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THE SITUATION ROOM

Obama Photo Firestorm; McCain's Iraq Fear: 'I Lose'; Interview With Governor Janet Napolitano

Aired February 25, 2008 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, a photo fueling new anger between the Obama and Clinton camps. We're taking a closer look at the picture and how the Democratic race is taking some very nasty new turns.
Also this hour, new snapshots of the mega battleground in Texas. Did our debate give Clinton new hope for a rebound next week, or new reason to fear a devastating defeat?

And John McCain's Iraq defense. The likely Republican nominee is looking toward the fall and hinging his hopes for victory on the war.

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

The closer we get to the big March 4th contest in Ohio and Texas, the testier the Democratic presidential race seems to be getting in the process. This is the latest target -- a photograph circulating on the Internet of Barack Obama dressed in traditional Kenyan garb during a 2006 trip to the region.

The Obama camp is blaming the Hillary Clinton campaign for distributing the photo showing the senator in clothing warn by Muslims in the area. Obama's campaign manager is calling it "... the most shameful, offensive, fear-mongering we have seen from either party in this election."

Clinton's top advisers haven't denied a role in distributing the photo. All this after a weekend of some very tough exchanges between the Democratic candidates over health care, the North American Free Trade Agreement, and campaign tactics.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: So shame on you, Barack Obama. It is time you ran a campaign consistent with your messages in public. That's what I expect from you.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: You can't be for something or take credit for an administration and 35 years of experience, and then when you run for president, suggest somehow that you really didn't mean what you said back then. It doesn't work that way. (END VIDEO CLIP)

BLITZER: Let's bring in our senior political correspondent, Candy Crowley. She's watching the story in Ohio right now.

Are we seeing more and more of these kinds of attacks coming forward, Candy?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: I think you will. It was a rough and tumble weekend over some brochures that are going into mailboxes across Ohio. One of them from Barack Obama attacking Hillary Clinton on her health care plan, telling Ohioans that they will be forced, mandated to buy health care insurance that they may not be able to afford. Another one tying Hillary Clinton to NAFTA, saying that she considered it a boon.

This has all really angered the Clinton campaign, who say there are distortions in these brochures. But they turned the page a little bit today, Wolf. Still some rough and tumble language, but Hillary Clinton went to George Washington University to talk about foreign policy.

Recall now that last Thursday at the debate she passed up a chance to say that Barack Obama was too inexperienced to be president. She was a lot less reticent today.

(BEGIN VIDEO CLIP)

CLINTON: The American people don't have to guess whether I understand the issues, or whether I would need a foreign policy instruction manual to guide me through a crisis, or whether I would have to rely on advisers to introduce me to global affairs. I'm lucky to have had a pretty good inside view.

Over the eight years in the White House and now over seven years in the Senate, we've seen the tragic result of having a president who had neither the experience nor the wisdom to manage our foreign policy and safeguard our national security. We can't let that happen again.

(END VIDEO CLIP)

CROWLEY: So, no mention specifically of Barack Obama. Delivered in very soft tones, but, Wolf, we pretty much know who that message was directed to.

BLITZER: It was pretty much a swipe because she's making the comparison between Barack Obama, effectively, and George W. Bush.

So, does he take the high road in responding, or does he respond in kind? What's he doing?

CROWLEY: Well, I tell you, first of all, there are all those mailers that are out there that the Clinton campaign say -- you know, call foul on that. The Clinton campaign, by the way, is going to put out a counter leaflet, if you will. Look, it is a lot easier for Barack Obama at this point, who at least is the slight front-runner, to not go on the assault toward Hillary Clinton. But they are not leaving anything unanswered to. And we do expect this afternoon that they will respond to her foreign policy speech today -- Wolf.

BLITZER: All right. We'll get that and bring it to our viewers as well. Thanks very much. Candy Crowley in Ohio.

The likely Republican nominee, John McCain, is drawing a new line in the sand today over Iraq. He offered a blunt prediction about how the war could impact his prospects for winning the general election. Dana Bash is covering the McCain campaign. She's joining us now from Ohio as well.

There was a -- I guess a lot of straight talk from John McCain today. But some are suggesting maybe it was a little too much straight talk. What exactly happened?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, John McCain himself quickly realized it was too much straight talk, Wolf.

What he did is, on his bus with reporters, John McCain said that if he doesn't convince voters that the U.S. policy in Iraq is succeeding, he said, "Then I lose. I lose."

But then immediately he said he wanted to retract that "I'll lose" prediction. But it was clear even earlier today, Wolf, at a town hall meeting outside Cleveland that John McCain understands that the way things are going in Iraq and his ability to convince people that things are going better in Iraq very much will determine how people judge his candidacy.

(BEGIN VIDEOTAPE)

BASH (voice over): Campaigning in Rocky River, Ohio, John McCain got his one standing ovation from this line...

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: We will never surrender. And they will. And I want to assure you of that.

BASH: But as defiant as the likely Republican nominee is about staying in Iraq, new evidence that McCain realizes the political battle against Democrat who want troops home now will not be easy.

UNIDENTIFIED MALE: What would be some benchmarks as far as progress in Iraq?

BASH: When a voter asked about Iraqi progress, McCain used the opportunity to clarify a controversial remark he made in January.

MCCAIN: By the way, that reminds me of this 100-year thing. My friends, the war will be over soon. The war, for all intents and purposes, although the insurgency will go on for years and years and years, but it will be handled by the Iraqis, not by us.

BASH: This, when asked how many years the U.S. will be in Iraq...

MCCAIN: Maybe 100.

UNIDENTIFIED MALE: Is that...

MCCAIN: We've been in South Korea -- we've been in Japan for 60 years. We've been in South Korea for 50 years or so. That would be fine with me...

UNIDENTIFIED MALE: So that's your policy?

MCCAIN: ... as long as Americans -- as long as Americans are not being injured or harmed or wounded or killed.

BASH: Democrats pounced and regularly used the "100 years" line to warn voters a McCain presidency would be a third Bush term.

OBAMA: He says we can stay in Iraq for 100 years. That's the politics of yesterday.

CLINTON: Continue the war in Iraq for 100 years. I will start bringing our troops home within 60 days.

BASH: McCain denied those attacks are resonating with voters. But...

MCCAIN: They hear it repeated by the Democrats. They don't talk about their predictions that the surge would absolutely fail.

(END VIDEOTAPE)

BASH: I asked John McCain what he thinks brought him back from the political dead last summer, and the GOP candidate so tied to the military strategy in Iraq will tell you that the surge started working. But Wolf, you know, convincing Republicans in a primary season, mostly Republican voters who support the war, is one thing, and convincing the voters in the general election, who are much more war weary, is a whole other thing -- Wolf.

BLITZER: Dana's in Parma, Ohio. Thanks, Dana, very much.

The Iraq war also at the center of an announcement today by former Democratic senator John Edwards. The former presidential candidate says he and his wife Elizabeth are now teaming up with anti- war leaders. They're launching a new nationwide, multimillion-dollar campaign to spotlight the massive cost of the war in Iraq and its impact on the U.S. economy.

Let's check in with Jack Cafferty. He's back for another week of "The Cafferty File."

Welcome back, Jack.

JACK CAFFERTY, CNN ANCHOR: Thank you, Wolf.

There is a growing chorus of voices now beginning to call for Hillary Clinton to give it up. In a "Newsweek" column called "Hillary Should Get Out Now," Jonathan Alter says, "If she wanted a graceful exit, now would be the time -- before the Texas and Ohio primaries -- to drop out and endorse Barack Obama."

Jonathan Alter says it would be the best thing imaginable for Clinton's political career. Meaning that it would set her up perfectly for 2012 if Obama loses.

Alter says Clinton doesn't have a reasonable chance of winning the nomination, but he doesn't think she'll call it quits either. He writes this: "The conventional view is that the Clintons approach power the way hard-core gun owners approach a weapon. They'll give it up only when it's pried from their cold, dead fingers."

Meanwhile, another tough piece, this one by Robert Novak, asks, "Who is going to tell Hillary Clinton that it's over, that she can't win the nomination, and the sooner she gets out of the way, the better the chances that her party will beat John McCain in November?" Novak writes this -- quote here -- "Clinton's burden is not only Obama's charisma, but also McCain's resurrection. Some of the same Democrats who short months ago were heralding her as the perfect candidate now call her a sure loser against McCain, saying that she would do the party a favor by just leaving."

So here's the question: Is it time for Hillary Clinton to admit defeat and quit the race?

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

BLITZER: Jack, thanks very much. Jack Cafferty with "The Cafferty File."

We heard Senator Clinton launching tough new criticism of Barack Obama's foreign policy experience. Up next, is Obama ready for the world stage, and are any of Clinton's attacks really sticking? I'll speak with a leading Obama supporter, the Arizona governor, Janet Napolitano. She's here in THE SITUATION ROOM.

Also, Bill Clinton has suggested his wife's campaign could live or die in Texas. We have brand new poll numbers coming in from Texas. What Texas voters are thinking eight days before the primary.

And the politics of jobs and free trade. Clinton and Obama have lots of bad things to say about NAFTA, but are they telling it like it is? We're telling it like it is.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: When Arizona's governor, Janet Napolitano, endorsed Barack Obama, she hailed him as a problem solver who could get things done in Washington. Hillary Clinton, though, won the Arizona primary. Since February 5th, Clinton's fortunes, though, have slid dramatically and Obama's have risen. Some question whether, though, Obama's experience and policies are getting enough scrutiny.

Let's get some scrutiny from the Arizona governor, Janet Napolitano. She's here in THE SITUATION ROOM.

Governor, thanks for coming in.

GOV. JANET NAPOLITANO (D), ARIZONA: Oh, thank you.

BLITZER: By the way, is that a problem for you, that you endorsed Obama before the primary in Arizona, the people, the Democrats who voted, endorsed -- basically supported Hillary Clinton? Is that going to force you to change your vote as a superdelegate?

NAPOLITANO: No, for a number of reasons. One is, I endorsed shortly before our primary. And even in that two-week period we picked up 11, 12 points. And he clearly was closing the gap. And Independents can't vote, obviously, in the Arizona primary. But our superdelegates will be divided between Clinton and Obama.

BLITZER: So you're staying with Barack Obama?

NAPOLITANO: I am.

BLITZER: All right. Here's what Hillary Clinton said about him earlier today. I'll play this little clip.

NAPOLITANO: OK.

(BEGIN VIDEO CLIP)

CLINTON: The American people don't have to guess whether I understand the issues, or whether I would need a foreign policy instruction manual to guide me through a crisis, or whether I would have to rely on advisers to introduce me to global affairs.

(END VIDEO CLIP)

BLITZER: All right. The implication is that he's not ready on day one to be the commander in chief.

NAPOLITANO: Well, I was listening, and it sounds familiar. And I wonder if the same thing was said about Bill Clinton in 1992.

BLITZER: Well, I covered that campaign. There were similar statements made.

NAPOLITANO: Exactly. But one of the things you want and I think the American people are looking for is a new vision, a new face. They don't just want the same old, same old out of Washington, D.C.

Why? They're not happy with what's come out of Washington, D.C. They're not happy with the gridlock. They're not happy with the progress our country is making. They're actually looking for something new.

BLITZER: So you think he's totally ready on day one, even though he's got a limited amount of foreign policy experience, to go in there and take charge?

NAPOLITANO: He is ready. And not only that, this campaign has been a test. I mean, these candidates have been out in front of the public for a year now debating, arguing, campaigning, persuading voters. And he has shown time and time again that he has a vision for the country, where we ought to go, and he unites people behind him.

BLITZER: Have you seen that photo circulating on the Web now with Obama dressed in sort of Kenyan/Muslim garb that's been circulating? The Clinton campaign is not saying whether or not -- there it is behind you if you want to take a look. You see it right there.

What do you think of this -- of this development? Sort of -- I guess the implication being to reinforce this notion that, you know, he is, at least on his father's side, there's some Muslim ancestry there.

NAPOLITANO: Oh, I think it's irrelevant to the issues of the campaign. And I know there was some back-and-forth today. The Clinton campaign says they had nothing to do with it. I take them at their word. We need to move on. The people of the United States, people out in Arizona, aren't interested in a photo.

What they're interested in is a president who will lead, who will help them deal with the economy, with health care, with foreign policy. And, by the way, with a new vision for the war in Iraq.

BLITZER: We spoke the last time when you were here -- Arizona is a border state. On the issues of drivers' licenses with Barack Obama I know you disagree, because you told us the last time. But when you heard what he was saying on illegal immigration in the last debate with Hillary Clinton, was there anything else there that caused you to be concerned? Because he takes a very -- shall we say liberal stance on how to deal with comprehensive immigration reform.

NAPOLITANO: Oh, I wouldn't say it's a liberal stance. I'd say it's a stance not uncommon with Hillary and not uncommon with John McCain. It means comprehensive immigration reform. It means enforcing our immigration law, enforcing at the border, but also in the interior of our country, particularly against employers to continue to hire illegal labor, and really looking at the labor aspects of this. So we're very consistent on that part.

BLITZER: So you're comfortable with what you heard at that last debate...

NAPOLITANO: I am.

BLITZER: ... on the issue of illegal immigration?

NAPOLITANO: I am. Immigration is not a driver's license issue. It's a labor issue. It's a crime issue. That's where we ought to focus.

BLITZER: Here's another clip of what Hillary Clinton said over the weekend, referring to a mailer that had been sent out from the -- presumably the Barack Obama campaign on her position on NAFTA. Watch this.

(BEGIN VIDEO CLIP)

CLINTON: Shame on you, Barack Obama. It is time you ran a campaign consistent with your messages in public. That's what I expect from you. Meet me in Ohio. Let's have a debate about your tactics and your behavior in this campaign.

(END VIDEO CLIP)

BLITZER: She says he was distorting in that mailer her stance on trade.

NAPOLITANO: Well, A, I think the mailer was not a distortion of her stance on trade. But, B, just the word, the language used, and whatever, it really is the expression of a frustrated candidate trying to pierce through.

And what Barack Obama has done so well and will do well he just offers people a new voice. And I will tell you, there's a hunger for that around this country. And a new voice can be associated with pragmatism and getting things done. Just because it's new doesn't mean it can't be effective.

BLITZER: You heard Jack Cafferty's question earlier, is it time for her to simply drop out right now, even before the contest on March 4th in Texas, Ohio, Vermont, and Rhode Island? What would you answer if you were responding to "The Cafferty File?"

NAPOLITANO: Oh, you know, I would say that's a nice academic speculation, but I think these are long, hard-fought campaigns. And I would be shocked if she didn't stay in, at least through March the 4th.

And, you know, both candidates need to keep putting forth their ideas before the American people. That's what we're looking for.

BLITZER: Janet Napolitano is the governor of Arizona. She's here in Washington for the National Governors Association Meeting. Welcome to Washington.

NAPOLITANO: Thank you.

BLITZER: See you soon.

Tomorrow, by the way, here in THE SITUATION ROOM we'll speak with a leading Hillary Clinton supporter about foreign policy and other hot topics out on the campaign trail. The former secretary of state, Madeleine Albright, she'll be joining us here tomorrow.

Millions of Americans were glued to the latest Democratic debate in Austin. But did the face-off actually change the minds of voters in Texas?

Coming up, we have some brand new poll numbers coming in from Texas, what the voters there are looking for in that state.

And the nominations could ride on Ohio. Both Democratic candidates are bickering about a major issue there. That would be jobs and trade.

Coming up, we're going to have "Fact Check" assessing where both of these candidates really stand.

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

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: One week from tomorrow the Democratic presidential nomination could be decided. Voters in Texas and Ohio could make all the difference.

Coming up, we have brand new poll numbers, whether the last debate in Texas had an impact. That's coming up.

Also, the ballots counted for two GOP races in Puerto Rico and America Samoa. We'll give you the results and the latest delegate count.

All that coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, North Korea lifts its vail of secrecy. CNN's Christiane Amanpour goes inside North Korea. We're one of two U.S. news organizations ever allowed to visit a major nuclear facility there. Christiane will join us live to explain what she saw.

Families of terror victims outraged. They claim the U.S. government wants to block money they're due from lawsuits against the Palestinian Authority. One woman feels the U.S. has "betrayed her." How is the U.S. responding? Zain Verjee standing by with that story.

And the latest on a woman who died on a plane. How did this happen? The airline says one thing, the family suggests the airline is partly to blame.

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

In the blistering standoff in Texas, neither Barack Obama or Hillary Clinton is backing down. At least not now. Both sides are blasting the other as they try to win Texas's critical primary. But are their efforts actually making a difference right now?

Let's go to our senior political analyst, Bill Schneider. He's watching the story for us.

Bill, what about the debate last week and the impact it's having on Democratic voters in Texas? What are we finding out?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, we're seeing some evidence that it did have an impact in Texas.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice over): Before last week's debate, the Democratic race in Texas was close. And after the debate, still close. Barack Obama, 50. Hillary Clinton, 46. Obama may have gained from the debate.

CLINTON: Whatever happens, we're going to be fine. You know, we have strong support from our families and our friends.

SCHNEIDER: Among Texas Democratic primary voters who watched the debate, Obama leads Clinton by 20 points. Among the 42 percent who follow news about the debate, Clinton and Obama are neck and neck. Among Democrats who paid no attention to the debate, Clinton leads Obama by nearly 20 points.

In Texas, as in other states, Clinton does best with older, blue collar and rural voters. They want a leader who can deliver.

BILL BISHOP, AUTHOR: I think rural areas have had a tough time in the last 20 years. And, so, they're looking for candidates that have -- that have some specific answers about changes in the economy.

SCHNEIDER: Clinton delivers. Obama inspires. He appeals to voters who identify with his values, like the ones who rallied for him in Austin Friday night.

BISHOP: They approach politics as self-identification. And it's not, what can this person do for me? It's, how can this person represent me and -- and be like the kind of person that I am?

SCHNEIDER: Identity politics has a lot to do with how Democrats are lining up in the Texas standoff, white men for Obama, white women for Clinton, African-Americans six-to-one for Obama, Latinos nearly two-to-one for Clinton, who claims to identify with Latino voters' needs and aspirations. She has even has got a new Spanish-language theme song.

(END VIDEOTAPE)

SCHNEIDER: How does the Democratic race look in the other three states voting on March 4th? Three Ohio polls show Clinton leading by an average of 10 points there. She's leading by 12 in Rhode Island.

But Obama has a big lead in Vermont. The Super Tuesday II states seem to be split, just like the Super Tuesday I states -- Wolf.

BLITZER: That's a new slogan we got, Super Tuesday II. You just make that up, or has that been out there for a while?

SCHNEIDER: I have been using it for about two weeks.

(LAUGHTER)

BLITZER: All right, Bill Schneider, Super Tuesday II, that's a good name. Thanks very much.

Obama and Clinton fight for votes in a state that hasn't actually turned for a Democratic presidential candidate since Jimmy Carter back in 1976. Texas is solidly Republican ground. President Bush carried nearly every county in his home state in the past two elections. And he -- and Republicans have dominated that state for decades now.

But there were some Democratic victories, largely because of popular politician and former vice presidential candidate Lloyd Bentsen. Up until the 1960s, Texas had been primarily a Democratic state because of Confederate memories and the appeal of President Roosevelt's New Deal. Things have changed, though, over the years.

CNN is taking politics to the people. Our Election Express has been traveling around the country and could be headed to a place near you. Ali Velshi has been riding out of the Election Express once again. He's joining us now from Devine, Texas.

It sounds divine over there, Ali. He's looking like a little cowboy right now.

All right, what are the voters out there, what are they saying to you as you go across this important state, Ali?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Wolf, you're right. We're going around Texas. And the one thing they're saying to us is that they are all going to vote on -- next Tuesday. They are all involved. And they know exactly what is going on in this election.

The economy does seem to be the number-one concern, at least so far. We haven't gotten all the way down to the Mexican border yet. Here's what we have learned on the Election Express this far.

(BEGIN VIDEOTAPE)

VELSHI (voice-over): The Election Express rolled into Bandera, Texas, in that state's majestic hill country.

Our first stop was a bar, the kind you can still hitch your horse outside of. Bandera, you see, is the self-proclaimed cowboy capital of the world. And it may be. What is for sure is that it's a different kind of place, where they have a different way of looking at things, with that familiar plainspoken Texan way of telling you what they really think.

UNIDENTIFIED MALE: If you're a working man, if you are a middle- class person, it's real simple, Democrat. If you're rich, you vote Republican.

UNIDENTIFIED MALE: There you go.

VELSHI: Texans have their own way of doing things. That's not a horse I'm on. It's a Texas longhorn steer. But, around these parts, most people still drive to get around. And while some Texans are getting rich off record oil prices, others are finding it hard to get by.

UNIDENTIFIED MALE: Gas is over $3 a gallon. If you make $6 an hour, figure it up. Forty hours a week, you don't get too much, you know? You don't have cable. You don't have Internet. There's lots of things you don't have. How do you get gas to go to work?

VELSHI: Luckily for me, this is work, at least for today.

(END VIDEOTAPE)

VELSHI: And, Wolf, I had to get off the horse and off the steer and back into the bus. We're heading further south. I must tell you, though, we are talking to -- randomly speaking, when we talk to people, we're hitting as many Democrats as Republicans down here -- Wolf.

BLITZER: Sunny and hot down there?

VELSHI: It is very sunny and very hot. I have been trying to get this hat off, but I can't. There's just too much going on here.

(LAUGHTER)

BLITZER: All right, Ali, thanks very much -- Ali Velshi, part of the best political team on television.

The state of Ohio is reeling from lost jobs, and Barack Obama and Hillary Clinton seem quick to point a finger of blame at the North American Free Trade Agreement. That would be NAFTA. Up next, are they getting their facts about NAFTA straight?

Also coming up, is John Edwards doing Hillary Clinton any favors by launching a new campaign against the war in Iraq? That's coming up in our "Strategy Session."

And, in our next hour, inside North Korea's nuclear program -- our Christiane Amanpour gets rare access to a main nuclear facility in North Korea. She calls some of the sites she's seeing extraordinary. We will go there live -- all that and a lot more coming up, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Eight days before the critical Ohio primary, the North American Free Trade Agreement is getting some red-hot scrutiny right now in the Democratic presidential race. The reason comes down to two words, jobs, votes.

But should the candidates' claims about NAFTA be believed? We have asked Brian Todd to take a closer look.

Brian, you have been looking into what Senators Clinton and Obama have been saying. How does that correlate with the facts out there? BRIAN TODD, CNN CORRESPONDENT: Well, it correlates sometimes. And, sometimes, it doesn't, Wolf. But this does underscore just how high the stakes are in Ohio next week, both Democrats there hitting hard on the economy and who is really going to look after voters concerned about the job market.

(BEGIN VIDEOTAPE)

TODD (voice-over): They both know the Democratic nomination could ride on Ohio, and both are trying to hit home on jobs and trade in a state where many voters have a popular boogeyman for the steady loss of manufacturing jobs.

UNIDENTIFIED MALE: NAFTA has devastated this country here.

TODD: Now Barack Obama and Hillary Clinton are sparring very pointedly, very publicly over who hates the North American Free Trade Agreement more and who hated it first.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: She was saying great things about NAFTA until she started running for president.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I have a record of criticizing NAFTA.

TODD: Was she fort it before she was against it? One biographer says Hillary Clinton had reservations about job loss and the environment when her husband was pushing NAFTA as president, but says she embraced it once it turned into a political victory.

In recent years, Mrs. Clinton has spoken out against the agreement. Obama's positions are also disputed. A libertarian free trade group disagrees with his position that more than a million Americans jobs have been lost because of NAFTA and says the job loss in Ohio was not NAFTA's doing.

DANIEL GRISWOLD, CATO INSTITUTE: Just U.S. transitioning from a heavy industry economy to a sophisticated information and services economy, and Ohio and Michigan have just been behind the curve.

TODD: Both candidates want to toughen NAFTA's labor and environmental standards. What's their biggest difference on NAFTA going forward? We asked the liberal advocacy group Public Citizen.

LORI WALLACH, GLOBAL TRADE WATCH: Senator Clinton has announced she wants a time-out to review existing trade agreements. On the other hand, Senator Barack Obama has said he will go back and look at the foreign investors protection. They're at the core of NAFTA and CAFTA and the related agreements that are actually the key promoter of offshoring that creates downward pressure on wages.

(END VIDEOTAPE)

TODD: Now, despite their desire to review and maybe even renegotiate NAFTA, both Clinton and Obama also favor a free trade agreement with Peru that's now in place that's similar in some ways to NAFTA. They say that's because that deal includes binding, enforceable labor and environmental standards that NAFTA does not have in it -- Wolf.

BLITZER: All right, Brian, thanks very much -- Brian Todd looking at that story.

While the Democratic candidates are criticizing NAFTA today, over a decade ago, the Clinton administration was pushing for passage of the trade treatment. Vice President Al Gore famously went on CNN's "LARRY KING LIVE" to defend NAFTA against the leading critic at the time, the failed presidential candidate Ross Perot.

(BEGIN VIDEO CLIP, "LARRY KING LIVE")

LARRY KING, HOST, "LARRY KING LIVE": And this treaty would increase jobs here?

AL GORE, VICE PRESIDENT OF THE UNITED STATES: Oh, no question about it. There have been 23 studies about the impact of NAFTA on jobs in the United States. Twenty-two of them have shown that it will cause an increase in jobs in the United States. The one that didn't showed that there would be a decline in illegal immigration. And they counted all of the illegal immigrants as holding jobs, and, when they were taken out of the picture, they said that was a decline. Everybody else says it increases jobs in the United States.

(END VIDEO CLIP)

BLITZER: More recently, Hillary Clinton has suggested her husband merely inherited NAFTA from the first President Bush and recognized back then that it was flawed.

In our "Strategy Session": Iraq and the president campaign. McCain sees an opening.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: They were wrong, Senator Clinton and Senator Obama, when they said that the surge would fail. And they were wrong when they said that the political process would not move forward.

(END VIDEO CLIP)

BLITZER: But he knows that what happens in Iraq could make or break his White House run.

And John Edwards lending his name and support to a multimillion- dollar anti-war campaign. Will his efforts help or hurt the Democratic presidential candidates?

That coming up. Donna Brazile and Terry Jeffrey, they are standing by in our "Strategy Session."

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

(COMMERCIAL BREAK)

BLITZER: John Edwards is again talking like a presidential candidate, the presidential candidate he was, in fact. Edwards is out today blasting Republicans, suggesting money spent in the war on Iraq is affecting the U.S. economy, your money.

Let's get to our "Strategy Session" right now. Joining us, our CNN political analyst, the Democratic strategist Donna Brazile, and conservative commentator Terry Jeffrey. He's editor in chief of the Cybercast News Service.

Guys, thanks for coming in.

Donna, what do you make of John Edwards doing this today with Elizabeth Edwards, trying to link the enormous expenditures every week, every month for the war in Iraq to a recession that may be building here in the United States?

DONNA BRAZILE, CNN POLITICAL ANALYST: Wolf, this is a very broad coalition of labor unions, some of the anti-war groups, and some of the traditional Democratic organizations that would like to educate the American people about the -- the cost of the Iraqi war and that the American people are afraid of a recession. John Edwards is saying, we can spend this money here at home, investing in health care, investing in job creation. That's what John Edwards is trying to do.

BLITZER: His big issue is trying to end poverty. And he says don't spend the money, you know, $5 billion or whatever a week or whatever it's costing in Iraq. Spend it here.

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: Well, the first thing I would say, if John Edwards really believes in the causes he was talking about in his presidential campaign, even if he out of elective politics, he ought to keep fighting for them and trying to change the country in the way he wants it to go.

But I also think John Edwards is trying out for the vice presidential role on the Democratic ticket this fall. And I think he would probably...

BLITZER: He's had that job once before.

JEFFREY: ... he would probably like to be there right with Barack Obama this fall, if he could be.

(LAUGHTER)

BLITZER: What do you think? Is that -- you think, if Barack Obama were to get the nomination, he might go to John Edwards as his running mate?

BRAZILE: I don't know about the running mate situation. But there are 36 million Americans who live in poverty in this country, 13 million children. I think John Edwards is trying to figure out a way to fund programs that will reduce the level of poverty and homelessness in this country.

(CROSSTALK)

BLITZER: Go ahead.

JEFFREY: Let's see if he's still doing it two years from now if he's not the V.P. and he's not in the Democratic Cabinet. That will be the test.

BLITZER: What about McCain basically, in one moment aboard his bus, suggesting, his presidency, if he gets elected, may hinge on how the war in Iraq unfolds. If things are moving in the right direction, he might win. If they're not, it could be over for him.

BRAZILE: I think it's tough. You know, he came back and retracted and said, I will lose.

He's trying to convince the American people that we're succeeding in Iraq. Unfortunately, the vast majority of Americans right now would like to see our troops come home. They believe the troops have done their job and it's time to bring them home.

BLITZER: What do you think? This is a winning issue for John McCain or one he would just as soon let go to the sidelines?

JEFFREY: I think it's an issue, Wolf, he has to make a winning issue. There's a certain degree which a candidate can formulate the issues that are talked about in a campaign. But there's two issues clearly that are going to be paramount in this campaign.

One is the economy. And one is the war. And, quite frankly, right now, both of those issues don't look good for the Republicans. But, if John McCain cannot convince that electorate that the surge was correct, that things have gotten better in Iraq, and that he holds out the prospects of making things even better, then he can't win.

But I will tell you, last week, in the debate on this network, on CNN, when John King asked Hillary Clinton, hasn't there been improvement, not just in security, but on the political situation in Iraq, I thought she gave a completely disingenuous answer. And if we keep having political progress in the war, in Iraq, which we are starting to have now, the sort of answer that Obama and Clinton are both giving will become increasingly implausible.

BLITZER: Her suggestion was that this whole surge was intended to create a new political environment, where all these democratic reforms were beginning to take shape. Some steps have been taken, clearly not as much as Hillary Clinton would like.

BRAZILE: Well, the 14 major benchmarks have not been met. And that's what -- that should be the goal, to have those benchmarks met, so that we can begin to bring our troops home.

That's what Senator Clinton said last week. And Senator Clinton and both Senator Obama have said that we need to start bringing our troops in an orderly slow, fashion. JEFFREY: Well, you know what? We have actually had amazing political progress in Iraq. They have had de-Baathification reform. We had him Muqtada al-Sadr just this last week come and extend his moratorium on violence.

BLITZER: For six months. But you can't trust that guy. He's so anti-American.

BRAZILE: Right.

JEFFREY: Well...

(CROSSTALK)

BLITZER: If you're resting all the hopes on Muqtada al-Sadr, you're in trouble.

JEFFREY: No, but there's only one thing you rest your hopes on in any foreign situation, whether or not you can marry that guy's interests to our interests. We have an interest in stability in Iraq. Somehow, the surge and General Petraeus have convinced Sadr, who no doubt is a bad actor, that, in this case, he has a shared interest in Iraq. This is all about persuading...

BLITZER: And General Petraeus and others say...

JEFFREY: Right.

BLITZER: ... he has got a lot of American blood on his hands.

BRAZILE: Amen.

JEFFREY: Well, of course.

BLITZER: And, so, I wouldn't -- I wouldn't rest too much hope on Muqtada al-Sadr.

But let me ask you this question. This garb, the -- that he's wearing, the picture that was circulated out on the Internet -- there it is -- you can see it right behind you -- when he was in Kenya, his father's country, what, last -- in 2006, all of a sudden, it shows up. And fingers are being pointed at the Clinton campaign for trying to do this. What do you make of this?

BRAZILE: Well, it's another example that the silly season is -- is under way in American politics.

Look, Wolf, I have been to Africa seven times. I probably have pictures like Senator Obama. African-Americans are proud of their heritage. We are Americans, but we are from African descent, and, clearly, Senator Obama. There's nothing wrong with showing him with that picture. But there's something wrong with a campaign the would to somehow or another insinuate, because of his name or his heritage, that something is un-American about him.

JEFFREY: And... BRAZILE: And that's where I take issue.

JEFFREY: If this, in fact, came from the Clinton campaign, it was an incredibly stupid move. But it illustrates, Wolf, the box that Clinton is in. She's too close to Barack Obama on the issues to really separate Democratic voters from Obama with a debate on the issues.

So, it's all about personality, judgment, and character. And to the degree that Hillary Clinton attacks Obama on that basis, it actually reflects on her character, increases her negatives. It makes it more difficult for her to persuade Democratic voters.

BRAZILE: Well, we don't know if it came from the Clinton campaign. If it did, that's another story.

(CROSSTALK)

BLITZER: Presumably, we will find out soon enough.

BRAZILE: We will find out.

BLITZER: All right, guys, thanks very much for coming in.

Like father, like son? Mitt Romney is out of the presidential race, but is a Romney son considering elective office?

Also, how did a woman die on a plane this weekend? Right now, the airline is explaining its actions. The family is saying something very different.

And is there skepticism in the American Jewish community of Barack Obama? You're going to find out what perceptions and possible misperceptions he faces as he courts Jewish voters. Mary Snow watching this story for us.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On our political radar this Monday: Democratic Party chairman Howard Dean today formally asked the Federal Election Commission to investigate John McCain -- Dean accusing McCain of trying to skirt campaign finance laws by opting out of the public financing system for his primary campaign.

McCain had been entitled to nearly $6 million in federal funds for the primary system. He's now deciding to try to bypass the system, so he can avoid spending limits between now and the GOP Convention September. McCain's campaign says the Republican is allowed to withdraw from the public financing system without FEC approval, and they're citing Howard Dean's own decision to opt out of the system back in 2004.

Mitt Romney's son Josh says he's considering a run for Congress. Romney reportedly has been approached to run for the seat in Utah now held by Democrat Jim Matheson.

Republican Party members in Puerto Rico rewarded all 20 delegates at stake yesterday to John McCain. McCain also won nine delegates in American Samoa on Saturday. By CNN's count right now, that brings McCain's total number of delegates up to 971. He needs 1,191 to clinch the GOP nomination.

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

Ralph Nader officially launched his presidential bid yesterday, promising an exciting and interactive campaign Web site. Let's go to our Internet reporter, Abbi Tatton. She's watching this for us.

So, how's he doing over there on the Web, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Well, if you're looking for some kind of Ron Paul type Web following for this bid, it's yet to come. But it's early days. Ralph Nader jumped in yesterday with this YouTube video looking for support for his campaign that he's going to be taking around the country. He's promising bells and whistles on his Web site. Nader is going to be 74 this week. He's already got a MySpace page going, trying the social networking group. He's got a few hundred members on that already.

And, on Facebook, which has literally just launched this afternoon, it's more like several dozen members there. That's not as many as groups like this that feel very strongly online about Ralph Nader running. And sides of the aisle, you're going to find people either supporting him or saying that this is just not supposed to be happening this time around, and saying that quite vocally.

But, really, the online response has been pretty muted. There is a Web site that was active in 2004 very strongly against Ralph Nader running. They have updated that one, saying, "We're saddened, but not surprised" -- Wolf.

BLITZER: Abbi, thanks very much.

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

CAFFERTY: Some people just don't get it, you know. How many times do they have to be told they're not welcome? He's run five times for this office. And he's never gotten enough votes to buy a bus ticket.

Both Jonathan Alter and Robert Novak out with pieces over the weekend saying that she has no realistic chance of getting the nomination, and Hillary Clinton should just step aside.

So, the question we asked is: Is it time for Hillary Clinton to admit defeat and quit the race?

Karen writes: "It doesn't bother me that she would wait for Texas and Ohio. However, her mood swings have me questioning her mental state. How rude, to talk down to another adult by saying, "Shame on you." We need someone with dignity and a little class. Please, stop giving her a performance stage. It's a bad act."

Vinnie in New York writes: "Let's see how Hillary does in Texas and Ohio. If she can win by double digits in both states, it will give her campaign a new heartbeat. Robert Novak should write about something he understands, which is nothing."

(LAUGHTER)

CAFFERTY: J.C. in Raleigh, North Carolina: "Why should Hillary drop out if she is, as her campaign claims, raising $1 million a day? Think how many consultants, posh hotels, caterers, pizza shops, and Dunkin' Donuts franchises can still make a bundle. Hillary's campaign spending might help spark an economic recovery."

Lex in Stone Mountain, Georgia: "I saw Clinton giving a speech earlier where she actually mimicked and mocked Obama like a sixth grader. She shows no signs of bowing out with grace."

David in San Bernardino: "No, Hillary needs to stay in the race to the very end. How would it look if the first real female presidential candidate just quit the race? Women would continue to be perceived as weak and not emotionally qualified to be president. Women are strong and smart and just as qualified as any man."

Jay writes: "The fat lady is singing. Can't you hear her? For the good of the party, Hillary should step aside. Her campaign strategy only went as far as Super Tuesday because she assumed she would be the nominee. Sometimes, things just don't work out. Her time has come and gone -- for this cycle, anyway."

Jim writes: "Absolutely, but she won't quit until the writing on the wall is written with the Democratic Party's blood."

And Victoria writes: "Jack, you're nuts. Heck no, she shouldn't quit. I think you should drop out -- of your job."

(LAUGHTER)

CAFFERTY: Wolf.

BLITZER: Good friend of yours.

All right, Jack, thanks very much.

CAFFERTY: My buddy.

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

Happening now, sharp attacks in Ohio, the Democrats scratching and clawing for every possible advantage heading into a round of primaries that may decide this nomination. Here's the question: How rough will it get?

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