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Pakistani President Pervez Musharraf Resigns; Obama Turns up Heat on McCain; Tropical Storm Fay Landfall Over Key West

Aired August 18, 2008 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, new uncertainty in the war on terror. Pakistan's U.S.-backed president Pervez Musharraf resigns. His exit could trigger a power struggle.
Also, one week from today until the Democratic convention. Barack Obama and John McCain, they're sharpening their attacks on one another right now. Could that hurt Obama before his big day in November?

And Tropical Storm Fay bearing down on Key West. It's expected to hit the Florida coast with hurricane strength. We're tracking the storm and the danger.

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

Pervez Musharraf says he stepped down as the Pakistani president to spare his country more confrontation and economic upheaval, and he was also threatened with impeachment. Musharraf called it quits today after nine years of power. The Bush administration is now promising to work with Pakistan's new leadership to strengthen its democracy and to fight terror.

CNN's Reza Sayah is in Pakistan -- Reza.

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Wolf, an historic day in Pakistan. President Pervez Musharraf, a long-time ally of Washington and the U.S.-led war on terror, announcing his resignation. An announcement that drew cheers throughout Pakistan.

(BEGIN VIDEOTAPE)

SAYAH (voice over): Celebration and sweets in the streets of Islamabad...

UNIDENTIFIED MALE: You will see that 99 percent of the people are happy.

SAYAH: ... moments after President Pervez Musharraf told the nation he was stepping down.

PERVEZ MUSHARRAF, FMR. PRESIDENT OF PAKISTAN (through translator): Now I have decided that I would resign from the post of president.

SAYAH: For the first 45 minutes of his televised speech, the embattled president kept the nation in suspense, defending his administration, questioning why Pakistan's young civilian government wanted to impeach him.

MUSHARRAF (through translator): ... why they are scared of me.

SAYAH: Ultimately, analysts say, Musharraf had no choice. Odds of fighting an impeachment vote and winning not in his favor.

While Pakistanis celebrated, a farewell ceremony at the president's house. Musharraf presented with the honor guard and salutes from military colleagues. Not the way he wanted to go out, say analysts.

TALAT MASOOD, POLITICAL ANALYST: He must be so disturbed that he told that he had done such a great job.

SAYAH: The farewell marks the end of more than eight years of military rule under Musharraf.

In 1999, Pakistan welcomed him with opened arms, Washington called him a crucial ally in the U.S.-led war on terror. But years passed in Pakistan without Democratic elections. Musharraf also broke promises to step down as army chief. His popularity plummeted when he twice sacked Pakistan's chief justice.

Pakistanis passed out sweets when he came the power. On Monday, they passed out sweets when he lost it.

UNIDENTIFIED MALE: This thing we must resolve to make sure that the general does not make a political comeback.

(END VIDEOTAPE)

SAYAH: All eyes now on Pakistan's coalition partners. They were successful in pressuring President Pervez Musharraf to resign, but will they grant him safe package? Will they allow him to remain in Pakistan? Meetings already under way to make those decisions -- Wolf.

BLITZER: Thank you.

Pervez Musharraf held power for almost a decade. In October of 1998, he was appointed army chief by the then-prime minister, Nawaz Sharif. A year later, Musharraf ousted Sharif in a coup.

In June of 2001, Musharraf made himself president, keeping his army job. Right after the 9/11 attacks, he pledged support for the United States, abandoning the Taliban.

Last October, parliament re-elected Musharraf over opposition protests. In November, he gave up his army post, becoming a civilian president. This month, ruling coalition leaders said they would seek Musharraf's impeachment. Today he stepped down.

Later we'll speak with Hussain Haqqani, the Pakistani ambassador to the United States.

But let's get to the presidential race right now. Today marks exactly one week before the kickoff of the Democratic convention. Barack Obama is back on the campaign trail after his Hawaiian vacation. He's trying to turn the heat up right now on Senator John McCain. In the battleground state of New Mexico, Obama focused in on the economy and McCain's response to a question at a faith forum over the weekend.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Rick Warren asked him, "How do you define rich?" He said -- now, maybe he was joking -- he said, "Five million dollars," which I guess if you're making $3 million a year, you're middle class. But that's reflected in his policies, where, you know, for people who are making more than $2.5 million, he's giving folks a $500,000 tax break.

(END VIDEO CLIP)

BLITZER: Senator McCain also on the offensive today. Speaking to the Veterans of Foreign Wars in Florida, McCain took a sharp new swing at Obama's position as far as the war in Iraq is concerned.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Not content to merely predict failure in Iraq, my opponent tried to legislate failure. This was back when supporting America's efforts in Iraq entailed serious political risk. It was a clarifying moment. It was a moment when political self-interests and the national interests parted ways.

(END VIDEO CLIP)

BLITZER: And Senator Obama speaking right now live in Albuquerque, New Mexico. That's a battleground state.

Let's listen in briefly to hear what he's saying.

(JOINED IN PROGRESS)

OBAMA: When we restore that sense of trust, then we can finally have an economy that works for all Americans from the bottom up. And we can make sure that we are creating good jobs, investing in our infrastructure, following the lead of people like Governor Richardson, and investing in solar and wind and biodiesel, clean energies that can put Americans back to work, jobs that won't be exported overseas.

(APPLAUSE)

We can raise the minimum wage to keep up with inflation so that people who work can actually look after their families. We can stop giving tax breaks to companies that ship jobs overseas and save those tax breaks for companies that are investing right here in Albuquerque, right here in New Mexico.

(APPLAUSE) We can stop pedaling slogans like "No Child Left Behind" and actually start funding early childhood education, and paying our teachers more money and giving them more support. And investing in our young people by saying, if you graduate from college -- if you graduate from high school, we will make sure that college is affordable for you. You're going to have to put some time in community service, joining the Peace Corps or work in an underserved school, or working in an underserved hospital, but we are going to make sure that you can get a college education. That's a guarantee we can make for every young person in America.

BLITZER: All right. We're going to break away from Senator Obama, but we'll monitor what he's saying in Albuquerque, New Mexico.

Earlier, at another event, he said flatly, "Republicans can run a negative campaign, but they just can't govern."

Let's bring in our senior political correspondent, Candy Crowley. She's been covering this campaign for us.

Are we seeing today, Candy, a more assertive Barack Obama?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, certainly we're seeing a more assertive Barack Obama and John McCain than we saw over the weekend at a forum which basically was about values and faith. But yes, I mean, what we're seeing is, I mean, it's getting to be crunch time.

I mean, we are, what, a little less -- a little more than a week away from Barack Obama's accepting of the nomination, a little more than two weeks away for John McCain. So they are stepping up their game. Particularly Obama, I think at this point, seems to be going at him a little more.

And he's running into the same problem, I think, that he ran into with Hillary Clinton. And that is, he's running as a different kind of campaign. And yet, he needs to fight back.

And he said today, listen, you know, I saw what happened to John Kerry. You're not going to see a guy that doesn't fight back. And yet when he crosses that line, then people say, well, isn't he just the same old kind of politician? So I think we're beginning to see the balancing of that.

BLITZER: A lot of us expect him to make his vice presidential selection this week. Next Monday the convention starts. Wednesday, Thursday, maybe Friday. You've been studying his travel schedule a little bit. Does it say anything, when he might do it?

CROWLEY: It really doesn't at this point. The only thing that tells us is the days are getting fewer which he has to announce this.

I mean, remember Bob Dole announced Jack Kemp a couple of days before the convention so they could use that time to kind of generate excitement and roll into the convention. That looks as though what Obama is doing now. But I have to tell you, he keeps going to the states that have the people who we think might be vice presidential choices, so we can't really read anything out of the itinerary right now. It's just sort of the calendar is getting shorter.

BLITZER: All right. Stand by, Candy, because we're going to be continuing this conversation. Thanks very much.

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

JACK CAFFERTY, CNN ANCHOR: John McCain is whining about the media. Again. His campaign manager, Rick Davis, wants a sit-down meeting with the president of NBC News to protest that network's coverage, saying that it's abandoning "nonpartisan coverage of the presidential race."

McCain's not happy with what NBC's Andrea Mitchell said on "Meet the Press" yesterday -- can we kill the audio in my ear, please? Thank you -- when she questioned whether McCain may have known about some of the questions at that faith forum on Saturday night ahead of time. See, John McCain was supposed to be in a so-called "cone of silence" during Barack Obama's interview, which happened first, the result of a coin toss.

It turns out, McCain wasn't even in the building, let alone the cone of silence. He was in the motorcade on his way to the church during Obama's portion of the program. McCain's campaign insists the Arizona senator did not hear the broadcast of the event in the car and didn't hear any of the questions. They say the insinuation from Obama's camp that McCain cheated is outrageous, and that they're going after Andrea Mitchell for simply repeating Obama campaign talking points.

This is not the first time McCain has been critical of the media's coverage of the race. The campaign recently put out a video spoofing how popular Obama is with the media.

A recent Pew poll found 48 percent of those surveyed say they're hearing too much about Barack Obama, compared to 26 percent who feel that way about John McCain. But a media study that came out last month found that NBC, ABC and CBS were tougher on Obama than they were on McCain during the first six weeks of the general election campaign.

So here's the question: How would you rate the objectivity of the news media in covering the presidential race?

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

BLITZER: All right. Good question, Jack. Thanks very much.

Urgent new storm warnings are in effect right now in Florida. Tropical Storm Fay is plowing closer and closer to the Gulf Coast. Up next, I'll talk about it live with the governor of Florida, Charlie Crist. He's standing by. Is the state ready for the worst? Also, questions about John McCain's time in the so-called "cone of silence." What really happened while Obama was talking over at that weekend faith forum?

And the Democrats mine for gold out West. Why several states in the region are tossups right now.

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

(COMMERCIAL BREAK)

BLITZER: The Florida Keys right now getting an expected but very dangerous visitor, the tropical storm Fay. The center of the storm just made landfall over Key West in the last hour. It's already caused at least 10 deaths in Haiti, and tourists who didn't get out of the way in time now have to stay put.

We're going to speak to the governor of Florida in a moment, but let's go to John Zarrella. He's in Key West right now.

John, I take it it's eased. A little while ago, we saw you in a very significant storm, but what's going on right now?

JOHN ZARRELLA, CNN CORRESPONDENT: Yes, Wolf, it looks like it's just about over here. The winds have completely died down. It's dead calm.

You can see the water here which was lapping up at the side of the seawall. The waves were crashing in, with the white caps and the foam being blown off the top. All that is over with.

Look up at the sky. Some dark and ominous clouds yet, but it's very still here as the center of the storm has moved over Key West, Florida.

Now, we are hearing reports from the local authorities here that there's some standing water on the roadways up and down the lower and middle keys. There's a report that there may have been a small tornado that actually touched down in the upper keys, and some very minor damage.

We were out a little while ago and got some of the street flooding at the intersection of Front Street and Duval (ph), about three, four inches of standing water there. A few people out making their way through that water. And, of course, that's about the worst of what we have seen here, which is, of course, very, very good news down here in the Keys, that there just does not appear to be any kind of significant damage.

And just again, some minor street flooding, and some -- maybe some trees down, a few reports of power outages. But again, Wolf, the worst appears to be over here in the lower Florida Keys -- Wolf.

BLITZER: All right. That's good news for the folks down there, John. Stand by. We'll be getting back to you.

Let's get the latest now from the governor of Florida, Charlie Crist. He's joining us live.

Governor, thanks very much for joining us.

Let's look ahead. It looks like what John Zarrella is saying, in the Keys it's not too bad, but what are we expecting from here on in?

GOV. CHARLIE CRIST (R), FLORIDA: Well, what we expect is this storm to continue to move north. We just got an update about it. It looks like it's going to be heading into southwest Florida.

The greatest concern that we have, Wolf, is the possibility of tornadoes being spawned from the storm, and then a -- sort of a cold front, if you will, coming in from the north. That convection can cause some tornadoes, and that's what we're most concerned about this evening and tomorrow morning.

We believe that it will come on the mainland, the peninsula of Florida, as it were, tomorrow morning. And we just want to make sure that our fellow Floridians are calm, that they don't panic, that they listen to local officials, and that they use common sense. And that's exactly the message we're putting out here tonight.

BLITZER: Good advice, Governor.

Are we still expecting it to hit around the Tampa area or -- this is a relatively wide, big storm, so you can't be all that precise, is that right?

CRIST: Well, that's exactly right. It looks like it may come in south of Naples, but it's uncertain.

The smart thing is for all Floridians to be prepared, to be ready and to be vigilant, and to listen to their local authorities and stay tuned to the news. To have a battery-operated radio is very important as well. And just be smart and use common sense.

BLITZER: So we expect the worst of it to be around the Naples area, not as far north as Tampa? Is that what you're saying?

CRIST: That's what we're saying at this point. But that is subject to change. These things have a mind of their own, as you know.

BLITZER: And what about in the Miami/Fort Lauderdale area? Are they just going to get some rain? Is that all they're expecting?

CRIST: That's what it looks like right now. You know, Miami, Fort Lauderdale, the east coast, mostly rain.

You know, we can use the rain, frankly, so that's not necessarily a bad thing. But we want our fellow Floridians to be cautious, to be smart. I mean, if they don't need to go out in south Florida tonight, they should stay home, they should stay off the roads, and they should just be safe.

BLITZER: Good advice, as I said. Governor, good luck to you and everyone in Florida. Appreciate it very much.

CRIST: Thank you, Wolf. And we'll look out for your mother, too.

BLITZER: Thank you. We'll check in with you tomorrow as well.

Governor Charlie Crist on the scene in Florida.

John McCain is talking about the war in Iraq today and why he says his plan for the troops is a better one than Barack Obama's. You're going to hear about it in his own words. That's coming up.

Plus, you may not have heard of them, but every teenager in the country has. The Jonas Brothers were at the White House today, and it wasn't just to meet the president.

Stay with us. We'll tell you what's going on.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: Mining for political gold out West, Democrats set their sights on a trio of western battleground states. And a key group of voters could make the difference on Election Day. We'll explain.

And was there really a cone of silence at that faith forum at the Saddleback Church in California? What's going on?

We'll explain, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, Russia reportedly considering putting nuclear weapons back on its Baltic fleet for the first time since the Cold War. Moscow denies it, but such a move could put Poland, Latvia, other NATO members in harm's way.

We're standing by to take a closer look.

Barack Obama and fellow Democrats aren't the only ones who will be heading to Denver. So are protesters, and they're already furious over a place some may end up, a processing center they're comparing to Guantanamo Bay.

And Barack Obama on abortion, what he's saying that may have some people on both sides of the issue unhappy.

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

All that coming up. But let's listen right now to Senator Obama's message for voters in New Mexico today at length. He spoke about the economy and he worked in some pointed digs at John McCain and President Bush.

(BEGIN VIDEO CLIP)

OBAMA: How do we create jobs and work that give people dignity and give people enough income that they can support themselves? I mean, under Bill Clinton in the 1990s, the average family income went up $6,000. Under George Bush, the average family income has gone down a thousand dollars. Even while the economy has been growing and corporate profits have been up and Wall Street was booming, the average income of a family in real purchasing power had gone down.

So, you're not seeing increased wages, you're not seeing increased incomes. Suddenly you're paying $4 a gallon for gas, food is 10, 15, 20, 30 percent more expensive than it was. And, you know, for a while, people were using home equity loans as sort of an ATM to help make ends meet.

More women were going into the workforce out of necessity and -- because right now, the average family -- let me take this -- let me say it this way. More than half of American families now get more than half of their income from the woman in the home and her work. Right?

So, more and more pressure is being placed on the average family, and that's why it's so important for us to just fundamentally change how our economy is working. And unfortunately, John McCain, what he's proposing are the almost exact same policies that George Bush has been pedaling for the last eight years.

He wants to give $300 billion worth of tax breaks to some of the wealthiest Americans, to -- you know, he was in a panel the other day and -- with me. Rick Warren -- some of you may have seen it -- and Rick Warren asked him, how do you define rich?

He said -- now, maybe he was joking -- he said $5 million. I said -- which, I guess, if you're making $3 million a year, you're middle class.

(LAUGHTER)

OBAMA: I -- but -- but -- but that's reflected in his -- his policies, where, you know, for people who are making more than $2.5 million, he's giving folks a $500,000 tax break.

And, so, this is a fundamental difference in this election. What I have said is, we're going to give 95 percent of working families a tax break. But it's going to be ordinary folks getting $1,000 for family to offset their payroll tax, getting several hundred dollars in additional homeowner interest relief, so that, you know, we can start preventing some of these foreclosures, making sure that we're expanding the child tax credit, dealing with the bread-and-butter issues that people are facing day to day. That's short term. Long term, we have got to create jobs.

(END VIDEO CLIP) BLITZER: John McCain is campaigning in Florida today. And he's making it clear that this is a -- this is a campaign he's going to take directly to the people there.

He's taking direct aim at Barack Obama's stance on the so-called troop surge in Iraq.

Addressing the Veterans of Foreign Wars in Orlando, McCain slammed Obama's -- quote -- "failure of judgment."

Listen to this.

(BEGIN VIDEO CLIP)

MCCAIN: Thank you.

With less than three months to go before the election, a lot of people are still trying to square Senator Obama's varying positions on the surge in Iraq. First, he opposed the surge and confidently predicted that it would fail. Then he tried to prevent funding for the troops who carried out the surge. Not content to merely predict failure in Iraq, my opponent tried to legislate failure. This was back when supporting America's efforts in Iraq entailed serious political risk. It was a clarifying moment. It was a moment when political self- interest and the national interest parted ways. For my part, with so much in the balance, it was an easy call. As I said at the time, I would rather lose an election than lose a war.

(CHEERING AND APPLAUSE)

MCCAIN: Thanks to the courage and sacrifice of our soldiers, sailors, airmen, and Marines and to brave Iraqi fighters the surge has succeeded. And yet Senator Obama still cannot quite bring himself to admit his own failure in judgment. Nor has he been willing to heed the guidance of General Petraeus, or to listen to our troops on the ground when they say -- as they have said to me on my trips to Iraq: "Let us win, just let us win." Instead, Senator Obama commits the greater error of insisting that even in hindsight, he would oppose the surge. Even in retrospect, he would choose the path of retreat and failure for America over the path of success and victory. In short, both candidates in this election pledge to end this war and bring our troops home. The great difference is that I intend to win it first.

(END VIDEO CLIP)

ANNOUNCER: This is CNN breaking news.

BLITZER: All right, there's some breaking news happening right now.

I want go right over to Barbara Starr. She's at the Pentagon watching this story.

And it involves Russia and the Republic of Georgia.

What are you hearing, Barbara? BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, just a few minutes ago, a senior Defense official told reporters, as of now, the U.S. sees no evidence that Russia is withdrawing its forces from Georgia and from the breakaway provinces. They simply see no evidence.

In fact, they say, Russia may be digging in and Russia is moving its missile launchers in to South Ossetia. So, very different than the public statements coming out of Moscow.

The official also -- also tells reporters, the U.S. is now talking to Turkey about trying to get permission to send Navy warships into the Black Sea for humanitarian relief, but, nonetheless, warships. If it happens, the announcement could come as soon as tomorrow -- Wolf.

BLITZER: Wow.

All right. We're going to have more on this story. And we're going to speaking live, Barbara, with the president of Georgia, Mikhail Saakashvili, here in THE SITUATION ROOM. Stand by for that. We will get his immediate reaction. This crisis is not over by any means.

While Barack Obama was answering questions at a forum on faith, John McCain was said to be in a cone of silence. It didn't quite turn out that way. We're looking into this story. What happened?

And, as speculation builds about Obama's vice presidential choice, is Hillary Clinton still in the running? New Democratic dream ticket talk in our "Strategy Session."

And we're keeping our eye on the storm, as Fay hits Key West and plows towards the Florida coast, moving toward Naples. We just heard from the governor. We're standing by for a new forecast from the National Hurricane Center.

(COMMERCIAL BREAK)

BLITZER: John McCain and Pastor Rick Warren, they're hitting back at speculation Senator McCain may have had an unfair advantage over Barack Obama at this weekend's faith forum.

Ed Henry has been looking into the controversy.

And -- and what are you hearing about the so-called cone of silence?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf. It's interesting. I mean, the McCain camp is insisting there absolutely was no unfair advantage. But the fact is, for Rick Warren, he promised that John McCain would be in some sort of isolation. That didn't turn out to be true.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP)

DON ADAMS, ACTOR: We can talk under the cone of silence.

UNIDENTIFIED MALE: Cone of silence?

(END VIDEO CLIP)

HENRY (voice-over): The fictional cone of silence on the TV show "Get Smart" helped keep conversations confidential. Pastor Rick Warren promised a real-life version Saturday, while he was asking Barack Obama questions at 8:00 p.m. Eastern time.

PASTOR RICK WARREN, AUTHOR, "THE PURPOSE DRIVEN LIFE": We have safely placed Senator McCain in a cone of silence.

HENRY: Since John McCain was going to be asked the same questions at 9:00 p.m. Eastern time, Warren said he was supposed to be waiting in a room at the church with no TV feed.

WARREN: Was the cone of silence comfortable you were in just now?

(LAUGHTER)

MCCAIN: I was trying to hear through the wall.

(LAUGHTER)

HENRY: No laughter for Obama allies, however, when they learned McCain was not in the cone the whole hour.

At 8:01 p.m. Eastern, as Obama took the stage, McCain's motorcade left his hotel, and did not arrive at the church for another 31 minutes. And organizers privately admit there were no specific restrictions on the use of cell phones or BlackBerrys. Obama supporters charge, McCain could have listened to the start on the radio or gotten electronic communications from staffers watching the Obama segment.

WARREN: I trust the integrity of John McCain and Barack Obama that they said they would abide by the rules.

HENRY: On Sunday, Warren acknowledged McCain was not in complete isolation, but said he took at the senator at his word that he did not know what Obama said.

WARREN: He was in a cone of a Secret Service motorcade.

HENRY: The Obama campaign is not commenting on the record about whether they believe McCain overheard or was told of the questions.

McCain aides angrily dispute any charge that there was an unfair advantage, with spokeswoman Nicole Wallace firing back: "The insinuation that John McCain cheated is an outrage. This is a clear sign the Obama campaign is losing its bearings."

(END VIDEOTAPE)

HENRY: Now, it turns out Rick Warren gave candidates a heads up about two of the questions: Who are your three wisest advisers and what was your biggest moral failing?

Now, there's no evidence that that changed the forum. Again, there's no evidence there was any wrongdoing, but perhaps the forum was not quite as transparent as Rick Warren made it out to be, Wolf.

BLITZER: Because he made it sound like he was sitting in some isolation booth and he had no idea of what was going on.

All right, thanks very much.

Rick Warren, I'm sure, is going to be asked questions about this later tonight. He's going to be a guest on "LARRY KING LIVE" at 9:00 p.m. Eastern. I think you're going to want to watch "LARRY KING LIVE" tonight.

Western battlegrounds in the spotlight today -- Barack Obama campaigning in New Mexico once week before Democrats hold their convention in another tossup state, Colorado.

Let's go to our senior political analyst, Bill Schneider. He's already in Denver with the CNN Election Express, getting ready for the festivities.

What are the Democrats looking for, Bill, out West?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Same thing their forbearers were looking for here: gold.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): There's gold in them thar hills. The Democrats are looking to strike it rich in the Mountain States, three in particular where their prospects look good, Nevada, New Mexico, and Colorado, all battleground states this fall.

BOB LOEVY, PROFESSOR OF POLITICAL SCIENCE, COLORADO COLLEGE: Take, for instance, Colorado. It ordinarily runs 4 percent more Republican than the country in presidential elections. But, last time out, in 2004, it was only 2 percent more Republican.

SCHNEIDER: The latest Colorado poll? John McCain leads Barack Obama by three points, within the margin of error. Why so close? The poll shows a striking generation gap. Colorado voters under 35 are going for Obama by a huge margin, 22 points. Seniors are going for McCain by nearly as big a margin, 17 points.

In 2004, young voters outnumbered seniors in Colorado, and Democrats are making a big push to get even more of them to the polls this year, along with Latinos and suburban women, two other groups that have been trending Democratic in Colorado.

What about the economy, issue number one in Colorado, just like everywhere else? Colorado voters who say the economy and jobs are their top concern favor Obama, but only by a narrow margin. Obama has yet to establish an undisputed claim on the economic issue.

Meanwhile, McCain has seized the advantage among voters whose top concern is energy and gas prices, a 16-point lead over Obama.

Asked to name his most significant policy shift, McCain said:

MCCAIN: Offshore drilling. We have got to drill now and we have got to drill here.

(APPLAUSE)

SCHNEIDER: McCain may have struck not gold, but oil in Colorado.

(END VIDEOTAPE)

SCHNEIDER: Of course, that stand could hurt McCain among coastal voters.

Oh, wait. Colorado doesn't have a coast. Wolf.

BLITZER: Good point.

Bill, see you out in Denver later in the week. Appreciate it very much.

Coming up in our "Strategy Session": On the campaign trail, Hillary Clinton stresses party unity.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: We may have started out on two separate paths, but we are on one journey now.

(CHEERING)

CLINTON: And this journey leads straight to the White House.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

BLITZER: Could an Obama/Clinton ticket, as unlikely as it looks right now, actually equal a White House win for the Democrats?

And al Qaeda and Pakistan -- what does Pervez Musharraf's resignation mean for American security? Barbara Starr is standing by with that.

We will be right back.

(COMMERCIAL BREAK)

BLITZER: Does Barack Obama need Hillary Clinton as his running mate to actually win the White House? Let's discuss this and more in our "Strategy Session." Joining us, our CNN political contractor and Democratic strategist Donna Brazile, and conservative commentator Terry Jeffrey. He's editor in chief of the Cybercast News Service.

Who helps Barack Obama more in states, some of these battleground states, like Florida and Pennsylvania, for example, which he desperately needs if he wants to be president? Would it Evan Byah, Joe Biden, Tim Kaine, or Hillary Clinton?

DONNA BRAZILE, CNN POLITICAL ANALYST: Oh, well, first of all, I think he should select someone who will help reassure the American people that Senator Obama can help lead us at a time of war.

(CROSSTALK)

BLITZER: Well, let's say all of them -- let's say all of them can do that. Who can help him the most in Florida and Pennsylvania, of those four Democrats?

BRAZILE: Well, Wolf, there's a reason I don't -- I hesitate to -- to know that answer, is because some of the choices might reinforce his message of change.

Clearly, many of the -- the candidates -- Senator Clinton would be a great V.P. selection, along with Senator Bayh and Senator Biden. And I have heard all of these names, including Senator Kerry.

I could support any of those Democrats. But the fact is that Senator Obama will reveal his choice some time this week. And I think it will be a reassuring choice.

BLITZER: You meant Senator Kerry, the former Democratic presidential...

BRAZILE: Well, I would keep him on a short list.

BLITZER: Really?

BRAZILE: Absolutely.

BLITZER: That would be a surprise.

Who could help Barack Obama the most in some of those battleground states, like Florida and Pennsylvania, Michigan, Ohio?

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: I think, of those candidates you mentioned, Wolf, that Senator Evan Bayh of Indiana would probably be the best pick politically for Senator Obama.

These -- these are the reasons, two big reasons. Senator Bayh serves on the Senate Armed Services Committee and the Senate Intelligence Committee. There's no doubt he has credibility on national security issues, which would help Barack Obama.

Secondly, he's a new Democrat. He's a little bit more conservative than some other Democrats in the Senate. Obviously, he's someone who could get votes in Indiana. I don't think that Obama is going to take Indiana one way or the other.

But it was those Reagan Democrats at the end of the Democratic primary that campaign Obama was losing to Clinton. Those are the votes he need in swing states. Evan Bayh could probably help him...

(CROSSTALK)

BRAZILE: They were really more Clinton Democrats. And Senator Obama is doing quite well with women, has a 14-point advantage over Senator McCain, has a 39-point advantage with Jewish voters, a 33- point advantage with Hispanic voters.

And Senator Obama is doing well, because Senator Clinton is out there every day stumping for Senator Obama, whether she's...

(CROSSTALK)

BLITZER: Here's one of the problems for Senator Bayh. There's a Republican governor of Indiana, who would name a Republican to the U.S. Senate. The Democrats would lose a seat. Is that something that Barack Obama should be concerned about?

BRAZILE: No. I don't think so.

And, by the way, that Republican governor has a strong Democratic challenge in Jill Thompson Long. So, I'm confident that, if Senator Bayh is chosen, we might have a Democratic governor in place.

JEFFREY: There's other potential nominees who could bring the same things politically to Obama, like former Senator Sam Nunn, for example. I think he basically would fit the same political profile as the V.P. nominee for Obama.

BLITZER: He's older, more experienced, has a lot of national security experience. Some have called him -- and I know he probably hates this when he hears it -- like sort of the Dick Cheney kind of selection, an older, more experienced running mate.

BRAZILE: And he's a little better looking, too.

(LAUGHTER)

BLITZER: We will leave it at that.

What did you think of this faith forum that we saw Saturday night out in California? What did it say to us about how these two presidential candidates will match up during the three presidential debates?

JEFFREY: I thought -- I thought it with you a tremendous forum, number one. I thought it said a lot about the debates, Wolf.

I think, in the Democratic primaries, you saw Hillary Clinton emerge as an excellent debater. I think, in almost every debate, she really got the advantage on Barack Obama. He's an excellent stump speaker. He's not a good debater.

When they were asked direct questions on Saturday, John McCain gave clear, direct, immediate answers. He was funny sometimes. Barack Obama was convoluted in his answers. He wasn't direct. He seemed evasive at times. I think that these debates could be very good for John McCain.

BLITZER: What does -- what did that forum, to you, say about the upcoming three presidential debates that start after the convention in September and October?

BRAZILE: Well, Senator -- Senator McCain went to sit in a choir and talk to the congregation. Senator Obama went to sit in the congregation and let the country that knows he shares their values.

So, I thought Senator Obama did well in answering those questions. Senator McCain had a lot to -- to gain. That was his audience, and he played to his audience.

BLITZER: And what about this whole issue about Pastor Rick Warren sort of screwing up -- quote -- "cone of silence" and perhaps inadvertently giving John McCain a slight advantage, if not a significant advantage?

JEFFREY: Well, if the rules were that McCain was not supposed to hear the questions, and was actually supposed to be isolated, they probably should have made sure that happened.

But I saw a report here, Wolf, that a spokesperson for the McCain campaign is categorically denying that the senator cheated in any way. And I think you have to accept that, unless someone can demonstrate...

(CROSSTALK)

BLITZER: Yes, I think it's obvious that, if anyone screwed up here, it was Pastor Rick Warren and his church and his organizers for failing to live up to what he himself said was part of their -- the ground rules.

BRAZILE: Well, I don't think that should be the message today.

I think what -- what Pastor Warren did was to try to conduct a civil forum. And he really gave them some tough questions. And I thought they both performed well, given the audience.

BLITZER: They were some tough questions. And it was very, very watchable television. And I think helped a lot of viewers out there who are still undecided make up some minds.

JEFFREY: By the way, Wolf, I watched it on CNN's Web site. So, anybody who wants to go and see how Barack Obama answered those tough questions, or John McCain, they can look at it now.

BLITZER: All right, good point.

Guys, thanks very much. BRAZILE: I agree.

BLITZER: Some stories we're working on right now in THE SITUATION ROOM on "Political Ticker": One-time presidential candidate John Edwards sees an icon from his political history go up in flames.

And with Russian troops seemingly dug in, in Georgia's contested regions, Secretary of State Condoleezza Rice says the NATO might not allow a new Iron Curtain to emerge in Europe.

We will explain what's going on right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On our "Political Ticker" today: Barack Obama has chosen 10 supporters to join him backstage in Denver at the convention before he accepts the Democratic nomination on August 28. They include a retired Naval officer, an Army veteran, a single mother, and several 20-something voters. Not surprisingly, most are from states considered to be battlegrounds in November. The Obama camp announced the winners in an e-mail to supporters urging them to host convention watch parties in their communities.

John McCain is hoping to make a splash in battleground states the day after Obama's big convention speech. The Republican plans a large rally in Ohio on August 29. Republican and McCain campaign sources tell our own John King, they're hoping for 15,000 people, roughly five times the size of McCain's largest crowd to date.

McCain may have big events that day in Pennsylvania and Michigan, as well, both battleground states. It's worth noting that several McCain V.P. prospects are from those states, including former Ohio Congressman Rob Portman, Michigan native Mitt Romney, and former Pennsylvania Governor Tom Ridge.

A piece of John Edwards' presidential campaign history now up in flames. Yesterday, a blaze tore through the abandoned North Carolina textile plant where Edwards launched his 2004 bid for the Democratic nomination. Edwards famously introduced himself to voters across the country as a son of a millworker. Edwards' political future, of course, now in serious doubt after his acknowledgement of an extramarital affair.

Remember, for the latest political news, you can always check out CNNPolitics.com. That's also where you can download and save our new political screen saver, if that's your intention.

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

CAFFERTY: The question this hour is: How would you rate the objectivity of the news media in covering this here presidential race?

Sandra writes from Texas: "It is very obvious to me the media is absolutely pro-McCain. After all, they are McCain's base. McCain does need to get more coverage -- more coverage of his gaffes, his pandering, his past indiscretions, his flip-flops, his hypocrisy, et cetera. I believe he lifted that cross-in-the-dirt story from Aleksandr Solzhenitsyn's 'The Gulag Archipelago.' Unlikely they had the very same prisoner experience."

John in California says: "This is a media that went gaga over Anna Nicole Smith."

Boy, did we.

"I don't expect anything approaching objectivity from the press on any subject. Everybody knows McCain listened to the questions put to Obama while he was in his motorcade Saturday. And I think McCain ought to get a lot of media attention on that. Let's call it cone- gate."

Danny in Illinois: "The news media, by far, has favored Obama throughout the entire reporting on the election. The news media is an utter failure on giving equality to the reporting on the candidates. Obama has been the wonder child for the last year. I am amazed this election is not a blowout for Obama with the type of reporting that he has been getting. It just goes to show you the public is aware you can't trust the media, and citizens are making up their own minds about the right candidate."

Melissa writes: "Absolutely not. Obama gets more coverage, but it's twice as negative. The media seems to be afraid to tell the truth about a war hero. So, with Obama, we saw a month of Reverend Wright 24 hours a day. Yet, I still don't know what this rumored Keating 5 scandal in John McCain's closet is all about. I am one of those Americans the Pew Center is talking about who wants to know more about John McCain, and not just all the glowing testimony to his POW days."

And, finally, Chryssa in Idaho writes: "McCain simply isn't as interesting, inspiring or newsworthy as Obama. That's life. You don't hear Lindsay Lohan complaining that Paris Hilton gets more magazine covers, do you?"

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile. Look for yours there, among hundreds of others -- Wolf.

BLITZER: All right, Jack, thank you.

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