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Barack Obama and Bill Clinton Do Lunch; Hurricane Ike Barrels Toward Texas

Aired September 11, 2008 - 18:00   ET


ABBIE BOUDREAU, CNN CORRESPONDENT: Now, I also interviewed his son Beau about when he nearly lost his father, and he still gets really emotional when he talks about remembering a priest administering last rites to his dad.
Now, Wolf, this documentary of course will examine Senator Biden's political record, but it will do much more of that. It will show you a side of him most people have not seen, that personal side that is so crucial to actually understanding who a person really is.

WOLF BLITZER, CNN ANCHOR: I can't wait to see it this weekend.

Abbie, thanks you.

Also, "Revealed" will have a second documentary on Sarah Palin. You can see all of the documentaries this weekend, Joe Biden and Sarah Palin, in probably ways you have neither seen either one before, the candidates revealed, Saturday night and Sunday night at 9:00 p.m. Eastern. That's when they start, 9:00 p.m. and 10:00 p.m.

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

Happening now: Sarah Palin says, without hesitation, she is ready to lead. She is speaking out about her qualifications and the threat of war in her first interview since becoming John McCain's running mate.

Plus, lunch with Bill Clinton. Barack Obama and the former president appear to put their recent grudges behind them. The best political team on television digging into this complicated relationship.

And Hurricane Ike barreling toward Texas. The mad dash is on to escape this monster storm.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Sarah Palin has largely stuck to a script so far since John McCain tapped her to be his running mate and thrust her on to the world stage, but right now the Alaskan governor has given her first national TV interview. And details are just coming into THE SITUATION ROOM right now.

Let's go to Dana Bash. She is working the story for us. In this ABC News interview, Dana, Governor Palin confronted one of the central questions that have been raised around her entire candidacy.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: That is right. That is the question that Charlie Gibson posed to her, whether she really thinks that she has the experience to be vice president or even president if circumstances came to that.

She responded that she is ready and she insisted that she did not hesitate when John McCain asked her to be his running mate. Here's more of what she said in that answer.

She said about John McCain in her answer to him -- quote -- "I answered him yes, because I have the confidence in that readiness and knowing that you can't blink. You have to be wired in a way of being so committed to the mission, the mission that we are on, reform of this country and victory in the war. So, I didn't blink then, even when asked to run as his running mate."

So, there you hear at least in that answer a pretty confident Sarah Palin about one of the central questions and that is her readiness.

BLITZER: And she was also asked about her threat from Russia, whether in Georgia or elsewhere. What did she say?

BASH: Well, first of all, she said, Wolf, that she believes that the Ukraine and Georgia should be allowed into the NATO Alliance.

Gibson followed up with her by reminding her that, under the NATO treaty, if another country is attacked within that treaty, that NATO should come to that country's defense. So, obviously, in the case of the recent conflict between Russia and Georgia, if Georgia were a member, that would mean war with Russia.

Palin responded -- quote -- "Perhaps so." But when Gibson followed up and asked if Georgia is really worth a war with Russia, here is what she said with that.

She said: "We have got to be vigilant. We have got to show the support, in this case, for Georgia. The support that we can show is economic sanctions perhaps against Russia, if this is what that leads to. It doesn't have to lead to war and it doesn't have to lead, as I said, to a Cold War, but economic sanctions, diplomatic pressure, again, counting on our allies to help us do that in this mission of keeping our eye on Russia and Putin and some of his desire to control and to control much more than smaller democratic countries."

So, there you have it. She does say, yes, Wolf, if Georgia was in NATO, then it is conceivable that the United States and other members would have to be called into using military force, but she is pretty clear there that she wants other options first, like economic sanctions.

BLITZER: All right. Dana, I want you the stand by, because I know we are getting more of this interview that is coming in. And we will check back with you on that.

Let's get to a powerful image right now on this September 11, two rivals for the job of commander in chief at a place where we learned, in the most horrible way, that the United States is vulnerable to attack.

And just two hours from now, John McCain and Barack Obama will come together once again at a forum of national service over at Columbia University in New York

Let's go over the Suzanne Malveaux. She is working this story for us.

You are near ground zero, where we saw those pictures, those images of the two candidates setting aside politics, at least on this day, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, you are absolutely right, because time is short, the stakes are high, and this race is tight. But, for 24 hours, these two candidates put aside their differences.


MALVEAUX (voice-over): Together at ground zero in a sign of unity.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: Hi. How are you? Good to see you.

MALVEAUX: Barack Obama and John McCain suspended their campaigns for this day to commemorate the September 11 attacks.

They were joined by New York Mayor Michael Bloomberg and McCain's wife, Cindy. Michelle Obama was in Chicago for their young daughters' first week of school. The candidates walked down the long ramp to greet families of the victims.

Their words were private, both sensitive to make sure this moment would not be political. Together, they placed flowers in the reflecting pool before a silent prayer, today a day that both candidates say there are no Republicans and Democrats, just Americans.

MCCAIN: Oh, thank you or the serving. Semper fi. Thank you. Thanks for serving.

MALVEAUX: After the ceremony, the candidates greeted first- responders and well-wishers outside.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: Thank you so much. Thank you so much. What's your name?

UNIDENTIFIED MALE: David (OFF-MIKE) OBAMA: I really appreciate it.

MCCAIN: All right, sir. See you soon.

MALVEAUX: Then cordial pats on the back and a final handshake before resuming their political fight.

MCCAIN: OK. Thanks.


MALVEAUX: And, Wolf, Barack Obama travels to New Hampshire to campaign, that, of course, the state that really rejuvenated Hillary Clinton's run, at least in the primaries. And then John McCain, he actually stays here in New York. He is going to be doing some taping for some shows, "The View," and "Rachael Ray," obviously trying to court a critical voting bloc. That is women -- Wolf.

SANCHEZ: Suzanne, do we know whose idea this was today for both of them jointly to come to ground zero? And, also, Michelle Obama, where was she?

MALVEAUX: Well, Michelle Obama was in Chicago. It was the first week of school for their young daughters, Sasha and Malia. So, she felt it was important to be with them for this week.

In terms of whose idea this was, we're even getting conflicting stories about that, Wolf. An Obama spokesman says that it was Obama who suggested this when he called McCain to congratulate him after the Republican Convention. A McCain spokesman says that this was something that was mutually agreed upon. So, both of these campaigns taking credit -- Wolf.

BLITZER: Suzanne Malveaux, thanks very much.

ANNOUNCER: This is CNN breaking news.

BLITZER: Let's go right to Allan Chernoff. He's got a story, really a potentially explosive story that you are working on, a lot of reporters are working on. And it refers to Lehman Brothers. Tell our viewers what we are learning just now, Allan?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, Wolf, "The Washington Post" is reporting that one of the oldest firms on Wall Street, Lehman Brothers, may be sold off, "Washington Post" saying that the Treasury Department and the Federal Reserve have agreed to join and help Lehman sell itself off.

This clearly is a real blow to the firm. It has been really under siege for several weeks, even months now. Today, the stock of Lehman Brothers fell more than 40 percent, to only $4 and change. This really is a firm that has been battered by the mortgage crisis, Lehman Brothers holding a very large quantity of mortgage securities, and that has really hurt Lehman Brothers very badly -- Wolf.

BLITZER: It is unbelievable. Bear Stearns, a venerable firm, virtually collapsed. Fannie Mae and Freddie Mac, who would have believed these mortgage giants were on the verge of bankruptcy, and now Lehman Brothers?

Explain to our viewers out there what this means for the average person out there who is watching.

MALVEAUX: Well, what the Fed and the Treasury have been trying to do with Bear Stearns, with Fannie Mae, Freddie Mac, and now it appears Lehman Brothers as well, they are trying to bring stability to the financial markets. They're trying to prevent the dominoes from falling and from that to then take our economy down even further.

So, they really are trying to be very careful here, step in. What it also means is that, potentially, potentially, we're talking about taxpayer money here, but they are trying to prevent that. They're trying to bring in private investors to buy the firm, so that there is no taxpayer money involved.

Remember, back in the Bear Stearns deal, there was $29 billion of taxpayer money put up to help J.P. Morgan Chase actually engineer its takeover of Bear Stearns. And they certainly will try to avoid some deal like that happening, but let's see what happens.

BLITZER: Wow. And it says a lot about what is going on in the housing market, the credit crisis. My head is spinning just thinking about this. I am getting dizzy. And I know a lot of investors are very, very worried. I know Allan is going to stay on top of this story for us. Wow.

Coming up, he is the latest friend of Bill. Barack Obama is about to do something he has not done before in this campaign. And Bill Clinton is making a bold prediction. Stand by.

The governor of Alaska is experiencing a proud and painful moment as a mother. Sarah Palin is seeing her son off to Iraq. Jessica Yellin is in Alaska for us right now. Stand by. We will go there.

And the danger is oh so real, and it's enormous. Hurricane Ike, it's a monster. And it's so large, hundreds of thousands of people are fleeing for their lives literally right now.

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


BLITZER: Get out and get out now, that is the message from officials to hundreds of thousands of people in and around the Houston-Galveston area and other Texas cities along the Gulf Coast.

Hurricane Ike is churning across the warm waters of the Gulf of Mexico, building up speed. It is expected to become at least a Category 3, with winds reaching 111 miles an hour before it makes landfall. And it could bring a storm surge as high as 18 feet.

The more powerful side of the storm could lash Houston, and that is home, the greater Houston area, to some four million people. The Texas governor, Rick Perry, says he cannot overemphasize the dangers that Hurricane Ike poses right now.

When and where Ike is expected to crash ashore, that is an important question.

Let's get some answers from our severe weather expert, Chad Myers. He is working the story at the CNN hurricane headquarters. All right, what is the latest right now? What do we know?

CHAD MYERS, CNN METEOROLOGIST: From the 11:00 advisory to the 5:00 advisory, Wolf, the Hurricane Center, they have moved this storm now over Galveston Island, the south end of Galveston Island. And I still have to stress that there is an 80-mile-wide error at this point. You can still be 80 miles one way or the other. But the center of the cone that we always tell you never to pay attention to, the center of the cone is right over south Galveston Island, the part that doesn't have the seawall.

Then it moves on up into the Houston area. And it could be a 100-mile-an-hour storm still as it gets to Houston. We are seeing storm surge winds now pushing water into Bay Saint Louis, into Pensacola, big-time winds and wave in Destin, all the way over to Cape San Blas and then the hurricane warning to the west of there.

It is not so bad over here yet, because the storm is still in the eastern Gulf of Mexico. But it is forecast to be a Category 3, 120 miles per hour, at 2:00 a.m. on Saturday, either all the way from Beaumont. Still, Port Lavaca, you are still in the error cone. It could still wobble back and forth. And this thing kind of has been doing a up and down and back and forth, not a perfect straight line. That is typical of what a hurricane does. It wobbles just a little bit.

One thing we are also seeing now on this east side of this storm, because it is still in the eastern Gulf of Mexico, big-time storms from Macon, all the way down to Valdosta, even into Florida as well. Some of these storms, as you know, in a hurricane can be spinning. There have been a couple of tornado warnings today so far, but nothing reported on the ground -- Wolf.

BLITZER: We spoke in the last hour -- I don't know if you were listening -- to the police chief, Harold Hurtt, and I asked him how many people really are in harm's way and should be evacuating, fleeing right now. He said about a half a million, everyone basically in the Galveston area and in one part of the Houston area, but he didn't say everyone in Houston should be leaving. And there are some four million people who live in the greater Houston area. You agree with his assessment?

MYERS: If an official tells you, you are under a mandatory evacuation, it is time for you to leave. Yes, I agree with it.

I also agree that people that don't want to be without power for a week or two, especially in this purple zone, where winds could approach 130 miles per hour, in a gust, not sustained, but a gust. A gust over 100 is going to knock the power lines down anyway. So, I would suggest, hey, if you are a little bit fragile, if you are on -- maybe you're on oxygen or you are plugged into something in the house, you need to go, too, even if they have not told you to go, because if you cannot live with a week or two without power, then that is something else to be concerned with. There are other factors in there.


BLITZER: The width of this storm, it is huge, like 700 miles or so. How worried at all should the folks in New Orleans be about the surge and some of the winds leading waters up to those levees, which we know are vulnerable?

MYERS: Well, haven't talked at all about that, because we have been looking at Bay Saint Louis. But the winds are blowing into Lake Pontchartrain, through Lake Borgne, and I believe some of these bayous are filling up in New Orleans.

We do know for a while that U.S.-90, that highway that got hit so hard by Gustav, was closed at times today, because water has pushed into those ditches and bayous and so that is a concern for New Orleans tonight, too. You are going to have to watch that. We are not going to be pushing water to the tops of those levees like we did with Gustav, but if you are in a low-lying area, things could still go wrong for you tonight.

BLITZER: All right, we will stay on top of this.

Chad is going to be working hard. All of us are going to be working hard over the next several days.

Some congressional Democrats are urging the new head of Fannie Mae and Freddie Mac to take a drastic step to help struggling borrowers stay in their homes.

And never-before-seen video of a young John McCain after he was released from the Hanoi Hilton prison in Vietnam. How it was uncovered, we have details.

And seven years after the 9/11 attacks, why isn't the national security issue a bigger issue on the campaign trail right now? I will discuss that and a lot more with the best political team on television.

Lot of news happening today, a very busy day right here in THE SITUATION ROOM.


BLITZER: Seven years after the attacks on America, national security is less of an issue for voters now choosing between Barack Obama and John McCain. But the presidential candidates still know they need to assure Americans that they will be safe on their watch if elected. Let's go to Mary Snow. She is working this story for us. You have been looking at the two candidates and how they compare, Mary, on these most important national security issues.

MARY SNOW, CNN CORRESPONDENT: And, Wolf, both camps say their campaigns have significant differences on national security issues. Security experts see similarities.


SNOW (voice-over): As they mark the 9/11 anniversary together, each has vowed on the campaign trail to think action to make the country safer from terrorism.

MCCAIN: My friends, if I have to follow him to the gates of hell, I will get Osama bin Laden and I will bring him to justice.

SNOW: Republican presidential hopeful Senator John McCain has stressed that Iraq is the central front in the battle against radical Muslim extremism. Democratic presidential hopeful Senator Barack Obama has maintained the U.S. has made a mistake in focusing on Iraq, and not Afghanistan, where soldiers are fighting al Qaeda and the Taliban.

OBAMA: We have seen more coalition deaths in Afghanistan than in Iraq. And the situation has been deteriorating.

SNOW: Terrorism expert Brian Jenkins has studied the positions of the campaigns and says, while the campaigns play up differences, he finds similarities.

BRIAN JENKINS, SENIOR ADVISER, RAND CORPORATION: If you look at their positions on the conflict in Afghanistan and going after al Qaeda, there is not a great deal of difference.

SNOW: Both candidates favor sending more military support to Afghanistan. Both have talked about the need to address terrorist activities in Pakistan. What is their big difference?

JENKINS: It is much more a matter of nuance and perhaps Senator Obama more concerned with international diplomacy, at least the rhetoric of Senator McCain more focused on the military aspects of the struggle.

SNOW: When it comes to issues of homeland security, both candidates have approved a wiretapping bill, although Obama initially opposed it. The candidates have outlined their positions on their Web sites. Some security experts say they would like to hear more from them on the campaign trail on issues like national I.D. cards or the future of the Department of the Homeland Security.

COL. RANDALL LARSEN (RET.), INSTITUTE FOR HOMELAND SECURITY: I think there's a lot of issues that they could give us some real definition that would give us a bright line between the two candidates.


SNOW: But voters don't seem to be overwhelmingly demanding those details either. A new CNN/Opinion Research Corporation poll shows that only about one in 10 Americans say terrorism is the most important issue to their vote for president -- Wolf.

BLITZER: All right. Mary, thanks. We are going to discuss later. Mary Snow reporting.

Barack Obama and Bill Clinton say they had a great conversation over lunch in New York today, but did they truly move beyond the bitterness of the primary season? The best political team on television is standing by.

And Obama and McCain on stage tonight. Will the forum on national service at Columbia University be a warmup for their first presidential debate?

And Sarah Palin sends her son off to the war in Iraq. CNN's Jessica Yellin is standing by live for us in Alaska right now.

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


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

Happening now: There was bitterness and anger during the primaries. Now Barack Obama and Bill Clinton are getting together for a meeting of the minds. The former president will go out on the campaign trail, but will he put his heart into it?

Sarah Palin gives her first big interview to the national news media. Will John McCain's running mate stray from her message?

And never-before-seen video of a young John McCain after he was released from Vietnam's notorious Hanoi Hilton prison. How was it uncovered?

All of this, plus the best political team on television.

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

There certainly were hard feelings during the primary season, but Bill Clinton and Barack Obama were all smiles today. Listen to this.


BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I'm going out this month. As soon as the -- as soon as my Global Initiative is over, I'm going out.

OBAMA: We're putting him to work.

QUESTION: Will you be out frequently? What...


CLINTON: Yes. Well, I have -- I have agreed to do a substantial number of things, whatever I'm asked to do.

QUESTION: What do you think of the state of the race, Mr. President?


QUESTION: What do you think of the state of the race right now? Is it too close for comfort?

CLINTON: I predict that Senator Obama will win, and will win pretty handily.

OBAMA: There you go.


OBAMA: You can take it from the president of the United States. He knows a little something about politics.

CLINTON: That's what I think is going to happen.


BLITZER: The former president and the presidential hopeful met today in New York -- you just saw it -- at the former president's office in Harlem.

Our senior political correspondent, Candy Crowley, is joining us right now to tell us a simple question, Candy. Tell us what it all means.


As you know, this has been the subplot since -- really since February and the New Hampshire primary, when things got extremely tense between Bill Clinton and Barack Obama, in fact, between the two families.

So, ever since then, since June, when Hillary Clinton pulled out, this was the drama that was going on. Would the Clintons fully support him? Did they really mean it? She came on board right away. Bill Clinton went silent. We were told, well, he is in Europe. Well, he is this, that kind of thing.

So, in the end, what we have here is the picture. And this is the picture they wanted, which is, here are the two of them together. They're smiling. They're talking about -- you know, Barack Obama congratulating Bill Clinton on his foundation, Bill Clinton congratulating Barack Obama on his successful campaign.

The next thing we're going to see is the two of them campaigning together. And that's -- that's what they need. They got their convention, now they need him out there. And they are moving it along.

BLITZER: And they need her out there, as well?

CROWLEY: Absolutely. But she's been out there. She's been in Florida for him. She's going out again this weekend. So she has been the trooper.

The drama really has been Bill Clinton, where there really was a lot of bitterness there. In particular, he felt that his administration in the late '90s was not given its due by Barack Obama. He felt that his relationship with the African-American community was hurt and he blamed Barack Obama for that.

So there was -- there was a little bit more personal bitterness between Bill Clinton and Barack Obama, it seemed. But they are, again, kind of on their way, it looks like.

BLITZER: All right, Candy. Thanks very much. Let's get some more analysis on what this all means.

Joining us, our senior political analyst, Gloria Borgia; our chief national correspondent, John King; and our senior analyst, Jeff Toobin. They're all part of the best political team on television -- John, when you hear the former president flatly predict he's going to win -- Obama -- and win big, you know, some people will be skeptical, but, you know, he's got a pretty good political antenna, doesn't he?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, Democrats certainly like that antenna, Wolf. He's the last Democrat to win the White House and he won two terms.

I know from talking to his associates that Bill Clinton views this race very much like 1980. He believes that Barack Obama has registered new voters, there's a movement afoot in American politics. And like Ronald Reagan, if he can do well in the debates, the election will break late.

That is Bill Clinton's theory on the election. He believes the issue set certainly favors the Democrats and you could tell from those comments today, yes, there's tension, still, between the two men. But Bill Clinton loves to campaign. He's eager to get out there.

BLITZER: I assume he will do it. And Obama clearly wants him and needs him and Hillary Clinton, as well, Gloria. This is very different than Al Gore back in 2000, when we didn't see much of Bill Clinton out on the campaign trail.

GLORIA BORGER, SENIOR POLITICAL ANALYST: Funny you should mention that, Wolf, because I just was talking to a Clinton person today who says, you know, they really out to be using him a lot more than they're probably thinking of using him. And o you go back this argument of how Bill Clinton can be useful.

And, of course, he can be useful in a state like Florida, but he can also useful in those battleground states that we've been talking about so much, in the rural areas, where Barack Obama notoriously had some real trouble against Hillary Clinton.

And there's a sense that Bill Clinton could be very useful to him there.

They also believe, by the way, that Bill Clinton should be appearing in Arkansas on behalf of Barack Obama, that he could do him a lot of good there.

BLITZER: Yes, I assume he could. What do you think, Jeff?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST, "NEW YORKER" MAGAZINE COLUMNIST: Well, you know, Bill Clinton and Barack Obama are both Democrats, but with very different appeals. You know, even at the height of the Lewinsky scandal, the question that Clinton always did well on was does he care about people like you?

He just had a magnetism for ordinary folks that Obama has had a little trouble with. He's a cooler character. And if Clinton can sprinkle some of that dust on Obama, that would be very good, because that is precisely what Obama needs.

BLITZER: And I guess the question is, will Bill Clinton go out there enthusiastically, John, and really put his whole heart into this or will it sort of just be a pro forma I'm here, I'm ready to help a little bit.

KING: He doesn't go halfway when he's out campaigning, Wolf. Obviously, again, there are lingering tensions. But if he is going to go out there, he knows it's not only Barack Obama on the ballot, but his effort will be judged every step of the way.

And Jeff makes a fascinating point, because Barack Obama's biggest problem right now is with those Hillary Clinton voters -- white, blue collar voters. In Missouri, Barack Obama now down 20 points among whites. In Florida, the number is about the same. And in those states, the polls are trending toward John McCain.

If that starts happening in Iowa and Pennsylvania and you see early evidence of McCain building his support among white men, then Barack Obama is in deep trouble. And that is a place where Bill Clinton can help connecting the policies. Barack Obama has the policies. He has not been able to connect them to the personal lives around the kitchen table of working, blue collar Americans.

That is what Bill Clinton was best at. That is how the Obama campaign, despite any tensions behind closed doors, they believe he can help and they believe today, more than a month ago, they need his help.

BLITZER: All right, guys, standby for a moment, because we've got a lot more to discuss, including the governor, Sarah Palin. She's been giving her first major interview since being named John McCain's running mate. We're going to have some details of that and we'll assess. That's coming up.

And the presidential candidates were together at ground zero this afternoon. They'll be together at tonight's presidential forum at Columbia University. You'll see it live here on CNN at 8:00 p.m. Eastern. What do they need to do tonight?

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


BLITZER: Let's get back to our panel, including Gloria Borger, John King and Jeff Toobin.

They're getting ready for this forum tonight, Jeff, over at Columbia University -- back-to-back interviews with McCain and Obama. A lot of people thought at the Faith Forum out in California in August, McCain seemed to be better prepared than Obama. His answers were shorter, tighter. What do you see happening tonight?

TOOBIN: Well, I think Obama better show some feistiness. Just for example, you want to talk about service, he should talk about being a community organizer, about how sometimes -- which is something he was attacked for at the Republican Convention. Talk about how sometimes government stinks, that it's corrupt and incompetent -- like he will say the Bush administration -- and I fought government as a community organizer.

I mean that's the kind of thing that I think he could take a disadvantage and turn it to his advantage, if he's willing to mix it up.

BLITZER: Who has the advantage tonight, Gloria, going into this forum?

BORGER: I think it's sort of more even terrain than the Faith Forum, because this is less treacherous ground for Barack Obama. He doesn't have to talk about those hot button cultural issues that became kind of a problem for him in the last forum.

He has a plan for service. He has a faith-based initiative. And I think that he's got a lot of ground to stand on.

As Jeff said, he could talk about his community organizing, just as John McCain can talk about the importance in his life of his service to his country.

So I think, in a sense, they are -- they're on more equal footing here tonight.

BLITZER: You know, John, I want to play for you a little clip -- we're just getting it in -- of the ABC interview with Sarah Palin. Charlie Gibson asked her about her credentials on national security, whether she was ready. She felt personally ready to be commander-in- chief.

Now, here's what she said, in part.

(BEGIN VIDEO CLIP) GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: But it is about reform of government. And it's about putting government back on the side of the people. And that has much to do with foreign policy and national security issues.

Let me speak specifically about a credential that I do bring to this table, Charlie. And that's with the energy independence that I've been working on for these years as the governor of the state that produces nearly 20 percent of the U.S.

domestic supply of energy, that I worked on as chairman of the Alaska Oil and Gas Conservation Commission, overseeing the oil and gas developments in our state to produce more for the United States.


BLITZER: All right. You got the gist of it. She's not flinching at all, at least in that excerpt and some of the transcript that we've read, John. She says she's ready, she's ready on day one and she has no doubts that she's up to being not only vice president, but, if necessary, president.

KING: And, Wolf, this will be the closely -- the most closely analyzed interview, perhaps, in vice presidential campaign history because of all the focus and attention and excitement surrounding Sarah Palin.

The McCain campaign does believe that when there are questions about her experience, her national security experience, that the argument she just made is one that she can sell to the American people.

At a time when energy has become the major subset of the economic debate in this country, that she can say I have credentials on an issue that is important to our domestic security and our international and national security because of our reliance on foreign oil.

So that is a subject matter in which they want her talking about all of the time. But the subject of this interview, she talks about Russia, she talks about NATO membership -- her own lack -- no hesitation, at all, she says, when John McCain asked her the question. This is going to be incredibly intensely analyzed by us in the media and by partisans on both sides and by voters out there trying to make up their minds.

BLITZER: And, Jeff and Gloria -- Jeff first -- there's no doubt people are going to be listening for every nuance to make sure she really appreciates and understands the -- what's going on.

TOOBIN: Yes. And I think there will be a little problem with the nuance of her answer about Georgia. She seemed a little overly willing to go to war with Russia over Georgia.

But, you know, like that question Charlie Gibson asked, I mean, are you ready to be president?

What she's going to say? No? I mean it's a pretty...


TOOBIN: I mean, yes, it's a perfectly fine answer that she gave. But I mean she's running for vice president. What other kind of answer could she give?

BLITZER: Yes. Well, on the Georgia thing, I read that chunk. And what she basically said was that if Georgia were to be a member of NATO...


BLITZER: ...the U.S., of course, would be obliged to come to the defense of Georgia or Ukrainian or any other NATO ally under those kinds of circumstances. So she had that little nuance in there.

BORGER: Right.

TOOBIN: Well, yes. But I mean we went through 50 years of a cold war without going to war with Russia over things a lot more important, frankly, than Georgia. So, I mean I just thought it was a somewhat odd answer, but we'll parse them very carefully.

BORGER: You know, she's going to be criticized no matter what she does, because if she's very firm, you're going to say how can she possibly be so firm, this is a nuanced answer that we've been debating for 20 years. And, by the way, the questions are going to be looked at very critically, too, because don't forget, this is someone that everybody, including all of us, would love to interview.

TOOBIN: That's for sure.

BORGER: And Charlie Gibson has that opportunity at great length. And so we're all going to be looking at both the questions and the answers, because we all have so many questions we want answered.

BLITZER: And we would love to have her in THE SITUATION ROOM...

BORGER: Any time.

TOOBIN: Any time.

BLITZER: Of course. An open invitation. Guys, thanks very much for joining us.

Barack Obama is certainly showing he takes his Republican opponents seriously, even when he's appearing with the late night comic, David Letterman. On "The Late Show" last night, Senator Obama talked with Letterman about John McCain's selection of Governor Palin as his running mate.


OBAMA: Look, she's on a wild ride and the -- and there's no doubt that she's energized the base. But ultimately what we've seen over the last week is a concession on the part of the McCain campaign that this election is going to be about change. You'll recall, you know, for the last two years, we've been talking about needing to change and how Washington works, how the country is managed. And people were saying no, it's about experience, experience, experience. And over the last week-and-a-half, I think they recognize that, no, the American people want something fundamentally different -- and for a good reason. Because when you travel, it doesn't matter whether here in New York City or a tiny hamlet somewhere in the Midwest, what you find is people are just having a tough time right now.

The economy is not working for middle class families. Incomes have gone down. People don't have health care. You've got foreclosures all across the country. And so people want something different. And whoever makes the better case that we have had enough of the last eight years, we need something fundamentally new, whoever makes that case to the American people will be the next president.


BLITZER: Senator Obama on "The Late Show with David Letterman" last night. Lou Dobbs is getting ready for a very special show that's ready -- that's going to be here in Washington right at the top of the hour.

You've got your Independent convention going on. We've been watching all week.

But first of all, what do you think about this latest sort of twist and turn in this presidential contest?

LOU DOBBS, CNN ANCHOR: Well, you know, it's funny. If you're sitting there listening to Obama, who's run the slickest, smartest, shrewdest campaign right up until Russia invaded Georgia. The man cannot find his tempo again. He is not -- his campaign is like they're still on vacation.

You just heard the man talking there with Letterman. He's boring, just as Palin comes in to give excitement to the Republicans. He talks about exciting the base -- 62 percent of the men in this country have a favorable view of Governor Palin.

And I heard our colleague

Jeff Toobin say well, he's got some questions or he's got to think about that answer of hers on whether or not, as a member of NATO, the United States would have to defend Georgia had Russia invaded it.

Let me help you out,

Jeff Toobin. No nuance required. We would be required to do so, as would all of the members of NATO. And that's the reason Russia does not want the Ukraine or Georgia or any other new Eastern bloc country to...

BLITZER: So I hear you saying that Obama seems to have lost his momentum, his mojo, if you will, but McCain has gained it, is that what you're thinking?

DOBBS: I don't think McCain has gained a darned thing except a great running mate who's energizing just about everybody. This woman has turned feminism on its head. You're watching women in this country trying to figure out what in the heck -- from the left, what in the heck this woman is doing to them. Women on the right are sitting there saying, you know, wow! She's talking sensibly. Because she's, first, pragmatic. She's trying to be painted as an ideologue, of course, by the Democrats, but she's coming across very pragmatic. She's strong. And, man, you've got to love the fact that this woman knows how to shoot.


BLITZER: I know you do.

DOBBS: I do.

BLITZER: All right. Tell us about the show that's coming up at the top of the hour.

DOBBS: Well, we're going to continue to examine all of the issues that these candidates are avoiding -- illegal immigration, border security.

And why aren't people talking about the real jobs that are being lost?

They want to put it in the context of the various Democratic prisms, if you will -- the kaleidoscope of their partisan ways. We're talking about it in real terms and talking about why these candidates cannot break away from financial -- the financial support of Wall Street.

Both of these candidates being supported by Wall Street firms. Both of these candidates being supported by the same usual suspects and crowding out the voice of the American people. Right here in this lovely town of yours, $3 billion a year being spent and the American people have no way to know that this is a democracy, because there isn't a rule of majority. This is the rule of money and big business and special interests and ethno-centric interests.

BLITZER: A special "LOU DOBBS." We know it's special when you're in Washington.

DOBBS: You bet you.

BLITZER: We'll see you...

DOBBS: And it's great to with you.

BLITZER: We'll see you in a few moments, Lou.

Thanks very much.

DOBBS: Thank you. BLITZER: A bill the White House once called a "gimmick" -- now it's on the president's desk. We're going to tell you what it's all about and whether a veto is coming.

And a major change in what American Special Operations troops can and can't do when it comes to hunting down terrorists. There's news right here in THE SITUATION ROOM.


BLITZER: More on Governor Palin right now.

Iraq -- it's surely still a dangerous place, even though it's much safer than it was only a few months ago. It's still an environment that Governor Palin's oldest son is going off to -- that would be Track Palin. He's headed to Iraq.

CNN's Jessica Yellin is in Fairbanks, Alaska -- Jessica?

JESSICA YELLIN, CNN CORRESPONDENT: Wolf, in remarks that lasted less than 10 minutes, Governor Palin thanked members of the 1st Stryker Brigade for their service and said they will see the mission through and they will see victory.

She also spoke like a mother, offering these comments.


PALIN: And it's left for each family to bear the stress and some fear and some loneliness in its own way. The best way for all of us, as a military family, is to stick together and to look after one another, as so many do. That spirit of solidarity runs strong in the Fairbanks community and in the greater Alaska community. And we're going to need to see it through with that solidarity until you are all back home.


YELLIN: Palin's son Track is a Stryker dismount. We're told that Track has been on leave and is now going to deploy in the next few weeks. Officials at the base tell us that no special considerations have been made for his security because of his mother's position.

From here, Governor Palin heads toward her hometown of Wasilla, where she is going to spent a night in her hometown -- Wolf.

BLITZER: Jessica, thanks very much.

We'll continue to watch this story.

Meanwhile, some newly unearthed video appearing to show John McCain being released from a Vietnam prison into U.S. custody has now surfaced online.

Let's bring back our Internet reporter, Abbi Tatton -- Abbi, walk us through this video. ABBI TATTON, CNN INTERNET REPORTER: Wolf, this video showing up after 35 years. It appears to be Hanoi, 1973. A limping John McCain getting off a bus surrounded by fellow prisoners. This, after five- and-a-half years in captivity, waiting in line for his name to be called, waiting for -- so he could go and greet U.S. officers.




TATTON: This clip was just put online by Swedish broadcaster SVT. A former reporter of theirs tells the Associated Press that he unearthed it in their archives, wondered if this was the only footage of this event.

It actually isn't. CNN recently dug up this archive footage from the National Archives. It appears to be the same scene, though a different angle and this one in black and white. The Swedish video that has just been put online is a more detailed, in color version of this scene from a chapter in Senator John McCain's life that's featured so heavily on the campaign trail -- Wolf.

BLITZER: Thanks very much.

A fascinating video. I'm going to take a look at that online myself.

Abbi Tatton reporting.

On our "Political Ticker" right now, an apparent break-in attempt involving the Obama family. Thieves reportedly tried to enter the home of Obama's elderly step-grandmother in Kenya. The senator's uncle tells the Associated Press the suspects never got inside Sara Obama's home and that everyone is OK.

Remember, for the political news any time, you can always check out The Ticker is now the number one political news blog out there on the Web.

Coming up, the Summer Olympics may be over, but Paralympic Games are underway in Beijing Games and it's a golden victory for a U.S. swimmer. Today's Hot Shots and more, coming your way next.


BLITZER: Carol Costello is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Carol, what's going on?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, Congress has just sent an $8 billion rescue package for the Federal Highway Trust Fund to President Bush. The House passed the bill today, a day after the Senate did the same. The White House ill called the bill "a gimmick" and threatened to veto it, but has since changed course. The move comes as the Trust Fund is on the verge of going broke.

New fees for checking bags are helping boost the financial outlook for Continental Airlines. In a filing today, the airline estimates a new $15 baggage check fee for most customers will generate -- get this -- $100 million in revenue and cost savings. That news, along with falling oil prices, drove up Continental's stock on Wall Street today.

A fire has shut down a 30-mile tunnel running beneath the English Channel between Britain and France. And it's believed to be still burning right now. French authorities say 14 are hurt, but not offering any more details. The fire reportedly started on a freight train inside the tunnel. No word yet on the extent of the damage or when the so-called Chunnel could be reopened to traffic.

And we're learning of a major change in the rules of engagement for U.S. troops hunting down suspected terrorists. A senior intelligence official says President Bush has intelligence authorized troops to carry out ground assaults inside Pakistan without seeking Islamabad's permission first. Pakistani officials say a U.S. ground operation in their country killed 15 civilians last week and are vowing that they will not permit such actions it in the future.

That's a look at the headlines right now -- Wolf.

BLITZER: Thanks very much, Carol. Appreciate it. We'll speak tomorrow.

Here's a look at some of the "Hot Shots" coming in from our friends over at the Associated Press -- pictures likely to be in your newspapers tomorrow. Check it out.

At ground zero, the presidential candidates, John McCain and Barack Obama, they toss some roses into a reflecting pool on this, the seventh anniversary of 9/11.

In Texas, a boarded up business bears signs telling Hurricane Ike it is about -- should take a hike. But it's not. It's coming right toward Galveston and Houston.

In Beijing, American Aaron Popovich (ph) generates her Gold Medal -- celebrates, that is -- her Gold Medal swim at the Paralympic games. Congratulations.

And in Kansas, a dog shakes off water while getting a bath at a dog show. Look at that, sweet little dog.

Some of this hour's "Hot Shots" -- pictures worth a thousand words.

Remember, you can always check out our new SITUATION ROOM screen saver. You can stay up to date on all the latest political news. I know you're interested, especially as we wind our way down to these final 54 days of this campaign. You can download the new screen saver at room.

I'm Wolf Blitzer in THE SITUATION ROOM.

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