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THE SITUATION ROOM

President Bush Slams 2008 Dems; America's Mortgage Mess; Children's Healthcare at Risk

Aired September 20, 2007 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, President Bush slams the 2008 Democrats, accusing them of being afraid of the left wing. It's a brash new turn in the political war over Iraq for a president who suddenly has a stronger hand.
Another target of Mr. Bush's wrath, the MoveOn.org ad slamming his Iraq commander. This hour, we'll have a debate about MoveOn's motives, its clout and whether it crossed the line.

Plus, top economic officials give Congress ideas for easing America's mortgage mess. We'll break down the subprime lending crisis into terms all of us can understand.

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

Up first this hour, President Bush stepping up to the bully pulpit today to give his Democratic critics on the Iraq war a peace of his mind. In a news conference, Mr. Bush used words like "irritating" and "disgusting". His top targets, a liberal anti-war group and the Democrats who want his job.

Let's go right to our White House correspondent, Ed Henry. He is standing by.

We are seeing a bit more forceful president, at least politically, emerge today, Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. He feels strong about pushing back against these Democratic attempts to take control of the war in Iraq. So after for so long insisting he would not be the pundit in chief in 2008, today Mr. Bush took aim at the Democratic presidential candidates that he says are too scared to take on MoveOn.org.

(BEGIN VIDEOTAPE)

HENRY (voice over): For the first time, the president publicly lashed out at the MoveOn.org ad that called his commander in Iraq "General Betray Us".

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I thought the ad was disgusting.

HENRY: Then Mr. Bush, who has repeatedly insisted he will resist the temptation to weigh in on the next presidential election, well, he couldn't resist. BUSH: I was disappointed that not more leaders in the Democrat Party spoke out strongly against that kind of ad. Most Democrats are afraid of irritating a left-wing group like MoveOn.org, or more afraid of irritating them than they are of irritating the United States military.

HENRY: Mr. Bush's brash comments are a sign of a commander in chief feeling strong. On Wednesday, he again kept pivotal Republicans like John Warner from voting to change his Iraq policy. This left Democrats beaten again, trying to put the best face on coming four short of the 60 votes need to force Mr. Bush's hand.

SEN. JIM WEBB (D), VIRGINIA: I regret the defection of Senator Warner. But other than that, I think that we have been able to, again, establish that a majority of the United States Senate wants to see this kind of policy in place. And we're going to keep persisting.

HENRY: Attacking MoveOn.org also allows the president to shift the focus away from actual problems with the war itself. In January, Mr. Bush said he wanted the Iraqis to take over security in all 18 provinces by this November. The administration now says that will not happen until at least next summer, though Mr. Bush denied he's moving the goal post.

BUSH: No, the goals are the same. Achieving those goals have been slower than we thought.

(END VIDEOTAPE)

HENRY: Now, this summer started with Mr. Bush's back against the wall on Iraq. A growing number of Republicans demanding a change in policy. But Democrats on the Hill have not been able to convert that criticism into actual Republican votes against the war, and that's why Mr. Bush has now seized the upper hand again. But obviously, he's still not out of the woods on Iraq. There's a lot of tough slogging ahead -- Wolf.

BLITZER: Are we going to see a more politically charged president in public, Ed, in the coming days and weeks?

HENRY: I think certainly him wading in into this MoveOn.org ad more than a week after all that controversy shows that maybe he's ready to jump into the fray finally -- Wolf.

BLITZER: All right. Let's see what happens.

Ed Henry at the White House.

Thanks.

We're going to have more on this story coming up. The executive director of MoveOn.org's political action committee, Eli Pariser, is standing by to join us live here in THE SITUATION ROOM, along the with the executive director of the pro-Iraq group Iraq Vets for Freedom, Pete Hegseth. They're both going to be here shortly.

Other important news.

Federal Reserve chairman Ben Bernanke is in the hot seat on Capitol Hill today. He's been testifying about the mortgage crisis that's costing some Americans their homes and sending shock waves through financial markets not only here but around the world.

Ali Velshi is in Washington, back in THE SITUATION ROOM with us.

All right, Ali, tell our viewers in terms we can all understand what is going on, especially in the aftermath of the decision by the Fed to cut this one key interest rate by half a point this week.

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Bigger than expected. That unexpected half a point drop is going to help some people keep their homes, but Ben Bernanke says the problem about subprime mortgages, people losing their homes because their interest rate is adjusting, is serious and more Americans are going to lose their homes.

(BEGIN VIDEOTAPE)

VELSHI (voice over): The subprime mortgage crisis is not over.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Delinquencies and foreclosures are likely to rise further.

VELSHI: Fed chairman Ben Bernanke is talking about borrowers with poor credit and adjustable rate mortgages. He wouldn't say how bad it will get, but he says for those still having trouble making their payment, talk to your bank.

BERNANKE: The Federal Reserve, together with the other federal supervisory agencies, has encouraged lenders and loan servicers to identify and contact borrowers who, with counseling and possible loan modifications, may be able to avoid entering delinquency or foreclosure.

VELSHI: The Fed chief says he's working with banks to make sure borrowers really understand how their monthly payments can change when they get an adjustable rate mortgage.

Treasury Secretary Henry Paulson says mortgages are just too complicated for most people.

HENRY PAULSON, TREASURY SECRETARY: The idea that I like a lot is every mortgage having one page, very simple, big print. You know, "Your mortgage payment is X dollars today and it could be as high as Y dollars."

VELSHI: Paulson and Bernanke emphasized that most Americans aren't facing a mortgage crisis. For homebuyers with good credit, a 30-year fixed rate mortgage is 6.29 percent, not even a full percentage point higher than it was a year ago. But there's still the actual housing problem. The median price for an existing home in America is $218,000, $3,700 less than it was a year ago.

(END VIDEOTAPE)

VELSHI: That's the median price. That's the price at which half the homes sell for more and half sell for less. Median prices don't mean much to people. The price that matters is the one that you got near you.

If you live in Phoenix or you live in Detroit, things are really bad. The -- one bright spot, as we started with, that Fed rate cut could give some people a bit of a break.

BLITZER: A break, because what we're talking about are people not able to pay their mortgages if their adjustable rate goes up. And there could be foreclosures.

There have been a dramatic increase in foreclosures. People losing their homes. They've worked so hard for so long to get this house. And all of a sudden they can't meet the mortgage payments.

VELSHI: And Ben Bernanke says to the banks, do what you can to talk to these people who are in trouble because it is better for the economy if they don't lose their homes. If you can adjust the mortgage terms that they have so that they can stay in that house, that's a better move. He says to people who are in trouble, call your bank, talk to them.

BLITZER: Work with the bank, because the bank could wind up losing a lot more money...

VELSHI: They don't want your house.

BLITZER: ... if they foreclose.

VELSHI: That's right.

BLITZER: Ali Velshi is here in THE SITUATION ROOM.

Welcome back.

VELSHI: Good to see you.

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

Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: And we all know how sympathetic banks are.

BLITZER: Yes.

CAFFERTY: Especially if you're in trouble. They are great if you've got a pocket full of money. But if you don't have any money, they don't want to know your name.

This could be a first. A Middle Eastern state owned stock exchange holding a large stake in an American stock exchange. Part of a four-way deal, Borse Dubai -- ring a bell -- has agreed to take a 20 percent stake in Nasdaq.

Dubai, which is in the United Arab Emirates, has been highlighted as a transit point for money used to finance terrorism. So, as you might imagine, not everybody thinks this is a terrific idea. Some lawmakers are worried about compromises to security in the U.S., and it sounds like some of what we heard back when another Dubai-owned company -- remember D.P. Ports World? -- tried to buy a company that manages several American ports.

Senator Chuck Schumer said the deal, which would make Dubai a big player in New York finance, would "raise serious questions that have to be answered." Adding, quoting again, "Should any government own any part of a major U.S. stock exchange?"

When asked about it, President Bush said a national security review will be conducted on the planned investment. Now, that should reassure everybody. The review would be done by CFIUS. That's the same bunch of clowns that didn't do anything except take a cursory look at the security issues involved in the Dubai Ports deal.

Many stock markets around the world have been combining or buying stakes in one another in order to improve global business. So much of the stock buying and selling is done electronically now that it doesn't matter. You don't have to geographically be situated some place. You push a computer button and the deal is done across the ocean.

The question in this hour is this: Should a Middle Eastern government be allowed to own a large stake in an American stock exchange?

E-mail your thoughts on that to caffertyfile@CNN.com, or go to CNN.com/caffertyfile.

CFIUS, I think they've turned down like one deal in 1,500 -- Wolf.

BLITZER: I wonder if any of our viewers know what CFIUS stands for, the Committee for Foreign Investments in the United States. Something like that, as I recall.

CAFFERTY: By god, you got it.

BLITZER: I think I did have it.

CAFFERTY: Yes, you got it.

BLITZER: You know, Jack, I was in Dubai last year during that Dubai Ports World controversy.

CAFFERTY: I remember.

BLITZER: It's an amazing place. You have no concept -- I don't think any of us have a concept how much money is there. The wealth in Dubai, in the United Arab Emirates, is truly amazing. CAFFERTY: It's all about that oil, isn't it? Which is part of the reason that you might want to speculate on why we are mired in Iraq. They have a lot of it too.

BLITZER: Yes. And it's only going to be more -- $80 a barrel and going higher.

CAFFERTY: Yes.

BLITZER: I remember when it was $10 or $12 a barrel. But we're showing our age a little bit.

Jack, thanks very much.

CAFFERTY: Well, you're showing yours.

BLITZER: Stand by, Jack Cafferty.

Coming up, a new battle is under way between the White House and congressional Democrats. And children's healthcare is hanging in the balance.

We're going to tell you why both sides are digging in their heels right now.

Also coming up, Rudy Giuliani in London trying to look the part of a leader of the free world. Did he make an embarrassing boast, though, about his global reach along the way?

And ducking debate. Why do Republicans and Democrats take part in some forums and skip others? We're going to tell you about the latest no-shows and whether the candidates are getting away with it.

Lots more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Healthcare for many poor children is at a new risk this hour. President Bush is threatening to veto a bill to expand a state- run federally funded insurance program. Republicans and Democrats now are pointing angry fingers at one another and they're trying to score political points in the process.

Let's go to our congressional correspondent, Jessica Yellin.

They are both -- both sides appear ready to fight on this issue, Jessica.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: They really are, Wolf. And it's shaping up to be an ugly fight with both sides seizing on this program to expand children's health insurance.

Democrats are for it because they say they want to help working families, but Republican leadership determined to show that they really are fiscal conservatives say it's way too expensive, and millions of children who rely on this program for health insurance are caught in the middle.

(BEGIN VIDEOTAPE)

YELLIN (voice over): President Bush is digging in his heels.

BUSH: Democrats in Congress have decided to pass a bill they know that will be vetoed.

YELLIN: House Republicans are backing him up, calling a new plan to give health insurance to more children a massive expansion of government-run healthcare.

REP. JOHN BOEHNER (R), MINORITY LEADER: This is Hillary care, and cloaked in expanding children's healthcare. That's what this is. That's not what most members of Congress want.

YELLIN: And Republicans are itching for a spending fight with the Democrats.

REP. ROY BLUNT (R), MINORITY WHIP: We want to have that, we're ready to have that fight.

YELLIN: The program created by the Republican Congress in 1997 insures more than six million children of the working poor. It will expire next Sunday.

Congressional sources tell CNN a bipartisan agreement has been reached to extend the program to another four million uninsured kids and pay for it through a tobacco tax of 61 cents a pack. The president calls this an unacceptable tax increase.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: If the Republicans think it is a winner to say we prefer not taxing cigarettes instead, so that we don't have to insure children, that's a fight we welcome.

YELLIN: And presidential candidate Hillary Clinton slams President Bush, saying he's out of touch with the needs of working families.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: The states in which they live want to help them. Republicans and Democrats in the Congress want to help them. And the president just says no.

(END VIDEOTAPE)

YELLIN: Now, the Senate is expected to pass this bill with a veto-proof majority. But at least one Republican congressional aide tells us the House will uphold the president's veto, which means that a program that insures over six million American kids would run out in a little over a week -- Wolf.

BLITZER: It looks like they're playing chicken to see who's going to blink first. And these six million kids are sort of stuck in the middle.

Is that a fair analysis?

YELLIN: It's really fair, Wolf. It's kids being caught in the middle of an ugly political fight up here in Congress.

BLITZER: Jessica Yellin, thanks very much.

This programming note for our viewers. Tune in this Sunday morning. Senator Clinton will be among my guests on "LATE EDITION," 11:00 a.m. Eastern. "LATE EDITION," the last word in Sunday talk.

Republican presidential candidate Rudy Giuliani is back in the United States this hour after a trip to London. He rubbed shoulders with current and former British leaders, hoping some of their international stature probably would rub off on him. But the former New York mayor may have said too much and tried too hard.

Let's go to our chief national correspondent, John King. He traveled with Giuliani to London -- John.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, Rudy Giuliani insists he has nothing to prove, that he has as much foreign policy experience as any governor or senator seeking the presidency. Yet, his visit here was clearly designed to rebut rivals who suggest it's a risky leap to go from big city mayor to war time commander in chief.

(BEGIN VIDEOTAPE)

KING (voice over): If all the world's a stage, consider this London in three acts. An evening handshake with Lady Thatcher, a morning courtesy call on Tony Blair. And in between, a stop at 10 Downing Street to chat with the current prime minister, Gordon Brown.

You get the picture. Rudy Giuliani is hardly the first candidate for president to travel overseas in an effort to look the part. The goal is to look at ease, to allay any worries that a mayor is better suited to fix schools and potholes than fight terrorism.

Looking tough is part of the package. To this lunch crowd, a pledge Iran would never get a nuclear weapon on his watch.

RUDY GIULIANI (R) PRESIDENTIAL CANDIDATE: That is not said as a threat. That should be said as a promise.

KING: He is also adamant about keeping a robust U.S. military presence in and around Iraq.

GIULIANI: We're going to probably have to make a military commitment there for the indefinite future.

KING (on camera): It sounds like Rudy Giuliani is saying the president is right when he talks about preemption, the president is right when he talks about standing up to this terrorist threat. The implementation, though, has been at times far less than competent.

GIULIANI: Yes. I would probably put it in a more generous way.

KING (voice over): He knows President Bush is unpopular both here and back home. So he suggests other comparisons.

GIULIANI: Well, you could also look at it as the Ronald Reagan approach.

KING: Of course, not any mayor, or any presidential candidate, for that matter, gets this much attention and access. London's "Daily Telegraph" went as far to label it a campaign coup.

(END VIDEOTAPE)

KING: Giuliani's 9/11 celebrity is not only the centerpiece of his campaign back home, but also a powerful calling card overseas. He told reporters here he thinks he's among the four or five best known Americans in the world. A list he concedes also includes two powerful voices in the Democratic race, Hillary and Bill Clinton -- Wolf.

BLITZER: John King in London for us.

Thanks, John, very much.

So who is your ideal presidential candidate? An online calculator takes on that question and the answers are surprising.

Plus, Arnold Schwarzenegger is comparing his party -- that would be the Republican Party -- to a bunch of fat people. The California governor takes on fellow Republicans again.

We are going to take on Schwarzenegger in our "Strategy Session".

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

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: Thousands of protesters overwhelming a small southern town thrust into the spotlight of American race relations. The protest in Jena, Louisiana, is the latest in a series of racially- charged events that started in August of last year. That's when African-American students sat under a tree at the high school where white students typically gathered. The next day, nooses were found hanging from that tree and three white students deemed responsible were suspended.

On November 30th, an unknown arsonist set fire to the school. And on December 4th, six black students beat a white student unconscious. They were initially charged with attempted murder, but that was later reduced. One of the six, Mychal Bell, was convicted of battery in June. He's still in jail.

Let's go to CNN's Tony Harris. He's in Jena right now.

You've got a new development, Tony, that you're watching right now.

What's going on? TONY HARRIS, CNN CORRESPONDENT: Yes, Wolf. Finally, we have a development in the legal case against Mychal Bell.

We've been -- we've been hearing rumors that something like this might actually take place today, and we just received word just a short time ago that the 3rd District Court of Appeals in Louisiana has ruled that Mychal Bell needs to be brought to this court inside the next 72 hours for a hearing.

It's a habeas hearing. And what that really means is that Mychal Bell has to be brought to this court and he has to be -- he has to learn about the charges. They have to be explained to him. And in essence, there needs to be a determination by the judge and by this appeals court as to why Mychal Bell continues to be held.

And that is news just within the last 10 minutes or so here to CNN. So that is a hearing that has to be scheduled in the next 72 hours. It won't -- it won't be scheduled today because the clerk of the court, the offices here, are actually closed for the day. But finally, some movement in the case.

And again, this is at the heart of it for the folks who have that gathered here in Jena, Louisiana. Folks want these charges dismissed. At least now Mychal Bell will be brought before a judge and there will be some explanation as to why he is still being held -- Wolf.

BLITZER: All right.

Tony Harris on the scene for us, doing an excellent job with this story all day.

Thanks for doing it, Tony, and your entire team out there.

Tony Harris in Jena, Louisiana.

President Bush says it's disgusting. That would be the MoveOn.org ad slamming his Iraq commander. A top MoveOn official, Eli Pariser, is standing by to dispute that. He'll go head-to-head with a leader of a pro-war group, Iraq Vets for Freedom, Pete Hegseth.

Also, we'll open our files on MoveOn and investigate how it got to be so powerful and so controversial.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: They're on a political collision course, critics continuing to drive hard against the liberal group MoveOn.org. This comes days after the group put out an ad critical of the top U.S. military commander in Iraq, an ad some say simply crossed the line. Today President Bush weighed in on that as well.

Carol Costello here in THE SITUATION ROOM. She's joining us.

Neither side at least blinking on this whole issue, at least so far.

CAROL COSTELLO, CNN CORRESPONDENT: Oh, actually, it has become pretty darned nasty. And it's not likely to end in a measured bipartisan kind of way.

(BEGIN VIDEOTAPE)

COSTELLO (voice over): If the liberal group MoveOn.org meant to rile things up with its "General Betray Us" ad, it did. It so angered Republicans, even the president lashed out, calling it disgusting.

BUSH: I felt like the ad was attacked not only on General Petraeus, but on the U.S. military.

COSTELLO: And Senators weren't far behind, with Republicans introducing a resolution condemning the ad, while challenging Democrats.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: This amendment gives our colleagues a chance to distance themselves from these despicable tactics, distance themselves from the notion that some group literally has them on a leash, like puppet on a string.

COSTELLO: In the end, senators voted to condemn the ad, with 21 Democrats joining in. But the moves on MoveOn point out how powerful this activist group has become.

MoveOn.org was born in 1998, created by Internet entrepreneurs Wes Boyd and Joan Blades, who invented the screen saver the flying toasters. They were angry Congress was spending so much time trying to impeach President Clinton over the Lewinsky affair. They wanted the government to move on.

After 9/11, recent college grad Eli Pariser joined them. They claim to have recruited 3.3 million supporters online who donate, on average, $45 apiece.

(BEGIN VIDEO CLIP, MOVEON.ORG POLITICAL ACTION AD)

NARRATOR: Rudy Giuliani has always been a big fan of George Bush's war in Iraq.

(END VIDEO CLIP)

COSTELLO: That money buys MoveOn.org plenty of clout.

RUDOLPH GIULIANI (R), PRESIDENTIAL CANDIDATE: I wish MoveOn.org would do several more commercials attacking me...

(LAUGHTER)

GIULIANI: ... because, if they do, it could get me nominated. They are not exactly the most popular group among Republicans. They have spent $200 million to $300 million assassinating the character of Republican candidates.

COSTELLO: But GOP Senator John Cornyn says MoveOn.org has moved beyond that into dangerous territory with its Petraeus ad.

SEN. JOHN CORNYN (R), TEXAS: The reason why MoveOn.org was the focus here today is because this was not a political campaign. General Petraeus is not a candidate running for office. He's merely a uniformed member of the United States military trying to do his duty.

COSTELLO: Dangerous territory for any activist group when America is at war.

(END VIDEOTAPE)

COSTELLO: Now, there's one more thing that ad has generated today.

The American Conservative Union has filed a complaint with the Federal Elections Commission against MoveOn.org and "The New York Times," accusing "The New York Times" of giving MoveOn.org a hefty discount to run that General Petraeus ad. "The New York Times" told us it does not distinguish ad rates based on political content, and that the standard rate for such a full-page black-and-white ad was about $65,000.

BLITZER: Carol, thanks very much -- Carol Costello reporting.

And we want to talk a little bit more now about this showdown between MoveOn.org and its critics. The group's executive director, Eli Pariser, is joining us from New York. And Pete Hegseth is the executive director of Vets For Freedom, a group that supports the war in Iraq. He is here in Washington.

Gentlemen, thanks to both of you for coming in.

Eli, quickly clarify the -- the $65,000 rate that you used to get that ad in "The New York Times." Was that what you were told was the standard rate for this kind of an ad? Or did you get a discount?

ELI PARISER, EXECUTIVE DIRECTOR, MOVEON.ORG: It's a -- it is a standard rate "The New York Times" has.

And all of this is really a distraction. You know, the Republicans are trying to distract from the fact that they are standing with Bush in a very unpopular war, a war that most people want to end, and that groups like MoveOn are creating a great deal of political pressure on Republican candidates to -- to break with the president.

BLITZER: All right.

Eli, did you go, though, too far in suggesting General Petraeus is really "General Betray Us"? Did that cross the line?

PARISER: Well, you can -- you know, different people can have different opinions about the wording.

But the fact is that this was a betrayal of trust. When a general goes before the U.S. Congress and misleads the country about the state of the operation on the ground, that's a problem. And it is not an attack on -- you know, we are not attacking the troops. A lot of our members of are Iraq veterans. But we are attacking the lies that this administration has put out to get us into this war and to keep us there.

BLITZER: All right, Pete Hegseth, give us your sense why you disagree with that notion.

PETE HEGSETH, EXECUTIVE DIRECTOR, VETS FOR FREEDOM: Well, Eli talks about a distraction.

A distraction is when, instead of listening to General Petraeus and hearing what he has to say, as the most professional officer we have got in Iraq, you attack his character. You call him a traitor and a liar, which is essentially what they were saying with their "General Betray Us" ad.

They didn't want to deal with the assessment he came back to give, because it didn't align with their political objectives. General Petraeus came back and gave...

PARISER: But, Peter, Peter, I would ask...

(CROSSTALK)

HEGSETH: Eli, let me finish. Let me finish, Eli.

(CROSSTALK)

PARISER: Yes, go ahead.

HEGSETH: General Petraeus came back and gave the facts on the ground: ethnosectarian violence down 80 percent in Baghdad, violence down throughout Iraq all over the place. And he came back and provided those numbers. And, instead, MoveOn didn't want to deal with the numbers. They wanted to attack him personally, which was a big mistake, because it backfired. And you saw today in the Congress, with Republicans and Democrats coming together to condemn a very despicable ad.

BLITZER: All right. All right.

Go ahead, Eli.

PARISER: Well, I -- the fact is that neither Peter, nor anyone else, can condemn -- can any fact that was in that ad that it is inaccurate.

The fact is that the statistics that General Petraeus was presenting were dead wrong. And this was part of a political strategy by the Bush administration to politicize the top command in Iraq. That is unfortunate, but it's the truth. And it is important for people like MoveOn to stand up and say when -- when -- when the country is not being given the straight -- the straight facts.

BLITZER: Well, what about the point that he is making, Pete, that, if you take a look at the specifics in the ad, he says they stand by the facts as they portrayed them in that ad.

Are there any -- I don't know if you know the ad by heart, but are they any -- is there anything in there that you want to dispute?

HEGSETH: There are a lot of things in there to dispute.

You know, they -- they claim that they don't -- that General Petraeus does not count people that are killed when they are shot in the back of the head, as opposed to in the front of the head. General Petraeus came out and said that's absolutely not true.

MoveOn.org cited an anonymous source in "The New York Times" as their evidence. That's all they said. No one will stand behind that fact, except MoveOn.org, because that fact, it advances their political objective, which is to assassinate, politically, a general who has served this country with honor for 35 years and making progress in a war zone.

(CROSSTALK)

BLITZER: Eli, let me just be precise.

(CROSSTALK)

BLITZER: Hold on one second, Eli.

You said in the ad, "The Washington Post" reported that assassinations only count if you are shot in the back of the head, not the front. That was in a "Washington Post" story that -- that General Petraeus later said was simply not true. They count all those assassinations.

PARISER: That's right. And -- and -- and "The Washington Post," to my knowledge, has not retracted that comment. And, frankly, you know...

(CROSSTALK)

HEGSETH: So, are you calling General Petraeus a liar?

PARISER: Well, frankly...

HEGSETH: Are you?

PARISER: If you look at this administration's record on the war, and you look at the number of times that they have misled and deceived the country about the state of the war, you know, I will leave to it the viewers to determine whether "The Washington Post" or this administration is more credible on that fact.

HEGSETH: Eli -- Wolf, this is what happens. They always go back to 2003, 2004, rather than engaging with the ideas and issues in front of us today, which is, General Petraeus has a coherent strategy that's making a lot of progress. And that does not fit with their political agenda. BLITZER: But, Pete, there was another line in the ad. And I'm going to read it to you. And you tell me if this is accurate or not: "We will hear of neighborhoods where violence has decreased, but we won't hear that those neighborhoods have been ethnically cleansed."

There are about four million Iraqi who have been displaced, Pete, as a result of this war, two million internally. Whole neighborhoods have been -- have been changed as a result of this -- two million externally becoming refugees. Is that a fair point that MoveOn makes?

HEGSETH: Well, there's no doubt there has been a lot of sectarian violence and ethnic cleansing. I'm not doubting that.

But what I do know is the strategy we are applying now, by pushing troops into the population, is quelling that violence and giving Iraqis an opportunity to come together politically, because what they want us to do, which is leave right away, is going to leave behind mass bloodshed...

BLITZER: All right.

HEGSETH: ... and a haven for al Qaeda.

BLITZER: Eli, are you concerned, with hindsight, that you gave the Republicans, at least a lot of the Republican presidential candidates and others, a weapon in this -- as a result of that ad? And, if you had to do it all over again, would have you done the same thing?

PARISER: Yes.

And, in fact, if you look at the polling from before President Bush and General Petraeus went into -- went before Congress and afterwards, what you find is that support for our position for a responsible withdrawal has actually increased somewhat in the general public.

The public knows that there is a difference between the troops on the ground, who we owe it to have a real exit strategy for, and the generals, who, mostly, if they have spoken out in this administration have been fired or marginalized.

BLITZER: What's more important, Eli, getting a Democrat elected in the White House or ending the war?

PARISER: That's a -- ending the war. And that's -- that's what our -- that's what we are here for, ultimately.

And that's why, you know, we do what we do. Our members are 3.3 million Americans, veterans, military families, and other people who are sick and tired of this administration misleading us about the war and are ready to take matters into their own hands.

BLITZER: All right, 10 seconds. Go ahead, Pete.

HEGSETH: Wolf, Eli and MoveOn.org does not speak for veterans and military families. They speak for a left-wing -- a marginalized left-wing group of Americans.

BLITZER: We will leave it there.

Eli Pariser, Pete Hegseth, thanks to both of you.

(CROSSTALK)

BLITZER: Hopefully, both of you will come back. This was a good discussion on an important issue.

All Americans want to hear from the presidential candidates. But why are some of the candidates ducking debates, especially those with African-American and Latino audiences? That is coming up.

And who is your ideal presidential candidate? You may be surprised to learn who many online voters are saying. We have the results of that.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All the Democratic presidential candidates, except Barack Obama, are taking part in a debate tonight in Iowa focusing in on senior citizens' issues. The Obama camp says there are simply too many debates and that the senator is not snubbing Iowa or older Americans.

He's not the only candidate ducking one or more debates.

Let's go to our senior political analyst, Bill Schneider. He's here joining us.

So many debates scheduled -- candidates clearly not showing up for all of them. What's going on, Bill?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, whether or not it damages a candidate depends on whether or not voters see a pattern.

(BEGIN VIDEOTAPE)

(APPLAUSE)

SCHNEIDER (voice-over): Democrats have had seven major debates this year. Republicans have had five. At least 13 more Democratic debates and 10 more Republican debates have been scheduled.

STEPHEN HESS, PRESIDENTIAL HISTORIAN, BROOKINGS INSTITUTION: As debates multiply and more and more groups ask to be part of the debates, it becomes, in a sense, easier to decline them. You can decline them with less political risk.

SCHNEIDER: But what does it mean when a whole group of candidates fails to show up? HESS: When eight candidates stand together in one position, it usually means a lot more than when one or two candidates look on the -- something askew.

SCHNEIDER: When Democratic candidates refused to show up at debates co-sponsored by FOX News this year, they were making a statement about FOX News. Only one Republican candidate showed up at an NAACP forum in Detroit. Was that a statement?

REP. TOM TANCREDO (R-CO), PRESIDENTIAL CANDIDATE: Well, thank you very much. But do you think that we should wait a few minutes to see if these other guys show up?

(LAUGHTER)

SCHNEIDER: John McCain was the only major Republican candidate to accept a debate invitation from Univision, a leading Spanish- language network.

All the major Republican candidates have turned down an invitation to participate in a forum next week hosted by talk show host Tavis Smiley to discuss minority issues. The candidates claim they have scheduling contacts.

Baloney, said Newt Gingrich. "For Republicans to consistently refuse to engage in front of an African-American or Latino audience is an enormous error," the former House speaker said.

BUSH: My advice to whoever will be our nominee is to reach out to the African-American community, as well as other communities.

(END VIDEOTAPE)

SCHNEIDER: Barry Goldwater once advised his fellow Republicans that, since they were not likely to get many black votes -- quote -- "We ought to go hunting where the ducks are."

Now, candidates may be concerned about becoming targets if they show up at what they consider unfriendly forums. On the other hand, if voters see a pattern of non-participation, they could read it as a statement that the candidates are indifferent to the group's concerns and willing to write off their votes -- Wolf.

BLITZER: All right, Bill, thanks very much -- Bill Schneider with that.

In our "Strategy Session" today: President Bush says he's politically viable.

(BEGIN VIDEO CLIP)

QUESTION: Mr. President, for Republicans seeking election next year, are you an asset or a liability?

BUSH: Strong asset.

(LAUGHTER)

QUESTION: Can I follow?

BUSH: No.

(LAUGHTER)

(END VIDEO CLIP)

BLITZER: But will Republican candidates in 2008 be flocking to or running away from the commander in chief?

And Arnold Schwarzenegger saying Giuliani is the Republican Party's man for 2008. Does that mean the rest of the field should simply hang it up? That, a lot more coming up -- Leslie Sanchez, Jamal Simmons in our "Strategy Session," right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The governor of California is talking like a fortuneteller. On Rudy Giuliani's campaign fortunes, Arnold Schwarzenegger predicts the former mayor will win the Republican nomination.

Let's get to our "Strategy Session."

Joining us, Democratic strategist Jamal Simmons and Republican strategist Leslie Sanchez.

Guys, thanks for coming in.

He says this. He says: "Giuliani," Leslie, "is the most consistent, stable person who is out there who makes the most sense to the people. That's why his poll numbers are high."

He's doing really well among the Republicans. That would be Giuliani.

LESLIE SANCHEZ, REPUBLICAN STRATEGIST: Yes.

No, I think he stated the obvious. Giuliani has been the front- runner for about a year. And, if you think about it, he's a mid-level conservative. People are getting comfortable with him. Economic conservatives like him very much.

BLITZER: Some consider him a liberal on the social issues.

(CROSSTALK)

SANCHEZ: On the social issues. But he's a -- these are national polls. He's a national candidate who is very strong on national security.

Now, if you look at the Iowa and New Hampshire, is he doing well there? Actually, no. Social conservatives still have their doubts about him.

BLITZER: Is he the Republican that the Democrats fear the most, precisely because he's a social liberal on a lot of those issues?

JAMAL SIMMONS, DEMOCRATIC STRATEGIST: Well, first of all, Leslie and Arnold Schwarzenegger know a lot more about the Republican nominating process than I do.

But I can't believe the Republicans are going to nominate a pro- gay, pro-choice, anti-gun politician from New York City. I just don't believe it. And, if they want to send Rudy Giuliani to us, I think that's a very fair conversation we need to have about the only time he had a chance to make a decision that affected the national security, choose the Homeland Security director, he sent us a mobbed-up cop from New York named Bernie Kerik.

(CROSSTALK)

SIMMONS: So, if that's the conversation they want to have next fall, then let's have it.

SANCHEZ: I think that's a great -- Rudy Giuliani can stand on its own credentials with respect to national security.

He is very well respected. People don't doubt his leadership. And that's like looking at a pinhole compared to the full scale of what he has done for New York, even if you look at the fact how he cleaned up New York.

But that -- the real consistency, there's two brackets. You are going to either have a Thompson or a Romney come out of the social conservative bracket, and you are going to have a McCain or a Giuliani come out of that bracket. And those two are basically going to be head to head.

BLITZER: It's still a fight.

On the Democratic side -- we're not going to talk about that -- Hillary Clinton is obviously doing a lot better in terms of her front- runner...

SIMMONS: If Rudy makes it out of South Carolina, I will give you a dollar.

(LAUGHTER)

SANCHEZ: Oh, yes. Yes. We will get more than a dollar.

BLITZER: Let's talk about the president of the United States. He said today he is an asset for Republicans seeking to win, what, the White House or get reelected next year. You think he is?

SIMMONS: Well, you just saw the video. It looked like he didn't even really believe it. He laughed when he said it.

I would love to have the Republican nominees embrace George Bush next year. You know, Karl Rove gave the same advice to the Republicans last year. We cleaned their clocks in 2006. If people want to run with George Bush, they should have at it.

(CROSSTALK)

BLITZER: Let me see if we have that clip from the president. If we do, we will play it again.

Go ahead.

(BEGIN VIDEO CLIP)

BUSH: Candidates who go out and say that the United States is vulnerable to attack and we are going to make sure our professionals have the tools necessary to protect are going to do well. Candidates who go out and say that helping these Iraqis realize the benefits of democracy are going to do well.

(END VIDEO CLIP)

BLITZER: He was going on, Leslie, in explaining why not only is he an asset, but how Republicans will win next year, if they would follow his recommendations.

SANCHEZ: The president and the substance of what the president is saying is correct. It is right, and it is the right solution for America.

The distinction is, I think a lot of voters, whether they are Republican, Democrat or independent, realize it is the sunset of the Reagan-Bush generation, that era. The Republican Party is essentially beginning a realignment. We're looking for new leaders.

BLITZER: So, Will Republicans next year run away from the president or run toward him?

SANCHEZ: I think, in an instant, in the 2008 election, it is a lot to ask to think the president's popularity is just going to blossom.

But, overall, think of the fact Ronald Reagan was not very popular at the late '80s because of Iran-Contra. Historically, I think Bush is going to be a tremendous asset for the party.

SIMMONS: Well, voters are ready for change. And if they are going to embrace Reagan, and Bush and Bush again, then they should have at it. Voters are ready for change.

(CROSSTALK)

BLITZER: Our...

SANCHEZ: And Clinton doesn't fit into that...

(CROSSTALK)

BLITZER: All right.

Well, let's talk a little bit about what Bill Schneider was reporting, that some of the candidates refusing to show up for these debates.

On the Republican side, the front-runners not participating in a Hispanic debate the other day, not participating in a Tavis Smiley debate that he's going to be hosting next week on PBS, is that a mistake for Republican front-runners to be avoiding those debates?

SANCHEZ: Absolutely. The Republican candidates need to be embracing these audiences, despite the fact that Univision has a bias to the left against Republicans in many cases.

It is still a very crucial audience for Republicans to engage in. And, with respect to Tavis Smiley, very respected, very biased -- no, excuse me -- unbiased on a lot of those things. And I think it is a great opportunity for Republicans.

BLITZER: What about Barack Obama tonight? He's skipping a debate in Iowa for -- that is being sponsored on behalf of senior- citizen issues.

SIMMONS: Well, you know, as someone who worked on some of these things, we want to see these all these candidates participate in as many of these forums as possible, so people can have a look at them.

But the candidates have to make a decision about what's the best way to use their time. And, on the Democratic side, there have been a whole host of debates that people have had to choose from.

For the Republicans, however, I think they are being shortsighted. One thing George Bush as a candidate was actually very good at reaching out and talking to people of different communities.

(CROSSTALK)

SIMMONS: Now it is time for these -- these new flock of Republican candidates to sort of do the same thing.

And we saw it today down in Jena in Louisiana.

(CROSSTALK)

SIMMONS: None of those candidates, I think, have said very much, but the president did say something...

(CROSSTALK)

SANCHEZ: Let's give it context. I worked with President Bush on those efforts and he did it during the general election. It was not during the primaries.

SIMMONS: Sure.

SANCHEZ: So, let's give it context. Time -- the time will come. SIMMONS: He was bad as president, but he was good as a candidate.

SANCHEZ: Oh, gosh.

(CROSSTALK)

(LAUGHTER)

BLITZER: We have got a lot of time for a lot more debates, including debates here on CNN.

Guys, thanks very much for coming in.

SIMMONS: Thank you.

BLITZER: Jamal Simmons, Leslie Sanchez -- good discussion.

Anger and crowds reminiscent of the 1960s civil rights marches, thousands of people protesting racially charged incidents in a small Louisiana town. And even President Bush, as we just heard, is weighing in.

And, with tears in his eyes, a Republican mayor who was against gay marriage now says he's for it. You may be surprised to learn his deeply personal reasons for changing his mind.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A new online tool that calculate -- calculates your ideal presidential candidate has thousands of people playing online. One Democratic presidential candidate is hoping the results will boost his campaign.

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

Abbi, how does this Web site work?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, you punch in the issues that are important to you as a voter, and it generates the candidate that best matches.

It's Web site called VAJoe.com, an unofficial Web site for the military community. And it has got pretty popular since this tool launched at the beginning of last week, almost 200,000 people playing so far.

Now, which candidate has emerged most frequently so far as ideal? It is this man, Democrat Mike Gravel, seen here in campaign video, a candidate that barely registers in polls.

Now, there are various tools like this one online. But the Gravel campaign is now touting the results of this one in an e-mail to supporters. A spokesman tells CNN that people that took the quiz have been contacting them, saying, who is this guy? Why did he come up?

The creators of the site, VAJoe.com, said it has no political affiliation, stress their calculator is not scientific -- Wolf.

BLITZER: Thanks very much, Abbi Tatton, with that.

Let's go right to Jack Cafferty. He is watching all of this for "The Cafferty File."

Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: Well, I actually wasn't watching it very closely.

BLITZER: A little bit.

CAFFERTY: The...

(LAUGHTER)

CAFFERTY: Mike Gravel throwing a stone in a lake. He should jump in after it.

The question: Should a Middle Eastern government be allowed to own a large stake in an American stock exchange? Dubai is looking to take a 20 percent stake in Nasdaq in this country.

Sarah writes: "Once again, the U.S. becoming a victim of its open market policy. A foreign government with suspected terrorist ties should never be allowed to own a piece of our stock market. The goal of terrorists is to bankrupt our economy. Ownership of any stock market is a good first step."

Eric in Utah: "I don't think so, but isn't it reassuring to see that our inflated oil prices can be now used to buy America?"

Darrell in Massachusetts: "I don't see why they shouldn't be able to. Their money is as green as ours.

Richard in Massachusetts: "Hi, Jack. Why shouldn't they be allowed? Isn't our White House mostly owned by Middle Easterners now?"

Douglas in California: "It's like asking if an 'Asian' country should own part of Nasdaq. It depends on what country you are talking about. Dubai has no interest in undermining world market stability, since its very economic existence depends on such stability."

Ron in Denver: "Let the Middle East own our stock exchange. Let the Middle East own our ports. Let Mexico own our interstate trucking. Let the Chinese own our economic future, and let India own our employment opportunities. Then we can have them all support us for a change.

And Glen in Colorado: "The entire country has been for sale for six years, with George Bush acting as the 'seller's agent.' I guess we will find out what his commission was after he's out of office" -- Wolf.

BLITZER: Jack. Thanks very much.

And, to our viewers, you're in THE SITUATION ROOM.

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