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Inside Politics

White House Request for Billions Still Hotly Contested; Interview With Don Evans

Aired September 10, 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.


(BEGIN VIDEOTAPE)
ANNOUNCER: The war on terror. On the eve of the 9/11 anniversary...

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: A free Iraq is in everybody's interest.

ANNOUNCER: Can Americans afford to foot the bill? Can they afford not to? We'll ask Commerce Secretary Don Evans.

Debatable points. After the '04 Democrats latest face off...

HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: I'm the only white politician that ever talks about race in front of white audiences.

ANNOUNCER: We'll review the debate hot shots, punchlines and post-mortems.

When Arianna Huffington holds a star-studded recall campaign fund raiser, the joke is on Arnold Schwarzenegger.

BILL MAHER, ENTERTAINER: I have two questions about Arnold Schwarzenegger: what does he know, and when will he know it?

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

(END VIDEOTAPE)

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us.

Well as Americans prepare to mark two years since terrorists hit home, it is a day to look at how far the nation has come. And at the risks and costs that still lie ahead.

Within the past two hours, the Al Jazeera network aired what it says is new videotape of Osama bin Laden and his top deputy. It also ran an audiotape attributed to bin Laden and Ayman al-Zawahiri praising the suicide hijackers who struck two years ago tomorrow.

(BEGIN VIDEO CLIP)

AYMAN AL-ZAWAHIRI (through translator): Here we would like to let you know also and emphasize that what you've seen so far is just -- are just the first skirmishes. And the real battle has not yet started yet. Prepare yourself for the punishments for your crimes.

(END VIDEO CLIP)

WOODRUFF: Well, not long after the tape was released, President Bush made a scheduled speech on Homeland Security, vowing that America will stay on the offensive. And he urged Congress to give law enforcement authorities more power to go after terrorists.

But on Capitol Hill, many lawmakers still are focused on the price tag of the war on terror, particularly in Iraq. Earlier today Mr. Bush defended his $87 billion budget request.

(BEGIN VIDEO CLIP)

BUSH: The $87 billion, it's important to spend that money. It's in our national interest that we spend it. A free and peaceful Iraq will save this country money in the long term.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: The safety of our men and women in uniform is critical. And they will have what they need. Democrats will fully support that.

But we want to see an accounting that what the president is requesting will make our men and women in uniform more safe and more secure.

(END VIDEO CLIP)

WOODRUFF: That was Nancy Pelosi.

And let's talk now about the costs of war on terror and more with Commerce Secretary Don Evans. He's with us from the Commerce Department.

Mr. Secretary, we heard Nancy Pelosi saying the president's going to get this money, but we want more information about how it's being spent. Are the members of Congress going to get that information?

DON EVANS, SECRETARY OF COMMERCE: Well I'm sure they will. I mean it's appropriate they ask good questions. I'm sure they'll get the information they need. They'll find out exactly what the president knows and that is it's important for us to stay on the offensive. It's important for us to spend this money to make sure that we provide for the national security of this country, that we win this war against terrorism.

As I've said many times, Judy, you can't have economic security in this country without national security. So, yes, indeed, they'll get the information that they need.

WOODRUFF: Mr. Secretary, let me ask you -- let me cite something that Ed Markey said just a few minutes ago. I interviewed him right after the president spoke at Quantico.

And he said, Yes, we know the money is important. But he said, We don't understand how the president is asking for $87 billion for Iraq and Afghanistan when the administration isn't willing to spend another $1.6 billion in the war -- or rather for homeland security. How do you explain that?

EVANS: Well, Judy, I'm not into the details of how the numbers are -- have been constructed. I mean, I'm relying on the Department of Defense, Homeland Security, the president's team to determine the kind of resources it's going to take to win the war on terrorism.

And, you know, so I'm not down into the details on exactly where all these numbers come from, but I can tell you that the president has a great team working on it. I know that he's very tough. These are resources that troops need in Afghanistan and in Iraq, and as we continue to prosecute the war on terrorism around the world. And the answer is yes.

And so that's the reasons for the request of $87 billion.

WOODRUFF: Here's another comment from Senator John Breaux. He's a Democrat, but he is typically with the administration on many of the things the president has asked for. He says, quote, "I've got things that need to be rebuilt in Louisiana. I certainly don't want to give money we don't have to a far away country to the neglect of the domestic demands we have here. Eighty-seven billion for Iraq and zero for better security at our ports." And so on.

EVANS: Again, Judy, you cannot have economic security, economic growth in this country without national security. And you will not have national security at the level that we need it, until we win this war on terrorism. And so that's the focus, is to win the war on terrorism. And that's where the president is focusing.

Let me put the number in perspective. I think is -- which I think is important to do. This is a one-time cost. This is a -- the debt level of the country is below where it has been, on average, for the last 50 years. We have an economy that is a very durable economy. It has withstood two world wars, a depression, ten recessions since the end of World War II. It's an $11 trillion economy. Largest economy in the world by far. A third of the global economy.

So this is a very affordable request that the president has made. But not only is it affordable, it is a must. It's what this country needs to spend in order to continue to prosecute the war on terrorism.

WOODRUFF: The president's Secretary of Commerce, Don Evans. Very good to see you and we thank you for talking with us.

EVANS: Thank you, Judy. Always good to see you. You bet.

WOODRUFF: We appreciate it. Thanks.

Well, now we turn to the political calculations in the state of California. Arnold Schwarzenegger has been talking education while strategists and pollsters try to figure out the ramifications of Peter Ueberroth's exit from the recall race.

CNN's Kelly Wallace is with us now from San Jose. Kelly, what is Mr. Schwarzenegger saying about education?

KELLY WALLACE, CNN CORRESPONDENT: Well, Judy, he's talking a lot about education today. This, as Californians say, it is their second most important issue that they are concerned about.

He gathered a panel of education advisers to talk about what he wants to do. Ultimately, he says, giving more control to the local schools. Saying Sacramento, in his words, must stop being a schoolyard bully.

Schwarzenegger brought together some heavy hitters, including a prominent Democrat, his mother-in-law, Eunice Kennedy Shriver. And a top Republican, Richard Riordan, the former mayor of Los Angeles. It was the first appearance between Riordan and Schwarzenegger after reports surfaced weeks ago that Riordan was angry that he found out on television and not from Schwarzenegger himself that he was getting into the race.

Now this has all coming as we have a new poll released today showing that Peter Ueberroth's departure from this race is not changing the current standings of this race whatsoever. When you factor in the 5 percent of likely voters who were supporting Peter Ueberroth, you still find that there is a five-point gap.

Lieutenant Governor Cruz Bustamante, the Democrat, leading Arnold Schwarzenegger by 5 points. So you have Republicans continuing to talk behind the scenes about a concern that the major Republican candidates could end up splitting the vote, and keeping the governorship in Democratic hands.

I asked Arnold Schwarzenegger this very question, if he believes the Republican state senator Tom McClintock could become a spoiler here.

(BEGIN VIDEO CLIP)

ARNOLD SCHWARZENEGGER (R), CALIF. GOV. CANDIDATE: Do I look like troubled for that?

(LAUGHTER)

SCHWARZENEGGER: No, I think that I have no problems with that at all. Great thing about Tom McClintock is we share a lot of the same philosophies and same ideas. We stand in some ways, in many ways for the same things. He's a very smart guy.

And eventually at one point or another he is to see, does he want to get out or does he want to stay in. Mathematically speaking, it's better clear that it's better when you're by yourself.

(END VIDEO CLIP)

WALLACE: McClintock's aides say it's absolutely too early to talk about anyone getting out of this race. They say McClintock wants to debate Arnold Schwarzenegger one on one on the issues. And, Judy, you know from your interview yesterday with the candidate himself, McClintock says he's in this until the finish line -- Judy.

WOODRUFF: That's right, Kelly. In fact, he said something to the effect, Don't you understand the word no, when we asked him when he was getting out.

WALLACE: Right. How many times can you say "no"? Exactly.

WALLACE: That's right. All right, Kelly Wallace following that fascinating California recall race.

Well the recall reference even made it into last night's presidential Democratic debate.

(BEGIN VIDEO CLIP)

REV. AL SHARPTON (D), PRESIDENTIAL CANDIDATE: I'm a man of action, and unlike Schwarzenegger, I never had a stunt man do my hard work.

(END VIDEO CLIP)

WOODRUFF: Did the '04 candidates' hard work at the debate podium pay off?

Also ahead, is it the answer to the big apple's budget problems that New Yorkers have been thirsting for?

And Bill Schneider goes Hollywood for celebrity buzz jokes about the California recall.

(COMMERCIAL BREAK)

WOODRUFF: Senate Democrats today blocked a Bush administration attempt to issue new overtime rules for workers. The measure, which has already passed the House, failed by a 54 to 45 vote. Democrats and their allies in organized labor say the rules would take money from the pockets of ordinary Americans. The White House says the changes are needed to reform outdated overtime rules.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

WOODRUFF: Democratic presidential hopeful John Edwards today had some sharp criticism for his rival Howard Dean. Edwards was upset by Dean's comment in last minute's debate that he, Dean, is -- quote -- "the only white politician that ever talks about race in front of white audiences" -- endquote. Well, Edwards called those remarks divisive, and said in the future that he hopes that Dean will -- quote -- "lead by example instead of by attack."

As for the rest of last night's debate, Howard Dean remained at center stage.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): They hit George W. Bush...

REP. DICK GEPHARDT (D-MO), PRESIDENTIAL CANDIDATE: This president's foreign policy a miserable failure.

WOODRUFF: ...and they hit each other.

REP. DENNIS KUCINICH (D-OH), PRESIDENTIAL CANDIDATE: Dick, I just want to say that when you were standing there in the Rose Garden with the president and you were giving him advice, I wish that you would have told him no.

WOODRUFF: And gingerly, the '04 Dems took the gloves of, Howard Dean and Joe Lieberman slinging the biggest barbs on Israel.

DEAN: It doesn't help, Joe, to demagogue this issue. We're all Democrats. We need to beat George Bush so we can have peace in the Middle East.

WOODRUFF: In the post-debate spin room, Lieberman bristled.

SEN. JOE LIEBERMAN (D-CT), PRESIDENTIAL CANDIDATE: For Howard Dean to say that I was demagoguing this issue, in responding to his break -- irresponsible break in 50 years ago of American foreign policy was unfair and intemperate statement.

WOODRUFF: The news media turned out in force for the second debate in a week. George Clooney was there, too, doing a little research. He's still on the fence.

GEORGE CLOONEY, ACTOR: I'm a Democrat, but I don't yet. We're (UNINTELLIGIBLE) -- that's what I'm here to do, is figure some things out.

WOODRUFF: Same with the debate's largely black audience, which the candidates took pains to court.

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: This Democrat has never taken African Americans for granted.

DEAN: One time I was down in South Carolina at an African American audience. They said, Why should we vote for a white boy from Vermont? I gave them the explanation and I finished it off by saying, I got soul. And that's why you ought to vote for me.

WOODRUFF: But one powerful black lawmaker says no candidate stood out.

ELIJAH CUMMINGS, CONGRESSIONAL BLACK CAUCUS: Nobody hit a home run. Not in my estimation.

(END VIDEOTAPE)

WOODRUFF: Elijah Cummings, who heads up of the Congressional black caucus, summing up last night's debate.

Well, checking the headlines now in our "Campaign News Daily." Democratic hopeful Dick Gephardt is here in Washington meeting with some of his most loyal supporters. Gephardt met this morning with most of the 31 House colleagues who've already endorsed him. Some of these members are planning to host fund-raisers between now and the end of the month, boosting Gephardt's third quarter fundraising totals.

Alabama Governor Bob Riley suffered a stinging defeat at the polls yesterday. Voters rejected Riley's package of tax hikes by a 2- to-1 margin. Riley says state residents should now prepare for major spending cuts.

In New York City, Mayor Michael Bloomberg has found a new way to help quench growing city spending needs. Snapple is now the official beverage of the Big Apple. The five-year deal is valued -- $166 million in cash and advertising for the city. The mayor says more marketing deals promoting New York are in the works.

Straight ahead, the favorites, the underdogs, and the emerging strategies in the three governor's races this November.

(COMMERCIAL BREAK)

WOODRUFF: The major focus of most election watchers, of course, is the '04 race for the White House. But could this year's three regularly scheduled governors' races foreshadow next year's political themes?

Joining me now to talk about all of this, Amy Walter of the Cook Political Report.

I point out these are regularly scheduled, because California is happening. But not so regularly scheduled.

Three contests this year. Let's talk about Kentucky first. Paul Patton, the governor not running against what's an open seat. What's going on?

AMY WALTER, COOK POLITICAL REPORT: That's right.

Well, what's fun about the '03 elections here is that it's a little bit like pre-season, right? We get a little sense of maybe how maybe these issues are going to play out in 2004, how messages are delivered, how the candidates go about doing that, what the parties can talk about.

Kentucky is a very interesting place to start because it's probably the starkest example right now of whether a Democrat can run against and try to tie his opponent to Bush's -- President Bush's economic policies. This in a state that Bush carried in 2000.

So in this case, you have attorney general Ben Chandler, who 's a Democrat. He's running against Congressman Ernie Fletcher, from Lexington, Kentucky. With every breath he takes, he talks about the Fletcher-Bush economy, and is really trying to tie job losses in the state to his opponent. Fletcher has the advantage, first of all, as I said, this is a state that the president won the last time.

WOODRUFF: Right.

WALTER: Democrats have controlled the state house for the last three (ph) years, not Republicans. And the governor, Patton, is embroiled in his own scandals...

WOODRUFF: Yes.

WALTER: ...and is pretty unpopular in the state. So we'll see how that plays out.

WOODRUFF: All right. That's Kentucky. Let's talk about Mississippi, where you have the only incumbent governor up for reelection, Ronny Musgrove.

WALTER: Right.

WOODRUFF: But he's got a challenger.

WALTER: He has a very serious challenger in Haley Barbour, the former RNC chairman. And this is the test case here to see how an incumbent governor can run. Can he survive in this sort of economic climate?

The economy, obviously is, playing a big role in this contest as well. Barbour is charging that Musgrove has not done well in the state and is pointing the state's economic troubles onto Musgrove. Musgrove is also one of the few Southern Democratic governors...

WOODRUFF: Very few.

WALTER: Yes, and 2002 wasn't a great year to be a Southern Democratic governor. Three of them lost that year. So that would be a big success, certainly not just for Musgrove, but for Democrats to say, We can run and hold on and win in these tough districts and states.

WOODRUFF: All right. Let's talk about the neighboring state. We talk about Mississippi. Let's talk about the neighboring state of Louisiana. You've got a lot of people running.

WALTER: You have 18 candidates running. We have an October 4 primary. So this thing is still very fluid. We haven't seen those issues come yet. After October 4, we'll have two candidates. And I think then we'll start to see where these issues start to go.

Again, I think you're looking at, in all three of these cases, an opportunity to test drive some messages., maybe to give the parties some ideas of where to go. Not to put too much stock into it, of course. These are all individual races with individual candidates and campaigns. But I think that both parties will take whatever happens in here and try to use that as some sort of momentum, or message into the '04 election.

WOODRUFF: Sure they will. If there's any good news for them, then they'll try to make -- it's a big deal, and if there's not good news they'll ignore it and talk about something else.

(CROSSTALK)

WOODRUFF: Where have we heard this? All right. Amy Walter, the Cook Political Report. Great to have you back on.

WALTER: Thanks a lot, Judy. Appreciate it.

WOODRUFF: And a quick update now on Indiana's political leadership. The Indiana supreme court today, approved a petition making Lieutenant Governor Joe Kernan the state's acting governor. Governor Frank O'Bannon remains in a comma after suffering a stroke on Monday. Doctors say there is evidence of brain damage, although the extent is not known. State legislative leaders requested the power transfer after consulting with O'Bannon's wife and his doctors.

Still ahead, lights, camera and the recall action. Find out what happens when the stars turn out to help a California candidate.

(COMMERCIAL BREAK)

WOODRUFF: The California recall extravaganza has made the line between politics and show business even blurrier in more ways than you might think.

Our Bill Schneider has been covering the race and mingling with the stars.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): Who is the big Hollywood candidate in this race? Not him. Her. The stars came out for Arianna Huffington Tuesday Night.

Look, there's Dustin Hoffman, and Paul Reiser. And what's her name -- you know, Nia Vardalos from the Greek wedding movie.

(on camera): Is this your big fat Greek fundraiser?

(voice-over): What do they like so much about Huffington?

ANJELICA HUSTON, ACTRESS: Well, I enjoy her column very much in "The Los Angeles Times." I think she's -- she's on the right side. And she's a good Democrat.

SCHNEIDER: Actually, she's running as an independent. And she used to be a Republican. Does that bother people here?

HARRY SHEARER, ACTOR: She's the only person in the opinion- mongering business that I've ever met who's actually willing to change her mind upon the insertion or the infusion of new information.

SCHNEIDER: The candidate even fessed up to her sordid past associations with Congressional Republicans.

ARIANNA HUFFINGTON (I), CALIFORNIA GOV. CANDIDATE: Well, we all have our vices. For some, it was booze. For others it was group sex. For me, it was Newt Gingrich.

SCHNEIDER: So what's the Huffington-Hollywood connection?

LAWRENCE O'DONNELL JR, WRITER/PRODUCER: She is saying exactly what her supporters want to hear. She's not off a little bit on this issue and a little bit on that issue.

SCHNEIDER: But do they think Huffington can win?

SHEARER: As a satirist I will never publicly support a candidate who has a chance of winning.

SCHNEIDER: A lot of the barbs at this event were aimed at that other Hollywood candidate.

ROB SCHNEIDER, ACTOR: Arnold Schwarzenegger. The last time I saw someone this unqualified running for office, Arianna was married to him.

SCHNEIDER: That would be her Republican ex-husband who failed in a Senate bid in 1994.

There's an interesting dilemma here for Huffington's Hollywood liberals.

O'DONNELL: What's going to be fascinating about the people who are here tonight, is if she becomes the Ralph Nader in this race, and is the one who's numerically capable of holding back a Democrat from winning the governorship in Bustamante's case.

SCHNEIDER: The candidate's response?

HUFFINGTON: It's too early to look at that. Because this is still such a fluid election.

(END VIDEOTAPE)

SCHNEIDER: Most of the people at the fundraiser said they were going to vote against the recall of Governor Gray Davis. That's practical. And then for Huffington. That's to make a statement.

You know, here in Hollywood, you can have your cake and eat it too -- Judy.

WOODRUFF: That's why we keep watching these movies over and over.

SCHNEIDER: Exactly.

WOODRUFF: OK. Bill Schneider, thanks very much.

That is it for INSIDE POLITICS. 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





Interview With Don Evans>


Aired September 10, 2003 - 16:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
ANNOUNCER: The war on terror. On the eve of the 9/11 anniversary...

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: A free Iraq is in everybody's interest.

ANNOUNCER: Can Americans afford to foot the bill? Can they afford not to? We'll ask Commerce Secretary Don Evans.

Debatable points. After the '04 Democrats latest face off...

HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: I'm the only white politician that ever talks about race in front of white audiences.

ANNOUNCER: We'll review the debate hot shots, punchlines and post-mortems.

When Arianna Huffington holds a star-studded recall campaign fund raiser, the joke is on Arnold Schwarzenegger.

BILL MAHER, ENTERTAINER: I have two questions about Arnold Schwarzenegger: what does he know, and when will he know it?

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

(END VIDEOTAPE)

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us.

Well as Americans prepare to mark two years since terrorists hit home, it is a day to look at how far the nation has come. And at the risks and costs that still lie ahead.

Within the past two hours, the Al Jazeera network aired what it says is new videotape of Osama bin Laden and his top deputy. It also ran an audiotape attributed to bin Laden and Ayman al-Zawahiri praising the suicide hijackers who struck two years ago tomorrow.

(BEGIN VIDEO CLIP)

AYMAN AL-ZAWAHIRI (through translator): Here we would like to let you know also and emphasize that what you've seen so far is just -- are just the first skirmishes. And the real battle has not yet started yet. Prepare yourself for the punishments for your crimes.

(END VIDEO CLIP)

WOODRUFF: Well, not long after the tape was released, President Bush made a scheduled speech on Homeland Security, vowing that America will stay on the offensive. And he urged Congress to give law enforcement authorities more power to go after terrorists.

But on Capitol Hill, many lawmakers still are focused on the price tag of the war on terror, particularly in Iraq. Earlier today Mr. Bush defended his $87 billion budget request.

(BEGIN VIDEO CLIP)

BUSH: The $87 billion, it's important to spend that money. It's in our national interest that we spend it. A free and peaceful Iraq will save this country money in the long term.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: The safety of our men and women in uniform is critical. And they will have what they need. Democrats will fully support that.

But we want to see an accounting that what the president is requesting will make our men and women in uniform more safe and more secure.

(END VIDEO CLIP)

WOODRUFF: That was Nancy Pelosi.

And let's talk now about the costs of war on terror and more with Commerce Secretary Don Evans. He's with us from the Commerce Department.

Mr. Secretary, we heard Nancy Pelosi saying the president's going to get this money, but we want more information about how it's being spent. Are the members of Congress going to get that information?

DON EVANS, SECRETARY OF COMMERCE: Well I'm sure they will. I mean it's appropriate they ask good questions. I'm sure they'll get the information they need. They'll find out exactly what the president knows and that is it's important for us to stay on the offensive. It's important for us to spend this money to make sure that we provide for the national security of this country, that we win this war against terrorism.

As I've said many times, Judy, you can't have economic security in this country without national security. So, yes, indeed, they'll get the information that they need.

WOODRUFF: Mr. Secretary, let me ask you -- let me cite something that Ed Markey said just a few minutes ago. I interviewed him right after the president spoke at Quantico.

And he said, Yes, we know the money is important. But he said, We don't understand how the president is asking for $87 billion for Iraq and Afghanistan when the administration isn't willing to spend another $1.6 billion in the war -- or rather for homeland security. How do you explain that?

EVANS: Well, Judy, I'm not into the details of how the numbers are -- have been constructed. I mean, I'm relying on the Department of Defense, Homeland Security, the president's team to determine the kind of resources it's going to take to win the war on terrorism.

And, you know, so I'm not down into the details on exactly where all these numbers come from, but I can tell you that the president has a great team working on it. I know that he's very tough. These are resources that troops need in Afghanistan and in Iraq, and as we continue to prosecute the war on terrorism around the world. And the answer is yes.

And so that's the reasons for the request of $87 billion.

WOODRUFF: Here's another comment from Senator John Breaux. He's a Democrat, but he is typically with the administration on many of the things the president has asked for. He says, quote, "I've got things that need to be rebuilt in Louisiana. I certainly don't want to give money we don't have to a far away country to the neglect of the domestic demands we have here. Eighty-seven billion for Iraq and zero for better security at our ports." And so on.

EVANS: Again, Judy, you cannot have economic security, economic growth in this country without national security. And you will not have national security at the level that we need it, until we win this war on terrorism. And so that's the focus, is to win the war on terrorism. And that's where the president is focusing.

Let me put the number in perspective. I think is -- which I think is important to do. This is a one-time cost. This is a -- the debt level of the country is below where it has been, on average, for the last 50 years. We have an economy that is a very durable economy. It has withstood two world wars, a depression, ten recessions since the end of World War II. It's an $11 trillion economy. Largest economy in the world by far. A third of the global economy.

So this is a very affordable request that the president has made. But not only is it affordable, it is a must. It's what this country needs to spend in order to continue to prosecute the war on terrorism.

WOODRUFF: The president's Secretary of Commerce, Don Evans. Very good to see you and we thank you for talking with us.

EVANS: Thank you, Judy. Always good to see you. You bet.

WOODRUFF: We appreciate it. Thanks.

Well, now we turn to the political calculations in the state of California. Arnold Schwarzenegger has been talking education while strategists and pollsters try to figure out the ramifications of Peter Ueberroth's exit from the recall race.

CNN's Kelly Wallace is with us now from San Jose. Kelly, what is Mr. Schwarzenegger saying about education?

KELLY WALLACE, CNN CORRESPONDENT: Well, Judy, he's talking a lot about education today. This, as Californians say, it is their second most important issue that they are concerned about.

He gathered a panel of education advisers to talk about what he wants to do. Ultimately, he says, giving more control to the local schools. Saying Sacramento, in his words, must stop being a schoolyard bully.

Schwarzenegger brought together some heavy hitters, including a prominent Democrat, his mother-in-law, Eunice Kennedy Shriver. And a top Republican, Richard Riordan, the former mayor of Los Angeles. It was the first appearance between Riordan and Schwarzenegger after reports surfaced weeks ago that Riordan was angry that he found out on television and not from Schwarzenegger himself that he was getting into the race.

Now this has all coming as we have a new poll released today showing that Peter Ueberroth's departure from this race is not changing the current standings of this race whatsoever. When you factor in the 5 percent of likely voters who were supporting Peter Ueberroth, you still find that there is a five-point gap.

Lieutenant Governor Cruz Bustamante, the Democrat, leading Arnold Schwarzenegger by 5 points. So you have Republicans continuing to talk behind the scenes about a concern that the major Republican candidates could end up splitting the vote, and keeping the governorship in Democratic hands.

I asked Arnold Schwarzenegger this very question, if he believes the Republican state senator Tom McClintock could become a spoiler here.

(BEGIN VIDEO CLIP)

ARNOLD SCHWARZENEGGER (R), CALIF. GOV. CANDIDATE: Do I look like troubled for that?

(LAUGHTER)

SCHWARZENEGGER: No, I think that I have no problems with that at all. Great thing about Tom McClintock is we share a lot of the same philosophies and same ideas. We stand in some ways, in many ways for the same things. He's a very smart guy.

And eventually at one point or another he is to see, does he want to get out or does he want to stay in. Mathematically speaking, it's better clear that it's better when you're by yourself.

(END VIDEO CLIP)

WALLACE: McClintock's aides say it's absolutely too early to talk about anyone getting out of this race. They say McClintock wants to debate Arnold Schwarzenegger one on one on the issues. And, Judy, you know from your interview yesterday with the candidate himself, McClintock says he's in this until the finish line -- Judy.

WOODRUFF: That's right, Kelly. In fact, he said something to the effect, Don't you understand the word no, when we asked him when he was getting out.

WALLACE: Right. How many times can you say "no"? Exactly.

WALLACE: That's right. All right, Kelly Wallace following that fascinating California recall race.

Well the recall reference even made it into last night's presidential Democratic debate.

(BEGIN VIDEO CLIP)

REV. AL SHARPTON (D), PRESIDENTIAL CANDIDATE: I'm a man of action, and unlike Schwarzenegger, I never had a stunt man do my hard work.

(END VIDEO CLIP)

WOODRUFF: Did the '04 candidates' hard work at the debate podium pay off?

Also ahead, is it the answer to the big apple's budget problems that New Yorkers have been thirsting for?

And Bill Schneider goes Hollywood for celebrity buzz jokes about the California recall.

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WOODRUFF: Senate Democrats today blocked a Bush administration attempt to issue new overtime rules for workers. The measure, which has already passed the House, failed by a 54 to 45 vote. Democrats and their allies in organized labor say the rules would take money from the pockets of ordinary Americans. The White House says the changes are needed to reform outdated overtime rules.

INSIDE POLITICS will be right back.

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WOODRUFF: Democratic presidential hopeful John Edwards today had some sharp criticism for his rival Howard Dean. Edwards was upset by Dean's comment in last minute's debate that he, Dean, is -- quote -- "the only white politician that ever talks about race in front of white audiences" -- endquote. Well, Edwards called those remarks divisive, and said in the future that he hopes that Dean will -- quote -- "lead by example instead of by attack."

As for the rest of last night's debate, Howard Dean remained at center stage.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): They hit George W. Bush...

REP. DICK GEPHARDT (D-MO), PRESIDENTIAL CANDIDATE: This president's foreign policy a miserable failure.

WOODRUFF: ...and they hit each other.

REP. DENNIS KUCINICH (D-OH), PRESIDENTIAL CANDIDATE: Dick, I just want to say that when you were standing there in the Rose Garden with the president and you were giving him advice, I wish that you would have told him no.

WOODRUFF: And gingerly, the '04 Dems took the gloves of, Howard Dean and Joe Lieberman slinging the biggest barbs on Israel.

DEAN: It doesn't help, Joe, to demagogue this issue. We're all Democrats. We need to beat George Bush so we can have peace in the Middle East.

WOODRUFF: In the post-debate spin room, Lieberman bristled.

SEN. JOE LIEBERMAN (D-CT), PRESIDENTIAL CANDIDATE: For Howard Dean to say that I was demagoguing this issue, in responding to his break -- irresponsible break in 50 years ago of American foreign policy was unfair and intemperate statement.

WOODRUFF: The news media turned out in force for the second debate in a week. George Clooney was there, too, doing a little research. He's still on the fence.

GEORGE CLOONEY, ACTOR: I'm a Democrat, but I don't yet. We're (UNINTELLIGIBLE) -- that's what I'm here to do, is figure some things out.

WOODRUFF: Same with the debate's largely black audience, which the candidates took pains to court.

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: This Democrat has never taken African Americans for granted.

DEAN: One time I was down in South Carolina at an African American audience. They said, Why should we vote for a white boy from Vermont? I gave them the explanation and I finished it off by saying, I got soul. And that's why you ought to vote for me.

WOODRUFF: But one powerful black lawmaker says no candidate stood out.

ELIJAH CUMMINGS, CONGRESSIONAL BLACK CAUCUS: Nobody hit a home run. Not in my estimation.

(END VIDEOTAPE)

WOODRUFF: Elijah Cummings, who heads up of the Congressional black caucus, summing up last night's debate.

Well, checking the headlines now in our "Campaign News Daily." Democratic hopeful Dick Gephardt is here in Washington meeting with some of his most loyal supporters. Gephardt met this morning with most of the 31 House colleagues who've already endorsed him. Some of these members are planning to host fund-raisers between now and the end of the month, boosting Gephardt's third quarter fundraising totals.

Alabama Governor Bob Riley suffered a stinging defeat at the polls yesterday. Voters rejected Riley's package of tax hikes by a 2- to-1 margin. Riley says state residents should now prepare for major spending cuts.

In New York City, Mayor Michael Bloomberg has found a new way to help quench growing city spending needs. Snapple is now the official beverage of the Big Apple. The five-year deal is valued -- $166 million in cash and advertising for the city. The mayor says more marketing deals promoting New York are in the works.

Straight ahead, the favorites, the underdogs, and the emerging strategies in the three governor's races this November.

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WOODRUFF: The major focus of most election watchers, of course, is the '04 race for the White House. But could this year's three regularly scheduled governors' races foreshadow next year's political themes?

Joining me now to talk about all of this, Amy Walter of the Cook Political Report.

I point out these are regularly scheduled, because California is happening. But not so regularly scheduled.

Three contests this year. Let's talk about Kentucky first. Paul Patton, the governor not running against what's an open seat. What's going on?

AMY WALTER, COOK POLITICAL REPORT: That's right.

Well, what's fun about the '03 elections here is that it's a little bit like pre-season, right? We get a little sense of maybe how maybe these issues are going to play out in 2004, how messages are delivered, how the candidates go about doing that, what the parties can talk about.

Kentucky is a very interesting place to start because it's probably the starkest example right now of whether a Democrat can run against and try to tie his opponent to Bush's -- President Bush's economic policies. This in a state that Bush carried in 2000.

So in this case, you have attorney general Ben Chandler, who 's a Democrat. He's running against Congressman Ernie Fletcher, from Lexington, Kentucky. With every breath he takes, he talks about the Fletcher-Bush economy, and is really trying to tie job losses in the state to his opponent. Fletcher has the advantage, first of all, as I said, this is a state that the president won the last time.

WOODRUFF: Right.

WALTER: Democrats have controlled the state house for the last three (ph) years, not Republicans. And the governor, Patton, is embroiled in his own scandals...

WOODRUFF: Yes.

WALTER: ...and is pretty unpopular in the state. So we'll see how that plays out.

WOODRUFF: All right. That's Kentucky. Let's talk about Mississippi, where you have the only incumbent governor up for reelection, Ronny Musgrove.

WALTER: Right.

WOODRUFF: But he's got a challenger.

WALTER: He has a very serious challenger in Haley Barbour, the former RNC chairman. And this is the test case here to see how an incumbent governor can run. Can he survive in this sort of economic climate?

The economy, obviously is, playing a big role in this contest as well. Barbour is charging that Musgrove has not done well in the state and is pointing the state's economic troubles onto Musgrove. Musgrove is also one of the few Southern Democratic governors...

WOODRUFF: Very few.

WALTER: Yes, and 2002 wasn't a great year to be a Southern Democratic governor. Three of them lost that year. So that would be a big success, certainly not just for Musgrove, but for Democrats to say, We can run and hold on and win in these tough districts and states.

WOODRUFF: All right. Let's talk about the neighboring state. We talk about Mississippi. Let's talk about the neighboring state of Louisiana. You've got a lot of people running.

WALTER: You have 18 candidates running. We have an October 4 primary. So this thing is still very fluid. We haven't seen those issues come yet. After October 4, we'll have two candidates. And I think then we'll start to see where these issues start to go.

Again, I think you're looking at, in all three of these cases, an opportunity to test drive some messages., maybe to give the parties some ideas of where to go. Not to put too much stock into it, of course. These are all individual races with individual candidates and campaigns. But I think that both parties will take whatever happens in here and try to use that as some sort of momentum, or message into the '04 election.

WOODRUFF: Sure they will. If there's any good news for them, then they'll try to make -- it's a big deal, and if there's not good news they'll ignore it and talk about something else.

(CROSSTALK)

WOODRUFF: Where have we heard this? All right. Amy Walter, the Cook Political Report. Great to have you back on.

WALTER: Thanks a lot, Judy. Appreciate it.

WOODRUFF: And a quick update now on Indiana's political leadership. The Indiana supreme court today, approved a petition making Lieutenant Governor Joe Kernan the state's acting governor. Governor Frank O'Bannon remains in a comma after suffering a stroke on Monday. Doctors say there is evidence of brain damage, although the extent is not known. State legislative leaders requested the power transfer after consulting with O'Bannon's wife and his doctors.

Still ahead, lights, camera and the recall action. Find out what happens when the stars turn out to help a California candidate.

(COMMERCIAL BREAK)

WOODRUFF: The California recall extravaganza has made the line between politics and show business even blurrier in more ways than you might think.

Our Bill Schneider has been covering the race and mingling with the stars.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): Who is the big Hollywood candidate in this race? Not him. Her. The stars came out for Arianna Huffington Tuesday Night.

Look, there's Dustin Hoffman, and Paul Reiser. And what's her name -- you know, Nia Vardalos from the Greek wedding movie.

(on camera): Is this your big fat Greek fundraiser?

(voice-over): What do they like so much about Huffington?

ANJELICA HUSTON, ACTRESS: Well, I enjoy her column very much in "The Los Angeles Times." I think she's -- she's on the right side. And she's a good Democrat.

SCHNEIDER: Actually, she's running as an independent. And she used to be a Republican. Does that bother people here?

HARRY SHEARER, ACTOR: She's the only person in the opinion- mongering business that I've ever met who's actually willing to change her mind upon the insertion or the infusion of new information.

SCHNEIDER: The candidate even fessed up to her sordid past associations with Congressional Republicans.

ARIANNA HUFFINGTON (I), CALIFORNIA GOV. CANDIDATE: Well, we all have our vices. For some, it was booze. For others it was group sex. For me, it was Newt Gingrich.

SCHNEIDER: So what's the Huffington-Hollywood connection?

LAWRENCE O'DONNELL JR, WRITER/PRODUCER: She is saying exactly what her supporters want to hear. She's not off a little bit on this issue and a little bit on that issue.

SCHNEIDER: But do they think Huffington can win?

SHEARER: As a satirist I will never publicly support a candidate who has a chance of winning.

SCHNEIDER: A lot of the barbs at this event were aimed at that other Hollywood candidate.

ROB SCHNEIDER, ACTOR: Arnold Schwarzenegger. The last time I saw someone this unqualified running for office, Arianna was married to him.

SCHNEIDER: That would be her Republican ex-husband who failed in a Senate bid in 1994.

There's an interesting dilemma here for Huffington's Hollywood liberals.

O'DONNELL: What's going to be fascinating about the people who are here tonight, is if she becomes the Ralph Nader in this race, and is the one who's numerically capable of holding back a Democrat from winning the governorship in Bustamante's case.

SCHNEIDER: The candidate's response?

HUFFINGTON: It's too early to look at that. Because this is still such a fluid election.

(END VIDEOTAPE)

SCHNEIDER: Most of the people at the fundraiser said they were going to vote against the recall of Governor Gray Davis. That's practical. And then for Huffington. That's to make a statement.

You know, here in Hollywood, you can have your cake and eat it too -- Judy.

WOODRUFF: That's why we keep watching these movies over and over.

SCHNEIDER: Exactly.

WOODRUFF: OK. Bill Schneider, thanks very much.

That is it for INSIDE POLITICS. I'm Judy Woodruff.

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