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THE SITUATION ROOM

Bush Hurls Insults at Congress; James Peake Nominated to Head Veterans Affairs; Huckabee Discusses Iowa Gains

Aired October 30, 2007 - 13:00   ET

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


WOLF BLITZER, CNN ANCHOR: Thanks very much, guys.
Happening now, President Bush goes to extremes of blasting Democrats in Congress. And they fire right back, questioning the credentials of his new choice to head Veterans Affairs, among other things. Is there truth behind the attacks?

Also, this hour, will Barack Obama finally show some claws against Hillary Clinton? The Democrats gear up for another debate. We're going to take a closer look at Obama's new, supposedly get tough strategy and whether Clinton's husband, the former president, is her best asset.

Plus, he's suddenly No. 2 in Iowa. And now Republican Mike Huckabee is the target of new criticism and a lot of second-guessing. Is he as conservative as he claims?

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

President Bush today seems to be trading the boxing gloves he's been using to jab Democrats in Congress with a sledgehammer. He's pounding majority leaders with a series of nasty one-liners to describe them as a bunch of do-nothing, tax-hiking, time-wasting lawmakers.

So what's behind the growing bitterness? And are Democrats taking the bait?

Let's go to our congressional correspondent, Jessica Yellin. She's watching all of this unfold on Capitol Hill.

What's the latest, Jessica?

JESSICA YELLIN, CNN CORRESPONDENT: Well, Wolf, what you're seeing here is a long-simmering spending fight start to boil over.

Democrats have yet to send the president a single spending Bill this year. They say that's because the president has vowed to veto most of them. But the president insists they're just wasting valuable time.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): Flanked by House Republican leaders, an increasingly confrontational President Bush took the latest swipe at the Democratic Congress. GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Congress is not getting its work done.

YELLIN: He branded them incompetent when it comes to finishing the spending bills that pay for government programs.

BUSH: The proposed spending is skyrocketing under their leadership. They have not been able to send a single annual appropriations Bill to my desk. And that's the worst record for a Congress in 20 years. The leadership that's on the Hill now, cannot get that job done.

YELLIN: The Democrats hit back more forcefully than usual.

REP. STENY HOYER (D-MD), MAJORITY LEADER: This president has had a disastrous six years. Perhaps one of the worst six years of any president in my lifetime.

SEN. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: I think the president's statement, in many respects, was a waste of time.

YELLIN: And they accuse the president of rewriting history, saying under Mr. Bush, spending increased 50 percent over President Clinton, turning a surplus into a $400 billion deficit.

And when Republicans controlled Congress, they regularly failed to send the president spending measures on time. Mr. Bush was not threatening to veto most of those bills.

HOYER: He no longer has a complacent, complicit conspirator in doing nothing in the Congress of the United States. And so he's complaining.

(END VIDEOTAPE)

YELLIN: Now Wolf, Republicans in Congress admit that they didn't run things perfectly here, but they say Democrats vowed to do things differently and get these bills to the president on time. They say the Democrats have made Congress worse -- Wolf.

BLITZER: How much money are they fighting about right now? What's -- the nature of the dispute?

YELLIN: You might be surprised by how small it is, Wolf. Out of a trillion dollars -- a trillion dollars -- of appropriations bills, they're fighting over only $22 billion. That's a tiny fraction of the total.

BLITZER: Jessica Yellin on the Hill for us. Thanks. Much more on this story coming up later.

Something else for the president and congressional Democrats now to fight about, as well. Mr. Bush announced his nominee to lead the Department of Veterans Affairs. His -- he's Lieutenant General James Peake, an Army doctor and combat veteran.

Let's go to our White House correspondent, Ed Henry. He's watching this.

I take it some Democrats already raising red flags about this nomination. What's going on?

ED HENRY, CNN CORRESPONDENT: Well, certainly Senator Patty Murray, the Democrat from Washington, raising sharp questions about General Peake's credentials.

But the White House is pushing back hard, saying that he is extremely well-qualified for this job. They feel that there will be not be a major confirmation battle ahead, but they are acknowledging that, if he's confirmed, he's going to have some enormous challenges in this job.

(BEGIN VIDEOTAPE)

HENRY (voice-over): As a doctor and wounded Vietnam vet, retired Army General James Peake is billed as the perfect choice to take care of the thousands of veterans returning from Iraq and Afghanistan.

BUSH: He will work tirelessly to eliminate backlogs and ensure that our veterans receive the benefits they need.

HENRY: The nominee also spoke of major challenges leading the Veterans Affairs Department, where there is up to a 600,000-claim backlog, veterans waiting 177 days for their benefits.

LT. GEN. JAMES PEAKE, VETERANS AFFAIRS SECRETARY NOMINEE: Though it's an honor, this is not an honorary position. And there's a lot of work to be done.

HENRY: Democrats are demanding to know why, then, it took the president three months to fill the job, since former Secretary Jim Nicholson announced plans to step down in July.

SEN. PATTY MURRAY (D-WA), VETERANS AFFAIRS COMMITTEE: It is really frustrating to me that the president did not make this a priority from day one three months ago.

HENRY: The White House brought Senator Bob Dole and former veterans secretary Anthony Principi to the TV cameras to extol the nominee's virtues.

ROBERT DOLE (R), FORMER U.S. SENATOR: His mother was a nurse. His father was in the medical corps. You know, he's sort of a central casting.

HENRY: So we asked both men, why did it take so long to name him to the job?

DOLE: I've been in conversation with the White House for about three months, and they've been very, very careful.

ANTHONY PRINCIPI, FORMER SECRETARY OF VETERANS AFFAIRS: I was in daily contact with the White House. They've had a number of nominees that they wanted to very carefully, you know, review and make sure that they were right for the challenges that the V.A. faces today.

HENRY: But when the president replaced Defense Secretary Donald Rumsfeld last November, he didn't wait. He introduced new Secretary Robert Gates the same day.

(END VIDEOTAPE)

HENRY: Now White House officials pushed back and say that they had a very capable acting secretary in Gordon Mansfield on the job of the Veterans Affairs Department. He's well respected by outside veterans groups.

And they point out Senator Dole has a plan to try to fix this antiquated disability system. It basically involves better integration between the departments of defense and veterans affairs, and they think that this nominee has the credentials to implement that, Wolf.

BLITZER: Ed Henry, thanks very much. Ed's at the White House.

If confirmed, by the way, as the Veterans Affairs secretary, James Peake would have a budget of more than $80 billion and oversee the care of 24 million military veterans.

More than 750,000 of those vets served in Iraq and Afghanistan. More than a third of them have been treated by the V.A. for a range of medical issues, including more than 6,300 amputees.

Let's check in with Jack Cafferty. He's in New York. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: There is a new and somewhat disturbing chapter report in the Blackwater saga.

State Department investigators offered limited immunity to Blackwater security guards in relation to last month's shooting in Baghdad that left 17 Iraqis dead.

The guards could still be prosecuted, but it could be a lot tougher to convict them now, because the prosecutors cannot use any of the information from the bodyguards' statements. That was what they were given partial immunity on.

The State Department insists that any lawbreakers, quote, "must be held to account," unquote, in what has now become an FBI investigation. Really? Then why was the State Department giving the suspects immunity, thereby making them -- holding them to account much more difficult?

Senate Judiciary Committee Chairman Patrick Leahy calls it an example of the amnesty administration. He says, "In this administration, accountability goes by the boards. That goes equally for misconduct and for incompetence. If you get caught, they will get you immunity. If you get convicted, they will commute your sentence," unquote. Senator Barack Obama wants to know if Secretary of State Condoleezza Rice knew anything about the immunity and agreed to it. He sent Rice a letter asking if the FBI and Justice Department were consulted before immunity was offered.

Congressman Henry Waxman also sent a letter to Rice. He wants the State Department to give his oversight committee answers about who gave the immunity, who approved it and what their motives were.

This is a murder investigation. Why was anyone offering any immunity to anybody?

Here's the question. What message does it send if the State Department offered immunity to the Blackwater guards suspected of killing 17 Iraqi civilians? E-mail your thoughts to CaffertyFile -- CNN.com. Or you can go to CNN.com/CaffertyFile -- Wolf.

BLITZER: They're saying, Jack, at the State Department officially that no senior executives -- I assume that includes the secretary of state -- had a clue that this was going on.

CAFFERTY: Well, I mean, I -- that's, I guess, what I expect them to say. But the fact of the matter is somebody gave these people immunity. They brought them in and took a statement from them and gave them immunity from those statements being used in a criminal investigation.

What was it Harry Truman used to say about where the buck stops? It stops at Condoleezza Rice's desk. She's the secretary of state.

BLITZER: It's one of these situations you don't know if it's more embarrassing if she knew or if she didn't know.

CAFFERTY: That's a -- that's a very good point. Either way it doesn't look good.

The other unanswered question is, if -- if they can figure out a way to protect all of this information under executive privilege, like they try to do everything else.

BLITZER: All right, Jack, stand by. Thanks very much.

This hour, the president's choice for attorney general is expected to answer a nagging question about torture. But top Democrats are turning against Michael Mukasey anyway. Can his nomination survive?

Also coming up, Bill Clinton playing many roles as he campaigns to be first spouse. Is it a winning performance?

But coming up next, the second-tier candidate who's jumped to second place in Iowa. I'll ask Republican Mike Huckabee about what critics say: he's not conservative enough.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A new poll out today shows Republican presidential candidate Mike Huckabee in second place in Iowa, just behind Mitt Romney. It's the second survey this week to show Huckabee could be a force in the leadoff caucus state.

Now his critics are pouncing even harder, questioning whether Huckabee is the true conservative in this race, as he claims is the case.

Joining us now is the former Arkansas governor, Mike Huckabee. He's here in THE SITUATION ROOM.

Governor, thanks very much for coming in.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: Happy to do it.

BLITZER: All right. The poll numbers are good, at least in Iowa. Not so good in others states, but in Iowa you're doing very well.

But Pat Toomey, who's been a critic of yours, from the Club for Growth, who's a conservative organization, responding to what you told me Sunday on "LATE EDITION".

He put out a statement saying, on your tax records, "Sooner or late Mike Huckabee is going to have to answer for his liberal tax-and- spend record, and humorous one-liners and half-truths won't cut it. The American people deserve honest answers, not a stand-up routine."

And then he listed a whole bunch of taxes you increased while you were the governor. I'll put them up on the screen behind you if you want to take a look at that list.

HUCKABEE: OK.

BLITZER: Although I suspect you've seen that list before. First of all, is all that true? Did you increase sales tax, gas taxes, cigarette taxes, all those other taxes, as they claim?

HUCKABEE: Well, not quite like that. In fact, the sales tax was a vote of the people. There was a constitutional amendment for conservation. The fuel taxes was a vote of the people. Eighty percent of the people in my state voted to improve roads.

Some of the taxes I did not sign. For example, the sales tax in '02 and the income surcharge, which was later repealed. And the nursing home bed tax actually was a quality assurance fee.

If people will go to my Web site they'll discover that it was supported by the industry and by people, because if we hadn't have done that, we would have had to have raised taxes to pay for nursing homes under Medicaid. And it would have shut half our nursing homes down.

You know, look... BLITZER: Why are they coming after you? What's your assessment?

HUCKABEE: I'm alive.

BLITZER: Why are they -- why are they coming after you like this? You're -- you've got a long conservative record as the governor of Arkansas.

HUCKABEE: Yes.

BLITZER: But they're saying you raised taxes, you weren't good on a whole bunch of other issues.

HUCKABEE: Yes.

BLITZER: What's your assessment? Why is this happening?

HUCKABEE: Because I'm a threat to some folks who really want an old-fashioned, establishment Republican that can be controlled by a handful of people on Wall Street. And you know what, Wolf? I can't.

I'm going to be a person who is going to be conservative, unapologetically. I have a record of that. I'm not a guy that's been all over the board. I've never been called a liberal. And that's a new one. But at the same time...

BLITZER: Who is that -- who is that old-fashioned, conservative Republican who will be controlled by Wall Street in this race?

HUCKABEE: I'm not going to throw stones at the other Republicans, because any one of us are better than the guys on the other side. And I don't want us to get into this kneecapping each other, because I think that's counterproductive.

BLITZER: Well, you may not want to do it, but others are beginning to do it to you.

HUCKABEE: Oh, they will.

BLITZER: Listen to Mitt Romney.

HUCKABEE: OK.

BLITZER: What he said on Friday on Iowa public television.

HUCKABEE: All right.

BLITZER: Listen to this.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Mike Huckabee supported, for instance, special tuition breaks to the children of illegal immigrants. Those kind of differences I think make a difference.

(END VIDEO CLIP)

BLITZER: First of all, is that true? Did you support special tuition breaks to children of illegal immigrants?

HUCKABEE: No, it wasn't special tuition breaks. What I supported was that people who had been in our schools, who had met all of the academic requirements for a very specific scholarship, would be able to get the same scholarship as anybody else, because they had been in our schools. And part of it, they had to apply for citizenship.

Now, what's better: having a person remain a minimum-wage worker and be under subsidy, or is it better that they become a citizen, they get a college education, they become a significant taxpayer? They've shown their academic credentials.

And you know what, Wolf? You don't punish the child for the crime of the parents.

BLITZER: Are these children who were born in the United States? If they were, they're U.S. citizens, and they're -- they should get all the benefits as every citizen.

HUCKABEE: Sure.

BLITZER: Or were they children who came here with their illegal -- immigrant parents and, as a result, they just went through the system.

HUCKABEE: Some would have been both. But some of them would have had to have been in our school system through their entire school career in order to qualify for the scholarships. It wasn't that, if they got them, someone else didn't, because it was available to anybody.

Bottom line is this country doesn't have a history of punishing the child for the sin of the parent. Now, if that causes somebody to want to vote for someone else for president, there's plenty of other people who are, you know, saying, "Let's punish children."

I'm sorry. But I think that you punish the crime-doer. If the parent committed the crime and came here illegally, I don't have any problem punishing them.

BLITZER: So just to put a finishing touch on it...

HUCKABEE: Yes.

BLITZER: Amnesty for the children of illegal immigrants would be OK for you?

HUCKABEE: It's not amnesty, because...

BLITZER: You said they could apply for citizenship.

HUCKABEE: Well, here's the thing. It's not an amnesty, because the child didn't commit a crime. The child didn't have -- when he's 5 years old and he comes here in the back of his parents' vehicle, did he commit the crime? That would be the point to be made.

But you know, the good news for me is, if Mitt Romney's attacking me, there's a reason. And that's because, obviously, we've moved up in some national polls that show me actually ahead of him.

BLITZER: Here's the number in the ARG poll, American Research Group in Iowa. Just came out today. Romney is at 27 percent in Iowa. Mike Huckabee is at 19 percent; Giuliani at 16; McCain, 14; Fred Thompson down at 8 percent.

You're doing well in Iowa.

HUCKABEE: We are doing well in Iowa. But we're doing well across the country. People want somebody who will be honest and straightforward and say the same thing today that I said yesterday and the same thing I'm going to say tomorrow.

BLITZER: Let me follow up on our Q&A we had Sunday on "LATE EDITION".

HUCKABEE: OK.

BLITZER: You said that abortion, from your perspective, was a holocaust. Right?

HUCKABEE: Yes.

BLITZER: So Rudy Giuliani is the only Republican presidential candidate who supports abortion rights for women. Is he participating in a holocaust?

HUCKABEE: No, and I think Rudy would be the first to tell you that he doesn't support abortion. He just believes that it ought to be legal. He and I disagree with that, in the sense he believes we ought to accommodate that viewpoint...

BLITZER: But in effect what you're saying is he wants -- at least a holocaust to be made legal, which is abortion from your perspective.

HUCKABEE: He at least says he wants to see abortions reduced and move more toward adoption. And I appreciate that in him. I hope we can keep working on Rudy and get him to a full pro-life convert before it's over.

BLITZER: If you asked you to be his running-mate, would you be his running-mate, knowing what his stance is on abortion?

HUCKABEE: The bigger question is would I ask him to be my running-mate.

BLITZER: Well, let me ask you that question then. Would you ask him to be your running-mate?

HUCKABEE: Well, that's why I'm working on him on his pro-life position, because I want to get him right on that issue.

BLITZER: So if he changed his view on abortion, you'd consider him as a running-mate?

HUCKABEE: Again, let's not be presumptuous. Let me get the nomination first, and then we'll work on who I'm going to pick.

BLITZER: The former governor of Arkansas, Mike Huckabee, thanks for coming in.

HUCKABEE: Thank you, Wolf.

President Bush is going after Congress with new gusto over spending too much and doing too little. Is either side likely to come out a winner? Paul Begala and Bill Bennett are standing by for our "Strategy Session".

And later, the man who spent years putting words in the president's mouth. The speechwriter, Michael Gerson, opening up about the message he honed for Mr. Bush and where things went wrong.

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

(COMMERCIAL BREAK)

BLITZER: Carol Costello is joining us now with a closer look at some other incoming stories making news.

Hi, Carol.

CAROL COSTELLO, CNN ANCHOR: Hi, Wolf.

Hello to all of you.

For one space project, it is "mission accomplished". But for another, it's "we may have a problem".

Today astronauts attached the solar powered tower to the International Space Station. But when the tower's giant solar panels began to open up, they spotted a rip in one of them. Astronauts took photos of it and beamed them to NASA, where engineers are trying to determine the extent of the damage. We'll keep you posted.

A blue chip Wall Street firm tells its CEO, "Thanks for your service, but the door is that way." Merrill Lynch sees its chairman and CEO step down today. Stanley O'Neal worked with the nation's largest brokerage for 21 years, but apparently, what did in his career was the firm's stunning $8 billion loss on risky investments and sub- prime mortgages, which was revealed last week.

Merrill Lynch has named an interim leader as it searches for a real replacement.

Imagine paying taxes to access the Internet. Like most of you, many members of Congress also do not want that. The House has passed a bill to extend a ban on Internet taxes for seven years. The current moratorium is set to expire in two days, but President Bush can prevent that by signing the current bill.

And moments before police shocked him with a stun gun, he screamed a line that became a national catch phrase. That would be "Don't tase me, bro."

Now that University of Florida student is apologizing for his behavior at a campus event last month featuring Senator John Kerry. That is, according to a Florida state attorney.

The student faced charges in the incident, but the state attorney offered him a deal to avoid prosecution: apologize and perform some other acts.

Back to you, Wolf.

BLITZER: I believe, Carol, he didn't say, "Don't tase me, bro." It was more like, "Don't tase me, bro!" Is that right?

COSTELLO: I think that is more accurate, Wolf. You're right.

BLITZER: A little bit more emphasis on the "tase."

COSTELLO: Well...

BLITZER: Thanks very much for that.

She wants to go where he's already been. As Hillary Clinton plots her own path to the White House, just how much is Bill Clinton helping her? Apparently, a lot. We're going to tell you how many roles he's now playing.

And right now some of Senator Clinton's opponents are likely plotting to step up their attacks against her. She's expected to be the punching bag in a big face-off later tonight. We'll tell you what's going on.

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

(COMMERCIAL BREAK)

BLITZER: Happening now, details emerging of an extraordinary battle against pirates after some rogue raiders at sea hijack a North Korean ship, emergency calls for help are answered by none other than the U.S. Navy. You're going to want to hear how it all unfolded. Stand by for that.

Members of Congress do something meant to strengthen the agency that protects all of us from deficient consumer products. So why would the head of that agency oppose it?

And they were involved in a shooting in Iraq that left 17 Iraqi civilians dead. Now we're learning that, actually, prosecuting Blackwater guards could be very difficult.

I'm Wolf Blitzer. You're in THE SITUATION ROOM. They're husband and wife, but since Hillary Clinton has a former president helping her get into the White House, she has one weapon none of her opponents has.

Our senior political analyst, Bill Schneider, is standing by to join us, more on this story.

So what role is the former president now playing?

BILL SCHNEIDER, CNN POLITICAL ANALYST: Wolf, he's playing several roles, actually, all at the same time.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): He's Hillary's husband, of course.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: We were talking about our life, and I said, "You know, you've got to say one thing. We never have bored each other. It's been interesting the whole time."

SCHNEIDER: But he's also a former president who can sort of be above it all.

CLINTON: One of the things I love about this race as the Democrat is I don't have to be against anybody.

SCHNEIDER: Oh, and there's a third role: shrewd political analyst.

CLINTON: They continue to say she's the most unelectable because she's so polarizing. Well, they have dumped on her for 16 years. They'd all be polarizing, too.

SCHNEIDER: Hillary Clinton is highly polarizing. Eighty-three percent of Democrats like her; 80 percent of Republicans don't like her. Barack Obama and John Edwards draw less positive reactions from Democrats and less negative reactions from Republicans.

National Republican front-runner Rudy Giuliani draws a 68 percent favorable response from his fellow Republicans. But nearly half of Democrats like him, too.

And the other leading Republicans contenders? Slightly less polarizing.

But as analyst Bill Clinton points out...

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: In all the surveys, she's the only one who wins and gets the majority of the electoral votes against any Republican potential nominee today.

SCHNEIDER: The three faces of bill: advocate for his wife, analyst for his audiences, and defender of his party's interests. Can he play all three roles at the same time? Maybe. CLINTON: If we had never been married, and she asked me to come here and do this for her today, I would do it in a heartbeat, because she ought to be the next president.

(CHEERING AND APPLAUSE)

(END VIDEOTAPE)

SCHNEIDER: He's sort of retired from the game, but he is also in the game, and he's offering commentary on the game, all at the same time -- Wolf.

BLITZER: There is only one Bill Clinton, and he -- and everybody knows that.

Thanks very much, Bill Schneider, for that.

We are only a few hours away from a fresh round of political combat. Right now, Barack Obama, John Edwards and the other Democratic presidential candidates are probably sharpening their knives. They are expected to step up their attacks in a debate later tonight in Philadelphia -- their most likely target, of course, the front-runner, Hillary Clinton.

Let's go to our senior political correspondent, Candy Crowley. She is joining us now from Philadelphia.

Obama, specifically, needs to sharpen his attack. At least that's what a lot of the analysts are suggesting, Candy.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Yes.

I think it really depends on what your definition of attack is. First of all, I don't think that the blood sport of politics is in Obama's DNA. So, what he's trying to do here is figure out a way to say, here are the differences between Hillary Clinton and myself. Here's why she's wrong. Here's where I am right.

This has proven to be really difficult over the past couple of months. I mean, he's tried on Iraq. He has tried on Iran. He has tried on Social Security. And, so far, it does not really appear to have made much of a dent.

So, he has to go at this and sort of find that sweet spot, because the fact of the matter is that even those Democrats who are not going to vote for Hillary Clinton like her. So, he does not want to turn off these Democrats. He does not want to come across as too harsh. And, so, you know, he's really got a problem here in trying to find that balance.

BLITZER: John Edwards doesn't seem to have that problem. He is really going after Hillary Clinton. But the question is, is it showing any traction?

CROWLEY: Absolutely not. And I'm not sure it's because John Edwards has run a bad campaign or Barack Obama has run a bad campaign. She has just run a very good campaign.

About a year ago at this time, there were about five points nationally between Hillary Clinton and Barack Obama. Now it's a hefty double-digit, in the 20 percent range, in some polls in the 30 percent range. So, she has just run a very good campaign. And it is very tough to find a way to go at her.

And John Edwards has been doing it for some time. And, as you note, he has been a lot harsher about it than Barack Obama has been. Now, look, they are looking to Iowa, obviously, because they believe they are getting some traction there. And, obviously, the polls are a lot closer. So, they're still trying it. But it has been very hard so far.

BLITZER: You know, a lot of people don't realize we are only, what, two months, a little bit more than 60 days, away from the first voting in Iowa. January 3, the Democrats and the Republicans will be holding their caucuses.

What kind of pitfalls would the front-runner on the Democratic side, Hillary Clinton, potentially be facing?

CROWLEY: You know, there are always pitfalls. I think we don't know what they are. Sometimes, they can be outside events. And, sometimes, you know, they can be something internally. She could fall and she could stumble inside her own campaign or somebody could catch on.

But, as you point out, they don't have much time.

BLITZER: Candy Crowley in Philadelphia for us, thanks very much.

This programming note for our viewers. On November 15, I will be in Las Vegas, Nevada, to moderate a debate in that key Western state among the Democratic presidential candidates, November 15 with the Democrats in Las Vegas.

And, as all of you know, Candy Crowley and Bill Schneider, they are 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 CNN.com/ticker.

He wrote the president's words and shaped his message of compassionate conservatism. But there is one moment the ex- speechwriter Michael Gerson is not necessarily all that proud of. And he is now sharing it with our own John King.

Also coming up: Democrats fall like dominoes opposing the president's choice to be attorney general. Will Michael Mukasey be confirmed anyway?

And the governor of New York and CNN's own Lou Dobbs in a war of words over illegal immigration and license -- driver's licenses.

Lou Dobbs standing by to join us live.

Stay with us. You are in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Even if you don't know the name Michael Gerson, you have probably heard his words coming out of the president's mouth. Now the former presidential speechwriter has a brand-new book, and he's opening up his role in shaping Mr. Bush's message, for better and sometimes for worse, as he himself acknowledges.

Our chief national correspondent, John King, is here in THE SITUATION ROOM.

You had a chance to speak with Michael Gerson. Give us a little sense of what he is thinking right now.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It was an interesting conversation, Wolf. And it is an interesting book.

This is it, "Heroic Conservatism." In it, Michael Gerson says he worries that the failings in Iraq will take the idealism out of foreign policy. He means Mr. Bush's democracy agenda in saying that. He also shares some of his frustrations, both inside the White House, his observations now that he's out of the White House, and, rare for a Bush insider, takes us a bit behind the scenes.

(BEGIN VIDEOTAPE)

KING (voice-over): It was the early hours of the Iraq war.

(BEGIN VIDEO CLIP, MARCH 19, 2003)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Our nation enters this conflict reluctantly. Yet, our purpose is sure.

(END VIDEO CLIP)

KING: And, before the president spoke those words, a private moment with the man who wrote them, Michael Gerson.

(on camera): "'The information is good. Let's hope we are right,'" he said, "tearing up."

Tearing up, why?

MICHAEL GERSON, AUTHOR, "HEROIC CONSERVATISM": Tearing up, I think, just because of the weight of the moment, the fact that the stakes were so high.

The president is a man whose emotions are very close to the surface.

KING (voice-over): Twenty months later, Gerson worked up the courage to make a suggestion: Dump Defense Secretary Donald Rumsfeld and replace him with Democratic Senator Joseph Lieberman.

The answer was no. GERSON: I felt like we needed to have a kind of new start, a fresh start for this policy. And the president's predisposition is always to be loyal to the people around him. It is often true that a leader's strengths are -- sometimes also become their weaknesses in a certain way.

KING: "Heroic Conservatism" is Gerson's take on his years as Mr. Bush's wordsmith. Early on, they were partners in trying to redefine the Republican Party. Compassionate conservatism, they called it.

(BEGIN VIDEO CLIP, AUGUST 3, 2000)

BUSH: Big government is not the answer. But the alternative bureaucracy is not indifference.

(END VIDEO CLIP)

KING: Katrina was an opportunity to prove and, for the president's chief speechwriter, a profound disappointment.

(BEGIN VIDEO CLIP, SEPTEMBER 15, 2005)

BUSH: Americans have never left our destiny to the whims of nature. And we will not start now.

(END VIDEO CLIP)

GERSON: For me, it was one of my worst moments at the White House. It showed the limits of the power of words in a certain way. I was proud of the speech. I was not proud of the debate that followed in the Congress.

(END VIDEOTAPE)

KING: A lot of thoughts in the book and in that interview from Michael Gerson about the role of race in poverty, about how he worries conservatives will abandon that agenda when Mr. Bush leaves the White House, Wolf, and some funny moments as well.

He talks about the day when John Kerry called after the 2004 election to concede the election. He says the president jumps up all smiles. He's hugging and laughing, hugging everyone that comes into the Oval Office.

Then he takes that short walk down the hall to where the vice president's office is. No hugs and laughter. He says, Bush stuck out his hand and said to the vice president: "Congratulations. I know you are not the hugging type."

(LAUGHTER)

BLITZER: That's true.

"Heroic Conservatism." Why doesn't he simply call it what they called it originally, compassionate conservatism? KING: It's a great question, because there is a big debate in the Republican Party. There are many Republicans who think compassionate conservatism doomed the party, if you will, because, by compassionate conservatism, Mr. Bush meant spend a lot of money, not veto spending bills, especially when they came to domestic programs like No Child Left Behind, like the expansion of the Medicare program.

So, Michael Gerson says those programs are good ideas and conservatives need to stand up and be heroic. But it is an interesting read. He thinks both parties right now, because of the close parity between the parties, because of the big challenges like Iraq, are too timid to deal with the big challenges.

BLITZER: Michael Gerson's new book, "heroic Conservatism."

John, thanks very much for that.

In our "Strategy Session": a war of words erupting between President Bush and the Democratic congressional leadership.

(BEGIN VIDEO CLIP)

BUSH: They have not been able to send a single annual appropriations bill to my desk. And that's the worst record for a Congress in 20 years.

REP. STENY HOYER (D-MD), MAJORITY LEADER: He has increased spending by 8.7 percent, as opposed to 3.9 percent when President Clinton was in charge.

(END VIDEO CLIP)

BLITZER: So, is spending and the political fallout President Bush's best weapon right now?

And Michael Mukasey, his nomination to become the next attorney general was sailing through Congress. But is it in real trouble right now? All that, Paul Begala and Bill Bennett, they are standing by live -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: When he was first nominated, many said that the attorney general nominee, Michael Mukasey, might be easily confirmed. But, right now, his confirmation may face an uphill battle.

Let's go once again to our congressional correspondent, Jessica Yellin. She is on the Hill.

What are you hearing, Jessica, about this nomination right now?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: The latest we hear, Wolf, is from a senior Democrat, who tells CNN that, if the vote on Mukasey were held in committee today, he would not make it through.

This person says that there are a lot of uncomfortable people on this in both parties. Right now, Mukasey does not have the votes. Now, the issue holding him up, as you might know, is water-boarding and whether he considers it torture. And there is a lot of hand- wringing, as senators wait to get a letter from Mukasey that's due any time now in which he is expected to answer that question.

If he fails to answer it in a way that satisfies Democrats, he might not get through committee, according to the senior Democrat. And, if he does, there is a chance he could be filibustered by Democrats on the floor. He would need 60 votes to get through, a very high bar -- quite a turn of fate for this nominee -- Wolf.

BLITZER: All right, thanks very much, Jessica Yellin on the Hill.

Let's get some analysis now in our "Strategy Session." Joining us, our CNN political analyst and Democratic strategist Paul Begala, and Bill Bennett, our CNN contributor. He's also of the Claremont Institute, has a daily morning radio talk show as well.

How much trouble is Mukasey, Paul, in right now?

PAUL BEGALA, CNN POLITICAL ANALYST: A lot of trouble.

And I think this is how the nominating system and confirmation system ought to work, a lot of hand-wringing about it, particularly Justice Thomas' new book about how the confirmation process is unfair. I think this is playing out the right way. The man began with the presumption that he should be in the Cabinet. The president should have that presumption.

But it is rebuttable presumption. And, as he testified, he started losing support, because he refused to say -- Sheldon Whitehouse, the senator from Rhode Island, asked him directly if he thought water-boarding was torture. He refused to say yes -- or no, for that matter.

Senator McCain on the Republican side, Senator Dodd on the Democratic side, have begun to criticize him for that. And I think that is the way the system ought to work.

BILL BENNETT, CNN CONTRIBUTOR: It is not clear that water- boarding is torture. The Senate itself has not defined water-boarding as torture.

BLITZER: John McCain...

BENNETT: I know.

BLITZER: ... who himself was tortured in Vietnam, as all of us remember, he says, anybody who says that water-boarding is not torture is wrong.

BENNETT: Well...

(CROSSTALK)

BLITZER: ... he uses a lot tougher words than that.

BENNETT: Well, water-boarding also, according to George Tenet, is the reason Khalid Sheikh Mohammed broke down and told us where the next targets were going to be after 9/11.

Again, if the Senate wants to define water-boarding as torture, if it is a clear and unequivocal question, let it do so. I'm a little uncomfortable about all these things being put out in public, too.

There -- there does need to be a national discussion about how far we are prepared to go in the interrogation of people who are terrorists. And, if the Democrats want to propel that into as in a national debate, fine. Let's have it.

I'm not at all clear, by the way, saying that, how it will come out. But, if they want to have that national debate, fine. It is just, I don't think we should be debating every detail of how we handle people in a public...

(CROSSTALK)

BLITZER: You know, it was interesting. On the Democratic presidential campaign front, Obama puts out a statement saying he thinks he is going to oppose Mukasey's nomination. And, then, within an hour or so, Hillary Clinton's campaign follows suit. Edwards has opposed this nomination.

What's the political fallout among the Democrats, as you see it unfolding?

BEGALA: And give Chris Dodd credit, though, who is a candidate for president. Not getting a lot of coverage or, frankly, that much support in the polls. But he was, at least by my reading, the very first Democrat who said he would oppose him based on his testimony.

There is another thing Mukasey said that's bothering Democrats. And that was the suggestion -- and it was sort of an arcane bit of constitutional interpretation -- but a suggestion that there are some laws perhaps the president does not have to follow.

And I think he was asserting that, under the Constitution, under Article 2, the president has certain inherent powers. But it troubles Democrats and a lot of Republicans for an attorney general, a potential attorney general, to say the president might not have to follow the law passed by Congress.

BLITZER: You want to comment on that?

BENNETT: Just quickly. No one suggests that Mukasey is some kind of right wing ideologue, even a conservative. He's a moderate and very...

(CROSSTALK)

BLITZER: Going into this, he had a lot of support. Leahy, the chairman of the committee, said he was inclined to confirm him. BENNETT: Right. Lay down clear markers on this, though, because if the Senate won't step forward and say what it is on water-boarding, I'm not sure they should convict a man or deny man the position who holds a view that they haven't come...

(CROSSTALK)

BLITZER: Now, there is another battle unfolding. And it is escalating right now between the president and the Congress over this whole issue of spending. The president came out swinging today.

Listen to this.

(BEGIN VIDEO CLIP)

BUSH: They have proposed tax increases in the farm bill, the energy bill, the small business bill and, of course, the SCHIP bill. They haven't seen a bill they could not solve without shoving a tax hike into it. In other words, they believe in raising taxes. And we don't.

(END VIDEO CLIP)

BLITZER: All right. Now, that's a line we have heard from Republicans a long time: The Democrats are simply tax and spend, if you will.

But, right now, there's a lot of issues, a lot of appropriations bills, whether the defense appropriations bill, veterans affairs, labor. A lot of key issues are at play right now. And the president says, you lump all those together into one big bill, I'm going the veto it, because you want to spend $20 billion too much.

BEGALA: Right, at a time when we are spending $200 million -- million with an M., but per day in Iraq.

The president, he may have a good argument. He may not. He is a really difficult messenger for this. He's not a very credible man to talk about big spending. It is a little like the mind reels when I think of metaphors, maybe Lindsay Lohan in charge of sobriety, or Britney Spears in charge of modesty. This is just not a man who has any credibility on spending.

He's the greatest, biggest spender in American history.

BLITZER: Steny Hoyer, the majority...

BENNETT: When the mind of man runneth, I will tell you.

(LAUGHTER)

(CROSSTALK)

BEGALA: And right to the dirty stuff. I'm sorry, Bill. That's just...

(CROSSTALK)

BENNETT: ... Catholic thing here.

But...

(LAUGHTER)

BLITZER: The Democratic House majority leader pointed out today that, during the first six years of the Bush administration, the national debt...

BENNETT: Right.

BLITZER: ... virtually doubled $3 trillion more. He never vetoed any of those huge spending bills that the Republican majorities in the House and Senate sent him.

BENNETT: I can't -- as an honorable man, I can't say much here. They are tax and spend. We are just spend.

And I'm afraid -- my old department, Education Department, 18 percent since 2001 in real spending. And American education is not any better for it. This is a disappointment. I'm glad he's saying stop at this point, but it is late. We have spent a lot of money in this administration.

BLITZER: Bill Bennett and Paul Begala, guys, thanks for coming in.

BEGALA: Thanks, Wolf.

BLITZER: It's an incredibly harsh line of attack. One Democratic presidential candidate reportedly says, you should start questioning President Bush's mental health. Why is he saying that?

Also, New York's governor takes on our own Lou Dobbs. You are going to want to hear what both of them are saying. It involves a fight over illegal immigration and driver's licenses.

Also, a bomb falls over Virginia. There were no explosives, but it was a huge accident. How did it happen?

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the "Hot Shots" coming in from our friends over at the Associated Press, pictures likely to be in your newspapers tomorrow.

In northern Israel, a boy covers his face as he stands near a fire burning in the street. Rioters were protesting a cell phone tower.

In Manila, a special action force sniper displays his weapon during a visit by the president of the Philippines. In Rio de Janeiro, children celebrate at the Christ the Redeemer statue, after Brazil was chosen to host the 2014 World Cup.

And, in Washington, check it out. Check out these runners, finishers of the Marine Corps Marathon. Our own show director, Howard Lutt (ph), and our associate producer, Emily Atkinson (ph), they ran 26.2 miles. But who is counting?

Some of this hour's "Hot Shots" -- pictures often worth 1,000 words.

And mark your calendars right now. Starting Monday, just one year from Election Day, THE SITUATION ROOM will be on for three hours back to back, from 4:00 p.m. Eastern to 7:00 p.m. Eastern, good news for all of us.

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

The good news, Jack, is, we can -- we are done at 7:00.

JACK CAFFERTY, CNN ANCHOR: I like that.

We got some more "Hot Shots" coming in the next hour. We have pictures of Howard Lutt (ph) riding the bus part of the way...

(CROSSTALK)

(LAUGHTER)

CAFFERTY: ... the marathon. Emily (ph) ran the whole race. Lutt (ph) ducked around the corner, rode the bus.

BLITZER: Got a little rest.

(LAUGHTER)

CAFFERTY: The question this hour: What message does it send if the State Department offered immunity to Blackwater guards?

Cliff writes from Florida: "It says we are the imperial presidency, and we will do what we want. That includes those at the top and those who serve us. As soon as Nancy Pelosi said impeachment was off the table, carte blanche was granted. And all of the above should be held to account. America will never be respected around the world unless this kind of foolishness stops."

Wendy in California: "It means, if you work for this administration, you can literally get away with murder, not to mention obstruction of justice, theft -- Where did the $9 billion go in Iraq? -- treason, the outing of CIA operative Valerie Plame, and any other miscellaneous crime you care to commit. It's as if the country is being run by the mafia, although at least they have rules."

Jim in West Palm Beach, Florida: "Immunity for Blackwater means we are in a war zone. Stuff happens." Vince in Carson City, Nevada: "The message is the same one that they have sent to all of corporate America: Go ye forth and rape, pillage, and plunder. We have got your back. It's time for pitchforks and torches, folks."

Walt writes: "If Condoleezza Rice spent less time trotting around the globe not accomplishing anything and more time overseeing the State Department, perhaps she would know what the hell is going on in her own department. This is more proof of this administration rewarding criminals, incompetents, and liars."

Paul writes: "You should know, Jack, a privately-owned army is necessary for any fascist regime. If Bush doesn't protect them now, they won't protect him later."

And Greg in Saint Paul: "The State Department now says -- quote -- 'Since we don't have authority to give immunity, we couldn't have given it' -- unquote. This is just another example of 'Condilogic.' It's mandatory at the State Department these days and goes as follows: If I didn't read it, nobody wrote it. If I didn't hear it, nobody said it. And, if I can't remember it, it didn't happen" -- Wolf.

BLITZER: Thanks, Jack. See you in a few moments.

On our Political Ticker this Tuesday, Democratic presidential candidate Dennis Kucinich is taking his criticism of President Bush to a new level. In an interview with "The Philadelphia Inquirer"'s editorial board, the Ohio congressman said he seriously believes Americans have to start asking questions about Mr. Bush's mental health.

The newspaper's Web site reports, Kucinich made the comment in reference to the president's remarks suggesting the nuclear stand-off with Iran could lead to World War III.

Republican presidential candidate Rudy Giuliani is signing on former FEMA Director Joe Allbaugh as a senior adviser to his campaign. Giuliani says he will tap Allbaugh's significant experience -- a direct quote -- in emergency management and use him as an adviser on homeland security. Allbaugh headed the Federal Emergency Management Agency during the September 11 attacks, and left before the FEMA debacle after Hurricane Katrina.

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

With only about 10 weeks to go until the first presidential caucuses in Iowa and with campaign season clearly heating up, this means phone calls to voters. If you don't want to get these calls, is there anything you can actually do about it? A new Web site may have a solution.

Let's go to our Internet reporter, Abbi Tatton. She's standing by with more on this.

So, what is this site proposing, Abbi? ABBI TATTON, CNN INTERNET REPORTER: Wolf, you may have registered your phone number here. This is the national do-not-call registry. It's got almost 150 million phone numbers on it.

But, if you live in one of the early primary states, this is not going to stop you from getting phone calls from politicians at dinnertime. You see, political calls are exempt. And, if they're bugging you, this might be the site for you: stoppoliticalcalls.org, a new site run by a man in Virginia by the name of Shaun Dakin he's offering.

You can register one phone number here for free. Republican strategist Terry Holt, who has managed political campaigns argues not all these calls are bad. Robo-calls may be ineffective, but other calls can be important, getting people rides to the polls, for example.

But Dakin says that, for a small fee, you can register here and specify exactly which calls you want to avoid. Don't expect any results any time soon, though. The candidates themselves have to buy the list and pledge not to call you -- Wolf.

BLITZER: Abbi, thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com