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Bush, Kerry Out on Campaign Trail; Latino Voters; Illinois Republicans to Choose Candidate to Run Against Obama

Aired August 3, 2004 - 15:29   ET


ANNOUNCER: Where's the bounce? Did John Kerry pick up support even though his numbers didn't rise dramatically? We'll take a poll of polls and speak with top Bush and Kerry strategists.

They're one of this year's hot voting groups. We'll take a look at the fight for Latino voters.

Who will run against Barack Obama? With 13 weeks until Election Day, Republicans meet to pick a candidate for the open Senate seat in Illinois.



JUDY WOODRUFF, HOST: Thank you for joining us.

President Bush, Senator John Kerry and their respective running mates all on the campaign trail this afternoon from Wisconsin to Texas, from Louisiana to South Dakota. The traditional August lull is long gone, replaced by full-throttle campaigning.

We begin our coverage with Senator Kerry in Beloit, Wisconsin, and our senior political correspondent, Candy Crowley.

All right, Candy, why is John Kerry in Beloit?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Jobs, jobs and jobs. This is basically a rural area. It has the second highest unemployment rate in the state. And Wisconsin, of course, is a very, very close race at this point.

It went for Al Gore in 2000. But it takes some work to keep it in the Democratic column. All of those add up to John Kerry coming to Beloit, Wisconsin, and bringing his jobs message.


SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: My priority, first and foremost, is putting America back to work, because that's how you're going to make America strong. That's how you make it strong.


CROWLEY: Also, this is a rather conservative community, although Democratic. So there was some talk about values and about John Kerry describing himself as a fiscal conservative, one of just two or three Democrats who early on wanted the balanced budget amendment, Gramm- Rudman-Hollings. So John Kerry here trying to dispute the Republican image of him as a Massachusetts liberal, trying to portray himself more as a moderate and a fiscal conservative -- Judy.

WOODRUFF: Now, Candy, we know that it's not only going to be John Kerry in Iowa tomorrow, in Davenport, but President Bush is going to be in the same town the same day. This doesn't happen very often. How do these campaigns decide where these candidates are going?

CROWLEY: It doesn't happen very often. But I tell you, it's happening more and more often. We almost crossed paths with President Bush the other day in Ohio.

Look, there is a universe of about 19 battleground states. And here's how the Kerry campaign and most campaigns figure it out.

They look at an area, in this case Beloit, in tomorrow's case Davenport. Davenport has the highest unemployment rate in Iowa. That is a very good issue for John Kerry. It's one that George Bush needs to shore up. It's a media market where they can reach not just Iowa, but Illinois as well.

In addition to that, there is a National Guard base there. And we are told by people in the Kerry camp that some of those in the National Guard have had their stays in Iraq extended, also a good Kerry issue, also an issue that George Bush needs to address.

So it's sort of like this explosion of campaign needs on both sides. One to shore up, one to try to make inroads.

So I will tell you that the Kerry camp thinks that George Bush is following them, not just in location, but in message as well. They say, look, he's talking about outsourcing, he never talked about that before, that's our issue. He's talking about deficits, that's our issue.

So they think that it's not just happenstance or a mater of mathematics. They think that this is a deliberate effort by the president to kind of dog where Kerry is going, to try to undo whatever damage is done by a Kerry appearance.

WOODRUFF: And we'll have to find out what the Bush campaign says about that.

CROWLEY: Exactly.

WOODRUFF: OK. Candy, thank you very much.

Well, as we said, John Kerry has a lot of company on the trail today. President Bush is in his home state of Texas, where he attended an RNC fund-raiser in Dallas. At the top of the hour, he is scheduled to speak to the international convention of the Catholic service group Knights of Columbus.

Nearby in Arkansas, Vice President Cheney attended a rally a short time ago at Fort Smith. He hosted a town hall this morning in Hot Springs. And later tonight he flies north for a fund-raiser reception in South Dakota.

As for John Edwards, he has multiple stops in Louisiana today. He's holding a town hall meeting this hour in Alexandria after beginning his day with a rally in Baton Rouge. About 2,000 people apparently attended the event, including about 50 Bush supporters who protested nearby. The Bush campaign had alerted reporters to expect up to 1,000 pro-Bush demonstrators.

Well, there's new numbers to report related to John Kerry's elusive post-convention bounce in nationwide opinion polls. A poll of post-convention polls looks like this.

The latest CNN survey, as we've reported, shows the race is tied. The new ABC-"Washington Post" poll shows Kerry leading by seven points. The CBS News poll has Kerry up by six. And the American Research Group shows Kerry leading by three points.

Now, compared with the pre-convention results in these surveys, Kerry dropped a point in the CNN poll, while he gained four points in the post-ABC News poll. There was no change in Kerry's position from before the convention in either the CBS or the American Research polls.

You've got all that, right?

Well, with me now to talk more about the presidential race, two top advisers to President Bush and Senator Kerry, Matthew Dowd, a senior strategist for the Bush-Cheney campaign, Tad Devine, a senior strategist for John Kerry and John Edwards.

Without getting into which poll is which, Tad Devine, no bounce for John Kerry? I mean, is this a problem for you all?

TAD DEVINE, KERRY CAMPAIGN SR. STRATEGIST: No, Judy. I think we had a spectacular convention. And I think John Kerry made enormous progress with voters.

We knew beforehand because he had been in the strongest position of any challenger to an incumbent president going into a convention. There wasn't a lot of horse race bounce to play. But we could do very important things, particularly convince people that he would be a strong commander-in-chief.

I thought it was stunning in the ABC-"Post" poll yesterday that John Kerry is defeating president Bush 52-44 percent on who would be the best commander-in-chief. That's enormous progress.

WOODRUFF: Enormous progress, Matthew Dowd?

MATTHEW DOWD, BUSH CAMPAIGN SR. STRATEGIST: I think you have to judge it based on the horse race. And this is the first candidate since McGovern to not get a bounce out of their convention. And, actually, in some polls it's a negative bounce.

So I think the situation is tough for them. I know they're trying to make it -- make it seem as good as possible. It's like the guy that loses a football game by a touchdown but says they gained more yards than the other team. It's the touchdowns that matter, not the yards that matter.

DEVINE: Judy, I would say that the situation is not tough for us at all. The situation for the president, who has an approval rating in the low 40s, a wrong track number in the high 50s, and a vote which can't seem to get anywhere above 45 is not only difficult -- and, by the way, Tony Fabrizio, the Republican pollster, I think agrees with our position and not with Matt's. So it's the president who's got his back against the wall right now, not John Kerry.

DOWD: This obviously -- this isn't true. We think the convention was so good for us that we put John Kerry's convention speech on our Web site today. So we're happy to have the convention highlighted as much as possible.

They had a convention. They went in, as Tad has said before, as the strongest challenger in the last 50 years. And they've come out as one of the weakest challengers in the last 50 years. It's a problem for them.

WOODRUFF: But what about the specific numbers that Tad is citing on the commander-in-chief number, John Kerry coming out ahead, on some other numbers, internal numbers in these polls, he's moving ahead on whether he would be better with the war in Iraq, for example?

DOWD: Well, I think those numbers are going to fluctuate around. They spent a week saying all kinds of nasty stuff and saying "strong, strong, strong, strong." We'll see where those internal numbers are in a week or so.

We are very happy about the position we're in. We thought we were going to be behind. We thought we would have to make up ground in August. We thought we would have to go into our convention and then come out of our convention even.

I think the race is very close. But we're very happy with the result of the Democratic convention.

WOODRUFF: And Tad Devine, despite the "strong, strong, strong" -- and we heard a lot of that at your convention...


WOODRUFF: ... still, John Kerry runs behind President Bush when it comes to -- to who's going to be better fighting the war on terror. And when you ask voters what's the most important issue for them, they say fighting the war on terror.

DEVINE: Well, in the "Post" poll, he was 18 points behind before the convention and three points behind after. So, I mean, I think that that kind of progress -- I mean, we're likely to be ahead. We're ahead on the economy. We're ahead on Iraq, where this administration continues to encounter problems. And we've closed the gap on terrorism. And I think we can move ahead there as well, because John Kerry, unlike the president, he has something the president doesn't have.

We have a plan. This is it to make America stronger at home and respected in the world. As long as we're -- and that's what they're talking about on the campaign. As long as we talk about a real plan, and have it, and the president have none, we're going to continue to make progress.

DOWD: Judy, the interesting thing about this book, one, it's a nice book that they put out on the campaign trail. About 90 percent of that the president has already done or is implementing. It's about 90 percent of what's in this book the president has already done or implemented.

So the Kerry campaign can announce something. They like the status quo. They'd like to take it back to the '80s of tax increases and a weak defense. And we're happy where they are.

WOODRUFF: Ninety percent of the book is already accomplished?

DEVINE: Well, totally false. Health care, for example. There's a great plan for health care in here. And, by the way, four million Americans have lost health care since the president's come into office.

DOWD: Why didn't Senator -- why didn't Senator Kerry do anything about health care in 20 years in the Senate.

DEVINE: He, along with Ted Kennedy, introduced the most innovative expansion of children's health in the generation, OK, while he was in the Senate. And by the way...

DOWD: So he can accomplish something as a president that he couldn't accomplish as a senator?

DEVINE: An awful lot. You'll be amazed how much power a president has.

DOWD: That shows something about leadership.

DEVINE: By the way, if a president uses it. And unfortunately we have a president who doesn't today. So...

WOODRUFF: What about this whole Senate business, though, Tad Devine?


WOODRUFF: The Republicans coming after you all, saying Senator Kerry barely mentioned his Senate time.

DEVINE: You know, it's interesting that they would attack John Kerry for what he didn't say in his speech, as opposed to what he did say. I think, first of all, that's the demonstration of the power of Senator Kerry's message, strengthening this country at home, restoring respect in the world.

We could have had a laundry list of his accomplishments. We could have talked about great things that he did in the Senate. For example, fighting for veterans on the issue of Agent Orange.

I mean, there are many, many things that he did. But instead, John Kerry wanted to talk about his values. He wanted to talk about his vision for the nation. And he wanted to talk about his plan, which he's going to continue to talk about, he and John Edwards, in the weeks ahead.

DOWD: Judy, I think average Americans judge leaders based upon their record in the past. We were happy to talk about our record as governor. The Gore campaign knocked us, knocked us, knocked us. We were happy to talk about it. It tells you about who you're going to be as a leader.

I am happy to talk about his convention speech. I think there's a huge credibility problem that he had in his convention speech. He didn't say whether or not...

WOODRUFF: Specifics.

DOWD: He didn't say whether or not Iraq was a mistake or not, a mistake. He still hasn't answered that question. He still hasn't figured out why he did the vote on $87 billion.

WOODRUFF: A very quick response.

DEVINE: Well, listen, you know...

DOWD: Was going into Iraq a mistake or not? What did Senator Kerry...

DEVINE: The way the president pursued it, a huge mistake.

DOWD: So should we have -- in the aftermath, should we or should we not have done it?

DEVINE: A huge mistake. A huge mistake.

I'll tell you, the way the president did it, we should not have done it. You know why?

DOWD: So...

DEVINE: Because America is bearing the burden almost alone right now. Nine hundred American -- and, by the way, four Americans dead today. You know?

DOWD: It's unfortunate. Is that the president's fault? Or is it the terrorists' fault?

DEVINE: The policy of the president is the president's fault. And it's unfortunate that this country is suffering from it.

WOODRUFF: We're going to have to leave it there.

DOWD: No problem.

DEVINE: Really? We're just getting going now.

WOODRUFF: I know you are. You could go on for the whole hour. We'll have you back very soon. Tad Devine, Matthew Dowd, thank you both for coming by.

DOWD: Thanks, Judy.

DEVINE: Thank you.

WOODRUFF: We appreciate it.

Well, hecklers have started chanting "four more years" at John Kerry campaign events. But Teresa Heinz Kerry has an answer. We'll hear it in just a minute.

Also ahead, we start a close look at the blocks of voters who may decide the presidential election.

Plus, help wanted. Can Illinois Republicans find anyone to run against this man?

With 91 days left until the election, this is INSIDE POLITICS, the place for campaign news.


WOODRUFF: Checking the headlines now in our "Campaign News Daily." vocal supporters of President Bush greeted John Kerry when he arrived last evening in Milwaukee. But Senator and Mrs. Kerry refused to let the protesters go unanswered. Teresa Heinz Kerry had a comeback for Bush backers who were chanting "four more years," and John Kerry offered an unflattering name for the protesters.


SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: We've got our individual voices, and we're going to speak for America.


KERRY: I want to thank -- I want to thank George Bush for sending the (UNINTELLIGIBLE) here tonight to excite us to do a little more work. Thank you.




TERESA HEINZ KERRY, JOHN KERRY'S WIFE: They want four more years of hell.



WOODRUFF: Meantime, the Democratic National Committee today announced what it is calling its truth squad. Congressman Dick Gephardt and Congresswoman Sheila Jackson Lee are among the group the party will call on to "set the record straight" when John Kerry is wrongly attacked at the RNC convention.

One more campaign note. Sources at the liberal political group America Coming Together say the group will sponsor 40 concerts nationwide, starting October 1 to raise money for their "get out the vote" effort. Performers are said to include Bruce Springsteen, Dave Matthews, the Dixie Chicks and REM.

Well, we keep hearing that the presidential election is going to boil down to who wins in some 17 showdown states. Today, we begin a close examination of the voting groups within these crucial states, starting with the Latino vote.

Joining me now is Chuck Todd. He's the editor-in-chief of "The Hotline," an insider's political briefing produced every day by the "National Journal."

All right, Chuck. First of all, we know that the Bush and Kerry campaigns together targeting the Hispanic, the Latino vote. Why is the Latino vote so prized this year?

CHUCK TODD, EDITOR-IN-CHIEF, "THE HOTLINE": Well, first of all, it's the fastest growing ethnic group in the country. Every census, every even -- every year that the census updates we see Latino numbers growing by leaps and bounds.

Take into account that of these 17 states that we've -- we have been focusing on so much, five of them have very significant Latino populations: Arizona, Colorado, Nevada, New Mexico, and Florida. They're double-digit as a percentage of the population. And they're growing faster.

They've been low -- they've not participated in very high numbers when it comes to actual elections. So it's this -- it's this unknown. If either party figures out how to suddenly register a bunch of Latino voters and get them to show up to the polls, it could make a huge difference and flip some states that we would be very surprised about you.

WOODRUFF: So what have the campaigns been doing to appeal to Latino voters?

TODD: Well, one thing that we've done so that us in the media notice that they're appealing to Latino voters is buy a lot of Spanish language television. Both campaigns -- the Bush campaign has spent millions of dollars already on Spanish language television in these five battleground states. The Kerry campaign came a little bit later to the game with it, but also has put well over seven figures on the air in these states.

But when they started -- they also need to spend some more time probably English language television. One of the things that a lot of Latinos tell me is that, you know, just because they're Latino doesn't mean they always want to watch Spanish language television. They watch English language television, and sometimes not enough advertising is used on English language television to target Latino voters.

WOODRUFF: How are we going to know, Chuck, whether either campaign has made headway among Latino voters?

TODD: Two states to look at very closely. One on the Democratic side is Arizona.

Al Gore carried about 62 to 65 percent of the Latino vote, not just nationwide, but also in Arizona. Arizona has a population of 25 percent -- is Hispanic. But the electorate was only 10 percent Hispanic in 2000.

If that number increases dramatically, let's say to 15 percent of the electorate, and John Kerry can carry the same numbers as Gore, Arizona is going to flip and Arizona is going to go in the Democratic column. And we'll know that the Latinos -- on the Republican side, New Mexico.

It was very close last time. If somehow Bush can increase -- he under-performed in New Mexico among Latinos last time. He only got 32 percent. If he can get to his sort of national average of 35 percent, or even 36 or 37, it will be a clue that maybe Republicans have figured out how to start appealing to some, at least some of the more conservative Latinos. So New Mexico and Arizona are easily the two states to watch the closest on this.

WOODRUFF: We're not really going to know until Election Day.

TODD: Absolutely.

WOODRUFF: But we can report -- we can report right up until then.

TODD: Yes, ma'am.

WOODRUFF: Chuck Todd, "The Hotline," thank you very much.

TODD: Thanks, Judy.

WOODRUFF: "The Hotline," of course, an insider's political briefing produced daily by the "National Journal." You can go online to for subscription information.

Republicans in the land of Lincoln have a tough decision on their hands. They're trying to decide who gets to face Democratic convention star Barack Obama in the battle for a Senate seat. The latest on the story when we return.


WOODRUFF: Republican leaders in Illinois are meeting behind closed doors at this hour to choose a nominee to face Barack Obama in the U.S. Senate race. The Democratic candidate star is certainly on the rise after his keynote address at his party's national convention last week. And he's expected to be a formidable opponent for the GOP candidate.

Here's CNN's Chris Lawrence.


CHRIS LAWRENCE, CNN CORRESPONDENT (voice-over): The buzz around Barack Obama had been building before he addressed the Democratic National Convention.

BARACK OBAMA (D), ILLINOIS SENATORIAL CANDIDATE: If there's a child on the south side of Chicago who can't read, that matters to me even if it's not my child.

LAWRENCE: And it only exploded after his speech. But Republicans refuse to play cheerleader to the new star of the Democratic Party.

UNIDENTIFIED MALE: This guy is so liberal that he would be a liberal in Massachusetts.

LAWRENCE: The State Central Committee has already vetted the potential candidates who have been making their pitch to get the party's backing. Even with the election 90 days away, Republicans still believe they can win. Some say Obama's credentials, a Harvard- educated law professor and state senator, could work against him in working class Illinois.

UNIDENTIFIED MALE: This is someone who really hasn't carried a lunch bucket to work. He's never sold a recliner. Never delivered a pizza. I mean, this -- this is a candidate that I think once Illinois gets to know him, they're going to feel less comfortable with.

LAWRENCE: After the primaries in early spring, Republicans were running what looked like a strong challenge. Jack Ryan was well known, well liked, well financed. And then his five-year-old divorce records became public.

In custody papers, ex-wife and actress, Jerri Ryan, accused her of taking her to sex clubs and asking her to have sex in front of others. When the fallout forced Jack Ryan to drop out, Speaker of the House Dennis Hastert went on the record and called Illinois state senator, Steve Rauschenberger, the best man to replace Ryan. The only problem being Rauschenberger refused to run. And just when it looked like an old coach would come off the Republican bench...

MIKE DITKA, FMR. NFL COACH: It's something that I can't do at this time, really.

LAWRENCE: ... Mike Ditka took himself out of the game. (END VIDEOTAPE)

LAWRENCE: This point is Jack Ryan left his name on the ballot until just last week. He says he didn't have time to finish the paperwork, but it's only a one-page form you could finish in a matter of minutes.

So now the big name that Republicans are throwing out is Alan Keyes, an economist and former ambassador who's also worked in the State Department. Now, Keyes ran for president in 1996 and 2000. He's a very powerful speaker. And many Republicans tell us they believe he could hold his own in a debate against Barack Obama.

And as an African-Americans, Keyes would present a very unique conservative contrast to the more liberal Democrat. The only problem is Keyes doesn't live here in Illinois. He's from Maryland. But many Republicans told us today that Hillary Clinton's successful run for the Senate in New York proves residency may not be an issue -- Judy.

WOODRUFF: We are all on the edge of our seats on this one. Chris, thank you very much. Appreciate it.

So, are there really two Americas? And if so, which two? Stay with us as we go looking for the truth behind one of John Edwards' favorite campaign lines.

Also in the next half-hour, I'll ask representatives of the Bush and Kerry camps about two of the biggest issues in the campaign.



ANNOUNCER: A divided America?

SEN. JOHN EDWARDS (D-NC), VICE PRESIDENTIAL CANDIDATE: The truth is we still live in a country where there are two different Americas.

OBAMA: There is not a liberal America and a conservative America. There is the United States of America.

ANNOUNCER: So who's right?

The dog days of August? Not this summer on Capitol Hill.

BOB KERREY, 9/11 COMMISSION MEMBER: There's been a lot of public placed -- putting pressure upon you all to hold hearings.

ANNOUNCER: But will congressional hearings on the 9/11 Commission recommendations turn into a partisan battle?

A new way to vote?

UNIDENTIFIED MALE: Ladies and gentlemen, the polls are now open. Welcome to (UNINTELLIGIBLE) election. ANNOUNCER: Why are people lining up for an election that doesn't even count?



WOODRUFF: Welcome back.

President Bush and Senator John Kerry courting key voter blocks today in two separate parts of the country. Bush is in Texas, where he is speaking this hour to a Catholic service group. His remarks follow an early afternoon party fund-raiser in Dallas.

Also today, the Bush campaign released a new television ad which takes a positive message on the president's behalf into 18 battleground states and national cable outlets.


UNIDENTIFIED FEMALE: What gives us optimism and hope? Freedom, faith, families, and sacrifice. President Bush, moving America forward.


WOODRUFF: John Kerry, meanwhile, spent time in Beloit, Wisconsin, a blue-collar area hit hard by job losses. Kerry repeated an earlier campaign pledge that if he's elected, he will hold a news conference every month, because, quote, "I don't have anything to hide."

Meanwhile, the pro-Kerry political group, the Media Fund, is buying TV time in showdown states through the month of August. The ads, some of which were created by another anti-Bush group,, criticized President Bush on issues like Iraq, the budget and health care costs.


UNIDENTIFIED MALE: Health care costs are soaring. Millions more Americans are uninsured, and those who have coverage are paying more out of pocket. Yet President Bush offers no plan to curb costs. And his new Medicare law would actually ban the government from negotiating lower prices from drug companies.

UNIDENTIFIED FEMALE: With the cost of these drugs, it's very scary.


WOODRUFF: Tomorrow's travels bring Bush and Kerry just down the street from each other. Both candidates plan to hold rallies in Davenport, Iowa, at about the same time. Despite their disagreements about embryonic stem cell research, former first lady Nancy Reagan is endorsing President Bush's reelection bid. Her spokeswoman tells the Associated Press that Mrs. Reagan is, quote, "in full and complete support of President Bush's candidacy." Mrs. Reagan will not attend this month's Republican convention. But her spokeswoman says she has not ruled out campaigning for the president.

There are 27 days left until the curtain rises on the Republican convention in New York. And, ever since the last election, we've heard a lot about the differences between the red and the blue states. Can one party bridge the gap? Our Bill Schneider reports the Democrats are trying very hard.


WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): We heard a lot of talk at the Democratic convention about two Americas. But which two Americas? John Edwards talked about two Americas divided by class, the haves and the have-nots.

SEN. JOHN EDWARDS (D-NC), VICE PRESIDENTIAL CANDIDATE: The truth is, we still live in a country where there are two different Americas. One...


... one, for all those people who have lived the American dream and don't have to worry. And another for most Americans, everybody else, who struggle to make ends meet every single day.

SCHNEIDER: That works for Democrats, because, as Edwards said, most Americans identify with the have-nots. But the division that dominates American politics right now isn't class, it's culture. Red versus blue doesn't mean haves versus have-nots. It means liberals versus conservatives. Polls show more people call themselves conservatives than liberals. So it's a division Democrats are quick to denounce.

BARACK OBAMA (D), ILLINOIS STATE SENATOR: There is not a liberal America and a conservative America. There is the United States of America.

SCHNEIDER: But listen to Bill Clinton, who sees values at the core of today's politics, more precisely, the '60s.

BILL CLINTON, FORMER U.S. PRESIDENT: If you look back on the '60s, and on balance, you think there was more good than harm in it, you're probably a Democrat. And if you think there was more harm than good, you're probably a Republican.

SCHNEIDER: It's a split between two figures who came of age in the '60s, Bill Clinton, who sees more good than harm, and George W. Bush, who sees more harm than good. Where does John Kerry fit in?

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: When I was in high school, a junior, John Kennedy called my generation to service. It was the beginning of a great journey, a time to march for civil rights, for voting rights, for the environment, for women, for peace. We believed we could change the world. And you know what? We did.

SCHNEIDER: But notice how Kerry defines those values.

KERRY: ... not narrow values that divide us, but the shared values that unite us: Family, faith, hard work, opportunity and responsibility for all.


SCHNEIDER: Faith, hard work, opportunity, responsibility. Now, that doesn't sound like the '60s of sex, drugs and rock 'n roll. Well, the '60s were also about idealism. And that's what Kerry was talking about -- Judy.

WOODRUFF: Bill Schneider, thank you very much. We'll be talking about these two Americas for weeks to come.

SCHNEIDER: Oh, yes. I'm sure.

WOODRUFF: All right, I want to show you some live pictures now from Texas. President Bush just arrived in Dallas at the Knights of Columbus gathering. This is a Catholic men's group. The president will be speaking to them. He's also having a fundraiser in Dallas today. Tomorrow, the president heads off to campaign in Iowa and Wisconsin.

The latest increase in the terror alert and the focus on potential targets associated with the economy has once again spotlighted the potential risks that a terror attack poses to the nation's economic health. Security remain highly visible and very tight today here in Washington at sites such as the World Bank and the International Monetary Fund.

Earlier, I discussed this and other campaign issues with Laura Tyson, an adviser to the Kerry campaign and a former adviser in the Clinton administration. I started by asking her what effects she thinks the latest alerts will have on the economy.


LAURA TYSON, FMR. CLINTON ECONOMIC ADVISER: Kerry and Edwards are absolutely committed to carrying out all of the recommendations of the 9/11 commission. And that is part of the process of helping the financial institutions in other parts of our economy continue to prepare to gird themselves for a possible terrorist attack in the future.

WOODRUFF: Let me ask you about the economy overall. President Bush said out on the campaign trail this week that the tax cuts that he pushed into law are the reason, he said, that the U.S. economy is growing at a rate, and here's what he said, "as fast as at any time in nearly 20 years." TYSON: Well, apparently, President Bush didn't see the most recent numbers. The most recent numbers, of course, from June, show real weekly wages falling by 2.6 percent, the largest annual decline since the early 1990s. Consumption spending slowed markedly, as did real income that Americans take home.

I think as far as the tax cuts are concerned, the evidence is clear that there was a lot of stimulus in the economy coming from monetary policy. There was some stimulus coming from tax cuts. But you know, they were the wrong tax cuts. What we needed was temporary tax cuts with big bang for the buck that put money in the hands and in the pocketbooks of average Americans who would spend that money and add oomph to the economy.

Instead, we got tax cuts that were disproportionately biased to the upper 1 percent of the population. And the bang for the buck from that kind of tax cut on stimulating the economy is actually quite weak. Furthermore, those tax cuts create huge deficits in the future. Wrong tax cuts.

WOODRUFF: But, I'm sure know you know that the Fed chairman, Alan Greenspan, said just a few days ago, that this softness in the economy that we saw in the last weeks, he thinks it's just temporary. He said he thinks it's going to be short-lived. He thinks the anecdotal data that he's seeing right now for July looks promising.

TYSON: Well, I think what I would -- I first want to distinguish between growth in the economy -- it may pick up from the June level -- and what it means to the average American. Because we still know that the median family income is down. It's down by about $1,500. Wages have not been rising at anywhere near the rate of gross national output. And indeed, as I just said, the most recent number was a decline in wages.

So the quality of jobs, and the growth of income from average Americans, has not kept up with the pace of recovery. And the pace of recovery seems to have moderated. By the way, Alan Greenspan has also been continuously warning about the effects of long-term deficits on the economy. And long-term deficits have been created primarily by the tax cuts that George Bush chose, tried to stimulate the economy.

WOODRUFF: But very quickly, Laura Tyson, a million and a half new jobs created just since last August, President Bush is saying directly related to his tax cuts. Doesn't that indicate in some sense that his policy's working?

TYSON: Well, I think you'd have to ask the American people. Is it working for them? Those million and a half jobs have been examined by such institutions as Morgan Stanley and Lehman Brothers, and what they have concluded is the quality of the jobs is quite wanting.

These are, in general, temporary jobs. They are, in general, jobs that are paying less than the jobs that have disappeared during the Bush presidency. And, as far as the tax cuts are concerned, I would say the following: When the economy's slow, if you cut taxes, that will help. But it matters which taxes you cut. These tax cuts had very little bang for the buck, did not stimulate the economy very much, and create a huge long-term deficit problem.


WOODRUFF: Laura Tyson, advising the Kerry campaign.

And now, stand by for equal time. I'll get the Bush administration's view of these top dollar issues from Commerce Secretary Don Evans.

Later, an issue that's urgent enough to have members of Congress working in August. Plus, what shaking heads may say about the upcoming election.


WOODRUFF: Joining me now with the Bush administration's view of the terrorism threat, and the U.S. economy is the secretary of commerce, Don Evans.

Secretary Evans, good to see you. Thank you for coming by.

DON EVANS, U.S. SECRETARY OF COMMERCE: You bet, Judy. Good to see you

WOODRUFF: This new terrible news about a terror threat on the nation's major financial institutions, what effect is that likely to have on the economy?

EVANS: Well, Judy, I think you do have to keep it in perspective. And knowing that our economy is certainly very durable and very resilient, our economy has been through two world wars, a depression, nine recessions since World War II, 9/11, corporate scandals. And so this is a very durable resilient economy.

But, we do need to make sure we're very diligent, and diligent when it comes to making sure our financial institutions remain protected and secure. And this administration has been laser-focused on terrorism, and counterterrorism measures, and protection of our financial institutions since it came into office. But certainly since 9/11 of 2001.

WOODRUFF: But you're walking a fine line. I mean, on the one hand you're protecting these institutions, you're telling people to be careful, and on the other hand, you want people to continue commerce, to continue going about business as usual.

EVANS: And America is. And that's my point. My point is, this is a very durable, resilient economy. People are very confident. Consumer confidence numbers are up to a record -- not record levels, but at levels of -- that are at a two-year high. And, so, consumer confidence is up, and economy continues to be very strong and continues to get stronger.

WOODRUFF: At the same time, you do have numbers out today, consumer spending for last month down .7 of a percent. The economists I saw quoted called this the sharpest decline in three years. Is this a problem?

EVANS: Well, I don't think so. I think, as you mentioned earlier on your show, the chairman has said, Chairman Greenspan has said, he thinks this is just a transitory period and feels like this is just a little soft patch in the economy. It's one month. Auto sales in July look to be strong again, so when you look at -- the trends of our friends, as I like to say. As you look at the economy over the last 12 months or so, all the indicators are very strong. Consumer confidence is up. Growth is up. And so this is a very strong economy right now.

WOODRUFF: But I read today on the Associated Press wire one economist in New York said these are sour numbers. Consumers were confronted with a whole range of high prices, including energy and they balked. In fact, oil prices today, I gather, hit a new record, $44 a barrel. You're not worried about all this?

EVANS: Well, listen, you know, the president's been saying since day one that we need to stay focused on some of the issues that face this economy, like bringing down health care costs, like bringing down energy costs. We all know how important it is to have affordable, available energy to continue to drive this economy. The president has been focused on it since January of 2001. It continues to be his focus.

These are areas that are of concern. And we must continue to work on them. We must do things like eliminate junk lawsuits. I mean, that's also a very important part of making sure we always are creating the conditions for this economy to continue to grow. So are there issues and concerns to work on? Of course there are. But is this economy strong? It is very strong, and continues to get better.

WOODRUFF: What about the point that we just heard from Laura Tyson, who, of course, advised Bill Clinton. She's now advising John Kerry. She made the point that real weekly wages, she says, falling by 2.6 percent, the largest annual decline in a decade.

EVANS: She was talking about one month. I mean, it seems like to me you ought to look at the trends. The trends are our friends. Over the last 12 months, take-home pay is up 3.8 percent. That's higher than the average take-home pay increases in the 1970s, 1980s, and the 1990s. Hourly compensation is up twice as high as it was in the 1990s and four times as high as it was in the 1980s.

WOODRUFF: The average person, though, doesn't know what to believe. They hear your numbers and they know you're -- assume you're telling the truth, and then they listen to her and she talks about median family income down $1,500 a year. What are people to believe...

EVANS: Well, because of the president's tax cuts, the average family -- say an average family of -- earning $40,000 a year, a family of four, they have an additional $2,000 in their pocket now because of the president's tax cuts. That would allow them to pay for their utility bills, electrical bills, for one year. I mean, when you look at the numbers and you consider that we have more Americans working today than ever in our history, when we have record home ownership in America, almost 70 percent of the people in America own their home for the first time ever in our history. Record minority home ownership in this country. You just go on and on and on, and you see positive data, how strong this economy is and continues to get better.

WOODRUFF: Commerce Secretary Don Evans saying the glass is more than half full. Thank you very much.

EVANS: Thank you, Judy.

WOODRUFF: Good to see you.

EVANS: Great to see you. You bet.

WOODRUFF: Coming up, while Congress takes time off for the summer, some committee members are still hard at work. Their focus: The 9/11 commission report. We'll go live to Capitol Hill when we return.


WOODRUFF: Some live pictures coming in to CNN from Alexandria, Louisiana. That's the Democratic vice presidential nominee, John Edwards, campaigning in that Louisiana city. Earlier today, he was in Baton Rouge. Later on this day, he heads to Shreveport. Three stops in the state of Louisiana, a state the Democrats are trying to turn into a battle ground.

Well, the 9/11 commission's recommendations are back in the spotlight on Capitol Hill. Members of two committees, one in the House and one in the Senate, have returned from summer break for hearings. Let's get the latest now from CNN congressional correspondent Ed Henry -- Ed.


These terror threats are really giving the 9/11 commissioners new impetus to push Congress to go further than President Bush went yesterday, in terms of endorsing recommendations. And thus far, it has appeared that Congress is going to move pretty quickly. As you mentioned, a lot of hearings under way. Also, a lot of talk of legislative action in September when Congress gets back into session.

But today we saw some of the political fault lines start to develop at these hearings. For example, at the House Government Reform hearing, Democrat Henry Waxman led a little bit of an attack on President Bush's plan to create a new national intelligence director. Henry Waxman was basically raising questions about the fact that it appears this intelligence official will not have budget authority. Waxman says that will make it an intelligence czar, basically a figurehead, not the kind of quarterback that the commission has envisioned that will really be strong in calling the plays. Also we heard from 9/11 commissioner Bob Kerry. He spoke at that House hearing, as well, and he said there were going to be massive turf battles here where people like Defense Secretary Don Rumsfeld are going to oppose this in a big way because they do not want to cede ground to this new national intelligence director. Here's what Kerrey had to say.


BOB KERREY, 9/11 COMMISSION MEMBER: I know that Secretary Rumsfeld is going to oppose this. And I just -- if they win one more time, if DOD wins one more time, the next time it's a dust-up, and there's a failure, don't call the director in central intelligence up here. Kick the crap out of DOD.


HENRY: Obviously some strong words there from Bob Kerrey as he is want to do. We all know him from his Senate days. Also, at the Senate hearing, the Senate Governmental Affairs Committee, John Brennan, who is currently in charge of the Threat Assessment Center that would be replaced by the national counterterrorism center that President Bush endorsed yesterday. John Brennan also had some strong words. He got very upset about all this talk about eliminating the Threat Assessment Center. In fact, Brennan was saying that maybe everybody is moving a little too quickly and they may create some new problems.


JOHN BRENNAN, THREAT ASSESSMENT CENTER: The system today works better than it ever has before. The status quo on 9/11 was certainly insufficient. It could have worked better. You betcha. We can improve ourselves, and we need to. And that's why continuing to change and to go through transformation of government is important.

But moving precipitously does not take into account the tremendous interconnectedness that is the result of legacy practices and procedures and statutes over the past 50 years.


HENRY: Judy, Senator John Kerry, as you know, has called for Congress to come back for a special session, actually work on legislation in August. But Bob Kerrey had a humorous quip and was saying he thinks everyone should calm down, as I mentioned, and instead, he said, "Put the Blackberries away. Hold these hearings. You know, take a little bit of a breather and then come back in September." You have plenty of time to pass legislation. And, in fact, House Republican leaders are saying they hope to pass legislation right before the 9/11 anniversary -- Judy.

WOODRUFF: Blackberries not being a fruit, but a handheld e-mail device without wires.

HENRY: That's right. Good advice for everyone. WOODRUFF: I guess that's the best description. Ed Henry, reporting from Capitol Hill.

Ed, thank you very much.

Well, there's a new twist in the race for the White House. Still to come on INSIDE POLITICS, minor league baseball fans are expressing their choice for president. The battle of the bobblehead, when we return.


WOODRUFF: Oh, no, here we go again. Another hotly-contested presidential election in the state of Florida. But this one has a twist. It involves minor league baseball and a battle between Bush the bobblehead and Kerry the bobblehead. Here's CNN's John Zarrella.


JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): Look at the line. Voting for president is serious business. Even if it's August, and it really doesn't count.

UNIDENTIFIED MALE: Ladies and gentlemen, the polls are now open. Welcome to Bobblelection (ph).

ZARRELLA: Seven minor league baseball stadiums hosted a spirited presidential election.

UNIDENTIFIED MALE: We need a change. We need a change.

ZARRELLA: Fans got to vote for either President Bush or Senator John Kerry. In exchange, they got a bobblehead doll of the candidate of their choice. Kim Harris cast the first Florida vote.

KIM HARRIS, LEE COUNTY RESIDENT: As a disabled veteran, I have to go with George Bush.

ZARRELLA: From Fort Myers, Florida, home of the Miracle, to the Sioux Falls Canaries, the ballparks were all decked out, bunting hanging from the facade, voting booths, and even representatives from the two major parties. It was supposed to be just a fun promotion to boost summer attendance, but...

LINDA MCNABB, PRESIDENT, MIRACLE BASEBALL: They're not smiling. I walked down a minute ago, and I said, "Would you people lighten up?" And they're just, you know, "We got to vote right. Got to vote right. Got to get in there."

ZARRELLA: As a reminder of unpleasantries past, every Fort Myers voter received a hanging chad. And as expected here in Florida, there were some who didn't think the election was fair.

UNIDENTIFIED MALE: How come Nader wasn't on the ballot?

UNIDENTIFIED MALE: I don't know. UNIDENTIFIED MALE: It's just like every other Florida election.

ZARRELLA: Dick Cheney had no problem with it. That's right, this man's name is Richard Cheney. You can guess who he voted for.

DICK CHENEY, LEE COUNTY RESIDENT: The vice president is a distant cousin.

ZARRELLA: Does he really -- does he know who you are?

CHENEY: No, I doubt it.

ZARRELLA: At the end of the night, just as it's expected to be in November, the election was close. Of the seven cities, President Bush won four to Senator Kerry's three, and the president won Fort Myers with 53 percent of the vote, despite partisan vote counters...

UNIDENTIFIED MALE: Uh-oh. Two in a row. We're rallying, baby, we're rallying.

ZARRELLA: ... who favored Senator Kerry.

(on camera): Now, given all the problems Florida's had with electronic voting machines and counting ballots, come November, elections officers might want to consider something really simple. Like, a bobblection (ph).

John Zarrella, CNN, Fort Myers, Florida.


WOODRUFF: They take their politics seriously there. That's it for INSIDE POLITICS. I'm Judy Woodruff. "CROSSFIRE" right now.


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