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Democrats Expound on Energy Ideas; Inside Obama's Ad Blitz; Suspicious Passenger Arrested at Orlando Airport; President Bush Urged to Boycott Olympics

Aired April 1, 2008 - 17:00   ET

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


JOHN KING, CNN ANCHOR: Happening now, oil execs defend their record profits on Capitol Hill. That's providing more fuel for the Democratic candidates, out pitching their energy ideas to the voters.
Chelsea Clinton says, "it's none of your business" when voters keep asking her how her mother dealt with the impact of the Monica Lewinsky scandal. Do they have a right to know?

And a note to America's foes -- don't mess with Condoleezza Rice when she's not working. The secretary of state is working out.

Wolf Blitzer is off. I'm John King. And you're in THE SITUATION ROOM.

Big oil was on Capitol Hill today defending its big profits and a big tax break. Top executives told angry lawmakers their companies aren't to blame for rising fuel prices and said higher taxes on energy companies won't help consumers.

Out on the campaign trail, the Democratic candidates burning up a lot of miles per gallon, taking their energy ideas directly to the voters. Let's go to CNN's Suzanne Malveaux.

Suzanne, Hillary Clinton seems energized, we might say.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: She was, John.

Actually, what happened here is that all eyes, of course, paying attention to what was happening on Capitol Hill, whether or not these members of Congress can do any more than simply hold hearings when it comes to gas prices. The big question, obviously, for the candidates is whether or not they can come up with plans that will ease the pain in the short-term. And Hillary Clinton made it very obvious, very clear earlier today that she is in this race -- sticking in this race -- to answer that question.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): Like Rocky Balboa who sprinted up the stairs in Philadelphia to prepare for the big fight, in the same city, Senator Clinton declared...

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: And when it comes to finishing the fight, Rocky and I have a lot in common. I never quit. MALVEAUX: Beating back calls from some of her opponents' supporters to step down, she reaffirmed her commitment not only to fighting Barack Obama, but also big oil.

H. CLINTON: The president is too busy holding hands with the Saudis to care about American truck drivers who can't afford to fill their tank any longer.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: We need a president to stand up to big oil and big energy companies and say enough is enough.

MALVEAUX: The two Democratic candidates are crisscrossing Pennsylvania, dropping in at gas stations and truck stops to convince voters they've got the best plan to tackle soaring gas prices and big oil profits. Clinton and Obama held dueling events in Wilkes-Barre, Pennsylvania just a mile apart -- bringing their campaigns to voters hungry for a quick fix.

UNIDENTIFIED MALE: The trucking business is pretty bad because as the gas prices are higher, the rates for the cabs is higher and the customers are all complaining.

UNIDENTIFIED FEMALE: It's getting ridiculous. You can't go anywhere hardly.

UNIDENTIFIED MALE: It's costing me $60, $70 a week that it used to cost me $30.

MALVEAUX: In Washington, top executives from five of the biggest oil companies were grilled before Congress over their growing profits and corporate tax breaks.

REP. JAY INSLEE (D), WASHINGTON: If you were going to give awards for taxpayer abuses, this would win the Heisman and the Oscar and the Nobel Prize.

MALVEAUX: Clinton is calling for oil companies to contribute to a $50 billion fund to invest in alternative energy, for car manufacturers to increase fuel-efficiency standards and for the government to tap into its emergency oil reserves.

Obama is calling for a $150 billion investment over 10 years in clean energy and an 80 percent reduction in carbon emissions over 40 years. Energy industry experts say the candidates' plans offer little to provide immediate relief, as even Obama acknowledges.

OBAMA: I would be dishonest if I said we've got a lot of short- term answers to bringing down gas prices. I don't think we do.

(END VIDEOTAPE)

MALVEAUX: And, John, this really isn't unlike what we've heard from President Bush for some time, saying that, really, energy independence is something that is going to take a long time. It fundamentally requires the U.S. government change relationships with Middle Eastern leaders and countries. And that is something that Democrats say he has failed to do -- John.

KING: And they will talk about it and talk about it and talk about it. Suzanne Malveaux on the trail for us.

Suzanne, thank you very much.

And on Capitol Hill, top execs from the top oil companies were digging in their heels on the idea of paying more taxes and blame the government -- the government -- for America's reliance on foreign oil.

(BEGIN VIDEO CLIP)

STEPHEN SIMON, SENIOR VICE PRESIDENT, EXXON MOBIL CORPORATION: While our worldwide profits have grown, our worldwide income taxes have grown even more. From 2003 to 2007, our earnings grew by 89 percent, but our income taxes grew by 170 percent. Over the last five years, Exxon Mobil's U.S. total tax bill exceeded our U.S. earnings by $19 billion.

JOHN HOFMEISTER, PRESIDENT, SHELL OIL COMPANY: Although oil and natural gas will be used to meet more than half our energy needs for decades, U.S. oil and gas production has fallen steadily for the last 35 years.

Why? Because government policies placed domestic oil and gas resources off limits. The U.S. government restricts supply to U.S. consumers. The result -- we import more oil to meet our growing demand.

(END VIDEO CLIP)

KING: As you're well aware, the average price for a gallon of regular gas this week, $3.29 per gallon. So where does your gas money go?

A surprisingly small amount goes to the gas station itself. Most take in just seven to 10 cents for each gallon they sell.

Getting the gas from refineries to the stations by trucks or pipelines, well, that costs about 23 to 26 cents per gallon. The government takes about 40 cents, about 18 cents to the Feds, while state taxes average about 22 cents. Refining companies that turn crude into gasoline take about 24 cents per gallon. And the biggest cost is the crude oil itself. The producers get more than $2 from every gallon.

Hillary Clinton today walked into a news conference and suggested something to break the Democratic deadlock -- a showdown at a local alley.

(BEGIN VIDEO CLIP)

H. CLINTON: This has been a very hard-fought race. Each of us is drawing enormous support. We clearly need to do something so that our party and the people can make the right decision. So I have a proposal. Today, I am challenging Senator Obama to a bowl off -- a bowling night, right here in Pennsylvania -- winner-take-all. I'll even spot him two frames.

(END VIDEO CLIP)

KING: Senator Clinton making that challenge, well aware her rival recently bowled a woeful 37. The challenge sounded like an intriguing idea, but, alas, Senator Clinton made it clear it was all an April Fools' joke on those laughing reporters.

There's no joke in Obama's Pennsylvania strategy. At its heart, a massive ad blitz bombarding the state's airwaves. CNN's Dan Lothian is live in Philadelphia with details.

Dan, just how heavily is the Obama camp advertising there in Pennsylvania?

DAN LOTHIAN, CNN CORRESPONDENT: Well, John it's pretty heavy. You know, Senator Clinton leads Barack Obama here in Pennsylvania by double digits. But when it comes to the television ad wars, Senator Obama is ahead.

(BEGIN VIDEOTAPE)

OBAMA: I'm Barack Obama and I approved this message.

LOTHIAN (voice-over): In Pennsylvania, you can switch the channel, but chances are Senator Barack Obama's television ads will follow you wherever you go.

OBAMA: I'm Barack Obama. I don't take money from oil companies or Washington lobbyists.

HELEN RICHARDSON, PHILADELPHIA VOTER: I've never seen so many of them. It seems to me we're flooded with them.

LOTHIAN: In this high stakes ad war, Senator Obama is outspending Senator Hillary Clinton here three-to-one, selling his message to undecided voters while trying to weaken his cash-strapped opponent.

EVAN TRACEY, TNS MEDIA INTELLIGENCE: The strategy is to put the money to work, buy all the ads that you can buy in Pennsylvania right now, make Senator Clinton use her money to buy ads, use her time in the State of Pennsylvania, one that she's leading in the polls.

LOTHIAN: Veteran ad man Neil Oxman says that strategy leaves Senator Clinton vulnerable in other states.

NEIL OXMAN, FOUNDER, THE CAMPAIGN GROUP: And in a war of attrition, one of the things he wants to do is wear her down as much as he can and bleed her so she doesn't have a lot of money for North Carolina coming up or Indiana coming up.

LOTHIAN: And as for the message in the ads, the sales pitch, does this blitz work?

Political analysts say with three weeks to go before the primary, it could help define Obama's message. But the voters we met aren't so sure.

RALPH FISHER, PHILADELPHIA VOTER: I learned pretty much just do my own research, which is, as far as I'm concerned, more voters need to do.

LUCY COX, PHILADELPHIA VOTER: I'm a traditionalist and I read the papers more. And I'm still trying to make up my mind.

LOTHIAN: In all this, there is a silver lining for Senator Clinton.

TRACY: The Clinton campaign can point to his advantage on the air in Pennsylvania as a reason they need their donors to get their checks in and get them in now.

(END VIDEOTAPE)

LOTHIAN: Now political analysts will point out that there's nothing new to this Obama strategy. But what is different this time around is that Senator Obama has been able to raise so much money to use against his opponent -- John.

KING: Dan Lothian with our Election Express in Philadelphia. We should note, some fancy TVs on that bus to watch all those ads.

Dan, thanks very much.

LOTHIAN: That's right.

KING: And Jack Cafferty is in New York now with "The Cafferty File" -- hi, Jack.

JACK CAFFERTY, CNN ANCHOR: Hello, John.

When it comes to the axis of evil, a little diplomacy can go a long way, indeed. According to the latest Gallup Poll, the number of Americans who view North Korea as our greatest enemy has declined by half in the last year. In fact, North Korea is not even among the top three anymore.

Thanks to diplomatic agreements reached concerning their nuclear weapons program, the percentage of Americans viewing North Korea as our biggest threat has declined from 18 percent to just nine percent. North Korea's axis of evil partners, Iran and Iraq, still top the enemies list. Twenty-five percent see Iran as our biggest enemy; 22 percent say it's Iraq.

Who is the new number three?

Well, that would be China, with 14 percent. North Korea has dropped to number four, with its nine percent rating. Number five is a tie between Afghanistan and us. That's right -- three percent of the people surveyed see Afghanistan and the United States as tied for fifth place, the United States being named as its own worst enemy.

The Russian bear is hardly even in the game anymore. Our number one nemesis for all the years of the cold war is only considered our worst enemy today by a paltry two percent of Americans.

So here's the question: What country do you think poses the biggest threat to the United States?

You can go to caffertyfile@cnn.com and post a comment on my blog.

Is it Pogo, the comic strip, where you met the enemy and it's us?

KING: And I was going to say we may get a few of those in the response. Chelsea Clinton, well, that was good last hour. This one is going to light it up, as well.

CAFFERTY: Don't send the Pogo thing in. We just did it.

KING: Yes. Yes. Save your fingers. Jack, thanks very much.

And breaking news from Orlando -- reports of a man with explosives in his luggage. We're working the story right now and we'll take you there live in just a few moments.

Plus, as John McCain considers a vice presidential pick, is his own age a factor?

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Not particularly. No. I think -- I think about whether that person who I select would be most prepared to take my place. And that would be the key criteria.

(END VIDEO CLIP)

KING: The Republican candidate talks about the age factor and his tough stance on the economy in a one-on-one interview.

Also, pressure on the president to put pressure on China by boycotting the Beijing Olympics ceremony. We'll tell you who's behind the push.

And Chelsea Clinton says, "It's none of your business." But do you have a right to know about how her mother was affected by the Monica Lewinsky scandal?

Stay with us.

(COMMERCIAL BREAK)

KING: A breaking story at Florida's Orlando International Airport. A passenger arrested after suspicious items were found in his bags. CNN's Susan Candiotti is following this story for us.

Susan, what do we know?

SUSAN CANDIOTTI, CNN CORRESPONDENT: Well, we don't have an identification of this man just yet. But all of this started, John, at about noontime today at Orlando International Airport. This man had entered the terminal and was on a checked flight -- an Air Jamaica flight to Jamaica, scheduled to leave at about 3:00 this afternoon. Once he was in the terminal, officials tell us that Transportation Security Administration official thought that he was acting suspiciously. People who are trained to look out for odd behavior pulled him aside and they found in his checked luggage some suspicious items.

The "Orlando Sentinel" newspaper is reporting that these items included possible components for a pipe bomb and some other explosive materials, including end caps.

CNN has not yet independently confirmed that information, but we are being told by law enforcement sources that this is something that we should watch. The FBI tells us that this is being treated as if it is a very serious incident and we are waiting for additional information as to exactly what was found inside this man's checked baggage.

In fact, we are also waiting to determine for sure whether this is a checked item or something that was supposed to be a carry-on bag. That could make a big difference here -- John, as we get more we'll bring it to you.

KING: And Susan, as you get more, we will get immediately back to you. Tracking this breaking news at Orlando's International Airport, Susan Candiotti.

Thank you very much, Susan.

Now, does John McCain feel voters' pains when it comes to the economy? The Republican candidate on what his campaign calls its biography tour. He visited his old high school in Virginia today.

CNN's Dana Bash accompanied the senator and sat down with him for a one-on-one interview.

(BEGIN VIDEO CLIP)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Senator, thank you for sitting down with us.

MCCAIN: Thanks, Dana.

BASH: The first question is about the issue that Americans do seem to care about the most -- and that's the economy. You've been very clear that because of your principle and because of your Republican philosophy, that you think that the government really should be limited and really should stay out, for the most part, of bailing out both homeowners and what you call irresponsible lenders.

But my question is, in this time of uncertainty, when there are so many people hurting, are you concerned that there are voters out there who hear that who say, John McCain is heartless when it comes to this issue? MCCAIN: Well, actually, I think the government should facilitate a lot of things. And there have been numerous proposals, many of which I have supported and some that I will be coming forward with.

What we really need to do is -- fundamentally -- is make sure that we take every action to have the lender and the borrower sit down together so that the millions of Americans who are facing terrible challenges will be able to afford to keep their home.

We don't want greedy speculators, obviously, to profit. We don't want unscrupulous lenders to gain from this and spend taxpayers' dollars on it. But we should devote all our efforts -- and I will be, as I say, encouraging and trying to provide ways for incentivizing that process to happen and, if necessary, give the homeowners who are sitting around the kitchen table today saying, well, I have to get another job, will we stay in our home, be able to do that.

That does mean government helps out. What I worry about, of course, are massive bailouts that will then reward people who didn't behave well. But my efforts and my proposals will to be help that homeowner who is now experiencing a great trauma of losing the American dream.

BASH: If the headlines that are on the front page of the newspapers today are the same headlines on the front pages in late October, early November, does John McCain lose?

MCCAIN: I have no idea. I think that John McCain's experience, knowledge, background and judgment on both national security and economic issues -- I've been involved in economic issues for the last 20 some years. I was chairman of the Commerce Committee that oversights all sectors, practically, of our economy.

So I'm strong on the economy. I'm strong on national security. And the important thing will be my envision -- my vision for the future of this country.

BASH: You're on this bio tour, this service tour that you're on. You're talking, obviously, a lot about your past and your experience. But by talking about the fact that you remember vividly -- at least your first vivid memory was the beginning of World War II, you're also maybe subtly reminding voters of your age.

And I want to just read you some numbers from a recent "Wall Street Journal" poll. Sixty-one percent said that they would elect somebody over 70, but 71 percent said they would elect a woman and 72 percent said a black.

So it looks like voters are much more eager -- or at least able to elect a black or a woman than somebody of your age.

MCCAIN: Well, that's interesting, because we are either tied or slightly ahead of both Senator Obama and Senator Clinton. So overall in the polls, I'm very satisfied, where we are, particularly since the generic ballot has Republicans trailing Democrats rather badly. So I'm very happy with where we are. And I'm very happy... BASH: Specifically on the age issue...

MCCAIN: ...to talk about the past and my values. But all of that is a prelude to the future. If you experience and knowledge and background and judgment, that's what -- and vision for the future -- that's what the American people will, I believe, the factor that will decide whether they support me or not. And I'm very confident.

BASH: One more question on this. You, when you're asked about who your vice president would be, you say that there are two real roles for the vice president, and one is to check on the health of the president. And you joked a couple of weeks ago in Pennsylvania that that would be especially important in your case.

MCCAIN: Sure.

BASH: What did you mean by that?

And I know you don't want to talk about the process of picking a vice president, but in terms of your approach, do you, in all candor -- straight talk -- think about your age when you -- and the fact that you are 71 -- will be 72 when you are deciding who would be a potential president?

MCCAIN: No. And in all candor, I will continue to use humor. And if any commentator chooses to take a humorous remark and turn it into something serious, they are free to do that. But I will continue to use humor. And I think the American people like to have a little humor from time to time.

BASH: Absolutely.

MCCAIN: And that was what that whole line was about.

BASH: Absolutely. But it -- but, understanding that completely, in all seriousness, when you're approaching who you're picking for the vice president, do you think about your age as a factor? And --

MCCAIN: Not particularly, no. I think -- I think about whether that person who I select would be most prepared to take my place. And that would be the key criteria.

(END VIDEOTAPE)

KING: Senator John McCain earlier today.

"It's none of your business" may be risky business for the Clinton campaign. We'll show you how Chelsea Clinton's refusal to talk about the Lewinsky scandal could backfire and perhaps cost her mother votes.

Plus, the private workout of a very public figure. Condoleezza Rice shares her fitness secrets.

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

(COMMERCIAL BREAK)

KING: Our Carol Costello is monitoring stories incoming into THE SITUATION ROOM right now.

Carol, what's going on?

CAROL COSTELLO, CNN CORRESPONDENT: Hey, guess what, John? The second quarter started with a bang on Wall Street. All three major indexes made tremendous gains, with the Dow surging 391 points. A series of positive reports put investors in a buying mood, including a stronger U.S. dollar, better than expected readings on manufacture and construction, and signs that the hard-hit financial sector is starting to recover from the credit crisis.

But it was a dismal report card for the nation's public schools. A new study says that in 17 of the country's largest cities, fewer than half of high school students graduate. Among the worst cases, Cleveland and Indianapolis, where only about a third of students finish high school. And number one on the list -- poor Detroit, with just a 25 percent graduation rate.

A quiet but very significant change of policy for the U.S. Army. For the last two years, it's been letting married couples live together at two U.S. bases in Iraq. About 50 couples have set up house in trailers lined up on what's come to be called Couples Row. It's an effort to boost morale and possibly re-enlistment rates -- back to you John.

KING: An interesting policy.

Carol Costello -- Carol, thank you very much.

Chelsea Clinton draws the line when it comes to some questions.

(BEGIN VIDEO CLIP)

CHELSEA CLINTON, DAUGHTER OF SEN. HILLARY CLINTON: It's none of your business. I think that is something that is personal to my family. I'm sure there are things that are personal to your family that you don't think are anyone else's business, either.

(APPLAUSE)

(END VIDEO CLIP)

KING: But some political analysts say it is our business. Should that private scandal be part of the public dialogue? The difficult questions surrounding Chelsea Clinton, next.

Plus, Prince Charles and other world leaders are boycotting part of the Olympics. Now, some members of Congress are pushing the president to do it, too. What he's decided ahead.

And the secretary of state is flexing her muscles -- literally. Condoleezza Rice is getting physical. See for yourself just a bit later. (COMMERCIAL BREAK)

KING: You're in THE SITUATION ROOM.

Happening now, the Homeland Security Department says it will bypass more than 30 environmental and other laws to build hundreds of miles of fence along the U.S./Mexico border. Congress has required the project finished by the end of the year and has authorized those legal waivers.

Also, a nationwide protest by independent truckers over skyrocketing fuel prices. Some are jamming highways by driving at very low speeds. Others are parking and refusing to drive at all.

And Britain's drawdown of troops in Iraq is on hold because of surging violence there. Prime Minister Gordon Brown says the withdrawal of 1,500 British soldiers is being delayed while the Iraqi government cracks down on Shiite militias.

Wolf Blitzer is off today. I'm John King. You're in THE SITUATION ROOM.

The question keeps coming up -- twice in as many weeks. And Chelsea Clinton's answer is always the same. The Monica Lewinsky scandal and its impact on her mother are none of your business.

But can that answer possibly backfire? CNN's Carol Costello is here with that.

Carol, what's the danger in Chelsea Clinton saying no way, off limits?

COSTELLO: Well, it can backfire. I mean there is a danger. A lot of young people feel it is their business and maybe like, you know, Chelsea Clinton should come up with a more politically astute answer.

(BEGIN VIDEOTAPE)

C. CLINTON: And I do not think that's any of your business.

COSTELLO (voice-over): "It's none of your business" is becoming a Chelsea Clinton trademark answer every time the Monica Lewinsky affair rears its ugly head.

QUESTION: Your father's relationship within the White House had any effect on or did it detriment your mother at all?

C. CLINTON: It's none of your business.

COSTELLO: But there are those who feel explanations are need about an affair that was painful not just for the Clintons but for the whole country.

BETH FRERKIN, THE POLITICO: I don't think she should say to people it's none of your business because, in fact, it was this nation's business for quite a long time. COSTELLO: For young people one of the most vivid impressions of Chelsea Clinton is this picture, taken after Bill Clinton was impeached, a daughter, a lot like them, drawing her wounded parents together. And while that image is part of why they respect Ms. Clinton, her mother's decision to say with her father makes them wonder about Senator Hillary Clinton.

GRACE HOYER, COLUMBIA UNIVERSITY STUDENT: No matter how right or wrong it is, whatever, it's still a fact. And a candidate's personal life is going to affect the way people think about him or her, and is going to change a person's vote potentially.

COREY VALDEZ, COLUMBIA UNIVERSITY STUDENT: In a general election campaign, all the drama and scandals of the Clinton years might be relevant.

HOYER: These feelings made their way to the "Tyra Banks Show" a -- talker that attacks the same young voters that Chelsea Clinton is trying to woo to her mother's side.

TYRA BANKS, TALK SHOW HOST: Do women cup up to you and ask you for advice, Senator Clinton, my husband stepped out on me. I'm going through hell. What do I do? Have they done that?

H. CLINTON: Yes. All the time.

BANKS: What do you say?

H. CLINTON: I say you have to be true to yourself. No one story is the same as any other story.

C. CLINTON: Well, sir, I respectfully disagree. I think that is something that is personal to my family. I'm sure there are things that are personal to your family that you don't think are anyone else's business either.

COSTELLO: From a daughter's perspective, it may not be, but if Chelsea Clinton helps to sell her mothers virtues to a young audience, maybe as Politico Beth Frerking says, it's none of your business, isn't the right answer.

(END VIDEOTAPE)

COSTELLO: I mean, wouldn't it be better to say I admire my mother for what she did and maybe you should ask my mother that question? I mean, keep in mind Chelsea Clinton isn't 14 anymore and she's acting as a surrogate, a spokesperson for her mother and that means she has to tackle tough questions that all surrogates must answer and as you know, John, she doesn't allow reporters to interview her either. So she avoids tough questions that way, too.

KING: That is a campaign's decision and they will either benefit or suffer or maybe in some places a little bit of both.

COSTELLO: We'll see.

KING: Carol Costello. Carol, thank you very much.

You can almost hear the theme music of that Oscar-winning classic "Rocky" as Hillary Clinton cast herself as the never-say-under dog where else, Philadelphia.

Listen to this.

(BEGIN VIDEO CLIP)

H. CLINTON: Could you imagine if Rocky Balboa had gotten halfway up those art museum stairs and said, well, I guess that's about far enough. That's not the way it works. Let me tell you something, when it comes to finishing the fight, Rocky and I have a lot in common.

I never quit. I never get up. And I know that we're going to make it together. Not just up those stares. But we're going to climb that mountain to a better day for America.

(END VIDEO CLIP)

KING: Too bad for Senator Clinton but "Rocky" star Sylvester Stallone is already on record as endorsing Republican John McCain.

So is it fair for Hillary Clinton to portray herself as the under dog, joining us to talk about that and much more in the Democratic contest, Democratic strategist, CNN contributor Paul Begala, he is a Clinton supporter, and California Congresswoman Anna Eshoo, she is backing Obama.

I suspect Iraq, the economy and many other issues will matter more than Hillary Clinton comparing herself to Rocky Balboa. But we have so long between primaries we get to have a little fun.

She says she's Rocky, but remember, he was the underdog from the beginning, Paul. She was the formidable front-runner. She was Apollo Creed at the beginning of this fight.

PAUL BEGALA, CNN CONTRIBUTOR: That's what's so cool and interesting about this movie that is our party's primary, right? Hillary started out with what even I as a Hillary supporter thought was sort of an arrogant strategy of inevitability and invincibility and invulnerability and now that's flipped, it's the Obama campaign that says she can't win, she has no chance, we're invulnerable and we're inevitable and she's the plucky underdog.

Now I was on this network still gainfully employed the morning after Iowa and I was calling on her to embrace her inner underdog and finally she's doing it and she's the underdog and America loves an underdog. So does Pennsylvania. Hillary is a lot tougher than Rocky. As you know, she's tougher than nickel steak. She's got a good left hook. And we'll see how she does up there.

KING: Cut me, Mick -- is that what she says? See if my eye swells up.

BEGALA: At the end she'll stand up and go, yo, Adrian! KING: Does any of this matter? The tactic? She's ahead in Pennsylvania. She is trying to keep the blue collar voter on her side. You see Senator Obama he's not doing these galactic, 20,000, 30,000 college, at least not now in Pennsylvania. He's doing these little factory tours and bowling alleys and sipping a beer. He obviously understands it's a different electorate.

REP. ANNA ESHOO, (D) CA: I think that Hillary's strategy fits with where she is right now, because she is the underdog nationally. And polling shows that in terms of who Democrats think will be the most electable in a general election. The rest of what the two of you are talking about, is fun. There's bowling. There's Rocky.

BEGALA: Right.

ESHOO: But there is obviously as serious as it gets. And -- but it's good to have some fun.

KING: As we have fun, there's a very serious undercurrent to what's going on in Pennsylvania. Senator Obama is now outspending Senator Clinton three-to-one on television in a state where they are down double digits.

It seems to me that they get the message that despite the lead in pledged delegates despite what many Democrats now are saying is the almost inevitability of an Obama nomination. That if she can win Pennsylvania by a significant margin, do you worry congresswoman that to the superdelegates she will be able to say, sure, she's ahead in the delegates but I'm winning the places and the voters if we don't get in November we lose?

ESHOO: I think one of the first rules in politics is that you never take voters for granted. So, this is something that's earned. And believe it or not, even in presidential elections you have to be with people and that's what both candidates are doing. Hillary Clinton is a known quantity. She's been around for some time. So, people in the country, certainly Pennsylvanians know her.

Senator Obama is new to most of the country. And, so, of course, he's going to get on a bus. Of course, he's going to go into diners. Of course, he's going to do all of that.

So -- and it shows and the polls show where he is closing the gap, as he has in other states. So, my mother used to say, we'll see, which meant, she's the one that held the answer, not us. But I think that he's doing exactly what he needs to do. I think Hillary Clinton is the underdog right now, nationally, and so this contest goes on, and I want to see June 3 when it's over.

KING: So, I have two very disciplined campaign advocates, surrogates, call it what you will right now, being very aggressive in supporting their candidate. Here's an example of not. Representative Emanuel Cleaver, congressman, Democrat from Missouri, he's a Clinton supporter.

Here's what he told the Canadian Broadcasting Corporation and maybe he didn't think it would filter across the border: "If I had to make a prediction, I would say Barack Obama is going to be the next president. I would be stunned if he's not the next president of the United States."

This is one of Howard Wolfson/Mark Penn's talking points for Clinton surrogates. Right, Paul?

BEGALA: It's the damn NAFTA treaty that allows communication back and forth across the border. It's part of the strategy, King, you don't get it. The congressman is trying to sort of lure them into a false sense of security in the Obama camp. Look, it happens in campaigns. It's one of the things that makes it fun is that these are real people and sometimes they pop off and say things they actually think and mean.

I do think Barack is the front-runner. I think Hillary is using that to her advantage. I don't think that those comments are probably usually helpful, but it's not like it's going to lose her any votes either. I've done a lot of work in Pennsylvania as you know and people in that state particularly, they are fiercely independent. They can make up their own minds.

KING: It will not do a thing in Pennsylvania, I think you are probably right about that. But in the contest for superdelegates you're calling on Capitol Hill and elsewhere across the country who are still on the fence and who will in the end probably decide who the nominee is of this party, can you walk around with this quote and say, look, even her support think you're guy's going to win, come on board?

ESHOO: Well, I think some people will. But the fact of the matter is the longer it goes on and the longer I think that Senator Clinton is the underdog that Barack Obama will be the Democratic nominee. I think it will be sooner rather than later, which is very important for the Democrats to come together, because this decision can't be made, in my view, successfully at a national convention. I think we'll pay the price in September. So, but I think maybe we should just rest our case with Congressman Cleaver.

KING: We will --

BEGALA: The congressman is smart, when you pointed out, this is why real candidates affidavits and real congress people are better than the strategist. She actually had to get vote. This is where Barack needs to listen to you and don't take any voters for granted. Don't say it's over.

KING: We need to call it quits. We'll continue the debates. You can lobby Representative Cleaver to get back on message.

Congresswoman Eshoo, Paul Begala, thank you both for coming in today.

And should he or shouldn't he? Congress wants the president to consider boycotting the Olympic opening ceremony. Find out what he's saying about it next.

Plus, the secretary of state like you've never seen her before. She's getting physical and we have the pictures to prove it.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: President Bush is facing new pressure to put pressure on China. For its human rights record. A powerful Democrat is the latest to focus on the Beijing Olympics. CNN's Mary Snow is the latest that's been looking into this.

Mary, is this an effort that's gathering steam?

MARY SNOW, CNN CORRESPONDENT: It is, John.

Fifteen House members today sent a letter to President Bush urging him to reconsider his decision to attend the Olympic Games. It follows House Speaker Nancy Pelosi's signaling that the president should skip the opening ceremony. But all say the games themselves should go on.

(BEGIN VIDEOTAPEP)

SNOW (voice-over): As Beijing readies to host the Olympics, Democratic House Speaker Nancy Pelosi suggests a snub to China for its crackdown on protesters in Tibet. Pelosi is just back from a trip to India where she met with the Dalai Lama, the exiled spiritual leader of Tibet and she says the U.S. should consider a boycott of the Olympic opening ceremonies.

REP. NANCY PELOSI, (D) HOUSE SPEAKER: The Olympic Games should continue. What I did say was -- with the chancellor of Germany putting this on the table, it's something that I should not take off the table.

SNOW: The German chancellor has no plans to attend the Olympics. France's president suggests he may boycott the opening ceremonies. Britain's Prince Charles said in January he has no plans to attend. Their athletes are all participating. President Bush said he's going to the Olympics as a sports fan and will address other issues with china's leadership while there. Human rights groups say the president isn't going far enough.

JOHN ACKERLY, INTL. CAMPAIGN FOR TIBET: We feel if he wants to go to Beijing he should go to Beijing to see the sports but not stand next to Chinese dictators at this point in time right after there's been such an incredible crackdown in Tibet.

SNOW: That crackdown began last month when Buddhist monks demonstrated against China's rule of Tibet. It escalated to deadly cry lens. China blames the Dalai Lama. The Nobel Peace Prize winner has condemned the violence.

One China expert said if conditions deteriorate, President Bush might have no choice but to bow out of the opening ceremony, which would be a slap in the face to China. DEREK MITCHELL, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: China views this as its statement to the world that it's arrived. That it's a major power. They desperately wanted these Olympics.

(END VIDEOTAPE)

SNOW: President Bush urged China last week to show restraint. Treasury secretary Henry Paulson is expected to echo the message as he meets with officials in China over the next two days to discuss economic issues -- John.

KING: We'll keep an eye on it.

Mary Snow in New York. Mary, thanks very much.

Boycotting of the Olympic games, nothing new. In 1956 the games in Melbourne, Australia, marked the start of a 32 year boycott by China in protest of the International Olympic Committee recognizing Taiwan. The 1980 games in Moscow were boycotted by 60 countries including the United States, Britain and France to protest the Soviet Union's invasion of Afghanistan.

Four years later the Soviet Union responded by boycotting the Los Angeles games. But 144 countries did participate in the 1984 summer games, more than at any previous Olympics.

In the weeks ahead the presidential candidates will have to head back from the campaign trail to take part in some important votes. CNN's Brian Todd joins us now.

Brian, if they can find the capital, what's at stake?

BRIAN TODD, CNN CORRESPONDENT: Well, John, we've got an extraordinary political situation unfolding here. All three major candidates, all senators, all three have records that can help or hurt them in the campaign. And over the next several weeks in Congress, all three have to be very careful about what they say and how they vote.

(BEGIN VIDEOTAPE)

TODD (voice-over): Under pressure to address a crisis facing millions of Americans, Democrats who control Congress are pushing bills to help struggling homeowners and reform the mortgage industry. They're also eager to highlight differences between their party's presidential candidates and John McCain.

REP. RAHM EMANUEL, (D) IL: The fact is, as long as the Republicans hew to the line and John McCain consistently says things are fine and they don't need a new agenda to deal with it, they're going to be the party of the status quo.

TODD: Analysts say Democrats hope that upcoming votes on the mortgage crisis will pin McCain on what Democrats call his inconsistencies on the subject. Saying in one recent speech it's not the government's job to bail out irresponsible lenders and borrowers but then ...

MCCAIN: I will consider each and every proposal based on their costs and benefits.

TODD: A McCain aide says he's not inconsistent but wants to make sure taxpayers assistance gets to honest homeowners who may simply be in the wrong mortgages. The aide is confident McCain can navigate the mortgage crisis in Congress without being politically hurt. Iraq is also a potential minefield when General David Petraeus testifies next week on Capitol Hill, the last time he was there, Hillary Clinton, who voted to authorize the war, said this.

H. CLINTON: The reports that you provide to us really require the willing suspension of disbelief.

TODD: Republicans seem ready to pounce if she does it again.

SEN. JOHN ENSIGN, (R) NV: I think that there's a real danger for Senator Clinton if she just looks like she's taking cheap, partisan shots at truly one of the great generals that the we've had in this country in a generation, I think she'll come out looking very bad on that.

TODD: Analysts say it's not unusual for members of Congress to use legislation to help their party's presidential candidate and hurt their opponents. But this year with each candidate having a record as a senator ...

DAVID DRUCKER, "ROLL CALL": It gives people a chance on both sides of the aisle to try to, you know, sort of get them caught politically with a bad vote here or there.

(END VIDEOTAPE)

TODD: And all this will play out in the next very crucial eight weeks. This is one of the longest stretches congress will have worked without a break. After that a lot of energy will be focused on the campaigns, John, these next two months very critical for the candidates and everyone pushing legislation up there.

KING: God forbid the campaign comes to Washington.

TODD: Right.

KING: Brian Todd for us. Brian, thank you very much.

Think your life is busy and you don't have time to work out. How's this for inspiration? The secretary of state gets physical every day. How it's helped her with the president just ahead.

And the Department of Homeland Security gets the green light to break dozens of laws. It's renewing the debate about immigration. Lou Dobbs will be with me to talk about it.

Stay right here. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: This note to would-be foes of the United States, you probably don't want to mess with Condoleezza Rice. When she's not working, the secretary of state is, well, working out.

CNN's State Department correspondent Zain Verjee joins us from the gym -- Zain.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: John, we all know that secretary of state Condoleezza Rice is a fitness buff, but in a recent interview, we see her in some rare form.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): Condoleezza Rice travels the world flexing her diplomatic muscle, but the secretary of state also flexes her biceps, pumping iron and doing cardio six days a week.

Secretary Rice tells "Fitness" magazine exercise is her private time. "I feel more awake and more alert, and I'm ready for the day," she says. "On the few mornings I have blown off exercise for whatever reason, I have trouble getting myself organized."

Rice says she likes working with her trainer, Tommy Tomlow (ph) to mix it up, weights, squats, ab crunches.

UNIDENTIFIED MALE: Got a set of pipes on her. She's in awesome shape. She never ceases to amaze me with the things she can do.

VERJEE: She used her stamina to motivate the masses at this breast cancer awareness war. It's lights out at 10:00 and she's hitting the gym as early as 4:00 a.m. "I have to push myself just like anybody else," she says. She pushed herself as a young figure skater. Now at 53 she has a new passion, golf.

Rice says exercise is about feeling mentally and physically healthy. "I like the fact that I can run up the stairs and not huff and puff," she adds. Saying she doesn't have to wonder whether her clothes will fit.

(END VIDEOTAPE)

VERJEE: Secretary Rice shares a passion for sports and fitness with President Bush. She told one of her biographers that some of her fondest bonding moments with the president has been over that -- John.

KING: Zain Verjee at the gym.

Time now to check back in with Jack Cafferty who has just huffed and puffed his way back from the gym. Jack is ready.

CAFFERTY: Why didn't we see tape of her actually doing the stuff? All we saw was still pictures.

KING: Because she's the secretary of state and she controls how and what and just exactly what you get on camera. CAFFERTY: We can control whether we do the story. With no tape, maybe we shouldn't have done the story. Just a thought.

The question is: Which country poses the biggest threat to the United States?

Al writes from Kansas: "It's the country of Kool-Aid. If 25 percent think Iran, 22 percent Iraq, that means 47 percent of Americans are still drinking the stuff."

Robert in North Carolina: "China, Jack. They'll destroy us without firing a shot and they know it. They've started an assault on the American economy and the workplace. Twenty years from today we'll be nothing better than a run-of-the-mill European country. China on the other hand will be the world leader in manufacturing, breaking all kinds of business profit records. It's time for America to wake up and smell the coffee. We could lose this country and never know we were even at war."

Mike in Syracuse, New York: "It's not a country, it's a movement. Specifically extreme Islam. They will do anything to advance their agenda, which is world conversion. The vast majority of mainstream Muslims are unwilling or incapable of controlling the extremists and eventually they will get their hands on nukes or biological weapons and when they do, 9/11 will seem like a picnic."

Chris in Chicago writes: "I'd have to say China. While Iran is a bit of a worry, they don't stack up to China in terms of military strength, need for resources and economic clout. Not only has China been fervently upping its military espionage, they are an enormous country with an insatiable appetite for resources. The need for resources not available through trade has driven countries through the centuries toward invasion and all-out war."

Dick writes: "I pick Cuba. If that country didn't have so many loyal Republicans in Florida, Al Gore would have been the president in 2000 and George Bush would be the baseball commissioner."

Peter writes: "Washington, what else?"

And Kel weighs in with a quote from Abraham Lincoln who said this: "American will never be destroyed from the outside. If we falter and lose our freedoms it will be because we destroyed ourselves."

And now, John, I have to get over to the gym and lift something.

KING: I am going to have a camera follow you. Video camera or still photos?

CAFFERTY: Sorry, no pictures.

KING: No pictures of Jack at the gym by decree, he has spoken, so it will be done. See you later, Jack.

The government bypassing laws to finish the border fence. Lou Dobbs standing by to weigh in.

(COMMERCIAL BREAK)

KING: The Department of Homeland security says it will bypass dozens of environmental and land-management laws to build hundreds of miles of security fencing along the U.S./Mexican border. It's an issue that's come up once or twice on "LOU DOBBS TONIGHT" so we thought we'd ask Lou about.

What do you think?

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": I think it is taking them a long time to get anything long. It's about 150 miles of fencing been built along a 2,00 mile long border.

So, John, I think it's about time they got it done. They ought to be using waivers, whatever necessary authority they can find to get it built. But they've got 2,000 miles to take care. And the issue, you know, you hear the snarky little, you know, chipmunks on the left. And the snarly little growling creatures on the right politically speaking.

The reality is every parent in this country ought to be demanding that that border be secured for the benefit of their children and for their children's children. Mexico remains the principle source of methamphetamines, cocaine, heroin and marijuana into this country.

We are losing millions of our young people to drugs. It's only part of the solution in the war on drugs but it's part of the solution that's not being implemented so the faster the Department of Homeland Security can carry out their mandate to have this fence built, the better and the better for millions of young Americans.

KING: There may be a political reason for that as well since the two leading Democrats say they would immediately review this policy on the fence if elected.

DOBBS: If elected and with those precious little words, we'll review it. I like that kind of silly nonsense. Why don't they say what the heck they mean? If they mean they're going to stop the fence and they don't care about border security and millions of young people succumbing to illegal drugs in this country, then I say to hell with them.

They are ridiculous candidates and lack the necessary obligation and sense of obligation to our young people and to law and order in this country. There's no room for that precious little, we'll review it. Let's do something and make certain sure we win the war on drugs.

KING: All right, Lou. More on that in just an hour, I'm sure, and in our program to come. We'll see you in a little bit.

DOBBS: Thank you.

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