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THE SITUATION ROOM

Karl Rove Calls Hillary Clinton "Fatally Flawed"; Slaughter in Iraq; Mine Owner on Rescue Effort: "Still Very Optimistic"

Aired August 15, 2007 - 16:00   ET

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


MILES O'BRIEN, CNN ANCHOR: Happening now, is Hillary Clinton fatally flawed? That's what Karl Rove says. The president's top strategist on his way out of the White House, but not going quietly.
Where is he headed? I'll ask CNN political analyst James Carville.

Also this hour, a couple of Fs. That's how you're grading the Congress and the president.

Plus, a horrifying massacre. The death toll rises from a string of suicide truck bombings in northern Iraq. Is al Qaeda to blame?

Wolf Blitzer is off today. I'm Miles O'Brien.

You are in THE SITUATION ROOM.

Well, Karl Rove may be an old political soldier, but he is not simply fading away. The president's long-time aide firing off some parting shots aimed at Hillary Clinton as he packs up his office, just steps away from the Oval Office.

CNN's Brianna Keilar is covering the story from the western White House in Crawford, Texas.

Brianna, Rove was on friendly turf when he made the comments, wasn't he?

BRIANNA KEILAR, CNN CORRESPONDENT: Well, that's right.. Rove was on Rush Limbaugh's radio show. He spent about 15 minutes on the show today, and he spent much of that time talking about a laundry list of examples that he says shows Hillary Clinton is weak on the issues of national security and health care.

(BEGIN AUDIO CLIP)

KARL ROVE, TOP BUSH ADVISER: She's against allowing people to buy health insurance across state lines like we routinely buy auto insurance today so you can shop for the cheapest price and the best product for your family's needs.

RUSH LIMBAUGH, RADIO TALK SHOW HOST: Right, because she...

ROVE: So I was a little surprised that she jumped out there and made such an accusation when she's got a record that's so spotty and poor on health care issues. (END AUDIO CLIP)

KEILAR: Now, Rove repeated his prediction that Clinton will be the Democratic presidential nominee, but he also said she is fatally flawed. He said that her approval ratings are too low, her disapproval ratings are too high to get to the White House.

And rather quickly, the Clinton campaign responded. A spokesperson saying, "It sounds like Karl Rove is riding Senator's Obama's talking points. The reality is that as the campaign now gets under way, Senator Clinton's ratings are improving because Americans are seeing that she has the strength and experience to deliver change."

Now, this is day two of Clinton versus the White House. This all started, Miles, yesterday, when the Clinton campaign started running an ad, a television ad in Iowa that said, "You're invisible." It said in part, "You're invisible to the Bush administration if you're a family that doesn't have health insurance, if you're a single mom that's trying to pay for child care, and even if you're a U.S. soldier serving in Iraq or Afghanistan."

We saw a back-and-forth follow that yesterday and it continues today -- Miles.

O'BRIEN: Brianna Keilar in Crawford, Texas.

Thank you very much.

Democratic strategist James Carville is standing by to talk about Karl Rove's slap at Hillary Clinton and Carville's theory that Rove has lost a generation of Republicans. There he is live in THE SITUATION ROOM.

Now to Iraq and the unprecedented violence in the north. Rescuers there are digging through the rubble of a village flattened by a series of truck bombings. The death toll now is at least 260, making it the bloodiest coordinated attack of the war.

CNN's Dan Rivers is in Iraq.

DAN RIVERS, CNN INTERNATIONAL CORRESPONDENT: An atrocity is really the only way to describe this. The death toll is now at least 250, with some 300 people wounded in this Yazidi community in western Iraq, right over near the Syrian border.

Already, the rescue services, the police, the army, the U.S. Army, are digging through the remains of these two towns, which have almost been totally leveled. Such was the ferocity of these truck bombs. We're told that two tons of TNT high explosives were used in these attacks.

Both the Ministry of the Interior and a senior U.S. general, Major General Benjamin Mixon, are both pointing the finger at al Qaeda. They say that this bears all the hallmarks of an al Qaeda spectacular designed to maim and kill as many people as possible. The Yazidi community so far has been really on the periphery of this conflict, has been largely untouched. There was not much of a U.S. presence in these towns because they were deemed to be so far out in the desert and so far near the Syrian border that they weren't really at risk. Now, clearly, that policy will have to be reassessed in light of this terrible, table attack -- Miles.

O'BRIEN: Dan Rivers in Baghdad.

The Yazidis are mostly ethnic Kurds. They live in northern Iraq, as well as parts of Syria, Turkey, Georgia and Armenia.

Their religion is a combination of several faiths, including Christianity, Judaism and Islam. And many of their traditions are shrouded in secrecy. The Yazidis say they have faced persecution in Iraq because one of the angels they worship is considered to be the devil by some Muslims and Christians.

Right now in Afghanistan, the al Qaeda stronghold of Tora Bora is once again in the crosshairs of the U.S. military. Hundreds of U.S. and Afghan fighters are targeting terrorists in that mountainous region. The Pentagon says the terrorists are dug in and well defended. U.S. forces are launching air and ground strikes as I speak.

We'll have a full report from the Pentagon very shortly from now.

Time now for "The Cafferty File". Jack Cafferty joining us from New York -- Jack.

JACK CAFFERTY, CNN ANCHOR: Miles, Democratic presidential hopeful Barack Obama claims that he can do what Hillary Clinton cannot do, and that's unify the country. The Illinois senator told "The Washington Post, "I think it's fair to say I believe I can bring the country together more effectively than she can."

Obama says that while Senator Clinton will argue that she's the experienced Washington hand, he will insist that we need to change the ways of Washington. And he adds that he doesn't think there's anybody in the race who can bring new people into the process and break out of what he calls ideological gridlock as effectively as he can.

Well, Clinton's campaign answered right back. They said it's unfortunate that Obama is using attack politics -- What other kind is there? -- instead of the politics of hope and that Clinton has the strength and experience to make the necessary changes in this country.

Of course, this isn't the first time certainly that we've heard politicians talk about uniting the country. Remember 2000? The campaign?

President Bush promised to be a uniter, not a divider. How's that working out so far?

Here's the question, then. Which candidate from the crop of 2008 contenders will do the best job uniting this country and why? E-mail your thoughts to caffertyfile@cnn.com or go to cnn.com/caffertyfile -- Miles.

O'BRIEN: And now when you say which candidate, you're not just limiting this to Obama and Hillary Clinton, correct? This is any candidate?

CAFFERTY: No, that's why I said which candidate.

O'BRIEN: Any old candidate? OK.

CAFFERTY: Any old candidate you like.

O'BRIEN: All right.

CAFFERTY: Dennis Kucinich, anybody. It doesn't matter. Whoever you like.

O'BRIEN: Jack Cafferty, a man who is always a uniter.

Thank you.

Karl Rove may have been the architect of President Bush's election victories, but Democratic strategist James Carville says Rove is responsible for a major loss for Republicans. Carville is standing by with his take on Rove's successes, failures, and what he says will be his legacy.

Plus, Democrats came into power in Congress making some big promises. But Americans are not impressed. Who rates worse, the Democrats or President Bush? We've got some new poll numbers.

And we're live in Utah, where rescuers are running out of options in the search for those six trapped miners.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

O'BRIEN: Karl Rove may be on his way out of the White House, but he is not leaving politics by any means. No, no, no. Today, he took the Hillary Clinton campaign to task for a spot. In the commercial, she charges U.S. troops and many American in need are invisible to President Bush.

Now, Rove fired back on the Rush Limbaugh radio show.

(BEGIN AUDIO CLIP)

ROVE: Again, I'm a little bit surprised that somebody with a record so weak on these things would somehow deign to lecture this president, who is very popular among the military and military families because they see him as a strong commander-in-chief who supports them, loves them and gives them everything they need and want.

(END AUDIO CLIP)

O'BRIEN: We are joined now by CNN political analyst and Democratic strategist James Carville.

James, thank you very much. Good to have you with us.

JAMES CARVILLE, CNN POLITICAL ANALYST: Thank you.

O'BRIEN: Let's talk about those negatives that he's talking about. Is she fatally flawed, do you think?

CARVILLE: Of course not. Her negatives are much lower than President Bush's negatives. I mean, it's almost hilarious that Karl Rove goes on Rush Limbaugh's show the day after he announces his retirement and talks about Hillary Clinton's negatives when his boss' negatives are like 65 percent.

You know, this is America. And everybody is free to make a fool of themselves.

O'BRIEN: But of all the candidates out there, she does have a problem with high negatives. What does she do about that? If you were to advise her, what would you tell her?

CARVILLE: Well, first of all, her negatives are coming down. Secondly, she's the most well-known.

As soon as everybody else gets more well-known, I suspect they'll have the same problem. But like I say, what I'm a little bit stunned at is that Mr. Rove, who is the architect of the Iraq war, the immigration reform, of Social Security reform, would be worrying about Hillary Clinton's negatives. It just -- but he has a -- like I say, it's a free country and he has a perfect right to do that.

O'BRIEN: Well, clearly, he's headed somewhere into Republican strategy with some campaign, don't you think? This is just -- no?

CARVILLE: I don't know. He better do something about all of these young people. The Republicans are losing young people now 20, 25 points.

He's lost a generation to the Republican Party, so maybe there's something else he can do. He's going to have a lot of toning (ph) to do before this is over.

O'BRIEN: Let's talk about this a little more, because you wrote an op-ed piece in "The Financial Times" about this.

CARVILLE: Yes.

O'BRIEN: You know, most people on both sides of the fence would says he's a political genius. You would disagree?

CARVILLE: Well, I'll say what I said in the piece, was he had a remarkable record of wins. But what is not yet clear is that, in order to attain this, that he sacrificed an entire generation to the Republican Party by his strict adherence to the base, to the James Dobsons of the world.

So wait and see. But right now, the evidence is, is that young people are decidedly Democratic, and I think this is a result of Mr. Rove's strategies.

O'BRIEN: So, wait a minute -- but that's a pretty sweeping statement. You're talking about a whole generation. You're saying an entire generation of young people are turned off by this brand of Republicanism. Really?

CARVILLE: Oh, of course they are.

O'BRIEN: How do you prove that?

CARVILLE: I can prove it. I've got poll after poll after poll.

Every Republican strategist that I know literally is saying, we're about to lose an entire generation here. This is the worst thing that's ever happened to the party.

Any account of anything between 18 and 30-year-olds shows them to be 15 to 20 points Democratic. Probably becoming the most Democratic age group demographic in the United States right now.

O'BRIEN: Yes, but there's a lot of factors here. It's hard to say that's Karl Rove. There's the war in Iraq. There's any number of other issues.

CARVILLE: Well, but Karl Rove had a lot to do with that. It's a lot to do with the Republican...

O'BRIEN: So you pin him with all of that?

CARVILLE: Well, I'm just saying -- I can't pin him with the entire war, of course not.

O'BRIEN: Right.

CARVILLE: But I pin him with the adherence that the base strategy was something that was much glorified in the national media. It was greatly praised, how smart it was that he was going to the base -- and remember what a brilliant move that Terri Schiavo was and everybody in the media was falling all over themselves to say how smart this was? Remember when they had the gay marriage thing?

And young people saw this, and they are turning away from the Republican Party, the likes of which we haven't seen.

O'BRIEN: All right. So make a...

CARVILLE: This is a remarkable that this happened to American politics.

O'BRIEN: So what you're saying is Karl Rove, the architect of the Bush success...

CARVILLE: Right?

O'BRIEN: ... is laying the groundwork or has laid the groundwork for Democratic hegemony for years to come?

CARVILLE: I think the Democrats are in place to have a very good election in 2008. I think the Democrats are in place to have a real opportunity to capture an entire generation of Americans. I think that 18 to 30 is almost going to become a core constituency group within the Democratic Party.

O'BRIEN: So you see a Democratic era here coming out of this?

CARVILLE: Well, you know, a lot of it depends on what the Democrats do, but I certainly don't -- the Republicans don't have much to say about the outcome of this election. And I can't imagine -- and the Democrats do.

It's going to wait and see. As I tell people all the time, the good news is that the country really wants to vote for the Democrats. The bad news is, is we have to talk our way out of it. We might be able to do that. But it's all about the Democrats right now.

O'BRIEN: And let's not forget that young people, generally speaking, don't vote in numbers that would be akin to...

CARVILLE: But that's accounted for. And all good pollsters account for this in the data.

They became very Democratic in 2006. And every evidence is, is that they're becoming more Democratic.

And I think any political party, if there's anything that you want, is you want to have young voters on your side. And that's -- and I thing it's fair to say that turning Democratic, maybe so, we could argue it out, but they're certainly turning away from the Republicans. That's not arguable.

O'BRIEN: Well, now, a lot of people will remember you from election night 2002.

CARVILLE: Right.

O'BRIEN: Remember that scene?

CARVILLE: I do remember it.

O'BRIEN: Shall we show that?

CARVILLE: Sure.

O'BRIEN: Shall we share that with -- why don't we show a little bit of that?

CARVILLE: Sure. Absolutely.

O'BRIEN: So what's going to happen, James? That was trashcan -- a little bit embarrassed as things did not go your way.

CARVILLE: You know, they didn't go my way, and I admitted that they didn't go my way. And why not poke a little fun at myself? I was pretty down that night.

O'BRIEN: So...

CARVILLE: And much credit goes to Karl Rove for producing that night, by the way.

O'BRIEN: Yes, all right. So you do give him credit?

CARVILLE: Absolutely.

O'BRIEN: But this column put you way out on a limb.

CARVILLE: Well, I don't think it does. I gave him credit for 2004, but my point is, in order -- what he did is the classic thing, where you sell your soul for some good on something on Earth.

He sold the Republican -- in my view, he sold the Republican Party down the river to win an election in 2004. He won that, but now Republicans are having to live with the consequences of Mr. Rove's base first strategy. And that's -- I think that's pretty clear from the 2006 election and I think it's going to be abundantly clear from the 2008 election.

O'BRIEN: All right. So since we're talking about young voters, let's talk about which Democrat you think really can resonate with young voters.

Is it Barack Obama or is it Hillary Clinton?

CARVILLE: I think both have a good -- I think both of them are doing pretty well right now and have an opportunity to do well. Look, this thing has a long way to go, and I would be the first to admit I'm a contributor to Senator Clinton's campaign. I am sympathetic to her campaign.

I'm for her. But Obama has a lot of appeal out there, too. A lot of these other Democrats do. And this thing is going to have to be fought out between now and January. Having said that, I can't imagine that she -- her people around her...

O'BRIEN: But when you consider generationally, Barack Obama, as a representative of the younger generation, does he have an advantage?

CARVILLE: You know, I don't know, because Reagan was always popular with young people. If you go back and you look at his numbers, he was the oldest president that we've had.

O'BRIEN: Right.

CARVILLE: I don't think it's a question of if you -- if you nominate somebody -- McCain had tremendous appeal to young people when he ran for president in 2000. So it's not -- it's not a question of your age. It's a question of how -- how you relate to them and the things that you talk about.

But they're not -- I can tell you what, the Rove agenda of anti- gay marriage, of pro-Iraq war, anti-environment, this president vetoes this energy bill, he's signing away -- he'll seal the fact that this generation is gone.

O'BRIEN: James Carville, all right. We'll bring you back and we'll see how it all plays back and we'll have the trash can handy just in case.

CARVILLE: All right.

O'BRIEN: Just in case.

CARVILLE: You got it. But let's also have a crown in case I'm right.

O'BRIEN: Yes, indeed. We'll do both.

CARVILLE: All right.

O'BRIEN: James Carville, thank you very much.

Many Americans are outraged by another massive recall of toys made in China. And so are some presidential candidates. But are they playing politics with the safety of your children?

J.C. Watts and Bill Press are standing by for our "Strategy Session".

And it's no secret that the public is not happy with the job Mr. Bush is doing, but the president may find comfort in a new report card on the Democratic-run Congress.

You're not happy with them, either.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

O'BRIEN: Welcome back.

Carol Costello monitoring the wires, keeping an eye on video feeds from all around the world. She joins us now with a closer look at some of the other stories we're looking at -- Carol.

(NEWSBREAK)

O'BRIEN: Nine days and long odds of finding six trapped miners alive. For the first time, though, we hear from a miner who is risking his own life to try to save his coworkers.

And tropical storm threats times three bearing down on the U.S. right now. We'll go to our severe weather center in Atlanta for an update.

(COMMERCIAL BREAK)

O'BRIEN: Breaking news coming into us from Iraq.

Local officials in the northern section of Iraq with a staggering death toll now in that series of truck bombings aimed at the religious sect known as the Yazidis. The death toll now estimated at close to 500 -- 400 people dead. It's the single-worst coordinated attacks since the beginning of the Iraq war.

The Yazidis, that religious sect in the Kurdish region, which has, by and large, been not the focus of a tremendous amount of violence in the Iraq war. But local officials there saying the death toll in that series of coordinated bombings by trucks now is at least 500. We're tracking it for you.

As we say, horrible violence there in the northern section of Iraq.

In Huntington, Utah, hope is diminishing even as rescues keep up the dangerous work of digging their way to those miners who are trapped more than nine days now.

Brian Todd is on the scene. He joins us now with an update on the effort.

Brian, it's got to be difficult after all this time to have much hope.

BRIAN TODD, CNN CORRESPONDENT: It really is at this point, Miles.

They are throwing every piece of technology and heavy equipment they can at this rescue effort, but it's just not going fast enough for them. Here's what we know now.

A third drill hole that was going to go down into a chamber where these miners might have retreated to for air has reached that chamber. But when they tried to lower a microphone down into it, the microphone didn't make it. It got to within about 20 feet of the chamber because it either hit a snag or it hit some kind of a bend in the drill hole. They're going to pull that microphone out, put casing in the hole, try to lower the microphone back down in there, and also try to get a camera in there very shortly.

Also, in the main tunnel where they're digging rubble out in an effort to try to get these miners, another setback. A bump overnight, a seismic shift in the earth caused by the mountain kind of settling over the mine, shifted some earth, and it damaged what they call a continuous miner. It's a huge machine that pulls rubble out. But that operation did resume and they progressed about 90 feet since yesterday.

Right now, they're at about a little less than 800 feet in, but the miners, they believe, are about 2,000 or so feet in. So they're only a little over a third of the way to where they believe these miners are trapped. A very emotional moment in the news conference just a short time ago. Bodie Allred, he is the cousin of trapped miner Kerry Allred -- Bodie Allred is also the director of safety for this operation -- got very, very emotional when talking about the risks of this mission.

(BEGIN VIDEO CLIP)

BODIE ALLRED, SAFETY DIRECTOR: As the men that's come across to help out in this effort, I've looked at every one of them and I shook their hand as they come, as they go, and as we do the training. And right off the top, the best thing that we can do right now is be safe in our efforts to get them.

I know these men well. I know they would not appreciate us taking any chances. And they know, they know damn well that we're doing what we can do to get to them, and we're going to get there. There's no doubt about it.

(END VIDEO CLIP)

TODD: Bodie Allred, at another point, was asked about reports that 12 miners, rescue miners, have asked to be reassigned because of safety concerns. He started to say, yes, some of the men have come up to me and asked me about that.

As soon as he said, Robert Murray, the CEO of Murray Energy Corporation, essentially cut in front of him and said, wait a minute. No one has said that this operation was not safe.

They're apparently trying to get a little bit on the same page there, Miles. But that was kind of an interesting moment.

O'BRIEN: Yes, tell us a little bit more about that.

Is -- are the miners themselves saying one thing and the owner another? I do know there's an effort on the part of the union to -- to organize this particular mine.

TODD: That's right. Robert Murray has eluded to that. And he's been very defensive about that effort to organization this mine. And he said all the criticism of him and the safety of this mine has come from the people who want to organize the mine.

Now, as for the these 12 miners who asked to be reassigned, Robert Murray did say that a couple of days ago in a news conference. He said 12 people have asked to be reassigned because they were frightened of working there.

Now, it could be that there's a nuance here, that these men were frightened of, but that nobody has said that this operation wasn't safe.

Still, you know, 12 people asking to be reassigned because of their own concerns does tell you something.

O'BRIEN: Yes. A little bit of semantics there, I'm afraid. All right. Brian Todd in Huntington, thank you very much.

It's a tropical storm triple play, three big storms moving toward U.S. soil from three different directions.

Chad Myers is monitoring the trio from the CNN Weather Center.

Chad, you have got your hands full.

(CROSSTALK)

O'BRIEN: Which ones -- which one is the biggest concern right there?

CHAD MYERS, CNN METEOROLOGIST: I'm glad we have all these pictures here.

O'BRIEN: Yes.

MYERS: Yes.

(LAUGHTER)

MYERS: And I'm glad you have enough boxes here on the Room.

We do have a couple storms that are moving toward and one that's actually was closest about 8:00 this morning now moving away. That would be Flossie. This here is ERIN, E-R-I-N. It's the Gulf of Mexico storm. It's very close to Texas. That's a good thing.

You know why? Because it's not going to have any time to get bigger. It's -- if it was way out here in the middle and it had another couple days to run, it could be a hurricane. That's not going to happen. It's just going to be a tropical storm, probably 50, 60 miles per hour as it moves onshore south of Corpus Christi, north of Brownsville tomorrow morning.

It's just going to be a little blow, a little bit of rain. Now, that rain could pile up four to five inches in some spots. That could cause some flooding. We will have to watch that for that freshwater flooding, not so much a storm surge, but freshwater flooding.

And then this here, this is Dean, D-E-A-N. It was a storm before that one. That is why this is the D storm. It is still headed to the Leeward Islands, headed to Puerto Rico, maybe to Jamaica. And by the time we get to Monday, it could be very close to Jamaica itself as a Category 3.

Now, remember, there is no line. Remember, just focus on the cone. It could be all the way in the Bahamas or maybe the Turks and Caicos. It could be all the way down into maybe even Belize. We are still seeing some of the models that are taking it very far to the south, not making anywhere near an approach to the U.S.

And now for Flossie, the joke is, it forgot to floss and it just fell apart, because this thing made a little bit of rain, a gust of 48 miles per hour on the very southern tip of Hawaii right there. And that's it. And this thing was a fizzling storm.

The water got cool. There was dry air up here where it was trying to get to. The rain never really happened. Hilo had about two inches. That's it. And that's good news. We like those fizzling storms -- Miles.

(CROSSTALK)

O'BRIEN: I guess you could say Flossie has no teeth.

(LAUGHTER)

MYERS: That's right. You got it.

O'BRIEN: All right.

MYERS: All right.

O'BRIEN: Thank you, Chad. Appreciate it.

MYERS: You bet.

O'BRIEN: Quick, when I say Washington, what comes to mind? Well, many of you apparently think of failure. But are politicians getting the message from our new poll?

And hazardous toys make an impact on the presidential campaign. Are the recalls of products made in China fair game for the candidates or are they just simply easy targets?

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

O'BRIEN: Once again, we're giving you the latest on this coordinated series of truck bombings in the northern part of Iraq that focuses and targeted a sect, a religious sect, called the Yazidis.

The death toll now in excess of 500, according to local officials there.

Joining us on the line right now from Baghdad is CNN's Arwa Damon with more on this.

Arwa, just such a horrifying massacre there, and really targeting a group that many Americans knew very little about.

ARWA DAMON, CNN CORRESPONDENT: It's absolutely horrific, Miles. In fact, it's chilling.

I mean, this death toll yesterday, just to give you an idea, 24 hours ago, right around when this attack took place, the death toll was originally at 100 people killed. Now, according to local officials, they're talking about at least 500 people now. Now, these bombs did target, as you mentioned, Iraq's minority Yazidi population that has managed to stay relatively on the periphery of much of the conflict here. But they have been targeted in the past. But this attack makes it one of the deadliest attacks to take place here since this war began -- Miles.

O'BRIEN: Give us a sense. Arwa, we have talked so much about Sunni vs. Shia. We talk about the Kurds a little bit.

Why the Yazidis? Why have they been singled out in this case, do you think?

DAMON: Well, the Yazidis have been targeted in the past mainly by Sunni extremists. And this attack has been blamed by the U.S. military on al Qaeda in Iraq.

Now, in the area where this attack took place that's in the northwestern portion of the country, al Qaeda is very active and has been fighting U.S. forces there for quite some time. And to put it quite bluntly, al Qaeda views Yazidis as being infidels, which, in their eyes, makes them a perfectly legitimate target.

So, while this is an area that does appear to be on the surface relatively calm most of the time, it doesn't take much for al Qaeda to carry out a spectacular attack like this one and just shatter everybody's illusions.

O'BRIEN: Arwa Damon, keeping up us to date on that horrible death toll, now in excess of 500 in northern Iraq.

We will keep you posted on all of that.

Well, if misery loves company, then President Bush may like our new poll numbers.

Our senior political analyst, Bill Schneider, is here with more.

Bill, the grades are in for Congress and for the president. And a lot of F's to go around, aren't there?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Let's just say, Miles, promotions do not seem to be in order.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): When Congress left for summer recess, they couldn't agree on what grades they deserved. Republicans saw failure.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: They have managed to achieve an astonishing thing, which is to have the lowest approval ratings anyone can find for Congress in -- in history.

SCHNEIDER: Democrats saw some things to be proud of.

SEN. HARRY REID (D-NV), MAJORITY LEADER: The 9/11 Commission recommendations were signed into law. It took some doing to do that.

SCHNEIDER: But the only grades that count are the ones that come from the voters. Their grades are now in. How did Congress do? Uh- oh. Most Americans give the Democratic Congress a failing grade. And how do they grade President Bush? Worse. Fifty-seven percent call the Bush presidency a failure. Voters are saying to Washington, kids, you have got to shape up. We want to see some changes.

Are politicians listening? Democrats running for president are promising change.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: I think we need big change in Washington.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: America is ready for change.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: They are insisting that it is time for us to turn the page and write a new chapter in American history.

SCHNEIDER: Do people have more confidence in President Bush or the Democrats in Congress? Answer: the Democrats, who have not been in power as long. But the Democrats' lead is significantly smaller now than it was last November. So, Republicans are also claiming to be agents of change.

RUDOLPH GIULIANI (R), PRESIDENTIAL CANDIDATE: And one of the things I'm good at is changing things. I know how to change things.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: If there's ever been a time that we need to see change in Washington, it's now.

(END VIDEOTAPE)

SCHNEIDER: That's because it's nearly back-to-school time, and no politician wants to be left behind -- Miles.

O'BRIEN: Bill Schneider, thank you very much.

So, what has this Congress accomplished? They have passed lobbying and ethics reform, a package of security measured recommended by the 9/11 Commission, an increase in the minimum wage, and a huge war spending bill. They have also voted to increase federal funding for embryonic stem cell research. But President Bush vetoed that.

And lawmakers are expected to pass a health insurance package for poor children and a student loan reform bill.

August in Washington, it can be a lonely place. It seems the political center of the universe these days is Iowa. Just about every candidate running for president has made or will make a stop there this month.

Our Tom Foreman is keeping count.

And, Tom, tell us why they're headed out to the -- the Midwest these days.

TOM FOREMAN, CNN CORRESPONDENT: You know, Miles, it's like counting corn out here now. I can't even keep track of it. It seems like you could walk across this state on the politicians' heads. And, trust me, it's not just the corn dogs and funnel cakes at the state fair that are wetting their appetites.

Take a look.

(BEGIN VIDEOTAPE)

CLINTON: People kept saying, well, you know, you have got to come to the very best fair, and that's the Iowa State Fair.

Is that right?

(CHEERING AND APPLAUSE)

FOREMAN (voice-over): Hillary Clinton courting voters at the Iowa State Fair. If you are running for president, this is a must stop.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Hi. How are you?

UNIDENTIFIED FEMALE: Hi. Good. How are you doing?

MCCAIN: Nice to see you.

FOREMAN: Right now, Iowa seems to be the center of the political universe. The Republicans debated here two weeks ago, and most of the GOP White House hopefuls flocked to the straw poll in Ames last weekend.

The Democrats will face off in an Iowa debate this coming weekend. Candidates from both parties are fanning out all across the state.

GIULIANI: Nice to be in Council Bluffs.

FOREMAN: And some are even bringing their kids.

EDWARDS: Yes, Jack and Emma, you can go now.

(LAUGHTER)

(APPLAUSE)

EDWARDS: Not that they don't love these events.

FOREMAN: Iowa's January caucuses lead off the presidential primary calendar. And, along with New Hampshire and South Carolina, Iowa sees a lot of political traffic, regardless of the heat.

UNIDENTIFIED MALE: Welcome to the hottest place on Earth.

FOREMAN: They all come to the state fair in Des Moines.

GOV. BILL RICHARDSON (D-NM), PRESIDENTIAL CANDIDATE: I just love the state fair, because, you know, I'm a grassroots candidate. And I love to shake hands and talk to people.

SEN. SAM BROWNBACK (R-KS), PRESIDENTIAL CANDIDATE: It's a piece of Americana, too. And that's -- politicians at a state fair, that's just kind of like apple pie and hotdogs.

(END VIDEOTAPE)

(LAUGHTER)

FOREMAN: Well, not exactly like hotdogs, but, still, you get the point.

Here's the deal. Right now, as much as they may not like rubbing shoulders with each other out in Iowa -- we have talked about it before -- the primary calendar is a mess right now, with so many people pushing up. The big-money campaigns know that, in the coming months, they're going to have to cover a lot of states. So, in some ways, I think a lot of the campaigns are happy to at least have one target they can all agree upon -- Miles.

O'BRIEN: Otherwise -- otherwise, it's literally all over the map, isn't it?

FOREMAN: Oh, my gosh. And -- and that's where the money is going to make a difference. People say, why does money matter so much?

It's going to matter so much this time because so many states are so early and so important. And you can't reach them unless you have got a lot of money.

O'BRIEN: Tom Foreman, thank you very much.

Tom is part of the best team in politics.

In our "Strategy Session": John Edwards, like all presidential candidates, is focused on the early states.

(BEGIN VIDEO CLIP)

EDWARDS: I have been to Iowa a time or two before. So, I'm glad to be back. I will be going through familiar territory, but talking about things that really matter.

(END VIDEO CLIP)

O'BRIEN: But why is Edwards pulling resources out of Nevada, home of an early caucus?

And Barack Obama has a message for all the others. He says he's the true uniter in the field. What do Bill Press and J.C. Watts think about that? They're coming up here in THE SITUATION ROOM. (COMMERCIAL BREAK)

O'BRIEN: Welcome back.

I guess Nevada was not a sure bet for the Edwards campaign. They have made the decision to pull a lot of resources out of that state, a state that is holding a crucial early caucus, just one of the subjects we will bat around in today's "Strategy Session."

Liberal radio talk show host Bill Press and former Republican Congressman J.C. Watts are here.

Gentlemen, good to have you here with us.

John Edwards said he was a national candidate. He pulls out of Nevada, or a lot of resources out of Nevada. That's not so national now.

So, what -- what do you -- what do you make of it?

BILL PRESS, RADIO TALK SHOW HOST: You know what I make of it? When you're a candidate with limited resources, you have got to focus. You have to focus. And the most important state is Iowa. I think this is a smart move on the part of John Edwards. He knows he's got to do well in Iowa. He knows he's got to win Iowa.

O'BRIEN: But his numbers are not so good in Iowa these days, are they?

PRESS: Well...

(CROSSTALK)

O'BRIEN: ... down.

PRESS: ... all the more -- all the more reason to focus there.

O'BRIEN: Right.

PRESS: And you know what? If he wins Iowa, wins the Iowa caucuses, Nevada will be in the bag.

O'BRIEN: Right.

PRESS: I mean, you hate to walk away from a state, but when you only have so much to go around, so many people, so much money, you have got to zero in on where it counts.

O'BRIEN: Kind of like triage, isn't it, J.C.?

J.C. WATTS, CNN POLITICAL ANALYST: Well, when you -- Miles, when see any Republican or Democrat candidate on a national basis doing that, that's probably the first signs of cracks in the foundation.

You know, no -- no candidate wants to do that. But I think they're making a bet to say, hey, we're running out of resources. We can't -- we can't raise any money. The numbers are not what we would hope they would be at this point in time. So, as Bill said, let's focus.

O'BRIEN: All right.

WATTS: But, still, that's -- that's not a good sign.

(CROSSTALK)

O'BRIEN: But how do you focus this time around, with so much confusion about what's coming first and all the -- I mean, literally, they -- they don't know -- I mean, I guess Iowa is the only default position, where you can -- you know, you spend money there, you will get some impact out of it, right?

PRESS: But what do you call it? Iowa is the slingshot. It's the slingshot from -- it used to be to New Hampshire. Now, for Democrats, it's a slingshot to, bang, Nevada and then to New Hampshire.

But, without Iowa, I think John Edwards, he knows he would be dead in the water. So, look, it's a roll of the dice, but I think, for Edwards, it's a necessary roll of the dice.

O'BRIEN: But isn't this more proof, though, that the primary season is just a mess?

PRESS: Totally.

WATTS: Well, it is that.

(CROSSTALK)

WATTS: But I also think, on the Democrats' side, on the Democrats' side, as I have said before, the thing is trending towards Senator Clinton. So, again, not looking good for Senator Edwards. He's not positioned as well as he thought he would be at this time.

On the Republican time, it's trending. We just don't know where.

(LAUGHTER)

WATTS: But, on the Democrats' side, it's trending more in favor of Senator Clinton. So, he's got to, you know, kind of hone things in a little more.

O'BRIEN: All right.

Let's -- Senator Edwards got into this toy controversy, as did Senator Dodd...

PRESS: Yes. Right.

O'BRIEN: ... also a presidential candidate.

Look what he had to say. He said: "I'm calling on the president to use his authority to immediately suspend all imports of toys and food from China. We have the legal right and power, under the WTO, to keep products out of our country that threaten the health and safety of our families. I'm going to do all I can do ensure we do so."

Holy cow, Batman, we're now -- we're now -- we now have toy politics, huh?

(LAUGHTER)

PRESS: Yes. I mean, that's a very, very bold move that Chris Dodd is calling for, to suspend all imports from China.

O'BRIEN: I mean...

PRESS: But I think the issue...

O'BRIEN: ... that's a lot of things.

PRESS: Yes, it is.

O'BRIEN: Yes.

(CROSSTALK)

PRESS: That's like what percentage of our trade? I don't know.

O'BRIEN: Yes.

PRESS: But I think the issue is a good one for Democrats. It's consumer protection.

I mean, if -- look, first it was fish, right? And now it's the toys that our kids are playing with. The question I also have is, what's wrong with America? Why do we have to import all of the toys that our kids are playing with from China? Why can't we make them here? I haven't heard anybody say that yet.

(CROSSTALK)

O'BRIEN: Well, it has something to do with labor costs, I think, probably, right?

PRESS: Well, pay them the minimum -- a living wage and make the toys here.

O'BRIEN: J.C., what do you think? Is this good political fodder?

(CROSSTALK)

WATTS: Well, Miles, Again, I don't think you see any front- runners -- you don't see Senator Clinton, you don't see Senator Obama talking about that. You don't see Rudy Giuliani. You don't see Mitt Romney talking about that. So, I... O'BRIEN: So, this is Chris Dodd trying to get a little bit of attention?

PRESS: Sure. Yes.

WATTS: I think it's candidates trying to get some traction. And I think, don't be surprised tomorrow, if it doesn't hit 100 degrees in Oklahoma, that somebody will have a press conference and issue a release on that, to say, by golly, it didn't hit 100 degrees. What's going on up there?

(CROSSTALK)

(LAUGHTER)

PRESS: I think Dick Durbin, who is not a candidate for president, had the best line on this at all. He said that American parents should not have to play Chinese roulette when they go to the...

(LAUGHTER)

O'BRIEN: That's good.

PRESS: ... when they go to the toy store.

O'BRIEN: That was good.

PRESS: It was a good line.

O'BRIEN: Good sound bite.

PRESS: Yes.

(LAUGHTER)

O'BRIEN: Let's talk about Barack Obama, the uniter, not the divider, saying -- it was interesting, because he was saying, you know, look, I'm -- I'm going to be positive about me here, but very negative about Hillary Clinton, saying, she's a divider, and it's not her fault, though. Just because by virtue of the fact that she was around in the '90s and has the Clinton name.

What do you say to that? Is that a good tactic for him?

(CROSSTALK)

PRESS: Well, strategically, I have been asking, what is the central theme of the Barack Obama campaign? And I don't think he put it out there. Why vote for me and not for Hillary Clinton?

And I agree with J.C. that she looks like she's rolling ahead every day. I think he's come up with a good theme. By the way, I think Hillary Clinton can unite the country, too. But Barack Obama is saying: I have got the vision. I have got the vigor. I have got the youth. I'm the one who could bring us together. O'BRIEN: Right.

PRESS: And she can't, maybe not for reasons all of her own. But she can't.

I think it's a good theme for him.

(CROSSTALK)

O'BRIEN: Could this backfire, though, on Barack Obama? What do you think?

WATTS: Well, I don't think it will.

O'BRIEN: Yes.

WATTS: But, Bill, if you think Hillary Clinton can unite the country, I'm Snow White and all seven dwarfs. I mean, that just -- that isn't going to happen.

O'BRIEN: Can Barack Obama be the uniter that he says he is?

(CROSSTALK)

PRESS: Just get used to saying it, J.C., President Clinton. Just get used to saying it.

WATTS: I think Barack has the demeanor. I think he has the -- the spirit about him that he could do that.

Miles, I'm not sure so the country wants to be united. I mean...

O'BRIEN: Oh, we like the vision. Really?

(CROSSTALK)

WATTS: But, no -- well, I think -- I think there are many in politics -- now, look at politics.

O'BRIEN: Yes.

WATTS: The political arena, we put our stakes down on the right. We put our stakes down on the left. We refuse to take them up, move them in, move where we have to do to get results, to get things done.

So, you know, those who are playing this game, they play it for a reason. And that's to stay, our guy is better than your guy or our person is better than your person. And, so, it's all -- unfortunately, a lot of it is a game.

PRESS: Yes, I just want to add, the day after Karl Rove resigns, I think America is ready for a uniter, not a divider. I mean, a lot of division Karl Rove created under this presidency of George Bush.

If Barack Obama can bring us back together, or Hillary Clinton, then good for America. WATTS: You know why Karl Rove's effective? He knew how to count to 51. And he got there more successfully than the Democrats. And the Democrats are going to do the same thing. They're going to try...

(CROSSTALK)

PRESS: Is that why the Democrats won the Congress the last time, J.C.?

(CROSSTALK)

O'BRIEN: Got to go.

(LAUGHTER)

(CROSSTALK)

O'BRIEN: And I just -- just to clarify a point at the beginning here, I want to make sure everybody is clear. We're not saying Edwards is pulling out of Nevada.

PRESS: No.

O'BRIEN: Just a few staffers coming out of Nevada. Just want to make that...

(CROSSTALK)

PRESS: He's focusing on Iowa.

O'BRIEN: Absolutely.

All right. Thank you, gentlemen. Always a pleasure, J.C. Watts, Bill Press.

The Bush administration is threatening to label Iran's Revolutionary Guard a terrorist organization. But would that stop insurgent attacks on U.S. troops in Iraq? CNN's Michael Ware is in Baghdad. He has a reality check for us.

Plus, the New York Police Department has just completed a study of potential terrorist attacks and who presents the greatest threat. And it's not who you think. We will tell you what they're saying.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

O'BRIEN: Here's a look at some of the day's most striking video.

We start in the Philippines, where traffic in Manila was brought to a near standstill by monsoon rains. School has been canceled throughout much of the country, as a tropical storm is expected to hit over the next few days.

Argentina now, where tango dancers from around the world strutted their stuff on the streets of Buenos Aires. The city hosts the world's tango championship this weekend. Not bad.

And, finally, check out this orangutan at the zoo in Tokyo. She has learned to tear open packets of medicine and take them herself. Zookeepers say it happened when they accidentally dropped one of the packets into her cage.

On the National Mall here in Washington today, the new Thomas Jefferson $1 coin made its debut. The Jefferson coin is the third in the U.S. Mint's presidential series. The George Washington coin was released in February, followed by the John Adams coin in May. The U.S. Mint hopes the series will have greater success than the dollar coin programs of the past. Americans' preference for dollar bills over coins caused one golden dollar released in 2000 and the Susan B. Anthony silver dollar originally released in 1979 to flop.

Jack is in New York with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Nice. I have to follow the word flop.

You know the reason the Susan B. Anthony dollar failed? Because they made it the same size, roughly, as a quarter. So, you wound up putting a dollar in the vending machines, and you reached in your pocket and you didn't know if you had quarters or dollars. If they had made it a different size, it might have had a chance.

The question: Which candidate from the crop of 2008 contenders would do the best job uniting the country, and why?

Liese in Mokena, Illinois: "As a staunch Democrat, there are only two in that bunch I would pick, Edwards and Biden. Obama has no experience. Hillary talks at times like a fish wife. In this wonderful country, are there no good people we could put for president? Maybe we will get lucky and somebody will come forward."

Scott in Colorado: "After 16 years of a Clinton or Bush in the White House, this country is hungry for a change and a new direction that is not stuck in the past with burnt bridges and high disapproval ratings. Senator Obama has shown he has a new vision that appeals across parties, demographics, and generations, something that could get this great country back on track."

Karl writes: "Giuliani, simply because the only thing that seems to unite Americans these days is 9/11, and he's the only candidate with firsthand experience dealing with real terrorism. Americans want a president they can trust to contend with the next and inevitable terrorist attack on U.S. soil."

Nick writes from Pennsylvania: "Ron Paul. He seems to be the only one who cares about the American people more than special interest groups. And he doesn't seem to have an underlying agenda. The fact his views are more that of an independent than a Republican is just what the country needs."

Ed in Texas writes: "Bill Richardson is clearly the best for this task. He is at least as much a statesman as a politician and he understands the need to get people to talk to one another with civility. And that's the start of getting people to work together to solve problems."

Roy writes: "Although I'm not certain we're ready for a female president, I feel Senator Clinton is the best candidate for one simple reason: She really wants the job. I don't think there's anybody else running that would do the job for free, like I think she would. I voted for Bill Clinton the first time because the Clintons advocated universal health care. I still think we need that. She's the only one I think can deliver."

And Jim writes from Virginia: "You're kidding, right? My vote: none of the above" -- Miles.

O'BRIEN: Thank you very much, Jack.

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