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North Korean Cooling Tower to be Destroyed; Supreme Court Rules on Second Amendment; Clinton-Obama Unity Tour

Aired June 26, 2008 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: All right, Jack, thanks.
To our viewers, you're in THE SITUATION ROOM.

Happening now, North Korea hands over details of its nuclear program and President Bush responds by lifting some U.S. sanctions. But the hard part of the deal may still lie ahead.

Also, for the first time in history, the U.S. Supreme Court defines the right to bear arms in a ruling that could mean more guns in your city.

And Arnold Schwarzenegger throws a fellow Republican governor under the bus, sort of, in a major GOP embarrassment.

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

We're following a major movement today in long-running efforts aimed at trying to dismantle North Korea's nuclear program. Just a short time ago in Beijing, Pyongyang handing over a long-awaited accounting of its nuclear activities. President Bush is calling it -- and I'm quoting now -- "the beginning of the process." He now says he'll remove North Korea from the list of states that sponsor terrorism and call for the lifting of some sanctions.

Our chief international correspondent, Christiane Amanpour, is covering all these dramatic events. She will be in North Korea tomorrow, where she'll witness another major step scheduled to take place.

(BEGIN VIDEOTAPE)

CHRISTIANE AMANPOUR, CNN INTERNATIONAL CORRESPONDENT: I'm reporting to you from North Korean television, here inside the studio, with a backdrop -- a painted backdrop of Pyongyang behind me. There this is a very rare occurrence and we are invited, amongst a small group of journalists from the six parties who are party to these negotiations that are aimed at disarming North Korea.

On Friday afternoon North Korea time, a Yongbyon nuclear plant, North Koreans are going to implode -- collapse their cooling tower -- the distinctive tower that is an important feature of the nuclear reactor.

Experts are saying that this, coupled with the systematic disabling of the Yongbyon nuclear plant ever since last summer, is a giant step forward in ending all the activities at Yongbyon.

Yongbyon, don't forget, is where North Korea, over the years, has been extracting plutonium and has been able to make several nuclear devices with that plutonium.

I'm Christiane Amanpour, CNN, in Pyongyang, North Korea.

(END VIDEOTAPE)

BLITZER: U.S. officials say they remain wary about whether North Korea is serious about ending its nuclear activities.

Let's go to our state correspondent, Zain Verjee.

She's following all of this for us -- Zain, what are you learning about what is included in this deal as opposed to lots of stuff not included?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, just getting the document is a breakthrough. But there is a lot we don't know.

(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Today, we have taken an important step in the right direction.

VERJEE (voice-over): That step, a 60-page declaration North Korea handed over confessing some of its nuclear sins from 1986. Senior State Department officials tell CNN North Korea admits to having roughly 40 kilograms of plutonium. U.S. officials say that's enough to make at least seven nuclear bombs. They've already tested one. The U.S. believes North Korea could have up to 50 kilograms of plutonium.

North Korea has also agreed to tough inspections so the U.S. can double check its claims.

A win for Secretary of State Condoleezza Rice and her top North Korea diplomat, Christopher Hill.

CONDOLEEZZA RICE, SECRETARY OF STATE: Having direct talks between the United States and these very difficult countries does and can produce results. One has to be a tough negotiator.

VERJEE: But there's a lot missing from the declaration -- no details about how many weapons or where they're hidden. Nothing on its suspected uranium enrichment program and no information on what nuclear secrets North Korea may have shared with Syria or others.

UNIDENTIFIED MALE: We've got to be very careful and to ensure that this is not insufficient. Because if it is, what we're looking at is a continuation of this process that will take many, many more years to come to conclusion.

VERJEE: The next step, North Korea must hand over its weapons. In an op-ed, Secretary Rice admits North Korea may end up cheating and keeping them.

Then what?

"It's simple," Rice says. "We will reimpose any applicable sanctions we have waived, plus add new ones."

(END VIDEOTAPE)

VERJEE: Diplomats are going to meet on Monday in China to work out how to verify North Korea's claims -- Wolf.

BLITZER: Zain, thank you.

North Korea is still being punished by the United States and the United Nations for nuclear proliferation, its nuclear test of October 2006 and many human rights violations. The remaining sanctions include no economic assistance except for humanitarian aid, a ban on all weapons sales and luxury goods, and a ban on all imports from North Korea.

President Bush says he's under, in his words, no illusions about North Korea. But some critics say he's not being tough enough with Pyongyang.

Joining us now, the former White House homeland security adviser and the relatively new CNN national security contributor, Fran Townsend.

Frances, thanks very much for coming in.

FRANCES FRAGOS TOWNSEND, FORMER BUSH HOMELAND SECURITY ADVISER: Good to be here.

BLITZER: One of those critics, President Bush's former United Nations ambassador, John Bolton, who tells the Associated Press, "It's shameful. This represents the final collapse of Bush's foreign policy."

And that's from a conservative Republican.

TOWNSEND: You know, Wolf, I think John Bolton's reaction is not surprising. But let's be honest, the North Koreans didn't get very much today. They were taking -- the president announced in 45 days they'll take them off the state sponsor list. Well, there's no evidence they've committed an act of terrorism since 1987.

We've removed the trade...

BLITZER: That's when they blew up a South Korean jetliner.

TOWNSEND: That's exactly -- a passenger liner. That's right.

BLITZER: Yes.

TOWNSEND: Then, well, there's also the Trading with the Enemy Act. They removed three of the sanctions related to that. Two of them, the president reimposed -- two additional ones -- by executive order that he signed today.

And so the reaction of the United States government has been very modest to what North Korea has done so far.

BLITZER: A lot of people will agree that diplomacy in this case, diplomacy with Libya in dismantling its nuclear weapons program, apparently have worked and worked pretty well.

So the question is: Why not engage in this kind of direct dialogue with Iran and try to get them to do the same thing?

TOWNSEND: Well, you know, as Steve Hadley acknowledged in his briefing, that is what we're trying to do through the E.U.-3 plus (INAUDIBLE).

BLITZER: But why not directly, the United States and Iran?

TOWNSEND: Well, because the circumstances are a little different. As you know, Iran is the largest state sponsor of terrorism in the world. They are giving money in support to Hezbollah and Hamas. We know that Iran is transferring weapons into Iraq. They're being used against Iraqi and coalition forces.

And so, for a lot of reasons, it's a different circumstance. We are trying multilateral negotiations. But you can -- there are good reasons why we don't talk to them directly, given their current ongoing terrorism activities.

BLITZER: Fran Townsend, thanks for coming in.

TOWNSEND: You're welcome.

BLITZER: Jack Cafferty is join us for "The Cafferty File" once again -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, after a rough and tumble primary season, the Democrats are now hard at work trying to heal their wounds. "The New York Times" reporting Barack Obama and Hillary Clinton are working their way through a stack of complicated issues with the help of one of Washington's top lawyers.

Sort of like a couple in a troubled marriage going through counseling.

On the table are topics like how to repay Clinton's campaign debt, what her role should be at the Democratic convention. Aides say no one has raised the issues yet of a potential V.P. slot for Hillary or what to do about Bill Clinton, who apparently is still pouting.

When it comes to Clinton's debt, which is estimated at more than $22 million, including $10 million of her own money, Obama has asked his big dollar fundraisers to help her out.

However, he says he's not going to go to the small dollar donors via e-mail to pitch Hillary's problems, since their budgets are tighter. That's a quote from Obama. Some Clinton backers are disappointed Obama hasn't made the symbolic move of writing Clinton a check himself for $2,300, which is the maximum allowed. Others think Obama hasn't made much of an effort to hire Clinton staffers.

As for the convention coming up, the two sides are negotiating which night Clinton should make a primetime speech and if her name should symbolically be placed in nomination. The talks have been described as complicated, but not hostile.

Meanwhile, Clinton and Obama will have a joint meeting with some of her top donors tonight in Washington. That's a private affair. And then tomorrow the two appear in public at that much ballyhooed rally in Unity, New Hampshire.

So here's the question this hour: What should Hillary Clinton's role be at the Democratic National Convention?

Go to CNN.com/caffertyfile. You can post a comment on my blog.

It isn't a love fest yet, Wolf.

BLITZER: No.

And what should Bill Clinton's role be at the Democratic National Convention?

What do you answer to that, Jack?

CAFFERTY: I don't know. I mean he hasn't even -- he hasn't even been seen for two or three, four weeks now. And the suggestion is that he's still pouting over the fact that his wife lost. He was characterized by some as making racial comments and his legacy was somewhat tarnished. So he's probably not in a real good mood either.

BLITZER: He's been relatively low key. He did speak to some mayors, but he didn't talk about Barack Obama when he did, over the weekend in Florida.

CAFFERTY: Yes.

BLITZER: All right. We'll see what he does, what she does. But you have a good question, as usual. Thank you.

An historic ruling with huge implications -- the Supreme Court says a ban on handguns is unconstitutional.

Afghanistan pointing a finger at neighboring Pakistan in a presidential assassination attempt.

And Hillary Clinton and Barack Obama publicly united, but behind- the-scenes deep campaign divisions -- still.

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

(COMMERCIAL) BLITZER: For the first time in U.S. history, the Supreme Court is clearly defining the Second Amendment to the U.S. Constitution, saying the right to bear arms trumps local laws banning handgun ownership.

We have three reports, beginning with CNN's Jeanne Meserve -- Jeanne, it was about as close, once again, as it comes, this decision.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: That's right, 5-4 from this court, smack in the middle of the District of Columbia -- a decision that is reverberating across the country.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): At a gun shop in Georgia, hundreds of miles from the District of Columbia, they cheered the end of the D.C. handgun ban.

BERT COLLINS, GUN STORE CUSTOMER: I thought I may celebrate and buy a gun today.

MESERVE: In an effort to stop a wave of violence, D.C. put the sweeping handgun ban in place 32 years ago. But in a 5-4 ruling, the Supreme Court said the ban violates the constitutional right of individuals to keep and bear arms. "It is not the role of this court to pronounce the Second Amendment extinct," Justice Antonin Scalia wrote for the majority.

The lead plaintiff, a Washington homeowner, hailed it as a victory for individual liberty.

DICK HELLER, PLAINTIFF, OPPOSES GUN BAN: And I'm very happy that now I'm able to defend myself and my household in my own home.

MESERVE: In a sharp dissent, four liberal justices, led by John Paul Stevens, criticized the majority for wading into a political thicket, saying elected officials should have the power to regulate guns.

D.C.'s mayor said his city would comply with the ruling, reluctantly.

MAYOR ADRIAN FENTY (D), WASHINGTON: More handguns in the District of Columbia will only lead to more handgun violence.

MESERVE: The conservative majority also wrote that, "There is not a right to keep and carry any weapon whatsoever in any manner whatsoever and for whatever purpose," referring to bans on gun ownership by the mentally ill and convicted felons and the assault rifle ban.

Gun control advocates found a silver lining in that.

PAUL HELMKE, CAMPAIGN TO PREVENT GUN VIOLENCE: This opinion still allows common sense gun control laws restrictions to make us all safer. MESERVE: But the National Rifle Association is already using the ruling to go on the offensive.

WAYNE LAPIERRE, NATIONAL RIFLE ASSOCIATION: I see this as the opening salvo of a step by step process to provide relief to people all over the country to access this freedom.

MESERVE: The NRA announced it is going to court to attempt to overturn gun restrictions in other cities, including Chicago.

(END VIDEOTAPE)

MESERVE: But there is real debate over whether gun restrictions make cities safer. In this city, where the gun ban has been in place, the homicide rate last year was the same as it was, more or less, in 1976.

But the question is what happens now -- Wolf.

BLITZER: Jeanne is at the Supreme Court.

Let's get right to the presidential campaign.

Bill Schneider is standing by.

Does this settle the gun issue in this campaign -- Bill?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Democrats hope so. They want the gun issue to go away.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): The Supreme Court's ruling striking down the District of Columbia's handgun ban is in line with public opinion. The court ruled for the first time that gun ownership is an individual right. The public agrees by better than 2-1.

John McCain and Barack Obama both say they support the court decision.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I saw the Supreme Court ruled in favor of the Second Amendment and, obviously, I'm very pleased about that decision.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I believe that the Second Amendment means something, that is an individual right.

SCHNEIDER: Does that mean the gun issue will go away?

Democrats hope so. In 2004, more than 40 percent of voters were gun owners. John Kerry got just over a third of their vote. Obama needs to do better than that. Democrats have learned that gun owners tend to vote the issue. So they are eager to reassure gun owners that they will not threaten their rights.

In his statement today, Obama said, "As president, I will uphold the constitutional rights of law-abiding gun owners, hunters and sportsmen."

Can you trust Obama, McCain asks?

MCCAIN: He refused to sign the amicus brief signed by a bipartisan group of 55 senators arguing that the Supreme Court should overturn the D.C. gun ban.

SCHNEIDER: In a statement released after the ruling, McCain said: "Unlike the elitist view that believes Americans cling to guns out of bitterness, today's ruling recognizes that gun ownership is a fundamental right."

Obama does not want to debate the issue.

OBAMA: The key is to try to stop using this as a wedge issue.

(END VIDEOTAPE)

SCHNEIDER: Democrats want the debate to be over. Obama is hoping the Supreme Court decision will do exactly that. And it just might.

Gun owners are applauding the decision and most Democrats are not complaining, especially since the court also ruled that gun rights are not absolute and can be regulated by law -- Wolf.

BLITZER: Bill Schneider is here in Washington.

Let's to go Brian Todd -- Brian, there are enormous ramifications for the future of the Supreme Court depending on who is elected president.

BRIAN TODD, CNN CORRESPONDENT: Absolutely, Wolf.

Today's ruling emblematic of a court that's deeply divided ideologically. It's also a court that may undergo a real sea change in the years ahead.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: How's it going?

How do you do?

TODD (voice-over): From gun control to Guantanamo detainees, the Supreme Court makes crucial rulings by the slimmest of margins. Those two decisions and one banning the death penalty for child rapists are 5-4 votes. The swing vote each time and in several 5-4 decisions dating back to the last term, Justice Anthony Kennedy.

How powerful has he become?

EDWARD LAZARUS, SUPREME COURT LEGAL ANALYST: Justice Kennedy is now one of the most powerful people in the United States. His vote determines how the Constitution is going to be interpreted in many areas of law.

TODD: Analysts say Kennedy considers himself conservative, but he's often voted with the liberal wing of the court.

That group, Justices John Paul Stevens, Ruth Bader Ginsburg, Stephen Breyer and David Souter, may lose as many as three of the members over the next few years to retirement. Of their conservative colleagues, Chief Justice John Roberts, Justices Antonin Scalia, Clarence Thomas and Samuel Alito, none are believed to be near retirement.

Analysts say that means this presidential election will have a huge impact on the court.

TOM GOLDSTEIN, SUPREME COURT LEGAL ANALYST: The court's already, by modern terms, really pretty conservative. But this election could decide its future for the next three or four decades.

TODD: If John McCain wins, he would be able to shape a much more conservative court.

How is he leaning?

MCCAIN: I will look for the people in the cast of John Roberts, Samuel Alito, and my friend, the late William Rehnquist.

TODD: If Barack Obama wins, experts say his best shot is to maintain the court's ideological balance if some of the liberals retire.

OBAMA: I think, actually, Justice Breyer and Justice Ginsburg are very sensible judges. I think that Justice Souter, who was a Republican appointee, is a sensible judge.

TODD: The cultural issues this court in transition may decide on over the next generation -- gun control, affirmative action, religion and, of course...

LAZARUS: The $64,000 question if John McCain is elected is whether there is going to become a five person majority for the court to actually overturn "Roe v. Wade".

(END VIDEOTAPE)

TODD: Senator McCain has already said publicly he believes the "Roe v. Wade" decision legalizing abortion should be overturned. And this court, with a narrow conservative majority, has already limited when abortions can be performed -- Wolf.

BLITZER: I write about this fragile balance on the Supreme Court in my blog post at CNNPolitics.com. We're getting comments from our viewers, as well.

Brian Todd working the story.

The ramifications, as I said, for the Supreme Court, for the country, for the next two, three, four decades, enormous depending on who's elected president of the United States.

They're trying, but deep divisions are keeping the Clinton and Obama campaigns from achieving true unity -- at least not yet.

And Arnold Schwarzenegger throws a hot spotlight on a Republican divide. It's an embarrassment for the GOP.

(COMMERCIAL BREAK)

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

Let's get details -- Carol?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, there was a major sell-off on Wall Street today, as oil prices surged to a new record. The Dow ended the day down more than 350 points, or about 3 percent. It came as oil prices soared above $140 per barrel for the first time ever. One expert blames what he calls "a perfect storm of bad news" involving, among other things, oil production and the value of the dollar.

In California, hundreds of firefighters are scrambling to try to save the scenic coastal area known as Big Sur. A wildfire has burned about 37 square miles in the area. And as of the latest report, only 3 percent of that fire is contained. The blaze has destroyed 16 homes and is threatening about 500 more.

The Justice Department is calling it one of the biggest antitrust settlements in U.S. history. Four international airlines will pay more than $500 million in fines. They're accused of conspiring to drive up cargo shipping prices. The scheme is believed to have cost consumers hundreds of millions of dollars between 2001 and 2006.

Water -- they need more of it in the West, less of it in the Midwest. And in New York City, well, they make it into art, of course. About 35,000 gallons per minute are pouring into the East River as part of the city's newest public art display. The $15.5 million project features four massive water falls. Mayor Michael Bloomberg says it could generate up to $55 million in economic activity.

It's beautiful.

BLITZER: It's nice. It's not exactly Niagara Falls, but it's nice.

COSTELLO: It's a social art experiment.

BLITZER: Correct. I like it. All right. I'll go watch it the next time I'm in New York.

COSTELLO: Yes.

BLITZER: Carol, we'll see you, too.

Unity easier said than done for the Clinton and Obama campaigns. Some wounds from their bitter battle are festering.

A jaw-dropping rant by one lawmaker who says he'd do some horrible things to victims on the witness stand. You're not going to believe this.

And who's to blame for gas prices?

Not station owners. They're feeling the pinch.

Stay with us.

(COMMERCIAL BREAK)

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

Happening now, the U.S. military conducts a so-called hit to kill missile defense test. Just a short time ago, an interceptor missile launched from a facility in Hawaii hit a mock intercept.

The military clashes with state regulators over whales again. The Navy says Hawaii does not have the authority to limit sonar levels that could harm marine mammals during war games in the Pacific.

And testing for HIV in the Bronx -- New York health officials announce an ambitious new plan to test every adult in the borough with the highest defendant rate from AIDS.

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

There's growing concern over the worsening war in Afghanistan right now and the role Pakistan may be playing. Let's get details that are breaking right now. Our correspondent, Barbara Starr, is at the Pentagon -- Barbara, what is the situation?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, I have to tell you, Wolf, this is the subject in the hallways of the Pentagon these days -- the violence in Afghanistan, the worsening security situation.

(BEGIN VIDEOTAPE)

STARR (voice-over): Afghanistan is accusing the Pakistani government of this attempted assassination last April of Afghan President Hamid Karzai. Pakistan denies it was behind the failed attack.

MOHAMMED SADIQ, PAKISTAN FOREIGN MINISTRY: These allegations suggest that responsible members in the Afghan government perhaps wish to reignite the blame game. Pakistan rejects these baseless and irresponsible allegations.

STARR: Washington is convinced Pakistan is failing miserably to crack down on militants, now freely crossing the border into Afghanistan to conduct attacks against U.S. troops.

ROBERT GATES, SECRETARY OF DEFENSE: The ability of the Taliban and other insurgents to cross that border and not being under any pressure from the Pakistani side of the border is clearly a concern.

STARR: Attacks are growing more sophisticated. This video was said to be the aftermath of an IED that hit a U.S. convoy, leaving three troops dead. The video could not be independently verified which the associated press which distributed the tape. But U.S. officials say the attack underscores escalating security concerns.

GATES: It actually was not bad until a few months ago. This is a fairly recent phenomenon of seeing the numbers come across the border.

STARR: A senior U.S. defense official tells CNN, in the last three months, hundreds of Pakistani fighters have entered southern Afghanistan to attack the coalition. Men sent by Baitullah Mehsud, the Pakistani Taliban leader said to be responsible for the assassination of Benazir Bhutto.

(END VIDEOTAPE)

STARR: And to the west, in the once quiet Farrah province, after seven U.S. troops were killed in the last three weeks, the marines are now considering sending in reinforcements -- Wolf.

BLITZER: All right. We'll watch this story. It's got serious impact on what's going on in that part of the world.

Barbara Starr is at the Pentagon.

Tonight they'll be meeting together for a fund-raiser. Tomorrow they'll have a public joint appearance. That would be Hillary Clinton and Barack Obama. Since the end of their bitter campaign battle, this will be their first public appearance tomorrow. Their visit to a town called Unity may be easier than actually achieving unity.

Let's go to Mary Snow. She's working this story, talking to sources.

What's happening, Mary, behind the scenes?

MARY SNOW, CNN CORRESPONDENT: Wolf, there's still some hard feelings among some Clinton supporters. But Senator Clinton is moving on, introducing her top fundraisers to Senator Obama in Washington, D.C. tonight. While she and Obama merge their money backers, tomorrow they will merge their message in their first joint appearance since Obama became the presumptive Democratic nominee.

(BEGIN VIDEOTAPE)

SNOW: Nearly three weeks after dropping out of the presidential race, Senator Hillary Clinton is heading back on the campaign trail, this time for her former rival.

SEN. HILLARY CLINTON (D), NEW YORK: We have to be determined to chart a new course, and we cannot do that without electing Senator Obama our president.

SNOW: Clinton and Senator Barack Obama will make their debut together in Unity, New Hampshire.

OBAMA: I'm looking forward to campaigning vigorously with her. I think we'll have -- I think we'll have a terrific time together in New Hampshire.

SNOW: But behind the photo-ops, say some political observers, there are wrinkles.

LARRY SABATO, UNIVERSITY OF VIRGINIA: The reality hasn't quite caught up to the image that's going to be projected. The reality is that a lot of Clinton supporters are still unhappy. Their feelings are raw after a very tough campaign.

SNOW: Clinton supporter Will Bower rejecting the unity bandwagon.

WILL BOWER, JUST SAY NO DEAL: A lot of us still want to see Hillary Clinton as the nominee and we're working hard to make that happen. It's still possible.

SNOW: While some Hillary Clinton holdouts fight on, Clinton is introducing her top fund-raisers to Obama. One member of Clinton's national finance committee says it will take time for some fund- raisers to open their wallets.

NOAH MAMET, CLINTON FUNDRAISER: The vast majority of donors are with Obama now. There's a few that are taking a little bit longer to get there. But they'll be there soon.

SNOW: As the campaigns merge, one person who won't be on hand for the initial push is Bill Clinton. The former president is traveling but said to his spokesman this week he's committed to supporting Obama.

Donna Brazile for one predicts old wounds will heal.

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: Once Senator Clinton and Senator Obama have been able to unite the part fully, there's no question whether Bill Clinton will be on the campaign trail, and along with former Vice President Al Gore and many others.

(END VIDEOTAPE)

SNOW: Wolf, still lots of details to be worked out, including Senator Clinton's role at the Democratic National Convention and on the campaign trail and of course, Bill Clinton's exact role -- Wolf.

BLITZER: Lots of negotiations under way. I suspect they're only just beginning. We'll look to see if the body language, how these two candidates, what they're going to do tomorrow when we watch them close in Unity. I know you'll be working the story for us as well.

Arnold Schwarzenegger throws a fellow Republican governor to a certain degree under the bus, in a major GOP embarrassment.

Also, stock prices are plunging, again.

Barack Obama said he has a plan to turn things around. We're going to show you his latest comments on the economy. First though, we'll take an in-depth look at his energy plan. How much change does it really involve? Frank Sesno standing by right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Yes, we can. Not according to John McCain's campaign. It's taken to calling Barack Obama Dr. No, after the James Bond novel and film. It's an effort to try to highlight Obama's opposition to McCain's energy proposals including a gas tax holiday and new offshore oil drilling.

Let's bring in our special correspondent, Frank, watching this story.

We got a little reality check on a day when the price per barrel is going up again.

FRANK SESNO, CNN SPECIAL CORRESPONDENT: Yes, I know. It's getting nasty out there. They're getting frustrated. They're demonstrating it. Supply, demand, what side does Barack Obama come down on?

(BEGIN VIDEOTAPE)

SESNO: Wind, solar, biofuels. Photo-ops Barack Obama uses to say he's looking to the future while John McCain looks to the energy past. In fact, McCain favors new technologies and conservation, too, but emphasizes the supply side of the oil and gas equation where now he says we need more. Obama leans on the demand side. He proposes to reduce oil and gas use through conservation, higher mileage standards, requirements for utilities to use renewables like wind and solar.

Obama's plan offers logic but also inconsistencies. He opposes additional offshore drilling, largely because it would take years to get the oil flowing. True enough. But just about every significant energy proposal would take years to bear fruit. His own plan gives automakers 20 years to double mileage standards.

Obama's criticized McCain for saying more drilling would have a positive psychological impact.

OBAMA: In Washington speak, what that means is, it polls well.

SESNO: But there is psychology in energy markets, worries about soaring demand in China or supply disruptions in Nigeria send prices up. Expectations of more production can send prices down.

Obama's stand on corn ethanol also raises questions. Despite its limited energy value and impact on food prices, Obama's long supported it, including billions in government subsidies to promote it and steep tariffs keeping cheaper Brazilian sugar ethanol out to protect it.

Obama's home state of Illinois is a big ethanol producer. "The New York Times" reported this week, close ties in Obama's campaign to the ethanol industry, from his top environmental adviser to one of his most vocal surrogates, former Senator Tom Daschle, who serves on the board of several ethanol companies.

Obama often criticizes big oil and a big part of his energy plan revolves around higher taxes on oil companies, to help fund R & D for new energy technologies, to pay for tax credits for some consumers, even to spur exploration.

(END VIDEOTAPE)

SESNO: Oil companies have faced a windfall profit tax before in the 1970s. The tax was repealed in the '80s. Why? Because a lot of people felt it wasn't raising enough revenue, Wolf, that it was an administrative headache and at the end of the day, oil exploration was going down when it need to be going up.

BLITZER: What does he get credit for from the experts?

SESNO: The experts, the people who are watching this energy supply demand equation give him credit for really leaning hard on the business of energy tax credits and the tax incentives to put a longer cycle in the thing so the marketplace has stability if you're trying to make solar panels or wind turbines or these very experimental and expensive technologies so you create a marketplace.

Also, this $150 billion that he wants to put into it, a lot of folks say it's time for a moon shot, call it what you will, to really invest heavily and make progress in new technology.

BLITZER: You did a terrific documentary. We were warned. Thanks very much for that.

SESNO: It was expensive as we thought.

BLITZER: All right. Frank Sesno working the story for us. We'll do more on this. He'll be looking at John McCain's energy proposals as well. Stand by for that.

No one disputes Americans are seriously feeling the pain at the gas pump. And anger as well. You may want to think twice before you point a finger of blame at your local gas station owner.

Let's go to CNN's Dan Lothian -- Dan.

DAN LOTHIAN, CNN CORRESPONDENT: Wolf, with gas prices averaging north of $4 a gallon, few people seem to have any sympathy for gas station owners. Most people assume that they are part of the problem. That they're making a killing. But in fact, some owners say they're getting crushed.

(BEGIN VIDEOTAPE)

LOTHIAN: Over 35 years, Elias Audy's made a good living owning two Boston area gas stations. But these days he's in survival mode.

ELIAS AUDY, GAS STATION OWNER: We're not that far away from closing doors and saying no. We don't want to do it anymore.

LOTHIAN: The gas crisis that's draining consumers is also squeezing small business owners.

AUDY: Gas prices are up, people driving less. Service calls are less. So we're making less and less.

LOTHIAN: He's dipping into his savings to pay the bills. Even his fees from oil companies, and credit card companies remain high. Industry official Paul O'Connell says there's very little wiggle room.

PAUL O'CONNELL, N.E. SERVICE STATION & AUTO REPAIR ASSN.: That's a huge problem, because it takes away all of their profit.

LOTHIAN: It costs about $40,000 to fill up underground tanks. For some owners like at this station at Rochester, New York, the math no longer makes sense.

AMY BENNEM, AGOSTINELLI'S TIRE AND AUTO: We just decided that with the competition here, with that down the road and the prices we were going to have to pay, gas went up so much, we couldn't guarantee that we were going to get any return on it at all.

LOTHIAN: They've stopped filling the tanks and pumping gas. Ditto at this station in Texas.

LISA SANDS, INDEPENDENT GAS STATION MANAGER: $4,000 out here on the gas pumps, I might make $50 off of it, after the fees and so forth. You know, so it's just -- it's not there.

LOTHIAN: O'Connell says it's an unfortunate trend that will get worse. Stop selling gas or shut down altogether.

O'CONNELL: We're praying every day there's relief on the way. But who knows.

LOTHIAN: Audy hopes emphasizing his quick oil change and repair services and adding state auto inspections will help him stay afloat.

AUDY: I've been in business 35 years. What else am I going to do?

(END VIDEOTAPE)

LOTHIAN: Some gas stations owners are offering customers a discount if they pay with cash or use a debit card, one way to avoid high credit card fees, while adding a few more cents per gallon to the bottom line -- Wolf.

BLITZER: Dan Lothian watching this story for us.

Here's a breakdown of where your gas money goes, based on the main national average for a gallon of regular, which was then $3.77. Seems quaint. The U.S. government's Energy Information Administration says seven cents to 10 cents, or about 3 percent, goes to the gas station itself. About 38 cents on a gallon or 10 percent goes for paying our refining costs. Another 38 cents goes to taxes. Seventy- six percent of your money, or $2.83 on a gallon pays for the actual crude oil used to make the gas. An embarrassing display of a Republican divide. You can blame California's governor Arnold Schwarzenegger. Maybe not.

CNN's national correspondent Susan Candiotti is joining us now. She's watching this story for us.

Susan, what do we know? What's going on?

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Here's what happened, Wolf.

Schwarzenegger was an invited guest of Governor Crist at a summit on the environment here in Miami. And Governor Schwarzenegger, the California governor, had just told an audience that politicians have been throwing around all kinds of ideas about how to solve the energy crisis. And that's when he delivered what appeared to be a backhanded zinger at Governor Crist.

(BEGIN VIDEOTAPE)

GOV. CHARLIE CRIST (R), FLORIDA: A dear friend of mine and of Florida's, the great governor of California, Governor Arnold Schwarzenegger.

CANDIOTTI: It's one of those ouch moments. Florida Governor Charlie Crist who just last week did an about-face and now supports lifting a ban on new offshore oil drilling had just introduced his star key note speaker, California Governor Arnold Schwarzenegger. It was the closing day of a global climate summit in Miami.

Both governors are strong advocates of renewable energy and alternative fuels. But as Schwarzenegger took the podium, he immediately took aim at his own party's proposals, to push offshore drilling to lower gas prices.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Anyone who tells you that this will bring down our gas prices immediately, or anytime soon, is blowing smoke. America is -- America is so addicted to oil, that it will take years to wean ourselves from it.

CANDIOTTI: Schwarzenegger's position isn't new. But he said it in front of Crist, who took a drumming from environmentalists last week for promoting drilling, if it will help lower fuel prices.

CRIST: If that could in fact help us lower the price of the gas at the pump, that we need to be willing to study it.

CANDIOTTI: Some have accused Crist of pandering to his party's presumptive nominee, John McCain, who is making offshore drilling part of his energy plan.

(END VIDEOTAPE)

CANDIOTTI: Now Crist said he favors lifting the oil drilling ban, if it can be done safely. But in the words of Governor Schwarzenegger, looking for new ways to feed our addiction is not the answer -- Wolf.

BLITZER: All right, Susan.

Susan's watching this story for us. A little split there between Republican governors.

A video from a Republican senator showed up on a Democratic senatorial campaign committee Web site.

(BEGIN VIDEO CLIP)

SEN. JOHN CORNYN (R), TEXAS: You see, I'm from Texas where we do things quick, in a way this place is about to make me sick.

(END VIDEO CLIP)

BLITZER: We're going to have the story behind that video. What people are saying about it. They're talking.

And child rape. It's a shocking crime. And now a state legislator in Massachusetts has some truly shocking things to say about it. You're going to hear his unbelievable comments right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Why is a video from a Republican senator, John Cornyn of Texas, featured on the Democratic senatorial campaign committee's Web site? Because they think it helps their cause more than it helps his.

Let's go to our Internet reporter Abbi Tatton.

Abbi, what is this video all about?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, it's being passed around on line with posts like, seriously, this is real. Big, bad, Senator John Cornyn. Take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I came down off the bench after doing his time, he was just getting started with a long ways to go, we sent him to Washington to the really big show, big John. Big bad John

(END VIDEO CLIP)

TATTON: Referencing the Jimmy Dean song, the video was made by the senator's campaign for the Texas Republican convention this month. A campaign spokesman said the people loved it and the campaign is thrilled that it's now gone viral. How does the senator feel? Well, he referenced it.

(BEGIN VIDEO CLIP)

CORNYN: My staff convinced me that it would be a good idea. Maybe I need a new staff.

(END VIDEO CLIP)

TATTON: He seemed to appreciate the humor -- Wolf.

BLITZER: Abbi, thanks.

Abbi will watch this for us, and we'll watch the web as well.

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

CAFFERTY: The question is this hour: What should Hillary Clinton's role be at the Democratic convention?

Bruce writes: "She should enthusiastically support Obama. I don't know how Hillary's debt is any of Obama's concern. Did he encourage her to borrow the money? Did he cosign? Hey, if you borrowed the money, it's your problem. It's not even Hillary's supporters' problems. Bill and Hillary need to liquidate some of their assets and pay off Hillary's debt."

Dori in Arizona writes: "Hey Jack, Hillary can have the opening act. She can welcome and greet, get the crowd clapping stomping their feet. We know she can give a good speech when she sets her mind to it. Then as the festivities roll on, Senator Obama will take over. He will close it in a slam dunk the party hasn't seen in eons."

Jen writes: "Her role should be whatever she wants it to be. She's the one with 18 million of us who still think she should be president, the one with some actual answers and goals to the problems at hand. She's the fighter. And the one who's been there and done that."

Winston in Las Vegas, Nevada: "The role for both Hillary and Bill Clinton at the Democratic Convention should be that of ushers. The Clintons are bitter. The American public voted and decided that they've had enough of them. They're sore losers and it's time they realize that it's not about them anymore."

Bo in Virginia says: "You know Hack, I think Hillary should be head of security at the convention. Seeing as how she managed to duck the sniper fire in Bosnia, she seems well qualified."

Willow in Iowa says: "She should be a wonderful cheerleader. She should rally everybody together, help the Democrats win in November. She should not, however, continue to remind everybody of her 18 million voters. This is Obama's time, not hers."

And Greg in Cabot, Arkansas says: "Maybe she could bake some cookies."

If you didn't see your e-mail here, you can go to my blog at CNN.com/CaffertyFile. Lots of other suggestions there for you to peruse.

BLITZER: Remember when she made that cookie comment back in the campaign in '92. Remember that?

CAFFERTY: Of course.

BLITZER: Do you want me to sit home and bake cookies?

CAFFERTY: Exactly and it will follow her to her grave. I mean, it's one of those things that just stuck to her like glue.

BLITZER: One of those sound bytes you don't necessarily love. All right.

Jack, thanks. See you in a few moments.

A lawmaker's truly shocking rant. Jaws dropped as he talked about grilling young victims on the stand.

And Barack Obama on North Korea. The Supreme Court ruling, and more. There's a brand-new interview he granted today. We'll share details with you.

(COMMERCIAL BREAK)

BLITZER: It's the speech that had jaws dropping in Massachusetts in the state house. Now people nationwide are shocked, shocked by what one lawmaker said about child rape victims.

Let's go to Brian Todd. He's working this story for us.

It's pretty shocking, hard to believe anyone could talk like this. Update the viewers on what we know.

TODD: Well Wolf, this state legislator is opposed to mandatory sentences for child rape cases. He painted a grim scenario of what could happen to young victims if this law is passed.

(BEGIN VIDEOTAPE)

TODD: A chilling declaration from a legislator in Massachusetts during a heated debate over whether to mandate minimum sentences for child rape. He said these proposed minimum penalties would force him as the defense attorney for an accused child rapist to do whatever it takes to win his acquittal, up to and including a merciless cross- examination.

JAMES FAGAN, MASSACHUSETTS STATE HOUSE: I'm going to rip them apart. I'm going to make sure that the rest of their life is ruined. That when they're 8 years old, they throw up. When they're 12 years old, they won't sleep. When they're 19 years old, they'll have nightmares and they'll never have a relationship with anybody.

TODD: State Representative James Fagan was opposing a bill named for Jessica Lunsford who was raped and murdered by a neighbor in Florida in 2005. That proposal would set a mandatory minimum sentence of 15 years for aggravated rape of a child under 16.

Jessica's father, Mark Lunsford, told a local newspaper, "He just added insult to injury. Why doesn't he figure out a way to defend that child instead of trying to figure a way for defense attorneys to get around Jessica's law?"

A grueling cross-examination like Fagan suggests, might not play well with the jury.

JEFF JACOBVITZ, CRIMINAL DEFENSE ATTORNEY: There is certainly a risk if you're questioning a child too aggressively, because a juror will have sympathy for a child. A defense attorney has to be careful and sensitive to that issue.

TODD: Jessica's law has been passed in some form in 42 states. In states without minimums, Lunsford says, there's a risk that justice won't be carried out.

MARK LUNSFORD, VICTIM'S FATHER: My story is only one of thousands across all these states. And the only people that are paying the price for these crimes are the children.

(END VIDEOTAPE)

TODD: Representative Fagan did not return our calls today but he did tell a local newspaper he did not intend to demean or offend victims but he stood by his comments saying his hyperbole was necessary to show how bad it could get in a courtroom if defendants faced mandatory minimums, Wolf.

BLITZER: Brian, what impact do mandatory minimums often have on these kinds of cases?

TODD: One defense attorney told us just the threat of a mandatory minimum can help a prosecutor can get defendants to plead guilty because they get a stiff penalty if they go to trial and lose. Of course, each case has its own merits and it could turn out differently.

BLITZER: Brian is working the story for us. Shocking, shocking comments.

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