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JUDY WOODRUFF'S INSIDE POLITICS

Dems Like Dean for His Fight; Congress Takes Steps on Immigration, Tort Reform; Republican Senator Backs Budget, Questions Prescription Drug Benefit; White House Reporter Resigns After Questionable Credentials Exposed

Aired February 10, 2005 - 15:30   ET

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


(BEGIN VIDEOTAPE)
ANNOUNCER: Will Howard Dean shake up the Democratic Party?

HOWARD DEAN, DNC CHAIR CANDIDATE: There are a lot of people in this city that are afraid I'm going to be very unorthodox. And -- and I am!

ANNOUNCER: Do Democrats think major changes are needed? Our new poll of the party may give some clues.

He's the leading voice of the left, and he's our guest today. We'll speak to Senator Ted Kennedy about soaring Medicare costs and bitter partisan politics.

Covering the president. Who's allowed to sit in on the White House briefings? We'll take a look behind the scenes.

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

(END VIDEOTAPE)

JUDY WOODRUFF, HOST: Thank you for joining us.

Democratic Party activists from around the nation gathering here in Washington where it is all but certain that they will complete one man's dramatic political comeback.

Howard Dean is set to become the new chairman of the Democratic National Committee this weekend, only a year after the demise of his once high-flying presidential campaign.

Earlier today, Dean met for half an hour with his party leaders in the Congress, Representative Nancy Pelosi and Senator Harry Reid.

And last night, Dean told young supporters at a Capitol Hill rally that he has the right strategy and the outsider's approach that his party needs.

(BEGIN VIDEO CLIP)

DEAN: Most of you know there are a lot of people in this city afraid I'm going to be very unorthodox. And -- and I am!

(END VIDEO CLIP)

WOODRUFF: So if Howard Dean is promising what he calls an unorthodox approach, what does that mean? The Democrats are ready for a change in direction?

We surveyed more than half of the DNC membership in our latest CNN/"USA Today" Gallup poll. For more on that, here's Bill Schneider.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN POLITICAL ANALYST (voice-over): As the Democrats gather in Washington, souls have been searched, recriminations have been visited. And what have they concluded?

The Gallup organization interviewed 220 members of the Democratic National Committee and asked them what went wrong last year. The current party chairman has his answer.

TERRY MCAULIFFE, DNC CHAIR: We had the biggest vote turnout we've ever had. Judy, we ran against an incumbent president while at war.

SCHNEIDER: Members of the Democratic National Committee agree, according to the new CNN/"USA Today"/Gallup survey. Their No. 1 reason of poor choices offered, because Republicans ran an incumbent president during wartime. Only 20 percent said it was because Democrats couldn't match the Republicans' grassroots efforts. Even fewer blamed John Kerry's weaknesses as a candidate, and almost no committee members said it was because of the party's issue positions. Nothing wrong with what we believe, Democrats say, which is what the prospective new party chairman says, too.

DEAN: We ought not to change our faith. We need to talk about who we are as Democrats. And we need to be proud to be Democrats every step of the way.

SCHNEIDER: But wait a minute. Look at this. Most committee members interviewed said they would rather see the Democratic Party become more moderate rather than more liberal and thought the key to future Democratic victory was to reach out to undecided and swing voters, rather than mobilize the party base.

So what do Democratic National Committee members see in Dean? Not ideology.

MCAULIFFE: It is not the Democratic National Committee chairman that sets policy.

SCHNEIDER: What they see in Dean is fight.

DONNIE FOWLER, DNC CHAIR CANDIDATE: Just like I think the party should do, Howard Dean stand up and fights back for what he believes in.

SCHNEIDER: Two-thirds of committee members interviewed said Democrats should try to defeat the Republican agenda rather than try to find areas of compromise. If Democrats are ready to fight, Dean's their man.

UNIDENTIFIED MALE: Right now, the Democratic Party seems pretty indecisive about where it's going but Governor Dean doesn't seem that way. That's why I think he has a lot of appeal.

(END VIDEOTAPE)

SCHNEIDER: The choice of Dean is not a statement about ideology. It's a statement about strategy, and the statement is Democrats are ready to stand and fight -- Judy.

WOODRUFF: Sure sounds like it. All right. Bill Schneider, thanks very much.

Turning now to Capitol Hill, where Republicans are making progress on two issues. A short time ago, the House passed an immigration bill containing tough new restrictions.

Meanwhile, the Senate has passed a bill designed to reduce the number of multimillion dollar court verdicts against big businesses. The measure would force many class action lawsuits to be heard in the often more restrictive federal courts instead of in state courtrooms.

Joining me now is our congressional correspondent, Joe Johns.

Hi, Joe.

JOE JOHNS, CNN CORRESPONDENT: Hi, Judy.

Republican leaders wanted a bipartisan vote on this bill. They got what they wanted. The vote was 72-26.

Of course, the class action system has a problem with lawyers shopping around the country to try to -- to try to find the best place to bring their cases. This bill, of course, would limit state involvement in class action suits.

But there is plenty of controversy, of course, both sides disagreeing on whether this bill will benefit the public in the end.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Our tort system is broken. Without the necessary reforms, beginning with class action lawsuits, we deny our nation not only fair and efficient access to justice but we allow this problem to pull our economy downward.

UNIDENTIFIED MALE: And, now, this Senate will pass a law to close the courthouse door in your state courthouse when you want to come together as a group and ask for justice. It's the highest priority, the Bush administration, closing that courthouse door, making sure that these families and these individuals don't have a fighting chance.

(END VIDEO CLIP)

JOHNS: The class action bill could be brought up on the House floor sometime next week -- Judy.

WOODRUFF: And, Joe, what about the other issue that we mentioned, and that is the immigration bill over in the House?

JOHNS: Right. Terrorist travel legislation, as it's called, the Real I.D. Bill. That, of course, cleared the House today.

Among other things -- we have a graphic -- it would keep illegal immigrants from using driver's licenses as identification. It completes the U.S./Mexico border fence in California, allows deportation on terrorism related grounds, and makes it harder for asylum applicants to get approval.

Of course, this bill also had vigorous debate on the House floor.

(BEGIN VIDEO CLIP)

REP. JAMES SENSENBRENNER (R), WISCONSIN: Today, there are over 350 valid driver's license designs issued by the 50 states. And we all know that it is very difficult for security officials at airports to tell the real I.D. cards from the counterfeit ones.

REP. SILVESTRE REYES (D), TEXAS: By forcing state governments to maintain and to share files on almost every adult in the state, this bill will truly usher in the era of Big Brother. The database could be used to track American movements, store information on political activities, and even store information on gun ownership.

(END VIDEO CLIP)

JOHNS: Now, the Real I.D. Act is expected to be attached to the first must pass legislation. That, in all likelihood, will be the Iraq supplemental spending bill. Of course, it's not clear right now what the United States Senate is planning to do about it -- Judy.

WOODRUFF: OK, Joe Johns with that update, thank you very much.

President Bush is on the road again today, making stops in North Carolina and Pennsylvania to promote his Social Security reform plan. In Raleigh this morning, Mr. Bush said it would be, quote, "a dereliction of duty not to tackle Social Security reform," and he said young Americans, especially, understand the need for changes.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: People are beginning to speak out. Younger Americans who understand the math and know the reality are beginning to say to those of us who have been elected, what you going to do about it? You're up there in Washington, D.C. Do more than just occupy the office. Solve problems and do your job.

(END VIDEO CLIP)

WOODRUFF: North Carolina's congressional Democrats responded to the president's remarks in a conference call with reporters. Their message, in the words of Congressman David Price, quote, "What he, the president, wants to do in this scheme would make these challenges far, far worse."

We'll have much more on the president at the top of the hour. Our correspondent Suzanne Malveaux will be with us.

Well, the president is in for a tough sell on his plans for Social Security and the budget with its extensive cuts in domestic programs. We're going to hear from two Senators who have different opinions on the president's spending plan.

First I'm joined by Senator Judd Gregg. He is chairman of the Senate Budget Committee.

Senator, thank you very much for being with us.

SEN. JUDD GREGG (R), NEW HAMPSHIRE: Thank you for having me, Judy.

WOODRUFF: Before we get to the budget, a quick question about Social Security reform. Your constituents, are you hearing a broad voice of support for the president's plan to come up with private savings accounts?

GRAY: I've run twice on the issue of personal accounts. And I think most of the people who look at the system recognize that, because so many people are going to be retiring, the Baby Boom generation, that we're going -- my generation, that we're simply going to overwhelm the system.

And that if we don't address it, younger people, my children and our children's children, are going to end up paying a huge amount of burden in order to support our generation when it's retired.

And one way to relieve that burden is to give them an asset and allow them to save and have an asset which they, when they retire will have available to them, and that's personal accounts. And yes, I think there's a lot of support for it out there.

WOODRUFF: So you're hearing -- you're hearing from your constituents?

GREGG: I ran twice on the issue and made it a sort of a centerpiece of my campaign the first time. And so the last time, it wasn't so -- such a high visibility item.

But I don't -- I think most people when they look honestly at the issue recognize that we've got to do something. And we don't want to bury their head in sand as some of my colleagues are regrettably doing on the other side of the aisle.

WOODRUFF: Senator, you are chairman of the budget committee. You are a loyal Republican. You said you supported what the president is trying to do with this budget by cutting back overall spending. But you've also said there are five, six, seven, maybe 20 or 30 things in here you don't like. Can you be more specific? GREGG: What I said is that we've got to fix the top line number that we're willing to agree to and not breach that number. And that that number should be a very stringent number, a fiscally responsible number, whether it's a one percent rate of growth or a flat rate of growth. That's what it should be.

And within that number, the president has proposed 150 programs he's willing to take a look at, either reduce or eliminate. And I said that the Congress is obviously going to work its will on those programs and make its own decisions.

But as long as we hold the top line numbers, as long as we say we're not going to spend more than X amount and that number is fairly stringent, or very stringent, in my opinion, which is what the president has proposed, and we enforce it with something called budget caps, then we'll be making progress towards getting spending under control on the discretionary side.

WOODRUFF: Are you concerned about some of the cuts in the environmental area in particular?

GREGG: Well, obviously, I've always been a strong supporter of environmental protection and initiatives in that area. But I'm willing to set priorities. If we have to make reductions in one place, we'll have to -- in order to increase another place, I'm willing to do that.

WOODRUFF: Senator, just very quick last question. You were one of those who voted against prescription -- Medicare prescription drug reform back in 2003. At the time, you said this puts in place a massive new benefit without any control over the cost.

Now that we are learning that this plan could cost hundreds of billions of dollars more than advertised, are you feeling vindicated?

GREGG: Well, yes.

WOODRUFF: OK. And? Is -- I mean, because I ask you because the White House is saying this is exactly what we expected. It's not really all that different.

GREGG: Well, actually, the numbers, as they score, continue to come in at what the estimates were, but I'm very suspicious of those numbers. I mean, the simple fact is that once this program kicks in, it's going to be a massive expenditure item.

The controller general tells us it's an $8.6 trillion unfunded liability. And in my opinion, the biggest intergenerational tax increase in the history of our country. Because basically what's happening is that my generation is saying to my -- to our children and our children we're going to raise your taxes so that we can get a drug benefit.

We could have done a better drug benefit, one that benefited the low income senior who needed the assistance, without putting in place this massive program, which is going to cause people to migrate out of private programs and into a public program and which is going to have incentives to over-utilize drugs, especially lifestyle drugs. We're already seeing that.

WOODRUFF: Yes or no, Senator, do you think it will be changed?

GREGG: Yes or no, do I think it will be changed?

WOODRUFF: Right.

GREGG: Well, it's unlikely. As you know, once a federal program gets on the books, it's hard, but I'm going to try to change it.

WOODRUFF: We hear you. Senator Judd Gregg, he is chairman of the Senate Budget Committee. A very important job to have.

GREGG: Thank you.

WOODRUFF: Thank you very much.

GREGG: Pleasure.

WOODRUFF: And we'll talk more about the budget and some other issues next with a leading figure in the Democratic Party. Senator Edward Kennedy joins me to share his thoughts on the president's agenda and how he thinks his party can regain its political footing.

When is the White House reporter not really a White House reporter? We'll tell you why a frequent questioner at news briefings has resigned his post and how he got his credentials in the first place.

Then later, North Korea comes clean about its nuclear weapons, or says it does. I'll talk with a former Clinton administration adviser about the next step in U.S. policy.

(COMMERCIAL BREAK)

WOODRUFF: Joining me now from Capitol Hill, Democratic Senator Edward Kennedy of Massachusetts.

Senator, good to see you. Thank you very much for joining us.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: Good afternoon.

WOODRUFF: I just spoke with Senator Judd Gregg of New Hampshire about what has happened to the projections cost of Medicare prescription drugs. He says this growth in the cost of this plan is exactly what he predicted. He calls it the biggest intergenerational tax increase in history.

You've called for spending even more to cover prescription drugs and Medicare. How can the country pay for it?

KENNEDY: Well, first of all, it's increased dramatically, and that has to be of concern to citizens all over the nation. But it isn't so much the increase as who is benefiting from it. Because with this increase, you're going to find out that the HMOs are going to have a big, big chunk of this increase, and the pharmaceutical companies have gotten a big chunk of this increase.

That is what I think is the real challenge. That basically, the Republicans hijacked the Medicare prescription drug bill in the last Congress so it was more of a give-away to the prescription drug companies and the HMOs. And now they are the ones that are going to benefit, not the senior citizens.

What we need is to have the power and the authority in HHS, like we have in the V.A., for the head of the HHS to be able to negotiate drug prices down as the Veterans Administration does. That's what we really need if we want to protect our senior citizens.

WOODRUFF: Senator, the president's budget, he says it's responsible. It does begin to bring down the deficit and in a way that this country desperately needs in order to avoid having the national debt grow even larger. Is this a responsible budget?

KENNEDY: Well, the fact remains that we're going to have the deficit, the $430 billion in deficit, and that doesn't include the expenditures in Iraq, nor does it consider the president's recommendations for the permanent tax cut. So we're going to be awash in red ink for a long period of time.

But what we do see on this is the first cuts in education in 10 years. I seriously believe that education is absolutely essential if we're going to be able to compete in a global economy. We can't be cutting back on education.

Education today represents two cents out of every federal dollar. In 1957, when we were racing against the Soviet Union, it was five cents out of every federal dollar. We're going in the wrong way on education in order to justify the tax cuts of this administration. That's bad for the children of this country and it's bad economics, as well. Education is certainly an area where the children are going to be short-changed.

WOODRUFF: Senator, a different subject. Class action lawsuits against big business, where the president appears to be on the verge of a big victory, if the Senate agrees to shift these from state courts to federal courts, which are more restrictive.

Your colleague, Senator Feinstein, says that this represents the best that can be done to solve a real problem. Do you agree?

KENNEDY: Well, I think that the president will have a victory, but it's basically a victory for the large corporations at the expense of consumers, at the expense of workers, and at the expense of civil rights.

What we're basically talking about, for example, is the workers in Wal-Mart that are being denied overtime. The idea that an individual is going to be able to take on Wal-Mart is ridiculous. And basically, what this is going to do is deny the opportunity for all of those workers in Wal-Mart that have all been forced to work overtime, to be able to get a fair remuneration.

It's going to be the consumers against the HMOs or against tobacco companies. The consumers are the -- are the big losers on this. And I think -- I think it was -- we have to make some adjustment in tort reform. There are different ways of trying to be able to do it. I think particularly in the areas, when I think of the -- in -- for some of the health professionals.

But this -- this just basically closes out consumers.

WOODRUFF: Senator, last question on the Democratic Party. At a time when Howard Dean is about to take over as party chair, CNN polled about half the members of the Democratic National Committee. Most of them say they think the party needs to move -- to take more moderate positions on the issues. Do you agree?

KENNEDY: Well, I think Howard Dean is a fighter. Democrats like a fighter.

Also, if you look at Howard Dean's record in the state of Vermont, Vermont was one of the leading states in terms of health care coverage for children. He actually balanced his -- the budget in that state. He had an outstanding record in terms of environmental issues.

He believes in involving the Democrats and the Democratic Party. That's what his national campaign was really all about. I think he'll bring a great energy to the party. I'm looking forward to working with him. I've talked with him. I think he's excited about this opportunity. And I think he'll be a great chairman.

WOODRUFF: Should the party take more moderate positions on the issue, though?

KENNEDY: I think the -- we ought to accept the challenge of the Republicans to debate values, because I think we value work. We think fairness. People ought to get an increase in the minimum wage rather than tax breaks.

And I think we ought to prepare our people for the global challenge that we're facing throughout the world. If we don't invest in our people, we're not -- we're going to be run out of town or it's going to be a race to the bottom with outsourcing and driving wages down.

If we equip our people, we're going to have the No. 1 economy in the world and the No. 1 national security. That's the direction the Democrats ought to go.

WOODRUFF: All right. Senator Edward Kennedy joining us from Capitol Hill. Senator, we appreciate it. Thank you.

KENNEDY: Thank you.

WOODRUFF: The White House faces more controversy. Coming up, questions are being raised about whether a conservative reporter may have received credentials to ask politically loaded questions during press briefings. Stay with us.

(COMMERCIAL BREAK)

WOODRUFF: After coming under fire to paying pundits to back its policies, the Bush administration is facing scrutiny again, this time for permitting someone with questionable credentials to attend White House press briefings.

The reporter has now resigned and at least one Democratic lawmaker is calling for an investigation.

(BEGIN VIDEOTAPE)

JEFF GANNON, FORMER WHITE HOUSE CORRESPONDENT: Say that...

WOODRUFF (voice-over): Jeff Gannon may wish he hadn't asked President Bush this question about Democrats at a news conference last month.

GANNON: How are you going to work with people who seem to have divorced themselves from reality?

WOODRUFF: Hearing this, liberal web loggers went to work. They disclosed Gannon's real name, James Dale Guckert, questioned his background and association with a conservative web site and asked how did he get into the news conference in the first place.

It turns out Gannon had been denied a Capitol Hill press pass. The reporters' organization that handles credentialing accepts only journalists who work for news outlets. Gannon's application shows his employers were TalonNews.com and GOP USA, a Republican advocacy group.

But at the White House, reporters play no role in press credentialing. If someone wants to attend a briefing, they contact the White House press office. If the office agrees, they pass on the person's Social Security number and date of birth to the Secret Service. Assuming the person is cleared, they can get a one-day temporary pass.

Today, White House Press Secretary Scott McClellan said he doesn't want to be in the position of deciding who gets press credentials.

So if neither the White House, nor the White House Correspondents Association takes responsibility for credentialing reporters, who does?

(END VIDEOTAPE)

WOODRUFF: So Jeff Gannon had been covering the White House for two years off and on with those daily passes. All of this raising another question: who are all those people attending press briefings and news conferences? Are they reporters? Who do they work for?

And one programming note. Jeff Gannon will be a guest today on "WOLF BLITZER REPORTS." That's at 5 p.m. Eastern, 2 p.m. Pacific right here on CNN.

Tough talk from North Korea over nuclear weapons. That's the next move. What is the next move for the Bush administration? We'll go live to the White House when we return.

And later, the race for 2008. Our poll puts these two familiar faces on top. We'll get the take from the left and the right on the next run for the White House.

(COMMERCIAL BREAK)

WOODRUFF: It's just after 4:00 in the East and as the markets close on Wall Street, I'm joined by Kitty Pilgrim in New York with "THE DOBBS REPORT." Hi, Kitty.

KITTY PILGRIM, CNN ANCHOR: Hi, Judy. Thanks. Well, blue chips rallied on some positive economic reports, but we are seeing the tech stocks lagging behind. So let's take a look. The final trades still being counted. The Dow Jones industrials up 85 points right now. The Nasdaq slightly higher.

Big story. Oil prices. They soared today. Crude jumped a $1.64, to above $47 a barrel. Now the reason why that is is the market watchdog raised it forecast for oil demands, while also warning that OPEC supply could not meet that level.

We did have some improvement in the job picture. The number of Americans who filed first-time jobless claims last week fell to the lowest level in more than four years.

Another economic number, on the surface, the trade number looks good. The nation's trade deficit narrowed by nearly five percent in December, to $56 billion. That's is not the case, however, for the year. America's addiction to foreign imports hit record levels. For all of 2004, the trade gap soared 24 percent, to a record $618 billion.

Here's an interesting story. PNC Bank, it's based in Pennsylvania, had an on again/off again merger with Riggs Bank, which is the so-called bank of the president. Well, here's the issue. Riggs, once the bank of Abe Lincoln and other presidents, was charged with laundering terrorist money. That accusation, however, came right after the merger was announced. Now, in the legal mess that followed, PNC tried to lower its offer, so then Riggs threatened to sue, but here's the ending. They've compromised on the price and PNC will pay 16 percent below the original price.

Well, who says business is boring? Here's some more real-life drama. ABC has approved a television movie about the star of "The Apprentice," but Donald Trump wants nothing to do with it. So without the real estate tycoon's cooperation, the network acquired the movie rights to a book about the Trump family.

Coming up on CNN, 6:00 p.m. Eastern on "LOU DOBBS TONIGHT," our special series, America's security risks. And tonight we take a look at the nation's power grid. Many experts say it is vulnerable to attack with potentially devastating consequences. We'll have a special report.

Also tonight, saving the country store, we'll take a look at how small, local businesses are fighting to keep afloat.

And Richard Trumka of the AFL-CIO will be our guest to talk about the horrible trade numbers.

Plus, North Korea admits for the first time publicly and defiantly it does have the bomb. And we'll talk to Congressman Tom Lantos and Chris Smith, both from the House International Relations Committee. That and more tonight, 6:00 Eastern, but for now, back to Judy Woodruff -- Judy.

WOODRUFF: Thanks, Kitty. We'll be watching at 6:00.

INSIDE POLITICS continues right now.

(BEGIN VIDEOTAPE)

ANNOUNCER: Selling Social Security.

BUSH: I intend to campaign on this issue around the country. I like to get out of Washington. I like to talk to people.

ANNOUNCER: The president hits the trail, but will he win support for his plans for personal accounts?

North Korea admits it has nuclear weapons and pulls out of talks.

CONDOLEEZZA RICE, U.S. SECRETARY OF STATE: This is an unfortunate move.

ANNOUNCER: Who makes the next move in this high-stakes jockeying?

He speaks his mind.

HOWARD DEAN, DNC CHAIR CANDIDATE: White folks in the South who drive pickup trucks with confederate flag decals on the back ought to be voting with us and not them.

ANNOUNCER: But will Howard Dean's past words come back to haunt him?

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

(END VIDEOTAPE)

WOODRUFF: Welcome back. The president did leave Washington today and returned to what amounts to a campaign trail of sorts to promote his Social Security reform plan in North Carolina and later this hour in Pennsylvania. Our senior White House correspondent John King has been tracking the president's travels. He joins us live from Blue Bell, Pennsylvania, near Philadelphia, John?

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Just outside Philadelphia, Judy. About a 30-minute drive away. The president just arrived here at a community college to continue his public education campaign, as the White House would call it. Certainly, the president trying to drum up public support and congressional votes for this signature domestic initiative of his second term, changing Social Security. North Carolina, earlier today, as you mentioned.

As Mr. Bush travels on this day, though, to promote that initiative, he of course is also receiving updates on a reminder that as he promotes a new initiative of his second term, a hangover, if you will, from one of the international showdowns of his first term, still. North Korea saying it has nuclear weapons, publicly saying that for the first time. Also saying that it will not come back to the negotiating table over its nuclear program because of what it considers to be a belligerent posture from the Bush administration.

The president has been briefed on all of this as he travels. His defense secretary has talked about this in Europe, saying one of the concerns here would be that North Korea has a track record of selling ballistic missile and other weapons technology on the open market. Also, the secretary of state Condoleezza Rice speaking out about this, saying that she says she believes North Korea is making a mistake. Should come back to those so-called six-party negotiations or face, Condoleezza Rice says, further international isolation.

(BEGIN VIDEO CLIP)

RICE: This is an unfortunate move, most especially, probably, for the people of North Korea, because it only deepens the North Korean isolation from the rest of the international community. It's very clear that all responsible members of the international community and most especially North Korea's neighbors, support the six-party framework as a way to resolve the North Korean nuclear issue.

(END VIDEO CLIP)

KING: You might expect a more dramatic reaction to North Korea's first public declaration that it has nuclear weapons, but the White House is staying relatively low-key about this. The White House Press Secretary, Scott McClellan, traveling with the president, says the administration has seen this pattern before. Provocative, some would say belligerent, rhetoric from North Korea, trying to draw attention, is the assessment of the White House, to itself.

The White House most heartened on this day by a statement from China saying that it hopes that North Korea will set this statement aside and agree it come back to the bargaining table. But Judy, it is a reminder, as the president tries in his second term to focus much more on his domestic agenda, including again, the signature initiative, Social Security, international issues continue to distract, at a minimum, this president.

You have the nuclear showdown with Iran, a major topic during secretary Rice's first trip to Europe and now very blunt public language -- forceful public language, some would say threatening, from North Korea -- Judy. WOODRUFF: All right. John King bringing us up-to-date from the president, from the White House, on the road in Pennsylvania. John, thank you very much.

North Korea's weapons announcement -- you just heard John talking about it and North Korea's retreat from multi-nation talks have increased the diplomatic challenge facing the U.S.

With me now to talk more about the North Korean situation is Wendy Sherman. She is a former State Department counselor and special adviser to President Clinton. Wendy Sherman, you have, on the one hand, Donald Rumsfeld, the secretary of defense, saying he's not sure North Korea has nuclear weapons. Seems like the rest of the administration saying they assume they do. What do you believe?

WENDY SHERMAN, FMR. ADVISER TO PRES. CLINTON: I believe that North Korea probably does have at least one or two nuclear weapons and maybe as many as four, six or eight nuclear weapons. We don't know for sure, but unlike the situation in Iraq where we found out that, in fact, Iraq didn't really have a viable nuclear weapons program, didn't have weapons of mass destruction to speak of, we do have evidence that we've seen with eyes that North Korea was reprocessing spent fuel into plutonium.

Enough -- there were 8,000 fuel rods that could be enough plutonium for four to six to eight nuclear weapons and we know before their nuclear weapons plant was closed down in 1994, they probably put away enough plutonium for one or two nuclear weapons. So there is good reason to be concerned about what North Korea is doing and where they are headed.

WOODRUFF: Has the Bush administration or the president, in any way, given North Korea reason to fear the United States? Because part of their statement today was that they were concerned that there would be an effort to change their government.

SHERMAN: I think that North Korea has always believed that their regime's very survival is at stake, that the United States is the only country, because we're the last remaining superpower that can either destroy them or guarantee their security. They watch what happens in the world. They have seen Secretary Condoleezza Rice in Europe be very tough toward Iran, saying that Iran understands that if it does not act to move back from its nuclear weapons program, that inaction has consequences.

They heard her talk about North Korea as an outpost of tyranny. They have not seen signs that the administration is serious about the six-party talks, in terms of having true negotiations to really get the job done. So North Korea, in a very typical style, is trying to up the ante on the negotiations, take control of the negotiations. I think it's important to get them back to the table, it's good China said what it did, but there's going to be have to be some work done in front of the curtain and behind the curtain to get these talks under way again.

WOODRUFF: Who should make the next move here and what? SHERMAN: I think there's several things that can be done. One, the international community has today all said that North Korea should come back to the table. This is where the job should get done. That's very important for there to be unanimity. Second, it's important for people like China, who have a relationship with North Korea, to go in, to -- even perhaps offer incentives, as they have done for every other talk, to get them back to the table.

And it's important for the United States to watch our rhetoric, to not escalate the situation, but at the same time, send a serious symbol. That might be naming a high-level special envoy for the six- party talks now that former Assistant Secretary Jim Kelly has stepped down. So there are a bunch of things that can happen to help get North Korea back to the table.

WOODRUFF: What kind of rhetoric should the administration avoid in your view?

SHERMAN: I think the administration should avoid talking about them, calling names. The president was very careful in his State of the Union Address, I think that's the trajectory we ought to be on. It's not that North Korea is right in what it's doing, but we have to get them to the table. We're the big, powerful country. They're the lesser powerful, little country. We can do this.

WOODRUFF: All right. But they can cause some problems.

SHERMAN: Indeed, they can. Very dangerous.

WOODRUFF: Wendy Sherman, we appreciate it. It's always good to see you. Thank you.

SHERMAN: Thank you, good to see you, too.

WOODRUFF: Stay tuned to CNN day and night for the most reliable news about your security.

On Saturday Howard Dean becomes the next man to run the Democratic Party. It's no secret that Dean can sometimes speak his mind, but will his past words come back to hurt him? That story's next.

Plus, is Dean good for the Democrats? Donna Brazile and Bay Buchanan join us with the take from the left and the right.

And will Al Franken toss his hat into the ring now that a Senate seat is opening up in Minnesota? The answer in our "Political Bytes."

(COMMERCIAL BREAK)

WOODRUFF: From governor to presidential contender to chairman of the DNC. Howard Dean made an incredible rise and then suffered an unforgettable fall during the 2004 Democratic presidential race. Now he is set to become the new face of the party, at least one important face. But will his outspokenness get him in trouble again?

Here's CNN's Bruce Morton.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): Howard Dean, the party chair? Doesn't he sometimes put his foot in his mouth? Well, yes. Just before the 2004 caucuses NBC News found a caucus put down in a four-year old Canadian TV interview.

DEAN: If you look in the caucuses system, they are dominated by the special interests on both sides in both parties.

MORTON: Rivals pounced.

REP. DICK GEPHARDT (D), MISSOURI: It would leave one to believe that he is cynically participating in these caucuses.

MORTON: Dean had a second thought. Quote: "I support the Iowa Caucus and I have already promised Iowa Democratic Chair Gordon Fischer that if elected, the Iowa Caucus will be first again in 2008."

Then there was this...

DEAN: White folks in the South who drive pickup trucks with Confederate flag decals in the back ought to be voting with us and not them because their kids don't have health insurance either and their kids need better schools, too.

MORTON: Of course Democrats want southern votes, but some didn't like the language.

DEAN: I make no apologies for reaching out to poor white people.

MORTON: Though he did say he didn't mean to offend anybody. But that's Howard Dean.

DEAN: Look, I am not a perfect person. I've got plenty of warts. I say things that get me in trouble.

MORTON: He got criticized for saying the U.S. won't always have the strongest military. But who knows, always is a long time. And he is candid. "I've waffled before," he told the Associated Press once, "I'll waffle again."

And then there was the well-remembered scream.

DEAN: Yeeeeaaaarrrrgh!

MORTON: As a candidate, Dean was much better at raising money than at getting votes. Party chairs are supposed to raise money, of course, but when the party doesn't hold the White House, the party chair often speaks for the party, too. Good quotes, bad quotes? Dean made a prediction in a speech here Wednesday night.

DEAN: Most of you know there are a lot of people in this city that are afraid I'm going to be very unorthodox. And I am.

MORTON: The question for the Democrats, is that a threat or a promise?

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: And in just a moment, we'll talk to Bay Buchanan and Donna Brazile about Howard Dean and what to expect.

A new poll offers some sobering news for Senator John Kerry. Up next, a look at how Kerry fares among the voters who know him best when he's matched against Senator Hillary Clinton in a hypothetical presidential primary.

(COMMERCIAL BREAK)

WOODRUFF: The travels of former New York City Mayor Rudy Giuliani lead off today's "Political Bytes." Giuliani spoke at a tsunami benefit yesterday in South Carolina, a state that just happens to hold an early presidential primary. As we told you yesterday, Giuliani leads a new CNN poll of potential GOP presidential hopefuls.

In Massachusetts, a Suffolk University survey asked residents if they would they prefer their own senator, John Kerry, or New York Senator Hillary Clinton in a hypothetical Democratic primary match up in 2008. In a show of strength for Senator Clinton, she was the choice of 51 percent, while 34 percent chose home state Senator Kerry.

And word yesterday that Minnesota Senator Mark Dayton would not run for re-election had some wondering if talk show host Al Franken, a one-time Minnesotan, might enter the race himself. Well, Franken kept everybody wondering until the end of his radio show today when he announced that he will not run for Dayton's seat, but he left open a possible race against Republican Norm Coleman in 2008. Stay tuned.

Howard Dean as head of the Democratic Party, just ahead, we'll hear what Donna Brazile and Bay Buchanan have to say about Dean's new role, as well as the early polls on the '08 presidential race.

(COMMERCIAL BREAK)

WOODRUFF: With me now former Gore campaign manager Donna Brazile and Bay Buchanan, president of American Cause. Everybody and we keep talking about Howard Dean. He is going to be elected chairman of the Democratic Party, barring something unforeseen on Saturday.

Donna, he said yesterday he's not afraid to be unorthodox, to stand up and say what he believes. Is that what the Democrats need?

DONNA BRAZILE, DEMOCRATIC STRATEGIST: Well, absolutely, if you look at the new CNN/Gallup poll today, 80 percent of Democrats, really, they want someone who will lead the party in a different direction. So I think Howard Dean will be a great chairman, he will lead the party in the same pragmatic style that he led the state of Vermont. He has a lot of energy, a lot of passion and a lot of enthusiasm and those are missing ingredients right now in the current Democratic Party. BAY BUCHANAN, CNN CONTRIBUTOR: I just wonder, a different direction, I don't know, different from Clinton, is it? Is it different from Kerry? I'm just curious about that, Donna. And the second point is, he says what he believes, I think he should do more of that. Just -- what was it, 10 days ago, he said, I hate Republicans and everything they stand for. Now that's a person who is wanting to build a party and a majority. He hates -- not doesn't like them, he hates us.

Now I know you don't hate me, Donna, at least I don't think you do. And I don't think that's a good person to have heading up the party.

BRAZILE: Well, what he was saying was that he disliked Republican tactics, but he actually gave Republicans what I call a backhand compliment by saying the Republican Party has done a great job.

Look, if Howard Dean can close the structural gap, the communication gap, the technology gap, then the Democratic Party will be in fighting shape to beat the Republicans, not just hate the Republicans in 2006.

WOODRUFF: Bay, should the Republicans come out with a lot of opposition material on Dean, presumably they have still got some stored up?

BUCHANAN: Just keep it in holding position. This is a guy, you just kind of leak it out there. You saw the kind of -- he obviously doesn't have control. He has got a weak spot. He has a very bad temper. And he just takes off, he just loses it and says what he believes. He did that in Iowa, he's done it now again. I think what they should do is hold it and leak it and just keep the pressure going. He's going to flip...

BRAZILE: Bay...

(CROSSTALK)

BRAZILE: No way.

WOODRUFF: So they should leak it?

BUCHANAN: No. Not now. After he is in position, let him have a little while out there, he is going to just be a great asset to Republicans.

BRAZILE: Bay, you're going to eat your words because, first of all, it's not what you say, it's what you do in politics. And Howard Dean, I think, will do a very good job in getting this Democratic Party back on the road to winning elections.

And by the way, he is a blunt-talking, straight-talking, honest doctor. When you go to Howard Dean, he's not going to lie and tell you that you're looking good and you're feeling good. He's going to say, Donna, go and exercise, you're gaining weight. (LAUGHTER)

BRAZILE: He's the kind of guy that you really want in the party at this point because he can heal, but he can also tell people the truth.

BUCHANAN: But he's too angry, and that's a problem your whole party has. You're too angry and you're led by emotions, which is not smart.

BRAZILE: There's something called passion and he's passionate.

BUCHANAN: Well, hate is a pretty strong, passionate word, I will agree.

WOODRUFF: Speaking of passion, let's move on to 2008 presidential election. You're ready to talk about it. We've done a poll this week. Let's talk about the Republicans first, Bay. We asked Republicans who their choice would be for president. Who came out on top? Rudy Giuliani, 34 percent; John McCain, 29 percent; Jeb Bush, 12; and on down the list. Does this sound about right to you?

BUCHANAN: No. The first two don't have a prayer of a chance to make it through the primary, Judy. They're -- neither of them are strong enough.

WOODRUFF: They're the choice of most Republicans.

BUCHANAN: No, no. But there is a process that takes place. You have to make it through primaries, which means grassroots. You have to have real energy and excitement behind you in the grassroots, which means you have to have issues that will appeal to them. Rudy Giuliani is pro-choice and he's for gay rights. He won't make it through a Republican primary taking those positions. He's way too left.

WOODRUFF: Would those be formidable opponents for the Democrats?

BRAZILE: Well, I think they're attractive candidates. Look, I think it's time the Republican Party open up its tent and allow people with different views to be part of its leadership. On the Democratic side we're excited to see that Hillary Clinton has emerged as one of the leading frontrunners for 2008.

WOODRUFF: Well, let me cite those numbers...

(CROSSTALK)

WOODRUFF: Democrats, who are your choices for '08? Hillary Clinton, 40 percent, John Kerry, 25 percent, John Edwards, 17; and so forth way down the list. Does this scare you, Bay?

BUCHANAN: No, no. This is the makings of an extreme left-wing conspiracy in my personal opinion. This is -- can you get more left than this group? I mean, what do you guys do to your moderates, put them in closets and lock them? Where are your people who can represent middle America, the people out there in red states, because this group cannot?

WOODRUFF: I believe Hillary Clinton will be a mainstream Democrat. She's going to win re-election next year to the United States Senate and we'll see what happens in terms of 2008. The fact is that we have an incredible woman who can raise money, who is nationally known and someone who I believe can not only unify Democrats but bring independents and some Republicans.

BUCHANAN: Bring them on. At least she doesn't hate us, I don't think, so that is a plus. But you put her with Dean and Kerry and I think we have got a great team there.

BRAZILE: Bay, Valentine's Day is coming up and you've been blowing a lot of kisses her way and then she may blow one your way.

WOODRUFF: Now Bay, if it's not Giuliani or McCain, which horse are you looking?

BUCHANAN: Listen, there are a lot people out there, a lot of good issues. You don't even have Mitt Romney listed there, I think he would be a strong candidate. You have others who are grassroots who represent people out there who really have strong constituents. So I think it's going to be a very exciting primary.

WOODRUFF: And you don't have red staters like Mark Warner and Evan Bayh on here on the Democrats.

BRAZILE: Or Bill Richardson or Kathleen Sebelius. So I think this is an early poll. It's an indication that, once again, Mrs. Clinton is very popular and people like her very much.

BUCHANAN: That poll is name ID and that's all.

WOODRUFF: Well, we're certainly -- we like both of you and you are both very popular.

BUCHANAN: Maybe we should run.

BRAZILE: Oh, not me.

WOODRUFF: Thank you, both. We appreciate it.

BRAZILE: Thank you.

WOODRUFF: And that's all the time we have for today's INSIDE POLITICS. I'm Judy Woodruff, thanks for joining us. "CROSSFIRE" starts right now.

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