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THE SITUATION ROOM

Democrats Battle President Bush Over War Funding; New York Governor Acknowledges Defeat Over Driver's Licenses For Illegal Aliens; McCain-CNN Beef

Aired November 14, 2007 - 18:00   ET

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


LOU DOBBS, HOST, "LOU DOBBS TONIGHT": And what happens, as states give driver's licenses to illegal aliens, you're giving -- putting someone on the honor system who has broken the law by entering this country illegally, who has created fictitious names and all sorts of information, fraudulent documents, and, in many cases, identity theft outright.
WOLF BLITZER, CNN ANCHOR: "Independents Day," that's the name of your new book.

DOBBS: Absolutely.

BLITZER: It's quickly emerging as a bestseller.

You're going to have your own show here from Las Vegas in one hour at the top of 7:00 p.m. Eastern.

DOBBS: Absolutely.

BLITZER: Lou, thanks very much.

DOBBS: Thank you. Good to be with you, Wolf.

BLITZER: And happening now: an issue that appears too hot to handle scalding yet another elected official dealing with illegal immigration. One big state governor, as we have been reporting, trying to do something about it, but now admitting heated opposition forced him to retreat. We're going to have a full report.

Democrats try, once again, to force the president's hand on Iraq. They have failed dozens of times already. What is different about this time?

And he's a gambling man, Las Vegas' Democratic Mayor Oscar Goodman. He is betting Nevada will be ready for a key presidential test. My one-on-one interview with the always colorful mayor of Las Vegas.

I'm Wolf Blitzer in Las Vegas and you're in THE SITUATION ROOM.

It's an issue many of you are very passionate about, but a hot- button issue some people in the government apparently do not want to touch, immigration reform. The latest person burned by that is the governor of New York, Eliot Spitzer. He wanted to issue driver's licenses to illegal immigrants in the state, but today he acknowledged defeat.

Our congressional correspondent Dana Bash is on Capitol Hill.

Dana, it's interesting that the New York governor announced this in Washington.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: It's fitting, actually, because this issue certainly has been a New York issue, but it has very much sparked a national controversy, Wolf. And it is the latest example of the fact that immigration is now the third rail of politics.

(BEGIN VIDEOTAPE)

BASH (voice over): In the face of a political pummeling, New York's governor announced he's retreating from his plan to give drivers' licenses to illegal immigrants.

GOV. ELIOT SPITZER (D), NEW YORK: I have listened to the legitimate concerns of the public and those who would be affected by my proposal and have concluded that pushing forward unilaterally in the face of such strong opposition would be counterproductive.

BASH: Eliot Spitzer had defended his controversial idea as a way to make roads safer and bring illegal immigrants out of the shadows. But it quickly stirred anger among critics who said it would make New Yorkers less safe, and polls show the public overwhelmingly oppose the idea.

SPITZER: It does not take a stethoscope to hear the pulse of New Yorkers on this topic.

BASH: Democratic sources tell CNN Spitzer was also pushed to pull the plug by members of his own party worried all Democrats would get killed politically. So dangerous, Hillary Clinton couldn't give a clear answer about her stance on the issue, causing her first major stumble in the presidential race.

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.

BASH: Even supporters admit she was trying to be too cautious.

REP. JOSE SERRANO (D), NEW YORK: As far as Senator Clinton, I think the problems there was on issues as difficult as immigration, you have to decide what your stance is and then just go with it and take the heat for it.

BASH: But the issue isn't just hurting Clinton. Vulnerable Democratic lawmakers were already taking a beating from Republicans seizing on staunch public opposition to the idea.

SEN. CHARLES SCHUMER (D), NEW YORK: This was not going to happen. There were many other issues to focus on, and he made the right decision. (END VIDEOTAPE)

BASH: And, as for Senator Clinton, she released a statement today backing Governor Spitzer's decision to withdraw his proposal and she also offered a new position of her own, Wolf. She said, "As president, I will not support driver's licenses for undocumented people" -- Wolf.

BLITZER: But, Dana, the Obama campaign, I take it, isn't letting that stand, are they?

BASH: Not even close. In fact, I will put a quote up for you in the wall from Obama campaign spokesman Bill Burton.

He said, "When it takes two weeks and six different positions to answer one question on immigration, it's easier to understand why the Clinton campaign would rather plant their questions than answer them" -- pretty harsh there.

But, look, Clinton's rivals have really seen an opening here to push the narrative that they say she's evasive and perhaps calculating, and they have no intention of letting that go -- Wolf.

BLITZER: All right, thank you, Dana Bash on the Hill.

He's officially been on the job since last Friday, but Judge Michael Mukasey has now closed the ceremonial loop to become the 81st attorney general of the United States. The retired federal judge took his public oath of office today in the Justice Department's Great Hall. President Bush attended his swearing in.

The president will next have to turn his attention to something brewing in the House of Representatives. Right now the House is engaged in a debate over more money for the war in Iraq. House Democrats are itching for another fight with Mr. Bush over the war, even though they have lost past battles.

Our White House correspondent Ed Henry is joining us now live.

Ed, this involves a new war funding bill.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. This would give the president another $50 billion in war funding, but with a big catch. He would only get the money if he would agree to setting a goal to withdraw most U.S. troops from Iraq by December 2008.

Obviously, the president is not going to give into that timetable. So even if the Democrats get this passed, the bottom line is the president will veto this. The Democrats will have to go back to square one. And that led White House spokeswoman Dana Perino today to charge that this is really all about political posturing, while Democrats insist they're not going to cede any ground to the president.

(BEGIN VIDEO CLIP) DANA PERINO, WHITE HOUSE PRESS SECRETARY: The Democrats believe that these votes will somehow punish the president, but it actually punishes the troops. It punishes our military planners, our procurement officers and many others who are working on this war effort.

UNIDENTIFIED MALE: This is a war that George Bush started, and this is a war that he needs to end.

(END VIDEO CLIP)

HENRY: Now, the bottom line is that Democrats are likely to get this passed. As I noted, the president will veto it. We will have to go back -- they will have to go back and negotiate and in the end the president is likely to get what he wants and, also, end up with a much stronger hand in war-making policy -- Wolf.

BLITZER: All right, Ed, thank you, Ed Henry at the White House.

Iraq, by the way, will be among the topics in our Democratic presidential debate tomorrow here in Las Vegas. Right now, one candidate has more support in this state than all the other candidates combined, Democratic candidates, that is, that according to a fresh new CNN poll for Nevada, one of the first states in this, the primary season.

Let's bring in our senior political analyst, Bill Schneider. He's joining us.

Let's talk about where the Democratic race stands in Nevada on the eve of this debate -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, Wolf, as they say here in Vegas, there is an odds-on favorite.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice over): Who's got the edge in the Nevada Democratic race? We asked a Nevada congresswoman.

REP. SHELLEY BERKLEY (D), NEVADA: I know that Hillary is ahead 2-1.

SCHNEIDER: Close. Hillary Clinton leads Barack Obama by a little more than 2-1 in Nevada. The CNN poll conducted by the Opinion Research Corporation shows the New York senator with majority support in the Silver State. That's better than she's doing in the two states that vote before Nevada.

The "New York Times"/CBS News poll shows a virtual three-way tie in Iowa. Clinton, John Edwards and Obama are within a few points of each other in the leadoff state. Clinton is clearly ahead in New Hampshire, but still short of her Nevada majority.

What's driving the Clinton vote? One word -- electability. Nevada Democrats choose Clinton as having far and away the best chance of beating the Republican ticket next year. Iowa and New Hampshire Democrats also give her the edge on electability.

What gives her that edge? Experience.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I'm here because I believe that Hillary is the best qualified person best suited to this time of any non-incumbent I have had a chance to vote for in 40 years as a voter.

SCHNEIDER: Nevada Democrats appear to agree. They see Clinton as the most qualified candidate to be commander in chief.

Obama is running as the candidate of change, but in Nevada, Clinton has the edge on change.

What about the heat she's taken for not being clear on the issues?

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: In the course of three minutes, I heard Senator Clinton say two different things.

SCHNEIDER: Nevada Democrats don't share that view. Where is Clinton weakest? Likability, where she has a narrower lead among Nevada Democrats. And honesty, where she stands out even less.

(END VIDEOTAPE)

SCHNEIDER: It's not mainly personal qualities that's putting Hillary Clinton over with Democrats. It's the perception, the view that she's experienced and that she's a winner -- Wolf.

BLITZER: All right, Bill, thank you. Bill's here in Vegas already.

I will be moderating tomorrow's Democratic presidential debate here on the campus of the University of Nevada, Las Vegas. Our coverage of the debate begins 8:00 p.m. Eastern tomorrow, 5:00 p.m. Pacific.

Let's go to Jack Cafferty. He's in New York. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, it's no secret that childhood obesity is a growing problem, but there are some parents that are showing definite signs of fat deposits between their ears.

The British newspaper "The Daily Mail" reports that parents are bringing their low-fat babies as young as four months old to gym class. One U.S. chain called Little Gym has signed up hundreds of babies and toddlers across London for what it calls developmental gymnastics, four months old.

Demand is surging as government research shows one in five London kids under 11 is obese. Some grandparents are buying their grandchildren memberships in these baby gyms as a Christmas present. The owner of one these places says she already runs packed classes for 10-month-olds and is going to start teaching 4-month-olds in February.

Parents accompany their kids up to 3 years of age. The classes are based on gymnastics and include like forward rolls, as opposed to sweet rolls. Excuse me. But experts say there's not much point in targeting babies trying to get them to exercise before they can even crawl.

So, here's the question. Have concerns about childhood obesity gone too far, if people are signing up 4-month-old babies for gym class? E-mail your thoughts to caffertyfile@CNN.com or go to CNN.com/Caffertyfile.

I don't know which is more amazing, that these places exist or that there are waiting lists to get into them -- Wolf.

BLITZER: Here's the short answer, Jack. Yes. The answer is yes.

(LAUGHTER)

BLITZER: Four-month-old kids, babies, don't need gym classes.

CAFFERTY: No, I don't think so. All right.

BLITZER: Thanks, Jack, very much.

Jack is standing by also. He will be participating in our roundtable this hour. That is coming up.

And "LOU DOBBS TONIGHT," by the way, starts at its new time, 7:00 p.m. Eastern, at the top of the hour.

Just ahead right here in THE SITUATION ROOM, the mayor of Las Vegas, Oscar Goodman.

(BEGIN VIDEO CLIP)

OSCAR GOODMAN (D), MAYOR OF LAS VEGAS: We're sort of a cross- section of America here in the sense that so many of our residents have moved in from other places.

(END VIDEO CLIP)

BLITZER: Why he believes his city, and all of Nevada, for that matter, will be so pivotal in the upcoming election. My one-on-one interview with the longtime city leader, that is coming up.

And a deadly 7.7 earthquake causing widespread damage in Chile. There are new details of fatalities. We will have the latest.

And John McCain hits hard back against CNN. You are going to find out why he is now demanding an apology.

Stay with us. You're in THE SITUATION ROOM. We're reporting live from the Cox Pavilion on the campus of the University of Nevada, Las Vegas. That's where the Democratic presidential debate will take place tomorrow night.

(COMMERCIAL BREAK)

BLITZER: Its new position at the top of the electoral calendar and tomorrow's Democratic presidential debate right here in Las Vegas cast a bright new spotlight on Nevada. Candidates seem very attentive to what Nevadans and their leaders have to say about everything, from their standings in the polls, to nuclear waste, to illegal immigrants.

(BEGIN VIDEOTAPE)

BLITZER: Joining us now, the mayor of Las Vegas, Oscar Goodman.

Mr. Mayor, thanks very much for welcoming us into your office.

GOODMAN: Well, it's great to have you in town, Wolf.

BLITZER: Hillary Clinton, by our new poll, has an overwhelming lead in Nevada right now. Is that what you sense on the streets in Las Vegas?

GOODMAN: There's no question about that. It appears that she had the ground crew out there real early and got the endorsements very, very early. So there's a reason that she's way ahead. It will be interesting to see what's going to happen at the debate.

BLITZER: What's the big issue here in Vegas?

GOODMAN: So many of them. You know, we're sort of a cross- section of America here in the sense that so many of our residents have moved in from other places in the past 10 years. So we represent the same kind of people that you will find in other places as far as their political philosophies.

BLITZER: But is Iraq the dominant issue, at least...

GOODMAN: Iraq's a dominant issue. Yucca Mountain is always something that's of great concern to us, that we don't want the high- level nuclear waste traveling through our community and being stored 90 miles away from a major metropolitan area like Las Vegas. We have issues with water, with transportation, with our infrastructure.

BLITZER: What about illegal immigration?

GOODMAN: We have a real issue as far as immigration is concerned because one third of our community here are Latinos.

BLITZER: Can the economy of Las Vegas really be sustained without illegal immigrants?

GOODMAN: Well, let's put it this way, I don't know who's legal or who's illegal at this point in time, but the folks who are working in the gaming industry, they're hard workers, they do their job. I don't think there are other people who'd replace them at this point in time.

We're adding thousands -- tens of thousands of rooms to our community here. They're being built as we sit here right now, so we need people to service the community.

BLITZER: You're not busy checking people's ID to make sure...

GOODMAN: No. Our policy here is that if somebody is arrested for a serious crime and we find out they're here illegally, then we will turn them over to immigration. But we don't go knocking on people's doors and raiding them and making them feel uncomfortable.

BLITZER: Unions are pretty powerful here.

GOODMAN: Very powerful.

BLITZER: Especially in Las Vegas.

GOODMAN: Very powerful.

BLITZER: And they don't like the fact -- or maybe they do -- that there are a lot of illegal immigrants.

GOODMAN: Oh, I don't think that that's necessarily true. The culinary union, which is about 70,000 strong, has an awful lot of members who are from other places.

I don't think that they're checking left and right to see whether or not they have proper documentation at this point in time. We're not a sanctuary city. If we find somebody who is here, who was violating the law and shouldn't be here, we send them home.

BLITZER: You're obviously a Democrat. So, you are going to go with the Democratic ticket, no matter what, right?

GOODMAN: Well, of course. When you say the ticket, whoever is going to be nominated.

BLITZER: Whoever is the nominee and the vice president.

GOODMAN: It would take -- it would take a mountain to change that. They would have to move a mountain.

BLITZER: And the Republicans, who do you like on the Republican side?

GOODMAN: I don't like anybody.

BLITZER: You don't like them at all?

GOODMAN: Not really.

BLITZER: Because?

GOODMAN: No, I just -- nobody is turning me on. I was raised with the philosophy before I got into politics that I voted for person. And there's nobody who's standing out, nobody who I believe is a great leader, nobody who's a great statesman who's going to think about future generations.

BLITZER: You're talking about on the Republican side.

GOODMAN: On the Republican side.

BLITZER: Well, maybe you're talking about the Democratic side, too.

GOODMAN: Well, I'm waiting to see. I have not -- haven't endorsed anybody.

BLITZER: Are you going to?

GOODMAN: It depends. It depends what comes out.

We're far away, far away from the election. I have a certain degree of popularity here. And they say that people will sometimes listen to what I have to say. So I'm going to be very careful before I endorse anybody, if I in fact endorse somebody.

BLITZER: It's been traditionally a Republican state, although it was pretty close in the last presidential election.

GOODMAN: And since that time.

BLITZER: Bush narrowly won.

What is Nevada right now? In your opinion, is it a red state or a blue state?

GOODMAN: Well, right now, I think as far as registration, 2,000 ahead as far as the Democrats are concerned. They have really come in here and made a concerted effort to get people registered.

BLITZER: You think this is because people are moving in from other states?

GOODMAN: They're moving in from other states, but also the Democratic Party, for the firs time, is becoming organized here.

BLITZER: Finally, what do you want to see in this debate tomorrow night?

GOODMAN: I would like -- I would like people to really declare themselves. Right now it's sort of like a sparring. I don't see anybody putting anything down in big black letters. That's what I would like to see, what they stand for in big black letters, not...

BLITZER: And you want to see them, you know, differentiate amongst themselves?

GOODMAN: Well, yes. I think they have to in order to decide who you want to vote for. If they're all cookie cutter types, the same as each other, you may as well flip a coin. BLITZER: Mayor, thanks very much for the hospitality.

GOODMAN: It's great having you here.

(END VIDEOTAPE)

BLITZER: And coming up: an illegal gambling ring allegedly being run from inside a casino, but not here in Las Vegas. We will tell you where, what's going on. We will show you why investigators say it's tied to the mob.

Plus, John McCain is accusing CNN of bias. The videotape, the TV program, the offensive language -- that story coming up as well.

Stay with us. You're in THE SITUATION ROOM. And we're live from Las Vegas.

(COMMERCIAL BREAK)

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

Carol, what's going on?

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

A deadly earthquake in Chile. At least two people were killed today and 100 hurt when the quake hit the country's northern region. Hundreds of homes are damaged. Dozens of construction workers who were trapped under a collapsed tunnel have now been rescued. The 7.7- magnitude quake was so strong, it could be felt as far away as Peru and Bolivia.

Pakistan's president makes an unexpected announcement. In an interview with the Associated Press, Pervez Musharraf says he expects to step down as Pakistan's army chief by the end of the month. But he adds that timeline all depends on when the country's newly installed supreme court approves his recent reelection.

And officials in New Jersey say they have broken up an illegal sports gambling ring that operated out of one of Atlantic City's top casinos, 23 people arrested today, including six employees of the Borgata Casino -- Borgata Casino, I should say -- and four alleged mobsters. Officials say the mob-run ring took in $22 million in bets on college and professional football and basketball games.

Charges include money-laundering and conspiracy to promote gambling. Authorities say the casino cooperated with the investigation -- back to you, Wolf.

BLITZER: Thanks, Carol.

An impromptu campaign turns -- campaign stop, that is, turns into an uproar when a woman in the audience calls Hillary Clinton an offensive name. Coming up, why John McCain is responding to questions and why he's now blaming CNN for the controversy. Plus, the plan is dead, but the issue still fueling arguments, driver's licenses for illegal immigrants. But what has really made New York's governor change his mind? Our roundtable will talk about it. That's coming up as well.

And a minister and an action hero working together on a presidential campaign. You're going to see who's raising money for Mike Huckabee.

We're live from Las Vegas, and you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening right now: New York's governor caving in, dropping his plan to give driver's licenses to illegal immigrants. Tonight, what made him do it and what the fallout could be. We're watching this story in our roundtable.

And a big lawsuit against the parent company of FOX News about lies, an affair and a New York City former police commissioner, why it could mean more trouble for Rudy Giuliani.

Plus, Nevada will be one of the first states to vote in this, the primary season. Why tomorrow night's debate here in Las Vegas is so critical for the candidates who want to be president.

I'm Wolf Blitzer. You're in THE SITUATION ROOM. We're live tonight from the Cox Pavilion on the campus of the University of Nevada.

ANNOUNCER: This is CNN breaking news.

BLITZER: All that coming up, but we have got some breaking news we're following right now out of Washington.

Let's go to our homeland security correspondent, Jeanne Meserve.

Jeanne, what are you learning?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Well, Wolf, the GAO coming out with a new report which raises more questions about airport security. GAO investigators were able to get through airport screening checkpoints with components for improvised explosive devices and improvised incendiary devices.

They said they obtained these components either over the Internet or at stores for about 150 bucks, and they were able to get them past screeners. Some of them were prohibited items, but, in other instances, they said the screeners appeared to be following protocols, procedures and using the right technology.

The bottom line is, there's a big hole that these things can get through security. I talked to the TSA about it just a minute ago. They said it's no news to them that there are vulnerabilities, and just because there is a hole in one place doesn't mean there are backstops at other places in the system. They say there is a layered system. It does provide security, although you just saw some of the video showing what these explosives can do, a bit frightening -- Wolf.

BLITZER: Very frightening, indeed. Let's hope they can fill that hole. Thanks very much, Jeanne Meserve, with some breaking news.

BLITZER: Right now, John McCain's campaign is having to respond to something someone else said. It involves one woman's use of some foul language, Hillary Clinton, and criticism of CNN.

Let's go to Brian Todd. He's following this story.

Brian, this has ignited some controversy. Give us the background.

BRIAN TODD, CNN CORRESPONDENT: It sure has, Wolf. John McCain's campaign is brushing back hard on a CNN prime-time segment, accusing the network of bias.

(BEGIN VIDEOTAPE)

TODD (voice-over): It started with an impromptu campaign stop by John McCain Monday in Hilton Head, South Carolina. A woman uses offensive language in asking how McCain can stop Senator Hillary Clinton's campaign momentum.

UNIDENTIFIED FEMALE: How do we beat the bitch?

(LAUGHTER)

SEN. JOHN MCCAIN (R), ARIZONA: I've got to get the translation.

(LAUGHTER)

MCCAIN: The way that...

UNIDENTIFIED MALE: Senator, I thought (INAUDIBLE) started (INAUDIBLE) my ex-wife.

(LAUGHTER)

MCCAIN: All right. But that's an excellent question. You might know that there was a -- there was a poll yesterday, a Rasmussen poll identified (ph) that shows me 3 points ahead of Senator Clinton in a head to head match up.

(APPLAUSE)

MCCAIN: I respect Senator Clinton. I respect anyone who gets the nomination of the Democrat Party.

TODD: The exchange plays out over less than a minute. Tuesday evening, CNN Anchor Rick Sanchez takes about six minutes at the very top of his prime time show, "OUT IN THE OPEN," raising questions about why Senator McCain didn't immediately chastise the woman for insulting Mrs. Clinton like that.

RICK SANCHEZ, HOST, "OUT IN THE OPEN": Is John McCain done as a result of this?

Is this going to become a viral video?

TODD: A top official in the McCain campaign tells CNN he believes the senator did a good job trying to diffuse the situation, that it goes without saying the woman's remark was offensive, but it's not McCain's job to come to Mrs. Clinton's defense.

The McCain campaign accuses Rick Sanchez of sensationalizing the exchange in hopes of generating a news story. They use the segment as a peg for this e-mail to supporters to stand with McCain against Sanchez and to make contributions. McCain's campaign later calls for an apology. Sanchez says he has nothing to apologize for.

SANCHEZ: If someone had used this word about Laura Bush or about Senator McCain's wife or about anybody else -- be they Democrat or Republican -- there are many people out there who would have said that's an offensive word and the senator should have distanced himself not only from the statement made against Senator Clinton, but against the use of the word itself. And at no time does it seem that he does that and that's the reason we did the story.

TODD: We asked Howard Kurtz of CNN's "RELIABLE SOURCES" and "The Washington Post" about the blow up.

HOWARD KURTZ, HOST, "RELIABLE SOURCES": It probably would have been better for John McCain to not have laughed along with the crowd and talked about that being an excellent question. But his campaign has a point. That little incident was pretty badly hyped by Rick Sanchez. Senator McCain did not embrace the "B" word that this woman in the audience used.

TODD: McCain has been criticized for some of his more candid public moments.

MCCAIN: You know, The Beach Boys song, Bomb Iran?

You know?

Bomb, bomb, bomb, bomb...

Anyway...

TODD: But he has also publicly shown solidarity with Hillary Clinton -- visiting Iraq with her, making other appearances. And the McCain campaign says he's expressed his utmost respect for Mrs. Clinton several times on the campaign trail.

(END VIDEO TAPE)

TODD: We contacted Mrs. Clinton's campaign for response to the woman's remark and Senator McCain's reaction.

Her spokesman had no comment.

A short time ago, Mr. McCain addressed the issue at a stop in Phoenix.

Listen.

(BEGIN VIDEO CLIP)

MCCAIN: I did. Then I walked into a restaurant in South Carolina. There was a number of people there. They asked questions. She made a comment. I made light of the comment and then I said very seriously, I treated and continue to treat Senator Clinton with respect. And I've said that many times.

I'm sure that's good enough for the American people, even if it's not good enough for CNN.

(END VIDEO CLIP)

TODD: Senator McCain responding there once again. And the campaign has reiterated that this woman was not a supporter, stressing again that it was an impromptu campaign stop and one of the McCain spokespeople told me that the people in the restaurant essentially turned it into a de facto town hall meeting -- Wolf.

BLITZER: All right, Brian.

thank you very much.

Brian Todd with that report.

New York's governor, Eliot Spitzer, is shifting into reverse. He's dropped his plan to give driver's licenses to illegal immigrants.

So now what?

Let's talk about that with our roundtable.

Our chief national correspondent, John King. He's here in Las Vegas.

CNN's Jack Cafferty. Jack's new book, by the way, is called "It's Getting Ugly Out There". If you haven't read it yet, you should.

Also, our CNN senior political analyst, Gloria Borger. She's out here in Las Vegas, as well.

It didn't take long, Jack, for Hillary Clinton to respond to the decision by the governor, Eliot Spitzer. She said this: "I support Governor Spitzer's decision today to withdraw his proposal. As president, I will not support driver's licenses for undocumented people and will press for comprehensive immigration reform that deals with all of the issues around illegal immigration, including border security and fixing our broken system."

Is this story over for now? CAFFERTY: No, I don't think this story is over. I think the driver's licenses for illegal aliens in New York might be over. But it's interesting to me that she didn't bother to show up at the Spitzer news conference, which was in Washington, D.C. It's also interesting to me that this announcement came from the governor of New York the day before the Democratic debate there in Las Vegas, which you will moderate tomorrow night.

The fact of the matter is the American public is fed up with the federal government's inability or unwillingness to address the crime of illegal immigration in this country. And Governor Spitzer finally got the message, it appears.

BLITZER: It looks like he got the message, Gloria. It didn't take all that long for him to do a 180.

BORGER: Yes, I think he got the message. He got the message because seven out of 10 people in New York State disagreed with him. He also probably got the message from the Clinton campaign, because this caused her an un -- an unimaginable amount of grief. She knows she's probably going to have to address it again here in Las Vegas tomorrow night.

And this is a big problem for the Democratic Party, Wolf. You know, for the last year they've just stood on the sidelines and watched the Republicans fight about immigration. Now, suddenly, they realize that this is an issue that the American public wants them to address in their own primaries and that's a problem for them.

BLITZER: John, most of the Democratic leadership in the Congress did, in fact, support what was called comprehensive immigration reform. The president put it forward. But it crashed and burned not long after it got off the ground -- if it did get off the ground.

How big of an issue is this going it be in the Democratic presidential contest?

JOHN KING, CHIEF NATIONAL CORRESPONDENT: Well, it is a huge issue across the country, Wolf, which makes it a huge issue in both primaries for both the Republicans and the Democrats. But it will be a big issue now -- even a bigger issue than it would have been -- in tomorrow night's debate because Hillary Clinton's rivals are going to press her. To them, they say she changed her position, she waffled, she took the cautious approach. And now they will say she's taking the general election approach.

But it's not just an issue for her, Wolf, because Senator Obama, one who issued a very tough statement about Senator Clinton's position today -- he is on record supporting driver's licenses for illegal immigrants. That is a position -- that is -- Governor Spitzer flipped because public opinion was so against this position. Senator Obama now will have to defend that on a national television stage tomorrow night.

If he is the Democratic candidate, yes, they will say Senator Clinton did support it, now she's moved toward a general election position. But if Senator Obama's position is the Democratic position next year, you can make no doubt about it, the Republicans will see that as a huge advantage.

CAFFERTY: Is it safe to assume the moderator of this debate tomorrow night may broach this issue with the candidates?

BLITZER: I think it's safe to assume that, yes, Jack. I'm not giving away any state secrets.

But let Gloria weigh in, as well.

BORGER: Wolf, you know, some Democrats are telling me that they privately said to the Clinton campaign, look, why don't you take this issue head on?

Why don't you do what Bill Clinton did with welfare reform and take this issue and make it your own? Because it helped define not only the Bill Clinton candidacy, but also the Bill Clinton presidency. And the question is whether Hillary Clinton has the guts that her husband had.

BLITZER: All right, guys, stand by, because we're going to move on. We've got more to talk about in our roundtable, including this -- at the heart of it, an affair with New York's former police commissioner. A disgraced publisher sues her former bosses at the parent company of Fox News. She says they pressured her to lie to supposedly protect -- protect Rudy Giuliani.

Plus, a pivotal presidential debate only about 24 hours away. Our roundtable talks about what the Democratic candidates need to do to come out on top.

Stay with us.

You're in THE SITUATION ROOM. And we're reporting live from the site of the debate -- the Cox Pavilion on the campus of the University of Nevada, Las Vegas.

(COMMERCIAL BREAK)

BLITZER: A disgraced publisher says her former bosses asked her to lie about an affair with a disgraced police commissioner to protect his former boss. That would be Rudy Giuliani.

Let's get back to our roundtable to try to sort it all out.

And I'll start with you, Jack.

It involves Judith Regan, who was the publisher who lost her job. And she was having an affair with Bernard Kerik, the former New York City police commissioner. And Rudy Giuliani is his close friend, as all of us know.

I want to play for you, Jack, first of all, what Rudy Giuliani said about all this sordid material earlier.

Listen to this.

(BEGIN VIDEO CLIP)

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: And I don't respond to the story at all. I have -- I have -- I don't know anything about it and it sounds it to me like a kind of a gossip column story more than a real story.

(END VIDEO CLIP)

BLITZER: Well, what do you think about this story?

Because he says it belongs in the tabloid gossip pages and that's where it should stay.

CAFFERTY: Well, it hardly rises to the level of the Profumo scandal. And Judith Regan isn't no Christine Keilar.

That said, if she can prove any of this stuff, then, potentially it's problematic. But anybody can file a lawsuit alleging anything, and right now that's all this is -- a bunch of allegations.

Potentially more troubling for the Giuliani campaign is the outcome of this 16-count federal indictment against Bernard Kerik. That could be much more problematic than whether he was fooling around with some book editor on the side.

BLITZER: Does all this, John, have a cumulative impact -- drip, drip -- raising questions about Rudy Giuliani or can he just shrug this off and move on?

KING: Well, he can shrug it off as a gossip column story as long as there's no evidence to back up the allegations. These are the things that happen in a presidential campaign. And you get not only asked not only about taxes and immigration and policy, but the unexpected comes up from time to time. And how a candidate handles those questions, whether they are within bounds or out of bounds, is a snapshot and a test of that candidate's temperament, if you will, and their strength to be president.

But as Jack said, we need to be very careful here. The lawsuit filed makes allegations, but it does not name the executives allegedly involved. There are no documents to back up the claims. So until there is any evidence to back any of this up, it is just allegation. And as long as it is just an allegation and unproven, Rudy Giuliani can push it to the side.

BORGER: You know, Wolf, I think this, really, though, feeds into the problem that Giuliani has with the Republican voters. Republican voters say, time and time again, that he does not share their values. And I think that that's really a problem for Giuliani. He doesn't share their values. And as he heads through these primaries, we'll have to see whether he can convince more and more Republicans that he does.

BLITZER: Yes, let's talk a little bit about this debate that's coming up tomorrow night, Jack. The latest Nevada poll -- and we have -- that CNN released today shows Hillary Clinton at 51 percent, Barack Obama at 23 percent in this state, John Edwards 11 percent, Bill Richardson 5 percent. A huge lead for Hillary Clinton.

But is it largely -- and you grew up in this state -- name recognition?

Or is she just simply way, way above and beyond all the other candidates combined?

CAFFERTY: Well, Gloria touched on something that I think is significant. It's about electability. Mitt Romney is perceived as a more mainstream, traditional Republican than Rudy Giuliani. But Giuliani is leading in the polls because he's perceived as being electable. A poll in Iowa and New Hampshire, voters said you'd be more likely to get an honest answer, what they really think, from Barack Obama or John Edwards, but Hillary is leading because she's more electable.

It goes to the depth of the partisanship and the rabid nature of partisanship in this country that people who, on the one hand, are not, perhaps, as attractive on the issues of principals are the favorite because people think they can win.

BLITZER: What do you think, John?

KING: Wolf, I think the debate is very important because for the first time, you have the frontrunner, Hillary Clinton, back on her heels. And the key test for her rivals is can they deliver any kind of a knockout punch.

Can they continue her problems as we get closer and closer to the early votes in Iowa, Nevada and New Hampshire?

Or can she try to clean all this up and leave the stage tomorrow night as someone who has put this stuff behind her?

That's what makes the debate so important. This state is very important because the Rocky Mountain area increasingly is going toward the Democrats. Hillary Clinton leads here right now for one reason -- Harry Reid's son is helping her out.

BLITZER: Good point.

All right, Gloria, stand by, because we're going to continue this discussion later -- actually, tomorrow.

Lou Dobbs is getting ready for his show that begins right at the top of the hour -- Lou, tell our viewers what you're working on.

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Wolf, thank you very much.

Tonight, we're reporting on Governor Eliot Spitzer's outright humiliating retreat and defeat on his plan -- a second plan that would have given driver's licenses to illegal aliens in New York. Governor Spitzer accusing his opponents and critics of what he called hyper- partisanship, fear mongering and being anti-immigrant. Three of his critics and political opponents are among my guests here tonight. The ranking member of the Homeland Security Committee, Congressman Pete King, also joins us tonight.

And tonight, a rising number of states are passing laws to stop illegal immigration altogether. But some of those states, under pressure from corporate elites and special interests, are refusing to crack down on the employers of those illegal aliens. We'll have that story.

And the number of Americans now in danger of losing their homes has nearly doubled in the past year. Tonight, we'll have a special report on the escalating mortgage crisis.

And we'll preview tomorrow's CNN debate by the Democratic presidential candidates right here in Las Vegas.

Join us at the top of the hour -- Wolf, back to you.

BLITZER: All right, Lou.

Thank you very much.

A first for Rudy Giuliani's campaign -- TV ads with a twist. We're going to show you how he's appealing to voters.

And have concerns about childhood obesity gone way too far if people are signing up 4-month old babies for gym classes?

That's Jack's question. He has your e-mail and The Cafferty File.

That's coming up.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In our Political Ticker, Rudy Giuliani is ready to launch the first television ad of his campaign -- yes, the first. It will air in New Hampshire tomorrow -- two months before that state is likely to hold its presidential primary. In the ad, the former New York mayor says he can't offer voters perfection, but says they'll find someone who's been tested and has dealt with crisis.

"Walker, Texas Ranger" wants you to do three things. The actor who played that part on TV is out with an appeal on behalf of Republican presidential candidate Mike Huckabee. Chuck Norris writes an e-mail with a few demands. Among them, he urges people to contribute to Huckabee's campaign. He wants people to urge their friends toward donating and he also encourages more people to learn about Mike Huckabee.

He's one of the world's wisest and wealthiest investors and he's speaking out against efforts to repeal the estate tax. Billionaire Warren Buffet was on Capitol Hill today, telling lawmakers the tax is not an unfair burden and that repealing it would give the wealthy an unfair advantage.

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

Let's go back to Jack Cafferty.

He's got The Cafferty File once again from New York -- Jack.

CAFFERTY: With all due respect to Mr. Buffet, the wealthy do have an unfair advantage because they're wealthy.

The question this hour -- this kills me -- have concerns about childhood obesity gone too far if people are signing up 4-month old babies for gym class?

And they're doing this in London.

Steven in San Francisco: "Babies can't eat on their own. Someone has to feed them. Perhaps the money those parents spend on baby gym classes should be put toward a lesson in common sense."

Tim in Atlanta: "My mother was a lifeguard, taught us how to swim when we were six months old. It saved our lives more times than you know. Yes, it's an excellent idea to introduce children to exercise at an early age so they adjust, adapt and think of it as second nature. Otherwise, they will turn into out of shape news reporters."

That's cruel, Tim.

David in Pennsylvania: "Our granddaughter is 4-months old and I have to tell you there is nothing that can stop her from getting her formula out of the refrigerator. Our daughter has tried everything -- padlocks, barbed wire. They even got a Doberman and chained it to the refrigerator. Nothing works. These people are doing a valuable service since there just doesn't seem to be an alternative to preventing infants from sneaking extra formula between their regular feedings."

Ashley in Virginia: "I don't think it has anything to do with obesity prevention. I think it's the type of business that provides more of a social status than anything else -- a way of meeting other like-minded parents. Why else would I pay someone to let my children roll around on their carpet when I have a perfectly good carpet at home?" Larry in Queens writes: "Dear Cafferty File, I'm a big fan of your segment. Jack, I send in e-mails often. This hour's question about gym class for 4-months for the first time has me completely stumped. I've got nothing. The stupidity has me overwhelmed. Sorry. Thanks for reading."

And John, who is a gymnastics coach in Denver, writes: "Gymnastics is the greatest sport in the world. Every child, no matter the age, can benefit from a little time in the gym. Didn't you ever want to flip and roll when you were a child?"

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

BLITZER: Yes. But interesting.

All right, Jack, thanks very much.

See you back here tomorrow.

Poker face -- quite the opposite for O.J. Simpson in court. We're going to show you those faces.

Jeanne Moos with a most unusual look.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A Las Vegas judge expected to announce in a few minutes whether O.J. Simpson will go to trial on kidnapping and armed robbery charges. And while a poker face could come in handy in a Las Vegas casino, Simpson had anything but in court today.

CNN's Jeanne Moos takes a most unusual look.

(BEGIN VIDEO TAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): He may hide behind sunglasses on his way into court. But once things get underway, O.J. Is a head holding, eye rolling, lip-licking smorgasbord of facial expressions.

UNIDENTIFIED MALE: You can just see that he's like a little volcano.

MOOS: A volcano of outraged disbelief.

UNIDENTIFIED MALE: That if I had spoke to the "National Enquirer," he was going to sue me.

MOOS: A volcano that shakes rather than quakes.

UNIDENTIFIED MALE: Yes, I carried a gun at the request of O.J. Simpson.

UNIDENTIFIED MALE: He wanted us out for the tabloids.

UNIDENTIFIED MALE: I brought my weapon because O.J. Simpson wanted me to have a weapon.

UNIDENTIFIED MALE: What were you doing with it in the room?

MOOS: O.J. Is a dream come true for a body language expert and author of the book, "Emotionomics."

(on camera): He doesn't want him blowing his cheeks out.

DAN HILL, AUTHOR, "EMOTIONOMICS": He blows his cheeks out in exasperation. He rolls his eyes. He shakes his head. But I think the thing that's going to give him the most trouble is the smirking. It's kind of contemptuous.

MOOS: The smirk of disbelief.

UNIDENTIFIED MALE: Oh, I see.

For money?

MOOS: Remember how Al Gore got panned for sighing over George Bush's debate performance?

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: He's in the State of Texas. That's what the governor...

MOOS: Well, O.J. Makes Al Gore look like an amateur.

UNIDENTIFIED MALE: Yes.

MOOS: Even when O.J.'s bored, he's demonstrably bored.

UNIDENTIFIED MALE: The whole issue with O.J. Is lack of control. And he has a lack of control over his facial expressions.

UNIDENTIFIED MALE: If you could see or shade...

MOOS: He purses his lips...

UNIDENTIFIED MALE: And was your suit buttoned closed or was it open?

MOOS: He licks them then comes back for seconds. It looks could kill, O.J. Would be guilty.

UNIDENTIFIED MALE: He said show them your weapon and look menacing.

MOOS: Years ago, "Time" magazine decided to interpret Simpson's mug shot by making it darker. Bet O.J. Rolled his eyes over that one. Talk about expressive.

UNIDENTIFIED MALE: Did you walk to the bathroom?

UNIDENTIFIED MALE: No.

UNIDENTIFIED MALE: Did you walk to the television?

MOOS: O.J. Gets startled by his own name.

UNIDENTIFIED MALE: Or Mr. Simpson.

MOOS: Jeanne Moos, CNN, New York.

(END VIDEO TAPE)

BLITZER: That's it for us.

Thanks for joining us.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou.

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