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Obama Rejects Public Funding; Interview With Missouri Governor Matt Blunt; Another Levee Breaks in Missouri; Controversy over the Medal of Freedom

Aired June 19, 2008 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: And, to our viewers, you're in THE SITUATION ROOM.
Happening now, Barack Obama opens the door to unlimited campaign cash. And the McCain campaign now is questioning his integrity -- this hour, Obama's unprecedented decision to opt out of the public financing system.

Obama's first fall campaign ad is now out. He's introducing his family. He's also addressing doubts about his values and his patriotism. We will show you what is going on.

And worlds apart -- while John McCain is in the flood zone, his wife is in Vietnam right now. And she's talking about an emotional issue that she and her husband can't agree on -- all that coming up, plus, the best political team on television.

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

Barack Obama says the public financing system for the presidential elections is broken. So, he's opting out.

We want to welcome our viewers in the United States and around the world.

The Democrat now is free to raise as much campaign cash as he can. But John McCain now feels free to accuse Barack Obama of breaking his word.

Let's bring in our senior political correspondent, Candy Crowley, to tell us what's going on.

Candy, Barack Obama makes a decision, and the Republicans are pouncing.


And, late this afternoon, Wolf, John McCain, who was seated on the Straight Talk Express -- and that's no accident -- told reporters that he is going to take public financing. That, of course, will limit McCain's spending. But McCain told reporters, "I said I would do it." He did not need to add, because it was implied, my opponent has decided otherwise. (BEGIN VIDEOTAPE)

CROWLEY (voice-over): If you raise more than a quarter-billion dollars in the primary season, would you limit yourself to $85 million in the fall campaign? Duh.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Hi. This is Barack Obama. I have an important announcement. And I wanted all of you, the people who built this movement from the bottom up, to hear it first. We have made the decision not to participate in the public financing system for the general election.

CROWLEY: In a Web video announcement, which includes a handy donate link dear, Barack Obama made history. He will become the first presidential nominee to refuse public financing in a general campaign. Legal and expected, all would be OK except for the video trail of this kind of thing, dateline: New Hampshire, April 2007.


B. OBAMA: I have been a public supporter of public financing since I got into politics.


CROWLEY: And, in late November, Obama responded to and then signed a questionnaire stating, "I will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election."

John McCain is the decided underdog in the money chase, but his campaign is hoping he does have a political issue. Aides helpfully provided a timeline of Obama's evolution on the subject, while the Republican National Committee reproduced quotes from Hillary Clinton from February, when it was clear Obama would opt out of the campaign finance system.

"Now we're seeing," she said, "how the words don't even mean what we thought they meant."

McCain, working his way through a day which ends at a fund- raiser, channeled Clinton and said pretty much the same thing.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: And this is a big deal. It's a big deal. He has completely reversed himself and gone back, not on his word to me, but the commitment that he made to the American people. That's disturbing.

CROWLEY: Lawyers for both campaigns have different versions of whether any agreement was aggressively pursued. But the bottom line is this. Barack Obama will be able to spend as much money as he can get ahold of. It will help a lot as he tries to define him to a public still learning about him. The first ad of his campaign goes up Friday.

(BEGIN VIDEO CLIP, OBAMA CAMPAIGN AD) B. OBAMA: And if I have the honor of taking the oath of office as president, it will be with a deep and abiding faith in the country I love.


CROWLEY: John McCain says he is reevaluating whether he will accept public funding. If he does, his spending will be limited to $85 million.


CROWLEY: But, again, McCain now says he will take public financing because he said he would. The Obama campaign shoots back that, in fact, their very campaign is campaign finance reform, because so much of their money, although it's a large amount, comes from very small contributions -- Wolf.

BLITZER: Thanks, Candy -- Candy Crowley reporting.

Let's get some more now on what happens when you check the yes box on your federal tax return. About 33 million Americans did that each of the last five years, putting three of their tax dollars into the presidential campaign fund. The Federal Election Commission says the $3 comes from taxes you already owe. Checking yes does not add to your tax bill or decrease your refund.

The system began back in 1976 to reform campaign financing after the Watergate scandal. Back then, each major-party nominee received almost $22 million. By 1992, that amount grew to a little more than $55 million. Now it's up to just about $85 million.

John and Cindy McCain, he got a firsthand look at the flooded Midwest today. She's in Vietnam today to promote a favorite charitable cause. We will have more on that coming up.

Mrs. Clinton -- excuse me -- Mrs. McCain also talked to CNN's John King about her role for her husband's campaign and her political rivalry with Michelle Obama.


JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: You did step forward at one point in the campaign, when Mrs. Obama had said for the first time that she was proud of her country, you did step forward and say, "Well, I've always been proud of my country."

You saw a reason to say that, didn't you, some political opening?

CINDY MCCAIN, WIFE OF SENATOR JOHN MCCAIN: No, it wasn't a political opening. There was nothing planned. It wasn't -- I'm just -- I'm an emotional woman when it comes to service to our country.

I have watched many people's children leave and go serve. This is something that is the fiber of the McCain family.


BLITZER: We're going to have a lot more of John's interview with Cindy McCain shortly. That's coming up.

Back to John McCain, though. He's in the flood zone. He was today, at least. The timing of his trip is raising some eyebrows, because President Bush also visited the devastated Midwest today.

Let's go to Dana Bash. She's watching this story for us.

A bit of a sensitive situation, Dana, for Senator McCain.


John McCain walks a fine line, trying to separate himself from the unpopular president that Democrats try so hard to link him to. And that was crystal clear today, as McCain took the same trip to Iowa's flood zone at the same time as the president, but was careful to appear nowhere here him.


BASH (voice-over): A bird's-eye view of the worst flooding Cedar Rapids, Iowa has ever seen, a briefing on the damage the flooding has caused, and a promise from a president chastened by his sluggish response to Hurricane Katrina.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Congress passed -- is about to pass a big chunk of disaster money. Hopefully, it will help put people's mind at ease, and that we're going to help you, help you recover.

BASH: Even as the president spoke, some 60 miles south, in Columbus Junction, the Republican candidate who wants his job was meeting with local officials, getting his own firsthand look at Iowa's flood damage.

J. MCCAIN: I know I speak for all of America, and we will do everything necessary to try to rebuild their lives and have a chance to continue leading a normal life here.

BASH: Visiting a disaster area is a standard move for any would- be president, especially when it happens in a battleground state like Iowa.

But this was a curious juxtaposition for John McCain -- 10 months ago in his quest to separate himself from the unpopular president, McCain made his harshest comments standing in the city that symbolizes Mr. Bush's failures, New Orleans.

J. MCCAIN: Never again, never again will a disaster of this nature be handled in the terrible and disgraceful way that it was handled, never again, never again.

(APPLAUSE) BASH: McCain aides tell CNN they knew the president would be in Iowa at the same time he was, but for scheduling reasons had little choice.

If nothing else, the images are a reminder of their sometimes awkward coexistence, a president determined to show he's still hands- on and learned Katrina's lessons, and a candidate whose own show of compassion is part of an effort to shield himself from Bush baggage.


BASH: And McCain's very different life experience from the president was on display. The Vietnam veteran saw several buildings that were partly under water and said -- quote -- "You lost the battle, but you won the war" -- Wolf.

BLITZER: Dana, thanks very much.

The front battle of this war against the floodwaters now in the towns along the Mississippi River. And they're bracing for the river to crest in Missouri as well.

Let's go to the governor of Missouri, Matt Blunt. He's joining us on the phone right now.

Governor, I know you're worried about Hannibal, Saint Louis. How bad potentially could this situation be for your state?

GOV. MATT BLUNT (R), MISSOURI: Well, obviously, it could be devastating.

It already has had a very terrible impact with tens of thousands of acres of farmland that have been flooded. People's farmsteads have indeed been flooded out already, a tenuous position with a number of levees. So, it could be very devastating in northeast Missouri.

Having said that, having traveled yesterday to Hannibal and Canton -- and I will be visiting other communities tomorrow -- those levees appear to be holding. And Missourians are resilient people. So, it's truly inspiring to see the community pulling together to strengthen their levees and do everything they can to withstand the flood.

BLITZER: We have been told and we have been reporting, Governor, that the levees in East Saint Louis -- that's in Illinois, across the river -- they're old. They're dilapidated. They're not structurally worthy.

What about the levees in Saint Louis and elsewhere on your side of Missouri?

BLUNT: Well, obviously, some levees are stronger than others. Many of our levees, particularly Corps levees, have been be strengthened since the '93 flood. And then, again, Missouri communities have banded together, often added several feet to their levees with sandbags and that sort of thing, strengthened and supported floodgates.

So, our levees are stronger than they have been in the past. When you get into some of our agricultural levees, levees not maintained by the Corps, those are the ones that often would have a breach or an overtopping.

But we're watching all of our levees very carefully. I have nearly 700 members of the Missouri National Guard that have been mobilized. And one of their objectives is to provide surveillance and to monitor the levees and report any problems as soon as they might emerge or something suspect begins to occur, so that it can be addressed very quickly.

BLITZER: Good luck, Governor, out there. Good luck to everyone in Missouri. Good luck to everyone along the Mississippi River. We will be watching it closely.

And Jack Cafferty has the day off today.

But, coming up, our own John King, he is in Vietnam, and he's talking there to the wife of John McCain.


KING: The Democrats are raising a stink about your husband's use of your family jet at a time his campaign was short on -- short on money. Is that a relevant question or is that silly season?

C. MCCAIN: It's not -- it's a relevant question.


BLITZER: Cindy McCain's explanation to that question and much more in her interview with John. Stand by for that.

And Barack Obama unveils a brand-new campaign commercial, the first of this, the general election campaign. And it's all about patriotism. But why now? What's going on?

And Obama also tries to patch up the rifts in the Democratic Party. He's been meeting with former Clinton supporters. Will that heal the wounds of a bitter campaign? We will hear about that and more from the best political team on television.


BLITZER: Even when Cindy McCain is overseas, as she is right now, she's certainly very well aware of the political pressures she's facing right here in the United States, that pressure, of course, shared by her rival for the first lady's job, Michelle Obama.

Our chief national correspondent, John King caught up with Mrs. McCain in Vietnam today. They sat down for a one-on-one interview.

(BEGIN VIDEOTAPE) KING: Let's talk about the role of the spouses in the campaigns. Let me just start with the threshold question. Where is the line, in your view? What's in and what's out? As you know, there's been a debate about the spouses, things that you have said and done, things Mrs. Obama has said and done. Where is the line, in your view?

C. MCCAIN: Well, I do not think that spouses and family members -- I'll broaden it out -- are -- are fair game. And I'm not saying that because of either treatment on either side. I just think that politics -- there has to be some decorum left in politics, and in American journalism as well. And our husbands are the candidates. And they -- and what we are looking at are two vastly different sides of issues, two vastly different approaches to how we govern our country.

It's a very -- people have a very clear choice. The choice is not whether -- who is going to be the best first lady or the first -- this is about our husbands. And this is far too important to muddle it up with -- with things like that.

KING: And, yet, under steady pressure from the Democrats, your husband had said adamantly for a long time your financial life was separate from his; you wouldn't release your taxes.

And you were forced, under political pressure, to release the summary.

C. MCCAIN: It wasn't the...

KING: Did you not like that?

C. MCCAIN: It wasn't the Democrats that forced it.

I felt that, if it was that important to the American people, and there was discussion, well, then, OK, I will. I mean, sure I said no. But the American people said, you know, we really are -- we really think we should see. And I -- and I said, OK. That's fine. I didn't have to -- you know, I'm not always right.


KING: And now the Democrats are raising a stink about your husband's use of your family jet at a time his campaign was short on -- short on money. Is that a relevant question or is that silly season?

C. MCCAIN: It's a relevant question. The rules are very clear, actually. And, if you notice today, there was a discussion from three or four different attorneys backing up our -- our discussion and our understanding of the law.

It's -- you know, we'll see. We'll see where this takes us. But our understanding -- and from what our attorneys have said -- the law was clear, and our use of it was very appropriate.

KING: You say spouses should not be the issue; the candidates are the ones who would be president.

You did step forward at one point in the campaign, when Mrs. Obama had said for the first time that she was proud of her country, you did step forward and say, "Well, I've always been proud of my country."

You saw a reason to say that, didn't you, some political opening?

C. MCCAIN: No, it wasn't a political opening. There was nothing planned. It wasn't -- I'm just -- I'm an emotional woman when it comes to service to our country.

I have watched many people's children leave and go serve. This is something that is the fiber of the McCain family. It was nothing more than me just saying, look, I believe in this country so strongly. That's all it was. It was an emotional -- an emotional -- an emotional outpouring on my part.

KING: It was taken as, you know, as somehow trying to -- a comment on your part that was trying to say you are more patriotic or her family is more patriotic.


KING: Your family is more patriotic.

C. MCCAIN: No. No. No.


C. MCCAIN: I -- I -- that is not how I meant it. And that is not, I believe, how it was represented.

I think she's a fine woman. She's a good mother. And, you know, we're -- we both are in an interesting line of work right now.


KING: That's a good way to put.


KING: You mentioned your emotion about this. This is -- there is one issue in the family where you and your husband do disagree sometimes, in the sense of...

C. MCCAIN: Only one?

KING: ... you are proud -- well, you can list them all if you would like.


KING: But you are very proud and effusive sometimes about your sons' service now, one of whom is recently back from Iraq, another who is at the Naval Academy that you mentioned. The senator, perhaps because of his own service, and perhaps because of his own history as a POW, doesn't like to talk about that publicly. When you do, is that something that makes him mad?

C. MCCAIN: No, not at all. No, he's -- we don't talk about our sons, particularly our Marine Corps son, for obvious reasons, particularly at the time, when he was deployed.

I am just like every other mother out there. If you want to listen, I'll tell you all about him. I'm very proud of him. but there is a time and a place. And every mother is proud of their sons. And every child that is either serving or not serving or trying to live a decent life, going to school and doing things to make -- to make their own family proud and living a good life, I mean, we're all proud of that.

So, I'm like no -- I'm no different from any other mom.


C. MCCAIN: I'm proud of all four of my children.

KING: I want to ask you a little bit about where we are.

But you said that you think spouses should be out of bounds. Yet, you've been involved in a discussion about your taxes, about the plane, about what you meant about Mrs. Obama.

Is this new to you, troubling to you, or is this just part of the sorting out of every campaign?

C. MCCAIN: Oh, I will tell you, I've seen a difference since 2000, sure. I've seen a difference in how the media approaches everything.

But, listen, it's not -- this race isn't about media. It's not about, you know, who said what to whom. This is about two men that have clear differences in what their vision is for America and who will be the better leader. And, of course, in my opinion, my husband would be a better leader, a better person for the job. He has more experience. He has the kind of life story that -- that enables someone to -- to look at an issue and really make a hard judgment, because you've lived a certain way and lived a life that has given him a compass that takes him the right direction.

He's a wonderful man. And I can't -- I'd be so proud if we were so lucky to be able to do this, because he's just a remarkable person.

KING: Does it get under your skin when you see the press releases? Why won't McCain release his taxes? Why is the senator flying on her plane?

C. MCCAIN: Right.

You know, to be honest, I really don't read it.


C. MCCAIN: The staff keeps me up on this stuff. But I'm with my kids, my family. I'm busy running from here to there. I'm here and doing things like to do. And they'll let me know if something's going on. But I don't really pay attention to it.


BLITZER: Barack Obama on values and patriotism. He unveils his first ad of the general election campaign, but why this theme? Why now? We will tell you.

South Carolina follows Florida's lead by offering license plates showing a cross and the words "I believe." We will tell you who is opposed, what they're doing about it.

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



BLITZER: Barack Obama's decision to reject public financing for the general election campaign is giving John McCain a new line of attack.


J. MCCAIN: And this is a big deal. It's a big deal. He has completely reversed himself and gone back, not on his word to me, but the commitment that he made to the American people.


BLITZER: McCain leveling charges of hypocrisy. The best political team on television considering whether Barack Obama's cash will triumph in the end.

Also coming up for discussion: Obama's brand-new ad declaring his love of country, will it ease voter doubts about his patriotism?

And Democrats struggling to come together -- Obama's quest for party until still a complicated work in progress.

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


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

Happening now, deep wounds still fresh from a bitter campaign. Now Barack Obama is reaching out to try to heal those wounds. We are going to show you how he's doing it and if it's working.

Also, Obama is taking heat for his decision to reject public campaign financing, including some serious criticism from within his own party.

And the politics of disaster -- the candidates visit the flood zone -- all this coming up, plus the best political team on television.

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

Barack Obama is trying to patch up the rifts among Democrats, meeting today with key segments of the party, including former supporters of Hillary Clinton. But can that heal the wounds of a bitterly divided primary campaign?

Let's turn to CNN's Suzanne Malveaux. She's watching the story for us.

The unity effort, Suzanne, is it working?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Too soon to tell, Wolf, but Obama's campaign is aggressively reaching out to important voting blocs this week. Earlier this week, it was Hispanics, today, three other critical groups, including labor.

And it just might be paying off. Just a few hours ago, the American Federation of State, County and Municipal Employees unanimously endorsed Obama. Now, this is the same group that spent lots of money attacking him.


MALVEAUX (voice-over): They aren't exactly singing kumbaya, but they're trying.

B. OBAMA: I want to thank all of you.

MALVEAUX: Wednesday, Barack Obama scheduled back-to-back meetings with union leaders, black congressional members, and female lawmakers.

But scheduling conflicts forced Obama to postpone at the last minute his sit-down with the Women's Caucus, who needed to cast votes on the Hill. They representative an essential voting bloc for an Obama win.

REP. CAROLYN MCCARTHY (D), NEW YORK: A lot of women are extremely concerned. They don't feel that he has reached out to them enough. They want to know exactly what he's going to be doing on kitchen table issues.

MALVEAUX: Aides acknowledge getting these folks together and behind Obama is not necessarily going to be easy. Take the Congressional Black Caucus, which was divided between Hillary Clinton and Barack Obama. While members say they're now united, some acknowledge Obama is going to be a hard sell.

REP. EMANUEL CLEAVER (D), MISSOURI: Missouri is a tough, tough state to win. And as I've said to all the Clinton people, do you want Senator Obama, who has already told you what he wants to do in Iraq, or do you want John McCain to keep the Iraq War going?

And if for no other reason, that's why you ought to embrace Senator Barack Obama.

MALVEAUX: Congressman Emanuel Cleaver's sales pitch is similar to other recently converted Clintonites -- that Obama is simply better than the Republican alternative, John McCain, on issues like health care, education and jobs.

But just listen to how some labor leaders were casting the candidate during the primary.

THOMAS BUFFENBARGER, INTERNATIONAL MACHINISTS /AEROSPACE WORKERS: I've got news for all the latte drinking, Prius driving, Birkenstock wearing, trust fund babies crowding in to hear him speak -- this guy won't last a round against the Republican attack machine.

MALVEAUX: Obama's meeting with rival union groups was aimed at proving the doubters wrong.

B. OBAMA: The reasons that I got into this campaign was a sense that American dream feels like it's slipping away for so many people.


MALVEAUX: Now, earlier, I spoke with the president of the United Farm Workers, Arturo Rodriguez, who attended that meeting. And he had initially endorsed Clinton. But he said that Obama's 45-minute private Q&A session over the weekend with some of his members really turned a corner here. And Obama pledged to take on immigration reform, and that is a big priority for that group -- Wolf.

BLITZER: It certainly is.

Thanks, Suzanne, very much.

Let's discuss this and more of the effort to patch up the Democratic Party.

Joining us, our senior political analyst, Gloria Borger; David Brody, the senior national correspondent for the Christian Broadcasting Network; and our CNN political contributor and Democratic strategist, Donna Brazil.

Guys, thanks very much for coming in.

How tough of a sell is this for Barack Obama right now?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: I don't think it's that tough right now. You know, he's going in. He's touching all the right bases. He's making nice to everybody he needs to make nice to, Wolf.

What I'm going to look for, though, how does he negotiate down his debt with Hillary Clinton and with Bill Clinton, because we still haven't heard anything on that. And that's going to be a really important signal to those Clinton supporters that they should really climb on board with Obama.

BLITZER: If they try to help her eliminate her $20 million campaign debt.

BORGER: They've got to figure out how to do that and they haven't yet.

BLITZER: What do you think, David?

DAVID BRODY, CHRISTIAN BROADCASTING NETWORK: Well, you know, Obama's team has always been about -- they've always said this actual mantra is Obama means no drama -- you know, no drama in the Obama campaign. And this is what they're -- they're striving for. I mean they're going for a drama-less convention in August. They're obviously on their way. And I think one of the key meetings...

BORGER: We want drama, by the way.

BRODY: I know we want drama, but, boy, they don't want it, for sure.

But one of the key parts here is this foreign leaders meeting -- you know, the Madeleine Albrights and Sam Nunns and all that. That's the one to really watch out for because as he goes forward, as the campaign goes forward, foreign policy is going to become crucial to go up against McCain. If they're going to make the argument, they're going to need those folks behind them all the way.

BLITZER: You know, Donna, I spoke earlier with James Clyburn, the number three Democrat in the House of Represents. He's a pretty blunt guy. He's a pretty outspoken guy. And acknowledged there are no shortage of Democratic members of the House who are not yet ready to jump on the Barack Obama bandwagon because they're looking out for themselves.

Listen to this. Well, let me read it to you. "A lot of them are going to look at their Congressional districts and see how the Congressional district voted and they'll be holding back, waiting to get some signal from their constituents as to how they ought to conduct themselves."

That's blunt talk.

DONNA BRAZILE, CNN CONTRIBUTOR, DEMOCRATIC STRATEGIST: Yes, it is. But, Wolf, that's not unusual in a presidential year, where Democrats who are running down ballot care more about their own options at the local level. So they're going to take the temperature of their constituents. And at the end of the day, if they decide that Barack Obama is the flavor of the day and the month, they will embrace him.

But, look, Barack Obama understands that some of these Democrats will have to run their own campaign and will not be able to embrace change.

BLITZER: All right. What about this new ad? This is the first commercial that Barack Obama is doing now in this, the general election campaign season.

I'll play a little clip.


B. OBAMA: That's why I passed laws moving people from welfare to work, cut taxes for working families, extended health care for wounded troops who have been neglected. I approved this message because I'll never forget those values. And if I have the honor of taking the oath of office as president, it will be with a deep and abiding faith in the country I love.


BLITZER: What do you think?

BORGER: Faith, values -- those are -- those are the key things. You know, the Obama people have clearly read the polls, even in those Democratic primaries, showing that there were questions about whether Barack Obama shares your values. So this is part of their reintroducing him to the American public, to let the public in on his biography and to let the public know that he shares a lot.

BLITZER: It's a pretty effective ad.

BRODY: It is pretty effective. And, also, what was interesting is this Kansas Midwestern values that he got from his grandparents. Well, the last time we checked, he grew up in Hawaii and Indonesia. But he got those values from...

BLITZER: But his grandparents did raise him.

BORGER: Right.

BLITZER: And they spent a great deal of time with him...

BRODY: No doubt.

BLITZER: ...and were seminal influences on his life.

BRODY: Well, there's no doubt about that. And so -- but he's going to make sure that is pointed out all the way through this campaign.

BLITZER: What do you think?

BRAZILE: First of all, I think it's going to be a very effective ad because we get to see who Barack Obama really is -- faith, family, but also love of country. To say that, look, I got where I am today because of the faith of my grandparents, but also because I worked very hard. And so I think it's a very effective message to start the general election for Senator Obama.

BLITZER: Stand by, guys. We've got much more to talk about. Senator Obama changing his mind when it comes to public financing -- now rejecting it after earlier suggesting he would accept it.

Is this a move that could come back to haunt him?

Plus, the candidates in the flood zone -- is it more than just a photo-op?

What's going on?

We'll discuss, right here in THE SITUATION ROOM.


BLITZER: Barack Obama turns down $85 million in public funds. He says when it comes to campaign finance, he can go it alone.

Is it a good move, a bad move?

The best political team on television in just a minute.


BLITZER: Another levee has just broken, this time in Missouri.

Let's bring in Carol. She's watching this story for us.

Carol, we just spoke to the governor, Matt Blunt, only a few minutes ago and he was clearly concerned at what's going on. But there you see these pictures, pretty dramatic. What do we know?

CAROL COSTELLO, CNN CORRESPONDENT: Yes, we know right now that at least two levees have broken in Lincoln County, Missouri. And that's affecting the small town of Foley. In fact, the emergency management person there is quoted by the Associated Press saying 60 to 70 homes in Foley are under water right now.

Now, the breaking of this levee, of course, puts more pressure on the other levees along the Mississippi River and things could get worse. I guess the good news is that it's not expected to rain much in the next few days.

BLITZER: All right. We'll see what happens to those other levees downstream along the Mississippi River as it gets closer to St. Louis -- East St. Louis, Illinois. Apparently they've got some serious concerns there.

Let's discuss some of the political fallout from what's going on.

Donna, you know, the president went there today. John McCain went there today. And our hearts go out to all those people who live in Iowa, in Illinois, in Missouri, elsewhere -- Wisconsin -- where this horrendous flooding is going on. This is the worst natural disaster to hit our country since Katrina.

BRAZILE: Well, Wolf, this is very serious. As you know, I'm familiar with levee breaks, not only...

BLITZER: You're from New Orleans.

BRAZILE: Not only -- I grew up less than a mile -- I mean less than a block from the Mississippi River. And every year during this time, we worried that the levees would break. And let me just say that -- to the people along that area of the country, they need to listen to what the authorities are saying. And if they can get out and get ahead of this storm or get ahead of the water, they should.

But we should also, as Americans, double up our efforts to help the people out, because they're hurting and they need our help.

BLITZER: What do you -- you know, when I look at this and I see what -- you know, obviously this is not like Katrina was...


BLITZER: Katrina is sort of a league of its own. But this is pretty devastating. And the governor -- the governor, Chet Culver of Iowa, he said tens of billions of dollars, he expects, this is going to eventually cost.

BORGER: Right. Well, and he's asking for federal aid. And he'll probably get a lot of federal aid. We know that the president was there today.

John McCain was there today. It seems that even Bush -- George W. Bush has learned his own lessons from Katrina, of not going to New Orleans, and is now going there...

BLITZER: Showing up.

BORGER: ...showing up, as is McCain and as has Obama. I mean everybody understands...

BLITZER: Shouldn't McCain and Bush have gone together -- they were both there in Iowa today. They were only 30 miles apart from each other. They went there on the same day, but they were in two different parts. They didn't -- their paths didn't cross.

BRODY: Yes, they didn't. And my guess is that conversation never happened. But, you know, let's also go back to the authenticity and maverick issues that John McCain has.

For example, why wouldn't John McCain say you know what, I'm going tour with the president of the United States and say, you know what, so what about politics?

So what, how this seems?

It doesn't matter. And that it would go really toward his authenticity to say you know what, I'm putting politics aside, because if Barack Obama wants a new type of politics, well, listen, you know what, I'm not going to worry about the political fallout just because I'm seen with the president. BORGER: Well, then maybe he should have gone with Barack Obama.

BRODY: Right.

BRAZILE: That's true.

BORGER: As opposed to...

BLITZER: Maybe that's not such a bad idea.

BORGER: Right. Right.

BRAZILE: The key thing is that FEMA is on the scene. And I just want to say it's so important that the Federal Emergency Management Agency is there working with state and local governments to help get people away from the dangerous water.

Let me get back to this story of Barack Obama opting out of public financing for the general election and saying, you know, the $85 million that I could have gotten, I'm not going to take it, I'm going to raise my own money. He can raise hundreds of millions of dollars. He's pretty good at it.

Russ Feingold, Democrat of Wisconsin, the architect of campaign finance reform, McCain-Feingold, as you know, issuing a statement, among other things, saying: "This is not a good decision. While the current public financing for the presidential primaries is broken, the system for the general election is not."

He thinks it's a mistake.

BRAZILE: Well, it's a risky decision. But Senator Obama clearly made this decision after talking with his lawyers, talking with everyone. You know, they had extensive negotiations and discussions with the McCain people. And they decided the best option for the campaign was to opt out of the system.

Look, Senator Obama has been a reformer on this issue. He has been one of the lead co-sponsors on the presidential financing system, which has not kept up with inflation and the rise of campaign costs. He made this decision. It's risky, but I think it's his best option.

BORGER: You know, I think the bottom line is, first of all, Obama did break his word. First of all, he promised he wouldn't do it and now he has changed his mind on it. And it gives -- and for obvious reasons, because he can raise a boatload of money. This -- he can raise a lot more money than John McCain and he wants to win.

But it gives McCain an opening to say, A, that Obama broke his word, and, B, that he's not really the reformer that he says he is. And, clearly, they've made a tactical decision that the short-term hit is worth it because in the long-term, they -- they need the money.


BLITZER: Smart politics? BRODY: Well, yes, it's smart politics, sure. I mean, you know, the bottom line is do you want $84 million or do you want $200 million or $300 million?

Of course...

BLITZER: Or more.

BRODY: Or more. There's no doubt about it. The problem for Barack Obama is the brand that he could be damaging here. You know, he talks about a new kind of politics. He talks about authenticity and we're going to do things differently. And then he serves it up to John McCain pretty much on a silver platter.

BLITZER: All right, guys, we'll...

BRAZILE: McCain is not completely clean, because he broke his word...

BRODY: No doubt.

BORGER: Right.

BRAZILE: ...on the matching funds.

BRODY: And they'll come back on that.

BORGER: And they're saying, you know, Obama is trying to make the case that small donors -- the small donors that he has is the same thing as public financing, because those are small donations. I don't know whether that argument, in the long-term, is going to make it.

BLITZER: Well, we'll hear some arguments back and forth.

Guys, thanks very much.

High honor and growing controversy -- do the men and women who play pivotal roles in the troubled war deserve the Medal of Freedom?

Plus, Ross Perot's online comeback -- we're going to show you what the former presidential candidate is doing now. Some of you might not be surprised.

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


BLITZER: Let's check in with Lou to see what's coming up right at the top of the hour.

He's got a preview -- Lou.


Tonight we're reporting on the total inability of the Food and Drug Administration to do its job. It's not just their latest failure to find the source of contaminated tomatoes. That agency also now stands accused of being too cozy with the industries it's supposed to be regulating.

And, also, E-Verify, the federal program that allows employers to check whether the people they hire are in the country legally -- E- Verify also protects your identity.

So why does the State of California want to outlaw it?

And tonight we'll expose the high tech industry and its plan to replace American workers with cheap foreign labor.

Please join us for all of that, all the day's news with an Independent perspective at the top of the hour -- Wolf, back to you.

BLITZER: Mr. Independent, thanks very much.

We'll see you in a few moments.


BLITZER: It's a way for America to honor citizens who have made outstanding contributions to our country. But in recent years, the Presidential Medal of Freedom has also come wrapped up in a bit of a controversy. President Bush presented the latest awards today.

Let's go it our White House correspondent, Ed Henry -- Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Wolf, this is the nation's highest civilian award, created in part to promote peace. The Democrats are wondering why an honor that's been given to the likes of Mother Teresa and Pope John Paul II is now also going to architects of the Iraq War.


HENRY (voice-over): A high honor for any president -- bestowing the Medal of Freedom on Americans like Dr. Anthony Fauci, tirelessly fighting AIDS; Dr. Benjamin Carson, a pioneer in neurosurgery.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Outstanding individuals who have been leaders in their chosen fields, have led lives of vision and character, and have made especially meritorious contributions to our nation and the world.

HENRY: Public servants like former Health Secretary Donna Shalala; retired federal Judge Laurence Silberman; the late Tom Lantos, the only Holocaust survivor ever to serve in Congress; and retired General Peter Pace, who served in Vietnam and rose to become chairman of the Joint Chiefs.

BUSH: For always putting the interests of our men and women in uniform first, I am proud to award the Presidential Medal of Freedom to General Pete Pace.

HENRY: The president again using the award to honor architects of the Iraq War, leaving Democrats to charge it's a way to mute potential criticism from former officials.

JENNIFER PALMIERI, DEMOCRATIC STRATEGIST: When the last works that this person has done has, you know, not been a successful as it could be, it does sort of -- I think it calls into question what -- what the White House's motivation in awarding these awards are.

HENRY: The tradition started in 2004, with three men criticized for war-related mistakes, former CIA Director George Tenet; Paul Brenner, who ran post-Saddam Iraq; and Retired General Tommy Franks, who led the invasion of Baghdad.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: What everybody was Iraq-related, I thought that was kind of -- I just didn't understand that.

HENRY: In his memoirs, Tenet acknowledged: "I was not at all sure I wanted to accept. We had not found weapons of mass destruction and post-war Iraq hadn't been the cakewalk that some had suggested it would be." But Tenet accepted after learning it would be focused on the CIA's war on terror, not the war. And the word Iraq was never uttered in the citation for Pace.

TONY FRATTO, WHITE HOUSE DEPUTY PRESS SECRETARY: I think President Bush is incredibly honored to give the award to Peter Pace.


HENRY: General Pace could not do an on camera interview, but he did call me to say he was touched by this honor. And despite any criticism, he said: "This is not about me as an individual. I accept it on behalf of the millions of men and women who have served their country in the armed forces" -- Wolf.

BLITZER: Ed Henry at the White House.

Thank you.

He ran for president back in 1992, Ross Perot. Most historians say that helped Bill Clinton -- helped him win the election. Now Ross Perot is launching another kind of campaign. We'll tell you what's going on.

Also, one fashion expert says she has the makings of an icon.

Jeanne Moos takes a Moost Unusual look.


BLITZER: On our Political Ticker, two time presidential candidate Ross Perot says the national debt is out of control and he's going online to make his point.

Let's go to Abbi -- what's going on?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, remember this? These are the charts laying out the national debt that Ross Perot paraded on television during his 1992 presidential bid. Now it's 2008 and they're getting a facelift.

Citing an economic crisis, Perot launched, a Web site highlighting the $9 trillion budget deficit and informing the public of what that looks like as only Ross Perot can.


ROSS PEROT, FMR. PRESIDENTIAL CANDIDATE: If you could take the dollars bills end on end from the Earth to the moon and back, it would take just over 1,900 round trips to pay off the debt.


TATTON: There are pages of charts here on government spending. The 77-year-old Perot is not running this time around and the site is not affiliated with a political party. But he is calling on voters to urge their representatives to act -- Wolf.

BLITZER: He's back and we'll watch him.

Thanks very much, Abbi.

When it comes a potential first lady, people are going to analyze her style.

Here's CNN's Jeanne Moos.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): Remember Obama mania?

Well, this felt like Mrs. Obama mania. What better way to pump up the crowd than with a fist pump.

UNIDENTIFIED FEMALE: Fist pump, please.

MOOS: Michelle Obama said she got the gesture from younger staff members. Ever since she did it with her husband, the fist pump has infected the nation -- spread even by politicians from opposing parties.

UNIDENTIFIED MALE: There we go. All right.

MOOS: Comedian Jimmy Kimmel did a long distance fist pump with Senator Obama.

JIMMY KIMMEL, HOST, "JIMMY KIMMEL LIVE": Here we go. There we go.

MOOS: Anyone expecting fisticuffs between Michelle Obama and "The View"'s archconservative got handholding instead.

UNIDENTIFIED FEMALE: This girl is, you know, she's solid.

MOOS: The hosts of "The View" seemed overexcited.

UNIDENTIFIED FEMALE: We have to talk about all kinds of...



MOOS: Enthusiasm was spilling out all over.

UNIDENTIFIED FEMALE: You are setting this trend where everybody wants to go sleeveless. Now, your arms are toned, but, you know, mine are just like flab, flab, flab, flab. But it's just like you -- you look gorgeous.

MOOS: We interrupt this newscast to bring you an admittedly superficial analysis of Michelle Obama's style.

MARK-ALAN HARMON, CELEBRITY STYLIST: She's doing bold collars, bright, clean lines, very modern.

MOOS (on camera): Orange, red, purple.

HARMON: Bold and savvy. It's like she's like -- it's like every designer in New York must be just dying right now to get their hands on her.

UNIDENTIFIED FEMALE: It's fun to look pretty.

UNIDENTIFIED FEMALE: You have a flair for it, too. And they compare you to Jackie Kennedy very often.

UNIDENTIFIED FEMALE: Well, that's very flattering.

MOOS: It's not, then, that she looks like Jackie Kennedy. Obviously, she's not black.

HARMON: Yes. Michelle's black.



MOOS (voice-over): But stylist Mark-Alan Harmon says Jackie was a style icon and Michelle Obama...

HARMON: There is the makings for an iconic woman there.

MOOS: And don't say you haven't noticed this about Michelle Obama's wardrobe.

(on camera): It is very form fitting.

HARMON: Right. She has got a great little body.

MOOS (voice-over): Hey, we once analyzed the husband. It's only fair to do the wife. And we're not alone.

UNIDENTIFIED MALE: Michelle Obama, I want to thank your mama for making you a cutie and giving you that booty.

MOOS: Even her pantyhose -- or lack thereof -- have drawn comment.

BARBARA WALTERS, CO-HOST, "THE VIEW": Out of respect for you, I put on pantyhose and you...


It feels better. That's what it is. I -- I stopped wearing pantyhose a long time ago because it was painful.

MOOS: No pantyhose, no runs for your husband's run -- for president.

Jeanne Moos, CNN, New York.


BLITZER: And that's it for us. Thanks very much.

I'll be back in THE SITUATION ROOM.

I'm Wolf Blitzer in Washington.

Up next, "LOU DOBBS TONIGHT" -- Lou.