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On the Story

A look at New Hampshire Democratic Primary; President Bush Makes Political Statement with State of the Union

Aired January 24, 2004 - 10:00   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.


JUDY WOODRUFF, CNN CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on what we covered this week. I'm Judy Woodruff in Manchester, New Hampshire, on the final countdown to this first presidential primary.
DANA BASH, CNN WHITE HOUSE CORRESPONDENT: I'm Dana Bash, on the story of President Bush staking out his own political turf in his State of the Union speech Tuesday night.

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: I'm Kelly Wallace in Manchester, New Hampshire, on the story of Democrat John Kerry, who came roaring out of Iowa and hopes New Hampshire will help keep him in the lead.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: I'm Candy Crowley, on the story of how Howard Dean limped home to New England from Iowa and the repairs the Dean team is making.

DARYN KAGAN, CNN CORRESPONDENT: I'm Daryn Kagan, live in Los Angeles. I am on the story of the Golden Globe Awards. I'll tell you why tomorrow night's award show could turn out to be the most fun and most significant of the award season here in Hollywood.

JEANNE MESERVE, CNN CORRESPONDENT: I'm Jeanne Meserve, in New Hampshire, on the story of the John Edwards campaign, hoping the late surge in Iowa will help him again here.

CHRISTINE ROMANS, CNNFN CORRESPONDENT: And I'm Christine Romans, on the story of worries on Wall Street that the market's been doing too well and that a correction may be looming.

Also ahead, the slow process of finding a jury with an open mind about Martha Stewart.

And the disconnect of talk of New jobs as some of the giants of U.S. industry, like Kodak, are talking about big cuts.

And we'll listen to the president's weekly radio address at the end of the hour.

E-mail us at onthestory@cnn.com.

Now straight ahead to Judy in New Hampshire. WOODRUFF: Well, if there was a theme park for politicians and for the people in love with the political game, it would be a lot like New Hampshire in the final days before this primary. You know, there is a growing consensus right now that John Kerry has a lead coming out of Iowa. He is likely to be also in the lead here in New Hampshire.

But at the same time, there's growing agreement that this contest is not going to be over in New Hampshire, that this -- it will go on to the states that vote on February 3, and maybe even beyond. For that reason, voters here taking a hard look at who is going to be in second, third, and even fourth place. John Edwards, Wesley Clark, and Howard Dean, of course.

So this race still very much mixed up. These candidates looking -- not just taking shots subtlety at John Kerry, but also at one another. It's very much alive here, as we are three days away from the New Hampshire primary.

CROWLEY: Judy, I'm wondering if you get any sense of trajectory. Certainly we've seen throughout the week Dean sort of on a slide, Kerry on the upswing. Is there any change in that?

WOODRUFF: No. Dean's slide has continued, Candy. The polls -- we're looking at a number of tracking polls. They're showing that maybe Dean's slide is plateauing. But there's still a debate about how low he can go, if you will. What is the floor going to be for Howard Dean?

At the same time, we're looking at Wesley Clark, who has -- who was doing very well here in New Hampshire. He, too, has fallen back. And there's a question of how far down he is going to fall. He wasn't in play in Iowa.

People looking very closely at John Edwards. He didn't get the bounce coming out of Iowa that John Kerry did, but he is moving up. And there is some sense, talking to reporters, talking to voters, there's a real interest in John Edwards and some real questions about whether he'll be able to move up in the next days.

WALLACE: And Judy, you, of course, talked to the candidates this week, the strategists. We're seeing the tone, especially in Thursday night's debate, very positive. What are you picking up from the strategists on what these other candidates can do as they're battling it out for possibly second, third, or fourth place out of New Hampshire?

WOODRUFF: Well Kelly, what's funny is that so often, as you come into a battle like this, the New Hampshire primary, the candidates start sniping. They would normally be attacking one another. But because of what we saw in Iowa, because John Edwards and John Kerry were able to do well because they were staying away from the negative and going positive, there's a real reluctance on the part of the candidates right now to go hard after each other. They're having to find more subtle ways to go after their opponents, and that's what makes this such a fun story. MESERVE: Judy, a large number of undecided in this state, as of a week ago. Are those people starting to make up their minds or is this situation here still as fluid as it was?

WOODRUFF: No, they are starting to make up their minds, Jeanne. There is still a significant pool of them. But a number of them have moved in the direction of John Kerry. They're saying they have taken a second look at the next-door senator from state of Massachusetts. They like him.

A number of them who were with Howard Dean -- softly, you might say, with Howard Dean -- as I mentioned, looking at John Edwards, looking at him, Wesley Clark. But we are still dealing with a lot of fluidity, as you said, here in these last hours.

KAGAN: Judy, my question comes from out here in California. March 2 is the primary here. You're focused on New Hampshire and then the next step, south Carolina. But millions of voters here wondering if March 2 is going to matter.

WOODRUFF: Well, you know, in fact, Daryn, there is an increasing sense that it may well do that. You know, we in the media, we're so used to looking at Iowa and New Hampshire as giving us the final shape of this race. But as I mentioned, if you have two or three viable candidates coming out of New Hampshire, even if John Kerry comes in first, if John Edwards is able to put up a race, a significant race in South Carolina, if Wesley Clark is able to do well in a couple of other states, Oklahoma, Arizona, you're going to have a contest coming out of February 3.

However, Daryn, having said that, money makes an enormous difference. And at some point, the candidates who are not winning are not going to have the money to be up on the air with television ads, which become more and more important as you move down the road.

BASH: Judy, one of the many differences between Iowa and New Hampshire are those independent voters. The independent voters that can vote in this primary, in New Hampshire. How is that playing into the dynamic there? How is that playing into how the candidates are presenting themselves?

WOODRUFF: You know, it's interesting. I am talk -- I've been to a Kerry event, to an Edwards event here, and also, last night, to a Wesley Clark event. And I am seeing Independent voters looking at all of these candidates.

I was talking with a longtime New Hampshire political reporter, Kevin Landrigan (ph), of "The National Telegraph," and he was saying voters in New Hampshire want to be in the game. They want to participate.

So even if they think of themselves -- maybe they voted in the Republican primary in 2000. This year, they're looking at the Democratic primary, and at this point, they're looking all over the lot. They're looking at Kerry, Edwards, and Clark, and at Joe Lieberman, who we haven't even mentioned yet, the senator from Connecticut.

He had been having a really hard time getting his campaign off the ground. But right now there is some evidence that even Joe Lieberman is picking up. So, you know, it's anybody's guess what the second, third, fourth, and even fifth order of finish is going to be.

ROMANS: Judy, give us a little idea of how it looks behind the scenes. I mean, to me, not covering this race like you are, it looks as though a whole operation just picked up from Iowa and moved to New Hampshire. I'm wondering what that means for the candidates. How much time are they spending talking to people, and how much time are they spending being followed by 50 cameras while they're flipping hamburgers or pancakes?

WOODRUFF: Well, it's both, Christine. That's a good question. I mean, they all -- they are scheduling their day with a number of events. I would say not as many events as they were doing in Iowa because, frankly, raising money has become hugely important for them.

They're having to spend time on the telephone raising money. In the case of John Edwards, for example, he's having to spend time flying down to South Carolina every other day, to put in an appearance, to shore up what support he has down there.

And the candidates are being a little more strategic about the media. They're not doing constant media -- we call them availabilities. They're being more strategic about the interviews they give. So, yes, they're doing voter interaction, but they're also having to think about the entire country and how all the American people are seeing them.

So speaking of all that, John Kerry has an event right here in Manchester today, where he's going to suit up in skates and hockey gear for a game with some Boston Bruins legends. It's a reminder that the political terrain can be very slippery too.

We'll be back on that after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), DEMOCRATIC PRESIDENTIAL CANDIDATE: I have not come here tonight to Exeter just to count down the days until next Tuesday. I've come here to mark with you the beginning of the end of the Bush presidency.

(END VIDEO CLIP)

WALLACE: And Senator John Kerry now has a New name for himself. He calls him "Comeback Kerry" after his Iowa win. But now he must try and keep on winning.

I'm Kelly Wallace. Welcome back to ON THE STORY.

It is so interesting, because inside the Kerry campaign, they don't like the "F" word, front-runner. They do not want to call him the front-runner. They say he is still acting like the underdog. But clearly, they're looking at the polls, they know he is doing well.

You see a little difference in him on the trail. He's spending more time criticizing President Bush's policy. He's not mentioning his rivals by name. Trying to get out and, again, hoping for a win here, too.

CROWLEY: Do they have -- have you talked to them at all about the Iowa win and what they think worked there for him, and whether it applies to New Hampshire?

WALLACE: They think he was doing what he had been doing for weeks and weeks, but he wasn't getting a lot of attention. Howard Dean, as the front-runner, was getting the attention, was the one who was being attacked by the other candidates. And John Kerry was getting out there and becoming a better candidate, going to these town halls.

There was one in Iowa where he said, tell my aides -- you're going to have to call, because Iowans in Davenport have questions. And I'm staying here until I answer the last question. So they think he was a better candidate.

No question, they think doubts about Howard Dean played a role. And people started looking for who has the national security and political experience. And they think he's a winner when it comes to that.

MESERVE: You know, voter after voter here in New Hampshire has said to me that the bottom line for them is electability. And yet I was talking to someone this morning who said, you know, "John Kerry's a real problem in this regard. He's a New Englander, he's a patrician, he's a liberal. Is this guy electable?"

Are they afraid of that? Are they hearing that? Are they seeing that in the polling?

WALLACE: Well, they're certainly concerned about that, no question. He has obviously put all of his resources into Iowa and New Hampshire. He himself said in an interview earlier this week that he needed to, "break through," and then he could focus on the South. He's only really starting to put some more resources in South Carolina and trying to get some endorsements. He got Fritz Hollings, the senator from South Carolina, his endorsement.

So they obviously are trying to get some resources out there. But you are hearing that. You have the Republican Party already painting him as more liberal than the senior senator of Massachusetts, Ted Kennedy. But they think, when you get the debate, if he does become the nominee, that he has that military, national security experience, political experience. So they think that will play well in terms of a head-to-head race with President Bush.

ROMANS: You know, a great showing in Iowa. Coming up number two. What about his momentum, his strategy, as they switch from Iowa to New Hampshire, and where he is sitting right now in terms of the strategy for Kerry as well?

WALLACE: Well, and no question, that's a big concern, Christine. And that is why right after Iowa, Senator Kerry was spending a lot of time on the phone as opposed to necessarily out talking to voters, working the phones, trying to line up endorsements.

We are told he's been calling Congressman Dick Gephardt from Missouri, who dropped out of the presidential race, calling him quite a bit, hoping for an endorsement. Missouri is now wide open. Biggest number of delegates at stake for those February 3 primaries.

So he is trying to expand, hoping to have some momentum after New Hampshire. But again, a big road ahead, because you have Wesley Clark and John Edwards, both candidates from the South, who are already doing much better than John Kerry in some of those states. So a big challenge ahead. They're hoping for momentum, and hoping for endorsements, and making some gains in some of those other states after New Hampshire.

MESERVE: You know, John Edwards had really hoped for a bounce out of Iowa, too. He has gotten one, but oh so small. It hasn't been anything like what they hoped for or expected.

They're still saying they're going to grow here, they're still saying they're going to do better. But clearly he's looking beyond New Hampshire already, looking down to South Carolina. He even left the state yesterday to get down there to try and make a stand, remind people that he's their candidate, he's their son of the South.

WALLACE: Are they surprised, Jeanne? Because he had such a great victory, really, a second place showing in Iowa. Are they surprised he's not seeing more of a bounce yet here in New Hampshire?

MESERVE: You know, they're being very coy. You know how they spin. They'll never make any admissions along those lines.

WALLACE: Right.

MESERVE: But yes, I think they're a little surprised. I was talking to someone this morning who said they thought that part of what happened here was that Kerry has sucked up all the publicity. I mean, that was the biggest story, and that's grabbed all the headlines. And you look at most of the papers and it's John Kerry emblazoned across the front pages here, it's not John Edwards. And they think maybe, you know, that was a factor here and why he hasn't seen the kind of bounce that he hoped for.

ROMANS: All right. From the cold campaign trail in New Hampshire, to cold facts and figures in the economy, did the recession start earlier than we thought and not under this president at all? I'm back on that story right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The American economy is growing stronger, the tax relief you passed is working.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: To make up for the three million private sector jobs that have been lost on the president's watch, the economy would have to create 226,000 jobs a month through the end of his term.

(END VIDEO CLIP)

ROMANS: President Bush gives Congress a pat on the back for tax relief and a growing economy

Welcome back. We're ON THE STORY.

Jobs, jobs, jobs. Even though Wall Street is doing well, even though the Dow is up 43 percent since last March, the focus on Wall Street continues to be jobs. News this week that Kodak will lay off 15,000.

Also, the unemployment line in the latest week only got shorter by about a thousand people. That's not a sign of a very robust jobs market.

So Dana, a lot of people still looking for the evidence that the jobs market is going to improve. In the meantime, it's still a jobless recovery. It's still a joyless recovery, some say. And, you know, Mr. Bush's tax stimulus seems to be working, but a lot of people want to see more proof in the jobs numbers. And some people think maybe the Democrats might be trying to -- or could get a little more strong on the notion that this jobs market is really in trouble.

BASH: And believe me, the White House is well aware of that. But one thing that's really interesting is that, you know, we travel with the president, listen to him every single time he talks. He says the recession is something that he inherited. Apparently there's a report that's coming out that might actually back that up this week?

ROMANS: The National Bureau of Economic Research is the arbiter of all recessions. It has set the beginning and end ending of all recessions all the way back to 1854. It is considering moving this recession's start to maybe the end of 2000 or January 2001, which would put it in the Clinton White House, something that the Bush White House has said for some time. Like, listen, we inherited a really tough problem and the president has taken strong action to try to fix that problem.

It's an interesting year. It's an interesting time. Some people are saying it might be a little bit political, but we'll watch to see if the arbiters of recessions are going to agree with the White House.

KAGAN: Christine, let's go ahead and talk about Martha, Martha, Martha in terms of Martha Stewart. Jury selection goes on. It's been fascinating to watch the coverage of the trial as it unfolds. It seem impossible for the media and even the prosecution to get away from the idea that this is a powerful woman who is facing these serious charges.

ROMANS: It's interesting, too, Daryn, because when you read the transcripts of the jury selection, don't forget, the jury selection's been closed to the media because of all of the media scrutiny and the media coverage. When you read the transcript, you can see that a lot of people either love or hate Martha Stewart. Every now and then, there's somebody who doesn't watch TV who has never even heard of her, which I find incredible.

But the media coverage as well, the references to what she's wearing. I mean, I don't know about all of you, but in journalism school, I was sort of taught that that was just never appropriate, unless it's like a witness to a crime or a perpetrator was wearing blue pants that you were trying to describe in a newspaper. Some people say she's a style guru, so of course everything about her style is fit to be printed.

You know, I say some of the former Enron people who are accused of bilking a company and everything, you know, you don't say that they showed up in handcuffs and a solid gold Rolex, which I guess would be just as appropriate. I don't know. What do you all think?

CROWLEY: Well, you know, on that score I must say that since we know that the attorneys spend so much time on the presentation of their client, I wonder if there's some message that they're sending with Martha Stewart in this. I mean, the message, I'm sure, is success, and one they actually want to send, because I know they talked to one another about it.

Let me take you back and give you a little whiplash here and ask you about the jobs issue. How does one define a recovery now? I mean, it used to be so many quarters of upward growth or something. And, you know, you've got Bush out there saying, hey, it's a great economy, we've done this, we've done that. And you have the Democrats saying, but there are no jobs, there's no jobs. So how do you define recovery now?

ROMANS: Well, we have six quarters in a row now of earnings growth. You know, American companies, their profits are growing. You've got the economy growing. I think six quarters in a row now, four or six quarters in a row now as well.

That's a definition of an economic recovery or economic growth. But there's never been a time when there hasn't been jobs growth that goes along with it, and that has got a lot of the economists sort of scratching their head, trying to figure out what's happening.

I mean, you know, we've been reporting over and over about the off-shoring or the outsourcing of jobs. It looks as though the economy is going through some kind of a new change, some kind of sea change, that, you know, you might have to go back 100 years or the industrial revolution to find another time when it was this dramatic. And that is that the big companies are moving jobs overseas. Peter Viles, one of our colleagues, has been reporting extensively about companies that are spending a lot of money on consultants, trying to figure out how to move as many American jobs overseas as they can, because in some countries they can do the work for 20 cents on the dollar. That mean those jobs might never come back. And then what happens?

How can the recovery continue to go on? And politically, what kind of fallout could there be? It's a very interesting time in terms of jobs in the economy right now.

WALLACE: Christine, I want to go back to the fascinating Martha Stewart. And picking up on on the point Candy was just raising about the message.

You know, you're talk to the lawyers, your colleagues are talking to the lawyers. What is their strategy here? What are they trying to do? What are they trying to convey to the jury? What is the best jury they can hope for when it comes to helping Martha Stewart's case?

ROMANS: It's still pretty early. And it looks as though, you know, they're trying to make sure that you're not going to have Martha-haters or people who are hiding the fact that they're Martha- haters on this jury. Also, they have to be careful about finding people who just don't like rich people.

One of the potential jurors said listen, you know, people have a lot of money. You know, I wonder how they got there. It makes me a little nervous. I don't think I trust people with a lot of money.

So there's both of those things going for them as well. There's also sort of this idea that maybe they're going to go after this. This is an unfairly prosecuted case, this is a case of little white lies. It's not necessarily a case of insider trading, and that that might be the angle they go for.

So it's still pretty early in the process, jury selection not done yet. But it proves to be fascinating. Of course there's a gaggle of reporters and cameras down in the freezing cold. And I was sort of predicting earlier this week that these reporters were all in parkas doing live shots right now. By the time it's over, I think there will be tulips blooming in lower Manhattan.

CROWLEY: From the world of business, we're going to come back to the political world and Howard Dean, and how to re-tool a campaign in a few days.

We're back ON THE STORY after this a check of the hour's top stories.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: May I say, we are going to win in South Carolina, we are going to win in New York, we will win in Ohio, we're going to win in Arizona...

(APPLAUSE)

(CHEERING)

DEAN: And then we're going to win in Massachusetts. After that, we'll win in New York. I couldn't resist.

(END VIDEO CLIP)

(LAUGHTER)

CROWLEY: Howard Dean, Take 2. You know this has been a week -- what else, the "I Have a Scream" speech, as they're calling it, out of Iowa. Fascinating, as they try to make Howard Dean a more rounded figure, not just that guy up there, the insurgent. But you know, they hauled out Mrs. Dean with a -- for a Diane Sawyer interview. He went on Letterman to do the "I can laugh at myself." On the trail, he's been much more subdued. I thought this was a riot last night.

MESERVE: Do they think all those efforts have worked?

CROWLEY: Well, he thinks they have. I mean we haven't seen a lot of evidence of that in the poll. I think, Judy said in the beginning, there may be some evidence he's bottomed out here. The question is now can he climb back up? Twelve points is...

MESERVE: A long way to go for three days.

CROWLEY: ... a long way to go for three days.

WALLACE: What was it, Candy, because you were in the room that night, for that Monday speech? What was your impression of the speech, and what happened? Was it that by being on television screens and people seeing Howard Dean that way, it just reinforced the perception?

CROWLEY: Yes. I mean in a word, yes. I mean look, when you were in the room -- first of all, this was a crazy crowd before he came out. Tom Harkin came out and they were nuts. And they were, you know, it was sort of a typical Dean speech. It didn't really sort of strike me as, oh, my goodness, he's gone nuts, he's angry. It struck me as, you know, he's doing his shtick.

I think in a lot of ways this is the Howard Dean that revved up those people who never get into politics. And you know, and he has this thing he does where he goes, you know, and they've got health care in you know, Sweden and the Dutch and the this and it is that. You know, and the crowd goes with him. And this was sort of more of that. And what was lost on him is the cameras are giving him a larger audience than he's ever had before that night. And the camera, you know, really can be harsh.

MESERVE: We all know that.

WALLACE: We all know that, I was going to say, as we know that first hand.

(LAUGHTER)

CROWLEY: And so it came across and reinforced those things. But I just think in a way, he really, again, just got stuck inside his own shtick.

BASH: Candy, Watching Howard Dean this week, I'm sort of waiting for him to call Al Gore and borrow his earth tones to be wearing to try to change his image.

But we were talking earlier. And you were saying that you kind of think that perhaps, just spending some time with him. That the toned down, more rounded image, if you will, is perhaps maybe who he actually is?

CROWLEY: Well, you know, I'm by no means an expert on Howard Dean. But I don't get the sense -- and he, in the interview he did with Diane Sawyer, said something very interesting. He had said before, I want to go back to who I am. And she said, you know, you've said this; what does that mean? He said, I mean I'm not a rock 'n' roll star. And I think he was -- you know, is a -- while he loved that role of insurgent and rev them up and everything, my sense is he's basically sort of a quiet bureaucrat, much like the people we see coming in and out of Washington.

I mean he's -- you know, certainly, he has, you know that kind of inner passion. But he's -- my sense of being around him is just that he is more naturally a quiet and just this side of shy guy, believe it or not. And that this was a way to get in -- to find a niche within the party. And that was the anti-war niche that was very angry. And he gave voice to their anger. I don't think it's necessarily his anger.

KAGAN: Candy, my question is about the ever-evolving role of the political wife. It seems like the Dean campaign isn't quite sure what to do with Mrs. Dean who happens to be Dr. Dean, and incredibly accomplished woman on her own. First she's nowhere, then she shows up in Iowa, then she's by Howard Dean's side with Diane Sawyer. They don't quite seem to know what she's supposed to be doing.

(LAUGHTER)

CROWLEY: Right. Well, you know, women are just always a problem.

WALLACE: Ohh...

(LAUGHTER)

KAGAN: Yes. That's us.

CROWLEY: Well, first of all; let's get this straight. It's Dr. Steinberg when she's work and Judy Dean when she's not. She came to Iowa as Judy Dean. Listen, it has been their choice to keep her at home. She has a teenaged son. She has a thriving practice. She's described as a woman very in to tending for her patients, as well as a family woman. Yes, that's understandable.

But here's what happens when they watched his numbers start to drop in Iowa, all they had was Howard Dean. I mean listen to those other stories the candidates tell you. We all know that John Edwards is the son of a mill worker. We all know that Richard Gephardt had a father who was a milk truck driver. We all know that John Kerry was over in Vietnam.

What do we know about Howard Dean? He was the governor of Vermont. There was no flesh to him, there was no heart to him there was no pulse to him, and they wanted to get that back. And that's the wife. And that's the role -- you know, they've tried the sweater. And we all kept saying, you know, what's the deal with the sweaters? And then they brought her in and she was charming, and she was all that. But it was like she was there for two events, then went back. Then when the speech got so panned, they brought her back on nationwide television just to give him some flesh.

BASH: Well, Candy, we're going to go from all of the would-be presidents up there in New Hampshire to the incumbent back here. We're back on that story in a moment. What did George W. Bush gain from the nation in his speech on Tuesday night? We're back on that story in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT, UNITED STATES OF AMERICA: Now we face a choice. We can go forward with confidence and resolve. Or we can turn back to the dangerous illusion that terrorists are not plot and outlaw regimes are no threat to us.

(END VIDEO CLIP)

BASH: "We now face a choice," said President Bush, Tuesday night in his State of the Union Address. The speech that was, by all accounts, a blueprint for election year theme.

You know, Christine, it's not always easy being the guy who is attacked by eight people constantly, all the time. But sometimes, like Tuesday night, it is definitely good to be the incumbent. Forty- three million people watched the president speak for one hour on a stage that looked quite different from the way it looks on the campaign trail. And that was the strategy of the Bush team, was to make it different in tone, to make it different in theater. Which, of course, it was by definition; but also to make it different, and to make a contrast in substance. That was exactly what they tried to do.

ROMANS: Very presidential on the day after the Iowa caucuses when it looked as though the Democrats were up for grabs, trying to figure out who was going to be leading.

What about the headline from this though? I mean two years ago it was axis of evil, last year it was weapons of mass destruction. Is it war on terror? Is it steroids? It's not steroids. Is it -- what -- what was it -- by design, it didn't seem to be a headline?

BASH: The headline really is, is that there is no headline. It was by design, because the headline was sort of implied, which is I'm your guy. I'm your guy who is keeping you safe. I'm the guy who has been sort of, you know, been the master of fighting the war on terrorism; don't change course. We're at a war, why would you want to change generals, change commanders in chief during a war?

But on domestic front, there really were no headlines because of what you were talking earlier, Christine, $500 billion deficit. So there wasn't a lot the president could do; in terms of giving out some of those big, domestic initiatives that presidents like to and can do, generally, in election years.

CROWLEY: Dana, you know, one thing I know from being out here and covering most of these Democrat candidates, is that their major theme is it's the big corporation, and the big lobbyists, and the big, money guys are in charge in Washington. And we're going to bring the real people back. You know, the oil contacts, Halliburton. Does the Bush White House ever start to formulate a push back to that?

BASH: Well certainly. You know, they, the president and his team, are absolutely well aware of that. Particularly with Halliburton, it's been in the headlines this week. And they -- right now, they're saying, oh, it's just politics. You know, it's just typical Democratic, political rhetoric. They're trying to get at the president. And that's really the only way they know how. But you did see for the first time this week in, really, many months, the president out there with real people. Sort of trying to have the same, similar image that you're seeing from the Democrats. He went to a -- we were traveling this week after the State of the Union to three, very important states. One of those was New Mexico.

He had an unscheduled stop, which we never, ever see from the president. And we'll certainly see more of. He went -- and he had some lunch with some, regular people. He, you know, was sort of talking about the fact he needed to help the economy there. So imagery is beginning to change and we're heading more into, really, into campaign mode.

MESERVE: Dana, you know, we think of State of the Unions as being lofty statements about the future of the nation, laying out an agenda. But the president did throw in the steroids business. Where did that come from? What was that all about, please?

BASH: You know, that was almost, exactly the question that I asked to a lot of people at the White House, just like that. Because we all sort of watched that and went, what was that? Because it's really, generally not George Bush's style to use the "bully pulpit," if you will, that way. Now, what I was told by one of his senior aides was that he came to them and said, look, I've been talking to my friends in baseball. I have been, you know, thinking about this issue for a really, long time. Obviously, baseball is close to his heart. And he wanted to do it. He said I want to put this in the speech. And they said, OK. WALLACE: Dana, of course, the White House must be watching very closely what is happening here in New Hampshire. So what are your sources saying about what the White House thinks about the possibility here that John Kerry, not Howard Dean, could be the nominee?

BASH: You know, Kelly, on Tuesday night, as the returns were coming in, I was blackberrying -- e-mailing some of the president's political advisers, saying, what do you think of Kerry? You know, tell me what you think. And immediately, it was, well, you know, he's not that moderate. He's really not that moderate.

And you know, this week, as you were talking about, we heard the Republican National Committee chairman saying that he is more liberal than Ted Kennedy, which you know, for anybody it's hard to believe. So they're certainly changing. They're certainly thinking about John Kerry; very, very different kind of campaign that they would run against him versus Howard Dean, which is what they were planning on.

KAGAN: Well, we've been talking politics and primaries and battlegrounds. But if you want to talk a real battleground, how about the award season? It's about to kick off here in Hollywood. The Golden Globes will be taking place here tomorrow. I'll give you a preview of what you can expect when the stars come out.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TOM CRUISE, ACTOR: I don't make movies for awards, you know, it's -- that's always kind of the icing on the cake.

CHARLIZE THERON, ACTRESS: It ain't bad. Let's just say that it's really nice.

(END VIDEO CLIP)

KAGAN: Two of the big megastars we'll see walking down the red carpet here in Hollywood tomorrow. Tom Cruise nominated for "The Last Samurai. And Charlize Theron, who is nominated for her role in "Monster."

Tomorrow does kick off the huge award season here in Hollywood. The Golden Globe awards, a lot of people wondering, who are the Golden Globe awards? Well, it's the Hollywood Foreign Press Association, 90 journalists who contribute to foreign-based publications. That's it. Compare that to the 5700 industry people who will vote on the Oscars. The significance of this year's awards race, the Oscar taking a page from the state, that sick of not having significance in the primaries. They have moved up the Oscars by a month; it will be on a Leap Year on February 29.

So buckle your seat belts, ladies because we're about to take off. Tomorrow, the Golden Globes, Tuesday, the Oscar nominations come out, then a few other awards, and then the Oscars February 29.

BASH: Daryn, we are so jealous back here on the East Coast. We know you'll be on the red carpet tomorrow. Tell us about your bling- bling. What are you going to be wearing in terms of the ice all over your ears and your neck, and everywhere else in?

KAGAN: You get right to it Dana?

BASH: Important stuff.

KAGAN: It's all about the jewels, isn't it? Well, it is about fashion. And actually, there is a significant, fashion story taking place out here, because the word is, and it not just who wins. But what do you wear. This is me trying on diamonds yesterday.

BASH: Very nice.

KAGAN: That was Martin Katz, he brought those by -- I think those were about $400,000. Guess what? I'm not...

BASH: It's on your expense account, right?

KAGAN: ... borrowing those -- yes, exactly. CNN accounting would be very interested in that.

You know, it's huge business, not just in winning awards. But I've talked to a number of designers, and stylists, and jewelers, they cannot even put a price tag on what it means to have a star wear their jewels and designers; and when that shows up in fashion magazines.

BASH: Wow.

KAGAN: And the word out here is that the top designers are going exclusive this year. And you will only see one star, for instance, in Yves St. Lawrence. You will only see one star one star in Ralph Lauren. And it causes this big scramble because what if you're like a "B" or "C" list star that had planned on wearing that designer? Guess what? They're pulling your dress and you need to find a new one tomorrow to wear on the red carpet.

ROMANS: Daryn, who cares about the on-screen drama? Let's talk about the behind the screens drama. Beniffer is no more, or so they tell us.

KAGAN: Yes.

ROMANS: And Jennifer Lopez is one of the presenters. I'm wondering if there will be any kind of machinations to make sure that, you know, she doesn't get caught with any television cameras? And also Nicole Kidman and Tom Cruise, could they run into each other on the red carpet? Tell us all about that.

KAGAN: Yes. Well, I have scoop on all that.

(LAUGHTER)

KAGAN: First of all, yes. Jennifer Lopez will be making her single debut, or re-single debut. She is a presenter. And interestingly enough, she's presenting a category that Ben Affleck happened to win, for best original screenplay, what, like four or five years ago, for "Good Will Hunting. So a little bit of twist in that.

And yes, both Nicole Kidman and Tom Cruise will be here tomorrow. They are both nominees. Nicole Kidman is a nominee for "Cold Mountain." And as I said before, Tom Cruise for "Last Samurai." I think their tables are just one table apart. But they have been very public in being supportive of each other as parents and as fellow performers. So I don't know how much drama there will be there, but it will be interesting to see them both at an awards show; I think for the first time since they split.

I happened to run into Nicole Kidman right here in the CNN bureau yesterday. I had a little girlfriend moment with her, talking about what is the big concern. It might actually rain tomorrow night, 62- degrees and rain. And what do you do with your hair and the frizz? She said she's

CROWLEY: Aww, 62-degrees and rain.

KAGAN: ... wearing her hair curly so she's not that concerned. Yes. There's your sweep; Nicole Kidman will have curly hair.

WALLACE: Yes. Yes. We are not feeling that pain.

(LAUGHTER)

MESERVE: I think we could all give her a few tips.

CROWLEY: Yes, 62-degrees and rain. Sorry, Daryn.

KAGAN: I know.

CROWLEY: Listen. How do these things get -- does one of these award ceremonies build on the next one? So if something wins here, does it then get the next step up to whatever the big award is? And what is the big award?

KAGAN: And -- well, the big -- of course, the big Mac Daddy is the Oscars. There's no way around that. But very interesting, Candy, how the schedule is going to change things. The significance of the Golden Globes used to be, despite who they are and how they come up with their award, used to be that once a Golden Globe was presented, there was 10 days still left for Oscar nominations to be entered. Those are all done and closed. Those nominations, that I said, will be announced Tuesday.

Some people think, though, this might make the Golden Globes even more significant because perhaps it's going to affect who wins the big award, rather than just who is nominated.

WALLACE: Daryn, very quickly, what's the buzz? What are the movies or actor, actress that are getting the most buzz to likely be the winners here at the Golden Globes?

KAGAN: The big buzz, of course, on "Lord of the Rings," the third trilogy, "The Return of the King," will Peterson Jackson finally be rewarded for the huge -- for what some people consider, the biggest gamble in show biz history that has proven to be very successful.

In acting, Sean Penn in "Mystic River. Golden Globes tend not to like to reward bad boys, but he was amazing in that movie. And Charlize Theron in "Monster" has the big buzz to walk away for best actress.

ROMANS: All right. And Daryn gets to wear a gown.

Thanks, Daryn.

President Bush gets his say when we're back ON THE STORY in a moment.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (voice-over): Joan Kroc died last year. But the wife of the founder of McDonald's was back in the headlines this week. What's her story? Coming up.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (voice-over): Did Joan Kroc, the wife of the founder of McDonald's, ever hear those bells ringing at Christmastime, calling people to toss in a contribution for the Salvation Army?

Mrs. Kroc was in the news this week. What's her story? She died last year and just this week, the Salvation Army announced she had left it $1.5 billion in her will to build and staff 25 to 30 community center. Similar to one she built in San Diego, where one former mayor dubbed her "Saint Joan of the Arches."

(END VIDEO CLIP)

BASH: Thanks to my colleagues, especially our hard-working team in New Hampshire. And thank you for watching ON THE STORY; we'll be back next week.

Still ahead, Beniffer might be no more being but "PEOPLE IN THE NEWS" is focusing this week on Ben Affleck and Jennifer Lopez. At 12:00 p.m. Eastern, 9:00 a.m. Pacific, CNN "LIVE SATURDAY." And 1:00 p.m. Eastern, 10:00 a.m. Pacific, CNN's "IN THE MONEY."

Coming up at the top of the hour a check of our top stories. But first, the president's weekly radio address.

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




Makes Political Statement with State of the Union>


Aired January 24, 2004 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JUDY WOODRUFF, CNN CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on what we covered this week. I'm Judy Woodruff in Manchester, New Hampshire, on the final countdown to this first presidential primary.
DANA BASH, CNN WHITE HOUSE CORRESPONDENT: I'm Dana Bash, on the story of President Bush staking out his own political turf in his State of the Union speech Tuesday night.

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: I'm Kelly Wallace in Manchester, New Hampshire, on the story of Democrat John Kerry, who came roaring out of Iowa and hopes New Hampshire will help keep him in the lead.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: I'm Candy Crowley, on the story of how Howard Dean limped home to New England from Iowa and the repairs the Dean team is making.

DARYN KAGAN, CNN CORRESPONDENT: I'm Daryn Kagan, live in Los Angeles. I am on the story of the Golden Globe Awards. I'll tell you why tomorrow night's award show could turn out to be the most fun and most significant of the award season here in Hollywood.

JEANNE MESERVE, CNN CORRESPONDENT: I'm Jeanne Meserve, in New Hampshire, on the story of the John Edwards campaign, hoping the late surge in Iowa will help him again here.

CHRISTINE ROMANS, CNNFN CORRESPONDENT: And I'm Christine Romans, on the story of worries on Wall Street that the market's been doing too well and that a correction may be looming.

Also ahead, the slow process of finding a jury with an open mind about Martha Stewart.

And the disconnect of talk of New jobs as some of the giants of U.S. industry, like Kodak, are talking about big cuts.

And we'll listen to the president's weekly radio address at the end of the hour.

E-mail us at onthestory@cnn.com.

Now straight ahead to Judy in New Hampshire. WOODRUFF: Well, if there was a theme park for politicians and for the people in love with the political game, it would be a lot like New Hampshire in the final days before this primary. You know, there is a growing consensus right now that John Kerry has a lead coming out of Iowa. He is likely to be also in the lead here in New Hampshire.

But at the same time, there's growing agreement that this contest is not going to be over in New Hampshire, that this -- it will go on to the states that vote on February 3, and maybe even beyond. For that reason, voters here taking a hard look at who is going to be in second, third, and even fourth place. John Edwards, Wesley Clark, and Howard Dean, of course.

So this race still very much mixed up. These candidates looking -- not just taking shots subtlety at John Kerry, but also at one another. It's very much alive here, as we are three days away from the New Hampshire primary.

CROWLEY: Judy, I'm wondering if you get any sense of trajectory. Certainly we've seen throughout the week Dean sort of on a slide, Kerry on the upswing. Is there any change in that?

WOODRUFF: No. Dean's slide has continued, Candy. The polls -- we're looking at a number of tracking polls. They're showing that maybe Dean's slide is plateauing. But there's still a debate about how low he can go, if you will. What is the floor going to be for Howard Dean?

At the same time, we're looking at Wesley Clark, who has -- who was doing very well here in New Hampshire. He, too, has fallen back. And there's a question of how far down he is going to fall. He wasn't in play in Iowa.

People looking very closely at John Edwards. He didn't get the bounce coming out of Iowa that John Kerry did, but he is moving up. And there is some sense, talking to reporters, talking to voters, there's a real interest in John Edwards and some real questions about whether he'll be able to move up in the next days.

WALLACE: And Judy, you, of course, talked to the candidates this week, the strategists. We're seeing the tone, especially in Thursday night's debate, very positive. What are you picking up from the strategists on what these other candidates can do as they're battling it out for possibly second, third, or fourth place out of New Hampshire?

WOODRUFF: Well Kelly, what's funny is that so often, as you come into a battle like this, the New Hampshire primary, the candidates start sniping. They would normally be attacking one another. But because of what we saw in Iowa, because John Edwards and John Kerry were able to do well because they were staying away from the negative and going positive, there's a real reluctance on the part of the candidates right now to go hard after each other. They're having to find more subtle ways to go after their opponents, and that's what makes this such a fun story. MESERVE: Judy, a large number of undecided in this state, as of a week ago. Are those people starting to make up their minds or is this situation here still as fluid as it was?

WOODRUFF: No, they are starting to make up their minds, Jeanne. There is still a significant pool of them. But a number of them have moved in the direction of John Kerry. They're saying they have taken a second look at the next-door senator from state of Massachusetts. They like him.

A number of them who were with Howard Dean -- softly, you might say, with Howard Dean -- as I mentioned, looking at John Edwards, looking at him, Wesley Clark. But we are still dealing with a lot of fluidity, as you said, here in these last hours.

KAGAN: Judy, my question comes from out here in California. March 2 is the primary here. You're focused on New Hampshire and then the next step, south Carolina. But millions of voters here wondering if March 2 is going to matter.

WOODRUFF: Well, you know, in fact, Daryn, there is an increasing sense that it may well do that. You know, we in the media, we're so used to looking at Iowa and New Hampshire as giving us the final shape of this race. But as I mentioned, if you have two or three viable candidates coming out of New Hampshire, even if John Kerry comes in first, if John Edwards is able to put up a race, a significant race in South Carolina, if Wesley Clark is able to do well in a couple of other states, Oklahoma, Arizona, you're going to have a contest coming out of February 3.

However, Daryn, having said that, money makes an enormous difference. And at some point, the candidates who are not winning are not going to have the money to be up on the air with television ads, which become more and more important as you move down the road.

BASH: Judy, one of the many differences between Iowa and New Hampshire are those independent voters. The independent voters that can vote in this primary, in New Hampshire. How is that playing into the dynamic there? How is that playing into how the candidates are presenting themselves?

WOODRUFF: You know, it's interesting. I am talk -- I've been to a Kerry event, to an Edwards event here, and also, last night, to a Wesley Clark event. And I am seeing Independent voters looking at all of these candidates.

I was talking with a longtime New Hampshire political reporter, Kevin Landrigan (ph), of "The National Telegraph," and he was saying voters in New Hampshire want to be in the game. They want to participate.

So even if they think of themselves -- maybe they voted in the Republican primary in 2000. This year, they're looking at the Democratic primary, and at this point, they're looking all over the lot. They're looking at Kerry, Edwards, and Clark, and at Joe Lieberman, who we haven't even mentioned yet, the senator from Connecticut.

He had been having a really hard time getting his campaign off the ground. But right now there is some evidence that even Joe Lieberman is picking up. So, you know, it's anybody's guess what the second, third, fourth, and even fifth order of finish is going to be.

ROMANS: Judy, give us a little idea of how it looks behind the scenes. I mean, to me, not covering this race like you are, it looks as though a whole operation just picked up from Iowa and moved to New Hampshire. I'm wondering what that means for the candidates. How much time are they spending talking to people, and how much time are they spending being followed by 50 cameras while they're flipping hamburgers or pancakes?

WOODRUFF: Well, it's both, Christine. That's a good question. I mean, they all -- they are scheduling their day with a number of events. I would say not as many events as they were doing in Iowa because, frankly, raising money has become hugely important for them.

They're having to spend time on the telephone raising money. In the case of John Edwards, for example, he's having to spend time flying down to South Carolina every other day, to put in an appearance, to shore up what support he has down there.

And the candidates are being a little more strategic about the media. They're not doing constant media -- we call them availabilities. They're being more strategic about the interviews they give. So, yes, they're doing voter interaction, but they're also having to think about the entire country and how all the American people are seeing them.

So speaking of all that, John Kerry has an event right here in Manchester today, where he's going to suit up in skates and hockey gear for a game with some Boston Bruins legends. It's a reminder that the political terrain can be very slippery too.

We'll be back on that after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), DEMOCRATIC PRESIDENTIAL CANDIDATE: I have not come here tonight to Exeter just to count down the days until next Tuesday. I've come here to mark with you the beginning of the end of the Bush presidency.

(END VIDEO CLIP)

WALLACE: And Senator John Kerry now has a New name for himself. He calls him "Comeback Kerry" after his Iowa win. But now he must try and keep on winning.

I'm Kelly Wallace. Welcome back to ON THE STORY.

It is so interesting, because inside the Kerry campaign, they don't like the "F" word, front-runner. They do not want to call him the front-runner. They say he is still acting like the underdog. But clearly, they're looking at the polls, they know he is doing well.

You see a little difference in him on the trail. He's spending more time criticizing President Bush's policy. He's not mentioning his rivals by name. Trying to get out and, again, hoping for a win here, too.

CROWLEY: Do they have -- have you talked to them at all about the Iowa win and what they think worked there for him, and whether it applies to New Hampshire?

WALLACE: They think he was doing what he had been doing for weeks and weeks, but he wasn't getting a lot of attention. Howard Dean, as the front-runner, was getting the attention, was the one who was being attacked by the other candidates. And John Kerry was getting out there and becoming a better candidate, going to these town halls.

There was one in Iowa where he said, tell my aides -- you're going to have to call, because Iowans in Davenport have questions. And I'm staying here until I answer the last question. So they think he was a better candidate.

No question, they think doubts about Howard Dean played a role. And people started looking for who has the national security and political experience. And they think he's a winner when it comes to that.

MESERVE: You know, voter after voter here in New Hampshire has said to me that the bottom line for them is electability. And yet I was talking to someone this morning who said, you know, "John Kerry's a real problem in this regard. He's a New Englander, he's a patrician, he's a liberal. Is this guy electable?"

Are they afraid of that? Are they hearing that? Are they seeing that in the polling?

WALLACE: Well, they're certainly concerned about that, no question. He has obviously put all of his resources into Iowa and New Hampshire. He himself said in an interview earlier this week that he needed to, "break through," and then he could focus on the South. He's only really starting to put some more resources in South Carolina and trying to get some endorsements. He got Fritz Hollings, the senator from South Carolina, his endorsement.

So they obviously are trying to get some resources out there. But you are hearing that. You have the Republican Party already painting him as more liberal than the senior senator of Massachusetts, Ted Kennedy. But they think, when you get the debate, if he does become the nominee, that he has that military, national security experience, political experience. So they think that will play well in terms of a head-to-head race with President Bush.

ROMANS: You know, a great showing in Iowa. Coming up number two. What about his momentum, his strategy, as they switch from Iowa to New Hampshire, and where he is sitting right now in terms of the strategy for Kerry as well?

WALLACE: Well, and no question, that's a big concern, Christine. And that is why right after Iowa, Senator Kerry was spending a lot of time on the phone as opposed to necessarily out talking to voters, working the phones, trying to line up endorsements.

We are told he's been calling Congressman Dick Gephardt from Missouri, who dropped out of the presidential race, calling him quite a bit, hoping for an endorsement. Missouri is now wide open. Biggest number of delegates at stake for those February 3 primaries.

So he is trying to expand, hoping to have some momentum after New Hampshire. But again, a big road ahead, because you have Wesley Clark and John Edwards, both candidates from the South, who are already doing much better than John Kerry in some of those states. So a big challenge ahead. They're hoping for momentum, and hoping for endorsements, and making some gains in some of those other states after New Hampshire.

MESERVE: You know, John Edwards had really hoped for a bounce out of Iowa, too. He has gotten one, but oh so small. It hasn't been anything like what they hoped for or expected.

They're still saying they're going to grow here, they're still saying they're going to do better. But clearly he's looking beyond New Hampshire already, looking down to South Carolina. He even left the state yesterday to get down there to try and make a stand, remind people that he's their candidate, he's their son of the South.

WALLACE: Are they surprised, Jeanne? Because he had such a great victory, really, a second place showing in Iowa. Are they surprised he's not seeing more of a bounce yet here in New Hampshire?

MESERVE: You know, they're being very coy. You know how they spin. They'll never make any admissions along those lines.

WALLACE: Right.

MESERVE: But yes, I think they're a little surprised. I was talking to someone this morning who said they thought that part of what happened here was that Kerry has sucked up all the publicity. I mean, that was the biggest story, and that's grabbed all the headlines. And you look at most of the papers and it's John Kerry emblazoned across the front pages here, it's not John Edwards. And they think maybe, you know, that was a factor here and why he hasn't seen the kind of bounce that he hoped for.

ROMANS: All right. From the cold campaign trail in New Hampshire, to cold facts and figures in the economy, did the recession start earlier than we thought and not under this president at all? I'm back on that story right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The American economy is growing stronger, the tax relief you passed is working.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: To make up for the three million private sector jobs that have been lost on the president's watch, the economy would have to create 226,000 jobs a month through the end of his term.

(END VIDEO CLIP)

ROMANS: President Bush gives Congress a pat on the back for tax relief and a growing economy

Welcome back. We're ON THE STORY.

Jobs, jobs, jobs. Even though Wall Street is doing well, even though the Dow is up 43 percent since last March, the focus on Wall Street continues to be jobs. News this week that Kodak will lay off 15,000.

Also, the unemployment line in the latest week only got shorter by about a thousand people. That's not a sign of a very robust jobs market.

So Dana, a lot of people still looking for the evidence that the jobs market is going to improve. In the meantime, it's still a jobless recovery. It's still a joyless recovery, some say. And, you know, Mr. Bush's tax stimulus seems to be working, but a lot of people want to see more proof in the jobs numbers. And some people think maybe the Democrats might be trying to -- or could get a little more strong on the notion that this jobs market is really in trouble.

BASH: And believe me, the White House is well aware of that. But one thing that's really interesting is that, you know, we travel with the president, listen to him every single time he talks. He says the recession is something that he inherited. Apparently there's a report that's coming out that might actually back that up this week?

ROMANS: The National Bureau of Economic Research is the arbiter of all recessions. It has set the beginning and end ending of all recessions all the way back to 1854. It is considering moving this recession's start to maybe the end of 2000 or January 2001, which would put it in the Clinton White House, something that the Bush White House has said for some time. Like, listen, we inherited a really tough problem and the president has taken strong action to try to fix that problem.

It's an interesting year. It's an interesting time. Some people are saying it might be a little bit political, but we'll watch to see if the arbiters of recessions are going to agree with the White House.

KAGAN: Christine, let's go ahead and talk about Martha, Martha, Martha in terms of Martha Stewart. Jury selection goes on. It's been fascinating to watch the coverage of the trial as it unfolds. It seem impossible for the media and even the prosecution to get away from the idea that this is a powerful woman who is facing these serious charges.

ROMANS: It's interesting, too, Daryn, because when you read the transcripts of the jury selection, don't forget, the jury selection's been closed to the media because of all of the media scrutiny and the media coverage. When you read the transcript, you can see that a lot of people either love or hate Martha Stewart. Every now and then, there's somebody who doesn't watch TV who has never even heard of her, which I find incredible.

But the media coverage as well, the references to what she's wearing. I mean, I don't know about all of you, but in journalism school, I was sort of taught that that was just never appropriate, unless it's like a witness to a crime or a perpetrator was wearing blue pants that you were trying to describe in a newspaper. Some people say she's a style guru, so of course everything about her style is fit to be printed.

You know, I say some of the former Enron people who are accused of bilking a company and everything, you know, you don't say that they showed up in handcuffs and a solid gold Rolex, which I guess would be just as appropriate. I don't know. What do you all think?

CROWLEY: Well, you know, on that score I must say that since we know that the attorneys spend so much time on the presentation of their client, I wonder if there's some message that they're sending with Martha Stewart in this. I mean, the message, I'm sure, is success, and one they actually want to send, because I know they talked to one another about it.

Let me take you back and give you a little whiplash here and ask you about the jobs issue. How does one define a recovery now? I mean, it used to be so many quarters of upward growth or something. And, you know, you've got Bush out there saying, hey, it's a great economy, we've done this, we've done that. And you have the Democrats saying, but there are no jobs, there's no jobs. So how do you define recovery now?

ROMANS: Well, we have six quarters in a row now of earnings growth. You know, American companies, their profits are growing. You've got the economy growing. I think six quarters in a row now, four or six quarters in a row now as well.

That's a definition of an economic recovery or economic growth. But there's never been a time when there hasn't been jobs growth that goes along with it, and that has got a lot of the economists sort of scratching their head, trying to figure out what's happening.

I mean, you know, we've been reporting over and over about the off-shoring or the outsourcing of jobs. It looks as though the economy is going through some kind of a new change, some kind of sea change, that, you know, you might have to go back 100 years or the industrial revolution to find another time when it was this dramatic. And that is that the big companies are moving jobs overseas. Peter Viles, one of our colleagues, has been reporting extensively about companies that are spending a lot of money on consultants, trying to figure out how to move as many American jobs overseas as they can, because in some countries they can do the work for 20 cents on the dollar. That mean those jobs might never come back. And then what happens?

How can the recovery continue to go on? And politically, what kind of fallout could there be? It's a very interesting time in terms of jobs in the economy right now.

WALLACE: Christine, I want to go back to the fascinating Martha Stewart. And picking up on on the point Candy was just raising about the message.

You know, you're talk to the lawyers, your colleagues are talking to the lawyers. What is their strategy here? What are they trying to do? What are they trying to convey to the jury? What is the best jury they can hope for when it comes to helping Martha Stewart's case?

ROMANS: It's still pretty early. And it looks as though, you know, they're trying to make sure that you're not going to have Martha-haters or people who are hiding the fact that they're Martha- haters on this jury. Also, they have to be careful about finding people who just don't like rich people.

One of the potential jurors said listen, you know, people have a lot of money. You know, I wonder how they got there. It makes me a little nervous. I don't think I trust people with a lot of money.

So there's both of those things going for them as well. There's also sort of this idea that maybe they're going to go after this. This is an unfairly prosecuted case, this is a case of little white lies. It's not necessarily a case of insider trading, and that that might be the angle they go for.

So it's still pretty early in the process, jury selection not done yet. But it proves to be fascinating. Of course there's a gaggle of reporters and cameras down in the freezing cold. And I was sort of predicting earlier this week that these reporters were all in parkas doing live shots right now. By the time it's over, I think there will be tulips blooming in lower Manhattan.

CROWLEY: From the world of business, we're going to come back to the political world and Howard Dean, and how to re-tool a campaign in a few days.

We're back ON THE STORY after this a check of the hour's top stories.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: May I say, we are going to win in South Carolina, we are going to win in New York, we will win in Ohio, we're going to win in Arizona...

(APPLAUSE)

(CHEERING)

DEAN: And then we're going to win in Massachusetts. After that, we'll win in New York. I couldn't resist.

(END VIDEO CLIP)

(LAUGHTER)

CROWLEY: Howard Dean, Take 2. You know this has been a week -- what else, the "I Have a Scream" speech, as they're calling it, out of Iowa. Fascinating, as they try to make Howard Dean a more rounded figure, not just that guy up there, the insurgent. But you know, they hauled out Mrs. Dean with a -- for a Diane Sawyer interview. He went on Letterman to do the "I can laugh at myself." On the trail, he's been much more subdued. I thought this was a riot last night.

MESERVE: Do they think all those efforts have worked?

CROWLEY: Well, he thinks they have. I mean we haven't seen a lot of evidence of that in the poll. I think, Judy said in the beginning, there may be some evidence he's bottomed out here. The question is now can he climb back up? Twelve points is...

MESERVE: A long way to go for three days.

CROWLEY: ... a long way to go for three days.

WALLACE: What was it, Candy, because you were in the room that night, for that Monday speech? What was your impression of the speech, and what happened? Was it that by being on television screens and people seeing Howard Dean that way, it just reinforced the perception?

CROWLEY: Yes. I mean in a word, yes. I mean look, when you were in the room -- first of all, this was a crazy crowd before he came out. Tom Harkin came out and they were nuts. And they were, you know, it was sort of a typical Dean speech. It didn't really sort of strike me as, oh, my goodness, he's gone nuts, he's angry. It struck me as, you know, he's doing his shtick.

I think in a lot of ways this is the Howard Dean that revved up those people who never get into politics. And you know, and he has this thing he does where he goes, you know, and they've got health care in you know, Sweden and the Dutch and the this and it is that. You know, and the crowd goes with him. And this was sort of more of that. And what was lost on him is the cameras are giving him a larger audience than he's ever had before that night. And the camera, you know, really can be harsh.

MESERVE: We all know that.

WALLACE: We all know that, I was going to say, as we know that first hand.

(LAUGHTER)

CROWLEY: And so it came across and reinforced those things. But I just think in a way, he really, again, just got stuck inside his own shtick.

BASH: Candy, Watching Howard Dean this week, I'm sort of waiting for him to call Al Gore and borrow his earth tones to be wearing to try to change his image.

But we were talking earlier. And you were saying that you kind of think that perhaps, just spending some time with him. That the toned down, more rounded image, if you will, is perhaps maybe who he actually is?

CROWLEY: Well, you know, I'm by no means an expert on Howard Dean. But I don't get the sense -- and he, in the interview he did with Diane Sawyer, said something very interesting. He had said before, I want to go back to who I am. And she said, you know, you've said this; what does that mean? He said, I mean I'm not a rock 'n' roll star. And I think he was -- you know, is a -- while he loved that role of insurgent and rev them up and everything, my sense is he's basically sort of a quiet bureaucrat, much like the people we see coming in and out of Washington.

I mean he's -- you know, certainly, he has, you know that kind of inner passion. But he's -- my sense of being around him is just that he is more naturally a quiet and just this side of shy guy, believe it or not. And that this was a way to get in -- to find a niche within the party. And that was the anti-war niche that was very angry. And he gave voice to their anger. I don't think it's necessarily his anger.

KAGAN: Candy, my question is about the ever-evolving role of the political wife. It seems like the Dean campaign isn't quite sure what to do with Mrs. Dean who happens to be Dr. Dean, and incredibly accomplished woman on her own. First she's nowhere, then she shows up in Iowa, then she's by Howard Dean's side with Diane Sawyer. They don't quite seem to know what she's supposed to be doing.

(LAUGHTER)

CROWLEY: Right. Well, you know, women are just always a problem.

WALLACE: Ohh...

(LAUGHTER)

KAGAN: Yes. That's us.

CROWLEY: Well, first of all; let's get this straight. It's Dr. Steinberg when she's work and Judy Dean when she's not. She came to Iowa as Judy Dean. Listen, it has been their choice to keep her at home. She has a teenaged son. She has a thriving practice. She's described as a woman very in to tending for her patients, as well as a family woman. Yes, that's understandable.

But here's what happens when they watched his numbers start to drop in Iowa, all they had was Howard Dean. I mean listen to those other stories the candidates tell you. We all know that John Edwards is the son of a mill worker. We all know that Richard Gephardt had a father who was a milk truck driver. We all know that John Kerry was over in Vietnam.

What do we know about Howard Dean? He was the governor of Vermont. There was no flesh to him, there was no heart to him there was no pulse to him, and they wanted to get that back. And that's the wife. And that's the role -- you know, they've tried the sweater. And we all kept saying, you know, what's the deal with the sweaters? And then they brought her in and she was charming, and she was all that. But it was like she was there for two events, then went back. Then when the speech got so panned, they brought her back on nationwide television just to give him some flesh.

BASH: Well, Candy, we're going to go from all of the would-be presidents up there in New Hampshire to the incumbent back here. We're back on that story in a moment. What did George W. Bush gain from the nation in his speech on Tuesday night? We're back on that story in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT, UNITED STATES OF AMERICA: Now we face a choice. We can go forward with confidence and resolve. Or we can turn back to the dangerous illusion that terrorists are not plot and outlaw regimes are no threat to us.

(END VIDEO CLIP)

BASH: "We now face a choice," said President Bush, Tuesday night in his State of the Union Address. The speech that was, by all accounts, a blueprint for election year theme.

You know, Christine, it's not always easy being the guy who is attacked by eight people constantly, all the time. But sometimes, like Tuesday night, it is definitely good to be the incumbent. Forty- three million people watched the president speak for one hour on a stage that looked quite different from the way it looks on the campaign trail. And that was the strategy of the Bush team, was to make it different in tone, to make it different in theater. Which, of course, it was by definition; but also to make it different, and to make a contrast in substance. That was exactly what they tried to do.

ROMANS: Very presidential on the day after the Iowa caucuses when it looked as though the Democrats were up for grabs, trying to figure out who was going to be leading.

What about the headline from this though? I mean two years ago it was axis of evil, last year it was weapons of mass destruction. Is it war on terror? Is it steroids? It's not steroids. Is it -- what -- what was it -- by design, it didn't seem to be a headline?

BASH: The headline really is, is that there is no headline. It was by design, because the headline was sort of implied, which is I'm your guy. I'm your guy who is keeping you safe. I'm the guy who has been sort of, you know, been the master of fighting the war on terrorism; don't change course. We're at a war, why would you want to change generals, change commanders in chief during a war?

But on domestic front, there really were no headlines because of what you were talking earlier, Christine, $500 billion deficit. So there wasn't a lot the president could do; in terms of giving out some of those big, domestic initiatives that presidents like to and can do, generally, in election years.

CROWLEY: Dana, you know, one thing I know from being out here and covering most of these Democrat candidates, is that their major theme is it's the big corporation, and the big lobbyists, and the big, money guys are in charge in Washington. And we're going to bring the real people back. You know, the oil contacts, Halliburton. Does the Bush White House ever start to formulate a push back to that?

BASH: Well certainly. You know, they, the president and his team, are absolutely well aware of that. Particularly with Halliburton, it's been in the headlines this week. And they -- right now, they're saying, oh, it's just politics. You know, it's just typical Democratic, political rhetoric. They're trying to get at the president. And that's really the only way they know how. But you did see for the first time this week in, really, many months, the president out there with real people. Sort of trying to have the same, similar image that you're seeing from the Democrats. He went to a -- we were traveling this week after the State of the Union to three, very important states. One of those was New Mexico.

He had an unscheduled stop, which we never, ever see from the president. And we'll certainly see more of. He went -- and he had some lunch with some, regular people. He, you know, was sort of talking about the fact he needed to help the economy there. So imagery is beginning to change and we're heading more into, really, into campaign mode.

MESERVE: Dana, you know, we think of State of the Unions as being lofty statements about the future of the nation, laying out an agenda. But the president did throw in the steroids business. Where did that come from? What was that all about, please?

BASH: You know, that was almost, exactly the question that I asked to a lot of people at the White House, just like that. Because we all sort of watched that and went, what was that? Because it's really, generally not George Bush's style to use the "bully pulpit," if you will, that way. Now, what I was told by one of his senior aides was that he came to them and said, look, I've been talking to my friends in baseball. I have been, you know, thinking about this issue for a really, long time. Obviously, baseball is close to his heart. And he wanted to do it. He said I want to put this in the speech. And they said, OK. WALLACE: Dana, of course, the White House must be watching very closely what is happening here in New Hampshire. So what are your sources saying about what the White House thinks about the possibility here that John Kerry, not Howard Dean, could be the nominee?

BASH: You know, Kelly, on Tuesday night, as the returns were coming in, I was blackberrying -- e-mailing some of the president's political advisers, saying, what do you think of Kerry? You know, tell me what you think. And immediately, it was, well, you know, he's not that moderate. He's really not that moderate.

And you know, this week, as you were talking about, we heard the Republican National Committee chairman saying that he is more liberal than Ted Kennedy, which you know, for anybody it's hard to believe. So they're certainly changing. They're certainly thinking about John Kerry; very, very different kind of campaign that they would run against him versus Howard Dean, which is what they were planning on.

KAGAN: Well, we've been talking politics and primaries and battlegrounds. But if you want to talk a real battleground, how about the award season? It's about to kick off here in Hollywood. The Golden Globes will be taking place here tomorrow. I'll give you a preview of what you can expect when the stars come out.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TOM CRUISE, ACTOR: I don't make movies for awards, you know, it's -- that's always kind of the icing on the cake.

CHARLIZE THERON, ACTRESS: It ain't bad. Let's just say that it's really nice.

(END VIDEO CLIP)

KAGAN: Two of the big megastars we'll see walking down the red carpet here in Hollywood tomorrow. Tom Cruise nominated for "The Last Samurai. And Charlize Theron, who is nominated for her role in "Monster."

Tomorrow does kick off the huge award season here in Hollywood. The Golden Globe awards, a lot of people wondering, who are the Golden Globe awards? Well, it's the Hollywood Foreign Press Association, 90 journalists who contribute to foreign-based publications. That's it. Compare that to the 5700 industry people who will vote on the Oscars. The significance of this year's awards race, the Oscar taking a page from the state, that sick of not having significance in the primaries. They have moved up the Oscars by a month; it will be on a Leap Year on February 29.

So buckle your seat belts, ladies because we're about to take off. Tomorrow, the Golden Globes, Tuesday, the Oscar nominations come out, then a few other awards, and then the Oscars February 29.

BASH: Daryn, we are so jealous back here on the East Coast. We know you'll be on the red carpet tomorrow. Tell us about your bling- bling. What are you going to be wearing in terms of the ice all over your ears and your neck, and everywhere else in?

KAGAN: You get right to it Dana?

BASH: Important stuff.

KAGAN: It's all about the jewels, isn't it? Well, it is about fashion. And actually, there is a significant, fashion story taking place out here, because the word is, and it not just who wins. But what do you wear. This is me trying on diamonds yesterday.

BASH: Very nice.

KAGAN: That was Martin Katz, he brought those by -- I think those were about $400,000. Guess what? I'm not...

BASH: It's on your expense account, right?

KAGAN: ... borrowing those -- yes, exactly. CNN accounting would be very interested in that.

You know, it's huge business, not just in winning awards. But I've talked to a number of designers, and stylists, and jewelers, they cannot even put a price tag on what it means to have a star wear their jewels and designers; and when that shows up in fashion magazines.

BASH: Wow.

KAGAN: And the word out here is that the top designers are going exclusive this year. And you will only see one star, for instance, in Yves St. Lawrence. You will only see one star one star in Ralph Lauren. And it causes this big scramble because what if you're like a "B" or "C" list star that had planned on wearing that designer? Guess what? They're pulling your dress and you need to find a new one tomorrow to wear on the red carpet.

ROMANS: Daryn, who cares about the on-screen drama? Let's talk about the behind the screens drama. Beniffer is no more, or so they tell us.

KAGAN: Yes.

ROMANS: And Jennifer Lopez is one of the presenters. I'm wondering if there will be any kind of machinations to make sure that, you know, she doesn't get caught with any television cameras? And also Nicole Kidman and Tom Cruise, could they run into each other on the red carpet? Tell us all about that.

KAGAN: Yes. Well, I have scoop on all that.

(LAUGHTER)

KAGAN: First of all, yes. Jennifer Lopez will be making her single debut, or re-single debut. She is a presenter. And interestingly enough, she's presenting a category that Ben Affleck happened to win, for best original screenplay, what, like four or five years ago, for "Good Will Hunting. So a little bit of twist in that.

And yes, both Nicole Kidman and Tom Cruise will be here tomorrow. They are both nominees. Nicole Kidman is a nominee for "Cold Mountain." And as I said before, Tom Cruise for "Last Samurai." I think their tables are just one table apart. But they have been very public in being supportive of each other as parents and as fellow performers. So I don't know how much drama there will be there, but it will be interesting to see them both at an awards show; I think for the first time since they split.

I happened to run into Nicole Kidman right here in the CNN bureau yesterday. I had a little girlfriend moment with her, talking about what is the big concern. It might actually rain tomorrow night, 62- degrees and rain. And what do you do with your hair and the frizz? She said she's

CROWLEY: Aww, 62-degrees and rain.

KAGAN: ... wearing her hair curly so she's not that concerned. Yes. There's your sweep; Nicole Kidman will have curly hair.

WALLACE: Yes. Yes. We are not feeling that pain.

(LAUGHTER)

MESERVE: I think we could all give her a few tips.

CROWLEY: Yes, 62-degrees and rain. Sorry, Daryn.

KAGAN: I know.

CROWLEY: Listen. How do these things get -- does one of these award ceremonies build on the next one? So if something wins here, does it then get the next step up to whatever the big award is? And what is the big award?

KAGAN: And -- well, the big -- of course, the big Mac Daddy is the Oscars. There's no way around that. But very interesting, Candy, how the schedule is going to change things. The significance of the Golden Globes used to be, despite who they are and how they come up with their award, used to be that once a Golden Globe was presented, there was 10 days still left for Oscar nominations to be entered. Those are all done and closed. Those nominations, that I said, will be announced Tuesday.

Some people think, though, this might make the Golden Globes even more significant because perhaps it's going to affect who wins the big award, rather than just who is nominated.

WALLACE: Daryn, very quickly, what's the buzz? What are the movies or actor, actress that are getting the most buzz to likely be the winners here at the Golden Globes?

KAGAN: The big buzz, of course, on "Lord of the Rings," the third trilogy, "The Return of the King," will Peterson Jackson finally be rewarded for the huge -- for what some people consider, the biggest gamble in show biz history that has proven to be very successful.

In acting, Sean Penn in "Mystic River. Golden Globes tend not to like to reward bad boys, but he was amazing in that movie. And Charlize Theron in "Monster" has the big buzz to walk away for best actress.

ROMANS: All right. And Daryn gets to wear a gown.

Thanks, Daryn.

President Bush gets his say when we're back ON THE STORY in a moment.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (voice-over): Joan Kroc died last year. But the wife of the founder of McDonald's was back in the headlines this week. What's her story? Coming up.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (voice-over): Did Joan Kroc, the wife of the founder of McDonald's, ever hear those bells ringing at Christmastime, calling people to toss in a contribution for the Salvation Army?

Mrs. Kroc was in the news this week. What's her story? She died last year and just this week, the Salvation Army announced she had left it $1.5 billion in her will to build and staff 25 to 30 community center. Similar to one she built in San Diego, where one former mayor dubbed her "Saint Joan of the Arches."

(END VIDEO CLIP)

BASH: Thanks to my colleagues, especially our hard-working team in New Hampshire. And thank you for watching ON THE STORY; we'll be back next week.

Still ahead, Beniffer might be no more being but "PEOPLE IN THE NEWS" is focusing this week on Ben Affleck and Jennifer Lopez. At 12:00 p.m. Eastern, 9:00 a.m. Pacific, CNN "LIVE SATURDAY." And 1:00 p.m. Eastern, 10:00 a.m. Pacific, CNN's "IN THE MONEY."

Coming up at the top of the hour a check of our top stories. But first, the president's weekly radio address.

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Makes Political Statement with State of the Union>