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THE SITUATION ROOM
Interview With Presidential Candidate John Edwards; Iowa Winners Look For Repeat in New Hampshire
Aired January 4, 2008 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR: Jason in Washington writes: "Huckabee just finished -- just had his first and last win. Giuliani's Iowa results signed his ticket out of front-runner status. McCain and Thompson are in a battle for mediocrity. Though enthusiastic about none of the candidates, I suppose in the end the GOP will stomach a Mitt Romney nomination, though I'm still crossing my fingers for Ron Paul."
Robert writes: "I think the fight for the Republican nominee is going to be nothing short of a war. Romney has spent millions. He will try to destroy anyone who gets in his way. John McCain isn't going to go quietly into the night. He is battle-tested. He has the organization to last. I look forward to a mud-slinging, name-calling, swift-boating Republican primary battle. I can't wait."
And Shelby says this: "Take the fenders from Giuliani, the grill from Romney, the engine from McCain and the interior from Huckabee, and you have one Republican contender. Otherwise, they're all just fragments in the pit for repairs."
WOLF BLITZER, CNN ANCHOR: Jack, thanks very much.
Happening now: the Iowa winners trying for a repeat in New Hampshire, but Barack Obama and Mike Huckabee face some tough new challenges in the next big presidential contest. We're following the mad dash to Tuesday's primary.
Plus, Hillary Clinton's comeback fight, the stakes are high after her third-place showing in Iowa. I will ask her rival John Edwards if Clinton still is a tough opponent -- and the best political team on television standing by to weight in.
And John McCain looks for a new shot of New Hampshire magic. This hour, will his recent rebound be sealed or will it fall flat next week?
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
For better or worse, many of the presidential candidates came out of Iowa with a fresh take on their campaigns and on their opponents, but perhaps none more so than the Democratic winner, Barack Obama. He heads into next week's New Hampshire primary with a powerful new shot of momentum, but will he get a big enough bounce to beat Hillary Clinton a second time?
Let's begin our coverage with CNN's Jessica Yellin -- Jessica JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Wolf, his message today is that he will change Washington and he's electable. Barack Obama told audiences in New Hampshire that his victory in Iowa proves that he is no gamble and he says if he can win here in New Hampshire, he believes he's unstoppable.
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 will reach out to undecideds and Independents and some Republicans too. And we are going to pull together this country.
YELLIN: Now, all this optimism comes with a heavy dose of caution from Obama aides. They say they still consider Senator Clinton a formidable opponent. They say they expect her to go negative fast and insist they will hit back. But going negative could be political quicksand for Senator Obama. He has promised to run a positive campaign and voters might not want to hear a change in tone now -- Wolf.
BLITZER: All right, Jessica, thank you very much.
Let's get to the Republican now who is feeling like a rock star heading into the New Hampshire primary. Of course, that would be the Iowa winner, Mike Huckabee.
Listen to this. There he is playing the bass guitar. The guitar-playing former Arkansas governor handily defeated his closest rival in Iowa, Mitt Romney, despite being considerably outspent.
(BEGIN VIDEO CLIP)
MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: Last night when we left Iowa, I left very grateful for the wonderful people of that state that proved that money and politics isn't as important as message in politics.
And it was a great statement by those folks last night. They proved that they were not for sale. They proved they were not even for rent. They proved that they wanted a campaign that was based upon how candidates stood on the issues, not what candidates could find wrong with someone else, even if they had to make it up.
I think it's a great opportunity for us to take that very idea right here in New Hampshire over these next five days and to prove it that, in New Hampshire, it's not just about how much money a candidate has raised; it's what kind of future and ideas are going to be raised for the next generation.
And, if any of us have a great responsibility when we run for office, it's not so much to say, hey, look over there, and let me tell you what's wrong with the guy running against me.
It's to, first of all, say, there are some things still right with this nation, but there are some things we could do better. And I'm a person who loves this country because I understand how good it is, but I'm running for office because I know it could be a lot better. I know we could do better in some areas. I know we could do better in protecting this country.
(END VIDEO CLIP)
BLITZER: Let's bring in our Dana Bash. She is covering the Mike Huckabee campaign in New Hampshire right now.
These two states, Iowa and New Hampshire, Dana, they're very different, Republicans in both states very different. Is that affecting Huckabee's message?
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Absolutely.
It is actually remarkable, and it's not so much what we heard from Mike Huckabee today, Wolf. It's what we didn't hear. His biggest applause lines back in Iowa were when he talked about the fact that he has been against abortion, pro-life forever, and that that is not because of anything a pollster told him.
He did not even mention the issue of abortion today. He did not even mention another issue that got him applause lines in Iowa, and that is same-sex marriage, no talk of God at all.
And there is a very real reason for that, just like you mentioned. It is because the evangelical base that propelled his victory in Iowa, that simply doesn't exist here. So, he changed it not only in taking that out, but he really played up things that do, do well among Republicans here in New Hampshire, talked about libertarian messages like ending government-run health care and talked about lowering taxes. Those are things that really play well in this "Live free or die" state -- Wolf.
BLITZER: Dana, thanks very much -- Dana Bash reporting.
Mike Huckabee scored the win, but there's another Republican who's feeling pretty good about the way the race is shaping up. John McCain didn't spend any money in Iowa, nothing on television advertising, yet, he came only a few hundred votes away from edging out Fred Thompson for third place.
Now, the race moves to New Hampshire, where McCain has spent a lot more money, a lot more time, and has a strong base of support.
Our chief national correspondent, John King, is in Manchester watching this part of the story.
So, what is the mood like right now in the McCain camp, John?
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It is remarkable, Wolf, how different John McCain is now as compared to say even just a few weeks ago.
You mentioned that narrow fourth-place finish in Iowa. He's in such a good mood today, he was joking, saying he was going to call up Senator Fred Thompson and demand a recount out in Iowa. The senator's sense of humor is back, Wolf, because he thinks, even though he was fourth in Iowa, those results in that state opened the door for a dramatic comeback.
KING (voice-over): John McCain is feisty, in high spirits, banking on New Hampshire's embrace. Change is the campaign catchphrase, all the more so after Iowa. But the 71-year-old senator insists he alone has shown the guts and the skills to deliver it.
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: My friends, I'm most proud of the change that I brought about in Iraq that saved American lives.
KING: Iowa's winners talked often of ending Washington's gridlock. Again, McCain says he's ahead of the curve.
MCCAIN: We will work together and we will get things done for America. I know how to get things done for America.
KING: Things are looking good here, and McCain sees a comeback path if he can win New Hampshire Tuesday. But the climate is turning tougher. Former Massachusetts Governor Mitt Romney placed second in Iowa and can ill afford to lose again.
(on camera): And his message on the flight here, his message this morning was: John McCain is not change. John McCain is yesterday. He's part of Washington. He's part of the problem on immigration, part of the problem on taxes. He is an insider. John McCain is not change.
MCCAIN: Well, first of all, all of those charges are inaccurate, just like the charges he made against Governor Huckabee, and lost to him out in Iowa.
KING (voice-over): If necessary, McCain says he is prepared to air his differences with Huckabee on national security and other issues, but:
MCCAIN: But it will be a respectful debate, just as he and I had a couple of times in the past. I think that is what Americans want. He is a likable, decent human being. And I think Americans are attracted to that, that he has got some genuine authenticity about him.
KING: The McCain team says there's still much work to do here, Wolf. They can't count on the independents as much as they could eight years ago.
But the McCain camp thinks, if they can beat Romney here, and then follow that up by defeating Romney again out in Michigan, the state where he was born and where George Romney was the governor, they believe they can knock Romney from the race and head south into a one- on-one confrontation with Mike Huckabee.
And I asked Senator McCain today, Wolf, what would it be like to run against Barack Obama, instead of Hillary Clinton?
He said, "I need to worry about the primary campaign first," but they're both, in his view -- quote -- "left-of-center liberals" -- Wolf.
BLITZER: One step at a time. We will see what happens.
All right, John, thanks very much.
Jack Cafferty is here. He's got "The Cafferty File."
JACK CAFFERTY, CNN ANCHOR: I do. Enough politics.
Here's something else to think about.
There's a high school in New Jersey getting very serious about teenage drinking. They are making Breathalyzer tests mandatory at school dances and other social events.
According to a local TV report, the school's superintendent says that some students' behavior at that high school left them with no choice. School officials say the test, similar to the one that takes place during a traffic stop that is administered by the police sends a clear message to the kids about their zero-tolerance policy when it comes to alcohol.
And it appears to be working. Students are passing the Breathalyzer tests, and other districts are now beginning to do the same thing. One Connecticut high school is even implementing such tests on a daily basis when students are suspected of drinking.
Now, critics of school Breathalyzer tests say that it violates students' rights, including the right to privacy. But the New Jersey school insists it's steering around that privacy issue by making the students sign a contract that says they have to take a Breathalyzer test if they attend school social events.
So, here's the question: Do you approve of mandatory Breathalyzer tests for high school students?
Go to CNN.com/caffertyfile. You can post your comment there on my blog.
Got a lot of mail today. There's a lot of interest in this election.
BLITZER: Good. Jack, stand by. We have got you coming back in a few moments with the best political team on television.
John Edwards says voters across the country made a mistake if they counted him out.
(BEGIN VIDEO CLIP)
JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: I think, oddly enough, outside the small world of the media, most of America was shocked that I beat Senator Clinton.
(END VIDEO CLIP)
BLITZER: But can John Edwards build on his Iowa success? My one-on-one interview with him coming up.
Also, what went wrong for Hillary Clinton and what does she have to do now to try to make it right in New Hampshire?
And could U.S. passenger jets soon be targeted by terrorists' missiles? Federal authorities aren't waiting to find out. They're ready to start testing some defensive measures. We are going to show you what they are.
Stay with us. You're in THE SITUATION ROOM.
BLITZER: Heading into the New Hampshire primary next Tuesday, Barack Obama is riding from his Iowa win, Hillary Clinton is regrouping, and John Edwards seems to be caught in the middle.
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.
EDWARDS: 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 versus Hillary Clinton and Barack Obama on the economy what would that be?
EDWARDS: Well, I have proposed, 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 have 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 has proposed a national predatory lending law.
So I think there are substantive differences between us. But I would just tack onto that, Wolf, I think the big difference is change versus status quo. Because in my mind Senator Clinton, in many ways, represents the status quo. Senator Obama and I both represent change but we have a different view about 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 is a little hard for me to tell sometimes exactly what Senator Clinton is saying. I have proposed I will have all combat troops out of Iraq in the first year of my presidency, end combat missions and have no permanent military bases.
At least in the past few months, I have 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 is 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 have never taken money from Washington lobbyists 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 that relationship she's had with those PACs?
EDWARDS: Well, I will let her argue for herself 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 that what happened was that -- among the three of us, I was the little guy. I was the guy who didn't spend as much on television. I just did 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 one percent that separated you and Senator Clinton, which is obviously not a lot. But you're suggesting, 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 is best to bring about that change and we have different approaches.
I think you have to fight for change and 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 a battle on our hands and that battle is not with politicians but it's with the entrenched money interests, oil companies, drug companies, insurance companies that are preventing the change.
BLITZER: I know you're looking forward to going not only to 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 as 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 am 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 will see how you do, Senator Edwards. Thanks very much for joining us and good luck.
EDWARDS: Thank you, Wolf, very much. (END VIDEOTAPE)
BLITZER: California is being battered by one of the biggest storms of the season so far. We have I-Reports coming in about the storm. That's coming up.
Also, baseball scandal over performance-enhancing drugs moving into the halls of Congress. Some very big names are being asked to testify.
Stay with us. You're in THE SITUATION ROOM.
BLITZER: Barack Obama is appealing to voters' big hopes and their big dreams.
(BEGIN VIDEO CLIP)
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.
(END VIDEO CLIP)
BLITZER: Will that message help Obama go the distance? The best political team on television looking ahead to New Hampshire and beyond.
Plus: What went wrong for Hillary Clinton in Iowa? Can she make it right in New Hampshire, only four days away?
And, very soon, you could be flying in an airplane carrying some shocking cargo, technology designed to shoot down missiles.
Stay with us. You're in THE SITUATION ROOM.
BLITZER: Happening now: The race for the White House, some say it's turned upside down, longtime Democratic front-runner Hillary Clinton facing high stakes in New Hampshire for coming in a disappointing third in Iowa. What does she have to do now to try to turn her campaign around?
Also, Republican Iowa winner Mike Huckabee, how will the message that carried him to victory in the Hawkeye State play in the Granite State?
And, on the other end of the GOP race, Texas Congressman Ron Paul, who has raised millions and millions of dollars on the Internet, he spent heavily in Iowa on campaign ads, he came in fifth, just ahead of Rudy Giuliani, who spent nothing on ads in Iowa -- all of this coming up, plus the best political team on television. I'm Wolf Blitzer. You're in THE SITUATION ROOM.
Hillary Clinton is trying to pick herself up, dust herself off a bit before next Tuesday's vote in New Hampshire. John Edwards is trying his best to trip her up, once again. With our Political Ticker, CNN's Dan Lothian is joining us now from New Hampshire. Dan, neither of them can afford a misstep right now.
DAN LOTHIAN, CNN CORRESPONDENT: That's right. They really need to make some big moves here in New Hampshire. Senator Hillary Clinton still has a deep network of supporters. She's well-funded for the long fight, but she admits that she has a lot of work to do here in New Hampshire, even as Senator John Edwards tries to continue what he started in Iowa.
LOTHIAN (voice-over): The presidential election may be a marathon, but the race to the New Hampshire primary is an all-out sprint. Senator Hillary Clinton understands what is at stake as she tries to rebound from a disappointing third-place finish in Iowa.
SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: The short period of time, but it's enough time. I think that I have both the track record, the depths of support and the understanding about how you put together those states that add up to the electoral majority.
LOTHIAN: Clinton says she wants to reach out to as many voters as possible. Selling her message over tea and getting help from daughter, Chelsea, and the former president. Bill Clinton remains a popular figure in New Hampshire. Senator John Edwards wasting no time rallying his supporters shortly after arriving from Iowa.
JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: Good morning!
LOTHIAN: Beaming after narrowly edging out Clinton for second place, Edwards is pushing his populous themes, talked about being the candidate of change, telling his supporters he's the candidate for the people of New Hampshire.
EDWARDS: Is there not interested in the status quo, they're interested in change. They want to see a candidate of change. And so they now have two choices. In making that decision and this choice is somebody who will fight for the change that makes America what it is capable of being.
LOTHIAN: Senator Edwards is trying to make this a two-man race. Edwards and Obama, but responding to the results of Iowa from yesterday, today, Senator Clinton said that it would be a shame for Democrats to move quickly through this process without taking a good look at all the candidates. Wolf?
BLITZER: Joe Biden dropped out, Chris Dodd dropped out after Iowa. Bill Richardson is still in. But what are you hearing from his campaign?
LOTHIAN: Yes, we are confirming that he has now laid off some staffers. This is just yet another sign that the campaign is having trouble. But this is not unusual. Campaigns that still want to keep going, but have to trim their staffs in order to do that. Wolf?
BLITZER: Dan Lothian in New Hampshire for us. Dan, thanks very much.
So what happened to Hillary Clinton on the way from Iowa on the way to New Hampshire and how can she turn things around? Joining us now to talk about that and more, our senior analyst Jeff Toobin, our own Jack Cafferty and our senior political analyst Gloria Borger. They're all part of the best political team on television.
A funny thing happened to Hillary Clinton on the way from Iowa to New Hampshire, what happened?
JACK CAFFERTY, CNN CORRESPONDENT: Well, the debate was always about experience versus change, experience versus change. Iowa decided they like the idea of change, I guess. They also, I think, decided they liked Barack Obama. We have all known Hillary Clinton for a long time. We didn't know Barack Obama as well. As he spent time in the state, made his speeches, did his appearances, I think he won over a lot of people. He beat her every way you can beat somebody. He beat her with women. He beat her with young people. He beat her among Independents and had double the turnout at the Democratic caucuses than they did four years ago. So, she's got her work cut out for her, 44 percent of the voters in New Hampshire are Independents.
BLITZER: And that's a big factor, potentially good for Obama. Here's how she reacted today. Listen to this.
(BEGIN VIDEO CLIP)
CLINTON: I was never a front-runner of any significance in Iowa. I knew Iowa was always going to be hard for me. It has a lot of difficulties that I knew were there.
(END VIDEO CLIP)
BLITZER: What do you think about that line?
GLORIA BORGER, CNN SR. POLITICAL ANALYST: We were all just shaking our heads. You know, she's, she was the front-runner. They worked so hard to establish this aura of invincibility around Hillary Clinton and now they have to make this turn into making her the complete underdog.
And it's just one more morphing of Hillary Clinton. Remember we had her as the tough candidate and then became soft and gentle. It's one more morphing that's the problem.
JEFFREY TOOBIN, CNN SENIOR ANALYST: She has a very hard decision to make because there are negative attacks you can make on Barack Obama, which are good attacks. He's very liberal. He voted for gun control in the Iowa states, in the Illinois State Senate. He had one of the most liberal voting records in a fairly liberal state.
He changed his positions on some issues like health care. He used to be for single payer plan, now he's not. He had different views on Iraq at different times.
Is he a flip-flopper? Is he too far to the left? Those are arguments you are certainly going to hear if he's a general election nominee, why isn't she making them now?
BORGER: You know, the Clinton campaign people make a very good point. They say that we in the media have given Barack Obama bit of a free ride, compared to the way that we treat --
CAFFERTY: It's the media's fault.
BORGER: On the other hand, on the other hand, I think that if this pivots in five days to a negative campaign, they call it a contrasting campaign. Forget that. It's going to be a negative campaign. It's going to be an attack campaign. To make that pivot in five days to try to get to Obama is very risky.
TOOBIN: By the way, it's three and a half how. Three and a half days.
BORGER: Oh, sorry.
BLITZER: Is it smart for her to go on the offensive and step up the negativity?
TOOBIN: The thing about her is that she's trying to be something different every 48 hours and people recognize that and it's very symptomatic of what she has sort of been her entire professional life. And Bill Clinton was the kind of the guy who had this sort of self- effacing, good old boy, warm, charismatic, you're my friend kind of approach. So then she comes across as cold and distant. She's surrounded by this machine. I read one of the columns today said she has got to quit acting like a celebrity and start acting more like somebody who wants --
BLITZER: John Edwards says it's shaping up to be a battle between him and Obama right now. What do you think?
TOOBIN: I don't think that's true. I think John Edwards is just about out of money. I think his message is just not resonating beyond a certain really sort of hard-core union member dispossessed group in Iowa. I don't see where he's going to go from here.
BLITZER: What do you think?
BORGER: I agree with that. I think that's a really smart spin on his part, but that's what he's doing, he's spinning.
BLITZER: So we could see in the next few days, presumably, maybe this race for the Democratic nomination coming down to a two-person race.
BORGER: Right with each of them, Wolf, having $100 million to spend.
CAFFERTY: Or fewer.
TOOBIN: But wait a second, John Edwards is not dropping out. John Edwards has been running for president essentially for 10 years. This is his occupation. If he is a professional candidate and he has no job to go back to. So why not hope lightning strikes on February 5th?
CAFFERTY: If Barack Obama can do what he did in New Hampshire he did last night, the race is over.
BLITZER: You think?
TOOBIN: You have California, you've got New York. Are they just going to fall into line with Barack Obama?
CAFFERTY: This country is so fed up with traditional politics and government by the establishment folks of which Hillary Clinton is a charter member that if this breath of fresh air that is Barack Obama gets a little wind in his sails, look out.
BORGER: As you say, when they put him under the magnifying glass, as they're going to do.
CAFFERTY: I'm not sure that even matters that much.
TOOBIN: Oh, I don't know.
CAFFERTY: How much worse could it be?
BLITZER: Hold your thoughts, hold your fire because we've got more to talk about. What about the Republicans? We're going to take a closer look at them. Mike Huckabee, will his Iowa momentum carry into New Hampshire?
Plus John McCain, find out why New Hampshire is where he'll really try to get into the game. Stay with us. You're in THE SITUATION ROOM.
BLITZER: All eyes on New Hampshire in the aftermath of Iowa. We looked at the Democrats, let's look at the Republicans right now beginning with last night's winner Mike Huckabee.
Jack, big win for Mike Huckabee. But what plays with the Christian base in Iowa among Republican voters, may not necessarily play in New Hampshire.
CAFFERTY: Because they aren't up there. They don't have that many Evangelicals in New Hampshire. He's got a much tougher road to hoe going into New Hampshire than he did last night.
On the other hand, what he did last night I think created what one writer referred to as a potentially demolition derby among the Republicans. It opened up the race to more people, potentially, than had Romney won for example last night.
BLITZER: And he delivered what I thought was a very good speech afterwards, too.
BORGER: Both he and Obama gave great speeches last night and they're kind of on a different level from Hillary Clinton and John Edwards. It's like they're in a different universe. They're almost speaking above a level where Hillary Clinton is. It's to your better instincts.
TOOBIN: You know, the sort of Republican establishment has this relationship with the Evangelical community. They pat them on the head and they say, we want your votes and we'll give you, you know, attention, but don't you try to run the party. It's our party. It's the Bush's party. No. These people are a big part of the party and they dominate it in many respects on the issues. Why shouldn't they have a candidate?
CAFFERTY: And after Bush, it's all the Republicans have left in some places is the base.
BLITZER: McCain came in fourth, just slightly behind Fred Thompson in Iowa. But he's going to do a lot better in New Hampshire. Listen to what he said today.
(BEGIN VIDEO CLIP)
SEN. 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 the people of New Hampshire not going to be fooled by these negative campaigns and the ads that they're running.
(END VIDEO CLIP)
BLITZER: Gloria, what do you think?
BORGER: That's what you call a preemptive strike. I mean, he knows he is going to get bombarded with these ads and he's telling the voters you're going to hear those terrible things about me, but you can't pay attention to them. Reminding people that Romney is a bad guy.
BLITZER: They say that in New England, in New Hampshire, the attack ads aren't as negative. They work actually, much more so than in Iowa where everybody is really a nice guy.
TOOBIN: Everybody attacks negative campaigning, but negative campaigning works a great deal of the time. It didn't work for Romney in Iowa. It may well work for him in New Hampshire, including over issues like taxes. In some respects, Romney is right. It's not an attack ad to say that John McCain voted against the Bush tax cuts. That's a relative factor.
BORGER: It's going to be interesting to see how Obama does this. If Hillary attacks -- Hillary Clinton attacks Barack Obama, what does Barack Obama do? Because he has run as the candidate of hope and all the rest.
BLITZER: They all have those smart strategists.
What do you think about Giuliani? Because Giuliani did worse than Ron Paul in Iowa. He's presumably not going to do very well in New Hampshire. He's saving his fire down the road.
CAFFERTY: I think last night with Huckabee winning, it helped Giuliani some. If Romney had won last night in Iowa and gone into New Hampshire and won, Giuliani would have his hands full. It's a risky strategy to say I'm not going to participate in the first four or five states and I'm going to wait for Florida. But if it's a free for all going into Florida, then he's still in the game. If Romney had came out with a couple three states under his belt, it might have been a lot tougher.
TOOBIN: Giuliani spent 51 days campaigning in Iowa. That's not a trivial amount of time and he got less than half of Ron Paul's votes. He finished sixth. Is that -- I don't see how you run as an electable candidate when you finish behind a guy who just, who has as much chance of being president as Ron Popeil.
CAFFERTY: Is that the pocket fisherman?
TOOBIN: The Veg-O-Matic guy.
BORGER: But the guy who, you know, who won was the anti-Giuliani guy. He was, you know, 61 percent of the voters in the Republican side were evangelical Christians. So, they're not going to go for Rudy Giuliani.
BLITZER: You know the real problem the Republicans have, I think? They have to run against the seven years that the Republicans have been running the White House. This economy is very close to going into recession. If that happens, the war in Iraq hasn't been resolved yet. Yes, it is getting better, but we are hemorrhaging money to support that enterprise over there.
If the economy slips into recession, I think it almost doesn't matter who the Republican is. I'm not sure they can overcome the headwinds that are already out there, courtesy of the boys in the White House for the last seven years.
TOOBIN: And to reinforce what Jack just said, a big story last night was the enormous increase in turnout among the Democrats, almost doubled. Republicans went up, but not nearly as much. The Democrats are feeling like they're going to win and their fundraising is going phenomenal. The Republican, whoever it is, is going to have a lot of.
BLITZER: Hold on one second. Lou Dobbs is getting ready for his show that is beginning right at the top of the hour and I want him to weigh in, as well. Give us a little preview, Lou, give us a sense of what you saw unfold last night.
LOU DOBBS, CNN ANCHOR: Well thanks for asking, Wolf. I was just sitting here listening to you guys as you're discussing this, trying to resolve what is a process that has only begun barely in the last 24 hours.
Huckabee and Obama clear cut winners, give it to them. Move on to the next one. Get ready because we're going to see a pretty good battle.
The idea that this, this is in any way a shaped and formed and conclusive moment in this campaign, I think we've got to be very careful of suggesting that if admitting it or in any way communicating that. It's just not happening, folks.
We have the most wide open campaign in 80 years. It is not over. It is over for a few of these aspiring presidents, would-be presidents. But the reality is it's going to be fascinating to see what happens from everywhere from Wyoming to New Hampshire or on into February 5th. I think it's wide open and I'm very excited about what's happening and as you all know, I'm not even interested in whether a Republican or a Democrat can compete here because I think the Independent is going to be determinate, both as a candidate and as a voter.
BLITZER: And maybe as a third party candidate emerging after the dust settles on the Democratic and Republican side. I'm not suggesting, Lou, it is going to be you, but there are others who may be waiting in the wings.
DOBBS: I think Michael Bloomberg, despite his denial, I think is an able candidate, would bring a lot of intriguing freshness to this campaign that's sorely needed.
BLITZER: Lou is coming up at the top of the hour. He's got a good hour ahead of us right after this show. Lou, thanks very much.
Missile defense systems on U.S. passenger planes. We're going to show you which airline is now testing them out and why.
Plus, the huge and dangerous storm pounding the West Coast right now. We have your i-Reports on the severe weather. Stay with us. You're in THE SITUATION ROOM.
BLITZER: In our CNN Security Watch, could U.S. passenger jets soon be targeted by terrorist missiles? Federal authorities aren't waiting to find out, they're ready to try to test some defensive measures on commercial airliners. Let's go to our Justice correspondent Kelli Arena. She's watching this story for us. What are you learning, Kelli?
KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well Wolf, this is something we have never seen before. For the first time ever, anti- missile technology will be tested on planes that are carrying passengers. Now, if you're on one of those planes the experts say you won't even know it.
ARENA (voice-over): Three American Airline jets that routinely fly between New York and California will soon be carrying some very special cargo. The latest in anti-missile technology, mounted on the belly of the aircraft.
BURT KEIRSTEAD, BAE SYSTEMS: This little device does what we call the jamming of the missile. You can think of it as a laser pointer. We have a high-powered multi-band laser that is pointed through this device at the missile, causes it to miss the aircraft.
ARENA: Rest easy, missiles won't actually be fired at planes. The tester geared to see how well the devices withstand daily wear and tear, how much more airlines will spend on fuel to carry them and how much maintenance they need. BAE Systems first developed the technology for the military.
KEIRSTEAD: It can be operated in the airline industry without introducing any special equipment, any new requirements. If something goes wrong with the system, it can be repaired very quickly.
ARENA: So how much of a threat are shoulder fired missiles to passenger jets? They are inexpensive and available on the black market. They've been used against military jets and cargo planes overseas, but never on U.S. soil. Homeland officials stress there is no specific or credible information that that will ever happen. What is more, officials maintain the biggest threat by far to airlines are explosives smuggled on board. But Congress mandated testing of anti- missile technology four years ago and allocated about $30 million for this latest phase.
GOEORGE FORESMAN, CNN SECURITY ANALYST: There are a lot of things that DHS is doing today that they were asked to do several years ago and what seemed like a good idea two or three years ago may not be the best use of resources today.
ARENA: American Airlines says that it agreed to participate in tests just in case Congress ever makes the systems mandatory.
ARENA: Those systems would cost $1 million per plane to install. At this point, Wolf, it's not clear who would foot that bill. The systems are expected to be installed for testing in the spring and that testing should last through the end of the year. Back to you.
BLITZER: All right, Kelli, thanks very much.
Let's bring back Jack. He's got "The Cafferty File." Jack?
CAFFERTY: Yes, a non-political question from the last hour here. There's a high school in New Jersey that's instituted mandatory breathalyzer tests for high school students and we asked if you think that is a good idea. Do you approve? Michael in Philadelphia: "Having just been a high school student less than a year ago, I can tell you how rampant alcohol and drug use is among our youth. I literally can only name one peer of mine who has not done marijuana and no one who hasn't drank alcohol. This is just one necessary step to reforming our schools."
David writes: "I don't approve of mandatory breathalyzer tests for high school students. I think we still need proof of a problem before we violate our students' constitutional rights. Kids are Americans, too. What message does it send to young people if we do this?"
John writes, "As a former public schoolteacher, I personally witnessed the decline in the active and diligent involvement of parents in their children's lives. Schools are consistently being asked to do everything but teach. Deal with manners, ethics, hygiene, respect, sociological issues, sexual orientation. While I don't relish the idea of breathalyzers in schools, I certainly can't blame the schools for having to pick up where the parents have left off."
Dale in Texas City: "Absolutely not. My kids now have to take drug urine tests in order to sing in the choir at age 13. I would like to pull them out of school and home school them or send them to private school. I expect the school to teach reading, writing and arithmetic. The school is not the parent and has no right."
Terry writes: "Let's go the whole route. Metal detectors, breathalyzers, random drug tests, whatever it takes to get back to making the schools a learning environment."
And Courtney says: "I think it's a great idea. I'm just glad they didn't come up with it while I was in high school."
BLITZER: Smart kid.
BLITZER: Jack, have a great weekend, thanks for all your terrific work.
Our i-Reporters are on the job in California where there is concern about hurricane-force winds. That story coming up next.
BLITZTER: Hurricane force winds, blizzard conditions plus the threat of landslides. It's all happening right now in California, being battered by a very large and dangerous winter storm. More than a million people are without power and the California highway patrol is strongly urging drivers to simply stay off the roads.
Our Internet reporter Abbi Tatton has been getting i-Reports on this situation. What are they showing us?
ABBI TATTON, CNN INTERNET REPORTER: Wolf, these are all pictures we've been getting in from across the state of the high winds, the damage, what people are going through. Right now, first of all, those winds gust more than 50 miles-an-hour.
This is from Jerry Klein. He's in Lincoln, California. His fence is down. He says people just aren't going out into the street because they've been advised not to. They're just staying home right now.
And then we go to the damage. Look at this, San Francisco street here. This sent in by Bret Goldstein. This is a scaffolding collapse that happened there in Pacific Heights.
Some of the trees that have been uprooted. You can see just how strong these winds were. Take a look at this one here. This one in Crescent City, California, took up the whole pavement there.
And then take a look at this. This is the blizzard-like conditions as well that you're getting to in the Sierra Nevadas. We're being taken around the Kirkwood Mountain Resort here by a couple of people who are still wearing shorts, even though they're saying they're getting four to six inches an hour of snow there, Wolf.
BLITZER: An amazing new technology we have as well. Abbi, thanks very much for that.
Sunday on "LATE EDITION," among my guests, Iowa's Republican caucus winner Mike Huckabee. "LATE EDITION" airs Sunday, 11:00 a.m. Eastern. That's it for us. I'm Wolf Blitzer in THE SITUATION ROOM. Up next, "LOU DOBBS TONIGHT." Lou?
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