Return to Transcripts main page


Fears of Another Wall Street Collapse; Obama: McCain Doesn't Get It

Aired September 16, 2008 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: All right Rick thanks very much. Happening now, fears of another corporate collapse as that big insurance firm, AIG desperately seeks some cash. There are new developments happening right now with your money and your future at stake.
When it comes to the economy, Barack Obama says John McCain simply doesn't get it. Can McCain prove him wrong? McCain and Sarah Palin they're speaking out live this hour. Stand by.

And Palin's allies in Alaska say she's the target of an unlawful and partisan investigation. They're filing a new lawsuit to try to stop it. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

This hour John McCain is reuniting with his crowd-drawing running mate, Sarah Palin. We're standing by for the republicans holding an event in the battleground state of Ohio, exactly, exactly seven weeks before Election Day. We heard from Senator McCain earlier today, unfiltered. We plan to bring you some of Governor Palin's remarks live, that's coming up shortly. McCain and Palin are trying to convince voters they understand the severity of America's economic troubles right now. The Obama campaign pouncing on Senator McCain's suggestion that the fundamentals of the economy are strong. That remark hit a sour note yesterday as two big investment banks faltered and stock prices plunged as all of us know.

More high anxiety today on Wall Street. Only moments ago though, the Dow Jones industrials closed up more than 100 points after a 500-point nose dive yesterday. Stock prices fluctuated after the Federal Reserve disappointed some investors by not lowering interest rates today. Shares of AIG, American International Group, tumbled as the nation's largest insurer scrambles for billions of dollars of cash to stay afloat. Right now federal officials indicate they won't bail out AIG, but yet another corporate collapse could unleash new waves of financial misery. We're over all of these business related developments, your money is at stake, stand by.

But let's get to the campaign trail right now and the red hot fight over whose better equipped to help Americans in economic pain. Barack Obama is seizing on this issue hoping to reclaim momentum against the McCain/Palin ticket. Let's go live to our senior political correspondent, Candy Crowley, she's in Colorado with what's going on today. He minced no words at all, Senator Obama, he came out swinging earlier today, Candy. CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: He absolutely did, Wolf. Here is how the Obama campaign views this. The crisis on Wall Street is something that they can use to look at two major issues. One is whether John McCain is connected to Wall Street and the other is to connect Barack Obama to Wall Street. So what we are getting now is a little less of those rhetorical flourishes, a little more policy in talking about it, and we're getting a lot of what they call compare and contrast with John McCain as they try to frame McCain as totally out of touch with what's going on around those kitchen tables across the country.


SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: We are in the most serious financial crisis in generations. Yet Senator McCain stood up yesterday and said that the fundamentals of the economy are strong.


CROWLEY: Now, again, as he pointed out and you did too, Wolf, this was said yesterday. But, in fact, the Obama campaign is not about to let this one go despite McCain's explanations that he was talking about American workers and American productivity. This is something the Obama campaign thinks is worth repeating again and again, not just on the ground, but on the air waves.


SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: Our economy, I think, still -- the fundamentals of our economy are strong. Fundamentals of our economy are strong. Fundamentals of our economy are strong.


CROWLEY: Obama today, Wolf, laid out what he called six principles of making sure the sort of thing that's happened on Wall Street now doesn't happen in the future. Basically those principles were ratcheting up some of the regulations and tougher oversight of those regulations. While this is pretty much the same thing that McCain has been saying in different ways, Obama said, listen, his entire life McCain has described himself as against regulation, a deregulator at one point. So that is another thing that Obama is hitting very hard as he tries to convince voters, particularly working-class voters, white males, white females, that John McCain is just more of the same and will not fix what's currently ailing the economy. Wolf?

BLITZER: All right, Candy. Stand by. We're going to be getting back to you.

John McCain may have given more fuel to the Obama camp today even as he vented his outrage about corporate greed and abuse. At issue McCain's proposal for a commission to study the problem. CNN's Ed Henry is joining us now from Vienna, Ohio where the McCain campaign is getting ready for another joint appearance. The senator and the governor, they're getting ready to come in there right away, what's the latest? Because the Obama camp, Ed, clearly feels they've put Senator McCain on the defensive right now and that's exactly where they want him.

ED HENRY, CNN CORRESPONDENT: Wolf, that's absolutely right. You know, John McCain at an event in Florida yesterday actually had some empty seats when he was on his own on the campaign trail. Today with Sarah Palin about to be at his side behind me in just a few moments, you've got a packed house here in Ohio. A big difference, reenergizing the campaign when he brings her out here on the trail. But you're right, this area of Ohio around Youngstown particularly hard hit by the economy and that has become a source of a sharp disagreement out here on the trail.


HENRY (voice-over): Here on the road in cities like Tampa he's running as an outsider.

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: When Governor Palin and I are elected in 49 days, we're -- we're not going to waste a moment in changing the way Washington does business.

HENRY: But John McCain's latest solution to fix the economy comes straight from inside the beltway. Appoint a blue ribbon panel in Washington to investigate greed on Wall Street.

MCCAIN: We have to ensure every American that their deposit in a bank is safe, we have to have a 9/11 commission and we have to fix this alphabet soup of regulatory agencies that's left over from the 1930s.

HENRY: In Colorado Barack Obama jumped all over that idea.

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: Senator McCain offered up the oldest Washington stunt in the book. You pass the buck to a commission to study the problem. Here's the thing, this isn't 9/11. We know how we got into this mess. What we need now is leadership that gets us out.

HENRY: Obama senses an opportunity to seize the momentum back by touting the fact his tax cuts would put more money in the pockets of middle-class voters. But McCain notes, Obama also wants to raise taxes on the wealthy which could further damage an already teetering economy.

MCCAIN: I think if you increase American's taxes right now, no matter who they are, it will be a harmful blow to an already very, very serious situation. And I'm committed to keeping taxes low and restraining spending.


HENRY: Now, John McCain and Sarah Palin just landed the straight talk express just a few hundred feet from me. That's why the crowd here is getting a little bit louder. The reason why he's rolling out Sarah Palin in this critical state as the latest CNN poll of polls shows it's a complete dead heat, John McCain at 46 percent, Barack Obama 45 percent, 9 percent undecided, Wolf. This state is extremely close. Wolf?

BLITZER: All right, we're going to be hearing from Sarah Palin. Does she speak first or does McCain speak first, do you know, Ed?

HENRY: We do not know the order yet but I assume Sarah Palin would go before John McCain.

BLITZER: All right, we'll go there live once she shows up, let us know. Ed Henry is on the scene for us in Ohio watching this story.

Let's check in with Jack, he's got the Cafferty file, Jack?

JACK CAFFERTY: Did I hear that right? McCain wants to appoint a commission to study greed on Wall Street?

BLITZER: Yes. What went wrong this time to try to learn the lessons to make sure it doesn't happen again. That's what he announced this morning.

CAFFERTY: Governor Sarah Palin is being investigated by lawmakers in her home state of Alaska. At issue, public safety commissioner Walt Monegan and whether he was fired because he refused to pink slip a state trooper who divorced Palin's sister. But Palin is refusing to cooperate with the investigation. Shades of President Bush, right? Embarrassing investigation, just refuse to cooperate and then claim it's all somebody else's fault. Palin says the probe has been hijacked by the Obama campaign for political gain. But Monegan was fired and this investigation was begun long before Palin was ever named to the republican ticket, clear back in July. The Obama campaign denies the accusation. McCain's people say that Sarah Palin will not cooperate with the investigation because it is, quote, tainted. They insist Monegan was fired because of insubordination. Palin has not been subpoenaed but last Friday Alaska lawmakers voted to subpoena her husband, several aides and a lot of telephone records. This kind of stuff goes a long way toward explaining why Sarah Palin is reluctant to do interviews or hold news conferences. Here's the question. What does it mean that Governor Sarah Palin's refusing to cooperate with the investigation into the firing of her public safety commissioner? Go to, post a comment on my blog. If you don't know the answer, maybe we could appoint a commission to study it for you.

BLITZER: All right Jack. We're going to be hearing directly from her in a few moments. We'll go there live. I suspect she's not going to be speaking about this issue in her prepared remarks.

CAFFERTY: No. I'm sure.

BLITZER: Stand by. Jack Cafferty will be back shortly.

Barack Obama is accusing John McCain of embracing old school, trickle down economics. Stand by to hear from Obama at length in his own words. What he's saying today.

Plus, a new phase in the campaign ad wars. Outside groups targeting the candidates and pressing all sorts of political hot buttons.

And should the government bail out America's biggest insurance company, AIG? New York's Governor David Paterson takes a stand.


GOV. DAVID PATERSON, NEW YORK: If we save Chrysler and we save the Penn Railroad, we need to save AIG.



BLITZER: Every American should be deeply concerned about what's happening in the financial industry right now. The nightmares unfolding on Wall Street will surely cause major ripple effects on Main Street for your portfolios, your retirement funds and a lot more. And the latest cause for concern, an insurance giant that insures many of you. You may not even know it. That insurance giant right now is desperate for cash to stay afloat.


BLITZER: And joining us now from our studios in New York, Governor David Paterson, he's the democratic governor of New York. Thanks very much governor for coming in.

GOV. DAVID PATERSON, NEW YORK: Thank you for having me, Wolf.

BLITZER: Let's talk about AIG, the American International Group, it's the largest insurance company in the United States as we speak and right now it's teetering. You came up with a proposal yesterday that potentially could have helped, but is it going anywhere?

PATERSON: We provided the authorization for AIG to access its assets and then post those assets from its subsidiaries in order to liquidate cash to run the day-to-day operation of the parent corporation. But, more importantly, Wolf, what we were able to accomplish is by rolling back the regulations, where AIG would normally not have been able to do this, it opens the door for the federal government or hopefully those the federal government would influence, to come in and, perhaps, refinance AIG.

BLITZER: But it sounds like the federal government, the treasury secretary Henry Paulson and others, they don't really want to bail out these companies anymore like Lehman Brothers or AIG, for that matter.

PATERSON: I can understand that the federal government had to put its foot down. And in the case of Lehman Brothers, every time they peel back the onion, they found more debt and so they weren't able to get Barclays or anyone to come in. Barclays has finally come in today, I mean they kind of have to, they're related with them. But AIG is different. They are different, they are not an investment bank. They will touch the American consumer more than any of these other activities on Wall Street. They run 130 companies, they have 116,000 employees. They have 74 million customers. And they have the ancillary effects of having $1 trillion in assets. So if you're in a car accident, you may not have AIG but the person that hit you might.

BLITZER: Is New York State ready to pump in some money to try to help AIG survive?

PATERSON: New York State doesn't have any money. We have a $5.4 billion debt and a $24 billion debt over the next three years. What we can do is to help the 40,000 people who could potentially lose their jobs if all of these companies are unable to survive. We sent our commissioner of labor and we sent the New Jersey commissioner of labor with Governor Corzine's permission, right down to Lehman Brothers to meet with those employees yesterday.

BLITZER: Do you think AIG will survive?

PATERSON: I'll just put it this way. If we saved Chrysler and we saved the Penn railroad, we need to save AIG. Because the ramifications of AIG falling, it's a retail insurance company, the largest industrial commercial insurance company in the world, one of the largest life insurance companies in the United States. I mean, the jobs, the ways that it touches other regulatory institutions and other companies, I don't think it had been predicted and I don't think this country with all we've been through right now where our economy is can afford it.

BLITZER: John McCain, the man you oppose for the presidency, says the fundamentals of the U.S. economy are strong, although he clarified what he said earlier this morning. I'm going to play a little clip of what he says he now means by saying the fundamentals are strong.


SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: The American worker is the most productive and most innovative. They're the fundamental of our economy and the strength of it, and the reason why we will rebound, we will come back from this crisis.


BLITZER: What do you think about McCain's strategy in trying to get the job done if he were elected president?

PATERSON: Well, the American worker has never been the problem. American workers are working very hard. But American workers are starting to lose their jobs. 772,000 workers have lost their jobs this year alone. In terms of the economy, we have a double shock. First, there's the downturn in the housing prices and the ancillary mortgage assets. But then there's the rise in the price of commodities. And that's the reason that this economy is not fundamentally sound. And the problem with these firms is that there's no transparency. The reason that it's hard to get buyers to come in and try to bail them out is because no one knows the value of their debt. No one really knows what their central booking sheets actually reveal. And this is what's making people hesitant. I think that a better way of looking at the economy is that it's severely injured, but could return if we start to put some regulation on it. And let's just remember that when Chairman Barney Frank of the financial services committee put in a bill to try to reform the manner that Freddie Mac and Fannie Mae were operating, they had a deal to pass it in the senate. The president said he wouldn't sign the bill and John McCain opposed it. That was just 18 months ago. This is the same John McCain who said there was cronyism in Washington. Why didn't he oppose it then? So I think the real important question is how we can get this economy back on its feet without injuring the American worker who has been the only steady -- steadfast, disciplined entity in the whole bargain.

BLITZER: Governor Paterson thanks very much for joining us.

PATERSON: Thank you, Wolf.


BLITZER: We'll get a different perspective in the next hour from Mitt Romney, a strong supporter of John McCain, that's coming up.

Her supporters, meanwhile, suggest she's the focus of a political witch hunt. The investigation hanging over Governor Sarah Palin takes a new dramatic turn. We'll tell you what's going on.

The road to the White House might lead through Indiana. Reliably red democrats now hope to turn it blue. They have one thing in their favor and one Indiana republican official says John McCain had better take notice. Stay with us. You're in THE SITUATION ROOM.


BLITZER: Earlier today we heard from Senator McCain. We're about to hear from Governor Palin for the first time today. Stand by. We'll go live to Ohio for that.

In the meantime Carol Costello is monitoring some other important stories incoming into THE SITUATION ROOM right now. Carol, what's going on?

CAROL COSTELLO: Wolf, President Bush says the government is working as fast as it can to help people's lives get back to normal after hurricane Ike. The administration was heavily criticized for its response to hurricane Katrina three years ago, you know that. The president took a quick tour of areas in Texas that were hardest hit.


BUSH: I'm now asking questions about how the federal government can help the response and help the recovery effort begin. One thing is, is that we have decided to match 100 percent -- or pay 100 percent with no state match for debris removal as well as the emergency preparedness. (END OF VIDEO CLIP) COSTELLO: We're getting incredible and incredibly sad i-Reports from those affected in Texas. Let's go to our internet reporter Abbi Tatton. Abbi, show us.

ABBI TATTON, CNN INTERNET REPOTER: Yeah Carol, they're saying they have no power at home and then a four hour wait for basic supplies. That's what i-Reporter Jason Barnes encountered yesterday at this Houston distribution point set up by FEMA to hand out food, water and ice. Barnes said that he and six family members waited. At the end of it they didn't get anywhere near what they were looking for. Texas officials saying that there were 16 of these distribution points set up yesterday. They're hoping to extend that number to 60 by the close of business today. Carol?

COSTELLO: Abbi, thanks.

President Bush busy today. He's also meeting with his chief advisory group on financial markets. He's doing that right now. White House canceled media coverage of it, though. Mr. Bush was scheduled to make a statement to reporters today and his spokesman says the White House decided it would be best to limit comments about the markets, at least at this time. Back to you, Wolf.

BLITZER: All right Carol, thank you. Barack Obama appears to be fired up. He's mounted a new aggressive effort to respond to John McCain and put him on defense. Today Obama spared few words talking about the economic mess. Wait until you hear what he actually said.

Meanwhile, McCain is not backing down. What should his strategy be going forward? That's coming up in our strategy session. All that, plus Sarah Palin, right after this.


BLITZER: To our viewers, you're in THE SITUATION ROOM. Happening now, five former secretaries of state, republicans and democrats, agree on one thing and it involves Iran and could boost perceptions about Barack Obama's foreign policy knowledge. Stand by, Brian Todd working the story.

Also, promises, promises. Obama and McCain pledge to fix what's wrong with the nation's health care system. But whose plan would really shrink the number of uninsured and soaring costs? Stand by for that. Christine Romans working that story.

Moments ago you heard from Obama supporter, New York Governor David Paterson. You'll be hearing from McCain supporter, the former Massachusetts Governor Mitt Romney, that's coming up. What does he think about the more aggressive tone from the Obama campaign? I'm Wolf Blitzer, you're in THE SITUATION ROOM.

Just seven weeks until Election Day, both campaigns are very careful not to be thrown off message. But there are some groups that are flush with cash trying to do just that. Let's go to our senior political analyst Bill Schneider. He's joining us, watching this story for us. Are we entering a new phase, a new stage in this ad campaign war?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Yes we are. We are starting to see more tactical strikes by independent expenditure groups.


SCHNEIDER (voice-over): Some of the most controversial ads in political campaigns have been run by independent groups. The Willie Horton ads in 1988. The Swift Boat ads in 2004. Independent ads have not played a major role in this year's campaign, until now. Suddenly inflammatory ads have started to appear. An ad by an anti-abortion group.

POLITICAL AD: Senator Obama, please support born alive infant protections. I'm living proof these babies have a right to live.

SCHNEIDER: An ad by defenders of --

* Suddenly, inflammatory ads have started to appear -- an ad by an anti- abortion group.


UNIDENTIFIED FEMALE: Senator Obama, please Support Born Alive Infant Protections. I'm living proof these babies have a right to live.


SCHNEIDER: An ad by defenders of wildlife.


NARRATOR: Palin even encouraged the cruelty by proposing a $150 bounty for the severed foreleg of each killed wolf, and then introduced a bill to make the killing easier. Do we really want a vice president who champions such savagery?


SCHNEIDER: Previously, independent ads had to stop running 60 days before the election. The Supreme Court has lifted that restriction. They can run right up to Election Day. Independent groups are seizing the opportunity.

UNIDENTIFIED MALE: You have a real chance to start making a difference, knock a candidate off message, knock them off stride.

SCHNEIDER: The whole point is to make sensational charges.


NARRATOR: Doesn't McCain want our children to protect themselves from sex offenders? (END VIDEO CLIP)


NARRATOR: Four times Barack Obama voted to oppose a law to protect babies left to die after failed abortions.


SCHNEIDER: What's the objective here?

UNIDENTIFIED MALE: They're really going to be looking to sort of deliver that silver bullet moment in a campaign. They're going to try very hard to knock a John McCain or a Barack Obama off stride in these last 40 days, 30 days, 15 days, 10 days. You know, these are the kind of groups that are out there trying to deliver that October surprise.


SCHNEIDER: The only rule is that the independent groups cannot coordinate their effort with the campaign. But the campaign can send a clear signal: "You know, we really need to start doing better in this particular state" -- Wolf.

BLITZER: Bill Schneider, thanks very much.

Let's go right out to Ohio right now.

The governor of Alaska, the Republican vice presidential nominee, Sarah Palin, is speaking about change and the economy.


GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL NOMINEE: ... is for government to take less from them, leave more for them, so that they can expand and create jobs.


PALIN: It's a pretty simple principle. And it works. And that is the way that we create jobs and hire more people. And that's exactly what we're going to do in a McCain/Palin administration.


PALIN: Now...


PALIN: ... we have got to be aware that our opponent has a very different plan. He wants to raise income taxes. And he wants to raise payroll taxes...


PALIN: ... and raise investment income taxes., and raise the death tax, and raise business taxes.


PALIN: That's his plan. He actually proposes to raise taxes in this hurting economy, this time of hurt, in America. Hurting economy, that increase in taxes would equate to about billions and billions of dollars on you, taken from you.

And, even with all those new taxes, still, our opponent would need more taxes to pay for the enormous new federal programs that he's proposing.


PALIN: But here's a little straight talk for our opponent.

His tax plans really would kill jobs and hurt small businesses and make even today's bad economy look like the good old days. To grow our economy -- Ohio, you know this -- to grow our economy and to avoid a recession, to bring new jobs to this state or save the jobs that you already have, we need relief for every taxpayer and for every business in America.

And we also need serious reform on Wall Street. And John McCain is the guy who will get it done.


PALIN: Reform on Wall Street is necessary. It's going to affect every single one of you.

Almost two out of every three Americans have a stake in the market. And that's through pensions and 401(k)s and IRAs and the like. Families across America have a right to expect that their interest and their investments will be protected.

Instead, what's going on now, huge investment banks are going under because of their own bad practices. And then they're asking the public to bail them out.


PALIN: Federal agencies are failing to defend you, are failing to defend the public interest.

And reckless CEOs are walking off with multimillion-dollar severance deals, money taken from what's left of some of these companies that they were supposed to be serving.

It's going to take a man of action and a proven reformer to clean up Wall Street. And that man is Senator John McCain.


PALIN: Now, as for my part, as mayor and as governor, I always knew that I was accountable to the people who hired me. That was the people of Alaska.

And, in a McCain/Palin administration, we will never forget that, first and foremost, we will be there working for you.


BLITZER: All right, the governor of Alaska, Sarah Palin, speaking out in Ohio. This is the first time in a few days she's been out together with John McCain.

We will continue to monitor that event.

Earlier today, we brought you Senator McCain's remarks. We're going to be standing by in the next hour. The Democratic vice presidential nominee, Joe Biden, will be speaking. We will go there live once he speaks as well.

Barack Obama surely hopes to drown out the negative messages from many of those independent advertising groups. He's taking a much more aggressive tone as he links John McCain to the overall economic mess.

Here's Senator Obama earlier today in Colorado.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: Yesterday, Wall Street suffered its worst losses since just after 9/11.

We are in the most serious financial crisis in generations. Yet, Senator McCain stood up yesterday and said that the fundamentals of the economy are strong.


OBAMA: That's what he said.

Now, a few hours later, his campaign sent him back out to clean up his remarks.


OBAMA: And he tried to explain himself again this morning by saying that what he meant to say was that the American workers are strong.

But we know that Senator McCain meant what he said the first time, because he has said it over and over again throughout this campaign, no fewer than 16 times, according to one independent count.


OBAMA: Now, I -- I raise this not because I fault Senator McCain for all the problems we're facing right now.

But I do fault the economic philosophy that Senator McCain subscribes to, because... (CHEERING AND APPLAUSE)

OBAMA: ... because the truth is, what Senator McCain said yesterday fits with the same economic philosophy that he's had for the last 26 years.

It's the philosophy that says we should give more and more to those with the most, and hope that prosperity trickles down.


OBAMA: It's -- it's the philosophy that says even commonsense regulations are unnecessary and unwise.


OBAMA: It's a philosophy that lets Washington lobbyists shred consumer protections and distort our economy, so it works for the special interests, instead of working people.

Now, we have had this philosophy for eight years. They call it the ownership society. But what it really means is that you're on your own.


BLITZER: Senator Obama speaking earlier today out in Colorado. He has an ambitious goal. That would be to turn reliably red states, like Indiana, blue.

Our own John King is on the ground there. He's checking various battleground state voters and why so many first-timers are getting involved now. Stand by for John's report.

And Obama and Biden are finding new fire. Will they hurt John McCain in the process? Will they help themselves? Our "Strategy Session" coming up.

Then, later, find out why independent presidential candidate Ralph Nader thinks news media coverage of the race is for the birds -- literally.

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


BLITZER: It's a state that certainly has lots of small towns and a major city as well. So, Barack Obama and John McCain are hoping their message is being heard by urbanites, suburbanites, farmers, and others. We're talking about the state of Indiana. That state offers 11 electoral votes and offers small signs of hope for the Obama campaign.

Our chief national correspondent, John King, has more from Evansville -- John. JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, George W. Bush won Indiana with 57 percent of the vote back in 2000 and then with 60 percent four years ago. So, consider this most unfamiliar territory. With seven weeks left in campaign 2008, Indiana is a battleground state.


KING (voice-over): At $4.29 a gallon, the grumbling and disbelief is to be expected.

UNIDENTIFIED MALE: I'm putting $80 in, and I'm eight gallons shy of being full.

KING: But listen closely to a very different sound Democrats are counting on to make history.

DOMINIQUE MORSON, BARACK OBAMA CAMPAIGN VOLUNTEER: Do you know who you're planning on supporting this year?

KING: Dominique Morson is cheerful...

MORSON: Are you registered to vote? OK, great. Thanks.

KING: ... patient...

MORSON: It takes 30 seconds, like, literally.

KING: ... and persistent.

MORSON: And what city is that?

KING: Morson is part of an unprecedented effort by the Obama campaign to register new voters, with the ambitious goal of turning reliably Republican states like Indiana from red to blue.

MORSON: I think we can. I really do. I think we definitely have enough people dedicated to the campaign, and then people that want to see some change. So, I think we will definitely see that happen.

KING: At Obama headquarters, constant reminders of the October 6 registration deadline.

And Republican Secretary of State Todd Rokita says the McCain camp had better take notice.

TODD ROKITA (R), INDIANA SECRETARY OF STATE: Yes, they have a fight here, yes. And I think it's real.

KING: In 2004, 2.5 million Indiana voters cast ballots for president. This year, the state has already processed more than 560,000 new and updated registration forms. And Rokita predicts that number will reach a record 750,000 by the deadline.

ROKITA: This is the first time I have ever seen a Democratic presidential campaign this engaged in this state. Usually, Indiana is number one on the board for the red states on election night when it comes to our presidential elections.

KING: Not since 1964 has a Democrat carried Indiana for president. And Republicans promise to keep it red this year.

Without a doubt, the state's farm communities and small towns lean conservative.

UNIDENTIFIED MALE: Every vote counts this year.

KING: Tough going for Obama foot soldiers along the Kentucky border in Evansville, too. President Bush took nearly 60 percent of the vote here in 2004.

UNIDENTIFIED MALE: Just the man himself. Not really sure about him.

KING: In this garage, a McCain voter.


UNIDENTIFIED MALE: All right, man.


KING: So, it's not easy. In a half-hour knocking doors, only one promise to vote for Obama, and plenty of skepticism.

UNIDENTIFIED MALE: You aren't registered?


UNIDENTIFIED MALE: Do you want to get registered.

KING: But that Democrats are here at all in the final few weeks, never mind here aggressively looking for every last vote, is itself a dramatic change.

UNIDENTIFIED MALE: Haven't decided?

UNIDENTIFIED MALE: Too much tossups.


KING: Most Republicans -- and even many Democrats here -- predict, in the end, Obama will come up short. But that he's competitive here at all is proof that the Democrats have the edge and more options this year in trying to assemble the 270 electoral votes needed to win the White House -- Wolf.

BLITZER: All right, John, thank you.

John's in Evansville, Indiana, continuing his search around all of these battleground states. Winning Indiana, by the way, is just one strategy for winning the White House. We're also looking at several other key states. Tomorrow, right here in THE SITUATION ROOM, we will have some brand- new poll numbers of where the race stands, not only in Indiana, but also in Florida, North Carolina, Ohio, and Washington State. Are John McCain and Barack Obama losing support in these states? Who might be gaining? Again, we will look at all of those states in our brand-new CNN/"TIME" magazine/Opinion Research Corporation poll for those battleground states.

That's coming out tomorrow, 4:00 p.m., right here in THE SITUATION ROOM.

In our "Strategy Session" with Paul Begala and Terry Jeffrey, what a difference a week makes. Obama seizes the initiative over issue number one, the economy. What's the strategy for taking it back?

And we're watching Wall Street right now, as the insurance giant AIG fights for its survival. What does that company's dire straits mean to you? Mary Snow is working this story.

Lots of news happening today -- right here in THE SITUATION ROOM.



SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENTIAL NOMINEE: John McCain can easily become known as Bush 44.

OBAMA: My opponent is running for four more years of policies that will throw the economy further out of balance.


BLITZER: Those are examples of the Democratic ticket's new offensive against John McCain.

Let's discuss with our CNN political contributor, the Democratic strategist Paul Begala. He's the author of a brand-new book entitled "Third Term." Guess what that is about? And conservative commentator Terry Jeffrey, he's editor in chief of the Cybercast News Service.

It seems that, for the first time in a long time, the -- the Obama campaign is doing what you and James Carville have been recommending they do, try to bring the story back to McCain and get him on the defensive.

PAUL BEGALA, CNN POLITICAL ANALYST: And -- and good for them.

You know, a lot of Democrats have their panties in a wad. You know, they're all nervous. They need to stop whining and start fighting, the way that Obama and Biden are doing.

And I have to say, the key to this has been John McCain. And I want to publicly thank him.

Senator McCain, thank you again for being so clueless on the economy.

I'm trying to think of a bigger presidential gaffe -- Carville and I were just talking on the phone -- than John McCain, in the midst of an economic meltdown, saying, the economy is fundamentally strong.

No, John McCain is fundamentally wrong. And this is the biggest gift he could have given Barack Obama. And Barack Obama, to his credit, is pouncing on it.

BLITZER: They are pouncing right now, you have got to admit. And he did give him an opening.

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: Well, look, the Democrats need a bad economy to win this election, Wolf.


BLITZER: And the economy is bad.


JEFFREY: Well, no, but wait a minute. It's not all bad. There's mixed news in the economy.

The fact is, a couple weeks ago, the Commerce Department came out and said growth in the second quarter was 3.3 percent. You don't see the Democrats talking about that. You don't even see it reported. You cannot...

BLITZER: Yes, but, for most average Americans, they are feeling the pinch, whether at the gas pumps or in the inflation. They know that there are serious economic problems.

JEFFREY: Actually, Wolf, the consumer price index went down in August. Inflation didn't go up.


BLITZER: So, do you think McCain and Palin should be running under the theme the economy is great right now?

JEFFREY: I think they should go right back in the face of the Democrats on the economy. The Democrats want people to think the economy is worse than it is, because it's good -- they can't run on the war, because we're winning the war in Iraq. They can't win on the culture, because they're left of middle America on culture.

The only way they can win is to convince people the economy is going badly; it's going badly because of Bush's policy.

BLITZER: All right, go ahead.

BEGALA: I just couldn't be happier. I think Terry is a great guy. And we're friends.

But, no, I think that the best gift McCain could be giving Barack is to continue to be so clueless on the economy. Now, you know what he did today?


BEGALA: Senator McCain.


BEGALA: He said -- get this -- I hope -- I hope our viewers at home are sitting down. He called for a commission. Whew, there's change. Oh, my goodness. What's next? A blue-ribbon panel? Maybe a task force? Oh, maybe a study group? How clueless can you get?

BLITZER: Because they -- Obama pounced him on that, because, whenever things aren't getting done in Washington, you know what they usually do.

JEFFREY: It is a stupid idea.

But what...


JEFFREY: But what Barack Obama wants is higher taxes, more regulation and bigger government.

And, right now, the big -- the big crisis the next president is going to face is the fiscal crisis of federal government on entitlement. Medicare and Social Security are going bankrupt. Barack Obama wants a bigger welfare state with a national health care plan and higher taxes. That is not the plan to help to make the economy grow in the long run.

BLITZER: All right, go ahead.

BEGALA: In fact -- and I'm not trying to do talking points here, but, in -- in point of fact, Barack Obama has proposed tax cuts for 95 percent of Americans and small businesses. He believes that will generate economic growth.


BEGALA: But -- but this is not where -- when McCain says...


BEGALA: Just a second.

When he wants to look at -- for example, Terry talks about deregulation. One of the reasons we're in this mess is that Phil Gramm, a banking lobbyist who used to be a senator who is very close to John McCain, put a loophole in the law that deregulated these Wall Street instruments that have caused so much of a problem. JEFFREY: One of the reasons we're in this mess is because of Fannie Mae and Freddie Mac, which were government-sponsored enterprises, which got government-subsidized interest rates, in order to encourage homeownership. Now they have been taken into government receivership. That's big government. Big government, not small government, is at the root of this, Paul.

BLITZER: Here's the argument that the Democrats are make -- and I will let Terry respond. Then you can have a quick final word -- that, for the last eight years, under the Bush administration, taxes were reduced. There was deregulation of a whole set of industries related to the credit industry, or whatever, the housing industry, and look at the mess that the economy is in right now.

JEFFREY: Well, you know, one thing the Bush tax cuts proved -- and John McCain, by the way, voted against both of Bush tax cuts -- is, when you cut, tax rates federal revenues go up.

Quite frankly, I'm not even in favor of increased federal revenues, Wolf. But that is what happened. If Barack Obama...


BLITZER: All right, quickly, but, if federal revenues went up, the national debt went from $5 million to $9 trillion, almost $10 trillion, over the last eight years.

But go ahead.

BEGALA: If people like the way the economy has been run under President Bush's policies, they should vote for Senator McCain. He would be a continuation of the Bush policies. If you like the Bush policies, you will love McCain's.

But if you want change...


BEGALA: ... on that commission, which is chump change, then you have got to be for Obama. He's the only hope for change. And he's actually...

BLITZER: All right.

BEGALA: ... put out quite a specific program...


BLITZER: All right, guys.


JEFFREY: ... Jimmy Carter's and LBJ's economic policies.


BEGALA: We have to go back 40 years now.


JEFFREY: That's right.


BLITZER: All right, guys. The good news is, we have seven weeks to go, 49 days, but who's counting.

BEGALA: That's right.

BLITZER: All right, we will continue this down the road.

Some stories we're working on right now here in THE SITUATION ROOM: more finger-pointing in Alaska, as five fellow Republicans go to court to try to stop what they call the partisan witch-hunt of Governor Palin.

And both McCain and Obama talk a big game about shoring up the nation's health care system. We're taking a closer look. Will either of their plans make a difference?

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


BLITZER: The Democratic vice presidential nominee, Joe Biden, is getting ready to speak in Media, Pennsylvania. We will go there live once he does.

But let's get to our "Political Ticker" right now.

Congressman Charlie Rangel's lawyer says the New York Democrat won't step down as the chairman of the powerful Ways and Means Committee as he undergoes an ethics investigation. Rangel is under scrutiny over unreported income and unpaid taxes on a beach house in the Dominican Republic. He now plans to hire an accountant to examine his tax records and financial statements over the past 20 years, and turn over the findings to the House Ethics Committee.

Let's go back to Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Shouldn't he ought to stand down until the results of that investigation are complete?

BLITZER: I -- I don't know what the rules are on the Democratic side of the House.

CAFFERTY: Yes. Well, the rules are, in Congress, if you got it, you hold on to it, regardless of what's going on.

Our question this our: What does it mean, Governor Sarah Palin refusing to cooperate in the investigation into the firing of her public safety commissioner? Marie from Minnesota writes: "This woman is ridiculous. She won't answer questions from the media. She won't answer questions from the voters, and she won't answer questions related to this investigation. It is obvious she is not prepared to be vice president. At some point, the American public deserves to have their questions answered."

Eileen says: "What else can it mean? Her handlers know she has something to hide, so let's blame the Democrats. So what if the facts are that the Republicans are the majority who opened this investigation?" It began, I think, back in July.

Bruce in Minnesota: "For the same reason Karl Rove, Dick Cheney, and anyone remotely connected to them will not honor congressional subpoenas, the same reason Nixon would not cooperate with the Watergate investigators, the same reason Bush would not produce his Air National Guard records. Laws are for suckers, like us."

Sasha writes: "Palin failing to cooperate with the investigation, along with the McCain campaign not letting her do any more interviews or press conferences on her own, says there are some question marks about her and this situation. Where did the Straight Talk Express go?"

Pablo in West Virginia writes: "It means they need more time to put lipstick on the pig, or bulldog, or whatever animal they are trying to disguise, before the American people can see it for what it really is. My guess is, it is a weasel."

And Debra writes: "It means she is better prepared to be vice president than any of us thought. Following in the footsteps of our current V.P., she has been taught the value of executive privilege, and is apparently a quick learner."

If you didn't see your e-mail here, you can go to my blog at Look for yours there, among hundreds of others -- thousands, actually. We have gotten, like, 6,000 e-mails in the last 90 minutes or so, Wolf.

BLITZER: It's only going to intensify over these final weeks of this campaign.

Jack, thank you.

CAFFERTY: What are we going to do November 5?

BLITZER: We will figure it out.


BLITZER: Stand by.