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THE SITUATION ROOM

September Spin on Iraq; Stocks Recover After Big Losses; Obama Defends Foreign Policy

Aired August 16, 2007 - 16:00   ET

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


MILES O'BRIEN, CNN ANCHOR: Happening now, general skepticism. As the -- as the top soldier in Iraq prepares to brief the country on what's next in the war, many more Americans are doubting his credibility.
Also this hour, Senator Barack Obama is calling for a new kind of foreign policy. Are his unconventional ideas as dangerous as his opponents claim?

And to run or not to run. Is Fred Thompson spending too much time on the sidelines thinking about getting in the game? Some say the train may have left the station.

Wolf Blitzer's off today. I'm Miles O'Brien.

You're in THE SITUATION ROOM.

First this hour, a report card on the Iraq war isn't due until next month, but Americans have already made up their minds about the man who is making the assessment. Our new poll showing a majority of you do not trust General David Petraeus to tell the truth about the war.

And meanwhile, a battle is brewing between the White House and Congress over how that report will be delivered.

We begin with our White House correspondent, Suzanne Malveaux, who is with the president in Crawford, Texas.

Suzanne, tell us about this debate inside the administration.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Miles, it really is all about credibility here. We have heard the president time and time again talk about that he will go to General David Petraeus for the assessment in terms of how the strategy is going, his war strategy, whether it's successful, what are the failures here. And that is why there's some congressional aides who told "The Washington Post," as well as CNN, that they were outraged when they say, they claim that the White House went before them and said that perhaps General Petraeus should brief them in private and have secretaries Gates, as well as Rice, brief the public here and testify publicly.

They say, look, if this is your guy you're going to go to, we want to hear it directly from him. We want him to answer questions before the microphones and before the cameras. Now, National Security Council spokesman Gordon Johndroe spoke with me today and said that this is a story that is bogus and that he says they are simply trying to make political hay.

(BEGIN VIDEO CLIP)

GORDON JOHNDROE, NSC SPOKESMAN: General Petraeus and Ambassador Crocker will testify to the Congress in both open as well as closed sessions prior to the September 15th report. That has always been our intention. I believe the president has talked about the need to hear from General Petraeus and Ambassador Crocker.

(END VIDEO CLIP)

MALVEAUX: And, Miles, we have heard from the Democrats as well. This from House Democratic caucus chairman Rahm Emanuel, putting out a statement, very skeptical about how all of this is going to go down. He says that, "The war in Iraq has seen too many reports and rosy assessments that put spin first and fact second."

And one thing that we've heard today, Miles, is really kind of a preview of the administration's case that they're going to make in September. We heard from Press Secretary Tony Snow making a major speech today taking on both Democrats and Republicans, saying that this is really kind of a do-or-die moment, a moment of choosing here in which they have to back the president's war effort -- Miles.

O'BRIEN: Suzanne Malveaux in Crawford, Texas.

And now the numbers. Four and a half years into the Iraq war, it appears Americans are pretty jaded and very skeptical of what they hear about the war from the Pentagon.

Here's our senior political analyst, Bill Schneider.

Bill, does it look like the Petraeus report will have much of an impact?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Not really, Miles, because most Americans have already made up their minds about Iraq.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice over): Washington is anxiously anticipating next month's report by the top U.S. commander in Iraq.

SEN. MITCH MCCONNELL (R), MINORITY LEADER: People on both sides expect policy post-September to be based in large measure on -- on what General Petraeus and Ambassador Crocker have to say.

SCHNEIDER: But the report may not have much impact, because most Americans have formed firm opinions about this war.

Twenty-one percent say they favor the war and their minds are made up. More than twice as many say they oppose the war and will not change their minds. Only 17 percent say they oppose the war but could change their minds.

SEN. TRENT LOTT (R), MISSISSIPPI: Let's give General Petraeus and our men and women and the Iraqi government a chance to meet some of these guide posts to improve the situation. And come September, we'll have to see how they're doing and we'll have to make an assessment.

SCHNEIDER: Suppose General Petraeus reports that the U.S. is making progress in Iraq. Would that have much impact on public opinion? Apparently not.

Seventy-two percent of Americans say it would not affect their view of the war at all. Only 28 percent say it would make them more likely to support the war. And most of those already favor the war.

The White House says it's not surprised by the public's response.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: Of course people are skeptical about what's going on with the war, which is why I think it's important for them to listen to what commanders have to say. What ought to be determined ultimately in this debate are what the facts are on the ground.

SCHNEIDER: But does the public trust the top commander to report what's really going on? Only 43 percent say yes. A majority of Americans say they do not expect a completely objective report.

(END VIDEOTAPE)

SCHNEIDER: By law, the report to Congress will be based on the assessments of General Petraeus and Ambassador Crocker. But it will actually be compiled by the White House. And that is likely to reinforce public skepticism -- Miles.

O'BRIEN: Bill Schneider, thank you very much.

It's a little after 4:00 Eastern is. Do you know where your nest egg is?

Sadly, it might be rolling down a steep hill. The markets once again on a wild ride today. Take a look at the chart behind me right now. Read and it weep. It tracks a month of bloodletting which erased this year's gains.

As you'll recall, the Dow reached 14,000 on July 19th. It's been downhill ever since.

Ali Velshi joins us now from the New York Stock Exchange, where the markets just closed.

After all the worry today, down 200, 300 points. They actually finished on the upside.

What happened, Ali?

ALI VELSHI, CNN CORRESPONDENT: Yes. In fact, we're just settling in, Miles. The numbers are settling in, but this was a remarkable turn around today.

At one point, the Dow was down more than 300 points, and a lot of people thought this was it. But, you know, a lot of folks we were talking to today said, you know, we're watching this thing, it doesn't make sense. It might be a little oversold, it might be an opportunity to get into the market. And that's what happened.

In the last hour of trading, the Dow just kept on building and we ended up the day, you know, off 13 points. That's still down, but the fact is, on a market like we've seen today, where the gains for the year, Miles, have been erased on most of these markets, a lot of people thought this was the big one and it didn't end up being so.

This is all about that mortgage mess. This is all about those subprime mortgages, the fact that people can't pay their mortgages and their rates are going up, and how that sort of floated around and affected world markets. But it did end at least for today on a positive note.

It's hard to say that down 15 points on the Dow is positive, Miles, but after the day that we've seen and the roller-coaster ride that we've had, there are a lot of people on Wall Street and across America looking at their 401(k)s, very happy that even though it's the sixth down day in a row, we'll take a 15-point loss over 200 or 300 points down on a given day.

O'BRIEN: I'll take it. I'm afraid to look at my 401(k).

Let's talk about this -- is it -- are we officially in a bear market now?

VELSHI: We are not, in fact. We were going to be in a correction.

When the Dow hits 12,600 on the downside, that means that it's 10 percent below the 14,000 that it hit on July 9th. When a market is 10 percent off its high, it's called a correction. When it's 20 percent off its high, it's a bear market. And that sort of placed areas to start becoming concerned about.

We did hit that 12,600 points today, but then the Dow started coming back. Major markets like the S&P 500 actually closing in positive territory today.

This is a signal that some people -- and the people I've spoken to on Wall Street today are saying the same thing. Sure, there are reasons to be concerned about this market, sure this mortgage thing is real, but the bottom line is there are a lot of good, strong companies out there. And this is bargain hunting.

This is -- this is a big sale. They're going in and buying stocks, and that's what you see.

It happened in the last hour of trade on very heavy volume. That means the pros are getting into this market, and they're coming in and saying there's money to be made in the stock market. Maybe the rest of us should take that advice -- Miles.

O'BRIEN: Buying opportunity. Let's not forget that.

Ali Velshi, thank you very much.

VELSHI: OK.

O'BRIEN: Another major story to tell you about this hour, a Florida jury finding Jose Padilla guilty of terrorism charges today. A U.S. citizen, Padilla's case has been a target for critics of the Bush administration's anti-terror tactics.

Padilla was convicted of conspiring to kill people in an overseas jihad and of conspiring to fund and support terrorism overseas. He was once accused of being part of an al Qaeda dirty bomb plot, but those allegations were not part of his trial in Miami.

We'll have more on the conviction of Padilla and his co- defendants in our next hour of THE SITUATION ROOM.

Time now for "The Cafferty File". Jack Cafferty joining us from New York.

Hello, Jack.

JACK CAFFERTY, CNN ANCHOR: Miles, there's a very troubling statistic. The rate of suicide in the U.S. Army has reached a 26-year high. Ninety-nine soldiers killed themselves last year. That translates to a rate of 17.3 suicides for 100,000 troops.

A new report out shows that more than one out of four soldiers who committed suicide did so while serving in Iraq or Afghanistan. Perhaps it's no surprise Iraq was the most common deployment location for those who either attempted or committed suicide.

The Army found that the main indicators for last year's suicides were failed relationships, legal and financial problems, and job stress. The findings also point to a significant relationship between suicide attempts and the number of days deployed in Iraq, Afghanistan, or neighboring countries.

The Army claims there's limited evidence, their words, that repeated combat deployments in the middle of Iraq's civil war are putting more troops at risk for suicide.

Really?

This news comes as the Army's beefing up old programs and creating some new ones that are designed to provide mental health care to the troops. Some troop surveys in Iraq show that 20 percent, one in five soldiers, have signs of Post-Traumatic Stress Disorder, and about 35 percent of them seek some sort of mental health treatment one year after returning home.

Here's the question: What should be done to reverse the Army's highest suicide rate in 26 years? E-mail your thoughts to caffertyfile@cnn.com, or go to cnn.com/caffertyfile -- Miles.

O'BRIEN: I wonder how that suicide rate compares to the general population. It would be an interesting statistics.

CAFFERTY: I have no idea.

O'BRIEN: Jack Cafferty, thank you very much.

Senator Barack Obama is fending off criticism he is not ready for the Oval Office. He's in Iowa today talking foreign policy. His rivals suggest he has some reckless ideas.

And could the White House have kept the Senate in Republican hands by telling the world Donald Rumsfeld had resigned the day before the last election?

And Hurricane Dean has all the makings of a monster storm. It has the Caribbean in its sights now and the Gulf after that. We'll have the latest.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

O'BRIEN: Senator Barack Obama on the defensive again today over his foreign policy vision or, as his rivals charge, lack thereof. The Democratic presidential candidate is campaigning in Iowa. Who isn't?

Our national correspondent -- actually, chief national correspondent, don't want to demote him -- John King is there.

John, Obama has a fair amount to talk about here. A fair amount to prove, doesn't he?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: He certainly does, Miles. And you mentioned we're at the Iowa State Fair. You can get a fried Twinkie here, you can get a corn dog here, or you can get a presidential candidate.

John Edwards is speaking right here behind me. Senator Chris Dodd also here on the Democratic side today. Barack Obama will be here in a little more than an hour.

He began his day though, as you noted, at another end of Iowa, confronting what at the moment is the greatest challenge to his campaign.

(BEGIN VIDEOTAPE)

KING (voice over): It is the question, and he knows it.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Well, I think it's time to turn the page on conventional foreign policy thinking. KING: In Council Bluffs, Iowa, Senator Barack Obama tried to turn his lack of Washington experience into an asset, lumping rival Hillary Clinton with Vice President Dick Cheney in making the case the Iraq war is deadly proof judgment matters more than experience.

OBAMA: After all, the war in Iraq wasn't cooked up in Council Bluffs. It was authorized by politicians in Washington who said they knew better than you did, and that's what conventional thinking on foreign policy amounts to. Conventional thinking has to change.

KING: A state fair draws all of the major presidential hopefuls to Iowa. Made-for-TV moments at every turn, and a chance to mix and mingle with the voters who get the first say.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I'm glad you're here. I wouldn't miss it.

KING: Among the Democrats, it is Senator Obama who perhaps has the most to prove at the moment, under attack from his rivals for several statements they say show the 46-year-old first-term senator doesn't grasp the complexities of foreign policy.

SEN. JOSEPH BIDEN (D-DE), PRESIDENTIAL CANDIDATE: This is no time for on-the-job training for this next president coming in.

PETER HART, DEMOCRATIC STRATEGIST: Senator Obama's biggest challenge is to answer the question, is he ready to be the foreign policy leader and commander in chief? He has yet to do this. And he has to do it before the primaries.

KING: There's time, but veteran Democratic strategist Peter Hart says Obama must first demonstrate post-9/11 leadership credibility. Only then could he turn to the next big challenge -- convincing Democrats nominating Senator Clinton is the real risk.

HART: Hillary Clinton polarizes the American voters. Democrats love her. Republicans hate her. And Independents are split. Any election she's involved in is going to be a close election.

(END VIDEOTAPE)

KING: I mentioned to you, Miles, three Democrats here today -- Dodd, Edwards and Obama. The Republicans also coming out to the state fair. Romney and McCain already through.

And tomorrow here at the state fair, the Iowa debut of former Senator Fred Thompson. His first campaign appearance in this state. Senator Thompson trying to prove to the people of Iowa, I may have skipped last weekend's Straw poll, but he's about to get into the race for good and said he'll be here at the fair to say hello -- Miles.

O'BRIEN: Oh, it will be interesting to see if he finally makes it official after all this talk.

Let's talk about Senator Edwards, who is speaking right behind you there. Iowa is so crucial to him right now, isn't it? KING: It absolutely is. He's been very frustrated for months now. Third in the national polls. He was ahead in most early polls here in Iowa, now the polls tend to show a more tight race here in Iowa with Edwards, Clinton and Obama at the top.

He's been very frustrated that most of the attention has gone to Senator Clinton and Senator Obama. He needs this state as a breakthrough.

The one way to go from three and to break up the conventional wisdom is to knock the front-runner off, in this case, her, lead, and that would be right here in Iowa. This is the place John Edwards' campaign says he needs to prove himself. One of the reasons he's taking his time and running through health care, the economy, the war and so many other issues at the "Des Moines Register" soapbox, as they call it, right behind me -- Miles.

O'BRIEN: John King, have a corn dog for me and enjoy the fair.

Thank you very much.

KING: Absolutely.

O'BRIEN: Republican presidential candidate Mitt Romney is slamming rival Rudy Giuliani, saying he didn't do enough to stop illegal immigration when he was the mayor of New York. Now Giuliani's past comments on immigration are starting to show up, where else, on YouTube?

Our Internet reporter, Abbi Tatton, is here.

Abbi, YouTube once again shaping another political war of words.

ABBI TATTON, CNN INTERNET REPORTER: Miles, in this circumstance, YouTube is becoming a place where people are contrasting candidates' statements now and then. Rudy Giuliani, this week...

(BEGIN VIDEO CLIP)

RUDY GIULIANI (R) PRESIDENTIAL CANDIDATE: I promise you, we can end illegal immigration.

(END VIDEO CLIP)

TATTON: And Rudy Giuliani, 11 years ago...

(BEGIN VIDEO CLIP)

GIULIANI: We're never, ever going to be able to totally control immigration to a country that is as large as ours. That has...

(END VIDEO CLIP)

TATTON: That 1996 clip was posted by the Web site TPMCafe, amongst others. They said they got it from a rival campaign. A spokesman for the Rudy Giuliani campaign, Jason Miller, says of this video, "As the mayor made clear in his comments over a decade ago, the technology simply did not exist to completely secure the border in 1996."

A spokesman for the Mitt Romney campaign, which denies being the source of this video, but which has gone after Giuliani on the issue of immigration, calls that explanation nonsensical. However, people in glass houses -- old videos of Mitt Romney's earlier position on abortion are all over YouTube, and earlier this year prompted Mitt Romney to go online to respond -- Miles.

O'BRIEN: Abbi, it's interesting how this all plays out on YouTube. And let's face it, all the candidates have a trail, an electronic trail, don't they?

TATTON: An e-trail. The videos are all online and they're having to respond online as well.

O'BRIEN: Abbi Tatton, watching the Internet for us.

Thank you.

Rudy Giuliani says, leave my kids alone. Is the Republican presidential candidate being hurt politically by his family woes?

Paul Begala and J.C. Watts are standing by for our "Strategy Session".

And first daughter Jenna Bush with a big announcement.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

O'BRIEN: Welcome back.

Our Carol Costello is monitoring the wires, keeping an eye on video feeds from all around the world. She joins us now with a closer look at what's happening.

(NEWSBREAK)

O'BRIEN: A sign of hope fades away. We're following new developments. We're following new developments in the search for trapped miners in Utah and the long, painful wait for answers.

And the rising death toll in the massive earthquake in Peru. We're learning more about the scope of the devastation.

(COMMERCIAL BREAK)

O'BRIEN: Happening now, it brings new meaning to the term "Cold War". Russia, Canada, the U.S. and others all vying for control of the Arctic. Or more precisely, the potential energy riches that lie deep below the polar ice cap. We'll taken an in-depth look at what is at stake.

Also, U.S. credit market woes are leading to turmoil on Wall Street. Stocks recovered after steep losses earlier today, but what if the credit crunch gets worse?

Frank Sesno takes a look at what might lie ahead.

And Democratic presidential candidate Chris Dodd is proposing cutting off one of America's top trading partners. He joins us in THE SITUATION ROOM. I'll ask him if he's going too far.

Wolf Blitzer's off today. I'm Miles O'Brien.

You're in THE SITUATION ROOM.

It is now day 10 of that excruciating mine ordeal in Utah. And once again today, it was an emotional roller-coaster. Hopes raised as rescuers looking for those six trapped miners detected some faint noises, but that hope has quickly given way to more frustration.

Brian Todd is on the scene.

Brian, tell us what they found, and tell us about the disappointments.

BRIAN TODD, CNN CORRESPONDENT: Well, you really captured it there, Miles. Every time there's a piece of good news regarding this search, there's always a setback to temper it. We got that again today.

First, we're going to show you some new pictures that we got. These are a from a cavity deep inside the mine, about 1,400 feet down from the third hole that they drilled.

They thought that the miners might have retreated to this cavity for air if they survived this collapse. You can see from the pictures there's a lot of water coming from the ceiling. Water that officials say is drinkable.

There's wire mesh down there. There are holes. They say the air down there is breathable. But, the bad news from this is that they say that this video indicates that the miners didn't -- did not likely go into this chamber.

Still, this can only see about 30 or 40 feet all the way around. They believe this cavity is much bigger than that.

Now, other piece of kind of mixed news here on the sounds that were picked up.

Yesterday, we learned that they did pick up sounds or vibrations of sounds from so-called geophones that were placed on the surface of this mountain. Those phones can pick up noises up to 2,000 feet down.

The news regarding that that's a little bit mixed here is, that it literally could have been anything. And owner Robert Murray alluded to that in my interview with him a short time ago.

(BEGIN VIDEO CLIP)

BOB MURRAY, PRESIDENT & CEO, MURRAY ENERGY CORP.: It could have been thunder, and it was thundering then. It could have been a deer or an elk. It could have been something else. And that's what we need now to find out, what was that sound that came from 143?

(END VIDEO CLIP)

TODD: And by 143, he means crosscut 143. That's where they're drilling a fourth hole right now based on those sounds. They're still going to explore that, go down to this crosscut 143 about 1,500 feet down and see if they see any trace of those miners.

Another thing that has set them back recently today, more of these so-called mountain bumps that affect the digging effort in the main tunnel. They're less than halfway in to where they need to go to get these miners. The mountain bumps today set them back again -- Miles.

O'BRIEN: Brian, the owner of the mine, Bob Murray, has said repeatedly throughout this that, when people talk about safety concerns there, that a lot of that criticism has to do with the fact that the union is trying to organize that mine.

Now, we talked briefly about this yesterday. Let's get this as clear as we can. Do we know if this was the focus of an organization effort, and was there some safety issue at the root of that?

TODD: Well, the safety issues have cropped up throughout this ordeal. And, as you pointed out, Mr. Murray has said that the people making these accusations are trying to organize this into a union mine.

We spoke today with officials of the United Mine Workers of America. They want to clarify this. They say they do not have an effort to organize this mine into a union mine. They have not had such an effort for years, and they really want to say away from this fray out of respect for the families here.

O'BRIEN: All right, Brian Todd in Huntington, Utah, thank you very much.

It's August, and that means the hurricane season is heating up. Two storms on the horizon right now. Erin, downgraded now to a tropical depression, sloshing ashore in Texas as we speak, causing heavy flooding in some areas. But Hurricane Dean, that's the one to watch. It is a big storm. It is gaining strength, heading toward the Caribbean islands right now.

Our severe weather expert, Chad Myers, joining us from CNN Center with more on this.

Chad, let's start with Dean and get a sense of what's going on with that one.

CHAD MYERS, CNN METEOROLOGIST: Dean is going to be either a Category 4 or a Category 5 hurricane before it's done, Miles. It is a huge storm.

I mean, look at this thing. This is the Virgin Islands up there. They are up -- and in Venezuela down here. This will completely fill the Caribbean when it gets there. It is still in the Atlantic at this point. It is a much more dangerous storm than Erin ever was.

Now, what was Erin? Erin was a rainmaker and still is. San Antonio flooding here just south of town, eight inches of rain in the past six hours. Six inches of rain in the past three hours. And Houston, you have seen flooding for most of the morning hours.

We do -- Hurricane Dean now is -- I just got the new 5:00 update, got that 31 minutes early. They have now increased Dean. We will get to that in a second. Now that I have the numbers, we will get to this. We will talk about Erin for a second. Houston seeing an awful lot of rain here still.

And, San Antonio, you have finally, finally broken out, especially to the east part of your city. But, San Antonio, we don't have any pictures for you yet. But you can see that little red dot right there? See that right there? That was your rainfall. That was your rainfall record for some spots south and east of town.

Now we're back to Dean. There it is, large storm. It's going to be a big-time category-something major hurricane, the first hurricane of the year. This will be the first major hurricane of the year as well. It will run through the islands as a Category 2, very close probably to Martinique.

But notice the cone. The cone is still very large. And as it moves to the west, it's going to get larger. Could be in Cuba. Could be all the way down to Honduras, but that 4 means Category 4 at 140 miles an hour.

Here's the latest, Miles, 100 miles per hour right now, that's maximum sustained winds with higher gusts. It's now a Category 2 storm, and it is probably going to get much, much stronger before it moves into the Caribbean Sea.

So, there we go, the islands, right now, you guys. Dominica, Martinique, you need to batten down the hatches. This is going to be a big storm for you in the next pretty much 24 hours -- Miles.

O'BRIEN: And, Chad, any of the long-range models predicting any sort of turns to the right that would send it up toward the Gulf Coast of the U.S.?

MYERS: Well, Dave (ph), get ready to move this for me.

Here is the model. These are the models. We call these the spaghetti models, Miles. There's the hurricane right there. We expect it to be over Fort-de-France, which is Martinique. Now we're taking you off to the west and through Kingston to Jamaica. If have plans to go to Jamaica or Grand Cayman, you better call ahead and try to find a different week, because this is going to be a big storm through here.

And, Miles, most of them -- it's kind of like a shotgun shell. Most of this shotgun here into the Yucatan Peninsula and then turning to the north, but some big-time outliers, this one here very dangerous. That takes it right into the Gulf of Mexico. It's 180- mile-per-hour storm.

O'BRIEN: Wow.

MYERS: Now, clearly, not every model. Only one or -- maybe just add them all up, divide by two, you might get something right. But I will tell you what. This is going to be a big storm for somebody, and the U.S. is still in the sights.

O'BRIEN: All right. We will be watching it. You will be watching it for us.

MYERS: Absolutely.

O'BRIEN: Thank you, Chad Myers, in the Weather Center.

(CROSSTALK)

O'BRIEN: In Peru today, a desperate search for survivors, after a huge magnitude-8.0 earthquake struck last night.

The death toll now stands at at least 450. More than 1,500 are injured. Tens of thousands are injured.

Joining us now on the line is Dan Brumbaugh. He's an American working in Lima.

Dan, first of all, give us the scene today. Tell us about the relief efforts.

DAN BRUMBAUGH, AMERICAN LIVING IN PERU: Well, what we are seeing here in Lima IS That there are a lot of people attempting to get down there, and the government is not letting any traffic through on the highways yet. It's only government, military planes and others like that that are able to get through. We have been trying to rent an airplane or a helicopter. Everything's gone.

So, there is a great bunch of relief going in there, I understand it, from Brazil, from Ecuador, from a number of people, countries, that sent people in down there already. But even in the -- even in the capital today, it it's just now seeming to get back to normal. We had a scare this morning about 10:30 that took everybody out of the most of the buildings again here in San Isidro, where I am.

But -- and there are a lot more ambulances and fire trucks running by today than there have been in the last couple of weeks. So, I imagine a lot of people are having stress problems and such. This country is really, really on edge from Lima on south. That's for sure. And we just pray for all the people that are hurt and without homes and such down there. And we ask anybody that can to go to any relief agency you can and help -- help -- help these people out down here.

O'BRIEN: Well, now, tell -- tell us about efforts to -- I assume you would like to get out and come back to the U.S. Are you able to do any business? I know there's probably not much business being done right now.

BRUMBAUGH: Well, surprisingly enough, even though this is the strongest quake the people in Lima have felt in 30 years, we -- believe it or not, we went last night and did business almost as usual in one part of Lima.

You know, it was quite a strong quake here in Lima. I was amazed personally that it could be that strong and not have more obvious damage than it did. But, believe it or not, people, although quite nervous and jumpy, business is going on, I'm going to say probably 60 percent as normal here in Lima today.

A bunch of schools are closed. But down here in the business district, it's pretty much business -- business as usual.

O'BRIEN: Dan Brumbaugh, an American in Lima, Peru, thanks for that report.

The days are passing, and Fred Thompson is still pondering. When, if ever, will he formally dive in to the Republican presidential race? And, if he does, will it be too late?

And the war in Iraq gets more personal for Democratic presidential contender Joe Biden. We will tell you about that.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

O'BRIEN: Republican Fred Thompson heads to Iowa tomorrow, his first trip there as an unofficial presidential candidate, whatever that means. Many people are asking if he will formally jump into the race anytime soon.

CNN's Tom Foreman is among the people asking the question, reading the tea leaves for us.

Is there any doubt he will run?

TOM FOREMAN, CNN CORRESPONDENT: Oh, is there any doubt? You know, this guy's like a bad lead singer in a rock band. He never knows when to come in. That's what we're dealing with here.

(LAUGHTER)

FOREMAN: Fred Thompson is making another important move tomorrow, but he still isn't answering the most important question. (BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: He's here, Senator Fred Thompson.

(CHEERING AND APPLAUSE)

FOREMAN (voice-over): Fred Thompson is going to the Iowa State Fair Friday, but not yet as a candidate. He's still mulling a run for the White House and won't make an announcement until early September. The actor and former Republican senator told a radio show on Wednesday that he's got plenty of time.

(BEGIN AUDIO CLIP)

FRED THOMPSON, FORMER U.S. SENATOR: And I'm taking the time that I have got allotted to me to get my team together, to get my act together.

(END AUDIO CLIP)

FOREMAN: But some folks are saying, get your act together soon.

JONATHAN GRELLA, REPUBLICAN STRATEGIST: A candidate that's looking to win this nomination in short order in 2008 would be would be ill-advised to take any more time than he already has.

FOREMAN: Thompson is still hovering in the top tier, but he's down a few points from June and July in some national polls.

AMY WALTER, CNN POLITICAL ANALYST: It's not the polls as much as it is the sort of banter inside Washington, which, you know, the -- the excitement level a Fred Thompson's candidacy, which was very high a few weeks ago, seemed to have dimmed.

FOREMAN: A late entry brings risks, and, quite simply, it can be dangerous to keep everyone hanging on for too long. Take New York Governor Mario Cuomo in 1991. With his plane idling on the tarmac headed to New Hampshire hours before the filing deadline there, he declared he would not run, in part because he feared ruining his party's chances.

(BEGIN VIDEO CLIP, DECEMBER 20, 1991)

GOV. MARIO CUOMO (D), NEW YORK: It would be in the best interests of the Democratic Party that I abandon any such effort now.

(END VIDEO CLIP)

(END VIDEOTAPE)

FOREMAN: Folks out in Iowa seem like they're still open to the possibility of another Republican contender, and these caucus folks have been known to make up their mind late. So, maybe, maybe, Thompson is playing it all right here. Maybe you wait to the last minute and some jump on board. But we will have to see.

O'BRIEN: Well, it is an awfully long campaign.

The most important thing, though, in this whole racket is money.

FOREMAN: Yes.

O'BRIEN: Is he raising any money while he's a non-candidate?

FOREMAN: He is. He raised about $3.5 million -- well, about $3.5 million in June, $3.5 million. That's a lot of money.

O'BRIEN: That's decent.

FOREMAN: Not so much compared to some other people.

O'BRIEN: Right.

FOREMAN: He could do better. We will have to see.

The biggest thing that is a wild card on Fred Thompson, though -- I keep saying this, and I think it's absolutely true -- never, never, never forget, this is the difference he has over everybody else. He's been, for years and years and years, associated with one of the most popular, well-known shows on TV. Most people aren't paying attention to the election right now, but they are playing attention to "Law & Order" still in reruns. That makes him a wild card whenever he wants to get in.

O'BRIEN: And it's a role which serves him well.

FOREMAN: Yes.

(CROSSTALK)

FOREMAN: I mean, he always looked like a guy in charge...

O'BRIEN: Yes.

FOREMAN: ... reasonable, fair, thoughtful guy.

O'BRIEN: Yes.

FOREMAN: If he can parlay that into his politics, then maybe it won't matter if he jumps in even in December.

O'BRIEN: Tom Foreman...

FOREMAN: We will see.

O'BRIEN: ... thank you very much.

Tom is, of course, part of the best political team on television.

And, remember, for the latest political news at any time, check out the CNN Political Ticker. You will find it at CNN.com/ticker.

Up next in the "Strategy Session": Rudy Giuliani has his back up when it comes to questions about his family. Well, is coverage of presidential politics focused too much on personality and not policy?

And what if Defense Secretary Rumsfeld had resigned before Election Day? Would the GOP still be the majority party in Congress? That's something for Paul Begala and J.C. Watts to bat around. Our "Strategy Session" is ahead.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

O'BRIEN: More grist today for politicos who like to wonder what if. They all do, don't they? A fresh report out says former Defense Secretary Donald Rumsfeld resigned the day before the election, but the president chose not to announce it until the day after the votes were cast and the Senate had swung to the Democrats.

That's one of the subjects we will be batting around today in the "Strategy Session."

Joining me now, Republican congressman -- former Republican Congressman J.C. Watts and Democratic strategist Paul Begala.

Gentlemen, good to have you with us here today, as always.

Let's look at three Senate races that were particularly close. Missouri, Claire McCaskill with 50 percent, Jim Talent with 47 percent. Montana, Jon Tester, 49 percent, Conrad Burns, 48 percent. Virginia, James Webb, 50 percent, George Allen, 49 percent. Especially the last two races, very close.

If there had been an announcement the day before that Rumsfeld was out, J.C. Watts, would those have gone the other way?

J.C. WATTS, CNN POLITICAL ANALYST: Miles, I think Donald Rumsfeld's arrogance probably contributed to, you know, the downfall of Republicans. But I don't think that it would have been impacted races. I think the...

O'BRIEN: Not at all, even with so few votes that could have swung it, right?

(CROSSTALK)

WATTS: You know, that's all speculation. That's -- that...

(CROSSTALK)

O'BRIEN: Well, yes, this is speculation. Yes, we're doing speculation.

(CROSSTALK)

WATTS: We're guessing, you know, as you say, playing the what-if game. I don't think -- I don't think it would.

I think -- I think Webb ran a very good race in Virginia. I think Tester ran a good race in Montana. Those candidates were wounded prior to Donald Rumsfeld. So, I think to say that Rumsfeld was -- he might have contributed. I'm not so sure he would have...

(CROSSTALK)

O'BRIEN: So, it would not have moved the election a bit? What do you think?

WATTS: I'm not -- I'm not -- I don't think it would have.

PAUL BEGALA, CNN POLITICAL ANALYST: I think the day before was too late.

O'BRIEN: Yes.

BEGALA: Six months before could have made a difference, because part of what voters were telling the president was, you have got to change course in Iraq. And the president was stubbornly refusing to do so.

And, so, the Democrats were using Rumsfeld, not really about not Rumsfeld, per se, but about the intransigence of the administration. But it is true. At that last minute like that -- what it does point out is -- I'm still stunned that -- I guess I shouldn't be -- that George W. Bush, he was -- I'm trying to say a nice word -- I don't want to say the L-word -- he was fibbing straight to us.

When he was asked just a few weeks before the election about Rumsfeld, he said, no, I want him here all the way through the end of my presidency. It's still...

(CROSSTALK)

O'BRIEN: ... say that about staffing issues all the time.

BEGALA: But they can't -- you can't lie like that. The president can't lie to the American people, ought never lie like that.

O'BRIEN: All right.

But let me ask you this. If Rumsfeld had -- his resignation had been announced on the eve of the election, what you would have said? You would have called it bare-bones politics, right?

WATTS: Bingo.

BEGALA: It was.

O'BRIEN: Right?

BEGALA: But he -- the president was playing politics.

Keep in mind, this is a president who scheduled a vote on going to war to coincide with influencing the midterm elections in 2002. So, I mean, I'm from Texas. As we say, don't pee on my boots and tell me it's raining. I don't want to hear tell George W. Bush to tell me that he wasn't trying to influence the election by hiding the Rumsfeld deal.

WATTS: Well, I don't -- if he was -- if we're saying that it would have influenced the election, then it -- it would have made sense. If the president was playing politics with it, he would have fired him the day before.

BEGALA: He was playing politics badly.

(LAUGHTER)

(CROSSTALK)

WATTS: He would have fired him the day before. It didn't make any sense to do it the day before. And, again, I think we're giving Donald Rumsfeld too much credit for ruining the election for Republicans in -- in November.

O'BRIEN: All right, let's talk -- let's move on to Rudy Giuliani.

Rudy Giuliani, he got a little testy on the stump at questions about his family, the three divorces, the two children who are estranged from him.

And his response to a questioner in Iowa goes like this. Let's listen.

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI (R), PRESIDENTIAL CANDIDATE: And the best thing I can say is, kind of leave my family alone, you know, just like I will leave your family alone.

(APPLAUSE)

GIULIANI: And, if you want to judge me, if you want to judge me, or I want to judge you, we judge each other on our public performance. I don't know -- I don't know your private life. You don't know my private life.

(END VIDEO CLIP)

O'BRIEN: Giuliani's back, so to speak.

(LAUGHTER)

O'BRIEN: Anyway, we're sorry we didn't have a better angle on that one.

BEGALA: Yes.

(LAUGHTER)

O'BRIEN: But what do you think? Let's talk about this in general, the whole -- where should the line be drawn on families? Where is it OK? Let's talk about the Clintons. They protected Chelsea Clinton very well all throughout. And there was -- there was -- the media, I think, respected that, generally, don't you think?

BEGALA: They did.

O'BRIEN: All right. Is this...

(CROSSTALK)

BEGALA: And George and Laura Bush, I think, did a very good job protecting their daughters.

O'BRIEN: Right.

BEGALA: So, this is not a partisan thing. I think the president and the first lady have done a good job at protecting those girls.

(CROSSTALK)

O'BRIEN: So, is this different? And are people crossing a line here, do you think?

BEGALA: I think so. I think Rudy is right.

I think, if -- if an issue affects your ability to do the job, then it's fair game. And that's mostly financial, medical. I mean, there are personal things I want to know about Rudy and the other candidates. But the kids ought to be off limits. I think he's right.

Now, the problem is, he's running in a party that's made a practice of going after people's families, not just attacking Bill Clinton. We remember Rush Limbaugh attacking Chelsea Clinton. Maybe it was just the OxyContin talking.

But somebody who supported George W. Bush was attacking John McCain's family. They had this beautiful little girl they adopted from Mother Teresa's orphanage in Bangladesh. She's dark-skinned.

O'BRIEN: Right. Right.

BEGALA: They were saying that this was a product of an illicit affair that McCain had had.

So, Rudy is entering into a party that has really made a practice of demonizing people's families.

O'BRIEN: All right, J.C., that's your party. You better respond.

WATTS: Well, I'm -- I'm shocked that we would think that it's only one party. I mean, I have seen both parties do it. And I'm saddened by it.

I think what Rudy -- Rudy Giuliani said there, Miles, is: I'm a father before I'm a presidential candidate.

I think he was right. Obviously, that's going to come up. I think both parties do it. No party has a corner on going after somebody's family over other people. As a matter of fact, a good way to get a history of your family tree is to run for public office.

(CROSSTALK)

BEGALA: ... defense of the Democrats, it didn't happen. That's just not true.

WATTS: It didn't happen, but it has happened.

(CROSSTALK)

BEGALA: Several divorced Democrats -- Bob Kerrey, John Kerry, several Democrats have been divorced. Nobody ever raised that in the Democratic primary. It's the Republicans who go after people's families. I think Rudy is right to try to stand up to those Republicans.

(CROSSTALK)

WATTS: Well, all I will say is, Republicans are wrong if they do that. But Democrats do it as well.

BEGALA: They do not.

WATTS: So, it's -- nobody's family is off limits to Democrats.

O'BRIEN: All right, gentlemen, thank you very much, Paul Begala, J.C. Watts. Always a pleasure.

BEGALA: Thanks, Miles.

O'BRIEN: What can and should be done about the Army's record- high suicide rate? Jack Cafferty is standing by with your e-mails.

Should the U.S. stop importing toys from China, at least while there are so many safety fears? Democratic presidential candidate Chris Dodd is pouncing on that issue. He joins us ahead.

And Jose Padilla's guilty verdict on terror-related charges -- a live report from Miami on this case, a real flash point in the war on terror.

Stay with us.

(COMMERCIAL BREAK)

O'BRIEN: Democratic presidential candidate Joe Biden is drawing new attention to his personal connections to the Iraq war. The senator's son, Beau, is an officer in the Delaware National Guard. And he's scheduled to be deployed to Iraq early next year. Beau was with his father in Iowa today when Senator Biden spoke of his son and the war.

Listen up.

(BEGIN VIDEO CLIP) SEN. JOSEPH BIDEN (D-DE), PRESIDENTIAL CANDIDATE: My son Beau is a captain in the United States Army. He's the captain in the Army National Guard. His unit's been notified they should be prepared to go to Iraq in '08. I don't want him going. I don't want him going. But I tell you what. I don't want my grandson or my granddaughters going back in 15 years.

(END VIDEO CLIP)

O'BRIEN: Republican presidential candidates John McCain and Duncan Hunter also have sons who have either served or have been called for duty in Iraq.

On the "Political Radar" today, our poll of polls. It's the presidential candidates' standings based on all the latest poll numbers this month compiled. In the Republican race, Rudy Giuliani remains the front-runner with an average of 30 percent. But his support has slipped somewhat since March, while likely candidate Fred Thompson has climbed to second place with 20 percent. John McCain gets an average of 16 percent support this month, Mitt Romney 10 percent, Mike Huckabee at 2 percent.

Democrats now -- Hillary Clinton gets 43 percent support when you average her August poll numbers, about where she was back in February. Barack Obama has had ups and downs, getting 23 percent support on average in August. John Edwards comes in at 14 percent in our poll of polls, Bill Richardson and Joe Biden in the single digits.

Jack Cafferty is in New York with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Miles, the question this hour is, what should be done about the Army's highest suicide rate in 26 years?

Lawrence in Montclair, New Jersey, writes: "Why mince words by saying it's the highest suicide rate in 26 years? Why not put it plain and simple? The Army has the highest suicide rate since Vietnam. The parallels are abundantly clear: failed policies, losing war, developing quagmire, corrupt Republican administration in the White House. And the answer as to how the Army should address the problem is also clear: Bring the troops home now."

Marie in Adkins, Texas: "Make Bush and Cheney serve in Iraq. That would cheer up these poor worn-out, stressed-out kids, if two of the biggest draft-dodgers in this country's history would have to put their money where their mouth is and do the duty they spent years avoiding."

Bob writes: "I'm a Vietnam vet, I know what a long deployment can do to someone. But our troops now are way too stretched out and exhausted. One deployment is bad enough, but two or three, maybe more, ridiculous. We need to tell Iraq that it's time for them to fend for themselves."

Dona in Ben Lomond, California: "Bring them home. My kid was in Fallujah at beginning of the war. He kept a diary in order to keep his sanity. He still won't let me read it. We, as a family, knew the signs, provided support and professional help. War is hell. War as a political tool is no longer an option in the 21st century."

Tony writes from Louisville, Kentucky: "If the sons and daughters of congressmen and senators began blowing their brains out, maybe they would face reality and end this farce they call a war."

And Margery writes: "This is a volunteer army. Soldiers should be able to leave voluntarily, with two weeks notice" -- Miles.

O'BRIEN: Thank you, Jack.

You're in THE SITUATION ROOM.

Happening now: victims laying in the street, others buried under rubble, after a massive earthquake strikes Peru. An elite U.S. rescue team with specially trained search dogs is ready to help.

Tainted toys and toxic toothpaste -- should the federal government keep products from China out of your home?

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