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Nancy Reagan Endorses McCain; How Will Candidates Respond to Housing Crisis; New York Governor Admits Past Drug Use; Nuke Parts Shipped by Mistake

Aired March 25, 2008 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: To our viewers, you're in THE SITUATION ROOM.
Happening now, Hillary Clinton takes a swipe at Obama's pastor problem, saying his controversial minister would not have been her pastor. But why is she speaking out right now?

John McCain gets a big endorsement, picking up the blessing of the former first lady, Nancy Reagan. But is that enough to ease the suspicions of the Republican right, especially after fresh reports of his past flirtations with Democrats?

He's already admitted to affairs right after replacing New York scandal-tarred Eliot Spitzer. Now, New York's governor, David Paterson, admitting to past drug use. Does coming clean work to his advantage?

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

Hillary Clinton is jumping into the fray over Barack Obama's former pastor. Her comments come a full week after Obama distanced himself from the racial rhetoric of the Reverend Jeremiah Wright.

In a newspaper interview, Clinton says flatly -- and I'm quoting now -- "He would not have been my pastor," and suggests she would not have sat and listened to such sermons for 20 years. Then, just a short while ago, Clinton spoke out publicly, raising the question, why now?

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: We have a choice when it comes to our pastors and the churches we attend. Everyone will have to decide these matters for themselves. They are obviously very personal matters. But I was asked what I would do if he were my pastor. And I said I think the choice would be clear for me.

As I said, it is a very personal matter. And I was asked a personal question. And I responded as to what I would have done. And, you know, everybody has to answer that for themselves, because it is a personal consideration and, obviously, you take into all -- into account all kinds of factors.

But when asked a direct question, I gave a direct answer. And I feel very comfortable with that. I don't think that's negative. That's what I would have done. And other people can evaluate that for themselves and make their own conclusions as to what they would have done.

(END VIDEO CLIP)

BLITZER: Barack Obama and his wife Michelle today posted their tax returns on his campaign Web site. The documents from the most recent year, 2006, showed the couple earned more than $991,000 that year and paid more than $277,000 in taxes. More than half their income came from royalties on Obama's books. Their income was significantly higher in 2005, more modest before that.

Obama's returns were posted just minutes after the Clinton campaign attacked him for not releasing them. Now the Obama campaign is challenging Clinton to release her most recent returns.

(BEGIN VIDEO CLIP)

CLINTON: I anticipate being able to release them shortly, I hope within the next week. And I'm pleased that Senator Obama has released his tax returns. I think that's a good first step. Now he should release his records from being in the state senate and any other information that the public and the press need to know from his prior experience because I think that, you know, we should continue to make available the information that we have. And I will be releasing my tax returns.

(END VIDEO CLIP)

BLITZER: Let's bring in a key member of the best political team on television, that would be our senior political analyst, Gloria Borger.

Gloria, you know, he may be on vacation still in the U.S. Virgin Islands, but she's taking no time off and she's going right after him on this whole Reverend Jeremiah Wright matter.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: You know, it's really not so much what she said today. A lot of other people have suggested over this controversy for the past week that they might have left the Reverend Wright's church. But it's when she said it, Wolf.

And what she's doing is sort of the oldest thing in politics -- trying to change the subject. She's had controversy of her own over this trip to Bosnia that she took and whether, indeed, she was under sniper fire, as she said. And the footage shows that she wasn't. And so she wants to change the subject and just as it looked like the Reverend Wright controversy was dying down, this kind of looks a lot like stoking the flames again on it.

BLITZER: And changing the subject, once again, from the Bosnia flap to this flap over Jeremiah Wright.

BORGER: Absolutely. Sure.

BLITZER: Does this have a tendency -- how much concern is there among Democrats that the Independent voters out there might say, you know what, a plague on both of their houses, I'm going with McCain? BORGER: Yes. If you're an Independent voter out there and you're looking at John McCain, who is actually talking about policy, who's doing very well in these match-ups with both Obama and Clinton -- better than a lot of folks think he ought to be doing given the president's unpopularity, you know, you're saying, look, this could appeal to Independent voters -- saying I'm going to take another -- I'm going to take another look at John McCain because what people liked about this campaign, Wolf, was that these candidates were talking about the issues. And now it's sort of tit for tat. We're kind of into the silly season here.

BLITZER: All right. We're going to continue this conversation in the next hour, Gloria. Thank you.

John McCain is getting a big boost today -- a formal endorsement from Nancy Reagan, the widow of the former president. In a statement, Nancy Reagan says she normally waits until after the party convention to announce support for a candidate, but she says it's now clear that the party has chosen its nominee. Mrs. Reagan says McCain has been a good friend for more than 30 years and that his record and experience have prepared him well for the presidency.

While Nancy Reagan may approve of his credentials, many conservative Republicans seem to have some continuing doubts about John McCain -- even more so after fresh reports of his past flirtations with Democrats.

CNN's Joe Johns has that story.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CORRESPONDENT: Is John McCain right for the right? On the campaign trail, McCain wears his conservative colors on his sleeve. But some Republicans question his loyalty.

LARRY SABATO, UNIVERSITY OF VIRGINIA: It's remarkable that somebody with that kind of track record could become the party nominee for president.

JOHNS: These questions -- that the Republican presidential candidate may have more in common with Democrats than his own party -- have dogged him for years. "The New York Times" reports McCain approached Democrats about leaving the GOP to join their ranks in 2001. Democrats were testing the waters with several Republican senators and McCain was one of the senators they asked to jump ship so they could gain control of the Senate.

The McCain campaign says that's what happened, but "The Times" says a McCain staffer may have been the first the to raise the issue.

Fast forward three years later, when John Kerry was running for president. And, once again, McCain was mixing it up with the other side.

Listen to what he told ABC News. CHARLES GIBSON, ABC NEWS ANCHOR: If he came across the aisle and asked you, would you even entertain the idea, or will you rule it out for good and all and ever right now?

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: John Kerry is a very close friend of mine and we've been friend for years. Obviously, I would entertain it.

JOHNS: But who came up with the idea? Once again, it depends on who you ask...

SEN. JOHN KERRY (D), MASSACHUSETTS: His people similarly approached me to engage in a discussion about his -- for potentially being on the ticket.

JOHNS: McCain quickly responded then, calling it a fantasy. More recently, he tried to set the record straight.

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.

JOHNS: Even if he didn't suggest it, McCain's dalliance with Democrats could leave conservatives uneasy. And get this -- that might be a good thing for him.

SABATO: When conservatives are complaining about McCain, McCain appeals more strongly to the swing Independents who will actually determine the election in November.

JOHNS: Joe Johns, CNN, New York.

(END VIDEOTAPE)

BLITZER: Hillary Clinton calls it "a crisis of the American dream." Today, it was John McCain's turn to speak on the collapse of the U.S. housing market.

Let's go to CNN's Mary Snow. She's watching this story.

Are they coming up with any real answers -- Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, answers, yes. The question is, will they work? Some economists say the housing crisis is way too complicated to be solved by one plan. But some find the suggestions proposed could help, some could actually make things worse.

(BEGIN VIDEOTAPE)

SNOW (voice-over): His ideas to fix the housing crisis are short on specifics.

MCCAIN: I will evaluate everything in terms of whether it might be harmful or helpful to our effort to deal with the crisis we face now. SNOW: Republican Senator John McCain says it's not the government's duty to bail out those who act irresponsibly. We asked one analyst who studies markets and public policy about the candidates' approaches to the housing crisis. Analyst Anne Mathias applauds McCain for addressing how companies' financial assets are valued, but say one potential problem is McCain doesn't directly address homeowners.

ANNE MATHIAS, STANFORD GROUP: It doesn't directly help those people immediately in a tangible way. And, in that sense, I think it's politically more difficult.

SNOW: On Monday, Democratic Senator Hillary Clinton offered her own detailed plan that includes $30 billion to allow cities and states to buy foreclosed properties.

CLINTON: Now, some may claim that the plan I've outlined today is a bailout. They'll argument that it's not the government's role to help. Well, that is the same kind of tired rhetoric we've been hearing for years now.

MATHIAS: Because it has some good elements in it. It has several things in it that just are impractical in the current political climate. And it has a few elements that are absolutely damaging.

SNOW: Mathias says Clinton's call for a 90-day moratorium on foreclosures and a freeze on the monthly rate on subprime adjustability rate mortgages could cause more damage. Democratic Senator Barack Obama hasn't given a speech on the mortgage crisis in recent days, but has proposed a $10 billion plan to help stem foreclosures. He's also been cautious about how aggressive the government should be.

Economist Lakshman Achuthan says the economy is already in a recession. He says the candidates' plans are probably too late.

LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: There is this piece of kryptonite related to the housing market that needs to be dealt with. And that is likely to occur in the next few months and well before any of these plans could really take action.

(END VIDEOTAPE)

SNOW: Now, the economist we spoke with says that the Fed taking action now, conditions in the housing market could begin to improve by the end of the year. There needs to be caution about how much the government is involved in finding solutions -- Wolf.

BLITZER: Mary Snow watching this story. Thank you.

For the latest political news any time, you can always check out our Political Ticker at CNNPolitics.com. The Ticker is the number one political news blog on the Web. That's also where you can read my latest blog post. I posted one just before the show on Hillary Clinton and the Reverend Jeremiah Wright, my latest comments.

Let's go to Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The sleeping giant may be starting to wake up. All it took was the illegal invasion of Iraq, which led to a war that's now in the sixth year, the destruction of our civil liberties in the name of the war on terror, quadrupling of oil prices and the early signs of a recession that could be as bad as anything we've seen in a long, long time and suddenly -- suddenly the American voter is all ears.

The evidence in the record turnouts for this year's primaries, especially among Democrats. Young people are suddenly showing up to vote in numbers we've never seen before. And based on information from places like Arizona, it looks like the tidal wave of voters is only going to continue to swell right into November.

Politico reports Arizona says voter turnout there could be as high as 80 percent. In 2004, voter turnout hit 61 percent nationwide and that was the highest level we'd seen since 1968. It's about time.

For the first time in our history, our worldwide reputation is shot and our standard of living is beginning to decline. One reason this has happened is we have let it. By not being proactive and participating in our democracy, the forces that would exploit it and ultimately destroy it have had a free reign. But these voter registration numbers are encouraging because when Americans finally decide to get up off their collective butts and do something, well, that's a force that's simply unstoppable.

Here's the question: What does it say about the importance of this election if voter turnout in November could be as high as 80 percent in some states?

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

BLITZER: It's amazing. Amazing, the energized moment right now that everyone is feeling.

All right, Jack. Thanks very much. See you in a few moments.

Attacks on his patriotism -- conservatives may already be testing the waters for a strategy to torpedo Barack Obama's presidential run. How would the candidate fight back?

Also, "like Lebanon on steroids" -- that's how our Michael Ware is describing an all-out proxy war that could explode in Iraq. As we'll hear, he's not the only one with that grim scenario.

And the day after he took office, he admitted to a series of affairs. Now he's owning up to past drug use. Does all of this somehow help New York's new governor?

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

(COMMERCIAL BREAK) BLITZER: Bloody clashes raged today between Iraqi security forces and followers of the anti-American Shiite cleric, Muqtada al- Sadr. At least 50 people died after Iraqi forces moved against Al Sadr's Mahdi Army in the southern city of Basra. The fighting has spread to Shiite districts, as well, in Baghdad. And there are now grim suggestions that clashes like these could foreshadow what would happen when U.S. troops leave Iraq.

And joining us now from London, our own Michael Ware.

Michael, thanks very much for coming in. I want to play a little clip of an interview you did with the U.S. ambassador in Iraq, Ryan Crocker. This exchange -- listen to it and then we'll talk.

(BEGIN VIDEO CLIP)

RYAN CROCKER, U.S. AMBASSADOR TO IRAQ: I think the fight would be on and on at a level that we just haven't seen here before.

MICHAEL WARE, CNN CORRESPONDENT: Well, we're talking like a regional proxy war?

CROCKER: I think that's the possibility you have to look at, because as bad as it was in 2006 -- and no one knows better than you how bad it was -- we were here. If we spiral into conflict again and we're leaving, everybody knows we're not coming back.

WARE: Yes.

CROCKER: So I think the gloves then come completely off. And it's in that environment that the risk of regional involvement in the conflict, particularly from Iran, becomes very grave, indeed.

(END VIDEO CLIP)

BLITZER: All right, Michael, describe the scenario -- that worst case scenario that he was talking about. What was he referring to?

WARE: Look, Wolf, what we're talking about is a crystal ball into an Iraq in a post-American withdrawal vacuum. Now Ambassador Crocker, like any U.S. commander on the ground in Iraq, does not speak in term of timetables. They simply do not exist nor can they work.

What we're talking about here is that right now, America, at the forced levels it has, though it is unable to really project the power, perhaps, America would like, it is nonetheless a stabilizing influence as far as it goes.

What we're looking at is perhaps something that we're seeing like today, in the Southern oil-rich city of Basra, where faction upon faction is battling it out in the streets. Now, one of them happens to be in government uniforms and another faction is not.

What Ambassador Crocker is saying is that without America in the middle, the grave potential -- with a premature withdrawal from Iraq or any pre-set timetable -- is a regional proxy war. We're talking about Lebanon in the 1980s writ large -- Lebanon on steroids. We already had the militia factions in place. We're going to see Iran funding and backing, as it is now, its forces in Iraq. We're then going to see America's Arab allies, such as Jordan and Saudi Arabia, and even Egypt and Kuwait, backing its Sunni allies.

All of this atop some of the largest oil reserves in the world. And, at the same time, whatever economic impact a conflict like that will have on the world markets and in America at the bowser (ph), let's not forget, in such chaos there will be more terrorist camps than you can shake a stick at.

BLITZER: So basically --

WARE: And if you don't think that will come back to bite America, you're deluding yourself. So that's what Ambassador Crocker is talking about, a regional proxy war whose aftershocks will come back and affect America -- Wolf.

BLITZER: And this presumes that the Iraqi government -- the Iraqi military would simply not be able to do what the U.S. military presence does any time soon, is that right?

WARE: Well, certainly, the Iranian ambassador -- with whom I spoke last week, as well, in an interview -- is of the belief that the Iraqi security forces are more than ready to take over the security environment that currently exists in Iraq. Indeed, the Iranians believe that it's the American presence that's fomenting terrorism and violence.

However, what you need to be aware is that this Iraqi government does not share U.S. agendas. It's much more closely related to Tehran than it is to Washington. And these are Iraqi security forces. These are -- by American military commanders' own admissions, essentially militia forces in uniform. The American commanders on the ground make no bones about the fact that what they're doing right now, today, in Iraq -- hopefully for the better, but perhaps for the worse -- is already training militias. Now they might be in police outfits. They might be in Iraqi Army training camps.

But where do you think these security forces come from? They're given by the most powerful factions in the country. And they are paramilitary or militia forces.

And then you have those forces working outside of the government who are now on the U.S. payroll. They're the Sunni insurgents. Now, out of the 90,000 in total, of whom 70,000 are being paid by Washington, only about 9,000 have been integrated into the official Iraqi security forces. And that 9,000 aren't working for Prime Minister Maliki. They're working in their own neighborhoods answering to their own sheikhs. So that is the future Iraq that we're talking about -- Wolf.

BLITZER: It sounds so gloomy.

Michael, thanks very much. We'll see you here in Washington.

WARE: Thank you, Wolf. I look forward to it.

BLITZER: A new tactic is being used against Barack Obama. We're going to show you what it is and why it could be just the beginning of an all out attack.

Plus, details of grave new warning that could have a major financial impact on tens of millions of Americans.

Plus, we're learning right now new details of a major U.S. military blunder. Parts of a nuclear missile sent to a foreign country by mistake.

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

(COMMERCIAL BREAK)

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

Carol, what's going on?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, there are dire new warnings on the government's two biggest benefit programs. A report issued a short time ago projects that funds for Medicare will be wiped out within 11 years and Social Security -- it will be broke by 2041. Even more ominous, for the first time, Medicare will be paying out more money than it collects this year. Treasury Secretary Henry Paulson says the fallout could be severe.

(BEGIN VIDEO CLIP)

HENRY PAULSON, U.S. TREASURY SECRETARY: Without change, rising costs will drive government spending to unprecedented levels, consume nearly all projected federal revenues and threaten America's future prosperity.

(END VIDEO CLIP)

COSTELLO: So you're on an airplane. You're stranded on the tarmac. The airline has to provide you with food water and a clean toilet, right?

No it doesn't. A federal appeals court has overturned a passenger rights law that would have done that. Why, you ask? Well, the court says only a federal law can do that -- not the New York State law that the court struck down.

Another dubious record in the housing market. An index of 20 key markets shows home prices in January fell nearly 11 percent compared with a year earlier. It is the steepest decline since the survey launched in 2000. Hardest hit are markets in Miami and Las Vegas -- both down nearly 20 percent. Charlotte, North Carolina is the only city shown posting gains. Back to you -- Wolf.

BLITZER: Thanks, Carol. See you in a few moments. Chelsea Clinton confronted on the campaign trail with an unwelcome question about the Monica Lewinsky scandal. But she had a quick comeback. You're going to find out what she said.

Also, details of the serious divide among Pennsylvania's African- American voters. We're going to show you why they're torn between Clinton and Obama.

Plus, they were supposed to ship batteries. Instead, they sent parts for a nuclear missile. You'll find out what's behind a very embarrassing U.S. military mistake.

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

(COMMERCIAL BREAK)

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

Happening now, a CNN investigation reveals U.S. airline flights may be vulnerable to attack. Our extensive research shows federal air marshals are aboard fewer than one percent of the 28,000 daily commercial flights. We're watching this story.

The French president, Nicolas Sarkozy, is refusing to rule out the possibility he may boycott the opening ceremonies of the Beijing Summer Olympics over China's crackdown in Tibet.

And in Pakistan, there's a new prime minister. He's sworn in. Yousuf Gillani took the oath of office from his long time rival, the president, Pervez Musharraf. Gillani belongs to the party of the assassinated former prime minister, Benazir Bhutto.

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

There's a new tactic against Barack Obama that we're sure to see more of if he wins the Democratic presidential nomination. What his campaign simply calls hit jobs on his patriotism.

CNN's Carol Costello has been working the story for us. She's coming into THE SITUATION ROOM to tell us what she's finding out.

What are you finding out?

CAROL COSTELLO, CNN CORRESPONDENT: A nasty YouTube video is out right now. It's pretty nasty. But if Barack Obama gets the Democratic nomination, it's just the tip of the iceberg.

(BEGIN VIDEOTAPE)

REV. JEREMIAH WRIGHT, FORMER PASTOR OF TRINITY UNITED CHURCH OF CHRIST: Not God bless America...

COSTELLO: It's the ultimate attack ad, cleverly edited video interspersing Senator Obama and words from his pastor maligning America. Obama supporters say the intent is vial to portray him as an American-hating racists. The Web site Politico says the video was spliced together by Lee Habib, a former producer for the conservative talk show host, Laura Ingraham.

The Obama camp calls it a hit job. Others say this sort of attack could do real damage if Obama becomes the Democratic candidate.

JOHN FORTIER, AMERICAN ENTERPRISE INSTITUTE: We may see it again in the fall where those states like Ohio are key to the election and those are the types of voters they'll be fighting over. Patriotism is something that will matter to them.

COSTELLO: Those who doubt Obama's patriotism also act where he could be trusted as commander in chief. Their take, if someone doesn't love our country, how could he support our troops defending it? That's not exactly a million miles from Republican charges against Barack Obama's Iraq policy.

On the RNC's Web site, there are doubts about Obama's commitment to U.S. troops in Iraq. While the RNC denies this has anything to do with an alleged patriotism problem, it is aware those charges are out there.

FRANK DONATELLI, RNC DEPUTY CHAIRMAN: It doesn't come from us. As I say, I can't just say more strongly enough that all the candidates running are patriotic.

There are a lot of voices out there. There's cable television. There's the Internet. Everybody has a blog. It can come from a lot of different sources.

COSTELLO: Obama is certainly aware of how this video and Pastor Wright's rhetoric could hurt him. He surrounded himself with eight U.S. flags as he repudiated Wright's remarks in a widely broadcast speech. His surrogates have addressed the charges directly.

GEN. TONY MCPEAK, U.S. ARMY (RET.): Both Barack Obama and John McCain are great patriots who love this country and are devoted to it. So does Hillary Clinton. Any suggestion to the opposite is wrong.

(END VIDEOTAPE)

COSTELLO: And the irony of the general's comments, he was actually addressing something said by Bill Clinton, a Democrat. So Barack Obama is getting it from all sides.

BLITZER: Carol, thank you.

Carol Costello reporting.

Let's discuss this and more. Let's discuss Obama's patriotism with two top Democratic strategist. Joining us, Jamal Simmons, he is an Obama supporter. And our contributor Paul Begala. He's backing Hillary Clinton.

Jamal, let me start with you. This is just the beginning if Barack Obama gets the nomination. You know what's going to happen from the other side in the months leading up to November.

JAMAL SIMMONS, OBAMA SUPPORTER, DEMOCRATIC STRATEGIST: Well, absolutely, Wolf. Certainly has been set up to make this line of argument against the Obamas, both Barack and his wife, Michelle. And I'll tell what's the most disturbing about this is this charge that they don't love America is so out of whack.

Here's a couple that's given up so much of their lives. Barack Obama has left his daughters in Chicago with his wife and mother-in- law so he could travel around the country and try to campaign to help take this country on a better attack, away from the way George Bush has it.

I tell you, African-Americans, nobody loves Americans more than African-Americans. We love this country even when America didn't love us back. And so it's especially egregious to come out for Barack Obama on this particular point.

BLITZER: What do you think, Paul?

PAUL BEGALA, CNN CONTRIBUTOR: I think Jamal makes a very good point. I don't want to get into things too specifically. Having worked in the White House, I wear this pin. It's not only a flag pin. It's from the U.S. secret service.

The Obama family is making an enormous sacrifice for their country. Not only in time away. But in the risk that any candidate for president runs particularly one who's trying to make history the way Barack is. He's a true American patriot. I think it's completely beyond the pale what these right wingers are doing, but it is going to come.

Look, I think, I hope and think Hillary Clinton will wind up being the nominee. They'll come after her, too. Just as rough. But I do think they are concerns out there among some Democrats. They want to make sure that Barack is tough enough to grab these guys by the scruff of the neck and throw them to the ground.

They understand power and force. I guess I'm not all for everybody let us come and reason together. Sometimes the best way to reason with the right wing thugs is with a baseball bat.

BLITZER: Some are suggesting Jamal that the swift voting, as a verb that it's becoming sort of based on the 2004 campaign against John Kerry, that would be child's play. Some of these groups gearing up for what they would do against. We know what they would do against Hillary Clinton. They've been doing that for a long time, but against Barack Obama specifically.

SIMMONS: Some Republicans, you know, are talking now about this issue of experience that we're hearing with Hillary Clinton today. Opposing this thing in Bosnia. There will be a bunch of issues with Hillary Clinton.

The thing that I think Barack Obama has as an advantage, which could help him. After he gave the speech on race a week or so ago, you've see his poll numbers tick back up. In the national polls he's coming back to the lead. In North Carolina, it look like he's coming back to the lead. He's talking to America like we're adults and can handle a complex issue.

Now I do believe with Paul, when you get hit you got to hit back. I think also Barack Obama is coming at people with a reasoned response. People happen to be listening this time.

BLITZER: She was asked today by a Pittsburgh newspaper Paul about the Jeremiah Wright controversy. She had blunt words. I'll play a clip for you. Then you and Jamal will discuss.

(BEGIN VIDEO CLIP)

CLINTON: I think given all we have heard and seen, he would not have been my pastor. We don't have a choice when it comes to our relatives. We have a choice when it comes to our pastors. And the churches we attend. Everyone will have to decide the matters for themselves. They are obviously very personal matters. But I was asked what I would do if he were my pastor. I said I think the choice would be clear for me.

(END VIDEO CLIP)

BLITZER: What do you think? Was this smart on her part to answer the question as opposed to last week when she was trying to avoid talking about it?

BEGALA: You can't win for losing sometimes. She tried to stay out of the issue. She was asked a very direct question in a 90-minute interview with a Pennsylvania newspaper. She gave a very classic Hillary, blunt, direct answer. That's how she is.

This is not going to go away. I checked before we did this program. I went on one of the right-wing Web sites. It's called World Net Daily and they have story after story. Some attacking Hillary on the Bosnia thing that Jamal mentioned, which is a problem for her.

But story after story of other ministers. Now they found another guy who is supposedly a spiritual adviser to Barack Obama who said really outrageous things about Mayor Daily in Chicago, about what he called "Hollywood Jews bringing 'Brokeback Mountain'," horrible, hateful, homophobic statements. These are going to continue to percolate.

I think Senator Obama gave just a brilliant speech. But I don't think his campaign believes they've put this thing to bed with one brilliant speech. They're going to have to fight back.

SIMMONS: Well first of all, there are a lot of ministers who say lots of things. I think Billy Graham had foul things to say about Jewish-Americans. He was invited by every president all the way through the time of Bill Clinton as being a part of -- you know, being a spiritual adviser. Their ministers have problems to go around. But I think that's there also this issue of today, in Hillary Clinton waiting until this Wright controversy. It's interesting that she did it today after having stayed out of this mess for a week. Today is the day that we're really talking about the issue and Bosnia and whether or not she got shot out.

And we see her getting poems and having a welcoming ceremony. What we're doing is I think is a good strategy on behalf of the campaign's part to try to muddle up all of that mess and get Jeremiah Wright back into the media today.

BEGALA: She was asked about it by the media. She didn't come out and say it. She's been trying to push this mortgage fix she's got to try to save people who are losing their homes. That's been her news of the week and it seems to be a pretty good policy if you ask me.

But she was asked about it. She responded. I'm telling you, this guy Reverend James, serviced Senator Obama, very close to Senator Obama. Senator Obama has named him as one of the three spiritual advisers. He said really horrible things about gay Americans and others.

SIMMONS: He's also a superdelegate.

BLITZER: Guys, unfortunately we're going to have to leave it there because we're up against the clock.

Thanks for coming in.

SIMMONS: Thank you, Wolf.

BEGALA: Thanks, Wolf.

BLITZER: First he admitted being unfaithful to his wife. Now another shocking confession from New York's new governor. You're going to find out what he's saying.

Plus, Chelsea Clinton's quick comeback to a question that caught her off guard about the Monica Lewinsky scandal.

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

(COMMERCIAL BREAK)

BLITZER: Chelsea Clinton was caught off guard on the campaign trail by a question about the Monica Lewinsky scandal. She was talking to students at Butler University in Indiana when a young man asked her whether the scandal had hurt her mother's credibility.

Listen to what happened next.

(BEGIN VIDEO CLIP)

CHELSEA CLINTON, DAUGHTER OF HILLARY CLINTON: The first person actually that's ever asked me that question. In the, I don't know, maybe 70 college campuses that I've now been to. And I do not think that's any of your business.

(END VIDEO CLIP)

BLITZER: Chelsea Clinton said she didn't want to end the session on that note, so she wound up taking one more question that one on global warming.

He acknowledged a series of affairs right after replacing the scandal-tarred predecessor of his. Now New York's new governor is admitting to another big indiscretion, this one further back in his past.

CNN's Jason Carroll has the story from New York -- Jason.

JASON CARROLL, CNN CORRESPONDENT: Well Wolf, this is a story that just seems to keep on giving. You've heard the expression honesty is the best policy. Well, Paterson now has some political strategists wondering if there's such a thing as being too honest.

(BEGIN VIDEOTAPE)

GOV. DAVID PATERSON (D), NEW YORK: I, David A. Paterson, do solemnly swear ...

CARROLL: New York's newest governor, David Paterson, took office from Eliot Spitzer, who resigned in disgrace of the wake of a prostitution scandal. In office just over a week, already Paterson is saying some scandalous things of his own. He admitted to having extramarital affairs and using illegal drugs.

UNIDENTIFIED MALE: Marijuana?

PATERSON: Yes.

UNIDENTIFIED MALE: Cocaine?

PATERSON: Yes.

UNIDENTIFIED MALE: You have used cocaine, Governor?

PATERSON: I'd say I was about 22 or 23. I tried it a couple of times, yes.

CARROLL: Paterson who is 53-years-old told a local New York news station the drug use happened decades ago.

PATERSON: Around that time. A couple of times. And marijuana probably when I was about 20. I don't think I touched marijuana since the late '70s.

CARROLL: Actually, Paterson was up front about the drug use earlier. He said he revealed it while running for lieutenant governor in 2006, but no one paid attention back then. He won handily and has been a popular figure in the state's capital. Paterson's approve approval ratings remain high even now. UNIDENTIFIED MALE: Americans are very fair people. They're going to give David Paterson the benefit of the doubt but at some point the public admissions of past behavior has to stop. The governing has to start. That's how he will be judged.

CARROLL: Paterson is only the latest in a long line of figures who have been candid about past indiscretions. George W. Bush admitted to alcohol abuse in his early years while running for president. Senator Barack Obama wrote about drug abuse during his youth. In his first presidential bid, Senator Al Gore admitted to marijuana use in his younger years. So, too, did former house speaker, Newt Gingrich.

WILLIAM BIKE, AUTHOR, "WINNING POLITICAL CAMPAIGNS": When somebody tries to cover up a scandal, you know that's when people get their juices up and when the media does as well. But if the person admits the potential scandal ahead of time, it really diffuses the issue.

CARROLL: Many political strategists agree it's best not to say anything rather than say something and appear dishonest.

WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I did not have sexual relations with that woman.

(END VIDEOTAPE)

CARROLL: Political analysts tell us that Paterson and others like him will ultimately be judged by how they govern. Paterson has a budget due April 1 -- Wolf.

BLITZER: Jason Carroll in New York. Thank you.

The Pentagon wants to know how it could happen. A stunning security lapse as fuses for nuclear missiles are mistakenly shipped off to another country.

And they're charged with lying about an affair under oath as Detroit's mayor and former chief of staff speak out. I'll speak about it with CNN's Lou Dobbs. We'll talk about the Motor City sex scandal.

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

(COMMERCIAL BREAK)

BLITZER: The Pentagon is now investigating a shocking slip up. Fuses for nuclear missiles actually shipped off to Taiwan by mistake.

Let's go to our Pentagon correspondent, Barbara Starr. She's watching this story for us.

All right, Barbara. How did this happen?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, that's the question on the table. How did it happen? How did the Pentagon not even notice these components were missing for more than a year? (BEGIN VIDEOTAPE)

STARR: The Pentagon says it mistakenly sent crucial parts for minute man three intercontinental ballistic missiles to Taiwan in 2006. And the U.S. just figured it out last week. Components for nuclear missiles are the most heavily guarded items in the U.S. military inventory. No nuclear material was sent to Taiwan.

MICHAEL WYNNE, AIR FORCE SECRETARY: Fuse assembly is a battery powered electrical fuse.

STARR: Four of the fuses were shipped. The minute man is topped by up to three nuclear warheads each containing a fuse device of the type sent to Taiwan. The device sends an electrical signal to trigger the nuclear warhead. Aides say a furious Defense Secretary Robert Gates has ordered an unprecedented inventory of all nuclear weapons and equipment.

Ryan Henry is deputy undersecretary.

RYAN HENRY, DEP. UNDER SECRETARY OF DEFENSE: In an organization as large as DOD, the largest and most complex in the world, there will be mistakes. But they cannot be tolerated in the arena of strategic systems.

STARR: It was just six months ago the air force accidentally flew six nuclear armed missiles across the country. After that, Gates was assured by the military it had fixed problems.

Defense officials tell CNN the fuses should have been accounted for in any one of ten air force inventories. Instead they went to Taiwan, which actually had ordered helicopter batteries. When the mistake was finally realized, alarm bells at the highest levels.

HENRY: When informed this past Friday morning the secretary, directed the plead return of the equipment to U.S. custody. The president was subsequently notified that day.

(END VIDEOTAPE)

STARR: Perhaps equally embarrassing the -- the Pentagon called in the Chinese ambassador last night to tell him about the mistake. This comes at a time when China of course is already objecting to any U.S. arms sales to Taiwan -- Wolf.

BLITZER: Barbara, thanks very much; Barbara Starr watching this story. What a blunder.

All right. Let's go to Jack. He's got "The Cafferty File" -- Jack?

CAFFERTY: So they had these nuclear missile fuses over there for more than a year. They thought they were getting a box of helicopter batteries. And nobody from Taiwan bothered to call and say, hey, you didn't send us the batteries. You sent us fuses for nuclear missiles. We don't any of have those. How about you send us the batteries? Aren't they supposed to be friends of ours?

BLITZER: You would think.

CAFFERTY: Don't we support Taiwan in the ongoing squabbles with China?

BLITZER: Yes.

CAFFERTY: Friends like this.

The question this hour is: What does it say about the importance of this election if voter turnout in November could be as high as 80 percent in some states? Arizona says it's getting right close to that number already.

Tom in Boston writes: "Good God, almighty! We finally have something we can praise George Bush for: eliminating voter apathy and creating the largest voter turnout on record. Everyone wins, including poor Georgie, who finally gets something for his legacy."

Ifeanyi in Houston writes: "It says the people have risen to the call for change. Win or lose, Obama has done something that he should be very proud of forever. His clarion call for change was headed by groups that never considered voting important, and his superb organization has been galvanizing people to register and to vote."

Keith in Irving, Texas writes: "It says John McBush is 'toast."

Pamela in Maryland: "As cliche as it sounds, it means there's a promise of hope lurking within the average voter. The economy is in the dumps, gas is at an all time high, education is a bitter disappointment and the old fogies in Washington couldn't be more disconnected with the American public if they lived in another country. It's beyond time for change."

Anu writes: "It says that we Americans are finally pulling our heads out of where the sun don't shine and attempting to do something about the mess we've ended up in while we were busy listening to what Simon Cowell has to say."

I'm told that Simon Cowell is a part of American Idol. I've never seen that program.

Michael says: "Where were all these people in 2004?"

And Brian in Texas writes: "I expect some may even rise from the grave to vote in this election."

They used to do that in Chicago you know. They'd come right up out of the ground and vote over and over again.

BLITZER: They used to vote early enough. All right. Jack, see you in a few moments. Thank you.

The mayor of Detroit charged with perjury, obstructing justice and more. Lou Dobbs standing by live. We'll discuss this exploding scandal.

Also, Hillary Clinton reignites the furor over remarks by Barack Obama's pastor. She's trying to change the subject as she comes under scrutiny to some controversial remarks of her own.

Stay with us. Lots more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Lou Dobbs. He's got a show coming up in an hour but I want to pick his brain on what's happening in the motor city in Detroit.

I know you've been following this story. What's your take?

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Well, it is whether it's Albany, New York, Detroit, Michigan, I mean the standards of conduct in national politics and local politics, I think they're sliding quite dramatically. I think that Mayor Kilpatrick there in Detroit has run into a buzz saw with Kym Worthy, who's the Wayne County prosecutor.

She's taking him on and not putting up with any of this race card nonsense that he's been spewing. None of this I'm sorry. She saying point blank the city council wants you out. She thinks the law has been broken by the mayor. She's coming after him.

BLITZER: But he says he's innocent until proven guilty. He also says according to his lawyer that the information that she has, those sexually explicit e-mails, they were obtained by her illegally. They're going to make the argument that the evidence is inadmissible in court.

DOBBS: They're saying everything except that he did not have an affair with his chief of staff. They acknowledge that. The fact - you know as a matter of civil proceedings, the city of Detroit had to put out over $8 million to pay off two officers were who fired, who lsot their jobs, their careers destroyed, trying to cover up this affair. All of that is a part of the public record.

This mayor is in incredible position of promising the people of Detroit he won't quit on them despite all of this and at the same time, trying to protest his innocence in a criminal proceeding. I don't think he's in what you would call a great position.

BLITZER: I'm sure he's not. He's got a lot of problems but legal technicality, do you think it will fly?

DOBBS: Not even for a moment. I think it is pure nonsense and I don't think it will last for even the time it takes to report on its filing. You know the fact is this mayor is a man of privilege. I mean his mother is Caroline Cheeks Kilpatrick, congresswoman and also the head of the Congressional Black Caucus. I mean good lord, talk about a man who should have known better, this is the one.

BLITZER: Lou's going to have a lot more on this story coming up in an hour. Lou, thanks very much.

DOBBS: Thank you.

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