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Obama Fights McCain; Palin Reform Pitch; Jobless Rate Soars; McCain & Palin Road Test

Aired September 5, 2008 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, voters in greater economic pain as the presidential campaign enters the final phase. This hour, a troubling new jobs report, and the impact on the race for the White House.
Also, John McCain and Sarah Palin, they're on the road in the heartland. Fresh from their convention, the Republican running mates are trying to capitalize on her new popularity.

And Barack Obama hits the re-send button on his message of change. He's pushing back against McCain and Palin and their claim that they are the true reformers.

I'm Wolf Blitzer at the CNN Election Center. And you're in THE SITUATION ROOM.

The balloons have dropped, the conventions are over, and now a new wakeup call about America's slumping economy. The government reports the nation's unemployment rate zoomed to a five-year high of 6.1 percent last month. And employers slashed another 84,000 jobs. More than 600,000 jobs have been lost this year already.

It's a very harsh reality that the presidential candidate can't ignore, as the general election campaign begins in earnest today. And it's a new punch in the gut for the president as his days in office wind down.

Elaine Quijano is standing by at the White House. Dana Bash is with John McCain in Michigan.

But let's go to Suzanne Malveaux first. She's watching all of this.

The Obama campaign wasted no time, Suzanne, reacting.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: You're absolutely right, Wolf. They wasted no time in reacting.

Barack Obama used these new job numbers to compare John McCain to President Bush. He argued that Americans will suffer economically under another Republican administration, and he specifically went after what he said was McCain's $200 billion tax relief plan for big businesses and oil companies.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): Off and running.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I want to start creating jobs here in the United States. That's going to be my central focus when I'm president of the United States.

MALVEAUX: Sixty days in the race to the White House. Barack Obama's message out of the gate, remember me? I'm the change guy, John McCain is the Johnny-come-lately.

OBAMA: John McCain's been in Washington for 26 years. And during those 26 years, John McCain kept on voting against tax credits for wind energy...

MALVEAUX: On energy, education, health care and jobs, Obama hit McCain hard, declaring his opponent had no plans to even tackle them.

OBAMA: Where have you been for 26 years? Where have you been?

We don't need a made-for-TV commercial energy policy. We need a real policy that's serious.

I'm learning about glass here.

MALVEAUX: At a glass factory in Pennsylvania, Obama focused on the new job numbers -- 84,000 lost in August, a five-year high. Obama's economic plan, he says, to cut taxes for 95 percent of working families, $500 for individuals, $1,000 for married couples. And a $25 billion state growth fund to prevent state and local cuts in health, education and housing assistance.

An important message in Pennsylvania, where support during the primaries for Obama in the northeastern region was lukewarm. Here, he is still trying to define himself, blaming the Republicans for spreading false rumors.

OBAMA: Maybe he's got Muslim connections, or we're going to say that, you know, he hangs out with radicals or he's not patriotic. Just making stuff up. Or that he never has gotten anything done.

(END VIDEOTAPE)

MALVEAUX: Obama took on all of those points. He also addressed gun control, which he says he's been largely misunderstood. In his words today, he says, "If you've got a rifle, a shotgun, a gun in your house, I'm not taking it away. We're not going to mess with them."

Obviously, Wolf, the gun owners in rural Pennsylvania today, a very important voting bloc -- Wolf.

BLITZER: A really sensitive issue for so many voters out there. Thanks, Suzanne, very much.

We're going to get McCain's reaction in a moment. Dana Bash is standing by.

But the White House is acknowledging now that tough times are going on right now for lots and lots of Americans. But White House officials also insisting it's not as bad as some people might think.

Let's go to our White House correspondent, Elaine Quijano. She's looking at this part of the story for us.

All right, Elaine. The administration trying to put the best face on what clearly is some very troubling numbers.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, that's right, Wolf. As we've heard before, the White House continues to insist that the fundamentals of the economy are sound, but officials here today also acknowledging that these latest numbers are disappointing.

BLITZER: All right. Unfortunately, we're having some technical problems right now with the audio. We're going to go back to the White House and get some more from Elaine Quijano standing by.

Clearly, these numbers are not good. These economic numbers are not good. Some 80,000 jobs lost already this past month. More than 600,000 jobs lost this year so far.

All right. Sarah Palin is hoping to help bolster John McCain's support among women, but one of her fellow female governors isn't very impressed. I'll speak live with the Kansas governor, Kathleen Sebelius, and ask if Palin may be a magnet for disgruntled Hillary Clinton supporters.

Plus, divided allegiances. Black Republicans torn between supporting their party or the first major party African-American presidential nominee.

And the candidates in their own words. You're going to hear for yourself what Barack Obama, John McCain and Sarah Palin are saying today.

Stay with us for all that. That's coming up.

But first, this very, very sad note. Jack Cafferty isn't here today for "The Cafferty File" because of some tragic news. His wife of 35 years, Carol, passed away unexpectedly this morning.

Carol was everything to Jack. The dedication of his book reads, "For Carol, my wife, my life."

Jack wrote about how she was the inspiration for him to get sober and straighten up his life. And I'm quoting now, "In all the years that we've been married, she has always brought to the table her unshakable grounding in something a lot more real than being on television or being recognized in the corner drugstore. She has been my rock, having done a magnificent job of keeping me from getting full of helium and drifting off the surface of the earth."

"She was all the incentive I needed to make painful but transforming changes to get sober and stop smoking. I knew that I'd lose her if I didn't. She's an amazing woman who simply wasn't worth losing." That's a quote from his book.

One story Jack loves to tell is how he and Carol met when he was a local news anchor in Kansas City. They started to meet regularly for a quick meal between his shows and became very good friends. Whenever Jack had to leave, his exit line would always be, "We better wrap this up, got to get back to the station."

One night Carol finally asked, "What kind of gas station do you work at? You're always wearing a tie." Jack explained it was a television station.

He loved the fact that she had no clue and couldn't care less that he had been on air there in Kansas City every night for four years. He later described that as one of his life's 24-carat moments that made his heart soar.

He said to himself then that he might marry her because "... it can't get any more honest and pure than that." Those are Jacks words.

Our deepest sympathies go out to Jack and their two daughters, Leslie and Lee (ph). Our thoughts also are with Jack's other two daughters, Julie and Jill Ann (ph), his grandchildren.

Carol, by the way, was an animal lover. If you would like to make a donation in her memory, the family asks that you give to the American Society for the Prevention of Cruelty to Animals. You can contribute at aspca.org.

(COMMERCIAL BREAK)

BLITZER: Now to John McCain and Sarah Palin. They're making headlines after the Republican convention. They're trying to carry the momentum forward, the momentum they built in St. Paul and to other battleground states.

Let's go to CNN's Dana Bash. She's with the GOP running mates in Michigan right now.

And that certainly is one of those battleground states, Dana. All right. What's the post-convention strategy? What are they up to?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, I'll give you a basic hint on what their strategy is. That is where I am.

I'm in Macomb County. This is the home of those legendary Reagan Democrats. They're swing voters that John McCain really must attract in order to win in November. But, Wolf, they're not the only focus, the urgent focus of John McCain and Sarah Palin post-convention. Their first stop today was Main Street in conservative country.

(BEGIN VIDEOTAPE)

BASH (voice-over): A big open-air rally in small-town Wisconsin, a GOP stronghold John McCain must win to take this battleground state, exactly the kind of place he hopes his new running mate will help. GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: I want to tell you squarely, plainly, there is only one man in this election who has ever really fought for you in places where winning means survival and defeat means death, and that man is Senator John McCain!

BASH: Sarah Palin's not-so-subtle message to conservatives here, believe me when I say you can trust him, because you can relate to me.

PALIN: ... people with honesty and sincerity and dignity, and I know just the kind of people he was talking about, because I grew up with those people. And I know that you did, too, here in the beautiful city of Cedarburg.

BASH: Palin's post-convention popularity is generating an energy largely absent from McCain's events before.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Isn't this the most marvelous running mate in the history of this nation?

BASH: The main message? You want change? Their ticket is best suited to deliver.

MCCAIN: It didn't matter if they were Democrats or Republicans. I fought the big spenders. I fought the pork barrelers.

BASH: But amid all the cheering, McCain was also careful to note yet another gloomy jobs report, calling these tough times.

MCCAIN: You're worried about keeping your jobs and finding a new one, struggling to put food on the table and stay in your home. All you ever asked of government is to stand on your side, not in your way.

(END VIDEOTAPE)

BASH: Now, the Republican ticket certainly is ending their convention week with an abundance of energy, Wolf. You see people gathering behind me for a rally here that's expected to start in about an hour and a half. But they also have very big, very different challenges ahead.

First, the idea that they are going to have to sharpen their economic message in the face of that new bad news that we got today. But also, they are going to have to figure out, and they're trying to figure that out as we speak, how to deploy their new headline-grabbing running mate -- Wolf.

BLITZER: All right, Dana. Thanks. Stand by.

Republican presidential candidate John McCain has Sarah Palin, as you know. Barack Obama's campaign has Senator Hillary Clinton, the Arizona governor, Janet Napolitano, and Kansas Governor Kathleen Sebelius. They are high-profile female Obama supporters who will now fan out to campaign for the Democratic presidential candidate in the coming weeks.

Governor Sebelius is joining us now live from Topeka, Kansas.

Governor, thanks very much for coming in.

GOV. KATHLEEN SEBELIUS (D), KANSAS: Good to be with you, Wolf.

BLITZER: All right. How does this change the equation? Because as you know, there's been criticism of some elements of the media for being sexist in criticizing the Alaska governor, the running mate for John McCain. What do you think?

SEBELIUS: Well, I think it's very fair to look at the record of a running mate of the person who's a heartbeat away from the presidency, and look at it as a decision, a key decision made by the candidate. I find it troubling that Senator McCain, by all reports, has met Governor Palin once. That's pretty difficult to imagine, any CEO in this country choosing as his or her top lieutenant, as the closest person to succeed them, taking over a company, somebody they've only met once.

It means to me that somebody else is calling this playbook. It has little to do with Governor Palin's ideas. It has much more to do with her gender.

But I think women are paying very close attention, and more attention to the economic numbers that just came out than the gender of the candidates on the trail. They want to know which ticket is really going to be looking after their interests, their family interests, and I think that's no doubt that that's the Obama/Biden ticket.

BLITZER: They met once back in February, then in the final days before the decision they had another meeting. At that point he made up his mind that she in fact would be the pick. But those are a couple serious points that you're making, potentially serious charges that, what, she's not really qualified to be vice president of the United States? Is that what you're suggesting?

SEBELIUS: Well, I didn't talk about qualifications. Think that the voters need to look at the record of what she has claimed to do and what she actually has done. And that's important.

What I think John McCain has done very clearly is to definitely change. He has changed to embrace the very radical winning of his party on social issues, take the most radical positions. A lot of the Republicans and moderates I know here in the state of Kansas, in the heartland, a very Republican state, find it very troubling that this is kind of a sharp veer to the right.

It's embracing the social conservatives, and they see that as a shift for John McCain. I think he has changed.

BLITZER: Are you suggesting -- somebody else is calling the shots. Who's calling the shots, if not John McCain?

SEBELIUS: Well, you know, I don't know, Wolf. A lot of the press reports that I listen to talked about the fact that he really wanted either Governor Ridge, former Governor Ridge, or Senator Lieberman as his running mates. But at the end of the day, they convinced -- I don't know who they are, but I think we better figure out who they are, because if they picked the running mate, my guess is they're going to pick the rest of the playbook.

I found a lot of what went on in Minneapolis/St. Paul very troubling. I think it's troubling to have a presidential team who disparages service of all kinds -- community service and public service. I guess nothing but military service counts.

And while I think Democrats certainly respect and uphold military service, we want people in America to have a serving heart, to reach out to others less fortunate. I think it's troubling to have the kind of demeaning dialogue about anyone who found their pathway to the American dream a little bit differently than somebody else.

I'm hoping that in the next 60 days, we can talk about the issues that really matter to Americans, to the Kansas folks in the heartland, about the pocketbook issues. The job numbers are appalling. More and more Americans have lost their jobs this month, highest unemployment in the last five years. We continue to lose jobs.

Barack Obama, Joe Biden have a plan -- a tax break for 95 percent of Americans, a plan to restore jobs, green energy jobs, workplace jobs, put people back to work in this country. Stop the tax bleeding to corporations that are moving jobs overseas. I think that's a real economic plan that women and families and working folks are going to pay attention to.

BLITZER: The governor of Kansas, Kathleen Sebelius.

Governor, thanks for joining us.

SEBELIUS: Sure. Nice to be with you.

BLITZER: Appreciate it. All right. Thanks. Let's move on.

The Pulitzer Prize-winning journalist Bob Woodward has a brand- new book that's coming out. The White House may not like some of its shocking claims. Among them, the White House extensively spied on the Iraqi prime minister, Nuri al-Maliki.

Stand by for details.

And many people along the southeastern coast in Florida are very worried right now of Tropical Storm Hanna, and the hurricane, Ike, a very serious threat.

We'll have the latest. Stay with us. You're in THE SITUATION ROOM.

(NEWSBREAK)

(COMMERCIAL BREAK)

BLITZER: Happening now, John McCain's running mate, the governor, Sarah Palin of Alaska, under investigation for possible abuse of power. It involves an Alaska state trooper who was locked in a very messy divorce with the governor's sister. The state trooper is now speaking to CNN exclusively.

Stand by for that.

Also, it's kind of like Facebook, but probably won't be used for sharing nice family photos or playing video games. On this site, topics will include secrets, sabotage and subversive plots -- a new social networking site for spies.

And the award-winning journalist Bob Woodward has a shocking new book about the Bush administration's handling the Iraq war. One claim, the White House extensively spied on Prime Minister Nuri al- Maliki.

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

Let's get back to our top story right now, very, very bad economic numbers. Jobs losses coming out, another 80,000 jobs lost in the last month. More than 600,000 jobs so far lost since January 1st.

Let's go to the White House, where they're watching this story. Elaine Quijano is standing by.

Not very encouraging numbers, Elaine. What are they saying at the White House?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, officials here at the White House insist that the economy is resilient. But, of course, officials are also acknowledging that today's numbers are disappointing.

(BEGIN VIDEOTAPE)

QUIJANO (voice-over): The U.S. economy is bleeding jobs, amid continued fallout from the housing and credit crises. Last month, employers slashed 84,000 jobs, far more than the 75,000 experts had predicted.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Most economists will tell you that, just to keep up with the growth in the working-age population in the United States, we have to add 100,000 to 150,000 jobs a month. We lost 84,000 jobs in August. We have been losing an increasing number of jobs for the last eight months. That's the serious part.

QUIJANO: So far this year, the economy has shed a whopping 605,000 jobs.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: There's no question that the labor market is not as strong as we would like. And these were disappointing numbers.

QUIJANO: Yet, with the election just two months away, the White House insists, better economic times are ahead. Press Secretary Dana Perino dismissed the notion that the economy may be in the early stages of a recession.

PERINO: We have gone through the recession thing before. I think -- I just told you that the last two quarters showed growth. I just haven't heard anybody talking necessarily about a recession.

QUIJANO: The Bush administration argues, the economic stimulus package passed this year is having a positive impact. And officials are hoping the job numbers will reflect that later in the year. Still, the signs so far paint a bleak picture.

VELSHI: Fundamentally, this jobless number is not going down because people don't sort of have faith in the economy, so they're not employing more people. We're likely to see this continue for the next few months.

(END VIDEOTAPE)

QUIJANO: Now, the latest numbers also include an unemployment rate of 6.1 percent, the highest level in five years. Still, officials here at the White House insist they don't believe that it's time right now to consider a second economic stimulus package -- Wolf.

BLITZER: Elaine Quijano at the White House with these bad jobs numbers, which will have spillover, no doubt, on the political campaign.

They're fresh off the conventions and on the campaign trail -- a little taste now for what the candidates are saying.

In Cedarburg, Wisconsin, today, here's Republican vice presidential nominee Sarah Palin.

(BEGIN VIDEO CLIP)

PALIN: Just last night, Senator Obama finally broke and brought himself to admit what all the rest of us have known for quite some time, and that's thanks to the skill and valor of our troops, the surge in Iraq has succeeded.

(CHEERING AND APPLAUSE)

PALIN: Senator Obama said that the surge, "succeeded beyond our wildest dreams." I think that, Senator Obama, that the surge has succeeded in ways that nobody anticipated. I guess when you turn out to be profoundly wrong on a vital national security issue, maybe it's comforting to pretend that everyone else was wrong too.

But I remember it a little differently. It seems to me there was one leader in Washington who did predict success, who refused to call retreat, and risked his own career for the sake of the surge and victory in Iraq.

And Ladies and Gentlemen, that man is standing right next to me, Senator John McCain.

(CHEERING AND APPLAUSE) (END VIDEO CLIP)

BLITZER: At a glass factory in Pennsylvania, a battleground state, as you know, the Democratic presidential nominee, Barack Obama, fired right back at Senator McCain.

(BEGIN VIDEO CLIP)

OBAMA: We can start focusing on energy independence in a serious way and create clean energy jobs here in the United States.

Now, John McCain will talk about this same stuff. He's got TV ads with a bunch of windmills. You know, he's -- he's looking out in the distance, or, you know...

(LAUGHTER)

OBAMA: ... talking about energy independence. It's the whole vision thing, you know?

Here's the truth, though. John McCain's been in Washington for 26 years. And, during those 26 years, John McCain kept on voting against tax credits for wind energy, tax credits for solar energy. He consistently opposed biofuels. He said, no.

So, you know, if -- if he had had his way in the United States Senate, that windmill he's standing in front of would be a gopher hole.

(LAUGHTER)

OBAMA: You know, but this is the thing about politics.

I mean, people feel like they can just say anything. You can just make stuff up. Now, suddenly, I -- I'm in favor of energy independence.

Where have you been for 26 years? Where have you been?

(APPLAUSE)

OBAMA: We don't need a made-for-TV-commercial energy policy. We need a real policy that's serious.

Now, part of that can include increasing domestic oil production. And, so, we should look for reserves offshore. And, if we can identify them, and they're profitable, and they can help relieve some of the pressure, that's great.

But, understand, we have only got 3 percent to 4 percent of the world's oil reserves, and we use 25 percent of the world's oil. So, instead, what we should be doing is investing in alternative energy.

(END VIDEO CLIP)

BLITZER: Two months to go before America votes, Barack Obama and John McCain certainly have their work cut out for them. Paul Begala and Leslie Sanchez, they're standing by to review the candidates' game plans.

And the secretary of state, Condoleezza Rice, on an historic trip to Libya, forming new ties with the nation the U.S. once deemed as a sponsor of terrorism.

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

(COMMERCIAL BREAK)

BLITZER: It's been only a week since John McCain's running mate has gone from being a relative political unknown to one of the most talked-about women in the world. But what's the Governor Sarah Palin's actual governing style? CNN's Randi Kaye is in Anchorage, Alaska, right now. She's been looking into this part of the story for us. Randi, what are you discovering?

RANDI KAYE, CNN CORRESPONDENT: Well, Wolf, we have found that the governor has a very unique advantage here in Alaska. As you know, Alaska is very rich in oil and natural gas, so it's actually benefiting from the high energy crisis, unlike many of the other states.

So, there's actually a $5 billion surplus here in Alaska. And the governor has agreed, because of that, to give $1,200 to all of the residents of Alaska. But, still, she has her critics.

(BEGIN VIDEOTAPE)

KAYE (voice-over): She's Alaska's most popular governor, and she prides herself on playing tough.

PALIN: They say the difference between a hockey mom and a pit bull, lipstick.

(CHEERING AND APPLAUSE)

KAYE: Some Alaska lawmakers say this hockey-mom-turned governor is a pit bull, bold, outspoken, gutsy. But critics say she's also stubborn, and so aggressive she will step on anyone in her way.

Political analysts refer to the "body count" of Palin's rivals.

(on camera): Are people afraid of her? Are legislators, lawmakers afraid of her?

LYDA GREEN (R), ALASKA STATE SENATE PRESIDENT: I got that feeling, that they were somewhat intimidated.

KAYE: Alaska's Senate president, Lyda Green, is a Republican, like Palin. Green decided not to run for another term because of differences with the governor. She admits, Palin may be charming, but says she governs like a one-way street. Disagree with her, and you're done. She takes it personally.

(END VIDEOTAPE)

KAYE: Our apologies for all of this plane traffic. There are a lot of float planes here, Wolf, as you know, in the state of Alaska.

But we also did speak today to Les Gara. He's a Democrat. He's a state representative here. And he told us that he believed that Sarah Palin is actually exaggerating her accomplishments for the national stage. He says that the pipeline that she spoke about at the convention, which, you know, she sort of implied that this pipeline is already under construction, this natural pipeline.

Well, actually, it's still under negotiation, and it may not be built until 2018, if ever. The other criticism has to do with this ethics reform bill. She takes a lot of credit for cleaning up corruption here in the state of Alaska, and he says that Democrats had actually been working on that ethics reform bill, and the legislators had actually written all of the language in that bill years before Sarah Palin ever came to office.

BLITZER: She does have -- correct me if I'm wrong -- pretty good job approval numbers in the state of Alaska, doesn't she?

KAYE: She does. They're hovering right around 80 percent. They're at 79 percent right now. She does equally well among women and men. And she actually has the highest approval ratings of any governor in the state of Alaska ever. And they think that is because she has really taken on the oil industry and -- and revamped the whole tax system here.

BLITZER: I think she -- she might have the highest job approval numbers of any governor in all 50 states. That's very impressive, indeed. Randi, thank you.

Randi's going to have a lot more coming up later tonight on "ANDERSON COOPER 360," 10:00 p.m. Eastern. You're going to want to stick around for that. Randi is in Alaska.

Today's shocking job loss numbers represent so many devastated lives.

Let's go to our senior political analyst, Bill Schneider. He's aboard the CNN Election Express. He's talking to people at the Mall of the Americas out in Minneapolis right now.

Did voters hear enough about the economy, Bill, during both of these conventions?

SCHNEIDER: Well, Wolf, I'm not sure they heard enough that was really new.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): The unemployment rate has hit its highest level in five years. A record number of homes are in foreclosure. What did we hear from the candidates at their conventions? Barack Obama said, John McCain doesn't get it. OBAMA: I don't believe that Senator McCain doesn't care what's going on in the lives of Americans. I just think he doesn't know.

SCHNEIDER: "Don't call me out of touch," McCain said.

MCCAIN: These are tough times for many of you. You're worried about keeping your job, or finding a new one. And you're struggling to put food on the table and stay in your homes.

SCHNEIDER: McCain said, Obama will raise your taxes.

MCCAIN: I will keep taxes low and cut them where I can. My opponent will raise them.

SCHNEIDER: "Don't call me a tax-raiser," Obama said.

OBAMA: I will cut taxes, cut taxes for 95 percent of all working families...

(CHEERING AND APPLAUSE)

OBAMA: ... because, in an economy like this, the last thing we should do is raise taxes on the middle class.

SCHNEIDER: The closest McCain came to spelling out an economic plan is when he talked about energy.

MCCAIN: We're going to embark on the most ambitious national project in decades.

SCHNEIDER: More drilling, nuclear power, clean coal, and alternative energy.

MCCAIN: This great natural cause will create millions of new jobs, many in industries that will be the engine of our future prosperity.

SCHNEIDER: Note the term "future prosperity."

Obama talked about tax cuts for small businesses.

OBAMA: I will eliminate capital gains taxes for the small businesses and startups that will create the high-wage high-tech jobs of tomorrow.

SCHNEIDER: Note the term "jobs of tomorrow."

(END VIDEOTAPE)

SCHNEIDER: Americans are hurting now. They want to know what government is going to do for them now. And, so far, they have not heard a lot -- Wolf.

BLITZER: They have 60 days, these candidates, to make their case before the American voters, Bill Schneider, out in -- at the CNN Election Express at the Mall of the Americas in Minnesota. In our "Strategy Session": The conventions are now over. So, what do they tell us about what's going to happen in the general election?

And the destruction of Gustav, our Sean Callebs gets a bird's-eye view in an exclusive helicopter tour with the governor of Louisiana.

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

(COMMERCIAL BREAK)

BLITZER: People online are buzzing about the backdrop used during Senator John McCain's speech at the Republican National Convention last night. The giant video screen behind McCain showed Walter Reed Middle School in North Hollywood, California. We're still not exactly sure why. When McCain was in a tight shot, viewers at home could only see the school's green lawn behind him.

Let's go to our Internet reporter, Abbi Tatton. Abbi, what are they saying about all of this online?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, they're talking about this green screen and the middle school. Because, when McCain walked out, all they could see was this bright green backdrop behind him. These are some of the (AUDIO GAP) from last night.

And that reminded them of this. Do you remember this speech, June 3 in Kenner, Louisiana, a speech that was widely ridiculed online because John McCain was standing in front of this green backdrop. It prompted comedian Stephen Colbert to issue a green screen challenge for people to change the backdrop and make McCain exciting, which they did, all over YouTube.

There's this video of McCain with the "Macarena." There's McCain with Madonna. There are all kinds of these, and there's dozens of them still on YouTube. So, people are saying, why would they open up this door again and make the same backdrop? And they're also asking about that middle school. What was Walter Reed Middle School doing in the picture?

We haven't heard from the campaign or the convention on why. But we did see a statement from the middle school, saying, permission was not granted to use this picture at the convention, and it should not be construed as an endorsement of any political party -- Wolf.

BLITZER: Is there some thought, Abbi, that they confused the Walter Reed Middle School with the Walter Reed Hospital in Washington?

TATTON: The blog Talking Points Memo, which has been really digging into this for the -- for the last few hours, brought up that possibility, that maybe this was a search, and they came up with the wrong thing.

But, as we haven't heard back from the convention or the campaign, we're still waiting. BLITZER: Well, that green screen behind him, that lasted for the first several minutes of his speech. But then they suddenly found a big flag and a blue sky, and they changed it. Maybe that was the plan, maybe not. We're checking.

Abbi, thanks very much.

The conventions now are over, both of them, and there's a horse race to November 4. Which convention was more successful overall? And what does each side have to do now?

Let's get to our "Strategy Session," Democratic strategist Paul Begala and Republican strategist Leslie Sanchez. Both are CNN contributors.

Leslie and Paul, quickly, what did -- Leslie, first to you -- what did you think of that whole green screen image behind Senator McCain at the beginning of this, the most important speech of his political life?

(LAUGHTER)

LESLIE SANCHEZ, CNN POLITICAL CONTRIBUTOR: It makes you think somebody didn't think that this was a -- a speech designed for a television audience. It was the kind of mistake you wouldn't expect. It's inexcusable. And -- but -- and it's unfortunate, because it detracts from a really important speech.

BLITZER: You know, I was in the -- I was in the Convention Center there, Paul. And inside, the 20,000 people who were watching, it was magnificent. You saw this beautiful high school, this beautiful building behind him. And it looked -- it looked grandiose and fabulous.

Unfortunately, the millions of people who were watching at home just saw that -- that green screen behind him.

(LAUGHTER)

PAUL BEGALA, CNN POLITICAL ANALYST: Yes.

You know, in our business, we talk about wide shots and tight shots. When it's a wide shot -- and we can see it here on our screen -- I thought it was one of McCain's nine homes, because it's -- he has 100 million bucks and nine homes in three time zones.

SANCHEZ: Paul...

BEGALA: And when you zoomed in...

(LAUGHTER)

BEGALA: Now, what's interesting is, when you zoomed in on a close shot, of course, McCain looked terrible.

I think the reverse was the case with Barack. When you had the wide shot, when we were at that football stadium, Mile High Stadium, in Denver, Wolf, it looked a little grandiose to me. You know, it looked like the Roman Senate or maybe Siegfried & Roy or something.

But when the tight shot came in, Barack had these wonderful windows behind him. He looked like maybe he was in front of a nice house, maybe the White House, maybe -- but it looked more intimate, actually, than McCain's.

And, so, I give an A to Barack's advance team for understanding that the tight shot matters more, and, frankly, an F to Senator McCain's team.

SANCHEZ: You know, I would say it looked more intimate. But, if you turned the volume down, he looked more mad. I mean, that's just...

(CROSSTALK)

SANCHEZ: ... observation.

BLITZER: Who looked more mad?

SANCHEZ: Barack in that speech.

BEGALA: Really?

SANCHEZ: If you turned the volume off, he looked tense, pensive, yes, just in terms of body language.

He was delivering an important speech, but in terms of his physical -- the nature of his expressions, it was a different story.

BEGALA: I think that's your -- I think that's your partisan hat now.

McCain...

(CROSSTALK)

SANCHEZ: No, not necessarily.

BEGALA: McCain, who did a workmanlike job...

SANCHEZ: Not necessarily.

BEGALA: Do the same with McCain. Turn it off and just keep repeating, "Get off my lawn, you kids."

(CROSSTALK)

(LAUGHTER)

SANCHEZ: No, no.

BEGALA: He's not as warm on television.

(CROSSTALK)

BLITZER: All right. Let's talk about both of these conventions.

Paul, first to you.

(CROSSTALK)

BLITZER: They were both pretty successful, I think. They both -- they managed to unify various parts of their respective parties. The Hillary Clinton supporters came on board Barack Obama's bandwagon in Denver. And, this -- this week, we saw the conservative base of the Republican Party rally around John McCain, largely because of Sarah Palin.

Which convention was more successful, Paul?

BEGALA: I -- you know, I would say I would give it a tie. I hate to be so -- so mealy mouthed about it. But I think you're right. the Democrats did their job. They introduced this very exciting and very new guy and his message of change, his wonderful family, his wife. And they reunified the Democratic Party by -- by bringing the Clintons on board -- big success for the Democrats.

The Republicans had a great success as well, right? They -- they fired up their base remarkably with Sarah Palin, who is a huge hit with social conservatives on the far right. And they did a really remarkable thing. They focused almost all the attention on the five years when -- when Senator McCain was suffering as a POW, as a war hero, and almost no time on the 25 years when he's been in Washington, supporting George W. Bush 91 percent of the time.

That's a heck of a thing to do. I mean, you take a guy who's 91 percent votes with Bush, and then you somehow remove Bush from the scene, that's a pretty successful convention.

(CROSSTALK)

BLITZER: All right.

So, what do you think, Leslie? Which -- which convention was more successful from the respective parties' perspectives?

SANCHEZ: You know, from the perspective that this traditionally should be a Democratic year, it was a tremendous success for the Republican Party.

Not only did it invigorate the base. It brought the base, which was already united, it engaged them and got them excited. And now they're ready to engage in this fight. And that's tremendously important, not only with evangelicals, but a lot of swing voters who are taking a look at this ticket, when they were basically flirting with the idea of an Obama candidacy.

(CROSSTALK)

SANCHEZ: And, also, with respect to Paul's point, these conventions are designed to introduce the candidates and solidify those -- those -- those tickets as they move forward -- and he knows this -- to the next stage, which is the most critical, which are the debates.

This is where the big gaffe can come. You know, think of Ronald Reagan 1980 to Jimmy Carter, "There you go again." It can amplify kind of the dynamics of this race. And I think that's what everybody's paying -- going to get the details of where their policies are going to lead us.

BLITZER: Paul, as one of the best political strategists out there in the business right now -- and I'm referring to you and James Carville, because you did get a Democrat elected twice to the White House -- do you have to grudgingly give John McCain credit for shaking this race up by selecting Sarah Palin?

BEGALA: Absolutely.

And look at what the Democrats have done. They have chased the rabbit, right? They have gone after Sarah Palin -- and there's a lot to go after, frankly, if you're a Democrat -- but it's a distraction. There's this remarkable soap opera of her family life, and then there's this checkered, interesting record in Alaska, none of which has anything to do with John McCain and George Bush.

If you looked at the interview you did, it was a great interview with Kathleen Sebelius, the governor of Kansas, a big Democratic supporter of Barack. She was distracted most of the time. She barely mentioned the economy, Wolf, which is what the Democrats ought to be talking about.

So, I think it's been, in that sense, remarkably successful. I think the Democrats have got to be really careful, and, I like to say, always attack the organ grinder, not the monkey...

BLITZER: All right, guys.

(LAUGHTER)

BEGALA: ... in other words, the number one, not the number two.

BLITZER: We have got to leave it there, Leslie. Stand by.

(LAUGHTER)

BLITZER: You will have more opportunities. This campaign is in the final 60-day sprint to November 4.

Obama supporter Oprah Winfrey has something to say about the Republican vice presidential candidate, Sarah Palin. Would she book the Alaska governor on her show, or not?

Plus, Obama's not-so-secret weapon against Palin -- that would be Hillary Clinton on a new campaign mission.

And it's like Facebook, but for a very elite and secretive crowd: spies.

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

(COMMERCIAL BREAK)

BLITZER: On our "Political Ticker": countdown to Election Day, only two months from now, and the milestones along the way.

The next big event, now that the conventions are behind us, the first presidential debate, that takes place on September 26. In October, the one and only vice presidential debate on the 2nd, followed by the remaining two presidential face-offs on the 7th and the 15th. Then it's full steam ahead to Election Day on November 4.

Oprah Winfrey is denying a report that her staff is divided over whether she should or should not book Sarah Palin as a guest. The talk show host issued a statement today, saying there's been no discussion about whether to have the Republican vice presidential candidate on her show.

Winfrey says, when she endorsed Barack Obama, she decided not to use her program as a political platform. She says, she thinks Palin would be a fantastic interview, after -- repeat -- after the campaign is over.

Remember, for the latest political news any time, check out CNNPolitics.com.

And to oue viewers, you're in THE SITUATION ROOM.