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Inside Politics

Anointing Dean?; Halliburton Bills: Overcharging in Iraq?

Aired December 12, 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: Howard Dean: the man, the media and the message. Has Howard Dean been prematurely pegged as winner?

When candidates attack: the Democratic race may only get uglier in the final days before Iowa and New Hampshire.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Everybody's looking for you and you're supposed to be working. And here you are playing.

ANNOUNCER: Barney reloaded. The Bush White House puts on a humorous holiday show.

UNIDENTIFIED MALE: And the president is counting on you.

Where's Barney? Where's Barney?

UNIDENTIFIED MALE: I'll see your Milk Bone and raise you two Snausages.

BUSH: I've got a job to do, and so do you. I think it's time for you to quit playing.

(END VIDEOTAPE)

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

CANDY CROWLEY, HOST: Thanks for joining us. I'm Candy Crowley. Judy is off today.

And Howard Dean is back in Iowa, still basking in the glow of his big Al Gore endorsement and the growing perception that he's got his party's presidential nomination virtually sewed up. But some Democrats are warning Dean not to count his chickens before they're hatched, including, it seems, another former little known govern who made a surprising slash in a primary season.

(BEGIN VIDEO CLIP)

JAMES CARTER, FMR. PRESIDENT OF THE UNITED STATES: Well, I think, at least at the present time, his chances in Iowa and New Hampshire look quite good. After that, though, he'll go to a much wider range of states, including some in the Deep South. And I think that's much more uncertain. (END VIDEO CLIP)

CROWLEY: More of that Jimmy Carter interview tonight on "LARRY KING LIVE."

So, is Dean a shoo-in for the nomination, or have his supporters in the news media gotten ahead of themselves? Howard Kurtz of CNN's "RELIABLE SOURCES" looks at the coverage of Dean's campaign.

(BEGIN VIDEOTAPE)

HOWARD KURTZ, "RELIABLE SOURCES" (voice-over): There are nine Democrats running for president, but the only one we seem to hear about these days is...

UNIDENTIFIED MALE: Howard Dean.

UNIDENTIFIED MALE: Howard Dean.

UNIDENTIFIED MALE: Howard Dean.

KURTZ: The primaries don't begin for another five weeks, but plenty of journalists are acting like they're a mere formality. The media message: forget about Kerry and Gephardt and Lieberman and Clark and Edwards. Dr. Dean's a done deal. You can hear it in what television calls teases.

MARK SHIELDS, CNN'S "CAPITAL GANG": Next on "CAPITAL GANG," can anyone stop the Dean machine?

UNIDENTIFIED FEMALE: Can Howard Dean beat George W. Bush?

KURTZ: The pundits are nearly unanimous.

BRIT HUME, FOX NEWS: It begins to look as if it's almost impossible to see a way that he loses at the moment.

KURTZ: The Bush White House seems to think the race is over, at least according to stories like this one in "The New York Times." At this week's New Hampshire debate, Ted Koppel kept asking the other candidates about Howard Dean.

TED KOPPEL, DEBATE MODERATOR: What is it that Governor Dean has done right? He's doing better in the polls than any of the rest of you.

KURTZ: Now, you're probably thinking, where did the media get off anointing the nominee? And what if they're wrong? Most journalists thought the first President Bush was untouchable after winning the Gulf War. A year ago, media prognosticators said John Kerry was the man to beat, dismissing Dean as a mere asterisk.

Now Dean has the money, the ads, the Internet, the Al Gore stamp of approval and, yes, the media momentum.

HOWARD DEAN (D), DEMOCRATIC PRESIDENTIAL CANDIDATE: Unbelievable.

KURTZ: Though even the man from Vermont finds the press hype a bit much.

DEAN: I actually think that kind of talk is a little silly, because the pundits in Washington have been talking about me as a frontrunner for a long time.

(on camera): At Dean's Burlington headquarters this week, as they celebrated the Gore endorsement with a cake the shape of Tennessee, campaign chief Joe Trippi sounded a warning. "The other candidates underestimated us," he said. "Let's not underestimate them."

Maybe it's time for the media to take the same advice.

This is Howard Kurt of CNN's "RELIABLE SOURCES."

(END VIDEOTAPE)

CROWLEY: Now that Dean has Al Gore in his corner, the other '04 Democrats seem to be looking for all the support from other party icons they can get. Senator Ted Kennedy is scheduled to campaign for his colleague, John Kerry, tomorrow at a health care rally in New Hampshire.

Kerry and the other top Democratic contenders have ratcheted up their attacks on Dean this week. We have Ron Brownstein of the "Los Angeles Times" to talk about that.

They don't have much time. I mean, it's attack or...

RON BROWNSTEIN, "LOS ANGELES TIMES": Right. Well, look, they're facing a situation where five weeks out, he's leading in the polls in both Iowa and New Hampshire. And you have Al Gore putting another big wind in his sail. So look what you see this week: an intensification really on every front from every -- almost every major Democrat -- literally every major Democrat -- of attacks on Howard Dean.

John Edwards today in San Francisco, giving a speech saying Howard Dean, in essence, has too narrow an appeal and is too angry a candidate to win. A story comes out in the "Boston Globe" this morning raising questions about tax breaks Dean gave as governor to attract companies like Enron to set up insurance subsidiaries in Vermont. And Dick Gephardt is on the phone with reporters this afternoon accusing Dean of following a Bush model in governing Vermont, tax cuts for big companies, spending cuts and social programs.

John Kerry out yesterday and the day before saying Dean flip- flopped on the war in Iraq and lacks enough experience in foreign policy to contest Bush. And Joe Lieberman planning a speech for next week attacking him on the economy, taxes and trade. So all of them are really focusing their fire on Dean because they realize the clock is ticking against them. CROWLEY: Well, and you kind of wonder how much good it does, don't you? Because it seems to me that Dean has the kind of support that only gets more fervent when people go after him.

BROWNSTEIN: Yes. The question is whether you can build a different base in the party, a different constituency than Dean. It's hard to peel away Dean supporters because they view him as a man of conviction who stood up on the war. And the war really is a shield against almost all of these attacks in different ways.

But look at what Dick Gephardt is doing. He is in the mail in Iowa now with his charge that Dean supported cuts in Medicare and Social Security in the 1990s. He's talking about this Enron economics or this Bush budgeting.

He is basically appealing to a different constituency: seniors, blue collar voters, non-college educated vote who are less attracted to Dean to begin with. It may be that you have a better chance of establishing an alternate constituency with these attacks than you do of carving away Dean supporters, who, as you say, are wounding and bounding him pretty tightly.

CROWLEY: So they're all sort of fighting for some other portion, and he's got the one all to himself.

BROWNSTEIN: He's got his. Kerry is the one who is probably most directly going after that. Look at what Kerry is doing with this attack. He's going after two key elements of Dean support.

He is saying, one, that Dean is not the McCain-like straight shooter you think. He's a (UNINTELLIGIBLE) who moves around on issues. And two, he's trying to question the depth and consistency of his opposition to the war. Those are hard arguments to make for the reasons that you say, but they're aimed more at the core of the Dean support, the better-educated voters who are really helping him in New Hampshire.

CROWLEY: Let me talk about the spate of endorsements we've got here. Clyburn in South Carolina...

BROWNSTEIN: Yes.

CROWLEY: How much do these matter, and what's going on in Iowa?

BROWNSTEIN: Well, Al Gore certainly is a huge boost for Howard Dean. But Jim Clyburn is a big help, potentially, the African- American congressman from South Carolina for Dick Gephardt. If Gephardt can win Iowa, which is, you know, that big "if," then he has stepping stones, potentially.

Now, Clyburn can help him in South Carolina. Michigan if he can get the UAW on board. He can imagine a scenario where he lives to fight another day on to the finals in March.

Iowa is fascinating. Tom Harkin, the senator there, clearly, in my conversations with him and others, he seems drawn to Howard Dean. He likes the populous message. He is excited by the energy that Dean has brought into the party.

On the other hand, Iowa is pretty well divided right now between Dean and Gephardt and, to some extent, Kerry. And for Harkin to endorse anybody, he would be alienating a lot of his own supporters. It's not clear whether he's going to want to take that risk, whether he cares enough about any of these candidates to risk putting himself in a position of conflict with the people he depends on for his own races.

CROWLEY: Phones lines are busy.

BROWNSTEIN: Absolutely.

CROWLEY: "LA TIMES" Ron Brownstein, thanks very much.

BROWNSTEIN: Thank you, Candy.

CROWLEY: We'll see you here on the (UNINTELLIGIBLE).

Checking in on some of Howard Dean's rivals in our Friday edition of "Campaign News Daily," John Edwards heads to the Midwest Sunday, where you'll get to hear his unofficial campaign song performed live. Singer John Mellencamp is scheduled to perform at an Edwards event, where he will no doubt sing his 1982 hit "Small Town," an Edwards favorite.

Mellencamp hasn't declared a favorite in the campaign, though. He's agreed to perform at events for other Democratic hopefuls.

One of those hopefuls, Wesley Clark, took his turn on hot seat of "The Daily Show" last night. The comedy program has become a regular stop for candidates these days. At one point, Clark shared his views on education with host John Stewart.

(BEGIN VIDEO CLIP)

WESLEY CLARK (D), DEMOCRATIC PRESIDENTIAL CANDIDATE: You cannot measure education by scores on tests, especially when you're just teaching the test. And that's where we're going to be with No Child Left Behind. It's a serious problem.

JOHN STEWART, HOST, "THE DAILY SHOW": I know kids -- and I'll tell you this, and this is frankly between me, you and the eight people watching, I know kids who should be left behind, quite frankly. I know a lot of them. And they shouldn't get there.

CLARK: I know some adults who have been left behind.

STEWART: Right, exactly.

(END VIDEO CLIP)

CROWLEY: Running for president very often can be a family affair. Still ahead, we hit the trail with a couple of the Democrats' daughters. Are they enjoying life in the political spotlight? Plus, the latest Iraq-related fallout for President Bush. What's the administration saying about possible overcharging by the company once run by Vice President Cheney?

And, is Karl Rove feeling tied up in knots? Some holiday laughs from the White House ahead.

(COMMERCIAL BREAK)

CROWLEY: The president of the oil services company, Halliburton, says he would welcome an outside audit of his company's work in Iraq. New questions about Halliburton's charges to the government have focused new attention on Halliburton's no-bid contract for rebuilding Iraq's oil industry. Earlier today, Defense Secretary Donald Rumsfeld said Halliburton has overcharged the government.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: There was no overpayment to any company, and, in fact, there is a fairly normal process going on where they submit bills from their subcontractors and for their own. It gets discussed and debated. We've got auditors that crawl all over these things.

(END VIDEO CLIP)

CROWLEY: With me now for more is our White House correspondent, Suzanne Malveaux.

Suzanne, you say Halliburton and the next couple words out of your mouth are Vice President Cheney and then the president. What is the White House saying about this?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, President Bush was drawn into this controversy. He spoke about it just moments ago. As you had mentioned before, of course, Vice President Dick Cheney used to be the head of this company before coming to the administration.

What we've been hearing over the last 24 hours is President Bush's critics, as well as the Democratic presidential hopefuls, using this, saying this audit is just another example of the White House putting big business and special interests before the interests of the American people. They say the taxpayers' money is being used to line the pockets of Halliburton executives. This Halliburton subsidiary, as you know, got this lucrative Iraq contract without a competitive bidding process.

Now, The White House, the vice president's office, from the very beginning have said there was no wrongdoing in this. But President Bush today went out of his way to distance himself and his administration from this controversy by vowing to get to the bottom of it.

(BEGIN VIDEO CLIP) BUSH: We're going to watch -- we're going to make sure that as we spend the money in Iraq that it's spent well and spent wisely. And their investigation will lay the facts out for everybody to see. And if there's an overcharge, like we think there is, we expect that money to be repaid.

(END VIDEO CLIP)

MALVEAUX: Now, Democratic aides who I spoke with today really don't believe that this is going to stick. They don't believe it's really going to damage the White House very much. They say, if anything, it's going to push the White House to be more open in its bidding process, the competitive process, to have that be transparent. White House officials already vowing that that is going to be the case.

Also, as well, of course this comes at a very delicate political time for the White House. The administration under criticism now, under fire for excluding war opponents, being France, Germany, Russia, Canada and others from these lucrative projects, $18 billion worth of Iraq projects.

Now, Monday, former Secretary of State James Baker, who is the president's special envoy, is going to be meeting with those leaders. He's going to be trying to appeal to them to forgive Iraqi debt. And the White House has indicated that there is some wiggle room -- Candy.

CROWLEY: Suzanne, before I let you go, let me just turn a really sharp corner here and ask you, HUD Secretary Mel Martinez has resigned, we think to go down and run for the Senate seat in Florida. What can you tell me about his replacement?

MALVEAUX: Oh, well, his name is Alphonso Jackson. He is the number two person at HUD. He is the youngest of 12 children, we learned today. His father holding three jobs.

The president welcoming here at the White House, saying that he's done an excellent job as number two. And as you had mentioned before, of course, Mel Martinez is off to a run for that Senate position in Florida. That from the encouragement not only of Republican strategists, but also from White House officials here, after Senator Bob Graham said he wasn't going to run for reelection.

CROWLEY: Suzanne Malveaux. Twelve brothers and sisters. That's going to be a big swearing-in ceremony, if it hasn't already happened. Thanks, Suzanne.

MALVEAUX: Sure.

CROWLEY: On a lighter note, a member of the first family has a starring role on the White House Web site. It seems the president's Scottish Terrier, Barney, was in charge of the holiday decoration those year. As we're about to see in this abbreviated version of the 10-minute video, making him get to work is more than half the fun.

Watch closely. No matter what your political affiliation, you'll appreciate the part where an utterly helpless Karl Rove pleads for help.

(BEGIN VIDEO CLIP)

BUSH: When somebody gives you a job, Barney, and you agree to do it, then you're supposed to go do the job.

UNIDENTIFIED MALE: Barney? What do I do with these, Barney?

UNIDENTIFIED MALE: What are you doing? I told you no playing games until the decorations were done.

UNIDENTIFIED MALE: Where's Barney?

UNIDENTIFIED MALE: Where should I hang this wreath, Barney?

UNIDENTIFIED MALE: We're stuck here. We don't know what to put on the menu. Where is Barney when you need him?

UNIDENTIFIED MALE: And the president is counting on you. I don't want you pushing that soccer ball around or...

UNIDENTIFIED MALE: They all tell me the same thing. They say you're not working. What do you say to that?

LAURA BUSH, FIRST LADY: Barney, you did a really wonderful job this year on the decorations. We weren't really sure you could do it, but it looks like you can.

Barney and I wish everyone a very happy holiday.

(END VIDEO CLIP)

CROWLEY: That, of course, was First Lady Laura Bush and Barney unveiling the new video today at the Children's National Medical Center.

They have familiar names, but not familiar faces. Stay with us and join some of the children of the presidential candidates on the campaign trail.

(COMMERCIAL BREAK)

CROWLEY: A presidential campaign needs thousands of volunteers, but a select few are a bit more motivated than the rest. They're helping out dad.

CNN's Aneesh Raman talked with a couple of them.

(BEGIN VIDEOTAPE)

VANESSA KERRY, JOHN KERRY'S DAUGHTER: Hello. How are you? I'm Vanessa Kerry, John Kerry's daughter.

ANEESH RAMAN, CNN CORRESPONDENT (voice-over): They're not running for president, but they might as well be. Candidate kids, like 26-year-old Vanessa Kerry, are working their parents' presidential bids cross country.

KERRY: Lots of New Hampshire for right now, and go to Iowa, Washington State. I've been to Virginia.

RAMAN: Also on the trail full-time, Chrissy Gephardt. Both her and Vanessa getting a glimpse of their parents' political lifestyles.

CHRISSY GEPHARDT, DICK GEPHARDT'S DAUGHTER: It's definitely high paced. It's never a moment to rest.

RAMAN: A key part of their job, connecting with young voters. Whether on issues like Medicare...

GEPHARDT: Well, that issue might seem irrelevant to us. It really isn't. I mean, one day, we're going to get old.

RAMAN: ... soliciting campaign volunteers...

KERRY: You want to do some stuff? There's offices all over.

RAMAN: ... or asking that critical question...

KERRY: Are you going to vote for my dad? I love that question.

RAMAN: According to locals, it's a successful strategy.

UNIDENTIFIED MALE: When a candidate brings their kid out, it does connect better with the public.

RAMAN (on camera): Why is that?

UNIDENTIFIED MALE: Because we can relate to their children.

UNIDENTIFIED FEMALE: The candidate's child brings us closer to who the person really is to their family life.

RAMAN: But jumping into the political spotlight, even by family, brings inherent media scrutiny and constant attention.

KERRY: The decision to join the campaign trail or not is incredibly personal. I was not asked to be here. I asked to do this. And I think that it's one of the best decisions I've ever made in my entire life.

RAMAN: One of the reasons, more time with her father.

KERRY: The truth is, you know, when we're together -- and half the time we're sitting up in a front of a bus -- we're not talking about campaign stuff. We're just yacking about life. I'm getting fatherly advice.

RAMAN: And the kids are always keeping a watchful eye, at times helping the candidates stay on message.

UNIDENTIFIED FEMALE: Special interests.

RAMAN: And at others, suggests new looks.

KERRY: You don't want to be a (UNINTELLIGIBLE), daddy?

RAMAN: It is a temporary life of duality, working as a campaign staffer, living as a candidate's child.

KERRY: I'm right here, pop.

RAMAN: Aneesh Raman, CNN, Manchester, New Hampshire.

(END VIDEOTAPE)

CROWLEY: It's time for congressional Democrats to choose up sides. In the next half-hour of INSIDE POLITICS, Congressman Charlie Rangel explains why he's enlisting in Wesley Clark's presidential campaign. And Representative Jesse Jackson, Jr. defends his choice of Howard Dean.

Plus, the Supreme Court, the 2004 presidential race, and just maybe a preview of 2008.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: Taking stock before the holidays. Can the president finally kick back and celebrate the economic turnaround?

Governor Schwarznegger enjoys a budget breakthrough, but it's not enough to stop a protest by Latino voters.

UNIDENTIFIED FEMALE: We want our people to be able to get driver's licenses. And we don't approve of what the new governor did.

ANNOUNCER: Surfer dudes unite. There are online rewards to be had in the "Political Play of the Week."

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

CROWLEY: Welcome back. I'm Candy Crowley, sitting in for Judy today.

If President Bush has said it once, he's said it a thousand times, and he did it again today. He says the economy is very strong and getting stronger. The markets seem to be backing him up. This hour, the Dow Jones industrial average is closing above 10,000 for the second day in a row, and inflation appears to be in check. The government reports wholesale prices unexpectedly dropped three-tenths of a percent in November, as food, energy and car costs tumbled.

We want to talk more about the economy now and how it may influence the presidential race with Jonathan Weisman of "The Washington Post."

Jonathan, thanks for joining us.

JONATHAN WEISMAN, "WASHINGTON POST": You're welcome.

CROWLEY: Can the Democrats just hang it up on the economy now? Is it done and roaring and no longer an issue?

WEISMAN: I wouldn't say that. I mean, remember, you know, you look at these overall national numbers and things look very good. But an election is done regionally. It's done state by state and certain sectors are still hurting. Manufacturing has been shedding jobs for 40 straight months and has not turned it around yet.

So, I mean, certainly things look good for President Bush on the economic front, but he can't be really popping corks yet, as long as certain sectors are still hurting.

CROWLEY: And can things still go awry? I mean, this looks like we're in for a period of pretty good growth. But can something suddenly come up to stop it between now and November?

WEISMAN: I mean, we learned a lot on September 11, 2001. Anything can happen especially with the stock market. Shocks happen and the stock market is teetering. Look, it did close over 10,000 today, but it just basically ended where it started, and you quoted the consumer price index numbers which were down, which was a surprise. But for some strange reason, consumer confidence was also down today and I don't know -- understand why that is.

CROWLEY: Well, if you don't understand, I'm not going to attempt it. Let me ask you about whether the Democrats can overplay their hand on this. Is there some danger that they sort of look too eager for things to fall apart? I mean, what's their...

WEISMAN: Yeah, well, you certainly don't want to look like you're basically cheering for the economy to go bad. You don't -- as a politician, you don't want to look like Gloomy Gus. I can remember in 1994 when Bob Dole was talking about the Clinton recession. In fact, we were just on the verge of one of the biggest booms in history and he looked kind of silly talking about the Clinton recession. If Democrats start looking silly in the face of these zooming numbers from the economy, they're just going to look like they're party poopers.

CROWLEY: Let me ask you another question about -- does the argument against the president's tax cuts, that they didn't help the economy, does that go away now? Is there some proof that they did or didn't help in these numbers?

WEISMAN: You know, frankly, most economists think that the tax cuts this go-round did help. They happened to be extremely well timed and there was just this -- these checks that went out exactly at a good time to get consumer spending again. That said, you know, President Bush still has a problem of record budget deficits, that those tax cuts, the thing that helped the economy, were these one-time checks.

But those tax cuts are the gift that keep giving and the Democrats are going to keep hammering away at saying that the tax cuts have thrown the budget completely out of whack, have sent the government into hock, and are mostly going to the rich. I think the tax cuts will remain the -- one of the biggest issues of the entire campaign, no matter what the economy is doing.

CROWLEY: Let me ask you about the political potency of the Dow number. What's in those numbers that sway politics, or is there nothing in them?

WEISMAN: Well, you know, about half or a little more than half of Americans own stocks in some way or the other. Most of those people own it in very indirect ways. They might have some money in a company 401(k) that has money in the stock market, or they even have a pension. They don't even know what's in their pension but the pension happens to be invested in the stock market. People have a stake in it.

But there's also just this psychological thing, you know, when they hear a news brief and it says the Dow was up to, you know, record levels or over 10,000. It makes people feel good. People for some reason look at the Dow Jones Industrial Average as a gauge of the economy, even though it's a very imperfect gauge and so when it's going up, people feel good.

CROWLEY: Jonathan Weisman, "Washington Post", thanks for your expertise, both political and financial. We appreciate it.

WEISMAN: Thank you.

CROWLEY: Now to California, a new life for Governor Arnold Schwarzenegger's economic recovery plan. The state senate today is considering a budget reform package crafted by Schwarzenegger and Democratic leaders. Last night, the state assembly overwhelmingly approved the plan which includes two of Schwarzenegger's main goals. Fifteen billion dollars in borrowing to retire the state's deficit and the balanced budget requirement.

It is a dramatic political turnaround for Schwarzenegger and a measure that seemed all but dead earlier this week. But the governor has not cured all his headaches. CNN's Frank Buckley joins us now from Los Angeles. I mean, California without headaches would be unheard of. What's on the governor's plate now?

FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Well, Candy, the governor is angering some Californians as he follows through on a couple of major campaign promises he made. Just this week, cities and counties began to see the money flow from the state Capitol drop off. That's because just moments after Governor Schwarzenegger took office last month, he delivered on his promise to repeal the increase in the vehicle license fee.

The monies generated from that fee goes to cities and counties and amounts to around $4 billion a year. This week, cities and counties began to experience the drop-off in that funding and protesters took to the Capitol.

More than 4,000 protesters were in Sacramento on one day this week, according to one estimate, to demonstrate against the cuts in services that are going to take place as a result of the cuts in funding. The demonstration was described as one of the largest Capitol demonstrations in years.

To give you a sense of the impact here in L.A., for example, the city will lose $19 million a month. That has angered the mayor, James Hahn. He called the situation in Sacramento immoral.

(BEGIN VIDEO CLIP)

JAMES HAHN (D), MAYOR OF LOS ANGELES: You now have a governor who made a personal pledge to me, made a personal pledge to the people of the state of California that cities and counties would not be harmed by the repeal of the car tax. We're asking the governor and the legislature to keep their word so that we can keep our faith in Sacramento. They don't keep their word this time, it's over. There is no more relationship between local government and Sacramento if they leave us out in the cold.

(END VIDEO CLIP)

BUCKLEY: Now, separately, there is anger by some Californians about the repeal of SB 60, that's the law that allowed illegal immigrants to obtain driver's licenses. Schwarzenegger promised to get the legislature to repeal that law. He was successful. Today, though, there's a statewide boycott that's supposed to be taking place as a protest against that move. These demonstrators are a part of that. The organizers of the boycott are asking people not to go to work and not to shop in stores in an effort to send a message to Governor Schwarzenegger.

(BEGIN VIDEO CLIP)

NATIVO LOPEZ, PRESIDENT, MEXICAN-AMERICAN POLITICAL ORGANIZATION: The day that Latinos are absent from the economy of California, that will send a wake-up call to the Terminator and to his minions of the California Republican assembly that continue the right wing shift in pursuing anti-immigrant policies.

(END VIDEO CLIP)

BUCKLEY: Governor Schwarzenegger's aides say he will reexamine the driver's license issue next year during the regular session of the legislature. On the funding issue, it isn't clear just where the governor intends to find the money to make up for the loss from the vehicle license fees -- Candy.

CROWLEY: Thanks so much, CNN's Frank Buckley on the Schwarzenegger watch. Appreciate it, Frank.

A number of African-American leaders are trying to influence the Democratic presidential race. Up next, we'll hear from two congressmen who have chosen different sides. Wesley Clark supporter Charles Rangel and Howard Dean backer Jesse Jackson Jr.

Plus, John Kerry revealed. We'll give you a sneak peek of my profile of the White House hopeful and his campaign struggles.

And an online gamble of sorts with truly high stakes. Bill Schneider will ante up the "Political Play of the Week."

(COMMERCIAL BREAK)

CROWLEY: Given the high percentage of African-Americans who vote for Democratic candidates, the presidential hopefuls are working hard to win the support of top African-American officials.

New York Congressman Charles Rangel this week officially endorsed Wesley Clark for president. A little while ago, I spoke with Congressman Rangel and asked him why Clark is his choice for the nomination.

(BEGIN VIDEO CLIP)

REP. CHARLES RANGEL (D), NEW YORK: Well, basically, because after looking at all of the candidates and recognizing that our country's at war without any game plan to get out of it and we got confusion as to how we got involved in the first place, I thought that General Wesley Clark was the best candidate to really whup George Bush.

He is a warrior. He's a decorated military man. And he's smart. He's a scholar. And just no question in my mind if Clark can stay on his feet until February or March and we're down to one, two, or three candidates, that he'll be our party's man.

CROWLEY: Now, how much of this -- the timing of this announcement had to do with the fact that you had a big endorsement in your area not too long ago. That, of course, was former Vice President Gore endorsing Howard Dean. That kind of ticked you off, I'm hearing?

RANGEL: No. Quite frankly, I'm just trying to figure out why Dean and Gore picked Harlem. There's speculation that they got in a cab and said, Take us to Harlot and they made a mistake and dropped them off in Harlem.

But the truth of the matter is that we have been planning us doing this thing for weeks trying to make certain that the general was available. So he had a fund raiser the night before. We just did it the next day.

It's abundantly clear that they had not planned a Dean event until two days before this occurred. So I don't want to speculate whether it was anti-Clinton. It certainly was anti-Lieberman. But it had nothing to do with us because it had very little to do with Harlem.

CROWLEY: Congressman, I know that you endorse general Clark for reasons larger than the African-American vote, but I want to focus you on the African-American vote and what is it you think that General Clark can offer, where it seems to me that South Carolina's going to be his first big chance to kind of shine in the primaries, if he can. And that, of course, has I think over 50 percent African- Americans voting in the primary. What's he got for them?

RANGEL: I think that as far as the African-American agenda is concerned, the biggest thing that Clark can do for African-Americans is promise us that he'll beat Bush in November.

CROWLEY: As simple as that?

RANGEL: Well you know, all the things that we like to talk about, education, affirmative action, Social Security, health, decent housing, all of those things -- and world peace, which is the primary importance, to see that our minority kids and poor white kids aren't just being shot like fish in a barrel in Iraq.

The frustrations of knowing that we're spending a billion dollars a week in Iraq. We'll spend more than that in rebuilding it. It's not as simple as that. It means that we have to get rid of this evil empire in Washington if we can refocus on our goals and aspirations.

CROWLEY: We have about 30 seconds left, but I want to ask you the reversal of the first question I asked you. And that is, you're kind of running up against the stream here. It seems the tide is kind of falling for Howard Dean. Why not Howard Dean?

RANGEL: I'm just saying that God bless Howard Dean and Gephardt and any of the others that survive the insanity of Iowa and New Hampshire and South Carolina.

But when you look at whoever is left and people start -- are able to focus on the finalists, I'm saying that I think that Clark, head and shoulder, would appear to be the best candidate to beat Bush.

CROWLEY: Illinois Democratic Congressman Jesse Jackson Jr. has a different view of the Democratic field. Last weekend, he endorsed Howard Dean for president. Congressman Jackson is with me now in Washington.

So, why Howard Dean?

REP. JESSE JACKSON JR. (D), PRESIDENTIAL CANDIDATE: Howard Dean has a strategy. He's reaching out to voters that traditionally do not vote, have not voted lately. Lest, should we forget, in the last campaign, 55 million Americans vote the for George Bush and 51 million Americans for Al Gore.

But 100 million Americans didn't vote for anybody. Had the Nader vote and someone reached out to that 100 million, that margin not only has the opportunity to change the direction of leadership in this country, it indeed has the opportunity to change the direction.

CROWLEY: So bottom line here you think he has the best chance to win? Is that what it's about?

JACKSON: Well any Democrat, from my perspective, consistent with Charlie Rangel, is better than George Bush. But Howard Dean has a method, he has a strategy and he has a message of jobs, of education, massive improvements in education and health care for all Americans.

I believe he is the only current Democrat running with a Southern strategy that makes sense. Why not, for once, blacks and whites together, since Republicans have run three decades of race-baiting campaigns in the south from -- you name it. Willie Horton to (UNINTELLIGIBLE) Goodman and Cheney when Ronald Reagan ran his campaign in 1980. You name it, they've tried every racial tactic.

Howard Dean believes blacks that and whites can come together in a coalition united behind jobs, education and health care, and that's a winning coalition in the South.

CROWLEY: Tell me, specifically, as I asked Congressman Rangel, what specifically is there about the Dean candidacy that should appeal to African-Americans? A lot has been made about this almost all white state of Vermont. He's not had a lot of dealings with governing a population that's diverse.

JACKSON: African-Americans overwhelmingly oppose unilateralism in Iraq. Governor Dean is the only candidate from the very outset who made it very clear that he was against that war and he's made that argument forceful across the campaign.

Not only has it generated young people supporting this process, but it's also generating increasingly African-American support for Governor Dean. So as the candidates begin to make their final runs through these various states, people are now beginning to tune into the campaign and I believe education health care, and jobs are resonating amongst African-Americans. It's certainly resonating in the Second Congressional District of Illinois and it's certainly going to resonate in the South.

CROWLEY: Now is Illinois where you think you can be most helpful to Howard Dean? We have South Carolina first, of course, and again as we mentioned, it's more than 50 percent African-American. Jim Clyburn has endorsed Richard Gephardt. Where can you be most helpful and how?

JACKSON: I plan to be most helpful wherever the Dean campaign instructs me to go. I'm a soldier in this process. I plan to spend a considerable amount of time in South Carolina, I plan to spend time in Iowa. Indeed, I will be there this coming Monday on behalf of the governor and a number of event in Iowa.

And that's one of the great things about the Dean campaign that I enjoy so much. We're not just a segment. African-Americans, you go talk to African-Americans. Hispanics, you talk to Hispanic-Americans.

In the Dean campaign, African-Americans talk to whites and whites talk to blacks. And we have to have that kind of coalition, that kind of trust in a campaign in order to bring the coalition together to beat George Bush.

CROWLEY: Illinois Democratic Congressman Jesse Jackson Jr, always good to have you, especially in person. Thank you.

JACKSON: Thank you so much. CROWLEY: It's almost time for Bill Schneider to reveal his "Political Play of the Week. " If you want a hint, you might try staring at your computer. Better yet, think of a big political event that happened on this date three years ago.

(COMMERCIAL BREAK)

(AUDIO/VIDEO GAP)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): ... Internet savvy political insurgents.

AL GORE, FRM. VICE PRESIDENT OF THE UNITED STATES: Howard Dean really is the only candidate who has been able to inspire, at the grassroots level, all over this country, the kind of passion and enthusiasm for democracy and change and transformation of America that we need in this country.

SCHNEIDER: There's a political movement going on out there.

JOE TRIPPI, DEAN CAMPAIGN MANAGER: What even we underestimated was the huge response that we've gotten in terms of the resources the energy, the number of people out there leafletting and talking about Howard Dean.

SCHNEIDER: Al Gore doesn't want to stop it. He wants to be part of it. Back in 1964, Barry Goldwater led a political movement that lost the election, but remade the Republican Party. The Dean movement, Gore says, is...

GORE: Promising to remake the Democratic Party as a force for justice and progress and good in America.

SCHNEIDER: A reporter promptly asked Senator Hillary Rodham Clinton whether she thought the Democratic Party needs a makeover. Her answer? No.

Gore made the endorsement in Harlem, Bill Clinton's neighborhood. How's that for a poke in the eye? By embracing Dean, Gore has distanced himself even further from the Clinton legacy, something that puzzles his old friends.

SEN. JOE LIEBERMAN (D-CT), PRESIDENTIAL CANDIDATE: Supporting Howard Dean, he's supporting somebody who is standing against so much that the Clinton-Gore administration stood for.

SCHNEIDER: If Dean loses, could Gore be setting himself up to run for president in 2008? He might have to face Hillary Clinton. But she'd be the candidate of the past. He'd be the man of the future allied with a hip political movement. He'd be Gore the Dean-dude, winner of the "Political Play of the Week."

(END VIDEOTAPE)

SCHNEIDER: Now, Gore could also end up tainted by a Dean loss. You did this to us, the Democratic establishment would say. But Gore doesn't care what the establishment says about him anymore. He's a Dean-dude now -- Candy.

CROWLEY: Thanks, Bill. 2008. I'm not sure I can make it till January. Thanks.

Just ahead, on the trail with John Kerry. A preview of my inside look at the man once seen as the Democratic front runner as he tries to regain his footing and momentum in New Hampshire.

(COMMERCIAL BREAK)

CROWLEY: John Kerry has launched a new TV ad on the Iowa airwaves. The new ad started running statewide today, it highlights Kerry's views on health care reform and other issues. And notes Kerry opposed what the ad calls the special interest feeding frenzy in Washington.

I spent some time with John Kerry this week in New Hampshire and found a candidate in full combat mode. My report, which airs tonight on "PAULA ZAHN NOW" at 8:00 Eastern, Kerry told me that despite continued questions, there should be no confusion over his views toward the war in Iraq.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: If anybody out there believes that if John Kerry were president of the United States we'd be at war with Iraq today, they wouldn't vote for me and they shouldn't.

(END VIDEO CLIP)

CROWLEY: Kerry is trailing by double digits in New Hampshire, but his wife, Teresa Heinz Kerry, told me he's at his best when he's down.

(BEGIN VIDEO CLIP)

TERESA HEINZ KERRY, JOHN KERRY'S WIFE: John has always done very well when he's under fire. He kind of focuses and he gets very calm.

Now, watch out when he's calm. He really becomes very focused and he goes for it. So I think he's now said, OK, it's time to get calm.

(END VIDEO CLIP)

CROWLEY: A complete report tonight at 8 Eastern on CNN's "PAULA ZAHN NOW."

That is it for INSIDE POLITICS. I'm Candy Crowley in for 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







Aired December 12, 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: Howard Dean: the man, the media and the message. Has Howard Dean been prematurely pegged as winner?

When candidates attack: the Democratic race may only get uglier in the final days before Iowa and New Hampshire.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Everybody's looking for you and you're supposed to be working. And here you are playing.

ANNOUNCER: Barney reloaded. The Bush White House puts on a humorous holiday show.

UNIDENTIFIED MALE: And the president is counting on you.

Where's Barney? Where's Barney?

UNIDENTIFIED MALE: I'll see your Milk Bone and raise you two Snausages.

BUSH: I've got a job to do, and so do you. I think it's time for you to quit playing.

(END VIDEOTAPE)

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

CANDY CROWLEY, HOST: Thanks for joining us. I'm Candy Crowley. Judy is off today.

And Howard Dean is back in Iowa, still basking in the glow of his big Al Gore endorsement and the growing perception that he's got his party's presidential nomination virtually sewed up. But some Democrats are warning Dean not to count his chickens before they're hatched, including, it seems, another former little known govern who made a surprising slash in a primary season.

(BEGIN VIDEO CLIP)

JAMES CARTER, FMR. PRESIDENT OF THE UNITED STATES: Well, I think, at least at the present time, his chances in Iowa and New Hampshire look quite good. After that, though, he'll go to a much wider range of states, including some in the Deep South. And I think that's much more uncertain. (END VIDEO CLIP)

CROWLEY: More of that Jimmy Carter interview tonight on "LARRY KING LIVE."

So, is Dean a shoo-in for the nomination, or have his supporters in the news media gotten ahead of themselves? Howard Kurtz of CNN's "RELIABLE SOURCES" looks at the coverage of Dean's campaign.

(BEGIN VIDEOTAPE)

HOWARD KURTZ, "RELIABLE SOURCES" (voice-over): There are nine Democrats running for president, but the only one we seem to hear about these days is...

UNIDENTIFIED MALE: Howard Dean.

UNIDENTIFIED MALE: Howard Dean.

UNIDENTIFIED MALE: Howard Dean.

KURTZ: The primaries don't begin for another five weeks, but plenty of journalists are acting like they're a mere formality. The media message: forget about Kerry and Gephardt and Lieberman and Clark and Edwards. Dr. Dean's a done deal. You can hear it in what television calls teases.

MARK SHIELDS, CNN'S "CAPITAL GANG": Next on "CAPITAL GANG," can anyone stop the Dean machine?

UNIDENTIFIED FEMALE: Can Howard Dean beat George W. Bush?

KURTZ: The pundits are nearly unanimous.

BRIT HUME, FOX NEWS: It begins to look as if it's almost impossible to see a way that he loses at the moment.

KURTZ: The Bush White House seems to think the race is over, at least according to stories like this one in "The New York Times." At this week's New Hampshire debate, Ted Koppel kept asking the other candidates about Howard Dean.

TED KOPPEL, DEBATE MODERATOR: What is it that Governor Dean has done right? He's doing better in the polls than any of the rest of you.

KURTZ: Now, you're probably thinking, where did the media get off anointing the nominee? And what if they're wrong? Most journalists thought the first President Bush was untouchable after winning the Gulf War. A year ago, media prognosticators said John Kerry was the man to beat, dismissing Dean as a mere asterisk.

Now Dean has the money, the ads, the Internet, the Al Gore stamp of approval and, yes, the media momentum.

HOWARD DEAN (D), DEMOCRATIC PRESIDENTIAL CANDIDATE: Unbelievable.

KURTZ: Though even the man from Vermont finds the press hype a bit much.

DEAN: I actually think that kind of talk is a little silly, because the pundits in Washington have been talking about me as a frontrunner for a long time.

(on camera): At Dean's Burlington headquarters this week, as they celebrated the Gore endorsement with a cake the shape of Tennessee, campaign chief Joe Trippi sounded a warning. "The other candidates underestimated us," he said. "Let's not underestimate them."

Maybe it's time for the media to take the same advice.

This is Howard Kurt of CNN's "RELIABLE SOURCES."

(END VIDEOTAPE)

CROWLEY: Now that Dean has Al Gore in his corner, the other '04 Democrats seem to be looking for all the support from other party icons they can get. Senator Ted Kennedy is scheduled to campaign for his colleague, John Kerry, tomorrow at a health care rally in New Hampshire.

Kerry and the other top Democratic contenders have ratcheted up their attacks on Dean this week. We have Ron Brownstein of the "Los Angeles Times" to talk about that.

They don't have much time. I mean, it's attack or...

RON BROWNSTEIN, "LOS ANGELES TIMES": Right. Well, look, they're facing a situation where five weeks out, he's leading in the polls in both Iowa and New Hampshire. And you have Al Gore putting another big wind in his sail. So look what you see this week: an intensification really on every front from every -- almost every major Democrat -- literally every major Democrat -- of attacks on Howard Dean.

John Edwards today in San Francisco, giving a speech saying Howard Dean, in essence, has too narrow an appeal and is too angry a candidate to win. A story comes out in the "Boston Globe" this morning raising questions about tax breaks Dean gave as governor to attract companies like Enron to set up insurance subsidiaries in Vermont. And Dick Gephardt is on the phone with reporters this afternoon accusing Dean of following a Bush model in governing Vermont, tax cuts for big companies, spending cuts and social programs.

John Kerry out yesterday and the day before saying Dean flip- flopped on the war in Iraq and lacks enough experience in foreign policy to contest Bush. And Joe Lieberman planning a speech for next week attacking him on the economy, taxes and trade. So all of them are really focusing their fire on Dean because they realize the clock is ticking against them. CROWLEY: Well, and you kind of wonder how much good it does, don't you? Because it seems to me that Dean has the kind of support that only gets more fervent when people go after him.

BROWNSTEIN: Yes. The question is whether you can build a different base in the party, a different constituency than Dean. It's hard to peel away Dean supporters because they view him as a man of conviction who stood up on the war. And the war really is a shield against almost all of these attacks in different ways.

But look at what Dick Gephardt is doing. He is in the mail in Iowa now with his charge that Dean supported cuts in Medicare and Social Security in the 1990s. He's talking about this Enron economics or this Bush budgeting.

He is basically appealing to a different constituency: seniors, blue collar voters, non-college educated vote who are less attracted to Dean to begin with. It may be that you have a better chance of establishing an alternate constituency with these attacks than you do of carving away Dean supporters, who, as you say, are wounding and bounding him pretty tightly.

CROWLEY: So they're all sort of fighting for some other portion, and he's got the one all to himself.

BROWNSTEIN: He's got his. Kerry is the one who is probably most directly going after that. Look at what Kerry is doing with this attack. He's going after two key elements of Dean support.

He is saying, one, that Dean is not the McCain-like straight shooter you think. He's a (UNINTELLIGIBLE) who moves around on issues. And two, he's trying to question the depth and consistency of his opposition to the war. Those are hard arguments to make for the reasons that you say, but they're aimed more at the core of the Dean support, the better-educated voters who are really helping him in New Hampshire.

CROWLEY: Let me talk about the spate of endorsements we've got here. Clyburn in South Carolina...

BROWNSTEIN: Yes.

CROWLEY: How much do these matter, and what's going on in Iowa?

BROWNSTEIN: Well, Al Gore certainly is a huge boost for Howard Dean. But Jim Clyburn is a big help, potentially, the African- American congressman from South Carolina for Dick Gephardt. If Gephardt can win Iowa, which is, you know, that big "if," then he has stepping stones, potentially.

Now, Clyburn can help him in South Carolina. Michigan if he can get the UAW on board. He can imagine a scenario where he lives to fight another day on to the finals in March.

Iowa is fascinating. Tom Harkin, the senator there, clearly, in my conversations with him and others, he seems drawn to Howard Dean. He likes the populous message. He is excited by the energy that Dean has brought into the party.

On the other hand, Iowa is pretty well divided right now between Dean and Gephardt and, to some extent, Kerry. And for Harkin to endorse anybody, he would be alienating a lot of his own supporters. It's not clear whether he's going to want to take that risk, whether he cares enough about any of these candidates to risk putting himself in a position of conflict with the people he depends on for his own races.

CROWLEY: Phones lines are busy.

BROWNSTEIN: Absolutely.

CROWLEY: "LA TIMES" Ron Brownstein, thanks very much.

BROWNSTEIN: Thank you, Candy.

CROWLEY: We'll see you here on the (UNINTELLIGIBLE).

Checking in on some of Howard Dean's rivals in our Friday edition of "Campaign News Daily," John Edwards heads to the Midwest Sunday, where you'll get to hear his unofficial campaign song performed live. Singer John Mellencamp is scheduled to perform at an Edwards event, where he will no doubt sing his 1982 hit "Small Town," an Edwards favorite.

Mellencamp hasn't declared a favorite in the campaign, though. He's agreed to perform at events for other Democratic hopefuls.

One of those hopefuls, Wesley Clark, took his turn on hot seat of "The Daily Show" last night. The comedy program has become a regular stop for candidates these days. At one point, Clark shared his views on education with host John Stewart.

(BEGIN VIDEO CLIP)

WESLEY CLARK (D), DEMOCRATIC PRESIDENTIAL CANDIDATE: You cannot measure education by scores on tests, especially when you're just teaching the test. And that's where we're going to be with No Child Left Behind. It's a serious problem.

JOHN STEWART, HOST, "THE DAILY SHOW": I know kids -- and I'll tell you this, and this is frankly between me, you and the eight people watching, I know kids who should be left behind, quite frankly. I know a lot of them. And they shouldn't get there.

CLARK: I know some adults who have been left behind.

STEWART: Right, exactly.

(END VIDEO CLIP)

CROWLEY: Running for president very often can be a family affair. Still ahead, we hit the trail with a couple of the Democrats' daughters. Are they enjoying life in the political spotlight? Plus, the latest Iraq-related fallout for President Bush. What's the administration saying about possible overcharging by the company once run by Vice President Cheney?

And, is Karl Rove feeling tied up in knots? Some holiday laughs from the White House ahead.

(COMMERCIAL BREAK)

CROWLEY: The president of the oil services company, Halliburton, says he would welcome an outside audit of his company's work in Iraq. New questions about Halliburton's charges to the government have focused new attention on Halliburton's no-bid contract for rebuilding Iraq's oil industry. Earlier today, Defense Secretary Donald Rumsfeld said Halliburton has overcharged the government.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: There was no overpayment to any company, and, in fact, there is a fairly normal process going on where they submit bills from their subcontractors and for their own. It gets discussed and debated. We've got auditors that crawl all over these things.

(END VIDEO CLIP)

CROWLEY: With me now for more is our White House correspondent, Suzanne Malveaux.

Suzanne, you say Halliburton and the next couple words out of your mouth are Vice President Cheney and then the president. What is the White House saying about this?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, President Bush was drawn into this controversy. He spoke about it just moments ago. As you had mentioned before, of course, Vice President Dick Cheney used to be the head of this company before coming to the administration.

What we've been hearing over the last 24 hours is President Bush's critics, as well as the Democratic presidential hopefuls, using this, saying this audit is just another example of the White House putting big business and special interests before the interests of the American people. They say the taxpayers' money is being used to line the pockets of Halliburton executives. This Halliburton subsidiary, as you know, got this lucrative Iraq contract without a competitive bidding process.

Now, The White House, the vice president's office, from the very beginning have said there was no wrongdoing in this. But President Bush today went out of his way to distance himself and his administration from this controversy by vowing to get to the bottom of it.

(BEGIN VIDEO CLIP) BUSH: We're going to watch -- we're going to make sure that as we spend the money in Iraq that it's spent well and spent wisely. And their investigation will lay the facts out for everybody to see. And if there's an overcharge, like we think there is, we expect that money to be repaid.

(END VIDEO CLIP)

MALVEAUX: Now, Democratic aides who I spoke with today really don't believe that this is going to stick. They don't believe it's really going to damage the White House very much. They say, if anything, it's going to push the White House to be more open in its bidding process, the competitive process, to have that be transparent. White House officials already vowing that that is going to be the case.

Also, as well, of course this comes at a very delicate political time for the White House. The administration under criticism now, under fire for excluding war opponents, being France, Germany, Russia, Canada and others from these lucrative projects, $18 billion worth of Iraq projects.

Now, Monday, former Secretary of State James Baker, who is the president's special envoy, is going to be meeting with those leaders. He's going to be trying to appeal to them to forgive Iraqi debt. And the White House has indicated that there is some wiggle room -- Candy.

CROWLEY: Suzanne, before I let you go, let me just turn a really sharp corner here and ask you, HUD Secretary Mel Martinez has resigned, we think to go down and run for the Senate seat in Florida. What can you tell me about his replacement?

MALVEAUX: Oh, well, his name is Alphonso Jackson. He is the number two person at HUD. He is the youngest of 12 children, we learned today. His father holding three jobs.

The president welcoming here at the White House, saying that he's done an excellent job as number two. And as you had mentioned before, of course, Mel Martinez is off to a run for that Senate position in Florida. That from the encouragement not only of Republican strategists, but also from White House officials here, after Senator Bob Graham said he wasn't going to run for reelection.

CROWLEY: Suzanne Malveaux. Twelve brothers and sisters. That's going to be a big swearing-in ceremony, if it hasn't already happened. Thanks, Suzanne.

MALVEAUX: Sure.

CROWLEY: On a lighter note, a member of the first family has a starring role on the White House Web site. It seems the president's Scottish Terrier, Barney, was in charge of the holiday decoration those year. As we're about to see in this abbreviated version of the 10-minute video, making him get to work is more than half the fun.

Watch closely. No matter what your political affiliation, you'll appreciate the part where an utterly helpless Karl Rove pleads for help.

(BEGIN VIDEO CLIP)

BUSH: When somebody gives you a job, Barney, and you agree to do it, then you're supposed to go do the job.

UNIDENTIFIED MALE: Barney? What do I do with these, Barney?

UNIDENTIFIED MALE: What are you doing? I told you no playing games until the decorations were done.

UNIDENTIFIED MALE: Where's Barney?

UNIDENTIFIED MALE: Where should I hang this wreath, Barney?

UNIDENTIFIED MALE: We're stuck here. We don't know what to put on the menu. Where is Barney when you need him?

UNIDENTIFIED MALE: And the president is counting on you. I don't want you pushing that soccer ball around or...

UNIDENTIFIED MALE: They all tell me the same thing. They say you're not working. What do you say to that?

LAURA BUSH, FIRST LADY: Barney, you did a really wonderful job this year on the decorations. We weren't really sure you could do it, but it looks like you can.

Barney and I wish everyone a very happy holiday.

(END VIDEO CLIP)

CROWLEY: That, of course, was First Lady Laura Bush and Barney unveiling the new video today at the Children's National Medical Center.

They have familiar names, but not familiar faces. Stay with us and join some of the children of the presidential candidates on the campaign trail.

(COMMERCIAL BREAK)

CROWLEY: A presidential campaign needs thousands of volunteers, but a select few are a bit more motivated than the rest. They're helping out dad.

CNN's Aneesh Raman talked with a couple of them.

(BEGIN VIDEOTAPE)

VANESSA KERRY, JOHN KERRY'S DAUGHTER: Hello. How are you? I'm Vanessa Kerry, John Kerry's daughter.

ANEESH RAMAN, CNN CORRESPONDENT (voice-over): They're not running for president, but they might as well be. Candidate kids, like 26-year-old Vanessa Kerry, are working their parents' presidential bids cross country.

KERRY: Lots of New Hampshire for right now, and go to Iowa, Washington State. I've been to Virginia.

RAMAN: Also on the trail full-time, Chrissy Gephardt. Both her and Vanessa getting a glimpse of their parents' political lifestyles.

CHRISSY GEPHARDT, DICK GEPHARDT'S DAUGHTER: It's definitely high paced. It's never a moment to rest.

RAMAN: A key part of their job, connecting with young voters. Whether on issues like Medicare...

GEPHARDT: Well, that issue might seem irrelevant to us. It really isn't. I mean, one day, we're going to get old.

RAMAN: ... soliciting campaign volunteers...

KERRY: You want to do some stuff? There's offices all over.

RAMAN: ... or asking that critical question...

KERRY: Are you going to vote for my dad? I love that question.

RAMAN: According to locals, it's a successful strategy.

UNIDENTIFIED MALE: When a candidate brings their kid out, it does connect better with the public.

RAMAN (on camera): Why is that?

UNIDENTIFIED MALE: Because we can relate to their children.

UNIDENTIFIED FEMALE: The candidate's child brings us closer to who the person really is to their family life.

RAMAN: But jumping into the political spotlight, even by family, brings inherent media scrutiny and constant attention.

KERRY: The decision to join the campaign trail or not is incredibly personal. I was not asked to be here. I asked to do this. And I think that it's one of the best decisions I've ever made in my entire life.

RAMAN: One of the reasons, more time with her father.

KERRY: The truth is, you know, when we're together -- and half the time we're sitting up in a front of a bus -- we're not talking about campaign stuff. We're just yacking about life. I'm getting fatherly advice.

RAMAN: And the kids are always keeping a watchful eye, at times helping the candidates stay on message.

UNIDENTIFIED FEMALE: Special interests.

RAMAN: And at others, suggests new looks.

KERRY: You don't want to be a (UNINTELLIGIBLE), daddy?

RAMAN: It is a temporary life of duality, working as a campaign staffer, living as a candidate's child.

KERRY: I'm right here, pop.

RAMAN: Aneesh Raman, CNN, Manchester, New Hampshire.

(END VIDEOTAPE)

CROWLEY: It's time for congressional Democrats to choose up sides. In the next half-hour of INSIDE POLITICS, Congressman Charlie Rangel explains why he's enlisting in Wesley Clark's presidential campaign. And Representative Jesse Jackson, Jr. defends his choice of Howard Dean.

Plus, the Supreme Court, the 2004 presidential race, and just maybe a preview of 2008.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: Taking stock before the holidays. Can the president finally kick back and celebrate the economic turnaround?

Governor Schwarznegger enjoys a budget breakthrough, but it's not enough to stop a protest by Latino voters.

UNIDENTIFIED FEMALE: We want our people to be able to get driver's licenses. And we don't approve of what the new governor did.

ANNOUNCER: Surfer dudes unite. There are online rewards to be had in the "Political Play of the Week."

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

CROWLEY: Welcome back. I'm Candy Crowley, sitting in for Judy today.

If President Bush has said it once, he's said it a thousand times, and he did it again today. He says the economy is very strong and getting stronger. The markets seem to be backing him up. This hour, the Dow Jones industrial average is closing above 10,000 for the second day in a row, and inflation appears to be in check. The government reports wholesale prices unexpectedly dropped three-tenths of a percent in November, as food, energy and car costs tumbled.

We want to talk more about the economy now and how it may influence the presidential race with Jonathan Weisman of "The Washington Post."

Jonathan, thanks for joining us.

JONATHAN WEISMAN, "WASHINGTON POST": You're welcome.

CROWLEY: Can the Democrats just hang it up on the economy now? Is it done and roaring and no longer an issue?

WEISMAN: I wouldn't say that. I mean, remember, you know, you look at these overall national numbers and things look very good. But an election is done regionally. It's done state by state and certain sectors are still hurting. Manufacturing has been shedding jobs for 40 straight months and has not turned it around yet.

So, I mean, certainly things look good for President Bush on the economic front, but he can't be really popping corks yet, as long as certain sectors are still hurting.

CROWLEY: And can things still go awry? I mean, this looks like we're in for a period of pretty good growth. But can something suddenly come up to stop it between now and November?

WEISMAN: I mean, we learned a lot on September 11, 2001. Anything can happen especially with the stock market. Shocks happen and the stock market is teetering. Look, it did close over 10,000 today, but it just basically ended where it started, and you quoted the consumer price index numbers which were down, which was a surprise. But for some strange reason, consumer confidence was also down today and I don't know -- understand why that is.

CROWLEY: Well, if you don't understand, I'm not going to attempt it. Let me ask you about whether the Democrats can overplay their hand on this. Is there some danger that they sort of look too eager for things to fall apart? I mean, what's their...

WEISMAN: Yeah, well, you certainly don't want to look like you're basically cheering for the economy to go bad. You don't -- as a politician, you don't want to look like Gloomy Gus. I can remember in 1994 when Bob Dole was talking about the Clinton recession. In fact, we were just on the verge of one of the biggest booms in history and he looked kind of silly talking about the Clinton recession. If Democrats start looking silly in the face of these zooming numbers from the economy, they're just going to look like they're party poopers.

CROWLEY: Let me ask you another question about -- does the argument against the president's tax cuts, that they didn't help the economy, does that go away now? Is there some proof that they did or didn't help in these numbers?

WEISMAN: You know, frankly, most economists think that the tax cuts this go-round did help. They happened to be extremely well timed and there was just this -- these checks that went out exactly at a good time to get consumer spending again. That said, you know, President Bush still has a problem of record budget deficits, that those tax cuts, the thing that helped the economy, were these one-time checks.

But those tax cuts are the gift that keep giving and the Democrats are going to keep hammering away at saying that the tax cuts have thrown the budget completely out of whack, have sent the government into hock, and are mostly going to the rich. I think the tax cuts will remain the -- one of the biggest issues of the entire campaign, no matter what the economy is doing.

CROWLEY: Let me ask you about the political potency of the Dow number. What's in those numbers that sway politics, or is there nothing in them?

WEISMAN: Well, you know, about half or a little more than half of Americans own stocks in some way or the other. Most of those people own it in very indirect ways. They might have some money in a company 401(k) that has money in the stock market, or they even have a pension. They don't even know what's in their pension but the pension happens to be invested in the stock market. People have a stake in it.

But there's also just this psychological thing, you know, when they hear a news brief and it says the Dow was up to, you know, record levels or over 10,000. It makes people feel good. People for some reason look at the Dow Jones Industrial Average as a gauge of the economy, even though it's a very imperfect gauge and so when it's going up, people feel good.

CROWLEY: Jonathan Weisman, "Washington Post", thanks for your expertise, both political and financial. We appreciate it.

WEISMAN: Thank you.

CROWLEY: Now to California, a new life for Governor Arnold Schwarzenegger's economic recovery plan. The state senate today is considering a budget reform package crafted by Schwarzenegger and Democratic leaders. Last night, the state assembly overwhelmingly approved the plan which includes two of Schwarzenegger's main goals. Fifteen billion dollars in borrowing to retire the state's deficit and the balanced budget requirement.

It is a dramatic political turnaround for Schwarzenegger and a measure that seemed all but dead earlier this week. But the governor has not cured all his headaches. CNN's Frank Buckley joins us now from Los Angeles. I mean, California without headaches would be unheard of. What's on the governor's plate now?

FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Well, Candy, the governor is angering some Californians as he follows through on a couple of major campaign promises he made. Just this week, cities and counties began to see the money flow from the state Capitol drop off. That's because just moments after Governor Schwarzenegger took office last month, he delivered on his promise to repeal the increase in the vehicle license fee.

The monies generated from that fee goes to cities and counties and amounts to around $4 billion a year. This week, cities and counties began to experience the drop-off in that funding and protesters took to the Capitol.

More than 4,000 protesters were in Sacramento on one day this week, according to one estimate, to demonstrate against the cuts in services that are going to take place as a result of the cuts in funding. The demonstration was described as one of the largest Capitol demonstrations in years.

To give you a sense of the impact here in L.A., for example, the city will lose $19 million a month. That has angered the mayor, James Hahn. He called the situation in Sacramento immoral.

(BEGIN VIDEO CLIP)

JAMES HAHN (D), MAYOR OF LOS ANGELES: You now have a governor who made a personal pledge to me, made a personal pledge to the people of the state of California that cities and counties would not be harmed by the repeal of the car tax. We're asking the governor and the legislature to keep their word so that we can keep our faith in Sacramento. They don't keep their word this time, it's over. There is no more relationship between local government and Sacramento if they leave us out in the cold.

(END VIDEO CLIP)

BUCKLEY: Now, separately, there is anger by some Californians about the repeal of SB 60, that's the law that allowed illegal immigrants to obtain driver's licenses. Schwarzenegger promised to get the legislature to repeal that law. He was successful. Today, though, there's a statewide boycott that's supposed to be taking place as a protest against that move. These demonstrators are a part of that. The organizers of the boycott are asking people not to go to work and not to shop in stores in an effort to send a message to Governor Schwarzenegger.

(BEGIN VIDEO CLIP)

NATIVO LOPEZ, PRESIDENT, MEXICAN-AMERICAN POLITICAL ORGANIZATION: The day that Latinos are absent from the economy of California, that will send a wake-up call to the Terminator and to his minions of the California Republican assembly that continue the right wing shift in pursuing anti-immigrant policies.

(END VIDEO CLIP)

BUCKLEY: Governor Schwarzenegger's aides say he will reexamine the driver's license issue next year during the regular session of the legislature. On the funding issue, it isn't clear just where the governor intends to find the money to make up for the loss from the vehicle license fees -- Candy.

CROWLEY: Thanks so much, CNN's Frank Buckley on the Schwarzenegger watch. Appreciate it, Frank.

A number of African-American leaders are trying to influence the Democratic presidential race. Up next, we'll hear from two congressmen who have chosen different sides. Wesley Clark supporter Charles Rangel and Howard Dean backer Jesse Jackson Jr.

Plus, John Kerry revealed. We'll give you a sneak peek of my profile of the White House hopeful and his campaign struggles.

And an online gamble of sorts with truly high stakes. Bill Schneider will ante up the "Political Play of the Week."

(COMMERCIAL BREAK)

CROWLEY: Given the high percentage of African-Americans who vote for Democratic candidates, the presidential hopefuls are working hard to win the support of top African-American officials.

New York Congressman Charles Rangel this week officially endorsed Wesley Clark for president. A little while ago, I spoke with Congressman Rangel and asked him why Clark is his choice for the nomination.

(BEGIN VIDEO CLIP)

REP. CHARLES RANGEL (D), NEW YORK: Well, basically, because after looking at all of the candidates and recognizing that our country's at war without any game plan to get out of it and we got confusion as to how we got involved in the first place, I thought that General Wesley Clark was the best candidate to really whup George Bush.

He is a warrior. He's a decorated military man. And he's smart. He's a scholar. And just no question in my mind if Clark can stay on his feet until February or March and we're down to one, two, or three candidates, that he'll be our party's man.

CROWLEY: Now, how much of this -- the timing of this announcement had to do with the fact that you had a big endorsement in your area not too long ago. That, of course, was former Vice President Gore endorsing Howard Dean. That kind of ticked you off, I'm hearing?

RANGEL: No. Quite frankly, I'm just trying to figure out why Dean and Gore picked Harlem. There's speculation that they got in a cab and said, Take us to Harlot and they made a mistake and dropped them off in Harlem.

But the truth of the matter is that we have been planning us doing this thing for weeks trying to make certain that the general was available. So he had a fund raiser the night before. We just did it the next day.

It's abundantly clear that they had not planned a Dean event until two days before this occurred. So I don't want to speculate whether it was anti-Clinton. It certainly was anti-Lieberman. But it had nothing to do with us because it had very little to do with Harlem.

CROWLEY: Congressman, I know that you endorse general Clark for reasons larger than the African-American vote, but I want to focus you on the African-American vote and what is it you think that General Clark can offer, where it seems to me that South Carolina's going to be his first big chance to kind of shine in the primaries, if he can. And that, of course, has I think over 50 percent African- Americans voting in the primary. What's he got for them?

RANGEL: I think that as far as the African-American agenda is concerned, the biggest thing that Clark can do for African-Americans is promise us that he'll beat Bush in November.

CROWLEY: As simple as that?

RANGEL: Well you know, all the things that we like to talk about, education, affirmative action, Social Security, health, decent housing, all of those things -- and world peace, which is the primary importance, to see that our minority kids and poor white kids aren't just being shot like fish in a barrel in Iraq.

The frustrations of knowing that we're spending a billion dollars a week in Iraq. We'll spend more than that in rebuilding it. It's not as simple as that. It means that we have to get rid of this evil empire in Washington if we can refocus on our goals and aspirations.

CROWLEY: We have about 30 seconds left, but I want to ask you the reversal of the first question I asked you. And that is, you're kind of running up against the stream here. It seems the tide is kind of falling for Howard Dean. Why not Howard Dean?

RANGEL: I'm just saying that God bless Howard Dean and Gephardt and any of the others that survive the insanity of Iowa and New Hampshire and South Carolina.

But when you look at whoever is left and people start -- are able to focus on the finalists, I'm saying that I think that Clark, head and shoulder, would appear to be the best candidate to beat Bush.

CROWLEY: Illinois Democratic Congressman Jesse Jackson Jr. has a different view of the Democratic field. Last weekend, he endorsed Howard Dean for president. Congressman Jackson is with me now in Washington.

So, why Howard Dean?

REP. JESSE JACKSON JR. (D), PRESIDENTIAL CANDIDATE: Howard Dean has a strategy. He's reaching out to voters that traditionally do not vote, have not voted lately. Lest, should we forget, in the last campaign, 55 million Americans vote the for George Bush and 51 million Americans for Al Gore.

But 100 million Americans didn't vote for anybody. Had the Nader vote and someone reached out to that 100 million, that margin not only has the opportunity to change the direction of leadership in this country, it indeed has the opportunity to change the direction.

CROWLEY: So bottom line here you think he has the best chance to win? Is that what it's about?

JACKSON: Well any Democrat, from my perspective, consistent with Charlie Rangel, is better than George Bush. But Howard Dean has a method, he has a strategy and he has a message of jobs, of education, massive improvements in education and health care for all Americans.

I believe he is the only current Democrat running with a Southern strategy that makes sense. Why not, for once, blacks and whites together, since Republicans have run three decades of race-baiting campaigns in the south from -- you name it. Willie Horton to (UNINTELLIGIBLE) Goodman and Cheney when Ronald Reagan ran his campaign in 1980. You name it, they've tried every racial tactic.

Howard Dean believes blacks that and whites can come together in a coalition united behind jobs, education and health care, and that's a winning coalition in the South.

CROWLEY: Tell me, specifically, as I asked Congressman Rangel, what specifically is there about the Dean candidacy that should appeal to African-Americans? A lot has been made about this almost all white state of Vermont. He's not had a lot of dealings with governing a population that's diverse.

JACKSON: African-Americans overwhelmingly oppose unilateralism in Iraq. Governor Dean is the only candidate from the very outset who made it very clear that he was against that war and he's made that argument forceful across the campaign.

Not only has it generated young people supporting this process, but it's also generating increasingly African-American support for Governor Dean. So as the candidates begin to make their final runs through these various states, people are now beginning to tune into the campaign and I believe education health care, and jobs are resonating amongst African-Americans. It's certainly resonating in the Second Congressional District of Illinois and it's certainly going to resonate in the South.

CROWLEY: Now is Illinois where you think you can be most helpful to Howard Dean? We have South Carolina first, of course, and again as we mentioned, it's more than 50 percent African-American. Jim Clyburn has endorsed Richard Gephardt. Where can you be most helpful and how?

JACKSON: I plan to be most helpful wherever the Dean campaign instructs me to go. I'm a soldier in this process. I plan to spend a considerable amount of time in South Carolina, I plan to spend time in Iowa. Indeed, I will be there this coming Monday on behalf of the governor and a number of event in Iowa.

And that's one of the great things about the Dean campaign that I enjoy so much. We're not just a segment. African-Americans, you go talk to African-Americans. Hispanics, you talk to Hispanic-Americans.

In the Dean campaign, African-Americans talk to whites and whites talk to blacks. And we have to have that kind of coalition, that kind of trust in a campaign in order to bring the coalition together to beat George Bush.

CROWLEY: Illinois Democratic Congressman Jesse Jackson Jr, always good to have you, especially in person. Thank you.

JACKSON: Thank you so much. CROWLEY: It's almost time for Bill Schneider to reveal his "Political Play of the Week. " If you want a hint, you might try staring at your computer. Better yet, think of a big political event that happened on this date three years ago.

(COMMERCIAL BREAK)

(AUDIO/VIDEO GAP)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): ... Internet savvy political insurgents.

AL GORE, FRM. VICE PRESIDENT OF THE UNITED STATES: Howard Dean really is the only candidate who has been able to inspire, at the grassroots level, all over this country, the kind of passion and enthusiasm for democracy and change and transformation of America that we need in this country.

SCHNEIDER: There's a political movement going on out there.

JOE TRIPPI, DEAN CAMPAIGN MANAGER: What even we underestimated was the huge response that we've gotten in terms of the resources the energy, the number of people out there leafletting and talking about Howard Dean.

SCHNEIDER: Al Gore doesn't want to stop it. He wants to be part of it. Back in 1964, Barry Goldwater led a political movement that lost the election, but remade the Republican Party. The Dean movement, Gore says, is...

GORE: Promising to remake the Democratic Party as a force for justice and progress and good in America.

SCHNEIDER: A reporter promptly asked Senator Hillary Rodham Clinton whether she thought the Democratic Party needs a makeover. Her answer? No.

Gore made the endorsement in Harlem, Bill Clinton's neighborhood. How's that for a poke in the eye? By embracing Dean, Gore has distanced himself even further from the Clinton legacy, something that puzzles his old friends.

SEN. JOE LIEBERMAN (D-CT), PRESIDENTIAL CANDIDATE: Supporting Howard Dean, he's supporting somebody who is standing against so much that the Clinton-Gore administration stood for.

SCHNEIDER: If Dean loses, could Gore be setting himself up to run for president in 2008? He might have to face Hillary Clinton. But she'd be the candidate of the past. He'd be the man of the future allied with a hip political movement. He'd be Gore the Dean-dude, winner of the "Political Play of the Week."

(END VIDEOTAPE)

SCHNEIDER: Now, Gore could also end up tainted by a Dean loss. You did this to us, the Democratic establishment would say. But Gore doesn't care what the establishment says about him anymore. He's a Dean-dude now -- Candy.

CROWLEY: Thanks, Bill. 2008. I'm not sure I can make it till January. Thanks.

Just ahead, on the trail with John Kerry. A preview of my inside look at the man once seen as the Democratic front runner as he tries to regain his footing and momentum in New Hampshire.

(COMMERCIAL BREAK)

CROWLEY: John Kerry has launched a new TV ad on the Iowa airwaves. The new ad started running statewide today, it highlights Kerry's views on health care reform and other issues. And notes Kerry opposed what the ad calls the special interest feeding frenzy in Washington.

I spent some time with John Kerry this week in New Hampshire and found a candidate in full combat mode. My report, which airs tonight on "PAULA ZAHN NOW" at 8:00 Eastern, Kerry told me that despite continued questions, there should be no confusion over his views toward the war in Iraq.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: If anybody out there believes that if John Kerry were president of the United States we'd be at war with Iraq today, they wouldn't vote for me and they shouldn't.

(END VIDEO CLIP)

CROWLEY: Kerry is trailing by double digits in New Hampshire, but his wife, Teresa Heinz Kerry, told me he's at his best when he's down.

(BEGIN VIDEO CLIP)

TERESA HEINZ KERRY, JOHN KERRY'S WIFE: John has always done very well when he's under fire. He kind of focuses and he gets very calm.

Now, watch out when he's calm. He really becomes very focused and he goes for it. So I think he's now said, OK, it's time to get calm.

(END VIDEO CLIP)

CROWLEY: A complete report tonight at 8 Eastern on CNN's "PAULA ZAHN NOW."

That is it for INSIDE POLITICS. I'm Candy Crowley in for Judy Woodruff. "CROSSFIRE" starts right now.

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