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Inside Politics

Bush-O-Nomics: Giving Thanks?; Interview With Dick Gephardt

Aired November 26, 2003 - 15:30   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: Just in time for the holidays, is the latest batch of economic numbers a gift for President Bush?

Is it Iowa or bust for Dick Gephardt? The '04 Democrat talks about his campaign hopes and his Hawkeye State showdown with Howard Dean.

REP. RICHARD GEPHARDT (D-MO), DEMOCRATIC PRESIDENTIAL CANDIDATE: I'm going to win it. I don't think about other alternatives.

ANNOUNCER: The big Thanksgiving countdown. We're tallying your votes for the political turkeys of the year.

(END VIDEOTAPE)

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

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. When the Federal Reserve makes proclamations about the economy, politicians tend to listen. And in a report out today, the Fed is sounding upbeat about the nation's recent economic spurt, calling it reasonably broad- based.

Several other new reports also seem encouraging. Orders for big- ticket items such as machinery or appliances jumped more in October than they had in over a year. Americans' incomes grew modestly last month, while consumer spending held steady. And though new home sales declined, they still represented the fifth best month on record. And just last week, new claims for unemployment benefits fell to the lowest level in almost three years.

Well, President Bush may be enjoying those economic snapshots as he settles in for the Thanksgiving holiday at his Texas ranch. Our White House correspondent, Dana Bash, is with Mr. Bush in Crawford, or is at least as close as they let the press get, Dana.

Dana, given all this good economic news, is this enough for the White House to feel confident about? Or are there still more numbers they're looking for?

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Judy, they're certainly feeling better. And you remember, this is a campaign that continues to point to history, showing that presidents are reelected or not reelected primarily based on the economy. So given that every one of the economic indicators you just read off brings a new and different sigh of relief from the Bush campaign and from the White House for sure, but they do know that something that Senator Tom Daschle said a few weeks ago does ring true.

And that is, that it's not necessarily about the GDP, it's about a j-o-b. And that is why officials I've talked to today say that they are looking at next week. They are looking at the jobless numbers that they do expect to come out at the end of next week, and that is something that they are going to be watching very, very closely. But until then, the White House will certainly do its part to keep the momentum going.

The president has a couple of events next week. One in Detroit, and another at the end of the week, to talk up the economy, to have some Oprah-style conversations about the economy. That is something he has started to do over the past weeks and will continue to do that.

That will also be done on the day that that new unemployment figure comes out, in the hopes that that number is better. So the president has some good news to crow about -- Judy.

WOODRUFF: And Dana, about that Medicare bill, the White House obviously very happy that that's passed the Congress now. Once the president signs it, how much is he going to keep talking about it?

BASH: We can certainly expect him to keep talking about it a lot, Judy. Because, as you know, the actual benefit, the full benefit doesn't kick in until 2006, well after the Election Day. So what you'll see from the White House is an attempt between now and the Election Day to define it, to explain exactly what is in the bill from their point of view, how it will help senior citizens.

The White house is well aware that Democrats on the campaign trail are hoping that once seniors read the fine print, they will actually rebel because they are not going to get as much of a benefit as perhaps they may think in hearing what is coming out of Washington. So we're likely to see events like we saw yesterday twice, once in Las Vegas, once in Phoenix with the president and senior citizens, explaining in his way what the fine print is, explaining that this is something that gives seniors options. This is something that modernizes Medicare, the likes of which has not happened certainly since its inception.

But what senior political advisors say, Judy, is that the most important thing about passing this bill is that it's a campaign promise kept. And that helps they say with the president's poll numbers when it comes to trustworthiness and when it comes to leadership -- Judy.

WOODRUFF: Right now, they can't say a whole lot negative about it, that is for sure. All right. Dana, thank you very much.

Well, for a little more on Medicare politics, you can go to cnn.com/allpolitics and read my online column. Today's edition is on how the GOP victory on Medicare may play out in next year's elections. Republican leaders are banking on Congress to approve a huge $373 billion spending bill when lawmakers return to the Hill next month. When they went on Thanksgiving break, they left behind a flood of red ink. Our Bill Schneider has been wondering who, if anyone, cares.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): As the congressional session winds down, we marked the first full year in nearly four decades that the Republicans have controlled both the White House and Congress. So what happened?

BILL MOFFIT, HERITAGE FOUNDATION: The deficits are exploding. The Republicans are supposed to be a party of fiscal responsibility.

SCHNEIDER: This year's deficit, by far the largest in the nation's history, could go above $500 billion. Official estimates show the national debt rising by more than three-quarters of a trillion dollars over the next 10 years. Four hundred billion dollars for the new prescription drug benefit, $300 billion for tax cuts, $50 billion for higher Medicare reimbursements, $22 billion to increase veterans' benefits.

Whatever happened to Ross Perot?

ROSS PEROT, FMR. PRESIDENTIAL CANDIDATE: If we do not solve these problems soon, we will have a financial meltdown and millions of great people in this country will suffer for decades.

SCHNEIDER: It was the Democrats who took up Perot's cause and paid a heavy price for it after they raised taxes in 1993. By 2000, Bill Clinton could claim his legacy.

BILL CLINTON, FMR. PRESIDENT OF THE UNITED STATES: Today we have gone from the largest deficits in history to the largest surpluses in history.

SCHNEIDER: And the thanks of a grateful nation? Al Gore lost.

Even now, Democrats seem disinclined to make the deficit their issue. Look how they're attacking Howard Dean for making tough budget choices.

SEN. JOHN KERRY (D-MA), DEMOCRATIC PRESIDENTIAL CANDIDATE: The fact is that Governor Dean raised prescription costs for seniors in his state when he needed to balance the budget. He called himself a balanced budget freak. Those are his own words.

SCHNEIDER: A balanced budget freak? Can't have that in the Democratic Party. So what do you do about this huge burden of debt? You get the economy to grow. Isn't that what happened under Clinton?

GEPHARDT: We did a variety of things to get the economy to grow. That's the way you get rid of deficits. You don't just cut the most vulnerable in our society.

SCHNEIDER: At last, a point on which both parties agree. You don't have to make any tough choices.

(END VIDEOTAPE)

SCHNEIDER: Could Ross Perot or someone like him run on the deficit issue next year? Unlikely. Perot did well in 1992 because the economy was bad and the deficit was an easy target. When the economy's improving, it's hard to make people care about deficits.

WOODRUFF: We're starting to notice that.

SCHNEIDER: Yes.

WOODRUFF: OK. Bill, thank you very much.

SCHNEIDER: Sure.

WOODRUFF: Well, in Iowa, Midwestern native Dick Gephardt is facing a formidable challenge from a certain governor of Vermont. Up next, I will ask Gephardt about his face-off with Howard Dean and whether the Iowa caucuses are do or die for him.

Happy or mad? Bob Novak will tap into Republicans' mixed emotions about the Medicare bill's passage.

And later, in Hawaii today, a presidential candidate faces his painful past and his long-missing brother's final journey.

(COMMERCIAL BREAK)

WOODRUFF: Checking the headlines in our "Campaign News Daily," Al Gore is the latest Democrat to criticize a new Republican TV ad. The spot defends President Bush against those it describes as "attacking the president for attacking the terrorists." Last night in Tennessee, Gore said the ad is "a cheap and petty political tactic not worthy of the presidency." "It is something you would find in a down and dirty sleazy campaign for city council."

Dick Gephardt and John Kerry have released new TV ads in Iowa promoting their health care plans. Both candidates promise to offer health cover to the uninsured, and they both using personal stories to draw in potential voters.

(BEGIN VIDEO CLIP)

KERRY: A few months ago, I was diagnosed with prostate cancer. I'm cured now. But I was lucky. As a United States senator, I could get the best health care in the world.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

GEPHARDT: Thirty-one years ago, our 2-year-old son Matt was diagnosed with terminal cancer. Our health insurance paid for experimental treatments that saved Matt's life.

(END VIDEO CLIP)

WOODRUFF: Recent polls show that Congressman Gephardt is in a tight race in Iowa with Howard Dean. I spoke with Dick Gephardt a little earlier today, and I started by asking him if he absolutely has to win the Iowa caucuses.

(BEGIN VIDEOTAPE)

GEPHARDT: The better way maybe is to say, I'm going to win Iowa. I really have the best organization there. But I've also got the best ideas. The boldest, biggest, but most realistic ideas that are built on my experience. And I think I'm making a connection with the voters out there that I can really do this job well and I can bring these ideas in to being. And that's important to people in the world we're in.

WOODRUFF: Is it do or die?

GEPHARDT: I'm going to win it. I don't think about other alternatives because I'm convinced I'm going to win there. And again, we're getting a great reaction from people.

People are excited about the health care plan, and the Apollo 21 Energy Program, and my agricultural ideas, and my trade ideas, international minimum wage at the WTO. These are the things that people are looking for. They're looking for experience, but translating that experience into realistic bold ideas.

WOODRUFF: And yet Governor Dean got those coveted labor endorsements, AFSCME, have a lot of members in Iowa, SEIU, the Service Employees International -- you really wanted those endorsements. How much does that hurt you?

GEPHARDT: I'm proud of the endorsements I've gotten. I've been endorsed by 21 international unions that represent 95,000 workers in Iowa. Now, only about 110,000 people are going to show up for the Iowa caucuses. Getting 30,000 votes is probably a winner.

If I can just produce a third of the union members that have endorsed me, I'm going to win the Iowa caucuses. And then that doesn't take into account their family members, or farmers, or senior citizens who aren't active union members today. So we've got a great operation, and we've got a great chance. People are getting excited about these caucuses.

WOODRUFF: Governor Dean running an ad, among other things in Iowa, pinpointing your vote to co-author the resolution with -- supporting President Bush, going to war in Iraq, supporting the $87 billion. How much is that going to hurt you? Iowa clearly has a lot of citizens who are upset about that war.

GEPHARDT: Now we put an answer ad on that really answered what he was saying. He's been all over the lot on this issue. And when people understand that, I think they'll ask questions about the ad that he's run. He favored a resolution that was supposed to be put in the Senate. It never came up. But it was literally the same kind of resolution that I supported. In essence, it was the same procedure.

He also has said, we have no choice but to put the $87 billion into Iraq to support our troops. He's also said that he didn't want to politicize this issue as a campaign issue. So he's been all over the lot. I think when people understand that, they're going to see that what I did was what I believed to be the right thing for the country.

WOODRUFF: But he is widely perceived as being against that war, pretty much his whole campaign. Has been positioned on the fact that he was against the war. And he's saying you were for it. Why can't he just make it black and white as that?

GEPHARDT: Well, because the facts don't bear that out. Again, he said at the time the resolutions were in the House and in the Senate, that he favored -- he was for a resolution that was virtually the same thing that I voted for and others voted for. But this is -- you know, this isn't an issue -- this is an issue that will be going forward.

I've told people in Iowa, and I've told people everywhere, I am always going to do what I think is important to do to keep our people safe. That's our highest responsibility. And I'm going to do what's right if I believe it's the right thing to do. And that's what I did.

WOODRUFF: Let me ask you about something you said this week to an audience in Michigan, mostly an African-American audience. You talked about -- you criticized three of your rivals for their being critical. You said of affirmative action back in the 1990s, they've all come back and taken issue with that.

In fact, Senator Lieberman has come out and said, "With all due respect, Congressman Gephardt is chucking stones in a glass house. In the mid 1990s, Lieberman, Kerry, Dean and Gephardt all raised questions about affirmative action." That's from Lieberman's campaign.

GEPHARDT: Well, you just have to go look at the statements. Obviously, when Bill Clinton and I were fighting against the Republican effort to end affirmative action, we said, reform it, don't end it. And we did make some slight changes in it. But we did not end it. We beat off the efforts to end it.

Governor Dean has said in the past that we shouldn't have affirmative action based on race but on some other basis. That really isn't affirmative action. John Kerry has made disparaging statements about it. And Joe lieberman has as well.

All I'm saying is that we need to keep affirmative action. And we need a candidate for president who has a proven record of fighting for this issue, because it is the right thing to do. We still need affirmative action.

WOODRUFF: So you stand by your criticism of your opponents?

GEPHARDT: I think my stand on this has been clear. And I have been the leader in keeping affirmative action against various attempts by the Republicans to end the program.

(END VIDEOTAPE)

WOODRUFF: Congressman Dick Gephardt talking to me just a few hours ago.

Well, the Medicare fight left a few political scars within the Republican ranks on Capitol Hill. When INSIDE POLITICS returns, Bob Novak opens his notebook and tells us who may be suffering from an attack of hard feelings.

(COMMERCIAL BREAK)

WOODRUFF: Bob Novak is here now with some inside buzz.

All right. Bob, I thought all the Republicans were happy about this Medicare reform bill. But you say no.

ROBERT NOVAK, CO-HOST, "CROSSFIRE": There are such hard feelings left over from that all-night session, where they really put a lot of heat on Republicans to vote for the bill on conservatives. Congressman Nick Smith of Michigan, who is retiring, was told that business interests would pay his son $100,000 in campaign contributions if he voted for the bill. His son is running for Congress.

When Nick refused to, then they turned around and said, we are going to defeat your son unless you vote yes. Tom Feeney of Florida, you remember him?

WOODRUFF: Sure.

NOVAK: He was the speaker in the vote recount in 2000, considered the most likely freshman to succeed. He was told if he voted no on this bill, his entrance into the leadership would be delayed for at least three years. He voted no.

Both of them voted no. But enough Republicans had their arms twisted yes to pass the bill.

WOODRUFF: Do you think the party would have made good on those threats?

NOVAK: Who knows?

WOODRUFF: All right. Next topic. There is a certain Republican in the Senate who you say was key to Medicare not going down.

NOVAK: It almost went down in the Senate on a procedural vote. Lindsay Graham, if he had stuck with his colleagues, with his allies, John McCain and Chuck Hagel, and voted on this procedural vote, the Medicare would have gone down. He was -- Lindsay Graham of South Carolina was talked into it at the last minute.

He was against the bill. He voted against (UNINTELLIGIBLE) and against the bill, but he rode in with the president on the procedural question.

WOODRUFF: All right. Let's talk about campaign '04. You're saying Republicans -- or you're hearing Republicans optimistic that a certain Republican will run against Tom Daschle?

NOVAK: Yes, John Thune, the former congressman of South Dakota, they had just about given up on him. But now there's a feeling that Thune has been talked into the belief that there will be a better turnout in '04 than there was in '02. And that he -- he just barely got beat for the Senate in '02 against Tim Johnson -- that he'll run against Tom Daschle. That would be a very close race against the Senate Democratic leader.

WOODRUFF: And that decision could come soon?

NOVAK: It will come I think before Christmas.

WOODRUFF: All right. Finally, you're talking to some Democrats. And what are they saying about the debate this week in Iowa?

NOVAK: Well, I mean, who liked this last debate from Des Moines on Monday? (AUDIO GAP) thought everybody did better. And General Clark's people really felt that he did much better than usual on the debate.

The problem is, of course, that the general has to finish better than third in either New Hampshire or Iowa. He's not running there now. But he was pretty good for a newcomer. He's learning the game, I think.

WOODRUFF: Well, spoken by somebody who knows whereof he speaks. Bob Novak, have a great Thanksgiving.

NOVAK: Same to you, Judy.

WOODRUFF: We'll see you. And you can catch Bob on weekdays, of course, on "CROSSFIRE" at 4:30 Eastern. You can also catch him every Saturday at 9:30 a.m. Eastern on "THE NOVAK ZONE."

Question: do today's business reports mean that it is full steam ahead for the economy? We'll check out on Wall Street to find out.

And will Hillary Clinton be joining her husband for Thanksgiving dinner? We'll tell you about the senator's global plans this holiday.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

HOWARD DEAN (D), DEMOCRATIC PRESIDENTIAL CANDIDATE: My brother was an extraordinary person. He was a person of deep principle. ANNOUNCER: Twenty-nine years after his brother disappeared in Southeast Asia, a painful chapter in Howard Dean's life finally comes to an end.

The battle for Iowa voters, it's not just out on the campaign trail.

NARRATOR: Dick Gephardt votes to spend $87 billion more on Iraq.

ANNOUNCER: We'll tun into a fierce fight be waged daily on TV.

Would you want to sit down to Thanksgiving with this man? A survey of New Yorkers holds no holiday cheer for his honor.

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

(END VIDEOTAPE)

WOODRUFF: Welcome back. Democrat Howard Dean says he is deeply comforted today after a long and emotional journey that led him to Hawaii and to a sense of closure about his brother's death.

Charles Dean's life and disappearance explain a lot about the presidential hopeful and the political passion that has helped fuel his campaign.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): On the eve of Thanksgiving, a brother returns. Remains believed to be those of Charlie Dean arrived in the United States today, nearly 30 years after he vanished in the jungles of Laos.

On hand to witness the arrival, presidential candidate Howard Dean, his mother, and brothers.

HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: My brother was an extraordinary person. He was a person of deep principle, who lived his life the way he believed it ought to be lived.

WOODRUFF: The ceremony at Hickham Air Force Base marks the culmination of a long journey for Howard Dean who traveled to Laos last year looking for clues of the disappearance of his 25-year-old brother and his traveling companion, Neil Sharman.

DEAN: They were arrested, held for three months, and then were executed. Probably by the north Vietnamese although we can't be sure.

WOODRUFF: Then earlier this month, a break-through. A military recovery team found the remains in a Laotian rice paddy shown here in pictures provided by the Army.

DEAN: We are deeply comforted by the fact that this operation has allowed us to repatriate what we believe are his remains and ultimately take them back home. WOODRUFF: Howard Dean rarely speaks of Charlie Dean, but counts his disappearance as a defining chapter in his own life, a chapter that will end soon, when the candidate finally brings his brother home.

(END VIDEOTAPE)

WOODRUFF: Before heading to Hawaii, Dean's last campaign stop was in Iowa. The state where he has been giving Dick Gephardt a run for his money, in the polls and on the airwaves. Here now is a sample of Dean-Gephardt tit for tat ads that are now airing in the Hawkeye State.

(BEGIN VIDEO CLIP)

AD ANNOUNCER: October 2002, Dick Gephardt agrees to co-author the Iraq War Resolution, giving George Bush the authority to go to war. A week later, with Gephardt's support, it passes Congress. Then last month, Dick Gephardt votes to spend $87 billion more on Iraq. Howard Dean has a different view.

DEAN: I oppose the war in Iraq, and I'm against spending another $87 billion there.

UNIDENTIFIED MALE: Is that an up or down yes or no on the $87 billion per se?

DEAN: On the $87 billion for Iraq? We have no choice but it has to be financed by getting red of all of the president's tax cuts.

I don't think this Iraq disagreement, frankly, rises to the level of a big campaign issue. And I don't intend to make whether you voted for or against the supplemental appropriation a campaign issue.

GEPHARDT: I'm Dick Gephardt and I approve this message because leadership is about making tough decisions and sticking with them.

(END VIDEO CLIP)

WOODRUFF: We're joined now by Evan Tracey of TNS Media Intelligence. It's a group that tracks ad spending in the top 100 markets.

Evan, so, first of all, this Dean/Gephardt back and forth, this is really the ad battle going on in Iowa?

EVAN TRACEY, TNS MEDIA INTELLIGENCE, CMAG.: That's correct, Judy. I mean these are the candidates with the most to gain and most to lose, really. And their ad spending reflects that.

Howard Dean has spent over $800,000, but only about 40 percent of his total ad spending in the primary states so far. Whereas Dick Gephardt has spend over $600,000, but that represents about 80 percent of his total ad spending so far.

And really the Dean campaign with going negative against Gephardt is now dictating the tempo. And Gephardt has to spend money in messages responding.

WOODRUFF: Let's talk about the race for third place. You've got John Edwards and John Kerry both spending as well. What are you seeing there?

TRACEY: Both of these candidates, I'm sure, want to win Iowa, but really the goal here is to get their ticket punched. Both candidates are spending about 50 percent of their total ad budgets in Iowa right now, with Edwards being -- having a more sustained campaign that started back in the summer, spending about $900,000.

And Kerry is spending about $700,000, but interestingly enough, in the last 20 days since he announced was not going to take public financing, he spent about $300,000 in the state of Iowa. So he's really ramped up here.

WOODRUFF: That much of a difference? All right, Evan, you've also got some outside groups spending money in Iowa. Let's listen right now to a bite from an ad that was put out by the so-called Alliance for Economic Justice.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Two years ago, I lost my job thanks to NAFTA. When you hear about layoffs every day, finding work is harder than ever. If something isn't done real soon, NAFTA will kill more and more jobs. That means hard times for families like mine.

We need fair trade, not free trade. The next time someone asks for your vote, ask them where they stood during the fight against NAFTA.

(END VIDEO CLIP)

WOODRUFF: So presumably, Evan Tracey, this is all an effort to help Dick Gephardt.

TRACEY: Right. These ads by labor, there's two groups -- they're spending about a combined $70,000 in just a couple of weeks -- are actually a big help Gephardt because it's going to help him bridge the gap with candidates like Dean and Kerry who aren't taking the public financing and can spend unlimitedly -- unlimited amounts of money in the state.

And it helps drive the message, too, to caucus goers who have, you know, economic concerns right, as well as organized labor which are, as you know, extremely important in the caucus environment.

WOODRUFF: Hugely important. And we talked to Gephardt a little bit about that today.

All right, separately, let's talk about the Republican National Committee. They're not part of this primary contest, but they did go up with an ad in Iowa that we've been talking about the last few days. Let's listen to part of that.

(BEGIN VIDEO CLIP)

BUSH: Our war against terror is a contest of will in which perseverance is power.

Some have said, we must not act until the threat is imminent. Since when have terrorists and tyrants announced their intentions, politely putting us on notice before they strike?

(END VIDEO CLIP)

WOODRUFF: All right. Now, this ad got enormous attention in the news media. But how much was really spent to air this?

TRACEY: They spent about $20,000, it seems, each of the first two days on the ads. So about $40,000 total right now. Not a big ad buy but the desired impact is to obviously get the press to talk about, get the president's side of the story on the record. (UNINTELLIGIBLE) about $10 million spent when you combine the candidates in the issue groups so far.

The unintended consequence that Howard Dean and John Kerry would both use campaign money to respond to this ad to someone their not running against yet. So I'm not sure that was the intended consequence or they expected it. But I think it's interesting that those two decided to use some resources to respond to the RNC's ad.

WOODRUFF: It's very interesting how quick the response has come.

(CROSSTALK)

TRACEY: ... rapid response.

WOODRUFF: OK. Evan Tracey, thanks very much. Good to see you.

TRACEY: Good to be here.

WOODRUFF: We'll talk to you again soon.

TRACEY: Thanks, Judy.

WOODRUFF: Have a good thanksgiving, too.

TRACEY: Bye.

WOODRUFF: Well in the New Hampshire battle ground today, '04 Democrat Wesley Clark seemed to get in a dig at Howard Dean's medical deferment from the military. During a radio interview, the retired general was asked a light-hearted question: would he be interested in a skiing competition among the presidential candidates? Well, here's what Clark said.

(BEGIN AUDIO CLIP)

WESLEY CLARK (D), PRESIDENTIAL CANDIDATE: I didn't have as much practice skiing as the governor did.

UNIDENTIFIED MALE: I understand that, but...

CLARK: He was out there skiing when I was recovering from my wounds in Vietnam. But that's OK.

(END AUDIO CLIP)

WOODRUFF: Not sure how light-hearted that was. Clark later denied his comment was intended to be critical of Dean. Dean did spend a year skiing in Colorado despite the back condition that kept him out of the Vietnam War. His campaign says that Dean fulfilled his obligation, he told the truth and was ruled ineligible to serve. And if General Clark wants to make this an issue, they said, that's his business.

Well analysts here in Washington and on Wall Street are busy crunching up a new round of economic numbers. And stock traders just delivered their verdict on the reports. Our financial news reporter, Mary Snow, is at the New York stock exchange. Mary, what are they saying?

MARY SNOW, CNNfn CORRESPONDENT: Well, Judy, in terms of Wall Street's response, pretty muted. And the second day in a row traders have shaken off stellar economic news. Stocks ended just slightly higher. But today's malaise was more having to do with the Thanksgiving holiday. Many investors and traders left early. And of course there's no treading tomorrow, just a half a day of action on Friday.

At the closing bell the Dow industrials ended 15 points higher. The Nasdaq gained ten points. However, Wall Street did rally on Monday on the expectation that this week's economic data would be better than expected -- Judy.

WOODRUFF: Mary, let me ask you a little bit more about these reports that are out today. How much do they really tell us about the health of the economy?

SNOW: Well, economists say a lot. And there were nine reports in all. Overall, economists saying it paints a pretty good picture. You put it alongside yesterday's GDP report which showed 8 percent growth, it shows the economy is kicking into high gear.

Now most importantly the labor market continues to improve. And that was what's key. The weekly jobless (UNINTELLIGIBLE) came out today and they fell to a near three-year low. And this is layoffs slowed.

Next week you get the closely-watched November employment report. And economists expect about 150,000 jobs were created this month. And that's not enough to lower the unemployment rate. However, it would certainly be a move in the right direction.

Another report out today showed the hardest hit manufacturing sector is picking up. New orders for durable goods had their biggest jump in nearly a year and a half. The federal reserve wrapped this all up saying the economic recovery was on track. There was evidence of it in October and early November, helped by a stabilizing job market.

Taken all together, it means businesses are ramping up activity and keeping more workers on the payroll. And if orders continue to roll in, that could lead to more robust job growth. And that is what economists say is really needed for a sustained economic recovery -- Judy.

WOODRUFF: All right. And, Mary, so what are the next numbers they're looking for?

SNOW: The next numbers coming out, retail sales. And this is key. The holiday shopping season officially starting on Friday. And it will be a test. It's traditionally the second busiest day in the Christmas shopping season. We'll get preliminary indications about those sales as soon as Monday. Last year they were lackluster. So hope that they will be picking up this year -- Judy.

WOODRUFF: Well, if psychology has anything to do with it, I think people may be hearing that the economy is picking up, may cause them to spend more. But I'm not the expert.

SNOW: (UNINTELLIGIBLE) but economists agree with you. And that's what they're thinking will happen.

WOODRUFF: All right. Mary Snow at the New York Stock Exchange. Thank you very much.

Question now: how does the new Medicare bill affect the 2004 races for Congress? In a minute, Stu Rothenberg checks the political fallout of the prescription drug vote.

Later, we'll check the holiday travel plans for Senator Hillary Rodham Clinton.

And we get a preview of Bill Schneider's menu of possible "Political Turkeys of the Year."

(COMMERCIAL BREAK)

WOODRUFF: Even though Bob Novak says a few Republican egos were bruised in the Medicare fight, the newly-passed bill could be just what the doctor ordered for many members of Congress.

Short time ago I sat down with Stu Rothenberg of "The Rothenberg Political Report," and asked him whether the Medicare bill will help Republicans when push comes to shove.

(BEGIN VIDEOTAPE)

STU ROTHENBERG, POLITICAL ANALYST: Judy, I think it will. I think it's a major accomplishment. They can argue that there's something previous Congresses have been unable to achieve.

And at the end of the day, what people remember is there's a prescription drug benefit for seniors. That's what they think about. That's the symbol of this bill. I think it's important for the Republicans. I think they'll do well with it in 2004.

WOODRUFF: What about the Democrats? I mean, they've been arguing for a long time that this was not something that the Republicans cared about. Now the Republicans in effect have taken it off the table. What is left for the Democrats to say is their message?

ROTHENBERG: I think a couple things. I think they're going to -- they'll go back to this sort of issue and talk about the substance of the bill and say it's not a real benefit. It's not a good enough benefit. Just like they were doing with education. Republicans passed an education bill. The Democrats are saying that the Republicans aren't funding it.

I think they'll talk about the economy. I think they'll talk about the fact that we won't recover all the jobs that have been lost. But the Democrats really need to sit down and come up with an agenda, a legislative agenda, a party agenda to take on the Republicans.

WOODRUFF: That doesn't involve a lot of spending, presumably.

ROTHENBERG: That doesn't involve new spending, you're right. And they're going to talk about priorities. They'll talk about leadership. They'll talk about people left behind.

But you're right. We have this big budget deficit so they can't offer new significant new spending or the Republicans will accuse them of being tax and spend Democrats.

It doesn't matter that the Republicans just passed a big $400 billion new entitlement, it's the Democrats who are vulnerable to the charge.

WOODRUFF: So the Republicans are not vulnerable, you're saying, on building up, or some would say blowing up the deficit?

ROTHENBERG: I think in the short-term, not. We saw the Republicans try to use the deficit as an issue in the '50s and '60s, and it didn't really work. Over the long term, to the extent that the deficit hurts the overall economy, the Democrats could use it.

But the problem for the Democrats would appear to be a strong economic rebound now, and so I don't think people aren't going to be very deficit sensitive. They may tell pollsters they're concerned about them, but they're not going to vote on the deficit.

WOODRUFF: All right, let's talk about the House of Representatives. Elections almost a year away, but right now, the Democrats have got to pick up 12 seats to win back control. Do they have any hope -- how many really competitive seats are there going to be out there?

ROTHENBERG: Well, we think there are going to be maybe a couple of dozen seats. The Democrats are hoping there's going to be special elections that they can build up some momentum if, Congressman Tauzin leaves to join the private sector, that would a district they could compete in.

They're hoping to compete in the special election in Kentucky's Sixth District where Ernie Fletcher got elected governor in Kentucky. That would build up some momentum.

They need for the courts to overturn the Texas redistricting plan. That would be a huge boost to them and it would deprive the Republicans of anywhere from three to five new congressional districts.

But they have to -- somehow the Democrats have to convince the voters that it's time for a change nationally, that the Republicans haven't been up to the job of governing. I think it's going to be hard if there's an economic rebound.

WOODRUFF: And, Stu, what about in the Senate? Are there -- do the Democrats have any better prospects there?

ROTHENBERG: Well, a little better, not great prospects. But there are a number of Republican seats that are potentially at risk. We know Illinois is at risk. Alaska possibly, Oklahoma possibly, Missouri possibly.

Democrats' problems are they're still defending a bunch of southeastern Democratic seats. So it's hard for them, too although they're only down 51-49 there. So, you know, if I had to pick which house was more in play for the Democrats, I'd probably say the Senate.

WOODRUFF: Sounds to me like the Democrats need to go get rested up this Thanksgiving so they can come back girded for battle after that.

ROTHENBERG: You know, it's one thing, Judy, to be angry about George W. Bush, it's another thing to allow that anger to make you so mad you can't come together and work on a new plan to take over this Congress.

(END VIDEOTAPE)

WOODRUFF: Steve Rothenberg of "The Rothenberg Political Report."

Well looking quickly now at some developing state races, Congresswoman Katherine Harris tops a new poll of Republican choices to replace retiring Democratic Senator Bob Graham. She has not decided yet whether to run. The same poll shows Harris losing to the Democrat's top choice who is former state education commissioner Betty Caster.

FBI whistleblower Colleen Rowley has decided not to run for Congress. Democrats were recruiting her as an opponent for Minnesota Republican Congressman John Kline. Rowley says she wouldn't fit into politics because she isn't much of a saleswoman, she says, noting that when she was a child everyone in her Girl Scout troop sold more cookies than she did.

A first look at this year's official White House Christmas card straight ahead.

Plus, would you like to have Thanksgiving dinner with the mayor of New York City? We'll tell you what New Yorkers say when INSIDE POLITICS returns.

(COMMERCIAL BREAK)

WOODRUFF: Today's second edition of "Campaign News Daily" features a holiday theme. Democratic Senators Hillary Rodham Clinton and Jack Reed plan to spend the holiday with troops overseas. After a thanksgiving stop in Afghanistan, the two members of the Senate Armed Services Committee plan to travel to Iraq. Both senators have criticized the Bush administration's policies in post-war Iraq.

President and Mrs. Bush plan to mail their official White House Christmas cards this Friday. (AUDIO GAP) feature a water color of the White House Diplomatic Reception room by New York artist Barbara Ernst Prey.

And a new poll, finding most New Yorkers would pass on a chance to have Thanksgiving dinner with Mayor Michael Bloomberg. Sixty-one percent of those polled by Quinnipiac University said they would not like to dine with Bloomberg tomorrow. Told of the poll, the mayor said, quote, "That's good because I have plans with my family." So there.

Thanksgiving traditions that stand the test of time. The meal, the parade and Bill Schneider's "Political Turkeys of the Year." When we come back, Bill previews his annual awards. And I'll give you a chance to cast your vote.

(COMMERCIAL BREAK)

WOODRUFF: Looking ahead to tomorrow's special Thanksgiving Day edition of INSIDE POLITICS, our Bill Schneider is here to preview an INSIDE POLITICS tradition -- Bill.

SCHNEIDER: Well tomorrow is Thanksgiving. And you know what that means, gluttony, sloth, the Macy's parade, and the "Political Turkey of the Year" to be named right here on INSIDE POLITICS.

On our CNN.com Web site we asked you to cast your vote among five of this year's nominated turkeys. Let's check the latest exit poll and see who's ahead.

Ooh, it looks like a tight race between Congressman Darrell Issa of California who bank rolled the recall in California, and Senator Trent Lott of Mississippi who thought the South could rise again. Both at 26.

And CBS Television for dumping its mini series on the Reagans. But, understand, not because of any political pressure. CBS has just tied the other two.

Well, you can keep on voting, folks. And we'll send the ballots down to Florida to be tabulated. (LAUGHTER)

SCHNEIDER: But first, following tradition, we'll declare the winner right here on INSIDE POLITICS tomorrow. And we will answer my annual Thanksgiving question. What three national disasters would occur if you dropped the Thanksgiving platter? Tune in tomorrow for the answer. And for the election results.

WOODRUFF: I can't wait. It's almost exciting as anticipating Turkey and dressing and pumpkin pie.

SCHNEIDER: And the Iowa caucuses.

(LAUGHTER)

WOODRUFF: And the Iowa caucuses, not to mention the New Hampshire primary.

SCHNEIDER: Exactly.

WOODRUFF: All right, I'll see you tomorrow.

SCHNEIDER: See you then.

WOODRUFF: Thank you.

That's it for this pre-Thanksgiving edition of INSIDE POLITICS. I'm Judy Woodruff. "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





Gephardt>


Aired November 26, 2003 - 15:30   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
ANNOUNCER: Just in time for the holidays, is the latest batch of economic numbers a gift for President Bush?

Is it Iowa or bust for Dick Gephardt? The '04 Democrat talks about his campaign hopes and his Hawkeye State showdown with Howard Dean.

REP. RICHARD GEPHARDT (D-MO), DEMOCRATIC PRESIDENTIAL CANDIDATE: I'm going to win it. I don't think about other alternatives.

ANNOUNCER: The big Thanksgiving countdown. We're tallying your votes for the political turkeys of the year.

(END VIDEOTAPE)

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

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. When the Federal Reserve makes proclamations about the economy, politicians tend to listen. And in a report out today, the Fed is sounding upbeat about the nation's recent economic spurt, calling it reasonably broad- based.

Several other new reports also seem encouraging. Orders for big- ticket items such as machinery or appliances jumped more in October than they had in over a year. Americans' incomes grew modestly last month, while consumer spending held steady. And though new home sales declined, they still represented the fifth best month on record. And just last week, new claims for unemployment benefits fell to the lowest level in almost three years.

Well, President Bush may be enjoying those economic snapshots as he settles in for the Thanksgiving holiday at his Texas ranch. Our White House correspondent, Dana Bash, is with Mr. Bush in Crawford, or is at least as close as they let the press get, Dana.

Dana, given all this good economic news, is this enough for the White House to feel confident about? Or are there still more numbers they're looking for?

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Judy, they're certainly feeling better. And you remember, this is a campaign that continues to point to history, showing that presidents are reelected or not reelected primarily based on the economy. So given that every one of the economic indicators you just read off brings a new and different sigh of relief from the Bush campaign and from the White House for sure, but they do know that something that Senator Tom Daschle said a few weeks ago does ring true.

And that is, that it's not necessarily about the GDP, it's about a j-o-b. And that is why officials I've talked to today say that they are looking at next week. They are looking at the jobless numbers that they do expect to come out at the end of next week, and that is something that they are going to be watching very, very closely. But until then, the White House will certainly do its part to keep the momentum going.

The president has a couple of events next week. One in Detroit, and another at the end of the week, to talk up the economy, to have some Oprah-style conversations about the economy. That is something he has started to do over the past weeks and will continue to do that.

That will also be done on the day that that new unemployment figure comes out, in the hopes that that number is better. So the president has some good news to crow about -- Judy.

WOODRUFF: And Dana, about that Medicare bill, the White House obviously very happy that that's passed the Congress now. Once the president signs it, how much is he going to keep talking about it?

BASH: We can certainly expect him to keep talking about it a lot, Judy. Because, as you know, the actual benefit, the full benefit doesn't kick in until 2006, well after the Election Day. So what you'll see from the White House is an attempt between now and the Election Day to define it, to explain exactly what is in the bill from their point of view, how it will help senior citizens.

The White house is well aware that Democrats on the campaign trail are hoping that once seniors read the fine print, they will actually rebel because they are not going to get as much of a benefit as perhaps they may think in hearing what is coming out of Washington. So we're likely to see events like we saw yesterday twice, once in Las Vegas, once in Phoenix with the president and senior citizens, explaining in his way what the fine print is, explaining that this is something that gives seniors options. This is something that modernizes Medicare, the likes of which has not happened certainly since its inception.

But what senior political advisors say, Judy, is that the most important thing about passing this bill is that it's a campaign promise kept. And that helps they say with the president's poll numbers when it comes to trustworthiness and when it comes to leadership -- Judy.

WOODRUFF: Right now, they can't say a whole lot negative about it, that is for sure. All right. Dana, thank you very much.

Well, for a little more on Medicare politics, you can go to cnn.com/allpolitics and read my online column. Today's edition is on how the GOP victory on Medicare may play out in next year's elections. Republican leaders are banking on Congress to approve a huge $373 billion spending bill when lawmakers return to the Hill next month. When they went on Thanksgiving break, they left behind a flood of red ink. Our Bill Schneider has been wondering who, if anyone, cares.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): As the congressional session winds down, we marked the first full year in nearly four decades that the Republicans have controlled both the White House and Congress. So what happened?

BILL MOFFIT, HERITAGE FOUNDATION: The deficits are exploding. The Republicans are supposed to be a party of fiscal responsibility.

SCHNEIDER: This year's deficit, by far the largest in the nation's history, could go above $500 billion. Official estimates show the national debt rising by more than three-quarters of a trillion dollars over the next 10 years. Four hundred billion dollars for the new prescription drug benefit, $300 billion for tax cuts, $50 billion for higher Medicare reimbursements, $22 billion to increase veterans' benefits.

Whatever happened to Ross Perot?

ROSS PEROT, FMR. PRESIDENTIAL CANDIDATE: If we do not solve these problems soon, we will have a financial meltdown and millions of great people in this country will suffer for decades.

SCHNEIDER: It was the Democrats who took up Perot's cause and paid a heavy price for it after they raised taxes in 1993. By 2000, Bill Clinton could claim his legacy.

BILL CLINTON, FMR. PRESIDENT OF THE UNITED STATES: Today we have gone from the largest deficits in history to the largest surpluses in history.

SCHNEIDER: And the thanks of a grateful nation? Al Gore lost.

Even now, Democrats seem disinclined to make the deficit their issue. Look how they're attacking Howard Dean for making tough budget choices.

SEN. JOHN KERRY (D-MA), DEMOCRATIC PRESIDENTIAL CANDIDATE: The fact is that Governor Dean raised prescription costs for seniors in his state when he needed to balance the budget. He called himself a balanced budget freak. Those are his own words.

SCHNEIDER: A balanced budget freak? Can't have that in the Democratic Party. So what do you do about this huge burden of debt? You get the economy to grow. Isn't that what happened under Clinton?

GEPHARDT: We did a variety of things to get the economy to grow. That's the way you get rid of deficits. You don't just cut the most vulnerable in our society.

SCHNEIDER: At last, a point on which both parties agree. You don't have to make any tough choices.

(END VIDEOTAPE)

SCHNEIDER: Could Ross Perot or someone like him run on the deficit issue next year? Unlikely. Perot did well in 1992 because the economy was bad and the deficit was an easy target. When the economy's improving, it's hard to make people care about deficits.

WOODRUFF: We're starting to notice that.

SCHNEIDER: Yes.

WOODRUFF: OK. Bill, thank you very much.

SCHNEIDER: Sure.

WOODRUFF: Well, in Iowa, Midwestern native Dick Gephardt is facing a formidable challenge from a certain governor of Vermont. Up next, I will ask Gephardt about his face-off with Howard Dean and whether the Iowa caucuses are do or die for him.

Happy or mad? Bob Novak will tap into Republicans' mixed emotions about the Medicare bill's passage.

And later, in Hawaii today, a presidential candidate faces his painful past and his long-missing brother's final journey.

(COMMERCIAL BREAK)

WOODRUFF: Checking the headlines in our "Campaign News Daily," Al Gore is the latest Democrat to criticize a new Republican TV ad. The spot defends President Bush against those it describes as "attacking the president for attacking the terrorists." Last night in Tennessee, Gore said the ad is "a cheap and petty political tactic not worthy of the presidency." "It is something you would find in a down and dirty sleazy campaign for city council."

Dick Gephardt and John Kerry have released new TV ads in Iowa promoting their health care plans. Both candidates promise to offer health cover to the uninsured, and they both using personal stories to draw in potential voters.

(BEGIN VIDEO CLIP)

KERRY: A few months ago, I was diagnosed with prostate cancer. I'm cured now. But I was lucky. As a United States senator, I could get the best health care in the world.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

GEPHARDT: Thirty-one years ago, our 2-year-old son Matt was diagnosed with terminal cancer. Our health insurance paid for experimental treatments that saved Matt's life.

(END VIDEO CLIP)

WOODRUFF: Recent polls show that Congressman Gephardt is in a tight race in Iowa with Howard Dean. I spoke with Dick Gephardt a little earlier today, and I started by asking him if he absolutely has to win the Iowa caucuses.

(BEGIN VIDEOTAPE)

GEPHARDT: The better way maybe is to say, I'm going to win Iowa. I really have the best organization there. But I've also got the best ideas. The boldest, biggest, but most realistic ideas that are built on my experience. And I think I'm making a connection with the voters out there that I can really do this job well and I can bring these ideas in to being. And that's important to people in the world we're in.

WOODRUFF: Is it do or die?

GEPHARDT: I'm going to win it. I don't think about other alternatives because I'm convinced I'm going to win there. And again, we're getting a great reaction from people.

People are excited about the health care plan, and the Apollo 21 Energy Program, and my agricultural ideas, and my trade ideas, international minimum wage at the WTO. These are the things that people are looking for. They're looking for experience, but translating that experience into realistic bold ideas.

WOODRUFF: And yet Governor Dean got those coveted labor endorsements, AFSCME, have a lot of members in Iowa, SEIU, the Service Employees International -- you really wanted those endorsements. How much does that hurt you?

GEPHARDT: I'm proud of the endorsements I've gotten. I've been endorsed by 21 international unions that represent 95,000 workers in Iowa. Now, only about 110,000 people are going to show up for the Iowa caucuses. Getting 30,000 votes is probably a winner.

If I can just produce a third of the union members that have endorsed me, I'm going to win the Iowa caucuses. And then that doesn't take into account their family members, or farmers, or senior citizens who aren't active union members today. So we've got a great operation, and we've got a great chance. People are getting excited about these caucuses.

WOODRUFF: Governor Dean running an ad, among other things in Iowa, pinpointing your vote to co-author the resolution with -- supporting President Bush, going to war in Iraq, supporting the $87 billion. How much is that going to hurt you? Iowa clearly has a lot of citizens who are upset about that war.

GEPHARDT: Now we put an answer ad on that really answered what he was saying. He's been all over the lot on this issue. And when people understand that, I think they'll ask questions about the ad that he's run. He favored a resolution that was supposed to be put in the Senate. It never came up. But it was literally the same kind of resolution that I supported. In essence, it was the same procedure.

He also has said, we have no choice but to put the $87 billion into Iraq to support our troops. He's also said that he didn't want to politicize this issue as a campaign issue. So he's been all over the lot. I think when people understand that, they're going to see that what I did was what I believed to be the right thing for the country.

WOODRUFF: But he is widely perceived as being against that war, pretty much his whole campaign. Has been positioned on the fact that he was against the war. And he's saying you were for it. Why can't he just make it black and white as that?

GEPHARDT: Well, because the facts don't bear that out. Again, he said at the time the resolutions were in the House and in the Senate, that he favored -- he was for a resolution that was virtually the same thing that I voted for and others voted for. But this is -- you know, this isn't an issue -- this is an issue that will be going forward.

I've told people in Iowa, and I've told people everywhere, I am always going to do what I think is important to do to keep our people safe. That's our highest responsibility. And I'm going to do what's right if I believe it's the right thing to do. And that's what I did.

WOODRUFF: Let me ask you about something you said this week to an audience in Michigan, mostly an African-American audience. You talked about -- you criticized three of your rivals for their being critical. You said of affirmative action back in the 1990s, they've all come back and taken issue with that.

In fact, Senator Lieberman has come out and said, "With all due respect, Congressman Gephardt is chucking stones in a glass house. In the mid 1990s, Lieberman, Kerry, Dean and Gephardt all raised questions about affirmative action." That's from Lieberman's campaign.

GEPHARDT: Well, you just have to go look at the statements. Obviously, when Bill Clinton and I were fighting against the Republican effort to end affirmative action, we said, reform it, don't end it. And we did make some slight changes in it. But we did not end it. We beat off the efforts to end it.

Governor Dean has said in the past that we shouldn't have affirmative action based on race but on some other basis. That really isn't affirmative action. John Kerry has made disparaging statements about it. And Joe lieberman has as well.

All I'm saying is that we need to keep affirmative action. And we need a candidate for president who has a proven record of fighting for this issue, because it is the right thing to do. We still need affirmative action.

WOODRUFF: So you stand by your criticism of your opponents?

GEPHARDT: I think my stand on this has been clear. And I have been the leader in keeping affirmative action against various attempts by the Republicans to end the program.

(END VIDEOTAPE)

WOODRUFF: Congressman Dick Gephardt talking to me just a few hours ago.

Well, the Medicare fight left a few political scars within the Republican ranks on Capitol Hill. When INSIDE POLITICS returns, Bob Novak opens his notebook and tells us who may be suffering from an attack of hard feelings.

(COMMERCIAL BREAK)

WOODRUFF: Bob Novak is here now with some inside buzz.

All right. Bob, I thought all the Republicans were happy about this Medicare reform bill. But you say no.

ROBERT NOVAK, CO-HOST, "CROSSFIRE": There are such hard feelings left over from that all-night session, where they really put a lot of heat on Republicans to vote for the bill on conservatives. Congressman Nick Smith of Michigan, who is retiring, was told that business interests would pay his son $100,000 in campaign contributions if he voted for the bill. His son is running for Congress.

When Nick refused to, then they turned around and said, we are going to defeat your son unless you vote yes. Tom Feeney of Florida, you remember him?

WOODRUFF: Sure.

NOVAK: He was the speaker in the vote recount in 2000, considered the most likely freshman to succeed. He was told if he voted no on this bill, his entrance into the leadership would be delayed for at least three years. He voted no.

Both of them voted no. But enough Republicans had their arms twisted yes to pass the bill.

WOODRUFF: Do you think the party would have made good on those threats?

NOVAK: Who knows?

WOODRUFF: All right. Next topic. There is a certain Republican in the Senate who you say was key to Medicare not going down.

NOVAK: It almost went down in the Senate on a procedural vote. Lindsay Graham, if he had stuck with his colleagues, with his allies, John McCain and Chuck Hagel, and voted on this procedural vote, the Medicare would have gone down. He was -- Lindsay Graham of South Carolina was talked into it at the last minute.

He was against the bill. He voted against (UNINTELLIGIBLE) and against the bill, but he rode in with the president on the procedural question.

WOODRUFF: All right. Let's talk about campaign '04. You're saying Republicans -- or you're hearing Republicans optimistic that a certain Republican will run against Tom Daschle?

NOVAK: Yes, John Thune, the former congressman of South Dakota, they had just about given up on him. But now there's a feeling that Thune has been talked into the belief that there will be a better turnout in '04 than there was in '02. And that he -- he just barely got beat for the Senate in '02 against Tim Johnson -- that he'll run against Tom Daschle. That would be a very close race against the Senate Democratic leader.

WOODRUFF: And that decision could come soon?

NOVAK: It will come I think before Christmas.

WOODRUFF: All right. Finally, you're talking to some Democrats. And what are they saying about the debate this week in Iowa?

NOVAK: Well, I mean, who liked this last debate from Des Moines on Monday? (AUDIO GAP) thought everybody did better. And General Clark's people really felt that he did much better than usual on the debate.

The problem is, of course, that the general has to finish better than third in either New Hampshire or Iowa. He's not running there now. But he was pretty good for a newcomer. He's learning the game, I think.

WOODRUFF: Well, spoken by somebody who knows whereof he speaks. Bob Novak, have a great Thanksgiving.

NOVAK: Same to you, Judy.

WOODRUFF: We'll see you. And you can catch Bob on weekdays, of course, on "CROSSFIRE" at 4:30 Eastern. You can also catch him every Saturday at 9:30 a.m. Eastern on "THE NOVAK ZONE."

Question: do today's business reports mean that it is full steam ahead for the economy? We'll check out on Wall Street to find out.

And will Hillary Clinton be joining her husband for Thanksgiving dinner? We'll tell you about the senator's global plans this holiday.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

HOWARD DEAN (D), DEMOCRATIC PRESIDENTIAL CANDIDATE: My brother was an extraordinary person. He was a person of deep principle. ANNOUNCER: Twenty-nine years after his brother disappeared in Southeast Asia, a painful chapter in Howard Dean's life finally comes to an end.

The battle for Iowa voters, it's not just out on the campaign trail.

NARRATOR: Dick Gephardt votes to spend $87 billion more on Iraq.

ANNOUNCER: We'll tun into a fierce fight be waged daily on TV.

Would you want to sit down to Thanksgiving with this man? A survey of New Yorkers holds no holiday cheer for his honor.

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

(END VIDEOTAPE)

WOODRUFF: Welcome back. Democrat Howard Dean says he is deeply comforted today after a long and emotional journey that led him to Hawaii and to a sense of closure about his brother's death.

Charles Dean's life and disappearance explain a lot about the presidential hopeful and the political passion that has helped fuel his campaign.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): On the eve of Thanksgiving, a brother returns. Remains believed to be those of Charlie Dean arrived in the United States today, nearly 30 years after he vanished in the jungles of Laos.

On hand to witness the arrival, presidential candidate Howard Dean, his mother, and brothers.

HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: My brother was an extraordinary person. He was a person of deep principle, who lived his life the way he believed it ought to be lived.

WOODRUFF: The ceremony at Hickham Air Force Base marks the culmination of a long journey for Howard Dean who traveled to Laos last year looking for clues of the disappearance of his 25-year-old brother and his traveling companion, Neil Sharman.

DEAN: They were arrested, held for three months, and then were executed. Probably by the north Vietnamese although we can't be sure.

WOODRUFF: Then earlier this month, a break-through. A military recovery team found the remains in a Laotian rice paddy shown here in pictures provided by the Army.

DEAN: We are deeply comforted by the fact that this operation has allowed us to repatriate what we believe are his remains and ultimately take them back home. WOODRUFF: Howard Dean rarely speaks of Charlie Dean, but counts his disappearance as a defining chapter in his own life, a chapter that will end soon, when the candidate finally brings his brother home.

(END VIDEOTAPE)

WOODRUFF: Before heading to Hawaii, Dean's last campaign stop was in Iowa. The state where he has been giving Dick Gephardt a run for his money, in the polls and on the airwaves. Here now is a sample of Dean-Gephardt tit for tat ads that are now airing in the Hawkeye State.

(BEGIN VIDEO CLIP)

AD ANNOUNCER: October 2002, Dick Gephardt agrees to co-author the Iraq War Resolution, giving George Bush the authority to go to war. A week later, with Gephardt's support, it passes Congress. Then last month, Dick Gephardt votes to spend $87 billion more on Iraq. Howard Dean has a different view.

DEAN: I oppose the war in Iraq, and I'm against spending another $87 billion there.

UNIDENTIFIED MALE: Is that an up or down yes or no on the $87 billion per se?

DEAN: On the $87 billion for Iraq? We have no choice but it has to be financed by getting red of all of the president's tax cuts.

I don't think this Iraq disagreement, frankly, rises to the level of a big campaign issue. And I don't intend to make whether you voted for or against the supplemental appropriation a campaign issue.

GEPHARDT: I'm Dick Gephardt and I approve this message because leadership is about making tough decisions and sticking with them.

(END VIDEO CLIP)

WOODRUFF: We're joined now by Evan Tracey of TNS Media Intelligence. It's a group that tracks ad spending in the top 100 markets.

Evan, so, first of all, this Dean/Gephardt back and forth, this is really the ad battle going on in Iowa?

EVAN TRACEY, TNS MEDIA INTELLIGENCE, CMAG.: That's correct, Judy. I mean these are the candidates with the most to gain and most to lose, really. And their ad spending reflects that.

Howard Dean has spent over $800,000, but only about 40 percent of his total ad spending in the primary states so far. Whereas Dick Gephardt has spend over $600,000, but that represents about 80 percent of his total ad spending so far.

And really the Dean campaign with going negative against Gephardt is now dictating the tempo. And Gephardt has to spend money in messages responding.

WOODRUFF: Let's talk about the race for third place. You've got John Edwards and John Kerry both spending as well. What are you seeing there?

TRACEY: Both of these candidates, I'm sure, want to win Iowa, but really the goal here is to get their ticket punched. Both candidates are spending about 50 percent of their total ad budgets in Iowa right now, with Edwards being -- having a more sustained campaign that started back in the summer, spending about $900,000.

And Kerry is spending about $700,000, but interestingly enough, in the last 20 days since he announced was not going to take public financing, he spent about $300,000 in the state of Iowa. So he's really ramped up here.

WOODRUFF: That much of a difference? All right, Evan, you've also got some outside groups spending money in Iowa. Let's listen right now to a bite from an ad that was put out by the so-called Alliance for Economic Justice.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Two years ago, I lost my job thanks to NAFTA. When you hear about layoffs every day, finding work is harder than ever. If something isn't done real soon, NAFTA will kill more and more jobs. That means hard times for families like mine.

We need fair trade, not free trade. The next time someone asks for your vote, ask them where they stood during the fight against NAFTA.

(END VIDEO CLIP)

WOODRUFF: So presumably, Evan Tracey, this is all an effort to help Dick Gephardt.

TRACEY: Right. These ads by labor, there's two groups -- they're spending about a combined $70,000 in just a couple of weeks -- are actually a big help Gephardt because it's going to help him bridge the gap with candidates like Dean and Kerry who aren't taking the public financing and can spend unlimitedly -- unlimited amounts of money in the state.

And it helps drive the message, too, to caucus goers who have, you know, economic concerns right, as well as organized labor which are, as you know, extremely important in the caucus environment.

WOODRUFF: Hugely important. And we talked to Gephardt a little bit about that today.

All right, separately, let's talk about the Republican National Committee. They're not part of this primary contest, but they did go up with an ad in Iowa that we've been talking about the last few days. Let's listen to part of that.

(BEGIN VIDEO CLIP)

BUSH: Our war against terror is a contest of will in which perseverance is power.

Some have said, we must not act until the threat is imminent. Since when have terrorists and tyrants announced their intentions, politely putting us on notice before they strike?

(END VIDEO CLIP)

WOODRUFF: All right. Now, this ad got enormous attention in the news media. But how much was really spent to air this?

TRACEY: They spent about $20,000, it seems, each of the first two days on the ads. So about $40,000 total right now. Not a big ad buy but the desired impact is to obviously get the press to talk about, get the president's side of the story on the record. (UNINTELLIGIBLE) about $10 million spent when you combine the candidates in the issue groups so far.

The unintended consequence that Howard Dean and John Kerry would both use campaign money to respond to this ad to someone their not running against yet. So I'm not sure that was the intended consequence or they expected it. But I think it's interesting that those two decided to use some resources to respond to the RNC's ad.

WOODRUFF: It's very interesting how quick the response has come.

(CROSSTALK)

TRACEY: ... rapid response.

WOODRUFF: OK. Evan Tracey, thanks very much. Good to see you.

TRACEY: Good to be here.

WOODRUFF: We'll talk to you again soon.

TRACEY: Thanks, Judy.

WOODRUFF: Have a good thanksgiving, too.

TRACEY: Bye.

WOODRUFF: Well in the New Hampshire battle ground today, '04 Democrat Wesley Clark seemed to get in a dig at Howard Dean's medical deferment from the military. During a radio interview, the retired general was asked a light-hearted question: would he be interested in a skiing competition among the presidential candidates? Well, here's what Clark said.

(BEGIN AUDIO CLIP)

WESLEY CLARK (D), PRESIDENTIAL CANDIDATE: I didn't have as much practice skiing as the governor did.

UNIDENTIFIED MALE: I understand that, but...

CLARK: He was out there skiing when I was recovering from my wounds in Vietnam. But that's OK.

(END AUDIO CLIP)

WOODRUFF: Not sure how light-hearted that was. Clark later denied his comment was intended to be critical of Dean. Dean did spend a year skiing in Colorado despite the back condition that kept him out of the Vietnam War. His campaign says that Dean fulfilled his obligation, he told the truth and was ruled ineligible to serve. And if General Clark wants to make this an issue, they said, that's his business.

Well analysts here in Washington and on Wall Street are busy crunching up a new round of economic numbers. And stock traders just delivered their verdict on the reports. Our financial news reporter, Mary Snow, is at the New York stock exchange. Mary, what are they saying?

MARY SNOW, CNNfn CORRESPONDENT: Well, Judy, in terms of Wall Street's response, pretty muted. And the second day in a row traders have shaken off stellar economic news. Stocks ended just slightly higher. But today's malaise was more having to do with the Thanksgiving holiday. Many investors and traders left early. And of course there's no treading tomorrow, just a half a day of action on Friday.

At the closing bell the Dow industrials ended 15 points higher. The Nasdaq gained ten points. However, Wall Street did rally on Monday on the expectation that this week's economic data would be better than expected -- Judy.

WOODRUFF: Mary, let me ask you a little bit more about these reports that are out today. How much do they really tell us about the health of the economy?

SNOW: Well, economists say a lot. And there were nine reports in all. Overall, economists saying it paints a pretty good picture. You put it alongside yesterday's GDP report which showed 8 percent growth, it shows the economy is kicking into high gear.

Now most importantly the labor market continues to improve. And that was what's key. The weekly jobless (UNINTELLIGIBLE) came out today and they fell to a near three-year low. And this is layoffs slowed.

Next week you get the closely-watched November employment report. And economists expect about 150,000 jobs were created this month. And that's not enough to lower the unemployment rate. However, it would certainly be a move in the right direction.

Another report out today showed the hardest hit manufacturing sector is picking up. New orders for durable goods had their biggest jump in nearly a year and a half. The federal reserve wrapped this all up saying the economic recovery was on track. There was evidence of it in October and early November, helped by a stabilizing job market.

Taken all together, it means businesses are ramping up activity and keeping more workers on the payroll. And if orders continue to roll in, that could lead to more robust job growth. And that is what economists say is really needed for a sustained economic recovery -- Judy.

WOODRUFF: All right. And, Mary, so what are the next numbers they're looking for?

SNOW: The next numbers coming out, retail sales. And this is key. The holiday shopping season officially starting on Friday. And it will be a test. It's traditionally the second busiest day in the Christmas shopping season. We'll get preliminary indications about those sales as soon as Monday. Last year they were lackluster. So hope that they will be picking up this year -- Judy.

WOODRUFF: Well, if psychology has anything to do with it, I think people may be hearing that the economy is picking up, may cause them to spend more. But I'm not the expert.

SNOW: (UNINTELLIGIBLE) but economists agree with you. And that's what they're thinking will happen.

WOODRUFF: All right. Mary Snow at the New York Stock Exchange. Thank you very much.

Question now: how does the new Medicare bill affect the 2004 races for Congress? In a minute, Stu Rothenberg checks the political fallout of the prescription drug vote.

Later, we'll check the holiday travel plans for Senator Hillary Rodham Clinton.

And we get a preview of Bill Schneider's menu of possible "Political Turkeys of the Year."

(COMMERCIAL BREAK)

WOODRUFF: Even though Bob Novak says a few Republican egos were bruised in the Medicare fight, the newly-passed bill could be just what the doctor ordered for many members of Congress.

Short time ago I sat down with Stu Rothenberg of "The Rothenberg Political Report," and asked him whether the Medicare bill will help Republicans when push comes to shove.

(BEGIN VIDEOTAPE)

STU ROTHENBERG, POLITICAL ANALYST: Judy, I think it will. I think it's a major accomplishment. They can argue that there's something previous Congresses have been unable to achieve.

And at the end of the day, what people remember is there's a prescription drug benefit for seniors. That's what they think about. That's the symbol of this bill. I think it's important for the Republicans. I think they'll do well with it in 2004.

WOODRUFF: What about the Democrats? I mean, they've been arguing for a long time that this was not something that the Republicans cared about. Now the Republicans in effect have taken it off the table. What is left for the Democrats to say is their message?

ROTHENBERG: I think a couple things. I think they're going to -- they'll go back to this sort of issue and talk about the substance of the bill and say it's not a real benefit. It's not a good enough benefit. Just like they were doing with education. Republicans passed an education bill. The Democrats are saying that the Republicans aren't funding it.

I think they'll talk about the economy. I think they'll talk about the fact that we won't recover all the jobs that have been lost. But the Democrats really need to sit down and come up with an agenda, a legislative agenda, a party agenda to take on the Republicans.

WOODRUFF: That doesn't involve a lot of spending, presumably.

ROTHENBERG: That doesn't involve new spending, you're right. And they're going to talk about priorities. They'll talk about leadership. They'll talk about people left behind.

But you're right. We have this big budget deficit so they can't offer new significant new spending or the Republicans will accuse them of being tax and spend Democrats.

It doesn't matter that the Republicans just passed a big $400 billion new entitlement, it's the Democrats who are vulnerable to the charge.

WOODRUFF: So the Republicans are not vulnerable, you're saying, on building up, or some would say blowing up the deficit?

ROTHENBERG: I think in the short-term, not. We saw the Republicans try to use the deficit as an issue in the '50s and '60s, and it didn't really work. Over the long term, to the extent that the deficit hurts the overall economy, the Democrats could use it.

But the problem for the Democrats would appear to be a strong economic rebound now, and so I don't think people aren't going to be very deficit sensitive. They may tell pollsters they're concerned about them, but they're not going to vote on the deficit.

WOODRUFF: All right, let's talk about the House of Representatives. Elections almost a year away, but right now, the Democrats have got to pick up 12 seats to win back control. Do they have any hope -- how many really competitive seats are there going to be out there?

ROTHENBERG: Well, we think there are going to be maybe a couple of dozen seats. The Democrats are hoping there's going to be special elections that they can build up some momentum if, Congressman Tauzin leaves to join the private sector, that would a district they could compete in.

They're hoping to compete in the special election in Kentucky's Sixth District where Ernie Fletcher got elected governor in Kentucky. That would build up some momentum.

They need for the courts to overturn the Texas redistricting plan. That would be a huge boost to them and it would deprive the Republicans of anywhere from three to five new congressional districts.

But they have to -- somehow the Democrats have to convince the voters that it's time for a change nationally, that the Republicans haven't been up to the job of governing. I think it's going to be hard if there's an economic rebound.

WOODRUFF: And, Stu, what about in the Senate? Are there -- do the Democrats have any better prospects there?

ROTHENBERG: Well, a little better, not great prospects. But there are a number of Republican seats that are potentially at risk. We know Illinois is at risk. Alaska possibly, Oklahoma possibly, Missouri possibly.

Democrats' problems are they're still defending a bunch of southeastern Democratic seats. So it's hard for them, too although they're only down 51-49 there. So, you know, if I had to pick which house was more in play for the Democrats, I'd probably say the Senate.

WOODRUFF: Sounds to me like the Democrats need to go get rested up this Thanksgiving so they can come back girded for battle after that.

ROTHENBERG: You know, it's one thing, Judy, to be angry about George W. Bush, it's another thing to allow that anger to make you so mad you can't come together and work on a new plan to take over this Congress.

(END VIDEOTAPE)

WOODRUFF: Steve Rothenberg of "The Rothenberg Political Report."

Well looking quickly now at some developing state races, Congresswoman Katherine Harris tops a new poll of Republican choices to replace retiring Democratic Senator Bob Graham. She has not decided yet whether to run. The same poll shows Harris losing to the Democrat's top choice who is former state education commissioner Betty Caster.

FBI whistleblower Colleen Rowley has decided not to run for Congress. Democrats were recruiting her as an opponent for Minnesota Republican Congressman John Kline. Rowley says she wouldn't fit into politics because she isn't much of a saleswoman, she says, noting that when she was a child everyone in her Girl Scout troop sold more cookies than she did.

A first look at this year's official White House Christmas card straight ahead.

Plus, would you like to have Thanksgiving dinner with the mayor of New York City? We'll tell you what New Yorkers say when INSIDE POLITICS returns.

(COMMERCIAL BREAK)

WOODRUFF: Today's second edition of "Campaign News Daily" features a holiday theme. Democratic Senators Hillary Rodham Clinton and Jack Reed plan to spend the holiday with troops overseas. After a thanksgiving stop in Afghanistan, the two members of the Senate Armed Services Committee plan to travel to Iraq. Both senators have criticized the Bush administration's policies in post-war Iraq.

President and Mrs. Bush plan to mail their official White House Christmas cards this Friday. (AUDIO GAP) feature a water color of the White House Diplomatic Reception room by New York artist Barbara Ernst Prey.

And a new poll, finding most New Yorkers would pass on a chance to have Thanksgiving dinner with Mayor Michael Bloomberg. Sixty-one percent of those polled by Quinnipiac University said they would not like to dine with Bloomberg tomorrow. Told of the poll, the mayor said, quote, "That's good because I have plans with my family." So there.

Thanksgiving traditions that stand the test of time. The meal, the parade and Bill Schneider's "Political Turkeys of the Year." When we come back, Bill previews his annual awards. And I'll give you a chance to cast your vote.

(COMMERCIAL BREAK)

WOODRUFF: Looking ahead to tomorrow's special Thanksgiving Day edition of INSIDE POLITICS, our Bill Schneider is here to preview an INSIDE POLITICS tradition -- Bill.

SCHNEIDER: Well tomorrow is Thanksgiving. And you know what that means, gluttony, sloth, the Macy's parade, and the "Political Turkey of the Year" to be named right here on INSIDE POLITICS.

On our CNN.com Web site we asked you to cast your vote among five of this year's nominated turkeys. Let's check the latest exit poll and see who's ahead.

Ooh, it looks like a tight race between Congressman Darrell Issa of California who bank rolled the recall in California, and Senator Trent Lott of Mississippi who thought the South could rise again. Both at 26.

And CBS Television for dumping its mini series on the Reagans. But, understand, not because of any political pressure. CBS has just tied the other two.

Well, you can keep on voting, folks. And we'll send the ballots down to Florida to be tabulated. (LAUGHTER)

SCHNEIDER: But first, following tradition, we'll declare the winner right here on INSIDE POLITICS tomorrow. And we will answer my annual Thanksgiving question. What three national disasters would occur if you dropped the Thanksgiving platter? Tune in tomorrow for the answer. And for the election results.

WOODRUFF: I can't wait. It's almost exciting as anticipating Turkey and dressing and pumpkin pie.

SCHNEIDER: And the Iowa caucuses.

(LAUGHTER)

WOODRUFF: And the Iowa caucuses, not to mention the New Hampshire primary.

SCHNEIDER: Exactly.

WOODRUFF: All right, I'll see you tomorrow.

SCHNEIDER: See you then.

WOODRUFF: Thank you.

That's it for this pre-Thanksgiving edition of INSIDE POLITICS. I'm Judy Woodruff. "CROSSFIRE" starts right now.

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