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CNN LIVE EVENT/SPECIAL

CNN Coverage of the State of the Union Address

Aired January 28, 2003 - 20:45   ET

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

AARON BROWN, CNN ANCHOR: Well, good evening.
JUDY WOODRUFF, CNN ANCHOR: Good evening. And thanks to Connie.

And welcome to CNN's special coverage of the 214th State of the Union.

From Washington, I'm Judy Woodruff.

BROWN: And I'm Aaron Brown.

WOODRUFF: Thank you for joining us. We are here on a very chilly night overlooking our nation's capitol, but you know, under that magnificent dome and especially inside the House of Representatives there's no chill in the air. Presidents are always warmly welcomed here and we expect that President Bush will be tonight. At the same time, circumstances in our country are very different from what they were the last time Mr. Bush addressed a joint session of Congress, and the aftermath of a war in Afghanistan.

BROWN: In normal times, the State of the Union's speech is often little more than a laundry list of a president's proposals, but these are not normal times. They find the country still struggling with the effects of September 11. They find an economy that is sluggish, at best and then there is that very real possibility that in just a few weeks the United States will again be at war. All of these issues face the president, the Congress and the country and poll after poll shows the economy is issue one.

WOODRUFF: And CNN's -- speaking of the economy, CNN'S "MONEYLINE" editor, Lou Dobbs is here with us tonight -- Lou.

LOU DOBBS, HOST, "LOU DOBBS MONEYLINE": Well, Judy, as you and Aaron pointed out, the economy will certainly be a principal focus of the president's speech. In the past year, we have seen this economy, however, do many things that are president. We've seen retail sales rise from year-ago levels. We've just set a record year in point of fact in terms of new home sales. We have also seen the stock market decline. We are now down just about 18 percent from a year ago.

There are many challenges including 2 1/2 million people who are out of work. The unemployment rate, however, has held steady. We are still, however, faced with a growing trade deficit as well as a rising budget deficit. The president tonight, no matter what program he discusses, whether domestic or international. Military or a civilian program of any sort will be faced with spending more money and raising the budget while proposing tax reduction. So that is an extraordinarily difficult set of competing and contesting claims for tax dollars that are, frankly, fewer in number.

WOODRUFF: No question about it.

BROWN: Well, we expect the president will begin by talking about the economy, but there is, in a matter of speak, an elephant in the room and that elephant, of course, is Iraq.

Wolf Blitzer will be dealing with the president and Iraq and what he has to say and what he must say.

Wolf, what do you know?

WOLF BLITZER, CNN ANCHOR: Aaron and Judy, the president will not only I insist that Iraq continues to violate United Nations resolutions by refusing to give up its weapons of mass destruction, but indeed will go further. Aides say he will make the case directly linking the Iraqi regime of Saddam Hussein to the al Qaeda terror network. Mr. Bush will not say Iraq had a role in organizing 9/11, but he will say the gravest danger in the war on terror is what he calls outlaw regimes that seek and possess nuclear, chemical and biological weapons. That's a clear reference to Iraq.

As far as the U.N. inspections are concerned, the president will say and on this, I'm quoting, "The dictator of Iraq is not disarming to the contrary. He's deceiving." As part of the president's continuing effort by the way to ratchet up the pressure Iraq. He'll begin consulting this week with allies, Thursday with Italy's Silvio Berlusconi, Friday with Britain's Tony Blair.

At the same time the CIA is declassifying information about Iraq's weapons programs that Secretary of State Colin Powell is expected to make public at the U.N. Security Council next week. That could include a variation, of course, of what the then U.S. ambassador Adley Stevenson did at the Security Council during the 1962 Cuban missile crisis when he dramatically released photographic evidence of Russian missiles in Cuba, something the Russians were at that very moment denying. All in all, the Powell presentation could be followed by yet another speech by the president later in February -- Aaron -- Judy.

BROWN: Wolf, thank you.

We are watching as we're listening to the formal filing in of members in the Senate -- of the Senate into the House chamber tonight. Virtually the -- Senator Clinton, Tom Daschle, the Senate minority leader, virtually the entire United States government will be in that building when the president walks in in about 10 minutes, 11 minutes from now.

WOODRUFF: And a number of the faces we've seen are people who want George W. Bush's job. We've seen Senator John Kerry from Massachusetts, John Edwards of North Carolina and Senator Joe Lieberman, among others. Joe Biden and Chris Dodd, two other senators saying they're thinking about running for president.

Well we know, Aaron, the United States constitution obliges the president to report to Congress about the State of the Union and it says -- quote -- from time to time we know that President George Washington did it in person, but president Thomas Jefferson thought that smacked too much of monarchy. So he started sending up his messages in writing.

BROWN: George Washington's speech was 833 words, about a 10- minute speech.

Anyway, things stayed pretty much that way until Woodrow Wilson went to the Capitol Hill in person and that was 1913, caused a bit of a stir back then. Franklin Roosevelt was the first president to call his message the State of the Union address. The name stuck.

WOODRUFF: And as we continue to watch the pictures from the chamber of the House waiting for the president, we'll you that President Harry Truman's 1947 speech was the first one broadcast on television. And we know in the years since, the State of the Union address has become a signal event, a president's chance to reach out to Congress, to the nation and the world.

BROWN: Well, much of the world is going to be watching all of this along with you tonight to hear what's president has to say in his State of the Union address.

A year ago, almost 52 million Americans tuned in. We'll find out later how many are watching tonight.

WOODRUFF: We will. CNN reporters are scattered throughout Washington and they are scattered around the globe to set the scene.

Our senior White House correspondent John King is standing by at his post. Senior political correspondent Candy Crowley is on Capitol Hill and senior international correspondent Nic Robertson joins us from Baghdad.

John, we'll start with you.

JOHN KING, SENIOR WHITE HOUSE CORRESPONDENT: Well, Judy, the president's top challenge here in the homefront is to convince the American people the economy is slowly recovering, but needs another jolt. The president said the prescription is a $674 billion 10-year tax cut.

The president then, in the second half of the speech, will turn to international affairs. Iraq there is the dominant theme. Mr. Bush will make the case that U.S. intelligence shows that Saddam Hussein is helping to protect al Qaeda terrorists, that he is actively working to conspire and hide things from the U.N. weapons inspectors in on the ground. Not a declaration of war from the president tonight, but certainly an effort to prepare the American people for war. He will say Saddam Hussein has shown utter contempt for the new United Nations inspection process under way. Mr. Bush will also announce the creation of a new intelligence counterterrorism task force here in the United States, bringing together the resources of the CIA, the FBI, the Defense Department and other intelligence agencies to better coordinate the sharing of U.S. intelligence information about the terrorist threat at home and abroad.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: I'm Candy Crowley on Capitol Hill. Timing is all and the calendar says a lot about this evening, or at least about the prism through which it will be judged.

The State of the Union marks both the last half of the president's term and the first half of the election cycle, meaning this speech is as important for the politics as the policy.

Despite getting heads handed to them in the mid-term elections, Democrats are jumping into the presidential fray at a fairly brisk race -- brisk pace and they claim to be optimistic about the presidential chances than at any time since 9/11.

There are six Democrats already in the race for the president's job. Three senators: Kerry, Edwards and Lieberman. One congressman, Richard Gephardt. It's too early for them to be attacking each other, so they've been in the early primary state taking on the president.

All four are expected in the audience this evening to sit silent while the president, as presidents can, command center stage.

We are off now to Baghdad and CNN's Nic Robertson.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, very unlikely for average Iraqis here to be watching the president's address, but I think it is very safe to assure that in the high offices of the foreign ministry --of the information ministry, where I am, the particular scrutiny will be given to this address.

They'll be listening particularly to link -- the possibility of links with al Qaeda, something Iraqi officials have denied up until now. They'll be listening to specifics on weapons of mass destruction about Iraq. But very much, they'll be listening and trying to read between the lines to gauge the strength of the president's resolve about dealing with Iraq.

They will also be very interested to gauge the fallout from this, if you will, how much support this public support, this conjures within the United States and also how much support it engenders within the United States, allies in particular in Europe at this time. Iraq very keen to build on differences between the United States and Europe, differences between the United States and Russia, differences between the United States and China.

They will be listening very carefully for the president's resolve at this time.

WOODRUFF: All right. Thank you, Nic Robertson, Candy Crowley and John King. We're going to be coming back to all three of you after the president finishes his State of Union.

As we talk to you, we're continuing to watch the pictures from the house chamber, anticipation builds. We're about to hear the members of the United States Supreme Court introduced.

And a little looking back as we watch. During last year's State of the Union address, President Bush spoke what may become some of the most memorable words of his presidency. He talked about Iraq, Iran and North Korea being part of a so-called axis of evil.

CNN's senior analyst Jeff Greenfield, who we know has written speeches for Mayor Richard Daley and Senator Robert Kennedy, joins us from New York with a little more on what we should be listening for tonight.

And Jeff, I think we have on pretty good authority that we we're not going to hear the phrase axis of evil again tonight.

JEFF GREENFIELD, CNN SENIOR POLITICAL ANALYST: We may not hear axis of evil tonight, Judy, but I have a feeling we're going to hear that theme repeated because if he doesn't refer back to Iran and North Korea as well as Iraq, people are going to say, Whatever happened to that?

But I think more -- the more significant thing is that words are not the key tonight. Even though we talk about this as a defining moment in the speech of his life, one of the characteristics of the State of the Union speech is that it is, as Aaron mentioned in the beginning, usually a litany of policy proposals.

Indeed, one of the president's problems tonight is while he wants to sound clear and convincing on the economy, which has given a lot of Americans pause, the overhang of Iraq, the real possibility of war in a matter of weeks, may make whatever he says about the economy that much less powerful because we're all waiting to hear what he's going to say about Iraq.

WOODRUFF: That's right.

And we are waiting to hear what he says about Iraq, but as you've pointed out and as Lou has as well, it's the economy that is foremost on people's minds.

GREENFIELD: You know, I was thinking back Judy, to the first George Bush in 1992, you'll remember this. He had come out of Iraq as the hero. Then the economy went sour and that State of the Union speech was where we all invented the wretched phrase, defining moment. It was going to the speech of his life, the reinvention of George Bush.

But the fact of the matter is, unaccompanied by results, the speech ultimately did not have any real political impact, and one of the questions tonight is if the White House means to put President Bush front and center on the economy, How do you do that? what magic phrase does Michael Gershen (ph), the president's speechwriter, or Karen Hughes comes up with to make us forget about the possibility that we may be at war. It's a very, very difficult if not impossible task for any piece of rhetoric to accomplish, I think, Judy.

WOODRUFF: Well, Aaron, they've had a lot of -- thank you, Jeff, and we're going to come back to you in a minute.

Aaron, they've had a lot of time to work on that and you can bet they've given it all their attention over the last few days.

BROWN: As we're probably about five or six minutes away now from the president coming in.

There's a wonderful ceremony about all of this, I think, if you just step back and watch the government, the diplomatic core, the Supreme Court come into this building for what is so clearly an important night.

Let me turn back to Lou for a second. What I hear from business people these days is the economy is not going to shift. The market's not going to shift until up or down, there's a decision on Iraq.

In the absence of one or the other, in or out, the uncertainty will kill the market.

DOBBS: Well, the market won't be killed, I don't think, Aaron, but certainly the fact that we have had Iraq hanging over us now. It has been almost four months since the president went before the United Nations. This does overhang the markets. It's overhanging consumer confidence, which is now at a nine-year low, as you know, and builds into all that the president must discuss tonight and advocate is the fact that these issues are all related.

Iraq, the war on radical Islamist terrorism and the fundamental growth of this economy.

WOODRUFF: And what we really don't know, I mean, as you're suggesting, the war isn't going to make all the difference, because even after whatever war happens take place, assuming it does happen -- I mean, most people assume they'll be a conflict of some duration. There are still going to be some underlying issues with regard to the economy.

DOBBS: Absolutely, Judy, many underlying issues and particularly business investment, which neither the Democratic nor the Republican plan deals with directly in either proposal.

But the history does suggest to us, following 1991, the war in the Persian Gulf, that resolution is important to the direction of the markets and the economy, also.

BROWN: The first lady, the president's Cabinet coming in now and we'll see that and, again, we'll mention that, as is always the case, one Cabinet member will not be there.

There's the Secretary of State coming in, leading the Cabinet as he would, because Secretary Rumsfeld following.

The attorney general, John Ashcroft, will not be there. I believe that a year ago it was Gale Norton, the interior secretary who was the chosen one. I don't know if that's considered an honor or what in the government. But...

WOODRUFF: I don't know that it is, because the most important members of the Cabinet never seem to get that honor. So I'm not sure if it's an honor. I mean, if you consider state and treasury and defense the most important ones -- but there's Elaine Chao, the labor secretary.

And again, we keep -- our eyes keep rolling back to Colin Powell and Donald Rumsfeld. They're the ones who are sitting around the table when those fateful decisions are made.

Wolf Blitzer is with us now from his post in the waroom and where we talked to you a minute ago.

Wolf, you and I were both at the White House today when a senior administration official talked to us about what it is that the president is going to say tonight.

BLITZER: Well, one of the most interesting points -- and I'll just make a point because we're going to wait for this speaker -- for the introduction of the president as he walks in. But one interesting nugget we heard, Judy, is that the president certainly believes that the U.N. inspection team has already been penetrated by the Iraqis.

Let's pause and listen to this.

BROWN: Not until Lyndon Johnson (UNINTELLIGIBLE) Vietnam and Civil Rights and just two years after the assassination of President Kennedy, Lyndon Johnson delivered the speech in primetime.

But before that it had always been an afternoon affair; no one wanting to work nights in the government, television not that powerful at the time -- as you see the first lady waiting for her husband to come into the room.

WOODRUFF: The president, we're told, is at the door just waiting to be announced.

We just saw the newest member of the Cabinet, Lou Dobbs reminds me. He is Tom Ridge, the first secretary of the Department of Homeland Security.

BILL LIVINGOOD, SENATE SGT.-AT-ARMS: Mr. Speaker, the president of the United States.

(CHEERING AND APPLAUSE)

BROWN: Behind the president are the leaders of the two parties in the House: Nancy Pelosi, the Democratic leader, and Tom DeLay, the Republican leader. Again, this is all part of the tradition that is almost -- not quite, but almost as old as the country itself.

WOODRUFF: It's a ritual, Aaron and Lou, because, you know, every -- no matter what kind of trouble the president is in, no matter what e's been through -- and we can all think back a few years to a time when a certain president was in a lot of heap of trouble.

BROWN: Bill Clinton walking into that building just days after.

WOODRUFF: It was just days after the Monica Lewinsky -- and people still stand, they applaud, they show the president respect, because we know, after all, this is not -- this is the man, George W. Bush. But he also represents the United States and government and every one is going to show him respect.

And there's a lot of affection in that room for him as well.

DOBBS: Judy, Aaron, I wonder if you see what I see. I see a president that is far more serious and set with his jaw and his eye clearly focused ahead. I do not see the normal warmth think we've become used to.

BROWN: It's not the backslapping, congenial -- none of the -- it's critical -- these are serious times and there are serious tasks at hand and the president's mood seems to reflect that.

He'll hand a copy of the speech back to the Speaker of the House, Dennis -- Denny Hastert of Illinois. The vice president, as the president of the Senate, gets a copy. And then he will be introduced again.

WOODRUFF: You know, there's often none of the sort of tentativeness or slight uncertainty about him that we perhaps saw the first time he walked into that chamber. This is a man who has gained confidence. He's been through thick and thin, if you and will, and he's matured, and I think you see that when you look at him.

BROWN: The speech he gave to a joint session of Congress in the week or so -- 10 days after September 11 seemed to me, at least, changed his sense of confidence in himself and changed the country's view of him.

DENNIS HASTERT (R-IL), SPEAKER OF THE HOUSE: Members of Congress, I have the high privilege and the distinct honor of presenting to you the president of the United States.

(APPLAUSE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Mr. Speaker, Vice President Cheney, members of Congress, distinguished citizens and fellow citizens, every year, by law and by custom, we meet here to consider the state of the union. This year, we gather in this chamber deeply aware of decisive days that lie ahead.

You and I serve our country in a time of great consequence. During this session of Congress, we have the duty to reform domestic programs vital to our country, we have the opportunity to save millions of lives abroad from a terrible disease. We will work for a prosperity that is broadly shared, and we will answer every danger and every enemy that threatens the American people.

(APPLAUSE) In all these days of promise and days of reckoning, we can be confident.

(APPLAUSE)

In a whirlwind of change and hope and peril, our faith is sure, our resolve is firm and our union is strong.

(APPLAUSE)

This country has many challenges. We will not deny, we will not ignore, we will not pass along our problems to other Congresses, to other presidents and other generations.

(APPLAUSE)

We will confront them with focus and clarity and courage.

During the last two years we have seen what can be accomplished when we work together.

To lift the standards of our public schools, we achieved historic education reform which must now be carried out in every school and in every classroom so that every child in American can read and learn and succeed in life.

(APPLAUSE)

To protect our country, we reorganized our government and created the Department of Homeland Security, which is mobilizing against the threats of a new era.

To bring our economy out of recession, we delivered the largest tax relief in a generation.

(APPLAUSE)

To insist on integrity in American business, we passed tough reforms, and we are holding corporate criminals to account.

(APPLAUSE)

Some might call this a good record. I call it a good start. Tonight I ask the House and the Senate to join me in the next bold steps to serve our fellow citizens.

Our first goal is clear: We must have an economy that grows fast enough to employ every man and woman who seeks a job.

(APPLAUSE)

After recession, terrorist attacks, corporate scandals and stock market declines, our economy is recovering. Yet it is not growing fast enough, or strongly enough.

With unemployment rising, our nation needs more small businesses to open, more companies to invest and expand, more employers to put up the sign that says, "Help Wanted."

(APPLAUSE)

Jobs are created when the economy grows; the economy grows when Americans have more money to spend and invest; and the best and fairest way to make sure Americans have that money is not to tax it away in the first place.

(APPLAUSE)

I am proposing that all the income tax reductions set for 2004 and 2006 be made permanent and effective this year.

(APPLAUSE)

And under my plan, as soon as I've signed the bill, this extra money will start showing up in workers' paychecks.

Instead of gradually reducing the marriage penalty, we should do it now.

(APPLAUSE)

Instead of slowly raising the child credit to $1,000, we should send the checks to American families now.

(APPLAUSE)

This tax relief is for everyone who pays income taxes, and it will help our economy immediately. Ninety-two million Americans will keep this year an average of almost $1,100 more of their own money. A family of four with an income of $40,000 would see their federal income taxes fall from $1,178 to $45 per year.

(APPLAUSE)

And our plan will improve the bottom line for more than 23 million small businesses.

You, the Congress, have already passed all these reductions, and promised them for future years.

If this tax relief is good for Americans three or five or seven years from now, it is even better for Americans today.

(APPLAUSE)

We should also strengthen the economy by treating investors equally in our tax laws. It's fair to tax a company's profits. It is not fair to again tax the shareholder on the same profits.

(APPLAUSE)

To boost investor confidence, and to help the nearly 10 million seniors who receive dividend income, I ask you to end the unfair double taxation of dividends. (APPLAUSE)

Lower taxes and greater investment will help this economy expand. More jobs mean more taxpayers and higher revenues to our government.

The best way to address the deficit and move toward a balanced budget is to encourage economic growth and to show some spending discipline in Washington, D.C.

(APPLAUSE)

We must work together to fund only our most important priorities. I will send you a budget that increases discretionary spending by 4 percent next year, about as much as the average family's income is expected to grow. And that is a good benchmark for us: Federal spending should not rise any faster than the paychecks of American families.

(APPLAUSE)

A growing economy and a focus on essential priorities will be crucial to the future of Social Security. As we continue to work together to keep Social Security sound and reliable, we must offer younger workers a chance to invest in retirement accounts that they will control and they will own.

(APPLAUSE)

Our second goal is high quality, affordable health for all Americans.

(APPLAUSE)

The American system of medicine is a model of skill and innovation, with a pace of discovery that is adding good years to our lives. Yet for many people, medical care costs too much, and many have no coverage at all.

These problems will not be solved with a nationalized health care system that dictates coverage and rations care.

(APPLAUSE)

Instead, we must work toward a system in which all Americans have a good insurance policy, choose their own doctors, and seniors and low-income Americans receive the help they need.

(APPLAUSE)

Instead of bureaucrats and trial lawyers and HMOs, we must put doctors and nurses and patients back in charge of American medicine.

(APPLAUSE)

Health care reform must begin with Medicare; Medicare is the binding commitment of a caring society. (APPLAUSE)

We must renew that commitment by giving seniors access to the preventive medicine and new drugs that are transforming health care in America.

Seniors happy with the current Medicare system should be able to keep their coverage just the way it is.

(APPLAUSE)

And just like you, the members of Congress, and your staffs and other federal employees, all seniors should have the choice of a health care plan that provides prescription drugs.

(APPLAUSE)

My budget will commit an additional $400 billion over the next decade to reform and strengthen Medicare. Leaders of both political parties have talked for years about strengthening Medicare. I urge the members of this new Congress to act this year.

(APPLAUSE)

To improve our health care system, we must address one of the prime causes of higher cost: the constant threat that physicians and hospitals will be unfairly sued.

(APPLAUSE)

Because of excessive litigation, everybody pays more for health care, and many parts of America are losing fine doctors. No one has ever been healed by a frivolous lawsuit; I urge the Congress to pass medical liability reform.

(APPLAUSE)

Our third goal is to promote energy independence for our country, while dramatically improving the environment.

(APPLAUSE)

I have sent you a comprehensive energy plan to promote energy efficiency and conservation, to develop cleaner technology, and to produce more energy at home.

(APPLAUSE)

I have sent you clear skies legislation that mandates a 70 percent cut in air pollution from power plants over the next 15 years.

(APPLAUSE)

I have sent you a healthy forest initiative to help prevent the catastrophic fires that devastate communities, kill wildlife and burn away millions of acres of treasured forests. (APPLAUSE)

I urge you to pass these measures for the good of both our environment and our economy.

(APPLAUSE)

Even more, I ask you to take a crucial step and protect our environment in ways that generations before us could not have imagined.

In this century, the greatest environmental progress will come about not through endless lawsuits or command-and-control regulations, but through technology and innovation.

Tonight I'm proposing $1.2 billion in research funding so that America can lead the world in developing clean, hydrogen-powered automobiles.

(APPLAUSE)

A simple chemical reaction between hydrogen and oxygen generates energy, which can be used to power a car, producing only water, not exhaust fumes.

With a new national commitment, our scientists and engineers will overcome obstacles to taking these cars from laboratory to showroom, so that the first car driven by a child born today could be powered by hydrogen, and pollution-free.

(APPLAUSE)

Join me in this important innovation to make our air significantly cleaner, and our country much less dependent on foreign sources of energy.

(APPLAUSE)

Our fourth goal is to apply the compassion of America to the deepest problems of America. For so many in our country -- the homeless, and the fatherless, the addicted -- the need is great. Yet there is power -- wonder-working power -- in the goodness and idealism and faith of the American people.

Americans are doing the work of compassion every day: visiting prisoners, providing shelter for battered women, bringing companionship to lonely seniors. These good works deserve our praise, they deserve our personal support and, when appropriate, they deserve the assistance of the federal government.

(APPLAUSE)

I urge you to pass both my faith-based initiative and the Citizen Service Act to encourage acts of compassion that can transform America one heart and one soul at a time.

(APPLAUSE)

Last year, I called on my fellow citizens to participate in the USA Freedom Corps, which is enlisting tens of thousands of new volunteers across America.

Tonight I ask Congress and the American people to focus the spirit of service and the resources of government on the needs of some of our most vulnerable citizens: boys and girls trying to grow up without guidance and attention, and children who have to go through a prison gate to be hugged by their mom or dad.

I propose a $450 million initiative to bring mentors to more than a million disadvantaged junior high students and children of prisoners.

Government will support the training and recruiting of mentors, yet it is the men and women of America who will fill the need. One mentor, one person, can change a life forever, and I urge you to be that one person.

(APPLAUSE)

Another cause of hopelessness is addiction to drugs. Addiction crowds out friendship, ambition, moral conviction, and reduces all the richness of life to a single destructive desire.

As a government, we are fighting illegal drugs by cutting off supplies and reducing demand through anti-drug education programs. Yet for those already addicted, the fight against drugs is a fight for their own lives.

Too many Americans in search of treatment cannot get it. So tonight I propose a new $600 million program to help an additional 300,000 Americans receive treatment over the next three years.

(APPLAUSE)

Our nation is blessed with recovery programs that do amazing work. One of them is found at the Healing Place Church in Baton Rouge, Louisiana. A man in the program said, "God does miracles in people's lives, and you never think it could be you."

Tonight, let us bring to all Americans who struggle with drug addiction this message of hope: The miracle of recovery is possible, and it could be you.

(APPLAUSE)

By caring for children who need mentors, and for addicted men and women who need treatment, we are building a more welcoming society, a culture that values every life.

And in this work we must not overlook the weakest among us. I ask you to protect infants at the very hour of their birth and end the practice of partial-birth abortion.

(APPLAUSE)

And because no human life should be started or ended as the object of an experiment, I ask you to set a high standard for humanity and pass a law against all human cloning.

(APPLAUSE)

The qualities of courage and compassion that we strive for in America also determine our conduct abroad. The American flag stands for more than our power and our interests. Our founders dedicated this country to the cause of human dignity, the rights of every person and the possibilities of every life.

This conviction leads us into the world to help the afflicted, and defend the peace, and confound the designs of evil men.

In Afghanistan, we helped to liberate an oppressed people, and we will continue helping them secure their country, rebuild their society and educate all their children, boys and girls.

(APPLAUSE)

In the Middle East, we will continue to seek peace between a secure Israel and a democratic Palestine.

(APPLAUSE)

Across the Earth, America is feeding the hungry. More than 60 percent of international food aid comes as a gift from the people of the United States.

As our nation moves troops and builds alliances to make our world safer, we must also remember our calling, as a blessed country, is to make the world better.

Today, on the continent of Africa, nearly 30 million people have the AIDS virus, including 3 million children under the age of 15. There are whole countries in Africa where more than one-third of the adult population carries the infection. More than 4 million require immediate drug treatment. Yet across that continent, only 50,000 AIDS victims -- only 50,000 -- are receiving the medicine they need.

Because the AIDS diagnosis is considered a death sentence, many do not seek treatment. Almost all who do are turned away.

A doctor in rural South Africa describes his frustration. He says, "We have no medicines, many hospitals tell people, 'You've got AIDS. We can't help you. Go home and die'."

In an age of miraculous medicines, no person should have to hear those words.

(APPLAUSE)

AIDS can be prevented. Anti-retroviral drugs can extend life for many years. And the cost of those drugs has dropped from $12,000 a year to under $300 a year, which places a tremendous possibility within our grasp.

Ladies and gentlemen, seldom has history offered a greater opportunity to do so much for so many.

We have confronted, and will continue to confront, HIV/AIDS in our own country. And to meet a severe and urgent crisis abroad, tonight I propose the Emergency Plan for AIDS Relief, a work of mercy beyond all current international efforts to help the people of Africa.

This comprehensive plan will prevent 7 million new AIDS infections, treat at least 2 million people with life-extending drugs and provide humane care for millions of people suffering from AIDS and for children orphaned by AIDS.

(APPLAUSE)

I ask the Congress to commit $15 billion over the next five years, including nearly $10 billion in new money, to turn the tide against AIDS in the most afflicted nations of Africa and the Caribbean.

(APPLAUSE)

This nation can lead the world in sparing innocent people from a plague of nature.

And this nation is leading the world in confronting and defeating the man-made evil of international terrorism.

(APPLAUSE)

There are days when our fellow citizens do not hear news about the war on terror. There's never a day when I do not learn of another threat, or receive reports of operations in progress or give an order in this global war against a scattered network of killers.

The war goes on, and we are winning.

(APPLAUSE)

To date we have arrested or otherwise dealt with many key commanders of al Qaeda. They include a man who directed logistics and funding for the September the 11th attacks, the chief of al Qaeda operations in the Persian Gulf who planned the bombings of our embassies in East Africa and the USS Cole, an al Qaeda operations chief from Southeast Asia, a former director of al Qaeda's training camps in Afghanistan, a key al Qaeda operative in Europe, a major al Qaeda leader in Yemen.

All told, more than 3,000 suspected terrorists have been arrested in many countries.

And many others have met a different fate. Let's put it this way: They are no longer a problem to the United States and our friends and allies.

(APPLAUSE)

We are working closely with other nations to prevent further attacks. America and coalition countries have uncovered and stopped terrorist conspiracies targeting the embassy in Yemen, the American embassy in Singapore, a Saudi military base, ships in the Straits of Hormuz and the Straits of Gibraltar. We've broken al Qaeda cells in Hamburg and Milan and Madrid and London and Paris -- as well as Buffalo, New York.

We've got the terrorists on the run. We're keeping them on the run. One by one the terrorists are learning the meaning of American justice.

(APPLAUSE)

As we fight this war, we will remember where it began: here, in our own country. This government is taking unprecedented measures to protect our people and defend our homeland.

We've intensified security at the borders and ports of entry, posted more than 50,000 newly trained federal screeners in airports, begun inoculating troops and first responders against smallpox, and are deploying the nation's first early warning network of sensors to detect biological attack.

And this year, for the first time, we are beginning to field a defense to protect this nation against ballistic missiles.

(APPLAUSE)

I thank the Congress for supporting these measures. I ask you tonight to add to our future security with a major research and production effort to guard our people against bio-terrorism, called Project Bioshield.

The budget I send you will propose almost $6 billion to quickly make available effective vaccines and treatments against agents like anthrax, botulinum toxin, ebola and plague. We must assume that our enemies would use these diseases as weapons, and we must act before the dangers are upon us.

(APPLAUSE)

Since September the 11th, our intelligence and law enforcement agencies have worked more closely than ever to track and disrupt the terrorists. The FBI is improving its ability to analyze intelligence, and is transforming itself to meet new threats.

Tonight, I am instructing the leaders of the FBI, the CIA, the Homeland Security and the Department of Defense to develop a Terrorist Threat Integration Center, to merge and analyze all threat information in a single location.

Our government must have the very best information possible, and we will use it to make sure the right people are in the right places to protect our citizens. (APPLAUSE)

Our war against terror is a contest of will in which perseverance is power. In the ruins of two towers, at the western wall of the Pentagon, on a field in Pennsylvania, this nation made a pledge, and we renew that pledge tonight: Whatever the duration of this struggle and whatever the difficulties, we will not permit the triumph of violence in the affairs of men; free people will set the course of history.

(APPLAUSE)

Today, the gravest danger in the war on terror, the gravest danger facing America and the world, is outlaw regimes that seek and possess nuclear, chemical and biological weapons.

These regimes could use such weapons for blackmail, terror and mass murder. They could also give or sell those weapons to terrorist allies, who would use them without the least hesitation.

This threat is new; America's duty is familiar.

Throughout the 20th century, small groups of men seized control of great nations, built armies and arsenals, and set out to dominate the weak and intimidate the world.

In each case, their ambitions of cruelty and murder had no limit. In each case, the ambitions of Hitlerism, militarism and communism were defeated by the will of free peoples, by the strength of great alliances and by the might of the United States of America.

(APPLAUSE)

Now, in this century, the ideology of power and domination has appeared again and seeks to gain the ultimate weapons of terror.

Once again, this nation and our friends are all that stand between a world at peace, and a world of chaos and constant alarm. Once again, we are called to defend the safety of our people and the hopes of all mankind. And we accept this responsibility.

(APPLAUSE)

America is making a broad and determined effort to confront these dangers.

We have called on the United Nations to fulfill its charter and stand by its demand that Iraq disarm. We are strongly supporting the International Atomic Energy Agency in its mission to track and control nuclear materials around the world. We are working with other governments to secure nuclear materials in the former Soviet Union and to strengthen global treaties banning the production and shipment of missile technologies and weapons of mass destruction.

In all of these efforts, however, America's purpose is more than to follow a process. It is to achieve a result: the end of terrible threats to the civilized world.

All free nations have a stake in preventing sudden and catastrophic attacks, and we're asking them to join us, and many are doing so.

Yet the course of this nation does not depend on the decisions of others.

(APPLAUSE)

Whatever action is required, whenever action is necessary, I will defend the freedom and security of the American people.

(APPLAUSE)

Different threats require different strategies. In Iran we continue to see a government that represses its people, pursues weapons of mass destruction and supports terror.

We also see Iranian citizens risking intimidation and death as they speak out for liberty and human rights and democracy. Iranians, like all people, have a right to choose their own government, and determine their own destiny, and the United States supports their aspirations to live in freedom.

(APPLAUSE)

On the Korean Peninsula, an oppressive regime rules a people living in fear and starvation. Throughout the 1990s, the United States relied on a negotiated framework to keep North Korea from gaining nuclear weapons. We now know that that regime was deceiving the world and developing those weapons all along.

And today the North Korean regime is using its nuclear program to incite fear and seek concessions.

America and the world will not be blackmailed.

(APPLAUSE)

America is working with the countries of the region -- South Korea, Japan, China and Russia -- to find a peaceful solution and to show the North Korean government that nuclear weapons will bring only isolation, economic stagnation and continued hardship.

(APPLAUSE)

The North Korean regime will find respect in the world and revival for its people only when it turns away from its nuclear ambitions.

(APPLAUSE)

Our nation and the world must learn the lessons of the Korean Peninsula and not allow an even greater threat to rise up in Iraq. A brutal dictator, with a history of reckless aggression, with ties to terrorism, with great potential wealth will not be permitted to dominate a vital region and threaten the United States.

(APPLAUSE)

Twelve years ago, Saddam Hussein faced the prospect of being the last casualty in a war he had started and lost. To spare himself, he agreed to disarm of all weapons of mass destruction.

For the next 12 years, he systematically violated that agreement. He pursued chemical, biological and nuclear weapons even while inspectors were in his country.

Nothing to date has restrained him from his pursuit of these weapons: not economic sanctions, not isolation from the civilized world, not even cruise missile strikes on his military facilities.

Almost three months ago, the United Nations Security Council gave Saddam Hussein his final chance to disarm. He has shown instead utter contempt for the United Nations and for the opinion of the world.

The 108 U.N. inspectors were sent to conduct -- were not sent to conduct a scavenger hunt for hidden materials across a country the size of California. The job of the inspectors is to verify that Iraq's regime is disarming.

It is up to Iraq to show exactly where it is hiding its banned weapons, lay those weapons out for the world to see and destroy them as directed. Nothing like this has happened.

The United Nations concluded in 1999 that Saddam Hussein had biological weapons materials sufficient to produce over 25,000 liters of anthrax; enough doses to kill several million people. He hasn't accounted for that material. He has given no evidence that he has destroyed it.

The United Nations concluded that Saddam Hussein had materials sufficient to produce more than 38,000 liters of botulinum toxin; enough to subject millions of people to death by respiratory failure. He hasn't accounted for that material. He's given no evidence that he has destroyed it.

Our intelligence officials estimate that Saddam Hussein had the materials to produce as much as 500 tons of sarin, mustard and VX nerve agent. In such quantities, these chemical agents could also kill untold thousands. He's not accounted for these materials. He has given no evidence that he has destroyed them.

U.S. intelligence indicates that Saddam Hussein had upwards of 30,000 munitions capable of delivering chemical agents. Inspectors recently turned up 16 of them, despite Iraq's recent declaration denying their existence. Saddam Hussein has not accounted for the remaining 29,984 of these prohibited munitions. He has given no evidence that he has destroyed them.

From three Iraqi defectors we know that Iraq, in the late 1990s, had several mobile biological weapons labs. These are designed to produce germ warfare agents and can be moved from place to a place to evade inspectors. Saddam Hussein has not disclosed these facilities. He has given no evidence that he has destroyed them.

The International Atomic Energy Agency confirmed in the 1990s that Saddam Hussein had an advanced nuclear weapons development program, had a design for a nuclear weapon and was working on five different methods of enriching uranium for a bomb.

The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa.

Our intelligence sources tell us that he has attempted to purchase high-strength aluminum tubes suitable for nuclear weapons production.

Saddam Hussein has not credibly explained these activities. He clearly has much to hide.

The dictator of Iraq is not disarming. To the contrary, he is deceiving.

From intelligence sources, we know, for instance, that thousands of Iraqi security personnel are at work hiding documents and materials from the U.N. inspectors, sanitizing inspection sites and monitoring the inspectors themselves.

Iraqi officials accompany the inspectors in order to intimidate witnesses. Iraq is blocking U-2 surveillance flights requested by the United Nations.

Iraqi intelligence officers are posing as the scientists inspectors are supposed to interview. Real scientists have been coached by Iraqi officials on what to say.

Intelligence sources indicate that Saddam Hussein has ordered that scientists who cooperate with U.N. inspectors in disarming Iraq will be killed, along with their families.

Year after year, Saddam Hussein has gone to elaborate lengths, spent enormous sums, taken great risks to build and keep weapons of mass destruction. But why?

The only possible explanation, the only possible use he could have for those weapons, is to dominate, intimidate or attack.

With nuclear arms or a full arsenal of chemical and biological weapons, Saddam Hussein could resume his ambitions of conquest in the Middle East and create deadly havoc in that region.

And this Congress and the American people must recognize another threat. Evidence from intelligence sources, secret communications and statements by people now in custody reveal that Saddam Hussein aids and protects terrorists, including members of al Qaeda. Secretly, and without fingerprints, he could provide one of his hidden weapons to terrorists, or help them develop their own.

Before September the 11th, many in the world believed that Saddam Hussein could be contained. But chemical agents, lethal viruses and shadowy terrorist networks are not easily contained.

Imagine those 19 hijackers with other weapons and other plans, this time armed by Saddam Hussein. It would take one vial, one canister, one crate slipped into this country to bring a day of horror like none we have ever known.

We will do everything in our power to make sure that that day never comes.

(APPLAUSE)

Some have said we must not act until the threat is imminent. Since when have terrorists and tyrants announced their intentions, politely putting us on notice before they strike?

If this threat is permitted to fully and suddenly emerge, all actions, all words and all recriminations would come too late. Trusting in the sanity and restraint of Saddam Hussein is not a strategy, and it is not an option.

(APPLAUSE)

The dictator who is assembling the world's most dangerous weapons has already used them on whole villages, leaving thousands of his own citizens dead, blind or disfigured.

Iraqi refugees tell us how forced confessions are obtained: by torturing children while their parents are made to watch. International human rights groups have catalogued other methods used in the torture chambers of Iraq: electric shock, burning with hot irons, dripping acid on the skin, mutilation with electric drills, cutting out tongues, and rape.

If this is not evil, then evil has no meaning.

(APPLAUSE)

And tonight I have a message for the brave and oppressed people of Iraq: Your enemy is not surrounding your country, your enemy is ruling your country.

(APPLAUSE)

And the day he and his regime are removed from power will be the day of your liberation.

(APPLAUSE)

The world has waited 12 years for Iraq to disarm. America will not accept a serious and mounting threat to our country and our friends and our allies.

The United States will ask the U.N. Security Council to convene on February the 5th to consider the facts of Iraq's ongoing defiance of the world. Secretary of State Powell will present information and intelligence about Iraqi's -- Iraq's illegal weapons programs, its attempts to hide those weapons from inspectors and its links to terrorist groups.

We will consult, but let there be no misunderstanding: If Saddam Hussein does not fully disarm for the safety of our people, and for the peace of the world, we will lead a coalition to disarm him.

(APPLAUSE)

Tonight I have a message for the men and women who will keep the peace, members of the American armed forces. Many of you are assembling in or near the Middle East, and some crucial hours may lay ahead.

In those hours, the success of our cause will depend on you. Your training has prepared you. Your honor will guide you. You believe in America and America believes in you.

(APPLAUSE)

Sending Americans into battle is the most profound decision a president can make. The technologies of war have changed. The risks and suffering of war have not.

For the brave Americans who bear the risk, no victory is free from sorrow.

This nation fights reluctantly, because we know the cost, and we dread the days of mourning that always come.

We seek peace. We strive for peace. And sometimes peace must be defended. A future lived at the mercy of terrible threats is no peace at all.

If war is forced upon us, we will fight in a just cause and by just means, sparing, in every way we can, the innocent.

And if war is forced upon us, we will fight with the full force and might of the United States military, and we will prevail.

(APPLAUSE)

And as we and our coalition partners are doing in Afghanistan, we will bring to the Iraqi people food and medicines and supplies and freedom.

(APPLAUSE)

Many challenges, abroad and at home, have arrived in a single season. In two years, America has gone from a sense of invulnerability to an awareness of peril, from bitter division in small matters to calm unity in great causes.

And we go forward with confidence, because this call of history has come to the right country.

Americans are a resolute people, who have risen to every test of our time. Adversity has revealed the character of our country, to the world, and to ourselves.

America is a strong nation and honorable in the use of our strength. We exercise power without conquest, and we sacrifice for the liberty of strangers.

Americans are a free people, who know that freedom is the right of every person and the future of every nation. The liberty we prize is not America's gift to the world; it is God's gift to humanity.

(APPLAUSE)

We Americans have faith in ourselves, but not in ourselves alone. We do not claim to know all the ways of Providence, yet we can trust in them, placing our confidence in the loving god behind all of life and all of history.

May he guide us now, and may God continue to bless the United States of America.

Thank you.

WOODRUFF: This was a determined President Bush that we heard tonight. We saw the set jaw. We saw the look in his face. A president that left no doubt what his intent is.

We heard him say if Saddam Hussein doesn't fully disarm for the safety of our people and the peace of the world, we will lead a coalition to disarm him. He left no doubt as to where this country is headed.

BROWN: "We seek a peace," he said. "We strive for peace and sometime peace must be defended. A future lived at the mercy of terrible threats is no peace at all."

The president making his way out, as the new Senate majority leader behind him, alongside of him. Senator Frist will be one of Larry King's guests later this evening. One of many.

WOODRUFF: He's being congratulated right and left, Aaron, but I think even when all is said and done, the question that still will hang in the air is, has the president made the case that this country should go to war? That Iraq poses an immediate threat, not just to the countries in the region, but to the United States?

BROWN: This had the feel of the beginning of the end game. The president laying cards out on the table of what the Iraqis in his view have failed to do. The president or the secretary of state will go to the Security Council on the 5th to lay it out before the members of the Security Council in more detail. Decisions are coming. The president seemed to leave no doubt where he stands.

DOBBS: Aaron, Judy, I think that what we witnessed tonight was as much, as you indicated, a president determined, but also there was a different look in the eyes of his audience immediately in the room. They were looking up to this president and he is asserting a leadership that I think suggests an absolute return to his roots, and that is compassionate conservatism.

This president has been criticized on a number of issues, including affirmative action, of bowing to the conservative core of the Republican Party. There was none of that tonight. This was President Bush speaking from the heart, absolutely resolute.

In terms of what he offered up, in terms of programs and issues and initiatives, they were broad, they are deep. They will add over $400 billion in federal spending over the course of the next 10 years. That on top of the $674 billion in tax cuts.

With all of that, he did not address the needs of now some 28 States of the 50 that are suffering severe budget deficits. A remarkable, broadside, if you will, against a host of issues. And, to me, this represents a return to his roots. And that is compassionate conservatism, at least as he's defined it.

BROWN: During the first part of the speech, when the president focused on the economy, you could see the clear partisan split over the methods of restoring the economy to more vigorous growth, to handling these domestic issues. But when the president got to the foreign policy side of the speech, Democrats stood. Each time the president made his points about the Iraqis in particular, and terrorism in general, which seems a -- well, it's just something to watch, as this congressional season plays out.

WOODRUFF: But we know that Democrats don't necessarily agree with the president's approach. And we're going to be hearing from them. They've made it pretty clear that they're not necessarily going to be supporting him.

Wolf Blitzer, you've been following very much the Iraq policy of this administration. What did you hear tonight?

BLITZER: You know, Judy, it's interesting that, as the president was speaking, we got some pictures from U.S. troops, sailors aboard the USS Constellation, an aircraft carrier in the Persian Gulf. They were watching and listening very carefully to the president as he was delivering this state of the union address. Obviously one of at least four, perhaps six aircraft carrier battle groups that will be deployed in the coming weeks to the Persian Gulf.

This may not necessarily have been a formal declaration of war by the president against Iraq, but it was getting very, very close to that, as the president began this process of beginning to release new information about how convinced he is the Iraqi government of Saddam Hussein represents a clear and present danger to the United States and its friends in the region. It was no accident that the president spoke about Hitlerism, militarism and communism of the 20th century, and the fact that the U.S. and its allies had to stand up to that. And now he's clearly making the link to the threat from the Iraqi government.

WOODRUFF: CNN's congressional correspondent John Karl, Wolf, has been doing some reporting tonight. In fact, on what the other party, the Democrats, have to say about the president's decision to move on Iraq. Jon, are you with us?

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Yes, I am Judy. And we have a development in that area. Senator Ted Kennedy, the Democratic icon in the Senate, has issued a statement saying that he intends to introduce a resolution requiring the president to come back to the Congress to get authorization to go to war against Iraq.

The Congress already gave him that authorization back in September, but Senator Kennedy says, in a statement announcing this, "Much has changed in the many months since Congress has debated war with Iraq. U.N. inspectors are on the ground and making progress and their work should continue. Osama bin Laden and the Korean nuclear crisis continue to pose far greater threats." Kennedy wants another vote in the Congress before the president were to go to war against Iraq.

BROWN: Jon, thank you. Jonathan Karl. We'll watch that play out tomorrow and in the days ahead. Up next, Gary Locke, the two-term governor of the state of Washington, will deliver the Democratic response. Candy Crowley has more on Governor Locke -- Candy.

CROWLEY: Well, for those who might be saying who, the reason they made this (UNINTELLIGIBLE) is the Democrats want to first take the president on, on the economy. And the governor speaks to that.

He will talk about the huge deficits in many of the states. And they really felt on the Democratic side of the aisle that this is the issue that they wanted to put out there for the American public. The fighting about Iraq and when to go or whether to go, they're going to leave to the Senate floor, as Jon Karl just talked about.

BROWN: And Candy, we expect that Governor Locke will talk for about 10 minutes or so. The response, whichever party gives it, is always much briefer than the State of the Union brief. So here's Washington Governor Gary Locke.

GOV. GARY LOCKE (D), WASHINGTON: Good evening. I'm Gary Locke, the governor of Washington State. It's an honor to give the response to President Bush on behalf of my family, my state, my fellow Democratic governors and the Democratic Party. Tonight I'd like to offer our view of how to strengthen America.

My grandfather came to this country from China nearly a century ago and worked as a servant. Now I serve as governor just one mile from where my grandfather worked. It took our family 100 years to travel that mile. It was a voyage we could only make in America.

The values that sustained us: education, hard work, responsibility and family, guide me every day. I want every person to have the chance this country gave our family. But like many of you, I'm concerned about the challenges now before us.

Tonight, President Bush spoke about the threats we face from terrorists and dictators abroad. Many of the young Americans who fought in Afghanistan and who tonight are still defending our freedom, were trained in Washington State. We're so grateful to them, to all the members of our armed service and their families. And we pray for their safe return.

But the war against terror is not over. Al Qaeda still targets Americans. Osama bin Laden is still at large. As we rise to the many challenges around the globe, let us never lose sight of who attacked our people here at home.

We also support the president in working with our allies in the United Nations to eliminate the threat posed by Saddam Hussein and Kim Jong Il of North Korea. Make no mistake, Saddam Hussein is a ruthless tyrant and he must give up his weapons of mass destruction. We support the president in the course he has followed so far, working with Congress, working with the United Nations, insisting on strong and unfettered inspections.

We need allies today in 2003 just as much as we needed them in Desert Storm, and just as we needed them on D-Day in 1944, when American soldiers, including my father, fought to vanquish the Nazi threat. We must convince the world that Saddam Hussein is not America's problem alone. He's the world's problem. And we urge President Bush to stay this course, for we are far stronger when we stand with other nations than when we stand alone.

I have no doubt that together we can meet these global challenges. But to be strong abroad, we need to be strong at home. And today, in too many ways, our country is headed in the wrong direction. We're missing the opportunity to strengthen America for the future.

Democrats have a positive specific plan to turn our nation around. Today the economy is limping along. Some say it's a recovery, but for far too many Americans there's no recovery in our states and cities. There's no recovery in our rural communities. There's no recovery for working Americans and for those searching for jobs to feed and clothe their families.

After gaining 22 million jobs in eight years, we've now lost two million jobs in the last two years since President Bush took office. 100,000 jobs lost last month alone. Two years ago the federal bug was in surplus. Now this administration's policies will produce massive deficits of over $1 trillion over the next decade.

These policies have powerful and painful consequences. States and cities now face our worst budget crisis since World War II. We're being forced to cut vital services from police to fire to healthcare, and many are being forced to raise taxes. We need a White House that understands the challenges our communities and people are facing across America.

We Democrats have a plan to restore prosperity so the United States once again becomes the great job engine it was in the 1990s. It's rooted in three principles. It must give our economy an immediate jump-start. It must benefit middle class families rather than just a few. And it must be fiscally responsible so we have the savings to strengthen Social Security and protect our homeland.

Our plan provides over $100 billion in tax relief and investments right now. Tax relief for middle class and working families, immediately. Incentives for businesses to invest and create jobs this year. Substantial help for cities and states like yours and mine, now. Extended unemployment benefits without delay for nearly a million American workers who have already exhausted their benefits. And all without passing on the bill to our children and grandchildren through exploding budget deficits for years to come.

Now, as you heard tonight, President Bush has a very different plan. We think it's upside down economics. It does too little to stimulate the economy now and does too much to weaken our economic future. It will create huge permanent deficits that will raise interest rates, stifle growth, hinder homeownership and cut off the avenues of opportunity that have let so many work themselves up from poverty.

We believe every American should get a tax cut. That's the way to create broad-based growth. But we shouldn't spend hundreds of billions of dollars on a plan that helps neither the economy nor the families that need it most, while making it harder to save Social Security and invest in healthcare and education.

Think about it. Under the president's proposal to eliminate taxes on stock dividends the top one percent -- that's people who earn over $300,000 a year -- would get more tax relief than the bottom 95 percent of taxpayers combined. That's wrong. It's irresponsible. And it won't create jobs.

Let's choose the right course. The successful and fair course for our economy.

We have another urgent priority, homeland security. In this unprecedented fight against terror, the front lines are in our own neighborhoods and communities, and this one hits home. In 1999, an al Qaeda operative tried to enter my state with a trunk full of explosives. Thankfully, he was caught in time.

Now, a year and a half after September 11, America is still far too vulnerable. Last year Congress authorized $2.5 billion in vital new resources to protect our citizens. For equipment for firefighters and police to protect ports, to guard against bioterrorism, to secure nuclear power plants and more. It's hard to believe, but President Bush actually refused to release the money.

Republicans now say we can't afford it. Democrats say, if we're serious about protecting our homeland, we can and we must. Now to strengthen America at home, there's much more to do.

You and I know that education is the great equalizer, the hope of democracy and the key to the information economy of the future. In my state, we've raised test scores, cut class sizes, trained teachers, launched innovative reading programs, offered college scholarships even as the federal government cut its aid to deserving students. Democrats worked with President Bush to pass a law that demands more of our students and invests more in our schools. But his budget fails to give communities the help they need to meet these new high standards. We say we want to leave no child behind, but our schools need more than kind words about education from Washington, D.C. We need a real partnership to renew our schools.

Tonight we also heard the president talk about healthcare. Too many seniors can't afford the remarkable new drugs that can save lives. Some are even skimping on food to pay for needed medicine. On this issue, the contrast is clear. Democrats insist on a Medicare prescription drug benefit for all seniors.

President Bush says he supports a prescription drug benefit, but let's read the fine print. His plan only helps seniors who leave traditional Medicare. Our parents shouldn't be forced to give up their doctor or join an HMO to get the medicine they need. That wouldn't save Medicare. It would privatize it and it would put too many seniors at too much risk, just when they need the security of Medicare.

And finally, let's talk about the environment and energy. Environmental protection has been a tremendous bipartisan success story over three decades. Our air and water are cleaner. In communities, in my state and yours, conservation is a way of life. But the administration is determined to roll back much of this progress.

Our nation should lead global efforts to promote environmental responsibility, not shun them. And instead of opening up Alaska's wilderness to oil drilling we should be committed to a national policy to reduce our dependence on oil by promoting American technology and sustainability.

Yes, the Republican Party now controls the executive branch and both houses of Congress. But we Democrats will hold the administration and congressional leaders accountable. We will work to create jobs and strengthen homeland security. We will fight to protect a woman's right to choose, and we will fight for affirmative action, equal opportunity and diversity in our schools and workplaces.

Above all, we will demand that this government advance our common purpose and not pander to narrow special interests. That's the vision of the Democratic Party. In state houses, in Congress, and in the homes of millions of Americans, we believe it's the best course for our nation. It's a vision we will work for and stand for in the coming years.

This is not an easy time. But I often think about my grandfather, arriving by steamship 100 years ago. He had no family here. He spoke no English. I can only imagine how he must have felt as he looked out at his new country.

There are millions of families like mine, people whose ancestor ancestors dreamed the American dream and worked hard to make it come true. They transformed adversity into opportunity. Yes, these are challenging times, but the American family, the American dream has prevailed before. That's the character of our people and the hallmark of our country. The lesson of our legacy is, if we work together and make the right choices, we will become a stronger, more united and more prosperous nation. Goodnight and god bless America.

BROWN: Gary Locke, the Democratic governor of Washington State. It's hard to match the majesty of the president speaking to...

WOODRUFF: It's always hard.

BROWN: But Gary Locke laid the clear distinctions between the two parties. And Candy, the Democrats in the last three or four weeks have been embolden, it seems to me, to take on the president more than they had in a long time.

CROWLEY: Well, sure, because if you look back at the mid-term elections, they got clocked. What they were doing, which a lot of Democrats feel was basically going along with the president because he was so popular, clearly didn't work for the mid-term. So I think what you've seen here tonight is sort of the setting of the stage for the big arguments in the year to come.

Remember, not only is this the beginning of the end of the president's first term, it's all the beginning of the presidential election cycle. I don't want to scare you, but in fact it is. And so what you're seeing here is that four issues really bubble to the top: Iraq, the economy, prescription drugs and homeland security. And I think that's where the big battles will be held over the next 12 months.

BROWN: Candy, thank you. The prospect of the presidential election doesn't scare me. I may be the one person in the country who looks forward to the campaigning.

WOODRUFF: No, no. You're not the only one. There are a lot of us who feel that way.

Well if, as Candy said, we are seeing the setting of the stage for the big arguments, let's turn to our senior White House correspondent John King. Is the White House ready, and did the president, by his remarks tonight, indicate that he's ready for the arguments to come?

KING: Well Judy, quickly, on the domestic front on the economy, that of course will be the big battle. And Governor Locke laying out the Democratic argument against President Bush. Here at the White House, though, they believe that the president in many ways has already won the argument. There is no disagreement on Capitol Hill that there will be another big tax cut this year.

The fight is over just what that tax cut will look like. So the White House saying it believes it already is ahead in the fight, if you will. The fight to come over the details. And Republicans do have the majority on Capitol Hill.

There is a fight for weeks, sometimes months, in putting together a president's State of the Union address. This one on paper runs almost 15 pages. Just count the pages. One and a half pages to the economy. That was the second largest amount of space in the speech.

More than four pages to Saddam Hussein and Iraq. The president making clear today to the American people and to the world, yes, he has not made a final decision on military action, but he sure sound like he knew where this one was going. The president beginning tonight what the White House calls the final phase of this debate.

Some in the United Nations wanted to delay this until at least March. The president saying no. He will send Colin Powell, the secretary of state, to the United Nations in little more than a week. Secretary Powell will detail some of the intelligence the president discussed.

And we are told Secretary Powell's message will be simply this: that the United States government meant what it said when it asked for that resolution and said disarm or face serious consequences. Secretary Powell will challenge the world, did you mean what you said?

And there's a power in the pictures, Judy. Secretary Powell sitting next to Donald Rumsfeld, the defense secretary, tonight. For months, many in Washington have said Secretary Rumsfeld wanted war, Secretary Powell wanted diplomacy. The president's diplomat, Colin Powell, the alleged dove in the war cabinet, will be the one who makes the president's case to the world a little more than a week from now.

WOODRUFF: He's already started to come around. And maybe I'm the only one here, but still marveling at the notion that one-third of the president's State of the Union address devoted to a country the size of California.

CNN's "MONEYLINE" managing editor Lou dobbs is with us. Lou, we've been talking about Iraq. We've been talking about the economy, certainly you have. Did this president give you the sense that he is firm in his plan, in his notion of what he needs to do to fix this economy?

DOBBS: Judy, he not only gave me that impression, I think that that was his distinct intention tonight. We all discussed, in the days leading up to this speech, the importance of the president persuading various constituencies of the case against Saddam Hussein. This president to me tonight in this speech, by his demeanor, by his delivery, said he's not interested in persuading.

He conveyed determination. And every constituency watching, whether it be the American people, leaders in Europe around the world, or particularly in Iraq, I don't think could miss this signal that this president is determined that it will be his policy carried out.

I found it remarkable that there was no appeal to European leaders, there was no appeal to the United Nations, this president saying, clearly, this man is a threat and he must disarm. The means by which he does so will be his choice entirely.

In terms of his domestic policy and, principally, on the economy, I frankly was staggered to see the scope of the proposals, on AIDS, on hydrogen-powered cars, and particularly on the addition of $400 billion to Medicaid, which is already in combination with Medicaid and with the other the Social Security and entitlements, the largest...

BROWN: Medicare. Medicare.

WOODRUFF: Medicare. You mean Medicare.

DOBBS: I mean Medicare -- the largest segment of the budget. This is remarkable.

BROWN: And the essence of that is, that additional money is prescription drug coverage in whatever form it ultimately plays out as.

DOBBS: And what will be interesting tomorrow -- and if I can make just a quick forecast -- the bond market is going to hate this. Wall Street and investors...

WOODRUFF: Why?

DOBBS: Because it means more spending, larger deficits. And Wall Street -- and, remember, 70 percent of investors -- 70 percent of voters are investors in this country -- are going to love it.

WOODRUFF: Even though the money is spread out over several years, you're saying

(CROSSTALK)

DOBBS: Correct. Absolutely.

BROWN: Wolf Blitzer, you were listening as the president talked about Iraq and the Democrats treading quite lightly on subject, I guess. What are your impressions?

BLITZER: Well, the Democrats were treading very lightly, only a very brief response from the Democratic governor, the Democratic response on Iraq, only that: We urge the president to stay this course, in other words, to get allies on board, a very different tone from what we heard from the president himself.

I was struck by the president's remarks at the end about being commander in chief and knowing what it means to go ahead and send young men and women into battle. Earlier, we heard from a senior administration official, the feeling the president had over at the Walter Reed Army Medical Center here in Washington a few days ago when he met with some wounded U.S. troops from the fighting in Afghanistan.

He met with one U.S. soldier whose leg had been blown off and he was recuperating. The soldier told the president how much he used to love to jog, how much he used to love to run. The president himself is a runner. That's had a dramatic impact on the president, those personal kinds of encounters, although, as we heard the president say, he is determined right now to go forward, because the risk of not acting is so much greater, he says, than the risk of acting, although it does take a personal toll on someone like the president.

BROWN: Wolf, just briefly, he ran down a litany of what he said were failures of the Iraqis to disclose how they had destroyed various chemicals, various weapons. In that litany, did you hear anything new?

BLITZER: I heard from -- the reference that he said that three former Iraqi officials, three people who had left Iraq had provided that information about the mobile vans that they had to move around germ warfare. That was a new nugget.

The other nugget that I heard is, he said that there are thousands of Iraqi agents, Iraqi officials now engaged in trying to deceive the U.N. inspectors, the UNMOVIC inspectors, to make sure that they can't get the information they are searching for. So, the president was beginning this process of declassifying sensitive information, a lot more coming from the secretary of state next week.

BROWN: Wolf, thank you.

WOODRUFF: All right, thank you, Wolf.

As always, careful consideration given to every word here. We want to step back before we wrap up our analysis, if you will, and look at what the president said in total.

Our senior analyst, Jeff Greenfield, we know was once a speechwriter himself.

Jeff, you said earlier that it might not be a particular word or a phrase that was going to matter tonight. But what did you hear?

GREENFIELD: I actually heard two very different speeches.

I heard a domestic speech, which, in my view, was pedestrian. It was a modular Republican conservative speech. And I heard a foreign policy speech -- or the Iraq part of the speech -- that was, in effect, written in steel, a declaration of war in the most serious words. And I don't think there was anything much a speechwriter or an administration can do about it.

The consequentiality of what he was talking about in the last part of that speech, putting Americans at risk, the possibility of a war whose dimensions we don't know, so overwhelmed the domestic debate about a dividend tax cut that it's simply impossible to make the economic part of this speech have the weight of the foreign policy part. And that's why I think you could almost, metaphorically, hear the country quiet down at the end of that speech.

WOODRUFF: So, Jeff, you're just -- let me just butt in here. You're basically dismissing the notion that, over the last few days and weeks, Americans have said they're more concerned about the economy?

GREENFIELD: No.

I think Americans are more concerned about the economy. I just think, for a president to weigh the decision of going to war just carries more weight. And it's what I said at the beginning. It's very tough to focus people on the economy when the seriousness of what you're talking about is so much greater on the one than the other, Judy.

WOODRUFF: OK, Jeff.

BROWN: Thank you, Jeff.

I think the headlines tomorrow -- my guess is, the headlines tomorrow will deal with Iraq. They certainly will around the world. The speech, unlike most State of the Union speeches, being watched in capitals in Europe, in the Middle East, because the consequences of what the president talked about with Iraq are so great.

We'll get some reaction from two Middle East capitals where they were listening carefully to the president tonight: Nic Robertson in Baghdad -- the people in Baghdad weren't listening, but the government certainly was -- and CNN's Christiane Amanpour, who is in Tel Aviv -- Christiane.

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, Aaron, I can't help remembering 11 years ago when President Bush's father was already 10 days into a war with Iraq. There was a massive and unprecedented global alliance with him, global support for that war on Iraq.

And as this president contemplates yet another military intervention there, the situation is not the same. There is a historic discord right now between the current U.S. administration and not only countries like allies in Europe and in the Middle East, but all the usual suspects as well.

There is going to be an enormous amount of work for this administration to do to convince the rest of the world that military intervention in Iraq is going to be the right thing to do, even though so many people around the world believe that Saddam Hussein is a threat and that the people of Iraq would be better off liberated and free from, as George Bush said, that tyranny over there.

But there are so many issues that put the rest of the world against the United States at this moment, not least the Arab-Israeli conflict, right here where I'm standing right now, fans the flames of anti-Americanism in the Islamic world. They are concerned that another war in an Islamic country is simply another war against the Islamic world and, also, in much of the world, as I say, even amongst allies, a feeling that this administration's foreign policy is unilateralist, is aggressive and is very scary.

So, it's going to be whether George Bush can get international consensus and goes back to the U.N. that will give the leaders in many parts of the world and the people more cover if they're going to support military action in Iraq -- Aaron.

BROWN: Christiane, thank you -- Christiane Amanpour, who is in Tel Aviv covering the Israeli election, which went on today.

I suppose, if you could put a camera anywhere in the world today, you'd put one in a living room in Baghdad to see how people in Baghdad reacted when the president said the people -- the troops surrounding your country now are not the enemy. The enemy are the people ruling your country.

But, Nic Robertson, they didn't hear any of that, did they?

ROBERTSON: Aaron, they didn't. It wasn't carried on Iraqi television. It's the morning here. They are very unlikely to wake up and read anything about it in their papers here.

Some people will tune in to some of the international broadcasts. So, later in the day, they'll probably pick up on it. Certainly, it will certainly raise the current fears here that the possibility of war is perhaps coming a little closer. And the resolve in President Bush's speech about Iraq will certainly not be lost on the leadership here. It will have been monitored in government offices here at the Information Ministry, the Foreign Ministry and elsewhere.

The issues raised by President Bush about V.X. and anthrax, even in the last 24 hours here, we've heard Iraqi officials saying: We never produced such good-quality products that we should even discuss the quantity now. They would have degraded. Iraq's ties to al Qaeda, we've heard that denied by the deputy prime minister, the links to terrorism denied by the foreign minister recently.

So, much of what laid out there, already we've heard from Iraqi officials here, Aaron that they're just -- as far as weapons of mass destruction are concerned, they just don't have them. As far as the people here are concerned, they will certainly read what they hear through the international radio broadcast. They will measure it and they will be much more concerned having heard it, Aaron.

BROWN: Nic, thank you -- Nic Robertson in Baghdad, where it is early morning there. Thank you for your work tonight.

WOODRUFF: I don't think anybody has any doubt coming out of this speech what the president's intentions are when it comes to Iraq, when it comes to -- he didn't use the term tonight axis of evil, but he made it clear he's thought about the distinction between Iran, North Korea and Iraq.

I think the question, though -- and I want to bring Lou back in here -- is, do people have a clear idea of what his intention is with regard to the economy? We heard Jeff Greenfield say it was almost boilerplate Republican words there.

DOBBS: Well, Jeff's view is shared by many in some of the polls, a number of people surveyed recently by CNN/"USA Today"/Gallup.

Many people in this country don't even know that the Republicans have a plan. The Democrats, they're unaware of. The difficulty -- Jeff is correct -- to persuade people of economic policy is one thing. For 2.5 million people who are unemployed in this country, economics is highly theoretical and really not of much interest. A job is. The president addressed that issue. His commitment is there, that of the Democrats as well. We're going to see a great deal of compromise on this domestic policy.

BROWN: Nobody really believes at this moment the president has the votes in the Senate to get what he wants.

DOBBS: No, I think nearly anyone understands -- and John King referred to it -- understands that this -- there will be a tax cut. There will...

(CROSSTALK)

DOBBS: Well, as always, when we leave the stage of political theater, there will be compromise.

And we will -- people talk about this country being a nation divided, because we're about 50 percent voting Democratic, 50 percent Republican. To me -- perhaps this is my prejudice and bias -- we're a nation balanced. And we're going to see that balance work through in the legislative process.

BROWN: Lou, thank you.

WOODRUFF: A little bit of a prediction: The President will probably get some kind of lift in the polls, which is what, I'm sure, the White House is looking for tonight. But, historically, those lifts don't last very long. And so it's, what have you done for me lately?

BROWN: Well, he laid out policy tonight, domestic and foreign. And people now can react to it. Lots of people are going to react to it with Larry King coming up. That's coming up next.

WOODRUFF: We want to thank all of our colleagues, Aaron, who have been with us, all our correspondents around this city and around the world, Lou Dobbs with us tonight.

For my colleague, Aaron Brown, thank you for watching.

Now on to "LARRY KING LIVE."

BROWN: Good night.

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