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THE SITUATION ROOM

Obama's New Hampshire Challenge; Can Huckabee Succeed in New Hampshire; Interview With John Edwards

Aired January 4, 2008 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, the winners in Iowa face a whole new ball game in New Hampshire. Barack Obama and Mike Huckabee fighting to keep their momentum going, but will the presidential contest be thrown some new curves just four days from now?
Hillary Clinton and John Edwards are rethinking their strategies after Obama's big win. I'll ask Edwards what he would do for New Hampshire and if he's expecting Clinton to make a comeback.

Plus, Iowa caucus-goers voted for change, but would the candidates really give them what they want? We'll take a closer look at what the new front-runners would do in the war in Iraq.

I'm Wolf Blitzer at CNN Election Center. You're in THE SITUATION ROOM.

There's no time for the presidential candidates to savor their victories in Iowa or lick their wounds. Most have hit the ground running in New Hampshire, with that critical primary only four days away.

For the Democrats, Barack Obama's Iowa win has forced Hillary Clinton's back against the wall in New Hampshire, but now Obama has to prove he has what it takes to go the distance.

Let's begin or coverage this hour with CNN's Jessica Yellin. She's on the trail with the Obama campaign.

Jessica, what was Obama's message today?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Wolf, his message is that he will change Washington and he is electable. Today he told voters in New Hampshire that his win last night shows that voting for him is no gamble, and he says if he wins here in New Hampshire, he's unstoppable.

(BEGIN VIDEOTAPE)

YELLIN (voice over): Without wasting a moment, Barack Obama swept into New Hampshire, telling voters they can make the difference.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: If you give me the same chance that Iowa gave me last night, I truly believe I will be the president of the United States of America.

YELLIN: He slept only two hours before hitting the trail, stopping to press the flesh at a cafe in Dover.

UNIDENTIFIED MALE: Congratulations on your win last night.

OBAMA: Thank you so much. I appreciate it.

YELLIN: Then moving to another audience with his message of change and a vow to address kitchen table issues.

OBAMA: With critical issues like health care and our schools and climate change, and an energy policy that breaks the grip of our dependence on foreign oil, that's the possibility that's before us in four days' time.

YELLIN: The excitement inside the Obama campaign is palpable, and that energy could serve him well here in New Hampshire.

JOHN CLAYTON, "NEW HAMPSHIRE UNION LEADER": Primaries, I think people tend to vote with their heart instead of their head. Now this is about passion, and I think Obama has incited a lot of passion.

YELLIN: But campaign aides insist they're not taking anything for granted, boasting to reporters about an aggressive organization in the state. As in Iowa, Obama will continue to focus in on Independents. They make up 44 percent of New Hampshire's voters. He's courting them with that promise of healing the partisan divide, and if past is prologue, those Independents could give Obama a victory here in four days.

OBAMA: And then we'll reach out to undecideds and Independents and some Republicans too. And we are going to pull together this country, and you and me...

(END VIDEOTAPE)

YELLIN: Now, Wolf, all this comes with a heavy dose of caution from the Obama campaign. Aides there say they still consider Senator Clinton a formidable opponent, and they're telling reporters they expect her to go negative fast. They insist they will hit back -- hit back, but that could be real quicksand for Senator Obama, because he has promised to run a positive campaign, and a change in tone from him now may not be what voters want to hear -- Wolf.

BLITZER: Jessica, we're going to be hearing from him in the next hour, Barack Obama. Thanks very much for that.

In New Hampshire today, Hillary Clinton is trying to incorporate the call for change she heard from Iowa voters and rebound from her disappointing third-place showing. But at the same time, she's trying to convince Democrats that she has the experience to deliver that change and the organization necessary to win in November.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: If you look at the evidence as to who can win, I think that I have both the track record, the depth of support, and the understanding about how you put together those states that add up to the electoral majority that we need.

(END VIDEO CLIP)

BLITZER: Edwards is portraying the Democratic race as a choice between him and Barack Obama, but Edwards is a distant third to Obama and Clinton in our latest New Hampshire poll. That poll, though, was taken before -- before the Iowa caucuses.

Coming up, my interview with John Edwards and a full report on where he and Senator Clinton go from here.

Let's go to the Republican success story out of Iowa. The one- time underdog, Mike Huckabee, handily beat his closest rival, Mitt Romney, last night. But in New Hampshire, Huckabee has to worry about Romney and John McCain, and a very different mindset among the voters there.

Let's go to Dana Bash. She's covering Huckabee and his rally right now that's unfolding.

I guess the question is, can he do in New Hampshire what he did in Iowa?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, that is the key question, there's no question about it, Wolf. But you know, what he has going for him is what I'm finding here at this rally, and that is buzz.

I just waded through the crowd and talked to many voters here, Independents, Republicans. You can imagine, they basically said they were coming here to check him out, to see what all the buzz and the fuss is about.

But you know, there still is a lot of skepticism about him on several issues. So that really speaks to his challenge. Can he turn a one-state win in Iowa to a national phenomenon?

(BEGIN VIDEOTAPE)

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: I've never had such an exciting breakfast in my life.

BASH (voice over): Breakfast on the run in New Hampshire from the "come from nowhere" GOP candidate trying to savor his big Iowa win. Snapshots from the moment he found out about his victory, but Mike Huckabee's overnight plane ride brought immediate questions about whether he can harness the momentum.

HUCKABEE: I think it would be bold to say, oh, we're going to win in New Hampshire. Probably not, although crazier things can happen.

BASH: Huckabee's biggest challenge? Proving he can prevail in states without the big evangelical base that fueled his Iowa upset.

HUCKABEE: We're going to have a big temporary bible out on the grounds of Congress, get them all converted to the evangelical faith, and then we'll win. How's that?

BASH: Jokes aside, the man who captured Christian conservative zeal is trying to broaden his appeal by hitting his populist message a bit harder.

HUCKABEE: Why is it that we've never been energy independent? That connects with voters. They're paying 70 cents a gallon more for gas now. And with oil prices hitting $100 a barrel, it's going to get worse.

BASH: As for Huckabee's next test, New Hampshire, it's unclear whether his plan to abolish the IRS will help or hurt, since it would bring a hefty new consumption tax to a state that prides itself on no income tax.

HUCKABEE: Eighty percent of Americans hate the current tax system, so why don't we change it? Why do we always let Washington just tinker with it?

(END VIDEOTAPE)

BASH: Now, Huckabee advisers admit that this really isn't the best plate for Huckabee to do well, to really seize on that momentum because of the issues. And the issues don't really fit primarily into what he stands for, when you look at the Republicans here and what they stand for. That he'll be better off going to South Carolina, which is much more similar to Iowa in terms of its base. It's got a big evangelical base there.

But I'll tell you the reason why they say they're coming here, Wolf, and they're staying here through the primary. It's because of us.

They're a very shoestring organization still. They don't have a lot of money, and they rely heavily on free media. And they know that we're all here. That's why Mike Huckabee is going to come here.

And you see the band playing behind me. When Mike Huckabee gets here, I guarantee you he's going to pick up his bass and he's going to play with them. That's definitely a good way for him to get free media -- Wolf.

BLITZER: Play the bass guitar, you know that's going to be shot there.

All right, Dana. Thanks very much. We'll stand by, wait to hear from Mike Huckabee in New Hampshire.

John McCain is hoping Huckabee's Iowa win helps his own chances against Mitt Romney in New Hampshire. Today the Republican senator is staying focused on the Granite State, where polls taken before the Iowa showdown showed him ahead or tied with Romney.

(BEGIN VIDEO CLIP)

JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Governor Romney is running these attack ads. He tried the same thing in Iowa against Governor Huckabee and just got beat. The people of New Hampshire are not going to be fooled by these negative campaigns and the ads that they're running.

(END VIDEO CLIP)

BLITZER: Mitt Romney has his own sights set on McCain today as he tries to fight back, to bounce back in New Hampshire and move beyond his Iowa defeat. We're going to have a full report on Romney's day. That's coming up.

Rudy Giuliani also is campaigning in New Hampshire today. He hasn't quite written off the leadoff primary state as he did Iowa, but Giuliani still is counting more heavily on later contests, especially in Florida and on Super Tuesday in early February.

Fred Thompson is facing questions today about his future of the campaign after tying for third with McCain in Iowa. He spoke with us out of Washington today. That interview with Fred Thompson and a lot more coming up here in THE SITUATION ROOM.

Jessica Yellin and Dana Bash, as all of our viewers know, are both part of the Emmy Award-winning best political team on television. And remember, for the latest political news at any time, check out our Political Ticker at cnnpolitics.com.

Jack Cafferty proved last night once again that he's part of the best political team on television.

You did an excellent job assessing, analyzing what was going on.

JACK CAFFERTY, CNN ANCHOR: Thank you.

BLITZER: You're welcome.

CAFFERTY: Barack Obama's huge win in Iowa last night was characterized this way by Peggy Noonan. She wrote this in "The Wall Street Journal" this morning.

Now, when you can write like this, then you're a writer -- "His takedown of Mrs. Clinton was the softest demolition in the history of falling buildings." That's a sentence.

Make no mistake, though, a demolition it was. What we don't know yet is whether Obama's victory was an anomaly created by the polarizing nature of Hillary Clinton and the widespread opposition to President Bush, or whether what we saw was the start of something truly historic.

I'll wager you this, though -- if Barack Obama goes on to win, students in classrooms around this country will be listening to that victory speech 20 years from now. It was beyond brilliant.

And it's not just that Obama won, it's how he did it. A huge turnout of voters, first-time caucus-goers, the overwhelming win among young people and Independents. He even beat Hillary Clinton among women.

This all suggests that something very important may have happened last night in Iowa. Americans may have made the first tiny steps on the road to taking the country back.

It's a long way from over, but if Barack Obama can come out in New Hampshire with two wins under his belt, head into South Carolina on January 26th, where that state's huge black population will have its first real chance to vote for one of their own, well, watch out.

Here's the question: What does Barack Obama's huge win in the Iowa caucuses mean?

You can go to cnn.com/caffertyfile, post a comment on my new blog.

We put these questions up a couple of hours ago before the show goes on the air. We get so much negative e-mail about government and politicians and Congress and Washington.

The e-mails coming in response to this Barack Obama phenomenon are full of hope and positive vibrations. It's something I haven't seen in a political story in a very, very long time. It's very interesting.

BLITZER: Well, it's great, because it's very encouraging to hear that kind of stuff, because as you know, we get a ton of criticism.

CAFFERTY: Oh, yes. And it's just nice to hear people have some hope and feel good about something for a change when it comes to government.

BLITZER: We're going to hear from him in the next hour, Barack Obama, as well.

Thanks very much for that, Jack.

John Edwards put a lot of basket -- a lot of his eggs in the basket of Iowa. So why did Barack Obama beat him? Coming up, I'll ask the former senator about his loss and what he has to offer New Hampshire voters.

Plus, after Iowa, how tough will Hillary Clinton be with her rivals in New Hampshire? Donna Brazile and Leslie Sanchez, they're standing by for our "Strategy Session."

And what drove Iowans to put Obama and Mike Huckabee on top? We're poring over the entrance polls from last night. We're looking for themes that may or may not play in New Hampshire.

We're at the CNN Election Center, and you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Heading into the New Hampshire primary next week, Barack Obama's riding high from the Iowa win. Hillary Clinton has some problems. John Edwards may be caught in the middle.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now from Nashua, New Hampshire, former Democratic senator John Edwards. He's a Democratic presidential candidate.

Thanks, Senator, for coming in.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: Thanks for having me, Wolf.

BLITZER: I'm trying to help people in New Hampshire have a better understanding where you stand as opposed to your two main rivals right now, Hillary Clinton and Barack Obama, on the three big issues that Democrats in Iowa said were atop their agenda, the first issue being the economy.

If there's one single difference between you and Hillary Clinton and Barack Obama on the economy, what would that be?

EDWARDS: Well, I propose, Wolf, a whole series of tax cuts for the middle class, a different trade policy for America, changes in trade deals like NAFTA and CAFTA that have cost America so many jobs. I did come out first and led the way with a universal health care plan, and I proposed very aggressive substantive policies on predatory lending and payday lending. I was the first and I think the only -- I'm not 100 percent sure of that, but I think the only one who's proposed a national predatory lending law.

So I think there are substantive difference between us. But I would just tack on to that, Wolf, I think the big differences are on change versus status quo. Because in my mind, Senator Clinton in many ways represents the status quo, and Senator Barack Obama and I both represent change, but we have a different view of how to bring about that change.

BLITZER: All right.

The second issue that they identified, Iowa Democrats, was the war in Iraq. Is there any significant difference right now between you and your two main rivals when it comes to ending the war in Iraq? All of you want to end it.

EDWARDS: Yes, I think there are differences. It's a little hard for me to tell sometimes exactly what Senator Clinton is saying.

I have -- I have proposed we have -- I will have all combat troops out of Iraq in the first year of my presidency in combat missions, and have no permanent military bases. At least in the past few months, I've heard her suggest keeping combat troops there for some longer period of time and continuing combat missions. And if that's what she's still saying, then we have a real difference on that front.

BLITZER: Is there any difference on the issue of universal health care that you would underline between where you stand and they stand?

EDWARDS: Yes. There's a big difference between Senator Obama and myself.

My plan is actually universal, which means everyone is required by law to have health care coverage. Senator Obama's plan could leave as many as 15 million Americans uncovered, and it's not universal. And there are also differences with Senator Clinton, primarily that I've never taken money from a Washington lobbyist or special interest PACs, because I think you have to be willing to take on drug companies and insurance companies to bring about universal health care, and she's in a different place.

BLITZER: So you don't think she could really deliver, given the relationship she's had with those PACs?

EDWARDS: Well, I'll let her argue for yourself, but I don't think you can take money from these special interest PACs and Washington lobbyists for drug companies and insurance companies and sit at a table, Wolf, and make deals with them. I don't think that works. If it worked, we would have had universal health care a decade ago.

BLITZER: Why do you think Barack Obama won the Iowa caucuses?

EDWARDS: You know, he spent almost $10 million advertising on television, far more than I spent. Senator Clinton also spent far more than I spent. And I think what happened was that Iowa -- I was the among the three of us, I was the little guy.

I was the guy who didn't spend as much on television, I did just grassroots, town hall meeting kind of campaigning. And I think the fact that I finished ahead of Senator Clinton and her pretty strong political machine and all her money, that I finished a strong second to Senator Obama, what it means is that this message of standing up for jobs and the middle class and fighting for change, I think that the voters there responded to it, and I think they will in New Hampshire, too.

BLITZER: It was less than half of 1 percent that separated you and Senator Clinton, which is obviously not a lot, but you're suggest -- and correct me if I'm wrong -- that this is now emerging as a two- man race between you and Obama.

You think Hillary Clinton is no longer all that formidable a candidate?

EDWARDS: Well, I don't underestimate anybody, Wolf, and that would certainly include Senator Clinton. But I think it was a blow for her, and I think what happened was, the Iowa caucus-goers just said we want change, they rejected status quo, and I think in many ways Senator Clinton represents status quo. And now they're going to have to choose in New Hampshire and subsequent states between myself and Senator Obama about who's best at bringing about that change, and we have different approaches. I think you have to fight for change and fight for -- fight against these entrenched interests that are standing between America and what it needs.

BLITZER: And you don't think he can do that?

EDWARDS: I think he has a more philosophical, more academic approach to it than I do. I think we have got a battle on our hands, and that battle's not with politicians, but it's with, you know, the trenched money interests, oil companies, drug companies, insurance companies, that are preventing the change.

BLITZER: I know you're looking forward to going to not only New Hampshire, but to South Carolina, which is the state where you were born. But how well do you have to do in New Hampshire first before you move on to South Carolina next Tuesday?

EDWARDS: Well, I think has a practical matter, Wolf, there are three of us who are relatively strong here. Both of them have enormous amounts of money and they have poured enormous amounts of money in here. And I think if I do reasonably well and I'm competitive, it will be surprising to people.

I think oddly enough, outside the small world of the media, most of America was shocked that I beat Senator Clinton last night. They had no idea, because they thought that it was Senator Clinton, Senator Obama. They had no notion that somebody like John Edwards could be ahead of Senator Clinton in Iowa.

And so I think anything I do here could surprise.

BLITZER: Well, we'll see how you do, Senator Edwards.

Thanks very much for joining us, and good luck.

EDWARDS: Thank you, Wolf, very much.

(END VIDEOTAPE)

BLITZER: The nation's economy getting to be a nail-biter. President Bush meeting with his experts to try to come up with a plan of attack. We're going to find out what they actually came up with.

And the Iraq conflict, it's still very much a key election year issue. Should the United States stay or should it go?

We'll take a closer look at the very different positions of the Iowa front-runners, Obama and Huckabee.

We'll be right back.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: His campaign spent millions and millions of dollars and many months in Iowa, counting on a strong win. But now fresh off a second-place finish, Republican Mitt Romney turns his full attention to New Hampshire. How badly does he need a victory there? And can he pull it off?

Barack Obama and Mike Huckabee head into New Hampshire on a wave of momentum. We'll take a closer look at what might have given them the edge in Iowa.

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

(COMMERCIAL BREAK)

BLITZER: Happening now, as many as three American Airlines jets will be equipped with laser systems to ward off terror attacks from shoulder-fired missiles. It will be the first time the devices will be tested on commercial airliners carrying passengers in this country.

We're going to take a closer look at how great the threat really is. That's coming up.

Ron Paul on the outside. He's raised a ton of cash, got double- digit support in Iowa last night, and is polling very well in New Hampshire. So why is he being left out of a Republican forum?

We're watching this story.

And a man survives a fall from the 47th floor of a skyscraper. How is that possible? You fall 47 floors. We're going to take a closer look at that.

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

Mike Huckabee, fresh from a big win in Iowa last night, he's meeting with his supporters in New Hampshire, and he's entertaining them with a bit of bass guitar. Let's listen in a little bit.

(MUSIC)

BLITZER: There he is, Mike Huckabee playing the bass guitar. We're going to watch this. We're going to listen to what he's saying. We will go back there to New Hampshire -- a big win for Mike Huckabee last night. Let's see what he does in New Hampshire on Tuesday.

Meanwhile, a very different story for Mitt Romney. He says it's a different presidential race, though, in New Hampshire, different than what occurred in Iowa. After his loss to Huckabee in the caucuses last night, Romney now has John McCain in his sights as he fights to be seen as a front-runner once again.

Let's turn to CNN's Mary Snow. She's covering the campaign for us in New Hampshire.

Mary, I guess it's a tough day for Romney, on the heels of a setback last night.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, not to hear from Mitt Romney. He's actually touting his second-place finish. But Iowa/New Hampshire were supposed to be a one-two punch for this one-time front- runner. And now there's added pressure on him here in New Hampshire.

(BEGIN VIDEOTAPE)

SNOW (voice-over): It was not the trip to New Hampshire the Romney camp envisioned.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: We came back with a silver medal. We wanted a gold. We got the silver. But, in New Hampshire, we're getting the gold.

(CHEERING AND APPLAUSE)

SNOW: Mitt Romney is putting a silver lining on Mike Huckabee's upset victory in Iowa, crediting Huckabee's win to his appeal to evangelicals. But, after Romney spent more time, energy and money than his Republican rivals in both Iowa and New Hampshire, the pressure is on for a victory.

DANTE SCALA, UNIVERSITY OF NEW HAMPSHIRE: The Romney campaign was built on winning Iowa, winning New Hampshire, becoming the consensus front-runner, and gliding to the nomination. Now he's lost Iowa and he's in danger of losing New Hampshire. So, those two pillars of his strategy could be wiped out by next Tuesday night.

SNOW: One part of that strategy Romney is not changing, his aggressive attacks. He is taking aim at John McCain and trying to portray himself as a Washington outsider.

ROMNEY: There's no way that Senator McCain is going to be able to come to New Hampshire and say he's the candidate that represents change, that he will change Washington. He is Washington.

SNOW: McCain has been fighting back hard against Romney, painting his attacks as desperate. Romney plans to use one weapon where he does have an advantage, his personal fortune.

ROMNEY: We intend to use our financial resources raised from our contributors and myself to make that sure we have a campaign that goes the distance.

(END VIDEOTAPE)

SNOW: And, in terms of money, Romney has already spent at least $17 million of his own money alone. And, on ads here in New Hampshire, just as in Iowa, he spent about $7 million in each state -- Wolf.

BLITZER: All right, thanks, Mary -- Mary Snow in New Hampshire.

You can bet all the candidates will be looking closely at last night's numbers, trying to figure out which issues were important to which voters and why.

Let's bring in our senior political analyst, Bill Schneider. He's doing exactly that, poring over the detailed entrance polls -- entrance polls -- numbers that we got last night, because we can learn a lot about Republican and Democratic voters.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: That's right.

And what we find is, in the Barack Obama and Mike Huckabee victories, some forces were very different, but some were quite similar.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): The force driving Barack Obama's victory? Youth. The younger the age group, the better Obama did. Going forward into New Hampshire, that could be an advantage for Obama. Young voters tend to be independents. Obama easily won independent voters in Iowa. In the New Hampshire Democratic primary, independents are likely to be an even larger constituency.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: Thank you.

SCHNEIDER: The force driving the Mike Huckabee victory? Religion. Sixty percent of the Iowa Republican caucus-goers were born-again or evangelical Christians. And they voted by better than 2-1 for Huckabee over Mitt Romney.

But there are not nearly as many evangelical voters in New Hampshire. Among non-evangelical Republicans in Iowa, Huckabee got only 14 percent of the vote. In order to survive, Huckabee has to expand his support beyond his religious base.

Obama's a liberal Democrat. Huckabee is a conservative Republican, but their victories send a similar message: change.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: In four days' time, you have the chance to change America. In four days, you can do what the cynics told us we could not do.

HUCKABEE: Americans are clearly saying: We want change. We want to give new people a chance to lead this country.

SCHNEIDER: Most Iowa Democrats say they wanted change, and they voted for Obama by more than 2-1 over Hillary Clinton, the candidate of the Democratic Party establishment.

Huckabee is also running as the voice of the people against the Washington Republican establishment. But the Republican establishment hasn't coalesced around any single candidate yet. Huckabee and Obama also share a similar style. They don't talk like typical politicians, cautious and calculating. They are both inspirational figures.

Huckabee carried Republican caucus-goers looking for a candidate who says what he believes. Romney came in fourth in that group.

(END VIDEOTAPE)

SCHNEIDER: Huckabee and Obama both share a quality of authenticity, which may be what voters who are sick to death of politicians this year may be looking for.

BLITZER: And we will see what they're looking for in New Hampshire in four days.

Bill, thank you very much.

SCHNEIDER: Twenty-two percent of Iowa caucus-goers were under 30 years old, under 30 years old. That's up from only 5 percent -- it's up 5 percent from 2004.

And this may have had something to do with Barack Obama, his victory. He's been pushing hard to attract that youth vote online.

Let's bring in our Internet reporter, Abbi Tatton.

How is Obama doing this, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, more than half of those young people that caucused yesterday caucused for Barack Obama.

And if you follow his online youth support, you know that they really like him. On his Web page here, he has groups and tools to attract young people. There's also a lot of support on social networking sites, like the wildly popular Facebook, where Obama's support crushes that of other candidates.

But what we didn't know until last night is whether this online frenzy would actually turn out. There were some good early indications for Barack Obama. Take a look at this video from last February. This is a YouTube video of a rally at George Mason University organized entirely through Facebook. And 3,000 people showed up to that one.

Now the Barack Obama campaign is trying to keep shoring up this online -- this youth support. Last night, the campaign actually posted a message to Facebook before Barack Obama even went out to speak to his supporters at campaign headquarters.

Last November, two advisers to Hillary Clinton were quoted as dismissing Barack Obama's supporters as looking like Facebook. In terms of Iowa last night, that wasn't such a bad thing -- Wolf.

BLITZER: Abbi, thanks very much -- Abbi Tatton looking at that story.

Both of last night's winners in Iowa were boosted by voters who say the war in Iraq is at the top of their agenda. But Barack Obama and Mike Huckabee have very different positions on the war. We're going to break it down for you.

Also, her husband was famous for his resiliency. So, after her disappointing third-place showing in Iowa, can Hillary Clinton be the new comeback kid? We will discuss that in our "Strategy Session."

And there was some speculation he might drop out of the race if he didn't finish at least third in Iowa, so what is Fred Thompson saying now? He did finish third in Iowa. He's standing by. He's joining us in the next hour.

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

(COMMERCIAL BREAK)

BLITZER: Polls of caucus-goers in Iowa last night reveal that the war in Iraq remains a very important issue.

For the Democrats, the war actually tied with the economy as the top issue on the minds of voters. Take a look at these numbers. For the Republicans, it was a bit lower on the list of priorities, but it was still important, a very important issue, indeed.

The polls show that both of the big winners in Iowa, Barack Obama and Mike Huckabee, beat their opponents among voters who say the war was their top priority. But, while they have that in common, Obama and Huckabee have very different positions on the war right now.

Let's turn to our senior Pentagon correspondent, Jamie McIntyre. He is breaking down the numbers for us. He is breaking down the positions of these front-runners out of Iowa for us -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Wolf, you know, a lot of people complain there's not a dime's bit of difference between some politicians, but, when it comes to the war in Iraq, that's certainly not the case for Barack Obama and Mike Huckabee.

(BEGIN VIDEOTAPE)

MCINTYRE (voice-over): When it comes to Iraq, there is a clear difference between the newly emerged front-runners. A vote for Senator Barack Obama would be a vote for a phased withdrawal, a gradual pullout of a brigade or two a month over 16 months.

OBAMA: And I will be a president who finally brings an end to this war in Iraq and brings our troops home.

(CHEERING AND APPLAUSE)

MCINTYRE: On the other hand, a vote for Mike Huckabee, the Republican Iowa caucus winner, would be a vote for General Petraeus' strategy of cautiously reducing troop levels only as security improves.

On his official Web site, Huckabee spells it out: "Withdrawal would have serious strategic consequences for us and horrific humanitarian consequences for the Iraqis."

Huckabee and Obama also were on opposite sides of the surge. Huckabee supported the strategy from the start.

HUCKABEE: The Republicans want to win the war in Iraq. The Democrats just want to get out. That's the big difference on Iraq.

MCINTYRE: While Obama denounced the surge strategy on the Senate floor as soon as it was announced.

OBAMA: Too many lives have been lost, too many billions have been spent, for us to trust the president on another tired and failed policy.

MCINTYRE: There is another clear split between the two Iowa winners. Barack Obama opposed the initial invasion of Iraq in 2003, while Mike Huckabee was generally supportive.

(END VIDEOTAPE)

MCINTYRE: And pundits seem to agree, Wolf, that the message out of the Iowa caucuses is that Americans want change.

And Barack Obama clearly offers more change than Mike Huckabee. But the question is, with Iraq, after five years of brutal fighting, finally showing some signs of stabilizing, how much change will actually be for the better?

And, Wolf, that will be for the voters to decide.

BLITZER: And two clearly different positions.

Jamie, thanks very much for spelling that out.

In our "Strategy Session": Does Hillary Clinton have a taste of sour grapes in her mouth from last night's caucuses?

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: Iowa does not have the best track record in determining who the parties nominate. Everybody knows that.

(END VIDEO CLIP)

BLITZER: Has her defeat in Iowa left her no choice but to get tough on Obama?

And, on the Republican side, is New Hampshire's -- in New Hampshire, Mitt Romney, he was hoping New Hampshire would be his firewall. How will his brand of conservatism be greeted by the Granite State voters?

Donna Brazile and Leslie Sanchez, they are standing by -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Through much of the fall, the talk around the Hillary Clinton campaign was all about her so-called air of inevitability. But, after her third-place finish in Iowa last night, the fate of the campaign may hinge on what happens in New Hampshire next Tuesday.

Joining us now in our "Strategy Session," Democratic strategist Donna Brazile and Republican strategist Leslie Sanchez. If you were advising Hillary Clinton -- I know you're not, Donna -- what would you say? How negative should she go on Barack Obama in New Hampshire over these next four days?

DONNA BRAZILE, CNN POLITICAL ANALYST: Senator Clinton is in a real box, that, on the one hand, she needs to slow down Senator Obama's momentum, but, on the other hand, Senator Clinton also must inspire people to come out and support her campaign.

Look, she may have to raise the kind of questions that Walter Mondale raised back in 1984 about Gary Hart: Who is this guy? What's his record? What kind of change is he talking about?

Either way, I think Senator Clinton is well positioned, still, to -- to do very well in New Hampshire. Everyone knows that the Clintons are well entrenched in that state. She has been in that state a lot. She has spent a lot of money. I don't rule her out, because she's -- she remains the national front-runner and she has a tremendous infrastructure around her.

BLITZER: You know, Leslie...

LESLIE SANCHEZ, REPUBLICAN STRATEGIST: Well...

(LAUGHTER)

BLITZER: ... I want to pick your brain on the Republican side, because it was a big win for Huckabee in Iowa, but the Republican voters in Iowa are different than the Republican voters in New Hampshire right now.

How -- what does -- what does Mitt Romney, from the neighboring state of Massachusetts, need to do to beat John McCain, who's arguably his main threat in New Hampshire right now? How -- how negative does he have to go on John McCain?

SANCHEZ: Well, you know, I -- the big thing to think about is Romney has had a two-state strategy. It was very much Iowa, New Hampshire.

I wouldn't say -- I heard some of your -- you guys talking about a firewall. It's not New Hampshire. I would say it's Michigan. I think even -- he's even going to do well tomorrow in Wyoming with the GOP caucus.

Romney is running a very strong campaign. He's talking about his credentials. He is a neighboring governor -- or was a neighboring governor. And those are all very positives.

The thing about John McCain is, he's the maverick, but he's a tested maverick. And he's -- so, he can be pro-change, but also somebody who has experience.

BLITZER: One thing that helped him back in 2000, Donna, John McCain, in New Hampshire -- and he won New Hampshire in 2000 -- was the -- were the independents, who can vote in either the Democratic or the Republican primaries in New Hampshire.

But, this time, he's going to have competition, McCain, from Barack Obama, I suspect from Ron Paul, Donna. They're going to appeal to a lot of independents, among others -- maybe John Edwards. How much of a setback, potentially, could that be for McCain?

BRAZILE: Look, I suspect that John McCain today is trying to solidify the support of independents. Ron Paul -- you're right -- is very much alive in New Hampshire.

Everyone knows that Senator Obama can inspire new people. He can inspire independents. And, you know, New Hampshire is one of those states that has same-day registration. People who are not registered can show up on Election Day and register right there at the polls. So, this is going to be an exciting race.

(CROSSTALK)

BRAZILE: If you thought the turnout was big last night, wait until next Tuesday. Obama will bring them out.

SANCHEZ: You know, there's a distinction with New Hampshire when you're talking about those independent voters when I'm talking about these -- this appeal in this election cycle for pro-change candidates and mavericks, so you would say.

But you can look at Obama and say, he's a maverick, he's pro- change, but he's untested. That's going to be the distinction between a John McCain and a Senator Obama.

And I have to address the point about Hillary. I think, in this case, the woman who developed the politics of personal destruction has to take the high road and look at the long haul. This compressed schedule makes it very hard to go negative and basically destroy the candidacies of herself and Obama.

BRAZILE: But, Leslie, you don't know New Hampshire voters.

SANCHEZ: Oh, but, Donna...

BRAZILE: They can stomach some of the negative kind of campaigning that the Iowans pretty much reject.

They want a candidate that knows how to mix it up. And Senator Clinton understands that. And she will have to go out there and slow down his momentum, without hurting her own chances of inspiring people to vote.

SANCHEZ: You know, the one thing I would say is, I would argue that they probably have a post-New Hampshire strategy that has -- other than having third-party candidates drop these bombs on Obama, basically, which is what she's done for the last six months, I think it's basically trying to figure out how to reconfigure that.

If she loses New Hampshire, she is in deep trouble. BLITZER: What about John Edwards, Donna? How important, how critical is New Hampshire for him right now? Because he does have a base of support in South Carolina, where he was born.

BRAZILE: It's very important for John Edwards.

Many people thought that Iowa was a must win, but, because of the closeness of the -- the second- and third-place finishes, he lives another day for another fight. Look, he needs to tone his rhetoric down just a little bit, talk about being on the side of the working people, but not be as angry as he was in Iowa.

I still believe that this is a -- a race that -- that's going to be unpredictable between now and February 5. And I won't count out John Edwards. The only person I will count out, because I believe they haven't announced their departure, is Mike Gravel and some of the others.

(LAUGHTER)

BRAZILE: This is really a race that will come down to Obama, Clinton and Edwards.

BLITZER: All right.

SANCHEZ: Well, surprisingly, I disagree on John Edwards. I think he's a one-trick pony, and that trick did not work in Iowa.

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

(LAUGHTER)

BLITZER: Donna Brazile, Leslie Sanchez, thanks very much.

Been there, done that. President Bush can relate to what the candidates went through last night in Iowa. We're going to get his take on the outcome.

Barack Obama, of course, was the big winner in Iowa on the Democratic side. Can he keep the momentum going? Our contributor Roland Martin goes straight to the source. He has an exclusive conversation with the new Democratic front-runner. That's coming up in our next hour.

And we're watching a lot of other news as well, including this: cloned cattle.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On our Political Ticker right now: Even President Bush was cut up in the excitement of the Iowa caucuses and the upset victories -- I think we could call those upset victories -- by Barack Obama and Mike Huckabee -- maybe not. Mr. Bush had planned to go to sleep at his usual early bedtime, but the White House says he actually stayed up later than expected to watch the results from the caucuses. President Bush says he will not endorse a contained this early in the race, although he will endorse a Republican at some point.

The disgraced political donor Norman Hsu was sentenced today to three years in prison. The judge in California rejected Hsu's bid to throw out his fraud conviction from 1992. Back then, Hsu fled before he could be sentenced. His fugitive status came to light last summer, casting a cloud over top Democrats, including Hillary Clinton and Barack Obama. Both later gave away funds raised by Hsu.

Remember, for the latest political any time, you can always check out our Political Ticker at CNNPolitics.com.

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

CAFFERTY: You said President Bush will eventually endorse a Republican.

BLITZER: Yes, he will.

CAFFERTY: Maybe they don't want his endorsement.

BLITZER: He will endorse whoever the Republican...

(CROSSTALK)

CAFFERTY: Whether they want it or not, right?

BLITZER: Yes. Yes.

(LAUGHTER)

CAFFERTY: You're my guy, whether you like it or not.

BLITZER: Yes. Yes.

CAFFERTY: All right.

The question this hour is: What does Barack Obama's huge win in the Iowa caucuses mean?

E. writes: "His speech, amazingly inspirational. I was an Obama supporter before last night, but wow. I have watched the speech three times. It gets better each time. How nice it would be, after seven years of illiterate mumblings and ignorant posturing, to have an eloquent, credible speaker. I listen to him and I feel the same way I do when I listen to the "I have a dream speech," moved, proud and inspired. Oh, and in case you're interested, I am a white Jewish girl born in Queens, New York."

Stefanie writes: "What it means for me is that, for the first time in my voting life, I am not voting for good enough or not the other guy. It means that I awakened this morning in a nation in which the dream may not be deferred all that much longer. It means a good man with a dream and plans to achieve the dream can be recognized as a leader. And it means that more people may be on the verge of making their voices heard."

Chris writes: "Obama's win in Iowa meant nothing to me. Sure, he has the ability to make great speeches, but look at his subpar performances in the debates. Despite what he says, I think he needs more experience. Let him sit in the Senate for a few more terms. Then maybe I will vote for him. For now, give me Hillary."

Brian writes: "In one word, everything. Obama emerges as the true agent of change. It makes New Hampshire an actual fight, and it turns the South Carolina primary into the true bellwether of this primary season. It means the first black president. It means everything."

Jim in Seguin, Texas: "What it means is, when the voters are hands-on in an election, the results are vastly different than when the corporations are in charge of our electronic voting machines, as they were in the 2004 election. And it's obvious the voters want change. To get change, though, we're going to have to fight for it, rather than just sit back and hope for the best, because that bus ain't ever going to get here."

And Jim write: "It means I smiled for the first time in seven years."

Pretty inspirational stuff.

BLITZER: Yes. And our Roland Martin just spoke with him just a little while ago. That interview is going to be coming up this hour -- right here in THE SITUATION ROOM.

Jack, thanks very much.

Happening now: The jobless rate hits a two-year high, as stunning new employment numbers raise fears of a recession. Wall Street feels the pain. Should you, though, be worried?

Meat from cloned cows may soon be on your dinner table. The feds may be about to declare it safe, but have they tested it enough to be sure about the health risks?

And Ron Paul elbowing his way back into the spotlight with a double-digit showing in Iowa last night and high hopes for New Hampshire.

I'm Wolf Blitzer at CNN Election Center.

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