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CNN NEWSROOM

McCain & Obama Prepare for Debate; Fed Official: U.S. is in Recession; Michelle Obama Speaks in Indiana

Aired October 15, 2008 - 13:00   ET

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


(BEGIN VIDEOTAPE)
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: What he promises today is the opposite of what he has done his entire career.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: There's some ideas that Senator McCain's put forward in the last couple of weeks that are very bad ideas.

KYRA PHILLIPS, CNN ANCHOR (voice-over): Tackling the economy. Tackling each other. Who's got what it takes? McCain and Obama in their final face-off.

UNIDENTIFIED FEMALE: For the record, Mama wants to stay.

PHILLIPS: Mama did stay, and so did her son, but, oh, Mama, they didn't know what they were getting into.

UNIDENTIFIED MALE: The wind. Holy cow! The wind. It's crazy.

PHILLIPS: A terrifying night in a terrifying storm.

UNIDENTIFIED MALE: Over here.

UNIDENTIFIED MALE: Oh, my God. No.

PHILLIPS: We debate in our morning meeting. We even argue, but today, we gasped. And you will, too.

(END VIDEOTAPE)

PHILLIPS: Hello, everyone. I'm Kyra Phillips live at the CNN World Headquarters in Atlanta. And you're live in the CNN NEWSROOM.

We're beginning with McCain in one corner, Obama in the other. The economy and those key battleground states in the center of the ring. Your money and your vote. We can't talk about one without the other, of course.

And three hours until the closing bell on Wall Street where stocks are on a rough ride. We're going to take you to the floor.

Eight hours until the opening bell for the final presidential debate. Ed Henry and Jessica Yellin on the seen. Twenty days left for voters in the swing states to make up their minds. Dan Simon is in Colorado. Let's go ahead and get right to it. New poll numbers show John McCain has a big fight ahead of him, even in some states that normally are Republican.

Ed Henry, what does he have to do in tonight's face-off?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, Kyra, I think John McCain may feel a little bit like that guy you just showed doing the high-wire act in Newark. He's got pressure from all sides. Some of his supporters saying good tough. Some of these poll numbers you're talking about, specifically the one in "The New York Times" suggesting, don't get too tough. Then you'll look negative; you'll look angry. And that will backfire with swing voters.

It's clear that John McCain didn't get done what he needed to get done in the first two debates. Time is now running out. When you look at those battleground polls that you mentioned, there's seven key states that CNN has now identified, including Ohio, Florida, Colorado, as well, that are essentially toss-up states. Only seven out of the 50. And in all seven, these are red states. They're states that George W. Bush carried in 2004.

So the point is that John McCain is playing defense. He's -- he's on turf that he should have locked up a long time ago in some of these states like Virginia, and Barack Obama is playing a lot of offense.

What he needs to do tonight is try this delicate balancing act of being tough with Barack Obama, laying out the differences between them on issues like the economy, how they would deal with it. But also trying to be positive about what John McCain would actually do to fix it instead of just attacking, Kyra.

PHILLIPS: Well, you know, I think the image of John [SIC] Biden the other day taking off his jacket and saying, you know, "In my neighborhood we deal with people straight on. I look them straight in the face." Now, if you read between the lines, was he saying, sort of subliminally to John McCain, "I don't want to hear anything about Bill Ayers"?

HENRY: Well, maybe go ahead, make my day. And in fact...

PHILLIPS: I dare you.

HENRY: Put that message -- yes, I dare you. And John McCain yesterday, actually, on a St. Louis radio station said, "I've been hearing" -- he was asked by a questioner, "The Democrats are basically saying you're scared to say this in Barack Obama's face."

John McCain's response is basically, like, "I'm ready to do it in the third debate." And he suggested he will bring up the name of Bill Ayers. But again, there could be a backlash. He's walking a very fine line here.

Sure, his supporters are urging him, get tougher. One supporter last week at a Wisconsin town hall meeting was saying, "I'm begging you, literally. I'm begging you, take it to Obama in the third debate."

But then you wonder about some of these poll numbers suggesting there could be a backlash if he goes too far, Kyra.

PHILLIPS: All right. What's this I heard about you drinking on the job?

HENRY: No, I'm not drinking. I just got you a prop from yesterday. We were talking about how both candidates insisted they get a replica of the glass. This is not the actual glass. But we got one from Hofstra. Both sides demanded this, because they wanted to know how it feels. They don't want to drop this thing on the air.

I assume that there's not just water on a college campus in a glass like this. But tonight, it will be water, ice water.

PHILLIPS: Well, save it for me. We'll have a cold Guinness. Thanks, Ed.

HENRY: All right.

PHILLIPS: All right.

HENRY: After the election.

PHILLIPS: That's true. After the election. Then again, we might need to drink our way through the elections. It's going to be a long night.

Now new poll numbers show that Barack Obama maintaining his national lead over John McCain. Will tonight's debate shrink the gap or widen it?

Jessica Yellin, she's never drinking on the job. She's covering the Obama camp.

Hi, Jessica.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Hi, Kyra.

And Barack Obama knows that tonight, what he needs to do is make no mistakes. I mean, the bottom line for him is he's seen those poll numbers. The campaign knows he's up and he's ahead. And they want to deliver a performance that makes no waves. And even if it's not memorable, that's just fine, because Barack Obama has done well so far by talking about policy.

If this were up to him, he would spend the whole night just talking about economic policy. He thinks that where he wins, and he thinks it's what independent voters want to hear about the most.

Now, as you mentioned with Ed, he expects that Bill Ayers' name will come up, that John McCain will attack him on a number of topics. And so he's going to have to respond on those issues. They are expecting it. They are prepared. And their response will be two parts. First Barack Obama will lay out specific explanations for what his relationship with Bill Ayers is, how he got to know him and why it's nothing controversial, in his view.

But then there'll be a pivot to saying, "Look, what John McCain is trying to do is distract from the issues and make -- Obama will try to turn that whole discussion back to the economy, saying all these attacks about voter fraud, about Bill Ayers and associations are really just distractions from the bigger issue, which is what's going to happen with the nation's economic picture? Who should be economist in chief?"

PHILLIPS: Well, yes, you talk about the bigger issues. I think we'll probably hear about the tax plans, speaking of tax.

YELLIN: Yes. And that's another thing that John McCain has been pounding Obama on. You heard it the last debate. We as reporters have been hearing it from the McCain campaign incessantly, that Barack Obama will be a tax raiser; he's going to raise taxes on Americans.

So the Obama campaign is responding to that already. They've launched a Web site where you can go in and input when what your income is. And it will spit out what your taxes would be under Obama and what they would be under McCain. And they show that for most people, you would get a tax cut either way. That's for, you know, Obama, except for the top five percent of the wealthiest earners. They have a tax increase under Obama.

So they've got a Web site function. They are blasting supporters with that information, and you can expect Barack Obama to hit back hard on this message that he does not plan to raises most people's taxes.

PHILLIPS: All right. Jessica Yellin, thanks so much.

Well, each day until election day we're going to zero in on all the important battleground states. They could go for either McCain or Obama, and they will determine who wins the White House.

So today's focus, Colorado. It's tilted Republican in the past three White House races. But Democrats say that they sensed a real opportunity around this time last year.

So what does the latest poll say right now? We've gotten some new numbers from Colorado and three other toss-up states within the last hour or so. Let's go ahead and take a look at them.

According to new surveys by CNN, "TIME" magazine, and the Opinion Research Corporation, Barack Obama leads John McCain by four points in Colorado, and he's leading McCain by five points in Florida.

Now, perhaps most troubling for McCain are the results from Virginia. Our poll gives Obama a ten-point lead in a state that has traditionally been a safe bet for Republicans.

McCain is leading Obama in Missouri but not by much. He's up by one point, 49 percent to 48 percent.

Now stay with us. We will have more at the bottom of the hour on the battle for Colorado. Our Dan Simon, he is live in Denver. He's going to join us with a look at why a changing electorate could explain the state's apparent tilt toward Barack Obama.

Now, this just into CNN. Nancy Reagan in a Los Angeles hospital right now, apparently with a broken pelvis. Her spokeswoman tells CNN that the former first lady fell at her home last week and later decided to get checked out at Ronald Reagan UCLA Medical Center.

Now, the spokeswoman says that Mrs. Reagan is in some pain and going through some physical therapy, but otherwise she's in good spirits. No surgery required, we're told. We'll just keep monitoring her condition and keep you updated.

Now, an unscheduled trip to this hospital this afternoon for Vice President Dick Cheney. His office says that Cheney is suffering from an abnormal heart rhythm, something he's dealt with before. He's going to have an out-patient procedure at George Washington University.

The last time this happened, last November I believe it was, doctors used an electrical impulse to actually restore Cheney's normal heart rhythm.

Retail sales take dive, helping spark another sell-off on Wall Street. We're going to head live to New York and CNN's Susan Lisovicz for the latest.

(COMMERCIAL BREAK)

PHILLIPS: Live out of New York City, Ben Bernanke, Fed chair, speaking at the Economic Club there in the Big Apple. We're going to monitor that and let you know what he says, bring you some live coverage a little later on.

The economy is the topic du jour for President Bush and two Federal Reserve officials. One of them even took the surprising step of using the word "recession." Susan Lisovicz at the New York Stock Exchange with all the details a look at how investors are reacting.

Susan, that's a word we don't want to hear.

SUSAN LISOVICZ, CNN CORRESPONDENT: It's a word that we don't want to hear, but let me tell you, Kyra, we're hearing it more and more often. Three economists I spoke to today all said the economy is already in recession. And one of them said it entered into recession January or February. So it's hardly a minority view at this point, although Fed officials are typically very conservative with their public comments, fearing they could make a bad situation worse.

Regional Fed president Janet Yellen said last evening that the U.S. economy does appear to be in recession. She says that in the third quarter, which just ended, the U.S. probably showed no growth at all and that we could see a contraction in the final three months of this year. Yellen says virtually ever major sector has been hit. And today we have a good example of that.

A new report shows weak consumer spending pulling down retail sales. Business spending is also down. Even many state and local governments were seeing their tax revenue fall.

All this talk of recession is hitting stocks, and the Dow Industrials are receding, as they have been since the opening bell. The blue chips right now down 364 points, or 4 percent. The NASDAQ, and the broader S&P 500 are down at least by that amount -- Kyra.

PHILLIPS: You know, we hear a Fed official say the word "recession," and we -- and I guess it hits us a little differently. I mean, it's pretty important when someone at that high level says the word. Right?

LISOVICZ: That's right. I mean, these people are tremendously influential, Kyra. And Yellen actually only used that word when talking about previous economic cycles. The Fed chief, Ben Bernanke, the closest he got was in April when he said recession was possible.

But the organization that is charged with officially declaring recession, that is the National Bureau of Economic Research, has not done so yet. They typically do it, like, after it already occurred. So like -- and when we're out of it. So you know, it may be like sort of a non-headline at that point.

But Kyra, no, no official declaration yet, but it's a growing chorus. No question about it, Kyra.

PHILLIPS: Growing chorus. OK. Susan, thanks.

We heard Susan mention the "R" word, recession, but we're not going to hear it from President Bush. Here's what we are hearing, though: assurances that the U.S. plan to bail out banks does not amount to a federal takeover. At a cabinet meeting today the president did say that the government is a, quote, "passive investor."

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: You have to take extraordinary measures, because these are extraordinary circumstances. As I said yesterday, it's very important for the American people to know that -- that the program is designed to preserve free enterprise. Not replace free enterprise.

(END VIDEO CLIP)

PHILLIPS: As the market's been struggling, the champagne's been flowing. That's for sure. Rick Sanchez and Abbie Boudreau take you inside the lives of Wall Street's rich and shameless. Don't miss "The Party's Over," Saturday and Sunday night at 8 Eastern.

And thousands of acres burn, dozens of homes destroyed. Straight ahead, the new fire season in Southern California, already taking a heavy toll. But today, a bit of a break for firefighters. We've got the latest from the front lines. (COMMERCIAL BREAK)

PHILLIPS: Life-threatening flash floods and mudslides. A major threat from Hurricane Omar as it churns toward Puerto Rico and the Virgin Islands. We're going to check in with our severe weather expert, Chad Myers, who's tracking the storm.

(COMMERCIAL BREAK)

PHILLIPS: Southern California getting a break from fierce Santa Ana winds that have spread some pretty big wildfires. Three major blazes have been burning in Southern California since this week's start of the fire season, including this one near Los Angeles. Right now it's about 20 percent contained.

And today lighter winds are really helping firefighters make some progress. The three major fires have swept across at least 34 square miles, destroying dozens of homes and forcing thousands of people to flee for safety.

For these homeowners, though, there's nothing to go home to. At least two deaths are blamed on those fires.

Chad Myers, is it going to get any better? Well, it has to get better. The question is when?

CHAD MYERS, CNN METEOROLOGIST: It is. It is going to get a little bit better. The winds blowing offshore today, but not nearly as bad as it was the past couple of days.

We have the wind coming across L.A. about 10 to 15 miles per hour. We had wind gusts almost 60 to 70 miles per hour even yesterday. Fremont Canyon, 74 miles per hour was the big gust. Right now the best gust I can find, or worst gust, I guess, would be about 25 miles per hour.

Hurricane Omar. Looking at this, because just when you thought it was safe to go back and fill up your tank, guess what this is going to do? This is going to hit St. Croix. I know this is going to be hard to see, but I've zoomed into St. Croix. This is the Western Hemisphere's second largest, 500,000 barrels per day, when it comes to production of gasoline and oil. And they're shutting it down now for the next couple of days until Omar finally goes away.

It is forecast to drive itself near St. Croix, maybe through the Onondaga (ph) passage and then on up for the British Virgin Islands and to the north of there, on up into the North Atlantic. But as a Category 2 hurricane. It's 105 miles per hour. So right now 85 miles per hour storm. It's not going to hit much of the U.S. Probably could be very close to Charlotte. I'm sure they'll be moving around some of these cruise ship, not taking them into this area. Dropping them off in different places rather than going through this.

At 105 miles per hour, there's going to be some pretty big waves, Kyra.

PHILLIPS: OK. Is that -- are you trying to tell me that might be a time to go surfing?

MYERS: Well, not at 105 miles an hour. No.

PHILLIPS: Knowing that I'm a California girl and I do love to surf. That might be a little too much for me, Chad Myers.

MYERS: Yes, all right.

PHILLIPS: But thanks for the tease. I appreciate it.

MYERS: OK. You bet.

PHILLIPS: We mentioned a little earlier that we were listening to Fed Chairman Ben Bernanke. He's speaking, actually, live in New York. Ali Velshi is there monitoring it.

What do you think? What is he saying? What's your take, Ali?

All right. We -- we're trying to get -- all right. We're trying -- OK. We're trying to get a connection with Ali. I can hear him, but he can't hear me. So we'll try and connect back with him in just a second as we're monitoring that live event.

Well, they call them battlegrounds for a reason. That's for sure. A handful of states like Colorado could make all the difference in the race for the White House. We're going to take you live to Denver, Colorado.

(COMMERCIAL BREAK)

PHILLIPS: Hello, everyone. I'm Kyra Phillips live at the CNN World Headquarters in Atlanta. And you're live in the CNN NEWSROOM.

We start off at 1:23 Eastern Time. Some of the stories that we're working on right here in the CNN NEWSROOM.

Whatever you have to say, gentlemen, you'd better say it tonight. The third and final presidential debate is at 9:00 p.m. Eastern at Hofstra University in New York.

Recession and reaction. One official with the Fed has said that the U.S. economy is in a recession. The Fed rarely uses the "R" word, by the way, but when they do the markets listen. Right now, the Dow in negative territory, remaining there so far most of the day.

And Vice President Dick Cheney in the hospital this afternoon for an out-patient procedure. Doctors will try to restore his normal heart rhythm. Cheney had a similar problem last year.

And Ben Bernanke speaking live in New York right now, Fed chair. What does he have to say? Ali Velshi is there monitoring it.

Ali, what do you think?

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: All right. What I think is Ben Bernanke is over my shoulder there on that front dais, and he is waiting. He's finished the frecais (ph) salad with goat cheese awaiting for a boneless breast of chicken, which is the main course.

Worked his appetite up, giving us a speech, which just finished. And I tell you, the speech is more notable for what wasn't in it, Kyra, than what was in it. The speech was largely a history lesson that we've heard many, many times over now in the last three weeks. Most Americans have heard how we got into this financial pickle that we're in and what -- what the federal government and the Fed have done to get out of it.

What he didn't say was what you just mentioned, that San Francisco Federal Reserve president Janet Yellen said that we're in a recession and that that's not really controversial. I think she's right, that it's not all that controversial amongst economists. It's real controversial with this guy. He doesn't say it.

So when he arrived here, I went right up to him and asked him what he thought of Janet Yellen's comments. And he didn't respond. A security guy shoved me aside. And then I found him when his security guys weren't with him. I asked him again, "What do you think about this idea being in a recession?" And he turned away and decided to talk to somebody else.

Here's the point. Does it matter whether Ben Bernanke thinks we're in a recession or not? They don't even make the decision about a recession, as Susan Lisovicz was telling you earlier.

The issue here, Kyra, is that many economists have told us that, if the Federal Reserve and the administration had acknowledged earlier the depth of financial trouble that we in, they would have taken evasive action earlier. So it's semantics at this point. It is what it is.

PHILLIPS: Ali, but if -- Ali, when he speaks we watch the market. You watch the numbers.

VELSHI: Yes.

PHILLIPS: They're tremendously affected. So what he says is important. So the fact that he's not saying recession -- well, the question is, is he not saying recession or does he just not want to go there because he knows that his speech influences the numbers?

VELSHI: I'll tell the security guy that you want the answer to that question. Maybe he'll let me closer.

PHILLIPS: I just want the goat cheese salad.

VELSHI: What you want to know, really what Americans want to know right now, I think, is they want absolute transparency on every level. At the corporate level, at the Federal Reserve level, at the treasury level. They would like to know at all stages now what's happening. Because they feel like maybe they weren't fully engaged in the conversation the whole way. We have discussed that, for Fed chairman and for president, it's hard for them to talk the economy down. Because can you imagine if he said, "Yes. You know what? She's right. We're in a recession"? Who knows where the market would be right now? So I guess they have to be a little bit careful.

But really, he gave a somewhat upbeat speech, saying that we're going to come out stronger than before. We've certainly heard that before.

I think the bottom line is not a lot of folks are buying into that right now. They want to know how bad it gets before it gets better. And I've had people here telling me today, watch unemployment. It could go into double digits. We're at 6 percent right now, 6.1 percent. That could go into double digits. That's the worry for most Americans. They really want it straight up. They want to know where we stand right now. We didn't get a lot of that today.

PHILLIPS: Well, don't you let anyone go. Security or not. You keep trying to get those straight answers.

VELSHI: I'm on the case.

PHILLIPS: I know you are. Thanks, pal.

Let's take you live to Fort Wayne, Indiana. Michelle Obama speaking. Let's listen in.

(JOINED IN PROGRESS)

MICHELLE OBAMA, WIFE OF BARACK OBAMA: ... and they want to know how it's going to happen. But I think about them all the time. Like any parent, I am only as good as they are. And what I know for sure is that their future and all of these kids' future is my stake and our stake in this election.

And I also come here as a daughter, and I tell my story everywhere I go. I told it at the convention, because where I come from provides some insight into what makes me "me," and what makes me just so passionate about my husband and this campaign. Because I'm a product of a working-class background. My father was a shift worker; worked for the city of Chicago his entire life, same job. And my father was stricken with multiple sclerosis in the prime of his life.

Like many men he was proud, you know. He was a boxer, a swimmer. He served in the military, and imagine one day not being able to walk without the assistance of a cane, and not being able to dress yourself as quickly as you could. Imagine the disappointment.

But what I remember most about my father is that he never complained. Not once. Was never late for work, not once. Never missed a day. Never talked about being sick, because the truth about my father was that he got his sense of worth and pride from the fact that he could get up and go to work, that he could take care of a family of four on a single salary. My father was like every American that I'm meeting out there. And I wouldn't be here if it weren't for him. Imagine a man like my father, parents like mine, who didn't go college, being able to send me and my brother to some of the best schools in the country and being here. Now that is the American story.

So for me, you see, the issues at stake in this election, how we're going to fix a broken economy and put men like my father back to work, and help families get back on their feet, how we're going to fix a broken health care system that is causing young kids to go without health care, causing people to live with cancer. How we're going to end this war. How we're going to...

AUDIENCE: Yes! Yes! Yes!

(APPLAUSE)

PHILLIPS: Michelle Obama talking family values there at a support rally in Fort Wayne, Indiana. We're monitor that. You can always go to CNN.com/live if you want to watch it in its entirety.

Meanwhile, every day until election day we are highlighting the most competitive states in the race for the White House. And today it's Colorado. One of the seven toss-up states on the CNN electoral map. Our latest gives Barack Obama a four-point lead over John McCain in Colorado, by the way. And that's a big deal because the state hasn't gone to a Democrat since 1992.

Dan Simon in Denver, with more on why Colorado appears to be trending toward Obama.

Why is it, Dan?

DAN SIMON, CNN CORRESPONDENT: Well, hi, Kyra.

One major factor we're looking at here, newly registered voters. The Democrats are really beating the Republicans in that endeavor by a three 3-1 margin. Now, there's no breakdown in terms of the ages of newly registered voters. But, local observers say, the college generation is an enormous factor.

Take a look.

(BEGIN VIDEOTAPE)

SIMON (voice-over): Katie Ulrich this of California as home. But the 20-year-old registered to vote in Boulder, Colorado, where she goes to college.

KATIE ULRICH, UNIVERSITY OF COLORADO STUDENT: I realized that my vote was much more important here in Colorado. So, that's why I registered here.

SIMON: What is helping to make this traditionally red state competitive, is people like Katie. New voters to the Democratic roles. This year Colorado Democrats have added nearly 140,000 new voters. Republicans, about 42,000. That's a more than 3-1 margin for the Democrats. It's not known yet how many are college-aged. But, students at Boulder say, they saw long lines at the registration booth. Katie says it was a speech on campus from Michelle Obama.

MICHELLE OBAMA, BARACK OBAMA'S WIFE: Register right now.

SIMON: That motivated her and several of her friends to change where they were registered. From their home states to battleground Colorado.

ULRICH: You know, I didn't really know when I came here that it was such a battleground state. But I think that the student population has a good chance of swinging it to the Democratic vote.

SIMON: Freshman Zach Perkins also saw a chance to have an impact.

ZACH PERKINS, UNIVERSITY OF COLORADO STUDENT: It's good to know I have some kind of control actually in this election. Whereas opposed to if I was in a state where my vote didn't necessarily make much of a difference.

SIMON: If Obama is actually able to turn this state blue, local observers say new voters could be a decisive factor.

PROF. KEN BICKERS, UNIVERSITY OF COLORADO: In a tight election, any group that really surges can put it over the top.

SIMON: Still, political science professor Ken Bickers says McCain has 40 years of history on his side. For Republicans, the task is clear.

BICKERS: McCain is going to have to turn out the base in a big way, that is social conservatives and traditional Republicans. He's going to have to work the neighborhoods and get those people out to vote.

(END VIDEOTAPE)

SIMON: And McCain, of course, also has to do well with Independents here and Colorado is a bit unusual in that a third of the registered voters here are Independents.

And Kyra, let me tell you where we are. We're in a Denver neighborhood and behind me, you see this house. There's going about to debate party here tonight hosted by the Obama campaign. I've talked to those folks a little while ago. And they're feeling very good about their chances here in Colorado. They've poured a tremendous amount of resources into this state. In fact, they say they have a lot more field offices here than the McCain campaign. Four times as many field offices, in fact. So, they feel they can turn this state blue after all these years.

PHILLIPS: It will be interested to watch. Dan Simon, live from Boulder.

Dan, thanks.

Let's get some insight on the battle grounds and the battle for the White House, from two favorite analysts; Roland Martin -- well, I don't know if I'm going to go favorite there. CNN political analyst and Obama supporter --

ROLAND MARTIN, CNN POLITICAL ANALYST: You know you love me, Kyra.

PHILLIPS: -- At least Leslie Sanchez, Republican strategist. And CNN political contributor is always on time.

Sorry, Leslie.

LESLIE SANCHEZ, REPUBLICAN STRATEGIST: I ran here. I ran here. .

MARTIN: A good man is worth the wait.

PHILLIPS: Oh, lord.

OK, Leslie. I'm not taking sides here politically or --

SANCHEZ: That's true. It's actually true. So, I'll agree. That's the only thing we'll probably agree on. So, let's start there.

PHILLIPS: OK. Perfect. We have one understanding.

Now Leslie, why don't we start with you. McCain, what does he have to do tonight in this debate to turn things around? Obama still commanding a lead over McCain at this point.

SANCHEZ: Tremendous. It's an uphill battle, there's no doubt about it. If you think about the fact, you have voter fatigue, economic anxiety and a history of people punishing the party in power, especially when you have an economic downturn like this. It's really difficult challenge for John McCain.

But, that being said, you never want to write him. There is a route to victory here. It's a difficult route but one, he has to get Barack Obama to respond to an attacks. He's yet to be able to do that. It's almost as if the Senate from Illinois is very much coasting along through this election, not making any big waves.

Everything is -- the momentum is in this favor. McCain needs to get him to respond to a variety of different things. He also needs to do what he did yesterday. Nailing out a very simple plan, like relieving the tax burden on seniors tapping into the retirement savings accounts. That's common sense principles. And if you saw at end of the day, Barack Obama was basically saying, me, too. I agree with that. Those are fundamentally strong.

And the third part of that, is that he has to basically those four to eight states that are going to determine this election. MARTIN: Kyra, let me jump on this. First of all, can we stop with this nonsense that Obama is coasting. No. What he is doing is running an efficient and effective campaign with a smart strategy. That's not coasting.

The problem is, John McCain wants to attack, attack, attack. And Obama is saying, I will give you the hand. But voters, they care about economics. They care about public policy, they care about their pocketbooks. That's where John McCain has failed.

Look, he has to step his game up big time tonight. If he comes in with the same deal, going over and over and over about earmarks and stuff along those lines, no. He has to show that he's a leader. There's no doubt Obama is benefiting because of the economy. But also, people are getting used to the idea of looking at Obama and seeing him as a president.

And so he is operating more as presidential person than McCain is. McCain has to -- if he wants to say, I'm a leader, he has to show it tonight.

PHILLIPS: Something interesting that caught my attention. Joe Biden taking off the jacket, getting Irish, looking into the camera, rallying up the crowds.

Take a listen to this I want to get your response, both of you.

(BEGIN VIDEO CLIP)

SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: All of the things they said about Barack Obama in rallies and on TV before the debate. And all of the things that they're saying right now after the debate, John McCain couldn't bring himself to look Barack Obama in the eye and say at the debate --

(APPLAUSE)

And folks, in my neighborhood, in my neighborhood -- in my neighborhood, where I came from, you've got to the say something to a man, look him in the eye and say it to him.

(END VIDEO CLIP)

PHILLIPS: OK. I didn't know Delaware was so tough.

MARTIN: Bring it! Bring it!

PHILLIPS: Yes, there he is. I was waiting for him to take off his tie. Can you see the two of them in an Irish pub, you know, in the back alley, going at it?

No, but Leslie, he's sending a message here to McCain, right? Saying, hey, look, don't even bring up Ayers, don't even start the mud-slinging. Look me in the eye, tell me how it is.

SANCHEZ: Bottom line, you talk to any Senate staffer and they'll say that Biden is one of these people that you only bring out when you have a safe lead and you're feeling comfortable. Because he is basically a gaffe machine. He's a free fighter --

MARTIN: Oh, come on!

SANCHEZ: -- he's a wind bag. You know, he's been missing in action for the last few weeks.

MARTIN: Stop talking about Sarah Palin like that.

SANCHEZ: Let's be clear about this. And you know, I think it's just -- it's political theater. Nothing more than that. And nothing --

MARTIN: Oh, so you mean when Sarah Palin said I'm going to take the heels off and go after them, that's not political theater? When she's got Hank Williams doing his thing? Not political theater? We know it's political theater.

But here's the thing, Kyra. They are setting John McCain up. And McCain is going to take the bite. When Obama threw that out there, Obama says, look, Independents don't like negatives. They don't care about this stuff. So, why don't you bring it up? McCain is falling for the trap. When he brings it up, watch Obama pounce on him. McCain would be dumb tonight to go to William Ayers. He needs to stay focused on the pocket book. If he goes there, he loses Independents.

(CROSSTALK)

PHILLIPS: Final thoughts, Leslie. Final thoughts.

SANCHEZ: This is where Roland's wrong. McCain is going to talk about the character distinction. And I agree with him, not on the William Ayers, but on the character. I was country first, this is what I did. He should be talking that way.

MARTIN: Obama's country first.

SANCHEZ: When this man did not take those steps, he put himself first over his country. There's a distinct --

MARTIN: When? When, Leslie? When? When did he do that?

SANCHEZ: When he was taking money from Fannie Mae and Freddie Mac.

(CROSSTALK)

PHILLIPS: Roland Martin, Leslie Sanchez. I can't wait for tonight. We'll talk again tomorrow, see what you guys both thought --

MARTIN: That's right. Watch CNN for the rumble in the jungle, tonight.

PHILLIPS: Oh, we're going to rumble and jungle with Roland Martin.

Anyway, that's a whole other story.

Ahead next hour, he stood for what he believes. Now, he's hearing the backlash.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: How can a black man stand up and say, you know what? I happen to be an American of African ascent, but I am a conservative.

(END VIDEO CLIP)

PHILLIPS: James T. Harris supports John McCain. I'll talk with him and another black conservative radio host about race, politics and what's happening in this campaign.

And a quick reminder, the final presidential debate tonight in Hempstead, New York. Join the best political team on television for Debate Night in America, live from Hofstra University.

And could a few bad apples be hurting ACORN? The liberal community organization group is under investigation in several states now for its voter registration efforts. Earlier this week, Indiana's Secretary of state said that he's found credible evidence of fraud there. And now election officials in Philly say they are getting -- registrations, rather, that are suspect from ACORN. And they hope that they have enough resources to catch them all.

Here's Drew Griffins from our special investigations unit.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT (voice-over): The good news, there have been hundreds of thousands of new voter registrations processed in Philadelphia, including a vast majority of good, clean registrations from ACORN. The bad news, Philadelphia has already sent 1,500 obvious fraudulent registrations to the U.S. attorney to be investigated, every one of them from the same group, ACORN.

(on camera): Is ACORN a group that has been problematic in its organizing of these voter registration drives?

FRED VOIGT, PHILADELPHIA DEPUTY CITY COMMISSIONER: (INAUDIBLE).

GRIFFIN: Have you tried to work with them to explain to them...

VOIGT: Absolutely. I don't have an answer for you, OK?

GRIFFIN: Right.

VOIGT: We originally -- I mean, this has been going on for a number of years. We have met with them. We have talked to them. GRIFFIN (voice-over): According to city officials, close to 8,000 applications turned in by ACORN are problematic, including the 1,500 already sent to the U.S. attorney. And officials expect the number to climb.

Fred Voigt says so far his office is catching them, making sure no bad registrations lead to bad votes. But admits he has limited staff.

VOIGT: Are there going to be bad votes? Sure there are going to be bad votes. There are always bad votes.

Am I concerned this is a close election? Of course I'm concerned this is a close election. But you have to weigh everything in terms of your capacity to find things out.

GRIFFIN: Voigt says the problem is ACORN hires people desperate for money, including drug addicts, homeless, recovering alcohols, even recent parolees who only get paid if they get signatures.

VOIGT: You just looked and it was all in the same hand. You know, you could see some where they used a phone book, including the apostrophe.

GRIFFIN: Someone went down in the phone book and just copied it verbatim, right out?

VOIGT: Kitchen petition. It's --

GRIFFIN: Kitchen petition?

VOIGT: Kitchen petition.

GRIFFIN: Sit around the kitchen, fill out the petition.

VOIGT: Fill out the petition. That happens.

GRIFFIN (voice-over): We went to ACORN's Philadelphia headquarters where a rally was taking place telling volunteers the recent news about voter fraud was just another attack by the right wing and the media on the poor.

UNIDENTIFIED MALE: That is fraud. That is voter suppression. That is not true.

(APPLAUSE)

UNIDENTIFIED MALE: Where is the news media when that is going on?

GRIFFIN: Junette Marcano is the local ACORN chairperson who acknowledges ACORN hires the less fortunate, but says there is nothing wrong with that.

(on camera): Why is the deputy city commissioner of Philadelphia telling me that ACORN is hiring recovering alcohols, drug addicts, homeless people who are so desperate to get money that they know that if they don't make their quota, they just fill in any old name? That's what he's telling me.

JUNETTE MARCANO, PHILADELPHIA ACORN CHAIRWOMAN: That's just not the point.

GRIFFIN: That's not the point?

MARCANO: No. That is not the point.

GRIFFIN: What is the point?

MARCANO: We did not deliberately go out there and say, you are homeless, you are a recovering alcohol, you are --

GRIFFIN: But has it presented itself as a problem to ACORN? Wouldn't ACORN like to run a nice, clean, smooth voter registration drive?

MARCANO: We have done that. Because if we have been able to register 85,000 -- above 85,000 -- good registrants, compared to 5,000 suspect cards, we have done a good job.

(END VIDEOTAPE)

PHILLIPS: Drew Griffin now joining me live from Chester, Pennsylvania.

Drew, could this affect the election? And was there actual voter fraud involved?

GRIFFIN: You know, there's a big distinction between voter registration fraud and voter fraud. We're talking about registration fraud because nobody's cast their votes here. There's been some early voting but there's no allegations of voter fraud.

The problem is, Kyra, the volume of bad registrations are getting hard to detect now, for these overworked county and city employees across the country. They've got so many of these registrations, they can't read them out fast enough before the deadline to get these voter cards out.

So, voter registration fraud can lead to voter fraud. But, it doesn't necessarily go that way.

PHILLIPS: We'll track it. Great investigation, Drew. It's nice to see that things are being done. That's for sure.

Well, it's a dilemma millions of Americans are facing Getting and keeping affordable health care. We're going to take a closer look at what the candidates are saying.

(COMMERCIAL BREAK)

PHILLIPS: Well, the economy is issue number one on the campaign trail. But, concern over health care is not far behind. Many Americans are struggling with medical bills that could spell financial ruin for their families.

Our T.J. Holmes introduces to us a man facing those very real concerns.

(BEGIN VIDEOTAPE)

T.J. HOLMES, CNN CORRESPONDENT: At 45 years old, Steve Decoff bought his dream house and he looked forward to nights just like this, with his two teenage daughters, Alaina (ph) and Alice.

STEVE DIEKHOFF, ALS PATIENT: They're going to solve a lot of disease for $700 billion.

HOLMES: Life seems close perfect even though Diek, as his friends call him, was worried.

Two years ago, he started getting some odd cramping in his left hand. Doctors were baffled until August of this year when his walk seemed off.

DIEKHOFF: First when told me I had Lou Gehrig's disease, I didn't know exactly what it was. I knew it wasn't good.

HOLMES: The first place he went, was to the ALS Web site. And he's been staring at these words ever since. "The average life expectancy of a person with ALS is two to five years."

A dad first and foremost, his thoughts raced to Alaina and Alice.

DIEKHOFF: The thing that's been most important to me in life is being a daddy. You know, I always used to say when my time is to go I just want one word on my headstone and that's "daddy."

HOLMES: Diek wants it leave his daughters wonderful memories, strong values and financial security. But the road ahead looks costly.

DIEKHOFF: I have heard that it can be up to $200,000 a year. You know, for the last couple years.

HOLMES: Diek admits he cares more now about the presidential election than he did three months ago. And no doubt, Barack Obama and John McCain have very different views about health care. Views that are obvious during this last presidential debate.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I think it's a responsibility.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I think it should be a right.

HOLMES: Obama wants to require larger employers to provide health care coverage. He also supports spending more on government sponsored programs for those who can't afford coverage.

McCain wants to stimulate the free economy by offering a $2,500 tax break for individual health insurance policies. Or a $5,000 tax credit for families.

But, the plans of both candidates could be blown out of the water by the current financial crisis.

DIEKHOFF: There's a lot of people out of work right now. What would happen if I would have gotten laid off earlier this year?

HOLMES: T.J. Holmes, CNN, Atlanta.

(END VIDEOTAPE)

PHILLIPS: Criminals used to hide their tracks by wiping away fingerprints. Well, those days are over. We're going to show you how crime scene investigations are getting more high tech.

(COMMERCIAL BREAK)

PHILLIPS: Well, any "CSI" viewer knows that any crime scene investigations have gone high-tech. But one clever inventor wants to make the equipment used to uncover and match fingerprints even more portable.

Deborah Feyerick explains in today's "Edge of Discovery."

(BEGIN VIDEOTAPE)

DEBORAH FEYERICK, CNN CORRESPONDENT: TV shows like "CSI" make crime solving look so simple.

UNIDENTIFIED FEMALE: It is a match. Your John Doe is Vincent Bartley.

FEYERICK: But in the real world --

DONNA ROSKOWSKI, INDIANA STATE POLICE: Science takes time. We don't solve crimes, generally, in half an hour.

FEYERICK: Well, crime scene investigators listen up, Purdue University's Dr. Graham Cooks believes he is on the brink of making TV fantasy a reality.

DR. GRAHAM COOKS, PURDUE UNIVERSITY: What we're trying to do is to get the chemical information which is captured in a fingerprint.

FEYERICK: He took these big machines, called mass spectrometers, and turned them into lightweight portable chemistry labs. They're used with a technique called DESI, which involves spraying a solvent onto a fingerprint. The droplets that splash up from the print are then analyzed.

COOKS: They could be drugs, they could be explosives, they could be other compounds. Those compounds are listed off by the spray, and they are sucked down this pipe here.

FEYERICK: Cooks says that the DESI system cannot only identify who made the fingerprints, but also what they had been touching. COOKS: This methodology could be used for day-to-day crime fighting, it could be used in terrorism and awesome (ph) cases.

FEYERICK: But the system is still experimental and would require extensive training by law enforcement. So it might be a while before it is used at a crime scene near you.

Deborah Feyerick, CNN, New York.

(END VIDEOTAPE)

PHILLIPS: Trying to riot his way to a record. One of the Flying Wallendas working without a net over Newark. Seriously, kids, don't try this at home.

(COMMERCIAL BREAK)

PHILLIPS: Well, if your newspaper gets swiped once, it is annoying, more than 20 times, hey, that is theft. But when North Carolina cops set up a camera to collar the perp, well it turned out the perp wore a collar. The bandit with a nose for news ain't nothing but a hound dog. The best part, he checks over his shoulder to make sure no one is watching. No charges expected against the bad, bad dog, but he won't be allowed to sniff the Snoopy comics for a week.

Now that was one of the stories that we all enjoyed in our morning meeting. But then we got a little distracted by a daredevil doing his thing, live.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Oh, this guy! Oh. We got -- this is a member of the Flying Wallendas' family preparing to try to break the world record 12 stories over Newark this morning.

UNIDENTIFIED MALE: No nets.

UNIDENTIFIED MALE: And that is how the dude fell.

(CROSSTALK)

UNIDENTIFIED MALE: Over --

UNIDENTIFIED GROUP: Oh! oh, my god! No!

(CROSSTALK)

UNIDENTIFIED FEMALE: Oh, my gosh!

UNIDENTIFIED FEMALE: There he is on the bike, guys!

PHILLIPS: Oh, geez!

UNIDENTIFIED FEMALE: Don't look! Don't look!

PHILLIPS: It's like you can't watch. (CROSSTALK)

UNIDENTIFIED FEMALE: Oh, my god. That is scary. Is he almost there?

(CROSSTALK)

UNIDENTIFIED FEMALE: Yes, thank god.

UNIDENTIFIED MALE: Now go backwards.

UNIDENTIFIED FEMALE: Is he going backwards.

(END VIDEO CLIP)

PHILLIPS: Well, despite all those shaky moments, Nick Wallenda safely wrapped up the ride and the record.

Next hour of NEWSROOM starts right now.

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