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Clinton's New Angle of Attack; Softer Side of John McCain?; Clinton Pounces on Obama's Remarks on Small Town America

Aired April 11, 2008 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, Hillary Clinton and Barack Obama engage in a new and nasty exchange -- Barack Obama blasting one thing about Bill Clinton's administration. Now Hillary Clinton has just hit back, hit back hard.
Also, criminals, beware. Hillary Clinton says, if she becomes president, she will tackle crime head on. You are going to want to hear about her just-revealed plans.

And, as Americans suffer with high gas and food prices, Democrats say John McCain is disconnected. Now McCain is changing his words to send out this message: He feels your pain -- all that coming up, plus the best political team on television.

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

Hillary Clinton has found a new angle of attack in Pennsylvania. Only moments ago, she pounced on comments made by Barack Obama, comments that seem to be very critical of some Pennsylvania voters.

Let's go straight to our senior political correspondent, Candy Crowley, with the latest on this little uproar.

So, what's going on, Candy?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, Wolf, these comments by Barack Obama were made at a fundraiser in California. It was a closed fundraiser. That means no press allowed. But a blogger, apparently, who blogs on "The Huffington Post," did get in and wrote a rather long blog about the time she had spent with Obama, and included in it was a part of what he said at this fundraiser.

He was talking about Pennsylvania. He said, you go through these little towns and you find out that all these manufacturing jobs have been gone for 25 years. These people don't have jobs. Their towns are crumbling. They fell through the Clinton administration. They fell through the Bush administration. They have been told these jobs are going to come back and they're not.

And then he said: "It's not surprising then that they get bitter. They cling to guns, or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."

Now, as you said, the Clinton campaign was all over it this the minute it appeared on a blog on "The Huffington Post." They began to push this to reporters. Did you see this? Did you see that?

And, just a little while ago, Hillary Clinton brought it up when she was speaking at an economic forum in Philadelphia. Take a listen.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: It's being reported that my opponent said that the people of Pennsylvania who faced hard times are bitter.

Well, that's not my experience. As I travel around Pennsylvania, I meet people who are resilient, who are optimistic, who are positive, who are rolling up their sleeves.

(CHEERING AND APPLAUSE)

H. CLINTON: They're working hard every day for a better future for themselves and their children. Pennsylvanians don't need a president who looks down on them.

(END VIDEO CLIP)

CROWLEY: Now, the Obama campaign said it didn't have a tape recorder in this fundraiser in California where he said these remarks. They didn't refute them. They didn't confirm them, just saying, we don't know because we weren't in there with him and we didn't have a tape rolling.

But, Wolf, you know how this goes. I can't imagine there's a time when a presidential candidate shows up that somebody isn't rolling a tape recorder. So, for now, not a lot of comment out of the Obama campaign while this kind of continues to fulminate -- Wolf.

BLITZER: The McCain campaign, Candy, is pouncing, pouncing very quickly, just like Hillary Clinton, in a statement they just released.

I will read it to you and to our viewers: "It's a remarkable statement and extremely revealing. It shows an elitism and condescension toward hardworking Americans that is nothing short of breathtaking. It's hard to imagine someone running for president who is more out of touch with average Americans" -- Steve Schmidt, senior adviser to John McCain.

So, it's getting a little emotional, a little buzz out there. And just to be precise, the controversial remarks that he made I guess are these: "It's not surprising then that they get bitter. They cling to guns, or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations." These are people who have lost their jobs.

That's the controversy emerging in a nutshell, right, Candy?

CROWLEY: Absolutely. And, again, it's just now breaking. We haven't heard yet from the Obama campaign exactly what he meant. We haven't heard from the candidate himself. We're in Indiana, as is the candidate. He's coming here to Terre Haute tonight. Obviously, if there's a chance to get to him, reporters are going to want to know, like, what he meant. But, again, waiting for the context of those words, but it seems pretty clear from this blog and this blogger who did get in to this fund-raiser that those are indeed the words he said.

BLITZER: And it will be interesting, as you say, to get the context, whether he was responding to a specific question, whether he was just talking, or whatever.

All right, Candy, we will stay on top of this story. Thank you very much.

Earlier today, Hillary Clinton laid out what she would do to keep Americans safe from rime. She unveiled a plan that would cost $4 billion a year. It aims to stem some nonviolent offenders away from prison.

Let's go to Philadelphia. CNN's Suzanne Malveaux is standing by. She's watching a story, an issue that really hasn't gotten a lot of attention lately.

What's the latest, Suzanne?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, you're absolutely right. It is a big deal for people in Philadelphia. There's -- the Philadelphia Police Department has a Web site that keeps a running tally of the number of murders. And it was this time last year that -- that a higher murder rate than some of those greater populated cities, Los Angeles, Chicago, New York. It has since gone down, that crime rate. But a lot of people affected by that issue. And that point has not been lost on Senator Clinton.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): Philadelphia, a city that in 2007 had at least one murder a day. Here's how the mayor put it...

MICHAEL NUTTER (D), MAYOR OF PHILADELPHIA: Here in west Philadelphia we're worried more about al gangster than we are al Qaeda. Osama bin Laden and some of those other folks couldn't last five minutes here in west Philadelphia.

MALVEAUX: With the mayor on a highly orchestrated tour, Hillary Clinton, with Secret Service and staff in tow, trying to earn some street cred by addressing the problem.

H. CLINTON: Violent crime is on the rise again in America.

MALVEAUX: She also did some dancing at the West Philly YMCA. Outside, across the street, she was meant with a chorus of supporters and detractors competing for her attention.

UNIDENTIFIED MALE: Hillary!

UNIDENTIFIED FEMALE: Hillary! Hillary !

MALVEAUX: While polls show Clinton is still ahead of Obama statewide, here in Philadelphia they show him with a double-digit lead, making the fight for this delegate-rich city all that more important, and fighting crime a relevant issue.

H. CLINTON: These are not just statistics. These are our children. And it doesn't just happen in big cities. It happens everywhere in America.

MALVEAUX: Clinton unveiled a $4 billion anti-crime plan aimed at cutting the murder rate in half in cities across the country, putting 100,000 new cops on the street, restoring the assault weapons ban, and expanding community outreach. Mindful of reaching her base of rural voters, Clinton also addressed their problems, including the rapid rise of drug use.

H. CLINTON: In rural counties across Pennsylvania, there are dealers who are cooking up fresh batches of amphetamines.

(END VIDEOTAPE)

MALVEAUX: And Senator Barack Obama has talked about the issue of fighting violent crime on the campaign trail. He says that the Justice Department should work for everyone. He's also for reinstating $1 billion to community policing -- Wolf.

BLITZER: Suzanne, thank you for that. Suzanne is in Philadelphia.

Some of the programs Senator Clinton proposes were actually launched during her husband's administration. A quick look at the Justice Department figures shows that, shortly after Bill Clinton took office, violent crime rates in the United States began to fall. They continued to drop throughout Clinton's term. And when President Bush took office back in 2001, that trend continued.

Those same figures show violent crime rates remained relatively low under the current administration, but, in the last two years, there's been an uptick in urban crime.

Many people are struggling to stay in their homes. And all of us are faced with rising food and gas prices. So, John McCain wants Americans to know he understands, no matter how many Democrats say he's simply disconnected.

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

The Democrats claim he's flip-flopping, he's out of touch. What's going on?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, he was specifically about that flip-flop charge today. He was in Texas. And he of course, as you can imagine, said that is factually inaccurate.

But, regardless, Wolf, the reality is that the McCain campaign, McCain himself, released a tangible proposal, his first, on the housing crisis yesterday to prevent a political crisis on the issue that voters care most about.

(BEGIN VIDEOTAPE)

BASH: Flashback: Santa Ana, California, two weeks ago:

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: It's not the duty of government to bail out and reward those who act irresponsibly.

BASH: Fast-forward to McCain's political course correction.

MCCAIN: I'm committed to using all the resources of this government and great nation to create opportunity.

BASH: Why the change? McCain advisers privately admit, in trying to prove he understands economics 101, they neglected politics 101, that, in times of economic trouble, candidates must talk solutions and show empathy.

One McCain aide concedes his first speech on the housing crisis lacked the compassion quotient.

MCCAIN: I will consider any and all proposals based on their cost and benefits.

BASH: Giving Democrats an opening.

H. CLINTON: If he got the 3:00 a.m. call on the economy, he would just let the phone ring and ring and ring.

(LAUGHTER)

(CHEERING AND APPLAUSE)

SEN. MEL MARTINEZ (R), FLORIDA: I would give Senator McCain an incomplete.

BASH: McCain supporters sent public signals of concern.

MARTINEZ: I think he fell short. We need to do some things that can help families, that can help people.

BASH: Thursday's housing proposal was just one attempt this week to blunt Democrats' success as painting McCain as aloof. A day earlier, he talked about corporate greed.

MCCAIN: There's many people that are very angry at Wall Street. There's many people that are angry at some -- when they see the -- the -- the CEO of Countrywide get a $20 million bonus just to stay in his job.

BASH: But the Democratic candidates have crafted meetings for the cameras with suffering homeowners, the kind of things some GOP strategists say their party often underestimates. B.J. COOPER, REPUBLICAN STRATEGIST: What is important is that you're connecting with the voter and making sure you're filling that void of them feeling that somebody's watching out for them.

(END VIDEOTAPE)

BASH: Now, McCain will unveil what his campaign calls a comprehensive economic proposal next week.

But, right now, aides say there are no plan in place to hold events with those voters that are really affected, Wolf, by the housing crisis. And I talked to some McCain supporters. They say they're really concerned about this, that that is such a critical party of the strategy, to really, to borrow a phrase, to show that you can feel the pain of the voters. And he's not doing that right now in terms of the events.

BLITZER: No one was better in feeling someone's pain than Bill Clinton, as all of us who covered his campaigns remember. Thanks very much for that.

(CROSSTALK)

BLITZER: Jack Cafferty is joining us once again with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Now he's causing his wife a little pain these days, I think.

(CROSSTALK)

CAFFERTY: A new survey out paints a pretty bleak picture of middle-class America today, no surprise when you take into account falling house values, increased costs for things like food, energy, health care, education, and growing unemployment.

A Pew Research poll finds 54 percent of those who call themselves middle class in this country -- that's more than half of us -- say they are no better off than they were five years ago. That's the worst outlook in more than 40 years.

Fifty-three percent say they've had to cut spending. Money is tight; 18 percent say they have troubling getting or paying for medical care; 10 percent say they've lost their jobs.

The view for the future isn't much better. In the coming year, half of the middle class surveyed say they think they will have to cut spending even more; 25 percent of those employed are worried they are going to be laid off, and 26 percent are concerned that their salary or health benefits will be cut.

When asked who's to blame for their economic problems, 26 percent lay it at the doorstep of the government; 15 percent blame the price of oil; 11 percent say the people themselves are responsible.

And don't look for positive economic news on the horizon either. The majority of economists polled by "The Wall Street Journal" say the U.S. economy has farther to fall. By a ratio of 3-to-1, they say the economy is now in a recession, and almost three-fourths of them say it hasn't hit the bottom yet.

Here's the question: Who's to blame for an increasingly discouraged middle class?

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

The history of this country, Wolf, has always been that the next generation enjoys a better standard of living than the generation that preceded it. These people said, for the last five years, they made absolutely no progress whatsoever. That's an ominous sign.

BLITZER: It's a pretty sad sign, too. All right, Jack, thanks very much. See you in a few moments.

Senator Arlen Specter knows about winning in Pennsylvania. He's done it five times.

(BEGIN VIDEO CLIP)

SEN. ARLEN SPECTER (R-PA), JUDICIARY COMMITTEE RANKING MEMBER: These elections have so many ups and downs, it's hard to say. But that would be my pick.

(END VIDEO CLIP)

BLITZER: He can't vote in the Democratic primary, but he certainly has an opinion about who will win. You are going to find out who, in his opinion, will win the Democratic contest -- my interview coming up next.

Plus, Bill Clinton tries to defend his wife, ends up, though, having to take it back -- the controversy, the correction and what happens next.

Plus, it's not ordinary beach trash -- major military weapons washing ashore right here in the United States, what are they doing? What's going on?

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

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

BLITZER: Less than two weeks to go before a potentially pivotal Democratic primary in Pennsylvania, Barack Obama and Hillary Clinton are battling right now for every single vote.

Let's discuss their race with the state's senior senator. That would be Republican Arlen Specter. We're also going to be talking about his very important brand-new book entitled "Never Give In: Battling Cancer in the Senate." It's a powerful book indeed. Senator Specter, we're glad you're here in THE SITUATION ROOM. Thanks for joining us.

SPECTER: Nice to be with you, Wolf. Thank you.

BLITZER: You have been elected statewide, what, five times in Pennsylvania?

SPECTER: Yes. Right.

BLITZER: You know the state politically about as well as anyone. Who's going to win the Democratic primary on April 22?

SPECTER: Well, Wolf, it's only one man's opinion, but I would pick Obama at this stage. He is running a good ground game. He's got a bus tour going to just the right spots. I know them because I have been there many times. Doing a lot more advertising. And I think the momentum is with him.

But these elections have so many ups and downs, it's hard to say. But that would be my pick.

BLITZER: You think the independents, those who have helped you over these years, you think by and large they're going to turn for Obama? Is that what you're saying?

SPECTER: Well, that's my sense of it. Senator Clinton started off with a big lead, 16 points. Down to five. That looks like a trend in politics.

And he's running a good campaign. And all of that television advertising with his extra money, I think is having a significant effect.

BLITZER: He's outspending her in terms of commercials at least three to one, because he's got so much more money.

There's a story out there now about what they call in Philadelphia, your hometown, street money. Politicians giving out cash -- 20 bucks, 50 bucks -- to various individuals to go get out the vote, if you will. He says he's not going to do that this time. Even though it's legal, he doesn't like it.

How big of a deal is that in terms of Philadelphia politics?

SPECTER: Well, it is traditional to pay people to go door to door, find out who hasn't voted, and bring them out. As you have quoted, Senator Obama saying it's legal and it is done. And a lot of times a political organization may do it without the candidate knowing it, or perhaps it's plausible deniability. But don't be surprised if it happens in Philadelphia.

BLITZER: It always has happened in Philadelphia. we will see if it happens this time around as far as his campaign is concerned. I suppose you're really happy you're not up for re-election this cycle. Given the huge number of Democrats that have registered that are coming out to vote, it's not necessarily going to be at all easy for -- at least right now for a lot of Republicans, is it?

SPECTER: I think it's very tough in projecting ahead for a primary, which I always have a tough one. Won my last one by a single percentage point. They have turned many Republicans who were my voters.

So we're going to be working very hard to try to turn them back. But it's not good because it creates an artificial imbalance.

BLITZER: Can McCain win in Pennsylvania in November?

SPECTER: Yes. Yes, he can. It's a horse race.

John McCain is the kind of an independent who will appeal to Philadelphia suburban voters, where traditional that's been the key to the election statewide. He can do it.

BLITZER: Let's talk about your book.

SPECTER: Thank you.

BLITZER: As I said, it's a powerful book entitled "Never Give In: Battling Cancer in the Senate."

We remember those days. A lot of us were very, very worried about you.

Remind our viewers. You suffered from cancer, you went through radiation, chemotherapy, all of that. We have a picture in fact of you and the president at one of the low moments in your struggle.

There it is right now. It's up on the screen. We have it up on the screen.

Tell us -- remind our viewers what you went through.

SPECTER: Well, the picture illustrates it. You see we're shaking hands. I'm bald as a billiard ball, pale and thin. And I speculate in the book the president's body language is pulling away. Maybe he's thinking, they say it's not contagious but who knows?

In this book I tell about meting Ed Rendell at a basketball game. I said, How you doing, Ed? He didn't recognize me. I had known him for decades.

And in the book I tell about what I went through and how I stayed on the job. And I felt -- found that even though chemotherapy is very debilitating, Wolf, to literally drag myself out of bed -- I had a job which was very demanding, chairing the Judiciary Committee during the Supreme Court confirmation hearings.

I had on the left the most liberal Democrats, on the right the most conservative Republicans. And I found that the tougher the day was, the better I liked it because I had no time to think about myself.

BLITZER: Senator Specter, we're happy you're OK, and I assume you are. How are you feeling?

SPECTER: I feel good, Wolf.

Let me make one other point about what I talk about in this book, "Never Give In." And that is I had two diagnoses of fatal diseases.

Once Lou Gehrig's Disease, the doctor was wrong. Once a malignant brain tumor, the doctor was wrong.

And in this book I tell about them in some detail to tell people that -- get a second opinion. Even the best doctors can be wrong.

And in working through it, I think if people see how I handled it with the high visibility that I had, people not recognizing me and fighting through -- using Churchill's famous statement, Never give in is the way to handle it. And I go into some great detail in the book.

(END VIDEOTAPE)

BLITZER: Arlen Specter speaking with me earlier.

Coming up: a large U.S. ship, three tiny speedboats. So, what happened when Iranian boats taunted an American ship in the Persian Gulf? That story is next.

Plus, just what is it that's reflected in Dick Cheney's sunglasses? The speculation, the truth, and why the White House is so upset.

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

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Bill Clinton reined in once again out on the campaign trail.

(BEGIN VIDEO CLIP)

WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Hillary called me and said: "Look, I misstated it. You said I misstated it. But you don't any -- you have got to let me handle it, because you don't remember it either."

(END VIDEO CLIP)

BLITZER: Find out what he said now that has some people wondering if he's actually hurting his wife's campaign more than helping it.

Plus, Clinton and Obama do something in the Senate that actually helps John McCain's race for the White House. We will tell you what it is -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, Bill Clinton's comments once again forcing his wife's campaign to do some damage control. Is the harm he's causing now outweighing the benefit he brings?

Also, the head of the Democratic Party says he has a plan to win against John McCain. And now he says Mitt Romney would have been more of a threat.

Plus, the Obama remarks about Pennsylvanians that are playing apparently right into Hillary Clinton's hands -- all of that coming up, plus the best political team on television.

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

Senator Hillary Clinton has told her husband to stop talking about her trip to Bosnia. Her misstatements about events surrounding that trip as first lady had just about blown over. Then suddenly last night in Indiana, the former president mentioned them again, putting it right back on the radar.

Our senior political analyst, Bill Schneider, is joining us now with more.

So I guess the question a lot of people are asking, Bill, is the former president becoming more of a burden than a benefit?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, he is a former president and, you know, it's kind of hard to keep a former president on message.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Remember the flap over Hillary Clinton's trip to Bosnia as first lady?

The candidate had to correct herself after she described landing under sniper fire. When that happens, the rule in a campaign is, move on.

Bill Clinton didn't quite follow that rule. In Indiana on Thursday, he said the press "fulminated because once, late at night, when she was exhausted," his wife...

W. CLINTON: Misstated and immediately apologized for it, what happened to her in Bosnia in 1995.

Did you all see all that? Oh, they blew it up.

SCHNEIDER: The former president's comments were not quite accurate. His wife actually described the incident several times, most recently on March 17. And she didn't immediately apologize. A week later, she acknowledged that she misspoke.

W. CLINTON: And you would have thought, you know, that she had robbed a bank, the way they all carried on about this. And some of them, when they're 60, they'll forget something when they're tired at 11:00 at night, too.

SCHNEIDER: Actually, Senator Clinton's March 17 remarks were part of a prepared speech delivered at 9:00 a.m.

W. CLINTON: Hillary called me and said: "Look, I misstated it. You said I misstated it. But you don't know any -- you've got to let me handle this, because you don't remember it either."

So, I'm going to let her answer it.

SCHNEIDER: Bill Clinton says he told his wife, "Yes, ma'am."

The former president was off message. He's becoming a distraction for his wife's campaign. During the course of the primary campaign, opinion of Bill Clinton has flipped from positive to negative. Democrats still like the former president. But his negatives have gone up among them, too.

(END VIDEOTAPE)

SCHNEIDER: Senator Clinton acknowledges that she and her husband have different positions on trade. He has earned $800,000 from supporters of the Colombia Free Trade bill, which she opposes.

You know, it's kind of hard to blame a husband for defending his wife. But these are distractions her campaign certainly doesn't need -- Wolf.

BLITZER: All right. Fair enough. Thank you very much, Bill.

Let's get some more on this and more. For that, we're from New York by our senior analyst, Jeff Toobin, our own Jack Cafferty and our senior political analyst, Gloria Borger. They're all part of the best political team on television.

That poll shows Bill Clinton still has a 75 percent favorability rating among Democrats -- Jack. That's a pretty good number, even though it's gone down from 80 percent just a little while ago.

CAFFERTY: I'll bet his approval rating at home isn't that high tonight.

(LAUGHTER)

BLITZER: Yes, right.

(LAUGHTER)

BLITZER: What do you think?

CAFFERTY: You know, I mean --

BLITZER: Why do you think he all of the sudden brought back the Bosnia trip... CAFFERTY: Yes --

BLITZER: ...just about when almost everybody else forgot about it?

CAFFERTY: And that phrase about, you know, the media acted like she had robbed a bank. She didn't rob a bank, she lied. And she lied over and over and over for a week about events that never happened in Bosnia. And all this stuff about she made a misstatement and I misspoke -- she lied. It was in the speech. It didn't happen. CBS produced video that proved it didn't happen. She lied. End of discussion.

BLITZER: What was he thinking, then, Gloria, when he brought up this sensitive subject?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: You know, I think he was trying to defend his wife, as Bill Schneider said. But you know what surprises me, Wolf, is really how rusty Bill Clinton is at this campaign thing. When I covered him a way long ago, he was one of the best campaigners I'd ever seen.

And I just think he's older and not quite as good at it. And he also dredges up all of this sense of what would it be like with two Clintons in the White House.

(LAUGHTER)

BORGER: Would you have he said/she said all the time?

BLITZER: I remember in the '92 and '96 campaigns he was amazing.

What do you think, Jeff?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, I think -- first of all, I think Jack is a little too tough on Hillary Clinton. I don't know about that repeated lie.

CAFFERTY: It's not a lie?

TOOBIN: I think she was mistaken. I think it's entirely possible...

CAFFERTY: Yes...

TOOBIN: ...to remember an event differently than it actually was.

CAFFERTY: Sniper fire?

TOOBIN: And I don't know if it really...

CAFFERTY: Have you ever been shot at, Jeff?

TOOBIN: What -- not until you shoot at me, Jack, no.

(LAUGHTER)

TOOBIN: I -- no, I haven't...

CAFFERTY: No, but I mean come on, sniper fire?

You've been in a combat zone and been shot at?

TOOBIN: Well, that...

CAFFERTY: Not likely to misremember.

TOOBIN: The plane apparently did make a spiral landing. I don't want to go through this.

BORGER: Ah!

TOOBIN: We'll have to get Sinbad on to talk about the trip again.

(LAUGHTER)

TOOBIN: But, you know, Bill Clinton remains very, very popular, not because of what he's saying on the campaign trail, but because of his presidency. That's the main appeal of Hillary Clinton -- not the A main appeal -- of Hillary Clinton's campaign, the fact that times were good and peaceful in the Clinton years and the fact that Clinton, you know, says goofy things on the campaign trail now and then, it's obviously not helpful, but I don't think it's fatal.

BORGER: But --

TOOBIN: I think it's important that -- it's good for Hillary Clinton that he's campaigning.

BORGER: -- But if you were running the Clinton campaign right now and you had just kind of pushed the Bosnia issue off to the side and suddenly Bill Clinton comes front and center and resurrects it again, you wouldn't be real happy about it.

TOOBIN: No. Of course not. And he didn't just resurrect it, he made all kinds of mistakes...

BORGER: Right.

TOOBIN: ...as Bill just pointed out.

BORGER: Yes.

TOOBIN: So it's clearly not good. But you can't suddenly not have Bill Clinton campaign. He draws big crowds. A lot of Democrats still like him. I think he's an asset to that campaign.

BLITZER: Yes, I think on balance, Jack -- and I think even you will admit that whether, you know, he made a mistake, didn't necessarily do the right thing last night, on balance, he's probably helped her more than hurt her. CAFFERTY: He's terrific, are you kidding? I'd rather watch him than her any day. He's got a lot of charisma, a tremendous amount of personality. The country did do pretty well when he was in the White House for eight years.

But that's not to necessarily conclude that now his wife, eight years later, can pick up right here he left off and things are going to be rosy again. I mean there's a disconnect there.

BORGER: I --

BLITZER: All right, hold on, Gloria. Hold on. We're going to take a quick break. But we've got a lot more to talk about. Stand by.

Just what did Barack Obama say about the people of Pennsylvania? You're going to hear it now in his own words. There's controversy brewing on this issue.

Also, the Democrats' plan of attack -- you're going to find out what kind of verbal ammunition they'll be using against John McCain in the general election.

Plus, gas prices sky high right now, so why is the U.S. still saving oil for a rainy day? Senator McCain weighing in and he's disagreeing with the president.

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

(COMMERCIAL BREAK)

BLITZER: There's new controversy right now involving something that Barack Obama said over the weekend on the campaign trail -- the audio of that only now emerging.

Let's get back to the best political team on television.

I'm going to play it for you guys. I'm going to play it for our viewers and then we'll discuss.

Listen to this.

(BEGIN AUDIO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: ...they fell through the Clinton administration and the Bush administration. And each successive administration has said that somehow these communities are going to regenerate and they have not. And it's not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."

(END AUDIO CLIP)

BLITZER: All right.

Gloria, he's already being hammered by Hillary Clinton and John McCain, for that matter, for supposedly being an elitist and speaking ill of the people of Pennsylvania by suggesting that the economic problems there are causing them to become bitter and buying guns and becoming xenophobic and all of that.

What do you think? Is this a real issue out there?

BORGER: Well, Hillary Clinton said today, you know, I don't see bitter people out there, I see struggling people or whatever it is. But she said that people aren't bitter.

I think the people are angry. And maybe -- and maybe Obama's terminology was inartful, but I think he's expressing a sentiment of mad as hell voters not going to take it anymore that we've seen throughout this election. And that's why, perhaps, voters are saying over and over again that they want a change.

CAFFERTY: Yes.

BORGER: So I think Hillary Clinton is trying to make him into the elite candidate but he's talking about people being angry.

BLITZER: All right, and Hillary Clinton responded to the Obama comments this way, Jeff.

Let me play her little sound bite.

(BEGIN VIDEO CLIP)

H. CLINTON: It's being reported that my opponent said that the people of Pennsylvania who faced hard times are bitter. Well, that's not my experience. As I travel around Pennsylvania, I meet people who are resilient, who are optimistic, who are positive, who are rolling up their sleeves.

(APPLAUSE)

H. CLINTON: They're working hard every day for a better future for themselves and their children. Pennsylvanians don't need a president who looks down on them.

(END VIDEO CLIP)

BLITZER: All right.

Jeff, what do you think?

TOOBIN: I think that is so ridiculous.

CAFFERTY: I agree.

TOOBIN: I mean that is not at all what Barack Obama said.

BORGER: Right.

TOOBIN: I mean I just think this is an example of how a campaign between the two of them can be purely destructive and not elevate either candidate. I mean Hillary Clinton is clearly distorting what Obama said.

And, by the way, what Obama said is factually accurate.

CAFFERTY: Right.

TOOBIN: It's been true throughout history that people who have economic problems lash out against various others. I just think it is embarrassing for the Clinton campaign just to hang on to this as if it's some sort of gaffe by Obama.

BLITZER: It's not just the Clinton campaign, Jack. It's also the McCain campaign.

They issued a statement saying, "It's a remarkable statement and extremely revealing. It shows an elitism and condescension toward hardworking Americans that is nothing short of breathtaking. It is hard to imagine someone running for president who is more out of touch with average Americans."

(LAUGHTER)

CAFFERTY: Oh, really?

And this is from John McCain? Amazing.

BORGER: Yes.

BLITZER: No this is from Steve Schmidt, a senior adviser for John McCain.

CAFFERTY: Look, Jeff's right. They call it the rust belt for a reason. The great jobs and the economic prosperity left that part of the country two or three decades ago. The people are frustrated. The people have no economic opportunity.

What happens to folks like that in the Middle East, you ask? Well, take a look. They go to places like al Qaeda training camps. I mean there's nothing new here.

And what Barack Obama was suggesting is not that the people of Pennsylvania are to blame for any of it. It's that the jerks in Washington, D.C. , as represented by the 10 years of the Bushes and the Clintons and the McCains, who have lied to and misled these people for all of this time while they shipped the jobs overseas and signed phony trade deals like NAFTA, are to blame for the deteriorating economic conditions among America's middle class.

I mean I'm a college dropout and I can read the damn thing and figure it out.

BORGER: You know, in this case, the Hillary Clinton campaign and the John McCain campaign have the same goal -- and that is to portray Obama as this sort of effete elitist who doesn't understand the real working class people or Independent voters. And so they're both on the same side on this one and it's obvious why.

BLITZER: You know --

TOOBIN: I think --

BLITZER: Go ahead, Jeff. Do you want to make a little point?

TOOBIN: Well, I just think it's remarkable that Barack Obama, this guy who grew up in a single family household with no money, who lived in Indonesia, who, you know, was -- came from very modest upbringings, somehow he's the elitist?

That's really a pretty extraordinary sort of contortion of his background. I mean --

BORGER: It's that Harvard/Yale thing, yes.

CAFFERTY: (INAUDIBLE) One hundred and nine million dollars in the last eight years, did he?

BORGER: Right.

CAFFERTY: No.

BLITZER: Yes. He made a few million on that book, but that's another story.

All right, Jack, very quickly, Howard Dean suggesting that Mitt Romney, he thought, would have been a more formidable Republican candidate than John McCain. He said, "Mitt Romney was the candidate I feared the most. I know him from New England and I thought he was a better candidate than Republicans thought he was."

What do you think?

CAFFERTY: I think based on the situation our economy is in and what John McCain has said and not said about economic conditions in this country in the last week or two, that John Dean might have a point. You know, Romney has a business background. He understands economics. He ran companies, did finance, knows about that stuff. He was younger, healthier.

The one drawback, conceivably -- potentially -- was the Mormon dimension of Mitt Romney. And that was maybe what took him out of the primaries. But I think he'd have been a formidable Republican challenger.

BLITZER: All right, guys, we've got to leave it right there.

By the way, we just got a response from Senator Obama's campaign on this whole little uproar involving what he said, what he meant about some Pennsylvanians who lost their jobs being bitter. A spokesman just issued a statement. Let me read it to you guys.

"Senator Obama has said many times in this campaign that Americans are understandably upset with their leaders in Washington for saying anything to win elections while failing to stand up to the special interests and fight for an economic agenda that will bring jobs and opportunity back to struggling communities. And if John McCain wants a debate about who's out of touch with the American people, we can start by talking about the tax breaks for the wealthiest Americans that he once said offended his conscience but now wants to make permanent."

All right, I suspect we're going to get more on this as the night goes on.

BORGER: And so it goes. Yes.

BLITZER: Guys, thanks very much for coming in.

Jack, don't leave. We've got "The Cafferty File" coming up.

John McCain may have more in common with his Democratic rivals than with President Bush when it comes to the nation's emergency oil supplies buried deep underground along the Gulf Coast. The split comes at a time of some sky high gas prices, as we all know.

Brian Todd has been looking into this story for us.

What are you learning -- Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, oil and gas prices, as we know, are at record levels. We could see $4 a gallon at the pump. And the issue is getting hot enough on the campaign trail that John McCain has made a critical decision.

(BEGIN VIDEOTAPE)

TODD (voice-over): Your pain at the pump again creeps into politics, prompting the likely Republican nominee to break with the president on the question of whether to keep storing oil away.

MCCAIN: We should stop adding to the Strategic Petroleum Reserve.

TODD: That reserve, a series of massive salt caverns under these tanks, where oil is kept in case of hurricanes, war or other disruptions in the oil supply.

How much oil is sitting there? The U.S. government has four facilities long the Gulf Coast, a fifth under development. Each place has dozens of caverns and each cavern can hold the Sears Tower in Chicago with room to spare. Seven hundred million barrels of oil are stored away. The Reserve's capacity is 727 million and the White House wants that doubled in 20 years.

The Bush administration is putting 70,000 barrels of oil a day in storage. A Department of Energy official says that's a tiny fraction of 1 percent of the world's daily oil consumption and has almost no impact on the market.

Oil analysts agree with the caveat.

DAVID PUMPHREY, CENTER FOR STRATEGIC & INTERNATIONAL STUDIES: The amount of oil in terms of the total oil market is quite small. But in a very tight market, each additional barrel begins to matter even more.

TODD: Analysts say those are barrels that could be released into the market to possibly drive prices lower.

The administration isn't budging, an energy official telling CNN the reserves need to be built up to protect America's energy security in case of a market disaster. But experts worry about the psychology of that.

ADAM ROBINSON, LEHMAN BROTHERS: The signal that it provides, in that the Bush administration is putting -- investing in barrels at the highest prices we've ever seen, suggests to some market players that perhaps the United States is preparing for a geopolitical disruption somewhere else in the world.

(END VIDEOTAPE)

TODD: Now, an Energy Department official says that's not the case, Democrats, including Hillary Clinton and Barack Obama, want the president to stop putting oil putting oil into the Strategic Reserve for the rest of the year unless oil prices come down.

To be clear, a McCain campaign official says he's not going that far. He just wants to stop adding to the reserves now and evaluate the situation later -- Wolf.

BLITZER: Brian, thank you for that.

Brian Todd reporting.

It's one of the hottest items out there right now on the Internet. So just what is being reflected in Vice President Cheney's sunglasses? You might be surprised at what some people are seeing.

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

(COMMERCIAL BREAK)

BLITZER: In our political ticker, a picture of the vice president, Dick Cheney, on vacation is creating a bit of a stir online. Across the Web, people are interpreting what appears in the reflection of his sunglasses as something rather lewd.

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

Abbi, what are they seeing?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, naked lady Cheney sunglasses -- search online today on those terms and you will get tens of thousands of hits because of this -- a photo posted on the White House Web site of Dick Cheney fly fishing in Idaho with a strange reflection in his sunglasses -- leading people online to ask what is that, a naked lady? Well, that sparked off an online guessing game. People are weighing in with suggestions of just what that reflection was, posting the photo, rotating it, trying to get a better look.

A spokeswoman for the vice president's office, Megan Mitchell, says clearly the photo shows a hand casting a rod. And that seems to be borne out by this enhanced version that somebody posted online.

It doesn't mean that the story didn't make its way to news sites in Australia -- Wolf.

BLITZER: All right. Thank you very much, Abbi, for that.

Let's check in with Jack. He's got "The Cafferty File" -- Jack.

CAFFERTY: Perverts. Maybe it was a naked lady.

Did you notice he was smiling? I mean how often do you see that?

BLITZER: Or maybe --

CAFFERTY: He had a big -- huh?

BLITZER: Never mind.

CAFFERTY: Never mind, yes.

The question this hour is: Who's to blame for an increasingly discouraged middle class?

A new Pew Research Poll out, very Democratic Congress. People say things are just tough and they're not getting any better.

Bert in California writes: "Jack, the highest levels of our government are responsible for stealing from the middle class. They've looked the other way, allowed employers to cheat by hiring illegal aliens, which depressed wages throughout the economy and even stole jobs from many sectors of our society. It came from the top because it was easier to make the rich richer and exploit the illegals than it was to pay our legal middle class reasonable wages."

Terry in California: "Families bought homes they couldn't afford and now look what's happening. Did anyone take Budgeting 101 prior to signing on the dotted line of their mortgage documents? If you're generating X dollars each month and spend more than what you can generate in income, then obviously it is your own stupidity that's created your woes. The American dream is more like I want it all and I want it all now, thus creating an economic foreclosure nightmare which impacts all of us."

N. Writes: "Bush, of course, from the fact that he favors large corporate interests, as well as those of the wealthy in our nation, instead of the rest of the people. As old as I am and as long as I have lived, this is absolutely the hardest I have ever had it financially. No one expects this at my age." Jenn in Pennsylvania: "We are, Jack. Most middle class Americans I know are trying to live like they're Hollywood millionaires or, at the least, knockoffs. They consume junk, live way beyond their means and don't bother to save a dime. The sad thing is they're mortgaging their children's futures."

And Okey writes: "The voter for re-electing the same pandering, corrupt corporate puppets back into Congress every term. Vote them out or live with it."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile and look for yours there. We have hundreds posted on each of the questions we do here every afternoon.

Wolf, have a good weekend.

BLITZER: See you next Monday. Have a greet weekend, too, Jack.

Thank you.

Up next, the most intriguing images of the day. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Let's wrap it up with some of this hour's Hot Shots.

In Brazil, Brazilian Air Force members load a plane with 14 tons of food headed for Haiti.

In India, a policeman returns a rock to protesters.

In London, a Masai warrior from Tanzania walks along the River Thames. He's running in this weekend's marathon.

And in India, a Tibetan child yawns during a protest.

Some of this hour's Hot Shots.

Among my guests on "LATE EDITION" on Sunday, Senators Joe Biden and Richard Lugar. "LATE EDITION" starts 11:00 a.m. Eastern this Sunday.

Until then, thanks very much for joining us. I'm Wolf Blitzer in THE SITUATION ROOM.

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

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