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Inside Politics

Discussion of Bush Politics on Iraq; North Korea; Economy

Aired January 14, 2003 - 16:00   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 ANCHOR: INSIDE POLITICS begins right now.
(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm sick and tired of games and deception.

ANNOUNCER: President Bush warns Saddam Hussein that Iraq's time to disarm is running out.

Is the U.S. too soft on North Korea? Some senators want to write a tougher line into law.

Is America's hatred of taxes history? That may be going overboard, but attitudes are changing.

How do you rise from the bottom of the Democratic pack? Presidential hopeful Howard Dean shares his strategy.

HOWARD DEAN, PRESIDENTIAL CANDIDATE: I think people would like to be told the truth for a change, and that's what I plan to do in the campaign.

(END VIDEOTAPE)

ANNOUNCER: Live from Washington, this is INSIDE POLITICS with Judy Woodruff.

WOODRUFF: Thank you for joining us. President Bush signaled his growing impatience with Saddam Hussein today, but he did not say when or if he would order an attack on Iraq. Also in this "Newscycle," U.N. Secretary-General Kofi Annan says he believes that a war can be avoided.

He says world leaders in the region remain engaged in convincing Iraq to disarm.

In the North Korea standoff, U.S. envoy James Kelly is in China where officials are offering to host talks between Washington and Pyongyang, a move welcomed by the Bush administration.

For his part, President Bush held out a carrot for North Korea today, even as he pressed on with his stick approach toward Iraq. Let's bring in our White House correspondent, Dana Bash.

Dana, this carrot for North Korea, is this a change of policy for the president? DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Judy, on North Korea, the president -- this is certainly the first time we heard the president himself mention that there would be any possible reward, so to speak, for North Korea if they first decided to stop its nuclear program.

We did hear yesterday from Assistant Secretary of State James Kelly in the region mention the idea of giving energy assistance to them if they stopped. But it is the first time we heard President Bush mention it, and he was referring to what he called a "bold initiative." That's something that the White House was considering offering to North Korea before they admitted, in October, that they were starting their nuclear program, and that initiative is to give energy aid and food aid to North Korea if they stopped their weapons of mass destruction.

(BEGIN VIDEO CLIP)

BUSH: I'm absolutely convinced this issue will be solved in a peaceful way. I want to remind the American people that prior to North Korea making the decision it made, that I had instructed our secretary of state to approach North Korea about a bold initiative, an initiative which would talk about energy and food, because we care deeply about the suffering of the North Korean people.

(END VIDEO CLIP)

BASH: Judy, before that, White House spokesman Ari Fleischer made clear that any future agreement with North Korea would have to be verifiable, that North Korea wouldn't be able to -- quote -- "flip up a switch" and turn on its nuclear program again if they agree to stop -- Judy.

WOODRUFF: Now, separately, Dana, some very tough language from the president with regard to Iraq.

BASH: That's right. At a meeting -- all of this he was saying he was saying at a meeting earlier today with the Polish president, and when he was asked about Iraq, he certainly sounded very frustrated. This is, of course, after a couple of days, including today, with leaders of the U.N. making clear that they want more time for the weapons inspectors to do their job, that they're really just getting started over there, but the president made clear that the onus is on Saddam Hussein, not on Iraq (sic).

(BEGIN VIDEO CLIP)

BUSH: He's been given 11 years to disarm, and so the world came together and we have given him one last chance to disarm. So far, I haven't seen any evidence that he is disarming. Time is running out on Saddam Hussein. He must disarm. I'm sick and tired of games and deception.

(END VIDEO CLIP)

BASH: Of course, he was saying the onus is on Saddam Hussein, not the weapons inspectors, but this is really all gives -- makes it really difficult diplomatically for the White House, because they want to make sure that they keep the pressure on Saddam Hussein, saying that he must disarm and keep the pressure on the inspectors to do their work.

At the same time, they want to make sure that they don't alienate any of the allies, that they want to really get what the president calls a "coalition of the willing" together if they do, in fact, have to go after Saddam Hussein.

I should add that Condoleezza Rice, the president's national security adviser, is in New York today meeting with the chief weapons inspector Hans Blix, going over some of the things that they really want the U.N. to make sure that they get done before that January 27 date, when the U.N. inspectors are going to give a report -- Judy.

WOODRUFF: All right. Dana Bash at the White House, thanks very much.

Well, our now poll suggests that Americans are somewhat less confident in the president's global view as the standoff with North Korea has intensified and the U.S. has mobilized for a possible war with Iraq.

Fifty-three percent now say they approve of how Mr. Bush is handling world affairs. Now, that is down from 60 percent just last week.

In the Senate, a bipartisan group is pushing for a tougher strategy toward North Korea than that laid out by the president. Republicans John McCain, Jon Kyl, Jeff Sessions, and Democrat Evan Bayh all introduced the legislation yesterday.

It calls for formally ending all U.S. aid to North Korea, and it urges the Bush administration to impose additional sanctions on the communist north.

We are joined now by one of the bill's sponsors. He is Senator Jeff Sessions of Alabama.

Senator, this administration, this president has taken a very tough line against North Korea until, actually, the last day or so. And that has, in large part, led us to the point where we've been at the brink of a crisis -- I think many would say the most serious crisis in a decade. You're saying it should be even tougher, though.

SEN. JEFF SESSIONS (R), ALABAMA: Well, we felt some time ago that the president needed to know that people in the Congress supported his tough position. This is a dysfunctional relationship that North Korea has had with the world. Like a dysfunctional family, the person that misbehaves gets rewarded, and we feel like we need to send a message, and American policy and world policy needs to make clear that misbehavior does not result in gain.

I don't know where the president precisely will come out on this. He is correct in trying to gain the support of allies in the region and nations in the region. We have great concerns about this matter, and maybe something can be -- a conflict and a continuing exacerbated circumstances can be diffused.

WOODRUFF: Well, in taking a tougher line, in arguing for more sanctions, aren't you taking a risk here, because the North Koreans, among other things, have said -- their ambassador to the U.N. said just the other day, if there are new sanctions, we're going to consider that a declaration of war. So how do you know they wouldn't lash out if the administration did what you suggest?

SESSIONS: They have continually used that kind of bluster and threats, and somehow we've got to get beyond that. We've got to establish a firm policy with regard to North Korea that is not a continually blowing about.

This is one of the most evil regimes in the world. A 7-year-old child in North Korea is 20 pounds less than a child in South Korea, 7 inches smaller because of malnutrition. It is one of the most terrible regimes that I know of. I was there last year, and it was just painful to think about the prosperity in South Korea and the devastation in North Korea.

WOODRUFF: My question is, really, about the unpredictability of North Korea, that if the United States takes a tougher line, imposes sanctions, how do you know that the North wouldn't just lash out and do something like start a war?

SESSIONS: Well, that would be devastating thing for North Korea. They would not prevail in such a conflict as that. It would be a total disaster for Kim Il Jong (sic) -- Jong Il, and it would just not -- I don't think that is going to happen. But we may be -- there's also the danger of encouraging such bad behavior by continuing to back down.

So I support the president working with the nations in the region, but we want to be sure that North Korea understands that this nation will not be run over by blackmail threats from them.

WOODRUFF: Are you saying it's worth risking a war here?

SESSIONS: Well, I don't think we are risking a war. What we are trying to do is achieve peace. What we are trying to do is provide some relief for the people in North Korea. It's particularly painful that we're having a stoppage of food reserves for them.

WOODRUFF: Senator Jeff Sessions, we thank you very much for talking to us. It's good to see you, sir.

SESSIONS: Thank you.

WOODRUFF: Thank you. Well, in these threatening times, you might think that the Senate would move quickly to confirm Tom Ridge as the new secretary of Homeland Security, but a hearing today on Ridge's nomination was postponed because of a broader Senate stalemate. At issue are resources to run the Senate committees and how they're divided between the two political parties. Here now is our Congressional correspondent, Jonathan Karl.

(BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT (voice-over): A spat over office space and funding for Senate committees has tied the Senate in knots. Unless an agreement is reached, Democrats will remain as chairman of Senate committees, and the ten new senators, eight of whom are Republicans, won't get their committee assignments. Republicans are outraged.

SEN. RICK SANTORUM (R-PA), GOP CONFERENCE CHAIRMAN: It's tantamount to an attempted coup.

SEN. KAY BAILEY HUTCHINSON (R), TEXAS: The people of America thought we had an election in November. They thought that the Republicans took control.

SEN. MITCH MCCONNELL (R-KY), MAJORITY WHIP: This is completely unacceptable, designed to thwart the results of the election last November 5.

KARL: What's at stake? Not much.

QUESTION: So what are we down to, fighting about space and $10 million?

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: Well, we're down to ensuring that the fairness that we established last year is continued this year.

KARL: Senator Daschle and the Democrats say office space and funding should reflect the narrow 51/49 Republican majority. He wants Republicans to get 51 percent of committee resources, Democrats to get 49 percent.

SEN. DICK DURBIN (D), ILLINOIS: I have a suggestion for a three- word organizing resolution. Very simple. In the three words are do unto others. Do unto others. What the Democrats are proposing as an organizing resolution in a 51/49 Senate, is exactly what the Democrats proposed to the Republicans when we had 51 votes and you had 49.

KARL: But Republicans say with the exception of the last Congress, where Democrats took over midway through the session after Jim Jeffords switched parties, the majority party gets two-thirds of the office space and two-thirds of the committee funding, regardless of how narrow the majority.

The showdown has real world consequences. Already, the confirmation hearing for Tom Ridge, which was supposed to happen Tuesday, has been postponed and the work of the Judiciary Committee, which had planned to begin immediately on the president's judicial nominations, has been delayed.

(END VIDEOTAPE) KARL: Now, Judy, despite all that sound and fury you're hearing when the senators come before the television cameras, behind the scenes, sources with both the Democrats and the Republicans say they are actually very close to an agreement on this deal that would get the Congress, get the Senate, at least, moving again. But they've been saying that for several days. We're seeing things get delayed.

One other thing that we expected to see this week was Alan Greenspan testifying before the Budget Committee. That is also delayed as the Budget Committee tries to figure out how they will get organized. So, Judy, that's how it stands now. We may yet hear from Tom Ridge that that confirmation hearing is now scheduled again for Friday. We'll see if that happens.

WOODRUFF: Just very quickly, Jon Karl, who are the driving forces behind the argument on each side?

KARL: Well, the driving forces are the chairman and ranking members on each side and also the leadership here. This has really come down to a battle between the Republican leadership and the Democratic leadership in the Senate. This is something that doesn't affect most of the rank and file senators, it's just those people at top.

WOODRUFF: OK, Jon Karl, thanks very much. It's fascinating.

Still ahead, a look at Joe Lieberman keeping the faith. Will his religion matter to voters, plus...

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: I'm Bill Schneider in Washington. (AUDIO GAP) -- I'll tell you why that may be changing.

WOODRUFF: How tough will it be to sell the Senate on the Bush economic plan? I'll ask Finance Committee Chairman Charles Grassley if the president went too far.

(BEGIN VIDEO CLIP)

BRUCE MORTON, CNN CORRESPONDENT: President Bush campaigned saying he'd lower the temperature in Washington, and work with both parties, but since the November election, he's been in your face with the Democrats.

(END VIDEO CLIP)

WOODRUFF: Bruce Morton revisits the president's call for a new tone in Washington.

And why are these women dancing? This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

WOODRUFF: The flag flap: Protesters take to the streets in Georgia, calling for an old flag to fly again. The story coming up on INSIDE POLITICS. Plus, Kmart closings, a major announcement by the retail giant could affect where you shop. We'll go live to Wall Street for the latest.

(COMMERCIAL BREAK)

(MARKET UPDATE)

WOODRUFF: Speaking of money, if death and taxes are the only two certainties in life, complaints about taxes are probably a close third. Our senior political analyst Bill Schneider is with me for more on Americans' attitude about taxes -- Bill.

SCHNEIDER: Judy, Americans hate taxes. The country was founded on that, and it's held steady for so long it seems like a fact of political life in this country. But the facts of life may be changing.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): The answer is cut taxes. What's the question? For Republicans, it's the answer to every question, including the current economic slowdown.

PRESIDENT GEORGE W. BUSH: Our first challenge is to allow Americans to keep more of their money. So they can spend and save and invest.

SCHNEIDER: Republicans rely on the fact that tax resentment has been high in this country for decades. Back in 1962, that's 40 years ago, 48 percent of Americans said they thought their federal income taxes were too high. In the mid 1960s, that number shot up to a majority and it stayed high for decades. As recently as April, 2001, nearly two-thirds of Americans said their federal income taxes were too high.

And now? Look what's happened. Down, way down. Now, only 47 percent of Americans say their taxes are too high. That's the lowest figure in more than 40 years. Why is tax resentment suddenly dropped? It's not because the tax burden is so much lower. Figures from Citizens for Tax Justice show that the average American's tax burden has declined only slightly over the past decade.

More likely, it's because of 9/11. Americans want government to make them safe. So fewer people are complaining about the amount they pay in taxes. Do American suddenly love taxes? No, you can't say that. Forty-seven percent still say their federal income taxes are too high, but 51 percent say they're not. this is the first time since 1949, the beginning of the cold war, that a majority of Americans have said their income taxes are not too high.

Tax resentment has dropped among both Republicans and Democrats. Just over half of Republicans continue to say their taxes are too high. Most Democrats now say they're not. That helps explain why the response to President Bush's first tax cut in 2001 was far more enthusiastic than the response he's getting now. And why the Democrats who supported him then are not there now.

(END VIDEOTAPE)

SCHNEIDER: If you want evidence that 9/11 has changed the political world, this is it. Americans value government more and complain about taxes less -- Judy.

WOODRUFF: All right, Bill Schneider, thanks very much.

Well, given the findings that Bill just showed us, selling new tax cuts may not be as easy as it once seemed. Even some Republicans are balking at some of the proposed tax cuts in the president's economic stimulus package.

With me now from Capitol Hill is Senator Charles Grassley of Iowa. He is chairman of the Senate Finance Committee, which handles tax legislation.

Senator Grassley, this 670 some odd billion dollar tax package over ten years, $360 billion alone is for the elimination of tax dividends. Is the president asking for more than he can get?

SEN. CHARLES GRASSLEY (R-IA), CHAIRMAN, SENATE FINANCE COMMITTE: I think that whatever we do, Judy, has to have bipartisan support to get through the United States Senate, even if we do it under a curtailed debate process that we call reconciliation. So I'm assuming that everything has to be on the table. I want the president to be successful, not just because he's successful, but because we do need some stimulus to create jobs.

And in order for me to do that, I'm going have to have plenty of leeway to adopt a bipartisan program that will get through the United States Senate. I think the Democrats want to create jobs too and obviously, some changes in the tax code that encourage investment and consumer spending puts money in the pockets of consumers, is going to be needed to do that.

WOODRUFF: So you're saying everything's on the table, but the president's Commerce Secretary, Don Evans, says you've got to have this dividend tax component in there. I'm reading a quote from him. He says, "This creates the condition for creating wealth for growing the economy in the long term." He says people have to be able to count on that.

GRASSLEY: Let me suggest to you there is a principle there you shouldn't tax something twice, and dividends are taxed twice. So that's a good reason for doing it. But let me also suggest, from a Democratic point of view, during the last year, a lot of them measured the economy's bad condition by downturn in the stock market. So I would think Democrats would be elated now when there's a program on the table by the president that will raise the value of stock, not only for stock generally, but particularly stock that are in retirement plans.

WOODRUFF: What do you say to your own Republican colleague, Senator Voinovich of Ohio, who is worried about the red ink. He says there is red ink when look at the deficit and you add the tax cut proposal to it, he says this is a tax plan that's not going to stimulate the economy.

GRASSLEY: Well, first of all, there is some stimulus in it. Just think about the money that is going to put in the pockets of lower-middle income and middle income families through the child credit, as an example.

WOODRUFF: But is it enough stimulus?

GRASSLEY: Well, it's as much stimulus in the first year as what the Democrats -- House Democrats have in their plan for the first year. And then in regard to Senator Voinovich's concern about -- and other people's concerns about the debt, listen, we are in debt not because of tax cuts. We're in debt because of September 11, the war on terrorism, the potential military thing in Iraq, and because of the homeland security. We would have had deficit if we didn't have the tax cut last year. And also, let me suggest to you that in a time of war, you don't worry about the deficit. You do whatever it takes to win the war and one of the things you have to do to back up your military is have a strong economy. So that's why the president's proposing a stimulus package.

WOODRUFF: So everything's on the table, but you're going to fight for it Senator Charles Grassley.

GRASSLEY: You bet.

WOODRUFF: Appreciate it. Thanks very much, senator.

Up next, the president and his approval rating. His poll numbers ever still high but there are signs of trouble ahead.

Paul Begala and Tucker Carlson in the "CROSSFIRE" next.

(COMMERCIAL BREAK)

WOODRUFF: Time to now to test your "I.P. I.Q." What was Presidents Bush's fathers approval rating at the start of his third year in the White House? Was it, a, 54 percent, b, 64 percent or c, 74 percent. The answer, b, 64 percent. That percentage sky rocketed for the elder Bush after bombing of Baghdad begun.

WOODRUFF: Well, while we are talking about polls, with us now from the CNN "CROSSFIRE" set at George Washington University, Paul Begala and Tucker Carlson.

Gentlemen, we are seeing new poll numbers this week that show for the first time since 9/11, President Bush's popularity rating slipping below 60 percent. January 10 through 12, approved 58 percent, disapprove 37 percent.

Tucker, is this something the president should be worried about, that Democrats should be encouraged by or is it inevitable given what's going on in the world? TUCKER CARLSON, CO-HOST, "CROSSFIRE": Well, it's something the Republicans ought to be -- White House ought to be concerned about. President Bush can lose in 2004. That is possibility and I think smart Republicans know that. But the more interesting numbers I think, are the ones on the terrorism and foreign policy and they show the Republican party beating Democrats by about 30 points.

So two years from now or a year and a half from now, were going into the general election, the economy may be better or may not be. It may be. We know for fact that Americans are still going to be frightened of terrorism. So I think those are the more significant numbers that Democrats are still lagging dramatically on them.

WOODRUFF: Paul, you know, is this something that Democrats should be jumping for joy about right now, that this president is finally showing some vulnerability?

PAUL BEGALA, CO-HOST, "CROSSFIRE": It's an early return, to be sure. Nobody ought to over interpret the numbers, but it's the first polling data we've had since the president announced his new economic package. Having worked for a president, usually these things start off great because the president announces them and people like this president and rally around his new idea, and then over time, support erodes.

If it's already cost him five, six, seven points in his job approval in the first week, combined with the troubles that he's having in North Korea and Iraq, this is a long term problem. The bigger number is not the comparative on things like terrorism. In that poll, the CNN/"USA TODAY"/Gallup poll, only 36 percent of Americans say they would definitely vote for Bush for reelections. When you're reelected at 36 percent, that's bad. Bush senior's was only 37 and we saw happened to him

CARLSON: Wait. Wait. The 30 point difference on who tougher on terrorism, there is no way to spin your way out of that. That is a absolutely a significant number. I would say, Paul, is right to an extent, he say this economic package is a gamble. And the final test will be does it work. I mean, is the country in better economic shape a year and a half from now. And that really is the wager that the White House is making. If they're right, they'll reap the benefits. If they're wrong, they won't.

WOODRUFF: Well, let's look at another poll number. And I think, Tucker, you were partly referring to this. People were asked, how do you approve of how the president's handling world affairs? Last week, it was 60 percent. This week, it's 53 percent. The economy has stayed about the same.

What is it about the handling of world affairs in the last week, Paul? North Korea has even become a bigger threat. The president is still talking tough about Iraq.

BEGALA: Well, I think the president has always had two things going for him on foreign affairs, at least since September 11: the sense that there is a constancy there and that there is a competence in the team. Both of them have come under fire in the North Korea problem. There's certainly no consistency or constancy in the way the president reacts to weapons of mass destruction in North Korea vs. Iraq.

And, frankly, it's beginning to look like it's not a very competent team after all. And if he loses those kinds of underpinnings -- it's very loyalty, but if he loses those kinds of underpinnings, he's in really big trouble.

WOODRUFF: Tucker?

CARLSON: Well, people are nervous about North Korea and Iraq, and they probably should be. But, still, in an election, voters are asked to make a choice not from whole series of options, but from two. And the question becomes, which party, which candidate is going to protect you better from foreign threats?

And I just don't see the Democrats beating the president on that question until they come up with a foreign policy. Keep in mind, they don't have one right now. And I think that is the challenge for the Democratic Party, is to come up with something to say about the rest of the world between now and 2004.

WOODRUFF: Well, they have got a few months to work on it.

CARLSON: Yes.

WOODRUFF: All right, Tucker Carlson, Paul Begala, gentlemen, thank you both.

One of the Democrats vying to challenge President Bush is coming up next. Former Vermont Governor Howard Dean says that his party has been too timid in taking on Mr. Bush.

Plus: Joe Lieberman and the Jewish factor. Will his religion be an issue? We'll ask Jeff Greenfield.

(COMMERCIAL BREAK)

WOODRUFF: They're strong in their home states, but can they draw outside their regions? An early handicap of the 2004 Democratic field is coming up later.

(NEWS BREAK)

WOODRUFF: Former Vermont Governor Howard Dean is here in Washington today, trying to drum up support for his presidential campaign. I spoke with Dean this morning about his disadvantages and his assets when compared with other Democratic candidates with bigger names and bigger political resumes.

(BEGIN VIDEOTAPE)

(voice-over): Howard Dean may be way back in the polls, but he's getting a lot of attention, as you can see by the standing-room-only crowd at the National Press Club. What's the appeal? For one, he's a former governor in a field crowded with senators and he says he's not afraid to take tough positions.

HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: I'm running as the candidate who is not afraid to tell the truth. Everybody I'm running against in the Democratic Party voted for the Iraq resolution. I think every one of them voted for the Every Child Left Behind bill, the school bill the president has had, which is undoing American education. The state of Ohio has already reduced its standards. And that's exactly the opposite of what we should be doing.

They're now going to pass some tax cut which is going to put the budget out of balance even further. I think people would like to be told the truth for a change. And that's what I plan to do in the campaign. I think that's a pretty marketable commodity these days.

WOODRUFF: Dean says the president's tax plan is a budget buster and says his rival Democrats' tax cut proposals, such as a payroll tax cut, make no sense either.

DEAN: Here's the problem with the payroll tax holiday. It's a very attractive idea. The problem with it is, it's completely irresponsible. Who is going to play fill-in-the-gap with Medicare and Social Security? That's what the payroll tax pays for. If you take money out of that to give it as a tax increase, what's the difference between that and President Bush taking money out of Social Security in order to give tax increases, other than who it goes to?

I want a balanced budget. I've done that as a governor. Nobody else in this race has ever balanced a budget before.

WOODRUFF: One more point of contention with the other Democrats running: Iraq. Dean says he would have voted against the resolution giving the president authority to go to war with Iraq. And he says he will remain opposed until the president can prove that Saddam Hussein has nuclear weapons.

DEAN: We are amassing 200,000 troops on the borders of Iraq to disarm somebody who the president has never said possesses nuclear weapons. I think he needs to make that case to the American people before we're going to support sending our kids to die in Iraq.

WOODRUFF (on camera): So, you're saying if they're able -- if they come and say it and say, we have intelligence that proves it, but we can't share it all with you, that's enough for you.

DEAN: That's right. That's enough.

WOODRUFF (voice-over): Dean says he has not yet begun to raise serious money, a few hundred thousand dollars so far. But his proximity to the kickoff primary state of New Hampshire gives him a geographical edge.

If he does well in New Hampshire, he'll have to follow up, with the next significant contest likely to be in South Carolina, where the Confederate flag is a divisive issue.

(on camera): In the state of South Carolina, where you'll be campaigning, on the state Capitol grounds flies a flag with the insignia of the Confederate flag. Should that come down?

DEAN: I don't like it, but that's a matter for the people of South Carolina to settle, not me.

WOODRUFF: So, you wouldn't urge them to change it?

DEAN: I just said, I don't like it, but it's not for somebody from out of the state to fix that problem. That's an in-state problem.

(END VIDEOTAPE)

WOODRUFF: Howard Dean talking to me a little earlier today.

Well, the GOP has its eye on Howard Dean in our Tuesday edition of the "Campaign News Daily." An e-mail sent to reporters and congressional offices criticizes Dean on a wide range of social issues. The mailing notes his stands on abortion, health care, and civil unions for gay couples and characterizes Dean as -- quote -- "an ultraliberal." Vermont's "Burlington Free Press" finds the label ironic, since Dean is considered a moderate in the state known for electing Bernie Sanders, a self-described socialist, to Congress.

Howard Dean is among the Democrats heading to Iowa for one of the first so-called cattle calls. Missouri Congressman Dick Gephardt and Massachusetts Senator John Kerry are scheduled to join Dean at a party event this Saturday in Linn County. The Iowa caucuses are tentatively scheduled to be held 366 days later, January the 19th, 2004. But who's counting?

Democratic hopeful Joe Lieberman is wasting little time taking his just-announced campaign on the road. Next week, Lieberman plans stops in five of the early caucus and primary states, including Iowa, New Hampshire, South Carolina, Arizona, and Michigan.

Well, Joe Lieberman, by the way, is hoping to make history by becoming the first Jewish president. His campaign announcement yesterday revived some dicey, but significant questions about religion and politics.

Our senior analyst, Jeff Greenfield, is here in Washington.

Jeff, is the fact that Joe Lieberman is Jewish going to have an effect on this campaign one way or another?

JEFF GREENFIELD, CNN SR. ANALYST: Well, not if you believe the polls. The problem is, you can't always believe the polls.

Two years ago, after the 2000 election, voters said, three- quarters of them said that the religion of Lieberman made no difference. And the rest split 2-1 on the favorable side. And you will remember that Lieberman's talk about faith seemed to resonate well with many Christians.

But we also know from history that when a so-called first-time candidate runs, first black, first woman, first whatever, first Catholic, voters sometimes shade their true feelings for fear of being called bigots. Black candidates always, almost always do worse on Election Day than in the polls.

What I think we can say is that there has been overall a big change in public attitudes toward faith. For instance, in one recent survey, people's feelings toward the three major faiths, Catholic, Protestant, Jewish, were identical, less favorable toward Muslim- Americans and very unfavorable, by comparison, toward people with no faith.

WOODRUFF: So, translate that into what people actually do when they get to the polls.

GREENFIELD: Well, we do know that voters are willing to elect Jews to high public office, and not just in states with significant Jewish populations. Oregon, Minnesota and Michigan, they each have Jewish senators and they have 1 percent of the population or less that is Jewish. And Wisconsin, with half of 1 percent of Jewish folks, two Jewish senators.

The question is, I think, is there a different calculus when it comes to the presidency? It took two tries to elect a Catholic. And the net effect of John Kennedy's religion, we forget sometimes, was to cost him a few million votes. The fact that Lieberman has been a candidate for national office, though, could make some difference.

WOODRUFF: Separate question, though: On its merits alone, do you think religion is ever an appropriate issue in the campaign?

GREENFIELD: Yes, you're not supposed to say so, but I think so.

Look, until 1978, the Mormon faith banned blacks from the priesthood. Now, when Mormon George Romney ran for president, wouldn't that be a fair question? If a Christian scientist seeks the presidency, would it be unreasonable to ask that candidate if he or she would fully fund Medicare or Medicaid or other traditional medicines, if they believe in a wholly different approach to health. And I think it's fair to ask if a Jewish president can be an honest broker in the Middle East. And we saw Lieberman run into some problem on that on the hawkish side.

I'll tell you something. I think one of Lieberman's problems is not about faith at all. Both "Saturday Night Live" and Jay Leno last night made jokes implying that Lieberman was the class nerd, the guy that always was given wedgies. So, apparently, there's a feeling that people think he's not tough enough, which is a lot different from the Jewish question. So, you never know what you're going to run into when you run for president.

WOODRUFF: Well, there was that Jeffrey Toobin piece in "The New Yorker," which talked about he didn't have any enemies, didn't have any enemies.

GREENFIELD: Right. But you see what I mean?

WOODRUFF: Yes. GREENFIELD: You think faith may be the issue. Now it turns out, did your ever beat anybody up in high school? We'd like to know about that.

WOODRUFF: Did you ever beat anybody up in high school?

GREENFIELD: By the time I got to high school, I realized you could get hurt. In elementary school, I got beaten up and beat people up.

(LAUGHTER)

WOODRUFF: Subject for another story. All right, Jeff Greenfield, thanks very much.

Well, it may not equal the excitement of March madness, but there are similarities. Up next: the emerging Democratic field in the campaign for president. Could regional victories be the key to success?

(COMMERCIAL BREAK)

WOODRUFF: The top seeds are emerging very quickly in the race for the 2004 Democratic nomination.

Political analyst Ron Brownstein of "The Los Angeles Times" is with me now.

All right, how do you size up this field?

RON BROWNSTEIN, CNN POLITICAL ANALYST: Judy, as this field settles in, there's an unusual dynamic developing, where you have candidates with clear sort of home court advantage in each of the three key early primaries.

It may look like the NCAA regionals, where you get brackets and candidates emerging. In Iowa, the first contest, Dick Gephardt from Missouri, who won it in 1988, is a clear favorite. When you move on to New Hampshire, the next critical contest, you have John Kerry, Joe Lieberman and Howard Dean, all from the region there. And then when you get to South Carolina, you have John Edwards, who was born in the state. And Al Sharpton, if he is going to make any noise, probably will be heard from first there, because it's the first place where you get to a significant African-American vote in the Democratic primary.

So, each of these candidates have regional strengths. The key may be who can first demonstrate strength outside of his natural home region and advantage.

WOODRUFF: So, are you already seeing some kind of a measuring stick in all this?

BROWNSTEIN: Well, I'm intrigued by the question of who comes in second in Iowa if Dick Gephardt does, in fact, maintain the advantage that he's likely to have there. Al Gore and Tom Daschle both could have been very competitive there. They're not in the race. None of these other candidates are necessarily a natural fit for Iowa other than Gephardt. So, it may be a real measuring stick who can use that caucus process to emerge as the No. 2 there and perhaps go into New Hampshire with some momentum.

WOODRUFF: Well, the latest one to get is, we know, yesterday, was Joe Lieberman. Does his getting in change the complexion of the race?

BROWNSTEIN: Well, Joe Lieberman is really going to test an interesting proposition. How centrist can you be, how much can you depart from Democratic orthodoxy and still be a viable nominee? Even Bill Clinton and Al Gore peeled off some significant support from the union movement and local liberal officials.

Lieberman has angered a long list of Democratic constituencies: organized labor on trade; teachers on vouchers; civil rights groups by questioning affirmative action; Hollywood by questioning the marketing of violent and, essentially, explicit entertainment to kids; environmentalists with his new bill with John McCain on greenhouse gases. So, he's going to have a challenge, I think, of finding a way to bring in new voters and perhaps also to sand down some of that resistance among the party base.

WOODRUFF: All right, Ron Brownstein, a lot for us to watch in these months to come.

BROWNSTEIN: It's getting exciting.

WOODRUFF: It is. It is. Thanks very much.

Well, one other Democrat considering a run for the White House is Joe Lieberman's Connecticut Senate colleague, Chris Dodd. Senator Dodd tells me he wishes Joe Lieberman well and he described the two of them as -- quote -- "good friends." Dodd says he wants to spend a few more weeks talking to his supporters and others before making up his mind about a presidential bid. He says he believes he has at least another month before he has to make a final decision.

Well, even as Democrats line up to take on the president, Mr. Bush is fighting back. Up next, our Bruce Morton says the man who has touted bipartisanship is sounding awfully partisan these days.

(COMMERCIAL BREAK)

WOODRUFF: President Bush says he isn't paying attention to the Democrats jockeying for his job. But a year before the primary season, he often sounds as if he's in campaign mode.

And, as our Bruce Morton explains, his tone is different from what it used to be.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP) GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL CANDIDATE: I've been a person that has been called a uniter, not a divider.

(END VIDEO CLIP)

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): President Bush campaigned saying he'd lower the temperature in Washington, work with both parties. But since the November election, he's been in your face with the Democrats, easing clean air and water rules, proposing another big tax cut tilted toward the rich, renominating Priscilla Owen and Charles Pickering, judicial candidates the previous Democratic Senate had rejected.

Partisan?

STUART ROTHENBERG, CNN POLITICAL ANALYST: When you get right down to it, the parties have different values, different assumptions and different constituencies. So, it shouldn't be surprising that they favor different policies and programs and ultimately would be fighting over those.

STEPHEN HESS, BROOKINGS INSTITUTION: It was really only with 9/11, of course, that it became an obvious bipartisan government. But, of course, it was a bipartisan government where people filed in behind the commander in chief.

MORTON: And in an area after area -- secrecy, keeping Congress at a distance, refusing to release notes of meetings -- Bush has tried to strengthen the executive branch of government.

HESS: He'll push as far as he can. And maybe with something as large as, let's say, his tax bill, he is playing a game in which he asks for twice as much as he really expects and then will compromise. But that hasn't been his habit so far.

ROTHENBERG: I was surprised by the Pickering nomination. It suggests the president is becoming more partisan. And barring an economic rebound, barring the country brought together by a foreign policy success, we could be headed back to the politics of November of 2000, very partisan, very bitter, very closely divided.

MORTON: And, of course, as Joe Lieberman reminded us only yesterday, the very partisan presidential campaign of 2004 is already well under way.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Indeed it is.

When we return: Politicians get the urge to dance.

(COMMERCIAL BREAK)

WOODRUFF: It wasn't exactly a victory dance, but two Arkansas Democrats celebrated their retirement yesterday with a few steps on the stairs of the statehouse in Little Rock. Both Jimmie Lou Fisher and Sharon Priest were term-limited from running again for their longtime jobs as state treasurer and secretary of state, respectively. Fisher capped her career with a failed run for governor last fall. Constituents cheered them on as they high-stepped their way to a life outside politics.

We wish them well.

That's it for INSIDE POLITICS. Thank you for joining us. I'm Judy Woodruff.

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 January 14, 2003 - 16:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JUDY WOODRUFF, CNN ANCHOR: INSIDE POLITICS begins right now.
(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm sick and tired of games and deception.

ANNOUNCER: President Bush warns Saddam Hussein that Iraq's time to disarm is running out.

Is the U.S. too soft on North Korea? Some senators want to write a tougher line into law.

Is America's hatred of taxes history? That may be going overboard, but attitudes are changing.

How do you rise from the bottom of the Democratic pack? Presidential hopeful Howard Dean shares his strategy.

HOWARD DEAN, PRESIDENTIAL CANDIDATE: I think people would like to be told the truth for a change, and that's what I plan to do in the campaign.

(END VIDEOTAPE)

ANNOUNCER: Live from Washington, this is INSIDE POLITICS with Judy Woodruff.

WOODRUFF: Thank you for joining us. President Bush signaled his growing impatience with Saddam Hussein today, but he did not say when or if he would order an attack on Iraq. Also in this "Newscycle," U.N. Secretary-General Kofi Annan says he believes that a war can be avoided.

He says world leaders in the region remain engaged in convincing Iraq to disarm.

In the North Korea standoff, U.S. envoy James Kelly is in China where officials are offering to host talks between Washington and Pyongyang, a move welcomed by the Bush administration.

For his part, President Bush held out a carrot for North Korea today, even as he pressed on with his stick approach toward Iraq. Let's bring in our White House correspondent, Dana Bash.

Dana, this carrot for North Korea, is this a change of policy for the president? DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Judy, on North Korea, the president -- this is certainly the first time we heard the president himself mention that there would be any possible reward, so to speak, for North Korea if they first decided to stop its nuclear program.

We did hear yesterday from Assistant Secretary of State James Kelly in the region mention the idea of giving energy assistance to them if they stopped. But it is the first time we heard President Bush mention it, and he was referring to what he called a "bold initiative." That's something that the White House was considering offering to North Korea before they admitted, in October, that they were starting their nuclear program, and that initiative is to give energy aid and food aid to North Korea if they stopped their weapons of mass destruction.

(BEGIN VIDEO CLIP)

BUSH: I'm absolutely convinced this issue will be solved in a peaceful way. I want to remind the American people that prior to North Korea making the decision it made, that I had instructed our secretary of state to approach North Korea about a bold initiative, an initiative which would talk about energy and food, because we care deeply about the suffering of the North Korean people.

(END VIDEO CLIP)

BASH: Judy, before that, White House spokesman Ari Fleischer made clear that any future agreement with North Korea would have to be verifiable, that North Korea wouldn't be able to -- quote -- "flip up a switch" and turn on its nuclear program again if they agree to stop -- Judy.

WOODRUFF: Now, separately, Dana, some very tough language from the president with regard to Iraq.

BASH: That's right. At a meeting -- all of this he was saying he was saying at a meeting earlier today with the Polish president, and when he was asked about Iraq, he certainly sounded very frustrated. This is, of course, after a couple of days, including today, with leaders of the U.N. making clear that they want more time for the weapons inspectors to do their job, that they're really just getting started over there, but the president made clear that the onus is on Saddam Hussein, not on Iraq (sic).

(BEGIN VIDEO CLIP)

BUSH: He's been given 11 years to disarm, and so the world came together and we have given him one last chance to disarm. So far, I haven't seen any evidence that he is disarming. Time is running out on Saddam Hussein. He must disarm. I'm sick and tired of games and deception.

(END VIDEO CLIP)

BASH: Of course, he was saying the onus is on Saddam Hussein, not the weapons inspectors, but this is really all gives -- makes it really difficult diplomatically for the White House, because they want to make sure that they keep the pressure on Saddam Hussein, saying that he must disarm and keep the pressure on the inspectors to do their work.

At the same time, they want to make sure that they don't alienate any of the allies, that they want to really get what the president calls a "coalition of the willing" together if they do, in fact, have to go after Saddam Hussein.

I should add that Condoleezza Rice, the president's national security adviser, is in New York today meeting with the chief weapons inspector Hans Blix, going over some of the things that they really want the U.N. to make sure that they get done before that January 27 date, when the U.N. inspectors are going to give a report -- Judy.

WOODRUFF: All right. Dana Bash at the White House, thanks very much.

Well, our now poll suggests that Americans are somewhat less confident in the president's global view as the standoff with North Korea has intensified and the U.S. has mobilized for a possible war with Iraq.

Fifty-three percent now say they approve of how Mr. Bush is handling world affairs. Now, that is down from 60 percent just last week.

In the Senate, a bipartisan group is pushing for a tougher strategy toward North Korea than that laid out by the president. Republicans John McCain, Jon Kyl, Jeff Sessions, and Democrat Evan Bayh all introduced the legislation yesterday.

It calls for formally ending all U.S. aid to North Korea, and it urges the Bush administration to impose additional sanctions on the communist north.

We are joined now by one of the bill's sponsors. He is Senator Jeff Sessions of Alabama.

Senator, this administration, this president has taken a very tough line against North Korea until, actually, the last day or so. And that has, in large part, led us to the point where we've been at the brink of a crisis -- I think many would say the most serious crisis in a decade. You're saying it should be even tougher, though.

SEN. JEFF SESSIONS (R), ALABAMA: Well, we felt some time ago that the president needed to know that people in the Congress supported his tough position. This is a dysfunctional relationship that North Korea has had with the world. Like a dysfunctional family, the person that misbehaves gets rewarded, and we feel like we need to send a message, and American policy and world policy needs to make clear that misbehavior does not result in gain.

I don't know where the president precisely will come out on this. He is correct in trying to gain the support of allies in the region and nations in the region. We have great concerns about this matter, and maybe something can be -- a conflict and a continuing exacerbated circumstances can be diffused.

WOODRUFF: Well, in taking a tougher line, in arguing for more sanctions, aren't you taking a risk here, because the North Koreans, among other things, have said -- their ambassador to the U.N. said just the other day, if there are new sanctions, we're going to consider that a declaration of war. So how do you know they wouldn't lash out if the administration did what you suggest?

SESSIONS: They have continually used that kind of bluster and threats, and somehow we've got to get beyond that. We've got to establish a firm policy with regard to North Korea that is not a continually blowing about.

This is one of the most evil regimes in the world. A 7-year-old child in North Korea is 20 pounds less than a child in South Korea, 7 inches smaller because of malnutrition. It is one of the most terrible regimes that I know of. I was there last year, and it was just painful to think about the prosperity in South Korea and the devastation in North Korea.

WOODRUFF: My question is, really, about the unpredictability of North Korea, that if the United States takes a tougher line, imposes sanctions, how do you know that the North wouldn't just lash out and do something like start a war?

SESSIONS: Well, that would be devastating thing for North Korea. They would not prevail in such a conflict as that. It would be a total disaster for Kim Il Jong (sic) -- Jong Il, and it would just not -- I don't think that is going to happen. But we may be -- there's also the danger of encouraging such bad behavior by continuing to back down.

So I support the president working with the nations in the region, but we want to be sure that North Korea understands that this nation will not be run over by blackmail threats from them.

WOODRUFF: Are you saying it's worth risking a war here?

SESSIONS: Well, I don't think we are risking a war. What we are trying to do is achieve peace. What we are trying to do is provide some relief for the people in North Korea. It's particularly painful that we're having a stoppage of food reserves for them.

WOODRUFF: Senator Jeff Sessions, we thank you very much for talking to us. It's good to see you, sir.

SESSIONS: Thank you.

WOODRUFF: Thank you. Well, in these threatening times, you might think that the Senate would move quickly to confirm Tom Ridge as the new secretary of Homeland Security, but a hearing today on Ridge's nomination was postponed because of a broader Senate stalemate. At issue are resources to run the Senate committees and how they're divided between the two political parties. Here now is our Congressional correspondent, Jonathan Karl.

(BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT (voice-over): A spat over office space and funding for Senate committees has tied the Senate in knots. Unless an agreement is reached, Democrats will remain as chairman of Senate committees, and the ten new senators, eight of whom are Republicans, won't get their committee assignments. Republicans are outraged.

SEN. RICK SANTORUM (R-PA), GOP CONFERENCE CHAIRMAN: It's tantamount to an attempted coup.

SEN. KAY BAILEY HUTCHINSON (R), TEXAS: The people of America thought we had an election in November. They thought that the Republicans took control.

SEN. MITCH MCCONNELL (R-KY), MAJORITY WHIP: This is completely unacceptable, designed to thwart the results of the election last November 5.

KARL: What's at stake? Not much.

QUESTION: So what are we down to, fighting about space and $10 million?

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: Well, we're down to ensuring that the fairness that we established last year is continued this year.

KARL: Senator Daschle and the Democrats say office space and funding should reflect the narrow 51/49 Republican majority. He wants Republicans to get 51 percent of committee resources, Democrats to get 49 percent.

SEN. DICK DURBIN (D), ILLINOIS: I have a suggestion for a three- word organizing resolution. Very simple. In the three words are do unto others. Do unto others. What the Democrats are proposing as an organizing resolution in a 51/49 Senate, is exactly what the Democrats proposed to the Republicans when we had 51 votes and you had 49.

KARL: But Republicans say with the exception of the last Congress, where Democrats took over midway through the session after Jim Jeffords switched parties, the majority party gets two-thirds of the office space and two-thirds of the committee funding, regardless of how narrow the majority.

The showdown has real world consequences. Already, the confirmation hearing for Tom Ridge, which was supposed to happen Tuesday, has been postponed and the work of the Judiciary Committee, which had planned to begin immediately on the president's judicial nominations, has been delayed.

(END VIDEOTAPE) KARL: Now, Judy, despite all that sound and fury you're hearing when the senators come before the television cameras, behind the scenes, sources with both the Democrats and the Republicans say they are actually very close to an agreement on this deal that would get the Congress, get the Senate, at least, moving again. But they've been saying that for several days. We're seeing things get delayed.

One other thing that we expected to see this week was Alan Greenspan testifying before the Budget Committee. That is also delayed as the Budget Committee tries to figure out how they will get organized. So, Judy, that's how it stands now. We may yet hear from Tom Ridge that that confirmation hearing is now scheduled again for Friday. We'll see if that happens.

WOODRUFF: Just very quickly, Jon Karl, who are the driving forces behind the argument on each side?

KARL: Well, the driving forces are the chairman and ranking members on each side and also the leadership here. This has really come down to a battle between the Republican leadership and the Democratic leadership in the Senate. This is something that doesn't affect most of the rank and file senators, it's just those people at top.

WOODRUFF: OK, Jon Karl, thanks very much. It's fascinating.

Still ahead, a look at Joe Lieberman keeping the faith. Will his religion matter to voters, plus...

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: I'm Bill Schneider in Washington. (AUDIO GAP) -- I'll tell you why that may be changing.

WOODRUFF: How tough will it be to sell the Senate on the Bush economic plan? I'll ask Finance Committee Chairman Charles Grassley if the president went too far.

(BEGIN VIDEO CLIP)

BRUCE MORTON, CNN CORRESPONDENT: President Bush campaigned saying he'd lower the temperature in Washington, and work with both parties, but since the November election, he's been in your face with the Democrats.

(END VIDEO CLIP)

WOODRUFF: Bruce Morton revisits the president's call for a new tone in Washington.

And why are these women dancing? This is INSIDE POLITICS, the place for campaign news.

(COMMERCIAL BREAK)

WOODRUFF: The flag flap: Protesters take to the streets in Georgia, calling for an old flag to fly again. The story coming up on INSIDE POLITICS. Plus, Kmart closings, a major announcement by the retail giant could affect where you shop. We'll go live to Wall Street for the latest.

(COMMERCIAL BREAK)

(MARKET UPDATE)

WOODRUFF: Speaking of money, if death and taxes are the only two certainties in life, complaints about taxes are probably a close third. Our senior political analyst Bill Schneider is with me for more on Americans' attitude about taxes -- Bill.

SCHNEIDER: Judy, Americans hate taxes. The country was founded on that, and it's held steady for so long it seems like a fact of political life in this country. But the facts of life may be changing.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): The answer is cut taxes. What's the question? For Republicans, it's the answer to every question, including the current economic slowdown.

PRESIDENT GEORGE W. BUSH: Our first challenge is to allow Americans to keep more of their money. So they can spend and save and invest.

SCHNEIDER: Republicans rely on the fact that tax resentment has been high in this country for decades. Back in 1962, that's 40 years ago, 48 percent of Americans said they thought their federal income taxes were too high. In the mid 1960s, that number shot up to a majority and it stayed high for decades. As recently as April, 2001, nearly two-thirds of Americans said their federal income taxes were too high.

And now? Look what's happened. Down, way down. Now, only 47 percent of Americans say their taxes are too high. That's the lowest figure in more than 40 years. Why is tax resentment suddenly dropped? It's not because the tax burden is so much lower. Figures from Citizens for Tax Justice show that the average American's tax burden has declined only slightly over the past decade.

More likely, it's because of 9/11. Americans want government to make them safe. So fewer people are complaining about the amount they pay in taxes. Do American suddenly love taxes? No, you can't say that. Forty-seven percent still say their federal income taxes are too high, but 51 percent say they're not. this is the first time since 1949, the beginning of the cold war, that a majority of Americans have said their income taxes are not too high.

Tax resentment has dropped among both Republicans and Democrats. Just over half of Republicans continue to say their taxes are too high. Most Democrats now say they're not. That helps explain why the response to President Bush's first tax cut in 2001 was far more enthusiastic than the response he's getting now. And why the Democrats who supported him then are not there now.

(END VIDEOTAPE)

SCHNEIDER: If you want evidence that 9/11 has changed the political world, this is it. Americans value government more and complain about taxes less -- Judy.

WOODRUFF: All right, Bill Schneider, thanks very much.

Well, given the findings that Bill just showed us, selling new tax cuts may not be as easy as it once seemed. Even some Republicans are balking at some of the proposed tax cuts in the president's economic stimulus package.

With me now from Capitol Hill is Senator Charles Grassley of Iowa. He is chairman of the Senate Finance Committee, which handles tax legislation.

Senator Grassley, this 670 some odd billion dollar tax package over ten years, $360 billion alone is for the elimination of tax dividends. Is the president asking for more than he can get?

SEN. CHARLES GRASSLEY (R-IA), CHAIRMAN, SENATE FINANCE COMMITTE: I think that whatever we do, Judy, has to have bipartisan support to get through the United States Senate, even if we do it under a curtailed debate process that we call reconciliation. So I'm assuming that everything has to be on the table. I want the president to be successful, not just because he's successful, but because we do need some stimulus to create jobs.

And in order for me to do that, I'm going have to have plenty of leeway to adopt a bipartisan program that will get through the United States Senate. I think the Democrats want to create jobs too and obviously, some changes in the tax code that encourage investment and consumer spending puts money in the pockets of consumers, is going to be needed to do that.

WOODRUFF: So you're saying everything's on the table, but the president's Commerce Secretary, Don Evans, says you've got to have this dividend tax component in there. I'm reading a quote from him. He says, "This creates the condition for creating wealth for growing the economy in the long term." He says people have to be able to count on that.

GRASSLEY: Let me suggest to you there is a principle there you shouldn't tax something twice, and dividends are taxed twice. So that's a good reason for doing it. But let me also suggest, from a Democratic point of view, during the last year, a lot of them measured the economy's bad condition by downturn in the stock market. So I would think Democrats would be elated now when there's a program on the table by the president that will raise the value of stock, not only for stock generally, but particularly stock that are in retirement plans.

WOODRUFF: What do you say to your own Republican colleague, Senator Voinovich of Ohio, who is worried about the red ink. He says there is red ink when look at the deficit and you add the tax cut proposal to it, he says this is a tax plan that's not going to stimulate the economy.

GRASSLEY: Well, first of all, there is some stimulus in it. Just think about the money that is going to put in the pockets of lower-middle income and middle income families through the child credit, as an example.

WOODRUFF: But is it enough stimulus?

GRASSLEY: Well, it's as much stimulus in the first year as what the Democrats -- House Democrats have in their plan for the first year. And then in regard to Senator Voinovich's concern about -- and other people's concerns about the debt, listen, we are in debt not because of tax cuts. We're in debt because of September 11, the war on terrorism, the potential military thing in Iraq, and because of the homeland security. We would have had deficit if we didn't have the tax cut last year. And also, let me suggest to you that in a time of war, you don't worry about the deficit. You do whatever it takes to win the war and one of the things you have to do to back up your military is have a strong economy. So that's why the president's proposing a stimulus package.

WOODRUFF: So everything's on the table, but you're going to fight for it Senator Charles Grassley.

GRASSLEY: You bet.

WOODRUFF: Appreciate it. Thanks very much, senator.

Up next, the president and his approval rating. His poll numbers ever still high but there are signs of trouble ahead.

Paul Begala and Tucker Carlson in the "CROSSFIRE" next.

(COMMERCIAL BREAK)

WOODRUFF: Time to now to test your "I.P. I.Q." What was Presidents Bush's fathers approval rating at the start of his third year in the White House? Was it, a, 54 percent, b, 64 percent or c, 74 percent. The answer, b, 64 percent. That percentage sky rocketed for the elder Bush after bombing of Baghdad begun.

WOODRUFF: Well, while we are talking about polls, with us now from the CNN "CROSSFIRE" set at George Washington University, Paul Begala and Tucker Carlson.

Gentlemen, we are seeing new poll numbers this week that show for the first time since 9/11, President Bush's popularity rating slipping below 60 percent. January 10 through 12, approved 58 percent, disapprove 37 percent.

Tucker, is this something the president should be worried about, that Democrats should be encouraged by or is it inevitable given what's going on in the world? TUCKER CARLSON, CO-HOST, "CROSSFIRE": Well, it's something the Republicans ought to be -- White House ought to be concerned about. President Bush can lose in 2004. That is possibility and I think smart Republicans know that. But the more interesting numbers I think, are the ones on the terrorism and foreign policy and they show the Republican party beating Democrats by about 30 points.

So two years from now or a year and a half from now, were going into the general election, the economy may be better or may not be. It may be. We know for fact that Americans are still going to be frightened of terrorism. So I think those are the more significant numbers that Democrats are still lagging dramatically on them.

WOODRUFF: Paul, you know, is this something that Democrats should be jumping for joy about right now, that this president is finally showing some vulnerability?

PAUL BEGALA, CO-HOST, "CROSSFIRE": It's an early return, to be sure. Nobody ought to over interpret the numbers, but it's the first polling data we've had since the president announced his new economic package. Having worked for a president, usually these things start off great because the president announces them and people like this president and rally around his new idea, and then over time, support erodes.

If it's already cost him five, six, seven points in his job approval in the first week, combined with the troubles that he's having in North Korea and Iraq, this is a long term problem. The bigger number is not the comparative on things like terrorism. In that poll, the CNN/"USA TODAY"/Gallup poll, only 36 percent of Americans say they would definitely vote for Bush for reelections. When you're reelected at 36 percent, that's bad. Bush senior's was only 37 and we saw happened to him

CARLSON: Wait. Wait. The 30 point difference on who tougher on terrorism, there is no way to spin your way out of that. That is a absolutely a significant number. I would say, Paul, is right to an extent, he say this economic package is a gamble. And the final test will be does it work. I mean, is the country in better economic shape a year and a half from now. And that really is the wager that the White House is making. If they're right, they'll reap the benefits. If they're wrong, they won't.

WOODRUFF: Well, let's look at another poll number. And I think, Tucker, you were partly referring to this. People were asked, how do you approve of how the president's handling world affairs? Last week, it was 60 percent. This week, it's 53 percent. The economy has stayed about the same.

What is it about the handling of world affairs in the last week, Paul? North Korea has even become a bigger threat. The president is still talking tough about Iraq.

BEGALA: Well, I think the president has always had two things going for him on foreign affairs, at least since September 11: the sense that there is a constancy there and that there is a competence in the team. Both of them have come under fire in the North Korea problem. There's certainly no consistency or constancy in the way the president reacts to weapons of mass destruction in North Korea vs. Iraq.

And, frankly, it's beginning to look like it's not a very competent team after all. And if he loses those kinds of underpinnings -- it's very loyalty, but if he loses those kinds of underpinnings, he's in really big trouble.

WOODRUFF: Tucker?

CARLSON: Well, people are nervous about North Korea and Iraq, and they probably should be. But, still, in an election, voters are asked to make a choice not from whole series of options, but from two. And the question becomes, which party, which candidate is going to protect you better from foreign threats?

And I just don't see the Democrats beating the president on that question until they come up with a foreign policy. Keep in mind, they don't have one right now. And I think that is the challenge for the Democratic Party, is to come up with something to say about the rest of the world between now and 2004.

WOODRUFF: Well, they have got a few months to work on it.

CARLSON: Yes.

WOODRUFF: All right, Tucker Carlson, Paul Begala, gentlemen, thank you both.

One of the Democrats vying to challenge President Bush is coming up next. Former Vermont Governor Howard Dean says that his party has been too timid in taking on Mr. Bush.

Plus: Joe Lieberman and the Jewish factor. Will his religion be an issue? We'll ask Jeff Greenfield.

(COMMERCIAL BREAK)

WOODRUFF: They're strong in their home states, but can they draw outside their regions? An early handicap of the 2004 Democratic field is coming up later.

(NEWS BREAK)

WOODRUFF: Former Vermont Governor Howard Dean is here in Washington today, trying to drum up support for his presidential campaign. I spoke with Dean this morning about his disadvantages and his assets when compared with other Democratic candidates with bigger names and bigger political resumes.

(BEGIN VIDEOTAPE)

(voice-over): Howard Dean may be way back in the polls, but he's getting a lot of attention, as you can see by the standing-room-only crowd at the National Press Club. What's the appeal? For one, he's a former governor in a field crowded with senators and he says he's not afraid to take tough positions.

HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: I'm running as the candidate who is not afraid to tell the truth. Everybody I'm running against in the Democratic Party voted for the Iraq resolution. I think every one of them voted for the Every Child Left Behind bill, the school bill the president has had, which is undoing American education. The state of Ohio has already reduced its standards. And that's exactly the opposite of what we should be doing.

They're now going to pass some tax cut which is going to put the budget out of balance even further. I think people would like to be told the truth for a change. And that's what I plan to do in the campaign. I think that's a pretty marketable commodity these days.

WOODRUFF: Dean says the president's tax plan is a budget buster and says his rival Democrats' tax cut proposals, such as a payroll tax cut, make no sense either.

DEAN: Here's the problem with the payroll tax holiday. It's a very attractive idea. The problem with it is, it's completely irresponsible. Who is going to play fill-in-the-gap with Medicare and Social Security? That's what the payroll tax pays for. If you take money out of that to give it as a tax increase, what's the difference between that and President Bush taking money out of Social Security in order to give tax increases, other than who it goes to?

I want a balanced budget. I've done that as a governor. Nobody else in this race has ever balanced a budget before.

WOODRUFF: One more point of contention with the other Democrats running: Iraq. Dean says he would have voted against the resolution giving the president authority to go to war with Iraq. And he says he will remain opposed until the president can prove that Saddam Hussein has nuclear weapons.

DEAN: We are amassing 200,000 troops on the borders of Iraq to disarm somebody who the president has never said possesses nuclear weapons. I think he needs to make that case to the American people before we're going to support sending our kids to die in Iraq.

WOODRUFF (on camera): So, you're saying if they're able -- if they come and say it and say, we have intelligence that proves it, but we can't share it all with you, that's enough for you.

DEAN: That's right. That's enough.

WOODRUFF (voice-over): Dean says he has not yet begun to raise serious money, a few hundred thousand dollars so far. But his proximity to the kickoff primary state of New Hampshire gives him a geographical edge.

If he does well in New Hampshire, he'll have to follow up, with the next significant contest likely to be in South Carolina, where the Confederate flag is a divisive issue.

(on camera): In the state of South Carolina, where you'll be campaigning, on the state Capitol grounds flies a flag with the insignia of the Confederate flag. Should that come down?

DEAN: I don't like it, but that's a matter for the people of South Carolina to settle, not me.

WOODRUFF: So, you wouldn't urge them to change it?

DEAN: I just said, I don't like it, but it's not for somebody from out of the state to fix that problem. That's an in-state problem.

(END VIDEOTAPE)

WOODRUFF: Howard Dean talking to me a little earlier today.

Well, the GOP has its eye on Howard Dean in our Tuesday edition of the "Campaign News Daily." An e-mail sent to reporters and congressional offices criticizes Dean on a wide range of social issues. The mailing notes his stands on abortion, health care, and civil unions for gay couples and characterizes Dean as -- quote -- "an ultraliberal." Vermont's "Burlington Free Press" finds the label ironic, since Dean is considered a moderate in the state known for electing Bernie Sanders, a self-described socialist, to Congress.

Howard Dean is among the Democrats heading to Iowa for one of the first so-called cattle calls. Missouri Congressman Dick Gephardt and Massachusetts Senator John Kerry are scheduled to join Dean at a party event this Saturday in Linn County. The Iowa caucuses are tentatively scheduled to be held 366 days later, January the 19th, 2004. But who's counting?

Democratic hopeful Joe Lieberman is wasting little time taking his just-announced campaign on the road. Next week, Lieberman plans stops in five of the early caucus and primary states, including Iowa, New Hampshire, South Carolina, Arizona, and Michigan.

Well, Joe Lieberman, by the way, is hoping to make history by becoming the first Jewish president. His campaign announcement yesterday revived some dicey, but significant questions about religion and politics.

Our senior analyst, Jeff Greenfield, is here in Washington.

Jeff, is the fact that Joe Lieberman is Jewish going to have an effect on this campaign one way or another?

JEFF GREENFIELD, CNN SR. ANALYST: Well, not if you believe the polls. The problem is, you can't always believe the polls.

Two years ago, after the 2000 election, voters said, three- quarters of them said that the religion of Lieberman made no difference. And the rest split 2-1 on the favorable side. And you will remember that Lieberman's talk about faith seemed to resonate well with many Christians.

But we also know from history that when a so-called first-time candidate runs, first black, first woman, first whatever, first Catholic, voters sometimes shade their true feelings for fear of being called bigots. Black candidates always, almost always do worse on Election Day than in the polls.

What I think we can say is that there has been overall a big change in public attitudes toward faith. For instance, in one recent survey, people's feelings toward the three major faiths, Catholic, Protestant, Jewish, were identical, less favorable toward Muslim- Americans and very unfavorable, by comparison, toward people with no faith.

WOODRUFF: So, translate that into what people actually do when they get to the polls.

GREENFIELD: Well, we do know that voters are willing to elect Jews to high public office, and not just in states with significant Jewish populations. Oregon, Minnesota and Michigan, they each have Jewish senators and they have 1 percent of the population or less that is Jewish. And Wisconsin, with half of 1 percent of Jewish folks, two Jewish senators.

The question is, I think, is there a different calculus when it comes to the presidency? It took two tries to elect a Catholic. And the net effect of John Kennedy's religion, we forget sometimes, was to cost him a few million votes. The fact that Lieberman has been a candidate for national office, though, could make some difference.

WOODRUFF: Separate question, though: On its merits alone, do you think religion is ever an appropriate issue in the campaign?

GREENFIELD: Yes, you're not supposed to say so, but I think so.

Look, until 1978, the Mormon faith banned blacks from the priesthood. Now, when Mormon George Romney ran for president, wouldn't that be a fair question? If a Christian scientist seeks the presidency, would it be unreasonable to ask that candidate if he or she would fully fund Medicare or Medicaid or other traditional medicines, if they believe in a wholly different approach to health. And I think it's fair to ask if a Jewish president can be an honest broker in the Middle East. And we saw Lieberman run into some problem on that on the hawkish side.

I'll tell you something. I think one of Lieberman's problems is not about faith at all. Both "Saturday Night Live" and Jay Leno last night made jokes implying that Lieberman was the class nerd, the guy that always was given wedgies. So, apparently, there's a feeling that people think he's not tough enough, which is a lot different from the Jewish question. So, you never know what you're going to run into when you run for president.

WOODRUFF: Well, there was that Jeffrey Toobin piece in "The New Yorker," which talked about he didn't have any enemies, didn't have any enemies.

GREENFIELD: Right. But you see what I mean?

WOODRUFF: Yes. GREENFIELD: You think faith may be the issue. Now it turns out, did your ever beat anybody up in high school? We'd like to know about that.

WOODRUFF: Did you ever beat anybody up in high school?

GREENFIELD: By the time I got to high school, I realized you could get hurt. In elementary school, I got beaten up and beat people up.

(LAUGHTER)

WOODRUFF: Subject for another story. All right, Jeff Greenfield, thanks very much.

Well, it may not equal the excitement of March madness, but there are similarities. Up next: the emerging Democratic field in the campaign for president. Could regional victories be the key to success?

(COMMERCIAL BREAK)

WOODRUFF: The top seeds are emerging very quickly in the race for the 2004 Democratic nomination.

Political analyst Ron Brownstein of "The Los Angeles Times" is with me now.

All right, how do you size up this field?

RON BROWNSTEIN, CNN POLITICAL ANALYST: Judy, as this field settles in, there's an unusual dynamic developing, where you have candidates with clear sort of home court advantage in each of the three key early primaries.

It may look like the NCAA regionals, where you get brackets and candidates emerging. In Iowa, the first contest, Dick Gephardt from Missouri, who won it in 1988, is a clear favorite. When you move on to New Hampshire, the next critical contest, you have John Kerry, Joe Lieberman and Howard Dean, all from the region there. And then when you get to South Carolina, you have John Edwards, who was born in the state. And Al Sharpton, if he is going to make any noise, probably will be heard from first there, because it's the first place where you get to a significant African-American vote in the Democratic primary.

So, each of these candidates have regional strengths. The key may be who can first demonstrate strength outside of his natural home region and advantage.

WOODRUFF: So, are you already seeing some kind of a measuring stick in all this?

BROWNSTEIN: Well, I'm intrigued by the question of who comes in second in Iowa if Dick Gephardt does, in fact, maintain the advantage that he's likely to have there. Al Gore and Tom Daschle both could have been very competitive there. They're not in the race. None of these other candidates are necessarily a natural fit for Iowa other than Gephardt. So, it may be a real measuring stick who can use that caucus process to emerge as the No. 2 there and perhaps go into New Hampshire with some momentum.

WOODRUFF: Well, the latest one to get is, we know, yesterday, was Joe Lieberman. Does his getting in change the complexion of the race?

BROWNSTEIN: Well, Joe Lieberman is really going to test an interesting proposition. How centrist can you be, how much can you depart from Democratic orthodoxy and still be a viable nominee? Even Bill Clinton and Al Gore peeled off some significant support from the union movement and local liberal officials.

Lieberman has angered a long list of Democratic constituencies: organized labor on trade; teachers on vouchers; civil rights groups by questioning affirmative action; Hollywood by questioning the marketing of violent and, essentially, explicit entertainment to kids; environmentalists with his new bill with John McCain on greenhouse gases. So, he's going to have a challenge, I think, of finding a way to bring in new voters and perhaps also to sand down some of that resistance among the party base.

WOODRUFF: All right, Ron Brownstein, a lot for us to watch in these months to come.

BROWNSTEIN: It's getting exciting.

WOODRUFF: It is. It is. Thanks very much.

Well, one other Democrat considering a run for the White House is Joe Lieberman's Connecticut Senate colleague, Chris Dodd. Senator Dodd tells me he wishes Joe Lieberman well and he described the two of them as -- quote -- "good friends." Dodd says he wants to spend a few more weeks talking to his supporters and others before making up his mind about a presidential bid. He says he believes he has at least another month before he has to make a final decision.

Well, even as Democrats line up to take on the president, Mr. Bush is fighting back. Up next, our Bruce Morton says the man who has touted bipartisanship is sounding awfully partisan these days.

(COMMERCIAL BREAK)

WOODRUFF: President Bush says he isn't paying attention to the Democrats jockeying for his job. But a year before the primary season, he often sounds as if he's in campaign mode.

And, as our Bruce Morton explains, his tone is different from what it used to be.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP) GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL CANDIDATE: I've been a person that has been called a uniter, not a divider.

(END VIDEO CLIP)

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): President Bush campaigned saying he'd lower the temperature in Washington, work with both parties. But since the November election, he's been in your face with the Democrats, easing clean air and water rules, proposing another big tax cut tilted toward the rich, renominating Priscilla Owen and Charles Pickering, judicial candidates the previous Democratic Senate had rejected.

Partisan?

STUART ROTHENBERG, CNN POLITICAL ANALYST: When you get right down to it, the parties have different values, different assumptions and different constituencies. So, it shouldn't be surprising that they favor different policies and programs and ultimately would be fighting over those.

STEPHEN HESS, BROOKINGS INSTITUTION: It was really only with 9/11, of course, that it became an obvious bipartisan government. But, of course, it was a bipartisan government where people filed in behind the commander in chief.

MORTON: And in an area after area -- secrecy, keeping Congress at a distance, refusing to release notes of meetings -- Bush has tried to strengthen the executive branch of government.

HESS: He'll push as far as he can. And maybe with something as large as, let's say, his tax bill, he is playing a game in which he asks for twice as much as he really expects and then will compromise. But that hasn't been his habit so far.

ROTHENBERG: I was surprised by the Pickering nomination. It suggests the president is becoming more partisan. And barring an economic rebound, barring the country brought together by a foreign policy success, we could be headed back to the politics of November of 2000, very partisan, very bitter, very closely divided.

MORTON: And, of course, as Joe Lieberman reminded us only yesterday, the very partisan presidential campaign of 2004 is already well under way.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Indeed it is.

When we return: Politicians get the urge to dance.

(COMMERCIAL BREAK)

WOODRUFF: It wasn't exactly a victory dance, but two Arkansas Democrats celebrated their retirement yesterday with a few steps on the stairs of the statehouse in Little Rock. Both Jimmie Lou Fisher and Sharon Priest were term-limited from running again for their longtime jobs as state treasurer and secretary of state, respectively. Fisher capped her career with a failed run for governor last fall. Constituents cheered them on as they high-stepped their way to a life outside politics.

We wish them well.

That's it for INSIDE POLITICS. Thank you for joining us. I'm Judy Woodruff.

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