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THE SITUATION ROOM

Pennsylvania Governor Ed Rendell on Supporting Clinton; Obama Adviser Resigns Following Anti-Clinton Remark; New Battleground in City of Brotherly Love

Aired March 7, 2008 - 18:00   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: a monster controversy. A Barack Obama adviser makes an ugly anti-Hillary Clinton slur, while Clinton essentially accuses Obama of trying to fool voters with promises over Iraq.
Also, to win, the candidates want you to turn on your party's nominee. But who will do better at luring moderate Republicans and Democrats?

And there's new reason to fear for the U.S. economy. Tens of thousands of people lost their jobs in a single month. The candidates certainly can't ignore it. But do you buy their promises to fix this disturbing trend?

All that coming up, plus the best political team on television.

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

We want to welcome our viewers in the United States and around the world.

Things get ugly out on the campaign trail. A Barack Obama adviser calls Hillary Clinton -- and I'm quoting now -- a "monster." Hillary Clinton reacts and then lobs an attack of her own latching on to something else the adviser said. Clinton essentially accusing the Obama campaign of saying one thing in public, but another thing in private.

Let's go straight to CNN's Jessica Yellin. She's watching this unfold in Cheyenne, Wyoming, where there's a Democratic caucus scheduled for tomorrow.

Jessica, the latest controversy is potentially significant. What's going on?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: What's going on, Wolf, is this state, which rarely sees a single candidate before the general election, getting inundated with them. And what they're seeing are these candidates going after each other with a new intensity.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): Wyoming Democrats basking in the glow of political attention as the candidates storm the state. SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: What a great crowd. Thank you so much, everybody.

YELLIN: Clinton determined not to forfeit another caucus had the family in town already.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Thank you very much.

YELLIN: On the stump, the backbiting between the campaigns is erupting in public. The latest dustup over this suggestion by one of Obama's foreign policy advisers that he can't guarantee when he would with draw troops from Iraq.

SAMANTHA POWER, FORMER OBAMA ADVISER: You can't make an arbitrary decision. You have no idea how things will unfold. You have no idea what your commanders are going to tell you.

YELLIN: Clinton seized on the opening.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: This is the latest example of promising the American people one thing on the campaign trail and telling people in other countries another.

YELLIN: It forced Obama to respond.

OBAMA: It was because of George Bush, with an assist from Hillary Clinton and John McCain, that we entered into this war. And I will bring this war to an end in 2009. So, don't be confused.

YELLIN: The adviser who was also quoted calling Clinton a monster has since resigned.

Meantime, the Obama campaign is hitting Clinton hard, calling her one of the most secretive politicians alive for her failure to release key documents.

(END VIDEOTAPE)

YELLIN: Now, Wolf, one of the big questions here, it's Obama's advisers who are hitting Clinton hard, not Obama himself. He says he's a skinny guy, but he's tough. He grew up in Chicago. He says he can give as good as he gets, but we have yet to see that on the campaign trail. And the question is, will he start attacking Hillary Clinton the way she's been attacking him? -- Wolf.

BLITZER: Jessica Yellin out in Wyoming for us -- thanks, Jessica, very much.

Bill Clinton stood in for his wife, and an Iraq war veteran backed Barack Obama today as the Democrats battled out in the City of Brotherly Love.

Let's go to Mary Snow. She is joining us now from outside Philadelphia, where Bill Clinton held a rally.

The campaigns, Mary, are wasting no time zeroing in on the next huge prize. That would be Pennsylvania.

MARY SNOW, CNN CORRESPONDENT: Yes, and, Wolf, particularly on Philadelphia. It's the state's largest city.

There is expected to be fierce competition between Senators Clinton and Obama. And in the last couple of days, both campaigns scrambled to get a chance to speak with Democratic leaders in an effort to try to win their endorsement.

(BEGIN VIDEOTAPE)

SNOW (voice-over): A routine meeting of Philadelphia Democrats turned to a battleground in the race for the White House. Former President Bill Clinton went before 69 ward leaders seeking their political blessing for his wife's candidacy. The meeting was closed to the press.

Philadelphia Mayor Michael Nutter, a Clinton supporter, says the president received a warm reception.

MICHAEL NUTTER (D), MAYOR OF PHILADELPHIA: Still no one better delivering a message and explaining what's going on in this country.

SNOW: Those who attended say the former president stuck to issues that included the economy and health care and did not attack Senator Barack Obama. Following the president, Pennsylvania Congressman Patrick Murphy, also an Iraq veteran, making his case for Senator Barack Obama. With Clinton already sealing the endorsement of the city's mayor and the state's governor, Murphy is bracing for a tough fight.

REP. PATRICK MURPHY (D), PENNSYLVANIA: This is going to be a dogfight. But the fact that Senator Obama continues to be the underdog all over, in every state across America, has won more states, got more volunteers, and has generated enthusiasm that we have not seen in a generation.

SNOW: Congressman Bob Brady is the city's Democratic chairman who's staying neutral. He says the committee voted not to endorse anyone for now and says the Democratic leaders remain split.

REP. ROBERT BRADY (D), PENNSYLVANIA: There are friends sitting in that room with an Obama button sitting right next to a Clinton button laughing back and forth. And they're still walking out there laughing back and forth. When you endorse somebody in this tight of an election, they may not be doing that.

SNOW: Temple University political science professor Michael Hagen says securing the endorsement of the city's Democratic leaders carries weight as winning support in Philadelphia is key to winning the state's primary.

MICHAEL HAGEN, TEMPLE UNIVERSITY: It's an extremely Democratic city, certainly the most Democratic part of Pennsylvania.

(END VIDEOTAPE) SNOW: And with Philadelphia in the spotlight, Democrats are now reaching out to both candidates to have them make their own personal appeals to leaders here and they're also trying to secure a debate before the primary on April 22 -- Wolf.

BLITZER: Mary, thanks very much.

Today, we learned that employers slashed 63,000 jobs in February alone, the most seen in five years. And that certainly has some ripple effects throughout the economy.

The Republican presidential candidate, John McCain, is talking how this affects Americans and what he would do to resolve it.

CNN's Dana Bash is in Atlanta -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Senator McCain is running on his national security credentials, but when a voter asked him today what his biggest issue is, he responded, "It's obvious, the economy."

(BEGIN VIDEOTAPE)

BASH (voice-over): An Atlanta town hall, John McCain insisted the term recession matters to economists, not people feeling the pinch, but concede that America is likely in one.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: The main factor out there is that Americans are hurting right now. And they don't care too much whether it's technically a recession or not. So, I would say that it's very likely. And more and more economists are saying that -- that we are probably, "in a recession."

BASH: That bleak assessment is vivid proof the presumptive Republican nominee sees the political reality of a sour economy, a huge challenge for a candidate who admits his strongest suit is not economics.

MCCAIN: I have been involved in the economic issues affecting this country for the last 25 years. Am I more versed on national security issues? I would argue yes.

BASH: Reacting to a new report of widespread job loss, McCain called for worker retraining. The first thing he would do for economy as president? Make permanent the Bush tax cuts he originally voted against.

MCCAIN: So that the American businesses and families are sure that they will not experience the impact of what I think would be a very serious blow to our economy.

BASH: Meanwhile, another town hall question was a bit of a flashback.

UNIDENTIFIED MALE: John Kerry approached you in 2004 about being his running mate. Would you be open to returning the favor and considering him as your running mate?

(LAUGHTER)

MCCAIN: No.

(LAUGHTER)

MCCAIN: I'm a conservative Republican. So, when I was approached when -- we had that conversation back in 2004, I mean, that's why I never even considered such a thing.

BASH: Later, a "New York Times" reporter reminded McCain that, four years ago, he denied to the newspaper that Kerry approached him. That elicited a testy exchange.

MCCAIN: Everybody knows that, that I had a conversation. There's no living American in Washington that knows that. There's no one.

And you know it, too.

(CROSSTALK)

MCCAIN: No, you know it. You know it. So, I don't know -- even know why you asked.

(CROSSTALK)

MCCAIN: No, you do know it. You don't know.

(CROSSTALK)

MCCAIN: I don't know. But it's well known that I had the conversation. It was absolutely well known by everyone. So, do you have a question on another issue?

(END VIDEOTAPE)

BASH: That exchange went on and on. And McCain still refused to answer any questions on the top pick. As for Democrats, they jumped on the incident calling McCain -- quote -- "Senator Hothead" and saying it's the latest example of his temper.

McCain adviser Steve Schmidt called this all -- quote -- "complete and total nonsense," insisting what Americans really care about are things like the 63,000 jobs lost last month -- Wolf.

BLITZER: Dana Bash in Atlanta for us, thank you.

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

JACK CAFFERTY, CNN ANCHOR: Some more depressing news when it comes to the economy. Home equity for the average American has dropped below 50 percent for the first time since World War II. That means homeowners' debt on houses exceeds their equity for the first time since the Fed began tracking this stuff in 1945.

For millions of people, it highlights the struggle to keep their homes, as their mortgage rates keep going up and property values keep going down. Home equity has been declining for the last several years. But there have been some other factors at work, including low and no down payment mortgages and the increase in home equity lines of credit and refinancing during the housing boom.

Consider that it's estimated that by the end of this month, 8.8 million homeowners or about 10 percent of all homes will have mortgage balances that are equal to or more than the value of their property.

Meanwhile, a new report shows home foreclosures skyrocketed to an all-time high in the fourth quarter of 2007. At this point, 900,000 Americans stand to lose their homes to foreclosure.

Add in the Labor Department report this morning showing the worst job loss in five years last month, 63,000 jobs, and you can expect things to continue to get worse on the housing front.

The question is this: What does it say about the state of our economy when home equity is at its lowest since World War II? You can go to CNN.com/caffertyfile. Post a comment on my blog.

BLITZER: Thanks very much, Jack. We will check back with you together with the best political team on television.

Bill Clinton stands in for his wife.

(BEGIN VIDEO CLIP)

B. CLINTON: I'm always a little apprehensive when I give these talks, because I say, no matter what I say about him, people will say, oh, they're married. He's got to say that. He can't go home at tonight if he doesn't say that.

(LAUGHTER)

B. CLINTON: And there's probably some truth to that.

(END VIDEO CLIP)

BLITZER: Democrats have a lot on the line in Pennsylvania, the nomination specifically. I will speak with the governor, Ed Rendell. He's standing by live.

Two of the candidates say they can attract voters from the other party. Why crossover appeal may be crucial on Election Day.

And who would pick up the tab for revotes in Michigan and Florida? One Clinton supporter says he will guarantee $15 million if the Obama camp can do the same. The best political team on television adding it all up -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: While the Democratic candidates themselves are focusing in on tomorrow's caucuses in Wyoming and Tuesday's Mississippi primary, many of their surrogates are working very, very hard already in the next huge big state battleground -- that would be Pennsylvania -- April 22.

Earlier, we heard from an Obama supporter, Tom Daschle, the former Senate majority leader.

Joining us now is the Pennsylvania governor, Ed Rendell. He's a strong supporter of Hillary Clinton's campaign.

Governor, thanks very much for joining us.

GOV. ED RENDELL (D), PENNSYLVANIA: My pleasure.

BLITZER: A lot of people are saying, you know what, the Democrats in Pennsylvania seem like they're geniuses to have come up with April 22. It's going to be a huge bonanza for your state. How excited are you?

RENDELL: Well, we're very excited. But I'm such a genius, that I scheduled a trip to meet my son's fiancee's family for these three or four days. And I never thought we would be relevant. And now we're the center of the universe. So, don't count meet in the genius category. This is blind luck.

BLITZER: Congratulations on the engagement.

(CROSSTALK)

RENDELL: Well, thank you.

BLITZER: And wish the happy couple our best.

Earlier, we heard James Carville and David Wilhelm. James Carville supports Hillary Clinton. David Wilhelm, formerly Clinton campaign manager back in '92, as you remember, he certainly supports Barack Obama right now.

But Carville said, if you want redos in Michigan and -- a redo in Michigan, as well as in Florida, he can raise $15 million, challenged the Obama campaign to do the same. Is that a good idea?

RENDELL: Yes, I think it's an excellent idea. The Obama campaign complains about the superdelegates may be in a position to decide this. And would the superdelegates override the view of the people? They say Senator Obama will have more pledged delegates.

The popular vote's about even. Of course, Hillary Clinton has won states, as you know, Wolf, that have 260 electoral votes. And Senator Obama has won states that have 190 electoral votes.

And, remember, folks, it's electoral votes that decide who the next president is going to be. And that's something we have to consider. But how can we talk about superdelegates and think of eliminating 366 Florida and Michigan delegates?

BLITZER: So, you think it's a good idea to have this redo down there?

(CROSSTALK)

RENDELL: Absolutely.

BLITZER: ... and that party big shots in effect should go ahead and pay for it?

RENDELL: Yes. Governor Corzine and I have sent a letter to "The Washington Post" calling for the revote and pledging that we would help raise money towards the revote as well. I think, look, Florida and Michigan are central to our strategy to win back the presidency.

If you were a Florida Democrat and a Michigan Democrat, Wolf, and the party told you, we're not going to count your votes in determining the nominee, you would be pretty ticked off. And I think we can't let that happen.

BLITZER: Here's what James Carville told us yesterday about your state and how important it is.

Listen to this.

(BEGIN VIDEO CLIP)

JAMES CARVILLE, CNN POLITICAL ANALYST: We don't know if Senator Clinton's going to win Pennsylvania. Senator Obama may win it. If he does, then he's going to be the nominee of the party.

(END VIDEO CLIP)

BLITZER: Do you agree with him on that, that whoever wins Pennsylvania -- he says if Obama can beat Hillary Clinton in Pennsylvania, he's going to get it. If Hillary Clinton wins in Pennsylvania, he went on to say she would then need to win in Michigan and in Florida, and then she would get the nomination. What do you think?

RENDELL: Yes, I think that's a pretty fair assessment. You know, assuming that -- and it looks like the Obama campaign will have more pledged delegates, although I think the electoral math that I talked about is something we all have to consider, Wolf.

But assuming that happens, the real argument Hillary Clinton can make to the pledged delegates is, look, all of the big states in the country with the heavy electoral votes, I won, assuming she wins Pennsylvania, Florida and Michigan, all of the key purple states. And, you know, Pennsylvania, we only carried for John Kerry by 1.7 percent.

We're purple. We're not blue. Pennsylvania, Michigan, Ohio, Florida, I carried. So, I should be your nominee. I have got the best chance to win in the fall. That's a strong argument. (CROSSTALK)

BLITZER: I'm going to put a map up on the screen, Governor, and show you the states surrounding Pennsylvania that have already voted. The light blue are counties that went for Hillary Clinton you see in New York State and in Ohio and in New Jersey. The dark blue counties went for Barack Obama. Maryland, he won a lot of counties in Maryland.

It looks like, at least in the areas surrounding Pennsylvania, she is doing incredibly well. Can you guarantee that you will help deliver, that you will deliver Pennsylvania for Hillary Clinton on April 22?

(LAUGHTER)

RENDELL: Wolf, I got to tell you, as I was going to the airport on Wednesday, three people between the terminal and the gate, three people said, it's up to you now, Governor. Hey, listen, you give Barack Obama six weeks to campaign in any state in this union and he's going to be formidable. He's a great campaigner. He has a terrific message.

I think the state has certain huge advantages for Senator Clinton, demographic advantages, advantages that Northeast Pennsylvania is really the hometown of the Rodham family and there's a great spirit for her there, advantages because she and Bill Clinton were omnipresent in southeast Pennsylvania and really helped the amazing turnaround of the city of Philadelphia. She's got great advantages. She should win the state.

But any of us who know what Barack Obama has done when he's had time to campaign, we're ready for a dogfight. I think we can win. My goal, I would love to win by more than Ohio, but when Barack Obama has six weeks to campaign, I will settle for a victory. But I think we're going to win Pennsylvania.

I don't do guarantees. I think one of the Patriots guaranteed they were going to win the Super Bowl, and probably wasn't a good idea.

BLITZER: Probably not a good idea to guarantee anything in this election. It's way, way too close.

Hey, Governor, thanks very much for coming in.

RENDELL: Thanks, Wolf. Good to see you.

BLITZER: And please congratulate the upcoming bride and groom.

RENDELL: Well, I will.

BLITZER: Thank you, Governor Ed Rendell of Pennsylvania.

And the bike and the bike rider -- new pictures from the scene of the Times Square bombing. That's coming up.

And from prime minister to professor. The former British leader Tony Blair, he goes Ivy League. We will tell you what he's planning to do when we come back.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: A Barack Obama adviser resigns after calling Hillary Clinton -- and I'm quoting now -- "a monster." Clinton reacts and attacks right back.

(BEGIN VIDEO CLIP)

H. CLINTON: Well, I think Senator Obama did the right thing. But I think it's important to look at what she and his other advisers say behind closed doors, particularly when they're talking to foreign governments and foreign press.

(END VIDEO CLIP)

BLITZER: Who might this back-and-forth bickering hurt the most?

Also, Republicans for Democrats, Democrats for Republicans. Which candidate might get the most crossover appeal?

And can anyone spare a few million dollars? Who should pay for a potential second round of Democratic contests in the critical battleground states of Florida and Michigan?

Lots more coming up -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now: damage control. A key adviser to Senator Barack Obama calls Senator Hillary Clinton a monster, loses her job, and finds herself at the center of a storm of controversy.

A Democratic do-over, they're still talking about it in Florida and Michigan and beyond. If they can make it happen, who would pick up the tab?

And campaigning isn't always smooth sailing. Republican John McCain surely found that out this week. Jeanne Moos recaps the candidate's rocky week -- all that, plus the best political team on television.

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

It's a remark that cost a top adviser to Senator Barack Obama her job. She called Hillary Clinton a monster. But it turns out that's not the only controversial thing she said.

Let's go to Brian Todd. He is working this story for us.

Brian, tell us about this former adviser to the senator and what she said.

BRIAN TODD, CNN CORRESPONDENT: Wolf, it is Samantha Power, a well-known activist and author about world crises. Well, today, the Obama campaign had to deal with a political crisis created by Ms. Power.

(BEGIN VIDEOTAPE)

TODD (voice-over): Under intense pressure to stick to what he promised would be a civil tone in this race, Barack Obama quickly accepts the resignation of a high-profile adviser.

Pulitzer Prize winner Samantha Power, featured in documentaries and numerous TV interviews for her activism on Darfur, apologizes to Hillary Clinton, then resigns from the Obama campaign.

Speaking to a Scottish newspaper, Power said says of Clinton: "She's a monster, too. That is off the record. She is stooping to anything."

The off-the-record backpedal is too late. And the paper publishes it.

Senator Clinton says Obama did the right thing in distancing himself from Power. But Power is drawing fire from Clinton over remarks she made about Obama's position on Iraq. In a recent BBC interview, Power was asked about Obama's plan to get U.S. combat brigades out within 16 months of taking office.

POWER: He will, of course, not rely upon some plan that he's crafted as a presidential candidate or as a U.S. senator. He will rely upon a plan, an operations plan, that he pulls in consultation with people who are on the ground.

TODD: Power also said Obama would try to get U.S. forces out as quickly as possible and that 16 months is the best case scenario.

But for Hilary Clinton, that raises the question of whether Obama is promising one thing on troop withdrawal and planning to do another.

H. CLINTON: While Senator Obama campaigns on his plan to end the war, his top advisers tell people abroad that he will not rely on his own plan should he become president.

TODD: Obama's campaign says that's a false attack. And Obama himself had this to say...

OBAMA: And I will bring this war to an end in 2009.

(APPLAUSE)

OBAMA: So don't be confused. TODD: On the monster remark, this context is offered by Democratic strategist Stephanie Cutter, who hasn't endorsed either candidate. Cutter was spokeswoman for John Kerry's 2004 campaign.

STEPHANIE CUTTER, DEMOCRATIC STRATEGIST: At any given time, you've got hundreds of people speaking for the campaign across the country. And they need to know what the daily talking points are, what the message is and you need to enforce discipline as much as possible. But things do happen.

(END VIDEOTAPE)

TODD: Now, does it mean that as president Obama would move this quickly away from other advisers in trouble?

Well, not necessarily. One analyst says this race is so tight right now, the pressure is so intense to strike the right tone, that Obama really had no other option here -- Wolf.

BLITZER: All right, Brian. Thank you.

Let's get some more on what has happened, including on that remark. We're joined by our senior political analyst, Gloria Borger. She's here in Washington Jack Cafferty is in New York. And our senior political analyst, David Gergen, he's joining us in Boston. They are all part of the best political team on television.

What is your take on this, Jack?

CAFFERTY: Well, I thought the decision he made to accept her resignation was in keeping with the tone of his campaign that he's run since he started. He has run one of the more civil political campaigns on a national level that I can recall witnessing in my 65 plus years or whatever it is I've been around. The other part of it is nobody's got a corner on the market for morons.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes.

CAFFERTY: You know, the woman said something stupid. As I recall, earlier in the campaign, I think the Clinton people had to address a similar situation in their camp.

BORGER: Yes.

CAFFERTY: Somebody misfires, you get rid of them and you go on to the next thing.

BLITZER: What do you think, Gloria?

BORGER: Yes, you know, I think that the Clinton campaign got rid of -- I think you're referring to Billy Shaheen...

CAFFERTY: Right.

BORGER: ...who was her co-chairman in New Hampshire...

CAFFERTY: Yes.

BORGER: ...after he talked about Obama's alleged drug use as a youth. But I also think, you know, the Obama campaign -- this points to a problem they've got.

It's about experience but not about experience in foreign policy. It is about experience, but not about experience in foreign policy. It's about in running a presidential campaign.

They weren't very nimble in Texas and Ohio when they had a problem with their top economic adviser talking to the Canadians about NAFTA. Perhaps you could argue now -- and this is all with the benefit of hindsight -- that they should have told him to leave, as well. And I think in this case, they decided to do what they didn't do in that case, having learned from their mistakes.

But I would argue that, in fact, Obama himself may -- perhaps should have come out and said look, I will not tolerate this in my campaign and she's gone. You know, there's no excuse to call Hillary Clinton a monster. He maybe even should have been more forceful about it.

BLITZER: Was he doing the right thing, David, because you know Samantha Power. She teaches at Harvard. She took a leave to work for the past year on the campaign. And she's been a key foreign policy adviser. Some even saying she's to Barack Obama as Condi Rice, who took a leave from Stanford back in 2000 to work for George W. Bush's campaign.

And she had done incredible work on Darfur and Sudan, won a Pulitzer Prize for her reporting on that. Was it too harsh to dump her from the campaign?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: No, she had to go. But I feel terrible about it because she is a friend and colleague. And I must tell you, Wolf, this is a woman who spent seven long years out in places like Rwanda doing research on her book about genocide that won a Pulitzer Prize.

And she's gone back to Darfur, as you say. She has been -- she has become a champion of human rights. And Sam Power is a deeply passionate woman about social justice and social causes. And I think this remark today -- you know, I've also seen with her, over the last few months, a rising resentment about the Clinton campaign, about the tactics that she thought were being employed against Barack Obama. And I think her comments, which were totally out of line, came more from a place of passion than from malice.

And so I think she had to go. But I think the damage -- there is damage not from the monster remark. I think that everybody understands that, you know, she just made a terrible mistake. It does reflect there's deeper resentments on both sides, if I might say.

But I think the deeper damage comes from the remarks about his plans in Iraq, because on that issue, that's sort of an echo of what we had on the NAFTA snafu... BORGER: Right.

BLITZER: And that raises...

GERGEN: ...just a few days ago.

BLITZER: And, Jack, that raises the question whether these are rookie mistakes for someone who doesn't have a whole lot of experience in dealing with these kinds of matters.

CAFFERTY: Well, they may well be and the criticisms are well- founded. That being said, the last time I looked, he's ahead. And as long as he's winning both the delegates and the popular vote, he's apparently been able to make a few rookie mistakes without sacrificing his position at the front of the pack.

Do you learn from your mistakes? Yes. Do you make them? Of course. You can't run an operation the size of a presidential campaign and have as many people, as somebody said, speaking for you simultaneously without occasionally being embarrassed by something that comes out of someone's mouth. He didn't say anything about Iraq, she did.

BORGER: But, you know, Wolf, I think both of these campaigns have to step back for a moment. Because I think they're both in danger of going down a road that the American public doesn't want. They're starting to really bicker and get at each other. And I understand why you have to do that, because you have to draw distinctions.

But the reason so many Democrats really enjoyed this campaign was because Hillary Clinton and Barack Obama could sit next to each other at a table and say that they were honored to be next to each other. Democrats like to hear that. So we're entering a different phase of this campaign and I'm wondering whether it's going to turn all of those excited Democratic voters off.

BLITZER: Yes.

And, David, very quickly, because I want to take a break, I think Gloria is spot on. This has so energized Democrats across the board because so many of them seem to love both of these candidates.

GERGEN: I think that's absolutely right. And then, you know, all this talk about a happy ending and, you know, the two of them joining up on the same ticket one day, if you've got one person calling the other one a monster and the Clinton people just compared Obama to Ken Starr, who is one of the reviled figures on the Democratic side, you know, that does portend or point toward a happy marriage at the end of all of this.

BLITZER: All right guys, stand by, because we're going to take a quick break. We're going to continue this conversation.

How do you pay for primary do-overs in Florida and Michigan? We're going to show you who's offering to put up $15 million right now toward a new vote -- with one condition. Plus, the economic news just keeps getting worse. We'll show what you it means for the presidential race. The best political team on television continuing right after this, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're back with the best political team on television.

Jack, earlier in THE SITUATION ROOM James Carville, a supporter of Hillary Clinton, he had a way to come up and finance the redo of primaries in Florida and Michigan. He was talking with David Wilhelm, who is a key Obama supporter, former Clinton campaign manager back in '92.

Listen to Carville.

(BEGIN VIDEO CLIP)

CARVILLE: We'll put up $15 million. I'll raise -- I'll guarantee $15 million and have the Obama people put up $15 million and let's go to the polls on June 7th.

(END VIDEO CLIP)

BLITZER: All right, simple. Now, the Florida -- the governors say they don't want to pay for it. The DNC says they don't want to pay for it. He's got an idea, you know what, they could raise the money easily. In the scheme of things, $30 million to pay for both primaries may not be all that much.

CAFFERTY: Well, two things. The governors who signed the legislation that created this problem, they're the two people that ought to pay for it -- Crist and the woman up in Michigan.

I like Jimmy Carville a lot. He's a very bright guy. But let me just make this one point. People who donate money to Hillary Clinton and Barack Obama don't do it with the idea that $15 million on each side is going to be taken out and used to correct the mistakes of the bumbling folks screwed up the primaries in Florida and Michigan. That's not why the money was sent in and I don't think it would be right to use it for that purpose.

BLITZER: But I think they could -- Gloria, correct me if I'm wrong -- come up with a fund, a legal fund...

BORGER: Oh, yes.

BLITZER: ...to raise money for primaries in Florida and Michigan.

BORGER: Sure.

CAFFERTY: Yes, but Carville said take it out of the Obama -- Obama should come up with the money. I just -- I don't think that's right. BORGER: You know, but as Wolf says, they could go to so-called soft money, which is kind of unregulated, unlimited amounts of money that go to the political parties for party building. So the Democratic National Committee can just raise this money from, you know, fat cats who want to sponsor it.

You know, someone around here was joking -- a producer was joking to me today saying, you know, we could have the HoJo primaries. We could give it a name -- The Waffle House, whatever -- and soft money folks could pay for it. That's one way of doing it.

BLITZER: David, what do you think?

GERGEN: Listen, the papers reported today that strategists for the Democratic Party in Florida had gone around already seeking private donations and in this case was turned down.

I think it's not inappropriate. I don't see the problem if there is some sort of fund created in which each side donated private funds.

BORGER: Sure.

GERGEN: I think you could you also do it -- the two states could pay 50 percent and you could get private donations to pay the other 50 percent. I think the critical thing is whether the voters of Florida and Michigan are going to have a fair way to express their preferences and not in this phony way we've had earlier. That should -- they should not be seated based on these phony earlier primaries.

They could possibly have primaries, they could have caucuses. There are a lot of different variations that could you do in Florida and Michigan. Well, by the way, Wolf, it will not necessarily resolve who's going to be the nominee.

BORGER: Right. Exactly.

BLITZER: Right.

GERGEN: But it is -- it's an important form of expression for those two states.

CAFFERTY: Well, the other thing Ed Lavandera reported on our program earlier is that the window of opportunity for doing anything -- primaries or caucuses -- is a small window and it's already starting to close very rapidly. So the time element is very much a part of this equation and it's starting to look like there might not be enough time, whether you have the money or not.

BORGER: You know, but I agree with David in the sense that you could spend all these millions of dollars and wind up in the same tight race where you are now. And then what this will be used for is for either candidate -- whoever were to win Florida or Michigan -- to make the point in their brief to those super-delegates I'm more electable because I won these key battleground states, or one or two of them, that are going to be really important to any Democrat to win in the fall. So you could spend all this money to make a case to a bunch of super-delegates.

GERGEN: Yes. Wolf, one last point on this is no question that if we do have redoes in Florida and Michigan and they are primaries that they would -- that was likely to benefit Hillary Clinton. She's...

BLITZER: Well, that's why they want it...

GERGEN: Exactly.

BLITZER: ...the Clinton people.

GERGEN: That's why Carville is pushing it.

BLITZER: And the Obama would prefer caucuses.

All right guys, thanks very much. David Gergen, Gloria we'll see you guys back here.

Jack is not leaving. He's got "The Cafferty File."

Not Ed Lavandera, it was John Zarrella. We don't want e-mail from John Zarrella.

CAFFERTY: I'm sorry. Of course it was.

BLITZER: All right guys, thanks very much.

Voting for the other side -- you're going to find out which presidential candidate is getting the most votes from the other party and how it could determine the race.

Plus, an announcement and a promise from one long shot candidate. We're going to show you what it is.

Lots more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In our political ticker, if you're a Republican for Barack Obama or Hillary Clinton, or a Democrat who likes John McCain, the candidates would like a word with you. No matter which candidates face off in the general election, they'll need to pull in more than just their normal base of support.

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

The so-called crossover appeal, Bill, is it likely to be a factor?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: I think it is, Wolf, because at least two of the candidates advertise themselves as politicians who can appeal to the other party and unite the country.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Crossover appeal -- who's got it? Barack Obama claims he's the candidate who can unite the country.

OBAMA: We've got to reach out to Independents and I think some disaffected Republicans. Obviously, I've said before, I think I can do that better than anybody else.

SCHNEIDER: Better than John McCain?

MCCAIN: We need to attract Independents, as we have been doing. And we even need to find the Reagan Democrats that we value and appreciate so much.

SCHNEIDER: OK. So how many Republicans would vote for Obama over McCain? Answer -- 16 percent are "Obamacans" in the latest national poll by "The Washington Post" and ABC News.

And how many Democrats would vote for McCain over Obama? Those are your "McCainocrats" -- 14 percent, about the same. Both candidates have some crossover appeal to the other party.

What about Hillary Clinton?

H. CLINTON: I want the people of America and particularly Democrats and like-minded Independents and Republicans who have seen the light.

SCHNEIDER: Are there many Republicans for Clinton -- "Clintocans" out there? Not so much. Only nine percent of Republicans say they would vote for Clinton over McCain. She has the lowest crossover appeal. That's one reason why Obama leads McCain by 12 points, while a race between Clinton and McCain is closer -- a six point lead for Clinton.

Here's another reason -- men. Men prefer McCain to Clinton by seven points. But they give Obama three point edge over McCain. The big surprise? Obama does better among white voters than Clinton does. Among whites nationwide, Clinton trails McCain by 10. Obama trails McCain by two.

(END VIDEOTAPE)

SCHNEIDER: Now Independents are the crucial swing voters. They like Obama -- 63 percent favorable. They kind of like McCain, too -- 51 percent favorable. Clinton, not so much -- 45 percent favorable, 50 percent unfavorable -- Wolf.

BLITZER: All right. Bill Schneider, thank you.

Ron Paul says he's winding down his presidential campaign. Let's go right to our Internet reporter, Abbi Tatton.

What is he asking supporters to do now -- Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, he's still encouraging them to participate in the remaining contests. But Ron Paul acknowledging he may not be heading to the White House.

(BEGIN VIDEO CLIP)

RON PAUL (R), PRESIDENTIAL CANDIDATE: Though victory in the conventional sense is not available in the presidential race, many victories have been achieved due to your hard work and enthusiasm. For that, I am deeply grateful and encouraged.

(END VIDEO CLIP)

TATTON: This YouTube video addressing this lot -- his diehard supporters, the ones that brought you the Ron Paul Blimp and organized and designed money bombs that brought in millions of dollars to this campaign.

Ron Paul promising those supporters a next phase that will need funding. He's touting his political action committee and an upcoming book "The Revolution: A Manifesto" -- Wolf.

BLITZER: All right, Abbi. Thanks very much.

Let's go back to Jack for "The Cafferty File" -- Jack.

CAFFERTY: The question is what does it say about the state of our economy when home equity in this country is at its lowest point now since World War II -- 1945?

David in North Carolina writes: "The problem was caused by people taking out exotic mortgages to buy homes they couldn't afford. The remainder of the problem was caused by refinancing all of their equity out of their homes, thinking that their home was an ATM. The current problems were caused by irresponsible people who made irresponsible decisions."

Bob in Philadelphia: "It means the country is in a lot of trouble. My mortgage payment in 2005 was $500. Today, it's $854. I'm afraid I'm going to be one of the 900,000 people who lose their homes."

Marjorie in Minneapolis: "It means both sellers and buyers have been stupid. It means the movers and shakers in the mortgage industry are greedy and stupid. Why can't people in the mortgage industry understand that iffy loans will always come back to bite them?"

Ben writes from Delaware: "I took out a $150,000 mortgage in 2003, 30-year, fixed rate, nine percent. I knew exactly how much money I had to spend. Now they're telling me that my neighbor will get federal help from my tax dollars to bail him out of his mortgage choices. It seems I made the bad choice in paying all that extra interest up front rather than taking the adjustable rate loan."

And Larry in Georgetown, Texas writes: "It's really easy to blame the current president. Sure, he's in the twilight zone in regards to what's going on outside Iraq, but he didn't sign the papers on that adjustable rate mortgage. Our society is based on wanting more, more, more. There's a perfect saying for this -- you did it to yourself. Our economy is exactly where it needs to be in order to wake up America" -- Wolf. BLITZER: Jack, thank you. Have a great weekend.

CAFFERTY: You, too.

BLITZER: See you back here next week.

Campaigning isn't always an easy ride. CNN's Jeanne Moos has her special spin one candidate's bumpy week.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the Hot Shots coming in from the Associated Press.

In Sweden, a skier jumps to a win in a World Cup event. In South Africa, protesters sing outside the Zimbabwe High Commission.

In Louisville, university students make their way past a statue covered with snow.

And in Cincinnati, a nine week old beagle plays with a snowball.

Some of this hour's Hot Shots -- pictures worth a thousand words.

You would think the crown of the presumptive Republican nominee would allow some downtime for John McCain. Not so when hundreds of cameras follow every step of his. Those steps are missteps that can result in a Moost Unusual blooper tape.

Here's CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: John McCain may be getting the royal back slapping treatment, but already there are moments the presumptive Republican nominee would probably nominate to forget. We're not going to let him.

MCCAIN: I'm a proud conservative liberal -- conservative Republican. Hello. Easy there.

MOOS: But nothing's easy when the press is following your every move. Heads-up, Senator. Hey, it was just a near miss and the cameraman apologized.

And then there was the sorry state of the senator's microphone.

MCCAIN: As many of you may recall...

MOOS: No amount of tapping was going to resurrect this mike, so he switched to mike number two.

MCCAIN: So I look forward to working...

MOOS: It was funny at first, but after repeated blowings and eye-rolling, mike number three was pressed into service.

MCCAIN: We're attempting to take on the recruiting station in Times Square today.

MOOS: McCain raised his voice only to be drowned out by an airplane. The airport press conference ended with...

MCCAIN: Thanks for the mic.

MOOS: All three of them, actually.

Then there were the crossed signals between the White House and the McCain campaign that resulted in President Bush killing time outside the White House waiting for the senator. It was a tap dance the media will be tapping into indefinitely.

JON STEWART, HOST: It's 3:00 a.m. in the White House. The phone is ringing, but the president doesn't hear it because he's dancing to Jamiroquai.

(LAUGHTER)

MOOS: After the president endorsed McCain, nothing to snort at.

BUSH: Look, he...

MOOS: The week ended with the senator getting peeved at a "New York Times" reporter for pressing him about the time Democrat John Kerry asked Republican McCain to be his vice presidential running mate.

MCCAIN: Well, you know it.

UNIDENTIFIED FEMALE: (INAUDIBLE).

MCCAIN: You know it so I don't even know why you ask.

MOOS: Which led to our favorite question.

UNIDENTIFIED FEMALE: Can I ask you about your (INAUDIBLE) why you're so angry?

MCCAIN: Pardon me?

UNIDENTIFIED FEMALE: Never mind. (INAUDIBLE).

MOOS: Minding our manners is something the press tends not to do.

UNIDENTIFIED FEMALE: I'm just watching the kids!

MOOS: Forget the kids, watch the candidate.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: Among my guests this Sunday on "LATE EDITION," Marc Morial, the president and CEO of the National Urban League. "LATE EDITION" airs Sunday, 11:00 a.m. Eastern, 8:00 a.m. Pacific.

I'm Wolf Blitzer in THE SITUATION ROOM. Thanks very much for joining us.

Up next, "LOU DOBBS TONIGHT." Christine Romans in for Lou -- Christine.

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