July 18, 2003

Announcer: From our nation's capital, this is WASHINGTON WEEK. And now here's moderator GWEN IFILL.

GWEN IFILL, host: Mounting questions about pre- and post-war Iraq, and the dollars and cents of domestic politics. Pre-war planning--White House credibility on the line as President Bush and British Prime Minister Tony Blair defend the intelligence they used to support overthrowing Saddam Hussein. Post-war difficulties--the Pentagon now admits a guerrilla war is under way in Iraq. Should we have seen it coming? Did we? Democrats are stepping up the criticism, but the candidates for president have their own problems--money, money and money. Other dollar signs were bleeding red this week as the administration announced a record $455 billion budget deficit. But how big a fiscal and political problem is it?

Covering these stories this week: Michael Duffy of Time magazine; Doyle McManus of the Los Angeles Times; Dan Balz of The Washington Post; and Gloria Borger of US News and CNBC.

Announcer: Here again is moderator GWEN IFILL.

IFILL: Good evening.

Analysis: How inaccurate intelligence ended up in Bush's State of the Union address

GWEN IFILL, host: This is one of those weeks where a half-hour is just not gonna seem like enough, so we're gonna get right to it. This story just won't go away: How could the president use inaccurate intelligence in a State of the Union speech? Was it the CIA's fault, the National Security Council's fault, Great Britain's? Reporters asked the president and Prime Minister Tony Blair just that yesterday. Their responses:

President GEORGE W. BUSH: I take responsibility for making the decision, the tough decision, to put together a coalition to remove Saddam Hussein because the intelligence, not only our intelligence, but the intelligence of this great country, made a clear and compelling case that Saddam Hussein was a threat to security and peace.

Prime Minister TONY BLAIR (Great Britain): The British intelligence that we had, we believe is genuine. We stand by that intelligence.

IFILL: Note the difference in the way each leader responded.

So, Michael, what did that tell us?

Mr. MICHAEL DUFFY (Time Magazine): Well, I think it tells us that politicians, no matter what country they're from or what language they speak, aren't really good at saying, `I'm sorry, I made a mistake,' and it's just not something that's really in their vocabulary or their makeup. We've seen it over again this week. I would've thought last Friday that we wouldn't be here talking about this story, that it would have gone away by now. But I think one of the reasons we are is that the White House worked almost overtime this week to keep it in front. They--they seemed to--seemed to want to keep it in front of us. On Monday, for example, Ari Fleischer came out and said, `Well, you know, even though we repudiated this evidence a week ago, we still think it's technically correct because we hung it on British intelligence and, in fact, we should really consider it to be true until proven false.' That had a lot of heads spinning. That kind of changed the burden of proof on us.

On Wednesday, George Tenet, who had said, `I take full responsibility for this,' went up to the Hill and was grilled by Senate Intelligence Committee members for four or five hours, and--and allowed as how he hadn't really read the speech after all, which raised the question of, `Well, who is responsible for it? Are you just taking credit for it, taking responsibility because it was a good, you know, smart, brave, bold thing to do?'

And then today in--in a move that I really don't understand, the White House released something that never gets released, a CIA national intelligence estimate. It's a--it's a document that--this is it. And it was designed, I think, in part to say, `Look, we--we hung this on British intelligence because they said it was true.' But if you read this document, you come away really thinking that there was a huge fight inside the government about the size and the shape and the vector of Saddam's nuclear ambitions. So I'm not sure a week later that they've done anything, really, to do but raise more questions.

Mr. DAN BALZ (The Washington Post): Mike, the--this administration has, I think, justifiably earned a reputation for being very good at damage control, for doing exactly what you suggested they might do, which was take a bad story and move it off the screen. Why has this one been so much more difficult for them?

Mr. DUFFY: I think because there actually are real, continuing, ongoing divisions inside the administration about what to believe and what to think about this evidence. I think one of the reasons it's in the speech--and this is what people who are skeptical about it say--is that the hard-liners in the administration just wanted to believe it. And if--and if you read the estimate, which is put out by the CIA, and they were a little more skeptical of it, it's full of things like `judge' and `we believe' and `we think' and `we--we guess.' But none of those doubts and--and cautionary statements are really in the stuff they shared with the public, which means there was clearly a difference of opinion, and I think that goes on today.

Ms. GLORIA BORGER (US News & World Report): Well, what does this tell us about kind of the nature of the intelligence, that the president is the depen--is really depending upon...

Mr. DUFFY: And we're all depending upon.

Ms. BORGER: ...ver--and very conflicting, right? I mean...

Mr. DUFFY: Right. It's really interesting. I--I've never seen one of these things. About a month ago on this show, I tried to describe it 'cause somebody had described it to me.

IFILL: Right. I remember.

Mr. DUFFY: And I said, `Well, I guess it lo--works like this.

IFILL: Yeah.

Mr. DUFFY: Well, here we have it finally, and not only is the language very hedged, which I think is probably wise on their part, at the end of the--the--at the end of this, they have something that says, `confidence levels and all of our judgments.' Then they list all the things for which they have high confidence in, and then they have a section saying, `We have moderate confidence in these statements, and we have low confidence in these statements.' I thought, well, this would be a great way to do our own stories.

Ms. BORGER: We should do that. Right. Yeah.

Mr. DUFFY: Yeah, but it tell...

Mr. BALZ: Dangerous way.

Mr. DUFFY: You know, Colin Powell said in his book, you know, you never can make decisions with one policy with 100 percent of the information. You know, it's good if you get 75 percent. What this tells you is that intelligence is--is an art, not a science, and they never have 100 percent of knowledge.

Mr. DOYLE McMANUS (Los Angeles Times): Michael, an awful lot of this controversy ha--ha--has circled around and around over the question of: Who put a flimsy statement in the president's speech and how come? Do we know any better now how that happened?

Mr. DUFFY: We do know a little bit. We kind of knew last week that when the--when the push came to shove in the speech in the language that it was--they had--it was basically a tug-of-war between a mid-level CIA official named Alan Foley and a mid-level NSC, National Security Council, official named Robert Joseph, and they argued about this. And even now their--their impressions of how that conversation, which took place on the phone a few days before the speech was given, differ. They differ in significant respects. One guy sees it, you know, `You did make me say this. You did ask for it. You were ...(unintelligible).' The other--the other view says, `No, we just kind of went back and forth. It was--it was very collegial.'

Even people who heard Mr. Foley talk about it behind closed doors in the Senate Intelligence Committee disagree about how he described it. So we're in the land of really never probably being able to get to the truth. But again, the divisions in this administration between the hard-liners and the moderates endure.

IFILL: Now, Michael, obviously, there's political fallout. At least we assume that they must think there's a political fallout. Your magazine has a poll which is coming out this weekend. Talked to a thousand people on Wednesday and Thursday, and you found out the president's job approval rating has slipped: 55 percent now approve of the job he's doing, which is an 8-point drop since May; and 40 percent say he's doing a good job on Iraq, which is down 13 points since May.

BUSH-JOB APPROVAL

55% APPROVE

40% DISAPPROVE

BUSH/IRAQ-JOB APPROVAL

40% APPROVE

55% DISAPPROVE

1,000 people polled; margin of error +/- 3.1%

TIME, July 16-17

IFILL: That's an amazing slippage.

Mr. DUFFY: It's the biggest drop of--of--if you ask people how they view the president's job performance in specific areas--economy, foreign policy, domestic policy--that's--it's on his handling of Iraq that is the biggest. I--I think you cannot attribute that entirely to WMD and the questions of who, you know, put what in what speech when and--it--it has a lot more to do, I suspect, with what's going on in Iraq and the continued danger and death that is faced by American soldiers.

IFILL: But does--but does it begin to explain why the White House is so anxious to get its version of events out there?

Mr. DUFFY: It--it does. I think why they are trying to do kind of classic political damage control about something that is essentially secret and, therefore, really hard to come clean on, especially if you still disagree about it.

Analysis: Pentagon admits US now engaged in guerrilla warfare in Iraq

GWEN IFILL, host: Well, you talk about what's going on in Iraq now. Even as the intelligence questions and answers continue to unfold, the Pentagon is struggling with how to fight what they now admit is a guerrilla war.

General JOHN ABIZAID (Commander, US Central Command): (From Wednesday) It's low-intensity conflict, in our doctrinal terms, but it's war, however you describe it.

IFILL: But is it a war we should have been prepared for? The Los Angeles Times had new details on that in today's editions. Doyle is here to fill us in.

Mr. DOYLE McMANUS (Los Angeles Times): Well, Gwen, whether we should have been prepared for this guerrilla war that we now face in Iraq is a matter that's being debated inside the administration and outside, but one thing is very, very clear. We were not fully prepared for what we've found. The planning for the war itself, for what the military calls the major combat phase, was brilliant. The war was--was won in--in--in much quicker order than even they had--had planned on. When the American troops arrived in Baghdad, there were two things going on that they had not fully prepared for. One was the extraordinary extent of the looting that had occurred, and the problem there was that the post-war administrators were coming in expecting to find government departments that they could plug into and a police force that was functioning; and none of that was there. Jay Garner, the head of that administration, said, `The stuff I was going to depend on had melted away.' And then the second thing was senior officials say they simply did not expect this level of guerrilla warfare. Now there--and that is really turning into the big toothache for the administration.

Now there--surprises happen in--in any war, and there's a little element of Monday morning quarterbacking going on in--in--in the bureaucracy and--and outside. There are two--two factors that people in the Pentagon point to to explain why they didn't--didn't expect this. One is--probably the most important--that it now appears that Saddam Hussein and his people had a plan, a sabotage plan, and a lot of that looting that occurred wasn't just looting, it was deliberately to make it impossible, especially of the electrical system and the water system, for the Americans to pick up and--and move on.

But the other was the fact--remember just before the war, Turkey refused to let the 4th Infantry Division go through Turkish territory into northern Iraq.

Unidentified Panelist: Right.

Mr. McMANUS: That ended up being key to what's going on now because that allowed Saddam Hussein's loyalists to melt back into that area. There were no American troops there for a week or more. That's where they now are. That's the center of the guerrilla warfare, and the guerrilla warfare is not getting better at this point; it's getting worse. The American military forces in Iraq say they are facing as many as 12 attacks every day, and the number of casualties from this combat is more than 30 since the president declared major hostilities over on May 1st.

Ms. GLORIA BORGER (US News & World Report): Didn't they also underestimate the problems they would have if Saddam Hussein were still alive? A, he could be leading this--the--this insurgency. And, B, people are afraid he's gonna come back.

Mr. McMANUS: That's right. That's right. They thought--the--and that's, of course, one reason that so much effort went into trying to get Saddam with those bombing stri--three different bombing strikes...

Ms. BORGER: Right.

Mr. McMANUS: ...trying to get him. Su--there was a new tape from Saddam Hussein this week. He is somehow communicating with people. He's not only communicating and operating, he's even reading the newspapers and keeping up, because his tape this week said, `Don't pay any attention to these excuses from Tony Blair and George W. Bush,' and he told people, `Don't cooperate.' He's told them to attack other countries that sent troops, which is a key part of the next phase for the Americans.

Mr. MICHAEL DUFFY (Time Magazine): If--if the situation is such a mess, why doesn't the US send more troops to fix it? Because we hear on--over the weekend that, you know, they sort of are playing with this idea. They say, `We'd like to. We don't want to send more, but we might have to.' What's going on with that? Is that a solution or is that just too prickly a political problem for the administration?

Mr. McMANUS: Part of it's political, but--but the folks on the military side insist that they believe the current force level of about 148,000 is the right force level. But what is going to change is the kind of troops. Because the troops that are there now, that--the 3rd Infantry, the 1st Marines, they were a fast-moving assault force to take territory. That big armor is going to start coming out and it's going to get replaced by people who can do police forces and anti-guerrilla warfare. But we are back in what is now called asymmetrical warfare. We are back fighting guerrilla forces who we can't recognize. They're not u--they're not wearing uniforms. And General John Abizaid, the new commander of--of Central Command, said at a remarkably candid and tough-minded briefing this week, the briefing at which he contradicted Secretary of Defense Rumsfeld who, in a--what looked a little bit...

Ms. BORGER: Oops.

Mr. McMANUS: ...like denial, said, `This isn't guerrilla war. It's just lawlessness.'

IFILL: Right.

Mr. McMANUS: Only a week later, Abizaid says, `I've seen guerrilla war. This is guerrilla war. And the worst part,' he said, `is the guerrillas are getting better. They're learning, they're learning what we do, they're using more weapons, they're using surface-to-air missiles.' At the moment, it's not getting better, it's getting worse.

Mr. DAN BALZ (The Washington Post): What does this mean in terms of our long-term commitment into--in the context of troop size, cost, budgetary costs, and the risks to our troops?

Mr. McMANUS: What it means, Dan, is that the troops are not being drawn down at the schedule that had been hoped for. There was a--a--a really unfortunate back-and-forth where the troops of the 3rd Infantry Division had been told they would be out by September. Then they were told, `No, you're in there indefinitely.' The morale plummeted. Now they're back to coming out over the fall. But what it really means is that the original hopes, which were to draw down the troops quite rapidly, ain't there anymore. We're still gonna be looking at these--at these levels. And it also means that the importance of getting troops from other countries in there is going up.

IFILL: The Center for Strategic & International Studies--I think I've got their name right.

Mr. McMANUS: Right.

IFILL: They sent a group, their own group over to assess what the chances were for post-war success, and their report today was that the window is closing. That should be giving the Pentagon some heartburn.

Mr. McMANUS: This was a task force, in fact, that Secretary Rumsfeld sent over there, and they came back with very sobering news, yes. They said, `Time is short. The security situation still isn't under control.' And they said, in fact, in Baghdad the security system itself looks as if it's getting worse. In Baghdad, women do not feel safe going out in the street during the day without male relatives accompanying them.

IFILL: Hmm.

Analysis: Democrats searching to find weaknesses in Bush's administration

GWEN IFILL, host: Well, on to the domestic front. Democrats are trying to sniff out the president's weaknesses on Iraq and other issues, what one campaign official called a crack in the president's armor.

Is that a fair description, Dan?

Mr. DAN BALZ (The Washington Post): I think it is. I think this has probably been two very bad weeks for the president, both Iraq and the economy. And the Democrats, I think, unlike past times when they've kind of gone after Bush with the hope that they might be able to break something open, I think they feel that he's actually vulnerable on these at this point, and they've gone after him with, I think, more energy and more intensity than--than you've seen in the past. There's really sort of two ways they're doing it. One is on the issue of credibility, kinds of things that Mike was talking about. Did the president deliberately mislead the country in making the case to go to war with Iraq? If that begins to stick, that's a big problem for the president. Those issues already, I think, have kind of reinforced the anger that exists on the Democratic base, which is very upset with President Bush. It tells them they were right about this and Bush was wrong, and it gives them more energy to try to go out and do something.

I think, though, in--in the long run what's potentially more dangerous is what Doyle's been talking about: an extended commitment, continued casualties, no significant improvement in the s--in the si--situation in Iraq. That's the kind of danger for Bush that will not affect the Democratic base, but will affect swing voters.

IFILL: If--if they find that crack in the armor, does it help them raise money? This week, we saw new reports which showed the president has raised a boatload of money, in spite of whatever question marks that may be out there, and the Democrats aren't quite there.

Mr. BALZ: There--there's two interesting money stories, and let's talk about Bush vs. the Democrats first, which is a real David and Goliath story and, I think, one of the important sort of underlying dynamics of this campaign over the next 15 months. George W. Bush raised, over the last quarter, $34 million for his presidential campaign. The nine Democrats combined raised about $31 million. Bush had 12,500 people who gave him $2,000, the maximum you can give to an individual candidate. He had 105,000 individual donors. They've had 18 people who have already raised $200,000 on behalf of the president. So what you now have is this huge imbalance. You have a playing field that between now and the two national conventions next summer, George W. Bush will have an enormous pot of money to spend without any primary opposition. The Democrats will individually have much less, and they will spend it going after one another, and whoever emerges is likely to be broke.

The flip side of that is on the Democratic side. You asked, `Is this helping people raise money?' It has certainly helped Howard Dean raise money. Howard Dean led the Democratic pack in fund-raising in this quarter. He raised $7 1/2 million. He raised a lot of that on the Internet, probably about half of that on the Internet, in small donations. He had 70,000 donors, which is astonishing for somebody who was, you know--who's still relatively unknown nationally. So it has helped him. Other Democrats are having real problems, Dick Gephardt being one in particular who's had problems.

Ms. GLORIA BORGER (US News & World Report): Why do you think Gephardt is--is having such problems? Is it because he was so supportive of the president on the war?

Mr. BALZ: It's not clear that that's the direct reason. Dick Gephardt came into this campaign with a reputation as somebody who--who had at least a better national fund-raising base than many of the other candidates, and it's turned out not to be the case. He--he raised, this quarter, $3.8 million. It was $1 million--$1 million plus less than they had said they hoped to raise. It was about $600,000 or $700,000 less than they said they had raised.

Ms. BORGER: Right.

Mr. BALZ: They woke up on the day they had to file their report and realized they had fallen far short. The question is: Was this simply that they were fishing in the wrong places for money, or is there a lack of enthusiasm for the Gephardt candidacy that has translated into problems for fund-raising? He's gotta answer that question in the next three months.

Mr. DOYLE McMANUS (Los Angeles Times): Dan, who else is in trouble here in terms of raising money, and how soon do these lagging candidates have to bite the bullet and think about getting out of the race?

Mr. BALZ: Well, it's interesting. Joe Lieberman had, as it turned out, a moderately decent quarter in raising money. He raised about $5 million. But he only had--has $4 million in the bank. He's spent at a pace far--you know, far faster than he should be, and he had a big shakeup in his campaign this week. He got rid of his top fund-raiser, dispute with his chief of staff over how they were raising money. But the--but the larger question you raise, which is will they have to--to think about getting out, I think we're not in that environment this year. We don't have a campaign in which you've got a dominant front-runner who has so much more money than everybody else, and I think most of them think they can stay in long enough to fight this campaign in Iowa and New Hampshire and see how they do.

Analysis: Budget deficit continues to grow

GWEN IFILL, host: Well, on to more about money. Remember when the deficit was such a big deal that it gave people like Ross Perot something to campaign on? Well, the news this week is that the deficit is back, bigger and badder than ever before, $455 billion this year, $475 billion next year. And that's just what they're admitting to.

Gloria, big news, big money.

Ms. GLORIA BORGER (US News & World Report): Whoa. Well, it's also--Gwen, it's a figure that's 50 percent higher than what the administration was projecting just five months ago...

IFILL: Yeah.

Ms. BORGER: ...so it's really quite extraordinary, although the White House promises--promise, promise--to cut it in half within the next few years or, you know, by 2006, and they say, you know, not to worry about it. This is what they call, quote, "manageable," because we'll be able to grow ourselves out of this once those tax cuts kick in, once the economy starts growing again, and we'll be fine. And by the way, interest rates are low, so if you're gonna have a big deficit, this is kind of a good time to have it. But, you know, if you look at the markets, the long-term interest rates started going up, and that means that at some point it's really gonna matter. And so, you know, Democrats came out swinging this week and said, `Hey, we had a balanced budget. George W. Bush did not.'

Mr. MICHAEL DUFFY (Time Magazine): Dissect this budget deficit for us, Gloria. What--what's in it and what isn't in it?

Ms. BORGER: Professor Borger.

Mr. DUFFY: Yeah. Hypothetically.

Ms. BORGER: Yeah, I--well, you know, it's very--it's very interesting because, of course, the big question we're all asking here in Washington is: What about the costs of military operations that Doyle was just talking about? The projections now are $5 billion a month, and listening to Doyle, I think that could even get worse if we do end up sending more troops or--or whatever.

Mr. DOYLE McMANUS (Los Angeles Times): And the real question is how long...

Mr. DUFFY: How long?

Mr. McMANUS: ...that level persists?

Ms. BORGER: Right. How long that--that level persists. What is the growth rate of the economy going to be? We've heard about rosy scenarios for years and years and years, you know. The White House says the growth rate's gonna be, you know, 3.-something percent, and Alan Greenspan said, `No, no, no. It's gonna be 2.5 or 2.7.' So there's a--so there's a discrepancy there. We don't really know what's gonna happen when the baby boomers start needing their Medicare and they start needing their Social Security. So when you look at this, it's really a long-term problem. It's not a--it's not a short-term problem. We'll get away with it for a couple of years.

Mr. DAN BALZ (The Washington Post): Republicans that I've talked to say they're not that concerned because they don't think it will have any resonance politically, that this will not be a big political issue. What do the Democrats do that about that?

Ms. BORGER: Well, the Democrats are out there using words to describe deficits that you would not believe. For example, John Kerry called it immoral. I mean, I would never have thought a deficit was immoral, but a deficit is immoral because you're robbing money from your children and your grandchildren...

IFILL: Or a deficit is immoral if you're like Jo--John Kerry and think maybe the tax cuts weren't a good idea.

Ms. BORGER: E--exactly. Or a deficit is reckless. So they're using these kinds of adjectives to really get people riled up about the deficit. The big problem that the administration has is not so much the deficit, but what they're doing is they're tying it to joblessness, and this is an administration that understands that hit--it has a real problem when it comes to joblessness. It's lost three million jobs. And how do you explain that to the American public? The American public doesn't think that there's a recovery going on even though some academic said, `Well, the recovery happened in--you know, sometime 18 months ago.' But American public doesn't see that. They see jobless rates and they're--and they're worried about that.

IFILL: I mentioned Ross Perot. The last time def--deficits were a big deal in 1992, we were--or even before that, we've been covering deficits up until the last several years--our whole careers.

Ms. BORGER: Oh my God. Right.

IFILL: But up unt--up until then, in 1992, the difference was there were deficits, but there were also sky-high interest rates. There were all these other things that were causing anxiety.

Ms. BORGER: That's right. So interest--that's right. So interest rates are low now. There's not that much anxiety about the deficits. If your interest rates, your mortgage rates started going up, people would clearly start worrying about it. So, you know, you've got to tie the deficit to something else that's bad. And the Democrats are try--trying to tie it to other things, but they're also trying to remind you--and this goes to the credibility issue, again, that Bill Clinton--and they are using his name--that Bill Clinton did balance the budget and that this is an administration that has no credibility when it comes to the economy because they promised to have a good economy and they didn't. And the administration says, of course, `Look, we're living in a post-9/11 world. It costs a lot of money to fight terrorism. It costs a lot of money to fight--to fight these wars. It costs a lot of money for homeland security, so it's a different--it's a different world.'

IFILL: OK.

Ms. BORGER: And so it's--it's difficult.

IFILL: OK. Well, thank you, Gloria. Thank everybody else.

Close: Argument breaks out in House of Representatives

GWEN IFILL, host: One thing more we've got to share with you before we go tonight. It happened in the House of Representatives today. Democrats walked out, police were called, words were exchanged. What were they thinking? The fight was supposed to be about pension reform, but it was really about long-simmering tensions between Democrats and Republicans. One Republican apparently told Democrat Pete Stark to shut up. Stark, who's a 71-year-old Democrat from California, responded, according to a committee transcript, quote, "Are you big enough to make me, you little wimp? Why don't you come over here and make me? I dare you, you little fruit cake, you little fruit cake." Stark later told the "NewsHour" that his language was inappropriate. You think?

Sign-off: Washington Week

GWEN IFILL, host: Keep up with daily developments on "The NewsHour with Jim Lehrer," and we'll see you again right here next week on WASHINGTON WEEK. Happy birthday, Jeff Bieber. Good night.