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THE SITUATION ROOM

Russia Slams U.S. 'Threat'; Down on Congress: Poll on Anti- Washington Mood; Hunting for Arsonists

Aired October 26, 2007 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, Russia's president takes a new shot at President Bush with tough talk of a Cold War-like crisis. Is the man Mr. Bush calls a friend turning into -- becoming an enemy?
Plus, heartbreaking finds in the ruins of southern California. More residents returning to their homes that simply don't exist anymore.

And border patrol agents make a gruesome discovery, pushing the death toll even higher.

And it's a campaign, a nuclear war campaign between Hillary Clinton and Barack Obama. This hour, new attacks and counterattacks over Iran and nuclear weapons.

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

Right now Russia's president warns America not to repeat history. Vladimir Putin is recalling a frightening Cold War confrontation involving the United States, the then Soviet Union and Cuba. He's slamming the U.S. right now for a plan the Bush administration says will help protect the United States and its allies, but Russia sees as a threat.

Let's go to our White House correspondent, Ed Henry. He's watching this story for us.

The comparison coming from the Russian president to the Cuban Missile Crisis, Ed, this is getting a lot of people nervous.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. And White House spokeswoman Dana Perino today suggested the media is hyping up President Putin's comments, but, in fact, Putin himself is ratcheting up the rhetoric to a whole new level.

(BEGIN VIDEOTAPE)

HENRY (voice over): Another blast from Russian president Vladimir Putin, now comparing President Bush's plan for a mission defense shield to the Cuban Missile Crisis, when the U.S. and the Soviet Union were on the brink of nuclear war.

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): For Russia, these situations are technologically very similar. HENRY: Hit with questions about a potential new Cold War, White House spokeswoman Dana Perino tried to downplay it by noting Putin also called Mr. Bush a friend.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: There's no way you can walk away without thinking that he thinks that we can work together.

HENRY: But with friends like Putin, who needs enemies? A point made recently by even Republican John McCain in a mocking reference to Mr. Bush's infamous declaration that he had seen into Mr. Putin's soul.

JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I looked into Putin's eyes and I saw three letters -- a K, a G, and a B.

HENRY: But Perino insisted a missile defense system in Europe would be good for Putin because it could help prevent rogue states like Iran from attacking Russia.

PERINO: And that's the purpose of it, and President Putin identified two people to work with, two people the president designated, Secretary Rice and Gates, who were there just that week.

HENRY: Of course, at that meeting, Putin mocked the two cabinet secretaries, declaring the missile defense plan should be built on the moon. This week, Putin also slammed the White House's latest sanctions against Iran, comparing that to "Running around like a madman with a razor blade."

PERINO: But the problem here isn't the United States, it's not the international community. The problem is Iran, and Iran has not stepped back from trying to pursue a nuclear weapon.

(END VIDEOTAPE)

HENRY: Now, in private, administration officials explain this away as Putin's bark being bigger than his bite and that in fact they believe he agrees with the U.S. that Iran should not have nuclear weapons. But in fact, if you listen closely to what Putin himself is saying, he's saying he doesn't believe Iran wants a nuclear program, and that's raising questions about whether the White House has misjudged the U.S./Russian relationship -- Wolf.

BLITZER: And the Russians also reacting negatively to the latest sanctions that the U.S. unilaterally is imposing against the Iranian Revolutionary Guard, the Quds force, among others. There's no great sign of receptivity in Moscow.

HENRY: That's right. And Putin basically saying that these sanctions could end up backfiring on the U.S., a repeat pretty much of what he said a week or so ago when he was meeting with the Iranian president in Tehran. And that's why there's so many questions right now being raised -- Wolf.

BLITZER: Tensions between Washington and Moscow.

Thanks very much for that.

President Bush is scolding Democrats in Congress, saying they're wasting time by passing another children's health care bill that he promises to veto. Does the American public share the president's feelings?

Let's go to or senior political analyst, Bill Schneider. He's got some brand-new poll numbers he's watching.

A year after the election that brought the Democrats to the majority in the House and the Senate, what's the public saying, Bill?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: What the public says is they see Congress going from bad to worse.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice over): A year ago, voters were furious at Congress. Congress's job approval? Twenty-eight percent. So voters threw the Republican majority out.

A year later, how is Congress doing? Worse. Twenty-two percent.

Who's down on Congress? Republicans? No. Everybody.

Congress symbolizes Washington. Congress' job rating is an index of anti-Washington sentiment. When Congress' job rating goes down, say, below 30 percent, where it is now, it means anti-Washington sentiment is up.

Congress was down in the late 1970s after Watergate. Those were the years of gas lines and stagflation. Anti-Washington sentiment brought Jimmy Carter to power and threw President Carter and the Democratic Senate out of power.

RONALD REAGAN, FMR. PRESIDENT OF THE UNITED STATES: You know, that might be more fun, pulling rabbits out of a hat, than jackasses out of the way in Washington.

SCHNEIDER: Congress' job ratings dipped even lower in the early 1990s when the country faced a deficit crisis and recession and tax hikes and a congressional banking scandal. Anti-Washington sentiment brought down the first President Bush. It gave Ross Perot his day in the sun. It got Bill Clinton elected, and then nearly brought him down, too, when the Democratic Congress was thrown out in 1994.

Have voters ever felt good about Congress? Sure.

Approval of Congress was over 50 percent in the late 1990s and early 2000s. The economy was booming. The budget was in surplus. And Americans didn't think anybody threatened them.

We learned otherwise in September 2001, but that shock caused national pride and confidence in Washington to soar.

CONGRESS (SINGING): God bless America, my home sweet home SCHNEIDER: Now voters are furious at Washington again -- the war in Iraq, congressional scandals, a soaring deficit, a broken immigration system.

(END VIDEOTAPE)

SCHNEIDER: What does it mean for 2008? It means voters want change.

It could be change in the White House like 1980 or '92, or a change in control of Congress like 1994 and 2006. It means Independents could do well. It means voters will look for Washington outsiders like in 1992, the year of the woman.

Now, no one is betting the Democrats are going to lose their majorities in the House and Senate, but when anti--Washington sentiment is as high as it is now, politics becomes very unpredictable -- Wolf.

BLITZER: And it's a year to go before the election.

All right. Thanks very much, Bill Schneider.

Bill and Ed Henry, as you saw, they are both part of the Emmy Award-winning best political team on television.

And remember, for the latest political news at any time, you can always check out our political ticker at CNN.com/ticker.

Let's go to Jack Cafferty. He's watching all of this for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, oil prices spiked above $92 a barrel at one point this afternoon. And one of the reasons is the escalating tension in the Middle East. More specifically, tensions between the U.S. and Iran.

Yesterday, the United States announced additional sanctions against Iran. Ninety dollars a barrel for oil could be nothing compared to what might happen if the United States decided to attack Iran.

Disrupted oil supplies could mean even higher prices. Also, there's the threat that Iran could retaliate against oil facilities all the way from southern Iraq to the Straits of Hormuz.

"The Washington Post" reports oil industry experts describe such a scenario with terms like "chaos," "all hell breaking loose," and suggestions that oil prices could shoot up to "God knows where." Because of this, some analysts think U.S. military action against Iran is unlikely.

Meanwhile, although the Bush administration may not be openly threatening a military strike against Iran, they're certainly ratcheting up the rhetoric. The president recently suggesting that if Iran got nuclear weapons, it could lead to World War III. Vice President Cheney said the U.S. would not stand by while Iran continued its nuclear program, adding, "We will not allow Iran to have a nuclear weapon."

So here's the question. When it comes to oil prices, can the United States afford to attack Iran?

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

BLITZER: It wasn't that long ago when we would have thought $100 a barrel, that's out of this -- that's crazy, it's never going to happen. But you know what? That could happen pretty soon.

CAFFERTY: I was going to say, sooner rather than later. I mean, oil's gone up, what, $10, $12 a barrel in the last two or three weeks. I mean, it's an amazing spike that occurring. Scary stuff.

BLITZER: Very scary.

All right, Jack. Thanks very much.

On the hunt in California in the fire zone, arson investigators now on the trail. They're looking for suspects accused of some despicable acts.

Plus, John McCain looks to his painful past to try to turn his presidential campaign around. Can he get some new respect?

And Hillary Clinton's presidential primary rivals try to chip away at her lead with the help from Iran as an issue.

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

(COMMERCIAL BREAK)

BLITZER: We're standing by to hear from the governor, Arnold Schwarzenegger, this hour. He's going to be speaking to reporters out in California, the latest on the California wildfires.

Firefighters there are getting more of a handle on the situation today with a number of active fires down to nine. Arson investigators are focusing in on who may be to blame for some of this destruction.

CNN's John Zarrella is joining us from Irvine, California. He's watching the latest on this arson probe.

Hard to say it even. Arson could have been the cause of so many of these fires.

JOHN ZARRELLA, CNN CORRESPONDENT: Yes, it's amazing, Wolf. And people here are just staggered by the thoughts that these fires -- or some of them, anyway, a few of them -- deliberately set. Certainly the one here, Santiago Canyon Fire, absolutely arson.

Alcohol, Tobacco and Firearms agents out again today up on the mountain where the fires were set, at those scenes, expanding the grid area, looking for more evidence up there to see what they can find. The reward now, $250,000.

They're saying they're getting more tips coming in. And they hope with those additional tips that would sort of shake some stuff from the trees. So far though, no suspects, no arrests in the Santiago Canyon Fire. But they're sure working it hard -- Wolf.

BLITZER: Do they have any hard leads on who may have been responsible? I know they've arrested some individuals, but what are they saying?

ZARRELLA: Yes, not on this particular fire. If there are anything, they're not saying.

But you're right, on the -- there were five people arrested over the past few days for other fires not related to these major fires. In fact, the Los Angeles district attorney just a little while ago announced that charges had been filed against a 41-year-old man, arson charges, for attempting to set a fire they said on the side of a hill on the Westside Hills, and that's very near Santa Clarita, where some of the major fires did break out.

But no linkage between him or any of these other people to these major fires. But this individual faces six years in state prison if he's convicted for attempting to set that fire on the side of the hill there in Westside -- Wolf?

BLITZER: All right, John. We'll check back with you.

John Zarrella is on the scene.

Authorities now link 14 deaths to the California wildfires. Seven of them are directly linked to the inferno. The death toll shot up after a grim discovery in a canyon east of San Diego.

Brian Todd is on the scene for us in this fire zone.

What do we know about these four bodies that were found, Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, we don't know their identities yet, but authorities believe they got caught in a very desperate very quickly. We have to warn viewers that some of these images they may find disturbing.

(BEGIN VIDEOTAPE)

TODD (voice over): The position of their bodies tells of a horrifying end, one at the bottom of a canyon, another dozens of feet higher, a third several feet above that. All severely burned. Authorities say it appears they were frantically trying to get out, but couldn't reach high ground fast enough.

DAMON FOREMAN, U.S. BORDER PATROL: The fires probably moved through here pretty rapidly. The fires burnt this area up around -- on Sunday, during the first initial waves of the fires when the winds were the strongest. TODD: Cadaver dogs found a total of four bodies in this remote canyon devastated by the Harris Fire. We were there as recovery teams and medical examiners struggled in the darkness and jagged terrain to reach them. Border Patrol and sheriff's officials tell us they suspect these were border crosser moving a common but treacherous route into the U.S.

FOREMAN: There's definitely danger for any border crosses when the fire's right at the border. The Border Patrol has made several rescues during this whole week. We've rescued well over 50 people who were affected by the fires.

(END VIDEOTAPE)

TODD: And even though as these fires die down, Border Patrol and other authorities there tell us that they're going to be more proactive in trying to get people out of these canyons before tragedies like this occur again -- Wolf.

BLITZER: Brian, all right. Thanks very much.

Brian Todd watching this story.

We're standing by also to hear from the governor, Arnold Schwarzenegger, momentarily. He's expected to walk up to that microphone and update us, the latest information on these devastating fires in southern California. Once he starts to speak, we'll go out there to catch his words.

Also coming up, a new war of words over Iran pitting Hillary Clinton against Barack Obama. How far will her rivals go to try to bring her poll numbers down?

And Senator Larry Craig has a new strategy for fighting back against his bathroom bust. We'll tell you what it is, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The governor, Arnold Schwarzenegger, right now in Mather, California. That's a live shot. You're going to see the governor walking into that room, speaking to reporters shortly. Once he does, we'll go there.

You're going to want to hear what he has to say. He's being briefed right now by members of his cabinet and others on these California wildfires.

(NEWSBREAK)

BLITZER: It appears Iran is the new Iraq in the Democratic race for the White House, and as an example of that, look no further than some fresh new attacks in a nasty exchange that's happening right now between senators Barack Obama and Hillary Clinton.

And is the controversial interrogation technique known as waterboarding torture or is it not? Two Republican presidential candidates arguing over that. One of them survived torture in Vietnam.

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

(COMMERCIAL BREAK)

BLITZER: Happening now, after the U.S. slapped Iran with a punishment for its nuclear activities, Iran is sending its own message. It partly comes in the form of an arrow piercing an American flag, a swastika and a Star of David.

We're going to show you what's going on.

Also, he allegedly lived a lavish lifestyle complete with million-dollar vacations, expensive jewels and a reported $10 million party with rock and rap stars. But did he loot a company that makes body armor for U.S. troops in Iraq to pay for his extravaganzas?

And as fire swallowed many homes in California, others were saved by firefighters for the rich. The homes they protect cost at least a million dollars.

We're going to have details of that.

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

As Senator John McCain attempts to jump-start his campaign, he's managing to get in his own digs at Hillary Clinton.

Let's bring in our senior political analyst, Bill Schneider, our senior political correspondent, Candy Crowley. They're both here. We've got a lot to assess.

Let's start with you, Bill.

First of all, on John McCain, he's trying obviously to make a comeback.

SCHNEIDER: He is, and he's doing it by trying to contrast very different images of the 1960s.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice over): On Friday, John McCain commemorated the 40th anniversary of the day he was shot down over Hanoi and captured.

MCCAIN: Many years ago on this day I was able to intercept a surface-to-air missile with my own airplane.

SCHNEIDER: And spent the next five and a half years as a prisoner of war, refusing to accept early release until those who were captured ahead of him were freed.

MCCAIN: I came out of the Vietnamese "hospital" in very bad condition. SCHNEIDER: This summer, McCain's presidential campaign had its own near-death experience when it almost ran out of money. He needs to bring back the McCain of 2000, starting with the image that first brought him national prominence -- service and sacrifice.

MCCAIN: In case you missed it, a few days ago Senator Clinton tried to spend $1 million on the Woodstock Concert Museum. Now, my friends, I wasn't there. I'm sure it was a cultural and pharmaceutical event.

I was -- I was tied up at the time. But the fact is -- but the fact is...

(APPLAUSE)

SCHNEIDER: The line worked so well, his campaign has turned it into a commercial, now running in New Hampshire.

MCCAIN: Now my friends, I wasn't there. I'm sure it was a cultural and pharmaceutical event. I was -- I was tied up at the time.

SCHNEIDER: McCain is hoping to turn things around, using what might be called the Aretha Franklin method.

MCCAIN: And I don't think you can fool the American people. I think the first thing you need is their respect, and I intend to earn their respect.

(END VIDEOTAPE)

SCHNEIDER: Quite a formula for winning over conservatives -- highlight your service, attack Hillary Clinton, and draw sharp contrasts between the '60s counterculture and his own dramatically different experience of the '60s. And maybe that will get McCain some R-E-S-P-E-C-T.

BLITZER: All right. That would be respect.

SCHNEIDER: Yes.

BLITZER: Stand by for a moment. I want to come back to that subject.

Candy Crowley is here as well.

Angry new e-mails are flying between the Hillary Clinton and Barack Obama camps. At issue, claims by Clinton's rivals that she effectively voted to give the president a blank check to attack Iran.

Candy is here.

So give us the background. How did this whole uproar over the Democratic presidential front-runners erupt, if you will, between Hillary Clinton and Barack Obama? John Edwards is getting involved as well. CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Absolutely. Lots of people involved in this.

Look, it began with a Senate amendment designating the Iranian Revolutionary Guard as a terrorist group. Hillary Clinton voted yes. Barack Obama did not vote. John Edwards cannot vote. But both of them jumped all over her, saying she basically gave the president the green light to go into Iran or to stay in Iraq to counter the Iranian threat.

Her campaign has said it's a politically motivated distortion of her vote, dueling flyers on the subject stuffed into mailboxes all across Iowa. So fast forward.

The president yesterday imposed a stiff set of sanctions on Iran, and camp Obama uses the occasion once again to blast Clinton. Her campaign responds with a lengthy memo and a snarl. "Stagnant in the polls and struggling to revive his once-buoyant campaign, Senator Obama has abandoned the politics of hope and embarked on a journey in search of a campaign issue to use against Senator Clinton."

But, wait. There is still more. In a response to the response, an adviser to Obama said, all of the political explanations in the world are not going to change the fact that, "once again, Senator Clinton supported giving President Bush both the benefit of the doubt and a blank check on a critical foreign policy issue."

All of this points to one thing, Wolf. And that is that Iran, at least for now, is the new Iraq on the campaign trail.

BLITZER: All right, guys, stand by for a movement.

Arnold Schwarzenegger, the governor of California, has just started to speak to reporters out there on the California fires.

(JOINED IN PROGRESS)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I think the death of those brave men reminds us of how much firefighters and their families risk every day when those heroes go to work and protect us and protect our properties.

This has been an extraordinary week, of course, for the people of California. We have experienced some of the most devastating and most difficult fires in the history of California. And they are not over yet. We have been severely tested.

And thanks to the great cooperation between the federal government, the state and the locals, and with the coordination of OES, I am very proud to say that California has responded very well. But we cannot rest on our laurels. There is so much more that needs to be done.

And I called this meeting that we had just today, again, with all the state officials, to lay out an exact plan on what we are going to do next. I think this is a very important phase, the next step. As I have always said, this first week was like a sprint, but the next phase is the marathon. Follow-through is extremely important.

And our top priority must always be to help rebuild the people's lives and to get them back on their feet as quickly as possible. Hundreds of thousands of Californians had their lives turned upside down. And my administration will not rest until their lives are back to normal.

It will not be easy. We have many, many tough, tough tasks ahead of us. And there's long months ahead of us. When you think about that 500,000 acres of land have been destroyed and have burned, that is twice the size of New York City, just to give you an idea of how much land that is.

Southern California's dynamic economy has definitely suffered a major body blow. We have to get businesses up and running as quickly as possible, and we are working with the federal and local governments to get this done.

While we are putting Southern California back together, I want to warn everybody, we will not tolerate price-gouges or shady contractors. They will be punished to the full extent of the law.

Now, to help speed up the recovery process, I'm signing an executive order today that will do various different things to move things forward. For people out of work from the fires, we are suspending the one-week waiting period for unemployment insurance.

If you lost any birth certificate or driver's license or other vital documents, we will waive replacement fees. We're cutting red tape to speed up cleanup, debris removal, and to repair environmental damages from the fires.

I have also asked the Franchise Tax Board and the State Board of Equalization to assist the fire victims with filing extensions and provide relief from penalties and assessments.

I have directed the Employment Development Department to extend payroll tax deadlines for up to 60 days for businesses hardest hit by the fire. I have also directed the Small Business Disaster Loan Guarantee Program to guarantee $7 million in loans for farmers and businesses in the communities affected by the wildfires.

And the U.S. Department of Labor has granted us our request for $50 million to hire 3,000 temporary workers to assist disaster relief and repair efforts.

And, as I said yesterday when I was with President Bush, we have many tools to help our people to rebuild their lives. And we're going to use as many of those tools as possible.

It will take time. It won't be overnight, and it won't be easy. But we won't let up until Southern California gets back to normal. I think the people of California expect that and the people of California deserve that.

Thank you very much. And now I would like to hand the microphone over to our insurance commissioner, Steve Poizner.

BLITZER: All right, the governor of California, Arnold Schwarzenegger, updating us on what's going on, clearly pleased that he's getting a lot of assistance from the federal government.

Bill Schneider and Candy Crowley are here in THE SITUATION ROOM.

Bill, he's getting tremendous grades for the way he's reacted, the way he's handled this enormous crisis in California.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: I always say that there are two Republican governors or former governors who would be right at the top of the polls for president if they were able to run for president. One is Arnold Schwarzenegger, who is popularity is soaring in California, a Democratic state.

And the other is Jeb Bush, the former governor of Florida, who left office on a high, even got a Republican successor elected in 2006, when Republicans couldn't get elected everywhere. Jeb Bush has the wrong name. Nobody wants to vote for another Bush. Arnold Schwarzenegger is ineligible under the Constitution.

BLITZER: Because he wasn't born in the United States.

SCHNEIDER: Exactly.

BLITZER: And that prevents him from running for president.

What do you think, Candy, though? Because this is a Democratic state, California, and he's very, very popular out there.

CROWLEY: Absolutely.

And, mostly, it's because he's not acting like a Republican, so, obviously, he's very popular out there.

I think what's interesting here is that Schwarzenegger really does benefit from the contrast. Now, Katrina was far more complicated in New Orleans as compared to these fires, but look at Blanco, look at Nagin, the leaders in Louisiana, look at George Bush. They were always behind the curve. They were always reacting.

He's very proactive. Already, he's saying, we're not going to tolerate gouging, price-gouging. We're not going to tolerate scammers. You will be prosecuted to the fullest extent of the law.

So, he's always out in front of this. And I think that's why he's getting, both by contrast and by action, such high marks.

BLITZER: And he's there. You know, he's not sitting at some desk. He's out there on the front lines. He's very visible. And that's a critically important element for either a governor or a president in a crisis like this.

SCHNEIDER: Woody Allen said, 80 percent of life is showing up. Well, being there is the most important thing for a politician. Any mayor or governor who has dealt with a disaster knows the most important thing is to show you're there for a reason. People want to believe that someone is in charge, that someone is in control, even if actually no one is in control.

Remember, it was the wind that was in control of these fires, but, because he was there, people felt better.

BLITZER: I like to think, Candy, that a lot of these politicians learned lessons from Katrina.

CROWLEY: Absolutely.

I mean, we had all of those politicians sort of in the first couple of days in Katrina sitting around, going, well, FEMA is in charge; no, the governor is in charge; no, wait, Ray Nagin ought to be doing something, the mayor.

So, here we had no doubt. I mean, look, it wasn't 9/11, it wasn't Katrina, but Bill is absolutely right. You saw him there, you knew who was in charge. And he was comforting.

BLITZER: Candy Crowley, Bill Schneider, as all of our viewers know, they are part of the Emmy Award-winning, best political team on television.

And, remember, for the latest political news at any time, check out our "Political Ticker" at CNN.com/ticker.

While hundreds of thousands were evacuating during the wildfires, some people refused to leave. Coming up, one man's frightening tale of going face to face with a wall of flames and winning.

Plus, the debate over water=boarding and how John McCain is using the issue against another Republican candidate.

Iran is getting even tougher against the U.S., how they're turning a parade into a message for America -- all that, a lot more, coming up, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The dangers from fast-spreading wildfires tested the survival skills of many Californians, including those who pride themselves in knowing how to come out of risky situations alive.

CNN's Ted Rowlands is joining us now from Lake Arrowhead in California.

You talked to one of those survivors who seemingly risked it all, Ted.

TED ROWLANDS, CNN CORRESPONDENT: Yes.

You know, you hear about these people that ignore all the evacuation orders and decide to stay behind with themselves -- by themselves with their garden hoses and whatever else they can cobble together. Well, we met a guy who had a plan for the past two years with his neighbor, that, if something like this happened, they were going to stay and they were going to fight the fire. Here is his story.

(BEGIN VIDEOTAPE)

ROWLANDS (voice-over): What kind of person would stay when a fire like this is coming at you?

SCOTT GARRETT, REFUSED TO EVACUATE: You could hear it coming. You could see it coming. And the roar, it was sounding like a jet.

ROWLANDS: Scott Garrett is a self-described survivalist living in the San Bernardino Mountains. He stayed behind with his next-door neighbor as others evacuated, and says the fire was liking nothing he had ever experienced or even imagined.

GARRETT: And all the embers then started raining down. And it was like roofing and stuffing from furniture, and all this flaming debris was coming down.

ROWLANDS: Garrett says he and his neighbor used simple garden hoses, buckets filled with water and shovels throwing dirt, to fight the flames, and they saved several homes. He says they battled for more than 12 hours.

(on camera): You could have been killed.

GARRETT: No, no.

ROWLANDS (voice-over): Garrett says he and his neighbor had an exit plan and could have escaped at the last second, saying they had been planning this scenario for two years. Dozens of people around him did evacuate and ended up losing their homes.

Fire officials say what Garrett and his neighbor did was foolish and that they absolutely could have been killed. A downed power line, a wind shift, even an ember can easily kill or injure. After going through it, even Garrett acknowledges staying behind was more dangerous than he thought.

(on camera): Would you advise other people to do what you did?

GARRETT: Absolutely not. No.

(END VIDEOTAPE)

ROWLANDS: And these two apparently weren't alone. Fire officials up here say a handful of folks did stay. And, as far as they know, everybody that stayed did survive. But they're quick to point out that the first death in these fires was in Malibu, a man who was trying to save his house -- Wolf.

BLITZER: What a story.

All right, Ted, thanks very much. As many evacuations orders are lifted in Southern California, some residents are returning to their homes to find nothing but rubble.

One CNN I-Reporter documented the destruction in Rancho Bernardo.

Let's go to our Internet reporter, Abbi Tatton. She's watching this.

What -- so, what was left after the fire, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, these pictures we're now getting into CNN's I-Report are of the return.

And, really, what's amazing about looking through them is just how random the destruction is. Take a look at Gina Yarbrough's pictures here from Rancho Bernardo.

The picture here in the foreground, the house is completely destroyed, but look at the house behind it, the white house, the walls, roof completely intact, whereas the one next to it, all that seems to remain is the chimney.

Her pictures here in Rancho Bernardo show where the trail of the fire went, through cars, destroying buildings, and, in this picture, just the mailboxes remains. Gina says that all that her house suffered was a lot of ash.

But others -- look at this resident looking through their belongings. Some of the residents there only got five or 10 minutes to clear their homes before they were evacuated.

CNN.com/ireport, this is where we have been getting hundreds of these pictures and personal stories in this week, Wolf. The sheer volume of material we have received here just shows you how many people have been affected.

BLITZER: These pictures are really, really amazing. Abbi, thank you.

Coming up, it's -- is it pure torture or is it not? A new feud under way right now between John McCain and Rudy Giuliani on an issue that cuts very close to both of their campaigns.

And could two presidential campaigns depend on who wins the World Series? You can place your bets right now.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

It's an interrogation technique that makes those undergoing it feel like they're drowning, but is water-boarding torture? Right now, two Republican candidates are giving their answers, one of them a torture survivor.

Let's bring in our "Strategy Session" right now, our CNN political analyst and Democratic strategist Paul Begala and Republican strategist Leslie Sanchez.

Let me give you some of the background. Giuliani, the former mayor of New York, arguably the Republican presidential front-runner, he said this about water-boarding. Listen to this.

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI (R), PRESIDENTIAL CANDIDATE: Well, I'm not sure it is either. It depends on how it's done. It depends on -- depends on the circumstances. It depends on who does it.

(END VIDEO CLIP)

BLITZER: He says he's not sure that water-boarding is torture, to which John McCain told "New York Times" this. He said: "They should know what it is. It's not a complicated procedure. It is torture."

And, today, he added this. Let me play this little clip.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I find it beyond belief that anybody would countenance such torture.

(END VIDEO CLIP)

BLITZER: All right, let's talk about the political fallout from this debate between Rudy Giuliani, who is not sure it's torture, John McCain, who says there's no doubt it is torture.

Give us the bigger political picture from what they're fighting about.

PAUL BEGALA, CNN POLITICAL ANALYST: Yes, you don't want -- it would be like arguing about flooding with Noah. OK? You don't want to argue torture with John McCain.

He's a person of impeccable moral standing on this, and of great military bearing, a graduate of the Naval Academy, led one of our big squadrons when he was a Naval officer. And he speaks not only as somebody who survived torture, but also as somebody who is expert in military affairs, and says torture just doesn't work.

I mean, Rudy needs to not be there. He has a lot of great qualities, probably even a better debater than most of the field, but he shouldn't be debating John McCain about torture.

BLITZER: What do you think, Leslie?

LESLIE SANCHEZ, REPUBLICAN STRATEGIST: I kind of -- I have to agree. It's very rare that that's going to happen here, but I do have to say that, especially with respect -- you have to look at the fact it's an emotional issue for John McCain, for good reason.

And he has such incredible credibility here, that it's something that we should move away from. If anything, though, politically it's important for John McCain to be stronger on national security. And this falls under the scope of that. So, he does shift the debate.

BLITZER: I don't know if you saw Bill Schneider's report earlier this hour here in THE SITUATION ROOM. He says McCain has had a pretty good week since that Republican debate. He's got a new ad that he's running.

And, in part, he's going after Hillary Clinton, the woman you support for the president of the United States, saying, you know, while she was trying to get a million dollars for some sort of museum to remember Woodstock, he was doing something else at the time. He was tied up, as a POW.

MCCAIN: The best line of 2007, the best.

And, yes, I love Hillary. You got to give him his due. McCain is showing the Republicans the right way to attack Hillary. And that is with humor, and with some dignity and some class, some self- deprecation that also reminds us that he's a war hero.

Contrast that with the rest of the field, which is like stumbling over each other to say the more hateful and nasty things about Hillary, which is self-defeating. So, my -- as a Democrat, I hope they're not listening to McCain. But, just as an observer, I think Republicans could learn a lot from watching John McCain this week.

(CROSSTALK)

SANCHEZ: Tremendously important, the window is closing on the primary schedule, the primary fight. John McCain is showing he's still a very viable candidate.

He has tremendous loyalty out there, not only because of his military credentials, but because he talks straight. And I think that's a -- that's very important.

BLITZER: The big problem he has, though, is money. You know, he raised $5 million or $6 million in the last quarter. But he spent a lot of it. He doesn't have a lot of cash on hand.

The other Republican candidates, especially Giuliani and Romney, they have a lot more money. What's he going to do about that? Because, without money in these kinds of primaries and caucuses, you're in trouble.

SANCHEZ: Well, there's no doubt about that. This is, in one sense, a Hail Mary effort, trying to shift the debate to national security.

And we have always talked about here that it's going to be a fight among moderates and it's going to go down to Giuliani and John McCain. You're seeing that materialize. And one thing he did do is step away from the immigration debate. Once, I think, he did that, you're starting to see tremendous amount of support.

BLITZER: What do you think?

BEGALA: Yes, but I -- I ran into one of Senator McCain's staffers. Actually, he was at my son's football game. I wasn't doing research.

(LAUGHTER)

BEGALA: But I was asking him that question about money, because that is, as Jess Unruh said, the mother's milk of politics.

And he said, if we can reignite the fire that we lit in 2000, because of the capacity to raise money quickly and ethically over the Internet, he said, the money will be there. It's that McCain has got to perform the way he has been performing. Even on Wednesday, he was really happy with his guy's performance.

BLITZER: What -- what about this latest fight that we're seeing now between the Democrats, especially Hillary Clinton and Barack Obama on this whole issue of whether she should have voted for that resolution that declared the Quds Force of the Iranian Revolutionary Guard a terrorist organization? Because especially Obama and John Edwards, they're saying she's giving the president basically a blank check to go ahead and start a war against Iran.

SANCHEZ: Well, two big points here.

One is, they are definitely trying to pull and appease the very extreme fringes of the left, the ones that want to pretend that the war -- there is no war, and that basically we are fighting, and want to kind of pull back within the U.S. borders.

But it also shows naivete on the part of Obama and Edwards. I mean, we have had sanctions against Iran forever. These are a continuation of that. And it's really sad when the French look like they're taking a stronger stand against Iran than the Democrats, you know, who are running for president.

BLITZER: There's a new government in France. Sarkozy and the foreign minister, Bernard Kouchner, they're pretty tough on the Iranians.

BEGALA: They are. And I think that Hillary probably has the better of the substance and for the general election. I think Leslie is right. You don't want to be a Democrat running in the general election...

BLITZER: Is she already looking down the road?

(CROSSTALK)

BLITZER: That's why she's trying to go toward the center a little bit?

BEGALA: No. I think she's not looking toward the general election. I think she's looking toward the notion that she just might win, that she might have to be the president of the United States who confronts Iran.

And, if she does so, my -- my belief is, she would do so with a mix of diplomacy, backed by the credibility threat of force, but diplomacy and sanctions much more important to her, if you look at the things she's saying.

The interesting thing is that Obama and some of the others in this race have all co-sponsored pieces of legislation in the past that would have declared the Iranian republic -- Revolutionary Guard a terrorist organization.

And, so, I think that they have got -- Hillary has got the better of the substance. Right now, though, Obama has the better of the politics, because he can say she's voting with Bush and Cheney. And, in my party, Bush and Cheney are...

(CROSSTALK)

BLITZER: Very quickly.

(CROSSTALK)

SANCHEZ: ... was Joe Biden. He was the only one who was attacking her originally on the national security issue. This would have been a place where you expected to hear from him, you know, and several other folks, in terms of pulling toward the center.

BLITZER: Well, he did issue a statement today, Biden, basically saying the Democrats, they have to get their act together, and work together on this issue of Iran to come up with a real good strategy.

All right, guys, we have got to leave it right there...

(CROSSTALK)

(LAUGHTER)

BLITZER: ... Paul Begala, Leslie Sanchez, until the next time.

On November 15, by the way, I will be in Las Vegas -- that's in Nevada -- to moderate a debate in that key Western state among the Democratic presidential candidates -- November 15 in Vegas with the Democratic candidates.

A presidential candidate makes a sort of bet on baseball. You might not believe the wager one Republican wants to make with a rival. It involves the White House and the World Series.

Also, did a man loot a company, a company that makes body armor for U.S. troops in Iraq, to pay for million-dollar vacations and expensive jewels?

And they're already trading verbal missiles. Might the U.S. and Iran actually engage in war? I will talk about that possibility and a lot more with Queen Rania of Jordan.

She's here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On our "Political Ticker" this Friday, Hillary Clinton turns 60 years old today, after celebrating her birthday with a star- studded fund-raiser. The Democratic presidential front-runner partied last night in New York City last night with her family, fellow politicians and entertainers, including the comedian Bobby Crystal and the rocker Elvis Costello. Costello sang "Happy Birthday" to the senator, while Bill and Chelsea Clinton looked on.

The best gift of the night? Clinton raised $1.5 million for her presidential campaign.

The World Series could influence the GOP race for the White House, if one candidate gets his way. Colorado Congressman Tom Tancredo is challenging former Massachusetts Governor Mitt Romney to a bet. If the Boston Red Sox beat the Colorado Rockies, Tancredo says he will drop his bid for the presidency. But there's a catch. If the Rockies beat the Red Sox, Romney would have to quit the race.

Romney isn't taking the bet, but the odds would have been in his favor, with the Red Sox now two games ahead in the series.

Former presidential candidate Sam Brownback says he's now much more comfortable with Rudy Giuliani's position on abortion. The GOP senator and staunch abortion opponent met with the Republican presidential front-runner late yesterday. Brownback says, after their talk, he's not sure the -- quote -- "pro-choice label" fits the mayor, the former mayor of New York.

That could be a good sign for Giuliani, who's hoping to get the endorsement of his conservative former rival.

For the latest political news at any time, check out our Political Ticker at CNN.com/ticker.

Let's go back to Jack in New York City for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question this hour is, when -- when it comes to oil prices, which touched $92 a barrel this afternoon, an all-time high, the question is, can the United States afford to attack Iran?

If you think people aren't cynical, listen to this.

Allen writes from Idaho: "It doesn't have anything to do with oil prices. It's all about getting Republicans elected next fall. A war with Iran will move a lot of voters away from the weak, less patriotic Democrats. President Bush doesn't care how many young Americans or Iranian civilians might die. The president has already decided. All he has to do now is find a justification that people will accept as plausible." J.T. in Tennessee: "I don't know how much you can -- how you can come up with such a dumb question."

It's easy, J.T. I come up with three a day, buddy.

"We all know the oil money will pay for the cost of the war. Look at how well it's turning out in Iraq. And with all the extra oil being imported now into the United States, well, our prices just keep going down, down, down."

Chuck in Illinois: "If it were only a question about oil, it would be wrong to attack. But, sadly, Iran has terrorists as leaders. And there would be a much higher price to pay should they get ahold of nukes."

Karl writes: "The United States can't go to war with Iran. If oil prices climb to the heavens, it will crumble our economy and our way of life. Oil runs the world. The U.S. is very dependent on oil. A shortage ruins us."

Tom in Pennsylvania: "Bush starts running his mouth about attacking Iran, oil prices spike, and his cronies in the oil industry get even fatter. Funny how that works out."

Glenda in Colorado: "If you're going to start putting restrictions on who we can invade just because of $200-a-barrel oil, then you take all the fun out of being a right-wing conservative" -- Wolf.

BLITZER: Thanks, Jack.

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