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Inside Politics

Bush's Intel Nominee; The 'Collectinator'; Tom DeLay Talks Social Security, So Does Evan Bayh

Aired February 17, 2005 - 15:29   ET

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

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


(BEGIN VIDEOTAPE)
ANNOUNCER: President Bush makes a long-awaited choice. Why did he tap John Negroponte to be the first national intelligence director?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He's a diplomat. He understands the power centers in Washington.

ANNOUNCER: Arnold Schwarzenegger does a star turn in Washington. Can he live up to his promise to be the "collectinator" for California?

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Hopefully we can work successfully in the future together in the future that we get more for California.

ANNOUNCER: The political calculations of Social Security reform. House Majority Leader Tom DeLay talks to Judy about the president's plan, congressional opposition and much more.

(END VIDEOTAPE)

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

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

So far, President Bush's nominee for national intelligence director is getting mostly positive feedback from both Republicans and Democrats on Capitol Hill. The selection of John Negroponte came just as some lawmakers have been wondering when Mr. Bush was finally going to fill the new and critical post.

Let's go to our White House correspondent, Suzanne Malveaux.

Hi, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hi, Judy.

Well, as you know, of course, John Negroponte is known around the world for his four decades of diplomacy, but it was not President Bush's first choice. The president went to at least two other top former officials in his father's administration offering the post. Both of them turning it down. Now, the president had four more months left to actually make his selection here, but he had been coming under increasing fire on the Hill, as you know, from critics who say that this vacancy was really crippling the intelligence community's ability to deal with potential threats.

Now, Mr. Bush's pick was really a surprise to many in Washington. Negroponte, as you know, has four decades of diplomatic experience as the U.S. ambassador to Iraq, to the U.N., to the Philippines, as well as to Mexico. But he has little experience when it comes to intelligence. But, of course, as this newly created head of some 15 intelligence agencies, all, of course, sharing a $40 billion budget, the president argued that he thought that perhaps Negroponte's diplomatic experience was specifically suited for the task.

(BEGIN VIDEO CLIP)

BUSH: This is going to take a while to get a new culture in place, a different way of approaching the budget process. That's why I selected John. He's a diplomat. He understands -- and he's an experienced person. He understands the power centers in Washington.

(END VIDEO CLIP)

MALVEAUX: And, of course, Judy, while he understands the power centers of Washington, he certainly will understand the mixed reviews that he's getting. Mostly positive reviews from members of Congress but, again, they are bringing up that point as well. They are bringing up a lack of experience when it comes to intelligence matters.

(BEGIN VIDEO CLIP)

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: I mean, think I always expected that the person who became the DNI would be more of a national security expert and a leader, and would bring together the various experts on intelligence in the community.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: This legislation appoints an individual as director of national intelligence. It is going to take other people's traditional turf, whether it be CIA, DOD, DIA, any of these other alphabet soup organizations that oversee intelligence. And so they aren't going to give up their turf easily.

(END VIDEO CLIP)

MALVEAUX: And, Judy, of course the president also says that the deputy that he is picking for Negroponte is Michael Hayden, a very important choice, as you know. This is because he heads the largest intelligence agency in the intelligence community, the National Security Agency.

This is meant to complement Negroponte's perhaps lack of experience in intelligence areas. Certainly hope that the White House will see it that way and that Negroponte will get through the Senate confirmation hearing relatively smoothly -- Judy. WOODRUFF: OK. Suzanne Malveaux with the latest from the White House. Thank you.

Well, a group of 9/11 families is questioning Mr. Bush's choice of Negroponte. The September 11th Advocates say they have serious reservations about Negroponte's skills and experience in the intelligence arena. And they say that Iraq, where he currently is ambassador, is far from an intelligence success.

Our Bruce Morton will take a closer look at Ambassador's Negroponte's personal and political history a little later on INSIDE POLITICS.

Now to the other main attraction here in Washington today, Arnold Schwarzenegger. The California governor is looking if something he was familiar with in his movie days, financing, to help ease his state's $8 billion budget shortfall. Our senior political correspondent Candy Crowley watched Schwarzenegger make the rounds.

(BEGIN VIDEO CLIP, "WILL & GRACE)

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): Hat in hand is not how one pictures the action figure who conquered California in a single weird election. But there he is, the collectinator.

SCHWARZENEGGER: Don't you think it's a great title?

(LAUGHTER)

CROWLEY: California's marquee governor came to Washington looking for better bang for the buck. He says for every dollar that Californians send east in federal taxes, the state gets back only 79 cents.

SCHWARZENEGGER: And we are not asking the White House, and we are not asking the federal government or anyone here in Washington to bail us out. We are not asking to go and get a hand-out. We just want our fair share.

CROWLEY: Though he will head home without a dime more, the governor's star power has put together a miracle of sorts.

REP. ZOE LOFGREN (D), CALIFORNIA: I'm very hopeful about the future.

CROWLEY: The governor managed to get the raucous and notoriously fractious California delegation in the same room at the same time, talking about the same thing. And they all came out saying things went great.

REP. BRAD SHERMAN (D), CALIFORNIA: If we don't act on it, it will have accomplished nothing. But we did all join hands and say Kumbaya.

CROWLEY: The governor, who still creates the chaos of a movie star, could use a little shine to take back home to the Golden State. Heir to a deeply troubled budget, his reform program will be put to the test in the special election this year.

His package includes a redo of the state retirement program; putting judges, not the legislature, in charge of redistricting; removal of protections for tenured teachers; automatic spending cuts during budget stalemates. Yikes! Lots of oxen being borne out there. Nowadays, Schwarzenegger even gets booed on the red carpet of movie premiers.

Did we mention he also put a freeze on nurse-patient ratios in hospital?

SCHWARZENEGGER: Pay no attention to those voices over there, by the way. Those are the special interests, if you know what I mean, OK? Ha ha ha.

UNIDENTIFIED FEMALE: Politics, to me, sometimes, it's like you say one thing to get where you need to go, and then when you get there, it's like you don't have to do what you said.

UNIDENTIFIED FEMALE: You referred to us as a special interest group. Yes, that was very insulting.

CROWLEY: You can say this for the governor, he still acts like it's the role of a lifetime.

SCHWARZENEGGER: I've been having the greatest time since becoming governor. I love my connection with the people.

CROWLEY: And it helps that Schwarzenegger still has a 60 percent approval rating and the ability to be an equal opportunity offender.

(END VIDEOTAPE)

CROWLEY: Schwarzenegger's former campaign manager and unofficial host of this visit is Congressman David Dreier, who opposes the governor's plan on redistricting. We are told the subject did not come up at the bipartisan meeting, but the governor did schedule another meeting with the liberal group Common Cause, which we expect will endorse the governor's idea.

WOODRUFF: Isn't that interesting?

CROWLEY: You know, it's probably one of the reasons he stays afloat, is he can -- you know, he both pleases and displeases, you know, sort of across the board.

WOODRUFF: Is he going to be in trouble if he goes home empty- handed, which is what you pointed out he may have to do?

CROWLEY: Nobody that we talked to thought that he'd come and get anything. They sort of see it as the beginning of the process.

But what was -- really was sort of incredible was to hear these -- the Democrats come out of this meeting going, "Well, it was really very good. And we've been invited to go to Sacramento. And so we'll carry on this conversation. We really feel like we're going to be unified as a group."

And you know very well that the California delegation is the delegation that's held up as "don't act like this." So it's been really interesting to see that he has -- his star power has, in fact, at least drawn them together in the same room.

WOODRUFF: Well, they all want more money for their state.

CROWLEY: Yes.

WOODRUFF: Not to mention their districts.

CROWLEY: Yes.

WOODRUFF: OK. Candy, thank you very much.

Governor Schwarzenegger may get the star treatment here in Washington. But as you heard a little of in Candy's piece, does he still have a huge fan club out in California? Coming up, our Bill Schneider will consider Schwarzenegger's survival strategy back home.

Next, the number two Republican in the House, Tom DeLay, joins us to talk about the big issues on the Hill from Social Security reform to defense spending.

Plus, our special segment this week, "Inside the Blogs." We'll tell you what the bloggers are getting fired up about now.

(COMMERCIAL BREAK)

WOODRUFF: Senate Democrats have found a new way of getting their message across about the president's Social Security reform plan. They unveiled a Social Security calculator which they say will tell Americans what they stand to lose under the president's proposal for private accounts. But the Bush plan is still very much a work in progress, with few specifics and many unanswered questions.

During his news conference today, Mr. Bush was asked about an interview he gave in which he refused to rule out raising the cap on payroll taxes. Would that be seen as going back on his pledge not to raise taxes? The president did not directly answer that question, talking, once again, about welcoming all ideas.

(BEGIN VIDEO CLIP)

BUSH: What I'm saying to members of Congress is that we have a problem. Come together and let's fix it, and bring your ideas forward. And I'm willing to discuss them with you. And so that's why I said what I said and will continue to say it.

(END VIDEO CLIP)

WOODRUFF: With me now to talk more about the president's Social Security reforms and other issues is Republican Tom DeLay of Texas. He is the House majority leader. He joins us from Capitol Hill. Mr. Leader, the president is leaving the door open to raising the current $90,000 income cap on which Social Security is taxed. If that were to be raised, would that be a tax increase?

REP. TOM DELAY (R-TX), MAJORITY LEADER: Well, Judy, the president is right in listening to anybody that wants to talk to him about any issue as to how to preserve and strengthen Social Security. But I, for one, am one of those that didn't come here to raise taxes. And it wouldn't do any good if you raised -- took the cap completely off.

It pushed the problem down maybe five to six years. It doesn't fundamentally fix the problem.

We can do this. We can strengthen and preserve Social Security and retirement security for our seniors and every generation, and we can do it without raising taxes.

WOODRUFF: So you're saying that would be, in your eyes, a tax increase if that happened, raising the cap?

DELAY: To everybody that makes over $90,000 a year, it's a tax increase.

WOODRUFF: So how do you do it if you don't, in some way or another, increase taxes or have enormous borrowing?

DELAY: Well, obviously, you have to first recognize the problem. As you well know, in 1945, there was 42 workers paying for every retiree. And in the 1950s, it was 16 to every retiree.

Right now, it's three workers working for every retiree. And by the time my daughter retires, it will be two workers for every retiree.

That is a real problem. And it's also a problem -- when they created Social Security, life expectancy was 60 years old. It is now 77 years old. And in just three years, the baby boomers start retiring. And the hit on Social Security is going to be mammoth.

So you have to understand, first you have to let people control their own retirement security. And secondly, those that are presently retired or about to retire, guarantee their benefits. That combination can more than fix the problem.

WOODRUFF: Are you advocating raising the retirement age?

DELAY: Not necessarily. Although, I think we can create a system where people can decide what their own retirement age is rather than the government making that decision.

And they can -- they can decide when to retire on their own. Particularly if they're the younger generation that has their own personal accounts. They ought to be able to decide when they retire and when it's more beneficial to retire.

WOODRUFF: Two other very quick things. First of all, how much Republican opposition is there still out there to the president getting what he wants, do you think?

DELAY: Well, I think there's some, but there is not very vocal. At least our members in the House understand that there is a problem, that we have to find a solution, that we can't just put this off for future generations.

Judy, every year that we wait adds another $600 billion to the cost of how to fix it later. We have to fix it now. And we know that we have to fix it now. Our members know that we have to fix it now.

Unfortunately, the Democrats won't admit that there is a problem, and certainly they're not going to provide any solution. We came here to provide solutions, and that's what we're going to do.

WOODRUFF: Mr. DeLay, I want to ask you finally about what -- one of the things that governor Arnold Schwarzenegger is trying to do, and that is reform the redistricting for not just legislative, but congressional districts in the state of California. You and I were just talking about this. You said to do it would set a bad precedent.

DELAY: Well, I'm very worried about this precedent of creating commissions to redistrict or to -- the system now of allowing judges to draw the lines. Our founding fathers envisioned having a House of Representatives that reflect the politics of the moment and reflect the politics of the people that they are representing. And they set up the system to do that for the state legislatures to draw these lines.

If you have a small group of people in a back room drawing the lines, what you'll end up with is a incumbent protection system instead of a system that truly represents the will of the people.

WOODRUFF: But don't -- but isn't there already a massive incumbent protection system with so little turnover?

DELAY: Yes, it's called judges. When the Democrats in Texas saw that they no longer were the majority party, they used judges to protect them. And they went 20 years being a minority party with a majority of the congressional delegation. And they used judges to do it. That makes my point for me.

WOODRUFF: We are going to leave it there. It's something I know we'll want to talk to you about again.

Congressman Tom DeLay, he is the House majority leader.

It's good to see you. Thanks very much.

DELAY: Thank you, Judy.

WOODRUFF: We appreciate it.

Well, fulfilling one of President Bush's top legislative priorities. The House today approved legislation designed to limit class action lawsuits. The bill shifts the venue for most large multi- state lawsuits from state to federal court, which are expected to allow fewer suits to go forward. The bill now goes to the president's desk for his signature.

The choice of John Negroponte to be the new director of national intelligence is drawing mostly positive reviews, as we've said. Members of both parties praising the president's choice, but what are the bloggers saying online? We'll check in on the blogosphere next, where critics are emerging on both the left and the right.

(COMMERCIAL BREAK)

WOODRUFF: It's time, once again, to go online to see what people are talking about in the blogosphere, the place where Web bloggers work. Joining me here in Washington, Jacki Schechner, again. She's our blog reporter. And with us again, CNN political producer Abbi Tatton.

Jacki, what are you seeing?

JACKI SCHECHNER, CNN BLOG REPORTER: Hi. We're going to talk about Negroponte in a minute, just like you mentioned, Judy. But the blogosphere today is abuzz with Peggy Noonan.

Abbi and I have been watching this all day long. The former Republican speechwriter and contributor to "The Wall Street Journal" wrote an article, an opinion article saying, "The blogs must be crazy or maybe mainstream media is just suffering from freedom envy."

She says the blogs are a public service. She comes out in favor of them. She says that they are self-correcting, it is not something to worry about, but rather something that we should all be embracing.

ABBI TATTON, CNN POLITICAL PRODUCER: So this very well-known Washington figure is suddenly a poster girl for the bloggers today. Let's look at what some of them are saying.

VodkaPundit. First of all, this is a Colorado-based blogger. He calls this article today "required reading."

Then Powerline Blog. Powerline is a very important blog, very well read. It was called by one mainstream media outlet as the blog of the year last year. What Powerline says about this article is that it's -- "It gives the sophisticated consumer celebration of the best of what is on offer in the blogosphere."

And Hugh Hewitt, as well, he looks at this. Hugh Hewitt, in fact, wrote a book about blogging. And he is very happy that "The Wall Street Journal" does have some writers who understand what is happening out there.

SCHECHNER: We also wanted to take a look at LittleGreenFootballs.com, and not just because we liked the name. That's one of the big blog stars.

And they have a lot of people posting comments on it, all very positive comments, and taking little excerpts from what Noonan wrote and talking about it all in a very good way. We had 173 comments and counting last time we checked and looked in on this one. TATTON: Now, the big political story here in Washington is that President Bush has nominated his national director of intelligence. That's John Negroponte.

Now, this is not the big story on the blogs today, but it's certainly getting talked about. We found it very difficult to find some -- any positive reaction to this. We were looking on some of the conservative sites and just saw that it doesn't seem too popular.

On The Corner -- The Corner, which is the National Review Online's blog, they consider themselves a little bit underwhelmed by this decision.

Another one, Outside The Beltway, let's look at what they're saying. They want to withhold an opinion on it, but they say, "At first blush, though, this strikes me as a very odd choice."

SCHECHNER: One of the other blogs we took a look at when we were delving into the Negroponte issue was StateProgress.org (ph), a more liberal blog. They started with headlines throughout the day.

It was "Negroponte Cuts and Runs" was the first one, talking about he was the ambassador to Iraq, now he's back in Washington. Then they went to "Negroponte New to Intelligence," talking about how he is the latest in a string of questionable nominations.

Then we went back to the site and it says, "Why Negroponte Got the Nod," talking about at least three potential nominees turned down the position. So what they're doing now is updating their headlines throughout the day and people are commenting on that.

We also went to (UNINTELLIGIBLE), which is always a fun site. The title was "Negroponte: No Stuff Sometimes." Let me flip over to (UNINTELLIGIBLE), so you can see that. And it talks about him being the former ambassador to Honduras, being called the ostrich ambassador, and the quote was, "Awesome. The dude who gives new meaning to the phrase 'couldn't find his behind with both hands.'"

So not favorable to Negroponte thus far.

The other thing that was climbing in the rankings today in terms of what people were linking to, another op-ed piece. This one by Maureen Dowd. And it was NewYorkTimes.com.

She talks about how she was rejected for a White House press pass at the start of the Bush administration, wondering how Gannon (UNINTELLIGIBLE), the guy we've been talking about all week, got in. It's been bumping around the blogosphere and now it's back in a lot of these blogs.

TATTON: And actually, this is interesting. Just in the last half- hour, there seems to be new things on the blogs breaking on this.

This is from AmericaBlog.org, one of the sites that has been looking into Gannon the whole time, and also from DailyKos.com. They're looking at a picture from March 2003, before it seems Talon News was even an organization, even founded, and they seem to think that Gannon was wearing a hard (ph) pass.

Now, this is just coming out right now. We don't know where this is going. But it seems that AmericaBlog.org and some of the others are continuing to delve on this story.

SCHECHNER: They also had a call to arms from the mainstream reporters for some help in finding background on Talon News. The idea being that Gannon was in the White House before Talon News even existed, and how did he get in there without a credible news agency behind him?

So it's also interesting that maybe this is a sign of what's to come, Judy, in terms of collaboration. Is this really a sign that maybe some of the mainstream media is embracing the immediacy and the sort of wide-reaching effect of the Internet and saying, help us out, how do we find information about this?

WOODRUFF: Well, we are certainly taking a look with this segment every day this week. So that's one day we're trying to get at least a better understanding of what the blogs are up to.

All right. Jacki Schechner, Abbi Tatton, thank you both. We appreciate it.

SCHECHNER: You're welcome.

TATTON: Thank you.

WOODRUFF: See you again tomorrow.

SCHECHNER: Absolutely.

WOODRUFF: Meantime, to another story we're watching. The Public Broadcasting Service says that a recent flap over a cartoon plot is not the reason the president and chief executive, Pat Mitchell, plans to step down next year.

Mitchell had been criticized by some conservatives for an episode featuring the animated rabbit Buster visiting a lesbian couple which she decided not to run, that episode. A PBS spokeswoman says, "That this has anything to do with her decision not to air the 'Postcards from Buster' episode is incorrect. And to think her deciding to leave has anything to do with it is blatantly incorrect." They could be the rivals in the next race for the White House. But today, John Kerry and Hillary Clinton teamed up for a common cause. We'll tell you what it is.

Plus, he was the wonder boy of the right, but is Ralph Reed finally ready to make his own run for office? The answer later on INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: It is just about to turn 4:00 on the East Coast. And as the markets get set to close on Wall Street, I'm joined by Kitty Pilgrim in New York with "The Dobbs Report." Hello, Kitty.

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

Stocks on Wall Street pretty much lower. The blue chip average retreating from its high for the year.

As the final trades being counted, we see the Dow significantly lower. It's down about 80 points right now. The Nasdaq is also about 1 percent lower.

Here is a number for you. Wal-Mart holiday sales topped $82 billion. Let's put that in perspective. It's more than the sales of Target, Home Depot, Costco, J.C. Penney and Sears all combined.

Well, soaring oil prices, a weak dollar, both sent import prices higher by nearly one percent last month. That is a worry, because Americans are relying more and more on foreign imports and higher prices could drag on the economy.

Speaking of the economy, Fed Chief Alan Greenspan says the problems of the country's Social Security system are nowhere near as bad as the shortfalls facing Medicare. But he believes that neither program is facing an immediate crisis. Greenspan told a House committee today economic growth would help both programs. He also repeated his support for personal retirement accounts. He believes that the accounts could promote savings and then create a sense of wealth and ownership among poor Americans.

Coming up on CNN, 6:00 p.m. Eastern on "LOU DOBBS TONIGHT," our special report, "Culture in Decline." The number of American students who are choosing to study Math or Science is declining and the results could be devastating for our country.

(BEGIN VIDEO CLIP)

C.D. MOTE, PRESIDENT, UNIV. OF MARYLAND: Our future, our economic future, our security, depends on us being a leading creator country. And that therefore, we need a base of science and technology people in our country that can provide us this advantage in the world.

(END VIDEO CLIP)

PILGRIM: Also tonight, President Bush's nomination of John Negroponte as director of national intelligence. We'll discuss it with Senators Pat Roberts and Jay Rockefeller, both of the Senate Intelligence Committee. Plus, cheap Chinese imports now affecting farmers, specifically garlic growers. Chinese farmers are taking advantage of a trade loophole and threatening the entire U.S. garlic industry. We have a special report on that.

And later, Senator Ted Kennedy talks about his efforts to protect Americans from bankruptcy brought on by medical bills. That and more tonight, 6:00 p.m. Eastern. Now back to Judy Woodruff -- Judy.

WOODRUFF: Thanks, Kitty. We'll be watching at 6:00. INSIDE POLITICS continues right now.

(BEGIN VIDEOTAPE)

JOHN NEGROPONTE, AMB. TO IRAQ: I'm honored that you would select me to be the first director of national intelligence.

(END VIDEOTAPE)

ANNOUNCER: Ambassador John Negroponte is tapped for a challenging new job. We'll examine his credentials and past controversies.

Governor Schwarzenegger on a mission in the nation's capital. Is his political future back in California on the line? .

BUSH: I clarified a variety of ideas that people should be encouraged to bring forth, without political retribution.

ANNOUNCER: But there are still taxing questions about Social Security reform. Does the president think a higher cap is the same as a tax hike?

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

(END VIDEOTAPE)

WOODRUFF: Welcome back. As some administration officials have told it, John Negroponte was not the president's first choice to be national intelligence director. The White House officially denies that, but there is no dispute that it took Mr. Bush some time before he nominated Negroponte for the job today. The president expressed his diplomatic skills as the current U.S. ambassador to Iraq and as a former ambassador to the United Nations.

Our national correspondent Bruce Morton takes a closer look at John Negroponte's career and qualifications.

(BEGIN VIDEOTAPE)

NEGROPONTE: Thank you, Mr. President. I'm honored that you would select me to be the first director of national intelligence.

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): Nobody is going to say he's not smart enough, that's for sure. Wealthy family, went Exeter, went to Yale, yes, just like the president. Was in Vietnam early in the 1960s along with Richard Holbrooke, who'd also be ambassador to the U.N. later on. Negroponte spoke Vietnamese, could sing in Vietnamese, friends say, which isn't easy.

He went to Paris when the peace talks broke with Secretary of State Kissinger over a provision allowing the north to keep some troops in the south, which would help Ho Chi Minh conquer Saigon in 1975. He was sent next to Quito, Ecuador. Kissinger said this was not sending him into exile.

First ambassadorship: Honduras. The Reagan administration used Honduras as a base to help the right-wing Contras fight the left-wing Sandinista government in nearby Nicaragua. Critics say Negroponte turned a blind eye to human rights abuses by Honduran death squads. One critic spoke up during the hearing on Negroponte's appointment to be ambassador to Iraq.

UNIDENTIFIED MALE: Senators, please ask the ambassador about Battalion 316. Ask him about his involvement in a death squad in Honduras that he supported.

MORTON: The Reagan administration gave the head of that battalion a medal. Negroponte said he protested the abuses privately. He and his wife have adopted five Honduran children. He went on to more ambassadorships: Mexico, the Philippines, United Nations and now Iraq. And he may need all his diplomatic skills, yet all the different intelligence agencies used to being in charge of their budgets, their secrets, their turf, to understand that they all now report for the first time to one man, to him. It surely won't be easy.

Bruce Morton, CNN, Washington. .

(END VIDEOTAPE)

WOODRUFF: Thank you, Bruce.

In contrast to John Negroponte, Arnold Schwarzenegger is a household name. The California governor is here in Washington today, banking on his star power to help his state and his own political fortunes. Our senior political analyst Bill Schneider reports on Schwarzenegger's strategy.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): A new movie just opened: Mr. Schwarzenegger Goes to Washington. The governor is on a promotional tour, just like he used to do for his movies. This time, he's promoting his state, pressing the federal government to give California more funding, exactly as he promised in 2003.

SCHWARZENEGGER: By the time I'm through with this whole thing, I will not be known as the terminator, I will be known as the collectinator.

SCHNEIDER: California has 53 members of Congress, one eighth of the House of Representatives, but they've always been divided by party. Schwarzenegger aims to change that.

SCHWARZENEGGER: Well, I'm the governor of the state of California and, therefore, it is really up to me to bring the delegation together.

SCHNEIDER: Unity is crucial for Schwarzenegger's political survival. He's a Republican governor of a strongly Democratic state and his Democratic support has been slipping. While Schwarzenegger has a 60 percent job approval rating among all California voters, Democrats are turning against him, including the Democratic party's new national chairman.

HOWARD DEAN, DNC CHAIRMAN: We have to make sure that Governor Schwarzenegger gets terminated.

SCHNEIDER: Schwarzenegger cannot survive in California as a partisan, hence, he is unity strategy. It's a positive unity to promote the interests of California and a negative unity.

SCHWARZENEGGER: We'll be against the politics as usual and it will be reform and changes versus status quo and a special interest. This is the way we framed the whole thing.

SCHNEIDER: He's championing a measure that threatens virtually every incumbent state and federal legislator in California, a measure that would draw new district lines without regard to party.

SCHWARZENEGGER: Whenever you see both parties disagree with something, then you know you're on to something really good.

SCHNEIDER: How's the governor going to overcome resistance from the politicians? Like a movie star, with a promotional tour.

SCHWARZENEGGER: You will see me at CostCos, you will see me at different shopping malls and I'll be out there gathering the signatures and helping and making sure that we get all those things on the ballot.

(END VIDEOTAPE)

SCHNEIDER: Governor Schwarzenegger is fighting partisanship with populism. It's a smart strategy for California and it's getting attention around the country.

WOODRUFF: Bill, you pointed out his support among Democrats is slipping, his support among Republicans holding steady.

SCHNEIDER: Yes, that's holding quite steady.

WOODRUFF: But among Democrats, why is he having any problems?

SCHNEIDER: He's taking on the teachers, challenging their interests and he's taking on the nurse's union, which ran a very biting ad against him, objecting to his calling them a special interest. He's getting into fights with some important Democratic constituencies and -- by taking them on on budgetary issues.

WOODRUFF: It's taking a little toll.

SCHNEIDER: Yes.

WOODRUFF: OK. Bill Schneider, thank you.

SCHNEIDER: Well, many people still have many questions about President Bush's Social Security reform plan. Up next, has he blurred the line about what constitutes a tax hike? Donna Brazile and Bay Buchanan will face off on that and other things. And later, Senate Democrat Evan Bayh has his own take on the Social Security debate and how the Pentagon is spending tax-payer's money.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

KARL ROVE, DEP. WHITE HOUSE CHIEF OF STAFF: Next time one of your smarty pants liberal friends to you says, well, he didn't have a mandate. You tell him about this delicious fact, this president got a higher percentage of the vote than any Democrat candidate for president since 1964.

(END VIDEO CLIP)

WOODRUFF: Karl Rove, the president's top political adviser, speaking today at the Conservative Political Action Committee gathering here in Washington, CPAC. With me now, former Gore campaign manager Donna Brazile and Bay Buchanan, president of American Cause.

Donna, I don't know if you're one of those smarty pants liberal friends of those CPAC attendees, but Karl Rove has a point here. The president does have a mandate, then.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: No. The president doesn't have a mandate. President Bush has the lowest re-elect numbers of any incumbent president since Woodrow Wilson in 1916. Karl's a historian, he knows that. What President Bush was able to achieve this time is an electoral success by winning the popular vote, but he did not -- I don't believe he has a mandate. And I'm a smarty pants liberal. I don't have a problem with that.

(LAUGHTER)

WOODRUFF: We know you're not a smarty pants liberal, but what do you think?

BAY BUCHANAN, PRES., AMERICAN CAUSE: This man is feeding a little red meat to the troops. That's all, getting them riled. But there is no question, he is smart, there's a big dispute out there, Democrats say it wasn't a mandate, the press says it might not have been a mandate. He should claim a mandate. Let the American people, as many who will listen, think it is a mandate, he accomplishes a great deal more and go right ahead.

BRAZILE: He claimed the last one was a mandate and he didn't win. So hopefully this time he will just claim some bipartisanship and civility.

BUCHANAN: He got in the White House, that was something.

BRAZILE: Well, thanks to the Supreme Court.

BUCHANAN: More than you guys did.

BRAZILE: That's right. We don't know how to take elections the way you guys do.

WOODRUFF: Bay, the president is leaving the door open to raising the income on which Social Security can be taxed. It's now $90,000. He's leaving the door open to raising that. Is that a tax increase?

BUCHANAN: It's most definitely a tax increase and the conservatives in the House will shut that door mighty quickly. I don't believe he can get that through his own party in the House. This is clearly a position that the party has taken. Republicans say we don't increase taxes. They fought for those tax cuts and now he's asking to reverse them. No, I don't think it will happen.

WOODRUFF: Would it be a smart thing to do if they could get it through, Donna?

BRAZILE: Well, I don't think so. I think there are other ways to secure the system. And first of all, the president should put his proposal on the table and stop just giving us another press conference and another rally. The Republicans have not put together a proposal and that's why the president is now opening the door to just about anything just to keep the idea of privatizing Social Security on the table.

BUCHANAN: And Judy, Donna and I both recognize it will be a tax increase because both of us will be hit hard by it.

(LAUGHTER)

BRAZILE: Yes. As self-employed women, we will get the brunt of it.

BUCHANAN: We were discussing this. We are both opposed to this.

(LAUGHTER)

WOODRUFF: All right. Let's talk about John Negroponte, the president's choice to be the new director of national intelligence. New position. The word is third choice. But was this the right choice, Bay?

BUCHANAN: You know, this position is a tough one. I think something has been created here that may not work, it just doesn't work. But what he did, is he chose somebody outside the intelligence industry, which is smart because there's so much turf war going on here and people seem to have an ax in one camp or another, and so maybe he can break that up. But I think his real problem is he controls the budget and he has the confidence of the president. But what he doesn't have is the ability to hire and fire. And if you can't fire the people that aren't giving you the kind of response you need, then I don't know how much you -- what kind of changes you can make.

BRAZILE: This is a very important position. The 9/11 Commission said that. People were very concerned the president was dragging his feet in selecting someone. We now know it was his third choice. He's a very seasoned and skilled diplomat, we all know that. He will answer some questions. I'm sure, once again, people will raise some of his background in Iran-Contra, et cetera. But, by and large, this is very important position, it's not a policy position. He must give the president objective advice, not subjective, and try to clean up and restore credibility to our intelligence agencies.

WOODRUFF: So, Bay, maybe the 9/11 families that have issued a statement today being critical, they're saying they don't think he has got the necessary experience and the skills for the job. Do they have a point?

BUCHANAN: What you need is somebody that will just crack heads. You need some -- you have all of these tough hardened people who are in intelligence, who have been working in their areas for years, and you need somebody who is going to break that open. Can he do that, somebody who is coming in from a field where you negotiate and compromise and work with people, use diplomacy.

Diplomacy doesn't work inside the government. The only thing it does is it says, you're out of here, you lose your job, you don't do what I tell you. And that's what concerns me. This is too critical of an area. But I think it's not the president's problem. Congress delivered him someone that doesn't have the clout that I think can do the job. Negroponte is a good guy. He has the confidence of the president. He's a smart guy. He's coming from the outside, all those things are pluses. But can anyone do it or does it need somebody even tougher? And will he be able to do it?

BRAZILE: But his number two, Mr. Hayden, is a very smart and very intelligence guy. He understands the job. He understands how to coordinate all these various departments that handle intelligence. So I think perhaps he needs to rely on number two and use his diplomatic skills just to keep the trains running on time, so to speak.

BUCHANAN: I don't know, but we hope obviously 15 agencies have to be brought together. I think this is just the start of something that is going to have to be changed. It is an unworkable system right now.

WOODRUFF: All right.

BRAZILE: Have to restore credibility to our own intelligence apparatus.

BUCHANAN: We have to get good intelligence for the president.

BRAZILE: Absolutely. Analyze it, disseminate in a subjective manner -- I mean, an objective manner and leave all the politics to the politicians.

(CROSSTALK)

BRAZILE: See, we agree today. I don't know. Smarty pants...

(CROSSTALK)

BUCHANAN: ... time to change the subject. BRAZILE: Karl Rove must have done it for us.

WOODRUFF: I think so.

BUCHANAN: I think it's that tax increase proposal.

WOODRUFF: Donna Brazile, Bay Buchanan...

(CROSSTALK)

BRAZILE: ... tax increase...

(CROSSTALK)

WOODRUFF: ... thank you, both. That was what did it. Donna, Bay, thank you very much.

The costs of the military operation in Iraq continue to rise. Up next, I'll ask Senator Evan Bayh about Pentagon spending and his effort to eliminate what he calls the "patriot penalty" affecting soldier salaries.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: He's a terrific person who has done a wonderful job in Iraq and he will be confirmed by the Senate, I have every reason to believe, and do a wonderful job for the country.

(END VIDEO CLIP)

WOODRUFF: Defense Secretary Donald Rumsfeld commenting just moments ago at the Capitol after testifying before a committee there, commenting on John Negroponte, announced by President Bush today as his choice to head the new -- to be the new head of national defense -- national intelligence.

Well, the Senate held hearings today on a new Pentagon budget, including an $80 billion supplemental request for Iraq. Yesterday I sat down with Democratic Senator Evan Bayh of Indiana and I started by asking if he thinks the money already allocated for Iraq is being well spent.

(BEGIN VIDEOTAPE)

SEN. EVAN BAYH (D-IN), ARMED SERVICES CMTE.: Not all of it, Judy. There have recently been some hearings showing that there may be some real problems with contracting and some potential waste and abuse in Iraq. But, look, we have no choice accept to approperate the money for the troops. We have to see this through to a successful conclusion. That is going to involve some money, but at the same time, we need to do everything humanly possible to make sure that the American taxpayers' dollars aren't being wasted there. So we have to do both, not choose one or the other. WOODRUFF: One thing we know you're trying to do, Senator, is redress the gap for the Guard and the reserves, the gap between what they earned as civilians versus what they're being paid in the military, if it's less. We're told this would add up to something like $250 million a year. And, yet, the spokesman for the National Guard Association is sounding kind of lukewarm. He's saying, well, there are so many needs out there. Are you convinced this is the best use of that money?

BAYH: Judy, this is imperative use of that money. And frankly I find the attitude of that spokesperson to be inconceivable. We have men and women who are being forced to choose doing right by their families and doing right by our country. That's wrong. And we should stop it. Where men and women have been called up for more than six months, we should try to address what I call the "patriot penalty," the substantial reduction in income that they face, which, for too many of them, has forced them into bankruptcy because they can't pay medical bills, can't pay their mortgage, it's just plain wrong, Judy.

And $250 million, that's still a lot of money for most Americans, but just look at the question you asked me about the $80 billion-some for Iraq, surely we can find it within not only our budget but within our hearts to do right by these brave men and women. I think it has to be one of our top priorities.

WOODRUFF: Senator, let me ask you a question about Social Security. The Federal Reserve Board Chairman Alan Greenspan testifying just this week on Capitol Hill, saying he approves of the president's proposal to have private investment accounts as long as those are phased in. You're on the Special Committee on Aging. Is that the right solution?

BAYH: Judy, I don't favor private accounts as a replacement for Social Security. But I do think they'd be a good idea in addition to Social Security. And the reason that I believe that is that Social Security is that basic insurance that we have. So that if your stock investments happen to go south or you happen to retire in the wrong year, you still have that bedrock you can fall back on.

It's a little bit like the insurance you have on your home or your car in case of a fire or a theft, you don't lose everything. So we ought to build on that. And if we did that, I think we could get a good bipartisan consensus. But in terms of basically changing the very nature of Social Security away from providing that floor against poverty that we don't allow seniors to sink through, I think that's a nonstarter and I would respectfully disagree with Chairman Greenspan on that.

WOODRUFF: Running for the presidency, a source who is said to be close to you has told Roll Call that you haven't made a firm decision yet, but that you're putting a team in place to work on fund-raising, politics, political action committee and strategy and so forth. So, clearly, you're giving this some serious thought.

BAYH: Well, Judy, I know you're only doing your job by asking me that question and I'm going to do my job. We've had hearings just this week on national security, what to do about Iran and North Korea. We're moving to try and address the issue you mentioned. What about retirement security and growing our economy to create more good-paying jobs?

And we just had an inaugural, we just had an election. I think what we need now is a season of progress, all of us working together, Democrats, Republicans, independents to move this country forward. And if we do that, Judy, then I think these political questions will take care of themselves.

WOODRUFF: But you've hired the man who ran the 527 in Ohio for America Coming Together to run your political action committee.

BAYH: Well, he's a good fellow. And I think we need direction in my committee. So I want to be effective, I want to be effective in addressing the important substantive challenges that face our country, and this man that you just mentioned, Steve Bouchard (ph) is his name, I think can help me do that.

(END VIDEOTAPE)

WOODRUFF: Indiana Senator Evan Bayh, not wanting to talk about running for president in four years.

Well, he has been the brains behind other candidates, now, he's ready, apparently, to put his own name on the ballot. Up next, we'll tell you which statewide office Ralph Reed has chosen to run for in his home state of Georgia.

(COMMERCIAL BREAK)

WOODRUFF: A man who's made his name advising other candidates has decided to make his own run for political office. Leading off today's "Political Bytes." Long-time Republican strategist Ralph Reed announced today he plans to run for lieutenant governor of Georgia next year. Reed was a regional director for the 2004 Bush campaign. Of course he also once headed the Christian Coalition. And he served as chairman of the Georgia Republican Party.

WOODRUFF: Election reform was the topic today at a news conference held by Senator Hillary Clinton along with fellow Senators Barbara Boxer and former presidential candidate John Kerry. They are proposing legislation to require a paper trail for electronic ballots, along with other new rules to standardize voting procedures nationwide. I remember some problems in Ohio.

Meantime, the Associated Press is reporting that former Homeland Security Secretary Tom Ridge met twice last spring with Republican pollsters just before he made more than a dozen trips to presidential battleground states. Department officials say one of those meetings was about communicating the department's messages to the public and that presidential politics was not discussed. The other meeting, they say, was personal. And that it had no connection to politics or homeland security issues.

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

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


Aired February 17, 2005 - 15:29   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
ANNOUNCER: President Bush makes a long-awaited choice. Why did he tap John Negroponte to be the first national intelligence director?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He's a diplomat. He understands the power centers in Washington.

ANNOUNCER: Arnold Schwarzenegger does a star turn in Washington. Can he live up to his promise to be the "collectinator" for California?

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Hopefully we can work successfully in the future together in the future that we get more for California.

ANNOUNCER: The political calculations of Social Security reform. House Majority Leader Tom DeLay talks to Judy about the president's plan, congressional opposition and much more.

(END VIDEOTAPE)

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

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

So far, President Bush's nominee for national intelligence director is getting mostly positive feedback from both Republicans and Democrats on Capitol Hill. The selection of John Negroponte came just as some lawmakers have been wondering when Mr. Bush was finally going to fill the new and critical post.

Let's go to our White House correspondent, Suzanne Malveaux.

Hi, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hi, Judy.

Well, as you know, of course, John Negroponte is known around the world for his four decades of diplomacy, but it was not President Bush's first choice. The president went to at least two other top former officials in his father's administration offering the post. Both of them turning it down. Now, the president had four more months left to actually make his selection here, but he had been coming under increasing fire on the Hill, as you know, from critics who say that this vacancy was really crippling the intelligence community's ability to deal with potential threats.

Now, Mr. Bush's pick was really a surprise to many in Washington. Negroponte, as you know, has four decades of diplomatic experience as the U.S. ambassador to Iraq, to the U.N., to the Philippines, as well as to Mexico. But he has little experience when it comes to intelligence. But, of course, as this newly created head of some 15 intelligence agencies, all, of course, sharing a $40 billion budget, the president argued that he thought that perhaps Negroponte's diplomatic experience was specifically suited for the task.

(BEGIN VIDEO CLIP)

BUSH: This is going to take a while to get a new culture in place, a different way of approaching the budget process. That's why I selected John. He's a diplomat. He understands -- and he's an experienced person. He understands the power centers in Washington.

(END VIDEO CLIP)

MALVEAUX: And, of course, Judy, while he understands the power centers of Washington, he certainly will understand the mixed reviews that he's getting. Mostly positive reviews from members of Congress but, again, they are bringing up that point as well. They are bringing up a lack of experience when it comes to intelligence matters.

(BEGIN VIDEO CLIP)

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: I mean, think I always expected that the person who became the DNI would be more of a national security expert and a leader, and would bring together the various experts on intelligence in the community.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: This legislation appoints an individual as director of national intelligence. It is going to take other people's traditional turf, whether it be CIA, DOD, DIA, any of these other alphabet soup organizations that oversee intelligence. And so they aren't going to give up their turf easily.

(END VIDEO CLIP)

MALVEAUX: And, Judy, of course the president also says that the deputy that he is picking for Negroponte is Michael Hayden, a very important choice, as you know. This is because he heads the largest intelligence agency in the intelligence community, the National Security Agency.

This is meant to complement Negroponte's perhaps lack of experience in intelligence areas. Certainly hope that the White House will see it that way and that Negroponte will get through the Senate confirmation hearing relatively smoothly -- Judy. WOODRUFF: OK. Suzanne Malveaux with the latest from the White House. Thank you.

Well, a group of 9/11 families is questioning Mr. Bush's choice of Negroponte. The September 11th Advocates say they have serious reservations about Negroponte's skills and experience in the intelligence arena. And they say that Iraq, where he currently is ambassador, is far from an intelligence success.

Our Bruce Morton will take a closer look at Ambassador's Negroponte's personal and political history a little later on INSIDE POLITICS.

Now to the other main attraction here in Washington today, Arnold Schwarzenegger. The California governor is looking if something he was familiar with in his movie days, financing, to help ease his state's $8 billion budget shortfall. Our senior political correspondent Candy Crowley watched Schwarzenegger make the rounds.

(BEGIN VIDEO CLIP, "WILL & GRACE)

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): Hat in hand is not how one pictures the action figure who conquered California in a single weird election. But there he is, the collectinator.

SCHWARZENEGGER: Don't you think it's a great title?

(LAUGHTER)

CROWLEY: California's marquee governor came to Washington looking for better bang for the buck. He says for every dollar that Californians send east in federal taxes, the state gets back only 79 cents.

SCHWARZENEGGER: And we are not asking the White House, and we are not asking the federal government or anyone here in Washington to bail us out. We are not asking to go and get a hand-out. We just want our fair share.

CROWLEY: Though he will head home without a dime more, the governor's star power has put together a miracle of sorts.

REP. ZOE LOFGREN (D), CALIFORNIA: I'm very hopeful about the future.

CROWLEY: The governor managed to get the raucous and notoriously fractious California delegation in the same room at the same time, talking about the same thing. And they all came out saying things went great.

REP. BRAD SHERMAN (D), CALIFORNIA: If we don't act on it, it will have accomplished nothing. But we did all join hands and say Kumbaya.

CROWLEY: The governor, who still creates the chaos of a movie star, could use a little shine to take back home to the Golden State. Heir to a deeply troubled budget, his reform program will be put to the test in the special election this year.

His package includes a redo of the state retirement program; putting judges, not the legislature, in charge of redistricting; removal of protections for tenured teachers; automatic spending cuts during budget stalemates. Yikes! Lots of oxen being borne out there. Nowadays, Schwarzenegger even gets booed on the red carpet of movie premiers.

Did we mention he also put a freeze on nurse-patient ratios in hospital?

SCHWARZENEGGER: Pay no attention to those voices over there, by the way. Those are the special interests, if you know what I mean, OK? Ha ha ha.

UNIDENTIFIED FEMALE: Politics, to me, sometimes, it's like you say one thing to get where you need to go, and then when you get there, it's like you don't have to do what you said.

UNIDENTIFIED FEMALE: You referred to us as a special interest group. Yes, that was very insulting.

CROWLEY: You can say this for the governor, he still acts like it's the role of a lifetime.

SCHWARZENEGGER: I've been having the greatest time since becoming governor. I love my connection with the people.

CROWLEY: And it helps that Schwarzenegger still has a 60 percent approval rating and the ability to be an equal opportunity offender.

(END VIDEOTAPE)

CROWLEY: Schwarzenegger's former campaign manager and unofficial host of this visit is Congressman David Dreier, who opposes the governor's plan on redistricting. We are told the subject did not come up at the bipartisan meeting, but the governor did schedule another meeting with the liberal group Common Cause, which we expect will endorse the governor's idea.

WOODRUFF: Isn't that interesting?

CROWLEY: You know, it's probably one of the reasons he stays afloat, is he can -- you know, he both pleases and displeases, you know, sort of across the board.

WOODRUFF: Is he going to be in trouble if he goes home empty- handed, which is what you pointed out he may have to do?

CROWLEY: Nobody that we talked to thought that he'd come and get anything. They sort of see it as the beginning of the process.

But what was -- really was sort of incredible was to hear these -- the Democrats come out of this meeting going, "Well, it was really very good. And we've been invited to go to Sacramento. And so we'll carry on this conversation. We really feel like we're going to be unified as a group."

And you know very well that the California delegation is the delegation that's held up as "don't act like this." So it's been really interesting to see that he has -- his star power has, in fact, at least drawn them together in the same room.

WOODRUFF: Well, they all want more money for their state.

CROWLEY: Yes.

WOODRUFF: Not to mention their districts.

CROWLEY: Yes.

WOODRUFF: OK. Candy, thank you very much.

Governor Schwarzenegger may get the star treatment here in Washington. But as you heard a little of in Candy's piece, does he still have a huge fan club out in California? Coming up, our Bill Schneider will consider Schwarzenegger's survival strategy back home.

Next, the number two Republican in the House, Tom DeLay, joins us to talk about the big issues on the Hill from Social Security reform to defense spending.

Plus, our special segment this week, "Inside the Blogs." We'll tell you what the bloggers are getting fired up about now.

(COMMERCIAL BREAK)

WOODRUFF: Senate Democrats have found a new way of getting their message across about the president's Social Security reform plan. They unveiled a Social Security calculator which they say will tell Americans what they stand to lose under the president's proposal for private accounts. But the Bush plan is still very much a work in progress, with few specifics and many unanswered questions.

During his news conference today, Mr. Bush was asked about an interview he gave in which he refused to rule out raising the cap on payroll taxes. Would that be seen as going back on his pledge not to raise taxes? The president did not directly answer that question, talking, once again, about welcoming all ideas.

(BEGIN VIDEO CLIP)

BUSH: What I'm saying to members of Congress is that we have a problem. Come together and let's fix it, and bring your ideas forward. And I'm willing to discuss them with you. And so that's why I said what I said and will continue to say it.

(END VIDEO CLIP)

WOODRUFF: With me now to talk more about the president's Social Security reforms and other issues is Republican Tom DeLay of Texas. He is the House majority leader. He joins us from Capitol Hill. Mr. Leader, the president is leaving the door open to raising the current $90,000 income cap on which Social Security is taxed. If that were to be raised, would that be a tax increase?

REP. TOM DELAY (R-TX), MAJORITY LEADER: Well, Judy, the president is right in listening to anybody that wants to talk to him about any issue as to how to preserve and strengthen Social Security. But I, for one, am one of those that didn't come here to raise taxes. And it wouldn't do any good if you raised -- took the cap completely off.

It pushed the problem down maybe five to six years. It doesn't fundamentally fix the problem.

We can do this. We can strengthen and preserve Social Security and retirement security for our seniors and every generation, and we can do it without raising taxes.

WOODRUFF: So you're saying that would be, in your eyes, a tax increase if that happened, raising the cap?

DELAY: To everybody that makes over $90,000 a year, it's a tax increase.

WOODRUFF: So how do you do it if you don't, in some way or another, increase taxes or have enormous borrowing?

DELAY: Well, obviously, you have to first recognize the problem. As you well know, in 1945, there was 42 workers paying for every retiree. And in the 1950s, it was 16 to every retiree.

Right now, it's three workers working for every retiree. And by the time my daughter retires, it will be two workers for every retiree.

That is a real problem. And it's also a problem -- when they created Social Security, life expectancy was 60 years old. It is now 77 years old. And in just three years, the baby boomers start retiring. And the hit on Social Security is going to be mammoth.

So you have to understand, first you have to let people control their own retirement security. And secondly, those that are presently retired or about to retire, guarantee their benefits. That combination can more than fix the problem.

WOODRUFF: Are you advocating raising the retirement age?

DELAY: Not necessarily. Although, I think we can create a system where people can decide what their own retirement age is rather than the government making that decision.

And they can -- they can decide when to retire on their own. Particularly if they're the younger generation that has their own personal accounts. They ought to be able to decide when they retire and when it's more beneficial to retire.

WOODRUFF: Two other very quick things. First of all, how much Republican opposition is there still out there to the president getting what he wants, do you think?

DELAY: Well, I think there's some, but there is not very vocal. At least our members in the House understand that there is a problem, that we have to find a solution, that we can't just put this off for future generations.

Judy, every year that we wait adds another $600 billion to the cost of how to fix it later. We have to fix it now. And we know that we have to fix it now. Our members know that we have to fix it now.

Unfortunately, the Democrats won't admit that there is a problem, and certainly they're not going to provide any solution. We came here to provide solutions, and that's what we're going to do.

WOODRUFF: Mr. DeLay, I want to ask you finally about what -- one of the things that governor Arnold Schwarzenegger is trying to do, and that is reform the redistricting for not just legislative, but congressional districts in the state of California. You and I were just talking about this. You said to do it would set a bad precedent.

DELAY: Well, I'm very worried about this precedent of creating commissions to redistrict or to -- the system now of allowing judges to draw the lines. Our founding fathers envisioned having a House of Representatives that reflect the politics of the moment and reflect the politics of the people that they are representing. And they set up the system to do that for the state legislatures to draw these lines.

If you have a small group of people in a back room drawing the lines, what you'll end up with is a incumbent protection system instead of a system that truly represents the will of the people.

WOODRUFF: But don't -- but isn't there already a massive incumbent protection system with so little turnover?

DELAY: Yes, it's called judges. When the Democrats in Texas saw that they no longer were the majority party, they used judges to protect them. And they went 20 years being a minority party with a majority of the congressional delegation. And they used judges to do it. That makes my point for me.

WOODRUFF: We are going to leave it there. It's something I know we'll want to talk to you about again.

Congressman Tom DeLay, he is the House majority leader.

It's good to see you. Thanks very much.

DELAY: Thank you, Judy.

WOODRUFF: We appreciate it.

Well, fulfilling one of President Bush's top legislative priorities. The House today approved legislation designed to limit class action lawsuits. The bill shifts the venue for most large multi- state lawsuits from state to federal court, which are expected to allow fewer suits to go forward. The bill now goes to the president's desk for his signature.

The choice of John Negroponte to be the new director of national intelligence is drawing mostly positive reviews, as we've said. Members of both parties praising the president's choice, but what are the bloggers saying online? We'll check in on the blogosphere next, where critics are emerging on both the left and the right.

(COMMERCIAL BREAK)

WOODRUFF: It's time, once again, to go online to see what people are talking about in the blogosphere, the place where Web bloggers work. Joining me here in Washington, Jacki Schechner, again. She's our blog reporter. And with us again, CNN political producer Abbi Tatton.

Jacki, what are you seeing?

JACKI SCHECHNER, CNN BLOG REPORTER: Hi. We're going to talk about Negroponte in a minute, just like you mentioned, Judy. But the blogosphere today is abuzz with Peggy Noonan.

Abbi and I have been watching this all day long. The former Republican speechwriter and contributor to "The Wall Street Journal" wrote an article, an opinion article saying, "The blogs must be crazy or maybe mainstream media is just suffering from freedom envy."

She says the blogs are a public service. She comes out in favor of them. She says that they are self-correcting, it is not something to worry about, but rather something that we should all be embracing.

ABBI TATTON, CNN POLITICAL PRODUCER: So this very well-known Washington figure is suddenly a poster girl for the bloggers today. Let's look at what some of them are saying.

VodkaPundit. First of all, this is a Colorado-based blogger. He calls this article today "required reading."

Then Powerline Blog. Powerline is a very important blog, very well read. It was called by one mainstream media outlet as the blog of the year last year. What Powerline says about this article is that it's -- "It gives the sophisticated consumer celebration of the best of what is on offer in the blogosphere."

And Hugh Hewitt, as well, he looks at this. Hugh Hewitt, in fact, wrote a book about blogging. And he is very happy that "The Wall Street Journal" does have some writers who understand what is happening out there.

SCHECHNER: We also wanted to take a look at LittleGreenFootballs.com, and not just because we liked the name. That's one of the big blog stars.

And they have a lot of people posting comments on it, all very positive comments, and taking little excerpts from what Noonan wrote and talking about it all in a very good way. We had 173 comments and counting last time we checked and looked in on this one. TATTON: Now, the big political story here in Washington is that President Bush has nominated his national director of intelligence. That's John Negroponte.

Now, this is not the big story on the blogs today, but it's certainly getting talked about. We found it very difficult to find some -- any positive reaction to this. We were looking on some of the conservative sites and just saw that it doesn't seem too popular.

On The Corner -- The Corner, which is the National Review Online's blog, they consider themselves a little bit underwhelmed by this decision.

Another one, Outside The Beltway, let's look at what they're saying. They want to withhold an opinion on it, but they say, "At first blush, though, this strikes me as a very odd choice."

SCHECHNER: One of the other blogs we took a look at when we were delving into the Negroponte issue was StateProgress.org (ph), a more liberal blog. They started with headlines throughout the day.

It was "Negroponte Cuts and Runs" was the first one, talking about he was the ambassador to Iraq, now he's back in Washington. Then they went to "Negroponte New to Intelligence," talking about how he is the latest in a string of questionable nominations.

Then we went back to the site and it says, "Why Negroponte Got the Nod," talking about at least three potential nominees turned down the position. So what they're doing now is updating their headlines throughout the day and people are commenting on that.

We also went to (UNINTELLIGIBLE), which is always a fun site. The title was "Negroponte: No Stuff Sometimes." Let me flip over to (UNINTELLIGIBLE), so you can see that. And it talks about him being the former ambassador to Honduras, being called the ostrich ambassador, and the quote was, "Awesome. The dude who gives new meaning to the phrase 'couldn't find his behind with both hands.'"

So not favorable to Negroponte thus far.

The other thing that was climbing in the rankings today in terms of what people were linking to, another op-ed piece. This one by Maureen Dowd. And it was NewYorkTimes.com.

She talks about how she was rejected for a White House press pass at the start of the Bush administration, wondering how Gannon (UNINTELLIGIBLE), the guy we've been talking about all week, got in. It's been bumping around the blogosphere and now it's back in a lot of these blogs.

TATTON: And actually, this is interesting. Just in the last half- hour, there seems to be new things on the blogs breaking on this.

This is from AmericaBlog.org, one of the sites that has been looking into Gannon the whole time, and also from DailyKos.com. They're looking at a picture from March 2003, before it seems Talon News was even an organization, even founded, and they seem to think that Gannon was wearing a hard (ph) pass.

Now, this is just coming out right now. We don't know where this is going. But it seems that AmericaBlog.org and some of the others are continuing to delve on this story.

SCHECHNER: They also had a call to arms from the mainstream reporters for some help in finding background on Talon News. The idea being that Gannon was in the White House before Talon News even existed, and how did he get in there without a credible news agency behind him?

So it's also interesting that maybe this is a sign of what's to come, Judy, in terms of collaboration. Is this really a sign that maybe some of the mainstream media is embracing the immediacy and the sort of wide-reaching effect of the Internet and saying, help us out, how do we find information about this?

WOODRUFF: Well, we are certainly taking a look with this segment every day this week. So that's one day we're trying to get at least a better understanding of what the blogs are up to.

All right. Jacki Schechner, Abbi Tatton, thank you both. We appreciate it.

SCHECHNER: You're welcome.

TATTON: Thank you.

WOODRUFF: See you again tomorrow.

SCHECHNER: Absolutely.

WOODRUFF: Meantime, to another story we're watching. The Public Broadcasting Service says that a recent flap over a cartoon plot is not the reason the president and chief executive, Pat Mitchell, plans to step down next year.

Mitchell had been criticized by some conservatives for an episode featuring the animated rabbit Buster visiting a lesbian couple which she decided not to run, that episode. A PBS spokeswoman says, "That this has anything to do with her decision not to air the 'Postcards from Buster' episode is incorrect. And to think her deciding to leave has anything to do with it is blatantly incorrect." They could be the rivals in the next race for the White House. But today, John Kerry and Hillary Clinton teamed up for a common cause. We'll tell you what it is.

Plus, he was the wonder boy of the right, but is Ralph Reed finally ready to make his own run for office? The answer later on INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: It is just about to turn 4:00 on the East Coast. And as the markets get set to close on Wall Street, I'm joined by Kitty Pilgrim in New York with "The Dobbs Report." Hello, Kitty.

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

Stocks on Wall Street pretty much lower. The blue chip average retreating from its high for the year.

As the final trades being counted, we see the Dow significantly lower. It's down about 80 points right now. The Nasdaq is also about 1 percent lower.

Here is a number for you. Wal-Mart holiday sales topped $82 billion. Let's put that in perspective. It's more than the sales of Target, Home Depot, Costco, J.C. Penney and Sears all combined.

Well, soaring oil prices, a weak dollar, both sent import prices higher by nearly one percent last month. That is a worry, because Americans are relying more and more on foreign imports and higher prices could drag on the economy.

Speaking of the economy, Fed Chief Alan Greenspan says the problems of the country's Social Security system are nowhere near as bad as the shortfalls facing Medicare. But he believes that neither program is facing an immediate crisis. Greenspan told a House committee today economic growth would help both programs. He also repeated his support for personal retirement accounts. He believes that the accounts could promote savings and then create a sense of wealth and ownership among poor Americans.

Coming up on CNN, 6:00 p.m. Eastern on "LOU DOBBS TONIGHT," our special report, "Culture in Decline." The number of American students who are choosing to study Math or Science is declining and the results could be devastating for our country.

(BEGIN VIDEO CLIP)

C.D. MOTE, PRESIDENT, UNIV. OF MARYLAND: Our future, our economic future, our security, depends on us being a leading creator country. And that therefore, we need a base of science and technology people in our country that can provide us this advantage in the world.

(END VIDEO CLIP)

PILGRIM: Also tonight, President Bush's nomination of John Negroponte as director of national intelligence. We'll discuss it with Senators Pat Roberts and Jay Rockefeller, both of the Senate Intelligence Committee. Plus, cheap Chinese imports now affecting farmers, specifically garlic growers. Chinese farmers are taking advantage of a trade loophole and threatening the entire U.S. garlic industry. We have a special report on that.

And later, Senator Ted Kennedy talks about his efforts to protect Americans from bankruptcy brought on by medical bills. That and more tonight, 6:00 p.m. Eastern. Now back to Judy Woodruff -- Judy.

WOODRUFF: Thanks, Kitty. We'll be watching at 6:00. INSIDE POLITICS continues right now.

(BEGIN VIDEOTAPE)

JOHN NEGROPONTE, AMB. TO IRAQ: I'm honored that you would select me to be the first director of national intelligence.

(END VIDEOTAPE)

ANNOUNCER: Ambassador John Negroponte is tapped for a challenging new job. We'll examine his credentials and past controversies.

Governor Schwarzenegger on a mission in the nation's capital. Is his political future back in California on the line? .

BUSH: I clarified a variety of ideas that people should be encouraged to bring forth, without political retribution.

ANNOUNCER: But there are still taxing questions about Social Security reform. Does the president think a higher cap is the same as a tax hike?

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

(END VIDEOTAPE)

WOODRUFF: Welcome back. As some administration officials have told it, John Negroponte was not the president's first choice to be national intelligence director. The White House officially denies that, but there is no dispute that it took Mr. Bush some time before he nominated Negroponte for the job today. The president expressed his diplomatic skills as the current U.S. ambassador to Iraq and as a former ambassador to the United Nations.

Our national correspondent Bruce Morton takes a closer look at John Negroponte's career and qualifications.

(BEGIN VIDEOTAPE)

NEGROPONTE: Thank you, Mr. President. I'm honored that you would select me to be the first director of national intelligence.

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): Nobody is going to say he's not smart enough, that's for sure. Wealthy family, went Exeter, went to Yale, yes, just like the president. Was in Vietnam early in the 1960s along with Richard Holbrooke, who'd also be ambassador to the U.N. later on. Negroponte spoke Vietnamese, could sing in Vietnamese, friends say, which isn't easy.

He went to Paris when the peace talks broke with Secretary of State Kissinger over a provision allowing the north to keep some troops in the south, which would help Ho Chi Minh conquer Saigon in 1975. He was sent next to Quito, Ecuador. Kissinger said this was not sending him into exile.

First ambassadorship: Honduras. The Reagan administration used Honduras as a base to help the right-wing Contras fight the left-wing Sandinista government in nearby Nicaragua. Critics say Negroponte turned a blind eye to human rights abuses by Honduran death squads. One critic spoke up during the hearing on Negroponte's appointment to be ambassador to Iraq.

UNIDENTIFIED MALE: Senators, please ask the ambassador about Battalion 316. Ask him about his involvement in a death squad in Honduras that he supported.

MORTON: The Reagan administration gave the head of that battalion a medal. Negroponte said he protested the abuses privately. He and his wife have adopted five Honduran children. He went on to more ambassadorships: Mexico, the Philippines, United Nations and now Iraq. And he may need all his diplomatic skills, yet all the different intelligence agencies used to being in charge of their budgets, their secrets, their turf, to understand that they all now report for the first time to one man, to him. It surely won't be easy.

Bruce Morton, CNN, Washington. .

(END VIDEOTAPE)

WOODRUFF: Thank you, Bruce.

In contrast to John Negroponte, Arnold Schwarzenegger is a household name. The California governor is here in Washington today, banking on his star power to help his state and his own political fortunes. Our senior political analyst Bill Schneider reports on Schwarzenegger's strategy.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): A new movie just opened: Mr. Schwarzenegger Goes to Washington. The governor is on a promotional tour, just like he used to do for his movies. This time, he's promoting his state, pressing the federal government to give California more funding, exactly as he promised in 2003.

SCHWARZENEGGER: By the time I'm through with this whole thing, I will not be known as the terminator, I will be known as the collectinator.

SCHNEIDER: California has 53 members of Congress, one eighth of the House of Representatives, but they've always been divided by party. Schwarzenegger aims to change that.

SCHWARZENEGGER: Well, I'm the governor of the state of California and, therefore, it is really up to me to bring the delegation together.

SCHNEIDER: Unity is crucial for Schwarzenegger's political survival. He's a Republican governor of a strongly Democratic state and his Democratic support has been slipping. While Schwarzenegger has a 60 percent job approval rating among all California voters, Democrats are turning against him, including the Democratic party's new national chairman.

HOWARD DEAN, DNC CHAIRMAN: We have to make sure that Governor Schwarzenegger gets terminated.

SCHNEIDER: Schwarzenegger cannot survive in California as a partisan, hence, he is unity strategy. It's a positive unity to promote the interests of California and a negative unity.

SCHWARZENEGGER: We'll be against the politics as usual and it will be reform and changes versus status quo and a special interest. This is the way we framed the whole thing.

SCHNEIDER: He's championing a measure that threatens virtually every incumbent state and federal legislator in California, a measure that would draw new district lines without regard to party.

SCHWARZENEGGER: Whenever you see both parties disagree with something, then you know you're on to something really good.

SCHNEIDER: How's the governor going to overcome resistance from the politicians? Like a movie star, with a promotional tour.

SCHWARZENEGGER: You will see me at CostCos, you will see me at different shopping malls and I'll be out there gathering the signatures and helping and making sure that we get all those things on the ballot.

(END VIDEOTAPE)

SCHNEIDER: Governor Schwarzenegger is fighting partisanship with populism. It's a smart strategy for California and it's getting attention around the country.

WOODRUFF: Bill, you pointed out his support among Democrats is slipping, his support among Republicans holding steady.

SCHNEIDER: Yes, that's holding quite steady.

WOODRUFF: But among Democrats, why is he having any problems?

SCHNEIDER: He's taking on the teachers, challenging their interests and he's taking on the nurse's union, which ran a very biting ad against him, objecting to his calling them a special interest. He's getting into fights with some important Democratic constituencies and -- by taking them on on budgetary issues.

WOODRUFF: It's taking a little toll.

SCHNEIDER: Yes.

WOODRUFF: OK. Bill Schneider, thank you.

SCHNEIDER: Well, many people still have many questions about President Bush's Social Security reform plan. Up next, has he blurred the line about what constitutes a tax hike? Donna Brazile and Bay Buchanan will face off on that and other things. And later, Senate Democrat Evan Bayh has his own take on the Social Security debate and how the Pentagon is spending tax-payer's money.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

KARL ROVE, DEP. WHITE HOUSE CHIEF OF STAFF: Next time one of your smarty pants liberal friends to you says, well, he didn't have a mandate. You tell him about this delicious fact, this president got a higher percentage of the vote than any Democrat candidate for president since 1964.

(END VIDEO CLIP)

WOODRUFF: Karl Rove, the president's top political adviser, speaking today at the Conservative Political Action Committee gathering here in Washington, CPAC. With me now, former Gore campaign manager Donna Brazile and Bay Buchanan, president of American Cause.

Donna, I don't know if you're one of those smarty pants liberal friends of those CPAC attendees, but Karl Rove has a point here. The president does have a mandate, then.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: No. The president doesn't have a mandate. President Bush has the lowest re-elect numbers of any incumbent president since Woodrow Wilson in 1916. Karl's a historian, he knows that. What President Bush was able to achieve this time is an electoral success by winning the popular vote, but he did not -- I don't believe he has a mandate. And I'm a smarty pants liberal. I don't have a problem with that.

(LAUGHTER)

WOODRUFF: We know you're not a smarty pants liberal, but what do you think?

BAY BUCHANAN, PRES., AMERICAN CAUSE: This man is feeding a little red meat to the troops. That's all, getting them riled. But there is no question, he is smart, there's a big dispute out there, Democrats say it wasn't a mandate, the press says it might not have been a mandate. He should claim a mandate. Let the American people, as many who will listen, think it is a mandate, he accomplishes a great deal more and go right ahead.

BRAZILE: He claimed the last one was a mandate and he didn't win. So hopefully this time he will just claim some bipartisanship and civility.

BUCHANAN: He got in the White House, that was something.

BRAZILE: Well, thanks to the Supreme Court.

BUCHANAN: More than you guys did.

BRAZILE: That's right. We don't know how to take elections the way you guys do.

WOODRUFF: Bay, the president is leaving the door open to raising the income on which Social Security can be taxed. It's now $90,000. He's leaving the door open to raising that. Is that a tax increase?

BUCHANAN: It's most definitely a tax increase and the conservatives in the House will shut that door mighty quickly. I don't believe he can get that through his own party in the House. This is clearly a position that the party has taken. Republicans say we don't increase taxes. They fought for those tax cuts and now he's asking to reverse them. No, I don't think it will happen.

WOODRUFF: Would it be a smart thing to do if they could get it through, Donna?

BRAZILE: Well, I don't think so. I think there are other ways to secure the system. And first of all, the president should put his proposal on the table and stop just giving us another press conference and another rally. The Republicans have not put together a proposal and that's why the president is now opening the door to just about anything just to keep the idea of privatizing Social Security on the table.

BUCHANAN: And Judy, Donna and I both recognize it will be a tax increase because both of us will be hit hard by it.

(LAUGHTER)

BRAZILE: Yes. As self-employed women, we will get the brunt of it.

BUCHANAN: We were discussing this. We are both opposed to this.

(LAUGHTER)

WOODRUFF: All right. Let's talk about John Negroponte, the president's choice to be the new director of national intelligence. New position. The word is third choice. But was this the right choice, Bay?

BUCHANAN: You know, this position is a tough one. I think something has been created here that may not work, it just doesn't work. But what he did, is he chose somebody outside the intelligence industry, which is smart because there's so much turf war going on here and people seem to have an ax in one camp or another, and so maybe he can break that up. But I think his real problem is he controls the budget and he has the confidence of the president. But what he doesn't have is the ability to hire and fire. And if you can't fire the people that aren't giving you the kind of response you need, then I don't know how much you -- what kind of changes you can make.

BRAZILE: This is a very important position. The 9/11 Commission said that. People were very concerned the president was dragging his feet in selecting someone. We now know it was his third choice. He's a very seasoned and skilled diplomat, we all know that. He will answer some questions. I'm sure, once again, people will raise some of his background in Iran-Contra, et cetera. But, by and large, this is very important position, it's not a policy position. He must give the president objective advice, not subjective, and try to clean up and restore credibility to our intelligence agencies.

WOODRUFF: So, Bay, maybe the 9/11 families that have issued a statement today being critical, they're saying they don't think he has got the necessary experience and the skills for the job. Do they have a point?

BUCHANAN: What you need is somebody that will just crack heads. You need some -- you have all of these tough hardened people who are in intelligence, who have been working in their areas for years, and you need somebody who is going to break that open. Can he do that, somebody who is coming in from a field where you negotiate and compromise and work with people, use diplomacy.

Diplomacy doesn't work inside the government. The only thing it does is it says, you're out of here, you lose your job, you don't do what I tell you. And that's what concerns me. This is too critical of an area. But I think it's not the president's problem. Congress delivered him someone that doesn't have the clout that I think can do the job. Negroponte is a good guy. He has the confidence of the president. He's a smart guy. He's coming from the outside, all those things are pluses. But can anyone do it or does it need somebody even tougher? And will he be able to do it?

BRAZILE: But his number two, Mr. Hayden, is a very smart and very intelligence guy. He understands the job. He understands how to coordinate all these various departments that handle intelligence. So I think perhaps he needs to rely on number two and use his diplomatic skills just to keep the trains running on time, so to speak.

BUCHANAN: I don't know, but we hope obviously 15 agencies have to be brought together. I think this is just the start of something that is going to have to be changed. It is an unworkable system right now.

WOODRUFF: All right.

BRAZILE: Have to restore credibility to our own intelligence apparatus.

BUCHANAN: We have to get good intelligence for the president.

BRAZILE: Absolutely. Analyze it, disseminate in a subjective manner -- I mean, an objective manner and leave all the politics to the politicians.

(CROSSTALK)

BRAZILE: See, we agree today. I don't know. Smarty pants...

(CROSSTALK)

BUCHANAN: ... time to change the subject. BRAZILE: Karl Rove must have done it for us.

WOODRUFF: I think so.

BUCHANAN: I think it's that tax increase proposal.

WOODRUFF: Donna Brazile, Bay Buchanan...

(CROSSTALK)

BRAZILE: ... tax increase...

(CROSSTALK)

WOODRUFF: ... thank you, both. That was what did it. Donna, Bay, thank you very much.

The costs of the military operation in Iraq continue to rise. Up next, I'll ask Senator Evan Bayh about Pentagon spending and his effort to eliminate what he calls the "patriot penalty" affecting soldier salaries.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: He's a terrific person who has done a wonderful job in Iraq and he will be confirmed by the Senate, I have every reason to believe, and do a wonderful job for the country.

(END VIDEO CLIP)

WOODRUFF: Defense Secretary Donald Rumsfeld commenting just moments ago at the Capitol after testifying before a committee there, commenting on John Negroponte, announced by President Bush today as his choice to head the new -- to be the new head of national defense -- national intelligence.

Well, the Senate held hearings today on a new Pentagon budget, including an $80 billion supplemental request for Iraq. Yesterday I sat down with Democratic Senator Evan Bayh of Indiana and I started by asking if he thinks the money already allocated for Iraq is being well spent.

(BEGIN VIDEOTAPE)

SEN. EVAN BAYH (D-IN), ARMED SERVICES CMTE.: Not all of it, Judy. There have recently been some hearings showing that there may be some real problems with contracting and some potential waste and abuse in Iraq. But, look, we have no choice accept to approperate the money for the troops. We have to see this through to a successful conclusion. That is going to involve some money, but at the same time, we need to do everything humanly possible to make sure that the American taxpayers' dollars aren't being wasted there. So we have to do both, not choose one or the other. WOODRUFF: One thing we know you're trying to do, Senator, is redress the gap for the Guard and the reserves, the gap between what they earned as civilians versus what they're being paid in the military, if it's less. We're told this would add up to something like $250 million a year. And, yet, the spokesman for the National Guard Association is sounding kind of lukewarm. He's saying, well, there are so many needs out there. Are you convinced this is the best use of that money?

BAYH: Judy, this is imperative use of that money. And frankly I find the attitude of that spokesperson to be inconceivable. We have men and women who are being forced to choose doing right by their families and doing right by our country. That's wrong. And we should stop it. Where men and women have been called up for more than six months, we should try to address what I call the "patriot penalty," the substantial reduction in income that they face, which, for too many of them, has forced them into bankruptcy because they can't pay medical bills, can't pay their mortgage, it's just plain wrong, Judy.

And $250 million, that's still a lot of money for most Americans, but just look at the question you asked me about the $80 billion-some for Iraq, surely we can find it within not only our budget but within our hearts to do right by these brave men and women. I think it has to be one of our top priorities.

WOODRUFF: Senator, let me ask you a question about Social Security. The Federal Reserve Board Chairman Alan Greenspan testifying just this week on Capitol Hill, saying he approves of the president's proposal to have private investment accounts as long as those are phased in. You're on the Special Committee on Aging. Is that the right solution?

BAYH: Judy, I don't favor private accounts as a replacement for Social Security. But I do think they'd be a good idea in addition to Social Security. And the reason that I believe that is that Social Security is that basic insurance that we have. So that if your stock investments happen to go south or you happen to retire in the wrong year, you still have that bedrock you can fall back on.

It's a little bit like the insurance you have on your home or your car in case of a fire or a theft, you don't lose everything. So we ought to build on that. And if we did that, I think we could get a good bipartisan consensus. But in terms of basically changing the very nature of Social Security away from providing that floor against poverty that we don't allow seniors to sink through, I think that's a nonstarter and I would respectfully disagree with Chairman Greenspan on that.

WOODRUFF: Running for the presidency, a source who is said to be close to you has told Roll Call that you haven't made a firm decision yet, but that you're putting a team in place to work on fund-raising, politics, political action committee and strategy and so forth. So, clearly, you're giving this some serious thought.

BAYH: Well, Judy, I know you're only doing your job by asking me that question and I'm going to do my job. We've had hearings just this week on national security, what to do about Iran and North Korea. We're moving to try and address the issue you mentioned. What about retirement security and growing our economy to create more good-paying jobs?

And we just had an inaugural, we just had an election. I think what we need now is a season of progress, all of us working together, Democrats, Republicans, independents to move this country forward. And if we do that, Judy, then I think these political questions will take care of themselves.

WOODRUFF: But you've hired the man who ran the 527 in Ohio for America Coming Together to run your political action committee.

BAYH: Well, he's a good fellow. And I think we need direction in my committee. So I want to be effective, I want to be effective in addressing the important substantive challenges that face our country, and this man that you just mentioned, Steve Bouchard (ph) is his name, I think can help me do that.

(END VIDEOTAPE)

WOODRUFF: Indiana Senator Evan Bayh, not wanting to talk about running for president in four years.

Well, he has been the brains behind other candidates, now, he's ready, apparently, to put his own name on the ballot. Up next, we'll tell you which statewide office Ralph Reed has chosen to run for in his home state of Georgia.

(COMMERCIAL BREAK)

WOODRUFF: A man who's made his name advising other candidates has decided to make his own run for political office. Leading off today's "Political Bytes." Long-time Republican strategist Ralph Reed announced today he plans to run for lieutenant governor of Georgia next year. Reed was a regional director for the 2004 Bush campaign. Of course he also once headed the Christian Coalition. And he served as chairman of the Georgia Republican Party.

WOODRUFF: Election reform was the topic today at a news conference held by Senator Hillary Clinton along with fellow Senators Barbara Boxer and former presidential candidate John Kerry. They are proposing legislation to require a paper trail for electronic ballots, along with other new rules to standardize voting procedures nationwide. I remember some problems in Ohio.

Meantime, the Associated Press is reporting that former Homeland Security Secretary Tom Ridge met twice last spring with Republican pollsters just before he made more than a dozen trips to presidential battleground states. Department officials say one of those meetings was about communicating the department's messages to the public and that presidential politics was not discussed. The other meeting, they say, was personal. And that it had no connection to politics or homeland security issues.

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

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