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Dems Battle Over Race; President Bush Delivers $20 Billion Arms Deal to Saudi Arabia; The Battle for Michigan

Aired January 14, 2008 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, a new round of attacks between Hillary Clinton and Barack Obama camps. Disputes over race, code words, political tactics, they're dominating the Democratic presidential race right now.
This hour, can either candidate come out of this ugly war of words a winner?

Plus, the Republicans' final drive to win Michigan. On the eve of the primary, three candidates in the state's troubled economy right now in the spotlight.

And President Bush gives the Saudis the royal treatment in the form of a huge weapons deal. Officials in Tehran are accusing Mr. Bush of trying to stir up Iranophobia, as they're calling it.

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

The top Democratic presidential candidates are adding more fuel today to their nasty fight over race and politics. And voters are left reading between the lines of what's been said by Hillary and Bill Clinton, Barack and Michelle Obama, and their respective surrogates.

Let's go out to our senior political correspondent, Candy Crowley. She's watching all of this unfold in Nevada, which holds its caucuses on Saturday. This dispute between these two camps, it's getting very, very nasty out there.

What's going on, Candy?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, it absolutely is getting nasty, Wolf, particularly between the surrogates and behind the scenes. But this is not just about race and politics. It's about who to blame for bringing it up.

(BEGIN VIDEOTAPE)

CROWLEY (voice over): The latest eyebrow-raising comment came from the head of Black Entertainment Television. Bob Johnson was introducing Hillary Clinton and attacked Barack Obama for allegedly questioning the civil rights credentials of the Clintons.

BOB JOHNSON, FOUNDER, BLACK ENTERTAINMENT TV: I am frankly insulted that the Obama campaign would imply that we are so stupid that we would think Hillary and Bill Clinton, who have been deeply and emotionally involved in black issues when Barack Obama was doing something in the neighborhood that I won't say what he was doing, but he said it in the book.

CROWLEY: Johnson denies he was talking about Obama's admitted drug use while a teen.

Bill Clinton, once referred to as the first black president, was under fire late last week for seeming to suggest that Obama's experience was a "fairy tale". Clinton denied it but felt the need for damage control on black talk radio most recently with Roland Martin.

WILLIAM JEFFERSON CLINTON, FMR. PRESIDENT OF THE UNITED STATES: I have got a list of 80 attacks on her going back six months. When his campaign referred to her as the senator from Punjab, on the very same day they put out a three-page printed release attacking me for my business relationships and work with teamsters and others to try to get investment back in poor communities in America.

It was a hard hit, man. I didn't say a word about it. And nothing happened to anybody who called Hillary the senator from Punjab. Then his top...

ROLAND MARTIN, RADIO TALK SHOW HOST: Well, actually that did generate some controversy in terms of the media.

CLINTON: It generated controversy, but the point is, it was dismissed. And what he did was nothing compared to...

(END VIDEOTAPE)

CROWLEY: So, Wolf, it went on like this all day long. Although, I will say that Hillary Clinton was up in New York today speaking at a Martin Luther King birthday celebration where she said in the end we may differ about minor things but we're all one family -- Wolf.

BLITZER: And John Edwards is sort of weighing on this as well, sort of watching it from the sidelines, this feud that's going on between the Clinton and Obama camps.

CROWLEY: Absolutely. And at this point, he is siding with Barack Obama.

As you know, the two of them in some ways are going after the same vote, but they have both gone after Hillary Clinton as sort of the same old-same old. So the two of them have been at her about it.

However, I will say that Barack Obama has tried very hard to kind of stay out of the direct conversation. Edwards, as you say, sort of injecting himself into this. But right now this is between the Obama camps and the Clinton camps.

BLITZER: Candy Crowley reporting from Las Vegas for us. Thank you.

Let's get to President Bush right now. He's delivering a major arms deal to Saudi Arabia. It's a sign of how important the Bush administration views its alliance with the Saudis and how worried it is about the threat from neighboring Iran. Our White House correspondent, Ed Henry, is traveling with the president in Saudi Arabia right now.

This is the first time the president has visited the Saudi kingdom. What's his bottom-line message there, Ed?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: He wants to show the U.S. is serious about defending an Arab ally against Iran.

(BEGIN VIDEOTAPE)

HENRY (voice over): Lots of red carpet for President Bush in the oil-rich kingdom of Saudi Arabia. But King Abdullah got the royal treatment as well. The U.S. giving the green light to a $20 billion arms deal to boost the Saudi military. All meant to show the U.S. is committed to helping protect Arab allies against a threat from Iran.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: So the United States is strengthening our longstanding security commitments with our friends in the Gulf and rallying friends around the world to confront this danger before it is too late.

HENRY: The president's tough talk came Sunday at this Abu Dhabi hotel, just 200 miles across the Persian Gulf from Iranian soil. The arms deal will give the Saudis precision-guided bombs so effective that some members of Congress are concerned the weapons could be used to target Israel.

But Israeli Prime Minister Ehud Olmert has not raised objections after the U.S. agreed last year to give them $30 billion in military assistance. Not to mention the president asserting Iran is still a threat, despite a U.S. intelligence report that found Tehran has halted its nuclear weapons program.

BUSH: A country which once had a secret program can easily restart a secret program.

HENRY: Another key message of the president on this trip is pushing his freedom agenda, spreading democracy in the region as an alternative to extremism.

BUSH: We cannot expect people to believe in the promise of a better future when they are jailed for peacefully petitioning their government. And you cannot stand up a modern and confident nation when you do not allow people to voice their legitimate criticisms.

HENRY: That message is not easy to sell here in Saudi Arabia, where women are still not allowed to vote and a blogger has been in prison for other a month without facing any charges.

(END VIDEOTAPE)

HENRY: But this is a close relationship. After dinner tonight, the president and the king had some late-night meetings. Now the president is staying at his guest palace. Tomorrow, he's going to the king's personal farm for more meetings, though there is a forecast right now for the first Saudi snowfall in decades -- Wolf.

BLITZER: I've met with top Israelis and top Saudi leaders, and I can tell you, the Saudis are almost as concerned about Iran as the Israelis are. And you know, Ed, how concerned the Israelis are. You were just there as well.

Let's turn to politics for a second. The American race for the presidency, it's having a resonance out there in the Middle East where you are. What are you hearing?

HENRY: Absolutely. Ed Gillespie, the White House counselor, told us today that in almost all the meetings the president has been having, whether in Israel, or here in Saudi Arabia, he's been getting quizzed -- what's going on in the election? Who's going to win on the Republican side? Who's going to win on the Democratic side?

And it's funny. The president keeps deferring to Gillespie, saying he used to be the Republican Party chairman, ask him. Gillespie is not giving who he thinks is going to one, but he said at one of the stops -- he was asked directly, "Who is going to win the Michigan primary?" That specific.

It tells you that even here in the Mideast, they're watching that U.S. election very closely -- Wolf.

BLITZER: The stakes are enormous for the United States, but they're also pretty good for the rest of the world as well, what happens here.

HENRY: Absolutely.

BLITZER: All right. Ed on the scene for us in Riyadh, Saudi Arabia.

Let's go to Jack Cafferty. He's got "The Cafferty File" for us in New York.

Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: Hi, Wolf.

For one brief moment after Barack Obama won the Iowa caucuses, it looked like we might actually have outgrown or petty racial bickering in this country. It didn't matter that Obama had run a dignified, intelligent campaign without so much as the mention of race. The people who have an interest of keeping this country divided along racial lines couldn't wait to get started.

Do you realize how many morons would go through the rest of their lives ignored and completely irrelevant if we could ever get over the racial garbage? There's a lot of them.

Now the racial fires are burning brightly once again. It's not like we don't have enough issues confronting all of us as Americans. We've got to get sidetracked by this crap. The last two days we've seen the Obama and Clinton camps embroiled in accusations that are steeped in race. Hillary Clinton defending her recent remarks on civil rights. She's suggesting Obama's campaign distorted what she said in an effort to inject race into the contest.

For his part, Obama is dismissing Clinton's suggestion, saying the notion that somehow this is our doing is ludicrous. Obama is also describing Clinton's earlier comments about the legacy of Martin Luther King, Jr. as unfortunate and ill-advised. The Clintons find themselves in some unusual territory here when you consider Bill Clinton was once dubbed America's first black president.

Meanwhile, all of this comes as large numbers of African- Americans are getting ready to vote in the primary in South Carolina. Ultimately, it looks like the big loser in all of this could be the Democratic Party. If the winner of the primary, whoever it turns out to be, wants to beat the Republicans' candidate, he or she will need the full support of a unified party, all of the Democrats, not one ripped apart by racial politics.

So here's the question. Why can't the Democrats conduct a primary campaign without it degenerating into racial politics? Go to cnn.com/caffertyfile, where you can post a comment on my blog -- Wolf.

BLITZER: Good question, Jack. And I'm anxious to hear what our viewers think. Jack Cafferty standing by with that.

Barack Obama right now getting ready to speak at a rally in Reno, Nevada. We're going to go there live and hear what he has to say. Will he discuss this whole issue of race?

Later, by the way, we're also going to get more on what Bill Clinton is saying. He spoke to our Roland Martin earlier. The Obama/Clinton battle over race, that's coming up as well in our "Strategy Session." Stand by for all of that.

Also coming up, Republicans try to close the sale in Michigan. Tomorrow is the primary. It's seen as critical, a critical test in that wide open GOP race.

And are Michigan Democrats being robbed? I'll speak live with the governor, Jennifer Granholm. We'll talk about the party dispute that's made the Democratic primary in Michigan a non-event. What happened?

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

(COMMERCIAL BREAK)

BLITZER: Many people in Michigan calling it a crisis. The state is among those leading in home mortgage delinquencies and foreclosures, and Michigan has lost almost 300,000 manufacturing jobs since the year 2000 alone. All reasons the Republican presidential candidates are telling voters elect them and help will be on their way. Let's go out to Kalamazoo. CNN's Dana Bash is watching all of this unfold.

Unemployment in Michigan, correct me if I'm wrong, Dana. I think it's the highest in the nation.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: It is. It's 7.5 percent. It is the highest in the nation, and that is why, Wolf, it is topic A, B and C for a pair of Republican candidates whose viability will be determined potentially by tomorrow's primary here.

(BEGIN VIDEOTAPE)

BASH (voice over): In Michigan, it's all about the struggling economy. Convincing people to vote for you is a vote for jobs.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: The most productive workers in the world reside in this state. My friends, as president of the United States, I will herald a new day for Michigan.

BASH: Now, I don't know about the Washington politicians, but I can tell you this: if I am president, I will not rest until Michigan has come back.

Campaigning in conservative western Michigan, John McCain is trying to repeat his win here eight years ago with what he calls "straight talk." Many lost automotive jobs won't come back, and it's time for retraining.

MCCAIN: We have got to go to the strongest part of our educational system in Michigan. And that is our community colleges.

BASH: At the Detroit Economic Club, Mitt Romney blames Washington for exacerbating Michigan's woes with too many mandates and regulations. He sells himself as a CEO who can fix it.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: That's what I've done all my life. I've taken on complex situations, led tough negotiations, found solutions, and then gotten things back on track.

BASH: A native son whose father was governor an and an auto executive.

ROMNEY: I have got Michigan in my DNA: I have got it in my heart. And I've got cars in my bloodstream.

BASH: Aboard his bus, McCain says his years of Senate committee work includes the auto industry. And he derides Romney's "It's personal" pitch.

MCCAIN: Governor Romney doesn't have that relationship with them. He's been gone since he was a kid.

BASH: Polls suggest that McCain and Romney battle for first. But Mike Huckabee is also competing here -- courting evangelicals, preaching populism.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: One of the reasons we've lost so many jobs starting here is because we have a system of taxation that penalizes productivity.

(END VIDEOTAPE)

BASH: Now, this race is neck and neck between Mitt Romney and John McCain. And the outcome could have a huge effect, Wolf, on the dynamic of the Republican race. If Mitt Romney doesn't win in his home state, after not having a win so far, it could fatally wound his candidacy. And if John McCain does win, that could put him in command of the Republican field, at least temporarily. At least until the next contest date, and that, of course, is South Carolina on Saturday -- Wolf.

BLITZER: After a few days of sun in South Carolina, she's back in the snow. Dana Bash in Michigan right now. All right, Dana. Thanks very much. Stay warm over there.

BASH: Thanks.

BLITZER: From the Midwest to the West Coast, California is also excited about its big role in this presidential contest. We're gauging just who appears to be ahead out there. Let's go to our senior political analyst, Bill Schneider. He's watching all of this for us. I know California is on Super Tuesday, February 5th.

Why should we care right now, Bill, about who may be ahead in California?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Wolf, because millions of Californians are already voting even though Super Tuesday is not for three weeks.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice over): The calendar says the California primary will be on February 5th, but millions of Californians are voting now, weeks before the campaign even gets to California. California has more than 15 million registered voters. More than 40 percent of them -- that's over six million voters -- have requested absentee ballots.

Those ballots started arriving in early January, around the time of the Iowa caucuses. But if there's no campaign, what determines how people vote? Name recognition and momentum. Look at the Democratic race. Hillary Clinton is in the lead. She has got name recognition and momentum coming out of New Hampshire. Barack Obama got momentum coming out of Iowa. He's second.

The Republican race is up in the air. John McCain may be slightly ahead, but what you really have is four Republicans all bunched together. McCain got momentum out of New Hampshire. Mike Huckabee got momentum out of Iowa. Rudy Giuliani has high name recognition. And Mitt Romney? Second in Iowa, second in New Hampshire. He's second in California, too. The California vote is a reflection of what's happening elsewhere.

STUART ROTHENBERG, ROTHENBERG POLITICAL REPORT: Republican voters still are looking for somebody, and they haven't decided who that is. Democrats are probably pretty comfortable with the top two candidates.

SCHNEIDER: Sure enough, most Californian Republicans say they have not found a candidate yet. Most Democrats have.

California is likely to be this year's decisive race. But it costs a lot of money to campaign there, so the candidates have to rely on momentum from other states. But in this campaign, the momentum shifts every few days it seems.

What about all those California voters who have already mailed in their ballots?

ROTHENBERG: A few days from now they may actually have a different view of the candidates, but they've already cast their ballots.

SCHNEIDER: They've already voted. Tough noogies.

(END VIDEOTAPE)

SCHNEIDER: So why didn't McCain get more bounce in California out of his New Hampshire victory? In California, the Republican Party has barred registered independents from voting in their primary. That's bad news for McCain. But Independents can vote in the Democratic primary. Good news for Barack Obama -- Wolf.

BLITZER: Fascinating little political nuggets. We rely on you for all of that, Bill. Thanks very much.

Just days before Super Tuesday, CNN will bring you back-to-back Republican and Democratic debates in California. Anderson Cooper moderates the Republican face-off on January 30th. I'll moderate the Democratic face-off on January 31st.

Also, please join us for the forums. They are cosponsored by the "Los Angeles Times" and "The Politico." And one week from today, at 8:00 p.m. Eastern, join me for the Democratic presidential debate in South Carolina. That's cosponsored by the Congressional Black Caucus Institute.

CNN's Suzanne Malveaux and Joe Johns will take part in the questioning just days before the Democratic primary in South Carolina. If you've got some questions, by the way, you would like us to ask, go to cnnpolitics.com. I have a new item up there asking for more help in helping us prepare questions for the Democratic presidential candidates.

Go to our ticker at cnnpolitics.com.

Dana Bash and Bill Schneider are both part of the Emmy Award- winning best political team on television. And remember, for the latest political news at any time, you can always go to cnnpolitics.com. In the midst of a war of words with Hillary Clinton's camp, Barack Obama is campaigning in Nevada right now. We're monitoring this latest event in Reno. We're going to go there and listen. Stay tuned. I think you might want to hear some of this.

Plus, it's a big concern for voters this winter, soaring fuel costs. We're going to tell you what the presidential candidates would try to do to make America more energy independent.

Lots of news coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: The Republican presidential candidates are campaigning hard for Michigan's presidential primary tomorrow. The Democrats, though, are not. Some even took their names off the ballot. We're going to tell you why. I'll speak live with Michigan's governor, Jennifer Granholm. We'll discuss that and a lot more.

And what's the number one issue many of you worry about this presidential season? We're going to tell you what the candidates say they do about it.

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

(COMMERCIAL BREAK)

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

Happening now, some say the recent tense confrontation between Iranian gun boats and the U.S. Navy might have been made worse by a heckler. We're going to tell you what's going on in this story.

In Afghanistan, six are dead after a suicide bombing. This, as sources tell CNN thousands of U.S. Marines will be sent there to help fight the Taliban.

And fresh revelations regarding Princess Diana. One man close to her makes some surprising comments about her relationships and about her mother's verbal attack against Diana.

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

While the Republicans actively campaign in Michigan's primary, the Democrats are not. The Democratic National Party is punishing Michigan for moving up its primary to tomorrow.

Michigan would have 156 delegates to the Democratic National Convention in Denver, but the national party is stripping Michigan of all of those delegates for holding its contest before February 5th.

Barack Obama and John Edwards actually withdrew their names from the ballot. Hillary Clinton, Dennis Kucinich and Mike Gravel are still on the ballot. Clinton is expected to win easily, but Obama and Edwards' supporters could cast an uncommitted vote, which many would see as a vote against Hillary Clinton.

Joining us now is the Democratic governor of Michigan, Jennifer Granholm.

Governor, thanks very much for coming in.

GOV. JENNIFER GRANHOLM (D), MICHIGAN: You bet, Wolf. Thanks for having me on again.

BLITZER: Was this a mistake? Because tomorrow's vote on the Democratic side, not the Republican side, is really not much of a vote. It doesn't really have much implications, does it?

GRANHOLM: Well, I think it was a mistake on the part of the Democrats who pulled their names off the ballot. It's very disappointing.

You know, Wolf, we've got the most challenged economy in the nation. Can you blame a state like Michigan, who has lost -- we've lost hundreds of thousands of jobs due to the policies, frankly, supported by the Bush administration. We wanted to be relevant in this election.

We said, if any others were going to break the cycle and move up, we would, too. And, when we do, we have candidates who actually pulled their names off the ballot. We put everybody on, and they pulled their names off. It's very disappointing.

BLITZER: It would have -- but it's only really a beauty contest, because the Democratic National Committee, Howard Dean and company, they say, you're not going to have any delegates that will actually be able to determine who the nominee is, if it comes down to a brokered convention, let's say, right? Isn't that what you're understanding?

GRANHOLM: Well, let -- I mean, look at Florida and Michigan. Both have the same issue. Do you really think that the Democratic National Committee can afford to lose all of those delegates at the convention?

BLITZER: That's what they say. They say they're going to do that.

GRANHOLM: Well, I understand that they want to protect the privileged status of Iowa and New Hampshire.

But Iowa and New Hampshire, with all due respect to them, they don't have the same issues that the industrial Midwest does, where we have lost so many jobs. We need to be heard. I'm glad that the conversation nationally has turned to the economy. I'm glad that Hillary Clinton decided to keep her name on the ballot, but the Democratic National Committee has got to get a different system for selecting our president in the future.

Michigan took a stand because we need to be heard. We are hurting. And we need the attention and the partnership of the federal government, including a president. BLITZER: She may have kept her name on the ballot, but she isn't campaigning there. They're not -- the Democratic candidates are not spending money there on advertising. With hindsight, what would have been so bad for Michigan if you would have been part of the February 5 Super Tuesday?

GRANHOLM: Or later. The -- the problem was that we would not have necessarily had our voice heard. I mean, this -- this unfortunate circumstance where everybody is clumped together at the end, well, usually, in many election years, Iowa and New Hampshire are the ones who have the disproportionate say in who gets elected.

We're fortunate this year that we have got a more robust contest. But the bottom line is that the issues that are important to Michigan are being raised. I think that's one of the reasons why candidates now, wherever they are campaigning, are talking about the economy. Clearly, those issues are important to the American public.

Boy, here in Michigan, I can tell you, we are mad as well. We are mad as hell at these unfair trade agreements that have not been enforced by the Bush administration. We are mad that we don't have a partnership out of Washington. So, we need to have that attention, and we need it early.

BLITZER: Here's what a lot of Democrats are worried about. Michigan is a pivotal state, a very important state in the national election next November 4th. And you have got a whole bunch of Republican candidates right now appealing to Michigan voters. They're all there in droves.

The Democrats basically boycotted Michigan. Are you concerned that this is going to hurt the Democrat, the Democratic Party, whoever that Democratic candidate is, in November?

GRANHOLM: I think there will be an awful lot of time spent here in Michigan. But I do think it's something that the Democratic National Committee needs to think about, is whether they really want to strip states like Michigan and Florida of all of their delegates. They need to devise a system that is more fair going forward.

But the bottom line is, there is a lot of time between now and November, a huge general election to play out. You will see these candidates here in Michigan. And I think you will see them in Florida as well.

BLITZER: Your fellow Democrats can show up and vote for Republicans tomorrow if they want. Do you think a lot of them will?

GRANHOLM: I -- I don't know. I can't tell you. I know that the last time this came up, there was some mischief that was played in the primary. And I think that's one of the reasons why McCain was elected here last time. There was a loss of crossover vote.

I don't know what will happen. I'm encouraging people to get out and vote for the candidate who stuck by Michigan, which is Hillary Clinton. Plus, she has got the best policies that will help the Industrial Midwest and a state like Michigan that is the epicenter of this global shift in manufacturing jobs.

BLITZER: Jennifer Granholm is the governor of Michigan. Good luck, Governor. You have got your hands full out there.

GRANHOLM: Yes.

BLITZER: We wish all the people of Michigan only the best.

GRANHOLM: I appreciate you saying that, Wolf. Thank you.

BLITZER: Thank you very much.

On the eve of the Michigan primary, CNN begins a special program on this riveting presidential campaign called "CNN Election Center." Tonight, Anderson Cooper and John Roberts anchor our coverage of the candidates, the stakes, the issues and a lot more. That begins tonight, 8:00 p.m. Eastern, 5:00 Pacific, right here on CNN. I think you are going to want to see it.

Members of Congress are back in town from a long break. And they're trying to get right to work on two issues that all of us should care a lot about. But will they actually be able to come together and do anything about it?

And John McCain is a long-term Arizona senator, but are his colleagues in the Senate supporting his presidential bid? We will talk about that and a lot more in our "Strategy Session..

And sources tell CNN, thousands of U.S. Marines are about to be deployed to Afghanistan to fight the Taliban. You are going to want to hear what's going on.

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

(COMMERCIAL BREAK)

BLITZER: Welcome back.

We want to head right out to Reno, Nevada, right now. Barack Obama is speaking to some supporters at a rally.

Let's listen in briefly.

(JOINED IN PROGRESS)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: ... politics that was based on our common values and our common ideals, a politics that was not based on tearing folks down, but was based on lifting the country up...

(CHEERING AND APPLAUSE)

OBAMA: ... a politics that was based not on spin and P.R., but on common sense and straight talk.

And, most of all, I decided to run because I was betting on all of you. I was betting on you, because I was convinced that the real agents of change in America have always been the people. Change doesn't come from the top down. It comes for the bottom up.

(CHEERING AND APPLAUSE)

OBAMA: I was convinced that we not as divided as our politics would suggest, that we are a decent people and a generous people, willing to work hard and sacrifice for future generations, and that, if we could just mobilize our voices to challenge the special interests in Washington, but also to challenge ourselves to be better, that there would be no problem we could not solve and no destiny that we could not fulfill.

That was the bet that I was making when I announced over 11 months ago. And I am here to say to you, Reno, to say to you, northern Nevada, that, after 11 months, my faith has been vindicated, because you, the American people, have responded to our message of change. We have seen it all across the country. We saw it in Iowa. We saw it in New Hampshire. And we're seeing it today right now in Nevada...

(CHEERING AND APPLAUSE)

OBAMA: .. all across the country.

I have seen it in conversations I have had. Everywhere I go, we have been seeing these magnificent crowds. Now, I have got to admit that, you know, I would like to take credit for all these crowds, but part of it is, people are excited because they know that next -- hat this coming November, they will be selecting the next president of the United States, and they know that the name George W. Bush won't be on the ballot.

(CHEERING AND APPLAUSE)

OBAMA: And that has them very excited.

(CHEERING AND APPLAUSE)

OBAMA: They're excited about that.

They know -- they know that the name of my cousin Dick Cheney won't be on the ballot.

(CHEERING AND APPLAUSE)

OBAMA: And that makes them excited.

(CHEERING AND APPLAUSE)

OBAMA: That was really embarrassing...

(LAUGHTER)

OBAMA: ... when that news came out. I -- you know, when they do these genealogical surveys, you're hoping you're related to somebody cool.

(LAUGHTER)

OBAMA: You know, like Abraham Lincoln or Willie Mays somebody.

(LAUGHTER)

OBAMA: But, Dick Cheney, that's a letdown.

(LAUGHTER)

OBAMA: Anyway, his name won't be on the ballot, so you know that the era of Scooter Libby justice and Brownie incompetence and Karl Rove politics will finally be over in 2009.

(CHEERING AND APPLAUSE)

OBAMA: But that is not the only reason you're here. You're here -- you -- you don't just want to just be against something. You want to be for something. You want -- you want to believe that we can still come together and do great things. I know this because I have been in a conversation with you for the last 11 months.

BLITZER: All right, Barack Obama speaking out in Reno, Nevada. We will continue to monitor what he's saying and go back there, update you on what he's saying.

I want to briefly go and listen to John McCain right now, arguably the Republican presidential front-runner -- at least national polls suggest he is. He's speaking in Spring Lake, Michigan, right now before a crowd of Supporters.

(JOINED IN PROGRESS)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: ... we allow America to be attacked and take innocent American lives.

(APPLAUSE)

MCCAIN: So -- so, my friends, this is a tough challenge. And it's a dangerous world we live in. If a month ago, we would have had this meeting and I had started talking about Pakistan, you would have said, what does Pakistan have to do with it?

Well, we know it's a nuclear armed country. We know the threat of radical Islamic extremism, and we know it's next to Afghanistan, where thousands, thousands of brave Americans are serving as we speak. If we had talked about the Straits of Hormuz and the confrontation that happened in the last few days between Iranian boats and American ships -- and, by the way, a tradition that America has fought for in the past and -- in fact, our first war after our independence was a group called the Barbary pirates that were trying to deprive us of freedom of the sea. My friends, I'm proud of our United States Navy officers and men who conducted themselves so well the other day. And we can rely on them.

(APPLAUSE)

BLITZER: All right, John McCain in Michigan -- we're going to monitor his speech as well.

By the way, if you would like to watch any of the candidates today, just go to cnn.com/live. You can watch their rallies, their events. It's streamed online. Any time you want to do that, just go ahead.

On Capitol Hill right now, House Democratic leaders are trying to get a jump on the election-year agenda. They're focusing in right now on two issues that primary season voters say they're deeply concerned about: fixing the economy and ending partisanship. CNN's Brianna Keilar is up on Capitol Hill watching all of this unfold.

Brianna, what's going on?

BRIANNA KEILAR, CNN CORRESPONDENT: Well, Wolf, the House doesn't reconvene until tomorrow, but, already, signs that fears of a recession are going to be a big issue in coming months, here on the Hill today, a photo opportunity to show Americans that Democrats are in tune with their growing concerns.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): As the Fed signals a deep cut in interest rates, House Speaker Nancy Pelosi met with Chairman Ben Bernanke, saying she wanted to coordinate efforts to stimulate the economy.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: As Senator Reid and I wrote to the president, we hope to work in a bipartisan way for an initiative that is targeted, that is timely, and is temporary.

KEILAR: Though plans for an economic stimulus package are still in the infancy stage on both sides, a congressional aide tells CNN, among the ideas being considered by Democratic leaders, tax rebate checks, tax holidays, and increasing spending on food and energy assistance for the poor.

When Democrats won a majority in Congress, they promised not to add new spending without paying for it. House Republican Leader John Boehner warned Democrats about making taxpayers fund a stimulus package that, according to Democrats, could cost as much as $150 billion.

In a statement, Boehner said, "Tax increases, even those disguised as spending offsets, simply do not stimulate the economy. Instead, they would only make today's economic uncertainty even worse." So, would an economic stimulus package even work? Ethan Harris, chief U.S. economist for Lehman Brothers, says, quick action could help, but:

ETHAN HARRIS, CHIEF U.S. ECONOMIST, LEHMAN BROTHERS: The problem is, that once the dynamics of recession start to kick in, with big negative psychological forces, policy just can't act quick enough to offset the negative psychology. (END VIDEOTAPE)

KEILAR: For instance, if consumers, fearful of a recession, take their tax rebate checks and just put them in the bank, instead of spending them, that doesn't stimulate the economy -- Wolf.

BLITZER: Brianna Keilar, watching this debate unfold on the Hill -- it's only just beginning right now. Brianna, thanks very much.

In our "Strategy Session," Senator John McCain has made a reputation for rocking the boat here in Washington.

(BEGIN VIDEO CLIP)

MCCAIN: I mean, if you like all that money going to Alaska, fine. I mean, but you shouldn't. But you shouldn't.

(END VIDEO CLIP)

BLITZER: So, if he is the Republicans' presidential nominee, how much support could he count on from his fellow Republicans on Capitol Hill?

And, as allegations of playing the race card fly back and forth between the Obama and Clinton camps, do both sides have mud on their hands? Jamal Simmons and John Feehery, they're standing by -- right here in THE SITUATION ROOM.

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BLITZER: Right now, many wonder if John McCain is getting a little help from his friends.

The Republican presidential candidate is a longtime senator, but how many in the Senate are actually supporting his presidential bid? Let's go to our "Strategy Session" right now to discuss that and more. Joining us, Democratic strategist Jamal Simmons and Republican strategist John Feehery.

John, let me start with you.

JOHN FEEHERY, REPUBLICAN STRATEGIST: Sure.

BLITZER: I got a list here. Ten senators have endorsed McCain, nine Republicans, plus Joe Lieberman, the independent Democrat, as he's called.

What -- what do you make of the kind of support that McCain so far has received from his colleagues?

FEEHERY: Well, John McCain is popular with some of his colleagues, like Chuck Hagel, but fairly unpopular with other -- many of his other colleagues because of the stands he's taken, like on campaign finance reform and many other issues, where he took that Straight Talk Express and took it right to the Senate, and a lot of the senators didn't like it so much. You know, this -- this primary season reminds me of the college championship this year. Each one of these candidates seems to me is going to have two losses. Each one of them, as soon as they get to number one, they get beat. And I think you could see the same thing in Michigan this year.

BLITZER: Hagel is not yet on this list of any of the...

(CROSSTALK)

FEEHERY: Oh, he's not? OK.

BLITZER: He's on this list as someone who has endorsed McCain.

Jamal, in all the national polls, it shows that McCain is incredibly competitive against Hillary Clinton or Barack Obama or John Edwards. How worried should the Democrats be right now that this maverick Republican, as many people call him, an independent on many of the issues, that he would be a really strong Republican candidate against whoever the Democrat is?

JAMAL SIMMONS, DEMOCRATIC STRATEGIST: Well, he will be a really strong candidate. One thing we learned this year, to keep John's analogy going, there's no sudden death in this tournament. I mean, people are losing a couple -- people are losing primaries and going on to keep going to campaign.

I think we're -- we ought to be concerned about McCain, because he does have that maverick -- that maverick image. And this is a year where voters seem to want authenticity and honesty and consistency. And that's what is killing people like Mitt Romney. They just are seen as being -- Mitt Romney is just not seen as being that authentic.

BLITZER: Is he the most electable Republican, John?

FEEHERY: Oh, I think you could make the case for any of the top candidates. I think you can certainly make that case for Mitt Romney or Rudy Giuliani or Fred Thompson. I think they're all electable, depending on how their campaign goes.

But I think what -- when you look at polls, though, John McCain seems to poll the best against Democrats right now. But, once again, it's not a done deal on the Republican side. John McCain took his Straight Talk Express to Michigan several months ago and talked about how the car industry had to change its ways. And that's not that popular. And Mitt Romney is using that message right now against him.

BLITZER: Let's see what happens tomorrow. We will know soon enough.

Jamal, what do you make of this spat that is going on between the Hillary Clinton and Barack Obama campaigns over race and politics?

SIMMONS: Well, you know what is interesting? I'm out here in Nevada, where we have our caucuses on the 19th. And you don't hear that much about it on the ground out here. But, in the national media, it certainly has taken up a lot of the airspace. So, it's a tough thing. I'm very disappointed that this is something that we are talking about in the Democratic primary. I thought this may be something that popped up if Barack Obama was the nominee and he made it to the general.

There seems to be kind of a strategy out there to talk about race. And it's a tough -- it's a really tough argument to have to live through as a Democrat.

BLITZER: I think, if someone would have said to me, you know, this is going to be an issue among the Democrats, I would have thought they were crazy.

But, John, what do you make of this?

FEEHERY: I think it's Hillary Clinton's fault, to be quite candid with you.

I think the idea that Barack Obama would use the race card is outrageous. And I -- you know, the Clintons are good about this. They make an attack, and they blame somebody else for the attack they made. I just -- I blame Hillary Clinton and Bill Clinton. I think what Bill Clinton -- what Bill Clinton said was absolutely outrageous.

BLITZER: Who is more to blame, Jamal?

SIMMONS: Well, it's clear that there are at least allies of the Clinton campaign that are fanning these claims. You saw it with Bob Johnson yesterday. You saw it with Billy Shaheen with the comments in December. You saw it with people asking whether or not he was black enough earlier in the year last year.

This has clearly been something that has been going on against him, and for no good reason, because, really, African-Americans have -- are fond of the Clintons. African-Americans are fond of there Clintons. And people think that the Clinton -- Hillary Clinton still has a chance to win this campaign. But the more she does this, the more their campaign orchestrates this, as it appears, it has the problem of pulling the party apart.

And we just can't have that in a year where Democrats ought to be winning.

BLITZER: Jamal Simmons and John Feehery, guys, thanks very much for coming in.

FEEHERY: Thank you.

SIMMONS: Thank you.

BLITZER: One Democratic presidential candidate wanted a hand recount for the New Hampshire primary. Now the state decides. You're going to hear the decision and what it means.

Also, it's about jobs. That's what Michigan has lost, needs, and what the Republican presidential candidates are largely talking about before the state's primary tomorrow. Who is promising what?

That and a lot more coming up -- right here in THE SITUATION ROOM.

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BLITZER: Checking our Political Ticker: New Hampshire officials say they will repeat -- repeat, will -- conduct a hand recount of the state's Democratic and Republican presidential primaries.

Democrat Dennis Kucinich and a little known Republican candidate asked for the recount. So, they're expected to pay the cost of the recount that could cost more than $100,000.

Kucinich, who got less than 2 percent of the vote, raised questions about the integrity of the results. State officials, on the other hand, stand by the final vote count showing Democrat Hillary Clinton and Republican John McCain the winners. Remember, for the latest political news any time, check out cnnpolitics.com. That's where you can read my latest blog as well.

Let's go to Jack. He's got "The Cafferty File."

Did I mention I have got a blog going on cnnpolitics.com?

CAFFERTY: Yes. Yes, Wolf. Yes, you're wearing me out with that stuff.

(LAUGHTER)

CAFFERTY: Does Kucinich think he's going to win if they recount the votes in New Hampshire?"

BLITZER: I don't think he thinks he's going to win, but maybe, you know, you find a little hanky-panky. Who knows what is going on over there.

CAFFERTY: Yes. OK.

The question this hour is, why can't the Democrats conduct a primary campaign without it degenerating into racial politics? Got a lot of e-mail.

Elsie in Milpitas, California, "As a black woman, I liked both Obama and Clinton, but I'm leaning more toward Obama. And this has nothing to do with the recent racial comments. I think the Clintons need to drop this topic, because they're making it worse in their attempts to clarify. America is tired of nasty politicians. I'm sick of it. We should be focused on the issues. I never thought this would happen, but I'm getting sick of the games the Clintons are playing."

California voter, "Jack, I think I can answer your question. You can answer your question yourself. The media is playing a major role in fueling any potentially racial and sexist comments by the Democrats. Republicans running are all white males, not much excitement there. Get back to the issues."

Jack writes from Laurel Springs, New Jersey, "Disgusting to see Bob Johnson" -- that's the BET executive -- "skippering the Clinton swift boat attacking Barack Obama. As a white guy, I'm disgusted to see this campaign turning into race-baiting."

Mile in Vero Beach, Florida, "Howard Dean, chairman of the Democratic Party, needs to invoke a version of Ronald Reagan's 11th commandant: Don't speak ill of another Republican. He needs to unite his candidate against their mutual opponents, those who support a third George Bush term in office. The longer Dean waits, the more damage is done to the Democratic Party, who will lose against a dogcatcher in November."

Larry in Boca Raton, Florida, "Hillary Clinton is now scrambling to hold on to the black vote. Her act is so staged. I noticed how she packed her audience in South Carolina with black participants. She's so calculating and so manipulative, that it's scary."

And Cee writes, "Look in the mirror, Jack. It's not the Democrats who are fanning the flames of racist commentary. It's people in the media who are blowing throwaway comments into a bonfire. Back off. Find another question. This one stinks. It's the kind that makes Karl Rove smile. Instead, why not ask, do you think it is indicative of the essence of the Republican Party that none of their front-runners is either black or a woman?" -- Wolf.

BLITZER: Thanks, Jack.

Before we get a lot of e-mail, Bob Johnson was the founder of BET. He's no longer involved in BET. He sold the company a few years ago.

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