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THE SITUATION ROOM

Senator's Guilty Plea Stands; Cold Hard Campaign Cash; Interview With John Edwards

Aired October 4, 2007 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, buying the GOP nomination. We have new financial reports from the top contenders. We're going to tell you who's the Republican to beat in the money race and how Mitt Romney's personal wealth is now skewing the numbers.
Also this hour, John Edwards going negative. Hear what he has to say about Barack Obama and Hillary Clinton. That interview coming up.

And new setbacks to Republican strength in the U.S. Senate. A judge refusing to let Larry Craig off the hook in a bathroom sex sting, even as Pete Domenici formally announces his retirement.

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

Let's get to Capitol Hill first. There's a developing story, new reason a scandal-plagued senator may or may not finally be calling it quits. That would be Republican Senator Larry Craig of Idaho. Today a Minnesota judge denied Craig's request to withdraw his guilty plea in an airport bathroom sex sting.

Let's go right to our congressional correspondent, Dana Bash. She's watching the fallout from this decision.

And what happens next to the Idaho senator? I take it we're getting some new news. What's going on?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: That's right. We are just getting a statement from Senator Larry Craig that in light of this decision by the judge to deny him his plea -- to withdraw his guilty plea, Senator Craig is staying in the Senate. That is the headline, the big headline here, Wolf.

Senator Craig just released a statement saying that he is going to say. I'll read you part of it. Again, we are just receiving this.

He said, "I will continue to serve Idaho in the United States Senate, and there are several reasons for that. As I continued to work for Idaho over the past three weeks here in the Senate, I have seen that it is possible for me to work here effectively."

And then he goes on to say, "Over the course of my three terms in the Senate and five terms in the House, I've accumulated assignments that are valuable to Idaho." And then he goes on from there.

Now, he also goes on, I should say -- I'm reading this as we get this -- that he's going to continue his efforts to clear his name in the Senate Ethics Committee. That he said it's not possible to do that if he's not serving in the Senate.

So this is yet another bombshell in this story that just keeping changing, and changing especially when it comes to the perspective of Senator Craig's own Republican leadership, Wolf. They -- as you remember, everybody knows they were extremely aggressive in trying to get Senator Craig to resign as soon as this scandal hit about what happened to him in the men's room in Minneapolis last month.

And so Senator Craig's leadership, they have not said anything yet. This is brand-new information. The senator was not really clear about what he would do, but now he is. He is saying that he has decided to stay in the United States Senate -- Wolf.

BLITZER: And interestingly enough, he was getting encouragement to stay on in the Senate from a handful of Republicans, like Arlen Specter, for example, of Pennsylvania. But a whole bunch of Democrats were saying, you know, there's no real need for you to resign simply because you pled guilty for a misdemeanor, disorderly conduct, which was questionable. They suggested it was the Republican leadership in the U.S. Senate that basically was trying to push him out as quickly as possible.

BASH: That's right. And that's exactly what they were doing.

And so the question now becomes, what are the Republican leaders going to do? I can tell you that this has already changed the dynamic and has thrown Republican leaders off message already today.

The Republican leadership in the Senate had a press conference, a long-time press conference planned for this afternoon that they abruptly canceled, and they fully admit -- at least GOP leadership aides admit -- that they canceled it because leaders like Senator Mitch McConnell and others simply did not want to answer questions about Senator Craig.

So this is something that the leadership thought that they had dealt with, and pretty swiftly and pretty aggressively, and almost in an unprecedented way last month, but this is something that they are going to have to continue to deal with. You know, Republicans also point out that the burden that they think many of them puts on their party politically, because Senator Craig is still the butt of late- night jokes.

Even if you watched late-night TV last night he is. He has become a character for the Republican Party. That certainly is why they wanted him to go.

You're right, Wolf, there are some Republicans who say that Senator Craig was mistreated by his leadership. Democrats may have another agenda in wanting Senator Craig to stay to keep this story alive. But it certainly is going to stay alive, because Senator Craig making abundantly clear in this lengthy statement he just issues he is now staying in the United States Senate.

BLITZER: All right. The judge may have rejected his request to get that guilty plea withdrawn, but he's staying in the Senate.

There's another Republican headache now. Senator Pet Domenici announcing he's leaving. All of a sudden, that Republican seat in New Mexico which had been assumed to be relatively safe for the Republicans, now that's up in the air.

Tell our viewers, A, what's going on with Senator Domenici, and B, the political fallout.

BASH: Well, Senator Domenici, in about two hours, in his home state of New Mexico, is going to announce that he is leaving. And the reason he is going to give is because he has a degenerative neurological disease that he is going to say really makes it hard for him to do -- to continue to do his job here in the U.S. Senate.

Now, this is something that he was diagnosed with at least six months ago, Wolf, but we are told about a source close to the senator that he had an appointment with a doctor within the last two weeks or so, and that doctor found that there was a negative progression in this disease. This disease makes it hard for him to potentially organize his thoughts and have -- it hurts him in terms of his mental capacity to function essentially.

Right now they say he is doing OK, but the checkup showed that it was having a negative progression. That is why he is going to leave. And it certainly is a surprise here.

He was on track to run for reelection next year. But that is not happening. The answer to your question in terms of the political impact, this is now the fifth Republican senator not running for reelection, and it puts yet another seat for grabs potentially for Democrats to take.

BLITZER: All right. We're going to have a lot more on this part of the story coming up.

Dana, thanks very much.

Also this hour, Rudy Giuliani is backing up his status as the Republican frontrunner with some cold, hard cash. Three GOP candidates released their third quarter fundraising numbers today, and Giuliani leads the pack. But Mitt Romney's war chest is very competitive, because he's lining it, in part, with his own cash.

Let's go to CNN's Brianna Keilar. She's watching the story for us.

How are the numbers breaking down, Brianna?

BRIANNA KEILAR, CNN CORRESPONDENT: Wolf, Mitt Romney and Rudy Giuliani have been battling all year for the top spot when it comes to campaign cash, and today is no different.

(BEGIN VIDEOTAPE)

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: I don't think so. I think it will end up that we have a very good quarter, probably one of the best of the Republicans.

KEILAR (voice over): And Rudy Giuliani appears to be right. The former New York City mayor and Republican frontrunner in the national polls raked in $11 million the past three months.

Mitt Romney's campaign reports $10 million in the third quarter. And they say the former Massachusetts governor loaned his campaign an additional $8.5 million. Romney was a financier before entering politics and he's worth at least $190 million. For the year, Romney's loaned himself $17 million.

Our John King recently asked Romney about the loans.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: How much are you willing to give to your own campaign?

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Oh, that's a closely- held secret, but sure, I'm asking people across the country 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.

KEILAR: Romney appears to be getting some bang for his bucks. He spent $8 million so far this year on the TV ads running mostly in the crucial early presidential primary States of Iowa and New Hampshire.

ANNOUNCER: Mitt Romney (INAUDIBLE) experience to turn around Washington.

ROMNEY: I'm Mitt Romney and I approved this message.

KEILAR: While Romney may not be known across the country, he's at around 10 percent in most national polls. The ads do seem to be paying off in Iowa and New Hampshire, where Romney tops the polls.

John McCain's campaign says the senator from Arizona raised $6 million in the third quarter.

JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Do I have a long way to go? Of course I do. But I'm happy with where we are.

KEILAR: McCain's cash is slightly more than Ron Paul's. The congressman from Texas raised $5 million in the third quarter, surprising even himself.

REP. RON PAUL (R), PRESIDENTIAL CANDIDATE: Yes, it's really fascinating. A bit surprised that we did so well, but very pleased, obviously, because it looks like our numbers went way up from the last time.

(END VIDEOTAPE)

KEILAR: As for Fred Thompson, we expect the former senator from Tennessee to report raising around $8 million this years.

And Wolf, one other important number. Cash on hand, the amount of money the campaigns have left, Giuliani reports $16 million left in the bank, Romney trails with $9 million -- Wolf.

BLITZER: And we're going to be speaking with Ron Paul live here in THE SITUATION ROOM. That's coming up later.

Brianna, thanks very much.

Let's check in with Jack Cafferty. He's joining us for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Take a look at any poll, you get the sense that Americans are disgusted with their government, with the war, with the lack of any sort of coherent foreign policy. You get the sense that the country is desperate for someone to show us the way, not the old way, not the same way, but a new way.

Think about this for a minute. What if we pulled all of our troops out of South Korea? They've been there for 50 years, tens of thousands of them.

What if we quit worrying about Iran and instead realized that its having a nuclear weapon isn't the end of the world?

What if pulled our troops out of Iraq and brought them all home?

What if we realistically addressed the debt and paid attention to the huge burden we're placing on generations to come?

Guess whose ideas these are? And you hardly ever hear his name. This is Republican candidate Ron Paul, talking in an interview with the "New Hampshire Union Leader".

Ron Paul, who raised more than $5 million in the third quarter, trailing not far behind fellow Republicans like John McCain and Fred Thompson. Ron Paul, who has a huge Internet following.

He's a congressman, a physician who's delivered more than 4,000 babies. Ron Paul has been married to the same woman for 50 years, which means he doesn't come to the race with a lot of the assorted baggage that some of the other candidates for the White House do.

So here's the question: Should more people be listening to what Ron Paul has to say?

E-mail your thoughts to caffertyfile@cnn.com, or go to cnn.com/caffertyfile -- Wolf.

BLITZER: All right, Jack.

You know, I'll just repeat that he's going to be here in the next hour in THE SITUATION ROOM as well, Jack.

Thanks very much.

John Edwards says he would end the Iraq war, and he contends Hillary Clinton would extend it. I'll press him about his strategy on the war and his uphill battle to narrow the gap with Senator Clinton. Plus, two White House hopefuls falling short of great expectations. What can Democrat Barack Obama and Republican Fred Thompson do to play catch-up?

And Florida fights back. State Democrats are suing the National Democratic Party, making the battle over the primary season schedule even more bitter and more complicated.

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

(COMMERCIAL BREAK)

BLITZER: Politics can be very, very tough. Right now John Edwards is talking very tough about Hillary Clinton to try to outline differences he says you should know about. They concern Iraq and another issue that Edwards is accusing Senator Clinton of being flat- out wrong on.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, Democratic presidential candidate John Edwards. He's joining us in Columbus, Kentucky.

Senator, we'll get to your location later in the interview. An interesting story there, but let's talk about what's happening in the campaign right now.

You said the other day -- and I'm sort of paraphrasing -- that Senator Hillary Clinton wants to extend the war, I will end the war.

I want you explain what you mean by that.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: What I mean is voters in this primary are going to have a choice. I have said I would take all combat troops out of Iraq, end the war, end the combat in Iraq. Senator Clinton has a different view.

She said that she will continue -- and I think I'm quoting her now -- combat mission in Iraq. And from my perspective, continuing combat missions in Iraq is a continuation of the war. And I want to have very clear differences between myself as the Democratic nominee next fall and the Republican.

They'll be for continuing the war, I want to end the war. Senator Clinton wants less war, but wants to keep the war going.

BLITZER: And I think what she says -- and I could be wrong -- but I think she's suggesting those combat missions she would keep behind would be specifically designed to go after al Qaeda elements that have formed in Iraq.

Would you let al Qaeda have a free rein in Iraq?

EDWARDS: Here's what I believe. I believe that what you just said is essentially what George Bush says. I mean, George Bush says we've got to keep our troops in Iraq, we've got to keep combat troops in Iraq. Al Qaeda is operating there, so we have to continue the war and keep out combat troops there.

I think that's wrong. I think the foundation for the violence in Iraq is the dispute between the Sunni and Shia. And I think America needs over a period of eight or nine months to get its combat troops out of Iraq and shift the responsibility to Sunni and Shia to reach a political solution.

But my difference -- and this is a choice for primary voters to make -- my difference is I would get all combat troops out of the Iraq. Senator Clinton wants to continue some form of combat missions in Iraq.

BLITZER: And she also says in addition to going after potential al Qaeda sanctuaries, or whatever, she would want to protect the U.S. diplomats, protect the U.S. Embassy, which is a huge -- the largest embassy that the United States has in the world. So she would have to keep some troops to protect Americans there.

I assume you would want to keep some troops for that kind of mission?

EDWARDS: That's correct. I think there's a difference between having troops there to protect the embassy, for example -- and we don't want it to be the only unprotected embassy in the world. The embassy in Baghdad has to be protected, but there's a difference between having a protective force there just to protect the embassy and having combat troops there for the purpose of carrying on combat missions.

One I believe is a continuation of the war. Protecting the embassy is not. We're doing that all over the world.

BLITZER: So on this issue I take it you're basically in line with what Governor Bill Richardson says. He just wants to pull out all troops as quickly as possible. And that's that.

I take it you and Governor Richardson agree?

EDWARDS: Well, I have a difference with Senator Clinton. I have a little trouble understanding exactly what Governor Richardson is saying. If he's saying that he's going to take all troops out, that's impossible. We have to -- we have to keep at least around a brigade for the purpose of protecting the embassy, and I would do that. But I would not continue combat missions as Senator Clinton is talking about.

BLITZER: Do you have any differences with Senator Clinton when it comes to what U.S. policy towards Iran should be?

EDWARDS: Yes. I think that's another place where voters are going to be given a choice.

Senator Clinton -- Senator Clinton and I both voted for the war in Iraq. I've made it very clear that I believe my vote was wrong. And there was a vote last week, a really important vote that took place in the Senate, on whether to declare the Iranian Revolutionary Guard a terrorist organization.

Senator Dodd, Senator Biden voted against it. Senator Clinton voted for it.

I think that's wrong. I think the lesson that I learned from Iraq and the vote on Iraq is you cannot give this president even an inch when it comes to moving forward with the possibility of a war. And declaring the Iranian Revolutionary Guard, I believe, gives George Bush that authority, and I would not do that.

BLITZER: On Senator Obama, the other Democratic presidential candidate who's doing really well in the polls, doing well with raising money, tell our viewers -- somebody in your campaign suggested that he was stealing your ideas. Explain what that -- what that person meant.

EDWARDS: Well, first of all, I don't know what they were saying. I don't -- I don't -- there's no such thing as stealing ideas. Ideas out for the purpose of helping America.

I'm proud of the fact that I came up with the first universal health care plan, the first plan to fight global warming, the first tax reform plan, the first trade policy plan, the first comprehensive policy to fight poverty here in America, the first comprehensive policy to fight poverty around the world. And just in the last couple of days I've come out with a series of ideas about what we do about Blackwater and private security firms like that that have been operating unchecked in Iraq.

And I suppose what they were saying is in some of these areas, Senator Obama has come along later and come out with similar ideas. My own view about that is, I'm proud of having led, but I think that debate and that discussion is good for America.

BLITZER: We promised to tell our viewers why you're in Columbus, Kentucky. To the best of my knowledge, it's not an early primary or caucus state.

What are you doing there?

EDWARDS: We had a contest through eventful.com where we allowed towns and communities around the country to gather signatures to see who could develop the most support for me coming. This community, which is about 225 people, gathered the most signatures, and they had somewhere between 1,500 and 2,000 people here today for this event by the Mississippi River.

A very small community. And also, this is the kind of place that I can go and campaign as a general election candidate. And I am committed to doing that. I'll campaign everywhere in America.

BLITZER: Senator Edwards, thanks for coming into THE SITUATION ROOM. EDWARDS: Thanks, Wolf. Thanks for having me.

(END VIDEOTAPE)

BLITZER: A powerful Christian conservative is throwing down the gauntlet, telling likeminded voters to stick to their principles. Is that a direct threat to Rudy Giuliani's campaign.

Paul Begala and John Feehery, they're standing by live for our "Strategy Session".

And a new buzzword in the political debate over illegal immigration, so-called "sanctuary cities". We'll see where the presidential candidates stand, we'll focus in on one city caught in the crossfire.

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

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: From rock star to falling star, Democrat Barack Obama's poll numbers aren't living up to his early political promise. Does he have a strategy to close that gap right now?

And Republican Fred Thompson has a similar dilemma. Can he rev up his campaign by looking south?

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Happening now, secret opinions revealed, reportedly, on how to break the silence of suspected terrorists. Some Democrats now saying the Bush administration says one thing in public but does another thing in private.

I'll ask the White House homeland security adviser, Fran Townsend, what's going on.

Some are asking if it's any way to treat U.S. troops. They bravely fought in Iraq and suffered the loss of some comrades, but when they come home, they were denied some important military benefits.

We'll tell you what's going on.

And Iraq is buying guns and other weaponry from China. Is the Pentagon worried about that? The answer might surprise you.

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

He's been called a rock star. And Democrat Barack Obama still knows how to draw a big and very enthusiastic crowd, but his performance in the polls, the public opinion polls, not yet quite as star worthy.

Let's turn to our senior political correspondent, Candy Crowley. She's covering Obama in Iowa.

Some are suggesting, Candy, that Senator Obama's campaign has sort of hit a plateau.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, look, here's how they look at it from the Obama perspective. They say it's really hard to affect a national race in the national pollings.

They say how you begin to affect the race is through a sequence of contests. And that sequence of contests begins here in Iowa.

(BEGIN VIDEOTAPE)

CROWLEY (voice over): Somewhere between the promise of February and the urgency of October, a question bubbled up around his campaign...

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Are you fired up?

CROWLEY: ... can Barack Obama fire it up? His national poll numbers have been stagnant for months, even as Hillary Clinton's has climbed. Still, he pulls in the crowds and the money. There is a magic about him, a newness, which both appeals and worries.

DAVID KELLEY, IOWA TEACHER: Charisma is a positive for me, and I find -- find I fall into a lot of what he's saying and -- and feel like I get wrapped up in what he's -- he's talking about. Negatives? Well, lack of experience.

CROWLEY: Obama says the experience question is code for, hasn't spent enough time in Washington.

OBAMA: The last president from Illinois turned out pretty good.

(LAUGHTER)

(APPLAUSE)

OBAMA: Although, you know, he really had no experience.

CROWLEY: His campaign believes Obama's newness to Washington is a net gain in an electorate fed up with a political system awash with money and special interest influence. The experience question dovetails with another hurdle Obama has to clear.

PEVERILL SQUIRE, UNIVERSITY OF IOWA: He hasn't yet demonstrated that he really has any good explanation for why he wants to be president, other than he's different. He hasn't come up with a theme yet that most voters can identify with.

CROWLEY: Seen as having more or less the same views on major issues as Clinton, Obama has to make the case that there are differences, there is a choice.

OBAMA: Senator Clinton has been effective in trying to blur the distinctions.

CROWLEY: Despite the aura of unbeatable the Clinton campaign is oozing, Obama strategists believe it is nothing that can't be cured, in fact, probably has to be cured, in Iowa. Nearly every poll of this first-in-the-nation state show a near dead heat, Clinton, Obama, Edwards.

OBAMA: If we win Iowa, I will be the nominee.

CROWLEY: His Iowa campaign is strong. His trips are frequent, and experts here figure about half of caucus-goers are still shopping.

ROSEMARY TOOHEY, RETIRED IOWA TEACHER: And it's the hope that he gives, absolutely the hope that he gives. I may vote for him. I may yet.

CROWLEY: Fall is about closing the deal.

(END VIDEOTAPE)

CROWLEY: In fact, Obama strategists say a win here in Iowa for Obama would be a double boost, first to his campaign, and then they say, in their words, it would be -- quote -- "catastrophic" for Hillary Clinton, because she is now seen as so much of a front-runner -- Wolf.

BLITZER: I'm looking, Candy, at our so-called poll of polls among Democrats. Back in March, Obama was running second, at about 25 percent. Now, in September, the last poll-of-poll numbers, he's still at 24 percent, basically the same thing. Hillary Clinton has gone from 40 percent to 43 percent.

Is there a new strategy he has in mind to -- to do something, to go more aggressive, for example, in trying to sharpen the differences between him and her?

CROWLEY: We -- we are told that, in fact, we will see over time -- they say, look, this is a -- the campaign has a rhythm and a flow to it. He will begin to ratchet up and, as they say, begin to define those differences.

You know, it's been sort of a problem for Barack Obama, because he said he runs a higher campaign, one that doesn't get into personal assault. And, in fact, his advisers say it won't be that, but that is very different from defining those policy differences, which he will be doing.

BLITZER: Candy on the campaign trail for us in Independence, Iowa -- love that name. Thanks very much, Candy, for that.

Another presidential hopeful is trying to turn his star power into some momentum in the polls and on the campaign trail. That would be Republican Fred Thompson. He's counting on South Carolina to help him do that.

Our chief national correspondent, John King is there -- John.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, this vacant storefront behind me will soon take center stage in the fight for the Republican presidential nomination. But the fact that it's not already open for business is adding to the growing debate about whether former Senator Fred Thompson is already sputtering or, smartly, taking the go-slow approach.

(voice-over): Temporary headquarters is through this door, five staffers crowded around a small table, beginning to organize a state where second or third just won't do.

UNIDENTIFIED MALE: They have committed to, you know, doing what it takes to win South Carolina.

KING: The early reviews from Iowa and New Hampshire are less than encouraging, the early fund-raising respectable, but hardly overwhelming.

It means more pressure in a state with a history of deciding the GOP race, where Governor Mark Sanford says Thompson has a giant opportunity, but also a lot to prove.

GOV. MARK SANFORD (R), SOUTH CAROLINA: A lot of the void that was out there and to a degree the Thompson candidacy has fueled by the search for the next Ronald Reagan. Whether or not he materializes as that is obviously what the next 100 days are all about.

FRED THOMPSON, REPUBLICAN PRESIDENTIAL CANDIDATE: And I want to tell you how good it is to be back in South Carolina again.

(CHEERING AND APPLAUSE)

KING: That Thompson has not returned to South Carolina since his quick announcement tour a month ago has even has some backers privately questioning whether he understands the organizational challenge.

Former New York Mayor Rudy Giuliani polls surprisingly strong here. And Massachusetts Governor Mitt Romney is methodically targeting conservatives. Ten direct-mail pieces over several months emphasized his opposition to same-sex marriage and to amnesty for illegal immigrants.

Joe Mack of the South Carolina Baptist Convention, which represents more than 2,000 churches statewide, also credits Romney with patiently answering questions about his Mormon faith many Southern Baptists liken to a cult.

JOE MACK, DIRECTOR OF PUBLIC POLICY, SOUTH CAROLINA BAPTIST CONVENTION: Theologically, they're probably not on the -- they are not on the same page as Baptists, but, in the value issues, I think very much that he may be right there where we are on those issues that are important to us.

KING: Mack has yet to hear from Thompson.

MACK: Well, I would say they're not too late. And I think they are off to a fairly good start.

KING: The first brochure is ready, but still no firm budget for mail and TV advertising.

Still, adviser Walter Whetsell shrugs off the naysayers, and say stressing the candidate's Tennessee roots is central to Thompson's southern strategy.

UNIDENTIFIED MALE: Lawrenceburg, Tennessee, is in fact a whole lot closer to Lexington, South Carolina, and Greenville, South Carolina, and Charleston, South Carolina, than are Boston or New York, for instance. He's the real deal. He's the real conservative in this race.

KING (on camera): Several of Thompson's key backers here in South Carolina tell CNN the candidate needs to spend more time here or risk losing the big wave of support that came with his official entry into the race, but more important, they say, is a strong Thompson performance in his first GOP presidential debate next week in Michigan -- Wolf.

(END VIDEOTAPE)

BLITZER: John King in South Carolina for us, thanks.

And we're getting some more news out of South Carolina today as well. The Congressional Black Caucus Political Education and Leadership Institute announced it will hold the final debate before the Democratic presidential primary on January 17 in Myrtle Beach. That debate will be televised right here on CNN.

Your city could be one of them, a place that gives safe haven to illegal immigrants. There's a huge debate over that, including on the presidential campaign trail. We're going to take a closer look at that -- at that as part of our series on "Uncovering America."

And why is Florida's state Democratic Party suing the Democratic national party? It involves a bitter battle in the presidential primary process.

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

(COMMERCIAL BREAK)

BLITZER: It's an issue that could involve where you live, and it's part of our CNN's series on "Uncovering America." Should cities stand in the way of federal enforcement of immigration laws and provide safe haven to illegal immigrants? Or should they help federal officials find them?

That issue is unfolding right now in several places, including on the presidential campaign trail.

Let's go to CNN's Mary Snow. She's watching this story in New York.

It's a pretty heated debate that's unfolding right now, Mary.

MARY SNOW, CNN CORRESPONDENT: It is, Wolf. And in the middle of that debate are cities with sanctuary policies, often referred to as so-called sanctuary cities.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Exactly what role a city or state should play in enforcing immigration law is a debate that's becoming a lightning rod in presidential politics, bringing to the forefront so-called sanctuary cities.

ALLISON KING, NEW ENGLAND CABLE NEWS: Would you allow these cities to ignore the federal law regarding the reporting of illegal immigrants and in fact provide sanctuary to these immigrants?

GOV. BILL RICHARDSON (D-NM), PRESIDENTIAL CANDIDATE: The answer is yes.

SNOW: Almost all of the Democratic presidential candidates agree. But, on the Republican side, a very difficult approach from some.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I think we should reduce federal funding to cities that call themselves sanctuary cities.

SNOW: Councilman Augusto Amador pushed a 2006 resolution declaring his city, Newark, New Jersey, a sanctuary city. He estimates about one-fifth of its residents, 60,000, are there illegally. The city's status ensures them access to health care and schools. Amador says he will push to get them driver's licenses, too.

AUGUSTO AMADOR, NEWARK CITY COUNCILMAN: They're here to stay. I'm not questioning their legal status.

SNOW: Newark found itself in the spotlight this summer after an illegal immigrant with a criminal record was alleged to have killed three college students there.

Republican presidential candidate Tom Tancredo blamed local officials.

REP. TOM TANCREDO (R-CO), PRESIDENTIAL CANDIDATE: Harboring illegal aliens and their actions have directly contributed to the deaths of these three promising young American kids.

SNOW: Newark officials say, this was a criminal issue, not an immigration issue. Two months later in Newark, Amador says illegal immigrants are afraid to cooperate with police as they once did. He says, if they are not welcome, there will be a price to pay. AMADOR: The economy of this community depends largely on undocumented folks, yes. And that's the reality.

SNOW: And Newark is just one of dozens of cities limiting enforcement of immigration laws. But don't call them sanctuary cities, says one former top administration official, who calls the term misleading.

DORIS MEISSNER, FORMER INS COMMISSIONER: They are saying, we enforce the laws in our city, but it is the federal government's job to enforce the immigration laws.

(END VIDEOTAPE)

SNOW: Now, cities spanning from Anchorage to New York have policies limiting enforcement of immigration laws. On the flip side of that, there are local jurisdictions that have entered into formal agreements with the federal government to enforce immigration laws -- Wolf.

BLITZER: Thanks, Mary -- Mary Snow watching this story.

This important note: Tomorrow, here in THE SITUATION ROOM, we will have a debate between two key players on the immigration issue, Congressman Brian Bilbray of California -- he's a Republican -- and Congressman Luis Gutierrez. He's a Democrat from Illinois. We will talk about sanctuary cities, driver's licenses for illegal immigrants, among other subjects.

Today, in the "Strategy Session": James Dobson, a leading evangelical voice in America, says there should be a values test for the next president. Is this an implicit criticism of Rudy Giuliani?

And the race to 60 -- 60 votes, that is. Does Republican Senator Pete Domenici's decision not to seek reelection mean a bluer Senate in 2008? All that, lots more. Paul Begala and John Feehery, they are standing by live for our "Strategy Session" right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A prominent Christian conservative group makes a bold threat, one that could be a huge problem for Rudy Giuliani and the GOP.

Joining us now in our "Strategy Session," CNN political analyst Paul Begala -- he's a Democratic strategist -- and Republican strategist John Feehery.

We're referring to James Dobson. Writing on the op-ed page today of "The New York Times" today, he says this: "If neither of the two major political parties nominates an individual who pledges himself or herself to the sanctity of human life, we will join others in voting for a minor-party candidate."

He was referring to a meeting that they had in Salt Lake City in which a lot of like-minded individuals said, you know what? If both of the candidates, the top Democrat and top Republican, support abortion rights for women, they're going to look for another candidate.

I take it -- and correct me if I'm wrong, John -- this seems to be a direct slap at Rudy Giuliani.

JOHN FEEHERY, REPUBLICAN STRATEGIST: Well, Dr. Dobson has picked a fight with Fred Thompson, he's picked a fight with John McCain in the past, so he's picking fights. There's no about that.

With Rudy Giuliani, though, he would say, his campaign would say he's doing well among social conservatives. He's leading in the money race. And he's really the front-runner for Republicans.

BLITZER: But he's the only Republican who actually supports abortion rights for women, with the possible exception of Ron Paul, who is going to be here coming in the next hour.

FEEHERY: Well, it's definitely a problem for Rudy. And he's got to -- he's doing extra work with the social conservatives to go after that vote.

I mean, it's definitely a problem. But he's going to manage it. And we will see what happens. I mean, right now, he's leading the polls.

BLITZER: What do you make of this threat?

PAUL BEGALA, CNN POLITICAL ANALYST: I think it's real. I think you have to honor every threat in politics.

I mean, again, yesterday, we were talking about how Ralph Nader earned enough votes to throw the election into a cocked hat in 2000. And the same thing could happen here. I don't see how Rudy can win with his position on abortion and other social issues.

There are enough -- like, who died and made Dr. Dobson king? Well, George W. Bush did. President Bush has had a strategy from the beginning of the base out, focusing on the base. His rationale was, if I can control the base, then I can control the Republican Party, the base being the most conservative. If I control the Republican Party, I can control the Congress.

Well, that's a tactical move that's worked for Mr. Bush, but, strategically, it's harmed his party greatly, because it has empowered the most extreme and most committed wing of his party. And the center is now abandoned, and the Democrats are going to take the center.

BLITZER: The polls do show that, in a hypothetical matchup against Hillary Clinton, Rudy Giuliani, among the Republicans, does best.

FEEHERY: And that's what I was going to say. If Hillary Clinton is the nominee, I will bet you a lot of social conservatives will, yes, we hear what you're saying, Dr. Dobson, but we're with the guy who can beat Hillary Clinton.

BLITZER: Yes. But, if he does go forward and others like him, and put forward an actual third-party candidate, that will take away votes from the Republican.

FEEHERY: And then that would ensure Hillary Clinton winning the presidency. And I don't think...

(CROSSTALK)

BLITZER: Would it ensure Hillary Clinton being the next president of the United States?

BEGALA: Yes.

But Rudy's -- there's data on this. There's social science data. The pro-life position for the Republican Party helps them win elections for the presidency. They very rarely act on it, except to give speeches. Well, they appoint some right-wing judges.

But if -- there are a whole lot of Democrats who vote for Republican presidential candidates only because of the abortion issue. If you take that away, those are Democrats who don't like the Republican position on insurance, health insurance, or on taxes, or on social and on economic issues at all.

So, I just -- I think Rudy is a loser for his party. And, I mean, I hope -- if they nominate him, that's fine. That's their right, but it will breed a third- or fourth-party candidate, and it will open up the center for Hillary.

FEEHERY: Listen, there are plenty of independent voters who like Rudy Giuliani because he's strong on crime. But he is also -- he is pro-choice, so there's a push and pull here.

The question is, will social conservatives vote against Hillary or vote for Rudy? And that's the big question in the election.

BLITZER: Pete Domenici, the longtime Republican senator from New Mexico, he's ailing. He's announcing that he's not going to be seeking reelection. That opens the door for potentially another Democrat taking that seat in New Mexico.

Right now, in the balance of power in the Senate, as you know, 51 Democrats, if you include the independent Joe Lieberman, 49 Republicans. What some are hoping for, Democrats, is to get to that magic number of 60. That's the number you need to break a filibuster and go forward with votes.

Is that doable? If you look right now, how close can the Democrats realistically get to that magic number of 60?

BEGALA: They could get close, but they would need to do what they did in '06. In '06, the magic number was 50. And they did it. They pulled an inside straight. It was highly unlikely. They would have to do the thing now. Now, I think the table is set well for them. Not only is Senator Domenici retiring, Senator Warner in Virginia, Senator Hagel in New Mexico, Senator Allard in Colorado. Then you have these very vulnerable Republicans, Smith in -- out in Oregon, Sununu in New Hampshire, Collins and Coleman.

So, there are seven or so at least who are in play. Well, Republicans -- Democrats would need to pick up all of them and still a couple more.

(CROSSTALK)

BLITZER: And not lose any of their own.

BEGALA: Right, and not lose any of their own.

BLITZER: I will put them up on the screen there. There are at least four seats where the incumbents are retiring. Larry Craig, we don't know what he's going to do now.

BEGALA: He's changed his stance, I think.

(LAUGHTER)

BLITZER: Unclear -- unclear what he's going to do.

But, as Paul said, Warner, Allard, Hagel, and Domenici. And, if you take a look at some of the more vulnerable Republicans who are up for reelection next year, Susan Collins in Maine, Norm Coleman in Minnesota, Gordon Smith in Oregon, John Sununu in New Hampshire, that would be eight right there. And -- but, if there's a landslide, if there's a political trend, you never know what could happen.

FEEHERY: Well, listen, it's a real possibility. And Republicans are concerned about it. That's why they're...

BLITZER: A real possibility of what?

FEEHERY: Getting to 60.

BLITZER: Really?

FEEHERY: I think that -- that Republicans are concerned about it. They're going to use it as a motivating factor to really fund incumbents, like John Sununu and Susan Collins. You know, I think Heather Wilson will maybe be a good front-runner in New Mexico to take that seat.

But, listen, giving a blank check to Hillary Clinton with a 60- vote Democrat Senate, that drives Republicans crazy, and they will fund the Republican candidates and work hard to get those incumbents elected.

BEGALA: There's one more we're going to have to throw into the mix, which is Ted Stevens, the invincible...

BLITZER: Of Alaska.

BEGALA: ... Alaska Republican senator, who is a legend up there. The airport is named after him. And he's not only alive; he's still serving in the Senate. That's how powerful he is.

But he's been embroiled in controversy up there. And he has served for an awful long time. A lot of Democrats think that he may retire or have to leave. And they're actually looking at Alaska, of all places. When Democrats are looking at campaigning in Alaska, you know it's a good year for my party.

BLITZER: You think Bill Richardson would think about running for the Senate? He's the governor of New Mexico, popular Democrat in New Mexico. You think, if -- if the presidential aspiration thing doesn't work out, he would decide, well, maybe I will come back to Washington and be a United States senator?

FEEHERY: Yes, I think his phone has been ringing off the hook lately.

And all those leading Democrats, including the ones he's running against for the presidency, all of a sudden, they need to be very careful about criticizing or attacking Bill Richardson. And I think a whole lot of contributors in the Democratic Party are going to see great virtues all of a sudden in Richardson, maybe even give to his presidential campaign, thinking, if he fails there, he can transfer the money to a Senate race.

But Democrats would love to see Governor Richardson -- he is a beloved governor in that state. They would love to see him run for the Senate.

BLITZER: I just want to correct what I suggested earlier. Ron Paul is with the other Republicans...

BEGALA: He's pro-life.

BLITZER: ... and opposes abortion.

All right. We are going to be speaking to Ron Paul. That's coming up here in THE SITUATION ROOM in the next hour.

Guys, thanks very much for coming in.

BEGALA: Thanks, Wolf.

BLITZER: It involves patriotism and the America flag. Why has Barack Obama stopped wearing a lapel pin of the U.S. flag? You are going to hear his explanation. That's coming up.

And secret opinions revealed -- they reportedly discuss just how to break the silence of suspected terrorists. I will speak live with the White House homeland security adviser, Fran Townsend. She's standing live -- standing by live to talk about that, and more.

We will be right back. (COMMERCIAL BREAK)

BLITZER: On our "Political Radar" this Thursday: Rudy Giuliani is shrugging off criticism from a Catholic archbishop who says he would deny communion to the Republican because he supports abortion rights.

The Associated Press quoting Giuliani as saying that he's not going to debate an interpretation of religion and that he's not running for religious office. Giuliani spoke out in Saint Louis, where the Archbishop Raymond Burke told the AP he would deny communion to any presidential candidate who supports abortion rights.

Democrat Barack Obama says he stopped wearing the American flag on his lapel that's come to symbolize patriotism since the 9/11 attacks. Obama tells an Iowa TV station he's decided he doesn't need to wear a pin on his chest and instead will show his patriotism by explaining his ideas for the country.

New development today adding to the chaos and anger surrounding the presidential primary schedule next year -- Florida Democrats sued the national party today. State Democrats are hoping to restore national convention delegates being stripped from Florida because it scheduled an early presidential primary, in violation of Democratic National Committee rules.

Florida Democrats have refused to back down from holding their primary on January 29.

Remember, for the latest political news at any time, just check out our ticker at CNN.com/ticker.

Let's go right to Jack Cafferty. He's in New York for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question this hour is, should more people be listening to what Ron Paul has to say? He doesn't track very high in the polls, but he has got an interesting message, and he's managing to raise some competitive money with some of the other Republican candidates.

So, we asked the question. We got some letters.

Benjie writes this from Texas: "Absolutely. My fantasy election would be Ron Paul against Dennis Kucinich. In my humble opinion, they're the only candidates who are speaking truth to power. It's a pity we don't have more people willing to stick their necks out like these guys do. Time to wake up, America."

John writes from West Virginia: "Yes, more people should listen. A rarity, a man of principle, integrity and high values running for president, exactly what America needs in this day and age."

Dick writes from Florida: "I must admit, I haven't been listening to Ron Paul at all. But after hearing your take, I will definitely start paying attention. He certainly has a new direction." Wish in Eerie, Pennsylvania: "As a registered Democrat all my life, I not only plan to vote for Ron Paul. I sing his praises every chance I get. However, in as much as the major media have already anointed Hillary and Giuliani, the poor man hasn't a chance."

Mike in Cranberry Lake, New York: "Yes, more people should listen to Ron Paul. Agree or disagree with his propositions, he's a refreshing change from the other candidates and is unafraid of speaking the unvarnished, unspun, unapologetic truth. One reason his Internet following is so large is that it's comprised of people who have taken the time to visit his Web site and read his opinions on the issues."

And, finally, Steve writes from Pennsylvania: "Remember the line from the classic Simon & Garfunkel song 'The Sound of Silence,' the line that says the words of the prophets are written on the subway walls and tenement halls? When I hear Ron Paul, sometimes, I wonder whether I'm not listening to a latter-day prophet, with the way he speaks truth about what our nation has come to. Yes, Jack, a lot more people ought to be listening seriously to Ron Paul" -- Wolf.

BLITZER: And, coming up here, Ron Paul will be our guest live right here in THE SITUATION ROOM.

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

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