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McCain Reverses Course on Oil Policy; Obama's Disunited Party; Special Mortgage Treatment For Democratic Senators?

Aired June 17, 2008 - 20:00   ET


CAMPBELL BROWN, CNN ANCHOR: Hi there, everybody.
Tonight in the ELECTION CENTER: a new scandal on Capitol Hill. And here's what it looks like. With the public getting angrier about the price of gasoline and nearly everything else, and with three to four million homeowners expected to lose everything in the mortgage foreclosure crisis, why are some powerful members of Congress getting sweetheart deals on their own mortgages?

Now, again, that's what it looks like. As always, we are not going to tell you what to think, but we will give you the facts straight down the middle, so that you can make up your mind on this.

Also tonight, John McCain changes his mind about offshore oil and gas drilling. In his 2002 campaign, he opposed it. Well, today, with high gas prices, he is bullish about it. We're going to have the facts on that.

Also, after Hillary Clinton dropped out, why Barack Obama is having problems creating party unity. Hint, it isn't helping when his crowds boo every time Hillary Clinton's name is mentioned.

But, first, they say it pays to have friends in high places. And it certainly appears to have paid off for some of Washington's heaviest hitters. We're talking about members of Congress here. They're friends of Countrywide financial CEO Angelo Mozilo. In fact, his mortgage company called these special customers FOAs, friends of Angelo. It appears they were given better deals on their mortgages than anything the average homeowner could get. And now those deals have a few senators sweating.

Here right now is Joe Johns with the very latest.

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT: Campbell, Democrats were hoping to use the mortgage crisis as a central theme this year. And the last thing they needed was for two of their most powerful members to get burned with negative publicity over their own mortgage lending arrangement. But, as it turns out, that's pretty much what has happened.


JOHNS (voice-over): Democratic Senator Kent Conrad is fit to be tied.

SEN. KENT CONRAD (D), NORTH DAKOTA: There's no wrongdoing here. JOHNS: He spent the last few days in damage control over news that he got a special deal from a mortgage firm, a deal Conrad says he didn't ask for, he didn't want, and he didn't even know about.

CONRAD: You can try to make it into something. You can try. It's not there. I didn't do anything wrong. I didn't. That's the truth.

JOHNS: The reason why this is a big deal is because the mortgage company in question is Countrywide, the company that wrote many of those now infamous subprime loans that are forcing thousands of Americans into foreclosure.

And, while average Americans lose their homes, it turns out Conrad got a nice little break a few years ago, which he says he only found out about after "Portfolio" magazine published a story about it on its Web site last Thursday. The break Conrad got added up to $10,700 when Countrywide waived a fee.

But it's caused him and some of his colleagues such a big headache, he's given the money to charity. The problem is the way it looks.

CONRAD: There may be an appearance issue -- I will grant you that -- especially given what's happened in the succeeding years. But, at the time, there was not even an appearance question to me.

JOHNS: Here's how it appears the deal went down. In 2002, Conrad needs a mortgage. So, for advice, he calls his old friend Jim Johnson, former head of Fannie Mae, the huge government-sponsored mortgage lender.

You remember Johnson. He was running Barack Obama's search for a vice presidential running mate, until the news came out that he got a good deal on a mortgage, too, also from Countrywide. The company had a VIP program for movers and shakers.

So, when Conrad called Johnson, he was meeting with Countrywide CEO Angelo Mozilo.

CONRAD: He says, I just happened to be with a guy that you could talk to or you should talk to.

And he hands the phone to this Mr. Mozilo, who I have never talked to before or since, never met.

JOHNS: Mozilo puts Conrad in touch with a Countrywide broker. The senator got a loan. Then, two years later, when he refinanced with Countrywide, he got a competitive rate Bush, lower points under the VIP program that resulted in the $10,700 savings for Conrad.

CONRAD: There was no clue here to me I was getting anything special. I did think I was getting good treatment. I did think I was getting good service.

JOHNS (on camera): Did you ever ask for any favor or special treatment?


JOHNS: Did you in any way solicit some type of help from Countrywide that the public couldn't get at large?

CONRAD: No, no, not at all. And anybody who knows me knows I wouldn't do that. That is not me. If somebody had suggested I was getting some sweetheart deal, I would have recoiled from that. Look, my reputation means a lot to me. I just wouldn't do that. I just wouldn't do that.

JOHNS (voice-over): But this is as much about politics as it is about any possible ethical lapses.

Democratic Senator Chris Dodd is spearheading the effort to clean up the housing mess. And he's gone after Countrywide. But, just like Conrad, he's also a customer. In 2003, Dodd got a Countrywide mortgage, but he says the rate was in line with others. And, he says, if he got a better rate, he was unaware of it.

SEN. CHRISTOPHER DODD (D), CONNECTICUT: I would never, ever, ever, ever be a part of that.

JOHNS: But he knew about the VIP program.

DODD: If there was a VIP section we were in, but the assumption was -- and no one ever said to us you're going to get some special treatment. That was a courtesy.


JOHNS: Now, Republicans have already called for an investigation into all of this. And there's a lot at stake here.

Democrats are fighting this election as the party that's on the side of average Americans struggling with the economy and housing. Suggestions that Democrats got sweetheart deals, while the rest of America suffers, makes that message a lot muddier.

BROWN: So, Joe, what are the chances that this investigation may go forward?

JOHNS: That's hard to say. Of course, the Ethics Committee has been iffy at times. They can take it up if they want to. A lot of people are suggesting there probably won't be very much action on this investigation.

As a matter of fact, there are some Republicans who got some Countrywide loans, too, but no questions have really been raised about those.

BROWN: Joe Johns for us tonight -- Joe, thanks.

So, VIPs, special treatment, some might say, well, that's just the way Washington works. But with the astounding number of Americans facing foreclosure, is this a case where even the appearance of wrongdoing is just as bad as the reality? It's all very muddy.

And, for that reason, we ask Senator Kent Conrad to drill down even more on what really happened to him vs. what it looks like happened.


BROWN: Senator, I think what a lot of people are struggling with is that, as a powerful U.S. senator, when the CEO of the largest mortgage lender in the country offers to help you out, doesn't a bell go off somewhere? Doesn't that raise a red flag for you?

CONRAD: You know, perhaps it should have in retrospect.

You know, the way things look in hindsight, absolutely, it should have. Let me just say, from my perspective, when I knew I needed a mortgage, I called a friend of 48 years who knew more about mortgages than anybody else I knew.

And he said, you know, I'm sitting with somebody right now that you could talk to. And he hands the phone to this gentleman, who I had never heard of before, never met, haven't talked to since or met since.

And he said, just call somebody at this number, and they will work with you on a loan.

And I should emphasize, I didn't just talk to them. I also talked to another mortgage broker, because I didn't know if Countrywide would provide me a loan or on what terms they would provide me a loan. And now the other mortgage broker I talked to at the time has just found his file, and just in formed me that they offered me the same rate that Countrywide did.

BROWN: But here, again, is what I think is so hard for people, is that...


BROWN: ... the person you were on the telephone with was not just some mortgage broker.

CONRAD: Right.

BROWN: It was the CEO of the biggest mortgage lender in the country.

You're a very powerful senator. And this guy says to you, hey, let me help you out.

And, to a lot of people, that would sort of, again, have a bell go off, ding, ding, ding, ding, maybe I should have a lawyer look at this. Maybe I should check this out with the Ethics Committee and make sure this is all up to snuff.

CONRAD: But, see, I thought it was totally up to snuff. I didn't expect, never knew I was getting special treatment, didn't want special treatment. I just wanted to...

BROWN: But you must be in this situation often, when you interact with someone that powerful, when they may offer to help you out. Do you have some kind of system in place in your office for handling situations like this?

CONRAD: But he didn't offer to help me out. That's not what he offered. He offered to look at my loan.


BROWN: A lot of people would interpret that as helping you get a loan.

CONRAD: Well, look, here's the facts.

Not only did I then get referred to a loan officer and go through the loan process. I also talked to somebody else about getting a loan, because I had no idea that Countrywide would give me a loan. I didn't know on what terms they would give me a loan. And now we know from the other person I was talking to, he's now found the file from six years ago. And he has just reported to me moments ago, Campbell...

BROWN: Right.

CONRAD: ... that they offered me the exact same loan terms that I was offered from Countrywide. So, I had no reason to believe that I was getting special treatment.

Senator Chris Dodd was also in this Countrywide VIP program. And he defended himself today. He was asked specifically if he had ever spoken with or met with Countrywide CEO Angelo Mozilo. And listen to what he said.


DODD: I never talked to him about my mortgages, and I never would. The idea you would call a CEO of a bank where you have got a mortgage to try and work something out, I just wouldn't do.


BROWN: It sounds like Senator Dodd is taking a swipe at you.

CONRAD: No, I don't take it that way at all. I didn't call Mr. Mozilo.

What happened was, I called my friend of 38 years.

BROWN: Jim Johnson, the very powerful former head of Fannie Mae.

CONRAD: Yes, my friend of 38 years. When I was trying to find a mortgage, I thought who better to know about mortgages than Jim Johnson?

And he said, Kent, I just happened to be sitting with a man who you could talk to. And he hands the phone to this gentleman.

BROWN: And he happens to be sitting with the CEO of the largest mortgage lending company in the country. It's an astonishing...

CONRAD: I know.

BROWN: ... sort of array of coincidences.

CONRAD: It is.

BROWN: Well, I bet there are a lot of Americans out there who sure wish they could call pick up the phone and Jim Johnson or the CEO of a major mortgage company in order to get their loan.

CONRAD: But I didn't do that.

BROWN: It's hard to get your arms around.

CONRAD: No, but, Campbell, let's be fair. Let us be fair.

I did not call the head of the mortgage company. I called my friend of 38 years, who happened to do very well in life, became -- and he is somebody who knew a lot about mortgages.

And he says, I'm just sitting with a man you can talk to.

You know, this has been twisted and turned and, frankly, misrepresented in a way that does not reflect my experience.

BROWN: All right, well, Senator, I appreciate you coming on our show and sharing your point of view on this. I'm sure...

CONRAD: You have been very fair.

BROWN: ... it will be up to people to decide.


BROWN: Thank you for your time tonight. Appreciate it.

CONRAD: Thanks for giving me the chance to answer. I appreciate it very much.


BROWN: Coming up, we're going to have a lot more on this developing story. Is the whole thing just business as usual in Washington? Some of the smartest people in politics weigh in when we come back.


BROWN: Well, let's face it. Washington just wouldn't be the same without a scandal or two. So, maybe this mortgage -- this Countrywide mortgage mess will blow over. Or is this just the beginning? Here to talk about that with us is Kevin Madden, Republican strategist and former Mitt Romney national press secretary, senior political correspondent Candy Crowley, and CNN political analyst, Roland Martin.

Candy, give us some context here. I mean, how bad do you think this is?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Listen, do you know what I think the worst is about this? Because I take the senator at his word that -- and I don't see this as illegal.

Here's the problem. He didn't know he was getting a special deal. And you have got lawmakers up there who don't know what people do to get loans, who don't know what they're paying on those loans. How can you represent the people if you get some kind of deal that is $10,000 less than a normal person is paying, and you don't know that?

I think that is where the real problem is. On a much, you know, lesser note, it's like George Bush saying, well, I didn't know gas prices were going to $4 a gallon, or his father not having seen a scanner at the grocery store before. There is this disconnect that happens when you go up on Capitol Hill. And part of it is what's provided for you that's legal.

And, so, they get away from what the actual basic problems are out there for normal people who don't get the VIP treatment.

BROWN: And, Kevin, do you agree with that? Is it just the fact that they have become so completely out of touch with reality, especially given what's going on right now with the mortgage crisis in this country?

KEVIN MADDEN, FORMER ROMNEY CAMPAIGN NATIONAL PRESS SECRETARY: I think that's exactly right. Candy hit on it perfectly.

It has more to do with the perception. And the biggest problem here for the folks involved is trying to explain to those thousands of constituents, millions of constituents in many cases, that they represent that they didn't get a deal that was better than anybody else would have available to them.

And, essentially, what happens is, you have a canyon between average people and the way that they're dealing with their problems and their mortgages vs. some folks in Washington who are in positions of power and are given an advantage. And that is where the big problem comes from trying to explain this to their constituents.

BROWN: Roland, Senator Chris Dodd is also part of this Countrywide VIP program. And he was asked about it today. And let's listen to a little bit of what he said.


DODD: If there was a VIP section we were in, but the assumption was -- and no one ever said to us you're going to get some special treatment. That was a courtesy.


BROWN: So, shouldn't these senators have known that they might be in for special treatment, by virtue of the fact of who they are and the power they have?


That's just the nature of it. Look, I'm not defending any of these guys, because they're Washington insiders who got the hookup. But we're a nation who loves the hookup. OK, you have got teenagers out there who loves when their buddy is on the door. Hey, my friend is on the door at the movie theater. We can get in free. That's what we are, a nation that goes by this.

And, so, we have celebrities who get the hookup. We have senators who do, the people who are in the elite status who do this. And so it's not a shock. I don't think America is sitting there saying, oh, my God, I can't believe this happened. They're saying, yes, it's Washington insiders. This is simply confirming what people probably already thought.

CROWLEY: Absolutely. I think Roland's right that people do think this.

But the difference between the rock star and the kid with friends that will let him into the bar scene is that they're not representing people who have real problems.

MARTIN: Oh, I agree.

CROWLEY: I don't think it's problem that -- of course, they know all these people who are Washington movers and shakers.

The problem is, how can they identify with what's wrong with their constituents if they don't know what the problem is because they're living in this wholly different world?


MADDEN: And, to that point, Candy, how can they fix it when they're essentially a part of the problem?

BROWN: Well, Kevin, let me ask you that, because there's one Republican congressman who is calling for an investigation. Do you think hearings are necessary? Would they do any good, hearings held by other Washington insiders into the matter?

MADDEN: Well, I'll tell you what. There's one guarantee you want in Washington. When there's a problem that has hit the front page, there is going to be a hearing. Republicans are probably going to try and take advantage of this with press conferences.

And a lot of folks that are facing angry constituents' calls right now from -- about this issue are going to try and call hearings in order to bring more attention to the issue and quite frankly answer the question, what when wrong here?


BROWN: Go ahead, Roland.

MARTIN: Campbell, look, look at all the so-called ethics investigations in Congress. Do you actually think members of Congress really want to start asking this question as opposed to who's getting perks? No. Because they all do. They're all in VIP lines. They all sail through the airports. They don't want to touch this. They want this thing to go away.

CROWLEY: And, again, Campbell, just to sort of button this up, it doesn't look as though anything illegal happened here. It looks as though the rarefied air on Capitol Hill made them blind to what ordinary people are going through.

MARTIN: That's right.

BROWN: A fair point to end on.

Candy Crowley, along with Roland Martin and Kevin Madden joining us, thanks, guys. Appreciate it.

Still ahead: John McCain says he's got the answer to sky-high gas prices; offshore drilling. But are we willing to pay the price? The real story -- when we come back.


BROWN: This just in right now coming from the White House: President Bush is planning a brand-new push to get Congress to end a longstanding ban on offshore oil and gas drilling. We're going to talk about this a lot more coming up.

After nine straight days of record highs, gas prices finally went down today, but not by anything you will notice. The national average is $4.07, eight-tenths-of-a-cent per gallon, down a whopping two- tenths-of-a-cent.

But before you go out and celebrate that, check your electric bill. Utilities around the country are raising rates, some by as much as 29 percent. Increases are on the way in New York, in Virginia, South Carolina, Missouri, Oklahoma, and California.

The main culprit behind the price hikes is -- you guessed it -- soaring fuel costs.

Now, a few hours ago, John McCain spelled out his plan for getting oil prices under control. And McCain's plan sent our David Mattingly straight to South Florida to the beach.

And why exactly is that, David?

DAVID MATTINGLY, CNN CORRESPONDENT: Well, that's because, Campbell, that, right now, some people are saying this is a very good place to start looking for oil. John McCain says we need to lift a ban that stops the drilling for oil offshore. He says, if you want to lower gas prices, the answer is out there.


SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: We have proven oil reserves of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy exploration and production. And I believe it is time for the federal government to lift these restrictions and to put our own reserves to use.


MATTINGLY (voice-over): The federal moratorium McCain is talking about has been in effect for 26 years, since 1982. Congress imposed it in a furious reaction to President Ronald Reagan's interior secretary, James Watt, who wanted to open up U.S. coasts for oil drilling.

At the time, members of Congress and much of the public were worried about the possibility of massive oil rigs ruining ocean views, the threat of air pollution, and the risk of oil spills. A huge one off Santa Barbara in 1969 coated 35 miles of California's coastline. Renewing the drilling moratorium became a yearly battle in Washington.

To end that, in 1990, the first President Bush announced that offshore drilling would be off-limits for 10 years along nearly all of California, Washington, Oregon, New England from Rhode Island up, and off the southwest Coast of Florida.

(on camera): President Clinton extended it to 2012. But the second President Bush is pushing to at least ease that ban. And the pressure to do that grows everyday with gasoline over $4 a gallon, because, when it comes to offshore oil and the waters of the United States, there is a lot out there.

UNIDENTIFIED FEMALE: Eighty percent of the Outer Continental Shelf is off-limits. That part alone, if we would just use that part of this oil, we would have actually a 35-year supply for gasoline for our cars. We would have heating oil for the millions of homes for the next hundreds of years.

MATTINGLY: As for the old worries about pollution, McCain says:

MCCAIN: It's safe enough these days that not even Hurricanes Katrina and Rita could cause significant spillage from the battered rigs off the coasts of New Orleans and Houston.


BROWN: David back with me now.

And, David, let me ask you about that, what McCain just said. Did technology or advances really prevent these oil spills after the big hurricane? MATTINGLY: According to a government report that came out after those two hurricanes, the technology did indeed help that. There was -- it what they called a successful use of underground safety valves on these oil rigs that prevented a catastrophic release of oil into the Gulf.

In fact, this report defined the loss of petroleum products into the Gulf of Mexico from these two hurricanes as minimal. But there are environmental organizations who would argue about this. Those two hurricanes in total released about 16,000 barrels of petroleum products into the Gulf. And they say that was not minimal, no matter how the government might try to slice it.

BROWN: OK. David Mattingly for us tonight -- David, thanks.

OK. So, it seems like a pretty simple equation: more oil equals lower prices. But we do did a reality check, and you may be surprised at what we found out. Our Ali Velshi is here to explain it all when we come back.


BROWN: Welcome back.

Senator John McCain says we should lift the federal ban on offshore oil drilling. By his math, there are 21 billion barrels of oil out there just waiting for us. But what he didn't say is that, at our current rates of consumption, that's only about four years supply of oil.

So, we want to get a reality check right now straight down the middle from senior business correspondent Ali Velshi. He's in Chicago for us tonight.

And, Ali, there's a lot more to this, I know. If we started drilling today, we are talking about, if I understand this correctly, at least 10 years before that oil would even be available to us, right?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Up to. There are some places where we could just move rigs or platforms into place and oil would be gushing because the oil companies have done some calculations as to where the easy oil is. But the easy oil is largely gone so the stuff that we're talking about, getting over the course of the next few years, would take longer to get at. It would do nothing for today's gas and oil prices.

If you believe that the answer is to find more oil, then John McCain, in his speech today, hit it out of the park. What he's not addressing with great specifics is what do we do to actually wean ourselves off oil. He had a very educational speech in which he said we use 20 million barrels of oil a day, a quarter of the world's oil production every day. We only produce five million of those barrels here in the United States. We have a long way to go.

BROWN: So Ali, what is this plan about? Is it as Obama calls it a gimmick, like losing the gas tax? Is it something that ultimately won't help the U.S.?

VELSHI: Well, it's got many parts to it. The gimmick is park of is this 18 cents federal gas tax on a gallon of gas that John McCain and both Hillary Clinton have supported. Well, neither of them are president so that wouldn't happen until next year anyway. The 18 cents on a gallon of gas isn't changing anybody's life right now.

But he did say a few things. He would not tax oil companies on their excess profits. He wants to reduce government regulations so that we can build more refineries, so that we can drill for more oil offshore and on shore, and so that we can build more nuclear power plants.

Basically what he says is over the course of the next two weeks, he will deliver some specifics. That's what everybody has been waiting for, Campbell, both from Barack Obama and John McCain, some specifics as to how they'd get us out of this energy crisis.

BROWN: And a lot of people out there, too, I mean, just about everybody feeling the crunch now. And take a look at this "Washington Post" ABC poll. This says that almost 80 percent of people say that the recent price increases in gasoline are causing financial hardship for them.

So who exactly is this plan most likely to help? Is it the people paying more than $4 a gallon for gas, or is it the oil company?

VELSHI: Not -- well, that's a good point. John McCain didn't come out as clearly in favor of oil companies as one might think. Basically, he favored getting rid of a lot of government regulation which would help them, but it tends to be a typical sort of Republican line. There's nothing other than that 18 cents of gas tax, federal government gas tax that would actually lower the price of oil in the immediate future. That's just going to be an expectation both of those candidates are going to have to manage.

We may not be able to deal with gas prices right now. We need a solution that over the course of three, five, 10 years is going to make it easier for Americans in terms of how much they pay for energy, Campbell.

BROWN: It's becoming your mantra, Ali, the long term problem that we're facing.

VELSHI: It is.

BROWN: Now I know. Ali Velshi for us tonight. Appreciate it, Ali. Thanks.

Senator Barack Obama now has the endorsement of the Democratic Party's best known environmentalist, former vice president and Nobel Peace Prize Laureate, Al Gore. So last night, we kept promising to let you hear Gore's endorsement speech but he didn't get started until after we were off the air. And since we believe in keeping our promises here in the ELECTION CENTER, here's a little bit of what Al Gore told the crowd last night in Detroit. (BEGIN VIDEO CLIP)

AL GORE, FMR. VICE PRESIDENT OF THE UNITED STATES: On January 20, 1961, as a 12-year-old boy, I stood in the snow in front of the Capitol as John Fitzgerald Kennedy took the oath of office. I know what his inspiration meant to my generation, and I feel that same spirit in this auditorium here tonight, building all over this country this year.

I feel your determination, after two terms of the Bush-Cheney administration, to change the direction of our country. In looking back over the last eight years, I can tell you that we have already learned one important fact since the year 2000. Take it from me, elections matter.


BROWN: Al Gore endorsing Barack Obama last night. Just ahead, some restaurants are now putting tomatoes back on the menu. But is it safe for you to eat them? We've got the facts on that coming up.


BROWN: We are following all the latest developments on the massive flooding in the Midwest. It is a race against time to keep the water from doing any more damage, and we're going to have a live report on that coming up.

But first, Erica Hill has "The Briefing" on what is also making news right now -- Erica.

ERICA HILL, CNN CORRESPONDENT: Hi, Campbell, good to see you.

If you want a little word on what's happening in the Middle East, this is a long awaited cease-fire we're hearing about that could be happening between Hamas and Israel. Hamas officials saying a fifth month truce between Israel and Hamas leaders in Gaza will take effect on Thursday. Israel, however, has yet to confirm the deal saying a "new reality would take hold if Palestinian attacks end." Egypt brokered this deal, and is, of course, aimed at ending violence in Gaza.

We'll continue to follow those developments.

A judge in Virginia has approved an $11 million settlement for most of the 32 victims of the Virginia Tech massacre. That settlement includes $100,000 and medical expenses for each of the 24 families that accepted it.

Tomatoes, back on the menu at Wendy's and Taco Bell. Yum Brands, which owns those two chains, says it will use tomatoes from areas that have been cleared of salmonella risk. Several fast food chains stopped serving tomatoes altogether earlier this month amid a salmonella outbreak that left nearly 300 people ill.

And thousands of people today paying their respects to veteran journalist, Tim Russert. The president and Mrs. Bush were among those attending Russert's wake in Washington. The moderator of NBC's "Meet the Press" died Friday of a heart attack. His funeral is scheduled for tomorrow. The House of Representatives submitted a resolution late today honoring Tim Russert -- Campbell.

BROWN: All right. Erica, thanks very much.

And after the break, holding back the Mississippi River. Rising floodwaters are breaking through levees as authorities raced against the clock to try to get people to safety. We're going to have a live report from the nation's heartland right after this.


BROWN: Two weeks now of flooding in the Midwest and authorities are still in emergency management mode.

President Bush just back now from a European trip said that he is going to go to Iowa Thursday to inspect the damage, which has left five people dead and forced more than 38,000 from their homes. Today, Mr. Bush pledged federal aid to victims of the Midwest storms.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We've got what we call a disaster relief fund. There's enough money in that fund to take care of this disaster, but what we're concerned about is future disasters this year.


BROWN: Now, the president says he's going to work with Congress on emergency legislation to help replenish that emergency disaster fund.

CNN's Dan Simon is joining me right now from Gulfport, Illinois.

And Dan, as I understand it, a levee along the Mississippi blew a gaping hole today. Give us an update on what's happening there now.

DAN SIMON, CNN CORRESPONDENT: That's right. There are actually a couple of levee breaches in this area, we are told by people who live in Gulfport, Illinois. This is on the western edge of the state.

And right now, we are standing in a cornfield, completely drenched. You can see the water just completely overtook this field. There are really acres and acres of farmland that have been destroyed by this flooding. It's just really incredible to see.

Within the past couple of hours, we know that crews raced out here to build a temporary levee to protect dozens of homes in this area. And basically, what's been happening is all of this water that we saw in Iowa is just headed south. And so, we're talking about 30 more levees that could potentially be at risk over the next couple of days with the swollen Mississippi water -- Campbell.

BROWN: And Dan, millions of sandbags are being filled. What's going to happen if they don't get enough filled on time?

SIMON: Well, you know, sandbags can only be so effective. We saw that in Des Moines a couple of days ago, where they put sandbags in an area called Birdland, and that neighborhood just got flooded. And, in fact, there is one town called Clarksville, Missouri, it doesn't have levees so all they can do is rely on sandbags.

But when you talk about water that is rushing so fast and there's so much of it, there's been so much rainfall over the past couple of weeks, that it's really unclear, unknown at this point if those sandbags will work. And that's why crews, especially here in Gulfport, taking the extra mile to build this temporary levee, really unloading truckloads of dirt, just building it feet high to try to protect some of these homes.

BROWN: Yes, tough time there.

All right, Dan Simon for us tonight from Illinois. Dan, thanks.

Now that Al Gore is stepping up and speaking out for Barack Obama, what's being left unsaid among the Democrats may actually be Senator Obama's biggest problem. We're going to talk about that when we come back.


BROWN: "LARRY KING LIVE" is coming up, and he has also been keeping an eye on all of the day's political news.

Larry, who's with you tonight?

LARRY KING, HOST, "LARRY KING LIVE": Campbell, we're going to have a great panel talking about terrorists and what to do about them. That's to take center stage in the political campaigns.

We'll also get into Al Gore's endorsement of Barack Obama and decide whether our competing groups think it matters or not.

And Steve Carell is here. He'll talk about the new film "Get Smart" which is hysterical, and that on-screen smooch with "The Rock." That's on "LARRY KING LIVE" next, Campbell.

BROWN: Can't wait for that, Larry. We'll see you soon.

A would-be president from Illinois once warned that a House divided against itself cannot stand. Well, there may be a lesson in there for another would-be president, especially when it comes to party unity. A challenge for Barack Obama when we come back.


BROWN: So following a long and bitter primary campaign, we know that Barack Obama is the presumptive king of the Democratic Party. But what we don't know is whether all of Obama's horses and all of his men and women can help him put the Democratic Party back together again. CNN's Candy Crowley joins me now with more on all of this -- Candy.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: You know, Campbell, one of the reasons that the Democratic Party, some of the hierarchy really wanted to get this primary season to come to an end, was they really felt that they would need the time between now and the late August convention to bring the party together. And it is very evident that they can use every minute of that time.


GORE: Yes, we can. Ladies and gentlemen, the next president of the United States of America, Barack Obama.

CROWLEY: Twenty thousand people showed up for another step in the healing of the party. The picture of unity. Democratic golden boy, Al Gore, presumptive nominee, Barack Obama, Michigan governor, Jennifer Granholm, a former supporter of Hillary Clinton. But it's going to take more.

GOV. JENNIFER GRANHOLM (D), MICHIGAN: That for all of those, who like me, supported Senator Clinton, we recognize that Senator Clinton -- Senator Clinton, come on, now. She's a great American. She's a great senator.

CROWLEY: There are bad feelings on both sides of the Clinton/Obama fault line, the aftershocks of a fierce, sometimes bitter primary season. He, of course, has the most to lose.

A "Washington Post"/ABC poll found a quarter of Clinton supporters at least a quarter of Clinton supporters say they'll vote for John McCain. A prime time appearance in an arena full of supporters jeering Hillary Clinton's name does not help the cause.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: She has, in her own words, shattered a glass ceiling into 18 million pieces. She has lifted up the sights of young women all across America, including my two daughters. She is worthy of our respect. She is worthy of our honor. She is going to be at the forefront of bringing about change in America.

CROWLEY: Odes to Clinton are a staple now in his campaign but in the cadence of politics, the best way to pull the party together is to rip your opponent apart.


UNIDENTIFIED FEMALE: Hi, John McCain. This is Alex, and he's my first.


CROWLEY: It is not Obama's ad and under campaign law, he can't have anything to do with it. But courtesy of the liberal and a major labor organization, Obama is no doubt getting an assist. (BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: John McCain, when you say you would stay in Iraq for 100 years, were you counting on Alex? Because if you were, you can't have him.


CROWLEY: A go for the jugular ad aimed at the most sought after vote of the season, women. It may do more to bring Clinton Democrats home than any ode Obama delivers.


BROWN: And Candy, you know, this is a long, hard fight between these two. Isn't any surprise to the Obama, to the Clinton camps, even if they want unity, that their supporters just aren't ready?

CROWLEY: It really isn't. And some of their supporters are ready and we see that in the polls. Obama is leading among female voters, so a number of them have already come over.

But listen, they also understand that they're the gladiators here. And gladiators understand that somebody is going to win and somebody is going to lose. And then whoever loses is going to have to step up to the plate and say, OK, go with this guy.

It is harder when you have been a supporter. It's hard for 20,000 people who have been rooting for Barack Obama and booing Hillary Clinton all along to turn on that dime, and they understand that. And it doesn't happen all the time.

So the Obama campaign is very confident that they can, come convention time, pick up most of those Clinton voters, first of all, by drawing a contrast with John McCain and second of all, by noting that, look, this is the Democratic Party. We have spats like this. Come on home, and by putting their candidate out there to talk about the issues that he believes will draw in those Clinton supporters.

BROWN: All right, Candy Crowley, again for us tonight.

Candy, as always, thanks.

So what does discord now in the Democratic Party mean for the Democrat's chances in November? We've got our political panel weighing in right after this.


BROWN: It's been 10 days since Hillary Clinton officially ended her run for president and endorsed Barack Obama. But among Obama and Clinton supporters the prevailing mood is anything but kiss and make up.

So joining me now to talk about this, political strategist, Laura Schwartz. She's a former special assistant to President Clinton. Tara Wall is former senior adviser to the Republican National Committee. She is now the deputy editor of the editorial page for the "Washington Times." And John Ridley is here with me in New York, a screenwriter, also a contributor to National Public Radio.

So we just saw this a few moments ago. I want everybody to look at this, but let's look at it again.

This is Michigan governor, Jennifer Granholm, who was a Clinton supporter. She gets booed at last night's Obama rally just for mentioning Senator Clinton. Take a look.


GRANHOLM: For all of those, who like me, supported Senator Clinton, we recognize that Senator Clinton -- Senator Clinton, come on, now. She's a great American. She's a great senator.


BROWN: Ouch! John, what happened to party unity?

JOHN RIDLEY, NPR CONTRIBUTOR: That's a tough crowd. That really is. But, you know, it's not unusual. We're seeing a lot of times after a tough primary season, a lot of voters who bet on the wrong horse, they feel disaffected. Normally that number runs about 40 percent.

So in Candy's piece, she said that Obama -- about 25 percent of the Clinton supporters may not vote for Obama. He's actually doing pretty well at this point. It may not sound like it, but he's actually in pretty good shape right now.

BROWN: You know, in fact, their supporters may still be nursing some of the sore feelings. But Clinton and Obama are trying hard to bring the party together and we just heard tonight that they're going to hold a meeting next week with Hillary Clinton's top donors to encourage them to max out on their donations to Obama?

I mean, Laura, is this something you think Clinton supporters are going to be up for, going to go along with?

LAURA SCHWARTZ, POLITICAL STRATEGIST: I think they will. You know, with any process of grieving, the loss of your candidate, I think there's this denial and then there's acceptance. The more that Hillary Clinton appears with Barack Obama in the coming weeks, the better.

We've seen a slow and steady rise since 10 days ago. Barack Obama was up five points among women, then 13, then 19. I believe that these are smart women. They're going to make an educated choice, and I really think over the next four weeks, six weeks, by the time the convention comes around, we will see Hillary supporters behind Barack Obama.

BROWN: And Tara, with this rift in party unity, John McCain thinks he has a shot at pulling Hillary Clinton voters, especially women, over to his side. Is there any chance that her supporters, and these are staunch Democrats, would they really ally themselves with the Republican candidate?

TARA WALL, "THE WASHINGTON TIMES": Well, he does have a shot because some of these -- and quite frankly, this is one of the longest mourning periods I've seen, but he does have already some of these voters. I mean, some of these women have already said in polling and otherwise that they would have voted for John McCain otherwise anyway.

So, I mean, there is a good chunk, of course, that will go over to Barack Obama eventually. You know, they're still a little bitter I think. But you couldn't have had a worst place than Michigan where the economy is in the tank and where they felt like they were mistreated by Hillary Clinton.

But I think that there are -- there's a good chunk of women. Women are not monolithic that still do support. They see a contrast between a more liberal way of approaching things that Barack Obama wants to come to some of these issues like economics and foreign policy and security and things of that nature, and they see a contrast between he and John McCain, and how John McCain will handle some of these issues. And some of those women will support John McCain in the long run.

BROWN: Maybe the so-called security moms.

WALL: Absolutely.

BROWN: I think we called them in the last election cycle.

WALL: Right.

BROWN: Laura, what do you think about that?

SCHWARTZ: Well, there definitely are security moms out there. But it's interesting because the ad you just showed by didn't talk about choice because you've got Barack Obama pro-choice, you know, John McCain, anti-choice.


WALL: A lot of those pro-life women are, too.

SCHWARTZ: But it was about the war, too. And I think that's what, you know, women are voting on a host of issues this time.

WALL: And you do have pro-life women.

BROWN: Right.

WALL: The majority of Americans are pro-life and the way --


BROWN: Got to -- got to end it there.

WALL: There's a stark difference. I'm seeing it, too.

BROWN: I'm sorry, John, I owe you one, next time you come on the show. Some chatty ladies.

Laura, Tara, John, thanks.

That's it for us. "LARRY KING LIVE" starting right now.