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Nineteen Days and Counting; The Star of the Debate; ACORN Counters Fraud Charges; Dealing with the Deficit

Aired October 16, 2008 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, 19 days and counting -- they faced off for the final time and now the presidential candidates are trying to prove to voters that it's still a race until the ballots are cast.
A star was born in last night's debate, emerging as an unlikely symbol of the candidates' duel over taxes. We're in Ohio with a man known as "Joe the Plumber".

And ACORN may be a tough nut to crack. The grassroots group, linked to accusations of voter registration fraud, is now fighting back.

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

The final face-off is behind them. The presidential candidates are now in the home stretch. The finish line is in sight. Only 19 days until election day.

Barack Obama trying hard not to the treat this as a runaway.

John McCain trying hard to hold onto his turf.

Our senior political correspondent, Candy Crowley, is looking into all of this -- Candy, I guess the question is, what's next?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, listen, you know, you're looking at two men who have different personalities, different philosophies, different parties. But for these next 19 days, they've got the same mission.


CROWLEY (voice-over): With time running out, they have the same mission -- convincing voters it's not over.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: We are 19 days away from changing this country.

CROWLEY: Barack Obama began his day in New Hampshire, the nation's first primary state -- the first one he lost.

OBAMA: But for those who are getting a little cocky, I've got two words for you -- New Hampshire. I learned right here, with the help of my great friend and supporter, Hillary Clinton, that you cannot let up. CROWLEY: This may take practice because earlier, at a $30,000 per person fundraiser in New York, Obama all but solicited resumes.

OBAMA: Once we're done, there's extraordinary expertise in this room and we're going to need good advice.

CROWLEY: Not to mention Joe Biden, who joked with Ohio campaign workers about his post-debate call to Obama.

SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENTIAL CANDIDATE: I called Barack last night and congratulated him. I told him I'm going to home to polish my golf game up again. No.

CROWLEY: There's a fine line between hubris and confidence. Hubris could turn off the persuadables and the undecideds. Confidence is presidential. And there is good reason for it. It is a story told in Obama's itinerary. From New Hampshire, he works his way through a string of red states -- Virginia, Missouri, North Carolina and Florida -- George Bush states in 2004.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: The real winner last night was "Joe the Plumber".


MCCAIN: Joe's the man.

CROWLEY: John McCain is in search of some Joe mo. If Obama can't afford to look as though he's already won, McCain can't seem as though he's already lost. It could depress the turnout of his Republican base and tempt undecideds to go with the flow of the polls.

McCain's first post-debate stop -- Pennsylvania, where he is down by 13 points.

MCCAIN: The State of Pennsylvania again will decide who's the next president of the United States. I need your vote. We've got to carry Pennsylvania. We will carry Pennsylvania.

CROWLEY: McCain's upcoming travel tells the rest of the story. Pennsylvania, which hasn't voted for a Republican president since 1988, is the exception.

McCain, like Obama, is beginning his own red state tour -- Florida, North Carolina, Virginia and Ohio. The difference is McCain is on defense.


CROWLEY: And the truth is, anything could happen during this campaign. In fact, we've already seen a lot of things happen, Wolf, that surprised us.

BLITZER: Yes, we certainly have. And there's still 19 days to go. But Pennsylvania is going to really be a tough nut for him to crack -- 13 points in our latest poll of polls, 53 for Obama, 40 percent for Johnny McCain. It's not looking good for McCain in Pennsylvania.

CROWLEY: It's not, but they've got to go somewhere. They have to find a blue state they can play in. History is also running against them in Pennsylvania. It's been a pretty solidly -- presidentially -- Democratic place. So...

BLITZER: Like Michigan. But they gave up in Michigan but they say they're not giving up in Pennsylvania.


BLITZER: At least not yet.

CROWLEY: A huge degree of difficulty. A huge degree.

BLITZER: Yes, very big. All right, thanks very much, Candy.

He may have been, as we've been pointing out, a big star of last night's debate -- a man Barack Obama met in Ohio found himself at the center of the candidates' duel over tax policies. Listen to this.


MCCAIN: My old buddy Joe -- "Joe the Plumber".

OBAMA: I'm happy to talk to you, Joe.

MCCAIN: People like "Joe the Plumber".

Joe, I want to tell you.

Hey, Joe, you're rich.

OBAMA: That includes you, Joe.

MCCAIN: I want, Joe, you to do the job.

OBAMA: The conversation I had with "Joe the Plumber".

MCCAIN: What Joe wanted to do...

Joe was trying to realize the American dream.

What you want to do to "Joe the Plumber," we're going to take Joe's money.

Joe, you're rich. Congratulations.

OBAMA: Tax cuts to "Joe the Plumber".

MCCAIN: Small business people like "Joe the Plumber".

OBAMA: Joe, if you want to do the right thing...

MCCAIN: I want "Joe the Plumber" to spread that wealth around.


BLITZER: Wow! "Joe the Plumber" -- what a center of attention right now.

Mary Snow is out there in the battleground state of Ohio watching all of this -- you tried to catch up with Joe today, didn't you, Mary?

MARY SNOW, CNN CORRESPONDENT: Yes, Wolf. And right now, he's the center of some unwanted attention. And we did talk to him just a short while ago, but off camera because of what is being written about him right now in the blogs.

He says he is really surprised by the ugly atmosphere that came about this afternoon, saying he's become the subject of a lot of questions, whether it be whether he's really a plumber, whether he's really registered to vote. He says yes, he is. His real name is Samuel.

We want to set the stage here, too, outside of Joe Wurzelbacher's home here in Holland, Ohio. This has been a camp for media reporters throughout the day. And Joe, as you can see, just leaving his house right now.

But he's been very reluctant, Wolf, to speak on camera. And he said that he really is overwhelmed by all of the attention that he's been getting.

As I mentioned, there were various number of questions coming up since he became the subject of last night's debate. He did, however, come out earlier today, when he was enjoying the spotlight, and talked about a host of issues.

Here's a little bit of what he had to say.


JOE WURZELBACHER, "JOE THE PLUMBER": Social Security is a joke. I'd like to -- you know, I have parents. I don't need another set of parents called the government. You know, let me take my money and invest it how I please. Social Security I've never believed in. I don't like it. I hate that it's forced on me.

You know, as far as for my son, you know, I want him to live in an America that he's proud of. And I'm tired of people downing America, saying that we're this bad country. I mean that upsets me and my friends greatly.

You know, we are the greatest country in the world. Stop apologizing for it. I mean, really, that just -- I get real mad about that. I'm not sorry for being an American. I'm not sorry for, you know, having the things I have. I've worked for them. I'm not sorry that -- you know, I wish that our borders were closed and that you have to come through in a legal manner. I'm not sorry for any of those things.

I'm not sorry that we're in Iraq. I mean, you know, my friends in the military that have come back and told me, you know, the thanks that they've received for us being there, that doesn't get enough play. I mean we've liberated another country. I mean, you know, freedom -- things that every one of you guys take for credit -- take for granted, everything that Americans take for granted. I mean these guys haven't had it. Now they've got it. I mean that's an incredible thing.

I mean that's almost -- you know, I don't know if you guys are Christians or not, but that's like somebody coming to Jesus and becoming saved. These guys have freedom. You know, our guys here that are poverty-stricken, they have cell phones. Those old people over there, you know, they have one pair of pants and a shirt. You know, so what we've done over there is an incredible, incredible thing.

Has it kept us safe? Absolutely. I believe that 100 percent.


SNOW: Joe Wurzelbacher earlier today on a host of subjects, Wolf, when he was actually agreeable to -- agreed to talk to the press, but now is reluctant at this point.

You know, four days ago, he became the center of attention when Barack Obama was campaigning here in Holland. Joe Wurzelbacher asked him a question about Obama's tax plan. And he said he wanted to buy a company that would cost about $250,000.

Joe told me that at that time, he was really asking questions about the tax plan, he didn't really understand it. That's why he was asking the questions.

He now understands that he would not be eligible -- he would not be affected, that is -- by a tax increase because he does not make $250,000. He says he makes far below that, but he says he still feels it was a legitimate question and he does not take back anything he said -- Wolf.

BLITZER: Yes, he'd have to make a profit -- a personal profit, as a small business owner, of more than $250,000 after expenses in order to pay additional taxes.

You'd see that tax rate, if Obama had his way, go from 36 percent, which it is right now, to 39 percent, which is what it was during the Clinton administration.

All right, we're going to get some more on this. Mary, stand by for that.

Here's what Senator McCain had to say last night about how Barack Obama's tax plan would impact "Joe the Plumber" and other small business owners. Listen to this.


MCCAIN: I will not stand for a tax increase on small business income. Fifty percent of small business income tax is -- taxes are paid by small businesses. That's 16 million jobs in America. And what you want to do to "Joe the Plumber" and millions more like him is have their taxes increased.


BLITZER: All right. So there were lots of charges and counter charges about taxes last night, small businesses.

Let's have -- the truth squad here at CNN has been checking some of those claims and counterclaims.

Carrie Lee is joining us right now -- Carrie, as you're looking at all of this, is McCain being truthful when he's speaking about Senator Obama's tax proposals?

CARRIE LEE, CNN CORRESPONDENT: And, you know, Wolf, we've heard this again and again -- McCain repeatedly saying Obama would raise taxes on 50 percent of small business income. Well, that's a high number. And tax experts say it's actually too high to be true.

Now, what is true is Obama does want to eliminate the Bush tax cuts. So, effectively raise taxes for individuals who make more than $200,000, couples more than $250,000.

But it depends on how you define small business. McCain's team is including people who report income for everything from consulting work to real estate rentals to book deals. Obviously, McCain and Obama themselves have had book deals. They're certainly not small business owners.

So a large number to start with. By this number, there are 35 million small businesses in the country. The Small Business Administration actually puts the number closer to about six million.

But even with this 35 million, according to the nonpartisan Tax Policy Center, just 1.3 percent, or about 480,000 of these filers, would fall into the top two income tax brackets. That's, again, according to the Tax Policy Center.

So basically about half a million small business owners would pay higher taxes, Wolf, under Obama's plan.

BLITZER: All right. Go ahead and elaborate a little bit, Carrie, on that last point you just made.

LEE: Right. So we have half a small -- half a million small business owners falling into it, right?

But here's the other kicker. Not all of their earnings will be taxed at the higher rate. It's only the income that exceeds the cutoff. So, for example, if a single business owner earns $210,000, only that extra $10,000 above $200,000 would be taxed at the higher rate.

So bottom line, Wolf, both candidates say they want to help small businesses, because businesses create new jobs. But the numbers, well, very different from one to the next.

BLITZER: Carrie Lee working the story -- the truth squad for us. Thank you.

The group at the center of allegations of possible voter registration fraud now fighting back. We're going to tell you why ACORN says they're getting a bad rap.

Also, the gloves came off at last night's presidential debate, but were the candidates punching below the belt?

And high drama at Senator Ted Stevens' corruption trial. The senator takes the stand to fight for his political life. We're going to tell you what he's saying.

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


BLITZER: CNN's Special Investigations Unit has been looking into allegations of possible voter registration fraud in several states. Now the group linked to those charges, known as ACORN, is fighting back -- and they're fighting back hard.

Drew Griffin is joining us once again -- all right, Drew, give us the latest, what's going on, because charge, counter-charge -- this story is getting, as we used to say in this business, some legs.

DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT: Yes, it's got some legs. A lot of charges and counter-charges, even at our reporting, Wolf.

We want to tell you the latest news. You know, the voter application forms turned in by ACORN are being investigated in many local jurisdictions across the country.

Now we're learning the FBI is taking at least a bigger look at the picture. Republicans have called for a national investigation.

What we're hearing is the FBI and Justice are reviewing the material that has been sent to them to determine if a broader investigation or even a criminal investigation will begin. They're just not there yet.

Now, today, I talked with ACORN's chief organizer. Her name is Bertha Lewis. She maintains what ACORN has been saying all along to us, that they are being targeted by right-wing groups, right-wing media, including CNN, in a politically motivated smear campaign against their work.


BERTHA LEWIS, ACORN CHIEF ORGANIZER: My concern is that despite us registering 1.3 million people, having 13,000 workers, actually turning in every single card that we collected, as well as turning in folks that we might have suspected bad behavior, year after year, time after time, these allegations continue to be visited upon us, especially at a time when it is a political season. And we just think that there's never been a time where it's been proven that we have ever committed registration or voter fraud.

And I just think it's very peculiar that the Republicans are attacking us like this. But, you know...

GRIFFIN: Can I jump in just for one second, Miss Lewis?

Did you say that no one in ACORN has ever been found to have committed registration fraud?

No worker for ACORN?

LEWIS: No, I -- that's -- ACORN -- the accusations are against my organization, ACORN.

GRIFFIN: Who hires people to fill out voter registrations...

LEWIS: And people that we hire...

GRIFFIN: ...and people who fill out voter registrations for ACORN, you admit, have been in trouble in the past for committing fraud, correct?

LEWIS: We've actually turned those people in and helped to prosecute individuals that commit voter registration fraud. So there's never been any case, period -- even the RNC's general counsel that says there's never been one single case where someone has voted fraudulently because of an organized voter registration effort.


GRIFFIN: Wolf, we learned about the FBI involvement after that interview. ACORN told us they have had no contact with the FBI, but have had rumors of a federal investigation.

The ACORN board meets tomorrow, actually, in New Orleans -- Wolf.

BLITZER: And, as you know, Drew, on other side, there are accusations that right-wing or conservative groups or Republican- oriented groups are trying to suppress voter turnout among African- Americans, poor people, some inclined -- greater numbers, potentially, for the Democrats and Barack Obama. And there's investigations going forward on that front, as well, in Ohio and elsewhere. What are we learning about that part of this story?

GRIFFIN: Wolf, I'm not as familiar. I must be honest, I'm not familiar with those investigations.

What we've been looking at is the allegations of voter purges and some of these other allegations. We haven't found any real facts to back that up, like we have found with ACORN, where could you have a piece of paper and obviously look at this and election officials say it's fraud.

I have not seen the actual proof of that voter suppression, although, like you, we've seen the allegations all over the place.

BLITZER: Yes. There's going to be a lot of these allegations back and forth on all sides over these next 19 days. Let's hope they don't pan out. We want a free and fair and important election with a huge turnout.

Drew Griffin doing some excellent reporting for us. Thank you.

A busted budget -- could the nation soon face -- get this -- a trillion -- trillion dollars in red ink? That's a thousand billion dollars. Does either candidate have a solution that would really work?

Jessica Yellin has been looking into this story. It's got enormous ramifications for our children and grandchildren and beyond. What are we learning?

JESSICA YELLIN, CNN CAPITOL HILL CORRESPONDENT: Well, Wolf, both Obama and McCain say that they are committed to slashing or even eliminating the budget deficit. But when they're pressed for specifics, they come up short.


YELLIN (voice-over): Senator Obama promises that as president, he would pay for every spending increase.

OBAMA: Every dollar that I've proposed, I've proposed an additional cut so that it matches.

YELLIN: Senator McCain says as president, he wouldn't allow any spending increases.

MCCAIN: I would have, first of all, an across the board spending freeze.

YELLIN: In their final debate, the candidates were pressed to explain how.

BOB SCHIEFFER, DEBATE MODERATOR: Won't some of the programs you're proposing have to be trimmed, postponed, even eliminated?

YELLIN: They were either short on specifics...

OBAMA: We need to eliminate a whole host of programs that don't work.

YELLIN: ...or offered solutions budget experts say fall short.

MCCAIN: I would fight for a line item veto and I would certainly veto every earmark pork barrel bill.

YELLIN: The bipartisan U.S. Budget Watch says both candidates are avoiding the ugly truth.

UNIDENTIFIED FEMALE: The answers they gave were not even close to being sufficient when we're talking about hundreds of billions of dollars in borrowing every year.

YELLIN: Her group has crunched the numbers and finds that John McCain's tax policy would add approximately $450 billion dollar to the deficit. Obama's would add roughly $360 billion.

McCain's health care policy would add another $17 billion. Obama's, $65 billion.

McCain has outlined about $250 billion in savings. Obama, $144 billion in savings.

Add it all up and McCain adds $217 billion to the deficit. Obama adds $281 million. And that's on top of the one trillion dollars the government has already racked up.

UNIDENTIFIED FEMALE: It's going to take some tough choices, but it is hard in a campaign to ask candidates to talk about raising taxes and cutting benefits -- the very things that we know they have to do.


YELLIN: Now, let me give you an example, Wolf, of where they're coming up short. Both McCain and Obama talk about slashing or even eliminating earmarks. Well, that group, the U.S. Budget Watch, says slashing earmarks would save $30 billion to $40 billion. That's a drop in the bucket. That expert we talked to, she said compared to the overall budget deficit, that's just a rounding error.

BLITZER: Yes, small potatoes, basically. All right. Thanks very much, Jessica, for that.

Years after his death, a stunning revelation about Pope John Paul II -- a secret kept since 1982 about an attack on the pontiff that left him injured.

And did their body language speak louder than their words? James Carville and Bill Bennett -- they're standing by live. They'll weigh in on the next 19 days.

Stick around. You're in THE SITUATION ROOM.


BLITZER: Carrie Lee is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Carrie, what's going on?

LEE: Well, Wolf, first of all, you might not be able to see it, probably can't smell it either, but the air you breathe could soon be a lot cleaner. The Environmental Protection Agency is cutting the amount of lead allowed in the air by 90 percent. Now, this represents the first change in lead standards in 30 years. The move aimed at protecting Americans' health, especially children's. That exposure can affect learning, I.Q. And memory.

And a harrowing ordeal for 22 sailors held hostage by Somali pirates is finally over. Their South Korean vessel was hijacked in the Gulf of Aden last month. Well, Seoul says the pirates freed the captives today. Pirates have commandeered 29 ships off Africa's coast this year alone -- the latest just yesterday. In response, a NATO flotilla is steaming to the area now and India's government plans to send warships, as well.

And for the first time, we're finding out that Pope John Paul II was wounded when a priest attacks him with a knife in 1982. Now, this stunning revelation came from the late pontiff's private secretary. It happened while Pope John Paul was visiting the Shrine of Fatima in Portugal to give thanks for surviving an assassination attempt. The priest who attacked him opposed Vatican reforms and he spent several years in jail.

Rather ironic circumstances -- giving thanks for surviving an attempt and then a priest and he ends up being wounded in the end.

BLITZER: Yes. Pretty amazing. All right, Carrie, thanks very much.

Here's a question: Is he or isn't he? Barack Obama says John McCain is the same as George Bush. McCain says he isn't. Which argument will voters believe?

And a Congressman who backs Barack Obama is scrambling to explain his claim that part of his home state is racist.

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


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

Happening now, no hiding behind attack ads -- this time Barack Obama and John McCain went at it the face to face. But is the truth getting lost in the war of words?

United by war and divided by a campaign -- two Iraq War veterans are battling each other for a key Congressional seat.

And speaking out in his own defense -- Senator Ted Stevens of Alaska takes the stand at his corruption trial. What he has to say about accusations he tried to hide hundreds of thousands of dollars in renovations and gifts.

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

The accusations were flying back and forth in the presidential debate, but were the candidates accurate in making their charges? Howard Kurtz of CNN's "RELIABLE SOURCES" has a debate fact check -- Howie?

HOWARD KURTZ, CNN CORRESPONDENT: Wolf, after weeks of attack ads and negativity on both sides, the presidential candidates confronted each other last night in what quickly became their toughest debate. All it took was a little prodding by CBS's Bob Schieffer.


SCHIEFFER: Are each of you tonight willing to sit at this table and say to each other's face what your campaigns and the people in your campaigns have said about each other?

KURTZ: McCain tried to tie Obama to a blast by one of his supporters.

MCCAIN: Congressman John Lewis, American hero, made allegations that Sarah Palin and I were somehow associated with the worst chapter in American history, segregation, deaths of children in church bombings, George Wallace. That to me was so hurtful. And Senator Obama, you didn't repudiate those remarks.

KURTZ: That's not true. The Obama camp put out a statement saying "Senator Obama does not believe that John McCain or his policy criticism is in any way comparable to George Wallace or his segregationist policies."

OBAMA: And 100 percent, John, of your ads, 100 percent of them have been negative.

MCCAIN: That's not true.

OBAMA: It absolutely is true.

KURTZ: Well, Obama overstated the case. Studies have shown that virtually all of McCain's commercials have been negative in recent weeks but Obama didn't mention any time frame. The same studies show about a third of the Democrat spots have been negative but because he's spending far more money, Obama is matching McCain's volume of negative ads.

MCCAIN: You're running ads right now that say that I oppose federal fund for stem cell research. I don't.

KURTZ: McCain's right. Listen to this Obama radio ad.

UNIDENTIFIED FEMALE: John McCain is opposed to stem cell research.

KURTZ: But the Republican nominee dropped his opposition back in 2001.

MCCAIN: We need to know the full extent of that relationship. We need to know the full extent of Senator Obama's relationship with ACORN who is now on the verge of maybe perpetrating one of the greatest frauds in voter history in this country, maybe destroying the fabric of democracy.

KURTZ: That's an exaggeration. ACORN is under investigation for false registrations in several states but the scope of the case isn't clear and none of those people has actually voted yet. The Obama campaign did pay more than $800,000 to an affiliate of ACORN to help get out the vote, not registered voters and there's no evidence linking the Democrat's campaign to the suspect registrations. OBAMA: It had nothing to do with us. We were not involved. The only involvement I've had with ACORN was I represented them alongside the U.S. justice department.

KURTZ: And that was 13 years ago.


KURTZ: There are more McCain charges to fact check because the Arizona senator spent much of the night swinging away while Obama largely played defense -- Wolf?

BLITZER: Howie Kurtz, thanks very much.

The presidential campaign has been getting nastier for weeks now but how low can it actually go? Joining us now a pair of CNN political contributors, the Democratic strategist James Carville and the national radio host, Bill Bennett.

How low, James, can it go?

JAMES CARVILLE, DEMOCRATIC STRATEGIST: You know, it's a very competitive thing and at the end, people get feisty. Senator McCain's behind. I don't blame him. He's trying. He's throwing his punches. So, you know, given the fact that politics is a give and take business, I don't know if this is like really in such a terrible gutter. I think we're doing a good job and I think these fact check things are very, very good if you go back and the press does a adjudicate job of cleaning this up. We do a particularly good job here on CNN. I think it's a good thing. I'm proud of it.

BLITZER: What do you think?

WILLIAM BENNETT, NATIONAL RADIO HOST: I don't think it's very low. I really don't. The last one was worse. Kerry/Bush was worse.

BLITZER: You mean the swift boating and all that?

BENNETT: Maybe. The whole campaign I think was lower grade in terms of how low people went. But also in the Republican primary, in the year 2000, I think that was tougher. American history's had much tougher campaigns and much lower stuff. I mean calling McCain erratic and so on, fine, saying that the associations of Obama are highly questionable, fine. I mean, I just don't think -- these are serious matters. People should take them seriously. It's free speech. It's a free country. People will decide what they think is appropriate.

CARVILLE: My problem with the debate last night is that I didn't have a sense it was taking place in an extraordinary time in American history. I could have watched that debate a year ago and that's just -- I don't think it's so much that the campaign is low, but I don't have a sense of call to mission. And I didn't think that the issues that were dealt with in the campaign were necessarily reflect how precarious.

BLITZER: It is the worst economic crisis since the great depression by almost all accounts.

BENNETT: I agree. But who really knows what to do? I mean I agree. These are the guys running for president, and you would likes to see them get their arms around it.

BLITZER: Would you say beats me, I have no idea.

BENNETT: No, they shouldn't say beats me but Paulson says this on Monday, something else on Thursday. These are supposed to be the smartest guys in the world. Nobody has a clear idea of the plan. They don't have their arms around it. I can't blame them for that.

CARVILLE: No, but people could acknowledge and to say look, we're in a very precarious thing. I think the mark of a good leader is one that can adjust as things go or whatever. But I didn't have -- there was nothing that was discussed or I'll say very little that was discussed last night that couldn't have been discussed a year ago. My problem with it, I don't think it was so much in the gutter but I don't think the stage acknowledged that the extraordinary times we live in.

BLITZER: You know Peter Wehner. He worked in the Bush White House.


BLITZER: He worked for you when?

BENNETT: Yes he did. He worked for me in "Power America" with Jack Kemp and me.

BLITZER: So you respect him?

BENNETT: I do very much.

BLITZER: Here's what he writes in, former deputy assistant to the president and President Bush. "I thought Barack Obama made a stronger outing than John McCain. Senator McCain scored some points and at times came across as passionate and aggressive - but also, at times, as angry, testy, and tightly coiled." A lot of people are looking at that body language of his last night and saying you know what? The image may have been much more significant than the actual words.

BENNETT: Wolf, I'm in the Alamo here. I would like a few more good men. James, you know some people? He doesn't work for me anymore.

BLITZER: Peter Wehner, not James Carville.

BENNETT: I know. He doesn't work for me anymore but look, I thought McCain had a great 40 minutes. I heard Mark Halperin saying that they were a little nervous in the Obama camp the first 40 minutes. Obama got his poise back but it was it the best 45 minutes that John McCain has had. I hope it lays the predicate for the next 19 or 20 days. One thing that was established is conservative agenda versus a liberal agenda. I know we've got to work on the independents but I still believe this is a center right country. I don't agree with Pete.

BLITZER: We didn't get your assessment of the debate last night. What did you think?

CARVILLE: I thought Obama crushed him.

BLITZER: Crushed him?

CARVILLE: I did. And I say that, and in all of the side stuff, McCain looked angry. He looked like he was swinging but wasn't hitting. And I thought just Obama was connecting with real voters throughout the night. I had the advantage of doing some on going research during the debate. That helped a little bit. But I just think the country has -- and I admire Secretary Bennett like I admire my wife and McCain. You've got to keep pitching but for some time now this thing is -- people have decided they want a change in this country.

BLITZER: He also went on in his commentary, Peter Wehner, to say he's in a category, Barack Obama, as an unusually gifted politician. He makes a comparison to John F. Kennedy and Bill Clinton. These are politicians that are rare out there.

BENNETT: It almost sounds a little starry eyed to me but he's very good. Look, he's got a kind of equanimity that's very good and he recovered last night. But I will predict and I don't expect James to be a Texan at the Alamo. I'm not going to call him anything else. Don't expect James to be in my view. But I'll bet you the polls move in a few days. Will they move enough? No, but there's still 19 days.

CARVILLE: We have the '68 model. Humphrey closed furiously, almost beat Nixon in '68. Ford was way behind, closed furiously, might have beaten Carter but for the debate in '76. Actually, Dukakis closed in '88, clearly not enough. So we don't know we're looking at a model. I don't think the race is going to end up where the polls have it now. There will be some close whether it's a furious close or just a kind of moderate close. We'll have to wait and see.

BENNETT: There has to be some appeal to the largest part of this country, even to Clinton Democrats, especially to Clinton Democrats to Barack Obama who's to the left of the Clintons with Harry Reid and Nancy Pelosi. Is that really what you want particularly given this situation?

CARVILLE: Democrats are ready for a change.

BLITZER: Hold on a minute. I don't want you to leave because I want to continue this conversation.

Barack Obama and John McCain both unveiled new campaign ads today. We're going to show you what they're saying one day after trading the sharp jabs at last night's debate and we'll continue our conversation with James Carville and Bill Bennett.

And they both fought in the Iraq war. Now they're fighting a political fight against each other. We're collecting in on a very unique congressional race in southern California.

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


BLITZER: We're back with James Carville and Bill Bennett. Dueling campaign ads coming out today on this, the day after last night's debate. Listen to this new, a little clip from the new Obama ad.


MCCAIN: Senator Obama, I am not President Bush.

NARRATOR: True. But did you vote with Bush 90 percent of the time. Tax breaks for big corporations and the wealthy but almost nothing for the middle class, same as Bush.


BLITZER: All right. Here's a new McCain ad on the very same subject. Listen to this.


MCCAIN: The last eight years haven't worked very well, have they? I'll make the next four better. Your savings, your job and your financial security are under siege. Washington is making it worse.


BLITZER: What do you think of that strategy, basically, hitting the incumbent Republican president? I mean the last eight years haven't worked out very well have, they.

BENNETT: No, gosh, I mean they're both using essentially the same text for their ad which is to beat up on George Bush. I bet he feels it's time to leave town. Look, he's got to say he's different because Bush's ratings are in the tank. This gives you a measure of the headwinds that John McCain's playing against. Bush's popularity, this economic situation, right track, wrong track, party identification, money. Still, the guy is afloat. I mean he's still, some of the polls today, three, four, five points. In some ways it's kind of amazing he's that close given the headwinds he's flying against.

BLITZER: Do you think?

CARVILLE: No. I might add that Obama ad is one of the most effective political ads I've ever seen.

BLITZER: The new one. CARVILLE: Yes, the new one. It's very simple. Anybody could have done it, but boy does it make a point.

BLITZER: They even have a sound bite from McCain where he boasts I voted more than 90 percent of the time with President Bush.

CARVILLE: That's clearly not a below the belt ad. That's clearly within the purview -- it was not a particularly clever ad. It was just effective.

BENNETT: You got to say he's not the president but you've got to say Obama voted with Harry Reid 100 percent of the time.

BLITZER: How worried are you, James that, this election, it's going to be a record turnout. But there could be irregularities whether voter suppression, preventing African-Americans, if you will, from voting, purging names from registrations or the accusations that are being leveled against ACORN right now falsely registering people. How worried are you there could be a serious problem on November 4th?

CARVILLE: It's possible. I think we're going to have a turnout of I mean proportions that we can't imagine. I don't know if the system is equipped to deal with that. If you look what happened to the turnout in the primaries, you look at the level of interest in this thing and look, every election has its irregularities. I suspect that the more people that vote, the more chance something like this could happen. I suspect that at the end, the will of the people is going to be pretty decisively heard. It's like every game you see you've got some bad calls.

BLITZER: How worried are you about this?

BENNETT: Well, I'm a little worried. It depends in part on what the results are. If it's a very close election this thing gets more and more serious.

BLITZER: A close election in a state, in Ohio or Florida. We've been there before.

BENNETT: Right and with ACORN, I mean one worries about them. We may have to have a second HBO thing, Recount 2.

BLITZER: Why is this even possible in the greatest democracy in the world that in this day and age there possibly could be problems going into an election day? How could this even be possible?

BENNETT: Well, liberty is to faction what air is to fire, the corruptibility of man. These things matter. These things count. This is what Madison wrote about. This is what you need all the protections for. One would think we'd have a handle on these things by now. My guess is, I do have worries about ACORN but I think there's probably some greater degree of worry about this than there is actual mischief.

CARVILLE: There's very little, very, very little research, there's very little U.S. fraud in U.S. elections. People have tried and tried to find it, and it is basically statistically --

BLITZER: But it's one thing to have voter fraud. It's another thing to have human blunder. The butterfly ballots in Florida in 2000 or the electronic voting machines that don't work and don't register. Nobody says that is deliberate, but that's just stupid.

CARVILLE: We have dropped passes. You know what I mean? We have ground balls hit. We have human beings.

BENNETT: Back to the founders.

CARVILLE: You have these kinds of things, but in terms of -- I'm not worried at all about deliberate fraud. And by the way, the penalty for it is you know, it's like you can spend a year in jail for illegal vote. What's -- one vote, you're going to risk going to jail for a year? It doesn't make much sense. But I am worried, of course, we're going to have human blunders out there. The more stress you put on the system in terms of people turning out, the more blunders you're going to have. People are going about to get in a fight and all kinds of things.

BENNETT: But your point, the founders understood that incompetent and blunder accounts for more mishaps in life than wickedness. I do think ACORN bears watching and I'm glad there is some attention.

BLITZER: My point is only this day and age of iPods and sophisticated technology, we should have a better way of doing this.

BENNETT: We're getting rid of greed and Wolf is going to get rid of ignorance. Greed and ignorance are gone.

BLITZER: All right guys. Thanks very much.

An American arrested in a remote part of a volatile country. What was he doing in the tribal region of Pakistan known as an al Qaeda and Taliban hot bed. We have that story coming up.

The candidates' schedules. Where they're spending time may tell us more about the polls and the state of this contest. John King is showing us more about this coming up here in THE SITUATION ROOM.


BLITZER: Senator Ted Stevens is fighting for his political life right now at the corruption trial. The Alaska Republican took the stand today in his own defense. We go to the courthouse with Kelli Arena with more on what is go on. It must have been a dramatic moment in that courtroom, Kelli?

KELLI ARENA, CNN CORRESPONDENT: Well, Wolf, we've been waiting for this for more than three weeks and as you said, he did finally take the stand. He was asked right off of the bat if he had ever engaged in any gifts that he may have receive. He said no. He was asked if he intentionally made false statements and he said no. Of course, he is charged with lying on Senate financial disclosure forms in after effort to hide more than $250,000 worth of gifts that he allegedly received including a major home renovation from a company called Veco.

Steven's testimony actually followed testimony from his wife, Wolf, who the defense has argued was really the person who was primarily responsible for paying all of the bills for the renovation and overseeing it. In the beginning she said that she did she paid every invoice that she received. She said that she believed she paid for everything, but when it got down to details, that is when it got very cloudy.

For example, she said she got home to Alaska and discovered that there was a wrap around deck that was built around the house that she didn't know was going to be built. She said she asked for a bill. She didn't get one immediately but then never followed up. Then she said that she didn't even know that the -- he was very involved in the renovation process, a very long time friend of the senator's. She said that he had been hanging around a lot and thought maybe he was retired, because he seemed to have a whole lot of time on his hands.

As the senator left the courthouse today, Wolf, he raised his fist in a victorious way and when asked how does it feel, Senator, to finally be able to tell your side of the story? But he didn't have much to say. Of course, as you said, he is fighting for the political life, and he had been -- for nearly -- his political opponent has been out on the campaign trail.

A lot of legal experts were surprised he was taking the stand, but the general consensus is that this is more of a political move than a legal move, because it is important for the voters to hear from the senator himself when he says he didn't do anything wrong rather than have the lawyers make the argument for him. We expect him to take the stand again tomorrow. They didn't get into the nitty-gritty, but they will tomorrow, and we may see this case go to jury by next week.

BLITZER: Kelli, thanks very much. Kelli is over at the courthouse right now.

Also, new information right now about an American being held by Pakistani authorities in a remote region of that country known to be a hot bed of al Qaeda and Taliban activities. Our State Department correspondent Zain Verjee is standing by. She's covering this story for us. What are you learning, Zain?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, the State Department says an American citizen from Florida has been arrested in Pakistan. Now the drama is really playing out in this wide volatile and dangerous border region between Pakistan and Afghanistan. This is where the U.S. says that the Taliban and al Qaeda are regrouping.

What we're hearing from Pakistani sources is that the American goes by a variety of names including Jude Kenan Muhammad. He is believed to be in his early 20s and that Wolf he was picked up three days ago right outside the Mohmad tribal area right here at a checkpoint that you will see just on this area. He was carrying an American passport.

Now Pakistan is saying that he was trying to get into the restrictive area without a permit, and you just can't do that. Wolf, it is not really clear why he wanted to go there, Wolf, but U.S. embassy officials have traveled from Islamabad, the capital, to this area and have met with him. The U.S. is also helping to communicate with his family, but really very few details about his arrest or about the investigation. State Department sources though Wolf are telling us that they don't believe he was going in there to fight -- Wolf?

BLITZER: All right. Zain, thanks very much. Zain will stay on top of this story for us.

Coming up, we are watching a Marine and Navy SEAL who both fought in Iraq and now they are fighting each other for a seat in Congress.

Stay with us here in THE SITUATION ROOM.


BLITZER: Just as John McCain and Barack Obama have had sharp differences over the war in Iraq, two men who fought in that war are now battling each other in a key congressional race. CNN's Chris Lawrence is joining us live from San Diego.

Chris, they certainly don't seem to see eye to eye with each other. Chris?

CHRIS LAWRENCE, CNN CORRESPONDENT: Wolf, just like the candidates at the top of their tickets, these two veterans have very different views on how to win the wars in Iraq and Afghanistan.


LAWRENCE (voice-over): A Marine artillery officer and a Navy SEAL, veterans in Iraq and Afghanistan and now fighting for a seat in Congress with a say in how to wage the wars.

(on camera): Do you support a timetable?

DUNCAN HUNTER (R) MARINE IRAQ WAR VETERAN: No, not at all. I don't support any timeline whatsoever.

LAWRENCE (voice-over): Republican Duncan Hunter is a Marine running to succeed his father.

MIKE LUMPKEY (D), NAVY SEAL IRAQ WAR VETERAN: I think you can have a blending of a timetable with conditions.

LAWRENCE: Democrat Mike Lumpkey advised 2,000 troops and advised Obama's foreign policy team.

(on camera): Do you think that the surge has worked?

LUMPKEY: I don't think history will prove that it succeeded. We are paying off the tribal sheiks to not commit acts of violence. LAWRENCE: And when the money cuts off?

LUMPKEY: I think what you're going to see is you're going to see a spike in violence.

HUNTER: No, that is not true.

LAWRENCE (voice-over): Hunter says U.S. troops are giving tribal leaders the ability to fight al Qaeda.

HUNTER: They will continue to work with us, because they want to be free and not because America is paying them off.

LAWRENCE: Like Obama and McCain, they disagree on how long and how many troops to keep in Iraq.

LUMPKEY: I would bring 50 percent of the troops home and then move the remainder of the troops out of the urban centers and station them along the borders to prevent the surrounding nations from entering the conflict.

HUNTER: We are so close to finishing it. We don't stop the fire departments when the fire is 70 percent contained, we don't say, stop fighting that fire now.

LAWRENCE: Republicans outnumber the Democrats in this suburban San Diego district, but like Obama, Lumpkin is counting on the voter's need for change.

LUMPKIN: We have the incumbent, who has been there for 28 years, who is trying to will this seat to his son, as if it were a birthright.

LAWRENCE: On the other hand, Hunter is distancing himself from the top of the ticket.

HUNTER: When you look at issues like illegal immigration, for instance, John McCain and I don't see eye to eye at all.

(on camera): One thing both candidates agree on, the winner should have a bigger roll in overseeing defense spending and strategy than your average newcomer to Congress -- Wolf.


BLITZER: Chris Lawrence, thank you.