This is a partial transcript from "The Beltway Boys", Feb. 12, 2005, that has been edited for clarity.

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MORT KONDRACKE, HOST: I’m Mort Kondracke.

BILL SAMMON, GUEST HOST: And I’m Bill Sammon, filling in for Fred Barnes. And we’re "The Beltway Boys."

KONDRACKE: Well, the hot story of the week is numbers crunch. Monday, President Bush (search) unveils his new budget, and by Tuesday, it’s pretty clear that, that the numbers don’t add up. In the first place, he didn’t include numbers for any years beyond this year for the war in Iraq and, and Afghanistan. Certainly there’s going to be a cost. But it’s, you know, it’s indeterminate what it’s going to be.

Secondly, the budget contains a five-year window, as they say, and doesn’t include any spending that’s going to go on beyond that, although we, we’re for sure, we know that he’s going to have, have to borrow money for Social Security reform (search), and there’s going to be an alternative minimum tax fix that’s not accounted for, and he wants his, his tax cuts extended and so on.

Then this week, we find out that the Medicare prescription drug benefit (search) that we get, got passed last year has a new estimate, a new number. Now, it’s $725 billion over, over a 10-year period. Previously it was 535 over a, an eight-year period. It’s, it’s math, but everybody was acting shocked and, and amazed that this, that this new number had come out, although it’s worth noting that the, that if the Democratic alternative bill had passed, it would, would have been probably double what the, what, what the, the president’s bill was.

Anyway, here is the president defending his Medicare prescription drug plan. Watch.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: For decades we promised American seniors that we can do better, and we finally did. Now we must keep our word. I signed Medicare reform proudly, and any attempt to limit the choices of our seniors and to take away their prescription drug coverage under Medicare will meet my veto.

(END VIDEO CLIP)

KONDRACKE: Those were his own people he was talking about to change. I mean, the Democrats want to expand it.

Anyway, the, the latest FOX poll shows that President Bush has a slight uptick in his job approval rating. He’s at 51 percent in our, in our new poll. And 57 percent agree with his assessment that the Social Security system is in crisis.

On the other hand, only 41 percent say that they will be worse off if President Bush’s Social Security plan is enacted, and 40 percent trust the Democrats more on this issue than they do the Republicans, which indicates trouble ahead on, on the Social Security front.

Finally, finally we have Harry Reid, the, talking about what he thinks about the president’s budget. Watch this.

(BEGIN VIDEO CLIP)

U.S. SENATOR HARRY REID (D-NV), MINORITY LEADER: We believe that this budget document is a moral document. And if it is as we say it is, and I believe it is, this document is immoral for what it does to those who can’t defend themselves.

(END VIDEO CLIP)

SAMMON: You know, Mort, Democrats sent out an e-mail this week with the headline, "Bush Losing Spin War Over Social Security." And based on those poll numbers, I think they’re right. I think the problem with Social Security and some of these other budget issues is that they’re so complicated that they’re easy to demagogue and difficult to understand.

And I think Bush isn’t taking it seriously enough. For example, there, there’s this charge floating around that Bush is going to cut Social Security benefits by 46 percent. I think a lot of people hear that and they believe it, and they don’t know where exactly it originated. Bush has never really said that. And yet it has an effect.

I think that the Republicans are going to have to start taking their cue from Elizabeth Dole (search), who won her Senate race, her senatorial race, in 2002 against Erskine Bowles (search) in part because every time this issue of Social Security came up, from Erskine Bowles, her opponent, she waved a blank sheet of paper and said, "This is the Democratic plan," a blank sheet of paper. It was devastatingly effective.

I think Republicans are going to have to start doing this.

Now, there are two problems for Bush. One is, the Democrats are just going to block Social Security at every turn. In fact, this week Republican Congressman Paul Ryan of Wisconsin said that he’s been trying to enlist individual Democrats that support this plan.

And he said that each Democrat told him the same thing, which Ryan paraphrased as follows, "I like what you’re doing, I like this bill. I think it’s the right way to go. But my party’s leadership will break my back. The retribution they are promising us is as great as I have ever seen. We can’t do it."

Now, that’s pretty serious stuff.

Now, the second problem Bush is facing is that he’s out there trying to sell his message, going on the road to various states. The problem is, his message is being overshadowed by international developments, like in North Korea and Iran.

And that brings us to our second hot story of the week, axis of evil. And I’ll let you explain that title later, Mort. But the background is that North Korea this week announced that it’s something that we’ve known for some time unofficially, and that is that it has a nuclear weapon.

You know, to make matters worse, they’ve also said, We don’t want to participate in these six-party talks that are aimed at getting them not to have a nuclear weapon and getting this nuclear, getting them to do away with the idea of a nuclear peninsula in Korea.

Here’s what Donald Rumsfeld, secretary of defense, had to say about this. Take a look.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: Given their dictatorial regime and the repression of their own people, one has to worry about weapons of that power in the hands of leadership of that nature. I don’t think, you know, anyone would characterize the leadership in that country as being restrained.

(END VIDEO CLIP)

SAMMON: Not to be outdone by North Korea’s ominous announcement, on the very same day, Iran came out and said that there will be a "burning hell," for any country that dares to invade them. Obviously they’re referring to the United States.

So the Iranians seem determined to join North Korea as members of the world’s nuclear club, which is a very bad development. President Bush seems to think that these problems can be solved through diplomacy. Let’s take a look at what he said to reporters this week in the Oval Office.

(BEGIN VIDEO CLIP)

BUSH: The Iranians just need to know that the free world is working together to send a very clear message, don’t develop a nuclear weapon. And the reason we’re sending that message is because Iran with a nuclear weapon would be a very destabilizing force in the world. And I look forward to going over to Europe to continue discussing this issue with our allies. It’s important we speak one voice.

(END VIDEO CLIP)

SAMMON: The problem is, Mort, you have two ways of dealing with this, this problem. One is military. And obviously our troops are already overstretched in Afghanistan, in Iraq.

The other option is diplomacy. And yet look at what these two countries are saying. You’ve got one of them, you know, talking about a burning hell if we do anything, and the other one is saying, we’re developing a nuclear weapon to repel an attack by the United States. We’re not exactly on good diplomatic terms right now. So it’s a major, major problem.

KONDRACKE: Right, it is. Bush’s strategy for both these countries, he has actually used this term for Iran, but it applies to North Korea too, is kick the can down the road.

And what he means by that is to try to delay, by diplomacy or other means, the development of the nuclear programs in both, in both those countries long enough for regime change to, to come about, in the, you, you know, the, he’s hoping that some, some, something will happen to Kim Jong- Il, and there are, there is evidence that he’s, that he’s weakening in his control of his, of his government. And he’s also hoping that the people of Iran, who hate their government, will oust them.

Now, the, the problem, that could happen is implosion in both cases, in, in which case, I don’t know what we do. I mean, if North Korea implodes, and refugees start heading north and south, you know, that’s big trouble. If we promised the Iranian people that if they decide to topple their government, we’re going to go to their aids in some.

SAMMON: Absolutely.

KONDRACKE: I don’t know, you know, could be a time of crisis for Bush.

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