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Craig Arrest Audiotape Released; Interview With Mitt Romney

Aired August 30, 2007 - 17:00   ET

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


WOLF BLITZER, HOST: What do you think, listening to the audio tape?
DANA BASH, CNN CORRESPONDENT: You just heard a very good legal explanation from Jeff there. But I can just tell you, in terms of the politics, this is something that we just heard that is going to give new life to this story in the political sphere, because, Wolf, look, As you know, in the age of the cable TV, in the age of the Internet, in the age of blogs, this is going to be everywhere.

And that is a part of the reason why Senator Craig is getting such pressure from his fellow Republicans, especially on the national stage, because what they are really, really upset about is that this is highly controversial. Look, you just heard -- regardless of his innocence or guilt -- what you just heard is a pretty detailed, embarrassing encounter with a United States Senator in the bathroom talking about a situation, an event in the bathroom. That is not something, again, that Republicans are going to want to keep hearing playing over and over again as they wait for word about whether or not Senator Craig is going to resign.

So I can't imagine that this will not, you know, add to the pressure that Senator Craig is already getting big time -- especially from his fellow Republicans in Washington -- to just, you know, to just resign, because this is something that is going to certainly add fuel to the late night comics, to the blogs, to the things that Republicans know are making this such a huge problem for them nationally.

BLITZER: And when you spoke to a spokesman today, he said he's not going to make any additional statement today. And that word jumped out at you, Dana.

BASH: Right.

BLITZER: It jumped out at all of us.

BASH: Absolutely, because what we -- just up until this audio tape came out, what we had been hearing, both from Republicans here and from Republicans in Washington, is that they were getting the sense that Senator Craig was getting closer to possibly actually resigning.

And so I put that to the senator's spokesman, and just as you said, he was very precise in his response. He said that there's not going to be an announcement today from Senator Craig. I thought that was quite interesting. We certainly are going to be standing by to see if that changes -- Wolf.

BLITZER: All right, Dana is in Boise, Idaho for us.

Carol Costello has been working this story, as well -- and, Carol, when you listened to the audio tape, you had the transcript that the authorities released simultaneously. It's one thing to just hear it, it's another thing to read it as you're hearing it.

What did you pick up?

CAROL COSTELLO, CNN CORRESPONDENT: Well, you know, something that's intriguing -- if I knew, because in 1982, remember, there were rumors circulating about Senator Craig's sexuality way back then and have been circulating ever since.

So I'm just going to play devil's advocate in here.

If I am caught in a bathroom and taken into a police interrogation and the police officer says to me: "You're going to have to pay a fine and that will be it. I don't call the media. I don't do any kind type of that crap."

If I heard that, maybe I would plead guilty.

Jeffrey Toobin, if you're really scared that this is going to come out in your very conservative state, might you plead guilty to something like this if the officer told you if you paid a fine it would go away and he wouldn't go to the media?

TOOBIN: Well, you know, that obviously does appear to be what Craig thought and that's why he did what he did.

The problem is, you know, what reasonable person -- much less a United States senator -- can plead guilty to a crime and think that it will somehow never become public. I mean every United States senator, every citizen knows that court proceedings are public.

And, yes, this particular detective might not have gone to the media. In fact, all the evidence is he didn't go to the media. He told the truth to Senator Craig.

But the problem is, these are public documents and public proceedings. And it took a while -- it took a little longer than many of us suspected. But it did become public. And now his defense is meaningless because he pled guilty.

BLITZER: I want to bring John King in, our chief national correspondent -- John, you've been covering these kinds of stories, like all of us have, for a long time.

His argument was that he didn't want to -- he decided to plead guilty because it come -- it came at a time when his local newspaper, "The Idaho Statesman," he said, was on a witch-hunt -- a month's long witch-hunt involving earlier allegations of homosexual activity and he just -- he decided he wasn't going to tell anyone because, presumably, that could -- this arrest could have played into that story that "The Idaho Statesman" was working on.

But you heard the audio now.

What do you think the political fallout from this is going to be?

We had the arrest -- the document earlier, but now actually heard the exchange.

JOHN KING, CHIEF NATIONAL CORRESPONDENT: Wolf, it is a contentious member of the United States Senate arguing with a police officer. We don't know who was right. We may never know exactly what happened in that bathroom stall.

But as Dana noted already, as we are speaking, this is spreading like wildfire on the Internet and the blogs.

And to a point Jeff just made, let's assume that Senator Larry Craig -- let's assume for the sake of this argument it was a big misunderstanding at the moment.

But he didn't plead guilty that very day during that contentious conversation with the police officer. There was a lag time of many days before he went back and in the presence of a judge signed a piece of paper in which he pleaded guilty. And on that piece of paper, it made crystal clear that the court is not allowed to accept a guilty plea from someone who is innocent.

Senator Craig has taken the oath of office many times, to uphold the laws of the United States and the Constitution of the United States. He signed a piece of paper that said do not sign this if you are not guilty. And he signed it, Wolf.

It is very hard for him now politically and legally to retreat from what he did. And an embarrassing tape like this, especially in today's day and age, especially in a conservative state like Iowa, where they don't want a circus surrounding their politicians, is going to make a very steep hill for Senator Craig even steeper.

BLITZER: Yes, and Jeff Toobin, remember, this occurred on June 11th. It wasn't until August that he signed the actual document pleading guilty, saying I know I could never say I'm innocent because I'm pleading guilty and I've read the actual police report that documented what the police officer alleged.

TOOBIN: And if you look at some of the court records and the correspondence between the Minnesota authorities and the senator during that period, he makes several references to the fact he's got to talk to his lawyers, he's been in touch with his lawyers.

So, I don't know if he was telling the truth to the Minneapolis authorities. But the fact is he was thinking about whether he had to plead guilty.

This was a decision he made upon serious reflection. This was not just an instinctual reaction -- I've got to make my flight, I'm going to pled guilty here today.

No. He thought about it. He pled guilty.

And I think John McCain, you know, had it right here, that, you know what?

Regardless of whether he's gay or the hypocrisy issue, he has plead guilty to a crime. He's a United States senator. You simply can't -- that's incompatible. So he's got to go.

And note -- and the other fact that I think is worth pointing out is, you know, we're counting how many people say he should get out.

How many people are saying he should stay in?

By my count, it's zero. And I think that's significant.

BLITZER: I haven't heard anyone say stay in the U.S. Senate.

I want to play a little clip and then we're going to talk about it.

Here's another little excerpt from this audio tape that the police recorded in Minneapolis at the airport on June 11th.

(BEGIN AUDIO CLIP)

CRAIG: I am not gay. I don't do these kinds of things and...

(CROSSTALK)

KARSNIA: That doesn't matter. I don't care about sexual preference or anything like that.

Here's your stuff back, sir. I don't care about sexual preference.

CRAIG: I know you don't. You're out to enforce the law.

KARSNIA: Right.

CRAIG: But you shouldn't be out to entrap people either.

KARSNIA: This isn't entrapment.

CRAIG: All right.

KARSNIA: You -- you're -- you're skipping some parts here, but what about your hand?

CRAIG: What about it? I reached down with my foot like this. There was a piece of paper on the floor. I picked it up.

KARSNIA: OK.

CRAIG: What about my hand? KARSNIA: Well, you're not being truthful with me. I'm kind of disappointed in you, Senator. I'm really disappointed right now.

OK? I'm not -- just so you know, just like everybody...

CRAIG: Yes?

KARSNIA: I treat with dignity. I try to pull them away from the situation.

(CROSSTALK)

KARSNIA: ... not embarrass them.

CRAIG: I appreciate that.

KARSNIA: And I...

CRAIG: And you did that after -- and I know that (INAUDIBLE)

KARSNIA: I will say every person I have had so far has told me the truth. We have been respectful to each other, and then they have gone on their way. And I have never had to bring anybody to jail because everybody's been truthful to me.

CRAIG: I don't want you to take me to jail. And I think...

(CROSSTALK)

KARSNIA: I'm not going to take you to jail as long as you be cooperative, but I -- I'm not going to lie. We...

CRAIG: Did my hand come below the divider? Yes, it did.

KARSNIA: OK. Sir, we deal with people that lie to us every day.

CRAIG: I'm sure you do.

(CROSSTALK)

KARSNIA: I'm sure you do too, sir.

CRAIG: And, gentleman, so do I.

KARSNIA: I'm sure you do. We deal with a lot of people that are very bad people. You're not a bad person.

CRAIG: No, I don't think I am.

KARSNIA: OK. So what I'm telling you is, I don't want to be lied to.

CRAIG: OK.

KARSNIA: OK. So, we will start over. You're going to get out of here. You're going to have to pay a fine, and that will be it. OK? And I don't call media. I don't do any of that type of crap.

CRAIG: Fine.

KARSNIA: OK?

(END AUDIO CLIP)

BLITZER: And that's the point Carol Costello is making, when he said you pay a fine, I don't call media or any of that crap. That's what the police officer said.

And to someone like Larry Craig who, going back to at least 1982, when, you know, he publicly denied engaging in any improper activity with Congressional pages, that, as Carol points out, Jeff, that must have been somewhat reassuring. Well, maybe I'll just pay a fine and this thing will disappear.

TOOBIN: Right. I mean that's -- that certainly his wish. And, you know, he used the key word in that -- in that exchange with the officer. He said, "You know, I think what you're doing is entrapment."

And, you know, there have been successful defenses at trial of arrests of men at these crui -- you know, alleged cruising locations where the people say, look, you know, entrapped me here. I was just walking by the Ramble on Central Park or some bathroom -- and they go to trial and win. And entrapment might have been a defense in this case.

But, as we've all said, he pled guilty. So all of the possible defenses are irrelevant now.

BLITZER: Let me go back to Dana Bash out in Boise, Idaho.

It's going to take a nanosecond, Dana, for people in Idaho, people all over the country to be hearing this audio tape. They've just heard it here. They're going to be hearing it on the Internet.

And people in Idaho are going to have to take a close, close look inside their gut, inside their hearts.

What happens to this long time politician?

He's been representing the State of Idaho here in Washington for decades.

BASH: That's exactly right.

And, you know, it comes after a couple of days where people in Idaho, for the most part, have already done that, Wolf.

And just from -- we've been here for two days. We got here just as the senator was making his statement. And I can tell you that already there just isn't -- there aren't a lot of people who believe him. And they say, you know, almost to a person, they say that is the issue for them. It is the issue of creditability. It is the issue of judgment.

Just as Jeff was saying, and others have been saying, look, there have been rumors about the senator being gay for a long time. They've plagued him probably throughout his whole career here for a quarter century.

But when it comes down to it, that is the problem that most of his constituents, even his top supporters, really have with him, that this is -- this whole question about whether or not he is telling the truth about all of this.

And hearing that, sure, some people certainly might listen to that and say, oh, that was sort of an aggressive cop, somebody who maybe had an agenda, somebody who maybe -- maybe, you know -- maybe he was out to get him because of, as you heard, what he thought that he should have gotten from the senator because of his stature.

But by and large, this is going to just basically add to the feeling that people here in Idaho already have, which is that their senator just isn't telling them the truth.

BLITZER: Dana, stand by.

Thanks very much.

Dana Bash on the scene for us in Boise, Idaho.

Jack Cafferty has The Cafferty File.

I know you were anxious to hear the audio tape.

We've all heard it -- Jack.

And I suspect our viewers are going to be interested in your brief comment.

CAFFERTY: Very brief. A wise man once said when you're dead lie down. It's over for him.

The question we asked last hour, John Edwards says he would ask Americans to give up driving SUVS. And we asked if you were willing to do that.

We got Jim, who says: "I've already done it. I got rid of my SUV. I bought a 2007 Nissan Sentra in July. I've replaced over 40 bulbs in my house with compact fluorescents, etc. My company lets me telecommute, so my carbon footprint is actually pretty small. Every little bit helps. If all of us did a small part, the cumulative effect is substantial."

Marie writes from Eden Prairie, Minnesota: "As a family, we did give up SUVs. My daughter and I used to drive SUVs that only got 14 to 16 miles a gallon. We now drive more energy efficient cars and have not sacrificed speed, size or convenience. It was easy, smart and there are a lot of energy efficient choices out there to pick from. The fuel savings has been great."

Marilyn in Arizona: "Edwards ought to take the money he spends on haircuts every year and fund research on how to make SUVs more environmentally friendly. How about adding in the tobacco subsidies from his home state? Maybe we could all drive SUVs some day."

Rose Marie, Flushing, New York: "I don't own an SUV, but why is it such an issue to ask Americans to sacrifice? Are we so spoiled and stupid to not understand that we must do whatever is possible to be free from our dependence on oil from countries that hate us? We did this during World War II, we can do it again. Wake up, America."

Jill writes from Fresno, California: "Yes, I'd give up driving an SUV or I'd switch to a hybrid one. I'd be happy to do anything to reduce the power of the oil companies and their hold on our country. The sooner gasoline is just one form of energy, the better."

And Ivan writes from Delaware: "Jack, to paraphrase Charlton Heston, I'll give up my SUV when they pry the keys from my cold, dead hands."

On to another topic. When Congress gets back to work after summer recess -- they've got to have a month off, go to the beach, do a little reading. When they get back, President Bush will be standing there with, his hand out, again.

The president is reportedly getting ready to ask for another $$50 billion in funding for the war in Iraq. That would keep current troop levels going through next spring. This could come on top of another $147 billion in a pending supplemental bill to fight the wars in both Iraq and Afghanistan. It means the bill for U.S. taxpayers for Iraq would soon exceed $3 billion per week.

The White House insists the size of the request hasn't been determined yet. I guess that means it couldn't be more, right?

But however much it is, they have to go through Congress to get the money. That's the way the system works in the U.S. of A. That's the same Congress, they of the huge 18 percent approval rating -- that tried and failed to attach conditions for troop withdrawals to a war funding bill earlier this year, remember?

Democrats say that upcoming hearings and reports coming out about Iraq will "provide a much-needed dose of reality to the spin coming out of the White House."

The question, though, is whether the Democrats will go along with Mr. Bush's request, again, for more money with no provisions for bringing our troops home. That's what they did last time -- they folded up like a cheap tent.

So here's the question -- if President Bush asks for another $50 billion for the war in Iraq, what should Congress do?

E-mail your thoughts to caffertyfile@cnn.com or go to cnn.com/caffertyfile -- Wolf. BLITZER: All right, Jack.

Thanks very much.

A good question, as usual.

Faster acts could have saved lives. There's a new report about that massacre at Virginia Tech that left 33 people dead. We're going to tell you about all the stunning and sad conclusions.

Also, he says he's not as well known as some of the competitors, but outlines how he hopes to become more of a household name. The presidential candidate, Mitt Romney, he talks to CNN's John King one- on-one.

And Hillary Rodham Clinton's campaign is tied to a man wanted in California for 16 years. We're going to tell you how it's now rushing to break those ties.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A health scare over at the United Nations in New York City today. It involves a gas with a fresh scent that can mask its deadliness. This highly toxic poison is extremely effective at killing people quickly and it has no antidote. And all of this involves chemical agents from Iraq. This is an intriguing story.

Let's go to our senior U.N. correspondent, Richard Roth.

He's joining us now from New York -- Richard, how much concern is there?

RICHARD ROTH, SENIOR UNITED NATIONS CORRESPONDENT: Well, there was quite a flurry a couple of hours ago.

We're one block from the United Nations. The building behind me houses the offices of the U.N. Weapons inspectors for Iraq. They've been voted out of business.

Quite a surprise Friday night when one of the inspectors doing an inventory found vials and bags of this potentially lethal chemical agent.

(BEGIN VIDEO CLIP)

EWAN BUCHANAN, UNMOVIC SPOKESMAN: We're in the process of winding up the organization. We had been going through our vast archive and somebody was going through boxes of documents, or what was presumed to be boxes of documents, from the Merthana (ph) state establishment, Iraq's old chemical weapons site. And they noticed a couple of plastic bags with some objects inside them. And so, you know, in accordance with our standard safety procedures, if you don't know what they are, the first thing do you is secure them.

And so they were secured, wrapped up put in a safe for safekeeping. And then we later found the inventory of this material that had come from Merthana from -- this was way back in 1996.

And it seems that the high likelihood is that the two things are, indeed, a canister -- a small thing about the size of a soda can of phosgene, which is a chemical warfare agent.

(END VIDEO CLIP)

ROTH: The chemical agents were away within the hour by a large motorcade of FBI, government, Environmental Protection, New York officials, presumably to a government lab for a analysis and probable destruction. An investigation will be launched -- Wolf.

BLITZER: You know, they're going to say, Richard, they couldn't find the weapons of mass destruction in Iraq, but they found them in New York.

ROTH: That's right.

BLITZER: Richard Roth reporting for us in New York.

Richard, thanks very much.

Fortunately, it looks like this crisis is over with at the U.N.

Crisis response by committee and a student with mental illness the school didn't do enough about. A governor's commission concludes that quicker warning and more specific information sharing might have saved lives during April's Virginia Tech massacre.

CNN's Brianna Keilar is joining us right now -- Brianna, what does the report say about university officials and how they responded?

BRIANNA KEILAR, CNN CORRESPONDENT: Well, Wolf, what really grabs your attention in this report are details of a troubled young man whose problems started long before he came to Virginia Tech.

(BEGIN VIDEO TAPE)

KEILAR (voice-over): Seung-Hui Cho suffered emotional problems as early as age three. In middle school, he was diagnosed with depression and selective mutism for his failure to speak. He was on antidepressants for a year in high school.

When Cho began college at Virginia Tech, the paper trail on his mental health problems did not follow him. University officials say that made it difficult for them to give Cho the support he needed.

CHARLES STEGER, PRESIDENT, VIRGINIA TECH: No one at this university had any foreknowledge of his mental health problems that seemed dominant throughout his life before college.

KEILAR: Even so, the panel doles out plenty of blame to the university for missing the red flags during Cho's four years at Virginia Tech.

Professors, resident assistants, students, parents, even high level university officials, knew Cho had problems. But there was no comprehensive picture of Cho's behavior and the university did not intervene effectively.

The report also points fingers at a counseling center that Cho called for guidance. It also faults Virginia Tech police for not informing university officials or Cho's parents that he had been detained pending a hearing on whether he should be committed to a mental health facility.

How did so many people fail to connect the dots that could have saved 33 lives?

The panel points to a widespread belief that sharing information about Cho could have been a violation of laws governing privacy.

Virginia Governor Tim Kaine, who ordered this report compiled, says the issue is still unclear.

GOV. TIM KAINE (D), VIRGINIA: I worry that since violations of privacy laws can create liability, that there may be kind of a default position that lay people get into, where they say well, we can't share this information because it might create liability.

(END VIDEO TAPE)

KEILAR: Escaping blame in this report, Cho's parents. They escaped blame. For years, they took him to weekly therapy sessions. And during Cho's first semester at Virginia Tech, they actually drove several hours to visit Cho every Sunday -- their only day off -- Wolf.

BLITZER: Brianna, thanks very much.

Brianna Keilar watching this story.

Still to come, Senator Larry Craig now on audio tape during his arrest involving an airport bathroom. We have the audio tape. We're following the political fallout. And now that the tape has been made public, we're staying on this developing story. You're going to hear the police interrogation for yourself, in case you missed it.

And Hillary Rodham Clinton's money trail apparently led to a fugitive from the law. Find out what the Democratic presidential frontrunner is doing about it.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Our Carol Costello is monitoring stores incoming into THE SITUATION ROOM right now -- Carol what do you have?

COSTELLO: A couple of things, Wolf.

Former astronaut Lisa Nowak is no doubt feeling a sense of relief. A judge ruled today that she can remove an electronic monitoring bracelet from her ankle. Nowak is awaiting trial on charges that she attacked a romantic rival. She had argued that the bracelet was expensive, bulky and uncomfortable. The judge says Nowak has behaved well enough over the last seven months that the device can be removed.

The Reverend Billy Graham is out of the hospital after almost a two week stay. The Evangelist was released from the hospital in North Carolina today. He was treated for intestinal bleeding. Doctors now say the bleeding source was a tangle of small blood vessels in the lining of the colon. Doctors were able to cauterize the spot and they expect a good recovery. Graham is 88-years-old.

In news impacting small business, the Agriculture Department is issuing a public health alert for more than 41,000 ground beef products. They may be linked to eight E. Coli illnesses in Oregon and Washington State. The ground beef was produced in July and sold in 16 ounce packages. They were labeled "Northwest Finest, 7 percent fat, natural ground beef" and "Northwest Finest, 10 percent fat, organic ground beef." They were sold in Alaska, Idaho, Oregon and Washington State.

Back to you -- Wolf.

BLITZER: Thanks very much, Carol.

It's an angry exchange caught on audio tape. We have more from that audio tape of Senator Larry Craig minutes after a police officer arrested him in a men's bathroom. It includes a heated argument. At one point, the officer even accusing the senator of lying.

And Mitt Romney is disappointed in the senator.

But does the Republican presidential candidate think the senator should resign?

He talks to CNN's John King one-on-one. That interview coming up.

(COMMERCIAL BREAK)

BLITZER: In case you missed it, coming up, we're going to play that audiotape for you of Larry Craig, his exchange with the arresting police officer back in June when he was arrested in that airport restroom in Minneapolis. That's coming up here in THE SITUATION ROOM.

But there's other news we're following as well. He's the top tier presidential candid. He's a top tier presidential candidate and suggests you may not know that. That would be republican former governor Mitt Romney talked to CNN today about Senator Craig's bathroom bust, Iraq, a range of other issues, including abortion.

Let's go to our chief national correspondent, John King. He's joining us from Charleston, South Carolina.

You got answers from Mitt Romney on some of these very sensitive issues.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, after several months of lagging low in the polls, Governor Romney had perhaps the best summer of all the republican candidates for president. We thought it would be a good time to say hello.

(BEGIN VIDEO CLIP)

You pulled ahead of the polls in Iowa, in New Hampshire. You have the most money in the bank. By traditional evidence of how we pick precedents, that would make you the front runner. Do you want to accept that?

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Wish I know. I'm not as well known as Mayor Giuliani and Senator McCain and so I've got a long way to go but I've focused on the early states first, Iowa, New Hampshire, Nevada, South Carolina and I'm making progress there. But I'm going to have to keep on battling. Ultimately I think what's happening is people who hear me and hear my message about strengthening America are warming to that message.

KING: Some people also say you have success in the policies but you've invested than your rivals in television advertisements. And another one up today reminding people of that. To do that, you've had to write yourself checks out of your own money while you try to raise money, about $8 million so far. How much are you willing to give to your own campaign?

ROMNEY: Well, that's a closely held secret. But sure, I'm asking people to help my campaign, $5 contributions, $2,000 contributions. If other people are going to make that kind of sacrifice I'm going to invest as well. This is just a critical election and I'm going to be part of the effort myself that we have a president that will strengthen us militarily, economically and in our values and in our homes.

KING: Part of your progress has been because you answered the skepticism of some social conservatives. When you first got into the race, and you know this very well, some of them said well this guy was pro choice on abortion once. Now he says he's pro life. Can we believe him? And you've answered that to a degree and you have greater support in Iowa because of that, greater support here in South Carolina because of that. But in the past couple of weeks people say they are confused again because at one event you said you wanted constitutional amendment, would support an amendment making abortion illegal in the country. Then said this is a states' issue that each state should decide whether it's legal or illegal. Which is it?

ROMNEY: Well actually, it's the same position that President Bush espoused a long time which is that I would welcome an America that didn't have abortion. But that's not where we are today. That's not where the people are. Therefore in my view the right course for it, for those of us who are pro life, is to fight to change hearts and minds and to see Roe v. Wade overturned and that would allow states and the elected representatives of the people to be able to make their own decisions with regards to abortion.

KING: So if anyone is confused by those two statements, you say they shouldn't be.

ROMNEY: If they are, I'll clarify it and tell them if they look back at President Bush's comments he had the same view which is it's an aspiration to have a America that's free of abortion but that's not where we are. Where we are is to allow states to make that choice and elected representatives to make that choice.

KING: You were just talking about Senator Craig and you have said you find his conduct incredibly disappointing but you are not among those who have said flatly that he should resign. Why?

ROMNEY: I think at this stage, the right course is for him to make this decision, looking at his own conscious, talking to the people of Idaho, meeting with his colleagues in the senate. I'm not one of those. I'm going to let him make that decision.

KING: You do though want to be leader of the Republican Party. You're campaigning for republican nomination which would make you the leader of the Republican Party. Is conduct like that welcome in Mitt Romney's Republican Party?

ROMNEY: Well, there's no question that I and other leaders of this country and parents across this country are disappointed and find conduct like that which is alleged here as being disgraceful. We've seen disappointment from the White House, we've seen it -- I'm not talking about during President Bush's term, but prior presidents from the White House, the Senate, from the House. It's disgraceful. That's something I hope we can end and I certainly would work in my party to make sure people understand we got to live by a higher standard once we get elected to an office of great respect.

KING: You're campaigning for president based on your record, including the successful turn around of Olympics, your business career. What advice would you give President Bush right now as he tries to turn around the country on the question of Iraq war? Even though even now many democrats now say there's some military progress in Iraq, the president is having a hard time convincing the American people to give him another chance to give him more time, if you will. What is he doing wrong and what would recommend to him?

ROMNEY: Well, he's following the right course by listening to General Petraeus and Ambassador Crocker as they'll come back with reports for the progress or lack thereof on various fronts in Iraq. But the key thing any president has to do is make sure he's also Educator in Chief. This president is doing that. He's making effort to speak to the American people. That's what it's going to take. If there's a change in perspective, we've got to get out there and talk about it, honestly, openly, the good, the bad, the ugly, and then lay out a course for the America people that show that we're not going to be in the surge forever, that at some stage we're going to move to a support role and ultimately in a stand bye role, we'll get our troops out of Iraq.

KING: Would it be better given his damaged political standing to let General Petraeus make that case and for the president to stand down?

KING: Well, certainly as Educator in Chief, you decide which things you talk about yourself and which things others speak about. It's going to take a lot of communication to understand just where we are. I was pleased that a lot of education comes from nonprofit and think tank organizations that have been spending time in Iraq. They've come back with generally positive reviews on the military front, disappointing news on the political front. Keep us informed. That's probably the best thing I think any president can do.

KING: Let me ask you lastly about this state. You have moved the numbers in Iowa and moved the numbers in New Hampshire quote successfully. This state seems to be a little slower at least to move your way. Is there something particular about South Carolina?

ROMNEY: Well, actually I was encouraged. I saw a poll last week that had me tied in first place in South Carolina but you know that's an early reading. I got great support in the straw polls here. I won the majority of straw polls in South Carolina. But more time in South Carolina, the same, if you will, posture and effort that I carried out in Iowa and New Hampshire I hope to carry out here and hopefully with the same result.

KING: Governor thanks for your time.

ROMNEY: Thanks, John.

KING: Appreciate it very much.

ROMNEY: Thank you.

(END VIDEO CLIP)

KING: And because Governor Romney has been moving up in the polls slowly but steadily over the summer months, perhaps, most of all his campaign awaiting the entry of former Senator Fred Thompson, one week from today. It is Governor Romney's view that Senator Fred Thompson has waited too long. We're about to find out.

Wolf.

BLITZER: September 6th, Fred Thompson will make it official. Thanks very much. Good work, John. John King reporting from Charleston, South Carolina.

Just ahead, the presidential candidate and the fugitive, Hillary Rodham Clinton's campaign is linked to a man who police have been after for 16 years. We're going to explain what's happening. And then some exchange that's igniting a fire storm of controversy. We're going to have more from that audiotape moments after Senator Craig was busted in a men's bathroom.

We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Supporter contributions are the life blood of any political campaign but democratic presidential candidate Hillary Rodham Clinton is returning tens of thousand of dollars to one fundraiser. His name is Norman Hsu. Let's go to CNN's Brian Todd. He's following this story for us.

Brian, why is Senator Clinton returning the money?

BRIAN TODD, CNN CORRESPONDENT: Well Wolf, they found out that among other questionable dealings, Mr. Hsu is a fugitive. Now no indication here of any illegal activity by the Clinton campaign. But this development has got them doing damage control because of the spectra of past fundraising scandals.

She said she's not reverting back to the days of campaign donors staying in the Lincoln bedroom.

SEN. HILLARY CLINTON (D), NEW YORK: I don't think it's analogous at all.

TODD: But Hillary Clinton is dumping $23,000 donated to her campaign by Norman Hsu, a top democratic fundraiser who's also a fugitive in California. The state attorney general's office tells CNN Hsu's has been wanted for 16 years since he skipped out on his sentencing after pleading no contest to grand theft in a fraud case. But Hsu's also involved in questionable fundraising for Mrs. Clinton.

As part of a practice called bundling, packing together donations from others after you've reached your legal limit, Hsu got the family of William Paw, a mailman who lives in this house near San Francisco, to contribute to the Clinton campaign. Despite seemingly modest means, records show the Paw family gave more than $45,000 to Mrs. Clinton since 2005, more than $200,000 total to democrats. Records also show that Norman Hsu once listed the Paw's home as his own address.

Bundling is not illegal but if Hsu reimbursed the Paws for their contributions, it would be. Hsu's lawyer tells us, he never reimbursed the family but the Paws could afford the money they gave. We couldn't reach the family for comment. Hillary Clinton says her campaign simply can't catch everything.

CLINTON: When you have as many contributors as I'm fortunate enough to have, we do the best job we can based on information available to us, to make appropriate betting decisions and this one was a big surprise to everybody.

TODD: But should it have been given the Clinton's heavily investigated practices in the 1990s when big donors with checkered pasts got access to the White House. JIM VANDEHEI, POLITICO.COM: The last thing they want to be seen is sort of giving access to people who are giving a lot of money. That's what people were tired of in the 1990s.

TODD: When we asked the campaign if they were going to return money from the Paw family as well, a spokesman from Mrs. Clinton said they're always reviewing contributions and if they find a basis to return any, they will do that.

Now on his fugitive status, Mr. Hsu issued a statement saying he is surprised there's a warrant for his arrest. "I have not sought to evade any of my obligation and certainly not the law." But he says until this matter is resolved, he won't do any more fundraising, Wolf.

BLITZER: Brian, thanks very much. Brian Todd reporting.

Still ahead we're following some other stories including President Bush seeking $50 billion perhaps as much as $50 billion additionally to fund the war in Iraq. Jack Cafferty has your email on that subject.

We're also going to play more on the audiotape of Senator Craig after his arrest in Minneapolis.

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

(COMMERCIAL BREAK)

BLITZER: We're following the latest details in the investigation involving the scandal of Senator Larry Craig. Within the last hour, we obtained the audiotape of the Minneapolis airport police officer's interrogation of Senator Craig back on June 11th. We want to play that tape for you right now. The voices you're about to hear are the arresting police officer Sergeant Dave Karsnia and Senator Craig. First you'll hear Sergeant Karsnia reading Senator Craig his rights.

(BEGIN VIDEO CLIP)

KARSNIA: You have the right to remain silent. Anything you say can and will be used against you in court of law. You have the right to talk to a lawyer now or have a present -- a lawyer present now or any time during questioning.

If you cannot afford a lawyer, one will be appointed to you without cost.

Do you understand each of these rights the way I have explained them to you?

CRAIG: I do.

KARSNIA: Do you wish to talk to us at this time?

CRAIG: I do.

KARSNIA: OK. I just want to start off with a your side of the story, OK? So...

(CROSSTALK)

CRAIG: So, I go into the bathroom here, as I normally do. I'm a commuter through here.

KARSNIA: OK.

CRAIG: I sit down to go to the bathroom. And you said our feet bumped. I believe they did, because I reached down and scooted over, and the next thing I knew, under the bathroom divider comes a card that says "Police."

Now, that's about as far as I can take it. I don't know of anything else. Your foot came toward mine. Mine came towards yours. Was that natural? I don't know. Did we bump? Yes. I think we did. You said so. I don't disagree with that.

KARSNIA: OK. I don't want to get into a pissing match here.

CRAIG: We're not going to.

KARSNIA: Good.

CRAIG: I don't -- I am not gay. I don't do these kinds of things and...

(CROSSTALK)

KARSNIA: That doesn't matter. I don't care about sexual preference or anything like that.

Here's your stuff back, sir. I don't care about sexual preference.

CRAIG: I know you don't. You're out to enforce the law.

KARSNIA: Right.

CRAIG: But you shouldn't be out to entrap people either.

KARSNIA: This isn't entrapment.

CRAIG: All right.

KARSNIA: You -- you're -- you're skipping some parts here, but what about your hand?

CRAIG: What about it? I reached down with my foot like this. There was a piece of paper on the floor. I picked it up.

KARSNIA: OK.

CRAIG: What about my hand?

KARSNIA: Well, you're not being truthful with me. I'm kind of disappointed in you, Senator. I'm really disappointed right now.

OK? I'm not -- just so you know, just like everybody...

CRAIG: Yes?

KARSNIA: I treat with dignity. I try to pull them away from the situation.

(CROSSTALK)

KARSNIA: ... not embarrass them.

CRAIG: I appreciate that.

KARSNIA: And I...

CRAIG: And you did that after -- and I know that (INAUDIBLE)

KARSNIA: I will say every person I have had so far has told me the truth. We have been respectful to each other, and then they have gone on their way. And I have never had to bring anybody to jail because everybody's been truthful to me.

CRAIG: I don't want you to take me to jail. And I think...

(CROSSTALK)

KARSNIA: I'm not going to take you to jail as long as you be cooperative, but I -- I'm not going to lie. We...

CRAIG: Did my hand come below the divider? Yes, it did.

KARSNIA: OK. Sir, we deal with people that lie to us every day.

CRAIG: I'm sure you do.

(CROSSTALK)

KARSNIA: I'm sure you do too, sir.

CRAIG: And, gentleman, so do I.

KARSNIA: I'm sure you do. We deal with a lot of people that are very bad people. You're not a bad person.

CRAIG: No, I don't think I am.

KARSNIA: OK. So what I'm telling you is, I don't want to be lied to.

CRAIG: OK.

KARSNIA: OK.

So, we will start over. You're going to get out of here. You're going to have to pay a fine, and that will be it. OK? And I don't call media. I don't do any of that type of crap.

CRAIG: Fine.

KARSNIA: OK?

CRAIG: Fine.

KARSNIA: All right, so let's start from the beginning. You went in the bathroom.

CRAIG: I went in the bathroom.

KARSNIA: And then what did you do when you...

(CROSSTALK)

CRAIG: I stood beside the wall, waiting for a stall to open. I got in the stall, sat down. I started going to the bathroom. Did our feet come together? Apparently, they did bump. Well, I won't dispute that.

KARSNIA: OK. When I got out of the stall, I noticed other -- other stalls were open.

(CROSSTALK)

CRAIG: They were at the time. At the time I entered, I -- I -- at the time I entered, I stood and waited.

KARSNIA: OK.

CRAIG: They were all busy, you know?

KARSNIA: Were you right at me while you were waiting? I could see your eyes. I saw you playing with your fingers, then look up, play with your fingers, and then look up.

CRAIG: Did I glance at your stall? I was glancing at a stall right beside yours waiting for a fellow to empty it. I saw him stand up. And, therefore, I thought it was going to empty.

KARSNIA: How long do you think you stood outside the stalls?

CRAIG: Oh, a minute or two at the most.

KARSNIA: OK. And, when you went in the stall, then what?

CRAIG: Sat down.

KARSNIA: OK. Did you do anything with your feet?

CRAIG: Positioned them, I don't know. I don't know at the time. I'm a fairly wide guy.

KARSNIA: I understand.

(CROSSTALK)

CRAIG: I bend to spread my legs...

KARSNIA: OK.

CRAIG: ... when I lower my pants so they won't slide.

KARSNIA: OK.

CRAIG: Did I slide them too close to yours? Did I -- I looked down once your foot was close to mine.

KARSNIA: Yes.

CRAIG: Did we bump? You said so. I don't recall that, but apparently we were close.

KARSNIA: Yeah. Well, your foot did touch mine, on my side of the stall.

CRAIG: All right.

KARSNIA: OK? And then with the hand. How many times did you put your hand under the stall?

CRAIG: I don't recall. I remember reaching down once -- there was a piece of toilet paper back behind me -- in picking it up.

KARSNIA: OK. Was your -- was your palm down or up when you were doing that?

CRAIG: I don't recall.

KARSNIA: OK. I recall your palm being up. OK?

CRAIG: All right.

KARSNIA: When you pick up a piece of paper off the ground, your palm would be down, when you pick something up.

CRAIG: Yeah, probably would be. I recall picking the paper up.

KARSNIA: And I know it's hard to describe here on tape, but, actually, what I saw was your fingers come underneath the stalls. You were actually touching the bottom of the stall divider.

CRAIG: I don't recall that.

KARSNIA: You don't recall...

(CROSSTALK)

CRAIG: I don't believe I did that. I don't.

KARSNIA: I saw -- I saw...

CRAIG: I don't do those things.

KARSNIA: I saw your left hand. And I could see the gold wedding ring when it when it went across. I could see that. On your left hand, I could see that.

CRAIG: Wait a moment. My left hand was over here.

KARSNIA: I saw -- there's a...

CRAIG: My right hand was next to you.

KARSNIA: I could tell it with my -- I could tell it was your left hand, because your thumb was positioned -- in a faceward motion, your thumb was on this side, not on this side.

CRAIG: Well, we can dispute that. I'm not going to fight you in court.

(CROSSTALK)

KARSNIA: But I -- I reached down with my right hand to pick up the paper.

But I'm telling you that I could see that, so I know that's your left hand. Also, I could see a gold ring on this finger, so that it's obvious it was the left hand.

CRAIG: Yeah, OK. My left hand was in the direct opposite of the stall from you.

KARSNIA: OK.

You -- you travel through here frequently, correct?

KARSNIA: I do, almost weekly.

KARSNIA: Have you been successful in these bathrooms here before?

CRAIG: I go to that bathroom regularly.

(CROSSTALK)

KARSNIA: I mean for any type of other activity?

CRAIG: No, absolutely not. I don't seek activity in bathrooms.

KARSNIA: It's embarrassing.

CRAIG: Well, it's embarrassing for both. But I'm not going to fight you.

KARSNIA: I know you're not going to fight me, but that's not the point. I would respect you. And I still respect you. I don't disrespect you. But I'm disrespected right now.

And I'm not tying to act like I have all kinds of power or anything, but you're sitting here lying to a police officer.

(CROSSTALK)

KARSNIA: That is not a (INAUDIBLE) I'm getting from somebody else. I'm...

(CROSSTALK)

KARSNIA: I have been trained in this.

(CROSSTALK)

KARSNIA: I have been trained in this, and I know what I am doing.

(CROSSTALK)

KARSNIA: And I saw you put your hand under there. And you're going to sit there and...

CRAIG: I admit I put my hand down.

KARSNIA: You put your hand and rubbed it on the bottom of the stall with your left hand.

CRAIG: No. Wait a moment.

KARSNIA: And I'm -- I'm not dumb. You can say, I don't recall...

(CROSSTALK)

CRAIG: If I had turned sideways, that was the only way I could get my left hand over there.

KARSNIA: It's not that hard for you to reach...

(CROSSTALK)

KARSNIA: It's not that hard. I see it happen every day out here now.

CRAIG: (INAUDIBLE) You do. All right.

KARSNIA: I'm just -- I'm just -- I guess -- I guess I'm going to say I'm just disappointed in you, sir. I just really am. I expect this from the guy that we get out of the hood. But, I mean -- I mean, people vote for you.

CRAIG: Yes, they do.

(CROSSTALK)

KARSNIA: Unbelievable. Unbelievable.

CRAIG: And I'm a respectable person. And I don't do these kinds of...

(CROSSTALK)

KARSNIA: ... respect right now, though.

CRAIG: But I didn't use my left hand.

KARSNIA: I saw...

(CROSSTALK)

CRAIG: I reached down with my right hand like this to pick up a piece of paper.

KARSNIA: Was your gold ring on your right hand at any time today?

CRAIG: Of course not. Try to get it off. Look at it.

KARSNIA: OK. Then it was your left hand. I saw it with my own eyes.

CRAIG: All right, you saw something that didn't happen.

(END AUDIO CLIP)

BLITZER: A very acrimonious exchange between the arresting police officer and Senator Larry Craig back in June. That's the audiotape that the police recorded on the day of the arrest. We'll continue to follow up on this story at 7:00 p.m. eastern right here in THE SITUATION ROOM.

Up ahead what should did Congress do if President Bush asks for another $50 billion in the war in Iraq. Jack Cafferty with your e- mail next.

(COMMERCIAL BREAK)

BLITZER: Check back with Jack for the Cafferty File.

Jack.

JACK CAFFERTY, CNN CORRESPONDENT: If President Bush asks for another $50 billion for the war in Iraq, as he's expected to, what should Congress do?

Bill in North Carolina, "First, they should ask the president where the money is going to come from and then they need to ask the American people if they approve of this. More debt to pass on to our kids and grandkids. I'm not that old but I do remember when the government used to work for the American people."

Jonathan in Nova Scotia, "This isn't about the White House or Congress. This is about the troops on the ground. I hope both sides put aide their political concerns and make their decisions based on what is best for the men and women who are fighting this war." Mike in North Carolina, "Laugh. That's what Congress ought to do, laugh so hard they fall on the floor and wet their pants. Then they ought to stand up, look President Bush in the eye and tell them to bring the troops home. Now."

Lindsay in Florida writes, "The Congress should only provide sufficient funds to withdraw the troops and demobilize the National Guard and Reserves."

Arthur in New Jersey, "Simple, give Bush his $3 billion a week, 12 billion for the first month and reduce it by 10 percent each month thereafter, that way the troops can be fully supported as they are gradually removed from Iraq."

Nancy in Edgewater, New Jersey, "Dear Jack, Congress ought to tell President Bush to pass the hat amongst the GOP."

And Dana in Oklahoma City, "Congress should say no to any more funding. I am so tired of Republicans claiming they are for less government spending. Yet the president is throwing money and lives out the window like a chambermaid throwing waste from a castle turret."

If you didn't see your email here, do you notice there's a theme in today's program? If you didn't see your email here, go to CNN.com/CaffertyFile. We post more of them online along with video clips of the Cafferty File.

Wolf.

BLITZER: Jack, see you back here in one hour. Thanks very much.

We're in THE SITUATION ROOM weekday afternoons from 4:00 to 6:00 p.m. eastern. Back for another hour at 7:00 p.m. eastern.

"LOU DOBBS TONIGHT" starts right now. Christine Romans in for Lou Dobbs.

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