Return to Transcripts main page

THE SITUATION ROOM

Sex, Drugs & Scandal with The Interior Department; Stunning Take by Military Officer on Afghan War; Obama Getting More Aggressive; The Latest on Hurricane Ike

Aired September 10, 2008 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: On our Political Ticker today, it looks as though Laura Bush is preparing to exit the White House in high style. The first lady is featured features in the upcoming issue of "Harper's Bazaar" magazine dressed to the nines, with the family dogs and reading in the Lincoln Bedroom. We're told she talks about looking forward to returning to private life or, as she calls it -- and I'm quoting now -- "after life."
Remember, for the latest political news any time, you can always check out CNNPolitics.com. That's where you can also download our political screen saver and you can check out all of our blogs there, as well.

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

Happening now: There's breaking news we're following -- scandal brewing over at the Department of the Interior. Government employees accused of a laundry list of misdeeds, including drug abuse, taking gifts from oil company employees, even having sex with them.

Also, a stunning admission from the nation's top military commander expressing serious doubts about the U.S.-led war in Afghanistan. What's going on?

And Barack Obama unleashing his silver tongue against the McCain campaign. But is he only hurting himself with his aggressive new stance? We're assessing. James Carville will be here together with Alex Castellanos. Stand by for that.

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

They're serious allegations at any workplace -- contract fixing, moonlighting, accepting vacations. Add to that -- to those issues drug use and illicit sex, and you have the accusations now being leveled against more than a dozen current and former government workers over at the Interior Department in their dealings with oil and gas companies.

Let's go to our senior correspondent, Allan Chernoff. He's investigating what's going on. A brand new scandal and it's got the ingredients of headlines not only in this country, Allan, but around the world. What do we know?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Wolf, we're talking about sex, drugs, money and oil all at the heart of this stunning report from the inspector-general of the Interior Department. The inspector-general found that employees of the Minerals and Management Service in Colorado responsible for collecting royalties from energy companies that drill on federal land were having sex and engaging in illegal drug use with oil company employees. And that a supervisor, Gregory Smith, had sex with two subordinates at MMS and engaged in illegal drug use with at least one of his subordinates.

In addition, the investigation found that one third of the staff of the so-called Revenue in Kind Office, which collects oil from energy companies in lieu of cash, they we were receiving improper gifts from these companies.

Now, according to the report, the oil companies included Chevron, Hess and Royal Dutch/Shell. A preliminary reported released in May said changes in the office in Colorado that we were made to some contracts cost the U.S. government about $4.5 million. But this afternoon, the director of the Minerals Management Service, Randall Luthi, said: "I don't see, where the American people have been hurt dollar-wise."

Gregory Smith, the former program director of the Revenue In Kind office, resigned during this investigation. The case was referred to the Department of Justice, but it chose not to prosecute him.

Another Interior Department employee caught in the scandal, Jim Mayberry, pled guilty to a criminal charge.

And, Wolf, we do have comments from Shell and from Chevron. Both companies are saying that they did cooperate with this investigation, but they have no further comment at the moment -- Wolf.

BLITZER: And the investigation -- it was the inspector-general at the Interior Department. This was, shall we say, an interior investigation at the Interior Department, is that right?

CHERNOFF: Absolutely. That's right. The inspector-general who oversees that department of the U.S. government. Correct.

BLITZER: All right. We'll stay on top of this story. Very lurid allegations. Allan, thank you.

A candid assessment of the U.S. mission in Afghanistan -- very candid. It may even be shocking because of its source. No less than the chairman of the Joint Chiefs of Staff questioning whether the U.S. and its allies are winning the war in Afghanistan, that is now in its seventh year.

Let's go to our Pentagon correspondent, Barbara Starr. She's watching this story for us. Admiral Mike Mullen, when he speaks, people listen -- Barbara. What exactly is he saying?

BARBARA STARR, PENTAGON CORRESPONDENT: Well, Admiral Mullen made it abundantly clear today, Wolf, that Afghanistan is front and center on the list of his concerns.

(BEGIN VIDEOTAPE) STARR (voice-over): On Capitol Hill, a stunning it admission from the most senior U.S. military officer about the war being fought where the 9/11 attacks we were planned.

ADM. MIKE MULLEN, JOINT CHIEFS CHAIRMAN: I'm not convinced we're winning yet in Afghanistan.

STARR: Mullen said he believes the war can be won, but it's now a regional conflict involving Pakistan's safe haven border region for Al Qaeda and the Taliban.

Pakistan's Army chief of staff, General Ashfaq Kayani, at the same time issued a highly unusual statement saying that Pakistan's territorial integrity will be defended at all costs and no external force is allowed to conduct operations inside his country.

It's a direct shot from Pakistan's most influential military leader at a recent U.S. military raid into Pakistan -- the latest in stepped up U.S. attacks inside Pakistan targeting insurgents believed to be responsible for attacks across the border in Afghanistan.

Mullen has been pressuring Kayani to step up Pakistani military action, warning U.S. troops alone can't win the war.

MULLEN: It is my professional opinion that no amount of troops in no amount of time can ever achieve all the objectives we seek in Afghanistan. And frankly, we're running out of time.

STARR: The U.S. is sending 4,500 more troops to Afghanistan in January. But it could be months before even more troops are sent because of ongoing concerns about the war in Iraq.

ROBERT GATES, SECRETARY OF DEFENSE: Our military commanders do not yet believe our gains are necessarily enduring.

(END VIDEOTAPE)

STARR: Wolf, running out of time -- that's the word from the top U.S. military officer one day before the seventh anniversary of the 9/11 attacks. Admiral Mullen also said the U.S. can't, in his words, "kill our way to victory in the war in Afghanistan." He says much more help is needed -- reconstruction, aid, assistance and, yes, still more troops -- Wolf.

BLITZER: And General David Petraeus is leaving Iraq, but he's still staying in the region. He's going to be the head of the U.S. military's Central Command which oversees the war in Afghanistan, as well. I suppose he'll put his fingerprints on what's going on there, as well, won't he, Barbara?

STARR: Well, I think absolutely. But really, what underlies all of this is a growing view by top U.S. military leaders that the route to success in Afghanistan really lies through Pakistan. They have to get control of that border region. Cross border attacks, insurgents coming in from Pakistan -- it's at all time highs now. It's very serious. And unless that can be controlled, they don't see a way for a quick victory in Afghanistan -- Wolf.

BLITZER: Barbara, thanks for that. Barbara Starr is watching the story at the Pentagon.

Let's go back to the presidential campaign right now. Democratic presidential nominee Barack Obama as we've seldom heard him in recent days, fired up and lashing out at his rival, John McCain's, campaign -- definitely more aggressive, at least on this day. Some Democrats, though, worry he's still not being aggressive enough.

Let's go to our senior political correspondent, Candy Crowley. She's watching this story for us. Some of the critics within the Democratic Party saying he's playing too much defense, not going enough on the offense. What do you think -- Candy?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Absolutely. And making it clear that this is from outside the campaign, so sources don't really want their names known.

But there is some concern among Democrats that the bloom is off the rose, basically, in the Obama campaign, that his poll numbers are stagnant. And their worst recurring nightmare -- that he is not tough enough, that he really needs to fight back against everything from lipstick on pigs to tax cuts to his position on early sex education in school.

What they want to see is Obama putting McCain on the defensive. But right now, when Barack Obama hit back today it was tough, but it was still defense.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: You know who ends up losing at the end of the day?

It's not the Democratic candidate. It's not the Republican candidate. It's you, the American people. Because then we go another year or another four years or another eight years without addressing the issues that matter to you.

Enough. 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.

(APPLAUSE)

(END VIDEO CLIP)

CROWLEY: We should add, Wolf, that inside the Obama campaign, they believe the whole Palin phenomenon will recede. And they also say, listen, we are not paying attention to those national polls, we're looking at those battleground states and the polls there -- Wolf.

BLITZER: Well, if they're looking at those battleground states, it's very, very tight in those beginnings. And in Florida, for example, Barack Obama is behind. He's ahead in Michigan and New Hampshire, but just barely.

CROWLEY: Right. Absolutely.

So they -- I mean and this is what the Democrats are looking at. And they're saying listen, this is our best atmosphere that we have had in decades. They don't want him to get -- and you saw he mention this exact phrasing -- swift boated. They want him to be tougher in a way they don't believe John Kerry was.

So, you know, in effect, they want two things. They want him to hit back on accusations, but they also want for him to give some incoming to John McCain so they can sort of rock him back at this point.

So there's concern out there. But again, it's from outside the campaign, as opposed to what it seems to be inside the campaign.

BLITZER: A lot of Democrats, they're nervous he would turn out like Michael Dukakis in '88. He didn't really respond forcefully -- or even John Kerry, four years ago, didn't respond forcefully to the so- called swift boat campaign.

The only one who really came out swinging in both of his campaigns was Bill Clinton. And we know what happened in those elections.

CROWLEY: Right. Absolutely, Wolf.

BLITZER: All right. Candy is going to be back later, as well. Thank you, Candy. We're going to continue to watch what's going on.

But right now, we've got breaking news.

ANNOUNCER: This is CNN breaking news.

BLITZER: Let's go right to Chad Myers.

He's got new information on Ike, the hurricane, just coming out from the National Hurricane Center -- and, Chad, it's very, very disturbing.

CHAD MYERS, CNN METEOROLOGIST: Yes. The 5:00 advisory, Wolf, now up to a category four, 135 mile per hour sustained winds, with gusts to almost 160, as it makes landfall on the Texas coast Friday night overnight into Saturday. They've made it a Category Two right now. It's a 100 mile per hour storm.

You're not finding 100 mile per hour winds in it yet. But the pressure -- the pressure is low enough to actually make a category three hurricane right now. You just have to wait for the winds to catch up.

A low pressure means air is being sucked into this storm and that's what's going to happen. And it's going to increase in strength all the way through landfall, which now has been nudged basically kicking a field goal between Galveston and Corpus Christi, Port Lavaca (ph) right through this area here. And it is just -- that 135 mile per hour storm will tear that area up, not only there, Wolf. But it's going to keep going through, probably into Victoria, still 110 miles per hour and maybe through Austin at 90 miles per hour.

That will do damages in big towns. Even if it doesn't hit Houston or Corpus, there are towns inland that will certainly be affected by this decaying but yet still very strong hurricane. It's going to take awhile to spin down a Category Four hurricane.

BLITZER: Wow!

MYERS: It takes a while.

BLITZER: Austin, Texas, the state capital -- you're saying that city, potentially, could be in trouble?

MYERS: With a 90 mile per hour wind, you bet. I mean that is going to knock -- that will take shingles off, for sure, and sometimes even take plywood off roofs. Now, the real scary thing here, Wolf -- and I'm going to very honest with you -- that many of the models this afternoon have been shifting it even farther to the right, kind of trying to make an approach at Houston, especially on -- maybe on a turning course here through Houston. And that would be even worse, to have a Category Four, Three or Two anywhere near closer than that to Houston at this point.

BLITZER: And as bad as it is for the residents of Texas, all the way from Brownsville up to Galveston and beyond, at least folks in New Orleans and Louisiana, they're breathing a lot easier right now.

MYERS: You know what, think about what we talked about last week, Wolf. You and I were talking off camera about moving our parents out of South Florida because it was -- it could hit there as a big category three. This thing has wobbled back and forth, moved across Cuba. You know, it still could turn left or turn right. But I do believe that there's no way it can get to New Orleans at this point. So, yes, that's good news.

BLITZER: Well, that's good news for the people in New Orleans.

MYERS: Right.

BLITZER: All right, Chad, stand by. We're going to be getting back to you.

It's a Category Two right now. But as you just heard Chad say, based on latest forecast from the National Hurricane Center, it could become, within a day or so, a category three and then a category four and be devastating to that Texas coast.

One of his sons was a lobbyist. Did vice presidential candidate Joe Biden pressure him to quit his job? The candidate sits down with CNN's Special Investigations Unit to confront that allegation head-on. Stand by.

And Sarah Palin and the environment -- we're in Alaska. We're looking closely at a wildlife controversy -- shooting wolves from the air.

And Michelle Obama hitting hard on behalf of her husband. Her own words, raw and unfiltered.

That's coming up this hour right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Democratic vice presidential nominee Joe Biden is denying allegations he pressured his son to quit his job as a lobbyist. He talked about that and a lot more with CNN's Special Investigations Unit correspondent Abbie Boudreau. She's joining us now -- Abbie, I know you're working on an important documentary on Joe Biden that will air Saturday and Sunday. What's the controversy here?

ABBIE BOUDREAU, INVESTIGATIVE CORRESPONDENT: Well, this is an issue that's been brought up time and again in the last several weeks, Wolf. I asked Senator Biden about his son Hunter's lobbying activities. Both Barack Obama, as you know, and John McCain have criticized the influence of lobbyists in Washington.

Well, Hunter is a 38-year-old lawyer who has lobbied on behalf of biotech companies and universities. But sometimes details can be buried in odd places. One of those odd places is in a lawsuit unrelated to Joe Biden that was filed in New York last year by businessman Anthony Lotito against Hunter and his uncle for fraud and breach of contract.

Among the allegations was the claim that Senator Biden wanted Hunter to get a job out of the lobbying business because of the impact it might have on his campaign for presidency.

(BEGIN VIDEOTAPE)

BOUDREAU: Politics is so much about appearance.

Were you at any point -- did you ever wish that your son, Hunter, had not become a lobbyist for a period of time...

SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENTIAL NOMINEE: No.

BOUDREAU: ...just because it might appear as if it we were a conflict?

BIDEN: No. Because I knew there was no possibility there would be a conflict in this kid.

BOUDREAU: But it might appear as a conflict.

BIDEN: It is -- well...

BOUDREAU: And that could hurt your career.

BIDEN: Well, I don't know -- I don't care about my career versus my son, for God's sake. BOUDREAU: But isn't it true that there is a lawsuit that alleges that you had asked your brother Jim to find Hunter a non-lobbying type of job?

BIDEN: Yes, there's a lawsuit that alleges that because people take advantage of the celebrity. That's simply not true. That is simply not true. And, you know, my son isn't even a registered lobbyist now. He deregistered because of all the pressure.

I have absolute, absolute, absolute faith in the integrity of every single member of my family. And -- but if Hunter did not -- did not -- and, by the way, one of the things for sure Hunter would never, Hunter has never spoken to me about a client. Never spoken to me about anybody when he was practicing law unrelated to lobbying.

BOUDREAU: But he didn't get out of it because of you? You never asked him to stop being a lobbyist?

BIDEN: I never asked him to do that.

BOUDREAU: OK.

BIDEN: I never would.

(END VIDEOTAPE)

BOUDREAU: Hunter's attorneys have said the suit is without merit and have also denied the allegations that Senator Biden was trying to steer him into a non-lobbying job.

Earlier today, we confirmed that Hunter submitted a letter late last month to the office -- Senate Office of Public Records, which terminated his lobbyist status -- Wolf.

BLITZER: Abbie doing some good work for us, as she always does. Thanks very much.

And we have an important note for our viewers. You can see, obviously, a whole lot more this weekend, as we show you sides of Joe Biden and Sarah Palin you probably haven't seen before. "The Candidates Revealed" this Saturday night, starting at 9:00 p.m. Eastern. "Sarah Palin Revealed" at 9:00, "Joe Biden Revealed" at 10:00 p.m. East Saturday and Sunday night.

And as we learn more about Sarah Palin, we're also uncovering questions about her environmental policies -- information you need to know.

Our own Randi Kaye, she went to Anchorage, Alaska to look into all of this. All right, what are you uncovering -- Randi? What do we know about her stance on some of these very sensitive environmental issues?

RANDI KAYE, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT: We found out quite a bit about all of the issues here, Wolf, and her stance on them. I can tell you, as far as global warming goes, Sarah Palin does not believe that global warming was caused by humans. Now, her running mate, John McCain, certainly does. And he has worked to curve carbon emissions.

But the campaign is telling us that Sarah Palin worked very hard -- in fact making it a priority, the natural resources here and the wildlife. But environmentalists that we've spoken with say that her record shows something else.

(BEGIN VIDEOTAPE)

KAYE (voice-over): What you're looking at may appear disturbing, but it's entirely legal in Alaska -- state wildlife officials in small planes chasing down wolves, then shooting them dead. The video was from the Defenders of Wildlife. Wolves eat caribou and moose -- a staple for Alaskan hunters and vital for tourism. So Governor Sarah Palin gave the go-ahead, making aerial shooting of wolves in Alaska legal.

MEGHAN STAPLETON, PALIN CAMPAIGN SPOKESWOMAN: It's about making sure that Alaska natives can put food on their table.

KAYE: Nationwide, aerial hunting has been banned since 1972. Governor Palin says Alaska's program is about managing predators to promote healthy populations of all wildlife.

Rod Amo is a member of the Alaska Outdoor Council, a statewide organization of hunters.

ROD AMO, ALASKA OUTDOOR COUNCIL: We're dealing with one of Alaska's renewable resources, that wild game harvest. And by controlling the number of wolf and bear that are preying on those, you can increase those numbers.

KAYE: The governor wants those resources protected.

(on camera): He says it is to help preserve the caribou and moose for Alaskans. Do you buy that?

RICK STEINER, MARINE BIOLOGIST: Absolutely not.

KAYE (voice-over): Biologist Rick Steiner, who says he is not a Republican or a Democrat, says there is no evidence wolves endanger Alaska's moose or caribou populations.

(on camera): In a word, if you could sum up Sarah Palin's record on the environment here, what would it be?

STEINER: Abysmal.

KAYE (voice-over): What is Sarah Palin's record on the environment?

She supports oil and gas drilling in the Arctic National Wildlife Refuge and this year opposed an initiative to protect salmon streams from a mining project. Despite federal conclusions Beluga whales are in critical danger, Palin says the belugas are rebounding. Just last month, she brought a lawsuit filed by the state against the U.S. government. In the suit, she challenges the listing of the polar bear as threatened under the Endangered Species Act and argues that listing hampers oil and gas exploration.

STAPLETON: You look at the polar bear numbers, the primary concern falls within Canada. They're doing fine in Alaska.

(END VIDEOTAPE)

KAYE: Now, a study by the U.S. Geological Survey actually contradicts that. It found that projected changes in future sea ice conditions could actually wipe out two-thirds of the polar bear population by the year 2050, if not sooner.

Now, the governor, Wolf, is getting some high marks for how she's been handling the compensation ruling in terms of the Exxon Valdez spill here. The ruling came down in June. She said she was very disappointed and her heart goes out to the families. She has said that that -- that the court gutted the jury's decision, undercut the state efforts to deter marine shipping here. So, again, high marks for that -- Wolf.

BLITZER: We can hear that plane landing behind you -- or taking off, something like that. Randi, thanks for that excellent, excellent piece for us. Very interesting that she disagrees with John McCain when it comes to drilling in the Arctic National Wildlife Refuge. He opposes it. She supports it. She also disagrees with John McCain on the issue of who's responsible for global warming. She doesn't believe humans are responsible. He certainly does.

And you know what's going to be fascinating over the next eight weeks or so, to see who influences whom more. Does she impact his stance on the Arctic National Wildlife Refuge or does he influence her? We'll see what's going to happen and you'll watch it closely for us, right?

KAYE: Absolutely, Wolf.

BLITZER: We're counting on Randi Kaye for us. Thanks very much.

Russian bombers in Venezuela -- why is America's most hostile southern neighbor right now -- that would be Hugo Chavez -- inviting them in?

Plus, a 9/11 survivor on a journey recalling that fateful day. We're with him as he returns for the first time to the Pentagon. Our own Jamie McIntyre was there with him. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Carol Costello is on assignment today.

Fredricka Whitfield is monitoring some other important stories coming into THE SITUATION ROOM -- Fred, what's going on?

FREDRICKA WHITFIELD, CNN ANCHOR: Hello again, Wolf. Well, two Russian bombers landed in Venezuela a short time ago, according to Russia's defense ministry. Russian officials say they'll take part in military training maneuvers. They're refusing to say how long the planes will be in Venezuela or whether they are armed. Washington has long been at odds with Venezuelan leader Hugo Chavez and relations with Moscow have been increasingly strained since Russia's military action in Georgia last month.

And crews in Virginia are searching for up to 12 workers who may have been inside a that building collapsed in a Richmond suburb today. A 60-foot section of the retail and residential building under construction came crashing down at lunchtime. Although emergency workers received reports that a dozen workers were stuck inside, crews have not been able to confirm that they are in there. The cause of the collapse is still unknown.

The ex-boyfriend of actress Anne Hathaway is headed to prison. Italian businessman Raffaello Follieri pleaded guilty today in a New York real estate fraud case. He agreed not to appeal any sentence of up to five years and three months. Prosecutors say Follieri posed as the Vatican's representative to the U.S. and told investors the church would sell him property at big discounts. Sentencing is now scheduled for October 3rd -- Wolf.

BLITZER: Fred, thanks very much.

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

Happening now, Michelle Obama out on the campaign trail. She's focusing in on the economy and talking about what her husband would do to help working class Americans.

Also, the New York congressman, Charlie Rangel, speaking out on his failure to pay some taxes on income from rental property in the Dominican Republic. He's saying something you don't often hear from politicians. But is it enough to quell the controversy?

And painful memories -- a 9/11 survivor returns to the scene of the attack for the first time. Our own Pentagon correspondent, Jamie McIntyre, goes along with him.

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

The weak economy here in the United States certainly a major focus out on the campaign trail. And Michelle Obama hit that theme hard today at a roundtable with a group of working women in Indiana.

Take a listen to what she had to say.

(BEGIN VIDEO CLIP, COURTESY WTHR)

MICHELLE OBAMA, WIFE OF BARACK OBAMA: Under the Obama economic plan, 95 percent of middle class families would receive a tax cut...

(APPLAUSE)

M. OBAMA: That's 95 percent of working class families.

(APPLAUSE)

M. OBAMA: And because so many people are struggling with the rising cost of energy, Barack would provide a $1,000 emergency energy rebate to working families.

(APPLAUSE)

M. OBAMA: Barack knows that thousands of women don't have family leave today in America. And many women who do have family leave can't take it because it's unpaid.

So if you can't afford not to receive a check, you don't get leave. And 22 million working women don't have a single paid sick day. So imagine that -- in America. You've got kids. They get sick. Mine certainly do. And you don't have a way to take them to a doctor's appointment. That's why as president, Barack will expand the family and medical leave act so that millions of additional American s will be able to take a little time off to care for a sick child or an elderly parent or maybe go to a school play, pot luck, parent-teacher conference.

(END VIDEO CLIP)

BLITZER: Michelle Obama speaking out earlier on issue number one, the economy in Indiana.

Her husband meanwhile is using some sharp words out on the campaign trail. James Carville believes that's what he should have been doing all along. James standing by to join us. Also, Alex Castellanos, he'll be here to talk about that and a lot more. Stand by.

Are current restrictions on what passengers is carry on board really preventing a terrorist attack? One explosive expert says flatly no. You'll hear a shocking assessment.

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

(COMMERCIAL BREAK)

BLITZER: Both Barack Obama and John McCain are going on the offense today, both making heated accusations against the other. Joining us now to talk about this intensifying campaign rhetoric, the Democratic strategist James Carville and the Republican consultant Alex Castellanos, both part of the best political team on television.

I know you've wanted him, James, to get tougher, more assertive. Is he doing the right thing, Barack Obama right now?

JAMES CARVILLE, DEMOCRATIC STRATEGIST: I think he's doing some of the right thing. And look, this election, you knew as soon as you saw the $407 billion deficit, that the McCain people were going to come up with something to distract people from it. I think what Senator Obama needs to do is not get so much angry at the attacks on himself but get passionate about what's happened to the American people and to call out the fact that he's not going to be deterred from talking about things that really matter to people, if you will, by these extraneous made-up attacks that the McCain camp, the Republicans traditionally get Democrats to chase after.

I think he's off to a better start but he has to show real passion about what's happened to the country and not so much what's happening to him because this is going to continue to happen. It happens every cycle of late.

BLITZER: Alex, listen to this new McCain ad on education going after Barack Obama, and I want to get your sense, your thought on this because it's causing lots of controversy. Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Obama's one accomplishment? Legislation to teach comprehensive sex education to kindergartners. Learning about sex before learning to read? Barack Obama. Wrong on education. Wrong for your family.

(END VIDEO CLIP)

BLITZER: Now, a lot of Obama supporters, a lot of Democrats and others say this ad is over the line because what he was trying to do is make sure that kids in kindergarten, if a teacher is improperly touching them or anything like that, let their parents know what's going on. Is that ad totally distorting what Barack Obama's position is?

ALEX CASTELLANOS, REPUBLICAN CONSULTANT: I think the McCain campaign's making the case that no, it's not. I guess this is one of the challenges for the Democrats in when they decided to put up an unknown, untested candidate.

You know, everything you learn about him new defines him as opposed to John McCain who's been around forever and has known warts and all and it's hard to burn down the same house twice with John McCain.

These new things define Obama and I think what the McCain campaign would point out is look, in their defense, the Obama campaign is holding up the SEIC standard, Sex Education and Information Council and those standards say 5 to 8-year-olds should be taught body parts and what feels good and lifestyles, things that are not essential to really protecting children from predators and so that's I think a challenge that Obama's going to have to define.

BLITZER: All right. James, go ahead.

CARVILLE: First of all, Alan Keys ran this same attack against Obama in 2004. Secondly, it starts with a lie. Obama voted for this legislation. He didn't sponsor it or anything. Thirdly, it was all parents could opt in or out and its purpose was is to tell children about the facts of pedophilia, how to report things. OK? And so, yes, of course, it's his one giant mass distortion. It starts out Alan Keys tried the same thing. If starts out with a distortion and ends with a distortion.

And John McCain, deep down inside my heart, you know, as you know, I've said before I admire McCain. I don't believe he knew about it. I hope somebody asked him. But I refuse to believe that John McCain agreed to airing this spot. I know he says I'm John McCain, I paid for it but they have that in the can and they do it. It I don't think he knew about it. I really don't.

BLITZER: Do you think he knew about it, Alex?

CASTELLANOS: I think, look, this is all Americans look at this and say you know what; this is how we get the mess in Washington. The politicians tell us they want a good thing to happen but then they vote for big pieces of legislation that turn out to be a mess. Obviously, Barack Obama is becoming enmeshed here in his own records so James says the Republicans are distorting it. The point of all of this is every day Barack Obama is talking about this, he's not the candidate of hope or the candidate of change. And you know, he's on defense instead of offense. That's a losing day.

BLITZER: James, go ahead.

CARVILLE: I can't sit here. They're run a completely false ad against Barack Obama and you say he's out there talking about this. I mean, my point is, I really don't think that senator McCain knows about this ad, and in my heart of hearts, I want to believe he's an absolutely furious about this and somebody's being called on the carpet because this ad is blatantly completely false. It's actually was by most people's estimation a superb piece of legislation and I'm certainly not going to say the Republican party don't want to stop pedophilia because I think almost all Republicans do. All Democrats do.

BLITZER: He came out swinging Obama today and he leveled this charge, Alex, take a listen to this.

(BEGIN VIDEO CLIP)

OBAMA: I don't care what they say about me. But I love this country too much to let them take over another election with swift boat politics. Enough is enough.

(END VIDEO CLIP)

BLITZER: All right. Go ahead and because they're referring to he was referring to another ad that the McCain campaign saying Obama was a sexist because he used the phrase you can put lipstick on a pig but it's still a pig, a phrase that John McCain used in describing Hillary Clinton's own health care plan earlier this year. And I don't remember anybody saying that he thought Hillary Clinton was a pig.

CASTELLANOS: You know, again, this is one of those things that the untested candidate who gets out there and obviously, I think he wasn't in my opinion; he certainly wasn't referring directly to Palin herself. But he certainly was referring to the McCain/Palin ticket so bam, he opens up another can of worms. He ends up on defense again and it's another poor day and that's another reason he's slipping in the polls.

But Obama's big problem is he's run out of script. He was the candidate of change and hope about a month ago. Then all of a sudden, he kind of got the nomination, ran into the old national Democratic party in Washington. They don't seem to want a lot of change.

So somehow the campaign of hope and change has disappeared and it's turned into this negative Bush/McCain equation that he's trying to sell. Unfortunately, these candidates have both been on the trail long enough that voters are getting to know each of them on their own merits, not who they're not but who they are. He's run out of scripted.

BLITZER: Very quickly James, go ahead.

CARVILLE: Very quickly is that of course Tory Clarke, my friend who is Donald Rumsfeld's communication director said lipstick on a pig. Obviously Senator McCain made the same reference when he was - Senator McCain when he was talking about Senator Clinton.

McCain doesn't believe this. He knows he wasn't talking about Governor Palin. The deficit you number came out. He knew he was tied to Bush. Steve Schmidt in that crowd knew that they had to change the subject. They put this thing out. Had nothing to do with anything and people's lives are still not what they need to be. That's what Obama needs to focus on.

BLITZER: James and Alex, we'll have you back hopefully tomorrow, maybe Friday. Guys, stand by. Thanks very much.

Safety in the skies. Are current restrictions on what passengers carry on board preventing a terrorist attack? One explosives expert says no.

And painful memories on this, the eve of the anniversary of the 9/11 attacks. A survivor retraces his steps for the first time.

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

(COMMERCIAL BREAK)

BLITZER: British prosecutors say they'll ask a judge to approve a second trial against seven suspects accused of plotting to blow up Transatlantic flights. Prosecutors claim the defendants were planning to use liquid explosives to take down flights between Britain, the United States and Canada. As a lot of our viewers will recall, that case change the way all of us now have to travel limiting the amount of liquids we can carry on board. One explosives expert tells CNN the restrictions are not enough to ensure passenger safety. Here's CNN's Paula Newton.

(BEGIN VIDEOTAPE) UNIDENTIFIED MALE: No drinking fluids, as well, please.

PAULA NEWTON, CNN CORRESPONDENT (voice-over): By now we all know the routine, one clear plastic bag shove in all those little bottles and you're through. Most people would assume safe.

SIDNEY ALFORD, EXPLOSIVES EXPERT: No, this is a liquid we don't want.

NEWTON: Not Dr. Sidney Alford, veteran explosives expert and advisor to the U.S. and British military even the FBI.

ALFORD: Now we have a bomb.

NEWTON: Since 9/11, Dr. Alford has been taking a close look what could bring down an airplane.

(on camera): I just flew with this. Hand sanitizer. I've got medicine here for my kids, I've got lotion.

ALFORD: This is capable of containing enough to be most detrimental to any aircraft. Probably destroy it.

NEWTON: Just the one single bag?

ALFORD: Oh, yes.

NEWTON (voice-over): Dr. Alford has been experimenting with explosives in air frames for years and he simulated explosions just as both the British government and the FBI have. He says even the amount of liquid allowed on board now could bring down an airplane.

(on camera): Does that surprise you?

JIM FITZPATRICK, BRITISH TRANSPORT MINISTER: Well, naturally, it would -- it concerns me.

NEWTON (voice-over): We put his findings to the British Transport Department who say they're confident the current restrictions eliminate most of the risk. But?

FITZPATRICK: Nothing is absolutely foolproof. We're constantly updating, constantly monitoring, constantly taking advice. You supply us with the information that he told you about, obviously we'll feed that to security people.

NEWTON: But in the U.S., the Transportation Security Administration or TSA voiced much confidence in the current restrictions.

KIP HAWLEY, TRANSPORTATION SECURITY ADMIN: We do analysis and know precisely what it takes to take down a plane. And that's something that is very carefully guarded secret. The size of the bottle and how much liquid you could bring gave us very good confidence that the small size was not such that it would represent a catastrophic risk. NEWTON: But even the TSA admits after months of testing in 2006, it was close but not close enough to restricting liquids even before the discovery of the alleged British plot to take down transatlantic airliners. Instead, the TSA was caught off guard and the resulting security clampdown created chaos. Both the TSA and its British counterpart point out the liquid restrictions are only one layer in a complicated security regime.

Paula Newton, CNN, London.

(END VIDEOTAPE)

BLITZER: President Bush and the president of Iraq, they're having their talks at the White House today. We'll go there live to hear what they discussed.

Also, Sarah Palin's pull with women, just how strong is it?

And did Barack Obama miss a major opportunity to win over women voters?

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

(COMMERCIAL BREAK)

BLITZER: President Bush has been huddling with his Iraqi counterpart, President Jalal Talabini, from Iraq over at the White House today. Let's go to Elaine Quijano. She is working the story for us. What did we learn, Elaine?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well Wolf, the two leaders met for about 45 minutes. They talked about a range of issues and including a yet to be finished agreement on the long term U.S. troop presence in Iraq. Afterwards President Bush talked to reporters and Mr. Talabani as well. Mr. Bush touting the surge saying it's been effective and for his part, president Talabani followed up some ephusive (ph) praise for President Bush and a sweeping statement about the situation in Iraq today.

(BEGIN VIDEO CLIP)

PRES. JALAL TALABANI: I can say all parts of Iraq are liberated from the terroristic control and activities through that groups remaining, and there is no place, no inch of Iraqi land that is under the control of terroristic activities.

(END VIDEO CLIP)

QUIJANO: Well, President Talabani went on to say that Iraq's relations with neighbors Turkey, Syria and Iran have improved to the point where they pose no problems -- Wolf?

BLITZER: Elaine over at the White House for us, thank you.

John McCain taking his rival Barack Obama to task today about an issue he talks a lot about out on the campaign trail, and that is pet spending projects. Here is what McCain lad to say at a rally earlier today in the battleground state of Virginia.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: The first pork- barrel-laden earmark big spending bill that comes across my desk, I will veto it. You will know their names. I'll make them famous and we will stop this. We will stop this corruption.

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 has asked for $932 million in earmark pork barrel projects. That change, while the governor has vetoed half a million worth of pork barrel earmarked projects. My friend, that is about as I figure it about $1.5 billion swing. That is a lot of money anyplace in America. We are going to stop it, and we are going to reform it.

(END VIDEO CLIP)

BLITZER: John McCain speaking earlier today out on the campaign trail in Virginia.

Their politics are worlds apart, so how does Hillary Clinton factor into Sarah Palin's popularity? We will take a closer look at the female factor. That is coming up here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Tomorrow's the seventh anniversary of the 9/11 attacks on Washington and New York. Our senior Pentagon correspondent Jamie McIntyre went along with a survivor of the attack on the Pentagon as he returned to the scene for the first time.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, SENIOR PENTAGON CORRESPONDENT (on camera): So this is the first time that we try to find exactly where you were on September 11th?

JOHN LEECH, 9/11 PENTAGON SURVIVOR: That is correct.

MCINTYRE (voice-over): For years retired Air Force Colonel John Leech had no desire to his old Pentagon office. It was too painful.

(on camera): So you were somewhere in this area, right?

LEECH: Yes.

MCINTYRE (voice-over) : But Leech agreed to take CNN there as he has vowed to reengage with the past.

LEECH: We would have been in this area, this area right here when the aircraft struck. And as I said, this was the far wall. The aircraft, as you know, drove in at an angle, and it went actually I believe it hit the first floor, and drove in three rings and hit with such force that I have never experienced anything like it in my life. It rattled you right down to the bone. The office filled with smoke. The roof started to disintegrating and I ran out of the door and I stood right about there in secondary explosions starting erupting. People were screaming. Blood-curdling screaming. At first there was a adrenaline rush, but within a few minutes I was scared, the first time I was really scared and it was my god, we are under attack. I was so lucky. If you look at the diagram at how the aircraft entered the building and the damage it did, it is almost like we were in a protected cocoon there and virtually untouched. I mean, I inhaled a lot of jet fuel vapors and dusted up, but that was the extent of my injuries.

MCINTYRE: First for John Leech, reviewing videotape of the destruction he escaped.

LEECH: This is where 90-some personnel were killed on the first floor and the devastation is just unbelievable. It makes you feel weak in the knees to see these pictures again.

MCINTYRE: Looking at this on the desk here. You can see a pair of glasses.

LEECH: A pair of glasses.

MCINTYRE: A bowl of candy is tipped over there. Last stop, the Pentagon chapel where in a photo album, John Leach finds the friend he was with him on September 11th, navy captain John punches.

LEECH: I have avoided this for the past six years and I have avoided anything to do with 9/11, so it feels good to be here. I mean, a lot happened that day. A lot of good people died. A lot of very good people.

MCINTYRE: Jamie McIntyre, CNN, the Pentagon.

(END VIDEOTAPE)

BLITZER: And to the viewers, you are in THE SITUATION ROOM