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Inside Politics

Post-Election Coverage; New Era as Republicans Dominate Senate

Aired November 03, 2004 - 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.


WOODRUFF: As the markets get set to close on Wall Street, it's just before 4:00 in the east. I'm joined by Lou Dobbs here in New York for "The Dobbs Report." Hello, Lou, on this day after the election.
LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Absolutely, Judy. Hello. Stocks today rallied as investors cheered the reelection of President George W. Bush. As the final trades on Wall Street are now being counted, the Dow Jones Industrials up 101.17. That is not the final number, as the numbers are being consolidated in these closing moments. The Nasdaq Composite up 17 points gaining 1 percent. The big gains on Wall Street likely as well for another year. That's because historically stocks have responded to the reelection of an incumbent president. Since 1945, the S&P 500 has gained an average of nearly 13 percent in the year after an incumbent president wins reelection.

When the incumbent is defeated, that index lost on average of more than 3 percent. The president's reelection may be an important victory as well for a number of industries. Pharmaceutical stocks in particular, moving higher today. Investors worried a Kerry administration would have pressured drug makers and defense stocks big winners as well. The conventional wisdom a Republican-led government keeps up heavier military spending. Stem cell stocks interestingly fell despite California's vote to authorize a $3 billion bond sale to support stem cell research. Senator Kerry's loss has erased hopes for aggressive federal government funding of oil prices for stem cells.

Oil prices jumped more than $1 a barrel this session, closing near $51. That despite a government report showing a bigger than expected increase in crude oil inventories.

Coming up on CNN at 6:00 p.m. Eastern, on "LOU DOBBS TONIGHT," 20 million Americans had an opportunity to vote on gay marriage yesterday and they overwhelmingly said no. We take a look at the so-called moral issues played in this election. And with a Republican party increasing its dominance on Capitol Hill, we look at the prospects for President Bush's agenda in his second term.

Also, among my guests tonight, former presidential adviser David Gergen, former New York governor Mario Cuomo and our senior political analyst here at CNN, Jeff Greenfield. They join me to assess the outcome of the election and our political future. Now back to Judy Woodruff. Judy, and great job last night, and of course, this morning. WOODRUFF: Thanks very much, Lou. It was a long night. But we didn't want to turn our eyes away for a single second of it. Lou, I want to ask you about the subject we've been talking about for the last hour or so, and that is, to what extent does this president have a mandate? He got 59 million votes, give or take some to John Kerry's 55 million. What does that give George W. Bush as he takes -- goes into office for a second term?

DOBBS: Frankly, Judy, talk of mandate, whenever it was used, and I remember with only a plurality, president Clinton, as I'm sure you do, talked about a mandate. The fact is, we elect a president who has an agenda. In this case, he has a powerful assembly of Republicans controlling both Houses in Congress. I think the mandate is overstated. But this president obviously will have a significant opportunity to drive forward his agenda. Again, that mandate thing always makes me nervous. But perhaps it's just a matter of semantics. What we do have is a -- definitely a Republican-led government. And a president in a second term who will be focused as well as anything else on his legacy for the next four years.

WOODRUFF: I think what you describe is a much more precise way of describing exactly what's going on. All right. Lou Dobbs. We'll see Lou back here again at 6:00 Eastern. Thank you.

DOBBS: Thank you, Judy.

WOODRUFF: INSIDE POLITICS begins right now.

(BEGIN VIDEOTAPE)

ANNOUNCER: After a cliff-hanger election night, a concession from John Kerry.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: I spoke to President Bush and I offered him and Laura our congratulations on their victory.

ANNOUNCER: And a victory speech from George W. Bush.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The voters turned out in record numbers and delivered an historic victory.

ANNOUNCER: The presidential contest of 2004 is over. But the campaign to bring a divided nation together is just beginning again. Now, live from New York, JUDY WOODRUFF'S INSIDE POLITICS.

(END VIDEOTAPE)

WOODRUFF: Thank you for joining us on this day after the election. This time it ended without a legal battle. After only hours instead of weeks of uncertainty, now President Bush says he has a duty to serve all Americans. And his defeat of rival John Kerry is promising to be his partner in uniting the nation. Our White House correspondent Dana Bash is with the president in Washington and our national correspondent Frank Buckley is with Senator Kerry in Boston. Dana Bash, to you first. DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Judy, it was just an hour ago that the president was speaking here. You see behind me, things have been torn down quite quickly. The president's supporters sat in this room for the better part of 15 hours overnight waiting to hear what they finally heard this afternoon, and that is, a victory speech from their candidate. And Mr. Bush came into the seldom-heard tune of "Hail to the Chief" to give a ten-minute address and he spoke directly to the 55 million Americans who voted for John Kerry.

(BEGIN VIDEO CLIP)

BUSH: To make this nation stronger and better, I will need your support. And I will work to earn it. I will do all I can do to deserve your trust. A new term is a new opportunity to reach out to the whole nation. We have one country, one constitution and one future that binds us. And when we come together and work together, there is no limit to the greatness of America.

(END VIDEO CLIP)

BASH: Now, reaching out across party lines, the president's opponents would say it's something that he talked about four years ago, but did not practice very often during his first term. There is certainly a lot of partisanship in Washington now. This is something that will likely be tested very shortly, if we do have a Supreme Court fight. But nevertheless, the president did describe at this time as a season of hope. His vice president introduced him with that word, talking about the word "mandate," something that the president's opponent said he certainly did not have the last time around, but governed with nonetheless.

And Mr. Bush talks about what he will use with that, talks about tax reform, talked about Social Security reform. Very different things philosophically than what a president Kerry would have been going for in this next four years if he would have won. Obviously the president was looking forward. His campaign aides though are taking some time at this time to look back at what they think that they did right. For example, their ground war, they worked very hard over the past four years to try to match what the Democrats traditionally have the upper hand in, which is getting out volunteers. They feel they did that very well. That they had equal turnout among Republicans and Democrats, which is the first time they've done that in some time historically. Now we go to Frank Buckley, the national correspondent traveling with the Kerry campaign in Boston.

FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Dana, Fanueil Hall here in Boston was filled with friends and emotional campaign staffers as Senator John Kerry and Senator John Edwards entered the hall here to a standing ovation. A great deal of emotion among the closest of friends and staffers who have been working with this team for the past couple of years, really. The announcement here following Senator Kerry's phone call to President Bush. Senator Kerry said here he would not have given up if there had been a chance that he could have prevailed. But he made the decision when it became clear that even if the provisional ballots had been counted, that he couldn't have won in Ohio. Senator Kerry then called for unity in the wake of what has been a bitter campaign.

(BEGIN VIDEO CLIP)

KERRY: In the days ahead, we must find common cause. We must join in common effort, without remorse or recrimination, without anger or rancor. America is in need of unity, and longing for a larger measure of compassion. I hope President Bush will advance those values in the coming years.

(END VIDEO CLIP)

BUCKLEY: Now, Senator Edwards also spoke, saying that you can be disappointed, but you can't walk away. The fight has just begun. But disappointment certainly dominated the day. A very emotional scene inside, especially afterward. A lot of tears. A lot of hugging. And after the event, we also got a little more insight into how the decision came down after talking to Bob Schrum and also listening in on a conference call with Mary Beth Cahill. They're telling us that they felt very good after the exit polls in the late afternoon. Senator Kerry went back home after doing four hours of those television interviews with local markets. They were feeling good. But then it became clear as Senator Kerry was having dinner, that the race was tightening, as Bob Schrum put it. It sort of slid away slowly. At that point, they started to realize that it was going in the wrong direction for them. This morning, Senator Kerry made the decision after hearing about the Ohio situation. Apparently, Judy, the lawyers wanted to litigate this, but Senator Kerry said, no, he didn't want to put the country through that -- Judy.

WOODRUFF: Frank Buckley reporting on John Kerry and Dana Bash reporting on President Bush. Thank you both very much.

Well, for all the concession speech and the victory announcement, there are still votes to be counted in some states. But this is where the electoral vote stands right now. 274 for President Bush, four more than needed to win the presidency. That is including Ohio. But it is not the still-too-close-to-call states of New Mexico and Iowa. John Kerry has 252 electoral votes. George Bush has also won the popular vote by more than 3 million votes. 51 percent to 48 percent.

Now we know who won and who lost the White House. Up next, we'll consider the reasons why. Our Bill Schneider has been combing through the exit polls.

Plus, a new era on Capitol Hill, with more Republicans in the Senate. And Democrat Tom Daschle out.

(COMMERCIAL BREAK)

WOODRUFF: Iraq, moral values, the economy, and the war on terror. The exit polls show that those were the issues voters were most concerned about as they marked their ballots yesterday. Our senior political analyst Bill Schneider is here with me now to talk more about what the exit polls show -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: They show those were the issues. Take a look. In our exit poll we asked people to pick the most important issue that was on their minds, and those were the four. Moral values was at the top of the list at 22 percent. Economy and jobs at 20 percent. Those who said the economy voted for Kerry. Those who said terrorism, which is almost 20 percent, voted heavily for Bush. And Iraq, interestingly, voted overwhelmingly for Kerry. Bush won the election, not because of his position on Iraq, but despite anger of a lot of voters over Iraq. Most interesting is the top issue, moral values. What was that all about?

If you had a single question to define how people voted in yesterday's election, it would be this: how often do you go to church? Take a look at people who said they attend church weekly. They voted very strongly 61 percent for George Bush, 39 percent for John Kerry. That's about 40 percent of the voters so it's a lot of people.

Those who attend church less than weekly, they voted the opposite way. They voted 55 percent, as we can see, for John Kerry, 44 percent for George Bush. This was a defining issue. Because what we found yesterday was that a lot of voters, and this was a big surprise, came out of the polling place and said, this election is not about Iraq, or terrorism, or the economy, it's about moral values by which they meant overwhelmingly issues like same-sex marriage, stem cell research, partial birth abortion, religious values where they saw a big difference between Bush and Kerry.

WOODRUFF: So Bill, is this a deeply divided country or isn't it?

SCHNEIDER: Yes, that's what the division is all about. It's about values. And what the Bush campaign really did was play to the values of the core conservative supporters of the Republican party. It rallied them with those issues. It got them out to vote in huge numbers. It countered the Democrats' heavy registration effort. That's how it did it. And it ended up, I fear to say, with an electorate more divided than ever.

WOODRUFF: We should say then, president newly reelected has his work cut out for him.

SCHNEIDER: He certainly does because both sides, you're talking about bridging the partisan divide, but given the kinds of issues that were raised in this election, that's going to be tough.

WOODRUFF: Bill Schneider, thank you very much. We appreciate it.

SCHNEIDER: Sure.

WOODRUFF: Great work all night long.

SCHNEIDER: Thank you.

WOODRUFF: Well, the Republican party is celebrating on Capitol Hill. Coming up, we're going to take a look at the GOP's growing clout in both the Senate and the House. And what that means for President Bush in his agenda. (COMMERCIAL BREAK)

WOODRUFF: Republicans apparently looking forward to a new dynamic on Capitol Hill. As of now, the GOP has scored a net gain in the Senate of three seats. The Associated Press is calling Alaska for incumbent Republican Lisa Murkowski. Now, if that holds, it would be a four-seat game for the Republicans. The new balance of power in the Senate would be 55 Republicans, 44 Democrats, and one Independent. Most notably absent from the new lineup will be the current minority leader, Tom Daschle.

(BEGIN VIDEOTAPE)

SEN. TOM DASCHLE (D), MINORITY LEADER: So beginning in January, I may not serve in the Senate, but that work is not done.

WOODRUFF (voice-over): Republicans had painted a bull's eye on Tom Daschle and they hit it making the Democrat the first Senate leader to lose reelection in over a half century.

JOHN THUNE (R), SOUTH DAKOTA SENATOR-ELECT.: I pledge to work my very, very hardest for South Dakota.

WOODRUFF: If anyone could be happier about John Thune's victory in South Dakota than Thune himself, it might be Senate Majority Leader Bill Frist.

SEN. BILL FRIST (R), MAJORITY LEADER: And I think that South Dakota as we all know, is a state that is strongly in support of President George W. Bush, yet Senator Daschle in his position of being Democratic leader on the floor of the United States Senate had as his goal to slow down, to obstruct, to stop that agenda.

WOODRUFF: Frist will have new allies to work with. Republicans won all five open Democratic seats in the south, including Florida. Democrat Betty Castor conceded today hours after Republican Mel Martinez had claimed victory.

MEL MARTINEZ (R), FLORIDA SENATOR-ELECT: I believe the people of Florida have spoken.

WOODRUFF: Martinez and some other newcomers will make the next Senate more diverse. He and Democrat Ken Salazar will be the first Hispanic senators in 30 years. Salazar defeated Republican beer tycoon Pete Coors in Colorado. As expected, Barack Obama easily defeated Alan Keyes in Illinois to become the only African-American senator, and a sort of consolation prize for Democrats.

BARACK OBAMA (D), ILLINOIS SENATOR-ELECT: I think it's important for us to be able to work across party lines and build up from the places we agreed to rather than just assume that we can steam roll whichever side is not in power.

WOODRUFF: With the Democrats' numbers in the Senate diminished they now face the difficult task of regrouping and wrangling over who will be their new leader. (END VIDEOTAPE)

WOODRUFF: We have in keeping with what we've just been talking about some live pictures now of Nevada Democratic Senator Harry Reed. He is the current minority whip, the number two Democrat in the United States Senate. He's announcing today that given Tom Daschle's defeat, and the fact that he, of course, will step down from the position of minority leader, Democratic leader in the Senate, Harry Reed is going to run for that position, and we're given to believe he is not facing any significant opposition. This may well be the man you'll be seeing in the months to come, leader of the Democrats in the United States Senate.

CNN's Ed Henry joins us now. Ed, give us a little more background on what it's going to look like with this new lineup on the hill.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Good afternoon, Judy. Democrats feeling crushed up here. Just a few moments ago House Minority Leader Nancy Pelosi saying Democrats lost just about everything they could lose between the House, the Senate and the White House. Of course, and as you just mentioned 55 seats for the Republicans, in the Senate. That gets them -- you know, they're only five seats short now of a filibuster-proof majority. That is going to enable them to enact all kinds of issues in a second term for the president. The Republicans feeling very good about that.

Democrats, of course, feeling crushed about that. In particular, Republicans feel that they were able to send a real strong message to Democrats that they have to stop trying to block President Bush's agenda. They were complaining about obstructionism, and they think it was embodied in Senate Democratic Leader Tom Daschle, who, of course, fell in South Dakota last night, the first Senate leader in 52 years to lose. And Republicans are saying there's now a strong message that Democrats have to wake up, they have to come on board.

And that's why when you mention Harry Reed, he now looks like he's gathering the votes to become the next Democratic leader. And he is basically somebody who works pretty well with Republicans. He has a lot of relationships across the aisle and some Democrats in the caucus may now feel that they need someone like that who can work better with Republicans, since Republicans will be running the show. I got off the phone with someone close to Senator Chris Dodd, he's from Connecticut. He's much more liberal than Harry Reed. Chris Dodd is saying basically that he's getting calls from colleagues checking out whether or not he wants to get into this race. Chris Dodd is taking a look at it. He has not made a decision yet.

Harry Reed, according to other people, may have the votes, but he still may face opposition from Chris Dodd. That is still being sorted out. That would be a case where if people in the Democratic caucus felt they needed a more aggressive, more liberal person to lead them, they might go with Dodd instead of Reed. But right now it looks like Reed may be in charge.

Republicans though are saying with this increased majority, they're going to try to enact more tax cuts, more conservative judges. And they're warning Democrats that in 2002, Max Cleland blocked the Homeland Security Department. He lost 2004. Tom Daschle was blocking the president's agenda. He lost. And they are saying Democrats in red states who are up in 2006, they better get on board with the president's agenda -- Judy.

WOODRUFF: All right. Ed Henry, pointing out that Harry Reed may face some opposition after all, that Connecticut -- long-time Connecticut Senator Chris Dodd is looking at making that run as well. All right, Ed, thank you very much.

Checking the day after election day headlines in our campaign news daily. In addition to the White House, Republicans can claim victory in the Senate. The Republicans can claim victory in the House of Representatives. Going into the election, Republicans held a 229- 205 advantage in the House. The GOP added at least two seats to their overall total. Two Louisiana races will be decided in runoffs, and one New York seat remains too close to call.

Nationwide, Republicans held 28 governorships before yesterday's vote, and the Democrats held 22. 11 governors were on the ballot yesterday, and Republicans took over seats in Missouri and Indiana. But Democrats won governorships that were held by the GOP in Montana and New Hampshire. Washington state remaining too close to call as of this hour.

It was a clean sweep, meanwhile, for ballot initiatives designed to ban gay marriage. Proposed constitutional amendments passed in all 11 states where they appeared on the ballot. The opponents say they are considering legal challenges.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

WOODRUFF: Only 1,462 days until the next election. But if you will, a personal word as we wrap up our coverage of Election 2004. We are reminded of why we love this democracy that we are so privileged to have. We have witnessed and participated in a great battle over the last many months to choose a new direction for this country and a new leader. We have seen around 115 million Americans go to the polls, make their choices, and then go along with the majority. No blood in the streets, not a shot fired. It's a reminder of why this country is the greatest and we love it.

I'm Judy Woodruff in New York. That's it for INSIDE POLITICS. "CROSSFIRE" begins right now.

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 November 3, 2004 - 16:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOODRUFF: As the markets get set to close on Wall Street, it's just before 4:00 in the east. I'm joined by Lou Dobbs here in New York for "The Dobbs Report." Hello, Lou, on this day after the election.
LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Absolutely, Judy. Hello. Stocks today rallied as investors cheered the reelection of President George W. Bush. As the final trades on Wall Street are now being counted, the Dow Jones Industrials up 101.17. That is not the final number, as the numbers are being consolidated in these closing moments. The Nasdaq Composite up 17 points gaining 1 percent. The big gains on Wall Street likely as well for another year. That's because historically stocks have responded to the reelection of an incumbent president. Since 1945, the S&P 500 has gained an average of nearly 13 percent in the year after an incumbent president wins reelection.

When the incumbent is defeated, that index lost on average of more than 3 percent. The president's reelection may be an important victory as well for a number of industries. Pharmaceutical stocks in particular, moving higher today. Investors worried a Kerry administration would have pressured drug makers and defense stocks big winners as well. The conventional wisdom a Republican-led government keeps up heavier military spending. Stem cell stocks interestingly fell despite California's vote to authorize a $3 billion bond sale to support stem cell research. Senator Kerry's loss has erased hopes for aggressive federal government funding of oil prices for stem cells.

Oil prices jumped more than $1 a barrel this session, closing near $51. That despite a government report showing a bigger than expected increase in crude oil inventories.

Coming up on CNN at 6:00 p.m. Eastern, on "LOU DOBBS TONIGHT," 20 million Americans had an opportunity to vote on gay marriage yesterday and they overwhelmingly said no. We take a look at the so-called moral issues played in this election. And with a Republican party increasing its dominance on Capitol Hill, we look at the prospects for President Bush's agenda in his second term.

Also, among my guests tonight, former presidential adviser David Gergen, former New York governor Mario Cuomo and our senior political analyst here at CNN, Jeff Greenfield. They join me to assess the outcome of the election and our political future. Now back to Judy Woodruff. Judy, and great job last night, and of course, this morning. WOODRUFF: Thanks very much, Lou. It was a long night. But we didn't want to turn our eyes away for a single second of it. Lou, I want to ask you about the subject we've been talking about for the last hour or so, and that is, to what extent does this president have a mandate? He got 59 million votes, give or take some to John Kerry's 55 million. What does that give George W. Bush as he takes -- goes into office for a second term?

DOBBS: Frankly, Judy, talk of mandate, whenever it was used, and I remember with only a plurality, president Clinton, as I'm sure you do, talked about a mandate. The fact is, we elect a president who has an agenda. In this case, he has a powerful assembly of Republicans controlling both Houses in Congress. I think the mandate is overstated. But this president obviously will have a significant opportunity to drive forward his agenda. Again, that mandate thing always makes me nervous. But perhaps it's just a matter of semantics. What we do have is a -- definitely a Republican-led government. And a president in a second term who will be focused as well as anything else on his legacy for the next four years.

WOODRUFF: I think what you describe is a much more precise way of describing exactly what's going on. All right. Lou Dobbs. We'll see Lou back here again at 6:00 Eastern. Thank you.

DOBBS: Thank you, Judy.

WOODRUFF: INSIDE POLITICS begins right now.

(BEGIN VIDEOTAPE)

ANNOUNCER: After a cliff-hanger election night, a concession from John Kerry.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: I spoke to President Bush and I offered him and Laura our congratulations on their victory.

ANNOUNCER: And a victory speech from George W. Bush.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The voters turned out in record numbers and delivered an historic victory.

ANNOUNCER: The presidential contest of 2004 is over. But the campaign to bring a divided nation together is just beginning again. Now, live from New York, JUDY WOODRUFF'S INSIDE POLITICS.

(END VIDEOTAPE)

WOODRUFF: Thank you for joining us on this day after the election. This time it ended without a legal battle. After only hours instead of weeks of uncertainty, now President Bush says he has a duty to serve all Americans. And his defeat of rival John Kerry is promising to be his partner in uniting the nation. Our White House correspondent Dana Bash is with the president in Washington and our national correspondent Frank Buckley is with Senator Kerry in Boston. Dana Bash, to you first. DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Judy, it was just an hour ago that the president was speaking here. You see behind me, things have been torn down quite quickly. The president's supporters sat in this room for the better part of 15 hours overnight waiting to hear what they finally heard this afternoon, and that is, a victory speech from their candidate. And Mr. Bush came into the seldom-heard tune of "Hail to the Chief" to give a ten-minute address and he spoke directly to the 55 million Americans who voted for John Kerry.

(BEGIN VIDEO CLIP)

BUSH: To make this nation stronger and better, I will need your support. And I will work to earn it. I will do all I can do to deserve your trust. A new term is a new opportunity to reach out to the whole nation. We have one country, one constitution and one future that binds us. And when we come together and work together, there is no limit to the greatness of America.

(END VIDEO CLIP)

BASH: Now, reaching out across party lines, the president's opponents would say it's something that he talked about four years ago, but did not practice very often during his first term. There is certainly a lot of partisanship in Washington now. This is something that will likely be tested very shortly, if we do have a Supreme Court fight. But nevertheless, the president did describe at this time as a season of hope. His vice president introduced him with that word, talking about the word "mandate," something that the president's opponent said he certainly did not have the last time around, but governed with nonetheless.

And Mr. Bush talks about what he will use with that, talks about tax reform, talked about Social Security reform. Very different things philosophically than what a president Kerry would have been going for in this next four years if he would have won. Obviously the president was looking forward. His campaign aides though are taking some time at this time to look back at what they think that they did right. For example, their ground war, they worked very hard over the past four years to try to match what the Democrats traditionally have the upper hand in, which is getting out volunteers. They feel they did that very well. That they had equal turnout among Republicans and Democrats, which is the first time they've done that in some time historically. Now we go to Frank Buckley, the national correspondent traveling with the Kerry campaign in Boston.

FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Dana, Fanueil Hall here in Boston was filled with friends and emotional campaign staffers as Senator John Kerry and Senator John Edwards entered the hall here to a standing ovation. A great deal of emotion among the closest of friends and staffers who have been working with this team for the past couple of years, really. The announcement here following Senator Kerry's phone call to President Bush. Senator Kerry said here he would not have given up if there had been a chance that he could have prevailed. But he made the decision when it became clear that even if the provisional ballots had been counted, that he couldn't have won in Ohio. Senator Kerry then called for unity in the wake of what has been a bitter campaign.

(BEGIN VIDEO CLIP)

KERRY: In the days ahead, we must find common cause. We must join in common effort, without remorse or recrimination, without anger or rancor. America is in need of unity, and longing for a larger measure of compassion. I hope President Bush will advance those values in the coming years.

(END VIDEO CLIP)

BUCKLEY: Now, Senator Edwards also spoke, saying that you can be disappointed, but you can't walk away. The fight has just begun. But disappointment certainly dominated the day. A very emotional scene inside, especially afterward. A lot of tears. A lot of hugging. And after the event, we also got a little more insight into how the decision came down after talking to Bob Schrum and also listening in on a conference call with Mary Beth Cahill. They're telling us that they felt very good after the exit polls in the late afternoon. Senator Kerry went back home after doing four hours of those television interviews with local markets. They were feeling good. But then it became clear as Senator Kerry was having dinner, that the race was tightening, as Bob Schrum put it. It sort of slid away slowly. At that point, they started to realize that it was going in the wrong direction for them. This morning, Senator Kerry made the decision after hearing about the Ohio situation. Apparently, Judy, the lawyers wanted to litigate this, but Senator Kerry said, no, he didn't want to put the country through that -- Judy.

WOODRUFF: Frank Buckley reporting on John Kerry and Dana Bash reporting on President Bush. Thank you both very much.

Well, for all the concession speech and the victory announcement, there are still votes to be counted in some states. But this is where the electoral vote stands right now. 274 for President Bush, four more than needed to win the presidency. That is including Ohio. But it is not the still-too-close-to-call states of New Mexico and Iowa. John Kerry has 252 electoral votes. George Bush has also won the popular vote by more than 3 million votes. 51 percent to 48 percent.

Now we know who won and who lost the White House. Up next, we'll consider the reasons why. Our Bill Schneider has been combing through the exit polls.

Plus, a new era on Capitol Hill, with more Republicans in the Senate. And Democrat Tom Daschle out.

(COMMERCIAL BREAK)

WOODRUFF: Iraq, moral values, the economy, and the war on terror. The exit polls show that those were the issues voters were most concerned about as they marked their ballots yesterday. Our senior political analyst Bill Schneider is here with me now to talk more about what the exit polls show -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: They show those were the issues. Take a look. In our exit poll we asked people to pick the most important issue that was on their minds, and those were the four. Moral values was at the top of the list at 22 percent. Economy and jobs at 20 percent. Those who said the economy voted for Kerry. Those who said terrorism, which is almost 20 percent, voted heavily for Bush. And Iraq, interestingly, voted overwhelmingly for Kerry. Bush won the election, not because of his position on Iraq, but despite anger of a lot of voters over Iraq. Most interesting is the top issue, moral values. What was that all about?

If you had a single question to define how people voted in yesterday's election, it would be this: how often do you go to church? Take a look at people who said they attend church weekly. They voted very strongly 61 percent for George Bush, 39 percent for John Kerry. That's about 40 percent of the voters so it's a lot of people.

Those who attend church less than weekly, they voted the opposite way. They voted 55 percent, as we can see, for John Kerry, 44 percent for George Bush. This was a defining issue. Because what we found yesterday was that a lot of voters, and this was a big surprise, came out of the polling place and said, this election is not about Iraq, or terrorism, or the economy, it's about moral values by which they meant overwhelmingly issues like same-sex marriage, stem cell research, partial birth abortion, religious values where they saw a big difference between Bush and Kerry.

WOODRUFF: So Bill, is this a deeply divided country or isn't it?

SCHNEIDER: Yes, that's what the division is all about. It's about values. And what the Bush campaign really did was play to the values of the core conservative supporters of the Republican party. It rallied them with those issues. It got them out to vote in huge numbers. It countered the Democrats' heavy registration effort. That's how it did it. And it ended up, I fear to say, with an electorate more divided than ever.

WOODRUFF: We should say then, president newly reelected has his work cut out for him.

SCHNEIDER: He certainly does because both sides, you're talking about bridging the partisan divide, but given the kinds of issues that were raised in this election, that's going to be tough.

WOODRUFF: Bill Schneider, thank you very much. We appreciate it.

SCHNEIDER: Sure.

WOODRUFF: Great work all night long.

SCHNEIDER: Thank you.

WOODRUFF: Well, the Republican party is celebrating on Capitol Hill. Coming up, we're going to take a look at the GOP's growing clout in both the Senate and the House. And what that means for President Bush in his agenda. (COMMERCIAL BREAK)

WOODRUFF: Republicans apparently looking forward to a new dynamic on Capitol Hill. As of now, the GOP has scored a net gain in the Senate of three seats. The Associated Press is calling Alaska for incumbent Republican Lisa Murkowski. Now, if that holds, it would be a four-seat game for the Republicans. The new balance of power in the Senate would be 55 Republicans, 44 Democrats, and one Independent. Most notably absent from the new lineup will be the current minority leader, Tom Daschle.

(BEGIN VIDEOTAPE)

SEN. TOM DASCHLE (D), MINORITY LEADER: So beginning in January, I may not serve in the Senate, but that work is not done.

WOODRUFF (voice-over): Republicans had painted a bull's eye on Tom Daschle and they hit it making the Democrat the first Senate leader to lose reelection in over a half century.

JOHN THUNE (R), SOUTH DAKOTA SENATOR-ELECT.: I pledge to work my very, very hardest for South Dakota.

WOODRUFF: If anyone could be happier about John Thune's victory in South Dakota than Thune himself, it might be Senate Majority Leader Bill Frist.

SEN. BILL FRIST (R), MAJORITY LEADER: And I think that South Dakota as we all know, is a state that is strongly in support of President George W. Bush, yet Senator Daschle in his position of being Democratic leader on the floor of the United States Senate had as his goal to slow down, to obstruct, to stop that agenda.

WOODRUFF: Frist will have new allies to work with. Republicans won all five open Democratic seats in the south, including Florida. Democrat Betty Castor conceded today hours after Republican Mel Martinez had claimed victory.

MEL MARTINEZ (R), FLORIDA SENATOR-ELECT: I believe the people of Florida have spoken.

WOODRUFF: Martinez and some other newcomers will make the next Senate more diverse. He and Democrat Ken Salazar will be the first Hispanic senators in 30 years. Salazar defeated Republican beer tycoon Pete Coors in Colorado. As expected, Barack Obama easily defeated Alan Keyes in Illinois to become the only African-American senator, and a sort of consolation prize for Democrats.

BARACK OBAMA (D), ILLINOIS SENATOR-ELECT: I think it's important for us to be able to work across party lines and build up from the places we agreed to rather than just assume that we can steam roll whichever side is not in power.

WOODRUFF: With the Democrats' numbers in the Senate diminished they now face the difficult task of regrouping and wrangling over who will be their new leader. (END VIDEOTAPE)

WOODRUFF: We have in keeping with what we've just been talking about some live pictures now of Nevada Democratic Senator Harry Reed. He is the current minority whip, the number two Democrat in the United States Senate. He's announcing today that given Tom Daschle's defeat, and the fact that he, of course, will step down from the position of minority leader, Democratic leader in the Senate, Harry Reed is going to run for that position, and we're given to believe he is not facing any significant opposition. This may well be the man you'll be seeing in the months to come, leader of the Democrats in the United States Senate.

CNN's Ed Henry joins us now. Ed, give us a little more background on what it's going to look like with this new lineup on the hill.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Good afternoon, Judy. Democrats feeling crushed up here. Just a few moments ago House Minority Leader Nancy Pelosi saying Democrats lost just about everything they could lose between the House, the Senate and the White House. Of course, and as you just mentioned 55 seats for the Republicans, in the Senate. That gets them -- you know, they're only five seats short now of a filibuster-proof majority. That is going to enable them to enact all kinds of issues in a second term for the president. The Republicans feeling very good about that.

Democrats, of course, feeling crushed about that. In particular, Republicans feel that they were able to send a real strong message to Democrats that they have to stop trying to block President Bush's agenda. They were complaining about obstructionism, and they think it was embodied in Senate Democratic Leader Tom Daschle, who, of course, fell in South Dakota last night, the first Senate leader in 52 years to lose. And Republicans are saying there's now a strong message that Democrats have to wake up, they have to come on board.

And that's why when you mention Harry Reed, he now looks like he's gathering the votes to become the next Democratic leader. And he is basically somebody who works pretty well with Republicans. He has a lot of relationships across the aisle and some Democrats in the caucus may now feel that they need someone like that who can work better with Republicans, since Republicans will be running the show. I got off the phone with someone close to Senator Chris Dodd, he's from Connecticut. He's much more liberal than Harry Reed. Chris Dodd is saying basically that he's getting calls from colleagues checking out whether or not he wants to get into this race. Chris Dodd is taking a look at it. He has not made a decision yet.

Harry Reed, according to other people, may have the votes, but he still may face opposition from Chris Dodd. That is still being sorted out. That would be a case where if people in the Democratic caucus felt they needed a more aggressive, more liberal person to lead them, they might go with Dodd instead of Reed. But right now it looks like Reed may be in charge.

Republicans though are saying with this increased majority, they're going to try to enact more tax cuts, more conservative judges. And they're warning Democrats that in 2002, Max Cleland blocked the Homeland Security Department. He lost 2004. Tom Daschle was blocking the president's agenda. He lost. And they are saying Democrats in red states who are up in 2006, they better get on board with the president's agenda -- Judy.

WOODRUFF: All right. Ed Henry, pointing out that Harry Reed may face some opposition after all, that Connecticut -- long-time Connecticut Senator Chris Dodd is looking at making that run as well. All right, Ed, thank you very much.

Checking the day after election day headlines in our campaign news daily. In addition to the White House, Republicans can claim victory in the Senate. The Republicans can claim victory in the House of Representatives. Going into the election, Republicans held a 229- 205 advantage in the House. The GOP added at least two seats to their overall total. Two Louisiana races will be decided in runoffs, and one New York seat remains too close to call.

Nationwide, Republicans held 28 governorships before yesterday's vote, and the Democrats held 22. 11 governors were on the ballot yesterday, and Republicans took over seats in Missouri and Indiana. But Democrats won governorships that were held by the GOP in Montana and New Hampshire. Washington state remaining too close to call as of this hour.

It was a clean sweep, meanwhile, for ballot initiatives designed to ban gay marriage. Proposed constitutional amendments passed in all 11 states where they appeared on the ballot. The opponents say they are considering legal challenges.

INSIDE POLITICS will be right back.

(COMMERCIAL BREAK)

WOODRUFF: Only 1,462 days until the next election. But if you will, a personal word as we wrap up our coverage of Election 2004. We are reminded of why we love this democracy that we are so privileged to have. We have witnessed and participated in a great battle over the last many months to choose a new direction for this country and a new leader. We have seen around 115 million Americans go to the polls, make their choices, and then go along with the majority. No blood in the streets, not a shot fired. It's a reminder of why this country is the greatest and we love it.

I'm Judy Woodruff in New York. That's it for INSIDE POLITICS. "CROSSFIRE" begins right now.

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