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THE SITUATION ROOM

Bill Clinton Unleashes on Obama Camp, Media; Giuliani has Tough Fight in Florida

Aired January 23, 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, Bill Clinton bristles at the allegation he's playing the race card and accuses Barack Obama's campaign of a "hit job."
This hour, we'll hear from the former president, defending his wife and duking it out with Barack Obama in South Carolina right now.

Plus, it's sink or swim in Florida. I'll speak live with Rudy Giuliani about his campaign struggles. And we'll have a report on all the Republicans trying to rise to the top in Florida.

And when it comes to fighting a recession, is bigger better? We'll have the latest on talks to hammer out an economic growth package and what all of us might get out of it.

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

Right now, Bill Clinton is lashing out at the Barack Obama campaign and at the news media, as well. Only moments ago, he responded to harsh criticisms from an Obama supporter in South Carolina. Clinton called them crazy and accused Obama of a political hit job on him and said Obama's camp is spinning the news media to distract from real issues.

Let's go straight to CNN's Jessica Yellin. She's in Charleston, South Carolina.

Jessica, the former president is not mincing any words. And you were on the receiving end as he lashed out. Give our viewers a sense of what is going on.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, I will tell you, first of all, Bill Clinton was here to talk directly to the voters before he even took on the media. And he is here because his wife has left this state.

No matter what the pundits will tell you, the Clinton campaign is not ceding South Carolina to Barack Obama. They are aggressively fighting for every vote in this state and doing what they can to win it. And they are using their greatest political master, Bill Clinton.

Now, he worked his skills just like you remember from the early '90s. He was in a room of voters for almost two hours, taking questions on every topic from the substantive economic issues to, is your wife tough enough to be president, to even addressing the question that he's looking only -- only at the vote on Saturday, he is not looking beyond South Carolina. They want to win here.

Let's listen.

(BEGIN VIDEO CLIP)

WILLIAM JEFFERSON CLINTON, FMR. PRESIDENT OF THE UNITED STATES: This economy right now is not working for ordinary American citizens. Half the time when she shows how tough she is, people say she's too tough.

She voted against the last energy bill because it gave tax breaks to the oil companies and he voted for that.

One of my rules is never look past the next election, or you may not get past the next election.

(END VIDEO CLIP)

YELLIN: That was the old Bill Clinton everyone remembers, really connecting with the voters in a small room, in an intimate setting. But I'll tell you, Wolf, the Obama campaign has not stopped with their criticisms of the way the Clintons are managing their side of the campaign. The Obama folks saying that it is inappropriate and that they are playing in an old school style of politics that is simply below the belt -- Wolf.

BLITZER: And after that event, he went and he spoke briefly to reporters. You were right there in that rope line. You asked him a serious question. And give us a sense of what he said in response.

YELLIN: He lashed out, Wolf. I asked him -- I had had a conversation earlier today with Dick Harpootlian, who is the former head of the Democratic Party here and now a Barack Obama supporter. And Harpootlian expressed what he called his immense disappointment with the way the Clintons have run the campaign. He said it's "reprehensible," and he even compared the way they are running their campaign to the great Republican mastermind, Lee Atwater, who was a master of finding wedge issues and dividing people against one another.

So I asked Bill Clinton to respond to these charges and whether he is playing the race card in an inappropriate way. Here's what he said.

(BEGIN VIDEO CLIP)

CLINTON: Once you accuse somebody of racism or bigotry or something, the facts become relevant. There are facts here.

And the final thing I would like to say is, you're asking me about this, you sat through this whole meeting. Not one single, solitary soul asked about any of this. And they never do. They are feeding you this because they know this is what you want to cover.

(END VIDEO CLIP) YELLIN: Well, I'll tell you, I called back Dick Harpootlian afterwards and he said that's a classic form of dissembling, trying to take the attention off of the Clinton campaign and what they are saying. They maintain from camp Obama that this is still a below-the- belt campaign the Clintons are running, the back and forth does not stop -- Wolf.

BLITZER: Jessica Yellin in Charleston for us.

Thanks very much.

And in just a few minutes, we're going to play the entire exchange that the former president had with Jessica Yellin at that stakeout in Charleston just a little while ago. You're going to hear the -- Mr. Clinton lash out at Barack Obama's campaign, as well as the news media, and you are going to hear how he's defending himself and his wife.

That's coming up in a few moments. I think you're going to want to see and hear this.

Remember, we're going to be live in the CNN Election Center all day on Saturday to bring you the results of the South Carolina Democratic primary. The polls there close 7:00 p.m. Eastern.

Please join me and the best political team on television all day and into the evening right here on CNN. That's coming up on Saturday.

In Florida right now, the Republican presidential candidates are feeling the heat less than a week before their next big contest. But Rudy Giuliani may be sweating more than his rivals, given all the time and resources he's invested in that one state.

Let's go to Dana Bash. She's on the campaign trail watching all of this in Florida.

Tense times, Dana, for the Giuliani campaign.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: It is.

You know, Wolf, this is Rudy Giuliani's 52nd day of campaigning in Florida. He really has had the stage to himself here in the Sunshine State. And despite that his commanding lead is gone, he's trying to adapt.

(BEGIN VIDEOTAPE)

BASH (voice over): On the stump, Rudy Giuliani's theme of tested is retooled.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: I did it with New York City, and you can go look at the results to the economy of New York City. I have done it with businesses. I have done it before, I can do it again.

BASH: Giuliani says he wants to jump-start the economy by simplifying the tax code immediately.

GIULIANI: Ultimately, if it's passed, you will be able to file your taxes on one page.

(APPLAUSE)

GIULIANI: One page.

BASH: His biggest challenge, getting Floridians to listen.

Before this appearance, volunteers worked the phones to beef up the crowd.

UNIDENTIFIED FEMALE: There'll be a gas station on your left. You will see Rudy Giuliani signs.

BASH: A packed house, but lots of people who can't vote in Florida.

UNIDENTIFIED MALE: I'm here visiting from Pennsylvania.

BASH (on camera): And where are you from?

UNIDENTIFIED FEMALE: Bremen, Indiana.

BASH (voice over): There are fresh signs Giuliani's strategy to skip most early contests in search of a Florida win may not be working. A new poll here shows Giuliani now statistically tied for third with Mike Huckabee, a 10-point fall from his Florida lead a few months ago.

(on camera): So why is it that you seem to be losing support, not gaining support?

GIULIANI: I think the reality is that we are gaining support. I think the issues that we are hitting on are the ones that are the key ones for the people of Florida. And the most important one is, you know, proven leadership.

BASH (voice over): There, his obstacle is John McCain, on TV with this new ad...

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: There's no one more qualified to meet our national security threats. I have been dealing with these issues my entire adult life.

BASH: And McCain appears to be competing for Florida's top spot with Mitt Romney.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: And I will go to Washington using the experience I have in the private sector, in the real economy, to strengthen our economy.

(END VIDEOTAPE)

BASH: And there is a saying here in Florida that the more south you travel in the state, the more north you are. And we met a lot of New York transplants here to see Rudy Giuliani today, Wolf. Those transplants Rudy Giuliani is banking on in order to do well here.

But, you know, after months of dominating, he really seems to be having trouble with the fact that the political terrain has shifted. And now the boisterous mayor from America's biggest city seems to be having trouble getting his voice heard -- Wolf.

BLITZER: You make a good point. A lot of them are probably snowbirds, as they call them. They don't necessarily have the right to vote in Florida, although they probably like Rudy Giuliani if they are from New York, especially.

BASH: We met a lot of them today.

BLITZER: I'm sure you did. All right.

Thanks, Dana, very much.

BLITZER: This note -- I will be speaking live with Rudy Giuliani about his campaign, his Florida gamble, what he's trying to do for the voters down there. That's coming up in our next hour right here in THE SITUATION ROOM.

Let's go to Jack Cafferty right now. He's joining us with "The Cafferty File."

JACK CAFFERTY, CNN ANCHOR: Wolf, this is a little bit like a bad acid flashback, but it's worth mentioning.

President Bush and top administration officials publicly made 935 false statements -- that's a polite way to say lies -- about the risk posed by Iraq in the two years following 9/11. According to a study done by two nonprofit journalism groups, the study found President Bush led the pack with 260 lies, but he wasn't alone.

Other officials include Vice President Cheney, former secretary of state Colin Powell, then national security adviser Condoleezza Rice before she got promoted, and former defense secretary Donald Rumsfeld, among others. The study points to at least 532 times where officials said Iraq had weapons of mass destruction or was trying to get them, or had links to al Qaeda.

They say the statements "were part of an orchestrated campaign that effectively galvanized public opinion and, in the process, led the nation to war under decidedly false pretenses." That's a quote.

The White House called the study flawed and repeated the administration's position that the world community saw Saddam Hussein as a threat. President Bush said that at the time he and other officials made these statements, the U.S. intelligence community and other nations thought Iraq had WMD. But they didn't.

And yet, we're still there. And almost 4,000 of our troops are dead because of it.

Here's the question.

What do you make of a study that shows President Bush and his top aides made 935 false statements about the threat from Iraq in the two years following 9/11?

Go to cnn.com/caffertyfile, where you can post a comment on my new blog -- Wolf.

BLITZER: Excellent blog it is, indeed, Jack. Thanks very much.

Jack Cafferty will be back shortly.

Coming up, we're going to be hearing more from Bill Clinton. He's very angry at the Barack Obama campaign and he's also angry at the news media.

(BEGIN VIDEO CLIP)

CLINTON: They are feeding you this because they know this is what you want to cover. This is what you live for.

(END VIDEO CLIP)

BLITZER: Up next, Bill Clinton in his own words on race and politics in 2008.

Also, Barack Obama's latest one-two punch against the Clintons. He says he's the one who's being raked over the coals and he's pushing back.

And the rise and slump of Mike Huckabee. After winning Iowa, he's on shaky ground in Florida right now. And his finances are shaky as well.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Now we want to let you listen to Bill Clinton at length going after the Obama camp and the news media in South Carolina just a little while ago.

Our Jessica Yellin asked him about a comment by a former South Carolina Democrat Party chairman, Dick Harpootlian. Harpootlian likened the former president to the late Republican Party chairman Lee Atwater. Atwater, as many of you will remember, was known as the grandfather of so-called modern-day hardball politics. He was widely accused by Democrats of playing the race card.

So, just so that you know, another name you're going to be hearing from the former president is Dolores Huerta, a founder of the Farm Workers Union.

Listen to this.

(BEGIN VIDEO CLIP) WILLIAM JEFFERSON CLINTON, FMR. PRESIDENT OF THE UNITED STATES: I never heard a word of public complaint when Mr. Obama said Hillary was not truthful, no character, was poll-driven. He had more pollsters than she did.

When he put out a hit job on me at the same time he called her the senator from Punjab, I never said a word. And I don't care about it today. I'm not upset about it.

The only thing I pointed out was that there was substantially no difference in her record and his on Iraq, and that he had said in 2004 there was no difference between his position and President Bush. And he said that was somehow dishonest, but he never answers how it's not accurate. So this is crazy.

This rhetoric is getting a little carried away here. And let me remind you, my ultimate answer is this -- there are still two people around who marched with Martin Luther King and risked their lives, John Lewis and Reverend Andrew Young. They both said that Hillary was right and the people who attacked her were wrong, and that she did not play the race card, but they did.

So I don't have to defend myself from Dick Harpootlian. I will just refer you to John Lewis and Andrew Young. And let him go get in an argument with them about it.

Let him go get in an argument with Dolores Huerta, one of the founders of Farm Workers, against what happened in Nevada.

There is a fact here -- this is almost like once you accuse somebody of racism or bigotry, or something, the facts become irrelevant. There are facts here.

And the final thing I would like to say is, you're asking me about this, and you sat through this whole meeting. Not one single, solitary soul asked about any of this. And they never do.

They are feeding you this because they know this is what you want to cover. This is what you live for.

But this hurts the people of South Carolina, because the people of South Carolina are coming to these meetings and asking questions about what they care about. And what they care about is not going to be in the news coverage tonight because you don't care about it.

What you care about is this. And the Obama people know that. So they just spin you up on this and you happily go along.

The people don't care about this. They never ask about it. And you are determined to take this election away from them. And that's not right. That is not right.

This election ought to belong to those people who are out here asking questions about their lives.

QUESTION: Do you think the Obama people are... (CROSSTALK)

CLINTON: Well, you ask me questions based on Harpootlian calls me Lee Atwater. I spent all my life fighting those people.

And he wasn't in Nevada. So he's having a fight not with me, but with Dolores Huerta, who founded the Farm Workers with Cesar Chavez. He should ask her. She was there.

He doesn't care what happened. He just knows he can call you a name and you guys will cover it.

They did not ask about this, and you don't care what your own people care about. They care about what happens to the American people. That's one thing John Edwards was right about in the debate.

QUESTION: But do you think the Obama people...

UNIDENTIFIED MALE: Got to go. Appreciate it.

CLINTON: One more story. Shame on you.

UNIDENTIFIED MALE: Thanks, guys.

CLINTON: Shame on you.

(END VIDEO CLIP)

BLITZER: Barack Obama isn't backing away from his tough criticism of Bill and Hillary Clinton in South Carolina. Today, Obama again questioned Senator Clinton's candor and trustworthiness. The Obama camp says its candidate is the one who's the target of hardball politics being thrown at him by the Clintons.

Let's go to Candy Crowley. She's covering the story for us in South Carolina as well.

These campaigns, both of them, neither is giving an inch, Candy.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: They really aren't. And it's kind of hard to keep up with, because there are so many balls in the air in terms of issues. But improbably, what's happened, at least over the past couple of weeks, that one of the main bones of contention is an icon from the Republican Party.

(BEGIN VIDEOTAPE)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Let's talk about Ronald Reagan.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: President Reagan...

CROWLEY (voice over): Ronald Reagan remains part of the daily drumbeat along the Democrat campaign trail. The latest pounding came over South Carolina radio, courtesy camp Clinton. ANNOUNCER: Listen to Barack Obama last week talking about Republicans.

OBAMA: The Republicans were the party of ideas for a pretty long chunk of time there over the last 10, 15 years.

ANNOUNCER: Really? Aren't those the ideas that got us into the economic mess we're in today? Ideas like special tax breaks for Wall Street, running up a $9 trillion debt, refusing to raise the minimum wage or deal with the housing crisis?

Are those the ideas Barack Obama's talking about?

CROWLEY: The Clintons, him and her, have been sounding this tune for several days.

H. CLINTON: The facts are that he has said in the last week that he really liked the ideas of the Republicans over the last 10 to 15 years.

CROWLEY: It's toxic stuff in a Democrat primary, but it's also not true. Obama never said he liked the Republican ideas, only that they dominated.

Over and above the daily to-and-fro with the Clinton campaign, Obama also struggles with the truth of history -- the often unspoken question in the African-American community, is the time right for a black man?

Wednesday, one woman spoke.

UNIDENTIFIED FEMALE: My dad's 77 years old. He's an African- American. And I think based on his history and his ignorance, he is undecided because he feels like maybe a black candidate will not be able to do what you need to do in Washington to get change done.

CROWLEY: In a campaign that has set out to be above racial and partisan divides, it is the ultimate question -- is that really possible?

OBAMA: If I came to you and I had polka dots, but you were convinced that I was going to put more money in your pockets and help you pay for college and help keep America safe, you would say, OK, you know, I wish he didn't have polka dots but I'm still voting for him.

CROWLEY: In a state where there is pretty much a 50/50 split among black and white Democrat primary voters, recent polls show Obama leads Hillary Clinton by six to nine points.

(END VIDEOTAPE)

CROWLEY: Though he is taking a lot of incoming, the Barack Obama campaign is giving as good as it gets. Today, the candidates took out after Hillary Clinton, questioning her position on trade, here, of course, in a state which has lost a lot of factory jobs overseas. Obama basically said that Clinton has changed her position on trade. Actually, candidate Clinton, while her husband did oversee the NAFTA trade agreement, has said that there are some things she'd like to review -- Wolf.

BLITZER: Candy, thanks very much.

Candy Crowley on the campaign trail in South Carolina.

While Obama and Bill Clinton are duking it out in South Carolina, Hillary Clinton is on her own right now in New Jersey. Up next, we'll take a closer look at the strategy behind her latest travel schedule and how it all comes down to the big D -- delegates.

And coming up next, new information on the shocking death of a young movie star, Heath Ledger.

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

(COMMERCIAL BREAK)

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, some are learning graphic details about the death of an Afghani man. He was beaten and died days later at a U.S. military base in Afghanistan. Now his story is the focus of an Oscar- nominated movie.

We're going to update you in the next hour.

Also, Mitt Romney makes comments related to Hitler and the Middle East peace process. How does he explain them?

We'll share those with you.

And one thing that's constant in the Barack Obama's message is his promise of change. But can he really change the government more than his rivals?

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

You can almost hear the sighs of relief just minutes after Wall Street pulled off a stunning comeback. The Dow Jones Industrials closed up almost 300 points after a steep plunge in the morning and days of volatility. But officials here in Washington know that's not enough to ease Americans' fears of recession.

Let's go to the White House. Our correspondent Ed Henry is standing by.

There's a concerted effort under way here in Washington to try to calm the markets. What's going on? ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf.

The president got some good news today when the Congressional Budget Office said they are not forecasting a recession for the near term, but White House officials say they realize there's still a problem here, and that's why they spent a second straight day trying to reassure the world.

(BEGIN VIDEOTAPE)

HENRY (voice over): The Bush administration went global Wednesday to calm panic over plunging markets. From Secretary of State Condoleezza Rice at the World Economic Forum in Davos, Switzerland...

CONDOLEEZZA RICE, U.S. SECRETARY OF STATE: The U.S. economy is resilient. Its structure is sound. And its long-term economic fundamentals are healthy.

HENRY: ... to Capitol Hill, where Treasury Secretary Henry Paulson continued negotiating a deal on a $150 billion economic stimulus package.

Several officials involved in the talks say it would give individuals tax rebate checks of about $800. Families would get around $1,600. To win over conservatives, the package is also slated to include business tax breaks, while liberals are expected to get an extension of unemployment benefits and an increase in food stamps.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I talked to them about my desire to work with the Congress to get a stimulus package passed, one that is going to be robust enough to affect the economy, simple enough for people to understand it, and efficient enough to have an impact. And I'm confident that we can get something done.

HENRY: Some Democrats seem ready to work with the president.

SEN. CHRISTOPHER DODD (D), CONNECTICUT: People want to know that their leaders understand their struggles and fears and are acting to remedy them.

HENRY: But others are testing the limits of all the talk of bipartisanship by blaming the president for the sagging economy.

REP. RAHM EMANUEL (D), ILLINOIS: By any measure, America is worse off today over the last seven years than it was as a country that George Bush inherited.

HENRY: White House Press Secretary Dana Perino fired back that Mr. Bush has been pushing Democrats since last summer to reform housing laws to deal with the subprime mortgage crisis.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: The president's committed to working in a bipartisan fashion, and I would hope that those individuals would take a step back and realize that we have an opportunity to get something done on behalf of the American people. But if they want to go down that road and not work with the administration, the label of the do-nothing Congress could stick in 2008, as it did in 2007.

(END VIDEOTAPE)

HENRY: Now, despite some of the back and forth, officials in both parties are still confident that congressional leaders can work out a deal on the stimulus package as early as next week, that the House can pass this bill in early February, and the Senate is going to try to do it by mid-February -- Wolf.

BLITZER: Ed Henry at the White House, thanks.

A quick check of the global markets today, Asian markets are up, with Hong Kong's leading stock index up more than 10 percent. Japan's Nikkei index closed more than 2 percent higher. But the European markets are down. Germany's DAX index closed down more than 4 percent, and the United Kingdom's leading index ended the day down more than 2 percent.

We are joined by the former U.S. Senator and Defense Secretary William Cohen. He's the chairman and CEO of The Cohen Group. It's a global business and consulting firm.

You're just back from the oil-rich, really rich part of the world in the Persian Gulf and the United Arab Emirates, among other places. What are they saying about the U.S. economy?

WILLIAM COHEN, CNN WORLD AFFAIRS ANALYST: Well, they are worried about the U.S. economy. They have what they call sovereign wealth now, and some of those countries are interested in investing.

(CROSSTALK)

BLITZER: This is government money, really, that they want to use to buy up property, including here in the United States, whether banking industries or whatever, on the cheap.

COHEN: Right. This is money that we are sending over in the form of higher oil prices, that they have become enormously wealthy. There is an enormous transfer of wealth from the United States to these oil-producing countries, and now they are accumulating that wealth and they want to reinvest it -- or invest in countries such as Europe and the United States.

BLITZER: The fact that they want to invest in the United States and buy pieces of whatever, you know, Goldman Sachs or Merrill Lynch, or whatever other companies we're hearing about, or real estate, at relatively cheap prices for them, because the dollar is so weak, what does that say about their level of confidence in the U.S.?

COHEN: I think their confidence is still high.

They are worried about what's going to take place in the region. That's a greater concern, I think, than whether or not the United States is in the beginning of a recession or the middle of a recession right now. I think that they are more concerned about their security interests and they are concerned about the U.S. and our role in Iraq, whether we are going to stay, whether we are going to have a preemptive pullout, so to speak, and whether they will be at risk.

So, that's their primary concern, one of security. Right now, they are looking to invest their accumulated wealth in various markets, including the United States, and the real issue for us is whether it will be opposed by members of Congress, whether they will see this as a threat, whether they will try to erect barriers against that.

I think that would be a mistake, but that's something that the Congress is going to have to deal with.

BLITZER: You have been criticizing the so-called broken government that we have seen here in Washington in recent years.

Right now, there's -- there's evidence that maybe, maybe the White House, together with the Democrat leadership in Congress, can get together and pass some sort of economic stimulus package in relatively quick terms. You see that unfolding?

COHEN: Oh, I think that's a real possibility.

The question is, however, that it's a temporary fix. It's sort of like a chronically ill patient being wheeled into the emergency room. We have neglected the fundamentals in this country. We have been engaged in reckless lending, reckless spending, that we have lost the discipline which has made this country great and strong, and it's something we have to get back again.

So, I hope the candidates can put aside, perhaps after Super Tuesday, at the earliest, but put aside the swords, come back to Washington, start digging a foundation that will build a security for the American people for the future.

Right now, we are putting ourselves at great risk by virtue of the partisanship, by the sniping, by engaging in activities which are not sound fiscal policies and governmental policies. We have not invested in infrastructure. Our bridges are collapsing. Our bridges are damaged throughout. We have seen the broken levees. All of these things have to be fixed.

Our country has not been served well by this kind of partisanship. We have got to get back to the middle. Hopefully, this bipartisan spirit will prevail more than just on this temporary measure, a long-term measure.

BLITZER: We will see if it does.

(CROSSTALK)

BLITZER: Secretary Cohen, welcome back. Good to have you back from that part of the world.

(CROSSTALK) BLITZER: Let's get back to the presidential race right now.

A recent Republican dropout, Duncan Hunter, the congressman, revealed today he is supporting his formal rival Mike Huckabee, but it may not be the lift Huckabee needs right now. The Iowa caucuses winner, he's having a very tough time in Florida and his staff and his cash are stretched, according to a lot of reports right now, pretty thin.

Let's go to our chief national correspondent, John King. He's joining us from Fort Lauderdale down in Florida.

What is the Huckabee camp saying about all these problems, John?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, Wolf, Governor Huckabee will be here in Fort Lauderdale in just a couple of hours. It will be just his third event in Florida, just his third event here since his disappointing second-place finish over the weekend in South Carolina.

You mentioned that big Iowa win. That was just three weeks ago. But, since then, the trail has turned much more difficult.

(BEGIN VIDEOTAPE)

KING (voice-over): A Baptist church in Tallahassee. Rich Kincl is the pastor. Look closely at that flag. Mike Huckabee has a friend in Florida, a worried friend.

RICH KINCL, SOUTHERN BAPTIST PASTOR: If I had a preference, I would stop the clock for Mike Huckabee. If we could stop the clock for six months and not have these primaries, you know, facing him so imminently here, the vast majority of Americans would get to know him.

KING: Kincl met Huckabee 25 years ago. Both were pastors in small-town Arkansas. This should be reunion week. Florida's 57 Republican delegates are up for grabs Tuesday. And Kincl is both a friend and supporter.

KINCL: His appeal is to the evangelical voter, but it's far beyond that.

KING: But Huckabee has been all but absent from the state since a disappointing second place in South Carolina Saturday. The former Arkansas governor acknowledges money is more than scarce.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: If the campaign doesn't make it all the way, we want to be able to walk away from it in the black.

KING: The cash crunch means no major TV ad buys in giant Florida. A few top aides have quit. Others are working without pay -- fewer events and no more big campaign plane.

HUCKABEE: Our primary goal is to get nimble, to get quick, to get where we can get from place to place as quickly as possible. KING: The trademark humor that helped him to his surprise Iowa win three weeks ago hasn't faded. When former Tennessee Senator Fred Thompson quit the race Tuesday, Huckabee wished aloud his exit had come before South Carolina, where Thompson's solid support among social conservatives likely cost Huckabee a much-needed win.

HUCKABEE: It would have been helpful if he had done this before. Now, if the rest of them will drop out, we will really be happy.

(LAUGHTER)

WHIT AYRES, REPUBLICAN POLLSTER: Based on his light schedule in Florida, it sounds like he's saving everything he can for some more comfortable states, Southern states with a high proportion of religious conservatives.

(END VIDEOTAPE)

KING: Now, Huckabee supporters here insist that they can do a lot with little resources. They promise, Wolf, a Florida surprise.

But, privately, many Huckabee aides concede he is hoping the race is still a jumble when it leaves Florida and that he can reestablish himself when it moves on to Southern states like his native Arkansas, Mississippi, Alabama, and Georgia -- Wolf.

BLITZER: All right, John, thanks very much.

John's in Fort Lauderdale right now -- the Florida primary for the Republicans next Tuesday.

This presidential race is already making history because of the candidates, but there could be something else very unusual about the 2008 election, the way the nominees are chosen. Will we have to wait until the conventions at the end of the summer? A story that's coming up next.

And Rudy Giuliani joining us live right here in THE SITUATION ROOM. I will ask him what he would do to fix America's economic problems and what he thinks about his low votes in the primaries so far.

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

(COMMERCIAL BREAK)

BLITZER: Today, Hillary Clinton is campaigning in New Jersey. And a new poll there suggests how she's doing right now. She leads Barack Obama 49 percent to 32 percent in the new Quinnipiac University poll. John Edwards gets 10 percent.

New Jersey is one of two dozen states offering a bonanza, something necessary to win the Democratic nomination this year.

Let's go to our senior political analyst, Bill Schneider. He is joining us right now. It seems, Bill, that we are entering a new phase in the nomination process.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: We are. As we approach Super Tuesday, the candidates start hunting a different animal.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Early in the nominating process, the candidates were hunting for an elusive prey, the big mo', momentum. Did anybody get the big mo'? Not really. Every time a candidate won a primary or caucus, they claimed to have captured the momentum, only to see it get away a few days later, when another candidate became the comeback kid. The result? No mo'.

As we approach Super Tuesday, the candidates have started hunting for a smaller prey.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: We are watching the delegate count pretty closely and want to be able to rack them up.

SCHNEIDER: The delegate hunt could go on for months. Democratic rules require states to award delegates in proportion to the primary vote. Republican rules allow it. If you get a quarter of the vote, you get a quarter of the delegates. Most delegates are allocated by congressional district. Candidates can win delegates even if they don't win states. That gives them an incentive to stay in the race.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: I'm in this for the long haul. We continue to accumulate delegates. There is actually a very narrow margin between Senator Obama, Senator Clinton and myself on delegates.

SCHNEIDER: Delegates give you a voice at the convention and real bargaining power.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: It's not just how you are doing at the beginning. It's not how even you are doing in the middle. It's whether you still have some kick left at the end.

(END VIDEOTAPE)

SCHNEIDER: But is it good for the party to have candidates still kicking at the end? The hunt for delegates prolongs the process and it keeps the parties divided, instead of uniting around the winner as quickly as possible -- Wolf.

BLITZER: This could go on for some time, indeed. We will see. Thanks very much, Bill, for that.

With California so rich in delegates, you especially want to see the candidates battle there in our upcoming debates next week. They face off just before Super Tuesday, the Republicans on January 30 at the Reagan Library -- Anderson Cooper will be moderating that debate -- the Democrats the next day at the Kodak Theatre in Los Angeles January 31. I will moderate that one -- both of these debates for two hours each. They begin at 8:00 p.m. Eastern right here on CNN.

All around Florida today, the GOP candidates are talking about voters' number-one issue. That would be the economy.

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI (R), PRESIDENTIAL CANDIDATE: I'm the only candidate who's turned around a government economy.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: We need faster economic growth in both Florida and the United States of America.

ROMNEY: I think it's time to have a president who thoroughly understands the economy.

(END VIDEO CLIP)

BLITZER: Well, which candidate will voters choose to help turn around America's money trouble? And now that we have learned details of the economic stimulus plan coming out of the White House, will it really impact what the Democrats do next? We are talking to Dick Armey and Steve McMahon about those topics and a lot more.

That's coming up next in our "Strategy Session."

(COMMERCIAL BREAK)

BLITZER: All the Republican presidential candidates have a message for you. They can best help with your money as they worry over the -- as you worry over the nation's economy. The candidates are delivering that message in Florida, ahead of a potentially pivotal contest there next Tuesday.

In today's "Strategy Session," Democratic strategist Steve McMahon and former House Majority Leader Republican Dick Armey joining us as well.

Thanks to both of you for coming in.

This economic fear, fears of a recession, who among the Republican candidates in Florida right now does it help the most?

DICK ARMEY, FORMER REPUBLICAN HOUSE MAJORITY LEADER: Well, let me just say, first of all, the fear is mostly in the hearts of officeholders and people seeking office.

But I think that, again, from a substantive economic point of view, Giuliani is the only person who's come up with a real substantive package that would promote the long-term growth of the economy.

BLITZER: Not Romney?

ARMEY: But, unfortunately, Giuliani has not himself showed up.

BLITZER: Yes. ARMEY: Mitt Romney is -- I don't think has put together any package that is so clearly and obviously a reflection of policies that will work.

BLITZER: And you're not impressed with McCain's package?

ARMEY: I don't think it matches what the -- what the mayor has done.

But, again, the problem is that everybody has sort of gotten themselves into a short term, what can we do now in the short term to get immediate results, which I think, quite frankly, is very little, and is more of a political exercise than an economic policy.

BLITZER: You're a Democrat, Steve, but, as you look at the Republican battle in Florida, economic fears, who does it help?

STEVE MCMAHON, DEMOCRATIC STRATEGIST: Well, I mean, I think Mitt Romney, if he can convince people that he's a turnaround artist economically, as opposed to just a turnaround artist in terms of his position on the issues, it probably helps him some.

(CROSSTALK)

MCMAHON: Mike Huckabee has been a governor. So, of course, people like governors. And he seemed to do a pretty good job in Arkansas.

And I think the leader is correct about Rudy Giuliani having the most substantive plan. But the fact that he comes from New York City probably is not very reassuring to people who are interested in lower taxes.

BLITZER: Looking ahead to November, irrespective of the Democrat or the Republican -- and we don't know who the nominees are going to be -- if the White House and the Democratic leadership in the House and the Senate, they do get some sort of short-term economic stimulus package passed and the economy responds positively, who does that help the most, looking ahead to November?

ARMEY: Well, I think, if it -- as we go forward, it would probably help the weaker candidates. It might help, for example, Obama.

Senator Obama, he is standing in precarious ground. He has no basis by which he can assert himself as a person who can resolve problems in the economy. If problems in the economy go away, he can go back to singing kumbaya with everybody, making everybody feeling good.

BLITZER: So, you think Hillary Clinton has an advantage over him on that?

ARMEY: Yes. Anything that is substance gives her an advantage, because he is a person who has no substantive experience or -- or -- or has -- has no substantive accomplishments in public policy. BLITZER: Steve?

MCMAHON: Well, I think he has a different kind of experience. And it's an experience that many Democrats value. If you look at the poll numbers, you can see that.

I do think Hillary Clinton benefits perhaps a little bit more, because, you know, her husband inherited an economy that was in tough shape. She was in the White House with him during that period of time. And, so, to the extent that people believe that he might be involved in her economic program, that's good for her.

But I think it definitely helps the Democrats much more than the Republicans, because most people feel that Bush, that George Bush, put the country on this precarious economic footing. It's his fault. And any rearguard action now to try to address what he...

BLITZER: But, if there is an improvement, in other words, in the economy between now and November, that would help the Republicans...

MCMAHON: Well...

BLITZER: ... because then the economic issues, the bread-and- butter issue, would presumably go away?

(CROSSTALK)

MCMAHON: I think it depends on who gets credit for this package.

I mean, the president's idea of an economic package left out 50 million Americans. The Democrats are the ones really bringing him to the table. So, I think change benefits Democrats. And this isn't going to turn around quickly. It's -- people feel it right now in their wallets. And I don't think $1,600, as much as that might help, is going to change that...

(CROSSTALK)

BLITZER: He makes the point former Governor Huckabee, 10 years as the governor of Arkansas, has got some executive experience. You see that being an advantage for him?

ARMEY: Not if you examine his record. He raised taxes. He grew the government. If you look at Republican primary voters, they are people who want a Republican who will contain the growth of government, who will lower taxes. Huckabee doesn't have a record of real activity that matches against that.

He -- and then he embraces what are frankly cockamamie ideas, like this -- this FairTax is one of the most foolish public policy ideas to come down the pike, and he's embraced it as if he thinks there's something of real value there.

(CROSSTALK)

BLITZER: Maybe one of these days, we will have a debate between you -- you're an economist yourself -- between Dick Armey and Mike Huckabee on the FairTax, as it's called, and we will resolve that issue once and for all.

(LAUGHTER)

BLITZER: You wanted to make one final point?

MCMAHON: I was just going to say, if the FairTax comes, we will have some fun running against that.

ARMEY: I will guarantee you that, if there's ever a national sales tax, it will be the Democrats that add it to the income tax and give the Republicans the credit.

MCMAHON: Oh, come on. You know that's not true.

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

Dick Armey, Steve McMahon, guys, thanks very much for coming in.

(CROSSTALK)

BLITZER: He was a superstar of the first Iraq war. Now retired General Norman Schwarzkopf is making news once again. You are going to find out who he's decided to endorse in this presidential contest.

And Rudy Giuliani, he's standing by to join us live right here in THE SITUATION ROOM. I will ask him how he feels about John McCain's success so far and if Giuliani can make a mark in Florida.

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

(COMMERCIAL BREAK)

BLITZER: Checking our Political Ticker right now, the Pennsylvania governor, Ed Rendell, says he's throwing his support behind Hillary Clinton's presidential campaign. His state has a hefty 188 delegates and its April primary -- April primary -- could be key, if -- if -- the Democrat race is still undecided after Super Tuesday.

Endorsements from governors can make a big difference because they have a built-in political operation in those states and can command news attention, news media attention, as well. Hillary Clinton now has the backing of 10 Democratic governors. Barack Obama has half as many.

In the Republican race, John McCain has four GOP governors in his corner. Mitt Romney has three. Rudy Giuliani and Mike Huckabee each have one.

On the endorsement front, the retired U.S. general in command of the first Gulf War threw his support today behind John McCain. General Norman Schwarzkopf, "Stormin' Norman," as they used to call him, says McCain has served his country with honor in war and peace and has shown the type of courageous leadership the country needs right now. Remember, for the latest political news any time, check out CNNPolitics.com. That's the place to go.

Jack Cafferty has got "The Cafferty File" right now -- Jack.

CAFFERTY: Wolf, the question this hour is: What do you make of a study? It was done by two nonprofit groups of journalist, a study that shows President Bush and his top aides made 935 false statements about the threat from Iraq in the two years following 9/11.

Larry writes: "I don't think anyone would be surprised that they lied, and this often. But, what's going to happen? Nothing. They will get away with this, like they have gotten everything else for the last seven years. What is wrong with this country when we have allowed this to happen? By tomorrow, you will never hear about this story again."

Dave in Brooklyn writes: "If I had any say in the matter at all, I would make a very strong case for impeachment out of it. But my question is, where were these journalists six years ago?"

Nelson in New Jersey: "Quick, someone make a copy of this database, so we'll have a proper backup in the event it disappears, like the administration's e-mails. This will come in handy when they are prosecuted for war crimes."

Vinny writes: "Hey, Jack, you failed to mention that the study was done by the Center for Public Integrity, which has ties to George Soros and which he funds through his Open Society Institute."

Michael writes from Connecticut: "Now that the truth has come out about what we already knew about Iraq, this Congress has a duty to bring impeachment against Bush and Cheney, as this is very serious and they must be held accountable -- billions and billions of dollars spent on top of thousands of innocent people dead because of this Iraq War based on lies. Congress must act."

Ben writes from Louisville, Kentucky: "What is worse, 935 lies or the watchdog press not doing anything about it for seven years?"

And Judy writes: "When I read your blog, my stomach turned: 4,000 kids who will never see the light of day again and their families, all for a pack of lies. Some legacy, this Bush and company" -- Wolf.

BLITZER: Thank you, Jack.

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

Happening now: It sounds like Democrats have already anointed John McCain as the Republican presidential nominee, even as Rudy Giuliani rolls the dice, betting on a big win in Florida. Did he pick the right strategy? I will ask him. That's coming up live, Rudy Giuliani, here in THE SITUATION ROOM.

And Barack Obama tries to set himself apart from the pack by casting himself as the candidate of change. Is it a label he can live up to?

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