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Interview With California Governor Arnold Schwarzenegger; Rudy Giuliani Endorses John McCain

Aired January 30, 2008 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: To our viewers, you're in THE SITUATION ROOM.
Happening now: a very big day in the race for the White House. Two candidates are pulling out. We're only moments away from an official announcement by Rudy Giuliani.

John Edwards says he's stepping aside. What does that mean for Hillary Clinton and Barack Obama? Who stands to benefit most?

And Governor Arnold Schwarzenegger, he's standing by to join us live from the site of the Republican presidential debate for a one-on- one interview. That's coming up.

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

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

Right now, big surprises could turn the presidential race on its head. We're here in Los Angeles at the Kodak Theatre, not far from the scene of our Republican presidential debate. That gets under way in two hours from now over at the Reagan Library in Simi Valley. But any moment now Rudy Giuliani will come out. He will formally endorse John McCain for president. Giuliani is bowing out after gambling on Florida's primary and losing.

Meanwhile, another surprise: Democrat John Edwards is bowing out of the race as well. He made that official today. Unable to gain ground on the Democratic front-runners, Senator Edwards says it's now time to step aside. He's not ready to jump on anyone's bandwagon, at least not yet. Edwards did speak with our Suzanne Malveaux shortly after he called it quits earlier today.

And Suzanne is joining us now from New Orleans, where he made the announcement.

What was it like, the mood there in New Orleans for this announcement, Suzanne?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, there was certainly a sense of disappointment. His supporters, a small group of them there for the occasion, a certain sense of resolution. They had tried so hard. And this really is a closing chapter for Edwards' journey, but he was the one candidate who spoke about the working people. He talked about two Americas, the haves and have-notes. Ultimately, this is a message that did not and could not save his campaign, but he did successfully shape the debate.

(BEGIN VIDEOTAPE)

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: Today, I am suspending my campaign for the Democratic nomination for the presidency.

MALVEAUX (voice-over): Full circle, John Edwards ending his campaign where it began, the Ninth Ward in New Orleans, devastated by Katrina.

EDWARDS: And I say to all of those who are struggling in this country, we will never forget you. We will fight for you. We will stand up for you.

MALVEAUX: His central themes, fighting poverty and corporate lobbyists, in the end didn't gain the traction he needed to win.

I asked him why bow out now.

EDWARDS: I think we have 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 was time for me to step aside, as I said in the speech, and let America make history and let my party make history.

MALVEAUX: Aides say he and his wife, Elizabeth, decided together Wednesday morning to call it quits, acknowledging he didn't have the votes or the delegates to make a difference. He made the announcement with her and his children by his side. He reassured supporters he was not stepping down because of his wife's battle with cancer.

EDWARDS: 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 had reached the place where this was the right thing to do.

MALVEAUX: Tuesday, Edwards called his two rivals, Senators Barack Obama and Hillary Clinton, to tell them he was considering bowing out. He said they agreed to his request to making fighting poverty central to their campaigns. Now he says he's deciding whether to endorse one.

EDWARDS: This is a conversation that needs to be in private. This cause is the cause of my life. And I need to be satisfied about, if I am going to endorse, which one will be committed to the cause.

(END VIDEOTAPE)

MALVEAUX: And, Wolf, I asked him what does he plan to do next. And he says, well, he is just going to have to figure all of that out, but the one thing that they say he's not likely to do is to become somebody's running mate, kind of been there, done that. But he still is a powerful political player as long as he has got that potential endorsement in his hand -- Wolf.

BLITZER: Suzanne Malveaux reporting for us -- thanks, Suzanne.

Suzanne is in New Orleans.

Meanwhile, Rudy Giuliani has just arrived over at the Reagan Library in Simi Valley, where he is going to be making his official announcement.

Let's get right to CNN's Dana Bash. She's on the scene for us there as well.

That's where our Republican presidential debate will happen in just under two hours from now over at the Ronald Reagan Library.

All right, set the scene for us, Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Everybody knows -- will be the official really, really big change to this Republican race. It was no surprise that Rudy Giuliani did poorly after it was clear from the polls that he wasn't going to do very well in Florida yesterday.

But the fact that he is in just a moment going to throw his weight behind his old friend John McCain really if you talk to the McCain campaign, and frankly you talk to several Republican sources that I have talked to both in Washington and sort of nationally, they say this is going to help John McCain tremendously in a number of ways.

Before I explain that, let's listen to what Rudy Giuliani himself said on his campaign plane on his way to California.

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI (R), PRESIDENTIAL CANDIDATE: I'm going to endorse John McCain. It's disappointing to lose a race for president, because you believe you are the best candidate. And -- but I had made it clear before I had to make this decision who I thought the other best candidate was. I think I made it clear in a debate that, had I not been running, I would be supporting John McCain.

(END VIDEO CLIP)

BASH: Now, what does this bring John McCain? Well, if you talk to John McCain's supporters and his advisers, they say it brings a lot of things.

First of all, the fact that we're going into what is essentially and ostensibly a national primary, and Rudy Giuliani still has a lot of fund-raisers. He still has a lot of supporters and some ground operations in these key states, particularly in the Northeast, in New York, in New Jersey. Those are people that we are told Rudy Giuliani is going to work very hard to shift over to the McCain campaign. So, that is going to be a tremendous help for him.

Now, if you talk to Mitt Romney's campaign, as you can imagine, Wolf, they insist that this simply paints John McCain as they're trying to paint him, as Mitt Romney tries to be the conservative alternative to John McCain, saying that Rudy Giuliani is somebody who is moderate in his social views on abortion, on same-sex marriage, and things like that.

But the reality is, if you talk to John McCain's campaign, they say that in a lot of states, even in the state of California, the goal for him is to reach out to some of those moderates. So that is one of the main reasons why they really think this could help in a big way John McCain's campaign -- Wolf.

BLITZER: All right, Dana, thanks very much. We're standing by to hear from Rudy Giuliani and John McCain.

Once they start speaking, we will hear what they have to say.

Let's hear what Jack Cafferty has to say right now. He's joining us once again with "The Cafferty File."

JACK CAFFERTY, CNN ANCHOR: Wolf, in case you're not convinced the government is broken, consider this: A new study shows that almost 60 percent -- 60 percent -- of government employees at all levels, federal, state and local, say they've seen violations of ethical standards, policies or laws at their workplaces within the last year. This includes everything from conflicts of interest, abusive behavior, altering documents, financial records, lying to employees, vendors, or to the public.

And apparently it's worse at the state and local levels. The nonprofit research group Ethics Resource Center found 63 percent of those at the local level saw this kind of misconduct. At the state level, it was 57 percent, and in Washington, D.C., 52 percent and elsewhere in the federal government.

And it's going to get worse. The head of this group says it looks like we're headed toward more ethical misconduct in government in the future, not less.

They found that 30 percent of the incidents go unreported. One reason for that is some employees who did report misconduct said they experienced retaliation from other workers. Researchers also say there aren't enough systems in place to stop these problems once they're exposed.

The center says the answer to this problem is what it calls a strong ethical culture, a lovely idea, to be sure. But when you watch example after example of government dishonesty and fraud and abuse go uninvestigated and unpunished, what's the message? That it doesn't matter, because nobody is going to do anything about it anyway. Here's the question: Does it surprise you that almost 60 percent of government employees at all levels say they've seen ethics violations at work?

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

BLITZER: Jack, thanks very much.

We're standing by to hear from Rudy Giuliani and John McCain. Rudy Giuliani will formally announce he's dropping out. That's no surprise. But there they are. He will then endorse John McCain.

And here is Rudy Giuliani. Let's listen.

(JOINED IN PROGRESS)

GIULIANI: ... Cindy.

It's appropriate to make this announcement here at the Reagan Library, because President Reagan's leadership remains an inspiration for both John McCain and for myself.

When you run for president of the United States, you spend a lot of time thinking about what qualities you would want in the chief executive of the United States, someone who can be trusted in times of crisis, someone with a clear vision about the challenges facing our nation, someone with the will and perseverance to get great goals accomplished.

Obviously, I thought I was that person.

(LAUGHTER)

GIULIANI: The voters made a different choice.

But I made it clear at different times during this campaign that, if I had not decided to run -- I believe I even said it at a debate -- that, if I had not decided to run, the one person in this country that I clearly would have supported for president of the United States would be John McCain.

And that came from the heart.

Today, I'm officially announcing my withdrawal as a candidate for president of the United States. And, so, deciding who to endorse in my particular case is not difficult, because, if I endorsed anyone else, you would say I was flip-flopping...

(LAUGHTER)

GIULIANI: ... after having already endorsed John.

John McCain is the most qualified candidate to be the next commander in chief of the United States. He is an American hero. And America can use heroes in the White House. He's a man of honor and integrity, and you can underline both, honor and integrity.

He's shown character throughout his life. We know his experiences in time of war. And, just in this very campaign, as an adversary, watching where he was and where he came from made me admire him even more. And, several times, when I would see him at debates, I would shake his hand and tell him that.

He came from way behind to go way ahead, and, once again, displayed his tenacity, his courage, his ability to focus, his ability to get things done. I can't imagine a campaign better demonstrating who the person that should be president of the United States should be.

We were friends before we were competitors for the nomination. We were even able to root for two different baseball teams during a World Series and not make any negative commercials about each other.

(LAUGHTER)

GIULIANI: And once, a long time ago, when he was running for president, I was very proud, because I was asked to do a negative commercial about John McCain, because, at the time, I was supporting another candidate, and I refused to do it.

I have tremendous regard for John, have always had tremendous regard for John. I had wished throughout this campaign that, when the campaign is over, and said it oftentimes, that we really will still remain friends, no matter what happens.

And part of the consolation for me, with the bitterness that comes about with losing, is, that wish has come true. We will remain friends.

But, most importantly, my country will have a candidate for president of the United States where I can rest very assured for myself, for my children, and for all the people that we care about so much, that this is a man prepared to be president of the United States at a time of great peril.

We share a similar vision for the future of our party, a similar vision of the major challenges facing our nation. We both believe that America must stay on offense to win the terrorist war on us. We both believe in fiscal discipline, cutting taxes and wasteful spending in Washington.

Finally, we both believe in building a stronger and broader Republican Party, a party that is growing and reaching out, one that competes for urban and rural voters of all races and all religions in all 50 states, because that's the way we're going to win this election, creating a revitalized 50-state Republican Party that can break through the red state/blue state divide.

John McCain gives us, as Republicans, our best chance of doing that. I'm going to campaign with John as much as he wants -- or not...

(LAUGHTER)

GIULIANI: ... depending on if I'm in trouble or not at that particular point.

I will campaign with him in California. I will campaign with him in New York. I will campaign with him in New Jersey, in Connecticut, in Illinois, any place where he and his campaign believe that I am helpful. I am fully aboard, 100 percent. I don't do things halfway. I do them 100 percent.

And, when I believe in a man like I do John McCain, this will become to me as important as my own election was.

I am hopeful that we can secure his nomination very soon, so we can unite our party and then begin the process of uniting our nation.

So, I am very proud to endorse my friend and fellow Republican, a hero, John McCain of Arizona, for president of the United States of America.

God bless you, John.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Thank you.

(APPLAUSE)

MCCAIN: Thank you.

(APPLAUSE)

MCCAIN: And thank you, Rudy.

And I'm deeply honored. I'm deeply honored by your friendship, which has been for many years.

I, like all Americans, will never forget the defining moment of recent American history, the tragedy of 9/11. And I saw Rudy Giuliani unite this nation in a way that made us all proud. And all of us were recommitted to defeating the terrible evil that attacked New York City on September 11.

I had the honor of spending time with him in New York City as he not only restored the spirits and the courage and the commitment of the people of New York City, but the people of the United States of America.

All life is full of anecdotes. My favorite anecdote was in the World Series of that year when Rudy came with me to Phoenix, Arizona, a packed stadium of 40-some-thousand rabid Diamondback fans. On the Jumbotron was the face of Rudy Giuliani. Every one of those fans stood and applauded and cheered and cheered and cheered, because this man is a national hero.

And I'm honored by his friendship, and I'm honored to know a person who played such a great role in uniting the United States of America after one of its greatest tragedies was inflicted on it. So, I want to say, I not only thank him for his friendship. I want to thank him for his leadership of America. I want to thank him as we wage this struggle to secure the presidency of the United States.

There will be a clear choice this November. And I believe that my life has prepared me, a life of service and a life of dedication, to lead this nation in the transcendent challenge of the 21st century, the great threat of the evil of radical Islamic extremism, which threatens everything we stand for and believe in.

And my strong right arm and my partner and my friend in this effort will be the former mayor of New York City, an American hero, Rudy Giuliani.

I'm deeply honored, Rudy. Thank you very much.

And thank you for being here.

(APPLAUSE)

BLITZER: All right, so there you have it, Rudy Giuliani dropping out this contest, John McCain still very much, inarguably, the front- runner, the clear front-runner right now, Rudy Giuliani throwing his support, formally endorsing John McCain.

Let's bring in our John King. He's been watching this story.

You know, as important as this endorsement could be, John, potentially, potentially, there could be another endorsement in the works involving the governor of California. That would be Arnold Schwarzenegger. I am going to be speaking with him shortly here in THE SITUATION ROOM, but that would be huge if in fact Arnold Schwarzenegger, only days before the Republican primary here in California, were to go ahead and endorse John McCain.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It certainly would be, Wolf.

And McCain's challenge at this moment is to unite the Republican Party, to prove that he in fact in position to be its nominee, that he can consolidate the party, both moderates and conservatives.

We are told by a number of sources who are familiar with the discussions that there are productive and positive, is the way they were described to me, discussions to get the endorsement of Governor Schwarzenegger, one of the sources saying it could happen as early as tomorrow here in California.

Governor Schwarzenegger, of course to be on hand for the Republican debate tonight, does not want to deliver any endorsement before that. Our sources are telling us to be very careful here. They say the final elements of this endorsement are still being worked out.

One of them, though, said to expect it tomorrow. The other said they described it as likely tomorrow, pending additional political conversations. The Schwarzenegger endorsement, Wolf, would be big here in California. We're also told within the next 24 to 48 hours, Senator McCain will get the backing of Georgia's two Republican senators, Saxby Chambliss and Johnny Isakson.

One of the big questions for Senator McCain is, can he rally more conservative support at a time many in the conservative movement across the country are still skeptical of him?

So, as much as they covet the Giuliani endorsement, would covet the Schwarzenegger endorsement, the McCain campaign will also highlight the endorsement of Georgia's two conservative Republican senators as proof in their case that Senator McCain can indeed unite the party, and be not only its front-runner, but, as Senator McCain just spoke, he believes -- he's already talking as if he's the nominee for the general election -- Wolf.

BLITZER: And Georgia is a Super Tuesday state as well. They will be having their Republican primary next Tuesday, as well.

All right, John, thanks very much.

And once again we're standing by. We will be speaking with Governor Schwarzenegger. That's coming up here in THE SITUATION ROOM. And I will ask him about a possible endorsement of John McCain.

Other news: They can stop looking in their rear-view mirrors. That would be the Democratic front-runners. They don't have to worry about John Edwards anymore. Hillary Clinton and Barack Obama can now focus on each other.

And, as Republican candidates gather in Governor Schwarzenegger's state, I will be speaking with him. And I will ask him if he's ready to endorse one of those Republican candidates.

We're here in Los Angeles at the Kodak Theatre, getting ready for tomorrow night's Democratic presidential debate. And you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: They don't have to look behind them anymore. No one is gaining on them, John Edwards bowing out of the race. Front-runners Hillary Clinton and Barack Obama now free to fight it out between themselves.

Let's bring in our senior political correspondent, Candy Crowley. She's here at the Kodak Theatre with me watching all of this unfold.

Fascinating material on this Democratic side, Hillary Clinton vs. Barack Obama, a two-person race right now. So, what happens?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Absolutely. It's what they both wanted.

So, what happens now is, as we saw today with Barack Obama, first in Colorado, then in Arizona -- Hillary Clinton went to Arkansas, where she clearly hopes to do well, and then to Georgia. They're kind of dancing around each other at this point. It's sort of a nice feel, except for the Clinton campaign says at the moment Barack Obama is going after Clinton. I want you to hear this bite.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: It is time for new leadership that understands that the way to win a debate with John McCain or any Republican who's nominated is not by having the Democrats nominate someone who agreed with him on voting for the war in Iraq, who agreed with him in voting to give George Bush the benefit of the doubt on Iran, who agrees with him in embracing the Bush/Cheney policy of not talking to leaders we don't like, who actually differed with John McCain by arguing for exceptions for torture, before changing positions when the policy of the moment changed.

(END VIDEO CLIP)

CROWLEY: Pretty clear reference there to Hillary Clinton.

The Clinton campaign says it now seems that all that talk from Barack Obama about unifying the nation was in fact just talk.

Now, Hillary Clinton again in Arkansas and in Georgia was pretty mellow today, no mention of Barack Obama, and really no mention of her husband. It was brought up at a news conference about whether or not she had asked him to tone it down.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: His promoting my candidacy -- and I am very happy that he is able to travel as widely as he has been, along with my daughter.

But this is my campaign. It is about my candidacy, what I want to do for America. It's about the future, as every election is about the future, and I want to keep it focused.

(END VIDEO CLIP)

CROWLEY: So, again, Barack Obama kind of going after Hillary Clinton, though not mentioning any names. And, Wolf, she's kind of mellow at this point. She sort of danced around the question of her husband, but I think the proof is in the pudding. We haven't actually heard a headline for a couple of days from him.

BLITZER: And we will see how this debate, the dynamic changes tomorrow night, where there's only two of them sitting up on that stage.

CROWLEY: Oh, totally. And they have been dying for this chance to go at each other, both of them.

BLITZER: And you know what? I'm moderating, so I'm going to let them have an opportunity to showcase their differences and their agreements if they want.

CROWLEY: I will watch.

BLITZER: Thanks very much, tomorrow night, right here at the Kodak Theatre.

And to our viewers, you're in THE SITUATION ROOM.

Happening now, we're counting down to tonight's CNN Republican presidential debate at the Ronald Reagan Library here in Southern California. Rudy Giuliani just officially endorsed John McCain, dropping out of the contest.

Plus, California Governor Arnold Schwarzenegger, sources now telling CNN he's in talks with John McCain's campaign about a possible endorsement. I will ask him about that and more. The governor joining us live, that's coming up.

All that, plus the best political team on television.

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

Former New York City Mayor Rudy Giuliani is bowing out of the race for the White House and throwing his support to Senator John McCain, an endorsement many observers say just makes sense.

Let's bring in the best political team on television to talk about this and more. Joining us, as they do every day, our own Jack Cafferty, Gloria Borger and Jeff Toobin.

Guys, thanks very much for coming in.

Jack, let's talk about the Democrats first. What do you think about this stunning announcement today, John Edwards dropping out? You know, it's been days and days and days he was saying he wasn't dropping out. He was going all nine innings, all the way to the convention in Denver at the end. But I guess he saw the light this morning.

CAFFERTY: Well, he was saying it as recently as yesterday, as I recall.

But this hasn't been about John Edwards for a couple of weeks now, and it's good in a way that he's out of the way, because the fight is between Clinton and Obama. And that will be an all-world smackdown you're refereeing out there tomorrow night.

But the one thing that I kind of miss is, we're going to lose Edwards' focus on the corporations and the lobbyists for the corporations that have their fingers firmly around the throat of this federal government. He recognized that. He recognized it. And he said it was important to do something about it. And I haven't heard those words out of either Clinton or Obama's mouth too much. So, we're going to miss hearing that from Edwards, but he had no business staying in this thing.

BLITZER: Gloria, how does it change, this contest, with Edwards now out?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I think Jack is right that Hillary Clinton and Barack Obama get a one-on-one that each campaign says it really wants.

But it's really unclear, Wolf, where Edwards' support goes to. I have talked to Democratic strategists who were sort of scratching their heads this morning, trying to figure that out. You know, in South Carolina, John Edwards took a lot from Hillary Clinton. So, there's one theory that, in the South, at least, that this would benefit Hillary Clinton now.

But there's another theory that says that Edwards voters were anti-Hillary voters and that they're change voters, and that those voters could then go to Barack Obama. So, the answer is, we don't really know.

BLITZER: What do you think, Jeff?

JEFFREY TOOBIN, CNN SENIOR ANALYST: Boy, I hate to agree too much with Gloria, because it's boring, but I completely agree.

(LAUGHTER)

CAFFERTY: And it's nice.

TOOBIN: I just think it's very hard to -- it's very hard to figure out where that -- where that vote goes.

I think, without an endorsement, it probably doesn't help one candidate a lot. I think, if there were an endorsement, that would make a big difference.

BORGER: I do, too.

TOOBIN: But it doesn't look like there's going to be one, because the calender is so weird here. You know, Edwards has basically got to endorse someone tomorrow or he's got to wait until after Super Tuesday, because Friday...

BORGER: Yes, I...

TOOBIN: You've got the weekend and then you've got the Super Bowl and then you've got Monday. I mean it just -- there's just no time.

BORGER: I agree that an endorsement would really matter, because, strangely enough in this campaign, endorsements have mattered. We've just seen Rudy Giuliani with John McCain. I think it's going to make a difference for McCain in New York, New Jersey Connecticut. And if Schwarzenegger endorses in California, that will make a difference. I think Governor Chris Crist endorsing McCain in Florida made a difference.

And if Edwards were to endorse someone, it would make a difference. CAFFERTY: You know, I loved Governor Crist yesterday, Wolf, when you asked him -- the Florida governor -- if the endorsement had -- was tied in any way to his ambitions to be vice president. And as they all say, it's like, no, no. I just want to be governor of Florida.

I would love to hear him to say you know what?

This governor gig blows and I'd like something bigger.

(LAUGHTER)

CAFFERTY: And I'm going to see if I can trade this endorsement for a spot up there inside the by the way, because this is small time down here and I'm ready to move up.

(LAUGHTER)

BLITZER: Well, I think McCain does owe -- he does owe Governor Crist and Mel Martinez, the Republican senator in Florida. I think he owes them both for helping him have that decisive victory in Florida yesterday. Clearly, it's given him some momentum right now.

I want to talk a little bit about that in a moment.

But let's wrap up on the Democratic side right now. And, Jack, give us your thoughts.

Why do you think -- knowing -- because you've studied John Edwards -- all of us have for some time -- why do you think he woke up this morning, he met with his wife, Elizabeth, and finally said you know what, it's over?

CAFFERTY: Well, I think there's a couple things and I think his wife has absolutely -- has got to be part of the equation. He has no chance of being the nominee. He has spent a ton of money. Her health is not good. Nobody knows how much time they have together.

And so what's the point in staying in this rat race, jumping on and off airplanes and in and out of hotel rooms?

You know, cash in your chips. If you can do some good with the delegate you have, fine. And focus on spending some quality time with your wife and family and think about what you want to do with the rest of your life. He wasn't going to be the president.

TOOBIN: And I think -- I mean he also left the race with a lot of dignity. You know, going to New Orleans, working for Habitat for Humanity, I mean this is what he has tried to make his campaign about. And I think the way he left it was an admirable summation of what he tried to do.

BORGER: I think it was, too, because he talked to each of the remaining candidates and said you guys have to promise me you're going to fight for -- against poverty, which was his entire platform. He didn't extract any promises from either one of them about his own political future. But it's clear that this is what he really cared about in this campaign.

Also, Wolf, he made a clear political calculation. I think he looked at the Super Tuesday states, figured he couldn't get the 200 delegates or so that he wanted in order to make a huge difference at the convention and figured, you know, ride off into the sunset in the right way.

BLITZER: You know, I think it's fair to say all of these candidates who drop out, who don't survive this contest, all of them who have dropped out so far, they've seemed to be dropping out with dignity. And we wish them all good luck.

All right, guys, stand by.

We're going to move on, take a quick break.

Rudy Giuliani, as we just saw live here in THE SITUATION ROOM, endorsing his former rival, John McCain. You're going to find out why it could just add up -- add to McCain's credibility gap -- at least with some conservatives who don't like Rudy Giuliani.

And will California's governor, Arnold Schwarzenegger, himself endorse John McCain?

Sources tell us that those talks are underway. Coming up shortly, my live interview with governor Schwarzenegger. He joins us one-on- one. That's coming up.

We're live at the Kodak Theater in Los Angeles.

And you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Rudy Giuliani out of the presidential race, endorsing John McCain. That's unlikely, though, necessarily to help McCain's conservative gap, as some of his critics are calling it.

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

Jack, what do you think, Rudy Giuliani endorsing John McCain?

Some conservatives don't like Rudy Giuliani and so that's not necessarily a blessing.

CAFFERTY: Well, they don't like John McCain either. I mean his mother...

BLITZER: That's true.

CAFFERTY: His 95-year-old mother said that, in the end, the conservatives are going to have to hold their nose and vote for him anyway.

Who are they going to vote for? Huckabee? That isn't happening. And Romney is no darling of the far right of the Republican Party. And it looks increasingly like he's being left in the dust, too.

I'm wondering why Huckabee doesn't do what Giuliani did -- get out and say Mitt Romney, here are my delegates, here's my conservative blessing, go to war with McCain and see what you can do.

BLITZER: Gloria, you know, I think it's fair to say that Rudy Giuliani, as we just saw, he did drop out with dignity -- just as John Edwards dropped out with dignity earlier in the day. That seems to be a -- that seems to be a theme we're seeing.

BORGER: Yes. He really did drop out with dignity. And I think he's going to help John McCain in a lot of states where there are a lot of Republicans who look like Rudy Giuliani. There are a lot of more so-called moderate Republicans. And conservatives can moan about it all they want, but he will help -- he will help McCain.

I should tell you, Wolf, the noise you're hearing in the background from me is a counterweight to a flag out here in Simi Valley that is blowing in the considerable breeze.

TOOBIN: I don't want to dissent too much. I mean I think Giuliani said something that was very helpful to McCain and I think it's certainly good. However, he did say something that is really pretty outrageous.

BORGER: Yes.

TOOBIN: He said he thought McCain should be commander-in-chief of the United States. The president is not commander-in-chief of the United States. He's commander-in-chief of the military. And...

CAFFERTY: So there.

TOOBIN: That is an example of, you know, Giuliani's kind of militaristic, authoritarian approach that I think is just not right. And, you know, the pres -- that's not what the president does.

CAFFERTY: But what is all this...

TOOBIN: He doesn't run the country.

CAFFERTY: What is all this dropping out with dignity?

They lost. Get out. Go away and get off the stage and lets -- let the players continue who still have a role in this thing. Just go away.

TOOBIN: By the way -- I mean, Jack -- I think -- Jack said, you know, why doesn't Huckabee endorse Romney. I think if Huckabee leaves, he'll endorse McCain. They have been much more personally connected. They are much more friendly. I don't see any chance of Huckabee endorsing Romney, even though, you know, their bases overlap. He's helping McCain by staying in the race. CAFFERTY: Absolutely.

TOOBIN: So maybe he's doing a service that way.

CAFFERTY: Yes.

BLITZER: Yes. Huckabee's, you know, he's got some Southern states, Jack, that he's working on next Tuesday...

CAFFERTY: Yes.

BLITZER: In Georgia, for example. And so maybe he thinks he can get something out of it, although he has not done that well since that win in Iowa. That was the first contest.

CAFFERTY: Well, that was -- that was it. I mean, and he hasn't done anything since.

What do you think he's going to get out of it?

I mean I'm -- I'm not that smart.

TOOBIN: You know, I saw...

BLITZER: So, in other words, you think he should just throw in the towel right now?

CAFFERTY: Well, he's not going anywhere. What -- I mean he won the caucuses in Iowa and that was the end of it. We talked about him for 72 hours.

And then they went to New Hampshire and it was Mike who?

I mean it's over.

TOOBIN: But, you know, Mitt Romney...

BLITZER: All right...

TOOBIN: ...gave a very interesting interview to John Roberts. And he certainly didn't seem like someone who was really expecting to win. That was a very down, depressed Mitt Romney, I thought. And it just seems to me that the writing is really on the wall here.

CAFFERTY: Oh, yes.

TOOBIN: We'll see how they act tonight, but, boy, I don't see anybody stopping McCain now.

CAFFERTY: I agree.

BLITZER: All right, guys, thanks very much.

Jeffrey Toobin and Gloria, thank her, as well.

Jack's got The Cafferty File coming up. Republican political sources say negotiations are now underway for another big endorsement -- one that could pack a lot of punch in a critical state. We're going to be speaking with the governor of California, Arnold Schwarzenegger. That's coming up right after this short break.

We'll be right back.

(COMMERCIAL BREAK)

BLITZER: And joining us now, the governor of California, Arnold Schwarzenegger.

He's at the Reagan Library in Simi Valley.

Governor, thanks very much for coming in. I know you're getting ready to watch our CNN Republican presidential debate at the Reagan Library. It should be exciting. It begins a little more than an hour from now.

Let me ask you about -- all these rumors out there, Governor, that you're seriously thinking about actually endorsing John McCain, perhaps as early as tomorrow. Update our viewers. Tell us what's going on.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Well, I have always said that I would stay out of the whole thing of endorsing anybody until our, you know, primaries are over. And so I think this is exactly what I'm going to do.

BLITZER: So you're not going to endorse anybody, at least until after next Tuesday, when the California primary takes place?

Is that right?

SCHWARZENEGGER: Well, no. I just say that at this point, I have no -- nothing to announce and so I'm sorry to say that -- I know that you want to get the information and you get the scoop. And CNN should have the first scoop on something like that. That is, of course, clear to me. But I mean I'm sorry, I have nothing really to announce today.

BLITZER: Today. OK. I guess the operative word is today. I'm not going to press you, Governor. You can make your announcement whenever you want.

But tell us, what do you think about these Republican candidates out there -- John McCain, Mitt Romney, Mike Huckabee, Ron Paul?

Who do you like?

What are their strengths and their weaknesses, from the California perspective -- the issues important to the people of your state?

SCHWARZENEGGER: Well, I think, first of all, all of those candidates are very strong candidates. I think that they all had great moments and some have had, you know, moments, where they didn't do so well in those debates. I think they are all having interesting views on the various different issues and all this. And I think what is important for me and I have to look it here in a little bit in a selfish way as the governor, of what is the most important for California.

And I think that, you know, each one of those candidates addresses certain things. But for us, what is important is health care reform. As you know, we struggled for a whole year negotiating with Democrats and Republicans, bringing them together with health care reform. It has failed, just a few days ago, here in the Senate. And we are going to go back and try again.

But at the same time, we feel it's very important for the federal government to create universal health care here in America. The federal government has talked about that, you know, since 1912, since Teddy Roosevelt has mentioned universal health care. Since then they were not able to do it -- the states -- anywhere in the 50 states they have not been able to do really comprehensive health care reform, other than Massachusetts. They came as close as possible.

We tried to do it.

So I think it's very important that the presidential candidates address that issue. That they also address the issue of the environment. It's extremely important that we have an administration that will have an energy policy -- that will have a policy that gets us off the fossil fuel and to really look at alternative fuels and at renewables and all of those kinds of things and that we cut down on pollution and fight global warming and take all that subject really -- those things really seriously.

It's also very important that we go and address immigration. I think that, you know, the Bush administration mass done a great job in trying to bring people together and address immigration reform. But I think it has failed. So I hope that the next administration is really serious about immigration reform, because right now what we have in America is a disaster.

So those are the things that ought to be addressed. And, of course, that we get a good reputation again worldwide with our country, because we have the best country in the world and we are the most giving country in the world. But our reputation right now is not the best.

BLITZER: Because on those issues that you mentioned, whether fighting on the issue of immigration reform or health care reform -- universal health care, the environment -- the Democratic candidates, Hillary Clinton and Barack Obama, they've laid out their positions.

What do you think of those positions that they've laid out?

Because on several of the issues, they seem to be pretty much in line with you.

SCHWARZENEGGER: I think that there are some differences. But I think that the most important thing is that we shoot for universal health care. We have to make sure that each one has a chance to get insured, that everyone has access to health care, that our health care costs come down and not increase every year, but double digit numbers, and that we don't overcrowd our emergency rooms with people that have no insurance. And they use the emergency rooms -- or abuse the emergency rooms -- because they don't have insurance and can't go to a doctor. So people have to wait sometimes with their children for 10 hours to see a doctor.

All of those things have to change. And that hidden tax that we all are paying, people that are insured are paying for the uninsured. So there's a 20 percent added tax that we all are paying. So those things all have to change and we have to pay much more attention to prevention -- which should be a big, big part rather than only going to the doctor after it is too late, many times.

BLITZER: You said you noticed that their -- they did get a health care plan underway in Massachusetts when Mitt Romney was the governor. You tried to do it in California. You weren't successful.

Yet what was the big issue?

Was it simply the money, that it wound up costing too much and that's why it was derailed?

SCHWARZENEGGER: Well, I cannot tell you exactly what the reason is because, you know, the senate hasn't really laid it out for us of what the real reason is. But I think there is, in general, also a fear because we have right now a budget crunch. I think we have an economy that has been declining. The housing market and the subprime mortgage crisis has had a tremendous effect on that. So we have now less revenues coming in.

So people are worried that maybe this health care reform that we are trying to do will have an effect, also, on the budget -- even though it is totally unrelated and we have built firewalls in between, you know, health care reform and our revenues.

So -- but people are still worried. So it's just -- it's strange timing right now, where people are scared of going on and tackling big issues like that -- if it is health care reform or if it is infrastructure or any of those other issues.

BLITZER: What do you think of these two Democratic candidates left standing, Hillary Clinton and Barack Obama?

Who would be the more formidable challenger, the more formidable opponent?

You're a Republican.

SCHWARZENEGGER: Well, first of all let me just say that, you know, both of them are extraordinary public servants. I mean it's not like, you know, we are talking about one is good and one is bad. I think they both are great. I think that they are doing a great job with their debates and laying out the issues, as much as the Republican candidates. We have great public servants here.

So I think that they -- all of them now, as it gets -- as the whole thing peaks, we can see that what is left is the best of the best. That's on the Republican and on the Democratic side.

BLITZER: And so I'll give you one final chance to give us a preference.

Do you want to give us an indication of who you like the most?

SCHWARZENEGGER: I like all of the candidates so far and I will let you know, you know, after tonight's debate, you know, if I'm going one way or the other.

BLITZER: All right, Governor.

We'll be listening. We'll be watching not only the debates, but we'll be watching after the debate to see what you decide, as you could be very, very instrumental, especially here in California.

Governor Arnold Schwarzenegger, thanks for the hospitality.

SCHWARZENEGGER: Thank you.

BLITZER: You've got a lovely state. We always love coming out here to California.

SCHWARZENEGGER: Thank you very much.

BLITZER: The governor of California.

SCHWARZENEGGER: And keep up the great job.

BLITZER: Arnold Schwarzenegger, thanks very much.

SCHWARZENEGGER: Thank you.

BLITZER: And the debate coming up a little bit more than one hour from now over at the Ronald Reagan Library.

Let's go to Jack Cafferty.

He's got The Cafferty File -- Jack.

CAFFERTY: Keep badgering "The Governator," he could hurt you.

BLITZER: I know.

CAFFERTY: The question this hour, there's a study out indicating that 60 percent -- 60 percent of government employees at all levels -- state, local and federal -- say that they have witnessed ethic violations. And we asked if that surprises you.

Barbara writes: "I'm one of those state employees who has witnessed such conduct. The more you speak up, the more you're isolated and retaliated against. I have six years until I can retire. If I won the lottery, I'd be out the door in a minute. This is a scandalous problem and it falls right in line with our need to shake up the government status quo at all levels."

John in California writes: "I'm not surprised at all. None of these government employees have any accountability to us or their superiors. The government as a whole needs accountability, not only for ethics, but for performance, as well. This statistic shows me that government is completely broken."

Lisa writes: "Before we answer the question, let's get some perspective. What percentage of employees at non-government jobs see the same kind of dishonesty at work? No, I'm not surprised. I've seen abusive behavior of managers just while I'm standing in line at a store. The real question is how pervasive these things are in our culture not just our government."

Doug writes: "I'm surprised only 60 percent say they've seen ethics violations. I suspect the other 40 percent are lying."

Kevin writes: "No, Jack, it doesn't surprise me at all. Our country has become so engulfed in the lives of athletes and cele- Brittanys," he writes, "that they have turned a blind eye to boring politics. They've let the government get away with whatever they want and continue to reelect them. Where is the incentive to do well? They have none and it doesn't surprise me."

And James writes: "It surprises me that more don't open their eyes and see the waste, fraud and abuse. As an employee of a federal contractor for five years, I saw far more than I could stomach -- from fraudulent accounting practices easily documented to overtly bigoted management. We get the government we deserve. We've gotten sewage." -- Wolf.

BLITZER: All right, Jack.

Thanks very much.

When we come back, Jeanne Moos has a Moost Unusual piece. You're going to want to see this.

We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Two more presidential candidates bow out of the race.

CNN's Jeanne Moos takes a Moost Unusual look.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): The beginning of this story is the end of theirs. As the gossipy Web site Jezebel put it, "the prettiest pretty boy bows out."

(on camera): John Edwards dropped out.

UNIDENTIFIED FEMALE: Oh, my God.

Paul, can I call you back in two minutes?

I'm on camera.

MOOS: Well, tell them the news.

UNIDENTIFIED FEMALE: Did you hear?

John Edwards dropped out of the race. Oh, no. He was the only one I liked.

MOOS (voice-over): We in the press won't have John Edwards' hair to kick around anymore.

(BEGIN VIDEO CLIP FROM YOUTUBE.COM)

UNIDENTIFIED FEMALE: I feel pretty, oh so pretty.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP FROM "THE LATE SHOW WITH DAVID LETTERMAN," COURTESY WORLDWIDE PANTS INC.)

DAVID LETTERMAN, HOST: Has it ever been messed up?

No, no, no, no.

(END VIDEO CLIP)

MOOS: As for tough guy Rudy Giuliani, even as he withdrew, he was still taking it on the chin.

UNIDENTIFIED MALE: He was a good mayor. He was good in a crisis, 9/11. But, also, you know, people tend to look at someone and you say hmmm, two ex-wives, his children don't speak to him. It didn't read well.

MOOS: And now we're reading about a lot fewer candidates.

(on camera): Simply put, they're dropping like flies.

(voice-over): Some of the earlier dropouts actually were pestered by flies.

(BEGIN VIDEO CLIP, COURTESY PBS)

UNIDENTIFIED MALE: We can do that now.

UNIDENTIFIED MALE: Increases...

GOV. BILL RICHARDSON (D), PRESIDENTIAL CANDIDATE: I've got this fly around me.

(END VIDEO CLIP)

MOOS: And while some were swatting at Rudi, his supporters warned...

UNIDENTIFIED FEMALE: You'll be sorry.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: You sound like my mother.

MOOS: Some said he sounded like a broken record.

UNIDENTIFIED FEMALE: I was very tired of the 9/11, 9/11. Everything was 9/11, 9/11.

MOOS: The Huffington Post humor page joked, "Rudy set to withdraw to spend more time with 9/11."

Perhaps hoping for an endorsement, the two remaining Democrats were smooching their formal rival on their Web sites. "We salute John and Elizabeth," trumpeted Hillary's site. "Thank you, Elizabeth and John," said Obama's.

In some ways, it must be a relief to drop out of a race where your dignity is under constant assault.

(VIDEO CLIP, COURTESY RIPEVIDEOS.COM)

MOOS: Not only did the fat lady sing, she had her mouth full.

Jeanne Moos, CNN, New York.

(END VIDEO TAPE)

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

In Paris, thousands of taxi drivers park in the street in a protest against the government's proposal to allow more competition.

In Florida, I guess it happens to everyone -- presidential candidate Mitt Romney goes through a security check before boarding his charter plane.

In Jerusalem's Old City, a woman walks through the snow -- yes, snow. Schools closed, public transportation came to a halt because of the overnight snowfall.

And in Austria, a young panda cub leans against his mother during his first public appearance.

Some of this hour's Hot Shots -- pictures worth a thousand words.

You've helped make our politics pod cast one of the most popular on iTunes. To get the best political team to go, subscribe at CNNPolitics.com.

And don't forget, only one hour from now, the Republican presidential candidates face-off at the Reagan Library debate here on CNN. That's coming up in one hour.

Until then, thanks very much for joining us.

I'm Wolf Blitzer in THE SITUATION ROOM.

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

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