JIM LEHRER: Kwame Holman begins our campaign coverage.
KWAME HOLMAN: At the YMCA in downtown Des Moines, Iowa, the president invited hundreds of supporters to witness him sign an extension of three middle- class tax cuts that were set to expire in January.
PRESIDENT GEORGE W. BUSH: Overall, 94 million Americans will have a lower tax bill next year, including 70 million women and 38 million families with children.
KWAME HOLMAN: The campaign's decision to promote the president's fourth tax cut in four years comes at a time when polls show the race for the presidency in a statistical dead heat.
A Newsweek poll taken Friday and Saturday has Sen. John Kerry ahead 47 to 45 percent, reversing the lead President Bush held in mid-September. A USA Today/CNN/Gallup Poll taken Friday through Sunday has the two candidates deadlocked at 49 percent. Last week, the president was up eight points in that poll.
With each campaign looking for an edge, two new strongly worded ads began airing this weekend nationwide on cable television and in select local media markets. The Bush-Cheney ad criticizes Sen. Kerry for saying in Thursday's debate that a preemptive U.S. military strike must meet a "global test."
AD SPOKESMAN: So we must seek permission from foreign governments before protecting America? So America will be forced to wait while threats gather?
President Bush believes decisions about protecting America should be made in the Oval Office, not foreign capitals.
KWAME HOLMAN: The Kerry-Edwards campaign fired back with its own ad, disputing the Bush campaign's interpretation of the senator's remarks.
AD SPOKESMAN: George Bush lost the debate. Now he's lying about it. This is what you heard John Kerry really say.
AD SPOKESMAN: The president always has the right for preemptive strike. I will hunt and kill the terrorists, wherever they are.
KWAME HOLMAN: On the campaign trail today, however, the focus was on domestic issues. Sen. Kerry touted his support of stem cell research at a rally in Hampton, New Hampshire.
He was joined by actor Michael J. Fox, who has Parkinson's Disease.
SEN. JOHN KERRY: One hundred million Americans, more than six hundred thousand of them-- your neighbors-- suffer from illnesses that could one day be treated with stem cell therapy. We know that stem cells could hold the key.
KWAME HOLMAN: Sen. Kerry attacked President Bush for placing restrictions on the use of federal funds for stem cell research.
SEN. JOHN KERRY: So I know that many of us, like Michael, as he just described it to you, take it very personally when three years ago George Bush enacted a far-reaching ban on federal funding for stem cell research, tying the hands of our scientists, driving some of them away from America to other countries, a brain drain so they can go and do the research that they're forbidden to do here; tying the hands and shutting down some of the most promising work on Parkinson's or diabetes or other life-threatening diseases.
And because of this ban all across America, we've got people praying every single day for cures that our scientists are limited in their ability to be able to explore without the full strength, the power of federal research, which has proven historically to be so powerful in pushing colleges and universities and laboratories and hospitals towards the finding of cures.
KWAME HOLMAN: And while Sen. Kerry supported extending the middle-class tax cuts, he criticized the president's earlier tax cuts as benefiting the rich at the expense of improving health care and education.
SEN. JOHN KERRY: George Bush thinks it's important to make those tax cuts for people earning more than $200,000 a year permanent. I think it's important to roll that back to where it was under Bill Clinton and invest in health care and education and lower the cost for Americans. That's the choice in this race. (Applause)
And what we're going do in my health care plan is every child in America is covered automatically day one. We take over Medicaid from the states, they're going to be covered. (Applause) And I'll tell you what else we're going to do. We're going to make America a place of fairness again.
You know that senators and congressmen give themselves the best health care in the world? And they give you the bill. Well, when I'm president-- and it's part of my plan-- we're going to make it possible for any American who wants to, to buy in... you've got to buy in, we're not giving it away, but we're going to make it possible for you so we expand your choices in the marketplace to buy into the same health care plan that senates, congressmen, and president give themselves. You ought to have that right just like we do.
KWAME HOLMAN: Campaigning this afternoon in Clive, Iowa, President Bush defended all of his tax cuts.
PRESIDENT GEORGE W. BUSH: We've got to keep people's taxes low. We need to make sure the tax relief we pass is permanent. Today I signed a piece of legislation that extended the child credit, marriage penalty and the 10 percent bracket for five more years. (Cheers and applause)
And when you help the small businesses, you help the job creators. And when you help the job creators, somebody is more likely to find work. We've added 1.7 million jobs since august of 2003. The tax relief plan is making a difference. (Applause) And there's a difference in taxes in this campaign. There's a big difference. I've lowered taxes and my opponent wants to raise taxes. (Audience boos)
You may have noticed, he changes positions quite frequently but not on taxes. (Laughter) during his 20 years in the Senate, he's voted to raise your taxes 98 times. Now, all of a sudden he's saying, well, he's for a middle- class tax relief, except he voted against raising the child credit. He voted against reducing the marriage penalty. He voted against creating a 10 percent bracket, which helps low-income Americans.
Plus, he's proposed $2.2 trillion in new federal spending. And so how... he said... they asked him, "How are you going to pay for it?" And he said, "Oh, I'll just tax the rich." We've heard that before, haven't we? If most small businesses pay individual income taxes, and you raise the top two brackets, you're taxing job creators. And that's bad economic policy, to be taxing the people who are creating the new jobs.
If you want more jobs, you keep people's taxes low, not run them up. (Applause) If you propose $2.2 trillion, and you only raise a little over $600 billion by raising the top two brackets, there's a gap. (Laughter) $2.2 trillion in spending, a little over $600 billion in revenues raised means you've got to fill the hole. You've got to find additional taxes if you're going to fulfill your promises.
And guess who ends up paying? Every time somebody out of Washington makes the promises and falls short of being able to raise the revenues, they're going to tax the middle-class every single time, aren't they?
KWAME HOLMAN: This was the president's 17th visit to Iowa this campaign season. He'll be back in Washington tomorrow, to spend the day preparing for his second face- to-face meeting with John Kerry Friday night in St. Louis. Meanwhile, Sen. Kerry will take his turn campaigning in Iowa tomorrow, then move on to Colorado for two days of debate preparations.
JIM LEHRER: Terence smith has more on the campaign.
TERENCE SMITH: We take a look now at the state of the presidential campaign and tomorrow night's vice presidential debate in Cleveland. We get the perspective of Susan Page, Washington bureau chief for "USA Today." Susan, welcome.
SUSAN PAGE: Thank you, Terry.
TERENCE SMITH: When you're reporting this campaign and looking at it this week, does it look different than last week or the week before?
SUSAN PAGE: It certainly does. We had a situation the previous two weeks where President Bush was pulling ahead. A small but pretty steady lead, eight points in our poll, six points in some other polls. That changed on Thursday night. The debate had the effect that these debates sometimes have, which is to shake up a race. We're now back to the kind of straight up even race that we saw from March until August.
TERENCE SMITH: And do you put this down specifically to Sen. Kerry's performance or President Bush's performance? What's the reaction?
SUSAN PAGE: I think certainly both men's performances played a role in this. Sen. Kerry seemed steady, he wasn't verbose, which can sometimes be a problem for him. He defended his position on Iraq called it consistent and attacked President Bush's handling of the situation in Iraq, said he was out of touch with reality with the growing violence on the ground.
That's an argument Democrats didn't make at their convention in retrospect I think they wish they had. President Bush on the other hand I think didn't fare so well. He had a few talking points, he kept returning to them, mixed message for instance, wrong war, wrong place, wrong time.
And when you had those cutaway shots to him he looked kind of petulant, fidgety and annoyed. He didn't look presidential.
TERENCE SMITH: When you look at these two new ads, and we just saw them in the setup piece that came out today, what, from your conversations with officials in those campaigns, what's the strategy behind, in effect, re-fighting the debate?
SUSAN PAGE: The terrain that President Bush would like to fight this election on is the war on terror. He has a big advantage over Sen. Kerry when it comes to handing the war on terror. People trust him more; they think he did a good job in the immediate aftermath of the Sept. 11 attacks.
He'd like to raise questions about whether Sen. Kerry would be strong enough to defend the nation to terrorists and that's why he ran that ad. You saw the Kerry people fight back immediately with an ad saying his comments were taken out of context from the debate.
So they felt the need to push back. But the Kerry people would really prefer to turn now to talking about domestic issues. That's terrain that favors Sen. Kerry.
TERENCE SMITH: Well, that's, indeed, what they did as we just saw on the stumps from today. They are out there; they're talking about important domestic issues. You say that plays to Sen. Kerry's strengths?
SUSAN PAGE: That's right. Sen. Kerry has an advantage. People think he'll do a better job handing the economy. If you look at President Bush's vulnerabilities, they come in the area of job creation: The loss of manufacturing jobs in some of the big battleground states like Ohio; health coverage: A million more Americans lacking health coverage now.
These are issues that haven't gotten the attention that they usually do in a presidential election. We've been talking about foreign policy, national security not so much about pocketbook issues, the Democrats would like to change that now.
TERENCE SMITH: This comes from your polls. It shows the there's greater strength?
SUSAN PAGE: That's right. When Sen. Kerry was really under fire, he lost that advantage in our poll in handing the economy. He had that back in the poll that we had in the paper this morning. That's critical for his prospects to win the election. Our poll shows that President Bush, though, still has a big advantage, 17 points, when it comes to handing the war on terror and a smaller advantage, seven points, when it come handling the war in Iraq.
TERENCE SMITH: Now, of course, the war in Iraq may very well be a topic tomorrow night when the vice presidential candidates gather in Cleveland and have their one and only debate. What do you... first of all, how important is it? Normally vice presidential debates are not considered campaign changers. Is it more important this year?
SUSAN PAGE: I think it's more important for two reasons: One is Dick Cheney is no ordinary vice president. He's been very important player inlaying policy.. especially when it comes to the war in Iraq and the war on terror. That's one reason.
Another is Republicans really feel the need to change the dynamic of the race from Thursday's debate. They would like to see Vice President Kerry [Cheney] rise and press some of these questions about Sen. Kerry....
TERENCE SMITH: Vice President Cheney?
SUSAN PAGE: Vice President Cheney raise questions about Sen. Kerry and they think actually that while John Edwards is a very effective speaker that he may be a little disadvantaged. He has been less effective in attacking the top of the ticket on the other side.
TERENCE SMITH: So you would anticipate Vice President Cheney then going after the man who's not there, John Kerry?
SUSAN PAGE: I think it's... somewhat called it a debate in the third person and I think that's right. It doesn't really matter whether you like John Edwards or dick Cheney better. It matters what you think about the men at the top of their tickets. That's what will determine people's votes in the end.
TERENCE SMITH: And for Sen. John Edwards? What does he have to accomplish?
SUSAN PAGE: Well, I think Sen. John Edwards needs to look like he has a grasp of policy, this that he has gravitas. That's a word we throw around for these debates, sometimes. He is just a first-term senator so the burden for him, I think, is to show that he can effectively be on a stage with a very experienced person and the incumbent Vice President Dick Cheney.
TERENCE SMITH: And the format, the two of them sitting with the moderator, Gwen Ifill, at a table, does that favor one or the other?
SUSAN PAGE: I think it may favor Vice President Cheney. John Edwards is a very dynamic guy. When you see him campaigning, as we both have, he walks around the stage, he embraces an audience. Dick Cheney is a much lower-key speaker.
But he's very effective in the kind of conversations like you and I are having now. When he's on Meet the Press" he has been a very effective communicator. So I think it's a good forum for Vice President Cheney.
TERENCE SMITH: Susan Page of USA Today, thank you very much.
SUSAN PAGE: Thank you, Terry.