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THE SITUATION ROOM

Mike Huckabee Goes Positive; Countdown to 2008; Candidate Bloomberg?

Aired December 31, 2007 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: Camp Taji in Iraq, northwest of Baghdad, where members of the U.S. military ushered in the new year.
Check out the festivities in Sydney, Australia. People there rang in the new year ten hours ago. There you can see some of the celebration going on right now.

And, remember, join Anderson Cooper for our special New Year's Eve programing. All of it will begin later tonight, 10:00 p.m. Eastern, 11:00 p.m. Eastern, all of that coming up.

Happening now, new finger pointing over Benazir Bhutto's assassination. The Bush administration denies turning a blind eye. And in my exclusive interview, Bhutto's widower now speaking out about whether the Pakistan government is to blame.

Plus, Mike Huckabee pulls a punch in Iowa. Has he had a change of heart about his bitter presidential rival Mitt Romney?

Coming up this hour, my interview with Mike Huckabee on a surprise about face and Mitt Romney's response. Both of those interviews coming up this hour.

Plus, flirting with a third party presidential bid. Is Michael Bloomberg dropping new clues that he's interested? The best political team on television reads into the New York mayor's latest moves.

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

Shocking new pictures show the final moments of Pakistan's assassinated opposition leader, Benazir Bhutto. But the U.S. government now says it actually warned Bhutto and the Pakistani government of the huge security risks she faced. Let's go to CNN's Brian Todd. He is looking into this story. He is getting new information. What are you learning, Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, tonight the State Department is getting involved in the back and forth over who knew what and when. State Department Spokesman Tom Casey told reporters today that U.S. officials had concerns about Bhutto's security before and after she returned to Pakistan, and that they discussed those concerns regularly with Bhutto, officials from her party, and with President Musharraf and his government.

Casey deny published reports that the State Department ignored two months of urgent pleas for better protection from Bhutto's representatives.

Meanwhile, we are learning where to look for important clues in two critical pieces of videotape.

(BEGIN VIDEOTAPE)

TODD (voice-over): A frenzied crowd before the shots, then sheer chaos. The kind of scene Bill Pickle spent his professional life trying to prevent. Pickle, a former Secret Service agent, who headed Al Gore's protective detail during his 2000 presidential campaign, looks at the videotape of Benazir Bhutto's killing with a trained eye and notices something that he believes supports the idea that she died from those nearly point-blank gunshots.

BILL PICKLE, FORMER SECRET SERVICE AGENT: At the first shot, both bodies move to the right, both the security guard in white, as well as Prime Minister Bhutto. You see a lifting of the scarf as well.

TODD (on camera): What does that tell you?

PICKLE: It tells you that both reacted to something at the same time. It was not a bomb, because there's obviously, after the shots were fired -- the explosion did not knock her -- or the concussion did not knock her to the right.

TODD: From analyzing the videotape, Pickle says he does not think there were snipers involved.

PICKLE: I don't mean to be too graphic, but a high-powered sniper rifle is going to essentially make her head explode.

TODD: We look at the video of what appears to be the gunman, seemingly focused on his target. Given the timing between those shots and the bomb blast, Pickle believes this was a professional job.

PICKLE: It could be the order was, whoever gets the closest, we may not be able to use the gun. We may misfire; we may miss. The bomb can pretty much get everything within close proximity. So it could have been just a backup.

(END VIDEOTAPE)

TODD: Pickle says this was a crime of opportunity and that the opportunity here was very obvious. The target perched in a slow- moving car, peering out from the top, surrounded by a crowd that was allowed to get far too close. He says this was a protection agent's worst nightmare. Wolf?

BLITZER: What does he say though about the Pakistani government's assertion that she died from some sort of skull fracture as she ducked into that sun roof, and perhaps hit the car latch.

TODD: He says he can't rule that out right now, but he says when you look at the pictures of the blood inside the car, those are critical, he says. The location there is very important, on the seat and floor, right-hand side. That's where you find the blood. He says that's consistent with a possible exit wound from the gun shots. That's where she would have bled from those exit wounds.

BLITZER: Brian Todd watching this part of the story for us. The widower of Benazir Bhutto, Asif Ali Zardari, is the co-chairman now of her political party. He insists next week's parliamentary elections must go forward as scheduled, and he tells me another key opposition leader, the former Prime Minister Nawaz Sharif also now shares that opinion. Asif Ali Zardari says the latest video images show that his wife was shot at nearly point-blank range, and he is holding the government of Pakistan responsible.

He spoke to me by phone in an exclusive interview.

(BEGIN VIDEO CLIP)

BLITZER: Do you believe Baitula Masoud (ph), the Taliban/al Qaeda-oriented rebel leader was responsible for killing your wife?

ASI ALI ZARDARI, WIDOWER OF BENAZIR BHUTTO: Wolf, when the first attack took place, that is what the government claimed. And Benazir herself had denied that. On the second day, she said I will not hold him or any of these so-called al Qaedas responsible. She left a letter for you also, in which she does not put the responsibility on the al Qaedas.

BLITZER: Well, who do you believe is responsible for killing --

ZARDARI: I think whoever has to gain from her death, and definitely the sitting government has to gain from her death. They should be held responsible

(END VIDEO CLIP)

BLITZER: Zardari also says he is appealing to President Bush to support an international investigation, perhaps led by the United Nations, to determine the cause of death and who was responsible. We're staying on top of this story for you. Ramifications enormous for the U.S. right now.

Other news we're following back here in the United States, the campaign slugfest between Republicans Mike Huckabee and Mitt Romney seemed ready to go nuclear three days before the Iowa caucus. Huckabee was set to unveil a stinging new attack ad today, but then his plans went awry and things got kind of strange. Let's go out to Dana Bash. She's covering Huckabee out in Iowa.

What exactly happened, Dana?

DANA BASH, CNN CORRESPONDENT: Wolf, you and I both have covered our share of bizarre political stories, but this was definitely the most bizarre press conference I've ever been to. We arrived to find a Huckabee aide preparing and testing a projector to show a new television ad against Mitt Romney. There were stacks and boxes of DVDs of that ad prepared to give to the press. But then Mike Huckabee walked and did something he said he knew would be greeted with skepticism and cynicism and it was.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CORRESPONDENT (voice-over): Enough is enough; it was a brand-new theme. New placards around the room hitting Mitt Romney's record and a new TV ad to be unveiled attacking him. Instead, Mike Huckabee said, never mind.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: If I were to continue this strategy, which is really not what I personally, deep in my heart, feel like is the right thing to do. It's not what I really want to do. If you gain the whole world and lose your own soul, what has it profited you? And ultimately that became just for me the issue, that it's not worth it.

BASH: Huckabee announced to the 50 plus reporters and dozen cameras packed in to see his first negative TV ad that he had a change of heart and decided to pull the ad from Iowa TV stations already planning to run it. But this was the kicker.

HUCKABEE: I know that some of you are saying, well, did you really have an ad? I'll show you the ad. You'll get a chance to find out exactly what we're doing.

BASH: To that, an eruption of laughter from the press, all likely thinking the same thing, Huckabee wanted credit for staying positive, but still make sure the message against Romney got out.

HUCKABEE: I want to you see it. This is what we planned to do. And I think once you'll see it, you'll realize this is why we're not going to run it.

BASH: But when he tried to play the ad, technical problems.

UNIDENTIFIED MALE: Romney's government mandated --

(CROSS TALK)

BASH: Huckabee admitted he's been going after Romney aggressively because Romney's attacks on him have hurt and he's been taking advice from new hardball veteran advisers like Ed Rollins.

HUCKABEE: There's certain conflicts between all of the advice that you get from people who tell you you just have to answer this stuff back. You've got to push back hard. And then ultimately deciding, is it really worth it?

(END VIDEOTAPE)

BASH: Now, Huckabee spent all day yesterday, all day Sunday, valuable campaigning time, filming and cutting this ad that he says is now not going to air. Now, he insists that he decided last minute not to go with this. He said he told his family and really told some of his aides right before this press conference was going to start. Wolf, you know, over the past couple of days, he's been a lot more aggressive on the stump against Mitt Romney in a way that he hasn't before. He, of course, has prided himself as somebody who is positive. So that has been risky for him.

But he also says he knows not responding to Mitt Romney may be just as risky.

BLITZER: We'll speak about all of this with Mike Huckabee. That's coming up. Thanks very much, Dana.

Let's move on to the Democrats right now. They're unleashing their own final attacks in Iowa. CNN's Jessica Yellin is standing by. Jessica, you're out there. What are you hearing from the Democrats today?

JESSICA YELLIN, CNN CORRESPONDENT: Wolf, I'm in Boon (ph), Iowa, where an event for Barack Obama has just wrapped up. It was a packed house. He got them asking questions and cheering for him and applauding. We've been seeing that at all of the events for the Democratic front-runners for the past week, as people get more focused on the caucuses they have to attend in just days.

But what we're seeing is, in addition to the closing arguments, Democrats are offering closing attacks, hitting each other on who is more beholden to special interests.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): But ask them and they say they are fighting back.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: You know, he hasn't been in Washington that long. We haven't stewed him and seasoned him enough in Washington. We haven't boiled all of the hope out of him so he sounds like all of the other politicians in Washington.

YELLIN: As Democrats promise to change Washington, one of the major issues that has arisen, who is tied to special interests.

OBAMA: We're seeing this last hurdle, the same old Washington tricks, folks are pouring money in, undisclosed donors.

YELLIN: Edwards insists he's the cleanest.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: But the difference between me and Senator Obama is I've been in public life for almost ten years now and every day that I've been in public life, I have voluntarily rejected taking any money from Washington lobbyists, from special interest PACs.

YELLIN: But the Obama camp points out a special interest group is spending hundreds of thousands of dollars running ads for Edwards. Though Edwards has said he would like them to stop. And now Senator Clinton is getting in on this act as well.

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: There's a lot of talk in this campaign about special interests, you know, who is going to be harder on special interest. These are great applause lines and speeches and people get really excited. But I submit to you there is not anybody running who has taken on more special interests and gotten more done and survived the incoming fire than I have.

(END VIDEOTAPE)

YELLIN: You know, Wolf, while the Democrats are going after each other on the top of the special interests, the audience that they speak to seem to be much more interested in a different topic; that is health care. At event after event, they are all grilled on what they will do to improve health care. Hillary Clinton and John Edwards always talk about their universal health care plan. Barack Obama got applause when he told folks anyone who currently has health care will pay a lot less under his plan.

So, the voters and candidates; they sometimes don't necessarily agree on what their highlights are.

BLITZER: Jessica, thanks very much. Jessica Yellin is out in Iowa.

The White House hopeful Mike Huckabee says, enough is enough.

(BEGIN VIDEO CLIP)

HUCKABEE: A lot of cynics are going to say, it was all contrived and planned. I don't care what they say. Here is the deal; I just said, look, politics in this country is out of control.

(END VIDEO CLIP)

BLITZER: Huckabee telling us here in THE SITUATION ROOM why he had an attack ad ready to go, but pulled it at the 11 hour. We'll tell you his explanation. Our interview with him is coming up.

Also, I'll be speaking with Mitt Romney about Huckabee's claims that Romney's ads are simply dishonest and desperate, and whether the two rivals' feud could actually backfire in Iowa.

And chatting up Chelsey Clinton. A pint sized kid reporter tries to get a scoop that all the adults on the campaign trail may have missed. We'll tell you about that as well. Lots more coming up in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: With the Iowa caucuses approaching fast, Republican White House hopeful Mike Huckabee has been blasting rival Mitt Romney and vice versa, calling Romney's campaign ads incredibly desperate and dishonest. But now he is saying, going on attack is not worth it. That's a direct quote.

Governor, thanks very much for coming in.

HUCKABEE: Thank you, Wolf. Great to be with you.

BLITZER: We saw Dana Bash's report earlier. Tell us why you decided to pull this attack ad on Mitt Romney, which clearly your campaign worked on very hard to get ready.

HUCKABEE: Well, we spent a lot of time and we spent a lot of money preparing the ad, And we thought look, conventional political wisdom is that when you get attacked, you've got to fire back and defend you record and counter-punch.

We had a pretty good ad in the can. It was scheduled to go at noon today. This morning, the more I thought about it, Wolf -- a lot of cynics are going to say it's all contrived and planned. I don't care what they say. Here is the deal; I just said, look, politics in this country is out of control. It's gotten so nasty, so negative. Everywhere I go, people say they hate it. They seem to respond to it.

But I decided, if we're going to change the discourse of politics and the civility of it, let it start now, let it start with me, let it start in Iowa. If it costs me the caucus, it does. But I don't want to have to run an ad in which I feel like I have to take a shower after it's run. And I just thought nobody can reduce my ten and a half year record as governor in 30 seconds, to attack it. And I can't fulfill all of the aspects of it in 30 seconds.

BLITZER: The criticisms -- you heard the reporters start laughing at the news conference when you then went ahead and played the ad for them, even though you weren't going to allow it to be aired on commercial spots. What was the theory behind even showing it to the reporters?

HUCKABEE: Well, the point was that if we hadn't shown it, they would have said, you don't even have one. We wanted to say, no, this is what we had in the can. This is what we were prepared to show. Sooner or later, someone will pop it up on Youtube, because the TV stations have it. I'm sure it will get leaked out. So we wanted to say, this is what we had. This is we were going to go with.

But we didn't give out DVDs, which we had prepared originally, to give out. We didn't give out the multi-page dossier on the Romney record, which we were prepared to give out. We said, we're just not doing it.

So, the only reason we showed it -- and they said the audio didn't work so it's not going to be usable anyway -- was because we wanted to validate that, in fact, there was an ad. Here's what it was. And we're just not going to run it.

BLITZER: Let's talk about Mitt Romney for a moment. Do you believe, as you've suggested in recent days, this is a dishonest man?

ROMNEY: I've said his campaign and the ads are dishonest and they are. I mean, they've said things that just simply are not true. You're entitled to your own opinion. You're not entitled to your own set of facts. Over the weekend, when he attacked Senator McCain, I just felt it had gone too far.

Look, Senator McCain is a rival in one sense, but he's also a friend and I think he's a great American and a true hero. And it's just gotten where the -- if we all wrap ourselves in the mantel of Ronald Reagan, then let's wrap ourselves in the spirit and tone of Ronald Reagan, who said though shall not speak ill of another Republican. So either we're going to be Reaganesque or we're not. And I think it's a little silly for us to talk about how Reaganesque we were, and then go out and do the very thing that he would have been appalled by, which is to savage another Republican in the presidential race.

BLITZER: I'm going to give you a chance to speak directly to Mitt Romney. He's going to be joining us later here in THE SITUATION ROOM. What would you like to say to him and convey from what you -- whatever you want, that we'll let him know how you feel?

HUCKABEE: Well, he's free to run his campaign anyway he wishes and he can say whatever he wants to about his own record. And he can say whatever he wants to about ours. We've made the decision that we're going to run a positive campaign throughout this. That's how we got here. We wouldn't be in the position to potentially win this thing and certainly to do better than anyone of ever imagined had we been negative. We're going to stay with what we came to.

Frankly, for me, it just came down to that if a man gained the whole world and loses his own soul, what does that profit? And that's what I had to decide. It doesn't profit you a lot. Presidency is important, but being able to put your head on the pillow at night and say, I ran an honorable, decent race, that's even more important.

BLITZER: Mike Huckabee speaking with me earlier. As I mentioned, Mitt Romney is standing by to join us live here in THE SITUATION ROOM. That's coming up in a few moments. We'll get his response to Huckabee's words.

Plus, 2007 has been the deadliest year for troops in Iraq. But those same figures tell a very different story about the end of the year. Is it the start of a new trend?

And she was the sole survivor of a plane crash. Now she's out of the hospital and may get a chance to meet with some of her rescuers. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're standing by to speak with Mitt Romney, get his reaction to what we just heard from Mike Huckabee. But let's check in with Carol Costello. She's monitoring some other important stories incoming to THE SITUATION ROOM right now.

(NEWS BREAK)

BLITZER: Is Michael Bloomberg in or out. There's new reason to wonder if the New York mayor will launch an independent bid for the White House. The best political team on television is standing by to weigh in on Bloomberg's possible bomb shell.

Plus, Mitt Romney responds to Mike Huckabee's sudden turn to the positive. Mitt Romney, standing by to join us live, right here in THE SITUATION ROOM. We'll be right back. (COMMERCIAL BREAK)

BLITZER: Happening now, a new years message from North Korea; the communist nation urging the United States to scrap what it calls America's hostile policy. That comes as North Korea fails to meet a year-end deadline to come clean about all of its nuclear programs.

President Bush today signed a bill allowing states and local governments to cut investment ties with Sudan because of the violence in Darfur. Mr. Bush voiced deep concern over the loss of hundreds of thousands of people there.

And existing home sales up barely in November. The National Association of Realtors reports a .04 percent increase. But sales are still down a full 20 percent from a year ago. All of this coming up, plus, the best political team on television. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

For a politician who insists that he's not running for president, Michael Bloomberg sure knows how to fuel speculation that he's perhaps likely to jump in. CNN's Jim Acosta is in New York. He's watching this story for us. All of this happening right in the middle of this presidential primary and these caucuses. What is going on?

JIM ACOSTA, CNN CORRESPONDENT: Wolf, while the nation is focused on Iowa and New Hampshire right now, the political landscape could be shaped by what happens this Sunday in Oklahoma, where all eyes will be on Michael Bloomberg.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): It may be time to start calling him potential independent presidential candidate Michael Bloomberg. The billionaire business man turned New York mayor insists he's not in the race, ignoring the question again this morning. But Bloomberg is expected to headline what has all the makings of a political summit. featuring a who is who of retired Washington moderates from both parties.

Some of those expected participants are naming Bloomberg as a leading alternative to the current two-party slate of candidates vying for the White House.

JIM LEACH (R), FORMER U.S. CONGRESSMAN: It's a little bit like people go to a store; they don't like to have the option of one or two or three things. They like to have a greater number of options.

ACOSTA: Whether it's the vice president swearing at a U.S. senator or the Senate majority leader calling the president names.

SEN. HARRY REID (D-NV), MAJORITY LEADER: I apologize for the loser. I haven't for the liar.

ACOSTA: What passes for political rhetoric may sound more like an episode of "The Jerry Springer Show." Some Washington veterans believe a so-called unity ticket featuring moderate candidates could turn down the temperature, break through the grid lock and solve problems.

SAM NUNN (D), FORMER U.S. SENATOR: We're frustrated with the political process. We think the two-party system is not working now for the best interests of the American people.

ACOSTA: One big question about a Bloomberg candidacy is who it would hurt more. Republican contender Mike Huckabee is already placing his bet.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: It will probably do more to help the Republican than to help the Democrats. So I would -- I would welcome his entry into the race.

ACOSTA: But to do that, Bloomberg still has to take the plunge.

STEVE FORBES (R), FORMER PRESIDENTIAL CANDIDATE: I think it would be highly unlikely that he wouldn't run.

ACOSTA (on camera): Really?

FORBES: I've thought for a long time he's itching to do it.

ACOSTA (voice-over): Some New Yorkers are starting to relish the idea of Bloomberg as America's top dog.

(END VIDEOTAPE)

ACOSTA: Political observers in New York have said it is unlikely Bloomberg would run against his predecessor, Rudy Giuliani, who, after all, backed the media mogul's bid for city hall -- Wolf.

BLITZER: Jim Acosta working a big political story for us.

Thank you very much.

So is Michael Bloomberg about to run for the White House?

Let's talk about that and more.

Our senior political correspondent, Candy Crowley, is out in Iowa.

Our political contributor, Bill Bennett, is here in Washington.

And our Congressional correspondent, Dana Bash, she's out covering the elections -- the caucus in Iowa, as well.

Bill Bennett, if you take a look at who's going to be in at this meeting in Oklahoma, it's a who's who of centrists -- Republicans and Democrats -- Sam Nunn, Chuck Robb, David Boren, Gary Hart...

WILLIAM BENNETT, CNN CONTRIBUTOR: Yes.

BLITZER: ...Chuck Hagel, John Danforth, Christine Todd Whitman and, of course, Michael Bloomberg.

What do you make?

BENNETT: Yes. It's a who's who of centrists -- a good four hours on C-SPAN, if you're having trouble sleeping, that's exactly what you've got.

Look, I know Mike Bloomberg. I know him pretty well. Everybody knows he's very rich. He's also very bright. But I think this is -- you know, it's a free country. You can do it if you want to do it. Right now, I think it's kind of a stinker thing to do. People have been working very, very hard, you know, for a year or more, going to every town in Iowa, every town in New Hampshire -- because this is the what we -- the way we believe democracy works.

These guys stand up and make pronunciamentos that this system isn't proper, they don't like two party system and so they'll do something else.

Well, let him do something else. By the way, it will hurt Democrats.

Mike Bloomberg might have been a Republican. He was a certain kind of New York Republican. But this is a very liberal guy.

What do you think, Candy?

Do you think Michael Bloomberg is really serious about doing this?

Steve Forbes -- you heard him in that piece. He says he has no doubt that Michael Bloomberg -- when the dust settles from the caucuses and the primaries -- will throw his hat into the ring as a third party, Independent candidate.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, Steve Forbes may talk to Michael Bloomberg a good deal more than I do. It's hard to see where his niche is. I know that everyone says that everybody wants a more bipartisan spirit in Washington. But I'll tell you what, if you get out here with these Republicans and, in fact, the Independents and the Democrats, what they're looking for, in fact, is their ideas to be pushed forward.

You know, the first thing that comes out of their mouth is not I really wish everybody would get along. It's I want this war stopped, I want the economy to be better, we need better jobs. So I'm just not sure what kind of constituency is out there.

BENNETT: Yes.

CROWLEY: And I kind of hark back to something that someone close to Michael Bloomberg once said, which was he didn't get this wealthy wasting his money. So I just have a hard time finding his constituency...

BLITZER: All right...

CROWLEY: ...and I have a hard time understanding, you know, where he goes, where he fits in.

BLITZER: Let me let Dana weigh in.

Go ahead -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, I think that's true. I think Candy is exactly right. Certainly when you're out here, like we have been, seeing voters, talking to voter, particularly those who are going to these events and really politically active, you get a sense that they are, you know, are putting forward the ideas that are really -- you find within the parties.

However, they're also -- especially on the Republican side, which I have been covering, certainly, a lot more than Candy has -- Candy has been covering the Democrats -- you just have a sense of dissatisfaction. You really, really do.

And I understand that, in large part, on the Republican side, it's because Republicans that don't really have that true conservative that they think is electable. But it's something else. I think there is some of that feeling that's driving a Barack Obama, that's driving a Mike Huckabee, that sense of looking for something different, looking for a new way to do things.

And you also do see and feel this out here on the campaign trail. There's no question.

BLITZER: All right, guys. I want all of to you stand by because I want to go out and speak to Mitt Romney right now.

He's joining us live.

We're going to talk about this and other issues.

Governor, thanks very much for coming in.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Thanks, Wolf.

Good to be with you.

BLITZER: Well, let me pick up on this notion of Michael Bloomberg and other centrist Democrats and Republicans saying you guys out there are sort of poisoning the political atmosphere -- not necessarily you personally -- but all of the Democrats and all of the Republicans, and there may be room for a third party -- a centrist party. And they're going to be meeting in Oklahoma next Sunday to talk about it, presumably.

What do you think about this phenomena?

ROMNEY: You know, there's a discussion about this every four to eight years. And, frankly, we have two strong parties in this country. We come together. We're able to elect somebody from one or the other of those parties and move forward as a nation.

I'd hate to see us divide up with multiple parties and having the smallest party able to call the shots by virtue of combining with one of the other parties.

So, you know, I think our two party system works well. And I think it's unlikely that you'll see a successful third party effort. But, you know, if Mayor Bloomberg wants to come on in, you know, terrific. The water's fine.

BLITZER: He's got a lot of money.

Who would he hurt more, the Republican nominee or the Democratic nominee.

What do you think?

ROMNEY: You know, I think it's really hard to tell. You know, I'm not a political pundit that can assess where his vote would come from. I'm not sure where his strong support would come. It probably depends on who the nominee is of each party. And so we'll see as time goes on.

But I -- you know, he's a good guy. He's been a good manager in New York. And so, you know, if he wants to get in, well, that will obviously give people an additional choice. But, frankly, I think the Republican Party and the Democratic Party will select good candidates that will be able to be the kind of voice that America needs going forward.

BLITZER: Let's talk about Iowa -- the caucuses right now is only three days away. Mike Huckabee, your main rival, apparently, out in Iowa right now. He pulled an attack ad literally at the last second today, going after you.

What do you think of that decision he made?

He said he just doesn't feel right doing to you what he says you are doing to him.

ROMNEY: Well, actually, I'm very pleased and proud to have a campaign that talks about issues. And we're describing issues between myself and him on key issues, like immigration and taxation and spending. And we're going to keep talking about issues.

But I understand he had a press conference where he said he wasn't, on the one hand, going to go forward with an attack on me, but, on the other hand, he showed the media the ad, hoping they'd take it to the public. So it's kind of confusing to the people of Iowa.

But I think in the final analysis, people recognize that this is a very serious election about serious matters. They want to understand where we line up on issues and they'll make their decision.

BLITZER: I asked him -- because I knew I'd be speaking with you later -- if he had a message for you.

I'll play a little clip of what he had to say.

Listen to this.

(BEGIN VIDEO CLIP)

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: He's free to run his campaign any way he wishes. And he can say whatever he wants to about his own record. And he can say whatever he wants to about ours. We've made the decision that we're going to run a positive campaign throughout this. That's how we got here.

(END VIDEO CLIP)

BLITZER: All right, what do you think about that message to you?

Will you respond in kind?

ROMNEY: You know, I'm very pleased to have a campaign that is focused on issues. I've been very careful not to be disparaging of other candidates, to attack their character or their intent, and I'm going to continue to talk about issues and differences, because, frankly, in a caucus state like this, where people really pay attention to politics, they deserve to understand where we stand on issues. And I'm going to keep on talking about those issues.

And, frankly, you know, I came here 11 months ago with a campaign that -- well, I was known by nobody and we built a strong grassroots team. We raised more money in the Republican field than anybody else. And I'm confident we're going to do well come Thursday.

BLITZER: So just to be precise -- because I want to move on and talk about some issues -- you're going to continue the same kind of strategy you have against, let's say, John McCain in New Hampshire, Mike Huckabee in Iowa.

Are you going to continue those same kinds of commercials?

ROMNEY: Well, we're going to continue to talk about differences on issues. But you're going to here me, as well, showing my respect for these other folks. I'm not attacking these people or their character their honesty or anything else about them. I talk about issues, where they voted.

Senator McCain, for instance, he voted against the Bush tax cuts and he defends that position as being correct. I don't think there's anything wrong with pointing out somebody's vote on a key issue, where they are and contrasting that with where I am. And if position like their position better, why, they'll line up with them. If they like my position better, they'll line up with me.

But that's very different than an attack ad where somebody goes after someone's character or impugns, in some way, their integrity. That's something which I think just -- just shouldn't be part of our process if we can possibly avoid it.

BLITZER: Let's talk about the crisis in Pakistan for a moment, Governor.

Do you believe the January 8th election, the parliamentary elections scheduled for January 8th, should go forward? ROMNEY: I do. I believe, for instance, that now that you have the Zabaris (ph) both encouraging the elections to go forward and also Mr. Sharif and their respective parties asking for the elections to go forward, that General Musharraf should be so inclined, as well.

I hope that the Pakistani Election Commission will make that decision to allow the elections to be held as scheduled. Of course, there are always -- there's always the possibility that something unusual or unexpected could occur to prevent that kind of development. But I certainly think it's best to have the elections go forward and to move toward democratization. I think that will help settle Pakistan at a very tumultuous time.

BLITZER: Do you support an international investigation -- outside investigation into who killed Benazir Bhutto?

ROMNEY: If that's deemed to be important by the people of Pakistan, I certainly would have no objection to that. If there's some concern about the reliability of the evidence relating to the death of Madam Bhutto, then having an outside group take a good look at it may well make sense. But that's something for the people of Pakistan to call.

BLITZER: What about the $10 billion the U.S. has provided Pakistan -- the Pakistan military since 9/11?

Was that money well spent and if you were president, would you condition to provide billions of dollars in military aid to Pakistan?

ROMNEY: Well, we send money to Pakistan. That is a gift -- and not because we agree with everything they do. We send money to Pakistan because their military, which is strong and which, by all accounts, is stable is working with us in key places to combat Al Qaeda and the Taliban. And that's a very important work, which is in collaboration with our own military. And that is something which I definitely would continue.

Now, of course, there are circumstances that could possibly put a brake on something like that, if they were misusing the money or using it for purposes other than fighting Al Qaeda and the Taliban. And we want to make sure that it's being used properly. But it is appropriate for us to continue to fund an effort to go after Al Qaeda and the Taliban. This is a -- this is a threat that not only to Pakistan, but, of course, to the people of Afghanistan, and to our own troops.

BLITZER: The former governor of Massachusetts, Mitt Romney.

Good luck out there.

And thanks very much for coming in.

ROMNEY: Thanks, Wolf.

Good to be with you.

BLITZER: Appreciate it very much. And coming up here in THE SITUATION ROOM, we're going to continue our conversation with three of the best political team on television -- Candy Crowley, Dana Bash, Bill Bennett.

They're standing by to dissect what we just heard from Governor Romney.

Plus, why Chelsea Clinton snubbed a 9-year-old reporter.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Negativity in Iowa -- who benefits if Mitt Romney and Mike Huckabee go after each other?

We're back with our senior political correspondent, Candy Crowley, your political contributor, Bill Bennett, and Dana Bash -- all part of the best political team on television.

What do you think?

Who benefits if these two guys are really going after each other in Iowa, Bill?

BENNETT: Well, I think Romney benefits and he's going to have a good new year. You know, I don't have a candidate in this race. I was for the big four plus Hunter (ph). Huckabee -- Huckabee is gone now. By his meretriciousness, he has taken himself out. This stunt today is almost beyond belief. I don't know if this was Ed Rollins' advice or he cooked this one up on his own. The Greeks have a term -- paralepsis. It's when you are doing something and denying you're doing it at the same time. "I will not talk about the fact that my opponent is a drunken wife beater" and then -- and then you move on.

Who does he think he's kidding?

You add this to, you know, Lucifer and Jesus are brothers, or so I understand in Mormonism. The other comment, you know, "the arrogant bunker mentality" of the Bush administration -- oh, I didn't mean that as a criticism.

This is just too cute by half (ph).

BLITZER: All right, do you...

BENNETT: He's going down, maybe not in Iowa but he's going down.

BLITZER: Dana, you were at that news conference today.

What was your impression?

BASH: Well, first of all, when we got there, it was pretty stunning because even before any talk of the ad really came out, you saw there were placards all around the room, Wolf. And they were really specific and really hard-hitting against Mitt Romney on taxes, on immigration, on abortion -- in a way that we really haven't seen from Mike Huckabee before, in a way that he has denounced before.

So right away we said, wait a minute, is this really the way he wants to go?

Does he want to be this kind of candidate?

And then came out and did what Bill described in a way that only Bill can describe. And we -- you know, having been there, as I told you before, it was absolutely bizarre.

But, look, I mean the bottom line is he realized -- no matter how he did it today -- he realized that he has done well because he has had a positive campaign. And the way he was going in the last couple of days -- being so incredibly harsh against Mitt Romney -- that had a potential to backfire. But, you know, not doing this, not defending himself, it also could hurt him.

BLITZER: Does it have the potential -- the battle between Huckabee and Romney -- to help a John McCain, a Rudy Giuliani, a Fred Thompson?

Candy, what do you think?

CROWLEY: Sure. I mean if Mitt Romney comes out of here weakened, that clearly helps John McCain, who has battled himself into some of the polls, showing a statistical tie. So, absolutely, it can help John McCain.

On the other hand, if Mitt Romney comes back and it's a big, powerful win, he looks like he fought back, which means, you know, that he looks like a fighter -- and that helps him. But I can assure you that if John McCain could caucus, he would caucus for Mike Huckabee.

BLITZER: What do you think, Bill?

BENNETT: I think McCain is rising. But I think Romney is rising, too. I think it's a two person race. This is, you know, a really wild projection. But it's not the two a lot of people thought. I think McCain will finish third in Iowa. I think Romney is now going win Iowa, not Huckabee.

BLITZER: Oh, well, he's gone and made his predictions.

BENNETT: (INAUDIBLE).

BLITZER: And I know Dana and Candy are not going to make any predictions...

BENNETT: Right.

BLITZER: ...because they're not in the business of making predictions. BASH: No way.

BLITZER: They're just in the business of reporting the news.

Give us a final thought, Dana.

BASH: Well, just the fact that I think what Candy said has been so fascinating to watch over the past 24 hours is this Huckabee-McCain love fest. I mean it is almost bizarre. We know why, because the enemy of your enemy is your friend. And that -- and that is certainly -- they're focused on Mitt Romney. There's no question about it.

But the way they're going at it, if they really do have to go at it, they're going to have a whole lot of nice things to say about each other that they're going to have in their past that they're going to have to clean up, if you will.

BLITZER: All right, Dana, Bill and Candy.

Candy, is it cold out there?

CROWLEY: A little bit, Wolf. Yes.

BLITZER: All right.

CROWLEY: Warm in there, is it?

BLITZER: It's very warm here in THE SITUATION ROOM.

BENNETT: Very nice.

Very nice here.

CROWLEY: Good.

(LAUGHTER)

BLITZER: Candy has been there, done it.

BENNETT: Happy New Year.

BLITZER: I appreciate it very much.

BLITZER: Happy New Year to all you guys.

CROWLEY: You, too.

BLITZER: And while the White House hopefuls are out duking it out, where's Rudy Giuliani?

We're going to show you where he's campaigning instead.

Plus, why Chelsea Clinton isn't speaking publicly out on the campaign trail.

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

(COMMERCIAL BREAK)

BLITZER: On our Political Ticker, Chelsea Clinton stumping for votes for her mother in Iowa. And while she's often seen in recent days, she's rarely heard. She's not making speeches. She's not taking talking to reporters -- even not talking to a 9-year-old little girl writing for a kids' magazine. She says Chelsea told her she was cute, but she doesn't talk to the press. But the young Miss. Clinton is talking to voters one-on-one.

While many of his presidential rivals are scurrying across Iowa, Rudy Giuliani is keeping his distance -- another sign he's not really competing in the Hawkeye State. He doesn't even plan to go to Iowa for the caucuses on Thursday. Instead, he'll swing through New Hampshire and then head to one of his make or break states. That would be Florida.

In Mississippi, a temporary replacement has been tapped for retiring Republican senator, Trent Lott. Governor Haley Barbour made the announcement today. The conservative congressman, Roger Wicker, will serve until a special election scheduled for November 4th. Wicker is expected to run in that election. Lott served one year of a six- year term that runs out in 2012.

While many Americans watch the action in Times Square at midnight, most of the presidential candidates will usher in the new year along with crowds of supporters in Iowa or New Hampshire. Some exceptions -- Democrat Joe Biden will have a low key dinner with his family in Des Moines. Rudy Giuliani's camp says he'll have a private celebration at an undisclosed location.

Remember, tomorrow is the big game -- CNN's Ballot Bowl, as we're calling it. It all starts at 9:00 a.m. Eastern. All day long you'll be hearing from all of the presidential contenders on all the biggest issues.

And if you're in Iowa, we want your campaign trail videos, your pictures. Share your experiences with us, your analysis, all day long. Send us I-Reports by visiting CNNPolitics.com.

It's the "D" word and it's been getting dropped a lot out on the campaign trail -- at least by Mike Huckabee.

Our Jeanne Moos couldn't help listening and she's standing by to fill us in. You're going to want to see this.

We'll be right back.

(COMMERCIAL BREAK)

BLITZER: It's the political rivalry that's got a lot of people talking and one of the presidential candidates using the so-called "D" word over and over. But that may be about to change.

CNN's Jeanne Moos has our Moost Unusual report.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Mike Huckabee was out jogging in the cold with the press in hot pursuit -- hot because Mr. Nice Guy Huckabee...

HUCKABEE: Yes, we are.

MOOS: ...a guy who grips with a two-handed shake and cracks jokes...

HUCKABEE: You thought I was dangerous with a gun. Wait until you see me with a knife.

MOOS: ...was sticking the knife in Mitt Romney. Sure, he pleaded self-defense, but there he was using the "D" word.

(BEGIN VIDEO CLIP FROM "TODAY," COURTESY NBC)

HUCKABEE: ...comes down to, do you trust somebody who gets the job by being dishonest?

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

HUCKABEE: And the dishonest attacks.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

HUCKABEE: Dishonest about not only my record, but...

(END VIDEO CLIP)

MOOS: The "D" word is seldom used by one presidential candidate against another. Mitt Romney's attacks on Huckabee's record sure riled him up.

(BEGIN VIDEO CLIP)

HUCKABEE: He's not only desperate, but dishonest.

(END VIDEO CLIP)

MOOS: Happy New Year.

(BEGIN VIDEO CLIP)

HUCKABEE: If a person is dishonest in order to get a job will you then be honest when you get the job?

(END VIDEO CLIP)

MOOS: He said the same thing...

(BEGIN VIDEO CLIP)

HUCKABEE: Do people want to elect a president...

(END VIDEO CLIP)

MOOS: ...on different networks, just minutes apart.

(BEGIN VIDEO CLIP)

HUCKABEE: ...who is dishonest?

(END VIDEO CLIP)

MOOS (on camera): By our calculations, Mike Huckabee was averaging two to three "dishonests" per interview.

(voice-over): But just when he was about to hold a press conference to unveil his counter-attack negative ad...

(BEGIN VIDEO CLIP)

HUCKABEE: About an hour ago, I just decided that's not the way we want to run it.

(END VIDEO CLIP)

MOOS: ...Huckabee announced he would pull the ad from stations that already had it.

(BEGIN VIDEO CLIP)

HUCKABEE: I want to show you the ad. You will get a chance to find out exactly what we're doing.

(LAUGHTER)

HUCKABEE: No, I -- I want you to see it.

(END VIDEO CLIP)

MOOS: Cynical reporters snickered, figuring Huckabee wanted credit for taking the high road while letting the press do the dirty work showing the low road.

(BEGIN VIDEO CLIP FROM MIKE HUCKABEE FOR PRESIDENT CAMPAIGN AD)

HUCKABEE: Iowans have a right to know the truth about Mitt Romney's dishonest attacks on me.

(END VIDEO CLIP)

MOOS: Meanwhile, the guy who first went negative was now positively lovey-dovey toward Huckabee.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: He's a good man. I like him.

(END VIDEO CLIP)

MOOS: And Huckabee, whose campaign had printed up the new counter-punch slogan aimed at Romney -- "Enough Is Enough" -- was left standing in front of it saying he's had enough. So though he didn't take it back, it sounds like for now we've heard the last of the "D" word.

(BEGIN VIDEO CLIP, COURTESY FOX NEWS)

HUCKABEE: And, just frankly, dishonest information...

(END VIDEO CLIP)

(BEGIN VIDEO CLIP FROM "MEET THE PRESS")

HUCKABEE: And, frankly, a dishonest campaign.

(END VIDEO CLIP)

MOOS: Honestly.

Jeanne Moos, CNN, New York.

(END VIDEO TAPE)

BLITZER: And thanks, Jeanne.

It's almost midnight -- only a few seconds before midnight in London.

I want to show you some pictures coming into THE SITUATION ROOM right now. In London -- you can see on the left part of your screen -- they're getting ready. Fourteen seconds, thirteen. New York, five hours to go until midnight there.

London and New York, Happy New Year to everyone out there.

I'm Wolf Blitzer in Washington.

Up next, "Heroes," tributes to our troops.

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