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Obama Campaign Accuses McCain of Phony Outrage; Republican Congressman Ron Paul Makes Push For Third-Party Candidates

Aired September 10, 2008 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now: Barack Obama accuses the McCain/Palin campaign of lies and phony outrage. The Democrat is fighting mad after Republicans pounced on his controversial line about lipstick. This hour, the uproar and the strategy on both sides.
And Ron Paul's rebellion. After he failed to capture the Republican presidential nomination, the Republican congressman is now urging his supporters to back Ralph Nader or other third-party candidates. They're both going to be here, Ron Paul and Ralph Nader together. Will they be spoilers this time?

And government officials accused of illicit sex with energy company employees they deal with. Federal investigators announce the lurid allegations.

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


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: I don't care what they say about me. But I love this country too much to let them take over another election with lies and phony outrage and Swift Boat politics. Enough is enough.



BLITZER: All right, Barack Obama showing more fire against his newly energized Republican opponents.

He's been under pressure from some fellow Democrats to show his tougher side. And, today, he found a reason do it. Senator Obama bristled at the McCain camp's charge that he used a phrase, "lipstick on a pig, with -- was a direct slap at Sarah Palin. He says that's ridiculous.

Some Republicans, though, still insist it was a clear and intended insult.

Let's go to Suzanne Malveaux. She's covering all of this for us. Suzanne, the Obama camp came out fighting today, especially Barack Obama.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, I talked to Obama aides who said that they believed it was necessary to address this flap, because they have learned from previous examples that, if you allow false statements to go unanswered, it becomes very hard to discredit them later.


OBAMA: Enough is enough.


MALVEAUX (voice-over): Barack Obama has had it with what he says are the lies and distortions coming from the McCain campaign.

OBAMA: They seize on an innocent remark, try to take it out of context, throw up an outrageous ad, because they know that it's catnip for the news media.

MALVEAUX: The remark he's talking about was delivered at a town hall meeting in Virginia the day before, criticizing McCain.

OBAMA: I'm talking about John McCain's economic policies. I say, this is more of the same. You can put lipstick on a pig, but it's still a pig.


OBAMA: And suddenly, they say, oh, you must be talking about the governor of Alaska.


MALVEAUX: The McCain campaign put out former Massachusetts Governor Jane Swift to make the charge.

JANE SWIFT, FORMER MASSACHUSETTS GOVERNOR: Well, as far as I know, she's the only one of the four presidential candidates or vice presidential candidates who wears lipstick.

MALVEAUX: A web ad from camp McCain quickly followed.


OBAMA: You know, you can put lipstick on a pig.


MALVEAUX: And then a former supporter of Hillary Clinton now in McCain's camp repeated the accusation at a McCain event, and scolded:

LYNETTE LONG, FORMER CLINTON SUPPORTER: Mr. Obama, calling girls name is something do you in fifth grade.

MALVEAUX: Obama aides called McCain's accusation a pathetic attempt to play the gender card from an increasingly dishonorable campaign and pointed out that McCain himself used the expression to criticize Hillary Clinton's health care plan.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: But the latest proposal I see is putting lipstick on a pig.

MALVEAUX: But when Obama's aides saw the charge catching fire in the media, Obama decided to take the lead in putting it out.

OBAMA: Everybody knows it's cynical. Everybody knows it's insincere. The media knows it.


OBAMA: I mean, this is a game that we play. It's a game. It's a sport.


MALVEAUX: Now, neither McCain, nor Palin have commented on the controversy today. And a web ad that was put up by McCain campaign repeating this lipstick pig accusation has been taken down. It says that CBS objected to the ad because it used its anchor Katie Couric in it. And a spokeswoman said that: "CBS News does not endorse any candidate in the presidential race. Any use of CBS personnel in political advertising that suggests this is misleading" -- Wolf.

BLITZER: All right, Suzanne, stand by. We're going to have more on this story coming up.

Like Barack Obama, John McCain and Sarah Palin have been courting Virginia voters today. The Republican running mates got quite a welcome, which may help explain why Obama tried to turn up the heat himself.

Let's go to Ed Henry. He's working this part of the story. Ed, you had a chance to speak with some of those voters out in suburban Washington, in Northern Virginia, which is turning out to be a key battleground for the -- for the entire Commonwealth of Virginia.


And Democrats, who have not carried Virginia since 1964 in a presidential election, have high hopes of winning it in November, but John McCain deployed his not-so-secret weapon, Sarah Palin, today to send a clear message that they're not giving up Virginia without a fight.


HENRY (voice-over): A new sign of momentum for John McCain, the largest crowd he's ever had on the campaign trail, 23,000 people,in a Democratic area of Virginia. But McCain knows the star of this show right now is Sarah Palin.

AUDIENCE: Sarah! Sarah! Sarah!

UNIDENTIFIED FEMALE: I'm so delighted to be here. I would have stood on my head to come.

HENRY: Self-proclaimed hockey moms and other women here said it was Palin who drew them to the rally.

UNIDENTIFIED FEMALE: I'm impressed with her, because she took on her own Republican Party and cleaned them out.

UNIDENTIFIED FEMALE: She's going to rock them and shake them up. And I think it's awesome. It's going to bring other people in.

HENRY: While some in the crowd found ways to slam Barack Obama's use of the phrase "lipstick on a pig," McCain and Palin stayed above the fray. Despite Obama's claim only that he's zeroing in on the issues, the Republican ticket focused almost entirely on policy, including bashing the federal rescue of Fannie Mae and Freddie Mac.

MCCAIN: We can't allow this to turn into a bailout of Wall Street speculators and irresponsible executives.


MCCAIN: The CEOs -- the CEOs that led us into this mess are walking away with over $20 million.

HENRY: Palin is still not deviating from her carefully prepared remarks.

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL NOMINEE: I reminded people that no, government, is not always the answer. In fact, too often, government is the problem.

HENRY: But it was the first time this crowd heard the script. And one working mom with three kids said it helped her decide to vote McCain/Palin.

UNIDENTIFIED FEMALE: I also think that the issues are very important to people. And we all know that the economy is suffering, and they are speaking to cutting the budget.


HENRY: But a lot of the women we spoke to at this rally were admittedly Republicans. They were not independent voters. And, so, what we're seeing so far is that Sarah Palin is getting Republicans, specifically Republican women, to come home, get more excited about the McCain/Palin ticket.

But it's not clear yet whether she's going to have crossover appeal and bring in independent women in particular. That's going to be the big key -- Wolf.

BLITZER: That will be decisive, indeed.

Ed Henry working this story for us.

Let's take a closer look at Virginia right now. It has 13 electoral votes up for grabs. The state has voted Republican in 13 of the last 14 presidential elections. But Democrats see new opportunities in Virginia, after winning the last two governor's races and the 2006 Senate race.

Plus, the Washington, D.C., suburbs in Northern Virginia make up the fastest-growing region in the whole Commonwealth of Virginia area, which leans Democratic, the northern part of Virginia.

Virginia, by the way, is one of eight tossup states on CNN's electoral map. We have some brand new poll numbers right now from Virginia and three other crucial battlegrounds, Michigan, New Hampshire, and Missouri. Together, those four states have 45 electoral votes, which could decide the presidential race one way or another.

Let's turn to our senior political analyst, Bill Schneider. He's working the numbers for us.

All right, anything surprising coming up in these four battleground states, these new poll numbers we're getting in today?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, yes. What's surprising is how little has changed since 2004.


SCHNEIDER (voice-over): 2004, George W. Bush narrowly wins reelection. 2008, the economy has taken a nosedive. President Bush's job rating has tumbled from 52 to 28 percent.

Let's look at where things stand in four key battleground states. Michigan, with its battered Rust Belt economy, Barack Obama has a 4- point edge over John McCain, which is exactly one point wider than John Kerry's margin over Bush four years ago.

New Hampshire, which voted for Bush in 2000, then switched to Kerry in 2004. And now? Obama leads by six, a bit wider than Kerry's one-point margin in 2004. Missouri, which has voted for the winner in every election for the past 100 years, save one, McCain up by five, a little tighter than Bush's margin four years ago.

Virginia, where Obama hopes to make his Southern breakthrough. Not yet. McCain leads by four. That shaves Bush's nine-point margin in Virginia by more than half. All four states are voting the same way they voted in 2004, although the Democratic ticket is doing slightly better in each. It's as if very little has changed in four years.

MARK PRESTON, CNN POLITICAL EDITOR: John McCain seems to be dodging the bullet, at least at this point, being tied to George Bush.

SCHNEIDER: In all four states, partisans are lining up solidly with their party. Independents are the key swing group. They're voting for Obama in New Hampshire and Michigan and for McCain in Missouri and Virginia.

PRESTON: It is that small sliver of undecideds or independents in the middle that John McCain and Barack Obama are fighting for.


SCHNEIDER: I often think it's comical how nature always does contrive that every boy and every gal that's born into the world alive is either a little liberal or else a little conservative, fa-la-la." William Schwenck Gilbert wrote that in 1882. It looks like it's still true -- Wolf.

BLITZER: And, you know, it's also fascinating in those numbers -- and I love the little sonnet or poem or whatever that was -- that, in Michigan and New Hampshire, where Obama is slightly ahead, Ralph Nader gets 6 percent in Michigan, 4 percent in New Hampshire.

We're going to be speaking with him. He's coming in here, shortly, with Ron Paul.


BLITZER: But all of us remember what happened in Florida in 2000, and that whole spoiler thing. That -- that, potentially could be shaping up this time as well.

SCHNEIDER: Potentially. And Democrats are in fact worried about that, if the election is as close as it looks like it could be.

BLITZER: We're going to talk to Ralph Nader about that -- Ron Paul not endorsing his fellow Republican John McCain. They're both coming in here together shortly. Stand by for that -- Bill Schneider reporting.

Let's look back an the CNN electoral map right now and the big picture of where the race stands right now. CNN estimates that John McCain has 189 electoral votes in states that are either safe or leaning Republican. Barack Obama has an estimated 243 electoral votes in states that are either safe or leaning Democratic. That leaves 106 electoral votes up for grabs in states still considered by us to be tossups. Remember, 270 electoral votes are needed to win the race for the White House.

Let's get back to that breaking news we have been following late this afternoon involving, allegedly, at least sex, drugs and cover-ups by some U.S. government employees.

While you have been struggling with high gas prices, there are shocking new reports out today claiming that some government workers were having illicit sex with oil company employees, and those government workers allegedly even received gifts from the oil company workers -- just a few of the scandalous claims laid out by Interior Department's inspector general.

They include this. Illicit drugs are said to be involved in what's called -- quote -- "a culture of substance abuse and promiscuity," even an alleged frat house atmosphere in a key Denver office. Allegedly involved are 13 Interior Department employees in Denver and here in Washington who handled billions of dollars in oil royalties.

The reports also say the government workers rigged contracts and worked part-time as private oil consultants.

We are going to have a lot more on exactly what all of this means for the government, big oil, and you. That's coming up later here in THE SITUATION ROOM.

Jack Cafferty is off today.

Stand by, though, as we take you to a battleground state where voters are in severe economic pain -- how issue number one, the economy, could decide the McCain-Obama contest in the key battleground state of Michigan.

Plus, it's one of John McCain's favorite tarts: lawmakers' pet projects that fatten the federal budget. We are going to check account candidates' records on spending and pork.

And, also, as I have been telling you, we're about to sit down with both Ron Paul and Ralph Nader together here in THE SITUATION ROOM. The failed GOP presidential hopeful is saying yes to third- party candidates like Nader, saying no to a fellow Republican like John McCain. And Ron Paul explains why.


REP. RON PAUL (R), TEXAS: Presidential elections turn out to be more of a charade than anything else, and I think that is true today. It is a charade.



BLITZER: Let's get back to the presidential race right now.

You feel it certainly every time your gas -- you put gas in your car or fill up your shopping cart at the supermarket. That would be the pinch of high prices.

Today, in Fairfax, Virginia, right outside of Washington, D.C., John McCain talked about cutting government spending and how to that help -- that help -- could help you in the process.


MCCAIN: We will work for you, and we will put our country first, and that's what this campaign is all about, change and reform -- change and reform.


MCCAIN: And I have fought corruption, and it didn't matter if it was Democrats or Republican, and so has Sarah Palin. I fought big spenders in both parties who waste your money on things you don't need and things you don't want. My friends, this is while you're struggling to buy groceries, fill your gas tank and make your mortgage payment. I have stood up, I have stood up and I guarantee you the first thing that we will do -- I got an old ink pen, my friends, and the first pork barrel-laden earmark big spending bill that comes across my desk, I will veto it. You will know their names. I will make them famous and we'll stop this corruption.


MCCAIN: We will stop this corruption.


MCCAIN: My friends, we will stop it. You heard Governor Palin mention that my opponent who talks about change, in the short period of time in the United States Senate, he's asked for $932 million in earmark pork barrel projects.



BLITZER: All right. We hear that in every stump speech that John McCain says, but here's the question. Is it factually accurate?

We asked Brian Todd to do a fact-check for us on what exactly the candidates do when it comes to pork barrel spending, what they actually do, what the records really are -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Well, and, shockingly, Wolf, what you hear on the campaign trail needs some more context.

All four of these candidates are now getting into the back and forth of who can really change things in this town, as you have just heard John McCain say, and what we have found is that these four really run the gamut from genuine reform credentials to old-line power politics.


TODD (voice-over): The hot debate now, who will really change the way Washington does business? Both campaigns taking aim at an old staple of machine politics, those sometimes wasteful fund requests made by lawmakers, often for their home districts.

John McCain's been a crusader against so-called earmarks. And he says his opponent has asked for almost $1 billion in pork barrel projects for his state in just less than four years in the Senate.

MCCAIN: Nearly a million dollars for every day that he's been in office. And that's change? My friends, don't be fooled. Don't be fooled.

TODD: According to the nonpartisan watchdog group Taxpayers For Common Sense, Barack Obama has asked for nearly a billion dollars in earmarks during his Senate term. But the group gives him credit for disclosing his requests, which most members of Congress don't do.

Obama's made no requests for the next fiscal year. And even when he was asking for earmarks, he was far from the worst offender.

STEVE ELLIS, VICE PRESIDENT OF PROGRAMS, TAXPAYERS FOR COMMON SENSE: Just to put it into perspective, he got $98 million worth of earmarks in fiscal year 2008. Senator Clinton got more than $300 million in earmarks. And Senator Cochran, the Republican ranking member of the Appropriations Committee, got more than $800 million in earmarks.

TODD: Obama's running mate doesn't come close to that, but Joe Biden also has never disclosed what he's asked for, until this year. Biden's office says he's requesting about $300 million.

The Obama campaign points out that, while McCain has never asked for earmarks, his running mate hardly has room to talk.

OBAMA: When you have been taking is all these earmarks when it's convenient and then, suddenly, you're the champion anti-earmark person, that's not change. Come on.

TODD: According to state records and Taxpayers for Common Sense, Sarah Palin has asked for about $450 million in federal money since she became governor. But she also gets some credit.

ELLIS: As governor, she has, by all records, started to reduce the number of earmark requests. So, it's a downward trajectory, by our analysis, but still significant earmark requests.


TODD: And Palin got into the earmarking game early, before she even became governor. According to state records and the group Taxpayers For Common Sense, she helped get about $27 million, some of which went to the small Alaskan town of Wasilla during her second term as mayor there from 1998 to 2002.

Now, the watchdog group says one of the reasons she was able to get all that, she hired a lobbying form run by former staffer for Senator Ted Stevens, who is one of Washington's most legendary earmarkers -- Wolf.

BLITZER: Let's talk about the differences, Brian, between what governors request for earmarks and what senators can request. What is the difference?

TODD: Well, and experts say it's not always fair to compare the two, because what governors are asking for are just projects that their state is undertaking, state projects, construction, things like that.

Senators are getting requests, funding requests, from private companies, other private entities. Not fair to necessarily compare the two. The senators get much more volume. Of course, Governor Palin is now on the campaign trail. She's making these accusations against Obama. She is going to be drawn in here.

BLITZER: So, she says he's asked for $1 billion almost, in earmarks -- John McCain -- but she's asked, as governor, for, what, a half-a-billion just in earmarks. So, that's basically the numbers we're talking about.


TODD: That's right.

BLITZER: All right, Brian, thanks very much for that.

Mention the word lipstick, and it appears Republicans see red. But will Barack Obama be hurt by claims he made a sexist comment? And might Republican pushback backfire and hurt Governor Palin's standing?

And you will hear the story of a man who used to work at the Pentagon, but had not been back there since 9/11, at least until now.

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


BLITZER: Barack Obama came out swinging today, really blasted John McCain on the issue of education. What he said, you will be anxious to hear this. That's coming up right here in THE SITUATION ROOM.


BLITZER: The race to the White House winds through Michigan. You have just heard our new poll numbers, showing how things are shaping up there. Now you're going to find out what Michigan voters say they really care about.

And Republican Congressman Ron Paul has a message for John McCain: No. Ron Paul won't endorse his own party's nominee, and he urges what some think is a radical idea. Congressman Paul is here, along with the independent presidential candidate Ralph Nader. They're here together to explain what's going on -- Ralph Nader right now polling at 6 percent in Michigan.

We will be right back.


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

Happening now, Joe Biden under scrutiny. We're taking a closer look at how he answers questions about one of his son's lobbying activities.

Also, British officials say they'll retry seven defendants accused of plotting to blow up airliners flying between Britain and the United States and Canada using liquid explosives. A jury could not agree on a verdict this week.

And Hurricane Ike over the Gulf of Mexico right now, the warm waters. It's gaining strength. We're taking a closer look at the latest computer model, showing where it might be headed.

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

Republican Congressman Ron Paul of Texas rejected calls to endorse Senator McCain and won't endorse Barack Obama either. And Ron Paul is urging voters to turn their backs on both candidates right now. He's had a strong following of dedicated supporters online. He's raised some $35 million during his own primary bid for the Republican presidential nomination.

So how are they reacting to his announcement, all of his supporters? Our Internet reporter, Abbi Tatton, is following the story. Abbi, what are you seeing online?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, Congressman Paul still has this following. Just last week, in St. Paul, this Rally for the Republic attracted thousands of his supporters. And since this announcement today, we've been checking in on what they've been saying online since Dr. Paul announced his support for third party candidates, that supporters could get behind one of these.

Checking in on the reaction on the forums and the Web sites where these supporters organize, it's fair to say that the reaction from them today is mixed. There are those who want to buy the bumper sticker for this idea already, but then there are others who are saying sure, I'll support a third party candidate, but only because it's what Dr. Paul wants me to do. It's really him that I want to support.

And as for which one of them they want to get behind, well, that's hard to discern. On the Ron Paul forums right now there's a fierce debate about who they don't want to vote for, rather than who they actually want to support. So, it's early days right now, but it's fair to say that there's no money bomb or third party blimp being organized just yet -- Wolf.

BLITZER: We'll see. We'll wait for that, as well. All right. Thanks, Abbi, very much.

Let's talk about what's going on right now with third party candidates. Joining us here in THE SITUATION ROOM is Ron Paul, the congressman himself. And he's here, together with the Independent presidential candidate, Ralph Nader.

Gentlemen, thanks very much for coming in.

REP. RON PAUL (R), TEXAS: You're welcome.

BLITZER: All right. Tell our viewers, Congressman, why you decided to reject your fellow Republican, John McCain.

PAUL: He doesn't represent anything I believe in. You know, I represent -- I believe what Republicans should believe, and I campaigned on that and got a lot of support. But I can't support somebody that virtually disagrees with all my positions.

BLITZER: What about Barack Obama?

PAUL: Well, I don't think he agrees any more. And I don't see any difference between the two candidates.

I know there's a lot. You have to have a horse race going, and you have to talk about something, but really there's no difference.

And that was part of -- we think the system is very biased. Our system doesn't allow alternative candidates, third party candidates. But the debate isn't there either because they pick on little things. And the issues that we picked out, we hardly hear anything from the candidates.

BLITZER: So is it fair to say -- you want a third party candidate to win. Would that candidate be the man sitting next to you right here in THE SITUATION ROOM, Ralph Nader?

PAUL: Ralph is a good friend. But we agree on tactics and what we're doing, and we agree on these very important issues, but quite frankly, he probably won't have joined my campaign and I probably won't join his campaign.

BLITZER: So you won't vote for him?

PAUL: No, I don't plan to. But I plan...

BLITZER: Who do you want to vote for?

PAUL: ... to get as many votes for him as possible because it will take the votes away from Obama. And that's where we have the agreement.

BLITZER: So you want to stop Obama, is that what you're saying?

PAUL: Well, no, I want to change the system. I want Ralph Nader and the third party candidates, all of them, to be in the debate. I mean, that's the only debate.

There's no debate going on. This is a ritual. This is a charade.

BLITZER: Let's bring in Ralph Nader.

What's your goal right now? You're not going to be elected president of the United States. You know that. Ron Paul knows that. What is your goal in aligning yourself, in effect, with Ron Paul?

RALPH NADER (I), PRESIDENTIAL CANDIDATE: Well, if we're in the presidential debates, it might be a Jesse Ventura, a three-way race. But -- and yet today, we put together...

BLITZER: Three presidential debates, but the Presidential Debate Commission has set a bar that's pretty hard for you to overcome.

NADER: Yes, since it's controlled by the two parties, as you know. Today I think it was a historic day because we, Ron Paul and the candidate for the Green Party, the candidate for the Constitution Party, and me and Bob Barr agreed on four major areas: foreign policy, get the soldiers back, end the war in Iraq, stop being imperialistic, privacy, deal with the repeal of the Patriot Act, the revision of FISA, the Military Commissions Act, and, you know, get rid of torture. And a third is the national debt. You know, deficits are now used for reckless government adventurism.

BLITZER: The national debt has nearly doubled over the last eight years.

NADER: Yes. And the Iraq war is financed from deficit spending.

BLITZER: And the fourth issue?

NADER: And the fourth issue is the Federal Reserve is now a government within a government. It is totally out of control. Congress doesn't control it. It's funded by the banks.

And we either have constitutional government or we don't. Because of this, Wolf, here's the question: Is there anything left for the American people to decide about their country?

BLITZER: Here is what the CNN/Opinion Research/"TIME" magazine poll shows in two key battleground states right now. In Michigan, 45 Obama, 42 McCain. Ralph Nader, 6 percent; Bob Barr, 2 percent; Cynthia McKinney 1 percent.

In New Hampshire, another battleground state, Obama, 48; McCain, 43; Nader, 4 percent; Bob Barr, 2 percent.

You know the accusations, Ralph Nader, that were leveled against you in 2000, that you stole the election, in effect, from Al Gore. He would have carried Florida if you had not been a candidate. You got 90,000-plus votes in Florida. He lost by 500 votes.

What do you say to those people who are saying you're just trying to spoil this election right now for Barack Obama?

NADER: I say two things. They're factually wrong about 2000. If you ask Al Gore why he lost, he'll say it was the Electoral College because he won the popular vote and it was stolen in a variety of ways before, during and after Election Day, from Tallahassee to the five politicians on the Supreme Court.

Now, I have news for you. The last four major polls, when they poll Obama and McCain, and then they poll Obama, McCain and they put Nader/Gonzalez in the poll, McCain does worse. Does worse.

BLITZER: But you think your presence hurts McCain more than Obama?

NADER: That's what the polls say.

BLITZER: What do you think? BLITZER: And it's explained on our Web site,

PAUL: I have no idea. We have to wait and see. But some people say, well, you're going to hurt McCain. And I'm not hurting anybody. But I expect that they'll be as many votes, maybe they will come from the liberals that will vote for him.

BLITZER: Ron Paul, you and I...


NADER: It's the two parties that are hurting our country.

BLITZER: I want both of you to answer honestly. And both of you are straight forward, you have nothing to hide. Give me your honest assessment right now.

Who is the lesser of two evils right now, John McCain or Barack Obama?

PAUL: I don't do that. Evil is evil.

If you vote for one that you think is a little less, actually you get tricked into that. You think that you vote for a Republican to balance the budget, and they're worse than the Democrats. That's what the people are sick and tired of. You vote for the Democrats to end the war and they expand the war as much as the Republicans.

BLITZER: I'll rephrase the question for Ralph Nader.

Who is the lesser of two bads right now?

NADER: The lesser of two bads is not good enough for the American people. We need the best.

BLITZER: But you agree -- you've been watching politics all these years -- it's unrealistic to assume a third party candidate is going to be elected president of the United States.

NADER: No, but we can push the two parties to address what's troubling the American people economically, politically, socially for their children and the world.

BLITZER: So your goal is to get these four issues on the agenda. And on these four issues that you're talking about, who is better, which of these two presidential candidates?

NADER: They're both bad on these four issues. The great constitutional questions about who's going to run this country in all kinds of ways, the people, or the domination of the corporations over our government, are off the table for McCain and Obama.

BLITZER: So one final question for Ron Paul.

You say you're not necessarily going to vote for Ralph Nader, but you want a lot of your supporters to vote for Ralph Nader. Will you go out there and do what you so successfully did during the primarily campaign, raise money on the Internet for these third party candidates?

PAUL: Probably not, because it's tough raising money for somebody else. We're doing this for some congressional candidates, and it's not as easy as when you're the candidate himself.

So I don't think I will do that. But I want to be engaged in the issues and try to push this country, but I really want the American people to wake up and challenge the system. You can't get in the debates, you can't get on the ballots, the parties are the same. There's really no choice in the system. We don't have good democratic process here.

We go overseas and fight wars to promote democracy. At the same time, we listen to these glib debates going on that's really irrelevant to these four important issues. That's what our goal is.

NADER: Which our majority support.

BLITZER: And we're going to focus in on those issues, because we want to make sure that we get to the bottom of these critical issues for all of our viewers. Ron Paul, Ralph Nader, thanks for coming in.

NADER: Thank you, Wolf.

BLITZER: Some might say you're the ultimate odd couple, but I'll leave that for some of the commentators and pundits.

NADER: Talk to the American people.

BLITZER: We'll see what they say.

NADER: Check out constitutional safeguards. That's the key here.

BLITZER: Thanks guys.

NADER: Thank you.

PAUL: All right.

BLITZER: The CNN Election Express is in the battleground state of Michigan right now, where the economy there is in a tailspin. The stakes are especially high for the presidential candidates. Our own John King is in Michigan right now talking to voters. Stand by. We'll go there live.

And the McCain camp is accusing Barack Obama of insulting Sarah Palin and going on a big dig for dirt. In our "Strategy Session," is Palin being portrayed as a victim?

And a stunning admission about the state of the war in Afghanistan, this one from the chairman of the Joint Chiefs of Staff. Wait until you hear what Admiral Mullen is saying about the troops and strategy in Afghanistan right now. Stay with us. You're in THE SITUATION ROOM.


BLITZER: You saw Barack Obama in Norfolk, Virginia, just a little while ago and heard what he had to say about the McCain campaign's response to the lipstick controversy, our report, Suzanne Malveaux, at the beginning of the hour. He also attacked Senator McCain on the important issue of education.


OBAMA: See, that's my track record. Let's talk about his for a moment.

He marched with the ideologues in his party in opposing efforts to hire more teachers, fully fund No Child Left Behind, and make college more affordable. He even called for closing the Department of Education.

Now, I'll admit that closing the Department of Education would be a change. But it's not the change we need.


After three decades -- you can get a sense of where somebody's going by where they've been. Do you really believe after three decades of indifference on education that John McCain is going to take this up as one of his top priorities when he's president?

I don't think he gets it. I don't think he understands that our success as a nation depends on our success in education.

And I do get it. And that's why last November, I laid out a plan to invest in early childhood education, combat our high school dropout rate, put a college degree in the reach of anyone who wants one by making sure that we've got a $4,000 tuition credit available to any middle class student who's willing to serve in their military or their country. And we'll also fix the broken promises of No Child Left Behind, because while the goals of that law were the right ones, it was wrong to force our teachers, our principals and our schools to make do without the resources that they need.



BLITZER: Barack Obama speaking just a little while ago. We're monitoring these developments.

Obama is also calling the GOP claims that he insults Sarah Palin -- and I'm quoting now -- "phony outrage." Did Senator Obama though cross the line, or is the McCain campaign too quick to defend the woman on the ticket?

Questions for Hilary Rosen and Leslie Sanchez, they're coming up in our "Strategy Session."

And a combustible mix: federal workers, big oil money, and allegations of sex and substance abuse.

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


BLITZER: Let's go out to the CNN Election Express out on the campaign trail in Michigan.

As we told you just a short time ago, a new CNN/"TIME" magazine/Opinion Research Corporation poll shows Barack Obama holding on to a slim four-point lead over John McCain in that crucial battleground state.

Let's go to our chief national correspondent, John King. He's over with the bus. He's watching what's going on for us.

All right. What are the voters out there, the real voters, John, actually focusing in on in this election?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, Wolf, that narrow Obama lead, some would say a dead heat given the margin of error, has local Democrats pretty nervous. Seventeen electoral votes here in Michigan. This state has voted Democrat for president for 20 years, but Democrats say Obama does not have a bigger lead because he hasn't been able to capitalize on what is by far the number one issue here.


KING (voice-over): The rusting lock blocks access to the giant shuttered Ford plant in Wixom. A few miles away in Pontiac, a barren lot where the GM truck assembly line once provided jobs around the clock. And with the unemployment rate in Michigan already over 8 percent, the housing slump only adds insult to injury.

Help is what homebuilder Ray Gardella (ph) wants from the next president, and he isn't sold by Barack Obama's promise of change.

UNIDENTIFIED MALE: Yes, we need more than that, especially in the economy we have. Certainly a strong candidate, very easy listen to candidate, but I don't think he gives us the substance we need.

KING: Gardella (ph) was a McGovern Democrat, and a Jack Kennedy guy before that. But he leans Republican now. And like many in his generation here, shrugs off Obama's talk that John McCain has been in Washington too long to change it.

UNIDENTIFIED MALE: I think he's more of a man of action. He wants to -- he's been waiting for 30 years to become a man of action. I think he wants do that in the executive office.

KING: That Michigan is in a dead heat has local Democrats increasingly nervous. Privately, many complain Obama isn't following their advice on how to tap economic anxiety and connect with blue collar workers, and they complain he could have locked up the state if he had chosen Hillary Clinton as his running mate.

UNIDENTIFIED MALE: We did fear the Obama/Clinton ticket. He kind of made the safe choice for VP. John McCain made a bold choice for VP which has gotten everybody's attention.

KING: Oakland County Republican chairman Dennis Cowan (ph) says McCain's pick of Alaska Governor Sarah Palin has knocked Democrats off stride.

UNIDENTIFIED MALE: That's definitely happened. There's no question that we in essence have stolen the change aspect of an Obama/Biden candidacy, but primarily it's because we are emphasizing reform in government, as opposed to just change.

KING: Sprawling Oakland County, just north of Detroit, is the battleground within the battleground, home to more than a million people, a fairly even mix of Democrats, Republicans and Independents. A place where economic pain is easy to find but so, too, are giant homes as you move north into more upscale suburbs and exurbs.


KING: And Wolf, it's interesting looking at our new polling. Barack Obama at the moment is running behind where John Kerry ran four years ago in the key swing counties -- here in Oakland County, next door in neighboring Macomb County, where those Reagan Democrats are. Democrats say Barack Obama must improve his standing in those two places.

And one other interesting footnote. This is where Mitt Romney grew up. He went to high school here in Oakland County. Most Republicans here had hoped he would be John McCain's number two, but they say, Wolf, they're over their disappointment, and they say with Sarah Palin on the ticket, the phones are ringing off the hook -- Wolf.

BLITZER: John King will be joining us later in THE SITUATION ROOM.

Thanks for that report.

Let's get some analysis on what's going on in our "Strategy Session."

Joining us, Hilary Rosen, a Democratic strategist, Leslie Sanchez, a Republican strategist. Both are CNN contributors.

Hilary, what does Barack Obama really need to do now? Some say he's lost his mojo a little bit, he's got to regain the momentum. What does he need to do?

HILARY ROSEN, DEMOCRATIC STRATEGIST: Well, you know, he's got to, I think, stop responding to the Sarah Palin incendiary fire here and focus on the things that people actually do care about. You know, I think that the Palin thing will die down a little bit if what he's talking about is, you know, John McCain can talk about health care, Sarah Palin can talk about health care, but the government pays their health care. They're against health care for everybody else.

Health care costs have risen four times faster than the average paycheck in the last eight years under George Bush. John McCain's done nothing about it. Barack Obama's got to stay on that.

On jobs, you know, the economic wages of the average family have gone down under George Bush. They were up under Bill Clinton.

BLITZER: So basically what you're saying, he's got to go back to the strategy of painting John McCain just as a follow-up to George Bush.

ROSEN: We just heard from the bottom of the ticket that...

BLITZER: Hold on, Leslie. Leslie, hold on a second.

Let me let Leslie weigh in on how John McCain, right now, what he needs to do to try to win this election.

LESLIE SANCHEZ, REPUBLICAN STRATEGIST: I think John McCain's doing it right now. There's no doubt about it.

He's put a very strong candidate, you know, as his counterpart that's really energized the Republican Party. He's out doing again his kind of town halls, his rallies. He's talking to the people about what he wants to do, not reforming America or changing America, but reforming Washington. And that's starting to connect with folks.

You know, I think Hilary -- to speak to Hilary's point, you've never seen -- I've talked to a lot of political historians who have never seen in recent memory a top leading presidential candidate go after the vice president. I mean, you can dismiss the candidate, but to really sacrifice your energy and effort to go after that candidate is unprecedented.

BLITZER: All right.

Should he focus strictly -- I'm talking about Barack Obama, Hilary -- on John McCain and sort of leave Sarah Palin on the sidelines?

ROSEN: Well, look, you know, everybody's talking about how Sarah Palin has let John McCain become the change candidate. You know, do you want change at the top of the ticket, who's actually going to be running the show, or are you going to bet on change on the bottom of the ticket?

That's where Barack Obama has got his message going, that's where he needs to stay. And I think, you know, the Republicans would love Democrats to talk about Sarah Palin for the next seven weeks. This will slow down with her. It will become clear that she's really become nothing more than a hypocrite, what she's projecting and what she believes. BLITZER: Well, you say she's a hypocrite. Give me one example.

ROSEN: But Barack Obama's got to stay at the top.

BLITZER: Give me one example where she's been a hypocrite.

ROSEN: One example, she's talking about families with special needs and she cut the families with special needs budget in Alaska by 60 percent. She's talking about, you know, family values.


SANCHEZ: This is not a filibuster, Wolf. I mean, come on.

BLITZER: Hold on.

Leslie, I haven't heard that charge on the 60 percent cut with families and 60 percent. Have you heard that?

SANCHEZ: Not specifically the 60 percent. But I think there's so many false accusations out there.

ROSEN: It is true, and you have heard it.

SANCHEZ: And they've been every day. You know, there's -- it's an interesting dynamic.

ROSEN: She's proud of her family.

BLITZER: Hold on. One at a time.

SANCHEZ: There's very -- it's an interesting dynamic that the Democrats want to spend all their time going after the seconds person on the ticket, when the bottom line they recognize, it's a candidacy that's changed the dynamic because it speaks to middle class values. It speaks to the fact that people know Washington is broken and they want people with common sense who can come together with a proven record who are going to do the right thing, reach across the aisle and get things done.

BLITZER: All right.

ROSEN: There is a record.

BLITZER: Hold on. Hold on, guys, because we've got to leave it right there. But you know what? There'll be time down the road to continue.

Hilary Rosen, Leslie Sanchez, thanks very much.

Liquid explosives plot. British officials say they'll retry seven suspects in a case that led to new security measures at airports around the world. We'll have the details after this.