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Pile-On Politics Against Hillary; Attorney General Nomination at Risk; RNC Chair Optimistic about Elections

Aired October 31, 2007 - 16:00   ET


DON LEMON, CNN ANCHOR: All right, Susan. Thank you. Now it's time to turn it over to THE SITUATION ROOM and Mr. Wolf Blitzer.
Hi, Wolf.

WOLF BLITZER, CNN ANCHOR: Hi, guys. Thanks very much.

Happening now, political torture. Michael Mukasey's nomination to become the next attorney general of the United States is now at risk. This hour there are new developments as the Senate panel finally moves toward a vote. Why is an outspoken Democrat now keeping quiet?

Also, a license to attack. Did Hillary Clinton's primary rival finally hit her where it hurts? We're going to look at her statements for driver's licenses for illegal immigrants and how fellow Democrats came out swinging.

And who's the Republican front-runner? It depends on which presidential polls you look at. I'll ask the RNC chairman, Mike Duncan, if his party is in any position to beat the Democrats next November.

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

Judge Michael Mukasey may be Washington's poster child for political fortunes that turn on a dime. Today, the White House insists Mukasey's nomination to become attorney general is not in jeopardy. But a top Senate Republican says it is at risk.

A delayed committee vote now is expected early next week. Our congressional correspondent Jessica Yellin reports.


JESSICA YELLIN, CNN CORRESPONDENT (voice-over): Attorney general nominee Michael Mukasey's smooth confirmation process has become decidedly rocky.

SEN. ARLEN SPECTER (R), PENNSYLVANIA: No doubt the confirmation is at risk at this moment, because he has not answered the question categorically.

YELLIN: At issue, Mukasey's response to Senate questions about water boarding. The nominee offered his personal view of the controversial interrogation technique, writing, "These techniques seem over the line, or on a personal basis repugnant to me."

But Mukasey says, since he was never briefed on U.S. interrogation programs, he can't say whether water boarding is illegal. That's not good enough for this Democrat.

SEN. RICHARD DURBIN (D-IL), MAJORITY WHIP: When you have a number of Democratic senators who have already publicly come out against Judge Mukasey, it creates a problem for him. I think that he could have resolved this so easily, so clearly and so simply with a straightforward answer: water boarding is torture, period.

YELLIN: Others say they're not sure yet.

UNIDENTIFIED FEMALE: Well, the first thing is I need to think more about it.

YELLIN: But key Republicans on the judiciary committee are defending the nominee and insist Democrats are just looking for an issue.

SEN. ORRIN HATCH (R-UT), JUDICIARY COMMITTEE: My Democratic colleagues cannot insist that Judge Mukasey be independent toward a Republican president, but compliant toward a Democratic Senate. What kind of a crazy, topsy-turvy confirmation process is this? What this debate boils down to is politics.

YELLIN: These Senate Republicans and the White House insist Mukasey will be confirmed.

One person who's staying unusually quiet: the generally outspoken New York Senator Chuck Schumer, Mukasey's chief Democratic sponsor. He now tells reporters he's still reviewing Mukasey's answers and won't comment on how he plans to vote.


YELLIN: And Wolf, one senior Senate Democrat on the judiciary committee now tells CNN that, despite the worries over Mukasey's answer to these questions, the bottom line is this senior Democrat believes he will be confirmed in the end -- Wolf.

BLITZER: Jessica, where do John McCain and John Warner stand on this nomination?

YELLIN: Well, as you know, John McCain, John Warner have been outspoken critics of water boarding, and McCain, Warner and Lindsey Graham sent a letter to the White House today, saying that they support this nominee. They would like to see him confirmed.

But they call on Mukasey in this letter to publicly make it clear that water boarding will never be employed. They asked him to do that after he becomes attorney general -- Wolf.

BLITZER: Jessica Yellin on the Hill, thank you.

President Bush is pouring more fuel today on his heated new confrontation with Democrats in Congress, and he's taking a shot at Senator Hillary Clinton in the process.

Speaking to a grocers' convention right here in Washington, Mr. Bush argued that Democrats want to change the health care system into what he calls, and I'm quoting now, "socialized medicine." And he alluded to the famously unsuccessful health care reform effort promoted by Senator Clinton when she was first lady.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We've tried, by the way, here in Washington to have a major effort to put the federal government square in the center of health care, in 1994, and the legislation didn't pass.


BLITZER: Senator Clinton may be feeling like a punching bag of sorts, but this may ease the sting. The presidential front-runner won a major labor union endorsement today.

The American Federation of State, County and Municipal Employees, or AFSME as it's called, is the largest union for public service workers. Labor endorsements don't necessarily translate into presidential votes, but AFSME is expected to give Senator Clinton money and manpower in crucial early voting states. Perhaps more reason for her Democratic rivals to go after her big-time, as they did last night.

Let's bring in our senior political correspondent Candy Crowley. She was in Philadelphia watching that debate. And as it went on, it seemed to get rougher and rougher for Senator -- Senator Clinton.

CANDY CROWLEY, CNN CORRESPONDENT: It did. And particularly from John Edwards, who was the most aggressive person last night. Literally and figurative, Hillary Clinton was center stage last night. It's a familiar position for her, but last night not an altogether comfortable place.


SEN. CHRIS DODD (D-CT), PRESIDENTIAL CANDIDATE: If 50 percent of the American public say they're not going to vote for them.

CROWLEY (voice-over): It was her roughest debate yet and arguably not her best, though camp Clinton thinks she more than held her own in the face of incoming from almost everywhere.

Still, her Democratic opponents think Hillary Clinton handed them plenty of ammo to fit the current narrative. The issue, said one rival camp, is candor.

There was this discussion, of why publicly Clinton only talks fiscal responsibility when asked about Social Security, but privately told the voters she would consider raising Social Security taxes on the wealthy. SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: But everybody knows what the possibilities are, Tim. Everybody knows that. But I do not -- I do not advocate it; I do not support it.

CROWLEY: Pounce.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: This is part of the politics that we have been playing, which is to try to muddle through, give convoluted answers.

CROWLEY: And there was this back-and-forth on giving driver's licenses to illegal immigrants, as proposed in New York.

CLINTON: It makes a lot of sense. What is the governor supposed to do? He is dealing with a serious problem.

I just want to add, I did not say it should be done, but I certainly recognize why Governor Spitzer is trying to do it. And we have failed. We have failed.

DODD: No, no, no. You said, yes, you thought it made sense to do it.

CLINTON: No, I didn't Chris, but the point is what are we going to do with all these illegal immigrants?

CROWLEY: Pounce.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: Unless I missed something, Senator Clinton said two different things in the course of about two minutes.

CROWLEY: Clinton aides argue her statements over time and in context are perfectly consistent, not to mention that everyone on the stage has apparent contradiction in their own records, but she's in the front-runner spot and the klieg lights are hotter there.

CLINTON: You know, Tim, this is where everybody plays "gotcha."

EDWARDS: I think it is crucial for Democratic voters and caucus- goers to determine who they can trust, who's honest, who's sincere, who has integrity.

CROWLEY: To be continued on the campaign trail.


CROWLEY: Looking to make this argument political rather than substantive, the Clinton campaign put up a Web ad this afternoon. It both underscores her front-runner status and tries to trivialize last night's criticism.

The ad is called "The Politics of Pile-On". It features Clinton's rivals last night, repeatedly saying her name and nothing else. BLITZER: It's interesting. I don't know who was piling on more: the Democratic candidates or the Republican presidential candidates. They're all targeting Hillary Clinton. Did she clarify today her stance on this very sensitive issue of offering driver's licenses in New York state, her home state, to illegal immigrants?

CROWLEY: She didn't, but I can tell you what the answer to that is. The Clinton campaign says, "Listen, if you read the entirety of this, here's what she's saying. She's saying she understands Governor Spitzer's move to give illegals these driver's licenses, even though she doesn't necessarily agree with it." So they think these are two separate things.

She gets why Spitzer is doing it. She feels there's been a failure of the federal government to get a rein on illegal immigration, but she doesn't necessarily support it. So -- but continue to see her rivals going after her.

BLITZER: All right, Candy. Thanks very much. Candy Crowley reporting.

Clinton rival John Edwards picked up his own endorsement today from a major union. He won the backing of the New Hampshire chapter of the Service Employees International Union.

The SEIU has decided not to endorse candidates on a national level, but so far Edwards has accepted the endorsement of 12 SEIU state chapters.

This important programming note, on November 15, I'll be in Las Vegas to moderate the next Democratic presidential debate. That's in the key state of Nevada, coming up, November 15. A lovely state indeed.

Let's go to Jack Cafferty. He's joining us for "The Cafferty File".

Aren't you from Nevada, Jack?

JACK CAFFERTY, CNN ANCHOR: Indeed I am. And a lovely place it is. You be nice to my -- my buddies out there when you go out to moderate that debate. Those are good people.

Our veterans deserve the best, right? Well, consider this. About 1.8 million veterans have no health insurance, and that's an increase of 290,000 veterans since 2000, which is the year President Bush took office.

And this is all according to some research that was done up there at Harvard Medical School. They found that about 1 of every 8 veterans under the age of 65 has no insurance. This goes against that assumption that all vets get free health care through the Veterans Affairs Department. Apparently, they don't. And I thought they did, as well. I was surprised at some of this.

It turns out most uninsured veterans are in the middle class and thus are not -- are ineligible for V.A. care because of their incomes. They're too high. Others can't afford to make the co-payments, and some just simply lack veterans' facilities in their communities.

Although veterans fare better than the overall population when it comes to getting health insurance, researchers still point out the findings suggest a need for more funding for the V.A. They suggest universal health coverage in the United States as the best solution.

And of course, the wars in Iraq and Afghanistan could make this problem even worse. One expert says the number of vets could rise if the returning troops have trouble getting their old jobs back.

So here's our question: what should be done about the rising number of uninsured veterans? E-mail us: Or go to

That, in this humble fellow's opinion, is a national embarrassment that we have any veterans in this country unable to get health care because they don't have the money. That's wrong.

BLITZER: I think you're right, Jack. Thanks very much. Jack Cafferty will be back shortly.

The Democrats may be hammering one another, but things aren't looking all that upbeat for Republicans. I'll be speaking with the Republican National Committee chairman and asking him what's going wrong for his party and for his presidential field. That's coming up.

Also coming up, more on the uproar over driver's licenses, illegal immigrants. Now that issue dodges Hillary Clinton's campaign. Is it more than a speed bump on the road to the White House?

And your money on the line right now. What the Federal Reserve is doing to help? And what does it say about the state of the economy, for better or worse?

Stick around. You're in THE SITUATION ROOM.


BLITZER: Right now the Republicans' hold on the White House could be rather shaky as we near one year before the presidential election. The president's party has clearly seen better days.

And joining us now Mike Duncan. He's the chairman of the Republican National Committee. Mike Duncan, thanks very much for coming in.

MIKE DUNCAN, RNC CHAIRMAN: Wolf, happy to. Great to be with you.

BLITZER: You have a tough assignment. The Republicans lost the majority in the House and Senate a year ago. There are a lot of indications the Democrats could increase their majority next November, might even take the White House. What's going on? Why -- why are things looking so gloomy for the Republicans right now? DUNCAN: Well, you're listening to the wrong people, Wolf. I'm very optimistic about it. I saw some great poll numbers today that showed our top-tier presidential candidates matching up very well and leading in some cases the Democrats' top tier candidates.

I'm optimistic about the recruiting that the congressional committee is doing. I'm traveling the country. I've been in 27 states so far, and I'm seeing a great enthusiasm. And after last night, my phone rang off the hook today with calls about the Democrat debate.

BLITZER: What happened with Mel Martinez, your partner? He was the chairman, the Republican senator from Florida. A lot of people thought he was made the chairman of the Republican Party to bring in a lot more Hispanics and others, but all of a sudden he resigned last week. What was that a sign of?

DUNCAN: Well, Mel had never intended to serve the full time. And Mel was the general chairman of the party to be the spokesman for the party. He did a great job. He raised a lot of money. We're going to make budget this year, and a lot of people have missed that in the story this year. We're out-raising DNC substantially. Mel was a big part of that.

He did over 100 interviews for us during the year, was a great spokesman for us, and will continue to represent his home state of Florida.

BLITZER: But a lot of people felt he had the rug pulled out from him, especially in reaching out to the Hispanic community, over this issue of comprehensive immigration reform which he, like the president, supported, but a lot of Republicans hated it. They called it amnesty, a pathway to citizenship.

Was that the final straw that forced them out?

DUNCAN: Mel made this decision on his own. And his timing was his timing. And he made -- he was a wonderful general chairman, made a tremendous contribution while he was there, and I appreciate his help.

BLITZER: The Republican candidates, the presidential candidates said they keep citing the name of Hillary Clinton. And in fact you, yourself, in your statement that you released today, reacting to the Democratic presidential debate last night, referred to Hillary Clinton specifically by name, not the other Democratic candidates.

Listen to what Senator John Edwards, the former senator from North Carolina, said last night. Listen to this.


EDWARDS: Another perspective on why the Republicans keep talking about senator Clinton is, Senator, they may actually want to run against you. And that's the reason they keep bringing you up.


BLITZER: Is that true? Do you want Hillary Clinton to be the Democratic presidential nominee?

DUNCAN: Wolf, I'm not involved in that. We put out statements on all the candidates. I'd be happy to talk about John Edwards' tax policy and what he's wanting to do to middle class America.

I think if you go back and look, we put out statements every day, showing -- showing the problems with the Democrat candidates. They all have weaknesses and flaws, and we try to point that out. And we saw a lot of those flaws last night.

BLITZER: But is she your dream candidates for the Democrats? Because a lot of pundits, as you know, have suggested she can unite the Republican Party a lot more than maybe even a Republican presidential nominee could unite the Republican Party.

DUNCAN: They have so many dream candidates. How many times have we had a candidate that talks about seeing a UFO, Wolf? I don't think that happens in modern history very often.

I'm not going to pick the Democratic candidate. We're just being prepared. We're ready for what they have on offer. We're very optimistic.

BLITZER: That was a reference to Dennis Kucinich, the congressman from Cleveland who said he once saw -- he believed he once saw a UFO.

Let's talk about what some Republicans say happened during the first six, 6 1/2 years of the Bush administration, the six years when there was a Republican in the White House and the Republicans had the majority in the House and Senate.

And I'll put some numbers up. The national debt when the president took office was $5.8 trillion, but now it's gone up. It's almost doubled, at least to $9 trillion. And this is money that our children and grandchildren are going to be owing to the Chinese, the Saudis, all the wealthy states out there who are taking these loans from the United States.

What happened to the fiscal conservatives that were so important to the Republican base?

DUNCAN: Wolf, I could get into a long explanation about the percentages and why we actually are bringing down the debt and over the next five years what's going to happen, but the bottom line is what other president has faced a calamity like 9/11?

We had the economy go down during that period of time. He brought us back with a great tax program and we're making progress. I could go into all these percentages, but it's giving hope to the American people.

BLITZER: But -- but the point is that, when the president had a Republican majority in the House and Senate, he got all these bloated appropriations bills, never vetoed any of them, even though there were a lot more appropriations, pork barrel spending, money going for all sorts of projects that he himself wanted. And all of a sudden the Democrats are now in the majority, and he's discovered his veto pen.

DUNCAN: Well, the Democrats are in the majority, and they can't deliver him tax bills. I mean, let's talk about the fact that they've not -- what their responsibility to give budget bills to the president, they've not been able to do that, because they want to argue over who's going to raise the taxes the most.

BLITZER: Why didn't he veto some of those outrageous appropriations bills? Even a lot of Republicans say the spending was out of control when the Republicans controlled the House and Senate for six years.

DUNCAN: Well, we were experiencing the growth in the economy. We were having to work on our tax program. And that was all part of what was going on at that time.

Let's look to the future and let's look at what the Democrats are wanting to do now. All they want to do -- the Charlie Rangel tax bill, the trillion-dollar Christmas tree package that he has out there, that's the future. And that's what we need to be debating now.

And you didn't hear a lot of specifics last night. Hillary Clinton didn't say if she supported that or if she was against that.

BLITZER: Mike Duncan, thanks for joining us.

DUNCAN: Wolf, thank you very much. Good to be with us.

BLITZER: Long-time presidential adviser Karen Hughes is doing it again. She's leaving the Bush administration. This time, the second time. Were her efforts to improve America's image in the Muslim world, in the Arab world a failure? James Carville and John Feehery (ph), they're standing by for our "Strategy Session".

And next, the president taps another cabinet nominee. Will this one fly?

Stick around. You're in THE SITUATION ROOM.


BLITZER: Other Carol Costello is monitoring some other stories incoming to THE SITUATION ROOM right now.

What's going on, Carol?

CAROL COSTELLO, CNN ANCHOR: A couple things, Wolf. President Bush says America's ranchers and farmers will have a friend in this man. That would be Edward Schafer, who the president wants to be the next agriculture secretary.

In announcing the nomination today, the president praised the former North Dakota governor's wisdom and foresight, Mr. Bush also urging the Senate to confirm Schafer as soon as possible.

How much contact did the White House have with the man who once was a Republican super-lobbyist but now sits in a jail cell? That's what one Democratic House committee chair wants to know.

Henry Waxman says the White House is withholding documents about its ties to the disgraced lobbyist Jack Abramoff, and Waxman demands the White House hand over hundreds of pages of material within the next week.

NASA needs more time to examine a tear in a solar wing attached to the International Space Station, so the agency is shuffling its spacewalk plans for Discovery astronauts for the remainder of their stay. Astronauts could go on a spacewalk either Friday or Saturday to assess and perhaps try to fix that tear.

And a man wins an almost $3 million judgment against a church that protests at military funerals. That church, based in Kansas, says the Iraq war is punishment for America's tolerance of homosexuality. And members often carry signs that read, quote, "Thank God for dead soldiers."

In this lawsuit, the man sued the Westboro Baptist Church, the one in Kansas, after its members demonstrated at the March 2006 funeral for his son, who was killed in Iraq.

A look at the headlines right now, Wolf.

BLITZER: Thanks very much, Carol, for that.

When her husband ran for president, critics then accused him of being slick with some of his answers. Now critics say Hillary Clinton is being sly with her words. Might that hurt her high-flying campaign?

And if you're one of the many people saddled with high mortgage and credit card debt, help could soon be on the way. The Federal Reserve has just cut interest rates again. You're going to find out how you may benefit.

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


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

Happening now, NATO stepping up efforts to catch or kill Taliban fighters in Afghanistan. This comes as the Taliban regroups in an area that was once an al Qaeda stronghold.

One of the President Bush's closest friends was supposed to improve America's image during her time at the State Department. Now Karen Hughes is set to leave. Did she succeed or fail at changing the minds of people with little love for the United States?

And near collisions in the air, confusion on the ground, and other potentially dangerous problems. What you don't know could potentially hurt you when you fly. Now, one agency promises to reveal some air safety secrets.

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

So who's afraid of Hillary Clinton? Apparently, her rivals for the Democratic presidential nomination are not.

Some are attacking her position on everything from the war in Iraq to the potential for war in Iran. And all of them are trying to knock the front-runner off her perch.

Let's go to our senior political analyst, Bill Schneider. He's been watching this, studying it.

So did the senator from New York hit a speed-bump of sorts last night?

BILL SCHNEIDER, CNN POLITICAL ANALYST: Well, she did on the immigration issue. And it's a bump that could turn into an obstacle for Democrats in next year's campaign.


SCHNEIDER (voice-over): New York Governor Elliott Spitzer has decided to give driver's licenses to illegal immigrants, so the question was raised at the Democratic debate --

TIM RUSSERT, MODERATOR: Does anyone here believe an illegal immigrant should not have a driver's license?

SCHNEIDER: Only one hand went up.

SEN. CHRISTOPHER DODD (D-CT), PRESIDENTIAL CANDIDATE: A license is a privilege, and that ought not to be extended, in my view.

SCHNEIDER: Hillary Clinton is the senator from New York. What is her view?

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I did not say that it should be done, but I certainly recognize why Governor Spitzer is trying to do it.

SCHNEIDER: Her Democratic rivals were quick to pounce. The charge? Evasiveness.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: Unless I missed something, Senator Clinton said two different things in the course of about two minutes just a few minutes ago.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I was confused on Senator Clinton's answer. I can't tell whether she was for it or against it. SCHNEIDER: What's his position?

OBAMA: I think that is the right idea. SCHNEIDER: Democrats are likely to have a bigger problem with this issue. By better than 3-1, the public opposes giving driver's licenses to illegal immigrants. Republicans are more than 80 percent opposed. Independents are right there with Republicans.

And Democrats? They don't much like the idea either. The Republican National Committee was quick to attack the Democratic front-runner on this issue. Mitt Romney's spokesman accused Clinton of being "both dismissive of efforts to enforce our nation's immigration laws and entirely unwilling to offer a straight answer to a very direct question."


SCHNEIDER: Republicans have finally found an issue where they believe they can put Democrats on the defensive, but there's one troublesome fact.

In 2004, a prominent Republican governor endorsed legislation to give driver's licenses to illegal immigrants in Florida, a fellow named Bush, Jeb Bush -- Wolf.

BLITZER: I remember him, the former governor and brother of the current president.

All right, Bill Schneider, thanks very much.

If you ask most people to name the Republican presidential front- runner, they probably would say Rudy Giuliani. And the average of the latest national polls does indeed show the former New York mayor holding a double-digit lead over his GOP rivals.

But look at this. New polls in the critical states of Iowa, New Hampshire and South Carolina, where the first Republican contest will take place, all show Mitt Romney now in the lead. But there's another new poll that shows Giuliani -- get this -- edging out Hillary Clinton if the two of them were in a hypothetical matchup today.

Let's bring in our chief national correspondent, John King. He's looking at all of these numbers.

I guess it's sort of a mixed bag for Giuliani. On the one hand, he's very competitive with Hillary Clinton in a potential race for the president, but Mitt Romney is doing a lot better in some of these early contests.


And when you are looking at the Republican race for president right now, focus more on those state polls and not on any national polls. But if you do look at the national polls and if you listen to last night's Democratic debate, this is what Senator Obama and Senator Edwards were trying to get at, Wolf, trying to say that maybe the Republicans wants to run against Hillary Clinton. Maybe they think they can do best against her. In this Quinnipiac College poll you were talking about, Rudy Giuliani has 45 percent. Senator Clinton has 43 percent. That's a bit -- it's been a bit of a roller-coaster. He was ahead in the spring. Then she went ahead of him in the summertime. And now he's ahead again in October, within the margin of error. So, that's essentially a dead heat nationally.

Yes, he can use that in the Republican race to say, see, I'm electable, I run tough against Senator Hillary Clinton.

But one contextual footnote here -- hate to be the skunk in the garden party for Rudy Giuliani, but let's look back in history at polls taken at this time in a campaign. At this time in 1999, George W. Bush beating Al Gore 45 percent to 34 percent. Gore actually won the popular vote in the end, and the Supreme Court decided that election.

And look at this one, Wolf. Remember 1991? George H.W. Bush was then the incumbent president of the United States. He had 58 percent to then Governor Bill Clinton's 22 percent. It was the Clinton presidency come 1993. So, look at the national polls now for benchmarks. I wouldn't go to Vegas with them.



BLITZER: Because it's way, way early for that.

But Giuliani no doubt will use this latest Quinnipiac poll, this hypothetical defeat of Hillary Clinton, although you point out within the margin of error, he will use that to strengthen himself within the GOP.

KING: He will try. But he's getting competition, in part because, just like in the Democratic race, electability, not ideology, is a big factor in the Republican race as well, not discounting ideology.

But what is unique about this primary campaign is, on both the Democratic side and the Republican side, a lot of talk about electability. If you live in South Carolina and you happen to be a Republican, look what you might have just received in the mail from Senator John McCain.

He is writing this. I believe we can show it up on the wall. He says that "McCain: the only conservative who can beat Senator Clinton." Three (r)MDNM¯new independent polls find McCain best to beat Hillary, he says in this mailing, if you look at it. And it also goes on to say McCain gives Republicans the best chance over Hillary in key swing states, performing better than Rudy Giuliani.

This also goes on to note near the end, Wolf, that McCain is anti-abortion, implicit there that Rudy Giuliani is not. So, we're beginning to see in the mail, on the Republican side, the race get a little bit tighter. It is John McCain and Rudy Giuliani who right now run strongest against any oft Democrats, including Senator Hillary Clinton. Both of them trying to use that to their advantage, and in this mailing McCain trying to say, Rudy is strong, but I'm stronger.

BLITZER: And just as the Democrats are beginning to beat up on each other, Republicans clearly starting to do the same thing.

KING: Count down the days to Iowa and check the mail.

BLITZER: We're only, what, 60-plus days away.

KING: That's right.

BLITZER: That's not very long.

John King and Bill Schneider, as you know, are both part of the Emmy Award-winning best political team on television. Remember, though, for the latest political news at any time, you can always check out our Political Ticker at

One of the President Bush's closest friends, Karen Hughes, was supposed to improve America's image around the world, but did she do that? We're going to talk about that in our "Strategy Session."

Also, you might think Hillary Clinton has a bullseye on her back. Her opponents are taking direct aim at her various positions. Will it work or will it backfire?

And it's happening again. For the third time in three months, a Republican lawmaker is now accused of soliciting gay sex. It's a scandal allegedly involving blackmail.

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


BLITZER: Many Americans are straddled with credit card and mortgage debt, but help soon could be on the way. Just a short while ago, the Federal Reserve made a move that will help many people who are strapped for cash.

CNN's Ali Velshi is at the Chicago Board of Trade.

Ali, what does this mean for consumers and for homeowners? There you are in the midst of all those people who aren't traders, right now, at least.

ALI VELSHI, CNN CORRESPONDENT: Right. They have gone home, but this is where the action was today, when the Fed decided to cut the interest rates, as expected, by a quarter of a percentage point.

What does that mean to anybody? Nothing. Here's what matters, Wolf. The prime rate dropped as well. It moves along with the fed rate. So, the prime rate is now 7.5 percent. If anybody out there has debt that moves with the prime rate, a credit card, a consumer loan, a home equity loan, that moves with the prime rate, you just got a discount today. That's number one. Number two it is going to move those mortgage rates a little bit lower, and that might serve to help this mortgage industry that we have struggled with for so long. There's a bad side of this, though, Wolf. When rates come down, it hurts the dollar. The dollar is at new lows, and we have got a fresh new high for oil. So, good news/bad news, probably mostly good news for anyone who carries debt.

BLITZER: The barrel of oil now approaching $95. It won't be long before it's $100 a barrel. The dollar sinking in value. That normally is a prescription for increased inflation in the United States.

VELSHI: I think people haven't felt inflation in the United States for so long, that many people don't understand how much of a danger that actually is.

The Fed cuts rates, interest rates go down, people go out and spend a little more. Businesses spend more. That creates more demand. That pushes prices up. Then we have a dollar that is low against other major currencies, $2.07 against a pound, $1.43 or $1.44 against the euro, $1.05 or something against the Canadian dollar. It means the things that we buy are more expensive, and we all buy energy. That oil price heading towards $100, inflation is a real concern.

So, this is the balancing act we're in, cheaper debt, but the danger of inflation. We will have to follow the story on an ongoing basis -- Wolf.

BLITZER: We certainly will, together with you, Ali. Thanks very much.


BLITZER: In our "Strategy Session": Karen Hughes, the woman picked by President Bush to try to improve America's tarnished image around the world, says her work is now complete. She's heading back to Texas.


KAREN HUGHES, UNDERSECRETARY OF STATE FOR PUBLIC DIPLOMACY AND PUBLIC AFFAIRS: I feel That I have done what Secretary Rice and President Bush asked me to do by transforming public diplomacy and making it a national security priority central to everything we do in government, while also engaging the private sector more extensively than ever before.


BLITZER: So, does she leave behind a record of succeed or a record of failure?

And a new batch of polls indicates Senator Clinton does win the nomination, but it won't necessarily be a cakewalk to the White House.

James Carville and John Feehery, they're standing by live in our "Strategy Session" -- right here in THE SITUATION ROOM.


BLITZER: It's rough being on top. Hillary Clinton is seeing that for herself, as critics attack from all sides, trying to knock the front-runner off her perch. Will that work or will that backfire?

Let's get to our "Strategy Session." Joining us, our CNN political analyst and Democratic strategist James Carville, and Republican strategist John Feehery.

First, let's talk about this Quinnipiac hypothetical matchup right now, Giuliani at 45 percent, Hillary Clinton at 43 percent, within the margin of error.

All right. Put on your strategy hat, because I know you're a big supporter of Hillary Clinton. But if you were working for Giuliani right now, what kind of strategy, what kind of advice would you give him, given the fact that he's 45/43 at least in this Quinnipiac University poll?

JAMES CARVILLE, CNN POLITICAL ANALYST: Yes, right. To be fair, there have been 10 polls that show Hillary ahead. We get one and it's like that it's biggest news that you can imagine.

Having said that, I suspect that what Giuliani is trying to do is tell these Republicans, I can beat -- you hate Hillary; I can beat Hillary. Don't pay attention to other things. They have been -- so, I'm sure that the Giuliani people are ferociously faxing or e-mailing or text-messaging or whatever they do trying to get this poll out, probably a meaningless poll, in the sense that most every poll I have seen has her ahead. But that doesn't mean anything yet anyway.

BLITZER: In the same Quinnipiac University poll, a hypothetical matchup between Hillary Clinton and Mitt Romney has Hillary Clinton at 48 percent, Mitt Romney at only 38 percent. Mitt Romney has got a bigger struggle ahead of him.


Rudy has made this his campaign: I can beat Hillary.

The thing about Hillary is, she's already running like a front- runner. She's running like if LSU was up 48-0, and she's not taking any chances. She's not moving forward the ball and she's getting hit really hard by Democrats. And it's hurting.


BLITZER: Is that a smart strategy, for these other Democratic presidential candidates, like Barack Obama, John Edwards, to really hit her hard, as they did last night?

CARVILLE: They have got to try something. They were losing.

And I think that Senator Clinton, who I am a contributor to, who I would like to see be the nominee and ultimately president...

BLITZER: Up front with all that.

CARVILLE: Up front with all of it.

She's smart enough to know that she's get the front-runner. She's going to get the bulk of the heat. She's going to get the attacks. She's the most -- she's the interesting person in the race. She's the people that, frankly, people want to cover, they want to talk about and want to discuss.

I'm not surprised by any of this. Edwards is not going to sit there and just go gently into some good night. He's going to fight hard.

BLITZER: The same thing is going to happen on the Republican side, whether Giuliani is the front-runner or Mitt Romney. At least, he's the front-runner of the three early states of Iowa, New Hampshire, and South Carolina. The other candidates are going to start hitting hard on them.

FEEHERY: Well, the thing that is happening with Republicans, they're hitting each other.

And what's happening is, authenticity is important. And I think why Rudy is doing pretty well. And that's what is going to hurt Hillary, is that she's all over the place on these -- I think the illegal immigration answer was bad for her, because she was on both sides of the same answer.

Being non-authentic is hurting her and it's going to hurt her with general election voters.


BLITZER: A lot of the pundits suggesting Hillary Clinton did not have a good night last night.

CARVILLE: Right. You know what?

She probably didn't -- let me say, as a supporter, sympathizer and somebody who loves her dearly, this was not her best performance. The answer on the immigration thing is not the best answer I ever saw her give.

Having said that, the overreaction by the punditocracy here in Washington is just unbelievable. These people are just out of breath. They're falling out. They're all at the cocktail parties. They're calling each other.

She gave an answer. She probably didn't want to hit Eliot Spitzer, the governor of New York, who is a political ally of hers. I can understand that.

But you would have thought she started a war. You would have thought she blew the surplus or something like that. It was an answer that was not the most elegant answer I have ever seen.

BLITZER: How bad of a night did she have?

FEEHERY: Really bad.

And I think people are going to say, hey, listen, Hillary, there's some chinks in her armor. I think that Edwards did pretty well. I think he's the guy that is looking, hey, if it's not going to be Obama, maybe Edwards.

And the fact of the matter is, people are thinking, you know, I'm not sure if Hillary is going to be able to beat Rudy and the Democrats. You see Al Gore who is even still popping up in some polls. I saw some poll he was up at 32 percent. The fact of the matter is that people are thinking, with Hillary Clinton as the Democratic nominee, you are going to get at least 40 percent of the country, 50 percent of the country voting against her.

BLITZER: If you're a good Republican -- and you are, John -- who would you want to be the Democratic nominee right now, from the Republican Party's advantage?

FEEHERY: Well, I think that Hillary Clinton gives us the best chance, because she's already now by 50 -- almost half the country says, I can't stand her.

And for a House Republican like me, she polls very poorly in Republican-leaning districts, because married women don't like her very much. Single women love her. African-American women love her, but married women don't like her very much. From the House perspective, she's the best candidate for us.

BLITZER: Because a lot of Republicans say, no one unites the Republican Party like Hillary Clinton.

CARVILLE: They all say that. In the last 15 polls I have seen, she's been ahead in 14.

And the other thing is, is that the Republican Party needs something, because they have got no record to run on. They got no candidates. Everybody hates them. And their thing is, well, we can't win on our own. Boy, if you just give us Hillary, we will do this.

I would say this. She is the most talented person out there in this campaign. And she continues to be. She racked up a big endorsement today, this AFSCME endorsement, which is huge in the Democratic primary. And I would be the first to say that last night was not the best performance she ever had. I'm sure that she probably at some level agrees with me.

She has been at every debate. She took heat for an hour and 58 minutes, and had an off two minutes. And she's going to take some heat for it. She understands that. I do, too.

BLITZER: Let's talk about Karen Hughes, the president's pal from Texas. She worked in the White House. Then she left, went back to Texas. Then she came back to become the special ambassador in charge of public diplomacy to try to improve America's image around the world, especially in the Middle East, in the Muslim world, in the Arab world.

She announced today she's going back to Texas to spend some more time with her family. What do you think? Was she a success in that mission or a failure?


FEEHERY: Yes, I think it's kind of mixed.

I think what she said when she said that she did the best she could to transform the way public diplomacy operated, I think that was a success, but it's a tough job. The Islamic world doesn't really us that much. I don't think Karen Hughes really changed -- moved the barometer on that. I think she tried hard. I think she's very earnest. She's hardworking, and the president loves her. And I think she did the best she could.

CARVILLE: I think Karen Hughes is a patriot. And I think she worked hard. And I was honored that she called and asked me to help her on a couple of things that I was able to do.

And it was a very tough position she was in. She gave up a lot of family time, I can tell you, a ton of potential income to do this. I think she is a really good person, a bright person. And I think America is much better that we have got somebody like Karen Hughes that lives here and is willing to sacrifice. So, I have great respect for her.


BLITZER: It's a tough assignment, although it shouldn't necessarily be all that tough assignment, given the U.S. argument, the U.S. record in liberating a lot of Muslim countries from tyranny, whether it was Kuwait back in the early '90s from Saddam Hussein, or Kosovo, or Bosnia, or, most recently, Iraq. Yet, the U.S. image not only in the Arab and Muslim world, but around the world in general, has deteriorated over these years.

Something -- something is not getting through.

FEEHERY: Well, I think that you see the rise of radical Islam. And it's really hard for America to understand radical Islam. And it's very hard for radical Islam to understand America.

And I think that overcoming the gulf is bigger than any one person can overcome. I think the fact of the matter is that radical Islam happened not because of what has happened in America, but what happened within the Arab countries. And they don't -- they have a different system than we do. They believe in different things.

And to ask Karen Hughes to say, hey, listen, get these people to like us was a very big...


BLITZER: Let me get back to politics for a moment.

In this Quinnipiac University poll, there was also a hypothetical matchup between Hillary Clinton and John McCain, 44 percent for Clinton, 44 percent for McCain.

Give us your assessment of the McCain campaign's standing right now.

CARVILLE: You know, I was very -- I have been very dismissive of McCain's chances all along. I thought he was kind of playing out of character, that he couldn't raise money, he couldn't do this.

You got to give the old bird some credit there. He's a fighter. And there's a reason that he's kind of John McCain and he has survived what he has. And my personal respect for him has sort of gone up, that he's in there punching away. I doubt if he's going to be successful, but he's going to give an account of himself and he is playing pretty tough out there.

BLITZER: And in this hypothetical matchup, 44/44, the Quinnipiac University poll between McCain and Clinton.



FEEHERY: The fact that McCain has done is he -- he was authentic. He decided to get rid of all the campaign stuff, because he had to. He had no money.


FEEHERY: And then he decided, hey, listen, I'm going to be me.

John McCain being John McCain is a pretty good candidate. And that's why he's coming back. Authenticity once again is working for McCain.

BLITZER: But the argument is, let John McCain be John McCain, and not someone else, right?

CARVILLE: And probably John McCain can't get elected, and he couldn't get elected in the first Republican primary, because the Republican Party doesn't like what John McCain is.

He's independent. He thinks for himself. He doesn't go along with all this supply-side foolishness and that kind of stuff.


CARVILLE: So, he's not going to -- he's not going to get the nomination being John McCain, because that's not what they want. They want somebody that goes down the line on what they want and the interest groups. (CROSSTALK)

BLITZER: But it's hard for John McCain to be -- to pretend to be somebody he's not.

FEEHERY: A lot of conservatives are taking a second look at John McCain, because they're frustrated with the rest of the field.

CARVILLE: I agree with...


FEEHERY: That's just the way it is. And I think that the fact that he's authentic helps him in this campaign with general voters and also with the base.

BLITZER: James Carville, John Feehery, good discussion.

CARVILLE: Thank you.

BLITZER: Good discussion. Thanks very much.

One senator says, happy Halloween, but you might not believe what costume that senator chose to wear.

Also, terror could lurk in U.S. waters. We're going to show you how the Homeland Security Department is now trying to counter that.

And, the heavier you are, the more you drink, apparently the more you're at risk for cancer. How concerned should you be? And what can you do about it?

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


BLITZER: Let's get to our Political Ticker this Wednesday.

An odd White House couple -- the first lady, Laura Bush, teaming up with former first lady turned senator turned Democratic presidential front-runner Hillary Clinton. They're working together to support legislation to preserve America's treasures, monuments and other symbols of the nation's tradition.

On this Halloween, President Bush is suggesting Vice President Dick Cheney is living up to the nickname of Darth Vader.

Listen to what Mr. Bush told an audience right here in Washington today.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This morning, I was with the vice president. I was asking him what costume he was planning.


BUSH: He said, well, I'm already wearing it.


BUSH: And then he mumbled something about the dark side of the force?



BLITZER: Another Hollywood -- excuse me -- Halloween stunt, retiring Republican Senator Chuck Hagel went to a Foreign Relations Committee hearing on Capitol Hill today in costume. He was wearing a mask bearing the likeness of his Democratic colleague Joe Biden and a Biden-for-president T-shirt. Biden is committee chairman.

It looks like the comedian Stephen Colbert is following through on his promise to run for president. A source familiar with Colbert's strategy says the funnyman will file papers late today or early tomorrow to try to get his name on South Carolina's Democratic primary ballot. The source says Colbert won't file to run as a Republican, as he had promised, because it costs too much to get on the GOP ballot in South Carolina. The source tells CNN the $35,000 price tag to run as a Republican is out of range.

Remember, for the latest political news at any time, you can check out our Political Ticker at

And mark your calendars. Starting next Monday, one year exactly from Election Day, THE SITUATION ROOM will be on three hours back to back, nonstop, from 4:00 p.m. Eastern to 7:00 p.m. Eastern, Monday through Friday.

Jack Cafferty is in New York with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: I will bet Stephen Colbert gets more votes in South Carolina than Fred Thompson. You want to bet lunch?


BLITZER: Let's see how he does.

CAFFERTY: The question this hour is, what should be done about the rising number of uninsured veterans? And we have bunches of them in this country, which was actually news to me. I didn't realize this.

Ken writes from Lawton, Oklahoma: "I'm a disabled Vietnam vet who has no VA doctor, because my doctor has been out for over two months, and the VA won't let me see another doctor yet for my heart, lungs, and diabetes. They cut my lung doctor. They say any VA doctor could handle my breathing problems. And they also cut my weekly counseling program for my PTSD" -- post-traumatic stress disorder." C. in Freeport, Maine: "The answer to help the one of eight veterans who lacks health care is simple. Suspend the health care we pay for all the senators and congressmen for a month. That will give them a taste of their own lack of medicine. And, within 30 days, the veterans will be covered."

Mike in South Carolina: "You wouldn't wish VA health care on anyone. Many of us go there because we have no choice. My suggestion is put all the veterans on Medicare A & B, no co-pays, pick up AARP Plus or something paid by the government, and let the veterans go to any doctor or hospital they want to."

That ought to be done.

Scott in Bella Vista, Arkansas: "Bush and his chicken hawk buddies are quick to send the troops into their misguided wars, quick to abandon them when they return home."

Michael in Washington: "I'm a veteran combat -- a combat veteran of Vietnam, and the VA doesn't provide health care to most of us. The benefits promised on my enlistment -- I served from '62 to 1970 -- are, for the most part, nonexistent or have so many strings attached, they wear down our ability to fight back. I have dealt with PTSD ever since returning from the Vietnam War. And trying to get help from the Veterans Administration just makes it worse."

And Carl in North Carolina says: "Here's a good one, Jack. I'm a Vietnam-era vet. I try to get VA medical, was told my income was too high. I then asked to be covered if I took the co-pay. I was told they were not accepting any new candidates. That's about as close to, 'Get lost, vet' as you can get."

That's pretty sad stuff -- Wolf.

BLITZER: Very sad, indeed, Jack. Thanks very much.