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Inside Politics

Schwarzenegger, First Lady Headline Day Two of Republican Convention; Kerry Campaign Shake-up?

Aired August 31, 2004 - 15:00   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: The Republicans bring out the muscle and the Mrs., hoping their second convention night will be must-see TV.

Take two. The president tries to make up for a blooper about the war on terror.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We are winning and we will win.

ANNOUNCER: Karl Rove revealed. We'll have a rare interview with the president's often elusive political guru.

Democrats see purple and then see red after some Republicans mock John Kerry's war medal. Meantime, is the Kerry camp preparing to shake things up?

(END VIDEOTAPE)

ANNOUNCER: Now, live from the Republican National Convention in New York, JUDY WOODRUFF's INSIDE POLITICS.

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us for this special 90-minute edition of INSIDE POLITICS.

Well, while our focus is again right here on the Republican National Convention, CNN has learned about a possible shake-up in the making in the John Kerry campaign. Unhappiness with the way the race is going is behind it all. We're on that story. We'll have much more in just a moment.

For now, back here in New York City, you might say Governor Arnold Schwarzenegger and first lady Laura Bush don't seem to have all that much in common. But tonight's headliners both have appeal beyond the Republican faithful. They will use that appeal to try to bolster TV ratings for the second night of this convention and, of course, try to pump up the vote for President Bush.

Republicans appear now to be keeping the text of Arnold Schwarzenegger's convention speech under wraps. There's been no advance release yet of any of the highlights, but the California governor's mere presence on the stage may be as important as what he says tonight. (BEGIN VIDEOTAPE)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I am a salesman by nature.

WOODRUFF (voice-over): But so far, Arnold Schwarzenegger hasn't done a lot of pitching for the president. Tonight, that changes. Schwarzenegger joins John McCain and Rudy Giuliani to form the golden trio of this week's gathering at the Garden, but, in some ways, he's in a league of his own. For one, he's more famous, a bigger draw for the nonjunky audience.

Of the trio, he's also the only one to score prime-time network coverage, preparing to talk of opportunity, not terrorism and war.

SCHWARZENEGGER: OK, I changed my mind. I want to go back to acting.

(LAUGHTER)

WOODRUFF: Then, there's the question of his future. Unlike Giuliani and McCain, foreign-born Schwarzenegger can't run on a national ticket. And Senator Schwarzenegger just doesn't ring true, limitations to be sure. But coupled with his vast wealth, they also afford the governor a certain freedom.

SCHWARZENEGGER: It doesn't matter if they're to the left or to the right or to the center. I extend my hands to them.

WOODRUFF: And so he has, changing the partisan culture of Sacramento, reaching out to voters across the partisan spectrum. Has he mastered the system, while remaining the ultimate nonpolitician? Well, maybe.

SCHWARZENEGGER: It will be a whole new ball game, trust me.

WOODRUFF: Not always. Schwarzenegger swept into office vowing to take on the politicians he's denounced as slaves to special interests, but he has been raising money hand over fist. And big business picked up the $350,000 tab to bring him here to New York on his private jet. Will it dim his aura? Maybe he is the ultimate salesman after all.

(END VIDEOTAPE)

WOODRUFF: Arnold Schwarzenegger coming up tonight.

Laura Bush will be the final convention speaker tonight. It should be a crowning moment for a first lady who has been more active than ever in her husband's campaign.

Kelly Wallace is on the convention floor with more on Mrs. Bush and what she hopes to accomplish tonight.

Hi, Kelly. You're in the Wyoming delegation.

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: I am, sort of nearby or not too far away from Texas.

And, as you know, Judy, first lady Laura Bush was up on this stage just about 45 minutes ago, along with her daughters, Barbara and Jenna, getting comfortable with the podium, looking out at an audience soon to be filled to capacity here inside the Garden, looking at the teleprompter as well.

A senior Bush administration official is hailing this as an opportunity to give a perspective that no one else can about the president. After all, who knows the president better than Laura Bush? And Laura Bush is someone who has really in the past few months taken on a new role in this, her husband's final campaign.

(BEGIN VIDEOTAPE)

WALLACE (voice-over): A new Laura Bush? Well, lately, she's showing a new side, her partisan side.

BILL HEMMER, CNN ANCHOR: And I just want to try and clarify a little bit.

WALLACE: Asks by CNN's Bill Hemmer if she really thinks the anti-Kerry swift boat ads by political groups called 527s are fair, she says, absolutely, citing attack ads against her husband.

LAURA BUSH, FIRST LADY: In fact, my husband and John McCain have both filed suit with the FEC to ask the FEC to rule on getting rid of 527s. And I'm wondering if Senator Kerry will join them in that suit to make sure that 527s aren't there.

WALLACE: She has become one of her husband's strongest defenders on issues ranging from embryonic stem cell research to the state of the economy.

L. BUSH: The record is clear. The economy is strong and getting stronger.

WALLACE: In her speech tonight, she gets personal. According to advance excerpts, she will say: "I want to try and answer the question that I believe many people would ask me if we sat down for a cup of coffee or ran into each other at the store. You know him better than anyone. Why do you think we should reelect your husband as president?"

Laura Bush played a role in 2000, but now she's the first lady, often going solo, targeting women, with polls showing the president's support weaker among women than men.

L. BUSH: My husband believes that we should all have an equal opportunity to achieve our dreams. And he has three strong women at home who won't let him forget it.

WALLACE: In a new "Los Angeles Times" poll, when asked who better fits your idea of a first lady, Laura Bush leads Teresa Heinz Kerry by 30 points. So should she and Teresa Heinz Kerry be an issue in campaign '04? L. BUSH: No, I don't think so. I mean, our names aren't on the ballot. I don't think we should be an issue.

WALLACE: Her husband telling CNN's Larry King he disagrees.

G. BUSH: I think Laura ought to be an issue, because it shows what shows what good judgment I have.

(END VIDEO CLIP)

WALLACE: And, according to a senior administration official, it will be the president who will be introducing his wife via satellite. The president will be speaking from a softball game in Pennsylvania.

But before we hear from the president, we will hear from his daughters, the Bush twins, Barbara and Jenna, who will be making really their national debut on this political stage when they introduce their father tonight -- Judy.

WOODRUFF: Mrs. Bush turning into a real asset for the president.

Kelly, thank you very much.

Well, as for Mr. Bush, the White House now confirms that the president will visit with firefighters and supporters in Queens, New York, tomorrow night. That event is likely to conjure up images of Bush and firefighters shortly after 9/11, amid charges by some Democrats that the Republicans are politicizing the tragedy by repeatedly invoking it at their convention.

Well, now we turn to that drama we mentioned at the top of the show, possible drama, that is, unfolding within the Kerry campaign. Could a shake-up be in the works?

Let's quickly bring in senior political correspondent, Candy Crowley.

Candy, some of us at CNN have been talking to Democrats. I know you have been talking to them, a number of them. What are you hearing from those Democrats outside the campaign?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Outside the campaign, they're a little unnerved by the polls. The undertow, which really had been pulling with Kerry, now seems to be pulling with Bush. It's not so much the overall horse race numbers, but the internal showing that Senator Kerry has slipped in some areas and President Bush has gone up.

What this has done, they said, look, we need a new direction. They don't have a message every week. They were too slow to respond to the swift boat ads, any number of things. They feel that there has been no clear message out there and that while there's a great anti- Bush movement that they see, they believe swing voters don't want to vote for George Bush.

They say, look, John Kerry hasn't made the case that he's the viable alternative. And they're concerned. There's nine weeks to go. They think there is a very small window in which to change some things. And they think it has to start with a shake-up in the campaign. And the name you hear the most, as you know, Mary Beth Cahill.

WOODRUFF: So what is -- and she is the manager of the campaign. So what about inside the campaign? What are they doing? What are they saying?

CROWLEY: Huge, strong, pushback thing: No major shake up. This is not happening. Mary Beth Cahill is on Nantucket and that she is in charge of the campaign, that no one is getting moved over. There's no minor shake-up, no major shake-up, that this is the peanut gallery that has been sniping at them and that said in January they couldn't possibly win.

So they see this -- and you know this does happen in a campaign. When things begin to go bad, people from the outside -- and also inside and outside the campaign they make the point, who is it that you would have us bring in that isn't already in the campaign? Most of the rock stars in the Democratic Party are already in there.

On the other hand, I also know and have talked to people who do indeed say that Kerry said, why aren't we fighting back more? So there is concern within the campaign. But they say this idea of a major shake-up is nuts.

WOODRUFF: Concern coming from the candidate himself.

CROWLEY: Right.

WOODRUFF: Very quickly, Candy, he is making a big speech tomorrow in Nashville, the American Legion, where the president is speaking today. Is any of this going to come up tomorrow or what is he going to talk about?

CROWLEY: I am told that he will spend some time about miscalculations in the post-Iraq war of this administration.

I am told that he will also take on the Swift Boat For Truth folks and say, look, you know, these people show up every 33 years and they attack me and my record. Where were they on the POW issue while I was fighting for it in the Senate? Where were they on Agent Orange while I was fighting for it? And they'll talk about this what they call going from mission accomplished to mission impossible, which was yesterday the president saying, well, I don't know if we can actually win the war.

So it's going to be partly hard on Bush and an assault on his Iraq record, but also beginning to take this on personally, as he has before, but say, well, where were these guys when I was standing up for vets?

WOODRUFF: Particularly tricky audience for him, the American Legion, a lot of veterans, of course.

CROWLEY: Right.

WOODRUFF: OK, Candy, thank you very much. We'll be seeing a lot of you tonight. We appreciate it.

And we're going to try to find out more about any possible upheaval in the Kerry camp when I talk to the campaign chairwoman, Jeanne Shaheen, next.

Plus, an angry response to anti-Kerry props that turned up on the Republican Convention floor.

And President Bush tweaks his line about whether the United States can win the war on terror.

With 63 days until the election, this is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

WOODRUFF: President Bush still working his way here to New York. His road trip to the convention took him today to Nashville, Tennessee.

In a speech to the American Legion convention, the president backtracked on a statement that he made yesterday, when he said he did not think one could win the war on terror. He told veterans today the war is winnable.

As Bush spoke, another controversy was getting some attention here in New York. It involves a jab at John Kerry and at his Purple Hearts earned in the Vietnam War.

Here now, CNN's Ed Henry.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Democrats are blasting the fact that some delegates wore Band-Aids with small Purple Hearts to mock John Kerry's wounds in Vietnam.

Korean War vet and Democratic Congressman Charlie Rangel accused these delegates of dishonoring the Purple Heart.

REP. CHARLES RANGEL (D), NEW YORK: This symbol is a very moving one, because many of the people that earned it never came back home.

RETIRED GEN. MERRILL MCPEAK, AIR FORCE: I think we ought to offer a bounty to any of those Band-Aid wearers who have ever seen combat.

HENRY: Democrats say the buck stops with President Bush.

TERRY MCAULIFFE, DNC CHAIRMAN: George Bush's boots never went to Vietnam. And that's his right. He had the right not to go. But he does not have the right to smear our veterans.

HENRY: The White House chief of staff denied any coordination with the delegates who wore the Band-Aids.

ANDREW CARD, WHITE HOUSE CHIEF OF STAFF: Not to my knowledge. I can tell you this. I have great respect for anyone who wears the uniform in the armed services. And I certainly have great respect for people who made sacrifice and earned the Purple Heart.

HENRY: One man who handed out the Band-Aids, Morton Blackwell, insists he acted on his own. But Democrats point out the conservative activist has been closely aligned with White House aide Karl Rove. The controversy comes as Swift Boat Veterans For Truth unveil a new ad called "Medals."

(BEGIN VIDEO CLIP, SWIFT BOAT VETERANS FOR TRUTH AD)

UNIDENTIFIED MALE: ... denounce the symbols which this country gives and that was the medals themselves.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: I gave back -- I can't remember -- six, seven, eight, nine.

NARRATOR: How can the man who renounced his country's symbols now be trusted?

(END VIDEO CLIP)

HENRY: Democratic Senator Zell Miller, who will be the Republicans' keynote speaker on Wednesday night, said Democrats should not claim the swift boat vets are doing the president's dirty work.

SEN. ZELL MILLER (D), GEORGIA: I don't think I would have the nerve to say that, not when I have George Soros tied around my neck.

(END VIDEOTAPE)

HENRY: Republicans wanted their opening night to appeal to independent voters. They feel they got the job done. But Kerry campaign officials charge that the attacks last night on John Kerry, especially by Rudy Giuliani, as well as these Band-Aids, will backfire with swing voters -- Judy.

WOODRUFF: All right, Ed Henry, on top of that story outside Madison Square Garden -- Ed, thank you very much.

Well, now we turn north from New York to Manchester, New Hampshire, and the Kerry's campaign national chairwoman, Jeanne Shaheen. She is a former governor of the Granite State.

Governor Shaheen, good to see you. First of all...

JEANNE SHAHEEN, JOHN KERRY CAMPAIGN CHAIR: Great to be with you.

WOODRUFF: Thank you very much.

Are there changes afoot at top levels in the Kerry campaign?

SHAHEEN: No. We have brought on some new people, but that's been in the works for some time, Joe Lockhart, Susan Rice, people who have been strong strategists and policy leaders. So, we're pleased they're joining us, as well as some other people are. We're filling out the campaign staff, as we knew we always needed to before the fall election.

WOODRUFF: What about people like Mary Beth Cahill, Bob Shrum? Do they continue to have a senior role?

SHAHEEN: They absolutely do. Mary Beth has done a terrific job as the campaign manager since she came on last November and turned things around. Bob Shrum is a trusted adviser of John Kerry and has been for more than 20 years.

WOODRUFF: Is John Kerry happy right now with the way his campaign is going?

SHAHEEN: Look, we knew at the beginning of this campaign that the Bush administration and campaign and the Republicans were going to come at John Kerry as they have in the last few weeks. We knew that because that's what they did to John McCain in 2000, because that's what they did to Max Cleland in 2002 and because we've seen these attacks on John Kerry throughout his public life.

But the fact is, you have to ask yourselves, why does George Bush and the Bush campaign want to talk about what happened 30 years ago in Vietnam, rather than what's happening today in the United States? And that's because they don't want to talk about the 1.8 million jobs lost or the 49 percent increase in health care or taking us to war in Iraq by misleading Americans about weapons of mass destruction.

WOODRUFF: But be that as it may, Jeanne Shaheen, that is what is being talked about. And I am told, other journalists are being told by senior Democrats, donors to the Kerry campaign, that there's unhappiness with the way the campaign has responded to the swift boat controversy, with indecision in the campaign, with a lack of a clear message.

SHAHEEN: Well, we will continue to respond to those lies by pointing out what John Kerry and John Edwards want to do as president.

We need a president who has a clear vision, who knows what we need to do to create good jobs here, who knows what we need to do to lower the cost of health care, who knows how we're going to make sure that people can send their kids to college, who knows what we need to do to restore credibility of the United States in the world community. And that's John Kerry.

WOODRUFF: One last question. These polls, you've seen the same ones we have. Just a few minutes ago, I looked at an AP analysis of several polls which show that the persuadable voters, the voters out there your campaign and the Bush campaign needs, for that matter, when it comes to personal qualities of leadership, who would be a stronger leader, who would be a better commander in chief, those questions, President Bush is pulling away from John Kerry on those questions. Are you concerned? SHAHEEN: Well, those same polls also show that when it comes to a president who understands and cares about you, who knows what you need to improve your lives, those voters also support John Kerry and believe he would be the better president.

And I think when voters come down to making the decision, they're going to decide based on who they believe is going to do something about the problems they have in their own lives.

WOODRUFF: Jeanne Shaheen, former governor of the state of New Hampshire, chairwoman of the John Kerry campaign.

SHAHEEN: Thank you.

WOODRUFF: Thank you very much for joining us.

SHAHEEN: Thank you.

WOODRUFF: We appreciate it.

Well, a possible new job for longtime Republican and Bush family friend James Baker. Details in our "Campaign News Daily."

Also ahead, John Edwards weighs in on last night's speeches right here at the Republican Convention.

(COMMERCIAL BREAK)

WOODRUFF: From inside Madison Square Garden, we check the headlines now in our "Campaign News Daily."

Democrats are keeping their counterspin machine busy during this convention. Today, the DNC released a new TV ad set to air this week in the New York market. The spot accuses George Bush of failing to rein in the rising costs of health care and prescription drugs. It was released this morning to promote the Democrats' convention theme, which is mission not accomplished.

While John Kerry continue his downtime in Nantucket, John Edwards is campaigning in West Virginia. Edwards had two appearances in the Mountaineer State today, where he made a point of criticizing what described as the -- quote -- "negative attacks" during last night's convention speeches.

Veteran Republican and longtime Bush family confidant James Baker is in line for a new post assisting President Bush. A source tells CNN's Candy Crowley that Baker has agreed to lead the Bush campaign's debate negotiations team. The source says an announcement of Baker's new role could come as soon as this weekend.

President Bush was campaigning among veterans today and there was a not-so-subtle change in his wording when he talked about the war on terrorism. A report from our Suzanne Malveaux when this expanded edition of INSIDE POLITICS returns.

(COMMERCIAL BREAK) WOODRUFF: A relatively quiet day, we're told, outside Madison Square Garden.

Inside the arena, we're getting ready for tonight's main speakers, first lady Laura Bush and California Governor Arnold Schwarzenegger.

Welcome back to this special 90-minute edition of INSIDE POLITICS, live from the Republican National Convention. I'm Judy Woodruff.

As George W. Bush continues his week-long campaign sprint through the showdown states, a new poll suggests the president has picked up new public support in the war on terror. According to a "Washington Post"/ABC News survey, Bush leads Kerry 56 percent to 38 percent when voters are asked which candidate can do a better job handling terrorism. At the beginning of the month, Bush's lead on this issue was just three points.

CNN White House correspondent Suzanne Malveaux has more on the President's Day and his appeal to a key voting bloc.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN CORRESPONDENT: President Bush and Senator Kerry are embroiled in a fierce battle over the veteran vote. President Bush, in Nashville, Tennessee, addressed the American Legion's national conference, the largest veterans group in the country, to try to convince this critical bloc that he would make a better commander in chief.

He also attempted to put to rest the controversy over his remark in a TV interview aired yesterday, in which he said he did not think the war on terror could be won.

G. BUSH: In this different kind of war, we may never sit down at a peace table. But make no mistake about it: We are winning and we will win.

(APPLAUSE)

G. BUSH: In this different kind of war, we may never sit down at a peace table. But make no mistake about it; we are winning and we will win.

(APPLAUSE)

G. BUSH: We will win by staying on the offensive, we will win by spreading liberty.

MALVEAUX: Next, President Bush travels to Iowa and Pennsylvania with Senator John McCain to try to win the support of the voters, particularly farmers, undecided women and labor.

Suzanne Malveaux, CNN, Nashville Tennessee.

(END VIDEOTAPE)

WOODRUFF: Meantime, people in states like Iowa and Pennsylvania are getting to know George W. Bush and John Kerry very well. Both candidates are spending most of their time and money in these and other so-called battlegrounds. Our Dana Bash is with me now from the convention floor. She has more on the Bush campaign's election strategy.

And Dana, you're right in the middle of one of the battleground delegations, Pennsylvania.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: That's right, Judy. Pennsylvania is one of eight states the president is hitting on his way here to the convention. What he says and where he goes specifically in those states is all part of a carefully calculated strategy.

(BEGIN VIDEOTAPE)

BASH (voice-over): For all the rancor this election year, there is one thing the president and his opponent mostly agree on, a political map that looks like this, blue states almost certainly for Kerry, red for Bush, and some 17 states in play. After the Republican convention, the number is likely to shrink to about a dozen, where polls show the candidates virtually tied.

MATTHEW DOWD, BUSH CAMPAIGN SR. STRATEGIST: We're in a much better position than the Kerry folks.

BASH: Because of population shifts, the president's wins in 2000 now add up to 278 electoral votes -- 270 means victory.

DOWD: They have to chip away at us. We only have to add on.

BASH: That's goal number one. But defending his 2,000 base is hardly guaranteed. Take Ohio, a historically must-win for Republicans, but among the big industrial states devastated by job loss on the president's watch.

BUSH: I understand something about the job base in Ohio. I know people are nervous.

ROBERT DALLEK, PRESIDENTIAL HISTORIAN: The fact that there are these heavy deficits that are piling up, the fact that he is the first president since Herbert Hoover to suffer job contraction during his four years in office...

BASH: Goal two: deny Kerry's states he needs for victory. Case and point, Pennsylvania. Mr. Bush lost four years ago, but has been there 32 times since, more than any other state besides Texas.

BUSH: Because we acted, Pennsylvania has added more than 68,000 jobs over the past four months.

BASH: Rural America is another target, especially in states team Bush sees as trending Republican, like Wisconsin and Minnesota. BUSH: We stand for a culture of life in which every person matters.

STUART ROTHENBERG, ROTHENBERG POLITICAL REPORT: Part of the Bush scenario is to bring out a couple million more conservative voters who sat home in 2000.

BASH: Then there are the national issues, Iraq and terrorism. The president defends the war in Iraq at virtually every stop, trying to keep it from being a liability by linking it to his defining day.

BUSH: Do I trust a mad man and forget the lessons of September the 11th, or take action necessary to defend America? Given that choice, I will defend our country every time.

BASH: With that "talk from the gut" style and portrayal of Kerry as indecisive, Bush aides hope to convince those few undecideds it's better to stay the course than take a risk on his challenger. The convention offers an unrivalled stage, one Republicans say Mr. Bush must use to influence a major danger sign for an incumbent, doubts about the country's direction.

BILL MCINTURFF, GOP POLLSTER: We're not at a great point. But there's been enough volatility and enough shift that I'm still hopeful and optimistic that we can improve those numbers between now and the election.

(END VIDEOTAPE)

BASH: And that's one of the main goals in giving Arnold Schwarzenegger a primetime speaking slot tonight. They are hoping that because they think he has the ultimate American dream story, he can begin to make people feel better about the country's direction and ultimately the president's leadership -- Judy.

WOODRUFF: All right. Dana Bash from the colorful convention floor. Dana, thank you.

And as Dana said, Arnold Schwarzenegger does take the stage tonight, representing a wing of the GOP sorely in need of a standard- bearer, you might say. Our Bill Schneider takes a look at whether Schwarzenegger's views represent the future or the past.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): Is there such a thing as a Schwarzenegger Republican? The California governor seems like one of a kind. Does "The Terminator" have a political philosophy?

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I have always said that I'm fiscally conservative. I'm very conservative. When it comes to issues like social issues, I'm moderate.

SCHNEIDER: Moderate? Moderate Republicans have come to look like a movement with a promising past. This week, a group of former Republican governors, senators and public officials took out a newspaper ad calling on the GOP to, as they put it, come back to the mainstream. They called for "a speedy return to the pragmatic, problem-solving mainstream." Almost all the signers were first elected in the 1970s and '80s. A promising past.

If there's a future for moderate Republicanism, Schwarzenegger is it. He prides himself in being a pragmatic problem solver.

SCHWARZENEGGER: The people have sent me to Sacramento to create action and to solve the problems.

SCHNEIDER: He's doing it, reform of the state's workers compensation system, voter approval of debt reduction bonds. Schwarzenegger is thriving politically. Sixty-five percent job approval in California, majority support from Democrats.

Could anyone else but Schwarzenegger pull it off? A Schwarzenegger advisor says his success is inseparable from his persona, a tough guy, a political outsider.

SEAN WALSH, SCHWARZENEGGER CONSULTANT: People will pay at fund- raisers just to go and have their kids shake Arnold Schwarzenegger's hands. So he's a huge money draw, regardless of whether you believe in his ideological or philosophical perspective.

SCHNEIDER: Schwarzenegger's appeal is more him than his philosophy. But in American politics, it takes a personality to sell a philosophy. That was true of Franklin D. Roosevelt. It was true of Ronald Reagan. And it may be true of Schwarzenegger.

WALSH: Right now he really is the man to be with if you're a conservative Republican or a moderate Republican. And, again, the California Republicans have figured that out, and the national Republicans are figuring that out as well.

(END VIDEOTAPE)

SCHNEIDER: The market for Schwarzenegger's philosophy would be a lot bigger if Bush loses. Then Republicans would be forced to examine what went wrong. And many would conclude, maybe, just maybe, the party went too far to the right.

WOODRUFF: But if Bush wins, it will be a different story.

SCHNEIDER: A very different story.

(LAUGHTER)

WOODRUFF: OK. Bill Schneider, thank you very much. Looking at "The Terminator."

Well, four years after its polling problems -- it through the presidential election into disarray -- Florida is keeping its fingers crossed this time around. Today is Primary Day, a tune-up before November. The key battle is over who will replace retiring Democratic senator Bob Graham. CNN's John Zarrella is keeping an eye on things at a polling place in north Miami.

(BEGIN VIDEOTAPE)

JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): Mel Martinez, in his bid to win the Republican nomination for the open U.S. Senate seat in Florida, has relied heavily on his ties with President Bush.

BUSH: The American dream is alive and well, and Mel Martinez represents it all.

ZARRELLA: This "ride the president's coattail strategy" by the former Bush administration housing secretary appeared to be working.

MEL MARTINEZ (R), FLORIDA SENATE CANDIDATE: I'm going to go earn this nomination. And I intend to do that. And then I proudly will stand by his side and campaign for his reelection and for my election to the Senate.

ZARRELLA: A "St. Petersburg Times-Miami Herald" poll this past weekend showed Martinez gaining on former U.S. representative, Bill McCollum. The two top candidates were searingly by just two points.

But Monday, "The Times" rescinded its endorsement of Martinez. "The Times" editorial said in part that Martinez "took his campaign into the gutter with hateful and dishonest attacks on his strongest opponent."

One ad said in part that McCollum sponsored a bill granting homosexuals special rights. In fact, it was a hate crimes bill that had support from both sides.

The Democrats have thrown some mud, too, but none stuck to frontrunner Betty Castor. That same "Times-Herald" poll showed Castor, a former university president and former state education commissioner, with a huge lead over U.S. Representative Peter Deutsch. But, despite high-profile candidates, the Senate race on both sides has, for the most part, flown below the radar.

JIM KANE, THE FLORIDA VOTER: People who are -- who have made up their mind are so polarized about which candidate they want for president of the United States, they're blinded to every other campaign that is going on in the state right now.

ZARRELLA: A lack of enthusiasm that translates to low voter turnout may not provide a true test for electronic voting machines. Critics maintain the systems can fail and there's no way to produce a paper trail if an election requires a recount.

SETH KAPLAN, MIAMI-DADE COUNTY ELECTIONS DEPT.: We wouldn't try to run an election with a system that we didn't think could conduct an election with a certain degree of integrity. I mean, that's the bottom line.

ZARRELLA: Following the 2000 presidential fiasco, touch screen machines replaced paper in the state's most populous counties. A true test of their reliability may not come until November, when turnout is high and the stakes even higher.

(END VIDEOTAPE)

ZARRELLA: And we're still keeping our fingers crossed here. Today, so far, nothing to report as far as any kind of glitches with the electronic voting machines, a couple of very minor snafus with openings of precincts.

Overall, hard to say how the turnout is in some places, like in Orange County, in Orlando, high turnout reported. In Broward County, to our north, low turnout. And here in north Miami, in Miami-Dade County, the turnout is pretty sparse, too, although, Judy, this is the middle of the afternoon and, of course, it's miserably hot here.

And over on the west coast of Florida, where Hurricane Charley ravaged that area, a lot of people had to double up and go to other precincts. In Arcadia, they're voting under a tent today.

So it's going to be interesting to see, overall, how turnout is here in the primary. But it doesn't appear as if there are going to be any really huge numbers in order to test that electronic voting equipment the way it needs to be tested before November -- Judy.

WOODRUFF: John Zarrella, a lot of pressure on Florida to get it right. John, thank you very much.

Well, there's been a political shocker in the state of Virginia. Republican Congressman Ed Schrock has dropped his bid for a third term amid allegations that he called a gay sex phone line.

Schrock, who is married, is one of the most conservative members of the House, and he is a leading supporter of a constitutional ban on same-sex marriage. His decision leaves Republicans scrambling to find a replacement candidate before Friday's deadline.

Well, there are only two months and two days left until the election. In a minute, Senator George Allen of Virginia joins me to look ahead to the rest of the campaign, as well as a look at Republican efforts to keep control of the U.S. Senate.

We'll also ask a panel of journalists to look back and grade last night's convention speakers.

Later, what grades would Republican delegates give New York City? We'll sample some of the reaction to the Big Apple.

(COMMERCIAL BREAK)

WOODRUFF: Here at the sky box here at Madison Square Garden, Karl Rove, who was President Bush's senior political adviser, being interviewed right this minute by our senior White House correspondent, John King. That interview is being taped. We're going to bring you a big chunk of it at 4:00 Eastern. So you'll want to stay tuned for that, Karl Rove talking to John King.

Well, meantime, as Republicans hold their national convention, the party is also working hard to pick up its slim hold on the U.S. Senate. With me now, Senator George Allen of Virginia. He's the chairman of the national Republican Senatorial Committee.

Senator Allen, great to see you. Thank you very much.

Before we talk about the Senate, let's talk about this convention. There is a group of mainstream Republicans who yesterday had a meeting. And one of them, Congressman Mike Castle of Delaware, said the big tent of his party has turned into what he said is a pop tent. In other words, he said there's just not enough -- moderates aren't welcomed in this party anymore.

What do you say to that?

SEN. GEORGE ALLEN (R), VIRGINIA: Oh, I don't know why former governor and Congressman Castle would say something like that, because, in fact, it is. Look at our speakers last night.

Rudy Giuliani is clearly a moderate Republican. He's obviously loved a great deal from his leadership after 9/11 here in New York City. John McCain, heck, there's hardly anybody who is more of a maverick than John McCain. Governor Schwarzenegger is a pragmatic -- I was following that -- pragmatic, but I'd say moderate, certainly, on social issues.

WOODRUFF: They're the speakers, but you've got a party platform that is very strongly conservative on the issues of abortion, gay marriage, any number of issues that the moderates in the party say make them feel left out.

ALLEN: Well, that's the majority of the way -- that's the majority of the Republican Party. It is a common sense conservative party. There are moderates, and we are all free to exercise our own views.

And we're not to be a bunch of pack mules and everyone have to hear (ph) if it's contrary to their philosophy and their conscience. But it is a document. I don't know how many pages long it is this year. But it reflects a majority view. But it doesn't mean that those who do not agree with every iota of it are to be run out.

We certainly are a party that trusts free people and free enterprise. Want to have a strong national defense, reduce taxes on families and small businesses. And I think it's one that reflects the views of, actually, the majority of the people in this country.

WOODRUFF: Senator Allen, last night, Rudy Giuliani ridiculed John Kerry, in essence, for changing positions on issues. But yesterday and today, President Bush made two completely -- gave two completely different statements when the question was, "Can the United States win the war on terror?"

Yesterday, saying no. Today, saying yes. Isn't every politician capable of changing his mind or changing his description of his views on things? ALLEN: Well, of course. As you learn, you also may change with more evidence. But the reality is, I don't think there is any question that President George W. Bush intends to win this war on terrorism. He's taking it to -- on offense against the terrorists, whether in Afghanistan, whether they're those who harbor them in Iraq or anywhere else. And I don't know what inpresident said yesterday, but it certainly would be contrary to all of his actions.

You get Senator Kerry, though, who did support this floor, at least the resolution, and then voted against funding it. But then even on the funding issue -- and we all know the story. He said, oh, gosh, I voted for it before I voted against it. On issue after issue, John Kerry is trying to hide his record as an elitist liberal Massachusetts Democrat.

WOODRUFF: Very quick last question on the Senate.

ALLEN: Yes?

WOODRUFF: You're predicting 54 seats for the Republicans?

ALLEN: Well, I put $100 bet on it. So that's pretty -- I think we have a great opportunity. We have great candidates.

WOODRUFF: Three-seat pickup?

ALLEN: Yes, three-seat pickup because we have some great candidates in great states. And I see them really doing well in the South. John Thune is ahead 50-48 against Tom Daschle in the Senate.

WOODRUFF: In South Dakota.

ALLEN: Yes.

WOODRUFF: All right. Well, we want to look at that race, as well.

ALLEN: It will be a great one.

WOODRUFF: Senator Allen, we're going to be talking to you in the two months to come before this election about the Senate campaign and more. Thank you very much for stopping by. We appreciate it.

ALLEN: My pleasure, Judy.

WOODRUFF: Good to see you.

Well, last night's session of this convention didn't quite get an "A" for keeping to the time schedule. But how did the speechmakers themselves do? A panel of journalist is going to be handing out some grades when INSIDE POLITICS continues right here in Madison Square Garden.

(COMMERCIAL BREAK)

WOODRUFF: The Republicans here in New York, of course, focused on this year's election. But after hearing those speeches last night, it's hard not to think a little bit about 2008.

Joining me now, three journalists who have been giving this some thought. Jonah Goldberg, who is the online editor for "The National Review." Liz Marlantes is with the "Christian Science Monitor." And Peter Beinart, editor of "The New Republic."

Peter, I'm going to start with you, since you're the closest. How would you grade these speeches last night, and what they do they say about '08?

PETER BEINART, EDITOR, "THE NEW REPUBLIC": I would give Giuliani a C. Giuliani, although he's the mayor who dealt with September 11, has no experience in foreign policy. And it showed. It was long on 9/11 and very short on a specific agenda for how you would fight the war on terrorism.

McCain, by contrast, gave a very compelling, I thought, defense of the war in Iraq. Much more substantive. I give him a B.

WOODRUFF: Liz?

LIZ MARLANTES, "CHRISTIAN SCIENCE MONITOR": I would say I give them both an A-. In part, because I think the two speeches, even though they were separate speeches, I think they were really designed to work together in many ways, although McCain was talking about Iraq and Giuliani was talking about 9/11.

They were both really making the same point, which is that you want a leader who is going to go after the threat early, who's going to nip it in the bud and not hesitate or waffle, which is what they say Kerry would do. And so I actually think the two speeches actually really functioned almost as one speech.

It also had the impact, I think, of further sort of wrapping Iraq into the larger war on terror, which is what the Bush administration is trying to do. So politically, I think they were -- they were very effective, and particularly back to back the way they were delivered.

WOODRUFF: And so, Jonah, are you going to go higher than an A- for both of them?

JONAH GOLDBERG, EDITOR, "THE NATIONAL REVIEW" (UNINTELLIGIBLE), but I think A- for both probably works, maybe B+ for McCain. I didn't think he was quite as strong in supporting Bush as I think some of the Republicans would have liked. But I still think he did a great job, and I thought it was a pretty strong speech overall.

Giuliani I thought was great. I don't know what Peter's talking about. I mean, I think...

BEINART: You never do.

GOLDBERG: I think Giuliani did a -- did a great job. He wasn't -- it wasn't soaring rhetoric, but it was direct communication and a personal style. I think a lot of people felt he was talking straight to them. It showed a really wide range of abilities. I thought he did very, very well.

WOODRUFF: Did these speeches last night literally translate into support in '08, Peter, do you think?

BEINART: Not literally, but they do set the tone. And I think what's interesting is both of these guys are trying to do the same thing, and actually the same thing Arnold Schwarzenegger tried to do, to be tough without being harsh.

That is the trick, to show you have strength in the war on terrorism, but you are not so judgmental and moralistic that you turn off swing voters. They were both trying to hit that same pitch, I think.

WOODRUFF: What about '08?

MARLANTES: Yes, I think they're positioning themselves absolutely -- well, less so necessarily about McCain. I'm less convinced that McCain is going to run. But Giuliani, definitely, I think is positioning himself. And it was -- it was a hawkish speech. I mean, in many ways, it was a red meat speech.

WOODRUFF: And Jonah, for conservatives in this audience, I mean, Rudy Giuliani has hardly been their favorite, you know, when they think about running -- somebody they would vote for, for president.

GOLDBERG: Yes. I'd hate to be the skeptic. I don't think there is too much 2008 that can be drawn out of all this.

You know, they want to boost their profile in the party, they want to boost their profile should Bush win, all those sorts of things. But come 2008, I think the deck is going to be very, very different. Giuliani is not going to capture a huge swath of the base of his party.

WOODRUFF: Last question, cut right to the core. Is -- can the Republicans get away with putting these moderate speakers up there and saying, hey, we're really more moderate than what a lot of people say we are?

BEINART: They can do it because the war on terrorism has to some degree overshadowed the culture war. You'll notice McCain and Giuliani spoke exclusively about foreign policy. And on the war on terrorism, all Republicans agree. And that's how they overcome the divisive cultural issues that have hurt them in the past.

WOODRUFF: Liz?

MARLANTES: I totally agree with that. I think in some ways we're almost seeing a potential shift in the definition of what's moderate. I mean, if you're defining moderate by someone's position on abortion, OK, Giuliani is from the moderate to liberal wing of his party.

But if it's in terms of where you stand on the war on terror or Iraq or those issues, like I said, I thought Giuliani's speech was very hawkish. It was extremely strong and strident on those. And so, in that sense, it might change the very definition of how we define moderate.

WOODRUFF: Quick last word.

GOLDBERG: This is a constant question that happens every time at a Republican convention. Yes, you have a lot of moderates up there, but that's because they're also very popular politicians. I think they're going to get away with it because no one who listened to those speeches last night thought that these guys were trying to sell a bill of goods.

It sounded like they were doing a lot of straight talk, as McCain likes to call it. I think it worked pretty well.

WOODRUFF: Jonah Goldberg, Liz Marlantes, Peter Beinart, great to see all three of you. We'll see you in a couple days right here at this convention.

MARLANTES: Thank you.

WOODRUFF: Thanks very much.

GOLDBERG: Thanks.

BEINART: Thanks.

WOODRUFF: All right. Well, we're going to hear from President Bush's most respected, some say most feared political adviser in just a few minutes.

Also coming up on our expanded edition of INSIDE POLITICS, what is behind any possible changes at the Kerry campaign?

And later, a visit with one of the state delegations here at Madison Square Garden.

This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: He's the mastermind behind the George W. Bush political machine. This hour, a rare one-on-one interview with Karl Rove.

Smooth sailing for the Kerry campaign? Maybe not. Are some Democrats calling for a campaign shakeup?

(END VIDEOTAPE)

ANNOUNCER: Now, live from the Republican National Convention in New York, JUDY WOODRUFF'S INSIDE POLITICS.

WOODRUFF: Welcome back to Madison Square Garden and this special convention edition of INSIDE POLITICS. The second night of the Republicans' big event gets under way just three hours from now. The theme tonight, compassion. The top speakers, California Governor Arnold Schwarzenegger and first lady Laura Bush.

In just a moment, we're going to be hearing from someone who has been throughout George W. Bush's political career, his senior political adviser, Karl Rover. He rarely gives interviews. He has spoken just moments ago in an interview with our own senior White House correspondent, John King. We're going to have that in just a few moments.

But before we turn to that, we want to turn to the story coming out of the Kerry campaign today, and that is speculation that a major shake-up of some sort may be in the works in the campaign.

The campaign itself knocking it down, but having said that, we're hearing, CNN is hearing from a number of Democrats that there are individuals in the party urging John Kerry to make changes.

We want to get the very latest, though, from our own editorial, political editor. His name is John Mercurio. Familiar face on INSIDE POLITICS.

John, what are you hearing from inside the Kerry camp?

JOHN MERCURIO, CNN POLITICAL EDITOR: We're hear -- No one is giving us any sort of indication that anyone at this point is going to lose their job specifically. Not Mary Beth Cahill, the campaign manager, not Stephanie Cutter, the communications director.

Marla Romash, one person -- Marla Romash is leaving the campaign. But absolutely, the campaign...

WOODRUFF: What has her title been?

MERCURIO: She's been an adviser to Teresa -- Teresa Heinz Kerry. From what we're hearing, it has nothing to do with any sort of shake- up or not shake-up.

Now, the talk, though, is that there are two people already with the campaign whose roles may be expanded. Those people are Joe Lockhart, recently hired as a senior communications adviser, and John Staso, who's currently the campaign's liaison to the DNC.

Now, Lockhart, everybody of course, knows him as the press secretary in the White House during Bill Clinton's second term. He has -- came onto the campaign just a couple of weeks ago and still working out his exact role.

But from what we're hearing, one of the ideas is that he would sort of take over the D.C. operation, the D.C. media, communications, press operations, Stephanie Cutter taking over sort of a traveling -- traveling role for the campaign.

Lockhart was traveling today himself with John Kerry. I flew up to Nantucket to meet with him, and the I was going to fly with him down to Nashville for the -- for the senator's speech tomorrow to the American Legion.

WOODRUFF: John, the source, apparently, of all this or the instigation is unhappiness over what's been happening in the campaign in the last few weeks.

Polls indicating that when you ask people about what personal qualities they want in a candidate, John Kerry is not doing very well.

MERCURIO: Exactly.

WOODRUFF: George Bush is doing better. And we've been hearing grousing for some time about strategy in the campaign.

MERCURIO: Sure.

WOODRUFF: What do you hear from Democrats outside the Kerry camp?

MERCURIO: That this has been a horrible month, that August was just a terrible month, that ever since the Democratic convention in Boston last month the Bush campaign has dominated the agenda. That the Kerry campaign has been on the defensive and he's, you know, responding to these ads from the Swift Boat Veterans for Truth.

I mean, a lot of the ads, a lot of the claims in the ads have been deemed inaccurate, but the Kerry campaign is still forced to spend a lot of money in the month of August that they didn't intend to spend until September.

And as you mentioned, these polls, a lot of new polls out that show that Bush is gaining ground not just nationally, but in Democratic battleground states, states that Gore won in 2000 that Kerry really needs.

And you showed a clip at the beginning of Kerry wind sailing, wind surfing. I was talking to one Democrat last night who said, "Why couldn't he have been playing basketball or throwing a football? Why did he have to be wind surfing? What does that get him?"

WOODRUFF: But of course, you have people like the national chairwoman of the party, Jeanne Shaheen, who said to me, "Well, there's always going to be complaining about how a campaign is going when there's a little bit of a downturn in the polls."

What makes this situation any different from any down bump in a campaign?

MERCURIO: The fact that it's taking place right before Labor Day. I mean, really, the thing that a lot of Democrats are telling us outside the campaign is that if Kerry -- Kerry is going to do this, he needs to do it before Labor Day, because once you hit Labor Day the campaign has to be, in some sense, on autopilot. You really need to have your staff in shape.

I mean, in the short term the talk about disarray, the talk about the distraction could prove detrimental, but in the long term -- you remember what he did during the primary in firing Jim Jordan, his campaign manager.

Turned out to be one of the best decisions, no offense to Jim, but one of the best decisions on the primary. From then on, he sailed through New Hampshire and Iowa.

WOODRUFF: So there's reason to believe that he might be willing to make some changes again, but to be determined. We'll see.

MERCURIO: We'll see. We'll see.

WOODRUFF: All right. John Mercurio, our political editor. Thanks very much.

MERCURIO: Thank you.

WOODRUFF: Well, while we're talking about the Kerry campaign, we want to get back to the Republican Party and the president's chief political strategist, Karl Rove, a man who often, in fact, always stays behind the scenes. Up next, Karl Rove speaks out in a rare interview with our John King.

Also ahead, what are convention delegates thinking? I want to head down to the floor to find out.

Plus, delegates venture outside this arena and they rate the New York City experience.

(COMMERCIAL BREAK)

WOODRUFF: In many aspects of this convention you can see the hand of the president's chief political strategist, Karl Rove. Our senior White House correspondent, John King just, had a rare interview with Karl Rove -- Rove a short while ago.

In fact we showed you up there in the booth while you were talking to him. Tell us...

JOHN KING, CNN CORRESPONDENT: You gave them a sneak peek up there?

WOODRUFF: No sound.

KING: We addressed quite a bit of subjects, and we'll play a portion of it in just a second.

Karl Rove, for one, called -- said the Democrats call him Dr. Evil, and he refuted the suggest that he has some nefarious role in dirty tricks, including those Purple Heart Band-aids down on the floor last night.

He said the president has an unprecedented grassroots organization. They think that will be the key.

He wouldn't tell us any of the new policy initiatives in the speech Thursday night, but he did discuss, among other topics, the president's emphatic statement today that we will win the war on terrorism. The president, of course, trying to clean up something he had said the other day that the White House insists was misinterpreted.

Let's listen to a portion of this interview with Karl Rove.

(BEGIN VIDEOTAPE)

KING: Answer the Democrats who called this the masquerade ball. They say Rudy Giuliani, Arnold Schwarzenegger, John McCain on some issues not leaders in sync with a party platform that they say is anti-abortion, anti-gay rights, hard right conservative.

KARL ROVE, BUSH'S CHIEF POLITICAL ADVISOR: I -- you know what? I don't think every Democrat agrees with John Kerry when tried to slash the intelligence budget in the aftermath of the first attack on the World Trade Center by $7.5 million dollars.

I don't think every Democrat agrees with his series of votes over 20 years in the United States Senate to end, cancel or gut the weapons programs that are absolutely vital to winning the war on terror.

I don't think most Democrats agree with him when he voted against the Defense of Marriage act. Even Bill Clinton signed that bill.

I don't think most Democrats agreed with his support for partial birth abortions. He voted against the ban on partial birth, late term abortions.

So before they start talking about our party, I think they ought to go clean up their party, where their candidate is on the far left of the party and out of the mainstream of both American politics and, I think even for a lot of Democrats if they looked at that time closely, out of the mainstream of their party.

KING: Let's talk a little bit about another speaker tonight, the first lady of the United States. She is more involved, especially on a solo basis, in this campaign than the last campaign. Very high approval ratings with the American people and not afraid to mix it up. She's been involved in this debate over the swift boat ads. She has been helping defend attacks from Ron Reagan, Jr. and others about the president's limits on embryonic stem-cell research.

How does she factor into your strategy, and where do you think she helps most?

ROVE: Well, she helps enormously everywhere, because she -- as you say, she's enormously popular and speaks with great credibility.

And she's drawn into politics reluctantly. I mean, the things that you talk about, the issues that she's commented on have been as a result of being pestered by people like you about them, so -- but, look, she's an enormously comforting.

I mean, Americans got to know her in the aftermath of 9/11 as a very reassuring and comforting figure with a lot of integrity. And they have confidence in her. And it's really remarkable, though, when you think about it in a way, because 10 years ago President Bush was running for governor of Texas. And she never made one political speech, because she was -- you know, she was an elementary school librarian and a mom and was uncomfortable with that public a role and yet blossomed into it as first lady of Texas.

And then Americans have come to really appreciate her and love her as first lady.

KING: When the conventions pass the next phase of the campaign, the next defining moment of the campaign likely to be the debates. The presidential commission says let's have three presidential and one vice presidential. The Kerry campaign says fine by us. The Bush campaign has said we'll talk about this after the convention.

ROVE: Right.

KING: Will we have three and one?

ROVE: Well, after the convention we'll -- we'll have a debate with the negotiating team. And we'll launch out there and that's the time for it to take place.

I know you want everything to happen on a sped up timetable, but we'll do that after the convention.

KING: Is there any reason not to have three presidential debates? Do you think that's too many, too few?

ROVE: Let's wait until the debate negotiating team gives their advice to the president.

KING: Let's talk about you a bit. Many Democrats essentially call you the boogieman or this wizard, somehow pulling strings behind...

ROVE: Dr. Evil.

KING: Dr. Evil? OK.

ROVE: Or Mini Me, I don't know. Which one is it?

KING: Last night on the floor we had an episode where some delegates were wearing these Band-aids with Purple Hearts on them, and they were mocking the medals given to Senator Kerry. I don't think there's any other way to say it.

And they were distributed by a conservative you know well, Morton Blackwell of Virginia. And many say well, he was one of your mentors, and this is proof that, you know, the campaign and the White House say we have nothing do with this and Karl Rove's friends and minions are out doing the dirty work.

ROVE: Well, I know Mort and he is a friend. Ancient history, but when I ran for national college chairman, Morton was one of my ardent opponents.

So look, it was inappropriate. We honor Senator Kerry's -- Senator Kerry's service, and I think it was inappropriate, and I hope -- most delegates obviously weren't wearing them, and I think most delegates would agree with me on it.

I do think though -- I understand why a few -- why some -- I had an uncle who was in Vietnam, several tours of duty. And I understand why, while we can all agree that Senator Kerry served in Vietnam with distinction and honor that, he asked -- he said he was proud of both his service in Vietnam and what he did afterwards.

And I understand why a lot of people take offense with what he did afterwards. I don't think my uncle, Colonel Verhai (ph), as having been raping and pillaging and acting like Genghis Kahn. I don't think he and the men under his command would have -- should be so quickly tarnished as being war criminals, as Senator Kerry did in his testimony in 1971.

KING: And so then in your view the swift boat ads are fine, that if men who served want to make that case.

ROVE: Look, I'm against all the 527 ads and activities. I don't think they're fair. I don't think it's appropriate. They're misusing the law. They all ought to stop.

But I understand why some people who were in Vietnam feel strongly about what Senator Kerry did and said when he came back. I mean, it's -- it is, frankly, an insult to them to suggest that they were routinely war criminals, which is what he called them.

And I've seen the e-mail traffic, and I've seen vets out there. I was at the VFW in Cincinnati a couple of weeks ago. And even people who are quick to disassociate themselves with the claims that he somehow didn't deserve the medals or didn't serve with valor are -- people who defend him on those issues feel very strongly about what he did when he came back to tarnish their good service, as well.

KING: We haven't heard that from the president. He said only good things about Senator Kerry's service in public. Does he share that view, that it is an insult?

ROVE: I'm speaking as the -- as the nephew of a decorated Vietnam veteran, and I'll leave it up to the president to say what he wants to say.

KING: I want to show you a picture in the newspaper today to ask you about something else the Democrats say. Excuse me for playing with a prop.

But this is the podium. And you see Mayor Bloomberg at the podium. Some Democrats are saying that that looks to them like a cross.

And I'll try show it. Maybe we can get the camera to pick this one up. That that looks like a cross and that this looks like a pulpit, and this is Karl Rove orchestrating some subliminal message to Christian conservatives.

ROVE: My God, where do they come up with this stuff?

Does it look to you like it's a cross? I don't -- I don't think so. Do you see it? It's right there. Go take a look.

Subliminal.

KING: Let me ask you about something else, as we turned around. On the wall here tonight, people with compassion. The president was elected on a platform of compassionate conservative.

ROVE: Right.

KING: And obviously, he did not choose September 11, and it changed the whole presidency. But some Republicans do worry that he's so defined by war now that that's been lost a little bit. And that that is, you know, his ticket, to reach out to people in the middle.

Do you worry about that?

ROVE: Well, I think -- I think you're right that the war just obscures a lot of things like education reform. We passed an incredibly powerful piece of reform legislation that that is really -- it's making a remarkable difference in people's lives.

(END VIDEOTAPE)

WOODRUFF: Fascinating. We don't get to hear from him very often.

KING: No, we don't.

WOODRUFF: You said at the beginning, you also talked to him about the president saying one thing and then another thing on the war on terror. Tell us about that.

KING: Well, the president said in his NBC interview that "I don't think we can win it," and the Democrats immediately seized on that, that the president was admitting failure in the war on terrorism, saying John Kerry and John Edwards will win it.

So the president twice or three times in his speech to the American Legion today said, "We will win. We are winning and we will win. Make no mistake, we will win."

Now the White House says the president was taken out of context. When he said I don't think we can win it, he means there will be no peace treaty with al Qaeda. There will be no formal surrender ceremony.

But it was clear that the Democrats had something to seize on. This is a very scripted convention. The first one to go off the script was the president of the United States, the candidate himself.

They knew they needed to clean up a little bit of a mess. That was the president's goal today. Karl Rove says, "Well, he was taken out of context," but he also conceded it is critical that the president make the point that he can win and is winning the war on terrorism, because leadership is the defining issue, what they are trying to make at this convention, the defining issue of the campaign.

WOODRUFF: So they've straightened that one out.

KING: They've straightened that one out. One other quick thing, Judy, Karl Rove, I asked him because he's one of the ones interviewed in the CIA leak investigation.

WOODRUFF: Did he leak the name of the CIA operative? And he emphatically said he did not.

WOODRUFF: All right. We're looking forward to seeing the whole interview, which is going to run -- the rest of it, I should say.

KING: We'll run pieces of it throughout the day.

WOODRUFF: OK. John King, thanks very much. We appreciate it.

Now we know a number of the states represented here in Madison Square Garden are firmly in the George Bush column, but then what's it like to be a Republican from one of the so-called blue states? In a minute, I'll ask a Massachusetts alternate delegate about life in John Kerry's home state.

(COMMERCIAL BREAK)

WOODRUFF: We've heard a lot about the swing states. We've heard a lot about the red states, the states that George Bush is supposed to win, likely to win in November. But what about the states that John Kerry is supposed to win?

I'm here in the Massachusetts delegation with an alternate delegate from Massachusetts. Your name is Jeanne Kangas. Any chance -- First of all, thank you for talking with me. Any chance...

JEAN KANGAS, MASSACHUSETTS DELEGATE: Glad to do it.

WOODRUFF: ... that President Bush is going to win the state of Massachusetts in November?

KANGAS: Where there's life there's hope. There's always a chance, but frankly, we are John Kerry's home state. Voters tend to vote for people when they don't know a heck of a lot about them who live geographically closest to them.

John Kerry is probably going to carry Massachusetts, but that does not stop us from trying. And, quite frankly, we are perfectly willing in Massachusetts to settle for him as our senator for the next four years.

WOODRUFF: But not as president. What is the argument you make, Jean Kangas, when you're trying to persuade people who are not decided how to vote? KANGAS: Well, we start by asking those who know the Democrat leadership of Massachusetts to find 10 leaders who really...

WOODRUFF: Put the mic closer.

KANGAS: ... who truly like John Kerry, who consider themselves to be friends of John Kerry. He really has few friends in Massachusetts. And as a senator, our senator for 25 years he clearly has stood in the shadow of Ted Kennedy. What has he done for us? Not a heck of a lot.

WOODRUFF: Are you comfortable with the platform at this convention, the platform of your party? The statement of principles? It's been commented on that it's been very conservative.

KANGAS: The platforms are sort of like, to paraphrase the name, pie crusts made to be broken. Nobody really pays a heck of a lot of attention to them.

But to answer your question directly, I disagree with some of it. I disagree with the stand on women's issues. I disagree with the capital punishment provision. I disagree with the marriage amendment.

WOODRUFF: Gay marriage?

KANGAS: I support gay marriage.

WOODRUFF: Ban on gay marriage?

KANGAS: I support gay marriage. I didn't come up with it. I didn't dream it up or think it up, but I've read both the decisions, the dissenting decision, as well as the majority support the decision.

WOODRUFF: What about pro-choice, abortion? Are you pro-life?

KANGAS: I'm pro-choice. I'm pro-choice; I always have been.

WOODRUFF: All right, Jean Kangas speaking out, a member of the Massachusetts delegation. We thank you very much for talking with us.

KANGAS: My pleasure.

WOODRUFF: We'll see you throughout this week.

KANGAS: My pleasure.

WOODRUFF: All right. INSIDE POLITICS will be back to wrap it up in just a minute.

(COMMERCIAL BREAK)

(STOCK REPORT)

(COMMERCIAL BREAK)

WOODRUFF: The incomparable Harlem Boys Choir, rehearsing here on the floor of the Republican National Convention at Madison Square Garden, one of the entertainment -- many entertainment that we're going to hear tonight. And also one of the reasons you've heard that slogan "I love New York." We've all heard it.

The question is are the delegates who have come from all over the country, how are they feeling about New York? Our own Bruce Morton went out and talked to some delegates about what they're finding.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): Delegates are here to renominate their president, of course, but they do other things, too.

We joined a group bound for Ellis Island, where millions of our grandparents first entered the United States. It's a bright, cheerful place and full of ghosts. The delegates found some.

MARY ANN BROOKE, ALASKA DELEGATE: This is fine for us, too, because this is our time to get a -- an Ellis Island certificate of my grandfather's arrival.

TIM VAN DOHLEN, TEXAS DELEGATE: It's nice to know where our roots are. I just found out I had 19 Van Dohlens that came over to Ellis Island.

MORTON: They liked city, we learned; they're not running scared.

LEROY CARVER, GEORGIA DELEGATE: I'm not scared. I was a little hesitant to come up here. But it's just a wonderful place, and I'm proud of it.

KRISTI PASSARO, NORTH CAROLINA: We got here Sunday afternoon and I think I've seen one protester. We missed the Sunday demonstration. So we feel very safe here.

MORTON: We learned they like it here.

MARY HARLOW, CONVENTION GUEST: This is the most beautiful place I've ever been. I feel so safe here. I've been out, walked this entire city and have loved every minute of it.

CANDLER WILLIS, NORTH CAROLINA DELEGATE: Some may talk about the protesters. I've been thanking them for defining our position.

MORTON: We learned who doesn't like it here. That would be tourists from other countries like Britain.

HARSHUTA RUPARELLA, BRITISH TOURIST: We haven't seen New York, because all those blocked roads and, you know, except for the helicopter ride, it wouldn't show us what we want to see.

MORTON: Kim and Peter Dunn from Australia.

KIM DUNN, AUSTRALIAN TOURIST: We feel a little intimidated to be quite honest. We don't have the police presence like this in Australia.

PETER DUNN, AUSTRALIAN TOURIST: You never see police back in Sydney with a submachine gun across the front of his chest. Never saw that before.

MORTON: Neither, of course, have many New Yorkers. Foreign visitors just picked the wrong week.

Bruce Morton, CNN, New York.

(END VIDEOTAPE)

WOODRUFF: Not really the wrong week, just the week of the Republican National Convention.

That's it for this Tuesday's special edition of INSIDE POLITICS. I'll be back at 8 tonight with Wolf Blitzer for our special convention coverage, along with Jeff Greenfield.

"CROSSFIRE" comes up right now. We'll see you tonight and again tomorrow.

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 August 31, 2004 - 15:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
ANNOUNCER: The Republicans bring out the muscle and the Mrs., hoping their second convention night will be must-see TV.

Take two. The president tries to make up for a blooper about the war on terror.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We are winning and we will win.

ANNOUNCER: Karl Rove revealed. We'll have a rare interview with the president's often elusive political guru.

Democrats see purple and then see red after some Republicans mock John Kerry's war medal. Meantime, is the Kerry camp preparing to shake things up?

(END VIDEOTAPE)

ANNOUNCER: Now, live from the Republican National Convention in New York, JUDY WOODRUFF's INSIDE POLITICS.

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us for this special 90-minute edition of INSIDE POLITICS.

Well, while our focus is again right here on the Republican National Convention, CNN has learned about a possible shake-up in the making in the John Kerry campaign. Unhappiness with the way the race is going is behind it all. We're on that story. We'll have much more in just a moment.

For now, back here in New York City, you might say Governor Arnold Schwarzenegger and first lady Laura Bush don't seem to have all that much in common. But tonight's headliners both have appeal beyond the Republican faithful. They will use that appeal to try to bolster TV ratings for the second night of this convention and, of course, try to pump up the vote for President Bush.

Republicans appear now to be keeping the text of Arnold Schwarzenegger's convention speech under wraps. There's been no advance release yet of any of the highlights, but the California governor's mere presence on the stage may be as important as what he says tonight. (BEGIN VIDEOTAPE)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I am a salesman by nature.

WOODRUFF (voice-over): But so far, Arnold Schwarzenegger hasn't done a lot of pitching for the president. Tonight, that changes. Schwarzenegger joins John McCain and Rudy Giuliani to form the golden trio of this week's gathering at the Garden, but, in some ways, he's in a league of his own. For one, he's more famous, a bigger draw for the nonjunky audience.

Of the trio, he's also the only one to score prime-time network coverage, preparing to talk of opportunity, not terrorism and war.

SCHWARZENEGGER: OK, I changed my mind. I want to go back to acting.

(LAUGHTER)

WOODRUFF: Then, there's the question of his future. Unlike Giuliani and McCain, foreign-born Schwarzenegger can't run on a national ticket. And Senator Schwarzenegger just doesn't ring true, limitations to be sure. But coupled with his vast wealth, they also afford the governor a certain freedom.

SCHWARZENEGGER: It doesn't matter if they're to the left or to the right or to the center. I extend my hands to them.

WOODRUFF: And so he has, changing the partisan culture of Sacramento, reaching out to voters across the partisan spectrum. Has he mastered the system, while remaining the ultimate nonpolitician? Well, maybe.

SCHWARZENEGGER: It will be a whole new ball game, trust me.

WOODRUFF: Not always. Schwarzenegger swept into office vowing to take on the politicians he's denounced as slaves to special interests, but he has been raising money hand over fist. And big business picked up the $350,000 tab to bring him here to New York on his private jet. Will it dim his aura? Maybe he is the ultimate salesman after all.

(END VIDEOTAPE)

WOODRUFF: Arnold Schwarzenegger coming up tonight.

Laura Bush will be the final convention speaker tonight. It should be a crowning moment for a first lady who has been more active than ever in her husband's campaign.

Kelly Wallace is on the convention floor with more on Mrs. Bush and what she hopes to accomplish tonight.

Hi, Kelly. You're in the Wyoming delegation.

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: I am, sort of nearby or not too far away from Texas.

And, as you know, Judy, first lady Laura Bush was up on this stage just about 45 minutes ago, along with her daughters, Barbara and Jenna, getting comfortable with the podium, looking out at an audience soon to be filled to capacity here inside the Garden, looking at the teleprompter as well.

A senior Bush administration official is hailing this as an opportunity to give a perspective that no one else can about the president. After all, who knows the president better than Laura Bush? And Laura Bush is someone who has really in the past few months taken on a new role in this, her husband's final campaign.

(BEGIN VIDEOTAPE)

WALLACE (voice-over): A new Laura Bush? Well, lately, she's showing a new side, her partisan side.

BILL HEMMER, CNN ANCHOR: And I just want to try and clarify a little bit.

WALLACE: Asks by CNN's Bill Hemmer if she really thinks the anti-Kerry swift boat ads by political groups called 527s are fair, she says, absolutely, citing attack ads against her husband.

LAURA BUSH, FIRST LADY: In fact, my husband and John McCain have both filed suit with the FEC to ask the FEC to rule on getting rid of 527s. And I'm wondering if Senator Kerry will join them in that suit to make sure that 527s aren't there.

WALLACE: She has become one of her husband's strongest defenders on issues ranging from embryonic stem cell research to the state of the economy.

L. BUSH: The record is clear. The economy is strong and getting stronger.

WALLACE: In her speech tonight, she gets personal. According to advance excerpts, she will say: "I want to try and answer the question that I believe many people would ask me if we sat down for a cup of coffee or ran into each other at the store. You know him better than anyone. Why do you think we should reelect your husband as president?"

Laura Bush played a role in 2000, but now she's the first lady, often going solo, targeting women, with polls showing the president's support weaker among women than men.

L. BUSH: My husband believes that we should all have an equal opportunity to achieve our dreams. And he has three strong women at home who won't let him forget it.

WALLACE: In a new "Los Angeles Times" poll, when asked who better fits your idea of a first lady, Laura Bush leads Teresa Heinz Kerry by 30 points. So should she and Teresa Heinz Kerry be an issue in campaign '04? L. BUSH: No, I don't think so. I mean, our names aren't on the ballot. I don't think we should be an issue.

WALLACE: Her husband telling CNN's Larry King he disagrees.

G. BUSH: I think Laura ought to be an issue, because it shows what shows what good judgment I have.

(END VIDEO CLIP)

WALLACE: And, according to a senior administration official, it will be the president who will be introducing his wife via satellite. The president will be speaking from a softball game in Pennsylvania.

But before we hear from the president, we will hear from his daughters, the Bush twins, Barbara and Jenna, who will be making really their national debut on this political stage when they introduce their father tonight -- Judy.

WOODRUFF: Mrs. Bush turning into a real asset for the president.

Kelly, thank you very much.

Well, as for Mr. Bush, the White House now confirms that the president will visit with firefighters and supporters in Queens, New York, tomorrow night. That event is likely to conjure up images of Bush and firefighters shortly after 9/11, amid charges by some Democrats that the Republicans are politicizing the tragedy by repeatedly invoking it at their convention.

Well, now we turn to that drama we mentioned at the top of the show, possible drama, that is, unfolding within the Kerry campaign. Could a shake-up be in the works?

Let's quickly bring in senior political correspondent, Candy Crowley.

Candy, some of us at CNN have been talking to Democrats. I know you have been talking to them, a number of them. What are you hearing from those Democrats outside the campaign?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Outside the campaign, they're a little unnerved by the polls. The undertow, which really had been pulling with Kerry, now seems to be pulling with Bush. It's not so much the overall horse race numbers, but the internal showing that Senator Kerry has slipped in some areas and President Bush has gone up.

What this has done, they said, look, we need a new direction. They don't have a message every week. They were too slow to respond to the swift boat ads, any number of things. They feel that there has been no clear message out there and that while there's a great anti- Bush movement that they see, they believe swing voters don't want to vote for George Bush.

They say, look, John Kerry hasn't made the case that he's the viable alternative. And they're concerned. There's nine weeks to go. They think there is a very small window in which to change some things. And they think it has to start with a shake-up in the campaign. And the name you hear the most, as you know, Mary Beth Cahill.

WOODRUFF: So what is -- and she is the manager of the campaign. So what about inside the campaign? What are they doing? What are they saying?

CROWLEY: Huge, strong, pushback thing: No major shake up. This is not happening. Mary Beth Cahill is on Nantucket and that she is in charge of the campaign, that no one is getting moved over. There's no minor shake-up, no major shake-up, that this is the peanut gallery that has been sniping at them and that said in January they couldn't possibly win.

So they see this -- and you know this does happen in a campaign. When things begin to go bad, people from the outside -- and also inside and outside the campaign they make the point, who is it that you would have us bring in that isn't already in the campaign? Most of the rock stars in the Democratic Party are already in there.

On the other hand, I also know and have talked to people who do indeed say that Kerry said, why aren't we fighting back more? So there is concern within the campaign. But they say this idea of a major shake-up is nuts.

WOODRUFF: Concern coming from the candidate himself.

CROWLEY: Right.

WOODRUFF: Very quickly, Candy, he is making a big speech tomorrow in Nashville, the American Legion, where the president is speaking today. Is any of this going to come up tomorrow or what is he going to talk about?

CROWLEY: I am told that he will spend some time about miscalculations in the post-Iraq war of this administration.

I am told that he will also take on the Swift Boat For Truth folks and say, look, you know, these people show up every 33 years and they attack me and my record. Where were they on the POW issue while I was fighting for it in the Senate? Where were they on Agent Orange while I was fighting for it? And they'll talk about this what they call going from mission accomplished to mission impossible, which was yesterday the president saying, well, I don't know if we can actually win the war.

So it's going to be partly hard on Bush and an assault on his Iraq record, but also beginning to take this on personally, as he has before, but say, well, where were these guys when I was standing up for vets?

WOODRUFF: Particularly tricky audience for him, the American Legion, a lot of veterans, of course.

CROWLEY: Right.

WOODRUFF: OK, Candy, thank you very much. We'll be seeing a lot of you tonight. We appreciate it.

And we're going to try to find out more about any possible upheaval in the Kerry camp when I talk to the campaign chairwoman, Jeanne Shaheen, next.

Plus, an angry response to anti-Kerry props that turned up on the Republican Convention floor.

And President Bush tweaks his line about whether the United States can win the war on terror.

With 63 days until the election, this is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

WOODRUFF: President Bush still working his way here to New York. His road trip to the convention took him today to Nashville, Tennessee.

In a speech to the American Legion convention, the president backtracked on a statement that he made yesterday, when he said he did not think one could win the war on terror. He told veterans today the war is winnable.

As Bush spoke, another controversy was getting some attention here in New York. It involves a jab at John Kerry and at his Purple Hearts earned in the Vietnam War.

Here now, CNN's Ed Henry.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Democrats are blasting the fact that some delegates wore Band-Aids with small Purple Hearts to mock John Kerry's wounds in Vietnam.

Korean War vet and Democratic Congressman Charlie Rangel accused these delegates of dishonoring the Purple Heart.

REP. CHARLES RANGEL (D), NEW YORK: This symbol is a very moving one, because many of the people that earned it never came back home.

RETIRED GEN. MERRILL MCPEAK, AIR FORCE: I think we ought to offer a bounty to any of those Band-Aid wearers who have ever seen combat.

HENRY: Democrats say the buck stops with President Bush.

TERRY MCAULIFFE, DNC CHAIRMAN: George Bush's boots never went to Vietnam. And that's his right. He had the right not to go. But he does not have the right to smear our veterans.

HENRY: The White House chief of staff denied any coordination with the delegates who wore the Band-Aids.

ANDREW CARD, WHITE HOUSE CHIEF OF STAFF: Not to my knowledge. I can tell you this. I have great respect for anyone who wears the uniform in the armed services. And I certainly have great respect for people who made sacrifice and earned the Purple Heart.

HENRY: One man who handed out the Band-Aids, Morton Blackwell, insists he acted on his own. But Democrats point out the conservative activist has been closely aligned with White House aide Karl Rove. The controversy comes as Swift Boat Veterans For Truth unveil a new ad called "Medals."

(BEGIN VIDEO CLIP, SWIFT BOAT VETERANS FOR TRUTH AD)

UNIDENTIFIED MALE: ... denounce the symbols which this country gives and that was the medals themselves.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: I gave back -- I can't remember -- six, seven, eight, nine.

NARRATOR: How can the man who renounced his country's symbols now be trusted?

(END VIDEO CLIP)

HENRY: Democratic Senator Zell Miller, who will be the Republicans' keynote speaker on Wednesday night, said Democrats should not claim the swift boat vets are doing the president's dirty work.

SEN. ZELL MILLER (D), GEORGIA: I don't think I would have the nerve to say that, not when I have George Soros tied around my neck.

(END VIDEOTAPE)

HENRY: Republicans wanted their opening night to appeal to independent voters. They feel they got the job done. But Kerry campaign officials charge that the attacks last night on John Kerry, especially by Rudy Giuliani, as well as these Band-Aids, will backfire with swing voters -- Judy.

WOODRUFF: All right, Ed Henry, on top of that story outside Madison Square Garden -- Ed, thank you very much.

Well, now we turn north from New York to Manchester, New Hampshire, and the Kerry's campaign national chairwoman, Jeanne Shaheen. She is a former governor of the Granite State.

Governor Shaheen, good to see you. First of all...

JEANNE SHAHEEN, JOHN KERRY CAMPAIGN CHAIR: Great to be with you.

WOODRUFF: Thank you very much.

Are there changes afoot at top levels in the Kerry campaign?

SHAHEEN: No. We have brought on some new people, but that's been in the works for some time, Joe Lockhart, Susan Rice, people who have been strong strategists and policy leaders. So, we're pleased they're joining us, as well as some other people are. We're filling out the campaign staff, as we knew we always needed to before the fall election.

WOODRUFF: What about people like Mary Beth Cahill, Bob Shrum? Do they continue to have a senior role?

SHAHEEN: They absolutely do. Mary Beth has done a terrific job as the campaign manager since she came on last November and turned things around. Bob Shrum is a trusted adviser of John Kerry and has been for more than 20 years.

WOODRUFF: Is John Kerry happy right now with the way his campaign is going?

SHAHEEN: Look, we knew at the beginning of this campaign that the Bush administration and campaign and the Republicans were going to come at John Kerry as they have in the last few weeks. We knew that because that's what they did to John McCain in 2000, because that's what they did to Max Cleland in 2002 and because we've seen these attacks on John Kerry throughout his public life.

But the fact is, you have to ask yourselves, why does George Bush and the Bush campaign want to talk about what happened 30 years ago in Vietnam, rather than what's happening today in the United States? And that's because they don't want to talk about the 1.8 million jobs lost or the 49 percent increase in health care or taking us to war in Iraq by misleading Americans about weapons of mass destruction.

WOODRUFF: But be that as it may, Jeanne Shaheen, that is what is being talked about. And I am told, other journalists are being told by senior Democrats, donors to the Kerry campaign, that there's unhappiness with the way the campaign has responded to the swift boat controversy, with indecision in the campaign, with a lack of a clear message.

SHAHEEN: Well, we will continue to respond to those lies by pointing out what John Kerry and John Edwards want to do as president.

We need a president who has a clear vision, who knows what we need to do to create good jobs here, who knows what we need to do to lower the cost of health care, who knows how we're going to make sure that people can send their kids to college, who knows what we need to do to restore credibility of the United States in the world community. And that's John Kerry.

WOODRUFF: One last question. These polls, you've seen the same ones we have. Just a few minutes ago, I looked at an AP analysis of several polls which show that the persuadable voters, the voters out there your campaign and the Bush campaign needs, for that matter, when it comes to personal qualities of leadership, who would be a stronger leader, who would be a better commander in chief, those questions, President Bush is pulling away from John Kerry on those questions. Are you concerned? SHAHEEN: Well, those same polls also show that when it comes to a president who understands and cares about you, who knows what you need to improve your lives, those voters also support John Kerry and believe he would be the better president.

And I think when voters come down to making the decision, they're going to decide based on who they believe is going to do something about the problems they have in their own lives.

WOODRUFF: Jeanne Shaheen, former governor of the state of New Hampshire, chairwoman of the John Kerry campaign.

SHAHEEN: Thank you.

WOODRUFF: Thank you very much for joining us.

SHAHEEN: Thank you.

WOODRUFF: We appreciate it.

Well, a possible new job for longtime Republican and Bush family friend James Baker. Details in our "Campaign News Daily."

Also ahead, John Edwards weighs in on last night's speeches right here at the Republican Convention.

(COMMERCIAL BREAK)

WOODRUFF: From inside Madison Square Garden, we check the headlines now in our "Campaign News Daily."

Democrats are keeping their counterspin machine busy during this convention. Today, the DNC released a new TV ad set to air this week in the New York market. The spot accuses George Bush of failing to rein in the rising costs of health care and prescription drugs. It was released this morning to promote the Democrats' convention theme, which is mission not accomplished.

While John Kerry continue his downtime in Nantucket, John Edwards is campaigning in West Virginia. Edwards had two appearances in the Mountaineer State today, where he made a point of criticizing what described as the -- quote -- "negative attacks" during last night's convention speeches.

Veteran Republican and longtime Bush family confidant James Baker is in line for a new post assisting President Bush. A source tells CNN's Candy Crowley that Baker has agreed to lead the Bush campaign's debate negotiations team. The source says an announcement of Baker's new role could come as soon as this weekend.

President Bush was campaigning among veterans today and there was a not-so-subtle change in his wording when he talked about the war on terrorism. A report from our Suzanne Malveaux when this expanded edition of INSIDE POLITICS returns.

(COMMERCIAL BREAK) WOODRUFF: A relatively quiet day, we're told, outside Madison Square Garden.

Inside the arena, we're getting ready for tonight's main speakers, first lady Laura Bush and California Governor Arnold Schwarzenegger.

Welcome back to this special 90-minute edition of INSIDE POLITICS, live from the Republican National Convention. I'm Judy Woodruff.

As George W. Bush continues his week-long campaign sprint through the showdown states, a new poll suggests the president has picked up new public support in the war on terror. According to a "Washington Post"/ABC News survey, Bush leads Kerry 56 percent to 38 percent when voters are asked which candidate can do a better job handling terrorism. At the beginning of the month, Bush's lead on this issue was just three points.

CNN White House correspondent Suzanne Malveaux has more on the President's Day and his appeal to a key voting bloc.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN CORRESPONDENT: President Bush and Senator Kerry are embroiled in a fierce battle over the veteran vote. President Bush, in Nashville, Tennessee, addressed the American Legion's national conference, the largest veterans group in the country, to try to convince this critical bloc that he would make a better commander in chief.

He also attempted to put to rest the controversy over his remark in a TV interview aired yesterday, in which he said he did not think the war on terror could be won.

G. BUSH: In this different kind of war, we may never sit down at a peace table. But make no mistake about it: We are winning and we will win.

(APPLAUSE)

G. BUSH: In this different kind of war, we may never sit down at a peace table. But make no mistake about it; we are winning and we will win.

(APPLAUSE)

G. BUSH: We will win by staying on the offensive, we will win by spreading liberty.

MALVEAUX: Next, President Bush travels to Iowa and Pennsylvania with Senator John McCain to try to win the support of the voters, particularly farmers, undecided women and labor.

Suzanne Malveaux, CNN, Nashville Tennessee.

(END VIDEOTAPE)

WOODRUFF: Meantime, people in states like Iowa and Pennsylvania are getting to know George W. Bush and John Kerry very well. Both candidates are spending most of their time and money in these and other so-called battlegrounds. Our Dana Bash is with me now from the convention floor. She has more on the Bush campaign's election strategy.

And Dana, you're right in the middle of one of the battleground delegations, Pennsylvania.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: That's right, Judy. Pennsylvania is one of eight states the president is hitting on his way here to the convention. What he says and where he goes specifically in those states is all part of a carefully calculated strategy.

(BEGIN VIDEOTAPE)

BASH (voice-over): For all the rancor this election year, there is one thing the president and his opponent mostly agree on, a political map that looks like this, blue states almost certainly for Kerry, red for Bush, and some 17 states in play. After the Republican convention, the number is likely to shrink to about a dozen, where polls show the candidates virtually tied.

MATTHEW DOWD, BUSH CAMPAIGN SR. STRATEGIST: We're in a much better position than the Kerry folks.

BASH: Because of population shifts, the president's wins in 2000 now add up to 278 electoral votes -- 270 means victory.

DOWD: They have to chip away at us. We only have to add on.

BASH: That's goal number one. But defending his 2,000 base is hardly guaranteed. Take Ohio, a historically must-win for Republicans, but among the big industrial states devastated by job loss on the president's watch.

BUSH: I understand something about the job base in Ohio. I know people are nervous.

ROBERT DALLEK, PRESIDENTIAL HISTORIAN: The fact that there are these heavy deficits that are piling up, the fact that he is the first president since Herbert Hoover to suffer job contraction during his four years in office...

BASH: Goal two: deny Kerry's states he needs for victory. Case and point, Pennsylvania. Mr. Bush lost four years ago, but has been there 32 times since, more than any other state besides Texas.

BUSH: Because we acted, Pennsylvania has added more than 68,000 jobs over the past four months.

BASH: Rural America is another target, especially in states team Bush sees as trending Republican, like Wisconsin and Minnesota. BUSH: We stand for a culture of life in which every person matters.

STUART ROTHENBERG, ROTHENBERG POLITICAL REPORT: Part of the Bush scenario is to bring out a couple million more conservative voters who sat home in 2000.

BASH: Then there are the national issues, Iraq and terrorism. The president defends the war in Iraq at virtually every stop, trying to keep it from being a liability by linking it to his defining day.

BUSH: Do I trust a mad man and forget the lessons of September the 11th, or take action necessary to defend America? Given that choice, I will defend our country every time.

BASH: With that "talk from the gut" style and portrayal of Kerry as indecisive, Bush aides hope to convince those few undecideds it's better to stay the course than take a risk on his challenger. The convention offers an unrivalled stage, one Republicans say Mr. Bush must use to influence a major danger sign for an incumbent, doubts about the country's direction.

BILL MCINTURFF, GOP POLLSTER: We're not at a great point. But there's been enough volatility and enough shift that I'm still hopeful and optimistic that we can improve those numbers between now and the election.

(END VIDEOTAPE)

BASH: And that's one of the main goals in giving Arnold Schwarzenegger a primetime speaking slot tonight. They are hoping that because they think he has the ultimate American dream story, he can begin to make people feel better about the country's direction and ultimately the president's leadership -- Judy.

WOODRUFF: All right. Dana Bash from the colorful convention floor. Dana, thank you.

And as Dana said, Arnold Schwarzenegger does take the stage tonight, representing a wing of the GOP sorely in need of a standard- bearer, you might say. Our Bill Schneider takes a look at whether Schwarzenegger's views represent the future or the past.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): Is there such a thing as a Schwarzenegger Republican? The California governor seems like one of a kind. Does "The Terminator" have a political philosophy?

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I have always said that I'm fiscally conservative. I'm very conservative. When it comes to issues like social issues, I'm moderate.

SCHNEIDER: Moderate? Moderate Republicans have come to look like a movement with a promising past. This week, a group of former Republican governors, senators and public officials took out a newspaper ad calling on the GOP to, as they put it, come back to the mainstream. They called for "a speedy return to the pragmatic, problem-solving mainstream." Almost all the signers were first elected in the 1970s and '80s. A promising past.

If there's a future for moderate Republicanism, Schwarzenegger is it. He prides himself in being a pragmatic problem solver.

SCHWARZENEGGER: The people have sent me to Sacramento to create action and to solve the problems.

SCHNEIDER: He's doing it, reform of the state's workers compensation system, voter approval of debt reduction bonds. Schwarzenegger is thriving politically. Sixty-five percent job approval in California, majority support from Democrats.

Could anyone else but Schwarzenegger pull it off? A Schwarzenegger advisor says his success is inseparable from his persona, a tough guy, a political outsider.

SEAN WALSH, SCHWARZENEGGER CONSULTANT: People will pay at fund- raisers just to go and have their kids shake Arnold Schwarzenegger's hands. So he's a huge money draw, regardless of whether you believe in his ideological or philosophical perspective.

SCHNEIDER: Schwarzenegger's appeal is more him than his philosophy. But in American politics, it takes a personality to sell a philosophy. That was true of Franklin D. Roosevelt. It was true of Ronald Reagan. And it may be true of Schwarzenegger.

WALSH: Right now he really is the man to be with if you're a conservative Republican or a moderate Republican. And, again, the California Republicans have figured that out, and the national Republicans are figuring that out as well.

(END VIDEOTAPE)

SCHNEIDER: The market for Schwarzenegger's philosophy would be a lot bigger if Bush loses. Then Republicans would be forced to examine what went wrong. And many would conclude, maybe, just maybe, the party went too far to the right.

WOODRUFF: But if Bush wins, it will be a different story.

SCHNEIDER: A very different story.

(LAUGHTER)

WOODRUFF: OK. Bill Schneider, thank you very much. Looking at "The Terminator."

Well, four years after its polling problems -- it through the presidential election into disarray -- Florida is keeping its fingers crossed this time around. Today is Primary Day, a tune-up before November. The key battle is over who will replace retiring Democratic senator Bob Graham. CNN's John Zarrella is keeping an eye on things at a polling place in north Miami.

(BEGIN VIDEOTAPE)

JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): Mel Martinez, in his bid to win the Republican nomination for the open U.S. Senate seat in Florida, has relied heavily on his ties with President Bush.

BUSH: The American dream is alive and well, and Mel Martinez represents it all.

ZARRELLA: This "ride the president's coattail strategy" by the former Bush administration housing secretary appeared to be working.

MEL MARTINEZ (R), FLORIDA SENATE CANDIDATE: I'm going to go earn this nomination. And I intend to do that. And then I proudly will stand by his side and campaign for his reelection and for my election to the Senate.

ZARRELLA: A "St. Petersburg Times-Miami Herald" poll this past weekend showed Martinez gaining on former U.S. representative, Bill McCollum. The two top candidates were searingly by just two points.

But Monday, "The Times" rescinded its endorsement of Martinez. "The Times" editorial said in part that Martinez "took his campaign into the gutter with hateful and dishonest attacks on his strongest opponent."

One ad said in part that McCollum sponsored a bill granting homosexuals special rights. In fact, it was a hate crimes bill that had support from both sides.

The Democrats have thrown some mud, too, but none stuck to frontrunner Betty Castor. That same "Times-Herald" poll showed Castor, a former university president and former state education commissioner, with a huge lead over U.S. Representative Peter Deutsch. But, despite high-profile candidates, the Senate race on both sides has, for the most part, flown below the radar.

JIM KANE, THE FLORIDA VOTER: People who are -- who have made up their mind are so polarized about which candidate they want for president of the United States, they're blinded to every other campaign that is going on in the state right now.

ZARRELLA: A lack of enthusiasm that translates to low voter turnout may not provide a true test for electronic voting machines. Critics maintain the systems can fail and there's no way to produce a paper trail if an election requires a recount.

SETH KAPLAN, MIAMI-DADE COUNTY ELECTIONS DEPT.: We wouldn't try to run an election with a system that we didn't think could conduct an election with a certain degree of integrity. I mean, that's the bottom line.

ZARRELLA: Following the 2000 presidential fiasco, touch screen machines replaced paper in the state's most populous counties. A true test of their reliability may not come until November, when turnout is high and the stakes even higher.

(END VIDEOTAPE)

ZARRELLA: And we're still keeping our fingers crossed here. Today, so far, nothing to report as far as any kind of glitches with the electronic voting machines, a couple of very minor snafus with openings of precincts.

Overall, hard to say how the turnout is in some places, like in Orange County, in Orlando, high turnout reported. In Broward County, to our north, low turnout. And here in north Miami, in Miami-Dade County, the turnout is pretty sparse, too, although, Judy, this is the middle of the afternoon and, of course, it's miserably hot here.

And over on the west coast of Florida, where Hurricane Charley ravaged that area, a lot of people had to double up and go to other precincts. In Arcadia, they're voting under a tent today.

So it's going to be interesting to see, overall, how turnout is here in the primary. But it doesn't appear as if there are going to be any really huge numbers in order to test that electronic voting equipment the way it needs to be tested before November -- Judy.

WOODRUFF: John Zarrella, a lot of pressure on Florida to get it right. John, thank you very much.

Well, there's been a political shocker in the state of Virginia. Republican Congressman Ed Schrock has dropped his bid for a third term amid allegations that he called a gay sex phone line.

Schrock, who is married, is one of the most conservative members of the House, and he is a leading supporter of a constitutional ban on same-sex marriage. His decision leaves Republicans scrambling to find a replacement candidate before Friday's deadline.

Well, there are only two months and two days left until the election. In a minute, Senator George Allen of Virginia joins me to look ahead to the rest of the campaign, as well as a look at Republican efforts to keep control of the U.S. Senate.

We'll also ask a panel of journalists to look back and grade last night's convention speakers.

Later, what grades would Republican delegates give New York City? We'll sample some of the reaction to the Big Apple.

(COMMERCIAL BREAK)

WOODRUFF: Here at the sky box here at Madison Square Garden, Karl Rove, who was President Bush's senior political adviser, being interviewed right this minute by our senior White House correspondent, John King. That interview is being taped. We're going to bring you a big chunk of it at 4:00 Eastern. So you'll want to stay tuned for that, Karl Rove talking to John King.

Well, meantime, as Republicans hold their national convention, the party is also working hard to pick up its slim hold on the U.S. Senate. With me now, Senator George Allen of Virginia. He's the chairman of the national Republican Senatorial Committee.

Senator Allen, great to see you. Thank you very much.

Before we talk about the Senate, let's talk about this convention. There is a group of mainstream Republicans who yesterday had a meeting. And one of them, Congressman Mike Castle of Delaware, said the big tent of his party has turned into what he said is a pop tent. In other words, he said there's just not enough -- moderates aren't welcomed in this party anymore.

What do you say to that?

SEN. GEORGE ALLEN (R), VIRGINIA: Oh, I don't know why former governor and Congressman Castle would say something like that, because, in fact, it is. Look at our speakers last night.

Rudy Giuliani is clearly a moderate Republican. He's obviously loved a great deal from his leadership after 9/11 here in New York City. John McCain, heck, there's hardly anybody who is more of a maverick than John McCain. Governor Schwarzenegger is a pragmatic -- I was following that -- pragmatic, but I'd say moderate, certainly, on social issues.

WOODRUFF: They're the speakers, but you've got a party platform that is very strongly conservative on the issues of abortion, gay marriage, any number of issues that the moderates in the party say make them feel left out.

ALLEN: Well, that's the majority of the way -- that's the majority of the Republican Party. It is a common sense conservative party. There are moderates, and we are all free to exercise our own views.

And we're not to be a bunch of pack mules and everyone have to hear (ph) if it's contrary to their philosophy and their conscience. But it is a document. I don't know how many pages long it is this year. But it reflects a majority view. But it doesn't mean that those who do not agree with every iota of it are to be run out.

We certainly are a party that trusts free people and free enterprise. Want to have a strong national defense, reduce taxes on families and small businesses. And I think it's one that reflects the views of, actually, the majority of the people in this country.

WOODRUFF: Senator Allen, last night, Rudy Giuliani ridiculed John Kerry, in essence, for changing positions on issues. But yesterday and today, President Bush made two completely -- gave two completely different statements when the question was, "Can the United States win the war on terror?"

Yesterday, saying no. Today, saying yes. Isn't every politician capable of changing his mind or changing his description of his views on things? ALLEN: Well, of course. As you learn, you also may change with more evidence. But the reality is, I don't think there is any question that President George W. Bush intends to win this war on terrorism. He's taking it to -- on offense against the terrorists, whether in Afghanistan, whether they're those who harbor them in Iraq or anywhere else. And I don't know what inpresident said yesterday, but it certainly would be contrary to all of his actions.

You get Senator Kerry, though, who did support this floor, at least the resolution, and then voted against funding it. But then even on the funding issue -- and we all know the story. He said, oh, gosh, I voted for it before I voted against it. On issue after issue, John Kerry is trying to hide his record as an elitist liberal Massachusetts Democrat.

WOODRUFF: Very quick last question on the Senate.

ALLEN: Yes?

WOODRUFF: You're predicting 54 seats for the Republicans?

ALLEN: Well, I put $100 bet on it. So that's pretty -- I think we have a great opportunity. We have great candidates.

WOODRUFF: Three-seat pickup?

ALLEN: Yes, three-seat pickup because we have some great candidates in great states. And I see them really doing well in the South. John Thune is ahead 50-48 against Tom Daschle in the Senate.

WOODRUFF: In South Dakota.

ALLEN: Yes.

WOODRUFF: All right. Well, we want to look at that race, as well.

ALLEN: It will be a great one.

WOODRUFF: Senator Allen, we're going to be talking to you in the two months to come before this election about the Senate campaign and more. Thank you very much for stopping by. We appreciate it.

ALLEN: My pleasure, Judy.

WOODRUFF: Good to see you.

Well, last night's session of this convention didn't quite get an "A" for keeping to the time schedule. But how did the speechmakers themselves do? A panel of journalist is going to be handing out some grades when INSIDE POLITICS continues right here in Madison Square Garden.

(COMMERCIAL BREAK)

WOODRUFF: The Republicans here in New York, of course, focused on this year's election. But after hearing those speeches last night, it's hard not to think a little bit about 2008.

Joining me now, three journalists who have been giving this some thought. Jonah Goldberg, who is the online editor for "The National Review." Liz Marlantes is with the "Christian Science Monitor." And Peter Beinart, editor of "The New Republic."

Peter, I'm going to start with you, since you're the closest. How would you grade these speeches last night, and what they do they say about '08?

PETER BEINART, EDITOR, "THE NEW REPUBLIC": I would give Giuliani a C. Giuliani, although he's the mayor who dealt with September 11, has no experience in foreign policy. And it showed. It was long on 9/11 and very short on a specific agenda for how you would fight the war on terrorism.

McCain, by contrast, gave a very compelling, I thought, defense of the war in Iraq. Much more substantive. I give him a B.

WOODRUFF: Liz?

LIZ MARLANTES, "CHRISTIAN SCIENCE MONITOR": I would say I give them both an A-. In part, because I think the two speeches, even though they were separate speeches, I think they were really designed to work together in many ways, although McCain was talking about Iraq and Giuliani was talking about 9/11.

They were both really making the same point, which is that you want a leader who is going to go after the threat early, who's going to nip it in the bud and not hesitate or waffle, which is what they say Kerry would do. And so I actually think the two speeches actually really functioned almost as one speech.

It also had the impact, I think, of further sort of wrapping Iraq into the larger war on terror, which is what the Bush administration is trying to do. So politically, I think they were -- they were very effective, and particularly back to back the way they were delivered.

WOODRUFF: And so, Jonah, are you going to go higher than an A- for both of them?

JONAH GOLDBERG, EDITOR, "THE NATIONAL REVIEW" (UNINTELLIGIBLE), but I think A- for both probably works, maybe B+ for McCain. I didn't think he was quite as strong in supporting Bush as I think some of the Republicans would have liked. But I still think he did a great job, and I thought it was a pretty strong speech overall.

Giuliani I thought was great. I don't know what Peter's talking about. I mean, I think...

BEINART: You never do.

GOLDBERG: I think Giuliani did a -- did a great job. He wasn't -- it wasn't soaring rhetoric, but it was direct communication and a personal style. I think a lot of people felt he was talking straight to them. It showed a really wide range of abilities. I thought he did very, very well.

WOODRUFF: Did these speeches last night literally translate into support in '08, Peter, do you think?

BEINART: Not literally, but they do set the tone. And I think what's interesting is both of these guys are trying to do the same thing, and actually the same thing Arnold Schwarzenegger tried to do, to be tough without being harsh.

That is the trick, to show you have strength in the war on terrorism, but you are not so judgmental and moralistic that you turn off swing voters. They were both trying to hit that same pitch, I think.

WOODRUFF: What about '08?

MARLANTES: Yes, I think they're positioning themselves absolutely -- well, less so necessarily about McCain. I'm less convinced that McCain is going to run. But Giuliani, definitely, I think is positioning himself. And it was -- it was a hawkish speech. I mean, in many ways, it was a red meat speech.

WOODRUFF: And Jonah, for conservatives in this audience, I mean, Rudy Giuliani has hardly been their favorite, you know, when they think about running -- somebody they would vote for, for president.

GOLDBERG: Yes. I'd hate to be the skeptic. I don't think there is too much 2008 that can be drawn out of all this.

You know, they want to boost their profile in the party, they want to boost their profile should Bush win, all those sorts of things. But come 2008, I think the deck is going to be very, very different. Giuliani is not going to capture a huge swath of the base of his party.

WOODRUFF: Last question, cut right to the core. Is -- can the Republicans get away with putting these moderate speakers up there and saying, hey, we're really more moderate than what a lot of people say we are?

BEINART: They can do it because the war on terrorism has to some degree overshadowed the culture war. You'll notice McCain and Giuliani spoke exclusively about foreign policy. And on the war on terrorism, all Republicans agree. And that's how they overcome the divisive cultural issues that have hurt them in the past.

WOODRUFF: Liz?

MARLANTES: I totally agree with that. I think in some ways we're almost seeing a potential shift in the definition of what's moderate. I mean, if you're defining moderate by someone's position on abortion, OK, Giuliani is from the moderate to liberal wing of his party.

But if it's in terms of where you stand on the war on terror or Iraq or those issues, like I said, I thought Giuliani's speech was very hawkish. It was extremely strong and strident on those. And so, in that sense, it might change the very definition of how we define moderate.

WOODRUFF: Quick last word.

GOLDBERG: This is a constant question that happens every time at a Republican convention. Yes, you have a lot of moderates up there, but that's because they're also very popular politicians. I think they're going to get away with it because no one who listened to those speeches last night thought that these guys were trying to sell a bill of goods.

It sounded like they were doing a lot of straight talk, as McCain likes to call it. I think it worked pretty well.

WOODRUFF: Jonah Goldberg, Liz Marlantes, Peter Beinart, great to see all three of you. We'll see you in a couple days right here at this convention.

MARLANTES: Thank you.

WOODRUFF: Thanks very much.

GOLDBERG: Thanks.

BEINART: Thanks.

WOODRUFF: All right. Well, we're going to hear from President Bush's most respected, some say most feared political adviser in just a few minutes.

Also coming up on our expanded edition of INSIDE POLITICS, what is behind any possible changes at the Kerry campaign?

And later, a visit with one of the state delegations here at Madison Square Garden.

This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: He's the mastermind behind the George W. Bush political machine. This hour, a rare one-on-one interview with Karl Rove.

Smooth sailing for the Kerry campaign? Maybe not. Are some Democrats calling for a campaign shakeup?

(END VIDEOTAPE)

ANNOUNCER: Now, live from the Republican National Convention in New York, JUDY WOODRUFF'S INSIDE POLITICS.

WOODRUFF: Welcome back to Madison Square Garden and this special convention edition of INSIDE POLITICS. The second night of the Republicans' big event gets under way just three hours from now. The theme tonight, compassion. The top speakers, California Governor Arnold Schwarzenegger and first lady Laura Bush.

In just a moment, we're going to be hearing from someone who has been throughout George W. Bush's political career, his senior political adviser, Karl Rover. He rarely gives interviews. He has spoken just moments ago in an interview with our own senior White House correspondent, John King. We're going to have that in just a few moments.

But before we turn to that, we want to turn to the story coming out of the Kerry campaign today, and that is speculation that a major shake-up of some sort may be in the works in the campaign.

The campaign itself knocking it down, but having said that, we're hearing, CNN is hearing from a number of Democrats that there are individuals in the party urging John Kerry to make changes.

We want to get the very latest, though, from our own editorial, political editor. His name is John Mercurio. Familiar face on INSIDE POLITICS.

John, what are you hearing from inside the Kerry camp?

JOHN MERCURIO, CNN POLITICAL EDITOR: We're hear -- No one is giving us any sort of indication that anyone at this point is going to lose their job specifically. Not Mary Beth Cahill, the campaign manager, not Stephanie Cutter, the communications director.

Marla Romash, one person -- Marla Romash is leaving the campaign. But absolutely, the campaign...

WOODRUFF: What has her title been?

MERCURIO: She's been an adviser to Teresa -- Teresa Heinz Kerry. From what we're hearing, it has nothing to do with any sort of shake- up or not shake-up.

Now, the talk, though, is that there are two people already with the campaign whose roles may be expanded. Those people are Joe Lockhart, recently hired as a senior communications adviser, and John Staso, who's currently the campaign's liaison to the DNC.

Now, Lockhart, everybody of course, knows him as the press secretary in the White House during Bill Clinton's second term. He has -- came onto the campaign just a couple of weeks ago and still working out his exact role.

But from what we're hearing, one of the ideas is that he would sort of take over the D.C. operation, the D.C. media, communications, press operations, Stephanie Cutter taking over sort of a traveling -- traveling role for the campaign.

Lockhart was traveling today himself with John Kerry. I flew up to Nantucket to meet with him, and the I was going to fly with him down to Nashville for the -- for the senator's speech tomorrow to the American Legion.

WOODRUFF: John, the source, apparently, of all this or the instigation is unhappiness over what's been happening in the campaign in the last few weeks.

Polls indicating that when you ask people about what personal qualities they want in a candidate, John Kerry is not doing very well.

MERCURIO: Exactly.

WOODRUFF: George Bush is doing better. And we've been hearing grousing for some time about strategy in the campaign.

MERCURIO: Sure.

WOODRUFF: What do you hear from Democrats outside the Kerry camp?

MERCURIO: That this has been a horrible month, that August was just a terrible month, that ever since the Democratic convention in Boston last month the Bush campaign has dominated the agenda. That the Kerry campaign has been on the defensive and he's, you know, responding to these ads from the Swift Boat Veterans for Truth.

I mean, a lot of the ads, a lot of the claims in the ads have been deemed inaccurate, but the Kerry campaign is still forced to spend a lot of money in the month of August that they didn't intend to spend until September.

And as you mentioned, these polls, a lot of new polls out that show that Bush is gaining ground not just nationally, but in Democratic battleground states, states that Gore won in 2000 that Kerry really needs.

And you showed a clip at the beginning of Kerry wind sailing, wind surfing. I was talking to one Democrat last night who said, "Why couldn't he have been playing basketball or throwing a football? Why did he have to be wind surfing? What does that get him?"

WOODRUFF: But of course, you have people like the national chairwoman of the party, Jeanne Shaheen, who said to me, "Well, there's always going to be complaining about how a campaign is going when there's a little bit of a downturn in the polls."

What makes this situation any different from any down bump in a campaign?

MERCURIO: The fact that it's taking place right before Labor Day. I mean, really, the thing that a lot of Democrats are telling us outside the campaign is that if Kerry -- Kerry is going to do this, he needs to do it before Labor Day, because once you hit Labor Day the campaign has to be, in some sense, on autopilot. You really need to have your staff in shape.

I mean, in the short term the talk about disarray, the talk about the distraction could prove detrimental, but in the long term -- you remember what he did during the primary in firing Jim Jordan, his campaign manager.

Turned out to be one of the best decisions, no offense to Jim, but one of the best decisions on the primary. From then on, he sailed through New Hampshire and Iowa.

WOODRUFF: So there's reason to believe that he might be willing to make some changes again, but to be determined. We'll see.

MERCURIO: We'll see. We'll see.

WOODRUFF: All right. John Mercurio, our political editor. Thanks very much.

MERCURIO: Thank you.

WOODRUFF: Well, while we're talking about the Kerry campaign, we want to get back to the Republican Party and the president's chief political strategist, Karl Rove, a man who often, in fact, always stays behind the scenes. Up next, Karl Rove speaks out in a rare interview with our John King.

Also ahead, what are convention delegates thinking? I want to head down to the floor to find out.

Plus, delegates venture outside this arena and they rate the New York City experience.

(COMMERCIAL BREAK)

WOODRUFF: In many aspects of this convention you can see the hand of the president's chief political strategist, Karl Rove. Our senior White House correspondent, John King just, had a rare interview with Karl Rove -- Rove a short while ago.

In fact we showed you up there in the booth while you were talking to him. Tell us...

JOHN KING, CNN CORRESPONDENT: You gave them a sneak peek up there?

WOODRUFF: No sound.

KING: We addressed quite a bit of subjects, and we'll play a portion of it in just a second.

Karl Rove, for one, called -- said the Democrats call him Dr. Evil, and he refuted the suggest that he has some nefarious role in dirty tricks, including those Purple Heart Band-aids down on the floor last night.

He said the president has an unprecedented grassroots organization. They think that will be the key.

He wouldn't tell us any of the new policy initiatives in the speech Thursday night, but he did discuss, among other topics, the president's emphatic statement today that we will win the war on terrorism. The president, of course, trying to clean up something he had said the other day that the White House insists was misinterpreted.

Let's listen to a portion of this interview with Karl Rove.

(BEGIN VIDEOTAPE)

KING: Answer the Democrats who called this the masquerade ball. They say Rudy Giuliani, Arnold Schwarzenegger, John McCain on some issues not leaders in sync with a party platform that they say is anti-abortion, anti-gay rights, hard right conservative.

KARL ROVE, BUSH'S CHIEF POLITICAL ADVISOR: I -- you know what? I don't think every Democrat agrees with John Kerry when tried to slash the intelligence budget in the aftermath of the first attack on the World Trade Center by $7.5 million dollars.

I don't think every Democrat agrees with his series of votes over 20 years in the United States Senate to end, cancel or gut the weapons programs that are absolutely vital to winning the war on terror.

I don't think most Democrats agree with him when he voted against the Defense of Marriage act. Even Bill Clinton signed that bill.

I don't think most Democrats agreed with his support for partial birth abortions. He voted against the ban on partial birth, late term abortions.

So before they start talking about our party, I think they ought to go clean up their party, where their candidate is on the far left of the party and out of the mainstream of both American politics and, I think even for a lot of Democrats if they looked at that time closely, out of the mainstream of their party.

KING: Let's talk a little bit about another speaker tonight, the first lady of the United States. She is more involved, especially on a solo basis, in this campaign than the last campaign. Very high approval ratings with the American people and not afraid to mix it up. She's been involved in this debate over the swift boat ads. She has been helping defend attacks from Ron Reagan, Jr. and others about the president's limits on embryonic stem-cell research.

How does she factor into your strategy, and where do you think she helps most?

ROVE: Well, she helps enormously everywhere, because she -- as you say, she's enormously popular and speaks with great credibility.

And she's drawn into politics reluctantly. I mean, the things that you talk about, the issues that she's commented on have been as a result of being pestered by people like you about them, so -- but, look, she's an enormously comforting.

I mean, Americans got to know her in the aftermath of 9/11 as a very reassuring and comforting figure with a lot of integrity. And they have confidence in her. And it's really remarkable, though, when you think about it in a way, because 10 years ago President Bush was running for governor of Texas. And she never made one political speech, because she was -- you know, she was an elementary school librarian and a mom and was uncomfortable with that public a role and yet blossomed into it as first lady of Texas.

And then Americans have come to really appreciate her and love her as first lady.

KING: When the conventions pass the next phase of the campaign, the next defining moment of the campaign likely to be the debates. The presidential commission says let's have three presidential and one vice presidential. The Kerry campaign says fine by us. The Bush campaign has said we'll talk about this after the convention.

ROVE: Right.

KING: Will we have three and one?

ROVE: Well, after the convention we'll -- we'll have a debate with the negotiating team. And we'll launch out there and that's the time for it to take place.

I know you want everything to happen on a sped up timetable, but we'll do that after the convention.

KING: Is there any reason not to have three presidential debates? Do you think that's too many, too few?

ROVE: Let's wait until the debate negotiating team gives their advice to the president.

KING: Let's talk about you a bit. Many Democrats essentially call you the boogieman or this wizard, somehow pulling strings behind...

ROVE: Dr. Evil.

KING: Dr. Evil? OK.

ROVE: Or Mini Me, I don't know. Which one is it?

KING: Last night on the floor we had an episode where some delegates were wearing these Band-aids with Purple Hearts on them, and they were mocking the medals given to Senator Kerry. I don't think there's any other way to say it.

And they were distributed by a conservative you know well, Morton Blackwell of Virginia. And many say well, he was one of your mentors, and this is proof that, you know, the campaign and the White House say we have nothing do with this and Karl Rove's friends and minions are out doing the dirty work.

ROVE: Well, I know Mort and he is a friend. Ancient history, but when I ran for national college chairman, Morton was one of my ardent opponents.

So look, it was inappropriate. We honor Senator Kerry's -- Senator Kerry's service, and I think it was inappropriate, and I hope -- most delegates obviously weren't wearing them, and I think most delegates would agree with me on it.

I do think though -- I understand why a few -- why some -- I had an uncle who was in Vietnam, several tours of duty. And I understand why, while we can all agree that Senator Kerry served in Vietnam with distinction and honor that, he asked -- he said he was proud of both his service in Vietnam and what he did afterwards.

And I understand why a lot of people take offense with what he did afterwards. I don't think my uncle, Colonel Verhai (ph), as having been raping and pillaging and acting like Genghis Kahn. I don't think he and the men under his command would have -- should be so quickly tarnished as being war criminals, as Senator Kerry did in his testimony in 1971.

KING: And so then in your view the swift boat ads are fine, that if men who served want to make that case.

ROVE: Look, I'm against all the 527 ads and activities. I don't think they're fair. I don't think it's appropriate. They're misusing the law. They all ought to stop.

But I understand why some people who were in Vietnam feel strongly about what Senator Kerry did and said when he came back. I mean, it's -- it is, frankly, an insult to them to suggest that they were routinely war criminals, which is what he called them.

And I've seen the e-mail traffic, and I've seen vets out there. I was at the VFW in Cincinnati a couple of weeks ago. And even people who are quick to disassociate themselves with the claims that he somehow didn't deserve the medals or didn't serve with valor are -- people who defend him on those issues feel very strongly about what he did when he came back to tarnish their good service, as well.

KING: We haven't heard that from the president. He said only good things about Senator Kerry's service in public. Does he share that view, that it is an insult?

ROVE: I'm speaking as the -- as the nephew of a decorated Vietnam veteran, and I'll leave it up to the president to say what he wants to say.

KING: I want to show you a picture in the newspaper today to ask you about something else the Democrats say. Excuse me for playing with a prop.

But this is the podium. And you see Mayor Bloomberg at the podium. Some Democrats are saying that that looks to them like a cross.

And I'll try show it. Maybe we can get the camera to pick this one up. That that looks like a cross and that this looks like a pulpit, and this is Karl Rove orchestrating some subliminal message to Christian conservatives.

ROVE: My God, where do they come up with this stuff?

Does it look to you like it's a cross? I don't -- I don't think so. Do you see it? It's right there. Go take a look.

Subliminal.

KING: Let me ask you about something else, as we turned around. On the wall here tonight, people with compassion. The president was elected on a platform of compassionate conservative.

ROVE: Right.

KING: And obviously, he did not choose September 11, and it changed the whole presidency. But some Republicans do worry that he's so defined by war now that that's been lost a little bit. And that that is, you know, his ticket, to reach out to people in the middle.

Do you worry about that?

ROVE: Well, I think -- I think you're right that the war just obscures a lot of things like education reform. We passed an incredibly powerful piece of reform legislation that that is really -- it's making a remarkable difference in people's lives.

(END VIDEOTAPE)

WOODRUFF: Fascinating. We don't get to hear from him very often.

KING: No, we don't.

WOODRUFF: You said at the beginning, you also talked to him about the president saying one thing and then another thing on the war on terror. Tell us about that.

KING: Well, the president said in his NBC interview that "I don't think we can win it," and the Democrats immediately seized on that, that the president was admitting failure in the war on terrorism, saying John Kerry and John Edwards will win it.

So the president twice or three times in his speech to the American Legion today said, "We will win. We are winning and we will win. Make no mistake, we will win."

Now the White House says the president was taken out of context. When he said I don't think we can win it, he means there will be no peace treaty with al Qaeda. There will be no formal surrender ceremony.

But it was clear that the Democrats had something to seize on. This is a very scripted convention. The first one to go off the script was the president of the United States, the candidate himself.

They knew they needed to clean up a little bit of a mess. That was the president's goal today. Karl Rove says, "Well, he was taken out of context," but he also conceded it is critical that the president make the point that he can win and is winning the war on terrorism, because leadership is the defining issue, what they are trying to make at this convention, the defining issue of the campaign.

WOODRUFF: So they've straightened that one out.

KING: They've straightened that one out. One other quick thing, Judy, Karl Rove, I asked him because he's one of the ones interviewed in the CIA leak investigation.

WOODRUFF: Did he leak the name of the CIA operative? And he emphatically said he did not.

WOODRUFF: All right. We're looking forward to seeing the whole interview, which is going to run -- the rest of it, I should say.

KING: We'll run pieces of it throughout the day.

WOODRUFF: OK. John King, thanks very much. We appreciate it.

Now we know a number of the states represented here in Madison Square Garden are firmly in the George Bush column, but then what's it like to be a Republican from one of the so-called blue states? In a minute, I'll ask a Massachusetts alternate delegate about life in John Kerry's home state.

(COMMERCIAL BREAK)

WOODRUFF: We've heard a lot about the swing states. We've heard a lot about the red states, the states that George Bush is supposed to win, likely to win in November. But what about the states that John Kerry is supposed to win?

I'm here in the Massachusetts delegation with an alternate delegate from Massachusetts. Your name is Jeanne Kangas. Any chance -- First of all, thank you for talking with me. Any chance...

JEAN KANGAS, MASSACHUSETTS DELEGATE: Glad to do it.

WOODRUFF: ... that President Bush is going to win the state of Massachusetts in November?

KANGAS: Where there's life there's hope. There's always a chance, but frankly, we are John Kerry's home state. Voters tend to vote for people when they don't know a heck of a lot about them who live geographically closest to them.

John Kerry is probably going to carry Massachusetts, but that does not stop us from trying. And, quite frankly, we are perfectly willing in Massachusetts to settle for him as our senator for the next four years.

WOODRUFF: But not as president. What is the argument you make, Jean Kangas, when you're trying to persuade people who are not decided how to vote? KANGAS: Well, we start by asking those who know the Democrat leadership of Massachusetts to find 10 leaders who really...

WOODRUFF: Put the mic closer.

KANGAS: ... who truly like John Kerry, who consider themselves to be friends of John Kerry. He really has few friends in Massachusetts. And as a senator, our senator for 25 years he clearly has stood in the shadow of Ted Kennedy. What has he done for us? Not a heck of a lot.

WOODRUFF: Are you comfortable with the platform at this convention, the platform of your party? The statement of principles? It's been commented on that it's been very conservative.

KANGAS: The platforms are sort of like, to paraphrase the name, pie crusts made to be broken. Nobody really pays a heck of a lot of attention to them.

But to answer your question directly, I disagree with some of it. I disagree with the stand on women's issues. I disagree with the capital punishment provision. I disagree with the marriage amendment.

WOODRUFF: Gay marriage?

KANGAS: I support gay marriage.

WOODRUFF: Ban on gay marriage?

KANGAS: I support gay marriage. I didn't come up with it. I didn't dream it up or think it up, but I've read both the decisions, the dissenting decision, as well as the majority support the decision.

WOODRUFF: What about pro-choice, abortion? Are you pro-life?

KANGAS: I'm pro-choice. I'm pro-choice; I always have been.

WOODRUFF: All right, Jean Kangas speaking out, a member of the Massachusetts delegation. We thank you very much for talking with us.

KANGAS: My pleasure.

WOODRUFF: We'll see you throughout this week.

KANGAS: My pleasure.

WOODRUFF: All right. INSIDE POLITICS will be back to wrap it up in just a minute.

(COMMERCIAL BREAK)

(STOCK REPORT)

(COMMERCIAL BREAK)

WOODRUFF: The incomparable Harlem Boys Choir, rehearsing here on the floor of the Republican National Convention at Madison Square Garden, one of the entertainment -- many entertainment that we're going to hear tonight. And also one of the reasons you've heard that slogan "I love New York." We've all heard it.

The question is are the delegates who have come from all over the country, how are they feeling about New York? Our own Bruce Morton went out and talked to some delegates about what they're finding.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): Delegates are here to renominate their president, of course, but they do other things, too.

We joined a group bound for Ellis Island, where millions of our grandparents first entered the United States. It's a bright, cheerful place and full of ghosts. The delegates found some.

MARY ANN BROOKE, ALASKA DELEGATE: This is fine for us, too, because this is our time to get a -- an Ellis Island certificate of my grandfather's arrival.

TIM VAN DOHLEN, TEXAS DELEGATE: It's nice to know where our roots are. I just found out I had 19 Van Dohlens that came over to Ellis Island.

MORTON: They liked city, we learned; they're not running scared.

LEROY CARVER, GEORGIA DELEGATE: I'm not scared. I was a little hesitant to come up here. But it's just a wonderful place, and I'm proud of it.

KRISTI PASSARO, NORTH CAROLINA: We got here Sunday afternoon and I think I've seen one protester. We missed the Sunday demonstration. So we feel very safe here.

MORTON: We learned they like it here.

MARY HARLOW, CONVENTION GUEST: This is the most beautiful place I've ever been. I feel so safe here. I've been out, walked this entire city and have loved every minute of it.

CANDLER WILLIS, NORTH CAROLINA DELEGATE: Some may talk about the protesters. I've been thanking them for defining our position.

MORTON: We learned who doesn't like it here. That would be tourists from other countries like Britain.

HARSHUTA RUPARELLA, BRITISH TOURIST: We haven't seen New York, because all those blocked roads and, you know, except for the helicopter ride, it wouldn't show us what we want to see.

MORTON: Kim and Peter Dunn from Australia.

KIM DUNN, AUSTRALIAN TOURIST: We feel a little intimidated to be quite honest. We don't have the police presence like this in Australia.

PETER DUNN, AUSTRALIAN TOURIST: You never see police back in Sydney with a submachine gun across the front of his chest. Never saw that before.

MORTON: Neither, of course, have many New Yorkers. Foreign visitors just picked the wrong week.

Bruce Morton, CNN, New York.

(END VIDEOTAPE)

WOODRUFF: Not really the wrong week, just the week of the Republican National Convention.

That's it for this Tuesday's special edition of INSIDE POLITICS. I'll be back at 8 tonight with Wolf Blitzer for our special convention coverage, along with Jeff Greenfield.

"CROSSFIRE" comes up right now. We'll see you tonight and again tomorrow.

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