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THE SITUATION ROOM

Rescued U.S. Hostages Speak Out; Obama and McCain Lay Out Economic Proposals

Aired July 7, 2008 - 18:00   ET

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


(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Hello, North Carolina.

Well, listen, guys, I'm so sorry that I'm not down there. We had a little glitch in our plane. It was nothing to worry about, although it gave the press some exciting things to write about.

But everybody is safe and sound. We're in Saint Louis.

(END VIDEO CLIP)

MILES O'BRIEN, CNN ANCHOR: Barack Obama on the phone with supporters explaining the flight problems that prevented him from going to North Carolina.

Welcome to our viewers in the U.S. and all around the world.

Stand by for the latest on how Obama's flight went wrong.

But, first, finally free after five years in captivity in the jungles of Colombia, those three American hostages whose rescue captivated the world were cheered at a welcome home ceremony in San Antonio, Texas, today. They also spoke for the first time about their ordeal publicly.

Let's go to CNN's Susan Roesgen in San Antonio.

Susan was in the room as it all happened.

And, Susan, what did they have to say about all those years in captivity?

SUSAN ROESGEN, CNN CORRESPONDENT: Well, you know, Miles, each former hostage made just a few remarks, but what they said was powerful.

(BEGIN VIDEOTAPE)

ROESGEN (voice-over): How do you describe five-and-a-half years held captive in the Colombian jungle?

Here is former hostage Tom Howes.

THOMAS HOWES, FORMER HOSTAGE: Almost five-and-a-half years ago, we fell off the edge of the earth.

ROESGEN: Speaking publicly, at least as free men, Marc Gonsalves talked of a long delayed dream.

MARC GONSALVES, FORMER HOSTAGE: There was a time that when I slept I would dream that I was free. That time was only a few days ago. It feels so good to be free here now with all of you.

ROESGEN: Gonsalves also said he would not forget the hundreds of hostages left behind.

GONSALVES: Right now, they're wearing chains around their necks. They're going to get up early tomorrow morning. They're going to put a heavy backpack on their backs, and they're going to be forced to march with that chain on their neck, while a guerrilla with an automatic weapon is holding the other end of this chain, like a dog.

ROESGEN: And, finally, former hostage Keith Stansell brought humor to the end of the long ordeal with one request.

KEITH STANSELL, FORMER HOSTAGE: To Governor Crist of the great state of Florida, sir, I don't have a driver's license. How am I going to get home?

(LAUGHTER)

(APPLAUSE)

(END VIDEOTAPE)

ROESGEN: Now, you saw there, Miles, Keith Stansell with some very young boys. Those are actually his twin sons whom he had not seen until this past weekend. His fiancee was pregnant with those boys when he was taken hostage. They're five years old now.

And also you heard Marc Gonsalves, one of the other hostages, speaking about what he called terrorists with a capital T., the FARC rebels who held them there. Marc Gonsalves is a former Air Force intelligence officer. He was hired by Northrop Grumman and was on that plane that went down to map the coca fields. So, we may hear more from him on just what he has to say about the rebels and all those years in captivity .

O'BRIEN: Susan, give us a sense. You were in the room there. That was an incredibly special and emotional moment. What was it like?

ROESGEN: Well, I thought it was especially incredible to see all these folks in military uniform. They were the ones holding the cell phones, taking the pictures, applauding. You could just feel it was so much excitement that, at last, these guys are out.

I mean, five-and-a-half years, Miles, they didn't even know that the Iraq war had happened. They missed Hurricane Katrina. They didn't know what YouTube and Facebook is. These guys are going to have to go through what the medical doctors here at Brooke Army Medical Center behind me are calling decompression. They need to learn how to adjust to not only their families again, but to life in the U.S. And it won't be easy -- Miles.

O'BRIEN: Won't be easy.

Susan Roesgen in San Antonio, thank you very much.

Issue one in the election -- John McCain is trying to convince voters that he's the candidate who can save their jobs and fix the economy, not Obama. The Republican is touting his economic proposals. It happened in Denver today. McCain is promising to balance the federal budget by the end of his first term. He says he would help American household budgets by encouraging free trade, building nuclear power plants, and first and foremost, cutting taxes.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: The choice in this election is stark and simple. Senator Obama will raise your taxes. I won't. I will cut them where I can. Jobs are the most important thing our economy creates. When you raise taxes in a bad economy you eliminate jobs. I'm not going to let that happen.

(END VIDEO CLIP)

O'BRIEN: Barack Obama is firing back, portraying McCain's economic agenda as a continuation of President Bush's policies.

(BEGIN VIDEO CLIP)

OBAMA: Senator McCain said earlier this year that America had made -- and I quote -- "great progress" economically over the past eight years. He believes we're on the right track, and he's launching a new economic tour today with policies that are very much the same as those that we have seen from the Bush administration.

(END VIDEO CLIP)

O'BRIEN: Senator McCain is trying to focus on the economy like a laser beam, as Bill Clinton once famously put it. It is evidence that McCain's campaign is under new management.

Let's bring in CNN's Jessica Yellin.

And it really is a new campaign, I guess now, Jessica, for McCain.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: It is, Miles, according to the McCain team, sort of the first day of their new campaign. They say events will have a different, more produced look for TV. And there is an organized effort to coordinate the campaign on the local level with McCain's message of the day. They're selling this really as the new McCain campaign.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): In the battleground state of Colorado, John McCain was on message on the economy.

MCCAIN: I have a plan to grow this economy, create more and better jobs, and get America moving again.

YELLIN: His plan to cut taxes, foster free trade, and support small businesses isn't new. What is new, the candidate's disciplined focus on the topic of the day.

MCCAIN: We must also get government's fiscal house in order. American workers and families pay their bills and balance their budgets, and I will demand the same thing of our government.

YELLIN: And the return of the town hall-style setting, where John McCain tends to excel.

MCCAIN: That's straight talk and it is accurate talk.

YELLIN: It is the start of the campaign makeover, coming after weeks of Republican hand-wringing over missteps. Some believe the candidate has watered down his image as an iconoclast and needs to rebuild it.

STUART ROTHENBERG, EDITOR AND PUBLISHER, "THE ROTHENBERG POLITICAL REPORT": He started to compromise his own brand, yes, by echoing a lot of the Bush positions, whether it is offshore drilling, whether it is tax cuts. He appears, I think, to some to have softened his maverick edges. And that's not good for him.

YELLIN: He's got less than four months to become the maverick again. There is one thing McCain excels at, it is coming back when he's down.

(END VIDEOTAPE)

YELLIN: Now, Miles, we did hear McCain emphasize his maverick streak a bit when he slammed the current administration for letting government spending balloon. So, that message of balancing the budget you talked about was paired with a criticism of the current administration. And that is the kind of independent McCain that has worked so well for him in the past -- Miles.

O'BRIEN: Jessica Yellin, thank you very much.

Now back to that scare in the air. Barack Obama is on a plane to Atlanta right now after the an odd in-flight incident aboard another aircraft earlier today.

The flight was heading from Chicago to North Carolina, when the emergency slide of the tail of the MD-80 apparently deployed while the plane was in the air. The slide expanded into the tail cone, but the cone remained attached to the plane. Now, the flight crew noticed some control problems with the plane. It is possible that inflated slide hindered the free movement of wires that move the surfaces on the tail.

The plane made an unscheduled and safe landing in Saint Louis with fire trucks standing by just in case. The National Transportation Safety Board is investigating.

President Bush once again may be doing some soul searching. You may remember what the president said the first time he met with then Russian President Vladimir Putin. Today, it was another Russian president's soul and substance President Bush was trying to assess for first time, all of it happening at a meeting of the world's major industrialized democracies.

CNN's White House correspondent Elaine Quijano is there.

(BEGIN VIDEOTAPE)

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT (voice-over): Beneath the smiles and pleasantries, the meeting was a chance for President Bush to size up Russia's new president, Dmitry Medvedev.

GEORGE W. BUSH, PRESIDENT, UNITED STATES OF AMERICA: Medvedev is a smart guy who understood the issues very well.

QUIJANO: On the sidelines, the group of 8 summit in Japan, the two men met for the first time since Medvedev took office in May.

BUSH: I'm not going to sit here and start psychoanalyzing the man but I will tell you that he's very comfortable, he's confident, and I believe that when he tells me something, he means it.

QUIJANO: That cautious assessment stands in sharp contrast to 2001 when President Bush after his first meeting with Russia's then President Vladimir Putin, famously said he had looked Putin in the eye and added -

BUSH: And I was able to get a sense of his soul.

QUIJANO: Now Medvedev, Putin's hand-picked successor says he agrees with the U.S. on the need to curb Iran and North Korea's nuclear ambition. But like Putin, he's firmly against the Bush administration's plan for a missile defense system in Eastern Europe.

(on-camera): Medvedev says he would like to reach an agreement on that issue as well. And while President Bush may only have six months left in office. In Medvedev words, he says he's very comfortable dealing with George.

Elaine Quijano, CNN, Hokkaido, Japan.

(END VIDEOTAPE)

O'BRIEN: We have word of a plane crash in Florida.

Let's get right to Mary Snow, who is following it for us -- Mary.

MARY SNOW, CNN CORRESPONDENT: Miles, what we know at this time is a small plane at Pembroke Pines -- this is in the Miami area -- you're seeing pictures from our affiliate. This apparently is happening at North Perry Airport. It appears to be a single engine Cessna that has crashed. We have no word on whether anybody was hurt in this crash. Of course, we will keep on top of it. But, again, this is taking place at Pembroke Pines area outside of Miami -- Miles.

O'BRIEN: All right, Mary, we will be watching that one very closely for you. Thank you very much.

New details about something so secret, we're just learning specifics, enough radioactive material to make dozen of nuclear weapons secretly shipped out of Iraq. Find out who has it now and how you paid for it.

John McCain responds to reports that his temper caused him to get physical with one president's aide years ago.

And Barack Obama will soon have something in common with the biggest rock stars. It involves 75,000 screaming fans and the eyes of the entire world watching him. We will explain.

(COMMERCIAL BREAK)

O'BRIEN: A top secret transaction revealed now, tons of radioactive yellow cake acquired by Saddam Hussein moved from Iraq in a massive U.S. mission that costs $70 million. So, what was it doing in Iraq in the first place and where is it now?

CNN's Brianna Keilar live at the Pentagon.

Brianna, this is not the same yellow cake that was the focus of President Bush's State of the Union address some years ago, is it?

BRIANNA KEILAR, CNN CORRESPONDENT: No, that's right. It is not. This is decades-old yellow cake uranium, but it is the same type of low-grade uranium that President Bush spoke of back in 2003.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): For sale, a relic of the Saddam Hussein era from before the first Gulf War, enough yellow cake uranium to produce several dozen nuclear weapons. Iraq sold 550 metric tons of the stuff to a Canadian company in a secret transaction that was months in the making.

SEAN MCCORMACK, STATE DEPARTMENT SPOKESMAN: There are obviously security concerns. This was done out of sight of the media for security reasons.

KEILAR: Saddam Hussein never built a nuclear weapon, but yellow cake uranium is a first step in the enrichment process. This is far from energy-grade uranium, further from weapons-grade, but U.S. officials are eager to clear Iraq of potentially dangerous material.

DARYL KIMBALL, ARMS CONTROL ASSOCIATION: It is a good thing this material is finally out of Iraq, where it has been less secure than it was before the U.S.-led invasion back in 2003. KEILAR: A State Department source says the sale tremendously minimizes the uranium left in Iraq. A U.S. military convoy moved 110 shipping containers of the uranium from Iraq's former nuclear site at Tuwaitha to Baghdad.

Pentagon officials say C-17 cargo planes flew it to the U.S. military base on the island of Diego Garcia. These picture shows sailers loading containers on to a U.S. government crane ship before a four-week journey to Montreal. That's where the military handed over the yellow cake uranium to Cameco Corporation. The world's largest producer of uranium, Cameco plans to enrich the yellow cake and sell it to nuclear power plants around the world.

LYLE KRAHN, CAMECO CORPORATION SPOKESMAN: In this case, we're proud of the fact that we're taking uranium from an unstable part of the world and putting it into a stable part, and, again, using it for fuel for electricity.

(END VIDEOTAPE)

KEILAR: It cost the U.S. military $70 million to secure and transport this yellow cake uranium. And a Pentagon spokesman says the Iraqi government will pick up part of the tab for that, reimbursing the U.S. government. But just how much, the Pentagon and the State Department aren't saying, Miles.

O'BRIEN: All right, Brianna Keilar at the Pentagon, thank you very much.

John McCain readily admits he can get angry at times, very angry. But some people want to know if his temper caused him to rough up one president's aide many years ago.

Our Brian Todd has details.

Brian, this pits McCain's word against a fellow Republican in the Senate.

BRIAN TODD, CNN CORRESPONDENT: It certainly does, Miles. It is why it stands out here, one Republican senator giving one version of an alleged incident, John McCain saying the exact opposite.

(BEGIN VIDEOTAPE)

TODD (voice-over): His legendary temper has rarely been disputed. But an account of one alleged confrontation is getting brushback. A fellow Republican senator says John McCain got physical with a Sandinista official during a trip to Nicaragua in 1987.

In a recent interview with the "Biloxi Sun Herald" newspaper, Mississippi Senator Thad Cochran, who was on the trip, said the incident happened during a meeting with Sandinista President Daniel Ortega. The audio of Cochran's interview was posted on the newspaper's Web site.

(BEGIN AUDIO CLIP) SEN. THAD COCHRAN (R), MISSISSIPPI: I looked down there and John had reached over and grabbed this guy by the shirt collar and had snatched him up like he was throwing him up out of the chair to tell him what he thought about him or whatever.

I don't know what he was telling him but I thought, good grief. Everybody around here has got guns.

(END AUDIO CLIP)

TODD: Responding during his trip to Colombia, McCain was unequivocal.

MCCAIN: I must say, I did not admire the Sandinistas, but there was never anything of that nature. And so it just didn't happen.

TODD: We spoke with Jose Sorzano, who was on that trip as a member of the National Security Council. Sorzano believes he was in every meeting and says he never saw McCain do that.

Sorzano does recall one exchange. President Ortega said the Sandinistas would rather negotiate with the U.S. than with the conference, likening the U.S. to the owners of a circus and the conference to the clowns. McCain had this response.

JOSE SORZANO, FORMER NSC OFFICIAL: And he said, well, I think that this is a very -- very wise saying in your culture, and that's why I'm taking a plane to Havana, because I want to meet with the owner of this circus, which is Fidel Castro, because you guys are the clowns.

TODD: Whatever happened, it's worth noting Cochran once said the thought of McCain once becoming president -- quote -- "sends a cold chill down my spine."

LARRY SABATO, DIRECTOR, UNIVERSITY OF VIRGINIA CENTER FOR POLITICS: It is fair to say they just don't like each other. Now, they may deny it during an election year, but people have known for a long time that they weren't because bosom buddies and they were never going to be.

(END VIDEOTAPE)

TODD: Larry Sabato says, even though Cochran has endorsed McCain, this might be emblematic of a problem that McCain has had consolidating his Republican base. He's put off some Republican senators because he's split off from them on certain issues and sometimes in the process that whole thing has become pretty personal -- Miles.

O'BRIEN: All right, Senator Cochran has had an opportunity to recast those remarks, dial them back a little bit, step away from the brink, if you will, whatever you want to say. Has he?

TODD: Only somewhat. Since his account of this, Cochran's spokeswoman has said he was trying to make the point that McCain has had problems with his temper, but that he's overcome them. A spokeswoman says this is one way Senator Cochran is trying to make the case that McCain is the best candidate for president. So, take that as you will.

O'BRIEN: All right. A bit of spin there. All right. Thank you very much, Brian Todd.

Barack Obama hopes to be welcomed like a rock star. He hopes to fill 75,000 seats during his speech at the Democratic National Convention.

President Bush's decision to attend China's Olympic opening ceremonies has some asking if the U.S. is too beholden to China.

And eyewitness to devastation and despair -- many of you are showing us exactly what you're seeing in those California wildfires. We will share them with you.

(COMMERCIAL BREAK)

(NEWS BREAK)

O'BRIEN: Abbi Tatton watches the Internet for us and she also watches our I-Reports and some very gripping ones coming out of those fires in the Santa Barbara County area.

Abbi, what are people saying? What are they showing us?

ABBI TATTON, CNN INTERNET REPORTER: Well, we're hearing, Miles, from some of the people who were a under mandatory evacuation over the holiday weekend just now returning home.

These pictures here from Cris Sugleris here. This is a street on Thursday when they were given about three minutes to evacuate, him and his family. You can see the fire in the distance there. As they were away this weekend, it passed within about a half-mile of their home.

He says you go back -- went back today and it looks like a fireball went through the house. It is OK, but what we're hearing from everyone around this region there is about the ash now. Their houses might be safe. They're feeling a little more confident now. The fire is moving -- direction -- but they feel like it has been raining ash. Chewing on ash is what one person told me there and there's more of these people uploading them at ireport.com.

O'BRIEN: Imagine having only three minutes to make a decision on what to take. What would you take?

TATTON: I would need a little bit more than three minutes.

O'BRIEN: I think I would take pictures.

(CROSSTALK)

TATTON: The pets, pictures.

O'BRIEN: Pets and pictures, those are the things you can't replace.

Abbi Tatton watching the I-Reports for us, thank you very much.

John McCain is making a balanced budget a priority. But voters may be more concerned with their own budgets right now -- the risks and benefits of his promise.

Plus, Barack Obama's message on Iraq and the rewrites. The best political team is standing by to consider what he said and what he meant to say.

And a legacy of luxury under the Saddam Hussein regime dug out of the dirt.

Stay with us.

(COMMERCIAL BREAK)

O'BRIEN: You're in THE SITUATION ROOM.

Happening now: More than ever, it is the economy, issue number one in this election. Which candidate can fix what ails us?

Also, Barack Obama taking a page from John F. Kennedy's playbook with plans for a convention finale that might look more like the Super Bowl.

And the dilemma over the Olympic opening ceremonies. Does the U.S. have more to gain or lose by President Bush attending?

All of this, plus the best political team on television.

Wolf Blitzer is off today. I'm Miles O'Brien. And you're in THE SITUATION ROOM.

We're taking a closer look at John McCain's pledge that if he's elected president, he will balance the budget within four years.

Our senior political analyst, Bill Schneider, joins us now.

Bill, may be a little bit surprising to hear that kind of rhetoric from Senator McCain.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, it is, because most people believe the country is in a recession. And, during a recession, balancing the budget is not usually a top priority.

(BEGIN VIDEOTAPE)

MCCAIN: American workers and families pay their bills and balance their budgets, and I will demand the same thing of our government, which you're not getting now.

(APPLAUSE) SCHNEIDER (voice-over): John McCain will balance the budget by the end of his first term. That's what McCain's new economic plan says.

We know two things about balancing the budget. One, voters think it's important. They agree with Ross Perot. Two, voters think other things are more important, like not raising taxes, and not cutting spending on popular programs.

So, how is McCain proposing to balance the budget? Not by raising taxes. McCain wants to make the Bush tax cuts permanent. Most voters think that's a fine idea. McCain says he will enforce spending restraint.

MCCAIN: I'll veto every single bill with wasteful pork barrel spending on it. You can count on it.

SCHNEIDER: His plan proposes a one year freeze in domestic spending. At a time of recession, that may be difficult. He proposes entitlement reforms, like personal Social Security accounts. Voters were skeptical of that. His plan talks about reducing the growth in Medicare spending. That's already meeting with resistance.

Remember all the talk in the 1990s about a peace dividend with the end of the cold war?

McCain's plan talks about savings from victory in the Iraq and Afghanistan operations -- a victory dividend. Balancing the budget involves many tough choices, but it helps McCain position himself as a candidate of change.

MCCAIN: The Congress and this administration have failed to meet their responsibilities to manage the government. Government...

(APPLAUSE)

MCCAIN: Government has grown by 60 percent in the last eight years.

(END VIDEO TAPE)

SCHNEIDER: Hmm. McCain is criticizing the last eight years.

Now wouldn't that be the period when George W. Bush was president?

Yes, it would.

Hmm -- Miles.

O'BRIEN: Interesting, indeed.

Bill Schneider.

Joining us to talk about the candidates and the economy a little more, CNN's senior political analyst, Gloria Borger; Stephen Hays, senior writer for the conservative "Weekly Standard"; and our senior political analyst, David Gergen.

Good to have you all with us.

Gloria, let's begin with you. When it comes to the issue of the economy, people are really concerned about what's going on in their checkbooks, aren't they, more than what's going on behind you in that Capitol dome as to whether they're balancing budgets, right?

GLORIA BORGER, SENIOR POLITICAL ANALYST: I think so. Except what John McCain is really doing here, Miles, is he's talking to all those conservatives who are very upset with this president for spending all kinds of money, for running a government in deficit. And these conservatives don't like John McCain on everything. So he's saying to them, I'm with you folks. I want to balance this budget. This administration has been spending money like crazy and I'm on your side. So it's good for him with conservatives.

O'BRIEN: Stephen, are concerns that upset with McCain and is that what this is all about?

STEPHEN HAYS, SENIOR WRITER, "THE WEEKLY STANDARD," AUTHOR, "CHENEY: THE UNTOLD STORY OF AMERICA'S MOST POWERFUL AND CONTROVERSIAL VICE PRESIDENT": Yes. I think Gloria has got it mostly right. I mean I think certainly what McCain is trying to do...

BORGER: Good.

O'BRIEN: Wow, that's good.

HAYS: Mostly, I said. What I think McCain is trying to do is make an appeal to conservatives who are angry about overspending in the Bush administration. And there are a lot of them. I think the difficulty he faces is that by making this an argument about the balanced budget, he loses some of those conservatives, because conservatives, as probably most viewers know, are split along supply side lines and deficit hawk lines. And if you're talking about balancing budgets, you're not talking probably enough about cutting taxes, which is what I think really gets conservatives excited.

O'BRIEN: Well, David Gergen, let's get on to that point because certainly going back to the Reagan years, they weren't too concerned about deficits, were they?

It was all about trickle down, it was all about tax cuts, right?

DAVID GERGEN, SENIOR POLITICAL ANALYST: Well, it was about tax cuts and about growth. And there was considerable economic growth during the Reagan years, in part due to those tax cuts and...

O'BRIEN: But with big deficits, right?

GERGEN: Well, with big deficits in the beginning. But over time, tax revenues came back. And it's true that over time -- that if you look at the overall Reagan years, the national debt went up. But it's also true that the revenues did start going up. What I think is -- there are two things, I think, happening with McCain. I think he actually is appealing to conservatives. But more broadly, he needs to bring in Independents and some Democrats. And after going and spending a week in South America, sort of lost in South America, from the point of view of most voters, he's come back to get on to the main issue that faces people.

Two things about his plan. It does not address the short-term. It doesn't do anything for us in the 12 to 24 months, when the real crunch is being faced by most Americans.

The second thing is it's not clear that the numbers add up at the end. He's going to have to come forward with a real budget in order to show that you can cut taxes this way, do all -- do all the other things he wants to do and balance the budget by 2013, as they're doing.

O'BRIEN: Well, Gloria, let me ask you this -- because Senator McCain famously admitted, obviously, a bit of a gaffe, that the economy wasn't his strong suit. I'm paraphrasing.

BORGER: Right.

O'BRIEN: Take that against Barack Obama, who has, you know, a relatively thin public resume.

Who has the better -- who has more credibility with voters on this issue?

BORGER: You know, I think they both start out at essentially the same place, except John McCain is a Republican and the Democrats are tying John McCain to George W. Bush's economy. And when you've got 80 percent of the public saying that you're going in the wrong direction in the economy, you know, that's really a problem for him.

So in this plan today, I think -- I think David is absolutely right. The only short-term thing is the gas tax holiday. And a lot of economists say that's a lot of bunk.

HAYS: Yes, Miles, if I can just jump in. I mean one of the things that...

O'BRIEN: Yes, go ahead.

HAYS: ...one of the things that I think probably is frustrating some conservatives right now is that you've got McCain essentially talking about the details. This is -- some of this is inside the beltway stuff. It's stuff that doesn't matter to the average voter, who wants to hear more about how they're going to have more money in their pocket. And I think the missed opportunity here might be that McCain is not talking about, you know, major tax reform.

Where is his major tax reform proposal, something that he could use to differentiate himself...

O'BRIEN: Well, Stephen, let me... HAYS: ...from the Bush administration if he wanted to do that?

O'BRIEN: That's a key point here, differentiating from the Bush administration.

How far can Senator McCain go on that front?

HAYS: I think he can go quite far and actually do it in a conservative way and say, look, we're talking about tax reform proposals. We're talking about getting the IRS off your back. You know, he could say even my opponent, Barack Obama, said three weeks ago that tax hikes are not the way to go during a potential recession. My reform plan is better.

I mean McCain already is seen by voters as a reformer. I guess if he were to be able to sort of package -- offer a package of conservative tax reform, I think that would sell better with the two groups he needs to appeal to, conservatives and Independents, which I think are more overlapping than most people do.

O'BRIEN: David, does he have a hard time making a break, putting some daylight between the Bush administration and himself?

GERGEN: Absolutely, because he is embracing the main tenets of the Bush economic plan. You know, he's -- he's not only embracing tax cuts, he's doubling down on tax cuts. He's increasing the number of tax cuts. And that's been the central tenet of George W. Bush's economic plan right from the beginning. And John McCain has linked himself to that. He's linked himself to more oil drilling, to more energy supplies on that central issue.

So of course he's linked to George W. Bush. What he's got to convince people is that even though it may sound like an extension of Bush, it's still better than what Obama wants to do.

I did think there was one thing -- a new wrinkle today that I haven't seen before. Carly Fiorina was talking about it this morning on television and it's in this speech -- McCain's speech. And that is the appeal to small business. And there, I think, he's got -- because small business has often been, for Republicans -- that's a very important constituency for Republicans. And to reach out to them, I thought, was one of the shrewder things that he did in the speech today.

O'BRIEN: We...

BORGER: Can I...

O'BRIEN: Go ahead. A quick point.

BORGER: Can I just say one thing?

O'BRIEN: A quick point.

BORGER: He also, if you want to balance the budget, you have to do something about Social Security and Medicare. He says he's going to do something about it, but nobody who's running for president dares to be specific about what needs to be done.

O'BRIEN: All right.

GERGEN: That's right.

O'BRIEN: Gloria has taken us to the third rail.

Dare we touch it?

BORGER: Yes.

O'BRIEN: Let's take a break. We'll come back. More with the best political team ahead.

President Bush's decision to attend China's Olympics' opening ceremonies has some people asking if the U.S. is beholden to China. I think we know the answer to that a little bit.

Plus, massive plans for Barack Obama's acceptance speech are unveiled and they're thinking big. Stay with us.

(COMMERCIAL BREAK)

O'BRIEN: Welcome back. Continuing our roundtable discussion with Gloria Borger, Stephen Hays and David Gergen, we are about to touch the third rail. So let's move on before we get in trouble. We don't want to get hurt.

Gloria, let's talk about the president and the opening ceremony of the Olympics. A lot of people say the president should not go to make a statement about human rights record in China, particularly the situation in Tibet. That's a tough political wicket for any president to deal with.

BORGER: It is. And I remember during the campaign that Hillary Clinton came out and said that she wouldn't go to the opening ceremony if she were president of the United States. And George W. Bush is just taking a position, saying, look, I want to be out there to wave to our athletes. I can make my points about human rights in different ways.

I think it's a presidential call, so I'm not going to fault him for it.

O'BRIEN: Stephen, what do you think?

HAYS: Well, I think, frankly, it would be a little weird at this point if he didn't go. You know, he's met with Chinese leaders over the course of his presidency. He's actually, in my view, outsourced much of his North Korea policy to China. And it would be strange for him to, on the one hand, say, well, we're counting on China to verify the disarming of North Korea's nuclear program...

BORGER: Good point.

HAYS: ...but their human rights give us such pause that we're not even going to show up for the opening ceremonies.

O'BRIEN: David, is this more proof that we're way too beholden to the Chinese at this point?

GERGEN: It's more proof that China is growing to be one of the most significant powers on the planet and we're going to be faced with these kind of calls for a long time to come. I think this is, as Gloria said, this is a 51-49 call, a very close call. I can't fault the president for doing this, either. He's got to -- listen, we are beholden to them financially. They're lending us tons of money. But they also did us -- they helped us a great deal in North Korea.

BORGER: Right.

GERGEN: Steve Hays may disagree with that. I think most international analysts would say without China, we wouldn't have gotten North Korea to come to the table and make the kind of agreement they did. A lot of conservatives don't like the agreement. Most people in the world think it's a good idea.

But beyond that, Miles, we have -- this is the most important relationship for us to manage over the next 25 to 50 years. And if you go around putting sticks in people's eyes because you don't like aspects of their policy, you don't manage it very well.

So from my point of view, overall, I think you can't fault the president. In fact, I would have come down the way he came down.

O'BRIEN: Gloria, go ahead.

BORGER: You know, it's easy to put a stick in their eye when you're a presidential candidate. I think it's a little...

GERGEN: Yes.

BORGER: It's a little more difficult when you're actually a president.

O'BRIEN: Stephen, what do you think?

HAYS: Well, I think -- I think the problem that he faces is that, you know, when you look back at his second inaugural, I mean he makes the argument that he wants to be the president who ends tyranny in the world. And, you know, it was a lofty speech and we expect that in inaugural addresses.

But at the same time, I think people look at the speech and say well, on the one hand, he's saying he wants to end tyranny and we stand with these people who are oppressed all over the world. On the other, you know, he's not doing the kinds of things, in some cases -- I would argue on North Korea he's not doing it -- standing with the people he said he was going to stand with. So I think that presents a little bit of a political problem that makes it more complicated than just, you know, sort of a coin toss choice.

O'BRIEN: Complicated it is, indeed. Gloria Borger, Stephen Hays, David Gergen, thank you for your time. We enjoyed the roundtable. We'll see you next time.

GERGEN: Thank you.

BORGER: Thanks.

HAYS: All right.

O'BRIEN: A cruise interrupted -- it was one stop that wasn't on the itinerary. The Coast Guard is heading to a stranded cruise ship in Alaska.

And dusting off the spoils of a toppled regime -- what Iraqi police uncovered in a Baghdad orchard. Quite a sight.

(COMMERCIAL BREAK)

O'BRIEN: Lou Dobbs is hard at work getting ready for his show right at the top of the hour -- Lou, what you got this night?

LOU DOBBS, CNN ANCHOR: Thank you, Miles.

Coming up at 7:00 p.m. Eastern here on CNN, tonight, we're reporting on the latest developments on a massive salmonella outbreak that has left the Food and Drug Administration baffled. And we were the first to report that this outbreak would be linked to Mexico. "LOU DOBBS TONIGHT" has learned now new details about the investigation and we'll have those for you.

Also, rising anger in our Congress over a European company's aggressive efforts to take over one of our biggest brewers and create a near monopoly in this country. We'll have that special report.

And a stunning reversal by San Francisco Mayor Gavin Newsom and his outrageous efforts to shield criminal illegal alien drug dealers. I'll be offering my opinion on a man I call the Little Darling of San Francisco, who is backing down under intense pressure from this broadcast and others with greater reason and sense of principle. I'll be talking with Governor Matt Blunt of Missouri. He, today, signed one of the nation's toughest laws to stop illegal immigration.

Join us for all of that at 7:00 Eastern, and a great deal more, all of it with an Independent perspective -- Miles, back to you.

O'BRIEN: All right. Thank you very much, Lou. Appreciate that.

Carol Costello is off today.

Mary Snow is looking at news headlines for us from the newsroom in New York -- Mary, what's going on?

SNOW: Well, Miles, the Coast Guard is on its way to a cruise ship that's grounded near Glacier Bay in Alaska. No injuries have been reported. The Coast Guard says the hull of the 178-foot ship is OK. Fifty-one people are on board. The ship is based in Juneau and is owned by Cruise West Enterprises.

Colombian authorities say a U.S. cargo plane headed to Miami crashed near Bogota today. Two people on the ground were killed. A hospital director says one member of the U.S. crew is in serious condition. It's the second time in six weeks that a Boeing 747 belonging to Kalitta Air of Michigan has crashed. The cause is now under investigation.

And more evidence of the opulent lifestyle of one of Saddam Hussein's sons has been dug up -- literally. Two Rolls Royces and several vintage classics belonging to Uday Hussein were found buried in the dirt of a Baghdad orchard. They were stolen during the looting after the 2003 U.S. invasion. And officer says a group was planning to smuggle them out of the country when the police were tipped off -- Miles.

O'BRIEN: All right.

Thank you very much, Mary.

We'll find out where they're headed eventually. And we'll keep you posted on that.

The Democrats now officially have a plan for a whiz bang finish to the Denver convention in a cavernous football field. It may feel more like the Super Bowl than a political event, with Barack Obama as the MVP. Here's CNN's Tom Foreman.

TOM FOREMAN, CNN CORRESPONDENT: Miles, what this is coming down to for Democrats is location and size. And in this case, size really does matter.

(BEGIN VIDEOTAPE)

FOREMAN (voice-over): It will be the crowning moment of the Democratic convention -- Barack Obama accepting his party's nomination for president. But now there's going to be a change of venue. The Democrats are holding their convention at the Pepsi Center in Denver, Colorado. That's a basketball and hockey arena that seats around 20,000 people. But convention organizers announced today that Obama will give his big speech at INVESCO Field. That's the outdoor stadium where the Broncos play football. And it seats some 75,000 people.

OBAMA: We are excited about the prospect of opening up the convention. And it's consistent with how we want to make sure that people from all walks of life, ordinary Americans, are able to participate in this convention.

FOREMAN: Drawing big crowds has never been a problem for Obama. His largest so far was more than 70,000 at a rally in Portland, Oregon two months ago. There are obvious benefits to the move.

PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: This should be a made-for-TV moment -- Barack Obama in front of 75,000 screaming supporters. It could send a powerful message about the candidate and his support. FOREMAN: But there could be a downside, as well.

STEINHAUSER: Obama opens himself up to the elements. There's a chance that a powerful lightning storm could wreak havoc.

FOREMAN: The Republicans are holding their convention at a arena in St. Paul, Minnesota just four days after Obama gives his speech. We asked the McCain campaign if they have any similar plans to move their acceptance speech to a larger stadium. They told us they don't have any announcements to make at this time.

(END VIDEOTAPE)

(on-camera) To political junkies, of course, the conventions are like the Super Bowl. So what better place to have this than a football stadium -- Miles?

O'BRIEN: Thank you very much.

Tom Foreman.

Obama is borrowing a page from John F. Kennedy. 1960 was the last time a presidential nominee moved to a bigger venue to give his acceptance speech. Kennedy spoke in front of thousands at the Memorial Coliseum in Los Angeles, telling Americans they stood on the brink of a new frontier.

(BEGIN VIDEO CLIP)

JOHN F. KENNEDY: I accept it without reservation and with only one obligation -- the obligation to devote every effort of my mind and spirit to lead our party back to victory and our nation to greatness.

(END VIDEO CLIP)

O'BRIEN: Checking our Political Ticker now.

Senator Jim Webb says he doesn't want to be Barack Obama's running mate. The Virginia Democrat has been widely touted as a V.P. prospect. But Webb issued a statement saying he won't be a vice presidential candidate under any circumstance. Webb says he has told Obama he wants to stay in the Senate.

There's a new addition to John McCain's campaign. A top adviser tells CNN that Rudy Giuliani's former campaign manager, Mike Duhaime, has been tapped to be political director. It's seen as a move to consolidate control by the new man in charge of McCain's campaign, Steve Schmidt.

And remember, for the latest political news any time, anyplace, check out CNNPolitics.com.

Some passengers describe it as the flight from hell. But for a mother, her four kids, her pregnant sister, it was the flight interrupted. Why they're accusing Southwest Airlines of stranding them with nowhere to go. And pictures worth a thousand words -- today's Hot Shots coming your way.

Stay with us.

(COMMERCIAL BREAK)

O'BRIEN: Let's take a look at some of our Hot Shots -- pictures from the Associated Press likely to be in your newspaper tomorrow.

In California now, a former -- or excuse me -- a farmer drives through a smoky haze caused by those wildfires in Big Sur.

In Washington now, demonstrators marched in front of the White House to bring attention to conditions in Yemen. They're concerned about Taliban influence there.

In Afghanistan, a man looks on as U.S. Marines take a rest during a patrol. What a face.

And in China, a boy poses in front of China's National Stadium, built for the Olympics. It's also known as the Bird's Nest. I think you can see why.

That's this hour's Hot Shots -- pictures worth a thousand words.

Trouble on a Southwest Airlines flight prompted the crew to kick off a mother and her four children, two of whom are disabled. They say they were left stranded with no money and no place to go.

Why?

CNN's Mary Snow is following this story. And it has a lot of dimensions to it -- Mary.

SNOW: A lot of dimensions, Miles.

It all started on a four hour Southwest flight on Friday. The one thing the mother of four and some of her fellow passengers agree on is that the flight was horrible. They're divided, however, over who was to blame.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Wendy Slaughter says she's furious and accuses Southwest Airlines of being unfair. The airline refused to allow her family to board a connecting flight because they were too disruptive. Slaughter was traveling with her four children. One is autistic. Another has cerebral palsy. Slaughter's pregnant sister was also with them. The family was flying from Detroit to Phoenix and was supposed to continue to Seattle. Both women told us, yes, the kids were anxious and restless, but say Southwest is being unreasonable.

WENDY SLAUGHTER, AIRLINE PASSENGER: I just couldn't believe they could do something like that and then leave us completely stranded with no money and no way to get anywhere. SNOW: But Pat McElroy, a passenger on the flight, came to Southwest's defense and blames Slaughter and her children.

PAT MCELROY, AIRLINE PASSENGER: And we did, indeed, have the flight from hell. I've never experienced anything like it in all my years of flying.

SNOW: McElroy says the children kept moving around when the seat belt sign was on, going up and down the aisle and being disruptive.

MCELROY: Shouting, chaos. The -- it wasn't the kid out of control so much as the adults.

SNOW: In a statement, Southwest Airlines says it needed to address the situation before it escalated, saying: "Southwest Airlines is responsible for the safety of all of our passengers, even the passengers whose behavior appears to jeopardize that safety."

But Slaughter says the kids were flying for the very first time and hadn't seen their dad in weeks. Slaughter's sister, Jennifer Woodward, says the kids were just being kids and they were sitting in the back of the plane so they wouldn't cause problems.

JENNIFER WOODWARD, SLAUGHTER'S SISTER: They have the symbol of a heart with wings. They have no heart. And I -- I'm really mad about it, I mean, because, you know, it was horrible. It was one of the worst experiences of my life.

(END VIDEO TAPE)

SNOW: Now, the Slaughter family says there was no threatening behavior. They say a relative paid $2,000 for them to fly on a different airline to Seattle. The family wants to be reimbursed for those tickets and their Southwest flight. For its part, Southwest says it has refunded the family for the tickets on Southwest flights -- Miles.

O'BRIEN: Mary Snow, thank you very much.

I'm Miles O'Brien in THE SITUATION ROOM in for Wolf Blitzer.

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