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THE SITUATION ROOM

Hurricane Dolly Hits; Obama Visits Israel

Aired July 23, 2008 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: And happening now, breaking news: residents scrambling for safety from the screaming winds and flooded streets, as Hurricane Dolly slams into Texas and Mexico, barrelling its way inland.
And making the rounds in Israel, Senator Barack Obama says a nuclear-armed Iran would be a major threat. Does he still plan to talk to Iran and try to change its behavior?

And President Bush caught on camera saying Wall Street got drunk and needs to sober up. But who allowed Wall Street to go on that bender? The best political team on television is standing by to take a closer look.

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

We want to welcome our viewers in the United States and around the world.

We're tracking Hurricane Dolly, still a dangerous storm, hours after making landfall on the South Texas coast as a Category 2 storm with winds up to 120 miles per hour and sheets of rain.

Our producer Aaron Cooper is standing by, getting some amazing pictures.

Aaron, what are you seeing right now?

AARON COOPER, CNN PRODUCER: Well, Wolf, we have been -- I have been up and down the island looking at quite a bit of damage. There's power poles down. There's trees down. There's quite a bit of damage here and there.

But some of the worst of it I have seen is at the (INAUDIBLE) resort and hotel. Here, you're looking at what amounts to about -- I don't know, about a 15-foot-tall hole in side of this building, right into the general manager's office.

There are at least five large holes in this hotel complex. A number of the condos, which are behind the hotel, have had walls collapse, just hitting the ground. There is quite a bit of debris that's blown out of the different hotel rooms, when the windows in the rooms gave way.

There is a large television right there and insulation and all other kinds of debris that you would expect to see in a hotel room now in the middle of this courtyard and this hotel. It's one of the largest hotels on South Padre Island, which is a major resort destination. And it's certainly sustained probably some of the worst damage that I have seen driving around here on the island.

Of course, the power is out. Most of the guests did evacuate. But those that were staying here, renting condos for the week, perhaps, are gathered in the hotel lobby, just kind of waiting it out. Many are soaking wet. They came in from the condos, just running through the rain, trying to get out of the wind and get to someplace safe. And right now it's a waiting game to wait for the storm to finally subside so they can come out and take a look at the damage for themselves.

BLITZER: And let's not forget, there are anywhere from 600,000 to 800,000 people in that area right now trying to deal with this storm.

Aaron, stand by.

Brian Todd is also on the scene with us. He's joining us now.

Brian, I don't know if you can hear me, but you're on South Padre Island. And, obviously, it's not as bad now as it was an hour or two ago.

BRIAN TODD, CNN CORRESPONDENT: Wolf, the worst of it is probably over, but we're still getting buffeted by very heavy winds and rain.

I am going to ask our cameraman, Bill Albeter (ph), to pan down here. We have got a couple of either brave or insane souls, however you would care to term them, who have ventured out. These are the first people who have been out on the beach since this storm hit.

Earlier today, just a short time ago, we were in the bulls eye of this storm as it moved ashore, winds in excess of 100 miles per hour. And we went out right into the middle of it.

(BEGIN VIDEOTAPE)

TODD (voice-over): By dawn, the first bands of the storm had been whipping at this island for several hours. The roads are passable, but hardly anyone has ventured out -- 9:00 a.m. Eastern time, the bay side of South Padre Island is getting pounded and this hurricane is feeling its oats.

(on camera): Now, what people here worried about is as the real echelon of the storm passes from east to west and moves inland, some of the circular motion of the storm is going to wash some of this water from the bay up on to the barrier island and flood parts of this island.

(voice-over): 10:00 a.m., Dolly is threatening to become a Category 2. We head out to where its strongest winds are about to come ashore. (on camera): This is where you really feel the storm picking up strength. There's really nothing standing between us and Hurricane Dolly. We're on the beach here in South Padre Island, the first point of land contact, really getting bracketed by the wind and rain now.

(voice-over): 11:00 a.m., the first serious signs of flooding. The water is almost knee-deep in some areas and about to get worse -- 11:30 a.m., Dolly is now a Category 2 and pounding all sides of this island.

Along the bay, Jarod Ellis (ph) worried about his family's charter boat business.

UNIDENTIFIED MALE: We're just seeing the docks get torn up. And there are still some boats in the water. They're getting torn up. We have tried to make calls, tell everybody to get them out. And just -- everything is just getting torn up down here.

TODD: 11:40 a.m., the storm is clearly strengthening. Street lights are coming off their moorings. Windows fall off a beachwear store. Then we see entire sections of roofs come off apartment buildings -- 12:30 p.m., we ask an emergency management spokesman what his biggest worry is.

UNIDENTIFIED MALE: The sustainability of roofs, of buildings and that, will they hope up? We urged all the construction crews, for example, to either cover their materials, get rid of loose materials, things like that.

TODD: 12:50 p.m., we head back to where we're supposed to take shelter, but we can barely see in front of our vehicle. And it's very dangerous.

(on camera): We think this is about the worst of it. We're not sure if we're catching the back side of eyewall, but winds here are about 100 miles an hour, behind me, nothing but a wall of water. You have got to hold on to anything you can find right now.

(voice-over): 1:40 p.m., the storm has gotten so intense that one of the windows in the building where we're taking shelter blows out.

(END VIDEOTAPE)

TODD: And we are still not out of danger here on South Padre Island, a lot of wind and rain, tropical storm strength.

We just got an update from the emergency services people here. It seems there is a lot of roof damage, a lot of debris on the roads, flooding on the roads. They are telling people even though the worst of it has passed here now, Wolf, they are telling people not to go out.

BLITZER: Because there's a lot of power lines that are down as well, especially dangerous.

Brian, be careful. We will check back with you. Brian Todd is on South Padre Island in Texas.

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

JACK CAFFERTY, CNN ANCHOR: Wolf, PUMA is an acronym that stands for "Party Unity, My Ass." It's the rallying cry of a group of disenchanted Democrats, PUMAs.

Many are supporters of Hillary Clinton who just can't quite seem to get over the fact that she lost and Barack Obama won. It's a humorless group for the most part. They accuse the party of rigging the primaries to favor Obama, saying the DNC unfairly punished Michigan and Florida.

Others say Obama is not qualified to be the party's nominee, not competent enough to leader the country. But he won, so a majority of the Democrats obviously think he is. Now Clinton has called on her supporters to vote for Barack Obama after she lost the nomination in June. She's not supporting these PUMAs and she says the stakes are so high that anyone who voted for her has much more in common with Obama than John McCain.

But the PUMAs aren't listening. The head of the group says there are 250 PUMA-related Web site, 2.5 million supporters online. They're supposed to hold a conference next month in Washington, where they are going to plan for the Democratic Convention in Denver in August. They want Hillary Clinton's name placed in nomination, so the delegates can get a chance to vote for her, if they decide to.

In the cut off your note to spite your face category, we find a bunch of these people, who insist that if they aren't successful at the convention, then they are going to vote for John McCain instead of Barack Obama come November. A recent poll showed more than four in 10 Democrats still prefer Hillary Clinton as the party's nominee.

But Obama leads McCain in general in most all of the election polls. And it's likely that as Clinton continues to show her support for Barack Obama, more of her backers will decide eventually to go ahead and vote for him.

Here's the question, though: Why do some of Hillary Clinton's supporters want to derail Barack Obama's nomination?

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

Interesting name, PUMAs.

BLITZER: PUMAs.

CAFFERTY: PUMAs.

BLITZER: OK, Jack, thank you. Stand by.

Barack Obama talks about Iran and Israel. But what he says prompts some questions. People are watching very closely every word he says. A complete report on Obama's day in Israel coming up.

And President Bush caught on camera blaming Wall Street for the ailing economy, saying it got drunk and is now hung over.

And African-American men are twice as likely to be out of work as white men. Can a hidden camera help find out why? CNN's Soledad O'Brien with a special report, "Black in America."

Stand by. We will have a complete preview -- much more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's turn to presidential politics right now.

Senator Barack Obama wants there to be no doubt at all. He says he staunchly supports Israel, and he took that message directly to Israel today, speaking with top officials.

Our senior political correspondent, Candy Crowley, is in Jerusalem with more -- Candy.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Wolf, Barack Obama ended his day in Jerusalem in a meeting and then dinner with Prime Minister Olmert. He will, in fact, go from here to Berlin. But before he left, Olmert said what he heard from many Israelis today, that a top concern here in Israel is Iran.

(voice-over): Yet another picture postcard home: Barack Obama in front of the remnants of rockets launched from Gaza into Israel, navigating the land mines of Middle East diplomacy by saying as little as possible.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: America must always stand up for Israel's right to defend itself.

CROWLEY: But it begs the question whether the U.S. would back an Israeli attack on Iran to prevent it from developing a nuclear weapon, Obama sidesteps.

OBAMA: I will take no options off the table in dealing with this potential Iranian threat.

CROWLEY: A nuclear Iran is a top concern for Israeli officials and political leaders.

BENJAMIN NETANYAHU, LIKUD PARTY CHAIRMAN: The main focal point of our conversation, the need to stop Iran from developing nuclear weapons.

CROWLEY: Like some American Jewish voters, Israelis were uneasy a year when they heard this...

UNIDENTIFIED MALE: Wow be willing to meet separately without preconditions during the first year of your administration in Washington or anywhere else with the leaders of Iran, Syria, Venezuela, Cuba and North Korea in order to bridge the gap that divides our countries?

ANDERSON COOPER, MODERATOR: Senator Obama?

OBAMA: I would.

CROWLEY: There were no caveats to that statement, and Obama has been trying to finesse it ever since.

OBAMA: But I think that what I said in response was that I would, at my time and choosing, be willing to meet with any leader if I thought it would promote the national security interests of the United States of America.

CROWLEY: Obama's picturesque news conference was part of a jam- packed day intermingling photo-ops with private meetings which often took on the feel of virtual reality, a kind of almost state meeting: a man who wants to be U.S. president meeting with a string of prime minister wannabes in Israel.

Obama's itinerary also took him past the security checkpoint into the West Bank city of Ramallah for a meeting with an obviously pleased Palestinian President Mahmoud Abbas. Four months ago, when John McCain passed through Israel, there was no visit with Palestinian leaders, a point Obama is happy to make with another picture postcard.

(on camera): From here, Obama is off to Berlin and what his preliminary advisers expect will be one of the highlights of this trip. It will be an open-air speech, free anyone who wants to come and listen.

Barack Obama expected to talk about transatlantic relationships. They are expecting thousands. In fact, one German newspaper said there might be hundreds of thousands. In any case, Wolf, it will be quite a picture.

(END VIDEOTAPE)

BLITZER: We will watch it with you. Safe travels, Candy Crowley from Jerusalem. She's heading to Germany with Obama.

Meanwhile, the world watches Senator Obama. As it does, John McCain is determined not to be edged out of the spotlight. He's doing some shall we say counterprogramming and going to some great lengths to keep your attention.

CNN's Dana Bash has more -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Wolf, John McCain's weeklong battle to get attention is a mix of biting hits on Obama's policies at home and abroad and a heavy dose of sarcasm.

(BEGIN VIDEOTAPE)

BASH (voice-over): While Barack Obama is overseas, John McCain is trying to convince voters at home he's working to ease their pain. He staged a photo-op, food shopping with a Pennsylvania family, going out of his way to show and tell he gets it.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: The price of a gallon of milk just went over $4 a gallon. And they said that that was the highest that she had ever seen it.

BASH: At a town hall, he even suggested the price of oil is down because of a controversial White House decision he supported, lifting the federal ban on offshore drilling.

MCCAIN: The president of the United States announced that we would be -- a week or so ago -- that we would be lifting the moratorium on offshore drilling. The price of oil dropped $10. We need to drill offshore.

BASH: But talking pocketbook politics is only half of McCain's double-barreled strategy while Obama is abroad. The other? Trying to keep Obama from bolstering his foreign policy credentials this week by pounding away on his Iraq plans.

MCCAIN: He is in favor of an unconditional withdrawal. An unconditional withdrawal, my friends, without paying attention to the facts on the ground, could lead to our failure.

BASH: Republicans frustrated with Obama's overseas spotlight are trying to be clever in getting their message out. The Republican National Committee will run these radio ads in Berlin while Obama is there.

(BEGIN VIDEO CLIP)

NARRATOR: When our military needed necessary resources, Barack Obama failed to stand up.

(END VIDEO CLIP)

BASH: But not that Berlin, the towns of Berlin in three battleground states, Wisconsin, New Hampshire and Pennsylvania.

(END VIDEOTAPE)

BASH: Now, another way McCain advisers know they will get attention is to tease the media on McCain's search for a running mate. The plan was to do the by going to New Orleans to meet with someone on the V.P. buzz list, Louisiana Governor Bobby Jindal. But it didn't happen. The trip was canceled because of bad weather -- Wolf.

BLITZER: Dana is working the story for us. Thank you.

By the way, I will be speaking with Senator McCain about his criticisms of Senator Obama over Iraq and other substantive policy issues, domestic, foreign policy, as well, the issues you care about the most. Senator McCain will be my guest here in THE SITUATION ROOM on Friday.

And you can take part in the interview. Send us your questions via CNN I-Report. You can submit your questions at ireport.com/situationroom. We will try to get some of your questions to Senator McCain on Friday.

An oil spill has closed down much of the Mississippi River in and around New Orleans. We are going to tell you what caused it and what's going on right now.

And Barack Obama on meeting with leaders of so-called rogue nations. We will compare what he said during the primary campaign to what he's saying right now. And we will talk about it with the best political team on television.

And a protester sticks to Britain's prime minister, literally.

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

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: We're working a very important story, discrimination in America right now. Does prejudice run rampant when it comes to blacks trying to find jobs?

Our Soledad O'Brien has a special report, part of the CNN series "Black in America" -- Soledad.

(BEGIN VIDEOTAPE)

SOLEDAD O'BRIEN, CNN SPECIAL CORRESPONDENT (voice-over): Queens, New York, Monday morning, April 14 -- 32-year-old Corey Mackey is getting dressed for a job interview. He's a high school graduate with some college credits and no criminal record. Last November he landed a job at a glass production company, but three months later the company was sold and relocated. Corey's been looking for a job ever since.

Corey applied for a position as a merchandise manager at a local store and received this reply, instructing him to meet the store manager in person. We wanted to see how the meeting would go, so we placed a hidden camera on Corey to record his job interview.

UNIDENTIFIED MALE: OK. Somebody call you to come in?

COREY MACKEY, JOB SEEKER: No. When I applied online, on you know, through the Internet, they told me the next step was to visit the store in person and ask to speak to the store manager.

UNIDENTIFIED MALE: OK. The way the process goes. You know, the human resources manager is the one who do the interviews and he's the one who actually, you know, do all the hiring. And he's not here today.

O'BRIEN: Corey is given this job application and a promise that someone will get back to him. To this day, Corey hasn't heard back from anyone at the store.

Corey lives with his girlfriend, Gina, and their 1-year-old daughter Janese (ph), in the Queens Bridge projects. One of the poorest and toughest communities in America.

(on camera): Did you go to college?

MACKEY: Yes, at the Essex County College. But then I had my first daughter, so I stopped to start working.

O'BRIEN: So that's little baby Janese?

MACKEY: No, that's Kiaro (ph). Yes, Kiaro. She'll be 10 in August.

O'BRIEN: So two kids.

MACKEY: Yes, two kids.

O'BRIEN: Do you look at them ever and say, if I hadn't had the kid I could be a college grad?

MACKEY: No. I never look at them and think that at all. I love them to death. I do what I do for them.

O'BRIEN (voice-over): The fact is, with kids and no college degree, it's a lot harder for young black men like Corey. That same afternoon he begins his job search again.

MACKEY: I'm getting frustrated here.

O'BRIEN: Adding to his woes, his cell phone might be cut off. And that's his only way of following up with potential employers.

MACKEY: How badly do I need a job? If it was on a scale of 1 to 10, it would be like a 13, 14 right now.

(END VIDEOTAPE)

BLITZER: And you're going want to see this very, very special CNN documentary. It debuts tonight, "Black in America." You're going to be amazed. It's getting rave, rave reviews already. Soledad O'Brien and her team have done an amazing, amazing job. They have look at the experiences of African-American women and families. They also look into the reasons behind some of the disturbing statistics -- tonight, 9:00 p.m. Eastern, right here on CNN.

He thought the cameras were off, so President Bush was speaking candidly about Wall Street, calling it drunk and hung over -- why he blames it for our financial woes.

Also, Barack Obama changing his stance on unconditional meetings with Iran, Syria, among others. What he said a year ago exactly today, what he's saying today.

Plus, lots of buzz about this governor as a potential John McCain running mate. Now Governor Bobby Jindal is speaking out definitively. We will tell you what he's saying right here in THE SITUATION ROOM.

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

Happening now: Dolly still a hurricane hours after making landfall on the South Texas coast. Powerful winds and driving rain are pounding the region right now.

Barack Obama on meeting with the enemy. Has he changed his stance from a year ago today when he vowed unconditional meetings? Details of what he's saying on this day.

And Wall Street drunk and hung over. President Bush caught on tape laying blame for the country's financial woes.

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

President Bush caught on camera casting blame for America's economic problems. He says Wall Street got drunk and needs to sober up.

CNN's Mary Snow is working the story for us.

Mary, tell our viewers what this is all about.

MARY SNOW, CNN CORRESPONDENT: Wolf, the president was speaking at a private event, unaware he was being videotaped.

He was summing up the mortgage collapse that has triggered the country's economic slump, and took aim at Wall Street with some stinging criticism.

(BEGIN VIDEOTAPE)

SNOW (voice-over): President Bush didn't intend for the public to hear a private talk given at a fund-raiser in Houston last week. But someone in the crowd had a camera rolling. And the video ended up on YouTube, allowing viewers to hear him fault Wall Street for the ailing economy.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It is uncertain, there's no question about it. Wall Street got drunk, it's one reason I asked you to turn off your TV cameras. It got drunk and now it's got a hangover. The question is how long will it sober up, and not try to do all these fancy financial instruments.

SNOW: The president then alluded to the housing crisis.

BUSH: And then we've got a housing issue. Not in Houston, evidently not in Dallas because Laura's over there trying to buy a house today.

SNOW: A White House spokeswoman downplayed the remarks saying the president has made similar criticisms of Wall Street in the past.

DAN PERINO, WHTIE HOUSE PRESS SECRETARY: The president has described it the way others have. Obviously he did it in a very, in a way with much candor. SNOW: But the president's finger pointing drew fire from some who make their living on Wall Street.

ART HOGAN, JEFFRIES & CO. CHIEF MKT. STRATEGIST: To put at the feet of Wall Street what happened in residential real estate and residential real estate mortgages is unconscionable.

SNOW: Art Hogan of Jeffries & Company says instead of Wall Street, blame shady lenders giving mortgages to people who couldn't afford them. But political analyst and former presidential adviser David Gergen said there's plenty of blame to go around and questions Washington's responsibility

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: The president said Wall Street got drunk and now it's got a hangover. There's truth to that. But for a lot of people the question is, where was the government? Why didn't the government take the bottles away? You know, why did it allow it to go on this binge?

(END VIDEOTAPE)

SNOW: Now that the damage is done, the government is moving on a rescue plan. Late this afternoon, the house passed a sweeping bill that will offer up to $300 billion in assistance to struggling homeowners. And it throws government support behind mortgage giants Fannie Mae and Freddie Mac. The president has also dropped an earlier threat to veto that bill -- Wolf?

WOLF BLITZER, CNN ANCHOR Mary thanks very much. Let's talk about this and more with our senior political analyst, Gloria Borger, our own Jack Cafferty and Stephen Hayes, a senior writer for "The Weekly Standard" here in Washington.

Jack, you used to be a long-time business reporter. You know the story. Forget about the colorful language that the president used but is he right to lay the blame on speculators if you will on Wall Street?

CAFFERTY: Well, what he was trying to get at was the fact that these mortgages, so many of which have gone sour, were bundled up in investments and then resold so you could buy what they called "mortgage-backed securities" and put them in your portfolio, not having the foggiest idea that half of them are going to go bad in the next couple of years.

When the mortgages began to go haywire, it raised the question about the value of these investments and the thing became this tangled ball of twine. The results of which are visible in the declining stock prices and the threats to people like Freddie Mac and Fannie Mae. But it seems that the president might have been one, a little more sympathetic and two, taken a couple of minutes to be a little more thorough in his explanation of what is arguably one of the worst economic downturns we've had in a long time, that he presided over, that occurred on his watch?

BLITZER: Is it fair to blame Wall Street, Steve? STEPHEN HAYES, THE WEEKLY STANDARD: Well I think they share some of the blame. It was interesting listening to Jack's explanation. He clearly knows a lot more about this than the president does. I think President Bush's phrase was actually "fancy, financial instruments." To sum up what Jack spent two minutes talking to.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Is that like a violin or something, I don't know?

HAYES: I'm not sure, but it was quite an extrapolation from those three words. Look, I think Wall Street shares some of the blame. The president did mention the housing market. I think what he was doing was speaking off the cuff at an informal fund raiser and not thinking that his remarks were going to be broadcast to the world and probably being a little more cute than he otherwise would have been.

BORGER: You know I have to think that this is probably the first time that a sitting president of the United States has been YouTubed. We don't get to see this very often. I know he told everyone to turn everything off but this really --

BLITZER: (INAUDIBLE) in this day and age, you've got to be careful. No matter how much you think that there are no cameras there, with these cellphones, there is always going to be a camera.

BORGER: There is always going to be a camera and there is no off Broadway for presidential candidates anymore. Everything is on the record. Even when you're a president when you say no cameras, sorry, somebody wants to be famous for one minute and send it to YouTube.

BLITZER: He said definitively, Steve, today Bobby Jindal, the young governor of Louisiana, guess what, he's not going to be the vice presidential running mate. What do you make of that?

HAYES: I think that's probably right. Jindal is a pretty impressive guy. He's certainly one of the next generation of Republican Party leaders. But he's young. And I think one of the things that John McCain's going to count on making as we -- especially in the last two months of the campaign, is that he has the experience to be president and Barack Obama doesn't. Hard to make that case if you've got someone 10 years younger than Obama on your ticket.

BORGER: I was talking to some Republicans today, Wolf, who say that Jindal is really being considered very seriously as the possible keynoter at the Republican Convention. Being their equivalent of Barack Obama in 2004. As you know, 2004 was the moment the world took notice of Barack Obama. And that's what they'd like to see for Bobby Jindal. He's so young, that McCain has to worry about that. Because he is going to be in his -- he is in his 70s. He can't have someone that young.

BLITZER: He's a very impressive young guy though Jack.

CAFFERTY: Newt Gingrich issued a little warning to John McCain today. No more boring old white guys. He was talking about the vice presidential pick. He said the last thing the country wants to see is another old boring white Republican and he specifically mentioned Jindal and the governor of Alaska as two people that Gingrich thought might bring some pizzazz and excitement to the ticket.

BLITZER: All right. But that's, at least in Jindal's case that's not happening. All right guys, stand by.

Is Barack Obama changing his stance when it comes to talking directly unconditionally with America's enemies? Details of what he said a year ago and what he said today in Israel.

Also, who decides whether to send more troops to Afghanistan? The pentagon puts it bluntly. Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right, we're back with Gloria, Jack and Steve. Guys, exactly one year ago, at the famous CNN/YouTube debate, some YouTuber named Steve asked this question to Senator Obama.

(BEGIN VIDEO CLIP)

STEPHEN SORTA: Would you be willing to meet separately, without precondition, during the first year of your administration in Washington or anywhere else, with the leaders of Iran, Syria, Venezuela, Cuba and North Korea, in order to bridge the gap that divides our countries?

ANDERSON COOPER, CNN ANCHOR: We'll also point out that Steven is in the crowd tonight. Senator Obama?

OBAMA: I would. And the reason is this, that the notion that somehow not talking to countries is punishment to them, which has been the guiding diplomatic principle of this administration, is ridiculous. Ronald Reagan and Democratic presidents like JFK constantly spoke to Soviet Union at a time when Ronald Reagan called them an evil empire.

The reason is because they understood that we may not trust them, they may pose an extraordinary danger to this country, but we have the obligation to find areas where we can potentially move forward. And I think that it is a disgrace that we have not spoken to them.

(END VIDEO CLIP)

BLITZER: Now, today at his news conference in Israel, an Israeli journalist said that answer a year ago caused some concern to Israelis and he wanted Senator Obama to elaborate. This is how he responded today.

(BEGIN VIDEO CLIP)

OBAMA: I think that what I said in response was that I would, at my time and choosing, be willing to meet with any leader, if I thought it would promote the national security interests of the United States of America. And that continues to be my position. That, if I think that I can get a deal that is going to advance our cause, then I would consider that opportunity. But what I also said, was that there is a difference between meeting without preconditions and meeting without preparation.

(END VIDEO CLIP)

BLITZER: Jack, he didn't say that in his initial answer a year ago. Today, the reference to the preconditions and the reference to, only if it would promote national security interests of the United States. He has said it several times over the past year. Is he finessing his original answer?

CAFFERTY: Maybe a little. I think the suggestion is very clear. That it's probably better to try diplomacy than to rush off to war. Maybe you can resolve your differences by talking than getting people killed. Who was it that said, keep your friends close and your enemies closer? I think it's pretty obvious what he was saying.

BLITZER: What do you think Steven?

HAYES: He wasn't finessing his answer, he was changing his answer and it's not the same answer that he gave a year ago. And I think what really makes it clear is watching the actual YouTube clip from that CNN/YouTube debate a year ago of the question being posed. Because the questioner couldn't have been any clearer. Will you meet without condition in Washington or anywhere else and then he names the four leaders, and Obama says almost sort of triumphantly, I would.

The other thing to remember is that this then became an issue between Hillary Clinton and Barack Obama. She used this to call him naive. Obama said, no, no, I'm not naive and I think started then back-peddling away. The answer he gave today bears some relation to the one he gave a year ago but very little.

BLITZER: The Obama campaign specifically says the question, would you be willing to meet and then he finessed it in the sense he would be willing to meet but didn't necessarily mean he would be ready to meet. But they may certainly be back-peddling. What do you think, Gloria?

BORGER: I think they are back-peddling. Welcome to the difference between a primary campaign and a general election campaign while you're on a tour of the Middle East with those folks standing behind you, right? I think Obama had to make it very clear. And he did have to tweak his position.

Because the Israelis don't want him to say, yes, I'm going to sit down and meet with Syria, I'm going to sit down and meet with Iran, without any preconditions. I'm going to -- they don't want to hear that. So it was very clear today that the politician in Barack Obama was coming out. Now, not that that -- you know, that's not a terrible thing to say that someone's position's evolved but it clearly has.

BLITZER: All right guys, we have to leave it right there because we're out of time. Jack has "The Cafferty File" coming up shortly so stand by for that.

Let's check in with Lou to see what's coming up right at the top of the hour. Lou?

LOU DOBBS, CNN ANCHOR: Wolf, coming up, we'll be reporting on the growing scandal over San Francisco Mayor Gavin Newsom's sanctuary policy for illegal aliens. New calls for an investigation into the city's decision to prevent the deportation of a criminal illegal alien who faces now triple murder charges. A member of the victim's family joins me.

And outrage and demands by pro amnesty Democrats for universal health care for everyone, including illegal aliens, presumably all 20 million of them. We'll have that report.

You won't believe this. The same Food & Drug Administration that can't find the source of our nationwide salmonella outbreak, has its own secret police department. Lawmakers say all the money being spent on that secret police department could be spent instead on more inspectors for both food and drugs. We'll have an exclusive report for you here tonight. Join us for all of that at the top of the hour. All the day's news and much more from an independent perspective. Wolf, back to you.

BLITZER: Lou, thank you. See you in a few moments. His city's computer network held hostage by a rogue techie. San Francisco Mayor Gavin Newsom comes to the rescue. We'll tell you what happened.

Britain's prime minister in a rather sticky situation. He got super glued. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Let's go back to Carol, she's monitoring some other important stories incoming into THE SITUATION ROOM right now. What's the latest Carol?

CAROL COSTELLO, CNN CORRESPONDENT: Wolf, the pentagon says it will be up to the next White House to decide on any sizeable troop increase for the war in Afghanistan. U.S. commanders have been asking for an extra 10,000 troops to fight growing insurgent violence. Both Senators Barack Obama and John McCain support sending more troops to Afghanistan. Of the 60,000 troops currently there, 36,000 are Americans.

German police arrested a man who tried to deface the location in Berlin where Barack Obama plans to give his big speech tomorrow. The man drove his car through a security barricade and he tried to pour red paint at the base of the city's victory column. No one was injured in the incident

And an update now on a story we told you about last week in THE SITUATION ROOM. Remember the San Francisco computer engineer who was holding the city's network hostage? Terry Childs finally gave up the access code but only after a secret visit by San Francisco's Mayor Gavin Newsom. The network handles the majority of the city's information, including sensitive law enforcement, payroll and jail booking records. It was a sticky situation for Britain's prime minister. An environmentalist tried to super glue his hand to Gordon Brown's sleeve at his Downing Street event. But Mr. Brown had little trouble freeing himself. I guess it wasn't very super, super glue. No charges were filed and the man was allowed to stick around after the stunt. They're very forgiving in Britain, aren't they?

BLITZER: Did he send him the dry cleaning bill for his suit? I would hope, right?

COSTELLO: At the very least.

BLITZER: That suit could have been ruined. It might have been an expensive suit. Carol, thank you.

Let's go back to Jack, he's got "The Cafferty File." Jack?

CAFFERTY: The question this hour is: Why do some Hillary Clinton supporters want to derail Barack Obama's nomination?

Ray in Florida writes: "I think they realize if Obama wins Hillary isn't on the ticket. She has almost no chance of ever being president. On the other hand if he should lose, the Clintons can run again in 2012."

Al in Lawrence, Kansas: "The bigger question is, why doesn't Hillary denounce and reject them?"

Teshome in Haymarket, Virginia: "Because we believe in Hillary, but thanks to you and your likes, she lost the primary. Now if Obama picks her as VP, he will get our vote. If not, John McCain will be the next president"

Susan in Georgia writes: "Republicans in Democratic clothing."

Karen in Tennessee, "They're like little kids having tantrums, screaming and pounding their fists on the ground and yelling no, no, no, because Hillary Clinton didn't get the nomination. Sadly, their idol is off somewhere doing exactly the same thing."

Zoe writes, "I am proud to be a puma. I will hold my nose and vote for the Democratic candidate, whoever it is. But I have every right to prefer someone else. That doesn't make me racist or stupid or stubborn. It means I think about my vote and the leader I give it to."

Nancy in Georgia says, "Clinton supporters and others who are trying to derail Senator Obama are unhappy with their own lives. Mr. Obama is confident, intelligent, knows how to galvanize the population. For that reason, unhappy folks don't get it. But you probably do, Jack, misery loves company."

And Tom in Maine writes, "Not every child in the playground learns to play well with others. We need to increase Head Start funding for the emotionally challenged who can't get past, I'm taking my ball and going home." If you didn't see your e-mail here, you can go to my blog at cnn.com/caffertyfile. Look for yours there among hundreds of others -- Wolf?

BLITZER: See you tomorrow, Jack, thank you very much.

On our "Political Ticker" today, Barack Obama may be beating John McCain when it comes to fundraising, but Republicans are beating Democrats in terms of money raised by the political parties. We're getting the most recent financial reports for cash on hand as of the end of June. And it shows Obama raised $50.5 million to McCain's $16.4 million. But the Republican Party has raised more than 15 times what the Democratic Party has raised. And that means McCain and his Republican Party, slightly more money than Obama and the Democrats. Interesting.

It wasn't a big surprise, but now it's official. President Bush will speak at the Republican National Convention on its opening night. That will be Monday, September 1st in St. Paul, Minnesota. The White House press Secretary Dana Perino says it's traditional for an incumbent president to speak on the first night of his party's convention.

The journalist Tim Russert provided an avenue for so much of the nation's political discourse. Now, a symbol of that in the form of a roadway. Today, President Bush signed into law the Timothy J. Russert Highway in upstate New York. It runs along a portion of U.S. Route 20-A in Orchard Park. That's a suburb of Russert's hometown of Buffalo.

Remember, for the latest political news anytime, check out cnnpolitics.com. The ticker is now the number one political news blog out on the web.

John McCain's campaign says the relationship between the media and Barack Obama should be set to a love song. Jeanne Moos takes a look at this "Moost Unusual" idea. And protesting a longer work week. Ahead in today's hot shots, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the hour's Hot Shots. Washington Redskins' football player Jason Taylor signs autographs for fans. There he is.

In France demonstrators protest a new law allowing companies to get around a 35-hour workweek rule.

In Afghanistan, a police vehicle blasted by a roadside bomb is removed from the scene.

In Brownsville, Texas, man's best friend weathers the approaching storm. Some of this hour's Hot Shots.

The McCain campaign is accusing the news media of engaging what the campaign video calls Obama love. CNN's Jeanne Moos presents a "Moost Unusual" juxtapositioning of the coverage of the two candidates.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): There he was, his arm nestled around Israel's president. There he was, waving, his arm draped around the Palestinian leader. Having his arm patted by Jordan's king. Talk about getting the presidential treatment. Palestinian spokesman almost called him president --

SAEB ERAKAT, SENIOR PALESTINIAN SPOKESMAN: Believe me, president -- Senator Obama left us feeling very well.

MOOS: Feeling not so well, the McCain campaign, accused the media of Obama love with examples set to music.

UNIDENTIFIED MALE: He's sort of a gift from the world to us in so many ways.

MOOS: On John McCain's website, you can vote for your preferred love song.

That one or this one.

UNIDENTIFIED MALE: Not cool if you haven't seen Barack Obama in person.

MOOS: Jordan's King Abdullah didn't just see him in person. The king personally got behind the wheel of a Mercedes and drove Obama to the airport. Contrast that the other day with former President George Bush giving John McCain a lift in a golf cart.

UNIDENTIFIED MALE: The media's love affair with Barack Obama is all-consuming.

MOOS: Jon Stewart's been running a daily bit on the trip called Obama quest.

JON STEWART, HOST "THE DAILY SHOW": Obama was off to Israel where he made a quick stop at the manger in Bethlehem where he was born. We'll have more tomorrow.

MOOS: What with all the press attention on Obama's trip --

STEWART: Who's covering the McCain campaign?

UNIDENTIFIED MALE: Uh, it's covered --

MOOS: Ok, so McCain has a bit more than a tape recorder to talk into. But not media love like this.

UNIDENTIFIED MALE: It's the kind of love that anybody who's been a ninth grade boy understands, this species of love. I think about you when I go to bed it's sealed with a kiss love.

MOOS (on camera): The snarky, dare we say slightly envious attitude even plastered on the McCain campaign press credentials. Reporters covering McCain were given credentials captioned, left behind to report in America, with a photo of a wine drinking Frenchman in a beret. While Senator Obama was getting counseled by presidents --

PRES. SHIMON PERES, ISRAEL: Permit me to speak as a young man to a young man.

MOOS (voice-over): And was being choppered around and saluted, Senator McCain was touring a grocery store in Bethlehem, Bethlehem, Pennsylvania.

UNIDENTIFIED FEMALE: You can grab one of those.

MOOS: Under attack not by the press -- by the apple sauce. Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: Leave it to Jeanne Moos for that. Remember, Senator McCain will be my guest here in THE SITUATION ROOM on Friday. We'll have a special interview with him. Senator McCain, in THE SITUATION ROOM, Friday.

I'm Wolf Blitzer in Washington. Up next, "Lou Dobbs Tonight." Lou?

DOBBS: Thank you.