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THE SITUATION ROOM

Giuliani Files Papers for Presidential Bid, John Edwards Interview, Non-Binding Iraq Resolute Blocked in Senate, Army Lt. Court Martialed For Refusing Iraq Deployment

Aired February 5, 2007 - 19:00   ET

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


WOLF BLITZER, CNN ANCHOR: Thanks very much, Lou. And it's happening right now.
Why is America being blamed for one of the worst bombings in Iraq? A shocking allegation as the Senate moves toward a showdown with President Bush.

A political tug of war between supporters of Hillary Clinton and Barack Obama -- tonight the comment that's touched a nerve.

And what did he say this time? Arnold Schwarzenegger caught on tape with stunning statements on his political rivals and his own wife Maria Shriver.

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

Are things getting even worse in Iraq? Bombings killed dozens more people in Baghdad today. Some Iraqis are now actually blaming the United States for the bloodshed. This follows a horrific weekend attack, which caused hundreds of casualties. That story in just a moment, first though, Congress's own message for President Bush and it's happening right now.

The showdown in the U.S. Senate is happening at this hour. We'll check in with CNN's Michael Ware in Baghdad, Brian Todd in Washington. Let's go to Capitol Hill, CNN's Andrea Koppel with an unfolding story on the Hill -- Andrea.

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Wolf, along mostly party lines, Republicans tonight block Democrats from launching what was supposed to be the start of the most comprehensive debate on the war in Iraq to date.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): In one corner, Majority Leader Harry Reid, in the other, Minority Leader Mitch McConnell. The two men deadlocked over how the Senate will debate the president's plan for Iraq or even if it will be debated at all. Reid determined to keep attention focused on a bipartisan nonbinding resolution opposed to the president's plan to boost troop levels in Iraq. Some moderate Republicans have said they would support this resolution. A vote if it happened, sure to embarrass President Bush.

SEN. HARRY REID (D-NV), MAJORITY LEADER: Is there anything who believes the Senate should remain silent on the most pressing issue facing the country today?

KOPPEL: McConnell equally determined to block that debate until Reid agrees to bring at least two Republican alternatives into the mix. One, offered by Senator John McCain, in support of the Bush plan, another would insure funding could not be cut off or reduced for U.S. troops in the field.

SEN. MITCH MCCONNELL (R), KENTUCKY: We welcome the debate. We're happy to have it. But the minority will insist on fair treatment. And our definition of fair has been paired down to two resolutions.

KOPPEL: Democrats accused McConnell of deliberately running down the clock.

SEN. DICK DURBIN (D-IL), MAJORITY WHIP: If he can delay this matter for three days or four days, we'll reach a point where we can't reach it before the presidential break recess. That is the strategy. It's just to delay to the point where there is no real debate.

MCCONNELL: Welcome to the Senate. I mean we're not stalling. We're using, at the risk of being redundant, the power of a robust minority to guarantee that we get fair treatment.

(END VIDEOTAPE)

KOPPEL: So what is next? Well both sides are pointing the finger of blame at the other. For the moment though, Majority Leader Reid is threatening not to bring up this resolution, what's known as the Warner/Levin resolution, perhaps not until later this month, Wolf. That's because he wants to focus on an emergency really next week, the federal government, the 2007 budget runs out, and he needs to pass a stop gap funding measure. Remember the Republicans failed to pass the 2007 budget last year -- Wolf.

BLITZER: So that robust minority, the Republican minority clearly has stymied the Democrats at least for now, Andrea. Thank you.

Let's get to those shocking accusations over one of the worst bombings in Iraq since the start of the war nearly four years ago. It comes from some Iraqis and it's aimed at America.

And joining us now our correspondent in Baghdad Michael Ware -- Michael, they seem to be blaming at least some elements in the Iraqi government, the United States for this massacre over the weekend that killed more than 100 Iraqis, wounded more than 300 others, horrendous pictures. It looks like the worst suicide bombing over the past three and a half years. What's going on?

MICHAEL WARE, CNN CORRESPONDENT: Yes, Wolf. I mean this was a massive truck bomb in a crowded marketplace on Saturday evening that killed at least 128 and as you say wounded more than 300. Now, the great irony is that there's elements, sheer elements within the government that is blaming the U.S. for creating this security situation or poor security situation that they say has created an environment that is allowing al Qaeda and others to launch these attacks.

This feeds a common conspiracy, particularly among Shia that says America is so all-powerful and all-pervasive; al Qaeda could not conduct these bombings if America was not complicit. We're now hearing that echoed in the wake of this bombing by elements of this government.

BLITZER: Because what they're saying is by the United States pressuring the Iraqi government to clamp down on Muqtada al-Sadr's Shiite militia, the Mehdi Army, in effect that's making the Shiites and these marketplace areas and elsewhere in Baghdad even more vulnerable?

WARE: Yes, they're arguing that this has increased the Shia public's exposure. I mean the government has never been able to underwrite people's security nor has the U.S. military. So more and more in these days of civil war, they have turned to their own neighborhood or to the local militias.

Now what these people are saying is that on the eve of what is perceived as a massive American-led operation, which indeed is not, many of these militias have evaporated or their leadership has taken its troops or its fighters off the streets, thereby creating a vacuum which is being filled by these bombers. Hence, they ultimately blame America for these deaths.

BLITZER: Michael Ware reporting for us from Baghdad. Michael thanks.

WARE: Thank you, Wolf.

BLITZER: And to help fight that war in Iraq, President Bush wants a lot more money, billions of dollars from you with congressional approval, of course. Today the president unveiled his $2.9 trillion, trillion spending plan for the fiscal year 2008. It covers items like health care and tax cuts, but it also requests just over $624 billion for the Defense Department, that includes more than $141 billion to wage the wars in Iraq and Afghanistan, 90 percent of that money going for the war in Iraq next year alone.

The budget also seeks to cut the growth of Medicare spending $66 billion over the next five years. Health care providers would get smaller pay increases to care for the elderly, the poor, and the disabled.

He refused to head to Iraq with his unit. Now a U.S. Army officer may be headed to jail. Court-martial proceedings got underway earlier today. Let's turn to CNN's Brian Todd. He's got the story -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, he is First Lieutenant Ehren Watada now facing a jury that very likely consists of young officers like himself, some of whom have probably served in Iraq, one reason Watada's family doesn't expect this court-martial to go very well for him.

(BEGIN VIDEOTAPE)

TODD (voice-over): As his former unit takes casualties in Iraq, Army Lieutenant Ehren Watada puts his freedom on the line at Fort Lewis, Washington. Watada, considered an exemplary soldier until last June when he became the first commissioned officer to refuse to go to Iraq. The reason...

FIRST LT. EHREN WATADA, U.S. ARMY: It's my conclusion that the war is not only morally wrong, but it is in fact illegal.

TODD: Watada is not a so-called conscientious objector. While he believes the Iraq war is illegal, he did say he was willing to fight in Afghanistan. The Army declined and Watada is now being court-martialed for failing to deploy with his unit and conduct unbecoming an officer. Part of that last charge has to do with all the public statements he's made against the Bush administration since last June.

UNIDENTIFIED MALE: I felt betrayed by my leadership.

TODD: But the judge has already ruled that Watada's central defense that the war is illegal, is a political question and can't be ruled on by this military court. Then there's the challenge of jury selection. By rule, it has to be a panel of peers, likely Army lieutenants.

EUGENE FIDELL, NAT'L INSTITUTE OF MILITARY JUSTICE: It's highly improbable that this jury will include no one who has been here. I think jury selection is going to be an interesting exercise because obviously it's a concern if you have people who have had the actual experience to go to Iraq.

TODD: The case has made Watada a poster boy for the anti-war movement, some of whom are protesting near Fort Lewis as his trial gets under way.

(END VIDEOTAPE)

TODD: But Watada is said to be resented by some inside Fort Lewis where he currently holds a desk job. His family tells CNN they expect this court-martial to be over by Thursday. If convicted, Lieutenant Watada could face four years in a military prison -- Wolf.

BLITZER: All right Brian. Thank you. And by the way, in addition to prison time, Watada could be dismissed. For officers, that's akin to a dishonorable discharge. He could also lose all the pay allowances he has accrued since he joined the U.S. Army.

Jack Cafferty is in New York with "The Cafferty File". I know you have strong views on this case, Jack.

JACK CAFFERTY, CNN ANCHOR: Well I don't have strong views on this particular case. I just -- I understand that once you're enlisted and a part of the unit, that unit is taking part in a military exercise authorized by the Congress and ordered by the president. It's a little tough to say I don't think I want to go here. I'll go over here and fight in this war, but I don't want to fight in this war. He's got a rough road to hoe between now and Thursday. My guess is he'll be convicted of something.

Speaking at the Democratic National Committee's winter meetings in Washington, Senator Barack Obama made an interesting comparison about what it's like to work in politics.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), ILLINOIS: Sometimes you feel like you're part of a reality TV show. You feel like this is "American Idol" or "Survivor." You're trying to figure out, are you going to go to Hollywood or are you going to be voted off the island.

(END VIDEO CLIP)

CAFFERTY: He's good. Obama says treating politics like a game ends up causing a kind of cynicism, and it's hard to disagree with the notion that many of us are very cynical about our whole political process thanks to the negative campaigning and the partisan bickering that we're exposed to day in and day out in Washington, D.C., but is it really like "American Idol" or "Survivor"?

Here's the question. How is politics like a reality TV show? E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile. I would suggest, Wolf, if there are parallels under the Bush administration it might be a little like "Big Brother."

BLITZER: Partisan bickering here in Washington, D.C., is that what you're suggesting, Jack?

CAFFERTY: It's been known to happen...

BLITZER: I am shocked...

(CROSSTALK)

BLITZER: Thank you. Coming up, is the former New York mayor, Rudy Giuliani, actually running for president? We're going to have details of the critical step he just took that has many people wondering if he's about to become an official candidate.

Also, California Governor Arnold Schwarzenegger, he's been caught on tape saying some unflattering things about a political rival. We're going to have the recording for you.

Plus, a candy bar controversy. We're going to show you why one Super Bowl ad is getting some unwanted attention. All that, plus John Edwards right here in THE SITUATION ROOM. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Who could ever forget that dark day? A nation terrorized, thousands murdered. It was during the nightmare of 9/11 that then New York City Mayor Rudy Giuliani helped calm an anxious city and an anxious nation. Might the popularity he earned then help his White House bid now? Today a spokeswoman says Giuliani filed a statement of candidacy with the Federal Election Commission.

Here with more is our senior political correspondent, Candy Crowley. Candy, he actually filed for that exploratory committee back in November, but then he was sort of quiet. The last couple of weeks he's becoming more active. He recently was in New Hampshire and South Carolina. What is going on?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well I think you put your finger on it. There was this sort of long period of silence and you began to see stories that said well, is he really running? Is he really serious about this?

Now, all of a sudden I think we have the response to that. We have him in all of these places. We have him getting ever, ever closer to saying, yes, I'm announcing. He says he wants to wait for a big formal thing. And then we get the story that he's filed this statement of candidacy, which really is paperwork. And in fact, all of the other candidates, save Barack Obama, filed that piece of paper when they filed their exploratory committees.

BLITZER: In our most CNN Opinion Research Corporation poll, he comes out top among registered Republicans nationally. In this poll -- actually this is not -- this is the wrong poll, but we've got in our poll the 32 percent, he gets 26 percent for John McCain, nine percent for Gingrich, everybody else done.

This is the Iowa poll, these numbers we're seeing, the ARG, The American Research Group poll, 27 percent for Giuliani, 22 percent for John McCain in Iowa. In New Hampshire, if we can get those numbers up in New Hampshire, he's got 27 percent -- John McCain does that is -- Giuliani is tied with Mitt Romney at 20 percent. But by all accounts among registered Republicans, whether nationally or in Iowa or New Hampshire, he does well, Giuliani.

CROWLEY: He does well, but I tell you his critics, most of them right of center Republicans say that's because Republicans don't really know where he stands. Now he does well, as you noted in the intro. He does well because of 9/11. I mean he's America's mayor. He was tough. He was uncompromising, all of that sort of thing. But mostly when you look at his credentials, you see that he's going to have a problem in these early primaries where conservative Republicans tend to be the ones that vote.

BLITZER: Because of his positions on several of the social issues, he favors abortion rights, gay rights, affirmative action, gun control. In several of these states, that's going to be a very difficult hurdle to overcome.

CROWLEY: Absolutely. Absolutely, particularly in South Carolina, which you know is key. I mean it's been called the firewall by a lot of Republicans, so it is a huge state. He's been down there saying look here is what a Republican is about. A Republican is about smaller government and I've been about smaller government, thereby decrease crime. I've been tough on crime, so he's trying to change the subject here. BLITZER: All right Candy. Thanks. By the way, I spoke about Giuliani's increasingly likely White House bid with another former presidential candidate, the Reverend Al Sharpton, just a little while ago, and he had some very sharp criticism for the former mayor. Listen.

(BEGIN VIDEO CLIP)

BLITZER: You were quoted in "The Times", "The New York Times" on Sunday as saying so right now he can lead all the media and the national pundits on the yellow brick road. He better never let us get near that veil. I know what's back there. I've pierced it before. What are you alluding to?

REV. AL SHARPTON, PRES., NATIONAL ACTION NETWORK: Well I think that Rudy Giuliani had one of the most polarizing and divisive terms of mayor in the history of the city of New York. Anyone knows that. His confrontations with the communities of African Americans and Latinos, his problems in terms of dividing this city, and many other issues will come to light. I think that as soon as the honeymoon is over with the media and he jumps in the ring, he becomes fair game, and I think that a lot of the title of America's mayor, people are going to have to examine what that (UNINTELLIGIBLE) was, and it will not be as flattering as it has been up until now.

(END VIDEO CLIP)

BLITZER: The Reverend Al Sharpton. We asked Giuliani's office for comments. So far we have not received a specific comment to that charge by the Reverend Al Sharpton.

Still ahead tonight right here in THE SITUATION ROOM, African American Democrats in a growing divide. Will they support Hillary Rodham Clinton or Barack Obama for president? We'll have details of one top black Democrat's controversial remarks.

Plus, Arnold Schwarzenegger talking about his wife and a political opponents in a recording he didn't intend for you to hear. We've got it. We'll play it for you.

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

(COMMERCIAL BREAK)

BLITZER: Dangerously cold weather as much of the northern part of the United States in a deep freeze tonight. And lake effect snow is piling up in upstate New York, as much as two feet falling in some areas. In Evans, New York, the low was six degrees today. It's closing roads including parts of Interstate 81, at least earlier, law enforcement warning people simply to stay off the roads.

Let's move west to Chicago. No snow right now, but bitter cold temperatures, the high today was only a few degrees above zero. The CNN forecast calls for snow in the windy city tomorrow and a high of only 10 degrees. And the cold snap is even catching the breath of Minnesotans. It hit eight degrees below zero in Minneapolis this morning, making conditions miserable for everyone including these fire fighters.

Carol Costello is in New York. She's monitoring all of these developments and a lot more. She's got some other news making headlines -- Carol.

CAROL COSTELLO, CNN ANCHOR: I do. Hi, Wolf. Hello to all of you. Missouri prosecutors have filed 71 more charges against Michael Devlin. He's the man suspected of kidnapping two young boys. The new counts of kidnapping and forcible sodomy were announced today. The youngsters were found last month and reunited with their families. One boy had been missing for several days, the other for four years. Devlin could get life in prison if he is convicted. He's pleaded not guilty to the kidnapping charges filed earlier.

It appears there were no mechanical problems with the airplane that crashed and killed New York Yankees pitcher Cory Lidle and his flight instructor. That's according to the NTSB's final report on the October 11th crash. Investigators say the aircraft's propeller and single engine were working properly before it smashed into a New York City skyscraper. In the wake of the crash, the FAA is making flight restrictions in the area permanent.

Two million dollars, that's what Turner Broadcasting System, CNN's parent company, and an advertising agency have agreed to pay for last week's bomb scares in Boston. Massachusetts Attorney General Martha Coxley (ph) says the money will reimburse state and local agencies and support anti-terrorism efforts. Bomb squads were called in after blinking electronic light boards around Boston set off a terrorism scare. The devices were a promotion for a cartoon network show.

What do you get when you win the Super Bowl? Well you get to go to Disney World, but at home you get a whole lot of love. You are looking at live pictures of Tony Dungy right there. Of course, the triumphant Indianapolis Colts high-fived cheering fans. They did that all day -- 40,000 people are now in the dome in Indy listening -- 40,000, can you believe it?

And talk about interest in this game. The game pulled in super ratings as well for CBS. An estimated 93.2 million people watched yesterday's match up between the Colts and the Chicago Bears. That makes it the third most watched program in television history. And also, Wolf, in Michigan, they're talking about coming up with a Tony Dungy day because he grew up in Michigan. If only he would move to the Lions and help them out.

BLITZER: I think he's got a good job with Indianapolis right now. Congratulations to Tony and to all of the Indianapolis Colts. They did an excellent job yesterday. Thank you very much for that, Carol.

And just ahead, some say Ralph Nader cost Al Gore the White House. Now he has some tough words for Hillary Clinton. We're going to get reaction to what Ralph Nader is saying from James Carville. That's coming up in our "Strategy Session". Plus, he has an ambitious plan for universal health care coverage, but is it too bitter a pill for Americans to swallow? I'll ask Democratic presidential candidate John Edwards right here in THE SITUATION ROOM. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM and it's happening right now. Together, they stand. Senate Democrats had hoped to move forward with a nonbinding resolution opposing President Bush's plan to increase troop levels in Iraq, but Republicans put up a unified front using a procedural maneuver to stop their Democratic colleagues. That's happening now.

Also, talks aimed at ending the deadly fighting between rival Palestinian factions got under way in Saudi Arabia earlier today. The fragile cease fire appears to be holding for at least most parts of Gaza. But Hamas militants reportedly stormed a presidential guard post in northern Gaza today, kidnapped five Fatah security officers. Hamas says the men will be released soon.

And nations like Russia and Japan are now banning British poultry after Britain sees its first outbreak of bird flu. The discovery of a deadly strain caused Britain to slaughter almost 160,000 turkeys. British officials say there's only a negligible risk to the public.

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

African American Democrats are increasingly being torn between their party's two front-runners in the race for the White House, Senators Hillary Clinton and Barack Obama and now underscoring the divide controversial remarks by one of Senator Obama's key supporters.

Let's turn to CNN's Mary Snow. She's in New York. She's watching the story for us -- Mary.

MARY SNOW, CNN CORRESPONDENT: Wolf, those comments came last week during a private caucus meeting. And one strategist who attended puts it this way; it sums up a debate going on in black political circles.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Do black Democrats feel they owe the Clintons? And would they cut the cord to support Senator Barack Obama over Senator Hillary Clinton?

This man, Illinois State Senate President Emil Jones, touched a nerve when he raised the issue.

EMIL JONES, JR., (D) ILLINOIS STATE SENATE PRESIDENT: I don't feel that we have to pay a debt to someone. How long are we going to pay this debt when our son is running and our son deserves their support? That was my message to them. SNOW: Jones made his comments during a meeting at the Democratic National Committee's black caucus. And he called for members to stand behind Obama.

JONES: We should be united. And African-Americans understand what I say when I say united. He is our son. And I'm behind him because he's our son.

SNOW: In the Obama versus Clinton matchup, some say black political operatives are conflicted.

JAMAL SIMMONS, (D) POLITICAL STRATEGIST: People are concerned, one, that they remain loyal to President Clinton, and two, that they -- they don't want to be on the wrong side of history if Barack Obama is going to be the first African-American nominee or African-American president.

SNOW: So far, Senator Clinton has been leading in the polls. Some say the black vote will be critical.

UNIDENTIFIED MALE: The nagging question about where Barack Obama Stands on issues relative to the black vote, if that's cleared up, then I would expect that his favorability numbers would skyrocket.

SNOW: New York Congressman Charles Rangel in January said there's no contest, predicting Senator Clinton would win Democratic support and citing Obama's lack of experience.

REP. CHARLES RANGEL, (D) NEW YORK: One has to prove himself, that he's mature enough, understanding enough, has the intellect to guide the entire country. And, of course, Hillary has proven that.

(END VIDEOTAPE)

SNOW (on camera): Now, another political strategist who attended last week's meeting says Obama does not have a lock on the black vote, that the black vote is wide open just like the Democratic vote -- Wolf.

BLITZER: Charlie Rangel, clearly likes Senator Clinton.

Thanks, Mary, for that.

We're going to continue to follow up on that story.

Meanwhile, could a U.S. pull-out from Iraq lead to a wider, even more savage war? As White House wannabes weigh their candidacies, one former contender is back in the race right now. And he's making waves on Iraq and on raising taxes for the rich.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, Democratic presidential candidate in his home state of North Carolina.

Senator, thanks very much for coming in. Let's get to Iraq first.

If you had your way, how long would it take to pull out U.S. forces from Iraq?

FORMER SENATOR JOHN EDWARDS, PRESIDENTIAL CANDIDATE: About a year. It could take a little more -- a little longer than that. But roughly a year, Wolf -- combat troops.

BLITZER: And what about the support personnel, because there's a lot of support personnel in Iraq, as well?

EDWARDS: Well, the support personnel that are there for the purpose of supporting the combat effort, most of them can leave. But the people who are there for logistical support, to help train the Iraqis, we will need to keep some presence there for a period of time.

BLITZER: Here's what the National Intelligence Estimate said the other day, this compilation, a summary of the 16 U.S. intelligence agencies: "A rapid withdrawal from Iraq would result in these -- in this nightmare scenario. The Iraqi security forces would be unlikely to survive. Iraq's neighbors might intervene openly. There probably would be massive civilian casualties. There would be a Kurdish play for autonomy in the north and that could prompt Turkey to launch a military incursion."

In other words, what they are saying is that as bad as the situation is right now -- and it is horrendous -- it could be even worse if there were a rapid withdrawal.

EDWARDS: It could be even worse no matter what happens, and I think they acknowledge that, too, Wolf, in the same report.

What the NIE tells us is the situation on the ground is very bad, the security situation. The political situation is bad. But the one thing everyone agrees on is the only potential solution in Iraq is a political reconciliation and the threshold question is how do you create the incentives for Maliki and the Shia led government by relatively disorganized Sunni leadership to reach that political reconciliation?

And I think -- others, too -- including the -- those -- some of the people in the Iraq Study Group -- believe that the best way to do it, do that, is to not continue to enable them by keeping our combat troops there for a period -- for a long period of time, or by doing what the president wants to do in escalating the war.

BLITZER: Yesterday, you were on "Meet The Press" and you acknowledged -- you said very candidly that if elected president, in order to pay for your health care initiative that you've announced today, to put forward, that you've put forward today, you would have to raising taxes on families making $200,000 a year or more.

Is that right?

EDWARDS: That is correct. BLITZER: You're -- it brought to my mind this famous comment from Walter Mondale in the presidential debates back in 1984.

Listen. You'll remember this sound bite from the then Democratic presidential nominee.

(BEGIN VIDEO CLIP)

WALTER MONDALE, FORMER PRESIDENTIAL CANDIDATE: Mr. Reagan will raise taxes. And so will I. He won't tell you. I just did.

(END VIDEO CLIP)

BLITZER: All right, so you've just told everyone you'll raise taxes if you're elected president.

Is that a smart political move, given the opportunity now that your opponents will have to hammer you on this sensitive issue?

EDWARDS: My view is that the single most important characteristic of the next president of the United States is somebody who's decent and honest with the country. No one can propose universal health care and say they can pay for it without doing anything to the tax structure. That is not the truth.

And I think the American people deserve and are entitled to the truth, that I suspect there will be other Democratic candidates as we go forward who will follow the lead that I've put out there today and will come forward with their own universal health care plan. And if they contend that they can pay for it leaving the tax cuts and the tax structure exactly as it is, I don't believe that's true. And we'll have to hear what they have to say.

BLITZER: But you're convinced that your health care plan, in effect, will be able to be paid for by this increase in taxes?

EDWARDS: For people who earn over $200,000 a year -- families that earn over $200,000 a year -- they -- they will lose the tax cuts they had under George Bush and go back to what the tax system that existed under Bill Clinton.

But in exchange, we're going to have a more efficient health care system, a less costly health care system. We're going to get rid of a lot of the administrative costs. Every single American will have health care coverage and every -- we'll bring down the costs of the entire system as a whole.

So this is -- this kind of political -- I mean health care reform, which I think is desperately needed and I think the country knows is desperately needed, is the kind of transformation, not small steps, but big steps, that I think we need to take to strengthen this country.

BLITZER: Senator Edwards, thanks very much for coming in.

EDWARDS: Thanks, Wolf. Thanks for having me.

BLITZER: And you just heard Senator Edwards say he'd raise taxes on the wealthiest Americans to pay for universal health care.

Across the United States, by the way, just three percent of all U.S. households make $200,000 a year or more. Here are the top five locations where wealthy Americans could take a hit.

In the District of Columbia, 6.8 percent of households reached that $200,000 a year threshold. It's six percent or more in Connecticut and New Jersey. And in both Maryland and California, almost five percent of households might have to pay more under Senator Edwards' plan.

(END VIDEOTAPE)

BLITZER: Still ahead, some think it's nothing to snicker at. Why would a Super Bowl ad designed for laughs need to be pulled, at least now?

And California Governor Arnold Schwarzenegger caught on tape talking about political enemies and even commenting about his wife Maria Shriver. We have the recordings. We'll let you know what's going on. Stay with us. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: They are conversations California Governor Arnold Schwarzenegger never intended for you to hear. But the newly released recordings are now out, and they reveal some very candid and unflattering comments. Let's go back to CNN's Carol Costello in New York for more details -- Carol.

CAROL COSTELLO, CNN ANCHOR: Wolf, these recordings were made in 2006 for Schwarzenegger's speechwriter, with full knowledge of the governor. The hope was that listening to the governor's casual conversation on tape would help the speechwriter write a better speech. Problem is, they were mistakenly put on the governor's Web site and then lifted by political rivals.

(BEGIN VIDEOTAPE)

COSTELLO (voice over): The recordings are very much Arnold unplugged, backroom conversations, a window into what he really thinks.

Listen to what he says about his famous wife's tinkering with his speeches.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: She is relentless. She will not stop. I like to lock it in, even if it's not perfect. But she goes until the last day. I said, 'Maria it's over, it's locked in. It's in the teleprompter.'"

COSTELLO: Schwarzenegger, who is heard talking with his aides about his political opponents, dishes about Democratic state senator Don Perata.

SCHWARZENEGGER: Perata is a very sick man.

UNIDENTIFIED MALE: Really?

SCHWARZENEGGER: Yes, oh, yeah. Absolutely.

COSTELLO: Quite a revelation from a politician who prides himself on his bipartisanship.

The question is, will that bipartisan cooperation continue?

PETER NICHOLAS, "LOS ANGELES TIMES": The governor's staff told me last night that Schwarzenegger had apologized, but I spoke to Senator Perata's office this morning, and they said the senator had gotten no apology from the governor and described the senator as being not in a particular happy mood this morning.

COSTELLO: The governor also discusses another hot-button issue -- immigration. He calls the idea of a fence between Mexico and the United States ridiculous. And when it comes to the subject of assimilation, he says Mexican immigrants do need to work harder to assimilate in the United States.

SCHWARZENEGGER: We love Mexico and we go there on vacation. We love to hear the mariachi music and all that stuff. But up here, for us to feel sympathetic towards you, you have to carry the American flag, and you have to say, "We want to be part of you. We love you."

(END VIDEOTAPE)

COSTELLO: The governor's office released the tapes in their entirety today, saying it did that to prove Mr. Schwarzenegger's comments are part of a long and thoughtful dialogue. Wolf.

BLITZER: So what are his political rivals actually saying about all of this?

COSTELLO: Well, I called state senator Don Perata's office. His press person tells me he's a little upset, but he can't start a war. And as a politician, there have been worse things said about him. He really wants to put this all behind him.

BLITZER: Very diplomatic comments. Thank you, Carol, for that. Carol Costello in New York.

Meanwhile, former presidential candidate Ralph Nader says he hasn't made up his mind yet if he'll run again in 2008. But the outspoken Green Party member is not mincing any words about Senator Hillary Clinton. CNN political analyst James Carville and "Human Events" editor at large Terry Jeffrey weighed in on all of that in our "Strategy Session." But first, here is what Ralph Nader had to say yesterday on "Late Edition."

(BEGIN VIDEO CLIP) RALPH NADER, FORMER PRESIDENTIAL CANDIDATE: I don't think she has the fortitude, actually. She's really a panderer and a flatterer. As she goes around the country, you'll see more of that.

(END VIDEO CLIP)

BLITZER: Certainly, if she were to get that Democratic nomination, I think that...

(CROSSTALK)

BLITZER: ... would increase the possibility he might run.

JAMES CARVILLE, DEMOCRATIC STRATEGIST: You know, only the American Green Party could stop Al Gore from being president.

I mean, you have to sit there and say, here is the Green Party that has stopped the greenest candidate in the history of American politics from being president.

I -- it -- it's almost -- if it wouldn't be -- if the man would not have accomplished so much in his life, if -- if, for the first -- until 2000, one of the most influential -- I think made more contributions to American society than almost any non-president, and he's, like, turned into an old fool. And it -- it's kind of tragic to see it.

I would rather remember that -- the Ralph Nader of the -- the '60s or '70s, even the '80s and '90s, than what you see now.

TERRY JEFFREY, HUMAN EVENTS: You know -- you know what Ralph Nader does that is getting increasingly rare in American politics? He says exactly what he thinks.

And it resonates with people. And, if he gets out there, and he tells the truth about Hillary Clinton, I know James won't like it.

CARVILLE: But...

JEFFREY: But -- and some voters may go out and vote for him, because he is speaking his mind about what he believes in.

BLITZER: And you have no doubt that -- he got about 90,000 -- more than 90,000 votes in Florida. Al Gore lost by 500 or so votes.

(CROSSTALK)

CARVILLE: That's not -- that's not...

(CROSSTALK)

CARVILLE: ... no one -- again, no, that is indisputable. But it is just so ironic that the Green Party of the United States of America is responsible for defeating Al Gore. I mean, if it wouldn't be so sad, you would just want to bust out laughing at the stupidity of the whole thing. I mean, it really is. (LAUGHTER)

(CROSSTALK)

BLITZER: And he is thinking -- he is thinking about doing it again. But he says he is going to need more time...

CARVILLE: Right.

BLITZER: ... before he makes his decision.

We will watch what Ralph Nader does.

Guys, thanks for coming in.

CARVILLE: Thank you, Wolf. Appreciate it.

(END VIDEOTAPE)

BLITZER: And still ahead, it certainly does involve deal making and cameras following a person's every move, but is politics really like a TV reality show? Jack Cafferty is wondering that. He'll be back with your e-mail.

Also, a time for a pop quiz. Here is a hint. It involves you, the president's new budget, and our own Jeanne Moos. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: You may have seen this ad during last night's Super Bowl. Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I think we just accidentally kissed.

UNIDENTIFIED MALE: Quick, do something manly.

UNIDENTIFIED MALE: Awww!

(END VIDEO CLIP)

BLITZER: That ad is now drawing heat, and the sponsor is on the defensive. Let's bring in our Jacki Schechner. She's following the story. Jacki, what's going on?

JACKI SCHECHNER, CNN INTERNET REPORTER: Well, Wolf, that same ad had several alternate endings that were posted on the snickers.com Web site. In one of the alternate endings, the two guys compensate for that kiss by drinking motor oil and antifreeze. And then in one of the other ones, the one I'm showing you here, they compensate for this kiss by essentially beating each other up. See if you can take a quick look.

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: I think we just accidentally kissed.

UNIDENTIFIED MALE: Quick, do something manly.

(END VIDEO CLIP)

SCHECHNER: Liberal activists, civil rights activists, liberal bloggers say that this ad is offensive. The Human Rights Campaign, which is a gay and lesbian rights group, are saying that it's a homophobic ad campaign and that is condones violence against gays Americans. They asked that Snickers take the ad down, especially the ads on the website. And Snickers has responded, doing that.

They say while the ads were well-received and had positive feedback by their target core audience, they do realize that humor is subjective and that some people could be offended by the ads. They didn't want to do that. They say the TV ad that ran last night is not going to run again. And all of those ads, again, have been taken off their website. If you go to snickers.com now, there is no reference to it there at all -- Wolf.

BLITZER: All right, Jacki, thank you very much.

Jack Cafferty, it's amazing what's going on in this world nowadays.

JACK CAFFERTY, CNN CORRESPONDENT: It's much ado about who cares.

BLITZER: Yes, I agree.

CAFFERTY: I like Baby Ruths myself.

The question is, how's politics like a reality TV show?

C.J. in Indiana -- Barack Obama in a speech suggested that there were similarities, which is where we got the question.

C.J. in Indiana: "Come on, Jack. Politics and reality TV share the staged back-stabbing and in-fighting and endorsements for controversial stands on issues that don't matter to anyone. But there's one glaring difference: no matter who gets 'voted off the island' in politics, it's always the American citizens that lose."

Steve in Charlotte, North Carolina: "I see no similarity between politics and reality TV. And given the actions of our politicians, they obviously don't see the correlation either. I suggest to our leaders a couple of new reality shows: 'Survivor, Washington, D.C.' and 'American Idiot'."

There should be no shortage of auditions in our nation's capital.

Kristen in Springfield, Oregon: "Politics and TV reality show are alike in that the plot is contrived, the people are narcissistic, the losers are abandoned, neither is terribly entertaining, and the entire event is controlled by big-money corporations." Jeff in Baltimore: "Jack, much like reality TV, we only see what they want us to see. And at the end you're left with a slight feeling that it was fixed."

Mary Jo in Massachusetts: "For years I've been telling anyone who will listen to my bantering the president should be elected just the way we choose out American Idol. Imagine: each wee, the presidential hopefuls would have a different issue to discuss. Each week, one --"

I'm not going to finish that. It's just dumb. Try again next week, Mary.

Paula in Dallas writes: "What number do we call to get them all voted off the island?"

If you didn't see your e-mail here, go to CNN.com/caffertyfile and read more of them online -- Wolf.

BLITZER: Maybe we could just have Donald Trump pick the new president the way he picks an apprentice.

CAFFERTY: There you go. That's an -- I could do that.

BLITZER: All right, Jack. Thanks very much.

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

Hi, Paula.

PAULA ZAHN, CNN ANCHOR: Hi, Wolf.

How you doing tonight?

Coming up just about seven minutes from now, we're going to shine a light on America's hidden secrets, bringing intolerance out into the open. Tonight, the absolute fury former President Jimmy Carter caused with his book, accusing Israel of apartheid. We're going to debate tonight whether it's possible for anyone to criticize Israel without being accused of anti-Semitism.

Plus, a black man who set out to make friends with members of the Ku Klux Klan. The results will really surprise you. I know I was stunned when I heard about this new-found friendship. I think you will be, too, when you see this piece tonight, Wolf.

BLITZER: Sounds good, Paula.

Thank you very much, Paula. It's coming up in a few minutes.

It has enough zeros to make your head spin. Up ahead, CNN's Jeanne Moos takes a unique look at President Bush's budget. Then she goes to the streets to find out what it means. You're going to want to see this.

Stick around, we'll be right back. (COMMERCIAL BREAK)

BLITZER: As we reported, President Bush's $2.9 trillion budget is out tonight and many people are having a hard time with all of those numbers.

CNN's Jeanne Moos takes a closer look.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): You are looking at your tax money on wheels, caressed by the president...

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: No tax increase...

MOOS: ... devoured by snapping photographers. You would think it was the latest Harry Potter book not...

UNIDENTIFIED MALE: The FYI 2008 five-year budget...

MOOS: A budget with a bottom line so full of zeros, blink and you'll miss one.

UNIDENTIFIED MALE: What, you got 2,900,000,000. How many zeros you got there?

MOOS: Enough that folks had to distance themselves.

(on camera): I like how you have to stand back from me to see the whole number. Can you tell my what the number is?

UNIDENTIFIED MALE: OK. All right, all right, all right. It's 29 quad -- $2,900 quadmillion.

UNIDENTIFIED FEMALE: It's $2.9 billion.

UNIDENTIFIED MALE: Two thousand, nine hundred million.

MOOS (on camera): Most of the answers landed with a thunk. And then there were those who almost got it right, by counting those zeros.

UNIDENTIFIED MALE: Three, six, nine. Two trillion, nine hundred million.

MOOS: Actually, it's two trillion, nine hundred billion.

With a nation debt like ours, who's counting?

This guy was mad at the Republicans and mad at the Democrats for not going after the Republicans.

UNIDENTIFIED MALE: I would use some words except you're a lady.

MOOS (on camera): Go ahead, use them. UNIDENTIFIED MALE: Well, where the hell are the Democrats? Where the hell are the Democrats?

MOOS (voice-over): A few folks were able to absorb all those zeros.

UNIDENTIFIED MALE: Two trillion.

MOOS: (on camera): How did you know so quickly?

UNIDENTIFIED MALE: I guessed.

UNIDENTIFIED MALE: Looks like $2.9 trillion.

MOOS: What do you do for a living?

UNIDENTIFIED MALE: I am a bank manager.

MOOS (voice-over): For those of you who aren't, there's always the MegaPenny Project, designed to help you visualize incomprehensively huge figures. Here's what a million pennies would look like.

A billion pennies.

A trillion pennies compared to the size of a football field.

Two trillion pennies would fill the Empire State Building.

The battle of the 08 budget has been joined.

UNIDENTIFIED MALE: It contains good news for the American people.

UNIDENTIFIED MALE: It's filled with debt and deception.

MOOS: By the way, you, too, can own a four-book set of the 08 budget for a mere $211. Prepare for chart after chart after chart as the two sides chart their course through the battle of the budget.

(MUSIC)

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: And we're just getting this in, coming into the SITUATION ROOM. Carol Costello's monitoring a story out in San Francisco.

Carol, what are you picking up?

COSTELLO: Yes, the San Francisco Mayor Gavin Newsom now reportedly seeking treatment for alcohol abuse. This is according to KGO, our affiliate, and also the "San Francisco Chronicle". He got his departments heads together today, Wolf, and said he was going to seek alcohol counseling. Someone who was at that meeting was quoted in the "Chronicle" as saying it was all too clear that he was not taking a leave from office.

CNN is working to confirm this story ourselves. When we get more, of course we'll pass it along.

Back to you, Wolf.

BLITZER: All right. We'll watch this together with you.

Carol, thanks very much.

And that it's for us here in the SITUATION ROOM. We'll be back tomorrow at 4:00 to 6:00 p.m. Eastern, another hour at 7:00 p.m. Eastern.

I'm Wolf Blitzer here in Washington.

Let's go to New York. "PAULA ZAHN NOW" starts right now -- Paula.

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