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Did Obama Exaggerate Army Captain's Story; Did Clinton Win Any Obama Supporters After the Texas Debate?;McCain Continues to Fight Rumors Involving a Lobbyist

Aired February 22, 2008 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: We're going to show you what they're doing, why it's so controversial and which candidate has the most lobbyists helping
Plus, President Bush's former top adviser, Karl Rove -- he's now accused of trying to get compromising pictures of a Democratic governor in an effort to bring him down. We're going to hear from a former GOP operative who is now speaking out.

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

It was perhaps the most closely scrutinized face-off yet between Hillary Clinton and Barack Obama. The tension is building. She was desperately in need of a strong showing in last night's debate in order to win over undecided Texas voters, who will likely make or break her White House quest. Clinton is now even farther behind in the so-called delegate race -- 1,258 to Barack Obama's 1,319. That's both pledged and super-delegates combined.

So how did Clinton do in the Austin showdown? Let's bring in senior political analyst, Gloria Borger. She watched this about as closely as anyone did.

GLORIA BORGER, SENIOR POLITICAL ANALYST: Oh, yes.

BLITZER: We all watched it very closely. What do you think? How did she do?

BORGER: Well, I think, looking back on what happened last night, personally, I think it's kind of a status quo event. There was a lot of debate inside her campaign, Wolf, about how she ought to go in the debate -- whether she ought to take him on hard -- which she did at certain points, as you know. And then other people said no, no, no, find your softer side, your voice after New Hampshire.

She did that, too, as well, in the closing statements. So I think she kind of split the difference. And, in the end, I believe -- talking to both of these campaigns today -- it was not much of a game changer for either campaign.

BLITZER: She had to really deliver sort of a knockout punch.

BORGER: She did.

BLITZER: He had to make a major mistake, which apparently he didn't do. He's getting a lot better with each of these debates.

BORGER: Much better.

BLITZER: I remember back in June of last year, when I moderated one of the early debates, he was still a little nervous and rusty. But, what, 15, 16, 18 debates later, he's doing a lot better.

BORGER: You know, you do enough live television, you get good at it, right, Wolf?

BLITZER: That's right. Yes. I think that's fair.

BORGER: And I think -- and I think that's happened with Obama. He seemed very comfortable last night. He clearly had a little bit of a cold. What was sort of interesting to me was their body language.

He looked at her as she spoke, but she kind of looked past him all the time, as if she couldn't quite get her arms around looking directly at him. I think there's a lot of tension between these two candidates and we could see a little bit of that.

BLITZER: That is -- well, that's understandable given the stakes involved.

BORGER: Yes.

BLITZER: But he seemed a lot more confident this time. But as you point out, in her closing statement, that might have been the best moment she had. And it was probably the best time to do it -- leaving the audience, not only there but around the state and around the country -- with a nice poignant moment of Hillary Clinton.

BORGER: When the plagiarism question was asked and she used the Xerox line and it got king of groans in the audience, I think there was a sense that maybe she ought to pull back from that, as she did. And she kind of reached over and touched Barack Obama's hand and said I'm honored to be here on the stage with you. You know, that's what the American people like and that's what they want to hear. And they want to see civil discourse. And I think they saw civil discourse last night.

But as for the state of the race, I don't think it's one of these debates where you take a poll overnight and oops, somebody made a mistake and it changes the state of play. I think it's pretty much the same.

BLITZER: On March 4th is Texas, Ohio, Vermont and Rhode Island.

BORGER: Right.

BLITZER: They have one more debate in advance of that next week. And people are going to be watching that debate, as well.

BORGER: Yes, we're going to watch that. We're going to -- we're going to see where the voters seem to be. And that can really affect each of their strategies as they -- as they head into that debate. I mean if Hillary Clinton feels like she's falling farther and farther behind, then her advisers may say get a little tougher. But if it seems as if it's a pretty even race and she can -- and she can carry Texas or Ohio, maybe she'll play it a little safer. Who knows?

BLITZER: It's a dangerous, dangerous strategy because I get the sense -- talking to a lot of Democrats -- they don't want to see these two Democrats fighting each other, because they think that merely helps John McCain in the long run. So they've got to walk a delicate -- a delicate line.

BORGER: Yes. And they don't want to -- they don't want to fight all the way to the convention either, Wolf. They really want to get rid of this whole super-delegate problem and, you know, each other and then fight against McCain.

BLITZER: Gloria will be back in the next hour with the best political team on television.

BORGER: I've heard that.

BLITZER: Gloria, thank you.

Hillary Clinton says she's heartsick over a tragedy in her motorcade. A Dallas police officer escorting Senator Clinton's vehicle to a rally died when his motorcycle crashed. Clinton decided to cancel the event. She says she's called the Dallas police chief to express her condolences and wants to do the same for the officer's family at an appropriate time.

There's a new spotlight shining on the role of lobbyists in the McCain campaign after that very controversial "New York Times" article suggesting an inappropriate relationship between McCain and a female lobbyist in the past -- years ago.

CNN's Brian Todd is watching this story for us.

Brian, don't all the major candidates have lobbyists playing significant roles in their campaigns?

BRIAN TODD, CNN CORRESPONDENT: They do, Wolf, some of them very influential lobbyists. But John McCain especially vulnerable now on this because he had been so outspoken in the past.

(BEGIN VIDEOTAPE)

TODD (voice-over): For decades, a crusader against special interests, John McCain now defends the high-powered lobbyists who have positions at the top of his campaign.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: These people have honorable records. They have -- and they're honorable people and I'm proud to have them as part of my team.

TODD: He's talking about his campaign manager, Rick Davis, co- founder of a lobbying firm whose clients include BellSouth and Verizon. The campaign said Davis was not available for comment, but stressed that he's not paid by the McCain campaign and hasn't done any lobbying in at least two years.

Charlie Black, one of McCain's top advisers, is an active lobbyist, head of one of Washington's most powerful firms -- Lockheed Martin and Philip Morris among its clients. Black tells CNN he's not paid to advise McCain, doesn't lobby him, always makes sure there are no conflicts and says McCain is very even-handed when it comes to lobbyists.

CHARLIE BLACK, MCCAIN CAMPAIGN SENIOR ADVISER: He listens to both sides. He then makes up his mind on the merits, on his principles, and don't do favors for anyone.

TODD: McCain is certainly not alone. Among Hillary Clinton's top advisers, Harold Ickes, a registered lobbyist whose firm represents Verizon, and Steve Richetti. His group has worked for Anheuser-Busch and G.M. But the campaign says he doesn't lobby Senator Clinton.

A top adviser to Barack Obama is lobbyist Steve Hildebrand. But the campaign says he's not currently working as a lobbyist. With some 35,000 lobbyists in Washington, is this unavoidable?

KAREN TUMULTY, "TIME" MAGAZINE: There is no small amount of overlap between the people who have the most expertise about politics and people who have lobbying on their resume.

(END VIDEOTAPE)

TODD: Still, Joan Claybrook, head of the watchdog group Public Citizens, says it's not what lobbyists tell their candidates, it's the money they bring in for them. And she says McCain leads on that score. Fifty-nine people who have registered as lobbyists are collecting money for him. The closest to that, Hillary Clinton, was 19. Barack Obama, the group says, has nine. But Claybrook says McCain is fiercely independent and less likely to be influenced by that than other candidates.

One quick correction, Wolf. We showed some incorrect video. Rick Davis -- that was not Rick Davis that we showed in the piece. Rick Davis is McCain's campaign manager. That was some incorrect video there.

BLITZER: All right. Good. We'll fix it down the road.

Thanks very much. Brian Todd with this important story for us.

The presidential age factor...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Do you ever worry that, like, you might die in office?

MCCAIN: Thanks for the question, you little jerk.

(END VIDEO CLIP)

BLITZER: John McCain would be one of the oldest presidents, Barack Obama one of the youngest. So how is age helping and hurting both of them?

Plus, Barack Obama on the folly of going to war in Iraq. You're going to find out why the story he tells of the U.S. Army captain has some asking if the story is true. We're doing a Fact Check. Jamie McIntyre all over this story.

And Karl Rove -- he's now accused of trying to get sex pictures to bring down a Democratic governor. You're going to hear from the former Republican operative who says Rove asked her to take them.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There's another number besides the delegate count factoring into the race for the White House. That would be age. On inauguration day, John McCain would be the country's oldest inaugurated president. Barack Obama would be among the youngest.

Carol Costello is here. She's watching the story.

How does this factor of age, if at all, factor into this race?

CAROL COSTELLO, CNN CORRESPONDENT: Oh, it's a fascinating topic. I mean age is already a factor. The leading candidates in both parties represent, arguably, three different generations. Think about it -- McCain is 71; Obama, 46; Clinton, 60 -- age differences wide enough to define each candidate.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): It's the issue that for some just might trump race and gender -- age.

MCCAIN: I am older than dirt, more scars than Frankenstein, but I've learned a few things along the away.

COSTELLO: At 71, his energy is amazing. Maybe 71 is the new 61.

UNIDENTIFIED MALE: Do you ever worry that, like, you might die in office?

MCCAIN: Thanks for the question, you little jerk.

COSTELLO: McCain often mentions his 95-year-old mother -- something not many 71-year-old people can do. But still, the presidency is job like no other. Anna Quindlen wrote in "Newsweek," "The presidency, it ages a person in dog years. Each year in office is equivalent to seven years in the life of an ordinary citizen. Compare George W. Bush in 2001 to George Bush today. Compare Bill Clinton in' 93 to Clinton in 2001. The presidency ages you. Then again, in the world of politics, 71 isn't really that old. The average age of the Senate is 62. Senator Robert Byrd is 90. Still, polling after Super Tuesday showed McCain doing best with voters over 60. But it's not just McCain at 71 facing the age issue. Barack Obama at 46 is facing it, too.

ANDREW YOUNG, FORMER U.N. AMBASSADOR: It's not a matter of being inexperienced. It is a matter of being young. There's a certain level of maturity. You've got to learn to take a certain amount of (EXPLETIVE DELETED).

COSTELLO: Born in 1961, Obama is technically a boomer. Still, "Boston Globe" columnist Ellen Goodman calls it a case of junior envy -- of aging baby boomers not willing to give up their influence just yet.

"Is it possible," Goodman asks, "that the same generation that didn't trust anybody over 30 when they were 20, doesn't trust anybody under 50 now that they're turning 60?"

And Hillary Clinton is 60. Her age issue has little to do with a number and everything to do with her generation.

ROBERT DALLEK, PRESIDENTIAL HISTORIAN: There is a generational divide here that is going to mean something in this election. And whether McCain is running against Clinton or Obama, I think you're quite right, that's going to one of the interesting divides that we'll see in the campaign.

MCCAIN: Senator Clinton tried to spend $1 million on the Woodstock concert museum. Now, my friends, I wasn't there. I'm sure it was a cultural and pharmaceutical event.

(LAUGHTER)

MCCAIN: I was tied up at the time. But the fact is...

COSTELLO: And Barack Obama is piling on, distancing himself from aging boomers in his book, "Audacity of Hope". He writes Of Bill Clinton's time in office, "I sometimes felt as if I were watching the psychodrama of the baby boom generation -- a tale hatched on a handful of college campuses long ago." And post-baby boomers are buying in. He scores best among young voters, Clinton among older folks.

(END VIDEOTAPE)

COSTELLO: And if you're wondering what age Americans think is perfect for a president, a recent "Time" magazine poll put that number at 50.

BLITZER: Fifty?

COSTELLO: Fifty.

BLITZER: All right.

COSTELLO: That's the perfect age for a president.

BLITZER: It's a good age.

Thanks very much. Carol Costello, a good piece.

Neither McCain nor Obama would be alone in their age bracket on the world stage. Mexican President Felipe Calderon is currently one of the youngest leaders. He's 45-years-old. The Egyptian president, Hosni Mubarak, is one of the oldest. He's 79. Hillary Clinton is closer in age to the Russian president, Vladimir Putin. He's 55. And to North Korea's Kim Jung Il, who is 66.

A number of influential African-Americans are gathering in New Orleans this weekend and the race for the White House will be a hot topic. One of the Democratic candidates will be there, but one will not.

Let's go to CNN's Sean Callebs. He's live in New Orleans right now watching this story.

Sean, what is going on?

SEAN CALLEBS, CNN CORRESPONDENT: Well, Wolf, the organizer of "The State of the Black Union" is bringing his annual symposium here to New Orleans. But he's more than a bit upset that one leading African-American will not be here this weekend.

(BEGIN VIDEOTAPE)

CALLEBS (voice-over): The convention center in New Orleans was the flashpoint for disaster in the aftermath of Katrina. Many of those in dire need were African-American. This weekend, the convention center will host the annual focus on "The State of the Black Union" -- an event led by talk show host Tavis Smiley.

TAVIS SMILEY, TALK SHOW HOST: And we owe it to them -- those who survived, those who are still struggling to rebuild their lives, those who didn't make it. We owe it to them. We owe it to them to raise these issues now louder than ever.

CALLEBS: Issues for African-Americans everywhere that in New Orleans are glaring problems -- crime, lack of affordable housing, entire communities that still lack hospitals or emergency care. Even a fresh coat of paint means something to a school where 97 percent of the students qualify for a free lunch program. How and whether New Orleans should be rebuilt is still being debated.

(on camera): Is it pathetic that two-and-a-half years after the storm, we're still trying to make that argument?

REP. JUAN LAFONTA (D), LOUISIANA STATE HOUSE: Man, it's sad.

CALLEBS (voice-over): State Representative Juan Lafonta is head of the legislative Black Caucus. He's raised eyebrows by supporting Hillary Clinton, not Barack Obama. Lafonta says Clinton has been there when the region needed help. LAFONTA: I don't know -- I don't support people just because they're black. I support people because they're qualified and they're committed to my issues that affect my constituent base.

CALLEBS: Hillary Clinton will be at "The State of the Black Union". Barack Obama won't. In a letter to Smiley, Obama wrote he'll be campaigning in Texas and Ohio, "talking directly with voters about causes that are at the heart of my campaign and the state of the black union."

SMILEY: And I think that it's a missed opportunity on Mr. Obama's part. Now, I'm not interested in demonizing him for his choice, but I do disagree with it.

(END VIDEOTAPE)

CALLEBS: And a little bit later in that letter, Obama also says he offered to send his wife Michelle here this weekend, but Smiley turned him down, saying this is a time to hear from the candidates, not from their surrogates. Obama says no one knows his record or his passion for leading the country better than his wife.

And one final note, Wolf. Smiley did invite the two GOP candidates. They are not going to be here, as well.

BLITZER: Sean Callebs in New Orleans for us. Thank you, Sean, very much.

Barack Obama sends some bloggers into a frenzy with one particular claim about U.S. troops in Afghanistan and Iraq. Is he playing loose with the facts, though? You're going to hear exactly what he said. We're doing a Fact Check. You'll want to see this.

Plus, Condoleezza Rice for vice president -- you're going to find out what the current secretary of state is saying about that possibility.

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

(COMMERCIAL BREAK)

BLITZER: Carol Costello is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Carol, what's going on?

COSTELLO: Well, Wolf, wire fraud, extortion and money laundering -- they're all part of an indictment today against an Arizona Congressman connected to the presidential campaign of Senator John McCain. Representative Rick Renzi is accused in a land swap scam that allegedly netted him hundred of thousands of dollars in payoffs.

The federal indictment accuses Renzi and two former business partners of embezzlement. Renzi is McCain's campaign co-chair in Arizona. McCain calls the indictment unfortunate, but says he doesn't have enough details to make a judgment. In the Northeast, what a mess. A winter storm which dumped up to a foot of snow from New York to Philadelphia brought air traffic to a near standstill in that region today. At Kennedy, La Guardia and Newark International Airports, hundreds of flights were canceled -- hundreds more delayed up to four and five hours. One National Weather Service meteorologist calls it "the most significant storm of the season for New York City."

A 23-year-old Minnesota woman faces vehicular homicide charges for a school bus crash that killed four children. It happened Tuesday in the southwestern Minnesota town of Cottonwood. Police say Aliannis Morales failed to stop the van she was driving at a stop sign and she slammed into the bus carrying 28 children. Immigration officials say Morales is not her real name and they're trying to find out her real identity.

So far, all clear after Wednesday night's missile strike on a dead U.S. spy satellite. The Pentagon says its ongoing analysis of the outcome of the strike has turned up no signs of danger from debris. A Navy cruiser Wednesday night launched a missile at the spacecraft, successfully blowing it to bits. Officials say the shoot down was necessary to prevent the satellite's tank of toxic fuel from falling into a populated area. Back to you -- Wolf.

BLITZER: Thanks very much, Carol. We'll see you in a few moments.

It's the sound bite that sparked a blogging frenzy.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I heard from an Army captain who was the head of a rifle platoon. You're supposed to have 39 men in a rifle platoon. He ended up being sent to Afghanistan with 24 because 15 of those soldiers had been sent to Iraq.

(END VIDEO CLIP)

BLITZER: Some people accuse Obama of playing loose with the truth on that one. Our Pentagon correspondent, Jamie McIntyre, is doing a Fact Check. Stick around. You'll see it.

Also, we're going to show you why all the candidates are vulnerable to what some call political hacktivism and how it could wind up costing you.

Plus, a Republican operative is making some serious allegations about Karl Rove and an alleged smear campaign. We'll have the details.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM. Happening now, a virtual fence along a 28-mile stretch of the U.S.-Mexico border gets the go ahead. The Homeland Security secretary, Michael Chertoff, today announced approval of the network of radar and surveillance cameras. It's part of a plan to try to secure the southwest border against illegal crossings with both physical and high tech barriers.

The U.S. ambassador to Serbia calls for the evacuation of non- essential personnel from the U.S. Embassy in Belgrade. The move comes in the wake of yesterday's attack on the compound by protesters.

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

The winds of change in Cuba have brought the communist island nation to the forefront as a campaign issue in the U.S. presidential race. In Indianapolis today, the Republican senator, John McCain, said he doesn't foresee any major reforms in Cuba until after the death of Fidel Castro, who stepped down as president Tuesday. McCain says he hopes Castro's demise comes soon. And he struck a pessimistic note about a likely successor -- that would be Castro's brother, Raul.

(BEGIN VIDEO CLIP)

MCCAIN: On the subject of Cuba, I made it very clear the other day that the time to aid Cuba, the time to sit down with the Cuban leadership will only be after they've emptied their prisons, when the human rights organizations are functioning and they've held free elections.

Raul, in many ways, has a worse record than Fidel. And, again, I think it's naive to think that you can sit down and have unconditional talks with a person who is part of a government that has been a state sponsor of terrorism, not only in the hemisphere, but throughout the world.

Again, I would strongly disagree with that kind of conduct of American national security policy, particularly since it would legitimize Raul Castro in the position that he's trying to solidify, which is a furtherance of an oppressive, repressive regime, which has caused the people of Cuba to suffer in every imaginable way, including economically for many, many years.

(END VIDEO CLIP)

BLITZER: The question of Cuba was a contentious one during last night's Democratic presidential debate between Senators Bill and Hillary Clinton. The two candidates sparred over the wisdom, or lack of it, in an open dialogue with whoever comes to power in Cuba.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Would you meet with him or not, with Raul Castro?

CLINTON: I would not meet with him until there was evidence that change was happening, because I think it's important that they demonstrate clearly that they are committed to change the direction. Then I think, you know, something like diplomatic encounters and negotiations over specifics could take place.

But we've had this conversation before, Senator Obama and myself. and I believe that we should have full diplomatic engagement where appropriate. But a presidential visit should not be offered and given without some evidence that it will demonstrate the kind of progress that is in our interests and, in this case, in the interests of the Cuban people.

BROWN: And Senator Obama, just to follow up, you had said in a previous CNN debate that you would meet with the leaders of Cuba, Iran, North Korea, among others. So presumably you would be willing to meet with the new leader of Cuba.

OBAMA: That's correct. Now keep in mind that the starting point for our policy in Cuba should be for the liberty of the Cuban people. And I think we recognize that the liberty has not existed throughout the Castro regime. And we now have an opportunity to potentially change the relationship between the United States and Cuba after over half a century.

I would meet without preconditions, although Senator Clinton is right that there has to be preparation. It is very important for us to make sure that there was an agenda, and on that agenda was human rights, releasing of political prisoners, opening up the press. And that preparation might take some time. But I do think that it's important for the United States not just to talk to its friends, but also to talk to its enemies. In fact, that's where diplomacy makes the biggest difference.

(APPLAUSE)

One other thing that I've said, as a show of good faith that we're interested in pursuing potentially a new relationship, what I've called for is a loosening of the restrictions on remittances from family members to the people of Cuba, as well as travel restrictions for family members who want to visit their family members in Cuba.

And I think that initiating that change in policy as a start and then suggesting that an agenda get set up is something that could be useful, but I would not normalize relations until we started seeing some of the progress that Senator Clinton was talking about.

BROWN: But that's different from your position back in 2003. You called U.S. policy toward Cuba a miserable failure, and you supported normalizing relations. So you've backtracked now...

OBAMA: I support the eventual normalization. And it's absolutely true that I think our policy has been a failure. I mean, the fact is, is that during my entire lifetime, and Senator Clinton's entire lifetime, you essentially have seen a Cuba that has been isolated, but has not made progress when it comes to the issues of political rights and personal freedoms that are so important to the people of Cuba.

So I think that we have to shift policy. I think our goal has to be ultimately normalization. But that's going to happen in steps. And the first step, as I said, is changing our rules with respect to remittances and with respect to travel.

And then I think it is important for us to have the direct contact, not just in Cuba, but I think this principle applies generally. I recall what John F. Kennedy once said, that we should never negotiate out of fear, but we should never fear to negotiate. And this moment, this opportunity when Fidel Castro has finally stepped down, I think, is one that we should try to take advantage of.

(END VIDEOTAPE)

BLITZER: Even though the man who led Cuba for almost five decades stepped down this week, he still has the eye on the U.S. presidential race. And retired Cuban president Fidel Castro has plenty to say about it.

Our Havana bureau chief Morgan Neill joins us with details -- Morgan?

MORGAN NEILL, CNN HAVANA BUREAU CHIEF: Wolf, just days after announcing his retirement, Fidel Castro is back - at least in print, blasting away at U.S. presidential candidates in a newspaper column. This time he's going after what he calls the candidates' embarrassing positions on Cuba. They're all shouting change, change, change. He writes. I agree, change. But in the United States, Castro also accused Washington of wanting to annex Cuba.

After nearly half a century in power, Fidel Castro on Tuesday announced he would not accept another term as president and the council of state and he resigned as the commander in chief. But he said it's not a farewell and vows to continue writing these essays, which until now have been known as reflections of the commander in chief.

Today for the first time they were published under their new title, "Reflections of Comrade Fidel." Castro said he hadn't planned on writing again so soon, but say he felt the need to send off another ideological shot at his old foe, the United States. This Sunday, Cuba's assembly will meet to select a new president of the Council of State. Raul Castro is widely expected to be that man. But clearly Fidel Castro doesn't plan on enjoying a quiet retirement -- Wolf.

BLITZER: Morgan Neill, our man in Havana, thank you Morgan very much. Fidel Castro has a new job, newspaper columnist.

The change of leadership in Cuba for better or worse raises a big possibility that has basically been off the table for many years. And joining us now our special correspondent Frank Sesno with this week's "What If" segment.

How are you doing?

FRANK SESNO, CNN SPECIAL CORRESPONDENT: Very well Wolf, how are you? Well with word that Fidel Castro is stepping aside this week, Cuba is in the news. It's on the candidates' minds. And it's very much a big what if. So you've been on "Celebrity Jeopardy!" I thought maybe we would tee up a few questions for you.

BLITZER: I'm nervous.

SESNO: The United States does business with Cuba, no business with Cuba, batters American wheat for Cuban sugar or sells agricultural products if Cuba pays cold cash. Which is it?

BLITZER: I would say -- I know they do business with Cuba. I say C.

SESNO: C is right. They will sell agricultural products if Cuba pays cold cash. Next question, Wolf.

BLITZER: Oh, more.

SESNO: Oh, yes. Last year the U.S. agricultural exports to Cuba totaled $30 million, $300 million or $600 million?

BLITZER: I'm going to say $600 million.

SESNO: Right, $600 million and going up. And finally this. Its largest import partner is Venezuela, China, Spain or the United States?

BLITZER: Its largest import. In other words, who sells the most to Cuba? Would it be Venezuela, China, Spain or the United States? Well I just saw Venezuela go up, so it must be Venezuela.

SESNO: It's all about timing. That's right. There is trade going on and a changing of the guard wit Fidel stepping aside. So the question is what will the next president of the United States do about this 50-year-old show down?

(BEGIN VIDEOTAPE)

SESNO (voice-over): What if the United States were to ease a trade embargo that's been in place since Dwight Eisenhower was president and Fidel Castro a young Communist revolutionary? There could be Cuban sugar, cigars and rum on American shelves. And a lot more American wheat, rice, chicken and beat by Cuban tables.

Cuban transplants could travel more freely to do business or see relatives. Americans could visit Cuba's beaches, cities, and universities. What if they were an exchange of trade and people and ideas? Famous Cuban-Americans like Gloria Estefan, Andy Garcia, Jose Canseco, could become good will ambassadors. Maybe Cuba's government would find it harder to demonize the U.S. Maybe the U.S. would find it easier to pitch democracy.

After all this conflict, the Bay of Pigs, the Cuban Missile Crisis, boatloads of desperate exiles, plots and politics, what if the U.S. decided to engage Cuba the way it's engaged China, Vietnam, even North Korea. Maybe Cuba would find it harder to repress its dissidents and Democrats.

Maybe the U.S. and Cuba would start discussing the thousands of claims from Cuban businesses and citizens whose property was seized after the revolution. Maybe politics and influential Cuban-Americans wouldn't have Castro to kick around anymore.

Fanciful ideas, but as surely as Castro is passing from the scene, change beckons. And the United States will always be only 90 miles away.

(END VIDEOTAPE)

SESNO: But the embargo is not likely to be lifted anytime son. President Bush has said that the Castros have to go and he says there have to be elections and not the kind of staged elections the Castro brothers try to hoist upon the Cuban people.

John McCain, candidate apparently from the Republican Party, says that Raul Castro, he just said this today, might be worse than Fidel Castro. And he says that he worries about doing anything that would prop up Castro or his "comrades who have repressed the people of Cuba for too long." Hillary Clinton suggests there could be some change if Cuba moves the towards the path of democracy. Barack Obama says he would meet without preconditions the next Cuban leader, but, again, if Cuba starts to change. So Wolf, in all cases, there are very big strings attached.

BLITZER: And not only strings attached, there's also the little matter of United States law.

SESNO: A little matter of the United States law. Passed in 1996, very specific conditions to any kind of easing of sanctions or relations between the two. Castros have to go, there have to be free elections, freedom assembly, freedom of the press, political prisoners have to be up. And the president of the United States has to certify to Congress that Cuba is making a transition to democracy. So a big what remains mostly a big if.

BLITZER: All right. Frank Sesno, thanks very much.

SESNO: Thanks, Wolf.

BLITZER: Karl Rove is linked to an alleged smear campaign. We're going to hear from a former Republican operative who says Rove actually asked her to get sex pictures of a Democratic governor.

Plus, the typo that could rip you off. You're going to find out how online con artists and vandals are now capitalizing on the presidential campaign in an effort to try to get you and your money.

Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: They are serious new allegations being leveled against former President Bush's top political adviser Karl Rove and his alleged role in trying to smear a Democratic governor. Let's go to Jim Acosta. He's watching the story for us.

Jim, what is this all about?

JIM ACOSTA, CNN CORRESPONDENT: Wolf, some members of Congress believe that during his time in the White House, Karl Rove repeatedly pressured federal prosecutors to pursue partisan investigations in states where Republicans would see gains. A Republican operative in Alabama believes that's what happened in her state.

(BEGIN VIDEOTAPE)

ACSOTA (voice-over): Alabama's former Democratic governor Don Siegelman is now in prison. He was convicted last year on federal bribery and corruption charges amid Democratic howls that the prosecution was politically motivated.

The Democrats point to Alabama Republican operative Jill Simpson, who alleges White House advisor Karl Rove she was out to smear Siegelman back in 2001. She tells CB's "60 Minutes" airing this Sunday, Rove had asked her to find evidence that Siegelman was having an affair, a charge, she says, she could never prove.

UNIDENTIFIED MALE: Karl Rove asked you to take pictures of Siegelman?

UNIDENTIFIED FEMALE: Yes.

UNIDENTIFIED MALE: In a compromising sexual position with one of his aides?

UNIDENTIFIED FEMALE: Yes, if I could.

ACOSTA: Rove's attorney said the story is not true, but Simpson says there's more. Last year, she testified before Congress she had overheard a Republican operative discussing Rove's involvement in the federal case against Siegelman. Simpson relayed that conversation to a reporter from the "Birmingham News."

UNIDENTIFIED MALE: What did you hear?

SIMPSON: I heard him say this, that he told him not to work in because he's already got it worked it out with Karl. And Karl spoke with Justice and Justice was already pursuing Don Siegelman, which meant that he had it worked out for Justice to already pursue Don Siegelman.

ACOSTA: Democrats in Congress still want Rove to testify in the controversial firings of eight U.S. attorneys in 2006. Last August, one of those former prosecutors David Iglesias told me his office was being pressured by top Republicans in the White House to pursue prosecutions against Democrats.

DAVID IGLESIAS, FORMER U.S. ATTORNEY: It's at the minimum inappropriate. It could very well be illegal.

ACOSTA: Last week House Democrats voted to hold White House chief of staff Joshua Bolten and former White House counsel Harriet Miers in contempt of Congress for refusing to cooperate in the U.S. attorney probe.

REP. JOHN CONYERS (D), JUDICIARY CMTE: There was plenty of evidence in our report that showed and suggested that there had been many lines crossed.

(END VIDEOTAPE)

ACOSTA: In response to claims that Rove was involved in a political smear against Governor Siegelman, Rove's attorney released a brief statement to CNN saying the story is false and foolish -- Wolf.

BLITZER: I understand you were able to reach this former Republican operative, Jill Simpson, on the phone. What did she tell you?

ACOSTA: Well, it was a brief conversation, Wolf, but she told me she believes that Don Siegelman is quote, in her words, "a political prisoner in the federal prison system right now," Wolf.

BLITZER: All right, Jim Acosta, thank you very much.

Until now, presidential candidates only had to worry about hecklers during a speech or a bit of misinformation uttered or printed in a strategic moment. But in the information age, there's a new way to undermine a campaign. That would be on the Internet. Let's go to our Homeland Security correspondent, Jeanne Meserve. She is watching this story.

What have you uncovered, Jeanne?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Well Wolf, you might call it political hacktivism, the exploitation and corruption of political candidates' Web sites.

(BEGIN VIDEOTAPE)

CLINTON: I'm Hillary Clinton and I approve this message.

MESERVE: Want to know more about Hillary Clinton? Go to her Web site. But if your finger slips and you type in G rather than T, you wind up here. Typo squatting, registering a domain name just slightly different from an authentic Web site is cheap, easy and when it looks like the real thing, potentially dangerous. Oliver Friedrichs works for Symantec, a computer security firm.

OLIVER FRIEDRICHS, SYMANTEC: If I'm an attacker, I can actually install malicious code on that Web site and try to infect you. When you come to my Web site, I may set up a fishing site that may try to solicit a donation from you and try to steal your credit card number.

MESERVE: The proliferation of political e-mail has opened up other avenues of attack. You might receive an e-mail instructing you to click on a link to make a campaign contribution. But what if the site is bogus?

It happened in 2004 to supporters of the Kerry/Edwards ticket. No one knows how much money was stolen or where it went. Earlier this month, an e-mail urged several hundred thousand people to click on a link to a Hillary Clinton video. Those who did inadvertently downloaded malicious code that made their computers start spewing spam. Experts worry that Web sites and e-mail can also be used to spread inaccurate and damaging information about a candidate.

TOM KELLERMANN, CORE SECURITY TECHNOLOGIES: Political Web sites are vulnerable to attack for manipulation from adversaries, from either competitors or folks who don't agree with that politician's viewpoints.

(END VIDEOTAPE)

MESERVE: Experts believe in the future there will be more and more of these incidents, and that they could undermine online fund raising and competence in our political system itself. Wolf?

BLITZER: All right, very worrisome story. Thanks very much, Jeanne Meserve, for that.

Some have called it the Republican dream team, the Republican dream team. So would Condoleezza Rice consider running as vice president? Zain Verjee asked her that question. Stick around for the answer.

Also, some are questioning Barack Obama's war story. Is it true? We're checking the facts. Jamie McIntyre all over this story, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: No sooner did he say it in last night's presidential debate then blogs began attacking it - Barack Obama's anecdote about a U.S. army captain's deployment to Afghanistan without enough troops, training and weapons.

We asked our senior Pentagon correspondent, Jamie McIntyre, to check the facts -- Jamie.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Wolf, the question is did Barack Obama correctly characterize what an army captain said? And is it accurate? And does it support his argument that the invasion of Iraq took resources from the war in Afghanistan?

So, CNN got in touch with the army captain in question with help from the Obama campaign. He requested anonymity because he's still on active duty. But the short answer is Barack Obama got the gist of the anecdote right, although he missed some important nuance. But let's start with what Obama said in last night's CNN Democratic debate.

(BEGIN VIDEO CLIP)

OBAMA: I heard from an Army captain who was the head of a rifle platoon, supposed to have 39 men in a rifle platoon. Ended up being sent to Afghanistan with 24 because 15 of those soldiers had been sent to Iraq.

(END VIDEO CLIP)

MCINTYRE: OK, here's what the captain said. "Fifteen soldiers with not sent as a group to Iraq." He said, "We lost 15 through normal reassignment and they were not replaced. Many of those 15 ended up in units going to Iraq, but I can't say all 15 were there."

All of this happened five years ago in the spring and summer of 2003 during the lead up to and the invasion of Iraq. The captain was a first lieutenant then and his rifle company from Fort Drum, New York was sent to eastern Afghanistan. OK, back to Barack Obama.

(BEGIN VIDEO CLIP)

OBAMA: As a consequence they didn't have enough ammunition. They didn't have enough Humvees.

(END VIDEO CLIP)

MCINTYRE: It's true, the captain said. "There were no Humvees with" at Fort Drum and "not sufficient ammunition" for training before they left. So he said they had to go do that after they got to Afghanistan and they only had three days to get up to speed.

(BEGIN VIDEO CLIP)

OBAMA: They were actually capturing Taliban weapons because it was easier to get Taliban weapons than it was for them to get properly equipped by our current commander in chief.

(END VIDEO CLIP)

MCINTYRE: With the soldiers scrounging for weapons? Well, not exactly. "The issue wasn't that we didn't have weapons. The issue was we couldn't get parts for the weapons, as they broke," the soldier told us.

So when the unit's 50-caliber machine gun broke down, he said, quote, "from the large stockpile of weapons we captured over the long tour, we took the best functioning Taliban weapons we could use and mounted that on our 50 cal."

Interesting side light. When then top commander General John Abizaid visited his front line fire base, the soldier replaced the Russian machine gun with a broken American one just for show. Now the officer is still in the army and his final comment to us was, "It made me pretty angry at the time and I'm still pretty bitter about it."

So while it's true, this unit didn't have all the troops, training and equipment this commander wanted, and that may indeed have been a result of the demands of the Iraq war, the unit was not split up and they weren't scrounging for weapons -- Wolf.

BLITZER: All right Jamie McIntyre, doing an excellent fact check for us. Thanks, Jamie McIntyre, our senior Pentagon correspondent.

There's going to be either an African-American or a woman on the top of the Democratic presidential ticket. But what about on the Republican side? The secretary of state has been talking to our Zain Verjee about possibly getting the nation's second highest office. What does she think about that? Zain asked Condoleezza Rice if she wanted to be a vice presidential running mate.

Stick around, you'll get the answer right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Condoleezza Rice's name has been floated as a possible vice presidential candidate. But would she take that job? Our State Department correspondent Zain Verjee just asked her that question.

Zain, what did she say?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, Secretary Rice was in good humor and really she just laughed off any speculation of becoming vice president.

(BEGIN VIDEO CLIP)

VERJEE: There's been several articles written about Condoleezza Rice for vice president. Some have called it a Republican dream team with you on the ticket. If asked, would you be willing to consider?

CONDOLEEZZA RICE, SECRETARY OF STATE: I've said all along what I'm going to do. You can all come and visit me in California.

VERJEE: So no? Not this time?

RICE: I have always said that the one thing that I have not seen myself doing is running for elected office in the United States. I didn't even run for high school president, you know. It's sort of not in my genes. But look, there will be very good people running for the American people to make their choices.

I will be making my choice as a voter and that's going to be fun. After a campaign in 2000 in which I was extremely involved after the reelection in 2004 where I was national security adviser and so not involved as directly. But obviously with an interest in how it came out, and I'm going to keep doing what I'm doing as secretary of state to see if we can use the last few months, as the president's put it, sprint to the finish because there's a lot of work to do.

(END VIDEO CLIP)

VERJEE: Wolf, Secretary of State Rice also added that she's not going to be involved in the campaign at all -- Wolf.

BLITZER: So no McCain/Rice ticket. Is that what she said?

VERJEE: Categorically, she says her next stop is California.

BLITZER: Thanks very much. She'll go back to Palo Alto and Stanford.

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