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McCain Aide Suspended; John Murtha Comes Out Supporting Clinton; Michigan Not Likely to Do Over Primary

Aired March 20, 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: Thanks guys, happening now, the chances of a primary revote in Michigan now appear to be dead. Hillary Clinton is casting direct blame on Barack Obama and asking what he's afraid of. We're going to take a closer look at where the Democrats fight for delegates stands right now. This is our big story.
Plus, the anti-war champion in Hillary Clinton's corner. I'll be speaking with Congressman John Murtha and ask him why he's supporting Clinton when Obama was against the war, the Iraq war invasion from the start.

And presidential portraits, we're going to show how Obama and John McCain are using backdrops that have commander in chief written all over them.

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

It's a very serious blow to Hillary Clinton's presidential campaign. Her hopes of getting a primary do over in Michigan appear to have been dashed. The state senate adjourned today without taking up a bill to hold a repeat primary on June 3. A last minute revote deal may still be possible, but for now, Democrats are left with a heap of delegates in limbo and lots of indecision and deep anger.

Let's go to our senior political correspondent, Candy Crowley. She's been watching the story for us. She's on the campaign trail right now in West Virginia.

Candy, the Clinton camp is blaming Barack Obama directly. Explain what's going on.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, what's going on here is a very, very political struggle. Because in these two states, Michigan and Florida may be what turns the tide for one of these candidates or the other. Right now it's not looking that great for Hillary Clinton.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): The campaign action this day is the inaction in Michigan, where a plan to hold a primary do over was left for dead as the state senate recessed. Michigan still looks like Florida which also stalemated in its efforts to put on a second primary. It's a double-barrel blow in camp Clinton and she has raised the stakes. SEN. HILLARY CLINTON (D-NY) PRESIDENTIAL CANDIDATE: I do not see how two of our largest and most significant states can be disenfranchised and left out of the process of picking our nominee without raising serious questions about the legitimacy of that nominee.

CROWLEY: Just prior to the Michigan meltdown, the Obama camp was touting a press release by supporter and Senator Chris Dodd suggesting that the best idea would be an arrangement where the delegates are apportioned fairly between Senators Obama and Clinton. Her best case scenario is seating Michigan delegates in accordance with the first primary results. But he wasn't on the ballot then, so she has focused on the re do and she blames him for its death spiral.

CLINTON: I do not understand what Senator Obama is afraid of.

CROWLEY: A revote would advantage her, but he says the argument is about fairness, in part because it bars people who may have voted Republican in the first primary because they knew a Democratic contest wouldn't count. No revote means she loses her best chance to overtake his leads in pledged delegates and the popular vote. But she says it's about disenfranchisement. He says baloney.

SEN. BARACK OBAMA (D-IL) PRESIDENTIAL CANDIDATE: As soon as she got in trouble politically and it looked like she would have no prospects of winning the nomination without having them count, suddenly she's extraordinarily concerned with the voters there.

CROWLEY: Michigan is likely to end up with no input at all.

GOV. JENNIFER GRANHOLM (D) MICHIGAN: I would like to see us resolve this. I think the fairest way is being having a vote. I think it would bring a huge amount of excitement to Michigan. Our issues would be raised on a national level.

CROWLEY: And the Democratic National Committee may end up with one huge fight at this summer's convention in Denver.

(END VIDEOTAPE)

CROWLEY: But Wolf, as you know, they will go all out to avoid that fight in front of a national audience in Denver. They are some steps between now and then in which they can resolve it, including the Democratic credentialing committee.

They certainly could do something about it. And at this point, don't rule out that Michigan and Florida could come to some kind of action that would seat these delegates by some sort of vote or a caucus or a mail-in. But right now looking pretty grim -- Wolf.

BLITZER: All right. We're going to stay on top of this story with you Candy, thank you.

Republican John McCain is responding today to a verbal slap from Barack Obama and he did it long distance from London. The presidential nominee in waiting also met with British officials and he made a point of reining in the straight talk he usually takes pride in.

Let's bring in Dana Bash. She's watching the story for us.

Did we see a more diplomatic John McCain today?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: That did seem to be the goal, Wolf. Great Britain didn't contribute to the military surge in Iraq. That's something obviously that John McCain is closely associated with and calls a big success. You didn't hear John McCain mention that or anything but careful dipo-speak (ph) on the world stage.

(BEGIN VIDEOTAPE)

BASH (voice-over): Day five of John McCain's overseas trip took him to 10 Downing Street, a meeting with British Prime Minister Gordon Brown and evidence the presumptive Republican nominee is trying to show he can bite his tongue for the sake of diplomacy.

McCain, an ardent supporters of keeping troops in Iraq, has publicly balked at Brown's plan to cut some British forces from Basra. But here he wouldn't go there.

SEN. JOHN MCCAIN (R-AZ) PRESIDENTIAL CANDIDATE: I fully appreciate that British public opinion has been frustrated by sometimes our lack of progress in both areas. But all I can do is express my gratitude to the British government and people.

BASH: McCain emphasized his support for a global agreement on climate change, a difference with the current president, an issue that contributed to his unpopularity here.

MCCAIN: I believe it's a compelling issue for the world's environment. And I am committed to it.

BASH: McCain insists he's traveling as a member of the Senate Armed Services Committee, not a presidential candidate, yet offered a transatlantic response to Democrat Barack Obama's dig at him for mistakenly suggesting Iran, a Shiite government is helping al Qaeda, mostly Sunni.

OBAMA: We heard Senator McCain confuse Sunni and Shia, Iran and al Qaeda. Maybe that is why he voted to go to war.

MCCAIN: Just as Senator Obama said he was looking forward to meeting the president of Canada. We all misspeak from time to time. It's very clear that I have a lot of experience in Iraq.

BASH: And other evidence presidential politics is part of this government-funded trip, McCain attended a fund-raiser for his campaign. For $1,000 a plate, $2,300 for a photo op, American citizens only were invited to lunch at London's historic Spencer house.

(END VIDEOTAPE) BASH: And you can see that invitation, that campaign invitation, fund raising invitation I should say right on the wall behind me Wolf. Now what the McCain campaign says is that before they send that invitation out, they got it approved by the Senate Ethics Committee and on the condition that U.S. taxpayers would be reimbursed by the campaign.

And we're told today that they will actually send back to the U.S. government about $3,000. They say that that's going to be the for the cost of McCain's London hotel room, for the cost of his car to his event and the cost of his trip, his plane fare back here to the U.S.

BLITZER: All right, Dana, thanks very much, Dana watching this story for us.

One thousand dollars a plate. That's $1,500 euros. It's I guess for the people who are dealing in euros, it's relatively cheap.

BASH: But only Americans can go.

BLITZER: That's right, thanks very much.

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

JACK CAFFERTY, CNN ANCHOR: How many pesos is that?

BLITZER: I don't know.

CAFFERTY: You don't. How about francs?

BLITZER: I know it's a lot of yen.

CAFFERTY: Many, many yens.

If there's a road to victory for Hillary Clinton, it is a fairly narrow one. That's a quote from today's "New York Times." The story suggests Clinton needs three breaks to grab the nomination from Barack Obama.

First, she needs a significant victory over Obama in Pennsylvania April 22 in order to support her argument that she can deliver big general election states. Then she needs a lead in the popular vote by the end of June. And lastly, Clinton has to convince the super delegates that she's the best candidate.

Here's the problem. Winning the popular vote seems a nearly impossible task for Clinton if those revotes don't happen in Michigan and Florida. And as Candy Crowley was just telling us, at this point it looks very doubtful that they will happen in either state.

Also Clinton's campaign had hoped the uproar over comments made by Obama's pastor would make voters and superdelegates question his candidacy. But it might be too early to tell on that. It seems like Obama's speech on race Tuesday was well received and in fact was praised even by some Clinton supporters.

Meanwhile, President Clinton's former political adviser Dick Morris is even more blunt about Hillary's chances. He writes, "Senator Back Obama has already won the Democratic nomination. It's over." Morris suggests Clinton cannot catch Obama in the pledged delegate count regardless of what happens during the rest of the primary season and he says the super delegates will not override the will of the voters "unless Obama is in jail."

So here's the question: How likely is it that Barack Obama will be the Democratic presidential nominee?

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

BLITZER: Jack, thanks for that. Jack Cafferty will be back shortly.

Democrats are debating which presidential candidate would be best when it comes to the war in Iraq. Congressman John Murtha has made a somewhat surprising choice.

Up next, I'll ask him, he's the anti-war leader, I'll ask him to explain why he's backing Hillary Clinton when some other Democrats are criticizing her initial support for authorizing the war.

And with oil prices sky high, can Iraq afford to pay its own way for reconstruction. Why are billions and billions of U.S. dollars still paying for reconstruction, new questions and outrage. That's coming up.

And a new embarrassment for John McCain. A staffer posts a video questioning Barack Obama's patriotism. We're going to tell you what's happening now, what happened to the staffer. Lots more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: When war hero and Congressman John Murtha turned against the war in Iraq, he helped galvanize lots of Democrats and their opposition to the mission. Now after five years of war, Murtha is staking his hopes for a new course on Hillary Clinton. Congressman Murtha is joining us now from his home state of Pennsylvania.

Congressman, thanks for coming in.

REP. JOHN MURTHA (D) PENNSYLVANIA: Nice to be with you, Wolf.

BLITZER: Barack Obama was against the authorization of the war from day one going back to 2002. He's been strongly opposed to the war. Why did you decide that Hillary Clinton would be a better president than Barack Obama, given the fact that she did authorize the war back in 2002?

MURTHA: Well, she voted the same way I did, Wolf. And I remember sitting there waiting on the floor. I didn't speak at all about the war in this particular instance. In '91 I did and I led the fight to go to war.

But this time, I felt the president ought to have the option and I think Hillary Clinton made the same mistake. But listening to her speech the other day -- and I've known her for a long time -- and her being in the White House for so long. Even though she may not have been openly involved in the policy issues, she certainly knows the pressure.

She learned that you can't do it partisan. You can't do as much as you would like to do. She has the tenacity, I think, to be able to get this war over with. Her speech was very thoughtful. She not only talked about getting the troops out, she talked about getting the troops getting past Iraq and making sure our troops were ready for any eventually down the road.

That's what I've been saying for a long time. So I agree with the speech she made and I think she would be able to bring people together more than any other candidate I would hope.

BLITZER: What does Senator Obama lack from your perspective?

MURTHA: I tell you what I think he lacks and this is a very narrow difference. I think he lacks that experience. I've seen presidents get older, every single one of them. There's seven presidents I've served with. Every one of them got older. They made mistakes. They learned from those mistakes.

I think being in the White House is something that you can't measure. And I think that experience that she had being there with the president and being through these very difficult decision gives her an edge and she realizes she can't do all the things she would like to do. But she also realizes that she has to be practical about it.

And one of the things she's convinced, she finally became convinced that we have to get the troops out. This is crippling the economy. It's crippling the United States, this war in Iraq. I've talked to supervisors. They don't have money for sewage and water. I'm talking to people that fill up their gas tank, cost $24 more Wolf today that it did when this war started. If you take a line, you measure that line that goes straight up the cost of gasoline, the cost of oil, compared to the war.

BLITZER: Let me play for you this little clip of what Senator McCain, who has had a lot of experience on national security and military matters, what he said the other day about Hillary Clinton.

(BEGIN VIDEO CLIP)

MCCAIN: She told General Petraeus last year when he testified that you would have to suspend disbelief in order to believe that the surge is working. Well, the surge is working.

(END VIDEO CLIP)

BLITZER: You want to respond to McCain's criticism of Clinton. MURTHA: Yes. Let me just say this. I measure it factually. For instance, oil production is still about the same as pre-war level. Electricity production is below pre-war level. As a matter of fact, there's seven or eight hours of electricity in Baghdad, 50 percent unemployment.

And here's the thing that's so frustrating. They haven't been able to convince the allies, the so-called coalition of the willing, to stay in Iraq. As a matter of fact, we've lost 37,000 troops, these allied troops. And so we've had to increase. Every time we turn around we've got to come up with more money. We got to convince the allies. We have to do more diplomacy. I think Hillary Clinton can do that.

BLITZER: But Congressman, in terms of the reduction in violence, General Petraeus, the U.S. military commander and others say there has been since the surge started almost a year ago, a reduction in violence. I'll play this excerpt of what General Petraeus said.

Listen.

(BEGIN VIDEO CLIP)

GEN. DAVID PETRAEUS, COMMANDER, MULTINATIONAL FORCES IN IRAQ: We're in a good or better place in terms of security. Even in terms of political progress by the Iraqis than we were say a year ago. Iraq was on the brink of a civil war.

(END VIDEO CLIP)

BLITZER: Does he have a point?

MURTHA: Well, he may have a point, but today he even say there's not enough progress being made on reconciliation. This is something that you can't measure by what they say daily. I said to him when I was there at Thanksgiving. I said General, you got to realize the burden this is putting on the American public.

The cost of this war is killing us. There's so many things -- bridges. I've got more dilapidated deficient bridges in western Pennsylvania probably than any place else in the country. I've got an older population where interest rates go down, they get less income.

The people are suffering because of this war. Not only the troops. And, listen, there's nobody as you well know that inspire me more than the troops. I talked to a young fellow, National Guard guy, just if other day, we're opening an armory and he was 20-years-old. He had been deployed twice.

I see the families and the tremendous burden on the families. I see the children of the families, the burden on them. You can't deploy people three and four times. I've seen people that had diabetes deployed overseas and the doctors advised him not to do that. That's the shape it's putting us into. So this war has to end and I told General Petraeus like I told General Casey. The country cannot stand this. It's crippling the American economy. BLITZER: One final question. I guess it's sort of a related question. Hillary Clinton and Barack Obama and John McCain, for that matter, they voted for legislation the other day that would have put a moratorium on what are called earmarks, the pet projects if you will. You disagree with her on that don't you?

MURTHA: Let me tell you something, Wolf. I disagree with everybody who is running for president. That's our job. The members of Congress, if they had earmarks when they were Congress, one of them is going to be president and they're going to have earmarks in their presidential budget. Every single one of them do. What we have is incidental compared to what the president has in the budget.

BLITZER: Congressman John Murtha, thanks for coming in.

MURTHA: Always good talking to you Wolf.

BLITZER: Thank you very much. Activists protesting in Tibet. China cracks down and there are numerous stories of violence and death. But the White House says that's no reason for President Bush to miss China's Olympic games. You're going to find out why.

And the road to the White House could be weaving through a place near you. But for one of the Democrats, that road will feel more like an uphill struggle. Bill Schneider standing by to explain. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Carol Costello is monitoring some other important stories incoming into THE SITUATION ROOM right now.

Carol, what's going on?

CAROL COSTELLO, CNN CORRESPONDENT: Wolf, there may be deaths, protests and outrage over a crackdown by the Chinese government in and near Tibet. But the White House says it's no cause for President Bush to cancel plans to attend the summer Olympics in China. White House press secretary Dana Perino says the president feels the focus should be on the athletes. For many days now, activists have clashed with Chinese government officials regarding Chinese rule in Tibet.

He was disgraced in a high-profile Washington scandal. Now Lewis "Scooter" Libby has been disbarred. Vice President Cheney's former chief of staff will not be able to practice law in Washington. This stems from Libby's perjury conviction in the case involving former CIA operative Valerie Plame Wilson's leaked identity. The appeals court that issued Libby's disbarment, says his conviction made it mandatory.

Across the Midwest roads look like rivers and actual rivers are rising to dangerous levels. At least 14 people are dead from storms and floods in Missouri, Ohio, Kentucky and Illinois. In one tragedy a woman clung to a tree for life after flood waters swallowed her car in southwest Ohio. She was rescued, but she later died. Forecasters predict more floods in the coming days. Back to you, Wolf.

BLITZER: Carol, thank you.

To be commander in chief you certainly should look the part. But if you look like a president and sound like the president, can that actually help you become the president?

And John McCain's campaign says it's not putting up with it. It punishes a staffer for circulating a provocative video that questions Barack Obama's patriotism. Stand by for details right here on THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers here in THE SITUATION ROOM, happening now, the U.S. travel industry effectively telling the world, give me your huddled masses yearning to visit and shop in the United States. The travel experts say things being done by the U.S. government are actually scaring off foreign travelers. Zain Verjee watching the story.

A new movie tackles a controversial military practice. Troops serving their required time in Iraq then unexpectedly learning they have to serve more. The military says it's in the nation's interest, but one person who was stop lost (ph) as they called it, is quoting it as dishonest.

And some service members trained to survive even the most life- threatening situations in Iraq have died by accidental electrocution. Some lawmakers demanding to know why.

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

It will be a long and winding road, two Democrats following each other around, going to the same places, looking for the same votes. But in the remaining battlegrounds for Barack Obama and Hillary Clinton, one of them faces more of an up hill struggle.

Our senior political analyst Bill Schneider is joining us now. He's watching the story, watching it closely.

What's the road ahead like where the Democratic contenders go?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well Wolf, to answer that question we need a road map.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Right now Barack Obama leads Hillary Clinton in both pledged delegates and popular votes. Can Clinton overtake Obama's lead in pledged delegates? She would need to win about two-thirds of the pledged delegates in the remaining contests to do that. That will be tough.

Can she overtake Obama's lead in popular votes? In the primaries and caucuses to date, Obama has gotten about 700,000 more popular votes than Clinton. We estimate that about six million more people are likely to vote. To overcome Obama's lead, Clinton would have to get 56 percent of those votes.

How tough will that be? In the 28 primaries in February and March when the Democratic contest became a two-candidate race, Clinton has averaged 46 percent. She's gotten 56 percent or more in only four states, Massachusetts, Rhode Island and her current and former home states, New York and Arkansas.

The next state to vote is Pennsylvania, where our poll shows Clinton leading Obama by 13 points. If you just look at decided voters, Clinton gets just over 56 percent. West Virginia and Kentucky are heavily rural states with a lot of lower income voters, also good for Clinton. Indiana looks like more of a battleground. Many Indiana voters are in the Chicago media market.

North Carolina, with its large African-American population and a lot of upscale voters, is Obama's most promising state. Obama also ought to do well in Oregon, which has a lot of affluent Democrats. Obama has generally done well in Western states where the traditional Democratic base is small, like Montana and South Dakota.

The outlook is for Clinton and Obama to split the remaining states. Can Clinton get 56 percent of the vote? That's a tall order.

(END VIDEOTAPE)

SCHNEIDER: If Michigan and Florida were somehow to redo their primaries, well, it might make things a little easier for Clinton. She would need to carry 53 percent of the remaining voters. But that won't be easy. She's gotten 53 percent of the vote in only eight of the 28 primaries since Super Tuesday.

The ultimate decision, of course, rests with the superdelegates. But they're likely to pay a lot of attention to who is ahead in the popular vote and who is ahead in pledged delegates -- Wolf.

BLITZER: Bill Schneider, thank you.

And let's take a look at the Democrats' primary schedule in the coming months. Pennsylvania is the big and only prize in April. One hundred and fifty-eight delegates are up for grabs on April 22. In May, Guam holds caucuses on the third. Indiana and North Carolina vote on the sixth, West Virginia on the 13th, Kentucky and Oregon on the 20th.

Between now and then, 480 Democratic delegates will have been awarded. In June, Puerto Rico is set to hold its primary now on June 1. Montana and South Dakota's contests are scheduled for the third. A grand total of 566 delegates are up for grabs between now and those final contests in early June.

There's another major test all the candidates are trying to pass as well, looking and sounding presidential.

Let's turn to Brian Todd. He's here in THE SITUATION ROOM. He's been watching this story.

And you have been looking specifically at the imagery.

BRIAN TODD, CNN CORRESPONDENT: We have, Wolf.

And how is this for imagery? Just this week, Barack Obama gives three major speeches, all positioned in front of American flags. Almost simultaneously, John McCain projects a presidential image throughout the Middle East in Iraq, in Israel, and elsewhere.

Now, their aides say that presidential politics did not play a part in any of this. But let's just say these pictures didn't exactly go unnoticed on the campaign trail.

(BEGIN VIDEOTAPE)

TODD (voice-over): Three major speeches in three days, American flags draped behind him each time. In two of them, he signals, the consequences of a president's toughest decision are not lost on him.

OBAMA: We have a sacred trust to our troops and our veterans.

(APPLAUSE)

OBAMA: And we have to live up to it.

TODD: That came on the heels of a high-profile appearance with retired generals. An aide to Barack Obama says these events were not staged to make their candidate look presidential, that, on Iraq, the goal was contrast his position with John McCain's during the five-year anniversary of the invasion. But that may be only part of the strategy.

JOE KLEIN, COLUMNIST, "TIME": Clearly, the Obama campaign has decided to make a move in the direction of substance and a more presidential tone. He's kind of toned down his rhetoric some. And he's gone with really substantial speeches this week, which has been a change in strategy.

TODD: Did John McCain do him one better by going to Iraq? McCain's campaign said his Senate office planned this trip. A spokesman there said he went to measure conditions in Iraq, ahead of General David Petraeus's upcoming congressional testimony, that the presidential campaign didn't factor in.

The spokesman also played down the visuals of McCain with European and Middle Eastern leaders. But one analyst says, he would be stunned if McCain's advisers didn't at least consider the potential political boost.

STUART ROTHENBERG, EDITOR AND PUBLISHER, "THE ROTHENBERG POLITICAL REPORT": The McCain folks have segued into the general election, and an international trip to Iraq and talking to other international figures is the kind of thing that a president of the United States does.

(END VIDEOTAPE) TODD: Does Hillary Clinton need a presidential photo-op? Well, analysts point out, she's already played the experience card against Obama. And, right now, she has to worry more about connecting with people as effectively as he does -- Wolf.

BLITZER: Brian, thank you for that.

A staffer for John McCain -- for the campaign, that is -- was suspended for sending out a YouTube video questioning Senator Barack Obama's patriotism.

Let's go to our Internet reporter, Abbi Tatton. She's been watching this story.

What did the video show, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, it's this video here posted on Sunday on YouTube called, "Is Obama Wright?" splicing together -- and it's two-and-a-half minutes -- amongst other things, Jeremiah Wright's controversial comments, along with remarks from Barack Obama saying that he had not heard them.

Traced by Politico.com to Lee Habeeb, who tells CNN he's a director of the conservative Salem Radio Network, although he says he made this in his spare time with a friend over the weekend, adding, "We're in a world where we're allowed to criticize public figures."

It has since been viewed by about 50,000 people, including, it seems, a staffer for the John McCain campaign by the name of Soren Dayton, who appears to have sent it out on his service, the Internet service Twitter, that allows people to send out short updates about what they're doing.

And sending has led to him being reprimanded by the campaign's leadership and suspended from the McCain campaign, says a McCain spokeswoman, Jill Hazelbaker, who adds: "We have been very clear on the type of campaign we intend to run. And this staffer acted in violation of our policy" -- Wolf.

BLITZER: Abbi, thank you for that.

Abbi and Brian and Bill Schneider, they are all part of the Emmy Award-winning best political team on television. Remember, for the latest political news any time, you can check out CNNPolitics.com.

The ticker, by the way, is the number-one political news blog out on the Web. That's also where you can read my latest blog post. Just posted one before the show on Michigan and Florida.

New outrage at Iraq.

(BEGIN VIDEO CLIP)

SEN. CARL LEVIN (D-MI), ARMED SERVICES COMMITTEE CHAIRMAN: We are paying for their reconstruction. And with the oil prices that have skyrocketing, giving them even greater surpluses, that just makes this more offensive.

(END VIDEO CLIP)

BLITZER: Up next, senators are investigating where Iraq's oil profits are actually going.

And Hillary Clinton now has some critical things to say about NAFTA. Is there new evidence, though, she once was gung-ho about the trade agreement? Donna Brazile, Leslie Sanchez, they're standing by for our "Strategy Session."

And Barack Obama's big news media push -- he's going one on one with CNN's own Larry King right now. We're going to give you a taste of what they're talking about.

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

(COMMERCIAL BREAK)

BLITZER: As the Iraq war enters its sixth year, there are now some new questions about the high-priced tag and whether oil-rich Iraq should actually be footing more of the bill.

Let's turn to CNN's Kate Bolduan. She's following the story for us.

What's going on here now? There seems to be a very obvious reason, Kate, that this is -- this is a huge issue that's emerging right now.

KATE BOLDUAN, CNN CORRESPONDENT: Yes, it sure is, Wolf. And it's one that lawmakers say need more attention drawn to it.

Lawmakers want to know, with Iraq making billions off of record oil prices, and Americans paying sky-high gas prices, why isn't Iraq paying more of its own bills?

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): March 2003, the war just under way, Deputy Defense Secretary Paul Wolfowitz memorably claims Iraqi oil would pay for rebuilding.

(BEGIN VIDEO CLIP, MARCH 2003)

PAUL WOLFOWITZ, DEPUTY DEFENSE SECRETARY: There's a lot of money to pay for this that doesn't have to be U.S. taxpayer money.

(END VIDEO CLIP)

BOLDUAN: That was then. This is now.

STUART BOWEN, SPECIAL INSPECTOR GENERAL FOR IRAQ: The highest oil prices in -- in -- in history coalesce into an enormous revenue windfall for the Iraqi government. SEN. PATRICK LEAHY (D-VT), JUDICIARY COMMITTEE CHAIRMAN: They ought to be use only some of their oil to pay for their own costs, and not keep sending the bill to the United States.

BOLDUAN: The special inspector general for Iraq says, American taxpayers have already paid more than $47 billion for Iraq reconstruction. At the same time, Iraq is raking in oil money, an estimated $41 billion last year alone. But it's apparently spent only a small fraction of that on rebuilding. No one can say for sure.

And with oil now topping $100 a barrel, Democratic Senator Carl Levin predicts, by the end of this year, Iraq will have made a total of at least $100 billion.

LEVIN: This absurdity has continued for five years, where we're paying for their reconstruction. And with the oil prices that have skyrocketing, giving them even greater surpluses, that just makes this more offensive.

BOLDUAN: Just back from Iraq, Levin says Iraqi leaders told him, they don't have the bureaucracy in place to spend the money effectively and without risking corruption. Levin and Republican John Warner says, that's no excuse, and they want congressional investigators to find out exactly how much money the Iraq government has deposited and where.

SEN. JOHN WARNER (R), VIRGINIA: We're all suffering with high oil prices and gas prices. It's an outrage that Iraq has $20 to $30 billion minimal surplus in our banks.

(END VIDEOTAPE)

BOLDUAN: Now, the White House says Iraq is making progress using oil revenue to pay for reconstruction, but Levin says, if Iraq doesn't do more to change its financial practices, Congress might try to use that to limit funding for the war -- Wolf.

BLITZER: Kate, thank you for that -- Kate Bolduan reporting.

In our "Strategy Session": Clinton's challenge to Obama.

(BEGIN VIDEO CLIP)

CLINTON: I have, as the Democratic National Committee has, come out in favor of an effort to revote in Michigan. I do not understand what Senator Obama is afraid of.

(END VIDEO CLIP)

BLITZER: But now that Michigan Democrats have failed to act, is there a deal still to be made to get Florida and Michigan's delegates to count?

And has Reverend Wright's controversial preaching cost Obama with voters? That and more coming up in our "Strategy Session." Donna Brazile and Leslie Sanchez, they're standing by live -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Deal or no deal? It looks like no deal in Michigan, no deal in Florida. What's going on with potential makeover primaries?

Let's discuss with our CNN political analyst, the Democratic strategist Donna Brazile, and the Republican strategist Leslie Sanchez.

Donna, you're right in the thick of things. You know what's going on, and a lot of our viewers are totally confused and frustrated. What happened today? In Michigan, it looks like no deal.

DONNA BRAZILE, CNN POLITICAL ANALYST: Well, Florida couldn't come up with a compromise and a revote. Michigan right now appears not to come up with a compromise. I think the rules and bylaws committee must...

BLITZER: Of the DNC.

BRAZILE: ... of the DNC, of which I'm a member, in full disclosure, must help bring some clarity to this issue. I don't know what the arrangement will look like. But I think the rules and bylaws committee should step up right now, since the two candidates clearly will not take positions that either one of them will like.

The rules committee should step up. The DNC should decide. And some candidates will like it. Some will not. That's not the point.

BLITZER: But is it -- the notion of formal primaries happening again in June in Florida and Michigan, is that now, for all practical purposes, off the table?

BRAZILE: I think -- I think it will be tough to another primary, given the time limitations right now. You have got to print these ballots. You have got to make sure you have poll workers. And the lawmakers will not come back for another two weeks in Michigan.

I know there's an attempt right now to probably have a mail-in vote. But, again, some of these states have problems with in-person voting. I would hesitate to even have a mail-in vote at this time. I think what we need to do right now is allow the rules and bylaws committee to help sort it out.

LESLIE SANCHEZ, REPUBLICAN STRATEGIST: I don't think we can underestimate how significant this split is in the Democratic Party.

If you figure that about $300 million has been raised for Democratic candidates, the fact you don't have a heavyweight Democrat -- you have Ted Kennedy, who has already endorsed Barack Obama -- you don't have somebody who can come and bring the people to the table. And you have a lot of concern. People are looking with a jaundiced eye at the Democratic rules and feeling they may not get a fair deal. That's a tremendous amount for them to have to...

(CROSSTALK)

BLITZER: For all practical purposes, if there are no makeover primaries in Michigan and Florida, that hurts Hillary Clinton, obviously, a lot more than it hurts Barack Obama...

(CROSSTALK)

BLITZER: ... because she was hoping to do well there again. She was hoping to do well there. And that might have elevated her over Barack Obama in terms of the popular vote, if not the pledged delegate vote.

BRAZILE: Wolf, I could look at this in terms of who it will help or who it will hurt. But what I'm concerned about is that, right now, it's helping John McCain.

So, I would just -- I'm trying to get the Democratic Party to recognize that. The rules committee should make a decision. Bring it toward to the full DNC. Let's vote on it. And let's figure out a way to accommodate these two states.

(CROSSTALK)

SANCHEZ: Also look at the fact, CBS poll today, 67 percent of Democrats believe this is something that is going to be resolved in Denver. So, I think a lot of people really don't see a quick solution to this.

BLITZER: Because some -- some are suggesting, including the governor of Tennessee, as you saw his article yesterday, saying the superdelegates should themselves get together over two days, have a meeting, maybe in Washington, after the last of the Democratic primaries in Puerto Rico, an early Denver, and have their own little -- little conference to decide where they're going to vote.

BRAZILE: Why don't we do it in Nashville? Al Gore lives there. And perhaps he can preside.

(LAUGHTER)

BRAZILE: So, yes, I don't have a problem with casting my vote in the public. But...

BLITZER: That way, at least there's a -- there's a nominee, for all practical purposes, two months before the convention, which happens at the end of August.

BRAZILE: I support -- I support having a nominee once these contests are over with over the next couple of days -- couple of weeks. Sorry.

(CROSSTALK)

BLITZER: So, you're not among those who would love the excitement of having a ballot count, first ballot, second ballot, at the convention? It wouldn't -- it would be very good for the convention.

BRAZILE: Wolf, I would prefer to spend more time with you in that little CNN booth...

(LAUGHTER)

BRAZILE: ... than be in some of those smoke-filled, drinking rooms, because I think what we will be drinking is some form of Rolaid.

SANCHEZ: Well, no, no, it's true. I mean, I agree with you completely. People want to feel that there's a role for them, that it's not going to be decided by a few superdelegates. And, then, many people are seriously thinking this is a way for Hillary Clinton could steal the election.

BRAZILE: People keep thinking that Hillary Clinton is trying to steal, take away something.

Senator Clinton is trying to win, but she's not trying to take anything away from Senator Obama.

(CROSSTALK)

BLITZER: How would she try to steal it?

(CROSSTALK)

BLITZER: I mean, what -- what would -- your definition of steal?

(CROSSTALK)

BLITZER: If she plays by the rules, and the superdelegates, that's part of the rules.

BRAZILE: We're part of the rules.

SANCHEZ: I think it's -- well, listen to Barack Obama himself, when he says she's disingenuous, in fact, at fighting so much for the voters of Michigan and Florida. I mean, I think it's interesting...

BLITZER: But that's not stealing. But that's a strong charge, to accuse her...

SANCHEZ: No, no, no, no, no. But I think she's trying -- I think a lot of people have looked at the Clintons and said they will use any tactic in their arsenal to really do what they can to position her as the front-runner, because she clearly is not that today.

BLITZER: But wouldn't you want like a fighter like that to lead your party, to...

SANCHEZ: That's what the Democrats have to ask themselves. I think...

BLITZER: But wouldn't you, as a Republican, want someone who is going to use whatever legal means are available to win?

SANCHEZ: I think we -- Republicans, we know the history of the Clintons. We -- we are not immune to this. We are very familiar with it. I think Democrats are surprised that she's willing to detonate a bomb, basically, within the Democratic Party, so that she can win.

BLITZER: Is she willing to do that?

(CROSSTALK)

BRAZILE: There's been a step stereotype of women throughout the ages that, somehow or another, we're not willing to fight as hard as a man to get what we want.

She's fighting hard to get what she wants. She wants to win the nomination. It's an uphill battle, but she's still in the fight. And I respect that.

BLITZER: All right, let's leave it right there on that note. Guys, thanks very much for coming in.

They're fierce opponents battling for the ultimate prize. But who will actually win it all, and not necessarily in the political arena, but in the basketball arena? Barack Obama and John McCain think they know. You're going to find out their college basketball final picks.

And drug smugglers come up with a new way to do their own business, submarine-like vessels apparently able to move lots of cocaine. It's a story you're going to want to hear about, see about. It's a CNN exclusive. Jeanne Meserve working the story -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Checking out political ticker, a once-powerful Republican congressman joins the swelling ranks of retiring GOP lawmakers -- Tom Reynolds of Buffalo, New York, announcing today he won't run for a sixth term.

He's the 29th Republican to call it quits in the House this term, giving Democrats a big chance to fatten their majority in the November elections. Reynolds used to chair the National Republican Congressional Committee and was once considered a potential House speaker -- not running for reelection.

March madness is alive and well in this presidential race. CNN caught up with Barack Obama. He was filling out his NCAA tournament picks on his campaign plane. Check out Obama's final four -- no great surprise here, North Carolina, Kansas, Pittsburgh, he says, and UCLA. Is it just a coincidence that North Carolina and Pennsylvania have upcoming primaries? Maybe. Obama is leaning toward North Carolina to win it all.

That means he sees eye-to-eye, actually, on this one with John McCain. The Republican revealed his tournament picks on his Web site today. McCain is betting on North Carolina to win the championship. He has UNC, Kansas, Memphis, and Connecticut in his final four.

And, with all do respect to the presidential candidates, in my opinion, they have it wrong. Here's my final four. I'm going on television to tell you: Tennessee, Georgetown, Memphis, and Duke. And my big winner? Tennessee. Yes, Tennessee.

For the record, we're told, by the way, that Hillary Clinton is deferring on this important issue to her chief basketball consultant, Bill Clinton. He's going to be talking about it with our own James Carville. We will get his assessment. That's coming up.

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

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

I'm going with Tennessee. I like Tennessee. I'm sticking by Tennessee. And that's my opinion.

CAFFERTY: That's only because Buffalo doesn't have a team in the tournament.

(LAUGHTER)

BLITZER: You're right.

CAFFERTY: Right?

BLITZER: University of Buffalo didn't make the tournament this year.

CAFFERTY: You know, if I was going to sit down, like, and make a list of the top five things I really don't care about...

BLITZER: March madness?

CAFFERTY: ... who the -- who the political candidates think is going to win the NCAA Tournament, that would be very near the top of stuff I don't care about.

(LAUGHTER)

CAFFERTY: Very near the top.

BLITZER: I know...

(CROSSTALK)

CAFFERTY: Might even -- might even be number one.

BLITZER: It's fun, though.

CAFFERTY: I find your choices interesting. I work with you every day.

BLITZER: Yes.

CAFFERTY: But I could care less who John McCain thinks is going to win the NCAA Tournament.

BLITZER: Yes. I have Duke and Tennessee in the final. Ask me why I like Tennessee.

CAFFERTY: Hmm?

BLITZER: I have Duke and Tennessee in the final.

CAFFERTY: Why do you like Tennessee?

(LAUGHTER)

BLITZER: Because...

(CROSSTALK)

CAFFERTY: Why do you like Tennessee in the final?

BLITZER: ... I think you really need brilliant basketball coaches in a final, because the players are all solid. Krzyzewski of Duke is brilliant. Bruce Pearl of Tennessee is brilliant. And this is going to be a strong, strong final. You heard it here.

CAFFERTY: The coach of the women's team at Tennessee is better than he is.

BLITZER: No. Bruce Pearl is a terrific coach.

CAFFERTY: No, I -- the women's coach, how many titles has she won?

BLITZER: She's won a lot. But you know what?

CAFFERTY: Yes.

BLITZER: He's pretty good.

CAFFERTY: How many titles has he won?

BLITZER: Not many.

CAFFERTY: I rest my case.

BLITZER: But he's a good coach.

CAFFERTY: Go with the women's team.

(LAUGHTER)

(CROSSTALK)

CAFFERTY: Oh, they're not in the tournament.

(LAUGHTER)

BLITZER: All right, tell what you got.

CAFFERTY: All right. I got to go here.

The question is: How likely is it Barack Obama will be the Democratic nominee for president?

Tom writes: "Clinton has no chance. And the sooner she realizes that and throws her support behind Obama, the better it will be for her, the party and the country. Obama needs to concentrate on debating the Republicans, instead of being diverted by Clinton's desperate, dirty, divisive tactics. Clinton is effectively working for McCain, and needs to turn over a new leaf and get busy working for Obama."

Mike in New Orleans writes: "I'm not so sure. There could be an Obama gaffe in the near future. He claims to be shaken up by the controversy over his pastor. That's cotton candy compared to what's ahead of him from the Swift Boat Republicans. If he's that faint at heart, I'm not so sure he can survive the remainder of Clinton's campaign, let alone the Republicans."

Larry in Fulton, Illinois: "Barack's the man, Jack. It's like everyone has been saying since Super Tuesday: The math doesn't come out in Clinton's favor. She ought to concede, so Obama can focus on the issues he needs to win in November."

Ingrid writes: "The more we learn about Obama, the less he is liked. He got a free ride from the media until a couple of weeks ago. That has reversed. If the media had done their job to begin with, he would not be ahead in delegates right now. It is going to be Hillary. Obama has become unelectable."

Brian in Cincinnati: "Clearly certain he will be the nominee. The elected officials who are superdelegates value their careers, especially the ones in states that Obama won handily, which is quite a lot of them. The problem is, Clinton will stop at nothing to destroy him in an attempt to make him unelectable."

And, finally, Erin writes from Battle Creek, Michigan: "I would like to think it is inevitable. But, after talking to my mother, an avid Clinton supporter, I have recently come to fear that we are in the grip of a maternal override. Mothers make no apologies when stepping in and doing what they think is in the best interest of the children, even if the so-called children hold the majority view. My mother and many more like her are banking on the superdelegates to rescue the party from the misguided, starry-eyed young people" -- Wolf.

(LAUGHTER)

BLITZER: Jack, thank you.

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