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THE SITUATION ROOM

Obama's National Security Theme in Virginia; Bush Holding Post- Election Economic Summit; Interview with John McCain; Al Qaeda and the Election

Aired October 22, 2008 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, if America's enemies pose an early challenge to the next president, John McCain says he's been tested. That and much more of my one-on-one interview with the senator coming up.
Amid fears of deep global recession, stock markets plunging again today. The Dow Jones Industrials dropping more than 500 points. President Bush calls together world leaders for a financial crisis summit.

Plus, new polls in the battlegrounds -- why several former Bush states may be turning from red to blue.

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

Another staggering day for the stock markets. They've tumbled all around the world. The Dow alone, as we said, down more than 500 points today.

In backing Barack Obama this week, the former secretary of State, Colin Powell, had sharp criticism for John McCain's approach to the economic crisis and for his running mate.

I asked Senator McCain about that during our interview today.

(BEGIN VIDEOTAPE)

BLITZER: Colin Powell was pretty biting in his criticism. He said you were a little unsure of how to deal with the economic crisis. You seem to have, he said, a different approach every day. He sensed you didn't have a complete grasp of the economic crisis the American people are going through right now.

I wonder if you'd like to respond to Secretary Powell.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I respect General Powell. But I respectfully disagree. I especially disagree when he said -- the comments that he made about Governor Palin, the most popular governor in America, a governor who knows energy issue, a $40 billion pipeline reformer, took on the governor of her own party. And I hope that sometime General Powell will take time out of his busy schedule to meet with her. I know she'd be pleased to meet with him.

(END VIDEOTAPE) BLITZER: We're going to hear my one-on-one interview with Senator McCain. Part two coming up this hour. You heard part one in the last hour. Part three in the 6:00 p.m. Eastern hour.

And we'll also get immediate reaction from a top strategist for Senator Obama's campaign, David Axelrod. He's listening. We're going to get his response.

He's standing by live. That's all coming up. With an endorsement from Colin Powell in his pocket, Barack Obama today met with other retired U.S. generals and diplomats, as he moved to try to take a key battleground state from the Republicans.

Let's go straight to our senior political correspondent, Candy Crowley. She's in Leesburg, Virginia, not far from the nation's capital -- national security, Candy, clearly being the theme of Senator Obama's day.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Absolutely. You know, here on stump, he tends to talk about the economy all the time. It's really a hundred percent of his speech.

But as you know, John McCain is out there pounding Obama on his experience, particularly his experience in dealing with global crises. So today Obama responded.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): In a double challenge to John McCain's turf, Barack Obama marked through Virginia -- Republican presidential territory for more than 40 years. At the same time, he challenged McCain's national security credentials. To McCain's argument that Obama is untested in a dangerous world, the Democratic nominee suggested McCain is outdated in a changed world.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: We're not going to defeat terrorist networks that operate in 80 countries through an occupation of Iraq. We're not going to deny the nuclear ambitions of Iran by refusing to pursue direct diplomacy, alongside our allies. We're not going to secure the American people and promote American values with empty bluster.

CROWLEY: Obama's mini new conference came after a muscle flexing photo-op with his national security brain trust -- formers -- ambassadors, lawmakers and military brass, and a little name-dropping of an absentee.

OBAMA: General Powell is one of our finest soldiers and statesmen. He has been a source of advice and I look forward to drawing on his counsel and the counsel of all these standing with me today if I am president.

CROWLEY: He also brushed back McCain-Palin criticism of Joe Biden's remark that Obama as president would be tested early in the global arena. Obama backs the gist of it, if not the wording. OBAMA: I think that Joe sometimes engages in rhetorical flourishes, but I think that his core point was that the next administration is going to be tested regardless of who it is.

CROWLEY: Back on issue one, Obama defended his plans to increase taxes on wealthy Americans. He once explained it as spreading the wealth around. The Republican team calls it growth busting socialism.

OBAMA: And was John McCain a socialist back in 2000 when he opposed the Bush tax cuts for the wealthiest Americans?

CROWLEY: McCain has since said he would preserve those tax cuts. In Richmond, rich territory for a Democrat, Obama pushed the point.

OBAMA: He's not fighting for "Joe the Plumber." He's fighting for Joe the hedge fund manager. John McCain likes to talk about "Joe the Plumber," but he's in cahoots with Joe the CEO.

(END VIDEOTAPE)

CROWLEY: So he has now moved from Richmond, Democratic territory, Wolf, here to Leesburg, which George Bush won handily in 2004. And you can tell a lot about the campaign by the schedule it keeps. With Obama moving deep into Republican territory, it tells you that he sees some victory here -- Wolf.

BLITZER: And he's still planning, Candy, on heading out to Hawaii Thursday and Friday to see his 85-year-old ailing grandmother?

CROWLEY: Absolutely. He will do one event in Indiana tomorrow and from there take-off and go to Hawaii and spend Thursday and Friday with her, before returning to someplace in the Rocky Mountain West to campaign on Saturday.

BLITZER: Candy Crowley is in Leesburg, Virginia, a key battleground state. Candy, thank you.

Whoever wins the election could end up tackling the financial crisis right away -- in fact, within days. Barack Obama or John McCain will possibly be at a major event -- an international summit on the economic meltdown.

Let's go to our White House correspondent, Elaine Quijano. She's been speaking with officials about this very high profile meeting. What do we know -- Elaine?

ELAINE QUIJANO, CNN CORRESPONDENT: Well, President Bush, Wolf, has invited leaders of the 19 other developed and developing nations to Washington next month after the election to examine just what went wrong in the financial crisis and how to prevent another one from happening again.

What is not clear, though, Wolf, is whether or not President Bush's successor will be there, as well.

(BEGIN VIDEOTAPE) QUIJANO (voice-over): Just 11 days after the election, President Bush will host world leaders in Washington for talks on the global financial crisis. The big question -- whether the elephant will actually be in the room -- the president-elect.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: Let's just let this election happen. We don't want to box the next president in. So we'll just let it happen and we'll get their input as we move forward.

QUIJANO: The White House isn't saying yet whether the president- elect will be invited to the summit, but it's already shaping up to be a delicate dance.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST, FORMER PRESIDENTIAL ADVISER: This is going to be the first of many awkward moments for both the White House and for the winner of this election.

QUIJANO: So far, neither candidate is committing to attending the November 15th summit, with an adviser to John McCain saying: "The candidate is pleased to see world leaders drawn together in this time of global economic crisis."

And from Senator Barack Obama...

OBAMA: But I don't want to make commitments at this point in terms of our participation -- my participation in something before I've even won the election.

QUIJANO: CNN's senior political analyst, David Gergen, says both candidates are right to keep their distance until the election results are clear and it's known exactly what's expected from the meeting.

GERGEN: What the president-elect does not want to do is to take responsibility or have George Bush set the policies which he himself doesn't want.

QUIJANO: Right now the White House is setting low expectations for the meeting, even as European leaders are pressing for global financial regulation.

PERINO: I don't believe that you'll have any details coming out of this meeting in terms of things that everyone agrees to at the first meeting.

(END VIDEOTAPE)

QUIJANO: Now, regardless of who wins the election, the next president will have a major role to play in shaping any global financial reforms. And working with the outgoing administration could prove tricky, Wolf, since, as you know, both candidates have actively campaigned against President Bush's economic policies -- Wolf.

BLITZER: All right, Elaine. Elaine is working the story at the White House.

Let's go back to Jack. He's in New York with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: After the longest, most expensive presidential campaign in history, seven percent of likely voters are still not sure who they're going to vote for. The election is now less than two weeks away. These are the findings in the latest CNN poll of polls. So what's the problem?

Perhaps if you haven't figured any of this out by now, you shouldn't be allowed to vote at all. I'm kidding.

Maybe it's the issues. We've had three debates, presidential; one vice presidential debate; one economic meltdown; a $700 billion bailout package; a couple of wars and countless arguments about under whose plan you and I will pay more in taxes and for health care.

Or maybe it's the mudslinging. A CNN/Opinion Research Corporation poll found that three out of five Americans feel the McCain campaign has gone too negative -- 60 percent. Another survey by the Associated Press and Knowledge Networks found that negative ads from both candidates are not convincing uncommitted voters. About 60 percent of undecided voters say the ads make them no more or less likely to vote for either John McCain or Barack Obama. And a third say that they are less likely to vote for either candidate after seeing these negative ads.

So here's the question: Why are so many voters undecided so late in the race?

Go to CNN.com/caffertyfile and post a comment on my blog.

You know, in some elections, there are a lot of similarities. This is an election where there couldn't be anymore distinct differences between the two candidates at the top of these tickets -- at least in my memory -- than the choices we have in front of us right here. And yet a lot of people are having trouble making up their minds.

BLITZER: Yes. Some people maybe -- maybe they just don't like either one of these two candidates. And, as a result, they're trying to figure out which one is the least bad, if you will.

CAFFERTY: The lesser of two evils.

BLITZER: Yes.

CAFFERTY: Yes. That's an old song going into the voting booth.

BLITZER: Right. All right, let's see what they do. All right, Jack, thank you.

Coming up, more of my one-on-one interview with Senator John McCain and the question he did not like.

(BEGIN VIDEO CLIP)

MCCAIN: With respect, Wolf -- and you know, better, my friend. You know better.

(END VIDEO CLIP)

BLITZER: The subject was Iraq. The question that prompted that response, that's coming up. Part two of my interview -- you'll see it here.

And new poll numbers coming in from some of the key battleground states right now -- signs of a major shift in one state that hasn't gone Democratic in three decades.

Plus, a disaster at sea -- fire on an American nuclear aircraft carrier, with the U.S. Navy now laying the blame in a scathing report. So what went wrong? The training video ahead and more, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: While Senator Barack Obama today met with retired U.S. generals, admirals, defense and diplomatic experts, among others, Senator John McCain is claiming to hold the high road -- the high ground in that battle.

Let's get more of my one-on-one interview today. The Republican presidential candidate saying he has the experience needed to be president.

(BEGIN VIDEOTAPE)

BLITZER: Let's move on and talk about national security.

MCCAIN: Good.

BLITZER: If you're elected president, of the United States, do you believe America's enemies, whether terrorists or hostile governments, would test you during the first six months of your presidency?

MCCAIN: I've already been tested. And I'm astonished and amazed to hear Senator Obama pre -- Senator Biden predict that the untried, untested President Obama will be tested by our enemies. And we may not agree -- his own backers may not agree.

Look, I've been tested. Senator Biden referred to the Cuban missile crisis. I was there. We came that close, as historians say, to a nuclear exchange.

Senator Biden expects his own running mate, expects Senator Obama to be tested in that way?

I mean that's a remarkable statement.

BLITZER: Because usually (INAUDIBLE)...

MCCAIN: That should concern all Americans.

BLITZER: ...they are tested early on by hostile powers out there.

MCCAIN: They know I've been tested. They know I've been tested. I've been tested many times.

BLITZER: The U.S. -- the Bush administration...

MCCAIN: And the thing that probably may encourage them a little is that Senator Obama has been wrong. He was wrong about the surge in Iraq. He still fails to acknowledge that he was wrong. I mean remarkable.

He was wrong when he said the Georgians should show restraint. He was wrong when he said he would sit down across the table from Ahmadinejad, Chavez and the Castro brothers. He was wrong about those.

So I can understand why the American people might be concerned, particularly when his own running mate says he's going to be tested.

BLITZER: All right...

MCCAIN: I've been tested, my friend.

BLITZER: We've got a limited amount of time, so I just want to get a couple of things in before I let you go. Iraq, a very important issue.

MCCAIN: Sure.

BLITZER: Right now, we still 140,000, 150,000 troops in Iraq. The Bush administration seems to be close to what's called a Status of Forces Agreement with the Iraqi government of Prime Minister Nuri Al- Maliki. It calls, in the draft agreement, at least, for complete withdrawal of forces from villages and cities by July 30th of 2009 and out of the country by December 31st 2011.

If you're elected president, would you, as commander-in-chief, honor this agreement if, in fact, it's formalized?

MCCAIN: Well, with respect, Wolf -- and you know better, my friend. You know better. It's condition-based. It's conditions-based. And Ryan Crocker, our ambassador in Baghdad, said if you want to know what victory looks like, look at this agreement. So you know better than that, Wolf. You know it's condition-based. And that's what the big fight was all about.

BLITZER: So you accept this -- what's on the table right now?

MCCAIN: I've always said we would be out based on conditions and honor in victory and not defeat. And it's very clear to any observer now that if we would have done what Senator Biden wanted to do -- break Iraq up into three countries -- if we'd have done what Senator Obama to do, which was immediate withdrawal and setting firm dates for it, we'd have probably been defeated in Iraq.

And the problem there is we would have had increased Iranian influence. We'd have had sectarian violence on the increase. And probably we would have had to go back.

So it's a big -- a big issue, a big issue for the American people. And I understand why it's not on the front pages or the lead in CNN, because we have a relatively secure environment that's getting more secure.

(END VIDEOTAPE)

BLITZER: All right, we're going to have a lot more of this interview coming up. In fact, we're playing the entire interview for you, uncut -- all my questions, all of his responses. John McCain talks about issue number one, the economy; pork barrel spending; and what he calls the big mistake of the Bush administration.

A lot more of this interview, in fact, part three coming up. And remember, we're going to be getting immediate reaction from the Obama campaign. David Axelrod, the top campaign strategist, he's standing by to join us live. Much more of the interview with McCain coming up.

Al Qaeda supporters seem to be watching this presidential campaign rather closely. And at least one online comment even suggests the terror network should be pulling for John McCain. And that's raising lots of eyebrows. We asked Brian Todd to take a look at this story -- Brian, what are you finding out?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, U.S. intelligence officials are not commenting on this. Terrorism experts say the bloggings of one low level supporter of al Qaeda should not be placed out of proportion.

But the posting does offer some insight into the dialogue among extremists on the American election.

(BEGIN VIDEOTAPE)

TODD (voice-over): Al Qaeda sympathizers get into the American political game, issuing threatening Web postings and blogs, even hinting at who they might like to take on as president, John McCain.

On a Web site that experts call a conduit for al Qaeda's agenda, a man considered a supporter of the there is group says Al Qaeda will have to support McCain in the election "so that he continues the failing march of his predecessor, Bush."

OCTAVIA NASR, SENIOR EDITOR, ARAB AFFAIRS: He talks about wars -- basically, he feels pretty strong about what Al Qaeda has achieved under the Bush administration.

TODD: In a conference call, McCain's advisers accused some in the mainstream media of implying that Al Qaeda is endorsing John McCain.

JAMES WOOLSEY, FORMER CIA DIRECTOR, MCCAIN SUPPORTER: It is ridiculous to believe that in its heart of hearts, Al Qaeda wants John McCain to be the president. TODD: Security experts say when reading these postings from Al Qaeda supporters, it's important to think about their possible motivations.

FRANCES FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Do they really want John McCain?

Maybe. Maybe because of his national security experience, they think they can sort of pick the rhetorical fight with him. Maybe what they want is, in a reverse psychology, maybe they're looking to endorse McCain hoping that gets Obama elected because they think he's less experienced and they may have -- that may present a vulnerability.

TODD: McCain's aides point out that a leader of the terrorist group Hamas once expressed support for Barack Obama. And observers say the al Qaeda-affiliated Web site doesn't play favorites when it comes to the next president.

NASR: The posting makes it clear -- it makes it clear that this person is going to be under attack and this person is going to be dealing with the laws of havoc that they plan to create.

(END VIDEOTAPE)

TODD: Again, important to point out that many experts on Al Qaeda, including CNN analyst Peter Bergen, say such postings don't much matter. They say just before the 2004 election, if you remember, Osama bin Laden himself issued a statement suggesting that if Americans want more terrorism and destruction, they should go ahead and re-elect George Bush. Analysts still are not sure what bin Laden's intent was or if he got the results that he wanted.

In any case, of course, we know, Wolf, there were no attacks on the United States mainland since the last election.

BLITZER: Since 9/11, actually.

TODD: Yes.

BLITZER: No significant terror attacks either.

TODD: Exactly. Right.

BLITZER: It's interesting. It's intriguing. I remember when that video from bin Laden came out only a few days before the 2004 election and some analysts thought it helped, when all was said and done, President Bush, because it reminded people out there of the terror threat.

TODD: Right.

BLITZER: You're speaking to intelligence sources. What are they saying about this Web site where this posting was contained?

TODD: Well, they say it's a known jihadist Web site not directly tied to al Qaeda, but known in the past to post messages from known Al Qaeda leaders. So if this thing gets on this particular Web site and Al Qaeda itself doesn't shut it down, it can be at least taken to, you know, have an opinion that they sympathize with. They're not going to repress it.

BLITZER: An interesting development. All right, we'll watch it together with you, Brian. Thank you. Brian Todd reporting.

Barack Obama is about to speak at a rally in Virginia. We're going to go there live to hear what he has to say. Stand by. I think you'll want to hear this.

And Sarah Palin courting Evangelical voters. Her remarks about God and the election. We'll talk about that and a lot more with James Carville and Bill Bennett. They're here in THE SITUATION ROOM. Stand by.

(COMMERCIAL BREAK)

BLITZER: Let's check back with Zain.

She's monitoring some other important stories incoming into THE SITUATION ROOM right now -- Zain, what's going on?

ZAIN VERJEE, CNN CORRESPONDENT: Wolf, Merck & Company is slashing 7,200 jobs. That's nearly 13 percent of its workforce. The move by the drug maker is part of a new restructuring program really designed to lower costs and be more competitive. This is the company's second major restructuring in less than three years. Today's announcement comes amid a dismal earnings report. Merck's third quarter net profit plunged 28 percent from the third quarter last year.

Oil prices are sharply lower this afternoon. U.S. crude for December delivery fell $5.43, to end the session at $66.75 a barrel. This was the lowest close since June of 2007. Prices plunged today after the government reported big increases in U.S. fuel supplies. Falling demand has helped drive oil prices down more than 50 percent since July, when prices were at a record high.

And India's space program is taking a giant leap forward, Wolf, with its first moon mission. This morning, India's unmanned lunar orbiter blasted into space. The two year mission will focus on redrawing maps of the moon's surface and exploring what lies beneath the surface. Two of the mapping instruments are a joint project with NASA. The orbiter will also search for evidence of water or ice.

And, Wolf, chand is actually moon in Hindi, which is what it's called, the Chandrayaan.

BLITZER: I'm missing. Help me again. What?

VERJEE: The -- it's called Chandrayaan, what the Indians blasted off.

BLITZER: Oh, I see what you mean. Yes. VERJEE: The Indian spacecraft. Chand is moon in Hindi. Sorry. I just thought I'd throw that in.

BLITZER: Zain speaks so many languages. All right, we'll talk about that later, Zain. Thanks very much.

But we're standing by, by the way, to hear from Senator Barack Obama. He's getting ready to speak at a rally in Virginia. We have important new poll numbers from that battleground state, as well.

Other states coming up in THE SITUATION ROOM.

And we have new poll numbers from North Carolina. That's a battleground state that hasn't voted for a Democrat for president since Jimmy Carter. Can Barack Obama turn North Carolina around?

And fire aboard a nuclear-powered aircraft carrier -- now the U.S. Navy laying the blame in a blistering new report.

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

(COMMERCIAL BREAK)

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

Happening now, brand new polls from states that voted Republican in 2004. We're going to show you the numbers. We'll talk about what they mean with our political contributors, James Carville and Bill Bennett. They're standing by live.

Also, early voting -- it's happening right now in states, including Georgia, where people -- tens of thousands of people are waiting in line for hours. So why is the turnout so high?

Plus, Barack Obama live -- we're going to go to his rally in Northern Virginia. It's just getting underway right now. We'll hear what he's saying on this day.

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

New polls show a number of states that went Republican in the last presidential election may -- repeat -- may be in the process of changing colors. Ohio is one of them and our senior political analyst Bill Schneider is over there with the CNN Election Express. He's just across the river from Cincinnati and Kentucky. What are we seeing in these battleground states?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, we polled five former Bush states, four ever them look shaky for the Republicans.

(BEGIN VIDEOTAPE)

SCHNEIDER: Virginia, North Carolina, West Virginia, Ohio, and Nevada, all Bush states in 2004. And now? GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: Nevada, are you ready to make John McCain the next president of the United States?

SCHNEIDER: Maybe not. According to new CNN/Time/Opinion Research Corporation polls. Right now, Barack Obama leads John McCain by five points in Nevada. McCain is doing four points worse in Nevada than 2004. Obama is doing three points better than John Kerry. Ohio's a major battleground.

MCCAIN: We need to win Ohio.

OBAMA: We intend to win Ohio.

SCHNEIDER: The latest poll? Obama up by four. McCain is doing five points worse than Bush, Obama is doing one point better than Kerry. The new polls have a sampling error between three and four points.

We are seeing the biggest changes from 2004 in two southern states with large numbers of African-American voters. Two weeks ago, North Carolina was a dead heat.

MCCAIN: We have to win the state of North Carolina.

OBAMA: I promise you, we won't just win North Carolina. We'll win this general election.

SCHNEIDER: Now Obama has a four-point edge in North Carolina. McCain is doing nine points worse than Bush. Obama is doing seven points better than Kerry.

The big news last week was a ten-point lead for Obama in Virginia. So we polled Virginia again. Still Obama up by ten. McCain is doing ten worse than Bush. Obama's doing nine points better than Kerry. McCain is leading in one former Bush state.

KENNIE BASS, POLITICAL ANALYST: West Virginia voters are very, very interested in defense and family and moral values and the second amendment.

SCHNEIDER: McCain's leading Obama by nine points in West Virginia up from four last month. But that's still smaller than Bush's 13-point victory in West Virginia last time.

(END VIDEOTAPE)

SCHNEIDER: In each of these five former Bush states, Republican losses since 2004 have been larger than the Democrats' gains which suggests a loss of confidence in the Republicans but some voters still unsure about supporting Barack Obama -- Wolf?

BLITZER: Bill Schneider, across the river from Cincinnati in Ohio. Thank you very much.

As we just heard from Bill, Barack Obama is doing very well in some of those traditionally red states. So what can John McCain do? Can he do anything about this at this late date?

Let's discuss; joining us now a pair of CNN political contributors, Democratic strategist James Carville and national talk show host Bill Bennett.

Bill, what do you think? Is there anything in these final 13 days McCain can do to turn things around.

WILLIAM BENNETT, NATIONAL RADIO HOST: Keep plugging. I guess it was Alec Baldwin said he would leave the country if Bush was elected. He didn't leave. He wasn't true to his word but maybe if Obama is I'll move to west by god Virginia, huh? Anyway, he's still ahead there.

These polls are close. Notice what Bill Schneider was doing. He was comparing where the polls are today with what the final results were, not where the polls are today where the polls were four years ago. A lot of these are tight races. I predict John McCain will win Virginia and North Carolina. And actually will win Ohio, too. I will buy James dinner at Pascal's if I'm wrong. He'll buy me dinner if I'm right.

JAMES CARVILLE, DEMOCRATIC STRATEGIST: I'll be glad to eat it.

BLITZER: Well you know James, you got to admit, three, four- point spread right now is almost sometimes well within the margin of error in some of these states.

CARVILLE: My eyes capitol get off of was honestly in North Carolina, Virginia, Ohio, that are he was at 50 in all of these states. I mean, he's already hitting the number. That's the thing. This is not where you have the advantage sort of coming back where the race is kind of 45-41. According to our polls, in those states, he just -- if he's where he is on Election Day, he wins it. That's pretty remarkable. There's not just that he's ahead but he's hitting the number.

BENNETT: Let me just say, there are polls and there are polls. I want to be loyal to CNN. I work for CNN but there were two polls out today, Wolf, I don't know if you saw them or James, AP poll and IBD poll which had these races much closer and in some of these states had McCain ahead. I was just talking to Gloria Borger and she was pointing out there are polls all over the place. So I mean, there is still a lot of movement going on.

BLITZER: That's why we do these poll of polls so that we average them in so we're not wedded to one poll, not even our own CNN Opinion Research Corporation poll.

BENNETT: I understand. I'm not whistling in the wind here. I would not agree with John McCain we got them where we want them. I think we'd rather trade places. We're behind. But the race isn't over by any stretch of the imagination. I think Pennsylvania is going to be a focal point.

BLITZER: All right. Let's go ahead and talk about that, James. CARVILLE: Well, first of all, I think our poll of polls, last time I looked Obama was up nine points. With all respect, this is not -- this is not even going to be a close race. And I mean, but of course, Senator McCain has to try something. He's not going to walk away from it. But you know, the country has decided on change. I think everybody sort of knows that and he's go the got to keep this as close as he can.

BLITZER: You're in New York, James. Did you read the front page story in the New York Times today about Pennsylvania and why John McCain believes he can still win Pennsylvania even though the polls show he's 10 or 12 or even 14 points behind in Pennsylvania?

CARVILLE: Look, we've all been in a predicament in politics where we knew things weren't going well and knew we weren't going to win. He's obviously in that predicament now. The reason he's got to try in Pennsylvania, it has 21 electoral votes. Last night, I was in Pennsylvania in Montgomery County close to the Bucks County line. I didn't talk to a person and this was a Republican township in what used to be a very Republican county that thought McCain had a chance to win Pennsylvania. I don't know anybody that shares that. I don't blame him for trying.

BENNETT: Was this a Republican event you were attending?

CARVILLE: It was a community event but it was a lot of Republicans there.

BENNETT: All right.

CARVILLE: I'm just saying.

BLITZER: Because Pennsylvania hasn't gone Republican in a presidential race, didn't do it either for -- in either race that President Bush won the election on. Bill, go ahead. Tell us why you think Pennsylvania is winnable for McCain.

BENNETT: A couple things. Some of them were in the New York Times story. Ed Rendell, the governor of Pennsylvania said he's nervous. He wants Obama to come back. The second thing as James will remember is Hillary Clinton just beat the living day lights out of Barack Obama in Pennsylvania. And John McCain is the kind of Republican that a lot of people in the suburban communities will like. I think he's got to make a stand there. It's a very important state. If he wins that state, things look very good.

Again, he's not ahead. He's behind. We don't have Obama where we want him. But I think John McCain has a shot in Pennsylvania. And I think their close polling suggests it's not an impossible thing.

CARVILLE: I'll do you one better, if McCain wins Pennsylvania, I'll take you to Danny Myers place, Union Square Cafe at Gramercy Tavern. Not just you but your whole family. I'll pay for it.

BENNETT: You can afford these meals. I can't. BLITZER: We have all of these wagers on tape right now. Stand by. We have a lot more to discuss. Bill Bennett, James Carville are not going anywhere. We're continuing our conversation right after the break.

Among other subjects, I want to get into the Republican vice presidential nominee, Sarah Palin is not talking about god in this election. You're going to want to hear what she's saying.

The incredible voter turnout already breaking records across the country. Hundreds of thousands of Americans are waiting in line. They're casting ballots. Who this benefit?

Plus, we're going to get part three, the final part of my interview today with Senator John McCain. He talks about Governor Palin, what he really thinks about the government bailout. That's coming up. Listen to this.

(BEGIN VIDEO CLIP)

MCCAIN: When you are in an extraordinary crisis, obviously you'd have to take extraordinary measures.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Our CNN political contributors James Carville and Bill Bennett are standing by live. They're going to rejoin us in a moment.

First, I want to show you long lines at the polling stations in the state of Georgia where they're casting their ballots and other long lines in Florida, 150,000 people voting in the first two days of early voting there. There were so many people in line in Florida, at one polling station, that the last person cast their ballots at 10:30 p.m. four hours after the polls closed.

You see those incredible lines, James. What does it say to you?

CARVILLE: People want to vote. Whoever the person was that voted at 10:30 at night we ought to give a citizenship award. That person really wanted to cast a vote in this election.

BLITZER: The polls show, Bill, that the Democrats are much more enthusiastic right now than the Republicans.

BENNETT: Well, maybe they are. We'll see. It's all about numbers on Election Day or you know, early voting, too. But I don't draw any conclusions from this other than I think people like to beat the rush.

BLITZER: What about Florida right now? All of us remember, James, what happened in 2000. You saw our latest CNN "Time" magazine poll on what's going on in Florida. What do you think is developing right there? I don't see any way that John McCain can be president of the United States without winning Florida. CARVILLE: Well, you're exactly right about that. I think that I actually feel more comfortable about Virginia than I do Florida. You saw Senator Obama and Senator Clinton down there campaigning. But I do think they'll carry it and I think these early vote numbers are very, very encouraging for Democrats. I think that our big story on Election Day is there's going to be a lot of stress on the system because the turnout in this election is going to be enormous across the board.

BLITZER: Listen to this little sound bite this clip, Bill, that this is the Governor Sarah Palin speaking to Dr. James Dobson in a radio interview that was broadcast today, but taped on Monday. Listen to this.

(BEGIN VIDEO CLIP)

PALIN: To me it motivates us, makes us work that much harder and it also strengthens my faith because I'm going to know at the end of the day, putting this in God's hands that the right thing for America will be done. The end of the day on November 4th.

(END VIDEO CLIP)

BLITZER: What do you think about that? She says that God will make sure that the right thing happens on November 4th.

BENNETT: Well, it may well be so. If Obama wins, he can thank god as well as the voters. Were people offended by this they couldn't be? This is Abraham Lincoln, this is George Washington, John Adams, this is Joe the founder. What -- could somebody be offended by this?

BLITZER: I don't know if anyone's offended by it but I thought it was interesting she thinks god will make sure that the right thing happens on November 4th. James?

CARVILLE: I'm certainly not offended by what she said. I've been looking for something nice to say about her. I agree with what she said there. I was worried. But that's fine.

BENNETT: This is a great American tradition. Great American tradition. Martin Luther King used to say this, to use that expression in god's hands a great deal.

BLITZER: When I spoke with Senator McCain today, James in, New Hampshire in Manchester, I reminded him that back in June of 2007, I moderated one of the first Republican presidential debates. There were ten Republican candidates up there on the stage. And he reminded me, you know what? I was sort of shunned aside. I was not very far away from Ron Paul or whatever because my career at that point looked pretty grim in the summer of 2007. He did come back dramatically and he beat Mitt Romney and Rudy Giuliani and Mike Huckabee and all the others. So, you know, you can't write him off yet, James.

CARVILLE: You know, erroneously and I'll very much admit that I was wrong. On this very program I said I didn't think he would make it to the first primary he looked so bad. He did have a great comeback.

Unfortunately, this thing is not going to happen for Senator McCain and I mean, he's had a career, but it's not going to work out, and the problem is that they never could settle on a message. There was great confusion. They didn't give thought to this Palin thing. It's not going to work out for them.

BENNETT: Could we take pause on the retrospectives until after November 4th? All this past tense stuff? John McCain has been through harder times than this and prevailed. I agree. It's uphill. I'm not being Pollyannaish about this but it's going to be closer than a lot of people think.

BLITZER: Gentlemen, a good discussion as usual. Stand by. We're watching these final 13 days and also watching Senator Obama speaking now in Virginia. We'll go there in a moment once he gets to the meat of his remarks today. Stand by for that.

Also a blistering new report from investigators hands out blame for the worst fire aboard a U.S. navy ship in four decades, a devastating blaze aboard a U.S. nuclear powered aircraft carrier.

And the rest of my interview, part three of my interview with Senator John McCain. How will he answer some sharp criticism from Barack Obama's latest backer?

He sensed you didn't have a complete grasp of the economic crisis the American people are going through right now. I wonder if you'd like to respond to Secretary Powell.

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BLITZER: Senator Obama is talking about issue number one, the economy, in a rally at Leesburg, Virginia outside of Washington. Let's listen in.

(JOINED IN PROGRESS)

OBAMA: And trying to distract us from talking about the economy. Senator McCain's campaign actually said a couple of weeks ago, they were going to launch a series of attacks on my character, because they said if we keep on talking about the economy, we are going to lose. Well, that is a promise that my opponent has kept. He has been on the attack. That's what you do when you are out ideas, out of touch and running out of time.

But, here -- Virginia, here is what they don't understand, with the economy in turmoil, the American dream, the American people don't want to hear politicians attack each other, but you want to hear how we will attack the challenges facing middle class families each and everyday. That is what I am going to talk about the last 13 days and that is what I will do as president over the next four years, because I can take two more weeks of John McCain's attacks, but the American people cannot take four more years of the same old thing.

BLITZER: All right. There he is making his pitch to voters in Virginia. Dramatic numbers by the way in the latest CNN/"Time" magazine poll. He is ahead 10 points in Virginia, Barack Obama.

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

CAFFERTY: What is amazing is how they keep up the energy they do after this many months of day after day after day of giving the speeches and flying around from one event to another and yet they walk up to the microphones and it is like they came out of 12 hours of sleep and a big meal and ready to go. Pretty impressive.

The question this hour: Why are so many voters undecided so late in the race. A CNN poll estimates 7 percent have not made up their mind.

Bill writes: "There's no way seven percent of the electorate is undecided at the stage of the process. Uninformed, uninterested and unwilling to share perhaps, but not undecided."

Greg in Florida writes: "While making a decision they start out with a goal and they don't know what they are looking for, but they will somehow recognize it when they see it, but they are looking for inspiration. So I am guessing that those who have not decided yet don't know what they want from the next president and have not been sufficiently inspired by either candidate."

R.L. writes: "Simple, I hate both candidates and I hate to choose between two totally horrible choices. I am a veteran and I sacrificed for the country and love this party and I feel there is no party to represent me and my family."

Chris writes: "People who have not made up their mind have no mind to be made up. You have to be a wing nut to still be on the fence in the election."

Al writes: "You hit the nail on the head. Anybody who hasn't been able to make up his mind about this race at this point after two years of campaigning and all of the debates, you would lack the mental acuity to make a important decision. And that is what scares me. The hands of the country is subject to these votes so why should we be trusted to the people who can't decide whether they want fries with that."

And John in Santa Barbara writes this: "It is like a girl thing. They have made up their minds, but they just love to be asked."

If you didn't see your email here, you can go to my blog CNN.com/Caffertyfile and look for yours there among hundreds of others. Have you made up your mind yet, Wolf?

BLITZER: No. It is a girl thing. We will talk about it, Jack. Thank you.

Disaster at sea. What went wrong aboard a nuclear carrier? The details next.

And part three of my interview with the John McCain interview and the Obama campaign's response. That is all coming up right here on THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There's a scathing new Navy report out laying blame for the worst disaster of its kind in 40 years, a devastating fire aboard the aircraft carrier "George Washington." Our Pentagon reporter Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN PENTAGON CORRESPONDENT: There is no greater threat to a ship at sea than fire, by accident or attack. It is why damage control drills like these conducted on the George Washington are among an aircraft carrier's crew most important tasks.

UNIDENTIFIED MALE: The fire is out and relaxed.

MCINTYRE: And it is why the failures aboard the same nuclear carrier last May were so inexcusable and left the navy no choice but to sack the ship's commander and executive officer. "This fire was entirely preventable," concludes the Navy's investigation. The report cites numerous failures, everything from orders not followed and fire equipment shortages and notes the longstanding problems did not receive corrective attention from the carrier's top officers.

Investigators believe that the blaze was sparked by a carelessly discarded cigarette butt and fueled by 90 gallons of improperly stored refrigerant oil. For 12 hours the crew battled the inferno as it spread through seven decks of the super carrier, destroying more than 80 spaces and causing $70 million in damage.

It was the worst aircraft carrier fire since the Vietnam War when the deck of the USS Forestall erupted in flames. 132 men died in that disaster and in famously which fighter pilot John McCain narrowly escaped.

No one died in the George Washington fire but it took the crew eight hours to find the source, a delay investigators blame on weaknesses in damage control and fire fighting training.

This Navy photo shows the GW crew drilling eight months before the fire. Their performance should have been a red flag. Investigation evaluated the damage control team at the time as ineffective and rated the knowledge as weak.

(END VIDEOTAPE)

MCINTYRE: The commander of the pacific command is now saying that a complete overhaul may be in order.

BLITZER: Thanks very much, Jamie.

Let's check in with Lou. He's got a show in an hour. One thing I love about the U.S. military is when they blunder and they do a mistake they do a full after action review and try to learn from the mistakes. LOU DOBBS, CNN ANCHOR: Absolutely. Accountability that could be brought over to the private sector, and something that we are seeing none of in political life it seems in this country nor certainly in business life, and certainly on Wall Street.

BLITZER: All right. What have you got on tap? Are you going to be following up on the economy I assume in an hour?

DOBBS: Yes, we are going to be talking about the economy. We're also going to talking about these polls, the presidential polls as you know, Wolf, the Zogby poll is showing a race that is about ten points, and we are looking at the "Wall Street Journal"/NBC poll about 10 points, but on the other extreme of it, we are looking at one poll, the battleground poll showing two points and Associated Press poll showing a one-point spread.

In covering presidential politics, all of the folks I have talked with in polling, none of them have seen this at this late stage this kind of volatility and this kind of differentiation in spreads for these candidates. So we are going to be focusing on that and reporting on a race that someone said it's over, which certainly isn't at least by some measures.

BLITZER: All right, Lou. See you in an hour. Thank you.