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Clinton, Warner to Speak Tonight; Obama Advisor Evaluates First Night's Speeches; McCain Addresses Veterans about Improving Services; A Panel Discusses Obama's and McCain's View on the Economy

Aired August 26, 2008 - 13:00   ET

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

JOHN ROBERTS, CNN ANCHOR: Yes, certainly some tough times. By the way, we're going to be going live to a John McCain event a little bit later on. When that happens, it'll be an American Legion event in Phoenix, Arizona.
Now, hey, Soledad, remember yesterday as we were closing out our noon hour broadcast here, you were mentioning these little canisters of oxygen --

SOLEDAD O'BRIEN, CNN ANCHOR: Oh, yes for $5.

ROBERTS: -- that they're selling here in Denver?

O'BRIEN: Because it sounded like a good deal.

ROBERTS: The atmosphere is -- the atmosphere is a little rarefied compared to the way that it is in Washington. Well, we were talking about it, and yesterday when I walked out to get the shuttle bus, a fellow walks up to me, and he hands me this bag. He, I guess, was the creative director of the company that's marketing this stuff.

O'BRIEN: He sees a good marketing opportunity.

ROBERTS: Gave me a bunch of these things. I don't know if they work.

O'BRIEN: Well, pop it open and try it out.

ROBERTS: I've been trying one of them all night.

O'BRIEN: Did it work?

ROBERTS: Well, I've been trying them all night, and it may be just the fact that I'm hyperventilating when I'm inhaling this stuff. Or it could be just the idea that if you think something works, it actually does. I'm not sure. The jury's out on that, but we'll keep trying.

O'BRIEN: Do you feel better? I mean, that's a simple question. Do you feel better?

ROBERTS: I haven't slept since Saturday night. So I don't think anything's going to make me feel better at this point.

O'BRIEN: Clearly, it's working. ROBERTS: But I'll tell you, the politics is invigorating and energizing. There's so much of it here. And Soledad, we're going to be covering it all week long.

O'BRIEN: You don't need the oxygen. You've got the politics to sustain you.

ROBERTS: And it's an interesting thing, exactly.

O'BRIEN: All right.

ROBERTS: Politics is my oxygen.

O'BRIEN: I knew you were going to come to that eventually. Thanks, John.

And everybody else, stay with us in the CNN Election Center as we continue live coverage of the Democratic National Convention in Denver from right here at CNN. I'm going to be talking to a top advisor to Senator Obama when we come back. Stay with us.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN's live coverage of the Democratic National Convention.

O'BRIEN: Welcome back, everybody. You're taking a look inside the Pepsi Center, a sweeping, sweeping view. And I'm Soledad O'Brien joining you from the CNN Election Center.

Let's get right to, oh, getting a shot there. Looks like Jimmy Carter is there right in the middle of your screen. He was one of the many folks being interviewed as we continue our around-the-clock coverage of the Democratic National Convention.

Susan Malveaux, of course, has been up around the clock, too, with the continuing coverage.

Suzanne, good afternoon to you.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Hey, good afternoon, Soledad.

It's really been quite exciting, especially the first night, to really get the impressions on the floor of some of the delegates. As you know, we're expecting Senator Hillary Clinton. She's going to be the prime-time speaker this evening. A lot of anticipation about that.

I got a chance to speak with a pastor from Beaumont, Texas. You know, Texas was one of the states that really delivered for Hillary Clinton. And he was one of these guys who organized -- he's a black pastor, organized about 25 black pastors to meet with Bill and Hillary Clinton. And he's a big supporter of the Clintons, and he said he was kind of frustrated, along with many of them. They want to hear more from Barack Obama, from many of their supporters that they are welcomed and that they feel appreciated.

But he really said that he's going to, when Hillary Clinton releases the delegates to vote for who they wish, that he'll follow her lead and vote for Barack Obama.

Another guy, actually an AIDS activist out of Florida, big Hillary supporter, who said that Michelle Obama's message last night when she thanked the 18 million cracks in the glass ceiling, convinced him that he was going to go ahead and support Barack Obama.

But these are the kinds of discussions, the kinds of debates that are taking place on the floor with the delegates to try to figure out what they're going to do. But we anticipate Hillary Clinton, obviously, going to give her endorsement, her support to Barack Obama tonight and eventually tell her delegates vote for who you wish. I'm ultimately going to vote for Obama -- Soledad.

O'BRIEN: What are the expectations for Warner's speech tonight?

MALVEAUX: Well, actually, there's -- there's a little bit of -- already a little bit of dust-up about that, as well, because we have heard from our own CNN contributors and Clinton supporters, Paul Begala, as well as James Carville, complaining that Warner says that he -- this is going to be a no to bipartisanship. He's going to be reaching across the aisle. You know, he's running for U.S. Senate. So he needs independent voters. He needs some Republicans, as well. So we don't expect kind of the red meat that some are looking for from him. Perhaps they'll get it from Hillary Clinton.

But what it really signifies, Soledad, is a difference in style here. A lot of the Clinton camp want that kind of attack dog, want that red meat to be thrown to the delegates. They're ready -- they're ready for that fight.

The Obama folks, a little bit more laid back about it, saying, look, you know, we're reaching across the aisle. We want to reach out to the independents and some of the Republicans. A little less, though, of that red meat style. So you're seeing almost a jockeying of two camps, trying to come together at this convention. So we'll see how it plays out tonight.

O'BRIEN: We certainly will. Suzanne Malveaux for us. Thanks, Suzanne.

The latest CNN/Opinion Research Corporation poll says that Obama and McCain are in a statistical dead heat, with 47 percent each.

Joining me from Denver now, one of Senator Obama's top advisors, Anita Dunn.

Nice to see you, Ms. Dunn. Thanks for being with us. What do you think? Many people said, critics said, was not tough enough, did not come out of the box tough enough on John McCain last night. Think that's true or not?

ANITA DUNN, OBAMA ADVISOR: You know, I think that the people -- and to my knowledge only one, James Carville, on your own network has said that it wasn't tough enough. And James seems a little cranky these days.

The fact is that, I think, everyone who watched the convention last night saw a night that really gave him a great sense of Barack Obama, Michelle Obama, their families, the obstacles they've overcome, the hard work of their parents. Everything about that family and American story.

And they also saw the inspirational appearance of Senator Ted Kennedy. I will tell you, it was an emotional night. I think if you look at and talk to most of the folks who were there last night, they thought it was a great kickoff.

Tonight, of course, we move to looking at the economy. And there is a clear choice here, Soledad. There is eight years of policies under Bush and McCain that have led the middle class to being squeezed in a way unprecedented since the Depression. And then, there is the change that we need to lift families up and really honor the working families of this country again.

I think that tonight you will see speakers really addressing the difference between Senator McCain and Senator Obama. The difference between more of the same and the difference and the change we need. And I think you will see that in every speaker tonight in one way or another. Certainly, we're excited about having Senator Clinton speak on women's equality day.

O'BRIEN: Just for the record, Carville wasn't the only one. He probably was the bluntest. But he certainly wasn't the only one who felt it was coming out a little too soft, for the record.

There's been a lot in the news, as you well know, and I would imagine much to your dismay, about the Obama-Clinton divide. The riff, the not getting along, President Clinton not being happy with his topic, blahdy, blahdy, blah. Is that over? Have you -- have you fixed -- finished that?

DUNN: Soledad, I think you said it best when you said the blahdy, blahdy, blah. The fact of the matter is that Senator Clinton and Senator Obama have been working closely together since these primaries ended, because they both share the goal of changing the direction of this country, of making sure we don't have more of the same disastrous policies.

Senator Clinton has campaigned for Senator Obama. Senator Obama has asked his donors to help her retire her debt. We've been working closely together.

So I think they're people in the periphery who -- who are still trying to extend this primary. But the fact is the two campaigns are working closely together. And we are excited about Senator Clinton, who throughout the primaries, was an eloquent voice for the working men and women of this country, making that speech tonight. And we think it's going to be a great night at the convention.

O'BRIEN: Anita Dunn, thank you very much. Appreciate your time this afternoon.

Let's get right to Senator John McCain, who's holding an event. He's talking about world politics. He's at the American Legion in Phoenix. Let's listen in for just a moment.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: ... sacrifices and -- of the men and women of the United States armed forces. And it will fall to the next commander in chief to make good on the obligation our government accepts every time any man or woman enters the military and, again, when they receive their DD-214. Those we depend on as troops -- those we depend on as troops should know when they become veterans, they can depend on us, thanks to you.

Honoring this obligation will require leadership. And I pledge to you that as president I will lead from the front to reform our V.A. system and make sure that veterans receive the respect and care that they have earned.

The Walter Reed scandal was a disgrace unworthy of this nation. And I intend to make sure that nothing like it is ever repeated. There are other problems, as well. There are other problems, as well, that have not received as much media attention. And my administration will do the hard and necessary work of fixing them, even when the press and the public aren't watching.

Reform begins with appointing a secretary of veterans' affairs who is the leader of the highest caliber and listens to veterans and veterans' service organizations. My V.A. secretary -- my V.A. secretary must be a forceful advocate for veterans and a forthright advisor to me so we can make the right choices about budgeting, health care and other veterans' benefit issues. He or she will also need be a high-energy leader, too, because we'll have a lot of work to do in improving service to veterans.

Veterans must be treated fairly and expeditiously as they seek compensation for disability or illness. We owe them. We owe them compassion and hands-on care in their transition to civilian life. We owe them training, rehabilitation, and education. We owe their families, parents, and caregivers our concern and our support, and our love. Veterans should never be deprived of quality medical care and mental-health coverage for illness or injury incurred as a result of their service to our country.

As president, I will do all it is in my power to ensure that those who served today and those who have served in the past have access to the highest quality health, mental health, and rehabilitative care in the world. And I will not accept a situation in which veterans are denied access to care on account of travel distances, backlogs of appointments, and years of pending disability evaluation and claims.

My fellow veterans, we should no longer tolerate requiring veterans to make an appointment to stand in line for a ticket to stand in another. I'm not here to tell you that there's a cost that is too high to be paid in the care of our nation's veterans. I'll make sure that Congress funds the V.A. health-care budget in a sufficient, timely, and predictable manner.

But I will say every increase in funding must be matched by increases in accountability, both at the V.A. and in Congress. And this requires -- my friends, this requires an end to certain practices and abuses that serve neither our veterans, our country, nor the reputation of Congress itself.

Exactly because funding V.A. programs command bipartisan support, some in the Congress like to attach unrelated pork-barrel earmark appropriations to V.A. bills. The result is to mix vital national priorities with wasteful and often worthless political pork. Earmarks show up in bills of every kind. Earmarks show up in bills of every kind and not just V.A. bills. I'm going to make them famous. I'm going to veto every one of those bills. And you'll know their names, and we'll stop it. And we'll spend our money for our veterans that needs to be spent for veterans, not for bridges to nowhere.

O'BRIEN: That's for Senator John McCain. Right, and talk about that when we come back with our panel in just a few minutes. That chit-chat there. He's speaking to the American Legion in Phoenix. And even though, historically, candidates on the other side tend to lay low, he is not. We'll talk about what he's been doing in just a few minutes.

You want to stay with CNN. The best political team on TV, as well. The well convention coverage on today. I'm Soledad O'Brien. We're back in just bout 10 minutes.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

KYRA PHILLIPS, CNN ANCHOR: Hello, everyone, I'm Kyra Phillips. We're starting off at 1:21 Eastern Time with word of a hijacking now.

A Sudanese plane, we're being told, was hijacked from Nyala in Darfur. But we are getting word now it has landed safely. The word we're getting is that the Sudanese passenger jet was hijacked shortly after takeoff from Nyala. That's the largest town, by the way, in the country's war-torn Darfur region. It was headed to Libya, we are told. And then about after 20 minutes or so, the pilot had made a call to the Nyala airport, telling them that the plane had been hijacked, that he was headed to Tripoli in Libya.

Now we're getting word that hijacked plane has landed in Kufra, Libya. We're working details now. We'll bring you more as we get it.

An impressive storm that could turn nasty. That's what forecasters are saying about Hurricane Gustav, a fast-moving storm that's gaining strength by the hour. It's still a Category 1 hurricane, but it could be a Category 2 before slamming into the southern coast of Haiti just hours from now.

Now, the Dominican Republic is already seeing flooding. The other worry, of course, is mudslides. Less than two weeks ago, a far weaker tropical storm, Fay, moved through, killing 23 people. Now Gustav, are we talking about a major hurricane, Chad Myers?

CHAD MYERS, CNN METEOROLOGIST: Yes, we are, probably into the Gulf of Mexico. And when this thing gets in the Gulf of Mexico, it's going to hit something, Kyra. There's no way to get around it. There's no way to get out of the Gulf of Mexico without hitting something.

So here's the problem. We have all of this onshore flow into Haiti, a very mountainous area right through here in Haiti. And that's where the mudslides will be again tonight.

This storm is a 90-mile-per-hour storm at this point in time and still getting stronger. Forecast to be 120-mile-per-hour as soon as it gets there into the Gulf of Mexico.

All the computer models a little bit in agreement today. Yesterday they were all over the place, but today a little bit better, taking it right here through the strait between Jamaica but also into Cuba, taking it over Haiti and then farther into the Gulf of Mexico. See how these are packed together? This is pretty amazing, to see this agreement. Pretty amazing.

And then into the Gulf of Mexico, into very warm water, which is called the gulf loop current. And there's a picture of where the warmest water is. Here's Florida. Here's Cuba, the Yucatan Peninsula. And if it gets in this water right here, it's going to get stronger and in a hurry, Kyra.

PHILLIPS: All right. We'll talk about it throughout the afternoon. Thanks, Chad.

MYERS: You're welcome.

PHILLIPS: His congregation rushed to his aid and stood by his side. An aspiring minister loved and admired for his battle against terminal cancer. It was all a fake. Now there's another shocking revelation to come.

(COMMERCIAL BREAK)

PHILLIPS: An Australian pastor whose song made him a Christian superstar is singing a bit of a different tune today. He shocked his flock by admitting he was living a lie.

(BEGIN VIDEOTAPE)

(MUSIC: "Healer")

PHILLIPS (voice-over): It became an inspiring anthem for hundreds of thousands of followers, the song, "Healer," performed by Pastor Michael Guglielmucci. For two years the pastor of one of Australia's biggest youth ministries said he had terminal leukemia. He even wore an oxygen tube on stage.

Now, Pastor Guglielmucci says he was faking it, even fooling members of his family.

REV. DANNY GUGLIELMUCCI, MICHAEL'S FATHER: We saw him so sick, so we had no reason to question. So my wife would be crying as he's vomiting in a bucket. We saw clumps of his hair fall out.

PHILLIPS: But the deception doesn't stop there. Listen to this statement read on behalf of the fallen preacher.

UNIDENTIFIED MALE: For over 16 years, I have struggled with an addiction to adult pornography. As a result of this secret life of sin, my body would often break down. But although I was ill, I did not have cancer, but was again using a misdiagnosis to hide the lie that I was living.

PHILLIPS: So what happens to the thousands of dollars donated to save the pastor?

D. GUGLIELMUCCI: Every cent that people want back will be given back.

PHILLIPS: Faked but forgiving. Just listen to church members.

UNIDENTIFIED FEMALE: We've all sinned. Everybody is a sinner and we've all been forgiven by God.

UNIDENTIFIED FEMALE: He's hurt and he's broken and he is sick. He has deceived people and lied. And yet-- but he has confessed.

PHILLIPS: Confessed, but stripped of his credentials. The pastor who sang about divine healing is now getting a different type of help, psychiatric treatment.

(END VIDEOTAPE)

PHILLIPS: Hillsong, the company that produced the video featuring the pastor, has pulled it from YouTube, citing copyright infringement. It had been viewed more than 300,000 times.

Not poor enough for Medicaid? Not old enough for Medicare? Americans caught between the two have to work through their health problems.

And day two for the Democrats in Denver. We'll go back to New York for more convention coverage from the best political team on television.

(COMMERCIAL BREAK)

O'BRIEN: And welcome back, everybody from the CNN center in New York. I'm Soledad O'Brien with continuing coverage of the 2008 Democratic Convention in Denver.

Very big night to come as we take a look over my shoulder at the Pepsi Center. High stakes for Hillary Clinton specifically. In her speech tonight, she's under pressure to heal the party, concede the peace, rally the troops, beat up a little bit on John McCain, do it all with style, good humor, and grace. And also do it with John McCain running some new ads using her own words that she uttered during the primary against Barack Obama. That is going to be very difficult.

What's more, Senator Clinton is also, and has always been a polarizing figure. People say they love her or hate her. And we've got some evidence of that in some new polling that we see.

Let's get right back to Dana Bash who's got the very latest for us on that. Let's, in fact, go to the numbers, first. In the latest CNN opinion research poll, 40 percent of registered voters say they have an unfavorable view of Senator Clinton; 56 percent said favorable. For her husband, it's 44 percent unfavorable; 53 percent favorable. So, his and her's, slightly better now than at the peaks of their -- height of the primary. But, still pretty negative and still pretty divided.

So, under ideal conditions, the Clintons don't always sit well with people. And that's added to that backdrop for Senator Clinton. For a preview of her speech and a closer look at the numbers now that we've laid them out, let's get right to CNN's Dana Bash.

So, I gave you the numbers. What do you make of those favorability polls? And to what degree do they really matter?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, they're very interesting in terms of the country at large. But, I think what's going to be so interesting, Soledad, is what the favorability ratings are if so to speak, of those who are going to be in the hall that she is speaking to.

You know, about 40 percent -- 40 percent of the delegates who are going to be on that convention floor, they supported her. So she is going to be speaking to an audience of people who have a lot of hard feelings, who are very upset about the fact that you know, many of them probably will be pinching themselves wondering what went wrong.

It was about a year ago that we were probably -- everybody was thinking there was no way, it was very unlikely that this would not be Hillary Clinton's convention. But obviously it is not.

And what her aides say she is going to try to do is kind of what you just laid out. Try to do all things and be all things to all the people she needs to be. She is going to thank her supporters and she is going to be very clear about the fact she does support Barack Obama and it is time for herself and for her supporters to move on.

(BEGIN VIDEOTAPE)

BASH (voice-over): Hillary Clinton must convince Denver Democrats she's now in it for Obama to win it.

SEN. HILLARY CLINTON (D), NEW YORK: And now I ask each and every one of you to work as hard for Barack and Joe Biden, as you worked for me. BASH: Clinton's first conventional audience was her home state political army -- the New York delegation. She pleaded with them to be good soldiers.

CLINTON: Now, we were not all on the same side as Democrats. But we are now. We are united and we are together and we are determined.

BASH: A sneak preview of her much anticipated convention speech. And a signal she knows what's expected of her. Preach unity and deliver it like she means it.

CLINTON: This is Barack Obama's convention, as it should be. And there is no doubt that what we're doing is trying to bring everybody together with the same level of commitment that I certainly feel so we can leave Denver unified.

BASH: But some angry Hillary supporters protesting outside the hall want no part of unity. And John McCain's campaign is eager to stoke it. Showcasing in Denver, the Clinton-turned-McCain supporter in a new anti-Obama add.

DEBRA BARTOSHEVICH, CLINTON SUPPORTER FOR MCCAIN: I know there are more delegates, I spoke to a lot of delegates who are in the same position I am in. But they are not ready to come out yet. I do believe they will come out after the convention.

CLINTON: I'm Hillary Clinton and I do not approve that message.

BASH: But with polls showing more and more Clinton voters turning towards McCain, this may be her most important message of all.

CLINTON: Electing John McCain would be a mistake for our country. That is the overriding reality. And anyone who voted for me has so much more in common with Senator Obama than they will ever have with Senator McCain and the Republican Party.

(END VIDEOTAPE)

O'BRIEN: Besides Hillary's speech, what do you think we should be watching for specifically tonight, Dana?

BASH: Well, tonight is also the keynote address. The keynote address of the convention. And that's a pretty important slot. And you'll remember the last time around in 2004, that was given to Barack Obama and that's how he made his name on the national stage because of the speech that he gave.

Tonight it is going to be Mark Warner. He's the former governor of the state of Virginia. He's also somebody who was running for the Senate seat in Virginia. And he is somebody who the Democrats wanted to showcase for a number of reasons. One is because Mike is what Barack Obama was then. He is an up and comer in the party. He also is somebody who is perhaps more socially conservative and might help bring in into the fold others into the Democratic Party. But I've got to tell you, there is a little bit of concern that we're hearing among some Democrats about the kind of address he's going to give, Soledad. Because of the fact that he is a moderate, he is making pretty clear that he isn't going to be the kind of guy he was going to give a red meat speech. He said, actually, to the politico that if that's what they wanted, I'm not their guy.

Well, there's some Democrats saying, wait a minute, that's exactly what we need. We need red meat, especially from the person who we gave this very important speaking slot to. So, there's a little bit of concern about the fact that he's not going to be -- sort of go for the jugular the way that many Democrats are hoping that they really step up here at this convention here in Denver.

O'BRIEN: And there's a little time for speech tweaks to be made if they need to be made, I suppose.

Dana Bash for us. Thanks, Dana. Appreciate it.

Coming up next, we continue our conversation and our coverage, as well with Mort Zuckerman, David Gergen and Amy Holmes; our panel, up next. Stay with us.

(COMMERCIAL BREAK)

O'BRIEN: Barack Obama is today at a town hall meeting inside a maintenance hangar at an airport in Kansas City, Missouri. A town hall in an area in fact, where these folks, hundreds of them, will lose their jobs. It's been slated to close and their jobs move to Tulsa, Oklahoma. So he is talking to a crowd very interested in what he is saying about the economy. He's been doing more of these kinds of events, fewer big speeches, even though, of course, he's going to make an exception on Thursday, in Denver, for 75,000 people who will come out to hear him speak.

The focus tonight though, is on Hillary Clinton. So, let's dig deeper now. We're joined by CNN senior political analyst David Gergen, CNN political contributor Amy Holmes and Mort Zuckerman, the publisher of the "New York Daily News" and editor and chief of "U.S. News & World Report."

It's the economy stoop. But I guess you can't really make it more clear than that. And Anita Dunn really set it up this. This is the time to look forward and look backward. So, I guess they're really going to start with looking backward and look at the numbers and how people are living today.

MORT ZUCKERMAN, EDITOR-IN-CHIEF, U.S. NEWS & WORLD REPORT: Well, 75 percent of the American people think the economy's in poor shape. It's the number one political issue. 68 percent of Americans own their own homes. American families -- its the largest asset on their balance sheet and homes prices have plunged by double-digit numbers in the last year. The first time that has happened since the end of the 1930s.

So everybody's hurting, particularly with oil prices and food prices going up and taking up about $2,000 of after tax income out of the average American family. It's going to be the number one issue, it's going get -- the economy's going down, it's going to get worse between now and November. Every candidate's going to have to address that and address that in ways that connect with the American people. Because they are hurting and they are hurting in a way -- whatever the numbers are, it actually is worse than the numbers look like.

So we are really, really looking at a very, very serious economic time and nobody knows where the bottom is. This is an unprecedented time over the last 70 years. Not going to be like the Great Depression. It's not going to be like the Great Depression, but still, nobody knows how bad this economy is going to be. And everybody's nervous about it.

O'BRIEN: Well, we were listening to little snippets of Barack Obama speaking in that town hall. He laid out some plans, I wouldn't say it was a specific 13-point proposal that he's kind of famous for.

What do you think about what you heard? Why don't you start.

ZUCKERMAN: Well, look. He's -- we are sitting here today with a $500 billion plus deficit in this economy that is threatening the validity and the value of the U.S. dollar, which is critical to the economy of this country.

He has articulated and to some extent so has John McCain, a huge array of expenditures that are just going to add dramatically to our budget deficit. At this point, nobody can afford it. Nobody in this country can afford either of their programs. So somebody's going to have to figure out a way to reduce government expenditures, to increase government tax revenues in order to support these programs.

All of these are going to be very, very difficult.

O'BRIEN: I was going to say, but ---

ZUCKERMAN: It sounds good in a political year. In reality, it's going to be difficult.

O'BRIEN: You can't stand in front of a group of people who are losing their jobs and say, let's raise taxes and let's more cut back because we don't have the money.

AMY HOLMES, CNN POLITICAL CONTRIBUTOR: And we heard during the Republican primary when John McCain was in Michigan, he said your jobs are gone and they're never coming back. That was a terrible gaffe for John McCain.

O'BRIEN: Not quite a rousing speech.

HOMES: No. And Mitt Romney won that state in the Republican primary.

But we heard with Barack Obama, you know, a list of things he would want to do. For example, he said that he'd like to give every student college tuition in exchange for national service. You know, this was an idea that Bill Clinton floated when he was president. He crunched the numbers and he found out it was too expensive. And you can bet that the John McCain campaign is going to be leaping all over this, adding up the numbers and telling America we just can't afford it.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I actually thought what John McCain said in Michigan was a little straight talk. And he won the primary.

So I think what we need is more straight talk from these candidates, not less. Because more just emphasize what we're going to be facing after this election is so much tougher than any president has faced in a long, long time. That voters deserve to know before we get there, basically what are you going to try to do? How are you going to tackle these enormous deficits you're going to inherit and then pay for the programs you're outlining?

Barack Obama's coming along with a lot of plans for spendings and some tax increases to pay for them. But, it's still falls fore short. John McCain is coming forward with massive additional tax cuts, not very much in spending, but he's even farther away from being able to balance the budget. Both candidates owe us some semblance of a real budget. And some sense of a plan before we get to the election, not after the election. And they ought to start here with the conventions.

O'BRIEN: Mort talked about -- you talked about the word unprecedented. Which I have to imagine for a political candidate is one of those terrifying words. Because you like to sort of fall in the footsteps of what's been mapped out a little bit before you.

What kind of challenges does this put in place of Barack Obama over the next couple of days, and also for John McCain when he gets his turn in the next week? For how they're going to navigate this unprecedented -- I mean, it's quite dire. You got to spin it to people who are in that room cheering at the end of your speech. And also be realistic, which is tough talk.

How do you navigate that?

ZUCKERMAN: This is a very serious issue because it is unprecedented in the sense that home prices have not dropped year- over-year since 1937, '38, '39. This is the first time this has happened in 70 years. It affects 68 percent of American families who own their homes. By the way, 75 percent of the people who vote, own their own homes.

There is no answer to that. No easy answer to that. Certainly if you want to in a sense flood the economy with money which you don't have, it's not going to solve the problem. So we are in for not an easy time, where all of these promises will simply be unaffordable, will not be able to be implemented.

And we are going to have to find a way to get ourselves out of this economic hole and it's going to take time. And I agree with what Dave said. We are going to need honest talk. Because people are going to come in, if they've made all of these promises and they don't live up to the promises, they'll lose their credibility with the American public immediately.

O'BRIEN: But we all know, honest talk often is a really great campaign ad for the other side. Right? You honest talk and it's kind of uncomfortable and then all of a sudden you're just handed a gift and you're not in a position to put your honest talk into action because you lose.

HOLMES: Sure. And it can be a very bitter pill for the American voter to swallow if they're being told your jobs are gone away and not coming back.

And it's also a note that the Obama campaign is running an ad quoting John McCain saying, I don't know much about the economy. He was being honest, but now it's being run as an attack ad.

GERGEN: Well, there is a dilemma. We all remember 1984. Perhaps you don't, you probably weren't alive.

HOLMES: I was alive.

O'BRIEN: She was alive then! We're the same age. I know how old she is.

ZUCKERMAN: I was a teenage, myself.

GERGEN: But, Walter Mondale, against the advice of his political director Bob Beckel, went up to the acceptance speech and said, Reagan won't take it, he's going to raise taxes. I will, I'm going to do it. And he wound up winning two states. You know, he was massively defeated.

So, there is a dilemma for the candidates. But you know, I think the country's in a different place that the country's willing to hear. Because if everybody understands we're in tough times now. Everybody wants it, just talk to us straight and we'll take it. You know, if you want to be Churchill, tell people the truth and tell it without the bark on and see if you can get there. You're going to be a lot better president when it all happens.

I think people are willing to accept some sacrifice if they think this is a sensible plan. You're not going to waste their money. There's an awful lot of feeling that all of these government programs waste too much money. And you've got to convince people this is money that's going to be sensibly spent and we're going to get rid of a lot of the junk.

ZUCKERMAN: And that's where McCain's focus on pork barrel earmarks really has such a resonance with the American public. Because that is total --

O'BRIEN: Waste is one of those things everybody understands. We talked about that earlier, being unclear about a message. Waste is a message people can truly grab. GERGEN: And he's right about that. But if you get rid of all of those little earmarks, it's a tiny percentage of what's needed.

HOLMES: David, you're not supposed to be reminding the voters of that fact.

O'BRIEN: You know, they're reminding me that we are way past our time. But, a fascinating discussion.

Thank you. I appreciate it, to our panel.

We've got much more coverage coming up in about 13 minutes. CNN Election Center in New York. I'm Soledad O'Brien.

Let's sent it right back to Atlanta and CNN NEWSROOM for coverage of Hurricane Gustav, right after this short break.

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PHILLIPS: More now on that Sudanese aircraft that was hijacked within the past hour. This is the word that we are getting now. The passengers of that jet that was hijacked shortly after take-off from Nyala, that is the largest town in the country's war-torn Darfur region, by the way, was headed to Libya.

And about 20 minutes after it took off, we're told that the pilot called into the Nyala Airport to report the plane had been hijacked and that he was en route to Tripoli in Libya. We don't have any immediate information on who was behind that hijacking, possibly about 87 passengers onboard. It was a Boeing 737, we are told. And now it has landed in Kufra, Libya. As we get more details, we'll tell you more.

It's now 1:51 Eastern time. Here are some other stories that we are working on right here in the CNN NEWSROOM.

Police and federal agents are scouring the southwest for five men who broke out of a New Mexico jail. These fugitives include a convicted murderer and an accused killer. Three other of the inmates who escaped with them have been caught.

Firefighters in Boise, Idaho find a badly-burned body inside the ruins of a home. It was one of nine houses destroyed in a wildfire that forced the neighborhood to evacuate yesterday. No I.D. yet on the victim.

And home sellers are getting hit like never before. Numbers out today show U.S. home prices fell 15.4 percent last quarter as compared to the same time last year. That is a record drop, by the way.

Watch out for Gustav. The brand new Category 1 hurricane has drenched the Dominican Republic. By the time it hits Haiti later today, it could be a Cat 2.

Rivers are still overflowing in Florida, but at least the sun is out, giving folks a chance to dry out a bit. What is left of Tropical Storm Fay is still soaking parts of the southeast. Tornado and flash flood watches extend from Georgia through western North Carolina. We're going to have an update from our Chad Myers in just about 30 minutes.

Well Madonna attacking John McCain. The campaign fires back at the pop star's concert video.

And not poor enough for Medicaid, not old enough for Medicare. Americans caught between the two have to work through their health problems.

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PHILLIPS: Live pictures now of day two of the Democratic shindig in Denver, Colorado. A live look at the Pepsi Center where the Democratic National Convention has another big night ahead. See it start to finish right here on CNN.

Surprise drop in the number of Americans without health insurance, the first in seven years. The Census Bureau found 45.7 million people without coverage in 2007. That's down by more than a million from 2006. It's attributed to more people enrolling in government health programs, particularly the children's plan.

Millions of people get health insurance through work, but what if you get sick and can't work? CNN chief medical correspondent, Dr. Sanjay Gupta, met a professional who is having to work through his heart problems.

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DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: As an optometrist in South Carolina, Jim Matthews was making about $100,000 a year. But he got sick, a serious heart condition forced him to sell his practice.

JIM MATTHEWS, OPTOMETRIST: It's a chronic condition. And -- had open heart surgery which cured it.

GUPTA: Then doctors found an aneurysm in a major artery. He may need major surgery again.

MATTHEWS: And you'd like to try some contacts?

GUPTA: At age 56, Matthews would like to slow down. But no job means no health insurance. So that's just not an option.

MATTHEWS: If you have health problems, you're not poor enough for Medicaid, you're not old enough for Medicare, and you don't have health insurance through your work, you are really out of luck.

GUPTA: According to the Kaiser Family Foundation, today more than 158 million Americans rely on their jobs for health coverage. But in the past eight years, thousands of companies have stopped offering insurance. Those who still do are asking workers to pay on average a whopping 112 percent more. Some health analysts say getting it from your employer is not the answer.

REGINA HERZLINGER, HARVARD UNIVERSITY: We wouldn't want them to buy our cars, our houses, our clothes, but we trust them to buy something that is so important to us, which is our health insurance.

GUPTA: But it can be a big gamble, especially for anyone with a pre-existing condition. When Jim Matthews went looking for individual health coverage, it wasn't just expensive, it was nonexistent.

MATTHEWS: Basically laughed at me. They said, you know, you don't have a hope with open heart surgery of having any broker write you a policy in the state of South Carolina. You are uninsurable.

GUPTA: Matthews leases a small office at a Wal-Mart making him eligible for a small business policy. Still, he paid $19,000 last year for medical insurance.

MATTHEWS: If my health condition changes, I'm just one step away of not being able to afford it. Suppose I can't work anymore?

GUPTA: So Matthews has to keep working.

MATTHEWS: I have no hope of retiring until I'm 65. I'm just crawling for the ropes to reach Medicare.

GUPTA: In the meantime, he and his wife will keep their fingers crossed and be thankful he has a job that offers health insurance.

Dr. Sanjay Gupta, CNN, reporting.

(END VIDEOTAPE)

PHILLIPS: In Canada, a dozen deaths are now linked to an outbreak of Listeriosis at a deli meat plant near Toronto. Maple Leaf foods is recalling more than 200 products now and sandwiches made with the recalled meat are being pulled off supermarket shelves.

And it is day two for the Democrats in Denver. We're going to go back to New York for more coverage of the party's national convention from the best political team on television.

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