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CNN Late Edition with Wolf Blitzer

Bush Tries to Reassure Public on Economy; Retirement Savings Being Drained; Predicting the Election

Aired October 12, 2008 - 11:00   ET

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

BLITZER: It's 11:00 a.m. here in Washington, 8:00 a.m. in Los Angeles and 6:00 p.m. in Baghdad. Wherever you're watching from around the world, thanks very much for joining us for "Late Edition."
President Bush is trying to reassure the country about the ailing U.S. economy after Wall Street suffered its worse week ever. Millions of Americans retirement savings have taken a hit, with more than $2 trillion worth of stocks lost in the last week alone.

And that's raising serious questions about whether the government should be doing more to get past this financial crisis.

Joining us now from his home state of New York is a senior member of the Senate Banking Committee, Senator Chuck Schumer...

SCHUMER: Good morning.

BLITZER: ... and in Philadelphia, Republican Senator Arlen Specter of Pennsylvania. He's a key member of the Senate Appropriations Committee.

Senators, to both of you, thanks very much for coming in.

SCHUMER: Good morning.

SPECTER: Nice to be here.

BLITZER: Let's start with you, Senator Schumer. The Dow Jones industrial average, on Friday, closed at 8400 and change.

A year ago -- a year ago, almost exactly, it was at 14164. That's a loss of 40 percent in one year. It's been an amazing drop for so many people out there, with enormous ramifications.

Right now, what is the single most important thing that the federal government should be doing as the markets get ready to open in Asia and we're ready for another roller coaster in New York, on Wall Street, tomorrow?

SCHUMER: Well, what they have to do is loosen up the credit markets. What's really happened here is that the credit markets are frozen. Finance, credit is the blood, the arteries of our economy, and if it freezes, the patient gets a heart attack, sooner or later, and it affects the whole thing.

The rescue plan of two weeks ago is moving very, very slowly. Some doubt whether auctions will work. And something that I've advocated for a while, and many others, economists both conservative and liberal, an injection of capital into the banks, is gaining steam. And I think that's where the government has to go.

I am hopeful that, tomorrow, the Treasury will announce that they're doing it. And they have to do it quickly. This cannot be two, three, four weeks.

The markets are waiting. The country is waiting. And we're beginning a downward spiral, not just in finance, which, as I said, is frozen, but in the whole economy. We need quick action.

BLITZER: Senator Specter, what do you say?

SPECTER: There's no doubt about the need for more credit. And the Fed and Treasury are now looking at a proposal to have an equity interest by the federal government in the banking system, which would make it effective to get that credit going.

That has to be very, very carefully done so that we do not nationalize our banking system. We are a capitalistic system and we don't want to move away with nationalizing the banking system, so that anything that's done, has to be done on a temporary basis.

BLITZER: But Senator Specter, if the U.S. government, if the Treasury Department starts buying stock in these financial institutions, don't they, the U.S. government, in effect, become part owners of these financial institutions?

SPECTER: Well, that's right. And that's why I say there has to be great care about the issues nationalizing the banking industry to make sure that what is done doesn't go that far and what is done is temporary.

But to be effective and to get the credit flowing, that may be the avenue of last resort.

(CROSSTALK)

BLITZER: Let me let Senator Schumer weigh in.

Go ahead, Senator.

SCHUMER: No, let me say, Wolf, first, this should be temporary. It does have a track record of success. It worked for the RFC.

We, obviously, don't have a banking system, but the RFC bought -- it's not to buy a majority or controlling interest in the banks, nor is it to control their day-to-day banking decisions. It's to give them some capital, give them some strength, temporarily, as Arlen said, and then they would be able to start lending again, start pushing out their bad paper, and get the economy flowing again.

It should only be for a short period of time. And, furthermore, the government should take preferred stock or warrants so that, when the banks are back in good shape, the government gets repaid and makes -- actually, the RFC makes some money. This was done in Sweden and it worked quite well.

BLITZER: So both of you agree on this, right, Senator Specter? You agree with Senator Schumer?

SPECTER: Well, I do. Let me add one other element, Wolf. And that is I think we ought to take the partisanship out of what we're doing now.

You find there's a real political squabble. For example, Senator Schumer, as head of the campaign committee, is going after Mitch McConnell. There had been a gentleman's agreement that that wouldn't be done, and now Senator Schumer is quoted in The Washington Post this morning as saying that, if the votes led up to the problem, then the gentleman's agreement doesn't stand.

The question is whether we have gentleman here. But votes leading up to it, many people were a party to, including Senator Schumer, who...

BLITZER: All right. Let me let...

SPECTER: Wait. Let me finish -- who was against reform measures on hedge funds, who was against reform measures, back in 2004, on Freddie Mac and Fannie Mae, so that, if we take partisanship out of this mix, I think we'd have a lot better chance of going to the heart of the substantive problem and solving it.

BLITZER: All right. Go ahead, Senator Schumer.

SCHUMER: Well, I find it ironic that Arlen first says, let's take partisanship out of it and then makes a partisan comment...

(LAUGHTER)

... after we agreed on what to do. But let me me just say this.

SPECTER: Well, what do you want, unilateral disarmament, Chuck?

SCHUMER: Well, let me just say this. It is a legitimate issue to discuss what brought us to the brink here. And many people believe -- I do -- that abject deregulation, saying let financial industries do whatever they want, in any way, led to it.

Now, that's a legitimate campaign issue. As for the rescue package, many of us voted for it. You did, Arlen. I did. Mitch McConnell did. That's not mentioned in any of the ads that the DSCC has put in.

SPECTER: Let me disagree with him head-on, Wolf. I don't think it is legitimate when Senator Schumer is a principal architect of the bailout program and there is an agreement, a gentleman's agreement, not to use it for political attack. And he's quoted in this morning's Washington Post, trying to justify, trying to get some cover by saying, well, if the votes led up to it -- well, Senator Schumer's votes were critical.

(CROSSTALK)

SPECTER: No, let me finish, Chuck.

SCHUMER: OK, Arlen.

(LAUGHTER)

SPECTER: Nobody successfully interrupts you.

(LAUGHTER)

SCHUMER: You're doing a pretty good filibuster there, Arlen.

SPECTER: His votes were. Well, you've got to be a little bit aggressive with you, Senator Schumer.

SCHUMER: Yes. You're known as a shrinking violet, Arlen.

(LAUGHTER)

SPECTER: A lot of kidney punches in the (inaudible)

(LAUGHTER)

His votes were critical on moving away from reform on Fannie Mae and Freddie Mac.

BLITZER: Let me just interrupt both of you.

(CROSSTALK)

Let me interrupt both of you.

SPECTER: Listen. What's fair is fair, and Schumer's not being fair.

BLITZER: Senator Schumer heads the Democratic committee, the Democratic Senatorial Campaign Committee that's charged with trying to get Democrats elected to the Senate.

And respond to the charge that Senator Specter just made that you're breaking what he called a gentleman's agreement and going after Senator Mitch McConnell, who is up for re-election in Kentucky. He's facing a tough challenge there. And he's the Senate minority leader.

SCHUMER: OK. The gentleman's agreement -- and there wasn't any explicit agreement -- but the gentleman's so-called agreement was that the rescue package for people who voted for it would not be part of the attack, whether you voted for that or not.

There are Democrats who voted for it, Democrats who voted against it, Republicans who voted for it, Republicans who voted against it. And that's fair, I think.

However, when you talk about the rescue package, that's one small vote. What we're talking about here is an issue, and I'm proud and I think we should have this issue, that the deregulation that the Bush administration proposed and most Republican senators, including Senator McConnell went along with willingly and happily, has led to this problem.

Let me give you one example. They put someone on the SEC, a man named Atkins, who believed in no regulation, none. He wanted to even repeal the New Deal regulations because he thought that these big Wall Street companies should be able to do what they wanted.

The kind of people we wanted to put on the SEC were pro- regulation. And they, for instance, were much tougher on these companies a year ago. I said -- I said that we should have a single tough, unitary regulator and that was just pushed aside by this administration.

(CROSSTALK)

BLITZER: Senator Specter, respond and then we're going to move on.

SEN. ARLEN SPECTER (R), PENNSYLVANIA: Wolf, the problem with Senator Schumer's last filibuster is that you don't need an explicit agreement when there is an implicit agreement among gentlemen, you follow it through.

And when he says that McConnell was responsible for prior votes, well, so was he. He was a leading voice in 2004 against regulating Fannie Mae and Freddie Mac. He was a leading voice against regulating the hedge funds. Look, the regulation is something we have to come back to, but carefully.

SCHUMER: You bet we have to.

SPECTER: We can't -- we can't...

SCHUMER: You bet we have to, Arlen.

SPECTER: Interrupting again.

SCHUMER: That's a whole nub of the issue.

SPECTER: That's his stock in trade, interrupting, defuse the issue. We have to be careful we don't go as far as we did in Sarbanes-Oxley. But when Schumer points the finger at McConnell, he ought to look in the mirror.

BLITZER: All right. Senators, let's look ahead briefly because we have a limited amount of time. And, Senator Specter, I want you to respond to Nancy Pelosi's proposal. She's the speaker of the house, that the Congress reconvene right after the election and go forward with $150 billion second economic stimulus package.

She says this: "Just as the president and Congress worked together in recent weeks on an economic rescue plan to help bring stability to our financial markets, we must now take additional action and pass a jobs creation and economic recovery stimulus plan." Are you with her, Senator Specter?

SPECTER: I'm with her that we ought to reconvene on November 5th. I wanted to be in session last August and urge the president to call the Congress back. I think it would be very healthy if we were in session now, although it's impractical.

But Speaker Pelosi is right, we ought to come back into session immediately. We ought to hear our congressional voices and congressional ideas. I had some amendments I wanted to offer to the bailout package which I think were far superior to what Paulson and Bernanke wanted to do. I'm not prepared to jump off a bridge on $150 billion on a sound bite, Wolf.

BLITZER: All right.

SPECTER: But I'm prepared to consider it.

BLITZER: All right. What about you, Senator Schumer?

SCHUMER: Yes, we definitely need a stimulus package because not only is Wall Street frozen, but, as I mentioned earlier, Main Street is in real trouble. And a stimulus package aimed at Main Street makes sense. And it has to be a kind of stimulus that's going to get into the guts of the economy.

So we believe that there ought to be some infrastructure. Significant amounts of money prime the pump through infrastructure. That has worked in the past when we've had recessions and other kinds of economic downturns: roads, water, sewer, buildings, schools, things like that.

We also believe there ought to be some help to the states. The states are now in real trouble and if they're not helped, they're going to do one of two things. They're either going to raise taxes or lay off tens of thousands and cut back on very vital and necessary programs, neither of which would be good for the economy in a recession.

We think both of those things should be the mainstay of a recovery package. We hope to come back, not before the election, but in early November and try to get this done.

BLITZER: Senator Schumer, Senator Specter, good, lively, important discussion. Thanks to both of you for joining us.

SPECTER: Nice being with you, Wolf. Thank you.

SCHUMER: And nice to be with you, Arlen, too.

SPECTER: I think time of possession wasn't quite the same, but OK.

(LAUGHTER)

BLITZER: All right. We'll check the time later, thanks, guys, very much.

So what is next for the U.S. economy? My exclusive interview with a Clinton treasury secretary, Robert Rubin, that's coming up here on LATE EDITION.

And does this latest market meltdown and the ailing economy signal more bad news for John McCain and the Republicans in Congress? The election only 23 days away. We'll talk about that and more with James Carville, Paul Begala, Leslie Sanchez, and Tara Wall. LATE EDITION continues right after this.

(COMMERCIAL BREAK)

BLITZER: And coming up later, my exclusive interview with a Clinton treasury secretary, Robin Rubin. You're going to want to want to stick around for that. But joining us right now, our CNN contributors, members of the best political team on television.

In New York, Republican strategist Leslie Sanchez. In New Orleans, Democratic strategist James Carville. And here in Washington, The Washington Times editorial page editor, Tara Wall. And Democratic strategist Paul Begala. Thanks very much to all of you for coming in.

Let me give the broad picture of where this election stands right now, the presidential contest 23 days out. In our CNN poll of polls, an average of the major national polls right now we have Obama at 49 percent, McCain at 41 percent, unsure 10 percent. Focus in on unsure 10 percent.

In our estimate of the Electoral College right now, 270 votes needed, as you know, we estimate that Obama has 264 either the very much in his column or leaning in his column to McCain's 174.

It looks like this is -- James, it looks like this is all good news for Barack Obama, only a few weeks to go. Are you already sensing this is over with?

JAMES CARVILLE, CNN CONTRIBUTOR: I did. And I said after the debate that this race is over and the question here is, do the Republicans understand this? And they got have to engage in some type of a political triage here.

And everybody knows the Democrats are going to gain seats in the House and the Senate, and do they say that, you know, we know McCain is going to lose, so we need to vote for Republicans in the House and the Senate to keep the majority tight or we know we're going to lose the Congress so maybe we need to try to get more votes than McCain to not send such a signal of landslide.

But for all intents and purposes, the Republicans now need to figure out what happened to their party, who brought them down, was it the greedy-cons, the neocons, the social conservatives or what? I mean, they are going to have to have this terrible internal discussion in their party as to what is going to cause a defeat of this magnitude. BLITZER: Let me ask Tara if she agrees with that assessment. Is it time for the Republicans to do what James is recommending, basically say, you know what, McCain is not going to be elected, you don't want the Democrats in the lopsided majority in the Congress, in the House and Senate because you need checks and balances.

So go ahead and vote whoever you want for president, but get Republicans elected in the House and Senate so there can be some check in an Obama administration.

TARA WALL, CNN CONTRIBUTOR: Well, with all due respect to James, I am sure he would love for the Republicans to listen him and take advice from him. But I think that, you know, to say that it's over to those 10 percent or so of undecided voters, I don't believe they believe it's over.

So, look, it is a struggle. It is going to be once again, McCain is back being the underdog of course and it is crunch time for that. We know that. I don't think you can cast that aside.

But remember, it was just three weeks ago he was ahead. We've got a little less than three weeks to go now. I think that anything can happen. It's going to be a hard-fought battle to the end, but I would not discount those voters out there who yet have remained undecided.

BLITZER: As you know Paul, John McCain has been written off, politically dead in the past. They all thought he was over with in his quest for the Republican nomination, but he came back and he beat some formidable Republican challengers.

BEGALA: Right, but he is no longer the master of his own destiny. This is the problem Senator McCain has. He has reached in his bag of tricks too many times. He has tried picking Governor Palin, the governor of Alaska. That shook things up for a while, helped him for a little while, now it looks like a negative in the polling data.

Then he tried suspending his campaign, remember, because they wouldn't pass a bill to bailout Wall Street. Now he'll try something else. The problem is, every tactic he tries looks like what it is, desperation and what the only hope, the best hope he has is --

(CROSSTALK)

BLITZER: Wait a second, what is the best hope he has?

BEGALA: If some horrible thing happens internationally. Right, if Putin decides to invade Ukraine because he's finished chewing on Georgia, that could work towards McCain's benefit. But that's a hope, not a strategy. And nobody, including John McCain, hopes something bad happens to America in order to McCain's future. I'm not saying that that's McCain's desire.

BLITZER: Let's let Leslie weigh in. Go ahead, Leslie.

SANCHEZ: A dose of reality here. It's the economy. I think everybody fundamentally understands that and they want to punish the party in power. This does not have to do with John McCain and his campaign. I mean, look at the fact, the last two presidential elections were so incredibly close and they tilted to the right to the Republican advantage. It's hard to say where this one is going to fall, but let's be real.

If this economy stays on the front burner, as hot as it is, then it is going to hurt Republicans all the way down ticket. The difference is, now the question becomes, to a lot of folks we're talking to, it's the type of experience and judgment.

Those folks are still leery about the experience level of a Barack Obama and is he susceptible to the influences of a Democratic Congress? He never stood up to them before. Whenever you have no checks and balances, you've got cronyism and all these other kind of social ills that people are concerned about and those are real things still that people are going to talk about.

BLITZER: Let me let Paul and then I'm going to go back to James. Go ahead.

BEGALA: Let me make a point. This is a big canard Republicans have, Barack Obama never stood up to his party. Hello, have we ever heard of Hillary Clinton, Bill Clinton? The most powerful and I think successful Democrats of my lifetime and Barack took them on. I was for Hillary, I've got the tire tracks across my head to show. He is the guy who took on the power establishment in his party and he benefited from it. Now, to his credit he has united the party and to Bill and Hillary's credit, they have joined in to unite the party but you can't say that a guy who ran against the Clintons is somehow not able to take on his own party.

SANCHEZ: Let's distinguish the difference between politicking and governing.

WALL: And legislation.

SANCHEZ: And legislation, exactly right, Tara. Look at the fact, even on taxes, you have got to look at his record in terms of what he wants to do and the McCain campaign is exactly right. They talk about he voted 94 times in the last three years in favor of higher taxes, but he tries to talk about being for the middle class. Let's look at the record --

BLITZER: Hold on, guys. I want to bring James back for a second. You hear a lot of Democrats say, you know what, all these poll numbers are great for Barack Obama but they're concerned there is this hidden racial undertone. The new issue of "Time" magazine, our sister publication, has a cover this week saying why the economy is trumping race.

How worried are you, James, that these poll numbers may not be accurate that some white folks out there are going to go into the polling booths and not vote, even though they say they are going for Obama, they are not going to vote for him?

CARVILLE: There may be some, but you know as a lot of recent studies on this and in the primaries you saw it, it favored Obama when it was over 15 or hurt him when the black contribution was 15 or over. It hurt him somewhat when it was under 10. I suspect that black contribution in this election will come in about 11. So I don't know, and we saw furious close in 1968 where Humphrey almost caught Nixon, but he didn't. We saw the same thing happen in 1976. So there could be just some natural closing. It would be pretty hard to win a presidential race by eight points. But the point is, this country's ready for a change. They're not going to elect a Republican president. They're not going to elect a Republican Congress.

BLITZER: Go ahead, Tara.

WALL: I think the fact that he is ahead and the fact that he is the nominee on the Democrat ticket clearly shows that race is not an issue in such high record that folks thought it was. And I think that even Democrats are changing the pace or changing the message on this one. Barack Obama was down, race was supposedly going to be this big issue. Now even he is saying it is not an issue, it's not going to be an issue now that he's ahead. I think that's quite ironic. But the bottom line is, he is gaining among working white class women and, so, look, trust America to be able to put race aside.

There will be a small percentage, obviously. It's not going to have as much of an impact. But you can say the same for John McCain, the percentage of those who won't vote for him because of his age or because of sexism, because of Sarah Palin. There are many factors that go into why people vote or don't vote for an individual. I think race is the least of these.

BLITZER: I want everybody to stand by because we're only getting started. We have much more to cover with our strategists, including the presidential campaign's increasingly angry tone out there. What is going on? You're watching LATE EDITION, the last word in Sunday talk.

(COMMERCIAL BREAK)

BLITZER: And we're back with our CNN contributors, Republican strategist Leslie Sanchez, Democratic strategist James Carville, "Washington Times" editorial page editor Tara Wall and Democratic strategist Paul Begala. As all of you know, they're part of the best political team on television.

Listen to this exchange on Friday in Minnesota that Senator John McCain had with a woman at his town hall. Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I can't trust Obama. I have read about him and he's not, he's, he's an Arab. He is not -- no?

MCCAIN: No, ma'am. He's a decent family man, citizen, that I just happen to have disagreements with on fundamental issues. (END VIDEO CLIP)

BLITZER: Paul, that was the second time that Senator McCain came to the defense of Senator Obama in the face of what arguably is a hostile question, which is clearly a hostile question. How did he handle the situation because on Friday I sensed the clear change in his tone how he deals with an increasingly angry crowd out there.

BEGALA: He handled it much better with this woman. I remember in the primaries when a woman called Hillary Clinton the "B" word and she said how do we beat the "B" word and he said, that's an excellent question. OK. That was bad John McCain.

BLITZER: That's a word that rhymes with witch.

BEGALA: Yes. I don't use it. My wife will slap my face. This time much better, right? And I think that is good for McCain. I can't tell you the damage that that gentleman in Waukesha, Wisconsin, did to the McCain campaign.

When he stood up, his face contorted with rage. He said, I'm angry and it's not about the economy. That was horrible. And it's not -- you know...

BLITZER: But let me bring in Leslie. Leslie...

(CROSSTALK)

BLITZER: You can't -- in fairness to John McCain, you can't blame him for crazy things that people say at town hall meetings and you can't blame Senator Obama for crazy things the left wing might be saying about John McCain.

LESLIE SANCHEZ, CNN CONTRIBUTOR: No, you're exactly right. I mean, one thing you can't downplay is the level of intensity that's out there. There are people who are very passionate on each side and a lot of them are reeling from false information,. I will say that much.

But what you saw there with Senator McCain was leadership. He took exactly the right tone. He took control of that conversation. Let me remind you, this is not a conversation that is only about African-Americans or Arabs or religion, I mean, there was so much in the immigration debate, you know, when they were talking about disparaging terms for Hispanics.

And I saw some Republican leaders step in and do exactly the right thing and Democratic leaders, as well. This is exactly what John McCain did...

(CROSSTALK)

BLITZER: James, it is clear he could have done one thing further and told that woman, you know what, there's nothing wrong with being an Arab, there's nothing wrong with being a Muslim, you don't have to make it sound like being an Arab is -- you know, being -- that that's some sort of evil description. Obviously, that's not true.

CARVILLE: Yes, he could have. First of all, I wonder what this poor woman was reading. I suspect she wasn't reading anything, she was listening to talk radio. But anyway, obviously her information was entirely erroneous.

I actually thought that he did fine. I mean, that maybe he could have gone further and I agree with the thing that you -- this whole game of you blame the candidate for the most extreme things some idiot that supports him says, is a little out of touch.

But I do think -- I talked to a lot of people in journalism and I think there is some fear that one of these crowds could literally cause physical harm to a cameraman or a journalist or somebody covering this.

You know, there was a racial epithet that was slung at an African-American cameraman during one of these debates. And this sort of increasing angry tone that the Republicans have, and I understand in one sense they're going to down defeat and they know it.

BLITZER: All right. Hold on. Let me read to you, Tara, what Congressman John Lewis, the civil rights icon, said on Saturday in a statement. He said: "As one who was a victim of violence and hate during the height of the civil rights movement, I am deeply disturbed by the negative tone of the McCain-Palin campaign. Senator McCain and Governor Palin are sowing the seeds of hatred and division and there is no need for this hostility in our political discourse."

Strong words and he went on to also speak about George Wallace and other things. But it has generated a lot of commotion out there.

WALL: The George Wallace comparison was really bottom of the barrel, quite frankly.

BLITZER: He insists he wasn't making the comparison, he was just citing another ugly period in American history.

WALL: And quite frankly, listen, when anyone -- Democrats have long, you know, in this race, continuously interject race. As much as Republicans are trying to say and continuously say, including John McCain, we're not going to have it, we're not going to tolerate this, we're not going to stand for it, from the very beginning. You see these instances of race being interjected.

I want to just make one point about Paul's point -- James' point, excuse me, and that it's not just Democrats that are -- excuse me, Republicans that are fired up this way and making these horrible statements like the one woman and even the gentleman who shouted "terrorist," listen, let me show you some of the e-mails that I get from the fired up left and Obama supporters. I can't even repeat some of which on the air. So let's not pretend like it's one side. It's wrong when either side does it.

BLITZER: Paul, what do you think?

BEGALA: It's wrong when either side does it. But let's not pretend it's even-steven. OK. Somebody yelled out...

WALL: It's not about even-steven.

BEGALA: ... at a Sarah Palin rally...

WALL: And he handled it.

BEGALA: ... "kill him." Someone yelled out at another rally, "off with his head," you know...

WALL: Which is wrong.

BEGALA: ... which is horrible. And that's not Sarah Palin's fault, but it is her fault when she says things like Barack Obama pals around with terrorists. Well, that's ridiculous. It's over the line. And it's incendiary. You know, Alaska was far, far removed from 9/11, but Washington wasn't, right?

And so people take it real, real seriously in this country when people say somebody is palling around with a terrorist. The governor of Alaska should know a lot better than to use that kind of incendiary rhetoric.

BLITZER: Is that appropriate? Let me let Leslie weigh in, and what Sarah Palin was referring to as William Ayers, the radical, Weather Underground terrorist stuff from the '60s who is now an education professor in Chicago.

SANCHEZ: Look, there's a very strong connection there that I think people are learning more and more about every day. I really did not appreciate the palling around comment. I agree with Paul on that.

And I also didn't appreciate that she didn't take a stand and say something very much to the extent that Senator McCain did, and to say that, you know, we're really not going to tolerate that, and really take that issue on.

I think that's what leadership is about. I like that the tone has changed within the campaign, but this is very sensitive. I think we have to be incredibly careful how it's perceived.

BLITZER: We have got to leave it there, guys. James Carville, thanks very much. Paul Begala, Leslie Sanchez. And Tara Wall, who has the last word of this segment, go ahead.

WALL: I just want to say, it's my dad's birthday today. Happy birthday, pops. I'll see you soon.

BLITZER: Happy birthday from all of us at LATE EDITION. Good work, pops.

Later on LATE EDITION, my exclusive interview with former Clinton Treasury Secretary Robert Rubin. That's coming up.

But coming up next, my colleague Campbell Brown on her week night program here on CNN, she likes to say there's no bias, there's no bull. She's telling us today why she's taking on both John McCain and Barack Obama. She's taking them to task. LATE EDITION continues right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. I'm Wolf Blitzer in Washington. You may have noticed that Campbell Brown, the anchor of CNN's "ELECTION CENTER," has been speaking out forcefully on some hot button issues during the course of this presidential campaign.

She and I had a chance to talk about that this week.

(BEGIN VIDEOTAPE)

BLITZER: Campbell, thanks very much for joining us. You said a couple of provocative things this week. You said there's an absence of leadership right now out there on the campaign trail. Explain to our viewers what exactly you meant.

CAMPBELL BROWN, HOST, "ELECTION CENTER": Well, Wolf, let me say, first of all, that I wasn't just talking about the presidential candidates. I think the president has frankly been pretty absent, especially in the midst of this economic crisis, and that is certainly not entirely not his fault. No president during an election this close out gets very much attention from anyone, frankly.

Members of Congress haven't shown leadership in this economic crisis. And, so, what I did was talk about a story -- or tell a story, rather, about a sheriff in Cook County in Chicago who made a decision, a pretty bold decision, if you ask me.

He decided he was going to stop evicting people on homes that had been foreclosed on for the foreseeable future because what he was finding is that when he went in, his men went in to carry out these evictions on the banks' orders, that in a lot of cases there were renters there who had been paying their rent on time, who had no idea that this home they were living in had been foreclosed on.

And the banks were not giving these people notice. And none of the rules were being followed, none of the due diligence was being done, and he just got fed up. And I think you're seeing, you know, people at the local level take action into their own hands, because they're not saying anybody, frankly, be it the president, members of Congress, our presidential candidates at the national level, say, you know, here's what we're going to do. Here's how we're going to handle this.

You're seeing lots of little piecemeal ideas sort of thrown out there, but no one feeling that void, and, frankly Wolf, I don't have the solution.

I mean, it may just be that we have to get to November 4th and we have to have an inauguration and a new president before we see someone step in.

BLITZER: Some real leadership out there. You also said this week. You said, "Don't you want to be able to walk into the White House with your dignity and tact and your head held high?" Referring to these two presidential candidates and all the negative advertising, and all the negative statements that have been made out there. Elaborate a little bit on what you meant.

BROWN: To me, this was so striking to me, especially at the beginning of the week when the economic crisis was at its height, it remains there, frankly. But it was extraordinary to me what was happening on the campaign trail. I mean, we're hearing our financial experts say that the situation we're in is as bad as it's been since the Great Depression.

I had a panel of women on my program talking about the debate and their anxieties and they're talking about having to scrimp just to save money to buy groceries. And, yet, at the start of last week what we heard from the presidential candidates, from McCain it was all about Obama's relationship with Bill Ayers. From Obama it was a video, they were putting out about McCain's involvement in the Keating Five, the savings and loans scandal from the late '80s.

And almost like these candidates were living in a parallel universe. The fact that this was going to dominate the conversation at this crucial time when people were talking about real pain and suffering and real life was pretty stunning to me. And, frankly, this week, Wolf, I don't think it's gotten all that much better.

BLITZER: She calls it no bias, no bull every week night here on CNN, 8 p.m. Eastern, Campbell Brown in "THE ELECTION CENTER." Campbell, thanks very much.

BROWN: Absolutely, Wolf, good to see you.

BLITZER: Campbell and Anderson Cooper will be joining me and the best political team on television as we bring you the third and final presidential debate between Barack Obama and John McCain, that's Wednesday night only here on CNN. Our special coverage will begin in "THE SITUATION ROOM."

But up next, a man that was once Treasury Secretary Henry Paulson's shoes offers his prescription for the ailing U.S. economy. My exclusive conversation with the former Clinton Treasury Secretary Robert Rubin when LATE EDITION continues.

(COMMERCIAL BREAK)

BLITZER: Bow, we're just getting in some new poll numbers from the key battleground state of Ohio. No Republican has ever been elected to the White House without carrying Ohio. In our new Ohio poll of polls just out, we have Senator Obama with 49 percent, Senator McCain 46 percent. We're watching this state very closely. Much more coming up on this shortly here on LATE EDITION.

After Wall Street closed out its worst week ever on Friday, I had the chance to speak with the former Clinton Treasury Secretary Robert Rubin.

(BEGIN VIDEOTAPE)

BLITZER: Mr. Secretary, I wish we were meeting under different circumstances. Have you ever seen in all your years, whether going back to Goldman Sachs, when you were Treasury Secretary, have you ever seen personally anything like this?

ROBERT RUBIN, FORMER U.S. TREASURY SECRETARY: Not in an American perspective, Wolf. These are the most difficult and uncertain and complex conditions that this country has faced in the financial market since the 1930s, though it is not the 1930s. That was a very different set of conditions. But this really is a perfect storm.

I do think that the Asian financial crisis, as it affected Asia and Russia and the Mexican crisis, as it affected Mexico had many similarities to what we're facing now, but now it's happening in our country and I think a lot of people can learn from having thought about how we addressed those crises in the '90s as you think about what we need to do here and in fact in some measure are doing.

BLITZER: I remember those crises in Asia and I remember what you were doing. What lessons did we learn from then that should be applied right now? In other words, what needs to be done to turn this around?

RUBIN: I think the absolutely, the No. 1 key and I think Henry Paulson, Hank Paulson and Ben Bernanke and Tim Geithner at the Federal Reserve Bank in New York have been doing this, is to be highly, highly proactive. And then the Congress did in the recent emergency legislation, highly, highly proactive with respect to policy. And a great deal has been done, with the recent emergency program. Now it has to be implemented in a wise and sensible fashion. And I take it very well of Hank Paulson. I think we're in very good hands with Hank there.

The Federal Reserve's system has taken a number of unprecedented measures. I think the single most important thing we could do that we haven't done is something that Senator Obama has been proposing for quite some time now, which is a major fiscal stimulus. And very importantly, if we do that, it has to be constructed in a way to have immediate effect and to get the most impact for the money you spend.

And I think it also needs to be married with a commitment to on the long term reestablishing fiscal discipline.

BLITZER: I know you support Senator Obama. You support him strongly. Let's talk about that stimulus, because Nancy Pelosi and others now are saying there should be another economic stimulus package. What would you see that package including?

RUBIN: Well, I do think there are a lot of choices you can make.

What I would do -- and it very much follows what Senator Obama has suggested -- and, as you probably know, he has met with a number of us, Paul Volcker, Larry Summers, myself, Laura Tyson, and others quite a number of times now to think this through.

I would put in place an infrastructure piece, because there are a lot of infrastructure projects that are in place.

(CROSSTALK)

BLITZER: What does that mean, an infrastructure project?

RUBIN: Oh, bridges, water systems, roads, highways, but not new projects that are going to take a long time to set up, Wolf.

There are a lot of projects under way, particularly where states and cities now are having trouble finding financing. We can funnel that money right into existing activities, so that you would be able to act very, very quickly.

BLITZER: Is that going to stimulate the economy and create jobs as well?

RUBIN: Oh, yes. What that would do is create economic demand. So, that stimulates the economy. And it very directly creates jobs in the infrastructure.

And, furthermore, since our country really has very serious needs in the infrastructure area for the long term, it, at the same time, is doing something very useful for the long-term good of our country.

I also think there are a number of measures that we could take that would provide immediate, additional demand in the economy that would help middle income people, poor people.

BLITZER: Like what?

RUBIN: Well one example would be the proposal that Senator Obama made which is a rebate to make up for the high price of gasoline. That would help middle income and lower income people meet their gas and heating bills and, at the same time, it is providing an additional stimulus for the economy.

BLITZER: Where is the federal government going to get all -- you're talk about tens of billions of dollars for another additional stimulus package. The federal government just put up $700 billion for the bailout, as it's called, the bailout package. Where is all this money coming from?

RUBIN: No, well, the $700 billion is not going to be what it will cost the government. It will cost the government some fraction of that because they'll be buying assets or injecting equity in the bank.

BLITZER: We hope. We hope.

RUBIN: Well, Wolf, I think -- I know so much about this thing. I think no matter what happens, it will cost the government something but I think that something will be a small portion of the total $700 billion and in any event, it's certainly not going to end remotely like the whole $700 billion.

Secondly, the government can spend money now when we're in trouble and then what it should do is what Senator Obama said in his stimulus package in his presentation, which is commit to establish sound fiscal conditions over the long term once we are past this immediate crisis so that can maintain the confidence in our markets.

And one of the concerns you have to have is if the international markets lose confidence in your long-term fiscal position, that could undermine our interest rates and currency right now, which could hurt us right now, which is why he was very wise in marrying fiscal stimulus now with a long-term commitment to re-establish fiscal discipline.

BLITZER: People are worried about their jobs, as you know. We have already lost 700,000 jobs since January 1st. In order to keep up with the population, if you will, you need to create about 100,000 jobs a month just to stay even.

How many more jobs are we talking about in the balance of this year and next year? Because this recession, a lot of people say it could be long, it could be deep.

RUBIN: Wolf, I don't know the answer to that, and nobody knows the answer to that. When you start getting into the question of trying to predict outlooks -- and as you said, I've been around this for a long, long time, including running Goldman Sachs at one time, and then being in the government, I don't think predictions are worth very much.

I think what is very important is to do what you think makes sense. And in this case, I think it is to be highly proactive in as many ways as we can think of, to provide relief for middle income and lower income people, because that also -- not only does it help the American people directly, but it creates demand in our economy. And we have to -- we have to focus on fixing our financial system, because that has an enormous effect on Main Street, jobs and standards of living.

And that, it seems to me, in the broader sense, is what we should be doing. And at the same time, we should be working with the rest of the globe, because we do have now very serious difficulties around the globe.

BLITZER: And leaders from the International Monetary Fund, the World Bank, they are gathering in Washington this weekend, leaders from the G-7. The Italian Prime Minister Berlusconi, is recommending that all the markets worldwide be shut down, at least temporarily.

Is that a good idea? Is that a bad idea? Because this is a global economic crisis, as you point out.

RUBIN: I think that that is a genuinely bad idea, because what happens when you close -- the experience, at least, with closing markets in other countries is that when you do, you have pent up demand or pent up anxiety. It increases anxiety. And then when you reopen them you have all kinds of problems.

What I think the G-7, the leaders of the global economies -- major global economies can do is as they did this week -- act cooperatively both with respect to rate cuts and with respect to their programs, to support financial systems and to create jobs, so that you get a cooperative global endeavor. There is a lot of advantage in that kind of cooperative endeavor.

We met, about -- I think it was -- I've forgotten exactly -- about three or four weeks ago with Senator Obama. He had Paul Volcker, Larry Summers, Laura Tyson, myself and others. And one of the things he talked about then was reaching out -- what this country should do is reach out to the leaders of the other major economies to work together, and that that would be far more effective than just working on our own. And I think that's right.

BLITZER: Robert Rubin, the former treasury secretary. Thanks very much for coming in, Mr. Secretary.

RUBIN: You're more than welcome, Wolf. It's very nice to be with you.

(END VIDEOTAPE)

BLITZER: And up next, the former Reagan Treasury Secretary James Baker on this financial crisis. We're going to show you what he was saying in case you missed it. Stay with us, we'll be right back.

(COMMERCIAL BREAK)

BLITZER: In case you missed it, let's check some of the highlights from the other Sunday morning talk shows here in the United States. First off on ABC, the former Treasury Secretary James Baker, was asked about the government's plan to essentially nationalize, as some are calling it, some of the country's banks to help stabilize the economy.

(BEGIN VIDEO CLIP)

JAMES BAKER, FORMER TREASURY SECRETARY: This is bigger than the private sector can fix by itself. Government is going to have to do what's necessary to restore financial stability to our markets and to our economy. Injecting liquidity into the system, coordinating our macroeconomic policies with other nations, these are the kinds of moves that are going to be required to get this thing under control.

(END VIDEO CLIP)

BLITZER: And we're going to have more highlights from the other Sunday morning talk shows coming up in our next hour. There's much more ahead including Congresswomen Debbie Wasserman-Schultz and Heather Wilson. They're standing by live.

BLITZER: Stay with us, we'll be right back.

(COMMERCIAL BREAK)

BLITZER: This is "Late Edition," the last word in Sunday talk.

(BEGIN VIDEOTAPE)

(voice over): Obama versus McCain.

SEN. BARACK OBAMA, D-ILL.: John McCain's been stealing my signs. You know, suddenly they're all about change.

(APPLAUSE)

SEN. JOHN MCCAIN, R-ARIZ.: I have a record of reform and a plan for the future.

BLITZER: We'll assess where the race stands with two congresswomen, Obama supporter Debbie Wasserman Schultz and McCain supporter Heather Wilson.

PRESIDENT GEORGE W. BUSH: It is important for our citizens to have understood that which affects Wall Street affects Main Street as well.

BLITZER: A nosedive in the financial markets puts pressure on a struggling U.S. and global economy. We'll get perspective from former Republican presidential candidate and McCain supporter Steve Forbes and former Clinton labor secretary and Obama supporter Robert Reich.

From the market meltdown to the presidential campaign, insight on a dramatic week from three of the best political team on television. "Late Edition's" second hour begins right now.

ANNOUNCER: Live from CNN in Washington, this is "Late Edition" with Wolf Blitzer.

BLITZER: Welcome back to the second hour of "Late Edition."

The U.S. economy -- it's issue number one for U.S. voters, and it's topic A for John McCain and Barack Obama, as well. Both candidates have been offering proposals to try to fix the economy, and they're speaking out about it on the campaign trail all the time now.

Let's discuss what the candidates are saying, what these key issues are, with two guests, Democratic Congresswoman Debbie Wasserman Schultz of Florida. He's supporting Barack Obama. She's joining us, right now, from Manchester, New Hampshire.

And Republican Congresswoman Heather Wilson of New Mexico -- she's backing John McCain. She's joining us from Albuquerque.

Thanks, Congresswomen, very much for coming in.

Debbie Wasserman Schultz, let me start with you.

The House speaker, Nancy Pelosi, says right after Congress -- right after the election, she wants to reconvene the House and get a $150 billion economic stimulus package off the ground.

But the question is this. Where is all this money coming from? The national debt is skyrocketing right now. It's over $10.2 trillion. It was $5.7 trillion only eight years ago when the Bush administration took office.

So, where is all this money coming from?

WASSERMAN SCHULTZ: Well, that's the whole point is that, at the beginning of the Bush administration, Wolf, we started out with a $5 trillion surplus, and now we are in a significant deficit and getting worse by the day.

But the average working family should not suffer. We need an economic stimulus package that Democrats have been pushing for, for months now, because we need some job creation, some job stimulation.

If we invest in our nation's crumbling infrastructure, then we're going to be able to create jobs and make sure that we can prevent accidents like the bridge collapse in Minneapolis.

I mean, we've had long-standing neglect of our infrastructure from the Bush administration for many, many years, a deteriorating regulatory process that has caused the economic crisis. And we've got to get things moving again.

BLITZER: All right. Heather Wilson, are you on board?

(LAUGHTER)

WILSON: Not at all. The whole idea of this new stimulus package won't even come into effect and won't have a stimulative effect. It's just more increases in taxes and increases in spending and will put us in a deeper hole financially.

BLITZER: You want to respond to that...

WILSON: One of the differences between...

BLITZER: Let's let Congresswoman Debbie Wasserman Schultz respond. Go ahead.

WASSERMAN SCHULTZ: Well, but Congresswoman Wilson had no hesitation to support the Bush tax cuts for the wealthiest few, which certainly contributed to our spiraling deficit.

It's time that we reach across the aisle, that we work together. We've lost hundreds of thousands of jobs, more jobs than even our national experts expected. We have an economic crisis that is the worst we've had in all of history.

(CROSSTALK)

BLITZER: Congresswoman Wilson, go ahead.

WASSERMAN SCHULTZ: It's time to work together.

WILSON: The jobs that we need to create have to come from small business. That's the engine of economic growth. And Senator Obama has proposed to...

(CROSSTALK)

BLITZER: One at a time.

WILSON: ... increasing taxes. We need tax relief for small business, and we need to make sure those small businesses have the credit they need to be able to do the jobs that they've got on the books.

You know, Wolf...

BLITZER: Congresswoman Wasserman Schultz, most economists say that, at a time of economic recession -- and almost everyone believes the U.S. is in a recession already, even if the technical definition hasn't yet been met -- it's not a good time to raise taxes.

WASSERMAN SCHULTZ: Wolf, I'm not going to let Congresswoman Wilson just make up facts as she goes along.

The bottom line is Barack Obama has proposed a 50 percent tax cut for small businesses, and just announced a small-business rescue package a couple of days ago that would allow small businesses in this country to get access to...

WILSON: Barack Obama and you.

(CROSSTALK)

WASSERMAN SCHULTZ: Excuse me. I didn't interrupt you. I did not interrupt you.

BLITZER: One at a time, one at a time.

WASSERMAN SCHULTZ: I did not interrupt you, Heather.

Barack Obama proposed a small-business rescue package, a couple of days ago, that would provide access for small businesses to disaster relief loans similar to what was allowed after Katrina. We are at that type of crisis level.

And Barack Obama has proposed tax cuts for small businesses. And we're not going to allow the McCain campaign and their supporters to just make up the facts as they go along.

BLITZER: Go ahead, Congresswoman Wilson.

WILSON: Well, let's talk about some facts. Barack Obama and you, Debbie, voted for the largest national tax increase in American history not once, but twice.

WASSERMAN SCHULTZ: Really? When did we do that?

WILSON: Debbie, if you'd like me to be patient with you, please be patient with me.

WASSERMAN SCHULTZ: Name the tax increase. WILSON: He voted for a tax increase on people making $42,000 a year or more. He has had a variety of tax proposals during his campaign. And the interesting thing, to me, is he had similar proposals when he ran for the Senate, saying we need to cut taxes on middle-class Americans; never even introduced a bill, and, when he got to the Senate, voted to increase taxes.

He is the only candidate in this presidential campaign who is proposing to increase taxes on Americans, both payroll taxes, income taxes, capital gains taxes. And that will squelch the economy.

BLITZER: Congresswoman Wilson, explain -- answer her question, when Congresswoman Wasserman Schultz and Senator Obama voted for the largest single tax increases in U.S. history?

WILSON: It was in the Democrat-proposed budget, the most important vote and sometimes the toughest vote that we have ever year. Now...

WASSERMAN SCHULTZ: You see -- can I respond to that?

BLITZER: All right.

WILSON: ... Debbie and others have said, oh, well, that's not a binding vote. The most important vote that we have all year is the budget vote. And the Democrats have been very...

WASSERMAN SCHULTZ: Excuse me. That's not...

(CROSSTALK)

WASSERMAN SCHULTZ: Excuse me. Wolf, if I can respond?

BLITZER: Go ahead.

WILSON: ... anxious to attack me for my budget votes, so...

WASSERMAN SCHULTZ: If I can respond, with all due respect?

BLITZER: Go ahead.

WASSERMAN SCHULTZ: The Republicans like to point to lots of different things that they call tax increases, including allowing the Bush tax cut for the wealthiest Americans to expire, which Heather has supported.

I mean, the wealthy have had their president for the last eight years. Barack Obama wants to focus on working families. That's why he proposed -- he's proposed a tax cut for 95 percent of families in America, 95 percent of individuals, and a 50 percent tax cut for small businesses.

So, you know, we're not just, you know, pointing at straw men here. Barack Obama nor I voted for the largest tax increase. We're proposing tax cuts for the middle class, and John McCain is leaving the middle class out in the cold. He didn't even mention them, at all, during either debate.

BLITZER: Congresswoman Wilson, let me read to you from an item that was just put on the Politico.com Web site by Mike Allen and Jonathan Martin. I'm going to read you this paragraph.

"McCain has careened from stance to stance on the economy, starting with saying the fundamentals are sound, focusing on earmarks, applauding new powers for the Treasury Department, then advocating a bailout for homeowners. In a matter of weeks, McCain has gone from being a conventional tax-cutting conservative to a big-government interventionist."

How concerned are you, as a fiscal conservative, that what these political reporters are writing could be true?

WILSON: It's fascinating to me that, when Senator Obama proposes things to deal with the very serious financial crisis on Wall Street, or changes six or seven times his tax proposals, that's OK.

But when Senator McCain says we need to take some serious action to face serious problems, we need to get at the root of the problem, which is subprime mortgages, which he, you know, two years ago, said we need to change the way we regulate Freddie and Fannie and the Democrats, including Senator Obama, said he think subprime loans are fine, then you criticize Senator McCain for reacting to current events, looking at what we need to do...

WASSERMAN SCHULTZ: Hour-by-hour reaction.

(LAUGHTER)

WILSON: I think that he has been forward-looking on a serious problem that he called attention to two years ago.

BLITZER: Well, here's an ad -- and I'll let you respond, Congresswoman Wasserman Schultz.

WASSERMAN SCHULTZ: Thank you.

BLITZER: But I'll play this McCain ad that makes a similar point. Listen to this.

(BEGIN VIDEO CLIP)

ANNOUNCER: Congressional liberals fought for risky subprime loans. Congressional liberals fought against more regulation. Then the housing market collapsed, costing you billions. In crisis, we need leadership, not bad judgment.

(END VIDEO CLIP)

BLITZER: All right. Go ahead and respond.

WASSERMAN SCHULTZ: Barack Obama has provided steady, consistent leadership for the last six or seven months, and even proposed, two years ago, reforms to go after predatory lenders. The bottom line is that, two weeks ago, John McCain said the fundamentals of the economy are strong. Then, later in that day, he said the fundamentals of the economy are at risk.

Then he proposed a task force to sit down and figure out what we should do about the economy, a couple days later.

Then he decided that we needed to, in the debate, give the largest giveaway to irresponsible lenders in American history by proposing $300 billion in loan forgiveness so that we could make sure we shore up homeowners and allow them to buy those mortgages at safe values.

That's irresponsible and erratic.

BLITZER: Go ahead, Congresswoman Wilson.

WILSON: That's absolutely...

(LAUGHTER)

That is just bizarre, Debbie.

(CROSSTALK)

WASSERMAN SCHULTZ: Every major paper in the country had said it.

(CROSSTALK)

WILSON: Debbie, let me finish.

(CROSSTALK)

WILSON: Would you let me finish?

WASSERMAN SCHULTZ: ... that his proposal is irresponsible.

WILSON: Debbie, would you let me finish?

BLITZER: Go ahead, Congresswoman Wilson.

WILSON: Thank you. The rescue bill that we passed included the authority to buy the loans themselves. Why is it that we should buy worthless paper...

SCHULTZ: You should buy them at face value.

(CROSSTALK)

WILSON: ... Wall Street while those banks are foreclosing on more people...

(CROSSTALK)

SCHULTZ: Heather, should we be buying those mortgages at face value? (CROSSTALK)

WILSON: ... and kicking people out of their homes because they're upside down on their mortgages.

SCHULTZ: We shouldn't. We already get...

WILSON: That's what John McCain...

(CROSSTALK)

BLITZER: One at a time. Hold on.

WILSON: ... get to the root of the problem.

SCHULTZ: We actually gave the government the authority to buy those mortgages, Heather. John McCain wants to let them boy them at face value.

WILSON: And John McCain was saying we should exercise that authority.

SCHULTZ: No. He's saying we should let us buy them at face value when they're devalued loans, and so that's a total giveaway to irresponsible lenders. What we should do is leave the bill intact so that we can -- it's not even allowed...

WILSON: I would encourage you to look at the...

(CROSSTALK)

BLITZER: Congresswoman Wilson, go ahead.

SCHULTZ: I'd encourage you to read the legislation because we as Democrats pushed to make sure we could have that provision in there to help homeowners who are struggling today in their homes. And John McCain...

WILSON: Then why was Senator Obama now turning his back on it?

(CROSSTALK)

WILSON: That's an interesting question.

SCHULTZ: John McCain is the one that is engaging in irresponsible proposals.

BLITZER: All right.

SCHULTZ: Should we give away the store to the irresponsible lenders and buy those mortgages at face value when they're devalued loans? That's ridiculous.

WILSON: I think John McCain has been clear, we need low taxes, we need to get these bad mortgages off the books...

(CROSSTALK)

SCHULTZ: John McCain is being erratic and irresponsible and he's listing and trying to get his campaign back on track. We need to focus on the middle class and help them.

BLITZER: All right, Congresswomen...

WILSON: You're good at comedy, Debbie.

SCHULTZ: And you're good at making things up. So it's great to see you.

WILSON: Thank you.

BLITZER: We will leave it on that note. All right. Congresswomen Debbie Wasserman Schultz and Heather Wilson, thanks to both of you for joining us for a rather lively discussion.

President Bush and finance ministers from the world's biggest industrial countries have met this weekend to try to map out a plan to address the global financial crisis. We're going to have much more on this coming up right after this.

(COMMERCIAL BREAK)

BLITZER: The world's finance ministers are meeting right now to try to map out a strategy for dealing with this global economic crisis. Let's talk about that, the impact on the U.S. economy and a lot more with two special guests. Joining us in New York, Forbes CEO and former Republican presidential candidate Steve Forbes. He's supporting John McCain. And in Berkeley, California, former Clinton Labor Secretary Robert Reich. He's backing Barack Obama.

Gentlemen, thanks very much for coming in.

STEVE FORBES, CEO, FORBES: Thank you.

BLITZER: Steve Forbes, let me start with you. And play this little clip. We heard from the Treasury, the former Clinton treasury secretary, Robert Rubin, making this point. You just heard it a little while ago. I'll play this little clip.

(BEGIN VIDEO CLIP)

RUBIN: I think the single most important thing we could do that we haven't done is something that Senator Obama has been proposing for quite some time now, which is a major fiscal stimulus.

(END VIDEO CLIP)

BLITZER: Nancy Pelosi, the house speaker, wants $150 billion second economic stimulus package passed in the coming weeks. Good idea, Steve Forbes, or a bad idea?

FORBES: Well, in terms of stimulus, simply sending out rebate checks as we did earlier this year doesn't do any long-term good for the economy, doesn't increase incentives. If they want to reduce tax rates, especially in small businesses, as John McCain has proposed, that would be a very positive thing creating long-term jobs instead of one blip for a couple weeks when the checks go out.

BLITZER: Well, what about, Steve Forbes, funding new infrastructure projects, roads, bridges, trying to help in that area? Is that going to stimulate the economy?

FORBES: That will have some stimulus, but a lot of these projects are already under way. This will just keep them going. Japan tried numerous projects like that during the 1990s, building plenty of bridges and everything else, but it didn't stimulate the economy because their tax rates are high, their monetary policy was very bad, and so the economy stagnated. Throwing money at it doesn't work. Increasing incentives does work.

BLITZER: What works, Robert Reich?

ROBERT REICH, FORMER LABOR SECRETARY: Well, Wolf, I think that an infrastructure stimulus is a very important part of a package to make the economy work again, as Senator Obama has said.

Also, as Senator Obama has said, a major investment in alternative technologies, creating about 5 million so-called green- collar jobs, all of these are investments for the future, they're not just to stimulate the economy right now, they're to grow the economy in the future because if we have a first class infrastructure and we have also alternative energy, we are going to do better.

BLITZER: What Nancy Pelosi is also recommending is new unemployment benefits be included in the second stimulus package. Is that a good idea, Robert Reich?

REICH: Yes. I think it's absolutely necessary. There are too many people now who are exhausting their unemployment benefits. Wolf, since the first of the year, we have lost, if you include just private sector jobs, over a million jobs.

And that is also including people who were even too discouraged even to look for work. If you lose the demand side, that is, people are losing jobs and they're losing wages, there's no way that they can turn around and buy the things that are produced in this economy.

So, we make the recession even worse and we are begging for a -- well, a very serious recession. I'm not going to use...

BLITZER: The official...

REICH: ... the D-word.

BLITZER: Yes. The official number, Steve Forbes, is 700,000 jobs approximately lost since January 1st of this year. But what about increasing unemployment benefits and a new package?

(CROSSTALK)

BLITZER: Steve Forbes.

FORBES: I think short term you can take some temporary measures, but you also have to look what -- how you get this economy growing longer term. That's why John McCain is proposing reducing tax burdens on businesses. As you know, America has got the worst tax burden, the second-worst tax burden among developed countries today.

He also wants to lower taxes on income-earning Americans and he also has a plan in terms of trying to get direct aid to beleaguered mortgage-holders. So these together I think provide a long-term basis. He also has a plan for tax credits for R&D. And that's where the future lies.

He is very big in terms of energy going offshore, a nuclear power program, removing the barriers there. So it all ties together not only short term but long term as well.

BLITZER: Here's his proposal, Robert Reich, as McCain unveiled it the other night at that town hall presidential debate. I'll play this clip, and then you'll respond.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes -- at the diminished value of those homes and let people be able to make those payments and stay in their homes. Is it expense? Yes.

(END VIDEO CLIP)

BLITZER: All right. Go ahead, Robert Reich. You agree with Senator McCain's proposal?

REICH: Well, not only do I agree, but Senator Obama has been saying the same thing for over a year. It is in the Treasury bill already. The Treasury Department does have that authority. But Senator McCain has gone one step further, he wants to -- the Treasury to buy those mortgages back at what's called face value.

And I think the problem here, very simply put, is that if you buy them back at face value, you are providing a huge windfall to the mortgage bankers and the others who made the loans. There's no reason -- you're not going to protect the taxpayers. And Barack Obama, when he talked about the conditions that should be applied to that $700 billion, he said, No. 1, it should go -- much should go to home owners to help them stay in their homes, and number two, the taxpayers should not be put at risk. And this puts taxpayers directly at risk, Wolf.

BLITZER: Steve Forbes, the "Politico" Web site -- we showed that little paragraph a little while ago - said that McCain was going from a conventional tax-cutting conservative to a big government interventionist. Is that right?

FORBES: No. What we have here is an emergency, and the key thing is how do we get the banking system lending money again? And that's why I hope this weekend, when they have this meeting come over with, that the federal government will make aggressive moves to buy preferred shares and banks, replenish their equities so they can start lending again instead of hoarding and clutching cash. That's what's needed. And anything that gets credit flowing again is absolutely necessary to avoid a very serious recession.

BLITZER: Are you worried though that the federal government, what some critics say are nationalizing these financial institutions?

FORBES: What they're doing is taking mostly non-voting stock, but you've got to replenish the balance sheets and if you don't replenish the balance sheets especially with this nonsense on mark to market, which artificially lowers the value of their assets, which makes them clutch their cash even more, you don't deal with those two things, replenish the equity and suspend this mark to market, the banking system will still be very, very sluggish. We've got to get that money flowing again like water in a reservoir that's frozen and not going through the pipes. We've got to get it going through the pipes again.

BLITZER: Do you agree, Robert Reich?

REICH: Well, if I may, look, I admire Steve Forbes, and there's got to be bipartisan -- yes, you've got to make sure that Wall Street has enough money to keep on lending because if it can't keep on lending, then small businesses and individuals can't get the money they need to keep on functioning.

But it is very important, and Barack Obama keeps stressing this, that Main Street has got to also be looked after in terms of jobs, jobless benefits, the kind of stimulus package we talked about. You said before that only 700,000 jobs have been lost. Actually, if you include people who are too discouraged even to look for work, it's over a million jobs. And again, Barack Obama wants to help homeowners directly. You've got to make sure that Main Street is actually functional.

BLITZER: All right.

REICH: Not just a matter of bailing out Wall Street.

BLITZER: I was referring to the official number put out by the Department of Labor, the department you used to head when you were the labor secretary. Are you saying that those official numbers, Mr. Secretary, are not accurate?

REICH: The official numbers of unemployed are accurate with regard to people who are now looking for jobs, Wolf, but the Bureau of Labor Statistics also puts out a number of people who are too discouraged even to look for work, and that's where you've got over a million jobs.

The issue here is it's probably even more than a million jobs. In fact, if you look at people who are working part-time who would rather be working full-time and people who are working on fewer hours than they need to work because their old salaries were based on a 40-hour work week, they're now working a 35-hour work week, you're talking about vast numbers of Americans right now who are really and deeply in trouble.

BLITZER: Steve Forbes, grade President Bush and Secretary Paulson on how they've handled this crisis.

FORBES: Well, I hope the package they come up with this weekend, if they do it especially making preferred investments in banks, all kinds of banks, that will help Main Street. In terms of their economic performance, I'll be blunt, in terms of monetary policy, allowing the dollar to get weak, I give both failing grades. That was the biggest mistake since Jimmy Carter allowing the dollar to get as weak as it did. Now in recent months, I think the Federal Reserve has taken steps to try to shore the thing up.

The other thing they haven't done is suspend this mark to marketing thing, which has been an utter disaster, so in that sense I give them an incomplete. I want to see if they come out with this the next weekend and the next few days replenishing capital in banks, getting them to lend again, and getting us over this utterly unnecessary crisis. And also though I do give them high marks for going after Freddie and Fannie. And unfortunately a Democratic Congress blocked reform efforts there which really hiked sub prime mortgages and got us into the disaster we have now.

BLITZER: What should we be bracing for, Robert Reich, in the coming I would even say hours because the Asian markets, they're getting ready to open. The New York Stock Exchange will be open tomorrow. What should we expect in the coming days?

REICH: Well, a lot of people are watching the market very carefully, Wolf, saying we are almost at the bottom. That is, historically, if you look at price-earnings ratios, we are very, very low right now. And there are a lot of good deals out there. I think the real concern is that this is not just a liquidity crisis. This is fundamentally a crisis in trust. A lot of people in the market don't trust the numbers they find on these securities, and again, that's why Barack Obama, among others, have called for better regulations with regard to disclosure and capital requirements and ending of conflict of interest on Wall Street. You can't get trust, you can't restore confidence unless you have a financial system that is playing by the rules.

BLITZER: Very quickly, Steve Forbes, has the market bottomed out already?

FORBES: If they do right this weekend, I think the answer is yes. And I think if John McCain's tax proposals begin to get traction with the electorate, I think people will start to see real hope for the future again.

BLITZER: Steve Forbes and Robert Reich, thanks to both of you for joining us. We'll certainly have both of you back. And coming up, we'll preview the third and final presidential debate with the best political team on television. Lots more coming up, right here on LATE EDITION. (COMMERCIAL BREAK)

BLITZER: A lot of to discuss today with our political panel, so let's get right to three of the best political team on television. Joining us are White House correspondent Ed Henry, our senior political correspondent Candy Crowley, and our senior political analyst Gloria Borger. Guys, thanks very much for coming in.

Candy, listen to this exchange that Senator McCain had at a town hall in Minnesota on Friday.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're scared of an Obama presidency. I'm concerned about, you know, someone that you're cohorts with domestic terrorists such as Ayers.

MCCAIN: I want to be president of the United States, and obviously I do not want Senator Obama to be. But I have to tell you, I have to tell you, he is a decent person and a person that you do not have to be scared as president of the United States.

(END VIDEO CLIP)

BLITZER: He got some boos when he said that. I sensed a clear shift on Friday in how Senator McCain deals with some of these comments that have been coming up at these town halls.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Yes, but Ed and I were talking about this earlier. Most of the comments have come at the Sarah Palin rallies. Friday he just got a number of questions that he felt that he need to correct, that he needed to begin to sort of tamp this down. I mean, Ed can tell you about the ones the day before, but I think this was definitely him trying to tamp down certainly what had become a very big story.

BLITZER: What do you think, you were out there at some of those rallies.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: On Thursday, people were sort of going right up to the line but they weren't really doing the personal attack on Barack Obama per se. They were doing broad attacks. There was one guy on Thursday who was constantly saying look, I'm tired, I'm angry, not about the economy, but the fact that the socialists are taking over, Pelosi, Obama. Obviously an attack but not quite crossing the line like on Friday at the Minnesota rally, where in addition to that guy you showed, there was a woman who said I can't vote for Obama, he's an Arab.

Finally, McCain had to jump in and basically took the microphone and said no, no, no. Again, when he said something similar, as look, I disagree with him but you don't have to be scared about Barack Obama, he got boos. John McCain is between a rock and a hard place. If he doesn't look like he's slamming Obama hard enough, his base is going crazy saying take it to him.

At Thursday's rally, there was an African-American voter saying I'm begging you in the final debate this week, take it to him, take it to him. Meanwhile, if he goes too harsh or looks like he's not pushing back, we have people in the middle, people in the media saying, wait a second, why aren't you pushing back?

BLITZER: What do you think?

GLORIA BORGER, CNN SR. POLITICAL ANALYST: Well, I think, look, they have run some negative ads, Obama has run some negative ads, Sarah Palin has been out there saying that Barack Obama pals around with terrorists.

This is the kind of thing you're going to get to stir up the base. And I think originally the McCain campaign thought this was going to be a campaign about character and that at a certain point they were going to turn and say, as they have recently, who is this Barack Obama? What do we know about him? He doesn't have the experience to be president. And maybe that was a great strategy until we had this domestic economic or global economic crisis. And at this point, that strategy seems a little old. They're still going to use it to try and get some of those independent voters, but on the other hand, I think he needs to get back to the economy.

CROWLEY: I think they're going after their base here, not the Independent voters.

BORGER: Right.

CROWLEY: I think, you know, Sarah Palin is -- you know, her job, her entire job, is get them out. His job has got to be do to go after the Independents, so I think that's what you saw Friday.

BORGER: And they think about one out of five of every Independent voters is persuadable and it could be on the economy or it could be on the sort of character, we need John McCain to lead. So, it's a little bit of both. But at a certain point, it gets out of hand.

BLITZER: And speaking of getting out of handle, Congressman John Lewis, the civil rights icon from Georgia, said this on Saturday. I'll put it up on the screen. "As one of who was a victim of violence and hate during the height of the Civil Rights Movement, I am deeply disturbed by the negative tone of the McCain-Palin campaign. Senator McCain and Governor Palin are sowing the seeds of hatred and division, and there is no need for this hostility in our political discourse."

Those are strong words.

CROWLEY: They are, they are strong words. Strong enough that the Obama campaign actually - and they took out after the part about that seemed to compare this to George Wallace and says he doesn't think this is a George Wallace campaign here. Nonetheless, he doesn't like the negative tone. So, it was pretty -- a little over the top.

BLITZER: The McCain campaign reacted very, very angrily. HENRY: Vehemently saying look, comparing John McCain to George Wallace, we all got calls about this yesterday, saying that's over the line. And I think clearly, John Lewis went a bit far, as Candy said, and the Obama campaign -like I said, McCain's caught in the middle. Barack Obama's a little caught in the middle too.

He's got some of his supporters saying we've got to push back harder. The bottom line is John Lewis went a bit far, he had to kind of walk it back late last night, clarify his statement. Maybe the Obama campaign should have let this play out a little bit, but I think they feel that the rhetoric was getting so hot, that it was getting a bit dangerous.

BLITZER: Because there had been some really ugly and nasty comments made at some of these rallies.

BORGER: Right.

BLITZER: And raising questions about Senator Obama's own security.

BORGER: Right, I think, yes. You know, and I think that both sides have understood the need to tone it down, which is why, as Candy said, when John Lewis said that yesterday, the Obama campaign put a lid on it and said, no, no, no, go out and clarify your statement, which he did. It doesn't help the Obama campaign to inject race into this campaign at this particular point. They don't want to do that.

BLITZER: But you've been at a lot of these Obama rallies. There have been some pretty ugly things said at these rallies by outspoken, you know, people out there about John McCain and Sarah Palin, too.

CROWLEY: Yeah. And, you know, from the podium - I mean, there are lots of things that go on at rallies, and there's booing and there's, you know, all that, because the whole point of a rally is to rally.

BORGER: Right.

CROWLEY: And so, you know, you are going to have 98 percent of your crowd is booing at the right time, there's the fashion play, it's a little kabuki, and then you're going to have, you know, a half a percent or something in there saying something pretty horrible. So, it just needs a little perspective on both sides, I think.

HENRY: But I think also Peggy Noonan yesterday in a "Wall Street Journal" column was saying that's all true what Candy just said, this happens on both sides. But for John McCain being down right now, he's got to find a way to get the anger down a little bit because he's not going to win the election and win those Independent voters that we were talking about.

CROWLEY: The anger part was far, the anger story and some of the things that were said was definitely not of the same caliber that you're hearing from the Obama campaign. BORGER: And let's give McCain some credit actually, at that rally for saying no, no, no, he's a decent man, you shouldn't be afraid of him.

BLITZER: He should have taken it one step further when that lady said he's an Arab. He should have said nothing wrong with being an Arab. Nothing wrong with being a Muslim and you shouldn't just make it sound like being an Arab is being a member of --

CROWLEY: Criticism of Obama, too.

BLITZER: Right. Obama should have said that, as well.

CROWLEY: Everyone said oh, he should say there's nothing wrong with being a Muslim, but it's just. It's on the one hand, on the other hand and then later on they think oh, of course, I should have said, you know.

BLITZER: Right. Both of them should make that point when continue fronted with those kinds of statements. All right. We'll take a quick break. We'll continue our political panel. Also, the campaign managers for Barack Obama and John McCain, they assess the state of the race on some of the other Sunday morning TV shows. We'll show you what they're saying in our very popular "In Case You Missed It" segment. That's coming up.

(COMMERCIAL BREAK)

BLITZER: And now, in case you missed it, let's check some of the highlights from the other Sunday morning talk shows here in the United States. On NBC, former Bush budget director Rob Portman who's supporting John McCain, and New Jersey Governor Jon Corzine is backing Barack Obama, talked about whether the economy will get worse before it gets better.

(BEGIN VIDEO CLIP)

GOV. JON CORZINE (D), NEW JERSEY: People understand that they've lost protection of their retirement savings and other things, and that erodes confidence. And so, they're going to spend less and be a little less proactive about how they go out and spend scarce dollars. And that's going to hurt the economy, slows production, has an unfortunate negative impact that I think has yet to be fully appreciated in the real economy.

ROB PORTMAN, MCCAIN SUPPORTER: If we move and move quickly, I think we can pull out of this and relatively quickly. I think the issue that has been underlying so much of this is the housing market. And one reason that Senator McCain has focused on this home resurgence plan, which says, let's get these people out from under their mortgages, people who are under water in their mortgages, this is going to be necessary for us to hit rock bottom for us to come back up.

(END VIDEO CLIP) BLITZER: On ABC, former Clinton Treasury Lawrence Summers suggested steps the government should take to ease the financial crisis.

(BEGIN VIDEO CLIP)

LAWRENCE SUMMERS, FORMER TREASURY SECRETARY: Government needs to step in and create jobs and prevent layoffs by upping infrastructure spending, by supporting state and local governments. It's a tragedy that schools are on four-day weeks, that we're laying people off when there's such important work to be done in so many areas of our health care system, of our education system.

But critically, we've got to do something about the housing market. We've got to approach this issue of mortgage relief, but we've got to do it with a view to protecting the homeowner rather than with a view to protecting the banks.

(END VIDEO CLIP)

BLITZER: And on FOX, the managers for the Obama and McCain campaigns debated the increasingly harsh tone of the presidential race.

(BEGIN VIDEO CLIP)

DAVID AXELROD, CHIEF STRATEGIST, OBAMA CAMPAIGN: When you stand up and you say someone has been palling around with terrorists, they don't see America the way we see it, you don't really know who he is and so on, and people start yelling, "kill him, bomb him, off with his head," that is not where we want to take politics in this country.

RICK DAVIS, MCCAIN CAMPAIGN MANAGER: Do we not think that the relationship between Bill Ayers and Barack Obama bears some scrutiny? Because the press will not ask any questions about Barack Obama's background, it is a legitimate question. There are voters all over the country who say we don't know enough about this man. What is his experience? What informs his judgment?

(END VIDEO CLIP)

BLITZER: Highlights from the other Sunday morning talk shows here on LATE EDITION, the last word in Sunday talk. And don't miss Fareed Zakaria's full coverage of the financial crisis at the top of the hour right after LATE EDTION . Fareed speaks with, among others, the billionaire George Soros, the man who says he predicted this financial crisis we're in today.

(BEGIN VIDEO CLIP)

GEORGE SOROS, CHAIRMAN, SOROS FUND MANAGEMENT: The housing bubble acted as a detonator that exploded this super bubble that was like, you know, an atomic bomb. We have a small explosion that creates a big explosion.

(END VIDEO CLIP) BLITZER: Stay tuned for "FAREED ZAKARIA GPS." That's coming up at the top of the hour only here on CNN.

But up next, the final debate between Barack Obama and John McCain only days away. We'll talk strategy with the best political team on television. LATE EDITION continues right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're joined once again by our political panel, Candy Crowley, Gloria Borger and Ed Henry.

Gloria, you know, 23 days to go. The next debate is going to be Wednesday night at Hofstra University out on Long Island. The chairman of Michigan's Republican Party was quoted in today's New York Times, on the front page as saying this: "I think you're seeing a turning point. You're starting to feel real frustration because we are running out of time. Our message, the campaign's message, isn't connecting."

Pretty strong words from a Republican leader in Michigan.

GLORIA BORGER, CNN POLITICAL ANALYST: I wish he would tell me what the message is that isn't connecting because, you know, I think that's the problem that lots of Republicans...

BLITZER: The problem for McCain right now.

BORGER: For McCain, lots of Republicans I talk to say he needs to have one consistent message and stick with it. You know, first it was experience. Then it was maverick. Now it's, who is Barack Obama, or I can solve the economic crisis.

And they're saying that they need to stick with one message the way Obama has. Now, the economic crisis obviously has been good for Barack Obama's standing because people want a change. Change has been his whole reason for being the last couple of years. So, he needs a consistent message on the economy, McCain does, to talk about...

BLITZER: Because we keep hearing Senator Obama, Candy, and you've been out at all those rallies, suggesting McCain is erratic, he's lurching back and forth, he's not consistent. Pretty strong words from him, but they may be resonating if you take a look at these polls.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, yes, and honestly, I mean, McCain has helped somewhat in these descriptions. But they clearly are saying, look, this man doesn't have the temperament to lead. That's where the lurching and the erratic -- you know, he's not quite trustworthy, that's what all of that is about.

But the fact of the matter is if -- you know how reporters sort of towards the end start writing the "how did he win" or "how did he lose" stories, probably both of them so that you kind of -- and honestly, if McCain should lose -- and we have got three weeks to go, but should he lose, you're going to go back to that -- the fundamentals of the economy are sound because that's when it began to go like this.

BORGER: Right. September 15th. I remember it well.

CROWLEY: Yes. And it just -- it has been -- he has not recovered from that, literally. They still talk about that on the campaign trail. I mean, he has got to shake loose with something really definitive about the economy.

BLITZER: Let's look ahead to Wednesday night at Hofstra University, the third and final presidential debate. What can he do?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, I mean, there are some advisors obviously saying go nuclear, just go on the attack, and as we've been talking about, that can really backfire. It can blow back in your face with the intent...

BLITZER: Especially with the undecided independents.

HENRY: Who are making up their mind in the final couple of weeks. I mean, part of this is very simple, everything that Gloria and Candy said, plus the fact that, you know, name me a day in the last three or four weeks where foreign policy, national security has been sort of the dominant headline in any newspaper in America.

Going into this election, it's very clear that if this election was about national security, framed about the war in terror like George W. Bush did in 2004, McCain had the upper hand. But instead, even though we've got threats from Iran, we've got Iraq, we've got Afghanistan, Pakistan, you name it, it's all about the economy.

BLITZER: What happens if Osama bin Laden makes another video appearance in the final days of this campaign as he did in 2004 in the final days, and when a lot of people thought that his appearance alone was enough to get George W. Bush elected -- re-elected against John Kerry?

BORGER: Well, I think this time it might remind people we haven't caught him. And both of the candidates are pledging to get him as soon as they get into office. So, I don't know if it would have a great deal of impact.

BLITZER: Do you agree, Candy?

CROWLEY: I totally agree. I mean, I think he appears now, it just -- I mean, the problem is everything plays into Barack Obama's arguments.

BORGER: Right.

CROWLEY: You know, when McCain goes nuclear on a character issue, he goes, well, he can't talk about the issues. If Barack Obama, you know, shows up suddenly, you know, on -- I'm sorry, if...

HENRY: Bin Laden. BORGER: McCain.

CROWLEY: Yes.

BORGER: Bin Laden.

CROWLEY: Mr. bin Laden. If bin Laden suddenly, you know, shows up on the TV, it helps Barack Obama, because what has been his argument? We haven't been fighting the right war, for heaven's sakes. He's in Afghanistan. What the heck are we doing? So it just plays right into Barack Obama.

BORGER: It brings George Bush front and center again, by the way, which he has been front and center, you know, and he hasn't done much to allay people's fears, but he has been front and center on the economic crisis. You don't want George W. Bush front and center again on a foreign policy crisis...

BLITZER: Is it -- you know, a lot of people have suggested that Senator McCain has some problems dealing with this economic crisis and it's a huge crisis unlike anything we've seen since the Great Depression according to all of the experts because he's really not that strong when it comes to economic issues. You covered him for a long time. Is that a fair criticism?

HENRY: He stepped in a little a few months ago by saying that's not my strong suit and obviously that comes back to bite him a little bit. On paper, does John McCain have a lot of experience on the economy? No. On paper, does Barack Obama have a lot of experience on the economy? No. But I think it gets to what Candy and Gloria have been saying, is that the Obama campaign has been very effective talking about change and framing the election that way.

And the fact is unfairly to John McCain, perhaps, he's getting tarred with the George Bush economy. He's worked very hard to separate himself from George W. Bush, but as Gloria was just saying, the president has spoken out about 20 out of the last 24 days on the economy. He's front and center.

Quick story. I was in Chicago Friday at an airport. President Bush came on CNN live to talk about the economy. I looked around the room. I counted about 15 people at this restaurant. One person, one person looked up at the TV to watch what the president was saying. The other 14 people were eating, looking around.

BLITZER: That one person was Ed Henry, I'm sure. All right, guys, we've got to leave it right there. But we'll continue this conversation, 23 days to go. Up next, there has been a new development in Europe to deal with the financial crisis. We're going to get the latest for you. You're going to want to see this. Stay with us, LATE EDITION continues.

(COMMERCIAL BREAK)

BLITZER: There's been a potentially significant development involving European leaders and their effort to deal with the financial crisis. Let's get the latest on that and more from the LATE EDITION update desk. Naamua Delaney is standing by with more. What do we know?

NAAMUA DELANEY, CNN CORRESPONDENT: Thank you very much, Wolf. Good afternoon everybody. Now in the news, Europe taking action to battle the financial crisis, as you say. It is a drop that says their governments will guarantee future bank debt to promote lending and ease up the credit market. Meanwhile, world financial ministers meeting in Washington today are voicing concern financial hardships in poor countries could worsen. The money crisis is expected to keep wealthier nations from helping countries in need. The president of the World Bank warns the cost of the crisis could be lifelong for the poor.

North Korea released a statement today explaining why it will now resume dismantling its nuclear weapons programs. The communist regime says it made the decision because the U.S. agreed to remove North Korea from its list of states that sponsor terrorism.

Both presidential candidates are gearing up for their last debate Wednesday night. John McCain is prepping in Washington, and Barack Obama travels to Ohio today where he'll prepare. Both running mates are on the campaign trail. Joe Biden is stumping with the Clintons in Pennsylvania, and Sarah Palin is courting votes in Ohio. All right. That's it for now. We will return to Wolf Blitzer and LATE EDITION. Wolf?

BLITZER: All right, thanks very much.

One governor out west says a very red state might not necessarily be in the bag for McCain. We're going to tell you who made this bold prediction when we come back.

(COMMERCIAL BREAK)

BLITZER: The Democrats have not carried the state of Montana since Bill Clinton won there in 1992. But the latest polls show the state is too close to call. On Friday, I spoke with Montana's Democratic Governor Brian Schweitzer.

(BEGIN VIDEO CLIP)

BLITZER: are the candidates showing up there?

Are they -- do they have ads running there?

Because I haven't seen either one, or their vice presidential running mates, at least recently, show up in Montana?

GOV. BRIAN SCHWEITZER (D), MONTANA: Of course, Obama has been to Montana five times. Joe Biden has been here one time...

BLITZER: Recently, though?

SCHWEITZER: ...McCain and Palin. Yes, Biden was here just a couple weeks ago. McCain and Palin have not come to Montana. Obama has been running ads now for several months. And the only ads that we see for McCain are on cable TV, CNN.

BLITZER: So are you flatly predicting that Senator Obama will carry your state?

SCHWEITZER: Oh, no. I'm not saying that. I'm, saying it's tied. I'm saying it's tied. I'm saying that Ron Paul is going to be decider here.

You know, Bill Clinton won Montana with only 38.5 percent because Perot received a higher percentage in Montana than any other state. So Montana is a ticket-splitting state. And we're also a state that likes independence.

(END VIDEO CLIP)

BLITZER: Brian Schweitzer speaking with me in "THE SITUATION ROOM." And that's your LATE EDITION for this Sunday, October 12th. Please be sure to join me again next Sunday and every Sunday at 11:00 a.m. Eastern for the last word in Sunday talk. We're in "THE SITUATION ROOM" Monday through Friday from 4:00 p.m. to 7:00 p.m. Eastern. Don't forget, the third and final debate Wednesday night, Hofstra University, the two presidential candidates will go there. We'll be there. Stay with us for complete coverage. I'm Wolf Blitzer in Washington. Thanks very much for watching. "FAREED ZAKARIA GPS" starts right now.