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THE SITUATION ROOM

Interview With Rudy Giuliani; Obama: Candidate of Change?

Aired January 23, 2008 - 17:00   ET

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


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

Happening now, it sounds like Democrats have already anointed John McCain as the Republican presidential nominee, even as Rudy Giuliani rolls the dice, betting on a big win in Florida.

Did he pick the right strategy?

I'll ask him. That's coming up live -- Rudy Giuliani, here in THE SITUATION ROOM.

And Barack Obama tries to set himself apart from the pack by casting himself as the candidate of change.

But is it a label he can live up to?

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

The Republicans are fanning out across Florida right now, gearing up for their next big primary showdown next Tuesday. And just a day after Fred Thompson dropped out of the pack, fellow Southerner Mike Huckabee sees an opening.

(BEGIN VIDEO CLIP)

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: Obviously, the field is narrowing. We're still in it and will be -- and that's good news for us. I think Fred's getting out was, unfortunately, about a week late for us. It would have been helpful if he had done this before. Now, if the rest of them will drop out, we'll really be happy.

(END VIDEO CLIP)

BLITZER: Democrats get their turn in South Carolina on Saturday. Barack Obama is there today. So is John Edwards and Bill Clinton.

But where is Hillary Clinton?

(BEGIN VIDEO CLIP)

JOHN EDWARDS, PRESIDENTIAL CANDIDATE: I know, for example, that Senator Clinton was here for the debate on Monday, left right after the debate, has not been back. It's a pretty basic thing -- if you're not spending time in South Carolina for the week before the primary, what are the chances that you're going to be here after the primary?

(END VIDEO CLIP)

BLITZER: Senator Clinton was actually here in Washington today and had stops later in Pennsylvania and New Jersey.

Just ahead, remember, my interview with Rudy Giuliani. That's coming up. He's rolling the dice on a win in Florida.

Also, the best political team on television standing by.

But first, some other important news we're watching right now. A CNN exclusive -- word that the Pentagon is now actually drawing up plans that might -- repeat -- might send U.S. troops to Pakistan. There are some significant obstacles underway right now.

Our Pentagon correspondent, Barbara Starr, has been looking into this story.

She's getting some new information -- Barbara, this is a lot easier said than done. Pakistan, a Muslim country, with a nuclear arsenal, an Al Qaeda and Taliban presence right there.

What's going on?

BARBARA STARR, PENTAGON CORRESPONDENT: Well, Wolf, the Pakistanis have already made it very clear they will not accept U.S. combat troops on the ground, but there is discussion behind-the-scenes about sending some U.S. troops to train the Pakistanis to fight Al Qaeda.

(BEGIN VIDEOTAPE)

STARR (voice-over): CNN has learned U.S. military commanders are reviewing a classified planning order which could result in hundreds of U.S. troops going to Pakistan to train security forces -- but only if the Pakistanis buy the idea. President Pervez Musharraf has said his troops will be the ones to fight the Taliban and Al Qaeda. But last week, Taliban fighters overran a Pakistani fort. There's worry Pakistani forces are failing against a growing extremist threat.

ADM. MICHAEL MULLEN, JOINT CHIEFS CHAIRMAN: That continues to be a grave concern to us, both in the near term and the long-term.

STARR: For the U.S., the job now is to get an agreement to train Pakistani forces in counter-insurgency warfare.

FREDERICK BARTON, CENTER FOR STRATEGIC & INTERNATIONAL STUDIES: The presence of U.S. forces in Pakistan would be hugely inflammatory for the rest of the country and probably would destabilize Pakistan in a more serious way than it is right now. So clearly training is the best thing we can do.

STARR: Why now?

The assassination of former Prime Minister Benazir Bhutto has destabilized the country. Al Qaeda now operates in many major cities. ROBERT GATES, SECRETARY OF DEFENSE: I think that the Pakistani government, frankly, is dealing with the emergence of a threat inside Pakistan that it has not confronted until very recently. That's not a surprise to me that they're having some challenges in trying to deal with that.

STARR: The planning order, should Pakistan give the OK, is part of a five year, $750 million security and economic effort. Still, the Pentagon is treading lightly before sending U.S. troops to a place they're not likely to be widely welcomed.

GEN. JAMES CARTWRIGHT, JOINT CHIEFS VICE CHAIRMAN: We're trying to make sure we understand ground truth before we take any action.

(END VIDEO TAPE)

STARR: Wolf, I have to tell you that U.S. military officials say if -- if this all came to pass, it actually might result in a very small number of troops going to Pakistan because the Pakistanis simply may not find it acceptable. But already senior U.S. military officials are saying if the Pakistanis won't take U.S. trainers, they may try and offer them either contractors -- like Blackwater -- or possibly they're even talking about trying to get the British to weigh in and send British troops -- Wolf.

BLITZER: Good reporting for us Barbara.

Thanks very much.

The border between Gaza and Egypt is suddenly blown wide open. Thousands of Palestinians hemmed in by an Israeli blockade are taking full advantage. Right now, they're bringing back food, fuel, anything else they can carry.

The U.S. and Israel deeply worried now that Islamic militants will bring back weapons.

CNN's Ben Wedeman is on the border.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN CORRESPONDENT (voice-over): The walls have tumbled down and the people of Gaza stream out by the tens of thousands -- free for the first time in months to leave their crowded, impoverished land.

"I want to go out to see the world," says Ashva (ph). "We've been closed in for years."

In the dead of night, militants from Hamas and other groups used acetylene torches and high explosives to destroy the wall Israel had built between Gaza and Egypt -- effectively sabotaging a tightening Israeli blockade that since last week had subjected Gaza to lengthy power cuts and shortages of food and fuel -- a blockade intended to pressure Hamas to stop firing rockets from Gaza into Israel.

(VIDEO CLIP)

WEDEMAN: This man cheers Hamas and curses pro-Western Palestinian president, Mahmoud Abbas, as, in his words, "the biggest dog on Earth" for being incapable of breaking what Palestinians call "the siege of Gaza."

WEDEMAN: While some Gazans crossed the border for a taste of freedom, most went in search for goods that have become increasingly scarce.

(on camera): This is one of the new border crossings between Gaza and Egypt. And on this day, there are no formalities, no passports, no I.D.s, no questions. Everybody can come and go as they please.

(voice-over): Egyptian border guards stood by and watched the commotion, while Hamas militiamen performed, at best, cursory checks of incoming groups. Israeli officials say this could be a field day for Hamas to bring in weapons and explosives.

With the walls down and the frontier wide open, it may be difficult close it again.

Ben Wedeman, CNN, on the border between Gaza and Egypt.

(END VIDEO TAPE)

BLITZER: In other news around the world, a spasm of violence today in the heart of Kenya's capital. A government office building was set ablaze, as participants in a prayer march torched cars and buildings after being tear gassed. This comes amid a high profile effort to try to resolve the bloody dispute after Kenya's recent election.

CNN's Zain Verjee is in Nairobi.

(BEGIN VIDEOTAPE)

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT (voice-over): Senseless destruction moments after a memorial service for victims of Kenya's election violence -- burning, smashing, looting. Workers trapped in this building...

(VIDEO CLIP)

VERJEE: ...until the police rescued them. Police hunted down the vandals.

Former U.N. Secretary-General Kofi Annan is hunting for a solution to Kenya's election dispute -- pushing for a breakthrough in the standoff between the President Mwai Kibaki and opposition leader Raila Odinga.

CAROLINE MUTOKO, RADIO TALK SHOW HOST: KISS 100.

Hello.

VERJEE: On the air, Caroline Mutoko, a popular radio show host, says she's fed up with politicians who won't make peace.

MUTOKO: We will not let them hold us at ransom.

VERJEE: She says politicians have failed Kenyans. Most Kenyans are getting back to normal here after the recent violence kept them away from the city.

MUTOKO: It's got to be a moment where you say shame on you to both parties because, frankly speaking, right now they're acting like brats.

VERJEE: Caroline says her listeners are more irritated than interested in demonstrations.

MUTOKO: There is that level of political maturity and understanding.

VERJEE: As Kofi Annan navigates raw nerves, Caroline has a message for him and for the rest of the world.

MUTOKO: Don't give up on us and give us a chance. And Kenyans are so resilient as a people. We will come back from this and we will not go to the edge.

VERJEE: Zain Verjee, CNN, Nairobi.

(END VIDEOTAPE)

BLITZER: Let's go right to Jack Cafferty.

He's got The Cafferty File in New York -- Jack.

CAFFERTY: It's gotten increasingly nasty between Hillary Clinton and Barack Obama -- and Bill Clinton seems to be enjoying it all. The former president said this: "I kind of like seeing Barack and Hillary fight. They're flesh and blood people. They have their differences. Let them at it."

Not everybody, though, thinks it's becoming. Several top Democrats concerned the gutter politics could end up harming the party's image ahead of the general election. Senator John Kerry, who's fan Obama backer, wrote in an e-mail to Obama supporters, saying: "The truth matters, but how you fight the lies matters even more." Kerry doesn't mention Clinton by name, but says they're fighting back against anonymous e-mails questioning Obama's Christian faith.

Former Senate majority leader Tom Daschle, another Obama backer, says attacks coming from the Clintons are similar to what he's seen from Republicans and he called comments about Obama from former President Clinton distortions. Daschle says such bickering ultimately destroys the party and that it will have a "huge lasting effect down the road if it doesn't stop soon."

On the other hand, Democrat strategist Donna Brazile thinks this "generational fight" will make the party stronger in the end. Meanwhile, an editorial in today's "Wall Street Journal" suggests that Barack Obama "seems to be awakening slowly to what everyone else already knows about the Clintons, which is that they will say and do whatever they've got to say or do to win."

So here's the question -- is the Obama/Clinton feud helpful or hurtful to the Democrat process?

Go to CNN.com/caffertyfile, where you can post a comment on my blog -- Wolf.

BLITZER: Jack, thanks for that.

Rudy Giuliani sets -- bets all on Florida. It's becoming a make or break state for him.

Is he making, though, a serious mistake?

Has he already made a serious mistake?

I'll ask him. He's joining us live.

Plus, Barack Obama -- he calls himself the candidate of change, but is he really all that different from his opponents when it comes to his voting record?

And John McCain -- you're going to hear what he has to say to Democrats, who declared him, effectively, the Republican frontrunner.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The economy -- it's the number one issue right now in the presidential campaign among Democrats and Republicans. And the Republican candidate, Mitt Romney, today said he's got a handle on it.

Listen to this.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: It will not be a mystery to me. I won't need briefings on how the economy works. I know how it works. I've been there. And I think it's time to have a president who thoroughly understands the economy, understands jobs, knows why jobs come and goes, knows how -- how we can be competitive around the world. That's something I know intimately and I'll fight to make sure that we have the strongest economy in the world and the brightest future for our kids and grandkids.

(END VIDEO CLIP)

BLITZER: The Democrat presidential candidates have lately been sizing themselves up against John McCain as a possible opponent in November's election. And McCain said he's more than ready.

Listen to this.

(BEGIN VIDEO CLIP)

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: You may have noticed a couple of nights ago that the Democrats, in their debate, the three of them spent a lot of time talking about me. I was very flattered. I was very flattered to hear them mention my name. I look forward to standing on the stage and debating Senator Clinton or Senator Obama or Senator Edwards.

(END VIDEO CLIP)

BLITZER: While Democratic candidates seem to think John McCain is a sure bet, Rudy Giuliani is placing a huge bet of his own on Florida. He's hoping a big win there next Tuesday can put him right back in the middle of this race.

And Rudy Giuliani is joining us now live.

Unfortunately -- oh, there he is. OK. You're taking a little hit, but we got the satellite thing worked out, we hope, Mr. Mayor.

Thanks very much for coming in.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: Thank you, Wolf.

Nice to be on.

BLITZER: What do you think about these Democrats basically nominating John McCain as their eventual opponent?

GIULIANI: Well, they don't get to nominate us and we don't get to nominate them. And I believe that we're going to win here in Florida. I think that with the issue focusing so much on the economy -- I'm the only one that's actually turned an economy around, a government economy, and one of the more complex ones. New York City's economy is the 17th largest in the world. I took it over when it was in very, very difficult condition and turned it around, with the kind of things that would have to be done now in America -- lowering taxes, reducing spending, getting control over growth, taking care of moderation in terms of regulation, so you don't regulate businesses and jobs out of the country.

This is exactly the stimulus package I introduced last week and it was introduced today. My stimulus package was introduced in Congress today by Congressman Dreier so it can get done right now.

BLITZER: He's one of your supporters, David Dreier of California.

GIULIANI: He is.

BLITZER: But Mitt Romney, he's a businessman. He's turned companies around. He's a former governor of Massachusetts. He helped turnaround the Olympic Games. What's wrong with his experience in this kind of matter?

GIULIANI: He hasn't had the experience of turning a government around. And I turned around a government that happens to be the financial capital of the world and the 17th largest economy in the world. And the thing to do to turn a government around involves lowering taxes. I'm the only Republican that's actually lowered taxes.

Mitt Romney didn't support the Bush tax cuts. I did. And I supported the Bush tax cuts because I understood what they could do, because I had done that previously in New York City.

BLITZER: All right...

GIULIANI: Now that's why the stimulus package that would, I think, be the most effective to make America competitive in the world economy.

BLITZER: Well, tell us why you think you can do a better job than John McCain, who's recently emerged as, arguably, the frontrunner down in Florida.

GIULIANI: Because -- because I've done it. Because I've actually done it. I've had more experience than they have in running an economy and running a government that intersects with an economy that (AUDIO GAP) of the United States.

And New York is the financial capital of the world. When I took it over, it had a $2.3 billion deficit, 10.5 percent unemployment. By the time I left, unemployment had been cut in half, jobs increased by 400,000 to 500,000.

It's the reason that I had the confidence to recommend a tax package that has major reductions.

BLITZER: All right...

GIULIANI: Major reductions in strategic areas like corporate tax and capital gains tax. And, also, the one page tax form, which will be a major reform of the way in which people pay taxes -- on one page.

BLITZER: Here's the deal, right now, though. There's a lot of fear of a recession. We may not be in a recession yet, but a lot of Americans think we already are in a recession. They're blaming the Bush White House over these seven years for getting the country into this predicament right now.

Looking back, what would you have done differently than President Bush to avert this kind of economic crisis that we're apparently in right now?

GIULIANI: I think one of the things that could have been done in the past -- and it should be done now -- is to make the tax cuts permanent. People are looking at these major tax increases in two years. It holds back investment in the United States when you look at a country that is competitively going to be one of the most -- one of the more highly taxed countries.

We already have the second highest corporate tax in the world. That hurts investment in the United States. We have to understand that we are in a global competitive environment. And America will grow and America will flourish if America is competitive. That means relatively low taxes, reducing government spending and moderate regulation.

BLITZER: But...

GIULIANI: If you're excessive in any of those areas, you'll really hurt your economy.

BLITZER: Could the subprime mortgage meltdown, which is causing a lot of these problems right now -- causing a lot of people to go into foreclosure and lose their homes -- could this problem have been averted if there would have been better government regulation?

GIULIANI: I think -- of course. You can always do better government regulation and in the future you can make sure that there's more transparency. I don't know how much of it would have been avoided by that. I don't know how much it is caused by that and how much of it is caused by bad decisions that were made.

But the most important thing you can do now is sound fiscal policy that gives liquidity to the economy, that makes the economy much more competitive.

For example, here in Florida there is a very, very big need for a national catastrophic fund. And there should be a national catastrophic fund for the country. There are people in Florida who can't afford to buy insurance. And the federal government needs to be a backstop there. And that's something that I'm fighting for.

BLITZER: If you don't win in Florida next Tuesday, who do you think would be more to blame, you yourself and the message you were trying to bring forward or your strategists, who said you know what, you're not doing all that well in New Hampshire or Iowa, pull out of there and focus...

GIULIANI: (LAUGHTER)

We're not going to...

BLITZER: ...focus in on...

GIULIANI: ...we're not going to...

BLITZER: Focus in on Florida.

GIULIANI: We're not going to do anything like that. We're going to win in Florida and then we're going to be talking about exactly who made the right decisions. That's really -- I'm an optimist. I'm an optimist about the way you govern and I'm an optimist about the way you run a campaign. And that's the way I -- that's the way I look at it.

BLITZER: Can you flatly say you will definitely win in Florida?

GIULIANI: (LAUGHTER)

We're going to win in Florida, Wolf. That's our objective.

BLITZER: And then you go on to New York and California and all those Super Tuesday states.

GIULIANI: Then we go on to who knows how many other places?

Twenty -- I think there are 21 on February 5th. But there's just one on the 29th, and that's the one we're focused on right now.

BLITZER: Mayor Giuliani, thanks very much for coming in.

Good luck.

GIULIANI: Thank you, Wolf.

Thank you very much.

BLITZER: All right, good.

Former President Bill Clinton is strongly defending his wife. He's talking about smears and slime and a lot more. You're going to find out what he's saying about Hillary Clinton and the right-wing of the Republican Party.

Plus, new developments in the investigation into the shocking death of the young actor, Heath Ledger. We're going to have the latest for you on that.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

What's going on -- Carol?

CAROL COSTELLO, CNN CORRESPONDENT: Well, guess what, Wolf?

Stocks made a stunning comeback on Wall Street today. Down more than 323 points in early trading, the Dow roared back, finishing almost 300 points on the plus side. That's a turnaround of more than 600 points for the day, for a final gain of 2.5 percent. The Nasdaq was up more than 1 percent. The S&P 500 Index rose more than 2 percent.

It costs $700 million so far and it's months behind schedule, but the State Department still can't say when its new embassy in Baghdad will open. The heavily fortified compound is the world's largest diplomatic outpost and it was supposed to be finished last fall. A spokesman says fire detection concerns are among the problems slowing down the project.

Secretary of State Condoleezza Rice is trying to ease international concern about America's financial footing. She told the World Economic Forum in Davos, Switzerland that the U.S. economy is resilient and that it will remain "an engine of growth." She assured business and world leaders that a stimulus package will boost spending and investment.

A gloomy forecast for the housing market by Merrill Lynch, though. It's warning of a 15 percent drop in prices this year, with another 10 percent slump in 2009. Some analysts call that way too pessimistic. The National Association of Realtors says it expects prices to remain flat for most of 2008, but start to rebound toward the end of the year.

And initial autopsy results are inconclusive, so it could be up to two weeks before we know what killed actor Heath Ledger. The 28- year-old was found dead in his New York apartment yesterday with prescription pills nearby. But police say the bottles were packed, with all the pills inside. There was also a rolled up $20 bill found. It has not been tested yet for possible drug residue.

That's a look at the headlines right now.

BLITZER: What a talent. A sad story, indeed.

COSTELLO: Yes.

Thanks, Carol, very much.

He portrays himself as a candidate of change, but can Barack Obama live up to his promises to change the ways of Washington?

We're keeping them honest.

Also, the key voting bloc that could make or break Republican presidential candidates in Florida -- and not necessarily seniors or Evangelicals. You're going to find out who it is.

Plus, we'll take a look at the controversial new documentary that's shining a spotlight on allegations of abuse and torture by U.S. forces. We'll tell you what it shows.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, the U.S. Army is looking at a proposal to cut soldiers' time on the battlefield in Iraq from 15 months to 12 to ease the strain on them and their families. But officials say the decision will hinge on the requirements of combat commanders. Also, the House has failed once again to override President Bush's veto of a bill to increase spending on a children's health insurance program. Forty-two Republicans sided with the Democrats, but the effort still fell 15 votes short.

And we're just learning right now about an alleged terror plot that's been thwarted in Spain. CNN has obtained court documents saying 10 men, including eight from Pakistan, were planning a series of suicide bombings last weekend in Barcelona.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

More than any other White House hopeful, Senator Barack Obama is touting himself as the candidate of change, trying to set himself apart from the pack. But is he really a new kind of politician and can he deliver on his promise to turn around Washington?

Carol Costello is keeping him honest here in Washington. Is Barack Obama really on to something new?

CAROL COSTELLO, CNN CORRESPONDENT: Well, it depends on how you define change, Wolf. I mean, is it your voting record, your way of politicking, or is it something you can't put your finger on but you know it's there.

(BEGIN VIDEOTAPE)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I want to change Washington.

COSTELLO: Change, it has become Barack Obama's most potent political tool, one he wields quite effectively against rival Hillary Clinton.

OBAMA: We are tired of the same-old, same-old. It is time for something new.

COSTELLO: But Obama's insistence that he represents change as opposed to all other candidates has prompted questions.

MIKE GRAVEL (D), PRESIDENTIAL CANDIDATE: Well what's change? I'm not being insulting. Intellectually he can't put his arms around that thought, nor can Hillary, nor can Edwards, nor can the other politicians.

COSTELLO: Especially, some say, in the senate, where it's difficult to break party ranks. For instance, we found Obama and Clinton have nearly identical voting records and according to the non- partisan Congressional Quarterly, nearly identical partisanship ratings.

DAVID HAWKINGS, CONGRESSIONAL QUARTERLY: Obama and Clinton were both in the 97%, 98% range last year. That was an even higher partisanship score than Harry Reid. It's been that way for the last three years that they have been together in the senate.

COSTELLO: Arguably, the biggest difference between the two happened before Obama was elected to the senate. She voted for the war. He didn't. He wasn't there. Although he said he wouldn't have. Obama did play a central role in pushing through a congressional ethics law which bans gifts from lobbyists. It's something Obama is now touting as change.

OBAMA: If you're ready for change, we can go ahead and tell the lobbyists that their days of setting the agenda in Washington are over.

COSTELLO: Still, Obama's liberal voting record and its similarity to Clinton's is something republicans are pouncing on.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: The change the democrats want to make is they want to take the change out of your pocket.

COSTELLO: But that, or whether Obama and Clinton vote alike, may not matter to voters when it comes to picking the democrat that defines change.

LARRY SABATO, UNIV. OF VIRGINIA'S CTR. FOR POLITICS: Intellectually, if you look at their records, they're not very different but emotionally, if you listen to them and look at them, they are very, very different.

COSTELLO: Obama is bicultural, young, and charismatic. The combo has garnered him a host of magazine covers. His supporters believe his freshness can trump partisanship and repair America's reputation. That's what Senator Patrick Leahy meant when he said ...

SEN. PATRICK LEAHY (D), VERMONT: I believe the next president has to reintroduce America to the rest of the world and has to reintroduce our country to ourselves. I believe he can do that.

COSTELLO: Since Obama hasn't been in the U.S. senate for very long, he doesn't have to defend what some consider Washington's past sins. Whether that is enough to beat Clinton is debatable.

SABATO: You have to draw enough contrast so that people are not just voting for you, they are also choosing you over the other major candidate.

(END VIDEOTAPE)

COSTELLO: Now, Sabato says there have been candidates of change who have been nominated but largely, they have not won the presidency. Ronald Reagan is perhaps the exception. But when he ran for president, the winds of change were already pushing in the republican direction. And Reagan had a long political history to draw upon.

BLITZER: I think as you point out, Carol, the biggest difference between Hillary Clinton and Barack Obama for a lot of democrat voters out there was back in 2002. She was in the senate. He was not. She voted to give the president authorization to go to war against Saddam Hussein. He was still in the state legislature in Illinois and he said he opposed any such notion. I guess that's the biggest issue.

COSTELLO: That's right. He says he's always opposed the war. If he would have been in the senate, he would have voted no.

BLITZER: He's on the record. He's on tape opposing it at the time in 2002.

COSTELLO: He is indeed.

BLITZER: All right. Thanks very much, Carol Costello. Good reporting for us.

Bill Clinton today took some time out from lashing out at the Obama campaign to defend his wife, Hillary Clinton. He says she's been under attack unfairly for a decade and a half but is tough enough to take it.

(BEGIN VIDEOTAPE)

BILL CLINTON, FORMER PRESIDENT OF U.S.: If you remember, basically the right wing of the Republican Party just beat the living daylights out of her for the eight years I was president, and they are still working on her today, if the news reports are right. And every charge they made against her was disproved. And she just keeps going. And yet, she has to live with the smears and the slime and the stuff that people put on her all those years. She gets up every day, goes to work, and has the strength and the moral force to do what she thinks is right in public service. I think she has shown a degree of toughness that I have rarely seen in public life. I don't know how many other people can take the kind of whipping she's taken for 15 or 16 years from those people and get up every day.

(END VIDEOTAPE)

BLITZER: In our next hour, you will be hearing a lot more from Bill Clinton. He lashes out at the Obama camp but he also lashes out at the news media when our own Jessica Yellin asked him a question. You're going to want to hear this change. That's coming up in our next hour.

Republican presidential candidates are focusing in on Florida right now which holds its primary next Tuesday. There is one group of voters there who could sway the race, current and former members of the United States military. Let's go to our man in Florida, John Zarrella. He's been covering this story for us.

The veterans in Florida, that's a very important block out there, isn't it, John?

JOHN ZARRELLA, CNN CORRESPONDENT: No question about it, Wolf. That's Patrick Air Force Base there behind me. For the candidates, winning the support of the men and women in the armed forces is hugely important. There are about two million veterans, reservists and active duty personnel in Florida. We spent some time with one young family, both reservists, to get an idea of what they are looking for in a president.

(BEGIN VIDEOTAPE)

ZARRELLA: Presidential candidates, if you're listening out there, here's a bit of advice from Ray and Lara Padgett. Don't flip- flop on your message.

RAY PADGETT, AIR FORCE RESERVIST: We are watching what's said in New Hampshire, watching what's said in South Carolina, and if it's different when they come down here, that would upset me a lot.

ZARRELLA: Ray and Lara are both U.S. air force reservists, and have been intensely studying the candidates. They take seriously their responsibility as voters because they know the president can change their lives in an instant.

PADGETT: As military members, we are picking a new CEO of the company.

ZARRELLA: With their two kids, a third on the way, they live in Tampa and are attached to Patrick Air Force Base near Cocoa Beach. They have both served overseas and Ray has spent time in Iraq and Afghanistan. They see the war going well and want a president who will stay the course and remain strong on terrorism.

LARA PADGETT, AIR FORCE RESERVIST: Keep them out of the U.S. Keep them over there on their soil. Fight the war over there, not here.

ZARRELLA: To the candidates, the Padgetts are part of a huge active voting block in Florida. There are 1.7 million veterans living here, second only to California. There are 21 military installations in the state and 144,000 active duty personnel and reservists call the state home.

SUSAN MACMANUS, UNIVERSITY OF SOUTH FLORIDA: You say military in Florida, it means just about every policy area, from health care to security to even education of veterans when they return home.

ZARRELLA: To a young couple like the Padgetts, pocketbook issues are extremely important, too. Gas prices, housing costs, taxes. Ray is an assistant principal at a Tampa public school. Both he and Lara want to hear more, a lot more, from the candidates on education.

PADGETT: Especially on the education side, I haven't heard very much at all about where people stand.

PADGETT: I haven't heard them talk about education at all.

ZARRELLA: Lara has pretty much made up her mind who she's voting for.

Ray? You still open?

PADGETT: Wide, wide open. ZARRELLA: For both Padgetts, it will come down to military issues, national security, terrorism and which candidate they believe will make the best boss.

(END VIDEOTAPE)

ZARRELLA: Another issue the Padgetts say they are very concerned about and they haven't heard enough about is how the candidates plan to take care of returning veterans, of health care. Health care for veterans, Wolf, a huge issue here among the members of the military. Wolf?

BLITZER: John Zarrella will be doing more reporting on the issues in Florida tomorrow and the next day. We are looking forward to those reports. Thanks very much.

Over the last four decades, candidates who have carried Florida in the general election have won the White House. That's true of every contest going all the bake back to LBJ in 1964 with one exception. In 1992, George Herbert Walker Bush, the president's father, won Florida but Bill Clinton won the election.

Coming up, a young Afghan cab driver dies in U.S. military custody. It's a controversial case. It is now the subject of a very controversial new film that's just been nominated for an Academy Award. We will hear from the man who made it.

Plus, is the Obama/Clinton feud helpful or hurtful to the democrat party and the democrat process for that matter? Jack Cafferty has your email in this hour's question.

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

(COMMERCIAL BREAK)

BLITZER: A new documentary is shining a very harsh spotlight on allegations of abuse and torture by U.S. military interrogators. The film is called "Taxi to the Dark Side." Our entertainment correspondent, Kareen Wynter, is out in Los Angeles. She is watching this story for us.

Tell us about this movie that's now been nominated for an Academy Award.

KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT: That's right, Wolf. I would love to. This documentary on U.S. forces at war is about to hit theaters and it features a candid portrayal of the U.S.'s alleged interrogation practices and just picked up an Oscar nomination.

(BEGIN VIDEOTAPE)

WYNTER: You almost never see soldiers explaining in graphic detail how they treated prisoners suspected of terrorism at military bases. But in the Oscar-nominated documentary, "Taxi to the Dark Side," that's exactly what you see. The movie takes a look at the death of 22-year-old Afghan taxi driver, Dilawar. He was detained at Bagram Air Base in December 2002 and died five days later after severe beatings.

UNIDENTIFIED MALE: They saw him shackled and hooded and said right now. You all are doing a great job.

WYNTER: Dilawar was detained along with his passengers after being stopped near Bagram Air Base. U.S. military officials suspected he was involved in a rocket attack against U.S. troops.

ALEX GIBNEY, WRITER, DIRECTOR: This is a kid who had never spent a day, a night, away from home in his life, until he was taken forcibly from his taxicab, thrown into Bagram Prison and five days later he was dead.

WYNTER: Two soldiers later accused in the case, Private 1st Class Willie Brand and Specialist Damien Corsetti acknowledge Dilawar was hit repeatedly during those five days. A military coroner ruled his death a homicide due to blunt force trauma. Gibney interviewed 28 soldiers and civilians for the film. One of them was Sergeant Ken Davis of the 372nd Military Police Company.

SGT. KEN DAVIS, 372ND MILITARY POLICE COMPANY: We were also told they are nothing but dogs. All of a sudden, you start looking at these people as less than human and you start doing things to them you would never dream of.

WYNTER: 15 months after Dilawar's death, his three passengers were released from U.S. detention facility at Guantanamo Bay in Cuba after the army concluded, "They posed no threat to American forces." Of the accused soldiers in the documentary, Sergeant Anthony Morden pleaded guilty to assault and dereliction of duty. Brand was convicted of assault, maiming and maltreatment. Corsetti was acquitted of charges, including assault, maltreatment and dereliction of duty.

UNIDENITIFED MALE: It became plausible to me this man wasn't even guilty of anything and was murdered in detention.

WYNTER: Corsetti admitted some of the interrogation techniques used against Dilawar were harsh but said he acted under pressure from his superiors.

UNIDENTIFIED MALE: Soldiers are dying to get the information. That's all you're told. Get the information.

WYNTER: Obviously, getting on camera interviews with those directly involved was tough.

GIBNEY: Some of these soldiers felt they had been badly scapegoated by an administration that really put them in an untenable position.

(END VIDEOTAPE)

WYNTER: By the way, we contacted the pentagon to get a comment about the documentary. It released a statement saying in part it has always taken allegations of detainee abuse seriously and responded to credible allegations with thorough and comprehensive investigations and that to date, more than 250 service members have been held accountable. Wolf, we also reached out to the White House which wouldn't comment on the film. Wolf?

BLITZER: Kareen Wynter in Los Angeles for us; thanks, Kareen, very much.

Coming up, we'll shift gears. John Edwards is letting his hair down. The candidate shares a late night laugh with David Letterman. No ruffled feathers but wait until you see what happens to the high- priced hair cut.

And why the candidates care more about counting delegates than piling up primary victories. How can they win without winning? The best political team on television. That's coming up.

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

(COMMERCIAL BREAK)

BLITZER: Who says politics can't be fun? Presidential candidate John Edwards and late night talk show host, David Letterman, shared more than just a laugh about Edwards' haircut. Watch this.

(BEGIN VIDEOTAPE)

DAVID LETTERMAN, TALK SHOW HOST: Could I just mess your hair up a little bit?

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: You want to? Go ahead.

LETTERMAN: Do you mind?

EDWARDS: I don't mind.

LETTERMAN: Has it ever been messed up? No, no.

(END VIDEOTAPE)

BLITZER: I was watching last night and it was funny when I saw it. Jack Cafferty, he's got a good little sense of humor there, John Edwards. I don't know how he's doing in the race but he did well on Letterman last night.

JACK CAFFERTY, CNN CORRESPONDENT: Well, you know, it's nice to see them with their guard down. I was just sitting here watching that clip, it was cute. I wonder if he tried that with Hillary, what the reaction might have been.

BLITZER: I don't think so.

CAFFERTY: Might not have been the same.

BLITZER: No.

CAFFERTY: The question this hour, is the Obama/Clinton feud helpful or hurtful to the democratic process?

James writes, "As an African American and a Democrat, I'm becoming extremely disenchanted with the slash and burn politics of this campaign. It has become apparent to many that there is a war of personal destruction going on. I'm shocked at the silence of the Congressional Black Caucus and the Democrat National Committee."

Dede writes, "Obama so far has been a one hit wonder: Iowa, that is all. The hard core press is making more of him then he really is. Obama is a great man, just not ready to be president. The media is falling into all the traps that the Obama camp has set for them. He doesn't really talk in detail about the issues. He cannot. He doesn't have the experience. In today's America, it's easier to slam a woman and take her down than it is to do it to a minority."

Bill writes, "The feud helps us see the Clintons as a continuation of the divisive politics of the last 20 years that have been so destructive to our nation and our people."

Pat writes, "Let them go. If Obama wants the play in the big leagues, he has to learn to take his lumps as well as give them. The presidency is not for amateurs. I'm sure this is kids' play compared to what the rest of the world will hit him with if he's elected. Hillary has already proven that she can take it."

Bruce writes, "When the news media are asking questions of President McCain, you will have your answer. But the fight isn't going to hurt the democrats as much as the lies they told in 2006. The war is still going on, no troops have come home. Thank you, Nancy Pelosi."

Betty writes, "Bill Clinton's behavior reminds me of an over the hill actor you just can't get off the stage. Pathetic. As we say in Texas, tacky. Every time he opens his mouth, you think do we really want the Clinton administration part two?"

And Dave writes, "I'm confused, Jack. I thought this was the democrat process." Wolf?

BLITZER: Thanks, Jack, very much. A controversy over a snow day sparks an online frenzy. It began when a high stool student phoned a school administrator at home asking why school wasn't let out early. When he got an angry call-back from the administrator's wife, the student posted it on the internet and it's been snowballing from there.

Let's go to our Internet reporter, Abbi Tatton. She's got the story. What did the message actually say, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Well Wolf, that original post has been taken down but you can still find the audio all over the internet. CARLY TISTADT, WIFE OF DEAN TISTADT, CHIEF OPERATING OFFICER, FAIRFAX COUNTY, VIRGINIA SCHOOLS: And don't you ever call here again! My husband has been at the office since 6:30 this morning. So don't you even suggest that he purposely didn't answer his phone. He was out almost every single night of the week at meetings for snotty-nose little brats.

TATTON: That's the wife of this guy. This is Den Tistadt. It is his job to decide what is going to be a snow day in the Fairfax County school system. When he decided last Thursday that school shouldn't be let out early, some kids online decided to organize on Facebook. A student called, you can see them discussing it here, called his home and set up this Facebook page. Let them know what you think about schools not being cancelled. The phone numbers were posted here. More than 1,000 numbers there. We can't hear his message online but he insists in this post that he was really respectful when he left it. A spokesman for the school system says the Tistadts received many other phone calls, some in the middle of the night, that were less than respectful and the spokesman said he considers all of these phone calls to an individual's home harassment. Wolf?

BLITZER: Abbi, thanks for that. Abbi Tatton watching the story online.

Lou Dobbs is standing by to give us an update and views on all things political today. That's coming up in a moment.

Also, fresh signs that Rudy Giuliani's focus on Florida, that strategy may not necessarily be working. We will show you what he's doing to stop any freefall in the polls.

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

(COMMERCIAL BREAK)

BLITZER: Let's talk to Lou Dobbs. He's getting ready for his show that begins in one hour, 7:00 p.m. eastern.

I love picking your brain on a lot of the political news of the day. First of all, Rudy Giuliani. The strategy, he worked hard in New Hampshire. He spent a lot of money there. It wasn't working. He pulled out and now is focusing all of his attention on next Tuesday's primary in Florida. Is this logical? Is it going to work?

LOU DOBBS, CNN ANCHOR: I guess there is a certain logic to it. Whether it will work or not, I would be the last person to know, Wolf. The reality is these polls proved unreliable in the case of New Hampshire. They may prove unreliable again. But it is a peculiar strategy to follow and one can only hope that it ultimately prevails as a logical, effective strategy for him. He spent a lot of money. When you think about it, look how much money all these candidates are spending, we are talking about over $1 billion for this race for the presidency amongst these candidates. You have already got Huckabee in money trouble. You have other candidates in money trouble. Other candidates have already dropped out because of a lack of money. You know, it's hard to buy a government or a job these days for a reasonable price.

BLITZER: Hillary Clinton and Barack Obama raised well over $100 million and they need more to compete effectively on Super Tuesday, February 5th.

DOBBS: Yeah. Doesn't it make you feel good to know this is a government that is effectively being bought. First, it's being -- they raised this money primarily with contributions from special interest, from contributors on Wall Street, on corporate America. Absolutely dependent upon them. I have to say, we have to give John Edwards great credit here. He has not gone there amongst the top candidates. Neither has Ron Paul. But the idea they have to do this, it's unseemly. It's not the way we should be going about electing a president.

BLITZER: How should we be doing it?

DOBBS: Personally, I'm all for publicly financed elections. There is no countervailing influence to the domination of special interest in this society of ours. The only ones who have that kind of money are we, the people, if we can get them to aggregate money on behalf of candidates, or the federal government.

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