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THE SITUATION ROOM

Barack Obama's Bold Plan; The Fed Cutting Interest Rates; Democrats Delaying Confirmation of Next Attorney General?; Did Petraeus Have a Big Impact?

Aired September 18, 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: Thanks very much, guys. Happening now, a plan to tax the rich to help millions of poorer people, it's from Barack Obama. Might you save some money in the process?
Also, some are calling it a big discount for America. The Fed, as you know by now, cut the key interest rate for the first time in four years. We're going to tell you exactly how that might affect your money.

And one person calls it a very expensive headache, higher airfares for the presidential candidates. They will now pay about what you would pay to fly around the country.

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

Right now we're following major developments that could affect millions of Americans who are struggling financially. Wall Street has just seen a huge rally today on news the Federal Reserve has cut a key interest rate for the first time in four years. Experts say it will mean more money in your pocket if you have some debt. We're going to have a lot more on this story. That's coming up in a little while right here in THE SITUATION ROOM.

But we're also following a bold plan from Senator Barack Obama that could also affect millions of people's bank accounts. The presidential candidate saying -- and I'm quoting now -- "some CEOs make more in 10 minutes than a worker makes in 10 months. So he wants to overhaul the entire tax code. Let's go to CNN's Tom Foreman. He's joining us now with more on this story. Tom, who might benefit from this proposal from Senator Obama?

TOM FOREMAN, CNN CORRESPONDENT: Wolf, some would call it a kind of Robin Hood approach taking from the rich and giving to the poor.

(BEGIN VIDEOTAPE)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: At a time when Americans are working harder than ever, we are taxing income from work at nearly twice the levels that we're taxing gains for investors.

FOREMAN (voice-over): Barack Obama says the current tax system is working against most of us, and he wants to fix it.

OBAMA: I will restore simplicity to the tax code and fairness for the American middle class. It's time to stand up to special interest carve outs.

FOREMAN: The senator from Illinois and Democratic presidential hopeful laid out his plan which calls for...

OBAMA: By cutting taxes for working people, cutting taxes for homeowners, cutting taxes for seniors.

FOREMAN: Among the specifics, a tax cut of up to $1,000 for 150 million working Americans, a tax credit for homeowners who don't itemize their deductions. Eliminating the income tax for seniors making less than $50,000 a year, and...

OBAMA: The final part of my plan will be simplifying the process of filing a tax return for all-Americans.

FOREMAN: Obama says he will pay for all of this by...

OBAMA: Cutting down corporate loop holes and tax savings. We will also turn the page on an approach that gives repeated tax cuts to the wealthiest, one percent of Americans even though they don't need them and did not ask for them.

FOREMAN: That sounds similar to Democratic rivals, including Hillary Clinton and John Edwards. They rolled out their tax cut plans earlier this year calling for...

HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: By rolling back part of President Bush's fiscally irresponsible tax breaks for the highest income Americans.

(APPLAUSE)

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: Got to get rid of Bush's tax cuts for people who make over $200,000 a year.

(END VIDEOTAPE)

FOREMAN: Today's announcement here in Washington is part of an economic policy pushed by Obama. Just yesterday he was at the NASDAQ headquarters in New York City chastising Wall Street executives for looking out for themselves rather than for helping out the middle class -- Wolf.

BLITZER: All right, Tom. Thanks very much, Tom Foreman with that. Many are wondering what Obama's tax plan might mean for them. The Obama campaign gave us this calculation for a married working couple with an income of just under $60,000 a year. In it the couple has an $80,000 home mortgage. Because of that they'll get a $500 tax credit. And because they work, they'll get another $1,000 tax credit as well.

That would total $1,500. Meanwhile, the Obama plan would eliminate federal taxes for senior citizens making less than $50,000 a year. For a senior earning $49,000, Obama's plan would save them about $4,000 a year based on our calculations. Joining us now to talk a little bit more about the politics of Senator's Obama's announcement our senior political analyst Gloria Borger.

She's walking here into THE SITUATION ROOM. Gloria, thanks very much. This decision by Senator Obama to go ahead and do what the Republicans, a lot of them at least call this class war fare, tax the rich some more in order to help the poor people, what do you think? How is this going to fly?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well first of all he's trying to play into this kind of middle class anxiety theme that the Democrats are all trying to play to. You just saw Hillary Clinton trying to do that. Obviously there is a lot of anxiety out there right now, particularly with this mortgage crisis that folks are facing. So I think that this is a Democratic theme you are going to see over and over and over again.

BLITZER: Here is what he said yesterday. Tom just reported this, but I want to play this little clip. What he told these traders on the NASDAQ yesterday.

(BEGIN VIDEO CLIP)

OBAMA: If we're honest, I think we must admit that those who benefited from the new global economy, and that includes almost everyone in this room, has not always concerned themselves with the losers in this new economy.

(END VIDEO CLIP)

BLITZER: All right. So does that get him voters basically to tell these rich guys out there, you know, you've been greedy so far. You have got to pay some more taxes.

BORGER: Well he may not get the rich guys, but he's going to establish himself as the truth teller in this campaign. You talk to his campaign today, as I did, and they said to me we're going to tell those voters we're all in this together. And so he wants to be the fellow who's out there being the honest one.

You may not like what I have to tell you, folks on Wall Street, but you have to care about the little guy. Detroit, you may not like the fact that I'm telling you, you have to have an energy policy, but you've got to do it. And he wants to get people to believe, therefore, that he is the truth teller.

BLITZER: Now this comes just a day after Senator Clinton...

BORGER: Yes.

BLITZER: ... unveiled her new health proposal, universal health care. She said she's going to tax the richest by eliminating some of the tax breaks that they got by the Bush tax cuts. Here is also a preemptive strike in defense of her plan. This is what she said.

(BEGIN VIDEO CLIP)

H. CLINTON: This is not government-run health care. We're not creating any new bureaucracy. We're trying to build on what works and fix what's broken in our system.

(END VIDEO CLIP)

BLITZER: That's what she told our John Roberts on "AMERICAN MORNING" earlier today. What do you think?

BORGER: Well I think Hillary Clinton has a bit of a credibility problem when it comes to health care because, of course, she had the debacle in 1993. She knows that however Wolf more than anybody else, so she's coming out and in every appearance you will notice she's very careful to say, I made some mistakes. I know what I did wrong. And so that's what she's going to do.

However, this time her plan is kind of risky because she requires families to buy insurance. Lots of liberals are going to say, gee, the government ought to do that for us, and conservatives are going to say we don't want to require any kind of mandates on people. She's taking a very centrist middle ground, but it's risky.

BLITZER: And John Edwards who is trying to establish himself as the real populist...

(CROSSTALK)

BLITZER: ... whether on health care or taxes or other issues, he came out with this proposal. I'm going to play this clip for you.

(BEGIN VIDEO CLIP)

EDWARDS: The first day that I'm sworn as president of the United States, I will submit a law that says that every member of Congress, the president of the United States, the vice president of the United States, and every cabinet member will lose their health care come July of 2009 unless they have passed universal health care for the United States of America.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: Members of Congress, they have pretty good health insurance just by being members of Congress.

BORGER: Sure they do. And you could see that as a plan hatched by some political consultant sitting around the table saying, OK, Hillary Clinton has got her health care proposal. Obama has got his. We've got one, but how do we one-up them? Well here is how we do this. And of course it is populist and the easiest people to hate are people in Congress and in Washington, right, Wolf? So that will get him an applause line on the campaign trail.

BLITZER: All right, Gloria. Thanks very much. Gloria Borger our senior political analyst. Gloria and Tom Foreman, as you saw earlier, they are both part of the best political team on television. And remember for the latest political news at any time check out our political ticker at CNN.com/ticker. Let's go to another member of the best political team on television. That would be Jack Cafferty, who is joining us from New York with "The Cafferty File". Jack, how does it feel to be a member of the best political team on television?

JACK CAFFERTY, CNN ANCHOR: I'm flattered and humbled.

BLITZER: Good.

CAFFERTY: Some Senate Democrats are in no rush to confirm President Bush's choice for attorney general. The president announced his pick, Michael Mukasey, a retired federal judge from New York, a lot of Democrats welcoming this choice, someone known for his independence relative bipartisanship, a far cry from that little creep Alberto Gonzales.

But nevertheless there are Democrats who are now warning they might delay Mukasey's confirmation unless the White House complies with those subpoenas and turns over documents the Judiciary Committee has been asking for, for months in connection with multiple investigations. Committee Chairman Senator Patrick Leahy said "all I want is the material we need to ask some questions about the former attorney general's conduct on torture and warrantless wiretapping so we can legitimately then ask here is what was done in the past, what will you do?", unquote.

Senator Chuck Schumer added that there are concerns about those documents and it would be better for everyone if there could be an agreement. The White House says they want Mukasey confirmed by October the 8th, which of course is when the Senate is scheduled to leave for its next recess. They say the request for documents and the confirmation are separate issues and should not be linked.

So here is the question -- do you think it's a good idea to for Senate Democrats to delay the confirmation of the next attorney general while they wait for subpoenaed documents from the White House? E-mail us at CaffertyFile@CNN.com or go to CNN.com/CaffertyFile.

Remember the last time they were about ready to go on vacation, Wolf, and they wound up passing that new NSA spy law, which actually gave President Bush more powers to eavesdrop than even he asked for because they wanted to be sure to get to the beach before they ran out of suntan oil.

BLITZER: It is amazing what they can do when they know they're going on vacation...

CAFFERTY: Isn't it?

BLITZER: How quickly they can do that...

(CROSSTALK)

BLITZER: Jack, let's tell our viewers what's coming up tomorrow night 8:00 p.m. Eastern. That would be Wednesday night, right after THE SITUATION ROOM. "The Cafferty File," a special edition. Give us a little preview.

CAFFERTY: Well we have got an hour tomorrow evening to talk about many of the points that I raise in my new book called "It's Getting Ugly Out There," which by the way is in its third printing after just a week...

BLITZER: Congratulations.

CAFFERTY: That's very good news. Whoopi Goldberg is going to join us. Wolf Blitzer is going to join us on videotape. My old buddy Andy Serwer from "Fortune" magazine is going to be with us. We're going to read some e-mails, look at some -- what do they call those -- I-news clips from viewers around the country and talk generally about why I think it is getting ugly out there and perhaps what we can do it turn things around. So I hope you'll join us tomorrow night at 8:00 Eastern Time. Wolf, you'll be watching, won't you?

BLITZER: I will watch it. I will watch the I-Reports, too. We have got to get the lingo right...

CAFFERTY: Is that what they are?

BLITZER: The I-Reports.

CAFFERTY: What did I call them?

BLITZER: I-news, something like that.

CAFFERTY: Yes, I had it wrong...

(CROSSTALK)

BLITZER: All right, Jack. Tomorrow night at 8:00 p.m. Eastern...

(CROSSTALK)

BLITZER: ... a special edition of "The Cafferty File" right after THE SITUATION ROOM.

Wall Street sees a huge rally today closing up more than 330 points after a move that will help those struggling financially. The Fed cuts a key interest rate for the first time in four years. We're going to tell what you that could mean for your bank account.

And more regarding that student who found himself at the wrong end of a taser gun during John Kerry's speech, millions have now seen the video. Should John Kerry try to defuse the controversy? What's he saying about that?

And Senate Democrats hope to force President Bush's hand on troop draw-downs in Iraq, but we're learning they're not necessarily finding a whole lot of fresh Republican support. Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Right now congressional Democrats are angry they can't convince President Bush to drawdown more troops from Iraq. So they're hoping to try to force his hand another way. One strategy involves passing anti-war legislation, but it appears they can't clear a major, major hurdle. Let's go to our congressional correspondent Dana Bash. She's watching this unfold up on Capitol Hill. It involves getting a lot more Republican support, something the Democrats have failed at doing at least so far.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: That's right, Wolf. Senate Democratic leaders have been talking to Republicans for more than two weeks trying to find compromise on a timeline for troop withdrawal. Today they announce they have virtually given up on that and they are instead going to push for once again a timeline with a deadline for troop withdrawal. That means that it will be very hard to get Republican support for this to pass. It also means that the Democrats' best shot at Iraq legislation now lies with the Democrat from Virginia.

(BEGIN VIDEOTAPE)

BASH (voice-over): Freshman Democrat Jim Webb thinks he's found a way to force a change in Iraq policy. Focus on the over extended troops.

SEN. JIM WEBB (D), VIRGINIA: There's nothing going on in Iraq that justifies requiring our soldiers and Marines to be in Iraq more than they're home.

BASH: His legislation mandates troops spend as much time at home as on the battlefield.

WEBB: This administration has continued this policy for four and a half years. It's reached the level where they are abusing in my view the well-being of our troops and the Congress has a duty to step forward.

BASH: Webb is a former Navy secretary and fought in Vietnam. His son is now serving in Iraq. He is driven by personal experience.

WEBB: I know what it's like to have a father deployed. I know what it's like to be deployed. I know what it's like to have a son deployed.

BASH: Some supporters of Webb's proposal call it a back door way to force redeployment from Iraq. The Pentagon is fighting to defeat it. Defense Secretary Robert Gates warns it would actually make him extend tours in Iraq, breakup military units, and reduce combat effectiveness.

ROBERT GATES, DEFENSE SECRETARY: Cumulative effect of these kinds of things, we think, would, frankly, increase the risk to our men and women in uniform over there.

WEBB: Secretary Gates is a member of this administration. This administration has created a problem that is affecting the morale and the retention of their troops.

BASH: Webb, a former Republican, says troop risk is even more critical since the president admitted the U.S. will be in Iraq for some time.

WEBB: They were denying it and denying it for years. And now they openly are saying this is going to be like Korea, so I think they need to get their stories straight.

(END VIDEOTAPE)

BASH: Webb appears to have 57 of the 60 votes he needs, and he says he is pretty confident he can find three more Republicans to actually pass his legislation, but he is up against staunch opposition, Wolf...

BLITZER: Unfortunately, Dana, we just lost your microphone. We're going to try to fix that, but we got the gist fortunately of the piece. Thanks, Dana, very much.

Meanwhile, what are Americans thinking about Iraq now that President Bush and his top military commander in Iraq outlined their hopes for the immediate future? Let's go to our senior political analyst Bill Schneider. He is joining us.

Did the Petraeus testimony and the president's address to the nation last week, Bill, have a big impact?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, Wolf, we now have the answer from two polls that were just released.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Two high-profile media events about Iraq last week. The top U.S. commander testified before Congress. The president delivered a prime time speech.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: In Iraq, an ally of United States is fighting for its survival.

SCHNEIDER: What impact did they have? Very little according to two polls taken at the end of the week. Before the Petraeus testimony and the president's speech, 26 percent of Americans polled by CBS News approved of the president's handling of Iraq; after the speech, 25. Before the testimony and the speech, 41 percent of Americans believed the United States did the right thing to take military action in Iraq. After the speech, 39 percent said it was the right thing. President Bush spoke about a return on success, drawing on General Petraeus assessment.

PRES. BUSH: His belief we're succeeding, his belief we will succeed, and I ask the United States Congress to support the troop levels and the strategies I have embraced.

SCHNEIDER: Democrats were skeptical. SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: We have now set the bar so low that modest improvement in what was a completely chaotic situation to the point where now we just have the levels of intolerable violence that existed in June of 2006 is considered success. And it's not.

SCHNEIDER: Does the public believe the U.S. troop buildup is making this situation in Iraq better? Before last week, 35 percent of Americans said yes in the CBS News poll. At the end of the week, 31 percent said yes. The Pew poll found that most Americans want the U.S. to bring its troops home as soon as possible, same as in July.

(END VIDEOTAPE)

SCHNEIDER: President Bush's overall job approval hardly changed. Thirty percent before the speech in the CBS poll, 29 after. But the president's rating did jump 15 points among Republicans. Bottom line, nothing much changed. The public still wants out of Iraq, but the president's Republican base remains loyal. Wolf?

BLITZER: Bill Schneider reporting for us. Thanks, Bill, very much.

A disgraced senator involved in a men's bath room bust is now back at work up on Capitol Hill. You're going to hear exclusively from Senator Larry Craig on his first day back on the job. One source telling CNN he apologized to his fellow Republicans for the embarrassment.

And a controversial claim -- a congressman says a pro Israeli lobbying organization here in Washington was behind the push to invade Iraq, and that sparks some serious outrage. We'll tell you what's going on -- all that and a lot more coming up in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Carol Costello is on assignment. Brianna Keilar is monitoring stories incoming into THE SITUATION ROOM right now. Brianna, what do you have?

BRIANNA KEILAR, CNN CORRESPONDENT: Wolf, an emotional hearing on Capitol Hill. The head of the National Football League Players Association urged members of a Senate committee to give them more authority to approve disability claims for retired athletes. Retired players testified tearfully about their injuries and how they were denied the benefits they needed. The NFL commissioner also testified saying league pensions are improving.

And at the meet and greet time for Michael Mukasey's, he is President's Bush's choice to be the next attorney general. Today Mukasey toured Capitol Hill and talked with key senators who will preside over his confirmation hearings. Some top Democrats say they're pleased with the president's choice. They call Mukasey a strong independent minded candidate.

And Republican presidential hopeful Fred Thompson says when it comes to drilling for oil, no place is off the table, and that includes the Florida Everglades. When Thompson was asked about drilling in that environmentally sensitive area during a visit to Florida, he appeared surprised saying he didn't know it was a big issue. Take a listen.

(BEGIN VIDEO CLIP)

FRED THOMPSON (R), PRESIDENTIAL CANDIDATE: Well gosh, no one has told me that there's any major reserves in the Everglades, but maybe that's one of the things I need to learn while I'm down here.

(END VIDEO CLIP)

KEILAR: And also several members of Congress are refusing to comply with subpoenas in a bribery case. Former House Speaker Dennis Hastert, House Republican Whip Roy Blunt and 11 other lawmakers were subpoenaed to testify in a trial of a defense contractor accused of bribing former Congressman Randy Duke Cunningham. The lawmakers cite House rules that allow them to refuse subpoenas if they don't have any relevant information about the case -- Wolf.

BLITZER: All right, Brianna. Thanks very much. Up next, the Federal Reserve makes a major cut in a key interest rate, a move that could have a major impact on your wallet -- CNN's Ali Velshi standing by with the details.

And flying in style just got pricier for lawmakers and presidential candidates. We're going to tell you why -- all that coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Happening now, they're speaking out, one of the apparent victims of the alleged armed robbery involving O.J. Simpson. Alfred Beardsley tells CNN he thought the robbery was a police or military operation. Beardsley says the people who barged into his room were well-dressed and carried themselves off like FBI agents on a mission. We're going to have a live report coming up on the latest developments in the next hour.

Radiation detectors at our airports, did the Department of Homeland Security help defense contractors with critical equipment tests? CNN's Jeanne Meserve is standing by with the answer.

And outrage in Florida. A college student gets tasered and arrested at a political event. Fellow students call the police action completely unwarranted, but there are also questions surrounding the student at the center of all of this.

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

A big move today by the Federal Reserve that sends the Dow soaring by more than 330 points and could now boost your bank accounts as well, the Fed announced it is cutting a key interest rate by an aggressive half a percentage point, an attempt to keep the economy from sliding into a recession. Let's turn to CNN's Ali Velshi. He's joining us right now for more on this.

Ali, it's the first time in four years they have done this. What's going on?

ALI VELSHI, CNN CORRESPONDENT: What -- what a thing.

Wolf, I'm here at the Chicago Board of Trade, where, just two hours ago, this surprise hit the floor. Everybody thought the Fed was going to cut today. They thought they were going to cut a quarter-of- a-percent. They cut by half-a-percent. That means that the prime rate has gone down by half-a-percent.

And then here, where treasury bonds are traded, that means that they came down. And that's where your mortgages are often financed. So, everybody got a discount today. And if you're any sort of investor, what a day you had, that Dow, the biggest point gain since 2002, gold at a 27-year high.

You saw General Electric have its biggest gain in five years. You saw Procter & Gamble hit an all-time high. Why? Because the Fed made interest rates lower.

Here is what happened.

(BEGIN VIDEOTAPE)

VELSHI (voice-over): The immediate effect of this cut is that certain types of credit card debt, personal loans, business loans, and home equity loans all got cheaper.

And, while the Fed cut doesn't bail out the sinking housing market or those people caught up in the subprime mortgage debacle, it is good news for millions of Americans with adjustable-rate mortgages. ARMs, as they're called, aren't tied to the Fed rate. They're actually tied to one-year treasuries, which are traded at the Chicago Board of Trade.

But treasury rates tend to follow the Fed rate, in this case, down. So, homeowners with adjustable rates that were about to adjust to a higher rate just caught a bit of a break. When interest rates come down, people and businesses spend more money. Businesses borrow money to expand and maybe hire more workers, who, in turn, borrow more money to spend.

Supply and demand increase, which keeps the economy going and growing.

(END VIDEOTAPE)

VELSHI: Now, Wolf, if you look at the Dow, it is now up 10 percent for the year. If you look at the top 10 mutual funds owned by Americans, they are all up more than 10 percent over the last 52 weeks. So, the markets are strong. Interest rates are coming down. This doesn't solve the housing problem, but it seems to be investors feel like this is a good step in the right direction -- Wolf.

BLITZER: I want to show our viewers some poll numbers, Ali, because a majority of Americans still believe the economy is in good shape right now. What do you make of that, considering the housing slump, some of the problems, the turmoil we have seen on Wall Street over these past several months?

VELSHI: Wolf, you have got to worry about three things if you're an American. You got to worry about your job. We saw them slowing down. That's probably the one shaky side of things. You have to worry about your investments.

And, as much as we talk about these big moves on the Dow. Look (AUDIO GAP) it's over 13,000 (AUDIO GAP) strong. And you have to look at your home. Home prices are down, but moves like this make it feel like it might get better. Americans were expecting a cut in interest rates. We're expecting this housing situation to bottom out. It may be a year before it does, but, fundamentally, the situation overall is not bad.

And here is one other thing, Wolf. Even if growth is slowing in America, the bottom line is, our dollar is low. We are now selling more products to people overseas. And growth in other countries is very strong. So, the future, economically, doesn't look bad for Americans -- Wolf.

BLITZER: All right, Ali, thanks very much.

Excellent explanation from Ali Velshi, doing some good reporting for us, as always.

Let's turn now to another money matter, this one affecting the presidential candidate. They will have now to budget in more money for their own travel expenses.

Our chief national correspondent, John King, explains -- John.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, the price of traveling in style on the presidential campaign trial is going up.

(BEGIN VIDEOTAPE)

KING (voice-over): The price hike for cozy flights on private jets isn't because of rising fuel costs. It's part of a sweeping new ethics law signed by President Bush last week.

FRED WERTHEIMER, PRESIDENT, DEMOCRACY 21: This new lobbying reform and ethics reform law is the most important new law in this area that we have had since the Watergate scandals.

KING: Most of the changes deal with Congress and making fund- raising by lobbyists more transparent. But the law also closes the loophole that allows presidential candidates to accept rides on corporate jets and pay just a tiny fraction of the cost.

Take, for example, a trip from Washington to Los Angeles, a frequent itinerary for fund-raising. A small jet would run about $25,000 one way from a charter service. But, if a corporation made its jet available, the lucky candidate could reimburse the company only $800, the going rate for a first-class ticket on a commercial carrier.

WERTHEIMER: You get chits for that. You're doing real favors that matter for these people, and you can get access and influence as a result.

KING: The new law requires reimbursement at the fair-market value of such flight.

On the Democratic side, the candidate impacted the most is former Senator John Edwards. His campaign filing show more than $430,000 in payments over the first six years months of the year for use of a jet owned by his finance chairman.

Senators Hillary Clinton and Barack Obama early on decided they would not fly on corporate jets. They already are paying out big bucks for more expensive private charters. On the Republican side, former Massachusetts Governor Mitt Romney makes frequent use of corporate jets. A top Romney adviser called the change a very expensive headache.

Former New York Mayor Rudy Giuliani's filings show more than $400,000 in reimbursements for private planes. One of his top aides said the new law makes life more expensive, but we will deal with it.

(END VIDEOTAPE)

KING: This change, of course, is easier on the candidates with the most money. They can afford the higher travel costs.

The bottom line, though, for ethics watchdogs, is one less way for the wealthy and big business to curry favor with politicians -- Wolf.

BLITZER: John King reporting for us. Thanks, John, very much.

Coming up: Congressman Jim Moran makes a comment that gets him into some hot water with Jewish groups. We're going to tell you what he said.

And Congressman John Murtha makes a bold prediction about the Republican support for the war in Iraq. That's coming up in our "Strategy Session."

And he's irreverent. He's informed. He's always funny. The talk show host and political satirist Bill Maher, he will be joining us live -- right here in THE SITUATION ROOM. Lots coming up.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: He was busted in a sex sting in a men's room. Some of his colleagues clearly want him to simply go away, and, yet, Republican Senator Larry Craig went back to work today here in Washington.

Our congressional correspondent Jessica Yellin is following the story from Capitol Hill. Some people were surprised to see Larry Craig even show up today, Jessica.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Wolf, it was a big surprise. In fact, it seems the only person who knew he was coming was Senate Minority Leader Mitch McConnell, who got a heads-up from Larry Craig.

The senator from Idaho also showed up today at the Republicans' weekly lunch. And not only did he make an appearance; he spoke to his colleagues. According to one senator who was there, he apologized for any embarrassment he may have caused and reminded them that his case is on appeal, but he did not say whether he plans to resign on September 30 or if he might fight it and stay on.

One -- one Republican aide who was also in the room said it seems like an unanswered question just sort of hanging in the air.

Now, this is what Larry Craig told CNN when we caught up with him when he arrived at the Capitol this morning.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What brings you back to the Capitol today?

SEN. LARRY CRAIG (R), IDAHO: Go to work.

UNIDENTIFIED MALE: Are you intending to vote today, sir?

CRAIG: That's my plan.

UNIDENTIFIED MALE: OK.

(CROSSTALK)

CRAIG: Good morning. Good morning.

UNIDENTIFIED MALE: Why did you decide to come back today?

CRAIG: Because I'm a serving United States senator from Idaho.

UNIDENTIFIED MALE: And -- and how are you doing in -- how are you doing in light of the scandal and everything else?

(END VIDEO CLIP)

YELLIN: Well, Larry Craig seemed to be doing OK to us. He was smiling as we saw him in the hallways. And, when we asked him whether he plans to leave on the 30 or if he might reconsider and stay, he said -- quote -- "We're working on that now."

It was not a very clear answer, so, we followed up and said, so, does that remain an open question?

And he said: "I have said I intend to resign by the 30th. I'm working on that now."

So, as you can see, Wolf, it seems like a not-very-decided position from Larry Craig -- a lot of questions hanging in the air here.

BLITZER: Has his -- has the mood among his Republican colleagues, based on everything you're picking up, up there, Jessica, changed in recent weeks, as the story has continued?

YELLIN: That's also unclear. Some Republicans refuse to answer any questions about Larry Craig when asked, but others, like Senator Orrin Hatch, said that, just this morning, he personally read the motion that's been filed by his attorney, by Larry Craig's attorney, and said that the appeal makes it is clear there's no underlying crime.

And, when he asked if Craig should stay or go, he said, well, that's really up to Larry Craig to decide. Senator Lindsey Graham says, no one has any animosity for Larry Craig.

And then Senator Specter, who has been defending Craig all along, went out of his way, in front of Republican -- excuse me -- in front of reporters gathered in the hallway. He broke away, extended his hand to Larry Craig as he walked by, said: "I want to say hello. It's nice to see you smiling."

And then Specter said that there's been a lot of positive talk about Larry Craig in the Republican cloakroom -- Wolf.

BLITZER: All right, Jessica, thanks very much -- Jessica Yellin up on Capitol Hill.

An uncomfortable deja vu for Congressman Jim Moran. The Virginia Democrat once again in some hot water with Jewish groups for linking a pro-Israel lobbying group here in Washington to the war in Iraq.

Brian Todd is watching this story for us.

So, Brian, what exactly did the congressman say?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, he claimed that the American pro-Israel lobby actually pushed for the invasion of Iraq in 2003.

Now, top Democrats in the House are already distancing themselves from Congressman Moran.

(BEGIN VIDEOTAPE)

TODD (voice-over): A controversial accusation -- in a magazine interview, Congressman Jim Moran of Virginia hits the American Israel Public Affairs Committee.

"AIPAC is the most powerful lobby and has pushed this war from the beginning. I don't think they represent the mainstream of American Jewish thinking at all, but, because they are so well- organized, they have been able to exert power."

The group tells CNN it took no position on the Iraq war. The number-two House Democrat was quick to dispute Moran's charge.

REP. STENY HOYER (D-MD), MAJORITY LEADER: I think he certainly ought to retract his remarks and indicate that he believes that he was inaccurate on the facts.

TODD: But a recent book by professors John Mearsheimer and Stephen Walt also criticizes the influence of Israel's supporters on U.S. foreign policy.

And former President Jimmy Carter voiced his own concerns in his recent book on Israeli-Palestinian relations.

Former Secretary of State George Shultz defended AIPAC: "The notion that U.S. policy on Israel and the Middle East is the result of their influence is simply wrong."

As to whether Jewish voters supported the invasion:

IRA FOREMAN, EXECUTIVE DIRECTOR, NATIONAL JEWISH DEMOCRATIC COUNCIL: Jewish voters in general are more anti-war than the rest of the electorate. They were more anti-war in 2003, when we first got into the Iraq war, than the rest of the electorate.

TODD: Today, Moran's office said, "It is not the Jewish people, but an organization aligned with the Bush administration, that he critiqued."

(END VIDEOTAPE)

TODD: Now, in 2003, Moran apologized for a similar remark. He said then that Iraq would not have been invaded without the Jewish community's support. Moran survived a primary and got reelected in 2004. But his remarks, these latest ones, could prompt another challenge -- Wolf.

BLITZER: Brian Todd, thanks very much -- Brian Todd reporting.

And there's a story just coming in.

I want to go back to Brianna Keilar. She's monitoring this for us.

What's going on with a jury, Brianna? KEILAR: We're hearing now about the Phil Spector trial. The judge in the case, Superior Court Judge Larry Paul Fidler, has just announced that the jury is hung.

This is a nine-man, three-woman jury. And, apparently, they were unable to come to a decision about the guilt of Phil Spector, of course, recording producer, famous for creating the recording technique the wall of sound. He was facing second-degree murder charges for the murder -- for the death, rather, of Lana Clarkson, an actress.

And, again at this point, Wolf, we are hearing that the jury is hung -- details still coming in at this point, but Spector had been facing a sentence of 15 years to life. The prosecution had alleged that he had killed Lana Clarkson. And the defense said that, actually, Lana Clarkson had killed herself.

And, obviously, the jury was unable to come to a decision about who they agreed with -- Wolf.

BLITZER: And we will see what the judge decides, now that he's got word that the jury is hung.

It's been four years, seven months since this actress was found dead out on the West Coast.

Brianna, thanks very much.

As soon as we get word on what the judge decides -- decides is the next step, you will let us know.

Leading anti-war Democratic Congressman John Murtha predicts the Republicans will stick together.

(BEGIN VIDEO CLIP)

REP. JOHN MURTHA (D), PENNSYLVANIA: As soon as the primaries are over, you are going to see Republicans jumping ship.

(END VIDEO CLIP)

BLITZER: But will anti-war activists be willing to wait that long?

And he wanted to get an answer from John Kerry. But, instead, he got Tasered. John Feehery and James Carville, they are going to tell us how they would advise their candidates to handle this kind of situation -- all that, a lot more coming up, here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A key Democrat in Congress makes a bold prediction about a mood change involving the war in Iraq. And a bold move that some say was reckless is sparking a lot of controversy down in Florida. It's all part of today's "Strategy Session." Joining us now, Democratic strategist James Carville and Republican strategist John Feehery.

Guys, thanks to both of you...

JAMES CARVILLE, CNN POLITICAL ANALYST: You bet.

BLITZER: ... for coming in.

Here is John Murtha, one of the most vocal anti-war Democrats, giving his assessment of what's going on right now.

Listen.

(BEGIN VIDEO CLIP)

MURTHA: We have a plan which we think we can sell in the House. The speaker deals continually with the Senate.

But -- so, here is what I foresee, purely political. As soon as the primaries are over, you are going to see Republicans jumping ship.

(END VIDEO CLIP)

BLITZER: All right. That would be probably February or March.

But, until then...

CARVILLE: Right.

BLITZER: ... there's going to be a lot of frustrated Democrats, who say, you know what? The Democrats were elected to end this war, and they're not doing it.

CARVILLE: Well, they can't. They don't have enough votes. If they need 60 senators, they can't do it. The Democratic Party, by and large, has voted in large numbers, large majorities, to set some kind of timetable.

I think what Colonel Murtha, or Congressman Murtha, is saying here is, it's not unreasonable that, once the Republicans get in a general election mood, as opposed to a primary mood and they pass this, that they're going to start picking up more Republicans. That's not an unreasonable political observation point to make.

BLITZER: Is he right, Murtha, that, after the primaries, you are going to see a lot of Republicans who are nervous about getting reelected jumping to the other side?

JOHN FEEHERY, REPUBLICAN STRATEGIST: We see some Republicans already jumping ship.

But it's very interesting to see how John Murtha is looking through this through a political prism. Many Republicans, if they want to do the right thing politically, they would say, no, we have got to pull out right now. But a lot of Republicans actually want to do the right thing philosophically. And they want to stay and try to win this the war. I just think it's interesting, for Murtha, you know, he used to be a bipartisan kind of guy. He used to be someone that would be a deal- cutter.

But now he's got this partisan hat, and he's lost his credibility because of it.

CARVILLE: No. But what he's saying, though, is that -- the war is popular among Republican voters, unpopular among general election voters. So, Republicans will stay until they -- until they pass a primary challenge. Then they will move.

I don't know if he's right, but it's not an unreasonable calculation to make.

BLITZER: All right. Let's talk about what a lot of people are talking about right now, that Taser incident down in Florida.

John Kerry, the Democratic presidential nominee, was speaking near the end. A student got up and he got a little bit excited.

Watch what happened.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Is anybody filming this? I'm not joking.

(CHEERING AND APPLAUSE)

UNIDENTIFIED MALE: Why are you...

(END VIDEO CLIP)

BLITZER: All right. He got Tasered. You're not going to see that part. But maybe we will show it to you later.

Here is what John Kerry said afterwards.

"In 37 years of public appearances, through wars, protests and highly emotional events, I have never had a dialogue end this way."

He went on to say, "I was not aware that a Taser was used until after I left the building. I regret enormously that a good, healthy discussion was interrupted."

If you're a politician, how do you deal with a situation like that on a college campus?

CARVILLE: Probably the same way Senator Kerry did. I mean, I can't fault that he kind of dealt with it. And everybody has been there. And, sometimes, these, people get out of hand. Obviously, this young fellow did get out of hand.

I think the police probably -- as the president of the -- course, I'm -- I'm torn, because anything that embarrasses Florida has to be good for an LSU fan, OK?

(LAUGHTER)

CARVILLE: And I was glad to see...

(CROSSTALK)

CARVILLE: And I hope they get embarrassed October 6.

BLITZER: It was at the University of Florida in Gainesville.

(CROSSTALK)

CARVILLE: Well, I think Kerry handled it well.

BLITZER: What do you think?

FEEHERY: This must -- this must, you know, pain someone like John Kerry, who got known, first of all, as being a good war protester back in the late '60s. You know, he probably wanted to join in the protest.

You know, as a Republican, I'm supposed to say, let's defend the cops. And I think I will on this one. And, you know, sometimes, you have got to get some order in the courtroom and order in a lecture hall.

James goes to college campuses all the right.

CARVILLE: Right.

FEEHERY: You really have to have some sense of order. A Taser might have been overreacting.

BLITZER: Because he was not armed, this student.

CARVILLE: Right.

BLITZER: And he...

FEEHERY: He wasn't armed. But, you know, he was a big guy, obviously. And, you know, it's one of these things that -- sometimes, you have got to defend the cops.

(CROSSTALK)

CARVILLE: Yes, you know what? That four cops, one guy -- the president of the University of Florida said that, look, that the university is embarrassed by this.

There might have been -- they might to need to look at their training manual or something like this. Obviously, this guy was a disturbance. But to Taser him was an overreaction.

(CROSSTALK) BLITZER: And John Zarrella, our reporter, is on the scene. We are going to go to him in the next hour and get the latest on the fallout from this.

Let's talk a little bit about Larry Craig, James.

He showed up today back at work on Capitol Hill. He said, I'm here representing the people of Idaho.

CARVILLE: Well, from day one, I never understood why somebody should have to resign because they pled guilty to disturbing the peace, which is all that he pled guilty to.

Apparently, he wants to get it withdrawn. Senator Specter agrees with me. Senator Hatch says the same thing. I'm saying, in all fairness, I don't know why he is -- why the Republicans are so anxious for him to resign from his Senate seat, because I wouldn't -- certainly, if a Democratic senator had pled guilty to disturbing the peace, I wouldn't say they should resign.

BLITZER: And the ACLU is filing on his behalf as well, saying the whole sting operation at that Minnesota men's room was unconstitutional.

FEEHERY: Any time the ACLU is backing you up, and you're a Republican, it has got make you a little bit nervous.

I'm not sure what to think about this. Obviously, Larry Craig needs to get -- he is getting paid at the end of the month. He's got to serve out his term and he's got to vote. I think that's -- that makes sense.

You know, I think a lot of Republicans still would like to see him go quietly in the night.

BLITZER: Well, we will see what happens. He's still saying it's his intent, but not necessarily he's going to do it.

Guys, thanks very much for coming in.

New developments involving O.J. Simpson and that alleged armed robbery -- one of the alleged victims is speaking out. You are going to hear what he has so to say about the incident that landed the one- time murder defendant back in jail.

And controversy over something designed to protect you at the airport. It involves radiation detectors and how rigorously they're being tested.

Stay with us. We will be right back.

(COMMERCIAL BREAK)

BLITZER: Let's go right back to Jack for "The Cafferty File" -- Jack? CAFFERTY: The question this hour, Wolf, is, is it a good idea for Senate Democrats to delay the confirmation of the next attorney general while they wait for those subpoenaed documents from the White House?

Mark writes from Florida: "No, I don't think holding up the nomination will cure the lack of cooperation from the White House. Congress needs to start issuing some contempt of Congress citations. A couple of days in the slammer will help them cooperate with Congress."

Robert in South Carolina: "The Congress should refuse to pass any White House requests, including nominations, until the subpoenaed information is delivered. If Bush and company are not guilty of high crimes and misdemeanors, they should have nothing to fear."

Nikki writes from Florida: "No, they need to quite screwing around and do the work the 'people' pay them to do."

Julian in Miami: "If they quite screwing around, they wouldn't do anything at all."

Julian in Miami: "The Democrats will posture, as well they should. But, in the end, the stubbornness of the Bush administration will prevail. And, just like Bolton, we will get another recess appointment. This will become just another example of the glaring lack of any interbranch cooperation in our government, as well as the secrecy of the current administration."

Jamie writes: "It is not a good idea for the Democrats to delay the appointment of the attorney general in exchange for the White House documents. It's a power play, and the public is sick of it."

And Sally in Texas writes: "We have been without an attorney general for two-and-a-half years. What's a couple more months?"

We invite to join us tomorrow, 8:00 Eastern time, a special one- hour of "The Cafferty File," talking about just how ugly it's getting out there. You can go to CNN.com/caffertyfile. Or you can send us your I-Reports, Wolf tells me they're called. And then you can e-mail us at Jack@CNN.com -- Wolf.

I like that e-mail address, Jack@CNN.com. We got a lot of mail, too Wolf.

BLITZER: I like that e-mail address. You get a ton of mail. You get some I-Reports. It's going to be a great Jack Cafferty special, 8:00 p.m. tomorrow night, Wednesday night, right after THE SITUATION ROOM.

Jacks, thanks for that.

CAFFERTY: Thank you.

BLITZER: And, to our viewers, you're in THE SITUATION ROOM. Happening now: His job is to keep them honest, but the State Department's inspector general is now accused of blocking investigations that could embarrass the Bush administration. Democrats and the White House are in a tug-of-war over fraud allegations.

A college student gets zapped with a Taser and arrested while nagging a visiting senator.

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