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THE SITUATION ROOM

Are U.S. Troops Losing Battle of Baghdad?; McCain Takes Aim at Mitt Romney

Aired June 4, 2007 - 17:00   ET

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


WOLF BLITZER, HOST: And to our viewers, you're in THE SITUATION ROOM.
Happening now, are U.S. troops losing the battle of Baghdad?

Despite reinforcements, the top commander says most of the capital is out of control.

And, also, troops -- are they facing a new threat?

As Republicans get ready for their debate, John McCain has already taken the gloves off.

Why is he taking aim at Mitt Romney right now?

And my interview with Elizabeth Edwards on her husband's attitude toward gays, her own battle with cancer and her legacy for her children.

Also, he's called himself a smut peddler. Now "Hustler" publisher Larry Flynt is offering a million dollars to anyone who will peddle their own story about having sex with a member of Congress.

What's behind the bounty?

I'm Wolf Blitzer in Manchester, New Hampshire.

You're in THE SITUATION ROOM.

The Pentagon has sent thousands more troops into Baghdad, but there are cracks in the security crackdown right now, as senior officers now conceding the Iraqi capital remains out of control. This comes as insurgent images may show a new threat to the troops.

Let's go live to our Pentagon correspondent Barbara Starr -- Barbara, the security crackdown, is it a failure?

BARBARA STARR, PENTAGON CORRESPONDENT: Well, not a failure yet, Wolf.

But today, a senior general giving a very grim assessment.

(BEGIN VIDEO TAPE)

STARR (voice-over): A top U.S. commander tells CNN that three quarters of Baghdad simply is not under the control of U.S. or Iraqi security forces. Brigadier General Vincent Brooks says just one quarter of Baghdad is in a controlled state. Brooks said control means U.S. and Iraqi forces are able to maintain physical influence over a specific area, preventing its use by the enemy.

It's been three months since the security crackdown began. More than 20,000 U.S. troops have poured into the city. But Brooks says there is still a crucial problem -- the lack of qualified Iraqi police.

In some areas, they are still loyal to death squads and militias. In other areas, there just aren't enough police. In neighborhoods such as Amiriyia and West Rashid, U.S. troops are still having to go back into those areas that they had cleared.

Attacks against U.S. troops in Baghdad are on the rise. Military intelligence officials are analyzing this video from the Islamic State of Iraq claiming to show Russian grenades being thrown at U.S. troops. Analysts say these grenades may be designed to burst into high temperature fires on impact. One official calls it a new threat.

(END VIDEO TAPE)

STARR: And, Wolf, just four days into the month of June, already 15 members of the U.S. military have lost their lives in Iraq. It's sure looking to shape up that June will again be a very violent month -- Wolf.

BLITZER: I want to be precise on these Russian grenades, Barbara.

Are these grenades that are being supplied to insurgents by the Russians themselves -- by the Russian government? Or are they simply available on the black market -- people buy them or whatever -- and they find their way to these insurgents?

STARR: There is no evidence at this point, Wolf, as you say, that they are being supplied by the Russian government directly. But the international arms market right now is a very fluid place. A lot of materiel and weapons are moving around the world and it's very tough to track.

One official told us they could be coming from just about anywhere -- Wolf.

BLITZER: What about these two missing American soldiers?

Some new information is coming out today.

STARR: Indeed, Wolf.

The Islamic State of Iraq Web site -- an insurgent Web site that often posts videos and other information -- today posted what, by all accounts, appears to be the military identification cards for the two Army soldiers that had been missing since last month after they came under attack in Iraq. Private Byron Fouty, 19 years old, of Waterford, Michigan and Specialist Alex Jimenez, 25 years old, of Lawrence, Massachusetts.

Both of these military I.D. cards were posted on this Web site. There was other information on there where insurgents claimed, without any proof, to have killed the two soldiers. What we want to tell people is that the families of these men had already been notified by the U.S. military that this information was out there on the Internet and might be appearing on the Web at any time. The families knew that this might be coming.

Wolf, the military says they're going to continue to search for the men.

BLITZER: Let's hope they find them OK.

Barbara, thanks.

Chilling new details emerging about that alleged plot to blow up fuel tanks and buildings at New York's John F. Kennedy International Airport. One suspect is in U.S. custody. Two are fighting extradition from Trinidad and a Guyana man is still at large.

Let's go live to our homeland security correspondent, Jeanne Meserve -- Jeanne, what's the latest information we're getting as to what these guys were after?

JEANNE MESERVE, HOMELAND SECURITY CORRESPONDENT: Wolf, according to the criminal complaint, the alleged plotters talked about attacking the buck eye fuel line that feeds JFK and La Guardia, believing that would cause greater destruction than the September 11th attacks.

They also allegedly conducted surveillance at JFK International Airport on four separate occasions, looking particularly at the fuel tanks around the airport.

According to the criminal complaint, they thought if they could blow a hole in one of those tanks and start a fire, it would result in the destruction of part of Queens and the whole of Kennedy because of the underground system of pipes which takes fuel direct to aircraft waiting at the gates at that airport -- Wolf.

BLITZER: If they had been successful in this alleged plot, Jeanne, what else might have happened?

MESERVE: Well, first, they would have had to penetrate security. And maybe they could have done that. But experts say pipelines like the buck eye have multiple safety systems, including shutoff valves, which might have localized the impact of an attack.

The fuel tanks at Kennedy are made of inch -- one expert told me it's about an inch thick and it would take someone with demolition skills and plastic explosives to breach one, though if they were able to do that, it would result in a very, very big fire.

As for the idea of a chain reaction causing damage elsewhere at JFK, most experts we've spoken to say that is unlikely. So, although prosecutors say the devastation from this plot would have been unthinkable, some experts say it would have been something less than that -- Wolf.

BLITZER: Jeanne Meserve reporting on this story.

Thank you.

JFK, by the way, is one of the world's busiest airports. It typically handles more than 1,000 flights daily, about half of them international flights. Annually, about 45 million passengers pass through the airport. So do more than 1.5 million tons of cargo. JFK's fuel depot is linked primarily, as Jeanne just said, to the buck eye pipeline, which also distributes fuel, shall we say, to among other places, including sites in Pennsylvania, New Jersey and New York City, the boroughs of Staten Island, Brooklyn and Queens, to be specific.

According to the government, the JFK plotters downloaded satellite images of the airport from Google Earth.

Let's bring back Jacki Schechner -- Jacki, how close can you get to JFK on Google Earth?

JACKI SCHECHNER, CNN INTERNET REPORTER: Well, Wolf, if we use Google Earth to fly around JFK Airport, the satellite imagery shows incredible detail -- planes, vehicles, control towers. It is this imagery that the four terror plot suspects allegedly sought out to supplement their own surveillance.

Now, just last month, one government official told the Associated Press that this kind of satellite imagery may need government restriction. Images of a number of sensitive locations are available online in great detail, like this nuclear power plant in Ohio. Others, like the vice president's house, are blurred out for security reasons.

Google says this kind of satellite imagery is already widely available from a number of sources, but they are paying close attention to security concerns. And, Wolf, they say they will continue to work with government and security experts.

BLITZER: Jacki, thank you for that.

Let's go back to New York and Jack Cafferty once again for The Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: California voters may soon get to weigh in on the war in Iraq. "The New York Times" reports that the state could become the first to ask voters if they favor an immediate withdrawal of U.S. troops.

The Democratic state legislature in California is expected to pass a measure that would put that question on the presidential primary ballot in February. Experts say it could have an important effect on the primary race because it would, in effect, force the presidential candidates to then address the war while campaigning in California. Some Republicans don't like the idea. They say the state legislature should not be holding votes on foreign policy. Of course, the nation held a vote on foreign policy last November.

Remember?

The biggest reason the Democrats were handed control of the Congress was opposition to the war in Iraq. And so far, the Democrats have done absolutely nothing to bring that war to an end.

On the contrary, in a surrender move that would make the French proud, the Democrats handed President Bush another blank check for almost $100 billion to continue his war as he sees fit -- no strings attached.

Meanwhile the surge doesn't appear to be working and the death toll just keeps climbing. It is the 4th of June and so far 15 U.S. troops have already been killed this month, bringing the total number of U.S. service members killed since the start of the war to 3,493.

So here's the question -- California's presidential primary ballot may include a question on the immediate withdrawal of U.S. troops from Iraq.

What difference would it make?

E-mail caffertyfile@cnn.com or go to cnn.com/caffertyfile -- Wolf.

BLITZER: A hundred twenty-seven American troops were killed, Jack, in May. That was the third worst month since the start of the war more than four years ago.

Jack Cafferty with The Cafferty File.

Thanks very much.

Up ahead, chilling relations and heated rhetoric reminiscent of the cold war. We'll have details of what Russia's president, Vladimir Putin, is saying, and whether he's actually making a nuclear threat.

Also, the picture of health -- or is it?

The Cuban president Fidel Castro appearing on state TV for the first time in months.

Is he poised to return to power?

Plus, "Hustler" magazine publisher Larry Flynt offering a reward for a Washington scandal. We're going to show you what he's after.

Live here in Manchester, New Hampshire.

Stay with us.

You're in THE SITUATION ROOM. COMMERCIAL

BLITZER: The United States and its allies are firing back after the latest icy blast from Russia's president Vladimir Putin -- a chilling warning which conjures up some cold war nuclear threats. All of this ahead of a G8 meeting this week with President Bush, who has now arrived in the Czech Republic.

Our White House correspondent, Ed Henry, is there, as well.

He's in Prague -- Ed what's behind this latest blast of harsh rhetoric?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, the Russian president, as you know, Wolf, is very angry about U.S. plans to build a missile defense program in Eastern Europe. And today, frankly, the White House was caught off guard, however, by the fact that the rhetoric just escalated.

(BEGIN VIDEO TAPE)

HENRY (voice-over): Russian President Vladimir Putin is talking tough, warning he may aim nuclear weapons at targets in Europe unless the U.S. stops plans for a missile defense system in the region.

PRES. VLADIMIR PUTIN, RUSSIA: (THROUGH TRANSLATOR): If this does not happen, then we will withdraw any responsibility for our retaliatory measures, because it wasn't us who initiated a new round of arms race development in Europe.

HENRY: That rhetorical blast came even before President Bush left the U.S. for the G8 summit, with a stop first in the Czech Republic, where the White House wants to place a radar system for the missile shield.

The White House insists this will be no threat to Russia and is merely designed to protect Europe from Iran and other rogue nations that may launch attacks from the Mideast.

STEPHEN HADLEY, NATIONAL SECURITY ADVISER: They should view missile defense as an element of long-term security for Russia and that it is a very productive area for cooperation between the United States and Russia.

HENRY: Putin isn't buying it, expressing fear the defensive weapons could be used as offensive weapons against Russia.

PUTIN (THROUGH TRANSLATOR): We think that there is no reason for placing an anti-missile system in Europe and our military experts believe that this system will cover the territory of the Russian Federation up to the Urals.

HENRY: Kremlin watchers say the White House appears to have misjudged the fury the missile defense system would spark.

PETER BAKER, "THE WASHINGTON POST": It really provoked a genuine and deep anger in Moscow, a sense that here was America coming up to its own back door in a very provocative way.

(END VIDEO TAPE)

HENRY: There was at least one anti-missile defense protest today here in Prague, a sign that Mr. Bush is going to have a tough sales job to the Czech people, who are very skeptical of the fact that the president wants to put the radar for this defense program here in the Czech Republic.

Later in the week the president is going to Poland, where he wants to put the interceptor missiles; also an uphill battle there. And both of these stops are only going to anger Mr. Putin even more, raising questions about whether the Bush/Putin meeting at the G-8 summit in the middle of the week might overshadow the entire summit -- Wolf.

BLITZER: Ed, the president giving what the White House is billing as a major address in Prague tomorrow.

Is he expected to bring up Russia?

And couldn't that escalate this confrontation -- this, I guess we could almost call it a crisis, even more?

HENRY: Yes and maybe. He is going to bring up Russia because he's going to be talking about what the president calls "the freedom agenda," trying to spread democracy around the world.

But will it escalate the tensions?

Maybe.

The White House is certainly hoping that the president can prod Russia on democratic reforms, but not turn this into a cold war. But that might be easier said than done.

As you know, Wolf, the tensions are escalating.

BLITZER: Ed Henry on the scene for us in Prague.

Thank you, Ed.

We'll check back with you tomorrow.

The president may have a different view of President Putin now than he did after their first meeting back in June 2001.

Listen to this.

(BEGIN VIDEO CLIP)

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: And I looked the man in the eye. I found him to be very straightforward and trustworthy. And we had a very good dialogue. I was able to get a sense of his soul.

(END VIDEO CLIP)

BLITZER: The dialogue may be a little bit more strained when the two presidents meet this time around. And President Putin invited to go up to Kennebunkport to meet with the president later in the summer. We're watching this story very closely.

We're also watching the situation in Cuba. The ailing president, Fidel Castro, appearing to be the picture of health. A new video shown today on Cuban TV, the first images we've seen of Fidel Castro in months.

Let's bring in our State Department correspondent, Zain Verjee -- what does this new video, Zain, reveal about Castro and his health?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Some very interesting things, Wolf.

His health, as you know, has really been a state secret in Cuba. But Fidel Castro is really making a very public show and sending a message to the United States.

(BEGIN VIDEO TAPE)

VERJEE (voice-over): We don't know what the joke was, but Fidel Castro seems to have the energy to crack some, in a two hour meeting with the Communist Party leader of Vietnam. In video on state run television "el commandante," as they call him, had plenty of smiles for cameras, a vigorous handshake and a warm embrace for his guest.

Perhaps most significant, since we saw him last year with Venezuelan leader Hugo Chavez, this time he's strong enough to stand up for his meeting. And he seems to have put on weight. The powerful national assembly leader, Ricardo Alarcon, spoke to CNN, saying Castro's worst moments are behind him.

RICARDO ALARCON, PRESIDENT, CUBAN NATIONAL ASSEMBLY: Practically, you can say that he has fully recovered. But -- but he has to continue a very strict regime of exercising, rehabilitation.

VERJEE: Castro sported a red, white and blue track suit. The State Department had something to say about that.

SEAN MCCORMACK, STATE DEPARTMENT SPOKESMAN: Somehow I don't think it's representing the stars and stripes.

VERJEE: Technically, Fidel Castro is not even president of Cuba now. He handed over power to his brother Raul after his intestinal surgery. In an exclusive interview with CNN, we asked Secretary of State Condoleezza Rice if it wasn't time to lift the trade embargo against Cuba, which many say doesn't seem to be working.

(on camera): Why not try something new?

CONDOLEEZZA RICE, SECRETARY OF STATE: If that were the case, then all of those who have pursued free trade and trade relations with Cuba, like the Europeans, would have had an impact on democracy in Cuba. And, in fact, there hasn't been an impact on democracy in Cuba. Cuba remains a dictatorship.

(END VIDEO TAPE)

VERJEE: Secretary Rice says the U.S. and other Latin American democracies should help the Cuban people and help them chart the course they want -- Wolf.

BLITZER: Zain Verjee at the State Department.

Zain, thanks for staying on top of this story for us.

Coming up, Elizabeth Edwards speaking candidly about her husband's campaign, her renewed battle with cancer and the legacy she's leaving for her children.

(BEGIN VIDEO CLIP)

ELIZABETH EDWARDS: You don't know when your time is going to come and whether you're going to have a warning. And it would be a great idea to pass on the things you thought were important to them.

(END VIDEO CLIP)

BLITZER: Find out what inspired her to write these letters to her children. My one-on-one interview with Elizabeth Edwards. That's coming up.

Also, critical test results are in on the man at the center of that international tuberculosis scare. We'll tell you what's going on on that front, as well.

Stay with us.

You're in THE SITUATION ROOM.

COMMERCIAL

BLITZER: Our Carol Costello is monitoring stories incoming into THE SITUATION ROOM right now -- Carol, what do you have?

CAROL COSTELLO, CNN CORRESPONDENT: A few things to tell you about, Wolf.

Results are in from two critical tests on the man at the center of that international tuberculosis scare. They show no traces of T.B. bacteria in his sputum. A third test is planned on Andrew Speaker. And if it proves negative, he would be considered relatively non- contagious and could be allowed outside of his isolated hospital room.

A Taliban commander is detained in Afghanistan. Coalition forces say Mullah Sher Mohammed was taken into custody during a raid in Kandahar Province on Friday. That raid was based on intelligence information. He is accused of leading Taliban fighters in deadly attacks on Afghan forces and for the kidnapping and deaths of three interpreters.

Here's some news impacting your bottom line now.

The Supreme Court ruled for two insurance companies that were sued for alleged violations of the Fair Credit Reporting Act. It requires insurers to notify you if you're paying higher premiums because of your credit rating. The justices upheld the current law and ruled Geico did not violate it. And while Safeco might have, it did not do so recklessly.

And the bottom line on Wall Street, not much gain, but just enough for the Dow and the S&P 500 to eke out record highs. The Dow closing at 13,676.

The S&P 500 closing at 15,039.

The Nasdaq also up.

That's a look at the headlines right now -- Wolf.

BLITZER: Carol, thank you.

We're going to get back to you very soon.

Coming up, allegations against Democratic presidential candidate John Edwards in a stinging new book. Now his wife responds.

EDWARDS: I have read them and I have to say, I'm enormously disappointed. As far as I can tell, there's not a single passage that is -- that is accurate.

(END VIDEO CLIP)

BLITZER: But has her husband read those passages, as well?

I'll ask Elizabeth Edwards about that, her battle with cancer -- my one-on-one interview with her. That's coming up.

Also, Republican presidential candidates do battle over immigration. We're going to show you who fired the first round, now who's firing back. All of this on the eve of the Republican presidential debate right here in Manchester.

Stay with us.

You're in THE SITUATION ROOM.

COMMERCIAL

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

Happening now, murder rates are climbing, especially in America's largest cities. New FBI numbers show murders are up more than 6 percent in cities of a million people or more. Other statistics show robbery is up, rape and auto theft down, and overall crime up just over 1 percent nationally.

Also, charges are dropped against a young Canadian detainee at the start of his trial at Guantanamo Bay in Cuba.

The reason?

A technicality regarding the language in the charge -- charges prosecutors are appealing.

And the defense secretary, Robert Gates, made a surprise visit to Afghanistan, insisting the war on terror in that country is on track. He also affirmed reports showing weapons from Iran are flowing to Taliban fighters, but Gates says it's not clear if the Iranian government is involved.

I'm Wolf Blitzer in Manchester, New Hampshire.

You're in THE SITUATION ROOM.

Tomorrow, they'll be here in Manchester, the Republican presidential candidates, including Senator John McCain. Right now he's fighting back after taking hits for his support of the controversial immigration reform bill, deeply unpopular with many conservative Republicans. And McCain is also aiming his verbal volleys at one fellow GOP candidate in particular.

Our senior political correspondent, Candy Crowley, is here with us in Manchester.

So what is McCain precisely, Candy, responding to?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, he did not name anyone in this, but we did talk to someone in his campaign who said he's talking about Mitt Romney. And what he is accusing Romney and others of is taking what he called cheap shots without offering alternatives.

(BEGIN VIDEOTAPE)

JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Pandering for votes on this issue while offering no solution to the problem amounts to doing nothing, and doing nothing is silent amnesty.

CROWLEY (voice over): A source confirms McCain's target is Mitt Romney, who today called his criticism of the immigration bill a principal disagreement. Romney has repeatedly been critical of the bill, always careful to link McCain with the legislation's chief sponsor.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: McCain-Kennedy, what it did is said that people who are here illegally get a special pathway. They're not like all the other immigrants in the world that want to come to this great country.

MCCAIN: We imposed fines, fees and other requirements as punishment. And if the path to citizenship we offer them is special, it's because it's harder, longer and more expensive than the path offered to those immigrants who come here legally.

CROWLEY: To understate the problem, McCain's immigration views are a bit of a barrier along the road to the White House.

DANTE SCALA, ASSOCIATE PROFESSOR, SAINT ANSELM COLLEGE: It's a marker for a lot of -- or a flash point for a lot of Republican voters. I think it's just one more thing where conservatives say, a- ha, that's the real John McCain, that's the one we were worried about.

CROWLEY: The speech today was part of a full-court press. McCain has talked to reporters and taken his cause to conservative voters via bloggers and talk TV and radio.

MIKE GALLAGHER, "MIKE GALLAGHER SHOW": This is a dumb question, but do you hear the anger in people's voices around the country?

MCCAIN: Oh yes. Oh yes. And my friend Jon Kyl and I, you know, are feeling that very intensely.

CROWLEY: Defense of the immigration bill is pretty much a solo mission for the senator. As one campaign source put it, "We knew we weren't going to get a substantial level of air cover, so we figured we'd do it ourselves."

MCCAIN: I'm not running to do the easy things, so I defend with no reservation our proposal to offer the people who harvest our crops, tend our gardens, work in our restaurants, care for our children, and clean our homes a chance to be legal citizens of this country.

(END VIDEOTAPE)

CROWLEY: You can say this for John McCain, Wolf. If he goes down on this, if his campaign folds because of this, it won't be without a fight.

BLITZER: He's obviously challenging Romney. He's going to be doing that I guess pretty vocally tomorrow night as well.

CROWLEY: I think you'll hear a little bit about it.

BLITZER: Right here in Manchester. I suspect you're right.

Thanks very much.

When it comes to the presidential candidates' spouses, Elizabeth Edwards is one of the most high profile, campaigning alongside her husband, former Democratic senator John Edwards, and also campaigning by herself very often as well. And she's been drawing extra attention since going public with her renewed battle against cancer.

(BEGIN VIDEOTAPE)

BLITZER: This is a really emotional article that is in the "People" magazine. And in it, one of the most emotional parts which I read deals with the letter you're writing to your kids. Tell us a little bit about this.

ELIZABETH EDWARDS, JOHN EDWARDS' WIFE: Well, it was actually something I've been writing probably nearly 20 years now. I started writing it after the movie "Terms of Endearment," where the mother knew she was dying and wrote a letter to her children. I thought, that's a really great idea.

You don't know when your time is going to come and whether you're going to have any warning. And it would be a great idea to pass on the things you thought were important to them.

So I started writing it then, long before I knew, of course, of any cancer. And it just tells them the things that I hope they'll know about growing up. I know they'd have their father as a great moral guide, but of course there's no mother who doesn't want to get her two cents in.

BLITZER: And you're giving them advice about people they should marry, what kind of church they should to go to.

EDWARDS: Right.

BLITZER: Simple things and really serious things.

EDWARDS: Exactly.

BLITZER: And your little kids are, what, 9 and 7, the little ones. You have an older daughter who's 25.

EDWARDS: Right. And these were actually written for our older children. They were a little bit older than this, I think, maybe when I started writing it. Or maybe not. But they -- I wrote it for children who -- you know, Kate now 25.

So it may come in handy for the younger ones. And maybe she'll read it, too.

BLITZER: And I was really happy to read in this "People" magazine article that the new treatment you're going through is not as terribly debilitating as the other treatment when you were first diagnosed with breast cancer.

EDWARDS: No. I still have my hair, so that's a good sign. And I'm not -- it doesn't exhaust me in any way. So that's also great. It means I can campaign.

BLITZER: All right. Let's talk a little bit about some of the issues in the campaign if that's OK with you.

EDWARDS: Absolutely. Yes, absolutely.

BLITZER: The political consultant Bob Shrum, he's got a new book out entitled "No Excuses". And he's -- he used to work for Senator Edwards.

EDWARDS: He did.

BLITZER: And then he went to work for Senator John Kerry's campaign, split, in effect, with your husband. But he's got some really nasty things he's written in there about Senator Edwards. And I'm sure you've spoken to your husband about it.

What does he think about what Shrum is saying?

EDWARDS: Well, John has not actually read the things that Bob Shrum said about John. I have read them, and I have to say I'm enormously disappointed. As far as I can tell, there's not a single passage that is -- that is accurate.

BLITZER: He says, "More troubling was an exchange we had one afternoon as we were throwing around questions and answers in his law firm's conference room. 'What is your position, Mr. Edwards, on gay rights?' I asked. 'I'm not comfortable around those people,' was how he began his answer."

You were there, supposedly...

EDWARDS: I was there. I was there.

BLITZER: ... at that conversation. What happened?

EDWARDS: John talked -- I believe that Bob Shrum brought up the issues of gays and lesbians. And John said, you know, I come from a small southern town, Baptist. As far as I know, I don't know -- this is -- he said, honestly an abstract issue for me, because he said, you know, I don't really know -- as far as I know, know any gay people. So sort of talk to me about it.

And I said, "Well, actually, you do." And I said -- I referred to a friend of mine from English graduate school and how we had been out -- John and I had been out for the evening, I saw this old friend from English graduate school -- this is when we were still in law school -- and I went over and spoke to him and I knew that he was gay. And I said, you know, "I'm engaged, and there's the fellow over there I'm engaged to."

And he said, "Oh, he's awfully cute, I might snake him if he wasn't with you." And I told John that, and this is where he used the word "uncomfortable". He said, "That made me feel uncomfortable."

So Bob correctly remembers the word "uncomfortable," but incorrectly remembers the circumstances in which he said it. I mean, all of us feel uncomfortable at someone trying to snake us in the presence of our fiancee, and that made him feel uncomfortable. And he -- John talked about that.

So he just -- he remembers it slightly, but he remembers it incorrectly. And I have a -- from my book, you'll know, I remember things very -- in quite good detail from years ago. And I remember this conversation very clearly. And I have talked to John about that, and he does recall exactly the same thing.

(END VIDEOTAPE)

BLITZER: Elizabeth Edwards, the wife of John Edwards, speaking with me earlier. Still ahead here in THE SITUATION ROOM, presidential candidates talking candidly about faith, politics and the influence of each on the other. It's a special you're going to see tonight here in THE SITUATION ROOM, 7:00 p.m. Eastern. We're about to get a preview from Soledad O'Brien.

Also, details of Larry Flynt's million-dollar reward for a Washington scandal.

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

(COMMERCIAL BREAK)

BLITZER: Tonight the top three Democratic presidential candidates will be speaking candidly about faith and politics in a special edition of THE SITUATION ROOM.

Our Soledad O'Brien is joining us now. She's over at George Washington University, in the nation's capital. She's got a little preview.

Soledad, give our viewers a sense of what we're hoping to learn tonight from these three Democratic presidential candidates.

SOLEDAD O'BRIEN, CNN CORRESPONDENT: Hey, Wolf.

This is Lisner Auditorium, and you can see it holds about 1,300 people. It's still early yet. We've got a ways to go before we start this conversation, which is what we're calling it. And yet, it's pretty full, and they're expecting a capacity crowd.

As you mentioned, we've got Senator John Edwards and Senator Barack Obama and Senator Hillary Clinton. And what we're expecting to hear really is some answers, some very straightforward answers to some very personal questions about their faith, their values, questions about poverty, what they believe in their heart as candidates who are running to be the president of the United States.

We're going to be asking some very pointed questions, and, of course, we're going to be holding them to some hopefully very pointed answers.

Our host of course is Sojourners Foundation. The "Sojourners" magazine you might be familiar with. They've been calling this a conversation about the compassion issues, and some of the things that we actually have not heard a lot about before.

For example, in the debate yesterday, not one mention of poverty. You heard Senator Edwards talk a little bit about that.

We're going to talk about those things, not mention necessarily in other -- in other debates this evening with those candidates. And we're expecting a very good and lively situation.

And Wolf, really, as you well know, it signifies just how far some of these Democrats have come, because they've gotten a lot of flak for not talking about their faith. And now we've seen certainly these three embrace their faith. And tonight we're going to hear them talk very specifically about their personal faith and what kind of role it might play if they were to be elected president of the United States -- Wolf.

BLITZER: Soledad, thank you very much. It's going to be a fascinating hour.

Soledad O'Brien, 7:00 p.m. Eastern. Paula Zahn will have a special tonight also at 8:00 p.m. Eastern.

Tomorrow night at 7:00 p.m. Eastern, the Republican candidates will gather here in New Hampshire. I'll be moderating that two-hour debate. All of that only here on CNN.

Up ahead, the "Hustler" magazine publisher, Larry Flynt, offering a sex bounty, $1 million. But the conditions are very specific. We're going to show you what has up -- what he has going for him, what he wants you to do.

Also, a show of hands at the presidential debates over and over again.

CNN's Jeanne moos takes a most unusual look.

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

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: It's more than kiss and tell. The "Hustler" magazine publisher Larry Flynt is offering a million-dollar bounty to anyone offering proof of a sexual liaison with a United States lawmaker.

Our Carol Costello is joining us once again.

Carol, this isn't the first time Flynt has done this. But what is he up to now?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, he's back. And politicians beware. Larry Flynt wants to know if you're a cheat, and he's willing to pay for it.

(BEGIN VIDEOTAPE)

COSTELLO (voice over): Larry Flynt has always wanted a platform besides this one. In 2003, he ran for governor of California. His slogan, "Vote for a smut peddler who cares."

Larry FLYNT, "HUSTLER" MAGAZINE: I honestly think that California wouldn't mind having a smut peddler who cares as governor.

COSTELLO: Well, he tried to talk the talk, but sadly California did mind. Still, Flynt's not giving up on politics. He put a full page ad in Sunday's "Washington Post" asking, if you can provide documented evidence of illicit sexual or intimate relations with a congressman or senator, Flynt will pay you a million bucks.

ANNE SCHROEDER, POLITICO.COM: This is what Larry Flynt does. You know, he sort of comes out every so often. He makes some sort of a scuffle. He causes some headlines. People start chattering. And then, you know, he slips back underneath the ether.

COSTELLO: Well, he did make a splash in 1998. Angry over the Republican push to impeach President Clinton over his illicit intimate relations, he made the same offer. And while he didn't net oodles of naughty Republicans, his efforts may have led to revelations of sexual infidelity against House Speaker Designate Robert Livingston, who then resigned.

ROBERT LIVINGSTON (R), FMR. U.S. REPRESENTATIVE: I must set the example that I hope President Clinton will follow. I will not stand for speaker of the House on January 6th.

COSTELLO: Sex scandals are nothing new in Washington. In 1974, Arkansas congressman Wilber Mills got caught with a stripper in Washington's tidal basin. Except Mills didn't resign. He ran again, and won.

Livingston aside, it makes you wonder if outing naughty politicos makes any difference.

Bill Clinton's ugly scandal didn't stop him. He's widely admired, and his wife is running for president.

Rudy Giuliani was accused of cheating by wife number two, married number three, and now he's the Republican front-runner for president.

And Newt Gingrich, who recently admitted to a past affair, he's a Republican darling who may want to run for president.

(END VIDEOTAPE)

COSTELLO: But Flynt sees things very differently. It's not the sexual activity. It's the lying that concerns him. As he puts it, this is an election year, and we have to be careful to elect someone who tells the truth. It is time, he says, Wolf, to weed out the liars.

BLITZER: Carol, thank you for that.

Let's go back to Jack, also in New York -- Jack.

JACK CAFFERTY, CNN ANCHOR: If you weed out all the liars in Washington, there won't be anybody there.

The question is, this hour, California's presidential primary ballot may include a question on the immediate withdrawal of U.S. troops from Iraq. We asked, what difference would that make if they put it on the ballot?

Ike writes, "It's a fine idea. Amazing how many state governments are coming up with ideas because the federal government isn't coming up with any ideas. It makes me feel like an American again!"

David Paul in Jacksonville writes, "I say let California move forward with its vote. Hopefully other states will follow suit. Just having the issue on the ballot should be enough to force the Republican candidates to rethink their positions on the war. Wolf should pose this question to the Republican candidates tomorrow night for everyone's entertainment."

Jim writes, "In defense of the Democrats, ending the war is not easy when there are a lot of people absolutely rabid about getting rid of 'those people'. A resolution such as that proposed for the California primary should make it easier for members of Congress to harden their stand for ending this horrible war."

Mark in Oklahoma City, "Jack, how much difference would asking the question make? Is there a word or phrase that means, 'less than none'?"

Ed in Atlanta, "Jack, I can see the contorted smirk on the president's face when he thinks about a California law telling him what to do."

And Cody in Capistrano Beach, California, "It might make Californians feel a little bitter, but it won't make any difference to the rest of the country. We're just a bunch of Hollywood liberals who get drunk, say terrible things, and get tossed in jail. And when we're not doing that, we're basking in the sun on the patios of our million-dollar homes while the rest of the country's freezing, blowing away in a hurricane or tornado, or being flooded out of their homes."

"We have nothing in common with ordinary people, Jack. Didn't you know that?"

Actually, I did.

If you didn't see your e-mail here, you can go to cnn.com/caffertyfile. We post more of them online, along with video clips of "The Cafferty File" -- Wolf.

BLITZER: Jack, thank you. See you tomorrow.

Up next, no hands down winner, but lots of hands up at the presidential debates. CNN's Jeanne Moos takes a most unusual look.

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

(COMMERCIAL BREAK)

BLITZER: Hands up at the presidential debates. CNN's Jeanne Moos takes a most unusual look.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: ... in the beginning of year, raise your hand.

JEANNE MOOS, CNN CORRESPONDENT (voice over): Oh, the frantic waving to get the teacher's attention, sometimes so exhausting you had to support your arm with your other hand. Those days are over by the time you run for president, right?

BLITZER: And I want you to raise your hand...

Let me just do a show of hands. If you would, raise your hand.

MOOS: It's the latest in presidential debate techniques...

CHRIS MATTHEWS, MSNBC: Does any gentleman want to raise his hand and say pardon him?

MOOS: ... whether it be asking Republicans about pardoning Scooter Libby or asking Democrats about making English America's official language.

BLITZER: The only hand I see is Senator Gravel.

MOOS: With candidates stretched as far as the eye can see, at least you get a snapshot of opinion.

BLITZER: If you think it's time to get rid of the "Don't Ask, Don't Tell policy in the U.S. military, raise your hands.

UNIDENTIFIED MALE: It should have been gotten rid of 20 years ago.

MOOS (on camera): Raise your hand if you saw the debate last night.

UNIDENTIFIED MALE: Nope.

MOOS: Raise your hand if you like the idea that they're being asked to raise their hands.

SANDRA BERNHARD, ACTOR/COMEDIENNE: I'd keep my hands firmly in my pockets, Jeanne Moos.

MOOS (voice over): Oh, yeah, Sandra Bernhard, comedienne?

BERNHARD: It's the Paris Hilton school of, you know, debate. You know. It's like, "Huh?"

MOOS: But it makes for good TV. For instance, when the Republicans were asked...

UNIDENTIFIED MALE: Is there anybody on the stage that does not agree -- believe in evolution?

MOOS: ... and three hands went up. But just when hand-raising comes to debates, it's under attack at these kids' school.

(on camera): Show me what you do.

UNIDENTIFIED FEMALE: No, no, no. In school we have to do this because it's too hard.

UNIDENTIFIED FEMALE: Yes.

UNIDENTIFIED FEMALE: Like, our teacher...

UNIDENTIFIED FEMALE: Well, our teacher doesn't like when we do that.

MOOS (voice over): When the debate questions got lethal, the candidates got jittery. How many would authorize a hit on Osama bin Laden if civilians would also die?

BLITZER: And if you would, raise your hand.

SEN. JOSEPH BIDEN (D-DE), PRESIDENTIAL CANDIDATE: It would depend on how many innocent civilians.

MOOS: At one point, Senator Obama protested under his breath to a chuckling Senator Clinton.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I don't want to raise hands anymore.

MOOS: When asked for a show of hands on using force in Darfur, the candidates mutinied.

BLITZER: Hold on.

MOOS: Hillary spoke for the class.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: Wolf, we're not going to engage in these hypotheticals.

UNIDENTIFIED FEMALE: Please, will you put us on TV?

MOOS (on camera): Raise your hand if you want to be on TV.

(voice over): Now, that's a question even the candidates would answer unanimously.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: I'll raise my hand.

Please be sure to join Soledad O'Brien for a special edition of THE SITUATION ROOM on politics and faith tonight with John Edwards, Barack Obama and Hillary Clinton. Then a "PAULA ZAHN NOW" special. That will follow at 8:00 p.m. Eastern.

Tomorrow night, 7:00 p.m. Eastern, don't forget the Republican presidential candidates. They'll debate here in New Hampshire. I'll be moderating that debate as well.

Thanks very much for joining us. Let's go to Lou in New York.

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