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JUDY WOODRUFF'S INSIDE POLITICS

Social Security Hard Sell; Sparring on the Hill; Donnie Fowler Still in DNC Race

Aired February 3, 2005 - 15:29   ET

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


(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Mr. Speaker, the president of the United States.

ANNOUNCER: From the halls of Congress, into the heartland, President Bush tries to sell Americans on Social Security reform.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I believe the role of a president and I believe the role of a Congress is to confront problems and not pass them on to future generations.

ANNOUNCER: The Democrats have their own post-State of the Union pitch, accusing the president of creating a Social Security crisis.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: This president has banged holes into the roof and now says we're in danger of a storm and rain coming in.

ANNOUNCER: A time for reflection. Did Mr. Bush give Christian conservatives anything to celebrate last night?

(END VIDEOTAPE)

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

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

President Bush may be done running for office, but one of his toughest campaigns yet now is under way in earnest. Mr. Bush is out stumping for his Social Security reform plan a day after using his State of the Union address to fill in a few of the blanks. The president is making his way through the great plain states. He'll wind up in Nebraska tonight.

Our White House correspondent Dana Bash is standing by for -- she's been covering the president in Omaha.

Hi, Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: That's right, just when you thought the campaign season is over, here we go again. But if you take a look at where the president is going, it's a very different set of states than what we saw during the fall. Look at his itinerary. First of all, he did start in Fargo, North Dakota, then on to Great Falls, Montana, here to Omaha, Nebraska, tonight, and then tomorrow then on to Little Rock, Arkansas, and Tampa, Florida. Now, what do all of those states have in common? Well, they're the home states of what the White House hopes will be the most persuadable Democrats to go along with his plan to create private accounts for Social Security.

Now, one way that the White House hopes to give Republicans in Congress some of the political cover that they've been asking for is to get Democrats on board with this idea. So he's trying to pressure key Democrats, especially those up for reelection in some conservative states.

This morning, Mr. Bush flew to North Dakota with Democratic senator Kent Conrad. He is described by his office as skeptical to the president's idea for reforming Social Security, but here is a taste of what he heard from the president.

(BEGIN VIDEO CLIP)

BUSH: Why it's a good deal for younger workers is, is because it compounds at a rate of interest faster than your own -- than the money inside the Social Security trust. I mean, you start setting aside money at a young age, it grows over time.

It's your money. It's money that you can decide to leave to whomever you want. It's money that the government can never take away.

(END VIDEO CLIP)

BASH: Now, that's a message that the White House is hoping will have a lot of appeal, especially here in the conservative Midwest. But there are some forces that are trying to oppose the president.

There have -- they have their own campaign, the AARP, for example. We know they're here in Nebraska. They are putting out word that the president's plan is something that he's trying to make something out of more than it is, saying that there isn't necessarily that big of a crisis, what we've heard from Democrats.

The AARP is also putting out word that they have to realize here in Nebraska that there will be some benefit cuts. That, of course, Judy, is a big question we don't know the answer to as to what kind of cuts some of the beneficiaries will see in the future.

It is worth noting, Judy, that this home state senator, Senator Ben Nelson of Nebraska, will appear with the president tomorrow morning. He is somebody who has been very careful not to say he is either for or against the president's plan at this point.

WOODRUFF: So some Democrats showing up with the president. Others deciding not to, or not being invited to. All right, Dana, thank you very much.

BASH: Thank you. WOODRUFF: The president is taking pains to try, as you just heard from Dana, to try to reassure older Americans that their Social Security benefits are not at risk. In his speech last night, Mr. Bush said his plan would only affect those born in 1950 or later. It would be voluntary and it wouldn't begin until 2009.

Only younger workers would be able to invest up to 4 percent of their wages in private accounts. He proposed their guaranteed benefits would be reduced. Mr. Bush said the transition would cost the governor over $750 billion. Now, many congressional Democrats do not find the details of the president's plan reassuring.

CNN's Joe Johns reports on the sparring on the Hill.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Democrats erupted Wednesday night when the president asserted that Social Security is going broke.

BUSH: By the year 2042, the entire system would be exhausted and bankrupt...

(BOOING)

BUSH: ... if steps are not taken to avert that outcome.

JOHNS: Thursday morning, a reaction from Republican Senator Robert Bennett.

SEN. ROBERT BENNETT (R), UTAH: And I've never heard that in all of the State of the Union messages I've ever heard.

JOHNS: But the battle over Social Security is only beginning, with the president taking his case straight to the Democrats. Senator Byron Dorgan of North Dakota responded to the president's visit to his state with TV interviews and a news conference.

SEN. BYRON DORGAN (D), NORTH DAKOTA: I really don't support that. I think that's the wrong approach for this country.

JOHNS: Meanwhile, Dorgan's Democratic colleagues were invoking the name of the president in power when Social Security became law, an in-your-face response to Mr. Bush delivered at a memorial to Franklin Roosevelt in Washington.

SEN. CHARLES SCHUMER (D), NEW YORK: We are here by FDR's statue because we believe that Social Security is the greatest government program of the 20th century and that we ought to keep it, not gut it.

JOHNS: The Senate Democratic leader and some of his colleagues were drawing a line in the sand.

SEN. HARRY REID (D-NV), MINORITY LEADER: We cannot work together to strengthen Social Security until the president abandons his plans for deep benefit cuts and massive debt increases. JOHNS: There was more. A letter to Mr. Bush signed by 43 Democrats, plus Independent Jim Jeffords, quoting the bible and posing Social Security as part of the debate over values. "In our view, shifting financial obligations of this magnitude to future generations is immoral, unacceptable and unsustainable."

Ben Nelson of Nebraska was the only Democrat in the Senate who did not sign the letter. On the House side, the Democratic Congressional Campaign Committee posted a page on its Web site inviting readers to visit the president's, "state of delusion." House Minority Leader Nancy Pelosi was on the attack.

PELOSI: This a crisis of his own making so that he can have his preordained idea about privatization which undermines Social Security, which takes a guaranteed benefit into a guaranteed gamble.

(END VIDEOTAPE)

JOHNS: Now, the office of Senator Ben Nelson, who did not sign the Democrats' letter today, told CNN that, in his view, he doesn't want to make a commitment to anything right now. He's not a "yes" vote or a "no" vote for the president's plan, but he does want to see the president's plan on paper and all the calculations.

Nonetheless, as Dana noted earlier, Senator Nelson is expected to appear at that event in Nebraska with the president tomorrow -- Judy.

WOODRUFF: So we know, Joe, he's going to be hearing the president's arguments firsthand?

JOHNS: That's certainly true.

WOODRUFF: OK. Joe Johns at the Capitol. Thank you very much for that fine reporting.

Also on the Hill, two cabinet confirmation votes still are pending. The full Senate is expected to confirm Alberto Gonzales as the nation's first Hispanic attorney general later today. The only real suspense, just how many "no" votes will he get from Democrats who have questioned Gonzales' views on torture and on the treatment of foreign detainees?

Michael Chertoff's nomination to be Homeland Security secretary has faced similar controversy but he is expected to be confirmed anyway. A Senate committee vote on Chertoff is likely to happen on Monday.

Across America, people who watched President Bush's speech last night are, by and large, giving it good reviews. Sixty percent say they felt very positive about the speech, 26 percent somewhat positive, 13 percent negative. But it is important to note that Republicans outnumbered Democrats 2-1 among those who watched the speech, and they were surveyed for our poll. The president did get higher marks from viewers this year than he did for his past two State of the Union addresses. Public reaction last night may have been enhanced by this unforgettable moment, when the mother of a soldier killed in Iraq embraced a voter in Iraq's landmark election earlier this week. But viewers apparently were impressed as well with Mr. Bush's less dramatic discourse on Social Security reform.

Among those who watched the speech, favorable opinions of the president's plan jumped 15 points after the address. Unfavorable opinions fell nine points.

So let's talk more now about the Bush plan and the speech with Dan Balz of "The Washington Post."

Dan, Social Security. The president has tackled some tough things since he became -- since he came into office. How does this issue compare with everything else he's had to deal with?

DAN BALZ, "WASHINGTON POST": I think it's much tougher and much more complicated than any other domestic issues that he's dealt with, Judy. He's going at a fundamental program, one that is Democratic turf and has been since Franklin Roosevelt signed the bill into law. Republicans have always had a political disadvantage on this.

He is calling for some significant and extraordinary changes. And he's got a wail of a fight on his hands.

WOODRUFF: Well, he makes it clear that he doesn't want to see any increase in the payroll tax. But the rest of it, he pretty much threw a number of different proposals out on the table for Congress to consider. Why isn't he being more specific right now?

BALZ: Well, there are two reasons. One is he is trying not to take ownership of any particular plan, particularly on how to cut benefits.

Everyone knows that in one way or another, benefits are going to be reduced if this plan goes through. The question is, how is that done? I think what he is trying to do is say he is willing to talk about any of them and to try to see if there is a consensus that develops on the Hill.

I think he's also doing this in some deference to some of the congressional leaders who want to see what they can put together, particularly in the House, to begin with, but also in the Senate, whether there is any kind of a coalition that they can put together on it. So part of it is to avoid direct political ownership so that he's not directly attacked for this or that proposal, but also to leave some maneuvering room on the Hill.

WOODRUFF: How much enthusiasm is there for all this among Republicans, Dan?

BALZ: Well, we've known all along that the enthusiasm is very mixed. There are some people who believe as strongly as President Bush that private accounts and personal accounts ought to be part of the new restructuring of Social Security. But there are many Republicans -- and it's hard to get a fixed number -- I've heard a dozen, two dozen, I've heard up to 50 who are nervous to oppose at this point. And I think that's partly where the president was going last night.

The way this speech was crafted and the way the proposal was outlined was done in such a way as to try to minimize the concern that people have that this is a radical plan or that it's fiscally irresponsible. Now, Democrats I've talked to privately say they thought the president was quite effective last night in his speech, but it was effective only as far as it went, and there are lots and lots of questions that are still to be answered.

WOODRUFF: Dan, what about a Democrat? Clearly, the president needs some Democrats to come over.

We know he's going to be wooing, has been wooing Senator Ben Nelson of Nebraska. He's going to with the senator tomorrow. What are some arguments that the president could win over someone like Senator Nelson?

BALZ: It's a good question. I mean, I think that the strongest argument he will use is that this is a system that is in some financial jeopardy. There will be an argument about just how serious the financial stress is.

But he can make the argument that the -- that the earlier Congress and he act on this, the simpler the solution will be. That will be part of it.

Look, everybody on the Hill that we've talked to in the last few weeks about this, including Republicans, say that the president needs a bipartisan consensus on this. Now, what does that mean? When we talk to people and say, well, does that mean one Democratic senator, they basically say no. It has to be done with broader support than that.

Obviously, in the Senate, he's got to have 60 votes to try to get this thing through. So he's going to have to go more than Senator Nelson. And I think what we saw last night was simply the opening argument of what is going to be a long and very delicate negotiation.

WOODRUFF: Dan Balz of "The Washington Post." Thanks very much.

BALZ: Thanks, Judy.

WOODRUFF: We appreciate it.

Well, there's still plenty more to say about the president's speech and whether he can follow through with his big plans for Social Security. Up next, I will ask Senate Majority Whip Mitchell McConnell about the challenge of getting some weary fellow Republicans on board.

Also ahead, can anyone stop Howard Dean from becoming the next Democratic Party chairman? I'll talk with one man who is still trying.

And later, Texas politics gets kinky.

(COMMERCIAL BREAK) WOODRUFF: As we continue to survey reaction to the State of the Union address, I'm joined from Capitol Hill by Republican Senator Mitchell McConnell of Kentucky. He is the Senate majority whip.

Senator, good to see you.

SEN. MITCH MCCONNELL (R), KENTUCKY: Glad to be with you, Judy.

WOODRUFF: Social Security, you just heard my conversation with Dan Balz. Among other things, he talked about the inevitability of benefit cuts. Are those inevitable down the road?

MCCONNELL: Look, the American people understand that Social Security is in trouble. Younger Americans know -- think, believe they're more likely to see a UFO than they are a Social Security check.

The president made it clear that for people 55 and older you can tune out this whole discussion if you want to. It's not about you, it's about the future.

We all know the demographics. By the time the president leaves office, the baby boomers are going to begin to retire. We've got to deal with the problem.

President Clinton said back in 1998 we ought to deal with the problem. I think some 9of our friends on the Democrat side of the aisle don't even want to concede there is a problem. And until they do that, then I think it's hard to get started.

WOODRUFF: So are benefit cuts inevitable? I mean, that is what -- essentially that's what you're saying, down the road.

MCCONNELL: Hold on. What I'm saying is, as the president said, first of all, we've got to agree that there is a problem. I mean, denying there's a problem is an absurd position. I don't think they're going to take this position much longer.

Once they come off of that position, then everything needs to be on the table, Judy, everything. And because we've got to save the system for our children and for our grandchildren.

WOODRUFF: Lindsey Graham, your Republican colleague, said, "As we debate the problem, we also need to be realistic about finding a solution." He said, "The truth is personal accounts," he said, "will not even come close to making Social Security solvent."

Is he right?

MCCONNELL: Yes, he is right. Personal security accounts are important, but they're not the fix. The fix has to be much more comprehensive, and is this only a small part of the overall discussion that we need to have.

Senator Graham has been a leader. He's been reaching out to Democrats. Senator Sununu's got a plan, Senator Bennett's got a plan. Each of them are talking to Democrats, looking for Democrats who will concede the obvious, which is that we have a problem here and that we're better off to deal with it today than to keep on kicking the can down the road and leaving this for the next generation to deal with.

WOODRUFF: How many Republican senators can the president count on, do you think?

MCCONNELL: I think the vast majority of Republican senators are really comfortable with this issue. As you know, the president and the vice president run on it twice. Republican Senate candidates have run on it in 2000 and 2002, 2004. Not a single one of them has lost an election over this issue.

We don't believe that it's politically impossible. We even think it's politically desirable to grapple with this problem and show the American people that we're sensitive so an issue that they all understand. That Social Security at its current rate is simply not going to be there as it is today for our children and our grandchildren if we don't act.

WOODRUFF: One other question about what the president said last night, cutting the government spending. He said he wants to substantially reduce or eliminate 150 different government programs to cut the deficit.

Do you have any idea what any one of those is?

MCCONNELL: No. We're going to take a look at them. We'd sure like to eliminate some federal programs.

We've only eliminated a couple since I've been here. And I'm anxious to look at the list, and I hope we can succeed in completely eliminating wasteful programs that no longer make sense.

WOODRUFF: Senator, one other quick thing from the United Nations. A report has just come out, an interim report by the former Federal Reserve chairman, Paul Volcker, essentially saying that there was corruption in the oil-for-food program, saying that the man who headed up the program sought and received bribes from the Iraqi government.

Do you have a reaction?

MCCONNELL: Well, I'm not surprised, Judy. Senator Norm Coleman has been leading the investigation here in the Senate. And we've all felt for some time that something was clearly wrong in the oil-for- food deal.

I'm frankly not surprised. And the corruption may go even deeper than Mr. Volcker has indicated that he's found.

WOODRUFF: We're going to have to leave it there. Senator Mitch McConnell, who's the majority whip in the Senate. Senator, good to see you.

MCCONNELL: Good to see you, Judy.

WOODRUFF: We appreciate it.

MCCONNELL: Thank you.

WOODRUFF: A renegade Texas writer and musician says he's running for governor. That story ahead in our "Political Bytes."

Also, President Bush and religious conservatives. Did a key constituency hear what it wanted in last night's State of the Union address?

(COMMERCIAL BREAK)

WOODRUFF: President Bush used his appearance at the national prayer breakfast this morning to build on his State of the Union remarks in favor of faith-based community programs. Our Bruce Morton has more on last night's address and how the president used parts of the speech to appeal to religious conservatives.

(BEGIN VIDEOTAPE)

BUSH: Prayer also meaning opening ourselves to god's priorities, especially by hearing the cry of the poor and the less fortunate.

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): President Bush at the national prayer breakfast. It's a stop most presidents make, but especially important for this one because religious conservatives are such a key part of his political base. Did their issues get enough attention in a State of the Union speech dominated by Social Security and foreign policy?

BUSH: I support a constitutional amendment to protect the institution of marriage.

MORTON: In other words, to ban gay marriage. Just one line, but of course Congress would have to pass such an amendment. The president isn't involved in the process.

BUSH: We must drive to build a culture of life.

MORTON: And some specifics about stem cell research.

BUSH: I will work with Congress to ensure that human embryos are not created for experimentation or grown for body parts.

MORTON: And the line urging the Senate to vote his judicial nominations up or down, no filibusters.

BUSH: Every judicial nominee deserves an up-or-down vote.

MORTON: Religious conservatives would agree with all of this, but will they think the president is paying enough attention to their agenda?

STUART ROTHENBERG, ROTHENBERG POLITICAL REPORT: It's enough for the moment, but it's clear that the president's agenda focuses on Social Security, tax reform, immigration, issues like that. Along the way he's going to have to sprinkle this second term with social issues, or else social conservatives are not going to be happy.

MORTON: One more worry for a president starting what may be a complicated, controversial second term.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: New developments in the San Diego mayor's race lead the "Political Bytes" on this Thursday. A California judge has upheld the reelection of Mayor Dick Murphy, dealing another legal defeat to supporters of write-in hopeful and city councilwoman Donna Frye. Attorneys for Frye supporters vow to appeal the decision.

Murphy won the race by more than 2,000 votes. But 5,000 ballots with Frye's name written on them were thrown out because voters failed to also darken an optical scan oval.

In Texas, off-beat author and musician Kinky Friedman has thrown his trademark cowboy hat into the ring for the 2006 race for governor. Freidman made his announcement this morning at the Alamo, where he vowed to make the ballot as an Independent.

Friedman toured with Bob Dylan back in the 1970s and he now writes mystery novels. He's been an overnight guest at the White House of both Present Bush and former President Clinton.

Well, the speech is over and the reviews are coming in. So how did the president do last night? Coming up, we'll speak with two political veterans to get the take from the left and the right.

Plus, is Karl Rove trying out for a new job? We'll explain later on INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: It's just before 4:00 in the East. And as the markets get set to close on Wall Street, I'm joined by Christine Romans in New York with "The Dobbs Report."

Christine, hi.

CHRISTINE ROMANS, CNN CORRESPONDENT: Thank you, Judy. Hi.

Stocks lower today, snapping Wall Street's three-day winning streak. Holding stocks back, a weak earnings report from Amazon.com and slowing productivity growth in the fourth quarter. The final trades still being counted here. But the Dow Jones industrial average down, oh, just shy of five points. The Nasdaq is nearly one percent lower. Amazon.com stock tumbling nearly 15 percent. Amazon's earnings were four times higher than they were a year ago, but on Wall Street, they had wanted even more.

Another potential merger in the telecom industry. Published reports say Quest and MCI have been in and out of talks for months and now the pressure's building to do a deal in the wake of AT&T's agreement earlier this week to be acquired by SBC. Quest is said to be offering more than $6 billion to buy MCI. And others might be interested, too. Verizon has also held talks with MCI.

A sign for the economy. After a solid holiday season, consumers were still out spending last month despite severe winter weather. A tally of retailers by UBS shows chain store sales rose better than expected, 3.5 percent in January. Analysts say heavy post-holiday discounting and those holiday gift cards lured shoppers back into the stores. Wal-Mart sales rose 2.5 percent and Target's rose more than nine.

One of the hottest gifts for Christmas was the digital camera. And get this. The maker of the top-selling camera is an American company. For the first time, Kodak surpassed all the major Japanese brands like Sony, Canon, Olympus, of the U.S. market share. This according to research firm IDC. It's quite a turn-around for Kodak, which was slow to get into the digital market.

Two senators, a Republican and a Democrat, want Congress to take a stand against the flood of Chinese imports coming into this country. Chuck Schumer and Lindsey Graham have proposed a bill to impose a tariff on all imports from China. By some estimates, Chinese manufacturing may have cost the U.S. 3 million jobs over the last five years.

We'll have more on that story at 6:00 p.m. Eastern on "LOU DOBBS TONIGHT." Also tonight, "Exporting America." Is Madison Avenue heading overseas? Advertising may be the next industry looking to capitalize on cheap overseas labor. We'll have a special report.

Plus, President Bush again talked tough on immigration in last night's State of the Union address. So far the administration has done little to improve the situation. We take a look at the reasons why.

And Lou will discuss the president's State of the Union address, Iraq and Social Security reform with senators Carl Levin and Rick Santorum. That and more tonight at 6:00 p.m. Eastern. Now back to Judy Woodruff -- Judy.

WOODRUFF: Christine, thank you very much. We'll be watching at 6:00. And INSIDE POLITICS continues right now.

(BEGIN VIDEOTAPE)

ANNOUNCER: Selling Social Security.

BUSH: I'm going to spend the next couple days going around the country explaining to people as clearly as I can the problem.

ANNOUNCER: President Bush heads out on the trail, but will his campaigning change minds?

BUSH: We will not set an artificial timetable for leaving Iraq.

ANNOUNCER: Last night did President Bush make the tough choices on international matters, but avoid them on domestic issues?

BUSH: I will listen to anyone who has a good idea to offer.

ANNOUNCER: More endorsements for Howard Dean. Is there anyone left who can stop his push to run the Democratic party?

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

(END VIDEOTAPE)

WOODRUFF: Welcome back. The political battle now underway over reforming Social Security offers a vivid reminder why politicians traditionally have been so skittish about making any changes to the program. And it helps explain why President Bush is taking the fight outside of Washington.

Our senior White House correspondent John King is traveling with the president.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): Wheels down Fargo, stop one in a Social Security sales pitch that will quickly test the president's second term political clout.

BUSH: I'm going to travel our country speaking as plainly as I can about a problem that I see.

KING: Five states in two days. North Dakota, Montana, Nebraska, Arkansas and Florida. All share this: Mr. Bush won them on the way to re-election, but all have Democratic senators who oppose the president's Social Security plan.

SEN. BYRON DORGAN (D), NORTH DAKOTA: The president's saying let's borrow $1 to $3 trillion, stick it in the stock market, cut Social Security benefits and somehow that will be good? Most people, I think, will understand that doesn't add up.

KING: Revamping Social Security is the most ambitious domestic challenge of the Bush presidency. One urgent goal to convince politically powerful older voters, anyone over age 55, that the Bush plan would not touch their benefits.

BUSH: For those of you who've received your check or are about to receive your check, not one thing will change.

KING: Another hurdle is rebutting Democrats who say the private investment accounts Mr. Bush wants for younger Americans would destroy a program designed as a guaranteed government safety net.

JOHN SNOW, TREASURY SECRETARY: These would be safe investment vehicles. They wouldn't be allowed to go out to the Las Vegas and play the wheels, or go to the racetrack.

KING: Protests in Fargo underscore why Republicans are nervous. Mr. Bush says the debate must consider trimming benefits and raising the retirement age.

(on camera): Touching Social Security has long been deemed political suicide, so Mr. Bush's enormous first challenge before there can be any negotiations about how to change the program is turning public opinion to the point where doing nothing is deemed the greater political risk.

(voice-over): Mr. Bush compares the Democratic opposition to the first term vows he would never win sweeping tax cuts, but even allies concede this fight will be far tougher and test the depth of what the president likes to call the political capital earned by winning re- election.

John King, CNN, Fargo, North Dakota.

(END VIDEOTAPE)

WOODRUFF: Thank you, John.

In his State of the Union address, the president suggested all options for reforming Social Security were on the table, except for raising taxes. How bold were those words?

Here now our senior political analyst Bill Schneider.

(BEGIN VIDEOTAPE)

BUSH: A nest egg for your own future.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): President Bush's Social Security plan sounds like a good deal for younger workers.

BUSH: Your money will grow over time at a greater rate than anything the current system can deliver.

SCHNEIDER: But there's a cost, Democrats warn.

REP. SANDER LEVIN (D), MICHIGAN: Who will pay for this? Mostly my kids and grandkids. And then benefit cuts. He didn't say that at all.

SCHNEIDER: Actually, he did, in a roundabout way. The president said fixing Social Security will require an open, candid review of the options, which he proceeded to spell out, in every case, attributing them to others.

BUSH: Some have suggested limiting benefits for wealthy retirees.

SCHNEIDER: Sounds like a Democratic idea.

BUSH: Former Congressman Tim Penny has raised the possibility of indexing benefits to prices rather than wages.

SCHNEIDER: Penny used to be a Democrat. BUSH: During the 1990s, my predecessor President Clinton spoke of increasing the retirement age.

SCHNEIDER: A Democratic ex-president.

BUSH: Former senator John Breaux suggested discouraging early collection of Social Security benefits.

SCHNEIDER: A democratic ex-senator.

BUSH: The late senator Daniel Patrick Moynihan recommended changing the way benefits are calculated.

SCHNEIDER: A deceased Democratic senator.

Those are all tough choices. What did President Bush have to say about them?

BUSH: All these ideas are on the table.

SCHNEIDER: In others, I'm not going to make those tough choices by myself. Any of those choices would really be tough for current retirees or those near retirement. But President Bush reassured older Americans.

BUSH: I have a message for every American who is 55 or older. Do not let anyone mislead you. For you, the Social Security system will not change in any way.

SCHNEIDER: Fewer than a third of Americans 55 and older favor private Social Security accounts. But nearly half of younger Americans are open to the idea. It's not a tough choice for them. The president did say he was willing to make tough choices to reduce the deficit.

BUSH: My budget substantially reduces or eliminates more than 150 government programs that are not getting results.

SCHNEIDER: What programs? He didn't say.

(END VIDEOTAPE)

SCHNEIDER: The president did have some tough language in the speech. He threatened Syria and Iran. He warned Saudi Arabia and Egypt to get with the march of democracy. But those were in world affairs, where the president has a lot more latitude.

WOODRUFF: For sure. Now, Bill, we do have some initial reaction from Saudi Arabia about the speech. There's one Saudi politician who today is quoted as calling the timing of the president's remarks strange. This is just days before they have a municipal election in Saudi Arabia, I guess the first one they've ever had. What's your reading on how this is playing overseas?

SCHNEIDER: Well, I think they were a little taken aback, both the Saudis and Egyptians, about this. But the president met with a lot of criticism after his inaugural address, when he called for overthrowing tyranny and spreading democracy around the world. The critics said, well what about countries that side with the United States, like Saudi Arabia and Egypt? They're not exactly models of democracy. So he sort of felt this was timely.

WOODRUFF: And he let them know what he thinks.

SCHNEIDER: He certainly did.

WOODRUFF: OK. Bill, thank you very much.

So the Democrats are a little over one week away from electing a new party leader and every day Howard Dean seems closer to locking up the job. Up next, I'll ask DNC chair candidate Donnie Fowler how he can persuade Democrats he's a better choice than Dean.

Plus, was the fifth time the charm? The president's big speech through the eyes of two political veterans.

(COMMERCIAL BREAK)

WOODRUFF: The race to succeed Terry McAuliffe as Democratic party chairman down to four candidates and Howard Dean has won some high-profile endorsements in recent days. Yesterday eight of Iowa's nine DNC voting members, including the governor, Tom Vilsack, endorsed Dean. The executive board of the United Autoworkers announced that it, too, supports Dean for party leader.

Democratic strategist Donnie Fowler is among those battling with Dean to become DNC chairman. And Donnie Fowler joins me now from New York. So Mr. Fowler, everywhere we look endorsements climbing for Mr. Dean. People are saying it's all but over, so why are you still in the race?

DONNIE FOWLER, DEMOCRATIC STRATEGIST: Because it's not over. Nobody's cast a single vote yet. Howard Dean has not gotten even public commitments of half the votes yet. I've got 72 voters on commitments and I'm getting calls every day of folks saying we don't need a carnation we need an election, and let's continue to have a good discussion.

WOODRUFF: So The Hotline poll that I saw today -- this, of course, is The National Journal Hotline, with 215 DNC members for Dean and you've got 13. You're saying that's way off?

FOWLER: That's way off. It's an old number. We've got 72. You know, Judy, so far, Dean and I have been the only people, A, that stood for change and can affect change and, B, that have delivered votes. Only two of us have actually got substantial and measurable votes on the board. That includes, for me, over two dozen state party chairs.

WOODRUFF: Why would you be better than Howard Dean? I mean, he's got all these people flocking to him, endorsing him now. People are accepting this as if it's inevitable. FOWLER: Well, inevitability doesn't vote. I'm not running against Howard Dean, Judy, I'm running for the chairmanship of the DNC because I think that the national committee, the aristocracy of consultants in Washington, has gotten a strangle hold of the party and they're not listening to election officials out in states, especially in the red states that winning elections and they're not listening and learning from strong state parties. You know, voters don't live in D.C., they live in the states. And the DNC and some of the national consultants have forgotten that at times.

WOODRUFF: Are you open to some sort of an arrangement where you would work at a high level at the DNC but with the chair rather than being chair?

FOWLER: I would be happy to have Howard Dean be my executive director of the DNC. Look, I've spent 20 years working in 14 states for Democrats for president, including four presidential campaign cycles, down to state legislature and mayor. And I'm going to continue to do that.

I am fortunate that I have one foot in technology and telecom out in the San Francisco Bay Area and another foot that I can keep doing political campaigns, helping state parties strengthen themselves and helping Democrats get elected.

WOODRUFF: Some people worry, as you know, Howard Dean has too visible, too liberal, too outspoken an image to help the party. Is that a problem for him?

FOWLER: Look, Howard Dean must be a voice in our party. He brings so much energy, so much commitment and just like I do, he stands for change. And just like I think the party should do, Howard Dean stands up and fights back for what he believes in.

But right now the Democratic National Committee needs someone who has been working with the state parties, not just in the past few years, but over the past 20 years, somebody who they trust, somebody who understands what it is to build up infrastructure on the ground in the states and the counties.

I'm running because I've got a record and a set of experiences that is unique among the field of candidates, which it has clearly now narrowed down to Governor Dean and me, but originally we had seven candidates and I'm the only one who has been on the ground for so long. That's why I'm running.

WOODRUFF: Very quickly, what shape is the Democratic Party in right now? Even the party's own strategists are saying the party has got real problems.

FOWLER: Well, the problem is, Judy, some of those strategists are the ones that have been creating the problems. You know, we get the same people making the same mistakes year after year and we're still losing.

Terry McAuliffe has done a fantastic job at bringing us up to speed financially and building out some of this infrastructure in the national party headquarters. We need to take Terry's legacy of matching the Republicans dollar for dollar.

We still lost the election, but we now are in a financial position to go to the state parties and the strong county parties and say, what are you doing right? What can we learn from you? And what can we learn from the elected officials that we can have a two-year plan, a four-year plan and a six-your plan?

And then the DNC's job needs to be, how can we help you get to these benchmarks? Money, technology, training, communications, staffing? That's the job of the DNC, to build the vehicle to deliver our message.

Donnie Fowler, still in the race for DNC chair, it's very good to talk to you.

FOWLER: Not going anywhere.

WOODRUFF: Not going anywhere. We hear you. thank you very much, we appreciate it. That vote coming up on February the 12th.

New numbers from the Federal Election Commission confirmed the huge spending estimates for the 2004 presidential campaign. An FEC analysis finds that total spending by the presidential candidates and their parties last year topped $1 billion. Now that is a 56 percent increase over the 2000 campaign.

During the presidential primaries alone, the commission reports that all of the candidates combined raised more than $670 million.

More on the State of the Union and the president's political plan. Straight ahead, I'll talk with political veterans Bob Barr and Jack Valenti about Social Security and the overall Bush agenda. That's next.

(COMMERCIAL BREAK)

WOODRUFF: For more now on the president's State of the Union Address, I'm joined by two political veterans. Jack Valenti here in Washington, he was an adviser to President Lyndon Johnson. Bob Barr is in Atlanta, he is a former Republican congressman from Georgia.

Jack Valenti, to you first. What do you primarily take away from this speech? What was really memorable about last night?

JACK VALENTI, FMR. AIDE TO PRES. JOHNSON: Well, I have been one who has helped draft three State of the Union speechers and I've listened to every one since 1969, and they're ritualistic. All presidents do the same, they lay out a laundry list of initiatives, 98 percent will never see the light of day, and 48 hours later nobody can remember anything that he said.

VALENTI: This speech, I think, people remember he said something about Social Security, but they didn't understand it. But, he was applauded 66 times, according to CNN. But the most passionate, lengthy applause was for a raw piece of emotional magic when this young Iraqi lady, her name Safia Taleb al-Suhail, and Janet Norwood, the mother of that brave Marine killed, embraced with dog tags dangling.

It was a staggeringly memorable moment. And I must tell you -- unscripted too, as a skeptic after all my years in national politics, I was deeply moved. I have to say it. My eyes grew a little moist and that is what will be remembered by this speech.

So, by my lights it was a successful speech because people will remember this embrace of United States and Iraq coming together.

WOODRUFF: Bob Barr, is that what you take away from last night?

BOB BARR, CNN CONTRIBUTOR: Certainly, simply, as Jack said, and he is far more astute and much longer time analyst of these things than I am.

From the standpoint of the emotional appeal of the speech, absolutely. That that's one thing people will remember. But even though, like Jack, I'm not impressed with how many times these men and women bounce up and down, whether it's 60 or 150, who cares, I do think that this speech will be a little bit different also because the president for the very first time in modern times laid squarely on the table of the Congress and before the American people the fundamental issue of the solvency and the future of Social Security. And that really has teed up what is going to be the battle of the decade.

WOODRUFF: And if it is the battle of the decade, Jack Valenti, did the president help himself on that issue last night?

VALENTI: I think he did, but the details are not out. Frankly, I trust Bob Barr's judgment on this better than mine. He has been a congressman and he knows this issue. I don't think many Americans truly understand, is it in crisis or not? Is it about to go bankrupt or not? In 2018 I think that we'll take in less revenues than we pay out. In 2042, there will be less benefits.

But 2042 is a long way away. I think the president did one thing that was very shrewd. He laid all the options on the table and said, OK, let's choose the one that's better suited to the future. That's good, but it's going to be a big battle and I'm not sure how it's going to come out.

WOODRUFF: Are you as uncertain, Bob Barr, as Jack Valenti is?

BARR: I would have to say yes. I think that something will happen. The administration cannot play a card this important without taking something away at the end of the day. But whether or not it will be a fundamental restructuring of the Social Security system, which is what the president and many in the Republican Party are positioning themselves for, or something far less remains to be seen.

It will be a very, very difficult battle as we saw by the unprecedented and I think highly improper virtual booing of the president when he simply said that the system is going to be bankrupt and the time is now to fix it.

WOODRUFF: Yes, I thought for a moment I was watching the House of Commons because it does sound like what the British prime minister -- was that inappropriate? Was that wrong for Democrats to do?

VALENTI: I must say, of all the State of the Union messages that I've heard, that was the first time I've heard heckling of the president, which only shows though, as Bob pointed out, the deeply impassioned feelings of a lot of people in the Congress.

It's going to take I think an enormous expenditure of capital by the president to get this passed because you're fooling around with what a lot of people in this country depend on for their retirement years, the certainty of some kind of a payment. And to fool around with that has in the past been, quote, "the third rail of politics."

WOODRUFF: Very quickly, Bob Barr, do you think the president can bring the Republicans on board on that?

BARR: I think he will be able to largely. And he may have to compromise, but I think he'll be OK in his own party. But whether or not he is going to be able to get the votes in the Senate, in particular, is highly problematic.

WOODRUFF: Bob Barr, Jack Valenti, very good to talk to both of you. Thank you for coming by on the day after the State of the Union.

INSIDE POLITICS will be right back.

WOODRUFF: Here's a teaser of a question: Is Karl Rove looking for a new job? The president's senior adviser ran into our John King today during Mr. Bush's Social Security event in Fargo, North Dakota.

Look at what happened.

(BEGIN VIDEO CLIP)

KARL ROVE, BUSH SENIOR ADVISER: Step aside, I'll be happy to do it. The president is making an incredible presentation to the audience here in Fargo, North Dakota. The crowd has received an overwhelming -- his reform message of Social Security. The crowd broke into a strong applause when the president attacked the mainstream media...

KING: It's not bad, I'd keep your day job, but that's not bad.

(END VIDEO CLIP)

WOODRUFF: I'd say more than not bad. I think we're ready to hire Karl Rove right now. We'll start -- we'll make the phone call right after the show.

That's it for INSIDE POLITICS. Thanks for joining us on this Thursday. I'm Judy Woodruff. "CROSSFIRE" starts right now.

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