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JUDY WOODRUFF'S INSIDE POLITICS

Bush News Conference; Rep. Pence Sees Conservative Mandate

Aired December 20, 2004 - 15:29   ET

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


(BEGIN VIDEOTAPE)
ANNOUNCER: Donald Rumsfeld, under fire by members of both parties, now attacked for not signing condolence letters for those killed in combat. Will President Bush stand by his man?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I know Secretary Rumsfeld's heart. I know how much he cares for the troops.

UNIDENTIFIED MALE: Do you have a sense of where Osama bin Laden is?

ANNOUNCER: A tough question for the president. We'll tell you how he answered in our "CNN Security Watch."

Other than John Kerry, he was the man most targeted by Republicans. Now, Tom Daschle says goodbye to Congress and its increasingly partisan politics.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: It's very corrosive, very damaging to the political system to see politics get this vindictive.

(END VIDEOTAPE)

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

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

President Bush addressed a wide range of issues this morning in what amounted to a year-end news conference with reporters. Among the many topics, the recurring criticism, some of it coming from Republicans, of Defense Secretary Donald Rumsfeld.

Public opinion appears to illustrate the concern over Rumsfeld's tenure. A new CNN-"USA Today"-Gallup poll finds that 52 percent of those polled think Rumsfeld should resign. Only 41 percent say they approve of the way Rumsfeld is handling his job. That is a steep drop from Rumsfeld's standing just after the invasion of Iraq.

Since April of 2003, his approval rating has fallen 30 percentage points. Rumsfeld's numbers have fallen as views of the situation in Iraq have declined. Forty-seven percent say the situation there has gotten worse in the last year, while just 20 percent say it has gotten better.

CNN White House correspondent Dana Bash has more on Iraq, on Rumsfeld, and other topics in the president's news conference.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): The president was strikingly candid about a problem in Iraq. The effort to build up its Army so American troops can start coming home is not going to plan.

BUSH: I would call the -- the results mixed in terms of standing up, Iraqi units who are willing to fight. There have been some cases where when the heat got on they left the battlefield. That's unacceptable.

BASH: One goal of the end-of-the-year news conference was to talk up Iraq's progress, but he also conceded this about a spike in suicide bombings.

BUSH: No question about it. The bombers are having an effect.

BASH: Mr. Bush stood firmly by his embattled defense secretary whom critics call responsible for Iraq policy failures. Rumsfeld has been most recently under fire for ignoring pleas for more armored vehicles in Iraq and using an auto pen, not his own hand, to sign letters for families of troops killed there.

BUSH: I have seen the anguish in his -- heard the anguish in his voice and seen his eyes when we talk about, you know, the danger in Iraq. You know, sometimes perhaps his demeanor and rough and gruff. But beneath that rough and gruff, no-nonsense demeanor is a good human being.

BASH: The president expressed disappointment but no regret for the ill-fated choice of Bernard Kerik for Homeland Security secretary, offering a veiled nod to critics of the White House vetting process.

BUSH: The lessons learned is to continue to vet and ask good questions.

BASH: Controversy over Kerik and Rumsfeld may already have dimmed the president's post-election glow. A new CNN-"USA Today"-Gallup poll shows his approval rating back below 49 percent, down six points in just a month. Bush aides understand building up his standing is crucial before pushing second-term goals like reforming Social Security. There the president deflected questions on specifics beyond his desire to create private accounts for younger workers.

BUSH: I'll propose a solution at the appropriate time. But the law will be written in the halls of Congress.

(END VIDEOTAPE)

BASH: And Judy, another reason why White House aides know the president has to build back up that support is because he insists he is going to stand by another promise, that is to cut the deficit in half in five years. And in his words today, that will mean a tough budget. Judy, that is Washington code for be prepared for some cuts, some cuts that will make those in Congress and around Washington probably quite unhappy.

WOODRUFF: We're going to hear some squealing when that happens. Dana, some would say the approach the president is using on Social Security is similar to the approach on other domestic initiatives.

BASH: That's right. You know, it was -- it struck me in watching the president today that it seems as though the White House is going to continue the pattern and the strategy that they use during the first term with Congress, talking about Social Security today.

I stopped counting the number of times he refused to answer questions when reporters wanted some specifics about his proposal. He had some principals out there. That is the way this White House has dealt with Congress, by putting out principals on some tough pieces of legislation and then letting Congress get down to the nitty-gritty.

That has led to some frustration, even among Republicans, in dealing with the White House, wanting to know exactly where the president stands. But it also has meant for this White House -- it's meant that it's been easier to claim victory because if you don't give that much up at the beginning about what you want, in the end, whatever you have you can say you are for it and you can claim victory.

WOODRUFF: Dana Bash on a very cold Washington afternoon, but looking warm. Dana, thanks very much.

BASH: Thank you.

WOODRUFF: Well, we asked Americans for their views on Social Security reform and the president's tax cut. It is an even split.

In our new poll on the question of allowing workers to invest part of their Social Security taxes in the financial market, 48 percent say they favor, 48 percent say they oppose. Views on the president's plan are clearly divided by age group. Sixty-two percent of those between the ages of 18 and 29 support the idea, but support declines among older Americans to a low of just 35 percent among those age 65 and over.

As for the president's tax cut, which will expire unless Congress acts to make them permanent, 52 percent say they support keeping the tax cuts while 40 percent say they oppose.

On the "CNN Security Watch," Osama bin Laden was also a topic at today's presidential news conference. A reporter asked Mr. Bush if he had a sense of where bin Laden might be and why the hunt for bin Laden, in the reporter's words, appears to have gone cold? The president said the search for bin Laden is ongoing.

(BEGIN VIDEO CLIP)

BUSH: If I had to guess, I would guess that Osama bin Laden is in a remote region on the Afghan-Pakistan border. But I don't have to guess that the damage we have done to his organization, the -- many of his senior operators have been killed or detained. And al Qaeda is dangerous, no question about it.

But we've got a good strategy. And it's a strategy that requires cooperation with other nations. And the cooperation has been great when it comes to sharing intelligence and cutting off finances and arresting people or killing people. And we'll stay on the hunt.

(END VIDEO CLIP)

WOODRUFF: Our "Security Watch" coverage continues in prime time on CNN's "PAULA ZAHN NOW." At 8:00 p.m. Eastern, "Civil Liberties Restrictions and the Muslim Community." Stay tuned to CNN day and night for the most reliable news about your security.

After 26 years in the House and Senate, Tom Daschle prepares to leave office. I'll talk with the outgoing Senate minority leader about his time in public life and hear his thoughts on the tone of Washington politics.

Some saw one of the president's new cabinet picks as a positive for social conservatives. But our Bob Novak is hearing conflicting reviews.

And later, after a general election, a machinery recount and an almost complete hand recount. The Washington State governor's race could be decided by a court ruling. We'll have a live update from Seattle.

(COMMERCIAL BREAK)

WOODRUFF: Checking the political bites on this Monday. California governor Arnold Schwarzenegger told a German magazine recently that he'd like to see the Republican Party move, "a little to the left." Schwarzenegger says the shift would give the party five percent more votes, "without it losing anything elsewhere."

Incoming Illinois senator Barack Obama has signed a deal to write three books for $1.9 million. Proceeds from one of the books which will be written for children will be donated to charity. Obama, of course, was the keynote speaker at the Democratic convention.

The "Los Angeles Times" reports that relatives of California congresswoman Maxine Waters have earned more than $1 million over the past eight years by doing business with companies and candidates that she has supported. The close financial ties are not expressly prohibited by law. As for her family, Waters told the newspaper, "They do their business and I do mine."

Former Alabama Supreme Court justice Roy Moore is reportedly thinking about running for governor in 2006. Moore, you may recall, was removed from office over his refusal to remove a display of the Ten Commandments from the state judicial building.

Well, one of the top figures in the U.S. Senate will be leaving his post soon after the new year. Minority Leader Tom Daschle lost his seat to Republican John Thune last month. During 26 years in Congress, Daschle was elected and reelected to the House and Senate from South Dakota. In many ways, he swam against the current, winning in a state that has voted for Republicans for president in each election since 1964.

I met with Senator Daschle just the other day and began by asking what happened this year.

(BEGIN VIDEOTAPE)

DASCHLE: Oh, I don't know. I think -- I look back with great satisfaction in the way the campaign played out. I am very proud of the organization.

We set us a goal 190,000 votes and we actually got 193,000. They just did a little better job of turning it out. And, of course, President Bush on the ballot was a big help for them as well.

WOODRUFF: You make it sound very amicable, but it was a tough, tough, campaign. You now have Republicans like Mitch McConnell saying, well, this just proves that obstructionism when it comes to policy isn't good politics, talking about you. And you have Democrats saying, well, Tom Daschle was too nice. He should have been more aggressive in going after John Thune.

Which one was it, do you think?

DASCHLE: Oh, I think that debate will go on for a long time, Judy. My feeling is that -- that you can't have a democracy unless have you a debate. You can't have a debate unless you have opposing points of view. You can't have opposing points of view unless somebody is willing to articulate them.

And as leader I felt very proud of the fact I had that role. Still do. I have no regrets.

WOODRUFF: What about the argument of other Democrats, though, that you weren't tough enough on John Thune?

DASCHLE: On John Thune? Well, I don't believe in getting that nasty, that vindictive. And I don't believe that it's -- it's the way we ought to run campaigns. And so I'll -- I'll accept the consequences because of those beliefs.

WOODRUFF: So if you had to do it over again?

DASCHLE: Absolutely. I wouldn't -- I wouldn't change a thing.

WOODRUFF: It's been reported that you -- well, we know -- let me just put it this way -- it was, what, less than two years ago that you were thinking about running for president of the United States. Here we are less than two years later, Tom Daschle is out of a Senate seat. How has this been for you to deal with personally?

DASCHLE: You know, Judy, it's just politics and life in general has its twists and turns. And you have to be willing to accept them.

I have no regrets. I am so grateful for the 26 years that I have had, the opportunity to live out my passions. And I look at this -- this juncture in my life as a newfound opportunity, a new opportunity to do things that I never thought I maybe would do.

So I don't -- you know, I've -- life has been good. And life will continue to be good.

WOODRUFF: It's been reported that you were called by -- you said you were called by a number of Republican senators to offer their condolences after you lost. But the only one who said you could use his name apparently was Trent Lott. What did the other ones say to you, we're sorry, but don't tell anybody I called?

DASCHLE: That's basically it. They called and said that they wanted to express their -- in some cases, even their apologies for the way the campaigns -- or the campaign was run.

They indicated they enjoyed working with me and said very, very nice things. But then in virtually every case they said, "But please don't say to anyone that we've had these conversations because I would rather not be quoted." So, yes, that was a fairly common comment made by others.

WOODRUFF: What did you think about that?

DASCHLE: Well, I was very grateful for their kind words and for their friendship and the -- just the nice gesture that it represented. I felt badly that there must be this oppressive feeling on the other side for anyone who showed any kindness towards me.

WOODRUFF: What about the partisanship that exists in this town, specifically in the Senate? You made a farewell speech. I gather there were very few if any Republicans even there to hear it. But more broadly, what -- I mean, how partisan is it right now in this...

DASCHLE: Well, it's very partisan, clearly. It's unfortunately too partisan in my view. I talked about the need to find the politics of common ground. I still believe that.

I feel very strongly that it's -- it's very corrosive, very damaging to the political system to see politics get this vindictive. And I worry about where that will all take us at some point.

WOODRUFF: Well, let's be specific. I mean, is this equally shared, Democrats and Republicans? Or are the Republicans mostly -- mostly to blame?

DASCHLE: Oh, I'll leave that to others. My feeling is that we often made overtures and expressed a willingness to negotiate and do things in common with our Republican friends. But oftentimes we just couldn't go where they felt we needed to be in order for our compromise to be reached.

As I said, the politics of common ground cannot be found on the far edges of the political spectrum. And that's where they felt in many cases we needed to be if we're going to reach any compromise at all. WOODRUFF: And last thing, the increased -- the mood in both the House and the Senate on the part of the Republican leadership, clear moves to consolidate their power. You have seen it. You and I were just talking about it in the Senate. We're seeing it in the House on the part of Tom DeLay, in the Senate on the part of Majority Leader Frist. What is your take on that?

DASCHLE: Well, again, I'm very concerned because, you know, this country is reflective only to the extent that the people appreciate the very delicate role they have of managing that power appropriately. The power grabs we have seen in other countries can be very, very damaging to the institutions itself. Power grabs like taking away the filibuster in the U.S. Senate would be a disaster for this country. So I just would caution my Republican friends to be very careful with the power they have.

(END VIDEOTAPE)

WOODRUFF: Some parting words from Tom Daschle, who says he plans to stay in Washington. Not sure yet what he's going to do.

When we return, Bob Novak take as look at a fight that is heating up on Capitol Hill.

And the story of a candidate for political office who has 96 good reasons to smile. Wait until you hear her story.

(COMMERCIAL BREAK)

WOODRUFF: Bob Novak joins us now from the "CROSSFIRE" set at George Washington University here in Washington with some "Inside Buzz."

So, Bob, what are you hearing is going to be the hot issue when Congress comes back to town next month?

ROBERT NOVAK, CO-HOST, "CROSSFIRE": An issue, Judy, that they have been trying to avoid and have avoided for years, immigration. But Chairman Jim Sensenbrenner of the House Judiciary Committee was unable to get immigration restrictions into the intelligence reform bill.

Speaker Hastert promised he would take it up. They will take it up, including restrictions on drivers' licenses that were used, of course, by illegal aliens in the 9/11 attacks.

The problem is that a lot of people on the Hill feel the White House is not anxious for this bill because they did so well with the -- President Bush did so well with the Hispanic vote in the last election. May not want to seem tough on immigration.

WOODRUFF: So, Bob, originally, when -- another subject -- when President Bush picked Mike Leavitt, the former governor of Utah, to run Health and Human Services, it was reported the conservatives were pleased. Now what are you hearing?

NOVAK: Wrong. It was absolutely wrong. The social conservatives say that Mike Leavitt is worse than Tommy Thompson on social conservative issues, including abortion restrictions. Mike Leavitt had a bad record, it seems, on pro-life issues when he was governor of Utah before he became EPA director. Of course he will be confirmed, but you may have some testimony against Leavitt from social conservatives in the confirmation hearings. The White House would like to avoid that.

WOODRUFF: OK. Separately, on the Hill, a battle over a very important committee in the House.

NOVAK: House Appropriations Committee, the most important committee for the members because that's where the money comes from. A battle between Jerry Lewis of California and Ralph Regula of Ohio.

Regula has the seniority, but Lewis may have the votes on the House Steering Committee. Jerry Lewis was an up-and-coming guy about 14 years ago, going to the top of the leadership. And somebody named Newt Gingrich intervened, put in Dick Armey and defeated him for House Republican conference chairman.

Lewis buckled down in the Appropriations Committee, worked his way up. And the question is, will Lewis be as cooperative with the leadership as Regula is? Perhaps. I don't think he's one of Speaker Hastert's favorite. Whether Hastert intervenes or not, we don't know.

WOODRUFF: But we'll see about that I guess in the next couple of weeks.

Bob, finally, retiring Republican Senator Don Nickles of Oklahoma. What are you learning about what he's doing next?

NOVAK: I have learned that Covington & Burling, one of the big famous law firms in Washington, has in signed up Senator Nickles. And they're pleased as punch.

They signed him up for the Government Affairs Office. You know what government affairs is? That's lobbying. And when you can get the former chairman of the Senate Budget Committee, former majority whip of the Senate, you have done well.

That's the revolving door in action. So congratulations to Senator Nickles for a big paying job, and congratulations to Covington & Burling for getting a big mover and shaker.

WOODRUFF: And we say congratulations to Bob Novak for being with us again today. Bob, thanks very much. And we'll see you at 4:30 Eastern on "CROSSFIRE."

NOVAK: Thank you, Judy.

WOODRUFF: Thank you.

Well, reelection this week should be a breeze for a woman named Dorothy Geeben. The 96-year-old mayor of Ocean Breeze Park, Florida, just might be the nation's oldest mayor. No one has run against Geeben, who has lived in the retirement community 100 miles north of Miami for more than 50 years. Experience counts, you see, in Ocean Breeze Park. The average age of elected officials there is 79.7 years.

I guess that's what you call job security.

Will President Bush get his way on Capitol Hill? It may not be just Democrats who stand in his way. Coming up, my conversation with a top House conservative Republican, and where he agrees and disagrees with the president.

And later, do you say "Merry Christmas" or "Happy Holidays?" Well, it may depend on if you are a Democrat or a Republican.

(COMMERCIAL BREAK)

WOODRUFF: It's a little before 4:00 on the East Coast. And as the markets get set to close on Wall Street, I'm joined by Kitty Pilgrim. She's in New York with "The Dobbs Report."

Hello, Kitty.

KITTY PILGRIM, CNN CORRESPONDENT: Hi, Judy. Thanks.

Well, stocks ended, little change, even though there was some positive economic news. Now, first off, there was a drop in oil prices. And also the conference boards index of leading economic indicators rose two-tenths of a percent in November. That was a positive because it ended a streak of five straight declines.

As the final trades are still being counted, the Dow industrials are adding about 14 points, 14.5. The Nasdaq is down a little bit less than one percent.

Shares of Pfizer lost another five percent today. That's on top of Friday's 11 percent selloff. And that, of course, because last week a government-sponsored study showed Celebrex was associated with increased risk of heart attacks.

Today the FDA forced the drug maker to stop advertising the drug. Pfizer says its Celebrex is safe. It continues to say that and plans to continue selling it. Pfizer says doctors and patients will still want to use it because it's effective.

Well, the holiday shopping season turning out to be a bit of a bust, at least so far. This past Saturday it was supposed to be the biggest shopping day of the year. But it wasn't as good as expected. According to ShopperTrak, retail sales that day actually fell seven percent compared to the same Saturday last year.

Now you've probably heard the saying the bulls are running on Wall Street. That means investors are making money in the stock market. Well, there is a famous bronze bull sculpture that is a popular tourist attraction in lower Manhattan. And the artist is hoping to take the money and run. The bull is being auctioned off starting today. Don't worry, this bull isn't leaving its pasture near Wall Street. It weighs nearly 7,000 pounds. The winner of the auction will get a tax break and can put their name on a plaque next to the bull. The organization handling the sale says it expects the bidding to start at $5 million.

Coming up on CNN, 6:00 p.m. Eastern tonight on "LOU DOBBS TONIGHT," we'll kick off our series of special reports "Holiday Homefront." And we'll tell you about ways Americans are sending holiday cheer to U.S. troops serving abroad.

Plus, Senator Carl Levin, the ranking Democrat on the Armed Services Committee, will join us. Senator Levin just returned from visiting American troop in Iraq.

And then, a deeper look into the U.N.'s oil-for-food scandal. All that tonight, 6:00 p.m. Eastern. And now back to Judy Woodruff in Washington -- Judy.

WOODRFUFF: Kitty, thanks very much. And we will see you at 6:00.

INSIDE POLITICS continues right now.

(BEGIN VIDEOTAPE)

ANNOUNCER: Another very violent weekend in Iraq.

BUSH: No question about it, the bombers are having an effect.

ANNOUNCER: So what do Americans think of the situation?

Nearly seven weeks after election day and one state still doesn't know who will be its next governor.

UNIDENTIFIED MALE: We're talking at the finest of margins here. This may be settled by single digits.

ANNOUNCER: Will the winner be decided by the voters or in court?

BUSH: Good morning and happy holidays to you all.

ANNOUNCER: Is saying merry Christmas no longer P.C.? Is a happy holidays greeting safer? What do you think? We'll unwrap our Christmas poll.

Now, live from Washington, Judy Woodruff's INSIDE POLITICS.

(END VIDEOTAPE)

WOODRUFF: Welcome back. As we approach the end of the year and as Americans take stock of their president and his policies, George W. Bush's approval rating has fallen slightly since election day. 49 percent say they approve of the way Mr. Bush is handling his job, down from 55 percent shortly after he was re-elected. The situation in Iraq and the increased criticism of Defense Secretary Donald Rumsfeld could be reasons for the decline in presidential approval.

Our senior political analyst Bill Schneider has more on the latest results in our CNN/"USA Today"/Gallup poll.

(START VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): Second honeymoons are nice but President Bush isn't getting one. One month after winning re-election, Bush's job approval has dropped below 50 percent. Did other re-elected presidents get a second honeymoon?

Bill Clinton got one, 58 percent job approval after he got re- elected in 1996. Ronald Reagan, 59. Richard Nixon, also 59 percent. Lyndon Johnson? 69. The greatest love affair on a second honeymoon? Dwight Eisenhower, 79 percent. What's the difference with Bush? The answer is Iraq.

SEN. CHUCK HAGEL, (R) NEBRASKA: The fact is we're in more trouble in Iraq today than we've ever been in. We're putting 12 to 15,000 new troops there. We've got 1,300 people killed.

SCHNEIDER: Senator Hagel's exasperation is shared by most Americans. Last January, 60 percent of the public approved of the way the U.S. was handling the situation in Iraq. That number is down to 39 percent. Nearly 60 percent now disapprove of U.S. Iraq policy.

BUSH: The bombers are having an effect. You know, these people are targeting innocent Iraqis. They're trying to shape the will of the Iraqi people and frankly, trying to shape the will of the American people.

SCHNEIDER: The insurgents may be succeeding. In January, 63 percent of the public thought the U.S. decision to go to war with Iraq was right. A majority now says it was wrong. Secretary of Defense Donald Rumsfeld is an architect of U.S. policy in Iraq.

Look at what's happened to Rumsfeld's job ratings. In April 2003, just after Saddam Hussein was overthrown, Rumsfeld got a 71 percent vote of approval. By October, it was down to 58. In May of this year, 46 percent. And now, just 41 percent approve of Rumsfeld.

SEN. JOE BIDEN, (D) DELAWARE: I think the policy has to change. Secretary Rumsfeld seems reluctant to change the policy.

SCHNEIDER: Rumsfeld should go, most Americans feel. 52 percent now say Rumsfeld should resign as secretary of defense.

(END VIDEOTAPE)

SCHNEIDER: Is there any good news for President Bush? Well, yes. 77 percent of Americans believe President Bush won the election fair and square and 60 percent of Democrats agree. The holdout? Well, one-third of Democrats believe Bush won only because of fraud or other illegal means -- Judy.

WOODRUFF: Hmm. Now, Bill, a question about the president's approval rating. It is down slightly from what it was after the election. But it was also down from that before the election, right?

SCHNEIDER: That's right. Before the election President Bush went into his re-election campaign not in the strongest shape as most presidents facing re-election who have actually won. He was just above 50 percent, which is the break-even point. And he won very, very narrowly. The official count is 51 to 48 percent. So therefore, you know, he wasn't in such good shape before the election and really could have gone either way. And now he slipped a little bit below that.

WOODRUFF: Bill, a subject that I know we've discussed before, certainly before and since the election. And that is people's disapproval of the way things are going in Iraq. What's your sense of why that didn't translate into more problems for the president in the election?

SCHNEIDER: Well, I would -- I put it this way. He won the election in spite of people's reservations about his Iraq policy, not because of Iraq. It was not a vote of endorsement of his Iraq policy. He won because of another related but separate issue to most Americans, and that's security, terrorism. Americans gave him very high ratings as someone who would protect the United States from terrorists, but rather low ratings on his handling of Iraq. To Americans, they were very, very different issues and Iraq was not a plus for this president's re-election campaign.

WOODRUFF: And it appears those Iraq numbers continue to slide.

SCHNEIDER: They certainly do.

WOODRUFF: Bill Schneider, thank you very much. We appreciate it.

SCHNEIDER: Sure.

WOODRUFF: Thank you.

Well, the American people appear to have their doubts about whether the planned Iraqi elections will result in a stable Democratic government. In our new poll, 41 percent say no, the vote will not produce a stable government. 40 percent say yes. But they say that U.S. troops will have to remain in the country at the current level. The latest violence in Iraq only adds to the concern about next month's vote.

These disturbing images were taken by an A.P. photographer, who witnessed this attack on three election workers yesterday in Baghdad. Armed insurgents executed the three in a daylight attack after ambushing their car. The executions are the latest attacks against Iraqi election workers who are trying to organize next month's vote.

It is almost Christmas and Washington state residents still don't know who their next governor will be. Straight ahead, the race is before the state supreme court. We'll have a live report from Seattle. The Republicans have tightened their grip on Capitol Hill. Is that automatically a good thing for the White House agenda? I'll ask GOP Congressman Mike Pence.

And is it merry Christmas or happy holidays? The president made his choice today. We'll check our new poll and we'll tell you what most Americans prefer to say.

(BEGIN VIDEO CLIP)

BUSH: Good morning and happy holidays to you.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

WOODRUFF: The Republican president and the Republican controlled Congress could face some large challenges on some issues from within the party in next year's session. I spoke with conservative Republican Congressman Mike Pence just a couple of hours ago. He has said the election was a mandate for conservative leadership in Washington.

So I asked him whether that agenda is the same as President Bush's.

(BEGIN VIDEOTAPE)

REP. MIKE PENCE (R), INDIANA: I think in most respects it is, Judy. I think that the broad mainstream of conservative Americans said yes to the leadership of George W. Bush on national security, on tax relief and in a very broad sense on his domestic agenda that puts such a primacy on the family and traditional values.

WOODRUFF: Let me tick off a couple of things that he has talked about. What about tax reform? He's talked about -- we don't have many of the details yet but a lot of speculation about a national sales tax, some sort of consumption tax. Is that something that appeals to you?

PENCE: Well, I think so. And across heartland America there's no more anxious time than at the kitchen tables in millions of American homes leading up to that April deadline, to file our taxes. You're running a calculator. You're looking at this extraordinarily complex tax code and trying to figure out exactly what your tax indebtedness is. I think the idea of tax simplification and tax reform is enormously appealing to average Americans and I'm delighted to see the president leading on that issue.

WOODRUFF: The proposed amendment to ban gay marriage, constitutional amendment, does this have better prospects this year than it did last year in the Congress?

PENCE: Oh, I don't think there's any question that the defense of traditional marriage will be a centerpiece of the debate on Capitol Hill. And now with at least seven new sympathetic members in the United States Senate, along with a strengthened majority in the House of Representatives, I believe we'll have greater success. Whether we achieve that constitutional super majority necessary to send the issue of the federal marriage amendment to the American people is yet to be seen. But we'll move on the bill. We'll move on it aggressively, and with the president's leadership I believe we'll make significant gains toward defending marriage traditionally defined.

WOODRUFF: What about in those areas where you and the president differ, for example, Medicare reform. You have -- you very strongly feel apparently that that should have been limited to the neediest seniors. How will that move ahead, given what the White House has said that it supports?

PENCE: Well, the only place that conservatives in the Congress and frankly around America have been disappointed in last four years has been in the areas where this administration has pursued initiatives in education and the Medicare entitlement that have failed to reflect our party's deep commitment to limited government, to the idea that government that governs least governs best. The idea that there are certain functions that belong, like our local schools and public safety, best done at the local level.

And in those areas, there will be, I believe, a concerted effort in the Congress to re-limit both education policy and Medicare policy along the lines of fiscal responsibility and the principles of limited government.

WOODRUFF: Don't you assume the White House, though, is going to fight this?

PENCE: Well, I do. There is an old saying in NASCAR that rubbing is racing. And there will probably be a little bit more fender-rubbing between the White House and House conservatives in the second term than maybe what was evident in the first. But I think that's healthy for the country. I really believe this president is in his heart a conservative. I believe he will continue to respect and appreciate the efforts of those of us in the Congress that want to see those policies, which are closest to the family.

What we do with the health benefits for our seniors, what we do with our local schools, are the most meaningful to the American family and therefore the most meaningful to conservatives. And this president, I think, is going to listen to House conservatives in the next term about that.

WOODRUFF: But you're going up against a president who was just re-elected, 51 percent of the vote. It was a close election. But, you know, his argument is he has a mandate to do what he wants to do.

PENCE: Well, and I think he does. I don't think there's any question that a 3 million vote plurality was a mandate for this president. But like so many millions of Americans, I believe it was a mandate for conservative leadership in Washington, D.C.

WOODRUFF: What does that say in terms of the deficit, in getting spending down? PENCE: Well, it means we've got some hard choices, Judy. This Congress has got to look at the federal budget, sharpen our pencils, pull down our green eyeshades and put our fiscal house in order.

WOODRUFF: To get that deficit down even if it involves butting heads from time to time with the White House in terms of priorities?

PENCE: Well, it does. I think there's no question that there's a great deal of affection and respect for this president on Capitol Hill. But I also believe that there are just as many people on Capitol Hill as there are in the White House who are committed to making the tough choices.

(END VIDEOTAPE)

WOODRUFF: Indiana Republican Congressman Mike Pence who said he believes that among the first piece of business that Congress will get done in January is legal reform limiting medical lawsuits.

The governor's race in Washington State seems like the election that just will not end. A solution may be closer as the state's supreme court gets involved. An explanation when we return.

(COMMERCIAL BREAK)

WOODRUFF: Now the latest in the very complicated governor's race in Washington state. The state supreme court is getting involved and will decide whether hundreds of disputed votes should be included in a lengthy hand recount in King County. Kimberly Osias is in Seattle with the latest.

(BEGIN VIDEOTAPE)

KIMBERLY OSIAS, CNN CORRESPONDENT (voice-over): It's been a legal and political nightmare. Almost seven weeks after election day and the governor seat hinges on another recount and court challenges. The official number that separates the two candidates is only 50 votes. The current governor-elect Republican Dino Rossi has won both the original vote and the first recount but Democrats say it's not over yet. They're exercising a constitutionally allowed second recount. This one by hand. Hoping to tip the scale in their favor.

But another twist. 723 newly found ballots from King County that weren't counted in the original tally. Nor in the first recount. Those may be critical votes in the Democratic stronghold that could swing the race in challenger Christine Gregoire's favor, away from the Republicans.

KIRSTIN BROST, WASHINGTON STATE DEMOCRATS: They would rather see hundreds of voters disenfranchised than to see the possibility of them losing their campaign.

OSIAS: Last week a superior court judge said those uncounted ballots should remain uncounted. Democrats are appealing that decision to the state supreme court, so is King County. Officials here admit error. DEAN LOGAN, KING CO. ELECTIONS BOARD: There were mistakes that were made in this election process.

OSIAS: Human error. When a computer failed to read hundreds of signatures, instead of doublechecking with hard copies on file, workers say they put them aside, uncounted. County officials believe they have the duty to right a wrong. The state supreme court is expected to hear arguments mid-week. Meanwhile, Republican governor- elect Rossi says he plans to take office in January. He's already working on his transition team.

MARY LANE, WASHINGTON STATE REPUBLICANS: Dino feels he's governor-elect and he's confident if this recount is conducted legally and fairly and honestly he will be confirmed a third time as governor- elect.

(END VIDEOTAPE)

OSIAS: It is in this very room where that decision is being worked on. We're in Washington state's King County where some 900,000 votes are being reconciled. At each table you can tell there is one Republican, one Democrat, also a county worker. As you can see it is a very open and transparent process. The public is invited to watch the proceedings. But there are some strict rules that apply. You can't have any white paper. Only colored paper because it may confuse the counters. You also can't have any colored pens. You can only have green. And you definitely can't count out loud -- Judy.

WOODRUFF: Whoa. So Kimberly, this could come down to those 723 misplaced ballots that are now found. If it ends up in the hands of the state supreme court people want to know what is the political makeup of that court?

OSIAS: You know, Judy, that's a very good question. And a very, very important point. Those judges are nonpartisan, that is how they are elected. But the reality of this matter is that Washington state swings very, very blue. In fact, there hasn't been a Republican governor just about 20 years.

WOODRUFF: OK. Kimberly Osias watching it all. Thank you very much. We appreciate it.

OSIAS: Thank you.

WOODRUFF: So, have holiday greetings become too politically correct? We'll see what most people, including the president, say. INSIDE POLITICS returns.

(COMMERCIAL BREAK)

WOODRUFF: This holiday season we have a question for you. Should the more politically correct "happy holidays" be used as a season greeting rather than "merry Christmas?" Our new CNN/"USA Today"/Gallup poll found 56 percent say they would use merry Christmas to greet someone they had just met. 41 percent went with happy holidays. The poll did find a difference along party lines. 71 percent of Republicans would say merry Christmas. 25 percent would use happy holidays. Only 44 percent of Democrats went with merry Christmas. 54 percent favored happy holidays. So get this, at this morning's news conference, President Bush went with the more P.C. choice.

(BEGIN VIDEO CLIP)

BUSH: Good morning and happy holidays to you all. I truly wish everybody a happy holidays.

(END VIDEO CLIP)

WOODRUFF: So we'll have to think about that for a few days and figure out what it means. That's it. I'm Judy Woodruff. Thank you for joining us. "CROSSFIRE" starts right now.

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