Inside Politics

Bush Demands China Release Reconnaissance Plane's Crew

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Now it is time for our servicemen and women to return home, and it is time for the Chinese government to return our plane.

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ANNOUNCER: Tougher talk from President Bush, as the spy plane standoff continues.

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UNIDENTIFIED MALE: This incident comes after a series of what Beijing has seen as hostile statements and gestures from the new administration.

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ANNOUNCER: What's behind China's stance? Is it time for President Bush to phone a friend?

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UNIDENTIFIED MALE: You have to wonder if the son might not be asking the father to stop by for a little chat these days.

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ANNOUNCER: Now, Judy Woodruff takes you INSIDE POLITICS.

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. A clear message from President Bush to the Chinese government: give back the crew, give back the reconnaissance plane, or risk diplomatic damage. But while U.S. diplomats were permitted to visit the crew today, on Washington's core demands, Beijing has been silent. We begin our coverage with John King at the White House -- John.

JOHN KING, CNN CORRESPONDENT: Well, Judy, it was just an hour ago, President Bush came into the Rose garden. This, after receiving a very detailed briefing, we're told, by members of his national security team and speaking to the U.S. Diplomats on the ground in China. The president began his statement with what he called the good news, that those 24 U.S. crew members are in good health, and he said they are not being mistreated by the Chinese.

But then the president's tone changed dramatically, as he made clear his own personal frustration and the rising tensions between Washington and Beijing.

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KING (voice-over): The president bluntly said it was past time for the Chinese government to bring the standoff to an end.

BUSH: Our approach has been to keep this accident from becoming an international incident. We have allowed the Chinese government time to do the right thing, but now it is time for our servicemen and women to return home, and it is time for the Chinese government to return our plane.

KING: Mr. Bush spoke after being told that China had rebuffed U.S. diplomats who tried to arrange for the crew's immediate release. His tone was far more urgent than just a day before.

BUSH: This accident has the potential of undermining our hopes for a fruitful and productive relationship between our two countries. To keep that from happening, our servicemen and women need to come home.

KING: U.S. officials say the president has tried to walk a fine line in the standoff, insisting on the immediate release of the crew and the plane, and insisting there will be no U.S. apology, as Beijing is demanding. But the hope was to stay optimistic about the long-term view.

COLIN POWELL, SECRETARY OF STATE: If we resolve this rather quickly, then hopefully it will not affect the overall relationship between the United States and the People's Republic of China.

KING: The administration's more hawkish voices, Vice President Dick Cheney and Defense Secretary Donald Rumsfeld, have so far said nothing in public. But there were some signs of tension within the administration as the standoff dragged on. Pentagon sources tell CNN Chinese military officials boarded the plane and removed some equipment.

But White House officials called that "conjecture" and said there was no firm evidence. And there was mounting political pressure on the White House. Senate Foreign Relations Committee Chairman Jesse Helms told CNN he had "very strong opinions and I don't want to aggravate the situation by giving those opinions."

Others in Congress warned of major consequences if China tampered with the plane.

SEN. KAY BAILEY HUTCHISON (R), TEXAS: We must find out if any of our equipment was violated, but the world will be watching China to see how they react to this situation.

(END VIDEOTAPE) KING: Several senior administration sources telling CNN, the major hang-up is this: the Chinese government is apparently insisting on a formal U.S. apology for the incident. But the U.S. position is that this collision took place over international waters, that it was an accident, and there is no apology coming -- Judy.

WOODRUFF: So, John, how does in get resolved? The Chinese asking for an apology. Administration saying it's not going to be forthcoming?

KING: Well, the administration hoping that more diplomacy and now the threat from President Bush -- the direct threat that this could this have a lasting, long-term impact on the relationship will perhaps get the Chinese to rethink their position and perhaps the diplomats could work out some language in which the United States acknowledged it was unfortunate incident and thanked the Chinese for help perhaps once the crew is released.

But U.S. officials say their position right now is that this plane was in international airspace, over international water, most U.S. sources suggesting privately -- the administration doesn't say this publicly -- that it was the Chinese plane that initiated the collision in their view, so U.S. officials saying now the position now is no apology forthcoming and they're leaving it to the diplomats. We're told the president increasingly frustrated.

WOODRUFF: All right, John King at the White House.

U.S.-Chinese relations had been cooling even before this spy plane standoff. CNN senior Asian correspondent Mike Chinoy takes a look.

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MIKE CHINOY, CNN CORRESPONDENT (voice-over): When President Bill Clinton visited Beijing in 1998, it was the high point of what the U.S. then described as a "strategic partnership" with China, downplaying differences on human rights, proliferation, and Taiwan to forge a new, warmer relationship.

George Bush came to office promising a much more hard-headed approach. Now, with the detention of a U.S. spy plane and its crew, he may be reaping the consequences. This incident comes after a series of what Beijing has seen as hostile statements and gestures from the new administration, not only replacing the concept of partnership with that of competition, but introducing a whole new U.S. approach to Asia.

Fueling Beijing's anxiety: the Bush administration's decision to freeze dialogue with China's ally, North Korea, despite a warming of ties under the Clinton administration. Its decision to highlight the U.S. relationship with Japan over that with China, symbolized by insisting that a visiting Chinese vice premier, Qian Qichen, switched the times of a visit to Washington two weeks ago so Mr. Bush could meet first with Japan's prime minister. Signs the administration will support a major new arms sale to Taiwan, which China claims is a renegade province, despite repeated warnings from Beijing not to do so. U.S. plans to create a missile shield, with the potential to counter China's own missiles facing Taiwan, thus eroding Beijing's ability to pressure the island.

And talk from U.S. Defense Secretary Donald Rumsfeld the future U.S. military planning would focus less on threats in Europe and more on those in Asia, meaning presumably from China. It's against this backdrop that Chinese leaders likely see U.S. surveillance activities off their coast, one more sign it would end constructive engagement.

(on camera): That helps explain why Beijing hasn't rushed to look accommodating to Washington. The signal seems clear enough: if Washington doesn't want to treat China like a partner any more, China has no intention of behaving like one.

Mike Chinoy, CNN, Hong Kong.

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WOODRUFF: Lawrence Eagleburger served as secretary of state under former President Bush. He joins us from Charlottesville, Virginia.

Secretary Eagleburger, is the administration on the verge of a crisis here?

LAWRENCE EAGLEBURGER, FORMER BUSH SECRETARY OF STATE: No, not unless we and the Chinese succeed in making one. I thought the president's speech, statement today was just right. He is seeking to get this thing done and get our people back, but he's also making it clear that if the Chinese continue this way, it's not going to be free.

I have to believe myself that while I think the Chinese are wholly to blame in this particular situation, they will at some point fairly soon come to grips with reality and get this thing over with. If they persist, it clearly is going to make it much more difficult for those of us such as myself who believe that the relationship with China is absolutely essential to peace. It's going to make it much more difficult for us to convince the rest of America that, in fact, a good relationship with China is essential.

WOODRUFF: Mr. Secretary, you say the Chinese are wholly to blame, and yet President Jiang Zemin, other Chinese, are saying the American plane was flying very close to the Chinese border, it was spying on the Chinese military and it ended up landing on Chinese territory.

EAGLEBURGER: It didn't have much choice but to land on Chinese territory.

WOODRUFF: But it was spying on Chinese...

EAGLEBURGER: Depends how you define "spying." We have done this sort of thing; namely, listen to radio transmissions and so forth, the Russians did it to us, the Soviets did it to us, I'm sure the Chinese do it. It is a common practice and as long as that aircraft was in international waters it is totally and completely legal, beyond which I think from our point of view we should say shame on the administration if, in fact, they weren't pursuing this kind of activity.

The fact of the matter is, as far as I can tell, that it is this Chinese aircraft that ran into our aircraft. You know, our aircraft is a slow, lumbering thing. It can't maneuver, it can't be the one that was responsible for the collision, and I'm totally prepared to believe that it was outside Chinese territorial water, it was doing its thing, which is to listen to transmissions and things of that sort, which also legitimate.

The Chinese blame this on us and now demand an apology. That is ridiculous. The fact that all of this looks clearly as if it was a situation created by the Chinese, not by the -- deliberately I'm convinced of that. But some pilot who can't fly his aircraft did this and now, the Chinese don't know how to get out of the middle of it.

WOODRUFF: So to their argument that this was something that happened very close to their territory, and it's something for which the U.S. is responsible, not because of what happened with the two planes, but just by virtue of our plane, the U.S. plane, being there, you are saying the U.S. has no explanation or needs to make no explanation?

EAGLEBURGER: Well, look, I happen to believe my own government when it says that the aircraft was outside Chinese territorial waters. If that proves to be untrue -- and believe me there is no way they can hide that over time -- if that proves to be true, then shame on us.

But if, in fact, it was in international waters, it is clearly, I think, it is the Chinese aircraft that harassed that airplane because they don't like what we're doing. And it is the Chinese aircraft that led to the collision. And our plane landed in Hainan because it had no choice.

WOODRUFF: Should U.S.-Chinese relations suffer as a result of this?

EAGLEBURGER: Again, I have to start by saying, you know, if we Americans don't understand that in the next 20 years the relationship with China is going to be one of our most critical foreign policy issues, then shame on us, but my point is, will it become -- will it damage the relationship? It certainly encourages those who already dislike the fact that we were getting closer with the Chinese. It encourages them to attack the policy. It makes people such as myself who believe in the policy of close relations with China to put it mildly irritated beyond belief that the Chinese could be so clumsy here.

I don't think it's going to lead to a major crisis unless they continue to hold the people, but at the same time, it certainly doesn't help. WOODRUFF: We just heard our correspondent in China, Mike Chinoy, reporting that President Bush may be reaping the consequences of a harder line, not only toward China but toward Asia overall. Do you think that's part of what's going on here?

EAGLEBURGER: In a sense, yes, but there is an implication here that, therefore, we are at fault. I don't accept that. If this administration believes that it should take a different tone and policy toward China or any other country, you know, that's fine, and the Chinese have to live with us and we have to live with them.

But to then say because we took a different approach for example, by no longer talking to North Korea, and that this is the cause of this sort of a relationship, I don't accept it. We have to do what we think is best. The Chinese did what they think is best. But in the meantime, when it comes to relationships between two countries, we both need to grow up and understand what is at stake if we don't behave ourselves.

WOODRUFF: And finally, what's the next step here? What is the correct next step here, and on whose part?

EAGLEBURGER: You have to ask me the question that is totally impossible to answer at the end, so I can't get out of it, I guess. But my point is the next step has to be a continuation of our diplomatic efforts to get the Chinese to release the people in the aircraft. And until that's done, there is nothing else, it seems to me, that can be done other than an exacerbation of the relationship, and this administration being forced to look at ways in which it can respond by escalating the tensions.

So the next step, I hope, is that the Chinese will understand they're playing with dynamite here. They have made a serious mistake, and I know they are going to have trouble getting out of it because of the loss of face, but they need to return the people and the plane. And by the way, we need to assume that the Chinese now know everything that was in that aircraft and may have taken some of it off it. And there's just no question about that. But we need to get the plane back.

WOODRUFF: All right, former Secretary of State Lawrence Eagleburger, thank you once again for being with us.

EAGLEBURGER: My pleasure, ma'am.

WOODRUFF: CNN will present a special report on the spy plane standoff later on this evening. Join Wolf Blitzer at 8:00 p.m. Eastern for the latest developments and analysis.

Still ahead on "INSIDE POLITICS: public opinion, international law and the U.S. relationship with China. Also ahead: Jonathan Karl with the latest tactic to sway support for the president's budget proposals. And Candy Crowley looks at the attempt to clean up Mr. Bush's environmental image.

Plus... (BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), NEW YORK: This is not a women's issue, as much as it affects women. It is a working families' issue.

(END VIDEO CLIP)

WOODRUFF: The wage gap as a political issue, and an everyday reality for American women.

And later: diversity and politics in the city of Angels, how L.A.'s population is molding the mayoral race.

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GEORGE W. BUSH, PRESIDENTIAL CANDIDATE: Our relationship with China, the current president has called the relationship with China a strategic partnership. I believe our relationship needs to be redefined as one as competitor. Competitors can find areas of agreement.

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WOODRUFF: That was then-presidential candidate George W. Bush on the campaign trail last year, trying to distinguish his views on China from President Clinton's. Let's look now at how Americans view the U.S.-China relationship, and for that, we bring in our senior political analyst, Bill Schneider.

First of all, Bill, what does the American public think about China?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: It has a pretty low opinion. In February, the Gallup Poll asked people: "Which country anywhere in the world do you consider to be America's greatest enemy today?" Iraq came first, at 38 percent, followed by China at 14 percent. No other country was in double digits, including Russia, Iran and Cuba.

Now, let's look at a poll question asked last year, which gave people four choices. Very few Americans described China as an ally of the United States, or even friendly. A third described China as unfriendly, and 21 percent called China an enemy.

Now, how did that compare with Russia? In fact, slightly more Americans describe Russia in positive terms -- an ally or a friendly country -- than in negative terms. Only 14 percent consider Russia an enemy. Times have changed.

WOODRUFF: Now what about over time? Has China's image grown worse?

SCHNEIDER: Yes. It really has. It certainly deteriorated after the incident in Tiananmen Square in 1989, when favorable views of China plummeted in the United States.

Has China recovered in the 12 years since? Here's the answer. And the answer is no. Back in 1983, only 21 percent of Americans described China as unfriendly or an enemy. That number has risen to 36 percent in 1999. Last year, in the wake of the spying controversy at Los Alamos and news of human rights violations, more than half of Americans held a negative view of China.

But you know what? That did not stop Congress from voting last year to grant China permanent normal trade relations with the U.S. Business is business.

WOODRUFF: And what about the political party in power in this country, the Republicans? What sort of problem does China pose for them?

SCHNEIDER: It's interesting, you know, it splits pro-business Republicans, on the one hand, from ideological conservatives. Business-oriented Republicans see China as a vast market for American goods, and a vast supply of cheap labor. Now, are they willing to sacrifice principle for the almighty dollar?

Well, not exactly. They see free trade as the best way to pressure Chinese leaders to accept political reforms. Ideological conservatives, on the other hand, are deeply hostile to China. Almost 60 percent describe China as unfriendly, or an enemy, even more than describe Russia that way.

The Chinese government is communist, it's hostile to religion, it suppresses human rights. For conservatives, values trump economic interests. My guess is that on a national security issue, like the spy plane, the conservative anti-China view will prevail. And that makes business very nervous as we can see from those stock market figures right there on the bottom of the screen.

WOODRUFF: Bill Schneider, and yes, they are. Thank you. Appreciate it.

Well, resolving the stand-off with China will likely require some political and diplomatic finesse, because international law may not cover all the points of contention.

Our Charles Bierbauer explains.

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CHARLES BIERBAUER, CNN CORRESPONDENT (voice-over): With the personal safety of the EP-3 crew now clearer, the security of the plane -- and its secrets -- remains a U.S. concern.

POWELL: We have said that the plane should not be violated. It is protected, in our judgment, from that kind of intrusion.

BIERBAUER: Chinese officials say the plane is not protected as sovereign U.S. territory, as an embassy would be.

ZHU BANGZAO, CHINESE FOREIGN MINISTRY: If this plane is sovereign American territory, how did it land in China?

BIERBAUER: U.S. officials counter that it does not matter where the plane is.

REAR ADMIRAL CRAIG QUIGLEY, PENTAGON SPOKESMAN: It is common diplomatic practice to not have that aircraft subject to inspections or boardings unless you are so specifically invited by the nation that owns the aircraft in the first place.

BIERBAUER: Experts in international law say a solution lies more in the tradition of providing safe harbor for a ship or plane in distress than in any international treaty. The U.S. may be arguing a double standard. During the cold war a Soviet pilot defected, landing his MiG-25 fighter, similar to this, in Japan. The U.S. did not return the plane until it had been dismantled and examined.

PROF. JAMES FEINERMAN, GEORGETOWN UNIVERSITY LAW CENTER: We don't exactly enter with what might be called legally clean hands because we've done something else as a matter of practice when foreign military planes used for intelligence have fallen into our hands in somewhat similar circumstances.

BIERBAUER: The Chinese were faced with a legal deadline for allowing U.S.officials to see the crew.

FEINERMAN: We have a consular convention with China which says that any U.S. citizen can be detained in China no longer than 48 hours without being granted access to diplomatic consular officials.

BIERBAUER: The assertion that the midair collision was in Chinese air space is based on China's claim to disputed islands in the South China Sea and the air space above them.

(on camera): International law won't support that. Other countries in the region adhere to a 12-mile territorial limit. The U.S. Plane would have been over international waters until it sought a place for an emergency landing.

Charles Bierbauer, CNN, Washington.

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WOODRUFF: Coming up on INSIDE POLITICS, we'll tell you how the markets did today and update you on some other top stories at this hour.

And later, vulnerable Democrats become political targets in the push for the Bush budget proposal. Stay with us.

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WOODRUFF: We'll have more of this day's political news coming up, but now a look at some other top stories.

The U.S. financial markets have suffered another dismal day. After losing 100 points to start the week, the Dow Jones Industrial Average sank today nearly 300 more points, shedding 3 percent of its value. Even worse, for tech stocks, the Nasdaq retreated by 6 percent. The S&P 500 lost about 3.5 percent.

CNN financial news correspondent Jan Hopkins joins us now with more -- Jan.

JAN HOPKINS, CNN CORRESPONDENT: Well, Judy, if you look behind the numbers it's even worse. For every stock that went up here at the New York Stock Exchange, 10 stocks went down. And if you look over time, the Nasdaq has lost two-thirds of its value in a year, and it still keeps falling. So, there is a lot of nervousness here on Wall Street.

Part of the concern: Earnings, or the lack thereof. Another part of the concern, as Bill Schneider was just saying, is China. And people are concerned about the situation with China. There is still a standoff. They're concerned about the uncertainty and the -- what it does to business, because, of course, a lot of American companies do business in China -- Judy.

WOODRUFF: All right, Jan Hopkins, thanks very much.

Renewed tensions in the Middle East today. Palestinians fired mortars on Israeli settlements in Gaza. And the Israelis retaliated with attacks on Palestinian positions.

CNN's Mike Hanna has been following the exchange and has this report.

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MIKE HANNA, CNN CORRESPONDENT (voice-over): Israel launches a military attack in the Gaza Strip. The Israeli defense force says the targets all directly linked to what it calls "terrorist activity against Israel." Helicopter gunships used in the attack and Palestinian sources say among the targets: A compound that Rafah, in Southern Gaza, used by the elite Palestinian police unit, force 17.

Earlier in the day, a 10-month-old baby was seriously injured in a Palestinian mortar attack on a Jewish settlement near Rafah. His mother was also wounded. The militant Hezbollah organization claimed responsibility, saying the attack was in retaliation for what it called "the assassination of a Palestinian activist" in an Israeli helicopter strike in Gaza, Monday. But the Israeli government insists members of force-17 were involved.

DORE GOLD, SHARON ADVISER: If we look at the pattern of what's occurred, the use of heavier weapons, like mortars, against Israeli settlements has been done in the past by Yasser Arafat's force-17.

HANNA: Last week Israel struck at what it called selected targets in Palestinian territory associated with force-17, who had accused of involvement in attacks against Israeli civilians. Palestinian security chiefs deny involvement in such attacks, but insist they will resist what they call "aggressive Israeli occupation." MUHAMMAD DAHALAN, PALESTINIAN SECURITY CHIEF (through translator): We have the right to defend ourselves using every means that we choose to defend ourselves. This does not mean that we will carry out attacks in Tel Aviv, or operations in Tel Aviv. But no one can fully control the emotions of an angry people who have lost their future.

HANNA: The latest Israeli strikes, apparent confirmation that a renewed cycle of attack and retaliation is now underway.

(on camera): The Israeli government says the Palestinian authority is doing nothing to prevent what it calls "terror-attacks" and says it has no option but to take whatever measures necessary to protect Israeli civilians. The Palestinian authority continues to contend it is the policies of the Israeli government that are the source of the ongoing conflict.

Mike Hanna, CNN, Jerusalem.

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WOODRUFF: When INSIDE POLITICS returns, the White House grapples with the environment, and the public perception of the president's positions.

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WOODRUFF: This week the Senate is expected to vote on the Bush budget proposal and the president's centerpiece tax cut plan. With victory less than certain, Republicans are reaching out to voters back home in an effort to sway some reluctant Democrats.

Jonathan Karl reports.

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JONATHAN KARL, CNN CORRESPONDENT (voice-over): As the fate of the president's budget hangs in the balance in a 50-50 Senate, the Republican party is targeting potentially vulnerable Democratic senators with a series of radio ads running in their home states.

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UNIDENTIFIED MALE: Working families deserve a tax cut, and our economy needs a boost. But what about our senator, Mary Landrieu? Landrieu won't say if she's supporting the president's bipartisan plan -- the plan to cut taxes and fight back recession.

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KARL: The ads, paid for national and state Republican party committees, target five Democrats up for reelection: Max Cleland of Georgia, Mary Landrieu of Louisiana, Jean Carnahan of Missouri, Max Baucus of Montana, and Tim Johnson of South Dakota.

The idea is to put pressure on Democrats from states that voted for George W. Bush. But most of the targeted senators say the tactic isn't working.

SEN. MARY LANDRIEU (D), LOUISIANA: People in Louisiana do not support tax reductions that would jeopardize Social Security or Medicare, or tax reductions that would jeopardize our national defense.

SEN. TIM JOHNSON (D), MONTANA: There's no stampede in Montana for the president's tax cut. In fact, it's encouraging people to look at it much more closely.

KARL: But Georgia Democrats acknowledge Senator Cleland is feeling pressure back home. And a Cleland spokesperson says there is a 50-50 chance he could cross party lines and vote for the president's budget. Cleland has shown independence before. In 1998, he was one of just three Democrats to vote for the Republican budget.

Meanwhile, as the Senate approaches a vote on the budget later this week, Democratic leaders are turning up the rhetoric against the president's tax cut.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: Are we going to give the tax breaks to the wealthiest individuals? Or are we going to say, as a matter of national priority, our senior citizens are a priority; there's a desperate need for a prescription drug program.

KARL: Democrats are proposing a series of amendments to reduce the tax cut in favor of increased spending on programs ranging from prescription drug coverage for Medicare to increased defense spending.

Republican leaders vow to fight back.

SEN. RICK SANTORUM (R), PENNSYLVANIA: The fundamental question for every one of these amendments is: Do you want $1.6 trillion of tax reduction over the next 10 years or do you want increased government spending?

KARL: But Republicans are also proposing increased spending in areas such as defense and agriculture.

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KARL: Just a few minutes ago, a little bit of history here in the Senate, Vice President Dick Cheney casting his first tie-breaking vote in this 50/50 Senate. It was on an amendment, a Republican amendment to the budget, that would allow the budget -- the Senate to spend up to $311 billion on a prescription drug program.

It was in response to a Democratic amendment that would have said the same figure, but also said that that figure would have to come out of the lower tax cut this. This, the Republican alternative passing by a 51-50 vote. Not a critical amendment, but critical because this was the first time Vice President Cheney was called on to cast the tie-breaking vote in this 50/50 Senate.

Now, Cheney has been up here all day as he was up here much of yesterday, not just here to cast the tie-breaking vote, but also to twist a few arms and try to lobby for the president's tax cut. Today, he also had a face-to-face private meeting, CNN has learned, with Democratic Senator Ben Nelson. Nelson is seen as one of those -- of a few Democrats who could possibly vote for the president's budget, including that tax cut, Judy.

WOODRUFF: And Jonathan, where does the White House stand, as far as you know, on this request that they lower the amount of the tax cut and put that money instead into education?

KARL: Well that is, of course, something that Vermont senator, Republican Jim Jeffords has been pushing for. He want to see $175 billion in increased money on special education spending come directly out of the tax cut.

The White House has gotten no stomach for a number that high. They are trying to negotiate with Jeffords, but it's one of the sticky points right now. One of the reasons that White House is actively trying to court Democrats so they might not have to work with Jeffords on that.

Also, Judy, something else going on here that we have talked about in the last week or so, is Senator Breaux actively trying to come up with some kind of a compromise. Now, Breaux has been shopping around the tax cut of $1.25 trillion. The White House is saying that that figure is too low, but I did learn that the president placed a call to Senator Breaux earlier today to talk with the senator -- and the White House, President Bush, has not ruled out working out some kind of a compromise with Breaux -- Breaux furiously trying to work with that.

One Republican he is trying to get on board is Lincoln Chafee, who has already said he won't go for the president's budget. Lincoln Chafee's office is saying, however, is too soon to say whether or not he will join with Senator Breaux.

WOODRUFF: All right. Jonathan Karl, thanks very much.

As the battle continues over the Bush budget proposal, the White House is examining the consequences of some of the president's recent environmental policy decisions. Our Candy Crowley takes a look at the backlash.

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CANDY CROWLEY, CNN CORRESPONDENT (voice-over): The Bush administration is looking for ways to clean up its image, this following a series of high-profile decisions on the environment, involving carbon dioxide, arsenic levels in water, and an international treaty on global warming, all decisions criticized as hostile to the environment.

Bush aides are unapologetic about the decisions themselves, but, said one source, in fine food and in politics, presentation matters. Another aide acknowledged: "We did not do a good job on the rollout." A former bush campaign official agrees. ED GILLESPIE, FORMER BUSH CAMPAIGN ADVISER: From the other side, from the liberal side and some of their charges, some of which were unfounded and false, got out ahead of us.

CROWLEY: The merits of the policy arguments aside, politicos inside the White House know they have a political problem of unknown duration. Said one aide: "First impressions last, and the first impression was not good."

While criticism from professional environmental groups was expected, poll numbers show angst well beyond the Beltway. The most recent CNN-"TIME" poll, taken even before the Bush administration walked on the global warming treaty, showed that 69 percent of those polled agreed with the statement that the government too often gives into business interests when it comes to protecting the environment.

A "Washington Post"/ABC poll found that 61 percent of Americans think Bush cares more about the interests of large corporations than ordinary Americans. The translation from one Bush official: "We've taken on a little water."

White House aides insist the president hasn't gotten credit where it's due.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The president has also taken actions on diesel fuel trucks, which were hailed by the environmental community. The president's position on national monuments, which were designated by the previous administration, leaving those national monument designations in place has also been hailed by the previous -- by the environmental community. And the president is finding balance in his environmental policies.

CROWLEY: And the president has defended his decisions as grounded in sound policy.

BUSH: Our economy has slowed down in our country. We also have an energy crisis, and the idea of placing caps on CO2 does not make economic sense for America.

CROWLEY: And in Bush-friendly territory, they believe there is time to cultivate grassroots understanding.

ED GILLESPIE, FORMER BUSH CAMPAIGN ADVISER: The more they learn about the president's pro-environmental policies, the more they're going to like it, and we've got to aggressively let people know about those positive policies.

CROWLEY (on camera): Time matters. Some within the administration feel too pressured about two upcoming events which could rev up the president's environmental critics: the April 22nd celebration of Earth Day and the recommendations of the vice president's energy task force.

Candy Crowley, CNN, Washington.

(END VIDEOTAPE) WOODRUFF: And now back to our lead story: the standoff between the United States and China over the spy plane incident.

CNN's military affairs correspondent Jamie McIntyre has some new information on the status of that reconnaissance plane that made the emergency landing -- Jamie.

JAMIE MCINTYRE, CNN CORRESPONDENT: Well, new details coming into the Pentagon, Judy, on the severity of the damage to that Navy surveillance plane. Pentagon sources now tell CNN that the damage was much greater than originally thought. In fact, the plane lost one propeller, had damaged two of its four engines, and also severe damage to the nose of the plane.

All together, that added up to a plane that could barely fly, and in fact, the sources say it fell several thousand feet after the collision before the pilots were able to struggle, regain control, and land the plane safely on that island in China.

One Pentagon official said that just off the cuff that he thought the pilots ought to get a medal for the way they were able to save this plane.

What it does mean is that the crew was probably preoccupied with saving the aircraft, may not have had time to destroy all of the sensitive equipment onboard.

After meeting today with the crew, U.S. officials were reporting that Chinese authorities said that they were holding the crew in protective custody. That was the term they used. And so there was no indication that they were planning to release them anytime soon -- Judy.

WOODRUFF: All right, Jamie McIntyre, and we'll see you again at the top of the hour for more on all this. Thanks.

What happens when men and women compare paychecks in the new millennium? Coming up on INSIDE POLITICS, Garrick Utley on why Julia Roberts and "Erin Brockovich" are more the exception than the rule.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

LINDA CHAVEZ-THOMSON, EXECUTIVE VICE PRESIDENT, AFL-CIO: Working women are in effect working one week every month for free and a 25- year-old woman can expect to lose an average of half a million dollars in her lifetime because of the wage gap.

(END VIDEO CLIP)

WOODRUFF: Well, that so-called wage gap was the subject of a new U.S. Labor Department study. It found that women are still woefully underpaid when compared with their male counterparts.

Garrick Utley has more on the issue of equal pay for equal work. (BEGIN VIDEOTAPE)

GARRICK UTLEY, CNN CORRESPONDENT (voice-over): Up there in orbit, equal work brings equal pay for astronauts of the same rank, male and female. But down below, in our imperfect world, that's not an inalienable right.

Yes, Congress did pass the Equal Pay Act of 1963, but according to the latest government figures, for every $1 earned by men in full- time jobs, women in full-time jobs earned, on average, $0.72.

(on camera): Here is another way of looking at that. A man goes to work Monday through Friday. For a woman to earn the same amount of money on average would require working Monday through Friday, and Saturday and Sunday, and then starting all over again Monday morning.

(BEGIN VIDEO CLIP)

JULIA ROBERTS, ACTRESS: ... shamefully, shamefully.

(END VIDEO CLIP)

UTLEY (voice-over): There are, of course, exceptions. The biggest movie stars can now earn the same millions as men. But not tennis champions. The man who wins the Wimbledon singles gets 10 percent more prize money than the woman who wins the singles title. The same is true for most tennis championships, except the U.S. Open.

ALISON REED, NATIONAL COMMITTEE ON PAY EQUITY: There are both explicit and implicit forms of discrimination. There are employers who will try to see what they can get away with, who will limit opportunities for women. A good example in the Home Depot case. You had women working as cashiers and being discouraged from the lucrative sales floor positions.

UTLEY: In 1997, Home Depot settled out of court for more than $100 million without admitting guilt.

In 1999, Texaco was fined $3 million for paying 186 women less than their male counterparts.

Women are particularly disadvantaged in fields where most workers are women. Supporters of pay equity point out that a nurse, for example, may earn 30 percent less than a corrections officer with a similar educational background, because most of them are men.

REED: I think that women frequently believe that this is what I deserve, and when they sit down to negotiate a salary, they are not always thinking about what a man might earn or what the market will bear.

UTLEY: Which brings us back to Julia Roberts in "Erin Brockovich." When her boss, played by Albert Finney, tells her he has altered the amount of a bonus she thinks she deserves, she assumes he's being cheap.

(BEGIN VIDEO CLIP, "ERIN BROCKOVICH")

ROBERTS: I want you to know something, Ed. It is not about the number. It's about the way my work is valued in this firm.

(END VIDEO CLIP)

UTLEY: Of course, a $20 million-a-film actress portraying a working girl getting a $2 million bonus is not exactly daily life. Reality is still that national average, which changes little, those 72 cents a woman earns for every dollar earned by a man.

Garrick Utley, CNN, New York.

(END VIDEOTAPE)

WOODRUFF: Some things take a long time to change. Just ahead: Could changing demographics be the key to winning the Los Angeles mayoral race? The latest on the contest with seven days to go.

(COMMERCIAL BREAK)

WOODRUFF: Some new information now in our lead story. The standoff between the United States and China over the spy plane incident. For the very latest, let's go to the White House and our John King -- John?

KING: Judy, senior administration officials tell CNN a bit about that debriefing of the 24 members of the crew by U.S. diplomats. We are told by this senior official that the military personnel are being held two-by-two in a Chinese military guest house, except for the pilot of the EP-3. He is being held alone, we are told.

We are also told there are no plans in place for additional meetings with the crew right now, although the U.S. will insist that for that such a meeting if this drags on. No plans to allow those crew members to call their families at this moment.

U.S. officials describing quite a dramatic landing. They say the plane lost propeller one, damage to propeller three, and also saying that the acting Secretary of State Colin Powell is traveling today, so his deputy, Richard Armitage, just again, called in the Chinese ambassador to the United States to once again make an urgent appeal for the Chinese government to immediately release the crew and immediately release the plane.

But this senior U.S. official telling CNN that the Chinese government won't give a direct answer when asked why they will not release the crew, except to say they want to continue to investigate this matter. And this official also being adamant about the Chinese request for the apology here, saying that the United States did nothing wrong, that this is an accident over international waters, and that there will be no apology.

Now, as for what happens next, the U.S. officials saying that there is still some hope that this can be worked out through diplomat channels but the official also said, "we will see if it's necessary to move it up the ladder." That would mean more involvement perhaps by the president himself by calling the Chinese leader Jiang Zemin or Secretary of State Colin Powell getting more directly involved.

The administration saying it has been hopeful all along that this can be resolved without any lasting damage to the U.S.-Chinese relationship but you sense a growing sense of frustration here as the United States says it cannot even get a direct answer from the Chinese as to why it will not release those crew members or the aircraft -- Judy.

WOODRUFF: All right, John King at the White House and we will hear more from you and from our military affairs correspondent at the top of the hour in just a few moments. We want to show our audience now pictures from the Xinhua Chinese News Agency.

These are pictures of the American surveillance plane, that was forced to make an emergency landing on Chinese soil on the island of Hainan in China. This is a picture of the plane as it sits there on the runway of you can see some of the damage to the nose, and as Jamie McIntyre reported earlier, two of the engines were damaged if not put out of commission altogether. The nose of the plane also damaged.

One week from today, Los Angeles voters will cast ballots for their next mayor, but with six candidates running, the race may be decided in a June runoff. Three candidates are out in front, according to a poll by the "Los Angeles Times." City attorney James Hahn led with 24 percent; followed by former state assembly speaker Antonio Villaraigosa with 20 percent; and real estate broker Steve Soboroff with 18 percent; city councilman Joel Wachs got 12 percent. Two other candidates were in single digits.

Of the three leading candidates, each is favored by a specific voter group. Hahn has a large lead among African-Americans; Villaraigosa has a narrow lead among Hispanics; and Soboroff tops the list among white voters. We get more now from Charles Feldman on how the city's changing demographics are shaping the mayoral contest.

(BEGIN VIDEOTAPE)

CHARLES FELDMAN, CNN CORRESPONDENT (voice-over): As five men and one woman, the six major candidates, scramble to win enough votes to become L.A.'s new mayor, they all find themselves testing their ability to harness the two emerging power centers of 21st century Los Angeles: Latinos and and organized labor.

ARTURO VARGAS, LATINO ELECTED OFFICIALS ASSN.: The Latino may be pivotal in deciding who makes it to the runoff and who is the next mayor of Los Angeles. We anticipate that Latinos may be anywhere from 20 percent to 24 percent of the city wide electorate.

FELDMAN: The "L.A. Weekly," an alternative paper with a heavy emphasis on political coverage, has paid homage to the new found clout of Latinos by endorsing the leading Latino candidate for mayor. And, says the paper's executive editor, unions must also be reckoned with in modern-day L.A. HAROLD MEYERSON, "L.A. WEEKLY": Since 1996, organized labor has sort of risen from the dead more in L.A. than any other city I know of to become an absolute powerhouse of local politics.

FELDMAN: The Latino/organized labor coalition reflects the changing face of Los Angeles since Richard Riordan moved into City Hall two terms ago.

Since Richard Riordan was elected mayor two terms ago, how has Los Angeles changed?

SHERRY BEBITCH JEFFE, POLITICAL ANALYST: L.A. has changed dramatically in terms of population and in terms of political allegiance. First of all, the city is almost half Latino. The Anglo population has declined over the last almost 20 years and, perhaps as significantly in terms of politics, although the Democratic registration has declined a bit, about 4 percent, Republican registration has declined 8 percent in the city.

FELDMAN: In many ways, L.A. is a more tranquil city today than it was when Riordan ran for his first term.

MAYOR RICHARD RIORDAN (R), LOS ANGELES: In 1993, the city was in depression. It had gone though the first major recession in history. They'd gone through Rodney King, the riots, floods, fires. Today, the city is full of confidence.

FELDMAN: But the city's proud presentation of the Democratic National Convention last summer may have been the zenith of its confidence. Storm clouds are fast approaching. Threatened strikes by Hollywood writers and actors could put the brakes on the city's otherwise fast moving economy.

And while L.A. has been thus far immune to the state's power crisis because it produces its own electricity, the economic impact on surrounding communities is bound to have an effect.

MEYERSON: When businesses locate, they have to be now sensitive to, are the lights are going to go out? Are the computers going to go down at a certain point? And whether they draw the distinction between L.A., where that might not happen, and Santa Monica, where it would happen, remains to be seen.

FELDMAN: Perhaps the biggest change in L.A. in the past eight years is the growing possibility that politics will do to L.A. what no earthquake has ever done: split it into two. Just last week, a Los Angeles county report concluded that the vast San Fernando Valley, which is threatening secession from the city of L.A., would have enough tax revenue to survive as its own incorporated city.

What about the problem of the San Fernando Valley?

JEFFE: Well, we talked a little about secession. It's ongoing. It's likely to go on the ballot in the year 2002, and it will be the province of the next mayor, to get up there, use that bully pulpit, and argue that the the valley ought not to secede. Los Angeles is very much a work in progress, a work that a new mayor will help to shape.

Charles Feldman, CNN, Los Angeles.

(END VIDEOTAPE)

WOODRUFF: Still ahead in our next half hour: We will check with our correspondents at the White House and the Pentagon as our coverage of the spy plane standoff continues.

And also ahead, if President Bush is looking for an old China hand to advise him, Bruce Morton has a suggestion.

(COMMERCIAL BREAK)

WOODRUFF: It has been almost three days since a U.S. surveillance plane made an emergency landing in China, and President Bush says time is running out for the Chinese government to return the crew members and the plane.

The president appeared before reporters at the White House this afternoon to make his strongest statement yet on the spy plane standoff.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Our approach has been to keep this accident from becoming an international incident. We have allowed the Chinese government time to do the right thing. But now it is time for our servicemen and women to return home. And it is time for the Chinese government to return our plane.

WOODRUFF: Earlier today, a team of U.S. diplomats made face-to- face contact with the crew of the surveillance plane. The 24 crew members are said to be in good health. But they remain in Chinese custody, and there is no word on when they might be released. One observer says the Chinese want an apology that the United States is unlikely to offer.

DOUGLAS PAAL, ASIA PACIFIC POLICY CENTER: I think the Chinese are trying to set conditions. That's why they've spent the last couple of days laying out terms. Yes, the Chinese say they're going to return these people, but with an apology, with an assumption of responsibility, and liability for the loss of the Chinese pilot and jet airplane.

That's a big stretch, given the facts as we know them, for the United States to accept it. I think it will be unacceptable for the president to try to meet those terms.

(END VIDEO CLIP)

WOODRUFF: And now let's bring in CNN senior White House correspondent, John King, and our military affairs correspondent, Jamie Mcintyre.

Jamie, to you first for the latest what you've been finding out there.

MCINTYRE: Well, some harrowing new details about what happened to the plane after it collided with that Chinese fighter jet. Damage to the plane much more significant than we were first led to believe.

It turns out two of the plane's engines were damaged. And as you see in this Chinese news agency photograph, a large part of the nose section of the plane, the nose cone of the plane, was damaged. According to Pentagon sources, the pilots had to struggle mightily to bring the plane under control. In fact, it fell a few thousand feet before the pilot was eventually able to bring it in safely for a landing, all 24 crewmembers safe and sound.

But one thing that means is the crew was obviously preoccupied with saving the plane and saving their lives, that means that during the landing, they had very little time or no time to worry about carrying out their instructions to destroy or disable some of the sensitive classified equipment on the aircraft. And Pentagon sources say that some of that equipment was taken off the plane by Chinese authorities.

According to U.S. intelligence, there is substantial evidence to indicate that the Chinese have tried to take some of the equipment off the plane. Now, there was a final radio transmission from the crew after it landed, saying that it was beginning the procedure of destroying and erasing some of the computer tapes on the plane. But it's unclear how far they got.

The U.S. diplomats who met with the crew today didn't ask them how far they got with that procedure because there were Chinese authorities in the room the whole time with them. So, they them asked mostly about their welfare and what happened during the accident -- Judy.

WOODRUFF: And to John King. John, you have had some more information about those crew members and how they are being held?

KING: Well, U.S. officials telling us, Judy, that they're being held two-by-two in a military guest house, with the exception of the pilot, who we're told is being held alone. As Jamie, said U.S. officials describing quite a harrowing incident. One senior official telling us a short time ago that only in general did the subject of the procedures to destroy or disable the sensitive equipment came up again, as Jamie mentioned, because the Chinese officials were in the room at the time.

U.S. officials saying the first thing the diplomats did when they arrived on the scene today was ask for the immediate release of the crew and the immediate return of the aircraft, and we're told by our sources that they did not get a direct answer from the Chinese, that the Chinese said simply that they needed more time to investigate.

Also on the question of whether an apology should be made, a senior U.S. official who spoke to us just moments ago quite adamant, saying the United States did nothing wrong, that this took place over international waters, and that there would be no apology forthcoming. This official, though, however, did say as the diplomatic back-and- forth continues, that the United States -- it was possible that the United States would regret the loss of life, if indeed that Chinese fighter pilot was lost.

But the official quite adamant, Judy, that there will be no apology from the Bush administration, and we're told the Chinese ambassador was brought into the State Department again this afternoon, told there would be no apology, and told the president wants the crew and the plane released immediately.

WOODRUFF: And Jamie, with regard to the sophisticated surveillance equipment on that plane, it's been -- you've been and others have been reporting through the day that the Pentagon, at the Pentagon they're saying they assume this has all been seen, looked at, and is being carefully inspected by the Chinese.

MCINTYRE: Well, they know -- they believe the Chinese boarded the plane. There's substantial evidence to indicate they've taken some of the equipment off the plane. Most of the equipment, by the way, one these planes, while very sophisticated, a lot of it's been declassified.

What's really sensitive is not so much the equipment, but the data that's stored in the computer hard drives, and especially the programs, the software, the encryption software, the software that allows sophisticated monitoring of many different sources at once. That kind of stuff is very sensitive, and they definitely want to prevent that from getting into their hands.

The Pentagon, however, also insists that this plane did nothing wrong. They dispute the description of it as a spy plane. They say that it was on a well-known, routine surveillance route that's flown over and over again in international airspace, and that what was being done was routine surveillance. It's done in the open, not any covert espionage.

WOODRUFF: Well, John King, if that's the case, then why are they so concerned about the Chinese finding out what it was that was in these computers?

KING: Well, U.S. officials certainly don't want any sensitive U.S. technology to fall into Chinese hands, as Jamie has been reporting. The White House won't even say, it won't even address that issue, saying the first priority is to get the crew home, and the debate here, as this standoff continues, is whether, in the words of this one U.S. official, quote: "We need to move this up the ladder." That means whether the president should personally pick up the phone and call the Chinese leader, Jiang Zemin, something he has not done so far.

WOODRUFF: All right, but it sounds like at least they are considering that now. John King at the White House, Jamie McIntyre at the pentagon, thank you both.

As this standoff drags on, there's growing concern on Capitol Hill. And let's check in now with our congressional correspondent Kate Snow. Kate, what are you hearing now?

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Well, Judy, I've been talking with members throughout the day about China. It is certainly a subject on many members' minds here. The one common thread that we're hearing from Republicans and Democrats is that they think President Bush is doing a very good job, they think he's taking the appropriate steps, and that they feel that it is the president's job to do this and to deal with the foreign policy. It is not the job of Congress to interfere.

Now that said, they do obviously have opinions about what's happening in China, and that hasn't stopped them from talking about it. Many Republicans saying that China is acting more like an adversary right now than a friend.

(BEGIN VIDEO CLIP)

SEN. KAY BAILEY HUTCHINSON (R), TEXAS: But the world is watching China, and we expect our crew to be safe, our equipment to be safe, and we consider that plane our sovereign territory.

(END VIDEO CLIP)

SNOW: On the house side, some members taking even more action, talking about the possibility that this incident in China will spur more action, more immediate action on sending and approving military weapons to be sold to Taiwan, a neighbor of China, of course. In fact, a group of 82 members in the House, Republicans and 29 Democrats sent a letter today to the White House urging just that.

It reads in part: "We strongly support and recommend that your administration recognize the legitimate need for Taiwan to acquire what's known as the Arleigh Burke Aegis destroyers and that you give full consideration to the release of this system to Taiwan this year."

Some Democrats responding to that call saying, that's a little too much too soon, and they are advising more restraint.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D), MASSACHUSETTS: This is not a moment for any of us to be brandishing, you know, the sword in an undue fashion at a moment we're looking for diplomatic resolution. If we do that, we only increase the tensions within China and raise the military hackles in a way that could work adversely.

Let's try to be calm and thoughtful. But we have to be clear, as I think the president has been: this has the potential of greatly harming the relationship of the United States and China.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN (D), CONNECTICUT: In regard to President Bush, I think everything he's done thus far has been right on target, just right. And the point is to concentrate on what we all want to have happen, which is that the plane and the crew, the American crew and the American plane, be returned home. That's not asking for very much, and in that sense, the next move truly is in the court of the Chinese.

(END VIDEO CLIP)

SNOW: Now, one Democratic aide says Congress needs to careful not to politicize this issue, but clearly, Judy, it does have some political implications here on Capitol Hill. Back to you.

WOODRUFF: All right, Kate Snow at the Capitol. Thanks.

Just ahead: more on the spy plane standoff with our roundtable guests from "The Los Angeles Times," "The Wall Street Journal," and "TIME" magazine. This is INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: Joining us now: Ron Brownstein of the "Los Angeles Times," John Dickerson of "TIME" magazine and Jeanne Cummings of the "Wall Street Journal."

Ron, to you first. So far, no criticism of the president. He's clearly ratcheting up the rhetoric when it comes to China. Is he handling this correctly so far?

RON BROWNSTEIN, "LOS ANGELES TIMES": Well, so far the consensus on Capitol Hill, he's been positive, he's been measured but firm as he goes forward. You do get the sense, though, of sort of a long-term situation here, how these events can sort of spiral out of control. Not necessarily in the sense of an immediate crisis, but most analysts I think believe that China here is taking such a hard line in part as a shot across the bough to Bush as he considers his decision what to do Taiwan.

Since he has been sort of hard-line toward them, the paradox is that they take a hard line on this, and it instantly empowers the hard-liners in the U.S. who want a harder policy toward China, and vice versa, and on it goes. It may be very hard to get out of this sort of cycle of souring relations for a while.

WOODRUFF: Jeanne Cummings, how much pressure is the president feeling to maintain a hard line here?

JEANNE CUMMINGS, "WALL STREET JOURNAL": Well, there is a lot of pressure on him to do that. During the campaign, he was very strong in his criticism of the Clinton administration. He sort of mocked their labeling of China as a strategic partner. He called them a strategic competitor, and talked tough about how he was going to deal with China.

And the most important way for him to keep the hard-liners and the isolationist wing of the Republican Party at bay, is for him to maintain a tough approach here. I think also that the White House and top Republicans feel like this is their first crisis. And to go soft now might be an invitation to South Korea, or -- I mean, North Korea, or perhaps some other hostile territory to decide, why don't we test the administration and see what happens as well.

WOODRUFF: John Dickerson, how is the president going to be measured on this? I mean, do we just have to wait and see how it turns out?

JOHN DICKERSON, "TIME" MAGAZINE: Well, he's going to be measured the way he likes to be measured: results and the outcome. And the only really important result right now is getting the 24 crew members home. But I think along the way, he will...

WOODRUFF: Not the plane?

DICKERSON: Well, the plane I think is secondary, and I think that maybe that even might be the White House position, which is basically you want the 24 crew members home, and then we'll talk about the plane.

And I think the plane may be lost. The White House now admits that it's been visited by the Chinese, and that pretty much everything is already looked through, and will be understood and known by the end of it.

WOODRUFF: Although, as our John King was reporting earlier, at some point today there was some disagreement, apparently, between the Pentagon -- the Pentagon saying they got access to the plane, the White House saying, well, we're not really sure about that yet.

BROWNSTEIN: Visited is a word that would qualify you for career diplomacy, I think.

Well, certainly I basically agree with John. I think that the test, as this goes forward, I think each day, first of all, public attention is going to move up significantly, as we see the media focusing on it more, and as the standoff drags on. The test will be bringing home the crew more immediately than the plane.

But there's no doubt that the stakes, politically and in terms of how it is viewed by the world, rise I think steadily for Bush by the hour and certainly by the day.

WOODRUFF: Jeanne, you were talking about how they feel they need to take, if anything, a harder line at this point. But are there risks in coming across too tough? I mean, if the Chinese don't back down?

CUMMINGS: There are a lot of political risks here. None of us want to think of the worst-case scenario, and that is the extended stay by our servicemen in China, the Chinese government refusing to release them, and then we get caught in a protracted diplomatic fight. It would overwhelm the president's domestic agenda. It would send all the wrong signals to other countries, and it would be the failing of the first test of the Bush administration with this star-studded foreign policy team. So the political risks here are great on all sides. You have the business community that has been promoting open trade with China, they want to take a lower approach to this, and say it's all right, we'll work through, stay calm. Because they don't want to threaten all of the doors that have just opened up to new trade with China. So within the Republican Party alone, there is a division on how to approach China.

WOODRUFF: John Dickerson, Jeanne is mentioning the so-called star-studded foreign policy team in this administration. Who is really calling the shots here? I mean, the president is clearly a newcomer to this.

DICKERSON: Well, he is. But what's striking is just look at the visuals. During the campaign, the president used to talk about his foreign policy team. He put Colin Powell in the audience during one of his debates that was heavy on foreign policy.

The idea was here is the group that's going to stand behind me. Remember all those shots on the stages with all the luminaries behind him. The shots here have all been just of the president. And this is clearly managed in this way.

There are no shots of advisers walking into the White House. It's just of the president standing alone. But clearly, he's got Dick Cheney, he's got Colin Powell, he's got Donald Rumsfeld. He's got sort of the all-star list behind him. But I think ultimately the president is the one making the final decision.

BROWNSTEIN: Just a quick point, Judy. What he doesn't have, though, is the staff level yet. This is the beginning of an administration. And between Colin Powell and the foreign service staff, there is very little in place at the NSC or the State Department yet in terms of their Asia policy-making. So they are, you know, to some extent doing this on the fly, and it is coming at a time when they were hoping to begin assessing their broader policy toward China.

They face these very important decisions on what kind of military hardware to sell to Taiwan. This is the backdrop -- this will now be the backdrop for that debate, and there will presumably be a lot of pressure in the Republican Party for a very assertive response to this in the form of aid to Taiwan.

WOODRUFF: Well...

CUMMINGS: There is also -- just one last thought. In terms of the campaign, the lingering question about Bush throughout was, could he do foreign policy? And I think that's also an important reason that we see the president out front.

If it was Cheney who was speaking for the administration, if it was Powell speaking for the administration, it could send a signal that, you know, Bush is taking a backseat, you know, could kind of start that sort of talk. And so it's important, I think, for the White House that it is the president who is leading in this first crisis.

WOODRUFF: So you're saying it's very deliberate that they're putting him out there and no one else.

DICKERSON: Oh, absolutely. Absolutely, yes.

WOODRUFF: I want to get to the budget. Let me just ask you all to give me about a three-word answer here, because it is very much on the White House agenda this week on Capitol Hill. Are they playing it right, Ron? I mean, they're hard-line but quietly negotiating.

BROWNSTEIN: I think they've wandered into deja vu all over again. After a campaign in which they said they were going to end the polarization in Washington, we have this eerie replay of the Clinton '93 budget, in which absent some late compromise by the White House you could have a virtually party-line vote in the Senate after a virtually party-line vote in the House.

Today on the very first test, we saw 50/50 with Dick Cheney having to cast the tie-breaking vote. It could be a very polarizing battle over the next week that polarizes public opinion, which is already sharply polarized over Bush, much more than I think they expected or hoped in the first months of the administration.

WOODRUFF: Well, we're going to have to have John and Jeanne to talk about the budget. We have run out of time. And I'm sorry, we will have you back again: Jeanne Cummings, John Dickerson, Ron Brownstein. Great to see all of you, thanks.

When it comes to diplomacy with China, President Bush has one unique resource. Ahead on INSIDE POLITICS, Bruce Morton on why the spy plane incident should, perhaps, become a Bush family affair.

(COMMERCIAL BREAK)

WOODRUFF: There's more INSIDE POLITICS coming up, but now let's go to Willow Bay for a preview of what's ahead at the bottom of the hour on "MONEYLINE." Hi, Willow.

WILLOW BAY, CNN ANCHOR: Hello, Judy. Coming up on "MONEYLINE," it was another bruising session on Wall Street. Every single Dow component closing lower except for Home Depot. We'll have more on the tensions with China. Are they worrying -- are they weighing on financial markets globally? We'll take a look. And what about their effect on trade policy? We'll talk to a former ambassador to Beijing.

All that coming up on "MONEYLINE" at 6:30. INSIDE POLITICS continues in just a moment.

(COMMERCIAL BREAK)

(JOINED IN PROGRESS)

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): ... sent its soldiers into Tiananmen Square to kill its students.

(GUNFIRE)

It was a reminder, if the world needed one, that China's leaders don't always obey their own laws, never mind international law.

Some of the old men who ruled then, like Deng Xiaoping, are gone. Others, like Li Peng, are not.

The world was shocked and then-President Bush denounced the killings, though he sent Brent Scowcroft quietly to Beijing to tell China that the two countries would keep talking.

(BEGIN VIDEO CLIP, JUNE 7, 1989)

GEORGE H.W. BUSH, PRESIDENT OF THE UNITED STATES: I want to see us stay involved and continue to work for restraint and for human rights and for democracy.

(END VIDEO CLIP)

MORTON: The first President Bush had a lot of international experience, those appointive jobs. As president, the architect of the coalition which fought and won the Gulf War, another area about which this president might like to chat.

The elder Bush got in trouble on domestic grounds -- "It's the economy, stupid" --turf where this president, an ex-governor, is more at home.

This Bush is new to international quarrels and plots, though he has a lot of advisers from past administrations around him.

Still, it would be no surprise, surely, if he picked up the phone one afternoon and said, "Dad, can you help me on this?" Fathers are supposed to be able to teach sons some things: how to ride a bike, girls are different, and so on. Dealing with China is clearly trickier, but in this case, who knows? It might help.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: And that's all for this edition of INSIDE POLITICS. I'm Judy Woodruff. "MONEYLINE" is next.

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