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Economic "Shot in the Arm"; Muddled After Michigan: New Snapshots of White House Race; Interview with Mike Huckabee

Aired January 18, 2008 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, President Bush acknowledging that Americans' worst economic fears are real. He's challenging Congress to pass a recession-fighting package chock full of tax breaks.
We're updating you on this story.

Also this hour, the presidential candidates, only hours away from their next big test. Are they seizing on the economy or pouncing on one another? I'll speak with Republican Mike Huckabee and Democrat John Edwards. They're both standing by live to join us here in THE SITUATION ROOM.

And new evidence of a huge shift among African-American Democrats. We're going to tell you who is benefiting. Would it be Hillary Clinton? Would it be Barack Obama? Would it be John Edwards?

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

Let's begin now with President Bush. He's trying today to put himself at the forefront of the efforts to fend off a recession. He urged Congress to pass an economic shot in the arm and to do it quickly. He painted a broad outline of the big relief package he's looking for.

Let's go to the White House. CNN's Kathleen Koch is standing by looking at this story.

Let's talk a little bit about the state of the economy as the president sees it and what he wants to do about it.

KATHLEEN KOCH, CNN CORRESPONDENT: Well, Wolf, you used the word yourself, the "R" word, "recession". And the increasing possibility of one is really -- a really dramatic motivator. So a president who has been accused too often of looking at the economy through rose- colored glasses today admitted it needed a boost.

(BEGIN VIDEOTAPE)

KOCH (voice over): A shot in the arm to keep the economy healthy, a rare admission by a president that the economy he once described as strong and getting stronger needs help.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: They are areas of real concern. KOCH: The stimulus package President Bush is prescribing would be large, $140 billion to $150 billion. It would include tax incentives for businesses and tax relief for the American people. President Bush wouldn't give specifics, but sources on Capitol Hill say the White House has suggested tax rebates similar to those given in 2001, when individuals and families received checks for between $300 and $600.

BUSH: This gross package must be built on broad-based tax relief that will directly affect economic growth, and not the kind of spending projects that would have little immediate impact on our economy.

KOCH: But Democrats insist spending programs, combined with tax rebates, would be most effective.

SEN. CHARLES SCHUMER (D), NEW YORK: We know extending unemployment insurance is one of the most effective stimulus proposals because we have deployed it successfully in the past and it gets the most bang for the buck.

KOCH: Democrats are also upset that tax rebates would not help the poorest Americans, those who don't earn enough to pay income taxes. Aides on Capitol Hill say a plan that ignores the most needy won't pass, but the administration says that's not what this stimulus package is about.

ED LAZEAR, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Not on thinking about ways to distribute and take care of different needs. Albeit those needs, perhaps, particularly important, we believe that this is what we're talking about right now, and that's growth.

KOCH: Democrats do applaud the president's decision not to insist extension of his tax cuts due to expire in 2010 be included in the package.

(END VIDEOTAPE)

KOCH: And perhaps because the president gave way on that point that was so important to him, most of the criticism by Democrats did remain behind the scenes. In fact, party leaders put out glowing reviews of the president's remarks, saying that they were encouraged, they welcome his willingness to work together.

So, Wolf, I think we're clearly seeing here a concerted effort to downplay any bipartisan bickering over what everyone does really agree is a must-pass package.

BLITZER: Well, let's see how long that lasts.

Kathleen, thank you very much for that.

We have some additional proof that Americans are steadily losing confidence in the economy. Our brand new CNN/Opinion Research Corporation poll shows 40 percent of the American people now think economic conditions are good, but that's down six points from last month. It's down 14 points from September. A full 59 percent of Americans say the economy is in poor condition right now.

We also have new snapshots of where the presidential race stands right now.

Let's go to our senior political analyst, Bill Schneider. He's watching this story for us.

We have got some new national poll numbers among Democrats, Republicans. Are the races -- do they seem to be getting a little bit tighter right now?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, they're not getting any clearer, Wolf. They're actually getting muddier.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice over): Is the Democratic race getting any clearer? Actually, no.

A week ago, just after the New Hampshire primary, Hillary Clinton led Barack Obama by 13 points. Now she leads by nine.

Over the past week, both Clinton and Obama seem to have lost support. Why? They've been squabbling.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: He said he would never vote to fund the war. And then in 2005, and '06, and '07, he voted for $300 billion worth of funding.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: And then she says I voted for it but I was glad to see that it didn't pass. What does that mean?

SCHNEIDER: In a race with several candidates, the rule is, if A and B get into a fight, the votes go to C. Well, guess what? Candidate C -- that's John Edwards -- has picked up a little.

There's now a racial split among Democrats. White Democrats favor Clinton. Black Democrats favor Obama by nearly two to one. There's been a huge shift among African-American Democrats around the country.

In October, black Democrats favored Clinton over Obama by a big margin. Now they favor Obama over Clinton by an even bigger margin.

What happened? African-American Democrats used to be reluctant to support Obama because they didn't think a black man could be elected president. Then Obama won Iowa and nearly won New Hampshire, two overwhelmingly white states. Now they believe.

OBAMA: I am absolutely convinced that we will not just win this primary contest, we will not just win the nomination and the general election, together you and I, we can transform this country and transform the world.

(END VIDEOTAPE) SCHNEIDER: The Republican race is even murkier. There was a Michigan bounce. Mitt Romney is up five, John McCain's down five. So McCain's lead has narrowed.

Meanwhile, conservatives are divided between McCain and Romney and Mike Huckabee. Usually we rely on South Carolina to tell us who the conservative favorite is. We'll see tomorrow if South Carolina can make up its mind -- Wolf.

BLITZER: Bill Schneider, thanks very much.

Let's take a look at the voters on the issues.

Our brand new survey shows Americans rate the economy as the issue most important for their vote for president. That's closely followed by the Iraq war, terrorism, health care, gas prices, and Iran.

When asked which presidential candidate agrees with you on the issues that matter most, look at this, 53 percent of registered voters said Barack Obama. Hillary Clinton and John McCain were close behind.

And if we move on and take a look at this, a third of Republicans say they're extremely enthusiastic about voting this year. But 41 percent of Democrats feel that way.

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

JACK CAFFERTY, CNN ANCHOR: Wolf, want to start here with Barack Obama and Hillary Clinton as they continue to battle it out for support among African-American voters. This is going to be a terrific fight it looks like. There's a very good reason why it's shaping up this way.

African-Americans are expected to make up as much as 50 percent of the voters in the South Carolina Democratic party a week from tomorrow. And in four other southern states, the vote on Super Tuesday, February 5th, those are Alabama, Arkansas, Georgia, and Tennessee.

Here's the problem. Bill Clinton, and by his extension his wife, Hillary, have a long and close relationship with the African-American community. Bill, as you know, was nicknamed America's first black president when he was in office.

But for the first time in our history an African-American has a real chance to become president of the United States. And in some cases, the decision of who to support is splitting families and long- time allies in the civil rights movement.

There seems the to be a generational divide as well. Younger blacks seem to be moving toward Barack Obama. Older African-Americans support Hillary.

It's even splitting members of the Congressional Black Caucus, with more than a third of them supporting Clinton or John Edwards. The polls suggest Obama has been increasing his support in the black community and now leads Clinton among that group.

As Bill Schneider was reporting a couple of minutes ago, Barack Obama has now surged ahead of Hillary Clinton when it comes to support from African-American Democrats. But we are a long way away from Super Tuesday and even farther from any kind of a finishing line. And if there's one thing history suggests, it's when it comes to politics, don't ever count out the Clintons.

So here's the question. What will ultimately decide whether Barack Obama or Hillary Clinton gets the most African-American votes?

Go to cnn.com/caffertyfile. You can post a comment there on my blog -- Wolf.

BLITZER: Love your blog.

I want to show you some video, Jack. Check this out.

The president of the United States, he was out in Maryland trying to stimulate the economy. He has got this lawnmower. Watch him drive around with it.

Take a look at this. He's -- I guess he's going to show us how to do it. It's pretty cool.

CAFFERTY: Maybe he's found his niche.

BLITZER: There it is. See, that's a pretty cool lawnmower.

You cut your own lawn?

CAFFERTY: No.

BLITZER: No, I don't either. All right.

CAFFERTY: I used to cut lawns for a living when I was a kid -- not for a living, to make spending money when I was a kid. And I learned to hate the business end of a lawnmower with a passion.

BLITZER: I'm sure you didn't have anything as fancy as that.

CAFFERTY: Oh, no, no. This was the push kind.

BLITZER: Yes.

CAFFERTY: No gasoline, no nothing. Human-powered.

BLITZER: Strength in arms.

All right, Jack. Thanks very much.

CAFFERTY: You bet.

BLITZER: With the economy in turmoil, is Mike Huckabee's plan for a so-called fair tax too risky? He's standing by live. We'll speak about that and a lot more. We'll get his reaction to the president's economic stimulus package.

Mitt Romney follows Bill Clinton's lead and gets ticked off at a reporter. Are these simply flashes of a temper or signs of a trend?

And find out how the candidates who want the job of president say they would get help -- they would help you keep your job, that is.

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

(COMMERCIAL BREAK)

BLITZER: While the Mike Huckabee campaign is focused on South Carolina right now, supporters online, in particular, a group of teenaged twins in Oregon, are working very hard to get out the vote for Huckabee -- Super Tuesday states.

Let's go to our Internet reporter, Abbi Tatton.

Abbi, what are these twins doing?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, you meet here Brett and Alex Harris. These are two brothers, Oregon based, who have two things going on online.

One is the Christian youth Web site that they founded when they were 16 years old in home school. And the other is this -- HucksArmy.com, a place that they founded a few months ago in order to meet likeminded people online supporting Mike Huckabee and coordinating grassroots efforts.

We spoke to them about a month ago and they had fewer than 2,000 people organized. Now it's boomed. Over 13,000 people are online and using this site.

In South Carolina, they've made more than 20,000 phone calls in that state. They've been doing door-to-door campaigning. But Brett Harris says their real push is nationwide.

They're looking to coordinate efforts, coordinate people who support Mike Huckabee in states across the country, particularly in February 5th states. In California right now, they're focusing efforts on getting volunteer coordinators in every single one of these counties. It's a tall order, but Brett Harris says whenever they get out there, they're meeting the people to make this happen, and it's all happening online -- Wolf.

BLITZER: Abbi, thanks very much.

And Republican Mike Huckabee does say President Bush is on the right track with his newly-launched economic stimulus proposals. But if Huckabee were in charge, he says he probably would go further.

Let's ask him. He's joining us now live, the former governor of Arkansas. He's a Republican presidential candidate. Thanks, Governor, for coming in.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: Well, thank you, Wolf.

It was great seeing the piece about Alex and Brett Harris. They're wonderful young men. They have personally been responsible for a lot of what has been called the Huckaboom. So I'm deeply grateful to those young men.

BLITZER: And you've got a lot of people out there who feel very much like those twins.

Let's talk about the economy, fears of recession. You've got some specific ideas, some controversial, including the fair tax. But I take it you would go further than the president did today. If you were president, what would you have done?

HUCKABEE: Well, I want to say how much I appreciate what the president is doing. I think he's on the right course. I support his moves today, the $145 billion stimulus package.

I think it's the right way to do two things. One, is to put some money back in the hands of Americans so that they don't just get totally afraid of the economic situation they face. But the second thing is to restore some confidence.

Consumer confidence is critical right now. I think the president taking a very decisive step of action is exactly the right move at the right time, and we ought to support him. But we need to be looking at some long-term issues.

Today in South Carolina, where I'm standing today, joblessness is now up to 142,000 South Carolinians. The highest jump in one month since 1990, 6.6 percent unemployment. And that's when it starts getting scary.

Several months ago, Wolf, I said we better start thinking the economy might not be doing as well as people say, because I was listening to people out there in the service economy, people that serve the food and handle the bags and folks who drive the cabs. And they were hurting, even back then. We're now seeing it catch up with the rest of America.

BLITZER: I know you've supported what's called the fair tax, abolishing the IRS, coming up with a new way to tax consumption, really, than the income tax. That's a long-term project.

Let's talk about if you were president in January 2009, would you, for example, want to keep the Bush tax cuts in place? Because they expire, as you know, in 2010.

HUCKABEE: They absolutely need to be made permanent, in part to give consumers and investors confidence that they're not going to be looking at an economic downturn because of high taxes. I think everything that the government does needs to be in the way of dialing taxes down, not dialing them up.

If we want to stimulate the American economy, create more opportunities for small business owners. Right now a lot of small business people are feeling the crunch of taxation, regulation, and litigation.

The result of that is that many simply are not competitive. And it's not because they don't have great ideas and aren't productive. It's because our government has policies that actually tend to work against small business owners, and that's where 80 percent of our jobs come from.

If we don't do something to ease up the burden on small business, then those small businesses can't become big businesses. The economy gets in serious trouble.

BLITZER: Let's talk about a controversial comment you've made in recent days, your support for two constitutional amendments, one that would ban abortion, one that would ban same-sex marriage. And you said this, among other things -- "I believe it's a lot easier to change the Constitution than it would be to change the word of the living God."

All right. Some controversy, as you know -- the whole issue of separation of church and state. Help us understand where you're coming from, where you want to bring the word of God, in effect, into the Constitution.

HUCKABEE: Well, what I'm simply saying, we've changed the Constitution 27 times in 221 years. But the Ten Commandments are still the Ten Commandments. We haven't added or subtracted any of them, and that's my point, is that the Constitution was created with the understanding that it could be changed, we could make changes.

And it's a good thing we can, because that's how women have the right to vote. It's how we recognized African-Americans as fellow human beings, as hard as it is to believe that we ever had to amend the Constitution to say that. We did.

It's where the First Amendment comes in and gives even guys like you the opportunity to say whatever you want, or the Second Amendment that preserves our right to bear arms. Every bit of that came as the result of an amendment or an addition or a change to the original Constitution.

And I think we all recognize that it's difficult to amend the Constitution, but there are times when that's the best way for us to settle issues. We don't want judges doing it. The last thing we need is some activist judge making that decision as an individual. That's why the amendment process is the proper way to go.

BLITZER: But the criticism is you, in effect, would want to amend the Constitution based on the bible. Is that right?

HUCKABEE: Well, it's really based on the idea that we've always had a historical understanding that life is precious. We go all the way back to the Declaration of Independence, when the founders made it very clear that all of us are equal.

And equality wasn't based on the point of our viability. It wasn't based on our net worth, our personal assets, or ancestry. At the heart of the pro-life movement is the idea of intrinsic worth in value.

Marriage has only meant one thing in all of our historical settings. It's only meant one man/one woman. When someone wants to change that, what we're looking for is an amendment to say let's affirm, not change the definition of marriage. Let's affirm the definition we have, because some states are trying to change it, creating a huge mess for whether or not another state would have to recognize what one state did. And, in fact, why I think we need the constitutional amendment.

BLITZER: I guess the bigger question, Governor, in a nutshell is, where do you come down on this tradition of separation of church and state?

HUCKABEE: I believe, just like Thomas Jefferson said it when he wrote that in a letter to the Danbury Baptist Association in the early 1800s. The Bill of Rights does not prohibit individuals. It prohibits government.

It says government can't do anything to either prefer religion or prohibit one. So, as long as government takes no action to prefer one religion over another, or to prohibit the practice of religion, people are free to do whatever they wish.

And that's exactly what he meant when he borrowed that phrase, which, by the way, a lot of people think it's in the Constitution. It is not. It was in a letter that he wrote to try to quell the fairs that there was going to be some national attempt to create a state church in the United States.

BLITZER: Governor Huckabee, good luck tomorrow. Thanks for coming in.

HUCKABEE: Thank you. We're predicting a win here in South Carolina, so I know you'll be watching.

BLITZER: And if you don't win, what happens?

HUCKABEE: We still go on. But we're going to win, and that -- then we win with a lot of wind to our backs as we head to Florida.

BLITZER: All right. We'll be watching. We'll be covering it every step of the way, as we have from the beginning.

Governor, thanks again.

HUCKABEE: Thank you, Wolf.

BLITZER: On Capitol Hill today, a man with a gun and a security scare. We're going to tell you how it played out. And the presidential candidates' plans for getting Americans back to work. Jobs, the economy, and the election, much more on that coming up. It's our big story of the day.

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

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: It's not the political Super Bowl, but it is a major battle. A southern contest where rivals are scrambling for votes. You're going to hear Republicans' final pitches only hours before the South Carolina primary.

And the Democratic presidential candidates are gambling in Las Vegas, betting on a Nevada win. Will their final pitches give them any luck?

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, initial findings regarding that British Airways flight that crash-landed. Close to landing, its engine simply stopped responding. Now the crew is hailed as heroes for their acts.

We're going to London for a complete update. Stand by for that.

Why are Ross Perot and others attacking John McCain's record on military matters? One man behind an anti-McCain Web site is even making wild claims about McCain as a Vietnam POW, but can he prove them?

We'll ask in an exclusive television interview. That's coming up as well.

And what would John Edwards do about the economy if he were president? He's here to respond to President Bush's plan for economic growth.

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

In Las Vegas, Democrats are gambling. All the top-tier candidates are campaigning around the state ahead of that state's Nevada caucuses tomorrow. They're all banking on a win.

CNN's Jessica Yellin is in Las Vegas. She's watching the Nevada caucuses for us.

They're focusing in, I take it, today on fears of the economy, fears of a recession. And they're also looking at some of these negative political ads that are going out.

What's going on?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: That's right, Wolf.

Right now, there's a little bit of something for everyone out here on the campaign trail. The Democratic candidates, they are throwing some red meat to stir up supporters and make sure they go out and caucus tomorrow. But they're also talking high-minded economic policy to offer solutions to the possible recession and try to get those undecideds in these last remaining hours.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): On the campaign trail, the candidates are promising to heal economic wounds.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I think your government that you pay tax dollars to should do more to help small businesses.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: We modernize our unemployment insurance laws to cover more people, that we get help to the states directly.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I have called for a tax rebate. Every American immediately gets $250, and then an additional $250 if the economy keeps on getting worse.

YELLIN: Sounds substantive, right? Well, while the candidates are taking issues, the campaigns or their supporters are on the attack.

(BEGIN VIDEO CLIP, AD)

UNIDENTIFIED MALE: Hillary Clinton (SPEAKING SPANISH)

(END VIDEO CLIP)

YELLIN: The ad says Hillary Clinton supporters went to court to prevent working people from voting, and Hillary Clinton has no shame. The ad is paid for by a labor union that supports Barack Obama. Now John Edwards is calling Obama a hypocrite, since the ad is paid for one of those reviled special interest group.

EDWARDS: I hope Mr. -- I hope Senator Obama will call for this ad, first denounce the ad, second, call for it to be stopped.

YELLIN: And camp Clinton is getting in on the circular firing squad, leaping on this from Obama.

OBAMA: I think Ronald Reagan changed the trajectory of America in a way that, you know, Richard Nixon did not and in a way that Bill Clinton did not.

YELLIN: Her supporters say they're stupefied, baffled that Obama would praise Ronald Reagan, a man they say made life worse for women, minorities, homeless people, and anyone living under apartheid.

(END VIDEOTAPE)

YELLIN: And, Wolf, to add to all this, Senator Obama added to the back and forth just this afternoon. In an unusual move, he actually named Senator Clinton by name, taking a jab at her, saying, she copied a key part of his economic stimulus plan.

But the Clinton people, they are howling at that. They say she came out with an economic stimulus plan before Barack Obama. Bottom line, there's not a lot of love lost out here on the campaign trail -- Wolf.

BLITZER: Only going to get more intense, I am sure. Thanks very much. We will be watching Nevada closely all day tomorrow.

This important programming note about the South Carolina Republican primary and Democratic primary: CNN and the Congressional Black Caucus Institute are sponsoring a Democratic presidential candidate in Myrtle Beach on Monday. That would be Martin Luther King Jr. Day.

Please join me, along with Suzanne Malveaux and Joe Johns, for this southern showdown on Monday night, our coverage at 8:00 p.m. Eastern, only here at CNN. And, all day tomorrow, we will be here at the CNN Election Center covering the Republican primary in South Carolina.

A quick snapshot now of some of the reasons so many Americans are in economic pain right now: The pace of new home construction -- check it out -- last month was slower than it's been since 1991, making the housing slump even worse.

According to AAA, gas prices are hovering just above $3 a gallon for regular on average, almost $1 a gallon higher than they were only a year ago. Stock prices keep falling, the Dow Jones industrial average closing down another 59 points today. Almost half-a-million people were out of work -- half-a-million people were out of work last month, and that's pushing the unemployment rate up to 5 percent.

Our senior correspondent, Allan Chernoff, looks at that and what the presidential candidates would do about it -- Allan.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Wolf, this issue is becoming more important as the primary season progresses, because the unemployment rate is on the rise. That's especially worrisome to students who are about to enter the work force.

(BEGIN VIDEOTAPE)

CHERNOFF (voice-over): Jon Judge, a Brooklyn College honor student, is only four months from graduation and entering a job market that appears less than inviting.

JON JUDGE, BROOKLYN COLLEGE SENIOR: It probably would be hard to apply cold turkey for a job nowadays. CHERNOFF: Jon plans a career in public service, but first wants to earn money in the private sector. So, he intends to vote for a presidential candidate whose priority is economic growth.

JUDGE: I think it's an issue the candidates do have to address. I want to know that, if I am going to provide for a family, that I'm going to be able to do so.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: And how about if we put those jobs in the places where the jobs are needed so badly?

CHERNOFF: John Edwards wants to create a million temporary jobs to get the unemployed back to work. Barack Obama and Hillary Clinton say they would invest in so-called green-collar jobs that make the country more energy efficient, weather-proofing government buildings, for example. And they both say they would raise taxes on companies that export jobs.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: Let's, once and for all, get rid of the incentives for American companies to ship jobs and profit overseas.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Tax take those tax breaks away from companies that ship jobs overseas and put them in the pockets of hardworking Americans.

CHERNOFF: Leading Republican candidates prefer tax cuts to put more money back into the economy.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: We're going to create jobs. We're going to create a new economy.

CHERNOFF: Rudy Giuliani says cutting corporate taxes will create jobs.

RUDOLPH GIULIANI (R), PRESIDENTIAL CANDIDATE: The more money you get to keep, the more you're going to put back into the business. Maybe you hire 10 more people. Maybe you hire 20 more people.

CHERNOFF: A strategy that sounds good to Jon Judge, who favors Giuliani.

JUDGE: I like the way he handled cutting taxes and improving the economy locally.

(END VIDEOTAPE)

CHERNOFF: Jon, by the way, is hedging his bets. His current plan is to go to law school after testing the job market for a year -- Wolf.

BLITZER: Allan Chernoff, thanks for that report.

Presidential candidates usually talk to reporters, not necessarily argue with them.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: He's not running my campaign.

QUESTION: He's helping you make the crucial decisions...

(CROSSTALK)

ROMNEY: But he's not running my campaign.

(CROSSTALK)

QUESTION: There's another lobbyist involved in your (INAUDIBLE) too.

(END VIDEO CLIP)

BLITZER: You're going to hear what that was all about and see what happens when other politicians have some testy exchanges with the news media.

Also, might John Edwards be able to beat out Hillary Clinton and Barack Obama in Nevada tomorrow? We will talk about that in our "Strategy Session."

And they were supposed to provide for disabled war vets. But the heads of two veteran charity organizations allegedly spent donations on themselves.

We're watching this and a lot more -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: John McCain says he's embarrassed to admit, but the government overspending helped cause rough economic times. Mike Huckabee says being a Southerner makes him uniquely qualified to understand southern problems. Mitt Romney will use jokes to get votes tonight on "Jay Leno."

Attempts at straight talk, association and humor all part of the strategy in South Carolina unfolding right now on the eve of the primary.

Let's go to our chief national correspondent, John King. He's in Spartanburg. He's watching all of this unfold.

They're trying to make their closing arguments in these final hours, John.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: And it's fascinating, Wolf.

You know, South Carolina, in the past, has all but settled contested Republican nomination battles. This time, the best we can hope for is perhaps a little clarity. (BEGIN VIDEOTAPE)

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: Thank you very much.

KING (voice-over): In the, end it comes down to message...

HUCKABEE: Marriage just means but one thing. It means a man and a woman.

KING: ... and organization.

UNIDENTIFIED FEMALE: Hi. Nice to see you. I'm a volunteer.

KING: The fight for South Carolina is always a defining moment in Republican nomination battles.

MCCAIN: We will win tomorrow. We will win tomorrow.

(CHEERING AND APPLAUSE)

KING: The struggling economy was one closing focus. All of the leading Republicans generally back the president's plan to negotiate a stimulus package with Congress.

HUCKABEE: Clearly, there are some things in this country that are on the wrong track.

KING: John McCain, though, said it can't just be new tax rebates.

MCCAIN: And, my friends, what we need to do, to start with, before we go any further, is stop the out-of-control spending.

KING: And Fred Thompson suggested, the best help could come from the Federal Reserve.

FRED THOMPSON, REPUBLICAN PRESIDENTIAL CANDIDATE: I would expect them to cut rates by half-a-point probably in the not-too-distant future.

KING: Most of all, though, the final day means playing to your strengths.

HUCKABEE: And I also led to pass a human life amendment in our state.

KING: Evangelicals are critical for Governor Huckabee, who hopes the energy on the state's Christian campuses help deliver a win that would make him the conservative favorite.

Senator Thompson needs those same conservative voters. And, so, with his talk of dealing with big problems like Social Security came digs at Huckabee on foreign policy and illegal immigration.

THOMPSON: When he was governor, he resisted any attempts to control illegal immigration. He welcomed it. Now he is tough on immigration, tough on the border.

KING: Senator McCain spent most of his day along the more moderate South Carolina coast, an area also packed with military installations and retirees.

MCCAIN: In case you missed it this morning, front page of the "USA Today" -- I don't know if you can read that or not -- it says, 75 percent of areas in Baghdad secure.

KING: Security and leadership are his calling cards.

MCCAIN: And I would like to serve our country. That's what I did when I was 17, when I raised my hand and became a midshipman at the United States Naval Academy.

KING: His campaign derailed here eight years ago. And he hopes a deeper organization this times makes the difference.

(END VIDEOTAPE)

KING: And Senator Thompson's aides have made clear, without a very strong showing here, he could be soon gone from the race.

And, Wolf, Senator McCain and Governor Huckabee say they will go on no matter the results here in South Carolina, but both very much need a win here to keep the money coming in and to have some momentum heading onto Florida and beyond -- Wolf.

BLITZER: All right, thanks very much, John King, reporting for us.

We are going to be on the air most of tomorrow covering these races for you.

Their job is to find the nuggets of news amid all the photo-ops and campaign breakfasts along the campaign trail. That would be reporters. They shadow the candidates closely every single day. Sometimes, though, it gets a little bit too close for comfort.

Howard Kurtz of CNN's "RELIABLE SOURCES" looks at what happens when they get on one another's nerves -- Howie.

(BEGIN VIDEOTAPE)

HOWARD KURTZ, CNN CONTRIBUTOR: Wolf, when presidential candidates spend day after day dueling with reports on the trail, tempers can get frayed. And, sometimes, journalists who are pushing for answers become the issue.

(voice-over): That's what happened when Associated Press veteran Glen Johnson, seated on the floor of a Staples store, challenged Mitt Romney about the campaign role of adviser Ron Kaufman.

ROMNEY: You know, I don't have lobbyists running my campaign. I don't have lobbyists that are tied to my...

GLEN JOHNSON, ASSOCIATED PRESS: Governor, that is not true. Ron Kaufman is a lobbyist.

(CROSSTALK)

ROMNEY: Did you hear what I said? Did you hear what I said, Glen?

JOHNSON: You said you don't have lobbyist running your...

ROMNEY: I said I don't have lobbyists running my campaign. And he's not running my campaign.

JOHNSON: He's one of your senior advisers.

ROMNEY: He's an adviser.

JOHNSON: He's just there as window dressing. He's the potted plant.

ROMNEY: Won is a wonderful friend, an adviser. He's not paid. He's an adviser, like many others.

But I do not have lobbyists running my campaign. Glen, I appreciate that you think that's funny, but Ron Kaufman is not even on the senior strategy meetings of our campaign.

KURTZ: Did Johnson go too far? His questions were perfectly legitimate, but he appear a bit dismissive of the former Massachusetts governor.

Bill Clinton has long harbored resentment towards the press for its coverage of Ken Starr's investigation of his finances and his affair with Monica Lewinsky. In fact, he still brings up Starr while campaigning for his wife.

When San Francisco TV reporter Mark Matthews (ph) asked whether Hillary Clinton was involved in a suit challenging the rules for Saturday's Nevada caucuses, the former president gave him a lecture.

UNIDENTIFIED MALE: ... supporters.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: We had nothing to do with that lawsuit.

UNIDENTIFIED MALE: I understand.

B. CLINTON: I read about it in the newspaper.

UNIDENTIFIED MALE: But people who have supported her.

B. CLINTON: All right.

So, when you ask me that question, your position is that you think the Culinary Workers' vote should count -- A, they should be -- it should be easier for them to vote than for anybody else in Nevada that has to work on Saturday. That's your first position. Second, when they do vote, their vote should count five times as much as everybody else. That's what the teachers have questioned. So, if that's your position, you have it. Get on your television station and say: I don't care about the home mortgage crisis. All I care about is making sure that some voters have it easier than others and that, when they do vote, when it's already easier for them, their vote should count five times as much than others.

That is your position. If you want to take that position, get on the television and take it. Don't be accusatory with me. I had nothing to do with this lawsuit.

KURTZ: But Matthews (ph) didn't take a position. All he did was ask about the lawsuit.

(on camera): Sometimes, reporters can seem a bit rude as they press for answers. But the test for presidential candidates and their spouses is whether they can deal with an aggressive press corps without losing their cool -- Wolf.

(END VIDEOTAPE)

BLITZER: Howie Kurtz, thanks very much.

And don't forget, you can catch Howard and his program "RELIABLE SOURCES" on CNN every Sunday morning, 10:00 a.m. Eastern, right before "LATE EDITION."

In our "Strategy Session": Voters' voices will be heard tomorrow in South Carolina for McCain, Huckabee, Romney, and Thompson. Will that state's voters believe that -- decide that they are the true conservative candidate?

And, in Nevada, as the voters caucus, will a clear front-runner emerge among the Democrats?

Bill Press, Leslie Sanchez, they're standing by right here for our "Strategy Session."

We will be right back.

(COMMERCIAL BREAK)

BLITZER: He lost the South Carolina presidential primary back in 2000. So, how might John McCain do tomorrow?

Let's talk about that and more in our "Strategy Session."

Joining us, radio talk show host Bill Press -- he's author of the book "How the Republicans Stole Christmas" -- and Republican strategist Leslie Sanchez.

Guys, thanks very much for coming in.

BILL PRESS, RADIO TALK SHOW HOST: Hi, Wolf. BLITZER: You heard Mike Huckabee here in THE SITUATION ROOM moments ago -- flatly predict -- he will win the Republican primary tomorrow in South Carolina.

Will he?

LESLIE SANCHEZ, REPUBLICAN STRATEGIST: It's going to depend on turnout, no doubt about that.

You have a lot of excitement among social conservatives for Huckabee. But I will say, John McCain is doing incredibly well there. He has a strong legacy in the state. People understand him and like war heroes.

BLITZER: What do you think?

PRESS: You know, first of all, I think it's a do or die almost for John McCain. I think he has got to win South Carolina tomorrow.

He has got to -- as Leslie says, he's got a huge base there. He has got the military presence there. I think there's a lot of leftover guilt from 2000, that South Carolinians feel they didn't do John McCain well in 2000. They want to come back.

He's got a very strong operation. But I would say watch out for Huck and Chuck, Chuck Norris and Mike Huckabee.

(LAUGHTER)

PRESS: I heard Mike Huckabee say he's going to win. I have heard John McCain say twice he's going to win.

But, I think for McCain to go forward into Florida, into February 5, he's going to need the resources from a win in South Carolina.

BLITZER: Fred Thompson really needs to show something in South Carolina, too.

SANCHEZ: No, definitely, he has to show a good level of support to remain competitive, no doubt about that.

But there's a lot of folks, not only in the money -- I mean, you have to look at John McCain in the sense that the best thing that ever happened the him was that he ran out of money and refocused the campaign.

PRESS: Right. Right. Right.

SANCHEZ: So, you never really know the nature of brokered conventions and how these delegates are going to break out.

BLITZER: There's no doubt that a lot of focus, as it should be, on South Carolina, the Republican primary there tomorrow. A week from tomorrow, the Democrats will have their primary in South Carolina.

But both parties will have caucuses in Nevada tomorrow. We're focusing a lot on the Democrats, who will win there.

But the Republicans have a caucus, Leslie, in Nevada as well, and only, as far as I can tell, Mitt Romney making much of his presence felt there.

SANCHEZ: Very much so.

He started that campaign effort a year-plus ago. There's a very strong Mormon population in Nevada. You can't deny that. There's a very strong understanding of the business community and a Hispanic operation, to some extent, there. So, I think he's going to do very well by seeding those seeds early.

BLITZER: What do you think?

PRESS: It think it was very smart to move on to Nevada, because he knows he can't win South Carolina. He has said...

(CROSSTALK)

BLITZER: Nevada has more delegates than South Carolina, too.

PRESS: Nevada has more delegates. He knows that South Carolina is McCain territory.

But the big story in Nevada, of course, is the Democratic -- on the Democratic side, the caucuses. And I think it's flip a coin or roll the dice, as you have been saying, between Hillary Clinton and Barack Obama.

BLITZER: You know, the -- I was going to point, out on the economy, fears of recession -- the president weighing in today on some principles for an economic stimulus package.

We asked in our new CNN/Opinion Research Corporation poll the importance of the economy to your vote for president. Look at this. Eighty-six percent said it was extremely or very important. Fourteen percent said moderately or not important.

This is emerging as the dominant issue right now. So, here's the question. If the -- if there is a recession, if the economic situation does get worse, who benefits in November, Republicans or Democrats?

SANCHEZ: I think the Democrats would lead you to believe that they would benefit the most if there's a downturn in the economy. It's the same thing we heard in 2006. I think you could even take if back further than that.

But, in reality, I think what you're seeing now is, people are coalescing around strong leadership and particularly executive leadership. Who can ride us through and make America competitive in a global environment? And that's something I think a lot of independent voters are going to be attuned to.

PRESS: If the recession happens, or even if this sluggish economy continues, Wolf, under this Republican administration, the administration and the incumbent party is going to get the blame.

Economy is the number-one issue. The war is still a big issue. Neither one of them works to the Republican advantage.

SANCHEZ: I have to say, the Democrats are going to have a very hard time running away from all their unfunded mandates, their new regulations, and all the taxes they have proposed in this Congress.

If you look at this last Congress as an example of what you would have under Hillary Clinton or Barack Obama, in terms of new taxes, more federal regulation, it's frightening to the U.S. economy.

PRESS: The Bush administration, the Bush recession, the Bush war, all to the Democrats' advantage.

BLITZER: We have got to leave it there, guys.

Bill Press, Leslie Sanchez, thanks for coming in.

PRESS: All right. Thanks, Wolf.

BLITZER: New clues today about a nightmare landing that left a plane damaged and passengers terrified. Could the presidential nominees of both political parties go down to the wire? The scenarios that it could have the delegates deciding in August and September.

Stay with us -- lots more news coming up, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Checking our Political Ticker: Republican John McCain is using a unique tactic to counterattacks from supporters of rival Mike Huckabee.

A new McCain Web ad features clips of Huckabee praising McCain. Take a listen to this.

(BEGIN VIDEO CLIP)

HUCKABEE: Senator McCain, no matter what anyone may say, is a genuine conservative. John McCain is a hero in this country. He's a hero to me.

(END VIDEO CLIP)

BLITZER: Rudy Giuliani has a new TV ad reminding voters of his leading role after the 9/11 attacks. The spot touts Giuliani's record as New York mayor and features video and photographs from 9/11.

(BEGIN VIDEO CLIP, GIULIANI CAMPAIGN AD)

NARRATOR: And, when the world wavered and history hesitated, he never did.

(END VIDEO CLIP) BLITZER: The ad is airing in Florida. That would be a major test for Giuliani's campaign, coming up on January 29.

Remember, for the latest political news any time, check out CNNPolitics.com.

Jack is joining us once again with "The Cafferty File" -- Jack.

CAFFERTY: The question this hour is: What will ultimately decide whether Barack Obama or Hillary Clinton gets the most African- American votes? It's like a dilemma, you know what I mean?

Charlotte in Clovis, California, writes: "The fact that older Americans, both black and white, tend to be more likely to vote, I'd say Hillary will win."

Gerald writes: "What will ultimately decide whether Clinton gets the black vote will be the revelation that the Clinton support for black Americans has been mainly show and very little in the way of substance. Besides playing his saxophone and profiling in black churches, apologizing for slavery, more profiling, awarding some posthumous medals, more profiling, and moving his office to 125th Street in Harlem, there ain't much here."

Quentin writes: "Still holding on to what was hardly a news story two weeks ago. Stop forcing race down the throats of American voters. You are not doing our country any favors with reporting like this. Why don't you use your position to help voters decide who is the best candidate, as opposed to trying to make them choose a side of an issue which you think is historical?"

Amy writes: "I think it will all boil down to who connects the strongest with the voters and who has the most positive campaign. Obama needs to remember that he took Iowa, nearly took New Hampshire by staying as positive as he could. He needs to remain that way. Let Hillary seem all nasty-tempered, and let her sling her mud, but Obama needs to at least appear to be above the fray."

George writes from South Carolina: "The deciding factor of the black vote will be the age breakdown of the voters. Young people think about today and don't want to think so much about yesterday. So, to them, the Clinton years are insignificant. The breath of fresh air Obama brings will motivate the young."

And Christopher in Bridgeport, Connecticut: "As a Democrat, I think this election between Hillary and Obama is going to seriously split the African-American vote. An ideal solution would be for the two of them to join and run together after the primaries. Can you say, "Take the White House by storm"? No current Republican front- runner would have a chance." -- Wolf.

BLITZER: Jack, thanks very much.

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

Happening now: With the economy reeling, President Bush says it's time for relief. He wants to put some money back in your pocket, but is that enough to really make a difference?

What brought a Boeing 777 to a frightening crash landing? Investigators in London coming up with one answer, and that's raising some more frightening questions.

And a filmmaker who once searched for meaning in the supersized world of McDonald's now has searched the globe for Osama bin Laden.

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

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