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THE SITUATION ROOM

Oil Markets Under Investigation; Scott McClellan Defends Tell- All Book; Obama's Health Examined

Aired May 29, 2008 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, breaking news we're following. The feds investigating the oil markets, looking for any evidence they're manipulating prices. We've got new information for you on this investigation.
Plus, Scott McClellan defending his bombshell book about the Bush White House. The former White House press secretary explains how he became disillusioned with the president and with the war in Iraq.

Also this hour, checkup time for the Democrats. We have new details on Barack Obama's health. And new questions about what happens to Hillary Clinton's campaign next week.

And John McCain's bottom line. We're looking at new claims about his campaign cash. And I'll be speaking with Louisiana Governor Bobby Jindal. I'll ask him if he's on McCain's vice presidential short list.

Lots of news happening.

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

But we begin with the breaking news this hour. Federal regulators revealing they're in the midst of a nationwide investigation of crude oil markets. This, at a time of soaring oil and gas prices and questions about whether those prices are being deliberately manipulated.

Today, the price of crude oil is a bit more than $126 a barrel, double what it was only a year ago. And on average nationwide, regular gas now costs just under $4 a gallon. About 80 cents more than it cost a year ago.

Let's turn to our senior business correspondent, Ali Velshi. He's watching this story for us.

All of a sudden, Ali, we learned today that the Commodities Futures Trading Commission -- that's a federal regulatory agency -- is six months into this investigation to see if these big oil companies are manipulating supply and demand so they can make more money. What's going on?

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Well, we don't even know that much for sure. What we know is the Commodities Futures Trading Commission, which is like the Securities and Exchange Commission for the trading of oil, has announced that they have been investigating what could be possible manipulation in the oil market since December, back when oil was $96 a barrel. What they won't tell us is who they're investigating, whether they think there's something that they're actually looking for or they're just generally looking for some sort of manipulation.

Remember, there have been allegations throughout this presidential campaign, particularly from Hillary Clinton, Wolf, about speculation and/or manipulation in the oil market. There are many people who think that a lot of today's price of almost $130 a barrel is because of speculation, buying and selling by people who don't use end product. They buy and sell oil to make money. But that is a very different story than manipulation.

The Commodities Futures Trading Commission says that they may be looking at manipulation. We're trying to find out exactly what they think is being manipulated and who they think might be manipulating it, but we cannot get that confirmation from them.

It could be, by the way, Wolf -- speculation is that it could be hedge funds and people like that, as opposed to the oil companies. But we don't know that yet. We just know there's an investigation.

BLITZER: So they're looking at something that may be, may be illegal, but it's unclear whether the big oil companies or the traders, the hedge fund guys...

VELSHI: Correct.

BLITZER: .. who are making a lot of money speculating on the price of oil, whether or not they're being investigated. Is that normal for this commission to be doing that?

VELSHI: Well, they have said that it's not normal for them to do any of their investigating in public, but because of the price of oil, because of the market, they've decided to go public with this, possibly because of political criticism that the government's not doing anything. But we did -- they did investigate the oil industry about two years ago and came out with no evidence of any manipulation or wrongdoing. But two years ago is like a generation ago when it comes to oil prices -- Wolf.

BLITZER: Two years ago seems like it never even happened, compared to where the price is now, $4 a gallon.

VELSHI: Yes.

BLITZER: All right, Ali. Thanks very much. Stand by. We're not going to go away from this story.

In the meantime, Scott McClellan is pushing back today at critics who now see him as a sellout and his tell-all book as nothing short of betrayal. The former Bush White House press secretary went on television today to promote and defend his memoir. And he described how he went from a loyal presidential aide to a very disillusioned one.

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

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Wolf, yesterday the White House and its allies took their shots at Scott McClellan. Today, it was his turn to fire back.

(BEGIN VIDEOTAPE)

HENRY (voice-over): The former White House spokesman stood his ground. Appearing on NBC's "Today Show," Scott McClellan said he'd given President Bush the benefit of the doubt, and that's why he didn't speak out sooner about what he now calls the propaganda to sell the war in Iraq.

SCOTT MCCLELLAN, FMR. WHITE HOUSE PRESS SECRETARY: My beliefs were different then. Like I said, I trusted the president's foreign policy team and I believed the president when he talked about the grave and gathering danger from Iraq.

HENRY: McClellan said he became disillusioned by two episodes -- being sent to the White House podium to insist Karl Rove and Scooter Libby were not involved in the CIA leak case which turned out to be false, and the president personally signing off on selective leaking of WMD intelligence which McClellan suggest led to manipulation in the run-up to the war.

MCCLELLAN: The information that we were talking about became a little more certain than it was. The caveats were dropped, intelligence -- you know, contradictory intelligence was ignored.

HENRY: McClellan also singled out Secretary of State Condoleezza Rice for being too likeminded with the president.

MCCLELLAN: Too often she was too accommodating of his views instead of challenging those views and questioning those views. And too accommodating of the other strong personalities on the foreign policy team.

HENRY: In Stockholm, Rice denied the administration misled the nation.

CONDOLEEZZA RICE, SECRETARY OF STATE: I'm not going to comment on a book that I haven't read. But I will say the concerns about weapons of mass destruction in Saddam Hussein's Iraq were the fundamental reason for tens -- for dozens of resolutions within the Security Council.

HENRY: McClellan came to Washington from Texas with the president, who fondly wished him fair well.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: One of these days he and I are going to be rocking on chairs in Texas talking about the good old days.

HENRY: But now McClellan says he's not even sure if they'll ever speak again.

MCCLELLAN: I certainly don't expect it anytime soon. I know that this is a tough book for some people to accept.

(END VIDEOTAPE)

HENRY: Wrapping up a fund-raising tour for John McCain, the president still has not commented on the book. And White House says they will not offer a point-by-point rebuttal. They say they're just too busy on other things. But also, politically, it's clear -- they don't want to pour anymore gasoline on this fire -- Wolf.

BLITZER: Ed Henry, in Salt Lake City, traveling with the president.

Thank you.

So what do you want to ask Scott McClellan? I'll be interviewing him here tomorrow in THE SITUATION ROOM. You can go to ireport.com/situationroom to submit your own video questions. I'm going to try to get some of those questions to Scott McClellan when he comes here tomorrow.

Let's get to the presidential campaign and the state of Barack Obama's health. The 46-year-old Democrat released a statement today from his doctor a week after John McCain released reams of his health records.

Our senior political correspondent, Candy Crowley, is with Obama in Chicago today.

The doctor says he's in excellent shape. We would expect that of a 46-year-old. But what else did we learn?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, we learned that his blood pressure is good, that there is some cancer in the family history. The doctor said there's nothing here that would keep him from performing the duties of the president of the United States.

He said all the blood work that they've done -- we know he had his last physical in January of 2007 that he has had -- since he has gone to this doctor, which is the late '80s, that he's had sort of normal, you know, rashes, flu, that kind of thing. But nothing exceptional, at least according to this doctor in the one-page letter that they released.

Now, I will say that they don't want the doctor to be doing interviews. And they said that's all of the papers they're going to put out. But he gets, you know, A plus on health from his doctor.

BLITZER: One page they released, hundreds of pages that Senator McCain's doctors released last week. What am I missing here?

CROWLEY: Well, I mean, I think first of all there is a difference. The McCain camp had to get those records out there. He is an older man. He has had cancer. He was tortured in Vietnam. He has had -- used to be a two-pack-a-day smoker.

And Barack Obama, by the way, one of the things the doctor did say was that he was an on again/off again smoker, which we knew, but that Obama now is using Nicorette "with success." So, you know, apparently he's been able, at least so far, to kind of kick the habit, at least this time around.

But McCain is a different story in many ways. The pressure was on McCain to get those records out there because of concerns about his age and concerns about his health. There are not that many questions about Obama. If the pressure gets high for him to put out records, I imagine they'll do that at some point -- Wolf.

BLITZER: Let's hope he can stay off the cigarettes. I'm sure his wife would be thrilled and his family would be thrilled as well.

CROWLEY: Absolutely.

BLITZER: Candy, thank you.

Let's check in with Jack Cafferty. He's got "The Cafferty File" for us.

You know, it's not that easy, people have told me, quitting smoking. It's a pretty addictive habit.

JACK CAFFERTY, CNN ANCHOR: I did it for 25 years. And the only way I was able to quit is I had one of my lungs collapse.

BLITZER: That'll do it.

CAFFERTY: And that'll get you right off the cigarettes. And that was about 20 years ago, and I've never had one since. But it was a little scary.

But yes, it's a very -- they say that nicotine is more addictive than cocaine. And I was a two-and-a-half, three-pack-a-day smoker, and I believe it. I mean, I couldn't live without them.

Anyway, that's in my rearview mirror, and I'm not releasing any medical records at any time ever about anything.

Despite being hopelessly behind in pledged delegates, and with only three primaries left to go, Hillary Clinton refuses to give up. In fact, she continues to insist that she is the more electable candidate -- more electable than Barack Obama. Clinton told voters in South Dakota yesterday that her wins in swing states, her strong vote margins among certain groups, make her more likely to beat John McCain in the general election.

At the same time, her campaign sent uncommitted superdelegates a letter with polling data showing how she could compete better than Obama in the fall. They pointed to her wins in states like Ohio, West Virginia, along with her strong showings among older women, Hispanics and rural voters.

While Clinton has toned down her attacks on Obama in recent weeks, she has implied that if he becomes the nominee, the Democrats could lose in November. Clinton insists she's the stronger candidate against McCain -- quoting here -- "... based on every analysis of every bit of research and every poll that's been taken and every state a Democrat has to win in the fall."

Not true at all. There are polls that show Clinton in a close race with McCain, some within the sample of error, the margin of error. And more importantly, there are other polls that show Obama beating McCain by a larger margin than Clinton does.

Sometimes facts are very inconvenient things to have around.

Clinton also claims to have won the most popular votes. That's not true either. It is if you include Michigan and Florida, but those states were stripped of their delegates after breaking the party rules, and their votes don't count.

Obama leads in the popular vote by 570,000. And he's now just 45 delegates shy of clinching the nomination.

So here's the question: Has Hillary Clinton's continual drumbeat of "I'm more electable" gained her any traction here in the late going?

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

Did you ever smoke, Wolf?

BLITZER: No, not really. I tried it in high school. I didn't like it.

CAFFERTY: How about marijuana and stuff?

BLITZER: No. Well, you know, you're getting into the sensitive areas.

CAFFERTY: I think we should release your medical records.

BLITZER: You know what, thank God, I'm OK.

Jack, thanks very much.

CAFFERTY: Good-bye.

BLITZER: Hillary Clinton and Barack Obama both want to win, but only one can. So how can the Democratic Rules Committee make decisions about seating Florida and Michigan delegates and be fair?

Could Clinton and Obama's fight go all the way to their party's convention? Not if Nancy Pelosi has anything to do with it. She's vowing to step in if it drags on much longer.

And is Louisiana's governor on John McCain's vice presidential short list? Bobby Jindal is here. I'll ask him if he has what it takes to help McCain win.

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

(COMMERCIAL BREAK)

BLITZER: Hillary Clinton is making a big push for votes with only five days and three contests left in this, a very long primary season. But her presidential hopes may now hinge on a big meeting of the Democratic Party. At issue, will Clinton's wins in the disputed Florida and Michigan primaries wind up counting at the convention in Denver at the end of the summer?

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

So what kind of challenge, Bill, does the DNC's Rules Committee face when they convene here in Washington on Saturday?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, Wolf, the committee has to make both sides equally happy. Or equally unhappy, as long as they're equal.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): On Saturday, the Democratic Party has to make two big choices. One is how many delegates from Florida and Michigan to seat. Right now the number is zero because those states were penalized for holding their primaries too early. The Florida and Michigan parties are appealing that decision, with encouragement from Hillary Clinton.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: Let's make sure your delegates are seated!

SCHNEIDER: Barack Obama supports seating some disputed delegates.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Florida Democrats will be seated. They will be participating.

SCHNEIDER: So what's the choice?

KAREN FINNEY, DEMOCRATIC NATIONAL COMMITTEE: Obviously, there are some who would like to see it reinstated to 100 percent. There are some who say that a 50 percent sanction was automatic, and therefore perhaps they could reinstate to 50 percent.

SCHNEIDER: Once the committee decides how many delegates to seat, it has to decide how to divide them. Florida Democrats voted 50 percent for Clinton and 33 percent for Obama. Obama's name was not on the ballot in Michigan, where 40 percent voted uncommitted.

FINNEY: Some would take the position that perhaps they were -- their intention was to vote for Senator Obama. Some would take the position that you can't know what the intention of those voters were.

SCHNEIDER: Here's a scenario Clinton would probably prefer -- all the Florida and Michigan delegates are seated, and Obama is given no uncommitted Michigan delegates. Then Obama would be 81 delegates ahead, and he would need 155 more to win. Here's a scenario that might be acceptable to Obama -- half the Michigan and Florida delegates are seated, and all the uncommitted Michigan delegates are given to him. Then Obama would be 167.5 delegates ahead, and he would need 72.5 more to win. Either way, Obama would be ahead in delegates.

(END VIDEOTAPE)

SCHNEIDER: If the Party seats Florida and Michigan delegates, then those states' popular votes can be included in the totals. Now, would that put Clinton ahead in popular votes? Only if you give Obama zero votes in Michigan, where nobody could vote for him because his name was not on the ballot -- Wolf.

BLITZER: This gets complicated. Thanks very much for that.

Bill Schneider.

And remember to stay with CNN for up-to-the-minute coverage as the Democratic Party's Rules Committee debates the status of Michigan and Florida. "Decision Day," our live coverage begins Saturday morning at 9:00 a.m. Eastern right here on CNN and at CNN.com. I'll be anchoring our special all-day coverage, together with the best political team on television.

The House speaker, Nancy Pelosi, is sounding more determined than ever to try to make sure the Democrats don't take their presidential fight all the way to the Denver convention. In fact, she's now threatening to take matters into her own hands.

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

Kate, you're learning Pelosi's actually starting to take some specific action. Tell us what she's doing.

KATE BOLDUAN, CNN CORRESPONDENT: Yes, Wolf, exactly. Wolf, we've just learned that House Speaker Nancy Pelosi is now calling uncommitted superdelegates, urging them to pick a candidate between now and next week. Clearly, it's crunch time for the Democratic Party, and they know it.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): A blunt warning from Speaker of the House Nancy Pelosi, telling "The San Francisco Chronicle" that the Democratic nomination fight must be resolved soon or else.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: Earlier than that I will step in, because we cannot take this fight to the convention. It must be over before then. I believe it will be over in two weeks.

BOLDUAN: Stepping in, according to a Pelosi spokesman, means she'll pressure undeclared superdelegates to publicly endorse either Hillary Clinton or Barack Obama. Those declarations are key, because it's unlikely either candidate will clinch the nomination after next week's final primaries.

Right now, excluding Florida and Michigan, whose delegations are being contested, there are 271 superdelegates in Congress. Ninety-two of them support Clinton, 114 support Obama. That leaves 65 lawmakers still undeclared.

One of those is Congressman Jason Altmire of Pennsylvania.

REP. JASON ALTMIRE (D), PENNSYLVANIA: If we allow this to fester, to drag out over the next three months into the national convention, which is at the end of August, then we may not have time to put the pieces back together.

BOLDUAN: While Speaker Pelosi plans on pushing superdelegates to declare their picks, she insists she'll remain neutral because of her role chairing the Democratic convention in August. But in the past, Pelosi has said superdelegates should follow one guiding principle.

PELOSI: It will do great harm to the Democrat Party if it is perceived that the superdelegates overturn the will of the people.

(END VIDEOTAPE)

BOLDUAN: Now, we've also learned that Pelosi is coordinating with Senate Majority Leader Harry Reid to bring this fight to an end, for superdelegates to make a public choice by next week. And Wolf, in a radio interview, Reid said he spoke to Pelosi just this morning.

BLITZER: All right, Kate. Thanks very much.

Good update from Kate Bolduan.

What Pelosi and other Democrats are simply trying to do is prevent any past -- any repeat of past conventions. Check this out.

One of the wildest was back in 1924. At more than two weeks, it was the longest continuously running convention in U.S. history. A record 103 ballots were cast. And there was heavy participation from Ku Klux Klan Democrats. John Davis eventually won the nomination, didn't win the election.

Check out 1968. Police clash with anti-Vietnam War demonstrators in Chicago streets. And it turned bloody. Hubert Humphrey won that year's nomination. He didn't get elected president, though.

In 1972, it was George McGovern, but only after a chaotic convention climaxed with his famous 3:00 a.m. acceptance speech. He didn't get elected either.

In 1980, sparks flew as Ted Kennedy tried to stop Jimmy Carter. Convention-goers beat back his attempts, handing the nomination once again to Carter. But his bid to get reelected fell short significantly to Ronald Reagan.

They preach political openness, but sometimes raise money in private. Do you see anything wrong with presidential candidates doing that?

And it's a medical helicopter that's supposed to treat injured people, not crash, burn and cause injuries. That's exactly what happened when this medical chopper putting other -- to this medical chopper, putting other patients in serious danger.

We're going to update you on what happened when we come back.

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, facing withering criticism for not having gone to Iraq in a long time, Obama's campaign says he's now considering it. Is that a smart strategy, or is Obama playing into a political trap?

We're watching this story.

Also, is the wall of support for Israel's prime minister beginning to crumble? After Israel's defense minister called for Ehud Olmert to step down amid a scandal, another top official now says prepare for every possible dramatic scenario.

And regarding gay marriage and California, New York's Governor David Paterson has done something that's delighted one side and angered many others. We will go live to New York to tell you what's going on.

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

John McCain knows that, pretty soon, the Democrats will have a nominee, and he may face even more competition for general election campaign cash. So, McCain is on a mission right now to rake in huge bucks.

Mary Snow is standing by in Los Angeles. She's watching the story for us.

What's going on, Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, John McCain took his fund-raising here to Los Angeles to what some consider an ATM machine for candidates. He's gearing up for the general election and he has got a big job ahead, since he's trailing his Democratic rivals in the money race.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Senator John McCain has been busy passing the hat. Wednesday, it was Beverly Hills. Tuesday, it was Phoenix with President Bush. His fund-raisers are closed to reporters.

And McCain was asked why he keeps that policy, since he's prided himself on being so open. SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: It's because the people who are the fund-raising money request that. And I will continue to be accessible and the most accessible campaign in history to the media.

SNOW: Democrats Barack Obama and Hillary Clinton allow a pool of reporters into fund-raisers held in public venues, but do close the door in private settings. One election law attorney says there's nothing wrong with McCain's keeping fund-raisers private.

KENNETH GROSS, ELECTION LAW EXPERT: There's certainly no legal requirement that he open up these events.

SNOW: But McCain is taking heat from Democrats for fund-raising behind closed doors with President Bush.

OBAMA: Senator McCain doesn't want to be seen, hat in hand, with the president whose failed policies he promises to continue for another four years.

SNOW: While Democrats criticize McCain for his ties with the president, Republican political consultant Matt Klink says, from the GOP standpoint, fund-raising with the president might open up wallets among conservatives who've been holding out on John McCain.

MATT KLINK, REPUBLICAN POLITICAL CONSULTANT: He definitely does not have the -- the rapport or the conservative credentials that the Bush family has built up over generations. That being said, John McCain is getting there. And it's just taking a little while for that to -- for all the pieces to fall into place.

SNOW: But the real test is about to come. Democrats have been smashing fund-raising records in the primaries, and that isn't expected to change in the general election.

(END VIDEOTAPE)

SNOW: And, Wolf, right now, since McCain is the Republican presumptive nominee, he's getting a boost from the party's national committee.

But, still, the map just tells of the challenges ahead. In April, McCain raised about $18 million, compared to Obama's $31 million and Clinton's $21 million -- Wolf.

BLITZER: He's got a challenge ahead of him.

Thanks very much, Mary, for that.

Whoever McCain picks as his running mate will also need to help raise money. Right now, many people are wondering if that will be my next guest. That guest is the Louisiana Republican governor, Bobby Jindal. He's joining us now from Baton Rouge.

Governor, thanks very much for coming in. GOV. BOBBY JINDAL (R), LOUISIANA: Wolf, thank you for having me. And thank you, again, for coming down to Louisiana. You continue to cover our recovery. And we appreciate that.

BLITZER: Well, we -- it's an important story that we're not going to forget. Appreciate what you're doing as well, Governor.

Let's talk about that barbecue you had over the weekend. It was sort of a bunch of friends of John McCain, including some potential vice presidential picks.

Let me be blunt and ask you the question a lot of people are asking. Do you believe, Governor -- you're 36 years old -- that you have what it takes to be president of the United States? Because, if you're the vice presidential running mate, you have got to be ready, God forbid, to step in.

JINDAL: Well, Wolf, the good news, I will be 37 in June. So, I'm getting older every day, just like all of us.

(LAUGHTER)

JINDAL: But, look, the honest answer is, I have got the job that I want. I enjoy being governor. I told the people of Louisiana, this is an historic time to change our state. And that's exactly what we're doing.

I will sign my sixth tax cut in a few weeks, when this legislature gets that bill to my desk. We have reformed our ethics laws. We're attracting investment like never before, Fortune 500 companies looking, investing $2 billion in our state. We have got a Fortune 1000 company moving their headquarters here, small businesses doing well.

So, I like the job that I have got. And the vice presidency did not come up during the barbecue. It was a social weekend. We talked about Louisiana's recovery to the senators, the CEOs that were there, talked about national issues. I have got the job that I want. I'm happy being governor.

BLITZER: All right, I will ask you the hypothetical question. If asked, will you say yes?

JINDAL: Well, you know, it would be presumptuous for me to turn down something I have not been offered. I will make a prediction here. I don't think I will be offered. The senator has got many choices he can make.

Look, I'm where I want to be. I have got the job that I want. In our lifetimes, we may not get this chance again to rebuild our state after Katrina, with the energy economy that is going on right now. Now is the time to diversify our economy, improve our schools and roads. I'm doing what I want to do.

BLITZER: Does Barack Obama have what it takes? Is he qualified to be president of the United States? JINDAL: Look, I think both these candidates are smart, patriotic Americans. I just -- I think Senator McCain is more qualified. I think he's got, not only the life experiences. I look at the positions he's taken.

He's been a longtime reformer when it comes to fighting earmarks and wasteful spending. I think he will be a stronger defender of America's interests in terms of national security. But I think they're both -- I'm a personal believer that you can be for a candidate without trying to destroy the other one.

And, so, I think you have got two intelligent, decent people who are both patriotic Americans. I happen to think Senator McCain is more qualified. I think his views are closely, more closely aligned with the majority of American voters.

I think we're a moderate, conservative country. And I think the majority will end up voting for Senator McCain. I hope this election can continue to be a positive, issues-based campaign now.

BLITZER: Because when we spoke at your residence in Baton Rouge back in February, at that time, you were still on the fence. You weren't sure who you were going to endorse. And, obviously, since then, you have made up your mind.

JINDAL: That's exactly right.

And I told you then I still believe Senator Obama is a very articulate, intelligent, eloquent spokesperson. I absolutely understand why he has the passionate supporters that he does. He talks very well about reform. I think the difference is, Senator McCain has been fighting for years, for decades for many of these reforms.

Even when it wasn't popular to be against earmark spending, even when his colleagues wished that he wouldn't talk so much about it, he was on the floor, fighting that earmarks, fighting what has become a corruptive influence in Washington.

So, I think, based on his experiences, based on his service, based on his record of reform, I think Senator McCain is the better candidate. I am supporting him.

But what I hate about Washington is, it's gotten so bad, where both sides feel like they have to tear each other apart. It's more about winning than being statesmen. I'm hoping this election won't be about that. Rather, it will be a good exchange of ideas.

Senator McCain wants to cut many of our taxes. Senator Obama doesn't always agree. They have got different views of international security and America's defense. They have got different views on many issues that Americans will want to hear them talk about. I think that Senator McCain doesn't want government running our health care, for example, something I care deeply about.

BLITZER: All right. All right. Governor, I want you to stand by. You know Washington because you served in the U.S. Congress. So, you know this place a little bit as well. We're going to take a quick break, but we have more to discuss. If you stand by for a moment, we will go back to Baton Rouge.

JINDAL: Sure.

BLITZER: We will also get the view from the Obama campaign coming up. That's coming up. The campaign strategist David Axelrod, he's standing by to join us in THE SITUATION ROOM as well.

Plus, a surprising donation to Barack Obama from a top Republican's wife. We will tell you what's going on.

And what will Hillary Clinton get out of this DNC meeting on Florida and Michigan when the Rules Committee meets on Saturday? We're going to consider her options. That's coming up in our "Strategy Session."

And, later, the actress Sharon Stone tries to make amends for causing an international incident.

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

(COMMERCIAL BREAK)

BLITZER: Let's get back to the Louisiana governor, Bobby Jindal. He's joining us from Baton Rouge.

Governor, Katrina, it's obviously had an enormous impact, not only on your state, but throughout the country. People feel the torment that people in Louisiana and the Gulf Coast went through.

Scott McClellan, the former Bush press secretary at the White House, has written a new book just coming out. He blames President Bush in part for the disaster of the response to Katrina. He writes: "It was a failure of imagination and initiative. And when the storm hit and the damage proved worse than anyone expected, our ability to adjust bespoke a failure of responsibility."

Do you blame the president for that horrible response that everyone acknowledges now occurred?

JINDAL: Well, three things, Wolf. One, there's certainly enough blame to go around at the federal level, the state level, the local level. I think anybody that lived through that knows our government did not respond adequately.

I think Senator McCain got it right when he came down here and said, never again. God forbid, if there was a natural disaster, a manmade disaster, our response has got to be much better the next time around.

Secondly, I want to thank the American people. They have been so generous, the faith-based groups, the companies, the private volunteers. This is an incredible country. If you ever lose faith in America, come to New Orleans, go to the Ninth Ward, see what the great people of this country are doing. We have got a lot of work to do, but people have been helping us.

But, third, I think it's more helpful to look forward. You know, looking back, absolutely, there was failure at every level. The military did a great job. There were certain exceptions that did a great job that stand out.

But, looking forward, what's more important is to us and Louisiana not just looking back, but saying, how do we rebuild better than what was there before? We had crime, education, health care problems even before the storms.

Here's the great shame, is that if we don't have more creativity -- you know, use McClellan's words, if we have a lack of imagination when it comes to rebuilding policies -- it's too late to undo the rescue effort, but it's not too late to get the rebuilding right.

Let's be more creative. Let's give people affordable health care, better housing, better schools. We're in the process of doing that. The worst that we could do is simply rebuild what was there before the storm, without taking this chance to improve it. We have got now dozens of charter schools, moving away from an emergency-room- based health care system to primary- and outpatient-based care. Those are just two examples of the kinds of changes we must make.

BLITZER: Bobby Jindal is the governor of Louisiana. He has his hands full right there.

We will see if you get a bigger challenge down the road, Governor. Thanks for coming in.

JINDAL: Thank you, Wolf.

BLITZER: On our Political Ticker today: A Republican senator's wife appears to be switching allegiances. That would be Senator Chuck Hagel's wife. She was a big supporter of John McCain back in 2000, but, this election, she's reportedly been giving money to Barack Obama, $250 in February, another $250 two weeks later, according to "The Washington Post."

Senator Hagel has long been very good friends with John McCain, but there's been recent speculation as to whether or not he would run on a joint ticket with Obama. Interesting story.

A new poll shows Hillary Clinton leading Barack Obama in Sunday's Puerto Rico primaries. The survey, taken May 8 through the 20th, shows Clinton with 55 percent support, Obama with 42 percent. This is an independent poll, but we should note it was conducted by Bill Clinton's former pollster.

A new endorsement could bolster Clinton's support within the Latino community. The singer Ricky Martin announced his endorsement of Clinton's presidential campaign. The Grammy Award-winning artist says Clinton has been consistent in her commitment to the needs of Latinos.

Remember, for the latest political news any time, check out CNNPolitics.com. That's where you can down load our new political screen-saver and where you can check out my latest blog post. Just posted one before the show.

In our "Strategy Session": Senator Clinton shows no signs of letting up.

(BEGIN VIDEO CLIP)

CLINTON: This decision on Tuesday is one of the most consequential that voters are going to make, because we know we have got to change direction in the country.

(END VIDEO CLIP)

BLITZER: But what will her reaction be if she doesn't get her way at this weekend's DNC meeting here in Washington?

And we know the Clinton campaign wants every delegate from Florida and Michigan seated, but what do we expect Obama's argument to be at this weekend's meeting? Donna Brazile and Terry Jeffrey, they are standing by -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Saturday morning, a few Democrats may feel like the entire weight of the Democratic presidential race will be resting on their shoulders.

A Rules Committee meeting will take place. They will try to decide what's fair for seating Michigan's and Florida's delegates. But what's fair may not necessarily make Hillary Clinton or Barack Obama happy.

Let's discuss in our "Strategy Session."

Joining us, our CNN political contributor Donna Brazile -- she's part of that Democratic Rules Committee -- and conservative commentator Terry Jeffrey. He's editor in chief of the Cybercast News Service.

Guys, thanks very much for coming in.

We know what will make Hillary Clinton happy: Seat all those delegates. Let the popular vote count, as if those were real elections, despite the fact they didn't -- they didn't campaign there. His name wasn't even on the ballot in Michigan.

You know these two sides. What will make the Obama campaign happy?

DONNA BRAZILE, CNN POLITICAL ANALYST: You know, Wolf, as we begin our deliberations this weekend, we're going to follow the rules. The rules may or may not help either candidate. But, if we follow the rules, follow the guidelines, I think the party will be happy, because the party will come together. We will seat the delegations. They may not get everything they want, but we will have a delegation...

(CROSSTALK)

BLITZER: Do you buy this -- this legal memorandum, this ruling that at least half the delegates have to be cast aside in both of those states?

BRAZILE: Well, Rule 20-C -- I have my bible with me -- allows the party to impose a penalty. So, there will be a penalty. But we have...

BLITZER: Is it mandated? Must they do that?

BRAZILE: Absolutely, Wolf. They violated rule 11-A.

(CROSSTALK)

BLITZER: So, there's no way they are going to get all those delegates. But half of them, at least half of them will be stripped away?

BRAZILE: We will make sure that these delegates who have been slated -- after all, they have been through the process -- will have a seat at the table. And we're working with both campaigns right now to ensure that...

(CROSSTALK)

BLITZER: Is the stripping away of the half the pledged delegates, the superdelegates, both? What's going on?

BRAZILE: First, we have to look at the challenges that are being brought to us by the -- by both states.

And one challenge calls for us to -- you know, to basically deal with the pledged delegates, another the superdelegates. We will look at those challenges, and we will appropriate the penalty that's needed. But we will also move to seat those delegates.

BLITZER: What a nightmare for the Democrats, Terry. You're looking in on this, and you're smiling.

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: Well, you know, I think Donna's doing the right thing. I think the Democratic Rules Committee is doing the right thing.

What Senator Clinton wants is, she wants to be rewarded for people breaking the rules. She wants to be the beneficiary of rule- breaking. I think all Barack Obama wants out of this weekend or out of the resolution is this is that he stays on track to getting the nomination. He is going to be the nominee of the Democratic Party. Hillary Clinton better watch out that she doesn't do too much damage to herself between now and the Democratic Convention, that she hurts her political career down the road.

BRAZILE: But let me just say something, because there are many Hillary Clinton supporters who are on the Rules Committee. And they're not coming to the meeting to advocate for Senator Clinton or Senator Obama.

They're coming to advocate for the rules, and to make sure that the party abides by its rules.

BLITZER: Because if they overly alienate voters in Michigan and Florida, John McCain could benefit from that.

JEFFREY: Well, they could. And the voters are the innocent bystanders here. They're not the ones that set up when these primaries should be.

It was the political elites of those states that did it. It's -- they should realize, though, it's very important, when candidates go to their presidential campaign for the most powerful office on Earth, that they know what the schedule of the primaries are going to be, and they know that the rules aren't going to change in the middle of the game.

Flat fact is, Hillary Clinton wants to benefit from the rules being changed in the middle of the game. They shouldn't be.

BLITZER: What about Nancy Pelosi's assertion now that she hopes, shortly after June 3, next Tuesday, the last two contests in Montana, South Dakota wrap up, that those uncommitted members of the House of Representatives, those Democrats, they announce or they get this process over with, no more -- no more fight looking on to the Denver convention?

BRAZILE: Well, it's clear to me that not only is Speaker Pelosi interested in seeing the party come together soon after the end of the contest next week, but also Majority Leader Reid.

So, I think this is in line with what Howard Dean said a couple of months ago, that we should come together before the end of the month of June.

BLITZER: What do you think?

JEFFREY: Well, is it really believable that a Democratic superdelegate, after this long process, doesn't know which one of these candidates they're for?

What possible reason would they have, Wolf, for waiting all the way to the end of August, at the Democratic Convention, to decide who they were going to vote for, unless they want something in return for their vote, other than the best candidate and the person they think would be the best president?

These folks should make up their mind. Otherwise, you know they're wheeling and dealing for something.

(CROSSTALK)

BLITZER: But you know what? The rules say these superdelegates can change their minds, too, right, Donna?

BRAZILE: Absolutely. That's also part of our...

(CROSSTALK)

BLITZER: You have made up your mind. You haven't declared who you support, but you have made up your mind. But you could change your mind if you wanted to. You could wake up tomorrow morning and say, you know what, I like the other guy.

JEFFREY: And what would make these guys change their minds?

BRAZILE: I have said from the get-go that I wanted to see every state, every jurisdiction, every territory, the District of Columbia, participate. I also stated that I would vote for the party's nominee and I would help use my vote to unify the party.

JEFFREY: Wolf, and once upon a time in the history of the United States, when presidential nominees were decided at conventions, where people were bargaining for delegates, what you had is an invitation to corruption.

That's what's going to happen if we go back...

(CROSSTALK)

JEFFREY: ... where it's not clean, straight primaries, where the voters are deicing, but it's literally people in the backrooms of Denver deciding what they want in return for a vote...

(CROSSTALK)

BRAZILE: I can tell you right now, the majority of us want a good president, someone who can turn things around, get us out of Iraq and put us back on the road to fiscal...

(CROSSTALK)

BLITZER: All right.

(LAUGHTER)

BRAZILE: There you go.

BLITZER: We will be speaking a lot between now and Saturday, and maybe later.

BRAZILE: I will read my rules again.

BLITZER: Donna, thanks very much.

Terry, thanks to you as well.

Carol Costello is monitoring a story that's just coming into THE SITUATION ROOM right now.

What's going on, Carol?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, we just got word of a massive fire in Peabody, Massachusetts. That's north of Boston.

Take a look at these flames and the thick black smoke pouring from a minimum complex here. We're not sure if anyone has been injured or if this complex is even occupied. That's because there are so many fire trucks on the scene, Wolf, that there's nobody to answer any questions.

They're all out trying to battle the blaze. And, as you can see, it's pretty much burning out of control.

BLITZER: All right, we will stay on top of this story.

Carol, thank you.

Anticipation is building for a big showdown over Michigan and Florida this Saturday. I will ask Obama's chief strategist, David Axelrod, what solution to the delegate dilemma would satisfy his candidate.

And something new for gay couples to celebrate -- the New York governor, David Paterson, takes a bold new stand on same-sex marriage. We will update you on new information coming into THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's check back with Jack Cafferty. He's got "The Cafferty File" -- Jack.

CAFFERTY: The question this hour, Wolf: Has Hillary Clinton's continual drumbeat of 'I'm more electable' gained her any traction in the closing days of the campaign?

Dale in Alexandria, Virginia, writes: "Unfortunately, it has gained traction, just as anything that is repeated enough. Fortunately, how much traction it gains is immaterial at this point, as it is impossible for Clinton to catch up, no matter what type of bizarro math you use."

Edgar in Los Angeles: "Of course, because it is the truth and nothing but the truth. She won all the big blue states, all the swing states, Pennsylvania, Ohio, West Virginia, Florida. Can you deny her the nomination? I don't think so."

Jeanie in Ava, Missouri, writes: "Let's see. She's had solidly behind her the whole way the huge Clinton machine, former President Bill, big political operatives, like Ed Rendell, setting up the whole state in Pennsylvania, FOX News network, et al, Sean Hannity pumping the radio airwaves, ditto Rush Limbaugh, ditto Laura Ingraham, the militant feminist army, a couple of whole states full of racists, pass after pass on subversive shots at Obama, campaign spokesmen that have stretched reason to the point that our brains have snapped. Obama's been a gentleman, given her wide berth. Point is, she ought to be ahead with all this advantage. She's behind."

Sue writes: "Senator Clinton is more electable, obviously more qualified, and mature in her decision-making than Barack Obama. She should have the back-stabbing -- leave the back-stabbing Democrats and run as an independent."

S. writes from Amarillo, Texas: "Just because she is delusional doesn't mean we are."

And Margot in San Francisco: "If she thinks she is more electable, then she just doesn't have a clue about how much most Republicans hate her and her husband. I'm a Clinton fan, and I have seen the bugged-out, wild eyed, red-faced fits that Republicans always seem to have whenever the Clinton name is mentioned. It can be so bad that, many times, I have wondered if I would have to perform CPR."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile. Look for yours there. We have gotten thousands of e-mails already, Wolf, and some of them are pretty funny.

BLITZER: All right. Jack, thank you. Stay -- stand by.

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