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THE SITUATION ROOM

Hillary Clinton's New Ad; Geraldo Rivera on Hispanics in the U.S.; Stagflation: Prices Continue Increasing While Economy Suffers; Who is on the List of Possible Vice President Candidates?

Aired February 29, 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: I'm Wolf Blitzer. You're in THE SITUATION ROOM.
A whirlwind weekend of campaigning on tap for Hillary Clinton and Barack Obama as they wage an all-out battle for next Tuesday's primaries, especially the crucial contests in Texas and Ohio that could mark the comeback or the end of the Clinton campaign. It's all going to come down to some delegates and that delegate count is significant.

Here's what it stands right now. Counting pledged delegates and those so-called superdelegates, Obama leads with 1,369 to Clinton's 1,267. That's a difference of just 102 delegates as of right now. More than three times that many up for grabs on March 4th, this coming Tuesday, which is why those primaries are so, so important.

With the polls tight and her campaign on the line in Texas, Senator Clinton is airing a brand new ad that's designed to serve a dual purpose.

Let's go to Suzanne Malveaux. She's out on the campaign trail in Waco, Texas watching this.

Suzanne, what is this all about, this new ad?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Wolf, this is really about trying some new things. And we saw Senator Clinton unveiling a sharp new attack line against Senator Barack Obama, claiming that he has been missing in action, in her own words, in dealing with a critical vote on Iran, as well as holding hearings on Afghanistan. We also saw a new ad suggesting that he was not ready to handle a national security crisis.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): This is the crisis scenario Senator Hillary Clinton is presenting voters today.

UNIDENTIFIED MALE: It's 3:00 a.m. and your children are safely asleep. But there's a phone in the White House and it's ringing. Something is happening in the world. Your vote will decide who answers that call.

MALVEAUX: The 30-second ad airing in Texas, called "Children," is aimed at highlighting Clinton's experience on national security matters.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I also understand completely what it means when that phone rings at 3:00 a.m. There isn't any time to convene your advisers, to do a survey about what will or will not be popular. You have to make a decision.

MALVEAUX: Reacting to the ad, Senator Obama said he thought it was legitimate to ask voters which candidate they'd prefer to pick up the phone during a time of crisis. But he also accused Clinton of fear mongering.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: The question is not about picking up the phone. The question is what kind of judgment will you exercise when you pick up that phone. In fact, we have had a phone moment. It was the decision to invade Iraq. Senator Clinton gave the wrong answer.

CLINTON: Senator Obama says that if we talk about national security in this campaign, we're trying to scare people. Well, I don't think people in Texas scare all that easily.

MALVEAUX: Clinton's top campaign officials say the ad is aimed not only at contrasting the senator's security credentials with Barack Obama's, but also, as one aide put it, denying Republican Senator John McCain from playing the national security card.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I am the more qualified candidate.

MALVEAUX: That card, political analysts believe, gives McCain a strong hand, considering credentials as decorated war veteran and 20 plus year member of the Senate Armed Services Committee.

CLINTON: I feel absolutely comfortable standing on that stage with John McCain and going toe-to-toe about national security.

MALVEAUX: In Waco, Texas, Clinton addressed the needs of veterans and rolled out the military brass supporting her campaign, including a key endorser, retired four star general, Wesley Clark.

(END VIDEOTAPE)

MALVEAUX: And, Wolf, she is also hitting hard on a very simple point that she's making. She says she is applying for the job as president and commander-in-chief, so she simply is telling voters, look at her resume and compare it to that of Senator Barack Obama, that she is more qualified for this job. If you look at it in an objective way, as she says, she believes people will turn to her and vote for her in Texas, Ohio and those other critical states -- Wolf.

BLITZER: And we're just hearing that Senator Barack Obama, Suzanne, has just released his own response ad, if you will, to what we just saw from Hillary Clinton. We're going to get that and show it to our viewers. That's coming up, as well.

Suzanne Malveaux in Waco, Texas. The McCain campaign is trying to put out a new fire from an endorsement that may win some evangelicals but is outraging a lot of Catholics and a lot of other people, as well. CNN's Brian Todd is following this story for us.

Explain the controversy. Brian, what is going on?

BRIAN TODD, CNN CORRESPONDENT: Wolf, some Catholic leaders are furious that John McCain has accepted the endorsement of televangelist John Hagee, who they say has a long history of vicious attacks on their church.

(BEGIN VIDEOTAPE)

TODD (voice-over): On the surface, it seemed like a much needed conservative endorsement for John McCain.

PASTOR JOHN HAGEE, TELEVANGELIST: John McCain will be a strong, courageous and effective leader from the first day he steps into the Oval Office.

TODD: Pastor John Hagee, a popular televangelist from San Antonio with a 19,000-member church and a TV ministry seen around the world, throws his support to the presumptive Republican nominee, who respond unequivocally.

MCCAIN: I'm very honored by Pastor John Hagee's endorsement today.

TODD: Since that Wednesday event, one key part of McCain's potential voting base has turned on him, Catholic leaders calling on McCain to repudiate Hagee.

BILL DONOHUE, PRESIDENT, CATHOLIC LEAGUE: This thing is out of bounds. And this is why McCain has to look at this. It's the totality of what the man stands for. He's been bashing Catholicism for decades and making a mountain of money over it.

TODD: In a letter calling on McCain to reject the endorsement and distance himself from Hagee, Catholics United, an online group that advocates strict adherence to Catholic teachings, says you are probably unaware of Pastor Hagee's longstanding derision of the Catholic Church.

Here's what they're talking about. In his book "Jerusalem Countdown," updated last year, Hagee writes that: "The Roman Catholic Church plunged the world into the Dark Ages" and "Adolf Hitler attended a Catholic school as a child and heard all the fiery anti- Semitic rantings from Chrysostom to Martin Luther."

We tried repeatedly to reach Pastor Hagee to get his response to the criticism from Catholic leaders. His aide said he was traveling and not available.

McCain had this to say...

MCCAIN: When he endorses me, it does not mean that I embrace everything that he stands for and believes in.

TODD: McCain's campaign also issued a statement saying he hopes Catholics and all people of faith share his vision for defending innocent life and traditional marriage. But McCain's campaign didn't respond when we asked if he knew about Hagee's writings before accepting the endorsement. Analysts say that may not move the ball far enough with Catholic voters in key states like Pennsylvania and Ohio.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: If John McCain is saying or accepting an endorsement that is offensive to Catholics and doesn't repudiate it, he risks alienating a crucial swing group.

TODD: This comes just after McCain did repudiate talk show host Bill Cunningham for an incendiary speech against Barack Obama and after Barack Obama rejected this endorsement from Nation of Islam leader, Louis Farrakhan.

LOUIS FARRAKHAN, NATION OF ISLAM: Who can lift America?

TODD: Do the candidates bear the ultimate responsibility for the brimstone of their endorsers?

DAVID GERGEN, CNN SENIOR POLITICAL ADVISER: The candidate bears a lot of responsibility for what goes on at his own rallies. If someone comes out of the blue and endorses you and it turns out in their background they have said something which is offensive or insulting, you continue to have some responsibility. It's less, but you do need to disassociate yourself.

(END VIDEOTAPE)

TODD: But McCain has some critical backup now by conservative Republican Senator Sam Brownback, who is Catholic. In a statement we just got, Brownback said McCain would never condone anti-Catholicism or even the slightest whiff of it.

Still, there is considerable pleasure on McCain to move further away from John Hagee than he has so far. The leader of the Catholic League says they will be relentless in calling attention to this -- Wolf.

BLITZER: All right, we'll watch the fallout. Thanks, Brian, very much. A good report.

For the latest political news anytime, you can always check out the political ticker at CNNPolitics.com. The ticker is the number one political news blog out on the Web. That's also where you can read my latest blog post.

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

JACK CAFFERTY, CNN ANCHOR: It turns out February was a huge money month for the Democratic presidential contenders. Hillary Clinton raised $35 million this month -- more than double her January total of $14 million. Despite 11 straight losses and her drop in the national polls, Clinton attributes the big jump in donations to her passionate supporters who wanted to help when they saw the campaign was struggling. One aide says the breakthrough moment actually came back when Clinton announced that she had loaned her campaign $5 million of her own money.

When it comes to Barack Obama, some estimate that he has raised more than $50 million in February. The campaign won't confirm that number, but insists that it had a strong month and raised "considerably more than Clinton's total." Obama raised $36 million in January and it's estimated that on many days during the month of February, Obama's campaign was taking in more than $2 million a day.

There's no denying the Democratic base is energized. They're raising buckets of money. A lot of these millions coming from hundreds of thousands of small donors who can keep on giving. And this can all prove to be a king sized headache for the Republicans. John McCain raised a paltry by comparison $12 million this month, which is about the same amount that he raised in January.

So do the math. If the Democrats can raise $85 million a month between the two of them and the Republicans raise less than a fourth of that, well, it could be a pretty short campaign.

Here's the question: The Democrats raised an estimated $85 million in February, how can John McCain compete when he only raised about $12 million?

Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: Jack, thank you for that.

Democratic superdelegates coming under political pressure and racial pressure to back Barack Obama. We're going to show you some are giving in, others are standing firm. Carol Costello working the story in Ohio.

Also, why the battle between Obama and Clinton may be closer than a lot of people think. You're going to find out exactly what it will take for her to stay in the race.

Plus, the critical role of Hispanic voters. We're going to be speaking with Geraldo Rivera about how they could determine the outcome. Geraldo, here in THE SITUATION ROOM.

Stay with us. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: With the Democratic race extremely tight right now, the party's superdelegates are facing growing pressure -- including some racial pressure, even some threats to back Barack Obama.

Let's go to Carol Costello. She's watching the story for us in Ohio. Carol, how intense is this pressure?

CAROL COSTELLO, CNN CORRESPONDENT: The pressure is very intense, Wolf. You know, I'm in Cleveland right now, a predominantly African- American city. And blacks here are ardently hoping that Barack Obama becomes the next president of the United States. But that's making it very difficult for the people who represent them.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): Cleveland city councilman, Kevin Cornwell, a one time Hillary Clinton supporter, is switching sides. He's now in the Obama camp. It has little to do with Clinton and everything to do with pressure from the people who voted him into office.

KEVIN CORNWELL, CLEVELAND CITY COUNCIL: Councilmen, I thought that I would never seen an African-American going for president of the United States of America. You know, this is a dream and you need to get on the right side of history. And my residents want me to be a part of this dream.

COSTELLO: Other nationally prominent politicians have experienced similar pressure. Three African-American superdelegates have also defected, including Georgia Congressman John Lewis, a long- time Clinton ally.

REP. JOHN LEWIS (D), GEORGIA: There comes a time when you have to make a decision. As a superdelegate to the Democratic Congress convention next summer, I will be casting my vote for Barack Obama.

COSTELLO: But other African-American politicians find the shifting loyalties disturbing. Ohio Congresswoman Stephanie Tubbs Jones.

REP. STEPHANIE TUBBS JONES (D), OHIO: All due respect to my other colleagues, whoever they are, I firmly believe if you don't have loyalty and integrity, what do you have? Oh, I'm a politician. I'm proud to be a politician. But I'm a woman of my word and I will not leave her.

COSTELLO: Neither will California Congresswoman Diane Watson -- even though she says she's received not just pressure, but threatening e-mails.

REP. DIANE WATSON (D), CALIFORNIA: We can disagree. But I don't think that's a cause for viciousness and for launching a campaign against me.

COSTELLO: Their continued loyalty is no doubt a plus for the Clinton campaign, although her supporters tell me Clinton understands.

ANN LEWIS, CLINTON ADVISER: People have to make their own decisions and you have respect their right to make their decision and say OK, I've got to reach that many more people enough for their support. (END VIDEOTAPE)

COSTELLO: But, you know, Wolf, one community organizer here in Cleveland told me that Ohio Congresswoman would pay for her loyalty to Hillary Clinton. He said there's no way that the people of his community would vote for her because many feel that she's a traitor -- Wolf.

BLITZER: Carol, thanks very much. Carol Costello in Cleveland.

Her campaign is definitely down, but it's certainly not out by any means. Hillary Clinton could still eke out a win against Barack Obama, despite her string of primary losses. But it all comes down to that all-important delegate count.

Nobody does a better job of counting than our own Tom Foreman. He's crunching the numbers for us. He's in THE SITUATION ROOM.

So how could she pull out a win and clinch this nomination, if she can?

TOM FOREMAN, CNN CORRESPONDENT: It's paint by numbers. That's all it is, really. Obama has won 11 states in a row. That's a lot. But the race still incredibly tight because of the delegates.

Here is the magic number -- 2,025 are needed. That's what you need in terms of delegates to lock the nomination when you go to the convention.

Here are the pledged delegate numbers. These are the ones the candidates win in all the primaries and caucuses. Barack Obama has 1,184. Hillary Clinton has 1,031. That's really not much of a difference. Only 153 delegates separating them.

It's so close because of the way the Democratic Party splits up these delegates. It's proportional. For example, the last primary in Wisconsin, Obama won pretty big time -- 58 percent to Clinton's 41 percent. That's a big victory. But look at how the delegates were distributed. Obama got 42 and she got 32.

The next big race is on March 4th. There you have four states, 370 pledged delegates being decided. Let's just say that Clinton were to win Ohio and Texas, the states she's really targeting and says she really has to win. The delegates would still be split proportionately. So, she might end up narrowing that Obama lead, but both of them will still be far away from reaching that magic number we mentioned at the top to clinch the nomination.

Which means that it really might come down to this question of the superdelegates -- made up of Democrats in Congress, other Democratic office holders, the party's big name players. Of the ones who have said how they will vote, more of them like her than like him. But at least 300 are still up for grabs. And in a race this tight, that's more than enough to make the difference, especially since some of those who have already pledged can switch if they want to, Wolf. So all it comes down to again and again is the numbers. And nobody has an insurmountable lead. And nobody can get the numbers to clinch in the immediate future, no matter what happens.

BLITZER: Well, before we get to any of that, let's see what happens on Tuesday.

FOREMAN: Yes, exactly.

BLITZER: Because that could be decisive.

FOREMAN: Absolutely.

BLITZER: And we'll see what happens.

FOREMAN: Absolutely.

BLITZER: Thanks very much. Tom Foreman doing an excellent job with the numbers for us.

And this important programming note. Tom Foreman anchors "THIS WEEK IN POLITICS," Saturday, 6:00 p.m. Eastern, Sundays, 1:00 p.m. Eastern, right after "LATE EDITION". You'll want to catch that program.

FOREMAN: It's where all the cool kids hang out -- Wolf. Our ratings are very close to "The Sopranos" right now.

(LAUGHTER)

FOREMAN: It's huge.

BLITZER: Tom Foreman, "THIS WEEK IN POLITICS".

It's one of the most important decisions the candidates will have to make after they secure their party's nomination -- picking a running mate. We're going to show you who could make their short list.

Plus, an exclusive look at a new Army weapon. You're going to find out how it could give soldiers a critical combat advantage.

Lots of news happening, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Carol Costello, as you just saw, is on assignment in Ohio.

Fredricka Whitfield is monitoring some other important stories incoming into THE SITUATION ROOM right now.

What's going on -- Fred?

FREDRICKA WHITFIELD, CNN ANCHOR: Hi, Wolf.

There was a major sell-off on Wall Street today. The Dow Jones Industrial Average dropped 315 points, or 2.5 percent, in the second worst trading day of the year. Analysts say a record quarterly loss reported by the financial services firm AIG combined with rising oil prices to spur increased fears of a recession.

And authorities in Las Vegas say a man is in critical condition after the discovery of the deadly poison ricin in his hotel room. The man has been hospitalized for more than two weeks now, but the ricin was not discovered until a relative went to his hotel room yesterday to clear out his belongings. Local and federal law enforcement officials say there's no reason to believe the ricin is linked to terrorism at this point.

And Britain's Prince Harry is being pulled out of Afghanistan after news of his deployment to the front lines was leaked. British military officials say they are concerned that the media coverage would put him and his army unit at increased risk. Though most media outlets had agreed not to report on Harry's service in Afghanistan until after he returned home, that agreement broke down after a Web site, "The Drudge Report," posted news of his deployment earlier this week -- Wolf.

BLITZER: Fred, thanks very much.

He has a unique perspective one of the most important voting blocs in this election, especially this coming Tuesday in Texas. Geraldo Rivera here in THE SITUATION ROOM on the candidates, the campaign and why Hispanics could be the swing vote to watch for this in presidential race.

Plus, we're not sure who the nominees will be, but there's already talk of the number two spot. A closer look at some vice presidential possibilities. That's coming up, as well.

Plus, it's a soldier's most important piece of equipment -- a rare, up close look at the military's new weapon, specially designed to take on America's deadliest enemies.

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

(COMMERCIAL BREAK)

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

Happening now, a federal judge ruling that the Pentagon can require troops to be vaccinated against anthrax. A lawsuit filed by a group of military service members argue that the vaccine should be optional because it's not proven to be safe or effective.

Iraq's presidential council approving the death sentence for a notorious official of Saddam Hussein's former regime. The official, known as "Chemical Ali" for his gassing of thousands of Kurds, is due to hang within a month.

And poppy production hitting record levels in Afghanistan. A new State Department report says a boom in the opium trade is funding the Taliban insurgency and threatening stability in the country. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

They are arguably the single most important voting bloc in the race for the White House right now -- at least in Texas. That would be Hispanics. In fact, some analysts are predicting their votes will decide who becomes the next president.

We're going to be talking about that in just a moment with Geraldo Rivera. He's here in THE SITUATION ROOM.

But let's begin with CNN's John Zarrella. He's uncovering America for us in Miami.

John, how critical is this Hispanic or Latino vote this time around?

JOHN ZARRELLA, CNN CORRESPONDENT: Probably very critical, Wolf. Based on past voter turnout, Hispanics will make up probably about 6.5 percent of voters in November. But political analysts say Hispanics themselves will say -- will tell you don't let that number fool you -- they may well decide who the next president of the United States is, because they fashion themselves the swing voters.

(BEGIN VIDEOTAPE)

ZARRELLA (voice-over): John McCain won Florida with solid Cuban- American support. Hillary Clinton won the California primary thanks, in large part, to Hispanic voters. And this may be just the beginning. For the first time, Latinos say they can make a difference in the presidency.

MARYTZA SANZ, LATINO LEADERSHIP: I think that right now the Latinos, we are in the best time. We are making history. And we will make the history if we come out in big numbers to vote.

ZARRELLA: Marytza Sanz is founder of Latino Leadership in Orlando, which registers Hispanics to vote.

SANZ: We are awake and we are paying attention to politics.

ZARRELLA: Not only are they the largest minority and growing, Hispanic clout is enhanced, political analysts say, because they are registering in large numbers and they're concentrated in key states.

SUSAN MINUSHKIN, PEW HISPANIC CENTER: In California, they were 30 percent of the turnout in the Democratic primary. Going into Texas, 25 percent of eligible voters in Texas are Hispanic.

SAMUEL RODRIGUEZ, HISPANIC CHRISTIAN LEADERSHIP CONFERENCE: The wild card for a 2008 election -- the Hispanic voter. As a matter of fact, I personally believe Hispanics will determine the outcome of who the next president of the United States will be.

ZARRELLA: A conservative, Samuel Rodriguez, heads the National Hispanic Christian Leadership Conference.

RODRIGUEZ: God is about to give you what you have been asking for.

ZARRELLA: He is influential in 18,000 Evangelical churches. Hispanics will be the swing vote, Rodriguez says, because they are moderates. But the Republican's Party's hard line on immigration reform has soured many.

RODRIGUEZ: The Latino Christians are caught between the proverbial rock and a hard place. This is the question. Or do we vote for a party that doesn't want us but does not resonate with what we believe? Or a party that does not that does want us but we don't believe in.

ZARRELLA: Forty percent is the magic number of Hispanic votes Republicans want in November. President Bush got it in 2004, instrumental in helping him win reelection. Cuban-American Congresswoman Ileana Ros-Lehtinen believes John McCain can bring them back.

REP. ILEANA ROS-LEHTINEN, (R) FL: John McCain has had a long history of reaching out to Hispanic groups. After all, he's a senator from Arizona. A border state. He understands the problems that Hispanics face.

ZARRELLA: How they vote may come down to who they trust more. Not on immigration, but the economy, which is everyone's number one issue.

(END VIDEOTAPE)

ZARRELLA (on camera): New Mexico, Colorado, Nevada and Florida, all significant numbers of Hispanic voters. President Bush in 2004 carried those states by five percentage points or less. They're expected to be close again in 2008, Wolf. The swing votes, Hispanics, could make the difference in those states -- Wolf?

BLITZER: All right, John. Thanks very much. John Zarrella, our man in Miami for us, thank you.

So can Hillary Clinton win the Hispanic vote in Texas? And if not will Barack Obama be able to withstand a Republican onslaught in the general election?

And joining us now, Geraldo Rivera. He has got an important new book coming out entitled "His Panic," or "Hispanic" -- depending on how you want to read the title on the book jacket. "Why Americans Fear Hispanics in the United States."

Geraldo, thanks for coming in to THE SITUATION ROOM.

GERALDO RIVERA, JOURNALIST: Wolf, I'm delighted to be with my old partner.

BLITZER: All right. We have a long history. We go back many, many years. I want to get to the book in a moment.

Let me pick your brain on the politics of what's happening right now. Can Hillary Clinton hold onto that Latino vote going into Tuesday especially in Texas which she so desperately needs to survive.

RIVERA: She could write a book right now, Wolf, called "Her Panic." It's Hillary's last stand. It's ironic that in the city of San Antonio, the home of the Alamo, where in 1836, 189 people perished in their last stand.

Her whole fate belongs to south Texas now. There are those six congressional districts now based around San Antonio to El Paso to Corpus Christi, in that area there are probably 70 percent of the voters are Hispanic. She has to carry them overwhelmingly.

In fact, the best indicator of her potential success in a primary up until now has been the Hispanic population. The percentage of Hispanics in a particular state. New York, New Jersey, Massachusetts, Arizona, New Mexico, Nevada, California, the states that had substantial populations have delivered their vote to her by more than three-to-two. She has to do least that well in Texas. Thirty six percent of Democrats in Texas are Hispanic, Wolf.

BLITZER: Can Barack Obama, Geraldo, you and I have covered a lot of political campaigns, withstand, if he gets the Democratic presidential nomination, the fierce assault that he will face from the Republicans, their supporters, can he withstand that? In other words, is he battle tested yet in order to withstand the criticism he is yet to receive?

RIVERA: He is incredibly smooth. He is charismatic. He's extremely bright. But Hillary's advertisement with the telephone ringing in the middle of the night and you're with your child. And the world is at war. What do you do? Who do you want with the finger on the nuclear button, that's very effective.

But that's small potatoes compared to the assault that Republicans will mount on Barack Obama. And it's not going to be pretty. Whether or not the excitement, the energy that he's been generating up until now will sustain him for the next eight months remains to be seen. But they will come at him and they'll come at him ferociously, Wolf.

BLITZER: Let's talk about "His Panic" or "Hispanic." Let's talk about the book for a moment. How did you come up with the title?

RIVERA: Well, I had a classic infamous confrontation with Bill O'Reilly on my network. He was making an example of a drunk driving case. An illegal alien drunk, ran down two Virginia girls and killed them on the cusp of their life. It was a very unfortunate incident. O'Reilly made a big point about it. I said what about the 350 other drunk driving deaths in the Commonwealth of Virginia that year? How come we never reported on them?

It was unfortunate and scapegoating to highlight every negative act by an illegal immigrant. And all it does was fosters ill will and a kind of overreaction that really borders on hate mongering I think. And It's just not fair. And nobody was speaking out for the 12 million at least who are here without documentation. So I thought if not me then who. BLITZER: So basically if the point that you are making in that book is what? The subtitle is "Why Americans Fear Hispanics in the United States." Who fears Hispanics? Who are you talking about?

RIVERA: Well, I think it's fair to say they have been the victims, the illegals. But it's not just the illegals. It's the entire community of the most savaged talk radio campaign ever. Even worse, I think, more egregious than the one that warped Bill Clinton's sex life with Monica Lewinsky into an impeachment.

And they are exaggerating and saying the immigrants are responsible for crime and terror and disease and the loss of jobs. It's the same old, same old. I researched back to the days of the Irish in the mid 19th century, the Italians, the Germans, the European Jews who came. Every time there's this reaction, the immigrants come in, there's this counter-reaction of a nativist, xenophobic. Let's put the walls, let's throw these people out, they're ruing what was a pure America.

And it's been to the point now where the citizens in the Latino community, they are 45 million of us now, really feel, you know, we're getting the traffic stops where local cops now empowered by legislation can say give me proof of your status just because I have a mustache or brown skin.

It's really not fair. My dad came from Puerto Rico in 1937. He fought discrimination and prejudice. He married Lily Friedman, my beautiful Jewish mother. My dad just wanted to assimilate. He just wanted to be American. That's what really the book is about. That we're just part of a process. We're just the latest group over the bridge.

BLITZER: It's part of the American dream. All of us. Except for the Native-Americans are children of immigrants, more or less. Michelle Malkin, the syndicated columnist, one of your critics wrote then in January.

She said, "The maverick," referring to John McCain, "remains a Geraldo Rivera Republican. Like the ethnocentric cable TV host who can't string a sentence about immigration together without drowning in demagoguery, McCain naturally resorts to open-borders platitudes when pressed for enforcement specifies."

He's backtracked somewhat, McCain, on the whole comprehensive immigration reform. He's now talking about fixing the borders. You know, securing the borders. Worrying about comprehensive immigration reform down the road. What do you make of what's going on?

RIVERA: Well, first of Michelle Malkin is usually wrong. She's right about the fact that John McCain is a Geraldo Rivera Republican. I'm proud to say that. I would be proud to vote for John McCain or Barack Obama or Hillary Clinton.

Mitt Romney, I ran into him in the green room over at Fox and I said governor, your anti-immigration rhetoric is going to cost you with South Florida Hispanics, the Cuban-Americans, who are the most socially conservative reliable voting bloc in the country are going to reject you because you're smearing us all with the same brush. Your rhetoric is much too sloppy, too hateful, too extreme.

He says I have 45 Hispanics on my advisory committee. I said governor, it's not going to be enough. It wasn't. Romney lost five to one to McCain in South Florida. The Hispanics rose up against him. Five to one among Hispanics in South Florida.

And that's why these conservatives like Michelle Malkin don't have a fellow conservative to vote for. You can only push a people so far. And in this case the extremist rhetoric really has laid like a putrid fog over the entire American Latino community. And I just hope it stops now.

BLITZER: All right. The book is entitled "His Panic: Why Americans Fear Hispanics in the United States." The author, Geraldo Rivera. Geraldo, thanks for writing this book. Thanks for coming in.

RIVERA: Wolf, thanks. It's been a delight. Thank you.

BLITZER: It's one of the most crucial decisions of the presidential race. Who to pick as number two. For each candidate there's a list of choices for vice president. We're going to show you who might be in the running.

That's coming up. Joe Johns coming by. You're in THE SITUATION ROOM.

Plus what if prices keep going up but the economy keeps going down? It's a big problem, huge problem with a funny name, though. It's called stagnation -- or stagflation. That's it. You're going to find out what to expect if it happens.

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

(COMMERCIAL BREAK)

BLITZER: The battle for the Democratic nomination could be over as soon as next week. Then again maybe not. Still there's growing tension being paid to the number two spot on both tickets.

Joe Johns is here. He is taking a closer look at this part of the story.

Often critical who a vice presidential running mate could be, at least in setting some sort of tone.

JOE JOHNS, CNN CORRESPONDENT: That's very true, Wolf. The candidates usually have plenty of time to figure out things like running mates. But with the primaries running so long this year, speculation in both parties is already heating up.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): Once the primaries are over, it's the single most important decision for the nominees, who to put on the ticket. MCCAIN: It would be someone who is prepared to take my place, who follows my philosophies, beliefs, principles and priorities.

JOHNS: Washington insiders suggest a governor from outside the beltway to balance McCain's Senate experience. South Carolina's Mark Sanford, Minnesota's Tim Pawlenty. Florida's Charlie Crist. The common advice to McCain is to pick a conservative to mend fences with the base. But former Reagan chief of staff Ken Duberstein says that's a double-edged sword.

KEN DUBERSTEIN, FORMER W.H. CHIEF OF STAFF: You walk in a very narrow line with somebody who is acceptable to a broad range of the American people and somebody you can also deflect to with the so- called Republican base.

JOHNS: The other advice to McCain, pick someone young because as he himself says.

MCCAIN: As you may have noticed, I'm not the youngest candidate in the race.

JOHNS: Duberstein's caution:

DUBERSTEIN: John McCain has to stay healthy and vigorous. Everything we've seen on the campaign trail, he'll make all of us who are much younger look very tired compared to the stamina John McCain has.

JOHNS: On the Democratic side, here's some advice Barack Obama might not like. Take a page from the George Bush playbook.

BILL CARRICH, DEMOCRATIC STRATEGIST: When he picked the Dick Cheney he was looking for somebody with experience. Somebody with gray hair. Somebody with Washington inside knowledge. I think if Senator Obama can do that it would probably enhance his candidacy a great deal.

JOHNS: Someone like former senator and foreign policy expert, Sam Nunn of Georgia. Or a military type, like retired Marine general and Iraq War critic Anthony Zinni.

Governor Kathleen Sebelius of Kansas gets mentioned for her red- state appeal. As does first term Senator Jim Webb of Virginia. And if Hillary Clinton wins, some advice she may not much like either. Go for Obama's votes. Young, upscale, African American.

CARRICH: She needs somebody to be an ambassador to those kind of voters. And of course the obvious person that comes to mind is Senator Obama himself.

JOHNS: But there are others. New Mexico Governor Bill Richardson. Indiana's Evan Bayh. The short lists aren't worth much now but this advice; make sure your pick is qualified to be president, and is not someone is that will drag you down.

(END VIDEOTAPE) JOHNS (on camera): In political circles, that's the do no harm theory. That despite the intense curiosity and the fact that running mates can help a nominee, the potential for damage is much more of a concern. Wolf?

BLITZER: All right, Joe. Thanks very much. Joe Johns reporting.

We haven't heard much about Bill Clinton in the past few days. But he's still out there. He's campaigning vigorously for his wife. His method, though may have changed. Not necessarily his message. We're on the trail with Bill Clinton. That's coming up.

And a CNN exclusive. A brand new weapon aimed at improving a soldier's chance against America's deadliest enemies. We'll tell you what's going on right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Check back with Jack Cafferty for "The Cafferty File" -- Jack.

CAFFERTY: Some startling numbers. The Democrats raised an estimated $85 million in the month of February. The question is, how can John McCain compete when he only raised $12 million during the same period of time

Kim in Columbus, Ohio writes: "John McCain needs to start a movement. Republicans are backing him but they're not very excited about him. They figure he has no choice. He needs to add some fire to his campaign. If his rallies are really as boring as they look to be on TV, he's going to have a problem."

Ian writes: "The question as well as those numbers are slightly skewed. McCain has practically locked up the nomination. Conservative donors will fund his campaign in time. But the money really won't start rolling into his coffers until the general election. The Democrats, on the other hand, are still in the midst of an extremely tight race. Democratic voters still split so they feel that they need to donate to their candidate to try to push them over the top."

Rich in Georgia writes: "He can't compete. He can raise $12 billion but it doesn't change his message. He can just push the same message more. We don't need any more from him. His stance is clear. He has wrapped himself in Bush's policies and that will be his ultimate downfall."

Susan in Seattle: "Easy Jack, as soon as Huckabee bows out the Republicans can declare McCain their nominee, the big corporations will then fill up the coffers. The RNC will dump millions into the campaign from these wealthy donors. It doesn't matter if McCain goes with public funding or not. All the conservative PACs will come out of the woodwork and they'll outspend the Democrats. They always do."

Jeff in New York writes: "The only way McCain can compete is if Obama keeps his pledge to use federal funding in the general election. If Hillary is the nominee, she is not bound by any such pledge and can bludgeon the Republicans with the same tool, money, that the Republicans have wielded so often and so successfully against the underfunded Democrats."

Ted in Phoenicia, New York says: "Dear Jack, maybe he should just bow out gracefully, McCain, give his money to a worthy cause like Barack Obama."

And Robert says: "Not to worry about the money, Jack. McCain won't need it when the right wing evangelicals begin to pray for him" -- Wolf?

BLITZER: Jack, thanks very much. See you in a few moments.

Let's get to a CNN exclusive right now. The U.S. military unveiling a new weapon on the battlefield.

Barbara Starr has a first look -- Barbara?

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, the most important piece of equipment a soldier carries is his rifle.

(voice-over): This Army ranger has served in Iraq and Afghanistan. Equipped with the best rifle the army has, a rifle designed years ago.

But soon special operations forces will take this into the field. A new assault weapon specifically designed for firefights against America's most deadly enemies.

UNIDENTIFIED MALE: The trigger mechanism in this is 100 times better than the M-4 that we're using now. It's a lot smoother.

STARR: Smoother and hopefully less prone to jamming than the M- 4.

(on camera): Have you been in combat situations, for example? You hear a lot of stories. Has your had a weapon ever jammed on you?

UNIDENTIFIED MALE: Yes, it has, ma'am.

STARR (on camera): CNN was given exclusive access to see the new rifles. We've been asked not to identify the rangers here, because on the battlefield their anonymity is crucial.

(voice-over): A second ranger is assigned to show me how the gun works and closely supervised me firing it.

The troops will actually get two different models. Each with three interchangeable barrels. Including a short barrel for close combat and a long barrel. One critical advantage, improved accuracy lets troops take aim from longer distances. Outside the firing range of the enemy. When you kick down a door, what happens on the other side of the door when you have that?

UNIDENTIFIED MALE: Mission is going to be accomplished, ma'am.

STARR (on camera): The bottom line, of course, special operations forces never want a fair firefighter. When they go against terrorists they shoot to kill and win. The accuracy and lethality of these weapons will improve their odds of making this happen -- Wolf.

(END VIDEOTAPE)

BLITZER: Barbara Starr with that exclusive report. Thanks, Barbara.

Prices go up while the economy spirals down. It's called stagflation. We've seen it before. A growing concern. We may see it again. You're going to find out why. This time it could even be worse. We're going to come right back.

(COMMERCIAL BREAK)

BLITZER: Bad economic news in recent months has some experts warning about a phenomenon known as stagflation. The Federal Reserve Chairman Ben Bernanke insists it's not an immediate threat. But what could it mean for American if it becomes a reality?

Joining us now in this week's "What If" segment, our special correspondent Frank Sesno.

Frank, what's going on?

FRANK SESNO, CNN CORRESPONDENT: Wolf, this week the economy. Rumbling all through the news and the campaign trail, of course.

Some major indicators right up on the wall here. First, housing. Toll Brothers. Big home builder reports sales down 23 percent. Oil, it touched $103 a barrel overnight. Jobs, first time jobless claims, 373 Americans filed them last week alone.

The exchange rate against the basket of currency, the dollar is at its lowest point since 1973. Inflation, wholesale prices up 7.4 percent. The concern now is history could be about to repeat itself.

(BEGIN VIDEOTAPE)

SESNO (voice-over): What if prices of gasoline, food, clothing, TVs, keep going up while the economy, jobs, retail and stuff factories make keeps going down? Not a pretty picture. It's called stagflation. A stagnating economy amid spiraling prices. Inflation, last time it was really bad was the 1970s.

It gave rise to something called the misery index, unemployment plus inflation. It peaked in 1980, the year Jimmy Carter lost his job. What if we have stagflation again? 2008 style. Experts say it could be even more complicated because the economy has gone global. America is in debt. And depends on foreign investors.

The collapse of home prices makes it worse. Some are lose their homes. Others less able to borrow against them to cover the higher cost of that new roof or a college education for the kids.

In the stagflation of the '70s, many unions negotiated cost of living adjustments into their contracts trying to sure that paychecks ratcheted up with prices. It fed inflation, but more workers kept up.

UNIDENTIFIED FEMALE: Union power!

SESNO: This time unions are weak, pay raise is small, and they are no guarantees. Just ask the people of GM or Ford. Nearly everyone is being offered a buyout to leave the companies. What if we get stuck with stagflation? The Fed will be stuck with a tough balancing act. Cutting interest rates to stimulate the economy on the one hand without fuelling inflation on the other.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: The economic situation has become distinctly less favorable since the time of our July report.

SESNO: There will be more talk in Congress about extending unemployment benefits. Maybe another even bigger stimulus package. Cities, towns and states will face higher costs and shrinking tax revenues. And whoever gets that job in the White House could find themselves getting daily briefings on the misery index.

(END VIDEOTAPE)

SESNO: And the misery index, where is it now? If you look at our chart right here, it's at 9.81 percent. Remember, that's unemployment plus inflation. It's getting a little bit worse. It's ticking up there. But compare it to 1980, 20.76 percent. So it's a big difference. But you can see why some of these other numbers, Wolf, are being driven by these sorts of trends.

Nearly two thirds of Americans think the country is going in the wrong direction and the Consumer Confidence Index is at its lowest point in 17 years. That spells real turmoil and debate out on that campaign trail.

BLITZER: Really disturbing numbers. Frank Sesno, thanks very much.

SESNO: Wolf, a pleasure.

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