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Raising Taxes for War; Fight Over Kids' Health Care; Obama Blasts Rivals on Iraq

Aired October 2, 2007 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, a new proposal to make you pay more for the war in Iraq. This hour, a plan to raise your taxes, and it's surprising timing. Are Democrats handing Republicans a political weapon when it comes to the war in Iraq?
Plus, our brand-new interview with Senator Barack Obama. The Democrat is reminding the nation he was against the war in Iraq from the start. But is he being trumped by Hillary Clinton's new fund- raising announcement?

And it's Anita Hill against Clarence Thomas all over again. She tells CNN her sexual harassment allegations against the Supreme Court justice stand 16 years later. And she also says she simply has to speak out now.

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

Just when House Democrats were hoping to break a partisan deadlock over the war in Iraq, some of their colleagues have thrown them a curveball. It's a new proposal to raise your taxes to pay for the war, and it's already giving Republicans some ammunition for one of their favorite lines of attack.

Let's begin our coverage with our congressional correspondent, Dana Bash. She's watching all of this unfold on Capitol Hill.

The timing of this is raising some eyebrows, Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: It is, because, Wolf, the House is about to vote on what is expected to be one of the first big bipartisan votes on an Iraq measure. That is what Democrats wanted frustrated voters to hear about.

Instead, they are likely going to hear about an idea for a tax hike, one GOP aide called a political gift for Republicans.


BASH (voice over): These senior Democrats want to help pay for the Iraq war by taxing most Americans.

REP. DAVID OBEY (D), APPROPRIATIONS CHAIRMAN: It will be a war surtax. It's a percentage of your tax bill. And if you don't like the cost, then shut down the war.

BASH: The proposal would require low and middle income Americans to pay an additional two percent in taxes. Wealthier taxpayers would see a 12 to 15 percent surcharge. Troops serving in Iraq and their families would be exempt.

OBEY: This war is draining the Treasury dry. It is destroying -- there is a huge opportunity cost that is being paid by the same younger generation that's going to be asked to pay the bill because the president is paying for this war on the cuff.

BASH: But hours later, House Speaker Nancy Pelosi issued a rare public dismissal of a proposal from her confidante, John Murtha, and appropriations chairman David Obey. "I am opposed to a war surtax," Pelosi said bluntly. In fact, most Democratic leaders could not run far enough, fast enough from the idea.

REP. STENY HOYER (D), MAJORITY LEADER: This is not a party position at this point in time. The leadership has not discussed this.

BASH: Democratic sources say leaders know full well the war tax idea allows Republicans to resurrect their classic Democrats tax and spend attack line. And they did.

REP. JIM GERLACH (R), PENNSYLVANIA: I think it is an awful proposal.

BASH: Pennsylvania Republican Jim Gerlach supports Democrats on what they wanted their message of the day to be -- bipartisan Iraq legislation forcing the president to send Congress a withdrawal plan. But he was eager to blast any war tax.

GERLACH: It seems to me that many in the Democrat leadership want to increase people's taxes and will find any reason in the world to do that. And I just don't think that's the right direction for our country.


BASH: Now, the House speaker found out about this idea from Congressman Murtha and Congressman Obey last night. But according to an aide, she did not try to stop them. This aide telling CNN she understands their frustration with the war -- Wolf.

BLITZER: Dana Bash, thanks very much.

A new poll is likely fueling Democrats' concerns that they need to push even harder to try to bring the troops home from Iraq. "The Washington Post"-ABC News survey shows more than half of Americans, 55 percent, say Democrats in Congress have not gone far enough in opposing the war. Thirty-five percent say that they have gone too far.

Congressional Democrats are sending President Bush a hot potato today, a bill to expand a very popular health insurance program for children. The White House says Mr. Bush will make good on that threat and veto the bill tomorrow. That new "Washington Post"-ABC News poll, by the way, shows 72 percent of Americans support the spending increase on children's health, 25 percent are opposed.

Let's turn to our White House correspondent, Suzanne Malveaux.

Suzanne, why is the president spending his political capital on what seems to be such a popular issue out there?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, there are really two reasons.

First of all, there is a philosophical reason. The president, the White House feels that this bill, as it exists, would allow kids who have private health care insurance to move them over to government-controlled, government-run insurance. The president wants exactly the opposite. That is, for kids, poor kids eventually to move from government insurance to private insurance to let the market control and basically work all of this out.

Secondly, however, is the political reason here. It is really a test case for the tax and spending debate that they are setting this debate up here. Essentially, they lost big credibility in 2006 in Congress, not only from Republicans, but also from Independents who really saw this White House as being fiscally irresponsible. So they are really trying to make amends there and trying to prove that this is something that they can carry out.

It was interesting, Wolf. There was a group of Republicans who just met with the president about 30 minutes ago. Senator Lott was one of them, and he told me -- very interesting. He says on deficit spending, "We didn't control it enough when we were in charge. We have to do something about it."

So, essentially, very much a political issue as well -- Wolf

BLITZER: Because when the Republicans were in the majority -- correct me if I am wrong -- they sent him huge spending increases. He never vetoed any of those bills.

MALVEAUX: Well, you're absolutely right, Wolf. And that's one of the things that they have to prove to these vulnerable Republicans who are up for election coming up.

They are very nervous about aligning themselves with this White House. The White House very much trying to prove here that they can be fiscally responsible and not hurt those vulnerable Republicans.

BLITZER: Suzanne Malveaux watching this at the White House.

We'll see that veto tomorrow, or will we see that veto, Suzanne, tomorrow? Will it be done openly in front of reporters? With camera crews? Or will it be done behind closed doors?

MALVEAUX: It's really going to be very quiet. It's going to be behind closed doors tomorrow morning. And essentially what you will hear the president say later when he travels to Lancaster, Pennsylvania, he will basically make it part of this argument about tax and spending, saying this is not necessarily about childcare and increasing childcare, but it's about whether you can be fiscally responsible and also try to increase the program -- Wolf.

BLITZER: All right, Suzanne. Thanks very much.

Suzanne Malveaux at the White House for us.

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

JACK CAFFERTY, CNN ANCHOR: America's reliance on private security contractors like Blackwater USA in Iraq may be backfiring. Democratic Congressman Henry Waxman chairs the House Committee on Oversight & Government Reform. They held hearings today on the role of Blackwater USA.

Both the State Department and FBI now investigating several incidents, including a shooting last month that left at least 11 Iraqi civilians dead. And there are allegations that Blackwater tried to cover up that shooting and other incidents as well.

A congressional report says there have been 200 shooting incidents involving Blackwater forces since 2005. And Waxman pointed out 122 employees or one-seventh of Blackwater's total workforce in Iraq have been fired for improper conduct.

Waxman also questioned the role of the State Department, highlighting an incident last year when a drunk Blackwater contractor shot an Iraqi guard. The State Department suggested how much the company should pay the family and then allowed the employee to leave Iraq.

The Blackwater chairman and CEO, Erik Prince, defended his company, saying that they acted proper appropriately at all times. He also says he support legislation that would make all contractors subject to prosecution in U.S. courts.

What a novel idea.

It's estimated Blackwater has almost a thousand people working in Iraq. The company has been paid more than $1 billion in government contracts since 2001. And there seems to be no end in sight. The Bush administration recently awarded another $92 million contract to an aviation affiliate of Blackwater to operate missions in Central Asia.

So the question is this: What should be done to exert more control on private security contractors like Blackwater?

E-mail your thoughts to or go to -- Wolf. BLITZER: You know, the government of Prime Minister Nuri al- Maliki, they've made it clear in recent weeks, they simply despise, despise -- that's not too strong a word -- these private security contractors because they could do basically whatever they want and they're not subject to Iraqi law.

If this is a sovereign country, why are these private contractors just doing what they are doing and not have to pay any kind of price if they do something wrong?

CAFFERTY: Well, didn't he want -- didn't he say he wanted them out of the country?

BLITZER: He did. And now there is a commission, a U.S.-Iraqi committee. They're looking into it.

CAFFERTY: Yes. But it's his country, not ours.

BLITZER: Supposedly, yes.

CAFFERTY: Yes. But they are still there, aren't they?

BLITZER: Yes, they are. We'll see what happens.

All right, Jack. Thanks very much.

We're going to have more on this story coming up here in THE SITUATION ROOM as well.

Senator Barack Obama says he has something to clear up.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I think that Senator Clinton has been effective in trying to blur the distinctions. And it's our job to make these distinctions clear to the American people.


BLITZER: The Democratic presidential candidate acknowledges his Iraq message needs work. It's part of a new interview with our own Candy Crowley.

We're going to share some of that with you.

Also coming up, Hillary Clinton reveals her bottom line and proves once again she is giving Barack Obama a run for his money. We have the newly-released numbers.

And Republican Rudy Giuliani makes a statement about immigration with a Philly cheese steak on the side.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Senator Barack Obama is accusing some of his Democratic presidential rivals of trying to rewrite history on Iraq. He's very publicly trying to remind voters today he opposed the war from day one while Senator Hillary Clinton and others did not.

Let's go to our senior political correspondent, Candy Crowley. She's in Chicago.

You had an interview, Candy, earlier today with Senator Barack Obama. Give us some of the headlines.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, you know, I did ask him about some of the criticism from rival camps and from other critics of Obama who say, yes, he was out there early, before the war began, criticizing the war. But since then, they say his record has not been quite so anti-war as he would have you believe.


CROWLEY: I want to talk about your Iraq speech, because have you also said since then that you're not sure what you would have done had you been in the Senate because you weren't privy to the intelligence.

OBAMA: The only time when I said I'm not sure what I would do if I were in the Senate was right before the Democratic convention, when we had two nominees that obviously I did not want to be criticizing right before they got up and received the nomination.

CROWLEY: But you didn't mean it?

OBAMA: So -- well, no. What I'm suggesting is, everybody had difficult choices to make. And I -- and these were difficult choices.

I made the right choice. And I think that is relevant not to the past, but to the future, because in this campaign, we have seen emerge the question of, who has got the experience to lead the country during difficult times? And what I'm absolutely confident about is that how we've made decisions on the most important foreign policy issue facing us in this generation, I did not only oppose the war, but laid out reasons that have proven to be prescient over time. And I think that says something about my judgment and my ability to assess the challenges that we are going face in the future.

CROWLEY: We see internally in the polls when you ask who is best able to end this war, lead America and a new foreign policy, they'll say Hillary Clinton.

OBAMA: I think that Senator Clinton has been effective in trying to blur the distinctions. And it's our job to make these distinctions clear to the American people, because it really ends up speaking to how we are going to make decisions in the future, how we're going to be making decisions about a series of significant threats and how we are going to make decisions about getting out of Iraq, which I think is going to be a top priority during the course of this election.

CROWLEY: I want to also ask about something you said recently, which was that you couldn't commit to having U.S. troops out of Iraq by 2013, which would be the end of your first term.

What does that say to all of the people who thought last year they voted to get out of Iraq?

OBAMA: What I said is that I would retain a very limited number of troops to carry out functions that we carry out in other areas of the world that aren't war zones -- protecting our diplomatic and civilian corps, our embassy, and having a strike force which might be an Iraq war in the region to target al Qaeda in Iraq.

CROWLEY: Isn't that war?

OBAMA: But the point is that we are going to have the need to engage in potential military actions in the region, against targets in the region. That is very different from having a set of troops in the midst of a civil war.

CROWLEY: How many troops you would leave on the ground in the -- in that -- how many will be there?

OBAMA: That will depend on the situation at the time. And that is the thing that I cannot guarantee.

CROWLEY: A campaign question. You've raised oodles of money. You get great crowds. It hasn't shown up in the polls. You need to close the deal. Time is a wasting, as they say.

OBAMA: What I am focused on is making sure that people understand the kind of president I would be, the kind of leadership that I want to bring on providing health insurance to all Americans, making sure that we've got a serious agenda for reforming our public schools. That we are dealing with the urgent crisis of global warming, and that people understand I want to take our foreign policy in an entirely new direction.

CROWLEY: Haven't you said all those these things before, though? I'm just wondering why it hasn't caught on.

OBAMA: Well, you know, I recognize that there has been a sense that this campaign has been lasting in perpetuity. But the American people are just now starting to focus on it.

We just went up for first time in New Hampshire on television. We have got three months of campaigning before the first Iowa caucus, and then we've got a number of primaries and caucuses after that.

So we feel very comfortable with the pace that we're on, and part of the reason that you are seeing us raise more small donations than all the other candidates combined. Part of the reason that you are seeing these enormous crowds and terrific organization on the ground in these early states is because the message does resonate when people hear it. Our job is obviously to make sure...


CROWLEY: As for fund-raising, clearly Hillary Clinton has outpaced Barack Obama for the first time this year. The Obama camp tosses that out, pointing to the 350,000 donors they have had so far. And also saying, look, when you take the year in its totality, we have raised more than she has without taking money from a campaign -- which Hillary Clinton has done -- and without raising money from lobbyists -- Wolf.

BLITZER: This last quarter, though, she had more individual contributors to her campaign than he had to his. Is that right?

CROWLEY: Right, as far as we can tell. And that's right, but they're sort of focusing on totality of the first three quarters. You know, statistics are all in how you read them.

BLITZER: Candy Crowley in Chicago for us.

Thanks very much.

Not too windy in Chicago today.

Anita Hill says no one ever put her up to making accusations against Clarence Thomas. The woman who failed to stop Thomas from becoming a United States Supreme Court justice is now responding to his fresh attacks on her.

Our new interview with Anita Hill, that's coming up.

And, are Democrats getting anything out of their new political assault on the radio talk show host Rush Limbaugh? Bill Bennett and Donna Brazile, they're standing by for our "Strategy Session" to discuss that and a lot more.

Stick around. You're in THE SITUATION ROOM.


BLITZER: Sixteen years after she got Americans talking about sexual harassment, Anita Hill is now talking to CNN. She says Supreme Court Justice Clarence Thomas effectively won their contentious he said/she said dispute that played out before the nation. The proof, he's now on the United States Supreme Court.

Let's bring in Carol Costello. She's here.

CNN caught up with Anita Hill today. She's clearly very angry at the latest accusations that Justice Thomas is making in his new book.

CAROL COSTELLO, CNN CORRESPONDENT: Well, she is angry. She's told us she was at peace, but you could clearly tell there was some emotion there. And it may be as strong as it was 16 years ago.

Justice Thomas called Hill's allegations lies. He called her a mediocre employee who was upset at not being promoted. He called her a pawn used by abortion rights groups.

When we asked her if Thomas had won, this was her response...


PROF. ANITA HILL, BRANDEIS UNIVERSITY: In essence, he won. He got what he came for. And I think -- I'm not sure what his expectations were. But that's for him to resolve. It's not for me to resolve.

The only portion of this that I have to respond to is his characterization of me and what I feel is the real injury that it can do to other people who want to stand up for their rights. That if they see a Supreme Court justice behaving in this way, they can see that that's going to be the model for other people who are accused of wrongdoing.

And that's what they are going to have to face. And it's hard enough to stand up for your rights anyway, but when you have this kind of behavior being played out by a Supreme Court justice, I think it is -- it has a chilling effect on claims.

Now, on the other hand, it could have just the opposite. And I hope that's what happens. And I think -- I hope that people are even more adamant about speaking out.


COSTELLO: Hill maintains her allegations of sexual harassment were true and she says she has made peace with her loss thanks to the support of thousands of people across the country.

We'll have much more of this interview just ahead in THE SITUATION ROOM. What she had to say, fascinating.

BLITZER: I know. We're going to play virtually the whole thing. But give us another headline. Something else she said.

COSTELLO: Well, she talks about how she found peace and what she's doing now. And you might be surprised by her answers.


Carol, thanks very much.

We'll hear from Anita Hill. That's coming up.

Hillary Clinton wants to show you the money. Millions of dollars of it. She is revealing how much she raised in the third quarter, but there's some serious strategy involved in the timing.

And Rudy Giuliani visits a so-called "speak English eatery" with a message to those who hope to become U.S. citizens. The message, learn English. But his critics charge he's toughened his thoughts on illegal immigration in order to run for the White House.

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

(COMMERCIAL BREAK) BLITZER: Happening now, a highly revealing look at President Bush's apparent thinking about Iraq before the war. You are going hear how his patience was apparently running thin with Saddam Hussein and how waiting for the U.N. to act was like "Chinese water torture."

$11.6 million, that's how much a jury awards a woman who says New York Knicks coach Isiah Thomas sexually harassed her. And yet Thomas does have a partial victory.

And getting caught with crack cocaine earns a much stiffer punishment than having powder cocaine. Some say that discriminates against African-Americans. Now the U.S. Supreme Court is about to look into this issue.

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

Hillary Clinton wants to get your attention and she's flashing tens of millions of dollars to do it. The presidential candidate is prodding out how much money she raised in the third quarter of this year, one day after some of her rivals trotted out theirs.

Let's go right to our senior political analyst, Bill Schneider. He's standing by here in Washington.

All right. So what's the news, Bill, on how much Hillary Clinton raised?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, the campaigns, all of them, are showing us the money. Some of them in a way calculated to grab our attention.


SCHNEIDER (voice over): Third quarter fund-raising is traditionally slow. It is the summer. People are away. Early contributors have maxed out.

The Hillary Clinton and Barack Obama campaigns said they expected to raise only about $20 million. Impressive, but less than the second quarter.

On Monday, Obama's figures came in, about $20 million, as expected. The first thing Tuesday morning, the Clinton campaign released its number -- $27 million. Wow.

MARK PRESTON, CNN POLITICAL EDITOR: And clearly, the Clinton campaign wanted a day of their own, so that's why we saw the numbers released this morning. Right now, they are carrying the headlines on all the major news stations and all the Web sites.

SCHNEIDER: First quarter this year, Clinton and Obama both raised about $26 million. Second quarter, Obama moves ahead, $33 million to $27 million. Third quarter, the lead shifts to Clinton, $27 million to $20 million.

Totals for the year so far, Clinton, $80 million. Obama, $79 million.

This is getting exciting.

The money race looks very different from the polls where Clinton has maintained the lead. In our monthly poll of polls Clinton was 15 points ahead in early summer and 18 points in August and 19 in September. That's one reason her fund-raising picked up. More and more people think she will win. And people like to bet on a winner.

The Obama campaign points out that it's raised nearly $75 million for the primaries. About $12 million more than Clinton. But in the last quarter, Clinton's primary contributions totaled more than Obama's for the first time. There's one unanswered question. Not how much you raise but how much you still got.

UNIDENTIFIED MALE: We don't know how much money they have spent and how much money they actually have in the bank.


SCHNEIDER (on camera): Both Clinton and Obama seem to have the money they need for a sustained primary race. And a lot more than all nine Republican candidates put together. Wolf?

BLITZER: All right. Thanks very much. Bill Schneider looking at the money. A critical factor in these elections.

Meanwhile, we want to talk a little bit more about the fortunes of at least one of those Republicans. That would be Senator John McCain.

Let's go right to our chief national correspondent, John King. He's following this story near the CNN Election Express bus. You are down in Columbia, South Carolina. Let's talk a little bit about John McCain. We just heard Bill say that Hillary Clinton raised, what, $27 million in the same three-month period. How much did John McCain raise?

JOHN KING, CNN CORRESPONDENT: Wolf, as we first reported in THE SITUATION ROOM last week, John McCain raised only $5 million, a little more than $5 million in that same three-month period. So when you compare it to Hillary Clinton or Barack Obama or Mayor Giuliani or Governor Romney on the Republican side, Senator McCain is clearly struggling.

Now his campaign would say things are getting better after a very terrible stretch throughout the summer months and they say he's beginning to tick back up in the polls and beginning to slowly raise more money. And they say now at those events they are bringing in more and more money and they expect to get back on track. More aggressively in the month of October.

But one quick example, Senator McCain raised about $5 million in the quarter. He's still getting by. But he was able to afford just under $80,000 for his first TV ad in New Hampshire. It is the first time he has gone on TV in this campaign, Wolf. Here in the state of South Carolina after already spending millions advertising in Iowa and New Hampshire, former Massachusetts Governor Mitt Romney is aggressively on the air here in South Carolina. And again, $80,000 ad via New Hampshire for Senator McCain, $841,000, more than ten times that amount Governor Romney is spending now here in South Carolina. Including $350,000 just in the last couple of weeks.

So you see right there how it matters. Senator McCain needs to raise much more money if he is going to keep pace as we get closer and closer to those early contests and all of his rivals start going so much on to the TV airwaves, Wolf.

BLITZER: We know that South Carolina where you are now, John, is a very important state for McCain by all accounts. He has got to do well there. Presumably will do relatively well in New Hampshire. Maybe not so well in Iowa. But South Carolina is critical. So here is the question. The comments, the controversial comments he made over the weekend about the United States being a Christian nation, how's that playing with Republicans in South Carolina?

KING: Well, so far so good based on our conversations here today. Now, Senator McCain would say, Wolf, in his defense he would say he was asked a question by BeliefNet, a Web site that obviously caters to faith and value voters. And he said that because he was answering the question with his views as he feels.

The campaign says he's not bringing this up. He's not raising these issues. He was simply asked a question. But I sat down just a couple of hours with Joe Mack. He runs public policy here for the South Carolina Baptist Convention. That is more than 2,000 churches in the state, more than 725,000 Southern Baptists go to those churches.

He says that he still thinks Senator McCain is having trouble getting traction here in South Carolina but to hear him talk more and more about his personal faith, about his values and how those values apply to how he would take stances on public policy, Joe Mack saying he thinks that will be well received and he understands some will say the senator is pandering. But he says as the voters get closer and closer to those decisions they welcome hearing the candidates, especially somebody like Senator McCain who he acknowledged is viewed somewhat suspiciously here by what he calls value voters, he says the more he talks about his faith the better.

BLITZER: John King reporting from Columbia, South Carolina outside the CNN Election Express. John, thanks very much. John King, as you know, Bill Schneider, they are both part of the Emmy-award winning best political team on television. Remember, for the latest political news at any time you can always check out our political ticker at

Rudy Giuliani's message to those that hope to become U.S. citizens, learn English. He visited a restaurant that wants people to order in English only. But have Giuliani's thoughts changed since he was mayor of New York? And why is a judge now ordering O.J. Simpson to hand over his Rolex watch to the father of Ron Goldman? There are some new details regarding the civil case that found Simpson liable for the death of his ex-wife and her friend. Stay with us. You're in THE SITUATION ROOM.


BLITZER: Our "Strategy Session" will Bill Bennett and Donna Brazile coming up. But let's check back with Carol for a closer look at incoming stories making news. Carol?

COSTELLO: Hi, Wolf. Hello to all of you.

A historic and symbolic moment on a long divided Korean peninsula. North Korean leader Kim Jong-Il welcoming his South Korean counterpart. It is the start of only the second ever summit between the leaders of those two nations. North Koreans cheered but Kim Jong- Il reportedly gave the South Korean president a chilly reception.

Two men rescued last week in the Florida Straits are now being treated as murder suspects. So far no charges have been filed but today a judge denied bail.

The men, ages 34 and 19, allege their fishing boat was hijacked by Cubans who killed the four-person crew. No bodies have been found. A Coast Guard investigator tells the judge the physical evidence contradicts the men's stories.

A judge's order for O.J. Simpson, hand them over. A Rolex watch, money earned from a sports video game and other assets. The California judge says assets that Simpson earns must be given to Ron Goldman's father to satisfy that 1997 civil judgment which found Simpson liable for the deaths of Nicole Brown Simpson and her friend.

New evidence today of the housing market meltdown. An industry group report shows the homes under contract fell 6.5 percent in August to its lowest level ever. The report is seen as an indicator of home sales in the coming months. The subprime mortgage crisis is drying up the supply of buyers for homes.

That's a look at the headlines right now, Wolf.

BLITZER: Carol, thanks very much in today's STRATEGY SESSION and we are getting more now on Hillary Clinton's fund-raising prowess. She raised $27 million in the third quarter. Let's get some analysis of what this means. Joining us, our CNN political analyst Donna Brazile. And I guess we can call you our Republican analyst, radio talk show host, and deep thinker Bill Bennett. Guys, thanks very much for coming in. Conservative.

BILL BENNETT, RADIO TALK SHOW HOST: Deep thinker. I like deep thinker.

BLITZER: How about just smart guy?


BLITZER: Let's talk a little bit -- why are the Democrats raising so much more money from so many more Americans than the Republicans are raising right now, Bill?

BENNETT: Well, people are unhappy what's going on in Washington. That is reflected with being unhappy with the governing party, at least the party in the White House. They are really not very happy with either party. But they are the party out of power. They usually in these kinds of things, they get momentum and they outraised us last time, by the way, too.

And I don't think we have settled our situation as well as the Democrats. That's beginning to look almost as if it is a settled situation with Hillary. Now anything can happen in Iowa as Howard Dean can tell you. But it looks pretty good for Hillary Clinton. We will see. Once we get a candidate, once it's clear who the candidate is, then we will see what happens to the fundraising.

BLITZER: Patti Solis Doyle, the campaign manager, for Hillary Clinton's campaign, said, "Hillary wanted you to know this was our best quarter yet. More than 100,000 new donors. A total of $27 million raised and $22 million for the primary. Substantially more than any other candidate in the race."

The way they unveiled this was, it was pretty intricate, pretty surprising. Because they were only suggesting a few days ago maybe she'd raise $17 million or $19 million and they came in with $27 million.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: Well, they had a lot a money to count. As you know, the last 72 hours of this fund-raising quarter, Bill Clinton and others were dialing for dollars, they were sending out e-mails. Senator Clinton has an impressive operation. Not only is she leading the polls but now she is leading this third quarter.

But we all remember back in 2003 when George Bush during his reelection raised $50 million, Howard Dean $50 million in the same period. This is a lot of money. Now we need to see how they will spend it. Will they spend it getting their message out? Obama is on TV in Iowa. Will Senator Clinton now go on TV in Iowa and New Hampshire? Let's see how they spend the money.

BLITZER: What do you think of this Democratic strategy now to go after conservative radio talk show host Rush Limbaugh? One Democratic congressman, Patrick Murphy of Pennsylvania, a veteran himself, he says, "Someone should tell chicken hawk Rush Limbaugh that the only phonies are those that choose and then criticize those who do."

What do you make of this strategy that Harry Reid, the Senate majority leader and others are saying now that Rush Limbaugh was inappropriately offensive to veterans by some of the comments he recently made?

BENNETT: I'm willing to criticize Republicans and conservatives when they have it wrong. You've heard me do it on the show a number of times. Not this time. When you shoot at a king, and he is the king of talk radio, you better get him. They didn't get him here. The argument was that he used the phrase "phony soldiers." He was talking about a phony soldier. The A.P. ran a story called "phony soldiers." ABC three days before rush's comments ran a story called "Phony Soldiers." He was talking about a guy who was lying. He was not a corporal in the Army and didn't get a Purple Heart. That's the guy Rush was talking about. Media Matters left that out.

I have been savaged by Media Matters unfairly. They did it this time. There is plenty to disagree with Rush if you are on the left. This isn't -- this was not fair. Let me tell you why. The Petraeus thing has really hurt the Democrats. They say it doesn't and it was all fair. But this thing is not going away. This is a soldier, commander in the field. And it really stung and they are looking for revenge.

BLITZER: As Bill says, Donna, a lot of people suggest that what Senator Harry Reid and the Democrats were doing in trying to go after Rush Limbaugh on this issue, quote, "phony soldiers," was sort of payback for the and the "General Betray Us" ad that a lot of people think backfired on the Democrats.

BRAZILE: Well, a lot of Americans who care about our troops, we think our troops and we believe that what they are doing is noble and courageous. And the left can condemn MoveOn, the right should be able to condemn Rush Limbaugh the comb he made about phony soldiers. Not only did he talk about this one soldier who may be discredited but he also used Jack Murtha.

And many of us believe Jack Murtha is a courageous American, he stood up and he fought for his country. And when Rush Limbaugh takes on Jack Murtha, then the left has every right to call on Rush Limbaugh to apologize.

BENNETT: He took on Jack Murtha. He did not call Jack Murtha a phony soldier. He took Jack Murtha on on the merits of the argument. That's an entirely different case. He can take on Rush Limbaugh, he can take on George Bush, take on Jack Murtha. Name calling was about a phony soldier.

BLITZER: Because you saw Bill Clinton last week in the interview with Anderson Cooper. He was really irate.

BENNETT: Seething.

BLITZER: He was seething. I think that's a good word. When he pointed out that the Republicans went after veterans like Max Cleland and John Kerry with the swift boat attack and all that.

BRAZILE: He said phony soldiers. So he didn't make a distinction that he was just referring to Mr. Macbeth (ph). He was referring to soldiers who have come out against this war. And over a third of members are soldiers. Many of them who served in Iraq and they are now opposed to the war. So many people on the left believe that he was taking on those soldiers as well as Mr. Macbeth. BENNETT: All you have to do is listen to the show. And it is perfectly clear. Crystal clear. Couldn't be clearer who he is talking about.

BLITZER: What about the whole he said, she said issue that's now been revived with the new Clarence Thomas book? He's gone on "60 Minutes." I saw him on "Nightline" last night. Anita Hill is going to be here in THE SITUATION ROOM in the next hour. You're going to want to hear what she is saying responding to his latest charges. What do you make of this late development?

BENNETT: Well, you know one thing is the world has changed. There is another Thomas. I don't mean to be cute here. But Isaiah Thomas. And the world has changed since that time. And you have got these kinds of suits. Consider this thing in New York with the Knicks and so on.

And that's all to be taken seriously. I think on this -- on this occurrence with this book, I think Clarence Thomas did himself a lot of good. It was very good interview on "60 Minutes" which frankly a lot us did not expect. And he looked good and he sounded good. And I think he impressed a lot of people. Old sores, old wounds were bought up here but I think he did himself a lot of good. He sounded like a guy without a lot of deep resentments. Still angry and still hurt about it, but a guy who is making the most of his life.

BRAZILE: But Anita Hill was also hurt and she is not trying to settle scores. She is trying to make sure the truth should continue to come out so other women who are facing similar circumstances on their job will not feel harassed and feel like they have to remain silent.

BENNETT: Well, the debate goes on. She did respond in "The New York Times." And so the debate was joined again. She had a very good career. She's had a great career.

BLITZER: You can't blame her for responding.

BENNETT: Of course.

BLITZER: If he's reviving these 16-year old allegations. She has every right, she is a professor, to come out and say you know what? I'm standing fully behind what I said 16 years ago.

BENNETT: I don't blame her at all. The thing is about the Supreme Court justices, they don't talk usually very much about these things.

BRAZILE: Especially this one.

BENNETT: And so he has come out and spoken. She has been talking about it for a long time.

BRAZILE: Well, she did it with grace and eloquence. And she showed once again why she has wonderful Christian values. She's also sounding like she's forgiven at least that part of it and she's ready to move on and he should move on, too.

BENNETT: Greater dignity than

BLITZER: We've got to move on, but very quickly, I take it you believe her and you believe him is that right?


BRAZILE: I know both of them. And I believe that she has a great deal of credibility and I believe that he believes his facts are right as well.

BENNETT: I believe Clarence. Sounds like one and a half to half.

BRAZILE: I believe Anita Hill. Let me not leave that untouched.

BLITZER: But you believe she was just making it all up?

BRAZILE: I don't think you make those things up.

BENNETT: Not necessarily. She may have in her mind a notion this happened. But I know the man. I have known him for a long time. And I believe him to be telling the truth.

BLITZER: Bill Bennett and Donna Brazile, guys, thanks for coming in.

Rudy Giuliani giving some food for thought about English as the official language. We are going to take a closer look at the visit to a Philadelphia steak and cheese shop. And the statement he's making about immigration. Simply by going there. Stay with us. You're in THE SITUATION ROOM.


BLITZER: Rudy Giuliani is speaking out on the issue of immigration and he's making news and he is doing it in a very interesting venue. Let's go right to CNN's Mary Snow. She is following the action for us. So what did the former mayor say and where did he say it, Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, Rudy Giuliani was in South Philadelphia. The setting was casual but one that carries political symbolism.


RUDY GIULIANI, (R) PRESIDENTIAL CANDIDATE: You want to become a citizen of the United States, you should be able to read, write and speak English.

SNOW (voice-over): Rudy Giuliani, speaking out last night on a very hot topic. The former New York City mayor and Republican presidential candidate made his comments at the same cheese steak stand that grabbed national attention last year. Geno's Steaks, one of Philadelphia's most famous and popular joints made headlines last year when it posted signs saying, "This is America. When ordering, please speak English."

JOEY VENTO, GENO'S STEAKS OWNER: That sign is never coming down.

SNOW: And owner Joe Vento kept his word. The sign still stands even though he has been criticized that they're discriminatory. Giuliani has toughened his stance on illegal immigration since his days as New York City mayor. But some rivals are highlighting his earlier career.

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: Mayor Giuliani made New York City what's known as sanctuary city.

SNOW: Giuliani defends his decision to continue a policy started by a predecessor to allow the children of illegal immigrants to attend public schools, received medical attention and cooperate with police without fear of being deported. Giuliani now opposes efforts to give some illegal immigrants a pathway to citizenship. And he's in favor of beefing up border security.

GIULIANI: Most important thing is we have to end the illegal immigration.

UNIDENTIFIED MALE: Immigration may not be a hot button issue in Iowa and New Hampshire. But it matters a great deal in Florida, California, New York, and other big states where Giuliani hopes to score big wins later in the primary.

SNOW: Giuliani did win over Vento, the Geno's owner says he's supporting Giuliani because the two men agree on immigration.


SNOW (on camera): Now, this is not the first time Philadelphia cheese steaks have come up in a presidential election. In the 2004 election, John Kerry made a campaign stop. He was criticized for ordering a cheese steak with Swiss cheese, not the Philadelphia culinary favorite of Cheez-Wiz. Giuliani was careful not to repeat that faux pas. He ordered provolone. Wolf?

BLITZER: OK. Thanks very much for that. Mary Snow watching this story.

A possible Christmas gift from Britain's Prime Minister Gordon Brown. Visiting Iraq right now and talking about when more British troops might be leaving.

And more on the he said, she said argument that's now lasted 16 years. Anita Hill speaks to CNN and she is answering Clarence Thomas' latest accusations and she was a weapon out to destroy him. You will want to see this interview. That's coming up here in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Here is a look at some of the "Hot Shots" coming in from our friends over at the Associated Press. Pictures likely to be in your hometown newspapers tomorrow.

In New York, India's consul-general places a necklace on Mahatma Gandhi's statue on the anniversary of his birth.

In Malaysia candles are lighted at a vigil for monks in Myanmar. More than 1,500 immigrants from Myanmar, also known as Burma, gathered to support the protesters.

In Germany, soldiers marched before an honorary serenade in Munich.

Also in Germany. Look at this. A two-month-old red panda braves the rain looking down at zoo visitors from a high tree branch. Actually we don't have that picture. Although it is a cute picture. There is another picture there. There it is right there.

Let's go to Jack Cafferty. He is in New York. He has got the "Cafferty File."

CAFFERTY: Let's hope this goes better than that did. The question this hour is one that ought to be done to exert more control on private security contractors like Blackwater.

David in Massachusetts. "Ideally, we should not rely on mercenary private soldiers. However, since our president refuses to reinstate the draft, we have few choices. I would place them under the Uniform Code of Military Justice system. If it's good enough for enemy combatants, it should be fine for Blackwater."

Jerry writes from Broken Arrow, Oklahoma. "There is little that can be done about the thieving contractors, Iraq, or the economy because our politicians are rotten to the core." What are you trying to say, Jerry? "If they're not stalking perverts in the bathroom, they're flushing 50 years of hard-earned credibility down the toilet."

Gary in Alabama writes, "Go back to the draft, then we might be able to exert a little more control over illegal and unnecessary wars like Iraq, too."

T writes from New Lenox, Illinois. "The ultimate control is to toss them out on their ear and have the military do their job. Take the profit motive out of war and maybe it won't be such an attractive endeavor."

Richard writes, "It's ridiculous. Blackwater is so despised by the Iraqi government and the Bush administration continues to give the company contracts. We're not liberators, we're occupiers."

And Chris writes from Tampa, Florida. "Exert more control? That would defeat the purpose of what these contractors were created for. They were always meant to be the lawless long arm of Sheriff Bush."

Wolf? BLITZER: Before I let you go, let's talk a little bit about "It's Getting Ugly Out There."


BLITZER: That would be your new bestselling book. I don't know if we've mentioned it to our viewers. But you are going to be on "The View." Is that right? That other popular program, the daytime show.

CAFFERTY: That's correct. On Thursday with Whoopi and Joy Behar and Barbara Walters. I think there's five of them. I'm looking forward to it.

BLITZER: And I think they are looking forward to talking to you. The book is doing really well. How well is it doing?

CAFFERTY: Well, it is in its fourth printing, I think, Wolf. And it made "The New York Times" bestseller list a couple of weeks ago. And for a college dropout from Reno, Nevada, it is a miracle.

BLITZER: Not a miracle because you've worked hard your whole life and you did an excellent job writing the book and an excellent job for us every single day here in THE SITUATION ROOM.

When you go out on the street and people come up to you, what they saying about the book?

CAFFERTY: Well, I had some people that said they saw me on "The Daily Show with Jon Stewart" last night which was a lot of fun. Jon has that show over on Comedy Central and he has this rabid audience that comes in and absolutely adores him and I went in and shot the breeze with him a little bit last night.

People have thoughts about all kinds of things that we talk about here. They are concerned about their country and their government and the direction we're headed in and they're concerned about the elections that are coming up.

They very seldom, however, mention that I am part of the best political team on television.

BLITZER: Do they mention that you're part of the Emmy Award- winning best political team on television?

CAFFERTY: No. But you know, maybe now that we won that enemy that title has got a little more cachet. What do you think?

BLITZER: It's obviously been confirmed, not only by us.

CAFFERTY: I'm not sure whether it's better to be like a best- selling author or a member of the Emmy Award winning best political team on television. It's a quandary.

BLITZER: You got both.

CAFFERTY: Well, there you go. BLITZER: OK. Jack, stand by.

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

Happening now, Blackwater in hot water. A U.S. security contractor gets a grilling from Congress after the deaths of Iraqi civilians.