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Inside Politics

Tweaking the Pitch; Social Security Showdown; Italian Journalist Shot At

Aired March 04, 2005 - 15:30   ET

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

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


(BEGIN VIDEOTAPE)
ANNOUNCER: In search of security. President Bush is on the road again hoping to shore up support for his Social Security reform plan.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And that's an important safety net, but the safety net has a got a hole in it.

ANNOUNCER: The Democrats are traveling, too, delivering warnings about the president's plan.

SEN. CHARLES SCHUMER (D), NEW YORK: Fix it, don't nix it.

UNIDENTIFIED MALE: Fix it, don't nix it.

UNIDENTIFIED FEMALE: Fix it, don't nix it.

UNIDENTIFIED MALE: Fix it, don't nix it.

ANNOUNCER: Move over Nixon, and Clinton, too. Martha Stewart is showing the world how to really make a comeback.

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

(END VIDEOTAPE)

WOODRUFF: Thank you for joining us.

Sometimes it's not so much what you say as how you say it. So President Bush is tweaking his Social Security reform pitch and borrowing a page from the Democrats' playbook in the process, or rather from their phrase book. Mr. Bush's next stop is Indiana, after launching his intensified sales campaign in New Jersey this morning.

Our White House correspondent Dana Bash is traveling with the president.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Before this trip to New Jersey, the president had already visited nine states trying to sell his Social Security plan. And instead of those travels helping gain support for his proposal, instead polls show that people tend to trust him less to tackle Social Security and people seem much less enthralled with his central idea, which is private accounts for younger workers.

In the face of that waning support there was a notable shift in the way the president talked about Social Security here in New Jersey. At the urging of some fellow Republicans in Congress, he adopted the Democrats' catch phrase. That is, he supports the safety net.

BUSH: Social Security has provided a safety net for many retirees. And that's an important safety net. But the safety net has got a hole in it. And we need to make sure we save that safety net for future generations of Americans to come.

BASH: White House aides say they understand they didn't do a good enough job trying to give political protection to GOP lawmakers by hitting at home that seniors, a very powerful voting bloc, will not see their benefits affected. So the president repeated that over and over, but he has massive opposition in this campaign to overcome.

Not only is AARP and other like-minded organizations holding rallies nearby about the president's plan, saying that it will make Social Security less solvent, not more, the Democratic National Committee launched its first ad drive, a radio ad, targeting a Republican lawmaker, one who appeared here with Mr. Bush, Mike Ferguson of New Jersey.

UNIDENTIFIED FEMALE: Cutting benefits and borrowing trillions from foreign nations won't solve Social Security problems. It will make them worse. Call New Jersey Congressman Mike Ferguson at 908- 757-7835 and tell him you do not want your benefits cut.

BASH: And Senate Democrats are trying to flex their political muscle. They sent a letter to the president saying that he should categorically reject the idea of personal accounts because 42 senators signed a letter saying that they don't support it. Now, the significance of that is that would make a filibuster impossible to overcome with any personal accounts in legislation.

Recently, Bush officials have signaled the president may be willing to compromise a little bit on the issue of personal accounts, but here in New Jersey the president repeated that he is very much for this because he thinks it is the best way for younger workers to have a return for their retirement. And just to prove his point, perhaps, he stacked the panel here in his discussion about Social Security with testimonials of people saying they support the idea.

Dana Bash, CNN, Westfield, New Jersey.

(END VIDEOTAPE)

WOODRUFF: Thank you, Dana.

Well, Senate Democrats are putting out their own Social Security road show in hopes of upstaging the president, or at least countering his message. Our congressional correspondent Joe John reports from New York.

(BEGIN VIDEOTAPE) UNIDENTIFIED MALE: Reform Social Security now.

UNIDENTIFIED FEMALE: Reform Social Security now.

UNIDENTIFIED MALE: Reform Social Security now.

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT (voice-over): On the street, a few Republicans dressed up in ostrich outfits taunted people as they headed to this event on Social Security, suggesting Democrats are sticking their heads in the sand by refusing to accept private retirement accounts.

NICHOLAS VERTUCCI, NEW YORK YOUNG REPUBLICANS: For young Americans like myself who want to have the opportunity to set money aside to get a better return, all we're asking for is that option.

JOHNS: Inside the hall at Pace University, top Senate Democrats were kicking off a two-day, four-city tour, beginning just blocks from the financial capital on Wall Street, ending in the casino capital of Las Vegas, trying to portray the president's proposal as a gamble. Senator Hillary Rodham Clinton and her colleagues used the word "risk" half a dozen times in the first half-hour.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: I don't think we can ignore what this risky plan would do in terms of adding to our nation's debt.

JOHNS: But at this carefully scripted event, Democrats were taking very little risk of their own, taking no questions from the audience. The real people who got to speak were invited guests sitting on the stage.

VICKIE OWENS, RETIRED HEALTH CARE AIDE: If I would depend on the stock market now, I would be in big trouble.

JOHNS: It was basically a rally, with New York Senator Charles Schumer even leading a chant.

SCHUMER: Fix it, don't nix it.

JOHNS: And a warm welcome back for former presidential candidate John Kerry, who participated in a debate here during the primaries.

SEN. JOHN KERRY (D), MASSACHUSETTS: Social Security is not in crisis. It's not bankrupt.

JOHNS: A far cry from the free-wheeling town meeting last week featuring Senate Republican whip Rick Santorum, who was peppered with often critical questions and skeptical comments from Democrats who had infiltrated the crowd. Here in New York, almost no evidence of dissenting views. Democrats said it was OK because the president was across the river in New Jersey making his best case.

SEN. FRANK LAUTENBERG (D), NEW JERSEY: Is there a better scripted event than George Bush today, President Bush today, in New Jersey having vetted the whole audience in an armory? (END VIDEOTAPE)

JOHNS: Now, Senate Democratic Leader Harry Reid also repeated his assertion today that Democrats will come to the negotiating table, but only after the president takes privatization off of the table. He was joined in that argument today by Max Baucus and Charlie Rangel on Capitol Hill, among others.

Judy, back to you.

WOODRUFF: Joe, reaction among the Democrats to the idea now or what we're hearing the president not so much emphasizing the private accounts today, but emphasizing the fact that the system needs to be shored up fiscally.

JOHNS: Well, clearly that's what they want. That's what Democrats are emphasizing.

They say they do want to talk about solvency. And they even don't mind talking about private accounts as long as they are outside of Social Security, rather than carved out of the money inside of the program.

So Democrats think obviously that is a move in the right direction, but they are pressing for the president to take privatization off of the table. And as you know, that's something the president has been pushing very hard for, Judy. Work in progress.

WOODRUFF: No sign of that yet. If ever. OK. Joe, thank you very much.

Well, with all the political sparring over Social Security, are the Democrats' punches packing any wallop? We'll get the administration's take on the debate coming up next. More of it.

Also ahead, how would a proposal to tie Social Security benefits to income work out for women in different tax brackets?

Plus...

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MINORITY LEADER: I voted against him the last two times. I think he's one of the biggest political hacks we have in Washington.

(END VIDEO CLIP)

WOODRUFF: The Senate minority leader blasted Alan Greenspan on this program yesterday. Today we'll tell you what the bloggers are saying about his remarks.

(COMMERCIAL BREAK)

WOODRUFF: Now for more on the administration's view on how to preserve Social Security and for a comment on today's unemployment and budget deficit numbers, we are joined by Deputy White House Budget Director Joel Kaplan.

Joel Kaplan, good to see you.

JOEL KAPLAN, DEPUTY WHITE HOUSE BUDGET DIRECTOR: Hi, Judy. Thanks for having me.

WOODRUFF: First of all, the Democrats are saying Social Security is fiscally sound right now, the problem doesn't really happen until 50 years down the road. They say, yes, let's address it then, for that period, but not now and not with private accounts.

KAPLAN: Well, Judy, the president and members of his administration are out on the road right now talking to the American people about the problem that Social Security does face. We begin to face that problem in just three years, when the baby boomers, the first baby boomers become eligible for retirement. And by 2018, the Social Security system will be spending -- will be putting more out in benefits than it's taking in, in revenues.

And as a result, at that time, we'll be faced with either massive borrowing, huge tax increases, or cuts to benefits. Obviously that's a president that the problem that the president sees, and he wants to go out there and explain that to the American people and start talking with people, Democrats and Republicans, about ways to address the problem with a comprehensive reform that makes it sound.

WOODRUFF: So when Senator Harry Reid, the minority leader, says that if nothing is done people are still going to draw 100 percent of their benefits for the next 50 years, that the only problem that needs to be addressed is for the period after that?

KAPLAN: Well, first of all, as someone who deals with the budget deficits, what I am concerned about and what the president is concerned about is that we're going to start to see massive borrowing or benefit cuts well before that -- well before that point. And when we get to 2042, when today's younger workers retire, the Social Security system that has done such important work in providing security for our seniors, and will continue to provide security for today's seniors, it will be bankrupt.

And at that point we'll see dramatic cuts in benefits. And that's the problem the president sees, and that he wants to address, and he wants to do that with members of Congress from both parties.

WOODRUFF: Very quickly, the Treasury secretary said today he doesn't think it's a good idea to look at raising the cap on -- the salary cap on which Social Security taxes are levied. So does that mean it's off the table, or is it still on the table?

KAPLAN: Well, as I said, Judy, the president's interested in discussing the problem and working with people in good faith to come up with solutions. It's too early in the process to be taking things off the table. At the same time, it doesn't mean the president is embracing particular proposals that others have.

We want to encourage people to come to the table, to recognize the problem. That's great progress. The president and his administration are going to be out there over the next 60 days reassuring today's seniors, those over 55, that they're going to be receiving their benefits, and that we need a solution to make sure that Social Security there is for today's younger workers when they retire.

WOODRUFF: Let me -- two other quick questions. The deficit today, the nonpartisan Congressional Budget Office put out some numbers basically saying that we're looking at deficits under this administration -- projection $200 billion annually for the next decade, $1.6 trillion over the almost $1 trillion that would occur anyway mainly due to the president's tax cuts being made permanent.

Is this the legacy this president wants to leave?

KAPLAN: Well, Judy, the first thing is, part of this president's legacy is the strong economic growth that we saw today again reflected in the 262,000 new jobs created last month. The tax relief that the president enacted is critical to fueling the recovery that's now well under way and to continuing the strong, robust economic growth.

What the CBO numbers -- I haven't had -- I haven't had a great deal of time to look at them, they just came out this afternoon -- what they do show is that in the next five years, we are on a path to cut the deficit in half, as the president has committed us to. And...

WOODRUFF: Yes. I just want to raise one other thing with you. And I'm sorry to be so short.

KAPLAN: That's OK.

WOODRUFF: But the unemployment numbers out today, there were more people who found jobs, over 260,000. But you also have the unemployment rate going up, and the observation that the pace of job growth still too slow to take up the slack from the so-called jobless recovery.

KAPLAN: Well, I'm sure that there are some who will try to find a cloud in this silver lining, but 262,000 jobs created this month, 2.4 million over the last year alone, I think the uptick in the unemployment rate is a reflection of more people coming into the workforce and looking for jobs because we've got such a strong economy. And the president's got the policies in place and the proposals to keep that economic growth going. We're looking forward to more job creation in the months ahead.

WOODRUFF: Joel Kaplan, he is the deputy White House budget director. We thank you very much. It's good to see you.

KAPLAN: Thanks, Judy. Good to be with you.

WOODRUFF: We appreciate it.

And right now, we want to bring you up to date on a story we've been following over the last hour or so, and that is an incident in Iraq. An Italian journalist who was released from captivity after a month apparently shot at by coalition forces.

For the very latest, let's go it to our Pentagon correspondent, Barbara Starr -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Judy, we do have an update. A spokesman for the multinational force in Iraq has now confirmed to CNN in Baghdad that it was U.S. forces that fired on a car in Baghdad tonight carrying Giuliana Sgrena, the Italian reporter for the Italian newspaper "Il Manifesto." She had been released earlier in the day after being held captive by insurgents in Iraq for several weeks.

Now, according to a statement put out by the coalition, forces fired on a vehicle, the statement says, traveling in Baghdad "at a high rate of speed," approaching a checkpoint. The statement does not say that U.S. forces were involved in the shooting, but separately that has been confirmed to CNN.

Judy, what is very interesting about all of this is the statement saying for the first time that the car was said to be traveling at a high rate of speed, approaching a checkpoint when the firing took place. Now, for anyone who has been in Iraq, this has been a continuing problem.

Cars approaching checkpoints at a high rate of speed often are a matter of great concern to coalition forces, as they watch for possible suicide car bomber attacks. What is not clear in this incident is why the forces manning that checkpoint did not know who was in that car and who was approaching at a high rate of speed.

Giuliana Sgrena, the Italian journalist, said to be injured, being treated tonight in a Baghdad hospital. One person in that automobile she was in killed in the incident. He is said to be an Italian security agent, if you will.

The entire matter remains under investigation. Apparently another tragic accident in Iraq -- Judy.

WOODRUFF: All sorts of questions. Barbara Starr, thank you very much from the Pentagon.

And now we want to turn to Alessio Vinci, CNN correspondent in Rome, for a little on what the Italian government is saying.

Alessio, are you with us?

ALESSIO VINCI, CNN CORRESPONDENT: Yes, Judy. The Italian prime minister, Silvio Berlusconi, just ended a news conference in the last half-hour or so. He did confirm that, indeed, it was U.S. troops that fired on the car.

No information whatsoever given at the fact of how fast the car was approaching that checkpoint. But the Italian prime minister said at some point fire -- shots were fired at that car. That car obviously had -- inside the car there was Giuliana Sgrena, the released hostage, as well as three Italian security officials. Italian secrets agents, if you want, were involved in the negotiations of the release of Giuliana Sgrena. One of those security agents apparently, according to the Italian prime minister, used his body to shield Giuliana Sgrena and was fatally wounded. The two other officers in the car were also wounded.

We understand as well that Giuliana Sgrena was hit by shrapnel to her left shoulder and was immediately taken to a U.S. military hospital in Baghdad where she was given immediately first medical attention. The prime minister, Silvio Berlusconi, has summoned already the U.S. ambassador to Rome, Mr. Mel Sembler. As of five minutes ago, the U.S. ambassador had not left the embassy yet, but we do understand from a embassy spokesman that the U.S. ambassador will be going to the office of the prime minister tonight.

Also, one more information about the killed officer. He was a skilled agent who had already been involved in previous hostage situations involving Italian hostages. He leaves a wife, who incidentally actually worked for the office of the prime minister, and two children.

Back to you, Judy.

WOODRUFF: All right. Alessio Vinci reporting from Rome.

Again, an incident that we've just learned about in the last hour or so, and that is the release. The freed Italian journalist was fired on, the car she was in. Someone who was protecting her was killed. We just heard Alessio referring to him, and as well two others in the car were injured.

We are continuing to gather all the information we can on this, and we'll be sharing it with you as we get it.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

WOODRUFF: It turns out our interview yesterday with the Senate Minority Leader Harry Reid is generating reaction online. With me now to talk about Reid's comments and other stories in the blogosphere this Friday, our CNN political producer Abbi Tatton, and our blog reporter, Jacki Schechner.

Hi, Jacki.

JACKI SCHECHNER, CNN BLOG REPORTER: Hi, Judy.

That you say that some of the reaction is a little bit of an understatement. They're talking about INSIDE POLITICS, specifically the liberal sites. And they're getting into the comments that Harry Reid made to you about Federal Reserve chairman Alan Greenspan, calling him "One of the biggest political hacks we have here in Washington."

Went over to Eskaton (ph), where Atrius (ph) say, "I'm glad the Democrats have realized that Greenspan is part of the problem." They are weighing in on this all over the place.

ABBI TATTON, CNN POLITICAL PRODUCER: Over here to Daily Kos, the guys there at Daily Kos have a call to arms on this. "We should hunt down anything Greenspan has ever written, said or done that reflects poorly on him." Though they do go as far as saying this is not a call for a smear campaign.

Not everyone on the left there agreeing on this one. Some saying it's a little bit too late. "Long, long overdue, " says the American Street (ph) here. "The problem is that the Democrats had a golden opportunity to stick it to Bush, the Republicans and Greenspan last summer but didn't do it." It goes on to say, "That is a classic example of why Kerry and the Democrats lost."

Now we want to bring you an update on another story right here -- actually on this ad. This is an ad by USA Next against the AARP, and in particular, this photo right here. The two people in this photo have been saying that USA Next has been illegally using this photo for their ad campaign.

SCHECHNER: OK. Now, this gets a little complicated, Abbi. So you guys are going to have to try and follow me on this one.

On Monday, this whole controversy broke over the use of the photo. So CNN called USA Next to find out if they had the rights to the photograph. USA Next, through a spokesperson, told us that they paid the "Portland Tribune," who took the photograph, $850 for the use of the photo.

It turns out that's not to true. We went over to AmericaBlog.org today, and just moments ago found out about this article in the "Portland Tribune" saying that they did not sell this photo.

The quote here is, "The paper did not give, sell or contribute its use in any way, and no request for its use was received before the photo appeared in the ad." This was according to the "Portland Tribune" photo director. "Such a request, if submitted, would have been rejected anyway," he says, "because the paper won't sell photos for commercial use without the permission of the people shown in the photo."

So CNN calls back over to USA Next, and the spokesperson says they didn't, in fact, buy the photo but they thought that their Web consultant had. So we spoke to the Web consultant says -- and this is a quote just moments ago -- "We screwed up. We made a mistake."

TATTON: Got to love that quote.

SCHECHNER: So that's what's going on.

Judy, back to you.

WOODRUFF: OK. We are following that one from start to finish. But we'll see if that is, indeed, the finish.

Jacki, Abbi, thank you both. Well, it is a tale of two women. We'll meet a wealthy retiree and we'll meet one who's just getting by. Their experiences and how they feel about Social Security reform when we return.

Plus, after five months in prison, Martha Stewart's back home, but that's not her only good news today.

Stick around. We'll explain.

(COMMERCIAL BREAK)

WOODRUFF: CNN has been following the story of a 9-year-old Florida girl who's been missing for several days. In just a few minutes we are expecting a police news conference. When that news conference gets under way, CNN will carry it live.

Meantime, it's just before 4:00 on the East Coast. And as the markets get set to close on Wall Street, I'm joined by Kitty Pilgrim. She's in New York with "The Dobbs Report."

Hello, Kitty.

KITTY PILGRIM, CNN CORRESPONDENT: Hi, Judy.

We've got a strong rally on Wall Street. That's sending the Dow industrials to their highest level since June of 2001. Solid job numbers helping fuel the gains.

Right now we have the Dow up 106 points. The Nasdaq up nearly 1 percent higher.

Let's look at oil prices. They edged higher again today, closing in on $54 a barrel. Now, analysts say that gasoline prices are likely to soar well above $2 a gallon in the next few days or weeks. The national average right now, $1.92.

There's been something of a drug bust at GlaxoSmithKline. U.S. marshals went to three of the company's plants, actually seized two batches of drugs. The FDA ordered production halt. One of those drugs was Paxil, which is a depression and panic disorder drug. The other was Avandamet. It's a diabetes drug.

Now, the FDA said manufacturing of them failed to meet standards. Neither drug poses a significant health hazard. Patients can continue taking the drugs they have.

Another story, ChoicePoint that exposed more than 145,000 personal identities to fraud artists now is under investigation by two federal agencies. They want to know how the criminals got access to so many pieces of personal information. And they're also questioning suspicious stock sales by the two top executives.

Coming up on CNN, 6:00 p.m. Eastern, "LOU DOBBS TONIGHT," U.S. telecom companies are selling underseas cable to foreign competitors. Is the privacy of our commercial and military communications at risk? We'll tell you all about it at 6:00. For now, back to Judy Woodruff.

WOODRUFF: Hi, Kitty, thank you.

We're going to interrupt -- we're sorry. But the news conference in Citrus County, Florida, police talking about the very latest in the search for missing nine-year-old Jessica Lunsford.

SHERIFF JEFF DAWSY, CITRUS COUNTY POLICE DEPT.: ... he is the lead investigator. They'll be profiling this case on national TV to try to help get as much information out as possible.

The reason why I asked you all to come here was just to address some of those things, answer some of your questions, but also to address to you that there is also information out there that is not new to us.

It has surfaced around the media that the grandfather, Archie, has a criminal record. He does have a criminal record. It's 50 years ago. And for the last week, we have been trying to get some substantial, concrete information about that.

You have to realize, you know, 50 years ago the documentation is much different than it is now, and it's not on a computer. We have asked them to go in and research these records so that we can validate Archie's statements to you.

We do have some information we're going to hand out, I believe, in reference to the charges. But let me go over to you.

He was arrested in '54 in Indianapolis by the police department on a charge of pre-kidnapping. He's pretty well answered that to us. There was no prosecution. He says it was his child. The problem is, I don't have a way to validate that. I have asked Indianapolis to go in and look at the charges.

The other one was in 1958 when he was charged with assault and battery. There was no prosecution and no conviction by his acknowledgment, not by anything of the agency. And I'm trying to get the agency to go in and research that.

And last but not least, in 1959, Titusville, the sheriff's office arrested Lunsford on charges of attempted rape. And I know that sends everybody's signals up high.

Again, apparently the adjudication was withheld. This is again for Archie. It was a female. It was an adult. It never went to trial. And I wish I had some concrete information. We have been asking to research this information for us and get it to me.

But again I do not have that information concrete so I can work out at specifics. And the reward is now up to $115,000 that we're overseeing. And there is conditions to that. Certain people are saying safe returns. Some people are saying just information. So there's all conditions to it, but it's up to $115,000.

That's what I wanted to share with you. I'll answer any other questions you may have.

QUESTION: The assault and battery, what was it on? Do you know? Who was it on, a known person, a child, an adult? Do you have any other information about that?

DAWSY: Do we have anything, Rhonda? OK, we do not.

See, that's our problem. You know, and again, it's 50 years ago. And I'm trying to extrapolate data from 50 years ago. And these people have been very nice to me. They have said they're going into their records to look. But I don't have anything.

QUESTION: What agency was that? The first one was... (OFF-MIKE)

DAWSY: The first one was Indianapolis, the same. The same -- I'm sorry -- the same agency, Indianapolis, and the third one was Titusville.

QUESTION: ... his own acknowledgment that you have from him, no confessions to those crimes 50 years ago?

DAWSY: Well, what happened was, we did the research. We saw these come up. We started questioning about him. But see, when you see something, you have to ask the questions. And normally I can go and I can pull the reports or have the report sent to me and I can validate the information. I have not been able to do that.

QUESTION: He didn't volunteer this, though, until you asked him?

DAWSY: Until we asked him.

WOODRUFF: Sheriff Jeff Dawsy, Citrus County, Florida, talking to reporters about missing nine-year-old Jessica Lunsford. The news there is that it turns out that Jessica Lunsford's grandfather -- we don't have his name here now -- but the grandfather was involved in three criminal events back in the 1950s.

And we heard the sheriff say they are trying to get more information. One an alleged rape, one an alleged assault and battery, and another kidnapping.

But the police -- the sheriff saying they're trying now to collect information and don't have a whole lot to go on. So again we're going to be following that story, and we'll bring you whatever we're able to learn.

We'll be right back after a short break.

(COMMERCIAL BREAK)

WOODRUFF: Welcome back.

Today, President Bush borrowed the Democrats' terminology about Social Security in more ways than one. Launching a new campaign and intensified campaign for his reform plan, Mr. Bush talked about the interest from personal retirement accounts as being a, quote, "add- on." And that is the same term the Democrats used to describe their alternative to allow personal accounts without diverting Social Security taxes to fund them.

(BEGIN VIDEO CLIP)

BUSH: You see, personal accounts is an add-on to that which the government's going to pay you. It doesn't replace the Social Security system. It is a part of making -- getting a better rate of return.

(END VIDEO CLIP)

WOODRUFF: While Mr. Bush was speaking in New Jersey, Senate Democrats were making their Social Security pitch in New York.

Former Bush rival John Kerry took up the party line that Social Security is not in crisis as the president contends.

(BEGIN VIDEO CLIP)

U.S. SENATOR JOHN KERRY (D), MASSACHUSETTS: As usual, diversion, as usual, misleading, as usual, tell the American people, scare them, give them fear and pursue an agenda that is ideological.

(END VIDEO CLIP)

WOODRUFF: Well, there's no shortage of ideas out there for reforming Social Security, including the possibility of reducing benefits for wealthier Americans to protect the system for those who most need it. Our senior political correspondent Candy Crowley looks at that option through the eyes of two women in very different financial circumstances.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN CORRESPONDENT (voice-over): 10:00 a.m. in Fort Lauderdale, 86-year-old Ginia Davis Wexler is at the community center for a go-round with the girls.

11:00 a.m. in Wilkes-Barre, 72-year-old Betty Jean Knorr leads exercise class at a senior center.

They have lived in parallel universes.

GINIA DAVIS WEXLER, RETIRED: This is a picture of me singing with Duke Ellington on board the United States. And there's the Duke playing the piano and I am singing, "In my solitude you haunt me." A song of Duke's I sang, that was the first song.

CROWLEY: She has lived the life fortunate, giving concerts around the world.

WEXLER: I must say this is a very nice album.

CROWLEY: A child of means, Ginia was 50 when she married a prosperous lawyer. He died more than a decade ago. She's a snowbird now, winters in Florida, summers in Maine. With trust and his Social Security, she figures her income at about $200,000 a year.

BETTY JEAN KNORR, RETIRED: And now, our meals that we have every day at the center are $1 donation, if you have it. And most of us do, but sometimes, especially towards the end of the month before you get your Social Security, sometimes people don't always have it.

CROWLEY: Betty Jean was a senior secretary for a construction firm until her 50s when she married and he asked her to quit to be with him.

KNORR: And that's Harold up there, right in that big picture there. That's my baby. And that was at Hershey Park.

CROWLEY: She has lived the life comfortable.

KNORR: I don't know. It seems like I knick-knacked myself to death.

CROWLEY: But not the life certain. Her husband died six years ago. She lives solely on his Social Security. And luxury is what she calls the "Cadillac of walkers," bought on QVC.

KNORR: I put my checks in here. And I don't have to worry about somebody stealing it or ripping it off when I go to the bank to put in my little Christmas account, et cetera.

CROWLEY: Betty Jean and Ginia get roughly the same amount of Social Security, about $17,000 a year.

BUSH: Fixing Social Security permanently will require an open, candid review of the options. Some have suggested limiting benefits for wealthy retirees.

CROWLEY: Means testing, giving less to people with more to help save the system. Critics say it will turn Social Security into welfare and politics on its head.

WEXLER: I like it when the moon is out and the moon is shining across the water, beautiful.

CROWLEY: Nothing that happens will affect Ginia Wexler or Betty Jean Knorr, but they are experts on Social Security and well-versed, opinionated, surprising.

WEXLER: Hello, Morris. What do you think I'm doing with that? No, he knows darn well. He knows me well enough to know that, if I have extra money, I am going to give it away.

CROWLEY: And she does. All his Social Security and a chunk of her annuity's income go to a wide swath of organizations. She believes in charity, and she believes in means testing.

WEXLER: What more do I need? I live in this gorgeous apartment. I have a beautiful place up in Maine.

CROWLEY: It is Betty Jean who opposes means testing. KNORR: That's what I'm down to.

CROWLEY: Social, she says, means everybody, security for everybody, something she learned the day Social Security began.

KNORR: I always remember my dad, because he was one of the first ones that they started taking the money out, you know. And he came home and he said, he said, "Honey," to my mom because she didn't work, he said, "We aren't going to have to worry." He says, "There is always going to be that kind of rock-bottom solid that we'll always have something."

CROWLEY: Candy Crowley, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Candy, thank you very much. We appreciate getting inside the lives of those two women.

Well, new political job opportunities still ahead. Up next, is Senator Trent Lott going back to the future? Bob Novak has the "Inside Buzz."

(COMMERCIAL BREAK)

WOODRUFF: Bob Novak joins us now with some "Inside Buzz."

Bob, I understand, news about the former Senate Majority Leader Trent Lott.

ROBERT NOVAK, CNN CORRESPONDENT: Trent Lott doesn't even know for sure whether he's going to seek re-election, but if he does seek re-election next year, he may seek to come back as majority leader. You remember he was pushed out when he made that silly joke about Strom Thurmond. But right now, Mitch McConnell, the second assistant Republican leader, is the only announced candidate for majority leader to succeed Bill Frist, who's not running again. So if Lott runs against McConnell, it'll be interesting.

WOODRUFF: Hmm, certainly would.

Dick Cheney, the vice president, reaching out to conservative group?

NOVAK: Yes, actually, the House conservatives have not been happy with the administration for a lot of things. So he had the conservative study committee -- Republican Study Committee which is the conservative group over at his residence the other night, about 30 of them. And he said that, you know, when I still had some power, I was a conservative Republican congressman.

WOODRUFF: When he still had some power? As if. As if.

The governor of California, normally the politicians go west to raise money to raise money. But what's he doing? NOVAK: He's going east. On Monday, he is going to be at a Republican Lincoln Day fundraiser in New York City. And that's only $1,000 ticket thing. Then afterwards, Judy, they're going to have a fundraiser at the 21 Club for Arnold Schwarzenegger's re-election. To get in costs you $11,150 a ticket. An odd number, but that's what it is.

But I know you want to go, but there's a problem. They're all sold out at the 21 just to be with Arnold. He can raise money, believe me.

WOODRUFF: That sounds like a precious invitation.

And, finally, you wanted to say something about one of your reports?

NOVAK: Yes, on Monday, I said -- I misspoke myself. I said that the new Democratic National Chairman Howard Dean had said in a speech at Cornell University that the Social Security fund in 30 years would be 80 -- would lose 80 percent of its value. What I meant to say, and what I should have said, is what he said that, that it would, after 30 years, it would be 80 percent of its present value, so it would lose only 20 percent. But he still said there is a problem on Social Security, which is not the party line.

WOODRUFF: OK.

Bob Novak -- in fact, we mentioned this the other day. And we said, as always, we're always happy to make a correction.

Bob, thank you very much. Have a good weekend.

NOVAK: Thank you.

WOODRUFF: See you on CAP GANG, as well as CROSSFIRE.

NOVAK: Thank you.

WOODRUFF: Well, for more of Bob's wisdom, also, be sure to tune in tomorrow for THE NOVAK ZONE. That's at 2:30 p.m. Eastern. He'll be joined by Alaska's Governor Frank Murkowski.

Condoleezza Rice already has an important job, but some Republicans would like to see her make a run for the White House. Up next, President Bush is asked if he thinks Rice would make a good president. His answer next in our "Political Bytes."

(COMMERCIAL BREAK)

WOODRUFF: President Bush comments on talk of a future White House run by Condoleezza Rice in today's "Political Bytes."

In an interview with the "New York Post," Mr. Bush was asked if he thought Rice would make a good president. He did not address the question directly, but he had strong praise for the secretary of state and her performance during a recent trip overseas. "Condi Rice is a remarkable woman," Mr. Bush said. "She is bright, talented, firm and clearly sees where the world is going. And she's going to do a very good job. She took Europe by storm," he said, "and that's good for the United States."

In Pennsylvania, State Treasurer Bob Casey said today that he will run for the Senate next year in hopes of challenging incumbent Republican Rick Santorum. A recent Quinnipiac poll found that Casey, a Democrat known for his opposition to abortion rights, led Santorum by five points in a hypothetical match up. Casey has already been endorsed by a one-time party rival, Governor Ed Rendell.

In Los Angeles, mayoral candidate Bob Hertzberg and a high- profile supporter, the former L.A. Mayor Richard Riordan, put on their racing jackets yesterday and staged a race from downtown to their suburban homes to dramatize the city's traffic problems. Hertzberg won by more than an hour by taking short cuts while Riordan got stuck on the freeway. A spokesman says that both men obeyed the speed limit from start to finish.

That's Los Angeles.

Well, Bill Clinton may be the comeback kid, but Martha Stewart might well be able to teach him a thing or two about public redemption. That story ahead.

(COMMERCIAL BREAK)

WOODRUFF: In case you missed the news, and if you've been watching TV in the last 24 hours, that seems unlikely, Martha Stewart is now a free woman. Our Bill Schneider is out in Los Angeles watching the Stewart story unfold -- Bill?

BILL SCHNEIDER, CNN CORRESPONDENT: Judy, getting out of jail is a good thing, but winning the "Political Play of the Week," now, that's a very good thing.

(BEGIN VIDEO CLIP)

SCHNEIDER (voice-over): Look at the TV coverage of Martha's release.

UNIDENTIFIED MALE: ... this Martha Stewart Friday.

KEITH OLBERMANN, MSNBC: Now, she is bigger than ever.

ANNE THOMPSON, MSNBC: More than a half-billion dollars richer.

SCHNEIDER: Look at her polls. In 2003, when she got indicted, the public's view of Martha Stewart was 53 percent unfavorable to 33 percent favorable. Now it's 53 to 32 percent favorable.

Politicians want to know: How do you turn your image around like that?

(on-screen): If you want to turn a disastrous menu into a triumphant meal, you'll need a recipe for redemption like Martha's.

(voice-over): As in all good recipes, you'll need some stock, about 4,000 shares. Trade them for $288,000. Mix with false statements to investigators, Make sure you do this when there are a lot of corporate scandals with other CEOs behaving badly. Fold in a four-count conviction. Then cook slowly in jail for five months.

Now, here's the secret ingredient: Don't complain. Be brave.

MARTHA STEWART, MARTHA STEWART LIVING OMNIPEDIA: I'm used to all kinds of hard work, as you know. And I'm not afraid. I'm not afraid whatsoever.

SCHNEIDER: Eventually the oven door opens and success.

KEITH NAUGHTON, NEWSWEEK: She looks so youthful and hip in that outfit with the poncho and the jeans.

SCHNEIDER: Although some complain there is something missing in this recipe.

MARGARET CARLSON, CNN'S "CAPITAL GANG": I'm looking for a cup of conscious and a tablespoon of shame to be added to this mix.

SCHNEIDER: But do most people mix those extra ingredients? Not really. Most people believe what Martha Stewart did was not seriously wrong, even if it was illegal. Can this recipe be marketed? You bet.

The share price of Martha's company was $8.64 the day before she was sentenced last year. By the time she got out of jail, it had soared to $33.95.

HARVEY LEVIN, EXEC. PROD., "CELEBRITY JUSTICE": Maybe she will recommend prison. It is certainly working for her.

SCHNEIDER: Advice to politicians: Clip and save Martha Stewart's recipe for redemption, file under "Political Play of the Week."

(END VIDEO CLIP)

SCHNEIDER: Cynics here in Hollywood, and there are plenty of those, like to tell the story of the actor who informed his agent that Elvis had just died. "Smart career move," the agent replied. Well, that's exactly what they're saying about Martha Stewart going to the slammer -- Judy?

WOODRUFF: OK, Bill Schneider, thanks very much.

And now we want to turn the corner to a story we've been following this hour. And that is an Italian journalist who had been held captive by insurgents in Iraq was released and today fired on shortly after, apparently by coalition forces.

More information, CNN's Pentagon correspondent, Barbara Starr, has been collecting. Let's go right to her now -- Barbara? STARR: Judy, more information, indeed. A statement now from the Third Infantry Division in Iraq saying it was U.S. soldiers that fired on this car in Baghdad about 9:00 p.m. this evening in Iraq, that they killed one civilian and wounded two others when they observed a vehicle in Western Baghdad traveling at their U.S. military checkpoint, they say, at high speed.

Now, the statement from the Third Infantry Division says that the soldiers tried to warn the driver traveling at high speed with hand and arm signals to stop, that they flashed light at the driver and fired warning shots in front of the car. All of this would be typical military procedures to stop a vehicle traveling at high speed that was suspect.

But when the driver did not stop, they proceeded to the next step. The statement from the Third I.D. saying soldiers, quote, "shot into the engine block of the car, which stopped the vehicle, killing one and wounding two others."

What we know now is that the Italian journalist, Giuliani Sgrena, for Il Manifesto, was wounded. One man was killed.

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 March 4, 2005 - 15:30   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
ANNOUNCER: In search of security. President Bush is on the road again hoping to shore up support for his Social Security reform plan.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And that's an important safety net, but the safety net has a got a hole in it.

ANNOUNCER: The Democrats are traveling, too, delivering warnings about the president's plan.

SEN. CHARLES SCHUMER (D), NEW YORK: Fix it, don't nix it.

UNIDENTIFIED MALE: Fix it, don't nix it.

UNIDENTIFIED FEMALE: Fix it, don't nix it.

UNIDENTIFIED MALE: Fix it, don't nix it.

ANNOUNCER: Move over Nixon, and Clinton, too. Martha Stewart is showing the world how to really make a comeback.

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

(END VIDEOTAPE)

WOODRUFF: Thank you for joining us.

Sometimes it's not so much what you say as how you say it. So President Bush is tweaking his Social Security reform pitch and borrowing a page from the Democrats' playbook in the process, or rather from their phrase book. Mr. Bush's next stop is Indiana, after launching his intensified sales campaign in New Jersey this morning.

Our White House correspondent Dana Bash is traveling with the president.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Before this trip to New Jersey, the president had already visited nine states trying to sell his Social Security plan. And instead of those travels helping gain support for his proposal, instead polls show that people tend to trust him less to tackle Social Security and people seem much less enthralled with his central idea, which is private accounts for younger workers.

In the face of that waning support there was a notable shift in the way the president talked about Social Security here in New Jersey. At the urging of some fellow Republicans in Congress, he adopted the Democrats' catch phrase. That is, he supports the safety net.

BUSH: Social Security has provided a safety net for many retirees. And that's an important safety net. But the safety net has got a hole in it. And we need to make sure we save that safety net for future generations of Americans to come.

BASH: White House aides say they understand they didn't do a good enough job trying to give political protection to GOP lawmakers by hitting at home that seniors, a very powerful voting bloc, will not see their benefits affected. So the president repeated that over and over, but he has massive opposition in this campaign to overcome.

Not only is AARP and other like-minded organizations holding rallies nearby about the president's plan, saying that it will make Social Security less solvent, not more, the Democratic National Committee launched its first ad drive, a radio ad, targeting a Republican lawmaker, one who appeared here with Mr. Bush, Mike Ferguson of New Jersey.

UNIDENTIFIED FEMALE: Cutting benefits and borrowing trillions from foreign nations won't solve Social Security problems. It will make them worse. Call New Jersey Congressman Mike Ferguson at 908- 757-7835 and tell him you do not want your benefits cut.

BASH: And Senate Democrats are trying to flex their political muscle. They sent a letter to the president saying that he should categorically reject the idea of personal accounts because 42 senators signed a letter saying that they don't support it. Now, the significance of that is that would make a filibuster impossible to overcome with any personal accounts in legislation.

Recently, Bush officials have signaled the president may be willing to compromise a little bit on the issue of personal accounts, but here in New Jersey the president repeated that he is very much for this because he thinks it is the best way for younger workers to have a return for their retirement. And just to prove his point, perhaps, he stacked the panel here in his discussion about Social Security with testimonials of people saying they support the idea.

Dana Bash, CNN, Westfield, New Jersey.

(END VIDEOTAPE)

WOODRUFF: Thank you, Dana.

Well, Senate Democrats are putting out their own Social Security road show in hopes of upstaging the president, or at least countering his message. Our congressional correspondent Joe John reports from New York.

(BEGIN VIDEOTAPE) UNIDENTIFIED MALE: Reform Social Security now.

UNIDENTIFIED FEMALE: Reform Social Security now.

UNIDENTIFIED MALE: Reform Social Security now.

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT (voice-over): On the street, a few Republicans dressed up in ostrich outfits taunted people as they headed to this event on Social Security, suggesting Democrats are sticking their heads in the sand by refusing to accept private retirement accounts.

NICHOLAS VERTUCCI, NEW YORK YOUNG REPUBLICANS: For young Americans like myself who want to have the opportunity to set money aside to get a better return, all we're asking for is that option.

JOHNS: Inside the hall at Pace University, top Senate Democrats were kicking off a two-day, four-city tour, beginning just blocks from the financial capital on Wall Street, ending in the casino capital of Las Vegas, trying to portray the president's proposal as a gamble. Senator Hillary Rodham Clinton and her colleagues used the word "risk" half a dozen times in the first half-hour.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: I don't think we can ignore what this risky plan would do in terms of adding to our nation's debt.

JOHNS: But at this carefully scripted event, Democrats were taking very little risk of their own, taking no questions from the audience. The real people who got to speak were invited guests sitting on the stage.

VICKIE OWENS, RETIRED HEALTH CARE AIDE: If I would depend on the stock market now, I would be in big trouble.

JOHNS: It was basically a rally, with New York Senator Charles Schumer even leading a chant.

SCHUMER: Fix it, don't nix it.

JOHNS: And a warm welcome back for former presidential candidate John Kerry, who participated in a debate here during the primaries.

SEN. JOHN KERRY (D), MASSACHUSETTS: Social Security is not in crisis. It's not bankrupt.

JOHNS: A far cry from the free-wheeling town meeting last week featuring Senate Republican whip Rick Santorum, who was peppered with often critical questions and skeptical comments from Democrats who had infiltrated the crowd. Here in New York, almost no evidence of dissenting views. Democrats said it was OK because the president was across the river in New Jersey making his best case.

SEN. FRANK LAUTENBERG (D), NEW JERSEY: Is there a better scripted event than George Bush today, President Bush today, in New Jersey having vetted the whole audience in an armory? (END VIDEOTAPE)

JOHNS: Now, Senate Democratic Leader Harry Reid also repeated his assertion today that Democrats will come to the negotiating table, but only after the president takes privatization off of the table. He was joined in that argument today by Max Baucus and Charlie Rangel on Capitol Hill, among others.

Judy, back to you.

WOODRUFF: Joe, reaction among the Democrats to the idea now or what we're hearing the president not so much emphasizing the private accounts today, but emphasizing the fact that the system needs to be shored up fiscally.

JOHNS: Well, clearly that's what they want. That's what Democrats are emphasizing.

They say they do want to talk about solvency. And they even don't mind talking about private accounts as long as they are outside of Social Security, rather than carved out of the money inside of the program.

So Democrats think obviously that is a move in the right direction, but they are pressing for the president to take privatization off of the table. And as you know, that's something the president has been pushing very hard for, Judy. Work in progress.

WOODRUFF: No sign of that yet. If ever. OK. Joe, thank you very much.

Well, with all the political sparring over Social Security, are the Democrats' punches packing any wallop? We'll get the administration's take on the debate coming up next. More of it.

Also ahead, how would a proposal to tie Social Security benefits to income work out for women in different tax brackets?

Plus...

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MINORITY LEADER: I voted against him the last two times. I think he's one of the biggest political hacks we have in Washington.

(END VIDEO CLIP)

WOODRUFF: The Senate minority leader blasted Alan Greenspan on this program yesterday. Today we'll tell you what the bloggers are saying about his remarks.

(COMMERCIAL BREAK)

WOODRUFF: Now for more on the administration's view on how to preserve Social Security and for a comment on today's unemployment and budget deficit numbers, we are joined by Deputy White House Budget Director Joel Kaplan.

Joel Kaplan, good to see you.

JOEL KAPLAN, DEPUTY WHITE HOUSE BUDGET DIRECTOR: Hi, Judy. Thanks for having me.

WOODRUFF: First of all, the Democrats are saying Social Security is fiscally sound right now, the problem doesn't really happen until 50 years down the road. They say, yes, let's address it then, for that period, but not now and not with private accounts.

KAPLAN: Well, Judy, the president and members of his administration are out on the road right now talking to the American people about the problem that Social Security does face. We begin to face that problem in just three years, when the baby boomers, the first baby boomers become eligible for retirement. And by 2018, the Social Security system will be spending -- will be putting more out in benefits than it's taking in, in revenues.

And as a result, at that time, we'll be faced with either massive borrowing, huge tax increases, or cuts to benefits. Obviously that's a president that the problem that the president sees, and he wants to go out there and explain that to the American people and start talking with people, Democrats and Republicans, about ways to address the problem with a comprehensive reform that makes it sound.

WOODRUFF: So when Senator Harry Reid, the minority leader, says that if nothing is done people are still going to draw 100 percent of their benefits for the next 50 years, that the only problem that needs to be addressed is for the period after that?

KAPLAN: Well, first of all, as someone who deals with the budget deficits, what I am concerned about and what the president is concerned about is that we're going to start to see massive borrowing or benefit cuts well before that -- well before that point. And when we get to 2042, when today's younger workers retire, the Social Security system that has done such important work in providing security for our seniors, and will continue to provide security for today's seniors, it will be bankrupt.

And at that point we'll see dramatic cuts in benefits. And that's the problem the president sees, and that he wants to address, and he wants to do that with members of Congress from both parties.

WOODRUFF: Very quickly, the Treasury secretary said today he doesn't think it's a good idea to look at raising the cap on -- the salary cap on which Social Security taxes are levied. So does that mean it's off the table, or is it still on the table?

KAPLAN: Well, as I said, Judy, the president's interested in discussing the problem and working with people in good faith to come up with solutions. It's too early in the process to be taking things off the table. At the same time, it doesn't mean the president is embracing particular proposals that others have.

We want to encourage people to come to the table, to recognize the problem. That's great progress. The president and his administration are going to be out there over the next 60 days reassuring today's seniors, those over 55, that they're going to be receiving their benefits, and that we need a solution to make sure that Social Security there is for today's younger workers when they retire.

WOODRUFF: Let me -- two other quick questions. The deficit today, the nonpartisan Congressional Budget Office put out some numbers basically saying that we're looking at deficits under this administration -- projection $200 billion annually for the next decade, $1.6 trillion over the almost $1 trillion that would occur anyway mainly due to the president's tax cuts being made permanent.

Is this the legacy this president wants to leave?

KAPLAN: Well, Judy, the first thing is, part of this president's legacy is the strong economic growth that we saw today again reflected in the 262,000 new jobs created last month. The tax relief that the president enacted is critical to fueling the recovery that's now well under way and to continuing the strong, robust economic growth.

What the CBO numbers -- I haven't had -- I haven't had a great deal of time to look at them, they just came out this afternoon -- what they do show is that in the next five years, we are on a path to cut the deficit in half, as the president has committed us to. And...

WOODRUFF: Yes. I just want to raise one other thing with you. And I'm sorry to be so short.

KAPLAN: That's OK.

WOODRUFF: But the unemployment numbers out today, there were more people who found jobs, over 260,000. But you also have the unemployment rate going up, and the observation that the pace of job growth still too slow to take up the slack from the so-called jobless recovery.

KAPLAN: Well, I'm sure that there are some who will try to find a cloud in this silver lining, but 262,000 jobs created this month, 2.4 million over the last year alone, I think the uptick in the unemployment rate is a reflection of more people coming into the workforce and looking for jobs because we've got such a strong economy. And the president's got the policies in place and the proposals to keep that economic growth going. We're looking forward to more job creation in the months ahead.

WOODRUFF: Joel Kaplan, he is the deputy White House budget director. We thank you very much. It's good to see you.

KAPLAN: Thanks, Judy. Good to be with you.

WOODRUFF: We appreciate it.

And right now, we want to bring you up to date on a story we've been following over the last hour or so, and that is an incident in Iraq. An Italian journalist who was released from captivity after a month apparently shot at by coalition forces.

For the very latest, let's go it to our Pentagon correspondent, Barbara Starr -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Judy, we do have an update. A spokesman for the multinational force in Iraq has now confirmed to CNN in Baghdad that it was U.S. forces that fired on a car in Baghdad tonight carrying Giuliana Sgrena, the Italian reporter for the Italian newspaper "Il Manifesto." She had been released earlier in the day after being held captive by insurgents in Iraq for several weeks.

Now, according to a statement put out by the coalition, forces fired on a vehicle, the statement says, traveling in Baghdad "at a high rate of speed," approaching a checkpoint. The statement does not say that U.S. forces were involved in the shooting, but separately that has been confirmed to CNN.

Judy, what is very interesting about all of this is the statement saying for the first time that the car was said to be traveling at a high rate of speed, approaching a checkpoint when the firing took place. Now, for anyone who has been in Iraq, this has been a continuing problem.

Cars approaching checkpoints at a high rate of speed often are a matter of great concern to coalition forces, as they watch for possible suicide car bomber attacks. What is not clear in this incident is why the forces manning that checkpoint did not know who was in that car and who was approaching at a high rate of speed.

Giuliana Sgrena, the Italian journalist, said to be injured, being treated tonight in a Baghdad hospital. One person in that automobile she was in killed in the incident. He is said to be an Italian security agent, if you will.

The entire matter remains under investigation. Apparently another tragic accident in Iraq -- Judy.

WOODRUFF: All sorts of questions. Barbara Starr, thank you very much from the Pentagon.

And now we want to turn to Alessio Vinci, CNN correspondent in Rome, for a little on what the Italian government is saying.

Alessio, are you with us?

ALESSIO VINCI, CNN CORRESPONDENT: Yes, Judy. The Italian prime minister, Silvio Berlusconi, just ended a news conference in the last half-hour or so. He did confirm that, indeed, it was U.S. troops that fired on the car.

No information whatsoever given at the fact of how fast the car was approaching that checkpoint. But the Italian prime minister said at some point fire -- shots were fired at that car. That car obviously had -- inside the car there was Giuliana Sgrena, the released hostage, as well as three Italian security officials. Italian secrets agents, if you want, were involved in the negotiations of the release of Giuliana Sgrena. One of those security agents apparently, according to the Italian prime minister, used his body to shield Giuliana Sgrena and was fatally wounded. The two other officers in the car were also wounded.

We understand as well that Giuliana Sgrena was hit by shrapnel to her left shoulder and was immediately taken to a U.S. military hospital in Baghdad where she was given immediately first medical attention. The prime minister, Silvio Berlusconi, has summoned already the U.S. ambassador to Rome, Mr. Mel Sembler. As of five minutes ago, the U.S. ambassador had not left the embassy yet, but we do understand from a embassy spokesman that the U.S. ambassador will be going to the office of the prime minister tonight.

Also, one more information about the killed officer. He was a skilled agent who had already been involved in previous hostage situations involving Italian hostages. He leaves a wife, who incidentally actually worked for the office of the prime minister, and two children.

Back to you, Judy.

WOODRUFF: All right. Alessio Vinci reporting from Rome.

Again, an incident that we've just learned about in the last hour or so, and that is the release. The freed Italian journalist was fired on, the car she was in. Someone who was protecting her was killed. We just heard Alessio referring to him, and as well two others in the car were injured.

We are continuing to gather all the information we can on this, and we'll be sharing it with you as we get it.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

WOODRUFF: It turns out our interview yesterday with the Senate Minority Leader Harry Reid is generating reaction online. With me now to talk about Reid's comments and other stories in the blogosphere this Friday, our CNN political producer Abbi Tatton, and our blog reporter, Jacki Schechner.

Hi, Jacki.

JACKI SCHECHNER, CNN BLOG REPORTER: Hi, Judy.

That you say that some of the reaction is a little bit of an understatement. They're talking about INSIDE POLITICS, specifically the liberal sites. And they're getting into the comments that Harry Reid made to you about Federal Reserve chairman Alan Greenspan, calling him "One of the biggest political hacks we have here in Washington."

Went over to Eskaton (ph), where Atrius (ph) say, "I'm glad the Democrats have realized that Greenspan is part of the problem." They are weighing in on this all over the place.

ABBI TATTON, CNN POLITICAL PRODUCER: Over here to Daily Kos, the guys there at Daily Kos have a call to arms on this. "We should hunt down anything Greenspan has ever written, said or done that reflects poorly on him." Though they do go as far as saying this is not a call for a smear campaign.

Not everyone on the left there agreeing on this one. Some saying it's a little bit too late. "Long, long overdue, " says the American Street (ph) here. "The problem is that the Democrats had a golden opportunity to stick it to Bush, the Republicans and Greenspan last summer but didn't do it." It goes on to say, "That is a classic example of why Kerry and the Democrats lost."

Now we want to bring you an update on another story right here -- actually on this ad. This is an ad by USA Next against the AARP, and in particular, this photo right here. The two people in this photo have been saying that USA Next has been illegally using this photo for their ad campaign.

SCHECHNER: OK. Now, this gets a little complicated, Abbi. So you guys are going to have to try and follow me on this one.

On Monday, this whole controversy broke over the use of the photo. So CNN called USA Next to find out if they had the rights to the photograph. USA Next, through a spokesperson, told us that they paid the "Portland Tribune," who took the photograph, $850 for the use of the photo.

It turns out that's not to true. We went over to AmericaBlog.org today, and just moments ago found out about this article in the "Portland Tribune" saying that they did not sell this photo.

The quote here is, "The paper did not give, sell or contribute its use in any way, and no request for its use was received before the photo appeared in the ad." This was according to the "Portland Tribune" photo director. "Such a request, if submitted, would have been rejected anyway," he says, "because the paper won't sell photos for commercial use without the permission of the people shown in the photo."

So CNN calls back over to USA Next, and the spokesperson says they didn't, in fact, buy the photo but they thought that their Web consultant had. So we spoke to the Web consultant says -- and this is a quote just moments ago -- "We screwed up. We made a mistake."

TATTON: Got to love that quote.

SCHECHNER: So that's what's going on.

Judy, back to you.

WOODRUFF: OK. We are following that one from start to finish. But we'll see if that is, indeed, the finish.

Jacki, Abbi, thank you both. Well, it is a tale of two women. We'll meet a wealthy retiree and we'll meet one who's just getting by. Their experiences and how they feel about Social Security reform when we return.

Plus, after five months in prison, Martha Stewart's back home, but that's not her only good news today.

Stick around. We'll explain.

(COMMERCIAL BREAK)

WOODRUFF: CNN has been following the story of a 9-year-old Florida girl who's been missing for several days. In just a few minutes we are expecting a police news conference. When that news conference gets under way, CNN will carry it live.

Meantime, it's just before 4:00 on the East Coast. And as the markets get set to close on Wall Street, I'm joined by Kitty Pilgrim. She's in New York with "The Dobbs Report."

Hello, Kitty.

KITTY PILGRIM, CNN CORRESPONDENT: Hi, Judy.

We've got a strong rally on Wall Street. That's sending the Dow industrials to their highest level since June of 2001. Solid job numbers helping fuel the gains.

Right now we have the Dow up 106 points. The Nasdaq up nearly 1 percent higher.

Let's look at oil prices. They edged higher again today, closing in on $54 a barrel. Now, analysts say that gasoline prices are likely to soar well above $2 a gallon in the next few days or weeks. The national average right now, $1.92.

There's been something of a drug bust at GlaxoSmithKline. U.S. marshals went to three of the company's plants, actually seized two batches of drugs. The FDA ordered production halt. One of those drugs was Paxil, which is a depression and panic disorder drug. The other was Avandamet. It's a diabetes drug.

Now, the FDA said manufacturing of them failed to meet standards. Neither drug poses a significant health hazard. Patients can continue taking the drugs they have.

Another story, ChoicePoint that exposed more than 145,000 personal identities to fraud artists now is under investigation by two federal agencies. They want to know how the criminals got access to so many pieces of personal information. And they're also questioning suspicious stock sales by the two top executives.

Coming up on CNN, 6:00 p.m. Eastern, "LOU DOBBS TONIGHT," U.S. telecom companies are selling underseas cable to foreign competitors. Is the privacy of our commercial and military communications at risk? We'll tell you all about it at 6:00. For now, back to Judy Woodruff.

WOODRUFF: Hi, Kitty, thank you.

We're going to interrupt -- we're sorry. But the news conference in Citrus County, Florida, police talking about the very latest in the search for missing nine-year-old Jessica Lunsford.

SHERIFF JEFF DAWSY, CITRUS COUNTY POLICE DEPT.: ... he is the lead investigator. They'll be profiling this case on national TV to try to help get as much information out as possible.

The reason why I asked you all to come here was just to address some of those things, answer some of your questions, but also to address to you that there is also information out there that is not new to us.

It has surfaced around the media that the grandfather, Archie, has a criminal record. He does have a criminal record. It's 50 years ago. And for the last week, we have been trying to get some substantial, concrete information about that.

You have to realize, you know, 50 years ago the documentation is much different than it is now, and it's not on a computer. We have asked them to go in and research these records so that we can validate Archie's statements to you.

We do have some information we're going to hand out, I believe, in reference to the charges. But let me go over to you.

He was arrested in '54 in Indianapolis by the police department on a charge of pre-kidnapping. He's pretty well answered that to us. There was no prosecution. He says it was his child. The problem is, I don't have a way to validate that. I have asked Indianapolis to go in and look at the charges.

The other one was in 1958 when he was charged with assault and battery. There was no prosecution and no conviction by his acknowledgment, not by anything of the agency. And I'm trying to get the agency to go in and research that.

And last but not least, in 1959, Titusville, the sheriff's office arrested Lunsford on charges of attempted rape. And I know that sends everybody's signals up high.

Again, apparently the adjudication was withheld. This is again for Archie. It was a female. It was an adult. It never went to trial. And I wish I had some concrete information. We have been asking to research this information for us and get it to me.

But again I do not have that information concrete so I can work out at specifics. And the reward is now up to $115,000 that we're overseeing. And there is conditions to that. Certain people are saying safe returns. Some people are saying just information. So there's all conditions to it, but it's up to $115,000.

That's what I wanted to share with you. I'll answer any other questions you may have.

QUESTION: The assault and battery, what was it on? Do you know? Who was it on, a known person, a child, an adult? Do you have any other information about that?

DAWSY: Do we have anything, Rhonda? OK, we do not.

See, that's our problem. You know, and again, it's 50 years ago. And I'm trying to extrapolate data from 50 years ago. And these people have been very nice to me. They have said they're going into their records to look. But I don't have anything.

QUESTION: What agency was that? The first one was... (OFF-MIKE)

DAWSY: The first one was Indianapolis, the same. The same -- I'm sorry -- the same agency, Indianapolis, and the third one was Titusville.

QUESTION: ... his own acknowledgment that you have from him, no confessions to those crimes 50 years ago?

DAWSY: Well, what happened was, we did the research. We saw these come up. We started questioning about him. But see, when you see something, you have to ask the questions. And normally I can go and I can pull the reports or have the report sent to me and I can validate the information. I have not been able to do that.

QUESTION: He didn't volunteer this, though, until you asked him?

DAWSY: Until we asked him.

WOODRUFF: Sheriff Jeff Dawsy, Citrus County, Florida, talking to reporters about missing nine-year-old Jessica Lunsford. The news there is that it turns out that Jessica Lunsford's grandfather -- we don't have his name here now -- but the grandfather was involved in three criminal events back in the 1950s.

And we heard the sheriff say they are trying to get more information. One an alleged rape, one an alleged assault and battery, and another kidnapping.

But the police -- the sheriff saying they're trying now to collect information and don't have a whole lot to go on. So again we're going to be following that story, and we'll bring you whatever we're able to learn.

We'll be right back after a short break.

(COMMERCIAL BREAK)

WOODRUFF: Welcome back.

Today, President Bush borrowed the Democrats' terminology about Social Security in more ways than one. Launching a new campaign and intensified campaign for his reform plan, Mr. Bush talked about the interest from personal retirement accounts as being a, quote, "add- on." And that is the same term the Democrats used to describe their alternative to allow personal accounts without diverting Social Security taxes to fund them.

(BEGIN VIDEO CLIP)

BUSH: You see, personal accounts is an add-on to that which the government's going to pay you. It doesn't replace the Social Security system. It is a part of making -- getting a better rate of return.

(END VIDEO CLIP)

WOODRUFF: While Mr. Bush was speaking in New Jersey, Senate Democrats were making their Social Security pitch in New York.

Former Bush rival John Kerry took up the party line that Social Security is not in crisis as the president contends.

(BEGIN VIDEO CLIP)

U.S. SENATOR JOHN KERRY (D), MASSACHUSETTS: As usual, diversion, as usual, misleading, as usual, tell the American people, scare them, give them fear and pursue an agenda that is ideological.

(END VIDEO CLIP)

WOODRUFF: Well, there's no shortage of ideas out there for reforming Social Security, including the possibility of reducing benefits for wealthier Americans to protect the system for those who most need it. Our senior political correspondent Candy Crowley looks at that option through the eyes of two women in very different financial circumstances.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN CORRESPONDENT (voice-over): 10:00 a.m. in Fort Lauderdale, 86-year-old Ginia Davis Wexler is at the community center for a go-round with the girls.

11:00 a.m. in Wilkes-Barre, 72-year-old Betty Jean Knorr leads exercise class at a senior center.

They have lived in parallel universes.

GINIA DAVIS WEXLER, RETIRED: This is a picture of me singing with Duke Ellington on board the United States. And there's the Duke playing the piano and I am singing, "In my solitude you haunt me." A song of Duke's I sang, that was the first song.

CROWLEY: She has lived the life fortunate, giving concerts around the world.

WEXLER: I must say this is a very nice album.

CROWLEY: A child of means, Ginia was 50 when she married a prosperous lawyer. He died more than a decade ago. She's a snowbird now, winters in Florida, summers in Maine. With trust and his Social Security, she figures her income at about $200,000 a year.

BETTY JEAN KNORR, RETIRED: And now, our meals that we have every day at the center are $1 donation, if you have it. And most of us do, but sometimes, especially towards the end of the month before you get your Social Security, sometimes people don't always have it.

CROWLEY: Betty Jean was a senior secretary for a construction firm until her 50s when she married and he asked her to quit to be with him.

KNORR: And that's Harold up there, right in that big picture there. That's my baby. And that was at Hershey Park.

CROWLEY: She has lived the life comfortable.

KNORR: I don't know. It seems like I knick-knacked myself to death.

CROWLEY: But not the life certain. Her husband died six years ago. She lives solely on his Social Security. And luxury is what she calls the "Cadillac of walkers," bought on QVC.

KNORR: I put my checks in here. And I don't have to worry about somebody stealing it or ripping it off when I go to the bank to put in my little Christmas account, et cetera.

CROWLEY: Betty Jean and Ginia get roughly the same amount of Social Security, about $17,000 a year.

BUSH: Fixing Social Security permanently will require an open, candid review of the options. Some have suggested limiting benefits for wealthy retirees.

CROWLEY: Means testing, giving less to people with more to help save the system. Critics say it will turn Social Security into welfare and politics on its head.

WEXLER: I like it when the moon is out and the moon is shining across the water, beautiful.

CROWLEY: Nothing that happens will affect Ginia Wexler or Betty Jean Knorr, but they are experts on Social Security and well-versed, opinionated, surprising.

WEXLER: Hello, Morris. What do you think I'm doing with that? No, he knows darn well. He knows me well enough to know that, if I have extra money, I am going to give it away.

CROWLEY: And she does. All his Social Security and a chunk of her annuity's income go to a wide swath of organizations. She believes in charity, and she believes in means testing.

WEXLER: What more do I need? I live in this gorgeous apartment. I have a beautiful place up in Maine.

CROWLEY: It is Betty Jean who opposes means testing. KNORR: That's what I'm down to.

CROWLEY: Social, she says, means everybody, security for everybody, something she learned the day Social Security began.

KNORR: I always remember my dad, because he was one of the first ones that they started taking the money out, you know. And he came home and he said, he said, "Honey," to my mom because she didn't work, he said, "We aren't going to have to worry." He says, "There is always going to be that kind of rock-bottom solid that we'll always have something."

CROWLEY: Candy Crowley, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Candy, thank you very much. We appreciate getting inside the lives of those two women.

Well, new political job opportunities still ahead. Up next, is Senator Trent Lott going back to the future? Bob Novak has the "Inside Buzz."

(COMMERCIAL BREAK)

WOODRUFF: Bob Novak joins us now with some "Inside Buzz."

Bob, I understand, news about the former Senate Majority Leader Trent Lott.

ROBERT NOVAK, CNN CORRESPONDENT: Trent Lott doesn't even know for sure whether he's going to seek re-election, but if he does seek re-election next year, he may seek to come back as majority leader. You remember he was pushed out when he made that silly joke about Strom Thurmond. But right now, Mitch McConnell, the second assistant Republican leader, is the only announced candidate for majority leader to succeed Bill Frist, who's not running again. So if Lott runs against McConnell, it'll be interesting.

WOODRUFF: Hmm, certainly would.

Dick Cheney, the vice president, reaching out to conservative group?

NOVAK: Yes, actually, the House conservatives have not been happy with the administration for a lot of things. So he had the conservative study committee -- Republican Study Committee which is the conservative group over at his residence the other night, about 30 of them. And he said that, you know, when I still had some power, I was a conservative Republican congressman.

WOODRUFF: When he still had some power? As if. As if.

The governor of California, normally the politicians go west to raise money to raise money. But what's he doing? NOVAK: He's going east. On Monday, he is going to be at a Republican Lincoln Day fundraiser in New York City. And that's only $1,000 ticket thing. Then afterwards, Judy, they're going to have a fundraiser at the 21 Club for Arnold Schwarzenegger's re-election. To get in costs you $11,150 a ticket. An odd number, but that's what it is.

But I know you want to go, but there's a problem. They're all sold out at the 21 just to be with Arnold. He can raise money, believe me.

WOODRUFF: That sounds like a precious invitation.

And, finally, you wanted to say something about one of your reports?

NOVAK: Yes, on Monday, I said -- I misspoke myself. I said that the new Democratic National Chairman Howard Dean had said in a speech at Cornell University that the Social Security fund in 30 years would be 80 -- would lose 80 percent of its value. What I meant to say, and what I should have said, is what he said that, that it would, after 30 years, it would be 80 percent of its present value, so it would lose only 20 percent. But he still said there is a problem on Social Security, which is not the party line.

WOODRUFF: OK.

Bob Novak -- in fact, we mentioned this the other day. And we said, as always, we're always happy to make a correction.

Bob, thank you very much. Have a good weekend.

NOVAK: Thank you.

WOODRUFF: See you on CAP GANG, as well as CROSSFIRE.

NOVAK: Thank you.

WOODRUFF: Well, for more of Bob's wisdom, also, be sure to tune in tomorrow for THE NOVAK ZONE. That's at 2:30 p.m. Eastern. He'll be joined by Alaska's Governor Frank Murkowski.

Condoleezza Rice already has an important job, but some Republicans would like to see her make a run for the White House. Up next, President Bush is asked if he thinks Rice would make a good president. His answer next in our "Political Bytes."

(COMMERCIAL BREAK)

WOODRUFF: President Bush comments on talk of a future White House run by Condoleezza Rice in today's "Political Bytes."

In an interview with the "New York Post," Mr. Bush was asked if he thought Rice would make a good president. He did not address the question directly, but he had strong praise for the secretary of state and her performance during a recent trip overseas. "Condi Rice is a remarkable woman," Mr. Bush said. "She is bright, talented, firm and clearly sees where the world is going. And she's going to do a very good job. She took Europe by storm," he said, "and that's good for the United States."

In Pennsylvania, State Treasurer Bob Casey said today that he will run for the Senate next year in hopes of challenging incumbent Republican Rick Santorum. A recent Quinnipiac poll found that Casey, a Democrat known for his opposition to abortion rights, led Santorum by five points in a hypothetical match up. Casey has already been endorsed by a one-time party rival, Governor Ed Rendell.

In Los Angeles, mayoral candidate Bob Hertzberg and a high- profile supporter, the former L.A. Mayor Richard Riordan, put on their racing jackets yesterday and staged a race from downtown to their suburban homes to dramatize the city's traffic problems. Hertzberg won by more than an hour by taking short cuts while Riordan got stuck on the freeway. A spokesman says that both men obeyed the speed limit from start to finish.

That's Los Angeles.

Well, Bill Clinton may be the comeback kid, but Martha Stewart might well be able to teach him a thing or two about public redemption. That story ahead.

(COMMERCIAL BREAK)

WOODRUFF: In case you missed the news, and if you've been watching TV in the last 24 hours, that seems unlikely, Martha Stewart is now a free woman. Our Bill Schneider is out in Los Angeles watching the Stewart story unfold -- Bill?

BILL SCHNEIDER, CNN CORRESPONDENT: Judy, getting out of jail is a good thing, but winning the "Political Play of the Week," now, that's a very good thing.

(BEGIN VIDEO CLIP)

SCHNEIDER (voice-over): Look at the TV coverage of Martha's release.

UNIDENTIFIED MALE: ... this Martha Stewart Friday.

KEITH OLBERMANN, MSNBC: Now, she is bigger than ever.

ANNE THOMPSON, MSNBC: More than a half-billion dollars richer.

SCHNEIDER: Look at her polls. In 2003, when she got indicted, the public's view of Martha Stewart was 53 percent unfavorable to 33 percent favorable. Now it's 53 to 32 percent favorable.

Politicians want to know: How do you turn your image around like that?

(on-screen): If you want to turn a disastrous menu into a triumphant meal, you'll need a recipe for redemption like Martha's.

(voice-over): As in all good recipes, you'll need some stock, about 4,000 shares. Trade them for $288,000. Mix with false statements to investigators, Make sure you do this when there are a lot of corporate scandals with other CEOs behaving badly. Fold in a four-count conviction. Then cook slowly in jail for five months.

Now, here's the secret ingredient: Don't complain. Be brave.

MARTHA STEWART, MARTHA STEWART LIVING OMNIPEDIA: I'm used to all kinds of hard work, as you know. And I'm not afraid. I'm not afraid whatsoever.

SCHNEIDER: Eventually the oven door opens and success.

KEITH NAUGHTON, NEWSWEEK: She looks so youthful and hip in that outfit with the poncho and the jeans.

SCHNEIDER: Although some complain there is something missing in this recipe.

MARGARET CARLSON, CNN'S "CAPITAL GANG": I'm looking for a cup of conscious and a tablespoon of shame to be added to this mix.

SCHNEIDER: But do most people mix those extra ingredients? Not really. Most people believe what Martha Stewart did was not seriously wrong, even if it was illegal. Can this recipe be marketed? You bet.

The share price of Martha's company was $8.64 the day before she was sentenced last year. By the time she got out of jail, it had soared to $33.95.

HARVEY LEVIN, EXEC. PROD., "CELEBRITY JUSTICE": Maybe she will recommend prison. It is certainly working for her.

SCHNEIDER: Advice to politicians: Clip and save Martha Stewart's recipe for redemption, file under "Political Play of the Week."

(END VIDEO CLIP)

SCHNEIDER: Cynics here in Hollywood, and there are plenty of those, like to tell the story of the actor who informed his agent that Elvis had just died. "Smart career move," the agent replied. Well, that's exactly what they're saying about Martha Stewart going to the slammer -- Judy?

WOODRUFF: OK, Bill Schneider, thanks very much.

And now we want to turn the corner to a story we've been following this hour. And that is an Italian journalist who had been held captive by insurgents in Iraq was released and today fired on shortly after, apparently by coalition forces.

More information, CNN's Pentagon correspondent, Barbara Starr, has been collecting. Let's go right to her now -- Barbara? STARR: Judy, more information, indeed. A statement now from the Third Infantry Division in Iraq saying it was U.S. soldiers that fired on this car in Baghdad about 9:00 p.m. this evening in Iraq, that they killed one civilian and wounded two others when they observed a vehicle in Western Baghdad traveling at their U.S. military checkpoint, they say, at high speed.

Now, the statement from the Third Infantry Division says that the soldiers tried to warn the driver traveling at high speed with hand and arm signals to stop, that they flashed light at the driver and fired warning shots in front of the car. All of this would be typical military procedures to stop a vehicle traveling at high speed that was suspect.

But when the driver did not stop, they proceeded to the next step. The statement from the Third I.D. saying soldiers, quote, "shot into the engine block of the car, which stopped the vehicle, killing one and wounding two others."

What we know now is that the Italian journalist, Giuliani Sgrena, for Il Manifesto, was wounded. One man was killed.

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