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THE SITUATION ROOM

Democrats' Money & Mud-Slinging; McCain's Seat at Title Fight; Attack at Jewish Seminary at Jerusalem; Tony Rezko Trial Begins

Aired March 6, 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, Hillary Clinton and Barack Obama's unfinished business. Dozens of delegates hanging in the balance in Texas and both trading barbs. Her camp comparing him to a man Democrats love to hate, and his camp accusing her of keeping something from the public.
We're watching all of this.

John McCain's job listing. He now needs a running mate. Might he be thinking about a popular governor from a popular state? I'll ask Florida's governor, Charlie Crist, on the very day that McCain made some very interesting comments about him.

And breaking news of a terror strike at an Israeli school. Gunfire sets off a scene of chaos. Hamas says it will not be the last.

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

Two days after a bitterly fought race in Texas changed the game between Barack Obama and Hillary Clinton, the suspense in Texas is not over. Right now we're following what's surely a nail-biter for both campaigns -- a painstaking vote count continuing, a sought-after prize and an unclear outcome.

At this point no one knows who will win Texas Democratic caucuses. Right now Obama holds a slight lead in the caucus vote count. On Tuesday, Clinton squeaked out a win in the state's primary, but these separate caucuses hold 67 separate delegates. It could be tomorrow until we know who actually won.

We're getting this breaking news that's just coming in to THE SITUATION ROOM. The Democratic senator from Florida, Bill Nelson, has just issued a statement formally calling for a new primary, a Democratic primary to take place in Florida.

The earlier primary didn't count because Florida moved up its date earlier than Super Tuesday, in violation of Democratic Party rules. Its delegates will not be seated at the convention.

Now Bill Nelson saying there must be a new primary going forward in Florida. He says the DNC, the Democratic Party should pay for it. The DNC, Howard Dean, the chairman, says that they say they don't have the money to pay for it. The funding of this is going to be a significant development. We're going to have a lot more on this breaking news coming up. We're going to be speaking also with the Republican governor of Florida, Charlie Crist. That's coming up as well.

As the candidates await what happens in Florida, they're moving on with their strategies for elbowing each other out. That will include much maneuvering, apparently some political mud-slinging.

Mary Snow is watching all of this from New York.

Mary, today the Clinton camp brought up a name that is not necessarily well liked among a lot of Democrats. What's the latest?

MARY SNOW, CNN CORRESPONDENT: That's right, Wolf. Kenneth Starr's name surfaced today in the Democratic race. This, as the fight intensifies between the Clinton and Obama camps. Now the candidates themselves are questioning each other's credentials.

(BEGIN VIDEOTAPE)

SNOW (voice over): Her message was clear. Senator Hillary Clinton surrounded herself in the nation's capital with military officer who support her to try and make the case that she is best suited to be commander in chief. It's her latest attempt to raise doubt about Senator Barack Obama's national security credentials.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: Look, I have said that Senator McCain will bring a lifetime of experience to the campaign. I will bring a lifetime of experience. And Senator Obama will bring a speech that he gave in 2002.

SNOW: She did not answer a question about her campaign's latest attack on Obama, comparing him to Kenneth Starr. He's the special prosecutor who investigated the Clintons on Whitewater and the impeachment of President Clinton. The comparison comes following the Obama camp's stepped-up requests to have Clinton release her most recent tax returns.

A Clinton campaign memo States, "Imitating Ken Starr is not the way to win the Democratic nomination." The Obama camp calls the comparison absurd, saying, "We don't believe that expecting candidates for the presidency to disclose their tax returns somehow constitutes Ken Starr tactics, but the kind of transparency and accountability that Americans are looking for and that's been missing in Washington for far too long."

On his way back to Chicago Wednesday, Obama was asked about the impacts of Clinton's attacks.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: There's no doubt that Senator Clinton went very negative over the next week. And, you know, the kitchen sink strategy I'm sure had some impact.

SNOW: As Obama tries to regain ground, some political observers say he needs to be weary of how hard he fights. STUART ROTHENBERG, POLITICAL ANALYST: Barack Obama's greatest strength is he's talking about change, a new politics, bringing people together. If his message is too mean, if it's regarded as nasty and petty, and just like every other political campaign message, I think it's going to hurt him.

(END VIDEOTAPE)

SNOW: One thing that will help, more money. The Obama campaign said it raised $55 million in the month of February.

The Clinton camp is also touting its fund-raising, saying since Clinton's wins on Tuesday, they've raised over $3 million online. Clinton is campaigning later today in Mississippi ahead of next Tuesday's contests there. Obama is in Chicago today. He'll be in Wyoming tomorrow, ahead of Saturday's caucuses -- Wolf.

BLITZER: Mary, thanks very much.

John McCain sounds like a spectator with a ringside seat to the Clinton/Obama main event. With his nomination essentially locked up, he's free to blast both potential rivals.

Let's go to Dana Bash. She's in Atlanta. She's watching this part of the story for us.

He's watching these two Democrats fight it out, Dana, but he's also looking ahead. What's going on?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: He is. But, you know, Senator McCain's advisers, a couple of them, called us to make sure we knew that the senator called New York City Mayor Michael Bloomberg to check in about today's bombing in Times Square. That is very much, they admit, an indication not just that he's looking ahead, but he's also looking to stay in the news now.

(BEGIN VIDEOTAPE)

BASH (voice over): Howie's (ph) Diner in West Palm Beach Florida, John McCain's first campaign stop as presumptive GOP nominee. And he's readying for a fall fight.

Here, on Barack Obama...

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I don't know if he's naive or not. I know he's inexperienced.

BASH: The reality is McCain doesn't know who his Democratic opponent will be, and he admits their gripping high-profile clash is a mixed blessing.

MCCAIN: I'm no longer in a competitive race. And there will understandably be more attention to Senator Obama and Senator Clinton. But at the same time, it does give me an opportunity to go around and shore up our base of support, unite our party. BASH: McCain's biggest challenge now is staying in the headlines. Knowing that, his advisers tell CNN they have a series of events planned to try.

First, travel abroad. Later this month McCain will go to Europe and meet with key allies, and also go to the Middle East.

MCCAIN: I've spent my entire life addressing national security issues.

BASH: The goal, not just words, but imagery of a leader comfortable on the world stage, hoping it provides a contrast to the Democrats' political brawl.

Upon his return, McCain advisers tell CNN they plan a tour touting his storied biography. Aides say voters may know he was a Vietnam prisoner of war, but they are eager to fill in the details in a campaign where they think voters are looking for inspiration.

MCCAIN: My background and my judgment allow me to do the thing that's most important for America -- to inspire a generation of Americans to serve a cause greater than their self-interest.

BASH: The spring tour will include stops like Annapolis and other places to help illustrate his life story and long lineage of military service.

(END VIDEOTAPE)

BASH: McCain advisers are also planning on dealing with a big issue. And that is substance -- a series of policy speeches from national security to the environment to the economy. And, Wolf, the economy for John McCain is going to be perhaps the most important, not only because it's the most important issue to voters, but because it's perhaps John McCain's biggest weak spot.

And CNN is told that already, his adviser and former Texas senator, Phil Gramm, is working on a McCain economic plan. We are told and promised it will be "bold," but we're given no other details of it yet -- Wolf.

BLITZER: What's he saying about picking a running mate?

BASH: Well, it's interesting, Wolf. He's insisting still he has got no real names in the hopper, but they are moving forward to form a process to pick somebody. In fact, they have -- Senator McCain has enlisted a man by the name of A.B. Coldhouse (ph).

He worked for Ronald Reagan. He was his lawyer. He's also a very prominent lawyer -- Republican lawyer in Washington, D.C.

He's going to help Senator McCain vent whatever nominee -- and list of nominee -- I should say running mates -- that he's going to pick down the road. That is really important in talking to McCain advisers, they think, because they're studying the process that various candidates used -- what worked, what didn't work. For example, they talk about Dan Quayle, the fact that nobody knew about his problems or issues with the National Guard. They want to do whatever they can to avoid that. They're setting up a process to do that as we speak -- Wolf.

BLITZER: The last time President Bush named someone to help him select a running mate, it was Dick Cheney. And guess who he selected? Dick Cheney.

BASH: Dick Cheney.

BLITZER: All right. Let's see what happens with Mr. Coldhouse. Appreciate it, Dana, very much.

BASH: Thank you.

BLITZER: Let's go to Jack Cafferty. He's got "The Cafferty File." He's joining us from New York -- Jack.

JACK CAFFERTY, CNN ANCHOR: Barack Obama's campaign up to this point has been refreshing. He seems almost too nice to be running for political office.

His message has been about hope and change and a future filled with the hard work of restoring the greatest nation on earth to its rightful place as a beacon of hope for the rest of the world. And it's a strategy that has propelled him to the front of the race for the Democratic presidential nomination. But his failure to seal the deal this week in Ohio and Texas may bring change.

Hillary Clinton landed some body blows in the hours leading up to Tuesday's voting. An ad about a 3:00 a.m. phone call that preys on women's fears for the safety of their children, questions about indicted real estate developer Tony Rezko, and Obama's position on NAFTA didn't help either.

Now Obama is starting to reciprocate, questioning what kind of foreign policy experience Hillary Clinton actually has and pointing out that she wasn't negotiating treaties or handling crises. Obama has dubbed Hillary Clinton "the most secretive politician in American today." He's criticizing her for not releasing her income tax returns after saying that she would do so "earlier" -- her word.

And he's calling on her to release those records about her years as first lady. She doesn't done that either. And Obama says voters deserve to know why Clinton is hiding this information.

The Clinton campaign doesn't seem to happy that Obama's starting to fight back. Clinton spokesman Howard Wolfson was whining earlier today that Obama's acting like Kenneth Starr, the special prosecutor who investigated the Clintons.

So here's the question: Does Barack Obama have to go negative in order to win the Democratic nomination?

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

BLITZER: Jack, thanks very much.

We want to follow some breaking news out of Jerusalem right now. Officials there say there's been a terror attack at a Jewish seminary in Jerusalem. It's left people dead, many others injured.

Let's go straight to CNN's Atika Shubert. She's in Jerusalem.

Atika, pretty horrendous pictures we're seeing at the seminary. What's the latest?

ATIKA SHUBERT, CNN CORRESPONDENT: The latest is that police have confirmed it was a single attacker who apparently walked into the front gate of this religious seminary, into the dining hall, opened fire, killing eight people, injuring scores of others.

Police say that the shooter was killed on the spot. Apparently shot by Israeli forces who were on the scene. Also, that he had apparently an explosives belt on him but failed to detonate. All of the people that were killed or injured were wounded by gunshots.

Now, I'm here at the scene, and as you can imagine, it's a very emotional scene. Neighbors have come here, and there's quiet a number of young religious men now gathered at the scene chanting for justice and revenge. Nobody has claimed responsibility for this attack yet. And police say they're still investigating, trying to find out who exactly the attacker was and how he managed to get inside the school.

BLITZER: All right, Atika. Thanks very much. Atika, we're going to have a lot more on this story coming up here in THE SITUATION ROOM. We're following this incident, this terrorist incident in Jerusalem right now.

There's also been a bombing, a huge bombing in Baghdad on this day. We're now learning that 50 people are dead, another 125 injured in Baghdad. Multiple terror attacks. We're going to go there as well. Stand by for that.

Coming up, is Florida's governor looking for a job promotion? I'll speak live with Governor Charlie Crist and ask him if he wants to be John McCain's running mate. You're also going to hear what McCain had to say about Governor Crist today. That's coming up.

Also, what to do about those primaries in Michigan and Florida.

And Hillary Clinton often touts her foreign policy bona fides. We're fact-checking a few key claims she's made about her accomplishments. Brian Todd working this story.

And New York City no longer has the most billionaires on the planet. A new city now holds that title. You want to know what that city is? Stand by.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Right now Democrats are fighting Democrats over a matter of delegates. It involves righting what many people see as a wrong -- the punishment against Michigan and Florida this primary season. At issue, whether or not delegates from those two states will be seated at the Democratic convention in Denver at the end of the summer.

Charlie Crist is the Republican governor of Florida. He's joining us now from Tallahassee.

Governor, thanks very much for coming in.

GOV. CHARLIE CRIST (R), FLORIDA: Good to be with you, Wolf. Thank you, sir.

BLITZER: Let me get the your reaction to what we just heard from the Democratic senator from your state of Florida, Bill Nelson. He's just issued a press release calling few a new Democratic presidential primary in Florida, and saying the DNC, the Democratic Party, should pay for it.

Are you on board with him on that?

CRIST: I wouldn't oppose that at all. In fact, I talked to Senator Nelson -- he's a friend -- yesterday about that very topic. Either seating the delegates, you know, who have already been selected by virtue of the vote here on January 29th, or to go ahead and have a primary redone on the Democratic side.

As you know, there's really not an issue on the Republican side anymore because of John McCain's victories. But on the Democratic side, paid for by the Democratic National Committee, that could be overseen by the state of Florida.

The difficulty we have for our Florida taxpayers paying for it, Wolf, is the fact that they paid for it once, number one. And number two, we're in a tight budget year.

But I think Senator Nelson is on the right track. If, in fact, there would be another vote, then paying for it by the Democratic National Committee would be the only way we could do it if, in fact, they don't agree to seat the delegates that already have been selected by virtue of the vote January 29th.

BLITZER: If there's another primary -- let's say in June, after Puerto Rico, which is June 7th -- how much are we talking about? Because I've heard various estimates -- $18 million, $20 million.

How much money would it cost the taxpayers of Florida if the Democratic Party under Howard Dean -- he says they're not going to pay for it. They don't have the money. How much would it cost Florida to redo it?

CRIST: I don't think it will cost them anything, because I don't think we would redo it under that circumstance. I think the only way we even contemplate it is if, in fact, the Democratic National Committee is willing to do so. And that's something for the Democratic Party to decide per Senator Nelson's recommendation, which I think is a good one.

BLITZER: I've just written a blog post for CNNPolitics.com in which I make the point that this could be an economic bonanza for Florida and Michigan if you -- you have critical primaries right now which could be the ultimate determinate factor of who the Democratic presidential nominee is. Think of the millions of millions of dollars which will be pumped into your state in commercials, advertising, people going there, hotels, restaurants.

I just spoke to the senator from Pennsylvania. They have one coming up on April 22nd. Between now and April 22nd, Pennsylvania taxpayers, the Pennsylvania economy, in effect, is going to get at least a partial economic stimulus package as a result of them holding this very important primary there.

Don't you think $18 million or $20 million in Florida could be money well spent to boost Florida's economy?

CRIST: Well, there's no question about it. I mean, the opportunity for the Democratic National Committee to pay for a second Democratic primary in the Sunshine State, certainly that's significant dollars being spent. And a lot of people would finish the Sunshine State.

BLITZER: But I'm talking about if Florida -- if Florida taxpayers were to shell out $18 million or $20 million. Don't you think you would get a lot more in return by having this critical primary in Florida in June?

CRIST: Well, that's not your typical stimulus package for economic development.

BLITZER: I know it's not typical. It's thinking outside the box a little bit. You know the history of Iowa and New Hampshire. They want their primaries first because this is -- these are such important economic bonazas for their state.

And I'm thinking of Florida right now, which is close to my heart. I've got some relatives living down there as will. Don't you think you would stand to make a lot more than you might lose in shelling out $18 million?

CRIST: Well, that may or may not be. But the fact of the matter is, I don't think you'll see a primary do-over, if you will, as people have been calling it, unless the Democratic National Committee were to pay for it. I understand your point. Don't lose sight of that fact. But I think that the right way to do it is to have the party pay for it, as Senator Nelson suggests.

And I have got to give credit, too, to Governor Granholm in Michigan. The notion of going ahead and making sure that these voters' votes count, that they aren't disenfranchised from this critical election and this election cycle for the next president of the United States I think is something very laudable on Governor Granholm's part on behalf of her citizens in Michigan. And I'm proud to have the support of Senator Bill Nelson, a Democrat, with this Republican governor, on behalf of the citizens of Florida.

Senator Mel Martinez, by the way, agrees. So this is not a partisan issue, I guess is the point I'm trying to make, Wolf. The point I'm trying to make is that this is an issue about democracy.

This is an issue about making the voter's voice be heard. This is a decision about the next president of the United States. It should be made by the people, not made by party bosses in Washington.

BLITZER: All right. Here's what John McCain -- you saw him today. Here's what he said today about you, Charlie Crist.

He said, "I know one thing about Governor Crist, and that is that he is a great governor. He does a great job. And I think there are many ways for him to serve the country."

Let me ask you a by now familiar question you get asked all the time. What about serving on his ticket?

CRIST: Well, my interest is serving the people of Florida. Listen, I love being governor of this great state. And you do have ties to it. I know your mother lives in the Sunshine State.

It's a great honor to be the governor of Florida. I'm working on issues like education, balancing our budget, which is constitutionally required, making sure that we protect our environment and keep our taxes low. And that takes up an awful lot of time.

You're right, I saw Senator McCain earlier today. It's an honor to be with him. He's a great leader. And I believe that he'll be a great president for the people of America.

He's the kind of guy who's got the honor, the integrity and the strength to be a great president. And certainly understands the kind of conflicts that are happening around the world and how to protect our fellow Americans.

BLITZER: Governor Crist, always a pleasure having you in THE SITUATION ROOM.

Thanks very much for coming in.

CRIST: Thank you, Wolf. Good to be with you.

BLITZER: If you have a chance, read my little blog post at CNNPolitics.com. It's an intriguing thought that I had thinking about Florida earlier. We discussed it. I'll be anxious to hear what you have to say.

CRIST: I'll check it out. Thanks so much, Wolf.

BLITZER: Thanks very much, Governor.

CRIST: You bet.

BLITZER: The governors of Florida and Michigan, as you just heard, are pressing the Democrats to seat their delegates. But what would it take to make that happen? We're going to sort through the various options. None very easy.

And he's 107-years-old, still going strong. And his war slips into history. Washington honors the last known living veteran of World War I.

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

(COMMERCIAL BREAK)

(NEWSBREAK)

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

Happening now, the Democratic presidential contenders getting pumped for the next big showdown. We're going to talk about that with Senator Bob Casey of Pennsylvania, what he can expect in the battleground state. That's what I'll ask him.

He's a tough campaigner, but the press is being kept away from former President Bill Clinton lately. We're going to take a closer look at how and why he is dodging the news media.

And it's one of the nation's most popular discount carriers, so why is Southwest Airlines' safety suddenly being called into question? All of that coming up in our next hour. We're watching these stories.

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

The trial of a businessman and political fund-raiser is under way in Chicago. Tony Rezko is on trial for allegedly using his clout to get millions from companies wanting to do business with two state boards. But it's his fund-raising connection to Senator Barack Obama that's turning the limelight on Rezko's trial under way right now.

Let's go to Chicago. CNN's Susan Roesgen is watching this story for us.

I take it, Susan, the senator's came up in the course of the trial today?

SUSAN ROESGEN, CNN GULF COAST CORRESPONDENT: It did, indeed, as I think we knew it would, Wolf. The opening arguments began with the federal prosecutor talking about Tony Rezko. She spent an hour in her opening arguments, did not mention Barack Obama, but she did say that, at the course of her trial, Tony Rezko would be revealed as, in her words, the man behind the curtain, the wheeler-dealer who benefited royally from all kinds of public contracts in illegal dealings with public officials.

Again, she did not mention Senator Obama. But, when the defense made its opening arguments, they portrayed Tony Rezko as a successful businessman who dealt with successful politicians, a longtime political fund-raiser here in Chicago. And the defense listed some of those successful politicians, the governor of Illinois, a Chicago city councilman, and Senator Barack Obama.

Now, Senator Obama has not been implicated in anything illegal here. But his name is likely to come up again in this trial for a couple of reasons. First of all, he did, Wolf, take $150,000 in campaign contributions from Tony Rezko. And then, when the story broke that some of that money might be tainted, the Obama campaign gave that money away to charity.

The second thing is that Senator Obama did some legal work for Tony Rezko involving a low-income housing project. Now, Senator Obama has said that he only spent five hours on it. It was a typical lawyer/client relationship.

But, during the campaign, you might remember that Senator Hillary Clinton called Rezko a slumlord and said that Senator Obama had dealings with a Chicago slumlord, referring to the low-income housing project. So, both the campaign contribution that was initially accepted and then given away and this deal with the low-income housing projects, some legal work on that, and finally actually one more thing, Wolf, a sweetheart deal that some say Obama got on his house that involved some land that Rezko had, these things, again, nothing illegal here.

But Senator Obama's name is likely to come up again, if not by the prosecution. The defense may bring his name up again as someone who is a respected politician and that Tony Rezko should be considered a successful, respected political fund-raiser -- Wolf.

BLITZER: Even Senator Obama has called his decision boneheaded to go ahead with that deal to buy the house in connection with Tony Rezko, a boneheaded decision. I think that was a direct quote.

In any case, you will stay on top of this for us, Susan?

ROESGEN: You bet.

BLITZER: Thank you. Thanks very much, Susan Roesgen, watching this trial for us.

In her battle for the Democratic presidential nomination, Senator Hillary Clinton has been playing the experience card heavily of late, particularly in regard to her role in foreign policy.

Let's go to Brian Todd. He's doing a fact check for us on this story.

How do her claims, Brain, actually stack up with what -- with -- with what really happened?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, in some cases, we found a lack of clarity on her real involvement. But, in other cases, her claims do seem to check out fairly well.

(BEGIN VIDEOTAPE)

TODD (voice-over): Her campaign revived, Hillary Clinton hammers at why she says she's best equipped to take on John McCain, what she says is real experience in real-world crises that sets her apart from Barack Obama.

He counters, the media has not held her feet to the fire on foreign policy.

OBAMA: But was she negotiating treaties or agreements or was she handling crises during this period of time? My sense is, the answer is no.

TODD: Here's what we found on Senator Clinton's specific claims.

CLINTON: I helped to bring peace to Northern Ireland.

TODD: A "Washington Post" blogger accused Senator Clinton in January of exaggerating her involvement in Northern Ireland.

But former Democratic Senate Majority Leader George Mitchell, who was U.S. special envoy to Northern Ireland, told us off camera, while Mrs. Clinton was not directly involved in negotiations, she did play a helpful role, bringing in women's groups who made a difference. Mitchell is a Democratic superdelegate and has not publicly endorsed Clinton or Obama.

Congressman Peter King, a Republican, was also involved in the Northern Ireland peace process. He recalls one late-night meeting with Bill Clinton, Hillary Clinton and Sinn Fein leader Gerry Adams.

REP. PETER KING (R-NY), HOMELAND SECURITY COMMITTEE RANKING MEMBER: There was discussion of how the IRA would decommission its weapons. And I know that Senator Clinton was part of that meeting.

TODD: Another claim from Hillary Clinton:

CLINTON: I negotiated open borders to let fleeing refugees into safety from Kosovo.

TODD: In May 1999, she was in Macedonia, visiting refugee camps near the Kosovo border and meeting Macedonia's president and prime minister. Sources with knowledge of her visit says she discussed the refugees' plights with her visitors. Not clear how much she helped, since CNN reported at the time that Macedonia reopened its border to Kosovar refugees before Mrs. Clinton's visit.

Then there's this statement about China...

CLINTON: I have been standing up against, you know, the Chinese government over women's rights and standing up for human rights in many different places.

TODD: During a 1995 visit to Beijing, Hillary Clinton made this speech at a time when her husband's administration was trying to press China on human rights. (BEGIN VIDEO CLIP, 1995)

CLINTON: No one should be forced to remain silent for fear of religious or political persecution, arrest, abuse, or torture.

(END VIDEO CLIP)

(END VIDEOTAPE)

TODD: One other thing to remember, a former National Security Council official in the Clinton administration tells us, Mrs. Clinton did not attend NSC meetings. So, while her experience is extensive, she rarely carried an official portfolio -- Wolf.

BLITZER: All right, Brian, thanks very much. Good reporting from you, as usual.

Many Americans feel that higher food and energy costs and plummeting home values are causing pain like many people have never seen. Now there's a new record on one level of misery.

Also, to win the next contests, might Barack Obama go negative against Hillary Clinton? And we're going to talk about that in our "Strategy Session." Would it be wise for him to do so?

And it's a story every air traveler worries about: plane safety. There's stunning news from some government documents we're just obtaining. They say one airline flew unsafe planes for months. Drew Griffin investigating.

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

(COMMERCIAL BREAK)

BLITZER: Turning now to the battered U.S. economy and a measure that's seeing a new level of misery.

Let's go to our senior correspondent, Allan Chernoff. He is in New York watching this story for us.

It involves people's homes and the rising costs of living -- what's going on, Allan?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: That's right, Wolf, more economic pain. We're getting new signs of just how bad the housing crisis is getting. A record number of Americans are on the verge of losing their homes.

(BEGIN VIDEOTAPE)

CHERNOFF: Manicurist Kimberly Sikorski got trapped in the housing crunch. She bought her house near Detroit with what appeared to be an attractive adjustable-rate mortgage. But, when her rates shot up, she could no longer afford the mortgage and was pushed into foreclosure. KIMBERLY SIKORSKI, HOME IN FORECLOSURE: It's going to be very sad. It's going to be very sad. I have cried about it many times. And I regret in just trusting my lender from the get-go and not actually reading through things properly myself, and really just -- just trusting somebody and -- and believing in everything that they say.

CHERNOFF: Sikorski is not alone. Over 900,000 American homeowners are in foreclosure, about to lose their homes, a new record, according to the Mortgage Bankers Association. With so many people unable to afford their mortgage payments, for the first time on record, Americans owe more on their homes than the amount they actually own.

That drop in homeowner equity is a measure of declining wealth in this country, since homes are typically a family's largest asset. Home values have been falling. And the National Association of Realtors said today prices are likely to continue dropping.

As Americans are losing wealth, they're also paying more at the gas pump, where the national average is up to $3.18 a gallon, a result of skyrocketing oil prices, which briefly touched a new record of nearly $106 a barrel today. And consumers will soon be paying more for imported goods because of the declining dollar, which hit yet another record low today.

(END VIDEOTAPE)

CHERNOFF: Economists agree, the housing crisis and inflation are going to be getting worse. It's no wonder that the economy is issue number one among American voters -- Wolf.

BLITZER: Thanks, Allan, very much.

With the March 4th primaries now over, what happens to all those leftover yard signs? Obama supporters are using the Web to send them to states with upcoming primaries.

Let's get specifics from our Internet reporter, Abbi Tatton.

Abbi, how are they dealing with this?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, a Barack Obama yard sign on a lawn in Amarillo, Texas, it was sent there from Virginia. And now that Texans are done voting and caucusing, it's going to be on its way to Pennsylvania, with a whole bunch of other Barack Obama swag, all courtesy of this Web site, ObamaCycle, set up by a Massachusetts supporter of Barack Obama by the name of Furqan Nazeeri, set up last month independently of the campaign to recycle these materials.

And, as the race stays competitive in later and later contests, you have got almost 1,000 people now logging on. You're going to see people in rural Mississippi asking for goods to be sent there, and also people offering things they no longer need, 10 booklets here from the Barack Obama campaign left over from a house party in Iowa. After Hillary Clinton's wins on Tuesday, some of the most urgent appeals seem to be coming in from Pennsylvania, one from Landenberg saying: "Hillary has the lead. We need to be visible to wipe that out" -- Wolf.

BLITZER: Thanks very much, Abbi, for that.

Is the longer primary season a good thing for the Democratic process?

(BEGIN VIDEO CLIP)

CLINTON: I think this has been for the good of the Democratic Party. And I don't think that the -- the voters in the states yet to be heard from would want the process to be short-circuited.

(END VIDEO CLIP)

BLITZER: In our "Strategy Session": What are the pros and cons of at least six more weeks of campaigning? Plus, will the candidates take the gloves off?

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

(COMMERCIAL BREAK)

BLITZER: It's going to be a long six-and-a-half weeks to the next big primary. That would be the one in Pennsylvania on April 22.

As the race goes into extra innings on the Democratic side, as they say, what are the pluses, what are the minuses for the candidates, Hillary Clinton and Barack Obama? What about for the party of the eventual nominee?

Let's talk about that in our "Strategy Session" with Democratic strategist Stephanie Cutter and Republican strategist Cheri Jacobus.

Guys, thanks very much for coming in.

Is it good for the Democrats or bad for the Democrats if this not only goes on through April 22nd, which it will...

STEPHANIE CUTTER, DEMOCRATIC STRATEGIST: Right.

BLITZER: ... but through June 7th, which is the last contest, in Puerto Rico, and then maybe later in June, if Michigan and Florida have redos.

CUTTER: Right. Well, so far, it's been a great thing, right. We have an engaged electorate. These candidates are raising tens of millions of dollars, $55 million today announced by the Obama campaign.

(CROSSTALK)

BLITZER: In February, last month. CUTTER: In February. We're bringing new voters into the party. We have had record turnout. We're driving the narrative. It's been a terrific thing so far.

We have to be careful going forward. I don't think voters are ready to end it, but, as the candidates move forward, we have to be careful about what types of attacks we're using on each other and make sure this stays on substance.

BLITZER: As a Republican, are you envious of what the Democrats have going for themselves right now?

CHERI JACOBUS, REPUBLICAN STRATEGIST: Well, the Democrats have a different type -- two different types of candidates than John McCain. And I think, in this particular race, it probably would help whomever is their nominee, because both of them, when you match them up against John McCain with regard to experience, he blows them out of the water.

I mean, they can't touch him. So, this gives both Obama and Clinton an opportunity to --

(CROSSTALK)

BLITZER: But they're going to be sucking up a lot of media oxygen between now and whenever there is a Democratic nominee.

JACOBUS: Right. And, Wolf, that's both an opportunity. Plus, it can also present some risks to them. They can't -- I think Obama in particular can't afford to make a wrong move. He has to do everything right. He can have nothing go wrong for him, because he is so inexperienced and he is such an unknown quantity. So, again, that can be an opportunity, but it also is risky.

BLITZER: What do you think?

CUTTER: Well, I think that it's been a great process for these two candidates. They're better candidates because of it. He's a better debater. He's a better campaigner. Hillary Clinton has gotten her footing on her message. And they're better candidates as a result.

I think that you have to look at the bigger picture here. And the bigger picture is that both of these candidates, given their experience, given their messages, given the number of people they're driving people to the polls, still beat John McCain. And they're driving the money process. They're driving the narrative of this campaign and forcing him to respond.

(CROSSTALK)

CUTTER: That is a good thing.

(CROSSTALK)

JACOBUS: There are some polls that show McCain beating both of them. But I think why I point out this is also risky, we also have seen real weak spots with Obama. He really cannot take a punch that well.

And Hillary Clinton before was not able to lay a glove on him or was afraid to. Now she's campaigning like a grownup. And he's taken aback by that. So, it's really starting to expose some important weaknesses as well.

(CROSSTALK)

BLITZER: She did get outspent in Texas and Ohio...

CUTTER: Right.

BLITZER: ... two-to-one by...

CUTTER: Right.

BLITZER: ... by Obama. Yet, she managed to win in both of those states.

CUTTER: Right. I think that even the Obama campaign would argue, over the past -- you know, the days leading up to the current primary, the NAFTA thing became a problem. And there were some other issues. But I think, after 20 debates it's hard to say that Obama can't take a punch.

BLITZER: Is it -- is it a problem if he gets really negative? Because, you know, he's not been necessarily a typical presidential candidate. He's tried to project this vision of change. And he's taken the high road, pretty much. Do you think, if he were to go negative, that could be a net minus -- a minus for him?

JACOBUS: Well, the answer to that is, it depends what you mean by negative. He has got to -- he has got to somehow the contrast. He has to show why he would be a better choice to be the Democratic nominee.

BLITZER: But let's say he goes after Hillary Clinton with all of those -- the history from the Clinton years, the Travelgate, the Whitewater, all that stuff.

(CROSSTALK)

JACOBUS: If he doesn't, Wolf, he's going to regret it, because this is do-or-die time. And if they -- on both sides -- if they don't pull out all the stops and they hold back and whoever loses, loses and wonders, gee, what if, what if?

I think, because the stakes are so high, because this is so close, and because of what's happening with this situation with Florida and Michigan, both camps have really no choice but to take off the gloves and just do their darndest.

BLITZER: Go ahead.

(LAUGHTER)

BLITZER: Is it -- is it a problem if he goes too negative for Barack Obama?

(CROSSTALK)

CUTTER: Right.

BLITZER: Because it would be different than what he's...

CUTTER: Right.

BLITZER: ... been doing so far.

CUTTER: He doesn't want to undermine everything that he's accomplished...

BLITZER: Right.

CUTTER: ... in terms of demonstrating that he's...

(CROSSTALK)

CUTTER: ... candidate.

BLITZER: On the other hand...

CUTTER: On the other hand, it's a legitimate thing to draw contrasts.

(CROSSTALK)

BLITZER: ... if you get slapped, you have got to slap back.

CUTTER: You have to got slap back, and you have got to slap back twice as hard. And if Hillary Clinton is saying that she is most vetted candidate in this race, then I think it's legitimate to ask for her records. If she's saying that she's the most experienced candidate, I think it's legitimate to ask her exactly what that experience is.

And, on the other hand, I think it's fine to ask Barack Obama those questions. Voters are looking for these candidates to be the best candidates they can and to be vetted.

(CROSSTALK)

JACOBUS: But they want to be on the offensive, rather than the defensive. So, you want to pick your own fights.

(CROSSTALK)

BLITZER: And the Democrats want a candidate who is a fighter, because they know...

(CROSSTALK)

BLITZER: ... whatever -- whatever kind of rivalry is going on right now... (CROSSTALK)

BLITZER: ... is small potatoes compared to what's going to happen in a general election.

(CROSSTALK)

JACOBUS: Look at what John McCain did in the primary. He came out of nowhere with no money. So, you can't say that this is a guy who did it with pollsters and consultants and focus groups.

John McCain is the candidate -- the man is the message on this one. He didn't even need a lot of money to get where he is.

(CROSSTALK)

BLITZER: He knows what negative campaigning is.

JACOBUS: He knows.

(LAUGHTER)

BLITZER: Because he goes back to 2000, when he was the victim of a lot of negative campaigning.

(CROSSTALK)

JACOBUS: He knows the world. He knows democracy. He knows what this country is about. He understands the Senate. He's the ultimate outsider's insider. So, he's a very formidable candidate. And Clinton or Obama is going to have a very tough time against John McCain.

BLITZER: We have got to leave it there, guys. Thanks very much. A good discussion.

Stephanie Cutter, Cheri Jacobus.

JACOBUS: Thank you.

CUTTER: Thanks, Wolf.

BLITZER: Jack Cafferty, he has got your e-mail about whether or not Barack Obama should go negative. That's coming up.

And investigators call it the worst air safety violation they have ever seen. Coming up: Southwest Airlines, unsafe jet, and the inspectors who may have been in on it.

And it's a different world these days for the news media covering Bill Clinton. They're being kept away from the former president. You're going to find out why and how.

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

(COMMERCIAL BREAK) BLITZER: In today's political ticker, the man who could make U.S. history sees something that has never been done by one magazine, Barack Obama earning the endorsement of "Rolling Stone."

It's the first time the magazine has endorsed a presidential candidate during the primary season. "Rolling Stone" says Obama can unite the country, calling his political talents rare, saying he has the judgment needed to be the next president of the United States. That's what "Rolling Stone" says.

Remember, for the latest political news any time, you can always check out CNNPolitics.com. That's where you can also read my daily blog posts.

A bit of living history today over at the White House: President Bush met with Frank Buckles, whom he called the last living doughboy of World War I. The 107-year-old Buckles was also guest of honor at the opening of a photographic display over at the Pentagon hosted by the defense secretary, Robert Gates.

At the age of 16, Buckles lied about his age, joined the U.S. Army. He served in Europe as an ambulance driver. During World War II, he was a civilian worker on a U.S. shipping line, but he was captured, spent three years in a prison camp in the Philippines. We wish him only, only the best, as I know Jack Cafferty does as well.

What a story that is, Jack.

CAFFERTY: Indeed. Looks like he's in pretty good shape, too.

The question this hour: Does Barack Obama have to go negative now in order to win the Democratic nomination?

Don writes: "Not yet, and only if he has to in order to avoid defeat. Barack Obama has put Hillary in a really bad position, despite her wins this week. It's like a game of chess, and he is approaching the end game, where she soon will be checkmated. He can afford to be patient, let Hillary end this on her own terms and in her own way."

Steve writes: "Hillary's campaign doesn't get it. Many Democrats want change in Washington. That's the attraction of Obama. Hillary's team knows exactly what they are doing, the 3:00 a.m. phone call, Obama in the Muslim outfit. It is all desperation tactics, and a lot of Democrats don't like it. Yes, Obama needs to get a lot tougher with Hillary, but do it in such a way that is effective, without going too negative."

Susan writes: "Does Barack need to go negative and get down in the dirt with the Clinton slash-and-burn machine? No. He does need to show that he has the mettle to push back and, as we trial lawyers say, put the other side to their proof. If the Clintons won't fess up their tax returns, make it an issue so hard to ignore, that they will have to address it. What exactly is her history of answering that red phone when it rings in the White House? None, except to say, 'It's for you, Bill.'" Frank writes: "Yes. Out of necessity, Obama will begin counterpunching Hillary with negative body blows. They will fight it out. It will be down and dirty. And McCain will watch unscathed from a safe distance."

Steve writes: "While we would all like to know what's in those tax returns, the longer it takes the Clintons to make them public, the more leverage Obama has to work with them. He really doesn't need to go negative. He needs to go positively presidential and convince the American people he is the one we want answering the phone whenever it rings" -- Wolf.

BLITZER: Jack, thanks very much.

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

Happening now, Democrats digging in for trench warfare, as Barack Obama and Hillary Clinton prepare for a long fight for delegates. Could Florida and Michigan go from rule-breakers the power-brokers?

A bombing right in the heart of New York's Times Square, the target, a U.S. military recruiting station. As police search for a person seen riding away on a bicycle, the Pentagon puts out an alert.

And Southwest Airlines is slapped with a massive fine after it allowed planes to fly in violation of federal safety rules. Congressional investigators call it the worst air safety violation they have ever seen.

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