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Giuliani's Cash Crunch; Interview With Arizona Senator John McCain

Aired January 11, 2008 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: And happening now: Bill Clinton returns to what he calls a fairy tale. Is he backing off from a jab at Barack Obama or criticizing his wife's top rival again?
Also this hour, John McCain revisits some painful memories in South Carolina. Is he trying to avoid a repeat of an ugly attack against him? We are going to hear from him this hour.

And Rudy Giuliani's cash crunch, is it a sign that his presidential campaign is in some deep trouble? I will ask the best political team on television.

We want to welcome our viewers in the United States and around the world.

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

Bill Clinton says his now famous remarks about a -- quote -- "fairy tale" were not meant to show any disrespect for Barack Obama. But the former president says he's standing by his criticism of the way Obama portrays his stance on Iraq.

Let's go to Brian Todd. He's watching this story for us.

The former president trying to clarify his remarks today in a series of radio interviews.

What's the bottom line, Brian?

BRIAN TODD, CNN CORRESPONDENT: He's trying to clear his record, Wolf, trying to clarify everything. With the race so tight, the stakes so high between Hillary Clinton and Barack Obama, this back and forth between Bill Clinton and Obama's camp has big implications.

The former president got right back in the middle of it just a short time ago.

(BEGIN VIDEOTAPE)

TODD (voice-over): First, the former president wants to make clear what's not a fairy tale about Barack Obama.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: There's nothing fairy tale about his campaign. It's real strong, and he might win. TODD: Bill Clinton's concerned he was taken out of context when he said this just before the New Hampshire primary about Obama's claim that Obama's always been against the Iraq war.

CLINTON: Well, how could you say that, when you said, in 2004, you didn't know how you would have voted on the resolution, you said, in 2004, there was no difference between you and George Bush on the war, and you took that speech you're now running on off your Web site in 2004, and there's no difference in your voting record and Hillary's ever since?

Give me a break.

(CHEERING AND APPLAUSE)

CLINTON: This whole thing is the biggest fairy tale I have ever seen.

TODD: That drew this reaction from the senator from Illinois.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I said from the start that Iraq was a bad idea, that we should not have gone in. Bill Clinton was taking some liberties with my statements.

TODD: Obama did say in 2004 there wasn't much of a difference between his position and President Bush's on Iraq. But that was just over the question of whether to stay in Iraq at that time, not the decision to invade in the first place.

Bill Clinton went on the Al Sharpton radio show today to take the personal edge off his earlier remarks, but didn't back off a key claim about Obama and Iraq.

CLINTON: It disproves the argument that he was always against it, and everybody else was wrong and he was right. So, that story is a fairy tale. Now, that doesn't have anything to do with my respect for him as a person or as a political figure in this campaign. He's put together a great campaign. It's clearly not a fairy tale.

(END VIDEOTAPE)

TODD: An Obama campaign official told me a short time again, Mr. Clinton is still distorting Obama's record with truncated quotes. Obama's campaign insists he's always been against the war.

Analysts say this controversy likely to come up again in crucial Democratic debates in the next few weeks, and you know better than anybody else, Wolf, including one of our own on the 31st with the Democrats.

BLITZER: Thanks very much, Brian Todd, watching the story.

Something appears to have happened to Fred Thompson in South Carolina. He's suddenly coming out swinging in a state considered crucial to the future of his campaign. One opponent suggesting Thompson is finally waking up. Our Dana Bash is covering Thompson in South Carolina -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Wolf, Fred Thompson was supposed to be the great hope for conservatives frustrated with the GOP field. That didn't happen. Now Thompson is pinning his hopes here, on South Carolina, and taking aim at the candidate most in his way.

(BEGIN VIDEOTAPE)

FRED THOMPSON, REPUBLICAN PRESIDENTIAL CANDIDATE: He would be a Christian leader, but he would also bring about liberal economic policies, liberal foreign policies.

BASH (voice-over): Hey, Mike Huckabee, take that.

THOMPSON: He believes we have an arrogant foreign policy, in the tradition of blame America first.

BASH: And that.

THOMPSON: He believes in taxpayer-funded programs for illegals, as he did in -- in -- in Arkansas.

BASH: And that. Suddenly, the man whose campaign has faltered from lack of energy perked up with a rapid-fire attack.

Huckabee's take?

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: And, you know, Fred is finally waking up and kind of realizing there is a race going on. But, after eight years in the Senate, I guess he has nothing to show for it, other than he attended some meetings and cast some votes, made a few trips and became a Washington lobbyist.

BASH: The reality? Huckabee has stolen Fred Thompson's conservative son of the South thunder. And, after Thompson's abysmal showing in Iowa, he skipped campaigning in New Hampshire and focused all his efforts in South Carolina.

Thompson advisers liken it to General George Custer's land stand.

(on camera): Is Thompson going Custer? Is this Custer's land stand for you?

THOMPSON: Oh, Custer's last stand. No. It didn't work out too well for Custer.

BASH: It didn't.

THOMPSON: No. No. I am going to -- I have got another model that I'm going to follow.

BASH: And what is that?

THOMPSON: Wellington at Waterloo. BASH (voice-over): History buffs recall the Duke of Wellington defeated Napoleon at Waterloo.

Battlefield analogies aside, Thompson tells CNN he knows South Carolina's primary means everything.

THOMPSON: They may be deciding my fate and they may be deciding, in my opinion, the fate of the Republican Party. It's in the hands of the South Carolinians and the good lord, as far as I'm concerned. And I feel perfectly comfortable with that.

(END VIDEOTAPE)

BASH: In many ways, Fred Thompson stole the show here in Myrtle Beach, delivering the kind of one-liners the actor's supporters wished they had heard a long time ago. The question now is whether it's too late -- Wolf.

BLITZER: Dana Bash, reporting, thanks.

John Edwards is hitting the road, pulling out all the stops in South Carolina right now. Our new CNN/Opinion Research Corporation poll shows Edwards running a distant third nationwide. Hillary Clinton is 13 points ahead of Barack Obama. Edwards is vowing to carry on with his presidential race and until the bitter end, but could his native state prove to be his last stop?

CNN's Dan Lothian is covering Edwards in South Carolina.

What's the latest, Dan?

DAN LOTHIAN, CNN BOSTON BUREAU CHIEF: Hello, Wolf.

Well, I spoke with two aides with the Edwards campaign earlier today. And they told me that it's not make or break here in South Carolina, that they feel that they don't have to win; they just have to come in strong.

But, clearly, this is a critical state for their campaign, after coming in second in Iowa and third in New Hampshire.

(BEGIN VIDEOTAPE)

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: Thanks, guys. Good to see everybody.

LOTHIAN (voice over): Former Senator John Edwards is riding a bus across his native South Carolina and telling supporters that his roots give him a unique perspective on their struggles.

EDWARDS: You watch the mills close, the jobs leave. It's been devastating for middle class families. And it's something I take very personally because my grandparents worked in the mills, my dad worked in the mills right here in South Carolina. And I know what it means when the mill closes and the jobs leave. LOTHIAN: At a town hall meeting in Summerville, Edwards promised to fight for the middle class, to help lift people out of poverty, and push for universal health care. Something that earned him the endorsement of a Clinton, Darrell (ph), that is. This Clinton describes himself as a staunch Republican, now putting party politics aside to support Edwards, the Democrat.

EDWARDS: And you're voting for me this time? OK.

And by the way, all the rest of you need to be telling your friends and neighbors you're looking at the candidate who can get Republican votes, including right here in South Carolina.

UNIDENTIFIED MALE: I think he's a good mainstream politician looking out for the little guy.

LOTHIAN: Edwards won South Carolina in 2004 and is trying to recapture that glory and boost his campaign. Since finishing third in New Hampshire, he spent more time than any of his Democratic opponents in South Carolina, holding town hall meetings and visiting a food pantry. The former senator, who says he's in the race for the long haul, told me he's in good shape to compete here.

EDWARDS: We have plenty of money to run a serious campaign. And I think more important than that, I don't think voters are going to be controlled by money.

(END VIDEOTAPE)

LOTHIAN: Edwards tells me that he doesn't believe that voters here in South Carolina are watching the horse race, but rather looking at his message -- Wolf.

BLITZER: Dan Lothian in South Carolina for us, thanks very much.

South Carolina is the backdrop for our next big Democratic presidential debate. CNN and the Congressional Black Caucus Institute are sponsoring the forum on Monday, January 21, five days before South Carolina's Democratic primary. Please join me and our Suzanne Malveaux and Joe Johns for our debate coverage. That begins 8:00 p.m. Eastern on January 21.

Jack Cafferty has got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: It's the economy, stupid -- that's the message presidential candidates are once again getting from voters, the economy now topping the war in Iraq as the most important issue to Americans.

The list of problems with our economy is long and it's getting longer: the mortgage meltdown, the credit crunch, the rise in unemployment, the continuing decline of the dollar, the high cost of gasoline, the high price of oil.

It all adds up to the likelihood of a recession. In fact, a lot of people think a recession has already begun. "The Wall Street Journal" surveyed a panel of economists who put the chance of recession at 42 percent. Ordinary Americans are more pessimistic than those economists. A new CNN/Opinion Research Corporation poll shows 61 percent of Americans surveyed in the poll think the economy is already in a recession.

There's more bad news: Moody's credit rating agency says the U.S. government is now at risk of losing its triple-A credit rating, unless we do something to curb our soaring costs of health care and Social Security, the entitlement programs.

U.S. government debt has had the highest rating possible, triple- A, ever since it was first rated 100 ago in 1917.

This is a big-time alarm bell and should force the candidates to sharpen their focus on these issues. The problem is that the solutions require either higher taxes or cuts in benefits, and no politician wants to talk about those things during a campaign.

Here's the question: Which presidential candidate is most capable of dealing with problems in our economy?

Go to CNN.com/caffertyfile, and you can post a comment on my blog -- Wolf.

BLITZER: A good blog, it is, indeed, and a lot of people posting.

CAFFERTY: Big old blog.

BLITZER: I got a little blog going at CNNPolitics.com. And people can go there if they want as well, Jack.

CAFFERTY: Very well.

(LAUGHTER)

BLITZER: See you in a few minutes with the best political team on television.

John McCain is mindful of what some are calling awful stunts from the past.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: What happened eight years ago is over, and I know that the people of South Carolina are not going to have such a thing happen again as happened then.

(END VIDEO CLIP)

BLITZER: McCain is talking about some stuns many people believe actually helped sink his 2000 campaign. You're going to hear what the McCain camp is doing to try to ensure it doesn't happen this time.

Mitt Romney is positioning himself as a conservative choice for president. So, why are some liberals telling Democrats to vote for him?

And, in the presidential race, one candidate already wants a vote recount. We're going to tell you who that is and why.

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

(COMMERCIAL BREAK)

BLITZER: He is beating back attempts by rivals to weaken his newfound strength. Today, John McCain campaigned today in South Carolina. Last night, he survived some attacks by Mitt Romney and others on stage at a Republican debate.

One piece of armor he uses to fend off attacks, his stance on the troop buildup in Iraq.

Our chief national correspondent, John King, spoke with McCain in Myrtle Beach, South Carolina.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: You were speaking yesterday on the one-year anniversary of the president calling for the troop surge about how, A, you think it was the right policy, and, B, you think, frankly, you a little deserve credit, because you stood up and pushed for it when it was unpopular.

It was interesting yesterday. I kept looking at my BlackBerry e- mails all day long. I didn't hear the Democratic candidates talking much about that date. What does that tell you about the evolution of the politics of Iraq, if you will?

MCCAIN: Well, I think it proves that every one of them, the leading candidates that declared the war lost, that said the surge couldn't succeed, maybe it's time that they fessed up that they were wrong, that they were wrong.

Now, we have got a long way to go in Iraq. We saw casualties in the last couple of days, because we're trying to get al Qaeda out of northern Iraq. And I have said many times, they're on the run, but they're not defeated. But, by any objective measure, we are succeeding there. And it's dramatically different from what it was when the surge began or it was announced that it was begun about one year ago yesterday.

KING: As you know, one of the issues you have had here in South Carolina in the past is either people don't understand your social conservative record or they're not willing to concede your social conservative record.

There's a mailing that hit South Carolina homes yesterday. It's a picture of you and Cindy on the front. It says "Always pro-life, 24-year record." Why do you think you still, after all this time, have to convince these people, "I have been with you from the beginning"? MCCAIN: I don't know. Maybe I haven't done a good enough job. We're trying to. And we're trying to show them that I am a conservative in every way. I'm a proud conservative. And I'm not embarrassed at all about the fact that I have reached across the aisle to try to get things done for them in Washington, while preserving those conservative principles.

KING: The flip side of that mailing shows Cindy holding Bridget...

MCCAIN: Yes.

KING: ... tiny Bridget, at the Bangladesh orphanage. As you know, some heinous and horrible things were said in the campaign eight years ago about you and about your daughter. Is that mailing in any way meant to tell people, here's the truth?

MCCAIN: Oh, no, no. This is just -- I think it's more of a testimonial to Cindy, because she's the one that made all that happen.

But it's, I think, trying to tell people about our family. I mean, so, it certainly isn't -- look, what happened eight years ago is over, and I know that the people of South Carolina are not going to have such a thing happen again as happened then.

KING: You feel good about the state this time?

MCCAIN: Feel good. But I...

(LAUGHTER)

MCCAIN: ... have felt good about this far out some years ago. We're not -- but we're not revisiting the past.

Yes, I feel good, John.

KING: Senator, thank you very much.

MCCAIN: Thanks.

(END VIDEOTAPE)

BLITZER: John King speaking with Senator McCain earlier today.

The popular liberal blog the Daily Kos, a site that receives hundreds of thousands of visits each day, is rallying its readers to vote for -- to vote for Republican presidential candidate Mitt Romney in the upcoming Michigan primary.

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

Abbi, what is this about?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, I think we all scratched our heads a little at first. But here's the justification from Markos Moulitsas of the site Daily Kos. The Michigan Democratic primary means little, but it's big for the Republicans, especially for Mitt Romney, who needs a win to keep afloat. So, vote Romney in Michigan, Kos tells Democratic readers, because, if he wins, he stays in the race; the whole Republican nominating process is prolonged, and Republicans spend more and more money attacking each other, instead of Democrats.

This plan has drawn mixed reactions online, but it's legal. Michigan has an open primary. The Romney campaign today called the idea odd, saying they would win with Republican voters. Mike Huckabee was also asked about it and responded, "Democrats can vote for me" -- Wolf.

BLITZER: Abbi, thanks very much for that.

The nation's largest mortgage lender is rescued from financial crisis. But you might not be able to tell the company's in such trouble. It's the CEO who is set to walk away with more money than most of us will ever see.

And are thousands of people living near one nuclear power plant in any danger? That's what some are asking after guards who protect the plant were caught on videotape apparently sleeping. You're going to see the tape for yourself.

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

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Security guards at a nuclear power plant caught on videotape apparently asleep on the job -- we're going to take a closer look at this very disturbing video. We will show it to you and the threat, serious threat, potentially, to the security.

Plus, the plot thickening right now, as Bill Clinton tries to clarify his -- quote -- "fairy tale" remark. Did the former president help his wife's campaign or Obama's? The best political team on television is standing by.

And Rudy Giuliani's staffers are feeling the pinch because the Republican is so focused right now on Florida. Is the Giuliani campaign in trouble?

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

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now: Bill Clinton goes public again to try to explain his comments that Barack Obama's Iraq war stance is -- quote -- "a fairy tale." Is he clearing up the confusion or just complicating things for his wife's campaign?

Who's the latest leader of the pack? We have some good news, some bad news for the candidates in both parties.

And Rudy Giuliani is putting most of his resources into the Florida primaries. But is he spending too much of those resources? There's word of a cash crunch that may leave some staffers unpaid, all of this, plus the best political team on television.

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

Security guards asleep on the job, bad in any situation, but especially disturbing at a nuclear power plant, in this case, the evidence all caught on videotape.

CNN's Brian Todd once again joining us. He's got more on this story.

Brian, tell us about this videotape, because it is oh so dramatic.

TODD: It is, Wolf. It has really shaken up the nuclear industry, led to a termination of a major security contract, and forced a federal agency to rethink the way it polices nuclear plants.

(BEGIN VIDEOTAPE)

TODD (voice-over): At rest when they're supposed to be at the ready, security guards apparently asleep on the job at a potential terrorist target, the Peach Bottom nuclear power plant in Pennsylvania, this video captured by a fellow security guard named Kerry Beal.

We spoke to his attorney, who gave us the video.

DAVID WACHTEL, ATTORNEY FOR KERRY BEAL: If something were to happen to the plant, it could jeopardize the safety of the people who lived around it.

TODD: One expert tells us, if there was a major incident at Peach Bottom, the fallout could affect tens of thousands of people, could reach Philadelphia, possibly Washington, D.C., or New York.

Beal's lawyer said Beal would not go on camera. He says Beal began noticing guards sleeping in this so-called ready room when he first entered the guard force early last year.

WACHTEL: He recalls seeing about 20 people at one time or another.

TODD: His attorney says, when Beal noticed the problem, he first went to his immediate supervisors at the security contractor, the Wackenhut Corporation.

WACHTEL: His supervisor told him, you need to be a team player.

TODD: Wackenhut officials would not comment on that directly, but, in a letter to CNN, they said they give their employees several avenues to report their concerns. But Beal's attorney says, the plant's parent company, Exelon Nuclear, and the government's Nuclear Regulatory Commission also didn't adequately respond when the situation was first presented to them.

Before it received the video, the NRC asked Exelon to investigate, but dropped the matter Exelon said it found no evidence of sleeping guards. So, Beal sent the video to a New York TV station.

DAVID LOCHBAUM, UNION OF CONCERNED SCIENTISTS: The company and the NRC were essentially asleep at the switch. They failed to respond to this threat until outside pressure forced them to look into it.

TODD: NRC officials deny being slow to respond and say they relied on Exelon's initial investigation, ordered by the NRC.

BRUCE MALLETT, NUCLEAR REGULATORY COMMISSION: And we thought, with the information we had, that they had taken an adequate and thorough job. Now, with the information we have, we have determined that is not correct. And so we're looking at our procedure and theirs to see what was missed.

TODD: We attempted to reach the apparently sleeping guards. Our efforts were unsuccessful.

(END VIDEO TAPE)

TODD: An Exelon official says his company responded as quickly and thoroughly as it could, given the information it had at first. Exelon denies claims that Beal claimed to them in the early stages of this whole thing. Exelon has since fired Wackenhut and is putting in place its own internal security force to guard its plants.

All three entities involved in this -- Exelon, Wackenhut and the NRC tell CNN they do not tolerate inattentiveness on the part of nuclear security guards and they're all looking at their procedures to make sure it doesn't happen again. A Wackenhut official says this was isolated and not reflective of the majority of its security force -- Wolf.

BLITZER: Brian, does Wackenhut guard other sensitive nuclear sites?

TODD: At least one very sensitive one, Wolf. It guards the U.S. nuclear laboratory at Oakridge, Tennessee, and a nearby facility that houses and manufactures nuclear weapons and guards enriched uranium. That contract was just awarded in June -- five years, more than $500 million. An official with the Department of Energy, which oversees all of that, tells us that they are pleased with Wackenhut's performance so far.

BLITZER: So far -- key words, so far.

All right, thanks very much.

Brian Todd reporting. Former President Bill Clinton retelling his "fairy tale" remark about Barack Obama's stance on the war in Iraq.

But is his damage control, as some are calling it, just causing more damage for Hillary Clinton's campaign?

Let's talk about it with CNN contributor Roland Martin, our own Jack Cafferty and our senior political analyst, Gloria Borger. They're all part of the best political team on television.

Jack, what do you make of this whole uproar that has developed, because, as you know, Bill Clinton went on multiple radio shows today to try to defend his comments that some have suggested were disparaging personally to Barack Obama?

CAFFERTY: Well, I mean, what's that old expression -- with friends like these I don't need enemies?

You know, I don't know how much Bill is helping his wife. I think a lot of this stuff is about Bill.

But here's my question. Based on President Clinton's record with African-Americans, there is no reason to believe -- at least in my mind -- that he intended anything racial in those remarks.

Why, then, would you pick one of the biggest racial lightning rods in the country -- Al Sharpton -- and go on his radio show to talk about it?

I don't get that. It doesn't compute.

BLITZER: Here's a little clip.

GLORIA BORGER, SENIOR POLITICAL ANALYST: Well...

(CROSSTALK)

BLITZER: Hold on a second. Hold on, guys. I'm going to let you both respond.

But here's a little clip of what the former president said on Al Sharpton's radio show.

(BEGIN AUDIO CLIP, COURTESY SYNDICATION ONE)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: But there's nothing "fairy tale" about his campaign. It's real strong and he might win. But I didn't -- I have a, I think not only a right, but an obligation to disagree with any argument he makes that I think is not fair against Hillary or any other candidate.

(END VIDEO CLIP)

BLITZER: All right, Roland let me let you talk about it first.

Go ahead. ROLAND MARTIN, CNN CONTRIBUTOR, SYNDICATED COLUMNIST: Well, Wolf, first and foremost, this wasn't the only show that he went on. He called the Steve Harvey Morning Show this morning. He called Reverend Al Sharpton. In fact, his campaign called me to be on my radio show in Chicago, but I'm on in the morning and they called in the afternoon, so he's probably going to be on my show on Monday morning. And so they said that he was planning to be on several different shows, as well.

But understand, this story is not just about the "fairy tale" comments. You have the comment made by -- the "shuck and jive" comment by New York Attorney General Andrew Cuomo. You have this whole an flap over MLK and LBJ. Plus, you have the Congressman James Clyburn story that was in "The New York Times" today. And trust me, the Clinton campaign does not want to tick Clyburn off. And so that got their attention, him saying that he was bothered by these comments, as well as some others, and very well might endorse Obama.

BLITZER: All right, James...

MARTIN: That's really what this is about, Wolf.

BLITZER: James Clyburn is the highest ranking African-American in Congress. He's the majority whip in the House -- the number three Democrat in the House of Representatives.

Gloria, go ahead.

BORGER: You know, this is all about Hillary Clinton winning. This is not about race. I mean, I was in Selma, Alabama this past spring when Bill Clinton came to be with Hillary Clinton because he didn't want her to be outshone by Barack Obama in that march in Selma. And, you know, Bill Clinton is a rock star in the African-American community. But he did have to take a little bit of a back step here, because he understands that he may have gone a bit overboard -- Wolf.

BLITZER: BLITZER: Jack, do you want to talk about...

MARTIN: But it is about race, though.

(CROSSTALK)

MARTIN: It is about race, though.

BLITZER: There's some suggesting...

(CROSSTALK)

BLITZER: I mean Clyburn, among others, including our own Donna Brazile, suggesting that they were a little concerned what the former president had said earlier in the week with that so-called "fairy tale" remark.

CAFFERTY: Let me -- let me just throw this out there. Barack Obama has conducted his campaign without any reference whatsoever to race up to this point. He didn't react to the Clinton stuff. He's not talking about it being racial, but suddenly everybody else is. I -- you know, this is nonsense.

BLITZER: Roland?

MARTIN: No, no, no. First and foremost, you've got a couple of Obama spokesmen who have so -- who have raised the point, as well. And sure, we -- when I say it's about race, it is about the competition for black...

CAFFERTY: I said Obama hadn't raised it.

MARTIN: No, no, no. Well, of course Obama is not going to raise it, because it -- that's why he has surrogates who also raise it.

CAFFERTY: (INAUDIBLE).

MARTIN: He has to walk a very fine line in this campaign because...

CAFFERTY: Why?

MARTIN: Absolutely. He doesn't want -- well, because, look -- because he has to play the dance, Jack, that African-Americans who are operating in mainstream America have to play. And that is when you don't want to necessarily raise issues of race. It is a very delicate issue. And trust me, his campaign is very sensitive to it.

But when I say it's about race, they're going to South Carolina. So you have this whole competition, this whole back and forth. And so when Clinton made this comment about MLK and LBJ -- when she said that, you know, well, it took a president to sign it into law -- people took that as an offense -- as her criticizing MLK. She said that wasn't the intention. But even Clyburn was very...

BORGER: But she backed off.

MARTIN: She did back off it.

BORGER: Yes.

MARTIN: But even Clyburn was bothered by it -- you know, that whole inference.

And so trust me -- you know, you have -- we have a little dance going on here -- a competition...

(CROSSTALK)

BLITZER: All right...

(CROSSTALK)

CAFFERTY: But Hillary's...

MARTIN: And the Clintons don't want to upset the African- Americans. CAFFERTY: Hillary is a candidate in the race. None of these other people are. Hillary is the candidate in the race. Barack Obama is a candidate in the race. And the rest of this dialogue is about people who are not involved in the race. I...

BORGER: Well, some people...

CAFFERTY: I -- that's, you know, that's all...

BORGER: ...people might say that Bill Clinton's thinks he's the candidate in the race.

CAFFERTY: Well, he does sometimes, yes.

BORGER: But that's a whole other story.

(LAUGHTER)

BLITZER: Guys, stand by. We've got a lot more to talk about. A good round one.

Word of a cash crunch is forcing Rudy Giuliani's campaign to take some drastic action. You're going to find out what our sources are telling us will happen to some staffers.

Also, we have a new snapshot of where the national contest is right now.

We're going to tell what you it shows.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're back with the best political team on television.

Let me show you guys some new poll numbers. Our new CNN/Opinion Research Corporation poll came out. On the Democratic side, nationally, registered Democrats, right now Hillary Clinton is at 49 percent, up from 40 percent this in December; 36 percent for Obama, up from 30 percent. Edwards down to 12 percent. He was at 14 percent in December.

On the Republican side right now, among registered Republicans, John McCain -- look at this -- he's at 34 percent. Huckabee 21, Giuliani 18, Romney 14.

But what's interesting, Jack, on John McCain -- he sort of flipped with Rudy Giuliani. Back in December, it was Giuliani who was on top. McCain now -- Giuliani is slipping, McCain is going up.

Remember, these are just snapshots. It could change again next week. But at this moment, that's what we're seeing.

What do you think, Jack?

CAFFERTY: Well, it's a snapshot based on the history of the race up to this point. And what it tells me is you've got to be in it to win it. I mean this idea that Rudy Giuliani has that he can go 0 for six going into Florida...

(LAUGHTER)

CAFFERTY: ...and he will -- just isn't going to get it. Now he's having, apparently, to ask people to work for nothing on his campaign -- or he's asking them if they'd like to volunteer...

BLITZER: They say, they say...

CAFFERTY: ...to work for nothing.

BLITZER: They say they asked him, could we please work for nothing?

CAFFERTY: Yes. I'm going to do that with CNN tomorrow.

(LAUGHTER)

CAFFERTY: I'm just not...

(LAUGHTER)

CAFFERTY: I'm not sure what time yet. But I'll be doing that right away.

BORGER: I thought you already did work for nothing, Jack.

Isn't that true?

CAFFERTY: Well, you -- I looked at my check. It's close.

(LAUGHTER)

BLITZER: Gloria, what do you think about this flip on the Republican side. Giuliani was the national frontrunner.

BORGER: Right.

BLITZER: McCain was down in the dumps. Now he's on top. Giuliani is hurting.

BORGER: You know, we have said this this whole campaign -- and you can't say it enough -- that the national polls really don't have an awful lot of meaning. What you're seeing reflected in this national poll is that John McCain won the last primary and he's gotten all the free media. So suddenly John McCain is up.

But I want to talk for a moment about the fellow that's not on this -- and that is Fred Thompson, who did very well in this debate last night. And he really has to make a showing in South Carolina if he's going to stay in this race. And there was one political cheat sheet today I have to pay a lot of attention to, because I want to read you something that it said. It said Fred Thompson was funny, biting, energetic. It was easily his smoothest performance, but it wasn't necessarily presidential. It was Jack Cafferty-esque.

What do you think...

(LAUGHTER)

BORGER: What do you think they meant by that, Jack?

CAFFERTY: Well, Cafferty-esque -- that's a noun, if you look it up in the dictionary -- a word used to describe old, white bald guys with bags under their eyes.

BORGER: Who can't (INAUDIBLE).

(LAUGHTER)

BLITZER: You mean it to be -- you mean an adjective, Jack. It's an adjective.

CAFFERTY: Right.

MARTIN: You know, Wolf, the whole notion of these national polls -- I mean right now, all these campaigns are in delegate counting mode. You know, coming out of New Hampshire -- you know, Clinton, a huge win.

Folks say you know what, we've got the same number of delegates. And that's what it -- that's what it boils down to. They really aren't focused on the national polls. It's about winning the next race -- the next race.

BLITZER: But what do you think...

MARTIN: How do we get the momentum...

BLITZER: Roland, a lot of people are focusing on the fact that February 5th, in effect, it will be a national primary -- what, 25 contests, about, happening on one day. So, in effect, it does become a national event on that day...

MARTIN: Well...

BLITZER: ...not just Iowa or New Hampshire or Florida.

MARTIN: Well, again it becomes a national day of voting but you're going to see different sort of focuses in the various states.

So you're going to have -- you're going to have a candidate saying, wait a minute, you know what, where are we going to move our resources?

And so let's move them to this state or to this state, where we're strong. They're all about counting those -- about counting delegates. They're looking at 23 states and saying where am I strongest?

BLITZER: All right...

MARTIN: Where did I get my most votes?

How can I maximize it?

And so a national poll, really, they're not focused on.

BLITZER: You know, Jack, one of the most interesting things in our new poll were the issues -- the issues resonating with Americans right now, Democrats and Republicans. And this poll shows that the number one concern right now is the economy...

MARTIN: Sure.

CAFFERTY: Right.

BLITZER: ...for Democrats and Republicans. Not the war on terror, not the war in Iraq. It's the economy.

Who stands to gain from that looking -- if that's the most important issue resonating out there right now?

CAFFERTY: Well, the economy is in trouble. A lot of people think we're in a recession. It could be a deep recession. There's a threat from Moody's today that U.S. government debt will be downgraded because of our runaway entitlement costs for the first time in more than a hundred years.

These are -- you know, whether it's fair or not, these are conditions that were created under a Republican administration. It's going to be tougher on the Republicans to run against that -- that set of statistics -- rising unemployment, the credit crunch, the mortgage meltdown, yada, yada -- the declining dollar -- than it will be for the Democrats, who can come in and campaign on ways to fix it.

BORGER: You know, and on the Republican side, Mike Huckabee is the populist Republican candidate speaking about...

MARTIN: Yes, indeed.

BORGER: ...speaking about middle class anxiety to Republican voters who, by the way, also suffer from middle class anxiety. I think he stands to gain.

And to your point, Wolf, about Rudy Giuliani running out of money, his campaign is about national security, is about the war on terror. And that's a problem for him if the terrain shifts to an economic anxiety front.

BLITZER: All right, guys...

BORGER: That's not good.

BLITZER: ...thanks very much. MARTIN: And, Wolf, it's about the pocketbook.

BLITZER: Hold on, Roland. We've got to go. We're out of time. Save your fire for the next time -- and there will be many opportunities.

MARTIN: Not a problem.

BLITZER: Roland Martin and Gloria can go.

Have a great weekend, guys.

Jack's got The Cafferty File. That's coming up. We're anxious to hear from our viewers, as well.

Right now we're going to hear from Lou Dobbs to see what's coming up right at the top of the hour -- Lou, what are you working on?

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Wolf, thank you very much.

Coming up at the top of the hour, we're reporting on new evidence that the mortgage crisis is destroying entire neighborhoods in some communities across the country. One mayor says the financial institutions behind the crisis are like organized crime syndicates. We'll have that report.

Also, a huge delay in a government program designed to protect this country from another September 11th. The Real I.D. Act won't be fully implemented until 2017.

That's a full 16 years after September 11th, but who's counting?

Certainly not your government. We'll have the report.

And an astonishing comment by Senator Hillary Clinton on illegal immigration. Senator Clinton saying, "No woman is illegal." The good Senator pandering to the pro-amnesty, open borders lobby to win votes, perhaps. We'll have a live report and discussion with three of the best political analysts and strategists. We'll be talking about that and the rest of the presidential election campaign, which is curious enough, I think, by any standard.

Join us for all of that, all the day's news and more, at the top of the hour, right here on CNN -- Wolf, back to you.

BLITZER: All right, Lou.

Thanks very much.

Which presidential candidate is the most capable of dealing with the problems involving our economy?

That's the question this hour.

Jack Cafferty standing by live with your e-mail.

Also this -- you're going to find out which candidate is calling for a recount of the votes in New Hampshire and why.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Checking our Political Ticker this hour, Hillary Clinton is calling on Congress to jump-start the economy. She's pushing a $70 billion package to immediately help low income families pay their mortgages and heating bills. It might be followed by another $40 billion in tax refunds.

Arizona's most prominent Democrat, the governor, Janet Napolitano, will endorse Barack Obama for president. Napolitano is expected to campaign with Obama this evening in neighboring Nevada. Her support could help Obama in next week's Nevada caucuses and in the Arizona primary on Super Tuesday, particularly among women voters.

Republican Mitt Romney is launching a new ad in Michigan today, playing up his ties to the state. Romney grew up in Michigan, where his father served as governor. In the ad, Romney pledges to turn around Michigan's troubled economy. After losses in Iowa and New Hampshire, Michigan is seen as a critical battleground for Romney.

Democratic presidential candidate Dennis Kucinich is calling for a recount in the New Hampshire primary. The Ohio Congressman contends there are questions about the integrity of the vote. Kucinich got less than 2 percent in the primary. The New Hampshire secretary of state says he's confident the results are accurate, but he says Kucinich can get his recount -- if he pays for it.

Remember, for the latest political news any time, check out CNNPolitics.com. That's where you can read my daily entry.

Jack Cafferty is joining us now with The Cafferty File -- Jack.

CAFFERTY: The question this hour -- which presidential candidate do you think is most capable of dealing with the problems in our economy, of which there are many?

Stephen writes: "Simple. The only candidate who understands the effects of a flawed monetary policy, the only candidate who has been talking about this problem for years, the only candidate who brings it up in every single debate he was allowed to attend, whether the people want to hear it or not -- Congressman Ron Paul."

Candice writes: "Hillary Clinton clearly the candidate for the job. Bill righted the economy, corrected the deficit in the '90s. Hillary can do it, too. It takes a Clinton to fix a Bush economy."

Taylor says: "John Edwards, of course. He's the only candidate who gives a damn about people who are losing their jobs and their health care. Since he's not beholden to special interests, he can stand for what he really believes. He's my guy."

G. Writes: "Rudy Giuliani transformed New York City's economy with fiscal discipline, welfare to work and reinvigorating business."

Erik: "This is where experience does count. Hillary Clinton, John McCain are by far the two candidates Americans can trust most to bring the economy back to healthy expansion. I'm a lifelong Democrat. I've never once voted Republican. But if it's Obama against McCain, I'd have to go with McCain."

And Robert writes: "Mitt Romney. He's the only candidate who has run companies, associations, governing bodies and governments. He understands what a budget is, how to raise revenues while controlling expenses. And Romney knows how to form a dynamic, talented team around him. We need a conductor not a soloist." -- Wolf.

BLITZER: I asked our friends on my -- in my little column on CNNPolitics.com, in the Ticker. I pointed out I was going to be moderating that debate coming up in South Carolina. I asked them -- I asked people, you know, just send me some ideas for questions, what they want to hear being asked of the Democratic presidential candidates.

CAFFERTY: (INAUDIBLE).

BLITZER: You know, I just checked. Almost 300 people have already submitted some ideas for me. And it's a good idea that I read them, because I think I'm going to learn something.

CAFFERTY: Well, let me understand this -- you're getting the viewers to do your work for you, right?

BLITZER: That's right. I want their help in helping me do a better job representing them, together with, Suzanne Malveaux and Joe Johns. And we're going to ask questions for the Democratic candidates. It's a good opportunity for me to hear what they really want us to ask.

CAFFERTY: And they're doing your work for you.

BLITZER: That's correct.

CAFFERTY: It sounds good to me.

BLITZER: Jack, go home for the weekend.

CAFFERTY: All right.

BLITZER: Have a great weekend.

Thanks very much.

South Carolina, as I pointed out, is the backdrop for our big Democratic presidential debate. That's the next one we're doing.

CNN and the Congressional Black Caucus Institute are sponsoring the forum on Monday, January 21st, five days before South Carolina's Democratic primary. You can join me, Suzanne and Joe Johns for our debate coverage that night, January 21st, 8:00 p.m. Eastern. Zingers, barbs and political pot shots -- the candidates and the campaign watchers -- they're taking direct aim at one another. Jeanne Moos picking her favorites in this free-for-all.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: You'd better duck (ph) comics -- campaign watchers, the candidates themselves -- they're all firing off political pot shots. Some them are Moost Unusual.

CNN's Jeanne Moos can't believe what she's hearing.

(BEGIN VIDEO TAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Ready, aim -- time for our favorite pot shots.

Fred Thompson let his rival Mike Huckabee have it at the latest Republican debate, calling Huckabee's policies liberal.

(BEGIN VIDEO CLIP, COURTESY FOX NEWS)

FRED THOMPSON (R), PRESIDENTIAL CANDIDATE: That's the model of the Democratic Party.

(END VIDEO CLIP)

MOOS: But when Mike Huckabee smiles, prepare for a pot shot.

(BEGIN VIDEO CLIP, COURTESY FOX NEWS)

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: I think Fred needs some Metamucil. I think it would help a lot.

(END VIDEO CLIP)

MOOS: A product for relieving constipation and restoring regularity?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Are you getting all the fiber you need?

(END VIDEO CLIP)

MOOS: That's not just a pot shot, that's a potty shot.

And did you hear the pot shots Howard Stern lobbed at Imus on "Letterman?"

(BEGIN VIDEO CLIP FROM "THE LATE SHOW WITH DAVID LETTERMAN," COURTESY WORLDWIDE PANTS INC.) HOWARD STERN: The big news is Imus came back. This guy, they resurrected him like a mummy. I knew he was a racist back then. I was screaming for 20 years the guy was a racist.

DAVID LETTERMAN, HOST: Really?

He's a racist?

STERN: He's screaming the "N" word in the halls. This guy looks like a crocodile in real life.

(END VIDEO CLIP)

MOOS: It sort of makes what the ex-wife of a certain president said seem not quite so bad.

In a new book, the former wife of French President Nicolas Sarkozy is quoted as saying "Nicolas is a womanizer. Nicholas is stingy -- a man who loves no one, not even his children."

Even with his writers on strike, Jon Stewart managed to fire off a pot shot at MSNBC's Chris Matthews.

(BEGIN VIDEO CLIP FROM "THE DAILY SHOW WITH JON STEWART," COURTESY COMEDY CENTRAL)

JON STEWART, HOST: That guy's insane.

(END VIDEO CLIP)

MOOS: Just because Matthews compared the Clinton campaign strategy to a certain movie.

(BEGIN VIDEO CLIP FROM "THE DAILY SHOW WITH JON STEWART," COURTESY COMEDY CENTRAL)

CHRIS MATTHEWS: But you in the great movie, "Lawrence of Arabia"...

(LAUGHTER)

STEWART: Where the Turks aimed all their guns at the sea.

MATTHEWS: And the Arabs -- the Arab revolt came in from the desert. They crossed the Nessou (ph).

STEWART: (INAUDIBLE) see this latter day Lawrence, Barack Obama, cross the Nessou (ph) and come in behind the Clintons.

(LAUGHTER)

(END VIDEO CLIP)

MOOS: And then there was Roseanne Barr's pot shot fired then taken back. On her blog, Roseanne launched a tirade against Barack Obama and Oprah, calling him "an empty suit selling hope in lieu of truth" and her "a closeted Republican." Roseanne later reconsidered. "I'd better keep my big fat stupid mouth shut!" she apologized, saying, "I am just so worried about another Republican getting in and I go over the top sometimes."

When it comes to pot shots, with or without Metamucil, you can count on them occurring with regularity.

(on camera): So here's to Fred Thompson and Mike Huckabee -- two guys with presidential fiber.

(voice-over): Jeanne Moos, CNN, New York.

(END VIDEO TAPE)

BLITZER: She's amazing.

All right, this Sunday on "LATE EDITION," four -- repeat, four presidential candidates -- John Edwards, Mitt Romney, Mike Huckabee and Fred Thompson. They'll all join me on "LATE EDITION". "LATE EDITION" -- the last word on Sunday talk, 11:00 a.m. Eastern, for two hours. We'll see you Sunday.

Until then, thanks very much for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou.

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