Republican can do that, an anti-Communist, if you will, in those days. You're saying this president, a second term, would have an opportunity to do what perhaps John Kerry would not have had an opportunity to do?

MILLER: I think that's right with one additional factor. We may over the next 18 months begin to disengage from Iraq. If, in fact, we do, we are going to need another issue with regional resonance on which to reengage. And there is no greater issue with regional resonance than the pursuit of Israeli-Palestinian peace.

BLITZER: Aaron Miller is the president of Seeds of Peace. Thanks very much for joining us.

MILLER: Thank you, Wolf.

BLITZER: We'll continue to watch this story, the situation, the health of Yasser Arafat. More coming up on that.

Also, domestic issues, foreign policy issues and the war on terror all facing the president as he prepares for a second term. But will he or should he do anything differently? We'll talk about that. That's coming up next.

(COMMERCIAL BREAK)

BLITZER: President Bush held his first news conference since being re-elected only in the past hour, laying out some broad goals for his second term. What's he likely to get accomplished in these next four years?

Joining us now, two guests. Melinda Henneberger is a contributing editor of "Newsweek" magazine. CNN political analyst Stu Rothenberg is the editor and publisher of "The Rothenberg Political Report." Thanks to both of you for joining us.

It look like he's got a window right now, Melinda, the president, given the fact that he got a majority of the vote, increases in the Senate, increases in the House. He's got some clout right now to get some agenda items done. What do you think he's going to push out first and foremost?

MELINDA HENNEBERGER, "NEWSWEEK": I don't think we'll see many surprises. He has said that he wants to push on partial privatization of Social Security, on tort reform, and of course he has to begin to address the situation in Iran and North Korea.

But I think really, overall, the most important thing he has to do now is make some conciliatory gestures to, as he said in his speech, bring the country together.

BLITZER: And that means reaching out, bringing in some Democrats, perhaps?

STU ROTHENBERG, CNN POL. ANALYST: Well, there's always talk about that in any administration. Obviously there will be some change at the cabinet level.

But I would simply add, Wolf, that we go into this always assuming that the president's going to set the agenda, and he may have the opportunity. But events may force him to react. If we have a Supreme Court vacancy, he's not able to duck that, and the country will be polarized over that immediately.

So while the president, yes, wants to talk about Social Security, Medicare, tax reform, outside events may force his hand.

BLITZER: When you say the government would be polarized over a surprise court vacancy immediately. Not necessarily. He could reach out and find someone that would be acceptable to both sides.

ROTHENBERG: Well, I'm sure that's a very short list, and it would include somebody that nobody knows. Sure, it's possible, and he might try to reach out to somebody of a particular ethnic background -- Hispanic, African-American -- that might make it easier to reach out. Sure, he could do that. But some issues, some decisions are inherently more ideological and become partisan. I don't think he wants that. I think he wants to be able to reach out, whether it's just rhetorically or on the basis of some issues, but you can't always be certain what's going to be on the front pages tomorrow. You don't know.

BLITZER: Let's play a clip of what the president said in his initial remark. Let's listen to this.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This week, the voters of America set the direction of our nation for the next four years. I'm honored by the support of my fellow citizens, and I'm ready for the job.

We are fighting a continuing war on terror, and every American has a stake in the outcome of this war. Republicans, Democrats, independents, all over our country, and together we'll protect the American people.

(END VIDEO CLIP)

BLITZER: The Democrats right now, they have -- they must be demoralized, they must be depressed. They tasted this victory, they thought they had it, as soon -- even after the polls were closing in some states, they thought they had it, and guess what? They didn't.

HENNEBERGER: Right, right. A lot of people are walk walking around today look like the biopsy just came back positive. And you know, I'm hearing from friends that the parents and pickup line at school are crying, and hugging and really very low, and he really does have to do something to address those feelings of people who feel like they're afraid we're not going to address the root causes of terrorism, their afraid that the message that this sends to the world is that we ratified Bush foreign policy. BLITZER: I got the sense, looking at results together with you, Stu, and everyone else and analyzing them the next day, he did well, John Kerry. He got more votes than Al Gore did, he got a state that Al Gore didn't get, which would be New Hampshire. He got big voter turnout. He got enormous amount of support, but the Republicans did so much better. All that voter registration all and bring out the vote, while it was great on the Democratic side, the Republicans were really amazing.

ROTHENBERG: That's right. We focused on the Democratic 527s, ACT, the Media Fund, we focused on Democratic organizations at the grassroots, younger voters. But the Republicans, you're absolutely right, Wolf, the RNC, the Bush campaign, they were doing the same kinds of things.

I don't think the country has changed fundamentally. This is a president who won this time where he won last time. He got a bigger vote, just as Senator Kerry got a bigger vote. So I'm not sure I expect dramatic changes or believe the country changed dramatically, except in one respect, you have 55 Republican senators now, and that could be a significant change in how the president handles the Senate and what the Senate disposes of.

BLITZER: Because you need 60 to break a filibuster. That's means, assuming all 55 stay, and there's one, Lincoln Chafee, who's a moderate Republican, who may not always go, George Voinovich of Ohio sometimes votes against the party, McCain sometimes does, so the 55 could be a loose 55, but there's no doubt that there are some conservative Democrats, or moderate Democrats, who might be only too happy to join with the Republicans and get to that 60 on critical issues.

HENNEBERGER: Right. And I think the difference in the mood of the country now, compared to four years ago, is that Democrats are not angry as they were then; they're sad. You know, and so I think that they feel open to conciliation.

BLITZER: Because the fundamental fact is that everyone, at least most people believe, this election was free, this was a fair election, there's no question about hanging chads and butterfly ballots and Jewish people in Palm Beach County voting for Pat Buchanan by mistake. There's no question of that.

HENNEBERGER: Right, at least it's clear.

ROTHENBERG: Right, yes.

BLITZER: Which is a major difference than four years ago. I'm going to ask both of you to stick around. We'll continue our conversation on the fallout from the re-election of President Bush. Stay with us.

(COMMERCIAL BREAK)

BLITZER: At his news conference in the past hour, the president issued some promises, issued some items he'd like to see on the agenda in the next four years. He opened up his news conference with a statement. Here's another portion of what he said.

(BEGIN VIDEO CLIP)

BUSH: Congress will return later this month to finish this current session. I urge members to pass the appropriations bill that remain, showing spending discipline while focusing on our nation's priorities.

Our government also needs the very best intelligence, especially in a time of war. So, I urge the Congress to pass an effective intelligence reform bill that I can sign into law.

(END VIDEO CLIP)

BLITZER: We're continuing our conversation with two guests, Melinda Henneberger of "Newsweek" magazine, Stu Rothenberg, our CNN political analyst of "The Rothenberg Political Report."

Spending discipline -- that's something I haven't seen a lot of on the part of Democrats or Republicans the past four years.

HENNEBERGER: Right. I think it remains to be seen what the plan for spending discipline, while we have this level of military spending and the tax break, could possibly look like mathematically. So, that'll be interesting.

BLITZER: You see any evidence that they're going to be spending discipline?

ROTHENBERG: No. So far I have seen no evidence. But I think this is an important issue, because for Republicans and conservatives, in principle this is a big deal. I mean, they want -- everybody wants their individual member to get whatever they can and bring back to the district.

But going into a midterm election -- and it's hard to say, we're already going into the next midterm -- Republicans are very sensitive on this subject. They're a little concern the president hasn't been vetoing spending bills. He needs to show that he cares about spending discipline. Maybe this is a signal, but the guys on the hill have to figure out that spending discipline...

BLITZER: Well, coming up very, very soon is going to be a supplemental budget request for funding troops in Iraq and Afghanistan, reports already suggesting $70 billion, maybe more. That's a lot of change.

HENNEBERGER: Of course, Dick Cheney's remark that Reagan proved that deficits don't matter, we may see that, too. This may just be talk. We'll see.

BLITZER: Do you sense right now, Stu, that this whole notion of Social Security reform, that getting a piece of it to privatize that, that this is an opportunity for him to do that in the sense that he doesn't have worry himself about getting reelected? He can't get reelected anymore, so he has an opportunity in his second term to do things that he might not have been able to do in a first term.

ROTHENBERG: Certainly. I think he's committed to it. He talked about it during the campaign. He said today at the press conference, "You heard me talk about this over and over, I meant it. Now I'm going to push it."

And indeed on the Hill, among many conservatives -- in some conservative circles, you have heard Social Security reform for many, many months. But again, the devil is in the details. It's still a controversial issue.

BLITZER: He can do things that a first-term president who wants to be reelected can't do. He doesn't have to worry about that that much. He wants to make sure Republicans stay in power so he'll be always worried about that.

He also says he wants to simplify the tax code. That's something you increasingly. He even talked about it once again today. A lot of people want to simplify the tax code. Do you think he's got a specific plan in mind?

HENNEBERGER: I don't know, but I certainly think that that would be more possible, that he could find a way to work in a bipartisan way on that issue than on privatizing Social Security. I don't see a lot of people putting their hands up to work with him on that.

BLITZER: Because in the past, simplifying the tax code has been sort of a Ross Perot flat tax or Steve Forbes' make it simple, don't have all of these tax loopholes in there.

You're shaking your head, Stu.

ROTHENBERG: Well, the problem is, you know, it sounds great, we're for simplified everything. The problem is again the details. Simply a tax reform often pits interest groups against interest groups. Many of them are Republican interest groups. And so, you have this -- the idea sounds great, but the specific plan is the one that's harder to figure out.

BLITZER: We only have a little time left, but what was the biggest lesson the Democrats should walk away with from this election?

HENNEBERGER: To me, the most striking thing I heard on Election Day was that 80 percent of those who voted for Bush cited moral values as the number one reason. And I think that people in the opposing party should really be curious about why that is and listen to what that really means, because there's so much moral superiority on both sides that we can't all be morally superiority. I think that's a sign that we need to listen to each other more.

ROTHENBERG: And I would play off that in only a slightly different way. I think the deepest division in the country is not over the war, it's not over taxes, it's over cultural issues. And by campaigning with Hollywood celebrities and thinking you can just say "I have values" -- "Republicans have those, but I have values, too." The Democrats are kind of misunderstanding what this cultural split division is all about.

BLITZER: Stu Rothenberg, thanks very much. Melinda Henneberger, thanks to you, as well.

HENNEBERGER: Thanks.

BLITZER: The decision was close here in the United States. Well, what about reaction across the globe to President Bush's reelection? We'll hear the latest from London.

And we'll also get the latest from Falluja. Coalition forces led by the United States continue to prepare for a possible military offensive. We have new details. They're coming up next.

(COMMERCIAL BREAK)

BLITZER: The world is weighing in on the U.S. presidential election and George Bush's victory. Our Diana Muriel has been checking out European newspaper headlines. She's joining us now live from London. And Diana, what are they saying?

DIANA MURIEL, CNN CORRESPONDENT: Well, Wolf, the idea of four more years of a Bush administration sinking in across Europe with some contentious headlines that have been printed, particularly in the British press.

This is the front page of "The Guardian" newspaper with the line "Four more years," and this is a line that we've seen on most of the newspapers -- the leading newspapers here in Britain, from "The Times," "The Financial Times," to the more right-wing "Daily Telegraph."

"The Guardian," which is a liberal newspaper, though, remember was the one that urged its readers to write to voters in Ohio urging them to vote for the Democratic challenger John Kerry. This was met with a degree of hostility in the United States. "The Guardian" was accused of interfering with another country's election. And its editorial perhaps more apparent on the page of its supplement, which is one big black page with just the words "Oh, God" in very small letters right in the middle of the page. So, a very dramatic headline there from "The Guardian" newspaper.

Now, one of your guests earlier on the program, Wolf, was talking -- Melinda Henneberger was talking about the idea that this result in the United States election -- presidential election meant that there was some sort of ratification of Bush's foreign policies. And that's definitely what has appeared on the front page of "The Independent" newspaper. "Four more years," it say, but it's also lined up there with a series of photographs which indicate issues which are closely identified with the Bush presidency -- the first Bush presidency: Guantanamo Bay, the war in Iraq, Abu Ghraib, and indeed Christian fundamentalism, and the oil market. The oil, of course, still trading at $50 a barrel.

There's a lot of acreage in the newspapers around Europe about what the election result means for other European leaders. Silvio Berlusconi has welcomed it. He's planning to bring in tax cuts. And he has publicly stated that he believed that one of the reasons Bush was re-elected was because of his tax policy. There have been some conciliatory words from the French President Jacques Chirac, and indeed from some German politicians.

But the biggest effect that this election may have would be on Tony Blair. There's been some concern here in Britain as to whether or not it was a good thing or a bad thing that President Bush was re- elected. The consensus seems to be that it was Blair that has done well out of this. He of course faces re-election at some stage early next year. No date for the general election here in Britain has yet been set.

But there was speculation in the newspapers around Europe that this is generally a good thing for Tony Blair. He is identified, of course, with the first Bush presidency, his support for the war in Iraq, which has separated Britain, to some degree, from its European allies. Indeed, Blair was one of the first people to congratulate Bush on his re-election, and indeed, he urged European nations to put aside differences over the Iraq war and work Bush in the new administration.

Lastly, perhaps one of most contentious headlines that we've had here, Wolf, is this one from "The Daily Mirror." This is a picture of George Bush, and the headline, "How Can 59 Million People be so Dumb? " And in very small print next to George Bush's face, the words "no- brainer." Inside it, the editorial says that if people of other nations had been given the chance to vote in the United States election, that he would have lost by a landslide -- Wolf.

BLITZER: Quick question, Diane, were there any newspaper headlines that were pro-Bush, that said something positive about what has happened here in the United States?

MURIEL: Many of them were neutral. "The Daily Telegraph" editorial was very sympathetic. It said that the result of the presidential election meant that democracy cannot be frightened and that Bush can now go forward and finish off the policies that he began in his first administration, and it was a signal to the world that terrorists cannot win out against democracy.

This, of course, was an echo of what happened in the Spanish election. If you remember, there was the Madrid train bombing in March of this year. The government fell in the election then, and the change of government was related to presence of Spanish troops in Iraq, and the new government of Zapataro (ph) removed those troops from Spain. So "The Daily Telegraph" has honed in very much on that, and so have many other newspapers, particularly the "Financial Times," which sees this as a very good result, particularly for the financial market. SO there is some support certainly in Europe for the re- election of President Bush -- Wolf.

BLITZER: Diana Muriel in London, thank you very much for that report.

We're getting a disturbing story in to CNN now here in Washington. Elizabeth Edwards, the wife of the former Democratic vice presidential candidate John Edwards, has been diagnosed with breast cancer the day her husband and Senator Kerry conceded the U.S. presidential contest.

A spokesman said that Mrs. Edwards, who's 55 years old, discovered a lump in her right breast while on a campaign trip last week. Her family doctor -- and I'm reading from an Associated Press story -- told her Friday that it appeared to be cancerous and advised her to see a specialist when she could. According to the story, she put off the appointment until Wednesday -- that would be yesterday -- so as to not to miss the campaign time. Mrs. Edwards had a needle biopsy performed at Massachusetts General Hospital in Boston, where Dr. Barbara Smith confirmed the cancer, this according to David Ginsberg, the spokesman for the Edwards campaign. He said the cancer was diagnosed as invasive ductile cancer. That is the most common type of breast cancer. It can spread from the milk ducts to other parts of breast or beyond.

And I'm, once again, reading this Associated Press story that has just moved. It says more tests were being done to determine how far the cancer has advanced and how to treat it. David Ginsberg saying spirits are high at the Edwards household. I'm quoting now, everybody feels good about it that this is beatable.

Once again, Elizabeth Edwards, 55 years old, has been diagnosed with breast cancer. We'll watch this story for you, get some more information. In the meantime, let's take a quick break.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

We're following a story that has just moved. Elizabeth Edwards, the wife of the former Democratic vice presidential candidate, has been diagnosed with breast cancer. Mrs. Edwards is 55 years old. She discovered a lump in her right breast on the campaign trail last week, and unfortunately, a biopsy performed at Massachusetts General Hospital in Boston has confirmed that she does, in fact, have breast cancer.

Ed Henry, our congressional correspondent, is following this story for us.

What else have you learned?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right, I just got off with a Kerry/Edwards campaign spokesman. He confirmed that in fact she was -- Mrs. Edwards was diagnosed yesterday after the concession speeches from Senator Edwards and Senator Kerry.

As you mentioned, she discovered a lump last week on a campaign trip. She then visited a doctor in Raleigh, North Carolina on Friday. The doctor suspected that it was cancerous, told her to get it checked out. She did have it checked out yesterday afternoon. Unfortunately, it was cancerous. But I can tell you that a Kerry/Edwards spokesman said that the senator and his wife are in very good spirits and they also feel very good that they're going to beat this. That's the quote, "very good that they're going to beat this."

BLITZER: David Ginsberg, was that the person you talked to?

HENRY: That's right, David Ginsberg.

BLITZER: He's been a longtime spokesman for the Edwards campaign, in supported of Elizabeth "is as strong a person as I've ever known. Together our family will beat this." She's a very impressive woman, an attorney in her own right. She's done some pretty remarkable things over the years.

HENRY: That's right. She was very impressive to a lot of Democrats and Republicans when you talk to them, just as Laura Bush has been -- has impressed Democrats, as well as Republicans, with her aplomb on the campaign trail and as first lady. And what they say is that Elizabeth Edwards is a lawyer, is very accomplished, but also has children, older children, as well as younger children that we saw on the campaign trial, and that she has been very accomplished both as a mother, and as a professional in her own right, and that's why, obviously, a lot of sadness right now at the Kerry/Edwards campaign, that she was diagnosed with breast cancer right in the middle of the difficulty campaign itself.

But as I said, David Ginsberg said that everyone involves feels that they're in good spirits and that they're going to beat the cancer.

BLITZER: And I think I speak for all of us here at CNN and certainly all of our viewers when we wish her a speedy recovery, and let's hope she beats this quickly, and she has many, many happy years together with her family and all of us.

Elizabeth Edwards, we wish you only the best.

We wish Ed Henry only the best, too. Thanks for coming in.

HENRY: Thank you.

BLITZER: I'll be back later today, every weekday, 5:00 p.m. Eastern for "WOLF BLITZER REPORTS." We'll take a look at the whole issue of celebrity endorsements. How much of a factor, if any, did they play in this year's election? We'll take a closer look. Our Brian Todd is monitoring that story.

Until then, thanks very much for joining us. I'm Wolf Blitzer in Washington. LIVE FROM with Kyra Phillips and Miles O'Brien will be coming up next. They'll have much more on what's happening with Elizabeth Edwards, and Yasser Arafat's deteriorating health.

Stay with CNN.

(COMMERCIAL BREAK) TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


Aired November 4, 2004 - 12:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: The president of the United States holding his first news conference since being reelected to a second term. The president spending about 45 minutes in the old Executive Office Building, right next door to the White House, answering reporters' questions on a wide range of issues.
A reporter suggesting to the president that Yasser Arafat -- reports of Yasser Arafat being dead. The president said, "God rest his soul."

Unclear at this point what the exact status of Yasser Arafat is. But we do have this reaction from a French official at the hospital near Paris where Yasser Arafat has been.

Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): Mr. Arafat is not dead. I thank you.

(END VIDEO CLIP)

BLITZER: Let's go to Fionnuala Sweeney, CNN's Fionnuala Sweeney. She's outside that hospital in Paris.

A lot of confusion right now, Fionnuala. One television station in Israel saying he's clinically dead, brain dead, denials. We just heard from a French spokesman, denials from Palestinian leaders. What exactly do we know at this point?

FIONNUALA SWEENEY, CNN CORRESPONDENT: Well, we know that after hours of waiting for a much long-promised news conference here, Wolf, what finally happened was the lone figure of one Christian Estripeau (ph), who is a general here in the French Medical Army Corps, who you just heard briefly from, came in front of the microphone and said the situation regarding Yasser Arafat, was "now more complicated."

It appears that yesterday afternoon he was transferred to a specialized unit within the military hospital behind me. And adding afterwards that, "He is not dead." And then, as you saw, he walked away and did not take any questions from journalists.

There has been rife speculation over the last 24 hours as to what exactly has happened to Yasser Arafat. It did appear from the medical update we received on Tuesday that he was doing better, that he was fit enough to undergo even further medical tests to try and make a firm diagnosis as to what ails him.

It appears that after he underwent further tests yesterday, Wednesday, he did not feel well. And that began a sudden deterioration in his condition. And as you say, media speculation rife. And I'm not sure that what Christian Estripeau (ph) had to say here to journalists a few minutes ago will do very much to calm that speculation.

But what we're hearing from Palestinian officials that is he is slipping in and out of consciousness and he is in a critical condition. But even those aides here accompanying Yasser Arafat to Paris are unsure as to his exact medical condition.

It would seem that only a very few people close to Yasser Arafat, including his wife, Suha, are privy to that information. Indeed, sources in Ramallah saying merely throughout the day that he had been sedated. That was the only reason that he wasn't alert or conscious, and sedated only so that further tests could be carried out.

So the only firm, firm statement we have is that statement from Christian Estripeau (ph), saying Yasser Arafat's situation is more complicated. He is not dead -- Wolf.

BLITZER: Fionnuala, stand by. I'm going to get back to you.

The president of the United States at this news conference we just saw live here on CNN, was asked about the reports that Yasser Arafat was already dead. He said, "My first reaction is god bless his soul." He then went on to say, "My second reaction is that we will continue to work for a free Palestinian state that's at peace with Israel."

Our senior White House correspondent, John King, was at the news conference. He's joining us now live from the old executive office building, the Eisenhower Building, right next door to the White House.

John, when the president said that, was he -- was he reacting, do we know, to specific information that he may have that Yasser Arafat might already be dead? Or simply to the reporter's report to him that there are reports Yasser Arafat is dead?

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: They do not know that here at the White House, Wolf. The president, most of his senior staff, including his national security adviser, Condoleezza Rice, were in this room.

Mr. Bush was asked the question, prefaced by the fact that Mr. Arafat was dead. Obviously that is in question at this hour. So he answered the question, assuming that what he was being asked was true.

I leaned forward during the news conference and had a very brief conversation with Condoleezza Rice. She said they simply do not know. And the senior staff here in the front row, including the president's chief of staff and his national security adviser, began exchanging notes. They say they simply do not know. Now, what their further explanation will be as this day goes on is to them -- and they don't mean this coldly, and it might sound cold -- that it doesn't matter. What Mr. Bush has long said is that for there to be an advancement of the Middle East peace initiative, means -- he believes firmly that the Palestinians need new leadership.

Now, the president did say, "God bless his soul," but they say they simply don't know here at the White House. Now that the news conference is at over, obviously they are more at liberty to try to find out any new available information -- Wolf.

BLITZER: The prime minister of Luxembourg has told reporters that Yasser Arafat has died, but that clearly could be reaction to reports. It's unclear exactly what the status of Yasser Arafat is.

Let me just also get you on this point, John. We heard the president say he agrees with Tony Blair, the British prime minister, who said yesterday the most important issue out there right now is to try to get the Israeli-Palestinian peace process back on track. The president didn't exactly say that in his response. He said it was "a" very important issue.

Is there any indication that in this second term the Bush administration is going to become a little bit more actively involved in trying to get peace talks between the Israelis and the Palestinians back on track?

KING: They would like to get more involved, Wolf. And they have said for months they would like to get involved. But they have also said -- and again, it's a delicate issue to discuss at this moment, Mr. Arafat's life hanging in the balance, apparently -- but they have always said that they believe you can only get back involved once the Palestinians have new leadership.

Mr. Bush and Mr. Arafat do not have a relationship. It's not right even to call it a bad relationship. They do not have a relationship.

This president would not speak to Mr. Arafat. He believes he is corrupt, he believe his refuses to make the right decisions to advance the path toward peace, which would be an independent Palestine.

So Mr. Bush has long said he would like to move the diplomacy forward. And he has said periodically that he's willing to lean on Israel, put diplomatic pressure on Israel, to do some things the Sharon government might not want to do. But that he needs first a partner in the Palestinians.

Again, a very delicate issue to discuss at this moment. But Mr. Bush has said months back, when Mr. Arafat's health was not in question, that the only way he could see advancing the process was for the Palestinians to have a new leadership, one that was willing to engage the Israelis, one that was not corrupt, one that was willing to have democratic reforms within Palestine, or the Palestinian Authority now, and put both parties back on the path to peace. A very difficult dilemma for this president. The Europeans long had said he should deal with Mr. Arafat. Mr. Bush has said simply, no, he will not.

BLITZER: I'm going to get back to Yasser Arafat. And clearly, here at CNN, we're going to be following all of these latest developments. The ramifications for the Middle East are serious with Yasser Arafat's health right now hanging in the balance. But let's get to the news conference for a moment, John.

You spent all of that time listening to the president. What have we learned? What did you come away with hearing the president answer questions for the first time since his reelection?

KING: That you have a conservative president who says he has a very activist agenda. Some might find a conflict in there. But this president says he has a very activist agenda. And he says, "I have the capital," meaning the political capital coming out of this election, with a majority win and advances by the Republicans in Congress. And he says he fully prepares to spend it.

What does that mean? That means in January some difficult issues: tax simplification, Social Security reform, some health care provisions that the president advances that are not welcomed by Democrats right now.

Mr. Bush says he's willing to push these items forward. He says he wants to reach out to Democrats. And that will be, essentially, the big challenge.

We know the specifics of many of his policy proposals, and we know the Democrats don't like them. The question now is, how much is Mr. Bush willing to compromise? How far across the aisle are the Democrats willing to reach?

Those will be questions, though, for January and February. The president clearly in high spirits after his reelection victory, and already at work, he says, on a new budget and the state of the union that will come in January.

BLITZER: And he said "I earned political capital," he said, "And now I intend to spend it." On this issue of privatizing or at least parts of Social Security, this is a very sensitive issue that the president was getting at. What specifically do you think in the next four years he would like to do?

KING: Well, what he would like to do first is bring together a bipartisan group to deal with this. It is a difficult issue.

And what he would like to do is lay the groundwork, as he did in the campaign, to try to convince those Americans who are in their late 50s or 60s that nothing will change in terms of their Social Security. But that he would like for the next generation to go to a program where if you are in your 20s or your 30s or your 40s, and you so choose, you can take some of the money you now give the government for Social Security payroll taxes and put it in private accounts, put it a stock account on Wall Street, for example, put it in certificates of deposit.

He would like to lay the groundwork for that in a way that's not frightening politically, if you will, to the American people. And he will need -- first, he will need Democratic votes to get it through the Congress. And then he will need up front a substantial amount of money, some say as much as $2 trillion to pay for the transition.

Where do you come up with that money at the time the government is running record budget deficits and Mr. Bush is promising to cut those deficits in half? So some very difficult choices.

The president acknowledging himself that he cannot get this done without at least modest Democratic support. Most who would believe in the history of changing Social Security would tell you he needs more than modest Democratic support, he needs significant bipartisan support to get it done. It will not be done in the first year of a new Bush term, but he hopes to lay the groundwork to get it done in the second or third year.

BLITZER: John King, stand by. We're going to be getting to you.

As follow these reports of Yasser Arafat's clearly deteriorating health, reports that he has died are being denied by several sources in Paris, as well as elsewhere.

Let's go to Ramallah. CNN's John Vause is standing by there.

John, what are you hearing from Palestinian Authority officials?

JOHN VAUSE, CNN CORRESPONDENT: Well, Wolf, right now we're being told by at least one source, to add more confusion in all of this, that, yes, Yasser Arafat remains alive, but his health has deteriorated to such a point that now what they are being told is that it is impossible for Yasser Arafat to recover. So, in other words, it's now only a matter of time before his end comes.

We also know that there is a lot of urgent meetings under way right now here on the West Bank, and also in Gaza. The heads of all the security forces, the various Palestinian security organizations are meeting in the Muqada (ph), as well as the West Bank, and also in Gaza.

Meetings, too, amongst various militant groups, like Hamas, Islamic Jihad. We're also being told that meetings amongst the Palestinian officials at the highest level are happening right now at Arafat's compound behind me. Just who is meeting with whom we do not know. But there has been a flurry of activity here for the last few hours.

Also, early today, the Fatah party, Yasser Arafat's political party, held an emergency session of the executive committee. And also, the central committee of the PLO also held an emergency meeting for a few hours.

And this morning, the former prime minister, Mahmoud Abbas, who is effectively the highest-ranking Palestinian official in Arafat's absence, he canceled his visit to Paris. He was told by doctors that Arafat is not able to receive visitors.

And we're also being told that the prime minister, Ahmed Qorei, as well as Mahmoud Abbas, are heading down to Gaza tomorrow. That's significant, Wolf, because if Arafat is, in fact, dead, there's a very good chance that he will be buried in Gaza.

This is speculation. They could be going down there to pave the way for what could be Arafat's funeral. But that is just purely speculation at this point. But we do know that they are heading to Gaza sometime tomorrow -- Wolf.

BLITZER: On that point about a burial for Yasser Arafat in Gaza, why Gaza, as opposed to the West Bank or someplace outside of Jerusalem? I know he would like to be buried in Jerusalem, but the Israeli government apparently has made it pretty clear they're not going to let him be buried in Jerusalem. Why Gaza, as opposed to the West Bank, specifically Ramallah, where he's been living for the past several years?

VAUSE: Well, quite simply, Wolf, Arafat was born in Gaza. His father, his mother and his sister are all buried in Gaza in the (UNINTELLIGIBLE) refugee camp area. So that would be a suitable, fitting place for Arafat to be buried, simple as that.

BLITZER: All right. John Vause in Ramallah. We'll get back to you as well.

Andrea Koppel, our State Department correspondent, is monitoring this situation for us.

Andrea, what are you hearing there?

ANDREA KOPPEL, CNN STATE DEPT. CORRESPONDENT: Well, here at the State Department, Wolf, officials telling us that they are equally in the dark as to what the status of Yasser Arafat's health is right now. This morning, at the senior staff meeting that was headed by Secretary of State Powell, he was told by Bill Burns, who is the senior Middle East hand here at the State Department, "Take your pick," that the U.S. was hearing conflicting reports, as we all are, as to whether or not Yasser Arafat is either brain dead, whether he has been slipping in and out of consciousness, or whether in fact he is just deteriorating and still conscious.

So the U.S. is, as we all are right now, in the dark and unsure as to what his status is. What I can tell you is that the State Department last week, when Yasser Arafat was transferred to the Paris military hospital where he is right now, prepared a statement that would be issued in the eventuality that Yasser Arafat does die at some point in the very near future in which the U.S. government would be expressing its condolences to the Palestinian people and would be expressing sorrow at the loss of Yasser Arafat.

It's a very delicate issue, as we heard John King point out there, because the Bush administration has essentially sidelined Yasser Arafat. Unlike Bill Clinton, who met with Yasser Arafat here in the United States both at the White House and at Camp David five times over the course of eight years, President Bush has never met Yasser Arafat, never shaken his hand, and has refused to deal with him.

So it's a delicate diplomatic issue for the State Department because, on the one hand, they want to express sorrow for the man, the loss of the man, if he should pass from the scene, Wolf, who has led the Palestinian liberation movement for over 50 years and who was clearly the symbol of Palestinian nationalism and aspirations for a Palestinian state. But at the same time, recognizing that he is someone that the U.S. believes, as Israel does, that they cannot do business with, that President Bush has called for new leadership to come forward.

So, in addition, Wolf, I can also tell you that it is highly unlikely -- in fact, we could say that is it very unlikely that Secretary of State Powell or Deputy Secretary of State Armitage or any anyone of that stature would be attending a funeral. What I have heard from at least one State Department source is that former President Jimmy Carter would like to attend a funeral, if that happens in the near future, and that he expressed this interest to the White House.

What would happen right now, as far as burial is concerned, the State Department, the Bush administration does not want to get involved, Wolf, with putting forward what it thinks is the right thing to happen as far as where Yasser Arafat should be buried, saying right now that that's up to the Israelis and the Palestinians to decide whether he should be buried in Jerusalem or whether he should be buried in Gaza, where his parents are right now -- Wolf.

BLITZER: Andrea Koppel, at the State Department. Thanks, Andrea, very much.

A spokesman at that Percy military hospital outside Paris where Yasser Arafat has been staying over these past several days issued that statement we heard at the top. Let me just read the words, precisely what he said.

"The clinical situation following the first days after Arafat's admission has become more complicated. The state of health of the patient requires appropriate treatment which necessitated his transfer during the afternoon of Wednesday, November 3, to a unit suitable for his condition."

Clearly deteriorating, though, Yasser Arafat at that hospital. Let's get some analysis of what all this means.

Joining us, Aaron Miller, a former State Department Middle East peace negotiator, now the president of Seeds of Peace, an organization that tries to promote peace, especially among young people in the Middle East.

Thanks very much, Aaron, for joining us.

First of all, I know you're in close touch with Palestinians. Have you heard anything lately in the last hour or two on what's going on?

AARON DAVID MILLER, PRESIDENT, SEEDS OF PEACE: Not on the health situation, no, Wolf. But I saw Arafat about two week ago. And it was clear that his -- he was a transformed man.

I mean, the weight loss was profound, the absence of focus. He need help standing. So whether this is incapacitation long range or he is on the verge of passing, the impact, frankly, is going to be profound.

BLITZER: When the president was asked at this news conference whether he had any comments on reports that Yasser Arafat has already died or at least was brain dead, clinically dead, he said, "God bless his soul. We will continue to work for a free Palestinian state that's at peace with Israel." It's unclear, though, if the U.S. government has additional information based on what we heard from our John King and our Andrea Koppel.

If you were still in the State Department -- and you spent many years there working on peace, met numerous times with Israelis and Palestinians, trying to jump-start the peace process -- what recommendation would you give the president of the United States on who should represent the U.S. at an Arafat funeral?

MILLER: Well, given the administration's determination to exclude Arafat for maybe reasons that were legitimate, maybe not, it's really not an option. They will probably send a low-ranking official, maybe our consul general in Jerusalem, for example. I doubt, frankly, if they'll send anyone from Washington.

If they were interested in sending an unmistakable signal that they did intend to engage seriously with regard to Palestinians and Israelis in a second Bush administration, they might up the -- up the level of representation a bit. But I doubt, frankly, whether Secretary Powell, Armitage or any White House official will attend.

BLITZER: What about this idea that's been floated that the former president, Jimmy Carter, would represent perhaps the United States at that kind of funeral? Jimmy Carter, the father of the Camp David peace process in the late '70s, certainly would be presumably someone who would want to go.

MILLER: Sure. I mean, that would be a way to signal again American interest in commitment to the Palestinian issue and perhaps the possibility of a reinvigorated role.

BLITZER: But Jimmy Carter would only go if he got a green light from the president, based on -- what -- you know how the U.S. government, all U.S. governments work.

MILLER: Well, I'm not entirely sure that's true. I mean, it may well be that former President Carter's commitment to Arab-Israeli- Palestinian peace is so strong that he might feel, if invited, that he should attend regardless of what the administration believed.

BLITZER: All right. Aaron Miller, stand by for a second. We're going it take a quick break. But we're going to continue coverage.

We're following reports out of Paris Yasser Arafat's situation has deteriorated steadily. There have been reports that he has died. Those reports are being denied by officials at that military hospital in Paris, as well as elsewhere among Palestinian Authority figures. We'll continue to watch this story.

We're also watching the fallout on the reelection of the president of the United States.

Much more coverage coming up.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Lots happening here in Washington, around the world, in fact. I'm Wolf Blitzer, reporting.

The president of the United States had a news conference in the past hour, answering a wide range of questions, including reports that Yasser Arafat had died, reports that are now being widely denied, although his situation has clearly deteriorated, suggestions he's in a deep coma right now. We're watching all of these developments.

Joining us, once again, Aaron Miller, former State Department Middle East peace negotiator, now the president of Seeds of Peace, an international organization designed to try to promote peace in the region.

The whole issue of an Arafat funeral, the fallout from that, passions, he's the father, or the grandfather, if you will, of a Palestinian state. What do you anticipate would happen among Palestinians in Gaza and the West Bank?

MILLER: I mean, I'm -- I'm predicting a fairly stable transition. I think the Palestinians will borrow a phrase from Ben Franklin, who said about the British to his revolutionary colleagues, "Either we're all going to hang together or we're going to hang separately."

I think the formal succession process will actually go quite smoothly. Abu Mazen, Abu Allah (ph), will try to maintain the continuity of the Palestinian Authority.

BLITZER: Those are the code names or the nicknames...

MILLER: For Ahmed Qorei and...

BLITZER: Ahmed Qorei, the current prime minister, and Mahmoud Abbas, the former prime minister.

MILLER: Right. I think the real question -- and I think it's important to focus on -- is who in the months ahead will have the legitimacy and the authority to make the kinds of decisions, critical decisions facing the future of the Palestinian people? Who is going to have the authority to deal with, if not confront, Hamas and Jihad? Who is going to have the authority to negotiate with the Israelis? Assuming there are negotiations. Or who would even have the authority to preside as an Israeli partner over a Gaza first withdrawal initiative?

That's the critical question. And you've got a guy who, for more than five decades, has dominated every aspect of the Palestinian national movement. More money, more guns, political authority, more international weight. You have now taken him out of the situation.

BLITZER: And he has never, never set the stage for an heir apparent.

MILLER: No. And charismatic founding leaders often don't. I mean, I think -- by way of perspective, we have seen three transitions over the last five years, and people predicted the worst in each case.

One, Hussein of Jordan, to the son, Abdullah. A second, Hafez Assad, to the son, Bashar. And a third, King Hassan of Morocco, to the son, Mohammed. In each of those cases, the transitions have not only been bloodless, but very smooth and stable.

BLITZER: But in each of those cases, there were states, there were formal governments, there were military, there were police, there were representatives of political factions. Among the Palestinians, there is no state, and there's a wide split right now between Hamas and Islamic Jihad, all of these factions, extremist groups who don't have much loyalty to the Palestinian Authority.

MILLER: Right, and that's precisely the point. I think you're entering terra incognito. I mean, I'm a historian by training. This is one of those historical moments which -- which are going to have profound implications not only for the future of the Palestinian national movement, obviously for the future of the Israeli-Palestinian peace process.

BLITZER: In those three transitions you talked about, in Jordan, Syria, and Morocco, those were transitions from fathers to sons.

MILLER: Yes.

BLITZER: All three of them. As far as I know, Yasser Arafat does not have a son.

MILLER: He has a daughter. And obviously she's not terribly relevant to the...

BLITZER: She's a child.

MILLER: ... to the transition. That's correct.

But as mentioned, I think you're going to be hearing a lot about Palestinian unity. The real issue is not the formal succession process, but the decision-making process behind the scenes, particularly in the next four or five months. Because you've got two other critical points. Number one, you have a second Bush administration that may or may not decide to adopt a more serious and sustained approach to Israeli- Palestinian peacemaking. And you have this historic, bold initiative by the prime minister of Israel on Gaza first. Assuming that's implemented, or if it were to be implemented with a Palestinian partner, Arafat's passing could indeed open up some opportunities for the first time in four years to break this stalemate.

BLITZER: Best case scenario is that Ahmed Qorei, the current prime minister of the Palestinian Authority, he takes charge. He's someone the Israelis say they can deal with. He's someone the Americans say they can deal with.

The question is, do the Palestinians have confidence in him? Can he emerge as a figure to unify all these various factions within the Palestinian community?

MILLER: The answer is perhaps. But he's going to require an enormous amount of help from the Israelis and the Americans. And this, I think, is the key.

The question about the legitimacy of any of Arafat's successors will come down to this: can he deliver the kinds of political economic and security benefits that the Palestinian public needs in order to get out of the situation that they're in? And to the extent that the government of Israel can facilitate and help that process, and the Americans are prepared to emerge as brokers in this process, I suspect they'll have success.

BLITZER: What was your reaction when you heard Tony Blair yesterday, the British prime minister, say "the" most pressing issue on the international agenda right now was Middle East peace, Israeli- Palestinian peace process? The president, in the news conference just a little while ago, saying it is "a" very important part of the overall agenda, and he said he meant he said it that he was going to try to get peace process -- the peace process going in 2002, when he was in the Rose Garden and delivered that famous declaration, calling for two states, Israel living alongside Palestine?

MILLER: Prime Minister Blair has long been committed to the notion that it's absolutely essential to western interests, British and American interests, that there be a serious pursuit of Israeli- Palestine peace. The Bush administration has adopted a somewhat different approach. But I would argue to you, somewhat counterintuitively, that this second Bush administration may be uniquely positioned to actually do something serious.

Number one, there's no reelection politics to consider. Number two, they have enormous currency in the bank with respect to Israel.

This president has -- has been incredibly sensitive and deferent, frankly, to Israeli security interests. So should this president want to make a withdrawal, figuratively speaking, from the bank, to spend it on Israeli-Palestinian peace, no one would be able to accuse him of being anti-Israel. BLITZER: Sort of just the way Nixon opened the door to China, conservative Republican can do that, an anti-Communist, if you will, in those days. You're saying this president, a second term, would have an opportunity to do what perhaps John Kerry would not have had an opportunity to do?

MILLER: I think that's right with one additional factor. We may over the next 18 months begin to disengage from Iraq. If, in fact, we do, we are going to need another issue with regional resonance on which to reengage. And there is no greater issue with regional resonance than the pursuit of Israeli-Palestinian peace.

BLITZER: Aaron Miller is the president of Seeds of Peace. Thanks very much for joining us.

MILLER: Thank you, Wolf.

BLITZER: We'll continue to watch this story, the situation, the health of Yasser Arafat. More coming up on that.

Also, domestic issues, foreign policy issues and the war on terror all facing the president as he prepares for a second term. But will he or should he do anything differently? We'll talk about that. That's coming up next.

(COMMERCIAL BREAK)

BLITZER: President Bush held his first news conference since being re-elected only in the past hour, laying out some broad goals for his second term. What's he likely to get accomplished in these next four years?

Joining us now, two guests. Melinda Henneberger is a contributing editor of "Newsweek" magazine. CNN political analyst Stu Rothenberg is the editor and publisher of "The Rothenberg Political Report." Thanks to both of you for joining us.

It look like he's got a window right now, Melinda, the president, given the fact that he got a majority of the vote, increases in the Senate, increases in the House. He's got some clout right now to get some agenda items done. What do you think he's going to push out first and foremost?

MELINDA HENNEBERGER, "NEWSWEEK": I don't think we'll see many surprises. He has said that he wants to push on partial privatization of Social Security, on tort reform, and of course he has to begin to address the situation in Iran and North Korea.

But I think really, overall, the most important thing he has to do now is make some conciliatory gestures to, as he said in his speech, bring the country together.

BLITZER: And that means reaching out, bringing in some Democrats, perhaps?

STU ROTHENBERG, CNN POL. ANALYST: Well, there's always talk about that in any administration. Obviously there will be some change at the cabinet level.

But I would simply add, Wolf, that we go into this always assuming that the president's going to set the agenda, and he may have the opportunity. But events may force him to react. If we have a Supreme Court vacancy, he's not able to duck that, and the country will be polarized over that immediately.

So while the president, yes, wants to talk about Social Security, Medicare, tax reform, outside events may force his hand.

BLITZER: When you say the government would be polarized over a surprise court vacancy immediately. Not necessarily. He could reach out and find someone that would be acceptable to both sides.

ROTHENBERG: Well, I'm sure that's a very short list, and it would include somebody that nobody knows. Sure, it's possible, and he might try to reach out to somebody of a particular ethnic background -- Hispanic, African-American -- that might make it easier to reach out. Sure, he could do that. But some issues, some decisions are inherently more ideological and become partisan. I don't think he wants that. I think he wants to be able to reach out, whether it's just rhetorically or on the basis of some issues, but you can't always be certain what's going to be on the front pages tomorrow. You don't know.

BLITZER: Let's play a clip of what the president said in his initial remark. Let's listen to this.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This week, the voters of America set the direction of our nation for the next four years. I'm honored by the support of my fellow citizens, and I'm ready for the job.

We are fighting a continuing war on terror, and every American has a stake in the outcome of this war. Republicans, Democrats, independents, all over our country, and together we'll protect the American people.

(END VIDEO CLIP)

BLITZER: The Democrats right now, they have -- they must be demoralized, they must be depressed. They tasted this victory, they thought they had it, as soon -- even after the polls were closing in some states, they thought they had it, and guess what? They didn't.

HENNEBERGER: Right, right. A lot of people are walk walking around today look like the biopsy just came back positive. And you know, I'm hearing from friends that the parents and pickup line at school are crying, and hugging and really very low, and he really does have to do something to address those feelings of people who feel like they're afraid we're not going to address the root causes of terrorism, their afraid that the message that this sends to the world is that we ratified Bush foreign policy. BLITZER: I got the sense, looking at results together with you, Stu, and everyone else and analyzing them the next day, he did well, John Kerry. He got more votes than Al Gore did, he got a state that Al Gore didn't get, which would be New Hampshire. He got big voter turnout. He got enormous amount of support, but the Republicans did so much better. All that voter registration all and bring out the vote, while it was great on the Democratic side, the Republicans were really amazing.

ROTHENBERG: That's right. We focused on the Democratic 527s, ACT, the Media Fund, we focused on Democratic organizations at the grassroots, younger voters. But the Republicans, you're absolutely right, Wolf, the RNC, the Bush campaign, they were doing the same kinds of things.

I don't think the country has changed fundamentally. This is a president who won this time where he won last time. He got a bigger vote, just as Senator Kerry got a bigger vote. So I'm not sure I expect dramatic changes or believe the country changed dramatically, except in one respect, you have 55 Republican senators now, and that could be a significant change in how the president handles the Senate and what the Senate disposes of.

BLITZER: Because you need 60 to break a filibuster. That's means, assuming all 55 stay, and there's one, Lincoln Chafee, who's a moderate Republican, who may not always go, George Voinovich of Ohio sometimes votes against the party, McCain sometimes does, so the 55 could be a loose 55, but there's no doubt that there are some conservative Democrats, or moderate Democrats, who might be only too happy to join with the Republicans and get to that 60 on critical issues.

HENNEBERGER: Right. And I think the difference in the mood of the country now, compared to four years ago, is that Democrats are not angry as they were then; they're sad. You know, and so I think that they feel open to conciliation.

BLITZER: Because the fundamental fact is that everyone, at least most people believe, this election was free, this was a fair election, there's no question about hanging chads and butterfly ballots and Jewish people in Palm Beach County voting for Pat Buchanan by mistake. There's no question of that.

HENNEBERGER: Right, at least it's clear.

ROTHENBERG: Right, yes.

BLITZER: Which is a major difference than four years ago. I'm going to ask both of you to stick around. We'll continue our conversation on the fallout from the re-election of President Bush. Stay with us.

(COMMERCIAL BREAK)

BLITZER: At his news conference in the past hour, the president issued some promises, issued some items he'd like to see on the agenda in the next four years. He opened up his news conference with a statement. Here's another portion of what he said.

(BEGIN VIDEO CLIP)

BUSH: Congress will return later this month to finish this current session. I urge members to pass the appropriations bill that remain, showing spending discipline while focusing on our nation's priorities.

Our government also needs the very best intelligence, especially in a time of war. So, I urge the Congress to pass an effective intelligence reform bill that I can sign into law.

(END VIDEO CLIP)

BLITZER: We're continuing our conversation with two guests, Melinda Henneberger of "Newsweek" magazine, Stu Rothenberg, our CNN political analyst of "The Rothenberg Political Report."

Spending discipline -- that's something I haven't seen a lot of on the part of Democrats or Republicans the past four years.

HENNEBERGER: Right. I think it remains to be seen what the plan for spending discipline, while we have this level of military spending and the tax break, could possibly look like mathematically. So, that'll be interesting.

BLITZER: You see any evidence that they're going to be spending discipline?

ROTHENBERG: No. So far I have seen no evidence. But I think this is an important issue, because for Republicans and conservatives, in principle this is a big deal. I mean, they want -- everybody wants their individual member to get whatever they can and bring back to the district.

But going into a midterm election -- and it's hard to say, we're already going into the next midterm -- Republicans are very sensitive on this subject. They're a little concern the president hasn't been vetoing spending bills. He needs to show that he cares about spending discipline. Maybe this is a signal, but the guys on the hill have to figure out that spending discipline...

BLITZER: Well, coming up very, very soon is going to be a supplemental budget request for funding troops in Iraq and Afghanistan, reports already suggesting $70 billion, maybe more. That's a lot of change.

HENNEBERGER: Of course, Dick Cheney's remark that Reagan proved that deficits don't matter, we may see that, too. This may just be talk. We'll see.

BLITZER: Do you sense right now, Stu, that this whole notion of Social Security reform, that getting a piece of it to privatize that, that this is an opportunity for him to do that in the sense that he doesn't have worry himself about getting reelected? He can't get reelected anymore, so he has an opportunity in his second term to do things that he might not have been able to do in a first term.

ROTHENBERG: Certainly. I think he's committed to it. He talked about it during the campaign. He said today at the press conference, "You heard me talk about this over and over, I meant it. Now I'm going to push it."

And indeed on the Hill, among many conservatives -- in some conservative circles, you have heard Social Security reform for many, many months. But again, the devil is in the details. It's still a controversial issue.

BLITZER: He can do things that a first-term president who wants to be reelected can't do. He doesn't have to worry about that that much. He wants to make sure Republicans stay in power so he'll be always worried about that.

He also says he wants to simplify the tax code. That's something you increasingly. He even talked about it once again today. A lot of people want to simplify the tax code. Do you think he's got a specific plan in mind?

HENNEBERGER: I don't know, but I certainly think that that would be more possible, that he could find a way to work in a bipartisan way on that issue than on privatizing Social Security. I don't see a lot of people putting their hands up to work with him on that.

BLITZER: Because in the past, simplifying the tax code has been sort of a Ross Perot flat tax or Steve Forbes' make it simple, don't have all of these tax loopholes in there.

You're shaking your head, Stu.

ROTHENBERG: Well, the problem is, you know, it sounds great, we're for simplified everything. The problem is again the details. Simply a tax reform often pits interest groups against interest groups. Many of them are Republican interest groups. And so, you have this -- the idea sounds great, but the specific plan is the one that's harder to figure out.

BLITZER: We only have a little time left, but what was the biggest lesson the Democrats should walk away with from this election?

HENNEBERGER: To me, the most striking thing I heard on Election Day was that 80 percent of those who voted for Bush cited moral values as the number one reason. And I think that people in the opposing party should really be curious about why that is and listen to what that really means, because there's so much moral superiority on both sides that we can't all be morally superiority. I think that's a sign that we need to listen to each other more.

ROTHENBERG: And I would play off that in only a slightly different way. I think the deepest division in the country is not over the war, it's not over taxes, it's over cultural issues. And by campaigning with Hollywood celebrities and thinking you can just say "I have values" -- "Republicans have those, but I have values, too." The Democrats are kind of misunderstanding what this cultural split division is all about.

BLITZER: Stu Rothenberg, thanks very much. Melinda Henneberger, thanks to you, as well.

HENNEBERGER: Thanks.

BLITZER: The decision was close here in the United States. Well, what about reaction across the globe to President Bush's reelection? We'll hear the latest from London.

And we'll also get the latest from Falluja. Coalition forces led by the United States continue to prepare for a possible military offensive. We have new details. They're coming up next.

(COMMERCIAL BREAK)

BLITZER: The world is weighing in on the U.S. presidential election and George Bush's victory. Our Diana Muriel has been checking out European newspaper headlines. She's joining us now live from London. And Diana, what are they saying?

DIANA MURIEL, CNN CORRESPONDENT: Well, Wolf, the idea of four more years of a Bush administration sinking in across Europe with some contentious headlines that have been printed, particularly in the British press.

This is the front page of "The Guardian" newspaper with the line "Four more years," and this is a line that we've seen on most of the newspapers -- the leading newspapers here in Britain, from "The Times," "The Financial Times," to the more right-wing "Daily Telegraph."

"The Guardian," which is a liberal newspaper, though, remember was the one that urged its readers to write to voters in Ohio urging them to vote for the Democratic challenger John Kerry. This was met with a degree of hostility in the United States. "The Guardian" was accused of interfering with another country's election. And its editorial perhaps more apparent on the page of its supplement, which is one big black page with just the words "Oh, God" in very small letters right in the middle of the page. So, a very dramatic headline there from "The Guardian" newspaper.

Now, one of your guests earlier on the program, Wolf, was talking -- Melinda Henneberger was talking about the idea that this result in the United States election -- presidential election meant that there was some sort of ratification of Bush's foreign policies. And that's definitely what has appeared on the front page of "The Independent" newspaper. "Four more years," it say, but it's also lined up there with a series of photographs which indicate issues which are closely identified with the Bush presidency -- the first Bush presidency: Guantanamo Bay, the war in Iraq, Abu Ghraib, and indeed Christian fundamentalism, and the oil market. The oil, of course, still trading at $50 a barrel.

There's a lot of acreage in the newspapers around Europe about what the election result means for other European leaders. Silvio Berlusconi has welcomed it. He's planning to bring in tax cuts. And he has publicly stated that he believed that one of the reasons Bush was re-elected was because of his tax policy. There have been some conciliatory words from the French President Jacques Chirac, and indeed from some German politicians.

But the biggest effect that this election may have would be on Tony Blair. There's been some concern here in Britain as to whether or not it was a good thing or a bad thing that President Bush was re- elected. The consensus seems to be that it was Blair that has done well out of this. He of course faces re-election at some stage early next year. No date for the general election here in Britain has yet been set.

But there was speculation in the newspapers around Europe that this is generally a good thing for Tony Blair. He is identified, of course, with the first Bush presidency, his support for the war in Iraq, which has separated Britain, to some degree, from its European allies. Indeed, Blair was one of the first people to congratulate Bush on his re-election, and indeed, he urged European nations to put aside differences over the Iraq war and work Bush in the new administration.

Lastly, perhaps one of most contentious headlines that we've had here, Wolf, is this one from "The Daily Mirror." This is a picture of George Bush, and the headline, "How Can 59 Million People be so Dumb? " And in very small print next to George Bush's face, the words "no- brainer." Inside it, the editorial says that if people of other nations had been given the chance to vote in the United States election, that he would have lost by a landslide -- Wolf.

BLITZER: Quick question, Diane, were there any newspaper headlines that were pro-Bush, that said something positive about what has happened here in the United States?

MURIEL: Many of them were neutral. "The Daily Telegraph" editorial was very sympathetic. It said that the result of the presidential election meant that democracy cannot be frightened and that Bush can now go forward and finish off the policies that he began in his first administration, and it was a signal to the world that terrorists cannot win out against democracy.

This, of course, was an echo of what happened in the Spanish election. If you remember, there was the Madrid train bombing in March of this year. The government fell in the election then, and the change of government was related to presence of Spanish troops in Iraq, and the new government of Zapataro (ph) removed those troops from Spain. So "The Daily Telegraph" has honed in very much on that, and so have many other newspapers, particularly the "Financial Times," which sees this as a very good result, particularly for the financial market. SO there is some support certainly in Europe for the re- election of President Bush -- Wolf.

BLITZER: Diana Muriel in London, thank you very much for that report.

We're getting a disturbing story in to CNN now here in Washington. Elizabeth Edwards, the wife of the former Democratic vice presidential candidate John Edwards, has been diagnosed with breast cancer the day her husband and Senator Kerry conceded the U.S. presidential contest.

A spokesman said that Mrs. Edwards, who's 55 years old, discovered a lump in her right breast while on a campaign trip last week. Her family doctor -- and I'm reading from an Associated Press story -- told her Friday that it appeared to be cancerous and advised her to see a specialist when she could. According to the story, she put off the appointment until Wednesday -- that would be yesterday -- so as to not to miss the campaign time. Mrs. Edwards had a needle biopsy performed at Massachusetts General Hospital in Boston, where Dr. Barbara Smith confirmed the cancer, this according to David Ginsberg, the spokesman for the Edwards campaign. He said the cancer was diagnosed as invasive ductile cancer. That is the most common type of breast cancer. It can spread from the milk ducts to other parts of breast or beyond.

And I'm, once again, reading this Associated Press story that has just moved. It says more tests were being done to determine how far the cancer has advanced and how to treat it. David Ginsberg saying spirits are high at the Edwards household. I'm quoting now, everybody feels good about it that this is beatable.

Once again, Elizabeth Edwards, 55 years old, has been diagnosed with breast cancer. We'll watch this story for you, get some more information. In the meantime, let's take a quick break.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

We're following a story that has just moved. Elizabeth Edwards, the wife of the former Democratic vice presidential candidate, has been diagnosed with breast cancer. Mrs. Edwards is 55 years old. She discovered a lump in her right breast on the campaign trail last week, and unfortunately, a biopsy performed at Massachusetts General Hospital in Boston has confirmed that she does, in fact, have breast cancer.

Ed Henry, our congressional correspondent, is following this story for us.

What else have you learned?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right, I just got off with a Kerry/Edwards campaign spokesman. He confirmed that in fact she was -- Mrs. Edwards was diagnosed yesterday after the concession speeches from Senator Edwards and Senator Kerry.

As you mentioned, she discovered a lump last week on a campaign trip. She then visited a doctor in Raleigh, North Carolina on Friday. The doctor suspected that it was cancerous, told her to get it checked out. She did have it checked out yesterday afternoon. Unfortunately, it was cancerous. But I can tell you that a Kerry/Edwards spokesman said that the senator and his wife are in very good spirits and they also feel very good that they're going to beat this. That's the quote, "very good that they're going to beat this."

BLITZER: David Ginsberg, was that the person you talked to?

HENRY: That's right, David Ginsberg.

BLITZER: He's been a longtime spokesman for the Edwards campaign, in supported of Elizabeth "is as strong a person as I've ever known. Together our family will beat this." She's a very impressive woman, an attorney in her own right. She's done some pretty remarkable things over the years.

HENRY: That's right. She was very impressive to a lot of Democrats and Republicans when you talk to them, just as Laura Bush has been -- has impressed Democrats, as well as Republicans, with her aplomb on the campaign trail and as first lady. And what they say is that Elizabeth Edwards is a lawyer, is very accomplished, but also has children, older children, as well as younger children that we saw on the campaign trial, and that she has been very accomplished both as a mother, and as a professional in her own right, and that's why, obviously, a lot of sadness right now at the Kerry/Edwards campaign, that she was diagnosed with breast cancer right in the middle of the difficulty campaign itself.

But as I said, David Ginsberg said that everyone involves feels that they're in good spirits and that they're going to beat the cancer.

BLITZER: And I think I speak for all of us here at CNN and certainly all of our viewers when we wish her a speedy recovery, and let's hope she beats this quickly, and she has many, many happy years together with her family and all of us.

Elizabeth Edwards, we wish you only the best.

We wish Ed Henry only the best, too. Thanks for coming in.

HENRY: Thank you.

BLITZER: I'll be back later today, every weekday, 5:00 p.m. Eastern for "WOLF BLITZER REPORTS." We'll take a look at the whole issue of celebrity endorsements. How much of a factor, if any, did they play in this year's election? We'll take a closer look. Our Brian Todd is monitoring that story.

Until then, thanks very much for joining us. I'm Wolf Blitzer in Washington. LIVE FROM with Kyra Phillips and Miles O'Brien will be coming up next. They'll have much more on what's happening with Elizabeth Edwards, and Yasser Arafat's deteriorating health.

Stay with CNN.

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