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Historic Meeting: Bush, Obama, McCain; Emergency Talks on Bailout; Will John McCain Attend Presidential Debate?

Aired September 25, 2008 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, there's breaking news at the White House. Historic news, indeed. Emergency talks on rescuing the economy.
President Bush meeting with John McCain, Barack Obama and other congressional leaders, Democrats and Republicans. Are they close to finalizing a deal right now?

Also this hour, $700 billion worries. Taxpayers share their feelings about the bailout and whether they'll get the short end of it.

And the debate cliffhanger. Organizers move forward with the face-off in Mississippi, but will John McCain show up?

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

The breaking news happening right now, President Bush and the men running to replace him together at the White House talking about the nation's financial crisis. We're standing by to bring you pictures from that emergency meeting, and we'll have a reporter inside the room, the Cabinet Room at the White House, when this unfolds.

The talks coming just hours after key congressional leaders said they agreed on some fundamental principles for the $700 billion bailout. But top Republicans insist there's no final agreement yet.

The market's upbeat about the prospects of a deal. The Dow Jones Industrials closing only seconds ago, about 200 points up. America's economic future right now at stake.

So is the fate of the first presidential debate also at stake right now? Scheduled for tomorrow in Mississippi, John McCain has said if there's no bailout deal by tomorrow, he simply won't participate.

We have correspondents out there in force covering all angles.

Let's go to CNN's Elaine Quijano first. She's over at the White House.

Elaine, tell us what's going on at the White House. Is this the Cabinet Room, is it the Roosevelt Room? I may have misspoken.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: It is the Cabinet Room. You're absolutely right, Wolf. As you noted, some extraordinary and historic images that we are going to see here very shortly. President Bush, less than six weeks from a presidential election, sitting down with the two men who are vying for his job. All of this in the name of tackling the nation's financial crisis.

Now, we learned a short time ago what it's going to look like as far as the seating arrangement. President Bush is going to be flanked in the room by Senate Majority Leader Harry Reid, as well as House Speaker Nancy Pelosi. And the two candidates themselves, who arrived here at the White House just minutes ago, Senator John McCain and Senator Barack Obama, are going to be seated, we're told, at opposite ends of the table.

Now, as for what we will hear out of this meeting, President Bush, according to a senior administration official, will only speak briefly, we are told, just a couple of minutes, giving a statement essentially thanking the members for being there and saying that he appreciates their leadership on this issue -- Wolf.

BLITZER: All right, Elaine. Stand by. We're going to come back to you.

I want to go to Dana Bash. She's up on Capitol Hill right now.

There's been some confusion, a lot of confusion, in fact, Dana. They say there's a deal in principle, then Republicans say not necessarily. So quickly, what are you hearing?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, what we're hearing is that the members of Congress, the senators and members of the House who were in the Banking Committee negotiations all morning, have come up with a general idea that they are going to present to the Treasury Department later today. And essentially what that is, is the $700 billion bailout, that is going to be split into different tranches, if you will. And this is coming from our Kate Bolduan, who's been reporting on the negotiations today.

And the first will be about $350 billion. That will be appropriated basically by Congress. And then the last part will basically be done later on, but only with congressional approval.

What this is all about is, you talk to Democrats, you talk to Republicans, they say regardless of the details, nobody feels comfortable just cutting a check for $750 billion and sending it to the Treasury Department without more congressional oversight. That's one way they're going to do it.

In general, the Democrats and Republicans in the Senate and some Democrats in the House say that they feel like they're getting there. I can tell you that House Republicans though, many of them, say that they are not comfortable with this. And that's coming from the House Republican leader, on down to the many in the rank and file -- Wolf.

BLITZER: And what's the latest with Senator McCain as far as participating in the first presidential debate in Mississippi tomorrow night?

BASH: Well, right now, the official line, Wolf, is that he is not going to go until there's a deal. However, I can tell you in talking to people inside the McCain campaign that they are hoping, hoping that there is some kind of resolution or at least some kind of at least broad agreement that comes at the end of the day that will allow him to go to the debate, because despite what he said yesterday -- yes, he laid down a line in the sand -- they do feel politically they need a game-changer right now, and they think that the debate is the way to bring them there.

So they're hoping that he's going to be able to get there. He did spend the day here today, four hours here on the Hill, meeting with those House Republicans I talked to you about that were not very happy, trying to get a sense of where they are.

He's going to go to the White House, bring some of their concerns there. Didn't meet with the negotiators, but he is hoping that at the end of the day, and his campaign is hoping at the end of the day, he'll be able to get to that debate tomorrow.

BLITZER: All right, Dana. Stand by.

Candy Crowley is down in Clearwater Beach, Florida, where Senator Obama had been preparing for that big debate, but he flew here to Washington, Candy, today to participate in this historic meeting under way right now at the White House.

What's the latest you're hearing from his campaign?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, in fact, you know, this was not a trip that Barack Obama was eager to take when John McCain suggested it. There was no sign that Obama was going to do it. But then he got that call from the president about the leadership meeting, John McCain being at the White House, and so, of course, he left this morning and headed toward Washington.

Now, before he did that, he did by satellite address the Clinton Foundation meeting up in New York. He talked about this deal and said again his four principles and what he wanted in the deal, including caps on CEO pay and someone to oversee, a board to oversee how that $700 billion is spent. But anybody who is looking at the situation, watching John McCain and watching Barack Obama, understands that it is very, very difficult to take the politics out of this. And the politics, of course, are about leadership.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Congressional leaders have made great progress in their negotiations. They appear close to a deal that would include these principles. President Bush addressed some of these issues last night, and I'm pleased that Senator McCain has decided to embrace them, as well.

(END VIDEO CLIP) CROWLEY: So, what from here? We do expect a statement from Barack Obama after he gets out of that White House session. It does not seem that there will be any new ground broken by that. Perhaps just an update.

At this moment, Wolf, what his campaign is planning is for him to come back here to Clearwater Beach, to continue to prepare for that debate. He'll fly out of here tomorrow, headed for Mississippi. It could change -- this is a sort of a moving target at this point. If there is a vote tonight, certainly Obama would stay for that.

BLITZER: All right, Candy. Stand by. Candy's in Clearwater.

We're standing by to hear from the president of the United States. He's meeting with these leaders right now, including Obama and McCain.

Ali Velshi is joining us in New York. Ali, investors, they seemed rather bullish today, hoping that there would be a deal.

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Yes, you could see the Dow finishing around 200 points higher. It was actually higher than that earlier. So something's happened in the last hour that had investors concerned.

But, you know, one of the arguments that Henry Paulson and Ben Bernanke used this week with congressmen is that this deal needs to get done. Otherwise, we'll be in a deep recession.

Well, a number of economists have been telling me all week what he didn't say is, and if the deal gets done, we may still be heading for a deep recession. There were economic numbers out today, Wolf, which normally would have shaken markets. They shluffed (ph) those off.

We had 32,000 people newly claiming unemployment benefits last week. The number of new benefits last week, 493,000. That's a very big number. That's a recessionary number.

We also had durable goods orders -- that's everything from refrigerators and dishwashers, all the way up to airplanes -- down 5 percent. Much more than expected.

We also had news on homes. New home sales plummeting again from the previous month, down 11.5 percent. And of course with new home sales plummeting, so do new home prices. And we saw a further drop in new home prices of 5.5 percent.

None of this, Wolf, tells us that we're in a good economy. And there's nothing about this deal that gets us substantially further ahead in the economy. It just stops us from slipping further back.

BLITZER: And we're just waiting to see what happens. All right, Ali. Thanks very much.

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

JACK CAFFERTY, CNN ANCHOR: Well, as you've been hearing, Barack Obama, John McCain both in Washington at this hour, waiting to meet with President Bush, other lawmakers. The president summoned both men there to help hash out this bipartisan resolution to the big $700 billion bailout plan.

It is another, indeed, grand but empty political gesture. But hey, you can't let a good photo-op go to waste.

Hours earlier, congressional leaders reached their own agreement on a bipartisan counterproposal to the Bush plan without the help of Bush or Obama or McCain. The lawmakers are hopeful that they'll have a vote within days and a bill on the president's desk soon after.

Yesterday, you'll recall, John McCain, in a grand gesture, announced that he was suspending his campaign and rushing back to Washington to save the day. A lot of people recognized that as the naked political stunt that it was.

House Financial Services Committee Chairman Barney Frank, one of the architects of this bipartisan agreement, said this: "We're trying to rescue the economy, not the McCain campaign."

McCain's plane had barely touched down when lawmakers announced their agreement on a potential deal. Now presumably, McCain won't have an excuse for not showing up to debate Barack Obama in Mississippi tomorrow night.

Here's the question: Is John McCain playing politics with the nation's deepening financial crisis?

Go to You can post a comment on my blog. Here's a hint -- yes -- Wolf.

BLITZER: That would be a hint, Jack. All right. Stand by, Jack. We're going to get back to you shortly.

I just want to alert viewers, we're waiting to get videotape that is about to be released to all the networks at the top of this historic meeting at the White House. The president speaking. And in that meeting, the leadership of the House and the Senate, Democrats and Republicans, as well as John McCain and Barack Obama. Both of them were in the Cabinet Room as the president opened up the meeting with a statement, and then reporters and the camera crews were asked to leave.

Ed Henry is our White House correspondent. He was the pool reporter. We're going to speak with him right after we roll the tape, but I want to get to this videotape of the president.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I want to thank the leaders of the House and the Senate for coming. I appreciate our presidential candidates for being here, as well. We are in a serious economic crisis in the country if we don't pass a piece of legislation. I want to thank the spirit of bipartisan cooperation that's taking place here in Washington.

One thing the American people have to know is that all of us around the table take this issue very seriously, and we know we've got to get something done as quickly as possible. And this meeting is going to be an attempt to move the process forward. My hope is that we can reach an agreement very shortly.

I want to thank the secretary of the Treasury for working hard with the members. I thank the members for working long hours like they've been doing to come up with a solution that's bipartisan and that will solve the problem.

Thank you very much.


BLITZER: All right. You heard the reporters shouting questions and there were no answers. One of those reporters inside representing the television networks, our own Ed Henry.

All right, Ed, we saw that video, but you saw the body language. Set the scene for us. What was really going on inside the Cabinet Room?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: What was interesting, at the very end of that tape, when you saw John McCain smiling broadly, he was to the president's right. He was looking right at me because I asked the president twice, "Do you regret not acting sooner to deal with this financial crisis?" The president just looked at me, didn't answer.

That's what he tends to do. He almost never, ever answers those questions.

But John McCain was sort of enjoying the moment, obviously as the man who could be the president next year facing questions like that. He was just laughing.

At the other side was Barack Obama, to the president's left. He also was smiling, sitting near Senate Majority Leader Harry Reid.

And it was sort of your typical almost photo-op, where this is the top of the meeting. When they do the actual work will be now once the press is herded out.

We're expecting this meeting, according to White House aides, to last about 45 minutes. There's some talk and some indications that Senator Barack Obama after the meeting will come out and talk to reporters about what happened inside there. We have not gotten an indication yet about whether Senator McCain will also speak to reporters.

Let me also tell you a little bit about the drama all around that room, outside that room. The White House briefing room right now has basically the pool for the White House, a whole group of reporters, then the pool for Senator Barack Obama, the pool for Senator John McCain. There's literally dozens of reporters, photographers all in the White House briefing room.

It's sort of the two presidential campaigns colliding here on Pennsylvania Avenue. And a short time before the start of the meeting, there were the two the motorcades from Senator McCain and Senator Obama out on Pennsylvania Avenue also converging at the same time within just a couple of moments each other. So it's just sort of that kind of drama, the rare moment where you have both presidential nominees meeting with the current president of the United States, nobody knowing who is going to be replacing this president, but all of them coming together to try and deal with this financial crisis.

I think the most significant thing the president said in his very brief comments was that he's expecting a deal very shortly, and that's why I think it will be key after this meeting to hear from leaders on both sides to define that better. When the president says "very shortly," how quick in fact is that? Is that a matter of hours, is it tomorrow, et cetera? -- Wolf.

BLITZER: And I know based on my experience over the years being a pool reporter, they usually let you into the Cabinet Room or one of the rooms in the White House for these photo opportunities once all the principals are seated around that big table. So you didn't have a chance to see if there was any exchange, for example, between McCain and Obama? Because they were really on opposite ends of that long table.

HENRY: That's right. They were on opposite ends, and you obviously have to expect that, you know, the White House was very cognizant of the fact that if they were sitting directly next to the president of the United States, that could be used in various campaign commercials on either side, a shot of McCain sitting next to the president at a time when he's trying to separate himself from this president, for example.

So they were sitting at opposite corners. And then out of respect and deference to the current congressional leaders, you had Nancy Pelosi, the speaker, and Harry Reid, the Senate majority leader, sitting next to the president.

It was all just pleasantries. They had all sat down already by the time we were let in. They let the still photographers in first. They ran through to get a couple of still shots of this historic meeting, then they brought in the television cameras and the print reporters.

That's when we heard the statement from the president, very, very brief, as you saw. Now this is when they do the actual work behind closed doors. They're trying to hash it out. And obviously, they're all trying to exchange information that they're getting, these scattered reports from the Hill, about exactly how close they are to a deal -- Wolf. BLITZER: Well, normally protocol would mandate that the speaker of the House and the Senate majority leader sit on both sides of the president. Then the minority leaders sit next to them. So I guess it would only make sense that the two presidential candidates who are both United States senators, not leaders in the Senate themselves, they are sitting a little bit further away from the president.

HENRY: Right. And you also had Vice President Cheney sitting directly across from the president on the other side of the table in the Cabinet Room. You also had other leaders on the Hill of the various committees -- the players that we've been seeing in recent days, Barney Frank, the House banking chairman, for example, Senator Chris Dodd, the Senate banking chairman, and their Republican counterparts, as well.

So this is why all the key people are sitting down. What is rare, as you note, is the fact that you also had the presidential nominees there.

There's a lot of back and forth right now here in Washington about whether this is really helping or hurting. Does it help to bring the presidential candidates into this room, try to have a detente and hash it out, or is it injecting presidential politics into the process? -- Wolf.

BLITZER: Seeing they didn't exactly bring out a lot of food. They have some coffee and that's about it. Maybe they'll bring them some water if they're talking, as well. We expect this meeting to go on for about 45 minutes to an hour? Is that right?

HENRY: That's the indication we've gotten, about 45 minutes to an hour. There have been reports, as you know, on the Hill that they're sort of close to an agreement in principle, that it's not quite -- the ink is not dry but that they're close.

That's why some Democrats from the Hill have been suggesting that this is more for show, this is giving the president an opportunity make it seem like he's finishing the deal, if you will. And also maybe providing a little political cover to John McCain, who's facing very tough questions about the economy with the Republican running the White House right now but.

By getting him to the table, along with Barack Obama, there have been suggestions by the Democrats that this is really more for show, gamesmanship, if you will. As you know, John McCain's perspective is he's insisting it's statesmanship, that he suspended his campaign yesterday because he wanted to come to the table and put country first.

That's the tag line from his campaign commercials. So you can see how he's trying to play this politically. The Democrats obviously want to play it their own way.

BLITZER: And often the principals, they emerge from the West Wing, they walk out to the driveway. I know it's raining or drizzling right now. They go to the microphones, a stakeout position, and make statements.

Do we anticipate that any of these principals are about to do that?

HENRY: They have not told us for sure, but we have gotten indications from the reporters traveling with Senator Obama that Senator Obama is expected to make some sort of statement after this. So we do expect him to either come to those stakeout microphones or some other position here on the White House campus or right near the White House.

We have not gotten an indication from Senator McCain. And as you know, typically, the leaders from Congress will come to the stakeout after a meeting of this importance, at a time when the nation and the world, frankly, are watching how these leaders are dealing with the financial crisis. We haven't gotten an official word, but one White House official suggested we should have our cameras ready, they expect some people to come to them.

BLITZER: Yes. You know what we should do? We used to do it when I was a White House correspondent.

We have a shot of that Marine guard outside the door in the West Wing. In those days during the Clinton administration, when it was raining, they would let our cameras move underneath the overhang so that the principals wouldn't get wet walking out, they wouldn't have to go with umbrellas.

I don't know if they will allow that anymore in the Bush...

HENRY: They still do, Wolf.

BLITZER: So maybe you could tell the crews to move underneath so that Barack Obama, John McCain and the others would be encouraged to come over and speak to all of us after this historic meeting. Just a recommendation.

HENRY: Some things never change -- Wolf.

BLITZER: All right. Good. All right, Ed. Stand by. We're going to be getting back to you.

We're also going to be speaking live with two of the principals who are inside that meeting. They've told us already following the meeting, they're going to come to our live shot location where you just saw Ed Henry, and they'll tell us what was going on inside.

This is truly a historic day here in Washington. Remember, this is the worst economic crisis, according to Bush administration officials, to hit the United States since the Great Depression of the 1920s and '30s. And we'll see how close they are to an actual deal.

Deal or no deal? That's the question.

From Wall Street to Main Street, the American people have plenty to say about the financial bailout and whether it's worth spending so much of their money. We're going to hear from the heartland. Stand by for that.

And the debate over holding the debate. Will John McCain actually show up in Mississippi tomorrow night? Will Barack Obama be on the stage alone?

We're live at the debate site. Suzanne Malveaux is there already.

And Sarah Palin breaking her silence, answering reporters' questions. Was that a good idea?

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


BLITZER: After days of haggling, congressional leaders from both sides of the aisle have now hashed out the "fundamental principles" of their response to the $700 billion financial rescue plan. So could their plan be on the president's desk within days?

Let's go to our congressional correspondent, Jessica Yellin. She's following all of these developments for us.

They've got to agree on the language, and then it's got to go to the floor of both houses. It's not going to be necessarily all that quick. Will it?

JESSICA YELLIN, CNN CORRESPONDENT: Well, Wolf, there is a lot of optimism that there could be something drafted overnight, and perhaps something on the floor of the House by early tomorrow morning. But now it's looking like this isn't as final and as done as a lot of the reporting is suggesting.

At this point, I still hear enormous opposition from some elements of the Republican conference in the House of Representatives. So much opposition and so fierce, that it might be a situation where the Democrats wouldn't want to proceed, at least on the House side, until they have more sign-on from those folks they have said repeatedly that they do not want this to move forward in either house without bipartisan support.

Now, this has been an evolution throughout the day, because you'll recall earlier in the day, we heard some very optimistic words from a bipartisan meeting of leaders in both these committees. Let's listen to what they said earlier today.


SEN. CHRISTOPHER DODD (D-CT), BANKING CHAIRMAN: We want to do what's correct and right in the next few days. We can't say exactly when. We've reached a fundamental agreement on a set of principles.


(BEGIN VIDEO CLIP) SEN. ROBERT BENNETT (R-UT), BANKING COMMITTEE: I now expect we will, indeed, have a plan that can pass the House, pass the Senate, be signed by the president, and bring a sense of certainty to this crisis that is still roiling in the markets.



REP. SPENCER BACHUS (R-AL), BANKING COMMITTEE: There was progress today, and I felt like the discussions were very open. And we're all committed to a successful and positive conclusion.


YELLIN: Now, what's happened since then, Wolf? The last man you saw speaking there, Spencer Bachus, in the House -- he's a Republican -- went back after that meeting, and the general information we're getting is many of the House Republicans were very angry that he stood there with those folks who were saying that a deal is very close, and it's their view that they're not ready to sign on to this deal. This is portions of the House Republican Conference.

And since then, both Bachus and the minority leader, Boehner, have issued statements saying that they have not signed on to this deal. The big unknown question is, how much of this is legitimate, substantive disagreement with what's in the negotiated terms and how much of it is just political so they can say, well, there's nothing, and then McCain comes in and suddenly there's agreement? We'll are to wait and see.

BLITZER: All right. We're going to wait with you, Jessica. Stand by on the Hill. We're going to get back to you.

Remember, we're waiting for this meeting to wrap up at the West Wing of the White House in the Cabinet Room. The president meeting with the congressional leadership, Democrats and Republicans, and John McCain and Barack Obama in that will meeting, as well.

We expect them to emerge at some point and tell us what happened, deal or no deal. We're expecting John McCain and Barack Obama to be speaking. We'll, of course, go live to the White House as soon as this meeting wraps up. But they're in the middle of the meeting right now.


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

Happening now, President Bush says he hopes for a bailout deal very soon. He's meeting right now at the White House with Barack Obama, John McCain, and the congressional leadership to discuss a bailout plan one of them, one of those Democratic or Republican presidential candidates will likely inherit.

We'll ask a top Bush advisor, Ed Gillespie, what he can expect to come out of this historic meeting. He'll be joining us live after the meeting is over with.

And John McCain says the nation's economic crisis calls for all hands on deck. Was the decision to suspend his campaign inspired or was it politically reckless?

"Meltdown," "financial panic." The rhetoric intensifying. Just how bad is the U.S. economic storm right now? CNN's Mary Snow, she's standing by to put it all in perspective.

All that coming up.

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

And you saw it live here on CNN, the leaders of Congress, as well as the two presidential candidates, walking in to the West Wing of the White House for this historic meeting with President Bush in the Cabinet Room. That meeting is under way right now. We're standing by to see all of these leaders emerge and hear what they have to say.

Will there be a deal to bail out Wall Street or won't there be a deal? We should know fairly soon.

At the top of the meeting, the president allowed cameras and reporters into the Cabinet Room. And this is what he said.


BUSH: I want to thank the leaders of the House and the Senate for coming. I appreciate our presidential candidates for being here, as well.

We are in a serious economic crisis in the country if we don't pass a piece of legislation. I want to thank the spirit of bipartisan cooperation that's taking place here in Washington.

One thing the American people have to know is that all of us around the table take this issue very seriously. And we know we've got to get something done as quickly as possible. And this meeting is an attempt to over the process forward.

My hope is that we can reach an agreement very shortly.

I want to thank the secretary of the treasury for working hard with the members. Thank the members for working long hours, like they have been doing, to come up with a solution that's bipartisan and that will solve the problem.

Thank you very much.


BLITZER: That meeting actually started about a half-an-hour ago. We expect it to last -- they were -- they were telling us either 45 minutes to an hour. So, maybe they're only midway through. Once that meeting wraps up, we're going to be hearing from Barack Obama and John McCain, get their sense on what's going on, as well as from the White House and the bipartisan congressional leadership.

So, there's a lot of fluidity under way right now, and the stakes, as all of you know, are enormous right now.

One of the decisions that could emerge from this meeting would be whether or not John McCain will go forward and join in the first presidential debate tomorrow night in Mississippi.

Suzanne Malveaux is on the scene for us in Oxford, Mississippi, in Ole Miss. They have got the stage ready. They have got the microphones. They have got the audience ready. It's a big deal for everyone in Mississippi. Indeed, it's a big deal for everyone around the country.

What -- what -- what is the latest? What are organizers of this debate saying about whether or not they think John McCain will actually show up?


I spoke with the governor of Mississippi, the chancellor, the vice chancellor of the university, asking all of them if they have gotten official word. They have no official word that John McCain is going to be here tomorrow, but they're all optimistic. You get a sense here, just behind me, they have been setting up, doing microphone checks, sound checks, with two podiums on stage.

Despite all the optimism, however, Wolf -- I have been talking to a lot of people -- there's a lot of angst here until they find out officially whether or not this debate is going to be delayed.


UNIDENTIFIED MALE: It was a shock. It was like getting kicked in the stomach, to -- to find out that McCain didn't want to have the debate.

MALVEAUX (voice-over): The consensus in the hometown of Ole Miss, sheer disbelief.

UNIDENTIFIED MALE: We were just all horrified.

UNIDENTIFIED MALE: Immediately, I says, he has already lost a lot of votes that were going to vote for him if he does not come.

MALVEAUX: At Oxford's camp for kids who are into politics, big pride in the debate for this third-grader.

UNIDENTIFIED FEMALE: Because it's in Oxford. It's, like, where we live.

MALVEAUX: Then disappointment.

UNIDENTIFIED FEMALE: He's going to possibly lose Mississippi's votes, half of them. UNIDENTIFIED MALE: You think so?


UNIDENTIFIED MALE: You're pretty smart about politics. How did you learn that?

UNIDENTIFIED FEMALE: It comes to me naturally.

MALVEAUX: Luckily, for McCain, little Ann Morgan's (ph) instincts are off. He's expected to win here easily. But, at the debate site, hundreds of students, volunteers, and faculty are in limbo.

GLORIA KELLUM, VICE CHANCELLOR FOR UNIVERSITY RELATIONS, UNIVERSITY OF MISSISSIPPI: Well, I was surprised and disappointed. But you immediately go into action.

MALVEAUX: Gloria Kellum, vice chancellor of university relations, operated as if it was a go.

KELLUM: The commission and the university are not talking about contingency plans. We have a strong belief that, tomorrow night, this debate will be right here.

MALVEAUX: But the question today to John McCain from the campus paper, will he show?

UNIDENTIFIED MALE: We expect to have the debate tomorrow night at 8:00.

MALVEAUX: That question dominated a news conference with the university chancellor and Mississippi governor, leaving them with very little to say.

UNIDENTIFIED MALE: I can't think of a bad day to be at Ole Miss.

MALVEAUX: A local editorial accused McCain of misplacing his Southern manners, where, in these parts, manners matter.

But some voters are cutting him some slack.

UNIDENTIFIED MALE: We're in a crisis, man. This man is a leader. He's taking personal responsibility.

UNIDENTIFIED FEMALE: He did hurt my feelings yesterday. My feelings were hurt, but I'm still a McCain girl.


MALVEAUX: So, Wolf, a little hurt feelings from some, but a lot of people saying that they're looking forward to this, that they believe it is going to happen.

And the vice chancellor I spoke with earlier today says she has been on the phone with the debate commission every hour getting updates. They have been rather tight-lipped with us, but they have been giving at least signals that this is going to be pulled off tomorrow sometime.

This is an investment of university, Wolf, of $5.5 million, hundreds of employees and volunteers, everybody on pin and needles, essentially, just waiting for the official word -- Wolf.

BLITZER: And, Suzanne, the subject of this first presidential debate was supposed to be foreign policy, national security. I assume, if the debate takes place, that that's still going to be the case; they're not going to change it to economics.

MALVEAUX: They're not going to change it to economics. It is going to focus on national security.

But, Wolf, it is really not out of the realm of possibility they will certainly deal with the economic crisis first. At least there will one or two questions. It certainly is at the discretion of the moderator. We fully expect that that's at least going to come up.

Then we will turn the corner, obviously talking about Pakistan, Iraq, Iran, North Korea -- Wolf.

BLITZER: We will, of course, have special coverage, assuming the debate actually takes place.

All right, thanks very much.

All right. I just want to remind our viewers what's going on. There, you can see the West Wing of the White House. That's the door where guests go in. You see the Marine guard standing outside that door. They took our advice. They moved those microphones underneath the overhang there, so, when some of those principals who were inside the Cabinet Room right now, when they emerge, they won't get wet as they speak to reporters.

There are the microphones right now, and we will see what is -- we will see what they have to say as this meeting wraps up. This is history unfolding right now, the president meeting with the congressional leadership, Democrats and Republicans, as well as with both presidential nominees, John McCain and Barack Obama.

Outside, there are some protests going on, actually.

Carol Costello is looking at that part of the story. What do we know, Carol?

CAROL COSTELLO, CNN CORRESPONDENT: Well, you know, while those candidates are meeting with President Bush and Congress is hammering out this bailout deal, in New York, there's an informal protest going on, on Wall Street.

An informal message went around over the Internet, asking people to gather on Wall Street near quitting time, so, as the workers came out of their businesses on Wall Street, they could protest. These people were asked to bring signs, banners, noisemakers, and the like. I am going to read you the note that went out to them over the Internet, Wolf.

It said: "By having this protest later in the day, we can show these thieves, as they leave work, we're not their suckers. Plus, anyone can can't get off work can still join us downtown as soon as they are able. There is no agenda, no leaders, no organizing group, nothing to endorse, other than we are not going to pay."

Needless to say, they are against the bailout play. They say it is a violation of our free market. And, as you can see, there are a good number of people on Wall Street waiting for those workers to leave, so that they can make their feelings known.

BLITZER: Yes. There was one poll that came out earlier today, Carol, that said about a third support the bailout, a third oppose the bailout, and almost a third are undecided about the bailout right now.

And among those who are opposed to the bailout, there's some pretty angry voices being heard. They don't think this is the time for the U.S. taxpayer to start bailing out fat cats on Wall Street.

COSTELLO: Well, and, plus, nobody really knows what bill the taxpayers themselves are going to get. There is so much about this thing that's unclear. I mean, if we knew more, if taxpayers knew more, maybe they would -- there would be more taxpayers in support of it than just a third.

BLITZER: All right, we will wait to see what happens at this meeting at the White House. It should be wrapping up fairly soon.

Carol, we will get back to you.

While officials here in Washington wrangle over a bailout plan, voters in the heartland are sounding off about the rescue and the price they will pay.

Also, Sarah Palin gives reporters what they have been looking for, an answer. Some wonder if she should have stayed silent. Stand by for our "Strategy Session."

And reports that Pakistani troops actually opened fire on U.S. helicopters -- we're sorting through conflicting claims about what happened.

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


BLITZER: We're told President Bush is getting ready to wrap up a meeting inside the Cabinet Room in the West Wing of the White House with the congressional leadership, as well as Barack Obama and John McCain, that meeting dealing with the proposed $700 billion bailout.

Whether or not there's a deal or no deal, we should know fairly soon, based on what happens in this meeting, and based on what we learn when they emerge and go to those microphones that are now outside the main door to the West Wing of the White House.

Once the leaders emerge and stop at the microphones, we will hear what they had to -- have to say, and we will get a better sense of, A, whether or not there will be a deal, and, B, whether or not there will be this first presidential debate tomorrow night in Mississippi.

John McCain says he's not going if there's no deal. He wants to work in Washington to make sure that there is a deal. All right, we're standing by for that. As soon as we see those individuals leaving the West Wing, we will go there live. Stand by for that.

As you know, President Bush has been warning Americans that they will pay a heavy price if Congress fails to pass this massive bailout package. But does the American public agree?

Let's go to CNN's senior political analyst Bill Schneider -- Bill.


WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, the public wants the federal government to do something to resolve the financial crisis, but people are worried about what the government will do.

(voice-over): The public has mixed feelings about a government rescue plan. President Bush says the plan is aimed at rescuing the economy.

BUSH: This rescue effort is not aimed at preserving any individual company or industry. It is aimed at preserving America's overall economy.

SCHNEIDER: Voters agree that the federal government should do something, but critics warn:

REP. JEB HENSARLING (R), TEXAS: We may have taxpayer bankruptcy for the next generation.

SCHNEIDER: Mention taxpayer money, and voters become reluctant. Asked whether taxpayers dollars should be used to rescue private companies whose collapse could have adverse effects on the economy, most Americans say no.

Suppose Congress and President Bush come to agreement on the new plan. Do Americans believe it will treat taxpayers fairly? No. But do they believe it will help the economy? Yes. Hence, mixed feelings.

John McCain said he was suspending his campaign, and favored postponing the first debate in order to keep politics out of the financial negotiations.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: All we must do to achieve this is temporarily set politics aside. And I am committed to doing so. SCHNEIDER: Barack Obama argued, the negotiations cannot be isolated from public debate.

OBAMA: 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.

SCHNEIDER: The Marist Poll interviewed voters Wednesday night. By 53 to 42 percent, most wanted the debate to go on as scheduled.

(on camera): When asked whether the topic of the debate should be foreign policy, as originally planned, or the current economic crisis, voters were split. Most Democrats want the debate to be about the economic crisis. Most Republicans want to stay with foreign policy -- Wolf.


BLITZER: All right, Bill, thank you -- Bill Schneider looking at the numbers.

The massive bailout plan is the talk of Wall Street and Pennsylvania Avenue here in the nation's capital, but it's also the talk of Main Streets across the country. Some people are clearly furious right now.

Let's go to our chief national correspondent, John King. He's out in Marysville, Montana, where you have been hearing what a lot of folks are saying out there.

What are they saying, John?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, there is a great deal of skepticism. Number one, the voters say Congress is in too much of a rush. They don't know the details. And they feel, as Bill just noted, that they're going to get stuck with the bill for this giant package that bales out a bunch of rich people.

We went to Congressman Denny Rehberg's office this morning in Helena, 55 calls against, only one for the bailout -- the president not making the case to the constituents of a Republican congressman there.

Then we went across town to Democratic senator's office, Max Baucus, just about the same, in the mail and over the phone, all sorts of complaints, all sorts of concerns, callers saying they're worried they're going to get stuck with a big bill when they have to pay their own bills and nobody is going to bail out them.

We also visited a rancher here, Wolf, in Boulder, Montana. Now, Dale Raider (ph) has lived on his property for 66 years, move there when he was 4 years old. He lives off the land. He has to borrow $80,000, sometimes $100,000, a year from the bank to keep his cattle business in business.

He says he has to pay his bills, and then he quoted George Bush, saying, well, the president says they got drunk on Wall Street. In his view, Dale Raider's view, they should have to deal with what he called the hangover.

And he says, simply, when he listens to the president talk, he doesn't believe him.


UNIDENTIFIED MALE: I was born during the days of FDR. FDR said that we have nothing to fear but fear.

Well, this is exactly the opposite. They're preying on our fears. If they don't bail them out, the rest of you are going to go down the tubes, and we will have another Depression.

And I don't -- I don't like the idea of these fear tactics. Who knows what it's going to do to us? We don't know. And they understand that. And that's where fear comes in.


KING: A great deal of uncertainty from people like rancher Dale Raider, Wolf.

And what I can tell you, it's sort of sad in some ways. The president addressed the nation last night. And you ask Americans of both parties whether they believe him or not, and many are saying just what Dale Raider said, that, because of what happened in the Iraq war -- the president said there was this great threat, told the American people they needed to trust him, he needed to act fast -- they say he's simply not trustworthy at this point of his presidency right now.

And they also say they don't much trust the Democrats or Republicans in the Congress either. So, it is in that distrustful political environment you have this enormous economic anxiety playing out -- Wolf.

BLITZER: And what are Montana's elected leaders saying to you, John? I know you have been speaking with them.

KING: Well, we -- and Congressman Denny Rehberg says he would like to vote for a deal, but he has to be clear it has taxpayer protects.

Max Baucus, of course, not is he up for reelection this year; he's the chairman of the Senate Finance Committee back in Washington. So, he's a big player in the negotiations and someone who says you can't let the financial situation collapse. He agrees with the president's take, that the domino effect would dry up credit across the country. But he wants changes to the president's plan.

And the governor here, Wolf, who, as you know, is very much a populist, he says, right now, people just simply don't trust Washington. They're not ready to sign on to a big deal. What he says that Congress needs to do is slow down and explain every line of any package before they try to push it and force it on the American people.

But, as you follow those negotiations now under way at the White House, you know that is not the political plan under way. They're trying to get a deal done as soon as possible.

BLITZER: And he delivered quite a populist speech at the Democratic Convention, Governor Schweitzer.

All right, John, stand by. We're going to be getting back to you shortly.

Coming up in our "Strategy Session": Sarah Palin takes some questions.


GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: I don't support that and until the provisions that Senator McCain has offered are implemented in that -- in (INAUDIBLE) proposals.


BLITZER: All right, she did something she doesn't usually do. She actually stopped and answered some reporters' questions today. Is it a good strategy for her to be less guarded with the traveling news media?

And John McCain's decision to suspend his campaign, it's being described as a Hail Mary by some Democrats. But is it indicative of his maverick streak?

Stand by for that. And stand by to go to the White House live, as this historic meeting wraps up. We will hear what happened inside -- all that and a lot more coming up -- right here in THE SITUATION ROOM.


BLITZER: We're awaiting a historic meeting at the White House to wrap up. It should be wrapping up pretty soon. Once they leave the White House, emerge from those doors at the West Wing, we will go there live and hear what they had to say -- the president meeting with the bipartisan congressional leadership, as well as the two presidential nominees, right now.

Let's discuss what's going on in our "Strategy Session."

Joining us, our CNN contributor the Democratic strategist Donna Brazile, and Bill Bennett, a CNN contributor, also a national radio talk show host.

Bill, it seems like -- correct me if I'm wrong -- the biggest stumbling block right now that the president and the secretary of the treasury have is not necessarily Democrats, but it's the conservative Republicans, many of whom are up in arms. And I know you have been trying to find out which way this thing is moving. BILL BENNETT, CNN CONTRIBUTOR: I think you're right.

I think the Republican senators, Wolf, are pretty passive in this. They're going along. They're agreeing. They're ready to deal. The House Republicans, a different story.

I had Jeb Hensarling, who you just showed, on my show yesterday. I had Paul Ryan, congressman from Wisconsin, today. They -- they give voice to the kind of thing John King was just talking about with the rancher in Montana. There's a kind of moral outrage about this.

Here's the funny thing. And I can say this as a moral philosopher. There was real fault here. There was real self-dealing and bad stuff going on. But the deal that is being offered is, well, look, this is bookkeeping and accounting. You know, get your moral sense out of this.

But a lot of Americans won't. People admire -- at least, my listeners admire McCain for, you know, being bold and stepping up. It's a big gamble. But they're worried about the final outcome of the deal. They don't want these rich guys on Wall Street rewarded.

And, if you take that out, I think they're going to be more inclined to deal. But, right now, the House Republicans, I think, are -- are holding the whip hand. And, if John McCain has a role to play after this meeting, it could be with those House Republicans.

BLITZER: And, Donna, if -- if Barack Obama gets those four conditions he laid out yesterday -- they seem to be pretty close to getting those four conditions included in the final language -- I assume the Democrats, by and large, in the House and Senate are on board?

DONNA BRAZILE, CNN POLITICAL ANALYST: Wolf, there's still some concerns, of course, about the rate of foreclosures that we're facing. This is the highest level of foreclosures since the Great Depression.

And, so, many Democrats are worried about those homeowners, because they're our neighbors. They're our co-workers. And, when you rip the carpet from underneath them, you undermine local governments that rely on property taxes.

So, this deal looks good, but we don't know all of the details. It protects the taxpayers, helps stabilize the market. But, homeowners, let's them in the deal as well, to make sure that we can stop the high level of foreclosures.

BLITZER: And that was one of Barack Obama's conditions.

And it seems that they're getting close to a deal on foreclosures and homeowners.

But, go ahead, Bill. You wanted to weigh in.

BENNETT: Well, I just -- not in a partisan way, but Donna's point, your question, really, I think Pelosi does want a deal. I think the Democrats do want a deal.

But, as I understand it, she expects 100 or at least 110, 120 Republicans to sign on, as a condition. She wants that Republican cover. And, again, Wolf, you correctly identify the Republican House as the place where the roiling water is.

BLITZER: You think they're going to get that, Donna? What do -- what does -- you have been trying to figure out what's going on here, as all of us are. What do you think? How is this going to play out?

BRAZILE: Well, there's no question that, with Congressman Barney Frank, Chris Dodd, they're working with Republicans to make sure that the proposal is sound, that it protects the taxpayers, and don't give the Wall Street barons a golden parachute.

I think Republicans and Democrats have really come together on this matter within -- within the last seven days. And I know John McCain is now on the scene, but, clearly, this has been an ongoing discussion. They have worked through the weekend. And the bill that Secretary Paulson put forward is now a stronger bill.

BLITZER: Would you be surprised, Bill -- and you know the Republicans about as well as anyone. The president of the United States wants this deal. Let's assume he gets John McCain on board and Barack Obama. The Democrats on board. How difficult would it be for the Republican leadership in the House -- I'm talking about John Boehner and Roy Blunt and others -- to go against, not only the president, but the new leader of the Republican Party, John McCain?

BENNETT: It's a great question. I think I ought to disaggregate the question, as we say.

Boehner and Blunt probably will go along. It's that Republican study group, Wolf, about 100, 110, some of the people I mentioned. And I think that's still an open question. I don't think they think -- this is my guess -- that it's concessions that they need or amendments to the bill. They think we need a new bill, a whole new approach. I'm not sure they're going to yield. I'm not sure.


BLITZER: Do you believe, Donna, what the president, the secretary of the treasury, Ben Bernanke, the chairman of the Federal Reserve, what all of them are saying, including John McCain, for that matter, that, if there's no deal, there's nothing done, there could be, not only a deep recession, but maybe even -- maybe even a depression?

BRAZILE: Wolf, I mean, all you have to do is look at the fundamentals of our economy, high unemployment. We're basically -- no one is able to get credit, people who are trying to get student loans. So, yes, there's a crisis in this country.

But the crisis is not just stabilizing the markets, but helping those Americans, you know, make ends meet and making sure that we can stop the -- the high level of foreclosures. After all, we have five million Americans -- that's five million families -- who are now worried about losing their homes. Let's try to help them as well.

BLITZER: Do you believe the president, what he said last night, Bill? Do you think he told the American people the truth, the whole truth, and nothing but the truth?

BENNETT: I don't know if it was the whole truth, but I think it was the truth. I thought it was a pretty good account. And, for a 12-minute speech, I thought it was pretty accurate. It was pretty clear. And it's so hard to grasp, it's hard to understand this stuff.

Look, again, I think the issue is whether, you know -- sorry -- let me back up. Are there alternatives? Are there other ways of looking at it? You have now got a lot of the position papers flying around on the Hill, Wolf, saying, no, it doesn't mean collapse if we don't do this.

And, in fact, we if we do it, we may have collapse. This has come late, but there are a lot of people -- Jim Bunning was on earlier on your show -- and others, saying, look, this is exactly the wrong way to go.

BLITZER: All right.

BENNETT: We're just going to feed the beast more.

So, there's a lot of different viewpoints being expressed.

BLITZER: All right.

I want both of you to stand by, because this is breaking news -- and, as I have been saying, it's even historic news -- happening right now.

In fact, Senator Shelby is just emerging right now. He's the ranking member of the Senate Banking Committee.

Let's hear what he's saying.


SEN. RICHARD SHELBY (R), ALABAMA: All I can say is, we had an interesting meeting with the president and the vice president, Senator Obama, Senator McCain, and a lot of the leaders in the Banking Committees of both houses.

I can tell you, I don't believe we have an agreement. I have voiced my concerns all along. I don't know if you have this, but I have a five-page -- five pages of the leading economists in America that wrote to me and the leadership, saying the Paulson plan is a bad plan. It will not solve problems. It will create more problems. We're rushing to judgment, that we do have stress in our financial markets, but this is not the best way. We ought to look at alternatives.

This is not me. This is economists at Harvard, Yale, MIT, University of Chicago, our leading universities, five pages. It ought to tell you something. I brought it up in the hearings.

I'm probably not welcome again, but I will be back.

QUESTION: What would constitute an agreement?

SHELBY: We haven't got an agreement. There's still a lot of different opinions. Mine is, it's flawed from the beginning. I said that the other day at the -- at Banking committee.

I asked Chairman Paulson -- I mean, Secretary Paulson and Chairman Bernanke had they considered other alternatives. Some of you recall silence. They hadn't, but they should.


SHELBY: Wait a minute. I can't...


SHELBY: Well, I hadn't -- I'm not in the House. It's been awhile since I was over there. I hadn't seen it, but...

QUESTION: Senator, can you share with us a little bit of the tenor of the meeting? Did Senators McCain and Obama participate? (OFF-MIKE)

SHELBY: Well, the -- they were -- Senator McCain and Obama were being senators and a member of the body. They were very courteous to each other and very respectful.

QUESTION: Then, the agreement with the Dodd announcement this morning...

SHELBY: Well, that's -- that agreement is obviously no agreement.

OK? -- Thank you.