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Historic Supreme Court Ruling on Right to Bear Arms; U.S. Rewards North Korea; Oil Prices Soar, Stocks Sink

Aired June 26, 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, an historic U.S. Supreme Court ruling on your right to bear arms. John McCain and Barack Obama now face some new realities in the politics of gun control. We're going to hear from Senator Obama in a brand-new interview just granted.
Also, a divided high court drives home the importance of winning the White House. The next president could tip the ballots one way or another on explosive cases.

And dramatic new progress in the nuclear standoff between the United States and North Korea. President Bush seizes a rare chance to claim a diplomatic success. Critics are wary and some of them are even angry.

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

We'll get to that brand-new interview with Barack Obama shortly.

But first, it's the first time in American history that the Supreme Court has defined gun rights under the Second Amendment to the Constitution. And now people all over the nation are coming to terms with it. The impact is perhaps strongest right here in the nation's capital.

In its 5-4 ruling, the court struck down the District of Columbia's very strict ban on handguns. Two of the most famous people who work in this city, Barack Obama and John McCain, also are grappling with the decision of what comes next.

Let's bring in CNN Jessica Yellin. She's working this story for us.

Jessica, it's especially sensitive, I take it, for Senator Obama?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: It really is, Wolf. That's because Barack Obama believes that local government has a right to pass gun laws. But he's trying to be careful not to alienate pro-gun moderates.

(BEGIN VIDEOTAPE)

YELLIN (voice over): Barack Obama trying to thread the needle in this interview with Bloomberg TV.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: The D.C. handgun ban overshot the runway, that it went beyond constitutional limits. But it doesn't mean that local communities can't pass background checks.

YELLIN: In other words, he believes in gun rights...

OBAMA: I believe that the Second Amendment means something. That it is an individual right.

YELLIN: ... but also in gun laws.

OBAMA: There's still room for us to, I think, have some commonsense gun laws that are also compatible with the Second Amendment.

YELLIN: According to the latest CNN poll, 70 percent of Independent voters believe the Constitution guarantees a right to own a gun. That's a crucial voting bloc. Both Al Gore and John Kerry fumbled by appearing too liberal or awkward on the issue.

In 2006, Democrats regained the Senate in part by running a new breed of pro-gun Democrats, including Senators Jim Webb, Jon Tester and Bob Casey. If Obama is to win pro-gun voters, he'll have to overcome gaffes, including his infamous comments about bitter and frustrated Americans who "cling to guns," and this...

OBAMA: Hillary Clinton's out there, you know, like she's out in a duck blind every Sunday. She's packing a six-shooter.

YELLIN: Hunters say duck hunters don't use six-shooters.

John McCain isn't helping Obama with his wholehearted embrace of the court's ruling.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Obviously I'm very pleased about that decision. I had filed a brief, along with 50- some other senators. Senator Obama had declined to do that.

(END VIDEOTAPE)

YELLIN: So, Wolf, to make it clear, John McCain wholeheartedly embracing the Supreme Court's decision today. Barack Obama, again, trying to insist that while the Constitution guarantees an individual right to own a gun, it also allows local jurisdictions to regulate gun sales and gun ownership, a more nuanced position he'll work hard to communicate -- Wolf.

BLITZER: And we're going to hear from Senator Obama more on this issue and other issues. That interview coming up shortly.

Let's get to the other major story this hour. President Bush lifting some key sanctions and ready to remove North Korea from a terror blacklist. This after the communist regime handed over information about its nuclear program. It's a remarkable turnaround in Mr. Bush's policy toward a country he once branded as part of the "axis of evil."

Let's go straight to our White House Correspondent Ed Henry. He's working the story for us.

The administration moving cautiously, but dramatically in the aftermath of what's going on, Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf.

On one hand, the president is moving cautiously, skeptically, by saying he wants to verify that North Korea's actually going to follow through on this. But on the other hand, the White House is so aggressively trying to sell this deal, that some Republicans on Capitol Hill think they signed off on a very weak deal.

(BEGIN VIDEOTAPE)

HENRY (voice over): The president lifted trade sanctions against North Korea after of the communist regime finally handed over a dossier on its nuclear program. A rare chance for this president to tout success from working with allies.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Today's developments show that tough multilateral diplomacy can yield promising results.

HENRY: The president vowed to make sure North Korea's nuclear program really gets shut down before taking them off America's blacklist for state sponsors of terror.

BUSH: I'm pleased with the progress under no illusions that this is the first step. This isn't the end of the process, this is the beginning of the process.

HENRY: But the most senior Republican on the House Intelligence Committee assailed the deal, saying North Korea has lied before.

REP. PETE HOEKSTRA (R), MICHIGAN: I think the president and this administration, they are limping out of office when it comes to dealing with proliferation.

HENRY: Hoekstra charged that in an effort to improve his legacy, the president is making concessions now, while North Korea's only making future promises, and just partially detailing its alleged program to develop nuclear bombs. White House officials counter North Korea on Friday will bring down the cooling tower at the Yongbyon nuclear plant.

ED GILLESPIE, WHITE HOUSE COUNSELOR: That's a pretty tangible sign of progress. They're allowing American and IAEA inspectors to come in to the -- in Pyongyang and look at the core.

HENRY: Back in 2002, the president famously called North Korea, Iraq and Iran the "axis of evil."

BUSH: By seeking weapons of mass destruction, these regimes pose a grave and growing danger.

HENRY: An adviser to Democrat Barack Obama said the White House should see any success from the North Korea talks as a model for dealing with Iran.

WENDY SHERMAN, OBAMA FOREIGN POLICY ADVISER: They need to do the same thing with Iran. I think this is a very good example of why Senator Obama's call for direct negotiations make sense. When one negotiates in a tough, verifiable way, you can make progress.

(END VIDEOTAPE)

HENRY: Now, the White House fired back that the president has been trying to work with European allies in order to try and get Iran to the negotiating table, but they say the Iranian president has not stepped up. But I can tell you, the president's approach is not just getting on Iran, it's not just getting fire from the left, also from the right.

You have conservatives like Richard Perle, today a stinging op-ed in "The Washington Post" charging that a "... hapless president and his coalition can only look on while the Iranians rush to the finish line in their race for a nuclear weapon." -- Wolf.

BLITZER: We're going to get a lot more on this important story, an important news day today.

Ed Henry is over at the White House.

Senator Obama is making the same case as his adviser, that the progress in North Korea supports his policy of creating a diplomatic dialogue with U.S. adversaries.

(BEGIN VIDEO CLIP)

OBAMA: I think it also, though, underscores the importance of direct talks. And keep in mind that when we weren't talking to North Korea, that they were advancing their nuclear program. Once we began direct talks, we saw the break route (ph) that is bearing fruit today.

(END VIDEO CLIP)

BLITZER: Obama and Senator McCain say North Korea's nuclear declaration must be reviewed closely. McCain sounding an especially cautious note.

(BEGIN VIDEO CLIP)

MCCAIN: There are still questions about the plutonium that was at Yongbyon. There are still questions about the Syrian facility. So we'll have to have a look and see how they -- how the overall agreement is.

(END VIDEO CLIP)

BLITZER: Besides North Korea, four countries are on the U.S. list of states that sponsor terrorism. They are Iran, Cuba, Sudan and Syria.

Remember, we're going to be hearing directly from Senator Obama shortly. He just gave a new interview. We'll hear more of what he has to say.

And if you take a look now at the State Department Web site, you'll see North Korea, by the way, is still on that list of countries that supports terrorism. Congress has 45 days to green-light the president's request to remove North Korea. Only then will it be off the terror list.

Wall Street and Main Street are reeling from breaking news right now. Gas prices could soon be going up again as stock values go down.

Today, oil prices hit $140 a barrel for the first time ever before slightly retreating. As oil soared, stocks sank. The Dow plunging more than 350 points, or 3 percent.

Our personal finance editor, Gerri Willis, is in New York right now.

Gerri, I guess the simple question is, what is going on?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, a great question, Wolf.

An OPEC official today said that oil prices could go to $170 a barrel by the end of the summer. This, after assurances we had over the weekend that OPEC would be doing what it could to increase supply, and therefore lower prices.

If you'll remember, Saudi Arabia said they would produce another 200,000 barrels. So very surprising there.

Another issue, Libya saying it may cut production. But the big headline here, what this OPEC official had to say about where prices could be going. This would represent a dramatic increase over today's close of $139.64 -- Wolf.

BLITZER: Gerri Willis watching this story with enormous ramifications for all of us. That's pretty scary stuff.

A programming note. We had planned to bring you an interview today with House Speaker Nancy Pelosi, but she lost her voice. I spoke with her earlier, I could barely understand what she was saying. She was clearly suffering.

A special thanks to all of you who sent in your iReport questions. We're going to let you know when we can reschedule our interview with the speaker. That's going to be sooner rather than later.

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

She sounded awful when she called me on the phone to tell me -- to apologize why she couldn't do the interview today.

JACK CAFFERTY, CNN ANCHOR: Yes, that's too bad.

BLITZER: Yes.

CAFFERTY: I -- you know, probably got a little cold or something.

BLITZER: I recommended hot tea. A little honey.

CAFFERTY: Well, I'm sure she'll be up and around then.

BLITZER: Yes.

CAFFERTY: Dr. Blitzer to the rescue.

BLITZER: Some people recommended cognac.

CAFFERTY: With a little hot tea perhaps.

BLITZER: Yes.

CAFFERTY: We'll get in trouble here.

It turns out John McCain doesn't work weekends. Well, sort of.

The Politico has a story that McCain has held only one public campaign event on a weekend since he wrapped up the nomination in February. That's more than four months ago.

McCain's aides say he uses time on the weekends. He goes back to Arizona, he can rest, work on policy, meet with his aides. McCain has also hosted reporters and donors over the weekends. He's appeared on "Saturday Night Live," and he's visited our troops in Iraq and at Walter Reed.

His advisers say McCain will campaign on weekends for a lot of the upcoming summer, including a speech in Washington and a fund- raiser in Kentucky, both scheduled for this coming Saturday. Nevertheless, it's a topic that raises some eyebrows, particularly because of McCain's age.

Political experts suggest the decision to not campaign on weekends was not the best use of all that extra time McCain had when the Democrats were still going after each other during the primary fight. Ed Rollins, who ran Ronald Reagan's re-election campaign, says it's easier to draw big crowds on weekends when people are not working. Rollins says McCain could have used that time to go to the less-populated areas and "rejuvenate the Republican base." His defenders, though, point out it's such a bad environment for Republicans right now, that McCain could have exhausted himself and not had very much to show for it.

Barack Obama, meantime, has made seven weekend campaign appearances so far this month alone.

Here's the question. Can a candidate be elected president without campaigning on the weekends?

Go to cnn.com/caffertyfile. You can post a comment on my blog. Wolf, you work weekends.

BLITZER: I do. You don't like to work weekends though.

CAFFERTY: Absolutely not. I need my rest. I'm older than you are.

BLITZER: So you identify with John McCain.

CAFFERTY: John and I need our naps. I'm old.

(LAUGHTER)

BLITZER: You're not old. You're a young guy. Stand by, Jack.

As the stock market tanks, Barack Obama talks about economic revival in a brand-new interview that you're going to see shortly right here in THE SITUATION ROOM.

Also, Obama and Hillary Clinton are just hours away from a show of togetherness that could help one of them more than the other. We'll explain.

Some conservatives who met with John McCain today are complaining about the things they did not hear.

And the future of the Supreme Court and decisions that matter to so many Americans now resting in the hands of either Obama or McCain.

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

(COMMERCIAL BREAK)

BLITZER: Remember, we're going to be playing for you a new interview that Senator Obama has just granted. He's speaking out on a whole host of issues, including the decision today by the U.S. Supreme Court, North Korea, what's going on there, and especially the economy. He's got some ideas. That interview is coming up.

And we'll also get immediate reaction from the McCain campaign. A top McCain official will be speaking with us as well.

Stand by for all of that. That's coming up.

Meanwhile, Obama and Hillary Clinton will be joining forces tonight to raise political cash. It's a closed-door event before they deliver the money shot of them together in a small town called Unity, New Hampshire. The site deliberate.

Our senior political correspondent, Candy Crowley, is here watching all of this.

I guess a lot of people are asking this question: Who needs whom more? Does Obama need Hillary Clinton more or vice versa?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Let's say at the top they both need each other a little bit. But Barack Obama raised a quarter million -- a quarter billion dollars during his primary race. He is now running in our Poll of Polls about seven points ahead. Some polls had him 15 points ahead.

Hillary Clinton needs a place in the party, wants to affirm her place in the party. She cannot be seen as sitting on her hands during this election. I think you could make an argument that she needs him, she needs this unity, and needs to be seen as promoting this unity, a lot more than he does.

BLITZER: The -- and so let's just recap. There will be a fund- raiser, both of them will be there tonight with her big fund-raisers mostly. And she's going to be encouraging them to start raising money for Barack Obama, and that will be followed tomorrow. When you say the money shot, they'll be together at this rally in Unity, New Hampshire.

CROWLEY: Right.

BLITZER: What about Bill Clinton? Will he be there tonight? Will he be there tomorrow? What's his story?

CROWLEY: No, and no. He has been traveling. They will -- everybody says to me, look, he'll come along. You know he's going to do this.

There were some rough feelings post the primary season. Clinton thought he was framed as a racist. He thought that Obama dissed his, you know, 1990s administration, and his wife lost. So he's kind of getting over what he thinks has been a triple blow to his legacy.

We should add that tonight we are told is not a fund-raiser. If somebody brings a check, great. This is sort of a, "Here are my guys. Let's introduce them to your guys, and let's all kind of come together."

BLITZER: And let's all go out and raise money.

CROWLEY: That's right.

BLITZER: Candy will be watching this for us tonight.

John McCain is courting voters today in the swing state of Ohio, holding one of his regular town hall meetings. Afterward, he met privately with a handful of Ohio conservatives, hoping to stir up some enthusiasm for him that's been lacking within the GOP base.

Let's bring in our Dana Bash. She's covering his campaign.

Dana, what are you hearing about McCain's meeting with these conservatives?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, you know, this meeting just wrapped up. In fact, I spoke to one of the Ohio conservatives who was invited to the meeting from -- by the McCain campaign. Remember, this is a private meeting. No press. Nothing. It was just Senator McCain, obviously some of his staff, and about a handful of conservatives from Ohio who really clearly, the McCain campaign understands, have their ear to the ground in terms of the kind of enthusiasm, or more importantly and more of a dangerous sign for Senator McCain, the lack of enthusiasm among conservatives, among social conservatives in the state of Ohio for Senator McCain.

Now, these (INAUDIBLE) were called last night, and, you know, it's no secret that Senator McCain has had a problem -- or has had historically a problem with conservatives because of his support for campaign finance reform and other positions, like support for embryonic stem-cell research that he has taken. So what I was told by several of these participants before the meeting is that they were really going to say, look, Senator McCain, you've got to talk more about our issues.

He had a public town hall, for example, today in Ohio. He spoke about a host of issues -- about taxes, about Iraq, about gas prices, as you can imagine, and he didn't talk at all about issues that they care about -- abortion, things like that. So that's one of the things that I was told that they were really going to hit him hard on.

And I was told by this one participant who just came out of this meeting that this meeting was congenial, frank, direct and candid. So that's the way this was described. And looking for some more information as soon as they get off the air -- Wolf.

BLITZER: I know you'll get it for us.

Dana and all of us remember that conservative base in Ohio was a critical element...

BASH: Absolutely.

BLITZER: ... in helping get President Bush reelected, because they came out enthusiastically, and did a tremendous service for the current president.

BASH: And Ohio was the final vote that put President Bush over the edge for the election.

BLITZER: If Kerry would have carried Ohio, it would have been a different ballgame altogether.

BASH: Exactly.

BLITZER: He would have been president of the United States.

All right. Dana's going to watch this story for us.

And you're going to be hearing shortly from Senator Barack Obama. He talks about the economy, what the government needs to do, and what he thinks John McCain would do wrong. We'll also get immediate reaction to Senator Obama from the McCain campaign.

And to the winner go the spoils. Whoever becomes president could dramatically tilt the current balance of the U.S. Supreme Court.

Stick around. You're in THE SITUATION ROOM.

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, North Korea reveals secrets on its nuclear program. And CNN has special access to what's going on. Our Christiane Amanpour is allowed to report from North Korea. She's there, North Korean TV. She'll be among a handful of journalists to watch the destruction of a major symbol of North Korea's nuclear program.

Stand by. We'll go there.

One Republican governor vs. another -- California's Arnold Schwarzenegger and Florida's Charlie Crist are at odds right now over offshore oil drilling. But wait until you hear what Schwarzenegger said about Republicans right in front of Governor Crist.

And we're fact-checking something said right here in THE SITUATION ROOM yesterday. As a state senator in Illinois, did Barack Obama really vote that a baby born alive after a late-term abortion can be terminated?

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

Today, Barack Obama is talking about a host of issues, including the U.S. Supreme Court's historic ruling on handguns and North Korea's major revelations on its nuclear program.

He spoke with Bloomberg TV and Bloomberg TV reporter Peter Cook just a little while ago. And he had a lot to say about the economy, what he would do right, and what John McCain, what he says John McCain would do wrong.

(BEGIN VIDEO CLIP)

OBAMA: We are going to have to get serious about reinventing the automobile, reinventing our electricity grid. I want to spend $150 billion over 10 years in solar, wind, biodiesel, plug-in hybrids, conservation, energy efficiency.

If we do those things, if we get that right, and we create a more efficient health system, as I have proposed, and we fix our school system, you know, those can be the building blocks of long-term competitiveness, and we can create jobs in the future. But we're going to have some short-term pain.

PETER COOK, BLOOMBERG: Well, there are a bunch of areas I would love to follow up on, but let's follow up on one specifically, the auto industry.

OBAMA: Right.

COOK: You had the GM CEO, Rick Wagoner, here. He said directly to you some of the things the government could do to help the auto industry right now, pay money, spend federal dollars on basic research, also incentives to allow Americans to buy the cars of the future.

First of all, are you prepared to do that? Are you prepared to go even further, some people are talking about perhaps federal dollars for this industry, the loan guarantees that Chrysler wanted back in the '80s?

OBAMA: Well, I think that let's start with those two things that you mentioned at the top. I do think that it's going to be important for the federal government to invest.

And I'm glad, for example, that John McCain also wants to invest in technology around electric cars. I think a $300 million bounty is the wrong way to go about it. When we decided we were going to send a man to the moon, we spent in today's dollars about $100 billion, not $300 million.

We're have to make a serious investment in basic research and technology around electric cars, plug-in hybrids, and our electricity grid, so that all those things are fitting together. I do think that incentivizing consumers, so that they can absorb some of the higher costs on the front end of more fuel-efficient cars, even though they will get that money on the back end in less gas expenditures, I think that's important as well.

If we do those two things, I think that the -- the auto industry here in the United States is ready to transition. They know they have got to do it. They're already making some investments. We need to provide them some help. And, if we do, then I think they can compete with anybody.

COOK: Sir, as you and I are talking, I'm hearing in my ear the AFL-CIO has officially endorsed you, organized labor, of course, part of the equation with the auto industry.

OBAMA: Right.

COOK: Does organized labor have some responsibility for the problems in the auto sector as well?

OBAMA: Well, look, ultimately, management is in charge of the auto industry. And, you know, I think some poor decisions were made in the past. I think that you have got some smart, enlightened auto executives who are in place now and recognize that they need to build the cars of the future.

I think what's happened in the UAW, and all industrial unions, is a recognition we now are in a global competition, and that we can't have the old adversarial relationship between management and labor. There has got to be cooperation. Labor is entirely justified to say that they want to share in the rewards when companies are profitable. But labor, I think, also recognizes that there won't be any rewards if companies go under or jobs are being shipped overseas.

So, I think there's -- in this new global economy, there's a natural corrective if labor is not working cooperatively, because jobs will be lost. And they have got every incentive to make sure that these companies are successful.

COOK: Sir, just a couple moments left here. I want to let you have your chance to make your pitch to those people in the business community who see your record, your experience, and they have real questions about whether Barack Obama should run the world's largest economy, and, if he does run the world's largest economy, what it means for their businesses.

OBAMA: Well, look, I have now had two successive days meeting with some of the top CEOs in the country.

And, if you talk to them, I think they will come -- they will tell you they came away with enormous confidence about my ability to move this economy in a better direction and to bring all the parties together to do what needs to be done.

If you look at my track record, I have got a terrific relationship with the business community in Chicago. I always had a good relationship with the business community in Illinois. And it was based on the fact that I listen, and I learn, and that I don't come with a particular ideological prescription in terms of how we should move forward.

Now, what -- I'm honest -- I'm very honest with CEOs. I will say, your individual income tax will probably go up. We are going to roll back the Bush tax cuts, back to the levels they were in the 1990s, when well-to-do folks, like myself and you, were doing pretty well.

But, when it comes to business growth, when it comes to making sure that we are stabilizing our deficit, that we're not running up another trillion or $2 trillion or $4 trillion worth of national debt, when it comes to being serious about reining in inflation, when it comes to making sure that we're getting a better bang for our federal buck, so that we're rooting out waste and corruption in the federal government, and then making some serious investments in energy, education, science and technology, those are the recipes for long-term economic growth.

And, you know, what's interesting is, there is a consensus among business, among labor, among academics about what needs to be done. What has been lacking in leadership. And that's what I intend to provide as president.

(END VIDEOTAPE)

BLITZER: Let's get some immediate reaction right now from the McCain campaign.

Joining us is Nancy Pfotenhauer. She's a top strategist for Senator McCain.

Nancy, thanks very much for coming in.

NANCY PFOTENHAUER, MCCAIN CAMPAIGN POLICY ADVISER: I'm delighted to be here.

BLITZER: All right.

So, what's wrong with the wealthiest Americans going back to the tax rate they had in the '90s during the Clinton administration? They were making a lot of money. Yes, they were paying more taxes. But what's wrong with going back to that tax rate, as Barack Obama suggests?

PFOTENHAUER: Well, first of all, that tax rate -- the people that are paying that tax rate, about 55 percent of those are small businesses.

So, you have more than the majority of small businesses who file as individuals, Wolf. And, so, they are caught in that higher tax structure. And the problem with that is that 70 percent of our jobs are created by small businesses. So, when you slam small businesses, you slam job creation, which is the last thing you want to do in a soft economy.

And he's got a really nasty cocktail, frankly, for small businesses, because you take that increased income tax rate, you add on an increase capital -- or a capital gains rate that will pop back up, and then you add in his health care mandate. He's going to define a -- kind of a gold-plated benefits package, and then insist that all employers provide it.

Well, if you're a small business, that's probably going to mean that you can't employ as many people. So, I think there's a particular problem for small businesses coming out of Barack Obama's economic plan. And I think, overall, there's a huge problem from an economic growth standpoint.

BLITZER: Well, what -- he says he will spend $150 billion over 10 years to develop alternative energy sources, given the gas crisis right now. Do you think Senator McCain would do something like that as well?

PFOTENHAUER: Well, it is kind of funny, Wolf, because, when he describes it, it's like one of my colleagues called it. It's like saying that you're for puppies, kittens and sunshine.

Saying that you're for hydro and solar and alternative fuels, well, everybody is for that, and everybody hopes that those technologies will move forward. What Barack Obama doesn't have is any plan in the short term. I mean, he's never really broken from your standard...

BLITZER: But does Senator McCain have a plan to develop alternative energy sources?

PFOTENHAUER: Yes. Oh, absolutely.

BLITZER: How much would he spend as an investment?

PFOTENHAUER: Well, he's talked, for example, about $2 billion a year for the next 15 years to clean coal technology.

BLITZER: So, that would be $30 billion over 15 years?

(CROSSTALK)

PFOTENHAUER: Yes. And he has talked about investing in other ways as well, and talking about providing a $5,000 credit for any customer who purchases a zero-emission vehicle.

There's a lot of what Senator Obama was saying that actually was an endorsement of proposals that Senator McCain has already made. What's missing here is, he has no plan to increase domestic production. He has no plan to help in the short term. He's against coal. He's against nuclear. He wants to tax oil companies. This all means a -- has huge implications for consumers as far as higher prices.

BLITZER: We're -- we're almost out of time.

But, very quickly, he ridiculed the $300 million award -- he called it a bounty -- to develop a new car battery that would be more fuel-efficient and safer to the environment. Go ahead and respond.

(CROSSTALK)

PFOTENHAUER: Well, it's typical. First of all, he supports prizes on his Web site, and then attacks John McCain for advocating one.

Secondly, we can get, with $300 million -- by setting it up this way, you only pay it, the taxpayer dollars only you go out if you achieve your objective. That's not true with federal research.

BLITZER: All right.

PFOTENHAUER: And Senator Obama's plan spends hundreds of billions of dollars, with no guarantees on results.

BLITZER: We have got to leave it right there.,

Nancy Pfotenhauer joining us from the McCain campaign, you will be back soon. Appreciate it.

PFOTENHAUER: Thank you.

BLITZER: We're investigating the political punch from a series of split decisions by the U.S. Supreme Court. So much is at stake right now for the next president of the United States.

Some Republicans fear John McCain is sounding defeatist about the party's future.

And we're reading the fine print of Barack Obama's energy plan and checking his facts.

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

(COMMERCIAL BREAK)

BLITZER: Let's back with Carol. She is monitoring some other important stories incoming into THE SITUATION ROOM right now.

Carol, what is going on?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, in Iraq, three U.S. Marines are among at least 20 people dead west of Baghdad. It happened in the Anbar Province, as a suicide bomber attacked a meeting of tribal sheiks. Elsewhere, in the northern city of Mosul, at least 10 people died after two bombings ripped through a busy market.

The U.N. Children's Fund says more than four million Ethiopians are desperately in need of food because of drought. Some of them, including children, are starving to death right now. UNICEF is appealing for $49 million to bring emergency food and supplies to the East African country. And they hope that happens over the next few months.

This fashion statement just in from the Vatican -- the rumors are so not true. Pope Benedict's bright red loafers are not from Italy's legendary designer Prada. The Vatican newspaper says high fashion footwear would not be consistent with the pontiff, described as a simple man, despite his showy shoes. As the newspaper puts it the pope does not wear Prada, but priced. They don't say who made the shoes, though.

BLITZER: I saw those shoes when I saw him when he was at Catholic University a few months ago. And I didn't ask him who made them.

COSTELLO: You didn't?

BLITZER: No, I didn't that question.

(CROSSTALK)

COSTELLO: Did you look? Because Prada -- you can tell a Prada, Wolf.

(CROSSTALK)

BLITZER: I can't. But I didn't ask him any questions. I just stood there, sort of in awe. All right, thanks very much, Carol, for that.

In our "Strategy Session": Barack Obama says he has plans to campaign in parts of the country not used to seeing Democratic presidential candidates. But here's the question. Is he spreading his resources too thin?

And a candid admission from John McCain about his party's prospects to pick up congressional seats. Hilary Rosen and John Feehery, they will tackle that, and more, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: It could be a radically effective campaign strategy or a radical failure. Barack Obama's campaign thinks neighbors talking to neighbors or friends talking to friends about Barack Obama is far more effective than any television commercial.

Let's discuss in our "Strategy Session."

Joining us, the Democratic strategist Hilary Rosen. She's the political director for TheHuffingtonPost.com. And Republican strategist John Feehery.

Are you nervous that Barack Obama could stretch himself too far by going out and campaigning in some of these traditionally red states, instead of focusing his money, his campaigning, his effort, his own personal presence in those states that are the traditional swing states?

HILARY ROSEN, DEMOCRATIC STRATEGIST: Well, his personal presence only goes so far. He only has so many hours in the days the 17 weeks or something until the election.

The money, we will have more money than we have ever had before. So, I'm less worried about that. There's a little bit of a concern, I think, among Democrats that everything is going to be different this year. On the other hand, the Obama campaign team has really proven that they can do things differently successfully.

This door-to-door grassroots campaign that they waged in the primary, that they're going to do now, has the effect of doing something we haven't had in the Democratic Party in a long time, local leadership and sort of connected community passion.

BLITZER: And there's no doubt, John, he's going to have a lot more money than John McCain, because he's going to raise money. And McCain's going to be limited to that $85 million in public financing. So, he could spend money in some of those traditionally red states...

JOHN FEEHERY, REPUBLICAN STRATEGIST: He could.

BLITZER: ... and, in effect, force the McCain campaign to use some of their scarce resources in those states.

FEEHERY: Which I think the McCain campaign is too smart to fall for that trap.

They're thinking Missouri, Virginia, North Carolina, North Dakota. These states, they are not going to win. What you're seeing with the Obama campaign is, they're getting a little arrogant, a little cocky. They think they're going to -- they have already got the presidential seal. They have got the...

(CROSSTALK)

BLITZER: They took that away.

FEEHERY: They're measuring the drapes.

BLITZER: That was a one-shot deal.

(LAUGHTER)

FEEHERY: They think they are going to win these Republican states. They think that everything's changed.

And the fact of the matter is, they didn't actually win any big states in head-to-head with Hillary Clinton. So, we're not sure how strong they are. They won a lot of caucus states, where there weren't that many -- Hillary wasn't really playing in.

BLITZER: As a strategist, is it more effective -- what this Obama campaign manager says, "A human being talking to another human being who is a swing voter, trying to figure out what to do in this election, is a very powerful thing."

What's more effective, the ads that they spend millions, sometimes hundreds of millions, of dollars on, or friends or associates talking to friends and associates?

ROSEN: Well, we don't want to bite the hand that feeds us with our company here, our cable company.

(LAUGHTER)

ROSEN: But there's no question that person-to-person contact about the passion for a candidate is more effective.

BLITZER: Do you agree?

ROSEN: It happens every time.

FEEHERY: In this world of TiVo, hand-to-hand, (INAUDIBLE) marketing, viral marketing is much more effective.

BLITZER: So, you both agree on that?

All right. Here is a sound bite from John McCain speaking about the conservative brand right now. And I want to discuss this. So I will play it.

(BEGIN AUDIO CLIP)

MCCAIN: Right now, if the election were tomorrow, we would lose -- we Republicans would lose seats in both the House and the Senate. That's just a fact."

(END AUDIO CLIP) BLITZER: All right, that's straight talk from John McCain. If the election were right now, the Republicans would lose more seats in the House and Senate.

Should he be saying that right now? I know he's a straight- talker, but what do you think?

FEEHERY: Well, I mean, it's -- he is a straight talker. And the fact is we will probably lose a couple seats in the House and a couple...

(CROSSTALK)

BLITZER: A couple, is that all?

FEEHERY: I'm not sure what the exact number will be. But I think it's straight talk.

The fact of the matter is, the question you asked is, how is the brand doing? The Republican brand right now is not that strong. And John McCain knows that. Part of this is also making sure that people know that, when the election comes, it will probably be -- the Congress will probably be dominated by Democrats. So, if you want a check to -- a blank check to give the Democrats, elect Barack Obama.

If you want someone who is going to keep the Democrats honest, elect John McCain.

BLITZER: What do you think?

ROSEN: Well, two things.

It's incredibly disconcerting to Republicans running in those down-ballot races to have the top of the ticket say, sorry, guys, we're in really bad shape. You want inspiration. You want energy. You want a plan.

And I think that the conservative brand, the plan isn't working, sort of the three stools of the conservative -- the three legs of the conservative stool. It's fiscal discipline, which they're failing at. We have record deficits. National security, the GAO report said we're failing on all of our measures in Iraq. And then moral values, which here had historical been a pretty strong element of conservative party, well, you know, the new generation of evangelicals and conservatives are finding they don't care that much about abortion and gay rights.

So, sort of the three things that got conservatives exercised I think are all in trouble.

BLITZER: I think what she meant was strong national defense, cut taxes, and moral values, that's brought the Republicans to where they are right now, rather effectively.

FEEHERY: And it has. And they had a pretty good run. And I think, actually... ROSEN: And the run is over.

FEEHERY: Well, if you look at what's happening right now, actually, Republicans are getting some traction on gas prices, because people are nervous about the Democrats coming in and making gas prices even higher.

The fact of the matter is that we're making some progress. We're making some traction. If you -- the overconfidence of the Obama campaign -- you would be surprised in this election. I think the Republicans are going to do a lot better than people think.

BLITZER: Guys, thanks for coming in.

ROSEN: OK. Thanks.

BLITZER: Ralph Nader accused Barack Obama of talking white, and now he's going after the Democrat once again on race.

Arnold Schwarzenegger has some fighting words for a fellow Republican who disagrees with him on offshore oil drilling.

And startling accusations that the Pakistani government was behind an attempt to kill the Afghan president, Hamid Karzai.

We will be right back.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the "Hot Shots" coming in from our friends over the Associated Press, pictures likely to be in your newspapers tomorrow.

In Pakistan, a soldier guards a burning pile of drugs on the international day against drugs and trafficking.

In Afghanistan, a young vendor selling chickens waits for customers.

In South Korea, protesters try to drag police buses out of the way while rallying against U.S. beef imports at the presidential house.

And in Bulgaria, look at this. A black bear takes a leisurely swim on a very hot day in Bulgaria -- some of this hour's "Hot Shots," pictures worth 1,000 words.

On our Political Ticker today: Ralph Nader is keeping his sparring match going with Barack Obama. The independent presidential candidate issued a statement today repeating his claim that Obama is not willing to tackle the -- quote -- "white power structure."

Obama dismissed that charge yesterday and Nader's suggestion that he's trying to -- quote -- "talk white." Obama contends Nader is simply trying to get attention for his own presidential campaign.

Let's go right to Jack Cafferty for "The Cafferty File" -- Jack.

CAFFERTY: He's starting to sound like Jesse Jackson, isn't he?

BLITZER: Yes. He's not nice to Barack Obama.

CAFFERTY: Hey, Ralph, it's all over, buddy. Go find something else to do.

The question: Can a candidate be elected president if he doesn't campaign on the weekends? We have learned that John McCain has an aversion to campaigning on the weekends. He does some other things that are election-related, but he doesn't do a lot of campaigning.

R. writes this: "The heights by great men reached and kept were not attained by sudden flight, but they, while their companions slept, were toiling upward in the night." That was written by Henry Wadsworth Longfellow. R. goes on to say: "Both Obama and McCain are good men who have earned the right, in different ways, to contend for the presidency. But this is the people's government, and the people want to know, who will work hardest for us?"

Mickie in Philadelphia: "I don't think it would matter if it were only occasionally taking a weekend off, but I definitely think, in order to hit the critical voters, those who are working, mothers who are running around taking care of their children, you have to be willing to get out there with those people when they are available."

Chris in Ocean Grove, Massachusetts: "If the candidate says all the right things during the week, why not? As long as, when he is the president, during the weekends after he wins, he works at being the president and not clearing brush on some ranch."

Chris, I apologize. I butchered that pretty good.

Dave in Mission Viejo, California: "Not campaigning on weekends is a great idea. Not campaigning at all until about October 15 would be better. I have heard so much from the candidates, I am beginning to think I could not vote for anyone. My plea to McCain and Obama is, please, give yourselves and the rest of us a break. With three debates and two to three weeks of campaigning, I am confident these guys could tell us all they have to say."

And Andrew in Missouri writes: "If McCain feels that he doesn't need to campaign on weekends, that's fine. But when Obama starts swinging McCain around by his funny-looking tie in November, we'll know the reason why."

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

I liked the picture of that bear swimming.

BLITZER: I did, too.

CAFFERTY: Pretty cool.

BLITZER: All right, Jack, thanks.