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THE SITUATION ROOM

President Bush at the U.N.; Armed Intruder Breaks into Capitol; Interview with Ken Mehlman

Aired September 18, 2006 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Thanks very much, and we're going to have more ahead on the first lady's unprecedented bell ringing on Wall Street. We're also going to tell you about another remarkable appearance she'll be making in New York City. You may be surprised about who she's pairing up with.
And to our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time. Standing by, CNN reporters across the United States and around the world to bring you today's top stories.

Happening now, Republicans in desperate search of a compromise. Can President Bush and rebel senators resolve their differences over the treatment of terror suspects? It's 4:00 p.m. in New York City, where Mr. Bush is appearing on the world stage, while dealing with an election year revolt back here in Washington.

Only 50 days from now, Americans cast their votes for Congress. Are Democrats poised to make their dream of control come true? This hour, new midterm snapshots, and a 2008 preview starring Barak Obama in Iowa.

Plus, taxing new questions about religion and politics. Did a California church cross the line? It's 1:00 p.m. in Pasadena, where an IRS investigation is going forward, along with the culture wars.

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

Right now, President Bush is in New York City. He's holding talks with world leaders on this, the eve of his speech before the United Nations General Assembly. But a dispute with fellow Republicans back here in Washington already casting a shadow over America's global image, and it's hanging over his party's fight to try to keep control of the Congress.

As early as this week, the full Senate could consider new rules for interrogating terror suspects. Senator John McCain and other rebel Republicans say they're trying to work out a deal with the White House.

Our congressional correspondent Andrea Koppel is standing by.

First, though, let's go to our White House correspondent, Suzanne Malveaux. S he's traveling with the president in New York -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Wolf, it's really going to be a very busy 48 hours for President Bush, already in New York. Holding a series of meetings. He really jump-started this three-day summit with an event with the first lady, the two of them focusing on global literacy.

But President Bush quickly, of course, meeting with key leaders. The prime minister of Malaysia, as well as the leaders of El Salvador, Honduras and at this hour, Tanzania. All of these leaders symbolic, if you will, in their efforts, their alliances with the United States in the war on terror. And that is what the president is going to focus on tomorrow before the General Assembly, when he makes his speech. It is going to on the broader war in terror, trying to sell that to world leaders, specifically talking about the Middle East, the importance of the international community, to focus on those fledgeling democracies inside of Lebanon, the Palestinian Authority as well as Iraq.

And as you know, Wolf, another centerpiece for this speech is he's going to call out Iran's president, Mahmoud Ahmadinejad, on what he believes is a weapons program; the need to stop him from building that nuclear arsenal that the United States believes he is involved in.

And there is somewhat of a Kabuki dance, if you will, going on here in New York. Many people wondering if these two leaders, being in the same building tomorrow, will meet face-to-face. I asked President Bush on Friday whether or not he would be willing to do just that. The president absolutely said no, that that would not happen. That first, he's got to stop and suspend his enrichment uranium program. So far, Iran has e fused to do that.

So, what you need to do, Wolf, is take a look at two tracks. The public track, President Bush and this leader again doing that kind of delicate dance to avoid each other. But behind the scenes track, as well. Secretary of State Condoleezza Rice, what she does not in the next couple of days, but the next couple of weeks, the quiet negotiations and discussions that are going on with European leaders, her counterparts in reaching out to Iran to try to set up those negotiations, those talks. Only after that happens, Wolf, that is when the president says he is willing to meet with Ahmadinejad -- Wolf.

BLITZER: The action right now clearly in New York City. Suzanne, thank you very much. I'll be there tomorrow. Among other things I'll have a one-on-one interview with President Bush about his United Nations address and other global political flash points. You're going to want to see that. That will air Wednesday, right here in THE SITUATION ROOM. My interview with the president.

And in the next hour, I'll be speaking with the U.S. military commander in charge of Iraq, Afghanistan, the war on terror. General John Abizaid will be my guest here in THE SITUATION ROOM. Let's go to Capitol Hill right now, the backdrop for the Republican rebellion over terror.

Let's bring in our congressional correspondent Andrea Koppel. What's the latest, Andrea? ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Wolf, during their appearances on Sunday talk shows yesterday, both sides continued to signal a willingness to reach agreement, if not to find some sort of possible compromise on how to -- what kind of techniques to use to question terrorism suspects. But with President Bush and much of his cabinet -- as we just saw in Suzanne's report -- up there in the U.N. General Assembly today and tomorrow, and with many lawmakers still out of town, the expectation is that there wouldn't be any kind of a compromise, if it happens at all, until later in the week at the earliest.

Ever since the Senate Armed Services Committee -- led by Chairman Warner, John McCain and Lindsey Graham -- threw down the gauntlet last week to President Bush and presented an alternative proposal to the president's plan for detainees and for those military tribunals, Senate staffers and White House aides have been burning up the phone lines all weekend long to try to find that common ground.

At issue is whether Congress will support the president's desire to clarify what's known as Common Article 3 of the Geneva Conventions, which outlaws what they call outrages upon personal dignity and humiliating and degrading treatment.

Now, last week, the House Armed Services Committee pretty much signed off on, without any question, the president's plan. They passed it out of committee. And the expectation had been that they were going to vote on it in the House on the floor this week. Now, we understand, that vote has been pushed off until next week. But with only two weeks left, Wolf, Congress has to come up with, according to the president, some sort of compromise language before they adjourn for the November elections. The clock is ticking loudly -- Wolf.

BLITZER: And the president warned only on Friday that unless Congress does that, those interrogations, at least the tough interrogations that were conducted, would have to be suspended. We'll see what happens in this eyeball-to-eyeball situation.

Andrea, thanks very much.

Also on Capitol Hill today, by the way, there was a security scare. A man with a gun was arrested after crashing his SUV into a wall, running into the Capitol building and forcing the Capitol complex into lockdown.

Let's go up to the Capitol right now. Brian Todd is outside -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, we're waiting for a briefing from Capitol Hill Police with more details on what took place this morning. We are promised that all day. We hope to get that soon. But in the meantime, we have been able to piece together some details based on witness accounts and law enforcement sources.

Here is what we know. Just before 8:00 a.m. this morning, a man drove through a construction gate, got his SUV to just over there, within a few feet of these steps. Here are words from a witness who saw it happen.

(BEGIN VIDEO CLIP)

JILLES RICHARDS, EYEWITNESS: He had actually went over a wall and crashed into another wall and got out of the truck and started running. By that time, I was trying to take some cover. I thought, you know, somebody was going to start shooting or something. And then by that time, it was like the Capitol police were on them like ants.

(END VIDEO CLIP)

TODD: Now, according to witnesses and law enforcement sources, the man then got out of the car after hitting that barrier and either ran up those steps, the center steps that are behind me, or through an entrance underneath those steps and possibly into the center of the building, where he then went to a staircase.

Now, congressional producer Deidre Walsh (ph) and I traced his likely route, based on all the eyewitness accounts we got. He went down a staircase toward a police security checkpoint, which is right near a police substation in the Capitol. And then was finally apprehended near the flag office of the Capitol. We're told that he had seizures after he was apprehended. All this time, he was carrying a weapon according to law enforcement officials. He had seizures, he was taken to a local hospital. That's where he is now -- Wolf.

BLITZER: I think, Brian, the key security issue -- yes, it's bad enough a guy can get out, run into the Capitol with a weapon -- but if, in fact, that car had been loaded with explosives, if there would have been a car bombing, how close did that car, that SUV, actually get to the Capitol? Did the system -- in other words, the security barriers that are there to prevent a car bombing -- did it work?

TODD: Well, there are barriers there and the barriers essentially did work. But the man got the SUV to about, I'd say -- I guess within about 20 yards of the Capitol steps. But he was stopped by a barrier. He then got out and ran up the steps. So the barriers, in that sense, did work.

BLITZER: Brian Todd is going to have more on this story coming up in the next hour. Brian, thank you very much.

Let's check in with Zain Verjee. She's watching some other important stories making news. Hi, Zain.

ZAIN VERJEE, CNN ANCHOR: Hi, Wolf.

The Vatican seeking to quell Muslim anger over comments by the pope about Islam and violence. In a speech last week, Benedict XVI cited a medieval text referring to the spread of Islam by violence, and characterizing some teachings of the Prophet Muhammad as quote, "evil and inhuman." Now, that sparked protests which are continuing around the world today. The pope now says that he regrets offending Muslims. Vatican envoys in many nations have been instructed to clarify that the comments do not represent the Pope's own personal opinion. We will bring you a full report on this story in the next hour.

There's been another surge of violence in Afghanistan. Three police officers died in a suicide bombing in Kabul this afternoon. In a separate incident, four Canadian soldiers were killed as they handed out gifts to children. Dozens of people were wounded, including several children. A bicycle rider set off the suicide blast.

And in Iraq a pair of suicide bombings killed at least 22 people in just the past few hours. In the northern city of Tal Afar 20 people were killed by a bomber in an open air market. It came shortly after a car rammed his vehicle into a police station in Ramadi, killing two police officers.

Federal health officials are now warning you to stay away from all fresh Spinach until they can pinpoint the source of an outbreak of E. Coli bacteria. So far authorities know of one person who has died and 110 people who have become ill after eating fresh Spinach, Wolf.

BLITZER: Zain thank you. Zain Verjee reporting. Let's go up to New York now. Jack Cafferty, another week, another week of the Cafferty File. Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, "Time's" cover story this week is something called "What War With Iran Would Look Like." "Time" reports there is a growing sense within the administration and high levels of the military that a showdown with Iran may be impossible to avoid. Oh, goody.

Meanwhile, when President Bush goes before the U.N. tomorrow, he is expected to talk about why he thinks Iran is such a big threat. Not everybody thinks Iran is a big deal. The International Atomic Energy Agency complained last week about a House Intelligence Committee report on Iran's nuclear program. It said parts of the report contained, quote, erroneous, misleading and unsubstantiated information, unquote.

But the committee stands by the report, saying that the substance is clear. Iran may not be there yet but they're working on making weapons-grade Uranium. Sound familiar? This is the same jibe we were fed in the run-up to the with in Iraq. Remember? It all turned out, thought, that International Atomic Energy Agency was right back then. Iraq didn't have any weapons of mass destruction. And look where we are in Iraq now.

Here is the question, "whom do you trust when it comes to Iran's nuclear program: the U.S. or the International Atomic Energy Agency?" E-mail your thoughts on that to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile, Wolf.

BLITZER: Jack, thank you. Jack Cafferty in New York, where I will be reporting from tomorrow.

Coming up, the battle for Congress. We're only 50 days away from election day. Will the Democrats win back the House? Will they win back the senate? Can Republicans hold on to power?

Plus, is the intra-party fight over terror hurting the GOP politically? I'll ask the Republican party boss, Ken Mehlman.

Plus, will he or won't he? Speculation about a Barack Obama run for the White House runs rampant as the Senator from Illinois works the crowds in Iowa. Stay with us.

(COMMERCIAL BREAK)

BLITZER: A milestone today as we count down to the high stakes midterm election. For better or worse, both parties are well aware that time right now is running out. Let's bring in our senior political analyst, Bill Schneider. Bill?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, it's 50 days to election day. Do you know where your campaign is?

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Will the Democrats take over either the House or the senate? Fifty days out the consensus among the experts is a resounding maybe.

BOB BENENSON, CQPOLITICS.COM: The Democrats have a chance to take back one or both chambers of Congress, but at this point, it's by no means a certitude.

SCHNEIDER: Maybe yes in the House, where at least 21 seats currently held by Republicans are threatened right now. Democrats would need to take 15 of those seats to win a majority. No Democratic held House seat appears seriously threatened.

The Senate looks less promising for Democrats. Experts count as many as seven Republican Senate seats that now look threatened. Five of them are in states that President Bush carried in 2004. Democrats would need to win six of them to take over the Senate and not lose any of the four Democratic seats that may be at risk, all in states that voted for John Kerry.

Republicans are worried about a wave. The same kind of wave that swept them into power in 1994 could sweep them back out to sea. The president's job approval rating has a strong influence over the political waves. President Bush's early September job rating in the Gallup poll, 39 percent. President Clinton's job rating at the same time in 1994, 39 percent.

Here is one big difference from 1994. The war on terror is an issue that tends to favor the president's party. President Bush has been trying to frame the campaign around that issue, but there is scant evidence of a Republican rebound.

BENENSON: I don't think there was enough of a change to change the dynamic.

SCHNEIDER: Another big difference from '94, it may be harder for the party out of power to win a big majority.

BENENSON: It's very hard mainly because of the structural factors.

SCHNEIDER: Factors like --

BENENSON: They're drawing of districts, the redistricting process, precisely so that they have big Republican majorities or big Democratic majorities.

SCHNEIDER: And in the Senate?

BENENSON: This political landscape problem the Democrats have where they mostly are seats in strongly Republican states.

SCHNEIDER (on camera): The levies protecting incumbent candidates are stronger than 12 years ago. It will take a bigger wave to smash them. Wolf?

(END VIDEOTAPE)

BLITZER: Bill Schneider, thank you. Bill Schneider also part of the best political team on television.

Fireworks today in one of the hottest Senate races in the nation. Virginia Republican George Allen debated his Democratic challenger James Webb. Allen pounced on Webb for suggesting that Iran and Syria should get involved in efforts to end the violence in Iraq and he accused Webb, a former Navy Secretary, of disrespecting women in the military.

Webb responded to the verbal attack by saying, and I'm quoting now, I guess this is my Macaca payback. That's a reference to Allen's controversial remark about a Webb campaign volunteer of Indian dissent, a remark Allen apologized for.

Republican party leaders are trying to make the most out of the next 50 days until the election. They are relishing their cash advantage and they are trying to minimize their disadvantages, including Iraq war and the party infighting over terror fighting tactics.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now here in the SITUATION ROOM, Ken Mehlman. He's the chairman of the Republican Party.

Ken, thanks very much for joining us.

KEN MEHLMAN, RNC CHAIRMAN: Thanks for having me.

BLITZER: I interviewed Joe Biden on Friday, the ranking Democrat on the Foreign Relations Committee, and Democrats supposedly were worried about this war on terror, but he made this point, given the current rift, a major rift, within the Republican Party.

Listen to this.

(BEGIN AUDIO CLIP) SEN. JOE BIDEN (D) DELAWARE: I think the American people are going to look and say, "Look, on one side of the equation, you've got Colin Powell, a revered four-star general, secretary of state, John Warner, Lindsey Graham, John McCain. On the other side, you have the secretary of defense, Cheney, I mean Rumsfeld, the vice president of the United States."

Who are the American people going to believe? I'm not worried.

(END AUDIO CLIP)

BLITZER: Now this has been a bonanza for the Democrats, this major rift within your party.

MEHLMAN: Wolf, I don't think it has. I think the American people who are looking at these elections are going to see an important difference.

But the difference is that people like George Bush and Dick Cheney, along with John McCain and Colin Powell and others, believe we need tools like the Patriot Act, like the NSA surveillance program, believe it would be a mistake to give the enemy what they say they want in Iraq, which is to cut and run and leave it to the terrorists, and believe we need to work out a way to make sure we keep a critical program going forward, while, at the same time, making sure we're protecting American values.

Good people on both sides are working this out. This program is critical. We have a new war. It requires us to adapt our tactics and it requires us to be consistent with our most important values.

BLITZER: But as Biden says, it's not just Biden and the Democrats. It's these Republicans, including Lindsey Graham, who himself is a JAG officer in the Reserves. He's a good Republican from South Carolina.

Listen to how he phrased this debate right now.

(BEGIN AUDIO CLIP)

SEN. LINDSEY GRAHAM (R) SOUTH CAROLINA: I am very concerned that if we do not watch it, we're not going to just redefine the law to meet the needs of the war on terror, we're going to redefine America.

(END AUDIO CLIP)

BLITZER: Basically, they're saying, Lindsey Graham and McCain and John Warner and Susan Collins, a lot of strong Republicans, that redefining America now and how the United States interrogates terror suspects is at stake.

MEHLMAN: Well, Wolf, as I said, I think that what most Americans are paying attention to is not a particular markup or a particular bill. They're looking at the totality of records and when you look at the totality of records, what you'll remember is that George Bush and John McCain and Lindsey Graham and others were on the same side on the Patriot Act, were on the same side on the NSA program, were on the same side of not cutting and running on Iraq, and, unfortunately, Joe Biden and his colleagues are on another side.

I think Americans understand something else, Wolf, and that is it's a different kind of war.

Remember, when the Geneva Convention was first entered into in 1949, it covered people that were at war, not terrorists who hide among and target civilians. And so what we're doing, as a nation, is we're figuring out how we make sure we adapt our tactics to defeat these terrorists and make sure we're consistent with our nation's oldest and most important and enduring values.

BLITZER: How worried are you that the defining issue come November 7 will be the war in Iraq, which all the polls show the overwhelming majority of the American public now disagrees with you?

MEHLMAN: Well, I think, actually, the most interesting poll that I saw was the "CBS-New York Times" poll that was taken about two and a half weeks ago, where more than 50 percent of the American people said they did not think it was a smart idea to cut and run and give the enemy what it says it wants, which is to use Iraq as a base to launch further attacks.

BLITZER: But that same poll did say the war was a mistake.

MEHLMAN: Well, I think the American people understand we're in the middle of a tough war. I think a lot of folks say, "You know what? I'm not as concerned at how we got there, but what do we do to keep our people safe," and I don't think most Americans are going to vote for leaders who, like Nancy Pelosi, she said, "I don't even think we're really at war," less than a year after 9/11.

And if you look at so many of the issues, the Patriot Act, the NSA program, look at missile defense. Right now, we know that Iran and we know that North Korea are testing long-range missiles. Yet, after 9/11, Democrats, leaders, have voted against missile defense.

BLITZER: Let me read to you what the Republican leader, the majority leader in the House, John Boehner, said last week. He said, "I listen to my Democratic friends and I wonder if they're more interested in protecting terrorists than in protecting the America people."

Did he go over the top and does he need to apologize to Democrats?

MEHLMAN: John Boehner was on another network yesterday and said, "I wouldn't have characterized it that way," that he was trying to focus on the important differences.

I think that's the perfect answer. I agree with him on that. I think that may be not the best way to characterize it.

There are, though, important differences. It's important that we discuss those differences, remembering... BLITZER: But you're not questioning the patriotism...

MEHLMAN: No, absolutely not.

BLITZER: ... the commitment to this war on terror of the Democrats.

MEHLMAN: Absolutely not. I think that my colleagues on the other side, on the other side of the aisle, they share my love of country.

The question is would their tools protect it. And I believe America would be less safe, because they would surrender important tools we need to protect America. That doesn't mean their motives are bad, but it does mean that I believe the outcome of their policies would be to make America less safe.

BLITZER: We're almost out of time. How are you going to do in November?

MEHLMAN: We're going to keep our majority in the House and Senate, which will be historic.

BLITZER: And when you define victory, define victory more precisely?

MEHLMAN: Well, look, the fact is, Wolf, that there hasn't been a period where there's been a party that's had a majority in Congress and the White House for eight years in a row, since Kennedy-Johnson.

For Republicans, it hasn't happened since the 1920s. I believe that will happen after this November. I believe it will be good for our public policy and I believe it will be a historic victory for our party.

BLITZER: Ken Mehlman, the chairman of the Republican Party, thanks very much.

MEHLMAN: Thanks a lot.

(END VIDEOTAPE)

BLITZER: And up next, much more on the battle for Congress. With only 50 days to go, can the Democrats keep their lead? Can the Republicans make a comeback? I'll ask two experts, James Carville and J.C. Watts. They're standing by live here in THE SITUATION ROOM.

Also, he is going head-to-head with the president over the treatment of terror detainees. But will John McCain's latest fight hurt him in his race for the White House? We'll raise that as well right here in our "Strategy Session." Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back to THE SITUATION ROOM, I'm Wolf Blitzer in Washington. In our "Strategy Session" today, the commander in chief and Senator John McCain are on opposing sides of a political war over terror and it's playing out with only just 50 days to go before the battle for Congress is decided, at least this time around.

Joining us now are political analysts, Democratic strategist James Carville and our Republican strategist, the former Republican Congressman J.C. Watts.

James, as someone who knows a lot about rifts within your own party, what do you make of this battle that's going on within the Republican Party between the Bush forces versus the McCain forces?

JAMES CARVILLE, CNN POLITICAL ANALYST: Well, I think when people see it, this is going to be the third major defeat that this president has experienced in a year. He lost Social Security, he lost immigration. Now he's going to lose this torture thing.

And he has the Republican majority. I mean, incapable -- the reason that they're not doing well now is people look at him and they say these people are incapable of government and they can't even -- the most civilized nation in the world cannot figure out a way to try these people or he can't figure out a way to interrogate them in accordance with the national law and I think people see this and wonder why we have these people in charge.

BLITZER: It is pretty amazing when you think about it, only a few weeks before an election, to have this all-star alignment of Republicans publicly disputing the president.

J.C. WATTS, CNN POLITICAL ANALYST: At the end of the day, Wolf, I think some agreement will be worked out. But I think this is governing. I think, you know, people have their differences and you draw some conclusion on what the best way is to go forward to the point that you don't allow the secrets or the intelligence that you have to be disbursed around the world and you can still keep the CIA operatives and those that's in charge of trying to gather intelligence, that you can protect them.

So I'll tell you what. I trust Lindsey Graham and John McCain and Senator Warner to do a good job and I feel very strongly that the president's not going to give on where he is. So, I do think something will happen. Something -- some compromise will be had.

BLITZER: John McCain spent much of the weekend in New Hampshire this weekend. He clearly is one of the front-runners, if not the front-runner, for the Republican presidential nomination.

(CROSSTALK)

BLITZER: But the question is this. Put on your strategic adviser hat right now. How much trouble, potentially, could he be in with the conservative base, if he continues to oppose the president like this?

CARVILLE: Well, first of all, most of the military people don't like this changing of the Geneva Convention.

Most -- most -- most people in uniform are very apprehensive about this. And that's very much part of his base.

I suspect, as J.C. says, they're going to work something out, but they're not going to amend Article 3 of the Geneva Conventions. And, you know, there will -- there will a lot of chances for him to come back and -- and re-massage the conservative base. He is probably going to have a -- quite a -- quite a bit a trouble. According to -- I think it was our poll. I know, one of them, I saw where he had 40 percent of the Republicans found him unacceptable. So, he's -- he's only -- he is only starting with 60 percent of...

(CROSSTALK)

BLITZER: "The Manchester Union Leader" this weekend, a newspaper -- the main newspaper in Manchester, New Hampshire, they were pretty critical of John McCain. It's a conservative newspaper.

WATTS: Well, and -- and -- and that is -- that's going to happen. You -- you're not going to -- you know, doing everything -- you know, when you're right, it doesn't mean it's going to be popular, and what is popular isn't necessarily going to be right.

I think Lindsey Graham said it best, when he said, you know, if -- if -- if J.C. Watts get convicted of something, regardless of what my crime is, can you send me to the electric chair without showing me the evidence of -- of what I have been convicted for? No.

That's -- that -- you -- you shouldn't be. And I think, to lower that standard, I think we're on a -- we are getting on a very slippery slope.

BLITZER: So, you disagree with the president on this?

WATTS: I do disagree with the president on that portion of it.

And -- but I do believe that the senators and -- and the president can work something out to go forward to -- to where the president can accomplish what he wants to accomplish, but, at the same time, you can -- you know, the senator has got a pretty strong position.

BLITZER: You heard Ken Mehlman, the Republican Party chairman, on this program just now say he is confident they're going to hold on to the House and hold on to the Senate.

CARVILLE: Well, Wolf, you and I have been around long enough to know -- what would you expect him to say?

(LAUGHTER)

CARVILLE: I mean, what is he going to say? "I think we're going to lose"?

(LAUGHTER)

CARVILLE: I -- you know, and I would say, I'm confident that the Democrats are going to win it. Most of our viewers can take that kind of thing with a grain of salt.

I am not going to sit...

BLITZER: Are you confident the Democrats can...

CARVILLE: No. I'm not -- oh, no, I'm too good a Catholic to be confident about anything.

(LAUGHTER)

CARVILLE: I mean, I -- you know what I mean? I always expect some -- some disaster to loom.

BLITZER: Fifty days, J.C., is a lifetime.

WATTS: Well, it is, Wolf. But I think, today, the winds are blowing in the direction of the Republicans.

I -- gas prices are going down. People tend to see the economy through those gas prices. In Oklahoma, gas prices were $2.01 per gallon. I do think, in spite of the fact the president doesn't have anything to do with gas prices, he will get -- get a benefit. Republicans will benefit from that.

And can you separate, as the Democrats are trying to do, the war in Iraq from terrorism?

BLITZER: All right.

WATTS: Republicans...

(CROSSTALK)

BLITZER: Very quickly, James.

(LAUGHTER)

CARVILLE: Well, first of all, how many times did they find out that Iraq had nothing to do with 9/11? Nineteen different times.

First of all, and if -- if gas is like $2.50, if they think that's low energy prices, then, have at it. I mean, I think people will -- most people find that pretty high.

WATTS: Two dollars a gallon.

BLITZER: Oklahoma.

WATTS: Two dollars a gallon in Oklahoma.

(CROSSTALK)

CARVILLE: Oklahoma is going to go Republican.

(LAUGHTER)

(CROSSTALK)

BLITZER: In Washington, D.C., it's a lot -- it's a lot more than that, at least right now.

(CROSSTALK)

BLITZER: J.C., thanks very much.

WATTS: Thank you.

BLITZER: James, thanks to you as well.

James -- James Carville and J.C. Watts are part of the best political team on television.

Up next: He's a hot ticket on the campaign trail this year, but does Barack Obama have 2008 and presidential ambitions on his mind? We're going to go out to Iowa and try to find out.

Plus: A historic day for the first lady, but it's just the beginning of a major week for Laura Bush. We're going to tell you what's ahead.

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

(COMMERCIAL BREAK)

BLITZER: If you needed any more evidence that Senator Barack Obama is the new darling of the Democratic Party, you only needed to go to Iowa yesterday. You can also see why so many people are talking about a possible Barak Obama run for the White House.

Our congressional correspondent, Dana Bash, traveled to the leadoff presidential caucus state -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Wolf, Senator Tom Harkin's Steak Fry is an annual Iowa event that always draws presidential hopefuls looking to win over Democratic activists. This year, potential 2008 candidates, like Iowa's current governor, Tom Vilsack, and the former Governor of Virginia Mark Warner, were in attendance.

But even they knew most of the 3,500-plus in the crowd came to catch a glimpse of a rising star in the Democratic Party, Barack Obama.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Let's go sit down and eat.

SEN. BARACK OBAMA (D), ILLINOIS: All right, where are we going -- where we going to eat today?

BASH (voice-over): For hungry Democrats, a day to sample their new possibility.

(CHEERING AND APPLAUSE)

BASH: The crowd at this annual Iowa Steak Fry devouring Barack Obama.

UNIDENTIFIED FEMALE: Can we get a (INAUDIBLE) right here?

BASH: Rock star treatment for a 45-year-old senator in office just two years, 97 of 100 in Senate seniority.

UNIDENTIFIED FEMALE: I think you're awesome.

OBAMA: Well, you -- I...

UNIDENTIFIED FEMALE: I don't want you to get a big head, but...

OBAMA: I appreciate that.

BASH: A phenomenon not lost on the host, Senator Tom Harkin.

SEN. TOM HARKIN (D), IOWA: I said we tried to get Bono to be here, but we couldn't, so we got the next biggest rock star in America, Barack Obama.

BASH: A trip to Iowa, home of the kickoff caucuses, usually means you're dipping a toe in the presidential waters.

UNIDENTIFIED FEMALE: I hope that you'll be running for president one of these times.

UNIDENTIFIED FEMALE: I know. I know.

SEN. BARACK OBAMA (D), ILLINOIS: I appreciate that.

BASH: Here, there are T-shirts and petitions begging him to run in '08. He doesn't say yes, but he doesn't say no.

UNIDENTIFIED FEMALE: Can we recruit you to run for president?

OBAMA: Well, I don't know about that. But I'm not -- the -- I'm here to make sure we -- I -- you can recruit me to make sure that I -- we get more Democrats in office in '06.

(CHEERING AND APPLAUSE)

BASH: Obama has visited 25 states, raising money for candidates this year. He urges Democrats to be tougher on national security, and scolds the Bush White House.

OBAMA: Tough talk doesn't make you tough...

(CHEERING AND APPLAUSE)

OBAMA: ... that alienating our allies isn't our strategy, that junking the Geneva Convention, so that Colin Powell, and John McCain and John warner have to stand up and say, enough, that that's not being tough on terrorism! (CHEERING AND APPLAUSE)

BASH: One thing they like is his definition of Democrat.

OBAMA: We don't want government to solve our problems, but what we do expect is that government can help, that government can make a difference in all of our lives.

BASH: Obama appears well aware celebrity guarantees crowds, but not necessarily lasting success.

OBAMA: I mean, when I look at sort of how I'm covered, there's a lot of emphasis on the celebrity and the -- and the -- you know, the -- the sizzle.

BASH: If he keeps coming back, there will be more questions about substance, from ethanol to Iraq to that senator named Clinton.

But this was a day to say hello, flip a few steaks, and just enjoy the sizzle.

(END VIDEOTAPE)

BASH: Obama may try to sidestep questions about 2008, but there is evidence of more than a passing interest. At his side all day was an operative who ran Al Gore's 2000 campaign here. And his staff made a point of introducing the senator to an activist quoted in the local newspaper, saying she was going to drive 130 miles to see if he was the real deal -- Wolf.

BLITZER: Dana Bash in Iowa -- thank you, Dana, for that.

And, by the way, while Obama got the lion's share of attention, several other Democratic presidential prospects were in Iowa in the last few days as well. And, as Dana mentioned, former Virginia Governor Mark Warner and Iowa Governor Tom Vilsack were at the Harkin Steak Fry. Senators John Kerry and Evan Bayh were in the lead-off presidential caucus state as well.

On our "Political Radar" this Monday: You saw it live at the top of the hour. Laura Bush became the first sitting first lady to ring the closing bell at the New York Stock Exchange. Another unprecedented move for Mrs. Bush this week, she will join Bill Clinton as a speaker at the former president's Global Initiative in New York.

It's the latest example of the Bushes and Bill Clinton working together, putting some of their past rivalries behind them.

More proof today that Democrats are trying to make the midterm election a referendum on President Bush -- an independent analysis shows that one out of every five TV ads by a Democrat or Democratic group in the battle for Congress features the president in an unfavorable light. The study was conducted by Campaign Media Analysis Group, CNN's consultant on political advertising -- a lot more coming up from them in this political season. More party lines are being crossed in the Connecticut state race. Democratic-incumbent-turned-independent Joe Lieberman will get a helping hand from a former Democrat-turned-Republican mayor of New York. Michael Bloomberg will host a Lieberman fund-raiser on November 1.

And coming up: murder on the rise. We're going to take a closer look at some new, disturbing numbers from the FBI on violent crime in the United States.

Plus: Hard-pressed U.S. troops face a raging insurgency in Iraq and a Taliban comeback in Afghanistan -- in the next hour, right here in THE SITUATION ROOM, my exclusive interview with General John Abizaid, the commander of all U.S. troops in Iraq and Afghanistan. He will be here.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: We showed you the wrong picture when we were talking about Mark Warner of Virginia making an appearance in Iowa. We meant, of course, Mark Warner. And there is a picture of Mark Warner on the bottom right-hand corner there. We showed you, inadvertently, a picture of a man a lot older. That would be John Warner, the senior senator from the Commonwealth of Virginia. Got the right picture in that graphic that time.

Zain Verjee is joining us with a closer look at some other stories making news.

You think a lot of viewers noticed that little mistake there, Zain?

VERJEE: They might have, but, certainly, Warner would have noticed that had he...

(CROSSTALK)

BLITZER: Correct. That is the correct answer.

(LAUGHTER)

VERJEE: I try.

Good news, Wolf: The first woman to pay for a trip into space is orbiting the Earth right now. Anousheh Ansari, an Iranian-American entrepreneur, was aboard a Russian-built rocket that lifted off from Kazakstan early this morning. She is scheduled to spend 10 days aboard the International Space Station. Ansari is thought to have paid around $20 million for her round-trip ticket.

State and federal authorities in California are searching for drug smugglers they say are responsible for digging this cross-border tunnel in Southern California. DEA agents say they discovered the tunnel after raiding a house in Calexico, about 120 miles east of San Diego. The tunnel extends about 400 feet into a house in Mexicali, Mexico.

Violent crime in America increased last year, for the first time since 1991. Now, that's according to a new report from the FBI. It says the overall rate of violent crime was up 2.3 percent in 2005. The number of murders rose by 3.4 percent. The report cites a surge in juvenile gun crimes as a particular concern -- Wolf.

BLITZER: Thank you, Zain, for that.

Let's get some more details now on this surge in violent crime right here in the United States.

For that, we will bring in our Internet reporter, Abbi Tatton.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, a violent crime reported every 22 seconds in 2005 -- that according to the Crime Clock, which is now available on the FBI Web site -- this recently updated with all this new data from the 2005 crime statistics from across the country.

Now, individual police departments in different cities do, do their own reporting online of crime -- this from the Dallas police, for example, which let you map exactly what crimes took place where on their Web site.

But this FBI site takes you nationwide, so you can zoom in on your city, on your state, or even on your college or university. All these figures are there. And there are some bright spots. What the FBI is saying, that, while violent crime was up last year, over five years, it's actually down -- Wolf.

BLITZER: And a lot of local law enforcement authorities are complaining that the federal government spending way too much money on the fight against terror, and, in effect, neglecting the old-fashioned crime. And perhaps that's one reason why crime rate -- the crime rate is going up.

We are going to have more on this story coming up.

Thank you, Abbi.

Up next: Jack Cafferty's combustible question. Who is telling the real story about Iran's nuclear threat, the U.S. or the international watchdog agency? Jack will be back in a moment with your e-mails.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Let's go up to New York and Jack Cafferty -- Jack.

CAFFERTY: Wolf, the question is: Whom do you trust when it comes to Iran's nuclear program, the United States or the International Atomic Energy Agency? Lonnie writes: "Jack, it's sad to say, but, at this point, I trust the IAEA more than I trust the Bush administration. But all this seems like it could be resolved so easily. If I were president, I would tell Iran it could do whatever it wants, but if one drop of nuclear material is weaponized and either used by Iran or used by a terrorist group it sold the stuff to, they could say goodbye to the city of Tehran, all of it."

Jenny in New York writes: "It's a slam dunk. The IAEA is the one to believe. This administration has no credibility left."

Rory in Minnesota: "Jack, I think your question is irrelevant. It doesn't matter. The IAEA has yet to be wrong, or that administration has yet to be right. The important thing to be remember is that, just like Iraq, the decision as to what to do has already been made, on ideological grounds, not facts. All we have to do is wait now to see what that decision was."

Mark writes: "I do trust the United States to make a best-effort judgment. I do not trust the fractured, partisan U.N. to divulge useful information. Dick Cheney calls it the 1 percent solution. I'm afraid of either scenario, the U.S. ignoring Iran until it's too late, and the U.S. stopping Iran too early. But which would you air on the side of?"

Linda in Milford, Connecticut: "After careful deliberation, I have come to the conclusion that we could trust a panel consisting of Aesop, P.T. Barnum, and Chicken Little before we could trust this administration and its rubber-stamp Congress..."

(LAUGHTER)

CAFFERTY: "... with an intelligent decision based on facts important enough to go to war."

And, finally, Kirk in California: "It's a question of where the track records speak volumes. I wouldn't believe this president if he told me I was a 47-year-old white male living in California. And I am."

(LAUGHTER)

CAFFERTY: Wolf.

BLITZER: Jack, thank you -- Jack Cafferty.

Still to come: The IRS takes on a California church over the preaching of politics. Was a line crossed? And will there be a price to pay?

And, in our next hour: my exclusive interview with General John Abizaid, the overall U.S. military commander in charge of America's most dangerous and difficult missions in Iraq, Afghanistan, and the war on terror.

That's coming up. (COMMERCIAL BREAK)

BLITZER: In the "Culture Wars": A watchdog group is launching a new campaign today, warning churches about financial fallout from preaching politics. Federal law forbids tax-exempt groups, such as churches, from overt partisan activity.

Americans United for Separation of Church and State say it's trying to counter religious conservative groups hoping to build a church-based political machine on behalf of Republican candidates. Tax law and religious politics are at issue in California, where a battle between the IRS and the church appears to be headed for court.

Let's bring in CNN's Peter Viles. He is joining us in Pasadena -- Peter.

PETER VILES, CNN CORRESPONDENT: Wolf, the church behind me, All Saints, risks losing its tax-exempt status over this battle with the IRS, or it could face a lesser penalty. It could have to pay one day's worth of taxes, the day in question being the day of a controversial sermon, which was Halloween 2004.

(BEGIN VIDEOTAPE)

VILES (voice-over): At All Saints Church in Pasadena, traditional sermon: First, start with a joke.

REVEREND EDWIN BACON, ALL SAINTS EPISCOPAL CHURCH: I want to begin the sermon by once again expressing my gratitude to the Internal Revenue Service.

(CHEERING AND APPLAUSE)

VILES: Then get right to the point.

BACON: This entire case has been an intrusion, in fact, an attack, upon this church's First Amendment rights to the exercise of freedom of religion and freedom of speech.

(APPLAUSE)

VILES: At issue is an IRS investigation of a sermon preached here on the eve of the 2004 presidential election. The IRS says it received a tip that the sermon -- quote -- "took a position in opposition to the candidate George W. Bush and in support of the candidate John Kerry."

It further reminds the church that, as a tax-exempt organization, it is -- quote -- "expressly prohibited from intervening in any political campaign."

The church has long maintained the sermon was anti-war, but not anti-Bush.

REVEREND GEORGE REGAS, ALL SAINTS EPISCOPAL CHURCH: I did not violate the tax law. I did not explicitly say, vote for Kerry. VILES: The IRS is demanding numerous church documents, and wants church officials to appear at a private hearing.

The church is digging in its heels.

BACON: I would rather have a judge making this decision in a free and open court, than in a closed hearing with the IRS.

VILES: And, to demonstrate that he will not be silenced, Reverend Bacon lashed out at the way the country is being governed.

BACON: I think we're seeing a slow train wreck of democracy in the past five years, since 9/11. And I'm very concerned, both as a Christian, as a believer, and as an American.

(END VIDEOTAPE)

VILES: Now, back to the controversial sermon in 2004, in that sermon, the reverend argued from the pulpit that Jesus would oppose the war in Iraq and that Jesus would also be upset with the pro-life movement, that Jesus, if he were alive today, would say -- quote -- "Shame on all those conservative politicians."

So, no doubt that this was a political sermon here two years ago -- the question is, did it cross that line and endorse or oppose one candidate or the other? -- Wolf.

BLITZER: Peter Viles, reporting for us, thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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