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Obama's Red State Push; "Joe the Plumber" Tour; Can McCain Turn It Around?; North Carolina Ground Wars

Aired October 23, 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, Barack Obama takes the fight to John McCain on Republican turf -- why he's trying to run up the score in a red state.
An open air rally in Chicago and a smaller party at a swanky Phoenix hotel -- both candidates planning election night bashes, but only one will be a winner. Do their plans tell us anything?

I'll speak about that and more with CNN contributors Paul Begala and Alex Castellanos. They're standing by live.

And John McCain is on a "Joe the Plumber" tour across Florida. Conservative blogger and radio talk show host, Hugh Hewitt -- he's standing by live to talk about it.

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

Barack Obama is taking time out from his presidential campaign. He's flying to Hawaii at this hour to be with his ailing grandmother. But earlier today, Senator Obama kept up the pressure on Senator McCain by taking the fight to Republican territory -- Indiana.

CNN's senior political correspondent, Candy Crowley, is standing by. She's watching the story for us.

All right, explain why, at this late date, he's in what has always been a traditionally red state.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, pretty simply put here, Wolf, he thinks he's got a shot there.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): It is a telling measure of this campaign that 12 days before the election, the Democratic nominee is in one of the most Republican states in the country.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: How's it going Indiana?

(APPLAUSE)

CROWLEY: In this state that George Bush won by 21 points, Barack Obama trails John McCain by only 5. Win or lose, the fact that Obama showed up in the Hoosier State at this point speaks to a candidate with both time and money on his hands -- not to mention an issue that crosses state lines.

OBAMA: The Dow plummeted again yesterday, threatening job security and retirement security and economic security for millions of ordinary Americans. Indiana lost 4,500 manufacturing jobs in September alone.

CROWLEY: Even as he flies high in the national polls and most of the battleground polls, Obama lands in every state urging his crowds not to let up. And he doesn't, either. Today, he took issue with McCain for saying that every U.S. business should get a tax cut. McCain argues companies move overseas and take jobs with them because they get better tax rates.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: If they go to Ireland, they're only paying 11 percent. So where are they going to go where they can create wealth and create jobs? It's simple, fundamental economics.

CROWLEY: Obama calls that a Wall Street first plan.

OBAMA: But I say let's end tax cuts for companies that ship jobs overseas and give them to companies that are investing right here in Indiana, right here in the United States of America.

(END VIDEOTAPE)

CROWLEY: Indiana is Obama's last appearance until Saturday. He is off to Hawaii to visit his seriously ill grandmother, who helped raise him. Obama will return from Hawaii and appear in the Mountain States on Saturday and part of Sunday -- yet more territory that used to be pretty reliably Republican that now Obama is targeting -- Wolf.

BLITZER: Candy, we're going to talk about this and more later. Stand by for that. Candy Crowley doing our reporting.

John McCain, meanwhile, is crisscrossing Florida on what the campaign calls a "Joe the Plumber" tour. That particular Joe isn't actually with him, but lot of other average Joes are turning out.

Let's go to Ed Henry. He's covering the campaign for us. All right, the theme of this tour is, what, keep your wealth? Is that what they're saying -- Ed?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right, Wolf. It's a chance for John McCain to go after Barack Obama on his tax plan, as you just heard Candy report about, especially because it's really hard to craft a winning scenario for John McCain without capturing the 27 electoral votes here in Florida.

Florida particularly hard-hit by the economy, the foreclosure crisis, but also retirees watching their nest eggs disappear because of the gyrations on Wall Street. Hence the "Joe the Plumber" bus tour. As you mentioned, Joe is not here, but all kinds of other average Joes are here -- Tom the contractor, Tim the sports pub owner. The point is this is a metaphor for John McCain to now say I feel the middle class's pain and Barack Obama does not. (BEGIN VIDEO CLIP)

MCCAIN: And that's the problem with Senator Obama's approach on taxes. He's more concerned about using taxes to spread the wealth than creating a tax plan that creates jobs and grows our economy.

(APPLAUSE)

MCCAIN: The Obama tax increase would come at the worst possible time for America, and especially for small businesses, like the one that Joe and you dream of owning.

(END VIDEO CLIP)

HENRY: Now Barack Obama insists, though, that any average Joe who earns less than $250,000 a year will actually get a tax cut under his plan. He's also been firing back by saying that John McCain is really fighting for Joe the hedge fund manager. And that, obviously, could have some resonance, given these stories now about Sarah Palin having Republican officials spend about $150,000 on clothes for her and her family, shopping at places like Neiman Marcus, obviously not the kind of place where "Joe the Plumber" shops -- Wolf.

BLITZER: How much is that coming up, really? How worried are they about this $150,000 bill that the Republican National Committee paid for her to buy some of these designer outfits and to use them out on the campaign trail? Because that certainly goes contrary to her -- you know, the image that they were trying to project of her.

HENRY: That's right, Wolf. McCain aides insist, look, this is not a big deal, it's a distraction, it's one of many negative stories that have been put out there to go after Sarah Palin. And they insist it won't have legs.

But the fact of the matter is it does take them a bit off message. And when John McCain today was asked about it by some Florida reporters who came aboard the Straight Talk Express, he seemed to get a little testy about it. He got several questions about it. He finally said, look, it's not a big deal and she's going to give the clothes, at the end of this campaign, to charity. They're basically going to auction it or do something so that the money is raised for charity. But it's clear this is not something they want to talk about -- Wolf.

BLITZER: Is that -- was that on videotape? Do we have that videotape of that testy exchange?

HENRY: It was not. It was off camera. It was with local reporters here in Florida -- Wolf.

BLITZER: All right, Ed. Thanks very much. Ed Henry -- he's down in Florida. That surf looks great -- the Atlantic Ocean right behind him.

Senator McCain isn't the only one invoking "Joe the Plumber." Listen to how Senator Barack Obama is countering McCain's claims.

(BEGIN VIDEO CLIP)

OBAMA: I've got no problems with "Joe the Plumber." I think he's working hard. He wants to live out the American dream. All I want to do is give Joe a tax cut.

(APPLAUSE)

OBAMA: That's all I want to do. So let's be clear about who John McCain is fighting for. He's not fighting for "Joe the Plumber." He's fighting for Joe the hedge fund manager. He's fighting for Joe the CEO.

(END VIDEO CLIP)

BLITZER: Let's check in with Jack the journalist. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: You can probably find people that would argue with that definition.

(LAUGHTER)

CAFFERTY: My question, before we get to the question, is which genius in the Republican Party decided it would be a great idea to blow $150,000 on buying new clothes for Sarah Palin so she could participate in what amounts to about a 90-day campaign? I wonder how that guy is doing in the Republican organization these days.

BLITZER: Good question.

CAFFERTY: Yes. Early voting underway in more than 30 dates already. And according to some predictions, one third of the electorate may cast their votes before the polls even open November 4th. And that should -- should ease the burden on election day, as record turnouts are expected all across the country.

But not everybody is convinced that it's going to be enough to prevent possible problems. Questions are already surfacing about the accuracy of the vote in Florida, in West Virginia, there's that court battle going on in Ohio over voter registration fraud or alleged voter registration fraud. There are concerns that we still may not have overcome the voting problems that plagued both the 2000 and 2004 presidential elections.

A new CNN poll -- this is discouraging -- a new CNN poll shows only 58 percent of Americans are confident that votes will be accurately cast and counted this year. That is worse than the 72 percent who felt that way in 2004.

We're supposed to be the shining example of democracy for the rest of the world. We send people overseas to observe their elections to make sure they're honest and fair. Plus, we've been doing this for like 230 years.

So here's the question: What does it mean when the public's confidence in the integrity of our elections continues to decline? Go to CNN.com/caffertyfile. You can post a comment on my blog -- Wolf.

BLITZER: Jack. Jack the Journalist -- I'll repeat it. Thanks very much for that.

(LAUGHTER)

CAFFERTY: Why, thank you.

BLITZER: You're welcome. Twelve days until the presidential election -- can John McCain turn around this campaign? What does he need to do? I'll speak about it with the radio talk show host, Hugh Hewitt. He's standing by live right here in THE SITUATION ROOM.

Also, a closer look at Senator McCain's claim that he was tested by the Cuban missile crisis. We're checking the facts. What was going on then? Where was he exactly? Barbara Starr is at the Pentagon taking a look.

And could Barack Obama already benefiting from the Colin Powell endorsement? We'll talk about that and much more with Paul Begala and Alex Castellanos. They're standing by live.

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

(COMMERCIAL BREAK)

BLITZER: He's done it before, but this would certainly be the comeback of a lifetime. With less than two weeks left, can John McCain turn around this campaign and win the White House? Joining us now to talk about that and more, the conservative radio talk show host, Hugh Hewitt.

Hugh, thanks for coming in.

HUGH HEWITT, HOST, "HUGH HEWITT SHOW," SUPPORTS MCCAIN: Great to be back, Wolf. Thank you.

BLITZER: Can he still do it?

HEWITT: Oh, absolutely. Four polls in four days, Wolf. I know they're not covered much in the media, but if you look at the "Investor's Business Daily" poll today, the poll, it's down to 1 point. Yesterday, it was three point seven. On Tuesday, A.P. had it at two points. And on Monday, Battleground said it was one point. And the IBD poll, the TIPP poll, shows a 20 percent -- a 20 point swing among Roman Catholics to John McCain in just the last few days, meaning that there are a lot of people making their minds up. And I think this is why Barack Obama is worried about Pennsylvania, worried about the battleground states, where they have a large Roman Catholic population.

BLITZER: So as John McCain says, he shouldn't be measuring the drapes in the Oval Office yet. That's what I hear you saying. And that's probably good advice to the Democrats, because some of them, as you know, are becoming pretty confident right now when they look at these battleground states where they're campaigning and the numbers coming in these latest polls, whether in Florida or Ohio or Pennsylvania or elsewhere.

HEWITT: Well, I heard Candy talking about Barack Obama being in Indiana. I guess the counterpart to that is that John McCain was in Pennsylvania yesterday. Each candidate is going into the heartland of their opposite color states. And they're doing so because it's great electoral sense. John McCain is in Florida today. Of course, Barack Obama will stop by in some blue states before he's done.

It's very neck and neck in a lot of close states. And as we know from the Reagan-Carter election of 1980, Wolf, big swings can occur in the last week, much less the last 11 days.

And, by the way, I've got the best drinking game for alcoholics in America. It's whether or not Jack Cafferty will mention ACORN when he comes back to report on voter fraud in the United States. That's the secret of this election. A lot of people are worried that the fraud that's been going on on the Democratic side is endemic. It hadn't been reported. It ought to be condemned.

BLITZER: But, as you know, there are complaints on the other side, as well, about voter suppression among African-Americans and elsewhere. We can -- you know, there's charge and counter charge. There's a lot of problems, as we all know, with voter participation and these ballots. And we hope they get it straightened out on November 4th.

If you were going to give some advice to John McCain right now, in these final 12 days, what would say to him in order to try to win this election?

HEWITT: Well, the most important thing is to ignore the media, ignore likes your friends here at CNN and other networks that are trying to say that it's over before it's over. In fact, it's not over. It's very, very close. And I'd also urge him to focus some of the stories on what upsets a lot of people.

The big story of the afternoon, Wolf, is that a McCain campaign volunteer was assaulted in Pittsburgh -- had the letter B carved in her cheek. Yesterday, Norm Coleman's house in Minnesota was attacked. He was threatened. The FBI is investigating.

There's a lot of extraordinarily disturbed people out there. They're on both sides, but the big issue of the last two days has come from that side.

I think that John McCain has to speak to the judgment issue -- who do you want in the Oval Office when a crisis breaks out -- and to the 3,000 appointments that the president gets to make. Do you trust Barack Obama? Is he going to bring in people like Bill Ayers and Tony Rezko and Jeremiah Wright --

BLITZER: What --

HEWITT: -- or is he going to bring in John McCain...

BLITZER: I was going to say, Hugh, what are your listeners saying to you, if anything, about the $150,000 clothing bill that the RNC paid for, for Governor Palin?

HEWITT: Nothing. Yesterday, I spent two hours with Victor Davis Hanson, an eminent class assistant historian, talking about the state of the world. Yesterday, Wolf -- I don't know if you saw this story, front on the Web site for "Ha'aretz," the leading newspaper of Israel, and, as you know, a center left newspaper -- is that Iran is planning a preemptive strike on Israel. These are the Joe Biden's generated crisis issues. And they're worried about the world.

A lot of them are also worried about the Obama tax plan. Now, he promises not to hurt too many people, but Barack Obama also promised to take public financing. $600 million later, we know what we can think about Barack Obama's word. And so I think McCain is doing right to fix on "Joe the Plumber" and the idea people want their money back. They want the retirement accounts to grow. They're not going to grow with the confiscatory, spread the wealth tax policies of Barack Obama. So if he hits that for 12 days and he's got to hit the life issue again and again and again. And I'll tell you why. That Roman Catholic swing, Wolf, matters a great deal.

BLITZER: All right --

HEWITT: People know Barack Obama is the most radical abortion rights candidate in the history of American politics to run for the presidency and that matters in these swing states.

BLITZER: Hugh Hewitt doesn't think this is over, by any means. A lot of people agree with you. We'll see what happens over the next 12 days. We'll check back with you, Hugh. Thanks very much.

HEWITT: Thanks, Wolf. Always a pleasure.

BLITZER: Thank you.

The candidates' plans for election night -- what do they tell us, if anything, about the race, where it stands right now? Paul Begala and Alex Castellanos -- they're here to talk about that and more. They're standing by live.

The U.S. and the Soviet Union at the brink of a nuclear war back then -- what was John McCain's role in the Cuban missile crisis of 1962 and how did it test him? We're looking into this part of the story, as well.

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

(COMMERCIAL BREAK)

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

ZAIN VERJEE, CNN CORRESPONDENT: Hi, Wolf. New York Mayor Michael Bloomberg will be allowed to run for a third term. This afternoon, the New York City Council voted in favor ever of extending term limits. Bloomberg says he needs another four years in office to deal with the city's financial crisis. Earlier today, the council rejected an amendment that would have allowed the public to vote on whether or not to let two-term mayors run again.

The search continues for the parents of a 5-year-old Mexican girl found during a raid of an Arizona drop house. Agents call the case very unusual. Donellia (ph) doesn't know her last name. She can't name her mother, father or a grandmother who's missing after apparently illegally bringing the child across the border. Officials say that she was well cared for and they're working with the Mexican consulate to figure out who exactly she is.

And, Wolf, they say imitation is the sincerest form of flattery. But no word yet on how Democratic presidential candidate Barack Obama feels about this. Take a look at that marching in the streets over there -- a 13-foot tall puppet. This is in Cleveland. The puppeteer -- you can just barely make him out there under the giant legs -- has apparently become quite the attraction in the city.

What do you think -- Wolf?

BLITZER: I think it's pretty cool. That's pretty amazing that they can do it. Pretty good -- pretty good work for a puppeteer.

VERJEE: How about a 13-foot Wolf Blitzer like that on the streets of Washington?

BLITZER: No. No. But Zain would look great like that, though.

(LAUGHTER)

BLITZER: Stand by, Zain. We're going to get back to you.

VERJEE: Yes.

BLITZER: There's a full-fledged ground war underway in North Carolina. Both sides fighting right now for every single vote.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Hello.

UNIDENTIFIED FEMALE: I'm a volunteer calling on behalf of --

UNIDENTIFIED MALE: Mecklenburg County Republican Party.

UNIDENTIFIED FEMALE: We were wondering if John McCain can count on your vote.

UNIDENTIFIED FEMALE: You haven't decided.

(END VIDEO CLIP) BLITZER: We're on the ground in this key toss-up say the. Paul Begala and Alex Castellanos -- they're also here it talk about the race. They're standing by live.

Plus, his Vietnam record is certainly well-known. But John McCain says he was also tested in the Cuban missile crisis. We're taking a closer look at his role in the nuclear showdown.

Plus, tens of billions of dollars in bonuses handed out by some of the same Wall Street firms taking hundreds of billions from the federal government right now.

We'll explain what's going on right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, the Obama and McCain campaigns are fighting an all out battle for every single vote in North Carolina -- a toss-up state that hasn't gone to a Democrat since Jimmy Carter. We're watching the race with Paul Begala and Alex Castellanos and more. Stay with us for that.

John McCain and the Cuban missile crisis -- he says it tested him. So what was his role? We're at the Pentagon checking the facts.

Plus, failing Wall Street firms -- they're handing out billions of dollars in bonuses, even as they rake in cash from the federal government bailout.

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

Fifteen electoral votes at stake and the battle for the toss-up state of North Carolina is raging right now. Our latest CNN/"Time"/Opinion Research Corporation poll shows 51 percent of likely voters backing Barack Obama, 47 percent picking John McCain. But with a four point sampling error, that's a statistical tie. North Carolina very much up for grabs. And both sides are giving it their all.

Let's bring in our chief national correspondent, John King. He's joining us right now -- John, you've spent time there. You saw what was going on. So what is going on?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, I'm just back from North Carolina. It is a snapshot of what is happening all across the country. You go into Southern Ohio, you go into Indiana, where I just spent a few days, in North Carolina -- places where Republicans are used to winning, normally accustomed to winning quite comfortably. And, Wolf, heading into the final days, they are literally hearing footsteps.

(BEGIN VIDEOTAPE)

MARY BOYD, NORTH CAROLINA GOP VOLUNTEER: We're just trying to get the base out.

KING (voice-over): Mary Boyd is a Republican foot soldier in Charlotte, North Carolina, charged with finding and delivering every available vote.

BOYD: And the best way to do that is to take a list of registered Republican households and take a piece of literature and leave it right on their door so that they have easy access to the information.

KING: It is her third presidential campaign as precinct captain.

BOYD: Definitely going to this house.

KING: Twice she walked these streets for a ticket led by George W. Bush. This one is very different.

BOYD: Well, it's extremely close. I think John McCain is going to win North Carolina. I hope by a lot, but we'll take it any way we can get it.

KING: Extremely close in North Carolina.

UNIDENTIFIED FEMALE: Hello, I'm a volunteer calling on behalf of --

UNIDENTIFIED MALE: The Mecklenburg County Republican Party.

UNIDENTIFIED FEMALE: We were wondering if John McCain could count on your vote.

UNIDENTIFIED FEMALE: You haven't decided.

KING: And in these final days, when the ground war matters most, Republicans are, for the first time in memory, outnumbered.

UNIDENTIFIED FEMALE: And I'm with the Obama campaign. Do you know when you're going to go and vote and that early voting is going on now?

KING: Early voting runs through November 1st in North Carolina and is a major priority of the vast Obama ground operation -- 45 offices across the state. McCain has 30. And the huge paid Obama staff is complemented by volunteers like these students on break from college in Tennessee.

UNIDENTIFIED MALE: The purpose of you guys going out today isn't to convince anybody. It's just to make sure they know about early voting.

KING: So far so good from Camp Obama's perspective. Early voting in North Carolina is running more than two to one in favor of the Democrats -- this in a state last carried by a Democrat for president in 1976.

LEE TEAGUE, MECKLENBURG COUNTY NORTH CAROLINA GOP: There are days I feel like we're in the movie "Braveheart" and we're the Scots and they're the English.

KING: Mecklenburg County Republican Chairman Lee Teague says his troops aren't accustomed to being a battleground state.

TEAGUE: It's a lot more competitive. There's a lot more interest in the race. And yes, we haven't had the practice, if you will, that folks in Ohio or Florida have in really ginning up the turnout for the presidential election.

UNIDENTIFIED FEMALE: Thank you.

KING: Teague and his largely volunteer army know time is short, that they are outnumbered and outspent. Most of all, they know the stakes if their way of doing things doesn't stack up.

UNIDENTIFIED FEMALE: North Carolina for McCain!

(END VIDEOTAPE)

KING: And those boots on grounds matter. And there are more Obama boots than McCain boots, especially paid staffers, in most of the key battleground states. And, Wolf, as you well know, they're getting a lot of help from the air, too. We're using military terms here, but in the air war of this campaign, in North Carolina, three to one advantage Obama in TV ad spending. Numbers like that all across the big battleground states -- money and boots matter.

BLITZER: But the air war -- the airborne being the commercials on television and on the radio.

KING: Absolutely.

BLITZER: The ground war is actually getting out the vote.

You know, it wasn't that long ago -- and you and I remember Harvey Gantt. He was the former mayor of Charlotte, an African- American, running for the Senate against Jesse Helms in North Carolina. There were some really vicious ads that were coming out, you know, pointing out -- you know, black hands, white hands. And you remember those ads. Are we seeing anything along those lines in North Carolina right now, given the fact that there's an African-American running for president?

KING: You don't see the TV ads. There was an infamous Jesse Helms ad that had black -- white hands crumpling a job paper. There was a job thing -- the man lost his job and blamed it on a black man. You don't see that on the TV ads.

You do hear sometimes in a conversation. You know, Mel Watt is the congressman now from Charlotte area, the district that snakes through North Carolina. He is a congressman now. He was the manager of Harvey Gantt's campaign. Harvey Gantt was the former mayor of Charlotte.

He says he hopes racial attitudes have changed a lot. It's been 18 years since that race. For starters, you do have a larger, more energized African- American community. And the biggest difference Mel Watt and even the Republicans would tell us is you also have a higher number of African- Americans on the city council, in mayors' jobs across the state. So it is not as unusual to see a prominent African-American politics but it is one of the states people will watch to see if there's a racial impact.

BLITZER: Yes. That's an important factor down there and a lot of parts of the country as well. We'll watch it with you. John, thanks very much.

There will only be one winner but both candidates are already planning election night parties. Barack Obama will hold a mass rally in Chicago's Grant Park while John McCain will be at a fancy hotel in Phoenix.

Let's go to our CNN political contributors. The Democratic strategist Paul Begala and Republican strategist Alex Castellanos. Guys, thanks very much. What does that say, if anything, to you, Paul? Grant Park where there could be literally 100,000, 200,000 people who might show up for a victory rally as opposed to the Phoenix -- the Arizona Biltmore Hotel, a ballroom there where, obviously, there will be a much smaller crowd?

PAUL BEGALA, DEMOCRATIC STRATEGIST: Yes, well, I mean, I think it's the two parties. You know there's Barack out in the park with real people. That's kind of where Democrats are happiest.

Senator McCain will be with the people who have $150,000 clothing budget, I guess, like his running mate. I wonder if that's one of the Keating hotels that they'll be partying at.

Charles Keating, of course, the S&L swindler who built a lot of hotels in Arizona, John McCain was very close to intervene on his behalf with the bank regulars. The sort of Keating-McCain crowd will be at the fancy Biltmore, and I kind of like being with the Democrats kind of the hotdog eaters and sports fan...

BLITZER: I don't think it's...

BEGALA: ... out in Grant Park.

BLITZER: I don't think one of those hotels was the Arizona Biltmore.

BEGALA: Probably not that.

BLITZER: But what does it say to you, Alex, if anything?

ALEX CASTELLANOS, REPUBLICAN STRATEGIST: Well, I think that Obama is trying to leverage a victory if he's able to obtain one and he's ahead now. He's trying to leverage a victory into momentum that he can as you to create a mandate with which to govern and with which to pass an agenda. And it's smart politics on his part. Now one of the things he's also doing, though, is he's charging the press about $900 or so for a good camera position or riser so they can see his election night victory if that's what he obtains.

And, you know, I think the McCain folks would tell you that considering the good press he's gotten, about three to one good press, a Pew study says recently, that the -- actually campaign the Obama campaign ought to be paying the press, not the other way around.

BLITZER: You know the press always gets involved in these things.

You know the Colin Powell effect last Sunday -- he formally endorsed Barack Obama. And our new CNN Poll of polls just out today right now among likely voters, Paul, we have Obama at 50 percent, McCain 42 percent, unsure eight percent. Do you believe that there was a so-called Colin Powell bounce?

BEGALA: You know I'm not a believer in endorsements, frankly. I mean General Powell is a very respected man in this country but I'm not that big on endorsements in presidential campaigns.

This one, though, I think had this effect. It had -- for the McCain campaign -- an opportunity cost, right? First off it was counterintuitive so it was more news worthy. And gaining that news crowded out whatever it was that Senator McCain was trying to get across. So I do think, in this case, it's been pretty helpful.

I try to look to break out independents. I found, for example, a Zogby poll, it showed Obama up by 27 points this week among independents. Now, my guess is, I didn't -- they didn't ask General Powell in the poll but my guess is Secretary Powell, very well respected especially among independents. So maybe this one is -- the exception that violates my rule that I don't like endorsements.

BLITZER: Alex, what do you think?

CASTELLANOS: Well, I think McCain had his own endorsement this week that helped him and it was Joe the Plumber. I think we heard about that a little bit. So, Paul, that's where Republicans had the every man, regular guy endorsement.

BEGALA: There we go. Well, I'm Paul the Pundit, can I --

CASTELLANOS: But I'll say this. I think Obama has a lot of support. You know, the Democratic tide is going very strongly this year. But a lot of voters, independents especially, I think Paul was right, wanted to vote for Barack Obama but they've just wasn't a safe choice and Powell coming along, he didn't have to persuade.

He just had to permit and in advertising it's called permission to believe. So that makes change safe, and I think it did have a big effect on this race, especially coming late as it did.

BLITZER: Let me pick your brain on North Carolina, Alex, because I know you, you're from North Carolina. You just heard John King's report. Do you think that it's really possible that Barack Obama is going to carry North Carolina? It hasn't been carried by a Democratic candidate since Jimmy Carter.

CASTELLANOS: Barack Obama may not have been able to carry the old North Carolina but that's -- it's a different state today. You have the research triangle. You have a lot of new south. You have those growing suburbs around Cary and in the Charlotte area, as well. And those are voters who have been economic Republicans but culturally they've been left of center. A great deal of them. But now you have the economy, not only neutralized, but it's turned into a Democratic issue.

So what keeps those voters from going to the Democratic column this year? It's a tough year to be a Republican in North Carolina. And I think this -- you know Barack Obama's success there in the generic Democratic tide, that spells trouble in the Senate race there also for Elizabeth Dole. She's fighting hard but it's an uphill battle.

BLITZER: And interestingly, Paul, in the last hour we interviewed the libertarian third party presidential candidate, the former Republican congressman Bob Barr of Georgia. And he said don't be surprised -- these are his words -- don't be surprised if Barack Obama carries Georgia, despite these polls, he's from Georgia. What do you think? Is that realistic at all?

BEGALA: You know it's possible. It's possible. I've done -- I know Alex knows North Carolina well. I've done a lot of work in Georgia. I worked for Zell Miller back when he was running for governor and then -- you know, now, I guess, he's probably going to wind up being for Obama or the Democrats.

But that is a state that has been reliable. Bill Clinton carried it in '92 but then did not carry it in 1996. So reliable for the Republicans. And yet I've seen data from down there, research and polling, that suggests, you know, maybe Senator McCain is only up by like two to four points.

Saxby Chambliss, the incumbent Republican -- senator from Georgia, having a terrible fight in his hands. Getting Jim Martin, a Democrat, is basically in a dead heat with Saxby Chambliss who should have waltzed in. The analogue would be -- what if we were sitting here looking at Connecticut and Chris Dodd was in trouble? You'd say, Chris Dodd is like the perfect senator for Connecticut. You know? He's a progressive Democrat from the New England state. Saxby Chambliss is a conservative Republican in a southern state. He should win in a walk, and yet he's in a dead heat just like Senator Elizabeth Dole is in North Carolina.

BLITZER: Yes, but Elizabeth --

BEGALA: These are big problems for them.

BLITZER: Yes, but Elizabeth Dole is in trouble in North Carolina --

BEGALA: Yes.

BLITZER: -- and Saxby Chambliss it in trouble in Georgia. You know the Democrats are making inroads in those two traditionally Republican states. Hugh Hewitt, the conservative radio talk show host, Alex, he was just here in THE SITUATION ROOM. He said look, he's seen polls in the last couple of days where tightening and he would not be surprised at all if John McCain could still pull this out. He specifically cited Catholic voters and the issue of abortion as one factor that could turn things around in these final days if, he says, if Senator McCain were to focus in on those issues.

Is he being realistic, Hugh Hewitt?

CASTELLANOS: No. I wish he were. But you know, if the Republicans don't have the pro-life vote now, you know, that's not going to turn late in the race. No, I think the efforts should be in the middle of the spectrum -- the swing voters. We should have our base locked up as Republicans right now. That's not the -- I think if we're going back to kind of a regressive strategy at this late date, it's going to be a problem.

Look, a state like Georgia, a state like North Carolina, those are tossup states. Look at the early voting numbers. The -- three to one, two to one Democrat advantage over Republican in registration of the people who are voting early. That means a really close race is not necessarily going to be that close. So Republicans need to concentrate on the swing voters in the middle and get their -- get those votes out -- votes out.

BLITZER: Yes. I think he said, Hugh Hewitt, Paul, that there's been a 20-point swing among Catholic voters in favor of Senator McCain. I don't know -- I haven't seen those numbers but you look at these numbers a lot more closely than I do.

BEGALA: Yes, I -- I would like to no what Mr. Hewitt is drinking and where I could get a case of it. I think it sounds like happy juice and I would love to -- and buy them. If it -- no. He's not grounded in reality. I mean, look, he's a -- I'm sure he's a lovely guy. But you know radio talk show hosts, they run their mouths. Guys like Alex and I, we have to run campaigns and so we have to be in the reality based community.

I think Alex is right. Any campaign that at the end is focused on its base, and you heard that woman in John King's piece in North Carolina saying, I'm trying to get the base vote out. Well, any campaign that's focused on its base vote at the end is a campaign that's pretty likely to lose. If you look at what Senator Obama is doing, he's reaching out. You know put a Catholic on his ticket, for goodness sakes, Joe Biden, and he's reaching out to folks in the middle and I think he's been pretty effective on that.

BLITZER: Paul Begala, Alex Castellanos, guys, thanks very much.

BEGALA: Thanks a lot.

BLITZER: Good discussion. John McCain says if he becomes president, he's ready for any challenge from America's foes.

(BEGIN VIDEO CLIP)

MCCAIN: Look, I've been tested. Senator -- Biden referred to the Cuban missile crisis. I was there.

(END VIDEO CLIP)

BLITZER: We're going to take a closer look at Senator McCain's role in that Cold War showdown as a Navy pilot. Barbara Starr working the story at the Pentagon.

Plus, more outrage at Wall Street firms taking in billions in taxpayer money while giving out billions in bonuses.

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

(COMMERCIAL BREAK)

BLITZER: In my interview yesterday with Senator John McCain, I asked if he's elected president whether he thinks America's enemies would quickly move to test him during the first six months.

He replied that he's been tested, tested during the Cuban missile crisis, the theme he's been hammering on now for days.

So let's go to CNN's Pentagon correspondent Barbara Starr. She's looking at this. Barbara, the example that Senator McCain cites, the Cuban missile crisis, focuses -- focusing in on his role as a Navy pilot back in 1962.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, let's take a look at the facts. Was young John McCain's role in the long-ago Cuban missile crisis part of the making of a president?

(BEGIN VIDEOTAPE)

STARR (voice over): Even in the final days of the campaign, John McCain still arguing he's the one ready to be commander in chief in a crisis.

MCCAIN: Senator Biden referred to how Jack Kennedy was tested in the Cuban missile crisis. I had a little personal experience in that. I was a Navy pilot on board the USS Enterprise, and I was ready to go into combat at any minute.

I know how close we came to a nuclear war. And I am not -- will not be a president that needs to be tested. I have been tested. Senator Obama hasn't.

STARR: In 1962, U-2 spy plane reconnaissance photographs revealed Soviet missiles in Cuba. President Kennedy ordered a naval blockade. The USS Enterprise with young Navy pilot John McCain on board was sent in. In his book "Faith of my Fathers," McCain writes, "We were as excited as hell but we kept our composure." But how was McCain tested?

He could have been handed a list of Soviet targets in Cuba to bond but both sides backed off. There was no war. A McCain spokesman says, "Sitting in the cockpit of a combat aircraft on the frontline of the superpower standoff when the world came closest to thermonuclear war was a much greater test of strength than running a voter registration drive with ACORN in campaign."

Several former and currently serving Navy officers CNN spoke with say being a pilot is a great test of personal courage and leadership, but as one said, nothing prepares you for being president of the United States.

LAWRENCE KORB, CENTER FOR AMERICAN PROGRESS: As a young pilot, he was not in a decision-making role. His job was to carry out the directions that he got from his superiors.

(END VIDEOTAPE)

STARR: Now, back in 1944, Wolf, young lieutenant J.G. George Bush was on an aircraft carrier in the South Pacific during World War II. His plane was shot down by Japanese fire. And years later, President Bush continued to say that experience did shape his decision-making throughout his career -- Wolf.

BLITZER: And certainly there was an example of a President Kennedy in World War II, PT 109, a patrol boat that he was on that, obviously, shaped his political career, as well and his presidency. There's no doubt about that. Thanks very much for that, Barbara Starr, reporting.

The U.S. military today gave Iraq's government security control over a bubble province and a former hot bed of violence known as the "Triangle of Death." But disagreements over a new status of forces agreement could soon force the U.S. to turn over all security activity to Iraq.

Our State Department correspondent Zain Verjee has been looking at this part of the story. Could cause some immediate problems for the next president whoever that might be.

VERJEE: Yes, exactly, Wolf. It really could. The U.S. and Iraq, essentially, are on a collision course with both playing a high stakes game of chicken.

The outcome is going to affect the next president.

(BEGIN VIDEOTAPE)

VERJEE (voice over): Like these effigies of President Bush and his secretary of state in Baghdad, the agreement between the U.S. and Iraq on the future of American forces could go up in flames. Secretary Rice has lobbied hard but Iraqi leaders won't sign a draft deal. The U.S. is getting tough. ROBERT WOOD, U.S. STATE DEPARTMENT SPOKESMAN: We're running out of time and that's why we said the door is closing.

GEOFF MORRELL, PENTAGON PRESS SECRETARY: This is a deal that is the product of seven months of intense negotiations.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: It'd be a very high bar to see any changes to the agreement.

VERJEE: Among the controversial parts of the deal, jurisdiction over U.S. troops and U.S. troop withdrawal.

This Iraq crisis could slip into the post-election transition or fall into the lap of the next president.

The U.S. ambassador to Iraq warns, without an extension, U.S. troops would withdraw immediately to bases. "No security operations, no logistics no, training, no support for Iraqis on the borders, no nothing." And no protection for high-ranking Iraqi officials like Prime Minister Nouri al-Maliki. Militant forces beaten back in Iraq could reemerge.

(END VIDEOTAPE)

VERJEE: To further complicate the standoff, the leader of Iran is criticizing the deal. President Mahmoud Ahmadinejad says the U.S. just wants to weaken Iraq. Secretary Rice really pushed back today saying, 'I think the Iraqis can defend their interests without the Iranians. Thank you very much."

BLITZER: So what options, Zain, does the United States have right now?

VERJEE: Well, they're running out of options especially as the clock is ticking. One of them is to go back to the United Nations and get a legal mandate to have those troops in Iraq. And that expires on the 31st of December. If that fails, then the U.S. may just be forced to make concessions to the Iraqis that, right now, they don't want to make.

BLITZER: I know, a lot of sensitive issues in that draft agreement, as well, including jurisdiction of those U.S. troops who will remain in Iraq and defense contractors, as well. Zain, thanks very much.

Taking a billion of dollars with one hand and giving them out with the other.

(BEGIN VIDEO CLIP)

REP. DENNIS KUCINICH (D), OHIO: The banks and these other firms feel that they can just take this money and distribute it for bonuses? Are you kidding me? I mean this -- this goes beyond unfair. This is now...

(END VIDEO CLIP) BLITZER: All right. There's new outrage over what Wall Street's giants may be doing with your tax dollars.

And love, devotion and community spirit helped a badly wounded vet and his wife start a new life in their own home. Our own Anderson Cooper with a story you will want to see.

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

(COMMERCIAL BREAK)

BLITZER: Let's go back to Jack. He's got "The Cafferty File" -- Jack?

CAFFERTY: Wolf, the question this hour is: What does it mean when the public's confidence in the integrity of our elections continues to decline?

We get this from C in Bellham, New Mexico: "It means that some things never change. I remember my grandfather is talking about questionable goings-on at the polls during the '20s, '30s and '40s. Newspaper stories about the same issues in the '50s and '60s and my own questions in the '70s, '80s and '90s. As long as some official can gain something from shifting ballots or counts that will affect an election, they will do so."

Debbie in Florida writes: "In our age of technology, with online banking and the Internet, why can't we get one of the basic rights of American citizens' right?"

Felicia -- Savannah, Georgia: "It means the price of liberty is continued vigilance as Thomas Jefferson stated. Other countries should be aware that democracy is a lifelong battle."

Rick in Florida writes: "It says to me the outcome means less and less and is not indicative of the desire of the total population. In this age of technology to have this primitive method of voting is ridiculous. Standing in line for hours on a workday, a Tuesday, no less, then having to hope the archaic contraption accurately records your vote. Stop the insanity."

Dave in Missouri: "It means they are probably too stupid to vote. If you they think this voting system is bad, go to Middle East or almost anywhere else in the world. People just like to complain. Get up elections Tuesday, go to the polls, follow the directions and everything will be just fine."

Al in Canada, writes: "America has always sent observers abroad to oversee election procedures there, make sure they run fairly. Who's going to come to do the same thing in America?"

And M.D. in Cedar Rapids, Iowa: "I wouldn't be surprised if the voting machines in my district register a third term for George Bush."

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

BLITZER: Jack, thank you for that. Jack Cafferty with "The Cafferty File."

Young veterans back from war, facing challenges few of us can imagine. Our own Anderson Cooper, he's got the stories. Stayed tuned for that.

Plus former President Bush's press secretary making an endorsement. Who does Scott McClellan want to replace his old boss?

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

(COMMERCIAL BREAK)

BLITZER: Love, devotion and community spirit, help an Iraq war vet deal with a devastating wound. CNN's Anderson Cooper has the inspiring story of a young couple and the hundreds who gathered to help them.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN ANCHOR (voice over): Matt and Tracy Keil is a story of love interrupted by war.

Home from his first tour of duty in Iraq, Matt met Tracy through a friend. It was, he says, love at first sight. Their wedding came during his second tour in Iraq.

TRACY KEIL, WIFE OF VETERAN: The main reason we got married is because, what if something happened.

COOPER: Something did happen just six weeks later. Fighting in Ramadi, Matt was shot by a sniper.

MATT KEIL, DISABLED VETERAN: I jumped up on the tallest part of the roof, (INAUDIBLE), I go to the stairwell, and that's when I got shot in the right side of the neck. It hit me like a ton of bricks.

T. KEIL: They told us that he had a Christopher Reeve-type injury and I just collapsed.

COOPER: He was paralyzed from the neck down.

M. KEIL: Realizing that my wife is going to be helping me eat, you know, cleaning me up, you know, doing things like that, you know, it was kind of devastating.

COOPER: Devastating, but slowly things did start to look up. Matt regained some use of his left arm and in August 2007 while undergoing treatment Matt heard about Homes for Our Troops, a nonprofit organization that builds specially adapted houses for disabled veterans.

John Gonsalves started Homes for Our Troops frustrated that not enough was being done for our veterans. JOHN GONSALVES, HOMES FOR OUR TROOPS: Our sons and daughters, mothers and fathers are all in faraway places, putting their lives on the line and getting injured and many of them dying for us, and we're not doing anything. I mean we have to do something.

COOPER (on camera): So now you're volunteering for those who volunteered for us?

GONSALVES: That's -- that's it.

COOPER (voice over): John got hundreds of volunteers to help build Matt and Tracy's home for free.

GONSALVES: It is the certificate of occupancy.

COOPER: We were there when it was presented to them.

GONSALVES: Your fingerprints are throughout our entire home now. You'll always be a part of our family no matter what. And we love you. Thank you very much.

(END VIDEOTAPE)

BLITZER: And Anderson is joining us now from Times Square in New York.

That organization, Anderson, Homes for Our Troops, they're really doing remarkable work. And I'm glad you're bringing this to the attention of our viewers out there, but talk a little bit about what is going on.

COOPER: Well, we're sponsoring, tonight, with along with MTV, a special in support of our troops in Iraq and in Afghanistan. Those currently serving and those who have returned already.

It's amazing statistic, 3 out of 4 young people in America knows somebody who has served in either Iraq or in Afghanistan, so this is something that really, obviously, hits home to people all across the United States.

And tonight, there are a lot of bands going to be performing. It's going to be a special on MTV tomorrow night at 8:00 p.m. and a special on CNN on Saturday and Sunday at 8:00 p.m. as well.

We're going to have a lot of the news reports about issues that vets are facing. Also a lot of musical acts, 50 Cent, Ludacris, and others.

BLITZER: Anderson, we'll be watching. Thanks again for doing this important work.

And let me remind our viewers, tomorrow night, Anderson Cooper will help MTV shine a light on this issue facing young veterans. Artists and celebrities from Kidd Rock and Beyonce will join forces for "A Night for Vets." You can watch "An MTV Concert for the Brave" this Friday night at 8:00 p.m. Eastern on MTV. Plus this weekend, as Anderson just mentioned, you can flip to CNN for stories that only today's young vets can tell. Watch Anderson Cooper's "360" special, "Back from the Battle," Saturday and Sunday night 8:00 p.m. Eastern right here on CNN.

And to our viewers you're in THE SITUATION ROOM.