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THE SITUATION ROOM

McCain Suspends Campaign to Focus on Ailing Economy; President Bush to Address Nation

Aired September 24, 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: breaking news, the presidential race thrown for a loop by the nation's financial crisis. John McCain puts his campaign on hold, Barack Obama rejecting his opponents' call to delay their first presidential debate. Will McCain's dramatic move help to push the $700 billion bailout forward? We are getting reaction coming in from Capitol Hill right now.

The best political team on television is standing by, all this just a few hours before President Bush makes a prime-time pitch for the bailout. His address to the American people tonight another possible curveball for a volatile economy and a close presidential campaign.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You are in THE SITUATION ROOM.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Tomorrow morning, I will suspend my campaign and return to Washington after speaking at the Clinton Global Initiative.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Presidents are going to have to deal with more than one thing at a time. It's not necessary for us to think that we can only do one thing and suspend everything else.

(END VIDEO CLIP)

BLITZER: Fast-breaking developments in the presidential race pushed forward by America's financial situation right now.

John McCain deciding to leave the campaign trail, at least for now, to focus on the crisis, and urging that the first debate with Barack Obama be delayed. Obama calling for the Friday night face-off to go on as planned.

The best political team on television standing by to cover all these dramatic turns in this presidential campaign. let's go the CNN's Dana Bash first. She is covering the McCain campaign for us.

All right, Dana, walk us through what we know, how John McCain came up with this surprising announcement today. DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, they say, Wolf, first of all, there were actually two reasons that drove this.

First, after talking to economic experts again today, he concluded that the situation is just incredibly dire. And, not only that, second, he talked to Republican leaders back in Washington, and it became clear to Senator McCain that in the words of one of the advisers, the administration didn't do good enough job of crafting and presenting their bailout plan and the votes just were not there to pass anything right now.

So, what happened this morning is that Senator Obama called McCain to discuss potentially issuing a joint statement, but by the time the two of them spoke this afternoon and Obama relayed that to McCain, McCain had already made his decision to suspend his campaign and the press corps was actually waiting outside of the door while he was getting ready to make the announcement.

(BEGIN VIDEO CLIP)

MCCAIN: We must pass legislation to address this crisis. If we do not, credit will dry up, with devastating consequences for our economy. People will no longer be able to buy homes, and their life savings will be at stake.

Businesses will not have enough money to pay their employees. If we do not act, ever corner of our country will be impacted. We cannot allow this to happen.

(END VIDEO CLIP)

BASH: Now politically McCain advisers have said for some time they believe this crisis is about showing voters leadership and they think obviously going back to Washington, which McCain will do tomorrow, is the best way to send that message now.

Now, a senior adviser said that McCain actually called President Bush today and asked him to convene a bipartisan meeting in Washington.

And, Wolf, McCain also called Democratic leaders this afternoon, the House speaker and Senate majority leader, Harry Reid, and he got a cool reception, to say the least. We are told by sources in both McCain's camp and Senator Reid's camp that Reid actually just read his public statement to McCain, which basically says he does not think it is helpful for McCain to come back to D.C. -- Wolf.

BLITZER: All right, Dana, stand by.

Candy Crowley is with the Obama campaign down in Florida.

We heard from Senator Obama. And there are some critics of Senator McCain saying this is simply a political -- quote -- "stunt" on his part. What are people saying in the Obama campaign?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, certainly, around the Obama campaign, they do believe that. They are pointing out various things about McCain's schedule, saying, listen, if it were such a crisis, why was he doing X, Y or Z?

It is very clear that they think that McCain coming out when he did, just after a phone conversation with Barack Obama about putting out a joint statement, McCain then several minutes later comes out and announces that he is headed for Washington, they clearly think that was a political stunt.

Now, as you just heard from Dana, Obama -- or, rather, John McCain was ready to do that anyway. There were reporters standing outside the door. Obama called that a perhaps miscommunication. He didn't think that the decision had already been made.

Nonetheless, Obama, himself, is not going so far as to call this a political stunt. But he did, A, say that he didn't think the debate should be postponed, because he thought in fact this was exactly the time that the American people should see the two of them, and that, in fact, they should show that they can do more than one thing at a time.

As for going back to Washington, Obama basically says, listen, there is no particular need for me to do that at this point.

(BEGIN VIDEO CLIP)

OBAMA: What I think is important, though, is that we don't suddenly infuse Capitol Hill with presidential politics at a time when we're in the middle of some very delicate and difficult negotiations.

So, you know, I think the message is, if you need us, if I can be helpful, I'm prepared to be there at any point.

(END VIDEO CLIP)

CROWLEY: Obama says he talks to Capitol Hill leaders and to Secretary Paulson nearly everyday and is monitoring that.

As for going home when the vote comes, he says it is possible that both he and McCain would need to go back for that to send a message that this really indeed was a bipartisan bill.

But, right now, they say they are still working on a joint statement of principles from both John McCain and Barack Obama, but a no-go on that canceling the debate or about Obama at this point going back to Washington.

BLITZER: Candy, stand by.

Jessica Yellin is working the Hill for us. We are getting ready to hear from the Senate majority leader, Harry Reid. He's already reacted somewhat. But what are you hearing, Jessica?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Well, first of all, the Democrats on Capitol Hill are calling this openly everything from a political stunt to legislation or leadership by photo-op, taking the position that this won't help a tricky deal get done. I can tell you that Nancy Pelosi and John McCain had a conversation this afternoon as well. And I am told that, in that conversation, Pelosi told Reid that they are making progress, which reflects, Wolf, what I am hearing from Democrats on the Hill in general, a sense that they feel they are close or at least on their war way to a deal, and there is some concern that, if John McCain were to come to town tomorrow and they reach a deal tomorrow, McCain would claim credit for it, and they really don't want that to happen.

So, we are hearing two very different messages from Republicans and Democrats on the Hill. Here are what two senators had to say.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: We need a solution on this financial crisis more than we need a foreign policy debate. The next seven days could determine the financial well-being of this country. We can postpone the debate for a week. In the next week, I hope we can find a solution to what I think would be a financial Pearl Harbor, according to Warren Buffett.

SEN. CHARLES SCHUMER (D), NEW YORK: Well, I thought what Senator McCain did was just weird, odd. We haven't heard hide nor hair of Senator McCain in these negotiations. He has not been involved, except for an occasional unhelpful statement sort of thrown from far away.

And the last thing we need in these delicate negotiations is an injection of presidential politics.

(END VIDEO CLIP)

BASH: Now, Democratic leadership, which has been driving these negotiations on the Hill side, say that, you know, they have been asking McCain to state his position for some time, several days, and why is it suddenly urgent now that McCain take action?

On the other hand, the McCain campaign says, look, the Democrats were calling for McCain's involvement. Now they have got it. Why are they complaining? -- Wolf.

BLITZER: Because this is a political season, so we're going to hear a lot of complaining, obviously. Jessica, thanks very much.

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

JACK CAFFERTY, CNN ANCHOR: In a little less than three hours now, President Bush will address the nation about the financial crisis. He's expected to put pressure on the Congress to pass the $700 billion financial bailout plan that Treasury Secretary Hank Paulson has put on the table.

Senate Majority Leader Harry Reid criticized the president earlier in the day for not explaining the plan to the American people. Tonight, presumably, he will. Then comes the hard part for Congress. They are scheduled to adjourn on Friday for the rest of the year, bailout package or not. And some lawmakers are more eager to leave Washington than others.

Democratic Congresswoman Jane Harman from California said that Congress should stay put until -- quote -- "they find the right answer to this problem" -- unquote.

According to Politico.com, Democratic Senator Byron Dorgan, Republican Senator George Voinovich have both expresses doubts that a consensus on the bailout can be reached by Friday, adjournment day.

Senator Sherrod Brown, the Democrat from Ohio, said -- quote -- "If it takes two or three weeks, that is OK" -- unquote.

But we haven't heard much from other lawmakers about sticking around in order to solve the problem. Of course, the president could order them to stay put by calling a special session of Congress.

The question for this hour is: What do you want to hear from President Bush tonight about the financial crisis? Go to CNN.com/caffertyfile. You can post a comment on my blog.

Very much an open question how much currency President Bush has in a presidential speech this late in his term, with his popularity ratings as low as they are, Wolf.

BLITZER: Yes, he's going to do the best that he can. Obviously, it is a critical moment. Thanks, Jack.

And we will have of course live coverage, 9:00 p.m. Eastern tonight, when the president addresses the nation from the White House.

Bill Clinton, a former president, is also speaking his mind. Guess what he really thinks of Governor Sarah Palin? He is going to be on "LARRY KING LIVE" tonight. We have an excerpt for you. That is coming up.

And, to win, Barack Obama and John McCain certainly need every vote they can get. You're going to find out who is ahead in our new poll of polls of key battleground states. That is coming up.

And hours from now, President Bush will address the nation about this financial crisis, with some saying he should have done this sooner. What will he say tonight?

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

(COMMERCIAL BREAK)

BLITZER: We are watching all the breaking news, but here is a question. What does former President Bill Clinton think about John McCain's running mate? You may be surprised what he tells CNN's "LARRY KING LIVE."

Listen to this. (BEGIN VIDEO CLIP)

LARRY KING, CNN ANCHOR: What about Governor Palin? By the way, do you know her?

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Never met her.

KING: Were you shocked at the selection?

CLINTON: I was surprised. I just -- apparently, some people who were following it more closely than I were not surprised.

But, look, I get the downside that, you know, that the people who criticize her give her, but I can only judge how I think this is going down like in a state like Arkansas, where I am from, where we have, you know, half the people who live in communities with less than 2,500, and there are people who are pro-choice and pro-life, and more than half the people have a hunting or a fishing license.

But they like families that hang together that deal with adversity, that are proud of all their members, and don't run off from life's vicissitudes. So, I think that she and her husband and their kids come across as gutsy, spirited and real.

You know, I have significant disagreements with her about any number of social and economic issues, but I find her an appealing person. And I think that it is best to say that Senator McCain looks like he knew what he was doing. He picked somebody who gave him a lot of energy, a lot of support.

(END VIDEO CLIP)

BLITZER: And you can see the full interview of Bill Clinton on CNN's "LARRY KING LIVE" tonight. It will air after the presidential address at 9:00 p.m. Eastern, Larry King's interview with Bill Clinton.

Before John McCain announced he was pointing his campaign on hold to address the financial crisis, he joined his running mate, Sarah Palin, over at the United Nations in New York. It's day two of Palin's whirlwind meetings with global movers and shakers.

Let's go to New York. Ed Henry is working this story for us.

The McCain camp still keeping a pretty controlled watch over who can talk to Sarah Palin, who can't talk, who can watch, who can't watch. What is going on?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That is right, Wolf. These events are still tightly controlled, but Sarah Palin finally today did give us a little taste at least of how the meetings are going.

(BEGIN VIDEOTAPE) HENRY (voice-over): John McCain arrived in New York for Sarah Palin's foreign policy 101 and there were plenty more pleasantries as they huddled with the presidents of Ukraine and Georgia.

MIKHAIL SAAKASHVILI, PRESIDENT OF GEORGIA: Senator, Governor, I am really honored to be here with you. I know you have many important things...

HENRY: But the tone changed when McCain gestured as if he would take some questions. As a reporter asked Palin what she had learned from all her meetings, a McCain aide quickly ushered journalists out of the room.

When Palin met solo with Iraq's president, an aide to Jalal Talabani wouldn't let reporters get any audio either. When she met with Pakistan's president, Palin finally spoke, though she didn't get very specific.

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: It's going great. These meetings are very informative and helpful, and a lot of good people sharing an appreciation for America.

HENRY: For his part, Asif Ali Zardari was positive gushing over Palin.

ASIF ALI ZARDARI, PAKISTANI PRESIDENT: Now I know why all of America feels about you.

HENRY: Also crazy for Palin, first lady Laura Bush, who told CNN's Zain Verjee that sexism is to blame for some of the attacks on the candidate.

LAURA BUSH, FIRST LADY OF THE UNITED STATES: I think Sarah Palin is plenty tough. And I think that is what we will find that out. And she brings a perspective that no other vice presidential candidate has ever brought. And I think that is terrific.

HENRY: But Mrs. Bush veered slightly off message when asked if Palin has foreign policy experience.

BUSH: Well, obviously, of course, she does not have that. That has not been her role. But I think she is a very quick study. And, fortunately, John McCain does have that sort of experience.

(END VIDEOTAPE)

HENRY: Now, President Zardari went a little further, telling Governor Palin that she is -- quote -- "even more gorgeous in person," not exactly the message the campaign wanted out there today as they try to stress substance over style -- Wolf.

BLITZER: Thanks, Ed -- Ed Henry working the story in New York for us.

New battleground state polls shows one of the presidential candidates picking up some serious momentum. We're going to update you on the latest CNN Electoral College map and these poll numbers. Stand by.

Also, the financial bailout plan, how the proposal is putting the squeeze on John McCain's campaign.

And New York Congressman Charlie Rangel will face more questions about some properties he owns, this time from his peers.

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

(COMMERCIAL BREAK)

BLITZER: Right now, we have a fresh look at CNN's electoral map. We have some new battleground polls just out today from states that could decide the presidential race.

Let's go to Colorado first. Our new CNN/"TIME" magazine/Opinion Research Corporation survey of likely voters gives Obama the edge in Colorado over McCain 51 percent to 47 percent. The state and its nine electoral votes remain tossup yellow.

In Michigan, our poll shows Obama with 51 percent, McCain 46 percent. The state and its 17 electoral votes still a tossup. In Pennsylvania, the our battleground poll shows Obama leading 53 percent to 44 percent for McCain. The state and its 21 electoral votes remain light blue or leaning Obama.

In West Virginia, McCain has the edge over Obama, 50 percent to 46 percent. The state and its 13 electoral votes stay light blue -- light red, that is, meaning it is leaning McCain.

And, in Montana, McCain leads Obama 54 percent to 43 percent. The state and its three electoral votes still leans McCain.

By CNN's estimate right now, Obama has 223 electoral votes. McCain has 200. Remember, 270 the magic number needed to win the White House.

And you can now access all these numbers online and create your own scenarios with CNN's new electoral map calculator at CNNPolitics.com.

Let's go to our Internet reporter, Abbi Tatton. She has got some more on this. Abbi, tell us what we can learn from this and how our viewers can get involved.

ABBI TATTON, CNN INTERNET REPORTER: Right, Wolf.

This is a new tool from CNNPolitics.com, where you can map out your own scenarios about how this is going to look on November 4. Here is the estimate that you were just showing us right now. This is blue states for Obama, red for McCain and then all these yellow ones here the tossup states right now.

But you don't have to trust us on this. You can look at this and make your own predictions, see how you think it's going to play out in the next couple of months, assign these states red or blue. Take a look at one of these scenarios. Let's start off with how the map looked in 2004, a sea of red for George W. Bush there. And now let's flip some of them. Let's give Ohio there, where Obama was the victor in January, into the blue side underneath here. If we can do New Mexico -- sorry -- let's close that one -- go to New Mexico there. Five electoral votes there, give that to Obama as well.

Go up here. Let's flip one of them for Senator John McCain, giving him New Hampshire. And then here, let's go to Virginia, where Barack Obama has opened more than 40 campaign offices, putting that in his side. And that is enough to send Barack Obama over the top.

There are so many scenarios you can play with right here, including that event of an electoral tie, 269 each. It is all here online at CNNPolitics.com -- Wolf.

BLITZER: And that would amazing, if that were to happen.

All right, Abbi, thanks.

ANNOUNCER: This is CNN breaking news.

BLITZER: We want to get back to the breaking news, our top story right now, Senator McCain today asking that there be a suspension in the campaign, and postponing Friday night's first presidential debate.

Dana Bash is working the story. And, Dana, you're getting new information. Tell us our viewers what you're learning.

BASH: What I am learning, Wolf, is the proposal that is coming from the McCain campaign for how to delay Friday's debate if they need to.

And I just spoke with Senator Lindsey Graham. He is in the McCain campaign. He is negotiating or is trying to negotiate with the Obama campaign and the Presidential Debate Commission.

What they are saying, what he is saying is that they are proposing to instead of having next Thursday the vice presidential debate in Saint Louis, to make that the presidential debate, and then to delay the V.P. debate to another time.

That is what they are proposing. They understand very well that both the Obama and the debate commission, they have no intention of delaying Friday's debate, but both he and a senior adviser told me that, if there is no bailout deal by Friday, that McCain has no intention of going to the debate.

BLITZER: All right, wow.

All right, we're going to talk about this with the best political team on television. Dana, thanks for breaking that story here.

John McCain leaving the campaign trail to focus on America's financial crisis. The Republican's stand on a bailout could be crucial in deciding whether or not it gets approved. Plus, President Bush's pitch tonight for the $700 billion bailout. What does he need to say? And will he sway Congress and the American people? The best political team on television standing by to assess.

And the U.S. government takes new action in response to the deadly truck bombing in Pakistan. We will tell you what is going on right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now: a political bombshell, John McCain putting his campaign and Friday night's presidential debate on hold to come back to Washington and work on the proposed Wall Street bailout, a plan that potentially puts him in a rather awkward position.

President Bush addressing the nation tonight to explain why the bailout is needed, pressuring Congress to approve it, and warning of financial disaster if not -- all of this coming up, plus the best political team on television.

And ominous new signs that North Korea may be moving to reactivate its main nuclear plant.

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

We're following breaking news right now -- John McCain's dramatic move today. He's putting his campaign on hold to return to Washington to try move forward the proposed government bailout of Wall Street. He also wants to put Friday night's first presidential debate on hold.

And CNN's Dana Bash just learned he doesn't plan to show up at the debate if there's no deal reached in Washington for a bailout of this financial crisis.

All right, you're looking at these live pictures from Mississippi, where they're getting ready for this first presidential debate at the university there, Old Miss. They will be hosting this debate there Friday night if, in fact, there is a debate. But these are live pictures you're seeing as the preparations go forward.

Mary Snow is working this story for us -- all right, Mary, this bailout plan, it does put Senator McCain in a rather difficult position.

MARY SNOW, CNN CORRESPONDENT: It does, Wolf, politically, because leading up to this announcement, there was growing pressure on McCain from both sides of the aisle there, this as the perception emerged that McCain could be the deciding factor on the bailout.

(BEGIN VIDEOTAPE)

SNOW (voice-over): It was an unexpected move. John McCain will return to Washington tomorrow morning to focus on the government's bailout plan.

MCCAIN: It has become clear that no consensus has developed to support the administration's proposal. I do not believe that the plan on the table will pass as it currently stands and we are running out of time.

SNOW: McCain's announcement coincides with mounting pressure from both sides of the aisle. Political observers say Congressional Republicans are looking to McCain for direction.

When conservatives started to balk at the bailout, Democratic Senate Majority Leader Harry Reid turned to McCain.

SEN. HARRY REID (D-NV), MAJORITY LEADER: So we need now the Republicans to start producing some votes for us. We need the Republican nominee for president to let us know where he stands on what we should do.

SNOW: And there's pressure from Republicans, like former House Speaker Newt Gingrich, who painted it this way.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), FORMER HOUSE SPEAKER: Either McCain will reluctantly will go along -- and I think Obama is clearly going to go along -- or you're going to see McCain decide, much the way he did with picking Palin, that, in fact, he's a genuine maverick, that he genuinely defends the taxpayer and this is a terrible bill.

SNOW: A "Washington Times" editorial concluded: "If McCain supports it, he can kiss any credible claim to be a reform candidate goodbye."

For a Republican candidate trying to distance himself from the Bush administration, it's a balancing act.

MARTIN KADY II, POLITICO.COM: McCain has sort of a tightrope to walk here because if he -- you know, he doesn't want to be held on responsible for the failures of this administration. At the same time, he doesn't want to be the guy who kills this bill. And if things go south with the economy, then he'll take the blame. So it's a real pickle. And it's also a problem for Democrats, too.

(END VIDEOTAPE)

SNOW: And it became a challenge for the Democrats that could have put them in a position where if Republicans had rejected it and it appeared to be a Democratic bill, they'd be siding with an unpopular Republican president at a time when taxpayers are outraged -- Wolf.

BLITZER: Mary Snow, thank you.

Let's discuss all the breaking news right now with our panel.

Joining us, our senior political analyst, Gloria Borger. She's here. Steve Hayes is here from "The Weekly Standard." And our contributor Dana Milbank, who covers politics for "The Washington Post." Dana, Gloria and Steve, in that order.

All right, guys, thanks very much for coming in.

What do you think -- first of all, Gloria, let me start with you, to the news -- the breaking news that Dana Bash just reported that Senator McCain is putting forward this proposal to cancel Friday night's first presidential debate, to move that to Thursday -- to Thursday, which is supposed to be the first vice presidential debate in St. Louis, and then reschedule the vice presidential debate because of this crisis involving the financial crisis?

You see the work going on at Old Miss. right there behind you as they're preparing for this -- supposedly, this first presidential debate Friday night.

GLORIA BORGER, SENIOR POLITICAL ANALYST: Well, and they've sent out a press release saying that they're continuing to prepare for this debate. As you saw, Wolf, Barack Obama has said that he intends to have a presidential debate this week and -- on Friday, and that you can do two things at once; and that, in fact, the American people want to hear what these candidates have to say about the economy.

So he'd like to be there doing it. And John McCain has given himself a little out. I think if the deal is done, he has said that he would show up.

BLITZER: Yes. It's unlikely, though, I mean, given the negotiations. But if it's done, it's done. Then they could have the debate Friday night.

But what do you think, as you read between the lines, Dana?

DANA MILBANK, NATIONAL POLITICAL REPORTER, "THE WASHINGTON POST": Well, I see a convenience here that -- to bump off the vice presidential debate...

BORGER: So do I. Yes.

MILBANK: ...which perhaps they could schedule that for November 10th.

BLITZER: To give Sarah Palin...

(LAUGHTER)

BLITZER: To give Sarah Palin and Joe Biden more time to prepare.

MILBANK: The maximum opportunity to prepare.

BORGER: Exactly.

MILBANK: But let's be honest, there's a lot of stunt activity going on here. People in the administration and negotiators on all sides were saying very close to a deal, possibly even able to announce it tonight. McCain comes in and blows it all up. So the purpose, obviously, is not to get people around the table to get a deal. They were doing that already. The purpose, it seems more likely, is to change the story line a bit at a time when it looks like this financial crisis has really been benefiting Obama.

BLITZER: How do you read it?

I suppose they could, if they wanted to, let Sarah Palin and Joe Biden debate Friday night in Mississippi...

BORGER: He could debate himself.

BLITZER: ...and they could take over the slot in St. Louis. But that's obviously not going to happen.

What do you think, Steve?

STEPHEN HAYES, SENIOR WRITER AT "THE WEEKLY STANDARD": Yes, I don't think that's going to happen. I think -- well, Dana raises an interesting point, because if it was true that they were, in fact, this close to some kind of a deal, then it could be something that's really risky for John McCain to have done. I think there are conflicting reports about how close they were. If -- my understanding is that they weren't that close that they were going to be able to announce something tonight.

And in that case, I think this actually is something that makes sense politically for John McCain, because it underscores his strength. He's a doer. And for conservatives like me, a lot of times he's done this much to our chagrin. You know, we haven't liked it when he's come in and he's negotiated these things and he's worked out deals. But he's gotten them done.

And Barack Obama this morning offered to put out a statement. You know, I think John McCain's campaign is likely to point out those differences.

BORGER: But this is tactical. You know, presidential campaigns are often about tactics more than substance. And, you know, the truth is that you can negotiate this from anywhere. But this is trying to change the momentum. Obviously, Obama has benefited from the economic debate. John McCain is coming into Washington to try and become a central player in it and to try and look as if he's -- he's going to actually going to be the one who's formulating a deal.

MILBANK: At the very least, he becomes a hero of the conservatives, who are very unhappy with this...

BLITZER: Who, John McCain?

MILBANK: John McCain does -- who are very unhappy with the deal.

BLITZER: But then he becomes the villain if he goes ahead and supports it, right?

MILBANK: If he ultimately... BORGER: Well...

MILBANK: ...goes ahead and supports it.

BORGER: But that's not bad for him.

(CROSSTALK)

HAYES: Not if he gets -- not if he gets -- look, I think he can actually win on this on substance. If he's able to incorporate some of these conservative ideas -- first of all, he wins with conservatives by getting a pause. If he's able to pause this, that's what they want first and foremost, right now.

Secondly, if he's able to incorporate some of their ideas, I think that works to his benefit among conservatives.

And, third, to the broader public, to Independents, he looks like he's doing something.

BORGER: Well...

(CROSSTALK)

BLITZER: And, obviously, the bottom line...

(CROSSTALK)

BLITZER: ...as far as the debates are concerned, if John McCain doesn't show up Friday night in Mississippi, guess what, there's not going to be a debate in Mississippi.

But let's hold our fire for a minute.

BORGER: OK.

BLITZER: Because we've got more to discuss, including Joe Biden. He's stepping up his attacks on John McCain. The Democratic vice presidential nominee's evolving attack role.

Plus, serious new concerns about North Korea's nuclear intentions -- new signs they're starting up an old reactor again.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: President Bush getting ready to address the nation tonight, 9:00 p.m. Eastern. He's pushing for the proposed $700 billion Wall Street bailout and he will warn of dire consequences if Congress doesn't approve it.

We're back with the best political team on television. Dana, only moments ago, CBS aired an excerpt of an interview that Katie Couric did with John McCain and he explained what he wants to see happen on this financial crisis and his strategy.

Listen to this little excerpt.

(BEGIN VIDEO CLIP)

MCCAIN: Well, I don't think at this time that we can worry much about politics, Katie. I just -- I think the American people expect more of us and I would hope that we would respond that way.

Senator Obama called this morning. We -- I called him back. We discussed that we do agree and I'd be glad to join in a common press release or statement. But now is not the time for statements.

(END VIDEO CLIP)

BLITZER: All right. What do you think? Is he sort of belittling what Barack Obama was recommending, they issue a joint statement on their principles going forward?

MILBANK: Yes. And, of course, it's a crazy time to be involved in politics 40 days before the national presidential election.

(LAUGHTER)

MILBANK: And, really, what's happened here is this is not the time for statements necessarily. It's the time for stunts in terms of what's going on here, because, you know, as we discussed, there is a sense that whatever has been happening in the negotiations on the Hill, the way that you do not improve this is by bringing two presidential candidates into the mix to start (INAUDIBLE) whatever it was.

BLITZER: But that's exactly what McCain says they need in Washington, that both of these guys...

BORGER: Two presidential candidates?

BLITZER: ...show up in Washington and they're the effective leaders of their respective parties. That could get the job done.

HAYES: Yes, look, I mean I just disagree with that fundamentally. It's what Barack Obama said in his statement, as well. He said basically, look, we don't want to inject this issue with presidential politics. That's baloney. Presidential politics has been evidenced throughout this debate the entire time. In certain ways, it's been about nothing but presidential politics.

So I don't have any problem if they want to come back and they want to sit down and do this and have a political show and get something done. Fair enough.

BORGER: But, you know, if you go back nine days ago, though, Wolf, you had John McCain saying the fundamentals of the economy are strong. And then you had him calling for the firing of the SEC chairman -- replacing that person, he said on "60 Minutes," with Andrew Cuomo, a Democrat, and now jetting back to Washington. And what has happened is his poll numbers have consistently gone down. And it's very clear that this is tactical, because his message has been inconsistent. And he's trying to get a consistent message...

BLITZER: I know...

BORGER: ...together right now.

BLITZER: I know, Steve, that President Bush wants to address the nation tonight -- and he will be addressing the nation tonight.

But in the process, is he doing John McCain a favor?

HAYES: Yes. I have no idea. I've been thinking about that all day. I can't decide how that plays or not.

I mean John McCain, you've seen in the past couple of days, carefully sort of inching himself away from President Bush. He definitely doesn't want to be seen as carrying Bush's water on this. So he's gone -- he's staked out some positions, some of them very close to Barack Obama's positions -- that make him different are the President Bush, on CEO compensation and those things.

So I think a lot of it depends on what the president says tonight.

BLITZER: Some, Dana, are suggesting you know what, John McCain came up with this very dramatic announcement suspending the campaign, postponing the debate, because he wasn't happy that President Bush was going to be the focus of all of our attention tonight and he wanted to...

MILBANK: Well, he did...

BLITZER: ...make sure that he remains the focus, not President Bush.

MILBANK: He did have a way of stepping all over that. I think it was one hour and 15 minutes after Bush announced that he was going to do this that John McCain stepped in there and crushed it. But, you know, if President Bush wants to help John McCain or help the bailout package, probably the best thing he can do, given his popularity, is to develop a very quick case of laryngitis right now.

BLITZER: And not deliver that 12 to 14 minute speech tonight.

BORGER: He will, though.

BLITZER: He'll be, obviously, delivering it tonight.

BORGER: He will.

BLITZER: And, look, he's got, what, four months left. And this is a critical moment. Everyone agrees that the economy is at a delicate, delicate state here. BORGER: And the White House has been hearing from Republicans, particularly those House Republicans, conservatives who are very upset about this, that the president has not made the case to the American public about why we need this bailout, which they would prefer we call a rescue plan rather than a bailout.

And so they're saying to the president, you've got to tell the American public why we need to do this, because then we may not be hearing from our constituents as much, who are opposed to it.

BLITZER: And we'll see how much credibility the president has tonight when he delivers that dire warning and urges everyone to get on board.

Guys, thanks very much.

Stand by. We're going to be here tonight covering the president's address, 9:00 p.m. Eastern on CNN.

A warning to Americans in Pakistan after the deadly truck bombing at that Marriott Hotel in Islamabad. A new indication that more attacks could be coming.

And President Bush, as you know, preparing to address the nation about the financial crisis tonight.

What do you want to hear from the president?

Jack Cafferty and your e-mail coming up in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Lou Dobbs is getting ready for his show that begins right at the top of the hour -- Lou, give us a preview. What are you working on?

LOU DOBBS, CNN ANCHOR: Well, I'll do that, Wolf.

Coming up at 7:00 Eastern, Senator McCain suspending his presidential campaign. Beginning tomorrow, he's setting politics aside, he says, and returning to Washington to deal with our financial crisis. Senator McCain also calling for a delay to Friday's scheduled debate.

Senator Obama, however, saying he's staying on the campaign trail. He wants that debate to go ahead. Well, will there be a debate if John McCain doesn't show up?

We'll have the story. President Bush will address the nation in just -- just about two hours, to pressure Congress to pass that massive $700 billion bailout package. The Bush administration and Congress today agreeing to a critical compromise on the limits of executive compensation.

At the same time, the FBI is tonight investigating the executives and top management at Fannie Mae, Freddie Mac, Lehman Brothers and AIG -- a fraud investigation, something I called for a week ago.

And among my guests tonight, congressman Barney Frank. He's the powerful chairman of the House Financial Services Committee. And I'll also be joined by three of the best political analysts in the country.

We hope you'll join us, as well, 7:00 Eastern, for all of the day's news and much more, with an Independent perspective -- Wolf, back to you.

BLITZER: See you in a few moments, Lou.

DOBBS: Yes.

BLITZER: Thank you.

Carol Costello is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Carol, what's going on?

CAROL COSTELLO, CNN CORRESPONDENT: A couple of things, Wolf.

The State Department is banning all government employees from staying at or visiting major hotels in Pakistan. The order follows last weekend's deadly truck bombing at the Marriot Hotel is Islamabad. The ban covers hotels in Islamabad, Karachi and Peshawar. The U.S. Embassy in Islamabad is urging American citizens in Pakistan to take similar precautions. The ban comes amid fears more attacks against Western targets may be imminent.

The Bush administration is warning North Korea it will international isolation if it reactivates its main nuclear plant. Today, there were more signs that may be happening. The U.N. nuclear agency says it removed surveillance equipment and seals from the Yongbyon nuclear facility following a request from North Korea. U.N. inspectors say North Korea is planning to reactivate the plant in a week.

Two mad cow deaths in the same family. Officials in Spain say a woman died of a human form of mad cow in August, just six months after her son died from the brain wasting disease. It's believed to be the first case in the world where two members of the same family died from mad cow. Health officials say it's likely the mother and son got the illness from contaminated meat before stricter controls were in place.

The North Carolina coast is bracing for some dangerous weather. A large storm that could strengthen into a tropical system is expected to hit the state tomorrow near Cape Fear. Forecasters say it will bring 40 mile an hour winds and a whole lot of rain. The storm is so big, much of the Southeast could be affected. Gale warnings are posted from Florida to Maryland, so get ready -- back to you, Wolf.

BLITZER: Did you say Maryland?

COSTELLO: I said Maryland. And there are some bad weather forecasted for Baltimore, so I'm ready, too.

BLITZER: Yes. I know where you live. All right, thanks very much, Carol, for that.

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

CAFFERTY: Lest you think there's no interest in this political campaign -- and for those of you keeping score at home, we have received 20,000 e-mails in the last three hours in The Cafferty File.

The question this hour is, what do you want to hear from President Bush tonight about the financial crisis?

Paula writes: "Absolutely nothing. There's no explanation or solution he can possibly offer for not doing something sooner to have prevented this."

Anthony writes: "I want to hear him say one thing -- I'm sorry. I'm sorry my administration has yet again failed you, the American people. Think I'll get that?"

Melanie writes: "I'll listen to what Bush says tonight. But honestly, with his history of failure, coupled with the fact that I have little respect for or trust in him, I probably won't give much credence to anything he says."

Barbara in New York: "Nothing. He has no credibility. He's proven himself to be an opportunistic liar. I'm more interested in what Jon Stewart will have to say about what Bush says."

Josh writes from Maryland: "I want to hear oops, my bad. This trickle-down economic philosophy sounded pretty good at the country club."

Allen in San Diego: "Frankly, I don't care much what he has to say. I'm skeptical that this is really a valid emergency as big as he and Paulson say it is. And given the administration's plan has asked for absolute unquestioned powers to do whatever they felt necessary to resolve it, that makes me even more skeptical."

And John says, from Pennsylvania: "I want to hear Bush say I'm going to let somebody else fix this."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile and look for yours there, among hundreds of others.

Twenty thousand e-mails -- that's the size of the response we got, Wolf, back when Hurricane Katrina hit New Orleans. Huge.

BLITZER: Wow! Yes, people are really, really obsessed right now, as they should be. And they're watching in huge numbers, as well.

Jack, we'll see you back here tomorrow. Thanks very much.

CAFFERTY: OK.

BLITZER: At the United Nations yesterday, as a lot of you know, the vice presidential nominee, Sarah Palin, held meetings to help her begin to build some relationships with foreign leaders.

But did she -- did she improve her relationship with the press in the process?

Jeanne Moos standing by with her Moost Unusual look at this Moost Unusual event.

And sifting through the rubble -- residents return home after Hurricane Ike. We're going to show you that and a lot more in today's Hot Shots.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at our Hot Shots.

In Hong Kong, families wait for health checkups in the wake of contaminated milk crises.

In Iraq, a man released from U.S. custody receives help getting off a truck.

In Texas, a man returns after Hurricane Ike and finds a cross amid the rubble where his home stood.

And in Washington, Senator Feinstein speaks to the ceremony opening construction for the presidential inaugural platform.

Some of this hour's Hot Shots.

She came, saw and she conquered everything at the United Nations, except the press.

Jeanne Moos looks at Sarah Palin's Moost Unusual relationship with the media.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Welcome to the photo-op follies...

UNIDENTIFIED FEMALE: I'm going to step all the way over.

MOOS: ...where handlers whisper urgent orders to the press pool. The pool gets to stay for a whopping 30 seconds or so getting pictures, then gets shown the door.

Sarah Palin...

PALIN: It's so nice to meet you.

UNIDENTIFIED MALE: Oh, nice to meet you.

MOOS: ...raced around to half a dozen of these in two days.

(BEGIN VIDEO CLIP)

CRAIG FERGUSON, HOST: It's kind of like she's speed dating the world leaders, you know?

(LAUGHTER)

FERGUSON: You know, they all come and join her. I know (INAUDIBLE) President Kennedy. I like nuclear weapons, long walks on the beach and you.

(LAUGHTER)

(END VIDEO CLIP)

MOOS: Comedian Craig Ferguson was prophetic. Pakistan's leader did Inaugural Forum like it was a date, telling Palin how gorgeous she is...

PRES. ASIF ALI ZANDARI, PAKISTAN: You are even more gorgeous in life...

MOOS: ...gushing over her popularity.

ZANDARI: Now I know why the whole of America is crazy about you.

MOOS: And when a photog asked for another handshake, threatening a hug...

ZANDARI: If he's insisting, I might hug.

MOOS: But the press and Governor Palin aren't so lovey-dovey, amid complaints that Palin is dodging questions. Which brings us to the most frequently heard phrase at a photo-op.

UNIDENTIFIED MALE: Thank you very much. Back out the same way. Thank you.

MOOS: It's not gratitude, it's attitude...

UNIDENTIFIED MALE: OK, you guys, thank you very much.

MOOS: ...commonly used to drown out pesky questions.

QUESTION: Governor, what have you learned from your meetings...

PALIN: Thank you, Paul.

(CROSSTALK)

QUESTION: ...in New York in the last couple of days?

PALIN: Thank you so much, Paul.

We're going to head out. QUESTION: Governor, can you say something about...

UNIDENTIFIED MALE: Thank you guys, please.

Thank you.

Thanks a lot.

Thank you very much.

OK, guys, if everybody keeps moving.

MOOS (on camera): In the world of photo-ops, thank you doesn't always mean thank you.

It means shut up and get out.

QUESTION: Governor (INAUDIBLE)...

UNIDENTIFIED MALE: Thank you, guys.

Thank you very much.

Thanks, guys.

MOOS: The press gets thanked all the way out the door.

UNIDENTIFIED MALE: Thank you.

PALIN: Thanks, you guys.

UNIDENTIFIED MALE: Will you guys please turn around?

UNIDENTIFIED MALE: OK.

UNIDENTIFIED MALE: Thank you.

PALIN: Great. Thank you.

MOOS: And when they finally did get a question answered, it wasn't much to be thankful for.

QUESTION: Governor, how has your day gone so far?

PALIN: It's going great. These meetings are very informative and helpful.

MOOS: One thing the media can't say is that their job is thankless.

UNIDENTIFIED MALE: Thank you.

PALIN: Thank you.

(CROSSTALK)

UNIDENTIFIED MALE: Thank you.

(CROSSTALK)

PALIN: Thanks, guys.

MOOS: At photo-ops, the definition of thanks is...

PALIN: Thanks, but no thanks.

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: All right, that's it for me.

Let's go to Lou.

He's in New York -- Lou.