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THE SITUATION ROOM

Stocks Tumble Following Fed Bailout; Presidential Dead Heat in Battleground States

Aired September 17, 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, to our viewers, you're in THE SITUATION ROOM.
Happening now: paying up for the federal bailout of an insurance giant. Stock prices plunge again. Taxpayers are burdened. John McCain gives Barack Obama, though, some new reasons to hammer him over the economy. Stand by.

Also, our new snapshots of the critical battleground states, including a famously divided Florida. The best political team on television is standing by to look at the squeakers across the new Electoral College maps. Stand by for that as well.

And do presidential and their vice presidential running mates need the same skills as a CEO? A remark about Sarah Palin's qualifications triggering a new debate about the candidates' resumes.

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

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

A powerful new jolt of economic stress on Wall Street today. U.S. taxpayers and the race for the White House we are watching all of this. Stock prices nose-diving once again today on the news that the federal government is bailing out the nation's largest insurance company, AIG. The Dow Jones industrials closed down about 450 points. The $85 billion loan from the Federal Reserve bank to AIG also is giving the presidential candidates more disturbing economic news to argue about.

Just moments ago, the House speaker, Nancy Pelosi, echoed Barack Obama's charge that the root of this crisis lies with Republicans and the Bush White House.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: The most recent bailout, initiated by the Bush administration, that of AIG, is just another example that George Bush is a failed manager. Because of the inattention or a decision on their part to have crony capitalism in our country, Americans across the country are feeling the pain of this.

(END VIDEO CLIP)

BLITZER: From Nancy Pelosi, let's head over to John McCain and Sarah Palin, and what they are saying about the AIG bailout.

McCain has been struggling with his economic message in recent days, and this new development doesn't seem to be making that struggle any easier.

Let's go Dana Bash. She traveled with McCain to Michigan today.

All right. I think it is fair to say there has been a change in his position from yesterday as opposed to today, Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: I think it is fair to say that for sure. What McCain is trying to do, Wolf, is trying to balance his stanch support for hard-hit Americans with what he calls zero tolerance for Washington and Wall Street being asleep at the switch. But what he clearly learned over the past 24 hours is that, when a big insurance company collapses, it is hard to do both.

(BEGIN VIDEOTAPE)

BASH (voice-over): John McCain visited the heart of Michigan's long-suffering economy, the auto industry, to try to erase any perception he's out of touch.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: We're not going to leave the workers here in Michigan hung out to dry while we give billions in taxpayers' dollars to Wall Street. We're going to take care of the workers.

BASH: Yet, a day after rejecting using taxpayer money to bail out AIG, he now supports it.

MCCAIN: And I don't think anybody I know wanted to do that, but there were literally millions of people whose retirement, whose investments, whose insurance were at risk here.

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL NOMINEE: How are you?

UNIDENTIFIED MALE: Pleasure to meet you.

PALIN: Thank you so much.

BASH: At a diner in Cleveland, the $85 billion AIG bailout was important enough that Sarah Palin answered traveling reporters' questions for the first time in nearly three weeks. She struck a harsher tone than her running mate.

PALIN: The shot that has been called by the Fed, it's understandable, but very, very disappointing that taxpayers are called upon for another one.

BASH: The mixed signals from camp McCain on the AIG rescue befuddling, since McCain aides are well aware that bad economic news is crushing political news for the candidate whose party is in the White House. Undecided voters in hard-hit Michigan who usually vote Republican say this. UNIDENTIFIED MALE: When Clinton was in office, I had a little jingle in my pocket. Everybody could live on their own do their own thing. Once Bush took over, everything went downhill.

BASH: That's why McCain is hitting his reformer message harder than ever, as he feels voters' pain.

MCCAIN: It's not your fault. I will tell you whose fault it is, corruption in Washington and corruption on Wall Street. And, as president, I'm going to clean it up and I'm going to fix it.

(END VIDEOTAPE)

BASH: And, tonight, Wolf, McCain aides are trying to explain why yesterday he rejected the idea of bailing out AIG and today he supports it.

What they say is that he still does not like it, but they realize that protection for American workers is the most important priority. And what they also say, Wolf, is that they didn't realize the financial safety nets like workers' compensation, that that is obviously in jeopardy without this bailout -- Wolf.

BLITZER: Dana Bash is out getting ready for this town hall. Sarah Palin will be there, with John McCain as well.

Dana, thanks very much.

The AIG bailout is certainly giving Barack Obama more reason to hammer away on the economy and to accuse John McCain of echoing the Bush administration's policies.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: We simply can't afford four more years of an economic philosophy that has worked for Wall Street, instead of Main Street, and ends up devastating both.

(END VIDEO CLIP)

BLITZER: Let's go right to our senior political correspondent, Candy Crowley. She's in Las Vegas covering the Obama campaign for us.

Certainly, this is lots of ammunition for the Obama campaign, what is happening as far as the economy is concerned.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Absolutely, Wolf.

Politically speaking, they think this has been a very good week. They have even been encouraged to look back at the end of the week day by day at what Obama has said and what McCain has said. They clearly believe inside the campaign that their guy has come out on top, as they always believed he would if the focus of attention would move to the economy. Now, we have yet to have polling numbers that back it up, but this has long been the long feeling in the Obama campaign, that if they could talk about the economy, they certainly could describe the stakes ahead for voters and try to draw very specific red lines.

We have talked a couple of times about how Barack Obama is now using a teleprompter. His campaign says they are trying out some new lines and that is the reason for it, but it has also focused his message, something Democrats have complained about, that it's been too rambling, too all over the place. So now his message seems very focused. And he also begun to sort of master the art of the sound bite, particularly when it comes to John McCain.

We heard Dana talk about how McCain is trying to buff up his maverick and his reformer credentials. Well, those are the very same credentials that Obama is targeting.

(BEGIN VIDEO CLIP)

OBAMA: This is somebody who has been in Congress for 26 years...

(LAUGHTER)

OBAMA: ... who put seven of the most powerful Washington lobbyists in charge of his campaign. And now he tells us that he is the one who is going to take on the old boys' network...

(LAUGHTER)

OBAMA: The old boys' network, in the McCain campaign, that's called a staff meeting.

(LAUGHTER)

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

CROWLEY: Lots of zingers like that.

Now, Wolf, as they try to push back McCain and also try to address some of the worries that are still out there by elected Democrats, he even hears it from voters, why at this point with the economy so bad, with the Iraq war so unpopular, is Barack Obama only running about even?

They actually don't quite believe those polls in the Obama campaign. They say most of those are national polls. They are looking at battleground states. They still believe they are in a very good electoral position, but, boy, they have really relished from a political sense this week and their ability to talk about the economy and get people to focus on it, Wolf.

BLITZER: All right, I like the music behind you, too. Candy, thanks very much. We will get back to you.

Let's go back to Jack in the meantime for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: House Speaker Nancy Pelosi says the Democrats do not bear any responsibility for the mess on Wall Street. And she said it with a straight face.

Democrats have had control of Congress for the last two years. None of this is their fault, though. Republicans pointed out the Democrats have not passed any legislation regulating congressional excess. If they had, it probably would have been vetoed by the White House or been blocked by the Republicans in the Senate before it ever got as far as the White House.

But it does not matter. Whether it is the economy or energy or foreign policy, the interests of the American people increasingly take a back seat or are completely ignored in favor of partisan politics, finger-pointing and the blame game. There is no commonality of purpose to cooperate in the interests of our citizens.

I think that the last bipartisan effort to do anything in Washington was that stimulus package a few months ago. The parties only care about power. They pretend to care about us, but they don't really. They care about holding on to power at all costs, which is why this presidential election is going to cost in the neighborhood of $1 billion. The job pays $200,000. Do the math.

What do you bet, too, that Congress will take its next scheduled vacation at the end of this month, right on schedule?

Here is the question. What will it take to restore your faith in our government?

Go to CNN.com/caffertyfile. And you can post a comment on my blog. It is getting ugly out there.

BLITZER: One correction, though, Jack. I think the president makes $400,000 a year, not $200,000.

CAFFERTY: Oh.

BLITZER: He used to make $200,000, but they gave him a pay raise a few years ago.

(LAUGHTER)

CAFFERTY: OK. Well, I am a little behind the curve.

BLITZER: All right. We will check that out just to make sure.

CAFFERTY: No, you're probably right. I am sure you are.

BLITZER: All right, stand by. We are going to get back to Jack momentarily.

Barack Obama or John McCain will become commander in chief, but could either of them become a successful CEO? Would running a company really help someone run the country? And take a look at this. These states could decide who wins, Florida, Wisconsin, Ohio, Indiana, and North Carolina. But guess who is leading and who is trailing there? We have brand-some new poll numbers in those battleground states. And you are going to be surprised at what we have discovered.

And will you soon see Sarah Palin and Hillary Clinton together on the stage? Or will you just have to watch the "Saturday Night Live" parody of it? We will update you on what is going on -- lots of news happening right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Right now, there are important developments in the presidential race.

CNN, "TIME" magazine, Opinion Research Corporation, we have all come together and we're releasing some new poll numbers on where things stand in a few states that potentially could decide who becomes the next president.

Let's get straight to those numbers. No one looks at them more closely, more thoroughly than our own Bill Schneider.

Bill, we are looking at these new battleground poll numbers. And they tell us the snapshot of what is going on. And it is fascinating.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: It is.

Let's compare 2004 with 2008,. The economy is much worse than four years ago, and the Democrats seem to be doing better in every state.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Indiana a battleground state? The McCain campaign has spent no money on TV ads there. Indiana went for George W. Bush over John Kerry by a whopping 21-point margin in 2004. But our new CNN poll of Indiana, conducted by the Opinion Research Corporation, has McCain ahead by only six.

Another battleground, North Carolina. Bush carried North Carolina by 12 points in 2004, even though a North Carolinian, John Edwards, was on the Democratic ticket. Obama sees an opportunity in North Carolina. He's outspent McCain 10-1 on TV ads. The latest CNN poll in North Carolina, McCain ahead by just one point.

If we do a poll of polls in North Carolina, McCain leads by 10, still a little closer than four years ago. Florida was not a squeaker in 2004. Bush carried it by five. And now? Uh-oh. McCain 48, Obama 48 in Florida. Don't sweep up those chads.

Everybody agrees Ohio's a battleground state. Both campaigns have been spending heavily there. Last time, Ohio went for Bush by two points. Now Obama's leading by two. What happened? Here is Obama's take. SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: What we have seen the last few days is nothing less than the final verdict on an economic philosophy that has completely failed.

SCHNEIDER: Not my philosophy, McCain says.

MCCAIN: The American worker is strong. But it's been put at risk by the greed and mismanagement of Wall Street and Washington. The top of our economy is broken.

SCHNEIDER: Wisconsin was another close one in 2004, Kerry by one point. And now Obama is up by three. In every battleground state, the Democratic ticket is doing better than it did four years ago.

(END VIDEOTAPE)

SCHNEIDER: Now, some other polls don't show quite as a dramatic shift to the Democrats. The poll of polls in Ohio, for instance, has McCain leading by three. That is about the same as in 2004 -- Wolf.

BLITZER: But our poll is -- is newer and would take into account the bad economic news of the past few days; is that right?

SCHNEIDER: That's right. Ours is the newest poll that was just taken in the last few days, so these are the freshest numbers.

BLITZER: OK, Bill Schneider looking at them for us, thank you.

And as Bill just said, our brand-new poll is showing something very interesting, Obama and McCain actually tied in Florida. But take a look at this. What if third-party presidential candidates are thrown into the mix? Something happens that might cause worry in the McCain campaign. John McCain loses support. His number drops four points when third-party candidates Ralph Nader, Bob Barr and Cynthia McKinney are included in the poll.

Florida is the only state in our poll that shows McCain's support taking this kind of hit when third-party candidates are added into the equation. Of course, all of us remember, a lot of people blame Ralph Nader's popularity in Florida for Al Gore's loss in that state back in 2000.

With the presidential race so close and economic times so tough, should White House officials know what it is like to actually run a big company? It is a topic of renewed debate out there on the campaign trail, with the Republican vice presidential nominee smack dab in the middle of it.

Let's go to Brian Todd. He is working this story for us. Is this an issue for all of the candidates, Brian?

BRIAN TODD, CNN CORRESPONDENT: It pretty much has been, Wolf. Each folks the four nominees has been criticized for never running a business, never facing the accountability of having to meet that bottom line.

Sarah Palin is the latest to come under that microscope. And it's led to some blowback for a member of her own team.

(BEGIN VIDEOTAPE)

TODD (voice-over): Internal grief of a key McCain surrogate. Carly Fiorina is skewered for saying in a radio interview that Sarah Palin could not run the same Fortune 500 company she did.

UNIDENTIFIED MALE: Do you think she has the experience to run a major company like Hewlett-Packard?

CARLY FIORINA, VICTORY CHAIR, REPUBLICAN NATIONAL COMMITTEE: No, I don't. But you know what? That is not what she is running for.

TODD: Fiorina later she did not think any of the four nominees for president or vice president could run a major corporation. That prompted another McCain supporters who knows a little bit about politics and business to chime in.

MITT ROMNEY (R), FORMER MASSACHUSETTS GOVERNOR: I think she is just misinformed in that regard. I would be happy to hire John McCain and Sarah Palin to run a business that I'm an investor in.

TODD: But analysts and historians we spoke to say, don't bank so heavily on that CEO experience, because, outside of Mitt Romney himself and maybe New York Mayor Michael Bloomberg, star CEOs have traditionally not been effective political leaders.

WILLIAM NISKANEN, CATO INSTITUTE: Politicians, by the nature of the job, have to pander to people to maintain a sufficient coalition to be elected, to get legislation through. And that is something that a businessman is unprepared or even uneducated to do.

TODD: Analysts say CEOs are also not used to transparency, having every decision scrutinized by political rivals and the media.

All four nominees have that experience as politicians, they say, and that will help them in the White House. Governors may be more qualified to be president than CEOs for that same reason, as are top- level military commanders, like Dwight D. Eisenhower.

JAMES THURBER, PROFESSOR, AMERICAN UNIVERSITY: When you run an army the way Eisenhower did, it is large, complex. It is highly political. It is somewhat democratic, even though you have command and control. He knew how to work with politicians, with people in Washington, D.C.

(END VIDEOTAPE)

TODD: But CEO skills are not completely written off when it comes to the presidency. Experts say it helps to be able to understand a budget, to be able to inspire people, set goals and go after them. Those linear skills they say are sometimes missing when a career politician hits the White House -- Wolf.

BLITZER: Brian Todd, thanks very much for that. We are following a developing story right now. It's being called a shocking invasion of privacy. Get this. Hackers break into Governor Sarah Palin's personal e-mail account. Republicans now demanding a full investigation.

Evacuees wait in long lines for what they need to survive -- the latest on Hurricane Ike's aftermath.

And she supported Hillary Clinton, holds an important job or at least used to over at the Democratic National Committee. She is now turning her back on Barack Obama. We will tell you why right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: The next president of the United States will inherit a very troubled economy, Wall Street firms in crisis right now. We are examining the candidates' records on regulation and the kind of big government bailout AIG is now getting.

Plus, our battleground state polls, the best political team is standing by to assess. We are talking about some squeakers and some surprises.

And new word of a federal investigation into allegations that someone hacked into Governor Palin's personal e-mail account.

Stay with us. We are following this developing story right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now: The country's financial crisis is putting the candidates in an awkward position, their words coming back to haunt them tangled up in the politics of regulation. Stand by.

Also, brand-new polls from some of the most important and critical battleground states. These are the states that could decide the election, all this coming up, plus the best political team on television.

And Sarah Palin's personal e-mail account has been hacked -- details of a new Secret Service investigation now under way.

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

Shockwaves from the massive government bailout of AIG insurance company felt not only on Wall Street, but also out on the campaign trail, where past and present are colliding right now and giving the candidates some of the bailout blues.

CNN's Christine Romans explains. (BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): On Tuesday, John McCain flatly opposed a taxpayer bailout of AIG.

MCCAIN: We cannot have the taxpayers bail out AIG or anybody else.

ROMANS: But we heard a different line just a day later. McCain said he didn't want to do it, but...

MCCAIN: There were literally millions of people whose retirement, whose investments, whose insurance were at risk here, and they were going to have their live destroyed because of the greed and excess and corruption.

ROMANS: For years, John McCain has worked to limit regulation. Now Wall Street's crisis has him casting himself as a champion of smart, new oversight of Wall Street. On the trail this week, this from a senator who has long said government should stay out of business:

MCCAIN: They dreamed up investment schemes that they themselves don't even understand, with their derivatives, credit default swaps, and mortgage-backed securities, and tried to make their own rules.

ROMANS: But McCain voted to loosen rules for financial companies. He voted for the broad deregulation in 1999 that many say planted the seeds of the crisis at AIG and Lehman Brothers, and the financial service modernization act that broke down depression era barriers between banks, insurance companies and investments. On the stump, his opponents pounced.

SEN. JOE BIDEN, (D) VICE PRESIDENTIAL CANDIDATE: All of the sudden, it is my goodness, there is greed on Wall Street. My goodness! We need common sense regulation.

ROMANS: Senator Biden knows well the criticism that comes from voting closely with big business, he voted with his home state credit card industry three years ago to make it harder for people to file for personal bankruptcy. But Biden too flatly rejected a bailout of AIG the day before the federal government stepped in and took over the company.

UNIDENTIFIED FEMALE: Now senator, do you think that AIG should be bailed out by the federal government?

BIDEN: No I don't think it should be bailed out by the federal government. I'll tell you what we should do, we should try to correct the problems that caused this.

ROMANS: Christine Romans, CNN, New York.

(END OF VIDEOTAPE)

WOLF BLITZER, CNN ANCHOR: And today the Obama campaign released a statement on the AIG bailout essentially acknowledging that the move was done to protect the rest of the economy, but said we must not bailout the shareholders or the management of AIG. Let's discuss the political fallout of all of this. Joining us our senior political analyst Gloria Borger, our chief national correspondent John King and Steve Hayes, the senior writer for The Weekly Standard. They are all part of the best political team on television. You can't help, Gloria, but get the sense that both McCain and Biden, they said one thing the day before the bailout, something very different the next day. They really didn't appreciate the consequences of what a collapse of AIG would be for millions of Americans out there and perhaps the entire financial system. As a result, they had to shift their stance. It could be a little politically awkward though, can't it?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes, look, I think people who know a lot more about this than I do certainly say it would have been a financial Armageddon if AIG had collapsed and as McCain said today, he was disappointed, but it had to occur and I'm sure Biden is backtracking as well to a certain degree. Although, I do think that McCain has a much harder turn to take, because he has an entire congressional career that has been against regulation. He has been a deregulator, and so now, he has to run against his own party and he has to change his definition of what is acceptable government intervention and that is tough.

BLITZER: And he is being hit hard, Steve, because his old pal, the former Senator Phil Graham when he was chairman of the banking committee he helped to get a lot of that deregulation going which the democrats say is now biting the American economy big time.

STEVE HAYES, THE WEEKLY STANDARD: Yeah, I think he is being hit hard and he did seem to stumble. We have seen this is a contradiction to his position yesterday and his position today are certainly at odds. What you hear from the McCain campaign when you talk to them is that you know he is trying now today to take a responsible position. He didn't necessarily want to see this happen, but because it has happened, he has to take a responsible position. He doesn't want to be out there railing on the federal bailout of AIG after it's already happened which they think would further scoop the markets and could cause additional problems.

BLITZER: You have been covering, John, Senator McCain for a long time, you did an outstanding documentary here on CNN that all of us saw in the past few weeks, is it true that he really doesn't feel all that comfortable talking about the economy?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It has not been his lead issue, Wolf. Since he came to congress in 1983, he has made national security his calling card. This AIG thing is quite interesting, it shows both a clumsiness on the behalf of Senator McCain and also incredibly bad staff work Wolf. What they are saying today is that he changed his position once he realized that so many workers compensation programs, so many life insurance policies, so many corporate pension plans were running through AIG. Well, AIG has been in the headlines not just in the past few days, but over the past year because of its financial struggles. So for the McCain campaign to say he switched his position from yesterday to today because they suddenly realized how much is at stake, is pretty bad staff work at a minimum and a blind spot by the senator in this case.

BLITZER: Yeah, I think everybody will agree on that. All right, standby guys, we have a lot more to talk about including a top democrat from a key committee is actually defecting. She had been backing Hillary Clinton and now she's endorsing John McCain and she told us why.

Plus, new polls just in from crucial battleground states, a dead heat right now in Florida, that state that decided the 2000 election could be pivotal once again. John King is down there. We'll get the latest and a lot more right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're back with the best political team on television. We have some new poll numbers I want to share with our viewers. First of all in the national poll of polls, right now it's about as close as it gets. Take a look. This is 46 for McCain, 45 for Obama and 9 percent unsure, but as important as that national poll is, three battleground polls I'm about to show you are much more important because the race is going to be decided in the electoral college. In Ohio right now, our brand new CNN/"Time" magazine Opinion Research Corporation poll has Obama at 49, McCain at 47. In North Carolina, McCain at 48, Obama 47. And in Florida, look at this, 48-48, McCain, Obama. John King is in Florida right now. It can't get any closer than that right now, John, but tell our viewers what you're seeing and what you're feeling in South Florida right now?

KING: What you're seeing and feeling is a sense of urgency you usually get in the last 72 hours. Because this race is so close I saw the same evidence of it in Ohio just a few days ago. McCain got a bounce out of his convention, there is no doubt about it, and the republican base is more energized. However in the past 72 hours or so as the campaign has swung back to the economy that momentum seems to have been at least slowed if not stopped and the Obama forces are out, and the Obama forces are trying to make the difference. Remember those states you just mentioned, Florida, North Carolina, Ohio, all carried by republicans in both of the last two presidential elections, so it is the republicans on defense in more of the red states, so that's advantage Obama when it comes to the electoral college. And I can tell you the fight here in Florida Wolf, especially down here in South Florida, it is remarkably fierce and if you were here in 2000 or even four years ago, very familiar.

BLITZER: I'm sure. And in Ohio, Steve, you know, no republican has been elected to the White House I guess for a long, long time without carrying Ohio, and right now, Obama is slightly ahead, a statistical tie of 49/47 percent. What does that say to you?

HAYES: Well it's a problem for John McCain I think. And you're right, the national polls I think at this point are virtually meaningless. What maters are these state-by-state polls, particularly the ones like Ohio, like Indiana, which I think is regarded as a very conservative state. North Carolina as well. If John McCain ends up spending all final seven weeks in the campaign playing defense in states that he is expected to win, obviously, that's not going to be to his advantage and I think he loses some momentum, spends time and resources that he would like to be spending in other places, you know other battleground states like Wisconsin and Minnesota and potentially Iowa.

BLITZER: And in North Carolina, if John McCain has to worry Gloria about North Carolina, this is a state in the democratic primary, Obama did really well, and he got the African American vote out there, he got a lot of young voters out there. If he can do that this time, that would be a huge headache for John McCain.

BORGER: Yeah, it could cost him the presidency. I mean, you know, I am going to echo what my colleagues are saying here. The fact that these states are very close, and that these are states that republicans won last time around is a real issue for John McCain. Particularly, a state like North Carolina where democratic registration is up about 7 percent just this year. There is an academic hub which they are registering a lot of voters down there and I talked to a democratic strategist today who said he believes that Obama only needs to win one-third of the white vote in that state in order to win the state. If that is true, he may be in pretty good shape.

BLITZER: He's not going to win Florida though, John, and that is where you are right now and I know you have been speaking with a lot of Jewish voters down there and there is a lot of them in Broward county and Palm Beach county and Miami Dade, and unless Obama wins that heavily democratic vote overwhelmingly, he's not going to carry the state.

KING: Exactly right, Wolf. You know this area very well. He needs 75, maybe even 80 percent of the Jewish vote in the counties right here, Broward county, Palm Beach county, the Jewish vote in Miami-Dade county, but he has a problem because of something he said in that CNN YouTube debate back in July 2007. Where he said he would be willing in his first year in office to sit down with Ahmadinejad, with Castro, with Kim Jong-Il, with other leaders of so-called rogue nations without preconditions. The republicans are using that here in the Jewish community they are using it, down in the Cuban American community they are using it and the Obama campaign is having to explain itself and having a harder time. That's one place. This is a democratic base, the Jewish voters here in South Florida We have talked about how McCain is on defense in a lot of his places, among the Jewish community Obama is a bit on defense. So there is a bit of a fighting back and forth for advantage here, the race here in Florida Wolf is incredibly close. Both campaigns investing heavily trying to pick the other guy's voters a little bit if you will.

BLITZER: You know, I want to pick up with that. But I want to point out we may have made an error earlier in our registered voters choice for president in our poll of polls, Obama is at 46 right now, McCain is at 45, and 9 percent unsure. I want to make sure we have it right. We may have had it right, but I just want to double-check and make sure it's right. Gloria, the fact that Hillary Clinton canceled that appearance next week at an anti-Iran, anti-Ahmadinejad rally in New York after she learned that Sarah Palin was going to be there as well. How is that going to play with Jewish voters?

BORGER: Well look, Hillary Clinton is very popular with Jewish voters and I bet John McCain is more popular than Sarah Palin is. Although I have no proof of that, but I am just guessing here. So, you know I don't think it will really affect it one way or another. I think in Hillary Clinton's case, she said that she did not think that this was going to be a partisan appearance, and she didn't want to turn it into one and that's why she turned it down.

BLITZER: What do you think Steve?

HAYES: Well, Wolf, if Hillary Clinton had been there and actually showed up when Sarah Palin was there, it wouldn't have been a partisan event, it would've been a bi-partisan event. And I think the McCain campaign intends to use this and I think they're actually right to use it. We're going to be talking about this quite a bit next week when Ahmadinejad is in New York City, he's going to be meeting with a variety of people and Sarah Palin is going to be part of this protest. I actually do think it will be something that Jewish voters will pay attention to as Ahmadinejad has said repeatedly that he intends -- or not that he intends but that he can see the destruction of Israel and state policies.

BLITZER: And next week, foreign policy will be a huge issue with the United Nations' general assembly meeting, that is why Ahmadinejad is coming and the first presidential debate a week from Friday focusing in on foreign policy. Guys, thanks very much, excellent discussion as usual.

Meanwhile, the FBI now says it will conduct a joint investigation with the secret service into reported hacking of Sarah Palin's personal e-mail account. Let's get some more on what's going on, our internet reporter Abbi Tatton has been working the story all day. What do we know, Abbi?

ABBI TATTON, CNN INTERNET REPROTER: Wolf, if appears that overnight last night, hackers got into Sarah Palin's personal yahoo account and posted the contents online. What we're seeing are screen grabs of family photos, email exchanges with friends and colleagues, even a list of contacts, including her children's email addresses. A private email address of Palin's had recently been published in news reports questioning how much she was using the account for state business. Today, the McCain/Palin campaign manager Rick Davis put out a statement calling the hack quote, "A shocking invasion of the governor's privacy and a violation of law. The matter has been turned over to the appropriate authorities and we hope that anyone in possession of these emails will destroy them." The FBI and the secret service are now coordinating on an investigation Wolf, but those emails they are still out there online.

BLITZER: What a story, all right Abbi, stay on top of it for us. Abbi is working the story.

Coming up, she was a diehard Hillary Clinton supporter, a prominent democrat, but just wait until you hear who she is endorsing for president right now. And Jack Cafferty will be back with your email, his question of the hour, "What would it take to restore your faith in our government?" Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Lou to see what's coming up at the top of the hour. Lou, what are you working on?

LOU DOBBS, CNN ANCHOR: A lot is coming up, Wolf. Tonight, more on the impact of the stunning rescue deal for AIG effective nationalization by the federal government of this country's largest insurance company. What's next for our economy, our middle class? Three of the best political thinkers in the country, best economic thinkers as well join me. We'll be talking about whether there are more drastic measures required to save this economy. And more partisanship, more (INAUDIBLE) from the presidential candidates, these candidates still failing to offer the American people new ideas, specifics on economic plans in particular. Top advisers of both the McCain and Obama campaigns join me here tonight. And U.S. law enforcement officials say they have crippled a top Mexican drug cartel. Will that however be enough to ease in any way the raging war by Mexican drug cartels that is spreading into the United States? That report, all of the day's news and more coming up at 7:00 eastern here on CNN. All of that with an independent perspective, of course. Wolf, back to you.

BLITZER: All right Wolf, see you in a few moments. Let's check in with Jack, he's got the Cafferty file, Jack?

JACK CAFFERTY: The question this hour is, "What would it take to restore your faith in our government?" Just a light breezy question before we get out of here. Kevin in Colorado, "Obama offering a cabinet post to McCain after he wins the White House and McCain accepting with excitement and working hard to support Obama's programs." Bill writes, "Faith? I don't want to believe they are doing a good job, I want to know." Donna in Oregon, "My faith in our government would be restored if the people currently in congress would do the right thing and impeach Bush and Cheney. Instead they're too worried about covering their own tails." Regina writes, "Since it's obvious we're heading into a depression, we need a new deal from the government to restore confidence and get people back to work." Dan writes, "Give the White House to Obama with a solid majority in both houses and America will begin to look like the country the middle class remembers." Nick in Kansas City writes, "Jack, it would take a miracle and I'm an atheist so that's not very likely for me." Dennis writes, "Change the players in both the White House and congress. If the people in this country don't start paying attention to who our leaders are and what they are doing, they may wake up one morning without a country." And Mark writes, "Two words, term limits." 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. Thanks very much.

A prominent Hillary Clinton supporter and a Democratic Party member is now defecting to the McCain/Palin camp. Lynn Forester de Rothschild says she doesn't trust Barack Obama or his charge that McCain is simply another George W. Bush.

(BEGIN VIDEO CLIP)

LYNN FORESTER DE ROTHSCHILD, FORMER DNCC PLATFORM COMMITTEE: I find it to be complete nonsense and just not credible to say that John McCain is an extension of George Bush. It's the classic cheap shot, just not true.

(END OF VIDEO CLIP)

BLITZER: And de Rothschild says that she thinks Barack Obama is an elitist. She's jumping ship after serving on the Democratic Party's convention platform committee. Says she'll raise money for John McCain as well. Barack Obama and the Democratic Party are about $11 million richer thanks to Barbara Streisand and other celebrities. Obama attended two fundraisers in L.A. last night, including one that featured a performance by Streisand. Speaking to the star-studded crowds, Obama emphasized the hard economic times after John McCain mocked him for hobnobbing with Hollywood types. Remember for the latest political news any time, check out cnnpolitics.com. The ticker is the number one political news blog out there on the web.

Independent presidential candidate Ralph Nader is complaining that he's being ignored by the news media.

(BEGIN VIDEO CLIP)

RALPH NADER: Sometimes I think I'd get more media if I just dressed up as a panda.

(END OF VIDEO CLIP)

BLITZER: The strategy may be for the birds, but as our Jeanne Moos reports, it may also be working. Stand by.

And today is constitution day in the historic home of the man sometimes referred to as the father of the constitution is open again to the public. That and more in today's hot shots, right after this.

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BLITZER: Here are some of the hot shots coming in from our friends over at the associated press. In Mississippi, they test out red and blue, the lighting at the Gertrude Ford Center. The first presidential debate between Barack Obama and John McCain will take place there a week from Friday. In Michigan, McCain poses for a picture with an assembly line worker. In Ohio, democratic vice presidential nominee Joe Biden chooses a pie at a sandwich shop. Biden made an unannounced stop after a campaign event.

And in Virginia, 2500 students make up a living flag at the home of James Madison, the country's fourth president. Some of this hour's hot shots.

Let's go back to Carol, she's monitoring some other important stories incoming into THE SITUATION ROOM. What's going on Carol? CAROL COSTELLO: A couple of things Wolf. A presidential pat on the back for the former top U.S. commander in Iraq. Today at the White House President Bush thanked General David Petraeus for serving in Iraq with both distinction and honor. Yesterday in Baghdad the general handed over his command to General Ray Odierno. I always mess up your name and I apologize general. Petraeus' next assignment, head of the central command to oversee U.S. military operations across the Middle East.

The U.S. navy has intercepted a submarine like boat near the coast of Costa Rica and you won't believe what was inside, six and a half tons of cocaine. The 70-foot vessel was found yesterday in international waters and towed away by a U.S. (INAUDIBLE). Officials say the self-propelled semi submersible vessel is capable of traveling thousands of miles. Wolf?

BLITZER: General Odierno is a very nice guy, no problem. He's used to it his whole life. All right stand by Carol, thanks very much. Let's check in with Jeanne Moos with a report on a most unusual strategy, as independent presidential candidate Ralph Nader looks for some media attention.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Birds of a feather campaign together.

RALPH NADER: Thank you, Cardoza, for keeping me company.

MOOS: The last time he ran for president, Ralph Nader used action figures of his opponents.

NADER: Neither George W. Bush nor John Kerry have an exit strategy.

MOOS: This campaign Nader's put out a video communing with a friend's parrot to make a point.

NADER: National television has just blacked out the Nader Gonzalez campaign. Sometimes I think I would get more media if I just dressed up as a panda.

MOOS: Well, it sure worked for the so-called hurricane bear during coverage of hurricane Ike. The cameraman had to be ordered to get off the bear.

UNIDENTIFIED MALE: We're watching a person in a bear suit right now. That's a first. But you are correct, Gus, if you could swing back over that way so we can show the folks at home what's left of this pier.

MOOS: Hurricane bear ended up with his own website with over 500,000 hits and his own t-shirt. No wonder Nader is joking about dressing up as a panda and heading for the zoo.

NADER: Cast some (INAUDIBLE) glances as female panda. MOOS (on camera): You know it's getting harder and harder in this campaign to find a nonpartisan parrot.

Barack Obama. Yes we can, yes we can.

MOOS (voice-over): At least, yes we can, doesn't make folks call the police.

UNIDENTIFIED FEMALE: They heard somebody yelling for help, help me, help me.

MOOS: Authorities broke down the door of a Trenton, New Jersey home, only to discover that help me came from Luna the cockatoo. Ralph Nader's right, we in the press can't resist an animal story. The only thing more alluring than pandas is a Guinness record story, like the two foot five inch smallest man posing with the woman with the longest legs. Now that gets global media attention. So while Nader muses.

NADER: To be or not to be a panda.

MOOS: It's too bad he couldn't pander to both the shortest voters and those with the longest legs. Jeanne Moos, CNN, New York.

(END OF VIDEOTAPE)

BLITZER: Leave it to Jeanne Moos. Only Jeanne Moos can file those kinds of reports. Remember to check out our SITUATION ROOM screen saver. Stay up to date on all the latest political news, you can download it at cnn.com/situationroom. I'm Wolf Blitzer in THE SITUATION ROOM. Up next, "LOU DOBBS TONIGHT." Lou?