Return to Transcripts main page

THE SITUATION ROOM

Candidates Prepare For Presidential Debate; McCain's Campaign Gamble

Aired September 26, 2008 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: To our viewers, you're in THE SITUATION ROOM.
Happening now, the breaking news we are following -- the president and the Democrats hope to reach a deal soon on that $700 billion financial bailout, but some from the president's own party are against what he is trying to do.

The presidential debate, as you know, is on, but only after John McCain changed his mind again. With all the drama, what do McCain and Obama need to do now? And what will they need to do down the road? We are going to preview the substance, their styles and the great expectations as the debate suspense builds, all that plus the best political team on television.

I'm Wolf Blitzer at the CNN Election Center. You are in THE SITUATION ROOM.

We are only three hours away from a dramatic point in this presidential race. Barack Obama and John McCain will hold their first debate. And as they get ready to face off in Oxford, Mississippi, Congress and the White House continuing their desperate effort, indeed their desperate debate, over that $700 billion Wall Street bailout.

We are following the breaking news that one high-ranking Democrat calls a revolt by House Republicans against the president's wishes. Congressional Democrats say President Bush needs to get House Republicans on board if there is any chance of passing it. Democrats and the president are hopeful a deal will be reached very soon.

Ed Henry is standing over at the White House. But let's go to Jessica Yellin first. She is up on Capitol Hill watching all the latest developments.

What is the latest. What do we know about the prospects right now, Jessica, of a deal?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Wolf, right now, negotiations are taking place at the staff level. And I have just gotten word that those staffers are taking a dinner break. Some of them have been at work on this project since 5:00 this morning.

We understand they will come back and continue to hammer out what will be a draft proposal in theory. And once they have worked through an entire draft, it's our understanding that is when they would have a meeting of the principals in this negotiation, two Democrats, two Republicans, with Secretary Paulson to hammer out the final details.

Now, we have heard a lot of sniping in the past day over who is to blame for the breakdown, Democrats today expressing some real frustration that they feel this process was politicized when the presidential candidates came to town. This was Nancy Pelosi earlier.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: I would not include yesterday among the days where we made progress, because there was an intervening -- an intervening event that set us back, took time. And now we're back on track.

(END VIDEO CLIP)

YELLIN: Now, House Republicans, of course, saying that they had reservations all along, and they are glad that their considerations are now in part of the negotiating process.

Of course, the overall message we're getting from members on both sides is that they do want to get something done, that progress is being made. One person described it to me as plodding, but still moving forward and they are looking still at a Monday date. That is their goal date to have something done, but we will see if that is realistic -- Wolf.

BLITZER: We will see and we're watching every moment with you, Jessica. Thanks.

Let's go over to the White House. Ed Henry is over there.

Ed, with hindsight, that dramatic meeting that the president had, what, 26 hours ago with the Republican and Democratic leadership on the Hill, and the two Palestinians candidates, was it a mistake? Did it set back the negotiations?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Wolf, Democrats certainly think so, but White House officials still believe that the president bringing the two presidential nominees to the table was a dramatic move to at least sort of focus everyone's attention in Washington and around the country about the urgent need to sort of move forward do something, but can it actually get done? That is the big question here at the White House this hour.

I can tell you that just in the last few moments, the president wrapped up a meeting with British Prime Minister Gordon Brown. At the end of that meeting, the president said he is still hopeful that he can get a deal through Congress. He also said that he thinks that the price tag, $700 billion, is big enough to make an impact here and around the world. That is something that the British prime minister expressed support for, obviously a lot of fears in Europe that this could spread over there even more.

Secondly, the president earlier today took a call from the French president, Nicolas Sarkozy, who also expressed his support in that phone call we're told for the actions here in the U.S., hopeful there in France as well that there will be some action in the U.S. Congress. Again, there is fear in Europe that this problem, the crisis in the United States, could be spreading overseas.

And finally I can tell you that the Treasury Secretary Henry Paulson not only has been reaching out to various members, but has been on the phone with Senate Majority Leader Harry Reid throughout the day today trying to get reports. Administration officials say, bottom line, they are getting word from the Hill about what they say is constructive talks, but still nowhere close to a deal -- Wolf.

BLITZER: All right, thanks very much, Ed. Stand by over at the White House.

Let's go up to Capitol Hill once again. Chris Dodd, the Democrat from Connecticut, the chairman of the Senate Banking Committee, and one of the negotiators, one of the inside players in all of this, is joining us right now.

When do you realistically believe, Senator, that you will resolve all these matters and actual legislation will come up for a yea or nay vote on the Senate floor?

SEN. CHRISTOPHER DODD (D), CONNECTICUT: Well, I don't know the answer to your question, Wolf.

I think it could come as early as the end of the weekend or maybe some time early next week. I am interested in getting this done quickly, but I won't be stampeded.

Listen, this crowd got us into this mess. It didn't have to happen. You have heard me say that in the past. This was preventable and avoidable. This was not like Katrina or Hurricane Gustav. So, we are here in a moment of tragedy candidly and everyone is angry about it, they ought to be.

The question is, what do we do about it? And I have made recommendations. We have had meetings yesterday, in fact all week since last Thursday, a week ago Thursday night. And I am prepared to be supportive of a plan, a rescue plan here, a workout plan, but it needs to have provisions on it dealing with executive compensation, dealing with taxpayer -- getting something back if profits are made on the sale of these assets.

But I clearly want to see strong accountability provisions, as well as of course dealing with the issue of foreclosures...

(CROSSTALK)

BLITZER: Are you any closer with those House Republicans, who are saying, you know what, the basic concept that Henry Paulson, the treasury secretary, came up with, that the Democrats accepted in the Senate and the House, with some major modifications, as you point out...

DODD: That is totally false.

(CROSSTALK)

BLITZER: What is totally false?

DODD: That we accepted the Henry Paulson plan.

(CROSSTALK)

BLITZER: No, no, no, but you accepted the core principle that there should be a bailout, there should be $700 billion as part of this package, that the U.S. government in effect should buy these so- called illiquid debts.

DODD: No, no, no.

In fact, the other day, you may have recalled, if you paid attention -- I'm sure you did -- to the hearings, I raised specifically the question, are you considering other options, other than just buying these distressed assets? Because I want to know if you need additional statutory authority to do that, because many people have serious reservations about exactly what you want to do, not just here in Congress, but economists across the country. He assured me that he was considering other options.

There's never been any question about whether or not...

(CROSSTALK)

BLITZER: Well, what do you think about the alternative proposal being put forward by these House Republicans?

DODD: Well, I don't know. I have been told by Henry Paulson it's a terrible idea.

Now, other economists are rejecting that as a proposal, but I have no objection to economists considering that idea, along with a variety of others that ought to be out there on the table. That has never been a debate.

The debate has been about whether or not you protect taxpayers, whether or not you protect against executive greed in compensation, whether or not you do something on foreclosures, and whether or not you're going to really do something here with accountability.

This proposal that was sent to us a week ago had none of that in it. And we have been insisting upon those conditions. If they are not there, this plan will die. If they are there, there's a chance we will pass it.

BLITZER: And, so, basically, give us your bottom line, Senator. How close do you believe -- and no one is closer to the negotiations than you are -- how close do you think you are now to a package, to a proposal, legislation that can be voted on in the House and Senate?

DODD: Well, I am heartened by the fact that the House Republicans are finally sending a serious negotiator in Roy Blunt. We have tried for seven days to get them to pay attention to this. And of course they wouldn't. Now they are. That is good news. And I welcome it.

So, I am optimistic that if we can sit down over this weekend, that we can get some result here that we can offer to our colleagues. But I have got to tell you, 38, 39 days before election, most people up here are angry that they have been put in this position, and they're not about to turn a $700 billion check -- or checkbook over to this president or his successor without some real conditionality associated with it.

BLITZER: Chris Dodd is chairman of the Banking Committee.

Senator, thanks very much. Good luck.

DODD: Thank you, Wolf.

BLITZER: All right, let's bring back Jack. He's got "The Cafferty File."

A lot of drama, but enormous stuff at stake right now.

JACK CAFFERTY, CNN ANCHOR: I like him.

BLITZER: Chris Dodd?

CAFFERTY: Got his stuff together.

BLITZER: Yes.

CAFFERTY: They have got to be tired. These guys have got to be getting worn slick. They are going almost around the clock with this stuff. Good job.

Joe Biden, the vice presidential candidate, never at a loss for words. That is both the good news and the bad news. You see, not everything Biden says is helpful to the Democrats' cause.

Here's an example: He told the "CBS Evening News" this week that, in 1929 -- quote -- "When the stock market crashed, Franklin D. Roosevelt got on the television and didn't just talk about the, you know, princes of greed. He said, 'Look, here's what happened'" -- unquote.

Except that FDR wasn't in office in 1929, and there wasn't no television when the stock market crashed either.

In that same interview, Biden called an Obama that attacked John McCain as being computer-illiterate terrible. Last week, Biden criticized the government bailout of AIG without checking with the Obama campaign first. And Barack Obama later had to say -- quote -- "I think Joe should have waited" -- unquote.

There's more. Biden said paying higher taxes is the patriotic duty of the rich. And earlier this month, he told a crowd that Hillary Clinton may have been a better vice presidential pick than he was. Like we said, never at a loss for words.

Here's the question: Is Joe Biden an asset or a liability for Barack Obama?

Go to CNN.com/caffertyfile. You can post a comment on the blog.

When is the vice presidential debate? Is it next week?

(CROSSTALK)

BLITZER: It's next Thursday.

CAFFERTY: Next Thursday. I can't wait.

BLITZER: Saint Louis, Missouri.

CAFFERTY: I can't wait. You think this thing is going to be interesting tonight? I can't wait until next Thursday in Saint Louis, Missouri.

BLITZER: I love all these debates, but you are right. That one will be pretty exciting, too.

CAFFERTY: Yes, it will.

BLITZER: All right, at last the two nominees getting ready to face off in a debate. We're counting down, two hours, 49 minutes to go.

Now that it is back on, how is the Obama camp managing expectations? What he needs to do tonight?

Also, did McCain's bailout strategy backfire? After his high- profile suspension of his campaign, there is still no rescue plan, so why is the debate back on?

And President Bush suffers a power failure. In a stunning twist, he has backing from many Democrats, while lawmakers from his own party, many of them turning a deaf ear to his pleas. All of this coming up, plus the best political team on television.

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

(COMMERCIAL BREAK)

BLITZER: All right. You are looking at some live pictures we are bringing to you right now from Oxford, Mississippi, Ole Miss. There are the podium, the stage for tonight's debate. You see the two lecterns there. The two candidates will be there. The moderator will be at the bottom of your screen at that desk.

We are counting down until that debate, two hours 45 minutes from now. Both of the candidates will be there. There was a little doubt about that, but we now know both will be there.

Barack Obama certainly appears ready for tonight's presidential debate. He travelled to the debate site earlier in the day. He's there now.

Let's go straight to CNN's political correspondent, Candy Crowley. She's on the scene for us.

How is the Obama camp, Candy, managing the expectations game?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, by raising them for John McCain.

They have put out a memo, one of his campaign aides, saying, listen, if John McCain doesn't have a game-changer today, well, it is a serious blow to his campaign. If he makes a gaffe, if he doesn't answer a question correctly, then John McCain's campaign has been dealt a serious blow.

So, they are pushing back. Obviously, the McCain campaign has a whole different take on what is expected tonight. Again, the Obama campaign says, well, John McCain has campaigned as this big foreign policy expert, so let's see what happens here.

They note, of course, that John McCain, they say, has had a very bad week, and he needs to do something here to change the game. So, this is about raising those expectations for John McCain and letting the chips fall where they may.

BLITZER: And what about after the debate, Candy? Where does Obama head out? I assume the troubled economy will help dictate what he is about to do, but at the same time, he is looking at those battleground states.

CROWLEY: Well, I can guarantee you that he will continue to talk about the economy.

There are some trips to North Carolina, supposedly, this weekend, but Obama also said on the plane that he expected to go back to Washington. At this point, I think both of these candidates feel the need to go back and vote on a package when it is ready.

So, they are leaving that open for the moment that perhaps some time this weekend, Obama will have to go home and vote on the Senate floor.

BLITZER: Well, we will see when that vote actually comes up. All right, Candy, thanks very much.

John McCain also getting ready for the big debate tonight, but only after reversing himself at the last minute and deciding to go to Mississippi.

Dana Bash is also in Oxford working this part of the story for us.

All right, Dana, tell our viewers how this played out.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, this played out in a quite frantic and frenetic way this morning, Wolf.

John McCain, we were following him around all over the United States Capitol as he went from one office to another of the Republican leadership trying to get in a place where, according to his aides, he felt comfortable that there was -- quote, unquote -- "sufficient progress" with regards to the bailout package that was making its way around Capitol Hill, but obviously quite stalled on Capitol Hill, the reason why he announced two days ago that he was stopping his campaign, suspending it, and going back to get a deal.

Well, there is not a deal, as we have been reporting all evening. However, the reality, the political reality is, over the past 24 to 36 hours, the McCain campaign has been telling us that they understood that he needed to come here for a lot of reasons, but primarily because they needed as Candy was talking about a game-changer, that the McCain campaign does believe that they need a game-changer.

The economy certainly is not the greatest issue for him. Polls across the board show that. This is primarily supposed to be about foreign policy and so he made his way here and came he just this afternoon and certainly, ti's -- logistically, it was quite interesting for all of us to get down here and follow him from Capitol Hill, but we made it.

BLITZER: Dana is going to be with us throughout the night as well. Dana is down at Ole Miss.

Barack Obama's running mate, Joe Biden, met with the Georgia president, Mikhail Saakashvili, in Milwaukee, Wisconsin, today in what the Obama campaign is calling a private meeting. Biden does not plan to miss the debate, though, later tonight. A spokesman says he will watch the debate in his hotel room.

McCain's running mate, Governor Sarah Palin, is in Philadelphia. She will be at a debate watch party for the McCain/Obama face-off. Palin and Biden, of course, will get their own chance to debate, their showdown next Thursday in Saint Louis.

U.S. relations with Russia have been tense, as a lot of us know. And they have even been strained with Venezuela. Now those two countries are linking up. We are going to tell you about a new oil deal between Moscow and Caracas. Does Washington need to worry about this?

Plus, McCain's debate about-face, to the debate -- involving the bailout talks on Capitol Hill. Is this really a rescue mission for the slipping economy or another example of politicians from both sides of the aisle playing politics? We are standing by to take a closer look. And we're watching the progress or lack thereof in the negotiations under way right now on Capitol Hill.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: As the drama builds and unfolds, the suspense also builds. We are less than three hours away to something that just this morning was still in doubt, Barack Obama and John McCain's first debate. What should you expect? It begins in two hours and 36 minutes. Did McCain show leadership by rushing off to the bailout negotiations or did he pull a political stunt, as Democrats say, that hurt those negotiations?

And some people say Obama might be too calm in tonight's debate. Should he be calm or should he show some sparks or something else? Lots to discuss right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now: Tonight's debate is supposed to be about national security and foreign policy, but it was almost derailed by the bailout drama. Will the economy now take center stage? What each candidate must do to succeed.

And John McCain's bailout gamble. He stole the spotlight by announcing he was going to suspend his campaign, but still there is no deal. Will his move backfire? All of this plus the best political team on television.

I'm Wolf Blitzer at the CNN Election Center. You are in THE SITUATION ROOM.

Take a look now at Ole Miss. That is the site of tonight's much- anticipated first presidential debate between Barack Obama and John McCain.

With all the expectations going into tonight's verbal showdown, what does each candidate need to do to win over the voters?

Let's turn to CNN's Brian Todd. He is working the story for us.

What are the best strategies that you are hearing for Obama and McCain from the so-called experts?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, on national security and on the economy, which likely will come up tonight, they have each got strengths they need to steer the audience toward, weaknesses they need to cover. And, with so much on the line right now, neither can afford a major misstep.

(BEGIN VIDEOTAPE)

TODD (voice-over): Kids, have a seat. The heavyweights take the stage in a debate now seen as white-hot in its importance. This forum was supposed to focus on foreign policy and national security. But, given the bailout brawl in Washington and the calamity that provoked it...

RUBEN NAVARRETTE JR., COLUMNIST, "SAN DIEGO UNION TRIBUNE": Everybody wants to talk about the 800-pound gorilla in the room. That's the economy, the economic crisis. TODD: If that happens, Republican strategists say it puts pressure on John McCain to make up for the perception that he's weaker on the economy.

TODD HARRIS, REPUBLICAN STRATEGIST: It's going to be critical during tonight for John McCain to literally reach into the camera and touch average working voters and let them know that, when he's president, he's not going to raise taxes, that he's going to make sure that Main Street's values prevail on Wall Street.

TODD: Another GOP strategist told us, McCain may struggle if he's asked too many specific about the crisis, and that he will do best to hit home his record against wasteful spending and earmarks.

As for Barack Obama, adviser Robert Barnett says, his pressure is clear: Counter the lack-of-experience label.

ROBERT BARNETT, OBAMA CAMPAIGN ADVISER: I think that Barack Obama will want to show the viewers and the listeners that he, is in the foreign policy/national security context, prepared to be president.

TODD: A tall order against McCain, who will hit on his own Senate experience and support for the Iraq troop surge. Obama will have to counter perceptions that he's aloof and explain his foreign policy strength in a streamlined way.

BARNETT: It is very difficult to explain a complicated issue, let's say, about policy with Iran in 30 seconds. Don't try it at home. You might get hurt.

(END VIDEOTAPE)

TODD: And you're looking at live pictures of the podium in Oxford, as they get ready for this debate. Just two-and-a-half hours now and counting.

We're reminded now by experts that both men have visual and stylistic challenges they've got to address tonight. Analysts say Obama has got to avoid coming across as being condescending. That has gotten him in trouble in this campaign. McCain has to hold his temper in check, not even give signs that he's angry, even when he's not speaking.

Some notorious cutaway shots in debate history, Wolf. You'll remember, George Bush, Sr. looking at his watch in 1992, Al Gore sighing repeatedly versus George Bush in 2000. Those kind of moments can really bring down a candidate in these forums.

BLITZER: They certainly can.

Brian, thank you.

We're also getting some new information right now on John McCain's debate preparations.

Let's go back to Ole Miss. Dana Bash is working the story.

What are you learning -- Dana.

BASH: Well, it dovetails right off of what Brian Todd was just reporting in terms of differing styles. John McCain, on his way down here, on the plane, was doing last minute debate prep with his aides along the way. And not just that, Wolf. He went to Ole -- Oxford High School, I should say, not far from this debate center. And he worked for about an hour in a formal style, just basically hours before the actual debate. They had podiums set up and they did some last minute preparation and kind of back and forth just before this.

And that is sort of interesting in and of itself, considering the other things that he has been doing in Washington over the past couple of days.

But another thing in terms of the expectations game, this is how they are doing it, in terms of playing down the expectations. I've got to read this quote from a senior adviser on the plane on the way down here. What she said was: "He's not an extraordinary debater by any stretch of the imagination, but we feel pretty good."

One of McCain's own advisers saying that he is not a extraordinary debater. That just shows you the kind of expectations games that both of these candidates really are playing.

BLITZER: Yes. They're both lowering those expectations, as far as they are concerned.

All right, Dana. Stand by.

So did John McCain actually blink by deciding to go through with the debate after all, after initially suspending his campaign, saying he wouldn't go to the debate unless there was a deal on the financial crisis?

There is no deal on the financial crisis, but he is now getting ready for the debate.

Let's discuss this and more with our senior political analyst, Jeff Toobin; Gloria Borger; and David Gergen. They're; all part of the best political team on television.

David, I'll start with you. Did he blink?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: He blinked big time. Yes, of course. He had said he was -- he disrupted his campaign. He called it off so he could go there in order to solve the problem -- and I will not go to the debate unless the problem is solved.

I think he had to face reality, that he was getting a lot of flak for not coming, that it didn't look like he was going to play that constructive a role anyway in solving the problem.

I think he got out of Washington to come here. So I think what you have to say, Wolf, is he's taken two big gambles in his campaign so far. One was with Sarah Palin. And so far that one is working. This gamble misfired.

BLITZER: Misfired. Did he make a mistake, though? Did he make matters worse by coming to Washington, in terms of the negotiations that were going forward?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, it depends which party you belong to. If you listen to Democrats, they say it made it worse, it kind of set us back. We were heading toward a deal. McCain jets in and upsets the apple cart. House Republicans are revolting and he needed to leave town.

If you look at Republicans, they're saying well, you know, we really didn't have a deal and John McCain is helping us.

But there is no doubt that yesterday morning they seemed to be moving toward a deal. And by the end of the day, after that meeting at the White House, which I'm told was completely disorganized, very contentious, things blew up.

BLITZER: Usually when there's a meeting at the White House of this nature -- and David knows this -- usually they know what the outcome is going to be. The president doesn't invite all these people in unless they know what's going to happen.

And, clearly, once Richard Shelby walked out after that meeting and delivered the bombshell, you know what, there's not a deal, there's not going to be a deal, that was not exactly the way that the White House wanted it scripted.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST, "NEW YORKER" MAGAZINE COLUMNIST: Not this year. Not this campaign.

This stuff -- and you know what? Can I just say one thing?

I am so excited. This is like the Super Bowl for nerds, you know?

(LAUGHTER)

TOOBIN: And I am just so ready for this. I just wanted to say that.

BLITZER: And wait until next Thursday.

TOOBIN: I know. That's right. Because we've got Sarah Palin coming up.

BLITZER: If you like (INAUDIBLE) debate, next Thursday could be a real lively one, too.

TOOBIN: I don't know if John McCain blew up these negotiations. But I think what we've had in the last two days is a lesson in temperament. These two campaigns, these two candidates are extremely different. Barack Obama is no drama Obama. He's been that way throughout his public life.

John McCain is someone who swings for the fences, is somewhat erratic, but often successful.

I think that's a real choice. And when you get away from the details, I think that temperament is what really matters here.

BORGER: Well, I also think it's a difference between two campaigns. The McCain campaign is tactical. They're just one tactic to the next to the next. And if one works, maybe the next one will.

The Obama campaign is completely strategic. They're not into the day to day tactics. And the McCain campaign is. And, by the way, it does flow from the -- from the top down.

BLITZER: It's pretty amazing, too, that the president and his secretary of the Treasury, the Federal Reserve chairman -- their biggest problem isn't with the Democrats right now, it's with these House Republicans

GERGEN: It is. And what's been interesting about it is how close John McCain seems to be to the House Republicans. What I think we're going to see on foreign policy tonight is on many issues John McCain may not be George Bush. He's actually to the right of George Bush. And he's closer to these House Republicans than he is, perhaps, to some of the Senate Republicans.

There is a split in the party, not only over foreign policy, but over this bailout bill. And he's shown a lot of sympathy for those House Republicans.

BLITZER: All right, guys, hold on. Hold on, because David makes a good point that I want to follow up on.

But let's take a quick break. Open revolt, as they're calling it, by these Congressional Republicans opposed to the Wall Street bailout.

So here's the question -- why can't President Bush get them to fall in line?

And new developments in the corruption trial of one of the most senior members of the Senate. We'll update you on that and a lot more right here on THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right. Take a look at this. These are live pictures coming in from Oxford, Mississippi, the campus of Ole Miss, where the debate will take place in about two hours and twenty minutes or so from now.

Let's go back to the best political team on television.

David, as you look ahead to this debate tonight, I can't help but wonder how aggressively John McCain will try to distance himself tonight from George Bush, the president, even as, presumably, Barack Obama tries to link him -- link the two together.

GERGEN: I don't think that's his chief objective tonight. I think it's a very secondary objective. He does need to do it in passing.

I think the more important objective for him tonight is to show that he's clearly a better leader. He has to win this debate tonight. I think the events of the last few days (INAUDIBLE)...

BLITZER: Does he go in with an advantage because the subject is foreign policy?

GERGEN: He went in with an advantage. But I think that he is -- he's in danger of having frittered it away during the past few days and bringing -- hauling in this bailout -- these questions into the middle of this debate. I think he did have a big advantage. And this is going to be a pivotal debate for him. Much -- this is, by far and away, the most important debate for him.

BLITZER: And usually the first...

GERGEN: He has to win this one.

BORGER: Yes.

BLITZER: ...the first presidential debates are the ones that set the tone. It's got a lot at stake, Gloria.

BORGER: It does. And, you know, couldn't have two more different people. Obama is the constitutional scholar and lawyer. And John McCain is a street fighter, a fighter pilot. And they have two really different styles.

And what McCain has to watch is that he doesn't get too nasty. He doesn't particularly like Barack Obama personally. He's told that to his friends and it's kind of an open secret.

He has to not let that kind of nastiness and the way he really feels about Obama come through.

And Obama has to answer questions in a straightforward way, which sometimes he has a difficulty doing.

BLITZER: Short and succinct.

GERGEN: Yes.

BLITZER: And there's a clock that's going to be running, a minute, a minute 30 or whatever.

BORGER: Yes.

BLITZER: So there's going to be a little bell. TOOBIN: But the great challenge for McCain, among other things, is to talk to Iraq in a way that appeals to voters, because this is the thing he was proudest of. He was right, he thinks, about Iraq, when everybody was wrong -- when Democrats were wrong, when even President Bush was wrong.

He supported the surge. He came up with the idea. He -- he is going to embrace that.

Obama is going to be completely in the opposite position. And it seems that most Americans want to get out of this war.

So the challenge for McCain on foreign policy is to say I was right on a subject that a lot of Americans think is wrong.

BLITZER: But can't -- isn't it a simple answer for Obama to simply say you were wrong in supporting going to war against Saddam Hussein. I opposed that war. The country would have saved a trillion dollars or whatever, and all those lives, if -- there would have been no war to begin with.

Isn't that a simple retort from Barack Obama?

TOOBIN: It is, but whoever wins this election is going to be president now. And our troops are there. And they have to be dealt with one way or another. So I think looking forward, McCain has a better argument. I don't know how much voters are going to care about who was right in 2002.

BORGER: And people aren't sure that Obama is ready to be commander-in-chief. When you look at the polls, that's the question he has the most trouble with. He has to tell people tonight I'm ready.

GERGEN: Yes. And one last thing, Wolf. It does seem to me -- there's a CNN poll that shows a big majority of people that think Obama will do better than McCain. What we saw at Saddleback was that McCain was better than Obama. He clearly won that. And then they had a second round at Columbia University on national service. And McCain at least tied, if he didn't win there.

McCain is a much better debater than people think.

BLITZER: He's got a lot of experience.

GERGEN: He's much more forceful.

BLITZER: He's been in the Senate for a long time.

GERGEN: Yes.

BLITZER: That's what they do there.

All right, guys, stand by. We've got a good and fascinating night coming up. The first presidential debate between Barack Obama and John McCain -- will they be able to sway voters?

We're watching tonight's face-off with a group of key voters in a toss-up state. We're going to tell you what's going on.

Plus, this hour's question -- is Joe Biden an asset or a liability for Barack Obama?

That's Jack Cafferty's question. He's got your e-mail and a lot more right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Lou to see what's coming up right at the top of the hour.

What are you working on -- Lou?

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Wolf, you'll never believe it. We're working on the debate coming up tonight.

We'll have the very latest, as well, on the bailout negotiations that have hit a bit of a roadblock. We're reporting on the House Republicans' refusal, at least at this point, to be intimidated by the Bush White House or the Democratic leadership in Congress. So far, no one has fully explained why this bailout is necessary -- not Henry Paulson, not Ben Bernanke, not President Bush, Nancy Pelosi, Harry Reid or anyone else.

And four members of Congress -- just four -- are now the ones who will decide the outcome of these bailout negotiations.

Will they do anything to help working men and women and their families in this nation or will they just keep selling out to Wall Street, corporate interests and every special interest?

We'll examine that question.

And Senator McCain taking part in tonight's presidential debate. It begins in just over two hours. We'll have much more on what you can expect.

And tonight, we're taking a closer look at that bailout plan and why anyone in the world would believe that a trillion dollars given to bail out Wall Street would do anything to fix the mess they created.

Join us at the top of the hour here on CNN for all of that, all of the day's news and much more from an Independent perspective -- Wolf, back to you.

BLITZER: Lou, we'll be watching. Thank you.

Let's go back to Jack. He's here. He's got "The Cafferty File" -- Jack.

CAFFERTY: The question this hour: Is Joe Biden an asset or a liability to Barack Obama?

Mr. Biden has been known to misspeak on occasion. Gil writes: "I think bad news is a great choice. Despite his propensity for talking too much, he's an honest, good man who's been in the thick of things for 37 years. Most importantly, he understands what's at stake in foreign affairs, understands basic balance of power politics -- something that's been missing for the last eight years."

Sherri writes: "Biden is an asset. Obama didn't want a yes man. He someone who was able to widen his perspective on an issue, who could brainstorm with him. Joe Biden is that guy."

Steve writes: "Biden is making a fool of himself with his many gaffes. Having said that, surprisingly enough, I don't think he's having an adverse effect on Obama's campaign or his momentum."

Tanis writes: "I think he ought to take one for the team and let Hillary Clinton become the vice president."

Wallace in North Carolina: "Biden's a tremendous asset -- his foreign policy credentials, his down home connection with cops and firefighters do more to add to the ticket than his gaffes. I think the only people who pay really pay attention to the gaffes are political junkies like me and pundits like you."

Paula writes: "Biden is just being Biden. It doesn't mean anything, except that he has a habit of misspeaking. In other words, although Roosevelt wasn't president immediately after the 1929 crash, he did inherit the Depression when he took office. This was obviously what Biden was talking about. No, Roosevelt didn't appear on TV. But film taken of Roosevelt at the time has and that's obvious that Biden was talking about when he said he went on the radio and said blah, blah, blah. The thing is, you just have to know how to listen to Joe Biden."

And Ed writes: "Joe Biden can be counted on to say something worthwhile half the time. Therefore, he is a half asset."

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

Twenty thousand of you wrote to us today about the stuff we today. It's a half asset.

BLITZER: An enormous number watching. And tens of millions will be watching this debate tonight, you know that.

CAFFERTY: I'm aware of that.

BLITZER: OK.

CAFFERTY: I'm going to be one of them.

BLITZER: I know you are. Jack, see you.

On our Political Ticker right now, federal prosecutors accuse the embattled Republican senator, Ted Stevens of Alaska, of trying to hide more than a quarter million dollars in home renovations and gifts. At Stevens' corruption trial, witnesses from an oil company testified that they worked overtime to remodel the senator's Alaska cabin -- work prosecutors allege Stevens didn't pay for personally. Stevens' lawyer says his client didn't know about the extent of the renovations and had no idea he wasn't being billed for it.

Hurricane Ike is figuring into the upcoming election. Some citizens groups in Texas want Governor Rick Perry to extend the voter registration deadline for counties hit hard by the storm. The deadline is now October 6th. Those citizen groups want the deadline pushed out at least seven days. The governor's office says individual counties first would have to ask the governor to extend the deadline.

Remember, for all those stories, all the latest political news any time, you can check out CNNPolitics.com. The Ticker is now the number one political news blog out there on the Web.

So here's a question -- will it help them make up their minds?

CNN's Soledad O'Brien is getting ready to watch the debate with a group of voters in Ohio.

We're going to take you there now and explain what's going on.

And while the candidates are facing off tonight, you can have your own debate with other viewers. We'll tell you how.

Lots going on. Tonight, a big night -- debate night in America, right after this.

(COMMERCIAL BREAK)

BLITZER: As you know, the Republican and Democratic National Conventions drew a huge number of viewers. Tonight's debate showdown will draw even more.

Let's go to CNN's Soledad O'Brien. She's joining us now from Columbus, Ohio -- and, Soledad, you're going to be watching this debate with a select group of voters.

Explain what is going on.

SOLEDAD O'BRIEN, CNN CORRESPONDENT: We're going to be joined -- sitting behind me -- by approximately 30 Ohioans who are registered voters. Approximately a third are registered Independent, a third registered Democrat and a third registered Republican.

But what they're going to have, Wolf, in their hands is this. It's called a perception analyzer. Now, look, when you turn it to the left, it goes down to one. That would be an indication that they are very unhappy with what they're hearing from the candidates. They're all going to have one of these in their hands. And as they watch the debate, they'll be working this knob here.

Turn it all the way to the right, you can go up to 100. That would be an indication that you are very happy with what you're hearing from the candidate. They're wireless, of course.

All this information fed to a couple of computers down here, which are being manned by two SMU professors who are working on all of these results.

Now, what this will be able to tell us is really how the people within these walls here -- approximately 30 people -- feel about what the candidates are saying, how it's resonating with them.

They've all said that they are persuadable. So even though they're in those categories, they are open to changing their minds. Before the debate begins, they will ask them, how do you feel about each candidate?

At the end of the debate, they revisit that question. And it will be an indication of how the debate has changed their thinking, how the debate went. They'll also declare who they think was the winner.

Can you extrapolate that exactly to the rest of the population?

No. But to some degree, they are a microcosm of the United States. At the of the day, we'll be able to see -- for other people who say that they are, too, flexible and they could be persuaded, there might be some relevance there.

So we'll be able to see what they think here tonight. And, of course, a couple of days later, overall, what the population thinks about how this debate went for both candidates -- Wolf.

BLITZER: Soledad, thanks very much.

We're going to be going to you in Columbus and your voters you're going to be watching with.

And I want to show our viewers right now what they're going to see on the screen during the course of the 90 minute debate, because this is going to be pretty interesting.

On the bottom of the screen, you're going to see those dial- tested -- those voters and their dial tests. We're going to see a running tally, the Republican registered voters, the Democrats, the Independents -- what they like and don't like.

And you're going to see that live unfold in real time, when the two candidates make a point, don't make a point, they're going to be -- you're going to see those lines going up and down to get a sense of what those undecided voters believe is going on.

And take a look on the two sides. Those of you who are lucky enough to be able to watch us tonight in high definition TV, you'll see these analyst score cards from our analysts, Paul Begala, Bill Bennett, Gloria Borger, Donna Brazile, Alex Castellanos, John King. You're going to see where they think the candidates actually made a valid point, made a good point or where they missed an opportunity.

The red for McCain, the blue for Obama. And you're going to be able to get a sense of what's going on.

Those of you who have high definition, you'll see the analysts' scorecards. All of you will see the audience reaction at the bottom of the screen tonight in real time live, as that's going on.

We want to check in with Abbi Tatton, also, because there's some other opportunities out there on the Web to enjoy what's going on -- Abbi.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, this is CNN.com/forum. Watch the debate on CNN and then weigh in here in real time online on this Web site that we've set up for you. Two hours to go and we've still got these comments coming in thick and fast.

Let me show you how to do this. First of all, you're going to go online and create your political profile.

What kind of voter are you? What are your top issues?

There's a way here to choose the issues that matter most to you. After that, after you've created that profile, you're ready to weigh in. You're ready to tell us how you think it's going and debate with other people there online.

With a couple of hours to go, we are most -- the thing most people are talking about is what's going to be the substance of this debate?

Foreign policy, the economy -- people are saying if the economy is ignored too much, then it will be like ignoring the elephant in the room -- Wolf.

BLITZER: All right, Abbi. Thanks very much.

We've got some unfortunate news we want to report. We have learned -- our John King has confirmed that Senator Ted Kennedy has been taken to a hospital out in Cape Cod. As you know, he's suffering from a brain tumor -- cancer, a brain tumor. We saw him last at the Democratic National Convention in Denver, where he delivered a rousing speech, very enthusiastic.

But now he's been taken back to the hospital. We don't know the extent of what's going on. But we'll watch it throughout the course of this night.

Senator Ted Kennedy, we are now told, at a Cape Cod hospital. That's coming up. Much more on that coming up as we get more information.

We'll be here throughout the night covering the debate. It starts, our special coverage, at 8:00 p.m. Eastern, in one hour from now.

Lou Dobbs is getting ready to pick up our coverage.

One additional note. Don't forget this Sunday on "LATE EDITION," the last word on Sunday talk, my interview with the new president of Pakistan, 11:00 a.m. Eastern.

Let's go to Lou right now in here in New York -- Lou.