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CNN LATE EDITION WITH WOLF BLITZER

Interview With Rudy Giuliani; Interview With Ed Lazear

Aired October 19, 2008 - 11:00   ET

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


WOLF BLITZER, HOST: This is LATE EDITION, the last word in Sunday talk.
(BEGIN VIDEOTAPE)

BLITZER (voice-over): The final stretch.

SEN. BARACK OBAMA, D-ILL.: Senator McCain still has not offered a single thing that he would do different than George W. Bush.

SEN. JOHN MCCAIN, R-ARIZ.: If I'm elected president, I would fight to take America in a new direction from my first day in office to my last.

BLITZER: With 16 days left to go in the presidential campaign, John McCain and Barack Obama turn up the heat. We'll talk about where the race stands with McCain supporters Rudy Giuliani and Roy Blunt and Obama supporters Claire McCaskill and Arthur David.

John McCain is playing defensive, while Barack Obama picks up momentum in key battleground states. We'll assess a shifting electoral map and more with the best political team on television.

PRESIDENT GEORGE W. BUSH: The federal government has responded to this crisis with systematic and aggressive measures to protect the financial security of the American people.

BLITZER: After another roller coaster week on Wall Street, President Bush tries to reassure the public about an economy in crisis. The White House point man on the economy Ed Lazear offers his perspective.

The first hour of LATE EDITION begins right now.

(END VIDEOTAPE)

BLITZER: It's 11:00 a.m. 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.

The big political story today is former Secretary of State Colin Powell's dramatic endorsement of Barack Obama and his stinging criticism of the Republican Party. These were among the topics when I spoke just a little while ago with a leading John McCain supporter, the former New York City Mayor Rudy Giuliani.

(BEGIN VIDEOTAPE)

BLITZER: Mr. Mayor, thanks very much for coming in.

GIULIANI: Thank you, Wolf, good to be with you.

BLITZER: Colin Powell, your fellow New Yorker, made news today when he said this. I'll play the clip. Take a listen.

(BEGIN VIDEO CLIP)

COLIN POWELL, FORMER SECRETARY OF STATE: We've got two individuals. Either one of them could be a good president, but which is the president that we need now, which is the individual that serves the needs of the nation for the next period of time? And I've come to the conclusion that because of his ability to inspire, because of the inclusive nature of his campaign, because he's reaching out all across America, because of who he is and his rhetorical abilities -- and we have to take that into account -- as well as his substance; he has both style and substance -- he has met the standard of being a successful president, being an exceptional president.

I think he is a transformational figure. He's a new generation coming into the world -- onto the world stage, onto the American stage. And for that reason, I'll be voting for Senator Barack Obama.

(END VIDEO CLIP)

BLITZER: All right, so you know Colin Powell. You've worked with him. You once wanted him to run for president of the United States...

GIULIANI: I did. I worked for his campaign...

BLITZER: ... back in '96.

GIULIANI: ... when I was mayor, wanted him to run for president. Have the highest regard for Colin Powell and consider him a personal friend, and like happens with personal friends sometimes, you disagree. I don't see the same things in Barack Obama that Colin Powell sees. I just come to a different conclusion.

BLITZER: When he says a transformational figure and passionate, and all these adjectives...

GIULIANI: What I see is a very traditional liberal Democrat, really a throwback -- even a throwback before the Clintons. Someone who supports union organizing in a way that we're not even going to have the benefit of secret ballot any longer, so that people could get intimidated to be in unions. Someone who supports government medicine. Some who really does seem to believe in redistribution of wealth, which I think at this point in our economy is a terrible idea.

BLITZER: So you think General Powell is flat wrong?

GIULIANI: I think General Powell is wrong, respectfully. I believe he has come to this conclusion, you can see, in an agonized way, because he likes both men very much. I know he's a close friend of John McCain's. He has great respect for Barack Obama.

Colin Powell's opinion is one I always respect. I have tremendous admiration for him. But even when you have tremendous admiration for someone, you can sometimes believe that, you know, their opinion is wrong and your opinion is right.

BLITZER: He spoke effusively about Senator McCain, how much he admires him...

GIULIANI: He did.

BLITZER: ... he's been a friend of his for a long time. But he really was scathing in going after your party, the Republican Party, the trends he's seeing there right now. And that's caused him to have this pause. And I'm going to play this little clip of what he said. Take a listen.

GIULIANI: Sure.

(BEGIN VIDEO CLIP)

POWELL: The party has moved even further to the right, and Governor Palin has indicated a further rightward shift. I would have difficulty with two more conservative appointments to the Supreme Court, but that's what we would be looking at in a McCain administration.

(END VIDEO CLIP)

BLITZER: All right. On a lot of these issues, whether abortion rights for women or gay rights or guns, you're with the moderate wing of the Republican Party. You're with Colin Powell on this.

GIULIANI: Right. You know, I kind of look at both parties, and I see in both parties a group that has a very aggressive agenda. The Democrats have it too. I mean, I was just talking about it. And the candidate of the party in the Democratic side is on the side of the most left-wing ideas in the Democratic Party. He seems to think of taxation as a way to redistribute wealth. He seems to be the most aggressive about pulling out of Iraq...

BLITZER: But hasn't the Republican Party gone too far to the right, as Colin Powell has suggested?

GIULIANI: Every party -- both parties have within the party -- people who are arguably, from my point of view, too far to the right, too far to the left. I do believe that American business gets done, American politics, in the middle. And I know John McCain for 20, 25 years. He's the best at that. When you get rid of all the campaign slogans and all the 30-second commercials, over the last 20 years, there has been no senator, Republican or Democrat, who's worked more with the other side than John McCain.

BLITZER: Because he raises the issue, which is a point that a lot of people have raised, Colin Powell, that maybe two seats on the Supreme Court, liberal seats right now, two so-called liberal justices retire, Senator McCain could replace them with conservatives, and that could undermine Roe versus Wade, some of these other issues, where you're very passionate.

GIULIANI: Right. Well, but I look at justices in a broader sense. What I want is a justice much more similar to what John McCain would appoint, someone who is a strict constructionist, and not because of Roe against Wade. It's because of all the other decisions that get disturbed when you have a very socially activist judge, and I believe that Barack Obama will appoint the most socially active judges, because I believe he is the furthest left of any Democratic candidate we've had maybe in my lifetime.

BLITZER: So you wouldn't be afraid that abortion rights for women could be undermined if McCain is elected president and names two conservatives to the Supreme Court?

GIULIANI: Here's what I would be concerned about -- that rights for criminal defendants would get expanded again. Barack Obama has a record voting that way...

BLITZER: And abortion rights you're not concerned?

GIULIANI: I'm worried about -- I'm worried about the whole -- checks and balances, the balance of power, all the other things. Property rights that could be taken away if you have too liberal a court and using eminent domain. There are a hundred issues.

BLITZER: And so the abortion issue is not that concerning to you?

GIULIANI: Well, the abortion issue, if there were an overturning of Roe against Wade -- and we don't know that there will be, even with a conservative court -- of course, that doesn't mean that abortion happens or doesn't happen. It means it goes back to the states.

BLITZER: And some states could decide that it would be illegal.

GIULIANI: And some states could decide that it is.

BLITZER: Would that be OK with you?

GIULIANI: Well, I think that, you know, that -- that would be the protection. It would be there. The idea...

BLITZER: Women would have to travel from state to state, is that OK? GIULIANI: They would have to make decisions like that. Yes. I've always said, if it goes back to that, there is a fallback position.

You can't, I don't think, choose a Supreme Court justice on one opinion. If you don't know the Supreme Court well, you probably think that. But I've argued before the Supreme Court one time. I wish I could get to do it again. I was in the Justice Department. Many of my cases went up to the Supreme Court. I'm very concerned about the national security issues they decide, and mainly about the criminal justice issues they decide. I saw a Supreme Court go so far on the other side that they were creating rights that helped crime, I believe, grow in this country. They need to be checked so that we could have an effect against crime.

BLITZER: The other point that General Powell made was that he was very disappointed in the judgment of Senator McCain selecting Sarah Palin, the governor of Alaska, to be his running mate. He says he just simply didn't believe she is ready. As wonderful as she may be as a governor or whatever, he didn't think she is ready to be commander in chief, and that raises questions, he says, about the judgment of Senator McCain.

GIULIANI: You know, I don't see a difference there between Governor Palin's record and experience and Barack Obama's. Governor Palin has been in office more often than Barack Obama, for a longer period of time, and she has held, as far as I'm concerned, offices that test you more for being president -- governor, mayor. Barack Obama has never run a city, never run a state, never run a business. And as Tom Brokaw pointed out, never even ran a military unit. So there's no management experience of any kind.

BLITZER: So you're totally comfortable with Sarah Palin potentially being...

GIULIANI: I am comfortable...

BLITZER: ... a heartbeat away from being commander in chief?

GIULIANI: ... heartbeat away, and what I would suggest is -- and if I were talking to Powell and we were having like a friend to friend discussion about this, I'd say, well, you know, you find deficiencies with the experience of the vice presidential candidate -- the presidential candidate you're supporting has less experience than she has.

BLITZER: The -- Senator McCain was at the Al Smith dinner in New York. You're familiar with this dinner over the years.

GIULIANI: Sure.

BLITZER: It was a lovely dinner. And in his remarks about Senator Obama, he was very effusive in his praise. And if you didn't know the whole picture, you'd think maybe this guy is really going with Senator Obama. I'm going to play this little clip about the historic nature of what's going on right now in this country. Listen to Senator McCain.

(BEGIN VIDEO CLIP)

MCCAIN: Senator Obama talks about making history, and he's made quite a bit of it already. There was a time when a mere invitation of an African-American citizen to dine at the White House was taken as an outrage and an insult in many quarters.

MCCAIN: There was a time when a mere invitation of an African- American citizen to dine at the White House was taken as an outrage and an insult in many quarters. Today, we're a world away from the cruel and prideful bigotry of that time, and good riddance.

I can't wish my opponent luck, but I do wish him well.

(END VIDEO CLIP)

BLITZER: That was -- compared to some of the nasty stuff that's going on, that was pretty remarkable, you have to admit.

GIULIANI: Yes. I think when you get into a race like this -- I remember, you know, being in the primaries last year -- you come away with tremendous admiration for the people you're running against. I know there are a lot of nasty words -- in a primary, maybe a little bit less but a lot of over-the-top charges that are made. But you realize, the other person is the only other person in the country going through what you're going through, and you have a great deal of admiration for their ability to do that, and I think John is a very generous man, also. He's somebody who really likes people, cares about people, so he sees very admirable things in Barack Obama.

BLITZER: And you make a good point, because Senator Obama did say lovely things about Senator McCain at that Al Smith dinner as well.

GIULIANI: Particularly to come to the end, even though there may be anger, there's still -- you realize there's only two people in the country that's been through this, and you probably understand it better than anyone else, what you have to go through and what your family has to go through.

BLITZER: We're almost out of time, but very quickly, New York City politics. Mayor Bloomberg, should he run for a third term?

GIULIANI: Well, of course he should run for a third term.

BLITZER: Will he win?

GIULIANI: Will he win? I believe he will, but you know, we're a year before that.

BLITZER: You support him for that?

GIULIANI: I do. I think he's the best choice for the city. I think this issue of a third term is a significant legal issue. It's got to get resolved. But if you're asking me is he the best choice that we have to be mayor during four what are going to be very challenging years, the answer is yes.

I believe that Mike Bloomberg took the things that I did, improved on them, did other things on his own -- I'm not saying he just did my things, he added things to it that are his own creation -- but I was very worried when I was leaving the mayor's office that everything would get reversed, all the COMSTAT programs and JOBSTAT programs and accountability programs. The way we were running the city as a business would get reversed.

Mike made it permanent, extended it. He gets four more years, maybe it can become part of the institutional history of the city and nobody can change it. The city will continue to be run in a very efficient way rather than in the old political way it used to be run.

BLITZER: Mayor Giuliani, thanks for coming in.

GIULIANI: Thank you. Always a pleasure. You're doing a great job.

BLITZER: Thank you.

GIULIANI: Thank you.

(END VIDEOTAPE)

BLITZER: And just ahead, we'll get the other side from a leading Obama supporter, the Alabama Congressman Artur Davis. He's standing by live.

And later, how can John McCain swing the momentum back his way with just more than two weeks to go? We'll get insight from four of the best political team on television. A lot more LATE EDITION coming up.

(COMMERCIAL BREAK)

BLITZER: And welcome back to LATE EDITION, I'm Wolf Blitzer in Washington. Coming up later by the way, we're going to go to the critical battleground state of Missouri. We'll get both sides of what's shaping up to be a very tight race there. Senator Claire McCaskill and Congressman Roy Blunt, they're standing by live.

But right now, let's turn to Democratic Representative Artur Davis of Alabama. He's a major supporter of Senator Barack Obama. Thanks very much, congressman, for coming in.

DAVIS: Wolf, thanks for having me.

BLITZER: You just heard Rudy Giuliani's reaction from the stunning news from Colin Powell today endorsing Senator Barack Obama and among other things, he was asked, General Powell, about what's called the Bradley effect. Whether white people will go into that booth and in the privacy of that voting booth, they'll vote against a black man simply because he's black. Listen to what General Powell said.

(BEGIN VIDEO CLIP)

POWELL: One may say that it's going to be a big factor and a lot of people say they will vote for Senator Obama, but they won't pull a lever. Others might say that has already happened. People are already finding other reasons to say they're not voting for him. He's a Muslim, he's this. So we may have already seen the so-called Bradley factor in the current spread between the candidates.

(END VIDEO CLIP)

BLITZER: Congressman, do you buy that?

DAVIS: I think General Powell is absolutely dead on. Anyone who wants to vote against Barack Obama can frankly find a variety of reasons to do that. Some legitimate, some not as legitimate. But I don't think there are a large group of people out there who are out there who are ashamed to say they're for John McCain. John McCain is a perfectly plausible national political figure. The state of polling is more advanced than it was in the 1980s when Bradley ran in California and Wilder ran in Virginia and both underperformed their polling numbers.

And, frankly, this campaign has gone on for a long period of time and people feel comfortable I think expressing their opinions on both sides. So we know polling is wrong for a variety of reasons, but I don't think there is any unique Bradley effect. There was a Kerry effect four years ago. You know, Senator Kerry didn't do nearly as well in the votes as he did in the exit polls. And no one knew what to attribute that to. So it may be that we can't be overly reliant on polling. But I don't think there's any unusual factor that says that people won't be honest in this campaign.

BLITZER: And listen to this exchange, congressman, that Secretary Powell had with Tom Brokaw, I want to play the question and the answer.

(BEGIN VIDEO CLIP)

TOM BROKAW, NBC NEWS ANCHOR: There will be some who will say this is an African-American, distinguished American supporting another African-American because of race.

POWELL: If I had only had that in mind, I could have done this six, eight, 10 months ago. I really have been going back and forth between the highest respect and regard for, John McCain, and somebody I was getting to know, Barack Obama. And it was only in the last couple months when I settled on this.

(END VIDEO CLIP)

BLITZER: How significant do you believe this endorsement by Secretary Powell will be?

DAVIS: It's very significant because Colin Powell sounds like a lot of good, thoughtful people in this country who respect both Barack Obama and John McCain, who think a lot of John McCain's service, a lot of his abilities and a lot of his record in the Senate, but who think on the key questions facing the country today that Obama's better.

And let me go directly to what General Powell just spoke about. Because there are some people who are going to say this is somehow racial solidarity. If General Powell were primarily concerned about racial solidarity, he frankly would never have chosen to be a Republican in a party where there is a very thin black presence. General Powell has a consistent history of doing what he thinks is right and what he thinks is in his country's interest. He has always put his country first, as some would say. So I think General Powell's endorsement is an important event in this campaign because Colin Powell is one of the most venerated figures in American public life. He made some mistakes in judgment when he served as secretary of state, and he has owned up to a lot of those mistakes in judgment. I think this is a very helpful event and is part of the momentum that Senator Obama is gathering around him.

BLITZER: Your colleague from Pennsylvania, Congressman John Murtha, a Democrat, another major supporter of Barack Obama, he caused a stir this week when he uttered these words and I'm going to play the clip for you.

(BEGIN VIDEO CLIP)

REP. JOHN P. MURTHA, D-PA.: Well, he'll have a tough time. You know, there's no question western Pennsylvania is a racist area. When I say racist area, I mean, the older people are hesitant, you know, they're slow in seeing change, real change.

(END VIDEO CLIP)

BLITZER: All right. Those words, "There's no question," he said, "that western Pennsylvania is a racist area" and that older people especially could be affected by this.

He later said -- you know, he apologized for that, but a lot of people have probably said, you know what, there's probably an element of truth there.

DAVIS: Wolf, I don't lake labeling areas racist. I don't like labeling areas "un-American." I think we need to get past some of the labels that people are throwing around, in this campaign, with too broad a brush to paint.

Are there people in this country who are not going to vote for Barack Obama for reasons related to race? Of course there are. For that matter, there are some who will vote for him because of his race, both black and white. Undoubtedly, there are.

But I agree with my candidate that the overwhelming majority of people in this country are willing to look past race. And what has made that so is, among other things, the economic crisis that we're facing.

There was a testing moment in this campaign, several weeks ago -- and General Powell alluded to it, the way these two candidates handled the fiscal crisis and the credit markets crisis.

You saw a steady, calm hand, with Senator Obama, and I'm not sure what we saw with senator McCain. I'm not sure if it was unsteadiness or expediency or just not knowing what the heck to do or not knowing how to calculate the politics.

But whatever it was, I'll contrast it with the evenhandedness we saw from Senator Obama and, by the way, Senator Obama's enormous command and poise during the debates. Mayor Giuliani was, as he's done before, belittling Senator Obama's experience. Anyone who watched Barack Obama during those debates appreciates that he has a fingerpoint grasp of the key issues facing this country.

He understands the issues; he has his convictions about them, and he may not have been on the national stage very long, but he's gotten up to speed very quickly.

BLITZER: But Congressman Davis, Alabama, your home state, I guess, not yet ready to be a battleground state in a presidential election?

DAVIS: That's fair to say. It's also fair to say of Tennessee and Mississippi. My state's a conservative state. And, candidly, while I don't think Senator Obama is anywhere near where Mayor Giuliani says he is on an ideological scale, he's a little bit left of where folks in Alabama are.

Also, frankly, the resources haven't been put into states like Alabama and Tennessee. But, in places where Barack Obama has been able to advertise his message, frankly, people see a centrist.

This is a guy who sided with gun rights in Washington, D.C. This is a guy who disagreed would the Supreme Court's ruling and believes you ought to be able to get the death penalty if you rape a child, an incredibly heinous act.

This is someone who stood up to trial lawyers and voted for the Class Action Fairness Act to rein in frivolous class action several years ago.

And this is someone who's voted for trade agreements, even though that's not the most popular position in the Democrat Party.

And the parts of the country that have heard about that Barack Obama, a Barack Obama that's squarely in the center, you see Barack Obama doing very, very well.

BLITZER: Congressman Davis, thanks very much for coming in.

DAVIS: Thank you, Wolf.

BLITZER: And coming up, we're going to assess the impact of General Colin Powell's stunning endorsement of Barack Obama today with the best political team on television. Stay with us. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: And welcome back to "Late Edition." I'm Wolf Blitzer in Washington. With only 16 days to go until Election Day, perhaps the last thing John McCain needed was to have Colin Powell endorse his opponent earlier today.

Let's talk about the impact of this, and more, with four CNN political contributors. Joining us in our New York bureau, we have Republican strategist Leslie Sanchez; also, Huffington Post editor-at- large Hilary Rosen, supporter of Barack Obama.

With me here in our Washington studio, Republican strategist Alex Castellanos, and David Gergen. He's been an adviser to four -- four U.S. presidents. He's a senior political analyst for CNN.

David, let me play this little clip of what General Powell said, because it was one of the reasons why he's been turned off lately to his party, the Republican Party. Listen to this.

(BEGIN VIDEO CLIP)

COLIN POWELL, FMR. SECRETARY OF STATE: This Bill Ayers situation that's been going on for weeks became something of a central point of the campaign, but Mr. McCain says that he's a washed-out terrorist. But then, why do we keep talking about it?

And why do we have these robo-calls going on around the country, trying to suggest that, because of this very, very limited relationship that Senator Obama has had with Mr. Ayers, somehow Mr. Obama is tainted.

What they're trying to connect him to is some sort of terrorist feelings, and I think that's inappropriate.

(END VIDEO CLIP)

BLITZER: All right. What do you think about this whole announcement, this morning, from Colin Powell to endorse Barack Obama, and the reasons he offered?

GERGEN: Sure. I think John McCain was right to remind people that he has the endorsements of four former secretaries of state on the Republican side, and he did lose this fifth one.

But, even so, this is a hugely significant announcement, just at the time McCain -- the polls are tightened a little bit; McCain thought he had some momentum; people around McCain thought they had some momentum.

This reverses it. It sends an important signal that John McCain is going to be surrounded by people whom the country can trust, that the country will be in good hands, if you have a Colin Powell around you, a Paul Volcker, a Warren Buffett -- all those re assuring notes to the country, right at this point.

It sends an important signal about -- that Colin Powell believes he would be a good commander in chief.

And, finally, Colin Powell has given voice, I think, to the disillusionment that a number of moderate Republicans and some others have had with the negativity of the McCain campaign, that they've been muttering about but they were afraid to give voice to, and he came out and said it, in a way.

I think it helps bring over undecided voters.

BLITZER: Can it close the deal for some of those undecided voters who are going back and forth?

Maybe 8 percent, 9 percent, 10 percent say they're still not sure; they're still persuadable, either way.

Hearing from Colin Powell in this kind of dramatic fashion -- could that close for deal for Barack Obama?

CASTELLANOS: Possibly, for a few, but it's hard to think that, in this campaign, anything's going to close the deal. It's gone up and down so much.

However, Colin Powell -- I think David is exactly right -- is a warm glass of milk and a cookie for those voters who have a hard time going to sleep at night thinking, well, what kind of president would Barack Obama be?

He says that, you know, Obama's change, but his job was to be safe. And Colin Powell sends that message. And I think David's also right that McCain was actually coming back.

Obama won this campaign about three or four weeks too early, and people were beginning to looking at him, saying, hmm, I don't know. And he had a horrible week with this redistribution of wealth thing. Americans are altruistic, but not socialist.

BLITZER: If timing, Leslie, in politics, is so, important, and, what, 16 days to go, just more than two weeks before the election, for Colin Powell to do this, it's, from Obama's perspective, pretty good timing?

SANCHEZ: It is. But I tell you, a lot of Democrats are reminded in 1976, you had Gerald Ford who was down double digits and you had a lot of voter fatigue with Republicans and he managed to come very close to defeating Jimmy Carter. So a lot of people are thinking of that before they get a little, have too much hubris and thinking about a landslide victory. It's important to think about the fact that Colin Powell is a great American, a great general and somebody who has fought many personal battles to see such a distinguished career and has achieved so much in this country. So I think in that sense, people can admire that but he's still one person. I don't think he has the type of influence that other people think it may.

BLITZER: Will it turn off, Leslie, some of the far left who say Colin Powell worked for the president, worked for President Bush, worked for Vice President Cheney, he was instrumental in getting the U.S. into this war in Iraq, he went before the United Nations Security Council and made the case that there were WMD, weapons of mass destruction, in Iraq. Is it going to turn off some on the left, some supporters shall we say, of Barack Obama?

SANCHEZ: I think he's an iconic figure. With respect, I don't know if that was directed to Hilary.

BLITZER: No, no, I wanted Hilary to respond to that.

ROSEN: Well I don't think it will. In fact, Colin Powell and again this morning said that he thinks that there were mistakes in judgment made and principally mistakes in the information that they were given.

So, I think that he's been somewhat redeemed. But Ii think this is the key piece for America, which is, it doesn't matter whether John McCain has four previous secretaries of state, Colin Powell is a Republican. He has been a Republican and served in Republican administration. What I think this endorsement says is how Barack Obama will govern and that's what people want to hear.

When you think about who is the big get in the primaries for Democrats, it was Al Gore. Now who was the big get in the general election? It's always been Colin Powell. A candidate who can bring both Al Gore and Colin Powell who disagreed on almost everything in public life in the last 10 years, somebody who can bring those kinds of people together, I think gives America a lot of confidence about the kind of president Barack Obama would be.

BLITZER: You think so, David? GERGEN: I think that's right. I actually thought that Ted Kennedy was a pretty big get in the primaries, as well. But you have to say, this has put new pressure on John McCain. How do you run up the campaign in the last two weeks to catch up? What we're watching on the Democratic side, it's like you're watching a fireworks show and we're now watching the finale on Obama's part. All these things happen. You have Powell endorsement, he gets 100,000 people in Missouri and St. Louis. He has $150 million that just came in the door in one month and he's got this big TV show he's going to do right before the election itself. It's like a crescendo.

BLITZER: You could make the case, it has been made, Alex, that it's almost a miracle that Senator McCain is still in this race.

CASTELLANOS: Well I tell you, it's a miracle and he seems to be turning water into wine again because this week has actually been very good for the McCain campaign. They have numbers that say McCain is coming back in Iowa and he's coming back in Florida. This redistribution of wealth theme seems to have turned it around.

BLITZER: Internal McCain?

CASTELLANOS: Internal McCain numbers. It seems to have caught on because, again, America generally thinks it's OK to help people. We want to help each other. I'll help you build your house, you help me build mine. But Americans don't think government should break in and steal something from me and give it to someone else.

BLITZER: Let me let Hilary weigh in on that. What do you think, Hilary?

ROSEN: Well, I think this constant refrain of redistributing wealth is not what Barack Obama said or means. Really what people are saying is that for the last 10 years, you know, 5 percent of this country has benefited from all the tax breaks and all of the economic growth in this country.

What Barack Obama is saying is it's time for the 95 percent of the rest of the country to benefit, as well. And so, that's the key message here. I think that there is some danger, though, when people believing that this election is over. And I don't think you're going to see that from the Obama campaign.

I'll go back to something they had been telling me privately for months. Which is they do believe no matter how far people perceive they're ahead, that in the closing days of this campaign it will be tight and they do expect it to stay tight for the last several days.

BLITZER: Leslie, hold on one second, Alex wants to weigh in and then I'll bring in Leslie.

CASTELLANOS: The point I think there is that is what Obama said. The point is not who benefits, but whether you should use the power of government to take something from one person to help another. Not that we shouldn't be generous with each other and if Obama loses this election, it will because of this redistribution of wealth theme was his "I voted for the $87 billion before I voted against it," what that was for Kerry.

BLITZER: Go ahead, Leslie.

SANCHEZ: Really quick, Wolf. I've been out there in the field and we're looking at a lot of focus groups too. I'll tell you, there are a couple things that are resonating. Exactly what Alex is talking about, shifting the conversation to taxes and this redistribution, it's toxic in terms of the impact it is starting to have. This other issue of voter fraud in ACORN is resonating because fairness, this issue of are these elections fair, it motivates people to turn out in higher numbers. It's motivating factor and finally it's the money.

BLITZER: All right, let me let David respond.

GERGEN: I just want to come back. We cannot leave a redistribution argument where it is. It is true.

BLITZER: And just to remind our viewers, what we are talking about was a comment that Senator Obama made to Joe the Plumber when he was out there, when he suggested one thing the government should do is spread the wealth around a little bit.

GERGEN: What has happened? Larry Summers pointed out on a speech this week at the 100th anniversary --

BLITZER: The former treasury secretary.

GERGEN: The former treasury secretary and a Democrat to be fair. But if you go back to the distribution of wealth in 1979, 30 years ago versus today, the people in the bottom 80 percent are losing, compared to back then, $600 billion a year. The top 1 percent of the population is gaining compared to back then. We have had a redistribution of wealth in this country, up. BLITZER: What the McCain people are suggesting and even Senator McCain yesterday in his radio address, suggested this is almost socialism.

GERGEN: We just had a Republican government that put $150 billion into banks. They have injected the government more fully into the banking system, the financial system than any time in history. And so it's a hollow argument. I mean, I think the Democrats, if they want to join this argument, they can. This is their very strong argument to say you guys are socialism when you just spent $150 billion as a down payment?

BLITZER: I want everybody to hold their thoughts for a moment because we're going to take a quick break. We're going to continue on this line. We also have much more to discuss with the best political team on television, including Sarah Palin. She makes an appearance last night on "Saturday Night Live." We're going to show you the clip, how she handled herself and a lot more, right here on LATE EDITION.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

POWELL: I was also concerned about the selection of Governor Palin. She is a very distinguished woman and she should be admired but at the same time, now that we have had a chance to watch her for some seven weeks, I don't believe she is ready to be president of the United States, which is the job of vice president.

(END VIDEO CLIP)

BLITZER: Former Secretary of State Colin Powell, as part of the reasons why he's endorsing Barack Obama, also complaining that Governor Sarah Palin not yet ready to be commander in chief.

BLITZER: Leslie Sanchez, what do you say, because you hear that from a lot of folks out there, that they were really disappointed in Senator McCain, that they say he didn't show good judgment as picking this woman, as inexperienced as she is, to be a heartbeat away from becoming commander in chief.

SANCHEZ: Wolf, I think it depends on the folks that you're asking. I just came back from Nevada and there's tremendous excitement. She's going to be there, I believe, Tuesday, and they're expecting a tremendous turnout. She's appealing to a certain common sense principle that people feel is refreshing and they want to see people that are outside Washington come in.

There is a lot of, as has been said, the conservative and liberal elite, a lot in the media that have criticized her. I think that's expected but overall, fundamentally, people have been impressed with what they see, what they've gotten a chance to know.

BLITZER: Alex, you've seen some prominent conservatives coming out and saying, what a mistake, Senator McCain. Whether it's George Will, Peggy Noonan writing in "The Wall Street Journal," former speech writer for Ronald Reagan writing this, saying, "We have Mrs. Palin on the national stage for seven weeks now and there is little sign that she has the tools, the equipment, the knowledge or the philosophical grounding one hopes for and expects in a holder of high office."

Some of your fellow republicans are saying, you know, they lost a lot of respect for Senator McCain in his decision to pick her.

CASTELLANOS: I think a lot of Republicans would like to see Sarah Palin out on the campaign trail, more engaged, more Q&A with the press. Let's have a job interview. Let's see if she can pass a test. Obviously Senator McCain thinks she can. Well if so, then we should see her. We should see her tested by the news media, by questions and answers. That hasn't happened and it's a little bit like when the witness doesn't take the stand in his own defense in a jury trial, there's a presumption of guilt.

BLITZER: What do you think, Hilary, even Bill Kristol writing in "New York Times," a week or so ago, a top Republican who worked for Dan Quayle as his chief of staff back in the first Bush administration said let her go out there. Let her go out and talk to reporters, don't hold her back. What do you think? Are we going to see that over the next 16 days?

ROSEN: I think the evolution of the Palin pick has almost come to the end. It started out pretty exciting. Oh, this is interesting. This says something about John McCain, that he's willing to go outside the orthodoxy. But the fact now that there has been so much desire for Sarah Palin to be out there, to let people really know who she is, to be more accessible and she, herself, acknowledges she's not.

She made a joke about it on "Saturday Night Live" last night. The fact that they're not putting her out there and letting her be subjected to more intense scrutiny means that they don't believe she could handle it. I don't see any other reason why they would do it. Because if they thought she could handle it, they'd put her out there.

BLITZER: All right, let me let David Gergen weigh in because you worked for four presidents. The decision from Senator McCain to pick Sarah Palin?

GERGEN: I thought at the time it was the biggest risk I'd ever seen a presidential candidate take. I think in the beginning it worked for him. I think Leslie Sanchez is right, it did help to energize the base. It united the party and energized Senator McCain in a very interesting personal way.

And so from that sense, it worked. But I do think that over time that it has now driven a lot of people who are not part of the base the other way. It has contributed to a decision to go for Obama. She has now become a divisive figure and in my mind, the last 16 days doesn't really make much difference what she does. People have pretty much made up their mind and the focus is going to be mostly on the two presidential candidates.

BLITZER: Alex, here's our CNN electoral map, our estimate right now where it stands, and it's just a snapshot right now. It could change over the next 16 days and almost certainly will. Right now, we estimate that Barack Obama has 277 electoral votes and you need 270 to be president and McCain has 174. And in our latest poll of polls, the average of all the major national polls, we have Obama at 49 percent, McCain 43 percent, unsure still, 8 percent. You think that McCain could still come back?

CASTELLANOS: Sure. And there's actually some data out there, some Gallup data and others that say one this new redistribution of wealth argument is starting to bite. Two, Obama got a little ahead of himself again, winning a little early here and people are taking a second look. What kind of president would he be, what kind of president, what would he do? How would he govern with a Democratic Congress when there was no one there to stop spending, to stop taxing? Would you be giving the keys to the candy store to the children?

BLITZER: Well Hilary, what about that? The argument you're hearing now increasingly from Republicans including Senator McCain and Sarah Palin, you know what? You don't want Barack Obama, Harry Reid and Nancy Pelosi in charge of everything.

ROSEN: I think that's a charge he'll make. It's probably their best weapon over the next couple of weeks and I think it has the potential to tighten the race. On the other hand, I think what you're seeing coming out of all three of those offices is that they have no intention of being fiscally irresponsible. That it would be hard to spend more money irresponsibly in fact than the Bush administration has in the last eight years.

And so I think when people -- Barack Obama didn't make himself be the leader over the last couple weeks. America decided that his economic proposals and the things they were saying are more appealing to what people want. They feel better about what he offers and they feel more trusting that he has --

BLITZER: Certainly, Leslie, that is certainly reflected in the polls.

SANCHEZ: It sure is. People want to punish the people in power. Historically we know that. Even around the world in different elections, this is not unique here and throw the bums out and give somebody else a fresh start. That's how people tend to look at these things when you have an economic downturn, especially in an election.

The distinct difference is, that tax argument, this redistribution of wealth, people are taking a second look at this. I heard it best from a voter. They said I know more believe that that cap of increasing taxes on people only making $250,000 and higher is going to stay the same, then I believe in Santa Claus and the tooth fairy. They believe with a Democratic Congress, really there's no check and balance to protect the tax payer.

BLITZER: Let me wrap up this segment with this little clip from last night's "Saturday Night Live." Because you not only saw Tina Fey, but you also saw Governor Palin. Here it is.

(BEGIN VIDEOTAPE)

TINA FEY, ACTRESS: What? The real one? Bye.

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: Thank you. Thank you.

(END VIDEO CLIP)

BLITZER: You know that she said, "Live from New York, it's Saturday night." Later we're going to play a clip where she's actually dancing and I've got to tell you, she's pretty good when it comes to dancing. Barack Obama has got some moves, but so does she.

GERGEN: She's a good sport to go on there. I didn't think she was entirely comfortable, but it was really hard to tell which one was which.

BLITZER: I can't tell the difference.

GERGEN: I kept on thinking through this campaign, Tina Fey is going to...

BLITZER: Those two ladies were separated at birth.

GERGEN: I thought right there before the Palin debate that Tina Fey was going to say, you know, I have been playing Sarah Palin all along and I've got a surprise for you, here's the real Sarah Palin.

CASTELLANOS: McCain/Fey stickers right now.

BLITZER: All right, guys, thanks for coming in. But we're going to continue this conversation. Much more coming up, including this. John McCain is now reacting to Colin Powell's endorsement of Barack Obama. We're going to show you what the Republican presidential nominee just said. That's coming up right here on "Late Edition."

(COMMERCIAL BREAK)

BLITZER: Let's check the highlights from one of the other Sunday morning talk shows here in the United States.

On Fox, Republican presidential candidate John McCain reacted to the dramatic news that former Secretary of State Colin Powell has endorsed his opponent.

(BEGIN VIDEO CLIP)

MCCAIN: Well, I've always admired and respected General Powell. We were longtime friends. This doesn't come as a surprise. But I'm also very pleased to have the endorsement of four former secretaries of state -- Secretaries Kissinger, Baker, Eagleburger and Haig -- and I'm proud to have the endorsement of well over 200 retired Army generals and admirals. But I respect and continue to respect and admire Secretary Powell.

(END VIDEO CLIP) BLITZER: And this note -- I'll be sitting down with Senator McCain this Wednesday in "The Situation Room." You can see it at 4:00 p.m. Eastern in "The Situation Room." My interview with Senator McCain.

Up next, the billionaire businessman Donald Trump. You're going to want to see how he grades the leaders currently dealing with the global economic crisis. "Late Edition" continues in a moment.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition." I'm Wolf Blitzer in Washington.

As the financial crisis has escalated over the past few weeks, President Bush and his economic advisers have come under intense scrutiny. On Wednesday, I spoke about the administration's performance with one of the country's leading businessmen, the billionaire Donald Trump.

(BEGIN VIDEOTAPE)

BLITZER: Let's talk about the economy right now. And I want you to do, in your Donald Trump style, some quick analysis, but give me some grades for these people, how they've done in dealing with the economic crisis that we're all going through right now. OK? Grades. A is the best, F is failing.

DONALD TRUMP: Good.

BLITZER: President Bush.

TRUMP: Well, I would certainly not give him an F, and I guess you can't give him an A, because, unfortunately, look at the mess we're in. But I think he's been dealing with the crisis pretty well. And he's got some very smart people -- I'm sure Paulson's going to be on your list -- in Paulson and Ben B., as the expression goes. I mean, they're pretty smart people. They're very smart people. So, I would give him a B.

BLITZER: Really?

TRUMP: Aren't you shocked to hear me say that?

BLITZER: Yes, I'm pretty surprising.

TRUMP: You're talking about dealing with it. You're not talking getting us into the crisis. You're talking about dealing with it.

BLITZER: How they've dealt...

TRUMP: So I'd give him a B.

BLITZER: How they've dealt with this financial crisis.

TRUMP: I would give him a B. BLITZER: All right. Henry Paulson.

TRUMP: I would give him an A.

BLITZER: Really?

TRUMP: I'd give him an A. And I know a lot of people are saying, oh, this and that. But the fact is, he came into a mess. He didn't create the mess, and he's helping us get out of the mess.

BLITZER: So if Obama were elected, you would advise him to keep Paulson on the job?

TRUMP: I wouldn't necessarily. He's got his own people, and he's got some very, very smart people with him. But I think Paulson I would give an A, because he really took something very strong -- now, you could say the UK came up with the first plan -- but Paulson's the one that got us there in the first place in terms of the concept.

BLITZER: The Federal Reserve Chairman Ben Bernanke, Ben B., as you call him.

TRUMP: I think that he has -- was a little bit late on the draw, but he's come around strongly, and I would give him a B-plus. A good, strong B-plus.

Look, I mean, these people inherited a mess. And they weren't necessarily to blame for it and they're trying to fix it.

I would say that Ben was a little bit late, and based on the lateness, but I'm not sure there's -- you know, if he was earlier, I'm not sure if it would be any different. So I would give him a B-plus.

BLITZER: John McCain.

TRUMP: Well, John is one of 100 senators, and you could put Obama in the same category. They have to vote yay or nay, and they sort of voted the same way.

BLITZER: Yay.

TRUMP: So I would certainly -- I probably wouldn't put them anywhere, because I don't think they had that much influence on what's happened.

(END VIDEOTAPE)

BLITZER: And coming up, Senator Claire McCaskill and Congressman Roy Blunt. They're standing by live. We'll talk about the fight for their state, the battleground state of Missouri, and a lot more. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: This is LATE EDITION, the last word in Sunday talk.

(BEGIN VIDEO CLIP)

BLITZER: The sprint to the finish.

MCCAIN: Senator Obama says that he plotted to spread your wealth around.

OBAMA: Senator McCain would pay for part of his plan by making drastic cuts in Medicare, $882 billion worth.

BLITZER: The economy is issue No. 1 as both candidates go on the attack with only 16 days to go. But who really has a plan for the failing economy? We'll go to the battleground state of Missouri and ask Democratic Senator Claire McCaskill, an Obama supporter and Congressman Roy Blunt, the number two Republican in the House and a backer of John McCain.

Global markets in turmoil.

BUSH: As we work to resolve the current crisis, let's also work to ensure that this situation never happens again.

BLITZER: This weekend, the president met with European leaders desperate to settle the global economy. We'll get perspective from the chairman of the president's council of economic advisers, Ed Lazear.

MCCAIN: The real winner last night was Joe the Plumber.

BLITZER: And in a week where you might have thought that the leading candidate was Joe the Plumber, we'll get the real story from four of the best political teams on television. This second hour of LATE EDITION begins right now.

(END VIDEO CLIP)

BLITZER: And welcome back to the second hour of LATE EDITION. I'm Wolf Blitzer reporting from Washington. We want to welcome our viewers in the United States and around the world.

We're following two major stories today. First, former Bush Secretary of State Colin Powell announcing just a little while ago that he's endorsing Barack Obama for president. Here's what General Powell said.

(BEGIN VIDEO CLIP)

POWELL: Two individuals, either one of them could be a good president. But which is the president that we need now? Which is the individual that serves the needs of the nation for the next period of time? And I've come to the conclusion that because of his ability to inspire, because of the inclusive nature of his campaign, because he is reaching out across America, because of who he is and his rhetorical abilities, and we have to take that into account, as well as his substance -- he has both style and substance. He has met the standard of being a successful president, being an exceptional president. I think he is a transformational figure. He is a new generation coming into the -- on the world stage, on the American stage, and for that reason, I'll be voting for Senator Barack Obama.

(END VIDEO CLIP)

BLITZER: All right. We're going to have a lot more on this developing story coming up, reaction to what Secretary Powell just had to say. We're going to be speaking shortly with Senator Claire McCaskill and Congressman Roy Blunt. We'll also get analysis from the best political team on television. Stand by for that.

The second big story we're following right now, the continuing fiscal meltdown in the United States and in major parts around the world. Once again, this week saw records broken as stocks skyrocketed up and down in markets around the globe. And this weekend, President Bush met with the French President Nicolas Sarkozy and the European Commission President Jose Manuel Barroso and announced he would soon be hosting a summit of world leaders to deal with this historic economic crisis.

To give us the latest on what's going on, we're joined now by Ed Lazear. He's the chairman of the White House Council of Economic Advisers. He's joining us live from California. Ed Lazear, thanks very much for coming in.

LAZEAR: Pleasure to be with you. Thank you.

BLITZER: Warren Buffett, the billionaire businessman, who's so often right in terms of his own investments, among other things, he wrote this in an op-ed in "The New York Times" on Friday. He said this. "The financial world is a mess, both in the United States and abroad. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary."

Ed Lazear, is Warren Buffett right?

LAZEAR: Well, I think Warren Buffett is characterizing what's happening in the United States right now, at least to some extent. We know that the economy has slowed. This is an amazingly resilient economy. We've seen shock after shock, housing markets, oil prices going up to near $150 a barrel this summer. We've seen credit markets tighten. All of those things are very difficult to get through. And yet the economy has gotten through it. But the reality is the shock that we're seeing right now in the tightening of credit markets, the extreme tightening of credit markets, is really a very large shock. It is going to mean a few difficult months ahead. There's no doubt about it.

BLITZER: Let me just press you -- let me press you Mr. Lazear on what Warren Buffett predicted. He said unemployment will rise. Do you believe it will?

LAZEAR: Well, unemployment right now is actually at the average that it's been for the last 30 years. We've gotten used to low rates of unemployment, and that's good. We'd like to get used to them again. Right now, we are at 6.1 percent. Some parts of the country where I'm sitting right now, for example, have much higher rates of unemployment and we are seeing what I think anyone would characterize as a recession in certain parts of the country.

But the hope is that we've taken the steps in the proper amount of time to get things turned around, and we think we have. The kinds of actions that were taken this week are very dramatic actions, $700 billion, as you know, is a lot of money, and we believe it's directed at the appropriate target and we think it'll work.

BLITZER: Here's what President Bush said on Friday. I'll play this little clip for you. Listen to this.

(BEGIN VIDEO CLIP)

BUSH: The actions will take more time to have their full impact. It took a while for the credit system to freeze up. It's going to take a while for the credit system to thaw.

(END VIDEO CLIP)

BLITZER: All right. How long will it take for the credit system to thaw?

LAZEAR: Well, it will take some time. But we've already seen --

BLITZER: What is "some time"? Give us a ballpark.

LAZEAR: I would say a few months before we really see a significant impact. But we've seen impacts already. What we're seeing is that banks are now willing to lend to one another. That's a huge plus for the economy because the big problem has been that banks have been unwilling to trust one another.

The reason we care about that is because when banks are unwilling to trust one another, they can't lend to businesses. When businesses can't borrow, they can't grow their firms, and if they can't grow their firms, they can't employ the workers.

And so, it amplifies immediately -- it's very important that we get credit markets going so the jobs continue to grow and that we get wage growth and turn this thing around. And we think we're on the right path. Again, you know, I don't want to be too technical, but if you look at the numbers that we've seen this week in terms of is the plan working, it looks like it is working. All the numbers have been going in the right direction.

BLITZER: The -- you refer to that $700 billion bailout or rescue plan. The president signed it into law on October 3rd. On October 3rd, the Dow Jones Industrial average was at 10,325. Since then, it's gone down almost 1,500 points, 8,852, closing October 17th. Why have the markets not been reassured by this $700 billion plan?

LAZEAR: Well, I would say the market was looking to see what we were going to do with the $700 billion. This week, when the plan was actually announced, Tuesday it started to come out on Monday afternoon, we did see some pretty significant action.

The market rose 300, 400 points, although I must say it sure did it the hard way. We've seen incredible volatility over the week, and it hasn't been easy to watch. But I think what that's reflecting right now is just a tremendous amount of uncertainty.

The questions that you raised about how long is it going to take, is it going to be effective, we believe it will be effective. We believe that it will happen relatively quickly. But everybody has uncertainty about that, and I think that's what you're seeing reflected in the markets right now.

BLITZER: The Democrats, the House Speaker Nancy Pelosi specifically and Harry Reid on the Senate side, they want a second economic stimulus package moved quickly. Listen to Nancy Pelosi.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, D-CALIF.: The recovery package is needed. It may have to be larger than the one we passed in the House. Our recovery package will contain some of the same goals, to rebuild America, to provide relief for the middle class, to encourage consumer confidence, and to have regulatory reform by rewriting the rules for financial institutions.

(END VIDEO CLIP)

BLITZER: They spoke of about a $150 billion stimulus package. Based on what you know, A, is it a good idea, and is the president on board?

LAZEAR: Well, you know, again, right now, we've already instituted a $700 billion package, so we think that is the right move at this point in time.

Most of the things we have heard from Congress in terms of what they have been suggesting may be policies that we want to discuss as to whether they're good over the longer run or not. For example, building bridges and roads. They may be good policy. That's something that Congress has to decide. But we can't really think of that as a stimulus that's going to get the economy turned around in the short run. It's simply too slow and it's also too focused on one particular industry.

So, those kinds of -- those kinds of measures are not really likely to get things going in the short run. And I think that anything that we do and anything we look at will be evaluated in that light. Is it going to be effective? Is it going to move the economy in the right direction? And is it going to do it soon enough?

LAZEAR: That's why we've focused on the credit markets. We believe that the credit markets are the center of the activity right now. That's where the problems lie, and that's what we need to attack. And, again, that's why we went after it.

BLITZER: The current budget deficit for this year is close to a half a trillion dollars, $500 billion, but there's now estimates it'll go up to $1 trillion, a trillion-dollar budget deficit.

Is that realistic?

LAZEAR: Well, the deficit reflects a couple of things. First of all, it will reflect the way in which we spend the $700 billion, which is, as you know, has already been passed and voted through.

The other thing it reflects is how quickly the economy grows. The deficit tends to shrink quite quickly when the economy is growing and growing at a rapid rate.

So, over the past couple of years, until this year, the deficit was shrinking. We got to very low levels of the deficit, by historic standards, and that was primarily a result of a strong and growing economy.

This year, as the economy has turned around, we're going to see the deficit grow. And we hope, of course, that the economy will turn around again, move in the positive direction, in the near future. That will reduce the deficit, and do so pretty quickly.

BLITZER: But that's going to take a while, for the economy to turn around. So, let me just repeat, is it realistic that the deficit could get close to a $1 trillion, or a thousand billion dollars?

LAZEAR: Well, our forecast, and also the forecast of the Congressional Budget Office, right now, is about half of that. And that's where we are.

Again, you know, this depends in large part on spending. One of the things that we're concerned about is making sure that we keep spending under control.

You asked me about a second stimulus earlier. You know, you want to make sure that you do the right thing for the economy, but you don't want to just spend money at a point when the economy is shaky.

So, we have to balance all of those things and take all of those things into account. And that's what we're trying to do.

Again, I would say that the deficit is important. We need to focus on it.

Right now, the main focus needs to be turning the economy around and making sure that workers have jobs and that wages continue to grow. That's the single most important thing.

BLITZER: Ed Lazear is the chairman of the Council of Economic Advisers at the White House. Mr. Lazear, thanks for coming in.

LAZEAR: Thank you very much. Pleasure to be with you.

BLITZER: And up next, Colin Powell's major endorsement of Barack Obama -- how will it play in the important battleground state of Missouri?

We're speaking with Senator Claire McCaskill and Congressman Roy Blunt. They're both standing by live. Much more of our coverage coming up, right here on "Late Edition."

(COMMERCIAL BREAK)

BLITZER: And welcome back to "Late Edition."

Some call Missouri the ultimate bellwether state because it's voted with the winner in every presidential election but one over the last 100 years.

Right now, Missouri is certainly one of the closest of the battleground states. The latest CNN poll of polls in Missouri shows John McCain leading Barack Obama by a single point.

Joining us now to discuss who will take these 11 electoral votes are two of Missouri's finest. In St. Louis, Democratic Senator Claire McCaskill. She's a very strong supporter of Barack Obama.

And in Springfield, Congressman Roy Blunt. He's the number two Republican in the House of Representatives and a very strong supporter of John McCain.

Thanks to both of you for coming in.

MCCASKILL: Thank you.

BLUNT: Glad to be here.

I know, Congressman Blunt, you must be disappointed that your friend Colin Powell, today, endorsed Barack Obama. And among the reasons he cited were some of the things happening in his party, the Republican Party, that he simply doesn't like.

Listen to this little clip.

(BEGIN VIDEO CLIP) POWELL: Now, I understand what politics is all about. I know how you can go after one another, and that's good. But I think this goes too far, and I think it has made the McCain campaign look a little narrow. It's not what the American people are looking for.

(END VIDEO CLIP)

BLITZER: He was referring to Bill Ayers, the 60s radical that's become a centerpiece for some of these attack ads against Barack Obama from Republicans.

How disappointed are you in what General Powell, A, is saying, and his endorsement?

BLUNT: Well, his endorsement -- I wish he would have endorsed John McCain. He said both of these guys were ready to be president. I was glad to hear him say that.

I like him a lot. I respect him a lot. I usually agree with him, but often, over the years, I haven't agreed with him, particularly about the tone of political debate in the country. I really do think that the associations that Barack Obama's had with Bill Ayers are one of the things that people ought to be thinking about. I think the association, frankly, with Reverend Wright, for 20 years, is something that I wish John McCain wouldn't have taken off the table.

I think it does matter what a guy listens to, week in and week, out for 20 years. I think it matters where you decide to launch your campaign for the Senate. I think those are well within the bounds of political discourse.

If John McCain had anything like that, at the other end of the spectrum, absolutely, I'm confident it would be a big issue.

I don't think either of those are going to be as big an issue, here in the last few days of this campaign in Missouri, as the economic questions.

I think Joe the plumber does matter here, not because he's Joe or not because he's a plumber but because of all that particular discussion represents.

And we're used to being a battleground state, and we're clearly going to be that the last two weeks of this campaign.

BLITZER: I think Missouri is going to definitely be a battleground state. All right. You want to respond to some of the serious -- serious points that Congressman Blunt just made, Senator?

MCCASKILL: First of all, General Powell's endorsement of Barack Obama is going to speak very loudly in Missouri. We had 175,000 people show up to see Barack Obama in Missouri yesterday, the most large political gatherings ever in the history of our country, and that was before General Powell said that Barack Obama is the right leader now.

And by the way, Missourians have common sense. Does anybody in their right mind think that General Powell would ever endorse anyone that had any patience with terrorists? Of course he wouldn't.

And the reason he endorsed Barack Obama is he's disappointed at the small, petty, angry campaign that's being run in Missouri and other states across this country, that's not talking about the middle class; it's not talking about more jobs; it's not talking about education. It's trying to scare people by bogus personal attacks against Barack Obama.

BLITZER: All right. Go ahead. I'll let Congressman Blunt respond to that.

BLUNT: Well, you know, at least Barack Obama is running for president. What we saw, the last few days, was attacking this guy, Joe the plumber. We heard his name wasn't Joe. We heard he wasn't a plumber. We heard he'd never made that much money in his life.

That doesn't matter. I mean, that's one way to try to defend yourself, where you have an undefensible political position, where you're out there telling some guy, in his own driveway, that he should be happy about spreading the wealth.

I think the American people understand that 54 percent of all small businesses would have a tax increase under the Obama plan, or hopefully they will, at the end of the next couple of weeks.

BLUNT: Sixteen million people work for small businesses that make more than $250,000. Almost all those people put their money right back into the business and try to create a few million more jobs. That's what frankly this campaign ought to be about.

BLITZER: Senator...

BLUNT: We had Joe Biden talking about whether Joe the Plumber was really a plumber or not, as if that's the question here.

BLITZER: Senator, here's what Senator McCain said yesterday in his radio address on this suggestion from Senator Obama that the wealth should be spread out and that the government should have a role in this. Listen to Senator McCain.

(BEGIN VIDEO CLIP)

MCCAIN: At least in Europe, the Socialist leaders who so admire my opponent are up front about their objectives. They use real numbers and honest language. And we should demand equal candor from Senator Obama. Raising taxes on some in order to give checks to others is not a tax cut. It's just another government giveaway.

(END VIDEO CLIP)

BLITZER: Those are strong words from Senator McCain, suggesting that what Senator Obama has in mind is socialism.

MCCASKILL: It's so unbelievable to me that a candidate for president would have the nerve to say that working people in America do not deserve a tax cut. And that's really what we're talking about. Both of these candidates want to cut taxes.

The question is who do they want to cut them for? The bottom line is that we all now know that Joe the Plumber will get a tax cut under Barack Obama. He won't with John McCain. Small businesses are going to get tax cuts.

Now, John McCain is going to cut some taxes, for the same people that George Bush cut them for -- big corporations and wealthy people. It's a very clear choice.

BLITZER: The point they're making, Senator McCaskill, is that among the millions who would get tax cuts, as you call them, are a whole lot of people out there who don't really pay federal income tax. They're not required to pay federal income tax. And they, under Senator Obama's plan, would get what's called a tax credit.

What McCain and his supporters call a tax giveaway, if you will, welfare checks to these folks. You want to respond to that charge? MCCASKILL: Yes. Wolf, what I'd like people to do and I think John McCain has probably never done this -- he needs to talk to some of the janitors that work at public schools. He needs to talk to some of the waitresses I've talked to over the last week that wanted an Obama pin. They are paying taxes. They may not be paying federal taxes, but they are paying plenty of taxes. And by the way, they're paying a lot more of their income in taxes than Warren Buffett, Paris Hilton and all the people on Wall Street that John McCain wants to give another tax cut to.

BLITZER: Let me let Congressman Blunt respond to that. Go ahead, congressman.

BLUNT: It's clear what Barack Obama wants to do. He said it himself. I'm sure he wishes he could have that we need to spread the wealth comment out. And again, they want to talk about Joe, the guy in the driveway, and his current circumstances. They want to shift the discussion away from all the small businesses in America that create 16 million jobs that are going to have a tax increase.

You and I and Claire know those small business people. We know a lot of them. It's not necessarily Joe the Plumber, but it could be. It could be Joe the Printer. They make money. They pay taxes as individuals because that's the best way for them to legally organize. And almost every one of them put that money right back into the business and tried to create another job.

We ought to be focused on job creation here rather than spreading the wealth, rather than trying to eliminate the potential for somebody to create a job for that waitress that Claire was talking about or pay the taxes that keep that school open that Claire was talking about. A spread the wealth environment will not get us through this.

In fact, Barack Obama himself in recent months said, well, you don't want to raise taxes in tough economic times. I wonder why not. The reason why not is you don't have the job creation opportunities that the tax policies that John McCain's talking about would create for you. And spreading the wealth creates less wealth, not more wealth.

BLITZER: Senator, I'm going to read to you what Governor Sarah Palin, the vice presidential nominee on the Republican side, said on Thursday because it's caused a stir out there. And I want to get your response. She said this. She said, "We believe that the best of America is in these small towns that we get to visit, and in these wonderful little pockets of what I call the real America, being here with all of you hard-working, very patriotic, very pro-America areas of this great nation."

Suggesting there are perhaps a areas of America that aren't pro- American. You want to respond to that? Because those are pretty serious words. MCCASKILL: Well, it's sad, honestly. You know, what we need right now is we need a president that sees all America as patriotic, that understands that everyone in America, wants what's best for this great country that we're so blessed to live in. And to divide us, to keep trying to divide us, to keep trying to use these nasty, hate robocalls and trying to act like some areas are more patriotic than the others or some people are more scary than the others, that's not what we need right now. This is a time of crisis in our country.

We need someone who says, hey, this is America, we need to come together. We can do better, create more American jobs, create more wealth in this country for the middle class, and that's what Barack Obama is about. It's a sad moment for the McCain/Palin campaign when she said that.

BLITZER: Congressman Blunt, those 100,000-plus folks that gathered in St. Louis, Missouri yesterday at an Obama rally. Is that not part of the pro-America part of America?

BLUNT: Well, obviously, the best of America is all over America. I think often in small-town America like so much of our state, you do see what America's about in a little clearer microcosm because everybody knows everybody else and you see that.

But clearly this a great and powerful country. And today in our state, there are going to be tens of thousands of families that go to church. They're going to be talking over the weekend about deer hunting season and turkey hunting season. And remember, that's the group that Barack Obama says is bitter and clings to their religion and guns.

BLITZER: Let me just wrap it up, Congressman Blunt.

BLUNT: Many comments have been made during this campaign that people in our state are going to be thinking about. I think at the end of the day, that helps John McCain.

BLITZER: Are there pro-America and anti-America parts of the country? Do you accept the premise of what the vice presidential nominee is saying?

BLUNT: Well, I didn't hear what she said. I'm sure she didn't say there were anti-American parts of the country. I don't believe that. I'm sure she doesn't either. But often you do see a microcosm of what we are in a clearer way in a small town than you do in a big town. It doesn't mean it's not there.

MCCASKILL: Roy, come on up to St. Louis. Come on up to St. Louis. I'll show you a microcosm of very, very pro-American people.

BLUNT: I like St. Louis. Claire, in your last campaign, you talked constantly about how you wanted to be out in small town Missouri.

MCCASKILL: Absolutely.

BLUNT: And you talked constantly -- and you've talked constantly about why Barack Obama needs to be out in small-town Missouri.

MCCASKILL: Absolutely.

BLUNT: Now why is that? Nobody believes the best of America is not in our cities.

MCCASKILL: Good.

BLUNT: We have great cities. In fact, John McCain is going to be in St. Louis and just south of Kansas City tomorrow. And we're a battleground. We understand that. I think Claire McCaskill did a lot in the primary to help Barack Obama win this state, and I admire her for taking that position in the primary.

But listen, when we get down to talking about the last things that people are going to focus on in this campaign, I think John McCain's going to carry the state. Not without tremendous help by lots of volunteers and both sides are engaged and that's why Missouri is the political state it is.

MCCASKILL: Wolf, just let me say this -- it's not that rural America and rural Missouri is not wonderful. It is. It is great. And I meant what I said about campaigning in rural America. But so are the cities. And we shouldn't divide ever in America between the two.

BLITZER: Let's leave it at that.

BLUNT: I'm sure Sarah Palin didn't say that.

BLITZER: But she didn't say -- congressman, you're right. She didn't say there were anti-American segments, but she did say she wants to be in the very patriotic, very pro-America areas of this great nation, implying that there may be other parts of this great nation which aren't were pro-America.

BLUNT: Senator Obama said there were parts of the country -- Barack Obama said there were parts of the country that were bitter, too. Talk about Sarah Palin, let's talk about Barack Obama.

BLITZER: And he says in "The New York Times" today that was one of the most dumb-headed statements he made and deeply regrets having made that statement about clinging to guns and religion.

BLUNT: He's right about that.

MCCASKILL: Yep, he's right about that.

BLITZER: And he deeply regrets that statement. All right, guys, a good discussion. Thanks very much.

MCCASKILL: Thank you. Thanks, Roy.

BLITZER: We'll be watching Missouri and the rest of the country as well. And coming up, our political panelists standing by to talk about this morning's endorsement by the former secretary of state Colin Powell. What else can we expect as this race heads into the home stretch? "Late Edition" continues right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition." Let's get right to the best political team on television. Joining us in New York, Campbell Brown. She's the anchor of CNN's "Election Center," where there's no bias, no bull.

(LAUGHTER)

In West Virginia, our senior political analyst, Bill Schneider. He's with the CNN Election Express.

And with us here in Washington, our senior political analyst Gloria Borger and our senior correspondent Joe Johns.

Campbell, let me start with you. I'm going to play this little clip. General Powell, effusive in his praise for Colin Powell (sic), just a little while ago, endorsing the Democrat. Listen to this.

(BEGIN VIDEO CLIP)

POWELL: I have watched Mr. Obama, and I watched him during this seven-week period, and he displayed a steadiness, an intellectual curiosity, a depth of knowledge.

I think that he has a -- a definitive way of doing business that would serve us well.

(END VIDEO CLIP)

BLITZER: How big of a deal, Campbell, is this?

BROWN: Wolf, I think it's a huge deal. I think, generally, endorsements don't matter that much, but Powell is different.

I mean, if you look at the possibilities for how this election could turn against Barack Obama at this stage, one, he could make some kind of huge gaffe, which he generally has not been prone to do; or, two, there could be some kind of international crisis, national security crisis that would give John McCain a real opportunity to show his strength.

I think Colin Powell coming out today, and to the extent that people still feel some uncertainty about Barack Obama in that role of commander in chief, I think Powell's endorsement goes a long way toward inoculating Obama against that.

Just -- you know, if something did happen, like a Georgia situation like we saw this summer, or, God forbid, a terrorist attack, the image of Obama standing there with Colin Powell and Joe Biden, I think, would be a pretty reassuring image to a lot of people.

BLITZER: I think it's a deal-closer for some of those undecided, Gloria, who are still waiting, trying to make up their minds. I think this will reassure them on the one issue where he seems to be weakest against John McCain, national security.

BORGER: Sure. But, also, what was so interesting to me about the Powell endorsement was the breadth of it. It wasn't just about he'll be OK in national security.

It spoke to McCain's judgment in a crisis, dealing with the economic crisis in the country. It spoke, in a way, to his temperament. It spoke to his judgment in choosing Sarah Palin as his vice president.

He said, point-blank, she's not qualified to be president. And it also spoke about the Republican Party. He specifically said, this is a party that's been narrowing.

He was a member of the big-tent -- or he is a member of the big- tent Republican Party, and it's very clear that, by saying it's narrowing, that he's talking to independent voters out there and saying, you know, this is not the way the Republican Party ought to go.

BLITZER: Even -- Joe, he even raised the issue of there could be two seats opening up; conservatives could take those seats on the U.S. Supreme Court.

And Gloria makes a good point. It wasn't just effusive in praise for Barack Obama but scathing and criticism of his own party, where he's been.

JOHNS: Certainly. And it's one of those thing where you hear him using these words, "transformational figure;" "we need generational change."

This is a Republican, a centrist Republican, who brings centrist Republicans as well military communities, but at the same time, he's a guy who doesn't agree with Barack Obama on a lot of things, particularly Iraq, say, but still coming over to Obama's side and saying, this is what we need now, for a variety of reasons.

It's fascinating. And it's pretty strong.

BLITZER: You've studied polls, Bill, for a long time. Is there likely to be what I'm ready to call a "Colin Powell bounce" for Barack Obama in these final 16, 17 days?

SCHNEIDER: There very well could be. And the reason is that the weakest area for Barack Obama has always been national security, dealing with a crisis, military matters, because he doesn't have any military experience, the whole commander in chief issue that Campbell mentioned earlier.

SCHNEIDER: This will reassure a lot of voters that he is qualified to be commander in chief. Colin Powell of course has impeccable credentials. He also said that Barack Obama will reassure the international community and restore its confidence in America. And that is something he's very sensitive to as a former secretary of state. So, I believe it will make a difference in the very area where Barack Obama has been weakest against John McCain.

BLITZER: All right, guys, stand by for a moment because we have a lot more to discuss. Our political panel is here. John McCain kept up his attacks on Barack Obama today. We're going to tell you what he had to say in our very popular "In Case You Missed It" segment. Lots more coming up right after this.

(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. On FOX, John McCain was confident that the tide was turning in his favor.

(BEGIN VIDEO CLIP)

MCCAIN: Are we behind? Sure? I'm the underdog. I've been the underdog in a number of races and very happy with the way the campaign is going. I'm very happy with the debate there the other night. And, look, I've been on enough campaigns, my friend, to sense enthusiasm and momentum, and we've got it.

(END VIDEO CLIP)

BLITZER: On NBC, former secretary of state Colin Powell made big news by endorsing Barack Obama for president. He was also very critical of the tone of the Republican campaign.

(BEGIN VIDEO CLIP)

POWELL: I'm also troubled by not what Senator McCain says but what members of the party say, and it is permitted to be said, such things as well -- you know that Mr. Obama is a Muslim. Well, the correct answer is he is not a Muslim. He's a Christian. He's always been a Christian. But the really right answer is, what if he is? Is there something wrong with being a Muslim in this country? The answer is no. That's not America.

(END VIDEO CLIP) BLITZER: Highlights from the other Sunday morning talk shows here in the United States. LATE EDITION, the last word in Sunday talk, continues in a moment. And Up next, Sarah Palin's star turns on "Saturday Night Live." We'll take a closer look at the vice presidential candidate's performance when we come back. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're talking politics with Campbell Brown, Bill Schneider, Gloria Borger and Joe Johns. They're all part of the best political team on television.

Campbell, as a lot of our viewers know, every weeknight at 8:00 you have a "No Bias, No Bull" segment where you come from the heart, you tell viewers what you're really thinking. And I was thinking of that today when we learned that Barack Obama raised in September $150 million. Wow, a huge, huge number, more than $600 million that he's raised so far in this campaign. You had a unique idea about some of that money on both sides and the nastiness of this campaign. Tell our viewers what you were thinking. BROWN: Well, what I had mentioned, and which I still think would be a great idea -- I don't know that it's going to happen though. Let's look at what's happening in this election cycle. It's very different from 2004. There was a big article in "The Wall Street Journal" last week talking about how negative ads are not working. They're just ineffective. The message of character attacks isn't resonating with people because everything is about the economy right now. That's the message that's resonating with people. There's an article in "The Washington Post" today that says independent groups, 527s, are not having the same effect that they did in 2004 because they don't have the money to spend on negative ads because, again, the economy is what it's all about.

So, if you look at what Obama has to spend and plans to spend on negative ads between now and Election Day and McCain, it's $30 million a week combined the two of them with Obama spending a lot more than McCain.

If they took that money and gave it to charity, since the ads aren't working anyway, why would that be so crazy? I mean, charities are suffering the way they haven't in a very long time, again, because of the economy and our problems. They're not getting the contributions that they desperately need.

Now, do I think either campaign would do this? But I'm trying to approach it from a rational perspective, a logical perspective. If negative ads aren't working for you anyway, why are you going to subject us to this and make us listen to it for the next two weeks when, in fact, they're now ineffectual if you believe these articles?

BLITZER: Give it to a good cause. No bias, no bull from Campbell every week night.

BLITZER: You know, here's a couple of ads that were running, Gloria, this week for McCain and Obama. And they refer to the notion of McCain potentially being a third term of Bush. Listen to these two ads.

(BEGIN VIDEO CLIP)

MCCAIN: The last eight years haven't worked very well, have they? I'll make the next four better. Your savings, your job and your financial security are under siege. Washington is making it worse, bankrupting us with their spending. Senator Obama, I am not President Bush.

UNIDENTIFIED MALE: True. But you did vote with Bush 90 percent of the time. Tax breaks for big corporations and the wealthy, but almost nothing for the middle class. Same as Bush.

(END VIDEO CLIP)

BLITZER: All right. Those are pretty strong ads.

BORGER: Right, but the guy who's being attacked is the one in the White House mostly, is George W. Bush. BLITZER: Who's very unpopular.

BORGER: Right. And the thing is, to Campbell's point that no candidate will ever admit that he's running a negative ad. He will say it's comparative, right, and that all Barack Obama's trying to do is point out nicely to you voters that John McCain has voted with George W. Bush 90 percent of the time and all McCain was trying to do was say, hey, I get it, the last eight years haven't gone so well.

BLITZER: What does it say to you that in these final days Senator McCain, Joe, has to go to North Carolina, Virginia, obviously Ohio, and as we heard earlier he is going to be in Missouri? What does that say to you?

JOHNS: His possibilities are narrowing. He's taking a red-state strategy and he's looking to the electoral map to try to get this thing done. People say there's still a path for McCain and you have to remember, this guy has risen from the ashes before. Everybody pronounced him dead in the primary and then, look, suddenly he's the nominee. That's why Barack Obama is literally carpet bombing the airwaves with all kinds of ads and continues to do so with something like a 4-1 ratio. BLITZER: A huge financial advantage. Bill Schneider, you're out there in West Virginia. Folks all over -- in some of these battleground states, I should say, are starting already to receive these robocalls, calls with a specific message. And we've got an excerpt of one of them from the Republican side. Listen to this.

(BEGIN VIDEO CLIP)

UNKNOWN: Hello, I'm calling for John McCain and the RNC because you need to know that Barack Obama has worked closely with domestic terrorist Bill Ayers, whose organization bombed the U.S. Capitol, the Pentagon, a judge's home and killed Americans. And Democrats will enact an extreme leftist agenda if they take control of Washington. Barack Obama and his Democratic allies lack the judgment to lead our country.

(END VIDEO CLIP)

BLITZER: Historically speaking, and usually at the end of a campaign you get these robocalls. Pretty nasty sometimes. Do they really work, Bill?

SCHNEIDER: Well, they did work against John McCain when George Bush's campaign used robocalls in the Republican primary in South Carolina, spreading very nasty rumors, many of them untrue about John McCain and he denounced them. He called them disgraceful.

And now look who's doing it. The Republican National Committee with the support of the McCain campaign is doing these calls. It is still disgraceful, and he has denounced it in the past. And, in fact, today, Colin Powell specifically called attention to what he called a disgraceful campaign tactic, a divisive campaign tactic being used by the McCain campaign as one of the reasons why he couldn't endorse McCain. BLITZER: And Campbell, a lot of people say these nasty, negative ads, they're counterproductive, they don't work, but the politicians out there say, you know what, they really do work.

BROWN: I think all the evidence to the contrary, at least in this campaign cycle. They have in the past, as Bill just pointed out, they have been effective. They certainly, the swift boat ads you can't deny, were very effective against John Kerry in 2004. But the economy is dominating, I think, in so many way, Wolf, and that's changed the dynamic.

People hear the stuff and it doesn't compare to what's going on in their own lives, and so it's just not connecting I think in the same way than it did in 2000 or in 2004.

BLITZER: All right. I'm going to leave everyone with a little clip from last night's "Saturday Night Live." I want you to watch. This is their "Weekend Update," and they have a special guest there, Sarah Palin. Watch as she's sitting. Watch the moves.

(BEGIN VIDEO CLIP) AMY POEHLER, ACTRESS: My country 'tis of thee, from my porch I see Russia and such. All the plumbers in the house put your hands up. All the mavericks in the house put your hands up. All the plumbers in the house, pull your pants up.

(END VIDEO CLIP)

BLITZER: All right. You may not see all the moves, but if you watched it, that's the governor, there she is right there. She's showing some good moves, Joe, what do you think? Barack Obama's got some good moves, but Sarah Palin, who knew?

JOHNS: Well, she's athletic. She's got it all going. As I told you, there's this great Photoshop right now of her and Barack Obama ballroom dancing. It's making its way around the Internet. It's on my Facebook page.

BLITZER: I think this kind of stuff helps these candidates, don't you think Gloria?

BORGER: It does help these candidates. Honestly, I didn't hear a lot from Sarah Palin and I'm wondering whether the campaign was really nervous about how to handle her on "Saturday Night Live." I wanted to see her and Tina Fey actually do something together.

BLITZER: Saw Alec Baldwin says she looks hotter in person than she is on television. That's Alec Baldwin. All right, guys, we've got to leave it right there. Good discussion. Up next, if Barack Obama wins the presidency, would Hillary Clinton serve in his cabinet? Her answer coming up when LATE EDITION continues.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. After Wednesday's fiery debate between Barack Obama and John McCain, I interviewed Hillary Clinton, who was in the audience, and I asked her if she would accept a cabinet position with an Obama administration should he win the presidential election.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON, D-N.Y.: I really want to stay a senator. I am committed to being in the Senate, working with President Obama. I think we have a real chance to break the gridlock, get things done, start progress going again in America. And I want to be part of that in the Senate. And one of the lessons that I took away from my husband's administration is don't take senators out of the Senate.

You need every Democratic senator that you possibly can have. You know, we still might have to face a filibuster if we don't get the 60 Democratic senators. We can't afford to whittle down the majority that President Obama will need to make some very hard decisions that will be in the best interests of our country. So, I am looking forward to being a senator, continuing my life-long work to try to come up with ways that will help every person live up to his or her god-given potential. And I'm excited with President Obama on health care, energy and all of the other important matters before our nation.

(END VIDEO CLIP)

BLITZER: Senator Clinton speaking with me earlier in the week. That's your LATE EDITION for this Sunday, October 19th. Please be sure to join me 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. Thanks for joining us. "FAREED ZAKARIA GPS" starts right now.

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