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CNN Late Edition with Wolf Blitzer

Best of 2007

Aired December 23, 2007 - 11:00   ET

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

WOLF BLITZER, HOST: It's 11:00 a.m. here in Washington, 10:00 a.m. in Des Moines, Iowa and 7:00 p.m. in Baghdad. Wherever you're watching from around the world, thanks very much for joining us for "Late Edition: The Best of 2007."
Over the next two hours, we'll bring you our interviews with the year's top news makers, plus analysis on the year in politics from three of the best political team on television.

First, though. let's go to the CNN Center in Atlanta for a quick check of what is in the news right now.

(NEWSBREAK)

BLITZER: Thanks very much.

We begin with my interview with President George Bush. In November, he convened a conference of Arab and Israeli leaders in an effort to recharge the Middle East peace process.

Just after that summit in Annapolis, Maryland, the president took some time to sit down with me in the White House map room to discuss his goals, including the possibility of his visiting Israel and the Palestinian territories.

(BEGIN VIDEO CLIP)

PRESIDENT GEORGE W. BUSH: First of all, the president doesn't have -- going to a region, in itself, is not going to unstick negotiations. It is working with the principals, Prime Minister Olmert and President Abbas. That's how you get things done.

Now, if I have to call them together, I will. But this idea of somehow you're supposed to travel and therefore good things are going to happen is just not realistic.

What's realistic is to get the frame of mind of the leaders right and head them off.

But this notion about how America can impose their vision just simply isn't going to work. It's got to be a Palestinian vision and an Israeli vision, where they find common ground. And our job is to help them find common ground. And I'm going to spend a lot of time doing it.

BLITZER: Mr. President, as you know, there are a lot of Israelis who are nervous right now, a lot of Palestinians who are nervous.

Our interview is being seen all over the world. Do you have anything you want to say directly to the Israeli people, who are worried, perhaps, the U.S. might squeeze Israel, pressure Israel into making concessions that could undermine their security?

BUSH: Well, first of all the vision that I hope emerges as a result of these negotiations -- the implementation of the vision will be subject to a road map. In other words, I would never expect a country to allow terrorists to be on their border. I mean, it's -- it's -- the big threat in the Middle East is terrorism and radicalism, and I understand that.

And therefore I believe that the best way to defeat those terrorists and radicals, however, is through a vision based upon liberty.

And so my message to the Israelis is it's in your interests that your prime minister negotiate, with the Palestinians, a democracy, but it's also -- they've also got to understand, and so do the Palestinians, that before that democracy comes into being, certain conditions have to be met.

And I happen to believe it's in the security interests of both people to conclude this agreement.

BLITZER: How much of a problem is the fact that Hamas was, after all, democratically elected? They control Gaza right now and they hate what you're trying to do.

BUSH: Yes. That's -- you know, part of the way to solve a problem is for there to be clarity. And the fact that they hate the thought of a democracy should say to the world what the problem with Hamas is.

I mean, what is their vision, is my question to the Palestinian people. Ultimately, if this can be done, if the state can be laid out, what the state should look like, then it gives people like President Abbas a chance to go to the Palestinians and say, you can have their vision of violence or this vision of peace; take your pick.

BLITZER: What about the Iranians?

They weren't invited to this conference, even though a lot of Arab and Muslim countries were. What was the thinking in saying, you know what, to the Iranians, who do have a lot of influence in that part of the world, you can't come?

BUSH: You know, they just -- they would be not constructive. This is a leader announced that he wants to destroy one of the parties that we're trying to support. And if you listen to their comments, they weren't going to come anyway. They were very nonsupportive of the process.

BLITZER: Well, let me read to you what Mahmoud Ahmadinejad, the president of Iran, said today, and I'll quote him. "It is impossible that the Zionist regime will survive. We are disappointed that some individuals fell victim to the sinister Zionist regime. They are mistaken if they thought that this summit will bring any achievements for them."

You want to react to that?

BUSH: It just made my point. It's -- this is a man who doesn't believe in democracy and freedom and peace. And this was a conference of people who were supportive of the idea of a democratic state living side by side with Israel.

It's a send-off of two leaders to negotiate this state, a vision that has taken awhile for people to accept.

You know, I'm the first American president, I think, the first American president ever to have articulated the vision. I did so because I understand that a democracy on Israel's border is important for Israel's security.

And that very democracy is important for the Palestinians to have a hopeful life, but it's also important for the broader Middle East. Because there is a struggle going on between a free society and society between radicals and extremists, many of whom are funded by Ahmadinejad.

BLITZER: Do you believe he would really like to destroy Israel?

BUSH: If I were an Israeli, I would take his word seriously.

BLITZER: Would the U.S. respond militarily on behalf of Israel, if Israel were attacked by the Iranians?

BUSH: I have made it clear that the -- absolutely, that we will support our ally, Israel, if attacked by Iran.

BLITZER: What does that mean?

BUSH: Well, you know, I hope it doesn't happen. But, you know, you're asking me to answer a hypothetical. My answer is, and they've got to understand, that we will support Israel if Iran attacks them.

(END VIDEOTAPE)

BLITZER: And shortly after the interview, White House officials said the president would, in fact, be visiting Israel, the Palestinian territories, Saudi Arabia, and other countries in the region in January.

While the president moved to restart the Middle East peace process, the war in Iraq remained the primary foreign policy focus of his administration in 2007.

The second half of the year was marked by a stunning turnaround in the violence, with a significant drop in deadly attacks against both U.S. troops and Iraqi civilians. The number two U.S. military commander in Iraq, Lieutenant General Raymond Odierno, spoke with me about the positive trend and what it could mean for U.S. troops there in 2008.

(BEGIN VIDEOTAPE)

LT. GEN. RAY ODIERNO, CMDR., MULTINATIONAL CORPS, IRAQ: I think, now, we have security at a level where we have to now look at other things, the increase of services to the people, the increase of political accommodation at the local level, the provincial level.

And we are starting to see some of that. And we need some time to do that. And we still need to reduce violence. It's still too high. There's still too many civilians that are dying.

And obviously, we're still losing too many soldiers and marines, airmen and sailors over here.

ODIERNO: If we lose any at all, it's too many. And we think we can continue to reduce that.

And so I think there are still things that we have to do to maintain this stability. That is, to bring the citizens involved in what we're doing, and they are reaching out to us with these concerned local citizen programs that we've established, and then we need the government to reach out to them to reconcile with them.

BLITZER: How many U.S. troops will be in Iraq by the end of July, and down the road, how many will be there by the end of 2008?

ODIERNO: Well, I think that's something that we have to talk about at the end of 2008.

I mean, I think we -- General Petraeus has been very clear. He wants to make an assessment in March. I think that's the right way to do it.

Six months is a long time in Iraq. Things change. So in order to do an appropriate assessment, I think we want to -- every six months is an appropriate time.

So I think when March comes around, we'll have a better understanding of what we can do from July on, and whether we can continue to reduce our structure and how fast we can reduce our structure.

It will be conditions based, based on the threat on the ground, based on the continued building of the capacity of the Iraqi security force, as well as the successes that we've had. And if we're able to do all of those three things, then I think he'll come in with a recommendation on how fast we would continue to reduce our structure, or if we cannot reduce our structure. And I think he'll do that in an assessment in March, but I will leave that up to him.

In terms of our numbers in July, again, I think we'll be somewhere around between 130,000 and 135,000 by the end of July, and that's about the same as we were pre-surge.

(END VIDEOTAPE)

BLITZER: The war in Iraq was a key, if not the main reason Democrats regained control of Congress this past year. But their efforts to force a change in war strategy in 2007 failed at every turn. The House speaker, Nancy Pelosi, addressed that in an interview with me.

(BEGIN VIDEOTAPE)

BLITZER: Let's talk about the war in Iraq. When you became speaker, you said bringing the war to an end is my highest priority as speaker. You've been speaker now for nine months.

REP. NANCY PELOSI, D-CALIF.: Right.

BLITZER: The war, if anything, not only continuing, but it's expanding. There's more troops now in Iraq than there were when you became the speaker. What are you going to do about that?

PELOSI: Well, we'll keep what we did when we took office, we took the majority here, we changed the debate on war. We put a bill on the president's desk that said that we wanted the redeployment of troops out of Iraq to begin in a timely fashion and to end within a year. The president vetoed that bill. He got quite a response to that veto, and the Republicans in the Senate then decided that he was never going to get a bill on his desk again.

So we have a barrier, and it's important to the American people to know that while I can bring a bill to the floor in the House, it cannot be brought up in the Senate unless there's a 60 vote -- now 60 votes...

BLITZER: But you could in the House of Representatives use your power of the purse, the money just to stop funding the war, if you really wanted to.

PELOSI: I wish the speaker had all the power you just described. I certainly could do that. That doesn't bar the minority from bringing up a funding resolution. They have their parliamentary prerogatives as well.

So what we have done is to send bills that limit the mission, to limit the time there to redeploy the troops. And last week, I believe, was a turning point in the congressional debate on Iraq. I think we changed it going in by putting the bill on the president's desk.

(END VIDEOTAPE)

BLITZER: During his visit to the United States this fall, the Iraqi president, Jalal Talabani, shared with me his thoughts about a long-time U.S. military presence in Iraq.

(BEGIN VIDEOTAPE) PRES. JALAL TALABANI, IRAQ: I am supporting military bases, and I am proposing -- this is long-time -- three bases, three military bases, after the ending of the American mission. One in north, one in the south, and one in the middle of Iraq, with small numbers of American officers and soldiers for training and for stability of Iraq, and preventing our neighbors from interfering in our internal affairs. But I cannot describe it permanent, or perhaps it will be (inaudible) for a while, until it will be needed.

BLITZER: What about the accusations of corruption in the government?

TALABANI: Yes, I will come to it. He is against all kinds of militias. Second, he's a clean man. He is against corruption. Corruption has been done before. His (inaudible). And there are corruptions through, but today, that was in the governments before him. Many people were accused even at the time of my friend, Ayad Allawi, minister of defense, for example, were accused for corruption.

BLITZER: So you still have confidence in Nouri al-Maliki?

TALABANI: Yes, I have. Personally, I have confidence in him. He is a pure and clean man. He is against corruption.

BLITZER: Is he too close to the Iranians?

TALABANI: No. He is independent. He is independent, and he was always living outside the country, even at the time of position (ph), he lived in Syria, not in Iran. And believe me, my relation with Iran is better than his relationship with Iran. Believe me.

BLITZER: Do you trust the Iranians, that they're helping Iraq or are they hurting Iraq? Because the U.S. position is that they're hurting.

TALABANI: In politics, that is not (inaudible). In love, it is between a boy and girl. But in politics, there are national interests.

I think Iranians nowadays, nowadays, they are helping to stop the Mehdi Army, which is a good, very good help to Iraqi people, because the activity of Mehdi Army was threatening a civil war among Shias and sectarian conflict.

(END VIDEOTAPE)

BLITZER: Iraqi President Jalal Talabani.

Coming up next.

(BEGIN VIDEO CLIP)

BUSH: If you're interested in avoiding World War III, it seems like you ought to be interested in preventing them from having the knowledge necessary to make a nuclear weapon.

I take the threat of Iran with a nuclear weapon very seriously.

(END VIDEO CLIP)

BLITZER: More of this year's "Late Edition" highlights, including what Vice President Dick Cheney said about the possibility of the United States going to war with Iran. You're watching "Late Edition: The Best of 2007." (COMMERCIAL BREAK)

BLITZER: This year, tension between the United States and Iran escalated, and with it, speculation that the two countries might go to war because of Iran's refusal to halt its nuclear program. I asked Vice President Dick Cheney about that.

(BEGIN VIDEOTAPE)

BLITZER: You said that Iran as a nuclear power is unacceptable.

VICE PRESIDENT DICK CHENEY: Right.

BLITZER: Are you ready to go to war to stop that?

CHENEY: Come on now, Wolf. You know I'm not going to speculate on something like that.

BLITZER: Well, how are you going to stop them?

CHENEY: Wolf, we have got a policy in place that I think is producing results. We've gone to the United Nations. We've gotten unanimous agreement to a sanctions resolution that's now in place with respect to the Iranian uranium program, and we're continuing to work the problem.

We want to solve the problem diplomatically. We'll do everything we can to achieve that, but we've also made it clear that all options are on the table.

Now, no administration in their right mind is going to answer the question you just asked.

BLITZER: Because you've heard Senator Biden, Senator Rockefeller say they think you need more congressional authorization if you are going to take any military steps against Iran. Do you?

CHENEY: I'm not going to speculate on military steps, Wolf. You can ask that question all day long.

(END VIDEO CLIP)

BLITZER: Just over a month before a recent U.S. intelligence report concluded that Iran had actually stopped trying to build a nuclear bomb four years ago, I spoke with the man in charge of monitoring Iran's moves, the head of the International Atomic Energy Agency, Dr. Mohamed ElBaradei.

(BEGIN VIDEO CLIP) MOHAMED ELBARADEI, IAEA DIRECTOR GENERAL: We haven't seen any concrete evidence to that effect, Wolf. We haven't received any information that there is a parallel, ongoing, active nuclear weapon program. What we have seen in the past, that certain procurements that have not been reported to us, certain experiments, and that's where we are working now with Iran to clarify the past and the present.

But I have not received any information that there is a concrete, active nuclear weapons program going on right now. And I think what, if you hear carefully what is being said about Iran, that Iran might -- we suspect that Iran might have the intention, but I don't think I have seen anybody saying Iran, today, is working actively on a weapons program.

And if there is such information, I would be very happy to receive it and go for it -- after it.

BLITZER: So what you're saying is that the United States government has not provided you hard intelligence evidence that Iran is see secretly working on this kind of nuclear weapons program?

ELBARADEI: We have information that there has been, maybe, some studies about possible weaponization, but we are looking into these alleged studies with Iran, right now, and that's why we have said that we cannot give Iran a pass right now, because there is still a lot of question marks.

But have we seen Iran having the nuclear materiels that can readily be used into a weapon? No.

Have we seen an active weaponization program? No.

(END VIDEO CLIP)

BLITZER: Just ahead: The crisis in Darfur and Sudan's foreign minister facing some tough questions about his country's alleged involvement in genocide.

Then my interviews with two key U.S. allies in the war on terror, Afghanistan's president, Hamid Karzai and Pakistan's president Pervez Musharraf. "Late Edition: The Best of 2007" continues right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition: The year in review.

Sudan was in the spotlight in 2007, but for the grimmest of reasons. The country's government is accused of slaughtering at least hundreds of thousands of people in the Darfur region.

But in an interview with me in October, Sudan's foreign minister, Lam Akol, defended his government against allegations of genocide.

(BEGIN VIDEOTAPE) LAM AKOL, SUDANESE FOREIGN MINISTER: The Sudan government, today, is a new government. We call it the government of national unity. That came about as a result of the peace agreement between the south and the north, the comprehensive peace agreement.

And unfortunately, some quarters tend to extrapolate the situation before 2005 to the present. And they carry on all the baggage.

BLITZER: Are you saying that the government now is not engaged in genocide?

AKOL: Yes, the government now is a government of national unity that has come with a new program based on the CPA, founded on democratic transformation, freedom of expression, freedom of movement.

BLITZER: Do you acknowledge, though, that genocide did occur previously?

AKOL: There wasn't any genocide in Sudan.

BLITZER: There was or was not?

AKOL: There wasn't. There is not.

BLITZER: There was not?

AKOL: Yes. There's only one country in the world who shall say that there is genocide in Sudan. And genocide is a precise word, with a precise definition, and this definition does not apply on Sudan.

BLITZER: All right. Let's listen precisely to what President Bush said at the United Nations General Assembly last week. Listen to this.

(BEGIN VIDEO CLIP)

BUSH: My nation has labelled what's taking place in Darfur as genocide. And when we find genocide, it's time to do something about it.

Maybe some don't think it's genocide, but if you've been raped, you think it's -- your human rights have been violated. If you're mercilessly killed by roaming bands, you know it's genocide.

(END VIDEO CLIP)

BLITZER: All right, what do you say to the president?

AKOL: Well, of course, as I said, there's only one country that says that it's genocide, and this is the United States and in particular the president.

And from what he has just said, from the earlier display, it is -- rape, yes, is an obnoxious act but it is not genocide.

BLITZER: Do you acknowledge that they were...

(CROSSTALK)

AKOL: It is a human violation.

BLITZER: I understand you're saying that your government did not engage in genocide, but do you acknowledge that your government engaged in crimes against humanity?

AKOL: Not government engaged, in that, in any war, whether in Darfur or in southern Sudan. In southern Sudan before, we had war for two rounds, I can say, the 1955 to 1972, 1983 to 2005. In these wars, the scale of death is more than Darfur.

(END VIDEOTAPE)

BLITZER: Up next on this special "Late edition," are Al Qaida and the Taliban gaining ground in the war on terror?

The view from Afghanistan's president Hamid Karzai and Pakistan's president Pervez Musharraf.

Plus, Musharraf's chief rival, Benazir Bhutto on her country's political power struggle. Stay with our special "Late Edition: The Best of 2007."

(COMMERCIAL BREAK)

BLITZER: Welcome back to our special "Late Edition." I'm Wolf Blitzer in Washington.

This year brought some setbacks in the war on terror with the resurgence of the Taliban in Afghanistan. The country experienced a significant jump in suicide attacks and roadside bombings, and Afghanistan's president, Hamid Karzai, acknowledged that security had definitely deteriorated.

I asked President Karzai about the war on terror and the search for Osama bin Laden.

(BEGIN VIDEOTAPE)

PRES. HAMID KARZAI, AFGHANISTAN: The information that we have in the Afghan system, we are not closer, we are not further away from it. We are where we were a few years ago.

BLITZER: And where do you believe Osama bin Laden is hiding out?

KARZAI: I can't say exactly where he's hiding, but I am almost certain he is in this part of the world.

BLITZER: Is he in Afghanistan or is he in Pakistan?

KARZAI: Well, I can't talk about that, whether he is in Afghanistan or Pakistan, but I definitely know that he cannot be in Afghanistan. Where he is, is a question that I cannot answer at this point.

BLITZER: Are you satisfied at this point that the Pakistanis...

KARZAI: Meaning I don't have the answer.

BLITZER: Are you satisfied at this point that the Pakistanis, now that their agreement with the tribal leaders in Waziristan and elsewhere along the border with Afghanistan has collapsed, that the Pakistani government of Pervez Musharraf is doing everything it can to clamp down on al Qaeda and the Taliban?

KARZAI: Well, Wolf, recent events in Pakistan and the situation in Afghanistan are a very clear indication to all of us in this region and the rest of the world that the fight against terror has to be real, meaningful, and effective. I'm looking forward, together with President Musharraf, to a grand meeting, a grand convention of the people of Afghanistan and Pakistan, the representatives of both countries, to be held soon after my return from Camp David, around the end of the first week of August. So that is a very important event, and I hope good will come out of it.

BLITZER: So you think President Musharraf and his government are doing everything they can to help in the struggle against the Taliban and al Qaeda?

KARZAI: I would believe, as the situation demands, all of us should be doing everything we can.

BLITZER: Are you satisfied yet with the stance of President Musharraf, or do you feel they still are lacking?

KARZAI: Well, they have taken some very strong measures in Pakistan against extremism. The Red Mosque example is one. There are other examples. I hope we can all speed up, increase and bring more effectiveness into this fight in this whole broader region, not in selected areas. If that happens, then we are on a good track.

(END VIDEOTAPE)

BLITZER: For another key U.S. ally in the war on terror, 2007 was the year of serious security and political challenges. Pakistan's President Pervez Musharraf caused an uproar in November, when he imposed a state of emergency that included suspending the country's constitution and firing its Supreme Court justices. Musharraf defended the action as necessary to fight terrorist attacks, and lifted the state of emergency last week.

Earlier this month, I spoke with the president about his country's political uncertainty, as well as the possibility of the United States taking unilateral action against terrorists inside Pakistan.

(BEGIN VIDEOTAPE)

PRES. PERVEZ MUSHARRAF, PAKISTAN: Frankly, I don't agree with that. I don't agree with that. We will -- whatever intelligence we get on the terrorists, we jointly think of what kind of action is possible and whatever assistance we can get, but it is the Pakistan forces who act. And I would continue with this arrangement, that in Pakistan, it is Pakistan forces which will act. If you need any kind of assistance, it is the prerogative must remain with Pakistan.

BLITZER: As you know, though, President Musharraf, there are some analysts here in Washington and elsewhere in European communities who suggest that there are elements within your intelligence service, within your military, who may be sympathetic to al Qaeda and the Taliban, and as a result, could not necessarily be completely trusted. Do you want to respond to that criticism that is often made?

MUSHARRAF: I think I take a very serious exception to this criticism which is going on in the western media and the western press, and some individuals who don't understand Pakistan army and Pakistani intelligence. I take very serious exception to it.

We are suffering here, and if these elements in the Pakistan army are of the Pakistan army, they know how much we have suffered. They know that we have suffered about 1,000 casualties at the hands of these very terrorists. So I can't even imagine one person to be sympathetic towards a person who is killing their own brothers in arms.

And as far as the intelligence is concerned, it is our intelligence which has got hold of each and every terrorist, either killed or eliminated or arrested. There hasn't been even one arrest in Afghanistan.

BLITZER: Let's talk a little bit about what's happening in Pakistan right now on the political front. You took off your military uniform. You're no longer the chief of the Pakistan military. And next Sunday, December 16th, the state of emergency is supposed to be removed, supposed to be lifted. Is that a firm date? Will the state of emergency be lifted on December 16th?

MUSHARRAF: Yes, I've been -- if you see my record, I have -- I don't say things which I don't mean. I give commitments which I always follow and honor. I have been giving commitments on the issue of following the constitution of Pakistan, on the elections, on my removal of uniform and shedding this appointment of chief of army staff, and I wanted to deliver it to the date. But it was unfortunately the chief justice of Pakistan, who tried to intervene and then totally destabilized the whole constitutional aspect of the whole arrangement. But then, now that I've said that the emergency will be finished on the 15th, I mean every word of it.

BLITZER: So the state of emergency will be lifted by December 16th, and the elections, the parliamentary elections will take place on January 8th. Is that right?

MUSHARRAF: Yes, absolutely. That is a commitment, and we are going ahead. The election commission is making full preparations, according to the (inaudible) road map. And they are going very, very accurately according to that. And so much so that we were worried about the Frontier Province, and we thought in a few districts we would not be able to hold the elections. But now that we have stabilized with the military action in Suat (ph) and other districts, I'm very glad to say that we will have elections even in the Frontier Province very safely.

BLITZER: And can you guarantee, President Musharraf, that these elections will be free and fair?

MUSHARRAF: Yes, I do guarantee that they will be free and fair, absolutely.

(END VIDEOTAPE)

BLITZER: In November, one of President Musharraf's chief political rivals, the former prime minister, Benazir Bhutto, returned to Pakistan, following a seven-year exile. In an interview with her by telephone, because of security reasons, the former prime minister was skeptical about Musharraf's promise to hold fair elections and blasted his record of fighting terrorists.

(BEGIN VIDEOTAPE)

BENAZIR BHUTTO, FORMER PAKISTANI PRIME MINISTER: A fair election doesn't just happen because one says. One wants a fair election. We have to see proof of that. We have to see whether our election commission is reconstituted, whether the present caretaker government is reshuffled, whether the mayors who control the guns and the funds and influence elections at the local level are suspended for the duration of the election period.

And I would also like to see him send a powerful message to the militants that they can't get away with terrorist attacks on anyone, leave alone political leaders, by calling in international investigators to investigate the terrorist attack that took place on my return cavalcade, and resulted in the deaths now, the total is 178 people. That's a huge number.

(END VIDEOTAPE)

BLITZER: The former secretary of state, Madeleine Albright, said on Friday that as bad as President Musharraf might be to some, the situation in Pakistan could still be a whole lot worse. I want you to listen to what the former secretary said.

(BEGIN VIDEO CLIP)

FMR. SECRETARY OF STATE MADELEINE ALBRIGHT: General Musharraf, for all his faults, has, in fact, been helping, in a number of ways, to fight terrorism, which is a genuine issue.

The people that hit us on 9/11 came out of Afghanistan, and Pakistan has been a very important country in helping us fight that.

(END VIDEO CLIP)

BLITZER: So what do you want to say -- because she represents a view that is pretty prevalent, here, among some, that it could be a whole lot worse?

BHUTTO: I understand -- and respect Madeleine Albright, and I understand that view. But I want to say that what General Musharraf has done is simply not enough. Because Al Qaida and Taliban have regrouped and pro-Taliban elements now control the tribal areas of Pakistan.

They have entered into the settled areas of the frontier province of Pakistan, and there is a fierce battle taking place between the military and the militants.

Now, the military is engaged in blanket-bombing at times. And instead of targeting just the terrorists, that actually ends up targeting the local population, too.

(END VIDEO CLIP)

BLITZER: Up next on our special "Late Edition," former British prime minister Tony Blair and former U.S. president Jimmy Carter weigh in on the prospects for Middle East peace.

And what does former vice president Walter Mondale think of Dick Cheney? You'll want to hear what I told me.

More "Late Edition" highlights right after this.

(COMMERCIAL BREAK)

BLITZER: In June, Tony Blair stepped down as prime minister of Britain after 10 years on the job. He immediately became the official envoy of the so-called quartet on the Middle East, on behalf of the United States, Russia, the European Union, and the United States. During Blair's visit to Jerusalem in November, I spoke with him about the seemingly unattainable goal of a lasting Israeli-Palestinian peace deal.

(BEGIN VIDEO CLIP)

FMR. BRITISH PRIME MINISTER TONY BLAIR: I keep saying to people, when they say to me, this is so difficult -- I say, what's the alternative?

The alternative is to continue with the situation where not just Israelis and Palestinians are worried about their future but the whole of this region has this issue, and the uncertainty that comes with it, hanging over the region, and where the extremists, who are trying to exploit this issue, exploiting the situation in Iraq and Lebanon and elsewhere in the Middle East, where those extremists gain even more traction on the political process.

And so, for all sorts of reasons, strategic, tactical, immediate, long-term, we've got to just make this work. And however difficult it is for the leaders, in a way, this is the toughest option, at one level, for them, but also the surest way to show people the leadership they want to have shown.

BLITZER: Is there a place for Hamas, for the Palestinian group, in Gaza?

They still have some support, obviously, in the West Bank. Is there a role they should be playing in this peace process?

BLAIR: Well, here's the situation, as I see it.

In the end, what is important is to get this process moving again with all of those people who say they believe in two states. You can't say I believe in two states, Israel and Palestine, but then say, but incidentally, I don't think one of those states, Israel, should exist.

So the process is open to all of those people who are prepared to say, OK, we're going to pursue this by peaceful means and on the basis of two states.

Now, I think, if we get that process moving again, then it will be important to be able to say to people in the Gaza who are suffering, ordinary people, look, there is a way that you can be reconciled with the West Bank on the Palestinian side and we can move forward together.

But I think we're not at that stage yet, so it has to be handled with an immense amount of care. It's a very delicate, difficult situation.

But let's be very clear. No one disputes that Hamas won that election, but if they want our help, then the terms upon which we can help are terms that accept the existence of Israel, as well as the existence of the Palestinian state. (END VIDEO CLIP)

BLITZER: Former president Jimmy Carter's involvement in the Middle East peace process dates back to his helping broker the Camp David peace accords between Israel and Egypt back in 1978.

In January, he talked about his ongoing efforts in the region and assessed the push for peace.

(BEGIN VIDEO CLIP)

FMR. PRESIDENT JIMMY CARTER: That's a major issue to which I have committed my life. And I hope, in the future, I will see Israel living in peace.

BLITZER: Is that possible, when you have the Hamas leader of the Palestinians, the Palestinian prime minister, Ismail Haniya, who said this on December 8, 2006?

He said, "We will never recognize the usurper Zionist government and will continue our jihad-like movement until the liberation of Jerusalem."

CARTER: Well, he's said all kinds of things, Wolf. In addition to that, he's also said that he would welcome peace talks between the Palestinian leader, Mahmoud Abbas, and the prime minister of Israel, and that if they evolved satisfactory peace agreement and submitted it to the Palestinian people in a referendum and it was approved, that they would accept that as a basis for the future.

So you can selectively quote anything you want to. The fact is that a major factor in bringing peace to Israel, as it was when I was president, is for the United States to play the leading role.

And this, as Condoleezza Rice has said yesterday, can be done with the full support now, of the other members of the quartet, in the international quartet; that is, the European Union, the United Nations and Russia.

So I don't think it's at all hopeless and I believe there is a clear avenue that has been carved out, under my administration and since then, that will lead to peace for Israel.

(END VIDEO CLIP)

BLITZER: In that same interview, Jimmy Carter's former vice president, Walter Mondale, offered a tough assessment of the Bush administration and especially of the current vice president, Dick Cheney.

(BEGIN VIDEO CLIP)

FMR. VICE PRESIDENT WALTER MONDALE: The fact of it is that ours was an honest administration. You could believe what you were told. We never played games with the law. We were true to that oath of office, and we did everything we could to enhance American power, based on our principles, and tried to avoid war.

And we accomplished that, and I feel good about it.

BLITZER: Is this a dishonest administration?

MONDALE: You know, let me just say this. A lot of the things -- I never use that word. A lot of the things we were told proved not to be true.

BLITZER: But was that a deliberate -- was the president and the vice president -- here's the question, Mr. Vice President.

Was the president and the vice president -- did they mislead the American people or were they misled themselves?

MONDALE: I have been very careful about avoiding words like deceit or lying and so on. What I'm talking about is our four years, during which I'm absolutely positive we told the truth, we obeyed the law, and we kept the peace. That's what I'm talking about.

We now have an administration that's stumbled over these values and is having its own great difficulties trying to sustain public leadership, in part because of things they said that got us into this war.

They surely have been contemptuous of enforcing the law. And they've been -- they've dumped, basically, the whole foreign intelligence surveillance system. They may be bringing it back. And it seemed, for awhile, they just recklessly wanted to get involved in international military conflicts. And I think it's been at great cost to our country.

(END VIDEO CLIP)

BLITZER: And just ahead on "Late Edition: The Best of 2007," could the U.S. mortgage crisis lead to an economic recession?

The former Federal Reserve chairman, Alan Greenspan, weighs in.

And if you'd like a recap of today's program, you can get highlights on our "Late Edition" podcast. Simply Go to CNN.com/podcast.

And coming up at 1:00 p.m. Eastern, "This Week at War" with host Tom foreman. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Some might call 2007 the year of the credit crunch. And nowhere was it felt more than in the mortgage industry, where thousands of homeowners faced foreclosure.

In October, the former federal Reserve chairman Alan Greenspan weighed in on the mortgage crisis and its impact on the U.S. economy. And he mentioned the dreaded "R" word.

(BEGIN VIDEO CLIP)

BLITZER: How nervous should they be, generally, about the American economy? GREENSPAN: I think they ought to be cautious, but nervous doesn't help. I think the best way of putting it is that the American economy's rate of growth is definitely slowing down.

And because of the housing industry and, most specifically home prices, the odds of a recession over the next six to nine months have gone up from about a third, which is where I thought it was back in March, to somewhat between a third and a half.

BLITZER: Now, define recession. You're talking in terms like an economist, the negative growth -- is that right?

GREENSPAN: Precisely. The odds of that happening are less than 50/50.

BLITZER: That's not necessarily all that encouraging, if you think it's a 50/50 chance or a less than 50/50 chance that there would be a recession, which would have very severe, very dramatic ramifications for American consumers.

GREENSPAN: No, only if it's severe. At the moment, I'm just merely postulating, if it happens, a mild recession.

Remember, Wolf, it's never clear what's going to happen 12 months out. Economists will give you forecasts that go out with a long series of digits. We really don't know.

And we're always confronted with the fact that there's a significant amount of potential unknown. We don't know what it is, but we do know that history tells us that something often happens, and that's why you can never say the chances of a recession are nil.

BLITZER: What needs to be done now, by the president, by the Congress, by the Federal Reserve, to make sure there isn't even a mild recession?

GREENSPAN: I doubt very much if there is anything that can or should be done. Because remember, we have a very complex, self- calibrating, self-adjusting economy.

And what our problem currently is, is the fact that we've got more than 200,000 newly-constructed homes for sale in inventory. And that's twice what ordinarily would be the case -- or I should put it this way -- it's a 200,000 excess. And the absolute level of inventories of new homes is approximately eight months, when the normal is usually four.

What that means is that builders around the country, having a very large stock of new and deteriorating new homes, are beginning fire sales in the marketplace. And prices are beginning to fall.

BLITZER: There's much more ahead on our special "Late Edition," including the year in politics and my conversations with several U.S. presidential candidates.

Plus, insight on what began early as a hard-fought race for the White House, with three of the best political teams on television. "Late Edition: The Best of 2007" continues right at the top of the hour.

(COMMERCIAL BREAK)

BLITZER: This is "Late Edition," the last word in Sunday talk.

(BEGIN VIDEOTAPE)

BLITZER: Eleven days and counting.

SEN. HILLARY RODHAM CLINTON, D-N.Y.: When I am president...

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: My position is the same as it's always been.

BLITZER: The first test of the 2008 presidential campaign is within sight.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: Well, it wasn't a slip-up.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: I can compete everywhere in the country.

BLITZER: How will the race shake up?

SEN. BARACK OBAMA, D-ILL.: I think her judgment was flawed on this issue.

FRED THOMPSON (R), PRESIDENTIAL CANDIDATE: I have never supported anything like amnesty.

BLITZER: My conversations with the presidential candidates are straight ahead.

Plus, insight and analysis with three of the best political team on television. "Late Edition" begins right now.

(END VIDEOTAPE)

ANNOUNCER: From Washington, this is "Late Edition" with Wolf Blitzer.

BLITZER: Welcome back to our special "Late Edition," our best interviews with the top newsmakers of 2007. We'll get to my conversations with several U.S. presidential candidates in just a moment. First, though, let's get a quick check of what's in the news right now. (NEWSBREAK)

BLITZER: While he's been behind in the early contest states of Iowa, New Hampshire and South Carolina, Republican presidential candidate Rudy Giuliani has held steady as the frontrunner in the national polls this year. He's counting on making up ground in the bigger states like Florida and California to win the GOP nomination. I caught up with him on the campaign trail this week in Missouri.

(BEGIN VIDEOTAPE)

BLITZER: Is waterboarding, should that be appropriate? Is there room for waterboarding in trying to get information from suspected terrorists?

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: Having looked at this, my belief is it certainly shouldn't be a practice that's approved, a practice that goes on, you know, generally. But I wouldn't want to say with what I know, including how some of these situations were effective with very dangerous people. A once in a lifetime situation, once in a decade situation, someone -- we've been asked about this during these debates, possibly even yours, in which you have a terrorist, there's a bomb that's going to go off in a day or might go off in a day, and he knows about information that could stop the killing of thousands and thousands of people.

BLITZER: John McCain, your rival...

GIULIANI: I know John...

BLITZER: He says that it should be outlawed. This is torture. The United States should not engage in torture.

GIULIANI: I'm not willing to go as far on that particular answer to that question.

BLITZER: He speaks with some authority on this subject.

GIULIANI: Sure, he does. And I respect John greatly, and I think John's opinion has great weight here. But I do think you have to preserve for the president and you have to preserve for our intelligence people at a time of grave national emergency a certain amount of discretion to do what's necessary. So I don't know that you can write this all out as a procedure that would apply in every situation. As a general matter, it would seem to me that a procedure like this would be appropriate and not allowed.

BLITZER: If American prisoners were subject to waterboarding, would that be considered torture and would that be a crime against -- a war crime?

GIULIANI: I'm not sure I know the answer to that, whether that's a war crime or not.

BLITZER: Because they will argue, the bad guys out there, that if we do it, that it's OK for them to do it. GIULIANI: Sure. And that's why this should not be a matter of procedure that would always be the case. I don't think that this should be something that you would allow all the time, or something you would allow as a matter of procedure, or as you say, something you would allow for the investigation of prisoners.

Again, however, if there's a once in a lifetime situation and you have -- you have a person who may know about a massive attack that's going go on, and then I think the president and the appropriate officials have to have some discretion there. You can't have it all written down as a group of procedures.

(END VIDEOTAPE)

BLITZER: Senator Hillary Clinton voted to authorize the war in Iraq back in 2002. She was forced to defend that decision when she entered the Democratic race for president this year, telling voters and her rivals for the nomination that if she knew back then what she knows now, she would have voted differently. I spoke with Senator Clinton about ending the war.

(BEGIN VIDEOTAPE)

CLINTON: I think it's clear that the country wants to extricate us from Iraq and bring our troops home. The Democrats certainly do, and a few Republicans are willing to side with us. But in order to get anything done, you've got to have the votes to do it.

And I'm very proud of the Democratic majority. We have consistently voted to try to change the policy in Iraq. Unfortunately, we have most of the Republicans in the Senate continuing to side with the president. That has meant that we've not been able to pass what we need to with the 60 votes necessary to send something to the president. Of course, he has said he would veto it.

BLITZER: But Senator...

CLINTON: I think what's become clear, though, Wolf, is the president has no intention of changing his policy in Iraq. He's not talking about leaving it to his successor. And as our system works, as you well know, if a president vetoes or a president has enough members of his party to stand in the way, even if you have a majority, although it's small as ours is, you can't get it done. Now, the answer for this is let's elect more Democrats in 2008. That will help solve the problem.

BLITZER: But you do have the power of the purse. You can simply stop funding the Pentagon, you can stop funding the war if you wanted to, to make your point, which you've avoided doing, the Democrats as a whole.

CLINTON: Well, I have, as you know, starting last spring, early summer, voted against continued funding for the war because I've reached the conclusion that the best way to support our troops is begin bringing them home, and I don't believe we should continue to vote for funding that has an open-ended commitment, that has no pressure on the Iraqi government to make the tough political decisions they have to make, or which really gives any urgency to the Bush administration's diplomatic efforts.

So I have reached that conclusion, and I think that it is unfortunate, because we know that even if we're successful on that, the president will veto it.

So it is frustrating. There is no doubt that the country voted for change in Iraq. The president, still under our system, has sufficient authority and support to avoid making those changes. That's why I've said that if he does not extricate us from Iraq before the end of his term, when I am president I will, as quickly and responsibly as I can.

(END VIDEOTAPE)

BLITZER: During the spring and summer, Republican presidential candidate Mitt Romney held a comfortable lead in the Iowa polls, but by the fall his rival Mike Huckabee was on the former Massachusetts governor's heals. In an interview with me last month, Romney blasted Huckabee's record and defended his own conservative credentials.

(BEGIN VIDEOTAPE)

ROMNEY: But, you know, that's the nature of what happens in this very late stage, that the right thing to do is to look at someone's record. And as Bob Novak said just over the weekend with regards to Mike Huckabee, he said he is a false conservative. He may be conservative on social issues, but when it comes to economic issues like immigration, he is a liberal on immigration. He fought for tuition breaks for illegal aliens, he raised taxes time and time again as the governor of Arkansas, and he more than doubled the state budget when he was governor of Arkansas and raised the state employee number in Arkansas. So his record speaks very loud. And with regards to my own views, I'm very proud of the fact that I became pro-life just like Ronald Reagan did, when theory met reality, when I became governor. Every action I took as governor came down on the side of life.

BLITZER: The other accusations, though, that he's made in addition to changing your view on abortion included for example, gun control, the Bush tax cuts, the Bush-Reagan thing as he called it, the Bush-Reagan legacy and same-sex relationships.

Is he specifically wrong on those four points that he's leveled against you?

ROMNEY: Yes. Absolutely. I have always opposed same-sex marriage. That's always been my position. At the same time, I don't discriminate against people who are gay.

With regards to guns, my position is the same as it's always been, which is that I believe that people have the right to bear arms in this country, and that's my view and always has been my view.

Let's see, what was the other one? Bush-Reagan legacy? Look, Ronald Reagan gets smarter and smarter as time goes on.

ROMNEY: I must admit that I find the vision and the direction that Ronald Reagan laid out for this country to be very powerful and very compelling.

And I'll tell you, Ronald Reagan would have never raised taxes like Mike Huckabee did. Ronald Reagan would have never said, let's give tuition breaks to illegals like Mike Huckabee did. Ronald Reagan would have never pushed for a budget that more than doubled during his term as president.

Mike Huckabee, as a matter of fact, has a very different record than Ronald Reagan. And I'm pretty proud that my record stands up quite well.

(END VIDEO CLIP)

BLITZER: Since he entered the Democratic race for president last January, Senator Barack Obama has been constantly reminding voters that he opposed the war in Iraq from the very start, unlike the Democratic front-runner, Senator Hillary Clinton.

He drove that point home when I spoke with him in October and asked whether Senator Clinton's vote for the war disqualified her from being president.

(BEGIN VIDEO CLIP)

OBAMA: I don't think it disqualifies her, but I think it speaks to her judgment and it speaks to my judgment.

You know, this was the most important foreign policy decision since the end of the Cold War. And when I stood up and opposed this war, I think I laid out a very specific case for why we shouldn't go in, that Saddam Hussein didn't pose an imminent threat, that we would be bogged down without an exit strategy, that it would cost us billions of dollars and thousands of lives and would distract us from the battle to be waged against Al Qaida.

So I think it does bear on the judgment of myself and Senator Clinton and it speaks to how we will make decisions, moving forward. Because the next president is going to have a number of difficult foreign policy decisions as well.

BLITZER: So what I hear you saying is, it speaks to her judgment. And you're saying her judgment was simply bad. OBAMA: I think her judgment was flawed on this issue. And I know that, you know, she was not the only one who voted for this authorization. John Edwards, for example, has acknowledged that it was a mistake.

I think that Senator Clinton has tried to massage the past a little bit, suggesting that it was a vote for inspectors. I think everybody, at the time, including you and the media and the American people, understood this was a vote for war.

You know, you can't give this president a blank check and then be surprised when he cashes it.

BLITZER: One final question, Senator. If you do get the Democratic presidential nomination, would you consider Hillary Clinton as your running mate?

OBAMA: Oh, you know, I think -- I'm not going touch that one, Wolf. Right now, I'm worried about getting the nomination. We'll have plenty of time to take a look at who would be a good vice presidential candidate.

BLITZER: But would she be on the short list?

(LAUGHTER)

OBAMA: You know, I think that Senator Clinton is a very capable person. Right now, my goal is to make sure that I'm the nominee and that she is still the senator from New York.

(END VIDEO CLIP)

BLITZER: And up next on our special "Late Edition," Republican presidential candidate Mike Huckabee defends his conservative credentials.

Democratic presidential candidate John Edwards tells us why he thinks he's the candidate of change.

And Republican presidential candidate Fred Thompson explains his stance on immigration reform.

You're watching "Late Edition: The Best of 2007.

(COMMERCIAL BREAK)

BLITZER: Welcome back to our special "Late Edition: The Best of 2007." I'm Wolf Blitzer in Washington.

If you're following the race for the White House this year, it's been hard to ignore the Republican presidential candidate Mike Huckabee's fourth quarter surge, but his rise in the polls has also sparked more attacks from his rivals for the GOP nomination.

When I spoke with him, the former Arkansas governor strongly defended his record as a fiscal conservative. (BEGIN VIDEOTAPE)

BLITZER: Fred Thompson, the former senator from Tennessee -- he had his YouTube video that he released. He didn't necessarily promote himself on that video but he attacked, specifically, you and he attacked Mitt Romney as well.

But listen to what he said about you.

(BEGIN VIDEO CLIP)

HUCKABEE: Others have suggested a surcharge on the income tax. That's acceptable. I'm fine with that. Others have suggested perhaps a sales tax. That's fine.

(END VIDEO CLIP)

BLITZER: Now, he put your clips, what you had said earlier, out on his video to show that you flip-flopped on these issues.

HUCKABEE: Well, it wasn't a flip-flop. First of all, if you notice, that was about 110 pounds ago. And so I could the excuse that I was in a state of sugar stupor and was talking out of my head. But the reality is that was a statement, about a minute's worth, taken out of context, of a speech in which I was basically giving a "put up or shut up" speech to the legislature, saying we have a $200 million deficit and we don't like any proposal the governor has to fix it.

So I said, OK, you don't like my proposals? Here's one of yours; I'll take it. Here's one of yours; I'll take it. Here's one of -- what I was saying to them was, if you don't like my proposals, give me yours, but let's fix this deficit. And we did, Wolf.

You know what we did?

In 11 years as governor, income tax stayed the same. Sales tax went up a penny. More importantly, I cut 94 taxes, a lot of those income taxes.

BLITZER: You took the pledge last night. You said you promised the president you wouldn't increase any taxes. Is that right?

HUCKABEE: That's correct.

BLITZER: Well, what about if there's a national security -- some of the other candidates said they'll make that promise, but if there's a national security -- a war and they've got no other alternative to raise the funds needed to support the troops to fund that war, they might have to increase taxes.

HUCKABEE: Well, that's...

BLITZER: Is that a fair exemption?

HUCKABEE: It is a fair exemption that even Grover Norquist, who delivers the pledge, would be the first to acknowledge. But there's no reason to raise taxes at the federal level. It's not at the federal level that our taxes are too low. Our spending is out of control.

(END VIDEO CLIP)

BLITZER: Though he's been somewhat overshadowed, in the Democratic presidential race, by Senators Hillary Clinton and Barack Obama, the former senator John Edwards has been holding a solid third place in the national polls. He's been running a very populist campaign and told me that he was the true candidate of change.

(BEGIN VIDEO CLIP)

EDWARDS: They're looking for a winner, Wolf. They want somebody who they believe can win in the general election. And I'm the candidate, on the Democratic side, who's actually won in a red state, grew up in a small town in rural America, which means I can compete everywhere in the country.

So I feel very good about my chances. But it will be a tough fight there.

BLITZER: Do you think the front-runner, Hillary Clinton could win in the general election?

EDWARDS: I don't have any idea. I mean, I think that remains to be seen. That's why we have campaigns.

I mean, what I know is that I can. And I think the empirical evidence supports that. And I think, most importantly, my message of weeding out corruption, of change, real change, substantive change, making this -- taking the democracy back for Americans, instead of just the small group of monied interest that seem to be running and corrupting the government now -- I think that message will resonate everywhere in America.

EDWARDS: I can go anyplace in this country and talk about -- to both Democrats and to independents and to Republicans, Wolf.

BLITZER: In the last debate, Hillary Clinton seemed to change her strategy. She had earlier tried to remain, sort of, above the fray, but she took the gloves off in Las Vegas.

She went directly after you on some of the substantive issues. And she made a serious accusation as well. I want to play this little clip. Listen to this. (BEGIN VIDEO CLIP)

CLINTON: Senator Edwards raised health care again. When Senator Edwards ran in 2004, he wasn't for universal health care.

I'm glad he is now, but for him to be throwing this mud and making these charges, I think, really detracts from what we're trying to do here tonight.

(END VIDEO CLIP)

BLITZER: All right. Let's talk about both of the points that she just raised in that little clip: throwing the mud, the mudslinging -- you want to respond to that?

EDWARDS: It's complete nonsense. I mean, what I had just spoken about was -- were differences that I have with Senator Clinton about what we need to do in Iraq, what we should be doing about Iran, what we should be doing about Social Security.

I mean, these are huge issues. The first two are issues of war and peace that the next president of the United States will have to deal with. And there's no purpose to have a debate if we're not going to talk about what we stand for.

And I was speaking the truth, both today and in that debate on Thursday night. And I will continue to speak the truth. And there's nothing -- this is not mud.

(END VIDEOTAPE)

BLITZER: For a while, this year, it appeared that Fred Thompson was the most popular Republican not running for president, but when the actor and former senator finally entered the race over the summer, his campaign stalled. He addressed that, among other things when I spoke with him earlier this month.

(BEGIN VIDEOTAPE)

THOMPSON: I have never opposed legal immigration. I've always said our legal immigration plan -- or program needs to be improved. Then they ease over into illegal immigration and say that -- what -- I tend to do something? They're just wrong.

BLITZER: No, they said, when you were in the Senate, you supported a pathway to citizenship for illegal immigrants.

THOMPSON: No. That's just factually incorrect. I have never -- you know, if people want to go back to their country and get in line the way, so many thousands of others have done, around the embassies around the world, in order to come here and be good citizens the way so many have, then I'm fine with that.

I think that's a wonderful thing. We're all products of that in one way or another. But I have never supported anything like amnesty or grandfathering anybody in, in front of these other people or anything like that.

BLITZER: Because, on this issue, you disagree, then, with John McCain, who's been a champion, in the Senate, on the issue of comprehensive immigration reform?

THOMPSON: Well, it depends on what you mean by comprehensive immigration reform. The bill that Senator McCain supported and President Bush put forth, I'm dead set against. I mean, I think it's an amnesty bill, and I've always been against that.

BLITZER: And when you were in the Senate, did you disagree, at that time, as well?

THOMPSON: No, I did not. I don't know what they're referring to. I had several votes there, and I wanted to strengthen our legal immigration system.

I think that we need to make it easier on everybody who plays by the rules to get in. You know, we've got a tremendous backlog, right now, of people trying to get in and play by the rules.

BLITZER: Is there too much pandering going on, on this issue, based on your experience?

THOMPSON: Why should this issue be any different from any other issue?

(LAUGHTER)

So there's a lot of pandering going on. That's the nature of politics. Is that what you're saying?

(LAUGHTER) THOMPSON: Well, some of us have been in the same place all of our political career, on this issue and others. And that's one of the strengths that I think that I have.

I got into politics in 1994, the first time I'd ever run for office, and I took positions on most of the current issues we're talking about today. And I've been consistent -- same common kind of common-sense, conservative approach to all these things.

Most of the other guys have had to alter their positions when they've decided to run for president. I have not.

(END VIDEOTAPE)

BLITZER: And when we come back, Democratic presidential candidate Bill Richardson talks about why the U.S. should withdraw its troops from Iraq, right now, while Republican presidential candidate and senator John McCain speaks out about torture.

Our special "Late Edition: The best of 2007" will be right back.

(COMMERCIAL BREAK)

BLITZER: The word "water-boarding" became a key part of the political dialogue this year, with the debate over whether the practice is torture.

Republican presidential candidate senator John McCain weighed in on that question when I spoke with him.

(BEGIN VIDEOTAPE)

SEN. JOHN MCCAIN, R-ARIZ.: There's no doubt about it being torture, Wolf. Pol Pot used to in acts of genocide. Burmese monks, today are being afflicted by this terrible practice of torture. And it's a violation of the Geneva Convention, of which we are signatories.

The question, in my view, is whether, as the attorney general of the United States, this nominee will not allow water-boarding. And I am confident he won't.

BLITZER: Because you know there are those within the U.S. government, at the CIA and the intelligence community, who say they need this option on a handful of occasions -- it's an extreme option -- because they get very useful information. Supposedly, they got useful information from Khalid Shaikh Mohammed and other Al Qaida higher-ups, and they don't want to completely forego the option of using water-boarding.

What do you say to them?

MCCAIN: Well, I say, probably, listen to Colin Powell. Listen to Jack Vessey, former chairman of the Joint Chiefs of Staff. Listen to former military leaders who say that, if we do that to people who are held captive, that when our service men and women are in the custody of a foreign government or entity, then they will be subjected to the same thing.

Look, we're going win this war the same way we won the Cold War, ideologically. And we have to have the moral high ground. The moral high ground is that we adhere to the Geneva Convention.

And I say to those people who would say, you may, quote, "need to do that," who say you've been watching Jack Bauer too often, that you then should advocate that we withdraw from the Geneva Conventions, which specifically prohibit this kind of treatment of people who are being held prisoner.

So there's no doubt about it. It's morally wrong and repugnant. There may be a one in a million situation where that -- something may have to be employed.

If the president of the United States has to do that, I would take that responsibility. But it is repugnant. It's hurting our image in the world very badly.

(END VIDEOTAPE)

BLITZER: Democratic presidential candidate Bill Richardson has been a staunch opponent of the war in Iraq and has been proposing a complete withdrawal of all U.S. troops within a year. Earlier this month, I spoke with Governor Richardson about his plan and also U.S. prestige around the world.

(BEGIN VIDEOTAPE)

GOV. BILL RICHARDSON, D-N.M.: You can't start a peace, in other words, a political compromise among the three groups in Iraq, a U.N. peacekeeping force, which I think is going to be needed, a donor conference to rebuild Iraq, unless we get all our troops out within a year.

RICHARDSON: And it's already chaos there. It's already civilian conflict and it's already a civil war.

What makes sense in my judgment is to have the leverage of our withdrawal within a year in a safe way. I'd ask our military experts -- and by the way, there are a number of generals, three-star generals that agree with me -- that we can have the safe withdrawal, but use that to convince the Maliki government -- which right now believes we're going to stay forever -- why should they give up power to move towards a political compromise? Maybe a soft partition. Sharing oil revenue...

BLITZER: So you're not talking about -- you still think get them all out, 160,000, within a year.

RICHARDSON: Absolutely. Absolutely. And get all the contractors out.

BLITZER: One final question. I just want to button up a question that I asked you at that last debate in Las Vegas, when you suggested that human rights was a greater priority for the U.S., for U.S. president than national security, and I wonder if you've had a chance to think about that and if you still believe that.

RICHARDSON: Well, no, you asked me that in the context of the Pakistani situation, and I think you have to be very clear that American values, respect for democracy, for the Geneva Convention, human rights, that has to be part of any equation in balancing America's security needs. But I think in the case of Pakistan, yes, I do believe that we should have made it very clear to the Pakistanis that we expected them to respect democracy, for Musharraf not to cancel elections, not to have an emergency order.

Look, Wolf, our strength is military, our strength is political, but our greatest strength is moral authority. And we've lost that moral authority by not emphasizing human rights and democracy. You know, we should be the world's conscience, not the world's policeman.

(END VIDEOTAPE)

BLITZER: Still ahead on our special "Late Edition: The Best of 2007," Democratic presidential candidate Senator Joe Biden talks about what he says that he says the other candidates don't. Democratic presidential candidate Senator Chris Dodd offers his view on Iraq's government. Plus, Republican presidential candidate Ron Paul on why he's breaking ranks with his party over the war in Iraq. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition: The Best of 2007."

Democratic presidential candidate Senator Joe Biden has been held to single digits in the national polls all year long, but he told me he had a key attribute that his party's frontrunners lack.

(BEGIN VIDEOTAPE)

SEN. JOSEPH R. BIDEN JR., D-DEL.: What I suggested is the American people are looking for someone with the depth and breadth of experience, who they can trust to guide them through what they know is going to be a very difficult decade internationally. And I'm the single most qualified in either party to do that right now. That's what I'm saying. I'm talking about my experience, and it does matter.

All my colleagues kid and say Joe would make a great secretary of state. Well, my response is, are you ready to vote for anyone for president who is not smarter than their secretary of state, who doesn't know more than their secretary of state? That's my generic point.

This is about what's going on in the world as well as at home, and we're in a very, very dangerous place, needing someone with a steady hand who knows an awful lot about the world.

(END VIDEOTAPE)

BLITZER: The war in Iraq has been a top issue in the presidential campaign all year long, particularly in the Democratic race. When I interviewed Democratic presidential candidate Senator Chris Dodd, he offered a tough assessment of the situation in Iraq.

(BEGIN VIDEOTAPE)

SEN. CHRISTOPHER J. DODD, D-CONN.: How many times have you and I been told that this is -- the insurgents are behind us, we're gaining the ground, and time after time we've learned painfully here that that's not the case? You know, the Iraqis again -- and I say this respectfully -- but they've known what they've had to do here. President Bush has urged them to do it. The vice president has. Our military leaders have. Members of Congress have gone over and over again, begging them to form that kind of government and assume this responsibility. And five years later, they've yet to do it.

So I hope that John Negroponte is right, but if history is any teacher to me, we're going to be disappointed once again. All the more reason, I think, why we need to speak with some clarity and boldness, and where we need to place our priorities and influence. That's what I would do as president here, is refocus our attention on the problems where they really exist, instead of continuing to depend upon us keeping a civil war going in Iraq. That's unfortunate.

(END VIDEOTAPE) BLITZER: When it comes to the war in Iraq, Republican presidential candidate Ron Paul isn't toeing the party line. He told me why a full U.S. withdrawal from Iraq was a key theme of his campaign.

(BEGIN VIDEO CLIP)

REP. RON PAUL, R-TEXAS: A poll showed that half the Republicans in Iowa are opposed to the war and would like to come home. The real control in New Hampshire, where I am right now, is by the independents, the group of people that won the election for McCain a few years ago. So I would say that since 70 percent of the American people want out of the war and they're tired of it, Republicans better pick somebody who is opposed to war or have a new foreign policy, or they can't win.

And I think the whole sentiment is shifting, that people are sick and tired of the war. We can't even afford it. We can't even fight the war without borrowing the money from the Chinese. So it doesn't add up.

It really doesn't matter whether I'm right or wrong. The war is going to end, because we're going to have such a political and financial havoc here with the devaluation of our dollar, because we just can't keep affording. This is usually how empires end, by spending too much money, maintaining their empires.

We're in 130 countries. We have 700 bases around the world. It is going to come to an end. I want it to come to an end more gracefully and peacefully, follow the Constitution, and follow more sensible foreign policy.

(END VIDEOTAPE)

BLITZER: And when we come back, from the campaign trail to Congress to White House, who were the political winners and losers of 2007? Insight on that and more from three of the best political team on television. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: It's been fascinating political year, from the White House to the Congress to the campaign trail.

So let's talk about it with three of the best in the business: CNN's congressional correspondent, Dana Bash; our senior political correspondent, Candy Crowley; and our White House correspondent, Ed Henry. They are all part of the Emmy award-winning best political team on television.

Candy, when we started 2007, you remember, way, way back in January, a lot of people just assumed that John McCain would be the inevitable Republican nominee. And it was virtually certain that Hillary Clinton would be the Democratic presidential nominee. As we end this year, maybe not.

CROWLEY: Not so much, yes. I mean, we love nothing better than uncertainty, so this is fun, something you can't predict. Look, with John McCain, I think people looked at him as the presumed front-runner or the presumed nominee because that is the way the Republican Party has always acted.

It's kind of like you earn it, you have been there, they give it to you, a la Bob Dole. Obviously, John McCain has run into a lot of problems -- primarily he just spent money like the drunken sailor he always talks about...

(LAUGHTER)

... and because there were just so many things within the Republican Party that he has done that really made him anathema in some cases to conservative Republicans, who are the ones voting in the primary.

Hillary Clinton, she's -- you know, she is still going full steam ahead. We will see what happens in Iowa. Nonetheless, the last month has been the worst of her campaign.

BLITZER: And you've got to give Barack Obama, over this year, a lot of credit for coming from, you know, not necessarily all that well known, to becoming a really formidable force in this presidential contest.

BASH: That's right. I mean, look, the whole discussion -- political discussion, when you look at the Democratic primary, has been change or somebody who has, sort of -- has experience. That's Barack Obama versus Hillary Clinton.

But what Barack Obama really has shown -- you see it on the Republican side too, but with Barack Obama in particular -- is the hunger out there for something different, for something new, even within the Democratic Party.

But when you're looking at what we have seen over the past eight years, it's basically been the same guy in the White House.

For all intents and purposes, yes, there has been a change in party on the Hill, but the same players have been in power. So that is really what is driving this.

And it is remarkable to see how Barack Obama really has illustrated that, over the last year.

HENRY: And since this is the first wide open election post-9/11, a lot of people, as Dana frames it, were thinking, OK, it's going to be all about experience. And I think that fueled a lot of talk about McCain and Clinton, the experience question.

But there is this contradiction about the fact that it's probably turning out to be a change election coming out of 2006, moving forward into 2008, a lot of people talking about change, breaking from the Bush administration.

You don't hear virtually any of the Republican candidates on the campaign trail touting President Bush on anything. They're all trying to turn into a new direction.

So there's this push in full. And that's why we let the voters do it, not the pundits.

(LAUGHTER)

They are going to decide, ultimately, whether they want a change or whether they really want to go with the experience.

BLITZER: And we will know very, very soon what is happening.

Your day job is congressional correspondent. You have been out on the campaign trail now covering politics for a while, Dana.

But the year started, 2007, with the Democrats taking the majority in the Senate, Harry Reid becoming the majority leader, Nancy Pelosi the speaker of the House, the first female speaker of the House of Representatives, with high expectations among the Democrats.

This was the year they were going to start bringing the troops home and get them out of Iraq. And the year has ended with those expectations not exactly met.

BASH: That has been the overriding story and the most fascinating story to watch over the past year, is what has happened with the Democrats on the war. And you know, you're right, I can still see myself sitting in that first press conference that Nancy Pelosi had as speaker, saying, we are here to do what the voters sent us to do, which is to change the course of the war.

And here we are at the end of the year, and they really haven't done that at all. And you know what, it comes down to -- just as we were saying a year ago, it comes down to votes. And they had the votes in the House. They never had the votes in the Senate. And they were stymied the entire way.

They tried over and over and over again. And they never really picked off enough Republican votes.

CROWLEY: They oversold, first of all, in '06. That's part of their problem, was -- you know, it was all "we will stop the war," and it worked very well as an election...

BLITZER: It helped get them elected.

CROWLEY: ... as an election theme. Yes, absolutely.

The question now is, so going forward, as you look at '08, what does this mean for '08?

Are they so mad at Democrats, now, they'll say they throw everybody out?

Or do the Democrats make that case that they're starting to make now, which is, well, gosh, if we just had more Democrats, we could do something, so... HENRY: And also the facts on the ground in Iraq, in particular, changed.

At the beginning of 2007, the president has this big speech, announces the surge policy and was very much in a defensive posture. And the Democrats seemed to be riding high.

And all of a sudden the surge appears, at least from a security standpoint, to have worked somewhat.

And those facts on the ground changing gave the Democrats a much tougher hand to convince moderate Republicans to come over with them...

BLITZER: And it helps explain why the year started, 2007, with a lot of people believing George Bush was a lame duck. You know, he lost the majority in the House and the Senate. The Republicans were now the minority in the U.S. Congress.

And he ends this year -- he is showing, by using the veto power that he has, using some other powers that he has, he's still a formidable force here in Washington.

HENRY: He finally found it. That veto pen must have been in the closet somewhere.

(LAUGHTER)

Because when the Republicans were running the Hill, he didn't veto a single spending bill, even though they were larding it up with pork. And now the Democrats are larding it up with pork and the White House doesn't like that kind of federal spending.

I mean, look, the debt is -- the federal debt is now something like $9 trillion. President Bush realizes, in part, in 2006, Republicans lost, not just because of the war but because conservatives stayed home on federal spending, issues like that. They felt Republicans had lost their core values.

And looking ahead to 2008, that's why, Dana and Candy, you're seeing so much where the Republican candidates in particular are talking about federal spending, reining in the government. All of the Republican candidates are talking about that. And that's why the president keeps using that veto pen.

BLITZER: And he's using it effectively with the Democrats on the Hill. They're stymied, as you were saying, Dana, left and right.

BASH: They are. They are stymied left and right. And what has truly been interesting to watch -- on the one hand you -- obviously, it's the Democrats. But on the other hand, it's the Republicans, particularly going back to the issue of Iraq.

Because you remember, the middle of the year there was almost an all-out revolt. The president was approached by a group of moderate Republicans in the White House and said, figure it out, change course in Iraq or else we are going to completely all-out revolt.

But really, what you saw was there were enough Republicans, kind of, teetering, not really sure if they you wanted -- if they wanted to completely go the Democrats' way or not, because they realize that ultimately if things really go bad, it would be their fault.

BLITZER: Candy, you know, you have covered these Republican presidential candidates a lot. They all refer to Ronald Reagan multiple times. But how often in their stump speeches to Republican audiences out there do they mention the name George Bush?

CROWLEY: Not all that often. When the surge came, they did. I mean, they were talking about, you know, George Bush and the surge and they were behind it.

But look, this is -- I mean, again, it's a change election. You don't really want to, despite the fact -- even in the primaries, despite the fact that George Bush is unpopular, he's popular in the primaries. But they want change too.

So, you know, it doesn't help to bring up George Bush at this point. And when you talk about reining in spending and a strong defense and lower federal spending, that's just absolutely the description of Ronald Reagan. The party has been looking for Ronald Reagan, now, ever since he left the scene.

BLITZER: And haven't yet found him, but we will see if they do.

Guys, stand by, we have a lot more to talk about, including what to expect in 2008. We'll be back with the best political team on television. Our special "Late Edition: The Best of 2007" continues right after this.

(COMMERCIAL BREAK)

BLITZER: We are assessing the year ahead in politics with three of the best political people on television, our own Dana Bash, Candy Crowley, and Ed Henry.

Candy, it's going to be fast and furious. January 3, Iowa, January -- New Hampshire. Then it goes on, South Carolina and Florida. On February 5, "Superduper Tuesday," there will, what, be 20 primaries.

Will we know after February 5th -- shortly after, who the two nominees, the Democratic and the Republican, nominees are?

CROWLEY: Having secured your promise that you won't replay this on the 6th, yes.

(LAUGHTER)

I think, after "Superduper Tuesday," we will.

Is there a possibility we won't? Sure, that is out there. But I think it will begin to form, even for Republicans, after South Carolina. So yes, I think after "Superduper Tuesday."

BLITZER: You agree, Dana?

BASH: Yes. I mean, I think -- we were just talking about it. I think that it is very likely that it's going to happen on the Democratic side.

Just being out and covering Republicans, I am not entirely optimistic or sure that we are going to know after February 5, where you have different campaigns sort of banking on different scenarios.

For example, Rudy Giuliani is certainly hoping that February 5 is the thing that determines it for him. Mitt Romney, on the other hand, is hoping that it happens way before February 5.

But, you know, one of the things that is -- it's almost a cliche to say this at this point -- but has been so exciting to cover this Republican race, in particular, is that we have absolutely no idea.

(LAUGHTER) BLITZER: I think it's fair to say -- you know, people come up to me all of the time, who are the two -- who are going to be the nominees?

And I say, well, it could be this, it could be that. And it could be anything right now. But what is clear, I think, in the next six or eight weeks, we will probably know.

HENRY: Yes. Well, one would hope. You know, now there are no longer the smoke-filled back rooms where they decide at conventions. We should know after February 5.

But I think Dana is right, if there is one that is unsettled, the one, at this point, that is more likely to be unsettled is the Republican one.

Because you can craft all kinds of scenarios about one guy winning in Iowa, another one winning in New Hampshire and then it being up for grabs. So the Republican one is still much more unsettled.

BLITZER: So there will be drama. All right. Here's the -- assuming we know, and that is a big assumption, by February -- early February, who the two nominees are, what are the prospects that a significant third-party candidate would then jump into the race?

And I'm referring specifically to the New York mayor, Michael Bloomberg, who's got billions and billions of dollars, if he wanted to do it. That would clearly shake up this race.

CROWLEY: It would. I recall someone who is close to Bloomberg saying he didn't get those billions and billions by spending it foolishly. So, you know -- and there are certainly candidates, if they win the nomination, that would make Bloomberg stay out of the race. And one of those is Hillary Clinton.

So, you know, I don't -- I just don't see a third party. I know he always, sort of, makes noise about it, but I think the more likely third party might come on the Republican side, again, depending on who that nominee is.

BLITZER: If Giuliani, for example, got it, because of his support for abortion rights, for gay rights, for gun control, there might be, what, a social conservative who would emerge?

CROWLEY: Something that -- you know, something that takes votes away from the Republican side, as opposed to one that...

BLITZER: And you can't even rule out the possibility, because he himself doesn't completely rule it out, this phenomenon on the Internet, Ron Paul, who's raising millions and millions of dollars, you know, this third quarter.

It's going to be in the -- at least $12 million or $14 million. He's become a phenomenon.

HENRY: But they often become just spoilers, essentially, whether it's Ralph Nader or Pat Buchanan, as actual third party candidates.

That's why I think one interesting possibility would be somebody like Bloomberg being wooed by both parties as a vice presidential nominee, as a former Democrat who is pro-choice.

You know, you could see someone like that -- we've heard -- there have been rumors about the potential of Republican Chuck Hagel being a V.P. nominee with somebody like Obama.

And I think maybe there is a chance, this is all speculation, but for some sort of more of a coalition government. Every four years people talk about it, but maybe now someone will want to try to bridge the divide.

BLITZER: They will all say that, but I don't know if that will happen.

CROWLEY: Right.

BLITZER: You were going to say?

CROWLEY: Well, I was just going to say, the Ron Paul phenomenon, it worries Republicans a little bit, and here is why. He has great appeal, they think, in the interior West, that whole independent, you know, attitude that they have, that, you know, leave us alone and stop spending so much money. They're really a little worried about Ron Paul and what he might be able to do in the sparsely populated interior West.

BLITZER: And in New Hampshire, he could shake things up big- time.

BASH: He definitely could shake things up. But the thing about Ron Paul -- and, you know, we will see once the votes actually start to come in, is that he has been a phenomenon on the Internet, phenomenon in raising money, just as you have said, but in the polls -- it's like nowheresville, basically still, in terms of where he ranks in the polls vis-a-vis the frontrunners.

So maybe those polls are wrong. Maybe he is going to surprise everybody and he will actually do better.

BLITZER: All right. I wish all of you a happy, happy new year, happy holidays.

BASH: You too.

BLITZER: We will continue this discussion down the road.

Three of the best political team on television.

And if you'd like a recap of today's program, you can get highlights on our "Late Edition" podcast. Simply go to CNN.com/podcast.

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