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THE SITUATION ROOM

Fighting Over Your Money: McCain vs. Obama; Obama as Man of the People; Interview With Obama Communications Director Robert Gibbs

Aired June 10, 2008 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, John McCain accusing Barack Obama of being bad for business. The Republican firing back on the economy. This, a day after the Democratic candidate took issue with him on issue #1.
We're all over this story.

A checkup on Obama's message. He's pushing populist themes right now and trying very hard to pick up where Hillary Clinton left off.

And a who's who of top Democrats. They're presenting a united front in hopes of reclaiming the White House, but the political wounds of this primary season still are fresh.

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

In these very tough economic times the presidential candidates are trying to convince voters they care about them and their hard- earned cash. So today, John McCain is taking a new slap at Barack Obama when it comes to taxes, and Obama is taking an "I feel your pain" tour with a working woman. Chances are we're going to hear those themes repeated over and over again in the weeks and months ahead.

CNN's Jessica Yellin is covering the Obama campaign. We'll go to her in a moment.

But let's check in with Dana Bash first. She's covering the McCain campaign for us.

Dana, Obama was on the offense yesterday when it came to the economy, issue #1. Today it was John McCain's turn. Tell us what he did.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: It sure was, Wolf.

You'll remember John McCain actually first laid out his economic proposals back in April, but today was his first shot at drawing sharp contrast with his new Democratic opponent on voters' top issue.

(BEGIN VIDEOTAPE)

BASH (voice over): A new twist on the time-tested Republican attack line. John McCain declared Barack Obama's economic policies change that voters can't afford. SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Under Senator Obama's tax plan, Americans of every background would see their taxes rise -- seniors, parents, small business owners, and just about every one who has even a modest investment in the market.

BASH: A day after suggesting Obama's presidency would be like Jimmy Carter's, McCain conjured up memories of that era's economic anxiety...

MCCAIN: Will we go back to the policies of the '60s and '70s that failed, or will we go forward?

BASH: ... and slammed Obama for wanting to repeal tax cuts for upper-income Americans, tax cuts McCain initially opposed.

MCCAIN: Will we enact the largest single tax increase since the Second World War, as my opponent proposes, or will we keep taxes low, low for families and employers?

BASH: McCain may be selling himself as a different kind of Republican, but not on the economy. Advisers want him to stick to what they insist is winning conservative credo: free trade, low regulation and low taxes. In fact, McCain in the past has sparred with fellow Republicans over repealing the estate tax. Now he's hitting Obama for wanting to raise it.

MCCAIN: The estate tax is one of the most unfair tax laws on the books.

BASH: From Obama, rapid response, calling McCain misleading.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Let me be clear: my tax reform plan would cut taxes for 95 percent of workers.

BASH: McCain's speech to small business owners was interrupted three times by anti war protesters.

MCCAIN: You know, one of the...

UNIDENTIFIED FEMALE: (INAUDIBLE)

BASH: He wooed the heckles into his pitch for joint town hall meetings with Obama.

MCCAIN: We need the town hall meeting. You just saw the example. Let's stop -- let's stop yelling at each other. Let's stop having sound bites and processed questions and those things.

(APPLAUSE)

(END VIDEOTAPE)

BASH: McCain said today he and Obama should travel to these town hall meetings together, in the same plane, and promised that he wouldn't fly it. It was a self-deprecating joke referring to the fact that while flying in Vietnam, he got shot down. But in all seriousness, McCain advisers say they haven't heard much from the Obama camp on this idea of these joint town halls since proposing it last week -- Wolf.

BLITZER: All right, Dana. Thanks very much.

Let's bring in Jessica Yellin right now. She's covering the Obama campaign for us.

And Obama's wasting no time in trying to make it clear he's a man of the people, unlike he says, the Republican candidate.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: That's true, Wolf, but I'd change genders and say that today he was trying to appeal to working women.

(BEGIN VIDEOTAPE)

YELLIN (voice over): Barack Obama spent the morning touring a Missouri hospital with a hardworking nurse. Remind you of something? Maybe Hillary Clinton's tour with a hardworking nurse? Or Hillary's ad about hardworking women?

NARRATOR: You work the night shift at the local hospital. You're often overworked, underpaid, and sometimes overlooked.

YELLIN: Obama's message is familiar, too.

OBAMA: It's time to stop saying that you are on your own to uninsured Americans and struggling families and small businesses. It's time to reclaim the idea that we all have mutual obligations to one another.

YELLIN: It sounds a bit like the populist themes Clinton adopted late in her campaign.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: Or we can elect somebody who's going to fight for you. That is the choice in this election.

YELLIN: Which sounds a bit like John Edwards' promise to be this...

JOHN EDWARDS (D), FMR. PRESIDENTIAL CANDIDATE: ... for somebody who speaks from here, who truly believes in this cause, who will stand up and fight for the middle class.

YELLIN: Clinton's overt appeal to working Americans helped her win over the blue collar vote. Her outreach to working women helped her lock up the female vote. Both are constituencies Barack Obama is now trying to woo, so he's honing in on health care, with a proposal that would guarantee every American access to health insurance at lower costs. And he's picking a fight with John McCain.

OBAMA: He's offering a tax cut that won't insure that health care is affordable for hardworking families who need help the most. YELLIN: McCain says Obama's plan is just more big government.

MCCAIN: I believe the best way to help small businesses and employers afford health care is not to increase government control of health care, but to bring the rising costs of care under control.

(END VIDEOTAPE)

YELLIN: And Wolf, even as Barack Obama adopts these populist themes, it's important to remember that he has taken some heat from his fellow Democrats who have not always liked his health care plan. Both Clinton and Edwards, you'll recall, were very critical of Obama's health care plan because he does not require that everyone sign up for health care. It's voluntary and not a mandate. They say that is not true universal coverage -- Wolf.

BLITZER: All right, Jessica.

I want to follow up on another front. He's having this private meeting with some religious leaders. What do we know about this?

YELLIN: That's right, Wolf. The campaign is not releasing a full list of names, but he is meeting with not just religious leaders, but evangelical leaders. And this is part of Barack Obama's effort to, as he says, reclaim religion for the Democratic Party. He's insistent that there's no reason that only Republicans should appeal to religious groups, and he is making an outreach that he says will continue throughout this campaign to religious groups of all stripes -- Wolf.

BLITZER: Jessica, thanks. We'll stay on top of that part of the story as well.

By the way, a slight uptick for Barack Obama against John McCain in our brand new Poll of Polls. We averaged out the four latest surveys of registered voters nationwide. We found that Obama had a four-point advantage over McCain right now, 47 percent to 43 percent. Obama had a two-point edge in our Poll of Polls last week.

We should note that three out of the four surveys we averaged were taken before Hillary Clinton's exit from the Democratic race on Saturday. We're expecting new numbers coming in soon in the coming days.

Representatives of the Obama and McCain camps are standing by to talk about their candidates' respective stands on various issues including the economy and your taxes. We'll be speaking live with Obama communications director Robert Gibbs. He's standing by.

Also later, McCain top adviser Carly Fiorina, she'll be here in THE SITUATION ROOM.

We're getting all perspectives today and every day.

Let's go to Jack Cafferty right now for "The Cafferty File" -- Jack. JACK CAFFERTY, CNN ANCHOR: Hillary Clinton, Wolf, is out of the race for president, but she's not out of the red. Far from it. In fact, it's believed that Clinton has the largest presidential campaign debt in history.

Recent filings show Senator Clinton loaned her campaign $11.4 million of her own money, and that she also owes vendors about $9.5 million. That's a total of about $20 million.

Other wealthier candidates, Mitt Romney, for example, loaned themselves more money, but they didn't always plan to get the money back. Clinton also has to deal with both the personal loan and the unpaid bills. One campaign finance lawyer told "The New York Times" Clinton's debt is "unprecedented." Other candidates who have lost -- have owed less than half the amount that she owes to businesses.

So, what exactly are her options, Senator Clinton's? The good news for her is that her campaign says it raised about $1 million since the final primaries last week, which suggests that some of her supporters may be committed enough to help her out with her bills.

The other possibility floated around is for Barack Obama to pitch in and help. Although campaign finance laws prohibit him from transferring money from his campaign to hers, his campaign could ask supporters to chip in or he could hold fund-raisers on her behalf. Not everybody is so sure that's the best idea.

Some Obama fund-raisers say it's going to be tough to help out Hillary Clinton because they're already raising money for Obama and for the Democratic National Committee. Others say the tensions from the primary race could make it more difficult. But if Obama does help Clinton, it could go a long way toward getting her and her supporters to work harder as he runs for president.

So here's the question. Would it be a good idea for Barack Obama to help Hillary Clinton pay off her campaign debt?

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

BLITZER: All right, Jack. Thank you.

Top Democrats, meanwhile, are trying to begin the healing process after their party's very divisive presidential primary. We're going to hear what they had to say today. Will lingering hurt get in the way of winning?

Plus, should oil companies get slapped with a brand new tax on their big profits? The Senate considering the question. We're going to tell you where the measure stands right now.

And President Bush joins forces with European leaders against Iran. They're talking about taking a tougher new line in the nuclear dispute.

Stay with us. You're in THE SITUATION ROOM. (COMMERCIAL BREAK)

BLITZER: John McCain is making a familiar big tax-and-spend case against Barack Obama, trying to turn the Democrat's campaign theme of change on its head.

Let's discuss this and more now with Robert Gibbs. He's the communications director for Obama's presidential campaign. He served in an earlier life as John Kerry's spokesman during the early days of his White House bid.

Robert, thanks very much for joining us.

ROBERT GIBBS, OBAMA COMMUNICATIONS DIRECTOR: Thank you for having me, Wolf.

BLITZER: He's trying to make the case, McCain, that if you like Jimmy Carter, you'll love Barack Obama. He's going to be a second term of Jimmy Carter.

What do you want to say about that?

GIBBS: Well, look, as I said yesterday, I think there's a very simple thing that John McCain can use to remember our tax plan. The wealthy lobbyists that are involved in his campaign are likely to pay more in taxes. But middle class families in America who are struggling with skyrocketing health care costs, skyrocketing gas prices, skyrocketing college education costs, under Barack Obama are going to see a $1,000 tax cut for their families.

You know, we've had eight years of George Bush's economy, and now what we have is John McCain dusting off the tired, old, worn-out ideas of George Bush, thinking that they're going to help middle class Americans get ahead right now, and it's just not the case. What we need is we need change.

BLITZER: Here's the specific charge he made today against Barack Obama when it comes to taxes. Listen to this.

(BEGIN VIDEO CLIP)

MCCAIN: Under Senator Obama's tax plan, Americans of every background would see their taxes rise -- seniors, parents, small business owners, and just about everyone who has even a modest investment in the market.

(END VIDEO CLIP)

BLITZER: Now that's pretty scary to a lot of voters out there. What do you want to say in response to that?

GIBBS: Well, again, it's -- it's -- it's a sad commentary that John McCain is making up attacks on a political campaign this early. It's certainly not straight talk from John McCain.

What Barack Obama will do is eliminate the income tax for most seniors. He's going to cut capital gains tax and eliminate it from most startup small businesses.

We're going to cut taxes for middle class families by $1,000. We're going to help families that own a home but don't have enough to deduct their home interest mortgage. So, obviously, John McCain just got it all backwards. Barack Obama...

BLITZER: He says you're going to have the biggest tax increase since World War II.

GIBBS: Well, again, another thing that John McCain just simply got wrong.

What John McCain wants to do is take George Bush's economic plan and put it on steroids. He wants a $300 billion tax break for corporations, and hasn't told us how he's going to pay for it.

I don't know anybody in this country who believes that a tax break for corporations and wealthy CEOs is the way to get middle America back on track. It's just not going to work. It hasn't worked for the past eight years, Wolf, and we just don't need the same tired, worn-out ideas from John McCain for four more years.

BLITZER: Let me ask about a specific tax that he says you guys are on the wrong side of, the estate tax. I'll play this clip for you.

(BEGIN VIDEO CLIP)

MCCAIN: Another one of my disagreements with Senator Obama concerns the estate tax, better known to you as the death tax. He proposes to increase to a top rate of 55 percent.

(END VIDEO CLIP)

BLITZER: Is that true?

GIBBS: Well, look, what we want to do is make sure that family- owned small businesses and family-owned farms can be passed down to generations. And what we would do is increase the exemption and make sure that people weren't penalized like that. But look, what it's going to mean is -- what we're not going to do is eliminate something like that for Warren Buffett and Bill Gates, positions that both of them support.

Look, what we need to do is restore some fairness in our tax system, stop giving all the benefits to wealthy corporations and to big CEOs, and instead put the tax code -- reform the tax code and put it back on the side of middle class working families which we've seen have to battle this economy and battle this administration. America can't afford four more years of that, and they can't afford four years of John McCain.

BLITZER: What's the status of the 10 town hall meetings that McCain is proposing that he and Barack Obama start as early as this week, if you will, engaging in? GIBBS: Well, look, our campaign has been in touch with them. They spoke, they traded phone calls over the weekend. I believe they're supposed to speak later on today about this.

We've been in touch with this. Senator Obama said even today that he looks forward to this idea, to getting in a room and discussing in front of the public the issues that are important in this campaign. I do think it will happen, Wolf.

BLITZER: And do you have any idea when it might start?

GIBBS: You know, I don't. We've been the nominee for -- or the presumptive nominee for a little less than a week right now. So things are coming out as fast and furious. But I'm pretty sure that we certainly want to do it. And we think we can get agreement from the McCain campaign to do unprecedented -- unprecedented appearances before the convention.

BLITZER: What about the vice presidential selection? I know you're not going to tell us who's on the short list, who's on the long list, or whatever. But in principle, does he have an idea when he wants to make his decision?

He's got a couple months basically until the convention, but do you want to just give us a ballpark? How long you think this vetting process might go on?

GIBBS: Well, look, I think it's -- as Senator Obama has said, this is one of the most important, if not the most important, decision he'll make before the convention. And it's a decision that he wants to take his time with and make sure that he gets right. So, I don't have a timetable, and I don't think Senator Obama has a timetable in mind. I do think he wants to get -- to get this selection right and make sure that people have confidence in that pick.

BLITZER: Robert Gibbs is the communications director for the Obama campaign.

Get ready, Robert. You've got a tough road ahead of you.

GIBBS: We know it. Thanks, Wolf.

BLITZER: Are you feeling strong?

GIBBS: So far, so good.

BLITZER: All right. Thanks very much for coming in.

GIBBS: Thank you.

BLITZER: Still ahead, we're going to hear from a top McCain campaign adviser as well, the former Hewlett-Packard CEO, Carly Fiorina. She's standing by live.

Also coming up, information still coming in right now about that fiery plane crash. We'll tell you what happened, how many people involved.

And later, is Barack Obama another Jimmy Carter? That's the allegation that John McCain is now increasingly leveling. We're going to take a closer look at the comparisons.

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

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, the McCain campaign says Barack Obama's vice presidential vetter may need vetting himself. The campaign's suggesting Jim Johnson should go under a microscope for his financial dealings.

Could he ultimately become a liability for Obama? We'll take a closer look at the facts of this story.

Also, the FDA is scrambling over a salmonella outbreak involving tomatoes that's affected McDonald's, Wal-Mart, and lots of other stores and restaurants across the country. Critics say the FDA is partly to blame, charging it's not fully doing its job.

Our Miles O'Brien has a full investigative report.

And does the Bush administration have plans to keep U.S. troops in Iraq permanently? Robert Gates, the defense secretary, tells CNN what's going on in an exclusive interview. You're going to hear what he's saying, what his message is for Barack Obama and for John McCain.

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

Hillary Clinton and Barack Obama stress that the Democratic Party is like family, and now that their rivalry is over, Democrats, they say, need to come together and come together quickly. That's the same show of unity Democratic leaders are putting on display right here in Washington today.

The Senate majority leader, Harry Reid; the House speaker, Nancy Pelosi; the Democratic Party chairman, Howard Dean; and others met to discuss their plans for defeating John McCain.

Let's turn to CNN's Kathleen Koch. She's watching this story for us.

They want to show they're united, Kathleen, but what's going on?

KATHLEEN KOCH, CNN CORRESPONDENT: Well, Wolf, they met here at DNC headquarters, had a press conference, and took a very strategic direction as they were here to, again, show their unity behind Senator Barack Obama. Much of the dialogue focused on issues like health care, education, Supreme Court nominees, global warming, issues of great concern to women. Translation, Hillary Clinton supporters. Also, the leaders here, they very freely admitted the divisions the party was dealing with. Chairman Howard Dean admitting the primaries "had bitter disagreements and ugly moments."

(BEGIN VIDEO CLIP)

HOWARD DEAN, DNC CHAIRMAN: This has been a hard-fought campaign, as I said in my remarks. It's understandable to be angry and upset when your candidate doesn't win.

It's only been three or four days since Senator Clinton announced that she would no longer continue her campaign. I have every confidence that we will be united as a party by the fall election, and I think before that.

(END VIDEO CLIP)

KOCH: The other theme here, of course, no surprises, McCain bashing. The Democratic leaders here referring to him as a flawed candidate, the status quo, the equivalent of four more years of George Bush.

So, Wolf, clearly themes that we have heard before and certainly will in the future as the campaign heats up.

Back to you.

BLITZER: Kathleen, thank you.

John McCain is forging ahead with a brand new line of criticism against Barack Obama. As we mentioned earlier, McCain is responding to claims that he would simply be another George W. Bush by suggesting Obama would simply be another Jimmy Carter.

Let's bring in our chief national correspondent, John King. He's watching this story for us.

Let me play a little clip of McCain's new line of attack on Obama. Listen to this.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Senator Obama says that I'm running for a Bush's third term. It seems to me he's running for Jimmy Carter's second.

(LAUGHTER)

(END VIDEO CLIP)

BLITZER: All right, so what do you think about this strategy?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, it is right out of the Republican playbook to try to cast the Democratic nominee as a liberal. One of the interesting things is, you don't hear John McCain saying he's running for Bill Clinton's third term, because the Republicans don't think they can make that argument about the most recent Democratic president, because the economy, as you know, Wolf, was booming. The Democrats say they balanced the budget. George Bush inherited a surplus, turned it into a deficit. So, they have to go back to President Carter, the last Democratic president, to make this case.

But look for a lot of this. President Carter signals to independent voters, they believe, and conservative Democrats, not only liberal on the economy, but just weak. Remember the hostage crisis and everything else. They are trying to say, Barack Obama, like Jimmy Carter, is not up for the job. He's not tough enough. He's too liberal.

But you will also hear George McGovern, Michael Dukakis and Walter Mondale before this is all over. They are trying to paint Barack Obama not as nothing new, not as something different, but as a traditional tax-and-spent liberal Democrat.

BLITZER: And a lot of remember who lived through the Jimmy Carter administration high interest rates. The economy was not in good shape. I'm sure we will be hearing a lot more about this in the coming days...

KING: History lesson.

BLITZER: Yes, in the coming and weeks, they will try to paint Obama as another Jimmy Carter.

Let's talk a little bit about the vetting process that's going on right now. Obama's looking for a vice presidential running mate. McCain is looking for a vice presidential running mate. But it seems their styles in going about this are a little different.

KING: Very different.

They're both doing -- both campaigns are doing exactly the same thing, but in very different ways. And the Obama campaign is being very open about this. They are having meetings on Capitol Hill. They are announcing they are going to meet with key Democrats, like the speaker, Nancy Pelosi, like the majority leader, Harry Reid, Dick Durbin, the senator from Illinois today.

And they're having these discussions with prominent Democrats. They are even talking about some names. They are soliciting advice, which is traditional for campaigns to do, saying, who do we think we should consider? Who do you think would be strong? Who do you think would be a disaster?

But they're also floating some names in the process. Retired General James Jones one of the names that has come up. The Marine general came up in some of these meetings. Now, why are they doing that? Perhaps it's the old trial balloon. You put a name out there, and you see how the political world reacts to it. They are doing in it in a very public way. Obama, in the end, will make this decision in private. But early on, it's a very public process. The McCain campaign, on the other hand, is doing very much the same. Charlie Black, the senior adviser, Rick Davis, the campaign manager, they have met with Republican House members, Republican senators, Republican governors, a select group of party operatives who have been through past presidential campaigns, saying, what do you think? Who should we look at? What kind of strengths and weaknesses should we look at?

But they are doing it very, very quietly, Wolf, the same solicitation, the same outreach, but one very public, one very private. We are going to go through June and all of July with this question.

BLITZER: And we're going to be speculating a lot. Thanks very much. Thanks much for coming in.

We're following a developing story about Wisconsin right now, where a dam is threatening to break. You heard Carol Costello talk about that. We're getting new details. Want to stand by for that.

Plus, some Democrats want to make oil companies pay for their windfall profits. Are Republicans willing to go along? There are new developments on Capitol Hill today.

Also coming up, will Barack Obama have to pay for Hillary Clinton's big campaign debt? We're looking at the options.

And he once took on Bill Clinton over Whitewater and Monica Lewinsky. Now Ken Starr is going after fighting a new fight against one of the most hated groups in Hollywood. We will tell you what Ken Starr's doing right now. You will hear it in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're watching a frightening story out of Wisconsin right now. Several dams are in danger in that state. And officials fear a lot of loss of life, potentially, and property.

Our severe weather expert, Chad Myers, is at our Weather Center, watching all of this.

What is going on? What do we know, Chad?

CHAD MYERS, CNN METEOROLOGIST: Wolf, what we know is that a lot of the lakes that are around Milwaukee, west of Milwaukee, are earthen dam or manmade lakes, even real dams. And some of these real dams are in harm's way from all of this high water.

We saw this with Delton Lake yesterday. That completely lost one side. The dam is still there, but it lost one side of a dam road. And the water went over the top, and it just kept leaking. Well, now we have Phantom Lakes. This is kind of off Mukwonago. This is the Mukwonago River area. And the dam itself is a strong sluice dam. It's big. It's concrete and it's metal. But there's water going around and saturating the soil on and around that dam you see right there. You can even see they have put some plastic tarps there on the left side of that dam to try to keep that dirt from being supersaturated and just washing away.

And this is not the only dam in trouble. There are many, many dams in trouble across parts of Wisconsin. Here are the graphics. Let's go right to Google Earth. I will fly you right to it and I can actually show you a little bit better what's going on. We will fly you south and southwest of Milwaukee.

There are the two lakes, Phantom Lakes. That right there, that is the dam that's in trouble. If that dam breaks, it's going to go down river, clearly, obviously, but away from the population, and eventually down river toward Waterford -- Wolf.

BLITZER: We're going to stay on top of this, together with you, Chad. Thanks very much. We will wish all our friends in Wisconsin lots of luck right now.

So, do high gas prices amount to a crisis? Our latest CNN/Opinion Research Corporation poll shows this. Twenty-four percent of you say yes -- 59 percent say it's a major problem, a problem Congress is grappling with. One idea involved a Democratic plan for a 25 percent tax on windfall profits on the big oil companies. Those are the profits deemed unreasonable.

Senate Republicans blocked the bill by filibuster, saying it will cause higher oil and gas prices. Democrats say the bill could help lower them. But they couldn't muster the votes to break the filibuster. Both sides explain their actions.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: We're not afraid on this side to go after big oil when they're not doing the right thing. And we're not afraid to go after OPEC, because they are a cartel that squeezes us. We're not afraid to do some strong, tough things that will, some in the short run, some in the longer run, bring down the price, the all-too-high price of gasoline.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: Hitting the gas companies might make for good campaign literature or evening news clips, but it won't address the problem. This bill isn't a serious response to high gas prices. It's just a gimmick.

(END VIDEO CLIP)

BLITZER: President Bush is taking a tough line against Iran right now. He's in Europe, issuing a clear warning for Iran and a clear warning of danger for the entire world.

Our White House correspondent Elaine Quijano is in Berlin, traveling with the president -- Elaine. ELAINE QUIJANO, CNN White House CORRESPONDENT: Wolf, there were a number of issues on the table at the president's final U.S.-E.U. Summit -- the most pressing, how to curb Iran's nuclear ambitions.

(BEGIN VIDEOTAPE)

QUIJANO (voice-over): At his final U.S./European Union Summit, President Bush stressed the positive.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I thought we had a very fruitful discussion. We're on the same page.

QUIJANO: Like the E.U.'s backing to ratchet up pressure on Iran with the threat of new sanctions aimed at curbing what the U.S. and other countries suspect is a nuclear weapons program.

BUSH: Iran with a nuclear weapon would be incredibly dangerous for world peace.

QUIJANO: The new sanctions aimed at Iranian banks would be in addition to U.N. sanctions already in place. The president also said he supports the E.U.'s foreign policy chief's trip to Iran in the coming days, to send a strong message to Tehran.

BUSH: There is a better way for you to move forward than a way that so far has led to isolation.

QUIJANO: But, on climate change, the president glossed offer his differences with European leaders, and, as expected, announced no breakthroughs.

BUSH: Unless China and India are at the table, unless they agree to a goal, unless they agree to firm strategies to achieve that goal, then I don't see how any international agreement can be effective.

QUIJANO: For the president, this first stop on his farewell-to- Europe tour was symbolic.

BUSH: A beautiful day here in Slovenia.

QUIJANO: His visit here a bookend of sorts -- it was seven years ago, on his first Europe trip as president, that he visited Slovenia.

BUSH: It's a fitting circle.

(END VIDEOTAPE)

QUIJANO: President Bush is now here in Germany, where Iran will also top the agenda during a meeting with German Chancellor Angela Merkel. The president will also note the 60th anniversary of the Berlin airlift and the Marshall Plan, the massive U.S. program to help rebuild Europe after World War II -- Wolf.

BLITZER: Elaine Quijano, in Berlin for us, thank you.

In our "Strategy Session": John McCain poses this question: (BEGIN VIDEO CLIP)

MCCAIN: Will we enact the largest single tax increase since the Second World War, as my proponent opposes, or will we keep taxes low, low for families and employers?

(END VIDEO CLIP)

BLITZER: Is McCain trying to paint Barack Obama as a simple old- fashioned liberal tax-and-spend politician? And will the tactic work in this year's election?

The Obama campaign plans to run a 50-state campaign. That's what they say. But shouldn't he be focusing in on those key swing states, about a dozen of them? That's a question that we will ask Donna Brazile and Dick Armey. They're standing by for our "Strategy Session" -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The message: He cares. That's what John McCain wants you to know, as Americans struggle every time they visit the gas station or the grocery store. But McCain warns, if you think things are bad right now, the pain will get even worse if Barack Obama is elected president.

So, let's discuss in our "Strategy Session."

Joining us, our CNN political contributor Donna Brazile. She's a Democratic strategist. And the former House Majority Leader Republican Dick Armey.

Guys, thanks very much for coming in.

Let's talk strategy right now. It's worked so often in the past, Republicans painting Democrats a simple big tax-and-spend liberals. How does the Obama campaign respond to this allegation right now?

DONNA BRAZILE, CNN POLITICAL ANALYST: First of all, I think he's taking it head-on. He is not only responding to Senator McCain's attack.

And, by the way, it's a ridiculous charge. Under the first 42 presidents, we accumulated $3.7 trillion in debt. Bill Clinton reversed that as president. And I'm sure Dick Armey can talk about how they did it, because, when he was in the Congress, clearly, that was a priority, to get us back on the road to fiscal prosperity.

BLITZER: They had surpluses in several of those years.

BRAZILE: But under John McCain's proposal, if you look at his proposal, according to the Center for American Progress, after the second McCain term, our debt will blossom to $12.7 trillion. So, Obama must continue to say: I will pay for all my programs.

BLITZER: That strategy has certainly worked in the past. Will it work for McCain now?

DICK ARMEY, FORMER REPUBLICAN HOUSE MAJORITY LEADER: Well, I think every political strategy plays off a predisposed impression the public has.

The public tends to believe that Democrats are big taxers and big spenders. So, the strategy is as good as any. I think the other thing that McCain has to do, though, is talk about big programs, big opportunities. He's started now with one, for example, where he would say, let the taxpayer choose to file the old-fashioned way or to file the flat tax. That's a big idea. That's a big change.

It's a substantive change in people's lives, and he would be far better off, in my book, to talk about, these are the things I'm for.

BLITZER: But the whole notion that, if you like your economic situation over the past eight years with Bush, just get ready, because McCain is going to be more of that. That's the Democrats' strategy right now, in painting him as simply more Bush.

ARMEY: Well, Armey's axiom is, you can't stand on principle with feet of clay.

And, if I were Obama, I would be very careful, because, for example, he has voted for virtually every medical mandate that ever came across his desk. That pushes health care costs up. He votes for the farm bill. Pushes food prices up. He votes for restrictions on energy exploration. Pushes gas prices up. He's got very thin ice on which to stand if he's going to present himself...

BLITZER: What do you think, Donna?

BRAZILE: Well, I think what Senator Obama has stated -- and I'm only going by his words -- is that he is going to get us out of Iraq. That's $10 billion a month that we're spending. He's going to let the tax cuts expire. That is also going to give the economy a big lift, in terms of giving Senator Obama the ability to invest in real critical needs facing this country.

Again, I think these old charges, these old allegations that Democrats are soft on terrorism, soft on crime, you know, tax-and -- it won't work, because everyone knows that, under George Bush and the Republicans, you know, our deficit has blossomed, our trade deficit, our budget deficits. I don't think it's going to work.

BLITZER: All right.

I want to get back to Donna in a second. But the national debt did increase over these last eight years from around $5 trillion to around $9 trillion right now.

ARMEY: Right. But you have to understand, that was President Bush. And I think...

BLITZER: You think McCain is different? McCain is different? ARMEY: Senator McCain has got to say: Look, I'm the guy that came out against earmarks. I'm for reforms in these programs. I understand the need to hold down spending and then follow with tax policies that will grow the economy for the purpose of reducing the debt.

BLITZER: Obama says he's got a 50-state strategy right now. He's not going to ignore any of these states, even the reddest of the red, the Wyomings or -- or the North Dakotas or whatever.

Is that a smart strategy? Or should he be devoting his money, his energies, to about a dozen of those swing states that will make the difference in the Electoral College?

BRAZILE: I believe he can do both.

Look, Wolf, many of us have gone into the general election with our hands tied because we didn't have the money, we didn't have the volunteers. And, don't forget, I used to get on Air Force Two and take posters out of Florida and try to tend send them to places where I knew we could not send posters or bumper stickers.

Senator Obama has enormous energy. His campaign has energy. They have volunteers in all of these 50 states. By investing in all 50 states, he will be able to help down-ballot Democrats. Clearly, some states will get more resources than other states. Some states will have staff people in every congressional district. But this is a very...

(CROSSTALK)

BLITZER: I suspect, given his ability to raise money, Obama will have the luxury of doing what Donna is recommending.

(CROSSTALK)

BLITZER: I don't think McCain necessarily and the Republican are going to have that luxury this time around.

ARMEY: No, McCain will have to more carefully ration scarce resources. Obama, on the other hand, seems to have this enormous capacity to raise money. I have never seen anything quite like it.

So, if your message is shallow and superficial, it doesn't cost much to spread it thin. And he can do that.

(LAUGHTER)

BRAZILE: Oh, that's a good one. I heard that.

(CROSSTALK)

BRAZILE: Oh, yeah, yeah. But...

(CROSSTALK)

BLITZER: He is an amazing politician, when you think...

(CROSSTALK)

BLITZER: When was the last time you saw a politician show up, and 60,000, 70,000 people show up at a football stadium?

ARMEY: I think he is an amazing politician.

But you should understand, that's the moral equivalent of me saying he's an amazing bank robber. Politicians -- there's nothing about politics that should cause us to covet the behavior characteristics. He's a good -- Texas, we use another word. He's a good B.S.-er. He gets away with it. People are drawn to it. That wins elections. But it is not very deep and it's not very substantive.

BLITZER: Well, a lot of people disagree with you on that, including Donna.

(CROSSTALK)

BLITZER: They think there's a lot more substance than just that.

BRAZILE: I'm so glad that the Republicans are at least taking this approach, because that will give Obama even more states to carry in the fall. I'm looking forward to it.

BLITZER: The fact that he could beat a formidable opponent like Hillary Clinton, that's nothing to sneeze at.

(CROSSTALK)

ARMEY: No. I said he's a good politician. I just don't happen to believe it's a complement to tell somebody you are a good politician.

BLITZER: You were a good politician.

ARMEY: I was a -- I would like to believe I was a good office- holder, and I did my duty.

(CROSSTALK)

BLITZER: You got elected many times.

ARMEY: Because I did something that -- I have yet to see any evidence that Obama has or is able to do something substantive by making...

(CROSSTALK)

BLITZER: All right, we're going to leave it.

(CROSSTALK)

BLITZER: But give us one piece of evidence. BRAZILE: You know, I went back and had an opportunity to look at his record in the Senate in Illinois. This is a guy who not only has been a leader, whether it's putting forward the first earned-income tax bill, putting forward bills on veterans' health.

And, of course, in the United States Senate, he's been there for a short while, but he's already creating a track record. And I think, look, this is what the campaign is about. Let's debate it, and we will have an opportunity to talk about it.

BLITZER: And the good thing is, as I wrote on my little blog post at CNNPolitics.com today, there are major differences, substantive policy differences on national security, on economic matters, between these two candidates. And that's good, because we're going to learn a lot about both of them on the substantive issues in the weeks and months ahead.

ARMEY: But I must say that Reagan got it right with respect to Obama when he said, you ain't seen nothing yet. We haven't.

BLITZER: All right. Well, we will see.

ARMEY: I'm anxious to see something.

BLITZER: We will see what happens, guys. Thanks for coming in.

BRAZILE: I'm letting him have the last word today.

BLITZER: Today, but there's another day.

(LAUGHTER)

BRAZILE: I want him to come back.

BLITZER: Coming up: A slip of the tongue by John McCain today may leave a bad taste in his wife's mouth. We're going to tell you what is going on.

And later: a top McCain adviser on today's campaign sparring over the economy. I will be speaking live with Carly Fiorina. We will talk about voters. Should they be concerned about McCain's tax cuts and a lot more?

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

(COMMERCIAL BREAK)

BLITZER: On our Political Ticker today: A top Senate Democrat says Barack Obama is considering former military leaders in his search for a running mate. Kent Conrad of North Dakota met with Obama's V.P. search team today. Conrad says the team came in with a list of about 20 names that they discussed, including current and former lawmakers, as well as several ex-military leaders.

John McCain says his vice presidential search is easier than you might think. At a fund-raiser in Virginia yesterday, the Republican was asked about his vetting process, and he joked that all he needed to do was Google his prospective V.P.s. Obviously, there's more to it than that. But McCain went on to say, it's remarkable what you can find out these days on the Internet.

McCain was not joking when he experienced a small slip of the tongue today. He meant to say he would veto every bill with earmarks. But the word bill and earmarks somehow morphed into this:

(BEGIN VIDEO CLIP)

MCCAIN: I will use the veto as needed. I will veto every single beer -- bill with earmarks.

(END VIDEO CLIP)

BLITZER: An honest mistake, but it might raise some eyebrows in Cindy's McCain's family, that made its fortune on beer distribution across the country.

Remember, for the latest political news any time, you can check out CNNPolitics.com. That's where you can download our brand-new political screen-saver, where you can check out my latest blog post. Wrote one before the show. Posted right now.

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

CAFFERTY: The question this hour is: Would it be a good idea for Barack Obama to help Hillary Clinton pay off her campaign debt? She owes about $20 million.

Shane in Montreal says: "Absolutely not. This woman is supposedly more qualified than Obama to be president, but she can't even manage her own five-month campaign. Many of her die-hard supporters have been downright vindictive towards Obama. He owes her squat."

Ray says: "I think it would be a smart and a unifying move for Barack Obama to ask his donors to help Hillary Clinton. I swore I would never give a dime to Clinton again after the negative campaigning of the primary, but, if Barack asks me, I will give her some money."

Betty in Alabama writes: "She should have to pay him for all the ads the Republicans are running in my state featuring Hillary bad- mouthing Barack Obama. I just saw one. It's awful that she gave the GOP so much free swift-boat material. No, he should not help her at all. She has hurt him, and continues to."

Buster in Poughkeepsie, New York, writes: "The correct answer to this query is, nope, nada, not at all. Barack may look presidential, but he sure doesn't look anything like an ATM machine. Memo to Hillary: His name is Barack Obama, not Bank of America."

Jonathan in Connecticut writes: "Of course Obama should help Hillary pay off her debt. It's all in the Democratic family. He is a gentleman. Hillary supporters will be moved." And Nancy in Cunningham, Tennessee: "I feel a book in the air. Hillary may have to write a book about the campaign this year to pay for the campaign. She could call it 'One More Stop and I'll Get Off the Train.

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile, and look for yours there, among the hundreds of others that are posted -- Wolf.

BLITZER: Jack, thanks very much.