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THE SITUATION ROOM

Al Qaeda Threat in U.S.; Dems Stage Anti-War Marathon; Interview With Senator Chris Dodd

Aired July 17, 2007 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, Iraq could be the launch pad for a new al Qaeda attack right here in the United States. That warning coming in a new U.S. government report as Senate Democrats pull out the cots for an all-nighter involving the war.
This hour, senator and presidential candidate Chris Dodd on the terror threat in Iraq.

Plus, an eye-popping new measure of John McCain's presidential campaign troubles. We're going to tell you how he's doing right now in his must-win state of New Hampshire.

And Barack Obama's grassroots cash bonanza. His campaign apparently using some creative math to report a massive list of donors.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

This hour, new warning bells are sounding about an al Qaeda terrorist activity in Iraq and the threat to all of us right here in the United States. A new United States. A new U.S. government intelligence analysis is fresh ammunition in the political arguments over the war in Iraq. In the Senate right now, Democratic leaders are rolling out the cots for an all-night debate about the war.

Our congressional correspondent, Dana Bash, is standing by with that.

But first, let's go to our White House correspondent, Suzanne Malveaux. She's watching this other important story we're seeing, this new intelligence report and the al Qaeda threat to the United States.

Update our viewers, Suzanne, on what is going on.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, as you know, the president has really been trying to reassure the American people that they are safer since the September 11th attacks. But there is now word of this new threat that is challenging that assertion.

(BEGIN VIDEOTAPE)

MALVEAUX (voice over): In light of the new intelligence report that al Qaeda has gained strength, President Bush acknowledged the terrorist organization has rebuilt.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Al Qaeda is -- is strong today. But they're not nearly as they were prior to September the 11th, 2001. And the reason why is because we've been working with the world to keep the pressure on, to stay on the offense.

MALVEAUX: President Bush says the central front in the war on terror is Iraq. But when the U.S. first invaded the country almost five years ago, al Qaeda had very little presence. But the intelligence report says that has changed. Al Qaeda not only has become a dangerous threat, the intelligence community expects the terrorist group will use its contacts and capabilities there to mount an attack on U.S. Soil.

Mr. Bush acknowledged this new challenge.

BUSH: And now we find them in Iraq. These killers in Iraq are people who will kill innocent life to stop the advent of democracy. These people have sworn allegiance to the very same man who ordered the attack on September the 11th, 2001, Osama bin Laden.

MALVEAUX: But the intelligence community predicted that invading Iraq could bring a resurgence of al Qaeda. The administration says there was lots of advice given before the war, but a lot has changed since.

FRAN TOWNSEND, HOMELAND SECURITY ADVISER: The fact is, we were harassing them in Afghanistan. We're harassing them in Iraq. We're harassing them in other ways nonmilitary around the world. And the answer is, every time you poke the hornet's nest, they are bound to come back and push back on you.

(END VIDEOTAPE)

MALVEAUX: So, Wolf, one of the places, ironically, that the Bush administration has not been harassing them is along the Pakistan- Afghan border, in that remote region. That is because Pervez Musharraf, the Pakistani president, made a deal with the tribal chiefs and really it's been a hands-off situation.

Well, I spoke with the homeland security adviser, Fran Townsend, who said that deal has since dissolved. It has not worked. And that is going to change, now that the Bush administration is taking a much more aggressive stand with the Pakistani government, to go after al Qaeda and Osama bin Laden -- Wolf.

BLITZER: Suzanne, thank you very much.

Suzanne's at the White House.

Administration officials clearly are on the defensive today about this new NIE report and the threat posed by Al Qaeda in Iraq.

Listen to our White House correspondent, Ed Henry, pressing the president's homeland security adviser, Fran Townsend. (BEGIN VIDEO CLIP)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: A Senate intelligence report in May came out saying the president was warned before the war in Iraq that if you go in and invade Iraq, you're going to give al Qaeda more opportunities to expand its influence.

TOWNSEND: OK, so -- well, what's the answer to that? So, we should leave them and we should not disturb our enemies anywhere in the world because they may use it for propaganda value? I don't think so.

(END VIDEO CLIP)

BLITZER: I also put Fran Townsend on the hot seat earlier today, asking her if the administration took its eye off the ball on the war on terror by invading Iraq. My interview with her, that's coming up here in THE SITUATION ROOM.

Let's get to the political theater under way on Capitol Hill right now.

Democratic leaders are pulling out the stops and the cots to dramatize their demand for an Iraq pullout timeline.

Let's go to our congressional correspondent, Dana Bash.

So where do things stand, Dana, right now?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, I can actually show you where things stand, Wolf. If you look at the wall next to me, you can see the Democrats just rolled in their props to help with the theatrics that we're going to see all night here, those cots that you really you see here during every all-nighter that the Senate pulls, Democrats or Republicans. And essentially, what that is part of is an attempt by Democrats, they made clear, to try to pressure Republicans who have been more vocally opposed to the president to actually vote with Democrats on their deadline for a troop withdrawal.

Well, I spoke with one of the Democrats' top Republican targets, Senator Susan Collins, just a short while ago. And she made pretty clear, Wolf, that she's angry about what Democrats are doing.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: This all-night debate has no impact on me whatsoever. It's clearly not an opportunity for a serious debate. We don't have to stay in all night to have a serious debate on Iraq. We can do that in the daylight hours just fine. All this is is a political stunt.

(END VIDEO CLIP)

BASH: Now, Senator Susan Collins, as I mentioned, is one of the Democrats' top targets because she has been so vocally opposed to the president's current strategy. She is up for re-election, but -- and she did admit to me, Wolf, that she is undecided. She may, in fact, vote with Democrats tomorrow, but she insists it will be despite this all-nighter that Democrats are pulling, not because of it -- Wolf.

BLITZER: So if this potentially could backfire with these Republicans who are on the fence right now, why are the Democrats doing it?

BASH: Well, it is part of a strategy that they have been really employing for the past several months to try to have vote after vote to try to pick off one Republican after another. But there is another audience here besides those Republicans. And it's their own democratic base, Wolf.

There has been a lot of frustration out there among anti-war activists and, really, if you look at the polls, maybe the public at large that they voted Democrats in eight months ago and they still have done virtually nothing to really change the course of the war. So this is a way of having this kind of spectacle to try to show those activists that they are at least trying -- Wolf.

BLITZER: Dana, we'll be watching this unfold, presumably all night, Dana. Thanks very much.

And many Americans first saw the showy side of politics in the 1939 film "Mr. Smith Goes to Washington". Jimmy Stewart's character leads an emotional Senate filibuster.

In real life, Louisiana senator Huey P. Long brought the chamber to a standstill in the 1930s by reading Shakespeare and recipes.

In 1988, Republican Bob Packwood, who was actually carried feet first into the Senate chamber by Capitol police. Democrats had ordered the move to try to force a vote on a campaign finance bill.

Senate sleepovers aren't new. In 2003 and in 2005, Republicans held all-night sessions to charge Democrats with blocking the president's judicial nominees.

The liberal group moveon.org is taking this Iraq all-nighter nationwide. They're organizing members across the country to support Harry Reid's overnight Senate showdown.

Let's go to Abbi Tatton. She's watching this for us.

What is MoveOn doing about all of this, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, right now, MoveOn urging their anti-war constituency of three million people to attend vigils tonight across the country. Counter-filibusters they're calling them. Some of them organized Senate -- district offices of Senate Republicans across the country, 150 of these events.

And the Democratic Party, for their part, trying to urge people to support Harry Reid as well. Howard Dean sending out this message in the last hour or so, urging people to e-mail senators their opposition to the war in Iraq and e-mail them all night long. The subject line of that, "Put On a Pot of Coffee".

The RNC response to this: "This strategy is nothing more than a political stunt" -- Wolf.

BLITZER: Thank you, Abbi, for that.

Let's go to Jack Cafferty. He's in New York with "The Cafferty File".

An all-nighter in the Senate, Jack.

JACK CAFFERTY, CNN ANCHOR: Yes, this is what passes for government these days, I guess.

"A prescription for American suicide." That's an editorial in the "Pittsburgh Tribune-Review," and it describes President Bush's policy in Iraq.

They'd be strong words coming from anywhere, but consider the source of these. The newspaper is owned by conservative billionaire Richard Mellon Scaife. He's been a loyal supporter of Republican politicians, many conservative causes, and he funded investigations out of his own pocket into President Clinton in the 1990s.

The editorial goes on to say that if President Clinton -- Bush, excuse me, does not end this war, the people must do so, and urges the Senate to follow the House's lead and vote to withdraw troops from Iraq. It says, the term "progress" no longer has any meaning.

"The fledgling Iraqi government -- how long can it reasonably be called that -- consistently has not stepped up to the plate. President Bush warns that U.S. withdrawal would risk 'mass killings on a horrific scale.' What do we have today, sir?"

It gets worse.

"... Quite frankly, during last Thursday's news conference, when George Bush started blathering about 'sometimes the decisions you make and the consequences don't enable you to be loved,' we had to question his mental stability."

That's a quote.

So here's the question: What does it mean when a conservative Pittsburgh newspaper owned by a longtime Republican supporter calls President Bush's Iraq policy a "prescription for American suicide" and questions his mental stability?

E-mail caffertyfile@cnn.com or go to cnn.com/caffertyfile -- Wolf.

BLITZER: It means the president's got a lot of problems.

CAFFERTY: Yes, he does.

BLITZER: All right, Jack. Thanks very much. Coming up, senator and Democratic presidential candidate Chris Dodd. He says White House insiders may be the last people in America who believe the Iraq war has made America safer.

Also ahead, is White House hopeful Bill Richardson getting any traction in New Hampshire? We have a brand new survey from the lead- off primary state. It's coming out only minutes from now. You're going to want to see who's up and who is down on the Republican and Democratic side.

And if you bought a Barack Obama T-shirt or a button, his campaign is labeling you as a donor. Is he overselling his grassroots support?

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Top Democrats are seizing on the new government intelligence analysis as proof of their claims that the war in Iraq has made the terror threat to America worse.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, Democratic senator Chris Dodd of Connecticut. He's a presidential candidate.

Senator, thanks for coming in.

SEN. CHRIS DODD (D-CT), PRESIDENTIAL CANDIDATE: Thank you, Wolf.

BLITZER: Do you think this is accurate? Do you -- this national intelligence estimate that was released today? Do you have confidence in it?

DODD: Well, after the last few years, I'm a bit more skeptical than I'd like to be about these things for all the obvious reasons. Too many times the books were cooked, information was manufactured to serve people's ideological point of view on this. But I want to -- I accept the fact that here -- and not terribly surprised by it here -- that al Qaeda is insurgent again. It's increasing its activities.

Here it's posing an additional threats. That shouldn't come as any great surprise. We've turned Iraq into an incubator here.

It's become basically a recruiting camp for jihadists around that part of the world. And that's been well known for some time here. Thus, one of the many reasons why many of us have drawn the conclusion that we need a different mission here.

BLITZER: I ask the question, is this the best judgment of the U.S. intelligence community, the professional analysts, the experts out there, or do you see fingerprints from political leaders, whether Vice President Cheney or others, in this document?

DODD: I'm not in a position to answer that question, Wolf. I listened to the interview you just had, and I'm satisfied that they are satisfied this is a pretty accurate description. And I'd have no reason to believe, based on other information we've received, when you are given all the information about what's happening in Iraq today, clearly, our continued military presence there doesn't surprise me as increasing the activity of these elements here, who are using our presence there as a way of recruiting people from throughout the region to join their efforts.

BLITZER: Now, the president's homeland security adviser, Fran Townsend, says you're flat wrong when you said in a statement that this NIE plainly shows that our continued involvement in Iraq is making us less secure at home and abroad. She is arguing, as is the Bush administration, that the U.S. involvement in Iraq is making us more secure, because the United States is fighting al Qaeda in Iraq and preventing them from having that sanctuary, that base there from which they could launch attacks against Americans.

DODD: Well, they may be -- that may be the only people left in America that believe that here. Everyone else has looked at this situation.

Look what's going on in the United States Senate today. Put aside the different amendments that are being offered.

There's a common denominator in all of them. And the common denominator, the policy has failed. Whether you are listening to Dick Lugar or you listen to Ken Salazar and Lamar Alexander, or you listen to Jack Reed and Carl Levin, almost every single amendment that's being offered differs in how they would deal with the problem, but the common denominator is the policy has failed, it's not working.

BLITZER: But do you have any doubt that there's an al Qaeda operation in Iraq?

DODD: No, I don't. No, of course not.

BLITZER: So what should the U.S. be doing about that?

DODD: Well, my view is you ought to start dealing with it as a problem there instead of pretending you're going to sort out a civil war in that country. And they are trying to come up with an excuse for staying in Iraq military.

I'll make my point again to you here. I think we're less secure, less safe, more vulnerable. And that's not my conclusion. That's the conclusion almost everyone...

(CROSSTALK)

BLITZER: But how do you fight al Qaeda in Iraq unless you have military forces that are going to go out there and crush them?

DODD: We're (ph) going to have to fight al Qaeda in more places than Iraq. This is, again, a stateless terrorist organization that is determined to do great damage to us here. The best way to deal with them is, of course, building those relationships internationally that will allow us to deal with them in Pakistan, where there's still most of them located, I think, in the mountains of western -- of western Pakistan here. And the assumption, we're going to have to stay in Iraq because al Qaeda's there.

BLITZER: So what is your solution? If you were president of the United States -- and you want to be president -- what would you do to fight al Qaeda in Iraq?

DODD: Well, I'd start building the relationships around the world that are going to help you deal with it effectively. There's no one single country that's going to deal with an international terrorist organization.

You need a lot more cooperation than we're getting. And you're not going to get it by just focusing on Iraq, continuing to have an expanding conflict there, when all we're getting is more hardship, more danger, more difficulty, and we're more isolated and less secure today. That's the conclusion.

And there never was going to be a military solution in Iraq. Every single person who has looked at that, from the Baker-Hamilton report, to our military leaders, have said there's not a win or a loss militarily for us in Iraq. It's a civil war between Shias and Sunnis. They have the obligation to pull together.

The al Qaeda elements are utilizing our presence there to expand their ranks and to use it as a broader base of operations. I'm not opposed to us all at dealing with al Qaeda. But you don't deal with al Qaeda by continuing your involvement in a civil war you can't win.

BLITZER: Let's talk politics for a moment.

DODD: Yes.

BLITZER: What do you need to do to break out, to get into that top tier right now? Because all the polls are suggesting you're not in the top tier right now.

DODD: About an hour or two with you, Wolf, ought to do it.

You know, the polling data doesn't mean an awful lot. Anyone you've talked to who has gone through these processes in the past will tell you that the polling number in July and the summer mean almost nothing.

BLITZER: But it does translate into fund-raising and to support and staff.

DODD: Well, we're doing very well on that. We have great ground operations and people working hard for us in New Hampshire and Iowa and Nevada and South Carolina.

BLITZER: Why are you or Senator Biden, who have been in the Senate for decades and are well known on a lot of these issues, have a wealth of experience, having trouble breaking through, but Senator Barack Obama, who has been in the Senate, what, for three years, all of a sudden he's raising tens of millions of dollars and the poll is right at the top there?

DODD: No, it's not at the top either. And, of course, we're getting a lot of good coverage back in the states where this is being conducted.

And I will tell you, the people in New Hampshire and Iowa and South Carolina and Nevada are not going to choose the candidate based on how well known they or how much money they have. Those problems if you are interested in money and notoriety, can be resolved fairly quickly.

What people want to know, who's ready to do the job? And I see over and over again a growing interest in that. People are shopping more carefully here about who the nominee will be, and they want to know where you stand on these issues, what experience you bring to it. That's going to become more and more and more important.

Remember, only four years ago, John Kerry was at 4 percent in the polls in mid-December and ended up winning the nomination. Gary Hart got 14 percent of the vote in Iowa some 20 years ago and ended up winning the New Hampshire primary.

I'm stunned, frankly, that people who observe this process here have almost no memory about what's happened historically with people who have not necessarily done well in the polls but end up doing better as people pay more attention to the race.

BLITZER: I'll ask you a question I asked Bill Richardson yesterday.

Would you rather be vice president of the United States or senator from Connecticut? I asked him if he'd rather be vice president or governor of New Mexico. He said he'd rather be governor of New Mexico.

DODD: I'd rather be the senator from Connecticut.

BLITZER: So you don't want to be vice president?

DODD: No, not at all.

BLITZER: That's not -- if they came to you and offered you that job?

DODD: I'm very happy where I am if that's the choice. But I think I'm going to do well in this presidential contest over the next 180 days, and I anticipate being the nominee.

BLITZER: I don't know anybody who has wants to be vice president anymore.

We'll see what happens.

Senator, thank you.

DODD: Dick Cheney has ruined the job.

BLITZER: Thanks for coming in.

DODD: Thank you.

(END VIDEOTAPE)

BLITZER: And still ahead, a controversial suggestion that Hillary Clinton may be trying to act too much like a man. The wife of one of her rivals speaking out. And that's a hot top in our "Strategy Session".

Also coming up, at a time when many Americans are on alert about food imported from China, could the U.S. government make matters worse?

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: Not good, even spooky. Those words used by one FDA official about testing and clearing suspect imports from China, according to an investigator for a House panel.

Today the Energy and Commerce Committee held a hearing because it's worried about an FDA plan to close half its labs. The FDA says it will streamline operations. But some lawmakers say it will expose more Americans to unsafe food.

This is happening while the government is recalling or holding products either made in China or with dangerous ingredients imported from China. They include, among other things, some toothpaste, five species of fish, toys, pet food and tires.

Up next, New Hampshire once was very, very good to John McCain, but times have changed for the presidential candidate and his embattled campaign. There's a new setback for the Republican in the lead-off primary states.

And we'll take stock of the GOP field, McCain's troubles. Our brand new poll numbers coming out. Standing by, our CNN contributor, Bill Bennett.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Happening now, it could make a potentially deadly situation even worse, an earthquake near one of the nation's nuclear reactors one day after that happened in Japan.

We're going to tell you if you're in a dangerous zone right now. Pentagon officials say it's a very small price to pay, more than $1 billion for special vehicles that save the lives of U.S. troops. So why is it taking so long to get them on the ground?

And a massive manhunt now under way for a former U.S. Army sharpshooter. He's accused of killing his wife as she sang onstage. Police say they found a note written by the man that was "near confessional in nature."

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

For the eight of them, there's good news for some, a bit of bad news for others. That would be seven of the presidential candidates and the man who has not yet declared. We have a just-released CNN/WMUR New Hampshire presidential primary poll conducted by the University of New Hampshire.

Join us now, our senior political analyst, Bill Schneider, who is crunching all these numbers.

So, why should we be paying a lot of attention to these early New Hampshire polls?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Because, Wolf, New Hampshire voters have seen these candidates up close, and more often than voters anywhere else.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Where does the Democratic race stand in New Hampshire? Pretty much where it stood last month, according to the CNN/WMUR poll. Hillary Clinton is still ahead. But Barack Obama's a strong second, followed by Bill Richardson and John Edwards.

Talk about the party of change. The top three Democrats in New Hampshire are a woman, an African-American, and a Latino. Clinton has a big lead over Obama among registered Democrats. Obama's support is coming from independents, where he and Clinton are nearly tied.

LORENZO MORRIS, POLITICAL SCIENCE DEPARTMENT CHAIR, HOWARD UNIVERSITY: For the most part, it is a two-person race. And if I had to put my money, as evidently most of the donors do, on the candidates, it would be on those two people.

SCHNEIDER: The New Hampshire Republican race has changed since last month. John McCain's support has dropped from 20 percent to 12 percent. Mitt Romney is now the front-runner in the Granite State. McCain won New Hampshire in 2000, and he's relying on New Hampshire to save him in 2008.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: We will win the same way we almost won in 2000.

SCHNEIDER: But he's slipping in New Hampshire.

MORRIS: He's stuck. And I think that's part of the problem. It's what -- whether he's lost the glamour or whether or not the ideological positions, his support for the war, the support for immigration reform, as well as the failure to have new finance initiatives, leaves him stuck in 2000 history.

SCHNEIDER: Only 15 percent of New Hampshire Republicans say they are very satisfied with their presidential field. Thirty-two percent of Democrats are very satisfied. The Associated Press and Ipsos have just polled Republicans nationwide. The leading Republican contender? None of the above.

(END VIDEOTAPE)

SCHNEIDER: McCain has an Obama problem in New Hampshire. Independents can vote in either party's primary. And, in 2000, a lot of them voted for McCain. This time, independents seem very interested in Obama -- Wolf.

BLITZER: All right, Bill, thank you -- Bill Schneider looking at these numbers.

My next guest is co-author of a new article that asks this question: if the Republican presidential candidates should run away from President Bush and just where they should firmly stand with him.

Joining us now, our CNN contributor Bill Bennett.

Thanks, Bill, for coming in.

BILL BENNETT, CNN CONTRIBUTOR: Hey, Wolf.

BLITZER: You know, there's a lot of suggestion that he is so popular right now, even with a lot of conservative Republicans -- we're talking about the president -- that Republican candidates should simply run away from George W. Bush.

BENNETT: So unpopular, you mean, yeah.

BLITZER: So unpopular.

BENNETT: Yes.

Well, obviously, there will be some running away from him. We will see a lot of that. And there was almost abandonment by the front-runners on the issue of immigration. But it suggests to me that, on one issue, they should stand behind him. And that's the issue of Iraq. They have...

(CROSSTALK)

BLITZER: But they are standing behind him on Iraq.

BENNETT: They are. I think they should have a press conference. I think they should go to ground zero and say, we have our differences among ourselves. We have our differences with the president, but, on this one, we stand foursquare.

(CROSSTALK)

BLITZER: Because almost all of them support the -- the so-called surge.

BENNETT: That's right.

BLITZER: And, on the war on terror, they, almost all of them, support exactly what he's doing.

BENNETT: That's exactly right. And I think this would give some more strength to people in the Senate, the Republicans in the Senate. A lot's been made out of the waverers, but it's really about five or six people.

And I think the base respond to this, too. This is a critical moment. I mean, you know, in the middle of the summer, it just strikes me, the last two weeks, this Iraq debate, this thing tonight that the Democrats are going to do, it's a very, very critical time.

I watched your interview with Chris Dodd. It's an odd thing, what the Democrats are arguing. No matter what you think about going into Iraq, how do you answer the question, how do you fight al Qaeda in Iraq without fighting al Qaeda in Iraq?

Of course we should fight al Qaeda elsewhere. But al Qaeda is in Iraq. It's an important battle. And the other thing I was struck by, again, if I can pay tribute to CNN, this morning, Barbara Starr, reporting from Ramadi in Anbar. Extraordinary was the word she used five times as she was walking around. These generals are telling us they are making some progress.

I don't know what's going to happen. Nobody knows really for sure what's going to happen. But it would be very odd if, while we're in the process of really making some progress, we were then to pull the plug.

BLITZER: Is it -- what -- the argument that McCain's problems in part arise not only from his stance on immigration reform, but also his strong support for the president's stance on Iraq, which has so alienated what had been back in 2000 a strong element of his -- of his support, namely independent voters.

BENNETT: That may be. I just don't think that's it with -- with John McCain. I really think it is the base. Every time I have been with a meeting of people from the Republican base, even in Arizona, very little support for John McCain. The immigration thing, campaign finance reform, these things I think have really hurt him.

Notice that Fred Thompson, with whom everybody's having a big flirtation now, and I expect to be a very serious candidate, he is strongly in support of the war, too. I don't think the American people punish a candidate. He was very good the other day, John McCain, on the floor of the Senate, saying he's a man of principle. I think people admire that.

They just don't like some of John McCain's principles. I don't think it's the war.

BLITZER: Because a lot of people think it's this dual issue, the -- immigration and the war.

Let's talk a little bit about the strategy that some of these other Republican candidates need to move forward with if they're going to get the nomination. Where do you see that unfolding?

BENNETT: Well, I think, right now, you have got three major candidates. You have got Rudy Giuliani, who continues to be strong, interestingly, even with the Republican base. And it's quite remarkable. He still draws big crowds in the South. And the conservative base likes him very much.

Fred Thompson, the big unknown, it looks like he will get in. Romney is still strong in those critical early states.

BLITZER: But you heard Bill Schneider say there's a lot of Republicans who like none of the above.

BENNETT: Well, that's right. And we will -- we will wait and see, because there are clearly, you know, problems with each of the Republicans, but -- as far as the base is concerned.

But, when you match them up against the Democrats, they're still matching up pretty well in a number of these races. And, given the circumstances, given the problems George Bush is in, I think they're pretty good.

BLITZER: Bill Bennett, thanks for coming in.

BENNETT: Thanks, Wolf.

BLITZER: Coming up: new information about Barack Obama's record- breaking donor list. Did he overstate his grassroots support or simply use some creating -- creative accounting? Obama's T-shirts and buttons are at the center of this new flap. We are going to check out the price tags online.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Senator Barack Obama is breaking records when it comes to the battle for presidential campaign cash, but some people now seem to be questioning the way he's adding up all of his numbers.

Let's go to CNN's Tom Foreman. He's in New York. He's following all of these numbers.

What is going on, Tom?

TOM FOREMAN, CNN CORRESPONDENT: Well, Wolf, to put it simply, what is going on is, Barack Obama has surprised a lot of people with all the money he has raised. And now those buttons and bumper stickers and T-shirts are causing a bit of a stir. (BEGIN VIDEOTAPE)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: We have got people who have been giving $5 and $10 and $25.

FOREMAN (voice-over): It was a record-breaking announcement, Barack Obama winning the money race big, both in contributions and the number of donors.

JOHN DICKERSON, CHIEF POLITICAL CORRESPONDENT, "SLATE": You get these stories of people who -- who -- who come to these Obama events and say, I -- I haven't much been interested in politics, but, here, I will give you the money out of my handbag. That -- that gives a sense of momentum. It gives a sense of movement.

FOREMAN: What's creating the fuss is the simple fact is that the senator from Illinois is growing his supporter list in a nontraditional way. People who buy Obama campaign hats, buttons and bumper stickers are all being counted as part of that record-breaking number of contributors.

At least four other presidential candidates do the same thing, John McCain, Tom Tancredo, Duncan Hunter, and Dennis Kucinich. Unlike most of his opponents, Obama sells his campaign merchandise directly, instead of outsourcing it. The people who have bought campaign merchandise only count for about 1 percent of all the donors who have given Obama money.

OBAMA: The reason that they're listed as donors is because, if they purchase it through the campaign, and it goes into the campaign coffers, it would be a violation of campaign laws if we did not list that. So, all we're doing is abiding by the law.

UNIDENTIFIED MALE: There's a whispering campaign that Obama is trying to inflate his donor numbers.

FOREMAN: Obama dismissed those charges.

OBAMA: We're so far ahead of everybody else in terms of number of donations, that we don't need to be playing with the numbers.

FOREMAN: And he may be actually on to a successful fund-raising venture.

UNIDENTIFIED MALE: The campaign spokesman tells me that they have raised several hundred thousand dollars through this process. It's a pretty novel way not only to raise money, but also to grow the campaign small-donor list.

(END VIDEOTAPE)

FOREMAN: And it's a novel way not to make your opponents not very happy.

You know, we mentioned this idea of a whisper campaign. What that is really all about is, there are people who don't like the fact that Obama seems to have a lot of grassroots support, that he has big numbers of people. So, they are looking at any way to tell somebody who will tell somebody who will tell a reporter, hey, maybe he's not counting it right.

But the truth is, he's obeying the law in all of this. And he gets to count them right now, whether or not opponents like it -- Wolf.

BLITZER: Interesting.

Thanks very much, Tom Foreman, looking at all those numbers for us.

Let's go straight to our Internet reporter, Abbi Tatton, right now.

Abbi, how much does a campaign T-shirt, for example, cost in the Obama store?

ABBI TATTON, CNN INTERNET REPORTER: Well, Wolf, this one sells for $2, and, yes, 08 cents at the Obama store, which is featured prominently at the front page of the Barack Obama Web site, and lets supporter even buy their campaign merchandise, pins, hats, all American and union-made, it says on the site, in bulk.

But some of the things go for a lot cheaper than that T-shirt, two stickers, for example, for five bucks. The keychain, which is so popular right now, it's only available on backorder on the Web site, selling at $4.50 -- the store one the many ways that Obama is using the Web site to bring in these small dollar amounts -- Wolf.

BLITZER: Abbi, thank you for that.

And this note to our viewers: The next presidential debate will be this coming Monday, July 23, in Charleston, South Carolina, over at the Citadel. CNN is teaming up with YouTube. It will be the first debate where all of you can submit your questions to the candidates online.

Abbi Tatton and Tom Foreman are both part of the best political team on television. And, remember, for the latest political news at any time, you can always check out our Political Ticker at CNN.com/ticker.

Up next in our "Strategy Session": President Bush says al Qaeda has taken a hit.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Al Qaeda is -- would have been a heck of a lot stronger today had we not stayed on the offense.

And it's in the interest of the United States to not only defeat them overseas so we don't have to face them here, but also to spread an ideology that will defeat their ideology every time. (END VIDEO CLIP)

BLITZER: But has the war on terror become an Achilles' heel for the GOP?

And harsh words from one political spouse to the Democrats' front-runner. Is Hillary Clinton acting like a man? All that coming up in our "Strategy Session." Stephanie Cutter, Terry Jeffrey, they're standing by live, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In today's "Strategy Session," differing opinions on that national intelligence estimate which says al Qaeda may use terrorists in Iraq to plan an attack right here in the United States. The Bush administration says very confident in the intelligence. Some say the war in Iraq, though, is making the U.S. less safe.

Joining us now, Democratic strategist Stephanie Cutter, Terry Jeffrey, the editor at large of "Human Events."

Guys, thanks very much for coming in.

You could see, Stephanie, this argument going both ways, that this fear of another al Qaeda attack in the United States plays into the strength of the Republican presidential candidates right now, especially Rudy Giuliani.

STEPHANIE CUTTER, DEMOCRATIC STRATEGIST: Yes. But I think that these arguments are becoming harder and harder to make.

I mean, the facts of today's report are that al Qaeda is using the situation in Iraq as a recruiting tool for new terrorists. And we have known that all along. We have been making those arguments for several years. The fact is that that violence on the ground is not because of al Qaeda. The violence on the ground is largely because of a sectarian civil war.

And I don't think that that's news -- you know, today's NIE report is any new news to the American people.

BLITZER: The other side is, it highlights a failure on the part of the Bush administration that, nearly six years after some 3,000 Americans were killed on 9/11, the U.S. still has not been able to deal with Osama bin Laden or his deputy directly.

TERRY JEFFREY, EDITOR, "HUMAN EVENTS": Right.

Well, I think, politically, it's a double-edged sword for the president. On the one side, it does remind people that we are still at war with al Qaeda, and they want to attack the United States, and, most importantly for the president, that it ties al Qaeda in Iraq into the potential of attack on the United States, which bolsters the argument he's been making for a long time, that, if we don't deal with al Qaeda there, we are going to have to deal with them over here. But the other side of it is just what you said, Wolf. Almost six years after 9/11, after we went to war against al Qaeda, after we invaded Afghanistan, not only are these guys still out there, but, according to the NIE, they found sanctuary in Pakistan, a country that technically is an ally of the United States, that is not a democracy, in the president's model.

We really don't have an idea of how to deal with that threat.

BLITZER: Because the -- the more Americans presumably are nervous, Stephanie, about another potential al Qaeda attack...

CUTTER: Right.

BLITZER: ... the more they are going to want someone, presumably, they feel confident in...

CUTTER: Right.

BLITZER: ... can deal with this threat.

CUTTER: Right.

And, you know, if we were two years ago, three years ago, it would be a huge positive for Republicans for this to come out today. But, because we have been living under six years of, going on seven years, of a Republican administration, you know, they don't have the trust of the American people, or at least the polls don't demonstrate they have the trust of the American people.

BLITZER: Do you -- do you agree with Bill -- Bill Bennett, who was just here, that the Republican candidates, on this issue, whether the war in Iraq or the war on terror, need to even be more forcefully aligned with the president right now?

JEFFREY: No, I think it's a mistake, because I believe that Senator Lugar's analysis of what's going on in Iraq is better than the president's.

The strategy of the surge, as explained by the president and explained by General Petraeus, is to use our forces to create enough stability there so that the government of Iraq can go forward with the reconciliations that they think will bring Sunni and Shia together.

Right now, in Iraq, Wolf, unless something has changed in the last day, the major Sunni parties -- parties are boycotting the parliament. They are not going to go on vacation early. They have a boycott. It doesn't seem like there's any end in sight. They haven't moved forward with any of the reconciliation legislation.

Before this presidential race is over, the situation in Iraq is going to change. If it doesn't change for the better, it's going to be the major problem for the Republicans going into the 2008 election. If the president sticks with his strategy, I don't believe it's going to change for the better. I agree with Senator Lugar.

BLITZER: Let's get to presidential politics, Stephanie.

Elizabeth Edwards, a very forceful, powerful woman in her own right, she said this in an -- according to Salon.com. She said: "Sometimes, you feel like you have to behave as a man and not talk about women's issues. I'm sympathetic. She wants to be commander in chief. But she's just not as vocal a woman's advocate as I want to see. John is."

She's referring to the front-runner, Hillary Clinton.

Is that a fair criticism of Senator Clinton from Elizabeth Edwards?

CUTTER: Well, she's making a legitimate point that, whenever you're breaking barriers as a woman into a field that has traditionally been dominated by men, you have to understand how the game is played. And that's a fair point to make.

The other point she's making is that, as a woman, there's a threshold you have to cross. If you are trying to be the president of the United States, you have to cross that commander in chief threshold. And I think that's what Elizabeth Edwards is pointing out. By all accounts, Hillary Clinton has crossed that threshold.

Now, where I don't agree is where she is saying that Hillary Clinton is not an advocate for women as strong as John Edwards. I think they are equally as strong. But it does show that Democratic candidates are playing for the women's vote. They traditionally vote more often in Democratic primaries. And they are an important part -- piece of this puzzle.

BLITZER: And Stephanie makes a fair point, because women in other countries who have been elected, Margaret Thatcher in Britain or Golda Meir in Israel, they had to prove to the constituency out there that they could be as tough, as you will, as -- as a man.

JEFFREY: Well, I think that's actually the main thrust of Hillary's political strategy. Ever since she got into the Senate, she wanted to prove that she was capable of being commander in chief of the world's greatest power.

I think Ms. Edwards, though, has half a point. It depends on which Hillary she's talking about. One Hillary, the one who wrote "It Takes a Village" and who voted against the partial-birth-abortion ban, is about as far left of feminists as you're ever going to find or has ever run for president of the United States.

There's another Hillary, though, who is a wannabe moderate, who worries about the voter in middle America, who doesn't want a far- left, East Coast, liberal feminist as the president of the United States. So, she occasionally talks about the culture of life, mimics her husband in saying she wants to make abortion safe, legal, and rare, things like that.

In substance, Hillary is a leftist feminist.

BLITZER: What do you think?

(LAUGHTER)

CUTTER: I think that the only people talking about making abortion safe, legal, and rare are Democrats. And Hillary Clinton is one of the people who originated that phrase and put forth the policies to make abortion safe, legal and rare.

I think that she has stood fast in her support for women and women's rights. But she's also understood that running for president means you -- you fight for all Americans, not just women. And women are not single-issue voters.

JEFFREY: Safe, legal and rare is a classic Clintonian equivocation. It's interesting to know that Hillary made it up.

(CROSSTALK)

JEFFREY: It means she shares at least one talent with her husband, Bill.

CUTTER: Now, don't take things out of context, like Drudge did today.

(LAUGHTER)

BLITZER: All right, guys, thanks.

We are going to leave it right there -- Stephanie and Terry joining us in our "Strategy Session."

Still to come: What it means when a -- what does it mean when a newspaper owned by a longtime Republican supporter calls President Bush's Iraq policy -- and I'm quoting now -- "a prescription for American suicide"? Jack Cafferty with your e-mail when we come back.

Also, more on the frightening information in the national intelligence estimate. The president's homeland security adviser, Fran Townsend, says she's very confident in the intelligence. I will speak with her.

And standing by their men -- one day after the wife of a Republican senator linked to the so-called D.C. madam came out to support him, we're going to take a closer look at other political wives who have seen their private problems aired in public.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On our "Political Radar" this Tuesday, the -- add the mayor of Washington, D.C., to the list of Barack Obama campaign supporters. Adrian Fenty today endorsed Obama's presidential bid. Fenty says he's impressed by Senator Obama's strong support for giving D.C. full representation in Congress and his stance on urban issues. The AFL-CIO is set to formally kick off its presidential endorsement process. The nation's largest labor union today announced it will hold a candidate forum in Chicago next month. Most of the Democratic candidates are set to attend. The AFL-CIO says no Republicans have responded to its invitation yet.

Remember, for the latest political news at any time, you can always check out our political ticker at CNN.com/ticker.

Let's go back to Jack Cafferty in New York for "The Cafferty File."

Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, the question this hour: What does it mean when a conservative Pittsburgh newspaper owned by a longtime Republican supporter calls President Bush's Iraq policy a prescription for American suicide and questions the president's mental stability?

Ken writes from North Woodmere, New York: "It means the Republican Party is not at war in Iraq. America is. Unless and until we come to a bipartisan consensus, there will be no solution in Iraq. George Bush has accused Democrats of politicizing the war, but isn't that what he is doing, pursuing a policy that has no broad-based support, was doomed to failure from the outset? Republicans and Democrats must come together to pursue a policy that has a chance for success. Digging into inflexible positions is a prescription for failure.

Jan writes from Bristol, Georgia: "It means the veil has been lifted from some eyes, and one newspaper is finally stepping up to do the job the press has neglected for five years. There has been plenty of evidence that the president is not mentally stable. At best, he's messianic. At worst, I don't want to think about it. He and Cheney must be impeached."

J.M. writes from Liverpool, Pennsylvania: "All things being relative, even if the president's mental stability is actually in question, he is more stable and pragmatic than the Democrat and liberal psychopaths, or, in this case, the conservative ones, who will have us all speaking Arabic and praying to Allah."

Frank writes: "It means he's done. Put a fork in him. The only thing to worry about is the additional damage this band of bozos can do over the next 18 months. All that is needed is 17 Republican senators to put patriotism over party to get rid of them."

Thomas in Harrodsburg, Kentucky: "It means absolutely nothing. The Bush administration has become completely isolated from the views of its own party, as well as those of the American people. Nobody can stop them from achieving their goals. I just want to know what those goals are. America is in big trouble."

And Doug in San Diego: "Jack, from my 83-year-old mother, who watches you every day: 'It's about time'" -- Wolf. BLITZER: A lot of people watch you every day.

Jack, you know, we have been nominated, CNN, for our coverage of the election night. I just wanted to let you and our viewers know about that. I'm very proud.

CAFFERTY: Well, and, if there's a God in heaven, we will win it. And you deserve it.

I was a very tiny part of that coverage that night. But that was as good a job as -- as I can remember CNN doing on any particular story, save maybe 9/11, in the 10 years I have worked here. And -- and you ought to be proud of the nomination. And I hope you win.

BLITZER: I hope we win, too. Thank you very much for those nice words -- Jack, as all of our viewers know, part of the best political team on television, bar none.

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