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Debbie Wasserman Schultz Interview; Santorum Surging to Finish Line; Romney's Big Guns in Iowa; Dems Use Laid-Off Worker Against Romney; Ron And Rand Paul In Iowa; Mitt Romney Speaks to Iowa Voters; Attack Ads Continue to Slam Newt Gingrich

Aired January 2, 2012 - 17:00   ET


WOLF BLITZER, HOST, CNN'S THE SITUATION ROOM: And you're in THE SITUATION ROOM, happening now, late attacks on the eve of the Iowa caucuses. Ron Paul takes aim at rising star Rick Santorum with a very tough word, at least in the minds of so many Republicans. Stand by for Ron Paul's interview with CNN.

Plus, Democrats go after Mitt Romney with the help of a worker who got laid off when Romney was his boss. This hour, Romney's credentials as CEO under fire. I will talk about that and more with the Democratic National Chairwoman, Debbie Wasserman Schultz.

And Iran tests missiles and fires back at the threat of new sanctions against its oil industry. Tensions exploding in the Strait of Hormuz.

We want to welcome our viewers in the States and around the world. Breaking news, political headlines and Jeanne Moos all straight ahead.

I'm Wolf Blitzer.


Right now, every second counts for the Republican presidential candidates in the final countdown to the Iowa caucuses tomorrow night.

Here in the CNN Election Center, we're following the last full day of frenzied campaigning across the state, especially for the Iowa frontrunners, Mitt Romney, Ron Paul and Rick Santorum. All three have rallies in Iowa this hour. We expect to hear from the top Republican contenders live.

Also unfolding, Rick Santorum -- he has five scheduled campaign rallies across Iowa today, including an event in Newton this hour. Santorum's campaign says his surge to third place in the polls in recent days is unleashing a sudden spurt in his fundraising. The new "it" candidate, as they're calling him, also drawing a lot of new criticism from his opponents.

Listen to Santorum fire back at Mitt Romney's attempt to portray him as a Washington insider. He never mentions Romney by name, only by his experience as CEO. (BEGIN VIDEO CLIP)

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: CEO is a sign of people who work for them. I can tell you, as a senator, I did not work for the president. And Congress doesn't work for the president. The American people don't work for the president. It's the other way around.


BLITZER: let's go to CNN's Jim Acosta.

He's on the ground in Boone, Iowa, where Santorum was campaigning just a short while ago.

What's the latest on that front -- Jim?

JIM ACOSTA, CNN CORRESPONDENT: Wolf, he's good poll numbers. His fundraising is taking off. And the world media is following his every step. Now the trick for Rick Santorum is to translate that momentum into something meaningful.


UNIDENTIFIED MALE: Make room. Make room.

ACOSTA (voice-over): Welcome to Rick Santorum's moment.




UNIDENTIFIED FEMALE: We're happy to see you.

ACOSTA: Just one day to go before the Iowa caucuses, the surging GOP contender noted the crush of cameras following his every move wasn't even there a week ago. That might explain why Iowans have their doubts whether any of this is real.

UNIDENTIFIED MALE: I'm one of those people here in Iowa that's sitting right on the edge trying to make up my mind.

SANTORUM: Come on over.

Come on.


ACOSTA: Santorum's message -- it's real, all right.

SANTORUM: We've raised more money in the last few days than we have the last few months. And, you know, going from -- from zero to 60 in the polls, if you will, will help -- help those resources a lot.

ACOSTA: Now when GOP frontrunner, Mitt Romney, punches...

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I, like Speaker Gingrich, Senator Schumer has -- has spent his career in the government in -- in Washington.

ACOSTA: -- Santorum punches back.

SANTORUM: We are not looking for a chief executive officer for this country. We're looking for a commander-in-chief.

UNIDENTIFIED MALE: He is a fine man and he'll do a fine job for Pennsylvania.

ACOSTA: But Santorum has some convincing to do. Republicans remember how he lost his Senate seat five years ago by an astounding 18 points.

UNIDENTIFIED MALE: What do you say to those voters who are concerned about that loss you had 2006 and whether you're viable in a general election?

SANTORUM: I lost an election in the worst election year for Republicans in the history of our state.

ACOSTA: A key factor in Santorum's loss was his controversial vote to have the courts intervene in the case of Terri Schiavo, a woman in a vegetative state whose family was at war over whether to remove her feeding tube.

Santorum has no regrets.

SANTORUM: What I -- what I cared about with Terri Schiavo was to make sure that -- that a -- that a judge looked fairly at the case. They did. And they made their decision.


UNIDENTIFIED MALE: Who has the best chance to beat Obama?

Rick Santorum.


ACOSTA: And Santorum is only now running a real ad campaign. His best chance to get on the air in Iowa is to tow the international press behind him.

(on camera): Just to show you how chaotic this is, we're having to go between this very tight space between two buildings just to catch up with Senator Santorum. He is bobbing and weaving his way to the finish line.

(voice-over): While Santorum's rivals have busses, he doesn't. This Santorum bus belongs to Jim Bob Duggar, a prominent backer of Mike Huckabee, who won the caucuses in '08. Duggar is now urging Evangelical voters to back Santorum. JIM BOB DUGGAR, SANTORUM SUPPORTER: He has a pretty good track record. He's a Christian conservative that has just always stood for what's right.

SANTORUM: The Chuck truck.

ACOSTA: Santorum doesn't ride in the Duggar bus. He does his campaigning in a pickup truck, a better fit for Santorum's down to earth pitch.


ACOSTA: Another sign of Santorum's strength, he is now the subject of negative robo-calls. Santorum said this afternoon that those calls falsely accuse him of being against the Second Amendment. And he accused the Ron Paul campaign of being behind those calls -- and, Wolf, I checked in with the Paul campaign. They're not denying that they're behind those calls -- Wolf.

BLITZER: I assume he appreciates the fact that, just as Newt Gingrich was slammed by a lot of these negative attack ads, as he moves up, he's about to face similar treatment.

ACOSTA: That's right, Wolf. But the advantage that Rick Santorum has versus Newt Gingrich is that Santorum's surge happened right at the last minute. So if that onslaught of negative stuff comes in, it may not have enough time to stick, as opposed to what happened to Newt Gingrich. He knows it -- it stuck and it stuck for a long time.

BLITZER: Yes, but wait until...

ACOSTA: It did a lot of damage.

BLITZER: -- wait until New Hampshire and South Carolina and Florida. There's still plenty of time on those contests.

ACOSTA: That's right.

BLITZER: Jim Acosta, thanks very much.

Mitt Romney has four scheduled campaign stops today, including a rally in Marion, Iowa this hour. He heads into the caucuses tomorrow night with a narrow lead in the final Iowa polls. It's still a very tough fight for the GOP nomination, but Romney is saving his attacks on the trail today for the man he hopes to challenge in November.


ROMNEY: This president's failed. He went on the -- the "Today Show" shortly after being inaugurated. And he said, "If I can't get this economy turned around in three years, I'll be looking at a one term proposition."

I'm here to collect. We're going to take it back. We're taking it back. (APPLAUSE)


BLITZER: Romney also played it for laughs. He reminded supporters in Dubuque about a mishap his wife, Ann, had in that city when he was campaigning for president fours year ago.


ROMNEY: But the one person I did introduce is a person who has a special -- a special relationship with Dubuque. As you may recall, this has been a source of lots of good humor for our family, because we were on a stage just like this one four years ago, I standing here, she standing there and suddenly, her half of the stage collapsed, in Dubuque, at the Best Western Hotel. And she went down to the ground, landed on her back side.

And I said, "How are you honey?"

A little later she said, "Well, I fell on da butt in Dubuque."




BLITZER: Let's go to our chief political correspondent, Candy Crowley.

She's watching what's going on on the ground in Des Moines.

You'll be at Romney's headquarters for our election coverage tomorrow night, Candy.

How is Romney trying to seal the deal in these, the final hours before the caucuses?

CANDY CROWLEY, HOST, STATE OF THE UNION: You know, Wolf, even though Mitt Romney has probably spent less time here than anybody else, I think as of a couple of days ago, he couldn't even make up to three weeks in this entire election cycle here in Iowa. So he has been here less than three weeks, while you have candidates like Santorum, who have been here for more than a hundred days, on down the line, Ron Paul, somewhere in the 70s.

So this was not where he put a lot of human time, at least by comparison of himself. But he had, you know, he ran four years ago. He used that skeleton, that kind of template that he already had in place.

And so there's been this quiet sort of campaign. I mean he has people that have been talking him up. And he hasn't so much come in to seal the deal as sort of to try to come in for the kill.

Would they love to take the first place out of here?

They really would. But at this point in the Romney campaign, they -- they don't see Rick Santorum as being able to go for the long haul. So if they lost to Rick Santorum, to them, that would be OK, because they think that still fuels Mitt Romney going to New Hampshire, where, as you know, Wolf, he has a very huge lead.

So they -- they would -- they would love to put this away and begin to end it here in the Iowa caucuses. But they're aware, as everyone else is, that Rick Santorum has lots of momentum going into this final day.

BLITZER: Yes. He is surging. There's no doubt about that -- Candy, Wednesday morning is a brand new ball game.

Where will the Iowa winners go from Iowa?

CROWLEY: Well, if it -- Mitt -- Mitt Romney is going back to New Hampshire no matter what. That's where he is looking very good. I mean he enjoys a double digit lead there.

If Rick Santorum does very well, as he is expected to do, he also has to go play in New Hampshire, even though the best place for a -- a Christian conservative, someone that can get a lot of support from Christian conservatives, the best place for them to go is South Carolina, which is right after New Hampshire.

That's where we're going to see Michelle Bachmann and Rick Perry go, is straight to South Carolina, because there's such a commanding lead for Mitt Romney in New Hampshire, that while they will go back for the debates, they're going to spend a lot of their time trying to build that firewall against sort of the Mitt Romney train, if they -- it goes as expected or as the polls now show, Mitt Romney could handily win New Hampshire.

If he won here or did something that was interpreted as a win, he's going to be pretty hard to stop. And South Carolina is going to be the place to do it. And the type of candidate that appeals down there is much the same as here, and that is, the conservative Evangelical wing of the party.

So that's why Perry and Bachmann are headed there, although they, too, will come back for debates.

BLITZER: Good point.

Thanks very much, Candy.

Let's give our viewers a little flavor of what's going on on the campaign trail right now, about 24 hours before voting in Iowa begins.

Ron Paul is in Cedar Falls.

Let's listen in briefly to get a little flavor of what he's saying. REP. RON PAUL (R), TEXAS: -- bank is that thing that we have in Washington called a Federal Reserve. I believe that we really need to reign in the Federal Reserve. We need to audit the Federal Reserve and we need to get control of the Federal Reserve.


BLITZER: All right. Well, we just lost our connection. But you get the point. But -- but, obviously, Ron Paul speaking about a major issue for him. He hates -- hates the Federal Reserve in Washington.

We're also waiting to hear from Mitt Romney. He's going to be speaking this hour, as well. We'll dip in, hear what he has to say in Marion, Iowa. You can see that a large crowd has gathered there.

Romney is focusing, though, right now, on the president. And the Obama campaign is targeting him and his credentials as a business executive. The Democrats are trotting out a new ally against Romney, a worker who actually got laid off on his watch.

Lisa Sylvester is looking into that for us -- Lisa.


Well, Romney is the wealthiest candidate among the GOP field. And Democrats are focusing now on how he made his money as CEO of Bain Capital. The firm has made hundreds of millions of dollars. But critics are lashing out at Romney, saying those profits came with a price.


SYLVESTER (voice-over): Mitt Romney, co-founder and former CEO of Bain Capital. The investment firm specializes in taking floundering businesses, reorganizing and turning them around. The company has done very well and has made Romney a very wealthy man.

The GOP frontrunner is now marketing his business experience and acumen on the campaign trail as the guy to turn around the U.S. economy.

ROMNEY: You see, when it comes to jobs in the private sector, I think it helps to have had one if you plan on creating some.

SYLVESTER: But Democratic critics say under Romney's watch at Bain Capital, thousands of Americans were laid off, including Randi Johnson. He worked at a company called American Pad & Paper, but lost his job after Bain Capital bought the company in 1992.

RANDY JOHNSON, FORMER FACTORY WORKER: I really feel he didn't care about the workers then. I mean, go back and look at some of the philosophies. Look at the pattern. Everything was probably done very legal, done the right way, but it was all about profit over people.

SYLVESTER: Johnson's news conference in Des Moines, Iowa was sponsored by the Democratic National Committee. The DNC is also hammering away at Romney in political ads.


ROMNEY: But corporations are people, my friend.


SYLVESTER: An indicator Democrats see Romney as the man to beat.

Romney responds this way -- "That's capitalism." Romney insists Bain Capital has ultimately been a job creator.

ROMNEY: What I offer to America is the fact that when I was head of that enterprise that invested in over a hundred companies, that if you take those places where we were able to add jobs and subtract those that lost jobs, we added over 100,000 -- 100,000 jobs.

SYLVESTER: But because Bain Capital is a private company that doesn't have to disclose details of its acquisitions, it's difficult to verify his claims or claims of the Democrats.

Politically, though, it's the DNC's message which may resonate with middle class voters.


Elections are won or lost in this country by the candidate who connects with the moderates and the middle class. And the middle class is really the ultimate swing vote in this situation. So the -- part of the strategy of the DNC will be to paint Mitt Romney as the candidate of the 1 percent personified.


SYLVESTER: The Romney camp is hitting back. A spokeswoman for Romney's campaign saying, quote, "President Obama and his cronies know that if they have to face Mitt Romney in the general election, they are going to lose, which is why they continue their kill Romney strategy."

Well, the fight is certainly on between the two sides. The DNC, in turn, has opened up a war room in Des Moines, calling it their home base for rapid responses -- Wolf.

BLITZER: Thanks very much, Lisa Sylvester.

You heard how the Democrats are going after Mitt Romney. I'll talk to the party's chairwoman, Debbie Wasserman Schultz, about the DNC's Romney obsession.

And Rick Santorum's conservative record under fire -- will a surprising new dig by Ron Paul stop Santorum from surging past him tomorrow night?

We have a new interview with Ron and Rand Paul, both of them, father and son. That's coming up this hour.


BLITZER: A new prediction from Newt Gingrich. He says he doesn't think he's going to win the Iowa caucuses tomorrow night, but he is promising to stay in the Republican race any way. Gingrich's fortunes have turned under withering attacks by his Republican opponents. In Iowa today, Gingrich went negative himself with stinging comments about President Obama.


NEWT GINGRICH, (R) PRESIDENTIAL CANDIDATE: I watch Obama and the Congress today, and I just think, I mean, this is like second graders. It is so childish and for the president's staff to announce he's now going to govern without Congress, well, that means he's not going to govern.

He's going to be a candidate for entire year. He shouldn't take a salary. He shouldn't pretend he's president. He's just a candidate, because he's not doing the job of the president.


BLITZER: Strong words from Newt Gingrich. Let's discuss. Joining us from Davie, Florida, the chairwoman of the Democratic National committee, the Democratic congresswoman, Debbie Wasserman Schultz. So, what do you want to say to Newt Gingrich about what he just said? He really blasted president for trying, supposedly, to skirt Congress in this coming year, this current year.

REP. DEBBIE WASSERMAN SCHULTZ, CHAIRWOMAN, DEMOCRATIC NATIONAL COMITTEE: Well, not really surprising. What President Obama has been doing is making sure that we can continue the fight to lift up the middle class and working families. He has a, you know, Republican House who refuses to even sit down and work through the appropriate balance between cutting the deficit and making sure that we have an appropriate amount of spending and make sure that we don't devastate the middle class in the process.

We've got Republicans in the Senate who have declared through their leader that their number one priority is defeating him. So, essentially, the Republicans in Congress are in full blown campaign mode.

President Obama is busy being president, and he has executive authorities to make sure that we can do things like stand up for the folks who are losing their houses, which Mitt Romney, for example, has said, don't matter, and we should just let the housing and foreclosure crisis hit rock bottom.

I mean, we're looking at a field of presidential candidates, Wolf, that really have stood up for the wealthiest and most fortunate Americans, while President Obama, since day one, has been in there swinging for the middle class. That's the contrast you have in this election.

BLITZER: Let's talk politics for a moment. It is a political season. The DNC has put out some ads really slamming Mitt Romney. He's the only Republican candidate you've really been going after in these ads. Is that right?

WASSERMAN SCHULTZ: Well he spent -- no, no, we've actually mentioned several other candidates, Newt Gingrich, at one point, but Mitt Romney --

BLITZER: In formal commercials that you pay for?

WASSERMAN SCHULTZ: No. The Mitt Romney has earned the focus because he has essentially relentlessly been attacking President Obama, lying about his record --

BLITZER: All of them have been doing that.

WASSERMAN SCHULTZ: Mitt Romney in particular. And he's, you know, he's near the top and near or at the top of the pack in spite of the fact that there is, clearly, and anybody but Romney campaign going on in the Republican primary. I mean, there's obviously so much angst. You have a flavor of the month in this primary every single week.

Santorum is now the new one, and that's because with Romney, there is no there, there. I mean, this is a person who has no conviction, who is willing it say anything to get elected, and when you're asking the American people to select you as president of the United States, the minimum that they expect is that you stand for something.

Not that you stand for anything that you need stand for at the time to earn the voters support. And people need to know that. People need to know that Mitt Romney won't release his tax returns. They need to know that he was pro-choice and supported Roe versus Wade, and now, he says he's pro life.

They need to know that he, at one point, said he didn't support the payroll tax, and then, he said he did and then he said he didn't again.

BLITZER: He's the one who scares you the most out of all these Republicans, let's be honest, right?

WASSERMAN SCHULTZ: No. It's not about being scared. We have been gearing up and focusing while the Republicans have been duking it out in their primary, and essentially, in a circular firing squad. We have been laser focused on gearing up for the most grassroots presidential campaign that has ever been waged.

In Iowa alone, we've made 350,000 phone calls. We've had 4,000 one-on-one meetings. We've had 1,200 house parties and meetings. We have eight offices open statewide. We have offices in all of the battle ground states now. So, while they are out there trying to be as extreme as possible and embrace the Tea Party on the Republican side, President Obama is busy being president.

And at the DNC and the Obama campaign, we're getting ready to run the most significant grassroots campaign in presidential history.

BLITZER: Very quickly because we're almost out of time, and I know you got to run as well.


BLITZER: What if Romney gets the nomination, these are two what- ifs, Romney gets the nomination and he picks Florida senator, Marco Rubio, as his running mate, Romney-Rubio in Florida. He's pretty popular, Rubio, in your state, isn't he?

WASSERMAN SCHULTZ: If there was a ticket like that, it would be, particularly, the most extreme ticket in history when it comes to immigration. That would be a ticket that has -- Mitt Romney who has said that he would he veto the Dream Act if Congress centered (ph) him, even a Republican Congress.

Marco Rubio who shuns comprehensive immigration reform, shuns his own roots, and ignores the fact that the overwhelming majority of Hispanics in our state are supportive of immigration reform. They don't support payroll tax and other cuts for the middle class and working families.

You know what, if we have to go up against a ticket like that, Floridians would embrace President Obama like they did in 2008.

BLITZER: Debbie Wasserman Schultz is not only a congresswoman from South Florida, she's also a chair of the DNC. Congresswoman, thanks very much for coming in.

WASSERMAN SCHULTZ: Thanks, Wolf. Take care.

BLITZER: Ron Paul brings in his son, Rand, a Tea Party favorite. We're going to tell you who they're going after as they make a final push in Iowa.

And Newt Gingrich says he's been ambushed by Mitt Romney. Has too much damage been done for him to recover?


BLITZER: With only one day left until the first presidential votes of the year, Ron Paul is on whistle stop tour right now across the state. He has an appearance in Cedar Falls this hour. Along for the ride, his son, Senator Rand Paul of Kentucky. He's predicting his dad will surge past Mitt Romney and beat back Rick Santorum and win Iowa tomorrow night.


SEN. RAND PAUL, (R) KENTUCKY: There is only one candidate who the soldiers trust, one candidate -- one candidate who has received more contributions from active duty soldiers than all of the other candidates combined. That candidate is my father. Please welcome, Ron Paul.



BLITZER: Our senior Congressional correspondent, Dana Bash, caught up with both Ron and Rand Paul out on the campaign trail in Iowa earlier today. Dana is joining us now from Cedar Falls. Dana, how did that go?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Very interesting to see both of them out on the stump and what is even more interesting, Wolf, is what I'm finding at these events that Ron and Rand Paul are having, which is the crowds, really, are different, I'm sure from every other Republican candidate, and that I am meeting independents.

I'm meeting some democrats who said that they came out just to listen to Ron Paul and see if, perhaps, if they would go to a Republican caucus and decide to vote for him. And, this is something that Ron Paul, certainly, is getting some new energy on, an urgent energy, with just 24 hours left.


BASH (voice-over): With time running out, Ron Paul's professorial meandering style on the stump morph into a focused candidate in campaign mode.

REP. RON PAUL, (R) PRESIDENTIAL CANDIDATE: There's one issue that ha made America great and the issue that you can answer all your questions on is individual liberty. That is the issue.


BASH: His son, Rand, a Tea Party favorite, warmed the crowds and raised expectations.

RAND PAUL: There's energy, and it's overflowing and it's big, and it's coming tomorrow. We're going to win --

BASH: But Rick Santorum's sudden surge could threaten that. In a father and son interview right before their first event, the candidate called Santorum a staunch conservative, the "L" word.

(on-camera) Why wouldn't he be a good Republican nominee?

RON PAUL: Because he's very liberal.

BASH: Rick Santorum is liberal?

RON PAUL: Have you looked at his record? Go and look at his record.

BASH: What makes him liberal? RON PAUL: I mean, he spends too much money. I mean, he wasn't leading the charge to slash the budgets and vote against big government.

BASH: What do you think?

RAND PAUL: Well, you know, he voted to double the size of the Department of Education. He voted to expand Medicare and add free drugs for senior citizens, and he's voted for foreign aid. Those are not conservative principles.

BASH (voice-over): But Santorum and other Republicans warn Paul doesn't have a prayer to be president, primarily, because of his anti- interventionist foreign policy.

RON PAUL: I have the old right foreign policy. I have the foreign policy of George W. Bush of 2000 when he says no nation dealing, no policing the world, no entanglements, none of these wars. Well, we're talking about a real cuts and the shrinking of the size of the federal government.

BASH: The man who wants to cut spending by a trillion dollars in the first year, repeal the Patriot Act, and bring all troops home from abroad is very different from every other candidate, and many Republicans worry he'll leave the Party and run against the GOP, which could help reelect President Obama.

RON PAUL: I have no intention of doing that, no plans, and no desire. Flat out, I don't want to.

BASH (on-camera): OK. Because before, you've been a little bit circumspect. You've run as a libertarian before.

RON PAUL: Right. And I've never spoken in absolute. I mean, I have no plans of doing -- no intention of doing it.


BASH: Now, at these events, some of Ron Paul's volunteers are handing out these cards, their caucus cards, and they give an internet address to give people information of exactly where they can go for the caucuses tomorrow night to support Ron Paul.

Now, even, Wolf, some of the Iowa Republicans I'm speaking to who support other candidates say they are very impressed with Ron Paul's organization here on the ground. In fact, our Peter Hamby learned from a Paul campaign source that they have signed up 1,480 all- important precinct leaders. Now, that is impressive, because there are going to be 900 sites tomorrow night, caucus sites, so if they have nearly 1,500 precinct leaders who go out and speak on a candidate's behalf, that is a pretty good number and that is why we are hearing all about this organization here on the ground.

BLITZER: Dana, thanks very, very much.

Those precinct leaders are going to be really important for Ron Paul if he wins. That organization clearly will have a huge, huge affect.

Let's bring in two CNN political contributors, the Democratic strategist James Carville and the former Bush White House press secretary Ari Fleischer.

By the way, Mitt Romney is getting ready to speak. We might dip in and listen a little bit to hear what he says. It's good to get a flavor of their stump speeches out there. Right now he is being a little bit cautious in this, the final day before the Iowa caucuses.

But Ari, where does Ron Paul go from here? What do you think? Let's say he wins Iowa.

ARI FLEISCHER, CNN POLITICAL CONTRIBUTOR: Wolf, I used to hope that he would go away. Now I'm not so sure when I look at where his vote comes from.

Four years ago in Iowa, Ron Paul got 10 percent of the vote, but he only got seven percent of the Republicans who showed up, 29 percent of Independents who showed up. He won the Independent vote.

I'm not sure Ron Paul entirely fits into a Republican primary anymore. So, if he runs Independent -- because he can't win a Republican nomination --

BLITZER: As a third party candidate.

FLEISCHER: -- as a third party, it's very unclear to me who he's going to hurt most. But he cannot win a Republican nomination.

BLITZER: Because the assumption, James, is that he would take votes away from the Republicans and guarantee President Obama's reelection.

JAMES CARVILLE, CNN POLITICAL CONTRIBUTOR: Yes. I think most Republicans think that. Whether it's true or not, I suspect they might probably disagree with Ari a little bit here.

But remember, his son is a member of the Republican Caucus in the United States Senate. And you saw him standing right by him. And I think that would probably play on his mind.

But by the same token, he is 76 years old. And he may say, this is my last shot at the deal, so I may go all the way. I can't get inside the mind of Ron Paul, nor do I want to.

BLITZER: I thought it was intriguing what he just said to Dana Bash out on the campaign trail today, because he said the same thing to me and to other reporters many times -- I'm not thinking about it, I have no plans to do it. But then he added, but I'm not being 100 percent definitive. I'm paraphrasing right now.

I thought that was sending a signal out.

FLEISCHER: Well, this is valid for anybody who enters public life. Crowds are intoxicating, the appeal is intoxicating, and he has a powerful message that he ardently believes in. That's his -- that's what drives him.

And it's not easy to walk away from that and let it go. So if he does run, I think it's heartfelt. Just because he has an ideology that's peculiar to him and a small group of folks -- who knows what he will do?

BLITZER: He has got an army of young people who have come into Iowa. Unlike the army came in for Howard Dean that antagonized a lot of the Iowa residents because they looked like hippies, or whatever, these people are dressed nicely, they're polite, and they are working hard for him.

CARVILLE: They are. And one of the reasons that he didn't want to close the door and run in the general is that that keeps the fires burning. They say, you know what? If we lose this one, we can come back and do another one.

And they want him to sort of stay relevant, if you will. I mean, so, yes, it makes complete sense that he would just leave the door that much ajar. But I noticed when he is with his son, it's much closer to being closed than it is when he's not.

BLITZER: Well, actually, the opposite just now, because his son was standing right next to him.

CARVILLE: No, but I've seen him be a little bit more expansive about running --


FLEISCHER: This won't come down to what his son thinks. This will comes down to what the congressman thinks. This is a decision individuals make about whether they have it in them to run as a third party. No one knows the answer.

BLITZER: All right. We're going to continue this conversation. Stay right here.

How do you like our new CNN Election Center?

CARVILLE: It's back to our ancestral roots here.


BLITZER: We have a lot more to discuss, guys.

A new missile test by Iran, and new fear the government is trying to provoke a military attack against the country.

And we are watching Mitt Romney's campaign event. We're going to go there live, check out what he's saying.

Stay with us. That's John Thune who's introducing him right now, the senator.

(COMMERCIAL BREAK) BLITZER: Ann Romney is speaking, introducing her husband in Marion, Iowa. Let's listen in very briefly.



ANN ROMNEY, MITT ROMNEY'S WIFE: I would tell people when we'd go out in public -- there would be five of them -- there are five of them -- they would be so well behaved. And I would get mad at them and I'd say, "Why don't you just act like you do at home? Then people can feel sorry for me instead of thinking you're just fantastic kids."

But being a grandmother is poetic justice, because when their kids misbehave, I just sit back and grin. I love every minute of it. They deserve it.

What joy they've brought in our life, and how great it's been to have a husband that stood by me in those early years when those boys weren't being as nice as they are now, and it would remind me that my job is more important than his, that real happiness comes from this, which is true. And our true happiness and joy now is being the grandparents of 16 grandchildren. So we are blessed.

Thank you, Tony (ph).



ROMNEY: So I'm excited about this year that's coming up.

BLITZER: All right. Get a little flavor of what's going on, on the campaign trail in Iowa with one day to go. This has really been a Republican roller-coaster, as we all know.

Erin Burnett is here at the CNN Election Center.

It's amazing what has happened, Erin.

ERIN BURNETT, HOST, "ERIN BURNETT OUTFRONT": It really is. All right. Now, what also is amazing is my walls.

My walls are pretty special, and it looks like nothing is on (ph) them, but when you talk about out on the campaign trail, trying to get these last-minute votes, there's all kinds of neat things everyone is going to see we're able to do at this wall. But just take a look at this one poll, "Is Your Mind Made Up?"

You look at 51 percent of the likely voters in Iowa, according to "The Des Moines Register," say they've mind up their mind. Forty-one percent haven't, Wolf.

BLITZER: It's amazing.

BURNETT: And it's just really -- I mean, look at last time around. Sixty percent of people had not only made up their minds, but had made up their minds months in advance. So I guess it is a case where you really have that horse race into the last 24 hours.

A couple of facts that stood out to me within this, though, when you look at Rick Santorum. Just in two days, from Wednesday to Friday of last week, he rose from 11 to 22 percent. So doubled in terms of his polls.

Maybe he peaked at the right time. Or did he peak too early? I mean, that will be the big question. Seventy-six percent, though, according to this poll of Santorum supporters, say they will go out no matter what, which obviously is a positive for Rick Santorum.

And when you just hear Ann Romney talking there, obviously, in contrast with Mitt Romney, Mike Huckabee is saying, hey, look, good weather is good for Mitt Romney because people who aren't that passionate will go and vote for him anyway. So we shall see.

One other thing as we get ready to use and show all of these walls tomorrow -- which is neat -- we've got faces that are going to pop up, show people all kinds of ways to break this down. One thing, Wolf, a number to leave you with, 14 percent. That is the increase in housing prices in the state of Iowa since the top of the housing market, which is stunning. Across America, an average drop of 53 percent.

BLITZER: Because the economy in Iowa is pretty good because of the agriculture.

BURNETT: That's right. That's right. And as you've seen housing prices plunge around the country, they're actually up in Iowa.

And the economy is still a crucial issue there, but it does open the question as to whether people will vote more on social issues there, as opposed to the economy, which we've seen ruling around the rest of the country, and what that might mean. And this could be persuaded for people like Rick Santorum, social conservatives, tomorrow.

BLITZER: You're going to have a lot more on your show, "ERIN BURNETT OUTFRONT," 7:00 p.m. Eastern, tonight from the Election Center.

BURNETT: That's right.

BLITZER: Are you excited to be here?

BURNETT: Yes, I am.

BLITZER: You better be.

Thanks very much.

BURNETT: All right.

You know what? I want to go back to Mary in Iowa a little bit and listen to Mitt Romney, the front-runner for the Iowa caucuses.


MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: He didn't get it out of trouble, and we still have Americans hurting today.

I am pained by the fact that we have seen the median income in America in the last four years drop by 10 percent. And just as Senator Thune indicated, that's at the same time that the prices for many of the things you buy have been going up and up and up.

He failed on another front, and that's with regard to reining in the size of the federal government. He spoke about our Medicare and Social Security problems. Wasn't it amazing that three years in he's proposed nothing to solve the problems?

And then the government spending -- I remember him criticizing President Bush appropriately for the fact that we had big deficits. But his deficits are three times larger. And by the end of his first term, his only term --


ROMNEY: -- he is on track to amass almost as much public debt as all the prior presidents combined.

This has been a failed presidency. And I remember after he got inaugurated he went on "The Today Show" and he said to the commentator, "Look, if I can't get this economy turned around in three years, I will be looking at a one-term proposition."

Well, I'm here to collect. We're taking it back.


ROMNEY: I happen to think that if you want to create jobs, it helps to have had a job. And I have. And I want to use that experience to get people back to work.

What do you do to get people back to work? Well, first of all, you make America the most attractive place in the world for entrepreneurs and innovators, for people who hire folks. You make this the place they want to grow and invest. You don't frighten them away.

I saw that head of Coca-Cola -- talk about an American icon, Coca-Cola -- he said the business environment in China is more favorable than the business environment in America. Can you understand why it is that we have a hard time getting jobs going?

Almost every day someone comes up to me, a small businessperson, and says they feel under attack by the Obama administration. And so what am I going to do? I'm going to change that.

I'm going to make it very clear that I'm not a foe of business and a foe of entrepreneurs and innovators and job creators. I want them to grow and thrive and to invest in America. I'm going to make sure that the tax rates for employers are competitive with other nations. Ours are the highest in the world right now. All those regulations that President Obama put in place,, I'm going to put a hold to every single one of them and kill those that kill jobs.



BLITZER: All right. We're going to continue monitoring. This is the stump speech. He's been giving this speech now for the past several days.

He seems to be confident going into the Iowa caucuses, but we shall see what happens tomorrow night.

It certainly is serious business for the Republican presidential candidates in Iowa. But Jeanne Moos is taking a closer look at the lighter side of the campaign. We'll have that. That's coming up.

Also, Ari Fleischer and James Carville, they're still here.


BLITZER: Let's bring back James Carville and Ari Fleischer.

Listen to this. This is Newt Gingrich. He's been hammered with these attack ads by Republicans. He responded and I want you to listen.


NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I was just struck by the Politico analysis of the sheer volume of anti-Gingrich ads run by Romney's PAC. I'll let you decide how you would describe it. It's pretty -- for a state this size, to spend that number of dollars in negative ads aimed at one candidate, is pretty amazing.

JIM ACOSTA, CNN CORRESPONDENT: Do you feel "swift-boated"?

GINGRICH: No. I feel Romney-boated.


BLITZER: I heard Jim Acosta say, "Do you feel swift-boated?" And he said, "I feel Romney-boated." He has been. Most of those attack ads in Iowa -- and I was there last week -- they have really slammed him.

CARVILLE: Right. And they've hurt him. Not only --

BLITZER: He should have responded earlier. Right?

CARVILLE: I don't think he had the money to respond.

BLITZER: But shouldn't he have responded publicly, free media, if you will, going on television? CARVILLE: He probably should have had some narrative, but his options was the debates. So people were watching the debates. He was able to deal with these charges somewhat in the debate. Once the debate stopped and they had this flood of negative ads, he was just getting overwhelmed.

BLITZER: He could have gone on television every single day for free -- it doesn't cost him a penny -- and responded to these attacks, which he didn't do.

FLEISCHER: James is right. You need money to respond to something like this.

When the candidate is just whining and complaining about the tactics and the ads, it makes the candidate look less like about ideas and more about politics. But this is the same Newt -- I remember this in 1995, when Bill Clinton was running "The Republicans are destroying Medicare" ads, and Newt gave the same complaints back then.

This is what happened because Newt's campaign fell apart. He didn't have infrastructure. It's a one-person band.

BLITZER: I wrote last week in my blog, James, that what I learned going out to Iowa, seeing these attacks, seeing how effective they were in destroying Newt Gingrich's campaign, at least for the time being, it's nothing compared to what is about to happen in the general election with these so-called super PACs on both sides.

CARVILLE: No. And remember, Paul's ads against Gingrich were unbelievably good.

BLITZER: Those weren't even the super PACs. That was from his campaign.

CARVILLE: One thing about Romney that people point out is when you go face to face with Newt, it was all fine. Once the debate stopped, then you just flooded the zone on him. And they did. They clobbered him, and pretty effectively.

BLITZER: So what's the most important lesson Republicans will learn going against Barack Obama?

FLEISCHER: In my opinion, Republicans have been saved, because if Newt can't withstand a barrage from fellow Republicans, what's he going to do when it comes from billion-dollar Obama? This was a candidate who had to prove he had the mettle and the ability, and he didn't have it.

BLITZER: But the negative attacks -- let's say Romney gets the nomination. The Democrats will slam him. The Republicans will slam Obama. This is going to be ugly.

FLEISCHER: Wolf, I don't know about ugly. Campaigns are about ideas, and there is nothing wrong with having an ad that's based on ideas.

CARVILLE: The first thing they're going to do when Romney is the nominee is they're going to hit him on his tax returns, and they're going to keep doing it for this reason -- he's eventually going to have to yield. And the Obama people are going to want to make it look like they forced him to. And I think that's going to be a real big component here.

BLITZER: All right. Guys, you're going to be with us for the duration, so don't go too far away.

Up next, the other side of presidential politics in Iowa.


BLITZER: The Iowa caucuses certainly have a serious side, but they also have a lighter side.

Here's CNN's Jeanne Moos.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): If you're unexcited about the Iowa caucuses, maybe this lady's enthusiasm will be contagious.

The candidates have been busy signing babies --

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE: Did he give me permission?


MOOS: -- and signing cups that other candidates have already signed. The last-minute tizzy even extends to posing with Tizzy the Coonhound.

GINGRICH: Tizzy, this way. Tizzy!

MOOS: Newt Gingrich suggested Tizzy go to his Web page, "Pets With Newt," where owners and pets like Flint pledge their support.

Though critics have called it --

LARRY GATLIN, COUNTRY MUSIC SINGER: Pandering to canine Americans.

MOOS (on camera): But there's one pet you don't see with Newt.

(voice-over): That would be Newt the aquatic amphibian.

And Newt the candidate isn't just lowering expectations. He is submerging them.

GINGRICH: Whatever I do tomorrow night will be a victory because I'm still standing.

MOOS: Lately Michele Bachmann has been standing in someone else's shoes.

REP. MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: In the shoes and in the legacy of Ronald Reagan, or you might say of a Margaret Thatcher --

We are in need of an American iron lady.

MOOS: She even refers to herself that way in a last-minute ad --

NARRATOR: -- has been a consistent conservative fighter.

MOOS -- America's "Iron Lady."

(on camera): Not to be confused with America's ironing lady.

(voice-over): Coming soon to a primary state near you.

MERYL STREEP, ACTRESS, "THE IRON LADY": Your problem is that you haven't got the courage --

NARRATOR: And she'll never back down.

MOOS: Michele Bachmann plays Maggie Thatcher, who is played by Meryl Streep. "She was an outsider who fought her way in."

BACHMANN: My favorite gun is an AR-15 because you can be so accurate with it.

STREEP: Gentlemen, shall we join the ladies?

NARRATOR: Michele Bachmann for president.

MOOS: And look how far Mitt Romney has come, to practically the same stage he stood on with his wife in Dubuque, Iowa, four years ago.

M. ROMNEY: I'm standing there, she is standing there, and suddenly her half of the stage collapsed.

MOOS: Flashback.

M. ROMNEY: Thank you, sweetie.

How are you?

A. ROMNEY: I'm good.

M. ROMNEY: A little later she said, "Well, I fell on de butt in Dubuque."

MOOS: There's nothing like Iowa caucus humor to soothe a sore coccyx.

Jeanne Moos, CNN --

A. ROMNEY: I ride horses. That was nothing.

MOOS: -- New York.


BLITZER: Please be sure to join us in the CNN Election Center for the first votes in the Republican presidential contest. Our coverage of the Iowa caucuses begins tomorrow, 7:00 p.m. Eastern.

I'm Wolf Blitzer in THE SITUATION ROOM.

The news continues next on CNN.