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Clinton/Obama Meeting; Barack McCain Battle Begins; Stock Market Woes

Aired June 6, 2008 - 16:00   ET

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


LEMON: Speaking of that, Susan, we have a day long "ISSUE #1" on Monday. We're going to focus on this. Thank you very much.
KEILAR: Let's head now to THE SITUATION ROOM and Wolf Blitzer.

WOLF BLITZER, CNN ANCHOR: Thanks very much, guys. Also happening now, inside the Obama/Clinton drama. There are new details about their secret meeting as she prepares to rally behind him tomorrow. We'll consider what's next for their stormy political relationship.

Plus, a nation divided between Barack Obama and John McCain. We have brand-new poll numbers. A new snapshot on what's on the minds of the voters, whether they're likely to change their minds.

The battle for congress. Democrats are counting on their new nominee in waiting to help give them an advantage with voters in November. Will the Obama factor be everything they're hoping for? I'm Wolf Blitzer, you're in THE SITUATION ROOM.

First more on the breaking news from Wall Street. A drastic new plunge in stock prices as we just heard. The worst drop this year. Let's get some perspective from our senior business correspondent, Ali Velshi. Ali, what's going on here?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: What a day. We have a drop right now. The Dow has just closed. The final bell is closed. We're 412 points lower. We haven't seen a number like that since February of 2007. That's the biggest drop by far we've had this year, maybe the biggest drop in longer than that if it settles in. We also have oil crossing $139 for the first time in history. We also have the biggest increase in a day. Oil was up more than $10 today on a number of concerns. Now the bottom line here is for people who are invested in stocks today, everything is down. There isn't a single Dow component of the 30 stocks that is up. The price of gas today gave us a break. It was the first day we didn't see an increase in almost a month Wolf. But you're going to see the increases because the price of gas is intricately tied to the price of a barrel of oil. We had a forecast today from Morgan Stanley that oil could hit $150 by July 4th of this year. All of this is coming into play, Wolf. We thought we had a break. We hadn't seen a record in oil since May 22nd. We are not only in record territory, but by a long shot. Right now oil trading just a little under the number that it hit. It's a little under $139. We're looking at a Dow that is about 410 points below ground. 410 points in the red. Wolf, this is a tough economic day mainly playing on some economic news we heard earlier today and the price of oil.

BLITZER: And the loss of yet more jobs. Almost 350,000 jobs lost so far since January 1st of this year. Not very encouraging in the political ramifications Ali, enormous in this campaign season right now. Ali, stand by. We're going to be getting back to you. We're not going to be leaving this story.

But I want to get to Barack Obama and Hillary Clinton right now. They're beginning to try to put their long and often bitter rivalry behind them. Less than 24 hours from now, Clinton is expected to fully and enthusiastically endorse Barack Obama as her party's all but certain presidential nominee. The two democrats took the first step toward mending fences last night with a secret meeting right here in Washington. Our Suzanne Malveaux is joining us now, she has some details on what's going on. It's not easy for either of these candidates, but they're trying to work together.

SUZANNE MALVEAUX, CNN CORRESPONDENT: And it really is all part of a process here. She's going to remain in the headlines until she finds a comfortable role in the campaign. Tomorrow's concession is a very important part of that process.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): All eyes are on Hillary Clinton. Set to make her concession speech Saturday to formally acknowledge he won. A realization Barack Obama is already relishing.

SEN. BARACK OBAMA, (D) PRESUMPTIVE PRES. NOMINEE: I have to let you know that in 2016, I'll be wrapping up my second term as president.

MALVEAUX: But first things first. Making amends with Hillary Clinton. Late Thursday Obama and Clinton had a secret face to face meeting in Washington. After Obama ditched his press corps in a highly orchestrated rouse. They met at Senator Dianne Feinstein's house where they chatted alone for an hour in her living room. Those familiar with their discussion say there were no substantive breakthroughs. They expressed relief that the primary was over and pledged to work together. They did not talk about her prospects of joining the ticket. Feinstein said they emerged laughing. The first step to healing wounds.

ROBERT GIBBS, OBAMA CAMPAIGN COMMUNICATIONS DIR.: The number one thing is -- for them was to talk about, was to talk about coming together and bringing this party together.

MALVEAUX: Both the Clinton and Obama camps recognize they've got a lot of work to do to unite the warring factions who've been fighting for 17 months.

DAVID GERGEN, CNN SR. POLITICAL ANALYST: Each of them has to massage, in effect, the egos and the interests and the emotions of their supporters and bring this together. I think it's his first big challenge as a nominee. MALVEAUX: Obama needs her voters. Largely older women, white working class. Clinton needs a new role in the campaign and some help in paying off her $20 million debt. Both are on the table. Democratic leaders say what's most important now is making up for lost time.

SEN. HARRY REID, (D) MAJORITY LEADER: People need to understand that the primary is over. We have a candidate, his name is Barack Obama. The republicans have had a candidate for a couple months, his name is John McCain.

(END OF VIDEOTAPE)

MALVEAUX: And I'm told that in the Clinton/Obama meeting it was really just the two trying to get comfortable with one another. Many of their supporters will be watching their body long and listening to their words and really Wolf, taking their cues from those two.

BLITZER: That's a good idea, I guess, from a lot of those supporters. Thanks very much, Suzanne. You'll be busy tomorrow as well. We all will be. CNN tomorrow will have special coverage of Hillary Clinton's rally and expected endorsement of Barack Obama. Please join me and the best political team on television. Our coverage begins at 11:00 a.m. eastern. Also live on cnn.com. Stay with us for complete coverage of this event tomorrow.

Here's why Barack Obama, by the way, was joking today about his political future in the year 2016. He unexpectedly turned up at an Olympic celebration in Chicago. Obama's hometown is one of four cities that made the cut as finalists to host the Olympic games eight years from now.

Meantime, Obama rival John McCain is wrapping up a three day trip to Florida. The republican toured the Everglades today and defended his vote against the measure to restore the largest wetlands in North America. McCain says it was part of a pork barrel spending bill. The measure does have broad support from top republicans and other officials in Florida. And as you know that's a crucial state this coming November. We're going to have a full report on McCain's day in Florida politics. That's coming up later here in THE SITUATION ROOM.

We also have a brand-new snapshot of the McCain versus Obama match up. Now that Obama has clinched the democratic nomination. It suggests the race for the White House will continue to be a thrilling ride. For the numbers let's bring in our senior political analyst Bill Schneider. What's the headline, Bill, from our brand-new poll?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Another close one.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): If you liked 2000, you may love 2008. Because the race between Barack Obama and John McCain looks like a close one. Right now, Obama's leading McCain by three points. That's within the margin of error. Here's the big puzzle in this election. President Bush's job rating is 32 percent. McCain is getting 46. Shouldn't the republican president be dragging the republican candidate down with him? Obama thinks so.

OBAMA: He is running for George Bush's third term.

SCHNEIDER: McCain does not think so.

SEN. JOHN MCCAIN, (R) PRESUMPTIVE PRES. NOMINEE: Why does Senator Obama believe it's so important to repeat that idea over and over again? Because he knows it's very difficult to get Americans to believe something that they know is false.

SCHNEIDER: Right now 16 percent of all voters disapprove of President Bush, but are still voting for McCain. Obama's going after them.

OBAMA: There are many words to describe John McCain's attempt to pass off his embrace of George Bush's policies as bipartisan and new. But change is not one of them.

SCHNEIDER: Does Obama have a problem with white voters? Most whites are not voting for Obama, but white voters have not voted for a democrat for president since Lyndon Johnson. Obama's getting 42 percent of the white vote. John Kerry got 41 percent, Al Gore got 42, Bill Clinton got 43, Michael Dukakis got 40. Obama's not doing any worse with white voters than other democrats. Are democrats happy with Obama as their nominee? Nearly 60 percent say yes. 35 percent would prefer Hillary Clinton. Are republicans happy with McCain? Only 55 percent say yes. 44 percent of republicans say they would prefer somebody else. McCain clinched his party's nomination three months ago. But Obama's actually done a better job solidifying his base.

(END OF VIDEOTAPE)

SCHNEIDER: Do democrats want Obama to pick Clinton as his running mate? Well, 54 percent of democrats say they do. The dream ticket is the dream of a lot of democratic women. 60 percent of women say they want Obama to pick Clinton. Men, not so much. 46 percent of democratic men want Obama to pick Clinton. 51 percent of men say, nah. Wolf?

BLITZER: Bill, thank you very much. Bill Schneider with the numbers for us. Let's check in with Jack. He's got the Cafferty file. Jack?

JACK CAFFERTY: Barack Obama likes the idea of Bill Clinton hitting the campaign trail for him this fall when he faces off against John McCain. When asked if he would be able to mend fences with the former president, and if he could use Clinton during the general election campaign, Obama said yes and yes. Adding that, I think Bill Clinton is an enormous talent. I would welcome him campaigning from me. Behind the scenes though Obama's advisers might be thinking something else. "The New York Daily News" reports senior campaign officials don't know what to make of Bill Clinton's erratic and increasingly sulfuric behavior, their words, on the campaign trail and many believe he's too toxic to be a high profile surrogate for Barack Obama. One democratic operative says Hillary Clinton will be a huge asset for Obama but the former president, quote, "Needs to just stay out of it," unquote. Others say Bill Clinton and Obama will likely appear together in rural areas that had heavily supported Hillary. It's no wonder Obama's advisers might be hesitant to employ the former president, once considered perhaps the most savvy politician of his time. Consider what he did for his wife, though. Not good, some of it. There was South Carolina where he was accused of inflaming racial fears about Obama. He called Barack Obama's claims about his stance on the war in Iraq a fairytale. There was the time President Clinton brought up and defended Hillary's Bosnia sniper fire fable which was totally untrue after the controversy over that had died down. Then just this week he lashed out at a "Vanity Fair" reporter who had the temerity to suggest that Bill Clinton has gotten angrier in his old age by calling that reporter a scumbag, sleazy and slimy. What do you mean, angry? Here's the question, "Should Barack Obama ask Bill Clinton to campaign for him?" Go to cnn.com/caffertyfile. You can post a comment on my blog. Wolf?

BLITZER: Thank you Jack for that. Another painful day as we just saw at the top of this hour for the U.S. economy. The stock market plunges the worst day of this year. That's not all. What, if anything, could Barack Obama and John McCain do about this economy? Two of their key supporters from a crucial battleground state. They're standing by live. We'll discuss with them.

Plus, the presidential candidates' coat tails. Who will be a bigger help to his party in the battle for congress.

A massive teacher protest driving home concerns about America's schools. We're going to tell you where Obama and McCain stand on paying for your kids' education. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Want to follow up on the breaking news we're following this hour. It involves "ISSUE #1", the U.S. economy. The Dow closed down dramatically today. Final numbers coming in just under 400 points. This is the worst stock drop of the year. It comes at a time when job losses are increasing as well. Barack Obama and John McCain, they're also launching their general election battle in earnest right now. And they're competing for crucial battleground states. Let's discuss what's going on with two key supporters for Barack Obama and John McCain. Democratic congressman Robert Wexler of Florida and republican congressman Mario Diaz-Balart of Florida, they're standing by to join us. Congressman Wexler, let me start with you. On day one what does Barack Obama do? 350,000 jobs have been lost since January 1st, the price of oil went up to $140 a barrel today, the market is in trouble at least on this day. What's the first thing he does on day one?

REP. ROBERT WEXLER, (D) FLORIDA: I think he needs to announce a second Manhattan project. When we needed to create an atomic bomb to win World War II, we went to work with great urgency. We need to do the same thing with respect to America's overdependence on foreign oil. In the process of developing alternative sources of fuel, we can create tens, hundreds of thousands of new jobs. At the same time we have to begin strict conservation in terms of making sure our automobiles are more efficient.

BLITZER: That's a long-term proposal.

WEXLER: Yes.

BLITZER: Let me ask Congressman Diaz-Balart. What does John McCain do on day one to deal with a U.S. economy in deep trouble right now?

REP. MARIO DIAZ-BALART, (R) FLORIDA: I agree with Congressman Wexler about the fact that we have to get out of this dependence on foreign oil. It's crucial. Here's another part we have to do. We all got together in a bipartisan way, republicans, democrats, the administration, we cut $150 billion in order to (INAUDIBLE) the economy. Wolf, you remember that, it got a lot of coverage. Three weeks later the democrats in congress passed a budget out of the budget committee and then to the floor, which was approved again just this week to increase taxes by $700 billion. First thing we got to do is continue to lower taxes. That debate went away when democrats agreed if you want to (INAUDIBLE) the economy you cut taxes. If you want to continue to get this economy rolling, you have to cut taxes. You have to make the tax cuts that are there permanent. If we did that we would probably have the biggest impact on helping the economy.

BLITZER: This is going to be a huge issue between McCain and Obama, Congressman Wexler, the issue of tax cuts.

WEXLER: Certainly. And Senator Obama believes in tax cuts for middle class Americans to allow working individuals to keep more of their money. What he doesn't believe is to continue this enormous deficits that America has created, while at the same time the wealthiest among us enjoy additional tax relief. That doesn't make sense. Also, we need to look at the gasoline, the oil companies who are making obscene profits. And we need to make certain that we take some of those profits and make sure they're reinvested to create these alternative uses of -- sources of fuel. What's so unfortunate at this point is that Mr. McCain doesn't have a plan to help people stay in their homes. Senator Obama, of course, does.

BLITZER: Let me let the other Congressman Diaz-Balart respond. Go ahead congressman.

DIAZ-BALART: Yeah, look. Again, there's nobody that speaks better than Rob Wexler. However, the democrats just passed a budget that increased taxes by $700 billion on all Americans. Including on the lowest wage earners. Including getting rid of the tax cuts for married couples. Including getting rid of the -- cutting in half the tax cuts per child. So rhetoric is good. But they just passed a budget that actually increased taxes by almost -- again, $700 billion.

BLITZER: Congressman --

DIAZ-BALART: Those are tax increases that Senator Obama continues to support. BLITZER: Listen to what the senate majority leader, Congressman Diaz-Balart, said today here on "AMERICAN MORNING" on CNN, because I want you to respond. Listen to Harry Reid.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D) MAJORITY LEADER: Here's a man who came out today supporting the unconstitutional illegal program that the president initiated dealing with wiretapping on Americans. John McCain is a flawed candidate. He is bad temperamentally. He's bad on the war. He's wrong on the economy. This is going to be an interesting campaign. Certainly interesting in watching Barack Obama become president.

(END OF VIDEO CLIP)

BLITZER: Those are serious charges that Harry Reid is making. Especially bringing in the whole issue of his temperament. You want to respond to Harry Reid?

DIAZ-BALART: Of course. Look, this is the same Harry Reid who also said to the press and floor of the senate that the war was lost. That's the same Harry Reid. I guess Senator Reid has forgotten that the bill Senator McCain supports on the FISA issue passed on a bipartisan vote of the United States House senate. It's just that the House has not agreed to bring it up. That passed on a bipartisan level by the United States Senate. The senate that he leads. We shouldn't be surprised. It's the same Senator Reid who said on the floor of the senate that we had already -- that our troops had already lost the war. He was wrong then, and he's wrong on this statement as well.

BLITZER: The FISA, the foreign intelligence surveillance act, that's what he's referring to, Congressman Wexler. What do you say?

WEXLER: All of us support giving our intelligence agencies all the powers they need to protect us from terrorism. The issue is whether or not we're going to continue President Bush's abuse of this power where President Bush is using his surveillance power without warrants to wiretap Americans. Innocent Americans. Senator McCain used to say no. Now he flip-flopped and said yes. Wolf, let's talk about what happened in Florida. Senator McCain went to the Everglades and yet he opposed funding for the Everglades. That's a really remarkable scene here.

BLITZER: Very quickly respond, congressman.

DIAZ-BALART: That's not accurate. He's been a leader in Everglades restoration. The reality is that he opposed a bill that had $21 billion of things that he believes are unnecessary and wasteful. It did have $2 billion for Everglades but he didn't oppose the bill because of the Everglades portion. He opposed the bill because of the rest of the 90 percent of the bill. I think he's got a point. He has always been a leader in Everglades restoration. The question is this, by the way. We would love to see Senator Obama come to the everglades or even spend a little bit more time in Florida. Senator McCain has history here, he's always been supportive of the Everglades. Senator Obama frankly he's been a big question mark because he's never been here, never spoken up, never led on this issue of the environment.

BLITZER: Congressman hold your fire. Because we're going to continue this discussion in the days and weeks to come. But a good debate previewing the very serious differences on important substantive issues between these two presidential candidates. Robert Wexler and Mario Diaz-Balart, thanks to both of you for coming in.

WEXLER: Thanks.

BLITZER: Can Barack Obama pull himself to victory and take other democrats over the finish line as well? Some party leaders think Obama at the head of the ticket means entirely new political threats for republicans.

Back to court for home run king Barry Bonds. At issue, did he actually lie to a grand jury in a steroid investigation. We're going to find out how Bonds responds to what he's accused of. Lots of news happening, including the breaking news on the economy. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Carol Costello is monitoring some other important stories incoming into THE SITUATION ROOM right now. Carol, what's going on?

CAROL COSTELLO: Wolf, he's the American convicted of joining al Qaeda and plotting to assassinate President Bush. Today a federal appeals court upheld the conviction of Ahmed Omar Abu Ali. But the court says he must be resentenced potentially for more time than his 30-year term after prosecutors argued that federal sentencing guidelines call for a life sentence. Abu Ali grew up in Virginia and joined al Qaeda while in college in Saudi Arabia.

Looks like it'll have to wait until next year. A senate bill to fight global warming. Republicans blocked it today with a filibuster. Democrats fell a dozen votes short of breaking it. That means debate over climate change will have to wait for the next congress. The bill would have put caps on the amount of carbon dioxide released in the atmosphere. Republicans argued it would spike energy prices.

Barry Bonds insists he did not lie to a grand jury and did not obstruct justice. Bonds' attorney entered that plea on Bonds' behalf at an arraignment in San Francisco. The 14 counts of perjury and one obstruction of justice charge stem from his 2003 appearance before a grand jury investigating steroid distribution by a west coast lab. Today's activity was a rearraignment after a judge ordered prosecutors to rewrite an indictment from late last year. Hope you could follow that. But needless to say, Wolf, the steroid saga in baseball isn't over yet.

BLITZER: I suspect it's going to go on for a while. Thanks Carol very much. There's no I in team. Can Barack Obama use team work to help himself and fellow democrats win in November? We're exploring whether wild enthusiasm for Obama is actually transferable to other candidates.

Want to meet Barack Obama? The Republican Party wants to help you. But it's not a flattering introduction. Abbi Tatton standing by to explain. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers you're in THE SITUATION ROOM. Happening now, a staggering measure of misery. Last month the number of people out of jobs took its biggest monthly jump in over 20 years. What do Barack Obama and John McCain propose to do about that. We're following the breaking news.

Also, disappointment and determination not to vote for Obama. That's how some Hillary Clinton female supporters feel right now. How can he win them over? What might she do? Carol Costello working this story.

Whoever wins the White House, there's fear terrorists could see the U.S. as a more tempting target amid the presidential transition. You're going to find out the extraordinary steps the pentagon is taking right now to make sure Obama and McCain are briefed and ready on day one. Barbara Starr has the latest. I'm Wolf Blitzer, you're in THE SITUATION ROOM.

Crowds like these are wildly enthusiastic about Barack Obama. Democrats are wildly enthusiastic about their chances to take back the White House. Party leaders are not just looking out for the candidate, they're also looking out for other democratic candidates running for congress.

One question they have, can Barack Obama pull himself to victory while pulling others in his party to victory as well?

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

Kate, what's going on? Because a lot of Democrats who want to be elected to the House and Senate, they're looking to Barack Obama right now for help.

KATE BOLDUAN, CNN CORRESPONDENT: They sure are, Wolf.

Well, there is finally a general election matchup here. And Democrats, as you said, are looking towards the White House. But they're also looking to their nominee to help them bolster their majority in Congress. And they even have a name for it.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): They call it the Obama factor. With a Democratic presidential nominee locked in, the party now hopes to capitalize on Barack Obama's popularity in upcoming congressional races.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: I use this word in the most complimentary way: exploit the opportunities that he's opened up for us by his campaign, which has proved to be very attractive.

BOLDUAN: Congressman Chris Van Hollen, the man in charge of getting Democrats elected to the House, says he's targeting takeovers in 40 districts this fall to expand the Democratic majority, utilizing Obama's draw not only to boost the African-American vote, but also reach out to independents and young voters.

REP. CHRIS VAN HOLLEN (D), MARYLAND: Republicans can't plan on a conventional type election. There's this whole new factor of people who have not been involved before who are getting involved. The Republicans can't count on them staying at home this time.

BOLDUAN: House Republicans acknowledge they face a tough political landscape in November.

But Congressman Roy Blunt, the number-two Republican, argues that the John McCain factor is also at play. He argues, McCain is the best chance Republican candidates have to appeal to independents and working-class voters.

REP. ROY BLUNT (R-MO), HOUSE MINORITY WHIP: I do think there's -- there's a presidential dynamic here that's stronger than it normally is. I think the presidential dynamic works to our advantage. And I think it does because of the unique appeal of John McCain to people who don't always vote for Republicans.

BOLDUAN: Overall, analysts say, the outlook favors Democrats across the board, with opportunities to pick up seats in Republican districts ranging from New York and Connecticut to New Mexico and Wyoming.

STUART ROTHENBERG, EDITOR AND PUBLISHER, "THE ROTHENBERG POLITICAL REPORT": There are three, four dozen congressional districts that the Democrats are playing in, and can play in. And the Republicans have only a handful of seats that they could possibly take back or take over.

(END VIDEOTAPE)

BOLDUAN: Now, political analysts forecast Democratic gains in the Senate as well, anywhere from two to five seats. But, right now, they say it's still unlikely that the Democrats will be able to reach that very desirable, Wolf, filibuster-proof majority.

BLITZER: Kate Bolduan, thanks very much.

Winning an election and helping your party win congressional seats is not always easy. Back in 1980, Ronald Reagan did it. He won the presidency and he helped Republicans pick up 45 seats, 12 of them in the Senate, 33 in the House. No president since Reagan has seen that. In fact, Bill Clinton saw the worst record for helping his party. Though he won the race back in 1992, his party lost 10 seats in the House and gained none in the Senate that year.

The Republican Party wants people to meet their opponent with a new Web site going after Barack Obama.

Let's go to our Internet reporter, Abbi Tatton. She's following this story for us.

All right, Abbi, what's going on?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, there's a video that greets visitors to the new RNC site, meetbarackobama.com. And, in it, the Republican Party is letting the Democrats do the talking.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: Senator McCain will bring a lifetime of experience to the campaign. I will bring a lifetime of experience. And Senator Obama will bring a speech that he gave in 2002.

(END VIDEO CLIP)

TATTON: This is Web video and opposition research all presented on the Republican National Committee's new Web site unveiled as Senator Obama clinches the nomination.

The Democratic Party did their own version last month with their new Web site called mccainpedia.

But the Republican Party inviting Web users to meet Barack Obama, online, millions have done that already. Just look at Senator Obama's own YouTube page with his videos. One of them alone has had more than four million views. The most watched video about John McCain, on the other hand, is one attacking him -- Wolf.

BLITZER: All right, Abbi, thanks very much.

The Web going to have an important effect on this election coming up.

Teachers in the nation's second largest school district skip class to vent their anger about funding for schools. Up next, where do John McCain and Barack Obama, where do they stand on paying for your children's education? This is one of the most important issues facing the country right now. And there are serious differences between these two candidates. Brian Todd standing by to explain.

Plus, a lot of buzz about Hillary Clinton's expected concession speech tomorrow. We're going to offer her a couple of possible scripts. That's coming up in our "Strategy Session."

And, later, McCain's proposal for a series of town hall meetings with Obama, we're going to tell you what those forums might actually look like and sound like -- Frank Sesno looking at the story.

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

(COMMERCIAL BREAK)

BLITZER: In Los Angeles today, a one hour walkout by thousands and thousands of teachers. Their message: When it comes to education, money matters.

School funding is a hot issue at the local level and in presidential politics as well.

Let's bring in our Brian Todd. He is working the story for us.

And there's a national concern on this issue right now, Brian.

BRIAN TODD, CNN CORRESPONDENT: A huge national concern, Wolf, those protests in L.A. a microcosm for a much larger problem the next president is going to face. There are a lot of great ideas out there on how to fix the nation's schools, but being cost-effective in doing that is really another story.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Schwarzenegger says, take away.

UNIDENTIFIED PROTESTERS: We say, no way.

TODD (voice-over): In the nation's second largest school district teachers play hooky, at least for the first hour of classes. Los Angeles teachers protest the state's school budget and the fact their district may not get the increase they had wanted.

Paying for your kids' schools, not overpaying, and making them competitive, huge challenges for the men seeking the White House.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I would not repeal No Child Left Behind -- I will give you straight talk -- because I think it was a good beginning.

TODD: Neither John McCain, nor Barack Obama would completely abandon the Bush doctrine on education, which steps up accountability standards for schools, focuses on standards goals for tests, and offers flexibility in school choice.

Both say they want to enhance the program. McCain focuses much of his plan on establishing more charter schools, merit pay for teachers, and giving parents vouchers to provide more choices in where their kids go to school.

MCCAIN: If there are schools competing with one another for you to go to school there, it's the best way to improve quality.

TODD: McCain himself has said, throwing money at schools won't fix them. He's voted against some education funding plans in Congress. But his aides say that's because they were attached to other measures that had wasteful spending.

Barack Obama has laid out a more detailed and more expensive overhaul of the nation's education system.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: A truly historic commitment to education, a real commitment, will require new resources and new reforms.

TODD: Teachers are at the center of his initiative.

OBAMA: We owe it to our children to invest in early childhood education and recruit an army of new teachers and give them better pay and more support.

TODD: Obama says that means creating new scholarships to train teachers, improving standards and assessments for teachers in training, programs for experienced teachers to mentor new ones, and, like McCain, more merit pay. But Obama's sweeping plan also expands funding for early education, even covering infants.

(END VIDEOTAPE)

TODD: Infants all the way through college, Obama proposing a tax credit that would make the first $4,000 of college completely free for most Americans.

Now, as we have said, his plan is fairly expensive. Just his pre-K through high school programs will cost $18 billion a year. Obama's campaign says he won't raise taxes on the middle class to pay for this. He will let the president's tax cuts for wealthy Americans expire, pay for that with some of that spending, and he's also going to be trim spending elsewhere.

McCain doesn't plan on raising any taxes for education, Wolf, either. He too, like Obama, is going to cut spending elsewhere, saving some money there. So, they both have very ambitious plans.

BLITZER: All right. Walk us through some of the other pointed criticisms of these candidates.

TODD: Right.

Well, conservative pundits and others say, on Obama's score, that he's probably too close to the teachers union. Now, his campaign counters that very vehemently by saying, look, his -- his plan for performance pay for teachers, his support of charter schools, that has gone against what the union wants. Still, the NEA is about to endorse him.

The -- McCain, on the other hand, has been accused of not being really specific enough with a lot of his programs. But McCain's people told us today he's going to be laying out a lot of specific ideas in the coming weeks and months. So...

(CROSSTALK) BLITZER: It's one of the most important issues affecting the country, the education of our children. And we're going to be watching this very closely. Brian is going to stay on top of the story for us.

In our "Strategy Session": The Senate majority leader, Harry Reid, says Hillary Clinton will be a key player in the fall election.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: She's a very good woman. She's been a great senator. And she's going to be a great help to us in this primary, no matter what role she has in the campaign.

(END VIDEO CLIP)

BLITZER: So, what does she have to say in her big speech tomorrow to bring the party together? We're getting new information right now.

And Senator McCain's new campaign ad telegraphing how and where he will be running hard against Barack Obama -- all that coming up.

And Jennifer Palmieri and John Feehery, they're standing by for our "Strategy Session."

Lots of news happening today -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: John McCain is ready for his debut. He's out with a brand-new general election campaign commercial. In it, he explains why he feels the way he does about war.

Listen to this.

(BEGIN VIDEO CLIP, MCCAIN CAMPAIGN AD)

MCCAIN: I was shot down over Vietnam and spent five years as a POW. Some of the friends I served with never came home.

I hate war. And I know how terrible its costs are. I'm running for president to keep the country I love safe.

(END VIDEO CLIP)

BLITZER: The ad is airing in several key battleground states.

Let's discuss this and more in our "Strategy Session."

Joining us, the former press secretary for John Edwards' 2004 campaign, Jennifer Palmieri.

Jennifer, thanks very much for coming in.

And John Feehery is joining us as well. He's a Republican strategist. Jennifer is also with the Center for American Progress.

That ad sounds, it like it could be pretty effective with undecided moderates, if you will, independents out there. What do you think?

JENNIFER PALMIERI, DEMOCRATIC STRATEGIST: Expect he's for -- except he supports the war in Iraq and he supports staying there. And that's where most of the -- most of the public is not in that place. And they oppose it.

So, I think that, you know, it's the -- so, I think people respect his record, but it's, well, what conclusions did you draw for it? He still wants to stay in Iraq.

BLITZER: Because the war is still very unpopular.

JOHN FEEHERY, REPUBLICAN STRATEGIST: Yes, people want peace.

But what McCain recognizes is, you don't have peace through wimpy leadership. You have peace through strength, as Ronald Reagan showed. I think this is an extraordinarily effective ad, because it shows that he loves peace, but he knows that, sometimes, you have to be ready to go to war. And, if you're in a war, you have to win it.

And I think that's why McCain -- this -- that ad is so effective.

(CROSSTALK)

BLITZER: He also feels that this is his strength right now...

PALMIERI: Sure.

BLITZER: ... the whole issue of national security. He's got a lot of experience, and Barack Obama doesn't have a lot of experience.

PALMIERI: Right.

But it's unfortunate for him that the issue he believes he's the best on is national security. He's on the wrong side of the most important issue in terms of voters' minds. Yes, it's a compelling story and it's a moving ad, in some ways. But the last four veterans that ran for president against somebody who wasn't a veteran lost, John Kerry, Al Gore, H.W. Bush, and, of course, Bob Dole.

And this is very sort of reminiscent of the Bob Dole strategy.

BLITZER: It doesn't necessarily -- well, she makes a fair point. What do you think?

FEEHERY: She makes a fair point. And that's a good point.

(CROSSTALK)

PALMIERI: Bill Kristol made that point, actually. That's pretty conservative.

(CROSSTALK)

FEEHERY: Obviously, this is going to be really tough election for Republicans, no doubt about it.

But I do think that McCain's war record, the fact that he knows how to win a war, and he has such vastly more experience than Obama in a very dangerous world, when people understand it's a dangerous world, that is going to be an advantage to him.

BLITZER: But, arguably, as unpopular as the war is right now, the economy is even a more compelling issue right now. And you see these numbers, the breaking news we have been following this hour, the worst day -- drop of the year so far on the stock market, 350,000 jobs lost since the first part of -- since January 1 this year. People are worried about oil prices and gas prices.

Potentially, that's a much bigger headache for McCain than it is for Barack Obama.

FEEHERY: You know, it's funny. If you look at the records of people who voted for oil exploration in the United States and who voted against oil exploration, Republicans voted 95 percent of the time for more oil exploration, whereas Democrats have always voted against it.

This is -- oil prices are a big issue. The Democrats have a bad record on that. And the other thing on the economy, yes, it's a bad economy, but people don't want higher taxes in a bad economy.

BLITZER: What does Hillary Clinton need tomorrow to say in her speech to try to bring this divided Democratic Party together?

PALMIERI: Right. Well.

I think it's an important speech for her because it's her opportunity to define her campaign, right? It's sort of like her first...

BLITZER: Well, her campaign's over with now.

PALMIERI: Right, but define the history of it, sort of re -- well, not rewrite, but sort of write the history of it. She gets to write the first draft in that speech. And I think that's why she has taken as long as she has to do it.

I think that she needs to -- it shouldn't be about her and Obama. It should be about what the party together accomplished, you know, this record -- record turnout, the first African-American candidate, the first major female candidate.

And when she talks about -- when she does her populist argument, it can't just be, I think this. It has to be, Barack Obama and I, so that she's able to try to help him appeal to more people.

(CROSSTALK)

BLITZER: Is there any indication at all that he might make a guest appearance at that event tomorrow?

PALMIERI: Good idea. That's a fabulous idea.

BLITZER: I was thinking about it. I have no information to say that he is.

(LAUGHTER)

BLITZER: But, if he were to show up at the end of that speech -- and sort of say, we have a surprise visitor -- that could electrify that crowd.

(CROSSTALK)

BLITZER: But maybe they're saving that moment for another rally, another occasion.

(CROSSTALK)

PALMIERI: I think they should do it. I'm for it. It's a great idea.

FEEHERY: And one of the things that she has to do tomorrow is, she has to convince white working-class women that Barack Obama is the right candidate. And she also has to try to make the same case to white working-class men.

And then she will also have to bring up issues like the Supreme Court and why that's important and for issues that women care about -- that some women care about.

BLITZER: Because how she bows out of this race -- it's almost become a cliche -- how the loser loses...

FEEHERY: Right.

BLITZER: ... could affect the outcome in November, but also affect their political future down the road.

FEEHERY: Well, that is the big question. What is she going to do next? Is she going to back to the Senate? Is she going to get appointed to some position, vice president, all these things? Maybe Supreme Court? Some people are talking about that as a possibility, I mean, all these things.

And so how she reacts on Saturday will really determine what she does after she leaves this campaign.

BLITZER: And you predict she will do a good job, bad job?

PALMIERI: No, I think -- you know Hillary. She will rise to the occasion. I think she will be super gracious. I think that she will make people proud of the process and to be Democrats and excited about Obama. And she will do this right.

BLITZER: We're going to watch it very closely, together with all of you and millions of other people in the United States and around the world.

(LAUGHTER)

BLITZER: Our special coverage, by the way, of Clinton's speech tomorrow, the rally at the National Building Museum right here in Washington, only a few blocks away from where I am right now, our coverage begins at 11:00 a.m. Eastern. I will be joined by the best political team on television. Again, that's live coverage of her highly anticipated speech. That will be here on CNN and CNN.com.

So, can Hillary Clinton convince her supporters to get on board with Barack Obama? Might they feel snubbed if he doesn't pick her as a running mate? I will speak about that and more with a key Clinton supporter, the mayor of Los Angeles, Antonio Villaraigosa. He's here in THE SITUATION ROOM.

And we will have more about why John McCain is touring the Florida Everglades right now. He's also taking heat for a vote he made against the Everglades. We will tell you how that happened and why.

Stay with us. Florida, it's an important state -- coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On our Political Ticker: Hillary Clinton's big confession.

As she prepares to admit defeat and endorse Barack Obama tomorrow, let's look back at some memorable clips from past concessions by presidential candidates.

(BEGIN VIDEO CLIP, NOVEMBER 11, 2004)

SEN. JOHN KERRY (D), MASSACHUSETTS: It was a privilege and a gift to spend two years traveling this country coming to know so many of you. I wish that I could just wrap you up in my arms and embrace each and every one of you individually all across this nation. I thank you from the bottom of my heart.

(END VIDEO CLIP)

BLITZER: Remember, for the latest political...

(BEGIN VIDEO CLIP, DECEMBER 12, 2000)

AL GORE, VICE PRESIDENT OF THE UNITED STATES: ... Tennessee and mend some fences, literally and figuratively.

Some have asked whether I have any regrets. And I do have one regret: that I didn't get the chance to stay and fight for the American people over the next four years.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, NOVEMBER 4, 1992)

GEORGE H.W. BUSH, PRESIDENT OF THE UNITED STATES: And we have fought the good fight, and we have kept the faith. And I believe I have upheld the honor of the presidency of the United States.

(CHEERING AND APPLAUSE)

G.H.W. BUSH: And now...

(CHEERING AND APPLAUSE)

G.H.W. BUSH: And now I ask that we stand behind our new president. And, regardless of our differences, all Americans share the same purpose, to make this, the world's greatest nation...

(END VIDEO CLIP)

BLITZER: All right.

Remember, for the latest political news any time, you can check out CNNPolitics.com. That's where you can download our new political screen-saver, where you can check out my latest blog post. Posted one just before the show, as I try to do every day.

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

JACK CAFFERTY, CNN ANCHOR: What did you write about today?

BLITZER: I wrote about the Hispanic, Latino vote. And I asked the question whether California, in this election, could be in play, given the fact there's a very popular Republican governor twice elected statewide working very hard for John McCain. And a lot of Hispanics, Latinos, love Hillary Clinton, are less sure about Barack Obama right now. Can McCain make inroads there? We're going to talk about it with Mayor Villaraigosa of L.A. That's coming up.

But I wrote about that, and want to get some comments from our viewers.

CAFFERTY: Sounds interesting to me.

I wrote about this: Should Barack Obama ask Bill Clinton to campaign for him?

Sharon writes from Canada: "You don't know what Bill would say. Obama would be distracted all the time, either worrying about what he said or correcting what he said. Jack, all somebody would have to ask him is whether he thought Hillary or Obama would make the best president. Bill's days are over as far as politics are concerned."

Kevin in Warren, Michigan: "After the past comments Bill Clinton had to say about Obama and his campaign, how could Obama even think of asking him? If Hillary ends up as his running mate, Bill campaigning is almost a guarantee. Billary is a package deal. If she is used for other party purposes, though, Obama should not even ask him." Terry writes: "Yes. If Bill Clinton were running for president, he would get my vote. Look what happened to Al Gore because he did not want President Clinton to campaign for him. He is a great politician and someone of great value."

Travis in Denver, Colorado: "No way. Bill Clinton has caused enough trouble for Hillary's campaign. Having either of the Clintons at Obama's side during this race is a recipe for disaster. Obama's whole message has been to set himself apart from Washington insiders. It wouldn't help to have a former president and first lady sharing the spotlight."

Joe writes, "Only if he wants to win."

Bodo in Ann Arbor says: "Bill's presence on the campaign trail would to the same damage to Obama as he did to his wife. But Obama could use him as a fund-raiser among Hillary's supporters."

Josh in Ontario, "Why wouldn't Obama want the first black president to help him on the campaign trail?"

And J.W. writes: "Bill Clinton could possibly do Obama some good in those states I call the new Mississippis, such as Kentucky, West Virginia, Pennsylvania, Tennessee, and perhaps Arkansas. Mr. Obama probably would not be well served by any of the William J. Clinton behaviors in the more normally enlightened states."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile. There are hundreds of them posted there. And you can while away the rest of your Friday afternoon and just have yourself a tidy time.

BLITZER: And a lot of people will, Jack. Thank you very much.