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JUDY WOODRUFF'S INSIDE POLITICS

Pennsylvania: A Bush Battleground; Interview With Senator Chuck Hagel

Aired March 15, 2004 - 15:30   ET

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

(BEGIN VIDEOTAPE)
ANNOUNCER: Keystones of politics: the president stumps in Pennsylvania, as a pivotal pole number heads south.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: How many Oscar- winning performances will it take to convince America that George Bush can actually put America back on track?

ANNOUNCER: Roll the videotape. John Kerry pounces on another Bush campaign tactic.

Spanish lessons: will the Madrid government's election surprise influence the race for the White House?

(END VIDEOTAPE)

ANNOUNCER: Now, live from Washington, JUDY WOODRUFF'S INSIDE POLITICS.

CANDY CROWLEY, HOST: CROWLEY: Thanks for joining us. Judy is off today. I'm Candy Crowley.

We begin with a breaking story. The Kerry campaign says the Reverend Al Sharpton has decided to drop campaigning for the Democratic presidential nomination, and will endorse John Kerry. At last word, Reverend Sharpton was coming out of Kerry headquarters. The meeting apparently concluded.

But even before Sharpton could tell us anything, come out before the cameras and make an announcement, the Kerry campaign put out a news release hailing Sharpton and his endorsement. The Kerry camp says Sharpton authorized them to put out the statement. We will have more on this story and what it means for the campaign as we get it.

Sharpton has said that he will continue to try to pick up some delegates. But, again, will endorse John Kerry.

Now, when political observers try to see the future they often rely on polls. Although it may seem as though they rely on tarot cards or tea leaves. But today, an often-consulted barometer of voter mood doesn't seem to bode well for President Bush.

A new Gallup poll shows a hefty 60 percent of Americans now say they are dissatisfied with the way things are going in the country. That is up six points since last month, and back to the level of dissatisfaction a year ago, before the Iraq war.

These numbers help explain some of the gloom. Americans are divided over whether the economy is getting better or worse, with slightly more saying it's getting worse.

Against that backdrop, Mr. Bush traveled today to the battleground state of Pennsylvania. Our White House correspondent, Suzanne Malveaux, is with President Bush in Ardmore.

Suzanne, what's the message in Pennsylvania?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, the message here is that President Bush is going to deliver, particularly when it comes to the economy and homeownership, Candy. This is the 26th time that the president has visited Pennsylvania.

This is a state that he narrowly lost to Gore back in 2000. It was 46 to 51 percent. But nevertheless, this is a state that carries 21 electoral votes. It is critical to a Bush re-election, and President Bush spending his time this afternoon in a suburb of Ardmore.

That is where he toured a housing development, and specifically toured the home of a woman, a first-time homeowner. And he is holding a town hall meeting-type discussion at the YMCA. That is where he is touting his homeownership policy, really highlighting the progress of his policy.

There's a rate of 68 percent of Americans who now own their homes. That is the highest level ever. But about half of minority Americans own their homes. The Bush policy is aimed at really lessening that gap. The president talking about some of the things that his administration is doing for modern and low-income families, providing down payments, as well as counseling and tax credits for some of those families.

Now, Candy, I have to tell you, it was just yesterday that Bush's opponent, Senator Kerry, was in Bethlehem, Pennsylvania. That is where he was touting his own policies, his economic policies, and his health care programs. This is a state, of course, that neither side is taking for granted -- Candy.

CROWLEY: Suzanne, let me ask you, in light of these polls, I know you probably haven't had a chance to ask the administration about them, but the news has been rather bleak for President Bush in the way the direction is headed in the country, according to voters. What is their sense of this? Do they -- is there any kind of worry? Do they sense this is just the result of getting pounded by Democrats for three months?

MALVEAUX: Well, of course, there's concern over these poll numbers. But they continually talk about some of the positive aspects of what is happening with the economy.

They talk about the fact that the interest rate is low, that inflation is low, that unemployment is steady. But, of course, they want to create more jobs, and the big question is whether or not this sluggish economy -- it is on the rise -- if it can move as fast as Americans would like it to by the time you get to November.

I mean, that is the big gamble here, and they are trying to emphasize to Americans that there is some progress that is being made. It is a tough sell to make at this time.

CROWLEY: It is indeed. Thanks so much. Suzanne Malveaux, in Ardmore, Pennsylvania. Appreciate it.

You never know when voters will deliver a curve ball. Just ask the outgoing prime minister of Spain. Will his party's election defeat be a factor in the race for the White House?

Here's our senior political analyst Bill Schneider. Or here's not our political analyst Bill Schneider.

What we're talking about here is...

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): On Sunday, Spain threw Aznar's party out and elected a socialist government with a very different view of Iraq.

JOSE LUIS RODRIGUEZ ZAPATERO, SPANISH PRIME MINISTER-ELECT: I think that Spain's participation in the war has been a total error.

SCHNEIDER: The White House had a big stake in Spain's election.

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: I believe that the Spanish people understand that they've had strong and good leadership in President Jose Maria Aznar and his government.

SCHNEIDER: Aznar's party had been ahead in the polls. But the terrorist attacks in Madrid on Thursday threw the political situation into turmoil.

EDUARDO NOLLA, SAN PABLO UNIVERSITY: You have had an election only 48 hours after the terrorist attacks. That's too early. Could you imagine an election in the United States on 9/14?

SCHNEIDER: There were two possible outcomes. The attacks might have rallied the Spanish people to support the Aznar government and the U.S. in a common front against terrorism. On Friday, it looked like that might happen.

NOLLA: Could you imagine a third of the population of the United States getting out on the streets, complaining about terrorist attacks?

SCHNEIDER: But when evidence came out on Saturday linking the attacks to al Qaeda, the political situation suddenly reversed. Now, it could be argued that Spain's participation in the Iraq war made it more vulnerable to terrorism.

Aznar's party apparently paid a price for supporting President Bush in Iraq. One reading of the result? The terrorists won.

JAMIE RUBIN, FMR. ASSISTANT SECRETARY OF STATE: Al Qaeda had a tactical victory. They contributed to the overthrow of a government.

SCHNEIDER: But it also helps Democrats make their case. Either the more extreme case that Spain's voters were right...

HOWARD DEAN (D), FMR. PRESIDENTIAL CANDIDATE: Did the capture of Saddam Hussein and the attack on Iraq make us safer? I said no during the campaign. I think it's very clear that the answer is no.

SCHNEIDER: ... or the more moderate case, that President Bush has isolated the United States in the world?

KERRY: He pushed away our allies at a time when we needed them the most.

(END VIDEOTAPE)

SCHNEIDER: If Aznar's party had won, it would have shown the U.S. and Europe pulling together in the war on terrorism. The actual result shows the U.S. losing an ally in the war on Iraq, something that's now likely to become an issue in the presidential campaign -- Candy.

CROWLEY: Thanks, Bill Schneider, senior political analyst. Appreciate it.

We will be talking more about the political and international implications of the Spanish election next with Republican Senator Chuck Hagel.

Also ahead, Bush v. Kerry: the strategies and the slipups. Dueling political operatives share their takes.

Plus, the latest buzz on the veep stakes. How's John Kerry's selection process coming?

And later, is Jesse Ventura wrestling with the idea of running for the White House?

This is "INSIDE POLITICS," the place for campaign news.

(COMMERCIAL BREAK)

CROWLEY: We want to show you some video that we just got in. The meeting we've been telling you about between Al Sharpton and John Kerry is over. This is tape of it.

When we he talked to the cameras, Sharpton said that he's actually not dropping out of the race. He is, in fact, going to stay in try to collect delegates, so that his urban agenda can be heard at the Democratic National Convention.

On the other hand, he, in fact, is endorsing Senator Kerry, whom he called a good person, and said it would not be a good idea for he, Sharpton, to continue criticizing Kerry. So, an endorsement from Reverend Al Sharpton to John Kerry.

Kerry, in turn, called Reverend Al Sharpton a man of warmth and candor, and someone who can cut through a lot of the double talk. So Al Sharpton still in the race, but endorsing John Kerry. Promoting, says Sharpton, his urban agenda.

Now, the Bush administration was set to appoint a so-called manufacturing czar last week, but Nebraska industrialist Anthony Raimando's nomination never got out of the starting gate after John Kerry jumped on a report that Raimando's firm had built a facility in China and laid off workers in Nebraska.

Earlier, I talked with Senate Foreign Relations Committee member Chuck Hagel, a Nebraska Republican. Before we got to the Raimando debacle, we talked about the election in Spain. And I asked whether the message from the election is, leaders who side with the U.S. are out of office?

(BEGIN VIDEOTAPE)

SEN. CHUCK HAGEL (R-NE), FOREIGN RELATIONS COMMITTEE: I wasn't surprised. When you're looking at the numbers that were violently opposed to Aznar's policy, putting 1,300 Spanish troops in Iraq, initially with the Bush administration on the invasion of Iraq a year ago, there's going to be a consequence for that. Certainly in a democracy.

So I was not surprised to see what happened. But the fact is -- and some of us were critical about this -- we were always very concerned as to how we went in. Because that wasn't the end of it.

What begins in Iraq doesn't end in Iraq. And we are an interconnected world. And we have to govern.

Someone has to govern. That's what we're going through now. Who's going to govern? How are they going to govern? So this is a very complicated process that was far beyond just a military invasion.

CROWLEY: Right. But what we have here is we have Spain's going to pull out of Iraq, which is probably more of a political problem than a military problem, I would guess. And so what does it say about what terrorists can do in terms of changing policy in countries?

HAGEL: Well, terrorism can, in fact, have political impacts, do. And always have. And that's why I say, again, if we're going to deal with the reality of what we're up against -- because terrorism is not just a terrorist component. It is political, and it has many dynamics to it -- then we're going to have to work through the United Nations.

We should have had the United Nations in at the front end. Why is that? Because it is the one legitimate international body that takes the focus off of Spain, takes the focus off the United States, Britain, and makes this a world effort to try to bring something together in Iraq so the people in Iraq can govern themselves.

CROWLEY: So would you -- are you saying directly that the Bush administration's failure to bring in the U.N. or a larger group of people is, in some way, tied to the fact that we now have a socialist government in place in Spain?

HAGEL: Well, I think that's probably too easy of a line-drawing process. But what I'm saying is this, Candy: actions have consequences. When you do not put a lot of time into thinking through your actions, then there will be consequences.

For example, just as I said, someone has to govern in Iraq. We should have thought more about that. How is that going to happen, what resources we're going to need, the legitimacy of the United Nations, a more multilateral effort going in. All those things I think I said, others did up front, should have been played out. But the fact is we are where we are.

We cannot lose now in Iraq. We cannot lose in the Middle East. And so, yes, these things have consequences. But the United States now, as you know, wants the United Nations in. And understands how completely, absolutely necessary it is for the future of Iraq.

CROWLEY: Let me ask you just really quickly, you sound like you're making the Democrats' case for an '04 change in the White House. Do you believe that, in fact, that what has happened is proof that this administration should have done this a lot better at the beginning?

HAGEL: Well, let me say this: this is an imperfect process. I wish I was wise enough to sort it all out. I'm not. I don't know of anyone who is.

CROWLEY: But you're kind of saying, he blew it, which is pretty much what we heard on the campaign trail.

HAGEL: Well, I'm not speaking for John Kerry or anyone else. I'm speaking for this United States senator. My record stands pretty clear, what I was saying two years ago, a year-and-a-half ago, a year ago. But I'm also saying that we need to sustain a policy that brings nations together.

This administration now wants -- is doing everything it can to get the United Nations in. John Kerry will have to defend himself in this. I'm co-chairman of George Bush's campaign in Nebraska. I want George Bush to be re-elected. I'm going to help him do that.

CROWLEY: Two words: Tony Raimando.

HAGEL: Yes?

CROWLEY: Whose fault was that?

HAGEL: The White House was inept, incompetent. I was stunned by what happened. Not one Republican senator knew about this. I'm the senior Republican senator of Nebraska, co-chairman of the president's campaign. I didn't know about it until I saw the AP story that John Kerry had just put out defining Tony Raimando. This was gross incompetence on the White House's part. (END VIDEOTAPE)

CROWLEY: But we wonder what he really thinks.

It is a long road to November. President Bush and John Kerry have already gone negative on the stump and in television advertising. Where do the campaigns go from here? A strategy session with two party insiders when "INSIDE POLITICS" returns.

(COMMERCIAL BREAK)

CROWLEY: With me now to discuss the presidential race are two party strategists. Democrat Kiki McLean is a spokeswoman for former Vice President Al Gore. Republican Greg Miller is a former adviser to Pat Buchanan and Steve Forbes.

Wow. We can't talk about this race -- I mean, the first question always has to be, what is up with the tone of this? What's prompting it?

KIKI MCLEAN, DEMOCRATIC STRATEGIST: Well, I think a defensive president who is in a little bit of a defensive crouch. His numbers are sliding. He knows that, frankly, his integrity is being questioned because of decisions he made about weapons of mass destruction. Decisions his administration and he had made about silencing administrators in his administration about Medicare numbers and the cost.

And so he feels like he's got to come out swinging. And this has really never happened in modern political politics before, where an incumbent president comes out in a negative attack, naming his opponent by name. And I think it just goes to show the weak position that George W. Bush is in for his reelection.

CROWLEY: I bet you have a different take.

GREG MUELLER, REPUBLICAN STRATEGIST: Well, Candy, I think when a candidate like John Kerry starts to resort to nasty comments, like calling people liars and crooks, it's a sign maybe of a little bit of desperation in a campaign that's a little lax on ideas. The now president has caught Saddam Hussein, the economy is starting to come back, 4.1 percent growth last quarter. Industrial production is up again this month.

The economy showing strong signs. And we've got a health care and Medicare reform plan that's putting people back into the health care system, which is what he's going to do tomorrow with health care savings accounts again.

CROWLEY: And before you say jobs, jobs, jobs, and Medicare, and all that stuff...

MCLEAN: All that important stuff.

CROWLEY: Right. I mean -- no, because I know what your tune is for (UNINTELLIGIBLE) and all that kind of stuff. But what I'm wondering is, what the heck are we going to be talking about in October? I mean, it seems to me that this campaign has exploded, you know, a couple of weeks ago. It is in high gear.

MCLEAN: Well, part of it is because John Kerry became a strong nominee for the Democratic Party, as you can see today by the endorsement of Al Sharpton. It's just one more step in terms of how unified the party is becoming behind John Kerry.

CROWLEY: So ready to go.

MCLEAN: So we're ready to go. And the other thing is, look, this president has raised money around everything. I mean, he's -- it seems like he sold more Girl Scout cookies than anybody, the kind of money he's raised. And Democrats are not going to be undone just because somebody walks around with a big, fat bank account.

You know, John Kerry is not going to let slings and arrows take him down when he has an important message of change for this country. And that's really important. I don't think that the people who've lost their jobs, the three million people who have lost their jobs, are going to mind if we debate about jobs every day between now and October.

CROWLEY: Right. But is there -- let me ask you -- surely reply to her, but is there a risk in being this rough on both sides? Let's just say everybody's guilty on both sides. Is there a risk to being this tough this early?

MUELLER: I don't think so, Candy. Look, I don't think there's a risk to debating issues. I think there's a risk for John Kerry when he starts calling people liars and crooks. And then in Florida the other day, he was saying we have a health care system that kills people. That kind of rhetoric is not becoming of a man or woman who wants to be president of the United States.

How are you going to deal with North Koreans? How are you going to deal with the global economy? How are you going to deal with the Iranians if you have that kind of temperament?

I think the bigger problem right now, Candy, though, is they're having a hard time defining John Kerry. He is a New England liberal just rated by National Journal the most liberal senator in the United States Congress. They've got to try and change the subject, so they're going on these vicious attacks on George Bush, so they don't get painted a McGovern, Dukakis kind of frame of mind.

MCLEAN: Greg forgets who launched the first negative attacks. And we probably agree on something. To talk about those issues, it would be great if the president would come forward, accept John Kerry's invitation to debate monthly between now and the election, so we could focus solely on issues and have a real dialogue that the American people could listen in on.

The reality is, John Kerry has looked up and said, guess what, it ain't working on the economy. We've got three million people losing jobs. We still have no job creation. We've got bad numbers from this president on what Medicare reform was going to cost. We got bad information on weapons of mass destruction.

There are questions about a tone of civility that George Bush said he was going to bring back, and he hasn't. And John Kerry has offered to do that. And, in the end, Greg, what's really important is that we give people the chance to have this debate. And I think George Bush doesn't want to debate because when we talk about these issues he loses every time now.

MUELLER: But that's simply not true. First of all, if you want to talk about Medicare, tomorrow he's going to give people health care. He's leading the country -- health care savings accounts.

MCLEAN: Let's talk about the guy who works for him who was told not to put the right numbers out.

MUELLER: But John Kerry wants a $900 billion health care package. That's what he's proposing, while President Bush is giving health care to the American people.

MCLEAN: John Kerry wants a health care plan that works.

(CROSSTALK)

MUELLER: But he wants to do it by taxing farmers and manufacturing jobs with the estate tax.

CROWLEY: OK. Let me just -- because I'm not sure how much (UNINTELLIGIBLE) listening to people viewing this. So let me move you to a slightly different subject, Al Sharpton.

Does it make any difference? I mean, here's -- far be it for me to speak for Al Sharpton, but what I believe is happening here is he has said, I'm going to stay in the campaign and gather delegates because I want to focus on an urban agenda. But I endorse John Kerry. Does this do anything?

MCLEAN: I think it's important for a couple of reasons. Number one, as I said, it's one more step to this party becoming really unified. Number two, I think even his sharpest critics will tell you that Reverend Sharpton made great strides in bringing up issues that are really important to urban America.

And I think what we saw today out of this meeting was John Kerry and Al Sharpton saying together as leaders they want to work to forward an agenda for urban America. Are cities are dying, Candy, and this is something the Bush administration hasn't done much about. But Al Sharpton has raised important issues, and John Kerry wants to act on them.

CROWLEY: So let me...

MCLEAN: So in the end, it can be very important. CROWLEY: And let me say that one of the things that was released from this was that 50 percent of African American males in New York City are unemployed. How does the Bush administration come back? Isn't that just a cold, hard fact that it's going to hurt him?

MUELLER: Well, I think unemployment is at 5.6 percent. It's lower than at any time in the last three decades.

I don't know -- look, you have to put people back to work that are out of jobs. But the bottom line is, when unemployment is at 5.6 percent, your economy is at 4.1 percent, surprising forecasters on Wall Street, and your industrial base is growing back, the signs for the economy and the cycle around November are probably going to be pretty good, Candy.

And I think the president's going to do fairly well. He's got a good message on all those things, and he's going to have a lot of people working. And the taxes are going to remain low, versus a tax- and-spend Democrat in John Kerry.

CROWLEY: One sentence, or I'll be unemployed.

MCLEAN: I think they're kidding themselves if they think the fact that three million people are out of work and they haven't created any jobs is going to help George Bush. It's why John Kerry is a messenger of change, and he'll win the election.

CROWLEY: Kiki McLlean, on the Democratic side, Greg Mueller, on the Republican side, come back.

MUELLER: Thanks.

MCLEAN: You've got it. We'd love to.

MUELLER: Love to.

CROWLEY: Some trends in a new poll may give the White House pause. Coming up, Americans' view of how things are going in this country, especially with the economy.

From now until June, most Tuesdays will mean there is a presidential primary somewhere in the country. And yes, there are reasons to care. We'll go through some of them.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

KERRY: I have heard from people who are leaders elsewhere in the world who don't appreciate the Bush administration approach and would love to see it change in the leadership of the United States.

ANNOUNCER: So who are those world leaders? And why is John Kerry refusing to name names?

It's the last major unanswered question. Who will John Kerry pick as his running mate? We'll read through the tea leaves.

Now, live from Washington, JUDY WOODRUFF'S INSIDE POLITICS.

(END VIDEOTAPE)

CROWLEY: Welcome back. I'm Candy Crowley sitting in for Judy today.

Well, so much for a big endorsement announcement. The Reverend Al Sharpton's apparent decision to stop campaigning for the Democratic nomination and support John Kerry came in a rather unusual way.

Emerging from a meeting with Kerry here in Washington, Sharpton stressed that he's not actually dropping out of the race, though he will endorse Kerry and he will continue to collect delegates to influence the party's agenda.

(BEGIN VIDEO CLIP)

REV. AL SHARPTON (D), PRESIDENTIAL CANDIDATE: I spent 30 minutes alone with the senator. And then he and I joined a broader group for awhile. And I informed him that I think that clearly he has won the nomination. And as I have stated during the race, I would support the nominee.

I think that it is, in my judgment, bad strategically, and bad for the country to engage in continuing to attack or in any way differentiate with him during the primaries that remain which would only help George Bush since he is the nominee.

At the same time, I intend to continue my campaign, though, to keep the issues of an urban agenda forward by electing delegates, and by appealing to other delegates to deal with things like the situation and conditions of our schools, health care, the problems in terms of policing, and the problems in terms of our urban centers. And that I expect to be able to go all the way to the campaign with those issues.

So, contrary to the public's report, we've not ended the campaign, we're going to the next step in our campaign, and that is the direction of the party. We've resolved who the nominee is. We should make the nominee victorious. We must resolve now what the party will stand for, who the party will stand for, so we can get the turnout necessary to defeat George Bush.

(END VIDEO CLIP)

CROWLEY: It was a statement from the Kerry campaign that alerted the media that Sharpton is endorsing Kerry. It was a statement the Kerry camp said Sharpton authorized them to make. So we want to try to sort all through this with our national correspondent Bruce Morton. Have at it.

BRUCE MORTON, CNN NATIONAL CORRESPONDENT: Well, Candy, people get in in the oddest ways, people get out in the oddest ways. The Reverend Sharpton says he wants to keep getting delegates so that he can advance his urban agenda. The fact is, as you know well, the guy who dictates the platform is the nominee. He will get whatever piece of paper he wants. He'll stress whatever issues he wants and in addition he has over 2,000 delegates.

Reverend Sharpton, the last time I looked at the CNN delegate count, had 27. You're not dictating anybody's agenda with 27 delegates or two or three more if you get those.

A lot of people thought he ran, really, to establish himself as the preeminent African-American spokesman the way Jesse Jackson did in the 1980s. And that flopped. And Jackson had in '88, if I remember right, some 7 million votes. He won actual primaries. He had over 1,000 delegates.

Sharpton, even in New York, among African-American voters, finished second to John Kerry, which proves, I suppose, that black Democrats are moving into the mainstream, they're more like regular Democrats. But Sharpton couldn't even carry that constituency in his home state.

So I don't quite know where he goes from here accumulating delegates. I think that will be fun to watch.

CROWLEY: It will be. And he's always fun to watch.

MORTON: Oh absolutely. He was the life of the campaign. No question.

CROWLEY: Absolutely. Does it do anything for Kerry to have put out a statement saying Al Sharpton supports me instead of George Bush?

MORTON: I don't think it brings those hundreds of Sharpton voters. He really doesn't have very many voters. But they are very unified this year. There haven't been any catfights and maybe this means there won't. This leaves only Dennis Kucinich as the sort of candidate in a race which is over.

CROWLEY: Our Bruce Morton, national correspondent. Knows everything about politics. Thanks, Bruce. Appreciate it.

The White House is edging closer today to accusing John Kerry of lying when he said he'd met with foreign leaders eager to see him defeat President Bush. Kerry says the administration is simply trying to change the subject. But calls for Kerry to name the leaders in question aren't only coming from the Bush camp.

(BEGIN VIDEOTAPE)

KERRY: I have had conversations...

CROWLEY (voice-over): Be careful what you say in politics, not because it may come back to you, but because it absolutely will.

KERRY: I'm not going to tell you who they are because that would betray their position. But I am telling you, point blank... UNIDENTIFIED MALE: Well then tell us who it was!

KERRY: I'm telling you, anybody who has traveled anywhere in recent weeks, months...

UNIDENTIFIED MALE: Senator, you're making yourself sound like a liar. Now answer the question.

CROWLEY: The Democratic candidate tangled with a Pennsylvania Bush supporter Sunday over Kerry's remarks a week ago to a group of Florida donors.

"I've met foreign leaders," he said, "who can't go out and say this publicly -- but boy they look at you and say, You've got to win this. You've got to beat this guy. We need a new policy."

Pummeled with questions later at a news conference, Kerry refused to say with whom, about what, or where the conversations took place.

KERRY: I don't think Colin Powell or the president would start listing names of people who said something critical of something or somebody. I'm not going to do that.

CROWLEY: Speaking of whom, Colin Powell says if Kerry isn't willing to say which foreign leaders support him and want the president out then Kerry should find something else to talk about. The White House seized the day Monday. A spokesman says if Kerry can't come up with names he's probably, quote, "making it up."

Asked for his response to their responses, Kerry went to fallback position.

KERRY: They're trying to change the subject from jobs, health care, the environment, Social Security. They don't have a campaign so they're trying to divert it.

(END VIDEOTAPE)

CROWLEY: And in a written statement, the Kerry campaign urged the president to stop using the White House press room to carry out political attacks. Kerry tried not to let the foreign leaders flap divert him from his message of the day, that the Bush administration is shortchanging first responders in the war on terror.

The presumed Democratic nominee told a firefighters union that supports him that the president is underfunding homeland defenders and using them as political props.

(BEGIN VIDEO CLIP)

KERRY: America doesn't need leaders who play politics with 9/11 or see the war on terror as just another campaign issue. Our nation's safety is too important. And if I am president, we will work toward victory in the war on terror, knowing that those on the front lines of this battle are heroes, not political props. That the needs of our first defenders will never be left for last. (END VIDEO CLIP)

CROWLEY: We want to now take a little closer look at new poll numbers that are out today that might be making the Bush campaign a bit uneasy. Just 39 percent of Americans now say they are satisfied with the way things are going in the country. That is down 16 points from January.

Among Republicans, the satisfaction level has dropped 13 points in two months. It dropped 15 points among independents. And it dropped the most in the Midwest, a whopping 20 points since January.

The state of the economy certainly plays a factor in all of that. The Gallup Poll shows 44 percent of Americans now believe economic conditions are getting better. That's down from 66 percent in January.

We want to talk about public perception and the economy, and how it squares with reality and politics. And Greg Valliere from Charles Schwab, a guy who can talk all these things.

GREG VALLIERE, CHARLES SCHWAB: Great to see you.

CROWLEY: I guess the first question is do those polls reflect reality, or do they reflect a perception of the economy?

VALLIERE: The latter. I think there's a perception, because the Democrats have dominated the news for the last couple of months, saying how terrible things are, because quite frankly I think the White House has done a terrible job of selling its own story.

But I think the perception now is that the economy is in trouble. If you talk, Candy, to all of us alleged experts or people on Wall Street, I think there's a consensus theory. Recovery is definitely under way. It's looking good, earnings are good. GDP is good.

But that's the statistics, the perception is totally different.

CROWLEY: Well, and also, we're now told -- and by Democrats, but others, that say look, it's not the jobless -- the unemployment rate. It's how many new jobs are being created, which has an awful big echo in there.

VALLIERE: Right. And every month, again, all of us alleged experts think there's going to be a big increase in what they call non-farm payroll. The next number comes out on April 2.

But every month it seems to be a disappointment. So for each successive month the White House is on the defensive. And if this continues much longer, if we go up to Memorial Day without much creation of jobs, I tell you, Candy, the similarities between right now, and '92, with a lot of us thinking the economy is doing well but the average American disagreeing, those similarities between now and '92 are getting eerie.

CROWLEY: And probably scary to the White House. Let me ask you about that because once the first Bush administration was out, we immediately had a recovery which everyone said well that's the Bush recovery. I mean are you saying that it may be a year before we're at the level of jobs and employment anyone really sees, at the base level, which is jobs?

VALLIERE: Right. It could take awhile. It could take many more months. And again, if it's summertime before jobs get created, at what point do public attitudes begin to harden? Does the public begin to just say look, this guy isn't doing a very good job on the economy.

So that's what I think the White House has to worry about. What I think they've got to do is show more empathy. Bill Clinton felt your pain. He said I'll work 24/7. I don't get the sense that this White House is really telling its story very well.

CROWLEY: So one of the things that I also noted was that there may not be much to do about the jobless situation. I've talked to some senators who have said, look, this is about the interconnection of world trade and world jobs. And you can't just create jobs out of that. Is there anything Bush can do to move any of the numbers that have to do with unemployment, jobs?

VALLIERE: Not a lot, really. Everything that we are going to get is in place. Whether it's the tax cuts or new spending. Maybe he could speed up unemployment benefits, maybe he could give more financial aid to workers who lose their jobs to India or China. But again, Candy, I think the main thing is empathy. Showing people that he really gets it. I'm not sure that a Boston Brahmin is going to do a much better job on the empathy front. The White House needs to show the public that they get it.

CROWLEY: We've only got about 30 seconds. When the White House goes out now it talks about home ownership. It talks about the amount of equity people, other things. Do those new move polls as much as seeing those jobless rates...

VALLIERE: No, they don't. And you would think with the stock market doing fairly well until the last couple of weeks, with homeownership, a lot of things looking good, they can make a stronger case. But as long as you have this albatross on jobs, I think the White House is going to be in some real trouble.

CROWLEY: Greg Valliere, if they're watching. This hasn't been very uplifting for them. Thanks so much. We appreciate it.

So how about the prospects of a Kerry/Edwards ticket? Coming up, one of our political experts reads the vice presidential tea leaves and is prepared to name names. We'll also count the reasons why the political parties still hold primaries and caucuses, even if the nominations are all but officially decided. And remember this?

(BEGIN VIDEO CLIP)

DEAN: The power to change this country is in your hands, not mine. (END VIDEO CLIP)

CROWLEY: Coming up, something that sure sounds like a case of what goes around comes around.

(COMMERCIAL BREAK)

CROWLEY: When it comes to choosing the Democratic presidential nominee, the guessing game has long since ended but the selection of a running mate for John Kerry is another matter. CNN political editor John Mercurio has been reading the tea leaves, the goat entrails, whatever we want to call this. You've come to tell us what you've learned. First of all, what process is this? All I really know about it is Jim Johnson.

JOHN MERCURIO, CNN POLITICAL EDITOR: It's Jim Johnson, Mary Beth Cahill, Bob Shrum, and obviously it's John Kerry, probably two or three other aides at most. We're not getting a lot of official information from these people so unfortunately it kind of remains one of Washington's favorite parlor games. I think it's probably going to remain that way for at least another month. That's by design for the Kerry campaign. I think what they're looking for or trying to do is keep this thing as tight as possible. They don't want any leaks. They don't want any of their possible VP candidates worrying about what they're telling them getting out to the "New York Times" or to CNN.

I think it's going to remain tight. I'm hearing from some people who may or may not know what they're talking about that May is sort of the target date for an announcement. One of the major reasons being that they need to start getting surrogates helping them on the fund- raising circuit.

CROWLEY: So, is Johnson -- is he who heads the VP team, is he at the point where he's talking to actual candidates or who is he talking to at this point?

MERCURIO: No, at this point he's going around Washington, Capitol Hill, talking to Democrats. I think they're at the consulting stage. He's talking to Tom Daschle, Nancy Pelosi, Democratic leaders of the house and Senate. People like John Sweeney, the head of the AFL-CIO who endorsed Kerry. Fritz Hollings, one of the biggest Democrats in the south to endorse Kerry. They're in a point where they want to consult, give the appearance that they're bringing everybody in. That they're listening to everybody, getting everybody's input. I think this week Johnson was supposed to meet with some governors around the country and leaders of the business community.

CROWLEY: That whole unity thing.

MERCURIO: They just want everybody to feel like they've had a part in the process. But he hasn't started interviewing potential candidates at least from what I'm hearing.

CROWLEY: So this is always sort of a quiet race. You know, people always say who wants to be vice president. But plenty of people do. Who's out there kind of auditioning or positioning themselves?

MERCURIO: Lots of people. Lots of people, and to different extents. You've got Bob Graham saying basically last week that he would -- what did he say? He would sacrifice anything except his grandchildren to be a vice president.

CROWLEY: Whew.

MERCURIO: Last week John Edwards the former candidate held a meeting with John Kerry, joining him were a lot of trial attorneys and other big donors to the Edwards campaign. A lot of Edwards' donors stood up and quite implicitly or explicitly linked their financial support for Kerry to their desire to have Edwards as the VP running mate. And made that very clear. Some of the Kerry campaign people weren't that pleased by that.

But you also have Tom Vilsack who's got the powerful, you know a sort of PR machine working behind him called the Democratic Governor's Association. They've been sending out e-mails keeping everybody abreast about what Vilsack is doing. He's the governor of Iowa. Endorsed Kerry after the Iowa primary. We're keeping an eye on him and we're being -- kept an eye on him.

Howard Dean on "Meet the Press" yesterday didn't say he wouldn't accept the nomination. Wes Clark is going to be in Ohio tomorrow. It's his third sort of surrogate visit on Kerry's behalf. He did a fund raiding letter for Kerry. What I'm hearing, though, is that Wes Clark's wife Gert who was very supportive of his presidential campaign has reversed course, has no desire for him to run for VP.

And the last name I want to mention is not a candidate for VP, but Bob Shrum. I mentioned him a couple minutes ago. He's very powerful, well-known consultant in Washington. Very close with Kerry and is very influential in this process and has been known to support his prior clients. Which is why I think we're hearing the name Bill Nelson, senator from Florida, one of his clients.

CROWLEY: We've given them something to chew up and we'll come up with some more names for tomorrow. How is that? CNN's political editor John Mercurio, thanks a lot.

Illinois will be holding its presidential primaries tomorrow, even though President Bush and Senator Kerry already have a lock on their party's nomination. For this week's how it works segment, we want to take a look at why the remaining contests are held.

Reason No. 1, delegates. The primaries and caucuses select the men and women who will go to this summer's conventions. Reason No. 2, the party faithful. You've noticed that President Bush and Senator Kerry are still campaigning. Nothing motivates the true believers or helps raise cash like seeing a candidate in the flesh. And reason no. 3, races for Congress, state legislators and other issues will be included on the ballot. Of the 16 states still to hold presidential primaries or caucuses, 12 are holding primaries for U.S. House seats and 8 have Senate primaries on the same day. Tomorrow's primaries in Illinois feature wide-open and hotly contested U.S. Senate races for both parties. April 27 in Pennsylvania, Republican Senator Arlen Specter faces a spirited primary challenge from Congressman Pat Toomey who says Specter is too liberal. The primaries continue until June 8.

For true political junkies there will be plenty to watch. Up next, the Bush family hopes to avoid a case of deja vu. The president's mother is keeping a close eye on the Bush re-election campaign with the pain of a past election defeat still on her mind. And former first lady Hillary Clinton once saw evidence of a right- wing conspiracy. Now she's a senator, and she says the conspiracy is back, and bigger than before.

(COMMERCIAL BREAK)

CROWLEY: Checking the headlines in campaign news daily. Former first lady and current presidential mom Barbara Bush is reportedly worried about reliving her husband's 1992 election defeat. According to "TIME" magazine, Mrs. Bush and current First Lady Laura Bush are questioning the current management of the Bush re-election campaign. The magazine quotes sources who say the president's mother has, quote, "seen this movie before and she doesn't want to relive it."

Senator Hillary Clinton is reviving claims from her own political past with a colorful description of Senator John Kerry's political opponents. At an event yesterday in Boston Senator Clinton said Kerry faces what she called, quote, "a vast right-ring media interlocking network and infrastructure."

Former pro wrestler and Minnesota governor Jesse Ventura may not be finished with politics after all. Over the weekend, Ventura won a round of applause when he told an audience gathered for a wrestling hall of fame ceremony, quote, "maybe in 2008 we'll put a wrestler in the White House."

When you hear a good line you might as well repeat it. Up next, Howard Dean's rhetoric struck a chord with the party faithful and apparently John Kerry was listening. An echo from the campaign trail when INSIDE POLITICS returns.

(COMMERCIAL BREAK)

CROWLEY: We want to give you an update of a story which began March 9 when a water taxi overturned in Baltimore Harbor. Authorities up there have now found the third and last person's body that had been missing from that accident. This now completes the search and rescue mission for the authorities. The last body, the third, that of a 26- year-old woman, has been recovered from the Baltimore harbor.

There will be more INSIDE POLITICS in a minute. Right now we want to run up to Wall Street for a business news update.

RHONDA SCHAFFLER, CNN SENIOR MARKET CORRESPONDENT: Candy, there was a broad-based sell-off today, that was tied to increasing concerns about terrorism and what that could mean for economic growth both here and abroad. Airline and vacation related stocks hit especially hard on reports linking al Qaeda to those attacks in Spain last week. The Dow Industrials off 137 points on the day. 29 of the 30 blue chip stocks losing ground. The NASDAQ slid more than 2.25 percent. The specter of more terrorism also played havoc with oil prices. Crude oil prices shot higher soaring $1.25 a barrel. That's it from Wall Street. "JUDY WOODRUFF'S INSIDE POLITICS" continues in just a moment.

(COMMERCIAL BREAK)

CROWLEY: Howard Dean's ability to fire up the party faithful included a number of applause lines centered on one theme, change. Dean, as you may know, lost out to Senator John Kerry but his campaign rhetoric lives on. If you listen closely on the campaign trail these days, you might hear a Dean echo.

(BEGIN VIDEO CLIP)

DEAN: The truth is that the power to change this country is in your hands, not mine.

KERRY: We need to change what is happening in this country, and the power to change it is in your hands.

(END VIDEO CLIP)

CROWLEY: Not convinced? Tomorrow the Kerry campaign plans the first of what it's calling "Change for America" rallies. That is it for INSIDE POLITICS. I'm Candy Crowley. "CROSSFIRE" starts right now.

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