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McCain Puts Campaign on Hold to Focus on Financial Crisis; President Bush Speech on Bailout; Interview With Senator Lindsey Graham

Aired September 24, 2008 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: And it's happening right now, the breaking news we're following. John McCain puts his campaign on hold to focus in on America's financial crisis, and he's calling for a delay of the first presidential debate.
We're standing by to bring you Barack Obama's reaction. We'll going to Florida live. He's about to speak.

All this only hours before President Bush makes a televised pitch to the nation for the $700 billion proposed bailout. Will his primetime speech sway Congress? Particularly; will it sway Senator McCain?

Plus, our new battleground polls from states that could decide this election. Will there be any changes in CNN's Electoral College map? We're only minutes away from what we know on that front.

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

But we begin with the breaking news in the presidential race. John McCain going to some stunning new lengths to try to show voters he's focusing in on the nation's financial mess. He says he's suspending his campaign to return to Washington to work with his colleagues in Congress on the $700 billion bailout, and he's urging that the first presidential debate scheduled for Friday night be delayed.

We're standing by to get the response from Senator Barack Obama. He's getting ready to speak. We'll hear his words live. His campaign says Obama called McCain earlier today to propose a joint statement on the Wall Street crisis and that McCain agreed.

Let's listen first to what Senator McCain had to say about his decision to put his campaign on hold, at least for now.


SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: It has become clear that no consensus has developed to support the administration's proposal. I do not believe that the plan on the table will pass as it currently stands, and we are running out of time.

Tomorrow morning, I'll suspend my campaign and return to Washington after speaking at the Clinton Global Initiative. I have spoken to Senator Obama and informed him of my decision. I've asked him to join me.

I'm calling on the president to convene a leadership meeting from both houses of Congress, including Senator Obama and myself. It's time for both parties to come together to solve this problem.


BLITZER: The best political team on television is standing by to assess what is going on and to bring more on this breaking news. We've got our reporters standing by covering all angles.

Dana Bash is here, Jessica Yellin is watching what's going on. Candy Crowley. And Elaine Quijano is over at the White House.

Dana, let me start first with you.

All of a sudden, it happened within the past hour or so, John McCain announcing he wants to suspend all political campaigning for the time being. Walk us through how this came about.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: That's right. Suspend all campaigning, all fund-raising. And the McCain campaign says that they're taking their political ads down right now.

What happened was McCain got a call from Barack Obama this morning with a suggestion that the two candidates put out a joint statement on the economic crisis. And both campaigns agreed to this and confirmed this timeline. Then what happened was, much later, about six hours later, this afternoon, about 2:30, Senator McCain called Senator Obama back and said, you know, forget this idea of just a statement, why don't we go back and actually deal with this, go back to Washington and get involved in the negotiations?

And then he came out and saw what you're seeing right now. He came out and made the statement that he is suspending his campaign.

What I'm told from McCain advisors is that he's been here in New York, he's been meeting with some world leaders, obviously been having some debate prep, but also been in touch with economic advisors inside and outside of his campaign. He also has been having conversations with leaders, Republican leaders back in Washington, the House and the Senate, and that they made it clear to him that they wanted him to come back to figure out how to get this thing done because as our Hill team has been reporting, everybody has been reporting, this is really in a place right now where there simply are not the votes to get anything passed right now -- Wolf.

BLITZER: Stand by, Dana, because I want to go to Jessica Yellin right now.

What are you hearing? What's the reaction from Senator Obama?

We're expecting to hear from him very soon. He's going to be speaking to reporters. We'll carry that live. But what are you getting? What's your initial reporting discovering? JESSICA YELLIN, CNN CORRESPONDENT: Well, Wolf, first of all, the Obama campaign takes the position that they don't want to do anything to politicize this debate because it is so urgent. And while they're not explicitly calling this move by John McCain politicizing, they said what they felt was the wise move was to issue a statement. This is one of the reasons we're seeing Obama continue to campaign.

And Obama, as well, is inclined, we're told, to go on, go ahead with the debate, even if he's the only one there, I suppose. So right now I'm also hearing from Democrats on the Hill who say this is a cynical move by John McCain, who feel that this is an effort to try to buoy his own sagging poll ratings.

They point to the fact that McCain has not been there to vote on a number of key issues. For that matter, neither has Obama. I think we have a graphic of the most recent times both men voted.

John McCain's last roll call vote was on April 8th of 2008. Obama's was July 9th. And last night's final vote was about more than 100 votes after the last one McCain attended, about 50 more than the last one Obama was present for.

So the Democrats are saying they think that they are -- they don't think that John McCain's presence or Obama's presence will be the significant deal-clencher. Of course, the Republicans see it very differently and applauding McCain's move -- Wolf.

BLITZER: Stand by, Jessica.

Candy Crowley is also working the story for us.

Candy, what are you hearing? You're down in Clearwater Beach in Florida. What are you hearing about the prospects that Obama will come out and say yes, I agree with Senator McCain, this is no time for politics -- first and foremost, we are both United States senators, and we've got to resolve this financial crisis and either vote yea or nay on this proposed bailout legislation?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, we will see what he says probably within the half-hour. But at this point, obviously, they do believe that McCain, because of the timing of how all of this worked out, which Jessica just explained, you know, they believe that McCain got out there wanting to look like the leader on this because, let's face it, this campaign is all about leadership.

So McCain and Obama have said all along this shouldn't be politicized. Obama has said that on the campaign trail, this is too serious, here are my principles. So whether he will want to go back to Washington, that was an open question, at least about 20 minutes ago. They said, you know, wait and see what he has to say, but at the moment, they were inclined not to go back and they were inclined, as Jessica said, not to postpone then debate at this point.

BLITZER: And if they don't postpone the debate, we'll have to see who is going to blink on this sensitive subject.

Elaine Quijano is over at the White House.

And all of this taking place only hours, Elaine, before the president of the United States at 9:00 p.m. Eastern tonight will go before the nation and deliver a televised address, basically outlining how awful this economic crisis is right now, and that if Congress doesn't quickly act, it's only going to get worse for the average people out there.

Tell our viewers why he decided to do this to, to go forward with this speech tonight.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, a senior administration official says the bottom line is that the situation in the administration's view has reached a crisis stage. And so it was felt that the president should go out there and explain why, in fact, he feels a $700 billion plan, financial rescue plan, is so desperately needed.

Now, we should tell you that a short time ago, White House Press Secretary Dana Perino weighed in on Senator McCain's announcement that he was going to suspend his campaign in order to focus on this situation. She released a statement saying, "We welcome Senator McCain's announcement. We are making progress in negotiations on the financial markets rescue legislation, but we have not finished it. Bipartisan support from Senators McCain and Obama would be helpful in driving to a conclusion."

"The financial market crisis is a big problem that requires a big solution. And solving this in a bipartisan way will help prevent economic damage spreading from Wall Street to all Americans."

And again, Wolf, that Main Street message is what President Bush is going to try to deliver tonight. One senior official telling my colleague Ed Henry that the president is going to lay out what's at stake, how the administration feels that not acting would have an immediate and dramatic effect on tangible things like 401(k)s and home and auto loans -- Wolf.

BLITZER: All right. Stand by.

We'll of course have live coverage of that at 9:00 p.m. Eastern tonight, the president addressing the nation.

Let me bring back Dana Bash.

Dana, it's going to be a back-and-forth I guess between these two campaigns, whether or not the Friday night first presidential debate on foreign policy actually goes forward.

What are you hearing? Because you're getting some more information.

BASH: Well, I just hung up the phone with Senator Lindsey Graham, who is the McCain campaign's representative in dealing with the debates, and he said that he has been trying to reach Democratic Congressman Rahm Emanuel, who is his counterpart on the Obama campaign. Trying to reach him to try to convince him what Senator McCain said, that they believe it is best to delay Friday's debate.

He says he's not been able to be reach Rahm Emanuel, but his sense is that he's getting from the Obama side, which you just heard all of our excellent reporters covering Obama say, is that they're not necessarily inclined to agree to delay this. But certainly Senator Graham is trying to convince the Obama campaign otherwise. We'll see what happens.

But, you know, there's no question, I have to agree with what all of my colleagues said, that you talk to the McCain from the beginning of this crisis, they have said that beyond the substance of it, they believe politically the most important thing here is to show leadership at this time of crisis, and that there's no question led to this abrupt decision by Senator McCain to suspend his campaign.

BLITZER: And we're going to be speaking live with Senator Lindsey Graham very, very shortly, and we'll get his assessment of what's going on.

Dana, stand by.

I want to bring Jack Cafferty in. I know he's got "The Cafferty File."

But I want to ask you a question, Jack. When I heard that the president of the United States tonight is going to go before the cameras, address the nation, and basically outline what would be horrible, dire consequences for all the American people if Congress doesn't act quickly and approve this $700 billion bailout, I said to myself, politically, this has got to be awful news for John McCain, because the president's going to tell tens of millions of Americans the economy is in serious trouble, and a lot of then are going to say, you know what? It's time for a change. You've got to move away from the Republicans and vote for a Democrat.

So, politically, and I wonder if you agree -- do you agree, Jack, that the president highlighting this awful economic crisis right now has got to be a spillover of a positive development for Barack Obama out on the campaign trail?

JACK CAFFERTY, CNN ANCHOR: Could you repeat the question? I'm just kidding.

Look, is he going to warn us about all the dire consequences if they don't do this the way he warned us about all the dire consequences if we didn't invade Iraq? With all due respect to the president, he couldn't sell snow in South Africa in the middle of July, I don't think.

If this is another, you know, give us $700 billion to do with what we want because you should be very afraid that if you don't do it, your world will come to an end, I don't know how well that's going to play. He's done this before. He's done it for eight years. They've used fear to pressure and leverage the Congress and the public into getting pretty much whatever they wanted on a whole raft of issues. Does this play against John McCain? Of course it does if he starts explaining how, you know, deep the problems are in this economy.

What I don't understand is this: Why does John McCain want to cancel the debate? The two men who want to be president of the United States, I would be interested in hearing them have a discussion about what their ideas are for leading this country through what is arguably the biggest financial crisis we've encountered maybe since the Great Depression. Why doesn't he want to talk about it? I mean, does anybody know the answer to that?

BLITZER: Well, he says this is not the time for partisan politics. It's now a time to focus in -- first, he says you can have the debate Friday night if Congress passes the legislation before then, but otherwise, you've got to spend all your time working on the legislation.

CAFFERTY: What does he -- he hasn't cast a vote in Congress since April. I mean, he's not going to be working on the legislation.

The debate is scheduled between the two men who want the job of running the country. I don't understand the logic of saying let's cancel the debate.

I want to hear what these guys have to say about what they're going to do about the problem that the country has. I think they should have the debate. You know, you don't have to talk about foreign policy. Talk about this.

But I don't understand not having the debate. The public wants to know which one of these men is capable of leading the country. They'll learn more about that by listening to them have a debate about the issues.

In the meantime, let me get to this before it's 7:00 and you don't have more time left.

John McCain does not want reporters talking to his running mate. Why not? The Straight Talk Express, which, by the way, is an expression you don't hear much from John McCain anymore these days, the Straight Talk Express would prefer no talk at all if the conversation is between the news media and Sarah Palin.

Yesterday's photo-op at the U.N. between Sarah Palin and the president of Afghanistan was a joke. The McCain people were not going to allow any reporters in the room when the two people met, just television cameras.

It was only after the networks threatened not to cover the event at all that the McCain people relented and allowed a single pool producer into the room. He was allowed to stay for a total of 29 seconds before being escorted out of the room. And, of course, he was not allowed to ask any questions.

This kind of cheap theatrics is beneath someone who wants to be the president of the United States, unless you're John McCain, and then apparently it's OK. And his campaign doesn't think the voters are smart enough to figure out what's going on here.

I think they're wrong about the voters.

Here's the question: Why won't John McCain allow reporters more access to Sarah Palin?

Go to and post a comment on my blog -- Wolf.

BLITZER: All right, Jack. Thanks very much.

I want to get back to our breaking news story. Senator McCain announcing just a short while ago he's suspending, at least for now, the campaign in order to come back to Washington and work on this $700 billion bailout proposal. And he's urging that Senator Obama do the same thing, and that they both agree to postpone Friday night's first presidential debate.

Jessica Yellin is working the story for us. What are you hearing, Jessica?

YELLIN: Two things, Wolf.

First of all, the joint leadership meeting that John McCain had called for in his public remarks, a top Senate Democratic aide says there is no plan for any kind of meeting of that sort, and goes on to say what McCain is doing, in the views of the Democrats, is just slowing down the process of the econ bill, not speeding it up. Senate Majority Leader Harry Reid has given us a statement, and he says the debate should go on.

He says, "... it would not be helpful at this time to have them come back during these negotiations and risk injecting presidential politics into this process, or distract from important talks about the future of our nation's economy. If that changes, we will call upon them. We need leadership, not a campaign photo-op."

A number of people, Democrats on the Hill, are calling this a Hail Mary pass by John McCain and dismissing it as just a political posturing. And, of course, they're none too pleased the Republicans seeing it quite differently -- Wolf.

BLITZER: Jessica, thanks very much.

And momentarily, we're going to be hearing directly from Senator Obama. He's getting ready to speak and respond to what we heard from Senator McCain just a little while ago.

Let's go to Senator Lindsey Graham right now, Republican of South Carolina, arguably, with perhaps the exception of Joe Lieberman, no U.S. senator is closer to John McCain than Lindsey Graham is right now.

What do you think about what the Senate majority leader, Harry Reid, just said, this is not the time for these two presidential candidates to get involved directly in these sensitive negotiations? It would not be helpful, Reid says, at this time to have them back during these negotiations and risk injecting presidential politics into this process, or to distract important talks about the future of our nation's economy.

Senator Graham, what do you think?

SEN. LINDSEY (R), SOUTH CAROLINA: I'm dumbfounded. When you look at the hearing yesterday in the Senate, it's clear that there is no consensus being formed around a solution. The House hearings did not go well today.

I think it would be enormously helpful, Wolf, for the two presidential aspirants to come back to town, talk to their party leaders, the president, the Congress as a whole, to find a solution. We need a solution to what Warren Buffett calls a financial Pearl Harbor.

We need a solution on this financial crisis more than we need a foreign policy debate. The next seven days could determine the financial well being of this country. We can postpone the debate for a week. In the next week, I hope we can find a solution to what I think would be a financial Pearl Harbor, according to Warren Buffett.

BLITZER: So you're inclined, Senator Graham, and you can only speak for yourself as a United States senator, one of 100, you're inclined to go along with what the president and the secretary of the Treasury want?

GRAHAM: No, I'm inclined to find a solution. It seems like there is no consensus around the solution being offered.

Senator McCain wants an independent oversight board. Senator McCain wants some restrictions on CEO reimbursement, and make sure that Main Street gets a benefit from this package.

The point is that we're going nowhere quickly up here. And unless you get some new input and some new ideas and bring this country together, the Congress is going to fold and not act. And that will be a financial disaster. So Senator McCain and Obama coming back to town, sitting down with the president and congressional leaders, is exactly what the country needs more than it needs a debate Friday.

BLITZER: Some of the pundits out there are already saying, you know, Senator McCain sees his numbers in the polls not only nationally, but in key battleground states, going down, and he's looking for a Hail Mary and that's why he's announcing what he's announcing right now.

What do you say to those critics who say he's doing this to showboat and try to score some political points?

GRAHAM: I think that Warren Buffett is right about the consequence of not acting, that Warren Buffett, an Obama supporter, has really been a great American, investing in Goldman Sachs, and has been calling on the Congress to support Secretary Paulson, showing support for him. This idea that this is politics to benefit one versus the other is crazy.

The people that are going to lose, the numbers that are going to drop, is the American savings accounts and 401(k) plans that will drop dramatically if we have financial institutions fail. The ability to get credit in this country, lend and borrow money, is at risk. So Warren buffett's not making this up, Paulson is not making it up, Bernanke's not making it up.

We need to get the leaders of this country in a room and get something done. And if you've listened to these hearings for the last two days, you could not be reassured by the tone and tenor that's going on in Congress.

So I am proud of my candidate for president, John McCain, who wants to suspend the campaign, come back and work with Senator Obama and congressional leaders to solve a problem that if not solved, will lead to a financial meltdown in this country.

BLITZER: Senator Graham, thanks for coming in.

GRAHAM: Thank you.

BLITZER: Good luck.

GRAHAM: Thanks.

BLITZER: The race to 60. The Democrats fighting to win a filibuster proof margin in the U.S. Senate are placing some of their highest hopes on a former TV funnyman. I'll speak with the Minnesota Democratic Senate candidate, Al Franken, and the Republican incumbent, Norm Coleman.

And we're waiting to hear directly from Senator Barack Obama. He will deliver his response to John McCain's request to delay the first presidential debate Friday night and to suspend the political campaign. We'll hear from Senator Obama. That's coming up live.

And what does Bill Clinton really think of Governor Sarah Palin? Wait until you hear what he tells our own Larry King.

Lots of news happening, breaking news happening, right here in THE SITUATION ROOM.


BLITZER: And here's one possible reason John McCain may be taking some rather dramatic action today in the midst of this financial crisis -- the electoral map. Right now we have some brand new battleground polls to unveil from states that potentially could decide whether John McCain or Barack Obama becomes the next president.

First to Colorado. Our new CNN/"TIME" Magazine/Opinion Research Corporation survey of likely voters gives Obama the edge over McCain, 51 percent to 47 percent. That state and its nine electoral votes remains a tossup yellow.

Up next, Michigan. Our poll shows Obama with 51 percent, McCain 46 percent. Michigan and its 17 electoral votes still a tossup.

In Pennsylvania, our battleground poll shows Obama leading right now, 53 percent to 44 percent. Pennsylvania and its 21 electoral votes remains light blue, or leaning Obama.

On to West Virginia, where McCain has the edge over Obama, 50 percent to 46 percent. West Virginia and its 13 electoral votes stays light red, in our estimate. In other words, leaning McCain.

And into Montana, McCain leads Obama there, 54 percent to 43 percent. That state and its three electoral votes still leans McCain.

Here's the bottom line. By CNN's estimate right now, Obama has 223 electoral votes, McCain has 200 -- 270 are needed to win the White House. And a reminder, our map is based on all the latest polling, historical trends, CNN reporting, and where the candidates are spending time and money. All of that will part of our assessment.

Let's go to our chief national correspondent, John King. He's in one of those battleground states and he's joining us now from Montana.

You're speaking to a lot of the folks out there. And I want to get back to the breaking news we're following, Senator McCain's decision to suspend the campaign, at least for now, until there's a resolution of the legislation involving the financial crisis, and to ask that the first presidential debate Friday night be postponed.

What are people out there saying to you, John, as far as this bailout and this economic crisis is concerned?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, it is remarkable. We came here to assess the presidential race, those polls you were just discussing. What we have found instead is dramatic evidence of this political crisis, the very reason the president feels compelled to go before the nation tonight and explain this plan, the very reason there is no consensus in Congress and that Senator McCain now believes he should go back to Washington to get involved in these negotiations. What we are finding here is dramatic and outspoken opposition to this plan.

This state, Montana, has three people in the congressional delegation, two Democratic senators, one Republican congressman. All of their offices are being flooded with people saying, no, bailout, no bailout, no bailout.

We went by the office of Congressman Denny Rehberg this morning. In the early morning hours, more than a dozen phone calls had come in. All but one saying, no bailout, no bailout, no bailout. But one other said, if you are going to pass something like this, take your time, do not be rushed into it by the president. A woman walking by me right here as I'm talking, Wolf, is saying, "No bailout."

This is the opposition to this swelling up here in Montana to what's happening in Washington. And we spent time today with the Democratic governor, Brian Schweitzer. He's a very colorful character. He's up for re-election this year, too. He says as he travels this state, what he's hearing from people is they view this $700 billion package as an example of the powerful in Washington helping the wealthy on Wall Street, and the people who have to pay the bills and take all the risks is the little guy in states like this.


GOV. BRIAN SCHWEITZER (D), MONTANA: We're expected to play by the rules out here in the heartland. When you owe somebody some money, you pay them back. When you shake hands on a deal, a deal is a deal, whether the price goes up or the price goes down. When you tell somebody you're going to do something, you will do it or you'll make it right.

It seems to us in Washington and Wall Street that a deal is not a deal anymore. Capitalism only works if somebody that's rich is making money. If they're not making money, then we need a government to bail them out. What happened to risk/reward in this country?


KING: What Governor Schweitzer told us is that everybody he encounters say, why are these companies too big to be bailed out when the little guy doesn't get bailed out when he can't pay his mortgage? So, Wolf, I am telling you, you see this dramatic grassroots movement, the phones ringing off the hook in the congressional offices.

And remember, it's not just a presidential year, it is a congressional year, as well. So you can find in a place here in Helena, Montana, ample evidence to why there is no consensus back in Washington and why both Democrats and Republicans are saying, wait a minute, let's ask some tough questions and let's not move as quickly as the president wants them to and approve this package by the end of this week, because they know when they come home, they are facing very skeptical voters -- Wolf.

BLITZER: As you know, John, a huge part of this problem out there is the perception, the perception that this is a bailout for fat cats on Wall Street. What John McCain just said and what the president will say tonight in his primetime address to the nation is that if the Congress doesn't act and doesn't act quickly, it's going to affect everyone.

It's going to affect people's lifestyles, it's going to affect their opportunities to buy homes, to stay in their homes. It's going to affect their 401(k)s, their life savings. This economy could collapse basically. It could be getting close to not only a recession, maybe a depression.

Now, I don't know if he's going to use words like that, but that's the fear that they've instilled in a lot of members of Congress right now. And I guess that fear is not trickling down and making itself known to a lot of average folks out there.

KING: That's a great way to put it, Wolf. And I think, sadly, we are in an environment where people have a skeptical view of all politicians.

President Bush clearly is unpopular across most of the country. But Congress has no great approval ratings either. And people are skeptical when they hear people in Washington tell them you have to do this now, we are on the verge of an economic collapse.

They're quite skeptical. And that message about the 401(k)s, about individual investors, is not getting through in a way where voters have the urgency that the Congress needs to act now. So that is obviously the president's biggest challenge tonight.

And, on that word bailout, I have been e-mailing both Democratic and Republican campaign strategists in the presidential races and in congressional races throughout the day.

And what I'm getting back from all these strategists is that they are urging members of Congress, urging all the politicians to call this a rescue plan, to drop the word bailout, because it is the very word bailout, bailing out these big firms, bailing out CEOs who make tens and -- tens and tens and more millions of dollars. The word bailout is what is stoking this anger out in the country.

So, be -- watch over the next few days when you hear more and more politicians say, this is a rescue plan -- Wolf.

BLITZER: All right, John is in the state capital of Helena in Montana. All right, John, stand by. We're going to be getting back to you.

Remember, we're awaiting Barack Obama. He's about to speak. We will go to Florida live when he speaks. We're going to get his response to Senator McCain's proposal to suspend all politics right now, to suspend the campaign, and to postpone Friday night's first presidential debate. We will hear from Senator Obama shortly. That's coming up.

In the meantime, let's check in with Carol Costello. She's monitoring some other important stories incoming to THE SITUATION ROOM right now.

Lots of news happening today, Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Oh, you're not kidding. But I will stop talking when Barack Obama comes on.

In the news today, a sobering homecoming for hurricane evacuees in Texas. Today, residents of hard-hit Galveston Island were allowed to return home for the first time since Hurricane Ike roared ashore almost two weeks ago. Many are finding their homes damaged or destroyed, of course. Officials are urging people to think hard before returning home, because power, water and sewer services are severely limited.

Outrage over a federal proposal on abortion and jobs. In August, the Bush administration proposed stronger job protections for health care providers who refuse to take part in abortions for religious or moral reasons. Several medical associations and 13 state attorneys general want the proposal nixed, saying it would end up denying patients access to health care information and services. Other opponents say the proposal could stretch the definition of abortion to include contraceptives.

A federal appeals court is deciding whether the bribery case against Congressman William Jefferson is tainted. Attorneys for the Louisiana Democrat argued today grand jury testimony from a congressional aide violated Jefferson's constitutionally protected activities, and so the indictment should be thrown out altogether.

Jefferson is accused of receiving a half-million dollars in bribes. The court is expected to issue its ruling in a few weeks.

The U.S. did not violate the Constitution when it required visitors from several Arab and Muslim countries and North Korea to register with immigration officials. That's according to a ruling issued today by a federal appeals court in New York.

The immigration requirement was put into place following 9/11. Several men claimed it violated their constitutional rights. The rule has since been phased out.

That's a look at the headlines right now -- Wolf.

BLITZER: All right. I know you're monitoring other developments, so stand by, Carol. We will get back to you.

Senate candidates certainly under lots of pressure to say how they would vote on that $700 billion proposed bailout. I will speak with Minnesota Democrat, the former comedian Al Franken. He's standing by live. I will ask him what's going on in his race to try to beat Norm Coleman.

Stand by for that.

Plus, Bill Clinton speaks out about Sarah Palin and whether he thinks Senator McCain made a smart choice. You will hear what he has to say.

And we're also standing by to hear from Senator Barack Obama. His response to Senator McCain, that is coming up live.


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

Happening now: The first lady, Laura Bush, gives her opinion of Sarah Palin, spelling out the candidate's strengths and conceding a weakness. That's just ahead, a one-on-one interview the first lady gave our own Zain Verjee.

And Joe Biden, never one to hold back, doesn't, as he unleashes a verbal new offensive against the Republican ticket. We're going to tell you what he had to say today. And John McCain drops a political bombshell. He says he's suspending his campaign to focus in on the country's financial crisis. And that's not all he wants to suspend. We're awaiting Senator Barack Obama's response. That's coming up live.

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


BLITZER: All right. We have got a live picture in from the Tampa Bay area.

Senator Barack Obama is about to walk over to this podium. There, you see it. "Change we need," that's one of his slogans. He's going to walk into this room and make a statement responding to what we heard earlier from Senator John McCain, now calling for an immediate suspension of the campaign, in order to allow both of these senators to return to Washington to participate in these high-level negotiations.

Here's Robert Gibbs. He's going to tell reporters something right now. Maybe they're delaying. Let's listen in. What did he say?

I guess he just walked out to put the statement out on the podium.

Senator Obama is going to walk out and deliver the statement, responding, as I said, to Senator McCain's recommendation that they both suspend their campaign and come to Washington, get involved in these negotiations to get some sort of deal through, and also, assuming there's no deal by Friday night, postpone the first presidential debate, postpone -- postpone the first presidential debate in Mississippi until a later date, Senator McCain saying this is no time for politics as usual; there's simply a crisis, an economic crisis right now going on, and the -- both of these United States senators effectively, effectively, as leaders of their respective parties right now, they have to get involved, and they have to get involved right away -- Senator McCain outlining a rather dire assessment right now of what's going on.

And there's also word that we got today that President Bush is going to be weighing in before the American people tonight. And he will be addressing the nation at 9:00 p.m. Eastern.

Here comes Senator Obama. So, let's listen in.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Thanks, all you guys, for gathering up on short notice. I know Dean (ph) was on the golf course, and we had to pull him away.

I wanted to have a chance to talk to you, because, obviously, there's a moment of great uncertainty in America. As I mentioned at the rally today, the era of greed and irresponsibility on Wall Street and in Washington has led us to a financial crisis as serious as any we have faced since the Great Depression. And there's much blame to go around for causing this crisis. But we're now here. Every American has a stake in solving this crisis and saving our financial system from collapse, because, if we don't act soon, then people's jobs, people's savings, the economic security of millions of Americans will be put at risk. So, the clock is ticking.

We have to act swiftly, but we have to -- we have to also get it right. And that means everyone. Republicans and Democrats, the White House and Congress need to work together to come up with a solution that protects American taxpayers and our economy, without rewarding those whose greed helped bring us to this point. This cannot fall victim to the usual partisan politics or special interest lobbying.

It's in this spirit that I reached out and called to -- called to Senator McCain this morning. I initiated the call, after determining that many of the principles that I had set forth were ones that Senator McCain had adopted as well, in terms of how this financial proposal should be structured.

And I also need to give credit to Republican Senator Tom Coburn, who had called me, suggesting that a joint statement might be useful.

I asked him -- he called me back at about 2:30 this afternoon, after our rally. And I asked him to join me in issuing a joint statement to let this Congress and this administration know where we stand and what we expect from this proposal, because, over the last few days, it's been clear that we have come to agree on some broad principles.

And let me just reiterate the principles that I have talked about previously.

First, I think everybody should be in agreement that we need to set up an independent board selected by Democrats and Republicans to provide oversight and accountability for how and where the money is going to be spent at every step of the way.

Second, if American taxpayers are financing the solution, they should be treated like investors. And that means that Wall Street and Washington should give every penny of taxpayers' money back once this economy recovers.

Third, we cannot and will not simply bail out Wall Street without helpings the millions of innocent homeowners who are struggling to stay in their homes. They deserve a plan, too.

And, finally, this is one that's important. The American people should not be spending one dime to reward the same Wall Street CEOs whose greed and irresponsibility got us into this mess. We can't allow this plan to become a welfare program for Wall Street executives.

Senator McCain, as I mentioned, returned my call this afternoon. We agreed that this was a critical time for everyone. Democrats and Republicans need to come together to help to stabilize the economy. I have been in constant contact with leadership in Congress. I have talked to Secretary Paulson just about every day. I spoke to him twice today, indicated to him that I intend to do everything that's required to be helpful.

And we should all do everything that's necessary to get a bill passed that contains the proposals that I mentioned. There are times for politics, and then there are times to rise above and -- politics, and do what's right for the country. And this is one of those times.

I don't think any of us enjoy putting taxpayer dollars at risk, but the risk of doing nothing is economic catastrophe, potentially. And that is a risk we cannot afford to take. No matter how this begun, this is no longer a Democratic or a Republican problem. It is an American problem. It requires an American solution.

And, with that, let me just open it up to some questions.

Jeff (ph)?

QUESTION: Do you plan on attending the debate on Friday? And is Senator McCain playing politics with this by saying (OFF-MIKE) not go to this debate?

OBAMA: Well, let me say this. Just to go through the chronology today, I called him this morning with the intent of issuing a joint statement. I got called back around 2:30. We had a conversation. I made the suggestion to him. He agreed to that suggestion.

He then suggested, in addition, that we need to have a meeting in Washington with the congressional leaders and potentially the president. And what I told him is, well, why don't we get the joint statement out first to enunciate the principles that both of us agree to and to send a clear signal to the members of Congress that this, in fact, is something that should not be bogged down by partisan politics?

And, now, when I got back to the hotel, he had gone on television to announce what he intended to do. I believe that our staffs are still working on this joint statement.

I -- I think the important principle at this point is to send a clear signal to members of Congress, as well as the country, that this is a serious problem that has to be solved and not -- should not be subject to the usual partisan politics.

With respect to the debates, it's my belief that this is exactly the time when the American people need to hear from the person who, in approximately 40 days, will be responsible for dealing with this mess. And I think that it is -- it is going to be part of the president's job to deal with more than one thing at once.

I think there's no reason why we can't be constructive in helping to solve this problem, and also tell the American people what we believe and where we stand and where we want to take the country. So, in my mind, actually, it's more important than ever that we present ourselves to the American people and try to describe where we want to take the country and where we want to take the economy, as well as dealing with some of the issues of foreign policy that were initially the subject of the debate.

QUESTION: Just so we're clear here, when Senator McCain called you back at 2:30, he agreed that there was a need for this joint statement.


QUESTION: Then he mentioned this meeting in Washington.

OBAMA: Right.

QUESTION: Did he also say to you that he was not going to participate in the debate?

OBAMA: Well, he -- you know, he mentioned that he was intending, potentially -- he was going to fly to Washington, and that he thought that perhaps we should suspend the debates.

I thought this was something that was -- that he was mulling over. Apparently, this was something that, you know, he was more decisive about in his own mind.

But, you know, as I said before, I think that one of the things that we need to determine is how can we be most helpful. I have spoken to congressional leaders every day this week. I have spoken to Secretary Paulson every day this week.

It's my sense that the most helpful thing we can do right now is to let everyone know that this is a sufficiently important problem, that the Democratic standard-bearer (AUDIO GAP) have come together to issue a statement saying that, in fact, we need to deal with this problem.

What I also think is important is that we tell our respective party leaders that extraneous issues or issues that threaten to cloud this thing with partisan politics needs to be left out of this particular piece of legislation.

So, earlier this week, I had said to the speaker of the House, as well as Harry Reid, that issues like bankruptcy reform, which are very important to Democrats, is probably something that we shouldn't try to do in this piece of legislation, that the stimulus package that I have been advocating for months now is not necessarily something that we should have in this package.

And my hope is, is that Senator McCain is going to be talking to Republicans, and sending them the same message, that there are some issues that they may be concerned about or things that are priorities for them.

But what we shouldn't do is to try to get everything done in this package. What we should be doing is following the clear principles, that taxpayers are protected, that we have oversight, that taxpayers are going to get their money back, and that the housing crisis is going to be dealt with as well.

QUESTION: (OFF-MIKE) change your decision to stay here? Or are you still going to stay here in Florida and prepare for the debate, or are you thinking of going back to Washington?

OBAMA: You know, what I'm going to do is, I'm going to -- what I have told the leadership in Congress is that, if I can be helpful, then I am prepared to be anywhere any time.

What I think is important, though, is that we don't suddenly infuse Capitol Hill with presidential politics at a time when we're in the middle of some very delicate and difficult negotiations.

So, you know, I think the message is, if you need us, if I can be helpful, I'm prepared to be there at any point.

But, keep in mind, again, I'm talking to Nancy Pelosi, Harry Reid, the congressional leadership, Hank Paulson, I'm talking to them every single day. We have been working around the clock. And, you know, presidents are going to have to deal with more than one thing at a time. It's not necessary for us to think that we can only do one thing and suspend everything else.

QUESTION: Senator...


QUESTION: (OFF-MIKE) Whenever this package is put together, do you think it's appropriate for both you and Senator McCain to be in Washington and actually vote on it?

OBAMA: I -- I -- my sense is, because of the delicate nature of the negotiations and the controversy surrounding how this thing may be structured, that it may be necessary for both of us to be present to -- to send a strong message that, in fact, we need to get something done.

Now, keep in mind, I continue to insist that this package contain the conditions that I have set forth, because, again, I don't think those are Democratic or Republican conditions. I think they're the conditions that the American people want to see before they pony up the amount of money that is being asked for by the administration.

QUESTION: Senator (OFF-MIKE) go to Oxford on Friday, will this debate go forward?

OBAMA: I believe that we should continue to have the debate.

I think that it makes sense for us to present ourselves before the American people to talk about the nature of the problems that we're having in our financial system, to talk about how it relates to our global standing in the world, what implications it has for our national security, how it relates to critical questions, like the war in Iraq and Afghanistan.

And, you know, obviously, if it turns out that we need to be in Washington, we have both got big planes. We have painted our slogans on the sides of them. They can get us from Washington, D.C., to Mississippi fairly quickly.

QUESTION: (OFF-MIKE) do you think that this is a problem of such magnitude that you should suspend your campaigning, pull your ads off the air, not do any campaign events?

OBAMA: You know, I think it's very important that the American people see the people who potentially could be in charge of this problem over the next -- within the next couple of months.

And, so, my attitude is that we need to be focused on solving the problem, as I have been over the last several days. But I think it is also important that we communicate to the American people where we need to go in getting us out of this situation. And -- and, again, I think it's possible for us to do both.


QUESTION: Senator McCain has suspended his campaign ads and fund-raisers. You're not going to match that at all?

OBAMA: Well, keep in mind what I'm planning to do right now is debate on Friday. And that's what I'm preparing to do.

Well, there are only two days between now and -- as I said before, you can talk to my staff, but my general view is that the American people need to know what it is that we plan to do in moving the economy forward.

OK. Yes.

QUESTION: Given that, apparently, there was some degree of noncommunication between your campaign and McCain's over this...


QUESTION: ... do you think a joint statement now will do any good? Are you still interested in pursuing that?

OBAMA: Well, I have still -- I have done what I -- Senator McCain and I discussed we were going to do.

What I have done is, is that I have instructed my staff to communicate with them. They have communicated with them. I think making sure that we have a statement that lays out the principles, the conditions of a package that would make sense from a bipartisan perspective, I think, could still serve an important purpose.

QUESTION: (OFF-MIKE) when you heard the news McCain suspended his campaign (OFF-MIKE) were you shocked? And what was your reaction? And do you think that he -- this is a (OFF-MIKE)

OBAMA: I think you should direct that to Senator McCain.

I mean, I think that the conversation we had was -- was cordial. I think we both agreed that this was a very important issue that we had to deal with.

You know, I proposed putting out the joint statement. And he concurred to -- with that. He then said, "I would actually also like to look at us potentially suspending campaigns and pushing debates off."

What I suggested to him was, well, why don't we get the joint statement out first and our staffs will discuss this?

I think the only mis -- the only possible miscommunication might have been how quickly there was an announcement and somebody was on television.

I think, probably, my assumption was is that the joint statement would go out initially.



QUESTION: (OFF-MIKE) to the idea when you talked to him that I don't think we should postpone the debate, we need to go forward?

OBAMA: What I told him was, I think what we should do is figure out what we need to do that would be helpful, and let's get this statement out first.

But -- but, look, the -- let's be clear. You know, Senator McCain is running his campaign. I'm running mine. I think that, given the fierce competition of this election and the enormous stakes involved, that the fact that both parties agree that we need to focus on this problem on Capitol Hill, and that this is an issue that should transcend the typical day-to-day politics, I think that's an important statement.

And it's one that I'm glad to be a party to, because one of the things that we have to be clear with the American people about is that this is a serious problem. We need to solve it. But I think the American people also need to understand that it can be solved, that, in fact, there are a set of principles out there that will allow taxpayers to have some protection, will allow homeowners to get the help that they need, will make sure that we get through this immediate emergency.

And then there are going to be a whole host of structural issues that still have to be dealt with by the next administration. And I don't want us to lose sight of that. Even before the most recent Wall Street crisis, we had a problem with a health care system that was broken. We had a problem with jobs that were being shipped overseas. We have lost well over 600,000 jobs since the beginning of this year.

Young people are still trying to figure out how to go to college. So, there are a whole host of issues that we're going to have to deal with, beyond this immediate crisis. But I think it's important to recognize that we do have a problem on our hands. Let's solve this problem.

Let's assist the administration in getting it right. And then let's make sure that we continue to present to the American people our ideas for how we're going to restore the economy, not just in the short term, but also in the long term, so it works for Main Street, and not just Wall Street.

All right?


OBAMA: Thank you.


OBAMA: I'm having a great time.

BLITZER: Well, there he is, Senator Barack Obama responding to what Senator McCain said earlier, Senator McCain calling for a suspension of the campaign and a postponement of the first presidential debate Friday night, Senator Obama saying he wants to go ahead and have that first presidential debate Friday night.

He also says he wants to continue, in his words, communicating with the American people. In other words, he wants to go ahead with the campaign, even though he wants to do whatever he says he can to try to resolve this huge economic crisis that is affecting the country right now.

Lindsey Graham, the senator from South Carolina, a close friend of Senator McCain's, had joined us a little bit earlier here in THE SITUATION ROOM.

Let's go to Senator Chuck Schumer right now. He's the chairman of the Banking Committee. He's a strong supporter of Barack Obama.

Senator Schumer, thanks very much for coming in.


Well, I thought what Senator McCain did was just weird, odd. We haven't heard hide nor hair of Senator McCain in these negotiations. He has not been involved, except for an occasional unhelpful statement sort of thrown from far away.

And the last thing we need in these delicate negotiations is an injection of presidential politics. I think they certainly ought to debate. The American people ought to hear their views on these extremely important issues.

Let us negotiate. A joint statement is a great idea, because that says to both parties that neither is going to take advantage of this delicate situation. But, then, for Senator McCain to unilaterally say, "Well, I'm coming here to help," when he hasn't been involved in this issue, we haven't heard hide nor hair of him on this issue or on many others here in Capitol Hill for a long time, because he's been on the presidential campaign, is not very helpful.

BLITZER: So, what are you saying, Senator Schumer? It's a political stunt that Senator McCain is trying to achieve right now?

SCHUMER: It certainly seems to inject presidential politics, the last thing we need, in very delicate and bipartisan negotiations.

BLITZER: Senator Lindsey Graham said exactly the opposite.

SCHUMER: Well...

BLITZER: Given the enormity of the crisis under way right now, these two men are the leaders, in effect, of their respective parties. They have to suspend politics and deal with an enormous crisis right now, and forget about the political campaign for a few days, until the Senate resolves it.

SCHUMER: Let me say, it's clear that what Senator Obama did was in the spirit of bipartisanship. He called Senator McCain and said, let's work this out.

What Senator McCain did was unilateral. He was trying to seek political advantage. And he is upsetting -- or he could upset some very delicate negotiations. It did seem to me to be very strange, a political stunt.

BLITZER: But wouldn't it help, Senator Schumer, if both McCain and Obama, who are the leaders of their parties right now, if they were to come and join you and other leaders in your negotiations with Henry Paulson...


BLITZER: ... and Ben Bernanke? Wouldn't that help try to bring along those who are resisting?


SCHUMER: The best thing they can do is state their feelings to the American people, because the American people need to know how each of them would handle a crisis as president.

So far, Obama is coming through with flying colors. And I don't think McCain is doing very well. We do not need an injection of presidential politics into this. These issues are complicated. The negotiations have gone on.

It's as if, you know, you're in the middle of drawing an amazing painting, and someone else comes in and says, hey, come in. Let me throw my brush marks on there.

BLITZER: Well...

SCHUMER: It just -- it just doesn't make sense.

BLITZER: Let me...

SCHUMER: And if -- and one other thing, Wolf. If Senator McCain truly was interested in helping, he would have called Senator Obama and said, let's -- what do you think of this? Let's do it together.

This was seeking political oneupmanship. And it's going to fail, both on the political, and it's substantively wrong.

BLITZER: We're almost out of time, Senator Schumer, but I want you to tell me, because you're involved in all these negotiations to come up with the legislation.

Senator Obama outlined four broad principles he says have to be included as part of any deal. And just give me a quick yes or no if you think that you're close to a deal with the administration on these principles, the first principle being an independent board of oversight to make sure the money is spent properly.



BLITZER: Are you close?



Second, second, that the American taxpayers, who are going to be shelling out a lot of money, they effectively become investors and they get an equity share of these firms?

SCHUMER: We're in process of negotiations there. There are a number of ways to put the taxpayer first. And we're in serious negotiations on that. We don't have a deal yet on that.

BLITZER: All right.

What about the notion that millions of American homeowners have to be helped out right now?

SCHUMER: It's agreed upon that there should be immediate homeowner assistance, yes.

BLITZER: And, finally, that there should be no financial rewards or bonanzas for any of these CEOs who are -- whose companies, if you will, are being bailed out by American taxpayers?

SCHUMER: The concept is agreed to. But, on this issue, Secretary Paulson and many of us in the Senate have differing views about how to do that.

BLITZER: Senator Schumer, it looks like you're getting closer and closer to a deal, but you're not there yet. So, good luck to you.

SCHUMER: Thank you, Wolf.

BLITZER: And we will hear what the president of the United States says later tonight.

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