[Pulled- Copyright complaint by owner. Please post excerpts] EVANS-NOVAK POLITICAL REPORT: June 18,

EVANS-NOVAK POLITICAL REPORT: June 18, 2002

2002-06-18 12:43 (New York)

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June 18, 2002

Washington, D.C.

Vol. 36, No. 13

To: Our Subscribers

Unhappiness with Ashcroft points to internal trouble in the Bush

Administration as the President announces a first strike against

Iraq.

U.S. makes move to win good graces of Russia, but may be losing

its free-trade credentials.

Daschle scores another win in the Senate, but Yucca battle

looms.

In this issue: primaries and runoffs in Alabama, South Carolina

and Utah next week.

BUSH ADMINISTRATION

Outlook: While President George W. Bush's approval rating

remains high, a sense of unease pervades his administration --

particularly when it comes to the performance of some key Cabinet

members.

1) The White House did not hide concern over Atty. Gen. John

Ashcroft's “dirty bomb” announcement from Moscow that had the effect

of spooking markets and frightening other Americans. Ashcroft is

accused of grandstanding -- a major sin in the Bush Administration.

2) Tom Ridge has been a disappointing Homeland Security director

and certainly is not first in line for the Cabinet-level post. He

could stay as a senior presidential aide or become Secretary of

Transportation.

3) The vacancy at Transportation could be created by the

possibility that Norman Mineta, the Cabinet's only Democrat, will be

its first resignation. He has been in poor health and clearly has not

been up to the challenges of 9/11.

4) White House Chief-of-Staff Andrew Card is possible for the

new Cabinet post, but his stock has fallen as a result of his

indiscreet comments in an Esquire magazine article about senior

adviser Karl Rove -- and about Bush himself.

5) Beyond personnel difficulties, the economy worries Bush

Administration officials more than they admit publicly. The recovery,

as we have reported, is passive. The prolonged stock market torpor is

disturbing.

6) The conviction of Arthur Andersen, a delight for the young

lawyers at the Justice Department, is seen in the White House and by

Republicans as going after the wrong target. The attack on a

corporation instead of individuals is widely viewed as a policy

error.

First-Strike: The surprisingly candid revelations that President

Bush has signed papers calling for the overthrow of Saddam Hussein,

coupled with his call for a first-strike against terrorist nations,

signals to the world that the attack on Iraq is set, with the time

still undetermined.

1) The dissent from this view is limited and certainly is not

coming from the Democratic leadership. Senate Majority Leader Tom

Daschle (D-S.D.) has signed on, and that is significant.

2) The anti-Iraq attack is tied to bipartisan, largely

uncritical support of Israel. Prime Minister Ariel Sharon told a

closed meeting of the Senate Foreign Relations Committee last week

that removal of Saddam Hussein is the best way to solve the

Palestinian question. He was not contradicted.

3) Secretary of State Colin Powell and the uniformed military

are skeptical about the Iraq attack, but their voices are necessarily

muted if the Commander-in-Chief seems to have made his decision.

U.S.-Russia: Last week, the U.S. followed Europe by recognizing

Russia as a market economy, a key step towards Russia's accession

into the WTO.

1) Like Europe's decision, the Bush Administration's recognition

of Russia followed promises by President Vladimir Putin that the

state would dismantle the high subsidies for its energy industry.

Still, in some ways, Russia is moving away from a free market,

and motivation behind Bush's decision can be found in political and

diplomatic considerations as much as in an assessment of Russia's

situation. The EU and the U.S. are engaged in a battle for the good

graces of Russia. Also, Russia has bought some favor with the U.S. by

its expressed support of the war on terrorism.

2) The recognition means that the U.S. and the EU will treat

Russia as it treats other allies in trade disputes. Specifically, in

determining punitive tariffs, nations will regard prices in Russia as

true market prices from which to calculate tariff rates.

3) Critics point out, though, that in some industries Russia is

making moves towards increased state control of some industries. In

particular, Russia has taken steps to nationalize the country's

largest vodka maker and monopolize the vodka industry there.

4) The Bush Administration hopes that the gesture will push

Russia to stop providing Iran with materials that can be used as

weapons. Also, if the recognition does work to liberalize the energy

industry in Russia, that will decrease the influence of OPEC over the

oil supply coming into the U.S.

5) Russia will have more difficulty obtaining market-economy

recognition by other WTO members who see themselves with less to gain

from the gesture than do the U.S. and EU.

Global Warming: President Bush has continued his missteps on the

environment, once again giving ammunition to his opponents on the

left while upsetting his supporters on the right. Because of the

incoherence of Bush's message, it is nearly impossible to predict, in

the short term, what policies and regulations the Administration will

put forth.

1) Bush blamed it on the “bureaucracy” when his Environmental

Protection Agency submitted to a UN panel a document that depends on

a report drafted during the Clinton/Gore Administration regarding the

human impact on global climate. Specifically, Administration watchers

blame Phil Cooney, the chief of staff at the Council on Environmental

Quality, an Executive Office agency outside of the EPA.

2) The change in direction hurts Bush in many ways. It allows

Bush opponents to further the perception of the President as bungling

and uninformed on the environment. It also exacerbates problems with

business interests and conservatives who want him officially to

withdraw the document and remove the U.S. signature from the Kyoto

global warming treaty.

3) This points to what some say is a systemic problem in the

Bush White House: too many career bureaucrats and appointees who are

not true conservative believers, and perhaps not even loyal to Bush.

MONEY REPORT

Steel Tariffs: The Bush Administration is coming across new

problems stemming from the 30 percent tariffs it imposed on imported

steel in March.

1) Administration officials say they are surprised by the price

spikes in steel and manufacturing. They assert these prices are more

due to exaggeration and over-reaction than actual market conditions.

Steel prices were rising in the first quarter of 2001, before the

tariffs were imposed. In January through March of this year, hot-

rolled steel prices climbed 10 percent -- about $20 per ton.

2) After the announcement of the tariffs, buyers flocked to pick

up steel before the levies went into effect, and prices approached

$275 a ton. The decrease in supply caused by the tariffs has brought

a ton of steel up to $300, compared to $210 at the end of last year.

Administration officials had said in March that they expected

increases smaller than have actually appeared.

3) Meanwhile, WTO agreed yesterday to rule on Europe's proposed

$888 million in retaliatory tariffs against U.S. The WTO panel will

also examine weather Asian countries have grounds for retaliation.

Underlying the European dispute are the political ambitions of EU

Trade Commissioner Pascal Lamy who wants to be a leader of the left

in France.

4) President Bush could defuse some European resentment on steel

by granting generous exemptions to certain exporters into the U.S.

Steel interests and manufacturers are lobbying heavily in Washington

on opposite sides of the debate over exemptions. Over 600 exemptions

have been requested already. Still, the steel interests-primarily the

labor unions-have more political influence with Bush than do the

opposing industries.

CONGRESS

Supplemental Appropriations: President Bush's threats against a

pork-laden bill are running into complications.

1) The House Republican leaders have insisted on passing the

debt-limit as part of the Supplemental rather than as a free-standing

bill, in order to save Republican members the embarrassment.

2) Senate Democrats have seized the opportunity and suggested

that they will drop their insistence on a separate debt-limit

extension if the Supplemental includes spending caps that are much

higher than the President wants.

3) That suggests the possibility that Bush may be forced to sign

a Supplemental that he definitely does not want, in order to get the

debt limit extension -- and keep the Social Security checks rolling.

Senate: Majority Leader Daschle is on a winning streak.

1) Most recently he caught Republicans off guard by bringing up

the bill for permanent repeal of the estate tax last Wednesday. He

had announced the bill would hit the floor before the July 4 recess,

and so anti-tax groups had planned for then a grass-roots campaign

targeting vulnerable Democratic Senators such as Tim Johnson (S.D.)

and Jean Carnahan (Mo.). The vote came before they could launch their

efforts.

2) The bill got 54 votes, six short of the 60 needed to waive

the budget rules and pass the tax cut. The three most vulnerable

Senate Democrats -- Johnson, Carnahan and Sen. Paul Wellstone (Minn.)

-- all voted no.

3) Liberal Sen. Lincoln Chafee (R-R.I.) joined most Democrats in

voting no, as did Sen. John McCain (R-Ariz.).

4) Daschle now is trying to avoid leaving Democratic

fingerprints on the vote to override Nevada's veto of the President's

decision to create a permanent nuclear-waste storage facility at

Yucca Mountain. The override will pass, but Democrats don't want to

look like the culprits. In Nevada's new House district, Democrat

Dario Herrera has a very slight edge over Republican Jon Porter, and

has successfully used Bush's Yucca stance against the GOP.

5) Law requires the Senate to vote on it, but does not dictate

who must bring up the vote. Republicans contend that it should be the

chairman of the Energy Committee, Sen. Jeff Bingaman (D).

House: Speaker Dennis Hastert (R-Ill.) upset his party when he

more or less announced that the House would have to come back for a

lame duck session to complete the year's work. Amid consideration of

a prescription drug benefit and the work required to create the

Department of Homeland Security, almost nobody is confident the House

can complete the appropriations process before the target adjournment

date of October 4. But Republicans wish that Hastert had kept the

pressure on rather than granting an extension this early.

ELECTION 2002

Texas Report: Republicans have edges in the two major statewide

races, but everything is still liquid there.

1) Gov. Rick Perry (R) has consistently held a healthy lead over

wealthy businessman Tony Sanchez (D). Perry surged ahead after early

missteps by Sanchez. Sanchez took out massive early television buys,

and they were ineffective and too much, too early. He has slowed down

the pace of the TV ads, and his latest spots have been more

effective. Also, after Sanchez attacked a Perry appointee for hiding

some assets, it came out that Sanchez had failed to report $295,000

in Conoco stock.

2) One recent poll showed Perry leading by 20 points, but

Sanchez's campaign has contended that he trails by only 4 points. One

poll, conducted by the Texas Medical Association (which has endorsed

Sanchez) shows an eight-point Perry lead. The TMA poll expects a 33

percent Hispanic turnout, and so it probably overstates Sanchez's

support among likely voters.

A realistic Perry lead is probably in the low double digits, not

insurmountable for a candidate as well heeled as Sanchez.

3) Atty. Gen. John Cornyn's (R) race to succeed Sen. Phil Gramm

(R) is close enough to make national Republican leaders

uncomfortable. The poll late last week showed Cornyn leading former

Dallas Mayor Ron Kirk (D) 35 percent to 30 percent, with 33 percent

of voters still undecided.

4) Kirk, if he won, would be the only African American in the

U.S. Senate, and national Democrats are uniting behind him.

Presidential hopefuls Sens. John Kerry (D-Mass.), Tom Daschle (D-

S.D.) and John Edwards (D-N.C.) are hosting a $1,000/head fundraiser

for Kirk next Tuesday night. Sen. Hillary Clinton (D-N.Y) will also

be appearing for him.

5) Cornyn's campaign hopes that Kirk's ties to liberal party

leaders will hurt him with Texans. They also emphasize that the

Dallas-Fort Worth chapter of the Center for American-Islamic

Relations counts Kirk as a friend.

6) Cornyn, meanwhile, is trying capitalize on two things very

popular in Texas: President Bush and tort reform. Cornyn pledges to

be Bush's go-to guy on the issue, which has some cache in a state

where trial lawyers are ubiquitous and have a bad reputation.

7) The redistricting plan leaves basically none of the state's

32 congressional seats in contention and Republicans will shrink the

Democrats' edge in the delegation from 17 to 13 down to 17 to 15.

New York Report: The Congressional redistricting plan requested

by Vice President Dick Cheney and House Speaker Hastert leaves out in

the cold Rep. Ben Gilman (R) and Democrat Rep. Louise Slaughter.

1) Slaughter may challenge Rep. John LaFalce (D) in a primary,

or move and run against Rep. Tom Reynolds (R). Either way, she

doesn't appear to have much of a chance.

2) For 15-term Rep. Gilman, though, the options are more open.

He has at least entertained bolting the Republican Party and running

as a Democrat against Rep. Sue Kelly (R). However, he may have ruled

this out when Democrats told him that he would not be in line for the

chairmanship of the International Relations Committee if he won and

Democrats regained the majority. Gilman ran the committee for six

years before GOP term-limits made him hand over the gavel. Rep. Tom

Lantos (D-Calif.), in his 11th term, is the top Democrat on the

committee.

3) Gilman has hired Republican consultant Arthur Finklestein to

test the waters in Kelly's district, as well as in the districts of

Reps. Nita Lowey (D) and Eliot Engel (D). Gilman may also consider a

run against Rep. Maurice Hinchey (D).

4) The most likely outcome in New York is that Gilman and

Slaughter both lose, and the other 29 incumbents win re-election,

leaving Democrats with an 18-to-11 majority in the state delegation.

5) The re-election of Gov. George Pataki (R) to a third term

long has been considered a virtual certainty, but a few caveats have

emerged.

6) The wild card is the independent candidacy of billionaire

Thomas Golisano. He claims he will spend $75 million of his own money

-- five times what he spent in his last run for governor four years

ago. Considering what happened in last year's New York City mayoral

election, Golisano could at least cripple Pataki.

7) Pataki has drifted considerably to the left over the last

eight years, and some disaffected conservatives could be attracted by

Golisano. While Golisano is even less of a legitimate conservative

than Pataki, he is using the same “too liberal for too long” label on

Pataki that Pataki used on in Mario Cuomo in 1994.

8) State Comptroller Carl McCall (D) and former HUD Secretary

Andrew Cuomo (D) are in a bitter battle for the Democratic

nomination. While Cuomo has made many mistakes and has proved an

unattractive candidate, he is still the favorite in the September

primary -- mainly because McCall is an African-American. Cuomo is an

underdog against Pataki, but would benefit if Golisano takes votes

from Pataki.

JUNE 25 PRIMARIES

Next Tuesday Alabama and South Carolina will each hold runoffs

in a couple of primaries. Also, after the state GOP convention

narrowed down the field in two congressional races in Utah, voters

there will nominate their candidates for an open seat and a

vulnerable Democratic seat. However, the U.S. Supreme Court may rule

Thursday that the census count in North Carolina was inaccurate, in

which case, Utah would win a fourth seat, mixing up the picture.

Alabama-1: In the battle of two former Capitol Hill Chiefs of

Staff, the advantage lies with the one who has been in the district

for the last five years. Jo Bonner (R) has been the top aide to

retiring Rep. Sonny Callahan (R), but moved back to his district

office in Mobile in 1997. Tom Young (R) ran the office of Sen.

Richard Shelby (R), but worked out of Washington, D.C.

In the primary, Bonner got 40 percent of the vote to Young's 20

percent. Both candidates have been raising serious cash, but the

climb is uphill for Young. Third-place finisher David Whetstone (R)

has gotten behind Bonner, which may not help him much, but it is

indicative of the leanings in Whetstone's home base-suburban Baldwin

County.

While it is not impossible for someone in Young's position

(having lost 2 to 1 in the first round) to come back and win the

nomination, Young would need some sort of anti-Bonner backlash.

Bonner has very low negatives, and so should coast to victory next

week, and easily win in November to succeed his old boss. Likely

Bonner.

Alabama-7: More than one Alabama political insider has likened

Artur Davis's (D) primary challenge of Rep. Earl Hilliard (D) to a

bar fight. Davis, a former Assistant U.S. Attorney, got in a good

first punch, catching Hilliard off guard by earning 43 percent in the

primary and forcing a runoff by holding the incumbent to 46 percent.

But Hilliard won't be surprised again, and will fare better in

the general election. Hilliard has gone on the offensive, running ads

attacking Davis for taking money from what his supporters

characterize as “New York Jewish Republicans.” The cavalry has also

arrived for the five-term incumbent, with national Democratic money

pouring in to save him.

Davis did a good job of giving voters in the majority-black 7th

district a reason to fire Hilliard -- pointing to his campaign-

finance irregularities among other problems. Hilliard also hurt

himself by launching a factually-incorrect personal attack on Davis.

Davis has strong support in the district's urban areas that

include Birmingham Montgomery and Selma, while Hilliard is solid in

the rural regions. Both have money coming in from Washington,

including Republican groups.

Turnout will be the key, and with the Democratic establishment

motivated behind him, Hilliard won't get sucker-punched again.

Leaning Hilliard.

South Carolina Governor: When he first won election to the U.S.

House in 1994, Mark Sanford (R) surprised everyone. In a crowded

field he worked his way into a runoff with former state party

chairman Van Hipp (R) and then surpassed him in the end.

This time, Sanford goes into the runoff as the leader, after

winning 39 percent, edging out the favored Lt. Gov. Bob Peeler (R)

who had 37 percent. Sanford did better than expected upstate and was

very strong in his own district. Now he has won the endorsement of

Atty. Gen. Charlie Condon, who finished third last week with 16

percent. Sanford is running radio ads touting that support.

Peeler, after the primary, immediately went on the attack,

picking on Sanford's votes against increased military spending.

Peeler is a southern-style conservative who wants to repeal the

state's property taxes, while Sanford is a more of a libertarian and

has a plan for phasing out the state's income tax.

To Peeler's advantage, the race is being cast in part as a Bush-

McCain rematch, with McCain getting behind Sanford, and Bush's people

backing the LG. But in polls throughout the race, Peeler has failed

to exceed 37%, while Sanford's stock is clearly on the rise.

Because all runoffs depend on turnout, Peeler will be helped by

his strong grass-roots support, and a handful of local runoffs

upstate. But Sanford's statewide ID and positives are high now, and

Peeler's uncharacteristic reversion to negativism will hurt him.

The winner will take on Gov. Jim Hodges (D). Leaning Sanford.

South Carolina-3: After a recount last night, State Rep. Jim

Klauber's (R) lead held up in the race for second place and the right

to battle State Rep. Gresham Barrett (R) in a runoff next Tuesday.

Klauber pulled in 22 percent and edged out Circuit Court Solicitor

George Ducworth (R) by 26 votes.

Barrett pulled in 44 percent in the primary, and the odds are

against Klauber making up that gap. It is difficult to get district-

wide television exposure in the 3rd, and Barrett has very few

negatives on which Klauber could play.

Rep. Lindsey Graham (R) is vacating this seat in his effort to

succeed retiring Sen. Strom Thurmond (R). Although the seat had been

Democratic before Graham won in 1994, Tuesday's winner will be

favored over Democratic nominee George Brightharp who lost to Graham

in 2000. Likely Barrett.

Utah-1: At first glance, the two Republicans seeking to succeed

Rep. James Hansen (R) have similar profiles: Rob Bishop (R) was the

House Speaker and Kevin Garn (R) is the House Majority Leader. Also,

both candidates are conservatives.

But Bishop's strength is the backing of the party operatives --

he was chairman of the state GOP. Garn's strength is his money. He

says he's worth more than $40 million, and has pumped $600,000 of his

own wealth into his campaign.

The cash gives Garn higher name ID, which in this race may be

the difference. Also, with his prominent role in the state House,

Garn keeps Bishop from holding a monopoly on the support of the

party's foot soldiers. Leaning Garn.

Utah-2: Tim Bridgewater (R) and John Swallow (R) were the two

candidates to survive the GOP convention in the Congressional

district now held by Rep. Jim Matheson (D). If the Supreme Court

Thursday announces that Utah is entitled to a fourth district, both

men will run in that open fourth, giving Matheson an easy ride to re-

election.

Without that ruling, or if the current districts stand for only

2002, the general election will be a competitive race. Bridgewater,

like Garn in the 1st, has much of his own money with which to run,

but Swallow, a state representative, has run a better campaign by

many accounts.

Bridgewater bears some stigma as a carpetbagger, and also has no

legislative experience. With higher profile stories in Utah right

now, the party faithful will form a larger portion of the primary

electorate than otherwise. This is to Swallow's advantage. Leaning

Swallow.

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