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Clinton and Obama Hope to Gain Ground After Texas Debate; McCain Wants no More of Lobbyist Story; Congressman Rick Renzi Accused in Alleged Scam

Aired February 22, 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, Hillary Clinton hopes debating Barack Obama one-on-one will slow his momentum, but the Clinton camp faces some tough expectations. And a tragedy throws the campaign off kilter.
John McCain says he won't personally talk anymore about the reports suggesting he had questionable ties to a female lobbyist. But a new report suggests McCain is contradicting himself on one critical point.

And McCain responds to another controversy. The Arizona co- chairman of his presidential campaign is accused of abusing his power as a United States congressman and allegedly being paid for helping a scam. How is John McCain reacting to this?

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

They came, they sparred, but who will conquer? Right now Barack Obama and Hillary Clinton hope to build on their debate performances last night. He's holding rallies in Texas. She's campaigning there and in Ohio. But one of them canceled some plans due to a tragedy today.

Let's go to our senior political correspondent, Candy Crowley. She's watching the story for us.

Candy, lots of activity out on the campaign trail today.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Absolutely, Wolf. You know, Hillary Clinton put in a solid debate performance last night, but today was pretty rocky both in the political world and in real life.

(BEGIN VIDEOTAPE)

CROWLEY (voice over): They parted well.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: No matter what happens in this contest -- and I am honored -- I am honored to be here with Barack Obama. I am absolutely honored.

CROWLEY: And both felt good enough about how the debate went they did a little evening celebrating.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: And I promise you we will not just win Texas. We will win this nomination. We will win this general election.

CROWLEY: They are looking at different crystal balls.

CLINTON: We are going to not only pick a nominee right here in Texas, but we are going to lay the groundwork for a great campaign this fall.

CROWLEY: Daylight was less forgiving than the night. The morning papers brought news she has lost ground in her must-win states. Her lead shrinking to seven points in Ohio, a tie in Texas.

Another story about money problems questioned her campaign's spending, including a single day expenditure of almost $100,000 on pre-caucus party food. But outside the disappointing news in her political world there was real life tragedy -- the death of a motorcycle policeman escorting the Clinton motorcade in Dallas.

CLINTON: We are just heartsick over this loss of life in the line of duty.

CROWLEY: A sobering tragedy which took its toll on the day. She moved forward with the Dallas event, pitching a central theme of her campaign -- her experience in a perilous world.

CLINTON: The president has to be ready and prepared to make decisions sometimes in a split second. You know, I have been honored to represent all of you traveling around the world to more than 80 countries. I know a lot of the leaders. I know a lot of the influential people in these countries.

CROWLEY: But she told an audience in Fort Worth it wasn't a time for politics and went to visit the dead officer's family.

Campaigning in southern Texas for most of the day, Barack Obama was taking some incoming about his statement that he would meet with the new Cuban leader without a change in behavior.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: And again, I think it's naive to think that you can sit down and have unconditional talking with a person who is part of a government that has been a state sponsor of terrorism, not only in the hemisphere, but throughout the world.

(END VIDEOTAPE)

CROWLEY: The Obama campaign responded by saying that McCain would simply follow the Bush policies toward Cuba, which have failed both the Cuban people and U.S. interests for more than 50 years. It is, Wolf, of course, a hint of the fall campaign.

BLITZER: Candy Crowley in Austin for us. Thanks, Candy, very much.

And as Candy just mentioned, a police officer is dead after his motorcycle crashed in that motorcade for Hillary Clinton in Dallas. Unfortunately, it's not uncommon. In the past year and a half alone, two police officers died in political motorcades.

A 40-year-old officer died in August in New Mexico after his motorcycle crashed in President Bush's motorcade. And in November of 2006, a Honolulu officer crashed on wet roads while serving in President Bush's motorcade. The 30-year-old officer died a week later.

In the Republican race for the White House, lingering questions about ties to a female lobbyist follow John McCain. He says he wants to move on, but there are new developments in this story potentially could delay that.

Our Dana Bash is in Indianapolis right now. Dana's watching the story for us.

Dana, he was very emphatic once again today about how he wants to proceed.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: He sure is. You know, Wolf, one of the golden rules of political damage control is to show you're not afraid to answer questions about a controversy, but then you move on. Today, John McCain is doing his best to follow that rule.

(BEGIN VIDEOTAPE)

BASH (voice over): At a town hall in Indianapolis, it was all about changing the subject. John McCain tried to do that with tough talk on Cuba, so tough he even suggested he wants Fidel Castro to die.

MCCAIN: As you know, Fidel Castro announced that he would not remain as president. Whatever that means. And -- but -- and I hope he has the opportunity to meet Karl Marx very soon.

BASH: But on "The New York Times" story suggesting he had an inappropriate relationship with a lobbyist, which enveloped his campaign a day earlier, McCain refused to answer more questions.

MCCAIN: I had a press conference yesterday morning. I answered every question. I do not intend to discuss it further.

BASH: That, even as President Bush's spokesman attacked "The New York Times," accusing the paper of intentionally trying to torpedo GOP presidential candidates.

" 'The New York Times' does try to drop a bombshell on the Republican nominee," said White House spokesman Scott Stanzel. "That is something that the Republican nominee has faced in the past and will probably face in this campaign."

MCCAIN: My campaign is not doing that anymore.

BASH: McCain wants to move on, but the story has turned a spotlight on the lobbyists and insiders who play key roles in his campaign. Of McCain's five top advisers, two, Rick Davis and Charlie Black, are senior partners in Washington lobbying firms. Steve Schmidt and Mark McKinnon do not lobby but work for firms that do.

MCCAIN: I'm proud to have them as part of my team.

BASH: The man running against Washington's special interests says there's nothing wrong with having advisers who lobby.

MCCAIN: It's not whether the individuals, many of whom are very honorable. It's whether a system or people have violated the trust of the people as the representatives.

(END VIDEOTAPE)

BASH: Now, one of McCain's senior advisers, Charlie Black, is still actively lobbying Congress while he works on McCain's campaign. Now, Black tells CNN he helps McCain strictly on a volunteer basis and never, under any circumstances, he says, would he or does he try to lobby McCain for one of his clients -- Wolf.

BLITZER: Dana, there's a "Newsweek" story that just moved out on the Web just a little while ago from their investigative reporter, Michael Isikoff. "Newsweek" suggesting in this story that the there could be a hole, maybe even a serious hole, in what McCain has been saying.

There was a deposition that McCain gave, what, five years ago in which he admitted in that deposition that the head of that Paxson telecommunications lobbying effort, that they did ask him to lobby the FCC on its behalf. "Newsweek" says that contradicts one of McCain's strong points. What are you hearing from the McCain camp?

BASH: The McCain campaign insists, Wolf, that there is no contradiction there. Of course, this whole thing is about whether or not McCain used his influence on the Senate Commerce Committee to help this -- to help this lobbyist, to help the lobbyist in question in "The New York Times" story.

But what the McCain campaign says is that Senator McCain himself admitted yesterday that, yes, he did send letters to the FCC, but what he said is he insists he didn't actually ask the FCC to rule one way or the other. So they say, yes, he got a call perhaps from Mr. Paxson, but he didn't ask the FCC to rule on his behalf. And I'll read you a statement from Jill Hazelbaker, a spokeswoman for John McCain.

She said, "... his letters to the FCC concerning this matter simply urged the commission to make up its mind. He did not and would not ask the FCC to approve or deny the application."

So, this is a strong denial from the McCain campaign, but it is a reminder, Wolf -- there's no question it is a reminder that this is a very complicated story. It's a very complicated issue. And it's one, despite the denials that John McCain is making, is likely not to go away. And there will be lingering questions about all of the details, and there are a lot of details that probably are still to come out -- Wolf.

BLITZER: All right, Dana. Thank you. Dana Bash watching this story for us.

John McCain also being asked about another controversy. This one does not involve him. It does involve the Arizona co-chairman of McCain's presidential campaign. He's Congressman Rick Renzi of Arizona, indicted today for his alleged role in a scam.

This is how Senator McCain reacted to the news...

(BEGIN VIDEO CLIP)

MCCAIN: I don't know enough of the details or anything to make a judgment. This kind of thing is always -- is always very unfortunate. I rely on our Department of Justice and our system of justice to make the right outcome.

(END VIDEO CLIP)

BLITZER: CNN's Brianna Keilar is joining us now with more on Congressman Renzi, what he's accused of.

Brianna, it's a scathing list of allegations.

BRIANNA KEILAR, CNN CORRESPONDENT: Wolf, these are very serious charges. House Republican Leader John Boehner calling them completely unacceptable for a member of Congress, and also urging Congressman Renzi to seriously consider if he can effectively serve in Congress.

(BEGIN VIDEOTAPE)

KEILAR (voice over): Arizona Republican Congressman Rick Renzi now facing 35 criminal charges, including conspiracy, money laundering, extortion, and insurance fraud, and the possibility of time behind bars.

DIANE HUMETEWA, U.S. ATTORNEY: Each of these are felony counts. So each of them are very serious. The penalties range from -- they are statutory penalties, mind you -- range from 10 to 20 years in prison and up to a fine of $250,000.

KEILAR: The government accuses Renzi of using his official position in Congress for financial gain. Federal prosecutors say Renzi insisted that a group of Arizona land investors buy property owned by Renzi's former business partner, James Sandlin. In exchange, Renzi would make sure the investors got congressional approval for a federal land deal they wanted.

The indictment says Renzi told investors, "no Sandlin Property, no bill" and promised a "free pass" for the land deal through the House of Representatives. Prosecutors say the deal made Sandlin $4.6 million richer and allowed Sandlin to pay off a $700,000 debt he owed Renzi. And they allege Renzi covered up the flow of money into his personal bank account.

ANDREA WHALEN, IRS CRIMINAL DIVISION: The highly intricate investigation we are talking about today required agents to trace the flow of funds through numerous corporations and business entities, and an array of personal and business bank accounts.

KEILAR: The indictment also says Renzi misused money from his business, an insurance company, taking hundreds of thousands of dollars in clients' insurance premiums and funneling the money into his campaign account.

(END VIDEOTAPE)

KEILAR: Renzi is maintaining his innocence. His lawyer issuing a statement just a short time ago saying Renzi will fight these charges until he is vindicated and his family's name is restored -- Wolf.

BLITZER: Brianna, so what's the next legal step in this process?

KEILAR: Well, at this point, Renzi is scheduled to be arraigned in federal magistrate court in Tucson, Arizona. That's scheduled for March 6th. And also scheduled to be arraigned, Sandlin, his former business partner, as well as a Renzi lawyer who allegedly helped Renzi in the insurance fraud part of this case -- Wolf.

BLITZER: All right, Brianna. Thanks very much. Brianna Keilar reporting.

Let's take a closer look at a few other current and former members of Congress who have been embroiled in scandal. In 2006, former California Republican congressman Randy "Duke" Cunningham was sentenced to just more than eight years in prison -- in a federal prison -- for taking more than $2 million in bribes. Officials say it's the highest sentence ever for a former member of Congress.

Last March, former Republican congressman Bob Ney of Ohio pleaded guilty to corruption charges, was sentenced to 30 months in prison.

Currently, the FBI is investigating taped conversations between Republican Senator Ted Stevens of Alaska and an oil company executive.

And Louisiana Democratic Congressman William Jefferson, he was indicted by a federal grand jury on corruption charges. Among them, that he took more than $500,000 in bribes.

Jack Cafferty is off today. He'll be back here on Monday.

Still ahead, John McCain calls Barack Obama dangerously naive when it comes to Cuba. Coming up, the former Senate majority leader, Tom Daschle, he'll explain whey he thinks Obama should be president.

McCain's campaign could hit a stumbling block. Not from another candidate, but from the Federal Election Commission. Why its staffing issues could cause money problems for the Republican front-runner.

Plus, vote early, vote often. Coming up, in this unusual election system in Texas, why Hillary Clinton said it had grown men crying over it. We'll explain.

Stick around. You're in THE SITUATION ROOM. (COMMERCIAL BREAK)

BLITZER: Barack Obama's rival says he does not yet have enough experience to be president. Talking about John McCain. The presumptive Republican nominee actually suggesting that Obama is "dangerously naive."

Joining us now is Tom Daschle. He's an Obama supporter. He's also the former Senate majority leader. Served in the majority and the minority.

You've been both. Senator, thanks for coming in.

TOM DASCHLE, FMR. SENATE MAJORITY LEADER: My pleasure, Wolf.

BLITZER: Here's what John McCain said today in a statement about Barack Obama's willingness, as expressed in the debate last night, to go ahead and meet with the new Cuban leader.

"Senator Obama says he would meet Cuba's dictator without any such steps in the hope that talk will make things better for Cuba's oppressed people. Meet, talk and hope may be a sound approach in a state legislature, but it is dangerously naive in international diplomacy, where the oppressed look to America for hope and adversaries wish us ill."

You've been in -- you've been watching this for a long time. We know you support Obama, but is it dangerously naive for him to talk about meeting with these leaders without preconditions?

DASCHLE: Well, Ronald Reagan didn't think it was naive to meet with Brezhnev. And Richard Nixon didn't think it was naive to meet with the Chinese leadership.

What Barack Obama has said is, throughout history, Wolf, what we've been able to do through dialogue, through opening our communication lanes, we're able to accomplish things that you can't through confrontation. What John McCain is suggesting is 50 more years of the same failed policy we've seen in Cuba. What's his alternative? That to me is naive.

(CROSSTALK)

BLITZER: So you would advise him to go ahead and meet with Raul Castro without any indication from Raul Castro he was going to improve the lives of the Cuban people?

DASCHLE: Listen, that's not what -- that's not what Barack said last night. And what Senator Obama has continued to say is that there ought to be ways in which to work through the process. There ought to be steps taken to ensure that we are in a position to talk. But why not begin the dialogue? Why not see if we can actually bring about some real change?

What Barack has said is that we ought to start with remittances. We ought to give families the opportunity to go back and forth. We ought to start acting as if they really are our neighbor. And that's the kind of common sense change that we've needed for a long time.

BLITZER: Would you have the same standard for Ahmadinejad in Iran?

DASCHLE: Well, again, I think each case has to be taken in its own situation. We've got to make sure that steps are taken along to way to ensure that these dialogues, this communication, can be successful, can be productive.

You're not going to jump into something without taking the necessary steps to do that to prepare for a good discussion. That's what Ronald Reagan did. That's what Richard Nixon did. That's what virtually every president has done in the past. You have got to make sure that you've prepared yourself. But once that happens, of course dialogue is going to be productive.

BLITZER: McCain is also saying that Barack Obama is backing away from his commitment to accept public financing in the general presidential election. Here's what McCain said.

(BEGIN VIDEO CLIP)

MCCAIN: And that's Washington doublespeak. I committed to public financing. He committed to public financing. It is not any more complicated than that. I hope he will keep his commitment to the American people.

(END VIDEO CLIP)

BLITZER: All right. Is he going to keep his commitment to the American people?

DASCHLE: It's amazing to me that John McCain would be the one to suggest that. He's now the one who is trying to get out from his obligation to...

(CROSSTALK)

BLITZER: But he says if the Democratic candidate agrees to public financing, he will agree to public financing.

DASCHLE: Here's what Barack has said -- he wants to negotiate with the Republican candidate to ensure that we put some lid on how much we spend. All the third-party ads and all the things that have happened in the past have to be part of this equation.

If we can work out some agreement on campaign finance, on third- party finance, on the overall way we're going to run this campaign, he is more than willing to sit down with the McCain people and come to some conclusion. But we've got to have everything on the table. And so far that hasn't happened. And it's probably premature to even be thinking about it.

BLITZER: Last night, when Hillary Clinton was asked if she was ready to be commander in chief on day one, she of course said yes. But she said it was up to the American people to make that determination as far as Barack Obama was concerned.

I wonder if you want to respond to that, because she was pretty firm in saying what McCain is saying, that Barack Obama, the senator you support, really is not yet ready to be president of the United States.

DASCHLE: Well, you know, there are so many ways with which to judge one's readiness. What I think one has to look at is one's judgment. And on occasion after occasion, instance after instance, experience after experience, what Barack Obama has shown is remarkably good judgment.

When John McCain said we ought to go to war and stay in Iraq for 100 years, Barack Obama said war was wrong in the first place and we should be finding a way to get out. And devoting and diverting our attention to the places where it could really make some good, do some good, like Afghanistan -- in particular, we have got a lot of work to do.

I mean, what Hillary Clinton and I and others did was made mistakes along the way with regard to the war in Iraq. Barack Obama has shown remarkably good judgment. And that to me at the end of the day is what this election is all about. Who has got the judgment on day one to take the reins of responsibility and power and do the right thing for this country?

BLITZER: Senator Daschle, thanks for coming in.

DASCHLE: My pleasure, Wolf.

BLITZER: Appreciate it very much.

And this note to our viewers. We're going to keep things balanced here in THE SITUATION ROOM. Coming up a little bit later, we're going to have a Clinton supporter, Senator Robert Menendez of New Jersey. We're going to ask him about the accusations of plagiarism coming from both sides, among other things.

One of the most contentious moments in last night's debate came when Hillary Clinton accused Barack Obama of lifting words for his speeches, but does Senator Clinton need to watch her own words?

And transparency on transparency. Brian Todd fact-checks an answer from Obama about his disclosures on spending federal money.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: We're fact-checking the candidates' statements from last night's debate, including Barack Obama's answers on whether he's really been open about those pet projects known as earmarks.

Plus, is it a primary? Is it a caucus? It's actually both. The next big race includes Texas, and its voting is unique. Which candidate might benefit?

Bill Schneider taking a closer look. That's coming up.

(COMMERCIAL BREAK)

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

Happening now, critics say Barack Obama misrepresented, even fabricated, an anecdote about a U.S. Army captain's deployment to Afghanistan without enough troops, training and weapons. Guess what? We're going to take you straight to the source. You're going to see what the Army captain himself has to say about this story.

John McCain would be the oldest president every sworn into office of the United States for a first term. Barack Obama would be one of the youngest. The age factor, how might it factor into the race for the White House? Carol Costello watching this story.

And you could call it political hacktivism, cyber attacks on the candidates' Web sites.

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

Both Democratic candidates have been campaigning in Texas this week. But they're not only trying to win the support of voters. Because a highly unusual system of choosing delegate in the state, they're also spending a lot of time trying to explain to Texans how to vote.

Let's go to our senior political analyst, Bill Schneider. He's watching this story for us.

Bill, it's a good thing you have a Ph.D., because you have to -- you need one to understand the complicated system in Texas. Explain.

(LAUGHTER)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: I have a Ph.D. I'm not sure I understand it.

They have a unique plan here. You could call it, if you want, the Tex-Mex plan.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Tex-Mex restaurants have these things called combination plates, where you get a little of this and a little of that. Same way Democrats pick delegates in Texas.

PAUL BURKA, "TEXAS MONTHLY": We have 126 by election, 67 by caucus, and 35 more are what they call PLEOs, which are party leaders and elected officials.

SCHNEIDER: The 37 page menu officially called the Texas Delegate Selection Plan explains how it works. First, there's a primary. The results are determined by state Senate district. Simple? Not so much.

BURKA: The senatorial districts do not all have the same number of delegates chosen. The ones with big Democratic turnouts get up to eight. And the small ones can be as low as two.

SCHNEIDER: Hillary Clinton is expected to do well in low-turnout Latino districts. Those districts elect fewer delegates than high- turnout African-American districts, where Barack Obama is likely to be strong. But the primary is only the first step.

WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Texas is the only place in America where you can vote twice in the same election without going to jail.

SCHNEIDER: On primary night, voters are supposed to go to precinct caucuses, where they can vote again to select more delegates.

BURKA: You vote in the primary, but then you have to have the motivation to go back at 7:15 to the site of the primary where the -- your precinct election was held and vote for your candidate. And it may be a long evening.

SCHNEIDER: Who runs the caucuses? The guide says, if no precinct captain shows up, it's whoever gets there first. Imagine Clinton and Obama voters rushing to grab control. It's enough to give you the same thing you could get from a combination plate: heartburn.

(END VIDEOTAPE)

SCHNEIDER: And one more thing: In section one, part B, paragraph three, item A of the Texas Delegate Selection Plan, it says -- quote -- "Participation in Texas's delegate selection process is open to all voters who wish to participate as Democrats." Now, that includes independents, who tend to like Obama, and Republicans, who may want to vote to stop Hillary Clinton -- Wolf.

BLITZER: All right. You did an excellent job, Bill Schneider, explaining a complicated system. Only in Texas, as they say.

SCHNEIDER: Yes.

BLITZER: Thanks very much, Bill Schneider, in Austin for us. Watch out for some that food. It's delicious, though.

Transparency was one of the issues discussed at last night's Democratic debate in Austin. Both candidates say they will clean up Washington. But can we take them at their word?

Brian Todd has been checking the facts for us.

Brian, what are you finding?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, when it comes to transparency on spending, there's a big difference between the Republican front-runner and the two Democrats. But there's some differences between the two Democrats as well. (BEGIN VIDEOTAPE)

TODD (voice-over): One pointed topic in the Texas debate, earmarks, those pet spending requests by members of Congress. Barack Obama was pressed on his earmarks outlined in a recent report.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It still said you were responsible for $91 million in earmarks. And you have refused to say where the money went, what it's for. Why?

OBAMA: No, that's not true. we have actually disclosed, John, all our earmarks. And I have been consistently in favor of more disclosure around earmarks.

TODD: Sure enough, Barack Obama's Senate Web site lists the earmarks he requested this year. Previous years? Not posted, the campaign says, although his debate answer was accurate, they say, because the question referenced this year.

STEVE ELLIS, VICE PRESIDENT OF PROGRAMS, TAXPAYERS FOR COMMON SENSE: Senator Obama has sponsored legislation to increase transparency in earmarks in the federal budget. He's also disclosed all of his earmark requests.

TODD: And Hillary Clinton? She does not post a list of requests, although she issues individual press releases about earmarks she gets.

ELLIS: Senator Clinton, on the other hand, has actually not disclosed her earmark requests -- we do have the information about what she has got -- and has not been a leader as far as sponsoring any legislation.

TODD: According to Taxpayers for Common Sense, Senator Clinton won $340 in earmarks this year. Obama got $91 million. This spending circumvents the normal appropriations process. But both candidates say it's all for worthy projects, like highways and hospitals.

Republican candidate John McCain doesn't have a single earmark request. He promises, as president, to make Congress stop using them.

MCCAIN: I will not sign a bill with earmarks in it, any earmarks in it.

(CHEERING AND APPLAUSE)

(END VIDEOTAPE)

TODD: Now, will voters judge the candidates on this issue? In the last election, voters seemed to be pretty keen on honest government. But, remember, earmarks can also be very popular with constituents who get a lot of money from the government for their districts -- Wolf.

BLITZER: If they -- if somebody wanted to know, how would they go about looking up earmarks for a candidate? TODD: Well, as of this year, Congress not only discloses earmarks, but also who asked for them. Now, watchdogs group like Taxpayers for Common Sense make spreadsheets to make them easier to look up. In addition, about 20 percent of all legislators make public earmarks on their own. And many say they are proud to do so, because they say earmarks are a useful way for them to make sure the money goes exactly where they think it should.

BLITZER: Thanks very much, Brian Todd, reporting for us.

Brian Todd and Bill Schneider are both part of the Emmy Award- winning best political team on television.

Remember, for the latest political news any time, check out CNNPolitics.com. It's the -- the ticker there is the number-one political news blog on the Web. And that's also where you can read my latest blog posts. I just wrote about the debates and more, posted it just a little while ago.

The presidential race is already shaping up to be very expensive. But might problems at a federal agency cause a dent in John McCain's campaign war chest?

Also, Hillary Clinton accuses Barack Obama of plagiarism. But is Clinton herself stealing other politicians' words? That's coming up in our "Strategy Session."

And, if you're trying to cruise your favorite candidate's Web site, be careful. You may wind up looking at something that seems very real, but it's designed to victimize you.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: At a critical time, the Federal Election Commission is essentially broken right now. And that could hurt John McCain's presidential campaign.

CNN's Kate Bolduan is following the story for us.

Kate, what's going on?

KATE BOLDUAN, CNN CORRESPONDENT: Well, Wolf, the public campaign financing that John McCain has long advocated now could cause some real problems for him, because, as the presumptive nominee, he may not have enough money left, much money left, at least, to keep battling Democrats before the general election begins.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): John McCain says, he can.

MCCAIN: We think it's perfectly legal.

BOLDUAN: But the chairman of the Federal Election Commission says, not so fast. At issue, guaranteed public money for presidential candidates that McCain signed up for last year. And, by doing so, he agreed to a spending limit, about $54 million for the primaries.

MCCAIN: Good. Good to see you.

BOLDUAN: But McCain has already spent over $49 million in his own campaign money, meaning he could only spend another $5 million between now and the GOP convention in September. In a letter to the FEC, McCain says he is withdrawing from public financing, saying he hasn't spent any of that money.

MCCAIN: We are confident that it -- it is the appropriate thing to do.

BOLDUAN: The FEC chairman says the commission has to vote on McCain's move, but the FEC can't, because four of six seats are empty, tied up in nomination battles. Allison Hayward was counsel to the former FEC chairman.

ALLISON HAYWARD, FORMER COUNSEL TO FEDERAL ELECTION COMMISSION CHAIRMAN: There's no way they can rally a four-vote majority to decertify him. And, so, it's a real question whether or not he's stuck in the system until additional commissioners are named.

BOLDUAN: The FEC also questions a loan agreement between McCain and Fidelity and Trust Bank. The FEC says McCain appears to promise future public funds as collateral.

HAYWARD: By reference the potential access to future matching payments, they might have been just a little too clever.

(END VIDEOTAPE)

BOLDUAN: Now, if John McCain knowingly goes against the FEC, he could technically face big fines and prison time. Now, that doesn't look likely here. Nevertheless, it could be a black mark for a self- proclaimed campaign finance reformer -- Wolf.

BLITZER: So, Kate, where do things go from here?

BOLDUAN: Well, right now, Wolf, the FEC is asking for McCain to respond by -- by early March, to basically explain himself. But McCain, experts say, could go to a federal judge to ask the judge to make a judgment, basically freeing him from the contract. But, of course, we will just to have to wait to see.

BLITZER: Kate Bolduan reporting for us -- thank you, Kate, very much.

In our "Strategy Session": The sharpest jab in last night's debate came from Senator Clinton.

H. CLINTON: I think that if your candidacy is going to be about words, then they should be your own words. That's, I think, a very simple proposition.

(CHEERING AND APPLAUSE)

H. CLINTON: And...

(END VIDEO CLIP)

BLITZER: But how original are some of Senator Clinton's own words? We're going to explain what's going on.

And the story the McCain camp wants to go away, it's living, at least for another day. Did Senator McCain contradict himself in how he dealt with a lobbyist and her client? And how much of a headache could that be for the GOP? Steve Murphy and John Feehery, they're standing by -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In one of the most contentious moments in last night's debate, Hillary Clinton suggested Barack Obama had lifted lines from a political ally, raised questions about his larger message.

(BEGIN VIDEO CLIP)

H. CLINTON: Lifting whole passages from someone else's speeches is not change you can believe in. It's change you can Xerox. And I just don't think...

OBAMA: Come on. That's not what happened there.

CLINTON: No -- but, you know, but, Barack, it is.

(END VIDEO CLIP)

BLITZER: But should Senator Clinton watch her own words? Later, she sounded remarkably senator to a former rival in the race for the Democratic nomination.

(BEGIN VIDEO CLIP)

H. CLINTON: Whatever happens, we're going to be fine. You know, we have strong support from our families and our friends. I just hope that we will be able to say the same thing about the American people, and that's what this election should be about.

(APPLAUSE)

JOHN EDWARDS (D), FORMER PRESIDENTIAL CANDIDATE: What's not at stake are any of us. All of us are going to be just fine no matter what happens in this election. But what's at stake is whether America is going to be fine.

(END VIDEO CLIP)

BLITZER: At another point in the debate, Senator Clinton seemed to echo lines once used by her husband.

(BEGIN VIDEO CLIP) H. CLINTON: You know, the hits I have taken in life are nothing compared to what goes on every single day in the lives of people across our country.

(BEGIN VIDEO CLIP)

W. CLINTON: When the history of this campaign is written, they may say, well, Bill Clinton took a lot of hits in this campaign.

(CHEERING AND APPLAUSE)

W. CLINTON: I want you to know something. That hits that I have took in this election are nothing compared to the hits that the people of this state and this country are taking every day of their lives.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

BLITZER: Let's get some reaction now.

Joining us now in our "Strategy Session," Democratic strategist Steve Murphy and Republican strategist John Feehery.

Guys, thanks very much for coming in.

Steve, what do you think?

STEVE MURPHY, DEMOCRATIC STRATEGIST: I think it's much ado about nothing. I think it's the silly season, as Barack Obama described it. You know, "We will all be fine" isn't exactly a copyrighted term. And it's not exactly a copyrighted sentiment. So, I think -- I don't think there's anything to it.

BLITZER: What do you think?

JOHN FEEHERY, REPUBLICAN STRATEGIST: What this shows is how hard it is for Hillary Clinton to make a comeback against Barack Obama. Negative campaigning does not work, hasn't worked for her. When she did that line about Xerox, it really fell flat.

As a matter of fact, it got boos. She has got to be positive. And she can't be positive, because, with momentum, the momentum is with Obama. And I think that really is something that is scary for the Clinton campaign.

BLITZER: They have another debate next week before the Ohio and Texas March 4th primaries. What advice, as a good strategist, would you give both of these candidates?

MURPHY: You know, I think, if I were Hillary, I would continue to take the high road. She doesn't have any real chance of breaking through by attacking Barack Obama.

The only thing that can bring him down now is a big mistake that he makes himself. So, that's what I do if I was her. If I'm him, I'm going to keep on trying to add substance to the message.

BLITZER: What advice would you give them?

FEEHERY: Play the expectations game. Lower expectations for you, but also get out the turnout mechanism. Go to the Latino community. Go to those ethnic voters in Ohio and really turn out the vote. I think Steve is absolutely right. You have got to stay positive, but do those technical things and lower expectations, so when -- if you do win, it's a bigger deal.

BLITZER: Let's follow up on the John McCain vs. "New York Times" flap, as some people are calling it.

Now "Newsweek" magazine is weighing in. Their investigative reporter Michael Isikoff has obtained an affidavit that he gave John McCain back, what, in 2002, suggesting he had been contacted by one of these lobbyists before he wrote this letter on behalf of some Pittsburgh television stations.

According to this affidavit in "Newsweek" -- it's a deposition, actually -- "I was contacted by Mr. Paxson on this issue. He wanted their approval very bad for purposes of his business. I believed that Mr. Paxson had a legitimate complaint."

The suggestion being, over the past 24 or 48 hours, he was saying that nobody had contact him. He just thought it was important, as the chairman of the Commerce Committee, to write this letter on the -- on the -- on the merits of the case.

FEEHERY: First of all, the story was good for John McCain in the sense that it was "New York Times" who broke it. And it...

(CROSSTALK)

BLITZER: Good among conservative -- the conservative base.

FEEHERY: It infuriated the Republican base. It infuriated Republicans. And I think it infuriated some independents, because it's the sexual innuendo that was absolutely outrageous in the story. I think the story was very thinly sourced, the anonymous sources on the sex stuff.

All this other stuff is just in the post-traumatic part of all of the first story. I don't think it's going to make any difference. I think McCain -- actually, for McCain, it was good timing, too, because, pretty much, he has the nomination sewn up. And by the time the general election rolls around, this story will be long forgotten.

BLITZER: What do you think, Steve?

MURPHY: He's raising money off this, too.

BLITZER: Yes.

MURPHY: I think it's -- I also think this is a little bit of the silly season. He has to be careful about getting holier than thou when he denounces lobbyists and saying he's going to change everything in Washington. He has got a lot of lobbyist friends. I totally agree. The voters are going to find the sexual innuendo to be completely inappropriate.

BLITZER: We have got to leave it there. Steve Murphy, John Feehery, guys, thanks for coming in.

FEEHERY: Thank you.

MURPHY: Thank you.

BLITZER: Former presidents have a presidential library. So, where will George W. Bush, where will he have his library? The answer coming up.

And bringing politics to the people in the key primary state of Texas. Ali Velshi is on the road with the CNN Election Express -- that and a lot more coming up, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the "Hot Shots" coming in from our friends over at the Associated Press, pictures likely to be in your hometown newspapers tomorrow. We are going to get to those in just a moment. But let's get to the political ticker first, before we do that.

It's official. President Bush will have his presidential center at the Southern Methodist University in Dallas. Today, the school's -- school's board of trustees formally approved a plan for the complex expected to cost more than $200 million. The center will include a library, a museum, and a public policy institute.

President Bush wrote to SMU's president that he's excited about the plans. The first lady, Laura Bush, graduated from SMU.

One congressman answers the question, will he or won't he? Republican John Shadegg of Arizona says he will run for an eighth term. Only last week, he announced he would retire. But Shadegg says he reconsidered after his peers in the House strongly urged him against retirement.

Remember, for the latest political news any time, check out CNNPolitics.com. That's where you can read my daily blog post as well.

CNN is bringing politics to the people. And we could be coming to a place near you.

CNN's Ali Velshi is crisscrossing Texas right now. He's aboard CNN's Election Express. Actually, he's just outside CNN's Election Express. He's joining us now live from Austin.

Give us a little flavor of what's happening deep in the heart of Texas, Ali. ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Absolutely. Absolutely, Wolf. The hat doesn't fit on the bus, so I had to stand outside. We're in Austin. We are on the campus of the University of Texas at Austin. We have been asking people what they want to know about the economy, what they're concerned about.

Texas is like a country in one state. It's the second most populous state. It's the second biggest work force. It's the second biggest economy. It's the biggest exporter of any state in the United States.

Here's what we have been talking to people about. We have been asking them whether they're connecting with the candidates. We spoke to a guy named Joe yesterday.

Here's what he told me.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I love the fact that Obama gets...

(APPLAUSE)

UNIDENTIFIED MALE: I'm 44-years-old. He's almost the same age I am. And, yet, that man has done more to inspire, more to not talk down to people like us, but talks to you. He talks in terms of hope. He talks in terms of inspiration. And I guess, most of all, he is not a part of the Washington bull.

(END VIDEO CLIP)

VELSHI: Joe is a first-time voter.

We spoke to Hillary supporters. We spoke to -- we -- there are Republicans on this campus, although this is a particularly liberal sort of environment, being a campus in a place like Austin. We're getting a lot of views. Everybody is engaged. Everybody is following this. And everybody has got concerns.

Here in Texas, oil at $100 a barrel is bad for some people because of gas prices. It's good for others, because they are getting rich off of it. There are a lot of stories across Texas. And, over the course of the next 10 days, we're going to get around the state and we're going to hear a lot of them -- Wolf.

BLITZER: So, you're going from where to where to where?

VELSHI: We're in Austin. We're going to go to San Antonio. Then We're going to go to Laredo, right by the Mexican border, then to Corpus Christi, over to Galveston, where you start to get a flavor for the oil drilling, then into Houston, a big cosmopolitan center, which, again, has a lot of oil money.

Then we will head up to Dallas. And we will see where we are on the calender by then, but we're going to hit all these cities. We're going to talk to people about their specific concerns. And, if you see the bus, come and talk to us.

BLITZER: You have got the hat. What about the boots?

VELSHI: I have got the boots, too. You have got to have the whole outfit. As I have heard, you can't be all hat and no cattle -- Wolf.

(LAUGHTER)

BLITZER: All right, Ali Velshi, he's all hat right now. And he's got some boots, too.

Ali, thanks. We will be watching every step of the way deep in the heart of Texas. Thanks very much.

Here's a look at some of the "Hot Shots" right now coming in from our over friends at the Associated Press, pictures likely to be in your hometown newspapers tomorrow.

In Germany, a ski jumper soars through the air during a jump at a World Ski Flying championship. This Austrian skier placed third.

In Havana Bay, Cuba, a fisherman shows off his catch during an afternoon break. Nice catch.

In Kosovo, U.S. peacekeeping officers guard a bridge that separates Albanians and Serbs.

And, in Brooklyn -- look at this -- a pedestrian walks along the snowy Eastern Parkway. A winter storm has blanketed the Northeast, delaying flights, and certainly a lot of inches of snow in New York right now -- some of this hour's "Hot Shots," pictures often worth 1,000 words.

Let's go to Frederik Pleitgen in Germany right now. There's an unusual development that I want to share with you.

(BEGIN VIDEOTAPE)

FREDERIK PLEITGEN, CNN BERLIN BUREAU CHIEF: I'm standing right at the site of the first preliminary digging. The treasure hunters believe that, somewhere down below me, there's a manmade cave. They believe it's about 10 yards underneath the ground.

And early geological measurements seemed to indicate that there's some sort of precious metal down there, perhaps gold, or silver. Now, the treasure hunters believe it might be Nazi gold. They think that the Nazis brought this gold here and dug it into this mountain as they realized they were going to lose the Second World War. And at least one of the treasure hunters believes that, somewhere here in this mountain range, he will be able to find the legendary Amber Room.

The Amber Room was called the eighth wonder of the world, because of its magnificent beauty. It was given to the Russians by Germany and then looted -- later looted by the Nazis as they took over parts of Russia in the Second World War. Later, the Nazis took it away and hid it, and no one has found it since.

Now the treasure hunters believe they might have found the first clue to its whereabouts.

Frederik Pleitgen, CNN, Deutschneudorf, Germany.

(END VIDEOTAPE)

BLITZER: And, to our viewers, You're in THE SITUATION ROOM.

Happening now, Hillary Clinton and Barack Obama rush back to the campaign trail, fresh from their most anticipated debate yet. But talk of the momentum is cut short, as tragedy strikes the Clinton camp.

Also, the role of high-powered lobbyists in the candidates' campaigns.

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