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Interview with Hillary Clinton; Barack Obama Woos Blue Collar Voters; Hillary Clinton's Debt; John Edwards Set to Endorse Barack Obama

Aired May 14, 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: I'm Wolf Blitzer. You're in THE SITUATION ROOM.
Her big win in West Virginia is a credit to her hard work and perseverance. A day after her primary victory, Hillary Clinton sat down with me for a one-on-one interview. She talked about how she keeps on going every single day. She also talked about a comment she now concedes was dumb and much more. Take a listen to a few of the highlights.

(BEGIN VIDEOTAPE)

BLITZER: When it comes to the war in Iraq, another issue on the minds of Americans right now, you've criticized Senator McCain for suggesting U.S. troops could stay there, perhaps, for a hundred years. But you yourself, back in 2005, suggested, you know what, if there's a peaceful environment like along the lines of Korea or Germany or Okinawa, maybe it wouldn't be that bad for a long-term U.S. military presence in that kind of environment.

Is the criticism of Senator McCain, who's made similar comments, is it warranted?

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: Well, I think it is, for this reason, that there isn't any significant milestone that the Iraqi government has met. It's a very different situation than Germany or Korea.

BLITZER: But if they were to meet those milestones...

CLINTON: But...

BLITZER: ...and if there were a new peaceful environment.

CLINTON: Well, I don't think though -- I think it's -- you're confusing kind of cause and effect. I don't believe that they will seriously attempt to meet those milestones until they are absolutely convinced we are going to withdraw.

BLITZER: Let's talk about an issue that's come up in this campaign -- the issue of race in the campaign. You were widely quoted in that "USA Today" interview.

(BEGIN VIDEO CLIP) CLINTON: Well, there was just an "A.P." (ph) article posted that found how Senator Obama's support among working -- hardworking Americans, white Americans, is weakening again and how the -- you know, whites in both states who had not completed college were supporting me. I have a much broader base to build a winning coalition on.

(END VIDEO CLIP)

BLITZER: Now your great friend and supporter, Congressman Charlie Rangel, said -- and I'm quoting now -- "It's the dumbest thing you could have said.

CLINTON: Well, he's probably right.

BLITZER: He is?

CLINTON: Well, absolutely. Well, I was -- I was referencing an "A.P." (ph) article. And, you know, obviously, I have worked very hard to get the votes of everyone. And I have campaigned hard. I understand that we've got to put together a broad coalition in order to win in the fall.

BLITZER: Mario Cuomo, the former governor of New York, among others, says the best way to heal this Democratic Party, irrespective of who gets the nomination, is for the two of you to be on the ticket.

CLINTON: I know. I think he made a speech or wrote something to that effect. And it's premature for either of us to talk about that.

BLITZER: John Edwards has says he gives you a lot of credit for being willing to stick in there and fight it out. He, as you know, dropped out.

And I guess the question is how do you do it every single day?

CLINTON: I don't believe in quitting. You may not win in life, but you do the best you can. You go the distance. You don't walk off the court before the buzzer sounds. You never know, you might get a three point shot at the end.

(END VIDEO CLIP)

BLITZER: You're going to be able to see the full interview with Hillary Clinton. That's coming up in the next hour -- right at the top of the next hour right here in THE SITUATION ROOM.

A day after his landslide loss in West Virginia, Barack Obama was in a key battleground state, mingling with blue collar voters -- the kind of voters who've mainly been in the Clinton camp.

Let's go live to CNN's Suzanne Malveaux.

She's watching this story for us -- Hillary Clinton, Suzanne, was trying to capitalize on her big win today by raising some capital, I guess. She's trying to raise some money, which she desperately needs. SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Absolutely right, Wolf.

As you know -- you talked to her -- she is moving forward. Her campaign saying that they've raised at least a million dollars in the last 24 after hours -- or at least since her victory last night.

But Barack Obama is doing something different. He is alternately trying to ignore Senator Clinton and moving on to taking on John McCain -- at the same time, trying to woo those Clinton supporters.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): After a trouncing in West Virginia, Barack Obama is trying to rebound. Donning safety goggles, ear plugs and a flag pin, the candidate toured a Chrysler plant in Sterling Heights, Michigan, making friends on the factory floor.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: How are you?

MALVEAUX: The goal here -- to show he is comfortable with the working class, who overwhelmingly have been going for Hillary Clinton, and to outline a $150 billion investment plan to help states like Michigan keep their manufacturing jobs while creating new, environmentally friendly ones.

OBAMA: Now, the big challenge here is battery technology?

UNIDENTIFIED SUPPORTERS: Obama. Obama.

MALVEAUX: Obama is also here in Macomb County, home of the so- called Reagan Democrats, to show he's ready to take on John McCain in this key battleground state.

OBAMA: I mean, listen. We feel very confident about our ability to win Michigan.

MALVEAUX: This is the first campaign stop here in nine months -- since Michigan decided to break party rules and hold an early primary. The fate of 600,000 ballots cast still undecided.

Meantime in Washington, Hillary Clinton meeting with several dozen top donors and some superdelegates, keeping her campaign alive by making the argument that her big win in West Virginia shows only she can win in battleground states.

(END VIDEOTAPE)

MALVEAUX: And, Wolf, both Barack Obama and Senator Clinton captured a superdelegate today, so that they are both -- can say they can brag about that. A little bit of good news for both of them. There are also some strong rumblings that there will be a major endorsement at the rally we're attending here. So we'll keep you posted -- Wolf.

BLITZER: All right, Suzanne. Thanks.

Suzanne is in Grand Rapids, Michigan.

Hillary Clinton's presidential campaign is up to the neck in red ink. Can she get out of debt by getting out of the race? It's an intriguing question. We asked Brian Todd to follow up on this story for us.

So how bad are Clinton's financial conditions right now -- Brian?

BRIAN TODD, CNN CORRESPONDENT: Twenty-one million dollars bad, Wolf. And while she hangs on in this race, Mrs. Clinton is still counting on fundraisers, including one extraordinary young man.

(BEGIN VIDEOTAPE)

TODD (voice-over): One of Hillary Clinton's youngest, most dedicated contributors. Eleven-year-old Dalton Hatfield sold his bike, video games, anything else he could find, to raise more than $400 for Senator Clinton's primary campaign.

When he presented his check to Bill Clinton recently, the former president was visibly moved.

DALTON HATFIELD, SOLD BIKE TO DONATE TO CLINTON: She cares for the middle and lower class people. I think she can work on our economy and get us out of Iraq.

TODD: Mrs. Clinton could have used a few other fundraisers like him. Her campaign is in debt more than $21 million. Nearly half of it is owed to vendors. The rest she owes to herself -- after loaning her own campaign more than $11 million.

Who might help her repay all that?

DAVID MARK, POLITICO: The most optimistic scenario for Hillary Clinton is that she drops out of the race and Barack Obama helps her. He sends an e-mail, letters out to donors to raise a lot of this money back.

TODD: It's happened before. Hillary Clinton's donors helped former Democratic candidate Tom Vilsack pay off his campaign debt after he dropped out. John McCain's backers did the same for Sam Brownback. The Clinton and Obama campaigns tell us there's been no talk yet of any deal between them. And Obama did seem to leave the door open if Senator Clinton drops out.

OBAMA: Obviously, I'd want to have a broad-ranging discussion with Senator Clinton about how I could make her feel good about the process and have her on the team moving forward.

TODD: Election laws say Obama can't give Clinton the money outright. He'd have to ask his donors to contribute to her. Observers say he'll likely do that for party unity and to win her supporters, but probably won't tap his entire well.

PETER FENN, DEMOCRATIC STRATEGIST: My sense is that Barack Obama will be glad to help out with some of his larger donors. Will he mail to a million-and-a-half of his hard contributors? No, I don't think so. They're going to need that money for the general election.

(END VIDEOTAPE)

TODD: So Senator Clinton may still have to pay some of that debt down herself. And her campaign has got only until the Democratic convention to pay off that money that Mrs. Clinton loaned to herself. After that, she can repay only $250,000 of that $11 million that she loaned to herself. That is according to campaign finance law shaped by none other than John McCain -- Wolf.

BLITZER: Brian, could she move some of the money around to help pay down her debt?

TODD: Yes, she can. Experts tell us that she can ask donors to redirect the money that they've raised for the general election to another campaign of hers, probably the 2012 Senate re-election campaign. That campaign can then repay some of this debt, but only under some very specific rules.

BLITZER: It's a complicated business, campaign financing.

TODD: Yes, it is.

BLITZER: All right.

Thanks very much, Brian, for that.

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

JACK CAFFERTY, CNN ANCHOR: There is no district no district -- no district that is safe for Republican candidates. That's a quote from the chairman of the Democratic Congressional Campaign Committee, a guy named Representative Chris Van Hollen. He told "The Washington Post" -- quoting again -- "No one could have imagined the tsunami that just crashed on the Republicans in Mississippi".

That's where a Democrat won a Republican held Congressional seat in the northern part of the state yesterday. This was a district where President Bush won by 25 points in the 2004 election and the former Republican congressman won re-election with 66 percent of the vote in 2006. It's the third special election Republicans have lost this spring, including a House race in Louisiana that had been Republican for more than three decades and the seat of former House Speaker Denny Hastert in Illinois.

It seems to have set off some warning bells. The head of the National Republican Congressional Committee is calling on all GOP candidates to take stock of their campaigns and get ready for challenging races in the fall.

Democrats, though, say those races are a sign of what's to come in November. They say they're going to go after Republicans and the strategy of tying Democrats to Barack Obama. It's a strategy that has failed twice now in the Deep South. And it didn't work so well in North Carolina the other day, either. Meanwhile, a new Gallup Poll shows Congress's approval rating below 20 percent for only the fourth time in 34 years. Only 18 percent of Americans approve of the job Congress is doing.

What are they smoking?

That ties a record for this survey. Add in the fact that 82 percent of Americans think the country is headed in the wrong direction and it is no wonder that so many incumbents in Congress are opting not to run for re-election.

Here's the question: Was yesterday's race in Mississippi a sign that Congressional Republicans should start packing their bags?

Here's a hint -- yes.

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

BLITZER: All right, Jack. Thank you.

John McCain facing attacks from both Hillary Clinton and Barack Obama. One of his biggest supporters is standing by to fight right back. That would be the former governor, Charlie Crist. He'll be live right here in THE SITUATION ROOM.

Also, as the death toll rises a handful of miracles in China. You're going to find out about the amazing survivor stories.

And former Justice Sandra Day O'Connor goes public for the first time, about her husband her illness and how it forced her to leave the bench. You're going to hear it from her right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Another major endorsement right now for Barack Obama.

CNN has now confirmed that John Edwards is about to endorse Barack Obama at an event in Grand Rapids, Michigan.

Let's go there. Suzanne Malveaux is watching this story for us.

Give us some context. This is big news and very warmly welcomed by the Obama campaign.

MALVEAUX: Absolutely, Wolf.

There have been some grumblings just within the last couple of hours or so. We've been making some calls. Our own producer, Mike Rozelli (ph), getting it from the Obama campaign officially that John Edwards will be endorsing Barack Obama here at this rally in Grand Rapids, Michigan.

This is a significant development because obviously Barack Obama has been looking for the greatest challenge -- those working class, blue collar voters, who he has been trying to win over. Senator Clinton has been doing a good job at actually getting those voters.

Those are the same voters that have been supporting John Edwards. As a matter of fact, just in yesterday's contest, he actually won some of those voters pledging for him, voting for him, although he was not on the ballot.

So this is significant to that group. It is sending a clear signal to them that this is the candidate who he is backing, who he's supporting. Over the weekend, there were some hints of what he might be doing because he was asked about this. He's been asked numerous times. And he said, quite frankly, that he was giving a warning to Senator Clinton that it might not be advantageous -- even detrimental -- to stay in the race that much longer, because the math was working against her.

So John Edwards obviously having his own delegates in his pocket. He can release those delegates. They do as they wish, Wolf. They can go with Barack Obama or Senator Clinton.

But this is a really significant boost for Barack Obama. It comes at a good time for him -- a time when he is looking for not only to those remaining contests, but to the general election and trying to get those blue collar voters -- the voters who John Edwards directly spoke to when he was running. He talked about their life -- their situations, their economic situations, the hardship that they are facing. These are the voters that Barack Obama needs and that he has been trying very hard to win over -- Wolf.

BLITZER: Stand by.

I know you're at that event in Grand Rapids.

I want to bring in on the phone Jonathan Prince. He's the former deputy campaign manager for the Edwards presidential campaign.

Jonathan, tell us what you know about this. We assumed at some point he would endorse someone. We didn't know it was going to happen today.

JONATHAN PRINCE, FORMER EDWARDS CAMPAIGN MANAGER: Well, it's obviously been a kind of very rapid chain of events unfolding here, Wolf. And it looks like -- it certainly looks like John is on his way to Michigan, as you guys just reported, to endorse Senator Obama.

You know, it's certainly something that I think folks expected to see when Senator Edwards first got out of the race, right at the end of January, for a number of reasons. I think, first of all, there was a lot of alignment in terms of messaging from both Senator Edwards and Senator Obama, as you heard throughout the campaign -- the kind of talk of big change that Washington really needs, the kind of political reform that folks are hoping -- a lot of folks in the Democratic Party in particular, and folks who have been kind of coming out to the polls from day one in the caucuses are hoping to see in Washington. You know, the stuff that they talked about in terms of the influence of special interest money and lobbyists and those things. So it's something I think folks did expect to see for a long time. Obviously, it didn't happen for a long time. And I think that's a testament to how much respect Senator Edwards also has for Senator Clinton. And I think that he very much wants to allow this process to play out. But it looks like he has come to the conclusion -- again, just to be clear, that I have not talked to him about it today. But it looks like he has come to conclude that this process is really is coming to a close and it looks like Senator Obama really is the likely nominee, that this is the right time to do this.

And, as I said, there has really been significant alignment in terms of the message and the vision of change that they both articulated for the country in the course of a, you know, a long campaign year last year.

BLITZER: Does this mean those 19 pledged delegates that he won when he was running for president, Jonathan, will automatically go to Barack Obama?

He certainly could use an additional 19 delegates.

PRINCE: Well, my understanding of the way the rules work -- and, you know, we should talk to -- you should talk to some delegate experts to be positive. But my understanding is that, you know, they will tend to go with where their candidate goes. They're not bound to do that, of course. But, also, just so that you understand, remember that, you know, our delegates came to us very early in the process. They came to us from those first four early states -- from Iowa, from New Hampshire and whatnot. So they're folks that are close to our organization.

It's not -- you know, as the campaign progresses, obviously, the other two campaigns had to expand their kind of delegate plays (ph) out to people that they -- you know, they have thousands of delegates each now -- or, you know, a little under 2,000 each now. For us, those are close to -- they're really close to us. So I expect that there will be a lot of respect for Senator Edwards' decision.

BLITZER: All right, stand by, Jonathan.

We have an expert on rules for the DNC. Donna Brazile is here.

Gloria Borger, our senior political analyst, is also joining us. She's in New York.

What does it mean about those 19 pledged delegates that Edwards won, based on the rules of the Democratic Party?

DONNA BRAZILE, DEMOCRATIC STRATEGIST: Well, Jonathan is right. They're not bound to take their vote with Senator Edwards. They could, of course, support Senator Obama.

I'm sure the Senator Obama campaign will reach out to them immediately. Rule 12, Jay, states that it is a matter of conscience. And, therefore, they could, in fact, endorse Senator Obama, as well.

BLITZER: How significant, Gloria, is this endorsement?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: I think it's very significant, Wolf.

First, of all, I think it's got to be a great disappointment for Hillary Clinton. Both she and Barack Obama were really courting John Edwards, keeping in touch with him, talking about his poverty agenda. She particularly, I am told, really reached out to him quite often. And I think she would have appreciated an endorsement from him at any time, but particularly early on. So this has got to be a real problem for her.

And, obviously, if Barack Obama can pick up any number of these delegates -- obviously, as you were just saying, they're free to do whatever they want. But if he can pick up these delegates, it really gets him to the end of this game sooner. And that's clearly important for him.

Also, in terms of those blue collar voters -- he has a lot of sway with them. And if he goes out there and starts campaigning for Barack Obama, that's really important.

BLITZER: You know, Donna, you were the campaign manager for Al Gore back in 2000. Al Gore is one of the few remaining heavyweights in the Democratic Party that hasn't endorsed anyone yet.

Do you expect he will follow -- at least follow in somebody's footsteps right now?

BRAZILE: I don't think so. I think former Vice President Al Gore has made it quite clear that he does -- he has no intentions of getting involved in this process at this time. There's a time for everything. And I'm sure, at the end of the day, he will back the nominee.

BLITZER: Al Gore will?

BRAZILE: Absolutely.

BLITZER: But give us your assessment.

How important is this Edwards endorsement of Obama?

BRAZILE: I totally agree with everything Gloria said. This is important. He's nationally known among working people in this country. He is familiar with organized labor. He can help Senator Obama erase that gap that he now has with blue collar voters. John Edwards can not only go out there and help Senator Obama campaign, but he can help Senator Obama sharpen his message so he can reach out to those voters.

BLITZER: And we expect the two of them, John Edwards and Barack Obama, to be coming out jointly sometime fairly soon and making this statement, making this endorsement official.

You know, Gloria, some of us thought that John Edwards might be tilting toward Hillary Clinton... BORGER: Right.

BLITZER: ...because his wife, Elizabeth Edwards, who's very active in health care, recently said she's more inclined to like Hillary Clinton's health care plan for universal coverage as opposed to Barack Obama's, which stops short of universal health care.

I don't know if John Edwards' endorsement means Elizabeth Edwards is on board, but I assume we'll find out fairly soon.

BORGER: Yes. It may -- I think we can assume that he wouldn't have done it without consulting Elizabeth Edwards. She's always been one of his key political advisers here.

But, you know, I think -- in judging from what the Edwards' have gone through and talking from people who used to work in his campaign, he doesn't share a lot with his former staff. But it does seem as if at one point he was tilting toward Hillary Clinton, that they had spoken quite frequently, that he felt at one point she was carrying his poverty message to those working class voters better than he thought Barack Obama was.

But at a certain point -- and I think Edwards himself has hinted at this in his recent interviews, Wolf, that I think he thinks it's time for this to end, that he does not want to see this go into the convention. He wants the party to come together.

BLITZER: Gloria, stand by.

We're going to continue to watch this story.

We want to also get some reaction now from a major supporter of John McCain. That would be the Florida governor, Charlie Crist. He's joining us now.

Governor Crist thanks very much for coming in.

Were going to talk about my interview with Hillary Clinton. And we will -- because I wanted reaction from a major McCain supporter. But let me get your reaction to the breaking news we've just been reporting -- John Edwards about to formally endorse Barack Obama for the Democratic presidential nomination.

What do you think?

GOV. CHARLIE CRIST (R), FLORIDA: It's big news. There's no question about it. I mean, you know, this is the senator who ran -- he ran strong. He did well in the early races in the Democratic primary. You know, he has a populist message. He comes across well. He's an effective speaker. His decision to go ahead and support Senator Obama is significant, I think. And I...

BLITZER: Well...

CRIST: Go ahead. I'm sorry.

BLITZER: No, no, no. Finish your thought.

CRIST: Well, I was going to say that, you know, it's got to be a disappointment to Senator Clinton, if the reporting is true and he goes ahead and he does this later today. But, you know, what that means to Senator Obama -- I mean this is a Southern senator taking a stand, a former senator, as it relates to, you know, the endorsement today. But it makes a strong statement about what a populist in the Democratic Party has to say about Senator Obama. It's good news for Senator Obama.

BLITZER: Senator Edwards was once the Democratic presidential -- vice presidential nominee, as you remember, with John Kerry.

How formidable would that team be -- Barack Obama and John Edwards -- as a Republican looking in?

CRIST: Well, it's hard to say. You know, certainly they're both worthy of great respect. There's no question about that. But, you know, I think the real question here is how Senator McCain stands up against anybody, whether it's Senator Clinton, Senator Obama or Senator Edwards -- as a running mate.

Senator McCain has done some very bold things in his career. He's a maverick. He's a true American hero. He's a true American hero. He's a former prisoner of war. He served five-and-a-half years in a prisoner of war camp in Vietnam.

He made some great statements, I think, this week, as it relates to climate change.

He's really shown that he's a different kind of new Republican, if you will. He's going to be very formidable and, I think, the next president of the United States.

BLITZER: I interviewed Hillary Clinton earlier today. And I just want to get your reaction to a couple of things she said about John McCain. She was critical of him for criticizing Barack Obama and his stance on Hamas and Iran.

I'm going to play you a little clip of what Hillary Clinton said.

CRIST: Sure.

(BEGIN VIDEO CLIP)

CLINTON: I think that that's really just an overstatement, an exaggeration of any kind of, you know, political meaning. And I don't think that anybody should take that seriously.

(END VIDEO CLIP)

BLITZER: She was referring to this notion that he, McCain, would be Hamas's worst nightmare, as opposed to Barack Obama, who won the endorsement of the North American spokesman for Hamas.

What do you think? CRIST: Well, I think it's very significant what Senator McCain has said. And I think he's exactly right. You know, we have a great friend in Israel. And Israel has been a loyal ally to the United States of America for a long time.

BLITZER: But don't you think Obama would be a strong supporter of Israel, as well?

CRIST: I have no idea. But what I know is Senator John McCain will be and always has been. This, after all, is the 60th anniversary of its independence day. President Bush is in Israel today. This is an important, significant event as it relates to relations in the Middle East. And I think that Senator McCain, time and time again, has proven his support for Israel, his support for moving forward in the Middle East peace process and having an endorsement or support by Hamas for Senator Obama is not good.

BLITZER: All right.

Governor Crist, thanks very much for coming in.

CRIST: It's my pleasure, Wolf.

BLITZER: All right, thank you.

CRIST: Good to be with you.

BLITZER: And thanks for going with us on this breaking news that we're reporting.

A major endorsement for Barack Obama from John Edwards.

Charlie Crist is the governor of Florida.

The battle for control of Congress isn't going well for Republicans right now.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The reputation is just in the trash can. And the Republican brand name -- if you were to put this on a dog food, the owners would just take it off the shelf because nobody's buying it.

(END VIDEO CLIP)

BLITZER: And that's coming from a top Republican. Why a few races are causing heartburn in the GOP.

Plus, former Senate Majority Leader Tom Daschle -- he's standing by live here in THE SITUATION ROOM. He's a major supporter of Barack Obama. We'll be talking with him about the Edwards announcement. We'll get his reaction to my interview with Hillary Clinton, as well.

And the big win in West Virginia -- how much of it was about race? We'll have an in-depth look at the issue. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, no relief in sight from those soaring gas prices. They jumped once again overnight, up more than two-and-a-half cents, to a new national average of $3.75 a gallon.

Also, the woman who helped former New York Governor Eliot Spitzer book his trysts with prostitutes is now facing up to 25 years in prison. Temeka Lewis pleaded guilty in the federal probe that led to Spitzer's March resignation.

And the Interior Department is declaring polar bears a threatened species -- the first to gain federal protection because of global warming.

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

We're also following the breaking news -- a huge, huge endorsement for Senator Barack Obama. That's just coming into THE SITUATION ROOM.

John Edwards, the former senator from North Carolina, the former Democratic presidential candidate, about to go up on a stage in Michigan with Barack Obama and make it official -- he will endorse the Democratic presidential frontrunner. We'll have live coverage of that as soon as it happens. We're standing by to go to Grand Rapids, Michigan.

Meanwhile, exit polls from West Virginia contain some numbers that underscore a major challenge Barack Obama will face if he becomes the Democratic presidential nominee.

Let's go back to Carol Costello. She's watching this story for us.

What are those results, Carol, from West Virginia telling us about race as an issue in this campaign?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, it's telling us that race is indeed a factor. The numbers in West Virginia certainly show that. And it illustrates what a good job Senator Obama's opponents have done in convincing some voters he doesn't share their values.

(BEGIN VIDEOTAPE)

COSTELLO: Barack Obama didn't just lose the white vote in West Virginia. He was annihilated. More than 60 percent of white voters backed Hillary Clinton. Some analysts say it could be an ominous sign.

ROGER SIMON, POLITICO.COM: I think race is going to be a factor in the election and it seems clear from last night's results that certain states may be beyond Barack Obama's reach simply because of his race.

COSTELLO: Like West Virginia. Unlike Iowa, a majority white state Obama won decisively just four months ago, West Virginia is different culturally. And Iowa came before the Reverend Jeremiah Wright controversy, something that is far from over for West Virginians. According to CNN exit polls, 51 percent think Obama shares Wright's controversial values.

Andrew Ward covered the West Virginia primary for the financial times.

ANDREW WARD, FINANCIAL TIMES: In their view, they really don't believe that they are being racist. They really do have a concern that he doesn't represent their values. I felt that that was legitimate.

COSTELLO: Exit polls suggest Obama's race was a factor in West Virginia. Twenty-two percent of voters there said the race of the candidate is important to them. That's a highest percentage recorded in voter surveys so far. Of course he did well with white voters in other states. At least before the Reverend Wright episode. And he does have this potential advantage.

SIMON: He says if he can go into the south, increase black voter registration dramatically, he can get some states to vote Democratic that have never voted Democratic before.

(END VIDEOTAPE)

COSTELLO: We did reach out to the Obama campaign. They point to how well he did in Iowa, Missouri. One thing that will help Obama and you mentioned this a couple minutes ago, Wolf, John Edwards now endorsed him. Edwards got 7 percent of the vote in West Virginia and he wasn't even in the race.

BLITZER: Thanks very much, Carol, for that.

Let's discuss the breaking news now and more with the former Senate majority leader Tom Daschle. He's a major supporter of Barack Obama.

Senator, thanks very much for coming in.

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

BLITZER: This has been in the works, I take it, for some time. Everybody's been courting John Edwards but Barack Obama apparently has succeeded.

DASCHLE: I'm not going to comment officially. That's going to be left to Grand Rapids.

BLITZER: We're standing by momentarily to hear from both of them. DASCHLE: Exactly.

BLITZER: The campaign has told us it's official, it's a done deal.

DASCHLE: You know, I think John Edwards is a tremendous national leader. And obviously it's no secret that we've been trying to get his support and his endorsement, his supporters and his counsel as we go through the balance of this campaign for a long period of time. Barack and John have talked on a number of occasions.

Not only with John but Elizabeth and Barack as well. So, you know, we -- we think that there's a real future. And, as I said, I'll leave the announcement to those in Grand Rapids.

BLITZER: Is it your sense though that his endorsement, John Edwards, means that Elizabeth Edwards who's a figure in her own right, that she's going to be endorsing Barack Obama as well?

DASCHLE: I can't speak to that, Wolf. All I know is it's very important as we go forward we unite this party. And John and Elizabeth Edwards have a tremendous following in the party. The more we can unite along with their leadership and their followership, the better off our party and the better off Barack Obama is going to be in November.

BLITZER: And I assume this means and we know the rules are little fuzzy. Donna Brazile was explaining them to us just a little while ago. The 19 pledged delegates that John Edwards won while he was a Democratic presidential candidate, he'll recommend that they go to Barack Obama, which 19 more delegates could be significant.

DASCHLE: Well, if he endorses, that's exactly right. He has the ability to release his delegates. Those delegates have then the ability to support Barack Obama and that's more than the equivalent of West Virginia, for example.

BLITZER: She won a net gain of 12.

DASCHLE: Twelve.

BLITZER: In West Virginia. Let's talk a little bit about the interview I did today with Hillary Clinton. Last week I interviewed Barack Obama, today Hillary Clinton. I want to play a little clip of what she said. Because she was generally avoiding any major criticism of Barack Obama. You see a new tone coming from her and her campaign in recent -- in recent days. But she did have this criticism and I'll play it.

(BEGIN VIDEO CLIP)

CLINTON: My husband often says laughingly that tax credits and energy programs were the only things that he couldn't get the Republican Congress to even look at. Because obviously they had a very different view about what we should be doing.

(END VIDEO CLIP)

BLITZER: I guess she was criticizing Senator Obama for not going along with her recommendation that there be some immediate relief for people who are paying high prices for gasoline right now by eliminating the federal tax between Memorial Day and Labor Day.

DASCHLE: Well, Wolf, what Barack has said and I think he's so right on this is that we have to remember that the infrastructure that we have in this country is in badly -- in bad need of repair. The jobs created, the opportunities to continue to build highways and bridges is so critical. And the minute relief you get, $28, is really not worth the tremendous consequences we pay in infrastructure. What Barack has said instead is I want to give real tax relief to every taxpayer under $100,000 and we're going to give real relief next year.

BLITZER: She also wants Michigan and Florida to be in play, the delegates to be in play. Barack Obama's in Michigan right now. These are two battleground states come November, both Florida and Michigan. I want to play this other clip of what she told me.

(BEGIN VIDEO CLIP)

CLINTON: What I would want them to do is to seat the whole delegations based on the votes that were taken. Because I think the voters who came out over 2.3 million of them in both states, clearly believed that their votes would count.

(END VIDEO CLIP)

BLITZER: All right. On May 31 the rules committee, the DNC will adjudicate, decide what to do about Michigan and Florida. Are you ready to go along with Senator Clinton's recommendation?

DASCHLE: There is no disagreement they ought to be seated. We think there ought to be some formula, some way with which to address the need to seat Michigan and Florida. They're critical states and we need to have their participation at all levels.

BLITZER: She wants the formula to be a simple formula. She got 60 percent and she wants 60 percent of the delegates or something like that.

DASCHLE: It's easy to win if your opponent isn't on the ballot.

BLITZER: In Michigan.

DASCHLE: But no one campaigned because that was the understanding. Hillary Clinton and Barack Obama both said we're going to respect the DNC rules --

BLITZER: Give me an idea how you do that?

DASCHLE: We think you can seat them 50/50. Split it 50/50. Give Hillary Clinton --

BLITZER: Even though she did so much better. DASCHLE: She did better because Barack wasn't on the ballot. Again, that's the big difference. They didn't campaign in Florida. The only way to do this fairly now is to provide --

BLITZER: Would you go along with 60/40 in her favor?

DASCHLE: I'm not the one negotiating. That's really up to the two states and the DNC. What Barack has said and what the campaign has said all along is we want to find a fair solution. I'm absolutely confident we can do that.

BLITZER: You think this contest is over for all practical purposes.

DASCHLE: That's up to Hillary Clinton. She will decide that. I think what we need to do now is to unify, to bring the parties together as much as possible, the two campaigns. I think that's coming. I think you saw that in the interview today. She didn't the same candidate she may have been two or three weeks ago. And that's encouraging. I think we ought to see more of that. I'd love to see the two of them together sometime soon.

BLITZER: As a ticket?

DASCHLE: Well, that's up to Barack Obama. But certainly as a party.

BLITZER: Senator Daschle, thanks very much.

DASCHLE: My pleasure, Wolf.

BLITZER: You can see the full interview I had with Hillary Clinton. That's coming up in the next hour right here in THE SITUATION ROOM.

As President Bush arrives in Israel pushing for a peace deal, a rocket slams into a crowd as Israeli shopping mall raising fears of a strong retaliation.

And we're standing by for more on the breaking news we're following. John Edwards about to make it official, about to announce his endorsement of Barack Obama. You're looking at live pictures now from an Obama rally in Grand Rapids, Michigan. That's where they will appear. We'll go there live as soon as we see them.

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

(COMMERCIAL BREAK)

BLITZER: We're standing by to see the breaking news unfold here in THE SITUATION ROOM. Barack Obama about to get a major endorsement. This one from John Edwards, the former Democratic presidential candidate, the former senator from North Carolina who himself while he was a candidate won 19 pledged delegates. We can assume those pledged delegates likely to go to Barack Obama. Those are important numbers now as this race beginning to wind down. As soon as we see Barack Obama and John Edwards walk into this hall in Grand Rapids, Michigan, we'll go there live. We're standing by for that. We expect that to happen soon.

Meanwhile, around the world there are new fears of a strong retaliation from Israel after a rocket fired by Islamic militants in Gaza slammed into a crowded Israeli shopping mall today. The attack in the southern city shows off a longer range than usual. Missile. It may have been meant to show up President Bush's latest peace efforts. He's in Jerusalem right now.

Our White House correspondent, Ed Henry, is traveling with the president.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Wolf, celebrations of Israel's 60th anniversary were overshadowed a bit today by some new violence.

(BEGIN VIDEOTAPE)

HENRY: As President Bush arrived in Israel to try and secure a peace deal, a fresh reminder of why peace is so elusive here. A rocket fired from Gaza into a shopping mall in southern Israel, 14 wounded, including a baby. While the chaos was a few dozen miles from the president, it came as he was sitting down with Israeli Prime Minister Ehud Olmert who blamed the Palestinian terror group Hamas for the recent spate of violence and later hinted at responding with force.

EHUD OLMERT, ISRAELI PRIME MINISTER: We will take the necessary steps so that they will stop.

HENRY: Mr. Bush has blamed recent Hamas attacks on Iran and Ahmadinejad who said again Wednesday Israel will be destroyed. Further clouding the chances of peace, the shaky status of the U.S. backed government in Lebanon.

Mr. Bush is also pinning that Hezbollah offensive on Iran.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: What took place in Lebanon is that Hezbollah, the so-called protector of the Lebanese against Israel, has now turned on its own people. And as you mentioned, Hezbollah is supported by Iran. This is an Iranian effort to stabilize that young democracy. And the United States stands strongly with the is a Norah government.

HENRY: The White House had been hoping these would be the pictures of the day. A joyous occasion for Israelis celebrating their 60th anniversary at the airport. And then at a concert. Where the president was honored by a who's who of Israeli politicians and Jewish American leaders.

BUSH: We share a powerful belief and a powerful weapon against the terrorists. We believe that the surest way to defeat the enemies of hatred is to advance the cause of hope through the cause of freedom, liberty as the great alternative to tyranny and terror. HENRY: Aides here say the president is still confident he can get a peace deal before leaving office but the new violence coupled with political problems for Olmert and Palestinian president, it will be an uphill battle.

(END VIDEOTAPE)

BLITZER: Ed Henry in Jerusalem for us, thank you.

The Democratic presidential candidates may have been in the spotlight last night, but the Republican Party is focused on the aftermath of a very important congressional vote in Mississippi.

Let's go live to CNN's Kate Bolduan. She's following this story.

It's a considerable setback for the GOP, Kate.

KATE BOLDUAN, CNN CORRESPONDENT: Wolf, the Republicans today say they're definitely not in good moods. There's some hand wringing and finger points going on and a lot of talks on how they're going to fix what went wrong.

(BEGIN VIDEOTAPE)

BOLDUAN: Another Democratic win.

UNIDENTIFIED MALE: It's still about you all.

BOLDUAN: And the third straight special election defeat this year for Republicans. This one in Mississippi. House Republican leaders openly acknowledged the party has problems.

REP. JOHN BOEHNER (R), MINORITY LEADER: It's another wake up call. That we have to show Americans that we can fix the problems here in Washington.

BOLDUAN: But from another Republican, a far more devastating assessment.

REP. TOM DAVIS (R), VIRGINIA: At the congressional level at this point the reputation is just in the trash can. And the Republican brand name, if you were to put this on a dog food, the owners would just take it off the shelf because nobody's buying it.

BOLDUAN: Congressman Tom Davis who used to be in charge of getting Republicans elected to Congress says the party faces the worst political atmosphere since Watergate. And if Republicans don't start addressing issues that matter to voters like housing and health care, they could be headed for much bigger losses in the fall. In a closed door meeting Wednesday, Davis handed out a memo warning his colleagues to distance themselves from the unpopular president.

DAVIS: We've got to run separate races across the country and shift strategically where we are and yes, that means you don't want to be attached at the hip to President Bush. BOLDUAN: At the same time house Republican leaders are hoping to capitalize on the politically popular notion of change, rolling out their own version of the message called change you deserve. Wednesday the focus was on working mothers.

REP. MARSHA BLACKBURN (R), TENNESSEE: It's time for action on issues that affect us and our families every day.

BOLDUAN: But house Democrats ridiculed the new GOP slogan, saying Republicans have new ideas and are out of touch with the American people. That can be Democrats say, is the message of Mississippi.

REP. JOHN LARSON, DEMOCRATIC CAUCUS VICE CHMN.: The difference between us and the Republicans is that change is not a platitude. Change is the persistent, constant, drum beat that Nancy Pelosi has put forward.

(END VIDEOTAPE)

BOLDUAN: But the Republicans say Democrats have it all wrong. In fact, they argue that the Democrats won those special elections in conservative districts because they ran like Republicans, highlighting conservative issues -- Wolf.

BLITZER: Kate Bolduan, thanks. She's on Capitol Hill.

The former presidential candidate John Edwards is finally ready to endorse one of his rivals. We're standing by for the announcement. We're going to go live to Grand Rapids, Michigan. There you see it. It's an Obama campaign rally. We're going to see these two men walk out fairly soon.

And Hillary Clinton stresses there's no Democratic winner yet. My one on one interview with her today. That's coming up a lot more right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Stand by to hear from Barack Obama and the latest endorsement he's about to get from former Democratic presidential candidate John Edwards, the former senator from North Carolina is there in Grand Rapids, Michigan, with Barack Obama. They're going to be walking out fairly soon. We'll go there live. Once we see them. This is a significant endorsement for Barack Obama because John Edwards himself won 19 pledged delegates when he was running for the Democratic presidential nomination. Nineteen pledged delegates, significant number in this tight battle with Hillary. We'll go there live shortly.

The Democratic nominating fight looks like it could go 15 rounds but would that leave the winner badly battered when it comes time to face John McCain?

That's a question a lot of Democrats are asking right now. We asked Mary Snow to look into this question for us. Mary, it wouldn't be the first time the Democrats have engaged in this kind of fight.

MARY SNOW, CNN CORRESPONDENT: It wouldn't, Wolf. Three contentious primary battles stand out in recent decades. There are some parallels between then and now but there are also some key differences.

(BEGIN VIDEOTAPE)

OBAMA: Michigan, I hope you give me a chance to be that with the president.

SNOW: Barack Obama is looking ahead to November but Hillary Clinton's fight for the Democratic nomination isn't shaken.

CLINTON: I am more determined than ever to carry on this campaign.

SNOW: The question, will there prolonged primary fight wind up hurting the Democrats' chances of winning the White House in November? One political scholar says history may hold some clues.

NORMAN ORNSTEIN, AMERICAN ENTERPRISE INSTITUTE: There are races that went right to the convention that ended up so bitter and divisive with a candidate willing to bring the walls of the temple around his head to make a point that you can snatch defeat from the jaws of victory.

SNOW: Case in point?

1976, Ronald Reagan fought to the convention challenging incumbent Republican president Gerald Ford. Ford survived the challenge but lost the general election. Reagan became president four years later. In 1980 Ted Kennedy had a bitter and drawn out Democratic primary battle with incumbent President Jimmy Carter who went on to lose the general election. In 1984 Gary Hart trailed Walter Mondale but went to the Democratic convention hoping for an upset. Mondale won the nomination but lost the election.

Political analysts say there's a difference between this and 2008. They say despite the Democratic fighting --

LARRY SABATO, UNIV. OF VA. CENTER FOR POLITICS: In 2008, the atmosphere, the condition of the general election couldn't be more favorable to the Democratic Party.

SNOW: If Clinton and Obama reconcile in the end some political observers say the prolonged battle could be seen as an asset, likening it to spring training for the Democratic nominee.

ORNSTEIN: But if this doesn't end reasonably well by June the 4th, then we're going to have a different matter. And we may very have the uncomfortable reality of history repeating itself.

(END VIDEOTAPE) SNOW: Now political observers say the unpopularity of the Bush administration, the Iraq war and worries over the economy are all conditions that are favorable for the Democrats this election -- Wolf.

BLITZER: All right, Mary. Thank you. Mary Snow reporting.

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

CAFFERTY: Question this hour is: Was yesterday's race in Mississippi a sign that congressional Republicans should start packing their bags?

This was an off year special election for a congressional seat that the incumbent won re-election in, a Republican in 2004, getting 66 percent of the vote. He got thrown out on his ear yesterday by the Democrat. It's the third time this year it's happened.

Mark in Michigan writes: "Not necessarily. But they'll need to give us a reason to vote for them other than just their party. If Barack's teaching us anything it's that the old divisions are becoming obsolete. Our nation's leaders for the next generation must be able to reach beyond all categories of race, gender or party. If Republican or Democrat incumbents can do that, we'll listen. If not, we're out."

Shawn writes: "When the Republican Party turned its back on the conservative principles of smaller government and controlled spending, we turned our backs on them. The RNC has offered no vision, no agenda, nothing to get excited about. And we're supposed to get behind John McCain, Mr. Democrat light?"

C. writes: "Not in if Democrats hand the Republicans something to rally behind like a polarizing candidate such as Hillary Clinton. Don't count the Republicans out yet. We all know the Democrats have a way of self-destroying. The current primary is a good example."

Douglas in Minnesota: "Yes, they ought to start packing. Republicans should also be required to undergo an exit interview accounting for their time, efforts and voting record that could have prevented our country from being in the mess it's in now."

Jerry in West Virginia: "They might as well pack. Otherwise they'll just be spectators at a filibuster proof Democratic Congress that can legislate whatever policies it chooses. What gridlock."

John in New Jersey: "The Mississippi campaign less assigned for Republicans and more assign for incumbents. Republicans are branded Bushed. Let's not forget Pelosi and her policy promised us some serious changes. Frankly it got worse, not better."

Finally, Erin in North Carolina: "No. Don't ever overestimate the intelligence of the voting public, Jack."

If you didn't see your e-mail here you can go to my blog at CNN.com/Caffertyfile and look for yours there among hundreds of others -- Wolf. BLITZER: All right, Jack. See you in a few moments. Thanks.

I want to go to James Carville right now. He is joining us on the phone. He's our -- he's our Democratic analyst. He's also a supporter of Hillary Clinton.

You know the breaking news we've been following now for some time, James. We're waiting for the official announcement. John Edwards, the former Democratic presidential candidate, the former senator from North Carolina, momentarily will endorse Barack Obama for president for the Democratic presidential nomination.

What do you think? How significant is this endorsement?

JAMES CARVILLE, DEMOCRATIC STRATEGIST: Well, I mean, it's clearly an endorsement that Senator Obama wanted. I'm sure Senator Clinton wanted it. It's going to be a well covered event. However, it doesn't strike me that these endorsements have a great deal of effect on election out comes. It could have some effect on the superdelegates which are really important right now. But I suspect that Oregon, Kentucky, Puerto Rico are not going to be that much affected by this.

BLITZER: Well, this is not just an endorsement. He did win 19 pledged delegates.

CARVILLE: Right.

BLITZER: Edwards, when he was running for president. And presumably he'll say to those delegates, go ahead and support Barack Obama.

CARVILLE: And the delegate count and it could sway some superdelegates.

BLITZER: Because, what, it'll encourage others to follow suit?

CARVILLE: I don't know if the supporters of Senator Clintons. I certainly hope not. I'm sure that's what Obama's hoping for. It's more delegates and it could encourage some superdelegates. My point is, is generally these endorsements have not had a great deal of effect on the actual voting out in the primaries. But it could have some effect on other superdelegates. It certainly has an effect on his 19.

BLITZER: How important, how significant, how much support would you say Edwards has out there among Democratic superdelegates?

CARVILLE: I don't know. You know, it's hard to say. His campaign ended relatively early. But it's not so much in a direct thing of support. But the psychology of it I suspect is what both candidates were hoping for here. 19 delegates that he has, and it could have some effect. But I think it's a psychological effect as much as it is a direct effect.

BLITZER: Do you see a way she can beat the math right now? Because the math clearly is not in her favor.

CARVILLE: Well, yes. She needs to roll up big wins. She has the superior moral case in Florida and Michigan and needs to make it because the Hillary Clinton people, myself being the first one, governor Rendell, offered to pay for a revote. Being they don't want to disenfranchise those people with a revote they should with the original vote.

I think she's got to keep pressing hard. This is an awfully impressive win in West Virginia. This is the biggest win of any primary since she won Arkansas. Any primary since Arkansas. No one has ever won a primary of this magnitude in this campaign, so she's got to keep pushing ahead. I would be -- I've said it in the past, that certainly senator Obama is the favorite here, but we've got to let this thing play out.

BLITZER: So you think it will play out until at least June 3rd?

CARVILLE: I think so. I think everybody wants to vote. I think after June 3, you know, it will begin to come together one way or another. But I don't think that we're going to go to Denver as a divided party. I think by that time, everybody will have settled on a course of action here.

BLITZER: James Carville, thanks as usual for joining us.

CARVILLE: I appreciate it, Wolf.

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