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John Edwards Suspends Campaign; Giuliani Exit Expected; Interview With Senator Claire McCaskill

Aired January 30, 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, campaign casualties. John Edwards is suspending his presidential bid. Will he endorse rival Barack Obama or Hillary Clinton? And who might Edwards' own supporters now support?
Rudy Giuliani also expected to bow out after his big Florida gamble simply went bust. We're told he's made up us his mind who he will endorse.

And the last candidates standing hope to force more rivals off the campaign road. They'll face off in our Reagan Library debate just hours from now here in California.

I'm Wolf Blitzer at the Kodak Theatre in Los Angeles, and you're in THE SITUATION ROOM.

There are big surprises in the presidential race, and who knows what sparks could fly only a few hours from now? We're here in Los Angeles at the Kodak Theatre, not far from the scene of our Republican presidential debate tonight over at the Reagan Library. But there's a major development under way right now on the Democratic side.

Earlier today, John Edwards suspended his presidential campaign in the same place where he started it. That would be in New Orleans. It's a dramatic about-face from what he said just after South Carolina's primary.

(BEGIN VIDEO CLIP)

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: If you're one of the millions of Americans who have yet to cast your vote in this Democratic process, beginning on February 5th and moving beyond, your voice will be heard, and we will be there with you every single step of the way! Join us in this movement!

(END VIDEO CLIP)

BLITZER: But after failing to win any of the early contests, Edward apparently faced political reality.

(BEGIN VIDEO CLIP)

EDWARDS: It is appropriate that I come here today. It's time for me to step aside so that history can -- so that -- so that history can blaze its path. We do not know who will take the final steps to 1600 Pennsylvania Avenue, but what we do know is that our Democratic Party will make history. We will be strong. We will be unified. And with our convictions and a little backbone, we will take back the White House in November and we'll create hope and opportunity for this country.

(END VIDEO CLIP)

BLITZER: CNN's Suzanne Malveaux is in New Orleans right now.

Many people want to know, Suzanne, if Senator Edwards will support one of his rivals. I know you had a chance to speak with him earlier today.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, you know, he was the one who spoke to the middle class, he talked about two Americas, the haves and the have nots. Clearly, it was not a message that garnered enough support, but he certainly shaped the debate.

I had a chance to talk with him and catch up with him, asked him why he dropped out of the race and what's looking ahead.

(BEGIN VIDEOTAPE)

EDWARDS: Well, I thought it was the right thing to do. I mean, my campaign has always been about giving voice to people who didn't have a voice. I'm proud of having done that, proud of what we've done. I think we've pushed issues that otherwise would not have been prominent in the campaign. And I thought we had come to this point, this historical point where it's time for me to step aside, as I said in the speech, and let America make history and let my party make history.

MALVEAUX: Will you endorse a candidate?

EDWARDS: I haven't made that decision yet. I've told both Senator Obama and Senator Clinton that I'd be happy to spend time with them to talk to them about what they intend to do for America, what they're committed to doing, and then I would make a decision.

MALVEAUX: What do they need to do for your endorsement, to win your support?

EDWARDS: Well, I don't want to say that now. I want to have a very serious, very substantive conversation with them. I know them both. I've been competing with them very hard for a year now. They're both very good candidates, but this is a conversation that needs to take place in private. This cause is the cause of my life, and I need to be satisfied about, if I'm going to endorse, which one will be committed to the cause?

MALVEAUX: Tell us how your family is doing. How is Elizabeth and her health. And was that a part of the decision at all, or was it purely a political one?

EDWARDS: Well, your family's always part of the decision, and any presidential campaign's hard on a family. But Elizabeth's health is actually very good, and she feels good, her spirits are good. My kids are doing well. I just thought we'd reached the place that this was the right thing to do for my country.

MALVEAUX: And what will you do next? What will you do next?

EDWARDS: I'm still figuring that out.

(END VIDEOTAPE)

MALVEAUX: So, Wolf, he says he's still figuring it out. Obviously, the question, would he accept becoming a running mate, potentially, for either Barack Obama or Hillary Clinton? Not likely in the cards.

Basically, aides, close friends, saying, been there, done that. He is going to head home with his wife and family and try to figure all this out. But clearly, still a powerful player as long as he has the possibility that he could endorse either one of his Democratic opponents -- Wolf.

BLITZER: We wish him success down the road, whichever path he takes.

Thanks very much for that. Suzanne Malveaux in New Orleans.

Meanwhile, gauging what impact Senator Edwards' exit might have on the race. It will surely be a topic in our Democratic presidential debate, the one I'll be moderating tomorrow night right here at the Kodak Theatre. A two-person debate -- Hillary Clinton and Barack Obama. That will start tomorrow night, 8:00 p.m. Eastern.

Don't forget, tonight, the Republican presidential debate that Anderson Cooper is moderating over at the Reagan Library. That also starts at 8:00 p.m. Eastern later tonight.

Meanwhile, we're awaiting another exit, another exit from the presidential campaign trail. After gambling on a Florida win and losing, Rudy Giuliani now expected to bow out.

Listen to him speaking in the past tense -- in the past tense -- after losing last night.

(BEGIN VIDEO CLIP)

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: I'm proud that we chose to stay positive and to run a campaign of ideas. In an era of personal attacks, negative ads and cynical spin, we ran a campaign that was uplifting.

(END VIDEO CLIP)

BLITZER: Republican sources now tell CNN Giuliani will endorse John McCain, who wasted no time after his win praising Rudy Giuliani.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: And I want to thank my dear friend, my dear friend Rudy Giuliani...

(APPLAUSE)

MCCAIN: ... who invested -- who invested his heart and soul in this primary, and who conducted himself with all the qualities of the exceptional American leader he truly is. Thank you, Rudy.

(END VIDEO CLIP)

BLITZER: CNN's Dana Bash is over at tonight's debate site, over at the Reagan Library.

Dana, what might Giuliani bring to the McCain campaign?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, first let's just start what we're going to see here in less than two hours, Wolf. We're going to see incredible symbolism when you're talking about the Republican race. Rudy Giuliani here at the Reagan Library endorsing John McCain, and this is at a time when every candidate is trying to sort of hold on to the mantle of Ronald Reagan, particularly a candidate like John McCain, who is trying to make clear to conservatives that he really is a true conservative.

On the issue, of course, it's the issue of security. That will help John McCain. There's no question about that. And just in terms of the tactics, when you look at the map and look at what's next, Wolf, as you know, you have 21 states on Super Tuesday. A lot of these states Rudy Giuliani was hoping to do well in. He certainly wasn't doing as well as he thought, but he is scoring pretty big in states like New Jersey and New York and some of the other northeastern states.

That could be very, very critical. Not just because his name will no longer be on the ballot, but because the people who were behind him will now be helping John McCain. Also, if you look at an important state like Missouri, Rudy Giuliani had a key senator locked up there, Kit Bond. That could now go to help John McCain.

So we talked to John McCain's adviser, as you talk to pretty much a lot of Republicans around Washington and around the country. Then say this is a huge, huge boost for John McCain -- Wolf.

BLITZER: Well, what about the Romney camp, Dana? What are they saying?

BASH: Well, what they say is that this is exactly what they were warning Republicans about, conservatives about, that John McCain is really not that conservative. That this plays right to the fact that he's more moderate than people think, because of the fact that Rudy Giuliani is more moderate on social issues like abortion and like gay rights. That is their mantra, because what the Romney campaign is trying to do right now is make him, make Mitt Romney, the conservative alternative to John McCain.

The problem for Mitt Romney -- and you talk to Romney's staffers privately, they admit that -- is that it's going to be hard for him, because the conservative vote will be siphoned off from him a bit, because, remember, Mike Huckabee, who appeals to Christian conservatives, he's still in the race. But that sort of speaks to the bigger picture problem for John McCain still, Wolf, because he understands that he has a problem as he goes towards -- towards getting the nomination, that he has to try to unify the party. And he talked about that on his plane on his way here today.

(BEGIN VIDEO CLIP)

MCCAIN: We've got to really have a united party. I mean, we all know that the party has had great challenges. I see the polls that show that the Democratic Party has more favorabilities on issues. We have got a lot of work to do (INAUDIBLE).

(END VIDEO CLIP)

BASH: So there you see John McCain already understanding today what his challenge is going to be as he moves ahead. But right now, when you look forward to the next couple of hours, it's going to be quite a scene here, as you can imagine, with the man who everybody thought was riding so high not too long ago, Rudy Giuliani, bowing out and endorsing John McCain -- Wolf.

BLITZER: All right, Dana. Thanks very much.

Dana's over at the Reagan Library.

With these changes, the Republican presidential contest is now very different. With Mitt Romney's second place finish in the Florida primary, you can see him step up attacks somewhat on John McCain.

As for Mike Huckabee, he says a Giuliani exit will not affect his standing in the field. Huckabee came in fourth in Florida's primary. Both of them -- all of them will be part of our Reagan Library debate. That's coming up only hours from now. Anderson Cooper will be moderating from Simi Valley, out here in California. The debate begins 8:00 p.m. Eastern, only here on CNN.

And I'll be hosting our Democratic presidential debate tomorrow night, 8:00 p.m. Eastern, over here at the Kodak Theatre in Los Angeles.

Dana Bash and Suzanne Malveaux, as all of you know, are part of the Emmy Award-winning best political team on television. And remember, for the latest political news any time, you can always check out our Political Ticker at CNNPolitics.com.

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

Good seeing you yesterday, Jack. I'm here in L.A. today. It's amazing, these airplanes. They get you coast to coast very quickly.

JACK CAFFERTY, CNN ANCHOR: You're a tough guy to keep up with, Wolf. The two apparent front-runners now are Hillary Clinton and John McCain. And if nothing changes, this is the choice we'll have for president of the United States.

Hillary's part of the monopoly on the White House. Between the Clintons and the Bushes, it goes back 28 years. Her husband is a two- term president. She's a former first lady, current member of the Senate. She's a poster child for the Washington establishment.

McCain has been a part of Washington for 26 years. A two-term congressman, he's been a senator since 1986. He's been running for president for the last eight years, in case you hadn't noticed. Another Washington insider.

Ask anyone what they think about our government these days, and most people will be only too happy to tell you. They are not happy. I get thousands of letters every week from people who are angry about health care and immigration and the war and the economy. You name it. The consensus is our government is broken and this country is in trouble.

The problems they complain about exist solely because of the actions of the Democrats and Republicans in Washington, D.C. The political establishment, if you will, that's in bed with the lobbyists and the corporations and the special interests and, quite frankly, couldn't care less about you, except now, at election time, when they need you.

They travel the country, they spew the same tired rhetoric we have heard for years. And like lemmings we appear now to be on the brink of continuing to send one of them to the White House.

Somebody said once the definition of insanity is doing the same thing over and over again and expecting a different result. Well, here's the question: When it comes right down to it, why won't we really vote to change things?

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

Very discouraging -- Wolf.

BLITZER: I know that that's how you feel, Jack. We'll see what our viewers feel as well. That's coming up in "The Cafferty File."

Thank you.

So, might John Edwards' decision to bow out of this bid help Barack Obama? I'll ask a key Obama supporter, Senator Claire McCaskill of Missouri. She's standing by live.

Also, it involves as plan to stimulate the economy and put money back in your pocket. President Bush sends a message to lawmakers today: do not -- repeat, do not -- hold it up.

And after Florida's primary, what benefits and problems might Mitt Romney and John McCain now have? You'll find out right here in THE SITUATION ROOM.

We're live from the Kodak Theatre in Los Angeles, site of tomorrow night's Democratic presidential debate.

(COMMERCIAL BREAK)

BLITZER: Right now Barack Obama wants to further introduce himself in places he might not necessarily be all that well known. He's running ads tailored to key states ahead of Super Tuesday. One of those states is Missouri, which also holds its primary next Tuesday.

My next guest supports Senator Obama and appears in one of those ads. That would be the Missouri Democratic senator, Claire McCaskill. She's joining us now from Capitol Hill.

Senator, thanks very much for coming in.

I want to get your quick reaction to Senator Edwards' decision to suspend his campaign. Is that going to help or hurt Barack Obama?

SEN. CLAIRE MCCASKILL (D), MISSOURI: Well, I hope it's going help. I think that most of the voters for John Edwards are really hungry for change. I think they see an America that is disconnected from its government, and I think Barack Obama is hitting a cord with people, at least I know in Missouri. Especially Independent voters who see his tone as one of respect for the other party, not demonizing the other party, realizing we've got to find ways to agree, because then we can change things.

So, I'm hoping as the other change agent in the race, that Edwards' votes actually come to Senator Obama.

BLITZER: And I take it you don't see Senator Hillary Clinton as an agent of change?

MCCASKILL: Well, I think it's harder to see her as an agent of change, because she has been part of -- I mean, you know, Jack is right about that. That -- that Senator Clinton, although very strong and smart, and I think she'd be a great president, but I do think that sometimes when you're here a long time, you begin to think that you've got to play the game the way its always been played instead of seeing the possibilities of doing things completely differently than we've done them before.

BLITZER: But what about the argument that she and her supporters make that he simply doesn't have the experience necessary to take charge of the Oval Office on day one, given the lack of experience they say he has?

MCCASKILL: Well, first of all, I disagree fundamentally that he doesn't have the experience. And secondly, you know, I don't think casting another 5,000 votes in the Senate make you any more prepared to the president of the United States. In fact, if you stay around that long, they could probably stew the hope right out of you, as Barack likes to say. I think it's more likely that now, having the variety of experience he's had -- and keep in mind, you know, Ted Kennedy has worked closely with so many presidents. He has been on the front lines of legislation for decades. He is confident, as somebody who has seen up close how government works, that Barack has what it takes to do the job very well.

And I think America, even if you disagree with Ted Kennedy's politics, you would have to admit that he would know who has the ability to do this job and do it well. And I think his endorsement speaks volumes about experience.

BLITZER: But there were a lot of reports that he was irritated with the former president, Bill Clinton, some of the comments he was making about Senator Barack Obama. Were you irritated by what senator -- or, excuse me, what former President Clinton was saying?

MCCASKILL: Listen, I understand being passionately in support of your spouse, and I think that the president was trying very hard to help his wife. I just think as a former president he has to be very, very careful with the language he uses and the way he uses the facts, because I think he has an obligation to make sure that he is playing it exactly on the straight and narrow and not exaggerating because he cares so much about his wife and wants her to get elected.

BLITZER: Well, what did you think -- where did he cross the line, if will you? What was inappropriate?

MCCASKILL: Well, you know, I think -- you know, not that Jesse Jackson isn't a good man, but if you look at what Barack Obama has accomplished, I mean, you know, could there be whiter states than New Hampshire and Iowa? And even though Barack didn't win New Hampshire, he came from way behind and came very close, and obviously had a resounding win in Iowa.

Then to say, well, Jesse Jackson won here, as if that this was simply a function of Barack being an African-American, you know, clearly that's not the case. I mean, this is not the kind of candidate he is.

He is a candidate that is running on the merit of his message, and not on anything else. And so I think that was a little, I think, dismissive of Barack Obama and what he represents.

BLITZER: Senator McCaskill, thanks very much for coming in.

MCCASKILL: You bet. Thanks for having me.

BLITZER: And in our next hour, by the way, we're going to be joined by a prominent Hillary Clinton supporter. That would be Congresswoman Maxine Waters of California. She's an influential member of the Congressional Black Caucus.

We'll get a different perspective. She'll join us right here in THE SITUATION ROOM. President Bush traveling to California and talking about the economy. You're going to want to hear what he has to say about a plan to put money in your pocket.

And on a day of campaign surprises, there's another one that could affect this race. You're going to want to hear what former presidential candidate Ralph Nader is now saying, and what he's doing about another possible run for the White House.

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

We're live here from the Kodak Theatre in Los Angeles, site of tomorrow night's Democratic presidential debate.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: And bowing out of the Democratic presidential race for the White House, John Edwards said he's received some promises from his two main rivals, Hillary Clinton and Barack Obama, that the issues he cares most about would not be forgotten. Will his shadow continue to hang, though, over this campaign?

And for the second time in just over a week, the Federal Reserve taking a dramatic step to address concerns about the economy. Are investors buying it?

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

We're live at the Kodak Theatre here in Los Angeles, site of tomorrow night's Democratic presidential debate.

(COMMERCIAL BREAK)

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

Happening now, will he or won't he? The question of the hour concerns Senator John Edwards and the potential for an endorsement of one of his former rivals for the Democratic presidential nomination. So what would it take for him to make an endorsement? We're watching this story.

And on the Republican side, they go way back. Now Rudy Giuliani appears ready to endorse his old friend, John McCain. We'll take a closer look at how this relationship might influence the race for the White House.

Also, a Democratic power couple. She's Latina, he's African- American. And they're backing different candidates. Does a house divided bear a party divided?

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

A big shakeup in the race for the Democratic presidential nomination today. How will John Edwards' withdrawal affect the campaign of two main contenders?

Our senior political correspondent, Candy Crowley, is out here in Los Angeles with me. We're watching the impact of this decision.

So, what do you think? How -- what impact will it have?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, we have sort of a couple things to go on. The first is the data. "Wall Street Journal" did a poll after Iowa in which they did Clinton/Edwards/Obama, and then took Edwards out. And, when you took Edwards out of the mix, they both picked up five or six points. So, it seemed sort of even at that point.

BLITZER: So, it would be a split, in effect?

CROWLEY: Right. And this was around January 20. A lot has happened since then. I can also tell you, though, that both campaigns kind of look at this. And, on the Obama side, they say, look, these are change voters. They already know Hillary Clinton. John Edwards has change voters.

But, if you look at who John Edwards' voters are, they are rural, they are white, and they are male, largely. And that has not been a group particularly friendly to Obama. So, everybody splits it different ways at this point.

BLITZER: You know, I spoke with him. A lot of reporters spoke with Senator Edwards only last weekend, the days leading up to the Florida primary and everything else that was going on. And he kept saying he was in it, he was in it until the convention. What happened? You have been doing some reporting on what we call the ticktock and specifically his wife, Elizabeth?

CROWLEY: His wife -- first of all, I asked about her role. And someone said, look, she was instrumental in getting him in, instrumental in having him stay in when her diagnosis came up of cancer in march. And, obviously, she's going to be instrumental in his getting out.

But what is interesting here is, after the South Carolina primary, where he underperformed, he went home to North Carolina on Sunday night. Monday, they had a big strategy meeting in camp Edwards. And they were talking about how they could pick up 200 delegates, where they would go.

So, they -- all the strategists came away and his top aides came away from that thinking, OK, full throttle. Tuesday, something happened. They say it was organic. It was John Edwards. And, when the decision was made, he called his staff and said, here's what I'm doing, after, of course, those phone calls to Obama and Clinton.

BLITZER: But we don't know what that spark was, that moment, that organic moment, if you will?

CROWLEY: They were not -- the staff say they were not in on it, that he called them... (CROSSTALK)

BLITZER: So, it was basically him; he made that decision?

CROWLEY: Yes.

BLITZER: All right, Candy, thanks very much. Candy's out here in Los Angeles.

Exit polls of voters in yesterday's Republican primary in Florida hold a lot of information about trends that potentially could shape the rest of the race for the nomination.

Our senior political analyst, Bill Schneider, has been breaking all the numbers down.

What are you learning about this Republican race, based on these exit polls, Bill?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, it gives us some clues about each candidate's advantages and weaknesses going into Super Tuesday.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): John McCain's victory in the Florida primary was highly personal. He did well among Florida voters who said personal qualities were more important to their vote than issues.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I will always put America, her strength, her ideals, her future, before every other consideration.

SCHNEIDER: Republicans were voting for him. That could be a problem for McCain as the campaign moves forward to Super Tuesday. Voters across the country may not know a lot about McCain. And he may not have the resources to reach them. McCain won Florida without carrying conservative voters. That's a problem.

Mitt Romney has the resources to sell himself across the country as a conservative alternative to McCain. He did it in Florida, where it almost worked.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I understand how the economy works. I understand why jobs come and why they go. No one needs to give me a briefing on the economy.

SCHNEIDER: Notice how the Democratic contenders have been running under the banner of change? Well, guess what? A lot of Republicans want change as well. A third of Florida Republican voters said they were dissatisfied with President Bush. Anti-Bush Republicans went big for McCain. That could be a problem for McCain in the Republican primaries, where Bush retains the loyalty of most Republicans. But, if McCain were to win the nomination, he might try to present himself as a candidate of change, no easy feat for a Republican. (END VIDEOTAPE)

SCHNEIDER: McCain is also identified with the war in Iraq. Now, that has not been an issue in the Republican primaries, but, if McCain were to get the Republican nomination, it would put the Iraq issue right at the center of the general election campaign -- Wolf.

BLITZER: Bill Schneider over at the Reagan Library in Simi Valley -- thanks very much, Bill, for that.

An amazing walk through the library of a revered president -- he's revered certainly by a lot of Americans. It's the scene of tonight's Republican presidential debate, and you can bet his name will come up more than a few times. We're watching this part of the story, and getting ready for the debate.

Also, John Edwards voters are now up for grabs. Could they swing the results of the upcoming Super Tuesday primaries? And a mixed couple in more ways than one. We are going to hear from a Democratic power couple about race and politics in their marriage and their party.

We're live at the Kodak Theatre in Los Angeles, and you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Just a few hours from now, a presidential library will be the scene of a major presidential debate. Ronald Reagan's library is where the Republicans face off in our debate. That's in Simi Valley here in California.

And among the interesting Reagan-era items there, the actual Republican -- excuse me -- the actual presidential plane that the Republican candidate Ronald Reagan used.

CNN's Thelma Gutierrez is at the library.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN CORRESPONDENT: You're looking at Air Force One. President Reagan flew 600,000 miles aboard this aircraft. I'm standing in the pavilion. And this is the site of tonight's debate.

If you look over to my right, the red chair, this is where the candidates will be seated, and then, right out in front, an area for VIP guests, 400 of them, including Governor Schwarzenegger and Nancy Reagan.

But what is amazing about all of this Saudi that, just a few months ago, none of this existed. The stage had to be built from the ground up. It's suspended on scaffolding three stories above where I'm standing right now. It took a total of six months of planning and a lot of muscle. And this is the reason, to have Air Force One right behind the candidates. Now we're aboard Air Force One. We will take tour of the communications center. This is where President Reagan could have reached anyone any time, any place while he was aboard the flying White House. Now we're going to into this cabin. This is where we find Duke Blackwood, director of the presidential library.

Duke, thanks for joining us.

DUKE BLACKWOOD, DIRECTOR, RONALD REAGAN PRESIDENTIAL LIBRARY AND MUSEUM: Thank you.

GUTIERREZ: Tell me about the scope of this undertaking for the debate.

BLACKWOOD: Well, first of all, it took six months of planning. And, if you think about it, we're building a three-story stage, has never been done before at a presidential library, in a unique setting.

GUTIERREZ: And what about the symbolism of having a GOP debate right here?

BLACKWOOD: Well, I can't think of any better place and more symbolic than the Reagan Library, with the candidates on stage, and behind them this majestic aircraft called Air Force One. And, remember, they all want to ride on Air Force One.

GUTIERREZ: And they want to sit?

BLACKWOOD: This is the seat that they're vying for, where the president sat.

(END VIDEOTAPE)

BLITZER: Thelma Gutierrez reporting for us from the Reagan Library, getting ready for the debate.

By the way, coming up later here in THE SITUATION ROOM, I will have a special live interview with the governor of California, Arnold Schwarzenegger. He met with President Bush earlier today out in California. The governor will meet with us. That's coming up later here in THE SITUATION ROOM, my special conversation with Arnold Schwarzenegger. I will ask him who he likes for president of the United States, among other things.

Meanwhile, other important news we're following: a major move by the Federal Reserve to help turn around America's ailing economy. The Federal Reserve cut a key short-term interest rate once again today, the second time in just over a week the rates have been slashed.

Let's bring in our senior business correspondent, Ali Velshi. He's following this important story for us.

All right, Ali, what does this rate cut mean?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Hey, Wolf. I'm here at the Chicago Board of Trade. This rate cut means for most people that your -- any loans you have just got cheaper. What it is, is, the Fed rate is now three percent. Now, when you add three percent to that, you get the prime rate. They prime rate is always three percent higher than the Fed rate. Prime rate is now six percent. That's a rate to which so many consumer loans and adjustable loans are tied.

So, tonight, everybody in America who has got a loan tied to the prime rate, it has gone down in price. All of the major banks have lowered the prime rate now to six percent.

BLITZER: So, the question is this, Ali. Is this enough to turn around the economy, the cut last week, the cut this week, the economic stimulus package that, presumably, it's working its way through the Congress?

VELSHI: It depends how you gauge that, Wolf. If you look at the Dow today, it closed down even after this drastic cut. Yet, last week's three-quarters of a percentage point, this week's half a percentage point, part of that is because GDP, the gross domestic product, the value of all of the goods and service that we create, at the end of 2007, up much less than people predicted.

In fact, Alan Greenspan just gave an interview to a German newspaper to which he says, it's not enough. It's not enough if the U.S. is headed for recession to keep the U.S. out of a recession. It remains to be seen whether or not we're actually headed there, but investors are not confident just yet. The Fed may have to cut again -- Wolf.

BLITZER: All right. We will watch every step of the way with you, Ali. Thanks very much.

And, to our viewers, this note, you have helped make our politics podcast one of the most popular on iTunes. To get the best political team to go, you can subscribe at CNNPolitics.com. Good idea to do it.

In our "Strategy Session" coming up: John Edwards bows down.

(BEGIN VIDEO CLIP)

EDWARDS: We do not know who will take the final steps to 1600 Pennsylvania Avenue, but what we do know is that our Democratic Party will make history.

(END VIDEO CLIP)

BLITZER: Does his departure make Super Tuesday the make-or-break moment for the Democrats' run for the White House, the two candidates still in this case -- this race?

And, if John McCain wants to court conservatives, how much does Rudy Giuliani's support actually help? Our "Strategy Session" -- coming up next.

We're live at the Kodak Theatre in Los Angeles. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Two major candidates, one from each party, leaving the presidential contest today.

Joining us now in our "Strategy Session" to discuss the implications are Democratic strategist Peter Fenn and conservative commentator Terry Jeffrey. He's editor in chief of the Cybercast News Service.

Peter, let's start with you on the Democratic side. Who is more likely to benefit by John Edwards' decision to suspend his campaign? Would that be Hillary Clinton or Barack Obama?

PETER FENN, DEMOCRATIC STRATEGIST: Now, do you hear pundits say very often I don't have the slightest idea, Wolf?

I think, look...

BLITZER: Not often.

(LAUGHTER)

BLITZER: Not often.

(LAUGHTER)

FENN: Look, I think it could go both ways.

I think that you could make an argument that the change issue does benefit Barack Obama, that he picks up that support. You could also make the argument that there's a lot of support out there amongst people that will go to Hillary.

But the big issue here, Wolf, is, who will he endorse? And, if he endorses somebody, I think that, then, makes a really big difference.

BLITZER: All right, Terry, what do you think?

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: I think it clearly helps Barack Obama, Wolf, for two reasons.

First of all, if you're a Democrat and you want Hillary Clinton, you're already with her. But, secondly, the Democrats clearly now face an historic choice. And it's not just whether they're going to nominate the first possible black president of the United States or the first possible woman. There's the question of whether they really want to put a Clinton back in the White House.

The number-one thing history is going to remember Bill Clinton for during his presidency is that he was impeached for perjury and obstruction of justice. Democrats in the Senate decided they didn't want to convict him because they were more interested in keeping a Democratic president in power than actually convicting him for crimes I believe he did commit.

The question is now, Wolf, when you have Democrats starting to not-so-subtly infer the Clintons aren't honestly campaigning against Obama, is whether they want to go down in history as the party that put the Clintons back at 1600 Pennsylvania Avenue.

BLITZER: Peter, how does it change the dynamic of tomorrow night's Democratic presidential debate, the one here at the Kodak Theatre that I will be monitoring, now that there are only two Democratic candidates left in this contest?

FENN: I think it makes a big difference, Wolf. I think you have got a situation where you have got one on one. There's no side comments, no ganging up. It's mano a not mano, I guess, in a race like this.

I think that -- though, that there's something very important here. And that is that -- that both candidates are going to have to make the argument that they're going to turn this country around. What are they going to do, as Hillary Clinton will put it, from day one, as Ted Kennedy put it, from day one, to get this country back on track?

And I think there are a lot of people who admire the Clintons' ability to get things done in those eight years. They don't look at the scandals so much. They think, hey, wait minute. These guys know what they're doing. Others say, look, we need the inspiration. We need the lift, and Barack Obama's going to give us that lift. So...

BLITZER: Well, Rudy Giuliani, Terry -- Terry, Rudy Giuliani is dropping out. He's about to endorse John McCain. We will have live coverage here in THE SITUATION ROOM. That's coming up shortly.

But is this a big deal or a modest deal for John McCain right now?

JEFFREY: Well, I think the endorsement is not as important for John McCain, Wolf, as the fact that Rudy Giuliani is getting out.

John McCain, if you look at exit polls out of Florida last night, is getting the more liberal Republican voters. He's getting the more pro-choice Republican. He's getting the Republicans that don't go to church.

The Rudy Giuliani Republicans are going to go to McCain. Meanwhile, Romney has to worry that a lot of his vote is going to get siphoned off by Mike Huckabee.

And I will tell you, Wolf, an interesting thing to watch in the debate tonight, is Mike Huckabee ready to go after John McCain and explain to voters where John McCain is not a conservative, or is he essentially going to play the same function in Super Tuesday that Fred Thompson played against him in South Carolina, where Fred Thompson attacked Huckabee, but didn't go after McCain, and really helped McCain win that state?

BLITZER: All right. What's your assessment, Peter?

FENN: Well, I tell you, I think that this is going to be huge for McCain. And we will see what happens tonight. I think, if McCain does not stumble, Wolf, that he's on his way -- 390 electoral votes on Super Tuesday are winner take all in key states.

BLITZER: Delegates. Delegates.

FENN: Delegates, excuse me. Delegates. I said -- yes, exactly. And, if he wins those states, he is well on his way to the 1,000-plus delegates that he's going to need. So, you know, I think that what we have got here is a contest where Mitt Romney really has to come back and come back strong tonight at this debate, or he's going to be in deep trouble.

BLITZER: A final word from you, Terry. If John McCain gets the Republican nomination, is he going to be able to unite the conservatives, unite all the Republicans?

JEFFREY: I think it's going to be very difficult, Wolf. There's real anger at John McCain among conservatives, not just among conservative pundits, but among conservatives on the grassroots.

He is going to have to come around on some issues. He's going to have to explain, for example, does he support the pro-life plank in the Republican platform? Would he actually vote to make law the immigration bill that he and Ted Kennedy sponsored in the U.S. Senate?

BLITZER: He has got his hands full, no doubt about that.

All right, guys, thanks very much, Terry Jeffrey and Peter Fenn.

Coming up, 83-year-old Senator Daniel Inouye of Hawaii, he is making headlines in the society pages of the newspapers. We are going to tell what it's all about. That's coming up in our Political Ticker.

We will also take a closer look at a Democratic power couple and what their divided loyalties say about the race for the presidential nomination in their party.

And vying for endorsements -- we will talk to a key member of the Congressional Black Caucus about who she is choosing and why.

We're also standing by to speak with the governor of California, Arnold Schwarzenegger.

We're live at the Kodak Theatre here in Los Angeles. And you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In today's Political Ticker, Jimmy Carter says he is not formally endorsing anyone in the Democratic presidential race, but he is praising Barack Obama, Carter telling "The Wall Street Journal" Obama's campaign, in his word, is extraordinary. Carter also compared Obama's communication skills to that of Dr. Martin Luther King Jr.

Hawaii's 83-year-old senator says he's getting married. Democrat Daniel Inouye is engaged to the head of the Japanese-American National Museum. That's here in Los Angeles. And the senator says he plans to marry her here in L.A. on May 24. Inouye's wife of almost 60 years died in March 2006, after battling colon cancer. Congratulations on the upcoming marriage to Senator Inouye.

Another House Republican says he won't seek reelection. Congressman Tom Davis of Virginia today announced he will retire at the end his term. In a statement, Davis says it's time to take a break from public life. One Republican official says keeping Davis' seat will be a challenge. Davis is the 28th House Republican to announce plans to retire or seek higher office this cycle.

Remember, for the latest political news at any time, you can always check out our CNNPolitics.com.

Ralph Nader, who was blamed by many Democrats for Al Gore's loss in the 2000 presidential election, is back, and he's online. This time, the longtime consumer advocate is taking steps toward a possible -- a possible White House bid once again.

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

Abbi, what did Ralph Nader announce today?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, this is a presidential exploratory committee from Ralph Nader. This is the new Web site that has just gone live. And he says that he's accepting contributions. And he's also filed paperwork with the Federal Elections Commission.

In discussing this decision today with CNN, Ralph Nader cited Democrat Dennis Kucinich dropping out of the race and now Democrat John Edwards. And he also had harsh words for some of the other candidates. And you will see them repeated online here as well, challenging people to stop sitting back and watching the corporate candidates spin their vapid mantras.

Now, of course, this is getting attention online, some of the comments here at CNNPolitics.com. Ralph Nader today rejects the suggestion that he's a spoiler. He says that, if he demonstrates the ability to raise $10 million and to rustle up enough lawyers to help him get ballot assess, then he's definitely going to do this.

Wolf, one other thing to add is an incentive he's offering online to try and get -- raise the money, a free copy of Michael Moore's "Sicko" for anyone that donates $300 -- Wolf.

BLITZER: Abbi, thanks very much for that. We will watch the Nader factor presumably once again.

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

Jack, before you start, I want to take a look. Some of your fans here in Los Angeles on Hollywood Boulevard, they're out in the full force. They're watching us. They're taking a close look at what's going on. I think you know some of these guys. But go ahead.

CAFFERTY: I think that's the correspondent who's covering the debate for the F-word network tonight.

(LAUGHTER)

CAFFERTY: Looks like he would fit right in over there.

BLITZER: There's a lot of stars here.

CAFFERTY: All right.

The question is this: When it comes right down to it, why won't we vote to really change things? Look at the two front-runners, McCain and Clinton. I mean, they don't get any more inside politics and inside Washington and part of the establishment than that.

Joe writes,"Can't vote for change if none of your choices want it. Why should the parties give us anyone who wants to change Washington when changing things threatens the establishment's special interests of both political parties?"

Dee in Texas writes, "We want change as long, as it doesn't interrupt our regularly scheduled program, raise our taxes, require too much effort or take too long. People vote for the establishment because it promises to take care of everything."

Sam writes, "Americans are voting to send corrupt, open-borders, establishment, favor-owing, slimy politicians who will say and do anything false to get elected because of a media that focuses on establishment candidates every four years. They're constantly looking for a story. Those candidates also are good at spinning the media right off its noggin. The media is in the tank for John McCain and Hillary Clinton."

Luz in El Paso, Texas, "We're afraid of change. A woman president? She's OK to be my mother, lover, mother of my children, but not president. A black man? Definitely not. Whether we like it or not, in the end, whoever runs against the Republican will have to face these issues. We are so closed-minded that we would rather have a dog run the presidency, like we do now, or -- rather than a woman or an African-American. Society makes us fear everything, and it's time that we elect a woman or a black man. Let's get insubordinate here."

Vince writes from Carson City, Nevada, "Probably because the only comfortable -- only the comfortable generally tend to vote. The poor don't bother, because, somehow, they know that, if voting really made a difference, it would be illegal."

And Karen writes, "Why don't we vote to change things? Because change is difficult, messy, painful, requires us not only to step out of our comfort zones, but to get involved. And we don't want to bother, to be honest with you."

She's probably right -- Wolf.

BLITZER: All right, Jack, see you in a few moments. Thank you.

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