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Deal to Boost the Economy; The Heat's on in Florida; Obama on "Dirty Tricks," Clintons

Aired January 24, 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 bipartisan deal to put more money in Americans' pockets. We're going to take a closer look at the fine print of the plan, what it might mean for the economy and what it will mean for you.
Also, on the front line in South Carolina. Hillary Clinton is back in the state right now. Is she backing away from her feud with Barack Obama?

And it's a primary concern in hurricane-prone Florida. Home insurance prices have gone through the roof. Now one Republican presidential candidate wants taxpayers to help pick up the tab.

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

It's not a done deal, but House leaders and the White House have hammered out a plan that could give tens of millions of dollars to Americans as a tax rebate. The House speaker, Nancy Pelosi, is calling the economic growth package remarkable. That could also describe the unusual speed and the spirit of bipartisanship in reaching this agreement, at least for now.

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

Ed, give us the nuts and bolts about this deal.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, it still has to pass Congress, but if it does, 116 million Americans will be getting a check in the mail in the hopes that they'll spend this money quickly to boost the economy. But there's still a lot of questions about how quickly they're going to get those checks.

(BEGIN VIDEOTAPE)

HENRY (voice over): The president was quick to declare victory on the stimulus package that will pump $150 billion into the sagging economy.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This package has the right set of policies and is the right size. The incentives in this package will lead to higher consumer spending and increased business investment this year.

HENRY: The deal came after round-the-clock negotiations, Congress moving at record speed. REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: I think this is a remarkable package because it is about putting money in the hands of America's working families.

HENRY: The deal gives $600 rebate checks to individuals making under $75,000, $1,200 for couples who earn less than $150,000 a year. Couples with kids get an extra $300 per child.

In a concession to Democrats, workers who make at least $3,000 but don't pay taxes will still get $300 checks. In return, Democrats dropped calls for increase in food stamps and extension on unemployment benefits. Republicans also secured tax breaks for small businesses, who can write off 50 percent of purchases of plants and other capital equipment.

REP. JOHN BOEHNER (R), MINORITY LEADER: The speaker gave some, as she said. And Republicans gave some.

HENRY: There's one reason for the bipartisanship -- it's an election year. And both parties are desperate to show they're doing something about the sliding economy.

BUSH: This agreement was the result of intensive discussions and...

HENRY: While the president does not have to face the voters in November, he has a legacy to fret about. That's why White House officials say the economy will be a major focus Monday when he delivers his final State of the Union Address.

BUSH: I know Americans are concerned about our economic future. Our economy is structurally sound, but it is dealing with short-term disruptions in the housing market and the impact of higher energy prices.

(END VIDEOTAPE)

HENRY: Now, Treasury Secretary Henry Paulson says that if Congress gets this passed by mid-February, he can start cutting the checks around early April. But that's obviously a busy time for the IRS. They'll be dealing with 2007 tax returns.

So Paulson says it could take up to 10 weeks from when it starts to actually get all these checks out there. Bottom line, that means a lot of these checks might not get out there until June or July, raising a lot of questions about whether the money will actually get out there quickly -- Wolf.

BLITZER: There still are some problems potentially in the Congress, especially in the Senate, in actually passing this legislation.

HENRY: That's right. The top two senators on the Finance Committee, Max Baucus and Chuck Grassley, are already saying they want to open this up and consider other proposals, like the food stamps that were dropped, also the unemployment compensation. That can open a can of worms. You have all kinds of senators -- Senator Leahy, Senator Lieberman -- saying, look, put the food stamp money back in there. If that happens, it's going to change the bill that the House passes, going to force it into conference committee, go behind closed doors for weeks. This could really delay it, so the Senate leadership has a tough battle on their hands, Wolf, to keep this narrow and not open up a whole can of worms.

BLITZER: Ed Henry over at the White House.

Thanks very much, Ed, for that.

Let's get a little closer look at these rebates.

As Ed just mentioned, the biggest checks will go to those people who make up to $75,000 a year, couples with combined incomes of $150,000 a year. Some people who make more than that will also still get some rebates, but not as much. Partial refunds will go to those who make less than $87,000 a year for individuals, and $174,000 combined with a spouse.

But don't look for that rebate in the mail, as Ed just said, anytime soon. We've been speaking with experts. They say the IRS isn't likely to start mailing out the checks until the end of June because the agency is now obviously preoccupied with the 2007 tax filing season.

We're watching this story very closely.

By the way, we'll be speaking in our 6:00 p.m. Eastern hour with Senator Max Baucus. He's the chairman of the Finance Committee. He's got some serious concerns about this deal that was announced today.

Democratic presidential candidate Barack Obama is welcoming the new deal on the economic growth package. Out in South Carolina earlier in the day, he seemed to take some credit for what's in the plan.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: It appears, based on the reports that I've read, that much of the agreement follows the contours of a proposal that I put out initially, that it's going to emphasize getting money immediately in the pockets of hard- working Americans, and that everybody is going to benefit.

(END VIDEO CLIP)

BLITZER: Hillary Clinton is suggesting that if President Bush had acted sooner, America might not be in the economic mess it's in right now. Senator Clinton is back in South Carolina today before Saturday's Democratic primary.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: After seven years of inattention, neglect, and denial, this Monday night President Bush may well actually discuss the serious economic problems the we face. And it's about time.

You know, we didn't hear from him when the typical American family's income dropped $1,000 over the past seven years, $2,600 for African-American families. As health care premiums nearly doubled, gas prices more than doubled. And college costs here in South Carolina rose 124 percent since 2000, the fastest increase in America.

(END VIDEO CLIP)

BLITZER: She's referring Monday night to the president's State of the Union Address before a joint meeting of the Congress.

John Edwards is criticizing the stimulus package, saying it's an example of Washington's deserting working people. And Edwards suggest the plan is simply a political stimulus in this election year.

We'll have a lot more on the Democrats campaigning in South Carolina during the course of this day. That's coming up here in THE SITUATION ROOM.

In the Republican presidential contest, check out this P.R. coup for John McCain, only five days before the Florida primary next Tuesday. He's on the cover of the new edition of "TIME" magazine with a headline asking, "Can John McCain Keep Rising?" Florida voters will begin to answer that question, as I said, on Tuesday.

Let's go to our chief national correspondent, John King. He's joining us now from Boca Raton in Florida, watching this Republican contest.

It's pretty intense right now. It's pretty heated. There's a lot riding on what happens Tuesday in Florida.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: There sure is, Wolf. John McCain told reporters just a short time ago he will consider accepting the label "front-runner" if he can back up his win in South Carolina with a victory here in Florida.

And what about the stakes for Rudy Giuliani? He has spent more $30 million, yet he's 0-6 so far in the early Republican contest. He has bet everything on Florida. And at the moment, things look bleak.

(BEGIN VIDEOTAPE)

KING (voice over): A jog on the Ft. Lauderdale strip, and a pre- debate joke from a candidate who is struggling of late, but hasn't lost his sense of humors.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: What I hope is that all three -- or four of the others will make some statement that takes them out of the race, and I'll make one that puts me at the very front. And tonight we could settle it all.

KING: But also a sharp dig from Mike Huckabee at rival Mitt Romney's assertion that his business record proves he's best suited to steer a troubled economy.

HUCKABEE: If it's taking companies who are in serious trouble, buying them when they're in pain, selling off their assets, and then making a huge profit off of it, that's not something a lot of Americans can relate to except those who have lost their jobs.

KING: New polls show Rudy Giuliani running third or worse in Florida, despite more than 50 days of campaigning here.

Look again, is his urgent appeal.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: Some candidates are good on one thing. Some candidates are good on another thing. I'm the candidate that is good on all of these things -- national security and economic security.

KING: John McCain commands the spotlight at the moment and suggests he's the strongest Republican for the general election.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Incredibly, Senator Clinton decided that she wants to surrender, she wants to raise the white flag. I look forward to this debate with Senator Clinton about whether we've succeeded in Iraq or not.

KING: But this question was a reminder many conservatives are still skeptical.

UNIDENTIFIED MALE: Do you mind being called a moderate Republican?

MCCAIN: I kind of resent labels, but the fact is that I am a conservative. If you look at my fiscal record, my national security record, my social, I'm a proud conservative in the Ronald Reagan tradition.

(END VIDEOTAPE)

KING: Former Massachusetts governor, Mitt Romney, out of the public eye today, preparing for a debate among the Republican candidates here in Florida tonight. And Wolf, just a short time ago, this startling admission from Giuliani. Taking questions from reporters, he conceded that he thought by the time the race made it here to Florida, there would be fewer viable candidates in the race.

That strategy of investing here and waiting here was always risky. Never has it looked more risky -- Wolf.

BLITZER: And because it's interesting, at least in this one poll down there, he's actually third, as you point out, in Florida, behind McCain and Romney. It looks like McCain and Romney, in Florida, if you believe this one poll, it's a very heated battle in Florida among Republicans. And this is a closed state.

Only Republicans can actually vote. Independents can't register to vote on that day and join in the Republican primary.

Is that right?

KING: Absolutely right. And that is the critical question people have been asking all along, can John McCain win an election with only Republicans voting? So it is a very tough contest.

He's counting on military veterans here, stressing his fiscal conservatism. Romney just put up another new ad today, Wolf, where he stresses his conservative credentials. Right now it is a McCain/Romney race, and it is a very, very tight race.

As you know, Giuliani down in third. One of the polls here actually shows him fourth.

BLITZER: And because the two contests he won, in New Hampshire and in South Carolina, basically there were, what, a lot of Independents who could vote in those contests. And they clearly helped McCain.

Is that right?

KING: Especially in New Hampshire. The Independents came in. South Carolina is open as well. They don't have party registration in South Carolina.

So this is a test. This is the most diverse state the candidates have competed in, the most ideological, the most economically, the most geographically diverse. But only Republicans can vote in the Florida primary.

So, if John McCain can walk out of here with a victory, not only does he -- will he think of accepting, as you said today, the "front- runner" label, he will quiet, Wolf, many of the conservatives you've been hearing back in Washington who say they don't want him to be the party front-runner. He won't quiet all of them, but he'll significantly turn down the volume if he can prove, look, Republican voters want me as their front-runner, why don't you embrace me?

BLITZER: All right, John. Thanks very much.

John King on the scene in Boca Raton.

Let's go to Jack Cafferty. He's on the scene for us in New York with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The other thing about Florida, of course, is it's winner take all. There is no silver or bronze medal. You don't come in first, you get bubkas.

BLITZER: Right.

CAFFERTY: No delegates, nothing. You get a ticket out of town and go home, or go to the next place.

All right. "The Clintons have introduced the politics of personal destruction to the presidential race, and they bear responsibility for cheapening the tone of the contest." Those words in a "New York Daily News" editorial this morning. Tough stuff, considering that Hillary is a senator from New York.

"The New York Daily News" accuses Senator Clinton of distorting Barack Obama's record and airing a TV ad that twists an Obama statement "to the point of clear inaccuracy."

Here's some more.

"She is indulging in the partisan-style politics that Americans are desperate to believe behind and certainly don't want in a president. And she's either giving free rein to, or failing to control, her husband. Neither possibility bodes well."

The same sentiments beginning to appear within the Democratic Party. The concern is this biter campaign could end up hurting whoever the nominee is.

If it's Obama, he could come out of this personally battered and politically weakened. And if it's Clinton, she risks losing black support. Black voters might blame her for Obama's loss and simply not bother to show up to vote come November.

So here's the question. Will Hillary Clinton's personal attacks on Barack Obama ultimately hurt her and her party?

Go to cnn.com/caffertyfile, where you can post a comment on my new blog.

New York's hometown newspaper laying it on the line. They don't like the way Hillary is conducting herself.

BLITZER: Yes. All right. Well, we'll see what impact that has on Super Tuesday. There's a primary in New York state that actually could have some significance in this contest.

Thanks, Jack, very much.

Hillary Clinton and Barack Obama, as Jack just noted, have been going at it tooth and nail. Is there any sign, though, of a real truce?

We're on the trail with the dueling Democrats in South Carolina.

And the other Clinton -- not Bill Clinton -- is she having an impact on the campaign trail? We're going to tell you what she's been doing and saying. That would be Chelsea Clinton, the daughter.

Also ahead, the inside story on the rise and fall of Fred Thompson's campaign. Strategist Rich Galen, he's here in our "Strategy Session."

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

(COMMERCIAL BREAK)

BLITZER: Who's afraid of Bill and Hillary Clinton? Apparently not Barack Obama. He's blasting back at what he calls distortions from both the Clintons.

Let's go to Suzanne Malveaux. She's watching the story for us in South Carolina.

Obama is using some colorful language out there right now, and he's being very forceful. Tell us what's going on.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, you know, we keep focusing on the issues. The voters are focusing on the issues. And in doing so, we have discovered a new issue amid all the bickering between Obama and Clinton.

(BEGIN VIDEOTAPE)

OBAMA: Don't let them bamboozle you with these dirty tricks.

MALVEAUX (voice over): The tricks he's talking about, false rumors circulating over the Internet that's he's a Muslim who refuses to pledge allegiance to the American flag. Misstatements the Clinton campaign says it has nothing to do with.

Their battle is over this...

ANNOUNCER: Listen to Barack Obama last week talking about Republicans.

MALVEAUX: ... dueling radio ads over whether Obama is giving praise to the Republican Party, not a good thing two days before the Democratic primary in South Carolina.

Obama countered today, releasing an ad of his own.

ANNOUNCER: Hillary Clinton, she'll say anything and change nothing.

MALVEAUX: While Obama still talks about issues on the trail, praising the president's economic stimulus package and assessing the turmoil in Kenya, it's become clear another issue has emerged front and center -- character.

WILLIAM JEFFERSON CLINTON, FMR. PRESIDENT OF THE UNITED STATES: He put out a hit job on me at the same time he called her the senator from Punjab. I never said a word.

MALVEAUX: The former president has plenty of words for Obama now, accusing him of playing the race card to win. A charge Obama denies.

OBAMA: I have consistently run my campaign but, more importantly, conducted my job as a public official based on the idea that we're all in it together.

MALVEAUX: For his part, Obama accuses both Clintons of lying about his record.

(END VIDEOTAPE) MALVEAUX: And Wolf, to back up his point, the Obama campaign pointed us in the direction of a blog of President Clinton's former labor secretary, Robert Reich. In it he says -- and I'm quoting here -- "Bill Clinton's ill-tempered and ill-founded attacks on Barack Obama are doing no credit to the former president, his legacy, or his wife's campaign. It's demeaning for a former president to say things that are patently untrue..."

Now, Clinton's ad recording Obama's comments about the Republican Party has since been put aside, taken down. But the Clinton campaign says it doesn't have anything to do with any kind of criticism or alleged untruths about the ad. Rather, they say they are cycling in a new ad for Clinton, and that, of course, is going to be her closer for South Carolina -- Wolf.

BLITZER: Suzanne Malveaux, thanks very much.

A new Web ad is John Edwards' latest attempt for a win in South Carolina, South Carolina's Democratic primary.

Let's go to our Internet reporter, Abbi Tatton. She's watching this story for us.

How are they trying to appeal to voters with this new video?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, John Edwards, of course, was born in South Carolina. And if there's any voter out there that doesn't already know that, the campaign is really trying to reach out to them with the last couple of days to go.

(BEGIN VIDEO CLIP)

ANNOUNCER: Born to humble beginning in South Carolina, he spent his life fighting against the rich and powerful to help the kind of regular people he grew up with.

UNIDENTIFIED MALE: (INAUDIBLE), John.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: Oh, I will.

ANNOUNCER: Now...

(END VIDEO CLIP)

TATTON: This is a movie-style trailer that they are putting out on the Web, but the campaign is asking for donations so they can get it on the air in South Carolina in the last 24 hours.

The name of it is "Native Son." And that follows a theme to the tours that he's been on in the state called "Bringing it Home." And the latest is "Back Roads, Back Home."

He's been campaigning in small towns that have been hit with economic worries, manufacturing job losses, and emphasizing all the while the last couple of days before the primary that his biography is very much like some of the people that are in the state -- Wolf. BLITZER: Thanks, Abbi, very much.

Republicans and Democrats right here in Washington are patting themselves on the back. But will voters be impressed with their bipartisan plan to try to jump-start the economy?

We're going to look at the possible political impact. That's coming up in our "Strategy Session."

Coming up next, though, a stunning ruling from California's high court on medical marijuana.

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

(COMMERCIAL BREAK)

(NEWSBREAK)

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

Happening now, Europe is beefing up security. An al Qaeda cell is suspected of planning suicide attacks on Barcelona's transportation system. Has the terror network rearmed to its pre-9/11 level?

We're going to go and check that story out. That's coming up.

Also, you've heard about blue collar. What about green collar jobs? And why are presidential candidates saying they could help save the troubled economy?

And it pits what Clinton wants against what Obama wants -- Bill Clinton and Michelle Obama, that is. How are they each responding to attacks on their spouses?

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

We're just getting this story in. It's now being confirmed to CNN that Dennis Kucinich is about to drop out -- has already decided to drop out of this presidential race. A spokesman for Kucinich's Cleveland congressional office confirms to CNN he's dropping out.

He told the Cleveland "Plain Dealer" in an interview that's just been put up on the Cleveland "Plain Dealer" Web site: "I want to continue to serve in Congress," but he's quitting the race right now. A formal announcement supposedly will be made on Friday.

Dennis Kucinich, the latest candidate now to drop out of the presidential contest.

It's not uncommon in presidential politics the candidate hits hard to get your attention, then quickly pulls back. That's what Hillary Clinton's campaign is doing right now, days before South Carolina's Democratic primary.

Our senior political correspondent, Candy Crowley, is joining us now from Greenville with more -- Candy. CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Wolf, Wal- Mart, slumlords, and Ronald Reagan. It has been testy on the South Carolina campaign trail, but, for a while today, it seemed like things were cooling down.

(BEGIN VIDEOTAPE)

(CHEERING AND APPLAUSE)

CROWLEY (voice-over): She's back. After two days working February 5 states, Hillary Clinton returned to South Carolina. Her campaign dropped a controversial ad, and her husband conceded to a concerned voter that maybe the Clinton/Obama food fight ought to end.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: That's pretty good advice.

(LAUGHTER)

B. CLINTON: That's probably good advice for me, too. When I was running, I didn't give a rip what anybody said about me. It's weird. But, if you love somebody, you think they would be good -- it's harder.

CROWLEY: Perhaps the mood is changing, as the South Carolina campaign moves into the final days, the traditional time to return to message.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: It's a time we had a president who believes that leading an economic comeback is a full-time, hands-on job, who renews our commitment to a strong and prosperous middle class.

CROWLEY: As the candidate revisited her economic stimulus plan, a Clinton radio ad linking Obama with Republican policies went off the air.

(BEGIN AUDIO CLIP, CLINTON CAMPAIGN AD)

NARRATOR: Aren't those the ideas that got us into the economic mess we're in today?

(END AUDIO CLIP)

CROWLEY: It was a quick hit, only on the radio for 24 hours. But the ads got lots of headlines. Mission accomplished.

Still, campaigns never really chill out, as Bill Clinton was so famously advised to do recently. There will be some jabbing. It's just a little more artful.

H. CLINTON: I'm not a show horse. I'm a workhorse.

(LAUGHTER)

CROWLEY: Hillary Clinton returns to New York tonight for a couple of fund-raisers, competing in the more than 20 contests. February 5 is not a cheap proposition. But never fear. Super surrogate is here on the ground in South Carolina showing some signs of wear and tear.

B. CLINTON: I feel like a little scrambled eggs this morning. But I will try to -- to make sense of what I came to do.

CROWLEY: Two more days until the South Carolina primary.

(END VIDEOTAPE)

CROWLEY: Still, before we get carried away with the kinder, mellower campaign trail, it should be noted that the Clinton campaign held a conference call this afternoon to criticize Barack Obama for ignoring the accomplishments of the Bill Clinton era -- Wolf.

BLITZER: Candy Crowley, thanks very much for that.

Hillary Clinton could have been -- could have the best set of political weapons in this race. There's not only one, but there's actually three Clintons actively trying to get her to the White House.

Let's go to Jim Acosta. He's in New York. He's watching this story, specifically daughter Chelsea's new role that is emerging -- Jim.

JIM ACOSTA, CNN CORRESPONDENT: That's right, Wolf.

Just recently, Hillary Clinton said she had found her own voice. Now, after carefully guarding her own privacy for years, it seems Chelsea Clinton may have done the same.

(BEGIN VIDEOTAPE)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I can't tell who I'm running against sometimes.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: You know -- well...

(APPLAUSE)

ACOSTA (voice-over): If Barack Obama feels it's two against one, get ready for three.

UNIDENTIFIED FEMALE: Hillary -- I mean Chelsea.

(LAUGHTER)

ACOSTA: When Chelsea Clinton took questions from students at Atlanta's Spelman College, she suggested the move was made by her mother's campaign to slice away at Obama's support among younger voters.

CHELSEA CLINTON, DAUGHTER OF BILL AND HILLARY CLINTON: I'm actually here today, to be honest, partly in reaction to that, in that I believe my mom does have the most responsive policies to people in my generation, but also people who are your age.

ACOSTA: The Clinton campaign is well aware of polling data indicating Obama's considerable youth advantage.

UNIDENTIFIED FEMALE: Chelsea is cool. She's only a couple years older than I am, so...

ACOSTA: To counter that, the 27-year-old former first daughter has already appeared on her mother's Web site, targeting the fresh- based electorate. Now the campaign is going one step further, offering Chelsea in her own words.

C. CLINTON: I think it's the most important election of my lifetime.

ACOSTA: While she's come a long way since the '92 campaign, Chelsea remains notoriously media-shy, just recently telling a 9-year- old school reporter she doesn't grant interviews.

SYDNEY RIECKHOFF, SCHOLASTIC NEWS: She said, "I'm really sorry, but I can't do questions from the press."

ACOSTA: Even at the Spelman event, she declined to stand in front of the reporters' microphones. The Clinton campaign tells CNN Chelsea is still not doing interviews, but some political observers wonder how long that will last.

LARRY SABATO, DIRECTOR, UNIVERSITY OF VIRGINIA CENTER FOR POLITICS: The next grade school reporter who approaches Chelsea Clinton is likely to get an interview. She probably won't go on "Oprah," but, beyond that, I think we may see her on some of these talk shows.

(END VIDEOTAPE)

ACOSTA: For years, the Clintons have argued their daughter is off limits to reporters, but some in the media may start to question, with the new, more outspoken Chelsea, whether that rule applies anymore -- Wolf.

BLITZER: And she's 27 years old right now, too.

All right, thanks very much for that, Jim Acosta.

This programming note: You will want to watch the candidates battle in California in our upcoming debates. They face off just before Super Tuesday. The Republican presidential candidates meet at the Reagan Library on January 30. Anderson Cooper will moderate. The Democratic presidential candidates the next day the Kodak Theatre in Los Angeles, I will moderate that one, both of these debates back to back, 8:00 p.m. Eastern. That's the start time right here on CNN.

Let's get back to our lead story right now.

House leaders in the White House have reached a tentative deal on an economic stimulus package. Both sides almost seem surprised that they have actually been able to get along and reach this agreement.

Brianna Keilar is up on Capitol Hill. They're watching this story -- she's watching the story for us.

All right, so, tell us how this happened. What's come over Congress?

BRIANNA KEILAR, CNN CORRESPONDENT: Well, Wolf, bipartisanship, if you can believe it. At least it appears to be that at this point.

Under this House agreement for an economic stimulus package, 117 million American families would receive tax rebates. However, this is by no means a done deal. It still has to go through the Senate. And Senate Democrats are saying they are a lot of things that are not in this agreement that they would like to see in final legislation.

Of course, this was a major obstacle that was cleared today, with the House leaders coming to an agreement with the Bush administration. And House Speaker Nancy Pelosi did celebrate that achievement.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: It is there to strengthen the middle class, to create jobs, and to turn this economy around. And that is what is important about it. It is timely. It is targeted. And it is temporary. And it was done in record time since our conversation with the president, and, again, in a bipartisan way.

(END VIDEO CLIP)

KEILAR: But there are a growing number of Democrats who say they want things like unemployment benefits to be extended as part of this economic stimulus package. They want things like food stamps, Medicaid aid to states.

Now, it is, though, a delicate dance that these Senate Democrats are doing. They don't want to appear to be slowing down this process at all. So, in one breath today, we heard Senator Patty Murray say that she was delighted by what the House was considering. But, in the next, she said she wanted to see a summer jobs program for young Americans.

At this point, Senate Majority Leader Harry Reid still optimistic that there will be legislation on the president's desk by mid-February -- Wolf.

BLITZER: Brianna, thanks very much.

A lot more on this story coming up.

Florida voters have a message for the Republican presidential candidates. If they want their votes, they would be wise to talk about one issue Floridians truly care about, and it involves something that is through the roof.

Also, how did Fred Thompson's presidential campaign fizzle? Why did it fizzle? I will ask one of his top strategists about mistakes, lesson learned the remaining might want to learn themselves.

And CNN's Election Express on the road right now, possibly headed to a place near you. Our Ali Velshi is breaking down what the economic stimulus deal could mean for all of us.

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

(COMMERCIAL BREAK)

BLITZER: Just want to reiterate what we reported some moments ago. Dennis Kucinich has now decided to drop out of this presidential contest, making a statement. It's already up on the "Cleveland Plain Dealer" Web site. He says he wants to stay in Congress, though, also says he doesn't plan on endorsing any of his Democratic rivals -- Dennis Kucinich out -- out -- of this presidential race.

In Florida right now, many homeowners in the state have been hit very hard over the years by hurricanes, as we all know. And that's becoming a federal issue in the Republican presidential contest, the primary there on Tuesday.

Let's go to Dana Bash. She's in Boca Raton. She's watching this story for us.

I guess it's no coincidence that at least one of the candidates making a big issue out of this specific matter that's of deep concern to Floridians.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: No coincidence at all, Wolf.

You remember, during the Michigan primary, Mitt Romney successfully seized on the plight of the autoworkers. Well, it seems that Rudy Giuliani is trying to take a page out of that "all politics is local" playbook. He's focusing on sky-high insurance premiums. That is really hurting Florida voters. But the question for Giuliani is whether it's too little, too late.

(BEGIN VIDEOTAPE)

BASH (voice-over): Stroll with Juan Barceras through his middle- class South Florida neighborhood and hear typical stories like this.

JUAN BARCERAS, UNDECIDED REPUBLICAN: There's actually a neighbor that I know that used to live a couple blocks down. She actually moved to North Carolina. And, again, it's because of the cost of living.

BASH: The cost of living has skyrocketed for Floridians like Barceras because of through-the-roof home insurance premiums.

BARCERAS: Back in the year 2000, I was paying about $2,000 a year. And that included flood and the wind storm, casualty, everything included. Now I'm paying upwards of $8,000.

BASH: In fact, the Florida Insurance Commission says hurricane- weary insurance companies have more than tripled average premiums in the last seven years.

RUDOLPH GIULIANI (R), PRESIDENTIAL CANDIDATE: People throughout Florida have been telling me how difficult it is to get insurance, how expensive it is.

BASH: Suddenly, the GOP candidate with the most riding on Florida's primary is calling for a national catastrophic insurance fund to help.

GIULIANI: The federal government would be a backstop, so that people could get insurance.

BASH: Mitt Romney and John McCain are two Republicans lukewarm to the federal government stepping in. And Giuliani is now trying to capitalize with this new ad.

(BEGIN VIDEO CLIP, GIULIANI CAMPAIGN AD)

NARRATOR: Only one Republican candidate has proven experience dealing with disaster.

(END VIDEO CLIP)

BASH: But undecided Republican voters like Juan Barceras are skeptical, calls Giuliani's new pitch shallow.

BARCERAS: This problem didn't just arise this week or last month. This has been an ongoing for years here. And he really hasn't been talking about it.

BASH: He's openly frustrated, saying no candidate is really addressing his economic concerns.

BARCERAS: But I still don't know who I'm going to vote for. I might just go ahead and vote for Ron Paul.

BASH (on camera): How come?

BARCERAS: You know what? Might as well.

BASH: Protest vote?

BARCERAS: Probably.

(END VIDEOTAPE)

BASH: Now, that would certainly be a big blow to Rudy Giuliani, but it speaks to a big issue for him right now here, Wolf. And that is the pool of undecided voters, according to pollsters, is actually very, very small in the Republican race right now. So, it makes it a lot harder for somebody as well known who has been here as long he has, like Rudy Giuliani, to turn his slide in the polls around -- Wolf.

BLITZER: Dana Bash in Boca Raton, Florida, thanks very much. This helps explain why home insurance prices have skyrocketed in Florida. Eight hurricanes struck the United States in 2004 and 2005. Six of them hit Florida. And they were among the most expensive disasters ever.

According to the Florida Insurance Council, insurance companies paid a whopping 35 billion -- billion -- dollars to cover claims associated with those hurricanes, including the monster storm Katrina. That's five times more than Florida spends on education every year and eight times more than it spends on health for the poor and elderly.

A rare moment of peace here in Washington between the Congress and the White House.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This agreement was the result of intensive discussions and many phone calls, late- night meetings and the kind of cooperation that some predicted was not possible here in Washington.

(END VIDEO CLIP)

BLITZER: Leaders from both parties are praising their rivals, but how long can this last? We will talk about it in our "Strategy Session."

Also, what really happened to Fred Thompson? We're going to get the full story from one of his top campaign strategists right here in our own "Strategy Session." That's coming up next.

(COMMERCIAL BREAK)

BLITZER: In today's "Strategy Session": House leaders and the White House have worked out a plan that could give millions of Americans a tax rebate. But how will it play with Democratic and Republican lawmakers? What's the political fallout from all of this?

Joining us now, our CNN political analyst the Democratic strategist Donna Brazile, and Republican strategist Rich Galen.

Rich, good to have you back.

RICH GALEN, REPUBLICAN STRATEGIST: Thank you.

BLITZER: I know you were working for Fred Thompson for the last several months. We will talk about that shortly.

Let's get your reaction, first of all. If there's an economic stimulus package, it gets through the House and the Senate, people start getting in June, let's say, $300, $600, $1,200, those kinds of checks, and the economy does respond, how does that impact the election in November?

DONNA BRAZILE, CNN POLITICAL ANALYST: Well, look, Democrats will continue to talk about the -- the stimulus package, because, of course, some Democrats believe that it will not go far enough in helping the middle class solve some of the crises that they're facing.

I think Speaker Pelosi and Senator Reid have indicated that they will get this over the Congress over the next five to seven days. And, hopefully, the IRS will have enough people on staff to get these checks cut right -- cut right away.

BLITZER: But you there there's going to be political fallout, assuming it works as advertised?

GALEN: Well, by the time we get that far down, we will be down to one candidate per side. So, my guess is that they will tinker around the edges.

But the big thing I think, Donna, about the package, as it sounds like it is, is not only the individual checks, Wolf, but also the fact that small businesses can write down or expense investments, rather than having to write them down over several years. That, in and of itself, will put a lot of money into the economy.

BLITZER: A lot of Democrats weren't happy that they had to give up on extending unemployment insurance and increasing food stamp benefits for the very poor. That went to the sidelines.

BRAZILE: But we know the president is about to put out his budget for fiscal year 2009. Democrats will have another opportunity to extend those benefits and provide even more benefits to stimulate the economy.

GALEN: Well, there's no -- I mean, unemployment is not historically high at all. It's 5 percent or 5.1. Some pockets that it is much higher. So, it's not like unemployment has spiked to 7.5, 7.7, where you have got a lot of people that need to be handled. And I think Republicans are being cautiously...

BLITZER: It shows, both sides of Pennsylvania Avenue, both ends of Pennsylvania Avenue, they're under enormous pressure to show they can get something done for the American people. I think that's the bottom line.

BRAZILE: I think the president's been looking for a way to extend an olive branch to Reid and Pelosi. And perhaps this is the beginning of other deals that can be cut.

Of course, the children health program is out there, No Child Left Behind. So, there are many opportunities for both sides to come together before we get into the real presidential season.

BLITZER: Should we hold our breath? Or what do you think?

GALEN: No. This is a true big train coming down Pennsylvania Avenue. Nobody is going to get in the way of this. But, after this train passes by, I think we will be back to bad businesses as usual.

BLITZER: All right.

You just came off the campaign trail yourself, Rich. You spent some time trying to get Fred Thompson elected president of the United States. Didn't exactly work out. Give us some of the lessons you learned. What happened?

GALEN: Well, I think, in Fred's case, I think there are a couple of pieces, one, that -- not that he started too late, but that, in starting around Labor Day, without really any kind of warmup, it was a little bit like missing spring training. Pitchers and catchers report in three weeks.

And, so, he didn't really -- he wasn't really in mid-season form until late season. And I think everybody who saw him, especially the reporters of CNN...

(CROSSTALK)

BLITZER: Because he came in with such high expectations.

GALEN: Yes.

BLITZER: The new Ronald Reagan. He was going to walk away with it.

GALEN: Yes, we didn't do a good job, as a campaign staff, in managing those expectations. And that's -- that's part of what you have got to do, similar to what Donna and I were discussing a little bit. Obama didn't manage expectations in Nevada. He actually won more delegates, but the campaign didn't manage those well.

That's a big part of it. Part of it is dealing with the press. It's a little bit like earnings week. If you earn $1.62, your company, and the Street thought you should have earned $1.64, you had a bad quarter, even though you made money.

BLITZER: But was he fully committed? Was his heart in this? Because there was a lot of speculation, as you well know, he was sort of lazy, he wasn't all that interested. Was he really on board from the beginning?

GALEN: Oh, yes, he -- he absolutely was.

But the difference between Fred Thompson and some of these other folks is that he wasn't absolutely dedicated for his whole life to be president of the United States. He thought he could have been president. If he would have been, I think he would have been a great president. But it wasn't the one point in his life that, if he didn't get there, it was going to change his life for the worse.

BLITZER: Dennis Kucinich just announced he's dropping out. He's not going to be a presidential candidate again.

GALEN: Who is he going to endorse?

BLITZER: He's not going to endorse anyone, he says, at least for the time being.

What do you think? BRAZILE: Well, first of all, he's probably the most consistent progressive candidate I have ever seen run for president, outside of Jesse Jackson. He had a terrific run both in 2004, 2008. He may not endorse, but everyone will remember that Dennis Kucinich, when it comes to progressive issues, progressive values, he was the real thing.

BLITZER: He certainly had a following out there. And they were passionate. And they really wanted to help him. Unfortunately, for him, it wasn't really translating into fund-raising or into poll numbers.

BRAZILE: The good news, he has Hillary Clinton, John Edwards, and Barack Obama that will carry on his message of ending the war in Iraq and providing more support for the middle class.

BLITZER: Donna Brazile, Rich Galen.

Rich, good to have you back here.

GALEN: Thank you, Wolf.

BLITZER: Be a frequent guest.

The man who played Rocky is flexing a political endorsement. Who is the actor Sylvester Stallone now supporting? And just wait until you hear how the candidate is reacting.

Also, some wonder if Bill Clinton has crossed the line from simply defending his wife into becoming a prime attacker. We're taking a closer look at whether his current campaign role is actually appropriate for a former president of the United States.

And how is another political spouse responding to all the attacks? Michelle Obama, what does she think of what is being said about her husband?

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

(COMMERCIAL BREAK)

BLITZER: On our Political Ticker this Thursday: John McCain has some new muscle behind his presidential campaign.

In a TV interview, "Rocky" start Sylvester Stallone says he likes McCain a lot. When McCain was told he has the support of the actor, the senator joked, he would go to Philadelphia, run up those steps, Rocky-style.

Two suspects were caught stealing computer equipment from Mitt Romney's presidential campaign headquarters in Boston today. It's the second break-in there in four months. Campaign officials say there's no evidence the theft was politically motivated. The suspects pleaded not guilty.

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

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

Hi, Jack.

CAFFERTY: Why would you steal stuff off computers in a campaign office if it wasn't for political purposes?

BLITZER: They stole equipment. Maybe they just wanted to steal the equipment.

CAFFERTY: Oh.

BLITZER: OK.

CAFFERTY: And I guess breaking into a Circuit City never occurred -- never mind.

The question: Will Hillary Clinton's attacks on Barack Obama ultimately hurt her and her party?

A lot of mail.

Cheryl writes: "Bill Clinton's comments and adversarial attitude are hurting Hillary's campaign. I am a single, white, middle-aged female who lives paycheck to paycheck, and who is a lifelong registered independent, and I will not vote for the Clinton machine. It's truly time for serious change."

Jeff in Connecticut: "Hillary's poorly-disguised disdain for her fellow citizens and her megalomania will most definitely be her downfall. Barack and everyone else should just ignore her."

Ron writes: "Poor Obama. If Hillary or Bill opens their mouth to breathe, you and the other media pundits are all over them. In the media eyes, Obama never makes a mistake or a misstatement. He must be the most truthful person on earth. I hope Hillary and Bill continue to talk about him, because you and others in the media sure won't."

John writes: "At this point, I think yes. It's ticked me off enough that, if the nominees are Clinton and McCain, I will switch party allegiance and vote for him."

Michael in Atlanta: "The Clintons got my vote twice. After the untruthful attacks against Senator Barack Obama, it's over. I have filed a complaint" -- pardon me -- "I have filed a complaint with the DNC. This is not what we want in the next president, not even close. Bill Clinton has closed the deal for her and our party. I think, if Senator Barack Obama is not given the respect due, then a third party will be in order."

And Greg writes from Pennsylvania: "The Wicked Witch of the West has ridden in on her broomstick and threatens to steal the Democratic Party's ruby slippers. If she doesn't heed the warning to back off, she will melt, along with all her kingdom. And then the wizard, Bush, will anoint the Scarecrow, Tin Man or Cowardly Lion to be the next king, AKA McCain, Romney or Huckabee" -- Wolf.

BLITZER: Very creative. Thanks very much, Jack, for that.

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

Happening now: putting tax money back in your pocket, the White House and Congress teaming up right now to treat an ailing economy. We're going to find out if the presidential candidates think it's the right medicine.

In a campaign that gets nastier by the day, both Clintons are battling Barack Obama. The spouse takes a kindler, gentler approach. But could Michelle Obama soon jump into the fray?

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