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McCain and Obama Clash Over Afghanistan; Guantanamo Bay Interrogation Video Released; House and Senate Vote to Override Presidential Veto

Aired July 15, 2008 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: And, to our viewers you're in THE SITUATION ROOM.
Happening now, war on the campaign trial, Barack Obama and John McCain clashing big time today over Iraq and Afghanistan, and they're warning that how you vote will impact the lives of American troops and efforts to keep all of us safe.

Also, the chance of Osama bin Laden being in the United States on trial for terrorism. Barack Obama tells our Larry King what he thinks of that possibility.

And he does have superior powers, but regarding something every American is struggling with, President Bush says he doesn't have a magic wand to help.

All that and the best political team on television.

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

A fight that's been brewing between the presidential candidates erupts big time today.

We want to welcome our viewers in the United States and around the world.

Barack Obama and John McCain unleashing very harsh words in their dueling speeches. Obama says, if you elect John McCain, U.S. troops will remain in Iraq. But McCain warns that a President Obama will mean a wartime commander in chief on a learning curve.

Let's begin our coverage with our senior political correspondent, Candy Crowley. She's watching the story for us.

Obama laid out his goals today. He says he can make America safer.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Absolutely.

And, Wolf, one of the things he says, and the reason he says that, is that he believes Iraq has all along been the wrong target.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): The Iraq war, says Barack Obama, distracts from every threat the U.S. faces.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: As should have been apparent to President Bush and Senator McCain, the central front in the war on terror is not Iraq. And it never was. And that's why the second goal of my new strategy will be taking the fight to al Qaeda in Afghanistan and Pakistan.

CROWLEY: Obama's foreign policy speech came as he prepares for an expected trip to the Middle East after a couple of weeks of criticism that he was wavering on his plan to withdraw troops, and as his new numbers suggest he needs to power up his foreign policy pitch.

An ABC/"Washington Post" poll found 72 percent of Americans think John McCain would be a good commander in chief for the military; 48 percent say that of Obama. And even though the vast majority of Americans are against the war, McCain has a marginal lead when respondents were asked who do they trust more to handle Iraq.

OBAMA: George Bush and John McCain don't have a strategy for success in Iraq. They have a strategy for staying in Iraq. They say we couldn't leave when violence was up. And they now say that we can't leave when violence is down.

CROWLEY: Continued reports that increased U.S. troop levels, decreased violence have given McCain a chance to pressure Obama for refusing to change his position on withdrawal. Obama concedes the surge successes, but focuses on broadening the discussion.

OBAMA: The greatest threat to the security lies in the tribal regions of Pakistan, where terrorists train and insurgents strike in Afghanistan. We cannot tolerate a terrorist sanctuary. And as president I will not.

CROWLEY: The message he hopes to send, Barack Obama is willing to use U.S. military muscle if the time and place are right.

(END VIDEOTAPE)

CROWLEY: And in addition to John McCain taking out after Obama's speech today, the president also got in a little hit for McCain, saying that he hopes when Obama goes to the region that he listens to commanders on the ground because the president said he understood that sometimes politics at home gets in the way of judgment -- Wolf.

BLITZER: This battle of words only just beginning.

Candy, thank you.

Apparently, John McCain listened to what Senator Obama had to say, because only moments later he responded and even mocked Obama. McCain then made one very bold vow.

Let's go to CNN's Dana Bash. She's working the story -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Wolf, John McCain was supposed to talk once again today about the economy, but aides scrambled to move up a speech about Afghanistan in order to offer a contrast to Obama's address today. They saw it as a chance to play on what McCain aides believe is their turf, foreign policy.

(BEGIN VIDEOTAPE)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: The situation in Iraq...

BASH (voice-over): Experience is his calling card, and on a day both candidates talked national security, John McCain laid this down as a basic test...

MCCAIN: I know how to win wars.

BASH: He offered proof: a new proposal for Afghanistan, where violence has spiked.

MCCAIN: And I will turn around the war in Afghanistan, just as we have turned around the war in Iraq, with a comprehensive strategy for victory.

BASH: McCain was an early supporter of the military surge in Iraq, which he repeatedly tells voters is working. He said he would apply those lessons to Afghanistan -- more troops and a better strategy for how to use them.

MCCAIN: ... a nationwide civil/military campaign that is focused on providing security for the population. Today, no such integrated plan exists. When I'm commander in chief, it will.

BASH: Specifically, McCain would send three more brigades to Afghanistan, call for a doubling of the Afghan army to 160,000 troops, and said a unified military commander must be in charge of all forces there. But this was as much about slamming Barack Obama's war plans as presenting his own. Obama wants to take troops out of Iraq and send them to Afghanistan.

MCCAIN: Senator Obama will tell you we can't win in Afghanistan without losing in Iraq. In fact, he has it exactly backwards. It is precisely the success of the surge in Iraq that shows us the way to succeed in Afghanistan.

BASH: He mocked Obama for outlining his plan for Afghanistan before ever visiting the country.

MCCAIN: Fact-finding missions usually work best the other way around. First, you assess the facts on the ground. Then you present a new strategy.

(END VIDEOTAPE)

BASH: Later, on his bus, McCain continued to hit Obama on his national security credentials. McCain reminded reporters that Obama is chairman of the Senate committee that oversees NATO, which has command in Afghanistan, but Obama has never held a hearing -- Wolf.

BLITZER: All right, Dana is watching the story.

By the way, we're going to be hearing a lot more from Senator Obama. We have excerpts of his interview that he conducted today with Larry King. That's coming up later this hour.

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

JACK CAFFERTY, CNN ANCHOR: President Bush says that Congress is the only thing standing between Americans and offshore drilling.

With gas averaging more than $4 a gallon, the president lifted an executive order yesterday banning offshore drilling, but it was pretty much an empty gesture, not unlike the rest of the Bush administration for the most part. Offshore drilling has been against the law since 1981, and it will require Congress repealing that law before any drilling can take place.

The president says Democrats should match his action to show that -- quote -- "They have finally heard the frustrations of the American people" -- unquote. Republicans in Congress are joining President Bush, laying the blame at the feet of the Democrats. Seven years without a coherent energy policy and suddenly $4 gas is the Democrats' fault. Can you tell it's an election year?

The Democrats are pushing back. House Speaker Nancy Pelosi says expanding offshore drilling would do little to lower gas prices in the near future. She says President Bush should release oil from the Strategic Petroleum Reserve. And that's a move that he has resisted.

It's not just Democrats who are against offshore drilling. California Republican Governor Arnold Schwarzenegger says it's not the answer and instead we should work toward alternative energy sources.

The whole debate is pretty silly when you think about it. The oil companies currently have 68 million acres under offshore lease that are not being developed, not one well-being drilled. And the U.S. has a shortage of refinery capacity. So, even if we started drilling for more oil, there would be an issue of just where we would take it to turn it into gasoline.

Here's the question: Should Congress go along with President Bush's call to lift the ban on offshore drilling?

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

BLITZER: See you in a few moment, Jack. Thank you.

A sobbing 16-year-old facing his interrogators at Guantanamo Bay. This Canadian was captured in Afghanistan. The tape is the first of its kind to be made public. We will share it with you.

A powerful congressman violates New York State rules by putting his campaign office in a rent-stabilized apartment. So, what is Charlie Rangel planning to do about it? We have new details.

And it's a drive-through back, but not for everyone. Astonishing, astonishing video of a very close call in Texas.

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

(COMMERCIAL BREAK)

BLITZER: A just released videotape offers the first look at an interrogation inside the U.S. prison camp at Guantanamo Bay in Cuba. The suspect at the time, a sobbing teenager from Canada captured in Afghanistan.

Our justice correspondent, Kelli Arena, has the story -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Wolf, as you know, we have never seen a tape like this before. And after hearing about harsh interrogation techniques, waterboarding, no one knew exactly what to expect.

(BEGIN VIDEOTAPE)

ARENA (voice-over): It's not what you would expect, a 16-year- old boy thousands of miles from home obviously upset at times.

UNIDENTIFIED MALE: You know, I'm not a doctor, but I think you're getting good medical care.

OMAR KHADR, DETAINEE: No, I'm not. You're not here.

ARENA: The U.S. government says Omar Khadr killed a U.S. serviceman during a firefight in Afghanistan. He was 15 at the time, a Canadian citizen. Now he's being held as a terrorist.

DENNIS EDNEY, ATTORNEY FOR OMAR KHADR: This kid needs to come home. This kid is not a terrorist.

ARENA: The tape of his interrogation at the U.S. detention facility at Guantanamo Bay is the first of its kind to be made public.

KHADR: You don't care about me. That's what.

UNIDENTIFIED MALE: Well, I do care about you, but I want to talk to the honest Omar that I was talking to yesterday.

ARENA: The video was released by his lawyers following a Canadian court order.

On the tape, Khadr is being questioned by Canadian intelligence officers. But there's no harsh interrogation on the tape. The 16- year-old is crying uncontrollably and says he was tortured in Afghanistan.

CHARLES STIMSON, FORMER ASST. DEFENSE SECRETARY: The civil libertarians will wring their hands and say how horrible. You made this little boy cry. Folks on the other side will say, look at that. They're offering him a hamburger. They're not mistreating him at all.

ARENA: His lawyers are hoping the tape will put political pressure on the Canadian government to demand Khadr be sent home.

UNIDENTIFIED MALE: It's time for Canada to act like every other Western nation in the world and demand the repatriation of its citizen.

ARENA: The Canadian Foreign Affairs Office said, "Discussions regarding his repatriation are premature and speculative."

And the Pentagon says Khadr should be held accountable for his actions.

(END VIDEOTAPE)

ARENA: Now 21 years old, Khadr is expected to go before a military commission in October -- Wolf.

BLITZER: Kelli is watching the story for us, first video of its kind released.

Americans seeking to dodge the Vietnam War have found a haven in Canada. Many began new lives there. But, now, right now, times have changed.

Brian Todd is working the story for us.

Brian, it's a different situation for what we're calling the Iraq war generation.

BRIAN TODD, CNN CORRESPONDENT: It certainly is, Wolf.

This one case of an American deserter being handed over turning this theory on its ear, the idea that Canada is an unqualified haven for American deserters.

(BEGIN VIDEOTAPE)

TODD (voice-over): It's the kind of history Robin Long probably wishes he wasn't making. He's is believed to be the first American deserter during the Iraq war handed back to the U.S. military by the Canadian government. During the Vietnam War, Canada was a haven for U.S. draft-dodgers and deserters. In this case, a Canadian judge ruled that Long didn't adequately prove he would suffer irreparable harm if he returned to the United States.

The leader of a Canadian war resistors group that had supported Long is frustrated.

UNIDENTIFIED MALE: I don't think there's any doubt that someone who has been up in Canada and a vocal opponent of the war will be treated harshly by the American military.

TODD: Long, who had trained as a tank commander, took off from Fort Carson, Colorado, to avoid serving in Iraq. Even though he had volunteered for the Army, his attorney told the court that Long became disillusioned over the mistreatment of Iraqi detainees and by the fact that no weapons of mass destruction had been found. In nearly three years in Canada, he fathered a child, was turned down for refugee status last year, and was arrested recently for not checking in as required with border officials. Commanders at Fort Carson will now decide his fate. They can court-martial him, give him a less-than-honorable discharge, or even reassign him.

A former military lawyer who has defended and prosecuted deserters says the first option is the most likely.

UNIDENTIFIED MALE: I do believe that he is going to be most likely court-martialed in this instance. The fact that he has been vocal, not to say that they would infringe on his First Amendment right to state his case or his objections, but rather his stated reason for leaving, to avoid service in Iraq, is going to be sort of the threshold issue for the legal authorities.

(END VIDEOTAPE)

TODD: But experts say U.S. military officials may also be thinking about deterrence here, sending a signal to others thinking of deserting that prison time could await them, and Canada may not be so receptive to harboring them in the future. If he's court-martialed and convicted, robin Long could get up to five years in prison -- Wolf.

BLITZER: Do we have any idea how many deserters are in Canada?

TODD: The leader of this war resistance group in Canada who we talked to today about this says that there are about 50 who they know of. But they say there are hundreds more they think who are living underground in Canada. You can believe this case is probably going to keep them underground.

BLITZER: I believe it. Brian, thank you.

So what would Barack Obama do if he got hold of Osama bin Laden? We are going to show you what the Democratic candidate told our Larry King just a little while ago.

Also, check out these wheels. We're going to tell you who in charge of this of this new -- who is in charge of this new political bus. It's not who you might think.

And if you don't like beer, you probably remember some of those classic Budweiser commercials. On the eve of its sale to a company from Belgium, CNN's Jeanne Moos has a "Moost Unusual" look.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Did the Obama campaign actually scrub its Web site of criticism of the military surge in Iraq?

Let's go to our Internet reporter, Abbi Tatton. She is working the story. What is missing, if anything, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, this is the Barack Obama campaign's page on Iraq. And here's what it looked like before the weekend, the problem, the surge. Now if you look at it, the problem, inadequate security and political progress in Iraq.

This was pointed out by "The New York Daily News," who noted that some of the older language on Iraq is now gone from the Web site, including this fact sheet that stated the surge is not working. That's no longer there.

This comes as Senator McCain is accusing Obama of dramatic shifts in his position on the situation in Iraq. The Obama campaign says, though, this is just part of them frequently updating their Web site. A spokesman said, Senator Obama has always stated the surge would reduce violence, but criticizes it for not leading to political progress. According to the spokesman, this new language reflects that -- Wolf.

BLITZER: Abbi is watching the story, as she does every day.

You could think it's too provocative, even by today's political standards, a billboard stirring up the painful memories of 9/11 and warning voters not to vote for Democrats. We will share it with you.

President Bush essentially says he doesn't have tricks up his sleeve when it comes to helping you cope with one thing.

And after a magazine cover draws Barack Obama and his wife using some very negative mischaracterizations, Senator Obama is now telling our own Larry King what he thinks of that cover.

(BEGIN VIDEO CLIP, "LARRY KING LIVE")

OBAMA: I know it was "The New Yorker"'s attempt at satire. I don't thing they were entirely successful with it.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: This is CNN breaking news.

BLITZER: A major setback for President Bush at the White House.

Let's go right to Capitol Hill. Kathleen Koch is working a story.

It doesn't happen every day, Kathleen.

KATHLEEN KOCH, CNN CORRESPONDENT: No, it does not, Wolf.

And the U.S. Senate and the House today both voting by significant margins to override a presidential veto. Now, this was a bill that would have slashed payments to doctors who treat Medicare patients by some 10.6 percent. This is something that kicks in on an annual basis, the cost-saving measure. It's automatic. And Congress usually swoops in, blocks the cut.

But, this year, they were going to pay for filling in the gap of those cuts by trimming a Medicare program that has greater benefits that's administered by private insurance companies. The president did not like that. He said it would reduce access, benefits, choices for all beneficiaries. He said taking choices away from seniors is wrong, but lawmakers were under a lot of pressure, Wolf, by doctors, by elderly.

Doctors said, hey, we may not be able to treat Medicare patients any longer if these cuts go into effect, so a major defeat for the president, only the third time that Congress has overridden one of his vetoes.

BLITZER: Republicans and Democrats teaming up -- another embarrassment for President Bush.

Kathleen, thanks very much.

KOCH: You bet.

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

Happening now, Barack Obama talking to CNN's Larry King about the death penalty for Osama bin Laden and that controversial "New Yorker" magazine cover.

Also, President Bush, soaring gas prices, and a magic wand -- is he forced to paint a positive picture of the economy?

All of this, plus the best political team on television.

And you're going to find out which group is making Michelle Obama an honorary member right now.

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

Dead or alive, that's how Osama bin Laden should be captured, says the Democratic presidential candidate. Senator Barack Obama talked about the world's most wanted terrorist with CNN's Larry King.

(BEGIN VIDEO CLIP, "LARRY KING LIVE")

LARRY KING, HOST, "LARRY KING LIVE": Would you go into Pakistan, militarily, to get him?

OBAMA: As I said before, I would use -- if I had actionable intelligence, we would go after bin Laden.

KING: And bring him back here, if possible?

OBAMA: Well, I think that, you know, we want to capture him or kill him. And, as I have said -- as I just said this past weekend, if we captured him, then we would want to put him on trial. And I think he would be deserving of the death penalty.

(END VIDEO CLIP)

BLITZER: Meanwhile, the real Barack Obama is responding to the cartoon of Senator Obama and his wife featured on a magazine cover. Now that "The New Yorker Magazine" has caused a controversy, Senator Obama tells Larry King just what he thinks of it.

(BEGIN VIDEO CLIP, "LARRY KING LIVE")

OBAMA: I know it was "The New Yorker"'s attempt at satire. I don't think they were entirely successful with it. But you know what? It's a cartoon, Larry. And that's why we've got the First Amendment. And I think the American people are probably spending a little more time worrying about what's happening with the banking system and the housing market, what's happening in Iraq and Afghanistan than a cartoon. So I haven't spent a lot of time thinking about it.

KING: But didn't it personally sting you?

OBAMA: No. You know, we've -- one of the things when you're running for president for almost two years is you get a pretty thick skin. And, you know, I've seen and heard worse. I do think that, you know, in attempting to satirize something, they probably fueled some misconceptions about me instead. But, you know, that was their editorial judgment. And, as I said, ultimately, it's a cartoon. It's not where the American people are spending a lot of their time thinking about.

(END VIDEO CLIP)

BLITZER: You can see, by the way, the full interview with Senator Obama tonight on LARRY KING LIVE. That airs at 9:00 p.m. Eastern.

Barack Obama and John McCain in their biggest clash yet over the wars in Iraq and Afghanistan. And it all happened today.

Joining us now to talk about this and more, our senior political analyst, Gloria Borger; our own Jack Cafferty; and Stephen Hayes. He's a senior writer for "The Weekly Standard" magazine.

Guys, thanks very much.

Jack, on this issue of who would be the better commander-in- chief, according today's ABC News/"Washington Post" poll -- would John McCain be a good commander-in-chief? Seventy-two percent said yes.

Would Barack Obama be a good commander-in-chief? Forty-eight percent said yes.

He seems to have an advantage on this one area, although a disadvantage on a lot of other areas.

CAFFERTY: Well, he's had an advantage there from the get go based, in large part, on his military background and his time as a POW and a fighter pilot in the Navy and all of those things. His military credentials exceed Barack Obama's.

That being said, remember that phrase, it's the economy stupid?

This election will be decided on the economy, I'm almost sure. And while the discussions of Afghanistan and Iraq are interesting and we can look back and look forward and debate what's going to happen next, the economy is collapsing around our ears. And that's the issue that will determine the outcome in November.

BLITZER: Steve, what do you think?

STEPHEN HAYES, SENIOR WRITER AT "THE WEEKLY STANDARD": Well, I think it's a combination. I don't think voters make their decision based on, you know, one issue or another issue. It's a combination of a variety of issues.

And McCain needs to campaign on national security -- on his national security credentials. It's been interesting to watch some McCain supporters say over the past couple of weeks that they've been disturbed that John McCain hasn't spent more time talking about national security in the six weeks since the general election started.

BLITZER: But, Gloria, I think Jack makes the point, issue No. 1, after all, is issue No. 1, which is the deteriorating state of our economy.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes. And I think it is a combination. But when you look at Barack Obama's number of 48 percent as commander-in-chief -- I was talking to some Democrats today and they said to me general election, for a Democrat, that's not bad. We'll take 48 percent, because it's kind of a threshold for Democrats. Most of them are used to sort of rating lower on the commander-in- chief issue.

If you combine that with the economy, Obama sort of passes that threshold. He does better on who's able to handle the economy. That's not a bad combination.

BLITZER: So, Jack, when Senator Obama delivers a major speech today on Iraq and Afghanistan, he's going to continue tomorrow and then he's off to the Middle East -- to Iraq, Afghanistan, Israel. He'll be in Europe.

Is he sort of playing into exactly what John McCain wants him to do?

CAFFERTY: Oh, I don't know. And I'm quite sure Barack Obama is not conducting his campaign based on what John McCain wants him to do.

Is it a good idea for him to go to the Middle East, to visit Iraq and Afghanistan? Sure.

Can he find out what's going on there without being present in those countries? Yes.

Is it a good idea to visit the nations of Europe and start to re- establish contact with some of our allies?

Of course. And as Gloria mentioned, he's a little short on the credentials that have to do with foreign policy and national security. But what he's doing is being dictated by the people who are running one of the smarter presidential campaigns I can remember, not by John McCain.

BORGER: Well, this is a very high stakes trip, though. I mean, honestly, this is going to be the first glimpse that a lot of Americans get of Barack Obama as that commander-in-chief. And so I think they're kind of raising the stakes here, as we're going to all watch this trip very, very closely.

BLITZER: Does he face a pitfall, Steve?

HAYES: Yes. You know, Wolf, I think one of the interesting things -- it's a line that the McCain camp used today and I think used quite effectively -- why is he unveiling his policies and talking about what he's going to do before he goes and actually consults with the people who would be responsible for shaping those policies, ideally?

And I think the McCain campaign may have hit on something here when they say, look, you should at least listen...

BORGER: But...

BLITZER: All right...

HAYES: ...to the people who are going to be determining how we're going to fight the war.

BORGER: But do you know why he's doing that?

He's doing that because it can't look like he's going to Iraq and it's the education of Barack Obama, someone who is naive on foreign policy.

CAFFERTY: Yes.

BORGER: I think he had no choice but to lay it out before he went to Iraq.

HAYES: Yes, but...

CAFFERTY: But the other thing is, it's kind of naive to pretend that unless you're in Iraq or Afghanistan, you're ignorant about the war. I mean that's nonsense. We have reports that come in all the time. He's a member of the United States Senate. He gets briefings anytime he wants. He can pick up the phone and talk to any member of the Joint Chiefs of Staff or anybody at the Pentagon. Chuck Hagel is going on the trip with him.

This idea you can't -- you don't know who Mickey Mouse is unless you're in Disney World is baloney.

BLITZER: All right...

(CROSSTALK)

HAYES: I'm not sure...

(CROSSTALK)

BLITZER: Hold on.

HAYES: Wait, wait. I'm not sure who made that argument, but it certainly wasn't me. The one thing the McCain campaign will tell you...

CAFFERTY: No, no but that's the -- that's the implication that John McCain makes...

HAYES: No. No. No, that's not.

CAFFERTY: ...when he talks about...

HAYES: That's not. The one thing that they will tell you.

CAFFERTY: ...Obama going to these countries.

HAYES: No, it's not. What they will say is...

CAFFERTY: Yes, it is.

HAYES: ...John McCain went to Iraq in 2003. And it was on a trip to Iraq in the fall of 2003 when John McCain first started having serious concerns about the way that Don Rumsfeld was running the war. It was when he first started considering proposing alternatives to the kind of war that the Pentagon was running at the time. And, of course, it turns out, in retrospect, that John McCain was right, we did need more troops...

BLITZER: All right...

BORGER: Well, and that...

(CROSSTALK)

BLITZER: Stand by.

Gloria, hold on.

(CROSSTALK)

BLITZER: Everybody, hold on.

BORGER: Obama has...

CAFFERTY: ...how safe the Baghdad marketplace was.

BORGER: And that's why Obama has to meet with Petraeus. BLITZER: All right. Hold on, guys, because we have to take a quick break. We're under a lot of pressure. But we'll continue this. Don't go away. We've got a lot more to talk about, including President Bush and the price of gas and a magic wand.

Can he tell Americans what they need to hear?

And new developments -- a powerful Congressman takes action after being caught up in a rent control controversy.

Stick around. Much more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I think it was in the Rose Garden where I issued this brilliant statement -- if I had a magic wand. But the president doesn't have a magic wand. You can't just say low gas. It took us a while to get here and we need to have a good strategy to get out of it.

(END VIDEO CLIP)

BLITZER: Let's go right back to Jack Cafferty.

And, Jack, the president, in his news conference that you watched today, he's got to be relatively upbeat, because if he starts to say things are really, really bad, you know the panic out there that's going to ensue.

CAFFERTY: Well, I love the statement, "it took us a while to get here." He's been in charge of getting here for seven -and-a-half years. He's been the commander-in-chief. He's been the guy without a coherent energy policy. He's the president of the United States. And three months ago he said he never heard about $4 gas. The man is an embarrassment.

BLITZER: You know, on that point, Steve, I want you to weigh in.

But listen to what the president today said when he was asked about $4 a gallon gas.

(BEGIN VIDEO CLIP)

QUESTION: Mr. President, in February, you were asked about Americans facing the prospect of $4 a gallon gasoline and you said you hadn't heard of that at the time. Gas prices...

BUSH: Where are they now?

QUESTION: Gas prices are now approaching $5 a gallon in some parts of the country. Offshore oil exploration is obviously a long- term approach.

What is the short-term advice for Americans?

What can you do now to help out?

(END VIDEO CLIP)

BLITZER: He may be a lame duck, Steve, but he still has an incredible amount of influence out there and he's got to project confidence, right?

HAYES: Yes, I think the question you posed to Jack is exactly the right one.

When I've interviewed the president, several times he's talked about speaking to multiple audiences. So he'll sometimes do a press conference like this and he'll be -- you know, ostensibly he's talking to the American people. But he's also talking to the global financial markets, to people -- he's also talking to foreign leaders. You know, I do think he has to project some sort of confidence in the economy...

BORGER: But he's to talk to Main Street, as well. He has to know the cost of a gallon of gasoline, just like his father needed to know the cost of a gallon of milk. Remember the trouble that his father got into. Now, I might add, that those are almost the same right now.

And I think it's been an issue for him, this notion, stemming from Hurricane Katrina, when people felt that he was out of touch with what Americans were feeling.

So he can talk to Wall Street and reassure the markets, but he's also got to talk to Americans out there who are waiting in line at a bank to get their money out.

HAYES: Yes...

CAFFERTY: (INAUDIBLE).

HAYES: I agree with that. I mean I think he has to do both. He has to be mindful of talking to both. But in the current situation, given the kinds of things that we've seen, especially over the past week, I think his first audience has to be Wall Street. He has to be spending time reassuring the financial markets so that we don't see sort of scares that we've seen in the past week.

BLITZER: Do you remember a time recent -- in recent memory -- I mean, I don't want to go back to the Depression, Jack -- but where people have -- we've seen lines of people waiting up at failed banks for -- nervous customers trying to get their money out and then you see these institutions like G.M. and these mortgage lenders like Fannie Mae and Freddie Mac, and you hear all about other banks, maybe dozens of them around the country, in serious financial difficulty right now.

CAFFERTY: Right. It's almost like an economic perfect storm has finally come home to roost four months before the election. The trade deals that drove jobs offshore, the lack of regulation concerning home mortgage loans and the kinds of predatory lending that were allowed to take place, the appetite for debt, whether people could afford it or not, individuals and the government -- all of these things have been building in the system for a good long while. And all of a sudden, the results are beginning to show up everywhere. And it's scary.

BORGER: You know, the only area, really, in which the president and John McCain may have the Democrats back on their heels a bit is the notion of offshore drilling and energy. Because while energy has not been their strong suit, energy policy has not been enacted, this idea of offshore drilling is now very popular with the American public. And the Democrats are on the other side of that issue.

BLITZER: Although I'm not sure it's popular with people in Florida and California, necessarily.

BORGER: You know what, it is not. But if you can drill 100 miles offshore, nobody is going to see it, as a Democrat said to me today. So there may be room for some compromise here where you come up with some kind of comprehensive energy policy and you get to do a little bit of everything to at least let the public think you're getting something done.

BLITZER: All right. Good discussion, guys.

Gloria, thank you.

Stephen, thanks to you, as well.

Jack, don't leave.

Lou Dobbs is getting ready for his show that begins right at the top of the hour. He's got a lot of news coming up there.

Give us a little preview -- Lou.

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Wolf, thank you.

We're reporting tonight on the president's surprising advice to middle class Americans concerned about our worsening economy. President Bush today said take a deep breath. President Bush again demonstrating a somewhat of a lack of leadership in Washington from both political parties on the issue of the economy. We'll have a full report.

And compelling new evidence tonight that the so-called Department of Labor is really the Department of Cheap Labor. The Bush administration under some criticism for utterly failing to enforce laws to protect working men and women in this country.

And we'll be reporting on a very important issue the presidential candidates are simply ignoring as they pander to the illegal alien amnesty lobby -- the surge in drug cartel violence in this country -- violence that has spread from Mexico to nearly 200 cities in this country.

Join us for that at 7:00 Eastern here on CNN, with all the day's news with an Independent perspective -- Wolf, back to you. BLITZER: See you in a few moments, Lou. Thank you.

Billboard outrage -- who's behind the sign that has both Democrats and Republicans crying foul?

Plus, why a beer buyout doesn't necessarily mean you'll have to kiss your Bud goodbye.

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

(COMMERCIAL BREAK)

BLITZER: Let's go right back to Carol. She's monitoring some other important stories incoming into THE SITUATION ROOM right now.

What's the latest, Carol?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, YouTube is promising to protect the identities of users when it hands over information. It's part of a lawsuit over copyright infringement. Viacom filed a $1 billion suit alleging that YouTube willfully allowed violations of copyright laws. A court is requiring YouTube to provide viewership records. Now, the company says it will hide users' I.P. Addresses -- Internet addresses and other information before following that court order.

Lots of controversy over this billboard near Orlando, Florida. It shows the burning World Trade Center on 9/11 and the message, "please don't vote for a Democrat." A businessman who lives in the area paid for it, but even the local Republican Party calls it "inappropriate," while the local Democratic Party chair say it's blatant exploitation.

And congratulations to the entire SITUATION ROOM staff. We have been nominated for an Emmy Award for our extended breaking news coverage of the assassination of the former Pakistani prime minister, Benazir Bhutto. This is our very first Emmy nomination. And, of course, we hope it's the first of many. And, of course, we hope we win -- back to you, Wolf.

BLITZER: We'll know September 22nd. In August, it'll be our third anniversary in THE SITUATION ROOM, our first nomination for an Emmy in THE SITUATION ROOM, although last year we did win an Emmy for our political coverage of the elections the year before.

So let's hope we win. That would be nice, right?

COSTELLO: Oh, go SITUATION ROOM.

BLITZER: We did an excellent job, I must say, covering the assassination of Benazir Bhutto.

COSTELLO: A sad story.

BLITZER: It was a sad story, but an important one.

COSTELLO: It sure was. BLITZER: Let's get right back to Jack. He's got "The Cafferty File."

He's part of our SITUATION ROOM team, as well, as is Carol. All of us should be proud.

CAFFERTY: And don't forget we're humble, too.

BLITZER: Not necessarily -- not so humble.

CAFFERTY: Not so humble.

BLITZER: Not so humble.

CAFFERTY: OK.

The question is this: Should Congress go along with President Bush's call to lift the ban on offshore oil drilling?

Allen in Georgia says: "All this will do is feed the pig. After offshore drilling, the oil companies will be after unregulated mining of the shale oil fields. We need to go on a low oil diet. If we Americans didn't waste so much fuel, we wouldn't be in this poor shape. We could tell the oil companies where to put all that oil that we no longer need."

Amanda writes: "If Bush, McCain and the majority of Republicans are in favor of this, it cannot be a good idea."

Tom in Las Vegas: "I don't oppose offshore drilling or even expanding drilling in Alaska. But I do believe the issue has no bearing on energy prices right now or even in the near future. The real problem isn't the availability of areas in which to drill, it's with the inability to motivate oil companies to spend additional money to look for oil. Why spend money to develop new sources when the current system is raking in record profits?"

Jim writes: "Of course, we should be drilling for new oil. Why is this such a big issue? Even if there were another solution to America's energy crisis today, it could take a decade or more to make the transition. Drilling now will, of course, not have an immediate effect on prices at the pump. But there's a more important issue at hand -- America's dependence on foreign oil. We ought to be doing anything we can to at least try to become energy independent."

Shirley in Ohio says: "Only if there's going to be relief at the gas pump the day after they start drilling."

And Tony says: "No. I put a windmill on top of my car and now it takes me about four hours to get to work. I live two miles away. The other day, I stuffed a bushel of corn in my gas tank. That worked out pretty well. And tomorrow I plan to look into other alternative fuels and will report back to let you know how that's going. Let the oil stay in the ground. Let the environmental lobbyists keep paying off those in Congress. They need more money to pay for their airplanes and limousines." If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile and look for yours there among hundreds of others -- Wolf.

BLITZER: And an excellent blog it is.

See you tomorrow, Jack.

CAFFERTY: All right, sir.

BLITZER: Thank you.

In our Political Ticker today, Charlie Rangel says he'll move his campaign office from a rent stabilized apartment in Harlem. This after a newspaper report exposed the congressman's low rent deal on that and three other apartments he uses for his family housing. It's against New York State and city rules to use rent stabilized apartments for an office and not as a primary residence.

Howard Dean now wants to talk to you. He'll be saying all aboard the bus when he heads down South to register voters. The Democratic National Committee chairman hopes the bus tour will persuade more Southerners to vote Democratic. And Dean has picked an interesting place to start on Thursday -- President Bush's hometown of Crawford, Texas.

Barack Obama's wife has reportedly accepted an honor. "The Washington Post" reports she's now an honorary member of the Alpha Kappa Alpha sorority. That's the oldest African-American sorority in the country. Thousands of these women are now gathered here in Washington to celebrate the group's 100-year anniversary. We've been seeing them in town over the past few days. Congratulations to Alpha Kappa Alpha.

Remember, for the latest political news any time, check out CNNPolitics.com. The Ticker is now the number one political news blog out there on the Web.

Jeanne Moos she learns to say "this Bud's for you in Flemish." Her look back at classic Budweiser ads. That's coming up.

And a telling expression -- how did the Fed chief, Ben Bernanke, look only moments before he delivered a speech that sent oil markets into a tailspin?

We're going to show you in today's Hot Shots.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of today's Hot Shots.

At the White House, President Bush takes questions from reporters in the briefing room.

On Capitol Hill, the Federal Reserve chairman, Ben Bernanke, waits to give his testimony before the Senate Banking Committee.

Also in Washington, Senator Barack Obama shakes hands with Lee Hamilton before delivering his speech on Iraq.

And in New Mexico, Senator John McCain makes a campaign stop at a coffee shop.

Some of this hour's Hot Shots.

You don't have to be a beer drinker to be a little sad about the sale of the company that brews American icon Budweiser.

Jeanne Moos goes on a "Moost Unusual" mission to find out who's crying into her beer.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Even if you don't actually drink Bud, it's impossible to nip all those slogans in the Bud-weiser.

UNIDENTIFIED MALE: When you say Bud, you've said it all.

MOOS: From this Bud's for you to...

UNIDENTIFIED FEMALE: Budweiser beer, the king is second to none.

MOOS: The king of beers is the nectar of presidential candidates trying to communicate with the average Joe six pack. But prepare to drown your sorrows in a vat of Bud.

(on camera): You know who's buying Budweiser?

Belgium -- a Belgian company.

UNIDENTIFIED MALE: A Belgian company out of Germany, right?

MOOS: Well, out of Belgium.

(voice-over): Noontime customers at Rudy's Bar near Times Square weren't exactly crying in their beer. But others were, with "Boycott Budweiser" T-shirts and a YouTube video.

Stephen Colbert went on a binge of false outrage against Belgium.

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": Well, as soon as I heard it, I started drinking nonstop before those waffle humpers change the formula.

MOOS: Actually, the formula isn't changing. Its plants in the U.S. will still manufacture Bud. But that hasn't stopped the reminiscing.

UNIDENTIFIED MALE: Well, I've watched every Bud bowl.

UNIDENTIFIED MALE: He takes it on the 10 and laterals across the field.

UNIDENTIFIED MALE: I drank Budweiser through the Clydesdale horses.

UNIDENTIFIED FEMALE: Budweiser beer is the one that's leading the rest.

UNIDENTIFIED MALE: The frogs.

UNIDENTIFIED MALE: Green buddies, I've got some bad news.

UNIDENTIFIED MALE: Bud.

MOOS: It was bad news to song writer Phil McClary, who wrote "Kiss Our Glass" and directed it at the Belgian company InBev.

UNIDENTIFIED MALE: Kiss our red, white and blue glass.

MOOS: But back at Rudy's Bar, only one guy seemed wistful.

UNIDENTIFIED MALE: To me, like Budweiser is like Ford Motor Company.

UNIDENTIFIED MALE: I'll drink Belgian Bud and I'll drink American Bud. It doesn't make (EXPLETIVE DELETED) to me. What matters to me is the price when I get to this stand right here. This is the pig stand. This is the hog trough.

MOOS: And one e-mailer treated Bud like hogwash, saying: "The Belgians can only improve the stuff. It can't get any worser than it already is. Worser?

COLBERT: This is American beer.

MOOS: So everyone kept writing headlines joking about the European Union.

UNIDENTIFIED MALE: This Bud's for you. There we go.

MOOS: Or as they say in Belgium...

(on camera): This Bud's for you in Flemish.

(voice-over): If only a presidential candidate casts a veto.

MCCAIN: I will veto every single beer -- bill.

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: Thursday in THE SITUATION ROOM, the House speaker, Nancy Pelosi.

That's it for me.

Let's go to Lou in New York -- Lou.