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THE SITUATION ROOM

State of Emergency in 7 California Counties; Billions More for War; Turkey Nightmare in Iraq

Aired October 22, 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, President Bush gives Democrats another 46 billion reasons to attack. He's upping the already massive price tag for America's wars.
Plus, a powerful Democrat declares war. House Ways and Means Committee Charlie Rangel taking direct aim at the nation's tax code, and he's also blasting Republican presidential candidate Rudy Giuliani's personal life in some very harsh terms.

I'll speak with Charlie Rangel. That's coming up.

And you never know what Elizabeth Edwards may say next. John Edwards' outspoken wife will join us live to talk about her husband's uphill presidential campaign.

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

All that coming up, but let's begin with the breaking news on the wildfires out in California.

Fire officials say it's worse -- it's worse than anyone could have imagined, and the situation is growing more dangerous by the hour. You're looking at these live pictures coming in from Lake Arrowhead. A quarter of a million people -- that's 250,000 people -- have been evacuated, and tens of thousands of acres have been burned so far. And there's no sign, absolutely no sign yet that the flames are being brought under control.

CNN's Dan Simon is out in the fire zone in San Diego. He's joining us now live with more.

Dan, it looks horrendous, what's going out there. Set the scene for us.

DAN SIMON, CNN CORRESPONDENT: Wolf, we got to this neighborhood in Rancho Bernardo just a little while ago, and my producer and I, when we pulled up here, we were both pretty much rendered speechless. Take a look of this behind me.

You can see two homes that have gone down here. And look at this. This house is still standing, but the house right next to it went down. This guy lost neighbors on both sides.

I count another house here, another one. All told, nine houses pretty much on this one block have gone down, Wolf. It is a very smoky environment. We're still seeing flames pass the ridge. There are a lot more homes in the area. Crews have told us that this fire is still roaring, it is still out of control.

One thing I did notice, Wolf, when we got to San Diego a couple of hours ago, we noticed that this town was pretty much a ghost town. Everybody had heeded the evacuation warning, 250,000 have been evacuated.

They actually opened up Qualcomm Stadium as a place for people to go, much like they did with the Superdome during Hurricane Katrina. We are told people are headed over there. Authorities say when it's all over, this could be an unprecedented event.

Take a look.

(BEGIN VIDEO CLIP)

MAYOR JERRY SANDERS, SAN DIEGO, CALIFORNIA: And this is an extremely quick-moving fire, probably one like we've never seen before because of the strong winds and the heavy smoke. And because of that, we're unable to use air assets, because they can't get close enough, they can't see, and it's hazardous.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: It's a tragic time for California. The devastating fires have killed so far one person and injured four firefighters.

Maria and I want to turn to all Californians to send our thoughts and prayers to the families of those victims.

(END VIDEO CLIP)

SIMON: And back here live, these images are just so frightening, Wolf. And what's even more frightening is we were told by a firefighter that it is like this in neighborhood after neighborhood.

Remember, in 2003, they lost more than 2,200 homes, and we're told they may even -- they may lose more homes with this fire, Wolf. It's just absolutely unbelievable.

BLITZER: And the smoke seems to be incredible in and around the whole area here you are right now. We can see the pictures, but you're smelling it, you're feeling it. What's it like with all that smoke and the char that remains on the ground?

SIMON: It's really tough. And as you can see, I have got my mask here and the goggles.

You have to wear these in between our shots, otherwise your eyes will burn. If you have asthma, you certainly don't want to be in this neighborhood. Obviously a major health hazard. We're doing the best we can and we're going into our car in between live shots and putting this stuff on -- Wolf.

BLITZER: All right. Just be careful over there.

We wish everybody our best -- best wishes.

Dan Simon on the scene in San Diego.

We're expecting to hear once again from the California governor, Arnold Schwarzenegger, on the fires. He's going to be speaking live shortly. He's going to be answering reporters' questions. We'll go there once he starts speaking.

There's other news though we're following right now. We won't go away from these fires for long, but we want to make sure you're up to speed on a lot of other news, including the soaring price tag for America's war, as the president today set to ask Congress for another $46 billion to pay for the Iraq and Afghanistan conflicts. And the financial cost rising along with the death toll and the public anger about the role in Iraq.

Let's go right to our White House correspondent, Ed Henry. He's watching the story for us.

What's the latest from the president on the price tag, what he's seeking in terms of funding for the wars?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, as you know, the president just vetoed a $35 million increase for children's health insurance coverage. Now he wants $46 billion for the two wars in Iraq and Afghanistan. And Democrats are already charging he has misplaced priorities.

(BEGIN VIDEOTAPE)

HENRY (voice over): Just moments before awarding a medal of honor posthumously to a Navy SEAL who paid the ultimate price in Afghanistan, the president yet again raised the economic costs for the wars in Afghanistan and Iraq by another $46 billion to cover everything from bullets to body armor.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Parts of this war are complicated, but one part is not, and that is America should do what it takes to support our troops and protect our people.

HENRY: To give you a sense of the enormity of it, $46 billion would fund the entire yearly budgets of the departments of Agriculture, Transportation and Treasury. And this brings the total tab for Iraq and Afghanistan for this year alone to $200 billion.

BOB GREENSTEIN, CENTER FOR BUDGET & POLICY PRIORITIES: It would be one thing if it were $200 billion a year but the end was in sight, but there really is no end in sight.

HENRY: Democrats are having a field day with the fact the Iraq war is now costing $330 million a day. That could pay for 1,700 more border patrol agents or provide health care to an extra 45,000 military veterans, or the funds from just one day in Iraq could give 270,000 more kids coverage under the State Children's Health Insurance Program.

SEN. HARRY REID (D-NV), MAJORITY LEADER: The entire war in Iraq has been paid for with borrowed money. We're borrowing money from China, India, Saudi Arabia, Mexico to finance this war -- Japan.

HENRY: Despite the soaring national debt, White House spokesman Tony Fratto said the president will find the money for the nation's needs.

TONY FRATTO, DEPUTY WHITE HOUSE PRESS SECRETARY: Poor children are getting health care and the needs of our troops can both be accomplished. They are both priorities and we can handle both of those requests.

(END VIDEOTAPE)

HENRY: Now, look for another major development on Wednesday, when House budget chairman John Spratt holds a hearing with new long- term projections for the costs of both wars. The last time there was such a projection for the next 10 years in Iraq and Afghanistan, the figure was $1 trillion. CNN has learned that the new projections from the Congressional Budget Office will be even higher. So, if you add that more than $1 trillion with the $800 billion that's already been spent, that's real money -- Wolf.

BLITZER: It certainly is, Ed. Thanks very much.

Ed Henry at the White House.

Since September 2001, Congress has approved $602 billion for the wars on terror. Those are the conflicts in Afghanistan and Iraq. The Congressional Budget Office estimates about 70 percent of that money, more than $421 billion, has been spent on Iraq since the invasion more than four years ago.

War spending averaged about $93 billion a year between 2003 and 2005, but look at this. The price tag jumped to $120 billion in 2006, and up to $170 billion this year. The price tag going up, not down.

There is a brand-new audiotape out today, said to be from Osama bin Laden. The speaker on the tape urges al Qaeda in Iraq and other groups in Iraq to unify their forces. The message broadcast by Al- Jazeera includes no dated references, so it's unclear when the tape was made. If authentic, it's the first time the fugitive al Qaeda leader has spoken out directly to militants in Iraq.

Let's go to Jack Cafferty. He's in New York with "The Cafferty File".

I know you always love to hear those audiotapes from Osama bin Laden, Jack.

JACK CAFFERTY, CNN ANCHOR: They're my favorites.

I have got a quick question, Wolf. Who approves the funding for the war?

BLITZER: The United States Congress.

CAFFERTY: Oh, yes, right -- Harry Reid and Nancy Pelosi, and those Democrats who were elected to do something about the war. I forgot.

NASA is refusing to release the results of -- this will -- this will warm your heart -- refusing to release the results of a survey of airline pilots that found safety problems happen much more often than we thought. The Associated Press reports an unprecedented national survey included interviews with 24,000 pilots over nearly four years. The survey cost $8.5 million, taxpayer dollars, but since ending the interviews and shutting down the project, NASA doesn't want to talk about the results.

In fact, just last week, they ordered the contractor that conducted the survey to purge all related data from its computers. One senior NASA official says the results could damage the public's confidence in airlines and affect airlines profits.

I mean, to hell with whether they're safe or not. Let's protect the profits.

And here's why. The findings apparently show that pilots reported at least twice as many near-midair collisions, bird strikes and runway incursions as previously reported. It also shows higher than expected number of pilots who experience what they call in-close approach changes, potentially dangerous last-minute instructions to change their landing plans.

In a late development this afternoon, the chairman of the House Science and Technology Committee is expected to announce a formal investigation of this, and is going to instruct NASA and its contractors not to destroy any data.

There's a good idea.

Here's the question: Should NASA have to release survey results that show safety problems like near collisions happen much more often than previously thought?

E-mail caffertyfile@cnn.com or go to cnn.com/caffertyfile.

This stuff is mind-boggling. They don't want to release the results, Wolf, because they don't want to undermine confidence in the airlines or affect airline profits.

BLITZER: That sounds fishy to me. I assume there must be something going on.

Jack, thanks very much. We'll check what our e-mail thinks as well.

The powerful House Democrat Charlie Rangel is lashing out on the issue of taxes and he's also going after Rudy Giuliani. He's targeting the Republican presidential candidate. The Ways and Means Committee chairman is standing by to joins us right here in THE SITUATION ROOM.

Plus, the GOP presidential hopefuls are mixing it up big time. After the debate fireworks in Florida, can the Republican race get any rougher? The answer is, yes.

And Vice President Dick Cheney turning up the heat on Iran. Is he pouring kerosene on a diplomatic fire? What's going on?

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

(COMMERCIAL BREAK)

BLITZER: You're looking at these live pictures out of California. Look at that, that house in flames right now.

We're standing by to hear from the governor, Arnold Schwarzenegger, momentarily. He should be speak to reporters. Once he starts, we'll get the latest on what's going on. But clearly a horrendous, horrendous situation out near San Diego, down in southern California, all the way up to Malibu and perhaps beyond.

We're watching the story closely.

The Bush administration is used to dealing with hair-trigger conflicts in Iraq and Iran, but Turkey -- Turkey is another matter. Traditionally a reliable NATO ally, now giving the White House some nightmares, as well as the presidential candidates themselves.

Let's get some analysis from the former defense secretary, former senator, congressman, William Cohen. He's now the head of the international business consulting group The Cohen Group here in Washington.

Secretary, you know, just when Petraeus and company are suggesting -- General David Petraeus -- things are moving in the right direction in Iraq, seemingly out of nowhere there's a potential for a NATO ally, Turkey, to be invading northern Iraq. And people don't realize the serious ramifications of what would happen if that were to go forward.

WILLIAM COHEN, FMR. DEFENSE SECRETARY: Wolf, this has been building for some time. Turkey has been quite patient, frankly, if you think about what has been going on.

You've got the PKK, which the United States has declared to be a terrorist groups, launching these attacks across the border, killing Turkish soldiers. And nothing is being done to prevent them going over that line. And so they're saying, unless you take action, unless the Iraqi government is willing to take action, we're going to take action.

BLITZER: This is a political nightmare for the White House, certainly for the Republicans in Congress who are supporting the president on his stance in Iraq, and the Republican presidential candidates, the impact of this.

COHEN: All of the above. It's also a nightmare for Turkey.

If Turkey were to in fact invade northern Iraq, it would call into question the future of their membership in the EU, the European Union, which has been delayed for some time now. We, the United States, have been very supportive of Turkey being admitted to EU.

You then run the risk -- you have now Turkey invading the northern part of the country, what might happen with Iran possibly being tempted to do something along the line in the southern part of the country. So all of our plans about having a sovereign country would come to naught after all that we've invested in blood and treasure.

BLITZER: But the U.S. is not going to deploy troops in the northern Iraq. The U.S. has its hands full in central Iraq, around Baghdad and elsewhere. This is something that the Iraqi government, the Iraqi army, the Kurdish autonomous region, as it's called up in the north, they have to come to grips with the specter of a war with Turkey.

COHEN: And it's time that the Iraqi government come to grips with this as well. They have been dancing around the issue.

They should label the PKK a terrorist group, they should deploy some of their forces in order to surround the camps -- and they know where the locations are -- in order to prevent thinks kind of cross- border attacks against Turkey.

BLITZER: They don't -- they don't want to go after fellow Kurds. That's a big problem.

COHEN: They have to do that or else run the risk that the Turks may in fact at some point lose all patience and then invade.

BLITZER: Let's talk about another nightmare, namely war with Iran, which is moving ahead with its nuclear program, by all accounts.

Listen to what the vice president, Dick Cheney, said.

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: The Iranian regime needs to know that if it stays on its present course, the international community is prepared to impose serious consequences. The United States joins other nations in sending a clear message, we will not allow Iran to have a nuclear weapon.

(END VIDEO CLIP)

BLITZER: All right. That kind of language from the vice president, does it help or does it hurt the diplomats who are trying to resolve this Iranian nuclear situation through diplomacy?

COHEN: I think it reinforces what the president has said in the past, namely that it's really the Iranians should not be getting a nuclear weapon. The international community has spoken to this.

You have now the Russians and others who are trying to find a way to allow Iran to go forward with a nuclear energy program without developing nuclear weapons. I think it's very important that both Russia and China join in this effort to say to Iran, so the Iranians can't split these two key members of the Security Council away from the United States and others, to say that they're going to impose sanctions. I think that's the message rather than the implications.

BLITZER: When Cheney says we will not -- and I'm quoting, "We will not allow Iran to have a nuclear weapon," that's a direct threat to the Iranians. Does it help or does it hurt to hear that coming from the vice president?

COHEN: I'm not sure it alters what the policy is today; namely, the policy of the U.S. to say they shall not get nuclear weapons. I don't think it undercuts Secretary of State Rice. I don't think it undercuts the international community.

It simply reminds Iranians that all options are still on the table. I frankly think the military option is one that ought not to be deployed, but it's one that remains on the table. And they have to be aware of this.

BLITZER: Secretary Cohen, thanks for coming in.

COHEN: A pleasure.

BLITZER: Democrat Barack Obama looked like he was ready to take the gloves off, but is the presidential candidate following through and trying to hit Hillary Clinton where it hurts?

And the Republican Party is giving its presidential candidates a slap on the wrist, while the Democratic Party is getting tough. Who will be hurt by the primary calendar chaos in the end?

Donna Brazile and Terry Jeffrey, they're standing by live for our "Strategy Session".

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

(COMMERCIAL BREAK)

BLITZER: You're looking at these live pictures. The governor of California, Arnold Schwarzenegger, momentarily expected to walk up to that microphone and brief all of us on what's going on. The fires in California horrendous, apparently no progress whatsoever, 250,000 people in southern California have already been evacuated.

We're watching the story. As soon as Governor Schwarzenegger starts briefing reporters, we'll go there live.

In the meantime, let's check in with Carol Costello. She's monitoring some other important stories making news -- Carol.

CAROL COSTELLO, CNN ANCHOR: OK. I'll stop when the governor comes out, Wolf.

But in the news this afternoon, An American sailor shoots and kills two female sailors, and then turns the gun on himself. That's according to Navy officials who say it happened at a U.S. Navy barracks in Bahrain. Officials say the shooter survived his own gunshot and is in critical condition at a military hospital. He's under very heavy security. Officials say they do not know what made the sailor go on the attack.

Oil prices retreat from their report highs slightly. Prices fall just over $1. Just last week, they hit over $90 a barrel amid fears the conflict between Turkey and Kurdish fighters in northern Iraq would disrupt oil supplies.

Governor Schwarzenegger is now speaking about those wildfires. Let's go out to California.

(JOINED IN PROGRESS)

SCHWARZENEGGER: ... for being part of this very important briefing.

I also just want to mention that we have gotten offers of help from Senator Feinstein. She just called and was very concerned about the fires, and offered her help.

The secretary of agriculture, Chuck Conner, called us and offered his help, anything that we need. And during the briefing inside, President Bush also called and offered his help. And he was very concerned about the fires, and anything -- he offered anything that we need, he would immediately provide.

So I think it's very nice to see everyone coming together on this very important emergency here.

First of all, let me just say it's a tragic day for San Diego County and for California. The devastating fires in this county have killed already one person and injured four firefighters.

Maria and my thoughts and prayers are with the families of the victim. And then after this press conference, I'm going to visit the four firefighters at the hospital and their families.

Now, let me just say that the authorities have set up already evacuation centers and shelters for animals. As you know, 250,000 people have been evacuated. And we also have asked General Wade (ph) from the National Guard to get us troops. He has committed to take 800 troops off the border to provide for evacuation and for crowd control.

Now, the Harris fire has already burned more than 20,000 acres. And of course those numbers are changing all the time.

The mandatory evacuations that have taken place, as I said earlier. The fires are fast-moving. Many, many of the structures have been already destroyed. More than 1,000 homes are threatened. The fire has been driven, of course, because of the strong winds, the high temperatures, and the dry -- the dry environment that we have.

So if you have any further questions, you can ask them afterwards, but first I want to bring out Mayor Jerry Sanders to say a few words here about the condition.

Thank you.

I just want to say -- I just want to say that anything the mayor needs, anything San Diego needs, anything San Diego needs, we are there. We are partners in this, the state and the federal government. Everyone is coming together here to help.

Thank you.

(APPLAUSE)

BLITZER: All right. We're going to continue to monitor the statements coming out from these officials out in California, but clearly a horrendous, horrendous fire. And you can see the smoke.

A quarter of a million Californians have already been relocated, told to evacuate this area. We'll update you as more information comes in.

The Republican presidential candidates may need a cooling off period after their latest debate. They went to Florida after weekend, (INAUDIBLE). When they weren't busy laying into one another, they were ganging up on Democratic senator Hillary Clinton, the Democratic presidential front-runner.

By our account, they mentioned Senator Clinton a whopping 31 times, and what they were saying wasn't necessarily very pretty. What they said about each other wasn't pretty, either.

Let's go to our congressional correspondent, Dana Bash -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Wolf, the scene may be familiar by now, Republican candidates for president side by side on the same stage. But this time the stone was decidedly sharper.

(BEGIN VIDEOTAPE)

BASH (voice over): Right out of the gate, Republican presidential hopefuls were encouraged to mix it up on who's the real conservative, but it didn't take much prodding.

FRED THOMPSON (R), PRESIDENTIAL CANDIDATE: Mayor Giuliani believes in federal funding for abortion, he believes in sanctuary cities, he's for gun control. He sides with Hillary Clinton on each of those issues.

RUDY GIULIANI (R) PRESIDENTIAL CANDIDATE: Fred has his problems, too. Fred Thompson, along with very few Republicans, blocked tort reform over and over and over again. That is not a conservative position.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: We're not going to keep Hillary Clinton out of the White House by acting like Hillary Clinton.

BASH: It was the most aggressive GOP debate with the sharpest exchanges to date. Front-runners Rudy Giuliani and Mitt Romney took the most incoming about their conservative credentials.

JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Governor Romney, you've been spending the last year trying to fool people about your record. I don't want you to start fooling them about mine.

BASH: All that prompted this...

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: Let them fight all they want tonight, shed each other's blood, and then I'll be ready to run for president.

BASH: Eleven weeks before the first Republicans vote in Iowa, Rudy Giuliani leads nationally, but in key first contest states, polls are mixed. The increasing heat here is generated by an unsettled and unsatisfied GOP electorate, but one thing these candidates know Republicans voters want is the best man to go after Hillary Clinton.

ROMNEY: She hasn't run a corner store, she hasn't run a state, she hasn't run a city. She has never run anything.

BASH: They were eager to deliver.

GIULIANI: No kidding, Hillary. America can't afford you.

BASH: John McCain attacked Clinton for trying to spend a million dollars on a Woodstock museum and used it as a reminder of his '60s experience, as a Vietnam POW.

MCCAIN: Now, my friends, I wasn't there. I'm sure it was a cultural and pharmaceutical event. I was tied up at the time.

(END VIDEOTAPE)

BASH: This was Fred Thompson's second debate, and he got the most pointed question about why he doesn't campaign more and criticism that he's lazy. Thompson responded by ticking off his lengthy resume and saying, "If a man can do all that and be lazy, I recommend it to everyone."

Not exactly an answer to the question, but it was an applause line -- Wolf.

BLITZER: Dana Bash on the scene for us.

Dana, thank you very much.

This programming note. On November 15th, I'll be in Las Vegas to moderate a debate in Nevada among the Democratic presidential candidates. They'll all be there, November 15th in Vegas.

And, as you just heard, Senator Hillary Clinton appears to be the talk of the Republican Party, with the presidential candidates warning that the country will be in big trouble if she becomes president. One issue they claim she will put in peril concerns your money.

(BEGIN VIDEO CLIP)

FRED THOMPSON, REPUBLICAN PRESIDENTIAL CANDIDATE: Hillary is always a good applause line. And almost everything everybody has said has been accurate. If we go down that road, we are going to go down the road of higher taxes.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: There's nothing funny about Hillary Clinton being president. Let me tell you why.

(CHEERING AND APPLAUSE)

HUCKABEE: If she's president, taxes go up.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: What is the one -- one Democrats want? Raise taxes. It's the wrong way to go.

(END VIDEO CLIP)

BLITZER: Joining us now, Democratic Congressman Charlie Rangel of New York. He's the chairman of the powerful Ways and Means Committee.

Congressman, what do you say to the Republicans, who are all harping on this theme that the Democrats, if they get back to power in the White House, that the American people are going to be spending more on taxes?

REP. CHARLES RANGEL (D-NY), HOUSE WAYS AND MEANS COMMITTEE CHAIRMAN: Well, presidents don't raise taxes. Constitutionally, it's the Congress, and, more specifically, it's the Ways and Means Committee.

As a matter of fact, this week, I will be unveiling a tax bill of simplification, tax fairness, which will provide tax cuts for 93 million people, instead of tax increases.

BLITZER: Who is going to be spending more on taxes? Which Americans are you targeting to raise their taxes?

RANGEL: Well, we're not talking about raising anyone's taxes. We're talking about closing some of the loopholes and unfairness, and it's in terms of a lot of preferences that shouldn't be in the tax code.

So, within the code, we will be able to close these gaps. For instance, we have certain people that are providing services. One group gets paid at 15 percent for capital gains, the other at ordinary income for 35 percent. We have got to bring a little fairness to the system.

BLITZER: You also -- Congressman, excuse me for interrupting -- you also want to make sure that the tax cuts that were enacted during the first Bush administration, that they will lapse. They're supposed to expire, what, in 2010. You don't want them to go on, do you? RANGEL: What I'm saying is that, at my age, I don't buy green bananas. That's 2010.

I'm saying, this week, we will have a tax bill out that simplifies and cuts taxes. And we will not be raising taxes. I agree with the president. The American taxpayer knows just what to do with their money much better than the federal government. But it doesn't mean it has to be the richest part of our country. We can have other people enjoy a tax cut to be able to send their kids to school, to be able to get decent housing and health care, and do those things which are necessary.

BLITZER: Well, give us one example how, if your proposal is enacted, it would simplify the -- the tax code for an average American family.

RANGEL: Well, first of all, it would simplify it by we would be dropping from the tax codes completely those people that shouldn't be paying taxes by expanding the family deduction.

BLITZER: So, poor people -- poor people would benefit?

(CROSSTALK)

RANGEL: Yes, but even those people who are working and still are poor, we will give them an earned income tax credit. In other words, instead of owing the government for working, even though they don't owe taxes, we will give them a check to make certain we appreciate what they're doing with an earned income tax credit.

BLITZER: And what income bracket would you expect taxes to go up, people making $200,000 a year, $100,000 a year? At what level would they be paying more in taxes?

RANGEL: I would take a guess that, if you're making $500,000 a year, that you would be expanded.

But I'm saying that all of the people before then, one way or the other, would be enjoying a tax cut. By closing the loopholes that shouldn't exist, people could say that's a tax increase.

I was talking with Secretary Paulson. He convinced me to reduce the corporate taxes from 35 percent to 25 percent. You would say, well, how do you pay for it? Well, he is saying that, at the higher rate, so many corporations are not paying any income taxes, because they get preferential tax treatment.

BLITZER: All right.

RANGEL: If you eliminate that, you're raising the money to provide fairness and equity for everybody.

BLITZER: There were tough comments attributed to you in the new issue of "The New York Observer" on Rudy Giuliani. I assume you saw the article. "It's totally unbelievable," you're quoted as saying. "I refuse to believe this could possibly happen to our country. I have too much confidence in our country to believe that this could really happen."

And you're referring to the possibility, what, that he would be the Republican presidential nominee?

RANGEL: It's really sad, because it cuts down the ability of the Democratic Party to effectively compete on the issues, I mean, to be dealing with a post-9/11 mayor with no foreign policy experiences, that has flip-flopped on gun control, on immigration, on so many -- on -- on birth control, to -- to say that God hasn't finished with him, as he moves in.

And with the record that he's had of lack of sensitivity as the pre-9/11 candidate, I just can't conceive that he would be involved as one of the possible people that could be president of this great country. And I know, sooner or later, it's going to be exposed.

BLITZER: And...

RANGEL: Whether it's Kerik or other people that he was involved with before he became a national figure.

(CROSSTALK)

RANGEL: And I give him credit for what he's done since 9/11.

BLITZER: But you also lashed out at his personal life, some of the experiences he's had, his multiple marriages, among other things.

RANGEL: Well, you know, two people, six spouses. It's a little complicated, if you're not religious, especially when you're running against a Mormon.

But I'm just saying that America has to look at all of these things, and that there are enough -- there are enough moles on this man that embarrasses those of us who have sought public life. When we get involved in public life, it means we're in a goldfish bowl. And it would seem to me, with all the breaks that the mayor has had, and touching with Kerik and being involved with his personal problems, that he would thank God he's got as far as where he did go, without making the politicians get involved in his personal life.

BLITZER: But, if his personal life becomes an issue, that opens the door for Hillary Clinton, your candidate. Her personal life, which we all know about, that becomes an issue as well.

RANGEL: I -- you know, you can say it over and over and over again. This woman got married, stayed married, the same husband. When they had problems, she stuck with him.

You tell me what her personal life is something that she should be ashamed of, and I want to talk about it. But I will tell you one thing, that, whether you like it enough, personal lives, once you throw your hat in the ring, then you're vulnerable to anything. And I can't for the life of me see how you could compare anything that has been suggested that Hillary Clinton has done as she's been exposed to public scrutiny and compare it with someone like Rudolph Giuliani, no comparisons.

But I agree with you. Once you're in, you're all in. So, if she's got something that you know and I don't know, tell me now.

BLITZER: I don't know anything, Congressman.

(LAUGHTER)

BLITZER: Thanks very much, Charlie Rangel.

RANGEL: Thank you, Wolf.

He trails badly in some national polls. So, what does Barack Obama need to do to try to overtake Hillary Clinton? Some suggest go on the attack.

Also, Republicans could punish five states that could be pivotal to their presidential prospects. It involves the fight over the nominating contest calendar.

And Osama bin Laden's apparent new audio message -- the terror leader talks to other terrorists in Iraq and appears to tell them something he's never said before.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Senator Barack Obama has amassed much of his popular support through a likable image and by staying positive, but some analysts say that could be keeping him behind Hillary Clinton in the polls.

Let's go to our senior political analyst, Bill Schneider. He is standing by with some analysis.

What can Senator Obama do to try to turn things around in this Democratic campaign?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, Wolf, he has to try a different kind of campaign: no more Mr. Nice Guy.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): When Barack Obama got into the race, he promised something different.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I have been struck by how hungry we all are for a different kind of politics.

SCHNEIDER: He's been running as a uniter, a (AUDIO GAP) maker. Is that what Democrats are looking for? Maybe not. Obama is running 30 points behind Hillary Clinton in national polls of Democrats.

What's she doing? She's showing some fight.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: And, you know, the idea that you're going to escape the Republican attack machine and not have high negatives by the time they're through with you I think is just missing what's been going on in American politics for the last 20 years.

(APPLAUSE)

SCHNEIDER: Democrats are tired of being bullied. They want a candidate who will punch the bullies in the nose. Can Obama get tough?

He tried last (AUDIO GAP) on "The Tonight Show."

(BEGIN VIDEO CLIP, "THE TONIGHT SHOW WITH JAY LENO")

OBAMA: Hillary is not the first politician in Washington...

JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Yes.

OBAMA: ... to declare mission accomplished a little too soon.

(END VIDEO CLIP)

SCHNEIDER: That hurt, a little.

He took another jab when he filed for the New Hampshire ballot.

OBAMA: The casual voter, many of them are still going to be parking their vote with Senator Clinton, because that's a familiar brand name.

SCHNEIDER: In his new ad, Obama continues to play the peacemaker.

(BEGIN VIDEO CLIP, OBAMA CAMPAIGN AD)

OBAMA: When we break out of the conventional thinking and we start reaching out to friend and foe alike, then I'm absolutely confident that we can restore America's leadership in the world.

(END VIDEO CLIP)

SCHNEIDER: What we're not hearing is criticism like this.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: She hasn't run a corner store. She hasn't run a state.

(CHEERING AND APPLAUSE)

ROMNEY: She hasn't run a -- a city. She has never run anything. And the idea that she could learn to be president as an internship just doesn't make any sense. SCHNEIDER: Internship? That's not very nice.

(END VIDEOTAPE)

SCHNEIDER: Republicans play rough. If he's going to overtake Clinton, Obama has to make it clear to Democrats he's ready to rumble, no more Mr. Nice Guy -- Wolf.

BLITZER: Bill Schneider, thanks very much.

Bill is watching this story.

In Louisiana today, the new governor-elect is promising to be a different kind of leader than they're used to in Louisiana. And he's being cheered on as far away as the -- his parents' homeland in India.

Republican Congressman Bobby Jindal won the top job on Saturday, getting more than half the vote against 11 opponents.

CNN's Sean Callebs is in New Orleans. He is watching the story for us.

So, you talked with the governor-elect, and he had some fascinating comments.

SEAN CALLEBS, CNN CORRESPONDENT: He really did. He's a very energetic guy, really interesting person to talk to.

And Bobby Jindal ran for governor actually four years ago, and was defeated by Kathleen Blanco. Well, in the wake of Katrina and Rita, Blanco decided months ago she wasn't going to run. So, Jindal placed himself at the top of the polls by telling people he was the best person to lead the state out of its morass.

(BEGIN VIDEOTAPE)

CALLEBS (voice-over): Louisiana made 36-year-old Bobby Jindal, the son of immigrants from India, the first non-white governor here since Reconstruction.

BOBBY JINDAL (R), LOUISIANA-GOVERNOR ELECT: My mom and dad came to this country in pursuit of the American dream.

CALLEBS: Jindal, a Republican, takes office in January. The cornerstone of his campaign has been hammering away at the state's reputation of fostering the good-old-boy network, where corruption has seemingly become part of the political fabric.

JINDAL: When I go to corporate CEOs and try to encourage them to invest in Louisiana, the first thing you hear is, where is the money really going? Or whose brother-in-law do I have to hire? Or who do I have to pay?

We need to eliminate that. And the way we do that is up front, early on, showing people this is a new day, not through words, but through actions. CALLEBS: Jindal converted from Hindu to Christianity in high school. He's been in Congress the past three years, and, to a large degree, billed himself as the last decent chance to rebuild the New Orleans area after Hurricane Katrina.

Jindal has close ties to President Bush.

JINDAL: But we do need additional help that was promised, again, for not only Road Home, but also for the levees, the wetlands that are so critical to protecting people as they continue to rebuild here.

CALLEBS: Jindal's victory touched off celebrations in India, even though he hasn't been there in decades.

Said one relative, "We are very happy with Bobby's achievements."

There are celebrations, not only in his village of Kampura (ph), but also in different other areas of India. Indeed, the 2.5 million citizens in the U.S. of Indian descent are likely cheering Jindal's win.

The head of the U.S.-India PAC says business leaders in I.T. and the hospitality industry are now looking to invest in Louisiana, in part out of loyalty.

JINDAL: Well, I think that's great. Look, if my election opens more doors, if my relationships, because of where I studied college or of who I am, if any of that allows us to talk to a business that now is more interested in being here than they were yesterday, that's fantastic.

(END VIDEOTAPE)

CALLEBS: Now, I don't want to say, during our discussion, that he wanted to distance himself from support in India and among Indian- Americans, but everything came back to Louisiana for Bobby Jindal.

And one of my favorite stories about him, Wolf, he was born with an Indian name, but, when he 4 years old, the story goes, he went to his parents and said, "Call me Bobby," after the youngest in "The Brady Bunch" -- Wolf.

(LAUGHTER)

BLITZER: Fascinating. Bobby Jindal, the governor-elect.

Thanks, Sean, for that.

At least the Republican presidential candidates can agree on one thing. They went after Senator Hillary Clinton with new gusto. But would all that -- will all that Clinton-bashing help them in the end? Donna Brazile and Terry Jeffrey, they are standing by for our "Strategy Session."

Plus, are Republicans turning the other cheek to Florida, while Democrats won't? Coming up next, a primary punishment and the road to the White House.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The Republican presidential candidates debated with some bitter words for each other and relentless attacks on Hillary Clinton.

Let's get some analysis from CNN analyst and Democratic strategist Donna Brazile and conservative commentator Terry Jeffrey. He's editor in chief of the Cybercast News Service.

Guys, thanks for coming in.

Were you surprised how -- they went after Hillary Clinton, each man, basically, saying that, you know, she is basically going to be the Democratic presidential nominee, and the Republicans have to stop her. Were you surprised how gung-ho they were in focusing their attention on Hillary Clinton at that debate?

DONNA BRAZILE, CNN POLITICAL ANALYST: Oh, absolutely not.

Look, they're running to be the best conservative in the race. And, as a result of it, they're running right now against Hillary Clinton, who has not won one primary or caucus. They assume that Hillary will become the Democratic nominee. So, all of the candidates, at least the top tier, they have loaded up their shotguns, and they are now trying to remove Hillary from being the front-runner of the Democratic Party.

BLITZER: I mean, they're really going after her. But is this a wise strategy for the Republicans at this point?

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: Yes.

I think it does two things for the Republicans. First of all, it gins up the conservative base of the Republican Party. They do believe that Hillary Clinton is going to be the Democratic nominee. They absolutely do not want her to be president.

And that debate last night showed that, if the Republicans can get into a general election next year with Hillary where the issue isn't the Iraq war, but domestic and cultural issues, we could have a very close election. The Republicans have an advantage in those areas.

BLITZER: How much damage do they do to Hillary Clinton in the process of her seeking the Democratic nomination, because they mentioned Hillary Clinton dozens of times? They never mentioned John Edwards. They never mentioned Barack Obama. They never mentioned any other Democrat.

BRAZILE: Well, that's because they don't know a lot about the other candidates and have decided that Hillary Clinton is a much easier target for them right now to rally campaign... (CROSSTALK)

BLITZER: But does it hurt her -- does it hurt her among Democrats, who are -- who might step back and say -- get nervous, and say, you know what, maybe we should take a second look at some of these other candidates, because she does generate that -- I guess you could call it hatred among the Republicans?

BRAZILE: No, I don't think it hurts her at all.

Look, if you look in some folks the swing states right now, she's leading in Florida. She's leading in Pennsylvania. She's leading in Ohio against some of the top-tier Republican candidates. So, it's clearly helping Senator Clinton to get all of this attention, to have the Republicans rally around fighting her, rather than going out and fighting others.

BLITZER: They were fighting themselves, the Republicans, at this debate. They going after -- especially the beginning. And one strong line was when John McCain went after Mitt Romney, suggested, you know, he's been trying to fool the country for the past year, but he's not going to succeed in getting -- fooling anyone about John McCain's stance on these conservative issues.

What's your take on that?

JEFFREY: Well, look, I think, for a long time, the Republican race has been about who gets to line up as the conservative opposite Rudy. And, for a long time, it has looked like Romney is going to be that guy, because he's been leading in New Hampshire and Iowa.

He seems to be slipping a little bit, Wolf. And I don't think that Romney did as well in last night's debate as he has done in some of the previous debates, where both McCain and Thompson, I think, and Huckabee did a little bit better job of appealing to the conservative base of the Republican Party.

BLITZER: Who do you think did the best last night?

BRAZILE: Well, there's -- I thought John McCain did very well. He was on his game. He was feisty. He was energized.

Fred Thompson came back. We saw some passion. He wasn't lackluster, like the first debate. But Rudy and both Romney seemed also to be comfortable in their own skin, but they didn't really have that much to say.

BLITZER: Fred Thompson did show some energy. And he certainly didn't slip up on any of the substantive issues.

JEFFREY: And he took a good, hard whack at Rudy Giuliani, which is really what the Republican race is about now. And, by doing it, he was positioning himself to the right and talking about issues that appeal to conservatives.

BLITZER: And Giuliani took a hard whack at him for saying he never supported tort reform, because he's a lawyer.

Let's talk a little bit about Rudy Giuliani's comment in Florida. The debate was in Florida, but he had these pointed words to the people of Florida and the Democrats.

Listen.

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI (R), PRESIDENTIAL CANDIDATE: I would also like to note, on behalf of all my Republican colleagues, we're not going to boycott Florida, the way the Democrats are.

(CHEERING AND APPLAUSE)

GIULIANI: We're going to be here, campaigning for your vote.

(END VIDEO CLIP)

BLITZER: All right, explain what he was suggesting.

BRAZILE: As you know, both political parties set -- set rules to nominate their presidential candidates. The calendar begins on February 5. The Democrats gave a couple states a waiver. The Republicans do not grant waivers. The Republicans today voted to penalize all the states that are going ahead of the opening of February 5.

So, Democrats are not boycotting Florida or Michigan or any other state. We're just trying to enforce our rules, so that all of the states can comply with the existing regulations.

BLITZER: Very quickly.

JEFFREY: Well, first of all, I have to highlight Rudy did a good job in the way he presented himself last night. He was witty. He was sort of attractive in the way he presented things.

Ironically, in the Republican Party, he's the one candidate that benefits most from the truncating of the schedule and from big states like Florida coming first. To the degree that they go Iowa, New Hampshire, South Carolina, that helps the conservative candidate against Rudy.

BLITZER: Terry Jeffrey, Donna Brazile, thanks, guys, for coming in.

BRAZILE: Thank you.

BLITZER: You know his on-screen abilities, but martial arts Chuck Norris wants you to know his favorite presidential candidate. And his pick may just surprise you.

Also, Elizabeth Edwards is doing all she can to try to help her husband get to the White House, but will she continue to talk tough against Edwards' opponents? She is standing by live. And a tragic time for California, that's what the governor, Arnold Schwarzenegger, says, as extraordinary, dangerous wildfires ravage some areas. Thousands of people are fleeing for their lives. Some believe the worst is yet to come.

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

(COMMERCIAL BREAK)

BLITZER: On our "Political Ticker" this Monday, a martial arts star is trying to put a little kick into a Republican presidential campaign.

Chuck Norris, the cult hero of "Walker, Texas Ranger," today announced his White House choice. Norris says he's backing the former Arkansas Governor Mike Huckabee, saying he believes he's the only candidate with all the characteristics to lead America into the future.

Move over, John Edwards. People suddenly are talking about Mitt Romney's hair. The Republican showed up at the latest debate having a bad hair day. We're told there was an audible gasp from the reporters at the sight of the usually impeccable Romney looking a little bit mussed up. Someone in the Romney camp must have caught on. A few minutes later, the former Massachusetts governor's hair was back in place.

Remember, for the latest political news at any time, you can always check out our "Political Ticker" at CNN.com/ticker.

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

JACK CAFFERTY, CNN ANCHOR: I no longer have to worry about bad hair days.

(LAUGHTER)

CAFFERTY: It's kind of a comfort.

BLITZER: You have got very nice hair.

CAFFERTY: Yes.

BLITZER: Yes.

CAFFERTY: The question this hour is, should NASA be forced to release survey results that show airline safety problems, like near collisions, happen much more frequently than any of previously thought? They're withholding the data at this point.

Jocelyn writes from Arizona: "I think we need a full account of what is happening at NASA. What is wrong with NASA anyway? Drunk astronauts, diaper-wearing, stalking astronauts, near misses. When I was a kid, these guys were heroes. Today, they're a laughing stock."

Bob in Georgia writes: "Imagine that, destroying commissioned study reports because they reveal potentially disturbing things, like not winning the war, not securing the borders, dangers of flying the not-so-friendly skies, disappearance of tens of billions of dollars. What's next, protecting us from the election results?"

Ed in Virginia: "If the government spent any of my tax dollars funding a study about airline safety, I don't want any of the information destroyed. I paid for it. I want it."

Jonathan in California: "It seems the only way to finally tackle the problems plaguing our airlines is to be realistic and honest about the problems that face us. If NASA is able to just get rid of the reports they don't like, imagine what else they might be hiding. Why does our government constantly try to cover up the truth? Why not spend a bit more time and energy fixing the problems, instead of telling us not to focus on them?"

Martin in Ohio writes: "They absolutely should, Jack, right after they have happy hour. Anybody could do it sober."

And Timothy in Minnesota: "I will have to get back to you, Jack. I'm checking out the Amtrak schedules."

(LAUGHTER)

CAFFERTY: Wolf.

BLITZER: Jack, thank you.

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