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White House Pushing Tax Cuts; Catching up With Democratic Presidential Candidates

Aired April 21, 2003 - 16:00   ET


ANNOUNCER: The scramble it on. While kids enjoy a post-Easter party, the White House is pushing tax cuts. But will the Republicans ends up with egg on their faces?

While you were watching the war, did you miss the Democratic presidential candidates? We'll tell you what they've been up to and whether it's been profitable.

Could the next election be 1992 all over again? We'll analyze the Democrats' dream scenario and the president's worst nightmare.

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


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

Like the president, we are putting politics back on the front burner now that the war in Iraq is mostly in the mop-up stage. On the domestic front, there's plenty for Mr. Bush and the Congress to fight about, particularly the economy and tax cuts. Much of the squabbling right and bitterness now pits Republicans against Republicans.

So, let's bring in our senior white house correspondent John King and our congressional correspondent John Karl. John King to your first. Is the tax cut problem the president has on the Hill now really his front and center problem?

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: It will be half of his problem. We are told by senior administration officials the president's time over the next several weeks will be dedicated about half to the continuing war effort and about half to the domestic agenda. Chief on the domestic list, of course, the tax cut and what the president calls an economic growth plan.

Mr. Bush just back to the White House from Crawford, Texas, in an extended Easter weekend. He will travel later this week to the state of Ohio. In Canton, Ohio, he will deliver an economic speech. Now, Canton is the home of the Football Hall of Fame. Also, much more importantly, the home of Republican Senator George Voinovich.

One of the Senate moderates who has forced the Senate to scale back the tax cut plan into the $350 billion, is the highest Senator Voinovich and some others say they will support. The president initially wanted $726 billion, of course. Under the agreement now under Congress, it looks like the most he could get is 550 billion.

And while many think that is too high of a target, several senior officials I have spoken to today say they have not given up on getting an even bigger tax cut. They say the key is to figure how to phase this in over time. And the key is to find other off rights, other ways in the budget over the next ten years to pay for tax cuts.

They believe, and perhaps they will be proven wrong, Judy, but they believe here they can get Senator Voinovich's vote. They can get Senator Olympia Snowe's vote. They can get Senator Chuck Grassley, the Chairman of the Finance Committee's vote down the road, if they can show they can pay for a bigger tax cut by cutting out of the budget somewhere else down the line. So, the fight will begin in earnest this week.

WOODRUFF: John, what about the man the White House was happy to see installed as the new Senate Republican majority leader, Dr. Bill Frist. And, yet, he turned out to be the one who signed off on this lower figure in the Senate, half of what the White House wanted. What are they saying at the White House right now about Bill Frist.

KING: Publicly very little, Judy. Behind the scenes, they are not happy. They believe Senator Frist was trapped by others in the Senate. They believe he's learning the ropes, if you will, as the new majority leader. But this is a White House that quickly, when mistakes are made and it views this as a mistake, wants to move on. It does not support anyone trying to sanction Senator Frist, trying to remove Senator Frist. So the view here at the White House is a mistake was made. Senator Frist realizes that and has told his colleagues in the House and his friends here at the White house, there was, at a minimum, a failure to communicate.

The White House view is let's move on. Let's try to get the votes. And they believe here in the wrong long run, perhaps because of these mistake, Senator Frist will be much more attuned to the White House's needs and definitely, I believe, much more attuned to communicating as the process goes on. So behind the scenes, there is certainly some unhappiness with the way this all played out. But the view the scenes here is it's time to simply just move on, make the best of this, as they can.

WOODRUFF: All right, making the best of it, John King at the White House, thanks very much.

And let's move now to John Karl at the Capitol. Jon, so we know Bill Frist is in China right now. But you've been talking to a lot of people on the Hill. What are they saying about how Bill Frist is going to fix this intra-party problem that he has.

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, they're saying that Senator Frist clearly knows he has a major problem on his hands. You know, Judy, he left on that trip to Asia the morning after Republicans were accusing him of double-crossing the conservative leadership in the House on the tax cut. So one aide I talked to this morning, a very senior Frist aide said that he knows he has some major damage control to do once he gets back.

In fact, the front page story in this morning's "Roll Call" actually talks about, quote, "somebody with Frist's staff saying, repeatedly, that Dennis Hastert, the speaker of the House is the senior partner in the Hastert-Frist relationship. So, clearly, they know they have some damage control to do in terms of the senator's relationship with conservatives, especially the conservative leadership over in the House.

But it may not be an easy task. The chairman of the Senate Finance Committee, Senator Chuck Grassley sent out a column to local newspapers in his home state of Iowa where he talked about the reaction of the conservatives in the house saying, quote, "They proved tantrums aren't restricted to the two years and younger crowd." So, clearly, it's going to be a long road here in terms of repairing the very seriously damaged relationship between Republicans in the Senate and Republicans over in the House.

WOODRUFF: We remember, some of us, when Charles Grassley was thought of as one of those conservatives. John, what about the Republican senators who are, so to speak, under fire, Voinovich and Snowe and others, how are they dealing with all of this?

KARL: Well, both of them very much are under fire by conservatives and, to some degree, by their colleagues up here in the Senate, their Republican colleagues. Senator Olympia Snowe this morning was reacting quite angrily to those ads that we saw go out last week from the conservative group the Club for Growth. Remember those ads that compared the French government's actions in the Security Council with the actions of Senator Voinovich and Senator Snowe in the United States Senate. Here's what Olympia Snowe had to say in her appearance today up in Bangor, Maine.


SEN. OLYMPIA SNOW (R), MAINE: I find these ads disheartening and dismaying, because it resorts to, you know, I think, political polarization and partisanship. I am proud if somebody calls me a Franco-Republican, to be honest with you. I think that's -- I take that as a moment of pride for me, because I grew up in the Franco- American community in Louiston and Auburn. And I certainly resent the fact that anybody would question my patriotism when it comes to supporting the war in Iraq.


KARL: By the way, Maine's got a lot of French-Americans. One out of every four citizens of Maine is of French descent, Judy.

One other quick note, that Senator Voinovich is already saying that on Thursday, when the president comes to his home state of Ohio to work on selling the tax cut, that he's got a busy schedule and he will not be joining the president. WOODRUFF: Very interesting, since we just heard John King reporting that they think they're going to turn around Mr. Voinovich. Looks like somebody's got some work to do. All right, John Karl at the Capitol, thanks very much.

Well, majority leader Frist is getting flack in another political conflict over caps on medical malpractice lawsuits. A group opposed to those caps is launching ads targeting eight senators who support the idea, including Frist.


UNIDENTIFIED FEMALE: Owen celebrated his second birthday. It was a Sunday. He started vomiting about 10:00 on Tuesday. All he needed was an I.V. Owen died at 3:00 on Wednesday. It's unheard of in the United States. You don't lose children to dehydration.

UNIDENTIFIED MALE: They lose one of their sons or daughters to medical malpractice, they won't be concerned about putting caps on damages.


WOODRUFF: Well, those ads start running Wednesday in the home states of the targeted senators. The initial buy, we are told, $225,000.

Still ahead, I'll talk to a Republican senator who is worried that Frist may have taken the party in the wrong direction.

Plus, if you missed them while we were gone, we're going to catch up with the Democratic presidential candidates and see what they were doing during the war.

And, like father like son? We'll compare the younger Bush's post-war reelection prospects to his father's situation back in 1992.

This is INSIDE POLITICS, the place for campaign news.


WOODRUFF: The Democrats vying for a chance to challenge President Bush in 2004 found themselves out of the spotlight during the war in Iraq.

Our Candy Crowley has a look at what happened on the campaign trail while the rest of the nation was focused on events overseas.


UNIDENTIFIED MALE: How are you doing?

UNIDENTIFIED MALE: Very well. Good to see you.

UNIDENTIFIED MALE: You doing, all right, running around?

UNIDENTIFIED MALE: Yeah, same as you. Hard work.

UNIDENTIFIED MALE: All over the country.

UNIDENTIFIED MALE: All over the country.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): With the prewar, the war and now the post-war, you have not heard much lately from the '04 candidates, which is not altogether a bad thing.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: If anybody here is asking the big question, can a man be president of the United States without a prostate, I say to you why not? We've had a number of Republicans who have been president without a heart. Without a brain. Why not?

CROWLEY: That's presidential hopeful John Kerry practicing his humor. This is presidential hopeful Al Sharpton promoting his alternative resume.

REV. AL SHARPTON (D), PRESIDENTIAL CANDIDATE: I know unquestionably, unequivocally, I've been to jail more times than anybody running for president of the United States.

CROWLEY: And so it went at the Building Trade Union meeting earlier this month. There had been a couple of those come one come all events recently, topics ranging from war to childhood obesity. There were some disagreements on the margins of policy and one certainty ...

UNIDENTIFIED FEMALE: A minute or less, Senator Brawn.

CAROL MOSELY-BRAWN, PRESIDENTIAL CANDIDATE: Thank you very much, Judy. I would point out I went under a minute on my opening, or close to it.

CROWLEY: An hour, divided by nine, doesn't give you much time to talk.

SEN. JOE LIEBERMAN (D-CT), PRESIDENTIAL CANDIDATE: Is this the bottom of the ninth as far as presidential candidates go?

CROWLEY: Apropos to nothing except maybe the hectic pace of the campaign trail, is that a laundry tag on Joe Lieberman's shirt cuff?

UNIDENTIFIED MALE: Are you all registered?

UNIDENTIFIED MALE: You got my vote.

UNIDENTIFIED MALE: You are number one.

CROWLEY: That's Senator Bob Graham, aka candidate number nine on his maiden voyage to New Hampshire just last week. Late into the game because of major heart surgery, Graham spent very little money this quarter, but did manage to raise over a million dollars, most of it out of Florida. Honors in the first quarter of the money chase went to John Edwards, who leaned heavily on fellow lawyers to beat out John Kerry for most money raised. Kerry spent the most, although Lieberman spent a greater percentage of what he raised than anyone else.

And Gary Hart, he's still giving speeches like he's going to run for president but hasn't said publicly that he will. That would make ten candidates. And if it keeps going like this pretty soon we're going to need a deck of cards to keep them all straight. So far, nobody seems to have an ace in the hole.


CROWLEY: Polling shows Richard Gephardt holding a slight lead in Iowa. Kerry and Dean battling things out in New Hampshire. Although Kerry remains on top, but nobody has so captured Democratic attentions as to rule anybody out. Only 272 more shopping days until the Iowa caucuses -- Judy.

WOODRUFF: And that counts Sundays, right?

CROWLEY: Absolutely.

WOODRUFF: OK, Candy Crowley, thank you for the update.

Well, we have more on the Democratic hopefuls in our "Campaign News Daily." Senator Joe Lieberman took aim at the Bush economic plan this morning in New Hampshire. The Connecticut senator said President Bush may be the first president with an MBA, but he has compiled, quote, "the worst business record in 50 years."

Earth Day is on the agenda for Massachusetts Senator John Kerry tomorrow. Senator Kerry starts his day in Boston at a morning Earth Day event. He then heads to New Hampshire for an Earth Day celebration and a Democratic party gathering. Congressman Dick Gephardt is gearing up for a major address on healthcare policy. Gephardt plans to unveil a sweeping healthcare initiative in New York Wednesday, designed to deliver health insurance to nearly all Americans.

While Republicans and Democrats plot their political strategies against one another, Republicans on Capitol Hill have their own fences to mend. Up next, GOP Senator Lindsay Graham weighs in on the tax cut controversy, and the future of majority leader Frist.


WOODRUFF: As we reported within the hour, there's been another major arrest in Iraq, post Saddam Hussein, this one reportedly the most senior figure from Saddam Hussein's regime.

For more, let's turn to Brian Bennett with "Time" magazine. He joins us on the telephone. Brian, tell us, who this man is, Muhammad Hazmaq al-Zubaydi.

BRIAN BENNETT, "TIME" MAGAZINE: Muhammad Hazmaq al-Zubaydi is the former prime minister of Iraq and is on one of the Pentagon's most wanted list. He was arrested today by the free Iraqi forces in coordination with the U.S. Army Special Operations. WOODRUFF: Do we know what he is accused of? I mean, obviously, his entire participation in the government, but what do they expect to get out of him, get from him?

BENNETT: An FIS commander told me today that he might have some information about weapons of mass destruction. They also have a videotape of Zubaydi torturing prisoners in Nasiriya after the uprising in 1991 and shooting them.

WOODRUFF: All right. Just a brief conversation with Brian Bennett with "Time" magazine. He is reporting on the arrest just within the last couple of hours of the so far most senior figure of Saddam Hussein's regime taken into custody, Muhammad Hazmaq al- Zubaydi.

Turning back now to news in the United States and politics, those Democratic hopefuls we were talking about a few minutes ago face a political scenario with a lot of similarities to the 1992 race for the White House. An incumbent Republican named Bush and a recent military victory in Iraq, just for starters.

Our senior political analyst Bill Schneider reports there's one very important factor this time around that was missing in '92.


WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): Will 2004 be 1992 all over again? That's the Democrats' dream and the Republicans' nightmare. There are some spooky parallels between the two campaigns. A poll taken immediately after the fall of Baghdad this month shows the economy and jobs outweighing the war in Iraq and terrorism as the voters' number one concern.

The 1992 campaign was about one issue. The economy, stupid. The Persian Gulf War simply vanished from the 1992 campaign. Bill Clinton certainly never talked about it. It wasn't on Ross Perot's flipcharts. If the Democrats have their way, the 2004 campaign will be a rerun of 1992. It's still the economy, stupid. We'll hear the number 2 million a lot. That's the number of jobs lost since George W. Bush became president. It was the record $290-billion deficit of 1992 that got Perot into the race. That record will be broken in 2004, with an expected deficit of more than $300 billion. And Democrats haven't forgotten Florida.

But there are reasons to believe 2004 will not be a rerun of 1992. This President Bush has an economic plan.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The tax relief I have proposed and will push for until enacted will create -- will create 1.4 million new jobs by the end of 2004.

SCHNEIDER: The biggest difference between 1992 and 2004 is this -- the U.S. has been attacked. The war on terrorism will go on.

BUSH: It's a war that requires patience and focus. SCHNEIDER: In the 2002 midterm, Democrats tried to change the subject from national security to the economy. It didn't work. In 1992, the U.S. was out of Iraq. In 2004, the U.S. will still be in Iraq, maybe even running the country. Is that good news for Republicans? It is if things are going well. But if Americans find themselves under attack, we might ask, what are we still doing in Iraq? And why are we rebuilding Iraq's economy? What about our own economy?


SCHNEIDER: In 1992, the Cold War was over, and the war on terrorism was ten years away. Whoever the Democrats nominate next year will have to pass a credibility threshold on national security that just wasn't a problem for Bill Clinton in 1992 -- Judy.

WOODRUFF: OK, Bill Schneider reporting, thank you very much. Well, as far as some Republicans are concerned, their own Senate majority leader, Bill Frist, has some explaining to do about the tax cut side deal that has complicated the president's political life.

Let's talk now with one Republican senator, he is Lindsay Graham who joins us from his home state of South Carolina. Senator, why is Senator Frist in so much trouble with members of his own party?

SEN. LINDSAY GRAHAM (R), SOUTH CAROLINA: Well, I don't think trouble is the right word. A lot of us are disappointed that a deal was cut to limit the size of the tax cut to $350 billion. The House, as you knew, passed a budget resolution that had a range of 350 to 550 over ten years. The day of the vote, there was a deal struck with a couple of senators that said that we would not support anything in the Finance Committee above 350. I just think that's unacceptable. That compromises what the president's trying to do.

And the good news is Senator Frist understands that was a mistake. He has done something I very rarely have seen in Washington. He came forward and said that was a mistake. He's apologized to the House. And I don't know if we can fix this or not, but recognizing that deal was a mistake is a really good start.

WOODRUFF: You said you don't know if it can be fixed or not. Right now, the Republicans in the Senate who are saying we're not going to go any higher than $350 billion say they're just not going to budge. So how could this get fixed?

GRAHAM: Well, the president's going to weigh in here and tell the public exactly what he's trying to do. There's nothing magic about the number 350. $550 Billion over a ten-year period in an $11- trillion-a-year economy is not very much. It's two cents on the dollar, Judy, that we will collect in taxes over the next ten years. We're going to collect about $24 trillion in taxes.

The dividend tax aspect is very important to me, eliminating double taxation of dividends so it would be easier to raise capital, make stock investment more attractive. If that's not in the deal, there's not going to be much economic stimulus. We need to eliminate the marriage tax sooner rather than later. We need to cut rates. We need to do things in the 350 package. But if there's no economic stimulus package, then the 350 is not going to a achieve the goal. And I'm about achieving the goal of jump starting the economy.

WOODRUFF: Well, not to get too caught up on numbers, but it sounds like you are saying it doesn't have to be 550 billion either, is that right?

GRAHAM: Right, Judy. If there's not a substantial reduction of double taxation of dividend rates, at least in half, then I don't see myself voting for the deal. I want to eliminate the marriage penalty. I want to accelerate the child tax credits.

But consumer spending has kept the economy going. That helps consumer spending. We need something in the tax cut stimulus package, that stimulates an investment. And that's where the dividend elimination double taxation dividend comes about. And the dilemma we face is we're going to spend the money if we don't cut taxes.

WOODRUFF: The head of the Congressional Budget Office who used to work for President Bush says he's not sure it's going to have any stimulus on the economy. But very quickly, on Senator Charles Grassley, whose the Chairman of the Senate Finance Committee, he says the White House never complained in the hours after this vote. Is the White House guilty in some way of just looking the other way when all this was taking place?

GRAHAM: Judy, honestly, I think this happened very quickly. The goal was to pass a budget resolution. And people were willing to make a deal to pass a budget resolution. I don't believe the House would have ever voted for a budget resolution if they'd known that the Senate had not gone beyond 350. I can assure you I didn't know that was going to be a part of the deal. I think a mistake has been made, but people have dealt in good faith in the past. I think they will in the future.

Senator Grassley says he's going to keep his word to hold it at 350. I don't feel bound by this deal. As a senator from South Carolina, no one asked me. And my comment is when you ask is I'm going to fight for the president's tax cut in totality, and I don't feel bound by this. We should have a significant tax cut that provides economic stimulus or not one at all.

WOODRUFF: All right, Senator Lindsay Graham, we heard it from you. Thanks very much for talking to us in South Carolina. We appreciate it.

GRAHAM: Thank you. Thank you, Judy.

Still ahead, the Easter egg roll is a White House tradition. We'll tell you why it looked a little different this year than last year.


WOODRUFF: Now, a look inside their politics. A power struggle in the West Bank. Palestinian Authority President Yasser Arafat is still at odds with Abu Mazan, the prime minister designate. The two men have yet to agree on a new cabinet. Palestinian sources say Arafat has started approaching other candidates about the prime minister job.

We'll be back in one minute.


WOODRUFF: It began back on the Monday after Easter in 1878. And the annual White House egg roll has continued almost every year since.

This year, Vice President Cheney's wife Lynn hosted the event, instead of the first couple. Due to wartime security concerns, the lawn party was limited to military families. About 12,000 children and parents got to hobnob with Mrs. Cheney and various cabinet secretaries. But many of the kids seemed more impressed, of course, by the Easter Bunny.

Well that's it for INSIDE POLITICS. Thank you for joining us. I'm Judy Woodruff. "CROSSFIRE" in its new time starts right now.


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